K12 education company settles case with Calif.

Local Education

By Ty Tagami


The Atlanta Journal-Constitution

Updated: 5:08 p.m. Thursday, July 28, 2016Posted: 2:47 p.m. Thursday, July 28, 2016

A company that is paid tens of millions of dollars to provide educational services in Georgia has settled a legal case in California after a state investigation into allegations of improper billing there.

There’ve been no public allegations of impropriety in Georgia, where the company, K12 helps operate Georgia Cyber Academy. The academy has come in for criticism over student results: in 2015, the school earned a D for its academic performance with more than 13,000 Georgia students, as reported by The Atlanta Journal-Constitution.

The Georgia academy is among the five biggest schools managed by K12, officials said. The company educates about as many students at a collection of 14 schools in California called the California Virtual Academies, or CAVA.

K12 was the target of a civil investigation by California Attorney General Kamala D. Harris, whose office alleged that K12 exploited weak charter school oversight in her state to excessively bill CAVA schools by pressuring teachers to sign “doctored” attendance records. Her office also accused the school of telling people it thought were prospective parents that classes were smaller than they really were.

On July 8, K12 agreed to settle for millions of dollars, without admitting to the alleged facts or to wrongdoing. Harris issued a statement saying the company had agreed to a settlement of $168.5 million, which K12 CEO Stuart Udell characterized as “shameless and categorically incorrect” in a conference call afterward with financial analysts.

The company did agree to pay $2.5 million to the state and $6 million to the attorney general’s office. But K12 objects to the way Harris described the other $160 million.

She called it “debt relief to the non-profit schools it manages.” Udell called it “the difference between K12’s contractual price and what the schools can afford to pay” based on their state funding.

“While K12 has a contractual right to recover these balanced budget credits, in all the years that K12 has worked with the CAVA boards we have never sought to recover those amounts,” Udell said on that conference call, according to a transcript provided by K12.

The final judgment in the case describes the $160 million agreement this way: an expungement of a decade’s worth of “credits against amounts otherwise due under managed school contracts.”

Neither the conference call nor the attorney general’s news release addressed another payment: $80,000 to a former CAVA teacher turned whistleblower. She alleged she was fired because she complained about the way K12 changed the attendance records she had submitted. The attorney general intervened in her case and K12 agreed to give her $50,000 to settle her employment-related claims and $30,000 for her legal fees.

Udell told the analysts that the company settled with the attorney general to avoid a “multiyear distraction” and litigation costs that would have been many times what it agreed to pay. He also said the company plans to fight legislation in California that would prohibit charter schools from using for-profit companies like his. And he said K12, which runs some 80 schools in 33 states, has plans to expand, going statewide in Alabama and Virginia and adding schools in other states, including Indiana, Michigan, Nevada and Maine.

K12 education company settles case with Calif.

5:08 p.m. Thursday, July 28, 2016

| Filed in: Education


Comments
0



A company that is paid tens of millions of dollars to provide educational services in Georgia has settled a legal case in California after a state investigation into allegations of improper billing there.

There’ve been no public allegations of impropriety in Georgia, where the company, K12 helps operate Georgia Cyber Academy. The academy has come in for criticism over student results: in 2015, the school earned a D for its academic performance with more than 13,000 Georgia students, as reported by The Atlanta Journal-Constitution.

The Georgia academy is among the five biggest schools managed by K12, officials said. The company educates about as many students at a collection of 14 schools in California called the California Virtual Academies, or CAVA.

John Amis

Graduate of Georgia Cyber Academy Brycen Walker of Savannah throws up his hands in jubilation as he follows Tyriq Wade of Columbus to the stage during commencement, Saturday, May 21, 2016, held at Cobb Galleria Centre in Atlanta. The statewide charter school educates more than 13,000 students a year, as young as 5 years old, all online and at about half the cost of traditional public schools. (Photo/John Amis)

K12 was the target of a civil investigation by California Attorney General Kamala D. Harris, whose office alleged that K12 exploited weak charter school oversight in her state to excessively bill CAVA schools by pressuring teachers to sign “doctored” attendance records. Her office also accused the school of telling people it thought were prospective parents that classes were smaller than they really were.

On July 8, K12 agreed to settle for millions of dollars, without admitting to the alleged facts or to wrongdoing. Harris issued a statement saying the company had agreed to a settlement of $168.5 million, which K12 CEO Stuart Udell characterized as “shameless and categorically incorrect” in a conference call afterward with financial analysts.

The company did agree to pay $2.5 million to the state and $6 million to the attorney general’s office. But K12 objects to the way Harris described the other $160 million.

She called it “debt relief to the non-profit schools it manages.” Udell called it “the difference between K12’s contractual price and what the schools can afford to pay” based on their state funding.

