Career Education Corporation Reports Results For Third Quarter 2013

Career Education Corporation (NASDAQ: CECO) today reported total revenue of $251.3 million, and a net loss of $87.1 million, or -$1.30 per diluted share, for the third quarter of 2013 compared to total revenue of $316.2 million and net loss of $33.1 million, or -$0.50 per diluted share, for the third quarter of 2012.

INTERNATIONAL SCHOOLS HELD FOR SALE

On October 22, 2013, the Company and one of its subsidiaries entered into a Securities Purchase Agreement with Insignis, a company controlled by funds managed by Apax Partners, pursuant to which the Company will sell and transfer control of its Paris-based INSEEC Group and the International University of Monaco. The closing of the transaction is subject to customary closing conditions, including the receipt of anti-trust regulatory approvals in France. The Company expects the closing to occur no later than December 27, 2013. As a result of the decision to sell our International Schools, the assets and liabilities and the results of operations of the entities to be sold are classified as held for sale within discontinued operations as of, and for the periods ending, September 30, 2013. All prior periods have been recast to be comparable to the current period.

“In addition to recapitalizing Career Education through the agreement to sell our International assets, and thus tapping unrecognized value for our investors, we continue to see improved performance as a result of operational changes made to our business,” said Scott W. Steffey, president and CEO of Career Education. “As an example, new enrollments across our continuing operations, excluding Transitional campuses, were down 10 percent from the same quarter last year. That compares to a decline of 19 percent in the second quarter and 20 percent in the first quarter. Additionally, we expect to reduce our expenses by up to $175 million in 2013, with an incremental $75 - $100 million reduction in 2014. While much work remains to be done to continue stemming declines and return to growth, I’m pleased with the progress made to date.”

CONSOLIDATED RESULTS

Quarter Ended September 30, 2013
  • Total revenue was $251.3 million for the third quarter of 2013, a 20.5 percent decrease from $316.2 million for the third quarter of 2012.
  • Operating losses of $68.6 million and $40.4 million were recorded for the third quarters of 2013 and 2012, respectively. The operating margin was -27.3 percent for the third quarter of 2013 versus -12.8 percent for the third quarter of 2012. The operating loss for the quarter ended September 30, 2013 included $11.6 million ($0.11 per diluted share) of non-cash asset impairment charges primarily related to a $10.7 million Le Cordon Bleu trade name impairment.
  • The loss from continuing operations for the third quarter of 2013 was $43.4 million, or -$0.65 per diluted share, versus the loss from continuing operations of $26.1 million, or -$0.40 per diluted share, for the third quarter of 2012.
  • The $87.1 million net loss for the third quarter of 2013 included a $39.9 million ($0.60 per diluted share) discrete tax expense related to unremitted earnings of our foreign entities. This charge was recorded within the loss from discontinued operations.

Year to Date Ended September 30, 2013
  • Total revenue was $810.9 million for the year to date ended September 30, 2013, compared to $1,047.8 million for the year to date ended September 30, 2012.
  • Operating losses of $159.4 million and $108.3 million were recorded for the years to date ended September 30, 2013 and 2012, respectively. The operating margin decreased to -19.7 percent for the year to date ended September 30, 2013, from -10.3 percent for the year to date ended September 30, 2012.
  • The loss from continuing operations for the year to date ended September 30, 2013, was $96.1 million, or -$1.44 per diluted share, compared to the loss from continuing operations of $79.4 million, or -$1.20 per diluted share, for the year to date ended September 30, 2012.
  • During the year to date ended September 30, 2013, the Company recorded non-cash asset impairment charges of $15.7 million ($0.15 per diluted share) primarily comprised of $13.0 million related to the Le Cordon Bleu trade name and $1.7 million related to the Sanford-Brown trade name, and a $10.3 million ($0.10 per diluted share) charge related to the settlement of a legal matter reported within the Health Education segment.
  • During the year to date ended September 30, 2012, the Company recorded non-cash goodwill and asset impairment charges of $85.5 million ($1.23 per diluted share), comprised mainly of goodwill impairment charges reflected within Health Education ($41.9 million) and Design & Technology ($40.8 million). In addition, the operating results for the year to date ended September 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 $77.8 million for the year to date ended September 30, 2013, compared to net cash flows provided by operating activities of $32.5 million for the year to date ended September 30, 2012.
  • Capital expenditures decreased to $16.6 million during the year to date ended September 30, 2013, from $29.5 million during the year to date ended September 30, 2012. Capital expenditures represented 1.8 percent and 2.6 percent of total revenue of continuing and discontinued operations during the years to date ended September 30, 2013 and 2012, respectively.

