Perdoceo Education (PRDO) 8-K Career Education Corporation Reports

Exhibit 99.1

CAREER EDUCATION CORPORATION REPORTS

THIRD QUARTER 2014 RESULTS

Improved enrollment trends, continued strong profitability of the University group and execution against strategic plan key objectives positions the Company for continued progress in 2015

Schaumburg, Ill. (November 6, 2014) – Career Education Corporation (NASDAQ: CECO) today reported operating and financial results for the third quarter of 2014.

Third Quarter Highlights

• Seventh consecutive quarter of sequential improvement in the decline of total student enrollments.

• For the first time in over three years, Colorado Technical University (“CTU”) experienced revenue growth compared to the prior year quarter, driven by positive new student enrollment growth.

• For the first time in over three years, Culinary Arts experienced revenue growth compared to the prior year quarter, driven by positive total student enrollment growth.

• Revenue from ongoing operations, which excludes Transitional Schools, was down 3.9% to $219.6 million.

• Lowered operating expenses by $26.7 million or 8.9% compared to the same quarter last year.

• Ended the third quarter with $250.9 million in cash, cash equivalents and short-term investments and increased the borrowing capacity under the Company’s existing revolving credit facility from $70 million to $120 million with our existing lender.

• Adjusted EBITDA from ongoing operations, which excludes Transitional Schools, improved nearly 7% to negative $15.0 million in the quarter, despite declines in revenue as compared to the prior year quarter.

“The results of our hard work to stabilize and transform Career Education were quite visible in this quarter’s results as we witnessed another period of solid sequential improvement across our organization,” said President and CEO Scott W. Steffey. “In particular our University group has delivered over $55 million in operating income over the last twelve months and is experiencing year-over-year fundamental new student growth which provides a strong base of support that anchors our future. We have reduced our operating expenses by over $84 million for the current year to date, surpassing our $75 million annual goal in just nine months. Further, we see numerous opportunities to continue to lower our cost base, while simultaneously improving our organization’s commitment to enroll, educate and place our students to succeed professionally in the future. We expect to be adjusted EBITDA positive in our ongoing operations for the fourth quarter of this year. Additionally, we will enter 2015 as a much stronger organization and we believe we are well positioned to achieve our objective of ongoing operations being adjusted EBITDA positive for the full year 2015.”

CEC ANNOUNCES 3Q14 RESULTS …PG 2

REVENUE

• Total revenue was $227.5 million for the third quarter of 2014 compared to $244.2 million for the third quarter of 2013, a decline of 6.8%.

• For ongoing operations, which excludes Transitional Schools, total revenue was $219.6 million for the third quarter of 2014 compared to $228.6 million for the third quarter of 2013, a decline of 3.9%, due to approximately 300 fewer total student enrollments. Both CTU and Culinary Arts grew revenue for the third quarter of 2014 as compared to the third quarter of 2013.

	Q3 2014		Q2 2014		Q1 2014		Q4 2013		Q3 2013
Revenue ($ in thousands)
CTU(1)	$	82,410	$	85,041	$	86,920	$	87,582	$	82,185
AIU(2)		51,889		49,685		52,573		49,088		56,284
Total University Schools		134,299		134,726		139,493		136,670		138,469
Career Colleges		40,799		42,589		47,832		49,924		45,900
Culinary Arts		44,499		42,566		42,247		42,778		44,256
Total Career Schools		85,298		85,155		90,079		92,702		90,156
Corporate and Other		52		38		100		—		—
Total Ongoing Operations		219,649		219,919		229,672		229,372		228,625
Transitional Schools(3)		7,803		9,115		11,233		13,500		15,545
Total(4)	$	227,452	$	229,034	$	240,905	$	242,872	$	244,170

(1) Revenue of $0.5 million, $0.7 million, $0.9 million, $1.0 million and $1.0 million for each of the sequential quarters presented above beginning with the third quarter of 2014, respectively, are attributed to a campus in the process of being closed that is still reported within the CTU segment in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280 –Segment Reporting.

(2) Revenue of $0.3 million, $0.4 million, $0.6 million, $0.7 million and $1.0 million for each of the sequential quarters presented above beginning with the third quarter of 2014, respectively, are attributed to a campus in the process of being closed that is still reported within the AIU segment in accordance with FASB ASC Topic 280 –Segment Reporting.

(3) Campuses included in our Transitional Schools segment are currently being taught out and no longer enroll new students.

(4) Excludes discontinued operations, which consists of the results of operations for campuses that have ceased operations or were sold and are considered distinct operations under FASB ASC Topic 205 –Presentation of Financial Statements.