“While K12 has a contractual right to recover these balanced budget credits, in all the years that K12 has worked with the CAVA boards we have never sought to recover those amounts,” Udell said on that conference call, according to a transcript provided by K12.

The final judgment in the case describes the $160 million agreement this way: an expungement of a decade’s worth of “credits against amounts otherwise due under managed school contracts.”

Neither the conference call nor the attorney general’s news release addressed another payment: $80,000 to a former CAVA teacher turned whistleblower. She alleged she was fired because she complained about the way K12 changed the attendance records she had submitted. The attorney general intervened in her case and K12 agreed to give her $50,000 to settle her employment-related claims and $30,000 for her legal fees.

Udell told the analysts that the company settled with the attorney general to avoid a “multiyear distraction” and litigation costs that would have been many times what it agreed to pay. He also said the company plans to fight legislation in California that would prohibit charter schools from using for-profit companies like his. And he said K12, which runs some 80 schools in 33 states, has plans to expand, going statewide in Alabama and Virginia and adding schools in other states, including Indiana, Michigan, Nevada and Maine.

Ohio’s charter schools ridiculed at national conference, even by national charter supporters

Children stands in line for a turn on a bounce house/obstacle course during the new Pearl Academy open house as a large banner encourages passers-by to sign up for classes Friday, June 21, 2013 in Lakewood. This is at the former Saints Cyril and Methodius school building. The open house was being hosted by White Hat Management, a company that operates lots of charter schools in Ohio.

Plain Dealer photography staff

By

The Plain Dealer
Email the author | Follow on Twitter

on March 02, 2015 at 12:23 PM, updated

DENVER, Colorado – Ohio, the charter school world is making fun of you.

Ohio’s $1 Billion charter school system was the butt of jokes at a conference for reporters on school choice in Denver late last week, as well as the target of sharp criticism of charter school failures across the state.

The shots came from expected critics like teachers unions, but also from pro-charter voices, as the state considers ways to improve how it handles charters.

Ohio has about 123,000  kids attending nearly 400 charter schools – public schools that receive state tax money, but which are privately run.

One after another, panelists at the conference organized by the national Education Writers Association targeted Ohio’s poor charter school performance statewide, Ohio’s for-profit charter operators and how many organizations we hand over charter oversight keys to as the sponsors, or authorizers, of schools.

“Be very glad that you have Nevada, so you are not the worst,” Stanford University researcher Margaret “Macke” Raymond said of Ohio. 

Places like Massachusetts and Washington, D.C., she told reporters from across the country, have high standards for charter school performance.

“Then you have folks at the low end, of which Ohio is a strong case,” said Raymond, who released a report on Ohio’s charter performance in December.

Stanford’s Center for Research of Educational Outcomes (CREDO), found that students learn less in Ohio’s charter schools than in traditional districts – the equivalent of 36 days of learning in math and 14 days in reading.

The National Education Association’s David Welker, a member of NEA’s charter policy team, said Ohio’s system has been taken over by “grifters” and “cheats” – the for-profit companies that run many Ohio schools.

He was suspect about Ohio’s attempts to rein them in, saying, “the horse has left the barn.”

The National Alliance for Public Charter Schools, a major national organization supporting the charter school movement, didn’t disagree.

“There are some operators who are exploiting things,” said Todd Ziebarth, a vice president of the Alliance.

He specifically named K12 Inc. and White Hat Management as major offenders. K12 is the nation’s largest provider of online charter schools and runs Ohio Virtual Academy, while White Hat is an Akron-based operator of many low-scoring charter schools that has regularly been a large donor to Republicans in Ohio. 

As Ziebarth started naming White Hat and K12, panelist Michael Petrilli of the Fordham Institute jumped in to add The Electronic Classroom of Tomorrow (ECOT) to the list. That online school is run by William Lager, another major donor to Ohio Republicans.

Just last month the Akron Beacon-Journal reported that former Ohio House Speaker William Batchelder formed a lobbying company that will have former House staffers lobby for ECOT.

“Mike could probably go down a list of Ohio operators,” Ziebarth said.

Petrilli nodded and added: “Ohio needs a top-to-bottom overhaul of its charter school sector.”

Fordham is both a charter supporter and critic. It sponsors, or authorizes, some charter in Ohio and promotes school choice efforts, while also wanting better quality. Fordham helped sponsor the CREDO study in Ohio, as well as another study suggesting ways to reform charter laws in Ohio.

Alex Medler of the National Association of Charter School Authorizers added his own criticisms of Ohio’s system, but far more subtle ones.

