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Share Name | Share Symbol | Market | Type |
---|---|---|---|
CECO Environmental Corporation | NASDAQ:CECO | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.72 | -2.99% | 23.38 | 22.98 | 25.00 | 23.75 | 23.22 | 23.74 | 164,585 | 01:00:00 |
Career Education Corporation (NASDAQ: CECO) today reported total revenue of $542.9 million, and net income of $12.1 million, or $0.15 per diluted share, for the fourth quarter of 2010 compared to total revenue of $507.5 million and net income of $30.7 million, or $0.36 per diluted share, for the fourth quarter of 2009. For the full year 2010, total revenue of $2.12 billion, and net income of $157.8 million, or $1.95 per diluted share increased from total revenue of $1.83 billion and net income of $81.2 million, or $0.94 per diluted share, for the full year 2009.
“Our financial performance both in the fourth quarter and in 2010 was in line with our expectations,” said Gary E. McCullough, President and Chief Executive Officer. “While private sector postsecondary education is in a period of heightened scrutiny and uncertainty, we view this as a period of opportunity in which we will continue to enhance our programs, processes and systems to better meet the needs of our diverse student population.”
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 $0.81 in the fourth quarter 2010 as compared to $0.74 in the fourth quarter of 2009. For the years ended December 31, 2010 and 2009, earnings per diluted share from continuing operations (non-GAAP basis) were $3.00 and $1.95, 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, 2010
Three Months Ended December 31, 2010
Trade Name Impairment $ 67.8 $ 0.55 Legal Settlement 0.8 0.01 Severance 7.7 0.06 TOTAL $ 76.3 $ 0.62Three Months Ended December 31, 2009
Remaining Lease Obligations for Vacated Space $ 14.3 $ 0.11 Performance-based Compensation Related to Plan Outperformance (2.2 ) (0.02 ) Termination of Insurance Policies (12.0 ) (0.09 ) TOTAL $ 0.1 $ -Year Ended December 31, 2010
Year Ended December 31, 2010
Trade Name Impairment $ 67.8 $ 0.55 Legal Settlement 40.8 0.33 Severance 7.7 0.06 TOTAL $ 116.3 $ 0.94Year Ended December 31, 2009
Asset Impairment $ 2.5 $ 0.02 Severance 1.5 0.01 Remaining Lease Obligations for Vacated Space 14.3 0.11 Performance-based Compensation Related toPlan Outperformance
23.1 0.17 Termination of Insurance Policies (12.0 ) (0.09 ) TOTAL $ 29.4 $ 0.22CONSOLIDATED CASH FLOWS AND FINANCIAL POSITION
Cash Flows
• Net cash flows provided by operating activities totaled $272.3 million for the year ended December 31, 2010, compared to $288.3 million for the year ended December 31, 2009. Operating cash flows remained relatively constant as compared to the prior year as strong cash flow driven by increased net income was offset by payment of prior year annual incentive compensation and the impact of student receivables growth and related payment performance.
• Capital expenditures increased to $127.3 million during the year ended December 31, 2010, from $74.1 million for the year ended December 31, 2009. Capital expenditures increased to 6.0 percent of total revenue during the year ended December 31, 2010 as compared to 4.0 percent for the year ended December 31, 2009 as a result of investments made in the Company’s new campus support center.
Financial Position
• As of December 31, 2010 and December 31, 2009, cash and cash equivalents and short-term investments totaled $449.2 million and $484.7 million, respectively.
Stock Repurchase Program and Treasury Stock
During 2010, the Company repurchased approximately 5.4 million shares of its common stock for approximately $154.9 million at an average price of $28.54 per share. The Company did not repurchase shares of its common stock during the fourth quarter 2010. 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, 2010, approximately $290.5 million was available under the Company’s stock repurchase program.
During January 2011, the Company repurchased an additional 3.7 million shares of its common stock for $79.9 million at an average price of $21.47 per share through the Company’s 10b5-1 repurchase program announced by the Company on November 15, 2010.
Our unaudited consolidated balance sheet reflects the correction of an error related to the recording of the treasury share retirement which occurred in the fourth quarter 2007. The impact of this correction was to increase additional paid-in-capital and reduce retained earnings by $417.9 million, respectively. All periods presented have been adjusted accordingly. This correction does not impact operating income, net income or total stockholders’ equity.
