Career Education Corporation Reports Record Third Quarter 2001 Results.Business Editors HOFFMAN ESTATES Hoffman Estates A village of northeast Illinois, a suburb of Chicago. Population: 49,700. , Ill.--(BUSINESS WIRE)--Oct. 31, 2001 Quarterly Net Revenues Up 62%; Net Income Up 78%; Summer and Fall Starts Up 37%; October October: see month. Student Population Up 42% Career Education Corporation (Nasdaq:CECO CECO Council of Engineering Companies of Oregon CECO Cost Estimate Change Order CECO Center for Economic and Community Outreach CECO CENTCOM Engineer Contingency Organization CECO Concrete Engineering Company of Omaha (Ceco Concrete Construction LLC) ) today reported record net revenues, net income and enrollment for the third quarter and nine months ended September September: see month. 30, 2001, its 15th consecutive quarter of record results since becoming a public company. Third quarter 2001 net revenues were $133.0 million, up 62 percent from $82.3 million for the same period last year. Third quarter 2001 net income was $7.8 million, or $0.17 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, up 78 percent from $4.4 million, or $0.10 per diluted share, a year earlier. Per-share data for both years has been restated to reflect the company's September 2001 two-for-one stock split that was effected in the form of a stock dividend. For the nine months ended September 30, 2001, net revenues were $374.0 million, up 65 percent from $226.2 million for the same period last year. Net income for the first nine months of 2001 was $19.1 million, or $0.42 per diluted share, up 85 percent from net income of $10.3 million, or $0.27 per diluted share, in the comparable 2000 period. Net income for the first nine months of 2000 excludes a charge of $0.8 million to reflect the cumulative effect of a change in accounting principle. Third quarter 2001 new student starts rose 31 percent to approximately 12,700, up from 9,700 for the same period last year. Summer and fall (July July: see month. through October) new student starts rose 37 percent to approximately 22,500 students, up from approximately 16,480 a year ago. Total student population on October 31, 2001 was approximately 41,100, up 42 percent from 29,000 on October 31, 2000. On a same school basis, excluding American InterContinental University American InterContinental University, commonly called AIU, is an international for-profit university owned by Career Education Corporation (stock symbol CECO). It was founded in 1977 as the American College of Applied Arts. (AIU AIU American Intercontinental University AIU Allegheny Intermediate Unit (Homestead, PA) AIU Atlantic International University AIU Association of Indian Universities AIU Association Internationale des Universités ), student population increased approximately 18 percent. During the same period, AIU's student population rose by 36 percent to approximately 6,100 students from 4,500 a year earlier. The total population at CEC (Central Electronic Complex) The set of hardware that defines a mainframe, which includes the CPU(s), memory, channels, controllers and power supplies included in the box. Some CECs, such as IBM's Multiprise 2000 and 3000, include data storage devices as well. colleges, schools and universities reflects excellent diversity in terms of age, gender, demographic characteristics and curricular focus. "Career Education Corporation once again set records for all key performance metrics Performance metrics are measures of an organizations activities and performance. Performance metrics should support a range of stakeholder needs from customers, shareholders to employees [1]. during the third quarter and first nine months of 2001, driven by strong top-line growth and continued margin improvement," said John M. Larson Larson may refer to: People with the surname Larson:
