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 Career Education Corporation Reports Results for Fourth Quarter and Full Year 2016
   Thursday, February 23, 2017 4:05:07 PM ET

Career Education Corporation (CECO ) today reported operating and financial results for the fourth quarter and year ended December 31, 2016.

University Group Full Year Highlights:

-- Total student enrollment growth of 5.3 percent as compared to the prior year

-- Revenue increase of 2.3 percent for 2016 as compared to the prior year

-- Student retention continues to improve as investments in various student-serving functions help enhance overall student retention and outcomes

Fourth Quarter Consolidated Results:

-- Revenue of $155.3 million for the quarter as compared to $199.9 million in the prior year quarter, with the decline primarily driven by teach-out campuses



-- Operating loss of $55.9 million compared to prior year quarter operating loss of $3.9 million; fourth quarter 2016 includes charges recorded for: -- $18.4 million related to remaining lease obligations for vacated space at teach-out campuses

-- $10.0 million legal settlement

-- $22.0 million of third party legal fees

Full Year Consolidated Results:

-- Revenue of $704.4 million for 2016 as compared to $847.3 million in the prior year, with the decline primarily driven by teach-out campuses

-- Operating expenses decreased by $202.7 million as compared to the prior year driven by continued execution on strategic initiatives

-- As of December 31, 2016, cash, cash equivalents, restricted cash and available-for-sale short-term investments was $207.2 million, with cash flow provided by operations of $5.9 million compared to cash usage in the prior year of $21.7 million

"I am pleased with our 2016 results and with the progress our teams have made against our strategic initiatives," said Todd Nelson, President and Chief Executive Officer. "Our commitment to improving student retention and outcomes while investing in technology and resources resulted in total enrollment growth at our University Group, with year-end total enrollments at the highest level since 2012. The results of our teach-out operations were ahead of our expectations, and our overall operating costs decreased by more than $200 million compared to last year, resulting in a year end cash balance that was higher than our outlook. For 2017, we will continue to invest in technology and resources which we believe will further enhance student retention and outcomes and pursue sustainable and responsible growth opportunities within our University Group."

REVENUE

For the quarter and year ended December 31, 2016, total revenue was $155.3 million and $704.4 million, respectively, representing a decrease of 22.4 percent and 16.9 percent, respectively, compared to total revenue of $199.9 million and $847.3 million for the quarter and year ended December 31, 2015, respectively. The decrease was driven by declining revenues within the teach-out segments. Total revenue for the University Group was $135.6 million and $562.4 million for the quarter and year ended December 31, 2016, respectively, representing a decrease of 1.3 percent and an increase of 2.3 percent, respectively.

                                                                                                                                                         
                                                                                                  For the Quarter Ended                                                                                                                                              For the Year Ended
                                                                                                      December 31,                                                                                                                                                      December 31,
                                                 ----------------------------------------------------------------------------------------------------------------------                                            ----------------------------------------------------------------------------------------------------------------------
                                                                                                                       Increase                                                                                                                    Increase
Revenue ($ in thousands)                                         2016                                                 2015                                  (Decrease)                                                             2016                                                 2015                                  (Decrease)
---------------------------                      ----------------------------------                       ---------------------------                       ----------                                             ----------------------------------                       ---------------------------                       ----------
  CTU                                                               $         94,696                                         $  91,481                             3.5 %                                                              $        369,319                                         $ 348,215                             6.1 %
  AIU                                                      40,909                         45,871                           -10.8 %                                                    193,032                        201,649                            -4.3 %
                                                 -------------------- --------------                      -------------------- -------                                                                             -------------------- --------------                      -------------------- -------
     Total University Group                                                  135,605                                           137,352                            -1.3 %                                                                       562,351                                           549,864                             2.3 %
  Corporate and Other                              --                             40                              NM                                               --                            157                              NM
                                                 -------------------- --------------                      -------------------- -------                                                                             -------------------- --------------                      -------------------- -------
     Subtotal                                                                135,605                                           137,392                            -1.3 %                                                                       562,351                                           550,021                             2.2 %
  Culinary Arts (1)                                                           14,462                                            42,020                           -65.6 %                                                                       104,452                                           170,190                           -38.6 %
  Transitional Group (1)                                    5,188                         20,535                           -74.7 %                                                     37,589                        127,062                           -70.4 %
                                                 -------------------- --------------                      -------------------- -------                                                                             -------------------- --------------                      -------------------- -------
     Total                                                          $        155,255                                         $ 199,947                           -22.4 %                                                              $        704,392                                         $ 847,273                           -16.9 %
                                                 ==================== ==============                      ==================== =======                                                                             ==================== ==============                      ==================== =======
(1)   Teach-out campuses included in the Transitional Group no longer
                         enroll new students. The Culinary Arts campuses were announced for
                         teach-out during December 2015 and ceased enrolling new students in
                         January 2016.
                          

TOTAL AND NEW STUDENT ENROLLMENTS

As of the end of 2016, total student enrollments for the University Group were 33,600, compared to 31,900 as of the prior year, primarily driven by improved student retention at CTU and new enrollment growth at AIU. New student enrollments for the University Group were 9,280 and 35,120 for the quarter and year ended December 31, 2016, respectively, compared to new student enrollments of 8,760 and 35,290 for the quarter and year ended December 31, 2015, respectively.

                                     
                                                                                                                                                                                  As of December 31,
                                                                                                                                     -------------------------------------------------------------------------------------------------------------
                                                                                                                                                            Increase
Total Student Enrollments                                                                                                             2016                                             2015                                            (Decrease)
---------------------------                                                                                                          ------                                           ------                                           ----------
  CTU                                                                                                                                21,900                                           21,300                                                  2.8 %
  AIU                                                                                                                                11,700                                           10,600                                                 10.4 %
                                                                                                                                     ------                                           ------
     Total University Group                                                                                                          33,600                                           31,900                                                  5.3 %
                                                                                                                                     ------                                           ------
  Culinary Arts                                                                                                                       2,300                                            7,800                                                -70.5 %
  Transitional Group                                                                                                                    700                                            3,500                                                -80.0 %
                                                                                                                                     ------                                           ------
     Total                                                                                                                           36,600                                           43,200                                                -15.3 %
                                                                                                                                     ======                                           ======
                                                                                                                 
                                                                                For the Quarter Ended                                                                                              For the Year Ended
                                                                                    December 31,                                                                                                      December 31,
                                                     --------------------------------------------------------------------------                                            -------------------------------------------------------------------
                                                                               Increase                                                                 Increase
New Student Enrollments                                   2016                            2015                      (Decrease)                                              2016                        2015                       (Decrease)
-------------------------------                      --------------                      -----                      ----------                                             ------                      ------                      ----------
  CTU (1)                                                     5,530                      5,710                            -3.2 %                                           20,770                      21,890                            -5.1 %
  AIU (1)                                                     3,750                      3,050                            23.0 %                                           14,350                      13,400                             7.1 %
                                                     --------------                      -----                                                                             ------                      ------
     Total University Group (1)                               9,280                      8,760                             5.9 %                                           35,120                      35,290                            -0.5 %
                                                     --------------                      -----                                                                             ------                      ------
  Culinary Arts (2)                                  --                        690                              NM                                                990                       7,470                              NM
  Transitional Group (2)                             --                         90                              NM                                                 90                       3,260                              NM
                                                     --------------                      -----                                                                             ------                      ------
     Total                                                    9,280                      9,540                            -2.7 %                                           36,200                      46,020                           -21.3 %
                                                     ==============                      =====                                                                             ======                      ======
(1)   New student enrollments were positively impacted by a change to how
                         the Company records certain cancelled students. Excluding the impact
                         of this change new student enrollments would have decreased 7.7
                         percent for CTU, increased 15.4 percent for AIU and increased 0.3
                         percent for the University Group for the quarter ended December 31,
                         2016 as compared to the prior year quarter. For the full year 2016,
                         new student enrollments would have decreased 7.1 percent for CTU,
                         increased 4.3 percent for AIU and decreased 2.8 percent for the
                         University Group, as compared to the prior year.
                          
