Career Education Corporation

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Career Education Corporation

• ANALYST DAY
• February 12, 2003

Nasdaq CECO
www.careered.com
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Safe Harbor Statement

• The forward-looking statements contained in
  this presentation and those statements made
  during this presentation are based upon various
  assumptions, and certain risks and uncertainties
  could cause actual results to differ materially
  from those stated. Factors that could cause such
  differences include costs and difficulties
  associated with opening new campuses and in
  integrating acquisitions, costs associated with
  the Online operations, changes in the regulatory
  environment and those matters disclosed in Career
  Education Corporation's filings with the
  Securities and Exchange Commission. Career
  Education Corporation assumes no obligation to
  update those forward-looking statements.

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Jack LarsonChairman, President CEO
Nasdaq CECO
www.careered.com
4
A brief look at CEC

• Formed in 1994 to create a premium education
  system
• Initial Public Offering in 1998
• 43 worldwide campuses
• Rapidly growing Online Education presence
• 1 on-campus provider in for-profit sector
• 20 consecutive quarters of record revenue
  earnings
• Cumulative shareholder return since IPO 1,000

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Revenue (in millions)
6
Earnings per Share
7
Favorable Industry Dynamics

• 270 billion North America market
• For-profit non-profit sectors are highly
  fragmented
• Strong long-term demographic trends
• Barriers to entry
• Attractive financial characteristics

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Top 3 Reasons Why Freshman Enroll in College

• To get training for a specific career 71.3
• To be able to get a better job 70.3
• To be able to make more money 69.8
• A person with a bachelors degree is expected to
  earn almost 1.0 million more in their career
  than a high-school grad US Department of Labor

Source The Chronicle of Higher Education
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Top 2 Reasons Why Freshman Select a College

• 1. College has a very good academic reputation
  
• CECs Schools of Choice nationally
  recognized programs
• 2. Colleges graduates get good jobs
• CECs Placement rate of 94.1

Source The Chronicle of Higher Education
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Top 20 U.S. Universities by Population
Fall 1995
Fall 2001
University Population University Populat
ion

• Community College of the Air Force 89,611
  1 Apollo Group 139,300
• University of MinnesotaTwin Cities 51,445
  2 Community College of the Air Force
  89,611
• Ohio State UniversityMain Campus 48,676
  3 DeVry University 58,736
• The University of Texas at Austin 47,905
  4 University of Minnesota-Twin Cities
  51,388
• Miami-Dade Community College 47,060
  5 Miami-Dade Community College 49,836
• Arizona State University-Main Campus 42,040
  6 Ohio State University-Main Campus
  48,362
• Texas AM University-Main Campus 41,790
  7 The University of Texas at Austin
  48,008
• Michigan State University 40,647
  8 Arizona State University-Main Campus
  42,483
• Pennsylvania State University-Main Campus
  39,646 9 Texas AM University-Main
  Campus 41,892
• Houston Community College System 39,641
  10 Michigan State University 41,545
• University of Florida 39,412 11
  Career Education 40,800
• University of Wisconsin-Madison 39,005
  12 University of Florida 39,883
• University of Illinois-Urbana-Champaign
  38,420 13 Pennsylvania State
  Univ-Main Campus 39,855
• Northern Virginia Community College 37,144
  14 University of Wisconsin-Madison
  39,289
• University of Michigan-Ann Arbor 36,687
  15 University of Illinois-Urbana-Champaign
  38,841
• Purdue University-Main Campus 36,427
  16 Houston Community College System 38,493
• University of South Florida 36,142
  17 Education Management 37,658
• New York University 35,835 18
  University of Phoenix Online 37,600
• Indiana University-Bloomington 35,083
  19 Purdue University-Main Campus 36,893

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Sustainable Growth Opportunity

