EX-99.1 2 d685336dex991.htm EX-99.1

Exhibit 99.1

CAREER EDUCATION CORPORATION REPORTS

RESULTS FOR FOURTH QUARTER AND FULL YEAR 2013

Schaumburg, Ill. (February 27, 2014) – Career Education Corporation (NASDAQ: CECO) today reported operating and financial results for the fourth quarter of 2013, posting its fourth consecutive quarter of sequential improvement in the decline of new enrollments and total enrollment across its family of ongoing schools.

Non-financial metrics indicating positive trends for the fourth quarter of 2013 as compared to fourth quarter of 2012, excluding Transitional Schools, include:

| • |  | New student enrollment growth for CTU (4%), Health Education (21%) and Design & Technology (12%),

| • |  | a 49% improvement in the rate at which we convert a prospective student to a new student enrollment, cumulatively reflecting improvement across all segments,

| • |  | higher student applications across all segments with a 38% overall improvement,

| • |  | slight improvement in retention rates, and

| • |  | a 2.1% decline in new student acquisition costs.

“We continue to make solid operational progress in the turnaround of the Company,” said President and CEO Scott W. Steffey. “We had new student enrollment growth in the last part of the fourth quarter at CTU, Design & Technology, and Health Education and the early results in 2014 are encouraging, which I will speak to in more detail on the earnings call. Furthermore, we expect Culinary Arts’ total enrollments to improve as we mark the one year anniversary, in April, of the re-introduction of the associates program.”

The Company disclosed that operating expenses dropped by $59.0 million in the fourth quarter and by more than $200.0 million for the full year (excluding significant items disclosed in the non-GAAP reconciliation referred to below). Net cash used in operating activities dropped to $8.0 million in the fourth quarter versus $10.9 million in the third quarter and $52.8 million in the second quarter.

“We significantly reduced operating expenses, completed the sale of our International operations and continued winding down campuses in our Transitional Schools segment during 2013,” said Steffey. “There is still more room for operating expense reduction in 2014, without negatively impacting our improving results, over and above the Transitional School closures.”

Career Education reported total revenue of $247.1 million, and net loss of $30.6 million, or -$0.46 per diluted share, for the fourth quarter of 2013 compared to total revenue of $303.3 million and net loss of $61.5 million, or -$0.93 per diluted share, for the fourth quarter of 2012. For the full year 2013, total revenue of $1.06 billion, and net loss of $164.3 million, or -$2.46 per diluted share decreased from total revenue of $1.34 billion and net loss of $142.8 million, or -$2.15 per diluted share, for the full year 2012.

The Company believes it is useful to present non-GAAP financial measures, which exclude certain significant items, as a means to understand the performance of its core business. On a non-GAAP basis, the loss per diluted share from continuing operations was -$0.29 for the fourth quarter of 2013 as compared to a loss per diluted share of -$0.54 for the fourth quarter of 2012. For the year ended December 31, 2013, on a non-GAAP basis, the loss per diluted share from continuing operations was -$1.41 as compared to a loss per diluted share of -$0.67 for the year ended December 31, 2012. (See tables below and the GAAP to non-GAAP reconciliation attached to this press release for further details.)

CEC ANNOUNCES 4Q13 RESULTS …PG 2

CONSOLIDATED RESULTS

Quarter Ended December 31, 2013

| • |  | Total revenue was $247.1 million for the fourth quarter of 2013, an 18.5 percent decrease from $303.3 million for the fourth quarter of 2012.

| • |  | Operating losses of $59.0 million and $91.5 million were reported for the fourth quarters of 2013 and 2012, respectively. The operating margin was -23.9 percent for the fourth quarter of 2013 versus -30.2 percent for the fourth quarter of 2012.

| • |  | The loss from continuing operations for the quarter ended December 31, 2013 was $107.9 million, or -$1.61 per diluted share, compared to the loss from continuing operations of $70.9 million, or -$1.07 per diluted share, for the quarter ended December 31, 2012.

| • |  | On December 3, 2013, the Company completed the sale and transfer of control of its International Segment, which consisted of its INSEEC schools and the International University of Monaco located in France and Monaco, respectively. Fourth quarter and full year 2013 results include a $130.1 million pretax gain on sale reported within discontinued operations. This sale reflects the Company’s strategy to redeploy assets to rebuild its domestic educational institutions and improve its options for accelerating growth.

| • |  | The operating results for the quarters ended December 31, 2013 and 2012 include the following significant items:

|  | Significant Items (In Millions) |  |  | Loss per Diluted Share Impact |
Quarter Ended December 31, 2013 |  |  |  |  |
Legal Settlements |  | $ | 15.7 |  |  | $ | 0.15 |
Asset Impairments |  |  | 7.0 |  |  |  | 0.07 |
Severance and Related Costs |  |  | 1.8 |  |  |  | 0.02 |
Deferred Tax Valuation Allowance |  |  |  |  |  |  | 1.08 |
TOTAL |  | $ | 24.5 |  |  | $ | 1.32 |
Quarter Ended December 31, 2012 |  |  |  |  |  |  |  |
Asset Impairments |  | $ | 40.8 |  |  | $ | 0.40 |
Severance and Related Costs |  |  | 13.1 |  |  |  | 0.13 |
TOTAL |  | $ | 53.9 |  |  | $ | 0.53 |

CEC ANNOUNCES 4Q13 RESULTS …PG 3

| • |  | During the fourth quarter of 2013, the Company recorded $15.7 million in legal settlements primarily related to a $15.5 million pending legal settlement within Culinary Arts. In addition, the Company recorded $7.0 million of non-cash asset impairments primarily within Design &Technology ($4.0) related to long-lived assets for ongoing schools ($2.3) and decisions made to exit certain leased facilities ($1.7), and within Transitional Schools ($2.5). The Company also recorded $1.8 million of severance and related costs in connection with both its reduction in force and campus closure actions. During the fourth quarter of 2012, the Company recorded $40.8 million of non-cash asset impairments charges primarily within Transitional Schools ($28.3) and trade name impairment charges within Culinary Arts ($8.1) and Health Education ($3.5). The Company also recorded $13.1 million of severance and related charges related to its reduction in force and campus closure initiatives in the fourth quarter of 2012.

| • |  | During the fourth quarter of 2013, the Company recorded a $72.2 million valuation allowance against its deferred tax assets. This non-cash charge, reducing the benefit from income taxes for continuing operations, is a result of the Company’s assessment of the realizability of its deferred tax assets over a certain period of time. A primary factor in the assessment is that the Company is in a cumulative loss position over the three-year period ended December 31, 2013. This valuation allowance can be reduced or reversed in the future as the Company returns to profitability.

| • |  | Excluding the significant items in the table above, the operating loss was $34.5 million in the fourth quarter of 2013 as compared to $37.6 million in the fourth quarter of 2012. The operating margin was -14.0 percent during the fourth quarter of 2013 as compared to -12.4 percent during the fourth quarter of 2012.