STUDENT POPULATION AND NEW STUDENT STARTS
Student Population
Total student population by reportable segment as of December 31, 2010 and 2009, was as follows:
As of December 31, % Change 2010 2009 2010 vs. 2009Student Population
University 62,400 59,300 5% Health Education 29,000 24,200 20% Culinary Arts 13,100 10,900 20% International 12,300 10,900 13%Total Student Population
116,800 105,300 11%New Student Starts
New student starts by reportable segment during the fourth quarter of 2010 and 2009, were as follows:
For the Three Months Ended December 31,% Change
2010 2009 2010 vs. 2009New Student Starts
University 16,510 18,550 -11% Health Education 6,270 5,510 14% Culinary Arts 1,390 1,430 -3% International 3,570 2,950 21%Total New Student Starts
27,740 28,440 -2%CONFERENCE CALL INFORMATION
Career Education Corporation will host a conference call on Friday, February 18, 2011 at 10:00 a.m. Eastern time. 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 28756801. 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 28756801.
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 more than 116,000 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, Italy, 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”); Istituto Marangoni; 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 outcome 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; the impacts of the U.S. Department of Education’s new and pending regulations addressing certain aspects of administration of Title IV federal financial aid programs (including among other matters, gainful employment, 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) on our business practices, costs of compliance and of developing and implementing changes in operations, student recruitment or enrollment, program offerings that may have significant or material effects on our operations, business and profitability; potential higher bad debt expense or reduced revenue associated with requiring students to pay more of their educational expenses while in school or with directly providing extended payment plans to our students; increased competition; the effectiveness of our regulatory compliance efforts; 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 regulations, and class action and other lawsuits; our ability to manage and continue growth; and other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2009, our Quarterly Reports on Form 10-Q for the most recent fiscal quarters, and from time to time in our current reports filed with the Securities and Exchange Commission.
CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands) As of December 31, (1) 2010 2009 (Restated) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 289,482 $ 284,334 Short-term investments 159,671 200,379Total cash and cash equivalents and short-term investments
449,153 484,713 Student receivables, net 62,287 57,795 Receivables, other, net 4,132 5,255 Prepaid expenses 45,990 40,748 Inventories 13,142 11,259 Deferred income tax assets, net 31,665 12,774 Other current assets 6,246 8,790 Assets of discontinued operations 6,742 7,501Total current assets
619,357 628,835 NON-CURRENT ASSETS: Property and equipment, net 366,775 304,028 Goodwill 381,476 377,515 Intangible assets, net 118,763 180,520 Student receivables, net 12,522 21,455 Deferred income tax assets, net 5,092 3,187 Other assets, net 37,816 23,178 Assets of discontinued operations 19,055 25,124 TOTAL ASSETS $ 1,560,856 $ 1,563,842 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of capital lease obligations $ 783 $ 880 Accounts payable 56,013 51,100 Accrued expenses: Payroll and related benefits 73,608 87,763 Advertising and production costs 18,846 21,436 Income taxes 8,069 17,849 Earnout payments 17,439 18,009 Other 98,113 45,923 Deferred tuition revenue 176,102 184,336 Liabilities of discontinued operations 15,100 14,713 Total current liabilities 464,073 442,009 NON-CURRENT LIABILITIES: Capital lease obligations, net of current maturities 1,223 2,262 Deferred rent obligations 103,996 90,676 Earnout payments 7,690 23,680 Other