Career Education Reports Record Results for Second Quarter 2002.Business Editors HOFFMAN ESTATES Hoffman Estates A village of northeast Illinois, a suburb of Chicago. Population: 49,700. , Ill.--(BUSINESS WIRE)--July 22, 2002 Quarterly Net Revenues Up 42% & Net Income Up 108%; Quarterly Starts Up 32%; July July: see month. Student Population Up 29% 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 earnings per share for the second quarter ended June June: see month. 30, 2002, its 18th consecutive quarter of record results since becoming a public company. Second quarter 2002 net revenues were $172.0 million, up 42 percent from $121.3 million for the same period last year. Second quarter 2002 net income was $10.3 million, or $0.22 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, more than double last year's net income of $5.0 million, or $0.11 per diluted share. Per-share data for both years has been restated to reflect the company's September September: see month. 2001 two-for-one stock split that was affected in the form of a stock dividend. As previously disclosed, on January January: see month. 1, 2002, the company adopted 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. ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142"), which eliminates the amortization of goodwill. If SFAS 142 had been adopted on January 1, 2001, pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma second quarter 2001 net income would have been $5.9 million, or $0.13 per diluted share and the second quarter 2002 increases in net income and earnings per share would have been 75 percent and 69 percent, respectively. For the six months ended June 30, 2002, net revenues were $341.9 million, up 42 percent from $241.0 million for the same period last year. Net income for the first half of 2002 nearly doubled to $22.3 million, or $0.47 per diluted share, from $11.2 million, or $0.25 per diluted share. Per-share data for both years has been restated to reflect the company's September 2001 two-for-one stock split. If SFAS 142 had been adopted on January 1, 2001, pro forma net income for the six months ended June 30, 2001 would have been $13.2 million, or $0.29 per diluted share and the six month 2002 increases in net income and earnings per share would have been 69 percent and 62 percent, respectively. Second quarter 2002 new student starts rose 32 percent to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 8,700, up from approximately 6,600 for the same period last year. Total student population on July 31, 2002 is expected to be approximately 40,650, up 29 percent from approximately 31,600 on July 31, 2001. On a same school basis, student population is expected to increase approximately 24 percent. "Career Education Corporation is ideally positioned, generating record numbers of leads, starts and career placement opportunities. We continued our record performance in the second quarter, achieving significant growth across each of our six divisions: Culinary cu·li·nar·y adj. Of or relating to a kitchen or to cookery. [Latin cul  n , 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. , International Academy of
Design & Technology, College, 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 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. ," said John M. Larson Larson may refer to: People with the surname Larson:
"Demand for our educational programs continues to grow in every area--visual communication, IT, business studies and culinary arts. These are among the high growth career fields of the 21st century, and our marketing message is reaching increasing numbers of high school graduates, young adults, older students and international students. Second quarter lead flow was up 69 percent over last year, demonstrating the high interest potential students have for our programs. More than ever before, students understand the importance of a high quality education to be competitive in any economic environment," he said. Mr. Larson said that two major internal growth initiatives -- E-learning and two new campus start-ups -- continue to perform well above expectations. "E-learning represents a major growth opportunity for 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. ," Mr. Larson said. "The performance of American InterContinental University (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, our rapidly growing E-learning initiative, has been outstanding. As of July 31, we expect to have over 1,000 full time students enrolled in AIU Online degree programs, more than double the number of degree seeking students we had as of April 30. We expect this rapid growth to continue. "AIU Online succeeds because it is redefining the standard for E-learning," Mr. Larson said. "During the second quarter, AIU Online launched the third generation of its groundbreaking `virtual campus'--a fully integrated learning environment that allows students to access everything they need at one site. AIU Online also became the first higher education higher education Study beyond the level of secondary education. Institutions of higher education include not only colleges and universities but also professional schools in such fields as law, theology, medicine, business, music, and art. institution in 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. to receive approval from the U.S. Department of Education to allow students to electronically sign financial aid documents, thus creating a completely paperless process." AIU Online recently received approval for a new Master's mas·ter's n. A master's degree. in Education program, adding to its current bachelor's bach·e·lor's n. A bachelor's degree. and master's degree master's degree n. 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. programs in information technology and business. "Education represents a major curricular platform opportunity for CEC. Because of its anytime, anyplace an·y·place adv. To, in, or at any place; anywhere. See Usage Note at everyplace. Adv. 1. anyplace - at or in or to any place; "you can find this food anywhere"; (`anyplace' is used informally for `anywhere') anywhere availability, AIU Online is the ideal launch point for the program," Mr. Larson said. "Current projections show increasing demand for new teachers, with 2.2 million more teachers needed in the United States over the next decade. With teacher compensation based in large part on educational achievement, we anticipate strong demand for our new Master's in Education program." Mr. Larson said that CEC's 2002 campus start-ups, the Orlando Orlando, city, United States Orlando (ôrlăn`dō), city (1990 pop. 164,693), seat of Orange co., central Fla., in a lake region; inc. 1875. In a citrus fruit and farm area, it is one of the world's most visited vacation spots. Culinary Academy and a new 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 campus in Northern California Northern California, sometimes referred to as NorCal, is the northern portion of the U.S. state of California. The region contains the San Francisco Bay Area, the state capital, Sacramento; as well as the substantial natural beauty of the redwood forests, the northern , are progressing as planned and are attracting great initial interest. "Orlando Culinary Academy opened its doors in July to more than twice its budgeted student count and the new Brooks College campus is nearing its projected enrollment level nearly three months before launch day," he said. "Career Education Corporation is hitting on all cylinders as we build to our goal of becoming the world's largest provider of quality postsecondary educational services," Mr. Larson said. Selected Financial 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 are summarized below:
-- We expect full year 2002 revenue to be approximately $735 to $745 million.
