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Exhibit 99.1

 

LOGO

CAREER EDUCATION CORPORATION REPORTS

RESULTS FOR THIRD QUARTER 2012

Company announces campus closures and workforce reductions to align with new long-term strategy.

Schaumburg, Ill. (November 8, 2012) – Career Education Corporation (NASDAQ: CECO) today reported total revenue of $332.8 million, and a net loss of $33.1 million, or -$0.50 per diluted share, for the third quarter of 2012 compared to total revenue of $428.4 million and net income of $10.6 million, or $0.14 per diluted share, for the third quarter of 2011.

“We are taking the difficult step of closing campuses and reducing our workforce because these measures are essential to advancing the turnaround of Career Education,” Chairman, President and Chief Executive Officer Steven H. Lesnik said. “To move forward successfully, we must align the organization to the new market realities in private postsecondary education.”

“As we rationally reduce the size and scope of the organization, we are ultimately positioning the Company to execute and embark upon our long-term strategic direction. Our strategy envisions a simplified and more nimble organization, fewer ground campuses, more differentiated brands serving distinct student populations and the leading student-centric, personalized learning technology in higher education. I am confident that this is the right strategic course for the Company and will ensure a leaner, stronger Career Education that continues to provide access to high-quality, career-focused postsecondary education long into the future.”

CONSOLIDATED RESULTS

Quarter Ended September 30, 2012

 

   

Total revenue was $332.8 million for the third quarter of 2012, a 22.3 percent decrease from $428.4 million for the third quarter of 2011.

 

   

An operating loss of $48.2 million was reported for the third quarter of 2012, compared to operating income of $19.9 million for the third quarter of 2011. The operating margin was -14.5 percent for the third quarter of 2012 versus 4.6 percent for the third quarter of 2011.

 

   

The loss from continuing operations for the third quarter of 2012 was $30.8 million, or -$0.47 per diluted share, versus income from continuing operations of $14.1 million, or $0.19 per diluted share, for the third quarter of 2011.


CEC ANNOUNCES 3Q12 RESULTS …PG 2

Year to Date Ended September 30, 2012

 

   

Total revenue was $1,135.9 million for the year to date ended September 30, 2012, compared to $1,445.0 million for the year to date ended September 30, 2011.

 

   

The operating loss for the year to date ended September 30, 2012 was $109.7 million, versus operating income of $208.1 million for the year to date ended September 30, 2011. The operating margin decreased to -9.7 percent for the year to date ended September 30, 2012, from 14.4 percent for the year to date ended September 30, 2011.

 

   

The loss from continuing operations for the year to date ended September 30, 2012, was $78.3 million, or -$1.18 per diluted share, compared to income from continuing operations of $138.1 million, or $1.83 per diluted share, for the year to date ended September 30, 2011.

The Company believes it is useful to present non-GAAP financial measures, which exclude certain significant items, as a means to understand the performance of its core business. There are no significant items included for the third quarters ended 2012 or 2011. For the year to date ended September 30, 2012, on a non-GAAP basis, loss per diluted share from continuing operations was -$0.14, as compared to earnings per diluted share of $1.79 for the year to date ended September 30, 2011. (See table below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

The operating results for the years to date ended September 30, 2012 and 2011 include the following significant items:

 

     Significant Items
(In Millions)
    (Loss) Earnings
per Diluted
Share Impact
 

Year to Date Ended September 30, 2012

    

Goodwill and Intangible Asset Impairments

   $ 84.4      $ 1.22   

Asset Impairments

     1.3        0.01   

Insurance Recoveries

     (19.0     (0.19
  

 

 

   

 

 

 

TOTAL

   $ 66.7      $ 1.04   
  

 

 

   

 

 

 

Year to Date Ended September 30, 2011

    

Goodwill and Intangible Asset Impairments

   $ 2.7      $ 0.02   

Insurance Recoveries

     (7.0     (0.06
  

 

 

   

 

 

 

TOTAL

   $ (4.3   $ (0.04
  

 

 

   

 

 

 

 

   

During the year to date ended September 30, 2012, the Company recorded non-cash goodwill and intangible asset impairment charges of $84.4 million, of which $42.9 million was reflected within Health Education and $41.5 million within Art & Design. In addition, $1.2 million of non-cash asset impairment charges were recorded resulting from the decision made in the second quarter of 2012 to teach out four campuses, primarily within Health Education. The operating results for the year to date ended September 30, 2011 included $2.7 million of non-cash goodwill and intangible asset impairment charges primarily related to accreditation rights impairment.

