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Safe Harbor Statement The forward-looking statements contained in this presentation and
those statements made during this presentation are based upon various assumptions, and certain risks and uncertainties could cause actual results to differ materially from those stated. Factors that could cause such differences include costs and difficulties associated with opening new campuses and in integrating acquisitions, costs associated with the Online operations, changes in the regulatory environment and those matters disclosed in Career Education Corporation's filings with the Securities and Exchange Commission. Career Education Corporation assumes no obligation to update those forward-looking statements.
A brief look at CEC…• Formed in 1994 to create a premium education
system • Initial Public Offering in 1998• 43 worldwide campuses• Rapidly growing Online Education presence• #1 on-campus provider in for-profit sector• 20 consecutive quarters of record revenue &
earnings• Cumulative shareholder return since IPO = 1,000%
$144.2$216.8
$325.3
$529.2
$751.0
$0
$100
$200
$300
$400
$500
$600
$700
$800
1998 1999 2000 2001 2002
Revenue (in millions)
$0.17$0.34
$0.57
$0.85
$1.42
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
1998 1999 2000 2001 2002
Earnings per Share
Favorable Industry Dynamics
• $270 billion North America market
• For-profit & non-profit sectors are highly fragmented
• Strong long-term demographic trends
• Barriers to entry
• Attractive financial characteristics
To get training for a specific career 71.3%
To be able to get a better job 70.3%
To be able to make more money 69.8%
A person with a bachelor’s degree is expected to earn almost $1.0 million more in their career than a high-school grad – US Department of LaborSource: The Chronicle of Higher Education
Top 3 Reasons Why Freshman Enroll in College …
Top 2 Reasons Why Freshman Select a College …
1. College has a very good academic reputation CEC’s “Schools of Choice” & nationally recognized programs
2. College’s graduates get good jobs CEC’s Placement rate of 94.1%
Source: The Chronicle of Higher Education
Top 20 U.S. Universities by Population
Fall 1995 Fall 2001
University Population University Population1 Community College of the Air Force 89,611 1 Apollo Group 139,3002 University of Minnesota–Twin Cities 51,445 2 Community College of the Air Force 89,611
3 Ohio State University–Main Campus 48,676 3 DeVry University 58,7364 The University of Texas at Austin 47,905 4 University of Minnesota-Twin Cities
51,388
5 Miami-Dade Community College 47,060 5 Miami-Dade Community College
49,836
6 Arizona State University-Main Campus 42,040 6 Ohio State University-Main Campus 48,362
7 Texas A&M University-Main Campus 41,790 7 The University of Texas at Austin 48,008
8 Michigan State University 40,647 8 Arizona State University-Main Campus 42,483
9 Pennsylvania State University-Main Campus 39,646 9 Texas A&M University-Main Campus
41,892
10 Houston Community College System 39,641 10 Michigan State University 41,545
11 University of Florida 39,412 11 Career Education
40,80012 University of Wisconsin-Madison 39,005 12 University of Florida
39,883
13 University of Illinois-Urbana-Champaign 38,420 13 Pennsylvania State Univ-Main Campus 39,855
14 Northern Virginia Community College 37,144 14 University of Wisconsin-Madison 39,289
15 University of Michigan-Ann Arbor 36,687 15 University of Illinois-Urbana-Champaign
38,841
16 Purdue University-Main Campus 36,427 16 Houston Community College System
38,493
17 University of South Florida 36,142 17 Education Management 37,658
18 New York University 35,835 18 University of Phoenix Online
37,60019 Indiana University-Bloomington 35,083 19 Purdue University-Main Campus
36,893
20 University of Arizona 34,777 20 University of Michigan-Ann Arbor
36,625
Source: Chronicle of Higher Education
Sustainable Growth Opportunity
• Demographic trends support sustainable growth2.5 mil increase in college enrollment in the next decade –
National Center of Education Statistics
• States are cutting budgets for public postsecondary education at the same time demand is escalating19 states have cut their higher education funding midway
through the current fiscal year – National Conference of State Legislatures
CEC’s Competitive Advantages• Career-oriented curriculum• Diversification creates stable market demand:
– Curriculum in multiple high-growth demand areas– Demographics in age & gender– Various degree offerings– Geography
• Strong Marketing Expertise• Excellent Placement Success• Technology Innovation• Quality name brand institutions
Start-ups/
Satellites
Acquisitions
ProgramTransplants
Largest Global Quality Provider of Postsecondary
Education
Strategic Growth Goal
AdvancedDegrees
OnlineEducation
RegionalAccreditation
InternationalExpansion
AdditionalCurricula
Poised for the Future
• Two Operating Groups– Colleges, Schools & Universities Group
– Jake Gruver - President
– Online Education Group– Nick Fluge - President
OperatingStrategy
“Schoolsof
Choice”
Refining Education Programs
Direct Response Marketing
ImplementingSystems & Procedures
Retention & Placement
Capital Investments
Cycle of Success
Academy Academy CollegeCollege Culinary Culinary Start-upStart-upInter-Inter-nationalnational
Health Health EducationEducation
Gibbs Gibbs UniversityUniversity
Colleges, Schools &Colleges, Schools &UniversitiesUniversities
8 Diversified 8 Diversified Platforms for Platforms for
GrowthGrowth
Visual Communication& Design Technologies
Business Studies
Culinary Arts
Health Education
43%
22%
18%
15%
2%
% of Students
Information Technology
51,100 students
Full-time degree seeking students
Current Core Curricula
Diversified Student Demographics
Student Population by Age Group
Under 21 yr.30%
21 – 30 yr.53%
Over 30 yr.17%
50%/50%
Male/Female
Diversified Degree Offerings
Student Population by degree objective
Bachelor’s/Master’s
28% Associate’s58%
Certificate14%
Superior Execution
• Attract & convert prospects using full marketing mix
• Assist students in financing their education • Deliver a superior education product• Develop new programs• Keep students in school through innovative
retention programs• Place students in their field of study by
soliciting job openings
School Operations
President
VP of Operations
VP of FinancialServices
VP of Student Services
VP Marketing/Admissions
VP of AcademicAffairs
• Tailored marketing at each school
Internet-based advertising
High school recruiting
TV infomercials & commercials
Direct mail
Referrals
Newspapers & print media
Effective Lead Generation
Internet
TV
Direct Mail
High School
Referral
Other
Internet
36%
TV
13%
H.S.
