CECO CECO Environmental Corporation

Career Education Corporation (NASDAQ: CECO) today reported total revenue of $405.6 million and a net loss of ($0.1) million, or $0.00 per diluted share, during the third quarter of 2008 compared to total revenue of $427.2 million and net income of $15.6 million, or $0.17 per diluted share, during the third quarter of 2007. Included in the results for the third quarter of 2008 are the following significant items: $15.7 million pre-tax, or ($0.12) per share in charges, related to the company�s ongoing effort to optimize its real estate footprint, representing $10.9 million pre-tax, or ($0.08) per share of cash lease exit expenses and $4.8 million pretax, or ($0.04) per share in noncash asset impairment charges, $2.0 million pre-tax, or ($0.01) per share, in trade name noncash impairment charges related to brand consolidation actions, and $3.2 million, or $0.04 per share, in tax benefit related to the sale of a foreign subsidiary. �I am encouraged that despite external challenges, our financial results remain in line with our expectations,� said Gary E. McCullough, president and chief executive officer. �Our Health Education and International segments maintained their strong performance in the third quarter and continue to execute well. Additionally, online starts within the University segment grew over nine percent in the quarter. Through the first nine months of the year, the Culinary Arts segment has taken the necessary steps to adjust its operations and student financing capabilities to the new lending environment. These actions provide a blueprint for the Art & Design segment as it seeks to address similar challenges. While we still have work to do, we continue to make solid progress in positioning the company for the long-term.� Three Months Ended September 30, 2008 Total revenue was $405.6 million during the third quarter of 2008, a 5.0 percent decrease from $427.2 million during the third quarter of 2007. Operating loss was ($8.8) million during the third quarter of 2008, a decrease from $18.9 million of operating income during the third quarter of 2007. Operating margin percentage was (2.2%) percent during the third quarter of 2008, a 6.6 percentage point decrease relative to an operating profit margin percentage of 4.4 percent during the third quarter of 2007. Loss from continuing operations was ($0.0) million, or $0.00 per diluted share, during the third quarter of 2008, compared to income from continuing operations of $16.2 million, or $0.18 per diluted share, during the third quarter of 2007. Nine Months Ended September 30, 2008 Total revenue was $1.279 billion during the nine months ended September 30, 2008, relative to $1.308 billion during the nine months ended September 30, 2007. Operating income declined to $28.6 million during the nine months ended September 30, 2008, from $64.2 million during the nine months ended September 30, 2007. Operating margin percentage decreased to 2.2 percent during the nine months ended September 30, 2008, from 4.9 percent during the nine months ended September 30, 2007. Included in the results from continuing operations for the nine months ended September 30, 2008 and for the nine months ended September 30, 2007 are the following significant items: � � � Pre-Tax Expense(In Millions) � � Diluted Earnings perShare Impact Income (Loss) Nine Months Ended September 30, 2008 Lease Exit Charges $10.9 ($0.08 ) Severance/Stay Bonuses $13.3 ($0.09 ) Asset Impairment Charges $9.1 ($0.07 ) Tax Benefit - $0.04 � TOTAL $33.3 ($0.20 ) � Nine Months Ended September 30, 2007 Legal Settlements $13.1 ($0.09 ) Severance $1.7 ($0.01 ) TOTAL $14.8 ($0.10 ) Income from continuing operations during the nine months ended September 30, 2008, was $31.8 million, or $0.35 per diluted share, relative to $52.4 million, or $0.55 per diluted share, during the nine months ended September 30, 2007. CONSOLIDATED CASH FLOWS AND FINANCIAL POSITION Cash Flows Net cash flow provided by operating activities was $158.9 million during the nine months ended September 30, 2008, compared to net cash flow provided by operating activities of $193.2 million during the nine months ended September 30, 2007. The decrease in operating cash flows in 2008 was due