x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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New Jersey
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57-1150621
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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Title of each class
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Name of exchange on which registered
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Common Stock, no par value per share
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The NASDAQ Stock Market LLC
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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PART I. |
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1
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ITEM 1.
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1
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ITEM 1A.
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22
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ITEM 1B.
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33
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ITEM 2.
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34
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ITEM 3.
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35
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ITEM 4.
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35
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PART II. |
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36
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ITEM 5.
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36
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ITEM 6.
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39
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ITEM 7.
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41
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ITEM 7A.
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54
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ITEM 8
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54
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ITEM 9.
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54
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ITEM 9A.
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54
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ITEM 9B.
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55
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PART III. |
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56
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ITEM 10.
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56
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ITEM 11.
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56
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ITEM 12.
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56
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ITEM 13.
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56
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ITEM 14.
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56
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PART IV. |
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57
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ITEM 15.
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57
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·
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our failure to comply with the extensive regulatory framework applicable to our industry or our failure to obtain timely regulatory approvals in connection with a change of control of our company or acquisitions;
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·
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our success in updating and expanding the content of existing programs and developing new programs in a cost-effective manner or on a timely basis;
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·
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risks associated with changes in applicable federal laws and regulations, including final rules that took effect during 2011 and other pending rulemaking by the U.S. Department of Education;
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·
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uncertainties regarding our ability to comply with federal laws and regulations regarding the 90/10 rule and cohort default rates;
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·
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risks associated with the opening of new campuses;
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·
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risks associated with integration of acquired schools;
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·
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industry competition;
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·
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our ability to continue to execute our growth strategies;
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·
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conditions and trends in our industry;
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·
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general economic conditions; and
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·
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other factors discussed under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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ITEM 1.
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Programs Offered
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||||||||||
Area of Study
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Bachelor's Degree
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Associate's Degree
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Diploma and Certificate
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Average Enrollment
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Percent of Total Enrollment
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|||||
Automotive
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-
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Automotive Technology, Master Certified Auto Service Management, Collision Repair & Refinishing Service Management, Diesel Technology, Master Certified Diesel & Truck Service Management
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Automotive Mechanics, Master Certified Automotive Technology, Master Certified Automotive Technology w/High Performance, Collision Repair & Refinishing Technology, Diesel & Truck Mechanics, Diesel & Truck Technology, Master Certified Diesel & Truck Technology, Motorcycle Technology
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6,819
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38%
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|||||
Health Sciences
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-
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Medical Assisting Technology, Health Information Administration, Dental Office Management, Child Development, Health Information Technology, Medical Office Management, Mortuary Science, Nuclear Medicine Technology, Occupational Therapy Assistant, Dental Hygiene, Dental Administrative Assistant, Surgical Technology, Advanced Medical Coding & Billing, Nurse
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Medical Office Assistant, Medical Assistant, Pharmacy Technician, Medical Coding & Billing, Dental Assistant, Licensed Practical Nursing, Phlebotomy, Medical Assistant w/Basic X-ray, Basic X-Ray Technician, Surgical Technologist, Paramedic
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6,322
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35%
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|||||
Skilled Trades
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-
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Electronic Engineering Technology, HVAC, Electronics Systems Service Management
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Electrical Technology, Electronics Systems Technician, HVAC, Welding Technology
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2,173
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12%
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Programs Offered (Continued)
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||||||||||
Area of Study
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Bachelor's Degree
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Associate's Degree
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Diploma or Certificate
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Average Enrollment
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Percent of Total Enrollment
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|||||
Hospitality Services
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Culinary Arts
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Culinary Arts, Salon Management, International Baking and Pastry
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Culinary Arts, Cosmetology, Aesthetics, Therapeutic Massage & Bodywork Technician, Italian Culinary Arts, International Baking and Pastry
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1,614
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9%
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|||||
Business and Information Technology
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Business Management, Criminal Justice, Funeral Service Management
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PC Systems & Networking Technology, Business Administration, Criminal Justice, Business Management, Broadcasting and Communications, Paralegal, Computer Networking and Security, Accounting
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PC Support Technician, Criminal Justice, Business Office Technology, Computer Networking and Security
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1,158
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6%
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|||||
Total:
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18,086
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100%
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School
|
Last Accreditation Letter
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Next Accreditation
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Type of Accreditation
|
|||
Philadelphia, PA
2
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December 5, 2008
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May 1, 2013
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National
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|||
Union, NJ
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December 9, 2009
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February 1, 2014
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National
|
|||
Mahwah, NJ
1
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March 10, 2010
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August 1, 2014
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National
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|||
Melrose Park, IL
2
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June 2, 2010
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November 1, 2014
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National
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|||
Denver, CO
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March 9, 2011
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February 1, 2016
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National
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|||
Columbia, MD
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March 7, 2012
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February 1, 2017
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National
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|||
Grand Prairie, TX
3
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December 7, 2011
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August 1, 2016
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National
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|||
Allentown, PA
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March 7, 2012
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January 1, 2017
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National
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|||
Nashville, TN
3
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November 30, 2012
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May 1, 2017
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National
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|||
Indianapolis, IN
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November 30, 2012
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November 1, 2017
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National
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|||
New Britain, CT
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September 5, 2008
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January 1, 2013
4
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National
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|||
Shelton, CT
2
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December 9, 2009
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September 1, 2013
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National
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|||
Hamden, CT
2
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September 7, 2007
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July 1, 2012
4
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National
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|||
Queens, NY
1
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September 5, 2008
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June 1, 2012
4
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National
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|||
Hartford, CT
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June 2, 2010
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November 1, 2014
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National
|
|||
East Windsor, CT
2
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September 5, 2008
|
February 1, 2013
4
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National
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|||
South Plainfield, NJ
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September 11, 2009
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August 1, 2014
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National
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1
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Branch campus of main campus in Union, NJ
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2
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Branch campus of main campus in New Britain, CT
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3
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Branch campus of main campus in Indianapolis, IN
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4
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Campus going through re-accreditation. Each campus has received written confirmation that it remains accredited pending consideration of its application for reaccreditation.
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School
|
Last Accreditation Letter
|
Next Accreditation
|
Type of Accreditation
|
|||
Brockton, MA
3
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December 16, 2008
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December 31, 2014
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National
|
|||
Lincoln, RI
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December 16, 2008
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December 31, 2014
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National
|
|||
Lowell, MA
3
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December 16, 2008
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December 31, 2014
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National
|
|||
Somerville, MA
3
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December 16, 2008
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December 31, 2014
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National
|
|||
Philadelphia (Center City), PA
1
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April 23, 2007
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December 31, 2012
4
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National
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|||
Edison, NJ
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April 23, 2007
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December 31, 2012
4
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National
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|||
Marietta, GA
3
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December 16, 2008
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December 31, 2014
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National
|
|||
Moorestown, NJ
1
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April 23, 2007
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December 31, 2012
4
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National
|
|||
Paramus, NJ
1
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April 23, 2007
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December 31, 2012
4
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National
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|||
Philadelphia (Northeast), PA
1
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April 23, 2007
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December 31, 2012
4
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National
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|||
Dayton, OH
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August 13, 2009
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December 31, 2015
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National
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|||
Cincinnati (Northland Blvd.), OH
2
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August 13, 2009
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December 31, 2015
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National
|
|||
Florence, KY
2
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August 13, 2009
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December 31, 2015
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National
|
|||
Toledo, OH
2
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December 9, 2009
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December 31, 2015
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National
|
|||
West Palm Beach, FL
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April 16, 2008
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December 31, 2014
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National
|
|||
Las Vegas (Summerlin), NV
3
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December 16, 2008
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December 31, 2014
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National
|
|||
Henderson (Green Valley), NV
3
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December 16, 2008
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December 31, 2014
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National
|
|||
Las Vegas (Aliante), NV
3
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April 8, 2009
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December 31, 2014
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National
|
|||
Cleveland, OH
2
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May 11, 2011
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December 31, 2015
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National
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1
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Branch campus of main campus in Edison, NJ
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2
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Branch campus of main campus in Dayton, OH
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3
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Branch campus of main campus in Lincoln, RI
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4
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Campus going through re-accreditation. Each campus has received written confirmation that it remains accredited pending consideration of its application for reaccreditation.
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School
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Last Accreditation Letter
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Comprehensive Evaluation
|
Type of Accreditation
|
|||
Southington, CT
|
June 29, 2012
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Fall 2017
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Regional
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School
|
Last Accreditation Letter
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Next Accreditation
|
Type of Accreditation
|
|||
Fern Park, FL
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December 17, 2010
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December 31, 2013
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National
|
|||
Coral Springs, FL
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August 10, 2012
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February 28, 2016
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National
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|||
Miami, FL
1
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August 10, 2012
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February 28, 2016
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National
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1
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Branch campus of main campus in Coral Springs, FL
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Brand
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Main Campus(es)
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Additional Location(s)
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Lincoln Technical Institute
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Union, NJ
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Mahwah, NJ
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Queens, NY
|
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Allentown, PA
|
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Edison, NJ
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Moorestown, NJ
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Paramus, NJ
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Philadelphia, PA (Center City)
|
||||
Philadelphia, PA (Northeast)
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||||
Lincoln, RI
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Marietta, GA
1
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|||
Brockton, MA
|
||||
Henderson, NV (Green Valley)
2
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||||
Las Vegas, NV (Summerlin)
2
|
||||
Las Vegas, NV (Aliante)
2
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||||
Somerville, MA
4
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||||
Lowell, MA
4
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||||
New Britain, CT
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Shelton, CT
|
|||
Hamden, CT
|
||||
Philadelphia, PA
3
|
||||
East Windsor, CT
3
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||||
Melrose Park, IL
1,3
|
||||
Hartford, CT
|
||||
South Plainfield, NJ
|
||||
Fern Park, FL
|
||||
Lincoln College of Technology
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Indianapolis, IN
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Nashville, TN
|
||
Grand Prairie, TX
|
||||
Columbia, MD
|
||||
Denver, CO
|
||||
West Palm Beach, FL
|
||||
Dayton, OH
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Cincinnati, OH (Northland Blvd.)
|
|||
Florence, KY
|
||||
Toledo, OH
|
||||
Cleveland, OH
|
||||
Lincoln College of New England
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Southington, CT
|
1
|
This campus operates under the Lincoln College of Technology brand.
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2
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These campuses operate under the Euphoria Institute of Beauty Arts & Sciences brand.
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3
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On September 6, 2012, the DOE approved the merger of the Philadelphia, PA, Melrose Park, IL and East Windsor, CT institutions into the New Britain, CT institution to become a new Office of Postsecondary Education Identification, or OPEID, institution.
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4
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On December 7, 2012 the DOE approved the merger of the Somerville, MA and Lowell, MA institutions into the Lincoln, RI institution to become a new Office of Postsecondary Education Identification, or OPEID, institution.