(2)                      Teach-out campuses within the Transitional Group and Culinary Arts
                         no longer enroll new students, effective upon their teach-out
                         announcement; students who re-enter after 365 days are reported as
                         new student enrollments. For Culinary Arts, teach-outs announced in
                         December 2015 were effective beginning after the January 2016 new
                         enrollment.
                          

OPERATING INCOME (LOSS)

For the quarter and year ended December 31, 2016, the Company recorded an operating loss of $55.9 million and $32.3 million, respectively, compared to operating losses of $3.9 million and $92.2 million for the quarter and year ended December 31, 2015, respectively. Total University Group operating loss of $9.9 million and operating income of $69.8 million for the quarter and year ended December 31, 2016, respectively, included charges of $32.0 million recorded for a legal settlement and associated third party legal fees within AIU as well as increased compensation expenses for the current year related to performance-driven metrics.

The fourth quarter operating loss for the teach-out segments included $18.4 million of unused space charges as compared to $2.5 million in the prior year quarter. Additionally, asset impairment charges for the teach-out segments of $0.9 million were recorded in the current year as compared to $60.0 million recorded in the prior year with $0.9 million and $9.2 million recorded in the current year quarter and prior year quarter, respectively.

                                                                                                                                                                     
                                                                                                              For the Quarter Ended                                                                                                                                              For the Year Ended
                                                                                                                  December 31,                                                                                                                                                      December 31,
                                                              ---------------------------------------------------------------------------------------------------------------------                                            ----------------------------------------------------------------------------------------------------------------------
                                                                                                                                   Increase                                                                                                                    Increase
Operating Income (Loss) ($ in thousands)                                  2016                                                 2015                                     (Decrease)                                                         2016                                                  2015                                     (Decrease)
----------------------------------------                      ---------------------------                          ---------------------------                          ----------                                             ---------------------------                          ----------------------------                          ----------
  CTU                                                                            $  28,719                                            $  30,001                               -4.3 %                                                              $  99,412                                            $   87,496                               13.6 %
  AIU (1)                                                       (38,634 )                           1,538                                 NM                                               (29,598 )                            5,520                                 NM
                                                              -------------------- -------                         -------------------- -------                                                                                -------------------- -------                         -------------------- --------
     Total University Group                                                         (9,915 )                                             31,539                             -131.4 %                                                                 69,814                                                93,016                              -24.9 %
  Corporate and Other                                            (7,937 )                          (6,331 )                            -25.4 %                                             (25,097 )                          (27,267 )                              8.0 %
                                                              -------------------- -------                         -------------------- -------                                                                                -------------------- -------                         -------------------- --------
     Subtotal                                                                      (17,852 )                                             25,208                             -170.8 %                                                                 44,717                                                65,749                              -32.0 %
  Culinary Arts (2)                                                                (22,274 )                                            (14,065 )                            -58.4 %                                                                (20,608 )                                             (57,577 )                             64.2 %
  Transitional Group (3)                                        (15,781 )                         (15,072 )                             -4.7 %                                             (56,453 )                         (100,340 )                             43.7 %
                                                              -------------------- -------                         -------------------- -------                                                                                -------------------- -------                         -------------------- --------
     Total                                                                       $ (55,907 )                                          $  (3,929 )                               NM                                                                $ (32,344 )                                          $  (92,168 )                             64.9 %
                                                              ==================== =======                         ==================== =======                                                                                ==================== =======                         ==================== ========
(1)   Charges of $10.0 million and $22.0 million were recorded during the
                         quarter ended December 31, 2016 for a legal settlement and
                         associated third party legal fees, respectively.
                          
(2)                      Asset impairment charges of $0.4 million were recorded during the
                         quarter and year ended December 31, 2016. Asset impairment charges
                         of $52.1 million were recorded during the year ended 2015, $9.0
                         million of which was recorded during the fourth quarter of 2015.
                          
(3)                      Asset impairment charges of $0.5 million and $7.9 million were
                         recorded during the year ended December 31, 2016 and December 31,
                         2015, respectively.
                          

NET INCOME (LOSS)

Net loss of $32.9 million was recorded for the quarter ended December 31, 2016 as compared to net income of $142.7 million in the prior year quarter. For the year ended December 31, 2016, net loss was $18.7 million as compared to net income of $51.9 million for the prior year. The prior year quarter and year ended included a tax benefit of $146.5 million and $147.5 million, respectively, driven by the partial reversal of tax valuation allowances.

ADJUSTED EBITDA

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 operations. (See tables below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

As shown in the table below, adjusted EBITDA for the University Group and Corporate was $17.9 million and $91.7 million for the quarter and year ended December 31, 2016, respectively, representing a decrease of 39.4 percent and an increase of 9.6 percent, respectively, as compared to the prior year periods. The current quarter variance is driven by increased compensation expenses related to performance-driven metrics recorded in the current quarter. Adjusted EBITDA for the Transitional Group, Culinary Arts and discontinued operations improved to negative $19.6 million and a negative $49.8 million for the quarter and year ended December 31, 2016, respectively, representing improvement of 5.1 percent and 43.5 percent, respectively, as compared to the prior year periods.

                                                                                                                                                                           
                                                                                                                              For the Quarter Ended                                                                                                                         For the Year Ended
                                                                                                                                  December 31,                                                                                                                                 December 31,
                                                                                        -------------------------------------------------------------------------------------------------                                            -------------------------------------------------------------------------------------------------
Adjusted EBITDA ($ in thousands)                                                                        2016                                      2015                                                                            2016                                      2015
------------------------------------------------------------------                      ----------------------------------                           ----------------------------------                                              ----------------------------------                           ----------------------------------
  University Group and Corporate:
------------------------------------------------------------------
   (Loss) income from continuing operations (1)                                                            $        (30,030 )                                           $        142,239                                                                $        (14,816 )                                           $         53,016
  Benefit from income taxes                                                                                         (25,326 )                                                   (146,531 )                                                                       (16,550 )                                                   (147,454 )
  Transitional Group pre-tax loss                                                                                    15,657                                                       15,182                                                                          55,856                                                      102,000
  Culinary Arts pre-tax loss                                                                                         22,211                                                       14,065                                                                          20,451                                                       57,518
  Interest (income) expense, net (2)                                                                                   (247 )                                                         87                                                                            (674 )                                                         44
  Depreciation and amortization (2)                                                                                   2,690                                                        3,318                                                                          11,164                                                       15,089
  Legal settlements (2)                                                                                              32,000                                                          200                                                                          32,000                                                          200
  Stock-based compensation (2)                                                                                          986                                                          404                                                                           3,237                                                        2,857
  Asset impairments (2)                                                                                      --                                                          507                                                                             237                                                          507
  Unused space charges (2) (3)                                                            --                                       114                                                          839                                       (63 )
                                                                                        -------------------- --------------                          -------------------- --------------                                             -------------------- --------------                          -------------------- --------------
                                                                                                           $         17,941                                             $         29,585                                                                $         91,744                                             $         83,714
     Adjusted EBITDA--University Group and Corporate
                                                                                        ==================== ==============                          ==================== ==============                                             ==================== ==============                          ==================== ==============
                                                                                                                                                                                                                                                                                                                                       
  Memo: Advertising Expenses (2)                                                                           $         32,841                                             $         33,431                                                                $        154,693                                             $        164,470
                                                                                        ==================== ==============                          ==================== ==============                                             ==================== ==============                          ==================== ==============
                                                                                                                                                                                                                                                                                                                                       
