Published: November 02, 2010
Career Education Corporation Reports Results for Third Quarter 2010
HOFFMAN ESTATES, Ill. - (BUSINESS WIRE) - Career Education Corporation (NASDAQ: CECO) today reported total revenue
of $524.2 million, and net income of $26.1 million, or $0.33 per diluted
share, for the third quarter of 2010 compared to total revenue of $458.3
million and net income of $20.8 million, or $0.25 per diluted share, for
the third quarter of 2009.
The operating results for the third quarter 2010 included a $40.0
million pretax charge related to the settlement of a legal matter. The
operating results for the third quarter 2009 included $18.8 million of
pretax performance-based compensation expense related to incentive plan
outperformance.
"Our performance in the third quarter was in line with our expectations
and marked a continuation of our year-over-year improvement," said Gary
E. McCullough, President and Chief Executive Officer. "While the third
quarter brought intensified government and media scrutiny of our sector,
I am particularly proud of the way that our company remained focused on
enhancing the quality of education and student services in order to
prepare students for success in their chosen careers."
CONSOLIDATED RESULTS
Three Months Ended September 30, 2010
• Total revenue was $524.2 million for the third quarter of 2010, a 14.4
percent increase from $458.3 million for the third quarter of 2009.
• Operating income was $38.3 million for the third quarter of 2010,
versus operating income of $38.1 million for the third quarter of 2009.
The operating margin was 7.3 percent for the third quarter of 2010,
compared to an operating margin of 8.3 percent for the third quarter of
2009. Excluding the impact of the significant items above, operating
income for the third quarter of 2010 was $78.3 million versus operating
income of $56.9 million for the third quarter of 2009; a 37.5 percent
increase over the prior year quarter.
• Bad debt expense for the three months ended September 30, 2010 and
2009 was $31.9 million and $14.2 million, respectively. The higher level
of bad debt expense is a result of increases made to the reserve rates
associated with the Company's student extended payment plans.
• Income from continuing operations for each three–month period ended
September 30, 2010 and 2009 was $26.9 million, or $0.34 and $0.32 per
diluted share for the three months ended September 30, 2010 and 2009,
respectively. Excluding the impact of the significant items above,
income from continuing operations for the three months ended September
30, 2010 was $52.9 million, or $0.66 per diluted share versus $39.1
million, or $0.47 per diluted share for the three months ended September
30, 2009.
Nine Months Ended September 30, 2010
• Total revenue was $1,581.8 million for the nine months ended
September 30, 2010, compared to $1,328.8 million for the nine months
ended September 30, 2009.
• Operating income increased to $221.8 million for the nine months ended
September 30, 2010, from $126.5 million for the nine months ended
September 30, 2009. The operating margin increased to 14.0 percent for
the nine months ended September 30, 2010, from 9.5 percent for the nine
months ended September 30, 2009. Operating income for the nine months
ended September 30, 2010 included a $40.0 million pretax charge related
to the settlement of a legal matter. In addition, increases made to the
reserve rates associated with the Company's student extended payment
plans contributed to a $38.7 million increase in bad debt expense for
the nine months ended September 30, 2010 as compared to the prior year.
Operating income for the nine months ended September 30, 2009 included
an additional $25.3 million pretax charge for performance-based
compensation expense related to incentive plan outperformance.
• Income from continuing operations for the nine months ended
September 30, 2010, was $148.0 million, or $1.82 per diluted share,
compared to $84.3 million, or $0.97 per diluted share, for the nine
months ended September 30, 2009.
CONSOLIDATED CASH FLOWS AND FINANCIAL POSITION
Cash Flows
• Cash provided by operating activities was $217.5 million for the nine
months ended September 30, 2010, compared to cash provided by operating
activities of $217.4 million for the nine months ended September 30,
2009. Operating cash flows remained relatively constant as compared to
the prior year as strong cash flow driven by increased net income was
offset by payment of prior year annual incentive compensation, lease
payments attributable to our discontinued operations and the impact of
student receivables growth and related payment performance.
• Capital expenditures increased to $81.9 million for the nine months
ended September 30, 2010, from $50.3 million for the nine months ended
September 30, 2009. Capital expenditures increased to 5.2 percent of
total revenue for the nine months ended September 30, 2010 as compared
to 3.8 percent for the nine months ended September 30, 2009 as a result
of investments made in start-up campuses and the Company's campus
support center.
Financial Position
• As of September 30, 2010 and December 31, 2009, cash and cash
equivalents and short-term investments totaled $442.5 million and $484.9
million, respectively.