Year Ended December 31, 2013

| • |  | Total revenue was $1.06 billion for the year ended December 31, 2013, compared to $1.34 billion for the year ended December 31, 2012.

| • |  | The operating loss for the year ended December 31, 2013 was $214.7 million, versus an operating loss of $197.0 million for the year ended December 31, 2012. The operating margins were -20.3 percent and -14.6 percent for the years ended December 31, 2013 and 2012, respectively.

| • |  | The loss from continuing operations for the year ended December 31, 2013, was $201.7 million, or -$3.02 per diluted share, compared to the loss from continuing operations of $149.0 million, or -$2.24 per diluted share, for the year ended December 31, 2012.

| • |  | The operating results for the years ended December 31, 2013 and 2012 include the following significant items:

|  | Significant Items (In Millions) |  |  | Loss per Diluted Share Impact |
Year Ended December 31, 2013 |
Legal Settlements |  | $ | 26.0 |  |  | $ | 0.25 |
Asset Impairments |  |  | 22.7 |  |  |  | 0.22 |
Severance and Related Costs |  |  | 6.2 |  |  |  | 0.06 |
Deferred Tax Valuation Allowance |  |  |  |  |  |  | 1.08 |
TOTAL |  | $ | 54.9 |  |  | $ | 1.61 |
Year Ended December 31, 2012 |  |  |  |  |  |  |  |
Goodwill and Asset Impairments |  | $ | 125.5 |  |  | $ | 1.62 |
Severance and Related Costs |  |  | 14.0 |  |  |  | 0.14 |
Insurance Recoveries |  |  | (19.0 | ) |  |  | (0.19 | )
TOTAL |  | $ | 120.5 |  |  | $ | 1.57 |

CEC ANNOUNCES 4Q13 RESULTS …PG 4

| • |  | During the year ended December 31, 2013, the Company recorded legal settlements of $26.0 million within Culinary Arts ($15.5), Health Education ($8.8), and Transitional Schools ($1.7). The Company also recorded $22.7 million of non-cash asset impairments primarily within Culinary Arts ($13.0), Design & Technology ($4.1) and Transitional Schools ($2.6). In addition, $6.2 million and $14.0 million in severance and related costs were recorded in 2013 and 2012, respectively, in connection with the reduction in force and campus closure initiatives which started in 2012 and continued throughout 2013. The operating results for the year ended December 31, 2012 also included $125.5 million of non-cash goodwill and asset impairment charges primarily within Health Education ($44.8), Design & Technology ($40.8), Transitional Schools ($28.4) and Culinary Arts ($8.1) and a $19.0 million insurance recovery related to the settlement of claims under certain insurance policies.

| • |  | Excluding the significant items in the table above, the operating loss was $159.8 million for the year ended December 31, 2013 and $76.5 million for the year ended December 31, 2012. The operating margin was -15.1 percent and -5.7 percent for the years ended December 31, 2013 and 2012, respectively.

CONSOLIDATED CASH FLOWS AND FINANCIAL POSITION

Cash Flows

Net cash flows used in operating activities increased to $85.8 million for the year ended December 31, 2013, compared to $16.8 million for the year ended December 31, 2012.

On December 3, 2013, the Company received proceeds of $276.5 million upon the completion of the sale of its International operations.

Capital expenditures decreased to $19.6 million during the year ended December 31, 2013, from $37.9 million for the year ended December 31, 2012, representing 1.6 percent and 2.5 percent of total revenue of continuing and discontinued operations during the years ended December 31, 2013 and 2012, respectively.

Financial Position

As of December 31, 2013 and December 31, 2012, cash and cash equivalents and short-term investments totaled $363.1 million and $274.6 million, respectively. The Company has recorded receivables for income tax refunds which include approximately $10.8 million that was originally expected to be received in 2013.

Credit Agreements

On December 30, 2013, the Company entered into a $70.0 million Amended and Restated Credit Agreement (the “Credit Agreement”) with BMO Harris Bank N.A. The revolving credit facility under the Credit Agreement is scheduled to mature on June 30, 2016 and replaced the original credit agreement entered into in December 2012, which was due to expire on January 31, 2014.

CEC ANNOUNCES 4Q13 RESULTS …PG 5

TOTAL STUDENT ENROLLMENTS AND NEW STUDENT ENROLLMENTS

Total Student Enrollments

Total student enrollments by reportable segment as of December 31, 2013 and 2012 were as follows:

|  | As of December 31, |  |  | % Change |
|  | 2013 |  |  | 2012 |  |  | 2013 vs. 2012 |
Total Student Enrollments |  |  |  |  |  |  |  |  |  |  |  |
CTU |  |  | 20,800 |  |  |  | 21,600 |  |  |  | -4% |
AIU |  |  | 11,600 |  |  |  | 14,200 |  |  |  | -18% |
Total University Schools |  |  | 32,400 |  |  |  | 35,800 |  |  |  | -9% |
Health Education |  |  | 7,000 |  |  |  | 7,400 |  |  |  | -5% |
Culinary Arts |  |  | 7,900 |  |  |  | 8,500 |  |  |  | -7% |
Design & Technology |  |  | 4,000 |  |  |  | 4,700 |  |  |  | -15% |
Total Career Schools |  |  | 18,900 |  |  |  | 20,600 |  |  |  | -8% |
Subtotal |  |  | 51,300 |  |  |  | 56,400 |  |  |  | -9% |
Transitional Schools |  |  | 2,400 |  |  |  | 7,900 |  |  |  | NM |
Total |  |  | 53,700 |  |  |  | 64,300 |  |  |  | -16% |