But Medler had already made his views on Ohio’s charter system clear a year ago, when he derided Ohio’s charter school free-for-all as “the Wild, Wild West” of charters.

Both Gov. John Kasich and Republicans in the Ohio House have made separate proposals to change the oversight and management of charter schools. A third proposal is coming soon from the Ohio Senate and State Auditor Dave Yost is expected to propose some additional changes this week.

Some of the suggested that Fordham seeks have been incorporated into House Bill 2 or Kasich’s charter reform plan.

While both proposals so far are receiving praise for taking on some important issues, some want them to go further.

For another account of the criticism at the conference in Denver, see this report from the Akron Beacon-Journal.

To follow education news from Cleveland and affecting all of Ohio, follow this reporter on Facebook as @PatrickODonnellReporter

K12 Earnings Call

This week CAVA’s management company K12 Inc. held its third quarter earnings call with executives, reporting revenue growth of 4 percent “year over year” and operating income (profit) of just about $19 million for the quarter.  On the conference call, recently-hired CEO Stuart Udell expressed his delight with being one of the newest members of the K12 executive team as well as his excitement about what he sees as K12’s potential to deliver for students.  It’s no surprise that Udell, whose pay and employment depends on improving K12’s stock performance and investor satisfaction, presented an extremely optimistic front as he speculated that K12’s fourth quarter will be even better.

This despite a rough start for the company’s current fiscal year – one that essentially began with a shareholder revolt that resulted in the voting down of K12’s executive compensation proposal, CAVA

teachers delivering a report card of straight F’s to K12’s leadership for its failure to invest in students and teachers, the removal of Nate Davis as the company’s CEO, and sharp criticism of the for-profit company following the release of a series of studies pointing to problems with virtual charter schools due to weak oversight and the industry’s misplaced priorities.

But, if you ask Stuart Udell, at K12 everything is awesome.  This is an interesting contrast to the doom and gloom the company sought to broadcast as early as last week in response to the recent articles published by the San Jose Mercury News, which raise very serious questions about how CAVA and K12 are using the public education dollars they receive – millions of dollars intended to provide instruction to our kids but instead funneled out of the state.  CAVA and K12 have yet to respond to the actual merits of the news story, instead opting to blame it all away on teachers who have stood up for our students by forming a union.  Hmmm.

Oh, and speaking of contradictions, did you know that one of K12’s newest ventures is in partnership with – wait for it – a labor union?!  That’s right.  Executives on this week’s conference call also touched on their excitement around K12’s Destinations Career Academy – a new technical education online high school in Wisconsin that offers a construction apprenticeship program in partnership with the International Union of Operating Engineers Local 139.  Imagine that – K12 seeking to deliver for students in partnership with organized labor.

We sincerely look forward to the day decision-makers at our school embrace a partnership with teachers and our union too – not only for the benefit of shareholders and the bottom line, but for the success of CAVA’s students.  Now, talk about awesome.

Like this:

Hot News: K12, Inc. (NYSE:LRN), Barnes & Noble, Inc. (NYSE:BKS), Media General Inc (NYSE:MEG), SolarCity Corporation (NASDAQ:SCTY), Marketo, Inc. (NASDAQ:MKTO)

Hot News: K12, Inc. (NYSE:LRN), Barnes & Noble, Inc. (NYSE:BKS), Media General Inc (NYSE:MEG), SolarCity Corporation (NASDAQ:SCTY), Marketo, Inc. (NASDAQ:MKTO)

K12, Inc. (NYSE:LRN) on Wednesday reported fiscal third-quarter earnings of $14.3 million. On a per-share basis, the Herndon, Virginia-based company said it had profit of 37 cents. The online education company posted revenue of $221.3 million in the period. K12 expects full-year revenue in the range of $205 million to $215 million.
K12, Inc. (NYSE:LRN)’s stock on 27 April traded at beginning with a price of $11.05 and when day-trade ended the stock finally increased 15.90% to end at $12.10. K12, Inc. (NYSE:LRN)’s showed weekly performance of 18.16%.

Barnes & Noble, Inc. (NYSE:BKS) Founder & Chairman, Leonard Riggio, said he will retire as chairman of the company following the annual shareholder meeting currently planned for September, and intends to remain on its board of directors. “I’ve done everything I have wanted to do in business and now it is time for me to pursue the many other endeavors related to my philanthropic and social interests,” Riggio said.
On Wednesday Barnes & Noble, Inc. (NYSE:BKS)’s shares closed at $12.36. Barnes & Noble, Inc. (NYSE:BKS) monthly performance stands at 0.53% while its year to date performance is 46.13%.

