Corinthian Colleges Reports Fourth Quarter and Fiscal Year 2013 Results

Corinthian Colleges Reports Fourth Quarter and Fiscal Year 2013 Results

SANTA ANA, Calif., Aug. 29, 2013 (GLOBE NEWSWIRE) -- Corinthian Colleges, 
Inc. (Nasdaq:COCO) reported financial results today for the fourth quarter and
fiscal year ended June 30, 2013. The results for the fourth quarter were
within the Company's previous guidance range for diluted earnings per share
and below guidance ranges for new student enrollment and revenue. (Guidance
excludes all one-time charges; the Company recorded a $1.5 million impairment,
facility closing and severance charge in the fourth quarter.)

"In fiscal 2013 we continued to make operational improvements while managing
through the loss of Ability-to-Benefit students," said Jack Massimino,
Corinthian chairman and chief executive officer. "We continued to focus on
student completion and achieved a slight increase in our graduate placement
rate despite a weak labor market. We reduced operating expenses to align with
our lower student population and closed or sold underperforming campuses. We
continued to increase the efficiency of our operations through increased
automation and standardization in a number of areas, including online service
center technology, faculty hiring and on-boarding, career services and
compliance. On the regulatory front, we maintained our strong culture of
compliance and continued to cooperate with regulators on several inquiries."

"Our new student enrollment decline was higher than expected in the fourth
quarter, primarily driven by underperformance in new online enrollments,"
Massimino said. "We have increased staffing in online admissions and student
finance, and we are implementing service center technology and a new academic
model which we believe will improve performance."

"Given the decline in our student population, we expect fiscal year 2014 to be
another challenging year," Massimino said. "In the first quarter, we expect
our ground schools to post positive new enrollment growth and our online new
student enrollment to decline year-over-year, in part due to a challenging
comparable in the first quarter last year. For fiscal year 2014, we expect the
company's consolidated operations to report positive new enrollment growth.

"To help restore growth in the ground schools, we are introducing several new
diploma programs and offering GED preparation programs to the general public
at most of our U.S. campuses. In addition, competitor schools have closed in
several of our service areas, and we expect our schools to benefit as a
result."

Comparing the fourth quarter of fiscal 2013 with the same quarter of the prior
year: (Note: results are for continuing operations only, unless otherwise
stated.)

  *Net revenue was $377.5 million versus $387.9 million, a decrease of 2.7%.
  *Total student population at June30, 2013 was 81,284 versus 90,794 at June
    30, 2012, a decrease of 10.5%.
  *New student enrollments totaled 24,276 versus 25,774, a decrease of 5.8%.
  *Non-ATB new student enrollments totaled 23,919 versus 22,833, an increase
    of 4.8%.
  *Operating income was $7.9 million, compared with operating income of $14.5
    million, which excludes $1.5 million and $0.5 million in impairment and
    severance charges in Q4 13 and Q4 12, respectively.
  *Net loss was $2.2 million, which includes a $1.5 million impairment,
    facility closing and severance charge, and a loss from discontinued
    operations of $5.3 million, compared with a net loss of $6.5 million,
    which included a $0.5 million impairment, facility closing and severance
    charge, and a loss from discontinued operations of $13.1 million.
  *Income from continuing operations (after tax) was $4.0 million, compared
    with $6.9 million, excluding impairment, facility closing and severance
    charges in both periods.
  *Diluted earnings per share from continuing operations were $0.05, versus
    diluted earnings per share of $0.08, excluding impairment, facility
    closing and severance charges of $0.01 per share in Q4 13 and $0.00 per
    share in Q4 12.

Comparing fiscal 2013 with fiscal 2012: (Note: results are for continuing
operations only, unless otherwise stated.)

  *Net revenue was $1.60 billion versus $1.58 billion, an increase of 1.2%.
  *New student enrollments totaled 106,200 versus 108,841, a decrease of
    2.4%.
  *Non-ATB new student enrollments totaled 104,796 versus 100,583, an
    increase of 4.2%. 
  *Operating income was $55.1 million, compared with operating income of
    $59.7 million, which excludes $3.6 million and $15.6 million in
    impairment, facility closing and severance charges in fiscal 2013and
    fiscal 2012, respectively.
  *Net loss was $1.7 million, which includes a $3.6 million impairment,
    facility closing and severance charge, and a loss from discontinued
    operations of $20.3 million, compared with a net loss of $10.2 million,
    which includes a $15.6 million impairment, facility closing and severance
    charge, and a loss from discontinued operations of $27.7 million.
  *Income from continuing operations (after tax) was $20.7 million, compared
    with $26.8 million, excluding impairment, facility closing and severance
    charges in both periods.
  *Diluted earnings per share from continuing operations were $0.24, versus
    diluted earnings per share of $0.31, excluding impairment, facility
    closing and severance charges of $0.03 per share in fiscal 2013 and $0.11
    per share in fiscal 2012.

