Business Headlines

K12 Inc. Reports Fourth Quarter and Full Year 2009 Results

K12's Annual Operating Income Increases 72% on 39% Revenue Growth

HERNDON, Va.--(via BUSINESS WIRE)--K12 Inc. (NYSE:LRN), a leading provider of proprietary, technology-based curriculum and education services created for online delivery to students in kindergarten through 12th grade, today announced its results for the fourth quarter and fiscal year 2009.

Ron Packard, Chief Executive Officer of K12 Inc. stated, “2009 was a year in which the Company progressed on many fronts including the continued expansion into new states, the rapid growth in high school enrollment and the expansion of our international academy.”

Revenues for fiscal year 2009 (FY 2009) grew to $315.6 million, an increase of 39.5 percent over the prior year, primarily due to strong enrollment growth. EBITDA increased 68.8 percent to $43.2 million for the full year FY 2009 over the same period in the prior year. Net income for the year was $12.3 million as compared to net income of $33.8 million in the same period in the prior year. Net income for the full year fiscal year 2008 (FY 2008), excluding the $27.0 million tax benefit, would have been $6.8 million. Operating income improved to $22.3 million, an increase of 71.7 percent as compared to the full year FY 2008.

“We are especially pleased with these results given the strong economic headwinds we faced,” said John Baule, Chief Operating Officer and Chief Financial Officer of K12 Inc.

For the year ended June 30, 2009

  • Revenues were $315.6 million, an increase of $89.3 million or 39.5 percent, as compared to revenues of $226.2 in FY 2008. Average enrollments for FY 2009 were 54,962, an increase of 34.5 percent over the same period FY 2008.
  • Operating income was $22.3 million, an increase of $9.3 million or 71.7 percent, as compared to operating income of $13.0 million in FY 2008. Operating margins increased to 7.1 percent of revenue, representing a gross increase of 1.3 percentage points, as compared to 5.8 percent for FY 2008.
  • Income tax expense was $9.6 million, representing an effective tax rate of 45.1 percent. The income tax benefit in FY 2008 was $21.1 million, due to a $27.0 million reversal of the valuation allowance on net deferred tax assets. Had that reversal not occurred, the Company would have recorded an income tax expense of $6.8 million, representing an effective tax rate of 46.6% for FY 2008.
  • Net income was $12.3 million as compared to net income of $33.8 million in FY 2008. Net income in FY 2008, excluding the $27.0 million tax benefit, would have been $6.8 million.
  • Diluted net income per share in FY 2009 was $0.42. On a pro forma basis, excluding the income tax benefit of $27.0 million and assuming the conversion of preferred stock, diluted net income per share for FY 2008 would have been $0.26.
  • EBITDA was $43.2 million, an increase of $17.6 million or 68.8 percent, as compared to EBITDA of $25.6 million in FY 2008. EBITDA as a percentage of revenue improved to 13.7 percent, representing a gross increase of 2.4 percentage points, as compared to 11.3 percent in FY 2008.

For the three months ended June 30, 2009

  • Revenues for the fourth quarter were $72.2 million, an increase of $15.7 million or 27.8 percent, as compared to revenues of $56.5 million for the fourth quarter of FY 2008. Average enrollments for the fourth quarter were 52,563, an increase of 31.3 percent over the fourth quarter of FY 2008.
  • Operating loss for the fourth quarter was ($0.3) million as compared to an operating loss of ($0.7) millions for the fourth quarter of FY 2008.
  • Income tax benefit for the fourth quarter was $0.1 million. The income tax benefit for the fourth quarter in FY 2008 was $17.7 million. This reflects a $17.3 million tax benefit from the reversal of the valuation allowance on net deferred tax assets. Had that reversal not occurred, the Company would have recorded an income tax benefit of $0.4 million for the fourth quarter FY 2008.
  • Net loss for the fourth quarter was ($0.7) million as compared to net income of $17.1 million for the fourth quarter of FY 2008. In FY 2008, excluding the $17.3 million tax benefit, net income for the fourth quarter of FY 2008 would have been a net loss of ($0.2) million.
  • Diluted net loss per share for the fourth quarter of FY 2009 was ($0.02). On a pro forma basis, excluding the income tax benefit of $17.3 million, diluted net loss per share for the fourth quarter of FY 2008 would have been ($0.01).
  • EBITDA for the fourth quarter was $5.7 million, an increase of $2.7 million or 89.3 percent, as compared to EBITDA of $3.0 million for the fourth quarter of FY 2008. EBITDA as a percentage of revenue was 7.8 percent, representing a gross increase 2.5 percentage points, as compared to 5.3 percent for the fourth quarter of FY 2008.

Cash and Capital Expenditures

  • As of June 30, 2009, the Company had cash and cash equivalents of $49.5 million and net operating loss carryforwards of $68.3 million.
  • Capital expenditures for the full year ended June 30, 2009 were $27.9 million, primarily due to $13.9 million for investments in capitalized curriculum and $13.9 million in property and equipment. In addition, the Company financed equipment purchases of $16.0 million through capital leases of which $9.1 million of payments were made for the fiscal year ended June 30, 2009. These financed purchases were primarily for computers and software for use by students.


Conference Call The Company will discuss the fourth quarter and full year 2009 financial results during a conference call scheduled for September 9, 2009 at 8:30 a.m. eastern time (ET).

The conference call will be webcast and available on the K12 web site at www.K12.com through the investor relations link. Please access the web site at least 15 minutes prior to the start of the call to register and download and install any necessary software.

To participate in the live call, investors should dial 888-396-2298 (domestic) or 617-847-8708 (international) at 8:20 a.m. (ET). The participant passcode is 58225971.

A replay of the call will be available starting on September 9, 2009, through September 16, 2009, at 888-286-8010 (domestic) or 617-801-6888 (international) passcode 52143613. It will also be archived at www.k12.com in the investor relations section for 60 days.

About K12
K12 Inc. (NYSE: LRN) is a leading provider of proprietary, technology-based curriculum and online education programs to students in grades K-12. K12 provides its curriculum and academic services to online schools, traditional classrooms, blended school programs, and directly to families. K12 Inc. also operates the K12 International Academy, an accredited, diploma-granting online private school serving students worldwide.

K12's mission is to provide any child the curriculum and tools to maximize success in life, regardless of geographic, financial, or demographic circumstances. K12 Inc. is accredited through the Commission on International Trans-Regional Accreditation (CITA), which recently joined AdvancED, the world's largest education community. K12 is the largest national K-12 online school provider to be recognized by CITA. More information can be found at www.K12.com.

Contact: Jeff Kwitowski, 703-483-7281, VP, Public Relations, jkwitowski@k12.com