[February 27, 2013] |
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Career Education Corporation Reports Results for Fourth Quarter and Full Year 2012
SCHAUMBURG, Ill. --(Business Wire)--
Career Education Corporation (NASDAQ: CECO) today reported total revenue
of $354.7 million, and a net loss of $61.5 million, or -$0.93 per
diluted share, for the fourth quarter of 2012 compared to total revenue
of $438.3 million and net loss of $120.4 million, or -$1.64 per diluted
share, for the fourth quarter of 2011. For the full year 2012, total
revenue of $1.49 billion, and net loss of $142.8 million, or -$2.15 per
diluted share decreased from total revenue of $1.87 billion and net
income of $18.6 million, or $0.25 per diluted share, for the full year
2011.
"While our financial results were unacceptable and unsustainable, 2012
was a year of renewal for Career Education," said Steven H. Lesnik,
chairman, president and chief executive officer. "We made significant
progress on the regulatory and accreditation fronts, reinforced our
leadership team, reorganized and reduced the footprint of our
institutions, adopted a long-term strategy and continued our investment
in cutting-edge education technology."
"Looking to 2013, we will sustain our sharp focus on student outcomes,
continue to re-engineer and right-size the organization and leverage our
investment in ground-breaking learning technology. The Company's return
to growth and profitability will be rooted in exceptional educational
experiences and strong outcomes for our students."
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. On a non-GAAP basis,
the loss per diluted share from continuing operations was -$0.35 for the
fourth quarter 2012 as compared to earnings per diluted share of $0.32
for the fourth quarter 2011. For the year ended December 31, 2012, on a
non-GAAP basis, the loss per diluted share from continuing operations
was -$0.44 as compared to earnings per diluted share of $2.14 for the
year ended December 31, 2011. (See tables below and the GAAP to non-GAAP
reconciliation attached to this press release for further details.)
CONSOLIDATED RESULTS
Quarter Ended December 31, 2012
-
Total revenue was $354.7 million for the fourth quarter of 2012, a
19.1 percent decrease from $438.3 million for the fourth quarter of
2011.
-
Operating losses of $77.2 million and $167.9 million were reported for
the fourth quarters of 2012 and 2011, respectively. The operating
margin was -21.8 percent for the fourth quarter of 2012 versus -38.3
percent for the fourth quarter of 2011.
-
The loss from continuing operations for the quarter ended December 31,
2012 was $58.7 million, or -$0.89 per diluted share compared to the
loss from continuing operations of $141.6 million, or -$1.93 per
diluted share, for the quarter ended December 31, 2011.
-
The operating results for the quarters ended December 31, 2012 and
2011 include the following significant items:
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(Loss) Earnings
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Significant Items
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per Diluted
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(In Millions)
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Share Impact
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Quarter Ended December 31, 2012
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Goodwill and Intangible Asset Impairments
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$
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12.1
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$
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0.12
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Asset Impairments
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29.3
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0.29
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Severance and Related Costs
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13.1
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0.13
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TOTAL
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$
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54.5
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$
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0.54
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Quarter Ended December 31, 2011
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Goodwill and Intangible Asset Impairments
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$
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188.8
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$
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2.25
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TOTAL
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$
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188.8
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$
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2.25
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During the fourth quarter of 2012, the Company recorded non-cash trade
name impairment charges of $12.1 million, primarily attributable to
Culinary Arts ($8.1) and Health Education ($3.5). In addition, the
Company recorded $29.3 million of non-cash asset impairments and $13.1
million of severance and related costs primarily in connection with
both our campus closure and reduction in force actions. During the
fourth quarter of 2011, the Company recorded $168.4 million of
non-cash goodwill impairment applicable to Culinary Arts ($73.7),
Health Education ($64.6), and Transitional Schools ($30.1), and a
$20.4 million non-cash trade name impairment within Culinary Arts.
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Excluding the significant items in the table above, the operating loss
was $22.7 million in the fourth quarter of 2012 compared to operating
income of $20.9 million in the fourth quarter of 2011. The operating
margin was -6.4 percent during the fourth quarter of 2012 as compared
to 4.8 percent during the fourth quarter of 2011.
Year to Date Ended December 31, 2012
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Total revenue was $1.49 billion for the year ended December 31, 2012,
compared to $1.87 billion for the year ended December 31, 2011.
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The operating loss for the year ended December 31, 2012 was $183.8
million, versus operating income of $40.7 million for the year ended
December 31, 2011. The operating margin decreased to -12.3 percent for
the year ended December 31, 2012, from 2.2 percent for the year ended
December 31, 2011.
-
The loss from continuing operations for the year ended December 31,
2012, was $134.9 million, or -$2.03 per diluted share, compared to the
loss from continuing operations of $3.3 million, or -$0.04 per diluted
share, for the year ended December 31, 2011.
-
The operating results for the years ended December 31, 2012 and 2011
include the following significant items:
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(Loss) Earnings
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Significant Items
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per Diluted
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(In Millions)
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Share Impact
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Year Ended December 31, 2012
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Goodwill and Intangible Asset Impairments
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$
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96.5
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$
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1.33
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Asset Impairments
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30.5
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0.30
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Severance and Related Costs
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14.9
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0.15
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Insurance Recoveries
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(19.0
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)
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(0.19
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TOTAL
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$
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122.9
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$
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1.59
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Year Ended December 31, 2011
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Goodwill and Intangible Asset Impairments
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$
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191.5
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$
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2.24
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Insurance Recoveries
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(7.0
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(0.06
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TOTAL
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$
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184.5
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$
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2.18
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During the year ended December 31, 2012, the Company recorded non-cash
goodwill impairment charges of $83.4 million, primarily related to
$41.9 million within Health Education and $40.8 million within Design
& Technology, as well as non-cash trade name impairments of $13.1
million, primarily within Culinary Arts ($8.1), Health Education
($3.5), and Transitional Schools ($1.0). In addition, the Company
recorded $30.5 million of non-cash asset impairments and $14.9 million
of severance and related costs primarily related to both our campus
closure and reduction in force actions. The operating results for the
year ended December 31, 2011 primarily included the $188.8 million of
non-cash goodwill and intangible asset impairment charges recorded in
the fourth quarter of 2011 as well as $2.5 million of non-cash
accreditation rights impairment.