CEC ANNOUNCES 3Q14 RESULTS…PG 3

TOTAL STUDENT ENROLLMENT

• For ongoing operations, which excludes Transitional Schools, total student enrollment decreased 0.6% as of September 30, 2014 as compared to September 30, 2013. Culinary Arts reported total student enrollment growth of 26.3% as of September 30, 2014 as compared to September 30, 2013, as a result of the reintroduction of the Associate degree program which is a longer term program as compared to the Certificate program. Total student enrollments for ongoing operations increased 8.9% sequentially from the second quarter of 2014.

	Q3 2014		Q2 2014		Q1 2014		Q4 2013		Q3 2013
Total Student Enrollment
CTU(1)		19,800		19,800		20,600		20,800		20,500
AIU(2)		11,500		10,800		13,300		11,600		12,000
Total University Schools		31,300		30,600		33,900		32,400		32,500
Career Colleges		10,000		8,600		10,700		10,000		11,200
Culinary Arts		10,100		8,000		8,400		7,900		8,000
Total Career Schools		20,100		16,600		19,100		17,900		19,200
Total Ongoing Operations		51,400		47,200		53,000		50,300		51,700
Transitional Schools		1,300		1,800		2,300		2,800		3,500
Total		52,700		49,000		55,300		53,100		55,200

(1) Total student enrollments of 100 for each of the third and second quarters of 2014 and 200 for each of the first quarter of 2014 and the fourth and third quarter of 2013 are attributed to a campus in the process of being closed that is still reported within the CTU segment in accordance with FASB ASC Topic 280 –Segment Reporting.

(2) Total student enrollments of less than 100 for each of the third and second quarters of 2014, 100 for each of the first quarter of 2014 and fourth quarter of 2013 and 200 for the third quarter of 2013 are attributed to a campus in the process of being closed that is still reported within the AIU segment in accordance with FASB ASC Topic 280 –Segment Reporting.

CEC ANNOUNCES 3Q14 RESULTS…PG 4

NEW STUDENT ENROLLMENTS

• For ongoing operations, which excludes Transitional Schools, new student enrollments increased 9.2% for the third quarter of 2014 compared to the prior year quarter. CTU, AIU and Culinary Arts each showed new student enrollment growth for the current quarter as compared to the prior year quarter. The new student enrollment growth of 14.5% for Culinary Arts is a result of timing of start dates in the prior year quarter as compared to the current year quarter. Excluding the impact of this shift in timing, new student enrollments would have declined 10.6% as compared to the prior year quarter for Culinary Arts.

	Q3 2014		Q2 2014		Q1 2014		Q4 2013		Q3 2013
New Student Enrollments
CTU(1)		5,460		5,280		4,820		5,260		4,780
AIU(1)		3,300		2,010		5,900		2,520		2,880
Total University Schools		8,760		7,290		10,720		7,780		7,660
Career Colleges		3,150		1,580		2,780		1,550		3,430
Culinary Arts		4,180		1,890		2,300		2,010		3,650
Total Career Schools		7,330		3,470		5,080		3,560		7,080
Total Ongoing Operations		16,090		10,760		15,800		11,340		14,740
Transitional Schools(2)		140		80		220		170		600
Total		16,230		10,840		16,020		11,510		15,340

(1) The increase in new student enrollments for the current quarter as compared to the prior year quarter is driven by both underlying positive performance trends and the implementation of a new student orientation process in the first quarter of 2014, which replaced our previously provided student readiness programs; this change impacts the way we calculate new student enrollments. This internal policy change had a positive impact on 2014 new student enrollments as compared to 2013.

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

CEC ANNOUNCES 3Q14 RESULTS …PG 5

OPERATING (LOSS) INCOME

• Consolidated operating losses of $44.9 million for the third quarter of 2014 declined by $10.0 million compared to the third quarter of 2013.

• For ongoing operations, which excludes Transitional Schools, operating losses improved by $11.3 million or 25.2% as compared to the prior year quarter, driven by reduced operating expenses and income recognized for a net insurance recovery of $8.6 million in the current year quarter as compared to the prior year quarter.

• Within Career Colleges, increased asset impairment charges recorded during the third quarter of 2014 as compared to the prior year quarter drove the operating margin decline. Within Culinary Arts, favorability for the current quarter as compared to the prior year quarter was driven by higher asset impairment charges recorded during the prior year quarter.