• Days sales outstanding (DSO) were 15 days as of September 30, 2010,
compared to 16 days as of September 30, 2009.
Stock Repurchase Program
During the nine months ended September 30, 2010, the Company repurchased
approximately 5.4 million shares of its common stock for approximately
$154.9 million at an average price of $28.56 per share. The Company did
not repurchase shares of its common stock during the third quarter 2010.
As of September 30, 2010, approximately $290.5 million was available
under the Company's authorized stock repurchase program to repurchase
outstanding shares of its common stock. Stock repurchases under this
program may be made on the open market or in privately negotiated
transactions from time to time, depending on various factors, including
market conditions and corporate and regulatory requirements.
|
|
|
STUDENT POPULATION AND NEW STUDENT STARTS
|
|
|
|
Student Population
|
|
|
|
Total student population by reportable segment as of September 30,
2010 and 2009, was as follows:
|
|
|
|
|
|
As of September 30,
|
|
% Change
2010 vs. 2009
|
|
|
|
2010
|
|
2009
|
|
|
Student Population
|
|
|
|
|
|
|
|
University
|
|
63,500
|
|
56,400
|
|
13%
|
|
Health Education
|
|
31,100
|
|
25,000
|
|
24%
|
|
Culinary Arts
|
|
16,300
|
|
13,600
|
|
20%
|
|
International
|
|
7,300
|
|
7,000
|
|
4%
|
|
Transitional Schools
|
|
5
|
|
100
|
|
NM
|
|
|
|
|
|
|
|
|
|
Total Student Population
|
|
118,205
|
|
102,100
|
|
16%
|
|
|
|
New Student Starts
|
|
|
|
New student starts by reportable segment during the third quarter
of 2010 and 2009, were as follows:
|
|
|
|
|
|
For the Three Months Ended
September 30,
|
|
% Change
2010 vs. 2009
|
|
|
|
2010
|
|
2009
|
|
|
New Student Starts
|
|
|
|
|
|
|
|
University
|
|
19,070
|
|
18,350
|
|
4%
|
|
Health Education
|
|
9,440
|
|
8,000
|
|
18%
|
|
Culinary Arts
|
|
7,360
|
|
7,100
|
|
4%
|
|
International
|
|
4,130
|
|
4,200
|
|
-2%
|
|
Transitional Schools
|
|
-
|
|
-
|
|
N/A
|
|
|
|
|
|
|
|
|
|
Total New Student Starts
|
|
40,000
|
|
37,650
|
|
6%
|
|
|
|
|
|
|
|
|
CONFERENCE CALL INFORMATION
Career Education Corporation will host a conference call on Wednesday,
November 3, 2010 at 10:00 a.m. Eastern time. Interested parties can
access the live webcast of the conference call at www.careered.com
in the Investor Relations section of the website. Participants can also
listen to the conference call by dialing 800-580-9478 (domestic) or
630-691-2769 (international) and citing code 27994422. Please log-in or
dial-in at least 10 minutes prior to the start time to ensure a
connection. An archived version of the webcast will be accessible for 90
days at www.careered.com
in the Investor Relations section of the website. A replay of the call
will also be available for seven days by calling 888-843-7419 (domestic)
or 630-652-3042 (international) and citing code 27994422.
ABOUT CAREER EDUCATION CORPORATION
The colleges, schools and universities that are part of the Career
Education Corporation ("CEC" ) family offer high-quality education to a
diverse student population of more than 118,000 students across the
world in a variety of career-oriented disciplines through online,
on-ground and hybrid learning program offerings. The more than 90
campuses that serve these students are located throughout the United
States and in France, Italy, the United Kingdom and Monaco, and offer
doctoral, master's, bachelor's and associate degrees and diploma and
certificate programs.
CEC is an industry leader whose institutions are recognized globally.
Those institutions include, among others, American InterContinental
University ("AIU" ); Brooks Institute; Colorado Technical University
("CTU" ); Harrington College of Design; INSEEC Group ("INSEEC" ) Schools;
International University of Monaco ("IUM" ); International Academy of
Design & Technology ("IADT" ); Istituto Marangoni; Le Cordon Bleu North
America ("LCB" ); and Sanford-Brown Institutes and Colleges. Through its
schools, CEC is committed to providing high-quality education, enabling
students to graduate and pursue rewarding career opportunities.
For more information, see CEC's website at www.careered.com.