Financial Review – Q4 13 and Fiscal 2013 

Impairment, facility closing and severance charges - During Q4 13 we recorded
a charge of $1.5 million versus $0.5 million in Q4 12. The charges were
related to severance expenses associated with workforce reductions.

Educational services expenses were 63.3% of revenue in Q4 13 versus 59.9% in
Q4 12. The increase was primarily due to an increase in bad debt. Bad debt
increased to 4.1% of revenue in Q4 13 versus 2.8% of revenue in Q4 12. In Q4
12, bad debt was unusually low; bad debt of 4.1% in Q4 13 is within the normal
range of our expectations.

Marketing and admissions expenses were 24.2% of revenue in Q4 13 versus 24.9%
in Q4 12. The decrease is primarily the result of lower advertising and lead
generation expenses.

General and administrative expenses were 10.4% of revenue in Q4 13 versus
11.5% in Q4 12. The decrease is primarily due to continued cost savings
measures.

The operating margin was 2.1% in Q4 13 versus 3.7% in Q4 12, excluding
impairment, facility closing and severance charges in both time periods.

Cash and cash equivalents totaled $46.6 million at June30, 2013, compared
with $72.5 million at June30, 2012.The decrease in cash is primarily due to
the timing of cash receipts and payments.

Debt and capital leases (including current portion) totaled $139.1 million at
June30, 2013, compared with $149.0 million at June30, 2012. 

Cash flow from operations was $41.5 million in the year ended June30, 2013,
versus $152.8 million for the year ended June 30, 2012. The decrease is
primarily due to the timing of cash receipts and payments.

Capital expenditures were $44.1 million for the year ended June30, 2013,
versus $42.2 million for the year ended June 30, 2012.

Regulatory & Accreditation Update

Composite Score – In order to remain eligible to participate in federal
student financial aid programs, institutions must satisfy specific standards
of financial responsibility. Each fiscal year, we submit our annual audited
financial statements to the Department of Education (ED) to demonstrate
compliance with the financial responsibility standards, and ED calculates a
"composite score" for the Company.

On August 16, 2013, we received a letter from ED regarding its review of our
composite scores for fiscal years 2011 and 2012. The letter said that ED had
determined the Company's composite scores for fiscal 2011 and fiscal 2012 to
be 0.9 and 1.5, respectively. Based on the strength of the Company's fiscal
2012 score, ED also determined that it will not require the Company to post a
letter of credit or be subject to other sanctions. ED's review of the
Company's fiscal 2012 borrowing under its student notes receivable sales
agreement as it relates to the composite score calculation is on-going; ED did
not provide a timeline for completing its review.

We have provided the ED letter to the lenders in our revolving credit facility
and they have waived any non-compliance with our financial covenants that
might have occurred as a result of ED's determination that our composite in
fiscal 2011 was 0.9.

For more information about ED's composite score determination, see the 8-K
issued on August 20, 2013, available at
www.cci.edu/investorrelations/financialreports/SECfilings.

90/10 Compliance – The 90/10 Rule requires that no more than 90% of the
company's revenue be derived from Title IV funds. The 90/10 Rule is applied to
each OPEID, of which we have 37 in continuing operations. Each OPEID, or
institution, consists of a main campus and its branches.

Two of our institutions exceeded the 90% threshold in fiscal 2013. Combined,
these two institutions had 521 students at June 30, 2013.However, the two
OPEIDs that exceeded the 90% threshold in fiscal 2012 did not do so in fiscal
2013.An OPEID must exceed the 90% threshold for two consecutive years before
it loses access to Title IV funding.

Guidance

The following guidance is for continuing operations and excludes any one-time
charges. 


Time Period Revenue             Diluted EPS     Total New Student
                                                Growth
Q1 14       $372 - $382 million $(0.06 - $0.09) (6%-8%)
FY 14       n/a                 $0.10 - $0.15   positive growth

Conference Call Today

We will host a conference call today at 12:00 pm Eastern Time, to discuss
fourth quarter and fiscal 2013 results. The call will be open to all
interested investors through a live audio web cast at www.cci.edu
(Investors/Events & Presentations.) The call will be archived on www.cci.edu
after the call. A telephonic playback of the conference call will also be
available through September 5, 2013. The playback can be reached by dialing
(800) 585-8367 and using passcode 14262272.

About Corinthian

Corinthian is one of the largest post-secondary education companies in North
America. Our mission is to change students' lives. We offer diploma and degree
programs that prepare students for careers in demand or for advancement in
their chosen fields. Our program areas include health care, business, criminal
justice, transportation technology and maintenance, construction trades and
information technology. We have 111 Everest, Heald and WyoTech campuses, and
also offer degrees online. For more information, go to http://www.cci.edu.