	Q3 2014			Q2 2014			Q1 2014			Q4 2013			Q3 2013
Operating (Loss) Income ($ in thousands)
CTU	$	10,698		$	20,957		$	14,481		$	22,146		$	9,615
AIU (1)		(4,194	)		(1,331	)		(3,583	)		(3,793	)		(5,930	)
Total University Schools		6,504			19,626			10,898			18,353			3,685
Career Colleges(2)		(29,908	)		(16,273	)		(13,922	)		(12,035	)		(17,242	)
Culinary Arts(3)		(12,602	)		(19,772	)		(18,046	)		(28,409	)		(23,655	)
Total Career Schools		(42,510	)		(36,045	)		(31,968	)		(40,444	)		(40,897	)
Corporate and Other (4)		2,528			(5,513	)		(11,136	)		(8,621	)		(7,561	)
Total Ongoing Operations		(33,478	)		(21,932	)		(32,206	)		(30,712	)		(44,773	)
Transitional Schools		(11,390	)		(9,642	)		(8,259	)		(12,944	)		(10,099	)
Total(5)	$	(44,868	)	$	(31,574	)	$	(40,465	)	$	(43,656	)	$	(54,872	)

(1) Operating losses of $1.0 million, $0.9 million and $0.7 million for the third quarter of 2014, each of the quarters from the fourth quarter of 2013 through the second quarter of 2014 and the third quarter of 2013, respectively, are attributed to a campus in the process of being closed that is still reported within the AIU segment in accordance with FASB ASC Topic 280 –Segment Reporting.

(2) Asset impairment charges of $12.8 million ($0.19 per diluted share) and $2.9 million ($0.03 per diluted share) were recorded during the third quarter of 2014 and fourth quarter of 2013, respectively.

(3) Trade name impairment charges of $1.5 million ($0.02 per diluted share), $7.4 million ($0.11 per diluted share) and $10.7 million ($0.10 per diluted share) were recorded during the third quarter of 2014, second quarter of 2014 and third quarter of 2013, respectively.

(4) Income related to a net insurance recovery of $8.6 million ($0.13 per diluted share) was recorded during the third quarter of 2014.

(5) Excludes discontinued operations, which consists of the results of operations for campuses that have ceased operations or were sold and are considered distinct operations under FASB ASC Topic 205 –Presentation of Financial Statements.

CEC ANNOUNCES 3Q14 RESULTS …PG 6

ADJUSTED EBITDA

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 ongoing operations and is viewed as an important metric to how management views the business. (See tables below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

• Adjusted EBITDA for ongoing operations, which excludes Transitional Schools, improved $1.1 million or 6.8% for the third quarter of 2014 as compared to the same quarter last year as revenue declines of $9.0 million were more than offset by reduced operating expenses.

• Adjusted EBITDA for Transitional Schools and Discontinued Operations was negative $15.4 million, an improvement of $8.8 million as compared to the third quarter of 2013 and a $3.3 million sequential improvement compared to the second quarter of 2014. This favorability is a result of the completion of teach-out campus operations and continued focus on exiting lease obligations once a teach-out is complete.

	Q3 2014			Q2 2014			Q1 2014			Q4 2013			Q3 2013
Adjusted EBITDA ($ in thousands)
Ongoing Operations:
Pre-tax loss from continuing operations	$	(44,787	)	$	(31,984	)	$	(39,930	)	$	(43,458	)	$	(54,989	)
Transitional Schools operating loss		11,390			9,642			8,259			12,944			10,099
Interest (income) expense, net		(120	)		(177	)		(25	)		65			15
Loss (gain) on sale of business		—			—			—			(68	)		39
Depreciation and amortization (1)		11,950			12,554			13,029			13,661			13,990
Stock-based compensation(1)		950			1,020			1,341			1,580			1,713
Legal settlements (1) (2)		—			1,600			5,850			17,000			300
Asset impairments (1)		14,396			7,403			74			3,050			11,513
Unused space charges(1) (3)		(226	)		(879	)		(606	)		(2,924	)		1,184
Insurance recovery		(8,588	)		—			—			—			—
Adjusted EBITDA—Ongoing Operations(4)	$	(15,035	)	$	(821	)	$	(12,008	)	$	1,850		$	(16,136	)
Adjusted EBITDA per diluted share	$	(0.22	)	$	(0.01	)	$	(0.18	)	$	0.03		$	(0.24	)
Memo: Advertising Expenses(1)	$	69,875		$	56,224		$	69,379		$	56,077		$	70,936
Transitional Schools and Discontinued Operations:
Pre-tax (loss) income from discontinued operations	$	(2,065	)	$	(12,726	)	$	(17,993	)	$	117,272		$	(21,712	)
Transitional Schools operating loss		(11,390	)		(9,642	)		(8,259	)		(12,944	)		(10,099	)
Loss (gain) on sale of business(5)		—			311			—			(130,109	)		—
International Schools operating (income) loss		—			—			—			(11,434	)		7,608
Interest (income) expense, net		—			—			—			(51	)		(21	)
Depreciation and amortization (5)		1,191			1,840			2,402			2,765			2,961
Legal settlements (2) (5)		225			—			—			—			—
Asset impairments (5)		89			51			(7	)		3,933			72
Unused space charges(3) (5)		(3,485	)		1,436			3,099			5,766			(3,092	)
Adjusted EBITDA—Transitional and Discontinued Operations	$	(15,435	)	$	(18,730	)	$	(20,758	)	$	(24,802	)	$	(24,283	)
Adjusted EBITDA per diluted share	$	(0.23	)	$	(0.28	)	$	(0.31	)	$	(0.37	)	$	(0.36	)

(1) Quarterly amounts relate to ongoing operations, excluding Transitional Schools.