 

   

During the year to date ended September 30, 2012, the Company recorded a $19.0 million insurance recovery related to the settlement of claims under certain insurance policies. During the year to date ended September 30, 2011, the Company recorded a $7.0 million insurance recovery related to previously settled legal matters.

 

   

Excluding the significant items in the table above, the operating loss was $43.0 million for the year to date ended September 30, 2012 and the operating income was $203.8 million for the year to date ended September 30, 2011. Operating margin was -3.8 percent and 14.1 percent for the years to date ended September 30, 2012 and 2011, respectively.


CEC ANNOUNCES 3Q12 RESULTS …PG 3

CAMPUS CLOSURES AND WORKFORCE REDUCTIONS

A key component to the Company’s long-term strategy is to invest in a smaller number of institutions that have the strongest likelihood of delivering strong student outcomes, operational efficiency and strength in their market. As a result, the decision was made to close twenty-three campuses. These campuses are expected to contribute approximately $124.3 million of revenue and approximately $62.0 million of operating loss for the year ending December 31, 2012. The campuses will remain open to offer current students the ability to complete their course of study. The majority of these campuses are expected to cease operations no later than the first quarter of 2014. Along with these closures, the Company made the decision to eliminate approximately 900 positions across the organization as it reorganizes its campus and corporate functions to better align with the current student population and common operating structures across our ground campuses, most notably within our Career Schools. The position eliminations are expected to be completed by January 2013, with annual savings estimated at $45-$55 million. The fourth quarter operating results will include a pretax severance charge of approximately $7.0 million as a result of this decision.

CONSOLIDATED CASH FLOWS AND FINANCIAL POSITION

Cash Flows

Net cash flows provided by operating activities totaled $32.5 million for the year to date ended September 30, 2012, compared to $209.4 million for the year to date ended September 30, 2011.

Capital expenditures decreased to $29.5 million during the year to date ended September 30, 2012, from $67.4 million during the year to date ended September 30, 2011. Capital expenditures represented 2.6 percent and 4.6 percent of total revenue of continuing and discontinued operations during the years to date ended September 30, 2012 and 2011, respectively.

Financial Position

As of September 30, 2012 and December 31, 2011, cash and cash equivalents and short-term investments totaled $373.3 million and $441.2 million, respectively.

U.S. Credit Agreement

The Company’s $185 million U.S. Credit Agreement expired on October 31, 2012. The Company’s discussions surrounding the level and terms of a replacement facility are ongoing.

Stock Repurchase Program

During the third quarter of 2012, the Company did not repurchase any shares of its common stock. Year to date through September 30, 2012, the Company repurchased 6.1 million shares of its common stock for approximately $56.4 million at an average price of $9.29 per share.

As of September 30, 2012, approximately $183.3 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.


CEC ANNOUNCES 3Q12 RESULTS …PG 4

STUDENT POPULATION AND NEW STUDENT STARTS

Student Population

Total student population by reportable segment as of September 30, 2012 and 2011, was as follows:

 

     As of September 30,      % Change
2012  vs. 2011
 
     2012      2011     

Student Population

        

CTU

     22,600         25,100         -10%   

AIU

     14,900         17,100         -13%   

Health Education

     16,700         28,100         -41%   

Culinary Arts

     11,200         15,400         -27%   

Art & Design

     7,400         10,300         -28%   

International

     8,800         8,400            5%   
  

 

 

    

 

 

    

Total Student Population

     81,600         104,400         -22%   
  

 