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During the year ended December 31, 2012, the Company recorded a $19.0
million insurance recovery related to the settlement of claims under
certain insurance policies. During the year ended December 31, 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 $60.9 million for the year ended December 31, 2012 and the
operating income was $225.2 million for the year ended December 31,
2011. Operating margin was -4.1 percent and 12.0 percent for the years
ended December 31, 2012 and 2011, respectively.
CONSOLIDATED CASH FLOWS AND FINANCIAL POSITION
Cash Flows
Net cash flows used in operating activities totaled $16.8 million for
the year ended December 31, 2012, compared to net cash flows provided by
operating activities of $230.5 million for the year ended December 31,
2011.
Capital expenditures decreased to $37.9 million during the year ended
December 31, 2012, from $78.3 million for the year ended December 31,
2011. Capital expenditures represented 2.5 percent and 4.1 percent of
total revenue of continuing and discontinued operations during the years
ended December 31, 2012 and 2011, respectively.
Financial Position
As of December 31, 2012 and December 31, 2011, cash and cash equivalents
and short-term investments totaled $402.3 million and $441.2 million,
respectively. Included in the 2012 amount is $97.9 million of restricted
cash, the majority of which is for amounts collateralized under our
Credit Agreement as of December 31, 2012.
Credit Agreements
During the fourth quarter of 2012, the Company entered into a revolving
credit facility pursuant to a Credit Agreement with BMO Harris Bank N.A.
The revolving credit facility under the Credit Agreement is scheduled to
mature on January 31, 2014. This Credit Agreement replaced our previous
U.S. Credit Agreement, which expired on October 31, 2012. As of December
31, 2012, we have borrowed the maximum amount of $80.0 million under the
Credit Agreement.
Stock Repurchase Program
During the fourth quarter of 2012, the Company did not repurchase any
shares of its common stock. During the year ended December 31, 2012, the
Company repurchased approximately 6.1 million shares of its common stock
for approximately $56.4 million at an average price of $9.29 per share.
As of December 31, 2012, approximately $183.3 million was available
under the Company's authorized stock repurchase program to repurchase
outstanding shares of our common stock. Stock repurchases under this
program may be made on the open market or in privately negotiated
transactions from time to time, depending on various factors, including
market conditions and corporate and regulatory requirements.
STUDENT POPULATION AND NEW STUDENT STARTS
Student Population
Total student population by reportable segment as of December 31, 2012
and 2011, was as follows:
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As of December 31,
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% Change
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2012
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2011
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2012 vs. 2011
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Student Population
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CTU
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21,600
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23,900
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-10%
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AIU
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14,200
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17,100
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-17%
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Total University Schools
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35,800
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41,000
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-13%
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Health Education
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8,800
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14,000
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-37%
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Culinary Arts
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8,500
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12,200
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-30%
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Design & Technology
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5,400
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8,000
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-33%
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Total Career Schools
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22,700
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34,200
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-34%
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International
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11,400
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11,100
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3%
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Subtotal
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69,900
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86,300
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-19%
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Transitional Schools
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6,100
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12,500
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-51%
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Total Student Population
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76,000
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98,800
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-23%
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New Student Starts
New student starts by reportable segment for the quarters ended December
31, 2012 and 2011, were as follows:
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For the Quarters Ended
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December 31,
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% Change
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2012
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2011
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2012 vs. 2011
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New Student Starts
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CTU
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5,040
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6,620
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-24%
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AIU
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3,370
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4,620
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-27%
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Total University Schools
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8,410
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11,240
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-25%
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Health Education
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1,180
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2,290
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-48%
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Culinary Arts (1)
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2,810
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1,320
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113%
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Design & Technology
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490
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710
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-31%
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Total Career Schools
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4,480
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4,320
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4%
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International
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1,940
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2,150
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-10%
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Subtotal
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14,830
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17,710
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-16%
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Transitional Schools
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840
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2,440
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-66%
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Total New Student Starts
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15,670
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20,150
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-22%
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(1)
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The fourth quarter 2012 had one additional new student start as
compared to the previous year quarter.
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Excluding this timing impact, the change in new student starts for
Culinary Arts would have been -16%.
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CONFERENCE CALL INFORMATION
Career Education Corporation will host a conference call on Thursday,
February 28, 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 34130002. 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 34130002.
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 75,000 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: 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, 2011
and its subsequent filings with the Securities and Exchange Commission.
