HERNDON, Va., Aug. 4, 2015 (GLOBE NEWSWIRE) -- K12 Inc. (NYSE:LRN), a technology-based education company and leading provider of proprietary curriculum and online school programs for students in pre-K through high school, today announced its results for the fourth fiscal quarter and full fiscal year ended June 30, 2015. Financial measures are provided on a GAAP basis, followed by a summary of results excluding the impact of specific charges which had a significant impact on fourth quarter and full year results.
Financial Highlights for the Three Months Ended June 30, 2015 (Fourth Quarter Fiscal Year 2015)
- Revenues of $235.7 million, compared to $232.0 million in the fourth quarter of FY 2014.
- EBITDA, a non-GAAP measure (see reconciliation below), of $15.2 million, compared to $36.0 million in the fourth quarter of FY 2014.
- Operating loss of $16.3 million, compared to income of $12.8 million in the fourth quarter of FY 2014.
- Net loss attributable to common stockholders of $11.6 million, compared to net income of $12.4 million in the fourth quarter of FY 2014.
- Diluted net loss attributable to common stockholders per share of $0.31, compared to net income of $0.32 in the fourth quarter of FY 2014.
During the quarter ended June 30, 2015, the Company incurred the following charges, totaling $28.4 million of which $0.5 million are cash charges.
- Reserves and write downs related to end of life products, software and inventory of $14.3 million.
- Incremental accounts receivable reserves of $10.7 million, primarily related to closed schools, a funding deficit in one state and the interest on a receivable.
- Severance costs of $3.4 million.
Excluding the impact of the aforementioned charges, for the three months ended June 30, 2015 (see Appendix C below).
- EBITDA would have been $26.6 million, compared to the $36.0 million from the fourth quarter of FY 2014.
- Operating income would have been $8.9 million, compared to operating income of $12.8 million in the fourth quarter of FY 2014.
- Net income attributable to common and Series A stockholders would have been $6.8 million, compared to net income of $12.4 million in the fourth quarter of FY 2014.
- Diluted net income attributable to common stockholders per share would have been $0.18 as compared to the $0.32 in the fourth quarter of FY 2014.
Financial Highlights for the Year Ended June 30, 2015
- Revenues of $948.3 million, compared to $919.6 million for the full fiscal year of 2014.
- EBITDA, a non-GAAP measure (see reconciliation below), of $102.2 million, compared to $115.5 million for the full fiscal year of 2014.
- Operating income of $18.4 million, compared to $22.9 million for the full fiscal year of 2014.
- Net income attributable to common and Series A stockholders of $11.0 million, compared to $19.6 million for the full fiscal year of 2014.
- Diluted net income attributable to common stockholders per share was $0.29, compared to $0.50, which includes the pro-rata effect of the Series A Special shares conversion to common shares on September 3, 2013, for the full fiscal year of 2014.
During fiscal year 2014, the Company sold certain businesses and incurred charges relating to additional reserves, accelerated amortization and severance costs. Excluding the impact of these businesses and charges, and excluding the impact of the aforementioned charges in the fourth quarter of fiscal year 2015, for the year ended June 30, 2015 (see Appendix C, D and E below).
- EBITDA would have been $113.6 million compared to $123.6 million for the full fiscal year of 2014.
- Operating income would have been $43.7 million compared to $54.5 million for the full fiscal year of 2014.
- Net income attributable to common and Series A stockholders would have been $29.4 million compared to $35.6 million for the full fiscal year of 2014.
- Diluted net income attributable to common stockholders per share would have been $0.78, compared to $0.88, which includes the pro-rata effect of the Series A Special shares conversion to common shares on September 3, 2013, for the full fiscal year of 2014.
Comments from Management
"We delivered solid financial results for the year, including double-digit revenue gains in our education technology sales to school districts and our private schools, while continuing significant investments in student academic outcomes," said Nate Davis, Chairman and Chief Executive Officer. "As we begin a new fiscal year, we will continue using our strong financial position to improve our products and services," added Davis.
Cash, Capital Expenditures and Capital Leases
For the year ended June 30, 2015, free cash flow(1) was $43.6 million, compared to $50.0 million for the full fiscal year of 2014. The Company had cash and cash equivalents of $195.9 million, a decrease of $0.2 million compared to the $196.1 million reported at June 30, 2014.
Capital expenditures for the year ended June 30, 2015 were $61.8 million, an increase of $12.4 million from the prior year's full fiscal year, and was comprised of:
$9.9 million for property and equipment,
$33.8 million for capitalized software development, and
$18.1 million for capitalized curriculum.