liabilities 11,761 18,612 Liabilities of discontinued operations 37,576 64,558 Total non-current liabilities 162,246 199,788 SHARE-BASED AWARDS SUBJECT TO REDEMPTION 153 521 STOCKHOLDERS' EQUITY: Preferred stock - - Common stock 812 954 Additional paid-in capital 576,853 662,865 Accumulated other comprehensive (loss) income (81 ) 8,408 Retained earnings 356,991 471,184 Cost of shares in treasury (191 ) (221,887 ) Total stockholders' equity 934,384 921,524 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,560,856 $ 1,563,842 (1) In December 2010, the Transitional Schools segment ceased to exist as we completed the teach out of our last remaining Transitional School, AIU-Los Angeles, CA. As a result, all current and prior period results have been recast 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 Three Months Ended December 31, (1)
% of % of Total Total 2010 Revenue 2009 Revenue REVENUE: Tuition and registration fees $ 526,636 97.0 % $ 491,399 96.8 % Other 16,293 3.0 % 16,056 3.2 % Total revenue 542,929 507,455 OPERATING EXPENSES: Educational services and facilities 164,931 30.4 % 165,587 32.6 % General and administrative 266,073 49.0 % 226,048 44.5 % Depreciation and amortization 19,762 3.6 % 17,176 3.4 % Goodwill and asset impairment 71,475 13.2 % - 0.0 % Total operating expenses 522,241 96.2 % 408,811 80.6 % Operating income 20,688 3.8 % 98,644 19.4 % OTHER INCOME (EXPENSE): Interest income 491 0.1 % 404 0.1 % Interest expense (302 ) -0.1 % (193 ) 0.0 % Miscellaneous income (expense) 182 0.0 % (2 ) 0.0 % Total other income 371 0.1 % 209 0.0 % PRETAX INCOME 21,059 3.9 % 98,853 19.5 % Provision for income taxes 5,749 1.1 % 36,151 7.1 % INCOME FROM CONTINUING OPERATIONS 15,310 2.8 % 62,702 12.4 % Loss from discontinued operations, net of tax (3,208 ) -0.6 % (32,022 ) -6.3 % NET INCOME $ 12,102 2.2 % $ 30,680 6.0 % NET INCOME (LOSS) PER SHARE - DILUTED: Income from continuing operations $ 0.19 $ 0.74 Loss from discontinued operations (0.04 ) (0.38 ) Net income per share $ 0.15 $ 0.36 DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 79,776 85,300 (1) In December 2010, the Transitional Schools segment ceased to exist as we completed the teach out of our last remaining Transitional School, AIU-Los Angeles, CA. As a result, all current and prior period results have been recast 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 Year Ended December 31, (1)
% of % of Total Total 2010 Revenue 2009 Revenue REVENUE: Tuition and registration fees $ 2,042,383 96.1 % $ 1,760,237 96.0 % Other 81,853 3.9 % 73,559 4.0 % Total revenue 2,124,236 1,833,796 OPERATING EXPENSES: Educational services and facilities 639,123 30.1 % 606,014 33.0 % General and administrative 1,095,519 51.6 % 931,118 50.8 % Depreciation and amortization 71,372 3.4 % 65,204 3.6 % Goodwill and asset impairment 71,829 3.4 % 2,500 0.1 % Total operating expenses 1,877,843 88.4 % 1,604,836 87.5 % Operating income 246,393 11.6 % 228,960 12.5 % OTHER INCOME (EXPENSE): Interest income 1,180 0.1 % 2,372 0.1 % Interest expense (377 ) 0.0 % (225 ) 0.0 % Miscellaneous expense (319 ) 0.0 % (706 ) 0.0 % Total other income 484 0.0 % 1,441 0.1 % PRETAX INCOME 246,877 11.6 % 230,401 12.6 % Provision for income taxes 80,287 3.8 % 80,894 4.4 % INCOME FROM CONTINUING OPERATIONS 166,590 7.8 % 149,507 8.2 % Loss from discontinued operations, net of tax (8,817 ) -0.4 % (68,288 ) -3.7 % NET INCOME $ 157,773 7.4 % $ 81,219 4.4 % NET INCOME (LOSS) PER SHARE - DILUTED: Income from continuing operations $ 2.06 $ 1.73 Loss from discontinued operations (0.11 ) (0.79 ) Net income per share $ 1.95 $ 0.94 DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 80,850 86,418 (1) In December 2010, the Transitional Schools segment ceased to exist as we completed the teach out of our last remaining Transitional School, AIU-Los Angeles, CA. As a result, all current and prior period results have been recast as a component of discontinued operations. CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATING INCOME BY QUARTER (In thousands) For the 2010 Quarters Ended, (1) March 31 June 30 