Career Education Reports Record Results for Third Quarter 2003.Business Editors HOFFMAN ESTATES Hoffman Estates A village of northeast Illinois, a suburb of Chicago. Population: 49,700. , Ill.--(BUSINESS WIRE)--Oct. 21, 2003 Quarterly Revenues up 60% & Quarterly Net Income Up 90%; Summer and Fall Starts Up 63%; October October: see month. Population Up 58%; Online Population Up Dramatically 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 revenues, net income and earnings per share for the third quarter ended September 30, 2003, its 23rd consecutive quarter of record results since becoming a public company. Third quarter 2003 revenues were $315.7 million, up 60 percent from $197.2 million for the same period last year. Third quarter 2003 net income was $26.9 million, or $0.26 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 90 percent from last year's net income of $14.2 million, or $0.15 per diluted share. For the nine months ended September 30, 2003, revenues were $817.3 million, up 48 percent from $551.8 million for the same period last year. Net income for the first nine months of 2003 was $65.8 million, or $0.66 per diluted share, up 80 percent from last year's net income of $36.5 million, or $0.39 per diluted share. Third quarter 2003 new student starts rose 73 percent to approximately 26,100, up from approximately 15,100 for the same period last year. Summer and fall (July through October) new student starts are expected to rise 63 percent to approximately 43,400, up from approximately 26,700 a year ago. Total 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. student population on October 31, 2003 is expected to be approximately 79,500, up 58 percent from approximately 50,400 on October 31, 2002. Of the expected total CEC student population on October 31, 2003, approximately 10,400 students are attributable to the Whitman Education Group acquisition. On a same school basis, total CEC student population is expected to increase year-over-year by approximately 26 percent. Total full time student population of CEC's Online Education Group on October 31, 2003 is expected to be approximately 9,300, a more than five-fold increase from approximately 1,700 students on October 31, 2002. The total expected online population includes approximately 70 students from the recently launched 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 (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). "Career Education Corporation continues to deliver record results, with the third quarter serving as a clear demonstration of the vitality vi·tal·i·ty n. 1. The capacity to live, grow, or develop. 2. Physical or intellectual vigor; energy. and scalability of our business model," said John M. Larson, chairman, president and chief executive officer. "Third quarter results were driven by significant revenue and profitability gains in our online business, continued strong organic growth in our on-campus on-campus adjective Referring to an on-site site of a medical complex with multiple buildings. Cf 'Off campus.'. operations, and better than expected results from the recently acquired, former Whitman and INSEEC INSEEC Institut de Hautes Etudes Economiques et Commerciales (French: Institute of Economic Studies) campuses. All of these factors helped drive our quarterly margin improvement of 210 basis points year-over-year. "As the results demonstrate, CEC is delivering on all fronts," Mr. Larson said. "The growth of our online business continues to outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. expectations and was the primary contributor to our exceeding third quarter revenue and earnings guidance. Our Online Education Group generated approximately $44 million in revenues during the third quarter and is on course to generate more than $140 million in revenues in 2003. This estimate is significantly higher than our 2002 revenues of $20 million. "Our recently launched CTU online platform, which offers less accelerated programs than those offered by 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 (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), is showing tremendous promise following its October start. The online business is our highest-margin business unit and is expected to continue to deliver strong bottom line results in the fourth quarter. We have great expectations for our Online Education Group, which has grown to become the second largest online education provider in our sector in just under three years," Mr. Larson said. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Mr. Larson, CEC's on-campus operations continue to deliver strong revenue and earnings growth, buoyed in 2003 by more than 50 academic program transplants Transplants are an American punk rock/rap rock supergroup. They formed in 1999 when Tim Armstrong of the band Rancid played his friend and roadie Rob Aston some beats he had made using Pro Tools and asked Rob if he would consider contributing lyrics. , campus start-ups, innovative marketing programs and investments in expanded campus facilities. "Our focus is to build the reputation and reach of our brand name schools," Mr. Larson said. "Our approach works, as demonstrated by strong same-school growth during the quarter and the immediate impact we have had on the former Whitman and INSEEC campuses." Mr. Larson noted that all four of the start-up Start-up The earliest stage of a new business venture. campuses in 2003 have exceeded internal enrollment targets. Three start-up campuses began operations this month, 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. College of Culinary cu·li·nar·y adj. Of or relating to a kitchen or to cookery. [Latin cul  n Arts/Atlanta,
International Academy of Design and Technology/Detroit and American
