Career Education (CECO) Updates on Expected Impact of Briarcliffe College Campuses

Career Education (NASDAQ: CECO) disclosed the following on Tuesday:

In May 2015, Career Education Corporation (the “Company”) announced its strategic decision to focus its resources and attention on its universities – Colorado Technical University (CTU) and American InterContinental University (AIU). In connection with that decision, the Board of Directors of the Company approved the pursuit of divestiture options for several of the Company’s Career College campuses, including Briarcliffe College, with those campuses to be taught out if a sale was not successful. In accordance with this strategy, on December 7, 2015, the teach-out of the Company’s Briarcliffe College campuses was announced. These campuses will remain open to offer current students the reasonable opportunity to complete their course of study. Briarcliffe College consists of two ground-based campuses and one online satellite campus and contributed $19.4 million and $32.2 million of revenue and ($7.0) million and ($2.6) million of operating losses for the nine months ended September 30, 2015 and for the year ended December 31, 2014, respectively.

The Company expects to record approximately $6 million to $8 million of restructuring charges related to the teach-out of the Briarcliffe College campuses. These estimated charges are based on the timing of campus teach-outs, and are subject to change. These costs primarily relate to severance charges (approximately $2 million - $3 million) and costs associated with exiting lease obligations (approximately $4 million - $5 million). The severance and related charges will primarily be recorded during the fourth quarter of 2015 and the lease charges will be recorded at the time each facility is vacated, which is expected to be during 2018. These amounts will result in actual cash outlay through 2018 for severance related charges and from the teach-out date through 2019 for lease obligations. The estimated charges and cash outlay associated with exiting lease obligations could be reduced if any sublease agreements are entered into.

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