 

    

 

 

    

New Student Starts

New student starts by reportable segment for the quarters ended September 30, 2012 and 2011, were as follows:

 

     For the Quarters Ended
September 30,
     % Change
2012 vs. 2011
 
     2012      2011     

New Student Starts

        

CTU

     5,250         6,510         -19%   

AIU

     3,700         4,590         -19%   

Health Education (1)

     4,820         7,710         -37%   

Culinary Arts (1)

     3,920         5,480         -28%   

Art & Design

     1,200         1,870         -36%   

International

     4,750         4,440            7%   
  

 

 

    

 

 

    

Total New Student Starts

     23,640         30,600         -23%   
  

 

 

    

 

 

    

 

(1) The third quarter 2012 had one additional new student start as compared to the previous year quarter. Excluding this timing impact, the change in new student starts for Health Education and Culinary Arts would have been -53% and -36%, respectively.


CEC ANNOUNCES 3Q12 RESULTS …PG 5

CONFERENCE CALL INFORMATION

Career Education Corporation will host a conference call on Friday, November 9, 2012 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 33496355. 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 33496355.

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 80,000 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, 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”); 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 assumptions, risks, uncertainties and other factors that could cause our results of operations, financial condition, 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 or revise such factors or 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 outcomes of which could materially and adversely affect our financial condition and operations, include, but are not limited to, the following: changes in enrollment, student mix and average registered credits taken by students; our ability to implement effective cost reduction strategies; our ability to obtain a replacement credit facility on acceptable terms; our continued compliance with and eligibility to participate in Title IV Programs under the Higher Education Act of 1965, as amended, and the regulations thereunder (including the “90-10 Rule” and financial responsibility standards prescribed by the U.S. Department of Education), as well as national and regional accreditation standards and state regulatory requirements; our ability to obtain accrediting agency approvals for existing, changed or new programs and to successfully defend litigation and other claims brought against us; rulemaking by the U.S. Department of Education and increased focus by the U.S. Congress and governmental agencies on for-profit education institutions; and changes in the overall U.S. or global economy. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and its subsequent filings with the Securities and Exchange Commission.

###


CEC ANNOUNCES 3Q12 RESULTS …PG 6

CONTACT

 

Investors: Matthew Tschanz
     Director, Corporate Finance
     (847) 585-3899

 

Media: Mark Spencer
     Director, Corporate Communications
     (847) 585-3802


CAREER EDUCATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

     September 30,
2012
    December 31,
2011
 
     (Unaudited)        
ASSETS     

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 242,828      $ 280,592   

Short-term investments

     130,495        160,607   
  

 

 

   

 

 

 

Total cash and cash equivalents and short-term investments

     373,323        441,199   

Student receivables, net

     65,021        60,573   

Student receivables held for sale

     1,019        —     

Receivables, other, net

     1,672        2,914   

Prepaid expenses

     75,183        62,399   

Inventories

     9,157        11,356   

Deferred income tax assets, net

     10,940        10,940   

Other current assets

     5,214        17,769   

Assets of discontinued operations

     3,441        3,328   
  

 

 

   

 

 

 

Total current assets

     544,970        610,478   
  

 

 

   

 

 

 

NON-CURRENT ASSETS:

    

Property and equipment, net

     317,484        349,788   

Goodwill

     131,862        212,626   

Intangible assets, net

     74,032        77,186   

Student receivables, net

     8,016        9,297   

Deferred income tax assets, net

     9,452        9,522   

Other assets, net

     42,293        30,122   

Assets of discontinued operations

     16,920        17,101   
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 1,145,029      $ 1,316,120   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

CURRENT LIABILITIES:

    

Current maturities of capital lease obligations

   $ 306      $ 844   

Accounts payable

     53,237        48,408   

Accrued expenses:

    

Payroll and related benefits

     39,359        41,853   

Advertising and production costs

     20,993        17,717   

Other

     48,542        67,271   

Deferred tuition revenue

     135,483        144,947   

Liabilities of discontinued operations

     12,843        8,403   
  

 