  Transitional Group, Culinary Arts and
  Discontinued Operations:
------------------------------------------------------------------
  (Loss) income from discontinued operations (1)                                                           $         (2,846 )                                           $            485                                                                $         (3,896 )                                           $         (1,131 )
  Benefit from income taxes from discontinued operations                                                             (2,064 )                                                       (997 )                                                                        (2,690 )                                                       (997 )
  Transitional Group pre-tax loss                                                                                   (15,657 )                                                    (15,182 )                                                                       (55,856 )                                                   (102,000 )
  Culinary Arts pre-tax loss                                                                                        (22,211 )                                                    (14,065 )                                                                       (20,451 )                                                    (57,518 )
  Interest income, net (4)                                                                                   --                                               --                                                                              (4 )                                             --
  Loss on sale of business (4)                                                                               --                                                          161                                                                  --                                                        1,793
  Depreciation and amortization (4)                                                                                   3,071                                                        1,759                                                                          11,583                                                        9,849
  Legal settlements (4)                                                                                      --                                               --                                                                  --                                                        1,319
  Asset impairments (4)                                                                                                 927                                                        9,171                                                                             927                                                       60,008
  Unused space charges (3) (4)                                                                    19,164                                    (2,002 )                                                     20,550                                       443
                                                                                        -------------------- --------------                          -------------------- --------------                                             -------------------- --------------                          -------------------- --------------
     Adjusted EBITDA--Transitional, Culinary Arts and Discontinued                                         $        (19,616 )                                           $        (20,670 )                                                              $        (49,837 )                                           $        (88,234 )
     Operations
                                                                                        ==================== ==============                          ==================== ==============                                             ==================== ==============                          ==================== ==============
  Consolidated Adjusted EBITDA                                                                             $         (1,675 )                                           $          8,915                                                                $         41,907                                             $         (4,520 )
                                                                                        ==================== ==============                          ==================== ==============                                             ==================== ==============                          ==================== ==============
(1)   (Loss) income from continuing operations and (loss) income from
                         discontinued operations make up the components of net (loss) income
                         as reflected on the Company’s consolidated statements of (loss)
                         income and comprehensive (loss) income.
                          
(2)                      Amounts relate to the University Group and Corporate.
                          
(3)                      Unused space charges represent the net present value of remaining
                         lease obligations for vacated space less an estimated amount for
                         sublease income as well as the subsequent accretion of these charges.
                          
(4)                      Amounts relate to Transitional Group, Culinary Arts and discontinued
                         operations.
                          

BALANCE SHEET AND CASH FLOW

Net cash used in operating activities was negative $9.8 million and net cash flows provided by operating activities was $5.9 million for the quarter and year ended December 31, 2016, respectively, as compared to net cash used in operating activities of $0.7 million and $21.7 million for the prior year periods, respectively. The cash usage in the fourth quarter of 2016 includes increased payments related to exiting and reducing long-term lease obligations as compared to the prior year. The Company’s continued focus on improving marketing efficiencies within the University Group and the reduction in operating losses related to our teach-outs contributed to the improvement in cash flow from operations for the full year.

                                                                                                                                           
                                                                                                        For the Quarter Ended                                                                                                     For the Year Ended
                                                                                                            December 31,                                                                                                             December 31,
                                                                           ------------------------------------------------------------------------------                                            ----------------------------------------------------------------------------
                                                                                                         Increase                                                                          Increase
Selected Cash Flow Items                                                      2016                             2015                           (Decrease)                                               2016                           2015                            (Decrease)
-----------------------------------------------------                      --------                          -------                          ----------                                             -------                       ---------                          ----------
  Net cash (used in) provided by operating activities                       $ (9,802 )                        $  (683 )                               NM                                              $ 5,912                       $ (21,686 )                           -127.3 %
  Capital expenditures                                                      $    777                          $ 3,769                              -79.4 %                                            $ 4,129                       $  11,695                              -64.7 %
                                                                                                                                                                                                                                                                                  

As of December 31, 2016 and December 31, 2015, cash, cash equivalents, restricted cash and available-for-sale short-term and long-term investments, net of borrowings, totaled $207.2 million and $201.0 million, respectively.

                                                                                                                                 
                                                                                           As of December                                       As of December                              Increase
Consolidated Cash ($ in thousands)                                                            31, 2016                                             31, 2015                                (Decrease)
----------------------------------------------------------                      ----------------------------------                       ---------------------------                       ----------
  Consolidated cash, cash equivalents, restricted cash and                                         $        207,160                                         $ 231,641                           -10.6 %
  available-for-sale short-term investments
  Available-for-sale long-term investments (1)                                                       --                                             7,374                              NM
  Short-term borrowings (2)                                                       --                         38,000                              NM
                                                                                -------------------- --------------                      -------------------- -------
  Consolidated cash, cash equivalents, restricted cash                                             $        207,160                                         $ 201,015                             3.1 %
  and available-for-sale short-term and long-term
  investments, net of borrowings (1)
                                                                                ==================== ==============                      ==================== =======
(1)   Available-for-sale long-term investment balances are included within
                         non-current other assets on the Company’s consolidated balance
                         sheets.
                          
(2)                      Cash, cash equivalents, restricted cash and available-for-sale
                         short-term investment balances as of December 31, 2015 include $38.0
                         million of restricted cash related to cash-collateralized borrowings
                         under the Credit Agreement.
                          

OUTLOOK

With the substantial completion of the teach-outs occurring in 2017, Career Education Corporation will begin disclosing its outlook based on an operating income (loss) and adjusted operating income (loss) measure as well as providing an outlook for year-end cash, cash equivalents, restricted cash and short-term investments, net of borrowings. The Company believes that an adjusted operating income (loss) measure will better reflect the ongoing operations of the business now that the teach-outs will be substantially complete. The Company will no longer provide updates under the previous measure of adjusted EBITDA. The Company expects the following results, subject to the key assumptions identified below (see the GAAP to non-GAAP reconciliation for adjusted operating income (loss) attached to this press release for further details):

-- University Group and Corporate operating income and adjusted operating income to grow in 2017 and 2018 as compared to each respective prior year period.

-- Adjusted operating loss for our teach-out segments, comprised of the Transitional Group and Culinary Arts, to be in the range of $50 million to $60 million in 2017 and to improve to a range of $10 million to $20 million in 2018 as we wind-down the remainder of our teach-out campuses.

-- End of year cash, cash equivalents, restricted cash and available-for-sale short-term investments, net of any borrowings, as reported on the consolidated balance sheets (i) of approximately $150 million to $160 million for the year ending December 31, 2017, which includes payments related to a legal settlement of $10.0 million and $22.0 million of associated third party legal fees (which amounts were recorded during the fourth quarter of 2016); and (ii) to grow in 2018 as compared to 2017.

Operating income (loss), which is the most directly comparable GAAP measure to adjusted operating income (loss), may not follow the same trends as discussed in our outlook above because of adjustments made for unused space charges that represent the present value of future remaining lease obligations for vacated space less an estimated amount for sublease income as well as depreciation, amortization, asset impairment charges and significant legal settlements. The operating income (loss) and adjusted operating income (loss) and cash outlook provided above for 2017 and 2018 are based on the following key assumptions and factors, among others: (i) modest total enrollment growth within the University Group while achieving the intended University Group efficiencies, (ii) teach-outs to progress as expected and performance consistent with current trends, (iii) achievement of recovery rates for the Company’s real estate obligations and timing of any associated lease termination payments consistent with the Company’s historical experiences, (iv) continued right-sizing of the Company’s corporate expense structure to serve primarily online institutions, (v) no material changes in the legal or regulatory environment and excludes legal and regulatory liabilities which are not probable and estimable at this time and any impact of new or proposed regulations, including the "borrower defense to repayment" regulations issued in November 2016 and the gainful employment regulation, and (vi) consistent working capital movements in line with historical operating trends and potential impacts of teach-out campuses on working capital in line with expectations. Although these estimates and assumptions are based upon management’s good faith beliefs regarding current events and actions that may be undertaken in the future, actual results could differ materially from these estimates.

