PERDOCEO EDUCATION Corp - FORM 8-K - EX-99.1

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8-K - 8-K - PERDOCEO EDUCATION Corp	d580369d8k.htm

Exhibit 99.1

LOGO

CAREER EDUCATION CORPORATION REPORTS

RESULTS FOR SECOND QUARTER 2013

Schaumburg, Ill. (August 7, 2013) – Career Education Corporation (NASDAQ: CECO) today reported total revenue of $294.8 million, and a net loss of $31.4 million, or -$0.47 per diluted share, for the second quarter of 2013 compared to total revenue of $365.9 million and net loss of $100.2 million, or -$1.52 per diluted share, for the second quarter of 2012.

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

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

CONSOLIDATED RESULTS

Quarter Ended June 30, 2013

•

Total revenue was $294.8 million for the second quarter of 2013, a 19.4 percent decrease from $365.9 million for the second quarter of 2012.

•

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

•

The loss from continuing operations for the second quarter of 2013 was $29.9 million, or -$0.45 per diluted share, versus the loss from continuing operations of $85.9 million, or -$1.30 per diluted share, for the second quarter of 2012.

Year to Date Ended June 30, 2013

•

Total revenue was $635.1 million for the year to date ended June 30, 2013, compared to $795.6 million for the year to date ended June 30, 2012.

•

Operating losses of $80.9 million and $57.0 million were recorded for the years to date ended June 30, 2013 and 2012, respectively. The operating margin decreased to -12.7 percent for the year to date ended June 30, 2013, from -7.2 percent for the year to date ended June 30, 2012.

•

The loss from continuing operations for the year to date ended June 30, 2013, was $43.9 million, or -$0.66 per diluted share, compared to the loss from continuing operations of $44.5 million, or -$0.67 per diluted share, for the year to date ended June 30, 2012.

•

In addition to the significant items for the quarter ended June 30, 2012 above, the operating results for the year to date ended June 30, 2012 include a $19.0 million ($0.19 per diluted share) insurance recovery related to the settlement of claims under certain insurance policies.

CEC ANNOUNCES 2Q13 RESULTS …PG 2

CONSOLIDATED CASH FLOWS AND FINANCIAL POSITION

Cash Flows

•

Net cash flows used in operating activities totaled $67.0 million for the year to date ended June 30, 2013, compared to net cash flows provided by operating activities of $16.6 million for the year to date ended June 30, 2012.

•

Capital expenditures decreased to $10.0 million during the year to date ended June 30, 2013, from $20.0 million during the year to date ended June 30, 2012. Capital expenditures represented 1.6 percent and 2.5 percent of total revenue of continuing and discontinued operations during the years to date ended June 30, 2013 and 2012, respectively.

Financial Position

•

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

LEGAL AND REGULATORY MATTERS

•

During the second quarter of 2013, the Company reached a preliminary agreement regarding the monetary component of a settlement with the Attorney General of the State of New York relating to their investigation of whether the Company and certain of its schools have complied with certain New York state consumer protection, securities, finance and other laws, which is subject to negotiation of a final agreement including certain injunctive provisions. This resulted in the Company recording a $10.0 million ($0.10 per diluted share) pretax charge in the current year quarter.

•

In addition, during the second quarter of 2013, the Company agreed to proposed settlements for its ongoing securities litigation and shareholder derivative actions which are subject to negotiation of final agreements and court approval. The Company expects that the costs to settle these matters will be covered under its insurance policies.

CEC ANNOUNCES 2Q13 RESULTS …PG 3

STUDENT POPULATION AND NEW STUDENT STARTS

Student Population

Total student population by reportable segment as of June 30, 2013 and 2012 was as follows:


	As of June 30,				% Change 2013 vs. 2012
	2013		2012		% Change 2013 vs. 2012
Student Population
CTU		20,500		22,600		-9%
AIU		11,600		14,500		-20%

Total University Schools		32,100		37,100		-13%

Health Education		7,800		10,200		-24%
Culinary Arts		7,700		12,000		-36%
Design & Technology		4,700		6,600		-29%