Financial Position
  • As of September 30, 2013 and December 31, 2012, unrestricted cash, cash equivalents and short-term investments totaled $83.1 million and $176.8 million, respectively.

TOTAL ENROLLMENTS AND NEW ENROLLMENTS

The enrollment data presented below excludes the campuses previously reported within the International segment, as these are classified as held for sale and are included within discontinued operations effective with the third quarter of 2013.

Total Enrollments

Total enrollments by reportable segment as of September 30, 2013 and 2012 were as follows:
          As of September 30,   % Change
2013   2012 2013 vs. 2012

Total Enrollments
CTU 20,500 22,000 -7%
AIU 12,000 14,900 -19%
Total University Schools 32,500 36,900 -12%
Health Education 9,000 10,600 -15%
Culinary Arts 8,000 11,200 -29%
Design & Technology 5,000 6,500 -23%
Total Career Schools 22,000 28,300 -22%
Subtotal 54,500 65,200 -16%
Transitional Schools 1,800 7,300 NM
Total 56,300 72,500 -22%
 

New Enrollments

New enrollments by reportable segment for the quarters ended September 30, 2013 and 2012 were as follows:
         

For the Quarter Ended
 

September 30,
% Change
2013   2012 2013 vs. 2012

New Enrollments
CTU 4,780 5,150 -7%
AIU 2,880 3,700 -22%
Total University Schools 7,660 8,850 -13%
Health Education 3,150 3,310 -5%
Culinary Arts 3,650 3,920 -7%
Design & Technology 990 1,060 -7%
Total Career Schools 7,790 8,290 -6%
Subtotal 15,450 17,140 -10%
Transitional Schools (1) 20 1,720 NM
Total 15,470 18,860 -18%
               
(1)  

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

 

CONFERENCE CALL INFORMATION

Career Education Corporation will host a conference call on Thursday, November 7, 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 35873930. 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 35873930.

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”, “continue”, “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)
 
September 30, December 31,

2013 (1)

2012 (1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents, unrestricted $ 30,924 $ 112,880
Restricted cash 12,564 97,878
Short-term investments   52,210     63,876  
Total cash and cash equivalents and short-term investments 95,698 274,634
 
Student receivables, net 41,694 54,935
Receivables, other, net 39,845 2,096
Prepaid expenses 112,836 38,296
Inventories 7,146 8,437
Deferred income tax assets, net - 7,095
Other current assets 5,885 4,393
Assets of discontinued operations   254,097     153,675  
Total current assets   557,201     543,561  
 
NON-CURRENT ASSETS:
Property and equipment, net 202,125 247,976
Goodwill 87,356 87,356
Intangible assets, net 40,387 56,006
Student receivables, net 5,552 6,832
Deferred income tax assets, net 47,932 47,703
Other assets, net 25,916 30,276
Assets of discontinued operations   18,714     102,993  
TOTAL ASSETS $ 985,183   $ 1,122,703  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ - $ 80,000
Accounts payable 33,723 32,094
Accrued expenses:
Payroll and related benefits 37,285 38,772
Advertising and production costs 25,733 20,963
Other 61,383 35,060
Deferred tuition revenue 69,051 69,806
Deferred income tax liabilities, net 32,752 -
Liabilities of discontinued operations   95,975     76,020  
Total current liabilities   355,902     352,715  
 
NON-CURRENT LIABILITIES:
Deferred rent obligations 85,805 94,072
Other liabilities 29,794 28,648
Liabilities of discontinued operations   22,555     35,478  
Total non-current liabilities   138,154     158,198  
 
STOCKHOLDERS' EQUITY:
Preferred stock - -
Common stock 819 816
Additional paid-in capital 602,735 596,826
Accumulated other comprehensive income (loss) 2,798 (4,785 )
Retained earnings 99,264 232,921
Cost of shares in treasury   (214,489 )   (213,988 )
Total stockholders' equity   491,127     611,790  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 985,183   $ 1,122,703  
                 
(1)  

During 2013, the Company completed the teach-out of SBI Landover and SBC Hazelwood and announced the pending sale of its International Schools. As a result, all current and prior periods results reflect these campuses 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 September 30, (1)
% of Total % of Total
2013 Revenue 2012 Revenue
REVENUE:
Tuition and registration fees $ 246,777 98.2 % $ 309,947 98.0 %
Other   4,536   1.8 %   6,208   2.0 %
Total revenue   251,313     316,155  
 