CONFERENCE CALL INFORMATION

Career Education Corporation will host a conference call on Thursday, February 23, 2017 at 5:30 p.m. Eastern time to discuss its fourth quarter and full year 2016 results. Interested parties can access the live webcast of the conference call and the related presentation materials at www.careered.com in the Investor Relations section of the website. Participants can also listen to the conference call by dialing 844-378-6484 (domestic) or 412-542-4179 (international). 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.

ABOUT CAREER EDUCATION CORPORATION

Career Education’s academic institutions offer a quality education to a diverse student population in a variety of disciplines through online, campus-based and blended learning programs. The Company’s two universities - American InterContinental University ("AIU") and Colorado Technical University ("CTU") - provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. Both universities predominantly serve students online with career-focused degree programs that are designed to meet the educational demands of today’s busy adults. AIU and CTU continue to show innovation in higher education, advancing new personalized learning technologies like their intellipath(TM) adaptive learning platform. Career Education is committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce.

A listing of individual campus locations and web links to Career Education’s institutions can be found at www.careered.com.

Except for the historical and present factual information contained herein, the matters set forth in this release, including statements identified by words such as "believe," "will," "expect," "estimate," "continue," "intend," "trend" 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 assumptions, risks, uncertainties and other factors that could cause our 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 or revise such factors or 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 outcomes of which could materially and adversely affect our financial condition and operations, include, but are not limited to, the following: declines in enrollment; our continued compliance with and eligibility to participate in Title IV Programs under the Higher Education Act of 1965, as amended, and the regulations thereunder (including the gainful employment, 90-10, financial responsibility and administrative capability standards prescribed by the U.S. Department of Education), as well as applicable accreditation standards and state regulatory requirements; the impact of recently issued "defense to repayment" regulations; rulemaking by the U.S. Department of Education or any state or accreditor and increased focus by Congress and governmental agencies on, or increased negative publicity about, for-profit education institutions; our ability to successfully defend litigation and other claims brought against us; the success of our initiatives to improve student experiences, retention and outcomes; negative trends in the real estate market which could impact the costs related to teaching out campuses and the success of our initiatives to reduce our real estate obligations; our ability to achieve anticipated cost savings and business efficiencies; increased competition; the impact of management changes; and changes in the overall U.S. economy. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and its subsequent filings with the Securities and Exchange Commission.

 
                                                                           CAREER EDUCATION CORPORATION AND SUBSIDIARIES
                                                                                    CONSOLIDATED BALANCE SHEETS
                                                                                          (In thousands)
 
                                                                                December 31,                      December 31,
                                                                                                       2016                              2015
                                                                                          ------------------------------  -------------------- ------------------------------
                                                                                                                                                                              
                               ASSETS
CURRENT ASSETS:
  Cash and cash equivalents, unrestricted                                                                    $   49,507                                           $   66,919
  Restricted cash                                                                                                 1,375                                               49,821
  Restricted short-term investments                                                                               8,597                                                    -
  Short-term investments                                                                     147,681                           114,901
                                                                                          -------------------- --------                        -------------------- --------
     Total cash and cash equivalents, restricted cash and short-term                                            207,160                                              231,641
     investments
                                                                                                                                                                              
  Student receivables, net                                                                                       22,825                                               31,618
  Receivables, other, net                                                                                           929                                                5,194
  Prepaid expenses                                                                                               14,446                                               14,380
  Inventories                                                                                                     1,868                                                3,353
  Other current assets                                                                                              817                                                2,523
  Assets of discontinued operations                                                              148                               254
                                                                                          -------------------- --------                        -------------------- --------
     Total current assets                                                                    248,193                           288,963
                                                                                          -------------------- --------                        -------------------- --------
                                                                                                                                                                              
NON-CURRENT ASSETS:
  Property and equipment, net                                                                                    40,512                                               58,249
  Goodwill                                                                                                       87,356                                               87,356
  Intangible assets, net                                                                                          8,500                                                9,300
  Student receivables, net                                                                                        3,055                                                3,958
  Deferred income tax assets, net                                                                               158,272                                              137,716
  Other assets                                                                                                    7,608                                               16,562
  Assets of discontinued operations                                                            6,105                             8,811
                                                                                          -------------------- --------                        -------------------- --------
TOTAL ASSETS                                                                                                 $  559,601                                           $  610,915
                                                                                          ==================== ========                        ==================== ========
                                                                                                                                                                              
                LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
  Short-term borrowings                                                                                      $        -                                           $   38,000
  Accounts payable                                                                                               10,099                                               25,906
  Accrued expenses:
     Payroll and related benefits                                                                                41,203                                               38,789
     Advertising and production costs                                                                            10,253                                               11,788
     Income taxes                                                                                                 1,830                                                1,061
     Other                                                                                                       69,244                                               24,082
  Deferred tuition revenue                                                                                       28,364                                               40,112
  Liabilities of discontinued operations                                                       8,219                            13,067
                                                                                          -------------------- --------                        -------------------- --------
     Total current liabilities                                                               169,212                           192,805
                                                                                          -------------------- --------                        -------------------- --------
                                                                                                                                                                              
NON-CURRENT LIABILITIES:
  Deferred rent obligations                                                                                      30,713                                               45,927
  Other liabilities                                                                                              31,751                                               25,197
  Liabilities of discontinued operations                                                       6,422                             9,376
                                                                                          -------------------- --------                        -------------------- --------
     Total non-current liabilities                                                            68,886                            80,500
                                                                                          -------------------- --------                        -------------------- --------
                                                                                                                                                                              
STOCKHOLDERS’ EQUITY:
  Preferred stock                                                                                                     -                                                    -
  Common stock                                                                                                      835                                                  830
  Additional paid-in capital                                                                                    613,325                                              610,784
  Accumulated other comprehensive loss                                                                             (258 )                                               (880 )
  Accumulated deficit                                                                                           (76,230 )                                            (57,518 )
  Cost of shares in treasury                                                                (216,169 )                        (215,606 )
                                                                                          -------------------- --------                        -------------------- --------
     Total stockholders’ equity                                                              321,503                           337,610
                                                                                          -------------------- --------                        -------------------- --------
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                   $  559,601                                           $  610,915
                                                                                          ==================== ========                        ==================== ========
 
                                                                                                            CAREER EDUCATION CORPORATION AND SUBSIDIARIES
                                                                                                       UNAUDITED CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND
                                                                                                                     COMPREHENSIVE (LOSS) INCOME
                                                                                                      (In thousands, except per share amounts and percentages)
 
                                                                                                                         For the Quarter Ended December 31,
                                                                            -------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        % of                                                    % of
                                                                                                                                           Total                                                                                         Total
                                                                                            2016                                          Revenue                                         2015                                          Revenue
                                                                            ------------------------------------                         -------                          ------------------------------------                         -------
REVENUE:
  Tuition and fees                                                                             $        154,489                             99.5 %                                           $        198,445                             99.2 %
  Other                                                                                  766                              0.5 %                                   1,502                              0.8 %
                                                                            -------------------- --------------                                                           -------------------- --------------
     Total revenue                                                                   155,255                                                                    199,947
                                                                            -------------------- --------------                                                           -------------------- --------------
OPERATING EXPENSES:
  Educational services and facilities                                                                    64,107                             41.3 %                                                     66,931                             33.5 %
  General and administrative                                                                            140,367                             90.4 %                                                    122,190                             61.1 %
  Depreciation and amortization                                                                           5,761                              3.7 %                                                      5,077                              2.5 %
  Asset impairment                                                                       927                              0.6 %                                   9,678                              4.8 %
                                                                            -------------------- --------------                                                           -------------------- --------------
     Total operating expenses                                                        211,162                            136.0 %                                 203,876                            102.0 %
                                                                            -------------------- --------------                                                           -------------------- --------------
Operating loss                                                                       (55,907 )                          -36.0 %                                  (3,929 )                           -2.0 %
                                                                            -------------------- --------------                                                           -------------------- --------------
OTHER INCOME (EXPENSE):
  Interest income                                                                                           362                              0.2 %                                                        246                              0.1 %
  Interest expense                                                                                         (115 )                           -0.1 %                                                       (333 )                           -0.2 %
  Loss on sale of business                                                                       --                              0.0 %                                                       (161 )                           -0.1 %
  Miscellaneous income (expense)                                                         304                              0.2 %                                    (115 )                           -0.1 %
                                                                            -------------------- --------------                                                           -------------------- --------------
     Total other income (expense)                                                        551                              0.4 %                                    (363 )                           -0.2 %
                                                                            -------------------- --------------                                                           -------------------- --------------
PRETAX LOSS                                                                                             (55,356 )                          -35.7 %                                                     (4,292 )                           -2.1 %
Benefit from income taxes                                                            (25,326 )                          -16.3 %                                (146,531 )                          -73.3 %
                                                                            -------------------- --------------                                                           -------------------- --------------
                                                                                                                                                                                                                                                