(2) Legal settlement amounts are net of insurance recoveries.

(3) Unused space charges include initial charge and subsequent accretion.

(4) Adjusted EBITDA amounts of -$1.0 million, -$0.9 million, -$0.8 million, -$0.8 million and -$0.6 million for each of the sequential quarters presented above beginning with the third quarter of 2014, respectively, are attributed to a campus in the process of being closed that is still reported within the AIU segment in accordance with FASB ASC Topic 280 - Segment Reporting.

(5) Quarterly amounts relate to Transitional Schools and Discontinued Operations.

CEC ANNOUNCES 3Q14 RESULTS …PG 7

LOSS PER SHARE

• Net loss per diluted share of -$0.71 and -$1.30 were reported for the third quarters of 2014 and 2013, respectively.

	Q3 2014			Q2 2014			Q1 2014			Q4 2013			Q3 2013
Loss Per Share (shares in thousands)
Loss per diluted share from continuing operations	$	(0.68	)	$	(0.50	)	$	(0.60	)	$	(1.45	)	$	(0.52	)
(Loss) income per diluted share from discontinued operations		(0.03	)		(0.19	)		(0.27	)		0.99			(0.78	)
Net loss per diluted share	$	(0.71	)	$	(0.69	)	$	(0.87	)	$	(0.46	)	$	(1.30	)
Diluted shares outstanding		67,209			67,157			66,994			66,916			66,849

BALANCE SHEET AND CASH FLOW

• Net cash used in operating activities increased to $101.1 million for the year to date ended September 30, 2014 compared to $77.8 million for the year to date ended September 30, 2013. This increase is driven primarily by the operating loss for the current year to date, legal settlement payments of approximately $21.6 million paid during the second quarter of 2014, as well as $6.3 million of cash payments during the current year to date related to early lease terminations.

• Net cash used in operating activities increased to $19.9 million for the current year quarter compared to $10.9 million in the prior year quarter primarily attributed to the prior year comparison including the seasonal impact of our International cash flow of approximately $27 million. The third quarter typically contained a seasonal peak in cash collections for that business that is not reflected in current year numbers as this business was sold in the fourth quarter of last year.

	Q3 2014			Q2 2014			Q1 2014			Q4 2013			Q3 2013
Cash and Cash Flow from Operations ($ in thousands)
Consolidated Cash, Cash Equivalents and Short-term Investments(1)	$	250,900		$	274,617		$	315,661		$	363,099		$	227,515
Cash Flow from Operations(2)	$	(19,860	)	$	(45,865	)	$	(35,420	)	$	(7,962	)	$	(10,867	)

(1) Consolidated cash, cash equivalents and short-term investment balances are quarter end balances and include both continuing and discontinued operations.

(2) Cash flow from operations includes payments of legal settlements of $21.6 million, $5.0 million and $10.7 million during the second quarter of 2014, fourth quarter of 2013 and third quarter of 2013, respectively.

CEC ANNOUNCES 3Q14 RESULTS …PG 8

CONFERENCE CALL INFORMATION

Career Education Corporation will host a conference call on Thursday, November 6, 2014 at 10:00 a.m. Eastern time. Interested parties can access the live webcast of the conference call and the related presentation materials 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 38261000. 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 38261000.

ABOUT CAREER EDUCATION CORPORATION

The colleges, institutions and universities that are part of the Career Education Corporation (“CEC”) family offer high-quality education to a diverse student population in a variety of career-oriented disciplines through online, on-ground and hybrid learning program offerings. In addition to its online offerings, Career Education serves students from campuses throughout the United States offering programs that lead to doctoral, master’s, bachelor’s and associate degrees, as well as to diplomas and certificates.

CEC’s institutions include both universities that provide degree programs through the master or doctoral level and colleges that provide programs through the associate and bachelor level. The University group includes American InterContinental University (“AIU”) and Colorado Technical University (“CTU”) – predominantly serving students online with career-focused degree programs that meet the educational demands of today’s busy adults. The Career Schools group offers career-centered education primarily through ground-based campuses and includes Briarcliffe College, Brooks Institute, Harrington College of Design, Le Cordon Bleu North America (“LCB”), Missouri College and Sanford-Brown Institutes and Colleges (“SBI” and “SBC,” respectively). Through its colleges, institutions and universities, CEC is committed to providing high-quality education, enabling students to graduate and pursue rewarding career opportunities.

A detailed listing of individual campus locations and web links to Career Education’s colleges, institutions and universities can be found at www.careered.com.