Total Career Schools		20,200		28,800		-30%

International		2,400		2,700		-11%

Subtotal		54,700		68,600		-20%
Transitional Schools		2,900		8,300		-65%

Total Student Population		57,600		76,900		-25%

New Student Starts

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


	For the Quarter Ended June 30,				% Change 2013 vs. 2012
	2013		2012		% Change 2013 vs. 2012
New Student Starts
CTU ⁽¹⁾		4,410		5,800		-24%
AIU ⁽¹⁾		2,110		3,050		-31%

Total University Schools		6,520		8,850		-26%

Health Education		1,540		1,470		5%
Culinary Arts		2,260		2,410		-6%
Design & Technology		540		610		-11%

Total Career Schools		4,340		4,490		-3%

International		370		510		-27%

Subtotal		11,230		13,850		-19%
Transitional Schools ⁽²⁾		30		1,090		NM

Total New Student Starts		11,260		14,940		-25%

(1)

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

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

CEC ANNOUNCES 2Q13 RESULTS …PG 4

CONFERENCE CALL INFORMATION

Career Education Corporation will host a conference call on Thursday, August 8, 2013 at 10:00 a.m. Eastern time. Interested parties can access the live webcast of the conference call at www.careered.com in the Investor Relations section of the website. Participants can also listen to the conference call by dialing 800-580-9478 (domestic) or 630-691-2769 (international) and citing code 35251022. Please log-in or dial-in at least 10 minutes prior to the start time to ensure a connection. An archived version of the webcast will be accessible for 90 days at www.careered.com in the Investor Relations section of the website. A replay of the call will also be available for seven days by calling 888-843-7419 (domestic) or 630-652-3042 (international) and citing code 35251022.

ABOUT CAREER EDUCATION CORPORATION

The colleges, schools and universities that are part of the Career Education Corporation (“CEC”) family offer high-quality education to a diverse student population across the world in a variety of career-oriented disciplines through online, on-ground and hybrid learning program offerings. The more than 90 campuses that serve these students are located throughout the United States and in France and Monaco, and offer doctoral, master’s, bachelor’s and associate degrees and diploma and certificate programs.

CEC is an industry leader whose institutions are recognized globally. Those institutions include, among others, American InterContinental University (“AIU”); Brooks Institute; Colorado Technical University (“CTU”); Harrington College of Design; INSEEC Group (“INSEEC”) Schools; International University of Monaco (“IUM”); International Academy of Design & Technology (“IADT”); Le Cordon Bleu North America (“LCB”); and Sanford-Brown Institutes and Colleges (“SBI” and “SBC”, respectively). Through its schools, CEC is committed to providing high-quality education, enabling students to graduate and pursue rewarding career opportunities.

For more information, see CEC’s website at www.careered.com. The website includes a detailed listing of individual campus locations and web links to CEC’s colleges, schools, and universities.

Except for the historical and present factual information contained herein, the matters set forth in this release, including statements identified by words such as “anticipate”, “believe”, “plan”, “expect”, “intend”, “project”, “will”, “potential” and similar expressions, are forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on information currently available to us and are subject to various assumptions, risks, uncertainties and other factors that could cause our results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update or revise such factors or any of the forward-looking statements contained herein to reflect future events, developments or changed circumstances, or for any other reason. These risks and uncertainties, the outcomes of which could materially and adversely affect our financial condition and operations, include, but are not limited to, the following: declines in enrollment; our ability to implement our strategic initiatives and effective cost reduction strategies; our continued compliance with and eligibility to participate in Title IV Programs under the Higher Education Act of 1965, as amended, and the regulations thereunder (including the “90-10 Rule” and financial responsibility standards prescribed by the U.S. Department of Education), as well as national and regional accreditation standards and state regulatory requirements; our ability to successfully defend litigation and other claims brought against us; rulemaking by the U.S. Department of Education and increased focus by the U.S. Congress and governmental agencies on for-profit education institutions; and changes in the overall U.S. or global economy. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and its subsequent filings with the Securities and Exchange Commission.