InterContinental in·ter·con·ti·nen·tal adj. 1. Extending or taking place between or among continents: intercontinental exploration; intercontinental cooperation. 2. University/Houston, joining the recently opened Le Cordon Bleu College of Culinary Arts/Las Vegas. "Our marketing message continues to resonate res·o·nate v. res·o·nat·ed, res·o·nat·ing, res·o·nates v.intr. 1. To exhibit or produce resonance or resonant effects. 2. among potential students throughout our global network," Mr. Larson said. "Third quarter lead flow for our on-campus and online groups was up an aggregate 76 percent over the same period last year, underscoring the high demand for the full range of degree options we offer in the career fields of visual communication and design, IT, business, culinary arts and health education." Mr. Larson said that Career Education Corporation instituted new, more aggressive cash collection practices and stricter credit standards Credit Standards The guidelines a company follows to determine whether a credit applicant is creditworthy. during the third quarter, resulting in a significant year-over-year drop in 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). (DSOs), and a corresponding increase in cash flow generation. "For the first time in CEC's history, DSOs have remained flat from the second to third quarter when normal seasonal trends have led to a quarter-to-quarter increase in the range of 4 to 9 days. Bad debt expense was up for the third quarter because of a higher level of student attrition Attrition The reduction in staff and employees in a company through normal means, such as retirement and resignation. This is natural in any business and industry. Notes: , which was partly due to toughening credit standards, and higher average receivable balances from dropped students," Mr. Larson said. "As we look to the fourth quarter and beyond, we see continued record growth and outstanding financial performance," 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: -- Quarterly Days Sales Outstanding (DSOs) for total accounts receivable were 33 days at September 30, 2003. This represents a five-day decrease from the quarterly DSOs at September 30, 2002 of 38 days. The company calculates DSOs by dividing its "Receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed , net" by average daily revenue. Average daily revenue is computed by dividing quarterly "Total revenue" by the total number of days in the quarter. -- Bad Debt Expense was 4.8 percent of total revenues for the quarter ended September 30, 2003, compared with 3.9 percent for the quarters ended September 30, 2002 and June 30, 2003. 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 2003 revenues to be approximately $1.171 billion to $1.173 billion and full year 2003 earnings per share to be approximately $1.14. We expect the Online Education Group's full year 2003 revenues, included in the preceding amounts, to exceed $140 million. -- We expect fourth quarter 2003 revenues to be approximately $354 to $356 million and fourth quarter 2003 earnings per share to be approximately $0.47. We expect weighted average shares outstanding to be approximately 104.5 million for fourth quarter 2003. -- We expect fourth quarter 2003 operating profit margin Operating profit margin The ratio of operating profit to net sales. improvement to be approximately 30 to 50 basis points higher than fourth quarter 2002. This improvement reflects the impact of the INSEEC, Whitman and Western acquisitions. -- We expect that 2003 capital expenditures will be approximately $88 to $93 million. Conference Call Career Education Corporation will host a conference call with analysts on Wednesday, October 22, 2003 at 10:30 a.m. (Eastern Daylight Time) to discuss its third quarter 2003 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 (617) 786-2961 and citing code 83978811. A rebroadcast will be available for 90 days at www.careered.com or for seven days by calling (617) 801-6888 and citing code 41955387. Career Education Corporation (www.careered.com) is the world's largest on-campus provider of private, for-profit postsecondary education and has a rapidly-growing presence in online education. CEC's Colleges, Schools and Universities Group operates 78 campuses in the U.S., Canada, France, 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 doctoral degree, 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. , 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 in the career-oriented disciplines of visual communication and design technologies, information technology, business studies, culinary arts and health education. The Online Education Group operates American InterContinental University Online and Colorado Technical University Online and offers a variety of degrees in information technology, business, visual communication and education. Including the impact of the Whitman acquisition, CEC's total student population on October 31, 2003 is expected to be approximately 79,500 students. Except for the historical and present factual information contained herein, the matters set forth in this release, including statements identified by words such as "anticipates," "expects," "projects," "plans," "will," and similar expressions, are forward-looking statements within the meaning of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements are based on information currently available to us and involve risks and uncertainties that could cause our actual growth, results, performance and business prospects and opportunities to differ materially from those expressed in, or implied by these statements. These risks and uncertainties include, but are not limited to, costs and difficulties related to the integration of acquired businesses, risks and effects of legal and administrative proceedings An administrative proceeding is a non-judicial determination of fault or guilt and may include in some cases penalties of various forms. A "Captain's Mast", held by a commanding officer of a warship is one such proceeding. and governmental regulations, future financial and operational results, competition, general economic conditions, ability to manage and continue growth, 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 as detailed 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, 2002, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. and from time to time in our reports filed with the SEC. We disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. any responsibility to update these forward-looking statements.