September 30 December 31 Full Year REVENUE: Tuition and registration fees $ 509,508 $ 509,129 $ 497,110 $ 526,636 $ 2,042,383 Other 19,918 18,610 27,032 16,293 81,853 Total revenue 529,426 527,739 524,142 542,929 2,124,236 OPERATING EXPENSES: Educational services and facilities 159,162 156,918 158,112 164,931 639,123 General and administrative 264,140 256,920 308,386 266,073 1,095,519 Depreciation and amortization 16,678 17,149 17,783 19,762 71,372 Goodwill and asset impairment - - 354 71,475 71,829 Total operating expenses 439,980 430,987 484,635 522,241 1,877,843 OPERATING INCOME $ 89,446 $ 96,752 $ 39,507 $ 20,688 $ 246,393 For the 2009 Quarters Ended, (1) March 31 June 30 September 30 December 31 Full Year REVENUE: Tuition and registration fees $ 414,632 $ 419,814 $ 434,392 $ 491,399 $ 1,760,237 Other 17,133 17,038 23,332 16,056 73,559 Total revenue 431,765 436,852 457,724 507,455 1,833,796 OPERATING EXPENSES: Educational services and facilities 145,068 146,981 148,378 165,587 606,014 General and administrative 218,169 235,173 251,728 226,048 931,118 Depreciation and amortization 15,963 16,259 15,806 17,176 65,204 Goodwill and asset impairment - - 2,500 - 2,500 Total operating expenses 379,200 398,413 418,412 408,811 1,604,836 OPERATING INCOME $ 52,565 $ 38,439 $ 39,312 $ 98,644 $ 228,960 (1) In December 2010, the Transitional Schools segment ceased to exist as we completed the teach out of our last remaining Transitional School, AIU-Los Angeles, CA. As a result, all current and prior period results have been recast as a component of discontinued operations. CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Year Ended December 31, 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 157,773 $ 81,219 Adjustments to reconcile net income to net cash provided by operating activities: Goodwill and asset impairment 71,829 2,500 Depreciation and amortization expense 71,624 67,596 Bad debt expense 106,324 56,718 Compensation expense related to share-based awards 17,318 16,516 Loss on disposition of property and equipment 457 1,291 Deferred income taxes (17,007 ) (8,702 ) Changes in operating assets and liabilities: Accrued expenses and deferred rent obligations (25,055 ) 81,239 Deferred tuition revenue (12,653 ) 29,570 Student receivables, net of allowance for doubtful accounts (98,920 ) (66,961 ) Other operating assets and liabilities 569 27,265 Net cash provided by operating activities 272,259 288,251 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of available-for-sale investments (291,864 ) (617,032 ) Sales of available-for-sale investments 332,445 668,281 Purchases of property and equipment (127,283 ) (74,087 ) Acquisition of the rights to the Le Cordon Bleu brand (16,852 ) (26,331 ) Business acquisition, net of acquired cash (6,194 ) - Other 88 (132 ) Net cash used in investing activities (109,660 ) (49,301 ) CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (154,913 ) (201,119 ) Issuance of common stock 3,109 2,797 Tax benefit associated with stock option exercises 223 237 Payments of assumed loans upon business acquisition (4,279 ) - Payments of capital lease obligations (1,013 ) (1,066 ) Net cash used in financing activities (156,873 ) (199,151 ) EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS: (1,316 ) 415 NET INCREASE IN CASH AND CASH EQUIVALENTS 4,410 40,214 DISCONTINUED OPERATIONS CASH ACTIVITY INCLUDED ABOVE: Add: Cash balance of discontinued operations, beginning of the year 738 1,945 Less: Cash balance of discontinued operations, end of the year - 738 CASH AND CASH EQUIVALENTS, beginning of the year 284,334 242,913 CASH AND CASH EQUIVALENTS, end of the year $ 289,482 $ 284,334 CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED SELECTED SEGMENT INFORMATION (In thousands, except percentages) For the Three Months Ended December 31, (1) 2010 2009 REVENUE: University $ 281,008 $ 269,009 Health Education 119,352 102,486 Culinary Arts 94,003 91,058 International 48,698 45,070 Corporate and Other (132 ) (168 ) Total $ 542,929 $ 507,455 OPERATING INCOME (LOSS): (2) (4) University (3) $ 69,018 $ 61,292 Health Education (3) 16,594 16,020 Culinary Arts (3) (5) (63,546 ) 12,328 International 12,139 8,903 Corporate and Other (3) (6) (13,517 ) 101 Total $ 20,688 $ 98,644 OPERATING MARGIN (LOSS): University 24.6 % 22.8 % Health Education 13.9 % 15.6 % Culinary Arts -67.6 % 13.5 % International 24.9 % 19.8 % Total 3.8 % 19.4 % (1) In December 2010, the Transitional Schools segment ceased to exist as we completed the teach out of our last remaining Transitional School, AIU-Los Angeles, CA. As a result, all current and prior period results have been recast as a component of discontinued operations. (2) Prior period financial results have been revised to account for a change in the allocation of shared service costs. Previously, shared service costs were allocated to our segments as a percentage of revenue. Improved data and analytical capabilities have allowed us to now allocate shared service costs based upon usage and consumption factors. (3) Fourth quarter 2009 includes pretax expense of $14.3 million related to the present value of the remaining lease obligations for vacated space within Corporate and Other ($5.3), University ($5.2), Culinary Arts ($2.9) and Health Education ($0.9). (4) During the fourth quarter 2010, a pretax charge of $7.7 million was recorded in association with a reduction in force to be completed during the first quarter of 2011. (5) Fourth quarter 2010 includes pretax expense of $67.8 million related to trade name impairment and $1.4 million related to goodwill impairment within Culinary Arts. (6) Fourth quarter 2010 includes pretax expense of $2.3 million related to an asset impairment charge for one of our investments within Corporate and Other. The prior year quarter results include a pretax charge of $5.3 million related to vacated space which was offset by a reduction of $12.0 million related to the termination of certain insurance policies. CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED SELECTED SEGMENT INFORMATION (In thousands, except percentages) For the Year Ended December 31, (1) 2010 2009 REVENUE: University $ 1,159,291 $ 1,018,194 Health Education 441,608 362,692 Culinary Arts 387,884 332,236 International 136,076 121,188 Corporate and Other (623 ) (514 ) Total $ 2,124,236 $ 1,833,796 OPERATING INCOME (LOSS):(2) (3) University (4) $ 282,013 $ 195,081 Health Education 52,028 42,072 Culinary Arts (5)¥ (66,813 ) 14,873 International 21,828 18,853 Corporate and Other (6) (42,663 ) (41,919 ) Total $ 246,393 $ 228,960 OPERATING MARGIN (LOSS): University 24.3 % 19.2 % Health Education 11.8 % 11.6 % Culinary Arts -17.2 % 4.5 % International 16.0 % 15.6 % Total 11.6 % 12.5 % (1) In December 2010, the Transitional Schools segment ceased to exist as we completed the teach out of our last remaining Transitional School, AIU-Los Angeles, CA. As a result, all current and prior period results have been recast as a component of discontinued operations. (2) Prior period financial results have been revised to account for a change in the allocation of shared service costs. Previously, shared service costs were allocated to our segments as a percentage of revenue. Improved data and analytical capabilities have allowed us to now allocate shared service costs based upon usage and consumption factors. (3) During the fourth quarter 2010, a pretax charge of $7.7 million was recorded in association with a reduction in force to be completed during the first quarter of 2011. (4) During 2010, University recorded $7.3 million of pretax legal expenses related to the settlements of legal matters and a $0.3 million asset impairment charge for one of our leased facilities within the University reportable segment. The prior year results include a $5.2 million pretax expense related to the present value of the remaining lease obligations for vacated space. (5) 2010 includes pretax expense of $67.8 million related to trade name impairment and $1.4 million related to goodwill impairment. Culinary Arts also recorded a $40.8 million pretax 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. The prior year