Corinthian Colleges Inc. (COCO, Financial) filed Quarterly Report for the period ended 2010-09-30.
Corinthian Colleges Inc. has a market cap of $428.3 million; its shares were traded at around $4.89 with a P/E ratio of 2.9 and P/S ratio of 0.2. Corinthian Colleges Inc. had an annual average earning growth of 7.3% over the past 10 years. GuruFocus rated Corinthian Colleges Inc. the business predictability rank of 2.5-star.COCO is in the portfolios of RS Investment Management, Andreas Halvorsen of Viking Global Investors LP, Chuck Royce of Royce& Associates, Paul Tudor Jones of The Tudor Group, Bruce Kovner of Caxton Associates, Mario Gabelli of GAMCO Investors, Steven Cohen of SAC Capital Advisors.
Educational Services. Educational services expenses include direct operating expenses of the schools consisting primarily of payroll and payroll related expenses, rents, occupancy costs, supply expenses, bad debt expense and other educational related expenses. Educational services expenses increased $70.8 million, or 32.9%, from $215.0 million in the first quarter of fiscal 2010 to $285.8 million in the first quarter of fiscal 2011. As a percentage of net revenues, educational services expenses increased from 55.3% of revenues in the first quarter of fiscal 2010 to 56.9% of revenues in the first quarter of fiscal 2011. The increase was primarily due to an increase in compensation expense and facility costs, partially offset by a decrease in bad debt expense as a percentage of revenue. The increase in compensation expense and facility costs is primarily due to an increase in placement and default management personnel and the opening of new campuses, respectively. Bad debt expense increased to $27.1 million or 5.4% of net revenues for the first quarter of fiscal 2011 compared to $25.0 million or 6.4% of net revenues for the first quarter of fiscal 2010. The improvement in bad debt expense was primarily the result of continued efficiencies in packaging students with financial aid.
General and Administrative. General and administrative expenses include corporate compensation expenses, headquarters office rents and occupancy expenses, professional fees and other support related expenses. General and administrative expenses increased $16.2 million, or 41.0%, from $39.5 million in the first quarter of fiscal 2010 to $55.7 million in the first quarter of fiscal 2011. As a percentage of net revenues, general and administrative expenses increased from 10.2% of revenues in the first quarter of fiscal 2010 to 11.1% of revenues in the first quarter of fiscal 2011 primarily due to an increase in spending related to a public affairs advocacy campaign which included print and online advertising and the launch of a website. The campaigns purpose was to inform policymakers and the public about the value of private post-secondary education and the negative impacts associated with proposed regulations.
On September 30, 2009, the Company entered into a Third Amended and Restated Credit Agreement (the Credit Facility) with aggregate borrowing capacity of $280 million, of which $260 million was a domestic facility and $20 million was a Canadian facility. On February 22, 2010, the Company increased by $35 million the aggregate capacity under the Credit Facility. The aggregate borrowing capacity under the Credit Facility is now $315 million, of which $295 million is a domestic facility and $20 million is a Canadian facility. The Credit Facility expires on October 1, 2012. The Credit Facility has been established to provide available funds for acquisitions, to fund general corporate purposes, and to provide for letters of credit issuances of up to $50 million for domestic letters of credit and $15 million for Canadian letters of credit. Borrowings under the agreement bear interest at several pricing alternatives available to us, including Eurodollar and adjusted reference or base rates. The domestic base rate is defined as the higher of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the Bank of America prime rate, or (c) the one-month Eurodollar Rate plus 1.00%. The Canadian base rate is defined as the higher of (a) the average rate for 30 day Canadian Dollar bankers acceptances plus 3/4 of 1%, (b) the Bank of America Canada prime rate or (c) the one-month Eurodollar Rate plus 1.00%. The agreement contains customary affirmative and negative covenants including financial covenants requiring the maintenance of consolidated net worth, fixed charge coverage ratios, leverage ratios, and a U.S. Department of Education (ED) financial responsibility composite score ratio. As of September 30, 2010, the Company was in compliance with all of the covenants. As of September 30, 2010, the credit facility had borrowings outstanding of $159.2 million and approximately $10.8 million to support standby letters of credit. The third amended and restated credit agreement is secured by the stock of our significant operating subsidiaries and it is guaranteed by our present and future significant operating subsidiaries.