 

   

 

 

 

Total current liabilities

     310,763        329,443   
  

 

 

   

 

 

 

NON-CURRENT LIABILITIES:

    

Capital lease obligations, net of current maturities

     —          207   

Deferred rent obligations

     97,766        102,079   

Other liabilities

     35,894        40,365   

Liabilities of discontinued operations

     28,842        37,935   
  

 

 

   

 

 

 

Total non-current liabilities

     162,502        180,586   
  

 

 

   

 

 

 

SHARE-BASED AWARDS SUBJECT TO REDEMPTION

     99        110   

STOCKHOLDERS’ EQUITY:

    

Preferred stock

     —          —     

Common stock

     816        820   

Additional paid-in capital

     599,534        590,965   

Accumulated other comprehensive loss

     (9,015     (5,136

Retained earnings

     294,315        375,607   

Cost of shares in treasury

     (213,985     (156,275
  

 

 

   

 

 

 

Total stockholders’ equity

     671,665        805,981   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 1,145,029      $ 1,316,120   
  

 

 

   

 

 

 


CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except per share amounts and percentages)

 

     For the Quarters Ended September 30,  
     2012     % of
Total
Revenue
     2011 (1)     % of
Total
Revenue
 

REVENUE:

         

Tuition and registration fees

   $ 326,464        98.1%       $ 417,420        97.4%   

Other

     6,293        1.9%         10,991        2.6%   
  

 

 

      

 

 

   

Total revenue

     332,757           428,411     
  

 

 

      

 

 

   

OPERATING EXPENSES:

         

Educational services and facilities

     133,206        40.0%         152,727        35.6%   

General and administrative

     227,369        68.3%         233,647        54.5%   

Depreciation and amortization

     20,429        6.1%         22,156        5.2%   

Goodwill and asset impairment

     —          0.0%         —          0.0%   
  

 

 

      

 

 

   

Total operating expenses

     381,004        114.5%         408,530        95.4%   
  

 

 

      

 

 

   

Operating (loss) income

     (48,247     -14.5%         19,881        4.6%   
  

 

 

      

 

 

   

OTHER INCOME (EXPENSE):

         

Interest income

     686        0.2%         263        0.1%   

Interest expense

     (22     0.0%         (44     0.0%   

Miscellaneous income

     77        0.0%         183        0.0%   
  

 

 

      

 

 

   

Total other income

     741        0.2%         402        0.1%   
  

 

 

      

 

 

   

PRETAX (LOSS) INCOME

     (47,506     -14.3%         20,283        4.7%   

(Benefit from) provision for income taxes

     (16,675     -5.0%         6,215        1.5%   
  

 

 

      

 

 

   

(LOSS) INCOME FROM CONTINUING OPERATIONS

     (30,831     -9.3%         14,068        3.3%   

Loss from discontinued operations, net of tax

     (2,315     -0.7%         (3,434     -0.8%   
  

 

 

      

 

 

   

NET (LOSS) INCOME

     (33,146     -10.0%         10,634        2.5%   
  

 

 

      

 

 

   

OTHER COMPREHENSIVE INCOME (LOSS), net of tax:

         

Foreign currency translation adjustments

     743           (11,761  

Unrealized losses on investments

     (206        (6  
  

 

 

      

 

 

   

Total other comprehensive income (loss)

     537           (11,767  
  

 

 

      

 

 

   

COMPREHENSIVE LOSS

   $ (32,609      $ (1,133  
  

 

 

      

 

 

   

NET (LOSS) INCOME PER SHARE - DILUTED:

         

(Loss) income from continuing operations

   $ (0.47      $ 0.19     

Loss from discontinued operations

     (0.03        (0.05  
  

 

 

      

 

 

   

Net (loss) income per share

   $ (0.50      $ 0.14     
  

 

 

      

 

 

   

DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING

     66,100           74,058     
  

 

 

      

 

 

   

 

(1) In November 2011, the Company sold its ownership interest in Istituto Marangoni. As a result, all prior period results have been recast to include Istituto Marangoni as a component of discontinued operations.


CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except per share amounts and percentages)

 

     For the Years to Date Ended September 30,  
     2012     % of
Total
Revenue
     2011 (1)     % of
Total
Revenue
 

REVENUE:

         

Tuition and registration fees

   $ 1,112,950        98.0%       $ 1,396,557        96.6%   

Other

     22,910        2.0%         48,432        3.4%   
  

 

 

      

 

 

   

Total revenue

     1,135,860           1,444,989     
  

 

 

      

 

 

   

OPERATING EXPENSES:

         

Educational services and facilities

     431,739        38.0%         476,370        33.0%   

General and administrative

     667,618        58.8%         695,313        48.1%   

Depreciation and amortization

     60,555        5.3%         62,563        4.3%   

Goodwill and asset impairment

     85,661        7.5%         2,676        0.2%   
  

 

 

      

 

 

   

Total operating expenses

     1,245,573        109.7%         1,236,922        85.6%   
  

 

 

      

 

 

   

Operating (loss) income

     (109,713     -9.7%         208,067        14.4%   
  

 

 

      

 

 

   

OTHER INCOME (EXPENSE):

         

Interest income

     1,426        0.1%         749        0.1%   

Interest expense

     (87     0.0%         (120     0.0%   

Miscellaneous income

     —          0.0%         1,968        0.1%   
  

 

 

      

 

 

   

Total other income

     1,339        0.1%         2,597        0.2%   
  

 

 

      

 

 

   

PRETAX (LOSS) INCOME

     (108,374     -9.5%         210,664        14.6%   

(Benefit from) provision for income taxes

     (30,109     -2.7%         72,582        5.0%   
  

 

 

      

 

 

   

(LOSS) INCOME FROM CONTINUING OPERATIONS

     (78,265     -6.9%         138,082        9.6%   

(Loss) income from discontinued operations, net of tax

     (3,039     -0.3%         940        0.1%   
  

 

 

      

 

 

   

NET (LOSS) INCOME

     (81,304     -7.2%         139,022        9.6%   
  

 

 

      

 

 

   

OTHER COMPREHENSIVE (LOSS) INCOME, net of tax:

         

Foreign currency translation adjustments

     (3,553        (269  

Unrealized (losses) gains on investments

     (326        40     
  

 

 

      

 

 

   

Total other comprehensive loss

     (3,879        (229  
  

 

 

      

 

 

   

COMPREHENSIVE (LOSS) INCOME

   $ (85,183      $ 138,793     
  

 

 

      

 

 

   

NET (LOSS) INCOME PER SHARE - DILUTED:

         

(Loss) income from continuing operations

   $ (1.18      $ 1.83     

(Loss) income from discontinued operations

     (0.05        0.01     
  

 

 

      

 

 

   

Net (loss) income per share

   $ (1.23      $ 1.84     
  

 

 

      

 

 

   

DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING

     66,325           75,518     
  

 

 

      

 

 

   

 

(1) In November 2011, the Company sold its ownership interest in Istituto Marangoni. As a result, all prior period results have been recast to include Istituto Marangoni as a component of discontinued operations.


CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

     For the Years to Date
Ended September 30,
 
     2012     2011  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net (loss) income

   $ (81,304   $ 139,022   

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

    

Goodwill and asset impairment

     85,661        2,676   

Loss on pending sale of student receivables

     930        —     

Depreciation and amortization expense

     60,555        63,319   

Bad debt expense

     28,967        40,909   

Compensation expense related to share-based awards

     7,302        11,884   

Loss (gain) on disposition of property and equipment

     293        (1,794

Changes in operating assets and liabilities

     (69,910     (46,599
  

 

 

   

 

 

 

Net cash provided by operating activities

     32,494        209,417   
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Purchases of available-for-sale investments

