Career Education Corporation (NASDAQ: CECO) today reported total
revenue of $439.5 million, and a net loss of $120.4 million, or
($1.64) per diluted share, for the fourth quarter of 2011 compared
to total revenue of $531.6 million and net income of $12.1 million,
or $0.15 per diluted share, for the fourth quarter of 2010. For the
full year 2011, total revenue of $1.88 billion, and net income of
$18.6 million, or $0.25 per diluted share decreased from total
revenue of $2.09 billion and net income of $157.8 million, or $1.95
per diluted share, for the full year 2010.
“In the past four months, we have taken steps to help move the
company forward,” President, Chairman and CEO Steven H. Lesnik
said. “The company-wide independent review into our placement rate
practices, ordered by our Board of Directors, has been completed.
We have reported to accreditors what we should; implemented
extensive corrective measures to address any issues found; and have
now closed the door on the review.”
“While we expect a challenging business and reputational year
ahead, we have put a new strategy in place to deal with our current
challenges and position ourselves for success beyond 2012. It’s
time for Career Education to reinvent itself for the future and
resume a leadership position in higher education,” Lesnik said.
The Company believes it is useful to present non-GAAP financial
measures, which exclude certain significant items, as a means to
understand the performance of its core business. On a non-GAAP
basis, earnings per diluted share from continuing operations were
$0.31 in the fourth quarter 2011 as compared to $0.74 in the fourth
quarter of 2010. For the years ended December 31, 2011 and 2010,
earnings per diluted share from continuing operations (non-GAAP
basis) were $2.16 and $2.89, respectively. (See tables below and
the GAAP to non-GAAP reconciliation attached to this press release
for further details.)
CONSOLIDATED RESULTS
Quarter Ended December 31, 2011
- Total revenue was $439.5 million for
the fourth quarter of 2011, a 17.3 percent decrease from $531.6
million for the fourth quarter of 2010.
- An operating loss of $168.9 million was
recorded for the fourth quarter of 2011, compared to operating
income of $18.2 million for the fourth quarter of 2010.
- The loss from continuing operations for
the quarter ended December 31, 2011 was $142.3 million, or ($1.94)
per diluted share, compared to income from continuing operations of
$14.1 million, or $0.18 per diluted share, for the quarter ended
December 31, 2010.
- During the fourth quarter of 2011, the
Company recorded a $27.1 million pretax gain in connection with the
sale of its ownership interest in Istituto Marangoni. All current
and prior period results have been recast to include the results of
operations for Istituto Marangoni as a component of discontinued
operations.
- The operating results for the quarters
ended December 31, 2011 and 2010 include the following significant
items:
Significant Items(In Millions)
Earnings perDilutedShare Impact
Quarter Ended
December 31, 2011
Goodwill Impairment $ 168.4 $ 2.07 Asset Impairment 20.4
0.18
TOTAL $ 188.8 $ 2.25
Quarter Ended
December 31, 2010
Asset Impairment $ 67.8 $ 0.55 Legal Settlement 0.8
0.01
TOTAL $ 68.6 $ 0.56
- During the fourth quarter 2011, the
Company recorded goodwill impairment charges of $94.7 million and
$73.7 million in its Health Education and Culinary Arts segments,
respectively. In addition, the Company recorded $20.4 million and
$67.8 million of trade name impairment charges in 2011 and 2010,
respectively. Both trade name impairment charges relate to the Le
Cordon Bleu trade name. These impairments were a result of the fair
value calculation for each declining below their respective
carrying values.
- Excluding the significant items in the
table above, operating income was $19.9 million in the fourth
quarter 2011 compared to $86.8 million in the fourth quarter of
2010. The operating margin was 4.5 percent during the fourth
quarter 2011 as compared to 16.3 percent during the fourth quarter
2010.
Year Ended December 31, 2011
- Total revenue was $1.88 billion for the
year ended December 31, 2011, compared to $2.09 billion for the
year ended December 31, 2010.
- Operating income decreased to $39.2
million for the year ended December 31, 2011, from $240.9 million
for the year ended December 31, 2010. The operating margin
decreased to 2.1 percent for the year ended December 31, 2011, from
11.5 percent for the year ended December 31, 2010.