New Student Enrollments

New student enrollments by reportable segment for the quarters ended December 31, 2013 and 2012 were as follows:

|  | For the Quarter Ended December 31, |  |  | % Change |
|  | 2013 |  |  | 2012 |  |  | 2013 vs. 2012 |
New Student Enrollments |  |  |  |  |  |  |  |  |  |  |  |
CTU |  |  | 5,260 |  |  |  | 5,040 |  |  |  | 4% |
AIU |  |  | 2,520 |  |  |  | 3,370 |  |  |  | -25% |
Total University Schools |  |  | 7,780 |  |  |  | 8,410 |  |  |  | -7% |
Health Education |  |  | 1,200 |  |  |  | 990 |  |  |  | 21% |
Culinary Arts |  |  | 2,010 |  |  |  | 2,810 |  |  |  | -28% |
Design & Technology |  |  | 460 |  |  |  | 410 |  |  |  | 12% |
Total Career Schools |  |  | 3,670 |  |  |  | 4,210 |  |  |  | -13% |
Subtotal |  |  | 11,450 |  |  |  | 12,620 |  |  |  | -9% |
Transitional Schools (1) |  |  | 60 |  |  |  | 1,110 |  |  |  | NM |
Total |  |  | 11,510 |  |  |  | 13,730 |  |  |  | -16% |

(1) | Students who re-enter after 365 days are reported as new enrollments; campuses within the Transitional Schools segment no longer enroll new students.

CEC ANNOUNCES 4Q13 RESULTS …PG 6

CONFERENCE CALL INFORMATION

Career Education Corporation will host a conference call on Thursday, February 27, 2014 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 36549819. The slides that will be referenced during the call will be available at www.careered.com in the Investor Relations section of the website. 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 36549819.

ABOUT CAREER EDUCATION CORPORATION

The schools and universities that are part of the Career Education Corporation (“CEC”) family offer high-quality education to a diverse student population in a variety of career-oriented disciplines through online, on-ground and hybrid learning program offerings. CEC serves students from campuses throughout the United States offering doctoral, master’s, bachelor’s and associate degrees and diploma and certificate programs.

Those institutions include, among others, American InterContinental University (“AIU”); Brooks Institute; Colorado Technical University (“CTU”); Harrington College of Design; International Academy of Design & Technology (“IADT”); Le Cordon Bleu North America (“LCB”); and Sanford-Brown Institutes and Colleges (“SBI” and “SBC”, respectively). Through its schools, CEC is committed to providing high-quality education, enabling students to graduate and pursue rewarding career opportunities.

A detailed listing of individual campus locations and web links to Career Education’s schools and universities can be found at www.careered.com.

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”, “expect”, “intend”, “continue”, “project”, “trend”, “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 assumptions, risks, uncertainties and other factors that could cause our 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 or revise such factors or 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 outcomes of which could materially and adversely affect our financial condition and operations, include, but are not limited to, the following: declines in enrollment; rulemaking by the U.S. Department of Education and increased focus by Congress, the President and governmental agencies on for-profit education institutions; our continued compliance with and eligibility to participate in Title IV Programs under the Higher Education Act of 1965, as amended, and the regulations thereunder (including the “90-10 Rule” and financial responsibility and student loan default rate standards prescribed by the U.S. Department of Education), as well as national and regional accreditation standards and state regulatory requirements; our ability to successfully defend litigation and other claims brought against us; and changes in the overall U.S. or global economy. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and its subsequent filings with the Securities and Exchange Commission.

###

CEC ANNOUNCES 4Q13 RESULTS …PG 7

CONTACT

Investors: | Doug Craney

Vice President, Investor Relations and Business Development

(847) 585-3899

Media: | Mark Spencer

Director, Corporate Communications

(847) 585-3802

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

|  | As of December 31, (1) |
|  | 2013 |  |  | 2012 |
ASSETS |  |  |  |  |  |  |  |
CURRENT ASSETS: |  |  |  |  |  |  |  |
Cash and cash equivalents, unrestricted |  | $ | 318,943 |  |  | $ | 112,884 |
Restricted cash |  |  | 12,564 |  |  |  | 97,878 |
Short-term investments |  |  | 31,592 |  |  |  | 63,876 |
Total cash and cash equivalents and short-term investments |  |  | 363,099 |  |  |  | 274,638 |
Student receivables, net |  |  | 34,650 |  |  |  | 54,194 |
Receivables, other, net |  |  | 27,440 |  |  |  | 2,084 |
Prepaid expenses |  |  | 20,750 |  |  |  | 38,225 |
Inventories |  |  | 6,741 |  |  |  | 8,361 |
Deferred income tax assets, net |  |  | 3,606 |  |  |  | 7,088 |
Other current assets |  |  | 3,468 |  |  |  | 4,393 |
Assets of discontinued operations |  |  | 263 |  |  |  | 154,578 |
Total current assets |  |  | 460,017 |  |  |  | 543,561 |
NON-CURRENT ASSETS: |  |  |  |  |  |  |  |
Property and equipment, net |  |  | 182,396 |  |  |  | 247,788 |
Goodwill |  |  | 87,356 |  |  |  | 87,356 |
Intangible assets, net |  |  | 40,117 |  |  |  | 56,006 |
Student receivables, net |  |  | 5,208 |  |  |  | 6,823 |
Deferred income tax assets, net |  |  | 10,644 |  |  |  | 47,349 |
Other assets, net |  |  | 18,107 |  |  |  | 30,276 |
Assets of discontinued operations |  |  | 1,200 |  |  |  | 103,544 |
TOTAL ASSETS |  | $ | 805,045 |  |  | $ | 1,122,703 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |  |  |  |  |
CURRENT LIABILITIES: |  |  |  |  |  |  |  |
Short-term borrowings |  | $ | — |  |  | $ | 80,000 |
Accounts payable |  |  | 24,651 |  |  |  | 32,070 |
Accrued expenses: |  |  |  |  |  |  |  |
Payroll and related benefits |  |  | 34,172 |  |  |  | 38,772 |
Advertising and production costs |  |  | 17,599 |  |  |  | 20,963 |
Income taxes |  |  | 14,994 |  |  |  | — |
Other |  |  | 43,275 |  |  |  | 34,999 |
Deferred tuition revenue |  |  | 61,131 |  |  |  | 69,675 |
Liabilities of discontinued operations |  |  | 11,610 |  |  |  | 76,236 |
Total current liabilities |  |  | 207,432 |  |  |  | 352,715 |
NON-CURRENT LIABILITIES: |  |  |  |  |  |  |  |
Deferred rent obligations |  |  | 83,843 |  |  |  | 93,611 |
Other liabilities |  |  | 30,804 |  |  |  | 28,648 |
Liabilities of discontinued operations |  |  | 27,582 |  |  |  | 35,939 |
Total non-current liabilities |  |  | 142,229 |  |  |  | 158,198 |
STOCKHOLDERS’ EQUITY: |  |  |  |  |  |  |  |
Preferred stock |  |  | — |  |  |  | — |
Common stock |  |  | 819 |  |  |  | 816 |
Additional paid-in capital |  |  | 600,904 |  |  |  | 596,826 |
Accumulated other comprehensive loss |  |  | (503 | ) |  |  | (4,785 | )
Retained earnings |  |  | 68,658 |  |  |  | 232,921 |
Cost of shares in treasury |  |  | (214,494 | ) |  |  | (213,988 | )
Total stockholders’ equity |  |  | 455,384 |  |  |  | 611,790 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |  | $ | 805,045 |  |  | $ | 1,122,703 |