(LOSS) INCOME FROM CONTINUING OPERATIONS                                                                (30,030 )                          -19.3 %                                                    142,239                             71.1 %
(Loss) income from discontinued operations, net of tax                                (2,846 )                           -1.8 %                                     485                              0.2 %
                                                                            -------------------- --------------                                                           -------------------- --------------
NET (LOSS) INCOME                                                                    (32,876 )                          -21.2 %                                 142,724                             71.4 %
                                                                            -------------------- --------------                                                           -------------------- --------------
                                                                                                                                                                                                                                                
OTHER COMPREHENSIVE LOSS, net of tax:
  Foreign currency translation adjustments                                                                 (220 )                                                                              --
  Unrealized loss on investments                                                        (125 )                                                                     (260 )
                                                                            -------------------- --------------                                                           -------------------- --------------
    Total other comprehensive loss                                                      (345 )                                                                     (260 )
                                                                            -------------------- --------------                                                           -------------------- --------------
COMPREHENSIVE (LOSS) INCOME                                                                    $        (33,221 )                                                                            $        142,464
                                                                            ==================== ==============                                                           ==================== ==============
                                                                                                                                                                                                                                                
NET (LOSS) INCOME PER SHARE - BASIC:
  (Loss) income from continuing operations                                                     $          (0.44 )                                                                            $           2.09
  (Loss) income from discontinued operations                                           (0.04 )                                                                     0.01
                                                                            -------------------- --------------                                                           -------------------- --------------
    Net (loss) income per share                                                                $          (0.48 )                                                                            $           2.10
                                                                            ==================== ==============                                                           ==================== ==============
                                                                                                                                                                                                                                                
NET (LOSS) INCOME PER SHARE - DILUTED:
  (Loss) income from continuing operations                                                     $          (0.44 )                                                                            $           2.08
  Loss from discontinued operations                                                    (0.04 )                                                           --
                                                                            -------------------- --------------                                                           -------------------- --------------
    Net (loss) income per share                                                                $          (0.48 )                                                                            $           2.08
                                                                            ==================== ==============                                                           ==================== ==============
                                                                                                                                                                                                                                                
WEIGHTED AVERAGE SHARES OUTSTANDING:
  Basic                                                                               68,505                                                                     68,046
                                                                            ==================== ==============                                                           ==================== ==============
  Diluted                                                                             68,505                                                                     68,506
                                                                            ==================== ==============                                                           ==================== ==============
 
                                                                                                         CAREER EDUCATION CORPORATION AND SUBSIDIARIES
                                                                                                         CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND
                                                                                                                  COMPREHENSIVE (LOSS) INCOME
                                                                                                   (In thousands, except per share amounts and percentages)
 
                                                                                                                     For the Year Ended December 31,
                                                                      -------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  % of                                                    % of
                                                                                                                                     Total                                                                                         Total
                                                                                      2016                                          Revenue                                         2015                                          Revenue
                                                                      ------------------------------------                         -------                          ------------------------------------                         -------
REVENUE:
  Tuition and fees                                                                       $        700,525                             99.5 %                                           $        842,062                             99.4 %
  Other                                                                          3,867                              0.5 %                                   5,211                              0.6 %
                                                                      -------------------- --------------                                                           -------------------- --------------
     Total revenue                                                             704,392                                                                    847,273
                                                                      -------------------- --------------                                                           -------------------- --------------
OPERATING EXPENSES:
  Educational services and facilities                                                             235,100                             33.4 %                                                    289,777                             34.2 %
  General and administrative                                                                      477,725                             67.8 %                                                    564,211                             66.6 %
  Depreciation and amortization                                                                    22,747                              3.2 %                                                     24,938                              2.9 %
  Asset impairment                                                               1,164                              0.2 %                                  60,515                              7.1 %
                                                                      -------------------- --------------                                                           -------------------- --------------
     Total operating expenses                                                  736,736                            104.6 %                                 939,441                            110.9 %
                                                                      -------------------- --------------                                                           -------------------- --------------
Operating loss                                                                 (32,344 )                           -4.6 %                                 (92,168 )                          -10.9 %
                                                                      -------------------- --------------                                                           -------------------- --------------
OTHER INCOME (EXPENSE):
  Interest income                                                                                   1,262                              0.2 %                                                        794                              0.1 %
  Interest expense                                                                                   (584 )                           -0.1 %                                                       (835 )                           -0.1 %
  Loss on sale of business                                                                 --                              0.0 %                                                     (1,793 )                           -0.2 %
  Miscellaneous income (expense)                                                   300                              0.0 %                                    (436 )                           -0.1 %
                                                                      -------------------- --------------                                                           -------------------- --------------
     Total other income (expense)                                                  978                              0.1 %                                  (2,270 )                           -0.3 %
                                                                      -------------------- --------------                                                           -------------------- --------------
PRETAX LOSS                                                                                       (31,366 )                           -4.5 %                                                    (94,438 )                          -11.1 %
 Benefit from income taxes                                                     (16,550 )                           -2.3 %                                (147,454 )                          -17.4 %
                                                                      -------------------- --------------                                                           -------------------- --------------
                                                                                                                                                                                                                                          
(LOSS) INCOME FROM CONTINUING OPERATIONS                                                          (14,816 )                           -2.1 %                                                     53,016                              6.3 %
Loss from discontinued operations, net of tax                                   (3,896 )                           -0.6 %                                  (1,131 )                           -0.1 %
                                                                      -------------------- --------------                                                           -------------------- --------------
NET (LOSS) INCOME                                                              (18,712 )                           -2.7 %                                  51,885                              6.1 %
                                                                      -------------------- --------------                                                           -------------------- --------------
                                                                                                                                                                                                                                          
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
  Foreign currency translation adjustments                                                            (77 )                                                                              --
  Unrealized gain (loss) on investments                                            699                                                                        (27 )
                                                                      -------------------- --------------                                                           -------------------- --------------
     Total other comprehensive income (loss)                                       622                                                                        (27 )
                                                                      -------------------- --------------                                                           -------------------- --------------
COMPREHENSIVE (LOSS) INCOME                                                              $        (18,090 )                                                                            $         51,858
                                                                      ==================== ==============                                                           ==================== ==============
                                                                                                                                                                                                                                          
NET (LOSS) INCOME PER SHARE - BASIC and DILUTED:
  (Loss) income from continuing operations                                               $          (0.22 )                                                                            $           0.78
  Loss from discontinued operations                                              (0.05 )                                                                    (0.02 )
                                                                      -------------------- --------------                                                           -------------------- --------------
    Net (loss) income per share                                                          $          (0.27 )                                                                            $           0.76
                                                                      ==================== ==============                                                           ==================== ==============
                                                                                                                                                                                                                                          
