Exhibit 99.1
Career Education Corporation Reports Results for Third Quarter 2006
HOFFMAN ESTATES, Ill.--(BUSINESS WIRE)--Nov. 7, 2006--Career
Education Corporation (NASDAQ:CECO) today reported revenue of $462.4
million and net income of $20.7 million for the quarter ended
September 30, 2006.
"Although third quarter results were disappointing, the board and
management of Career Education Corporation took a number of
significant steps during the quarter to resolve our current issues,
improve our operating results, and lay the foundation for future
growth," said Bob Dowdell, Career Education's President and Chief
Executive Officer. "The potential for our company and our industry
remains very strong, and we aim to steadily build value for all of our
stakeholders going forward. Initially, we are focused on finding the
best leadership for the company, specifically a permanent CEO, and
strengthening key internal positions."
RESULTS OF OPERATIONS
Three Months Ended September 30, 2006
-- Consolidated revenue was $462.4 million during the third
quarter of 2006, a 7.0 percent decrease from consolidated
revenue of $497.5 million during the third quarter of 2005.
Revenue generated by the University segment's fully online
platforms decreased 8.5 percent, to $154.7 million during the
third quarter of 2006 from $169.1 million during the third
quarter of 2005.
-- Income from operations declined to $28.3 million during the
third quarter of 2006, from $83.7 million during the third
quarter of 2005. Operating profit margin percentage was 6.1
percent during the third quarter of 2006, a 10.7 percentage
point decrease relative to an operating profit margin
percentage of 16.8 percent during the third quarter of 2005.
The decrease in operating profit margin percentage was
primarily due to a decrease in operating profit margin
percentage generated by our University segment's fully-online
platforms and increases in administration expense, advertising
expense, and occupancy expense as a percentage of revenue,
offset, in part, by a decrease in bad debt expense as a
percentage of revenue.
University segment income from operations declined to $33.2
million during the third quarter of 2006, from $63.9 million during
the third quarter of 2005.
-- Consolidated net income during the third quarter of 2006 was
$20.7 million, or $0.22 per diluted share, relative to
consolidated net income of $54.9 million, or $0.53 per diluted
share, during the third quarter of 2005. Third quarter 2006
net income includes a non-cash charge for share-based
compensation expense of $3.9 million, net of tax benefit of
$2.3 million, or $0.04 per diluted share. Share-based
compensation expense recorded during the third quarter of
2005, prior to our adoption of SFAS 123R, was insignificant.
Nine Months Ended September 30, 2006
-- Consolidated revenue was $1.48 billion during the nine months
ended September 30, 2006, compared to consolidated revenue of
$1.51 billion during the nine months ended September 30, 2005.
Revenue generated by the University segment's online platforms
increased 6.3 percent, to $528.1 million during the nine
months ended September 30, 2006, from $497.0 million during
the nine months ended September 30, 2005.
-- Income from operations decreased to $73.7 million during the
nine months ended September 30, 2006, from $264.4 million
during the nine months ended September 30, 2005. Operating
income margin percentage decreased to 5.0 percent during the
nine months ended September 30, 2006, from 17.6 percent during
the nine months ended September 30, 2005. During the nine
months ended September 30, 2006, we recorded goodwill and
intangible asset impairment charges of $96.1 million, pre-tax,
attributable to our Health Education and Gibbs divisions.
University segment income from operations declined to $183.1
million during the nine months ended September 30, 2006, from $218.1
million during the nine months ended September 30, 2005. The decrease
in University segment income from operations is primarily attributable
to the adverse impact on student population and revenue of AIU's
probation status and the cost and effect of changes adopted in
response to recommendations made by AIU's accrediting body. University
segment operating income margin percentage decreased to 27.6 percent
during the nine months ended September 30, 2006, from 33.7 percent
during the nine months ended September 30, 2005. The decrease in
University segment operating income margin percentage is primarily a
result of the adverse impact on revenue of AIU's probation status and
the disproportionate growth of CTU Online operations, which operates
at a lower operating margin percentage than that of AIU Online.
-- Consolidated net income during the nine months ended September
30, 2006, was $25.9 million, or $0.26 per diluted share,
relative to consolidated net income of $163.6 million, or
$1.57 per diluted share, during the nine months ended
September 30, 2005. Consolidated net income during the nine
months ended September 30, 2006, includes the following
non-cash charges (in millions, except per share data):
Impact on
Earnings Per
Pretax Tax Benefit Net Diluted Share
- ----------------------------------------------------------------------
Goodwill and intangible
asset impairment
charge - Health
Education division $(85.8) $2.7 (1) $(83.1) $(0.84)
- ----------------------------------------------------------------------
Goodwill and intangible
asset impairment
charge - Gibbs
division $(10.3) $3.9 $(6.4) $(0.07)
- ----------------------------------------------------------------------
Share-based
compensation expense $(14.7) $5.5 $(9.2) $(0.09)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Total $(110.8) $12.1 $(98.7) $(1.00)
- ----------------------------------------------------------------------
(1) The company estimates that only $7.3 million of the Health
Education division goodwill and intangible asset impairment charge
will be deductible for income tax reporting purposes.