     (117,188     (149,234

Sales of available-for-sale investments

     146,873        148,934   

Purchases of property and equipment

     (29,496     (67,444

Proceeds on the sale of assets

     —          6,259   

Business acquisition, net of acquired cash

     (3,094     —     

Other

     (1,533     40   
  

 

 

   

 

 

 

Net cash used in investing activities

     (4,438     (61,445
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Purchase of treasury stock

     (56,431     (137,033

Issuance of common stock

     1,262        3,827   

Tax benefit associated with stock option exercises

     —          377   

Payments of assumed loans upon business acquisition

     (318     —     

Payments of contingent consideration

     (5,818     (12,589

Payments of capital lease obligations

     (741     (855
  

 

 

   

 

 

 

Net cash used in financing activities

     (62,046     (146,273
  

 

 

   

 

 

 

EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS:

     (3,774     (2,080
  

 

 

   

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

     (37,764     (381

DISCONTINUED OPERATIONS CASH ACTIVITY INCLUDED ABOVE:

    

Add: Cash balance of discontinued operations, beginning of the period

     —          28,838   

Less: Cash balance of discontinued operations, end of the period

     —          36,428   

CASH AND CASH EQUIVALENTS, beginning of the period

     280,592        260,644   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, end of the period

   $ 242,828      $ 252,673   
  

 

 

   

 

 

 


CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

     For the Quarters Ended
September 30,
 
     2012     2011 (1)  

REVENUE:

    

CTU

   $ 88,976      $ 100,477   

AIU

     71,204        85,787   

Health Education

     65,399        102,195   

Culinary Arts

     54,583        73,686   

Art & Design

     37,914        49,686   

International

     14,665        16,664   

Corporate and Other

     16        (84
  

 

 

   

 

 

 

Total

   $ 332,757      $ 428,411   
  

 

 

   

 

 

 

OPERATING (LOSS) INCOME:

    

CTU (2)

   $ 9,712      $ 16,755   

AIU

     1,084        12,430   

Health Education

     (28,468     (3,632

Culinary Arts

     (10,722     3,800   

Art & Design

     (7,963     2,557   

International

     (6,444     (3,064

Corporate and Other

     (5,446     (8,965
  

 

 

   

 

 

 

Total

   $ (48,247   $ 19,881   
  

 

 

   

 

 

 

OPERATING MARGIN (LOSS):

    

CTU

     10.9%        16.7%   

AIU

     1.5%        14.5%   

Health Education

     -43.5%        -3.6%   

Culinary Arts

     -19.6%        5.2%   

Art & Design

     -21.0%        5.1%   

International

     -43.9%        -18.4%   
  

 

 

   

 

 

 

Total

     -14.5%        4.6%   
  

 

 

   

 

 

 

 

(1) In November 2011, the Company sold its ownership interest in Istituto Marangoni. As a result, all prior period results have been recast to include Istituto Marangoni as a component of discontinued operations.

 

(2) Third quarter 2011 included a $5.0 million accrual for an estimate for potential reimbursement of government funds which was subsequently settled in the third quarter of 2012 for approximately $3.6 million.


CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

     For the Years to Date Ended
September 30,
 
     2012     2011 (1)  

REVENUE:

    

CTU

   $ 283,750      $ 330,603   

AIU

     238,985        288,092   

Health Education

     232,375        328,329   

Culinary Arts

     176,430        248,718   

Art & Design

     125,636        170,962   

International

     78,634        78,630   

Corporate and Other

     50        (345
  

 

 

   

 

 

 

Total

   $ 1,135,860      $ 1,444,989   
  

 

 

   

 

 

 

OPERATING (LOSS) INCOME:

    

CTU (2)

   $ 40,272      $ 87,016   

AIU

     22,623        66,384   

Health Education (3)

     (107,565     11,379   

Culinary Arts

     (15,171     30,741   

Art & Design (4)

     (55,823     20,627   

International

     4,275        8,729   

Corporate and Other (5)

     1,676        (16,809
  

 

 

   

 

 

 

Total

   $ (109,713   $ 208,067   
  

 

 

   

 

 

 

OPERATING MARGIN (LOSS):

    

CTU

     14.2%        26.3%   

AIU

     9.5%        23.0%   

Health Education

     -46.3%        3.5%   

Culinary Arts

     -8.6%        12.4%   

Art & Design

     -44.4%        12.1%   

International

     5.4%        11.1%   
  

 

 

   

 

 

 

Total

     -9.7%        14.4%   
  

 

 

   

 

 

 

 

(1) In November 2011, the Company sold its ownership interest in Istituto Marangoni. As a result, all prior period results have been recast to include Istituto Marangoni as a component of discontinued operations.