to lower net income as compared to the prior year as well as payments related to legal matters accrued for in the previous year. Capital expenditures decreased to $39.9 million during the nine months ended September 30, 2008, from $44.1 million during the nine months ended September 30, 2007. Capital expenditures represented 3.1 percent of total revenue during the nine months ended September 30, 2008. Financial Position As of September 30, 2008 and December 31, 2007, cash and cash equivalents and investments totaled $509.0 million and $390.0 million, respectively. Days sales outstanding (DSO) were 14 days as of September 30, 2008, consistent with DSO of 14 days as of December 31, 2007. POPULATION AND NEW STUDENT START DATA Student Population Total student population by reportable segment as of October 31, 2008 and 2007, were as follows: � As of October 31, � % Change 2008 � 2007 2008 vs. 2007 STUDENT POPULATION Art & Design 14,000 14,700 (5 %) Culinary Arts 10,300 12,100 (15 %) Health Education 17,200 14,600 18 % International 9,700 8,600 13 % University 44,800 42,300 6 % Subtotal 96,000 92,300 4 % Transitional Schools 2,700 8,200 (67 %) Total Student Population 98,700 100,500 (2 %) ONLINE POPULATION Art & Design 800 300 N/M University 34,400 31,900 8 % Total Online Population 35,200 32,200 9 % New Student Starts New student starts by reportable segment during the third quarter of 2008 and 2007, were as follows: � For the three months endedSeptember 30, � % Change 2008 � 2007 2008 vs. 2007 NEW STUDENT STARTS Art & Design 3,080 3,490 (12 %) Culinary Arts (1) 4,710 4,480 5 % Health Education 5,600 4,740 18 % International 4,070 3,380 21 % University 14,130 13,120 8 % Subtotal 31,590 29,210 8 % Transitional Schools 10 2,000 N/M Total New Student Starts 31,600 31,210 1 % ONLINE STARTS Art & Design 320 190 68 % University 11,480 10,520 9 % Total Online Starts 11,800 10,710 10 % (1) Culinary Arts new student starts comparability was impacted by an additional start period in the third quarter of 2008, which resulted in approximately 1,100 additional student starts in the quarter as compared to the third quarter 2007. Accordingly, in the fourth quarter 2008, Culinary will have one less start period than the fourth quarter of 2007. CONFERENCE CALL INFORMATION Career Education Corporation will host a conference call on November 6, 2008 at 10:00 AM (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 866-362-4666 (domestic) or 617-597-5313 (international) and citing code 65468933. 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. A replay of the call will also be available for seven days by calling 888-286-8010 (domestic) or 617-801-6888 (international) and citing code 45600050. 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 population of approximately 90,000 students across the world in a variety of career-oriented disciplines. The more than 75 campuses that serve these students are located throughout the U.S. and in France, Italy, and the United Kingdom, and offer doctoral, master's, bachelor's, and associate degrees and diploma and certificate programs. Approximately one-third of its students attend the web-based virtual campuses of American InterContinental University Online and Colorado Technical University Online. CEC is an industry leader whose gold-standard brands are recognized globally. Those brands include, among others, the Le Cordon Bleu Schools North America; Harrington College of Design; Brooks Institute; International Academy of Design & Technology; American InterContinental University; Colorado Technical University and Sanford-Brown Institutes and Colleges. Through its schools, CEC is committed to providing quality education, enabling students to graduate and pursue rewarding careers. For more information, see the company�s website at www.careered.com. The company's website includes a detailed listing of individual campus locations and web links to its more than 75 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," 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 the 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: the adverse impact and potential impacts on the availability of Title IV and private student loans for our students of (1) the willingness