PROVISION FOR INCOME TAXES
Provision for income taxes during the nine months ended September
30, 2006, was $62.3 million, relative to income before provision for
income taxes during the nine months ended September 30, 2006, of $88.3
million. This represents an effective income tax rate of 70.6 percent
for the nine months ended September 30, 3006. The unusual relationship
between income before provision for income taxes and our provision for
income taxes for the nine months ended September 30, 2006, is
attributable to the fact that only $7.3 million of our total $85.8
million Health Education division goodwill and intangible asset
impairment charge recognized during the second and third quarters of
2006 is deductible for income tax reporting purposes. Excluding the
effect of the Health Education goodwill and intangible asset
impairment charge, the company's effective income tax rate for the
nine months ended September 30, 2006 was 37.4%.
CASH FLOWS AND FINANCIAL POSITION
Cash Flows
-- Net cash provided by operating activities was $83.2 million
during the third quarter of 2006, compared to $106.2 million
during the third quarter of 2005. The decrease is primarily
attributable to the decrease in net income during the third
quarter of 2006.
-- Capital expenditures decreased to $16.9 million during the
third quarter of 2006, from $28.3 million during the third
quarter of 2005. Capital expenditures represented 3.6 percent
of consolidated revenue during the third quarter of 2006 and
5.7 percent of consolidated revenue during the third quarter
of 2005.
Financial Position
-- As of September 30, 2006, and June 30, 2006, cash and cash
equivalents and investments totaled $444.5 million and $378.0
million, respectively. This increase is primarily attributable
to cash generated by operating activities during the third
quarter of 2006.
-- Accounts receivable quarterly days sales outstanding (DSO)
were 17 days as of September 30, 2006, which represents a
six-day increase from DSO as of June 30, 2006, of 11 days and
is consistent with DSO as of September 30, 2005, of 17 days.
Stock Repurchase Program
Since July 2005, CEC's Board of Directors has authorized the use
of $500.2 million to repurchase outstanding shares of the company's
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 factors including market conditions and corporate and
regulatory requirements. The stock repurchase program does not have an
expiration date and may be suspended or discontinued at any time.
Since the inception of the program, the company has repurchased
9.1 million shares of its common stock for approximately $325.0
million at an average price of $35.63 per share. No shares were
repurchased during the third quarter of 2006.
SEGMENT REPORTING
Pursuant to Statement of Financial Accounting Standards No. 131,
Disclosure about Segments of an Enterprise and Related Information, as
of September 30, 2006, CEC identified seven school reportable
segments: the University segment, the Culinary Arts segment, the
Colleges segment, the Health Education segment, the Gibbs segment, the
Academy segment, and the INSEEC segment, and one non-school segment,
the JDV Online segment.
POPULATION AND NEW STUDENT START DATA
Student Population
Total student population by reportable segment as of October 31,
2006 and 2005, was as follows:
Population Population Percentage
Segment October 31, 2006 October 31, 2005 Difference
- ----------------------------------------------------------------------
University (1) 41,400 46,400 (11%)
- ----------------------------------------------------------------------
Culinary Arts 11,700 12,500 (6%)
- ----------------------------------------------------------------------
College 11,800 14,200 (17%)
- ----------------------------------------------------------------------
Health Education 11,700 11,200 5%
- ----------------------------------------------------------------------
Academy 10,000 10,100 (1%)
- ----------------------------------------------------------------------
Gibbs 7,000 7,500 (7%)
- ----------------------------------------------------------------------
INSEEC 6,000 5,500 9%
- ----------------------------------------------------------------------
CEC Consolidated 99,600 107,400 (7%)
- ----------------------------------------------------------------------
(1) As of October 31, 2006 and 2005, the University segment
population includes approximately 28,800 students and 32,000 students,
respectively, who were taking classes at such dates in fully-online
academic programs offered by University segment schools.
New Student Starts
New student starts by reportable segment during the third quarter
of 2006 and 2005 were as follows:
Third Quarter Third Quarter Percentage
Segment 2006 2005 Difference
- ----------------------------------------------------------------------
University (1) 11,730 15,250 (23%)
- ----------------------------------------------------------------------
Culinary Arts 4,320 4,300 0.5%
- ----------------------------------------------------------------------
College 3,220 3,870 (17%)
- ----------------------------------------------------------------------
Health Education 4,070 4,050 0.5%
- ----------------------------------------------------------------------
Academy 1,860 2,280 (18%)
- ----------------------------------------------------------------------
Gibbs 1,620 1,650 (2%)
- ----------------------------------------------------------------------
INSEEC 2,680 2,400 12%
- ----------------------------------------------------------------------
CEC Consolidated 29,500 33,800 (13%)
- ----------------------------------------------------------------------
(1) University segment new student starts includes approximately
9,200 students and 12,200 students, respectively, who were taking
classes in fully-online academic programs offered by University
segment schools during the third quarter of 2006 and 2005.
RECENT INITIATIVES
During the third quarter of 2006, the company executed a number of
initiatives aimed at fostering the sustainable growth of its student
population and profitability. These initiatives included the
following:
-- We began a search for a new Chief Marketing and Admissions
Officer and continue to look for a senior-level admissions
executive for our on-ground business.
-- We initiated a new branding effort to better leverage CEC's
competitive advantages.
