Career Education Corporation Reports Results For Second Quarter 2013

Career Education Corporation (NASDAQ: CECO) today reported total revenue of $294.8 million, and a net loss of $31.4 million, or -$0.47 per diluted share, for the second quarter of 2013 compared to total revenue of $365.9 million and net loss of $100.2 million, or -$1.52 per diluted share, for the second quarter of 2012.

“Our results are very much in line with our initial projections for the quarter. We are actively taking costs out of the business as we become more efficient and adjust the organization’s size to serve a smaller overall student population,” said Scott W. Steffey, president and CEO of Career Education. “I’m encouraged by the progress we’ve made across our domestic operations on improving our interactions with students, from the initial point of contact straight through to student outcomes, which gives me confidence that the actions we’re taking will positively impact the direction of the Company.

“The University group continues to be a profitable business, and as we continue to make improvements, we expect enhanced performance. The International segment continues to perform very well, and we’ve made significant progress towards finalizing our action plan for the Career Schools group, along with any additional strategic decisions,” Steffey said.

CONSOLIDATED RESULTS

Quarter Ended June 30, 2013
  • Total revenue was $294.8 million for the second quarter of 2013, a 19.4 percent decrease from $365.9 million for the second quarter of 2012.
  • Operating losses of $63.5 million and $105.3 million were recorded for the second quarters of 2013 and 2012, respectively. The operating margin was -21.5 percent for the second quarter of 2013 versus -28.8 percent for the second quarter of 2012. Operating loss for the quarter ended June 30, 2013 includes a $10.0 million ($0.10 per diluted share) charge related to the probable settlement of a legal matter and non-cash trade name impairment charges of $2.3 million ($0.02 per diluted share) related to the Le Cordon Bleu trade name and $1.7 million ($0.02 per diluted share) related to the Sanford-Brown trade name. The operating loss for the quarter ended June 30, 2012 included non-cash goodwill and asset impairment charges of $85.4 million ($1.24 per diluted share).
  • The loss from continuing operations for the second quarter of 2013 was $29.9 million, or -$0.45 per diluted share, versus the loss from continuing operations of $85.9 million, or -$1.30 per diluted share, for the second quarter of 2012.

Year to Date Ended June 30, 2013
  • Total revenue was $635.1 million for the year to date ended June 30, 2013, compared to $795.6 million for the year to date ended June 30, 2012.
  • Operating losses of $80.9 million and $57.0 million were recorded for the years to date ended June 30, 2013 and 2012, respectively. The operating margin decreased to -12.7 percent for the year to date ended June 30, 2013, from -7.2 percent for the year to date ended June 30, 2012.
  • The loss from continuing operations for the year to date ended June 30, 2013, was $43.9 million, or -$0.66 per diluted share, compared to the loss from continuing operations of $44.5 million, or -$0.67 per diluted share, for the year to date ended June 30, 2012.
  • In addition to the significant items for the quarter ended June 30, 2012 above, the operating results for the year to date ended June 30, 2012 include a $19.0 million ($0.19 per diluted share) insurance recovery related to the settlement of claims under certain insurance policies.

CONSOLIDATED CASH FLOWS AND FINANCIAL POSITION

Cash Flows
  • Net cash flows used in operating activities totaled $67.0 million for the year to date ended June 30, 2013, compared to net cash flows provided by operating activities of $16.6 million for the year to date ended June 30, 2012.
  • Capital expenditures decreased to $10.0 million during the year to date ended June 30, 2013, from $20.0 million during the year to date ended June 30, 2012. Capital expenditures represented 1.6 percent and 2.5 percent of total revenue of continuing and discontinued operations during the years to date ended June 30, 2013 and 2012, respectively.

Financial Position
  • As of June 30, 2013 and December 31, 2012, cash and cash equivalents and short-term investments totaled $241.8 million and $402.3 million, respectively. During the first quarter of 2013, the Company repaid the $80.0 million of outstanding borrowings under its Credit Agreement. Accordingly, restricted cash balances decreased to $12.0 million at June 30, 2013 from $97.9 million at December 31, 2012.