- The loss from continuing operations for
the year ended December 31, 2011, was $4.2 million, or ($0.06) per
diluted share, compared to income from continuing operations of
$162.8 million, or $2.01 per diluted share, for the year ended
December 31, 2010.
- The operating results for the years
ended December 31, 2011 and 2010 include the following significant
items:
Significant Items(In Millions)
Earnings perDilutedShare Impact
Year Ended
December 31, 2011
Goodwill Impairment $ 168.4 $ 2.04 Asset Impairment 20.4
0.18
TOTAL $ 188.8 $ 2.22
Year Ended
December 31, 2010
Asset Impairment $ 67.8 $ 0.55 Legal Settlement 40.8
0.33
TOTAL $ 108.6 $ 0.88
- During 2010, Culinary Arts recorded a
$40.8 million charge related to the settlement of a legal
matter.
- Excluding the significant items in the
table above, operating income was $228.0 million for the year ended
December 31, 2011 and $349.5 million for the year ended December
31, 2010. Operating margin was 12.1 percent and 16.7 percent for
the years ended December 31, 2011 and 2010, respectively.
CONSOLIDATED CASH FLOWS AND FINANCIAL POSITION
Cash Flows
- Net cash flows provided by operating
activities totaled $230.5 million for the year ended December 31,
2011, compared to $272.3 million for the year ended December 31,
2010.
- Capital expenditures decreased to $78.3
million during the year ended December 31, 2011, from $127.3
million for the year ended December 31, 2010. Capital expenditures
decreased to 4.1 percent of total revenue during the year ended
December 31, 2011 as compared to 6.0 percent for the year ended
December 31, 2010 due to the investments made in the Company’s
campus support center in 2010.
Financial Position
- As of December 31, 2011 and
December 31, 2010, cash and cash equivalents and short-term
investments totaled $441.2 million and $420.3 million,
respectively.
Stock Repurchase Program
During the quarter ended December 31, 2011, the Company
repurchased 1.8 million shares of its common stock for
approximately $13.4 million at an average price of $7.41 per share.
During 2011, the Company repurchased approximately 8.1 million
shares of its common stock for approximately $150.4 million at an
average price of $18.67 per share. Under the Company’s previously
authorized stock repurchase program, stock repurchases 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. As of December 31, 2011,
approximately $239.8 million was available under the Company’s
stock repurchase program.
During January 2012, the Company repurchased an additional
6.1 million shares of its common stock for $56.4 million at an
average price of $9.29 per share through the Company’s 10b5-1
repurchase program announced by the Company on November 21, 2011.
As a result, approximately $183.3 million was available under our
previously authorized stock repurchase program to repurchase
outstanding shares of our common stock as of January 31, 2012.
STUDENT POPULATION AND NEW STUDENT STARTS
Student Population
Total student population by reportable segment as of December
31, 2011 and 2010, was as follows:
As of December 31, % Change
2011 2010 2011 vs. 2010
Student
Population
CTU 24,900 30,900 -19 % AIU 17,100 20,000 -15 % Health Education
24,200 29,000 -17 % Culinary Arts 12,400 13,100 -5 % Art &
Design 9,300 11,500 -19 % International 11,100 10,300 8 %
Total
Student Population 99,000 114,800 -14
%
New Student Starts
New student starts by reportable segment for the quarters ended
December 31, 2011 and 2010, were as follows:
For the Quarters Ended December
31,
% Change 2011 2010 2011 vs.
2010
New Student
Starts
CTU (1) 6,810 8,740 -22 % AIU (1) 4,620 6,230 -26 % Health
Education 4,410 6,270 -30 % Culinary Arts 1,330 1,390 -4 % Art
& Design 840 1,540 -45 % International 2,150 2,480 -13 %
Total New Student Starts 20,160 26,650
-24 % (1)
In 2011, CTU and AIU implemented the
Student Orientation and Academic Readiness ("SOAR") program which
identifies students who may not be prepared for the rigor of
college studies. A student is not included as a new student start
until successful completion of SOAR.
CONFERENCE CALL INFORMATION
Career Education Corporation will host a conference call on
Tuesday, February 28, 2012 at 10:00 a.m. Eastern time. In addition
to discussing the results of operations for the fourth quarter and
year-to-date, the Company will address the status of the
independent review of student placement rates and other regulatory
matters, including the 90-10 Rule, on its conference call.
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 31668922. 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
31668922.
