Zovio Inc - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - August 7, 2014

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News Release
Contact: Paul Goodson, Associate Vice President of Investor Relations
866.475.0317 x2271
investorrelations@bridgepointeducation.com

Bridgepoint Education Reports Second Quarter 2014 Results
SAN DIEGO, (August 7, 2014) - Bridgepoint Education (NYSE:BPI), a provider of postsecondary education services, announced today its results for the three and six months ended June 30, 2014.

Highlights for the second quarter ended June 30, 2014, are as follows:
•
Total student enrollment at period end was 61,117.
•
Revenue was $171.5 million compared with $193.5 million for the same period in 2013.
•
Operating income was $22.4 million compared with $19.1 million for the same period in 2013.
•
Net income was $13.0 million compared with $12.1 million for the same period in 2013.
•
Fully diluted earnings per share was $0.28 compared with $0.22 for the same period in 2013.

Student Enrollment
Total student enrollment at Bridgepoint Education's academic institutions, Ashford University and University of the Rockies, was 61,117 students at June 30, 2014, compared with 71,685 students at the end of the second quarter of 2013.
The twelve-month retention for students who started in the second quarter of 2013 was 65.6% as measured in the second quarter of 2014. The twelve-month retention for students who started in the second quarter of 2012 was 61.2% as measured in the second quarter of 2013.
Financial Results
Revenue for the second quarter of 2014 was $171.5 million, compared with revenue of $193.5 million for the same period in 2013. Revenue for the six months ended June 30, 2014, was $328.8 million, compared to $406.5 million for the same period in 2013.
Operating income for the second quarter of 2014 was $22.4 million compared with operating income of $19.1 million for the same period in 2013. Operating income for the six months ended June 30, 2014 was $14.6 million compared to $58.8 million for the same period in 2013.
Net income for the second quarter of 2014 was $13.0 million compared with net income of $12.1 million for the same period in 2013. Net income for the six months ended June 30, 2014 was $8.6 million compared to $36.8 million for the same period in 2013.
Fully diluted earnings per share for the second quarter of 2014 was $0.28 compared with $0.22 for the same period in 2013. The results for the second quarter of 2013 included a pre-tax charge of $5.9 million for severance, which had an impact on second quarter earnings equal to $0.06 per diluted share, which was not replicated in 2014. Fully diluted earnings per share for the six months ended June 30, 2014, was $0.19 compared with $0.66 for the same period in 2013.
The Company's effective tax rate for the second quarter of 2014 was 44.0%.


Balance Sheet and Cash Flow
As of June 30, 2014, the Company had cash, restricted cash, cash equivalents and marketable securities of $342.0 million, compared with $356.4 million as of December 31, 2013. The Company used $3.8 million of cash in operating activities in the six months ended June 30, 2014, compared with generating $38.7 million for the same period in 2013.
Earnings Conference Call and Webcast
Bridgepoint Education will host a conference call at noon ET (9:00 a.m. PT) today to discuss its latest financial results and recent highlights. The dial-in number for callers in the United States / Canada is 866-859-7412, and for other callers, 856-452-0684. The access code for all callers is 80721216. A live webcast will also be available on the Company's website at http://ir.bridgepointeducation.com.
A replay of the call will be available via telephone through August 14, 2014. To access the replay, dial 855-859-2056 in the United States / Canada and for other callers, 404-537-3406; then enter the access code 80721216.
About Bridgepoint Education

Bridgepoint Education, Inc. (NYSE:BPI) improves the way individuals learn. By harnessing creativity, knowledge and proprietary technologies, such as Constellation® and Waypoint®, Bridgepoint Education has re-engineered the modern student experience with innovative solutions that advance learning. Its academic institutions - Ashford University and University of the Rockies - embody the contemporary college experience. Ashford University offers associate's, bachelor's and master's degree programs while University of the Rockies offers master's and doctoral degree programs. Both provide progressive online platforms, as well as traditional campuses located in Iowa (Ashford University), and Colorado (University of the Rockies). For more information about Bridgepoint Education, call Paul Goodson, Associate Vice President of Investor Relations at 866.475.0317 x2271.
Forward-Looking Statements

This news release may contain forward-looking statements. These statements involve risks and uncertainties, and the Company's actual performance may differ materially from those expressed in or suggested by such statements. Risks and uncertainties include, without limitation:

•
any statements regarding enrollments and student retention;
•
our ability to successfully remediate the control deficiencies that constitute the material weaknesses in our internal controls;
•
Ashford University's ability to successfully operate as an accredited institution subject to the requirements of the California Bureau for Private Postsecondary Education;
•
the risk that the results of the Company’s investments and related enhancements may be different than currently anticipated;
•
failure to comply with the extensive regulatory framework applicable to the Company and its institutions, including Title IV of the Higher Education Act and its regulations, state laws and regulatory requirements, and accrediting agency requirements;
•
adverse regulatory or legislative changes affecting the Company's institutions;
•
the imposition of fines or other corrective measures against the Company or its institutions;
•
competition in the postsecondary education market and its potential impact on the Company's market share and recruiting costs; and
•
reputational and other risks related to potential compliance audits, regulatory actions, negative publicity or service disruptions.