Media General Inc (NYSE:MEG) will report its first quarter 2016 earnings results before the market opens on May 6, 2016. The Company will host a conference call to discuss the earnings release that morning at 10:00 a.m. (ET). The conference call-in number is 1-888-218-8172 for U.S. callers and 1-913-312-0391 for international callers.
Media General Inc (NYSE:MEG) shares decreased -0.34% on last trading day to close the day at $17.35. Company price to sale ratio is 1.70 and has 0.90% insider ownership. Media General Inc (NYSE:MEG) belongs to Services sector.

SolarCity Corporation (NASDAQ:SCTY) announced that it will issue its first quarter 2016 earnings report after the market’s close on Monday, May 9, 2016. A conference call has been scheduled to discuss these results at 2:00 p.m. (Pacific Time).

On last trading day SolarCity Corporation (NASDAQ:SCTY) increased 0.94% to close at $33.31. SCTY is -5.00% away from its 52 week high and is moving 47.30% ahead of its 52 week low. SolarCity Corporation (NASDAQ:SCTY) return on investment (ROI) is -17.40% while return on equity (ROE) is -7.30%.

Marketo, Inc. (NASDAQ:MKTO) on Tuesday reported a loss of $18.4 million in its first quarter. The San Mateo, California-based company said it had a loss of 42 cents per share. Losses, adjusted for stock option expense and amortization costs, came to 17 cents per share. The results matched Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was also for a loss of 17 cents per share.
Marketo, Inc. (NASDAQ:MKTO) on Wednesday closed at $20.73. Stock institutional ownership is 96.00% while insider ownership includes 1.40%. Marketo, Inc. (NASDAQ:MKTO) distance from 50-day simple moving average (SMA50) is 13.13%.

K12’s (LRN) CEO Stuart Udell on Q3 2016 Results – Earnings Call Transcript

Apr. 27, 2016 10:31 AM ET

K12 Inc. (NYSE:LRN)

Q3 2016 Earnings Conference Call

April 27, 2016 08:30 AM ET

Executives

Mike Kraft – VP of Finance

Nate Davis – Executive Chairman

Stuart Udell – CEO

James Rhyu – CFO

Analysts

Jeff Silber – BMO Capital Markets

Corey Greendale – First Analysis

Operator

Greetings, and welcome to the K12 Fiscal 2016 Third Quarter Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mike Kraft, Vice President of Finance. Please go ahead sir.

Mike Kraft

Thank you and good morning. Welcome to K12’s third quarter earnings call for fiscal year 2016. Before we begin, I would like to remind you that in addition to historical information, certain comments made during this conference call may be considered forward-looking statements, made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, and should be considered in conjunction with cautionary statements contained in our earnings release and the Company’s periodic filings with the SEC. Forward-looking statements involve risks and uncertainties that may cause actual performance or results to differ materially from those expressed or implied by such statements. In addition, this conference call contains time sensitive information that reflects management’s best analysis only as of the day of this live call. K12 does not undertake any obligation to publicly update or revise any forward-looking statements. For further information concerning risks and uncertainties that could materially affect financial and operational performance and results, please refer to our reports filed with the SEC, including without limitation, cautionary statements made in K12’s 2015 Annual Report on Form 10-K. These filings can be found on the Investor Relations section of our website at www.k12.com.

In addition to disclosing financial results in accordance with Generally Accepted Accounting Principles in the US or GAAP, we will discuss certain information that is considered non-GAAP financial information. A reconciliation of this non-GAAP financial information to the most closely comparable GAAP information was included in our earnings release and is also posted on our website. This call is open to the public and is being webcast. The call will be available for replay for 30 days. With me on today’s call is Nate Davis, Executive Chairman, Stuart Udell, Chief Executive Officer and James Rhyu, Chief Financial Officer. Following our prepared remarks, we will answer any questions you may have.

I like to now turn the call over to Stuart Udell. Stuart?

Stuart Udell

Thank you Mike, good morning and thanks for joining us on the call today. Before reviewing the results for the quarter, I just want to share how delighted I am that I came to K12. My entire career is focused on providing instructional services to kids who need the most help. I have always been a champion of school choice and educational options for students. Now, after almost 3 months on the job, I’m even further convinced that there is no better platform to do this at scale and to make a difference with kids than in K12. I’ve spent the last 75 days visiting schools, attending school board meetings, listening to customers and talking with employees to quickly gain a deep understanding of the Company’s operations, curriculum and talent. My takeaway is that the K12 team is more than just a leader in building create curriculum and technology; it’s a team of incredibly passionate and committed individuals including teachers, school administrators and support personnel who are on a mission. It’s those individuals that truly differentiate this organization and make us a true pioneer and leader in online and blended education.

K12 Inc. Reports Third Quarter Fiscal 2016 with Revenue of $221.3 Million

April 27, 2016 07:00 ET

| Source: K12 Inc.