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Institution
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2010
|
2009
|
2008
|
|||||||||
Union, NJ
|
17.6 | % | 19.1 | % | 14.1 | % | ||||||
Indianapolis, IN
|
21.0 | % | 15.8 | % | 11.8 | % | ||||||
Columbia, MD
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16.7 | % | 17.7 | % | 13.7 | % | ||||||
Allentown, PA
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13.8 | % | 15.2 | % | 11.2 | % | ||||||
Edison, NJ
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17.0 | % | 17.4 | % | 17.3 | % | ||||||
Denver, CO
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23.9 | % | 20.9 | % | 11.7 | % | ||||||
Lincoln, RI
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21.2 | % | 16.0 | % | 14.0 | % | ||||||
Dayton, OH
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19.4 | % | 19.6 | % | 20.2 | % | ||||||
New Britain, CT
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18.3 | % | 12.0 | % | 9.0 | % | ||||||
West Palm Beach, FL
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16.0 | % | 18.8 | % | 14.2 | % | ||||||
Southington, CT*
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11.6 | % | 9.4 | % | 18.6 | % | ||||||
South Plainfied, NJ**
|
17.5 | % | 8.1 | % | 4.6 | % | ||||||
Fern Park, FL**
|
15.7 | % | 13.3 | % | 7.0 | % | ||||||
Hartford, CT**
|
14.6 | % | 10.7 | % | 4.1 | % |
*
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This institution was acquired on December 1, 2008.
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**
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These institutions were acquired on January 20, 2009.
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Institution
|
2009
|
|||
Union, NJ
|
32.1 | % | ||
Indianapolis, IN
|
33.9 | % | ||
Columbia, MD
|
28.3 | % | ||
Allentown, PA
|
26.4 | % | ||
Edison, NJ
|
31.0 | % | ||
Denver, CO
|
36.3 | % | ||
Lincoln, RI
|
30.3 | % | ||
Dayton, OH
|
36.3 | % | ||
New Britain, CT
|
24.0 | % | ||
West Palm Beach, FL
|
32.1 | % | ||
Southington, CT
|
16.9 | % | ||
South Plainfied, NJ*
|
25.0 | % | ||
Fern Park, FL*
|
22.9 | % | ||
Hartford, CT*
|
19.4 | % |
*
|
These institutions were acquired on January 20, 2009.
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·
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The equity ratio, which measures the institution's capital resources, ability to borrow and financial viability;
|
|
·
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The primary reserve ratio, which measures the institution's ability to support current operations from expendable resources; and
|
|
·
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The net income ratio, which measures the institution's ability to operate at a profit.
|
|
·
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Posting a letter of credit in an amount equal to at least 50% of the total Title IV Program funds received by the institution during the institution's most recently completed fiscal year;
|
|
·
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Posting a letter of credit in an amount equal to at least 10% of such prior year's Title IV Program funds, accepting provisional certification, complying with additional DOE monitoring requirements and agreeing to receive Title IV Program funds under an arrangement other than the DOE's standard advance funding arrangement; and/or
|
|
·
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Complying with additional DOE monitoring requirements and agreeing to receive Title IV Program funds under an arrangement other than the DOE's standard advance funding arrangement.
|
|
·
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Comply with all applicable federal student financial aid regulations;
|
|
·
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Have capable and sufficient personnel to administer the federal student financial aid programs;
|
|
·
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Administer Title IV programs with adequate checks and balances in its system of internal controls over financial reporting;
|
|
·
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Divides the function of authorizing and disbursing or delivering Title IV Program Funds so that no office has the responsibility for both functions;
|
|
·
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Establish and maintain records required under the Title IV regulations;
|
|
·
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Develop and apply an adequate system to identify and resolve discrepancies in information from sources regarding a student’s application for financial aid under Title IV;
|
|
·
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Have acceptable methods of defining and measuring the satisfactory academic progress of its students;
|
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·
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Refer to the Office of the Inspector General any credible information indicating that any applicant, student, employee or agent of the school has been engaged in any fraud or other illegal conduct involving Title IV Programs;
|
|
·
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Not be, and not have any principal or affiliate who is, debarred or suspended from federal contracting or engaging in activity that is cause for debarment or suspension;
|
|
·
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Provide financial aid counseling to its students;
|
|
·
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Submit in a timely manner all reports and financial statements required by the regulations; and
|
|
·
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Not otherwise appear to lack administrative capability.
|
1
|
Provisionally certified as a result of our then largest shareholder’s sale of a portion of its ownership in our company during 2010.
|
2
|
Provisionally certified as a result of our then largest shareholder’s sale of a portion of its ownership in our company during 2010 and for having a default rate under the Perkins program in excess of 30%.
|
|
·
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Any adverse action, including a probation or similar action, taken against the institution by its accrediting agency;
|
|
·
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Any event that causes the institution, or related entity to realize any liability that was noted as a contingent liability in the institution's or related entity's most recent audited financial statements;
|
|
·
|
Any violation by the institution of any loan agreement;
|
|
·
|
Any failure of the institution to make a payment in accordance with its debt obligations that results in a creditor filing suit to recover funds under those obligations;
|
|
·
|
Any withdrawal of owner's equity from the institution by any means, including by declaring a dividend; or
|
|
·
|
Any extraordinary losses, as defined under Accounting Standards Codification 220-20.
|
Item 1A.
|
|
·
|
Require the repayment of Title IV funds;
|
|
·
|
Impose a less favorable payment system for the institution's receipt of Title IV funds;
|
|
·
|
Place the institution on provisional certification status; or
|
|
·
|
Commence a proceeding to impose a fine or to limit, suspend or terminate the participation of the institution in Title IV Programs.
|
|
·
|
loss of eligibility to participate in Title IV Programs;
|
|
·
|
requirement to repay Title IV funds and related costs to the DOE and lenders;
|
|
·
|
transfer of the institution to the heightened cash monitoring level two method of payment or to the reimbursement method of payment, which would adversely affect the timing of the institution's receipt of Title IV funds;
|
|
·
|
requirement to post a letter of credit in favor of the DOE as a condition for continued Title IV certification;
|
|
·
|
requirement to provide timely information regarding certain oversight and financial events;
|
|
·
|
proceedings to impose a fine or to limit, suspend or terminate the institution's participation in Title IV Programs;
|
|
·
|
an emergency action to suspend the institution's participation in Title IV Programs without prior notice or a prior opportunity for a hearing;
|
|
·
|
denial or refusal to consider an institution's application for renewal of its certification to participate in Title IV Programs; or
|
|
·
|
referral of a matter for possible civil or criminal investigation.
|
|
·
|
Student dissatisfaction with our programs and services;
|
|
·
|
Diminished access to high school student populations;
|
|
·
|
Our failure to maintain or expand our brand or other factors related to our marketing or advertising practices; and
|
|
·
|
Our inability to maintain relationships with automotive, diesel, healthcare, skilled trades, IT and hospitality services manufacturers, suppliers and employers.
|
|
·
|
Authorize the issuance of blank check preferred stock that could be issued by our board of directors to thwart a takeover attempt;
|
|
·
|
Prohibit cumulative voting in the election of directors, which would otherwise allow holders of less than a majority of stock to elect some directors;
|
|
·
|
Require super-majority voting to effect amendments to certain provisions of our amended and restated certificate of incorporation;
|
|
·
|
Limit who may call special meetings of both the board of directors and stockholders;
|
|
·
|
Prohibit stockholder action by non-unanimous written consent and otherwise require all stockholder actions to be taken at a meeting of the stockholders;
|
|
·
|
Establish advance notice requirements for nominating candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholders' meetings; and
|
|
·
|
Require that vacancies on the board of directors, including newly created directorships, be filled only by a majority vote of directors then in office.
|
ITEM 1B.
|
ITEM 2.
|
Location
|
Brand
|
Approximate Square Footage
|
||
Henderson, Nevada
|
Euphoria Institute
|
18,000
|
||
Las Vegas, Nevada
|
Euphoria Institute
|
19,000
|
||
North Las Vegas, Nevada
|
Euphoria Institute
|
12,000
|
||
Southington, Connecticut
|
Lincoln College of New England
|
113,000
|
||
Columbia, Maryland
|
Lincoln College of Technology
|
110,000
|
||
Denver, Colorado
|
Lincoln College of Technology
|
212,000
|
||
Grand Prairie, Texas
|
Lincoln College of Technology
|
146,000
|
||
Indianapolis, Indiana
|
Lincoln College of Technology
|
189,000
|
||
Marietta, Georgia
|
Lincoln College of Technology
|
30,000
|
||
Melrose Park, Illinois
|
Lincoln College of Technology
|
88,000
|
||
West Palm Beach, Florida
|
Lincoln College of Technology
|
117,000
|
||
Suffield, Connecticut
|
132,000
|
|||
Hartford, Connecticut
|
Lincoln Technical Institute
|
367,000
|
||
Allentown, Pennsylvania
|
Lincoln Technical Institute
|
26,000
|
||
Brockton, Massachusetts
|
Lincoln Technical Institute
|
22,000
|
||
East Windsor, Connecticut
|
Lincoln Technical Institute
|
289,000
|
||
Edison, New Jersey
|
Lincoln Technical Institute
|
64,000
|
||
Fern Park, Florida
|
Lincoln Technical Institute
|
46,000
|
||
Hamden, Connecticut
|
Lincoln Technical Institute
|
14,000
|
||
Lincoln, Rhode Island
|
Lincoln Technical Institute
|
59,000
|
||
Lowell, Massachusetts
|
Lincoln Technical Institute
|
21,000
|
||
Mahwah, New Jersey
|
Lincoln Technical Institute
|
79,000
|
||
Moorestown, New Jersey
|
Lincoln Technical Institute
|
35,000
|
||
New Britain, Connecticut
|
Lincoln Technical Institute
|
35,000
|
||
Northeast Philadelphia, Pennsylvania
|
Lincoln Technical Institute
|
25,000
|
||
Paramus, New Jersey
|
Lincoln Technical Institute
|
30,000
|
||
Philadelphia, Pennsylvania
|
Lincoln Technical Institute
|
36,000
|
||
Philadelphia, Pennsylvania
|
Lincoln Technical Institute
|
29,000
|
||
Queens, New York
|
Lincoln Technical Institute
|
48,000
|
||
Shelton, Connecticut
|
Lincoln Technical Institute
|
42,000
|
||
Somerville, Massachusetts
|
Lincoln Technical Institute
|
33,000
|
||
South Plainfield, New Jersey
|
Lincoln Technical Institute
|
60,000
|
||
Union, New Jersey
|
Lincoln Technical Institute
|
56,000
|
Properties Continued
|
||||
Location
|
Brand
|
Approximate Square Footage
|
||
Nashville, Tennessee
|
Lincoln College of Technology
|
278,000
|
||
Cincinnati (Tri-County), Ohio
|
Lincoln College of Technology
|
30,000
|
||
Dayton, Ohio
|
Lincoln College of Technology
|
27,000
|
||
Florence, Kentucky
|
Lincoln College of Technology
|
22,000
|
||
Toledo, Ohio
|
Lincoln College of Technology
|
28,000
|
||
Cleveland, Ohio
|
Lincoln College of Technology
|
25,000
|
||
West Orange, New Jersey
|
Corporate Office
|
52,000
|
||
Melbourne, Florida
|
Florida Medical Training Institute
|
11,000
|
||
Jacksonville, Florida
|
Florida Medical Training Institute
|
7,000
|
||
Tampa, Florida
|
Florida Medical Training Institute
|
8,000
|
||
Miami, Florida
|
Florida Medical Training Institute
|
7,000
|
||
Coral Springs, Florida
|
Florida Medical Training Institute
|
7,000
|
ITEM 3.