Capital leases of $14.7 million were incurred during the year ended June 30, 2015, primarily for student computers.
(1) Free cash flow is defined as cash flow from operations less capital expenditures and capital leases financed.
Revenue and Enrollment Data
Revenue
The Company's revenues are generally in four categories -- Managed Programs (management, technology and academic support services provided to public schools), Non-managed Programs (curriculum, technology and other educational services where K12 does not provide primary administrative oversight), Institutional Software and Services (educational software and services provided to school districts, public schools and other educational institutions), and International and Private Pay Schools (private schools for which it charges student tuition and makes direct consumer sales) -- The following table sets forth the Company's revenues for the periods indicated:
Three Months Ended | Change | Year Ended | Change | |||||
June 30, | 2015 / 2014 | June 30, | 2015 / 2014 | |||||
($ in thousands) | 2015 | 2014 | $ | % | 2015 | 2014 | $ | % |
Public School Programs | ||||||||
Managed Programs | $ 201,333 | $ 201,387 | $ (54) | 0.0% | $ 813,677 | $ 793,854 | $ 19,823 | 2.5% |
Non-managed Programs | 8,312 | 6,535 | 1,777 | 27.2% | 39,321 | 28,836 | 10,485 | 36.4% |
Total Public School Programs | $ 209,645 | $ 207,922 | $ 1,723 | 0.8% | $ 852,998 | $ 822,690 | $ 30,308 | 3.7% |
Institutional Software & Services | 13,101 | 12,591 | 510 | 4.1% | 48,770 | 48,545 | 225 | 0.5% |
International and Private Pay Schools | 12,909 | 11,533 | 1,376 | 11.9% | 46,526 | 48,318 | (1,792) | -3.7% |
Total | $ 235,655 | $ 232,046 | $ 3,609 | 1.6% | $ 948,294 | $ 919,553 | $ 28,741 | 3.1% |
Enrollment Data
The following table sets forth average enrollment data for students in Public School Programs for the periods indicated. These figures exclude enrollments from classroom pilot programs and consumer programs.
Three Months Ended June 30, |
2015 / 2014 |
Year Ended June 30, |
2015 / 2014 |
|||||
2015 | 2014 | Change | Change % | 2015 | 2014 | Change | Change % | |
Public School Programs | ||||||||
Managed Programs (3) (4) | 108,913 | 111,381 | (2,468) | -2.2% | 114,579 | 119,197 | (4,618) | -3.9% |
Non-managed Programs (4) | 19,044 | 14,341 | 4,703 | 32.8% | 20,053 | 14,482 | 5,571 | 38.5% |
Total Public School Programs (2) | 127,957 | 125,722 | 2,235 | 1.8% | 134,632 | 133,679 | 953 | 0.7% |
(2) If a school changes from a Managed to a Non-managed program, the corresponding enrollment classification would change in the period in which the contract arrangement changed.
(3) Public School Programs include enrollments for which K12 receives no public funding or revenue.
(4) Managed Program enrollments are lower than those reported in our historical average student enrollments for Managed Public Schools due to reclassifying certain schools that meet the current definition of Non-managed Programs.
Revenue per Enrollment Data
The following table sets forth revenue per average enrollment data for students in Public School Programs for the periods indicated.
Three Months Ended | Change | Year Ended | Change | |||||
June 30, | 2015 / 2014 | June 30, | 2015 / 2014 | |||||
2015 | 2014 | $ | % | 2015 | 2014 | $ | % | |
Public School Programs | ||||||||
Managed Programs | $ 1,849 | $ 1,808 | $ 41 | 2.3% | $ 7,101 | $ 6,660 | $ 441 | 6.6% |
Non-managed Programs | 436 | 456 | (20) | -4.4% | 1,961 | 1,991 | (30) | -1.5% |
Total Public School Programs | $ 1,638 | $ 1,654 | $ (16) | -1.0% | $ 6,336 | $ 6,154 | $ 182 | 3.0% |
FY 2016 Outlook
The Company will provide an outlook for fiscal 2016 results in the Fall of this year.