LEGAL AND REGULATORY MATTERS
  • During the second quarter of 2013, the Company reached a preliminary agreement regarding the monetary component of a settlement with the Attorney General of the State of New York relating to their investigation of whether the Company and certain of its schools have complied with certain New York state consumer protection, securities, finance and other laws, which is subject to negotiation of a final agreement including certain injunctive provisions. This resulted in the Company recording a $10.0 million ($0.10 per diluted share) pretax charge in the current year quarter.
  • In addition, during the second quarter of 2013, the Company agreed to proposed settlements for its ongoing securities litigation and shareholder derivative actions, which are subject to negotiation of final agreements and court approval. The Company expects that the costs to settle these matters will be covered under its insurance policies.

STUDENT POPULATION AND NEW STUDENT STARTS
   

Student Population

Total student population by reportable segment as of June 30, 2013 and 2012 was as follows:
 
As of June 30, % Change
2013   2012 2013 vs. 2012

Student Population
CTU 20,500 22,600 -9 %
AIU 11,600 14,500 -20 %
Total University Schools 32,100 37,100 -13 %
Health Education 7,800 10,200 -24 %
Culinary Arts 7,700 12,000 -36 %
Design & Technology 4,700 6,600 -29 %
Total Career Schools 20,200 28,800 -30 %
International 2,400 2,700 -11 %
Subtotal 54,700 68,600 -20 %
Transitional Schools 2,900 8,300 -65 %
Total Student Population 57,600 76,900 -25 %
 

New Student Starts

New student starts by reportable segment for the quarters ended June 30, 2013 and 2012 were as follows:

 

For the Quarter Ended June 30,
% Change
2013 2012 2013 vs. 2012

New Student Starts
CTU (1) 4,410 5,800 -24 %
AIU (1) 2,110 3,050 -31 %
Total University Schools 6,520 8,850 -26 %
Health Education 1,540 1,470 5 %
Culinary Arts 2,260 2,410 -6 %
Design & Technology 540 610 -11 %
Total Career Schools 4,340 4,490 -3 %
International 370 510 -27 %
Subtotal 11,230 13,850 -19 %
Transitional Schools (2) 30 1,090 NM
Total New Student Starts 11,260 14,940 -25 %
 
   
(1)

During 2012 and 2013, CTU and AIU had established certain programs to enable students to assess their readiness to commit to enrolling in college-level courses. Excluding the impact of these readiness programs, new student starts for CTU and AIU are 15% and 8% lower in the second quarter of 2013 as compared to 2012, respectively.
 
(2)

Campuses within the Transitional Schools segment no longer enroll new students; students who re-enter after 365 days are reported as new student starts.

 

CONFERENCE CALL INFORMATION

Career Education Corporation will host a conference call on Thursday, August 8, 2013 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 35251022. 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 35251022.

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 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 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 (“SBI” and “SBC”, respectively). 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: declines in enrollment; our ability to implement our strategic initiatives and effective cost reduction strategies; 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 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, 2012 and its subsequent filings with the Securities and Exchange Commission.
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)
   
June 30, December 31,

2013 (1)

2012 (1)
 
ASSETS
CURRENT ASSETS:
Cash and cash equivalents, unrestricted $ 165,921 $ 240,559
Restricted cash 11,966 97,878
Short-term investments   63,947     63,876  
Total cash and cash equivalents and short-term investments 241,834 402,313
 
Student receivables, net 53,518 68,798
Receivables, other, net 40,453 3,837
Prepaid expenses 96,436 44,297
Inventories 7,690 8,471
Deferred income tax assets, net 7,129 7,095
Other current assets 7,245 4,422
Assets of discontinued operations   3,705     4,328  
Total current assets   458,010     543,561  
 