ABOUT CAREER EDUCATION CORPORATION
The colleges, schools and universities that are part of the
Career Education Corporation (“CEC”) family offer high-quality
education to a diverse student population of approximately 100,000
students across the world in a variety of career-oriented
disciplines through online, on-ground and hybrid learning program
offerings. The more than 90 campuses that serve these students are
located throughout the United States and in France, the United
Kingdom and Monaco, and offer doctoral, master’s, bachelor’s and
associate degrees and diploma and certificate programs.
CEC is an industry leader whose institutions are recognized
globally. Those institutions include, among others, American
InterContinental University (“AIU”); Brooks Institute; Colorado
Technical University (“CTU”); Harrington College of Design; INSEEC
Group (“INSEEC”) Schools; International University of Monaco
(“IUM”); International Academy of Design & Technology
(“IADT”); Le Cordon Bleu North America (“LCB”); and Sanford-Brown
Institutes and Colleges. Through its schools, CEC is committed to
providing high-quality education, enabling students to graduate and
pursue rewarding career opportunities.
For more information, see CEC’s website at www.careered.com. The
website includes a detailed listing of individual campus locations
and web links to CEC’s colleges, schools and universities.
Except for the historical and present factual information
contained herein, the matters set forth in this release, including
statements identified by words such as “anticipate,” “believe,”
“plan,” “expect,” “intend,” “project,” “will,” “potential” and
similar expressions, are forward-looking statements as defined in
Section 21E of the Securities Exchange Act of 1934, as
amended. These statements are based on information currently
available to us and are subject to various risks, uncertainties and
other factors that could cause our actual growth, 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 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 outcomes of which
could materially and adversely affect our financial condition and
operations, include, but are not limited to, the following:
availability of Title IV and other student financial aid or loans
for our students; Congress’ willingness or ability to maintain or
increase funding for Title IV Programs; our ability to maintain
continued eligibility to participate in Title IV Programs,
including under the “90-10 Rule” under the Higher Education Act of
1965, as amended; the impacts of the U.S. Department of Education’s
regulations addressing certain aspects of administration of Title
IV federal financial aid programs, (including among other matters,
gainful employment, the 90-10 Rule and limits on cohort default
rates, certain compensation related to recruiting and admission of
students, more stringent state approval criteria that may affect
current state approval and licensing processes applicable to
postsecondary education institutions and distance learning
programs, and misrepresentation liability) on our business model,
marketing strategies and practices, costs of compliance, costs of
developing and implementing changes in operations, student
recruitment or enrollments, student and program mix and program
offerings; increased competition; other regulatory developments;
the effectiveness of our regulatory compliance efforts; the outcome
of any state attorney general investigations, including those under
way in Florida, Illinois and New York; any claims, sanctions,
operational limitations or adverse accreditation or regulatory
action initiated as a result of any adverse findings from our
investigation into the determination and reporting of placement
rates at our domestic schools; our ability to successfully attract
and retain qualified personnel to fill key senior management
positions, including the positions of president and chief executive
officer; changes in the overall U.S. or global economy; any further
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; our ability to
comply with accrediting agency requirements or obtain accrediting
agency approvals for existing or new programs; the outcome of any
reviews and audits conducted by accrediting, state and federal
agencies; our dependence on information technology systems; our
ownership or use of intellectual property; costs and impacts of
regulatory, legal and administrative actions, proceedings and
investigations, governmental regulation, and class action and other
lawsuits; our ability to manage growth; and other factors discussed
in our Annual Report on Form 10-K for the year ended
December 31, 2011, and from time to time in our current
reports filed with the Securities and Exchange Commission.