The website includes a detailed listing of individual campus locations
and web links to CEC's colleges, schools, and universities.
Except for the historical and present factual information contained
herein, the matters set forth in this release, including statements
identified by words such as "anticipate," "believe," "plan," "expect,"
"intend," "project," "will," "potential" and similar expressions, are
forward-looking statements as defined in Section 21E of the Securities
Exchange Act of 1934, as amended. These statements are based on
information currently available to us and are subject to various risks,
uncertainties and other factors that could cause our actual growth,
results of operations, cash flows, performance, business prospects, and
opportunities to differ materially from those expressed in, or implied
by, these statements. Except as expressly required by the federal
securities laws, we undertake no obligation to update such factors or to
publicly announce the results of any of the forward-looking statements
contained herein to reflect future events, developments, or changed
circumstances or for any other reason. These risks and uncertainties,
the outcome of which could materially and adversely affect our financial
condition and operations, include, but are not limited to, the
following: availability of Title IV and other student financial aid or
loans for our students; Congress' willingness or ability to maintain or
increase funding for Title IV programs; the impacts of the U.S.
Department of Education's new and pending regulations addressing certain
aspects of administration of Title IV federal financial aid programs
(including among other matters, gainful employment, certain compensation
related to recruiting and admission of students, more stringent state
approval criteria that may affect current state approval and licensing
processes applicable to postsecondary education institutions and
distance learning programs) on our business practices, costs of
compliance and of developing and implementing changes in operations,
student recruitment or enrollment, and program offerings that may have
significant or material effects on our operations, business and
profitability; potential higher bad debt expense or reduced revenue
associated with requiring students to pay more of their educational
expenses while in school or with directly providing extended payment
plans to our students; increased competition; the effectiveness of our
regulatory compliance efforts; impairment of goodwill and other
intangible assets as we continue to redefine the company and manage our
brands and marketing to improve effectiveness and reduce costs; charges
and expenses associated with exiting excess facility space; our ability
to comply with accrediting agency requirements or obtain accrediting
agency approvals for existing or new programs; the outcome of any
reviews and audits conducted by accrediting, state and federal agencies;
our dependence on information technology systems; our ownership or use
of intellectual property; costs and impacts of regulatory, legal and
administrative actions, proceedings and investigations, governmental
regulations, and class action and other lawsuits; our ability to manage
and continue growth; and other factors discussed in our Annual Report on
Form 10-K for the year ended December 31, 2009, our Quarterly Reports on
Form 10-Q for the most recent fiscal quarters, and from time to time in
our current reports filed with the Securities and Exchange Commission.
|
|
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
|
|
UNAUDITED CONSOLIDATED BALANCE SHEETS
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
2010
|
|
2009
|
|
ASSETS
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
283,515
|
|
|
$
|
284,473
|
|
|
Short-term investments
|
|
|
158,988
|
|
|
|
200,379
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents and short-term investments
|
|
|
442,503
|
|
|
|
484,852
|
|
|
|
|
|
|
|
|
Student receivables, net
|
|
|
64,366
|
|
|
|
57,823
|
|
|
Receivables, other, net
|
|
|
5,514
|
|
|
|
5,256
|
|
|
Prepaid expenses
|
|
|
43,561
|
|
|
|
41,090
|
|
|
Inventories
|
|
|
11,078
|
|
|
|
11,271
|
|
|
Deferred income tax assets, net
|
|
|
12,983
|
|
|
|
12,983
|
|
|
Other current assets
|
|
|
7,810
|
|
|
|
9,442
|
|
|
Assets of discontinued operations
|
|
|
5,297
|
|
|
|
6,118
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
593,112
|
|
|
|
628,835
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS:
|
|
|
|
|
|
Property and equipment, net
|
|
|
335,836
|
|
|
|
306,279
|
|
|
Goodwill
|
|
|
383,821
|
|
|
|
377,515
|
|
|
Intangible assets, net
|
|
|
182,351
|
|
|
|
178,520
|
|
|
Student receivables, net
|
|
|
14,426
|
|
|
|
21,455