WEIGHTED AVERAGE SHARES OUTSTANDING:
  Basic                                                                         68,373                                                                     67,860
                                                                      ==================== ==============                                                           ==================== ==============
  Diluted                                                                       68,373                                                                     68,328
                                                                      ==================== ==============                                                           ==================== ==============
 
                                                                              CAREER EDUCATION CORPORATION AND SUBSIDIARIES
                                                                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                             (In thousands)
 
                                                                                                             For the Year
                                                                                                                             Ended December 31,
                                                                                          -----------------------------------------------------------------------------------------
                                                                                                          2016                                 2015
                                                                                          ------------------------------------                       ------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss) income                                                                                          $        (18,712 )                                         $   51,885
  Adjustments to reconcile net (loss) income to net cash provided by
  (used in) operating activities:
     Asset impairment                                                                                                   1,164                                               60,515
     Depreciation and amortization expense                                                                             22,747                                               24,938
     Bad debt expense                                                                                                  31,885                                               21,980
     Compensation expense related to share-based awards                                                                 3,237                                                2,857
     Loss on sale of business, net                                                                             --                                                1,793
     (Gain) loss on disposition of property and equipment                                                                (438 )                                                663
     Deferred income taxes                                                                                            (18,087 )                                           (145,807 )
     Changes in operating assets and liabilities:
        Student receivables, gross                                                                                      6,925                                               (1,517 )
        Allowance for doubtful accounts                                                                               (29,033 )                                            (20,960 )
        Other receivables, net                                                                                          1,127                                               14,311
        Inventories, prepaid expenses, and other current assets                                                         2,783                                                6,160
        Deposits and other non-current assets                                                                           1,634                                                2,711
        Accounts payable                                                                                              (16,264 )                                              2,539
        Accrued expenses and deferred rent obligations                                                                 28,691                                              (31,104 )
        Deferred tuition revenue                                                                   (11,747 )                         (12,650 )
                                                                                          -------------------- --------------                        -------------------- --------
Net cash provided by (used in) operating activities                                                  5,912                           (21,686 )
                                                                                          -------------------- --------------                        -------------------- --------
                                                                                                                                                                                    
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of available-for-sale investments                                                                        (160,590 )                                            (93,360 )
  Sales of available-for-sale investments                                                                             126,830                                              100,173
  Purchases of property and equipment                                                                                  (4,129 )                                            (11,695 )
  Proceeds on the sale of assets                                                                                        3,600                                                2,272
  Payments of cash upon sale of businesses                                                                                (62 )                                             (4,013 )
  Purchase of equity method investment                                                      --                            (1,368 )
                                                                                          -------------------- --------------                        -------------------- --------
Net cash used in investing activities                                                              (34,351 )                          (7,991 )
                                                                                          -------------------- --------------                        -------------------- --------
                                                                                                                                                                                    
CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of common stock                                                                                                773                                                1,401
  Borrowings from credit facility                                                                              --                                               38,000
  Payment on borrowings                                                                                               (38,000 )                                            (10,000 )
  Change in restricted cash                                                                         48,446                           (26,883 )
                                                                                          -------------------- --------------                        -------------------- --------
Net cash provided by financing activities                                                           11,219                             2,518
                                                                                          -------------------- --------------                        -------------------- --------
                                                                                                                                                                                    
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH                                              (192 )                             246
AND CASH EQUIVALENTS:
                                                                                          -------------------- --------------                        -------------------- --------
                                                                                                                                                                                    
NET DECREASE IN CASH AND CASH EQUIVALENTS                                                                             (17,412 )                                            (26,913 )
CASH AND CASH EQUIVALENTS, beginning of the period                                                  66,919                            93,832
                                                                                          -------------------- --------------                        -------------------- --------
CASH AND CASH EQUIVALENTS, end of the period                                                                 $         49,507                                           $   66,919
                                                                                          ==================== ==============                        ==================== ========
 
                                                         CAREER EDUCATION CORPORATION AND SUBSIDIARIES
                                                            UNAUDITED SELECTED SEGMENT INFORMATION
                                                              (In thousands, except percentages)
 
                                                         For the Quarter Ended December 31,
                                                 ----------------------------------------------------------------------------------------
                                                                 2016                                2015
                                                 ------------------------------------  -------------------- -----------------------------
REVENUE:                                                                                
   CTU                                                              $         94,696                                           $  91,481
   AIU                                                     40,909                           45,871
                                                 -------------------- --------------                        -------------------- -------
     Total University Group                                                  135,605                                             137,352
   Corporate and Other                             --                               40
                                                 -------------------- --------------                        -------------------- -------
       Subtotal                                                              135,605                                             137,392
   Culinary Arts                                                              14,462                                              42,020
   Transitional Group                                       5,188                           20,535
                                                 -------------------- --------------                        -------------------- -------
     Total                                                          $        155,255                                           $ 199,947
                                                 ==================== ==============                        ==================== =======
                                                                                                                                          
OPERATING INCOME (LOSS):
   CTU                                                              $         28,719                                           $  30,001
   AIU                                                    (38,634 )                          1,538
                                                 -------------------- --------------                        -------------------- -------
     Total University Group                                                   (9,915 )                                            31,539
   Corporate and Other                                     (7,937 )                         (6,331 )
                                                 -------------------- --------------                        -------------------- -------
       Subtotal                                                              (17,852 )                                            25,208
   Culinary Arts                                                             (22,274 )                                           (14,065 )
   Transitional Group                                     (15,781 )                        (15,072 )
                                                 -------------------- --------------                        -------------------- -------
     Total                                                          $        (55,907 )                                         $  (3,929 )
                                                 ==================== ==============                        ==================== =======
                                                                                                                                          
OPERATING MARGIN (LOSS):
   CTU                                                                          30.3 %                                              32.8 %
   AIU                                                      -94.4 %                            3.4 %
                                                 -------------------- --------------                        -------------------- -------
     Total University Group                                                     -7.3 %                                              23.0 %
   Corporate and Other                                                            NM                                                  NM
                                                 ------------------------------------                       -----------------------------
       Subtotal                                                                -13.2 %                                              18.3 %
   Culinary Arts                                                              -154.0 %                                             -33.5 %
   Transitional Group                                      -304.2 %                          -73.4 %
                                                 -------------------- --------------                        -------------------- -------
     Total                                                  -36.0 %                           -2.0 %
                                                 ==================== ==============                        ==================== =======
 
                                                         CAREER EDUCATION CORPORATION AND SUBSIDIARIES
                                                            UNAUDITED SELECTED SEGMENT INFORMATION
                                                              (In thousands, except percentages)
 
                                                           For the Year Ended December 31,
                                                 -----------------------------------------------------------------------------------------
                                                                 2016                                 2015
                                                 ------------------------------------  -------------------- ------------------------------
REVENUE:                                                                                
   CTU                                                              $        369,319                                           $  348,215
   AIU                                                    193,032                           201,649
                                                 -------------------- --------------                        -------------------- --------
     Total University Group                                                  562,351                                              549,864
   Corporate and Other                             --                               157
                                                 -------------------- --------------                        -------------------- --------
       Subtotal                                                              562,351                                              550,021
   Culinary Arts                                                             104,452                                              170,190
   Transitional Group                                      37,589                           127,062
                                                 -------------------- --------------                        -------------------- --------
     Total                                                          $        704,392                                           $  847,273
                                                 ==================== ==============                        ==================== ========
                                                                                                                                           
OPERATING INCOME (LOSS):
   CTU                                                              $         99,412                                           $   87,496
   AIU                                                    (29,598 )                           5,520
                                                 -------------------- --------------                        -------------------- --------
     Total University Group                                                   69,814                                               93,016
   Corporate and Other                                    (25,097 )                         (27,267 )
                                                 -------------------- --------------                        -------------------- --------
       Subtotal                                                               44,717                                               65,749
   Culinary Arts                                                             (20,608 )                                            (57,577 )
   Transitional Group                                     (56,453 )                        (100,340 )
                                                 -------------------- --------------                        -------------------- --------
     Total                                                          $        (32,344 )                                         $  (92,168 )
                                                 ==================== ==============                        ==================== ========
                                                                                                                                           