or ability of private lenders to make private student loans in the current U.S. credit markets, (2) new student lending related reporting and disclosure obligations on institutions that participate in Title IV federal student financial aid programs under The Higher Education Opportunity Act (�HEOA�), signed into law on August 14, 2008, in the first full reauthorization of the Higher Education Act of 1965, as amended, and (3) pending regulations under HEOA and Congress� willingness or ability to maintain or increase funding for Title IV programs; potential higher bad debt expense or reduced revenue associated with requiring students to pay more of their educational expenses while in school or with directly making student loans to our students; increased competition; the effectiveness of our regulatory compliance efforts; impairment of goodwill and other intangible assets as we continue to redefine the company and manage our brands and marketing to improve effectiveness and reduce costs; charges and expenses associated with exiting excess facility space, centralizing various functional areas, such as human resources and financial aid, and continuing to align the SBUs and corporate staff to remove layers, overlaps and redundancies; the impact on our revenues and profitability of our discontinued operations segment; our ability to comply with accrediting agency requirements or obtain accrediting agency approvals; costs and impacts of legal and administrative proceedings and investigations, governmental regulations, and class action and other lawsuits; costs and difficulties related to the integration of acquired businesses; our ability to manage and continue growth; and other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2007, and from time to time in our quarterly and current reports filed with the Securities and Exchange Commission. CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts and percentages) � � � � � � � For the Three Months EndedSeptember 30, % of % of 2008 Revenue 2007 (1) Revenue � REVENUE: Tuition and registration fees $ 385,849 95.1 % $ 401,939 94.1 % Other 19,784 � 4.9 % 25,266 � 5.9 % Total revenue 405,633 � 100.0 % 427,205 � 100.0 % � OPERATING EXPENSES: Educational services and facilities 170,055 41.9 % 162,636 38.1 % General and administrative 218,454 53.9 % 227,186 53.2 % Depreciation and amortization 19,034 4.7 % 18,500 4.3 % Goodwill and asset impairment 6,843 � 1.7 % - � 0.0 % Total operating expenses 414,386 � 102.2 % 408,322 � 95.6 % Operating (loss) income (8,753 ) -2.2 % 18,883 � 4.4 % � OTHER INCOME (EXPENSE): Interest income 2,875 0.7 % 4,152 1.0 % Interest expense (211 ) -0.1 % (342 ) -0.1 % Share of affiliate earnings - 0.0 % 209 0.0 % Miscellaneous (expense) income (220 ) -0.1 % 65 � 0.0 % Total other income, net 2,444 � 0.6 % 4,084 � 1.0 % � Pretax (loss) income from continuing operations (6,309 ) -1.6 % 22,967 5.4 % � (Benefit) provision for income taxes (6,263 ) -1.5 % 6,755 � 1.6 % � (Loss) income from continuing operations (46 ) 0.0 % 16,212 3.8 % � Loss from discontinued operations, net of tax (101 ) $ (651 ) � NET (LOSS) INCOME $ (147 ) $ 15,561 � � NET (LOSS) INCOME PER SHARE - DILUTED (Loss) income from continuing operations $ (0.00 ) $ 0.18 Loss from discontinued operations (0.00 ) (0.01 ) Net (loss) income $ (0.00 ) $ 0.17 � � DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 89,675 � 93,455 � (1) � Prior period financial results have been reclassified to account for the teach-out of our schools previously reported as held for sale, the change in our reportable business segments during the first quarter of 2008 and to present Brooks College - Sunnyvale, CA and IADT Toronto as discontinued operations. For further information regarding our reclassification of reportable segments, please refer to our Form 8-K filings dated March 28, 2008 and April 11, 2008. CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands) � � � � � September 30,2008 December 31,2007 (1) � ASSETS CURRENT ASSETS: Cash and cash equivalents $ 224,908 $ 223,334 Investments 284,046 � 166,618 � Total cash and cash equivalents and investments 508,954 389,952 Receivables: Students, net of allowance for doubtful accounts of $35,393 and$35,507 as of September 30, 2008, and