|
|
|
Deferred income tax assets, net
|
|
|
3,984
|
|
|
|
3,659
|
|
|
Other assets, net
|
|
|
36,099
|
|
|
|
23,178
|
|
|
Assets of discontinued operations
|
|
|
23,491
|
|
|
|
24,401
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
1,573,120
|
|
|
$
|
1,563,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
Current maturities of capital lease obligations
|
|
$
|
784
|
|
|
$
|
880
|
|
|
Accounts payable
|
|
|
47,613
|
|
|
|
51,108
|
|
|
Accrued expenses:
|
|
|
|
|
|
Payroll and related benefits
|
|
|
62,571
|
|
|
|
88,439
|
|
|
Advertising and production costs
|
|
|
25,186
|
|
|
|
21,436
|
|
|
Income taxes
|
|
|
1,206
|
|
|
|
17,849
|
|
|
Earnout payments
|
|
|
17,061
|
|
|
|
18,009
|
|
|
Other
|
|
|
92,391
|
|
|
|
46,182
|
|
|
Deferred tuition revenue
|
|
|
210,618
|
|
|
|
184,411
|
|
|
Liabilities of discontinued operations
|
|
|
19,371
|
|
|
|
13,695
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
476,801
|
|
|
|
442,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES:
|
|
|
|
|
|
Capital lease obligations, net of current maturities
|
|
|
1,336
|
|
|
|
2,262
|
|
|
Deferred rent obligations
|
|
|
105,011
|
|
|
|
91,725
|
|
|
Earnout payments
|
|
|
11,898
|
|
|
|
23,680
|
|
|
Other liabilities
|
|
|
13,140
|
|
|
|
19,124
|
|
|
Liabilities of discontinued operations
|
|
|
43,464
|
|
|
|
62,997
|
|
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
174,849
|
|
|
|
199,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARE-BASED AWARDS SUBJECT TO REDEMPTION
|
|
|
160
|
|
|
|
521
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
Common stock
|
|
|
964
|
|
|
|
954
|
|
|
Additional paid-in capital
|
|
|
262,040
|
|
|
|
244,992
|
|
|
Accumulated other comprehensive income
|
|
|
2,356
|
|
|
|
8,408
|
|
|
Retained earnings
|
|
|
1,035,090
|
|
|
|
889,057
|
|
|
Cost of shares in treasury
|
|
|
(379,140
|
)
|
|
|
(221,887
|
)
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
921,310
|
|
|
|
921,524
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
1,573,120
|
|
|
$
|
1,563,842
|
|
|
|
|
|
|
|
|
|
|
|
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
|
|
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In thousands, except per share amounts and percentages)
|
|
|
|
|
|
For the Three Months Ended September 30, (1)
|
|
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
2010
|
|
Revenue
|
|
2009
|
|
Revenue
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
Tuition and registration fees
|
|
$
|
497,172
|
|
|
94.8
|
%
|
|
$
|
434,932
|
|
|
94.9
|
%
|
|
Other
|
|
|
27,034
|
|
|
5.2
|
%
|
|
|
23,359
|
|
|
5.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
524,206
|
|
|
|
|
|
458,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
Educational services and facilities
|
|
|
159,104
|
|
|
30.4
|
%
|
|
|
149,822
|
|
|
32.7
|
%
|
|
General and administrative
|
|
|
308,627
|
|
|
58.9
|
%
|
|
|
251,935
|
|
|
55.0
|
%
|
|
Depreciation and amortization
|
|
|
17,843
|
|
|
3.4
|
%
|
|
|
15,908
|
|
|
3.5
|
%
|
|
Goodwill and asset impairment
|
|
|
354
|
|
|
0.1
|
%
|
|
|
2,500
|
|
|
0.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
485,928
|
|
|
92.7
|
%
|
|
|
420,165
|
|
|
91.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
38,278
|
|
|
7.3
|
%
|
|
|
38,126
|
|
|
8.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME:
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
189
|
|
|
0.0
|
%
|
|
|
326
|
|
|
0.1
|
%
|
|
Interest expense
|
|
|
(30
|
)
|
|
0.0
|
%
|
|
|
(10
|
)
|
|
0.0
|
%
|
|
Miscellaneous income
|
|
|
760
|
|
|
0.1
|
%
|
|
|
62
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total other income
|
|
|
919
|
|
|
0.2
|
%
|
|
|
378
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRETAX INCOME
|
|
|
39,197
|
|
|
7.5
|
%
|
|
|
38,504
|
|
|
8.4
|
%
|
|
Provision for income taxes
|
|
|
12,304
|
|
|
2.3
|
%
|
|
|
11,626
|
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS
|
|
|
26,893
|
|
|
5.1
|
%
|
|
|
26,878
|
|
|
5.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax
|
|
|
(762
|
)
|
|
-0.1
|
%
|
|
|
(6,086
|
)
|
|
-1.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
26,131
|
|
|
5.0
|
%
|
|
$
|
20,792
|
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE - DILUTED:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.34
|
|
|
|
|
$
|
0.32
|
|
|
|
|
Loss from discontinued operations
|
|
|
(0.01
|
)
|
|
|
|
|
(0.07
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
|
|
$
|
0.33
|
|
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING
|
|
|
79,819
|
|
|
|
|
|
83,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Prior period financial results have been reclassified for those
campuses previously taught out or sold. They are now reflected as a
component of Discontinued Operations.