HERNDON, Va., April 27, 2016 (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 third fiscal quarter ended March 31, 2016.

Financial Highlights for the Three Months Ended March 31, 2016 (Third Quarter Fiscal Year 2016)

  • Revenues of $221.3 million, compared to $244.6 million in the third quarter of FY 2015.
  • EBITDA, a non-GAAP measure (see reconciliation below), of $36.7 million, compared to $45.2 million in the third quarter of FY 2015.
  • Operating income of $19.1 million, compared to $27.4 million in the third quarter of FY 2015.
  • Net income attributable to common stockholders of $14.3 million, compared to $17.0 million in the third quarter of FY 2015. 
  • Diluted net income attributable to common stockholders per share of $0.37, compared to $0.45 in the third quarter of FY 2015. 

Financial Highlights for the Nine Months Ended March 31, 2016

  • Revenues of $651.4 million, compared to $712.6 million for the first nine months of FY 2015.
  • EBITDA, a non-GAAP measure (see reconciliation below), of $64.0 million, compared to $87.0 million for the first nine months of FY 2015.
  • Operating income of $13.4 million compared to $34.7 million for the first nine months of FY 2015.
  • Net income attributable to common stockholders of $10.0 million, compared to $22.6 million for the first nine months of FY 2015.
  • Diluted net income attributable to common stockholders per share of $0.26, compared to $0.60 for the first nine months of FY 2015.

Changes to the year-over-year financial results, for the three and nine months ended March 31, 2016, are primarily due to the transition of the Agora Cyber Charter School contract from a managed to a non-managed program.

Comments from Management                         

“We continue to achieve financial results in line with the guidance we provided for the year,” said Stuart Udell, Chief Executive Officer. “I am also extremely proud of this year’s academic accomplishments and the extraordinary efforts of our dedicated teachers and school teams.  While we have made great strides in the last few years, we will continue to work with our partners to further improve the academic outcomes for all the students we serve,” added Udell.

Cash, Capital Expenditures and Capital Leases

As of March 31, 2016, the Company had cash and cash equivalents of $199.5 million, an increase of $3.6 million compared to the $195.9 million reported at June 30, 2015. This increase is largely the result of normal seasonal trends.

Capital expenditures for the nine months ended March 31, 2016 were $41.0 million, a decrease of $4.3 million from the prior year’s first nine months, and was comprised of:

  • $2.5 million for property and equipment,
  • $26.3 million for capitalized software development, and
  • $12.2 million for capitalized curriculum.

Capital leases financed additional purchases of $6.9 million during the nine months ended March 31, 2016, primarily for student computers.  This compares to capital leases financed during the nine months ended March 31, 2015 of $12.1 million.

Revenue

The following table sets forth the Company’s revenues — Managed Public School Programs (curriculum and services sold to managed public schools), Institutional (curriculum, technology and services provided to school districts, public schools and other educational institutions that the Company does not manage), and Private Pay Schools and Other (private schools for which the Company charges student tuition and makes direct consumer sales) – for the periods indicated.

Beginning in fiscal 2016, the Company has presented revenue from Non-managed Programs as part of the Institutional line of business, along with the Institutional Software and Services, which together constitute total Institutional revenue.  In the prior year these revenues were presented as part of the Public School Programs line of business, which included both Managed and Non-managed Public School Programs. We believe this revised presentation clarifies and better aligns the disclosure of Non-Managed Program revenues with the Company’s operational and sales structure.

  Three Months Ended   Change   Nine Months Ended   Change
  March 31,   2016 / 2015   March 31,   2016 / 2015
($ in thousands)   2016     2015       $   %     2016     2015       $   %
Managed Public School Programs (1) $ 185,832   $ 213,230     $ (27,398 )   -12.8 %   $ 533,633   $ 612,344     $ (78,711 )   -12.9 %
Institutional                      
Non-managed Public School Programs (1)   13,145     9,324       3,821     41.0 %     44,441     31,009       13,432     43.3 %
Institutional Software & Services   10,645     10,954       (309 )   -2.8 %     36,134     35,670       464     1.3 %
Total Institutional   23,790     20,278       3,512     17.3 %     80,575     66,679       13,896     20.8 %
Private Pay Schools and Other   11,718     11,115       603     5.4 %     37,173     33,617       3,556     10.6 %
Total $ 221,340   $ 244,623     $ (23,283 )   -9.5 %   $ 651,381   $ 712,640     $ (61,259 )   -8.6 %
(1) Managed Programs include schools where K12 provides substantially all of the management, technology and academic support services in addition to curriculum, learning systems and instructional services. Non-managed Programs include schools where K12 provides curriculum and technology, and the school can also contract for instruction or other educational services.  Non-managed programs, however, do not offer primary administrative oversight.