(1) | During 2013, the Company completed the sale and transfer of control of its International Segment, and also completed the teach-out of SBC Hazelwood, SBI Landover, SBC Milwaukee and IADT Schaumburg. As a result, all current and prior period results reflect these schools and campuses as components of discontinued operations.

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(In thousands, except per share amounts and percentages)

|  | For the Quarter Ended December 31, (1) |
|  | 2013 |  |  | % of Total Revenue |  |  | 2012 |  |  | % of Total Revenue |
REVENUE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tuition and registration fees |  | $ | 243,879 |  |  |  | 98.7% |  |  | $ | 297,991 |  |  |  | 98.3% |
Other |  |  | 3,215 |  |  |  | 1.3% |  |  |  | 5,285 |  |  |  | 1.7% |
Total revenue |  |  | 247,094 |  |  |  |  |  |  |  | 303,276 |  |  |  |  |
OPERATING EXPENSES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Educational services and facilities |  |  | 97,073 |  |  |  | 39.3% |  |  |  | 118,049 |  |  |  | 38.9% |
General and administrative |  |  | 185,488 |  |  |  | 75.1% |  |  |  | 216,352 |  |  |  | 71.3% |
Depreciation and amortization |  |  | 16,579 |  |  |  | 6.7% |  |  |  | 19,558 |  |  |  | 6.4% |
Goodwill and asset impairment |  |  | 6,979 |  |  |  | 2.8% |  |  |  | 40,844 |  |  |  | 13.5% |
Total operating expenses |  |  | 306,119 |  |  |  | 123.9% |  |  |  | 394,803 |  |  |  | 130.2% |
Operating loss |  |  | (59,025 | ) |  |  | -23.9% |  |  |  | (91,527 | ) |  |  | -30.2% |
OTHER INCOME: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  |  | 162 |  |  |  | 0.1% |  |  |  | 246 |  |  |  | 0.1% |
Interest expense |  |  | (227 | ) |  |  | -0.1% |  |  |  | (56 | ) |  |  | 0.0% |
Miscellaneous income (expense) |  |  | 328 |  |  |  | 0.1% |  |  |  | (163 | ) |  |  | -0.1% |
Total other income |  |  | 263 |  |  |  | 0.1% |  |  |  | 27 |  |  |  | 0.0% |
PRETAX LOSS |  |  | (58,762 | ) |  |  | -23.8% |  |  |  | (91,500 | ) |  |  | -30.2% |
Provision for (benefit from) income taxes |  |  | 49,088 |  |  |  | 19.9% |  |  |  | (20,569 | ) |  |  | -6.8% |
LOSS FROM CONTINUING OPERATIONS |  |  | (107,850 | ) |  |  | -43.6% |  |  |  | (70,931 | ) |  |  | -23.4% |
Income from discontinued operations, net of tax |  |  | 77,244 |  |  |  | 31.3% |  |  |  | 9,439 |  |  |  | 3.1% |
NET LOSS |  |  | (30,606 | ) |  |  | -12.4% |  |  |  | (61,492 | ) |  |  | -20.3% |
OTHER COMPREHENSIVE (LOSS) INCOME, net of tax: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments |  |  | (3,247 | ) |  |  |  |  |  |  | 4,056 |  |  |  |  |
Unrealized (losses) gains on investments |  |  | (54 | ) |  |  |  |  |  |  | 174 |  |  |  |  |
Total other comprehensive (loss) income |  |  | (3,301 | ) |  |  |  |  |  |  | 4,230 |  |  |  |  |
COMPREHENSIVE LOSS |  | $ | (33,907 | ) |  |  |  |  |  | $ | (57,262 | ) |  |  |  |
NET LOSS PER SHARE - DILUTED: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss from continuing operations |  | $ | (1.61 | ) |  |  |  |  |  | $ | (1.07 | ) |  |  |  |
Income from discontinued operations |  |  | 1.15 |  |  |  |  |  |  |  | 0.14 |  |  |  |  |
Net loss per share |  | $ | (0.46 | ) |  |  |  |  |  | $ | (0.93 | ) |  |  |  |
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING |  |  | 66,916 |  |  |  |  |  |  |  | 66,199 |  |  |  |  |

(1) | During 2013, the Company completed the sale and transfer of control of its International Segment, and also completed the teach-out of SBC Hazelwood, SBI Landover, SBC Milwaukee and IADT Schaumburg. As a result, all current and prior period results reflect these schools and campuses as components of discontinued operations.