CAREER EDUCATION CORPORATION AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
As of December 31, (1) 2011 2010
ASSETS CURRENT ASSETS: Cash and cash
equivalents $ 280,592 $ 260,644 Short-term investments
160,607 159,671 Total cash and cash
equivalents and short-term investments 441,199 420,315
Student receivables, net 60,573 62,091 Receivables, other, net
2,914 1,861 Prepaid expenses 62,399 51,380 Inventories 11,356
13,142 Deferred income tax assets, net 10,940 31,665 Other current
assets 17,769 6,089 Assets of discontinued operations 3,328
39,982 Total current assets 610,478
626,525
NON-CURRENT ASSETS:
Property and equipment, net 349,788 363,516 Goodwill 212,626
374,587 Intangible assets, net 77,186 110,222 Student receivables,
net 9,297 12,522 Deferred income tax assets, net 9,522 6,793 Other
assets, net 30,122 38,923 Assets of discontinued operations
17,101 39,872
TOTAL ASSETS $
1,316,120 $ 1,572,960
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES: Current maturities of capital lease obligations $
844 $ 783 Accounts payable 48,408 53,115 Accrued expenses: Payroll
and related benefits 41,853 72,657 Advertising and production costs
17,717 18,846 Earnout payments 5,735 17,439 Other 61,536 96,664
Deferred tuition revenue 144,947 152,590 Liabilities of
discontinued operations 8,403 44,990
Total current liabilities 329,443 457,084
NON-CURRENT LIABILITIES: Capital lease
obligations, net of current maturities 207 1,223 Deferred rent
obligations 102,079 103,872 Earnout payments - 7,690 Other
liabilities 40,365 30,047 Liabilities of discontinued operations
37,935 38,507 Total non-current
liabilities 180,586 181,339
SHARE-BASED AWARDS SUBJECT TO REDEMPTION 110 153
STOCKHOLDERS' EQUITY: Preferred stock - - Common stock 820
812 Additional paid-in capital 590,965 576,853 Accumulated other
comprehensive loss (5,136 ) (81 ) Retained earnings 375,607 356,991
Cost of shares in treasury (156,275 ) (191 ) Total
stockholders' equity 805,981 934,384
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $
1,316,120 $ 1,572,960
(1) In November 2011, the Company sold its ownership
interest in Istituto Marangoni. As a result, all current and prior
period results have been recast to include Istituto Marangoni as a
component of discontinued operations.
CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per
share amounts and percentages)
For the Quarters Ended December 31, (1)
2011
% of TotalRevenue
2010
% of TotalRevenue
REVENUE: Tuition and registration fees $ 430,607 98.0
% $ 515,600 97.0 % Other 8,909 2.0 % 15,968
3.0 % Total revenue 439,516 531,568
OPERATING EXPENSES: Educational services and
facilities 156,223 35.5 % 161,191 30.3 % General and administrative
241,401 54.9 % 261,270 49.2 % Depreciation and amortization 21,949
5.0 % 19,460 3.7 % Goodwill and asset impairment 188,848
43.0 % 71,475 13.4 % Total operating expenses
608,421 138.4 % 513,396 96.6 %
Operating (loss) income (168,905 ) -38.4 % 18,172
3.4 %
OTHER INCOME (EXPENSE): Interest income
627 0.1 % 452 0.1 % Interest expense (443 ) -0.1 % (286 ) -0.1 %
Miscellaneous income (expense) 4 0.0 % (119 )
0.0 % Total other income 188 0.0 % 47
0.0 %
PRETAX (LOSS) INCOME (168,717 ) -38.4 % 18,219
3.4 % (Benefit from) provision for income taxes
(26,436 ) -6.0 % 4,141 0.8 %
(LOSS) INCOME
FROM CONTINUING OPERATIONS (142,281 ) -32.4 % 14,078 2.6 %
Income (loss) from discontinued operations, net of tax
21,832 5.0 % (1,976 ) -0.4 %
NET
(LOSS) INCOME $ (120,449 ) -27.4 %
$ 12,102 2.3 %
NET (LOSS) INCOME PER
SHARE - DILUTED: (Loss) income from continuing operations $
(1.94 ) $ 0.18 Income (loss) from discontinued operations
0.30 (0.03 ) Net (loss) income per share $ (1.64 ) $
0.15
DILUTED WEIGHTED AVERAGE SHARES
OUTSTANDING 73,429 79,776
(1)
In November 2011, the Company sold its
ownership interest in Istituto Marangoni. As a result, all current
and prior period results have been recast to include Istituto
Marangoni as a component of discontinued operations.