• Demographic trends support sustainable growth
• 2.5 mil increase in college enrollment in the
  next decade National Center of Education
  Statistics
• States are cutting budgets for public
  postsecondary education at the same time demand
  is escalating
• 19 states have cut their higher education funding
  midway through the current fiscal year National
  Conference of State Legislatures

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CECs Competitive Advantages

• Career-oriented curriculum
• Diversification creates stable market demand
• Curriculum in multiple high-growth demand areas
• Demographics in age gender
• Various degree offerings
• Geography
• Strong Marketing Expertise
• Excellent Placement Success
• Technology Innovation
• Quality name brand institutions

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CECs Brand Names
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Global System Onsite Online
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Strategic Growth Goal
Start-ups/ Satellites
Program Transplants
Advanced Degrees
Acquisitions
Largest Global Quality Provider of Postsecondary
Education
Regional Accreditation
International Expansion
Additional Curricula
Online Education
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Poised for the Future

• Two Operating Groups
• Colleges, Schools Universities Group
• Jake Gruver - President
• Online Education Group
• Nick Fluge - President

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Jake GruverPresident Colleges, Schools
Universities Group
Nasdaq CECO
www.careered.com
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Cycle of Success
Refining Education Programs
Direct Response Marketing
Schoolsof Choice
OperatingStrategy
ImplementingSystems Procedures
Capital Investments
Retention Placement
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8 Diversified Platforms for Growth
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Current Core Curricula
43 22 18 15 2

• Visual Communication Design Technologies
• Business Studies
• Culinary Arts
• Health Education

of Students
51,100 students
Information Technology
Full-time degree seeking students
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Diversified Student Demographics
Student Population by Age Group
21 30 yr. 53
Under 21 yr. 30
Over 30 yr. 17
50/50 Male/Female
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Diversified Degree Offerings
Student Population by degree objective
Certificate 14
Bachelors/ Masters 28
Associates 58
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Superior Execution

• Attract convert prospects using full marketing
  mix
• Assist students in financing their education
• Deliver a superior education product
• Develop new programs
• Keep students in school through innovative
  retention programs
• Place students in their field of study by
  soliciting job openings

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School Operations
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Patrick AndrewsFirst VP of Marketing
Nasdaq CECO
www.careered.com
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High Impact Marketing
CEC generated 1.7 million leads in 2002
60 over 2001
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Effective Lead Generation

• Tailored marketing at each school

Internet-based advertising High school
recruiting TV infomercials commercials Direct
mail Referrals Newspapers print media
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Leads By Media Source
2002
TV 13
Direct Mail 10
Internet 36
H.S. 30
Other 4
Referral 4
Print 3
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Media Source Examples
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Marketing Site
- Over 150 school marketing Web Sites -
Interactive Media Presentations Webmercials -
Leads automatically loaded into CECs database
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Dr. Jon CooverSenior VP of Marketing Admissions
Nasdaq CECO
www.careered.com
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Marketing Admissions Process

1. Generate leads
2. Convert leads to enrollments (booked futures)
3. Convert enrollments to starts

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Convert Leads to Enrollments

• Specialized Admissions Efforts
• Approx. 1,000 Professionals
• Local Area
• High school
• Out-of-area
• International
• Internet

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Automated Enrollment Center

• - Branded Enrollment Centers
• - Virtual Campus Tours/Catalog
• Multi-currency multi-lingual
• Enrollment Agreement
• Candidate for Acceptance

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Start Culture- Start to Stay

• 2nd Interview
• Tuition planning session
• Set financial aid deadline
• Mandatory orientation

• Stitch-In process
• Part-time job
• Presidents acceptance letter
• Open house
• Housing

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Jeff TiceSenior VP of Student Finance
Nasdaq CECO
www.careered.com
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How do Students Pay for College ?