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(In thousands, except per share amounts and percentages)

|  | For the Year Ended December 31, (1) |
|  | 2013 |  |  | % of Total Revenue |  |  | 2012 |  |  | % of Total Revenue |
REVENUE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tuition and registration fees |  | $ | 1,040,987 |  |  |  | 98.5% |  |  | $ | 1,316,848 |  |  |  | 97.9% |
Other |  |  | 16,373 |  |  |  | 1.5% |  |  |  | 28,032 |  |  |  | 2.1% |
Total revenue |  |  | 1,057,360 |  |  |  |  |  |  |  | 1,344,880 |  |  |  |  |
OPERATING EXPENSES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Educational services and facilities |  |  | 406,285 |  |  |  | 38.4% |  |  |  | 489,858 |  |  |  | 36.4% |
General and administrative |  |  | 774,432 |  |  |  | 73.2% |  |  |  | 851,757 |  |  |  | 63.3% |
Depreciation and amortization |  |  | 68,640 |  |  |  | 6.5% |  |  |  | 74,737 |  |  |  | 5.6% |
Goodwill and asset impairment |  |  | 22,687 |  |  |  | 2.1% |  |  |  | 125,529 |  |  |  | 9.3% |
Total operating expenses |  |  | 1,272,044 |  |  |  | 120.3% |  |  |  | 1,541,881 |  |  |  | 114.6% |
Operating loss |  |  | (214,684 | ) |  |  | -20.3% |  |  |  | (197,001 | ) |  |  | -14.6% |
OTHER (EXPENSE) INCOME: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  |  | 1,361 |  |  |  | 0.1% |  |  |  | 1,199 |  |  |  | 0.1% |
Interest expense |  |  | (1,354 | ) |  |  | -0.1% |  |  |  | (147 | ) |  |  | 0.0% |
Loss on sale of business |  |  | (6,905 | ) |  |  | -0.7% |  |  |  | — |  |  |  | 0.0% |
Miscellaneous income (expense) |  |  | 242 |  |  |  | 0.0% |  |  |  | (156 | ) |  |  | 0.0% |
Total other (expense) income |  |  | (6,656 | ) |  |  | -0.6% |  |  |  | 896 |  |  |  | 0.1% |
PRETAX LOSS |  |  | (221,340 | ) |  |  | -20.9% |  |  |  | (196,105 | ) |  |  | -14.6% |
Benefit from income taxes |  |  | (19,672 | ) |  |  | -1.9% |  |  |  | (47,150 | ) |  |  | -3.5% |
LOSS FROM CONTINUING OPERATIONS |  |  | (201,668 | ) |  |  | -19.1% |  |  |  | (148,955 | ) |  |  | -11.1% |
Income from discontinued operations, net of tax |  |  | 37,405 |  |  |  | 3.5% |  |  |  | 6,159 |  |  |  | 0.5% |
NET LOSS |  |  | (164,263 | ) |  |  | -15.5% |  |  |  | (142,796 | ) |  |  | -10.6% |
OTHER COMPREHENSIVE INCOME, net of tax: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments |  |  | 4,295 |  |  |  |  |  |  |  | 503 |  |  |  |  |
Unrealized losses on investments |  |  | (13 | ) |  |  |  |  |  |  | (152 | ) |  |  |  |
Total other comprehensive income |  |  | 4,282 |  |  |  |  |  |  |  | 351 |  |  |  |  |
COMPREHENSIVE LOSS |  | $ | (159,981 | ) |  |  |  |  |  | $ | (142,445 | ) |  |  |  |
NET LOSS PER SHARE - DILUTED: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss from continuing operations |  | $ | (3.02 | ) |  |  |  |  |  | $ | (2.24 | ) |  |  |  |
Income from discontinued operations |  |  | 0.56 |  |  |  |  |  |  |  | 0.09 |  |  |  |  |
Net loss per share |  | $ | (2.46 | ) |  |  |  |  |  | $ | (2.15 | ) |  |  |  |
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING: |  |  | 66,738 |  |  |  |  |  |  |  | 66,475 |  |  |  |  |

(1) | During 2013, the Company completed the sale and transfer of control of its International Segment, and also completed the teach-out of SBC Hazelwood, SBI Landover, SBC Milwaukee and IADT Schaumburg. As a result, all current and prior period results reflect these schools and campuses as components of discontinued operations.

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATING (LOSS) INCOME BY QUARTER

(In thousands)

|  | For the 2013 Quarters Ended, (1) |  |  |  |
|  | March 31 |  |  | June 30 |  |  | September 30 |  |  | December 31 |  |  | Full Year |
REVENUE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tuition and registration fees |  | $ | 285,620 |  |  | $ | 264,800 |  |  | $ | 246,688 |  |  | $ | 243,879 |  |  | $ | 1,040,987 |
Other |  |  | 4,583 |  |  |  | 4,039 |  |  |  | 4,536 |  |  |  | 3,215 |  |  |  | 16,373 |
Total revenue |  |  | 290,203 |  |  |  | 268,839 |  |  |  | 251,224 |  |  |  | 247,094 |  |  |  | 1,057,360 |
OPERATING EXPENSES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Educational services and facilities |  |  | 107,950 |  |  |  | 101,697 |  |  |  | 99,565 |  |  |  | 97,073 |  |  |  | 406,285 |
General and administrative |  |  | 194,102 |  |  |  | 204,548 |  |  |  | 190,294 |  |  |  | 185,488 |  |  |  | 774,432 |
Depreciation and amortization |  |  | 17,619 |  |  |  | 17,453 |  |  |  | 16,989 |  |  |  | 16,579 |  |  |  | 68,640 |
Goodwill and asset impairment |  |  | 157 |  |  |  | 3,966 |  |  |  | 11,585 |  |  |  | 6,979 |  |  |  | 22,687 |
Total operating expenses |  |  | 319,828 |  |  |  | 327,664 |  |  |  | 318,433 |  |  |  | 306,119 |  |  |  | 1,272,044 |
OPERATING LOSS |  | $ | (29,625 | ) |  | $ | (58,825 | ) |  | $ | (67,209 | ) |  | $ | (59,025 | ) |  | $ | (214,684 | )
|  | For the 2012 Quarters Ended, (1) |  |  |  |
|  | March 31 |  |  | June 30 |  |  | September 30 |  |  | December 31 |  |  | Full Year |
REVENUE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tuition and registration fees |  | $ | 373,230 |  |  | $ | 336,941 |  |  | $ | 308,686 |  |  | $ | 297,991 |  |  | $ | 1,316,848 |
Other |  |  | 10,471 |  |  |  | 6,072 |  |  |  | 6,204 |  |  |  | 5,285 |  |  |  | 28,032 |
Total revenue |  |  | 383,701 |  |  |  | 343,013 |  |  |  | 314,890 |  |  |  | 303,276 |  |  |  | 1,344,880 |
OPERATING EXPENSES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Educational services and facilities |  |  | 128,765 |  |  |  | 126,071 |  |  |  | 116,973 |  |  |  | 118,049 |  |  |  | 489,858 |
General and administrative |  |  | 201,554 |  |  |  | 215,010 |  |  |  | 218,841 |  |  |  | 216,352 |  |  |  | 851,757 |
Depreciation and amortization |  |  | 18,348 |  |  |  | 18,193 |  |  |  | 18,638 |  |  |  | 19,558 |  |  |  | 74,737 |
Goodwill and asset impairment |  |  | 83 |  |  |  | 84,602 |  |  |  | — |  |  |  | 40,844 |  |  |  | 125,529 |
Total operating expenses |  |  | 348,750 |  |  |  | 443,876 |  |  |  | 354,452 |  |  |  | 394,803 |  |  |  | 1,541,881 |
OPERATING INCOME (LOSS) |  | $ | 34,951 |  |  | $ | (100,863 | ) |  | $ | (39,562 | ) |  | $ | (91,527 | ) |  | $ | (197,001 | )