|
|
|
|
|
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
|
|
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In thousands, except per share amounts and percentages)
|
|
|
|
|
|
For the Nine Months Ended September 30, (1)
|
|
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
2010
|
|
Revenue
|
|
2009
|
|
Revenue
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
Tuition and registration fees
|
|
$
|
1,516,181
|
|
|
95.9
|
%
|
|
$
|
1,271,207
|
|
|
95.7
|
%
|
|
Other
|
|
|
65,579
|
|
|
4.1
|
%
|
|
|
57,620
|
|
|
4.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
1,581,760
|
|
|
|
|
|
1,328,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
Educational services and facilities
|
|
|
477,419
|
|
|
30.2
|
%
|
|
|
444,899
|
|
|
33.5
|
%
|
|
General and administrative
|
|
|
830,421
|
|
|
52.5
|
%
|
|
|
706,566
|
|
|
53.2
|
%
|
|
Depreciation and amortization
|
|
|
51,813
|
|
|
3.3
|
%
|
|
|
48,399
|
|
|
3.6
|
%
|
|
Goodwill and asset impairment
|
|
|
354
|
|
|
0.0
|
%
|
|
|
2,500
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
1,360,007
|
|
|
86.0
|
%
|
|
|
1,202,364
|
|
|
90.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
221,753
|
|
|
14.0
|
%
|
|
|
126,463
|
|
|
9.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME:
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
689
|
|
|
0.0
|
%
|
|
|
1,968
|
|
|
0.2
|
%
|
|
Interest expense
|
|
|
(75
|
)
|
|
0.0
|
%
|
|
|
(32
|
)
|
|
0.0
|
%
|
|
Miscellaneous expense
|
|
|
(506
|
)
|
|
0.0
|
%
|
|
|
(704
|
)
|
|
-0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total other income
|
|
|
108
|
|
|
0.0
|
%
|
|
|
1,232
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRETAX INCOME
|
|
|
221,861
|
|
|
14.0
|
%
|
|
|
127,695
|
|
|
9.6
|
%
|
|
Provision for income taxes
|
|
|
73,842
|
|
|
4.7
|
%
|
|
|
43,351
|
|
|
3.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS
|
|
|
148,019
|
|
|
9.4
|
%
|
|
|
84,344
|
|
|
6.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax
|
|
|
(2,348
|
)
|
|
-0.1
|
%
|
|
|
(33,805
|
)
|
|
-2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
145,671
|
|
|
9.2
|
%
|
|
$
|
50,539
|
|
|
3.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE - DILUTED:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
1.82
|
|
|
|
|
$
|
0.97
|
|
|
|
|
Loss from discontinued operations
|
|
|
(0.03
|
)
|
|
|
|
|
(0.39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
|
|
$
|
1.79
|
|
|
|
|
$
|
0.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING
|
|
|
81,195
|
|
|
|
|
|
87,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Prior period financial results have been reclassified for those
campuses previously taught out or sold. They are now reflected as a
component of Discontinued Operations.