OPERATING MARGIN (LOSS):
   CTU                                                                          26.9 %                                               25.1 %
   AIU                                                      -15.3 %                             2.7 %
                                                 -------------------- --------------                        -------------------- --------
     Total University Group                                                     12.4 %                                               16.9 %
   Corporate and Other                                                            NM                                                   NM
                                                 ------------------------------------                       ------------------------------
       Subtotal                                                                  8.0 %                                               12.0 %
   Culinary Arts                                                               -19.7 %                                              -33.8 %
   Transitional Group                                      -150.2 %                           -79.0 %
                                                 -------------------- --------------                        -------------------- --------
     Total                                                   -4.6 %                           -10.9 %
                                                 ==================== ==============                        ==================== ========
 
                                                                                                                                                        CAREER EDUCATION CORPORATION AND SUBSIDIARIES
                                                                                                                                                   UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1)
                                                                                                                                                                       (In thousands)
 
                                                                                                           For the Quarter Ended                                                                                     For the Year Ended
                                                                                                                                  December 31,                                                                                                                                   December 31,
                                                                                        -------------------------------------------------------------------------------------------------                                              -------------------------------------------------------------------------------------------------
Adjusted EBITDA                                                                                         2016                                      2015                                                                              2016                                      2015
------------------------------------------------------------------                      ----------------------------------                           ----------------------------------                                                ----------------------------------                           ----------------------------------
  University Group and Corporate:
------------------------------------------------------------------
  (Loss) income from continuing operations (2)                                                             $        (30,030 )                                           $        142,239                                                                  $        (14,816 )                                           $         53,016
  Benefit from income taxes                                                                                         (25,326 )                                                   (146,531 )                                                                         (16,550 )                                                   (147,454 )
  Transitional Group pre-tax loss                                                                                    15,657                                                       15,182                                                                            55,856                                                      102,000
  Culinary Arts pre-tax loss                                                                                         22,211                                                       14,065                                                                            20,451                                                       57,518
  Interest (income) expense, net (3)                                                                                   (247 )                                                         87                                                                              (674 )                                                         44
  Depreciation and amortization (3)                                                                                   2,690                                                        3,318                                                                            11,164                                                       15,089
  Legal settlements (3) (4)                                                                                          32,000                                                          200                                                                            32,000                                                          200
  Stock-based compensation (3)                                                                                          986                                                          404                                                                             3,237                                                        2,857
  Asset impairments (3)                                                                                      --                                                          507                                                                               237                                                          507
  Unused space charges (3) (5)                                                            --                                       114                                                            839                                       (63 )
                                                                                        -------------------- --------------                          -------------------- --------------                                               -------------------- --------------                          -------------------- --------------
     Adjusted EBITDA--University Group and                                                                 $         17,941                                             $         29,585                                                                  $         91,744                                             $         83,714
     Corporate (6)
                                                                                        ==================== ==============                          ==================== ==============                                               ==================== ==============                          ==================== ==============
                                                                                                                                                                                                                                                                                                                                         
  Memo: Advertising Expenses (3)                                                                           $         32,841                                             $         33,431                                                                  $        154,693                                             $        164,470
                                                                                        ==================== ==============                          ==================== ==============                                               ==================== ==============                          ==================== ==============
                                                                                                                                                                                                                                                                                                                                         
  Transitional Group, Culinary Arts and
  Discontinued Operations:
------------------------------------------------------------------
  (Loss) income from discontinued operations (2)                                                           $         (2,846 )                                           $            485                                                                  $         (3,896 )                                           $         (1,131 )
  Benefit from income taxes from discontinued operations                                                             (2,064 )                                                       (997 )                                                                          (2,690 )                                                       (997 )
  Transitional Group pre-tax loss                                                                                   (15,657 )                                                    (15,182 )                                                                         (55,856 )                                                   (102,000 )
  Culinary Arts pre-tax loss                                                                                        (22,211 )                                                    (14,065 )                                                                         (20,451 )                                                    (57,518 )
  Interest income, net (7)                                                                                   --                                               --                                                                                (4 )                                             --
  Loss on sale of business (7)                                                                               --                                                          161                                                                    --                                                        1,793
  Depreciation and amortization (7)                                                                                   3,071                                                        1,759                                                                            11,583                                                        9,849
  Legal settlements (4) (7)                                                                                  --                                               --                                                                    --                                                        1,319
  Asset impairments (7)                                                                                                 927                                                        9,171                                                                               927                                                       60,008
  Unused space charges (5) (7)                                                                    19,164                                    (2,002 )                                                       20,550                                       443
                                                                                        -------------------- --------------                          -------------------- --------------                                               -------------------- --------------                          -------------------- --------------
     Adjusted EBITDA--Transitional, Culinary Arts and Discontinued                                         $        (19,616 )                                           $        (20,670 )                                                                $        (49,837 )                                           $        (88,234 )
     Operations (6) (8)
                                                                                        ==================== ==============                          ==================== ==============                                               ==================== ==============                          ==================== ==============
  Consolidated Adjusted EBITDA                                                                             $         (1,675 )                                           $          8,915                                                                  $         41,907                                             $         (4,520 )
                                                                                        ==================== ==============                          ==================== ==============                                               ==================== ==============                          ==================== ==============
(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 operations. 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 operations, 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.
                          
                         During 2016, the Company believed adjusted EBITDA to be a useful
                         measure as it allowed the Company to compare current operating
                         results with corresponding historical periods and with the
                         operational performance of other companies in its industry because
                         it did not give effect to potential differences caused by items not
                         considered reflective of underlying operating performance. In
                         evaluating adjusted EBITDA for 2016 and earlier, investors should be
                         aware that in the future the Company may incur expenses similar to
                         the adjustments presented above. The presentation of adjusted EBITDA
                         should not be construed as an inference that the Company’s future
                         results will be unaffected by expenses that are unusual, non-routine
                         or non-recurring. Adjusted EBITDA has limitations as an analytical
                         tool, and it should not be considered in isolation, or as a
                         substitute for net (loss) income, operating (loss) income, or any
                         other performance measure derived in accordance and reported under
                         GAAP or as an alternative to cash flow from operating activities or
                         as a measure of liquidity.
                          
                         Non-GAAP financial measures, when viewed in a reconciliation to
                         corresponding GAAP financial measures, provide 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)                      (Loss) income from continuing operations and (loss) income from
                         discontinued operations make up the components of net (loss) income.
                         A reconciliation of these components for the quarters and years
                         ended December 31, 2016 and December 31, 2015 is presented below:
                                                                                                                                     
                                                                                               For the Quarter Ended                                                                                                                              For the Year Ended
                                                                                                   December 31,                                                                                                                                      December 31,
                                                                -----------------------------------------------------------------------------------                                                               ----------------------------------------------------------------------------------
                                                                            2016                               2015                                                                                        2016                               2015
                                                                -----------------------------                         -----------------------------                                                               -----------------------------                         ----------------------------
(Loss) income from continuing operations                                           $ (30,030 )                                           $ 142,239                                                                                   $ (14,816 )                                           $ 53,016
(Loss) income from discontinued operations                         (2,846 )                              485                                                                   (3,896 )                          (1,131 )
                                                                -------------------- -------                          -------------------- -------                                                                -------------------- -------                          -------------------- ------
Net (loss) income                                                                  $ (32,876 )                                           $ 142,724                                                                                   $ (18,712 )                                           $ 51,885
                                                                ==================== =======                          ==================== =======                                                                ==================== =======                          ==================== ======
(3)   Amounts relate to the University Group and Corporate.
                          