Certain statements in this press release may be deemed to be forward-looking
statements under the Private Securities Litigation Reform Act of 1995. The
company intends that all such statements be subject to the "safe-harbor"
provisions of that Act.Such statements include, but are not limited to, those
regarding our initiatives to focus on student outcomes, increase our ground
and online student population, improve operational efficiency, and achieve new
student enrollment growth in fiscal 2014; our expectation that we will improve
online's performance through increased staffing, new service center technology
and a new academic model; our belief that launching new diploma programs in
ground schools and offering free GED preparation programs at some Everest
campuses will help increase enrollment over time; our expectation that
competitor campus closures will continue and that our enrollment will increase
as a result of such closures; and the statements under the heading "Guidance"
above.Many factors may cause the company's actual results to differ
materially from those discussed in any such forward-looking statements or
elsewhere, including: the continuing negative effects from the loss of ATB
students; a negative determination related to the Department of Education's
("ED's") on-going review of our fiscal 2012 financial responsibility composite
score; the company's effectiveness in its regulatory and accreditation
compliance efforts; the outcome of ongoing reviews and inquiries by
accrediting, state and federal agencies; the outcome of pending litigation
against the company; risks associated with variability in the expense and
effectiveness of the company's advertising and promotional efforts; potential
increased competition; changes in general macroeconomic and market conditions
(including credit and labor market conditions, the unemployment rate, and the
rates of change of each such item); and the other risks and uncertainties
described in the company's filings with the U.S. Securities and Exchange
Commission. The historical results achieved by the company are not necessarily
indicative of its future prospects.The company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.

Corinthian Colleges,Inc.
(In thousands, except per share data)
                                                             
Consolidated Statements of Operations
                                                             
                       Forthethreemonthsended Forthetwelvemonthsended
                       June 30,                   June30,
                       2013          2012         2013          2012
                       (unaudited)                             
Net revenues            $ 377,501     $ 387,898    $ 1,600,205   $ 1,581,933
Operating expenses                                            
Educational services    238,910       232,175      983,516       955,660
General and             39,298        44,558       165,544       175,572
administrative
Marketing and           91,406        96,634       396,039       391,007
admissions
Impairment, facility
closing and severance   1,525         480          3,565         15,644
charges
Total operating         371,139       373,847      1,548,664     1,537,883
expenses
Income from operations  6,362         14,051       51,541        44,050
Interest income         145           200          654           1,772
Interest expense        (1,343)       (1,353)      (5,184)       (9,128)
Other expense, net      (7,042)       (5,057)      (23,803)      (11,631)
Income (loss) from
continuing operations   (1,878)       7,841        23,208        25,063
before provision for
income taxes
                                                             
Provision (benefit) for (4,979)       1,234        4,596         7,610
income taxes
Income from continuing  3,101         6,607        18,612        17,453
operations
Loss from discontinued  (5,252)       (13,099)     (20,272)      (27,698)
operations, net of tax
Net Loss                $(2,151)      $(6,492)     $(1,660)      $(10,245)
Income (loss) per                                             
share—basic
Income from continuing  $ 0.04        $ 0.08       $ 0.22        $ 0.21
operations
Loss from discontinued  $ (0.06)      $ (0.16)     $ (0.24)      $ (0.33)
operations
Net loss                $ (0.02)      $ (0.08)     $ (0.02)      $ (0.12)
Income (loss) per                                             
share—diluted
Income from continuing  $ 0.04        $ 0.08       $ 0.21        $ 0.20
operations
Loss from discontinued  $ (0.06)      $ (0.16)     $ (0.23)      $ (0.32)
operations
Net loss                $ (0.02)      $ (0.08)     $ (0.02)      $ (0.12)
Weighted average number
of common shares                                              
outstanding
Basic                   86,183        85,178       85,881        84,982
Diluted                 87,554        86,112       86,868        85,581
                                                             
                                                             
Selected Consolidated Balance Sheet Data                       
                                                             
                       June30,      June30,                  
                       2013          2012                      
Cash and cash           $ 46,596      $ 72,525                  
equivalents
Receivables, net
(including long term    $ 167,861     $ 199,881                 
notes receivable)
Current assets          $ 286,067     $ 339,312                 
Total assets            $ 1,028,744   $ 1,073,021               
Current liabilities     $ 251,244     $ 297,271                 
Total debt and capital  $ 139,085     $ 148,974                 
leases
Total liabilities       $ 457,901     $ 508,106                 
Total stockholders'     $ 570,843     $ 564,915                 
equity

CONTACT: Investors:
         Anna Marie Dunlap
         SVP Investor Relations
         714-424-2678
        
         Media:
         Kent Jenkins
         VP Public Affairs Communications
         202-682-9494

Corinthian Colleges, Inc. Logo
 
Press spacebar to pause and continue. Press esc to stop.