Special Note on Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We have tried, whenever possible, to identify these forward-looking statements using words such as "anticipates," "believes," "estimates," "continues," "likely," "may," "opportunity," "potential," "projects," "will," "expects," "plans," "intends" and similar expressions to identify forward looking statements, whether in the negative or the affirmative. These statements reflect our current beliefs and are based upon information currently available to us. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause our actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. These risks, uncertainties, factors and contingencies include, but are not limited to: reduction of per pupil funding amounts at the schools we serve; inability to achieve sufficient levels of new enrollments to sustain or to grow our business model; failure of the schools we serve to comply with regulations resulting in a loss of funding or an obligation to repay funds previously received; declines or variations in academic performance outcomes as curriculum and testing standards evolve; harm to our reputation resulting from poor performance or misconduct by operators or us in any school in our industry and in any school in which we operate; legal and regulatory challenges from opponents of virtual public education, public charter schools or for-profit education companies; discrepancies in interpretation of legislation by regulatory agencies that may lead to payment or funding disputes; termination of our contracts with schools due to a loss of authorizing charter; failure to enter into new school contracts or renew existing contracts, in part or in their entirety; unsuccessful integration of mergers, acquisitions and joint ventures; failure to further develop, maintain and enhance our technology, products, services and brands; inadequate recruiting, training and retention of effective teachers and employees; infringement of our intellectual property; non-compliance with laws and regulations related to operating schools in a foreign jurisdiction; entry of new competitors with superior competitive technologies and lower prices; and other risks and uncertainties associated with our business described in the Company's filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of August 4, 2015, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
Conference Call
The Company will discuss its fourth quarter and full year fiscal year 2015 financial results during a conference call scheduled for Tuesday, August 4, 2015 at 8:30 a.m. eastern time (ET).
The conference call will be webcast and available at http://public.viavid.com/index.php?id=115414. Please access the web site at least 15 minutes prior to the start of the call.
To participate in the live call, investors and analysts should dial (877) 407-4019 (domestic) or (201) 689-8337 (international) at 8:15 a.m. (ET). No passcode is required.
A replay of the call will be available starting on August 4, 2015 at 11:00 a.m. ET through September 4, 2015 at 11:00 a.m. ET, at (877) 660-6853 (domestic) or (201) 612-7415 (international) using conference ID 13614346. A webcast replay of the call will be available at http://public.viavid.com/index.php?id=115414 for 30 days.
Financial Statements
The financial statements set forth below are not the complete set of K12 Inc.'s financial statements for the three months and full fiscal year ended June 30, 2015, and is presented below without footnotes. Readers are encouraged to obtain and carefully review K12 Inc.'s Form 10-K for the year ended June 30, 2015, including all financial statements contained therein and the footnotes thereto, filed with the SEC. The Form 10-K may be retrieved from the SEC's website at www.sec.gov or from K12 Inc.'s website at www.k12.com.
K12 INC. | ||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
June 30, | ||
2015 | 2014 | |
(In thousands, except share and per share data) | ||
ASSETS | ||
Current assets | ||
Cash and cash equivalents | $ 195,852 | $ 196,109 |
Accounts receivable, net of allowance of $9,657 and $3,460 at June 30, 2015 and June 30, 2014, respectively. | 188,246 | 194,676 |
Inventories, net | 29,571 | 33,830 |
Deferred tax asset | 8,989 | 7,732 |
Prepaid expenses | 11,428 | 7,356 |
Other current assets | 24,877 | 25,498 |
Total current assets | 458,963 | 465,201 |
Property and equipment, net | 34,407 | 48,581 |
Capitalized software, net | 62,683 | 49,920 |
Capitalized curriculum development costs, net | 58,696 | 60,782 |
Intangible assets, net | 21,195 | 23,708 |
Goodwill | 66,160 | 58,088 |
Deposits and other assets | 6,495 | 5,387 |
Total assets | $ 708,599 | $ 711,667 |
Current liabilities | ||
Accounts payable | $ 29,819 | $ 30,976 |
Accrued liabilities | 12,486 | 20,539 |
Accrued compensation and benefits | 26,790 | 17,400 |
Deferred revenue | 24,927 | 24,353 |
Current portion of capital lease obligations | 16,635 | 20,492 |
Total current liabilities | 110,657 | 113,760 |
Deferred rent, net of current portion | 7,692 | 8,488 |
Capital lease obligations, net of current portion | 13,022 | 16,447 |
Deferred tax liability | 22,456 | 22,478 |
Other long term liabilities | 8,233 | 4,763 |
Total liabilities | 162,060 | 165,936 |
Redeemable noncontrolling interest | 9,601 | 16,801 |
Equity: | ||
K12 Inc. stockholders' equity | ||
Common stock, par value $0.0001; 100,000,000 shares authorized; 41,837,894 and 41,144,062 shares issued and 38,335,296 and 38,948,866 shares outstanding at June 30, 2015 and June 30, 2014, respectively | 4 | 4 |