-- We instituted an incentive compensation program for admission
representatives to reduce turnover. The plan rewards admission
representatives for enrolling students who successfully
complete all or a specified portion of their academic
programs, and is fully compliant with the requirements and
guidelines of the Department of Education.
-- We expanded financing options available to all students, which
primarily impacted our Culinary Arts and Healthcare segment
schools during the third quarter of 2006.
-- We began a program to rationalize our assets, starting with
the teach-out of our Springfield, Massachusetts Sanford-Brown
campus.
"In the near term, we will be making a number of significant
decisions related to profitability, marketing direction, and student
and employee retention that we believe will position our company for
future growth," said Dowdell. "We will ensure that our resources and
attention are directed toward opportunities that will offer the
greatest benefit to our students and provide the greatest return for
our shareholders."
CONFERENCE CALL INFORMATION
Career Education Corporation will host a conference call today,
November 7, 2006, at 5:00 p.m. (Eastern Time). Interested parties can
access the live webcast of the conference call at www.careered.com.
Participants can also listen to the conference call by dialing
617.614.2707 (international) or 866.761.0749 (domestic) and citing
code 81765373. Please log-in or dial-in at least 10 minutes prior to
the conference call start time to ensure a connection. An archived
version of the conference call webcast will be accessible for 90 days
at www.careered.com. A replay of the conference call will also be
available for seven days by calling 617-801-6888 (international) or
888-286-8010 and citing code 78537381.
About Career Education Corporation
The colleges, schools and universities that are part of the Career
Education Corporation (CEC) family offer high quality education to
approximately 100,000 students across the world in a variety of
career-oriented disciplines. The 80-plus campuses that serve these
students are located throughout the U. S., Canada, France, and the
United Kingdom, and offer doctoral, master's, bachelor's, and
associate degrees and diploma and certificate programs. Many students
attend the fully online educational platforms offered by American
InterContinental University Online and Colorado Technical University
Online.
Career Education is an industry leader whose gold-standard brands
are recognized globally. Those brands include, among others, Le Cordon
Bleu Schools North America; Harrington College of Design; Brooks
Institute of Photography; the Katharine Gibbs Schools; American
InterContinental University; Colorado Technical University and
Sanford-Brown Institutes and Colleges. The mission of CEC, through its
schools, its educators, and its employees is education--their primary
goal, to enable students to graduate successfully and pursue rewarding
careers.
For more information see www.careered.com. The company's website
also has a detailed listing of individual campus locations and web
links for its 80-plus colleges, schools and universities.
Except for the historical and present factual information
contained herein, the matters set forth in this release, including
statements under "Recent Initiatives" and statements identified by
words such as "anticipate," "believe," "plan," "expect," "intend,"
"project," "will," 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 risks, uncertainties, and
other factors that could cause our actual growth, results of
operations, performance and business prospects, and opportunities to
differ materially from those expressed in, or implied by, these
statements. Except as expressly required by federal securities laws,
we undertake no obligation to update such factors or to publicly
announce the results of 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 outcome of which could materially and adversely affect our
financial condition and operations, include, but are not limited to,
the following: future financial and operational results, including the
impact of the impairment of goodwill and other intangible assets;
risks related to our ability to comply with accrediting agency
requirements or obtain accrediting agency approvals, including the
adverse impact of negative publicity concerning the continued
probation status of American InterContinental University and ongoing
review by its accrediting body; risks related to our ability to comply
with, and the impact of changes in, legislation and regulations that
affect our ability to participate in student financial aid programs;
costs, risks, and effects of legal and administrative proceedings and
investigations and governmental regulations, including the pending
Securities and Exchange Commission and Justice Department
investigations and class action, derivative, and other lawsuits; costs
and difficulties related to the integration of acquired businesses;
risks related to our ability to manage and continue growth; risks
related to competition, general economic conditions, and other risk
factors relating to our industry and business and the factors
discussed in our Annual Report on Form 10-K for the year ended
December 31, 2005, and from time to time in our other reports filed
with the Securities and Exchange Commission.