• Title IV Financial Aid
• Grants
• Cash Pay
• Family
• Personal Investment
• Part-time Employment
• Alternative Third Party Loans

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Personalized Tuition Plan

• Financial Aid
• Review State Federal Programs
• Determine Eligibility
• Design a Personal Financial Aid Package
• Family Commitment
• Assistance from Family or Significant Other
• Monthly School Payment
• Personal Investment
• Tuition Deposit
• Personal Responsibilities
• Part-time Income

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Financial Aid Online - Opportunity
28 of CECs students completed the FAFSA online
for 2002-2003
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Dr. Patricia KapperSenior VP of Education
Nasdaq CECO
www.careered.com
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Mission Statement for Learning

• Our mission is to serve students from diverse
  backgrounds, seeking to enhance their individual
  worth and professional potential, by delivering
  quality educational programs and services. Our
  faculty and staff are committed to promoting
  student success as measured by graduation and
  career achievement.

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Our Education Product
Focused on 21st Century Careers

• Curricula matched to long-term demographic and
  employment trends
• Employers help create, refine programs
• Advisory boards create lasting relationships

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Superior Education Product

• High quality faculty and staff
• Approximately 4,000 faculty industry
  professionals
• 62 part-time, adjunct faculty
• First class equipment, facilities
• Ongoing investments
• Hands-on education

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Retention for Success

• Retention is everyones responsibility from the
  President, to the faculty, to the staff
• A practical, institutional approach
• Weekly reporting and monitoring

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Kathy BennicoffVice President of Career Services
Nasdaq CECO
www.careered.com
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Our moral report card
94.1
Recent placement rate
Up from 92 in 2001
A
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Placement for Success

• 200 Career Service Professionals focused on
  securing job orders
• Students required to take a professional
  development class or attend seminars that
  discusses job search skills
• Transferred proven marketing discipline to the
  career services department

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CECs Career Services Website
4,000 Employers 5,200 Jobs 17,200 Applications
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CECs Virtual Job Fair
723 Employers 4,161 CEC Students/Alumni 116 Chat
Rooms 2,500 Job postings 12 Hours
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Some Well-known Employers
VisComm Design JAK Films (Star Wars) DDB Worldwide Jockey EMCI Culinary Hyatt Hilton Spago/Wolfgang Puck Ritz Carlton
Business Studies CIA Bank Atlantic Booz, Allen Hamilton ADP IT Intel Televista Cox Communications Spherion
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Mark GriesbaumChief Information Officer
Nasdaq CECO
www.careered.com
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Technology

• New technologies are changing the most
  traditional college campuses. The conditions are
  finally right for these technologies on
  campus the traditional classroom has
  found a powerful companion in Technology.

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CECs 2003 IT Initiatives

• Online Tools Services for Students
• Business Process Improvements
• Financial Systems Implementation
• Management Information Delivery
• Business Expansion/Integration

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CECs 2003 IT Initiatives

• Online Tools Services
• MyCampus.Com - where students faculty can
  communicate, share information, view academic
  progress, schedule account information, make
  payments, register, etc.

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MyCampus.Com Login Sample
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CECs IT 2003 Initiatives

• Business Process Improvements
• Leverage student database drive continuous
  business process improvements allowing CEC to
  scale its growth
• Financial Systems Implementations
• Implement convert existing financial data to
  new G/L automated TE system

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CECs IT 2003 Initiatives

• Management Information Delivery
• Enhance delivery of online information across
  our business
• Business Expansion/Integration
• Work closely with the business to incorporate
  new schools integrate acquisitions into CECs
  technology infrastructure business application
  suite

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Steve SotraidisExecutive VP of Administration
Nasdaq CECO
www.careered.com
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Support Services for Schools

• Financial Aid
• Information Technology Innovations
• Financial
• Admissions
• Education
• Student Retention
• Career Services

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Reports we use to Manage our Business?