results include $2.9 million pretax expense related to the present value of the remaining lease obligations for vacated space. (6) Fourth quarter 2010 includes pretax expense of $2.3 million related to an asset impairment charge for one of our investments within Corporate and Other. The prior year results include pretax charges including an additional $11.3 million for performance- based compensation related to plan outperformance and $5.3 million related to vacated space which were offset by a reduction of $12.0 million related to the termination of certain insurance policies. CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED SELECTED UNIVERSITY SEGMENT INFORMATION (Dollars in thousands) For the Three Months Ended December 31, For the Year Ended December 31, 2010 2009 2010 2009 REVENUE: CTU $ 123,236 $ 105,520 $ 465,315 $ 368,621 AIU 98,647 99,767 448,581 409,043 Art & Design 59,125 63,722 245,395 240,530 Total University $ 281,008 $ 269,009 $ 1,159,291 $ 1,018,194 OPERATING INCOME: CTU $ 39,603 $ 31,352 $ 133,881 $ 79,889 AIU 22,905 20,604 118,959 90,127 Art & Design 6,510 9,336 29,173 25,065 Total University $ 69,018 $ 61,292 $ 282,013 $ 195,081 OPERATING MARGIN: CTU 32.1 % 29.7 % 28.8 % 21.7 % AIU 23.2 % 20.7 % 26.5 % 22.0 % Art & Design 11.0 % 14.7 % 11.9 % 10.4 % Total University 24.6 % 22.8 % 24.3 % 19.2 % As of December 31, STUDENT POPULATION: 2010 2009 CTU 30,900 27,300 AIU 20,000 20,300 Art & Design 11,500 11,700 Total University 62,400 59,300 For the three months ended December 31, NEW STUDENT STARTS: 2010 2009 CTU 8,740 9,800 AIU 6,230 7,210 Art & Design 1,540 1,540 Total University 16,510 18,550 CAREER EDUCATION CORPORATION AND SUBSIDIARIES UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1) (In millions, except per share amounts) For the Three Months Ended December 31, 2010 2009 Operating Earnings per Operating
Earnings per
IncomeDiluted Share (2)
IncomeDiluted Share (2)
As Reported $ 20.7 $ 0.19 $ 98.6 $ 0.74 Reconciling Items: Trade Name Impairment (3) 67.8 0.55 - - Legal Settlement (4) 0.8 0.01 - - Severance (5) 7.7 0.06 - - Remaining Lease Obligations for Vacated Space - - 14.3 0.11 Performance-based Compensation Related to Plan Outperformance (6) - - (2.2 ) (0.02 ) Termination of Insurance Policies (7) - - (12.0 ) (0.09 ) Adjusted to Exclude Significant Items $ 97.0 $ 0.81 $ 98.7 $ 0.74 Diluted Weighted Average Shares Outstanding 79,776 85,300 For the Year Ended December 31, 2010 2009 Operating Earnings per Operating Earnings per IncomeDiluted Share (2)
IncomeDiluted Share (2)
As Reported $ 246.4 $ 2.06 229.0 $ 1.73 Reconciling Items: Asset Impairment (3) 67.8 0.55 2.5 0.02 Legal Settlement (4) 40.8 0.33 - - Severance 7.7 0.06 1.5 0.01 Remaining Lease Obligations for Vacated Space - - 14.3 0.11 Performance-based Compensation Related to Plan Outperformance (6) - - 23.1 0.17 Termination of Insurance Policies (7) - - (12.0 ) (0.09 ) Adjusted to Exclude Significant Items $ 362.7 $ 3.00 $ 258.4 $ 1.95 Diluted Weighted Average Shares Outstanding 80,850 86,418 (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 Income from Continuing Operations. (3) Fourth quarter 2010 includes a $67.8 million pretax trade name impairment within Culinary Arts. The $2.5 million asset impairment in 2009 resulted from the carrying value exceeding the fair value for one of our owned facilities. (4) 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. (5) During the fourth quarter 2010, a pretax charge of $7.7 million was recorded in association with a reduction in force to be completed during the first quarter of 2011. (6) The fourth quarter of 2009 performance-based compensation related to plan outperformance represents the year-end adjustment to the estimated payout based upon full-year results. The full year outperformance by segment was: Corporate - $11.3, University - $5.4, Health Education - $4.3, and Culinary Arts - $2.1 million. (7) A $12.0 million payment was received in the fourth quarter 2009 related to the termination of certain insurance policies.
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