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended September 30, 2006 and 2005
(In thousands, except per share amounts and percentages)
% of % of
2006 Revenue 2005 Revenue
--------- ------- --------- -------
REVENUE:
Tuition and registration fees $437,996 94.7% $472,231 94.9%
Other 24,389 5.3% 25,251 5.1%
--------- ---------
Total revenue 462,385 100.0% 497,482 100.0%
--------- ---------
OPERATING EXPENSES:
Educational services and
facilities 159,519 34.5% 154,797 31.1%
General and administrative 251,903 54.5% 238,075 47.9%
Depreciation and amortization 21,886 4.7% 20,899 4.2%
Goodwill and intangible asset
impairment charge 785 0.2% - - %
--------- ---------
Total operating expenses 434,093 93.9% 413,771 83.2%
--------- ---------
Income from operations 28,292 6.1% 83,711 16.8%
--------- ---------
OTHER INCOME (EXPENSE):
Interest income 4,491 1.0% 1,890 0.4%
Interest expense (322) -0.1% (343) -0.1%
Share of affiliate earnings 510 0.1% 428 0.1%
Miscellaneous income 120 0.1% 228 0.1%
--------- ---------
Total other income 4,799 1.1% 2,203 0.5%
--------- ---------
Income before provision for income
taxes 33,091 7.2% 85,914 17.3%
PROVISION FOR INCOME TAXES 12,376 2.7% 30,979 6.3%
--------- ---------
NET INCOME $20,715 4.5% $54,935 11.0%
========= =========
NET INCOME PER SHARE - DILUTED: $0.22 $0.53
========= =========
DILUTED WEIGHTED AVERAGE SHARES
OUTSTANDING: 96,195 103,125
========= =========
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
For the Nine Months Ended September 30, 2006 and 2005
(In thousands, except per share amounts and percentages)
% of % of
2006 Revenue 2005 Revenue
----------- ------- ----------- -------
REVENUE:
Tuition and registration fees $1,413,074 95.6% $1,433,044 95.2%
Other 64,726 4.4% 72,337 4.8%
----------- -----------
Total revenue 1,477,800 100.0% 1,505,381 100.0%
----------- -----------
OPERATING EXPENSES:
Educational services and
facilities 478,017 32.3% 464,596 30.9%
General and administrative 765,105 51.8% 718,468 47.7%
Depreciation and amortization 64,837 4.4% 57,933 3.8%
Goodwill and intangible asset
impairment charge 96,149 6.5% - 0.0%
----------- -----------
Total operating expenses 1,404,108 95.0% 1,240,997 82.4%
----------- -----------
Income from operations 73,692 5.0% 264,384 17.6%
----------- -----------
OTHER INCOME (EXPENSE):
Interest income 13,469 0.9% 7,877 0.5%
Interest expense (1,010) -0.1% (1,199) -0.1%
Share of affiliate earnings 2,109 0.2% 3,670 0.2%
Miscellaneous expense (9) 0.0% (530) 0.0%
----------- -----------
Total other income 14,559 1.0% 9,818 0.6%
----------- -----------
Income before provision for
income taxes 88,251 6.0% 274,202 18.2%
PROVISION FOR INCOME TAXES 62,346 4.2% 104,882 7.0%
----------- -----------
Income from continuing
operations 25,905 1.8% 169,320 11.2%
DISCONTINUED OPERATIONS:
Loss from discontinued
operations - 0.0% (5,700) -0.3%
----------- -----------
NET INCOME $25,905 1.8% $163,620 10.9%
=========== ===========
NET INCOME PER SHARE -
DILUTED:
Income from continuing
operations $0.263 $1.620
Loss from discontinued
operations - (0.055)
----------- -----------
Net income $0.263 $1.566
=========== ===========
DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING: 98,556 104,489
=========== ===========
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2006 2005
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $116,157 $132,308
Investments 328,328 272,093
------------- -------------
Total cash and cash equivalents and
investments 444,485 404,401
Receivables:
Students, net of allowance for
doubtful accounts of $37,902 and
$44,839 as of September 30, 2006,
and December 31, 2005, respectively 76,076 76,447
Other, net 8,494 5,015
Prepaid expenses 39,141 37,412
Inventories 13,839 14,090
Deferred income tax assets 10,122 10,122
Other current assets 19,021 31,067
------------- -------------
Total current assets 611,178 578,554
PROPERTY AND EQUIPMENT, net 400,431 411,144
GOODWILL 349,459 443,584
INTANGIBLE ASSETS, net 34,559 35,286
OTHER ASSETS 31,844 37,537
------------- -------------
TOTAL ASSETS $1,427,471 $1,506,105
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $572 $627
Accounts payable 30,544 28,627
Accrued expenses:
Payroll and related benefits 30,653 39,471
Income taxes 2,618 23,509
Other 75,652 82,513
Deferred tuition revenue 177,419 152,007
------------- -------------
Total current liabilities 317,458 326,754
------------- -------------
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities 13,737 16,358
Deferred rent obligations 97,453 89,680
Deferred income tax liabilities 31,212 31,212
Other 5,769 5,854
------------- -------------
Total long-term liabilities 148,171 143,104
------------- -------------
SHARE-BASED AWARDS SUBJECT TO REDEMPTION 15,641 -
STOCKHOLDERS' EQUITY:
Common stock 1,038 1,033
Additional paid-in capital 616,679 591,287
Accumulated other comprehensive income 1,127 1,989
Retained earnings 652,360 642,096
Cost of shares in treasury (325,003) (200,158)
------------- -------------
Total stockholders' equity 946,201 1,036,247
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,427,471 $1,506,105
============= =============
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended September 30, 2006 and 2005
(In thousands)
2006 2005
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $20,715 $54,935
Adjustments to reconcile net income to net cash
provided by operating activities:
Goodwill and intangible asset impairment
charge 785 -
Depreciation and amortization 21,886 20,899
Compensation expense related to share-based
awards 6,163 -
Loss on disposition of property and equipment 5 22
Share of affiliate earnings, net of dividends
received 3,633 (428)
Tax benefit associated with stock option
exercises - 2,410
Other (234) 193
Changes in operating assets and liabilities 30,273 28,202
--------- ---------
Net cash provided by operating
activities 83,226 106,233
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Business disposition - 26