###

CEC ANNOUNCES 2Q13 RESULTS …PG 5

CONTACT

Investors:

Doug Craney

Vice President, Investor Relations and Business Development

(847) 585-3899

Media:

Mark Spencer

Director, Corporate Communications

(847) 585-3802

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands)


	June 30, 2013 ⁽¹⁾			December 31, 2012 ⁽¹⁾
ASSETS
CURRENT ASSETS:
Cash and cash equivalents, unrestricted	$	165,921		$	240,559
Restricted cash		11,966			97,878
Short-term investments		63,947			63,876

Total cash and cash equivalents and short-term investments		241,834			402,313

Student receivables, net		53,518			68,798
Receivables, other, net		40,453			3,837
Prepaid expenses		96,436			44,297
Inventories		7,690			8,471
Deferred income tax assets, net		7,129			7,095
Other current assets		7,245			4,422
Assets of discontinued operations		3,705			4,328

Total current assets		458,010			543,561


NON-CURRENT ASSETS:
Property and equipment, net		246,008			277,302
Goodwill		132,389			133,025
Intangible assets, net		56,895			61,670
Student receivables, net		6,029			6,832
Deferred income tax assets, net		47,936			47,707
Other assets, net		28,149			33,280
Assets of discontinued operations		18,772			19,326

TOTAL ASSETS	$	994,188		$	1,122,703

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current maturities of capital lease obligations	$	—		$	80,211
Accounts payable		31,863			38,416
Accrued expenses:
Payroll and related benefits		46,414			46,586
Advertising and production costs		22,630			20,963
Other		83,483			44,585
Deferred tuition revenue		80,945			111,896
Liabilities of discontinued operations		13,522			10,058

Total current liabilities		278,857			352,715


NON-CURRENT LIABILITIES:
Deferred rent obligations		91,415			95,073
Other liabilities		29,331			29,799
Liabilities of discontinued operations		24,844			33,326

Total non-current liabilities		145,590			158,198


STOCKHOLDERS’ EQUITY:
Preferred stock		—			—
Common stock		818			816
Additional paid-in capital		600,796			596,826
Accumulated other comprehensive loss		(3,712	)		(4,785	)
Retained earnings		186,328			232,921
Cost of shares in treasury		(214,489	)		(213,988	)

Total stockholders’ equity		569,741			611,790

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	994,188		$	1,122,703

(1)

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

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(In thousands, except per share amounts and percentages)


	For the Quarter Ended June 30,⁽¹⁾
	2013			% of Total Revenue		2012			% of Total Revenue
REVENUE:
Tuition and registration fees	$	289,241			98.1%	$	359,871			98.3%
Other		5,606			1.9%		6,078			1.7%

Total revenue		294,847					365,949

OPERATING EXPENSES:
Educational services and facilities		121,353			41.2%		143,120			39.1%
General and administrative		214,170			72.6%		223,200			61.0%
Depreciation and amortization		18,884			6.4%		19,503			5.3%
Goodwill and asset impairment		3,966			1.3%		85,381			23.3%

Total operating expenses		358,373			121.5%		471,204			128.8%

Operating loss		(63,526	)		-21.5%		(105,255	)		-28.8%

OTHER INCOME (EXPENSE):
Interest income		772			0.3%		470			0.1%
Interest expense		(213	)		-0.1%		(28	)		0.0%
Loss on sale of business		(222	)		-0.1%		—			0.0%
Miscellaneous income (expense)		27			0.0%		(77	)		0.0%

Total other income		364			0.1%		365			0.1%

PRETAX LOSS		(63,162	)		-21.4%		(104,890	)		-28.7%
Benefit from income taxes		(33,274	)		-11.3%		(19,027	)		-5.2%


LOSS FROM CONTINUING OPERATIONS		(29,888	)		-10.1%		(85,863	)		-23.5%
Loss from discontinued operations, net of tax		(1,502	)		-0.5%		(14,371	)		-3.9%

NET LOSS		(31,390	)		-10.6%		(100,234	)		-27.4%

OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Foreign currency translation adjustments		2,811					(9,736	)
Unrealized gains (losses) on investments		4					(108	)

Total other comprehensive income (loss)		2,815					(9,844	)