NON-CURRENT ASSETS:
Property and equipment, net 246,008 277,302
Goodwill 132,389 133,025
Intangible assets, net 56,895 61,670
Student receivables, net 6,029 6,832
Deferred income tax assets, net 47,936 47,707
Other assets, net 28,149 33,280
Assets of discontinued operations   18,772     19,326  
TOTAL ASSETS $ 994,188   $ 1,122,703  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current maturities of capital lease obligations $ - $ 80,211
Accounts payable 31,863 38,416
Accrued expenses:
Payroll and related benefits 46,414 46,586
Advertising and production costs 22,630 20,963
Other 83,483 44,585
Deferred tuition revenue 80,945 111,896
Liabilities of discontinued operations   13,522     10,058  
Total current liabilities   278,857     352,715  
 
NON-CURRENT LIABILITIES:
Deferred rent obligations 91,415 95,073
Other liabilities 29,331 29,799
Liabilities of discontinued operations   24,844     33,326  
Total non-current liabilities   145,590     158,198  
 
 
STOCKHOLDERS' EQUITY:
Preferred stock - -
Common stock 818 816
Additional paid-in capital 600,796 596,826
Accumulated other comprehensive loss (3,712 ) (4,785 )
Retained earnings 186,328 232,921
Cost of shares in treasury   (214,489 )   (213,988 )
Total stockholders' equity   569,741     611,790  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 994,188   $ 1,122,703  
           
 
(1)

During the 2013 quarters ended June 30 and March 31, the Company completed the teach-out of SBI Landover and SBC Hazelwood, respectively. As a result, all current and prior period results for these campuses are reflected as components of discontinued operations.

 
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(In thousands, except per share amounts and percentages)
         
 
For the Quarter Ended June 30, (1)

% of Total

% of Total
2013

Revenue
2012

Revenue
 
REVENUE:
Tuition and registration fees $ 289,241 98.1 % $ 359,871 98.3 %
Other   5,606   1.9 %   6,078   1.7 %
Total revenue   294,847     365,949  
 
OPERATING EXPENSES:
Educational services and facilities 121,353 41.2 % 143,120 39.1 %
General and administrative 214,170 72.6 % 223,200 61.0 %
Depreciation and amortization 18,884 6.4 % 19,503 5.3 %
Goodwill and asset impairment   3,966   1.3 %   85,381   23.3 %
Total operating expenses   358,373   121.5 %   471,204   128.8 %
Operating loss   (63,526 ) -21.5 %   (105,255 ) -28.8 %
 
OTHER INCOME (EXPENSE):
Interest income 772 0.3 % 470 0.1 %
Interest expense (213 ) -0.1 % (28 ) 0.0 %
Loss on sale of business (222 ) -0.1 % - 0.0 %
Miscellaneous income (expense)   27   0.0 %   (77 ) 0.0 %
Total other income   364   0.1 %   365   0.1 %
 
PRETAX LOSS (63,162 ) -21.4 % (104,890 ) -28.7 %
 
Benefit from income taxes   (33,274 ) -11.3 %   (19,027 ) -5.2 %
 
LOSS FROM CONTINUING OPERATIONS (29,888 ) -10.1 % (85,863 ) -23.5 %
 
Loss from discontinued operations, net of tax   (1,502 ) -0.5 %   (14,371 ) -3.9 %
 
NET LOSS   (31,390 ) -10.6 %   (100,234 ) -27.4 %
 
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Foreign currency translation adjustments 2,811 (9,736 )
Unrealized gains (losses) on investments   4     (108 )
Total other comprehensive income (loss)   2,815     (9,844 )
 
COMPREHENSIVE LOSS $ (28,575 ) $ (110,078 )
 
NET LOSS PER SHARE - DILUTED:
Loss from continuing operations $ (0.45 ) $ (1.30 )
Loss from discontinued operations   (0.02 )   (0.22 )
Net loss per share $ (0.47 ) $ (1.52 )
 
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING   66,751     66,034  
                     
 
(1)

During the 2013 quarters ended June 30 and March 31, and the fourth quarter of 2012, the Company completed the teach-out of SBI Landover, SBC Hazelwood and LCB Pittsburgh, respectively. As a result, all current and prior period results for these campuses are reflected as components of discontinued operations.