Purchases of property and equipment (16,870) (28,336)
Purchases of available-for-sale investments (249,160) (284,012)
Sales of available-for-sale investments 208,241 272,629
Investments in and advances to affiliates (108) -
Other (146) 46
--------- ---------
Net cash used in investing activities (58,043) (39,647)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock - (200,158)
Issuance of common stock 1,236 5,051
Tax benefit associated with stock option
exercises 51 -
Payments of revolving loans (3,487) (181)
Proceeds from the issuance of other long-term
debt - 2,431
Payments of capital lease obligations and other
long-term debt (69) (248)
--------- ---------
Net cash used in financing activities (2,269) (193,105)
--------- ---------
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS 2,654 (284)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 25,568 (126,803)
CASH AND CASH EQUIVALENTS, beginning of period 90,589 217,044
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $116,157 $90,241
========= =========
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2006 and 2005
(In thousands)
2006 2005
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $25,905 $163,620
Adjustments to reconcile net income to net cash
provided by operating activities:
Goodwill and intangible asset impairment
charge 96,149 -
Loss from discontinued operations - 5,700
Depreciation and amortization 64,837 57,933
Compensation expense related to share-based
awards 14,649 -
Loss on disposition of property and equipment 260 572
Share of affiliate earnings, net of dividends
received 2,034 (1,810)
Tax benefit associated with stock option
exercises - 4,826
Other 236 593
Changes in operating assets and liabilities 10,617 55,886
--------- ---------
Net cash provided by operating
activities 214,687 287,320
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Business disposition - (908)
Purchases of property and equipment (60,021) (99,232)
Purchases of available-for-sale investments (801,610) (700,636)
Sales of available-for-sale investments 745,526 447,024
Investments in and advances to affiliates (134) -
Other (230) 1,504
--------- ---------
Net cash used in investing activities (116,469) (352,248)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock (124,845) (200,158)
Issuance of common stock 8,647 12,003
Tax benefit associated with stock option
exercises 2,101 -
Payments of revolving loans (3,487) (2,060)
Proceeds from the issuance of other long-term
debt - 2,431
Payments of capital lease obligations and other
long-term debt (253) (1,753)
--------- ---------
Net cash used in financing activities (117,837) (189,537)
--------- ---------
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS 3,468 (4,752)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (16,151) (259,217)
CASH AND CASH EQUIVALENTS, beginning of period 132,308 349,458
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $116,157 $90,241
========= =========
CAREER EDUCATION CORPORATION
SELECTED SEGMENT INFORMATION (1)
(Dollars in thousands)
For the Three Months
Ended September 30,
-------------------------
2006 2005
------------ ------------
REVENUE:
University segment $193,352 $215,280
Culinary Arts segment 96,908 100,406
Colleges segment 58,427 68,961
Health Education segment 42,811 38,310
Academy segment 37,688 38,160
Gibbs segment 25,921 30,756
INSEEC segment 7,045 5,609
JDV Online segment 233 -
------------ ------------
$462,385 $497,482
============ ============
SEGMENT PROFIT (LOSS) (2):
University segment $33,208 $63,925
Culinary Arts segment 19,341 25,439
Colleges segment 3,876 9,644
Health Education segment 339 683
Academy segment 427 2,193
Gibbs segment (9,244) (5,501)
INSEEC segment 886 297
JDV Online segment (1,983) (785)
Corporate and other (18,048) (11,756)
------------ ------------
$28,802 $84,139
============ ============
SEGMENT PROFIT (LOSS) PERCENTAGE:
University segment 17.2% 29.7%
Culinary Arts segment 20.0% 25.3%
Colleges segment 6.6% 14.0%
Health Education segment 0.8% 1.8%
Academy segment 1.1% 5.7%
Gibbs segment -35.7% -17.9%
INSEEC segment 12.6% 5.3%
JDV Online segment -851.1% N/A
- ----------------------------------------------------------------------
(1) Effective September 30, 2006, we changed the composition of our
reportable segments. The historical 2005 segment information
reflected in this table is categorized in accordance with our new
segment structure.
(2) Segment profit equals the sum of income from operations and share
of affiliate earnings.
CAREER EDUCATION CORPORATION
SELECTED SEGMENT INFORMATION (1)
(Dollars in thousands)
For the Nine Months Ended
September 30,
-------------------------
2006 2005
------------ ------------
REVENUE:
University segment $663,256 $648,029
Culinary Arts segment 270,242 283,870
Colleges segment 184,572 212,214
Health Education segment 124,471 113,739
Academy segment 120,133 115,915
Gibbs segment 82,088 102,144
INSEEC segment 32,554 29,470
JDV Online segment 484 -
------------ ------------
$1,477,800 $1,505,381
============ ============
SEGMENT PROFIT (LOSS) (2):
University segment $183,092 $218,137
Culinary Arts segment 41,734 58,824
Colleges segment 15,632 33,090
Health Education segment (3) (83,673) (709)
Academy segment 6,828 5,628
Gibbs segment (3) (37,262) (11,469)
INSEEC segment 5,927 6,056
JDV Online segment (6,053) (1,232)
Corporate and other (50,424) (40,271)
------------ ------------
$75,801 $268,054
============ ============
SEGMENT PROFIT (LOSS) PERCENTAGE:
University segment 27.6% 33.7%
Culinary Arts segment 15.4% 20.7%
Colleges segment 8.5% 15.6%
Health Education segment -67.2% -0.6%
Academy segment 5.7% 4.9%
Gibbs segment -45.4% -11.2%
INSEEC segment 18.2% 20.5%
JDV Online segment -1250.6% N/A
- ----------------------------------------------------------------------
(1) Effective September 30, 2006, we changed the composition of our
reportable segments. The historical 2005 segment information
reflected in this table is categorized in accordance with our new
segment structure.