|
ITEM 4.
|
Price Range of Common Stock
|
||||||||||||
High
|
Low
|
Dividend
|
||||||||||
Fiscal Year Ended December 31, 2012
|
||||||||||||
First Quarter
|
$ | 9.60 | $ | 7.62 | $ | 0.07 | ||||||
Second Quarter
|
$ | 7.91 | $ | 5.49 | $ | 0.07 | ||||||
Third Quarter
|
$ | 6.38 | $ | 3.44 | $ | 0.07 | ||||||
Fourth Quarter
|
$ | 5.94 | $ | 3.64 | $ | 0.07 |
Price Range of Common Stock
|
||||||||||||
High
|
Low
|
Dividend
|
||||||||||
Fiscal Year Ended December 31, 2011
|
||||||||||||
First Quarter
|
$ | 16.62 | $ | 14.28 | $ | 0.25 | ||||||
Second Quarter
|
$ | 17.29 | $ | 14.11 | $ | 0.25 | ||||||
Third Quarter
|
$ | 19.46 | $ | 7.62 | $ | 0.25 | ||||||
Fourth Quarter
|
$ | 9.64 | $ | 6.89 | $ | 0.07 |
Plan Category
|
Number of
Securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights
|
Weighted-
average
exercise
price of
outstanding
options,
warrants and
rights
|
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column)
|
|||||||||
Equity compensation plans approved by security holders
|
655,875 | $ | 14.72 | 280,410 | ||||||||
Equity compensation plans not approved by security holders
|
- | - | - | |||||||||
Total
|
655,875 | $ | 14.72 | 280,410 |
ITEM
6.
|
SELECTED FINANCIAL DATA
|
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
(In thousands, except per share amounts)
|
||||||||||||||||||||
Statement of Operations Data, Year Ended December 31:
|
||||||||||||||||||||
Revenue
|
$ | 402,697 | $ | 491,821 | $ | 604,762 | $ | 526,745 | $ | 364,617 | ||||||||||
Cost and expenses:
|
||||||||||||||||||||
Educational services and facilities
|
192,205 | 210,892 | 227,331 | 202,501 | 150,394 | |||||||||||||||
Selling, general and administrative (1)
|
204,299 | 232,478 | 257,621 | 243,975 | 183,875 | |||||||||||||||
(Gain) loss on sale of assets
|
(75 | ) | 5 | (14 | ) | 33 | 80 | |||||||||||||
Impairment of goodwill and long-lived assets
|
33,925 | 8,290 | 4,850 | 215 | - | |||||||||||||||
Total costs and expenses
|
430,354 | 451,665 | 489,788 | 446,724 | 334,349 | |||||||||||||||
Operating (loss) income
|
(27,657 | ) | 40,156 | 114,974 | 80,021 | 30,268 | ||||||||||||||
Other:
|
||||||||||||||||||||
Interest income
|
2 | 40 | 30 | 29 | 113 | |||||||||||||||
Interest expense
|
(4,475 | ) | (4,369 | ) | (4,523 | ) | (4,272 | ) | (2,151 | ) | ||||||||||
Other income
|
14 | 18 | 45 | 35 | - | |||||||||||||||
(Loss) income from continuing operations before income taxes
|
(32,116 | ) | 35,845 | 110,526 | 75,813 | 28,230 | ||||||||||||||
(Benefit) provision for income taxes
|
(8,235 | ) | 14,730 | 44,839 | 31,557 | 11,243 | ||||||||||||||
(Loss) income from continuing operations
|
(23,881 | ) | 21,115 | 65,687 | 44,256 | 16,987 | ||||||||||||||
(Loss) gain from discontinued operations, net of income taxes
|
(13,305 | ) | (3,575 | ) | 4,044 | 4,983 | 3,208 | |||||||||||||
Net (loss) income
|
$ | (37,186 | ) | $ | 17,540 | $ | 69,731 | $ | 49,239 | $ | 20,195 | |||||||||
Basic
|
||||||||||||||||||||
(Loss) earnings per share from continuing operations
|
$ | (1.08 | ) | $ | 0.96 | $ | 2.69 | $ | 1.68 | $ | 0.67 | |||||||||
(Loss) earnings per share from discontinued operations
|
(0.60 | ) | (0.16 | ) | 0.17 | 0.19 | 0.13 | |||||||||||||
Net (loss) income per share
|
$ | (1.68 | ) | $ | 0.80 | $ | 2.86 | $ | 1.87 | $ | 0.80 | |||||||||
Diluted
|
||||||||||||||||||||
(Loss) earnings per share from continuing operations
|
$ | (1.08 | ) | $ | 0.95 | $ | 2.63 | $ | 1.63 | $ | 0.65 | |||||||||
(Loss) earnings per share from discontinued operations
|
(0.60 | ) | (0.16 | ) | 0.16 | 0.19 | 0.13 | |||||||||||||
Net (loss) income per share
|
$ | (1.68 | ) | $ | 0.79 | $ | 2.79 | $ | 1.82 | $ | 0.78 | |||||||||
Weighted average number of common shares outstanding:
|
||||||||||||||||||||
Basic
|
22,195 | 22,020 | 24,418 | 26,337 | 25,308 | |||||||||||||||
Diluted
|
22,195 | 22,155 | 25,024 | 27,095 | 25,984 | |||||||||||||||
Other Data:
|
||||||||||||||||||||
Capital expenditures
|
$ | 8,839 | $ | 38,119 | $ | 42,352 | $ | 24,018 | $ | 20,166 | ||||||||||
Depreciation and amortization from continuing operations
|
25,592 | 26,924 | 25,281 | 23,857 | 17,797 | |||||||||||||||
Number of campuses
|
38 | 39 | 39 | 38 | 34 | |||||||||||||||
Average student population from continuing operations (2)
|
18,086 | 23,276 | 29,735 | 26,404 | 19,199 | |||||||||||||||
Cash dividend declared per common share
|
$ | 0.28 | $ | 0.07 | $ | 1.00 | $ | - | $ | - | ||||||||||
Balance Sheet Data, At December 31:
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 61,708 | $ | 26,524 | $ | 65,995 | $ | 46,076 | $ | 15,234 | ||||||||||
Working capital (deficit) (3)
|
40,939 | 1,540 | (4,176 | ) | 4,494 | (19,840 | ) | |||||||||||||
Total assets
|
346,774 | 362,251 | 412,822 | 388,368 | 268,042 | |||||||||||||||
Total debt (4)
|
73,527 | 36,508 | 56,945 | 57,328 | 10,174 | |||||||||||||||
Total stockholders' equity
|
198,477 | 239,025 | 222,485 | 218,636 | 174,949 |
|
·
|
Annual federal Title IV loan limits, including grants have increased. Title IV funds represented 81% of our 2012 revenue on a cash basis;
|
|
·
|
Our internal financing is provided to students only after all other funding resources have been exhausted; thus, by the time this funding is available, students have completed approximately two-thirds of their curriculum and are more likely to graduate;
|
|
·
|
Funding for students who interrupt their education is typically covered by Title IV funds as long as they have been properly packaged for financial aid; and
|
|
·
|
We have a good collection history with our graduates. Historically, 87% of all of our graduates have repaid their balances in full.
|
|
·
|
the equity ratio, which measures the institution's capital resources, ability to borrow and financial viability;
|
|
·
|
the primary reserve ratio, which measures the institution's ability to support current operations from expendable resources; and
|
|
·
|
the net income ratio, which measures the institution's ability to operate at a profit.
|
|
·
|
Educational services and facilities.
Major components of educational services and facilities expenses include faculty compensation and benefits, expenses of books and tools, facility rent, maintenance, utilities, depreciation and amortization of property and equipment used in the provision of education services and other costs directly associated with teaching our programs excluding student services which is included in selling, general and administrative expenses.
|
|
·
|
Selling, general and administrative.
Selling, general and administrative expenses include compensation and benefits of employees who are not directly associated with the provision of educational services (such as executive management and school management, finance and central accounting, legal, human resources and business development), marketing and student enrollment expenses (including compensation and benefits of personnel employed in sales and marketing and student admissions), costs to develop curriculum, costs of professional services, bad debt expense, rent for our corporate headquarters, depreciation and amortization of property and equipment that is not used in the provision of educational services and other costs that are incidental to our operations. Selling, general and administrative expenses also includes the cost of all student services including financial aid and career services. All marketing and student enrollment expenses are recognized in the period incurred.