Enrollment Data

The following table sets forth enrollment data for students in Managed Public School Programs and our Non-managed Public School Programs for the periods indicated.  These figures exclude enrollments from classroom pilot programs and consumer programs.

  Three Months EndedMarch 31,   2016 / 2015   Nine Months EndedMarch 31,   2016 / 2015
  2016   2015   Change    Change %   2016   2015   Change    Change %
Managed Public School Programs (1,2) 104,640   115,330     (10,690 )     -9.3 %   104,229   116,198     (11,969 )     -10.3 %
Non-managed Public School Programs (1) 26,816   20,165     6,651       33.0 %   27,326   20,341     6,985       34.3 %
(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) Managed Public School Programs include enrollments for which K12 receives no public funding or revenue.

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   Nine Months Ended   Change
  March 31,   2016 / 2015   March 31,   2016 / 2015
    2016     2015     $ %     2016     2015     $ %
Managed Public School Programs $ 1,776     $ 1,849     $ (73 )     -3.9 %   $ 5,120     $ 5,270     $ (150 )     -2.8 %
Non-managed Public School Programs   490       462       28       6.0 %     1,626       1,524       102       6.7 %

Fourth Quarter Outlook

The Company is forecasting the following for the fourth quarter of FY 2016:

  • Revenue in the range of $205 million to $215 million.
  • Operating income in the range of $5 million to $9 million.
  • Capital expenditures, which includes curriculum and software development, computers and infrastructure, of $22 million to $27 million.

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 April 27, 2016, 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 third quarter fiscal year 2016 financial results during a conference call scheduled for Wednesday, April 27, 2016 at 8:30 a.m. eastern time (ET).