(2) Segment profit equals the sum of income from operations and share
of affiliate earnings.
(3) Health Education and Gibbs segment loss for the nine months ended
September 30, 2006, includes goodwill and intangible asset
impairment charges of $85,760 and $10,389, respectively.
CAREER EDUCATION CORPORATION
SELECTED ACCOUNTS RECEIVABLE AND ALLOWANCE INFORMATION
(Dollars in thousands)
DAYS SALES OUTSTANDING
September 30,
-----------------------
2006 2005
------------ ----------
Total revenue during
the quarter ended $462,385 $497,482
Number of days in the
quarter ended 92 92
Total revenue per day $5,026 $5,407
Total receivables, net $84,570 $89,578
Days sales outstanding 17 17
ALLOWANCE AS A PERCENTAGE OF STUDENT
RECEIVABLES
September 30,
-----------------------
2006 2005
------------ ----------
Allowance for doubtful
accounts $37,902 $50,626
Gross student
receivables $113,978 $134,877
Allowance as a
percentage of student
receivables 33.3% 37.5%
STUDENT RECEIVABLES VALUATION
ALLOWANCE
Balance, Amounts Balance,
Beginning of Charges Written- End of
Period to Expense Off Period
------------ ---------- ---------- -----------
For the three months
ended September 30,
2006 $38,716 $18,196 $(19,010) $37,902
For the three months
ended September 30,
2005 $50,726 $22,685 $(22,785) $50,626
For the nine months
ended September 30,
2006 $44,839 $50,460 $(57,397) $37,902
For the nine months
ended September 30,
2005 $61,136 $61,719 $(72,229) $50,626
CAREER EDUCATION CORPORATION
SELECTED HISTORICAL 2006 SEGMENT INFORMATION (1)
(Dollars in thousands)
For the Three
Months Ended,
-------------------
March 31, June 30,
--------- ---------
REVENUE:
University segment $243,582 $226,322
Culinary Arts segment 90,628 82,706
Colleges segment 66,320 59,825
Health Education segment 40,578 41,082
Academy segment 43,027 39,418
Gibbs segment 29,505 26,662
INSEEC segment 14,883 10,626
JDV Online segment 107 144
--------- ---------
$528,630 $486,785
========= =========
SEGMENT PROFIT (LOSS):
University segment $82,390 $67,494
Culinary Arts segment 14,009 8,384
Colleges segment 7,274 4,482
Health Education segment (2) 1,213 (85,225)
Academy segment 4,681 1,720
Gibbs segment (3) (17,553) (10,465)
INSEEC segment 3,862 1,179
JDV Online segment (1,889) (2,181)
Corporate and other (13,869) (18,507)
--------- ---------
80,118 (33,119)
========= =========
SEGMENT PROFIT (LOSS) PERCENTAGE:
University segment 33.8% 29.8%
Culinary Arts segment 15.5% 10.1%
Colleges segment 11.0% 7.5%
Health Education segment (2) 3.0% -207.5%
Academy segment 10.9% 4.4%
Gibbs segment (3) -59.5% -39.3%
INSEEC segment 25.9% 11.1%
JDV Online segment -1765.4% -1514.6%
STUDENT STARTS:
University segment (4) 17,020 10,510
Culinary Arts segment 2,510 1,690
Colleges segment 1,740 1,110
Health Education segment 3,790 3,060
Academy segment 1,540 1,170
Gibbs segment 1,270 1,190
INSEEC segment 460 330
--------- ---------
28,330 19,060
========= =========
STUDENT POPULATION AS OF: April 30, July 31,
--------- ---------
University segment (5) 44,000 37,700
Culinary Arts segment 10,600 10,600
Colleges segment 11,500 10,300
Health Education segment 11,100 10,600
Academy segment 9,100 8,600
Gibbs segment 6,500 6,200
INSEEC segment 4,300 700
--------- ---------
97,100 84,700
========= =========
(1) Effective September 30, 2006, we changed the composition of our
reportable segments. The historical segment information reflected
in this table is categorized in accordance with our new segment
structure.
(2) Health Education segment loss for the quarter ended June 30, 2006,
includes a goodwill impairment charge of $84,975.
(3) Gibbs segment loss for the quarter ended March 31, 2006, includes
a goodwill impairment charge of $10,389.
(4) University segment student starts during the quarters ended March
31, 2006, and June 30, 2006, included student starts of 14,800
and 9,000, respectively, for its fully-online platforms.
(5) University segment student population as of April 30, 2006, and
July 31, 2006, included 31,500 and 28,500 students, respectively,
enrolled in its fully-online platforms.