 
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(In thousands, except per share amounts and percentages)
         
 
For the Year to Date Ended June 30, (1)

% of Total

% of Total
2013

Revenue
2012

Revenue
 
REVENUE:
Tuition and registration fees $ 624,292 98.3 % $ 779,025 97.9 %
Other   10,804   1.7 %   16,555   2.1 %
Total revenue   635,096     795,580  
 
OPERATING EXPENSES:
Educational services and facilities 253,724 40.0 % 292,997 36.8 %
General and administrative 420,184 66.2 % 435,016 54.7 %
Depreciation and amortization 37,946 6.0 % 39,144 4.9 %
Goodwill and asset impairment   4,123   0.6 %   85,464   10.7 %
Total operating expenses   715,977   112.7 %   852,621   107.2 %
Operating loss   (80,881 ) -12.7 %   (57,041 ) -7.2 %
 
OTHER (EXPENSE) INCOME:
Interest income 1,027 0.2 % 740 0.1 %
Interest expense (919 ) -0.1 % (65 ) 0.0 %
Loss on sale of business (6,934 ) -1.1 % - 0.0 %
Miscellaneous expense   (439 ) -0.1 %   (77 ) 0.0 %
Total other (expense) income   (7,265 ) -1.1 %   598   0.1 %
 
PRETAX LOSS (88,146 ) -13.9 % (56,443 ) -7.1 %
 
Benefit from income taxes   (44,240 ) -7.0 %   (11,930 ) -1.5 %
 
LOSS FROM CONTINUING OPERATIONS (43,906 ) -6.9 % (44,513 ) -5.6 %
 
Loss from discontinued operations, net of tax   (2,687 ) -0.4 %   (3,645 ) -0.5 %
 
NET LOSS   (46,593 ) -7.3 %   (48,158 ) -6.1 %
 
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Foreign currency translation adjustments 1,068 (4,296 )
Unrealized gains (losses) on investments   5     (120 )
Total other comprehensive income (loss)   1,073     (4,416 )
 
COMPREHENSIVE LOSS $ (45,520 ) $ (52,574 )
 
NET LOSS PER SHARE - DILUTED:
Loss from continuing operations $ (0.66 ) $ (0.67 )
Loss from discontinued operations   (0.04 )   (0.05 )
Net loss per share $ (0.70 ) $ (0.72 )
 
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING:   66,585     66,439  
                     
 
(1)

During the 2013 quarters ended June 30 and March 31, and the fourth quarter of 2012, the Company completed the teach-out of SBI Landover, SBC Hazelwood and LCB Pittsburgh, respectively. As a result, all current and prior period results for these campuses are reflected as components of discontinued operations.

 
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
      For the Year to Date Ended
June 30,
2013   2012
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (46,593 ) $ (48,158 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Goodwill and asset impairment 4,123 85,661
Depreciation and amortization expense 38,235 40,126
Bad debt expense 14,042 17,779
Compensation expense related to share-based awards 3,406 5,735
Loss on sale of business 6,934 -
Loss on disposition of property and equipment 103 287
Changes in operating assets and liabilities   (87,225 )   (84,853 )
Net cash (used in) provided by operating activities   (66,975 )   16,577  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investments (34,570 ) (108,198 )
Sales of available-for-sale investments 34,485 108,188
Purchases of property and equipment (10,005 ) (19,990 )
Payments of cash upon sale of business (2,525 ) -
Business acquisition, net of acquired cash - (2,873 )
Other   9     (120 )
Net cash used in investing activities   (12,606 )   (22,993 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock - (56,431 )
Issuance of common stock 565 883
Payments of contingent consideration - (5,818 )
Payment on borrowings (80,000 ) -
Change in restricted cash 85,912 -
Payments of assumed loans upon business acquisition - (318 )
Payments of capital lease obligations   (210 )   (641 )
Net cash provided by (used in) financing activities   6,267     (62,325 )
 