COMPREHENSIVE LOSS	$	(28,575	)			$	(110,078	)


NET LOSS PER SHARE - DILUTED:
Loss from continuing operations	$	(0.45	)			$	(1.30	)
Loss from discontinued operations		(0.02	)				(0.22	)

Net loss per share	$	(0.47	)			$	(1.52	)


DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING		66,751					66,034

(1)

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

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(In thousands, except per share amounts and percentages)


	For the Year to Date Ended June 30,⁽¹⁾
	2013			% of Total Revenue		2012			% of Total Revenue
REVENUE:
Tuition and registration fees	$	624,292			98.3%	$	779,025			97.9%
Other		10,804			1.7%		16,555			2.1%

Total revenue		635,096					795,580

OPERATING EXPENSES:
Educational services and facilities		253,724			40.0%		292,997			36.8%
General and administrative		420,184			66.2%		435,016			54.7%
Depreciation and amortization		37,946			6.0%		39,144			4.9%
Goodwill and asset impairment		4,123			0.6%		85,464			10.7%

Total operating expenses		715,977			112.7%		852,621			107.2%

Operating loss		(80,881	)		-12.7%		(57,041	)		-7.2%

OTHER (EXPENSE) INCOME:
Interest income		1,027			0.2%		740			0.1%
Interest expense		(919	)		-0.1%		(65	)		0.0%
Loss on sale of business		(6,934	)		-1.1%		—			0.0%
Miscellaneous expense		(439	)		-0.1%		(77	)		0.0%

Total other (expense) income		(7,265	)		-1.1%		598			0.1%

PRETAX LOSS		(88,146	)		-13.9%		(56,443	)		-7.1%
Benefit from income taxes		(44,240	)		-7.0%		(11,930	)		-1.5%


LOSS FROM CONTINUING OPERATIONS		(43,906	)		-6.9%		(44,513	)		-5.6%
Loss from discontinued operations, net of tax		(2,687	)		-0.4%		(3,645	)		-0.5%

NET LOSS		(46,593	)		-7.3%		(48,158	)		-6.1%

OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Foreign currency translation adjustments		1,068					(4,296	)
Unrealized gains (losses) on investments		5					(120	)

Total other comprehensive income (loss)		1,073					(4,416	)

COMPREHENSIVE LOSS	$	(45,520	)			$	(52,574	)


NET LOSS PER SHARE - DILUTED:
Loss from continuing operations	$	(0.66	)			$	(0.67	)
Loss from discontinued operations		(0.04	)				(0.05	)

Net loss per share	$	(0.70	)			$	(0.72	)


DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING:		66,585					66,439

(1)

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	For the Year to Date Ended June 30,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(46,593	)	$	(48,158	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Goodwill and asset impairment		4,123			85,661
Depreciation and amortization expense		38,235			40,126
Bad debt expense		14,042			17,779
Compensation expense related to share-based awards		3,406			5,735
Loss on sale of business		6,934			—
Loss on disposition of property and equipment		103			287
Changes in operating assets and liabilities		(87,225	)		(84,853	)

Net cash (used in) provided by operating activities		(66,975	)		16,577


CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investments		(34,570	)		(108,198	)
Sales of available-for-sale investments		34,485			108,188
Purchases of property and equipment		(10,005	)		(19,990	)
Payments of cash upon sale of business		(2,525	)		—
Business acquisition, net of acquired cash		—			(2,873	)
Other		9			(120	)

Net cash used in investing activities		(12,606	)		(22,993	)


CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock		—			(56,431	)
Issuance of common stock		565			883
Payments of contingent consideration		—			(5,818	)
Payment on borrowings		(80,000	)		—
Change in restricted cash		85,912			—
Payments of assumed loans upon business acquisition		—			(318	)
Payments of capital lease obligations		(210	)		(641	)

Net cash provided by (used in) financing activities		6,267			(62,325	)


EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS:		(1,381	)		(2,539	)


