SANTA ANA, Calif., April 28 /PRNewswire-FirstCall/ -- Corinthian
Colleges, Inc. (NASDAQ:COCO) reported financial results today for
the third quarter ended March 31, 2006. The results met the
Company's previously issued guidance for revenue and earnings per
share. "Our operating margin has steadily improved since the
beginning the fiscal year," said Jack D. Massimino, Corinthian's
chief executive officer. "In the third quarter, our sequential
margin improvement was primarily the result of more effective
management of variable expenses such as marketing and bad debt. As
anticipated, new student starts declined in the quarter compared to
the same period last year, the result of low conversion rates in
some of our lead source channels, the teach-out of our New Orleans
campus due to hurricane damage, and the proactive steps we took to
slow enrollment at three Georgia Medical Institute schools
currently under accreditation scrutiny." "Revitalizing enrollment
growth continues to be our main focus," said Massimino. "We believe
there are substantial growth opportunities in our core business
which can be captured through improved execution. We are working to
reduce turnover and build the capabilities of our managers and
other employees, standardize processes, consolidate information
systems, and create more competitive marketing programs. We expect
these and other initiatives to improve growth and performance over
time." Comparing the third quarter of fiscal 2006 with the same
quarter of the prior year (All data presented includes the
previously announced change in revenue recognition policy): * Net
revenue was $250.3 million versus $252.8 million. The previously
announced divestiture of Corporate Education Services (CES) reduced
revenue by approximately $7.1 million in Q3 06. Excluding CES,
revenue increased by approximately $4.6 million or 1.9%, in Q3 06
versus Q3 05. * Total student population was 69,403 versus 72,383.
* Total student starts were 24,647 versus 25,985. * Operating
income was $19.8 million compared with operating income of $36.2
million. * Net income was $14.7 million compared with $21.6
million. * Diluted earnings per share were $0.17 versus $0.23. Q3
06 includes stock-based compensation expense of $0.02 per share,
reflecting our adoption of FAS 123R. Comparing the first nine
months of fiscal 2006 with the same period of the prior year: *
Total revenue increased to $731.0 million from $724.2 million. *
Operating income was $49.1 million compared with $94.5 million. *
Net income was $32.8 million versus $56.7 million. * Diluted
earnings per share were $0.36 versus $0.61. Financial Review As
reported on August 22, 2005, we have changed our revenue
recognition method for certain diploma programs. This change
required a restatement of revenue for fiscal years 2001 through the
first three quarters of fiscal 2005. Our fiscal 2005 Form 10-K
contains the restated financial statements for the applicable time
periods. The percent-of-revenue data presented below includes the
effect of the change in revenue recognition policy for all periods
presented. Educational services expenses were 54.9% of revenue in
Q3 06 versus 53.1% in Q3 05. The increase was mainly the result of
higher compensation and increased facility costs, partially offset
by lower bad debt expense. Bad debt expense was 4.0% of revenue in
Q3 06 versus 4.8% in Q3 05. The decrease is the result of increased
collections. Marketing and admissions expenses were 26.3% of
revenue in Q3 06 versus 24.2% in Q3 05. The increase is the result
of higher advertising, admission representative compensation, and
lead processing technology costs. General and administrative
(G&A) expenses were 10.1% of revenue in Q3 06 versus 8.4% in Q3
05. The increase is the result of higher compensation expenses and
outside professional services fees. Statement of Financial
Accounting Standards No. 123R expense -- We adopted FAS 123R at the
beginning of fiscal 2006, resulting in stock-based compensation
expense of 0.8% of revenue in Q3 06. Operating margin -- As a
result of the factors outlined above, our operating margin was 7.9%
in Q3 06 versus 14.3% in Q3 05. Cash, restricted cash and
marketable securities totaled $97.6 million at March 31, 2006,
compared with $99.2 million at June 30, 2005. During this
nine-month period we used $70 million to repurchase approximately
5.7 million shares of our common stock. Cash flow from operations
was $107.6 million in the first nine months of fiscal 2006 versus
$103.2 million for the same period of fiscal 2005. Capital
expenditures were $35.5 million in the first nine months of fiscal
2006 compared with $60.9 million in the same period of fiscal 2005.