-- We expect year-to-year operating profit margin to increase approximately 50 basis points for the 2002 third and fourth quarters.
-- We expect third quarter 2002 earnings per share to be approximately $0.27 to $0.28 and fourth quarter 2002 earnings per share to be approximately $0.57 to $0.59. These earnings include the effect of the adoption of the Statement of Financial Accounting Standards No. 142, Goodwill and Intangible Assets ("SFAS 142"). The adoption of the standard will cause an elimination of approximately $4.2 million in amortization expense in 2002 and an increase of approximately $3.9 million in 2002 net income or $0.02 earnings per share each quarter in comparison to the 2001 results.
-- Our effective income tax rate is expected to decrease from 45.0 percent in 2001 to approximately 41.0 percent in 2002. If SFAS 142 had been in effect in 2001, the tax rate would have been approximately 43.0 percent. The remaining decrease is due to various tax savings initiatives.
-- We expect that 2002 capital expenditures will be approximately $60 to $65 million.
Business Outlook 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. .
-- We expect full year 2002 revenue to be approximately $735 to $745 million.
-- We expect year-to-year operating profit margin to increase approximately 50 basis points for the 2002 third and fourth quarters.
-- We expect third quarter 2002 earnings per share to be approximately $0.27 to $0.28 and fourth quarter 2002 earnings per share to be approximately $0.57 to $0.59. These earnings include the effect of the adoption of the Statement of Financial Accounting Standards No. 142, Goodwill and Intangible Assets ("SFAS 142"). The adoption of the standard will cause an elimination of approximately $4.2 million in amortization expense in 2002 and an increase of approximately $3.9 million in 2002 net income or $0.02 earnings per share each quarter in comparison to the 2001 results.
-- Our effective income tax rate is expected to decrease from 45.0 percent in 2001 to approximately 41.0 percent in 2002. If SFAS 142 had been in effect in 2001, the tax rate would have been approximately 43.0 percent. The remaining decrease is due to various tax savings initiatives.
-- We expect that 2002 capital expenditures will be approximately $60 to $65 million.