Long-term debt also includes a term loan credit facility (the Mortgage Facility) dated March 24, 2009 between the Companys wholly-owned subsidiary, Heald Real Estate, LLC (Heald Real Estate), and Bank of America, N.A. (B of A) that is secured by real estate of Heald Real Estate and guaranteed by Heald Capital, LLC and Heald Education, LLC (the Heald Guarantors). On January 4, 2010, Heald Real Estate, the Heald Guarantors and B of A entered into an amendment and waiver to the Mortgage Facility (the 1st Amendment and Waiver), pursuant to which B of A waived compliance with all covenants and defaults under the Mortgage Facility except for the requirement that Heald Real Estate continue making regularly scheduled payments under the Mortgage Facility. Also on January 4, 2010, Corinthian entered into a Continuing and Unconditional Guaranty to guarantee the obligations of Heald Real Estate under the Mortgage Facility. The parties also agreed that any defaults under Corinthians syndicated Third Amended and Restated Credit Agreement (the Credit Facility) will constitute a default under the Mortgage Facility. On March 31, 2010, Heald Real Estate, entered into an Amended and Restated Credit Agreement (the Amended Heald Credit Agreement) with B of A as administrative agent for the lenders, and each lender from time to time party thereto. Pursuant to the terms of the Amended Heald Credit Agreement, the parties amended and restated the covenants and default provisions under the Mortgage Facility to substantially parallel those provisions in the Companys Credit Facility. All other material provisions of the Mortgage Facility remained substantially unchanged. As a condition precedent to the effectiveness of the Amended Heald Credit Agreement, Bank of the West agreed to assume approximately $8 million, and Heald Real Estate prepaid approximately $7 million, of the loans outstanding under the Mortgage Facility. The total outstanding principal and interest under the Amended Heald Credit Agreement as of September 30, 2010 was approximately $15.6 million. The outstanding term loans under the Amended Heald Credit Agreement bear interest, at Heald Real Estates option, either (a) at the Base Rate (as defined in the Amended Heald Credit Agreement) or (b) at the Eurodollar Rate (as defined in the Amended Heald Credit Agreement) for the applicable interest period plus 3.00% per annum. The minimum interest rate is 4.00% per annum. The Amended Heald Credit Agreement matures on March 24, 2012. The Amended Heald Credit Agreement has a related fixed interest rate swap agreement with B of A that is guaranteed by the Heald Guarantors and secured by the same collateral that secures the Amended Heald Credit Agreement. The fair value of the fixed interest rate swap is not material at September 30, 2010.
Cash flows used in investing activities amounted to $33.9 million in the first three months of fiscal 2011 compared to cash flows used in investing activities of $14.3 million in the same period of fiscal 2010. The increase in cash used in investing activities in the first three months of fiscal 2011 compared to the same period last year was due to higher capital spending. Capital expenditures of $33.9 million during the first three months of fiscal 2011, compared to capital expenditures of $14.3 million in the same period of fiscal 2010, were incurred primarily for new campuses, relocations, remodels and enlargements of existing campuses and to fund information systems expenditures. We expect capital expenditures to be approximately $100 million for fiscal 2011.
Read the The complete Report
Corinthian Colleges Inc. has a market cap of $428.3 million; its shares were traded at around $4.89 with a P/E ratio of 2.9 and P/S ratio of 0.2. Corinthian Colleges Inc. had an annual average earning growth of 7.3% over the past 10 years. GuruFocus rated Corinthian Colleges Inc. the business predictability rank of 2.5-star.COCO is in the portfolios of RS Investment Management, Andreas Halvorsen of Viking Global Investors LP, Chuck Royce of Royce& Associates, Paul Tudor Jones of The Tudor Group, Bruce Kovner of Caxton Associates, Mario Gabelli of GAMCO Investors, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Net Revenues. Net revenues increased $113.2 million, or 29.1%, from $388.5 million in the first quarter of fiscal 2010 to $501.7 million in the first quarter of fiscal 2011. The increase was due to an approximate 27.9% increase in average student population and a 0.8% increase in average revenue per student during the period. At September 30, 2010, student population was 113,818 compared with 93,493 at September 30, 2009, an increase of 21.7%. Total student starts increased 11.8% to 41,075 for the first quarter of fiscal 2011 when compared to the first quarter of last year. The revenue related to Heald for the three months ending September 30, 2010 was $74.1 million and the student population of Heald was 17,427 as of September 30, 2010.Educational Services. Educational services expenses include direct operating expenses of the schools consisting primarily of payroll and payroll related expenses, rents, occupancy costs, supply expenses, bad debt expense and other educational related expenses. Educational services expenses increased $70.8 million, or 32.9%, from $215.0 million in the first quarter of fiscal 2010 to $285.8 million in the first quarter of fiscal 2011. As a percentage of net revenues, educational services expenses increased from 55.3% of revenues in the first quarter of fiscal 2010 to 56.9% of revenues in the first quarter of fiscal 2011. The increase was primarily due to an increase in compensation expense and facility costs, partially offset by a decrease in bad debt expense as a percentage of revenue. The increase in compensation expense and facility costs is primarily due to an increase in placement and default management personnel and the opening of new campuses, respectively. Bad debt expense increased to $27.1 million or 5.4% of net revenues for the first quarter of fiscal 2011 compared to $25.0 million or 6.4% of net revenues for the first quarter of fiscal 2010. The improvement in bad debt expense was primarily the result of continued efficiencies in packaging students with financial aid.
General and Administrative. General and administrative expenses include corporate compensation expenses, headquarters office rents and occupancy expenses, professional fees and other support related expenses. General and administrative expenses increased $16.2 million, or 41.0%, from $39.5 million in the first quarter of fiscal 2010 to $55.7 million in the first quarter of fiscal 2011. As a percentage of net revenues, general and administrative expenses increased from 10.2% of revenues in the first quarter of fiscal 2010 to 11.1% of revenues in the first quarter of fiscal 2011 primarily due to an increase in spending related to a public affairs advocacy campaign which included print and online advertising and the launch of a website. The campaigns purpose was to inform policymakers and the public about the value of private post-secondary education and the negative impacts associated with proposed regulations.