|
|
|
|
|
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
|
|
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(In thousands)
|
|
|
|
|
|
For the Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
2010
|
|
2009
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
145,671
|
|
|
$
|
50,539
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Goodwill and asset impairment
|
|
|
354
|
|
|
|
2,500
|
|
|
Depreciation and amortization expense
|
|
|
51,813
|
|
|
|
50,038
|
|
|
Bad debt expense
|
|
|
77,374
|
|
|
|
38,927
|
|
|
Compensation expense related to share-based awards
|
|
|
14,390
|
|
|
|
12,313
|
|
|
Loss on disposition of property and equipment
|
|
|
546
|
|
|
|
1,196
|
|
|
Changes in operating assets and liabilities
|
|
|
(72,633
|
)
|
|
|
61,883
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
217,515
|
|
|
|
217,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
Purchases of available-for-sale investments
|
|
|
(229,771
|
)
|
|
|
(464,163
|
)
|
|
Sales of available-for-sale investments
|
|
|
271,035
|
|
|
|
502,383
|
|
|
Purchases of property and equipment
|
|
|
(81,944
|
)
|
|
|
(50,329
|
)
|
|
Acquisition of the rights to the Le Cordon Bleu brand
|
|
|
(12,729
|
)
|
|
|
(25,000
|
)
|
|
Business acquisition, net of acquired cash
|
|
|
(6,194
|
)
|
|
|
-
|
|
|
Other
|
|
|
81
|
|
|
|
(370
|
)
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(59,522
|
)
|
|
|
(37,479
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
Purchase of treasury stock
|
|
|
(154,913
|
)
|
|
|
(181,126
|
)
|
|
Issuance of common stock
|
|
|
2,453
|
|
|
|
2,166
|
|
|
Tax benefit associated with stock option exercises
|
|
|
216
|
|
|
|
194
|
|
|
Payment of assumed loans upon business acquisition
|
|
|
(4,279
|
)
|
|
|
-
|
|
|
(Payments)/borrowings of capital lease obligations & other long term
debt
|
|
|
(2,085
|
)
|
|
|
1,214
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(158,608
|
)
|
|
|
(177,552
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
|
|
|
|
|
|
CHANGES ON CASH AND CASH EQUIVALENTS:
|
|
|
(942
|
)
|
|
|
888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(1,557
|
)
|
|
|
3,253
|
|
|
DISCONTINUED OPERATIONS CASH ACTIVITY INCLUDED ABOVE:
|
|
|
|
|
|
Add: Cash balance of discontinued operations, beginning of the period
|
|
|
599
|
|
|
|
2,004
|
|
|
Less: Cash balance of discontinued operations, end of the period
|
|
|
-
|
|
|
|
987
|
|
|
CASH AND CASH EQUIVALENTS, beginning of the period
|
|
|
284,473
|
|
|
|
242,854
|
|
|
CASH AND CASH EQUIVALENTS, end of the period
|
|
$
|
283,515
|
|
|
$
|
247,124
|
|
|
|
|
|
|
|
|
|
|
|
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
|
|
SELECTED SEGMENT INFORMATION
|
|
(Dollars in thousands)
|
|
|
|
|
|
For the Three Months Ended September 30, (1)
|
|
|
|
2010
|
|
2009
|
|
REVENUE:
|
|
|
|
|
|
University (2)
|
|
$
|
290,512
|
|
|
$
|
260,167
|
|
|
Health Education (2)
|
|
|
110,421
|
|
|
|
90,718
|
|
|
Culinary Arts
|
|
|
108,305
|
|
|
|
91,654
|
|
|
International
|
|
|
15,061
|
|
|
|
15,333
|
|
|
Transitional Schools
|
|
|
63
|
|
|
|
565
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
524,362
|
|
|
|
458,437
|
|
|
Corporate and Other
|
|
|
(156
|
)
|
|
|
(146
|
)
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
524,206
|
|
|
$
|
458,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS): (3)
|
|
|
|
|
|
University (2) (4)
|
|
$
|
64,824
|
|
|
$
|
45,421
|
|
|
Health Education (2)
|
|
|
12,820
|
|
|
|
9,030
|
|
|
Culinary Arts (5)
|
|
|
(23,867
|
)
|
|
|
6,793
|
|
|
International
|
|
|
(6,740
|
)
|
|
|
(4,498
|
)
|
|
Transitional Schools
|
|
|
(1,287
|
)
|
|
|
(1,187
|
)
|
|
|
|
|
|
|
|
Subtotal
|
|
|
45,750
|
|
|
|
55,559
|
|
|
Corporate and Other (6)
|
|
|
(7,472
|
)
|
|
|
(17,433
|
)
|
|
|
|
|
|
|
|
Total operating income
|
|
$
|
38,278
|
|
|
$
|
38,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING MARGIN (LOSS):
|
|
|
|
|
|
University
|
|
|
22.3
|
%
|
|
|
17.5
|
%
|
|
Health Education
|
|
|
11.6
|
%
|
|
|
10.0
|
%
|
|
Culinary Arts
|
|
|
-22.0
|
%
|
|
|
7.4
|
%
|
|
International
|
|
|
-44.8
|
%
|
|
|
-29.3
|
%
|
|
Transitional Schools
|
|
|
NM
|
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Prior period financial results have been reclassified for those
campuses previously taught out or sold. They are now reflected as a
component of Discontinued Operations.
|
|
|
|
|
|
(2)
|
|
Prior period financial results have been reclassified to account for
the realignment of our International Academy of Design and
Technology (IADT) schools, Harrington College of Design, Collins
College and Brooks Institute into the University SBU. Briarcliffe
College and Brown College shifted into the Health Education SBU.
|
|
|
|
|
|
(3)
|
|
Prior period financial results have been revised to account for a
change in the allocation of shared service costs. Previously, shared
service costs were allocated to our SBUs as a percentage of revenue.