|
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Revenue
|
$ | 8,500 | $ | 20,804 | $ | 34,732 | ||||||
(Loss) income before income tax
|
(22,142 | ) | (5,260 | ) | 7,657 | |||||||
Income tax (benefit) expense
|
(8,837 | ) | (1,685 | ) | 3,613 | |||||||
Net (loss) income from discontinued operations
|
$ | (13,305 | ) | $ | (3,575 | ) | $ | 4,044 |
At December 31,
|
||||||||
2012
|
2010
|
|||||||
Expected volatility
|
51.25% | 45.00% | ||||||
Expected dividend yield
|
4% | 0% | ||||||
Expected life (term)
|
4.65 Years
|
4.82 Years
|
||||||
Risk-free interest rate
|
0.87% | 1.95% | ||||||
Weighted-average exercise price during the year
|
$ | 7.79 | $ | 20.78 |
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Revenue
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
Costs and expenses:
|
||||||||||||
Educational services and facilities
|
47.7 | % | 42.9 | % | 37.6 | % | ||||||
Selling, general and administrative
|
50.8 | % | 47.2 | % | 42.6 | % | ||||||
Impairment of goodwill and long-lived assets
|
8.4 | % | 1.7 | % | 0.8 | % | ||||||
Total costs and expenses
|
106.9 | % | 91.8 | % | 81.0 | % | ||||||
Operating income
|
-6.9 | % | 8.2 | % | 19.0 | % | ||||||
Interest expense, net
|
-1.1 | % | -0.9 | % | -0.7 | % | ||||||
Other income
|
0.0 | % | 0.0 | % | 0.0 | % | ||||||
Income from continuing operations before income taxes
|
-8.0 | % | 7.3 | % | 18.3 | % | ||||||
Provision for income taxes
|
-2.1 | % | 3.0 | % | 7.4 | % | ||||||
Income from continuing operations
|
-5.9 | % | 4.3 | % | 10.9 | % |
Cash Flow Summary
|
||||||||||||
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
(In thousands)
|
||||||||||||
Net cash provided by operating activities
|
$ | 15,986 | $ | 36,838 | $ | 114,464 | ||||||
Net cash used in investing activities
|
$ | (10,187 | ) | $ | (37,389 | ) | $ | (42,111 | ) | |||
Net cash provided by (used in) financing activities
|
$ | 29,385 | $ | (38,920 | ) | $ | (52,434 | ) |
As of December 31,
|
||||||||
2012
|
2011
|
|||||||
Credit agreement
|
$ | 37,500 | $ | - | ||||
Finance obligation
|
9,672 | 9,672 | ||||||
Capital lease-property (with a rate of 8.0%)
|
26,344 | 26,715 | ||||||
Capital leases-equipment (with rates ranging from 5.0% to 8.5%)
|
11 | 121 | ||||||
Subtotal
|
73,527 | 36,508 | ||||||
Less current maturities
|
(412 | ) | (481 | ) | ||||
Total long-term debt
|
$ | 73,115 | $ | 36,027 |
Payments Due by Period
|
||||||||||||||||||||
Total
|
Less than
1 year
|
1-3 years
|
3-5 years
|
More than
5 years
|
||||||||||||||||
Credit agreement (including interest) (1)
|
$ | 37,514 | $ | - | $ | 37,514 | $ | - | $ | - | ||||||||||
Capital leases (including interest)
|
52,543 | 2,506 | 4,988 | 5,234 | 39,815 | |||||||||||||||
Uncertain income taxes
|
135 | 135 | - | - | - | |||||||||||||||
Operating leases
|
142,311 | 22,546 | 40,865 | 30,445 | 48,455 | |||||||||||||||
Rent on finance obligation
|
6,064 | 1,516 | 3,032 | 1,516 | - | |||||||||||||||
Total contractual cash obligations
|
$ | 238,567 | $ | 26,703 | $ | 86,399 | $ | 37,195 | $ | 88,270 |
(1)
|
Amounts outstanding under the Credit Agreement were repaid on January 3, 2013.
|
ITEM 9A.
|
/s/ Shaun McAlmont
|
|
Shaun McAlmont
|
|
Chief Executive Officer
|
|
March 12, 2013
|
|
/s/ Cesar Ribeiro
|
|
Cesar Ribeiro
|
|
Chief Financial Officer
|
|
March 12, 2013
|
ITEM 9B.
|
ITEM 11.
|
ITEM 12.
|
1.
|
Financial Statements
|
2.
|
Financial Statement Schedule
|
3.
|
Exhibits Required by Securities and Exchange Commission Regulation S-K
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of the Company (1).
|
|
|
|
3.2
|
|
Amended and Restated By-laws of the Company (2).
|
|
|
|
4.1
|
|
Management Stockholders Agreement, dated as of January 1, 2002, by and among Lincoln Technical Institute, Inc., Back to School Acquisition, L.L.C. and the Stockholders and other holders of options under the Management Stock Option Plan listed therein (1).
|
4.2
|
|
Assumption Agreement and First Amendment to Management Stockholders Agreement, dated as of December 20, 2007, by and among Lincoln Educational Services Corporation, Lincoln Technical Institute, Inc., Back to School Acquisition, L.L.C. and the Management Investors parties therein (3).
|
|
|
|
4.3
|
|
Registration Rights Agreement, dated as of June 27, 2005, between the Company and Back to School Acquisition, L.L.C. (2).
|
|
|
|
4.4
|
|
Specimen Stock Certificate evidencing shares of common stock (1).
|
|
|
|
10.1
|
|
Credit Agreement, dated as of April 5, 2012, among the Company, the Guarantors from time to time parties thereto, the Lenders from time to time parties thereto and Bank of America, N.A., as Administrative Agent (5).
|
|
|
|
10.2
|
|
Employment Agreement, dated as of January 8, 2013, between the Company and Scott M. Shaw (8).
|
10.3
|
|
Employment Agreement, dated as of January 8, 2013, between the Company and Cesar Ribeiro (8).
|
10.4
|
|
Employment Agreement, dated as of January 8, 2013, between the Company and Shaun E. McAlmont (8).
|
10.5
|
Employment Agreement, dated as of January 8, 2013, between the Company and Piper P. Jameson (8).
|
|
10.6
|
|
Lincoln Educational Services Corporation Amended and Restated 2005 Long-Term Incentive Pl an (7).
|
|
|
|
10.7
|
|
Lincoln Educational Services Corporation 2005 Non-Employee Directors Restricted Stock Plan (1).
|
|
|
|
10.8
|
|
Lincoln Educational Services Corporation 2005 Deferred Compensation Plan (1).
|
|
|
|
10.9
|
|
Lincoln Technical Institute Management Stock Option Plan, effective January 1, 2002 (1).
|
|
|
|
10.10
|
|
Form of Stock Option Agreement, dated January 1, 2002, between Lincoln Technical Institute, Inc. and certain participants (1).
|
10.11
|
|
Form of Stock Option Agreement under our 2005 Long-Term Incentive Plan (4).
|
|
Form of Restricted Stock Agreement under our 2005 Long-Term Incentive Plan.
|
|
10.13
|
|
Form of Performance-Based Restricted Stock Award Agreement under our Amended & Restated 2005 Long-Term Incentive Plan (9).
|
10.14
|
|
Management Stock Subscription Agreement, dated January 1, 2002, among Lincoln Technical Institute, Inc. and certain management investors (1).
|
|
|
|
10.15
|
|
Stock Repurchase Agreement, dated as of December 15, 2009, among Lincoln Educational Services Corporation and Back to School Acquisition, L.L.C (6).
|
|
Subsidiaries of the Company.
|
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101**
|
The following financial statements from Lincoln Educational Services Corporation’s Quarterly Report on Form 10-K for the year ended December 31, 2012, filed on March 12, 2013, formatted in XBRL: (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and in detail.
|
(1)
|
Incorporated by reference to the Company’s Registration Statement on Form S-1 (Registration No. 333-123644).
|
(2)
|
Incorporated by reference to the Company’s Form 8-K filed June 28, 2005.
|
(3)
|
Incorporated by reference to the Company’s Registration Statement on Form S-3 (Registration No. 333-148406).
|
(4)
|
Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.
|
(5)
|
Incorporated by reference to the Company’s Form 8-K filed April 11, 2012.
|
(6)
|
Incorporated by reference to the Company’s Form 8-K filed December 21, 2009.
|
(7)
|
Registration Statement on Form S-8 (Registration No. 333-173880)
|
(8)
|
Incorporated by reference to the Company’s Form 8-K filed January 10, 2013.
|
(9)
|
Incorporated by reference to the Company’s Form 8-K filed May 5, 2011.
|
*
|
Filed herewith.
|
**
|
As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.
|
Date: March 12, 2013
|
|||
LINCOLN EDUCATIONAL SERVICES CORPORATION
|
|||
By:
|
/s/ Cesar Ribeiro | ||
Cesar Ribeiro
|
|||
Executive Vice President, Chief Financial Officer and Treasurer
|
|||
(Principal Accounting and Financial Officer)
|
Signature
|
Title
|
Date
|
||
/s/ Shaun McAlmont
|
Chief Executive Officer and Director
|
March 12, 2013
|
||
Shaun McAlmont
|
||||
/s/ Cesar Ribeiro
|
Executive Vice President, Chief Financial Officer and
|
March 12, 2013
|
||
Cesar Ribeiro
|
Treasurer (Principal Accounting and Financial Officer) | |||
/s/ Alvin O. Austin
|
Director
|
March 12, 2013
|
||
Alvin O. Austin | ||||
/s/ Peter S. Burgess
|
Director
|
March 12, 2013
|
||
Peter S. Burgess | ||||
/s/ James J. Burke, Jr.