(4)                      Legal settlement amounts are net of insurance recoveries.
                          
(5)                      Unused space charges represent the net present value of remaining
                         lease obligations for vacated space less an estimated amount for
                         sublease income as well as the subsequent accretion of these
                         charges. These charges relate to vacated leased space as the Company
                         continues to right-size the organization and therefore are not
                         considered representative of ongoing operations.
                          
(6)                      Management assesses results of operations for the University Group
                         and Corporate separately from the Transitional Group and Culinary
                         Arts. As the Transitional Group and Culinary Arts have been
                         announced for teach-out, management views these operations as not
                         reflective of the ongoing business. As a result, management views
                         adjusted EBITDA from the University Group and Corporate separately
                         from the remainder of the organization, to assess results and make
                         decisions. Accordingly, the Transitional Group and Culinary Arts
                         pre-tax losses are added back to (loss) income from continuing
                         operations and subtracted from (loss) income from discontinued
                         operations.
                          
(7)                      Amounts relate to the Transitional Group, Culinary Arts and
                         discontinued operations.
                          
(8)                      Adjusted EBITDA amounts for Culinary Arts separate from the
                         Transitional Group and discontinued operations include:
                                                                                                                                          
                                                                                             For the Quarter Ended                                                                                                                         For the Year Ended
                                                                                                 December 31,                                                                                                                                 December 31,
                                                       -------------------------------------------------------------------------------------------------                                            -------------------------------------------------------------------------------------------------
                                                                       2016                                      2015                                                                            2016                                      2015
                                                       ------------------------------------                         ------------------------------------                                            ------------------------------------                         ------------------------------------
Pre-tax loss                                                              $        (22,211 )                                           $        (14,065 )                                                              $        (20,451 )                                           $        (57,518 )
Depreciation and amortization                                                        1,776                                               --                                                                           6,234                                               --
Legal settlements                                                           --                                               --                                                                  --                                                          775
Asset impairments                                                                      383                                                        9,005                                                                             383                                                       52,138
Unused space charges                                             13,684                                       191                                                       17,394                                      (959 )
                                                       -------------------- --------------                          -------------------- --------------                                             -------------------- --------------                          -------------------- --------------
Adjusted EBITDA for Culinary Arts                                         $         (6,368 )                                           $         (4,869 )                                                              $          3,560                                             $         (5,564 )
                                                       ==================== ==============                          ==================== ==============                                             ==================== ==============                          ==================== ==============
 
                                                                                                              CAREER EDUCATION CORPORATION AND SUBSIDIARIES
                                                                                                         UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1)
                                                                                                                             (In thousands)
 
                                                                                ACTUAL RESULTS                                                                            OUTLOOK
                                                             ------------------------------------------------------------------------------------------                                              -------------------------------------------------------------------
                                                                                                 For the Year Ended                                                                                                          For the Year Ended
                                                                                                    December 31,                                                                                                                December 31,
                                                             ------------------------------------------------------------------------------------------                                              -------------------------------------------------------------------
Adjusted Operating Income (Loss)                                             2015                                  2016                                                                    2017                     2018
---------------------------------------                      ----------------------------------                           ---------------------------                                                ----------------------                      ----------------------
  University Group and Corporate:
---------------------------------------
  Operating income (2) (3)                                                      $         65,749                                             $  44,717                                                   Growth vs 2016                              Growth vs 2017
  Depreciation and amortization (3)                                                       15,089                                                11,164                                                                           2016 Levels
  Asset impairments (3)                                                                      507                                                   237                                                                          None Assumed
  Unused space charges (3) (4)                                                             1,556                                                 1,134                                                                          None Assumed
  Significant legal settlements (3)                            --                             32,000                                                                          None Assumed
                                                             -------------------- --------------                          -------------------- -------                                               -------------------------------------------------------------------
     Adjusted Operating Income --                                               $         82,901                                             $  89,252                                                   Growth vs 2016                              Growth vs 2017
     University Group and Corporate (5)
                                                             ==================== ==============                          ==================== =======                                               ======================                      ======================
                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                    
  Transitional Group and Culinary Arts:
---------------------------------------
  Operating loss (2) (6)                                                        $       (157,917 )                                           $ (77,061 )                                             $(80) -- $(90) million                      $(18) -- $(28) million
  Depreciation and amortization (6)                                                        9,849                                                11,583                                                      $5 million                               --
  Asset impairments (6)                                                                   60,008                                                   927                                                                          None Assumed
  Unused space charges (4) (6)                                         17,940                             34,719                                                     $25 million                                  $8 million
                                                             -------------------- --------------                          -------------------- -------                                               ----------------------                      ----------------------
     Adjusted Operating Loss --                                                 $        (70,120 )                                           $ (29,832 )                                             $(50) -- $(60) million                      $(10) -- $(20) million
     Transitional and Culinary Arts (5)
                                                             ==================== ==============                          ==================== =======                                               ======================                      ======================
(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 operations. 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 operations, 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.
                          
                         The Company believes adjusted operating income (loss) allows it to
                         analyze and assess its ongoing operations and compare current
                         operating results with the operational performance of other
                         companies in its industry because it does not give effect to
                         potential differences caused by items it does not consider
                         reflective of underlying operating performance, such as unused space
                         charges and significant legal reserves. In evaluating adjusted
                         operating income (loss), investors should be aware that in the
                         future the Company may incur expenses similar to the adjustments
                         presented above. The presentation of adjusted operating income
                         (loss) should not be construed as an inference that the Company’s
                         future results will be unaffected by expenses that are unusual,
                         non-routine or non-recurring. Adjusted operating income (loss) has
                         limitations as an analytical tool, and it should not be considered
                         in isolation, or as a substitute for net (loss) income, operating
                         (loss) income, or any other performance measure derived in
                         accordance and reported under GAAP or as an alternative to cash flow
                         from operating activities or as a measure of liquidity.
                          
                         Non-GAAP financial measures, when viewed in a reconciliation to
                         corresponding GAAP financial measures, provide 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)                      Operating income for University Group and Corporate and operating
                         loss for the Transitional Group and Culinary Arts make up the
                         components of operating (loss) income. A reconciliation of these
                         components for the years ended December 31, 2016 and December 31,
                         2015 is presented below:
                                                     
                                                                                                          For the Year Ended
                                                                                                             December 31,
                                                                         ------------------------------------------------------------------------------------
                                                                                      2015                               2016
                                                                         ------------------------------                         -----------------------------
Operating income for University Group and Corporate                                         $   65,749                                             $  44,717
Operating loss for Culinary Arts and Transitional                          (157,917 )                          (77,061 )
                                                                         -------------------- --------                          -------------------- -------
Operating loss                                                                              $  (92,168 )                                           $ (32,344 )
                                                                         ==================== ========                          ==================== =======
(3)   Amounts relate to the University Group and Corporate.
                          
(4)                      Unused space charges represent the net present value of remaining
                         lease obligations for vacated space less an estimated amount for
                         sublease income. These charges relate to exiting leased space as the
                         Company continues to right-size the organization and therefore are
                         not considered representative of ongoing operations.
                          
(5)                      Management assesses results of operations for the University Group
                         and Corporate separately from the Transitional Group and Culinary
                         Arts. As the Transitional Group and Culinary Arts have been
                         announced for teach-out, management views these operations as not
                         reflective of the ongoing business. As a result, management views
                         adjusted operating income from the University Group and Corporate
                         separately from the remainder of the organization, to assess results
                         and make decisions.
                          
(6)                      Amounts relate to the Transitional Group and Culinary Arts.
                          

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170223006482r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170223006482/en/

SOURCE: Career Education Corporation

Investors: 
Alpha IR Group 
Sam Gibbons or Chris Hodges 
(312) 445-2870 
CECO@alpha-ir.com 
Or 
Media: 
Career Education Corporation 
(847) 585-2600 
media@careered.com


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