Le Cordon Bleu (French for "blue ribbon") is an international group of hospitality management and cooking schools teaching French cuisine. , International Academy of Design and Technology The International Academy of Design and Technology (IADT) is a for-profit private media arts college accredited by a national agency, the Accrediting Council for Independent Colleges and Schools (ACICS). , Katharine Katharine or Katherine. For some persons thus named, use Catherine. Gibbs Gibbs , Josiah Willard 1839-1903. American mathematician and physicist who formulated the theoretical foundation of physical chemistry, developed vector analysis, and conducted optical and thermodynamic research. Noun 1. , and American InterContinental University." CEC's marketing programs continued to generate record numbers of high-quality leads during the quarter. "Inquiries and enrollments remained strong despite the current economic environment," Larson said. "Lead generation was up approximately 33 percent in September from last year, and October lead flow was even better, demonstrating that prospective students understand the importance and value of education during difficult economic times. "Demographic trends also continue to work in our favor, with record numbers of recent high school graduates seeking to begin their careers," Larson said. "In addition, CEC programs appeal strongly to other prospective students, including young adults seeking to advance their careers and established workers seeking to change careers. Targeting all three groups assures CEC of a large and growing prospective student base for many years to come. "Our mix of diploma DIPLOMA. An instrument of writing, executed by, a corporation or society, certifying that a certain person therein named is entitled to a certain distinction therein mentioned. 2. , associate, bachelors and masters degree programs enables us to provide a continuum Continuum (pl. -tinua or -tinuums) can refer to:
Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , full-time full-time adj. Employed for or involving a standard number of hours of working time: a full-time administrative assistant. full degree programs, yielding greater visibility of CEC earnings," Larson said. "We also maintained our position as an industry leader on many important performance measures, including same-school population growth, student retention and default and placement rates," Larson said. "And our proven ability to maximize the value of acquired schools is reflected in the rapid and dramatic performance improvements at American InterContinental University." Momentum also continues to build at AIU Online, CEC's E-learning (Electronic-LEARNING) An umbrella term for providing computer instruction (courseware) online over the public Internet, private distance learning networks or inhouse via an intranet. See CBT. division, Larson said. "Student response thus far to our online full-degree programs has exceeded our expectations and reaffirmed our belief that E-learning will be a significant contributor to CEC's future revenues and earnings. CEC's unique program allows students to complete all requirements for our three current degree programs - an Associate of Arts Associate of arts and Associate of science are two-year undergraduate degrees offered by many community colleges or junior colleges in the United States. Such degrees transfer to four-year institutions which offer full bachelor of arts and bachelor of science degrees. degree in Business Administration and Bachelor and Master degrees of Information Technology - 100 percent online. Early next year we will add a Master of Business Administration degree to our online curriculum. "Our Virtual Campus replicates a residential campus experience and allows students to move from enrollment to financial aid, from courses to technical support and from graduation Graduation is the action of receiving or conferring an academic degree or the associated ceremony. The date of event is often called degree day. The event itself is also called commencement, convocation or invocation. to job placement with a click of a button. E-learning is in very high demand and enables CEC to capture a different segment of the student market. Our online program also leverages company resources such as our large and growing lead base and our education content. "Collectively, these factors indicate that CEC is on course to become the largest provider of for-profit for-prof·it adj. Established or operated with the intention of making a profit: a for-profit organization. postsecondary education in 2005," Larson said. "We will achieve this goal by continuing to pursue our proven strategy that combines internal growth, acquisitions, new campus start-ups, expansion of our degree programs and curricular offerings, and continued growth in E-learning." Selected Historical Data Certain supplemental information related to Accounts Receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and Bad Debt Expense is provided on an accompanying schedule. Highlights are summarized below: -- Days Sales Outstanding (DSOs) for total accounts receivable was 40 days for the period ended September 30, 2001. This represents a partial reversal of a prior trend of year-over-year increases in DSOs. DSOs, which fluctuate on a quarterly basis due to the seasonal nature of cash collections, have increased from 6 to 9 days from the second to third quarter in each of the last three years. This year the increase was 4 days. -- Bad debt expense was 3.6 % and 3.1 %, respectively, for the quarter and nine months ended September 30, 2001, compared to 3.1% and 2.7%, respectively for the year earlier periods. Business Outlook -- We affirm the fourth quarter 2001 guidance previously released on July 31, 2001. -- We expect first quarter 2002 revenue and earnings per share growth to be in excess of 25 percent before the impact of the change in accounting principle for goodwill. This change, necessitated by the adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , will result in an increase of earnings per share of approximately $0.02 per share each quarter of 2002. While the company may make further acquisitions, none are contemplated by these forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Career Education Corporation will host a conference call with financial analysts on Thursday Thursday: see week. , November November: see month. 1, 2001 at 10:00 a.m. (Eastern Time) to discuss its third quarter 2001 financial performance. Interested parties can listen to the conference call live through the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.careered.com, www.vcall.com, or by calling (719) 457-2617 and citing confirmation code 533469. Following the conference call, a rebroadcast will be available for 90 days at www.careered.com and www.vcall.com, or for seven days by calling (719) 457-0820 and citing confirmation code 533469. Career Education Corporation (www.careered.com) is one of the world's largest providers of private, for-profit postsecondary education in the career-oriented disciplines of visual communication and design technologies, information technology, business studies and culinary cu·li·nar·y adj. Of or relating to a kitchen or to cookery. [Latin cul  n arts. CEC operates 39 campuses throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ,
Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , the United Kingdom and the United Arab Emirates United Arab Emirates, federation of sheikhdoms (2005 est. pop. 2,563,000), c.30,000 sq mi (77,700 sq km), SE Arabia, on the Persian Gulf and the Gulf of Oman. , and offers a
full online program through AIU Online, its E-learning division. Total
student population as of October 31, 2001 exceeded 41,000 students. CEC
colleges enjoy long operating histories and offer a wide variety of
master's degree master's degreen. An academic degree conferred by a college or university upon those who complete at least one year of prescribed study beyond the bachelor's degree. Noun 1. , bachelor's bach·e·lor's n. A bachelor's degree. degree, associate degree and diploma programs. The CEC family includes American InterContinental University (six campuses), the International Academy of Design & Technology (eight campuses), the Katharine Gibbs Schools (nine campuses), Le Cordon Bleu Culinary Program North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. (seven campuses) and other well-known well-known adj. 1. Widely known; familiar or famous: a well-known performer. 2. Fully known: well-known facts. educational institutions. The forward-looking statements contained in this release are based upon various assumptions, and certain risks and uncertainties could cause actual results to differ materially from those stated. Factors that could cause such differences include costs and difficulties associated with opening new campuses and in integrating acquisitions, costs associated with the Distance Learning Division, changes in the regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. environment and those matters disclosed in Career Education Corporation's filings with the Securities and Exchange Commission (SEC). Career Education Corporation assumes no obligation to update its forward-looking statements.
Career Education Corporation
CONSOLIDATED STATEMENTS OF INCOME
For the Nine Months Ended September 30, 2001 and 2000
(Amounts in thousands, except EPS)
2001 % of 2000 % of
ACTUAL NSR ACTUAL NSR
------ ------
Revenue:
Tuition and registration
fees, net $ 338,335 90.5% $ 205,566 90.9%