|
Director
|
March 12, 2013
|
||
James J. Burke, Jr. | ||||
/s/ Celia H. Currin
|
Director
|
March 12, 2013
|
||
Celia H. Currin | ||||
/s/ Paul E. Glaske
|
Director
|
March 12, 2013
|
||
Paul E. Glaske | ||||
/s/ Charles F. Kalmbach
|
Director
|
March 12, 2013
|
||
Charles F. Kalmbach | ||||
/s/ Alexis P. Michas
|
Director
|
March 12, 2013
|
||
Alexis P. Michas | ||||
/s/ J. Barry Morrow
|
Director
|
March 12, 2013
|
||
J. Barry Morrow |
Page Number
|
||
F-2
|
||
F-4
|
||
F-6
|
||
F-7
|
||
F-8
|
||
F-9
|
||
F-11
|
||
Item 15
|
||
F-30
|
/s/ DELOITTE & TOUCHE LLP
|
Parsippany, New Jersey
|
March 11, 2013
|
/s/ DELOITTE & TOUCHE LLP
|
Parsippany, New Jersey
|
March 11, 2013
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 61,708 | $ | 26,524 | ||||
Accounts receivable, less allowance of $17,751 and $20,194 at December 31, 2012 and 2011, respectively
|
17,370 | 19,696 | ||||||
Inventories
|
2,677 | 3,051 | ||||||
Prepaid income taxes and income taxes receivable
|
7,085 | 11,743 | ||||||
Deferred income taxes, net
|
7,729 | 8,725 | ||||||
Prepaid expenses and other current assets
|
2,944 | 2,919 | ||||||
Total current assets
|
99,513 | 72,658 | ||||||
PROPERTY, EQUIPMENT AND FACILITIES - At cost, net of accumulated depreciation and amortization of $137,834 and $122,274 at December 31, 2012 and 2011, respectively
|
154,096 | 180,014 | ||||||
OTHER ASSETS:
|
||||||||
Noncurrent receivables, less allowance of $1,078 and $1,664 at December 31, 2012 and 2011, respectively
|
6,109 | 5,572 | ||||||
Deferred finance charges
|
774 | 329 | ||||||
Deferred income taxes, net
|
17,065 | 1,877 | ||||||
Goodwill
|
65,527 | 97,371 | ||||||
Other assets, net
|
3,690 | 4,430 | ||||||
Total other assets
|
93,165 | 109,579 | ||||||
TOTAL
|
$ | 346,774 | $ | 362,251 |
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
REVENUE
|
$ | 402,697 | $ | 491,821 | $ | 604,762 | ||||||
COSTS AND EXPENSES:
|
||||||||||||
Educational services and facilities
|
192,205 | 210,892 | 227,331 | |||||||||
Selling, general and administrative
|
204,299 | 232,478 | 257,621 | |||||||||
(Gain) loss on sale of assets
|
(75 | ) | 5 | (14 | ) | |||||||
Impairment of goodwill and long-lived assets
|
33,925 | 8,290 | 4,850 | |||||||||
Total costs & expenses
|
430,354 | 451,665 | 489,788 | |||||||||
OPERATING (LOSS) INCOME
|
(27,657 | ) | 40,156 | 114,974 | ||||||||
OTHER:
|
||||||||||||
Interest income
|
2 | 40 | 30 | |||||||||
Interest expense
|
(4,475 | ) | (4,369 | ) | (4,523 | ) | ||||||
Other income
|
14 | 18 | 45 | |||||||||
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
(32,116 | ) | 35,845 | 110,526 | ||||||||
(BENEFIT) PROVISION FOR INCOME TAXES
|
(8,235 | ) | 14,730 | 44,839 | ||||||||
(LOSS) INCOME FROM CONTINUING OPERATIONS
|
(23,881 | ) | 21,115 | 65,687 | ||||||||
(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES
|
(13,305 | ) | (3,575 | ) | 4,044 | |||||||
NET (LOSS) INCOME
|
$ | (37,186 | ) | $ | 17,540 | $ | 69,731 | |||||
Basic
|
||||||||||||
(Loss) earnings per share from continuing operations
|
$ | (1.08 | ) | $ | 0.96 | $ | 2.69 | |||||
(Loss) earnings per share from discontinued operations
|
(0.60 | ) | (0.16 | ) | 0.17 | |||||||
Net (loss) income per share
|
$ | (1.68 | ) | $ | 0.80 | $ | 2.86 | |||||
Diluted
|
||||||||||||
(Loss) earnings per share from continuing operations
|
$ | (1.08 | ) | $ | 0.95 | $ | 2.63 | |||||
(Loss) earnings per share from discontinued operations
|
(0.60 | ) | (0.16 | ) | 0.16 | |||||||
Net (loss) income per share
|
$ | (1.68 | ) | $ | 0.79 | $ | 2.79 | |||||
Weighted average number of common shares outstanding:
|
||||||||||||
Basic
|
22,195 | 22,020 | 24,418 | |||||||||
Diluted
|
22,195 | 22,155 | 25,024 |
December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Net (loss) income
|
$ | (37,186 | ) | $ | 17,540 | $ | 69,731 | |||||
Other comprehensive (loss) income
|
||||||||||||
Employee pension plan adjustments, net of taxes of $25, $1,321 and $102 for the years ended December 31, 2012, 2011 and 2010, respectively
|
(60 | ) | (1,968 | ) | 153 | |||||||
Comprehensive (loss) income
|
$ | (37,246 | ) | $ | 15,572 | $ | 69,884 |
Accumulated
|
||||||||||||||||||||||||||||
Additional
|
Other
|
|||||||||||||||||||||||||||
Common Stock
|
Paid-in
|
Treasury
|
Retained
|
Comprehensive
|
||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Stock
|
Earnings
|
Loss
|
Total
|
||||||||||||||||||||||
BALANCE - January 1, 2010
|
27,722,471 | $ | 137,689 | $ | 14,161 | $ | (32,771 | ) | $ | 104,458 | $ | (4,901 | ) | $ | 218,636 | |||||||||||||
Net income
|
- | - | - | - | 69,731 | - | 69,731 | |||||||||||||||||||||
Employee pension plan adjustments, net of taxes
|
- | - | - | - | - | 153 | 153 | |||||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||
Restricted stock
|
17,624 | - | 2,036 | - | - | - | 2,036 | |||||||||||||||||||||
Stock options
|
- | - | 629 | - | - | - | 629 | |||||||||||||||||||||
Purchase of treasury stock
|
- | - | - | (50,089 | ) | - | - | (50,089 | ) | |||||||||||||||||||
Tax benefit of options exercised
|
- | - | 1,484 | - | - | - | 1,484 | |||||||||||||||||||||
Net share settlement for equity-based compensation | (52,214 | ) | (112 | ) | (932 | ) | - | - | - | (1,044 | ) | |||||||||||||||||
Cash dividend of $1.00 per common share | - | - | - | - | (22,200 | ) | - | (22,200 | ) | |||||||||||||||||||
Exercise of stock options
|
422,106 | 3,149 | - | - | - | - | 3,149 | |||||||||||||||||||||
BALANCE - December 31, 2010
|
28,109,987 | 140,726 | 17,378 | (82,860 | ) | 151,989 | (4,748 | ) | 222,485 | |||||||||||||||||||
Net income
|
- | - | - | - | 17,540 | - | 17,540 | |||||||||||||||||||||
Employee pension plan adjustments, net of taxes
|
- | - | - | - | - | (1,968 | ) | (1,968 | ) | |||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||
Restricted stock
|
393,431 | - | 3,141 | - | - | - | 3,141 | |||||||||||||||||||||
Stock options
|
- | - | 400 | - | - | - | 400 | |||||||||||||||||||||
Tax benefit of option exercised
|
- | - | 158 | - | - | - | 158 | |||||||||||||||||||||
Tax deficiency of stock-based awards and canceled | - | - | (740 | ) | - | - | - | (740 | ) | |||||||||||||||||||
Net share settlement for equity-based compensation | (68,250 | ) | (60 | ) | (802 | ) | - | - | - | (862 | ) | |||||||||||||||||
Cash dividend of $0.07 per common share | - | - | - | - | (1,583 | ) | - | (1,583 | ) | |||||||||||||||||||
Cash dividend declared true-up
|
- | - | - | - | (257 | ) | - | (257 | ) | |||||||||||||||||||
Exercise of stock options
|
113,106 | 711 | - | - | - | - | 711 | |||||||||||||||||||||
BALANCE - December 31, 2011
|
28,548,274 | 141,377 | 19,535 | (82,860 | ) | 167,689 | (6,716 | ) | 239,025 | |||||||||||||||||||
Net loss
|
- | - | - | - | (37,186 | ) | - | (37,186 | ) | |||||||||||||||||||
Employee pension plan adjustments, net of taxes
|
- | - | - | - | - | (60 | ) | (60 | ) | |||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||
Restricted stock
|
1,213,621 | - | 3,982 | - | - | - | 3,982 | |||||||||||||||||||||
Stock options
|
- | - | 358 | - | - | - | 358 | |||||||||||||||||||||
Tax deficiency of stock-based awards and cancels | - | - | (667 | ) | - | - | - | (667 | ) | |||||||||||||||||||
Net share settlement for equity-based compensation | (102,438 | ) | - | (531 | ) | - | - | - | (531 | ) | ||||||||||||||||||
Cash dividend of $0.28 per
common share
|
- | - | - | - | (6,444 | ) | - | (6,444 | ) | |||||||||||||||||||
BALANCE - December 31, 2012
|
29,659,457 | $ | 141,377 | $ | 22,677 | $ | (82,860 | ) | $ | 124,059 | $ | (6,776 | ) | $ | 198,477 |
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net (loss) income
|
$ | (37,186 | ) | $ | 17,540 | $ | 69,731 | |||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
26,848 | 28,464 | 26,218 | |||||||||
Deferred income taxes
|
(14,229 | ) | 3,200 | 2,431 | ||||||||
(Gain) loss on disposition of assets
|
(71 | ) | 5 | (8 | ) | |||||||
Impairment of goodwill and long-lived assets
|
43,364 | 10,377 | 6,244 | |||||||||
Provision for doubtful accounts
|
21,056 | 30,553 | 39,106 | |||||||||
Stock-based compensation expense
|
4,340 | 3,541 | 2,665 | |||||||||
Tax benefit associated with exercise of share based payments
|
- | (158 | ) | (1,484 | ) | |||||||
Deferred rent
|
421 | 768 | 1,566 | |||||||||
(Increase) decrease in assets, net of acquisition of business:
|
||||||||||||
Accounts receivable
|
(19,202 | ) | (15,317 | ) | (36,732 | ) | ||||||
Inventories
|
421 | 504 | (226 | ) | ||||||||
Prepaid income taxes and income taxes receivable
|
4,053 | (13,268 | ) | (2,830 | ) | |||||||
Prepaid expenses and current assets
|
(1,274 | ) | (1,670 | ) | 4,511 | |||||||
Other assets
|
999 | 696 | (439 | ) | ||||||||
Increase (decrease) in liabilities, net of acquisition of business:
|
||||||||||||
Accounts payable
|
(2,180 | ) | (5,510 | ) | 2,338 | |||||||
Accrued expenses
|
(1,688 | ) | (14,936 | ) | (984 | ) | ||||||
Pension plan liabilities
|
(718 | ) | (276 | ) | (822 | ) | ||||||
Unearned tuition
|
(9,466 | ) | (7,702 | ) | 2,857 | |||||||
Other liabilities
|
498 | 27 | 322 | |||||||||
Total adjustments
|
53,172 | 19,298 | 44,733 | |||||||||
Net cash provided by operating activities
|
15,986 | 36,838 | 114,464 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Restricted cash
|
- | 694 | 164 | |||||||||
Capital expenditures
|
(8,839 | ) | (38,119 | ) | (42,352 | ) | ||||||
Proceeds from sale of property and equipment
|
124 | 36 | 77 | |||||||||
Acquisition of business, net of cash acquired
|
(1,472 | ) | - | - | ||||||||
Net cash used in investing activities
|
(10,187 | ) | (37,389 | ) | (42,111 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds from borrowings
|
37,500 | - | 20,000 | |||||||||
Payments on borrowings
|
- | (20,000 | ) | (20,000 | ) | |||||||
Payment of deferred finance fees
|
(659 | ) | - | - | ||||||||
Proceeds from exercise of stock options
|
- | 711 | 3,149 | |||||||||
Tax benefit associated with exercise of share based payments
|
- | 158 | 1,484 | |||||||||
Net share settlement for equity-based compensation
|
(531 | ) | (862 | ) | (1,044 | ) | ||||||
Dividends paid
|
(6,444 | ) | (18,490 | ) | (5,550 | ) | ||||||
Principal payments under capital lease obligations
|
(481 | ) | (437 | ) | (384 | ) | ||||||
Purchase of treasury stock
|
- | - | (50,089 | ) | ||||||||
Net cash provided by (used in) financing activities
|
29,385 | (38,920 | ) | (52,434 | ) | |||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
35,184 | (39,471 | ) | 19,919 | ||||||||
CASH AND CASH EQUIVALENTS—Beginning of year
|
26,524 | 65,995 | 46,076 | |||||||||
CASH AND CASH EQUIVALENTS—End of year
|
$ | 61,708 | $ | 26,524 | $ | 65,995 |
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$ | 4,184 | $ | 4,003 | $ | 4,180 | ||||||
Income taxes
|
$ | 226 | $ | 23,218 | $ | 49,331 | ||||||
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||||||
Liabilities accrued for or noncash purchases of fixed assets
|
$ | 1,789 | $ | 1,166 | $ | 5,962 | ||||||
Dividends payable
|
$ | - | $ | - | $ | 16,650 |
1.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
FINANCIAL AID AND REGULATORY COMPLIANCE
|
3.