Except for the historical and present factual information contained herein, the matters set forth in this release, including statements identified by words such as “expect,” “anticipate,” “believe,” “intend,” “will,” “continue to” 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. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions, and we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. 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. 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; rulemaking by the U.S. Department of Education or any state and increased focus by Congress, the President and governmental agencies on for-profit education institutions; 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 and student loan default rate standards prescribed by the U.S. Department of Education), as well as national and regional accreditation standards and state regulatory requirements; changes in the real estate leasing market and the success of our efforts to lower our ongoing lease obligations; our ability to successfully defend litigation and other claims brought against us; 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, 2013 and its subsequent filings with the Securities and Exchange Commission.

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CEC ANNOUNCES 3Q14 RESULTS …PG 9

CONTACT

Investors: Chris Hodges or Sam Gibbons

Alpha IR Group

(312) 445-2870

CECO@alpha-ir.com

Media: Mark Spencer

Director, Corporate Communications

(847) 585-3802

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	September 30, 2014(1)			December 31, 2013(1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents, unrestricted	$	126,926		$	318,468
Restricted cash		13,238			12,564
Short-term investments		110,734			31,592
Total cash and cash equivalents and short-term investments		250,898			362,624
Student receivables, net		32,463			33,530
Receivables, other, net		18,516			27,336
Prepaid expenses		20,297			19,649
Inventories		5,192			6,586
Deferred income tax assets, net		3,606			3,606
Other current assets		4,719			3,445
Assets of discontinued operations		604			3,241
Total current assets		336,295			460,017
NON-CURRENT ASSETS:
Property and equipment, net		138,248			179,835
Goodwill		87,356			87,356
Intangible assets, net		29,062			40,117
Student receivables, net		4,235			5,179
Deferred income tax assets, net		10,644			10,644
Other assets, net		17,167			17,834
Assets of discontinued operations		1,029			4,063
TOTAL ASSETS	$	624,036		$	805,045
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	29,660		$	24,477
Accrued expenses:
Payroll and related benefits		34,035			34,160
Advertising and production costs		25,472			17,585
Income taxes		1,506			14,994
Other		26,722			40,609
Deferred tuition revenue		60,241			59,967
Liabilities of discontinued operations		16,014			15,640
Total current liabilities		193,650			207,432
NON-CURRENT LIABILITIES:
Deferred rent obligations		70,578			77,280
Other liabilities		25,695			27,553
Liabilities of discontinued operations		28,429			37,396
Total non-current liabilities		124,702			142,229
STOCKHOLDERS’ EQUITY:
Preferred stock		—			—
Common stock		821			819
Additional paid-in capital		604,789			600,904
Accumulated other comprehensive loss		(746	)		(503	)
Retained (deficit) earnings		(84,017	)		68,658
Cost of shares in treasury		(215,163	)		(214,494	)
Total stockholders’ equity		305,684			455,384
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	624,036		$	805,045

(1) During the third quarter of 2014, the Company completed the teach-out of three Transitional Schools. As a result, all current and prior periods reflect these campuses as components of discontinued operations.

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(In thousands, except per share amounts and percentages)

	For the Quarter Ended September 30, (1)
	2014			% of Total Revenue		2013			% of Total Revenue
REVENUE:
Tuition and registration fees	$	225,626			99.2%	$	240,261			98.4%
Other		1,826			0.8%		3,909			1.6%
Total revenue		227,452					244,170
OPERATING EXPENSES:
Educational services and facilities		82,892			36.4%		90,308			37.0%
General and administrative		161,897			71.2%		181,688			74.4%
Depreciation and amortization		13,070			5.7%		15,461			6.3%
Asset impairment		14,461			6.4%		11,585			4.7%
Total operating expenses		272,320			119.7%		299,042			122.5%
Operating loss		(44,868	)		-19.7%		(54,872	)		-22.5%
OTHER INCOME (EXPENSE):
Interest income		223			0.1%		194			0.1%
Interest expense		(103	)		0.0%		(209	)		-0.1%
Loss on sale of business		—			0.0%		(39	)		0.0%
Miscellaneous expense		(39	)		0.0%		(63	)		0.0%
Total other income (expense)		81			0.0%		(117	)		0.0%
PRETAX LOSS		(44,787	)		-19.7%		(54,989	)		-22.5%
Provision for (benefit from) income taxes		1,116			0.5%		(20,087	)		-8.2%
LOSS FROM CONTINUING OPERATIONS		(45,903	)		-20.2%		(34,902	)		-14.3%
Loss from discontinued operations, net of tax		(2,065	)		-0.9%		(52,162	)		-21.4%
NET LOSS		(47,968	)		-21.1%		(87,064	)		-35.7%
OTHER COMPREHENSIVE (LOSS) INCOME, net of tax:
Foreign currency translation adjustments		—					6,474
Unrealized (losses) gains on investments		(108	)				36
Total other comprehensive (loss) income		(108	)				6,510
COMPREHENSIVE LOSS	$	(48,076	)			$	(80,554	)
NET LOSS PER SHARE - DILUTED:
Loss from continuing operations	$	(0.68	)			$	(0.52	)
Loss from discontinued operations		(0.03	)				(0.78	)
Net loss per share	$	(0.71	)			$	(1.30	)
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING		67,209					66,849

(1) During the third quarter of 2014, the Company completed the teach-out of three Transitional Schools. As a result, all current and prior periods reflect these campuses as components of discontinued operations.

