EX-99.1 2 dex991.htm PRESS RELEASE Press release

Exhibit 99.1

LOGO

CAREER EDUCATION CORPORATION REPORTS

RESULTS FOR SECOND QUARTER 2011

Schaumburg, Ill. (August 3, 2011) – Career Education Corporation (NASDAQ: CECO) today reported total revenue of $497.2 million, and net income of $55.4 million, or $0.73 per diluted share, for the second quarter of 2011 compared to total revenue of $527.7 million and net income of $64.3 million, or $0.80 per diluted share, for the second quarter of 2010.

CONSOLIDATED RESULTS

Quarter Ended June 30, 2011

 

   

Total revenue was $497.2 million for the second quarter of 2011, a 5.8 percent decrease from $527.7 million for the second quarter of 2010.

 

   

Operating income was $82.7 million for the second quarter of 2011, versus operating income of $96.8 million for the second quarter of 2010, a decrease of 14.5 percent. The operating margin was 16.6 percent for the second quarter of 2011, compared to an operating margin of 18.3 percent for the second quarter of 2010. Operating income for the second quarter of 2011 included $2.7 million in non-cash goodwill and asset impairment charges primarily related to accreditation rights for certain schools.

 

   

Income from continuing operations for the quarter ended June 30, 2011, was $55.8 million, or $0.74 per diluted share, compared to $66.3 million, or $0.82 per diluted share, for the quarter ended June 30, 2010. Income from continuing operations for the quarters ended June 30, 2011 and 2010 included discrete income tax benefits of $1.6 million and $4.2 million, respectively.

Year to Date Ended June 30, 2011

 

   

Total revenue was $1,040.6 million for the year to date ended June 30, 2011, compared to $1,057.2 million for the year to date ended June 30, 2010.

 

   

Operating income increased to $195.9 million for the year to date ended June 30, 2011, from $186.2 million for the year to date ended June 30, 2010. The operating margin increased to 18.8 percent for the year to date ended June 30, 2011, from 17.6 percent for the year to date ended June 30, 2010. Operating income for the year to date ended June 30, 2011 included a $7.0 million insurance recovery related to previously settled legal matters and $2.7 million in non-cash goodwill and asset impairment charges. Operating income for the year to date ended June 30, 2010 included an additional expense of $8.1 million for the increase in the allowance for doubtful accounts associated with certain extended payment plan programs and a $3.7 million lease termination charge in connection with the Company’s move to its new campus support center.

 

   

Income from continuing operations for the year to date ended June 30, 2011, was $129.3 million, or $1.70 per diluted share, compared to $123.4 million, or $1.51 per diluted share, for the year to date ended June 30, 2010.


CEC ANNOUNCES 2Q11 RESULTS...PG 2

 

CONSOLIDATED CASH FLOWS AND FINANCIAL POSITION

Cash Flows

 

   

Net cash flows provided by operating activities totaled $114.8 million for the year to date ended June 30, 2011, compared to $47.9 million for the year to date ended June 30, 2010. The increase in operating cash flows, as compared to the prior year to date, is primarily due to the prior year cash flow being negatively impacted by a delay in the receipt of Title IV funds of approximately $30 million and the continued use of Company funds being extended to an increasing number of students in the form of extended payment plans.

 

   

Capital expenditures increased to $47.9 million during the year to date ended June 30, 2011, from $43.2 million during the year to date ended June 30, 2010. Capital expenditures represented 4.6 percent of total revenue during the year ended June 30, 2011 and 4.1 percent during the year to date ended June 30, 2010.

Financial Position

 

   

As of June 30, 2011 and December 31, 2010, cash and cash equivalents and short-term investments totaled $388.8 million and $449.2 million, respectively.

Stock Repurchase Program

During the quarter ended June 30, 2011, the Company repurchased 1.8 million shares of its common stock for approximately $40.0 million at an average price of $22.51 per share. Year to date ended June 30, 2011, the Company repurchased 5.9 million shares of its common stock for approximately $129.9 million at an average price of $21.94 per share.