|
WEIGHTED AVERAGE COMMON SHARES
|
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Basic shares outstanding
|
22,195,407 | 22,019,563 | 24,418,460 | |||||||||
Dilutive effect of stock options
|
- | 135,437 | 605,713 | |||||||||
Diluted shares outstanding
|
22,195,407 | 22,155,000 | 25,024,173 |
4.
|
DISCONTINUED OPERATIONS
|
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Revenue
|
$ | 8,500 | $ | 20,804 | $ | 34,732 | ||||||
(Loss) income before income tax
|
(22,142 | ) | (5,260 | ) | 7,657 | |||||||
Income tax (benefit) expense
|
(8,837 | ) | (1,685 | ) | 3,613 | |||||||
Net (loss) income from discontinued operations
|
$ | (13,305 | ) | $ | (3,575 | ) | $ | 4,044 |
5.
|
BUSINESS ACQUISITIONS
|
6.
|
GOODWILL AND OTHER INTANGIBLES
|
Balance as of January 1, 2011:
|
||||
Goodwill
|
$ | 115,303 | ||
Accumulated impairment losses
|
(8,594 | ) | ||
106,709 | ||||
Goodwill impairment (1)
|
(9,338 | ) | ||
Balance as of December 31, 2011:
|
||||
Goodwill
|
115,303 | |||
Accumulated impairment losses
|
(17,932 | ) | ||
97,371 | ||||
Acquisition of FMTI
|
1,873 | |||
Goodwill impairment (2)
|
(33,717 | ) | ||
Balance as of December 31, 2012:
|
||||
Goodwill
|
117,176 | |||
Accumulated impairment losses
|
(51,649 | ) | ||
$ | 65,527 |
|
(1)
|
$1.0 million included in discontinued operations.
|
|
(2)
|
$5.5 million included in discontinued operations.
|
Student Contracts
|
Indefinite
Trade Name
|
Trade
Name
|
Accreditation
|
Curriculum
|
Non-compete
|
Total
|
||||||||||||||||||||||
Gross carrying amount at December 31, 2011
|
$ | - | $ | 180 | $ | 509 | $ | 1,268 | $ | 1,150 | $ | 1,980 | $ | 5,087 | ||||||||||||||
Acquisition of FMTI (1)
|
25 | - | 25 | - | 224 | 200 | 474 | |||||||||||||||||||||
Write-off (4) | - | - | - | - | - | (1,980 | ) | (1,980 | ) | |||||||||||||||||||
Impairment (2)
|
- | - | (168 | ) | - | (250 | ) | - | (418 | ) | ||||||||||||||||||
Gross carrying amount at December 31, 2012
|
25 | 180 | 366 | 1,268 | 1,124 | 200 | 3,163 | |||||||||||||||||||||
Accumulated amortization at
|
- | - | 262 | - | 620 | 1,952 | 2,834 | |||||||||||||||||||||
December 31, 2011
|
||||||||||||||||||||||||||||
Amortization
|
25 | - | 74 | - | 135 | 56 | 290 | |||||||||||||||||||||
Write-off (4) | - | - | - | - | - | (1,980 | ) | (1,980 | ) | |||||||||||||||||||
Impairment (2)
|
- | - | (127 | ) | - | (85 | ) | - | (212 | ) | ||||||||||||||||||
Accumulated amortization at December 31, 2012
|
25 | - | 209 | - | 670 | 28 | 932 | |||||||||||||||||||||
Net carrying amount at
|
$ | - | $ | 180 | $ | 157 | $ | 1,268 | $ | 454 | $ | 172 | $ | 2,231 | ||||||||||||||
December 31, 2012
|
||||||||||||||||||||||||||||
Weighted average amortization period (years)
|
Indefinite
|
7 |
Indefinite
|
9 | 3 |
Student Contracts
|
Indefinite
Trade Name
|
Trade
Name
|
Accreditation
|
Curriculum
|
Non-compete
|
Total
|
||||||||||||||||||||||
Gross carrying amount at December 31, 2010
|
$ | 4,827 | $ | 660 | $ | 839 | $ | 2,307 | $ | 1,150 | $ | 2,181 | $ | 11,964 | ||||||||||||||
Reclassification (3)
|
- | (480 | ) | 480 | - | - | - | - | ||||||||||||||||||||
Write-off (4)
|
(4,827 | ) | - | (810 | ) | - | - | (201 | ) | (5,838 | ) | |||||||||||||||||
Impairment (5)
|
- | - | - | (1,039 | ) | - | - | (1,039 | ) | |||||||||||||||||||
Gross carrying amount at December 31, 2011
|
- | 180 | 509 | 1,268 | 1,150 | 1,980 | 5,087 | |||||||||||||||||||||
Accumulated amortization at December 31, 2010
|
4,824 | - | 503 | - | 505 | 1,478 | 7,310 | |||||||||||||||||||||
Amortization
|
3 | - | 569 | - | 115 | 675 | 1,362 | |||||||||||||||||||||
Write-off (4)
|
(4,827 | ) | - | (810 | ) | - | - | (201 | ) | (5,838 | ) | |||||||||||||||||
Accumulated amortization at
|
- | - | 262 | - | 620 | 1,952 | 2,834 | |||||||||||||||||||||
December 31, 2011
|
||||||||||||||||||||||||||||
Net carrying amount at
|
$ | - | $ | 180 | $ | 247 | $ | 1,268 | $ | 530 | $ | 28 | $ | 2,253 | ||||||||||||||
December 31, 2011
|
||||||||||||||||||||||||||||
Weighted average amortization
period (years)
|
Indefinite
|
6 |
Indefinite
|
10 | 3 |
(1)
|
The Company purchased FMTI in April 2012. Refer to Note 5 for more information on the purchase.
|
(2)
|
Refer to Note 1 for more information related to the impairment.
|
(3)
|
Reclassification due to the Company’s plan to rebrand one of its institutions.
|
(4)
|
The Company wrote-off the value of fully amortized assets not in service.
|
(5)
|
The impairment relates to regional accreditation indefinite intangible asset that is no longer being utilized.
|
7.
|
PROPERTY, EQUIPMENT AND FACILITIES
|
Useful life (years)
|
At December 31,
|
|||||||||||
2012
|
2011
|
|||||||||||
Land
|
- | $ | 18,363 | $ | 18,363 | |||||||
Buildings and improvements
|
1-25 | 192,990 | 206,499 | |||||||||
Equipment, furniture and fixtures
|
1-12 | 79,172 | 75,112 | |||||||||
Vehicles
|
3 | 1,231 | 1,155 | |||||||||
Construction in progress
|
- | 174 | 1,159 | |||||||||
291,930 | 302,288 | |||||||||||
Less accumulated depreciation and amortization
|
(137,834 | ) | (122,274 | ) | ||||||||
$ | 154,096 | $ | 180,014 |
8.
|
ACCRUED EXPENSES
|
At December 31,
|
||||||||
2012
|
2011
|
|||||||
Accrued compensation and benefits
|
$ | 3,163 | $ | 4,701 | ||||
Other accrued expenses
|
6,583 | 6,595 | ||||||
$ | 9,746 | $ | 11,296 |
9.
|
LONG-TERM DEBT AND LEASE OBLIGATIONS
|
At December 31,
|
||||||||
2012
|
2011
|
|||||||
Credit agreement (a)
|
$ | 37,500 | $ | - | ||||
Credit agreement (b)
|
- | - | ||||||
Finance obligation (c)
|
9,672 | 9,672 | ||||||
Capital lease-property (with a rate of 8.0%) (d)
|
26,344 | 26,715 | ||||||
Capital leases-equipment (with rates ranging from 5.0% to 8.5%)
|
11 | 121 | ||||||
73,527 | 36,508 | |||||||
Less current maturities
|
(412 | ) | (481 | ) | ||||
$ | 73,115 | $ | 36,027 |
Year ending December 31,
|
||||
2013
|
$ | 412 | ||
2014
|
435 | |||
2015
|
37,971 | |||
2016
|
10,243 | |||
2017
|
748 | |||
Thereafter
|
23,718 | |||
$ | 73,527 |
10.
|
STOCKHOLDERS' EQUITY
|
Shares
|
Weighted Average Grant Date Fair Value Per Share
|
|||||||
Nonvested restricted stock outstanding at December 31, 2011
|
501,551 | $ | 16.10 | |||||
Restricted stock awarded
|
1,213,621 | 4.82 | ||||||
Restricted stock vested
|
(374,088 | ) | 9.30 | |||||
Nonvested restricted stock outstanding at December 31, 2012
|
1,341,084 | 7.79 |
At December 31,
|
||||||||
2012
|
2010
|
|||||||
Expected volatility
|
51.25% | 45.00% | ||||||
Expected dividend yield
|
4% | 0% | ||||||
Expected life (term)
|
4.65 Years
|
4.82 Years
|
||||||
Risk-free interest rate
|
0.87% | 1.95% | ||||||
Weighted-average exercise price during the year
|
$ | 7.79 | $ | 20.78 |
Shares
|
Weighted Average Exercise Price Per Share
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate Intrinsic Value
|
||||||||||
Outstanding December 31, 2009
|
1,183,921 | $ | 11.74 |
4.95 years
|
$ | 11,934 | |||||||
Granted
|
68,000 | 20.78 | |||||||||||
Cancelled
|
(108,875 | ) | 15.15 | ||||||||||
Exercised
|
(422,106 | ) | 7.46 | 5,668 | |||||||||
Outstanding December 31, 2010
|
720,940 | 14.59 |
5.14 years
|
2,095 | |||||||||
Cancelled
|
(74,459 | ) | 12.80 | ||||||||||
Exercised
|
(113,106 | ) | 6.29 | 759 | |||||||||
Outstanding December 31, 2011
|
533,375 | 16.60 |
4.68 years
|
- | |||||||||
Granted
|
157,000 | 7.79 | |||||||||||
Cancelled
|
(34,500 | ) | 12.26 | ||||||||||
Outstanding December 31, 2012
|
655,875 | 14.72 |
4.89 years
|
- | |||||||||
Vested or expected to vest as of December 31, 2012
|
623,609 | 15.02 |
4.67 years
|
- | |||||||||
Exercisable as of December 31, 2012
|
494,543 | 16.60 |
3.54 years
|
- |
At December 31, 2012
|
||||||||||||||||||||||
Stock Options Outstanding
|
Stock Options Exercisable
|
|||||||||||||||||||||
Range of Exercise Prices
|
Shares
|
Contractual
Weighted Average
life (years)
|
Weighted
Average Price
|
Shares
|
Weighted
Exercise Price
|
|||||||||||||||||
$ | 4.00-$13.99 | 262,792 | 7.11 | $ | 9.63 | 115,792 | $ | 11.96 | ||||||||||||||
$ | 14.00-$19.99 | 277,083 | 3.19 | 16.42 | 277,083 | 16.42 | ||||||||||||||||
$ | 20.00-$25.00 | 116,000 | 3.89 | 22.19 | 101,668 | 22.37 | ||||||||||||||||
655,875 | 4.89 | 14.72 | 494,543 | 16.60 |
11.
