Career Education Corporation Reports Results for First Quarter 2007.HOFFMAN ESTATES Hoffman Estates A village of northeast Illinois, a suburb of Chicago. Population: 49,700. , Ill. -- Career Education Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : 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 consolidated revenue from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $424.0 million and income from continuing operations, net of tax, of $34.6 million for the quarter ended March 31, 2007. "Career Education's results for the first quarter of 2007 reflect the effects of challenges the company has faced as it makes the changes necessary to position the company for future growth," said Pat Pesch, Chief Financial Officer. "Importantly, positive forward-looking indicators and the satisfactory conclusion of several legal and regulatory matters demonstrate the company's progress in building long-term value for its stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. ." RESULTS OF CONTINUING OPERATIONS As previously reported, in November 2006, the company announced its decision to sell 13 of its schools and campuses, including the nine campuses that comprise the Gibbs division, McIntosh College, the two campuses of Brooks College Brooks College is a system of two for-profit colleges in Long Beach and Sunnyvale, California. They offer career college programs in a variety of areas. The school in Long Beach is best known for its fashion design and fashion marketing programs (and their ads on late-night (Long Beach and Sunnyvale), and Lehigh Valley College Lehigh Valley College is a college owned by Career Education Corporation which is a for-profit educational company. The college is located near Allentown, Pennsylvania, in Center Valley which is approximately 55 miles (89 km) . The results of these 13 schools and campuses are noted in all presentations as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Except as otherwise noted, financial data and non-financial metrics reflected in this release exclude discontinued operations. Three Months Ended March 31, 2007 * Consolidated revenue was $424.0 million during the first quarter of 2007, a 12.5 percent decrease from consolidated revenue of $484.6 million during the first quarter of 2006. Revenue generated by the University segment's fully-online platforms decreased 28.8 percent to $137.4 million during the first quarter of 2007, from $193.0 million during the first quarter of 2006. * Consolidated income from operations declined to $48.2 million during the first quarter of 2007, from $99.7 million during the first quarter of 2006. Operating profit margin Operating profit margin The ratio of operating profit to net sales. percentage was 11.4 percent during the first quarter of 2007, compared to operating profit margin percentage of 20.6 percent during the first quarter of 2006. The decrease in operating profit margin percentage was primarily due to: a. an unfavorable student population mix change resulting in disproportionately larger revenue declines in our University segment, which has historically produced the highest operating profit margin percentages, b. a decrease in the operating profit margin percentage generated by our University segment, driven by decreased revenue, increased administrative expenses, and the disproportionate growth of CTU CTU Colorado Technical University CTU Czech Technical University in Prague CTU Counter Terrorist Unit CTU Clinical Trials Unit CTU Catholic Theological Union CTU Chicago Teachers Union CTU Computer Training Unit CTU Control Unit Online, which operates at a lower operating profit margin percentage than that of 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 Online, c. price decreases in our AIU Online associate degree programs, and d. increased occupancy expense and other fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). as a percentage of revenue due to declines in revenue. The adverse impact on operating profit margin percentage of the factors discussed above was offset, in part, by a decrease in bad debt expense as a percentage of revenue. The University segment's fully-online platforms' income from operations declined to $34.4 million during the first quarter of 2007, from $77.2 million during the first quarter of 2006. * Consolidated income from continuing operations, net of tax, during the first quarter of 2007 was $34.6 million, or $0.36 per diluted share, compared to consolidated income from continuing operations, net of tax, of $65.5 million, or $0.65 per diluted share, during the first quarter of 2006. RESULTS OF DISCONTINUED OPERATIONS Loss from discontinued operations associated with our 13 schools and campuses currently held for sale was $4.6 million, net of tax, during the first quarter of 2007, compared to loss from discontinued operations of $12.8 million, net of tax, during the first quarter of 2006. Loss from discontinued operations during the first quarter of 2006 includes a goodwill impairment charge of $6.5 million, net of income tax benefit of $3.9 million, and depreciation expense of $2.0 million, net of income tax benefit of $1.2 million. Loss from discontinued operations during the first quarter of 2007 includes no goodwill impairment charge or depreciation expense, in accordance with applicable accounting standards. CONSOLIDATED CASH FLOWS AND FINANCIAL POSITION Cash Flows * Cash provided by operating activities was $89.1 million during the first quarter of 2007, compared to $122.6 million during the first quarter of 2006. The decrease is primarily attributable to the decrease in net income during the first quarter of 2007. * Capital expenditures decreased to $16.8 million during the first quarter of 2007, from $17.5 million during the first quarter of 2006. Capital expenditures represented 3.7 percent of total consolidated revenue, including revenue generated by schools and campuses held for sale, during the first quarter of 2007. Financial Position * As of March 31, 2007 and December 31, 2006, cash and cash equivalents and investments totaled $449.8 million and $447.8 million, respectively. This increase is primarily attributable to cash generated by operating activities during the first quarter of 2007, offset substantially by first quarter 2007 cash expenditures in connection with stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. activity and the acquisition of Istituto Marangoni Istituto Marangoni is a fashion institute with campuses in Milan, London, and Paris. It was founded and granted the status of 'Professional Art School' on December 17, 1935. Under the Ministerial Decree of 13 February 1951, the status of the school was raised to 'Institute'. . * Quarterly days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). (DSO See CSO. ) were 11 days as of March 31, 2007, which is consistent with DSO as of March 31, 2006, of 11 days. Stock Repurchase Program Since July 2005, CEC's Board of Directors has authorized the use of a total of $500.2 million to repurchase outstanding shares of the company's common stock. Stock repurchases under this program may be made on the open market or in privately negotiated transactions from time to time, depending on factors including market conditions and corporate and regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. . The stock repurchase program does not have an expiration date Expiration Date The day on which an options or futures contract is no longer valid and, therefore, ceases to exist. Notes: The expiration date for all listed stock options in the U.S. and may be suspended or discontinued at any time. During the first quarter of 2007, the