More information on potential factors that could affect the Company's performance is included from time to time in the “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company's periodic reports filed with the SEC, including the Company's Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 17, 2014, and amended on August 1, 2014, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, to be filed with the SEC. Forward-looking statements are made on the basis of management's views and assumptions regarding future events and business performance as of the time the statements are made, and the Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates, except as required by law.



BRIDGEPOINT EDUCATION, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Revenue
$
171,522

 
$
193,470

 
$
328,792

 
$
406,456

Costs and expenses:
 
 
 
 
 
 
 
Instructional costs and services
76,853

 
99,603

 
159,934

 
196,631

Admissions advisory and marketing
55,518

 
57,582

 
121,296

 
115,125

General and administrative
16,737

 
17,152

 
33,006

 
35,891

Total costs and expenses
149,108

 
174,337

 
314,236

 
347,647

Operating income
22,414

 
19,133

 
14,556

 
58,809

Other income, net
712

 
748

 
1,079

 
1,585

Income before income taxes
23,126

 
19,881

 
15,635

 
60,394

Income tax expense
10,171

 
7,767

 
7,010

 
23,613

Net income
$
12,955

 
$
12,114

 
$
8,625

 
$
36,781

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.29

 
$
0.22

 
$
0.19

 
$
0.68

Diluted
0.28

 
0.22

 
0.19

 
0.66

Weighted average number of common shares outstanding used in computing earnings per share:
 
 
 
 
 
 
 
Basic
45,233

 
54,136

 
45,066

 
54,132

Diluted
46,503

 
55,634

 
46,524

 
55,488



BRIDGEPOINT EDUCATION, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

 
June 30,
2014
 
December 31,
2013
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
150,490

 
$
212,526

Restricted cash
32,628

 
36,946

Investments
81,130

 
65,901

Accounts receivable, net
25,881

 
22,953

Student loans receivable, net
925

 
1,043

Deferred income taxes
16,734

 
16,683

Prepaid expenses and other current assets
23,405

 
21,563

Total current assets
331,193

 
377,615

Property and equipment, net
88,694

 
91,425

Investments
77,752

 
41,062

Student loans receivable, net
10,447

 
11,785

Goodwill and intangibles, net
26,232

 
26,878

Deferred income taxes
18,502

 
18,507

Other long-term assets
2,654

 
2,740

Total assets
$
555,474

 
$
570,012

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
4,029

 
$
5,195

Accrued liabilities
46,531

 
54,290

Deferred revenue and student deposits
112,404

 
132,791

Total current liabilities
162,964

 
192,276

Rent liability
22,493

 
23,927

Other long-term liabilities
9,693

 
9,271

Total liabilities
195,150

 
225,474

Total stockholders' equity
360,324

 
344,538

Total liabilities and stockholders' equity
$
555,474

 
$
570,012



BRIDGEPOINT EDUCATION, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

 
Six Months Ended June 30,
 
2014
 
2013
Cash flows from operating activities
 
 
 
Net income
$
8,625

 
$
36,781

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Provision for bad debts
12,921

 
24,403

Depreciation and amortization
11,972

 
10,338

Amortization of premium/discount
(89
)
 
2,165

Stock-based compensation
5,058

 
7,443

Excess tax benefit of option exercises
(986
)
 
—

Loss on impairment of student loans receivable
1,189

 
292

Loss on disposal of fixed assets
52

 
—

Changes in operating assets and liabilities:
 
 
 
Restricted cash
4,518

 
6,451

Accounts receivable
(15,755
)
 
(13,222
)
Prepaid expenses and other current assets
(1,766
)
 
(4,110
)
Student loans receivable
480

 
3

Other long-term assets
86

 
801

Accounts payable and accrued liabilities
(8,842
)
 
5,400

Deferred revenue and student deposits
(20,292
)
 
(39,996
)
Other liabilities
(1,012
)
 
1,975

Net cash provided by (used in) operating activities
(3,841
)
 
38,724

Cash flows from investing activities
 
 
 
Capital expenditures
(6,203
)
 
(6,778
)
Purchases of investments
(72,426
)
 
(26,689
)
Restricted cash
(200
)
 
—

Capitalized costs for intangible assets
(2,112
)
 
(2,353
)
Sales and maturities of investments
20,000

 
109,916

Net cash provided by (used in) investing activities
(60,941
)
 
74,096

Cash flows from financing activities
 
 
 
Proceeds from exercise of stock options
2,964

 
183

Excess tax benefit of option exercises
986

 
—

Proceeds from the issuance of stock under employee stock purchase plan
—

 
604

Tax withholdings on issuance of restricted stock
(1,204
)
 
—

Net cash provided by financing activities
2,746

 
787

Net increase (decrease) in cash and cash equivalents
(62,036
)
 
113,607

Cash and cash equivalents at beginning of period
212,526

 
208,971

Cash and cash equivalents at end of period
$
150,490

 
$
322,578



Zovio Inc Reports