Guidance We expect earnings for the fiscal 2006 fourth quarter
ending June 30, 2006, to be approximately $0.13 - $0.15 per diluted
share, including approximately $0.01 for stock-based compensation
expense. The Company will provide more detailed guidance during its
conference call today (details below). Conference Call Today We
will host a conference call at 12:00 p.m. Eastern Time (9:00 a.m.
Pacific Time) today, for the purpose of discussing third quarter
results. The call will be open to all interested investors through
a live audio web cast at http://www.cci.edu/ (Investor
Relations/Webcasts & Presentations) and
http://www.earnings.com/. The call will be archived on
http://www.cci.edu/ after the call. A telephonic playback of the
conference call will also be available through 5:00 p.m. EDT,
Friday, May 5. To hear the replay, dial (888) 286-8010 (domestic)
or (617) 801-6888 (international) and use pass code 29773033. About
Corinthian Colleges, Inc. Corinthian Colleges, Inc. is one of the
largest post-secondary education companies in North America,
operating 97 schools in 25 states in the U.S. and 34 schools in
seven provinces in Canada. The Company's mission is to help
students prepare for careers that are in demand or advance in their
chosen career. Corinthian offers diploma programs and associate's,
bachelor's, and master's degrees in a variety of fields, including
healthcare, business, criminal justice, transportation maintenance,
trades and technology. Certain statements in this press release may
be deemed to be forward-looking statements under the Private
Securities Litigation Reform Act of 1995. The Company intends that
all such statements be subject to the "safe-harbor" provisions of
that Act. Such statements include, but are not limited to, the
company's statements regarding its expectation that it will be able
to improve growth and operating performance over time; and its
statements under the heading "Guidance" above. Many important
factors may cause the Company's actual results to differ materially
from those discussed in any such forward-looking statements,
including increased competition, potential higher average costs to
offer new curricula, the company's effectiveness in its regulatory
compliance efforts, variability in the expense and effectiveness of
the company's advertising and promotional efforts, and the other
risks and uncertainties described in the Company's filings with the
U.S. Securities and Exchange Commission. The historical results
achieved by the Company are not necessarily indicative of its
future prospects. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Contacts:
Investors: Anna Marie Dunlap SVP Investor & Corporate
Communications Corinthian Colleges, Inc. 714-424-2678 Media: Robert
Jaffe Pondel Wilkinson, Inc. 310-279-5969 Corinthian Colleges, Inc.
(In thousands, except per share data) Consolidated Statements of
Operations For the three months For the nine months ended March 31,
ended March 31, 2006 2005 2006 2005 Restated Restated Net revenues
$250,253 $252,848 $731,014 $724,239 Operating expenses: Educational
services 137,328 134,256 409,843 390,992 General and administrative
25,253 21,148 71,021 63,845 Marketing and admissions 65,940 61,082
195,231 174,608 Stock based compensation 1,946 162 5,861 307 Total
operating expenses 230,467 216,648 681,956 629,752 Income from
operations 19,786 36,200 49,058 94,487 Interest (income) (1,402)
(1,127) (4,014) (2,321) Interest expense 739 1,280 2,517 3,192
Other (income) expense (1,451) 274 (1,298) (58) Income (loss)
before provision for income taxes 21,900 35,773 51,853 93,674
Provision (benefit) for income taxes 7,241 14,130 19,093 37,002 Net
income $14,659 $21,643 $32,760 $56,672 Income per common share:
Basic $0.17 $0.24 $0.37 $0.63 Diluted $0.17 $0.23 $0.36 $0.61
Weighted average number of common shares outstanding: Basic 86,330
90,860 89,435 90,569 Diluted 87,790 93,131 90,899 92,668 Selected
Consolidated Balance Sheet Data (unaudited) March 31, June 30, 2006
2005 Cash, restricted cash, and marketable securities $97,649
$99,238 Receivables, net (including long term notes receivable)
51,817 58,324 Current assets 203,101 229,965 Total assets 646,057
674,572 Current liabilities 156,398 139,707 Long-term debt and
capital leases (including current portion) 45,770 66,791 Total
liabilities 262,364 263,747 Total stockholders' equity 383,693
410,825 DATASOURCE: Corinthian Colleges, Inc. CONTACT: Investors,
Anna Marie Dunlap, SVP Investor & Corporate Communications of
Corinthian Colleges, Inc., +1-714-424-2678; or Media, Robert Jaffe
of Pondel Wilkinson, Inc., +1-310-279-5969, for Corinthian
Colleges, Inc. Web site: http://www.cci.edu/
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