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CAREER EDUCATION CORPORATION AND SUBSIDIARIES
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UNAUDITED CONSOLIDATED BALANCE SHEETS
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(In thousands)
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As of December 31, (1)
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2012
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2011
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ASSETS
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CURRENT ASSETS:
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Cash and cash equivalents, unrestricted
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$
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240,560
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$
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280,592
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Restricted cash
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|
97,878
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-
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Short-term investments
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63,876
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|
160,607
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Total cash and cash equivalents and short-term investments
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|
402,314
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|
441,199
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Student receivables, net
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68,940
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|
|
|
59,960
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Receivables, other, net
|
|
|
3,845
|
|
|
|
2,896
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|
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Prepaid expenses
|
|
|
44,440
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|
|
|
62,176
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|
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Inventories
|
|
|
8,575
|
|
|
|
11,334
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|
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Deferred income tax assets, net
|
|
|
7,092
|
|
|
|
10,837
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|
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Other current assets
|
|
|
4,422
|
|
|
|
17,871
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|
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Assets of discontinued operations
|
|
|
3,933
|
|
|
|
4,205
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|
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Total current assets
|
|
|
543,561
|
|
|
|
610,478
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NON-CURRENT ASSETS:
|
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|
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|
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Property and equipment, net
|
|
|
277,571
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|
|
|
349,719
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|
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Goodwill
|
|
|
133,025
|
|
|
|
212,626
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|
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Intangible assets, net
|
|
|
61,681
|
|
|
|
76,286
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|
|
Student receivables, net
|
|
|
6,832
|
|
|
|
9,311
|
|
|
Deferred income tax assets, net
|
|
|
48,070
|
|
|
|
2,673
|
|
|
Other assets, net
|
|
|
33,333
|
|
|
|
30,122
|
|
|
Assets of discontinued operations
|
|
|
18,630
|
|
|
|
24,905
|
|
TOTAL ASSETS
|
|
$
|
1,122,703
|
|
|
$
|
1,316,120
|
|
|
|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
Short-term borrowings and current maturities of capital lease
obligations
|
|
$
|
80,211
|
|
|
$
|
844
|
|
|
Accounts payable
|
|
|
38,440
|
|
|
|
48,362
|
|
|
Accrued expenses:
|
|
|
|
|
|
Payroll and related benefits
|
|
|
46,586
|
|
|
|
41,853
|
|
|
Advertising and production costs
|
|
|
20,963
|
|
|
|
17,717
|
|
|
Other
|
|
|
44,651
|
|
|
|
67,077
|
|
|
Deferred tuition revenue
|
|
|
112,038
|
|
|
|
144,696
|
|
|
Liabilities of discontinued operations
|
|
|
9,826
|
|
|
|
8,894
|
|
|
Total current liabilities
|
|
|
352,715
|
|
|
|
329,443
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES:
|
|
|
|
|
|
Capital lease obligations, net of current maturities
|
|
|
-
|
|
|
|
207
|
|
|
Deferred rent obligations
|
|
|
95,164
|
|
|
|
102,034
|
|
|
Other liabilities
|
|
|
29,931
|
|
|
|
40,365
|
|
|
Liabilities of discontinued operations
|
|
|
33,103
|
|
|
|
37,980
|
|
|
Total non-current liabilities
|
|
|
158,198
|
|
|
|
180,586
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
Common stock
|
|
|
816
|
|
|
|
820
|
|
|
Additional paid-in capital
|
|
|
596,826
|
|
|
|
590,965
|
|
|
Accumulated other comprehensive loss
|
|
|
(4,785
|
)
|
|
|
(5,136
|
)
|
|
Retained earnings
|
|
|
232,921
|
|
|
|
375,717
|
|
|
Cost of shares in treasury
|
|
|
(213,988
|
)
|
|
|
(156,275
|
)
|
|
Total stockholders' equity
|
|
|
611,790
|
|
|
|
806,091
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
1,122,703
|
|
|
$
|
1,316,120
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
In November 2012, the Company completed the teach out activities for
LCB Pittsburgh, PA. As a result, all current and
|
|
|
prior period results include LCB Pittsburgh 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 Quarter Ended December 31, (1)
|
|
|
|
|
|
|
% of
|
|
|
% of
|
|
|
|
|
|
|
Total
|
|
|
Total
|
|
|
|
|
2012
|
|
Revenue
|
|
2011