Career Education Corporation
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended September 30, 2003 and 2002
(Amounts in thousands, except per share data and percentages)
% of % of
2003 Revenue 2002 Revenue
---------------- ----------------
Revenue:
Tuition and registration fees $287,575 91.1% $176,126 89.3%
Other 28,121 8.9% 21,029 10.7%
--------- ---------
Total revenue 315,696 100.0% 197,155 100.0%
--------- ---------
Operating expenses:
Educational services and
facilities 112,587 35.7% 76,723 38.9%
General and administration 145,838 46.2% 87,690 44.5%
Depreciation and amortization 11,736 3.7% 8,431 4.3%
--------- ---------
Total operating expenses 270,161 85.6% 172,844 87.7%
--------- ---------
Income from operations 45,535 14.4% 24,311 12.3%
Other income (expense):
Interest income 37 0.0% 266 0.1%
Interest expense (423) -0.1% (656) -0.3%
Share of affiliate earnings 96 0.0% 100 0.1%
--------- ---------
Total other income (290) -0.1% (290) -0.1%
--------- ---------
Income before provision for income
taxes 45,245 14.3% 24,021 12.2%
Provision for income taxes 18,324 5.8% 9,849 5.0%
--------- ---------
Net income $26,921 8.5% $14,172 7.2%
========= =========
======================================================================
Diluted net income per share $0.26 $0.15
Diluted weighted average number of
shares outstanding 103,713 95,114
======================================================================
Note: 2002 bad debt expense of $7,753 has been reclassified from
revenue to general and administration expense to conform with
2003 financial statement presentation
Career Education Corporation
CONSOLIDATED STATEMENTS OF INCOME
For the Nine Months Ended September 30, 2003 and 2002
(Amounts in thousands, except per share data and percentages)
% of % of
2003 Revenue 2002 Revenue
---------------- ----------------
Revenue:
Tuition and registration fees $746,192 91.3% $496,274 89.9%
Other 71,121 8.7% 55,556 10.1%
--------- ---------
Total revenue 817,313 100.0% 551,830 100.0%
--------- ---------
Operating expenses:
Educational services and
facilities 296,775 36.3% 214,909 38.9%
General and administration 380,934 46.6% 250,903 45.5%
Depreciation and amortization 30,764 3.8% 24,714 4.5%
--------- ---------
Total operating expenses 708,473 86.7% 490,526 88.9%
--------- ---------
Income from operations 108,840 13.3% 61,304 11.1%
Other income (expense):
Interest income 874 0.1% 642 0.1%
Interest expense (1,374) -0.2% (1,534) -0.3%
Share of affiliate earnings 2,167 0.3% 1,393 0.3%
--------- ---------
Total other income 1,667 0.2% 501 0.1%
--------- ---------
Income before provision for income
taxes 110,507 13.5% 61,805 11.2%
Provision for income taxes 44,755 5.5% 25,340 4.6%
--------- ---------
Net income $65,752 8.0% $36,465 6.6%
========= =========
======================================================================
Diluted net income per share $0.66 $0.39
Diluted weighted average number of
shares outstanding 99,259 94,356
======================================================================
Note: 2002 bad debt expense of $20,512 has been reclassified from
revenue to general and administration expense to conform with
2003 financial statement presentation
Career Education Corporation
SELECTED BALANCE SHEET & FINANCIAL DATA
As of September 30, 2003 and 2002
(Dollars in thousands)
2003 2002
----------- -----------
Cash $78,328 $13,541
Receivables, net 111,888 81,557
Current assets 247,364 134,747
Total assets 1,001,226 556,052
Current liabilities 219,008 125,525
Long-term debt and capital lease obligations 75,833 43,251
Other long-term liabilities 19,109 14,131
Stockholders' investment 687,276 373,145
--------------------------------------------------------------------
Purchases of Net cash
property provided by
and operating
equipment, activities
net
----------- -----------
Three months ended September 30, 2003 $25,505 $57,520
Nine months ended September 30, 2003 $53,370 $119,969
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