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(In thousands, except per share amounts and percentages)

	For the Year to Date Ended September 30, (1)
	2014			% of Total Revenue		2013			% of Total Revenue
REVENUE:
Tuition and registration fees	$	690,588			99.0%	$	767,243			98.7%
Other		6,803			1.0%		10,446			1.3%
Total revenue		697,391					777,689
OPERATING EXPENSES:
Educational services and facilities		243,690			34.9%		276,487			35.6%
General and administrative		507,607			72.8%		559,591			72.0%
Depreciation and amortization		41,063			5.9%		47,410			6.1%
Asset impairment		21,938			3.1%		15,668			2.0%
Total operating expenses		814,298			116.8%		899,156			115.6%
Operating loss		(116,907	)		-16.8%		(121,467	)		-15.6%
OTHER INCOME (EXPENSE):
Interest income		614			0.1%		1,199			0.2%
Interest expense		(292	)		0.0%		(1,127	)		-0.1%
Loss on sale of business		—			0.0%		(6,973	)		-0.9%
Miscellaneous expense		(116	)		0.0%		(62	)		0.0%
Total other income (expense)		206			0.0%		(6,963	)		-0.9%
PRETAX LOSS		(116,701	)		-16.7%		(128,430	)		-16.5%
Provision for (benefit from) income taxes		3,190			0.5%		(55,964	)		-7.2%
LOSS FROM CONTINUING OPERATIONS		(119,891	)		-17.2%		(72,466	)		-9.3%
Loss from discontinued operations, net of tax		(32,784	)		-4.7%		(61,191	)		-7.9%
NET LOSS		(152,675	)		-21.9%		(133,657	)		-17.2%
OTHER COMPREHENSIVE (LOSS) INCOME, net of tax:
Foreign currency translation adjustments		—					7,542
Unrealized (losses) gains on investments		(243	)				41
Total other comprehensive (loss) income		(243	)				7,583
COMPREHENSIVE LOSS	$	(152,918	)			$	(126,074	)
NET LOSS PER SHARE - DILUTED:
Loss from continuing operations	$	(1.79	)			$	(1.09	)
Loss from discontinued operations		(0.48	)				(0.91	)
Net loss per share	$	(2.27	)			$	(2.00	)
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING:		67,121					66,663

(1) During 2014, the Company completed the teach-out of twenty campuses; three in the third quarter of 2014. In addition, the Company sold Everblue Training Institute (Career Colleges segment) and Sanford-Brown Pittsburgh (Transitional Schools segment). As a result, all current and prior periods reflect these campuses as components of discontinued operations.

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Year to Date Ended September 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(152,675	)	$	(133,657	)
Adjustments to reconcile net loss to net cash used in operating activities:
Asset impairment		22,006			15,708
Depreciation and amortization expense		42,966			56,619
Bad debt expense		19,107			22,028
Compensation expense related to share-based awards		3,311			5,119
Loss on sale of businesses, net		311			6,973
Loss on disposition of property and equipment		32			103
Changes in operating assets and liabilities		(36,203	)		(50,735	)
Net cash used in operating activities		(101,145	)		(77,842	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investments		(131,487	)		(40,842	)
Sales of available-for-sale investments		51,540			52,485
Purchases of property and equipment		(10,558	)		(16,602	)
Payments of cash upon sale of businesses		(387	)		(2,525	)
Other		—			31
Net cash used in investing activities		(90,892	)		(7,453	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock		575			792
Payment on borrowings		—			(80,000	)
Change in restricted cash		(674	)		85,314
Payments of capital lease obligations		—			(210	)
Net cash (used in) provided by financing activities		(99	)		5,896
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS:		121			1,518
NET DECREASE IN CASH AND CASH EQUIVALENTS		(192,015	)		(77,881	)
DISCONTINUED OPERATIONS CASH ACTIVITY INCLUDED ABOVE:
Add: Cash balance of discontinued operations, beginning of the period		475			128,207
Less: Cash balance of discontinued operations, end of the period		2			133,098
CASH AND CASH EQUIVALENTS, beginning of the period		318,468			112,415
CASH AND CASH EQUIVALENTS, end of the period	$	126,926		$	29,643