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
Tuition and registration fees
|
|
$
|
349,243
|
|
|
98.5
|
%
|
|
$
|
429,392
|
|
|
98.0
|
%
|
|
Other
|
|
|
5,448
|
|
|
1.5
|
%
|
|
|
8,866
|
|
|
2.0
|
%
|
|
|
Total revenue
|
|
|
354,691
|
|
|
|
|
|
438,258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
Educational services and facilities
|
|
|
141,654
|
|
|
39.9
|
%
|
|
|
155,018
|
|
|
35.4
|
%
|
|
General and administrative
|
|
|
227,836
|
|
|
64.2
|
%
|
|
|
240,831
|
|
|
55.0
|
%
|
|
Depreciation and amortization
|
|
|
21,071
|
|
|
5.9
|
%
|
|
|
21,449
|
|
|
4.9
|
%
|
|
Goodwill and asset impairment
|
|
|
41,346
|
|
|
11.7
|
%
|
|
|
188,848
|
|
|
43.1
|
%
|
|
|
Total operating expenses
|
|
|
431,907
|
|
|
121.8
|
%
|
|
|
606,146
|
|
|
138.3
|
%
|
Operating loss
|
|
|
(77,216
|
)
|
|
-21.8
|
%
|
|
|
(167,888
|
)
|
|
-38.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
400
|
|
|
0.1
|
%
|
|
|
627
|
|
|
0.1
|
%
|
|
Interest expense
|
|
|
(184
|
)
|
|
-0.1
|
%
|
|
|
(443
|
)
|
|
-0.1
|
%
|
|
Miscellaneous income
|
|
|
483
|
|
|
0.1
|
%
|
|
|
3
|
|
|
0.0
|
%
|
|
|
Total other income
|
|
|
699
|
|
|
0.2
|
%
|
|
|
187
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
PRETAX LOSS
|
|
|
(76,517
|
)
|
|
-21.6
|
%
|
|
|
(167,701
|
)
|
|
-38.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Benefit from income taxes
|
|
|
(17,771
|
)
|
|
-5.0
|
%
|
|
|
(26,063
|
)
|
|
-5.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM CONTINUING OPERATIONS
|
|
|
(58,746
|
)
|
|
-16.6
|
%
|
|
|
(141,638
|
)
|
|
-32.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from discontinued operations, net of tax
|
|
|
(2,746
|
)
|
|
-0.8
|
%
|
|
|
21,189
|
|
|
4.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
|
(61,492
|
)
|
|
-17.3
|
%
|
|
|
(120,449
|
)
|
|
-27.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
4,056
|
|
|
|
|
|
(4,746
|
)
|
|
|
|
Unrealized gains (losses) on investments
|
|
|
174
|
|
|
|
|
|
(80
|
)
|
|
|
|
|
Total other comprehensive income (loss)
|
|
|
4,230
|
|
|
|
|
|
(4,826
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE LOSS
|
|
$
|
(57,262
|
)
|
|
|
|
$
|
(125,275
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER SHARE - DILUTED:
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(0.89
|
)
|
|
|
|
$
|
(1.93
|
)
|
|
|
|
(Loss) income from discontinued operations
|
|
|
(0.04
|
)
|
|
|
|
|
0.29
|
|
|
|
|
Net loss per share
|
|
$
|
(0.93
|
)
|
|
|
|
$
|
(1.64
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING
|
|
|
66,199
|
|
|
|
|
|
73,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
In November 2012, the Company completed the teach out activities for
LCB Pittsburgh, PA. As a result, all current and
|
|
|
prior period results include LCB Pittsburgh 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 Year Ended December 31, (1)
|
|
|
|
|
|
|
% of
|
|
|
% of
|
|
|
|
|
|
|
Total
|
|
|
Total
|
|
|
|
|
2012
|
|
Revenue
|
|
2011
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
Tuition and registration fees
|
|
$
|
1,460,959
|
|
|
98.1
|
%
|
|
$
|
1,816,746
|
|
|
97.0
|
%
|
|
Other
|
|
|
28,310
|
|
|
1.9
|
%
|
|
|
56,623
|
|
|
3.0
|
%
|
|
|
Total revenue
|
|
|
1,489,269
|
|
|
|
|
|
1,873,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
Educational services and facilities
|
|
|
571,169
|
|
|
38.4
|
%
|
|
|
626,158
|
|
|
33.4
|
%
|
|
General and administrative
|
|
|
894,185
|
|
|
60.0
|
%
|
|
|
932,643
|
|
|
49.8
|
%
|
|
Depreciation and amortization
|
|
|
80,658
|
|
|
5.4
|
%
|
|
|
82,350
|
|
|
4.4
|
%
|
|
Goodwill and asset impairment
|
|
|
127,007
|
|
|
8.5
|
%
|
|
|
191,524
|
|
|
10.2
|
%
|
|
|
Total operating expenses
|
|
|
1,673,019
|
|
|
112.3
|
%
|
|
|
1,832,675
|
|
|
97.8
|
%
|
Operating (loss) income
|
|
|
(183,750
|
)
|
|
-12.3
|
%
|
|
|
40,694
|
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
1,826
|
|
|
0.1
|
%
|
|
|
1,376
|
|
|
0.1
|
%
|
|
Interest expense
|
|
|
(271
|
)
|
|
0.0
|
%
|
|
|
(563
|
)
|
|
0.0
|
%
|
|
Miscellaneous income
|
|
|
483
|
|
|
0.0
|
%
|
|
|
1,972
|
|
|
0.1
|
%
|
|
|
Total other income
|
|
|
2,038
|
|
|
0.1
|
%
|
|
|
2,785
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
PRETAX (LOSS) INCOME
|
|
|
(181,712
|
)
|
|
-12.2
|
%
|
|
|
43,479
|
|
|
2.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(Benefit from) provision for income taxes
|
|
|
(46,806
|
)
|
|
-3.1
|
%
|
|
|
46,740
|
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM CONTINUING OPERATIONS
|
|
|
(134,906
|
)
|
|
-9.1
|
%
|
|
|
(3,261
|
)
|
|
-0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from discontinued operations, net of tax
|
|
|
(7,890
|
)
|
|
-0.5
|
%
|
|
|
21,834
|
|
|
1.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME
|
|
|
(142,796
|
)
|
|
-9.6
|
%
|
|
|
18,573
|
|
|
1.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
503
|
|
|
|
|
|
(5,015
|
)
|
|
|
|
Unrealized losses on investments
|
|
|
(152
|
)
|
|
|
|
|
(40
|
)
|
|
|
|
|
Total other comprehensive income (loss)
|
|
|
351
|
|
|
|
|
|
(5,055
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE (LOSS) INCOME
|
|
$
|
(142,445
|
)
|
|
|
|
$
|
13,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME PER SHARE - DILUTED:
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(2.03
|
)
|
|
|
|
$
|
(0.04
|
)
|
|
|
|
(Loss) income from discontinued operations
|
|
|
(0.12
|
)
|
|
|
|
|
0.29
|
|
|
|
|
Net (loss) income per share
|
|
$
|
(2.15
|
)
|
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING
|
|
|
66,475
|
|
|
|
|
|
74,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
In November 2012, the Company completed the teach out activities for
LCB Pittsburgh, PA. As a result, all current and
|
|
|
prior period results include LCB Pittsburgh as a component of
discontinued operations.