As of June 30, 2011, approximately $160.5 million was available under the Company’s authorized stock repurchase program to repurchase outstanding shares of its common stock. Stock repurchases under this program may be made on the open market or in privately negotiated transactions from time to time, depending on various factors, including market conditions and corporate and regulatory requirements.


CEC ANNOUNCES 2Q11 RESULTS...PG 3

 

STUDENT POPULATION AND NEW STUDENT STARTS

Student Population

Total student population by reportable segment as of June 30, 2011 and 2010, was as follows:

 

     As of June 30,    % Change
     2011    2010    2011 vs. 2010

Student Population

              

CTU

       28,100          29,000          -3%  

AIU

       17,600          20,400          -14%  

Health Education

       29,100          28,600          2%  

Culinary Arts

       13,200          12,100          9%  

Art & Design

       10,000          11,600          -14%  

International

       3,700          2,800          32%  
    

 

 

      

 

 

      

Total Student Population

       101,700          104,500          -3%  
    

 

 

      

 

 

      

New Student Starts

New student starts by reportable segment for the quarters ended June 30, 2011 and 2010, were as follows:

 

     For the Quarters
Ended June 30,
    
        % Change
     2011    2010    2011 vs. 2010

New Student Starts

              

CTU

       7,810          9,480          -18%  

AIU

       4,290          5,670          -24%  

Health Education

       7,750          8,450          -8%  

Culinary Arts

       3,700          3,150          17%  

Art & Design

       1,000          1,690          -41%  

International

       330          380          -13%  
    

 

 

      

 

 

      

Total New Student Starts

       24,880          28,820          -14%  
    

 

 

      

 

 

      

INTERNAL INVESTIGATION REGARDING PLACEMENT RATES

Career Education Corporation has identified improper practices at certain of its health education segment campuses relating to the determination of reported placement rates. The company recently discovered these practices in preparing its response to the previously disclosed subpoena issued to the company by the New York Attorney General on May 17, 2011. Career Education’s Board of Directors has directed outside independent legal counsel Dewey & LeBoeuf to undertake a thorough investigation of these practices. In addition, independent counsel has been directed to review the determination of student placements at all of the company’s domestic schools. The company will implement remedial measures based on the results of independent counsel’s investigation. Results of the investigation will be reported to the New York Attorney General and other relevant accrediting and governmental bodies, as appropriate.

“The integrity of Career Education and its schools is paramount. I am greatly disappointed that some people within our organization have acted inappropriately and not lived up to the standards Career Education expects,” said Gary E. McCullough, president and chief executive officer. “We will take all steps necessary to ensure we accurately determine and report placement rates in the future.”

CONFERENCE CALL INFORMATION

Career Education Corporation will host a conference call on Thursday, August 4, 2011 at 10:00 a.m. Eastern time. Interested parties can access the live webcast of the conference call at www.careered.com in the Investor Relations section of the website. Participants can also listen to the conference call by dialing 800-580-9478 (domestic) or 630-691-2769 (international) and citing code 30161720. Please log-in or dial-in at least 10 minutes prior to the start time to ensure a connection. An archived version of the webcast will be accessible for 90 days at www.careered.com in the Investor Relations section of the website. A replay of the call will also be available for seven days by calling 888-843-7419 (domestic) or 630-652-3042 (international) and citing code 30161720.


CEC ANNOUNCES 2Q11 RESULTS...PG 4

 

ABOUT CAREER EDUCATION CORPORATION

The colleges, schools and universities that are part of the Career Education Corporation (“CEC”) family offer high-quality education to a diverse student population of more than 100,000 students across the world in a variety of career-oriented disciplines through online, on-ground and hybrid learning program offerings. The more than 90 campuses that serve these students are located throughout the United States and in France, Italy, the United Kingdom and Monaco, and offer doctoral, master’s, bachelor’s and associate degrees and diploma and certificate programs.