The conference call will be webcast and available at http://public.viavid.com/index.php?id=119013.  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 April 27, 2016 at 11:00 a.m. ET through May 27, 2016 at 11:00 a.m. ET, at (877) 660-6853 (domestic) or (201) 612-7415 (international) using conference ID 13634573. A webcast replay of the call will be available at http://public.viavid.com/index.php?id=119013 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 nine months ended March 31, 2016, and are presented below without footnotes. Readers are encouraged to obtain and carefully review K12 Inc.’s Form 10-Q for the quarter ended March 31, 2016, including all financial statements contained therein and the footnotes thereto, filed with the SEC. The Form 10-Q 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
March 31,   June 30,
  2016       2015  
  (In thousands, except share and per share data)
ASSETS      
Current assets      
Cash and cash equivalents $ 199,508     $ 195,852  
Accounts receivable, net of allowance of $9,949 and $9,657 at March 31, 2016 and June 30, 2015, respectively   222,884       188,246  
Inventories, net   16,146       29,571  
Deferred tax asset   8,406       8,989  
Prepaid expenses   16,837       11,428  
Other current assets   24,797       24,877  
Total current assets   488,578       458,963  
Property and equipment, net   26,717       34,407  
Capitalized software, net   67,710       62,683  
Capitalized curriculum development costs, net   58,345       58,696  
Intangible assets, net   19,347       21,195  
Goodwill   66,160       66,160  
Deposits and other assets   7,049       6,495  
Total assets $ 733,906     $ 708,599  
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY              
Current liabilities      
Current portion of capital lease obligations $ 13,453     $ 16,635  
Accounts payable   15,745       29,819  
Accrued liabilities   14,209       12,486  
Accrued compensation and benefits   26,898       26,790  
Deferred revenue   50,898       24,927  
Total current liabilities   121,203       110,657  
Capital lease obligations, net of current portion   9,660       13,022  
Deferred rent, net of current portion   6,958       7,692  
Deferred tax liability   27,654       22,456  
Other long-term liabilities   6,475       8,233  
Total liabilities   171,950       162,060  
Commitments and contingencies          
Redeemable noncontrolling interest   9,801       9,601  
Stockholders’ equity              
Common stock, par value $0.0001; 100,000,000 shares authorized; 42,593,095 and 41,837,894 shares issued and 39,090,497 and 38,335,296 shares outstanding at March 31, 2016 and June 30, 2015, respectively   4       4  
Additional paid-in capital   668,238       663,461  
Accumulated other comprehensive loss   (643 )     (1,065 )
Accumulated deficit   (40,444 )     (50,462 )
Treasury stock of 3,502,598 shares at cost at March 31, 2016 and June 30, 2015   (75,000 )     (75,000 )
Total stockholders’ equity   552,155       536,938  
Total liabilities, redeemable noncontrolling interest and equity $ 733,906     $ 708,599  
K12 INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended   Nine Months Ended
  March 31,   March 31,
  2016       2015       2016       2015  
  (In thousands, except share and per share data)
Revenues $ 221,340     $ 244,623     $ 651,381     $ 712,640  
Cost and expenses                              
Instructional costs and services   134,755       148,985       403,374       440,857  
Selling, administrative, and other operating expenses   64,888       64,871       225,598       226,972  
Product development expenses   2,563       3,337       9,004       10,065  
Total costs and expenses   202,206       217,193       637,976       677,894  
Income from operations   19,134       27,430       13,405       34,746  
Interest expense, net   (101 )     (315 )     (596 )     (134 )
Income before income tax expense and noncontrolling interest   19,033       27,115       12,809       34,612  
Income tax expense   (5,368 )     (10,586 )     (3,924 )     (12,711 )
Net income   13,665       16,529       8,885       21,901  
Adjust net loss attributable to noncontrolling interest   608       484       1,133       667  
Net income attributable to common stockholders $ 14,273     $ 17,013     $ 10,018     $ 22,568  
Net income attributable to common stockholders per share                              
Basic $ 0.38     $ 0.46     $ 0.27     $ 0.60  
Diluted $ 0.37     $ 0.45     $ 0.26     $ 0.60  
Weighted average shares used in computing per share amounts:                              
Basic   37,692,826       37,211,634       37,562,106       37,334,598  
Diluted   38,999,871       37,408,911       38,559,204       37,574,665  
K12 INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31,
    2016       2015  
  (In thousands)
Cash flows from operating activities      
Net income $ 8,885     $ 21,901  
Adjustments to reconcile net income to net cash provided by operating activities              
Depreciation and amortization expense   50,622       52,273  
Stock-based compensation expense   13,759       13,471  
Excess tax benefit from stock-based compensation   (6 )     (8 )
Deferred income taxes   (552 )     4,128  
Provision for doubtful accounts   2,895       1,442  
Provision for excess and obsolete inventory   543       541  
Benefit for student computer shrinkage and obsolescence   (422 )     (262 )
Expensed leased computer peripherals   2,532        
Changes in assets and liabilities:              
Accounts receivable   (37,521 )     (81,421 )
Inventories   12,882       15,532  
Prepaid expenses   (5,409 )     (4,226 )
Other current assets   79       (3,719 )
Deposits and other assets   (159 )     (425 )
Accounts payable   (14,074 )     (10,979 )
Accrued liabilities   3,483       (1,974 )
Accrued compensation and benefits   110       4,619  
Deferred revenue   25,971       32,336  
Deferred rent and other liabilities   (2,496 )     2,510  
Net cash provided by operating activities   61,122       45,739  
Cash flows from investing activities              
Purchase of property and equipment   (2,458 )     (7,656 )
Capitalized software development costs   (26,321 )     (25,430 )
Capitalized curriculum development costs   (12,206 )     (12,194 )
Investment in LearnBop, Inc.         (6,512 )
Net cash used in investing activities   (40,985 )     (51,792 )
Cash flows from financing activities              
Repayments on capital lease obligations   (13,428 )     (16,743 )
Purchase of treasury stock         (26,452 )
Proceeds from exercise of stock options   14       513  
Excess tax benefit from stock-based compensation   6       8  
Retirement of restricted stock for income tax withholding   (3,056 )     (2,388 )
Net cash used in financing activities   (16,464 )     (45,062 )
Effect of foreign exchange rate changes on cash and cash equivalents   (17 )     (2,144 )
Net change in cash and cash equivalents   3,656       (53,259 )
Cash and cash equivalents, beginning of period   195,852       196,109  
Cash and cash equivalents, end of period $ 199,508     $ 142,850  

Non-GAAP Financial Measures

EBITDA

EBITDA consists of net income plus net interest expense, 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 March 31,   Nine Months Ended December 31,
    2016     2015       2016     2015  
    (In thousands)   (In thousands)
Net income — K12 Inc.    $   14,273   $   17,013     $   10,018   $   22,568  
Interest expense (income), net        101       315         596       134  
Income tax expense       5,368       10,586         3,924       12,711  
Depreciation and amortization        17,586       17,764         50,622       52,273  
Noncontrolling interest        (608 )     (484 )       (1,133 )     (667 )
EBITDA    $   36,720   $   45,194     $   64,027   $   87,019  

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 33 states and the District of Columbia, and through school districts and public and private schools serving students in all 50 states and more than 100 countries.  More information can be found at K12.com.