|
|
|
|
|
|
|
|
|
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
|
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATING INCOME (LOSS) BY
QUARTER
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the 2012 Quarters Ended, (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
Full Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
|
|
Tuition and registration fees
|
|
$
|
422,935
|
|
$
|
362,480
|
|
|
$
|
326,301
|
|
|
$
|
349,243
|
|
|
$
|
1,460,959
|
|
|
Other
|
|
|
10,495
|
|
|
6,080
|
|
|
|
6,287
|
|
|
|
5,448
|
|
|
|
28,310
|
|
|
|
Total revenue
|
|
|
433,430
|
|
|
368,560
|
|
|
|
332,588
|
|
|
|
354,691
|
|
|
|
1,489,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Educational services and facilities
|
|
|
151,625
|
|
|
144,837
|
|
|
|
133,053
|
|
|
|
141,654
|
|
|
|
571,169
|
|
|
General and administrative
|
|
|
214,017
|
|
|
225,265
|
|
|
|
227,067
|
|
|
|
227,836
|
|
|
|
894,185
|
|
|
Depreciation and amortization
|
|
|
19,798
|
|
|
19,659
|
|
|
|
20,130
|
|
|
|
21,071
|
|
|
|
80,658
|
|
|
Goodwill and asset impairment
|
|
|
83
|
|
|
85,578
|
|
|
|
-
|
|
|
|
41,346
|
|
|
|
127,007
|
|
|
|
Total operating expenses
|
|
|
385,523
|
|
|
475,339
|
|
|
|
380,250
|
|
|
|
431,907
|
|
|
|
1,673,019
|
|
OPERATING INCOME (LOSS)
|
|
$
|
47,907
|
|
$
|
(106,779
|
)
|
|
$
|
(47,662
|
)
|
|
$
|
(77,216
|
)
|
|
$
|
(183,750
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the 2011 Quarters Ended, (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
Full Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
|
|
Tuition and registration fees
|
|
$
|
505,656
|
|
$
|
466,588
|
|
|
$
|
415,110
|
|
|
$
|
429,392
|
|
|
$
|
1,816,746
|
|
|
Other
|
|
|
21,903
|
|
|
14,967
|
|
|
|
10,887
|
|
|
|
8,866
|
|
|
|
56,623
|
|
|
|
Total revenue
|
|
|
527,559
|
|
|
481,555
|
|
|
|
425,997
|
|
|
|
438,258
|
|
|
|
1,873,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Educational services and facilities
|
|
|
163,594
|
|
|
156,376
|
|
|
|
151,170
|
|
|
|
155,018
|
|
|
|
626,158
|
|
|
General and administrative
|
|
|
235,348
|
|
|
223,340
|
|
|
|
233,124
|
|
|
|
240,831
|
|
|
|
932,643
|
|
|
Depreciation and amortization
|
|
|
19,576
|
|
|
19,721
|
|
|
|
21,604
|
|
|
|
21,449
|
|
|
|
82,350
|
|
|
Goodwill and asset impairment
|
|
|
-
|
|
|
2,676
|
|
|
|
-
|
|
|
|
188,848
|
|
|
|
191,524
|
|
|
|
Total operating expenses
|
|
|
418,518
|
|
|
402,113
|
|
|
|
405,898
|
|
|
|
606,146
|
|
|
|
1,832,675
|
|
OPERATING INCOME (LOSS)
|
|
$
|
109,041
|
|
$
|
79,442
|
|
|
$
|
20,099
|
|
|
$
|
(167,888
|
)
|
|
$
|
40,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
In November 2012, the Company completed the teach out activities for
LCB Pittsburgh, PA. As a result, all current and prior period
results include
|
|
|
LCB Pittsburgh as a component of discontinued operations.
|
|
|
|
|
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
|
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In thousands)
|
|
|
|
|
|
|
|
For the Year
|
|
|
|
Ended December 31,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
Net (loss) income
|
|
$
|
(142,796
|
)
|
|
$
|
18,573
|
|
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:
|
|
|
|
|
Goodwill and asset impairment
|
|
|
127,007
|
|
|
|
191,524
|
|
Loss on sale of student receivables
|
|
|
720
|
|
|
|
-
|
|
Depreciation and amortization expense
|
|
|
81,813
|
|
|
|
85,367
|
|
Bad debt expense
|
|
|
40,022
|
|
|
|
55,721
|
|
Compensation expense related to share-based awards
|
|
|
9,687
|
|
|
|
14,831
|
|
Gain on sale of business
|
|
|
-
|
|
|
|
(27,085
|
)
|
Gain on bargain purchase
|
|
|
(669
|
)
|
|
|
-
|
|
Loss (gain) on disposition of property and equipment
|
|
|
301
|
|
|
|
(1,711
|
)
|
Deferred income taxes
|
|
|
(42,014
|
)
|
|
|
14,226
|
|
Changes in operating assets and liabilities
|
|
|
|
|
Accrued expenses and deferred rent obligations
|
|
|
(19,473
|
)
|
|
|
(74,075
|
)
|
Deferred tuition revenue
|
|
|
(35,882
|
)
|
|
|
2,595
|
|
Student receivables, net of allowance for doubtful accounts
|
|
|
(39,995
|
)
|
|
|
(51,749
|
)
|
Other operating assets and liabilities
|
|
|
4,481
|
|
|
|
2,233
|
|
Net cash (used in) provided by operating activities
|
|
|
(16,798
|
)
|
|
|
230,450
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
Purchases of available-for-sale investments
|
|
|
(147,085
|
)
|
|
|
(189,258
|
)
|
Sales of available-for-sale investments