CEC is an industry leader whose institutions are recognized globally. Those institutions include, among others, American InterContinental University (“AIU”); Brooks Institute; Colorado Technical University (“CTU”); Harrington College of Design; INSEEC Group (“INSEEC”) Schools; International University of Monaco (“IUM”); International Academy of Design & Technology (“IADT”); Istituto Marangoni; Le Cordon Bleu North America (“LCB”); and Sanford-Brown Institutes and Colleges. Through its schools, CEC is committed to providing high-quality education, enabling students to graduate and pursue rewarding career opportunities.

For more information, see CEC’s website at www.careered.com. The website includes a detailed listing of individual campus locations and web links to CEC’s colleges, schools, and universities.

Except for the historical and present factual information contained herein, the matters set forth in this release, including statements identified by words such as “anticipate,” “believe,” “plan,” “expect,” “intend,” “project,” “will,” “potential” and similar expressions, are forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects, and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances, or for any other reason. These risks and uncertainties, the outcome of which could materially and adversely affect our financial condition and operations, include, but are not limited to, the following: availability of Title IV and other student financial aid or loans for our students; Congress’ willingness or ability to maintain or increase funding for Title IV Programs; our ability to maintain continued eligibility to participate in Title IV Programs, including under the “90-10 Rule” under the Higher Education Act of 1965, as amended; the impacts of the U.S. Department of Education’s regulations addressing certain aspects of administration of Title IV federal financial aid programs (including among other matters, gainful employment, certain compensation related to recruiting and admission of students, more stringent state approval criteria that may affect current state approval and licensing processes applicable to postsecondary education institutions and distance learning programs, and misrepresentation liability) on our business practices, costs of compliance and of developing and implementing changes in operations, student recruitment or enrollment growth, and program offerings that may have significant or material effects on our operations, business and profitability; increased competition; the effectiveness of our regulatory compliance efforts; the outcome of any state attorney general investigations, including those underway in Florida and New York; the outcome of our investigation into the determination and reporting of placement rates at our domestic schools, including any claims, sanctions, operational limitations or adverse accreditation or regulatory action initiated as a result of any adverse findings from such investigation; any impairment of goodwill and other intangible assets as we continue to redefine the company and manage our brands and marketing to improve effectiveness and reduce costs; charges and expenses associated with exiting excess facility space; our ability to comply with accrediting agency requirements or obtain accrediting agency approvals for existing or new programs; the outcome of any reviews and audits conducted by accrediting, state and federal agencies; our dependence on information technology systems; our ownership or use of intellectual property; costs and impacts of regulatory, legal and administrative actions, proceedings and investigations, governmental regulations, and class action and other lawsuits; our ability to manage and continue growth; and other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2010, our Quarterly Reports on Form 10-Q for the most recent fiscal quarters, and from time to time in our current reports filed with the Securities and Exchange Commission.

###


CEC ANNOUNCES 2Q11 RESULTS...PG 5

 

CONTACT

 

Investors:   Jason Friesen
  Senior Vice President of Finance, Investor Relations and Treasurer
  (847) 585-3899
Media:   Mark Spencer
  Senior Director, Corporate Communications
  (847) 585-3802


CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

     June 30,
2011
    December 31,
2010
 
ASSETS     

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 228,821      $ 289,482   

Short-term investments

     159,939        159,671   
                

Total cash and cash equivalents and short-term investments

     388,760        449,153   

Student receivables, net

     57,968        62,287   

Receivables, other, net

     3,214        4,132   

Prepaid expenses

     36,634        52,077   

Inventories

     11,085        13,142   

Deferred income tax assets, net

     31,665        31,665   

Other current assets

     24,665        6,246   

Assets of discontinued operations

     4,886        6,742   
                

Total current assets

     558,877        625,444   
                

NON-CURRENT ASSETS:

    