(1) | During 2013, the Company completed the sale and transfer of control of its International Segment, and also completed the teach-out of SBC Hazelwood, SBI Landover, SBC Milwaukee and IADT Schaumburg. As a result, all current and prior period results reflect these schools and campuses as components of discontinued operations.

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

|  | For the Year Ended December 31,(1) |
|  | 2013 |  |  | 2012 |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |
Net loss |  | $ | (164,263 | ) |  | $ | (142,796 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |
Goodwill and asset impairment |  |  | 22,691 |  |  |  | 127,007 |
Loss on sale of student receivables |  |  | — |  |  |  | 720 |
Depreciation and amortization expense |  |  | 73,150 |  |  |  | 81,813 |
Bad debt expense |  |  | 28,892 |  |  |  | 40,022 |
Compensation expense related to share-based awards |  |  | 6,699 |  |  |  | 9,687 |
Gain on sale of businesses, net |  |  | (123,204 | ) |  |  | — |
Gain on bargain purchase |  |  | — |  |  |  | (669 | )
Loss on disposition of property and equipment |  |  | 118 |  |  |  | 301 |
Deferred income taxes |  |  | 58,087 |  |  |  | (42,014 | )
Changes in operating assets and liabilities |  |  |  |  |  |  |  |
Accrued expenses and deferred rent obligations |  |  | (4,885 | ) |  |  | (19,473 | )
Deferred tuition revenue |  |  | (13,907 | ) |  |  | (35,882 | )
Student receivables, net of allowance for doubtful accounts |  |  | 16,306 |  |  |  | (39,995 | )
Other operating assets and liabilities |  |  | 14,512 |  |  |  | 4,481 |
Net cash used in operating activities |  |  | (85,804 | ) |  |  | (16,798 | )
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |  |  |  |  |
Purchases of available-for-sale investments |  |  | (40,842 | ) |  |  | (147,085 | )
Sales of available-for-sale investments |  |  | 73,070 |  |  |  | 246,464 |
Purchases of property and equipment |  |  | (19,636 | ) |  |  | (37,944 | )
Proceeds on the sale of business, net of cash divested |  |  | 156,816 |  |  |  | — |
Payments of cash upon sale of asset |  |  | (2,525 | ) |  |  | — |
Business acquisitions, net of acquired cash |  |  | — |  |  |  | (1,721 | )
Other |  |  | (17 | ) |  |  | (1,359 | )
Net cash provided by investing activities |  |  | 166,866 |  |  |  | 58,355 |
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |  |  |
Purchase of treasury stock |  |  | — |  |  |  | (56,431 | )
Issuance of common stock |  |  | 998 |  |  |  | 1,599 |
Tax benefit associated with stock option exercises |  |  | 1 |  |  |  | — |
Payments of assumed loans upon business acquisition |  |  | — |  |  |  | (318 | )
Payments of contingent consideration |  |  | — |  |  |  | (5,818 | )
Borrowings from credit facility |  |  | — |  |  |  | 80,000 |
Payments on borrowings |  |  | (80,000 | ) |  |  | — |
Change in restricted cash |  |  | 85,314 |  |  |  | (97,878 | )
Payments of capital lease obligations |  |  | (210 | ) |  |  | (844 | )
Net cash provided by (used in) financing activities |  |  | 6,103 |  |  |  | (79,690 | )
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS: |  |  | (8,844 | ) |  |  | (1,837 | )
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |  |  | 78,321 |  |  |  | (39,970 | )
DISCONTINUED OPERATIONS CASH ACTIVITY INCLUDED ABOVE: |  |  |  |  |  |  |  |
Add: Cash balance of discontinued operations, beginning of the year |  |  | 127,738 |  |  |  | 109,371 |
Less: Cash balance of discontinued operations, end of the year |  |  | — |  |  |  | 127,738 |
CASH AND CASH EQUIVALENTS, beginning of the year |  |  | 112,884 |  |  |  | 171,221 |
CASH AND CASH EQUIVALENTS, end of the year |  | $ | 318,943 |  |  | $ | 112,884 |

(1) | During 2013, the Company completed the sale and transfer of control of its International Segment, and also completed the teach-out of SBC Hazelwood, SBI Landover, SBC Milwaukee and IADT Schaumburg. As a result, these schools and campuses are reported as components of discontinued operations.