Other, net 35,681 9.5% 20,591 9.1%
------------- -------------
Net school revenue 374,016 100.0% 226,157 100.0%
------------- -------------
Operating Expenses:
Educational services
and facilities 156,478 41.8% 92,852 41.0%
General and
administration 160,212 42.9% 99,886 44.2%
Depreciation and
amortization 22,590 6.0% 14,964 6.6%
------------ -------------
Total operating expenses 339,280 90.7% 207,702 91.8%
------------ -------------
Operating Profit 34,736 9.3% 18,455 8.2%
Interest income 563 0.1% 915 0.4%
Interest expense (1,677) -0.4% (1,103) -0.5%
Share of affiliate earnings 1,034 0.3% - 0.0%
------------- -------------
Income before provision
for income taxes 34,656 9.3% 18,267 8.1%
Provision for income taxes 15,595 4.2% 7,977 3.6%
------------- -------------
Net Income before cumulative effect
of change in accounting
principle 19,061 5.1% 10,290 4.5%
Cumulative effect of change in
accounting principle, net of
tax effect of $587 - 0.0% (778) -0.3%
------------- -------------
Net Income $ 19,061 5.1% $ 9,512 4.2%
============= =============
======================================================================
Earnings before Interest,
Taxes, Depreciation &
Amortization (EBITDA) 58,360 15.6% 33,419 14.8%
Diluted net income per share
attributable to common
stockholders before cumulative
effect of change in
accounting principle $ 0.42 $ 0.27
Diluted net income per share
attributable to common
stockholders $ 0.42 $ 0.25
Diluted weighted average number
of shares outstanding 45,427 37,546
======================================================================
Career Education Corporation
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended September 30, 2001 and 2000
(Amounts in thousands, except EPS)
2001 % of 2000 % of
ACTUAL NSR ACTUAL NSR
------ ------
Revenue:
Tuition and registration
fees, net $ 119,306 89.7% $ 74,007 90.0%
Other, net 13,697 10.3% 8,254 10.0%
------------ ------------
Net school revenue 133,003 100.0% 82,261 100.0%
------------ ------------
Operating Expenses:
Educational services
and facilities 55,677 41.9% 34,003 41.3%
General and administration 54,996 41.3% 35,246 42.9%
Depreciation and
amortization 7,756 5.8% 5,278 6.4%
------------- ------------
Total operating expenses 118,429 89.0% 74,527 90.6%
------------- ------------
Operating Profit 14,574 11.0% 7,734 9.4%
Interest income 167 0.1% 370 0.4%
Interest expense (577) -0.4% (262) -0.3%
Share of affiliate earnings 59 0.0% - 0.0%
------------- ------------
Income before provision for
income taxes 14,223 10.7% 7,842 9.5%
Provision for income taxes 6,401 4.8% 3,451 4.2%
------------- ------------
Net Income $ 7,822 5.9% $ 4,391 5.3%
============= ============
======================================================================
Earnings before Interest, Taxes,
Depreciation & Amortization
(EBITDA) 22,389 16.8% 13,012 15.8%
Diluted net income per share $ 0.17 $ 0.10
Diluted weighted average
number of shares outstanding 46,000 42,277
======================================================================
Career Education Corporation
SELECTED BALANCE SHEET DATA
As of September 30, 2001 and 2000
(Amounts in thousands)
2001 2000
Cash $ 9,188 $ 40,447
Receivables, net 60,696 31,332
Current assets 97,752 89,098
Total assets 393,044 265,904
Current liabilities 78,855 53,802
Long-term debt and
capital lease
obligations 33,293 15,616
Other long-term
liabilities 5,451 8,323
Stockholders'
investment 275,445 188,163
Career Education Corporation
SELECTED HISTORICAL DATA
As of September 30, 2001
Net Bad Debt Gross Ending
Revenue Expense Revenue Net A/R
------- -------- ------- -------
1998 1Q $32,597 $1,355 $33,952 $10,786
2Q 32,325 1,275 33,600 11,563
3Q 34,994 1,065 36,059 14,427
4Q 44,316 1,289 45,605 12,407
1999 1Q 45,435 2,724 48,159 10,486
2Q 48,780 1,290 50,070 10,727
3Q 55,605 1,181 56,786 15,654
4Q 66,984 1,502 68,486 15,941
2000 1Q 70,315 1,877 72,192 15,645
2Q 73,581 1,719 75,300 20,638
3Q 82,261 2,648 84,909 31,332
4Q 99,136 2,991 102,127 33,651
2001 1Q 119,715 3,492 123,207 42,528
2Q 121,298 3,375 124,673 49,173
3Q 133,003 4,936 137,939 60,696
Note: CEC's policy is to report revenue net of bad debt expense. This
policy has been consistently applied to all reported periods. Gross
revenue has been used to calculate Days Sales Outstanding (DSOs) to
provide more comparable information to other post-secondary education
providers which classify their bad debt expense as an operating
expense.
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