|
PENSION PLAN
|
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
CHANGES IN BENEFIT OBLIGATIONS:
|
||||||||||||
Benefit obligation-beginning of year
|
$ | 21,233 | $ | 17,903 | $ | 16,326 | ||||||
Service cost
|
35 | 117 | 91 | |||||||||
Interest cost
|
872 | 939 | 918 | |||||||||
Actuarial loss
|
1,926 | 3,008 | 1,210 | |||||||||
Benefits paid
|
(897 | ) | (734 | ) | (642 | ) | ||||||
Benefit obligation at end of year
|
23,169 | 21,233 | 17,903 | |||||||||
CHANGE IN PLAN ASSETS:
|
||||||||||||
Fair value of plan assets-beginning of year
|
14,639 | 15,087 | 13,134 | |||||||||
Actual return on plan assets
|
1,807 | 12 | 1,773 | |||||||||
Employer contributions
|
719 | 274 | 822 | |||||||||
Benefits paid
|
(897 | ) | (734 | ) | (642 | ) | ||||||
Fair value of plan assets-end of year
|
16,268 | 14,639 | 15,087 | |||||||||
BENEFIT OBLIGATION IN EXCESS OF FAIR VALUE FUNDED STATUS:
|
$ | (6,901 | ) | $ | (6,594 | ) | $ | (2,816 | ) |
At December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Noncurrent liabilities
|
$ | (6,901 | ) | $ | (6,594 | ) | $ | (2,816 | ) |
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Accumulated loss
|
$ | (11,276 | ) | $ | (11,191 | ) | $ | (7,903 | ) | |||
Deferred income taxes
|
4,500 | 4,475 | 3,155 | |||||||||
Accumulated other comprehensive loss
|
$ | (6,776 | ) | $ | (6,716 | ) | $ | (4,748 | ) |
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
COMPONENTS OF NET PERIODIC BENEFIT COST
|
||||||||||||
Service cost
|
$ | 35 | $ | 117 | $ | 91 | ||||||
Interest cost
|
872 | 939 | 918 | |||||||||
Expected return on plan assets
|
(1,021 | ) | (1,034 | ) | (1,041 | ) | ||||||
Recognized net actuarial loss
|
1,056 | 742 | 732 | |||||||||
Net periodic benefit cost
|
$ | 942 | $ | 764 | $ | 700 |
Quoted Prices in
Active Markets
for Identical
Assets
|
Significant Other
Observable Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
|||||||||||||
Equity securities
|
$ | 7,455 | $ | - | $ | - | $ | 7,455 | ||||||||
Fixed income
|
5,835 | - | - | 5,835 | ||||||||||||
International equities
|
2,957 | - | - | 2,957 | ||||||||||||
Cash and equivalents
|
21 | - | - | 21 | ||||||||||||
Balance at December 31, 2012
|
$ | 16,268 | $ | - | $ | - | $ | 16,268 |
Quoted Prices in Active Markets for Identical Assets
|
Significant Other Observable Inputs
|
Significant Unobservable Inputs
|
||||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
|||||||||||||
Equity securities
|
$ | 6,798 | $ | - | $ | - | $ | 6,798 | ||||||||
Fixed income
|
5,289 | - | - | 5,289 | ||||||||||||
International equities
|
2,538 | - | - | 2,538 | ||||||||||||
Cash and equivalents
|
14 | - | - | 14 | ||||||||||||
Balance at December 31, 2011
|
$ | 14,639 | $ | - | $ | - | $ | 14,639 |
2012
|
2011
|
2010
|
||||||||||
Equity securities
|
46 | % | 47 | % | 48 | % | ||||||
Fixed income
|
36 | % | 36 | % | 37 | % | ||||||
International equities
|
18 | % | 17 | % | 15 | % | ||||||
Cash and equivalents
|
0 | % | 0 | % | 0 | % | ||||||
Total
|
100 | % | 100 | % | 100 | % |
2012
|
2011
|
2010
|
||||||||||
Discount rate
|
3.55 | % | 4.10 | % | 5.75 | % | ||||||
Rate of compensation increase
|
1.75 | % | 4.00 | % | 4.00 | % |
2012
|
2011
|
2010
|
||||||||||
Discount rate
|
4.10 | % | 5.18 | % | 5.18 | % | ||||||
Rate of compensation increase
|
4.00 | % | 4.00 | % | 4.00 | % | ||||||
Long-term rate of return
|
7.00 | % | 7.00 | % | 8.00 | % |
Year Ending December 31,
|
||||
2013
|
$ | 1,002 | ||
2014
|
1,050 | |||
2015
|
1,167 | |||
2016
|
1,255 | |||
2017
|
1,320 | |||
Years 2018-2022
|
7,082 |
12.
|
INCOME TAXES
|
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ | 4,499 | $ | 8,570 | $ | 34,392 | ||||||
State
|
1,494 | 2,960 | 8,016 | |||||||||
Total
|
5,993 | 11,530 | 42,408 | |||||||||
Deferred:
|
||||||||||||
Federal
|
(11,394 | ) | 3,312 | 2,742 | ||||||||
State
|
(2,834 | ) | (112 | ) | (311 | ) | ||||||
Total
|
(14,228 | ) | 3,200 | 2,431 | ||||||||
Total (benefit) provision
|
$ | (8,235 | ) | $ | 14,730 | $ | 44,839 |
At December 31,
|
||||||||
2012
|
2011
|
|||||||
Deferred tax assets
|
||||||||
Current:
|
||||||||
Accrued vacation
|
$ | 60 | $ | 63 | ||||
Net operating loss carryforwards
|
586 | 586 | ||||||
Allowance for bad debts
|
7,083 | 8,076 | ||||||
Total current deferred tax assets
|
7,729 | 8,725 | ||||||
Deferred tax assets
|
||||||||
Noncurrent:
|
||||||||
Allowance for bad debts
|
430 | 665 | ||||||
Accrued rent
|
3,785 | 3,645 | ||||||
Stock-based compensation
|
2,095 | 1,855 | ||||||
Depreciation
|
5,953 | - | ||||||
Other intangibles
|
547 | 511 | ||||||
Pension plan liabilities
|
2,754 | 2,637 | ||||||
Net operating loss carryforwards
|
1,553 | 2,139 | ||||||
Sale leaseback-deferred gain
|
2,482 | 2,438 | ||||||
Other
|
77 | 120 | ||||||
Total noncurrent deferred tax assets
|
19,676 | 14,010 | ||||||
Deferred tax liabilities
|
||||||||
Noncurrent:
|
||||||||
Depreciation
|
- | (1,995 | ) | |||||
Goodwill
|
(2,611 | ) | (10,138 | ) | ||||
Total deferred tax liabilities
|
(2,611 | ) | (12,133 | ) | ||||
Total net noncurrent deferred tax assets
|
17,065 | 1,877 | ||||||
Total net deferred tax assets
|
$ | 24,794 | $ | 10,602 |
Year Ended December 31,
|
||||||||||||||||||||||||
2012
|
2011
|
2010
|
||||||||||||||||||||||
(Loss) income from continuing operations before taxes
|
$ | (32,116 | ) | $ | 35,845 | $ | 110,526 | |||||||||||||||||
Expected tax (benefit) expense
|
$ | (11,240 | ) | 35.0 | % | $ | 12,546 | 35.0 | % | $ | 38,684 | 35.0 | % | |||||||||||
State tax (benefit) expense (net of federal)
|
(871 | ) | 2.7 | 1,851 | 5.2 | 5,008 | 4.6 | |||||||||||||||||
Permanent impairment
|
3,588 | (11.2 | ) | 109 | 0.3 | 1,698 | 1.5 | |||||||||||||||||
Other
|
288 | (0.9 | ) | 224 | 0.6 | (551 | ) | (0.5 | ) | |||||||||||||||
Total
|
$ | (8,235 | ) | 25.6 | % | $ | 14,730 | 41.1 | % | $ | 44,839 | 40.6 | % |
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Balance at January 1,
|
$ | 100 | $ | 100 | $ | 200 | ||||||
Decrease for tax positions of prior years
|
(100 | ) | (100 | ) | ||||||||
Increase for tax positions of current year
|
135 | - | - | |||||||||
Balance at December 31,
|
$ | 135 | $ | 100 | $ | 100 |
13.
|
SEGMENT REPORTING
|
14.
|
RELATED PARTY TRANSACTIONS
|
15.
|
COMMITMENTS AND CONTINGENCIES
|
Year Ending December 31,
|
Finance Obligation
|
Operating Leases
|
Capital Leases
|
|||||||||
2013
|
$ | 1,516 | $ | 22,546 | $ | 2,506 | ||||||
2014
|
1,516 | 21,270 | 2,494 | |||||||||
2015
|
1,516 | 19,594 | 2,494 | |||||||||
2016
|
1,516 | 15,819 | 2,556 | |||||||||
2017
|
- | 14,626 | 2,678 | |||||||||
Thereafter
|
- | 48,456 | 39,815 | |||||||||
6,064 | 142,311 | 52,543 | ||||||||||
Less amount representing interest
|
(6,064 | ) | - | (26,188 | ) | |||||||
$ | - | $ | 142,311 | $ | 26,355 |
16.