Improved data and analytical capabilities have allowed us to now
allocate shared service costs based upon usage and consumption
factors.
|
|
|
|
|
|
(4)
|
|
During the third quarter 2010, University recorded $7.3 million of
legal expense related to the settlements of legal matters.
|
|
|
|
|
|
(5)
|
|
During the third quarter 2010, Culinary Arts recorded a $40.0
million charge related to the settlement of a legal matter, and $7.3
million of additional bad debt expense for increases in reserve
rates related to our student extended payment plans.
|
|
|
|
|
|
(6)
|
|
Corporate and Other costs decreased primarily due to the prior year
including additional performance-based compensation expense related
to incentive plan outperformance of $7.3 million for the prior year
quarter.
|
|
|
|
|
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
|
|
SELECTED SEGMENT INFORMATION
|
|
(Dollars in thousands)
|
|
|
|
|
|
For the Nine Months Ended
|
|
|
|
September 30, (1)
|
|
|
|
2010
|
|
2009
|
|
REVENUE:
|
|
|
|
|
|
University (2)
|
|
$
|
878,283
|
|
|
$
|
749,185
|
|
|
Health Education (2)
|
|
|
322,256
|
|
|
|
260,205
|
|
|
Culinary Arts
|
|
|
293,881
|
|
|
|
241,178
|
|
|
International
|
|
|
87,378
|
|
|
|
76,119
|
|
|
Transitional Schools
|
|
|
452
|
|
|
|
2,485
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
1,582,250
|
|
|
|
1,329,172
|
|
|
Corporate and Other
|
|
|
(490
|
)
|
|
|
(345
|
)
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
1,581,760
|
|
|
$
|
1,328,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS): (3)
|
|
|
|
|
|
University (2) (4)
|
|
$
|
212,995
|
|
|
$
|
133,789
|
|
|
Health Education (2)
|
|
|
35,434
|
|
|
|
26,052
|
|
|
Culinary Arts (5)
|
|
|
(3,267
|
)
|
|
|
2,545
|
|
|
International
|
|
|
9,689
|
|
|
|
9,950
|
|
|
Transitional Schools
|
|
|
(4,135
|
)
|
|
|
(3,853
|
)
|
|
|
|
|
|
|
|
Subtotal
|
|
|
250,716
|
|
|
|
168,483
|
|
|
Corporate and Other (6)
|
|
|
(28,963
|
)
|
|
|
(42,020
|
)
|
|
|
|
|
|
|
|
Total operating income
|
|
$
|
221,753
|
|
|
$
|
126,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING MARGIN (LOSS):
|
|
|
|
|
|
University
|
|
|
24.3
|
%
|
|
|
17.9
|
%
|
|
Health Education
|
|
|
11.0
|
%
|
|
|
10.0
|
%
|
|
Culinary Arts
|
|
|
-1.1
|
%
|
|
|
1.1
|
%
|
|
International
|
|
|
11.1
|
%
|
|
|
13.1
|
%
|
|
Transitional Schools
|
|
|
NM
|
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Prior period financial results have been reclassified for those
campuses previously taught out or sold. They are now reflected as a
component of Discontinued Operations.
|
|
|
|
|
|
(2)
|
|
Prior period financial results have been reclassified to account for
the realignment of our International Academy of Design and
Technology (IADT) schools, Harrington College of Design, Collins
College and Brooks Institute into the University SBU. Briarcliffe
College and Brown College shifted into the Health Education SBU.
|
|
|
|
|
|
(3)
|
|
Prior period financial results have been revised to account for a
change in the allocation of shared service costs. Previously, shared
service costs were allocated to our SBUs as a percentage of revenue.