Conference Call Career Education Corporation will host a conference call on Tuesday Tuesday: see week. , July 23, 2002 at 10:30 a.m. (Eastern Daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). Time) to discuss its second quarter 2002 results. 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 or by calling (913) 981-4910 and citing confirmation code 493247. Following the conference call, a rebroadcast will be available for 90 days at www.careered.com or for seven days by calling (719) 457-0820 and citing confirmation code 493247. Career Education Corporation (www.careered.com) is one of the world's largest providers of private, for-profit for-prof·it adj. Established or operated with the intention of making a profit: a for-profit organization. postsecondary education in the career-oriented disciplines of visual communication and design technologies, information technology, business studies and culinary arts. CEC operates 42 campuses throughout the United States, 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 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 on July 31, 2002 is expected to be approximately 40,650 students. CEC colleges enjoy long operating histories and offer a wide variety of master's degree, bachelor's degree, associate degree and 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. 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 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. 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. (11 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 in the College Division (nine campuses). 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 E-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 Three Months Ended June 30, 2002 and 2001
(Amounts in thousands, except EPS)
% of % of
2002 NSR 2001 NSR
---- ---- ---- ----
Revenue:
Tuition and
registration fees,
net $ 153,515 89.3% $ 109,616 90.4%
Other, net 18,489 10.7% 11,682 9.6%
--------- ---------
Total net revenue 172,004 100.0% 121,298 100.0%
--------- ---------
Operating Expenses:
Educational services
and facilities 71,046 41.3% 51,913 42.8%
General and
administration 75,511 43.9% 52,641 43.4%
Depreciation and
amortization 8,177 4.8% 7,709 6.4%
--------- ---------
Total operating
expenses 154,734 90.0% 112,263 92.6%
--------- ---------
Income from operations 17,270 10.0% 9,035 7.4%
Other Income (Expense):
Interest income 231 0.2% 167 0.2%
Interest expense (553) -0.3% (585) -0.5%
Share of affiliate
earnings 556 0.3% 398 0.3%
--------- ---------
Total other
income (expense) 234 0.2% (20) 0.0%
--------- ---------
Income before provision
for income taxes 17,504 10.2% 9,015 7.4%
Provision for income
taxes 7,176 4.2% 4,058 3.3%
--------- ---------
Net income $ 10,328 6.0% $ 4,957 4.1%
========= =========
Elimination of goodwill
amortization, net of
tax effect of $69 (1) 959 0.8%
---------
Pro forma net income (1) $ 5,916 4.9%
=========
======================================================================
Earnings before Interest,
Taxes, Depreciation &
Amortization (EBITDA) 26,003 15.1% 17,142 14.1%
(includes "Share of
affiliate earnings)
Diluted net income
per share $ 0.22 $ 0.11
Pro forma diluted net
income per share (1) $ 0.22 $ 0.13
Diluted weighted
average number of
shares outstanding 47,316 45,586
======================================================================
(1) Pro forma net income and pro forma diluted net income per share
assumes adoption of SFAS 142 on January 1, 2001.
Career Education Corporation
CONSOLIDATED STATEMENTS OF INCOME
For the Six Months Ended June 30, 2002 and 2001
(Amounts in thousands, except EPS)
% of % of
2002 NSR 2001 NSR
---- ---- ---- ----
Revenue:
Tuition and
registration
fees, net $ 307,389 89.9% $ 219,029 90.9%
Other, net 34,527 10.1% 21,984 9.1%
--------- ---------
Total net revenue 341,916 100.0% 241,013 100.0%
--------- ---------
Operating Expenses:
Educational services
and facilities 138,186 40.4% 100,801 41.8%
General and
administration 150,454 44.0% 105,216 43.7%
Depreciation and
amortization 16,283 4.8% 14,834 6.1%
--------- ---------
Total operating
expenses 304,923 89.2% 220,851 91.6%
--------- ---------
Income from operations 36,993 10.8% 20,162 8.4%
Other Income (Expense):
Interest income 376 0.1% 396 0.2%
Interest expense (878) -0.2% (1,100) -0.5%
Share of affiliate
earnings 1,293 0.4% 975 0.4%
--------- ---------
Total other income 791 0.3% 271 0.1%
--------- ---------
Income before provision
for income taxes 37,784 11.1% 20,433 8.5%
Provision for income
taxes 15,491 4.6% 9,194 3.8%
--------- ---------
Net income $ 22,293 6.5% $ 11,239 4.7%
========= =========
Elimination of goodwill
amortization, net of
tax effect of $139 (1) 1,934 0.8%
---------
Pro forma net income (1) $ 13,173 5.5%
=========
======================================================================
Earnings before Interest,
Taxes, Depreciation &
Amortization (EBITDA) 54,569 16.0% 35,971 14.9%
(includes "Share of
affiliate earnings)
Diluted net income
per share $ 0.47 $ 0.25
Pro forma diluted
net income
per share (1) $ 0.47 $ 0.29
Diluted weighted
average number of
shares outstanding 47,021 45,323
======================================================================
(1) Pro forma net income and pro forma diluted net income per share
assumes adoption of SFAS 142 on January 1, 2001.
Career Education Corporation
SELECTED BALANCE SHEET & FINANCIAL DATA
As of June 30, 2002 and 2001
(Amounts in thousands)
2002 2001
--------------------------
Cash $ 5,947 $ 273
Receivables, net 65,777 49,173
Current assets 104,074 80,619
Total assets 474,109 377,024
Current liabilities 105,321 78,118
Long-term debt and capital lease
obligations, net 6,472 32,376
Other long-term liabilities 18,668 4,841
Stockholders' investment 343,648 261,689
----------------------------------------------------------------------
Net Bad Debt Gross
Revenue Expense Revenue
Three months ended June 30, 2002 $ 172,004 $ 6,386 $ 178,390
Six months ended June 30, 2002 $ 341,916 $ 12,759 $ 354,675
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