December 31, 2007, respectively 54,981 59,584 Other, net 7,969 9,052 Prepaid expenses 44,691 50,025 Inventories 11,850 15,400 Deferred income tax assets 19,403 19,418 Other current assets 10,120 16,456 Assets of discontinued operations 628 � 23,554 � Total current assets 658,596 � 583,441 � NON-CURRENT ASSETS: Property and equipment, net 302,955 337,073 Goodwill 377,288 379,507 Intangible assets, net 40,851 44,395 Other assets, net 20,074 � 22,050 � TOTAL ASSETS $ 1,399,764 � $ 1,366,466 � � LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt and capital lease obligations $ 9,683 $ 11,843 Accounts payable 39,726 27,826 Accrued expenses: Payroll and related benefits 56,435 34,305 Income taxes 5,822 19,556 Other 76,784 102,058 Deferred tuition revenue 175,581 159,482 Liabilities of discontinued operations 2,590 � 8,282 � Total current liabilities 366,621 � 363,352 � � LONG-TERM LIABILITIES: Long-term debt and capital lease obligations, net of current maturities 1,984 2,179 Deferred rent obligations 99,051 98,115 Deferred income tax liabilities 412 624 Other 13,085 � 4,473 � Total long-term liabilities 114,532 � 105,391 � � SHARE-BASED AWARDS SUBJECT TO REDEMPTION 6,191 11,615 � STOCKHOLDERS' EQUITY: Preferred stock - - Common stock 933 930 Additional paid-in capital 220,833 207,294 Accumulated other comprehensive income 8,777 16,304 Retained earnings 770,955 736,603 Cost of shares in treasury (89,078 ) (75,023 ) Total stockholders' equity 912,420 � 886,108 � TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,399,764 � $ 1,366,466 � (1) � Prior period financial results have been reclassified to account for the teach-out of our schools previously reported as held for sale, the change in our reportable business segments during the first quarter of 2008 and to present Brooks College - Sunnyvale, CA and IADT Toronto as discontinued operations. For further information regarding our reclassification of reportable segments, please refer to our Form 8-K filings dated March 28, 2008 and April 11, 2008. CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts and percentages) � � � � � � For the Nine Months EndedSeptember 30, % of % of 2008 Revenue 2007 (1) Revenue � REVENUE: Tuition and registration fees $ 1,224,581 95.7 % $ 1,245,274 95.2 % Other 54,371 � 4.3 % 62,960 � 4.8 % Total revenue 1,278,952 � 100.0 % 1,308,234 � 100.0 % � OPERATING EXPENSES: Educational services and facilities 502,617 39.3 % 479,885 36.7 % General and administrative 680,007 53.2 % 708,147 54.1 % Depreciation and amortization 58,630 4.6 % 56,043 4.3 % Goodwill and asset impairment 9,070 � 0.7 % - � 0.0 % Total operating expenses 1,250,324 � 97.8 % 1,244,075 � 95.1 % Operating income 28,628 � 2.2 % 64,159 � 4.9 % � OTHER INCOME (EXPENSE): Interest income 9,327 0.7 % 12,787 1.0 % Interest expense (703 ) -0.1 % (877 ) -0.1 % Share of affiliate earnings 4,665 0.4 % 2,870 0.2 % Miscellaneous (expense) income (496 ) 0.0 % 784 � 0.1 % Total other income, net 12,793 � 1.0 % 15,564 � 1.2 % � Pretax income from continuing operations 41,421 3.2 % 79,723 6.1 % � Provision for income taxes 9,655 � 0.8 % 27,329 � 2.1 % � Income from continuing operations 31,766 2.5 % 52,394 4.0 % � Loss from discontinued operations, net of tax (2,838 ) (1,670 ) � NET INCOME $ 28,928 � $ 50,724 � � NET INCOME PER SHARE - DILUTED Income from continuing operations $ 0.35 $ 0.55 Loss from discontinued operations (0.03 ) (0.02 ) Net income $ 0.32 � $ 0.53 � � DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 90,144 � 95,055 � (1) � Prior period financial results have been reclassified to account for the teach-out of our schools previously reported as held for sale, the change in our reportable business segments during the first quarter of 2008 and to present Brooks College - Sunnyvale, CA and IADT Toronto as discontinued operations. For further information regarding our reclassification of reportable segments, please refer to our Form 8-K filings dated March 28, 2008 and April 11, 2008. CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) � � � � For the Nine Months Ended September 30, 2008 2007 � CASH FLOWS FROM OPERATING ACTIVITIES OF CONTINUING OPERATIONS: Net income $ 28,928 $ 50,724 Adjustments to reconcile net income to net cash provided