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

	For the Quarter Ended September 30,
	2014			2013
REVENUE:
CTU	$	82,410		$	82,185
AIU		51,889			56,284
Total University Schools		134,299			138,469
Career Colleges(1)		40,799			45,900
Culinary Arts		44,499			44,256
Total Career Schools		85,298			90,156
Corporate and Other		52			—
Subtotal		219,649			228,625
Transitional Schools (1) (2)		7,803			15,545
Total	$	227,452		$	244,170
OPERATING (LOSS) INCOME:
CTU	$	10,698		$	9,615
AIU		(4,194	)		(5,930	)
Total University Schools		6,504			3,685
Career Colleges(1) (3)		(29,908	)		(17,242	)
Culinary Arts(4)		(12,602	)		(23,655	)
Total Career Schools		(42,510	)		(40,897	)
Corporate and Other(5)		2,528			(7,561	)
Subtotal		(33,478	)		(44,773	)
Transitional Schools (1) (2)		(11,390	)		(10,099	)
Total	$	(44,868	)	$	(54,872	)
OPERATING (LOSS) MARGIN:
CTU		13.0%			11.7%
AIU		-8.1%			-10.5%
Total University Schools		4.8%			2.7%
Career Colleges(1) (3)		-73.3%			-37.6%
Culinary Arts(4)		-28.3%			-53.5%
Total Career Schools		-49.8%			-45.4%
Corporate and Other(5)		NM			NM
Subtotal		-15.2%			-19.6%
Transitional Schools (1) (2)		-146.0%			-65.0%
Total		-19.7%			-22.5%

(1) The Company announced the teach-out of three additional campuses during the third quarter of 2014. As a result, prior period results have been recast to report the schools being taught out within the Transitional Schools segment.

(2) During the third quarter of 2014, the Company completed the teach-out of three Transitional Schools. As a result, all current and prior periods reflect these campuses as components of discontinued operations.

(3) The third quarter of 2014 expenses include $11.3 million of fixed asset impairment charges and a $1.5 million trade name impairment charge.

(4) The third quarters of 2014 and 2013 expenses include an $1.5 million and $10.7 million trade name impairment charge, respectively.

(5) The operating income for the third quarter of 2014 includes an $8.6 million insurance recovery.

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

	For the Year to Date Ended September 30,
	2014			2013
REVENUE:
CTU (1)	$	254,371		$	258,504
AIU		154,147			182,518
Total University Schools		408,518			441,022
Career Colleges(1) (2)		131,220			147,065
Culinary Arts		129,312			134,771
Total Career Schools		260,532			281,836
Corporate and Other		190			—
Subtotal		669,240			722,858
Transitional Schools(1) (2)		28,151			54,831
Total	$	697,391		$	777,689
OPERATING (LOSS) INCOME:
CTU (1)	$	46,136		$	42,932
AIU		(9,108	)		(1,763	)
Total University Schools		37,028			41,169
Career Colleges(1) (2) (3)		(60,103	)		(56,617	)
Culinary Arts(4)		(50,420	)		(52,809	)
Total Career Schools		(110,523	)		(109,426	)
Corporate and Other(5)		(14,121	)		(24,979	)
Subtotal		(87,616	)		(93,236	)
Transitional Schools(1) (2)		(29,291	)		(28,231	)
Total	$	(116,907	)	$	(121,467	)
OPERATING (LOSS) MARGIN:
CTU (1)		18.1%			16.6%
AIU		-5.9%			-1.0%
Total University Schools		9.1%			9.3%
Career Colleges(1) (2) (3)		-45.8%			-38.5%
Culinary Arts(4)		-39.0%			-39.2%
Total Career Schools		-42.4%			-38.8%
Corporate and Other(5)		NM			NM
Subtotal		-13.1%			-12.9%
Transitional Schools(1) (2)		-104.0%			-51.5%
Total		-16.8%			-15.6%

(1) During 2014, the Company completed the teach-out of twenty campuses; three in the third quarter. In addition, the Company sold Everblue Training Institute (Career Colleges segment) and Sanford-Brown Pittsburgh (Transitional Schools segment). As a result, all current and prior periods reflect these campuses as components of discontinued operations.

(2) The Company announced the teach-out of three additional campuses. As a result, all current and prior periods reflect these campuses within the Transitional Schools segment.

(3) Year to date 2014 expenses include $11.3 million of fixed asset impairment charges and a $1.5 million trade name impairment charge. Year to date 2013 expenses include $8.6 million of legal settlements and a $1.7 million trade name impairment charge.

(4) Year to date 2014 and 2013 expenses include an $8.9 million and $13.0 million trade name impairment charge, respectively.

(5) The operating income for the year to date ended September 30, 2014 includes an $8.6 million insurance recovery.