Improved data and analytical capabilities have allowed us to now
allocate shared service costs based upon usage and consumption
factors.
|
|
|
|
|
|
(4)
|
|
During the third quarter 2010, University recorded $7.3 million of
legal expense related to the settlements of legal matters.
|
|
|
|
|
|
(5)
|
|
During the third quarter 2010, Culinary Arts recorded a $40.0
million charge related to the settlement of a legal matter. For the
first and third quarters 2010, Culinary Arts recorded $3.2 million
and $7.3 million, respectively, of additional bad debt expense for
increases in reserve rates related to our student extended payment
plans.
|
|
|
|
|
|
(6)
|
|
Corporate and Other costs decreased primarily due to the prior
year including additional performance-based compensation expense
related to incentive plan outperformance of $9.7 million for the
prior year to date.
|
|
|
|
|
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
|
|
SELECTED UNIVERSITY SEGMENT INFORMATION
|
|
(Dollars in thousands)
|
|
|
|
|
|
For the Three Months Ended September 30, (1)
|
|
For the Nine Months Ended September 30, (1)
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
AIU
|
|
$
|
113,119
|
|
|
$
|
107,184
|
|
|
$
|
349,934
|
|
|
$
|
309,276
|
|
|
CTU
|
|
|
116,311
|
|
|
|
92,848
|
|
|
|
342,079
|
|
|
|
263,100
|
|
|
Art & Design
|
|
|
61,082
|
|
|
|
60,135
|
|
|
|
186,270
|
|
|
|
176,809
|
|
|
|
|
|
|
|
|
|
|
|
|
Total University
|
|
$
|
290,512
|
|
|
$
|
260,167
|
|
|
$
|
878,283
|
|
|
$
|
749,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME: (2)
|
|
|
|
|
|
|
|
|
|
AIU
|
|
$
|
23,252
|
|
|
$
|
23,716
|
|
|
$
|
96,054
|
|
|
$
|
69,525
|
|
|
CTU
|
|
|
32,414
|
|
|
|
15,556
|
|
|
|
94,278
|
|
|
|
48,536
|
|
|
Art & Design
|
|
|
9,158
|
|
|
|
6,149
|
|
|
|
22,663
|
|
|
|
15,728
|
|
|
|
|
|
|
|
|
|
|
|
|
Total University
|
|
$
|
64,824
|
|
|
$
|
45,421
|
|
|
$
|
212,995
|
|
|
$
|
133,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING MARGIN:
|
|
|
|
|
|
|
|
|
|
AIU
|
|
|
20.6
|
%
|
|
|
22.1
|
%
|
|
|
27.4
|
%
|
|
|
22.5
|
%
|
|
CTU
|
|
|
27.9
|
%
|
|
|
16.8
|
%
|
|
|
27.6
|
%
|
|
|
18.4
|
%
|
|
Art & Design
|
|
|
15.0
|
%
|
|
|
10.2
|
%
|
|
|
12.2
|
%
|
|
|
8.9
|
%
|
|
Total University
|
|
|
22.3
|
%
|
|
|
17.5
|
%
|
|
|
24.3
|
%
|
|
|
17.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30,
|
|
|
|
|
|
STUDENT POPULATION:
|
|
2010
|
|
2009
|
|
|
|
|
|
AIU
|
|
|
21,000
|
|
|
|
19,500
|
|
|
|
|
|
|
CTU
|
|
|
29,900
|
|
|
|
24,500
|
|
|
|
|
|
|
Art & Design
|
|
|
12,600
|
|
|
|
12,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total University
|
|
|
63,500
|
|
|
|
56,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30,
|
|
|
|
|
|
NEW STUDENT STARTS:
|
|
2010
|
|
2009
|
|
|
|
|
|
AIU
|
|
|
6,760
|
|
|
|
6,530
|
|
|
|
|
|
|
CTU
|
|
|
9,180
|
|
|
|
8,760
|
|
|
|
|
|
|
Art & Design
|
|
|
3,130
|
|
|
|
3,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total University
|
|
|
19,070
|
|
|
|
18,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Prior period results have been reclassified to account for the
realignment of our International Academy of Design and Technology
(IADT) schools, Harrington College of Design, Collins College and
Brooks Institute into the University SBU. Briarcliffe College and
Brown College shifted into the Health Education SBU.
|
|
|
|
|
|
(2)
|
|
During the third quarter 2010, University recorded $7.3 million of
legal expense related to the settlements of legal matters.
|
|
|
|
|
Career Education Corporation
Investors:
Jason Friesen
Senior
Vice President of Finance, Investor Relations and Treasurer
(847)
585-3899
or
Media:
Jeff Leshay
Senior Vice
President, Public Relations
(847) 585-2005
Copyright © 2012, Business Wire, Inc., All rights reserved. Copyright © 2012, NewsBlaze, Daily News
|
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