Property and equipment, net

     364,757        366,775   

Goodwill

     385,325        381,476   

Intangible assets, net

     112,731        118,763   

Student receivables, net

     11,374        12,522   

Deferred income tax assets, net

     4,770        5,092   

Other assets, net

     31,999        42,752   

Assets of discontinued operations

     18,843        19,055   
                

TOTAL ASSETS

   $ 1,488,676      $ 1,571,879   
                
LIABILITIES AND STOCKHOLDERS’ EQUITY     

CURRENT LIABILITIES:

    

Current maturities of capital lease obligations

   $ 878      $ 783   

Accounts payable

     47,395        56,013   

Accrued expenses:

    

Payroll and related benefits

     45,315        73,608   

Advertising and production costs

     22,868        18,846   

Income taxes

     9,132        —     

Earnout payments

     14,047        17,439   

Other

     48,104        98,113   

Deferred tuition revenue

     159,765        176,102   

Liabilities of discontinued operations

     14,010        15,100   
                

Total current liabilities

     361,514        456,004   
                

NON-CURRENT LIABILITIES:

    

Capital lease obligations, net of current maturities

     464        1,223   

Deferred rent obligations

     105,627        103,996   

Earnout payments

     —          7,690   

Other liabilities

     39,706        30,853   

Liabilities of discontinued operations

     30,317        37,576   
                

Total non-current liabilities

     176,114        181,338   
                

SHARE-BASED AWARDS SUBJECT TO REDEMPTION

     119        153   

STOCKHOLDERS’ EQUITY:

    

Preferred stock

     —          —     

Common stock

     824        812   

Additional paid-in capital

     588,676        576,853   

Accumulated other comprehensive income (loss)

     11,457        (81

Retained earnings

     485,413        356,991   

Cost of shares in treasury

     (135,441     (191
                

Total stockholders’ equity

     950,929        934,384   
                

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 1,488,676      $ 1,571,879   
                


CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts and percentages)

 

     For the Quarters Ended June 30,  
     2011     % of
Total
Revenue
     2010 (1)     % of
Total
Revenue
 

REVENUE:

         

Tuition and registration fees

   $ 481,970        96.9%       $ 509,129        96.5%   

Other

     15,223        3.1%         18,610        3.5%   
                     

Total revenue

     497,193           527,739     
                     

OPERATING EXPENSES:

         

Educational services and facilities

     161,529        32.5%         156,918        29.7%   

General and administrative

     229,801        46.2%         256,920        48.7%   

Depreciation and amortization

     20,507        4.1%         17,149        3.2%   

Goodwill and asset impairment

     2,676        0.5%         —          0.0%   
                     

Total operating expenses

     414,513        83.4%         430,987        81.7%   
                     

Operating income

     82,680        16.6%         96,752        18.3%   
                     

OTHER INCOME (EXPENSE):

         

Interest income

     263        0.1%         252        0.0%   

Interest expense

     (24     0.0%         (32     0.0%   

Miscellaneous income (expense)

     69        0.0%         (988     -0.2%   
                     

Total other income (expense)

     308        0.1%         (768     -0.1%   
                     

PRETAX INCOME

     82,988        16.7%         95,984        18.2%   

Provision for income taxes

     27,228        5.5%         29,714        5.6%   
                     

INCOME FROM CONTINUING OPERATIONS

     55,760        11.2%         66,270        12.6%   

Loss from discontinued operations, net of tax

     (407     -0.1%         (1,952     -0.4%   
                     

NET INCOME

   $ 55,353        11.1%       $ 64,318        12.2%   
                     

NET INCOME (LOSS) PER SHARE - DILUTED:

         

Income from continuing operations

   $ 0.74         $ 0.82     

Loss from discontinued operations

     (0.01        (0.02  
                     

Net income per share

   $ 0.73         $ 0.80     
                     

DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING

     75,533           80,459     
                     

 

(1) In December 2010, the Transitional Schools segment ceased to exist as the Company completed the teach out of its last remaining Transitional School, AIU-Los Angeles, CA, whose results for all periods presented are now reflected as a component of discontinued operations.


CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts and percentages)

 

     For the Years to Date Ended June 30,  
     2011     % of
Total
Revenue
     2010 (1)     % of
Total
Revenue
 

REVENUE:

         

Tuition and registration fees

   $ 1,003,064        96.4%       $ 1,018,637        96.4%   

Other

     37,490        3.6%         38,528        3.6%   
                     

Total revenue

     1,040,554           1,057,165     
                     

OPERATING EXPENSES:

         

Educational services and facilities

     330,430        31.8%         316,080        29.9%   

General and administrative

     470,660        45.2%         521,060        49.3%   

Depreciation and amortization

     40,873        3.9%         33,827        3.2%   

Goodwill and asset impairment

     2,676        0.3%         —          0.0%   
                     

Total operating expenses

     844,639        81.2%         870,967        82.4%   
                     

Operating income

     195,915        18.8%         186,198        17.6%   
                     

OTHER INCOME (EXPENSE):

         

Interest income

     500        0.0%         499        0.0%   

Interest expense

     (50     0.0%         (45     0.0%   

Miscellaneous income (expense)

     2,069        0.2%         (1,265     -0.1%   
                     

Total other income (expense)

     2,519        0.2%         (811     -0.1%   
                     

PRETAX INCOME

     198,434        19.1%         185,387        17.5%   

Provision for income taxes

     69,089        6.6%         61,971        5.9%   
                     

INCOME FROM CONTINUING OPERATIONS

     129,345        12.4%         123,416        11.7%   

Loss from discontinued operations, net of tax

     (957     -0.1%         (3,876     -0.4%   
                     

NET INCOME

   $ 128,388        12.3%       $ 119,540        11.3%   
                     

NET INCOME (LOSS) PER SHARE - DILUTED:

         

Income from continuing operations

   $ 1.70         $ 1.51     

Loss from discontinued operations

     (0.01        (0.05  
                     
         

Net income per share

   $ 1.69         $ 1.46     
                     

DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING

     76,174           81,887     
                     

 

(1) In December 2010, the Transitional Schools segment ceased to exist as the Company completed the teach out of its last remaining Transitional School, AIU-Los Angeles, CA, whose results for all periods presented are now reflected as a component of discontinued operations.


CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

     For the Years to Date Ended
June 30,
 
     2011     2010  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income

   $ 128,388      $ 119,540   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Goodwill and asset impairment

     2,676        —     

Depreciation and amortization expense

     40,873        33,970   

Bad debt expense

     26,834        45,569   

Compensation expense related to share-based awards

     8,488        10,034   

Gain on disposition of property and equipment

     (1,777     (474

Changes in operating assets and liabilities

     (90,730     (160,774
                

Net cash provided by operating activities

     114,752        47,865   
                

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Purchases of available-for-sale investments

     (110,162     (172,569

Sales of available-for-sale investments

     109,894        210,460   

Purchases of property and equipment

     (47,886     (43,156

Earnout payments

     (8,509     (8,457

Proceeds on the sale of assets

     6,259        —     

Business acquisition, net of acquired cash

     —          (6,194

Other

     46        (5
                

Net cash used in investing activities

     (50,358     (19,921
                

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Purchase of treasury stock

     (129,879     (154,913

Issuance of common stock

     3,025        1,718   

Tax benefit associated with stock option exercises

     322        195   

Payments of assumed loans upon business acquisition

     —          (4,279

Payments of capital lease obligations

     (744     (450
                

Net cash used in financing activities

     (127,276     (157,729
                

EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS:

     2,221        (4,960
                

NET DECREASE IN CASH AND CASH EQUIVALENTS

     (60,661     (134,745

DISCONTINUED OPERATIONS CASH ACTIVITY INCLUDED ABOVE:

    