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS:   (1,381 )   (2,539 )
 
NET DECREASE IN CASH AND CASH EQUIVALENTS (74,695 ) (71,280 )
DISCONTINUED OPERATIONS CASH ACTIVITY INCLUDED ABOVE:
Add: Cash balance of discontinued operations, beginning of the period 63 -
Less: Cash balance of discontinued operations, end of the period 6 35
CASH AND CASH EQUIVALENTS, beginning of the period   240,559     280,592  
CASH AND CASH EQUIVALENTS, end of the period $ 165,921   $ 209,277  
 
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
   
For the Quarter Ended June 30,
2013

2012 (1)
 
REVENUE:
CTU $ 86,887 $ 91,839
AIU   59,935     78,841  
Total University Schools   146,822     170,680  
Health Education 35,289 45,457
Culinary Arts (2) 44,577 57,895
Design & Technology   27,858     34,724  
Total Career Schools   107,724     138,076  
International 25,824 21,140
Corporate and Other   -     20  
Subtotal 280,370 329,916
Transitional Schools (2)   14,477     36,033  
Total $ 294,847   $ 365,949  
 
OPERATING (LOSS) INCOME:
CTU $ 16,588 $ 12,181
AIU   1,021     6,878  
Total University Schools   17,609     19,059  
Health Education (3) (27,107 ) (50,230 )
Culinary Arts (2) (4) (17,017 ) (3,121 )
Design & Technology (5)   (7,595 )   (45,006 )
Total Career Schools   (51,719 )   (98,357 )
International (3,659 ) (2,406 )
Corporate and Other   (11,050 )   (5,373 )
Subtotal (48,819 ) (87,077 )
Transitional Schools (2) (6)   (14,707 )   (18,178 )
Total $ (63,526 ) $ (105,255 )
 
OPERATING (LOSS) MARGIN:
CTU 19.1 % 13.3 %
AIU 1.7 % 8.7 %
Total University Schools 12.0 % 11.2 %
Health Education -76.8 % -110.5 %
Culinary Arts -38.2 % -5.4 %
Design & Technology -27.3 % -129.6 %
Total Career Schools -48.0 % -71.2 %
International -14.2 % -11.4 %
Corporate and Other NM NM
Subtotal -17.4 % -26.4 %
Transitional Schools -101.6 % -50.4 %
Total -21.5 % -28.8 %
           
 
(1)

Prior period financial results have been recast to report the schools that are currently being taught out within the Transitional Schools segment.
 
(2)

During the 2013 quarters ended June 30 and March 31, and the fourth quarter of 2012, the Company completed the teach-out of SBI Landover, SBC Hazelwood and LCB Pittsburgh, respectively. As a result, all current and prior period results for these campuses are reflected as components of discontinued operations.

 
(3)

The second quarter of 2013 includes $10.0 million related to the probable settlement of a legal matter and a $1.7 million non-cash trade name impairment charge. The second quarter of 2012 includes a $41.9 million non-cash goodwill impairment charge.
 
(4) The second quarter of 2013 includes a $2.3 million non-cash trade name impairment charge.
 
(5) The second quarter of 2012 includes a $40.8 million non-cash goodwill impairment charge.
 
(6)

The second quarter of 2012 includes a $1.0 million non-cash trade name impairment charge, $0.9 million non-cash asset impairment charges recorded as a result of the decision made in the second quarter of 2012 to teach out several schools, and a $0.7 million non-cash goodwill impairment charge.