OPERATING EXPENSES:
Educational services and facilities 100,053 39.8 % 117,929 37.3 %
General and administrative 191,301 76.1 % 219,919 69.6 %
Depreciation and amortization 17,023 6.8 % 18,749 5.9 %
Goodwill and asset impairment   11,585   4.6 %   -   0.0 %
Total operating expenses   319,962   127.3 %   356,597   112.8 %
Operating loss   (68,649 ) -27.3 %   (40,442 ) -12.8 %
 
OTHER (EXPENSE) INCOME:
Interest income 194 0.1 % 319 0.1 %
Interest expense (209 ) -0.1 % (23 ) 0.0 %
Loss on sale of business (39 ) 0.0 % - 0.0 %
Miscellaneous (expense) income   (62 ) 0.0 %   74   0.0 %
Total other (expense) income   (116 ) 0.0 %   370   0.1 %
 
PRETAX LOSS (68,765 ) -27.4 % (40,072 ) -12.7 %
 
Benefit from income taxes   (25,333 ) -10.1 %   (13,925 ) -4.4 %
 
LOSS FROM CONTINUING OPERATIONS (43,432 ) -17.3 % (26,147 ) -8.3 %
 
Loss from discontinued operations, net of tax   (43,632 ) -17.4 %   (6,999 ) -2.2 %
 
NET LOSS   (87,064 ) -34.6 %   (33,146 ) -10.5 %
 
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Foreign currency translation adjustments 6,474 743
Unrealized gains (losses) on investments   36     (206 )
Total other comprehensive income   6,510     537  
 
COMPREHENSIVE LOSS $ (80,554 ) $ (32,609 )
 
NET LOSS PER SHARE - DILUTED:
Loss from continuing operations $ (0.65 ) $ (0.40 )
Loss from discontinued operations   (0.65 )   (0.10 )
Net loss per share $ (1.30 ) $ (0.50 )
 
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING   66,849     66,100  
                         
(1)  

During 2013, the Company completed the teach-out of SBI Landover and SBC Hazelwood and announced the pending sale of its International Schools. As a result, all current and prior periods results reflect these campuses 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 September 30, (1)
% of Total % of Total
2013 Revenue 2012 Revenue
REVENUE:
Tuition and registration fees $ 797,748 98.4 % $ 1,025,014 97.8 %
Other   13,160   1.6 %   22,752   2.2 %
Total revenue   810,908     1,047,766  
 
OPERATING EXPENSES:
Educational services and facilities 310,948 38.3 % 375,705 35.9 %
General and administrative 591,382 72.9 % 639,280 61.0 %
Depreciation and amortization 52,221 6.4 % 55,593 5.3 %
Goodwill and asset impairment   15,708   1.9 %   85,464   8.2 %
Total operating expenses   970,259   119.7 %   1,156,042   110.3 %
Operating loss   (159,351 ) -19.7 %   (108,276 ) -10.3 %
 
OTHER (EXPENSE) INCOME:
Interest income 1,199 0.1 % 953 0.1 %
Interest expense (1,127 ) -0.1 % (91 ) 0.0 %
Loss on sale of business (6,973 ) -0.9 % - 0.0 %
Miscellaneous (expense) income   (17 ) 0.0 %   7   0.0 %
Total other (expense) income   (6,918 ) -0.9 %   869   0.1 %
 
PRETAX LOSS (166,269 ) -20.5 % (107,407 ) -10.3 %
 
Benefit from income taxes   (70,145 ) -8.7 %   (27,959 ) -2.7 %
 
LOSS FROM CONTINUING OPERATIONS (96,124 ) -11.9 % (79,448 ) -7.6 %
 
Loss from discontinued operations, net of tax   (37,533 ) -4.6 %   (1,856 ) -0.2 %
 
NET LOSS   (133,657 ) -16.5 %   (81,304 ) -7.8 %
 
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Foreign currency translation adjustments 7,542 (3,553 )
Unrealized gains (losses) on investments   41     (326 )
Total other comprehensive income (loss)   7,583     (3,879 )
 
COMPREHENSIVE LOSS $ (126,074 ) $ (85,183 )
 
NET LOSS PER SHARE - DILUTED:
Loss from continuing operations $ (1.44 ) $ (1.20 )
Loss from discontinued operations   (0.56 )   (0.03 )
Net loss per share $ (2.00 ) $ (1.23 )
 
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING:   66,663     66,325  
                         
(1)  

During 2013, the Company completed the teach-out of SBI Landover and SBC Hazelwood and announced the pending sale of its International Schools. As a result, all current and prior periods results reflect these campuses as components of discontinued operations.
   