K12 Inc.
Investor Contact:
Mike Kraft, 571-353-7778
VP Finance & Corporate Treasurer
mkraft@k12.com

K12 Inc. Second Quarter Fiscal 2016 Earnings Conference Call Details


January 14, 2016, 05:19:00 PM EDT

HERNDON, Va., Jan. 14, 2016 (GLOBE NEWSWIRE) — K12 Inc. (NYSE:LRN) announced today it plans to host a conference call to discuss its second quarter fiscal year 2016 financial results during a conference call scheduled for Thursday, January 28, 2016 at 8:30 a.m. eastern time (ET).

A live webcast of the call will be available at http://ift.tt/1SUA0SS. 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.  Please access the web site at least 15 minutes prior to the start of the call.

A replay of the call will be available starting on January 28, 2016 at 11:00 a.m. ET through February 28, 2016 at 11:00 a.m. ET, at (877) 660-6853 (domestic) or (201) 612-7415 (international) using conference ID 13627926. A webcast replay of the call will be available at http://ift.tt/1SUA0SS for 30 days.

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 33 states and the District of Columbia, and through school districts and public and private schools serving students in all 50 states and more than 100 countries.  More information can be found at K12.com.

K12 Inc.
Investor or Press Contact:
Mike Kraft, 571-353-7778
VP Finance & Corporate Treasurer
mkraft@k12.com

Source: K12 Inc.

See headlines for LRN

View Print Version

More from GlobeNewswire

Referenced Stocks

K12 Inc. Financial Guidance for Fiscal 2016 – Conference Call Details


By GlobeNewswire,  October 06, 2015, 06:09:00 PM EDT



Vote up

A
A
A

HERNDON, Va., Oct. 6, 2015 (GLOBE NEWSWIRE) — K12 Inc. (NYSE:LRN) announced today it plans to announce full year and first quarter fiscal 2016 financial guidance on Wednesday, October 14, 2015, followed by a conference call at 8:30 a.m. eastern time (ET).

A live webcast of the call will be available at http://public.viavid.com/index.php?id=116570. 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 October 14, 2015 at 11:00 a.m. ET through November 14, 2015 at 11:00 a.m. ET, at (877) 660-6853 (domestic) or (201) 612-7415 (international) using conference ID 13622167. A webcast replay of the call will be available at http://public.viavid.com/index.php?id=116570 for 30 days.

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.

CONTACT: K12 Inc.
         Investor Contact:
         Mike Kraft, 571-353-7778
         VP Finance & Corporate Treasurer
         mkraft@k12.com
         or
         Press Contact:
         Frank Giancamilli, 703-483-1529
         Senior Manager Corporate Communicationsfgiancamilli@k12.com


Source: K12 Inc.

This article appears in:

News Headlines

Referenced Stocks:

LRN

Latest News Video

Kosovo Prime Minister Pelted with E… Minor Hit by Vehicle in West Phoeni… Some Volkswagen Investments May Be … Man Killed in Phoenix Hit and Run   

Related stocks Articles



Subscribe

3010375052_f59c5b677d_o

This week in Ohio, The Columbus Dispatch reports that “Reps. Bill Hayes and Teresa Fedor, the House Education Committee’s top Republican and Democrat, […] forwarded an anonymous whistle-blower’s email” to David Yost, the state Auditor. The whistle-blower alleges that Ohio Virtual Academy, a K12 Inc. school, failed to remove more than 400 chronically truant students from its rolls. With charter schools funded on a per-pupil basis, padding enrollment with fake or absent students would mean collecting extra state funds while spending less money in the classroom.

Fortunately, Ohio’s Auditor is already quite familiar with the issue. In January, Yost released a special audit on the findings of an investigation into discrepancies between charter school enrollment and student attendance. As he told Central Ohio NPR, what Yost discovered “shocked” him: on average, the 30 charter schools investigated were reporting two times as many students as were actually in their classrooms. In fact, at one charter school that reported an enrollment of 95 students, the auditors found none in attendance. Four of the schools were managed by the notorious White Hat Management, and it’s hardly surprising that the audit flagged all for further investigation due to the “unusually high” variance between reported and actual attendance discovered.

Kristin Stewart, the head of Ohio Virtual Academy, disputes the allegations made by the whistle-blower. However, The Toldeo Blade reports that it acquired an audio recording of a conference call held by school officials in April, in which staff members are told that truant students will no longer be removed from enrollment.

While Ohio Virtual Academy and its sponsor try to mop up the mess, Rep. Fedor is looking for answers: “My question is how long has it been going on. For years? I don’t know. This is a serious gap and it’s a serious issue if these e-schools are getting money that they shouldn’t get.”

Image by Frits Ahlefeldt-Laurvig

The post K12 Inc. School Accused of Inflating Enrollment by Over 400 Students appeared first on Cashing in on Kids.