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

|  | For the Quarter Ended December 31, |
|  | 2013 |  |  | 2012(1) |
REVENUE: |  |  |  |  |  |  |  |
CTU |  | $ | 87,735 |  |  | $ | 89,283 |
AIU |  |  | 49,088 |  |  |  | 65,223 |
Total University Schools |  |  | 136,823 |  |  |  | 154,506 |
Health Education |  |  | 33,185 |  |  |  | 36,046 |
Culinary Arts |  |  | 42,778 |  |  |  | 49,694 |
Design & Technology |  |  | 22,308 |  |  |  | 28,220 |
Total Career Schools |  |  | 98,271 |  |  |  | 113,960 |
Corporate and Other |  |  | — |  |  |  | 5 |
Subtotal |  |  | 235,094 |  |  |  | 268,471 |
Transitional Schools (2) |  |  | 12,000 |  |  |  | 34,805 |
Total |  | $ | 247,094 |  |  | $ | 303,276 |
OPERATING (LOSS) INCOME: |  |  |  |  |  |  |  |
CTU |  | $ | 21,752 |  |  | $ | 13,344 |
AIU |  |  | (3,793 | ) |  |  | (1,727 | )
Total University Schools |  |  | 17,959 |  |  |  | 11,617 |
Health Education(6) |  |  | (7,380 | ) |  |  | (11,104 | )
Culinary Arts(3) |  |  | (28,409 | ) |  |  | (21,863 | )
Design & Technology(4) |  |  | (9,016 | ) |  |  | (5,876 | )
Total Career Schools |  |  | (44,805 | ) |  |  | (38,843 | )
Corporate and Other |  |  | (8,621 | ) |  |  | (9,445 | )
Subtotal |  |  | (35,467 | ) |  |  | (36,671 | )
Transitional Schools (2) (5) |  |  | (23,558 | ) |  |  | (54,856 | )
Total |  | $ | (59,025 | ) |  | $ | (91,527 | )
OPERATING (LOSS) MARGIN: |  |  |  |  |  |  |  |
CTU |  |  | 24.8% |  |  |  | 14.9% |
AIU |  |  | -7.7% |  |  |  | -2.6% |
Total University Schools |  |  | 13.1% |  |  |  | 7.5% |
Health Education |  |  | -22.2% |  |  |  | -30.8% |
Culinary Arts |  |  | -66.4% |  |  |  | -44.0% |
Design & Technology |  |  | -40.4% |  |  |  | -20.8% |
Total Career Schools |  |  | -45.6% |  |  |  | -34.1% |
Corporate and Other |  |  | NM |  |  |  | NM |
Subtotal |  |  | -15.1% |  |  |  | -13.7% |
Transitional Schools |  |  | -196.3% |  |  |  | -157.6% |
Total |  |  | -23.9% |  |  |  | -30.2% |

(1) | During the fourth quarter of 2013, the Company completed the sale and transfer of control of its International Segment and announced the teach-out of additional campuses. Prior period results have been recast to report the International Segment as a component of discontinued operations and to report the schools being taught out within the Transitional Schools segment.

(2) | The Company completed the teach-out of SBC Milwaukee and IADT Schaumburg. As a result, all current and prior period results for these campuses are reflected as components of discontinued operations.

(3) | Fourth quarter 2013 expenses include $15.5 million related to a pending legal settlement. Fourth quarter 2012 expenses include a non-cash trade name impairment charge of $8.1 million.

(4) | Fourth quarter 2013 expenses include $4.0 million in non-cash asset impairment charges related to long-lived assets for ongoing schools ($2.3) and decisions made to exit certain leased facilities ($1.7).

(5) | Fourth quarter 2013 and 2012 expenses include non-cash asset impairment charges of $2.5 million and $28.3 million, respectively.

(6) | Fourth quarter 2012 includes a $3.5 million non-cash trade name impairment charge related to the Sanford-Brown and Missouri College trade names.

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

SELECTED SEGMENT INFORMATION

(In thousands, except percentages)

|  | For the Year Ended December 31, |
|  | 2013 |  |  | 2012(1) |
REVENUE: |  |  |  |  |  |  |  |
CTU |  |  | $347,255 |  |  |  | $363,935 |
AIU |  |  | 231,606 |  |  |  | 304,208 |
Total University Schools |  |  | 578,861 |  |  |  | 668,143 |
Health Education |  |  | 125,845 |  |  |  | 153,441 |
Culinary Arts |  |  | 177,549 |  |  |  | 224,842 |
Design & Technology |  |  | 96,348 |  |  |  | 124,611 |
Total Career Schools |  |  | 399,742 |  |  |  | 502,894 |
Corporate and Other |  |  | — |  |  |  | 55 |
Subtotal |  |  | 978,603 |  |  |  | 1,171,092 |
Transitional Schools (2) |  |  | 78,757 |  |  |  | 173,788 |
Total |  |  | $1,057,360 |  |  |  | $1,344,880 |
OPERATING (LOSS) INCOME: |  |  |  |  |  |  |  |
CTU |  |  | $63,460 |  |  |  | $54,928 |
AIU |  |  | (5,556 | ) |  |  | 20,896 |
Total University Schools |  |  | 57,904 |  |  |  | 75,824 |
Health Education (3) |  |  | (50,480 | ) |  |  | (70,888 | )
Culinary Arts (4) |  |  | (81,218 | ) |  |  | (33,854 | )
Design & Technology (5) |  |  | (30,542 | ) |  |  | (56,747 | )
Total Career Schools |  |  | (162,240 | ) |  |  | (161,489 | )
Corporate and Other (6) |  |  | (33,600 | ) |  |  | (7,699 | )
Subtotal |  |  | (137,936 | ) |  |  | (93,364 | )
Transitional Schools (2) (7) |  |  | (76,748 | ) |  |  | (103,637 | )
Total |  |  | $(214,684) |  |  |  | $(197,001) |
OPERATING (LOSS) MARGIN: |  |  |  |  |  |  |  |
CTU |  |  | 18.3% |  |  |  | 15.1% |
AIU |  |  | -2.4% |  |  |  | 6.9% |
Total University Schools |  |  | 10.0% |  |  |  | 11.3% |
Health Education |  |  | -40.1% |  |  |  | -46.2% |
Culinary Arts |  |  | -45.7% |  |  |  | -15.1% |
Design & Technology |  |  | -31.7% |  |  |  | -45.5% |
Total Career Schools |  |  | -40.6% |  |  |  | -32.1% |
Corporate and Other |  |  | NM |  |  |  | NM |
Subtotal |  |  | -14.1% |  |  |  | -8.0% |
Transitional Schools |  |  | -97.4% |  |  |  | -59.6% |
Total |  |  | -20.3% |  |  |  | -14.6% |

(1) | During 2013, the Company completed the sale and transfer of control of its International Segment and announced the teach-out of six additional campuses. Prior period results have been recast to report the International Segment as a component of discontinued operations and to report the schools being taught out within the Transitional Schools segment.

(2) | The Company completed the teach-out of SBC Hazelwood, SBI Landover, SBC Milwaukee and IADT Schaumburg. As a result, all current and prior period results for these campuses are reflected as components of discontinued operations.

(3) | 2013 expenses include $8.8 million related to the settlement of a legal matter and a non-cash trade name impairment charge of $1.7 million. 2012 expenses include non-cash goodwill and trade name impairment charges of $41.3 million and $3.5 million, respectively.

(4) | 2013 expenses include $15.5 million related to a pending legal settlement and a non-cash trade name impairment charge of $13.0 million. 2012 expenses include a non-cash trade name impairment charge of $8.1 million.