NET DECREASE IN CASH AND CASH EQUIVALENTS		(74,695	)		(71,280	)
DISCONTINUED OPERATIONS CASH ACTIVITY INCLUDED ABOVE:
Add: Cash balance of discontinued operations, beginning of the period		63			—
Less: Cash balance of discontinued operations, end of the period		6			35
CASH AND CASH EQUIVALENTS, beginning of the period		240,559			280,592

CASH AND CASH EQUIVALENTS, end of the period	$	165,921		$	209,277

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)


	For the Quarter Ended June 30,
	2013			2012 ⁽¹⁾
REVENUE:
CTU	$	86,887		$	91,839
AIU		59,935			78,841

Total University Schools		146,822			170,680

Health Education		35,289			45,457
Culinary Arts ⁽²⁾		44,577			57,895
Design & Technology		27,858			34,724

Total Career Schools		107,724			138,076

International		25,824			21,140
Corporate and Other		—			20

Subtotal		280,370			329,916
Transitional Schools ⁽²⁾		14,477			36,033

Total	$	294,847		$	365,949

OPERATING (LOSS) INCOME:
CTU	$	16,588		$	12,181
AIU		1,021			6,878

Total University Schools		17,609			19,059

Health Education ⁽³⁾		(27,107	)		(50,230	)
Culinary Arts ^{(2) (4)}		(17,017	)		(3,121	)
Design & Technology ⁽⁵⁾		(7,595	)		(45,006	)

Total Career Schools		(51,719	)		(98,357	)

International		(3,659	)		(2,406	)
Corporate and Other		(11,050	)		(5,373	)

Subtotal		(48,819	)		(87,077	)
Transitional Schools ^{(2) (6)}		(14,707	)		(18,178	)

Total	$	(63,526	)	$	(105,255	)

OPERATING (LOSS) MARGIN:
CTU		19.1%			13.3%
AIU		1.7%			8.7%
Total University Schools		12.0%			11.2%
Health Education		-76.8%			-110.5%
Culinary Arts		-38.2%			-5.4%
Design & Technology		-27.3%			-129.6%
Total Career Schools		-48.0%			-71.2%
International		-14.2%			-11.4%
Corporate and Other		NM			NM
Subtotal		-17.4%			-26.4%
Transitional Schools		-101.6%			-50.4%
Total		-21.5%			-28.8%

(1)

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

(2)

(3)

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

(4)

The second quarter of 2013 includes a $2.3 million non-cash trade name impairment charge.

(5)

The second quarter of 2012 includes a $40.8 million non-cash goodwill impairment charge.

(6)

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

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)


	For the Year to Date Ended June 30,
	2013			2012 ⁽¹⁾
REVENUE:
CTU	$	177,096		$	188,168
AIU		126,234			167,781

Total University Schools		303,330			355,949

Health Education		73,310			99,549
Culinary Arts ⁽²⁾		90,515			120,733
Design & Technology		58,147			76,525

Total Career Schools		221,972			296,807

International		75,501			63,969
Corporate and Other		—			34

Subtotal		600,803			716,759

Transitional Schools ⁽²⁾		34,293			78,821

Total	$	635,096		$	795,580

OPERATING (LOSS) INCOME:
CTU	$	32,500		$	31,260
AIU		4,167			21,539

Total University Schools		36,667			52,799

Health Education ⁽³⁾		(38,417	)		(51,902	)
Culinary Arts ^{(2) (4)}		(29,154	)		(1,855	)
Design & Technology ⁽⁵⁾		(14,751	)		(44,672	)

Total Career Schools		(82,322	)		(98,429	)

International		9,821			10,719
Corporate and Other ⁽⁶⁾		(17,418	)		7,209

Subtotal		(53,252	)		(27,702	)
Transitional Schools ^{(2) (7)}		(27,629	)		(29,339	)

Total	$	(80,881	)	$	(57,041	)

OPERATING MARGIN (LOSS):
CTU		18.4%			16.6%
AIU		3.3%			12.8%
Total University Schools		12.1%			14.8%
Health Education		-52.4%			-52.1%
Culinary Arts		-32.2%			-1.5%
Design & Technology		-25.4%			-58.4%
Total Career Schools		-37.1%			-33.2%
International		13.0%			16.8%
Corporate and Other		NM			NM
Subtotal		-8.9%			-3.9%
Transitional Schools		-80.6%			-37.2%
Total		-12.7%			-7.2%

(1)

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

(2)

(3)

2013 expenses include $10.0 million related to the probable settlement of a legal matter and a $1.7 million non-cash trade name impairment charge. 2012 expenses include a $41.9 million non-cash goodwill impairment charge.

