Corinthian Colleges Inc. (COCO, Financial) filed Quarterly Report for the period ended 2010-03-31.
Corinthian Colleges Inc. has a market cap of $1.4 billion; its shares were traded at around $16.01 with a P/E ratio of 11.4 and P/S ratio of 1.1. Corinthian Colleges Inc. had an annual average earning growth of 6.5% over the past 10 years.COCO is in the portfolios of RS Investment Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Paul Tudor Jones of The Tudor Group, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC.
Discontinued Operations. During the fourth quarter of 2008, the Company decided to divest the WyoTech Oakland campus. During the fourth quarter of fiscal 2009, the Company sold the capital assets of WyoTech Oakland for $0.2 million. Additionally, during the fourth quarter of 2008, the Company completed the teach-out of its Lynnwood WA, Everett WA, and Atlanta GA campuses. Accordingly, the results of operations of these campuses are reflected as discontinued operations in the Companys consolidated statements of income for all prior periods presented. The net assets held for sale are required to be recorded on the balance sheet at estimated fair value, less costs to sell. Accordingly, during the fourth quarter of 2008, the Company recorded a charge of approximately $2.6 million, net of income tax benefit of $1.2 million, to accrue future rental payments related to the closed campuses and to reduce the carrying value of the net assets of the Companys campuses held for sale and closed to estimated fair value, less costs to sell, as of June 30, 2008 (primarily related to the accrued rent of $2.8 million and the impairment of fixed assets in the amount of $1.0 million). The charge is reflected as a component of loss from discontinued operations on the Companys Consolidated Statements of Operations for the year ended June 30, 2008. The Company expects to have no significant continuing involvement with these entities.
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 $65.1 million, or 33.5%, from $194.2 million in the third quarter of fiscal 2009 to $259.3 million in the third quarter of fiscal 2010. As a percentage of net revenues, educational services expenses decreased from 56.1% of revenues in the third quarter of fiscal 2009 to 54.2% of revenues in the third quarter of fiscal 2010. The decrease was primarily due to a reduction in facility costs and bad debt expense as a percentage of revenue, partially offset by an increase in compensation expense. The reduction in facility costs as a percentage of revenue is primarily due to the amount being fixed in nature. Bad debt expense decreased to $20.6 million or 4.3% of net revenues for the third quarter of fiscal 2010 compared to $28.0 million or 8.1% of net revenues for the third quarter of fiscal 2009. The improvement in bad debt expense was primarily the result of higher student retention and continued efficiencies in packaging students with financial aid.
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 $140.3 million, or 25.2%, $555.9 million in the first nine months of fiscal 2009 to $696.2 million in the first nine months of fiscal 2010. As a percentage of net revenues, educational services expenses decreased from 58.2% of revenues in the first nine months of fiscal 2009 to 54.3% of revenues in the first nine months of fiscal 2010. The decrease was primarily due to a reduction in facility costs and bad debt expense as a percentage of revenue. The reduction in facility costs as a percentage of revenue is primarily due to the amount being fixed in nature. Bad debt expense decreased to $69.8 million or 5.5 % of net revenues for the first nine months of fiscal 2010 compared to $81.6 million or 8.5% of net revenues for the first nine months of fiscal 2009. The improvement in bad debt expense was primarily the result of higher student retention and continued efficiencies in packaging students with financial aid.
On September 30, 2009, we 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, we 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 March 31, 2010, we were in compliance with all of the covenants. As of March 31, 2010, the credit facility had borrowings outstanding of $120.0 million and approximately $27.4 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.
Cash flows used in investing activities amounted to $399.5 million in the first nine months of fiscal 2010 compared to cash flows used in investing activities of $33.5 million in the same period of fiscal 2009. The increase in cash used in investing activities in the first nine months of fiscal 2010 compared to the same period last year was due primarily to the acquisition of Heald. Capital expenditures of $52.2 million during the first nine months of fiscal 2010, compared to capital expenditures of $34.3 million in the same period of fiscal 2009, were incurred primarily for relocations, remodels and enlargements of existing campuses and to fund information systems expenditures. We expect capital expenditures to be approximately $95 to $105 million for fiscal 2010.
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Corinthian Colleges Inc. has a market cap of $1.4 billion; its shares were traded at around $16.01 with a P/E ratio of 11.4 and P/S ratio of 1.1. Corinthian Colleges Inc. had an annual average earning growth of 6.5% over the past 10 years.COCO is in the portfolios of RS Investment Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Paul Tudor Jones of The Tudor Group, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC.