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

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

(In thousands, except per share amounts)

	Q3 2014			Q2 2014			Q1 2014			Q4 2013			Q3 2013
Adjusted EBITDA
Ongoing Operations:
Pre-tax loss from continuing operations	$	(44,787	)	$	(31,984	)	$	(39,930	)	$	(43,458	)	$	(54,989	)
Transitional Schools operating loss		11,390			9,642			8,259			12,944			10,099
Interest (income) expense, net		(120	)		(177	)		(25	)		65			15
Loss (gain) on sale of business		—			—			—			(68	)		39
Depreciation and amortization (3)		11,950			12,554			13,029			13,661			13,990
Stock-based compensation (3)		950			1,020			1,341			1,580			1,713
Legal settlements(3) (4)		—			1,600			5,850			17,000			300
Asset impairments(3) (5)		14,396			7,403			74			3,050			11,513
Unused space charges(3) (6)		(226	)		(879	)		(606	)		(2,924	)		1,184
Insurance recovery		(8,588	)		—			—			—			—
Adjusted EBITDA—Ongoing Operations(2)	$	(15,035	)	$	(821	)	$	(12,008	)	$	1,850		$	(16,136	)
Adjusted EBITDA per diluted share	$	(0.22	)	$	(0.01	)	$	(0.18	)	$	0.03		$	(0.24	)
Memo: Advertising Expenses(3)	$	69,875		$	56,224		$	69,379		$	56,077		$	70,936
Transitional Schools and Discontinued Operations:
Pre-tax (loss) income from discontinued operations	$	(2,065	)	$	(12,726	)	$	(17,993	)	$	117,272		$	(21,712	)
Transitional Schools operating loss		(11,390	)		(9,642	)		(8,259	)		(12,944	)		(10,099	)
Loss (gain) on sale of business (8)		—			311			—			(130,109	)		—
International Schools operating (income) loss (7)		—			—			—			(11,434	)		7,608
Interest (income) expense, net		—			—			—			(51	)		(21	)
Depreciation and amortization(8)		1,191			1,840			2,402			2,765			2,961
Legal settlements(8)		225			—			—			—			—
Asset impairments (8)		89			51			(7	)		3,933			72
Unused space charges (6) (8)		(3,485	)		1,436			3,099			5,766			(3,092	)
Adjusted EBITDA—Transitional and Discontinued Operations(2)	$	(15,435	)	$	(18,730	)	$	(20,758	)	$	(24,802	)	$	(24,283	)
Adjusted EBITDA per diluted share	$	(0.23	)	$	(0.28	)	$	(0.31	)	$	(0.37	)	$	(0.36	)

(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 ongoing operations. 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 ongoing operations, 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.

We believe Adjusted EBITDA allows us to compare our current operating results with corresponding historical periods and with the operational performance of other companies in our industry because it does not give effect to potential differences caused by items we do not consider reflective of underlying operating performance. We also present Adjusted EBITDA because we believe it is frequently used by securities analysts, investors and other interested parties as a measure of performance. In evaluating Adjusted EBITDA, investors should be aware that in the future we may incur expenses similar to the adjustments presented above. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by expenses that are unusual, non-routine or non-recurring. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for net income (loss), operating income (loss), or any other performance measure derived in accordance and reported under GAAP or as an alternative to cash flow from operating activities or as a measure of our liquidity.

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) Management assesses results of operations for ongoing operations, which excludes Transitional Schools, separately from Transitional Schools. As schools within the Transitional Schools segment are fully taught-out, these schools will be recast as components of Discontinued Operations. As a result, management views adjusted EBITDA from ongoing operations separately from Transitional Schools and Discontinued Operations to assess results and make decisions. Accordingly, Transitional Schools operating loss is added back to pre-tax loss from continuing operations and subtracted from pre-tax loss from discontinued operations.

(3) Quarterly amounts relate to ongoing operations, which excludes Transitional Schools.

(4) Legal settlement amounts are net of insurance recoveries and are recorded within the following segments:

	Q3 2014		Q2 2014			Q1 2014			Q4 2013		Q3 2013
CTU	$	—	$	—		$	(900	)	$	1,300	$	—
Career Colleges		—		—			—			200		300
Culinary Arts		—		2,000			3,000			15,500		—
Corporate & Other		—		(400	)		3,750			—		—
Total	$	—	$	1,600		$	5,850		$	17,000	$	300

(5) Asset impairments primarily relate to impairment charges within Culinary Arts of $1.5 million, $7.4 million and $10.7 million which were recorded during the third quarter of 2014, second quarter of 2014 and third quarter of 2013, respectively, and within Career Colleges of $12.8 million and $2.9 million recorded during the third quarter of 2014 and fourth quarter of 2013, respectively.

(6) Unused space charges represent the net present value of remaining lease obligations less an estimated amount for sublease income as well as the subsequent accretion of these charges.

(7) The International Schools segment was sold during the fourth quarter of 2013. As such, management excludes operations from the International Schools when assessing results and trends of Transitional Schools and Discontinued Operations.

(8) Quarterly amounts relate to Transitional Schools and Discontinued Operations, excluding International.