Additional paid-in capital | 663,461 | 639,036 |
Accumulated other comprehensive loss | (1,065) | (112) |
Accumulated deficit | (50,462) | (61,450) |
Treasury stock of 3,502,598 and 2,195,196 shares at cost at June 30, 2015 and June 30, 2014, respectively | (75,000) | (48,548) |
Total K12 Inc. stockholders' equity | 536,938 | 528,930 |
Total liabilities, redeemable noncontrolling interest and equity | $ 708,599 | $ 711,667 |
K12 INC. | |||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
Three Months Ended | Year Ended | ||||||
June 30, | June 30, | ||||||
2015 | 2014 | 2015 | 2014 | ||||
(In thousands, except share and per share data) | |||||||
Revenues | $ 235,655 | $ 232,046 | $ 948,294 | $ 919,553 | |||
Cost and expenses | |||||||
Instructional costs and services | 166,900 | 142,053 | 607,756 | 569,219 | |||
Selling, administrative, and other operating expenses | 80,756 | 74,847 | 307,730 | 313,258 | |||
Product development expenses | 4,317 | 2,303 | 14,381 | 14,220 | |||
Total costs and expenses | 251,973 | 219,203 | 929,867 | 896,697 | |||
Income (loss) from operations | (16,318) | 12,843 | 18,427 | 22,856 | |||
Realized gain on sale of assets | -- | 6,404 | -- | 6,404 | |||
Interest (expense), net and other | (3,158) | 55 | (3,291) | (69) | |||
Income before income tax expense and noncontrolling interest | (19,476) | 19,302 | 15,136 | 29,191 | |||
Income tax benefit (expense) | 6,901 | (7,349) | (5,810) | (11,075) | |||
Net income (loss) | (12,575) | 11,953 | 9,326 | 18,116 | |||
Adjust net loss attributable to noncontrolling interest | 995 | 403 | 1,662 | 1,484 | |||
Net income (loss) attributable to common stockholders, including Series A stockholders | $ (11,580) | $ 12,356 | $ 10,988 | $ 19,600 | |||
Net income (loss) attributable to common stockholders per share, excluding Series A stockholders, through the conversion date September 3, 2013: | |||||||
Basic and Diluted | $ (0.31) | $ 0.32 | $ 0.29 | $ 0.50 | |||
Diluted | $ (0.31) | $ 0.32 | $ 0.29 | $ 0.50 | |||
Weighted average shares used in computing per share amounts: | |||||||
Basic | 37,318,085 | 38,540,464 | 37,330,569 | 38,987,470 | |||
Diluted | 37,318,085 | 38,742,379 | 37,625,425 | 39,230,516 |
K12 INC. | ||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
Year Ended June 30, | ||
2015 | 2014 | |
(In thousands) | ||
Cash flows from operating activities | ||
Net income | $ 9,326 | $ 18,116 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 83,801 | 86,267 |
Stock-based compensation expense | 21,299 | 22,828 |
Excess tax benefit from stock-based compensation | (118) | (1,679) |
Deferred income taxes | (3,094) | (5,754) |
Provision for doubtful accounts | 9,300 | 1,439 |
Provision for inventory obsolescence | 1,406 | 4,293 |
Provision for student computer shrinkage and obsolescence | (430) | (526) |
Impairment loss on other assets | 3,200 | -- |
Realized gain on sale of assets | -- | (6,404) |
Changes in assets and liabilities: | ||
Accounts receivable | (1,892) | (12,257) |
Inventories | 2,853 | 6,272 |
Prepaid expenses | (4,073) | 2,735 |
Other current assets | (2,579) | (1,645) |
Deposits and other assets | (1,440) | (212) |
Accounts payable | (1,192) | 9,778 |
Accrued liabilities | (7,854) | 5,474 |
Accrued compensation and benefits | 9,389 | (4,214) |
Deferred revenue | 621 | (1,429) |
Deferred rent | 1,562 | (209) |
Net cash provided by operating activities | 120,085 | 122,873 |
Cash flows from investing activities | ||
Purchases of property and equipment | (9,928) | (7,405) |
Capitalized software development costs | (33,755) | (26,553) |
Capitalized curriculum development costs | (18,057) | (15,411) |
Mortgage note to a managed school partner | -- | (2,100) |
Net cash received on sale of assets | -- | 5,665 |
Acquisition of LearnBop Inc. | (6,512) | -- |
Net cash used in investing activities | (68,252) | (45,804) |
Cash flows from financing activities | ||
Repayments on capital lease obligations | (21,939) | (22,694) |
Repayments on notes payable | -- | (390) |
Purchase of treasury stock | (26,452) | (48,548) |
Proceeds from exercise of stock options | 553 | 10,294 |
Net proceeds from investment in noncontrolling interest | -- | 1,275 |
Excess tax benefit from stock-based compensation | 118 | 1,679 |
Retirement of restricted stock for tax withholding | (2,672) | (5,018) |
Net cash used in financing activities | (50,392) | (63,402) |
Effect of foreign exchange rate changes on cash and cash equivalents | (1,698) | 962 |
Net change in cash and cash equivalents | (257) | 14,629 |
Cash and cash equivalents, beginning of year | 196,109 | 181,480 |
Cash and cash equivalents, end of year | $ 195,852 | $ 196,109 |
Non-GAAP Financial Measures
EBITDA
EBITDA consists of net income plus net interest expense and other, plus income tax expense, minus income tax benefit, plus depreciation and amortization and non-controlling interest. Interest expense primarily consists of interest expense for capital leases. We use EBITDA in addition to income from operations and net income as a measure of operating performance. However, EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or GAAP, and when analyzing our operating performance, investors should use EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Not all companies use identical calculations for EBITDA, therefore our presentation of EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free cash flow for our management's discretionary use, as it does not consider certain cash requirements such as capital expenditures, tax payments, interest payments, or other working capital.