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

For the Year to Date Ended

September 30,
2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (133,657 ) $ (81,304 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Goodwill and asset impairment 15,708 85,661
Loss on sale of student receivables - 930
Depreciation and amortization expense 56,619 60,555
Bad debt expense 22,028 28,967
Compensation expense related to share-based awards 5,119 7,302
Loss on sale of business 6,973 -
Loss on disposition of property and equipment 103 293
Changes in operating assets and liabilities   (50,735 )   (69,910 )
Net cash (used in) provided by operating activities   (77,842 )   32,494  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investments (40,842 ) (117,188 )
Sales of available-for-sale investments 52,485 146,873
Purchases of property and equipment (16,602 ) (29,496 )
Proceeds on the sale of assets (2,525 ) -
Business acquisition, net of acquired cash - (3,094 )
Other   31     (1,533 )
Net cash used in investing activities   (7,453 )   (4,438 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock - (56,431 )
Issuance of common stock 792 1,262
Payments of assumed loans upon business acquisition - (318 )
Payments of contingent consideration - (5,818 )
Payment on borrowings (80,000 ) -
Change in restricted cash 85,314 -
Payments of capital lease obligations   (210 )   (741 )
Net cash provided by (used in) financing activities   5,896     (62,046 )
 
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS:   1,518     (3,774 )
 
NET DECREASE IN CASH AND CASH EQUIVALENTS (77,881 ) (37,764 )
DISCONTINUED OPERATIONS CASH ACTIVITY INCLUDED ABOVE:
Add: Cash balance of discontinued operations, beginning of the period 127,742 154,668
Less: Cash balance of discontinued operations, end of the period 131,817 109,683
CASH AND CASH EQUIVALENTS, beginning of the period   112,880     125,924  
CASH AND CASH EQUIVALENTS, end of the period $ 30,924   $ 133,145  
   
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
   
For the Quarter Ended September 30,
2013

2012 (1)
REVENUE:
CTU $ 82,424 $ 86,484
AIU   56,284     71,204  
Total University Schools   138,708     157,688  
Health Education 34,129 40,469
Culinary Arts (2) 44,256 54,415
Design & Technology   24,752     33,129  
Total Career Schools   103,137     128,013  
Corporate and Other   -     16  
Subtotal 241,845 285,717
Transitional Schools (2)   9,468     30,438  
Total $ 251,313   $ 316,155  
 
OPERATING (LOSS) INCOME:
CTU $ 9,208 $ 10,324
AIU   (5,930 )   1,084  
Total University Schools   3,278     11,408  
Health Education (14,783 ) (12,758 )
Culinary Arts (2) (3) (23,655 ) (10,136 )
Design & Technology   (10,036 )   (6,240 )
Total Career Schools   (48,474 )   (29,134 )
Corporate and Other   (7,561 )   (5,389 )
Subtotal (52,757 ) (23,115 )
Transitional Schools (2)   (15,892 )   (17,327 )
Total $ (68,649 ) $ (40,442 )
 
OPERATING (LOSS) MARGIN:
CTU 11.2 % 11.9 %
AIU -10.5 % 1.5 %
Total University Schools 2.4 % 7.2 %
Health Education -43.3 % -31.5 %
Culinary Arts -53.5 % -18.6 %
Design & Technology -40.5 % -18.8 %
Total Career Schools -47.0 % -22.8 %
Corporate and Other NM NM
Subtotal -21.8 % -8.1 %
Transitional Schools -167.8 % -56.9 %
Total -27.3 % -12.8 %
                     
(1)  

Prior period financial results have been recast to report the schools that are currently being taught out within the Transitional Schools segment. In addition, effective with the third quarter of 2013, the campuses previously reported within our International segment are classified as held for sale and accordingly are reported within discontinued operations.
 
(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 third quarter of 2013 includes a $10.7 million non-cash trade name impairment charge.
   