by operating activities: Goodwill and asset impairment 13,600 - Depreciation and amortization expense 60,070 57,744 Bad debt expense 33,350 32,055 Compensation expense related to share-based awards 10,017 11,700 Gain on sale of business (1,555 ) - Loss (gain) on disposition of property and equipment 573 (220 ) Share of affiliate earnings, net of cash received 939 (927 ) Changes in operating assets and liabilities 13,022 � 42,164 � Net cash provided by operating activities 158,944 � 193,240 � � CASH FLOWS FROM INVESTING ACTIVITIES: Business acquisitions, net of acquired cash - (30,324 ) Acquisition transaction costs - (1,553 ) Purchases of property and equipment (39,874 ) (44,085 ) Purchases of available-for-sale investments (470,324 ) (504,180 ) Sales of available-for-sale investments 352,896 522,789 Other 944 � (196 ) Net cash used in investing activities (156,358 ) (57,549 ) � CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (14,055 ) (149,241 ) Issuance of common stock 3,089 14,730 Tax benefit associated with stock option exercises 433 2,868 Payments on revolving loans (1,492 ) - Payments of capital lease obligations and other long-term debt (479 ) (1,385 ) Net cash used in financing activities (12,504 ) (133,028 ) � � EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS: (2,815 ) 7,993 � � NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (12,733 ) 10,656 Add: Cash balance of discontinued operations at beginning of the period 14,371 8,530 Less: Cash balance of discontinued operations at end of the period 64 13,059 CASH AND CASH EQUIVALENTS, beginning of the period 223,334 � 181,286 � CASH AND CASH EQUIVALENTS, end of the period $ 224,908 � $ 187,413 � CAREER EDUCATION CORPORATION SELECTED SEGMENT INFORMATION (In thousands) � � � For the Three Months EndedSeptember 30, 2008 2007 (1) � REVENUE: University $ 172,856 $ 166,322 Culinary Arts 85,961 98,472 Health Education 58,071 51,916 Arts & Design 61,766 68,450 International 12,595 10,891 Transitional Schools 14,385 31,151 Corporate and other (1 ) 3 � $ 405,633 � $ 427,205 � � SEGMENT OPERATING (LOSS) INCOME: University $ 27,341 $ 16,899 Culinary Arts (2) (10,423 ) 15,566 Health Education 3,289 2,578 Arts & Design 3,832 8,281 International (5,240 ) (3,054 ) Transitional Schools (3) (10,646 ) (8,879 ) Corporate and other (16,906 ) (12,508 ) $ (8,753 ) $ 18,883 � � SEGMENT OPERATING (LOSS) INCOME PERCENTAGE: University 15.8 % 10.2 % Culinary Arts -12.1 % 15.8 % Health Education 5.7 % 5.0 % Arts & Design 6.2 % 12.1 % International -41.6 % -28.0 % Transitional Schools -74.0 % -28.5 % (1) � Prior period financial results have been reclassified to account for the teach-out of our schools previously reported as held for sale, the change in our reportable business segments during the first quarter of 2008 and to present Brooks - Sunnyvale, CA and IADT Toronto as discontinued operations. For further information regarding our reclassification of reportable segments, please refer to our Form 8-K filings dated March 28, 2008 and April 11, 2008. � (2) Culinary Arts 2008 operating loss includes pretax charges in the quarter of $18.5 million. Pretax charges related to the following: $9.7 million in lease exit charges related to two facilities, $4.8 million asset impairment due to the exit of a facility, and $4.0 million expense associated with an increase in legal reserves. � (3) Transitional Schools 2008 operating loss includes charges in the quarter of $1.1 million for unused space. CAREER EDUCATION CORPORATION SELECTED SEGMENT INFORMATION (In thousands) � � � For the Nine Months EndedSeptember 30, 2008 2007 (1) � REVENUE: University $ 525,365 $ 530,746 Culinary Arts 251,026 271,743 Health Education 171,120 152,369 Arts & Design 196,214 202,328 International 71,872 49,322 Transitional Schools 63,347 101,587 Corporate and other 8 � 139 � $ 1,278,952 � $ 1,308,234 � � SEGMENT OPERATING (LOSS) INCOME: University $ 79,806 $ 75,903 Culinary Arts (2) (5,317 ) 34,121 Health Education 12,191 9,062 Arts & Design 19,002 18,557 International 10,754 3,577 Transitional Schools (3) (36,926 ) (37,619 ) Corporate and other (50,882 ) (39,442 ) $ 28,628 � $ 64,159 � � SEGMENT OPERATING (LOSS) INCOME PERCENTAGE: University 15.2 % 14.3 % Culinary Arts -2.1 % 12.6 % Health Education 7.1 % 5.9 % Arts & Design 9.7 % 9.2 % International 15.0 % 7.3 % Transitional Schools -58.3 % -37.0 % (1) � Prior period financial results have been reclassified to account for the teach-out of our schools previously reported as held for sale, the change in our reportable business segments during the first quarter of 2008 and to present Brooks - Sunnyvale, CA and IADT Toronto as discontinued operations. For further information regarding our reclassification of reportable segments, please refer to our Form 8-K filings dated March 28, 2008 and April 11, 2008. � (2) Culinary Arts 2008 operating loss includes pretax charges of $18.5 million. Pretax charges related to the following: $9.7 million in lease exit charges related to two facilities, $4.8 million asset impairment due to the exit of a facility, and $4.0 million expense associated with an increase in legal reserves. � (3) Transitional Schools 2008 operating loss includes charges totaling $12.7 million. Charges of $9.5 million in severance and stay bonuses, asset impairment of $2.1 million related to a school being taught out, and charges of $1.1 million for unused space. CAREER EDUCATION CORPORATION SELECTED SEGMENT START-UP INFORMATION (In thousands) � � � � � For the Three Months EndedSeptember 30, For the Nine Months EndedSeptember 30, 2008 2007 (1) 2008 2007 (1) � REVENUE: Culinary Arts (2) $ 4,694 $ 391 $ 10,400 $ 391 Health Education (3) - � - � - � - � $ 4,694 � $ 391 � $ 10,400 � $ 391 � � SEGMENT OPERATING (LOSS) INCOME: Culinary Arts (2) $ (2,408 ) $ (2,025 ) $ (7,353 ) $ (4,531 ) Health Education (3) (229 ) - � (596 ) - � $ (2,637 ) $ (2,025 ) $ (7,949 ) $ (4,531 ) (1) � Prior period financial results have been reclassified to account for the teach-out of our schools previously reported as held for sale and the change in our reportable business segments during the first quarter of 2008. For further information regarding our reclassification of reportable segments, please refer to our Form 8-K filings dated March 28, 2008 and April 11, 2008. � (2) For the three and nine months ended September 30, 2008 and 2007, Culinary Arts start-up campuses include LCB, Boston, MA, Dallas, TX and St. Louis, MO and Kitchen Academy Seattle, WA. � (3) For the three and nine months ended September 30, 2008, Health Education start-up campuses include SBI San Antonio, TX. CAREER EDUCATION CORPORATION SELECTED UNIVERSITY SEGMENT INFORMATION (In thousands) � � � � � For the Three Months EndedSeptember 30, For the Nine Months EndedSeptember 30, 2008 2007 (1) 2008 2007 (1) � UNIVERSITY REVENUE: AIU Online $ 77,767 $ 73,122 $ 229,343 $ 245,606 Onground 16,787 18,880 57,918 66,467 CTU Online 58,925 55,701 175,584 156,861 Onground 12,543 11,700 39,249 37,085 Briarcliffe 6,834 � 6,919 � 23,271 � 24,727 � University $ 172,856 � $ 166,322 � $ 525,365 � $ 530,746 � � UNIVERSITY SEGMENT OPERATING INCOME (LOSS): AIU Online $ 21,545 $ 14,716 $ 52,042 $ 64,609 Onground (5,374 ) (7,508 ) (11,654 ) (13,129 ) CTU Online 12,659 11,298 41,041 26,738 Onground (1,025 ) (632 ) (959 ) (927 ) Briarcliffe (464 ) (975 ) (664 ) (1,388 ) University $ 27,341 � $ 16,899 � $ 79,806 � $ 75,903 � � UNIVERSITY SEGMENT OPERATING INCOME (LOSS) PERCENTAGE: AIU Online 27.7 % 20.1 % 22.7 % 26.3 % Onground -32.0 % -39.8 % -20.1 % -19.8 % CTU Online 21.5 % 20.3 % 23.4 % 17.0 % Onground -8.2 % -5.4 % -2.4 % -2.5 % Briarcliffe -6.8 % -14.1 % -2.9 % -5.6 % University 15.8 % 10.2 % 15.2 % 14.3 % � � Student Population as of October 31, 2008 2007 AIU Online 16,100 15,600 Onground 3,800 4,100 CTU Online 18,300 16,300 Onground 4,800 4,300 Briarcliffe 1,800 � 2,000 � University 44,800 � 42,300 � � � Student Starts for thethree months endedSeptember 30, 2008 2007 AIU Online 5,200 4,830 Onground 930 880 CTU Online 6,280 5,690 Onground 1,020 900 Briarcliffe 700 � 820 � University 14,130 � 13,120 � (1) � Prior period financial results have been reclassified to account for the teach-out of our schools previously reported as held for sale and the change in our reportable business segments during the first quarter of 2008. For further information regarding our reclassification of reportable segments, please refer to our Form 8-K filings dated March 28, 2008 and April 11, 2008.