We believe EBITDA is useful to an investor in evaluating our operating performance because it is widely used to measure a company's operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, and to present a meaningful measure of corporate performance exclusive of our capital structure and the method by which assets were acquired. Our management uses EBITDA:
- as an additional measurement of operating performance because it assists us in comparing our performance on a consistent basis; and
- in presentations to the members of our Board of Directors to enable our Board to have the same measurement basis of operating performance as is used by management to compare our current operating results with corresponding prior periods and with the results of other companies in our industry.
The following tables provide a reconciliation of net income to EBITDA:
Three Months Ended June 30, | Year Ended June 30, | |||
2015 | 2014 | 2015 | 2014 | |
(In thousands) | (In thousands) | |||
Net income (loss) — K12 Inc. | $ (11,580) | $ 12,356 | $ 10,988 | $ 19,600 |
Interest income (expense), net and other | 3,158 | (55) | 3,291 | 69 |
Income tax expense (benefit) | (6,901) | 7,349 | 5,810 | 11,075 |
Depreciation and amortization | 31,528 | 16,776 | 83,801 | 86,267 |
Net loss attributable to noncontrolling interest | (995) | (403) | (1,662) | (1,484) |
EBITDA | $ 15,210 | $ 36,023 | $ 102,228 | $ 115,527 |
Appendix
(A) The following tables are provided for reference only and conform to the disclosure provided in previous years.
Revenue
The following table sets forth the Company's revenues -- Managed Public Schools (turn-key management services provided to public schools), Institutional Sales (educational products and services provided to school districts, public schools and other educational institutions that it does not manage), and International and Private Pay Schools (private schools for which it charges student tuition and makes direct consumer sales) -- for the periods indicated:
Three Months Ended | Change | Year Ended | Change | |||||
June 30, | 2015/ 2014 | June 30, | 2015 / 2014 | |||||
($ in thousands) | 2015 | 2014 | $ | % | 2015 | 2014 | $ | % |
Managed School Programs | $ 204,752 | $ 203,722 | $ 1,030 | 0.5% | $ 828,286 | $ 804,470 | $ 23,816 | 3.0% |
Institutional Sales | 17,993 | 16,791 | 1,202 | 7.2% | 73,482 | 66,765 | 6,717 | 10.1% |
International and Private Pay Schools | 12,910 | 11,533 | 1,377 | 11.9% | 46,526 | 48,318 | (1,792) | -3.7% |
Total | $ 235,655 | $ 232,046 | $ 3,609 | 1.6% | $ 948,294 | $ 919,553 | $ 28,741 | 3.1% |
Enrollment Data
The following table sets forth average enrollment data for students in Managed Public Schools. These figures exclude enrollments from classroom pilot programs and consumer programs.
Three Months Ended June 30, |
2015 / 2014 |
Year Ended June 30, |
2015 / 2014 |
|||||
2015 | 2014 | Change | Change % | 2015 | 2014 | Change | Change % | |
Managed Public Schools | ||||||||
Average Student Enrollments (1) | 114,330 | 115,367 | (1,037) | -0.9% | 120,257 | 123,259 | (3,002) | -2.4% |
(1) Managed Public Schools include enrollments for which K12 may receive no public funding. Managed Public School enrollments include all programs which had been classified as turn-key programs or where substantial management services are performed in accordance with the contract.