Highlight of Business Operations:
Allowance for Doubtful Accounts. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability, failure or refusal of our students to make required payments. We determine the adequacy of this allowance by regularly reviewing the accounts receivable aging and applying various expected loss percentages to certain student accounts receivable categories based upon historical bad debt experience. We generally write off accounts receivable balances deemed uncollectible as they are sent to collection agencies. We offer a variety of payment plans to help students pay that portion of their education expense not covered by financial aid programs. These balances are unsecured and not guaranteed. We believe our reserves are adequate; however, losses related to unpaid student balances could exceed the amounts we have reserved for bad debts. The effect of an increase in our accounts receivable allowance of 3% of our outstanding receivables from 29.2% to 32.2% or $29.5 million to $32.5 million would result in a decrease in pre-tax income of $3.0 million for the period ending March 31, 2010. The effect of an increase in our student notes receivable allowance of 3% of our outstanding earned notes receivable from 36.4% to 39.4% or $37.9 million to $41.0 million would result in a decrease in pre-tax income of $3.1 million for the period ending March 31, 2010.Discontinued Operations. During the fourth quarter of 2008, the Company decided to divest the WyoTech Oakland campus. During the fourth quarter of fiscal 2009, the Company sold the capital assets of WyoTech Oakland for $0.2 million. Additionally, during the fourth quarter of 2008, the Company completed the teach-out of its Lynnwood WA, Everett WA, and Atlanta GA campuses. Accordingly, the results of operations of these campuses are reflected as discontinued operations in the Companys consolidated statements of income for all prior periods presented. The net assets held for sale are required to be recorded on the balance sheet at estimated fair value, less costs to sell. Accordingly, during the fourth quarter of 2008, the Company recorded a charge of approximately $2.6 million, net of income tax benefit of $1.2 million, to accrue future rental payments related to the closed campuses and to reduce the carrying value of the net assets of the Companys campuses held for sale and closed to estimated fair value, less costs to sell, as of June 30, 2008 (primarily related to the accrued rent of $2.8 million and the impairment of fixed assets in the amount of $1.0 million). The charge is reflected as a component of loss from discontinued operations on the Companys Consolidated Statements of Operations for the year ended June 30, 2008. The Company expects to have no significant continuing involvement with these entities.
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 $65.1 million, or 33.5%, from $194.2 million in the third quarter of fiscal 2009 to $259.3 million in the third quarter of fiscal 2010. As a percentage of net revenues, educational services expenses decreased from 56.1% of revenues in the third quarter of fiscal 2009 to 54.2% of revenues in the third quarter of fiscal 2010. The decrease was primarily due to a reduction in facility costs and bad debt expense as a percentage of revenue, partially offset by an increase in compensation expense. The reduction in facility costs as a percentage of revenue is primarily due to the amount being fixed in nature. Bad debt expense decreased to $20.6 million or 4.3% of net revenues for the third quarter of fiscal 2010 compared to $28.0 million or 8.1% of net revenues for the third quarter of fiscal 2009. The improvement in bad debt expense was primarily the result of higher student retention and continued efficiencies in packaging students with financial aid.
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 $140.3 million, or 25.2%, $555.9 million in the first nine months of fiscal 2009 to $696.2 million in the first nine months of fiscal 2010. As a percentage of net revenues, educational services expenses decreased from 58.2% of revenues in the first nine months of fiscal 2009 to 54.3% of revenues in the first nine months of fiscal 2010. The decrease was primarily due to a reduction in facility costs and bad debt expense as a percentage of revenue. The reduction in facility costs as a percentage of revenue is primarily due to the amount being fixed in nature. Bad debt expense decreased to $69.8 million or 5.5 % of net revenues for the first nine months of fiscal 2010 compared to $81.6 million or 8.5% of net revenues for the first nine months of fiscal 2009. The improvement in bad debt expense was primarily the result of higher student retention and continued efficiencies in packaging students with financial aid.
On September 30, 2009, we 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, we 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 March 31, 2010, we were in compliance with all of the covenants. As of March 31, 2010, the credit facility had borrowings outstanding of $120.0 million and approximately $27.4 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.
Cash flows used in investing activities amounted to $399.5 million in the first nine months of fiscal 2010 compared to cash flows used in investing activities of $33.5 million in the same period of fiscal 2009. The increase in cash used in investing activities in the first nine months of fiscal 2010 compared to the same period last year was due primarily to the acquisition of Heald. Capital expenditures of $52.2 million during the first nine months of fiscal 2010, compared to capital expenditures of $34.3 million in the same period of fiscal 2009, were incurred primarily for relocations, remodels and enlargements of existing campuses and to fund information systems expenditures. We expect capital expenditures to be approximately $95 to $105 million for fiscal 2010.
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