-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fdc+97M2b8Eb57bb+OCBfUb7iKcXhdIp8Hy7A3gDqXVO/m4unKiRv8o1KCVzpif5 /Xb3N4JTDTrp9851AHh+Gg== 0001104659-05-062040.txt : 20051221 0001104659-05-062040.hdr.sgml : 20051221 20051221162031 ACCESSION NUMBER: 0001104659-05-062040 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20051215 ITEM INFORMATION: Entry into a Material Definitive Agreement FILED AS OF DATE: 20051221 DATE AS OF CHANGE: 20051221 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAREER EDUCATION CORP CENTRAL INDEX KEY: 0001046568 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 363932190 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23245 FILM NUMBER: 051278814 BUSINESS ADDRESS: STREET 1: 2895 GREENSPOINT STREET 2: SUITE 600 CITY: HOFFMAN ESTATES STATE: IL ZIP: 60195 BUSINESS PHONE: 8477813600 MAIL ADDRESS: STREET 1: 2800 WEST HIGGINS ROAD STREET 2: SUITE 790 CITY: HOFFMAN ESTATES STATE: IL ZIP: 60195 8-K 1 a05-22235_18k.htm CURRENT REPORT OF MATERIAL EVENTS OR CORPORATE CHANGES

 

 

UNITED STATES

OMB APPROVAL

 

SECURITIES AND EXCHANGE COMMISSION

OMB Number: 3235-0060
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Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported)

December 15, 2005

 

Career Education Corporation

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Delaware

 

0-23245

 

36-3932190

(State or other jurisdiction

 

(Commission

 

(IRS Employer

of incorporation)

 

File Number)

 

Identification No.)

 

 

 

2895 Greenspoint Parkway, Suite 600, Hoffman Estates, IL

 

60195

(Address of principal executive offices)

 

(Zip Code)

 

 

 

Registrant’s telephone number, including area code

  (847) 781-3600

 

 

 

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 


 

Item 1.01 Entry into a Material Definitive Agreement.

 

On December 15, 2005, the Compensation Committee of the Board of Directors of Career Education Corporation (the “Company”) approved the acceleration on such date of the vesting of all outstanding, unvested stock options with a per share exercise price greater than $32.63 (the market closing price of the Company’s common stock on December 15, 2005) that were previously awarded to employees, including executive officers, and directors during 2003 and 2004 under the Company’s equity compensation plans, such that all such options became immediately exercisable.

 

Options to purchase approximately 1.0 million shares of the Company’s common stock, or approximately 26% of the Company’s outstanding unvested options as of December 15, 2005, are subject to the vesting acceleration.  This amount includes approximately 336,000 options held by the Company’s executive officers and directors.  The weighted average exercise price of the options subject to the acceleration is $60.38, and the individual exercise prices of such options range from $35.73 to $68.24.  The exercise price of all options subject to the acceleration held by the Company’s executive officers and directors is $62.56.

 

As of December 15, 2005, the weighted average exercise price of these options of $60.38 exceeded the current per share market value of the Company’s common stock of $32.63 by approximately 85%.  As such, the Company believes that the options have limited economic value and were not fully achieving their original objectives of incentive compensation and employee retention.  The Company believes the acceleration of the vesting of these options may have a positive impact on employee morale and perception of option value and an insignificant impact on employee retention.

 

The primary purpose of the vesting acceleration of these options is to eliminate the recognition of compensation expense associated with these options that the Company would be required to recognize in its future consolidated statements of operations upon its adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (“SFAS 123R”).  SFAS 123R will generally require that the fair value of all share-based payments to employees, including stock option awards, be recognized as compensation expense in the Company’s statements of operations. The Company will be required to adopt the expense recognition provisions of SFAS 123R effective January 1, 2006.

 

Future pre-tax compensation expense that has been eliminated as a result of the acceleration of the vesting of these options, which otherwise would have been recognized as compensation expense during the original vesting periods, totals approximately $17.9 million, including a reduction of expense of approximately $8.2 million in 2006, approximately $7.4 million in 2007, and approximately $2.3 million in 2008.  This expense, net of the tax effect of approximately $6.8 million, will be reflected as a component of pro forma 2005 compensation expense in the share-based compensation disclosure in the notes to the Company’s 2005 consolidated financial statements.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

CAREER EDUCATION CORPORATION

 

 

 

 

 

 

 

By:

/s/ Janice L. Block

 

 

Janice L. Block

 

 

Senior Vice President, General Counsel, and Corporate Secretary

 

 

Dated:  December 20, 2005

 

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