SCHAUMBURG, Ill.--(BUSINESS WIRE)--
Career Education Corporation (NASDAQ: CECO) today announced that it has
reached agreements with attorneys general from 48 states and the
District of Columbia to bring closure to the multi-state attorneys
general inquiry on-going since January 2014. As part of the agreements
the Company expressly denied any allegations of wrongdoing or liability.
In addition, the attorneys general have provided a release of potential
claims that they may have brought.
“The resolution of this open inquiry is an important milestone for the
Company that coincides with the completion last month of a multi-year
process of teaching out and closing our transitional campuses.” said
Todd Nelson, Chief Executive Officer. “We have remained steadfast in our
belief that we can work with the attorneys general to demonstrate the
quality of our institutions and our commitment to students.”
In connection with these agreements, the Company expects to record a
total pre-tax charge of $6.3 million,consisting of (i) a $5.0
million payment to the attorneys general to cover expenses incurred
during the course of their inquiry over the last five years (which the
attorneys general will distribute as they elect), and (ii) the write-off
of approximately $1.3 million of accounts receivable. Although the
Company agreed to forgo efforts to collect on approximately $556 million
of old accounts receivable that were incurred during the last 30 years
by students at more than 100 campuses who reside in participating
states, all but approximately $1.3 million of these old accounts
receivable were written-off in prior reporting periods in the ordinary
course of the Company’s operations. The agreement to forgo efforts to
collect on previously written-off receivables does not require
additional write-off expense to the Company’s financial statements.
The agreements build upon the significant compliance monitoring
processes the Company has adopted over the past several years with
commitments to a number of additional operational initiatives that will
benefit our students. Our future students will receive additional
informational resources on important policies, academic program
information and financial aid information during the enrollment process
and an enhanced refund policy all of which to the extent not already
implemented the Company plans to implement over the next six months.
The Company will work with a third-party administrator over the next
three years who will provide ongoing oversight and review of the
Company’s implementation of the terms of the agreements. The Company
will reimburse the administrator a total of $2.0 million for fees and
expenses to be paid over the next three years.
The Company has entered into agreements with the attorneys general of
all states except for New York and California. The state of California
is expected, per its own procedures, to enter into a stipulated judgment
with the Company at a later date reflecting the terms of the agreements
and as a result the amounts above include California. The Company had
previously entered into an agreement with the attorney general of New
York.
For further information and additional detail the Company refers you to
the Form 8-K which was filed today with the U.S. Securities and Exchange
Commission regarding the agreements with the attorneys general.
About Career Education Corporation
Career Education’s academic institutions offer a quality education to a
diverse student population in a variety of disciplines through online,
campus-based and blended learning programs. Career Education
institutions are committed to providing a quality education that closes
the gap between learners who seek to advance their careers and employers
needing a qualified workforce.
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Investors:
Alpha IR Group
Chris Hodges or Sam Gibbons
(312)
445-2870
[email protected]
or
Media:
Career
Education Corporation
(847) 585-2600
[email protected]
Source: Career Education Corporation