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except
per share amounts and percentages)
For the Years Ended December 31,
(1) 2011
% of TotalRevenue
2010
% of TotalRevenue
REVENUE: Tuition and registration fees $ 1,827,164
97.0 % $ 2,007,903 96.1 % Other 57,341 3.0 %
81,270 3.9 % Total revenue 1,884,505
2,089,173
OPERATING EXPENSES: Educational
services and facilities 632,593 33.6 % 626,254 30.0 % General and
administrative 936,714 49.7 % 1,080,148 51.7 % Depreciation and
amortization 84,512 4.5 % 70,043 3.4 % Goodwill and asset
impairment 191,524 10.2 % 71,829 3.4 %
Total operating expenses 1,845,343 97.9 %
1,848,274 88.5 % Operating income 39,162 2.1 %
240,899 11.5 %
OTHER INCOME (EXPENSE):
Interest income 1,376 0.1 % 1,138 0.1 % Interest expense (563 ) 0.0
% (381 ) 0.0 % Miscellaneous income (expense) 1,972
0.1 % (484 ) 0.0 % Total other income 2,785
0.1 % 273 0.0 %
PRETAX INCOME 41,947
2.2 % 241,172 11.5 % Provision for income taxes
46,146 2.4 % 78,401 3.8 %
(LOSS)
INCOME FROM CONTINUING OPERATIONS (4,199 ) -0.2 % 162,771 7.8 %
Income (loss) from discontinued operations, net of tax
22,772 1.2 % (4,998 ) -0.2 %
NET
INCOME $ 18,573 1.0 %
$
157,773 7.6 %
NET (LOSS) INCOME PER SHARE -
DILUTED: (Loss) income from continuing operations $ (0.06 ) $
2.01 Income (loss) from discontinued operations 0.31
(0.06 ) Net income per share $ 0.25 $ 1.95
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING
74,498 80,850
(1)
In November 2011, the Company sold its
ownership interest in Istituto Marangoni. As a result, all current
and prior period results have been recast to include Istituto
Marangoni as a component of discontinued operations.
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATING INCOME (LOSS) BY
QUARTER (In thousands)
For the 2011 Quarters Ended, (1)
March 31 June 30 September 30
December 31 Full Year REVENUE: Tuition
and registration fees $ 509,454 $ 469,683 $ 417,420 $ 430,607 $
1,827,164 Other 22,246 15,195 10,991
8,909 57,341 Total revenue 531,700
484,878 428,411 439,516 1,884,505
OPERATING EXPENSES: Educational services and
facilities 165,631 158,012 152,727 156,223 632,593 General and
administrative 237,061 224,605 233,647 241,401 936,714 Depreciation
and amortization 20,133 20,274 22,156 21,949 84,512 Goodwill and
asset impairment - 2,676 - 188,848
191,524 Total operating expenses 422,825
405,567 408,530 608,421
1,845,343
OPERATING INCOME (LOSS) $ 108,875
$ 79,311 $ 19,881 $
(168,905 ) $ 39,162
For the 2010 Quarters Ended, (1) March
31 June 30 September 30 December 31
Full Year REVENUE: Tuition and registration
fees $ 498,411 $ 499,142 $ 494,750 $ 515,600 $ 2,007,903 Other
19,845 18,595 26,862 15,968
81,270 Total revenue 518,256 517,737
521,612 531,568 2,089,173
OPERATING
EXPENSES: Educational services and facilities 155,618 153,795
155,650 161,191 626,254 General and administrative 260,694 253,040
305,144 261,270 1,080,148 Depreciation and amortization 16,267
16,849 17,467 19,460 70,043 Goodwill and asset impairment -
- 354 71,475 71,829 Total
operating expenses 432,579 423,684 478,615
513,396 1,848,274
OPERATING INCOME
$ 85,677 $ 94,053 $
42,997 $ 18,172 $ 240,899
(1)
In November 2011, the Company sold its
ownership interest in Istituto Marangoni. As a result, all current
and prior period results have been recast to include Istituto
Marangoni as a component of discontinued operations.