On September 30, 2009, the Company entered into a Third Amended and Restated Credit Agreement (the Credit Facility) with aggregate borrowing capacity of $280 million, of which $260 million was a domestic facility and $20 million was a Canadian facility. On February 22, 2010, the Company increased by $35 million the aggregate capacity under the Credit Facility. The aggregate borrowing capacity under the Credit Facility is now $315 million, of which $295 million is a domestic facility and $20 million is a Canadian facility. The Credit Facility expires on October 1, 2012. The Credit Facility has been established to provide available funds for acquisitions, to fund general corporate purposes, and to provide for letters of credit issuances of up to $50 million for domestic letters of credit and $15 million for Canadian letters of credit. Borrowings under the agreement bear interest at several pricing alternatives available to us, including Eurodollar and adjusted reference or base rates. The domestic base rate is defined as the higher of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the Bank of America prime rate, or (c) the one-month Eurodollar Rate plus 1.00%. The Canadian base rate is defined as the higher of (a) the average rate for 30 day Canadian Dollar bankers acceptances plus 3/4 of 1%, (b) the Bank of America Canada prime rate or (c) the one-month Eurodollar Rate plus 1.00%. The agreement contains customary affirmative and negative covenants including financial covenants requiring the maintenance of consolidated net worth, fixed charge coverage ratios, leverage ratios, and a U.S. Department of Education (ED) financial responsibility composite score ratio. As of September 30, 2010, the Company was in compliance with all of the covenants. As of September 30, 2010, the credit facility had borrowings outstanding of $159.2 million and approximately $10.8 million to support standby letters of credit. The third amended and restated credit agreement is secured by the stock of our significant operating subsidiaries and it is guaranteed by our present and future significant operating subsidiaries.
Long-term debt also includes a term loan credit facility (the Mortgage Facility) dated March 24, 2009 between the Companys wholly-owned subsidiary, Heald Real Estate, LLC (Heald Real Estate), and Bank of America, N.A. (B of A) that is secured by real estate of Heald Real Estate and guaranteed by Heald Capital, LLC and Heald Education, LLC (the Heald Guarantors). On January 4, 2010, Heald Real Estate, the Heald Guarantors and B of A entered into an amendment and waiver to the Mortgage Facility (the 1st Amendment and Waiver), pursuant to which B of A waived compliance with all covenants and defaults under the Mortgage Facility except for the requirement that Heald Real Estate continue making regularly scheduled payments under the Mortgage Facility. Also on January 4, 2010, Corinthian entered into a Continuing and Unconditional Guaranty to guarantee the obligations of Heald Real Estate under the Mortgage Facility. The parties also agreed that any defaults under Corinthians syndicated Third Amended and Restated Credit Agreement (the Credit Facility) will constitute a default under the Mortgage Facility. On March 31, 2010, Heald Real Estate, entered into an Amended and Restated Credit Agreement (the Amended Heald Credit Agreement) with B of A as administrative agent for the lenders, and each lender from time to time party thereto. Pursuant to the terms of the Amended Heald Credit Agreement, the parties amended and restated the covenants and default provisions under the Mortgage Facility to substantially parallel those provisions in the Companys Credit Facility. All other material provisions of the Mortgage Facility remained substantially unchanged. As a condition precedent to the effectiveness of the Amended Heald Credit Agreement, Bank of the West agreed to assume approximately $8 million, and Heald Real Estate prepaid approximately $7 million, of the loans outstanding under the Mortgage Facility. The total outstanding principal and interest under the Amended Heald Credit Agreement as of September 30, 2010 was approximately $15.6 million. The outstanding term loans under the Amended Heald Credit Agreement bear interest, at Heald Real Estates option, either (a) at the Base Rate (as defined in the Amended Heald Credit Agreement) or (b) at the Eurodollar Rate (as defined in the Amended Heald Credit Agreement) for the applicable interest period plus 3.00% per annum. The minimum interest rate is 4.00% per annum. The Amended Heald Credit Agreement matures on March 24, 2012. The Amended Heald Credit Agreement has a related fixed interest rate swap agreement with B of A that is guaranteed by the Heald Guarantors and secured by the same collateral that secures the Amended Heald Credit Agreement. The fair value of the fixed interest rate swap is not material at September 30, 2010.
Cash flows used in investing activities amounted to $33.9 million in the first three months of fiscal 2011 compared to cash flows used in investing activities of $14.3 million in the same period of fiscal 2010. The increase in cash used in investing activities in the first three months of fiscal 2011 compared to the same period last year was due to higher capital spending. Capital expenditures of $33.9 million during the first three months of fiscal 2011, compared to capital expenditures of $14.3 million in the same period of fiscal 2010, were incurred primarily for new campuses, relocations, remodels and enlargements of existing campuses and to fund information systems expenditures. We expect capital expenditures to be approximately $100 million for fiscal 2011.
Read the The complete Report