(4)

2013 expenses include a $2.3 million non-cash trade name impairment charge.

(5)

2012 expenses include a $40.8 million non-cash goodwill impairment charge.

(6)

During 2012, a $19.0 million insurance recovery was recorded related to the settlement of claims under certain insurance policies.

(7)

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

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION BY QUARTER - 2012

(In thousands)


	For the 2012 Quarters Ended ⁽¹⁾
	March 31			June 30			September 30			December 31			Full Year
REVENUE:
CTU	$	96,329		$	91,839		$	86,484		$	89,283		$	363,935
AIU		88,940			78,841			71,204			65,223			304,208

Total University Schools		185,269			170,680			157,688			154,506			668,143

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

Total Career Schools		158,731			138,076			128,013			123,141			547,961

International		42,829			21,140			14,665			49,934			128,568
Corporate and Other		14			20			16			5			55

Subtotal		386,843			329,916			300,382			327,586			1,344,727

Transitional Schools ⁽²⁾		42,788			36,033			30,438			26,332			135,591

Total	$	429,631		$	365,949		$	330,820		$	353,918		$	1,480,318


OPERATING (LOSS) INCOME:
CTU	$	19,079		$	12,181		$	10,324		$	13,344		$	54,928
AIU		14,661			6,878			1,084			(1,727	)		20,896

Total University Schools		33,740			19,059			11,408			11,617			75,824

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

Total Career Schools		(72	)		(98,357	)		(29,134	)		(42,206	)		(169,769	)

International		13,125			(2,406	)		(6,444	)		16,856			21,131
Corporate and Other		12,582			(5,373	)		(5,402	)		(9,425	)		(7,618	)

Subtotal		59,375			(87,077	)		(29,572	)		(23,158	)		(80,432	)

Transitional Schools ⁽²⁾		(11,161	)		(18,178	)		(17,327	)		(52,771	)		(99,437	)

Total	$	48,214		$	(105,255	)	$	(46,899	)	$	(75,929	)	$	(179,869	)

(1)

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

(2)

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION BY QUARTER - 2012


	As of the 2012 Quarters Ended ⁽¹⁾
	March 31		June 30		September 30		December 31
STUDENT POPULATION:
CTU		23,500		22,600		22,000		21,600
AIU		18,900		14,500		14,900		14,200

Total University Schools		42,400		37,100		36,900		35,800

Health Education		13,600		10,200		10,600		8,800
Culinary Arts ⁽²⁾		12,500		12,000		11,200		8,500
Design & Technology		7,800		6,600		6,500		5,400

Total Career Schools		33,900		28,800		28,300		22,700

International		8,000		2,700		8,800		11,400

Subtotal		84,300		68,600		74,000		69,900

Transitional Schools ⁽²⁾		10,600		8,300		7,300		6,000

Total		94,900		76,900		81,300		75,900


	For the 2012 Quarters Ended ⁽¹⁾
	March 31		June 30		September 30		December 31		Full Year
NEW STUDENT STARTS:
CTU		5,670		5,800		5,150		5,040		21,660
AIU		6,640		3,050		3,700		3,370		16,760

Total University Schools		12,310		8,850		8,850		8,410		38,420

Health Education		3,160		1,470		3,310		1,180		9,120
Culinary Arts ⁽²⁾		3,160		2,410		3,920		2,810		12,300
Design & Technology		1,080		610		1,060		490		3,240

Total Career Schools		7,400		4,490		8,290		4,480		24,660

International		740		510		4,750		1,940		7,940

Subtotal		20,450		13,850		21,890		14,830		71,020

Transitional Schools ⁽²⁾		2,520		1,090		1,720		840		6,170

Total		22,970		14,940		23,610		15,670		77,190

(1)

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

(2)

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