|
|
|
246,464
|
|
|
|
188,322
|
|
Purchases of property and equipment
|
|
|
(37,944
|
)
|
|
|
(78,333
|
)
|
Proceeds on the sale of assets
|
|
|
-
|
|
|
|
6,259
|
|
Proceeds on the sale of business, net of cash divested
|
|
|
-
|
|
|
|
16,670
|
|
Business acquisitions, net of acquired cash
|
|
|
(1,721
|
)
|
|
|
(9,851
|
)
|
Other
|
|
|
(1,359
|
)
|
|
|
(40
|
)
|
Net cash provided by (used in) investing activities
|
|
|
58,355
|
|
|
|
(66,231
|
)
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
Purchase of treasury stock
|
|
|
(56,431
|
)
|
|
|
(150,445
|
)
|
Issuance of common stock
|
|
|
1,599
|
|
|
|
4,370
|
|
Tax benefit associated with stock option exercises
|
|
|
-
|
|
|
|
376
|
|
Payments of assumed loans upon business acquisition
|
|
|
(318
|
)
|
|
|
-
|
|
Payments of contingent consideration
|
|
|
(5,818
|
)
|
|
|
(16,355
|
)
|
Borrowings from credit facility
|
|
|
80,000
|
|
|
|
-
|
|
Restricted cash
|
|
|
(97,878
|
)
|
|
|
-
|
|
Payments of capital lease obligations
|
|
|
(844
|
)
|
|
|
(989
|
)
|
Net cash used in financing activities
|
|
|
(79,690
|
)
|
|
|
(163,043
|
)
|
|
|
|
|
|
|
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
|
|
|
|
|
CHANGES ON CASH AND CASH EQUIVALENTS:
|
|
|
(1,837
|
)
|
|
|
(10,066
|
)
|
|
|
|
|
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(39,970
|
)
|
|
|
(8,890
|
)
|
DISCONTINUED OPERATIONS CASH ACTIVITY INCLUDED ABOVE:
|
|
|
|
|
Add: Cash balance of discontinued operations, beginning of the year
|
|
|
-
|
|
|
|
28,844
|
|
Less: Cash balance of discontinued operations, end of the year
|
|
|
62
|
|
|
|
-
|
|
CASH AND CASH EQUIVALENTS, beginning of the year
|
|
|
280,592
|
|
|
|
260,638
|
|
CASH AND CASH EQUIVALENTS, end of the year
|
|
$
|
240,560
|
|
|
$
|
280,592
|
|
|
|
|
|
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
|
UNAUDITED SELECTED SEGMENT INFORMATION
|
(In thousands, except percentages)
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended December 31,
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
REVENUE:
|
|
|
|
|
|
CTU (1)
|
|
$
|
89,283
|
|
|
$
|
97,161
|
|
|
AIU
|
|
|
|
65,223
|
|
|
|
77,111
|
|
|
|
Total University Schools
|
|
|
154,506
|
|
|
|
174,272
|
|
|
|
|
|
|
|
|
|
Health Education (1)
|
|
|
41,559
|
|
|
|
60,326
|
|
|
Culinary Arts (2)
|
|
|
49,694
|
|
|
|
64,296
|
|
|
Design & Technology (1)
|
|
|
31,888
|
|
|
|
41,285
|
|
|
|
Total Career Schools
|
|
|
123,141
|
|
|
|
165,907
|
|
|
|
|
|
|
|
|
|
International
|
|
|
49,934
|
|
|
|
47,257
|
|
|
Corporate and Other
|
|
|
5
|
|
|
|
(54
|
)
|
|
|
Subtotal
|
|
|
327,586
|
|
|
|
387,382
|
|
|
|
|
|
|
|
|
|
Transitional Schools (1)
|
|
|
27,105
|
|
|
|
50,876
|
|
|
|
Total
|
|
$
|
354,691
|
|
|
$
|
438,258
|
|
|
|
|
|
|
|
|
OPERATING (LOSS) INCOME:
|
|
|
|
|
|
CTU (1)
|
|
$
|
13,344
|
|
|
$
|
25,494
|
|
|
AIU
|
|
|
|
(1,727
|
)
|
|
|
6,354
|
|
|
|
Total University Schools
|
|
|
11,617
|
|
|
|
31,848
|
|
|
|
|
|
|
|
|
|
Health Education (1) (3)
|
|
|
(13,628
|
)
|
|
|
(63,382
|
)
|
|
Culinary Arts (2) (4)
|
|
|
(21,863
|
)
|
|
|
(94,708
|
)
|
|
Design & Technology (1)
|
|
|
(6,715
|
)
|
|
|
(3,857
|
)
|
|
|
Total Career Schools
|
|
|
(42,206
|
)
|
|
|
(161,947
|
)
|
|
|
|
|
|
|
|
|
International
|
|
|
16,856
|
|
|
|
16,017
|
|
|
Corporate and Other
|
|
|
(9,425
|
)
|
|
|
(13,452
|
)
|
|
|
Subtotal
|
|
|
(23,158
|
)
|
|
|
(127,534
|
)
|
|
|
|
|
|
|
|
|
Transitional Schools (1) (5)
|
|
|
(54,058
|
)
|
|
|
(40,354
|
)
|
|
|
Total
|
|
$
|
(77,216
|
)
|
|
$
|
(167,888
|
)
|
|
|
|
|
|
|
|
OPERATING (LOSS) MARGIN:
|
|
|
|
|
|
CTU
|
|
|
14.9
|
%
|
|
|
26.2
|
%
|
|
AIU
|
|
|
|
-2.6
|
%
|
|
|
8.2
|
%
|
|
|
Total University Schools
|
|
|
7.5
|
%
|
|
|
18.3
|
%
|
|
|
|
|
|
|
|
|
Health Education
|
|
|
-32.8
|
%
|
|
|
-105.1
|
%
|
|
Culinary Arts
|
|
|
-44.0
|
%
|
|
|
-147.3
|
%
|
|
Design & Technology
|
|
|
-21.1
|
%
|
|
|
-9.3
|
%
|
|
|
Total Career Schools
|
|
|
-34.3
|
%
|
|
|
-97.6
|
%
|
|
|
|
|
|
|
|
|
International
|
|
|
33.8
|
%
|
|
|
33.9
|
%
|
|
Corporate and Other
|
|
|
NM
|
|
|
|
NM
|
|
|
|
Subtotal
|
|
|
-7.1
|
%
|
|
|
-32.9
|
%
|
|
|
|
|
|
|
|
|
Transitional Schools
|
|
|
-199.4
|
%
|
|
|
-79.3
|
%
|
|
|
Total
|
|
|
-21.8
|
%
|
|
|
-38.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Prior period financial results have been recast to report the
schools that are currently being taught out within the Transitional
|
|
|
Schools segment.