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION
(In thousands, except percentages)
 
For the Year to Date Ended September 30,
2013

2012 (1)
REVENUE:
CTU $ 259,520 $ 274,652
AIU   182,518     238,985  
Total University Schools   442,038     513,637  
Health Education 107,439 140,018
Culinary Arts (2) 134,771 175,148
Design & Technology   82,899     109,654  
Total Career Schools   325,109     424,820  
Corporate and Other   -     50  
Subtotal   767,147     938,507  
Transitional Schools (2)   43,761     109,259  
Total $ 810,908   $ 1,047,766  
 
OPERATING (LOSS) INCOME:
CTU $ 41,708 $ 41,584
AIU   (1,763 )   22,623  
Total University Schools   39,945     64,207  
Health Education (3) (53,200 ) (64,660 )
Culinary Arts (2) (4) (52,809 ) (11,991 )
Design & Technology (5)   (24,787 )   (50,912 )
Total Career Schools   (130,796 )   (127,563 )
Corporate and Other (6)   (24,979 )   1,746  
Subtotal (115,830 ) (61,610 )
Transitional Schools (2) (7)   (43,521 )   (46,666 )
Total $ (159,351 ) $ (108,276 )
 
OPERATING (LOSS) MARGIN:
CTU 16.1 % 15.1 %
AIU -1.0 % 9.5 %
Total University Schools 9.0 % 12.5 %
Health Education -49.5 % -46.2 %
Culinary Arts -39.2 % -6.8 %
Design & Technology -29.9 % -46.4 %
Total Career Schools -40.2 % -30.0 %
Corporate and Other NM NM
Subtotal -15.1 % -6.6 %
Transitional Schools -99.5 % -42.7 %
Total -19.7 % -10.3 %
                     
(1)  

Prior period financial results have been recast to report the schools that are currently being taught out within the Transitional Schools segment. In addition, effective with the third quarter of 2013, the campuses previously reported within our International segment are classified as held for sale and accordingly are reported within discontinued operations.
 
(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)

Year to date 2013 expenses include $10.3 million related to the settlement of a legal matter and a $1.7 million non-cash trade name impairment charge. 2012 expenses include a $41.9 million non-cash goodwill impairment charge.
 
(4) Year to date 2013 expenses include a $13.0 million non-cash trade name impairment charge.
 
(5) Year to date 2012 expenses include a $40.8 million non-cash goodwill impairment charge.
 
(6)

The operating income for the year to date ended September 30, 2012 included a $19.0 million insurance recovery related to the settlement of claims under certain insurance policies.
 
(7)

Year to date 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  
 
Corporate and Other   14     20     16     5     55  
Subtotal   344,014  

 
  308,776  

 
  285,717  

 
  277,652     1,216,159  
 
Transitional Schools (2)   42,788     36,033     30,438     26,332     135,591  
Total $ 386,802  

 
$ 344,809  

 
$ 316,155  

 
$ 303,984   $ 1,351,750  
 
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 )
 
Corporate and Other   12,585     (5,450 )   (5,389 )   (9,445 )   (7,699 )
Subtotal   46,253  

 
  (84,748 )

 
  (23,115 )

 
  (40,034 )   (101,644 )
 
Transitional Schools (2)   (11,161 )   (18,178 )   (17,327 )   (52,771 )   (99,437 )
Total $ 35,092  

 
$ (102,926 )

 
$ (40,442 )

 
$ (92,805 ) $ (201,081 )
                                             
(1)  

Prior period financial results have been recast to report the schools that are currently being taught out within the Transitional Schools segment. In addition, effective with the third quarter of 2013, the campuses previously reported within our International segment are classified as held for sale and accordingly are presented within discontinued operations.
 
(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
TOTAL ENROLLMENTS:
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
 
Subtotal 76,300 65,900 65,200 58,500
 
Transitional Schools (2) 10,600 8,300 7,300 6,000
Total 86,900 74,200 72,500 64,500
 
For the 2012 Quarters Ended (1)
March 31 June 30 September 30 December 31 Full Year
NEW ENROLLMENTS:
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
 
Subtotal 19,710 13,340 17,140 12,890 63,080
 
Transitional Schools (2) 2,520 1,090 1,720 840 6,170
Total 22,230 14,430 18,860 13,730 69,250
                         
(1)  

Prior period financial results have been recast to report the schools that are currently being taught out within the Transitional Schools segment. In addition, effective with the third quarter of 2013, the campuses previously reported within our International segment are classified as held for sale and accordingly are presented within discontinued operations.
 
(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.

 

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