(5) | 2013 expenses include $4.1 million of non-cash asset impairment charges related to long-lived assets for ongoing schools ($2.3) and decisions made to exit certain leased facilities ($1.8). 2012 expenses include a $40.8 million non-cash goodwill impairment charge.

(6) | The 2012 operating loss includes a $19.0 million insurance recovery related to the settlement of claims under certain insurance policies.

(7) | 2013 expenses include $2.6 million of non-cash asset impairment charges and $1.7 million related to the settlement of a legal matter. 2012 expenses include $28.4 million of non-cash asset impairment charges, a $1.3 million non-cash goodwill impairment charge, and a $1.0 million non-cash tradename impairment expense.

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ITEMS (1)

(In millions, except share and per share amounts)

|  | For the Quarter Ended December 31, |
|  | 2013 |  |  | 2012 |
|  | Operating Loss |  |  | Loss per Diluted Share (2) |  |  | Operating Loss |  |  | Loss per Diluted Share (2) |
As Reported |  | $ | (59.0 | ) |  | $ | (1.61 | ) |  | $ | (91.5 | ) |  | $ | (1.07 | )
Reconciling Items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Legal Settlements (3) |  |  | 15.7 |  |  |  | 0.15 |  |  |  | — |  |  |  | — |
Asset Impairments (4) |  |  | 7.0 |  |  |  | 0.07 |  |  |  | 40.8 |  |  |  | 0.40 |
Severance and Related Costs (5) |  |  | 1.8 |  |  |  | 0.02 |  |  |  | 13.1 |  |  |  | 0.13 |
Deferred Tax Asset Valuation Allowance (6) |  |  |  |  |  |  | 1.08 |  |  |  |  |  |  |  | — |
Adjusted to Exclude Significant Items |  | $ | (34.5 | ) |  | $ | (0.29 | ) |  | $ | (37.6 | ) |  | $ | (0.54 | )
Diluted Weighted Average Shares Outstanding |  |  |  | 66,916 |  |  |  |  |  |  |  | 66,199 |
|  | For the Year Ended December 31, |
|  | 2013 |  |  | 2012 |
|  | Operating Loss |  |  | Loss per Diluted Share (2) |  |  | Operating Loss |  |  | Loss per Diluted Share (2) |
As Reported |  | $ | (214.7 | ) |  | $ | (3.02 | ) |  | $ | (197.0 | ) |  | $ | (2.24 | )
Reconciling Items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Legal Settlements (3) |  |  | 26.0 |  |  |  | 0.25 |  |  |  | — |  |  |  | — |
Goodwill and Asset Impairments (7) |  |  | 22.7 |  |  |  | 0.22 |  |  |  | 125.5 |  |  |  | 1.62 |
Severance and Related Costs (5) |  |  | 6.2 |  |  |  | 0.06 |  |  |  | 14.0 |  |  |  | 0.14 |
Insurance Recoveries (8) |  |  | — |  |  |  | — |  |  |  | (19.0 | ) |  |  | (0.19 | )
Deferred Tax Asset Valuation Allowance (6) |  |  |  |  |  |  | 1.08 |  |  |  |  |  |  |  | — |
Adjusted to Exclude Significant Items |  | $ | (159.8 | ) |  | $ | (1.41 | ) |  | $ | (76.5 | ) |  | $ | (0.67 | )
Diluted Weighted Average Shares Outstanding |  |  |  | 66,738 |  |  |  |  |  |  |  | 66,475 |

(1) | The Company believes it is useful to present non-GAAP financial measures which exclude certain significant items as a means to understand the performance of its core business. As a general matter, the Company uses non-GAAP financial measures in conjunction with results presented in accordance with GAAP to help analyze the performance of its core business, assist with preparing the annual operating plan, and measure performance for some forms of compensation. In addition, the Company believes that non-GAAP financial information is used by analysts and others in the investment community to analyze the Company’s historical results and to provide estimates of future performance and that failure to report non-GAAP measures could result in a misplaced perception that the Company’s results have underperformed or exceeded expectations.

Non-GAAP financial measures when viewed in a reconciliation to corresponding GAAP financial measures, provides an additional way of viewing the Company’s results of operations and the factors and trends affecting the Company’s business. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding financial results presented in accordance with GAAP.

(2) | Loss per diluted share is based on loss from continuing operations and assumes a 35% tax rate for each deductible item.

(3) | A $15.5 million charge related to a pending legal settlement was recorded within Culinary Arts in the fourth quarter of 2013; year to date legal settlements include $10.5 million for the settlement of a legal matter recorded within Health Education ($8.8) and Transitional Schools ($1.7).

(4) | In fourth quarter 2013, non-cash asset impairment charges of $7.0 million were recorded primarily within Design & Technology ($4.0) related to long-lived assets for ongoing schools ($2.3) and decisions made to exit certain leased facilities ($1.7), and Transitional Schools ($2.5) for schools being taught out. 2012 included non-cash asset impairment charges of $29.2 million recorded primarily within Transitional Schools ($28.3) and $11.6 million of non-cash trade name impairment charges attributable to Culinary Arts ($8.1) and Health Education ($3.5)

(5) | Severance and related costs were recorded in 2013 and 2012 in connection with both the reduction in force and campus closure actions. In 2013, these costs were principally recorded within Transitional Schools ($2.1 million) and Corporate and Other ($2.1 million). The 2012 severance and related costs of $14.0 million were recorded within Transitional Schools ($6.7), AIU ($1.8), Health Education ($1.6), Corporate ($1.6), Design & Technology ($1.4), Culinary Arts ($0.6) and CTU ($0.3).

(6) | Fourth quarter of 2013 included a deferred tax valuation allowance of $72.2 million recorded within income tax benefit of continuing operations.

(7) | 2013 includes non-cash trade name impairment charges of $14.7 million attributable to Culinary Arts ($13.0) and Health Education ($1.7) and $8.0 million of non-cash asset impairment charges, of which $7.0 million were recorded in the fourth quarter. In addition to the fourth quarter asset impairment charges, 2012 expenses include non-cash goodwill impairment charges of $83.4 million, of which $73.6 million is non-deductible for income tax purposes, primarily applicable to Health Education ($41.3) and Design & Technology ($40.8) and additional non-cash asset impairment charges of $1.3 million.

(8) | 2012 includes a $19.0 million insurance recovery related to the settlement of claims under certain insurance policies.