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
For the Years Ended December 31, 2011
2010 CASH FLOWS FROM OPERATING ACTIVITIES: Net
income $ 18,573 $ 157,773 Adjustments to reconcile net income to
net cash provided by operating activities: Goodwill and asset
impairment 191,524 71,829 Depreciation and amortization expense
85,367 71,624 Bad debt expense 55,721 106,324 Compensation expense
related to share-based awards 14,831 17,318 Gain on sale of
business (27,085 ) - (Gain) loss on disposition of property and
equipment (1,711 ) 457 Deferred income taxes 14,226 (17,007 )
Changes in operating assets and liabilities Accrued expenses and
deferred rent obligations (74,075 ) (25,055 ) Deferred tuition
revenue 2,595 (12,653 ) Student receivables, net of allowance for
doubtful accounts (51,749 ) (98,920 ) Other operating assets and
liabilities 2,233 569 Net cash provided
by operating activities 230,450 272,259
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of
available-for-sale investments (189,258 ) (291,864 ) Sales of
available-for-sale investments 188,322 332,445 Purchases of
property and equipment (78,333 ) (127,283 ) Acquisition of the
rights to the Le Cordon Bleu brand (16,355 ) (16,852 ) Proceeds on
the sale of assets 6,259 - Proceeds on the sale of business, net of
cash divested 16,670 - Business acquisition, net of acquired cash
(9,851 ) (6,194 ) Other (40 ) 88 Net cash used
in investing activities (82,586 ) (109,660 )
CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury
stock (150,445 ) (154,913 ) Issuance of common stock 4,370 3,109
Tax benefit associated with stock option exercises 376 223 Payments
of assumed loans upon business acquisition - (4,279 ) Payments of
capital lease obligations (989 ) (1,013 ) Net cash
used in financing activities (146,688 ) (156,873 )
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS: (10,066 ) (1,316 )
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(8,890 ) 4,410
DISCONTINUED OPERATIONS CASH ACTIVITY INCLUDED
ABOVE: Add: Cash balance of discontinued operations, beginning
of the year 28,838 26,824 Less: Cash balance of discontinued
operations, end of the year - 28,838
CASH AND CASH EQUIVALENTS,
beginning of the year 260,644 258,248
CASH AND CASH EQUIVALENTS, end of the year $ 280,592
$ 260,644
CAREER EDUCATION
CORPORATION AND SUBSIDIARIES UNAUDITED SELECTED SEGMENT
INFORMATION (In thousands, except percentages)
For the Quarters Ended December 31, 2011 2010
REVENUE: CTU (1) $ 100,985 $ 123,236 AIU (1) 77,111
98,647 Health Education 100,658 119,352 Culinary Arts 65,554 94,003
Art & Design (1) 48,005 59,125 International (2) 47,257 37,337
Corporate and Other (54 ) (132 )
Total $
439,516 $ 531,568
OPERATING (LOSS)
INCOME: CTU (1) $ 25,610 $ 39,603 AIU (1) 6,354 22,905 Health
Education (3) (101,012 ) 16,594 Culinary Arts (4) (95,725 ) (63,546
) Art & Design (1) (5,584 ) 6,510 International (2) 16,017
9,623 Corporate and Other (14,565 ) (13,517 )
Total
$ (168,905 ) $ 18,172
OPERATING MARGIN: CTU
25.4 % 32.1 % AIU 8.2 % 23.2 % Health Education -100.4 % 13.9 %
Culinary Arts -146.0 % -67.6 % Art & Design -11.6 % 11.0 %
International 33.9 % 25.8 %
Total
-38.4 % 3.4 %
(1)
Prior period financial results have been
reclassified to report CTU, AIU and Art & Design as individual
segments due to a change in organizational structure beginning in
January, 2011. Previously, these results were reported on a
combined basis as the University segment.
(2)
In November 2011, the Company sold its
ownership interest in Istituto Marangoni. As a result, all current
and prior period results have been recast to include Istituto
Marangoni as a component of discontinued operations.
(3) Fourth quarter 2011 includes a $94.7 million
goodwill impairment charge.
(4)
Fourth quarter 2011 includes a $73.7
million goodwill impairment charge and a $20.4 million trade name
impairment charge. The prior year quarter results include a $67.8
million trade name impairment charge.