(B) The following table is provided for reference only and is related to the new disclosure format. The table sets forth average enrollment data for students in Public School Programs for fiscal year 2014. All student enrollment figures include enrollments for which K12 receives no public funding or revenue. These figures exclude enrollments from classroom pilot programs and consumer programs.
Three Months Ended | ||||
9/30/2013 | 12/31/2013 | 3/31/2014 | 6/30/2014 | |
Public School Programs | ||||
Managed Programs (1) | 124,448 | 120,994 | 120,862 | 111,381 |
Non-managed Programs (1) (4) | 14,857 | 14,330 | 14,603 | 14,341 |
Total Public School Programs (2) (3) | 139,305 | 135,324 | 135,465 | 125,722 |
(1) If a school changes from a Managed to a Non-managed program, the corresponding enrollment classification would change in the period in which the contract arrangement changed.
(2) Public School Programs include enrollments for which K12 receives no public funding or revenue.
(3) Public School Program enrollments for the three months ended September 30, 2013, are equal to the official count date number, which is the first Wednesday of October in a year, or October 2, 2013.
(4) The number of students enrolled in Non-managed Programs has been changed in each quarter of FY14 from those previously reported. These adjustments are not material.
The following table sets forth the Company's revenues for fiscal year 2014 in the new disclosure format -- Managed Programs (management, technology and academic support services provided to public schools), Non-managed Programs (curriculum, technology and other educational services where K12 does not offer primary administrative oversight), Institutional Software and Services (educational software and services provided to school districts, public schools and other educational institutions), and International and Private Pay Schools (private schools for which it charges student tuition and makes direct consumer sales) -- for the periods indicated:
Three Months Ended | Year Ended | ||||
($ in thousands) | 9/30/2013 | 12/31/2013 | 3/31/2014 | 6/30/2014 | 6/30/2014 |
Public School Programs | |||||
Managed Programs | $ 193,558 | $ 192,939 | $ 205,970 | $ 201,387 | $ 793,854 |
Non-managed Programs (1) | 8,597 | 6,940 | 6,764 | 6,535 | 28,836 |
Total Public School Programs | $ 202,155 | $ 199,879 | $ 212,734 | $ 207,922 | $ 822,690 |
Institutional Software & Services (1) | 14,499 | 11,968 | 9,487 | 12,591 | 48,545 |
International and Private Pay Schools | 11,712 | 12,072 | 13,001 | 11,533 | 48,318 |
Total | $ 228,366 | $ 223,919 | $ 235,222 | $ 232,046 | $ 919,553 |
(1) The revenue for Non-managed Programs has been changed and a corresponding amount changed in Institutional Software & Services in each quarter of FY14 from those previously reported. These adjustments are not material.
In fiscal 2014 K12 Inc. announced the sale of certain businesses. In aggregate, these businesses were responsible for $16.9 million in revenue. The following table sets forth the Company's revenues for fiscal year 2014 in the new disclosure format excluding these certain businesses.
Three Months Ended | Year Ended | ||||
($ in thousands) | 9/30/2013 | 12/31/2013 | 3/31/2014 | 6/30/2014 | 6/30/2014 |
Public School Programs | |||||
Managed Programs | $ 193,558 | $ 192,939 | $ 205,970 | $ 201,387 | $ 793,854 |
Non-managed Programs (1) | 8,597 | 6,940 | 6,764 | 6,535 | 28,836 |
Total Public School Programs | $ 202,155 | $ 199,879 | $ 212,734 | $ 207,922 | $ 822,690 |
Institutional Software & Services (1) | 13,590 | 10,914 | 8,129 | 11,852 | 44,485 |
International and Private Pay Schools | 9,187 | 8,361 | 9,080 | 8,810 | 35,438 |
Total | $ 224,932 | $ 219,154 | $ 229,943 | $ 228,584 | $ 902,613 |
(1) The revenue for Non-managed Programs has been changed and a corresponding amount changed in Institutional Software & Services in each quarter of FY14 from those previously reported. These adjustments are not material.
(C) The following tables are provided as reference only and adjusts fourth quarter and full year 2015 results for the removal of $28.4 million charges incurred in the fourth quarter of FY 2015.