CAREER EDUCATION CORPORATION
SELECTED HISTORICAL 2005 SEGMENT INFORMATION (1)
(Dollars in thousands)
For the Three Months Ended,
-------------------------------------------
For the
Year Ended
September December December
March 31, June 30, 30, 31, 31,
---------- ---------- ---------- ---------- -----------
REVENUE:
University
segment $211,719 $221,030 $215,280 $222,095 $870,124
Culinary
Arts
segment 92,556 90,908 100,406 99,461 383,331
Colleges
segment 75,765 67,488 68,961 76,287 288,501
Health
Education
segment 37,921 37,508 38,310 40,135 153,874
Academy
segment 40,648 37,107 38,160 44,094 160,009
Gibbs
segment 38,272 33,116 30,756 31,728 133,872
INSEEC
segment 13,555 10,306 5,609 15,360 44,830
JDV Online
segment - - - 14 14
---------- ---------- ---------- ---------- -----------
$510,436 $497,463 $497,482 $529,174 $2,034,555
========== ========== ========== ========== ===========
SEGMENT PROFIT
(LOSS):
University
segment $78,530 $75,682 $63,925 $69,887 $288,024
Culinary
Arts
segment 18,336 15,049 25,439 23,847 82,671
Colleges
segment 14,245 9,201 9,644 14,707 47,797
Health
Education
segment (1,003) (389) 683 1,797 1,088
Academy
segment 2,863 572 2,193 6,068 11,696
Gibbs
segment (955) (5,013) (5,501) (3,920) (15,389)
INSEEC
segment 3,462 2,297 297 3,077 9,133
JDV Online
segment (75) (372) (785) (2,171) (3,403)
Corporate
and other (14,680) (13,835) (11,756) (7,207) (47,478)
---------- ---------- ---------- ---------- -----------
$100,723 $83,192 $84,139 $106,085 $374,139
========== ========== ========== ========== ===========
SEGMENT PROFIT
(LOSS)
PERCENTAGE:
University
segment 37.1% 34.2% 29.7% 31.5% 33.1%
Culinary
Arts
segment 19.8% 16.6% 25.3% 24.0% 21.6%
Colleges
segment 18.8% 13.6% 14.0% 19.3% 16.6%
Health
Education
segment -2.6% -1.0% 1.8% 4.5% 0.7%
Academy
segment 7.0% 1.5% 5.7% 13.8% 7.3%
Gibbs
segment -2.5% -15.1% -17.9% -12.4% -11.5%
INSEEC
segment 25.5% 22.3% 5.3% 20.0% 20.4%
JDV Online
segment N/A N/A N/A -15507.1% -24307.1%
STUDENT
STARTS:
University
segment 20,030 13,010 15,250 16,600 64,890
Culinary
Arts
segment 2,710 1,940 4,300 2,100 11,050
Colleges
segment 2,630 1,460 3,870 1,620 9,580
Health
Education
segment 3,220 2,830 4,050 2,570 12,670
Academy
segment 1,810 1,380 2,280 2,640 8,110
Gibbs
segment 1,620 1,250 1,650 1,800 6,320
INSEEC
segment 480 260 2,400 900 4,040
---------- ---------- ---------- ---------- -----------
32,500 22,130 33,800 28,230 116,660
========== ========== ========== ========== ===========
STUDENT
POPULATION AS October January
OF: April 30, July 31, 31, 31,
---------- ---------- ---------- ----------
University
segment 39,400 41,200 46,400 46,400
Culinary
Arts
segment 11,600 11,500 12,500 11,500
Colleges
segment 13,500 12,700 14,200 13,100
Health
Education
segment 10,700 10,100 11,200 10,900
Academy
segment 8,900 8,800 10,100 9,800
Gibbs
segment 8,100 7,400 7,500 7,000
INSEEC
segment 4,500 300 5,500 5,500
---------- ---------- ---------- ----------
96,700 92,000 107,400 104,200
========== ========== ========== ==========
(1) Effective September 30, 2006, we changed the composition of our
reportable segments. The historical segment information reflected
in this table is categorized in accordance with our new segment
structure.