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED SELECTED SEGMENT INFORMATION (In thousands, except
percentages)
For the Years Ended December 31,
2011 2010 REVENUE: CTU (1) $ 431,588 $
465,315 AIU (1) 365,203 448,581 Health Education 428,987 441,608
Culinary Arts 314,272 387,884 Art & Design (1) 218,967 245,395
International (2) 125,887 101,013 Corporate and Other (399 )
(623 )
Total $ 1,884,505
$ 2,089,173 OPERATING INCOME
(LOSS): CTU (1) $ 112,626 $ 133,881 AIU (1) 72,738 118,959
Health Education (3) (89,633 ) 52,028 Culinary Arts (4) (64,984 )
(66,813 ) Art & Design (1) 15,043 29,173 International (2)
24,746 16,334 Corporate and Other (5) (31,374 )
(42,663 )
Total $ 39,162 $
240,899 OPERATING MARGIN: CTU 26.1 %
28.8 % AIU 19.9 % 26.5 % Health Education -20.9 % 11.8 % Culinary
Arts -20.7 % -17.2 % Art & Design 6.9 % 11.9 % International
19.7 % 16.2 %
Total 2.1 %
11.5 %
(1)
Prior period financial results have been
reclassified to report CTU, AIU and Art & Design as individual
segments due to a change in organizational structure beginning in
January, 2011. Previously, these results were reported on a
combined basis as the University segment.
(2)
In November 2011, the Company sold its
ownership interest in Istituto Marangoni. As a result, all current
and prior period results have been recast to include Istituto
Marangoni as a component of discontinued operations.
(3)
2011 expenses include a $94.7 million
goodwill impairment charge and $5.1 million of impairment and
amortization charges associated with accreditation rights.
(4)
2011 expenses include goodwill and trade
name impairment charges of $73.7 million and $20.4 million,
respectively. 2010 includes a $67.8 million trade name impairment
charge, a $40.8 million charge related to the settlement of a legal
matter and additional bad debt expense for increases in reserve
rates related to our student extended payment plans.
(5) During 2011, a $7.0 million insurance recovery
was recorded related to previously settled legal matters.
CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS
(1) (In millions, except per share amounts)
For the Quarters Ended December 31,
2011 2010
Operating (Loss)Income
Earnings perDiluted Share
(2)
Operating Income
Earnings perDiluted Share
(2)
As Reported $ (168.9 ) $ (1.94 ) $ 18.2 $ 0.18
Reconciling Items: Goodwill Impairment (3) 168.4 2.07 - - Asset
Impairments (4) 20.4 0.18 67.8 0.55 Legal Settlement (5) -
- 0.8 0.01
Adjusted to
Exclude Significant Items $ 19.9 $
0.31 $ 86.8 $ 0.74
Diluted Weighted Average Shares Outstanding
73,429 79,776 For the Years
Ended December 31, 2011 2010
Operating Income
Earnings perDiluted Share
(2)
Operating Income
Earnings perDiluted Share
(2)
As Reported $ 39.2 $ (0.06 ) $ 240.9 $ 2.01
Reconciling Items: Goodwill Impairment (3) 168.4 2.04 - - Asset
Impairments (4) 20.4 0.18 67.8 0.55 Legal Settlement (5) -
- 40.8 0.33
Adjusted to
Exclude Significant Items $ 228.0 $
2.16 $ 349.5 $ 2.89
Diluted Weighted Average Shares Outstanding
74,498 80,850
(1) The Company believes it is useful to
present non-GAAP financial measures which exclude certain
significant items as a means to understand the performance of its
core business. As a general matter, the Company uses non-GAAP
financial measures in conjunction with results presented in
accordance with GAAP to help analyze the performance of its core
business, assist with preparing the annual operating plan, and
measure performance for some forms of compensation. In addition,
the Company believes that non-GAAP financial information is used by
analysts and others in the investment community to analyze the
Company's historical results and to provide estimates of future
performance and that failure to report non-GAAP measures could
result in a misplaced perception that the Company's results have
underperformed or exceeded expectations. Non-GAAP financial
measures when viewed in a reconciliation to corresponding GAAP
financial measures, provides an additional way of viewing the
Company's results of operations and the factors and trends
affecting the Company's business. Non-GAAP financial measures
should be considered as a supplement to, and not as a substitute
for, or superior to, the corresponding financial results presented
in accordance with GAAP.
(2) Earnings per share is
based on (Loss) Income from Continuing Operations.
(3) Fourth quarter 2011 includes goodwill impairment charges
totaling $168.4 million applicable to Health Education ($94.7) and
Culinary Arts ($73.7).
(4) The fourth quarters 2011
and 2010 include trade name impairment charges of $20.4 million and
$67.8 million, respectively, within Culinary Arts.
(5) In 2010, a $40.8 million charge was recorded in Culinary
Arts related to the settlement of a legal matter; of which $0.8
million was recorded in the fourth quarter.
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