company repurchased 1.6 million shares of its common stock for approximately $50.0 million at an average price of $30.42 per share. Since the inception of the program, the company has repurchased 12.4 million shares of its common stock for approximately $416.3 million. As of March 31, 2007, the company was authorized under the stock repurchase program to use an additional $83.8 million to repurchase outstanding shares of the company's common stock. POPULATION AND NEW STUDENT START DATA Student Population Total student population by reportable segment as of April 30, 2007 and 2006, was as follows: [TABLE OMITTED] (1) As of April 30, 2007 and 2006, the University segment population included approximately 30,600 students and 31,500 students, respectively, who were taking classes at such dates in fully-online academic programs offered by University segment schools. Total student population for schools held for sale as of April 30, 2007 and 2006, was as follows: [TABLE OMITTED] New Student Starts New student starts by reportable segment during the first quarter of 2007 and 2006, were as follows: [TABLE OMITTED] (1) University segment new student starts includes approximately 12,600 students and 14,800 students, respectively, who began taking classes in fully-online academic programs offered by University segment schools during the first quarter of 2007 and 2006. New student starts for schools held for sale during the first quarter of 2007 and 2006, were as follows: [TABLE OMITTED] "During my first two months at the company, I have seen first hand the tremendous strengths in the organization, particularly the talent and commitment of our employees and the opportunity for future success," said Gary McCullough, Career Education's new President and Chief Executive Officer. "However, changes need to be made to ensure that we fulfill our potential. By ensuring that we are service-oriented and market-responsive, we can generate value for our students and all stakeholders as we drive the business forward." CONFERENCE CALL INFORMATION Career Education Corporation will host a conference call today, May 3, 2007, at 5:00 PM (Eastern Time). Interested parties can access the live webcast of the conference call at www.careered.com. Participants can also listen to the conference call by dialing 617-614-3523 (international) or 800-561-2693 (domestic) and citing code 41457192. Please log-in or dial-in at least ten minutes prior to the conference call start time to ensure a connection. An archived version of the conference call webcast will be accessible for 90 days at www.careered.com. A replay of the conference call will also be available for seven days by calling 617-801-6888 (international) or 888-286-8010 and citing code 73712939. About Career Education Corporation The colleges, schools and universities that are part of the Career Education Corporation (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. ) family offer high quality education to approximately 90,000 students across the world in a variety of career-oriented disciplines. The 75-plus campuses that serve these students are located throughout the U.S., and in Canada, 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 our students attend the web-based virtual campuses of 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. Online and Colorado Technical University Colorado Technical University (CTU) is a system of proprietary for-profit colleges in the United States providing career training, accredited programs, and college degrees in a variety of areas. CTU grants bachelor's, master's and doctoral degrees. Online. Career Education is an industry leader whose gold-standard brands are recognized globally. Those brands include, among others, the Le Cordon Bleu For the Schnitzel variant, see . Le Cordon Bleu (French for "blue ribbon") is an international group of hospitality management and cooking schools teaching French cuisine. Schools 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. ; the Harrington College of Design Harrington College of Design is located in the Loop area of Chicago, Illinois. It offers students programs leading to either a bachelor's or associate's degree upon completion of the Interior Design Program, Digital Photography Program, or Communication Design Program. ; the Brooks Institute of Photography The Brooks Institute of Photography is a for-profit college based in Santa Barbara, California and Ventura, California. Brooks offers four majors. The Still photography program is based in Santa Barbara, and the Visual communications (Graphic Design), Motion Picture/Video and ; the Katharine Gibbs Schools; American InterContinental University; Colorado Technical University and Sanford-Brown Institutes Sanford-Brown Institute is a system of for-profit colleges in the United States providing career training programs in health care and criminal justice. Several of its campuses were originally known as the Ultrasound Diagnostic School, before the system was purchased by its current and Colleges. The mission of CEC, through its schools, its educators, and its employees is education-their primary goal, to enable students to graduate successfully and pursue rewarding careers. For more information, see http://www.careered.com. The company's website also has a detailed listing of individual campus locations and web links for its 75-plus 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 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. as defined in Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on information currently available to us and are subject to various risks, uncertainties, and other factors that could cause our actual growth, results of operations, performance and business prospects, and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by federal securities laws, we undertake no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances or for any other reason. These risks and uncertainties, the outcome of which could materially and adversely affect our financial condition and operations, include, but are not limited to, the following: future financial and operational results, including the impact of the impairment of goodwill and other intangible assets 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. ; risks related to our ability to comply with accrediting agency requirements or obtain accrediting agency approvals, including the adverse impact of negative publicity concerning the continued probation status of American InterContinental University and ongoing review by its accrediting body; risks related to our ability to comply with, and the impact of changes in, legislation and regulations that affect our ability to participate in student financial aid programs; costs, risks, and effects of legal and administrative proceedings and investigations and governmental regulations, including the pending Securities and Exchange Commission and Justice Department investigations and class action, derivative, and other lawsuits; costs and difficulties related to the integration of acquired businesses; risks related to our ability to manage and continue growth; risks related to the sale of any campuses; risks related to competition, general economic conditions, and other risk factors relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our industry and business and the factors discussed in our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2006, and from time to time in our other reports filed with the Securities and Exchange Commission. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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