 

(2) Year to date 2011 included a $5.0 million accrual for an estimate for potential reimbursement of government funds which was subsequently settled in the third quarter of 2012 for approximately $3.6 million.

 

(3) Year to date 2012 includes a $41.9 million non-cash goodwill impairment charge, a $1.1 million non-cash asset impairment charge associated with the decision to teach out three campuses and a $1.0 million non-cash trade name impairment charge. 2011 results include a $2.0 million non-cash charge related to the impairment of certain accreditation rights.

 

(4) Year to date 2012 includes a $41.5 million non-cash goodwill impairment charge. 2011 results include a $0.5 million non-cash charge related to the impairment of accreditation rights.

 

(5) Year to date 2012 includes a $19.0 million insurance recovery related to the settlement of claims under certain insurance policies. Year to date 2011 includes a $7.0 million insurance recovery related to previously settled legal matters.


CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1)

(In millions, except share and per share amounts)

 

     For the Years to Date Ended September 30,  
     2012     2011  
     Operating
Loss
    Loss
per Diluted
Share (2)
    Operating
Income
    Earnings
per Diluted
Share (2)
 

As Reported

   $ (109.7   $ (1.18   $ 208.1      $ 1.83   

Reconciling Items:

        

Goodwill and Intangible Asset Impairments (3)

     84.4        1.22        2.7        0.02   

Asset Impairments (4)

     1.3        0.01        —          —     

Insurance Recoveries (5)

     (19.0     (0.19     (7.0     (0.06
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted to Exclude Significant Items

   $ (43.0   $ (0.14   $ 203.8      $ 1.79   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted Weighted Average Shares Outstanding

       66,325          75,518   
    

 

 

     

 

 

 

 

(1) The Company believes it is useful to present non-GAAP financial measures which exclude certain significant items as a means to understand the performance of its core business. As a general matter, the Company uses non-GAAP financial measures in conjunction with results presented in accordance with GAAP to help analyze the performance of its core business, assist with preparing the annual operating plan, and measure performance for some forms of compensation. In addition, the Company believes that non-GAAP financial information is used by analysts and others in the investment community to analyze the Company’s historical results and to provide estimates of future performance and that failure to report non-GAAP measures could result in a misplaced perception that the Company’s results have underperformed or exceeded expectations.

Non-GAAP financial measures when viewed in a reconciliation to corresponding GAAP financial measures, provides an additional way of viewing the Company’s results of operations and the factors and trends affecting the Company’s business. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding financial results presented in accordance with GAAP.

 

(2) (Loss) earnings per diluted share is based on (loss) income from continuing operations and assumes a 35% tax rate for each deductible item.

 

(3) Year to date ended September 30, 2012 includes non-cash goodwill and intangible asset impairment charges totaling $84.4 million, of which $74.5 million is non-deductible for income tax purposes, applicable to Health Education ($42.9) and Art & Design ($41.5). Year to date ended September 30, 2011 includes a $2.7 million non-cash impairment charge primarily related to accreditation rights.

 

(4) Year to date ended September 30, 2012 primarily includes non-cash asset impairment charges of $1.2 million associated with the decision to teach out three Health Education campuses ($1.1) and one AIU campus ($0.1).

 

(5) Year to dated ended September 30, 2012 includes a $19.0 million insurance recovery related to the settlement of claims under certain insurance policies. Year to date ended September 30, 2011 includes a $7.0 million insurance recovery related to previously settled legal matters.