 
 
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
     
For the Year to Date Ended June 30,
2013

2012 (1)
 
REVENUE:
CTU $ 177,096 $ 188,168
AIU   126,234     167,781  
Total University Schools   303,330     355,949  
Health Education 73,310 99,549
Culinary Arts (2) 90,515 120,733
Design & Technology   58,147     76,525  
Total Career Schools   221,972     296,807  
International 75,501 63,969
Corporate and Other   -     34  
Subtotal   600,803     716,759  
Transitional Schools (2)   34,293     78,821  
Total $ 635,096   $ 795,580  
 
OPERATING (LOSS) INCOME:
CTU $ 32,500 $ 31,260
AIU   4,167     21,539  
Total University Schools   36,667     52,799  
Health Education (3) (38,417 ) (51,902 )
Culinary Arts (2) (4) (29,154 ) (1,855 )
Design & Technology (5)   (14,751 )   (44,672 )
Total Career Schools   (82,322 )   (98,429 )
International 9,821 10,719
Corporate and Other (6)   (17,418 )   7,209  
Subtotal (53,252 ) (27,702 )
Transitional Schools (2) (7)   (27,629 )   (29,339 )
Total $ (80,881 ) $ (57,041 )
 
OPERATING MARGIN (LOSS):
CTU 18.4 % 16.6 %
AIU 3.3 % 12.8 %
Total University Schools 12.1 % 14.8 %
Health Education -52.4 % -52.1 %
Culinary Arts -32.2 % -1.5 %
Design & Technology -25.4 % -58.4 %
Total Career Schools -37.1 % -33.2 %
International 13.0 % 16.8 %
Corporate and Other NM NM
Subtotal -8.9 % -3.9 %
Transitional Schools -80.6 % -37.2 %
Total -12.7 % -7.2 %
             
 
(1)

Prior period financial results have been recast to report the schools that are currently being taught out within the Transitional Schools segment.
 
(2)

During the 2013 quarters ended June 30 and March 31, and the fourth quarter of 2012, the Company completed the teach-out of SBI Landover, SBC Hazelwood and LCB Pittsburgh, respectively. As a result, all current and prior period results for these campuses are reflected as components of discontinued operations.
 
(3)

2013 expenses include $10.0 million related to the probable settlement of a legal matter and a $1.7 million non-cash trade name impairment charge. 2012 includes a $41.9 million non-cash goodwill impairment charge.
 
(4) 2013 expenses include a $2.3 million non-cash trade name impairment charge.
 
(5) 2012 expenses include a $40.8 million non-cash goodwill impairment charge.
 
(6) During 2012, a $19.0 million insurance recovery was recorded related to the settlement of claims under certain insurance policies.
 
(7)

2012 expenses include a $1.0 million non-cash trade name impairment charge, $0.9 million non-cash asset impairment charges recorded as a result of the decision made in the second quarter of 2012 to teach out several schools, and a $0.7 million non-cash goodwill impairment charge.

 
 
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION BY QUARTER - 2012
(In thousands)
           
 
For the 2012 Quarters Ended (1)
March 31 June 30 September 30 December 31 Full Year
REVENUE:
CTU $ 96,329 $ 91,839 $ 86,484 $ 89,283 $ 363,935
AIU   88,940     78,841     71,204     65,223     304,208  
Total University Schools   185,269  

 
  170,680  

 
  157,688  

 
  154,506     668,143  
 
Health Education 54,092 45,457 40,469 41,559 181,577
Culinary Arts (2) 62,838 57,895 54,415 49,694 224,842
Design & Technology   41,801     34,724     33,129     31,888     141,542  
Total Career Schools   158,731  

 
  138,076  

 
  128,013  

 
  123,141     547,961  
 
International 42,829 21,140 14,665 49,934 128,568
Corporate and Other   14     20     16     5     55  
Subtotal   386,843  

 
  329,916  

 
  300,382  

 
  327,586     1,344,727  
 
Transitional Schools (2)   42,788     36,033     30,438     26,332     135,591  
Total $ 429,631  