30%
Direct Mail
10%
Other
4%
Referral
4%
2002
Leads By Media Source
3%
Marketing Site
- Over 150 school marketing Web Sites
- Interactive Media Presentations & Webmercials
- Leads automatically loaded into CEC’s database
Marketing & Admissions Process
1. Generate leads
2. Convert leads to enrollments (“booked futures”)
3. Convert enrollments to starts
Convert Leads to Enrollments
• Specialized Admissions Efforts
Approx. 1,000 Professionals 1. Local Area
2. High school
3. Out-of-area
4. International
5. Internet
Automated Enrollment Center- Branded Enrollment Centers
- Virtual Campus Tours/Catalog
- Multi-currency & multi-lingual
- Enrollment Agreement
- Candidate for Acceptance
Start Culture- “Start to Stay”
• 2nd Interview• Tuition planning
session• Set financial aid
deadline• Mandatory
orientation
• “Stitch-In” process• Part-time job• President’s
acceptance letter• Open house• Housing
How do Students Pay for College ?
• Title IV Financial Aid
• Grants
• Cash Pay – Family– Personal Investment– Part-time Employment
• Alternative Third Party Loans
Personalized Tuition Plan • Financial Aid
– Review State & Federal Programs– Determine Eligibility– Design a Personal Financial Aid Package
• Family Commitment– Assistance from Family or Significant Other– Monthly School Payment
• Personal Investment– Tuition Deposit– Personal Responsibilities– Part-time Income
Our mission is to serve students from diverse backgrounds, seeking to enhance their individual worth and professional potential, by delivering quality educational programs and services. Our faculty and staff are committed to promoting student success as measured by graduation and career achievement.
Mission Statement for Learning
Our Education Product
• Curricula matched to long-term demographic and employment trends
• Employers help create, refine programs
• Advisory boards create lasting relationships
Focused on 21st Century Careers
Superior Education Product
• High quality faculty and staff• Approximately 4,000 faculty; industry
professionals• 62% part-time, adjunct faculty
• First class equipment, facilities• Ongoing investments• “Hands-on” education
Retention for Success
• Retention is everyone’s responsibility – from the President, to the faculty, to the staff
• A practical, institutional approach
• Weekly reporting and monitoring
• 200 Career Service Professionals focused on securing job orders
• Students required to take a professional development class or attend seminars that discusses job search skills
• Transferred proven marketing discipline to the career services department
Placement for Success
723 Employers
4,161 CEC Students/Alumni
116 Chat Rooms
2,500 Job postings
12 Hours
CEC’s Virtual Job Fair
Some Well-known EmployersVisComm & Design•JAK Films (Star War’s)•DDB Worldwide•Jockey•EMCI
Culinary•Hyatt•Hilton•Spago/Wolfgang Puck•Ritz Carlton
Business Studies•CIA•Bank Atlantic•Booz, Allen & Hamilton•ADP
IT•Intel•Televista•Cox Communications•Spherion
Technology
New technologies are changing the most traditional college campuses. The conditions are finally right for these technologies on campus; the traditional classroom has found a powerful companion in Technology.
CEC’s 2003 IT Initiatives
• Online Tools & Services for Students
• Business Process Improvements
• Financial Systems Implementation
• Management Information Delivery
• Business Expansion/Integration
• Online Tools & Services– “MyCampus.Com” - where students &
faculty can communicate, share information, view academic progress, schedule & account information, make payments, register, etc.