• Monthly Marketing Report
• Daily/Weekly/Monthly Flash
• Financial Reports
• Daily Cash Collection Reports
• Financial Aid Packaging Reports
• Retention Reports
• Many more

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CEC University- Staff Development
We have 7,000 employees worldwide 4,000
faculty 1,000 marketing 2,000 administration

• CEC Online Courses
• Faculty Development
• AchieveGlobal / Managing
• Interpersonal Skills
• Training at CEC
• Regional, Divisional,
• Departmental Training

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Todd SteeleExecutive VP of Strategic Planning
Development
Nasdaq CECO
www.careered.com
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Four Principal Activities

1. Strategic Planning
2. Acquisitions
3. Campus Start-ups
4. International Expansion

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Acquisitions
Excellent Educational Franchise
Broad StudentMarketability
All activities support business strategies
Potential for Market Leadership
Excellent Regulatory Compliance
24 Acquisitions Completed since 1994
Attractive 5-year ROIC
Manageable Near-term EPS impact
Attractive Long-Term Financial Profile
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Acquisitions Keys to Success

• Rigorous, structured due-diligence process
• Conservatively honest assessment of required
  investment growth potential
• Detailed integration plans, efficient integration
  process
• Accurate long-term opportunity assessment

Full pipeline, many attractive opportunities
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Campus Start-ups

• Means of geographic market entry
• Leverage brand equity of existing CEC brands
• Excellent returns on invested capital

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Campus Start-ups

• 4 start-ups to date all operating ahead of
  budget
• 2 in 2001 - Gibbs in Philadelphia, IADT in
  Orlando
• 2 in 2002 Le Cordon Bleu in Orlando, Brooks in
  Sunnyvale
• 4 start-ups in 2003
• Las Vegas Le Cordon Bleu (Summer 03)
• Atlanta Le Cordon Bleu (Fall 03)
• Detroit IADT (Fall 03)
• Houston AIU University (Fall 03)
• Dedicated divisional team

Numerous additional market opportunities
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International Expansion

• Growing demand for postsecondary education
• Opportunity to leverage best practices, utilize
  corporate assets to grow schools overseas
• Proven success with AIU-London AIU-Dubai
• Visited numerous properties over past 24-months

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Pat PeschExecutive VP and CFO
Nasdaq CECO
www.careered.com
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Annual 2003 Business Outlook

• Revenue to be approx. 940 to 950 mil (includes
  Online of approx. 60 mil)
• Operating profit margin to increase approx. 50
  basis points
• EPS to be approx. 1.80 to 1.82
• Capital expenditures to be approx. 75 to 80 mil

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Revenue (in millions)
mid-range of 03 Guidance
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EBITDA (in millions)
mid-range of 03 Guidance
73
Earnings per Share
mid-range of 03 Guidance
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Capital Expenditures
75 to 80 million expected in 2003
43 mil
35 mil
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Internal Growth Record
Population
Revenue
EBITDA
02 vs. 01
34
42
21
01 vs. 00
57
35
21
00 vs. 99
59
35
24
76
Avg. Annual Revenue Per Student
Apollo, EDMC, Strayer, COCO, ITT and DeVry
77
Annual Bad Debt Expense
Oct. 7, 2000 Change in Title IV Return of Funds
Policy
78
Days Sales Outstanding
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Start-up Campus Guidance

• 6 to 9 months pre-opening
• 0.8 mil to 1.2 mil operating loss
• 9 to 12 months until break-even
• 0.8 mil to 1.2 mil operating loss
• Capital Expenditures
• Culinary school is 4.0 to 5.0 mil
• All other schools are 1.0 to 2.0 mil

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3 to 5 yr. Business Outlook

• 20 Internal Revenue Growth
• 15 population growth
• 5 7 pricing
• 50 to 100 basis point operating margin
  improvement
• 25 earnings per share growth

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Jack LarsonChairman, President CEO
Nasdaq CECO
www.careered.com
82
The Future is Bright

• Favorable industry dynamics
• Sustainable growth opportunity
• Competitive position
• Multi-faceted growth platform
• Proven track record
• Positioned for strong EPS growth

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QUESTIONS