Add: Cash balance of discontinued operations, beginning of the period

     —          738   

Less: Cash balance of discontinued operations, end of the period

     —          —     

CASH AND CASH EQUIVALENTS, beginning of the period

     289,482        284,334   
                

CASH AND CASH EQUIVALENTS, end of the period

   $ 228,821      $ 150,327   
                


CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

     For the Quarters Ended June 30,  
     2011     2010 (1)  

REVENUE:

    

CTU (2)

   $ 112,061      $ 114,769   

AIU (2)

     98,031        120,037   

Health Education

     109,825        107,971   

Culinary Arts

     83,259        92,822   

Art & Design (2)

     56,676        62,301   

International

     37,466        29,979   

Corporate and Other

     (125     (140
                

Total

   $ 497,193      $ 527,739   
                

OPERATING INCOME (LOSS):

    

CTU (2)

   $ 33,973      $ 32,458   

AIU (2)

     26,337        40,004   

Health Education

     3,381        11,606   

Culinary Arts

     13,174        12,395   

Art & Design (2)

     7,675        7,001   

International

     5,407        2,997   

Corporate and Other

     (7,267     (9,709
                

Total

   $ 82,680      $ 96,752   
                

OPERATING MARGIN:

    

CTU

     30.3%        28.3%   

AIU

     26.9%        33.3%   

Health Education

     3.1%        10.7%   

Culinary Arts

     15.8%        13.4%   

Art & Design

     13.5%        11.2%   

International

     14.4%        10.0%   
                

Total

     16.6%        18.3%   
                

 

(1) In December 2010, the Transitional Schools segment ceased to exist as the Company completed the teach out of its last remaining Transitional School, AIU-Los Angeles, CA, whose results for all periods presented are now reflected as a component of discontinued operations.

 

(2) Prior period financial results have been reclassified to report CTU, AIU and Art & Design as individual segments due to a change in organizational structure in January, 2011. Previously, these results were reported on a combined basis as the University segment.


CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

 

     For the Years to Date Ended June 30,  
     2011     2010 (1)  

REVENUE:

    

CTU (2)

   $ 230,126      $ 225,768   

AIU (2)

     202,305        236,815   

Health Education

     226,134        211,835   

Culinary Arts

     175,032        185,576   

Art & Design (2)

     121,276        125,188   

International

     85,942        72,317   

Corporate and Other

     (261     (334
                

Total

   $ 1,040,554      $ 1,057,165   
                

OPERATING INCOME (LOSS):

    

CTU (2)

   $ 70,261      $ 61,864   

AIU (2)

     53,954        72,802   

Health Education

     15,011        22,614   

Culinary Arts (4)

     26,941        20,600   

Art & Design (2)

     18,070        13,505   

International

     19,522        16,429   

Corporate and Other (3)

     (7,844     (21,616
                

Total

   $ 195,915      $ 186,198   
                

OPERATING MARGIN:

    

CTU

     30.5%        27.4%   

AIU

     26.7%        30.7%   

Health Education

     6.6%        10.7%   

Culinary Arts

     15.4%        11.1%   

Art & Design

     14.9%        10.8%   

International

     22.7%        22.7%   
                

Total

     18.8%        17.6%   
                

 

(1) In December 2010, the Transitional Schools segment ceased to exist as the Company completed the teach out of its last remaining Transitional School, AIU-Los Angeles, CA, whose results for all periods presented are now reflected as a component of discontinued operations.

 

(2) Prior period financial results have been reclassified to report CTU, AIU and Art & Design as individual segments due to a change in organizational structure in January, 2011. Previously, these results were reported on a combined basis as the University segment.

 

(3) Year to date 2011 included a $7.0 million insurance recovery related to previously settled legal matters. Year to date 2010 included a $2.4 million lease termination charge incurred in connection with the Company’s move to its new campus support center and a $4.1 million charge for an increase in the allowance for doubtful accounts related to the Company’s previously terminated recourse loan program.

 

(4) Year to date 2010 included a $3.2 million charge for additional bad debt expense for increases in reserve rates applied to outstanding student receivable balances attributed to the Company’s student extended payment plans.