CEC’s 2003 IT Initiatives
• Business Process Improvements – Leverage student database & drive
continuous business process improvements allowing CEC to scale it’s growth
• Financial Systems Implementations – Implement & convert existing financial data
to new G/L & automated T&E system
CEC’s IT 2003 Initiatives
• Management Information Delivery– Enhance delivery of online information
across our business
• Business Expansion/Integration– Work closely with the business to
incorporate new schools & integrate acquisitions into CEC’s technology infrastructure & business application suite
CEC’s IT 2003 Initiatives
Support Services for Schools
• Financial Aid
• Information Technology Innovations
• Financial
• Admissions
• Education
• Student Retention
• Career Services
Reports we use to Manage our Business?
• Monthly Marketing Report
• Daily/Weekly/Monthly Flash
• Financial Reports
• Daily Cash Collection Reports
• Financial Aid Packaging Reports
• Retention Reports
• Many more…
“CEC University”- Staff Development
• CEC Online Courses• Faculty Development • AchieveGlobal / Managing Interpersonal Skills• Training at CEC• Regional, Divisional, Departmental Training
We have 7,000 employees worldwide:
4,000 faculty
1,000 marketing
2,000 administration
Four Principal Activities
1. Strategic Planning
2. Acquisitions
3. Campus Start-ups
4. International Expansion
Potential for Market Leadership
Excellent Educational Franchise
All activities support business strategies
24 Acquisitions Completed since 1994
Broad StudentMarketability
Excellent Regulatory Compliance
Manageable Near-term EPS impact
Attractive 5-year ROIC
Attractive Long-TermFinancial Profile
Acquisitions
Acquisitions – Keys to Success
• Rigorous, structured due-diligence process
• “Conservatively honest” assessment of required investment & growth potential
• Detailed integration plans, efficient integration process
• Accurate long-term opportunity assessment
Full pipeline, many attractive opportunities
Campus Start-ups
• Means of geographic market entry
• Leverage brand equity of existing CEC brands
• Excellent returns on invested capital
Campus Start-ups • 4 start-ups to date – all operating ahead of
budget– 2 in 2001 - Gibbs in Philadelphia, IADT in Orlando– 2 in 2002 – Le Cordon Bleu in Orlando, Brooks in
Sunnyvale
• 4 start-ups in 2003– Las Vegas – Le Cordon Bleu (Summer ‘03)– Atlanta – Le Cordon Bleu (Fall ‘03)– Detroit – IADT (Fall ‘03)– Houston – AIU –University (Fall ’03)
• Dedicated divisional team
Numerous additional market opportunities
International Expansion
• Growing demand for postsecondary education
• Opportunity to leverage best practices, utilize corporate assets to grow schools overseas
• Proven success with AIU-London & AIU-Dubai
• Visited numerous properties over past 24-months
Annual 2003 Business Outlook• Revenue to be approx. $940 to $950 mil (includes
Online of approx. $60 mil)
• Operating profit margin to increase approx. 50 basis points
• EPS to be approx. $1.80 to 1.82
• Capital expenditures to be approx. $75 to $80 mil
$144.2$216.8
$325.3
$529.2
$751.0
$945.0
$0
$200
$400
$600
$800
$1,000
1998 1999 2000 2001 2002 2003 *
* mid-range of ’03 Guidance
Revenue (in millions)
$23.2$34.9
$60.0
$101.3
$149.3
$191.8
$0$20$40$60$80
$100$120
$140$160$180$200
1998 1999 2000 2001 2002 2003 *
* mid-range of ’03 Guidance
EBITDA (in millions)
$0.17$0.34
$0.57
$0.85
$1.42
$1.81
$0.00
$0.50
$1.00
$1.50
$2.00
1998 1999 2000 2001 2002 2003 *
* mid-range of ’03 Guidance
Earnings per Share
Population Revenue EBITDA
59%
57%35%
’01 vs. ‘00
’00 vs. ’99
21%
24% 35%
’02 vs. ‘01
21% 34% 42%
Internal Growth Record
$11,500
$15,500
$10,700
$20,000
$20,000
$30,000
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
On-campus Online Culinary
Peer * CEC
Avg. Annual Revenue Per Student
* Apollo, EDMC, Strayer, COCO, ITT and DeVry
3.0%2.8%
3.7%3.3% 3.3%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
1998 1999 2000 2001 2002
Annual Bad Debt Expense
Oct. 7, 2000
Change in Title IV Return of Funds Policy
3133
3634
4038 36
33
0
5
10
15
20
25
30
35
40
1st Q 2nd Q 3rd Q 4th Q
2001 2002
Days Sales Outstanding
Start-up Campus Guidance
• 6 to 9 months pre-opening – $0.8 mil to $1.2 mil operating loss
• 9 to 12 months until break-even – $0.8 mil to $1.2 mil operating loss
• Capital Expenditures– Culinary school is $4.0 to $5.0 mil– All other schools are $1.0 to $2.0 mil
• 20%+ Internal Revenue Growth– 15 % population growth– 5 – 7 % pricing
• 50 to 100 basis point operating margin improvement
• 25%+ earnings per share growth
3 to 5 yr. Business Outlook
The Future is Bright…
• Favorable industry dynamics
• Sustainable growth opportunity
• Competitive position
• Multi-faceted growth platform
• Proven track record
• Positioned for strong EPS growth