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Career Education Corporation (



Q4 2011 & Year End Earnings Call

February 28, 2011 10:00 am ET


John Springer – Vice President Strategy & Investor Relations

Steven H. Lesnik – Chairman of the Board, President & Chief Executive Officer

Michael J. Graham – Chief Financial Officer & Executive Vice President


Gary Bisbee – Barclays Capital

Robert Craig – Stifel Nicolaus & Company, Inc.

Jeff Mueller – Robert W. Baird & Company

Suzanne Stein – Morgan Stanley

Jeff M. Silber – BMO Capital Markets

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Welcome to the fourth quarter and full year 2011 earnings conference call. At this time, all participants are in a listen only mode. Later we will conduct a question and answer session. Please note that this conference is being recorded. I will now turn the call over to Mr. John Springer.

John Springer

Thank you for joining us on our fourth quarter 2011 earnings call. With me on the call this morning are Steve Lesnik, President and Chief Executive Officer and Mike Graham our Executive Vice President and Chief Financial Officer. Following remarks made by management, the call will be opened for analyst and investor questions.

This conference call is being webcast live within our investor relations section of our website at

. A reply of this call will also be available on our site. If we do not get to your question during the call, please call our investor relations department at 847-585-3899. Now, before I turn the call over to Steve, let me remind you that yesterday’s press release and remarks made today by our executives may include forward looking statements as defined in the Private Securities Litigation Reform Act of 1995.

These statements are based on information currently available to us and involve risks and uncertainties that could cause our actual future results and performance and business prospects and opportunities to differ materially from those expressed in or implied by these statements. These risks and uncertainties include, but are not limited to, those factors described in our quarterly earnings release, our annual report on Form 10K for the year ended December 31, 2011 and our other filings with the Securities & Exchange Commission.

Except as expressly required by the Securities’ laws, we undertake no obligation to update those risk factors or to publically announce the results of any of these forward-looking statements to reflect future events, developments, or changed circumstances, or for any other reason.

Now, let me turn the call over to Steve Lesnik.

Steven H. Lesnik

It’s been an eventful four months since I arrived and I can assure you of that with some authority. 2011 was a challenging year for post secondary education, some might say a watershed year. I myself, have been heavily involved in higher education for more than 25 years and there are unprecedented challenges in front of both public non-profit and public sector institutions.

Today, we all to one degree or another, face a challenging landscape in post secondary education whether it be a shrinking of tax payer dollars available to public sector schools or regulatory change aimed at private sector schools. These restrictive developments are occurring even though the need for post secondary educated students in our country has never been higher and never been more out of reach for so many.

We are responding to these industry wide challenges. During the year we undertook initiatives across the company to adapt as did our peers. Nevertheless, the downward pressures on student population, revenues, and margins for everyone, was readily apparent and we were no exception. Our Career Ed institutions also faced some unique challenges in 2011 leading to my arrival here in November with a clear set of priorities to immediately address.

This morning I’d like to cover a few of those priorities with you. Then I’ll turn the call over to Mike Graham, who you all know, who will talk about our current business metrics, trends, and indicators. The priorities the board and I have adopted that I am going to provide you with an update of our progress on is as follows: first, ameliorate the current legal, accreditation, and regulatory issues facing us when I arrived; second, establish a clear strategic path for the company; and third, address where we are regarding leadership of the company and our institutions.

Even before we get to those priorities, let me share with you the core cultural value we have emphasized throughout the organization. It is a simple thought, students first. Every decision we make now goes through the filter of how it impacts our students from the moment they consider us for enrollment until the day they graduate and even beyond as they progress in their careers. That idea permeates every action we take.

Now, let’s talk about the external issues that we face today. You all know we, along with a number of other companies, received a subpoena from the New York Attorney General’s Office last year. Discussion between the AG’s office and ourselves are ongoing and we continue to cooperate in every way we can. Nevertheless, I don’t think anyone can determine when these discussions will conclude.

One consequence of the subpoena was that in preparing to respond, we discovered some anomalies in the determination of placement rates at our New York based health schools. We quickly informed the AG as well as the accreditors of these schools. Our board also mandated a review of placement determination and reporting practices in all our schools across the country.

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