CAREER EDUCATION CORPORATION
SELECTED HISTORICAL 2004 SEGMENT INFORMATION (1)
(Dollars in thousands)
For the Three Months Ended,
------------------------------------------
For the
Year Ended
September December December
March 31, June 30, 30, 31, 31,
---------- ---------- ---------- --------- -----------
REVENUE:
University
segment $123,049 $145,556 $155,840 $173,103 $597,548
Culinary
Arts
segment 78,861 79,433 92,749 98,558 349,601
Colleges
segment 69,210 61,776 68,921 84,185 284,092
Health
Education
segment 33,771 34,855 37,732 38,637 144,995
Academy
segment 34,423 32,790 34,740 41,443 143,396
Gibbs
segment 46,781 41,650 41,289 42,049 171,769
INSEEC
segment 11,270 8,002 4,763 13,096 37,131
---------- ---------- ---------- --------- -----------
$397,365 $404,062 $436,034 $491,071 $1,728,532
========== ========== ========== ========= ===========
SEGMENT PROFIT
(LOSS):
University
segment $41,302 $48,452 $44,737 $48,517 $183,008
Culinary
Arts
segment 15,033 14,328 23,322 26,821 79,504
Colleges
segment 12,468 8,854 12,324 22,543 56,189
Health
Education
segment (552) (634) 1,344 2,819 2,977
Academy
segment 2,081 (408) (878) 3,427 4,222
Gibbs
segment 877 (3,133) (4,755) (5,191) (12,202)
INSEEC
segment 2,599 1,577 (628) 3,357 6,905
Corporate
and other (8,732) (7,558) (5,885) (2,619) (24,794)
---------- ---------- ---------- --------- -----------
$65,076 $61,478 $69,581 $99,674 $295,809
========== ========== ========== ========= ===========
SEGMENT PROFIT (LOSS)
PERCENTAGE:
University
segment 33.6% 33.3% 28.7% 28.0% 30.6%
Culinary
Arts
segment 19.1% 18.0% 25.1% 27.2% 22.7%
Colleges
segment 18.0% 14.3% 17.9% 26.8% 19.8%
Health
Education
segment -1.6% -1.8% 3.6% 7.3% 2.1%
Academy
segment 6.0% -1.2% -2.5% 8.3% 2.9%
Gibbs
segment 1.9% -7.5% -11.5% -12.3% -7.1%
INSEEC
segment 23.1% 19.7% -13.2% 25.6% 18.6%
STUDENT STARTS:
University
segment 12,190 9,250 12,840 14,490 48,770
Culinary
Arts
segment 2,760 2,120 4,530 2,620 12,030
Colleges
segment 3,040 2,030 5,000 2,320 12,390
Health
Education
segment 3,810 3,010 4,100 2,630 13,550
Academy
segment 1,880 1,510 2,720 2,780 8,890
Gibbs
segment 2,830 2,300 2,690 2,630 10,450
INSEEC
segment 290 320 1,660 1,160 3,430
---------- ---------- ---------- --------- -----------
26,800 20,540 33,540 28,630 109,510
========== ========== ========== ========= ===========
STUDENT
POPULATION AS October January
OF: April 30, July 31, 31, 31,
---------- ---------- ---------- ---------
University
segment 28,500 29,600 35,600 39,800
Culinary
Arts
segment 10,500 11,100 12,700 12,200
Colleges
segment 13,900 12,900 16,000 15,200
Health
Education
segment 10,800 10,200 11,100 10,800
Academy
segment 8,200 8,200 9,100 9,400
Gibbs
segment 11,000 10,200 10,300 9,200
INSEEC
segment 3,800 100 4,600 4,900
---------- ---------- ---------- ---------
86,700 82,300 99,400 101,500
========== ========== ========== =========
(1) Effective September 30, 2006, we changed the composition of our
reportable segments. The historical segment information reflected
in this table is categorized in accordance with our new segment
structure.
CAREER EDUCATION CORPORATION
OCTOBER 2006 SEGMENT STUDENT START INFORMATION
For the Month Ended
October 31,
-------------------
2006 2005
--------- ---------
STUDENT STARTS:
University segment 7,450 11,270
Culinary Arts segment 1,470 1,140
Colleges segment 1,120 1,520
Health Education segment 1,430 1,210
Academy segment 2,530 2,650
Gibbs segment 2,070 1,820
INSEEC segment 930 940
--------- ---------
17,000 20,550
========= =========
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
SELECTED QUARTERLY DATA FOR UNIVERSITY SEGMENT
2006 2005
--------------------------- ---------------------------
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
------ ------ ------ ------ ------ ------ ------ ------
Revenue
earning days
AIU Online 83 84 78 70 82 84 79 70
CTU Online 77 77 77 77 77 77 77 77
------ ------ ------ ------ ------ ------ ------ ------
Total 160 161 155 147 159 161 156 147
====== ====== ====== ====== ====== ====== ====== ======
AIU Online CTU Online
--------------------------- ---------------------------
2006 2005 2006 2005
------------- ------------- ------------- -------------
Start Grad Start Grad Start Grad Start Grad
------ ------ ------ ------ ------ ------ ------ ------
January 1/1 none 1/2 none 1/1 none 1/2 none
February 2/5 2/4 2/13 2/5 2/8 2/7 2/9 2/8
March 3/19 3/11 3/20 3/19 none 3/18 none 3/19
Total 1Q
dates 3 2 3 2 2 2 2 2
April 4/23 4/22 none 4/23 4/2 none 4/3 none
May none 5/27 5/1 none 5/17 5/9 5/11 5/10
June 6/4 none 6/5 6/4 none 6/24 none 6/18
Total 2Q
dates 2 2 2 2 2 2 2 2
July 7/9 7/8 7/17 7/9 7/2 none 7/3 none
August 8/27 8/12 8/21 8/20 8/16 8/8 8/10 8/9
September none 9/30 none 9/24 none 9/23 none 9/17
Total 3Q
dates 2 3 2 3 2 2 2 2
October 10/1 none 10/9 none 10/1 none 10/2 none
November 11/12 11/4 11/13 11/12 11/15 11/7 11/9 11/8
December none 12/16 none 12/17 none 12/23 none 12/17
Total 4Q
dates 2 2 2 2 2 2 2 2
CONTACT: Career Education Corporation
Investors:
Karen M. King
847-585-3899
www.careered.com
or
Media:
Pattie Overstreet-Miller
847-851-7351
or
Lynne Baker
847-851-7006