 
$ 365,949  

 
$ 330,820  

 
$ 353,918   $ 1,480,318  
 
OPERATING (LOSS) INCOME:
CTU $ 19,079 $ 12,181 $ 10,324 $ 13,344 $ 54,928
AIU   14,661     6,878     1,084     (1,727 )   20,896  
Total University Schools   33,740  

 
  19,059  

 
  11,408  

 
  11,617     75,824  
 
Health Education (1,672 ) (50,230 ) (12,758 ) (13,628 ) (78,288 )
Culinary Arts (2) 1,266 (3,121 ) (10,136 ) (21,863 ) (33,854 )
Design & Technology   334     (45,006 )   (6,240 )   (6,715 )   (57,627 )
Total Career Schools   (72 )

 
  (98,357 )

 
  (29,134 )

 
  (42,206 )   (169,769 )
 
International 13,125 (2,406 ) (6,444 ) 16,856 21,131
Corporate and Other   12,582     (5,373 )   (5,402 )   (9,425 )   (7,618 )
Subtotal   59,375  

 
  (87,077 )

 
  (29,572 )

 
  (23,158 )   (80,432 )
 
Transitional Schools (2)   (11,161 )   (18,178 )   (17,327 )   (52,771 )   (99,437 )
Total $ 48,214  

 
$ (105,255 )

 
$ (46,899 )

 
$ (75,929 ) $ (179,869 )
                         
 
(1) Prior period financial results have been recast to report the schools that are currently being taught out within the Transitional Schools segment.
 
(2)

During the 2013 quarters ended June 30 and March 31, and the fourth quarter of 2012, the Company completed the teach-out of SBI Landover, SBC Hazelwood and LCB Pittsburgh, respectively. As a result, all current and prior period results for these campuses are reflected as components of discontinued operations.

 
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION BY QUARTER - 2012
           
 
As of the 2012 Quarters Ended (1)
March 31 June 30 September 30 December 31
STUDENT POPULATION:
CTU 23,500 22,600 22,000 21,600
AIU 18,900 14,500 14,900 14,200
Total University Schools 42,400 37,100 36,900 35,800
 
Health Education 13,600 10,200 10,600 8,800
Culinary Arts (2) 12,500 12,000 11,200 8,500
Design & Technology 7,800 6,600 6,500 5,400
Total Career Schools 33,900 28,800 28,300 22,700
 
International 8,000 2,700 8,800 11,400
Subtotal 84,300 68,600 74,000 69,900
 
Transitional Schools (2) 10,600 8,300 7,300 6,000
Total 94,900 76,900 81,300 75,900
 
For the 2012 Quarters Ended (1)
March 31 June 30 September 30 December 31 Full Year
NEW STUDENT STARTS:
CTU 5,670 5,800 5,150 5,040 21,660
AIU 6,640 3,050 3,700 3,370 16,760
Total University Schools 12,310 8,850 8,850 8,410 38,420
 
Health Education 3,160 1,470 3,310 1,180 9,120
Culinary Arts (2) 3,160 2,410 3,920 2,810 12,300
Design & Technology 1,080 610 1,060 490 3,240
Total Career Schools 7,400 4,490 8,290 4,480 24,660
 
International 740 510 4,750 1,940 7,940
Subtotal 20,450 13,850 21,890 14,830 71,020
 
Transitional Schools (2) 2,520 1,090 1,720 840 6,170
Total 22,970 14,940 23,610 15,670 77,190
                         
 
(1) Prior period results have been recast to report the schools that are currently being taught out within the Transitional Schools segment.
 
(2)

During the 2013 quarters ended June 30 and March 31, and the fourth quarter of 2012, the Company completed the teach-out of SBI Landover, SBC Hazelwood and LCB Pittsburgh, respectively. As a result, all current and prior period results for these campuses are reflected as components of discontinued operations.

 

Copyright Business Wire 2010

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