Three Months Ended June 30, 2015 | |||||
Reported Results |
Specific Charges |
Results Excluding Charges |
Reported Results |
Results Excluding Charges |
|
(In thousands, except share and per share data) | (% of Revenue) | ||||
Revenues | $ 235,655 | $ -- | $ 235,655 | 100.0% | 100.0% |
Cost and expenses | |||||
Instructional costs and services | 166,900 | 9,565 | 157,335 | 70.8% | 66.8% |
Selling, administrative, and other operating expenses | 80,756 | 15,670 | 65,086 | 34.3% | 27.6% |
Product development expenses | 4,317 | -- | 4,317 | 1.8% | 1.8% |
Total costs and expenses | 251,973 | 25,235 | 226,738 | 106.9% | 96.2% |
Income (loss) from operations | (16,318) | (25,235) | 8,917 | (6.9%) | 3.8% |
Realized gain on sale of assets | -- | -- | -- | 0.0% | 0.0% |
Interest (expense), net and other | (3,158) | (3,200) | 42 | (1.3%) | 0.0% |
Income (loss) before income tax expense and noncontrolling interest | (19,476) | (28,435) | 8,959 | (8.3%) | 3.8% |
Income tax (expense) benefit | 6,901 | 10,006 | (3,105) | 2.9% | (1.3%) |
Net income (loss) | (12,575) | (18,429) | 5,854 | (5.3%) | 2.5% |
Adjust net loss attributable to noncontrolling interest | 995 | -- | 995 | 0.4% | 0.4% |
Net income (loss) attributable to common stockholders, including Series A stockholders | $ (11,580) | $ (18,429) | $ 6,849 | (4.9%) | 2.9% |
Net income (loss) attributable to common stockholders per share, excluding Series A stockholders, through the conversion date September 3, 2013: | |||||
Basic | $ (0.31) | $ (0.49) | $ 0.18 | ||
Diluted | $ (0.31) | $ (0.49) | $ 0.18 | ||
Weighted average shares used in computing per share amounts: | |||||
Basic | 37,318,085 | 37,318,085 | 37,318,085 | ||
Diluted | 37,318,085 | 37,318,085 | 37,318,085 |
Year Ended June 30, 2015 | |||||
Reported Results |
Specific Charges |
Results Excluding Charges |
Reported Results |
Results Excluding Charges |
|
(In thousands, except share and per share data) | (% of Revenue) | ||||
Revenues | $ 948,294 | $ -- | $ 948,294 | 100.0% | 100.0% |
Cost and expenses | |||||
Instructional costs and services | 607,756 | 9,565 | 598,191 | 64.1% | 63.1% |
Selling, administrative, and other operating expenses | 307,730 | 15,670 | 292,060 | 32.5% | 30.8% |
Product development expenses | 14,381 | -- | 14,381 | 1.5% | 1.5% |
Total costs and expenses | 929,867 | 25,235 | 904,632 | 98.1% | 95.4% |
Income (loss) from operations | 18,427 | (25,235) | 43,662 | 1.9% | 4.6% |
Realized gain on sale of assets | -- | -- | -- | 0.0% | 0.0% |
Interest (expense), net and other | (3,291) | (3,200) | (91) | (0.3%) | (0.0%) |
Income (loss) before income tax expense and noncontrolling interest | 15,136 | (28,435) | 43,571 | 1.6% | 4.6% |
Income tax (expense) benefit | (5,810) | 10,006 | (15,816) | (0.6%) | (1.7%) |
Net income (loss) | 9,326 | (18,429) | 27,755 | 1.0% | 2.9% |
Adjust net loss attributable to noncontrolling interest | 1,662 | -- | 1,662 | 0.2% | 0.2% |
Net income (loss) attributable to common stockholders, including Series A stockholders | $ 10,988 | $ (18,429) | $ 29,417 | 1.2% | 3.1% |
Net income (loss) attributable to common stockholders per share, excluding Series A stockholders, through the conversion date September 3, 2013: | |||||
Basic | $ 0.29 | $ (0.49) | $ 0.79 | ||
Diluted | $ 0.29 | $ (0.49) | $ 0.78 | ||
Weighted average shares used in computing per share amounts: | |||||
Basic | 37,330,569 | 37,330,569 | 37,330,569 | ||
Diluted | 37,625,425 | 37,625,425 | 37,625,425 |
(D) The following table is provided as reference only and adjusts full-year 2014 results for the removal of $32.2 million charges incurred in the second quarter of FY 2014 and the sale of certain businesses.