|
|
|
|
(2)
|
|
In November 2012, the Company completed the teach out activities for
LCB Pittsburgh, PA. As a result, all current and prior
|
|
|
period results include LCB Pittsburgh as a component of discontinued
operations.
|
|
|
|
(3)
|
|
Fourth quarter 2012 includes a $3.5 million non-cash trade name
impairment charge related to the Sanford-Brown and Missouri
|
|
|
College trade names; fourth quarter 2011 includes a $64.6 million
non-cash goodwill impairment charge.
|
|
|
|
(4)
|
|
Fourth quarters 2012 and 2011 include non-cash trade name impairment
charges of $8.1 million and $20.4 million, respectively.
|
|
|
In addition, fourth quarter 2011 includes a $73.7 million non-cash
goodwill impairment charge.
|
|
|
|
(5)
|
|
Fourth quarter 2012 includes a $28.3 million non-cash asset
impairment charge; fourth quarter 2011 includes a $30.1 million
|
|
|
non-cash goodwill impairment charge.
|
|
|
|
|
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
|
UNAUDITED SELECTED SEGMENT INFORMATION
|
(In thousands, except percentages)
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
REVENUE:
|
|
|
|
|
|
CTU (1)
|
|
$
|
363,935
|
|
|
$
|
415,411
|
|
|
AIU
|
|
|
|
304,208
|
|
|
|
365,203
|
|
|
|
Total University Schools
|
|
|
668,143
|
|
|
|
780,614
|
|
|
|
|
|
|
|
|
|
Health Education (1)
|
|
|
181,577
|
|
|
|
252,330
|
|
|
Culinary Arts (2)
|
|
|
224,842
|
|
|
|
303,135
|
|
|
Design & Technology (1)
|
|
|
141,542
|
|
|
|
186,879
|
|
|
|
Total Career Schools
|
|
|
547,961
|
|
|
|
742,344
|
|
|
|
|
|
|
|
|
|
International
|
|
|
128,568
|
|
|
|
125,887
|
|
|
Corporate and Other
|
|
|
55
|
|
|
|
(399
|
)
|
|
|
Subtotal
|
|
|
1,344,727
|
|
|
|
1,648,446
|
|
|
|
|
|
|
|
|
|
Transitional Schools (1)
|
|
|
144,542
|
|
|
|
224,923
|
|
|
|
Total
|
|
$
|
1,489,269
|
|
|
$
|
1,873,369
|
|
|
|
|
|
|
|
|
OPERATING (LOSS) INCOME:
|
|
|
|
|
|
CTU (1)
|
|
$
|
54,928
|
|
|
$
|
111,119
|
|
|
AIU
|
|
|
|
20,896
|
|
|
|
72,738
|
|
|
|
Total University Schools
|
|
|
75,824
|
|
|
|
183,857
|
|
|
|
|
|
|
|
|
|
Health Education (1) (3)
|
|
|
(78,288
|
)
|
|
|
(47,562
|
)
|
|
Culinary Arts (2) (4)
|
|
|
(33,854
|
)
|
|
|
(63,452
|
)
|
|
Design & Technology (1) (5)
|
|
|
(57,627
|
)
|
|
|
14,223
|
|
|
|
Total Career Schools
|
|
|
(169,769
|
)
|
|
|
(96,791
|
)
|
|
|
|
|
|
|
|
|
International
|
|
|
21,131
|
|
|
|
24,746
|
|
|
Corporate and Other (6)
|
|
|
(7,618
|
)
|
|
|
(30,132
|
)
|
|
|
Subtotal
|
|
|
(80,432
|
)
|
|
|
81,680
|
|
|
|
|
|
|
|
|
|
Transitional Schools (1) (7)
|
|
|
(103,318
|
)
|
|
|
(40,986
|
)
|
|
|
Total
|
|
$
|
(183,750
|
)
|
|
$
|
40,694
|
|
|
|
|
|
|
|
|
OPERATING (LOSS) MARGIN:
|
|
|
|
|
|
CTU
|
|
|
15.1
|
%
|
|
|
26.7
|
%
|
|
AIU
|
|
|
|
6.9
|
%
|
|
|
19.9
|
%
|
|
|
Total University Schools
|
|
|
11.3
|
%
|
|
|
23.6
|
%
|
|
|
|
|
|
|
|
|
Health Education
|
|
|
-43.1
|
%
|
|
|
-18.8
|
%
|
|
Culinary Arts
|
|
|
-15.1
|
%
|
|
|
-20.9
|
%
|
|
Design & Technology
|
|
|
-40.7
|
%
|
|
|
7.6
|
%
|
|
|
Total Career Schools
|
|
|
-31.0
|
%
|
|
|
-13.0
|
%
|
|
|
|
|
|
|
|
|
International
|
|
|
16.4
|
%
|
|
|
19.7
|
%
|
|
Corporate and Other
|
|
|
NM
|
|
|
|
NM
|
|
|
|
Subtotal
|
|
|
-6.0
|
%
|
|
|
5.0
|
%
|
|
|
|
|
|
|
|
|
Transitional Schools
|
|
|
-71.5
|
%
|
|
|
-18.2
|
%
|
|
|
Total
|
|
|
-12.3
|
%
|
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Prior period financial results have been recast to report the
schools that are currently being taught out within the Transitional
|
|
|
Schools segment.