Year Ended June 30, 2014 | |||||
Reported Results |
Specific Charges & Sale of Certain Businesses |
Results Excluding Charges & Sale of Certain Businesses |
Reported Results |
Results Excluding Charges & Sale of Certain Businesses |
|
(In thousands, except share and per share data) | (% of Revenue) | ||||
Revenues | $ 919,553 | $ 16,941 | $ 902,612 | 100.0% | 100.0% |
Cost and expenses | |||||
Instructional costs and services | 569,219 | 26,690 | 542,529 | 61.9% | 60.1% |
Selling, administrative, and other operating expenses | 313,258 | 21,272 | 291,986 | 34.1% | 32.3% |
Product development expenses | 14,220 | 630 | 13,590 | 1.5% | 1.5% |
Total costs and expenses | 896,697 | 48,592 | 848,105 | 97.5% | 94.0% |
Income (loss) from operations | 22,856 | (31,651) | 54,507 | 2.5% | 6.0% |
Realized gain on sale of asset | 6,404 | 6,404 | -- | 0.7% | 0.0% |
Interest (expense), net and other | (69) | -- | (69) | (0.0%) | (0.0%) |
Income (loss) before income tax expense and noncontrolling interest | 29,191 | (25,247) | 54,438 | 3.2% | 6.0% |
Income tax (expense) benefit | (11,075) | 10,156 | (21,231) | (1.2%) | (2.4%) |
Net income (loss) | 18,116 | (15,091) | 33,207 | 2.0% | 3.7% |
Adjust net loss attributable to noncontrolling interest | 1,484 | -- | 1,484 | 0.2% | 0.2% |
Net income (loss) attributable to common stockholders, including Series A stockholders | $ 19,600 | $ (15,091) | $ 34,691 | 2.1% | 3.8% |
Net income (loss) attributable to common stockholders per share, excluding Series A stockholders, through the conversion date September 3, 2013: | |||||
Basic | $ 0.50 | $ (0.39) | $ 0.89 | ||
Diluted | $ 0.50 | $ (0.38) | $ 0.88 | ||
Weighted average shares used in computing per share amounts: | |||||
Basic | 38,987,470 | 38,987,470 | 38,987,470 | ||
Diluted | 39,230,516 | 39,230,516 | 39,230,516 |
(E) The following table is provided as reference only and compares year ended June 30, 2015, excluding the $28.4 million charges recorded in the fourth quarter of FY2015, to year ended June 30, 2014, excluding $32.2 million charges incurred in the second quarter of FY 2014 and the sale of certain businesses.
FY15 Results Excluding Charges |
FY14 Results Excluding Charges & Sale of Certain Businesses |
FY15 Results Excluding Charges |
FY14 Results Excluding Charges & Sale of Certain Businesses |
|
(In thousands, except share and per share data) | (% of Revenue) | |||
Revenues | $ 948,294 | $ 902,612 | 100.0% | 100.0% |
Cost and expenses | ||||
Instructional costs and services | 598,191 | 542,529 | 63.1% | 60.1% |
Selling, administrative, and other operating expenses | 292,060 | 291,986 | 30.8% | 32.3% |
Product development expenses | 14,381 | 13,590 | 1.5% | 1.5% |
Total costs and expenses | 904,632 | 848,105 | 95.4% | 94.0% |
Income from operations | 43,662 | 54,507 | 4.6% | 6.0% |
Realized gain on sale of asset | -- | -- | 0.0% | 0.0% |
Interest (expense), net and other | (91) | (69) | (0.0%) | (0.0%) |
Income before income tax expense and noncontrolling interest | 43,571 | 54,438 | 4.6% | 6.0% |
Income tax expense | (15,816) | (21,231) | (1.7%) | (2.4%) |
Net income | 27,755 | 33,207 | 2.9% | 3.7% |
Adjust net loss attributable to noncontrolling interest | 1,662 | 1,484 | 0.2% | 0.2% |
Net income attributable to common stockholders, including Series A stockholders | $ 29,417 | $ 34,691 | 3.1% | 3.8% |
Net income attributable to common stockholders per share, excluding Series A stockholders, through the conversion date September 3, 2013: | ||||
Basic | $ 0.79 | $ 0.89 | ||
Diluted | $ 0.78 | $ 0.88 | ||
Weighted average shares used in computing per share amounts: | ||||
Basic | 37,330,569 | 38,987,470 | ||
Diluted | 37,625,425 | 39,230,516 |
About K12 Inc.
K12 Inc. (NYSE:LRN) is driving innovation and advancing the quality of education by delivering state-of-the-art, digital learning platforms and technology to students and school districts across the globe. K12's award winning curriculum serves over 2,000 schools and school districts and has delivered more than four million courses over the past decade. K12 is a company of educators with the nation's largest network of K-12 online school teachers, providing instruction, academic services, and learning solutions to public schools and districts, traditional classrooms, blended school programs, and directly to families. The K12 program is offered through K12 partner public schools in approximately two-thirds of the states and the District of Columbia, and through private schools serving students in all 50 states and more than 100 countries. More information can be found at K12.com.