|
|
|
|
(2)
|
|
In November 2012, the Company completed the teach out activities for
LCB Pittsburgh, PA. As a result, all current and prior
|
|
|
period results include LCB Pittsburgh as a component of discontinued
operations.
|
|
|
|
(3)
|
|
2012 expenses include non-cash goodwill and trade name impairment
charges of $41.9 million and $3.5 million, respectively.
|
|
|
2011 includes non-cash goodwill impairment of $64.6 million and $3.7
million of non-cash impairment and amortization charges
|
|
|
related to accreditation rights.
|
|
|
|
(4)
|
|
2012 expenses include a non-cash trade name impairment of $8.1
million. 2011 expenses include $73.7 million and $20.4 million
|
|
|
of non-cash goodwill and trade name impairments, respectively.
|
|
|
|
(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. In 2011, a $7.0 million insurance recovery, related to
previously settled legal matters, was recorded.
|
|
|
|
(7)
|
|
2012 expenses include $29.3 million of non-cash asset impairment
charges, $1.0 million impairment related to the
|
|
|
Sanford-Brown trade name, and a $0.7 million non-cash goodwill
impairment charge. 2011 includes non-cash goodwill
|
|
|
impairment of $30.1 million and $1.4 million of non-cash impairment
and amortization charges related to accreditation rights.
|
|
|
|
|
|
|
|
|
|
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
|
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1)
|
(In millions, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended December 31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
Loss per Diluted
|
|
Operating (Loss)
|
|
(Loss) Earnings per
|
|
|
|
|
|
|
|
Operating Loss
|
|
Share (2)
|
|
Income
|
|
Diluted Share (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
|
|
|
$
|
(77.2
|
)
|
|
$
|
(0.89
|
)
|
|
$
|
(167.9
|
)
|
|
$
|
(1.93
|
)
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and Intangible Asset Impairments (3) (4)
|
|
|
12.1
|
|
|
|
0.12
|
|
|
|
188.8
|
|
|
|
2.25
|
|
|
|
Asset Impairments (5)
|
|
|
29.3
|
|
|
|
0.29
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Severance and Related Costs (6)
|
|
|
13.1
|
|
|
|
0.13
|
|
|
|
-
|
|
|
|
-
|
|
Adjusted to Exclude Significant Items
|
|
|
|
$
|
(22.7
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
20.9
|
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Weighted Average Shares Outstanding
|
|
|
|
|
|
|
66,199
|
|
|
|
|
|
73,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
Loss per Diluted
|
|
Operating
|
|
(Loss) Earnings per
|
|
|
|
|
|
|
|
Operating Loss
|
|
Share (2)
|
|
Income
|
|
Diluted Share (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
|
|
|
$
|
(183.8
|
)
|
|
$
|
(2.03
|
)
|
|
$
|
40.7
|
|
|
$
|
(0.04
|
)
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and Intangible Asset Impairments (4) (7)
|
|
|
96.5
|
|
|
|
1.33
|
|
|
|
191.5
|
|
|
|
2.24
|
|
|
|
Asset Impairments (5)
|
|
|
|
|
30.5
|
|
|
|
0.30
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Severance and Related Costs (6)
|
|
|
|
|
14.9
|
|
|
|
0.15
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Insurance Recoveries (8)
|
|
|
|
|
(19.0
|
)
|
|
|
(0.19
|
)
|
|
|
(7.0
|
)
|
|
|
(0.06
|
)
|
Adjusted to Exclude Significant Items
|
|
|
|
$
|
(60.9
|
)
|
|
$
|
(0.44
|
)
|
|
$
|
225.2
|
|
|
$
|
2.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Weighted Average Shares Outstanding
|
|
|
|
|
|
|
66,475
|
|
|
|
|
|
74,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
Fourth quarter 2012 includes non-cash trade name impairment charges
of $12.1 million; primarily attributable to Culinary Arts ($8.1) and
Health Education ($3.5).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
Fourth quarter 2011 primarily includes non-cash goodwill impairment
charges totaling $168.4 million, of which $120.6 is non-deductible
for income tax purposes,
|
|
|
applicable to Culinary Arts ($73.7), Health Education ($64.6) and
Transitional Schools ($30.1), as well as a $20.4 million non-cash
trade name impairment charge
|
|
|
within Culinary Arts. Year to date 2011 also includes a $2.5 million
non-cash impairment charge related to accreditation rights.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
In 2012, non-cash asset impairment charges of $30.5 million were
recorded, primarily within Transitional Schools ($29.3) for schools
being taught out,
|
|
|
of which $29.3 million was recorded in the fourth quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6)
|
|
In 2012, $14.9 million of severance and related costs were recorded
in connection with both our reduction in force and campus closure
actions, within
|
|
|
Transitional Schools ($7.6), AIU ($1.8), Health Education ($1.6),
Corporate ($1.6), Design & Technology ($1.4), Culinary Arts ($0.6),
and CTU ($0.3).
|
|
|
Of the $14.9 million, $13.1 million was recorded in the fourth
quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7)
|
|
2012 includes non-cash goodwill impairment charges of $83.4 million,
of which $73.6 million is non-deductible for income tax purposes,
primarily
|
|
|
applicable to Health Education ($41.9) and Design & Technology
($40.8), as well as a non-cash trade name impairment of $13.1
million, primarily within
|
|
|
Culinary Arts ($8.1), Health Education ($3.5) and Transitional
Schools ($1.0).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8)
|
|
2012 includes a $19.0 million insurance recovery related to the
settlement of claims under certain insurance policies. 2011 includes
a $7.0 million insurance
|
|
|
recovery related to previously settled legal matters.
|
|
|
|
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|