|
UNAUDITED QUARTERLY FINANCIAL INFORMATION
|
Quarter
|
||||||||||||||||
2012
|
First
|
Second
|
Third
|
Fourth
|
||||||||||||
Revenue
|
$ | 101,158 | $ | 97,031 | $ | 102,057 | $ | 102,451 | ||||||||
Income (loss) from continuing operations
|
(2,176 | ) | (13,838 | ) | 1,086 | (8,953 | ) | |||||||||
Loss from discontinued operations
|
(879 | ) | (6,870 | ) | (2,570 | ) | (2,986 | ) | ||||||||
Net loss
|
(3,055 | ) | (20,708 | ) | (1,484 | ) | (11,939 | ) | ||||||||
Basic
|
||||||||||||||||
(Loss) earnings per share from continuing operations
|
$ | (0.10 | ) | $ | (0.62 | ) | $ | 0.05 | $ | (0.40 | ) | |||||
Loss per share from discontinued operations
|
(0.04 | ) | (0.31 | ) | (0.12 | ) | (0.14 | ) | ||||||||
Net (loss) income per share
|
$ | (0.14 | ) | $ | (0.93 | ) | $ | (0.07 | ) | $ | (0.54 | ) | ||||
Diluted
|
||||||||||||||||
(Loss) earnings per share from continuing operations
|
$ | (0.10 | ) | $ | (0.62 | ) | $ | 0.05 | $ | (0.40 | ) | |||||
Loss per share from discontinued operations
|
(0.04 | ) | (0.31 | ) | (0.12 | ) | (0.14 | ) | ||||||||
Net (loss) income per share
|
$ | (0.14 | ) | $ | (0.93 | ) | $ | (0.07 | ) | $ | (0.54 | ) |
Quarter
|
||||||||||||||||
2011
|
First
|
Second
|
Third
|
Fourth
|
||||||||||||
Revenue
|
$ | 138,404 | $ | 122,665 | $ | 118,985 | $ | 111,767 | ||||||||
Income (loss) from continuing operations
|
10,159 | 5,001 | (1,334 | ) | 7,289 | |||||||||||
Income (loss) from discontinued operations
|
198 | (71 | ) | (2,592 | ) | (1,110 | ) | |||||||||
Net income (loss)
|
10,357 | 4,930 | (3,926 | ) | 6,179 | |||||||||||
Basic
|
||||||||||||||||
Earnings (loss) per share from continuing operations
|
$ | 0.46 | $ | 0.23 | $ | (0.06 | ) | $ | 0.33 | |||||||
Earnings (loss) per share from discontinued operations
|
0.01 | (0.01 | ) | (0.12 | ) | (0.05 | ) | |||||||||
Net income (loss) per share
|
$ | 0.47 | $ | 0.22 | $ | (0.18 | ) | $ | 0.28 | |||||||
Diluted
|
||||||||||||||||
Earnings (loss) per share from continuing operations
|
$ | 0.45 | $ | 0.22 | $ | (0.06 | ) | $ | 0.33 | |||||||
Earnings (loss) per share from discontinued operations
|
0.01 | - | (0.12 | ) | (0.05 | ) | ||||||||||
Net income (loss) per share
|
$ | 0.46 | $ | 0.22 | $ | (0.18 | ) | $ | 0.28 |
17.
|
DIVIDENDS
|
Description
|
Balance at Beginning of Period
|
Charged to Expense
|
Accounts Written-off
|
Balance at End of Period
|
||||||||||||
Allowance accounts for the year ended:
|
||||||||||||||||
December 31, 2012 Student receivable allowance
|
$ | 21,858 | $ | 21,056 | $ | (24,085 | ) | $ | 18,829 | |||||||
December 31, 2011 Student receivable allowance
|
$ | 26,993 | $ | 30,553 | $ | (35,688 | ) | $ | 21,858 | |||||||
December 31, 2010 Student receivable allowance
|
$ | 26,859 | $ | 39,106 | $ | (38,972 | ) | $ | 26,993 |
Date of Award : | ||
Participant : |
|
(A)
|
Vesting Schedule
.
|
|
(1)
|
Subject to the Participant’s continued employment with the Company and its Subsidiaries (the “
Company Group
”), __________ of the Restricted Shares shall vest on each of the _____________ anniversaries of the Date of Award (each, a “
Vesting Date
”). Any fractional Restricted Shares resulting from the application of the vesting schedule shall be aggregated and the Restricted Shares resulting from such aggregation shall vest on the fifth anniversary of the Date of Award.
|
|
(2)
|
Upon vesting, the Restricted Shares shall no longer be subject to the transfer restrictions pursuant to Section D or cancellation pursuant to Section B.
|
|
(B)
|
Termination of Employment.
|
|
(1)
|
If, prior to a Vesting Date, the Participant’s employment with the Company Group terminates for any reason other than death, Disability or due to an Involuntary Termination, the unvested Restricted Shares shall be cancelled immediately without consideration as of the date of such termination and the Participant shall immediately forfeit any rights to the Restricted Shares.
|
|
(2)
|
If, prior to a Vesting Date, the Participant’s employment with the Company Group terminates as a result of the Participant’s death, Disability or Involuntary Termination, all of the unvested Restricted Shares shall immediately vest in full and shall no longer be subject to the transfer restrictions pursuant to Section D or cancellation pursuant to Section B.
|
|
(3)
|
“
Involuntary Termination
” has the meaning set forth in the employment agreement between the Participant and the Company. In the event that the Participant is not party to an employment agreement, “Involuntary Termination” means the termination of the Participant’s employment (i) by the Company (or any successor thereto) without Cause or (ii) by the Participant for Good Reason, each as defined in Appendix A.
|
|
(4)
|
For purposes of this Agreement, “
Disability
” has the meaning set forth in the employment agreement between the Participant and the Company. In the event that the Participant is not party to an employment agreement, Disability shall mean a physical or mental disability or infirmity of the Participant that prevents the normal performance of substantially all of the Participant’s duties as an employee of the Company or any Subsidiary, which disability or infirmity shall exist for any continuous period of 180 days within any twelve (12) month period.
|
|
(C)
|
Change in Control
.
|
|
(1)
|
In the event of a Change of Control prior to any Vesting Date, all of the unvested Restricted Shares shall immediately vest in full and shall no longer be subject to the transfer restrictions pursuant to Section D or cancellation pursuant to Section B.
|
|
(2)
|
“
Change in Control
” has the meaning set forth in the employment agreement between the Participant and the Company. In the event that the Participant is not party to an employment agreement, “Change in Control” has the meaning set forth on Appendix A.
|
|
(D)
|
Transferability
. Pursuant to Section 12 of the Plan, the Restricted Shares are not transferable other than by last will and testament or by the laws of descent and distribution, and the Participant’s rights under this Award Agreement shall be exercisable during the Participant’s lifetime by the Participant only.
|
|
(E)
|
Rights as a Stockholder
. The Participant shall have, with respect to the Restricted Shares, all the rights of a stockholder of the Company, including, if applicable, the right to vote the Restricted Shares and to receive any dividends, subject to the restrictions set forth in the Plan and this Award Agreement.
|
|
(F)
|
Dividends and Distributions
. Any shares of Common Stock or other securities of the Company received by the Participant as a result of a distribution to holders of Restricted Shares or as a dividend on the Restricted Shares shall be subject to the same restrictions as the related Restricted Shares, and all references to Restricted Shares hereunder shall be deemed to include such shares of Common Stock or other securities.
|
|
(G)
|
Share Certificates
. The certificate representing the shares of Common Stock covered by the Restricted Shares shall be held in custody by the Company until the restrictions thereon shall have lapsed. As a condition of the award of Restricted Shares, the Participant shall deliver to the Company a stock power, endorsed in blank, relating to such shares of Common Stock. The Committee may cause a legend or legends to be put on the certificate to make appropriate reference to such restrictions as the Committee may deem advisable under the Plan or as may be required by the rules, regulations, and other requirements of the Securities and Exchange Commission, any exchange that lists the shares of Common Stock, and any applicable federal or state laws.
|
|
(H)
|
No Entitlements.
|
|
(1)
|
The Restricted Shares are discretionary awards. Neither this Award Agreement nor the Plan confers on the Participant any right or entitlement to receive compensation or bonus in any specific amount for any future fiscal year (including, without limitation, any grants of future Awards under the Plan) and do not impact in any way the Company Group’s determination of the amount, if any, of the Participant’s compensation or bonus. The Restricted Shares do not constitute salary, wages, regular compensation, recurrent compensation or contractual compensation for the year of grant or any later year and shall not be included in, nor have any effect on, the determination of employment-related rights or benefits under law or any employee benefit plan or similar arrangement provided by the Company Group (including, without limitation, severance, termination of employment and pension benefits), unless otherwise specifically provided for under the terms of such plan or arrangement or by the Company Group. The benefits provided pursuant to the Restricted Shares are in no way secured, guaranteed or warranted by Company Group.
|
|
(2)
|
The Restricted Shares are awarded to the Participant by virtue of the Participant’s employment with, and services performed for, the Company Group. Neither this Award Agreement nor the Plan constitutes an employment agreement. Nothing in either this Award Agreement or the Plan shall modify the terms of the Participant’s employment.
|
|
(3)
|
Subject to the terms of any applicable employment agreement, the Company reserves the right to change the terms and conditions of the Participant’s employment, including the division, subsidiary or department in which the Participant is employed. This Award Agreement, the Plan, the grant of Restricted Shares, and/or any action taken or omitted to be taken under this Award Agreement or the Plan shall not be deemed to create or confer on the Participant any right to be retained in the employ of the Company Group, or to interfere with or to limit in any way the right of the Company Group to terminate the Participant’s employment at any time. Moreover, the termination of employment provisions set forth in Section (B) only apply to the treatment of the Restricted Shares in the specified circumstances and shall not otherwise affect the Participant’s employment relationship. By accepting this Award Agreement, the Participant waives any and all rights to compensation or damages in consequence of the termination of the Participant’s office or employment for any reason whatsoever insofar as those rights arise or may arise from the Participant’s ceasing to have rights under, or be entitled to receive payment in respect of, the Restricted Shares as a result of such termination, or from the loss or diminution in value of such rights or entitlements. This waiver applies whether or not such termination amounts to a wrongful discharge or unfair dismissal.
|
|
(I)
|
Miscellaneous
.
|
|
(1)
|
The Committee shall have the right to impose such restrictions on the Restricted Shares as it deems necessary or advisable under applicable federal securities laws, the rules and regulations of any stock exchange or market upon which such Shares are then listed and/or traded, and/or under any blue sky or state securities laws applicable to such Shares. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to administer the Plan and this Award Agreement, all of which shall be binding upon the Participant.
|
|
(2)
|
The Board may, at any time, or from time to time, terminate, amend, modify or suspend the Plan, and the Board or the Committee may amend or modify this Award Agreement at any time;
provided
,
however
, that no termination, amendment, modification or suspension shall materially and adversely alter or impair the rights of the Participant under this Award Agreement without the Participant’s written consent.
|
|
(3)
|
Shares of restricted stock are not subject to Section 409A of the Internal Revenue Code of 1986, as amended (“
Section 409A
”). Notwithstanding the forgoing or any provision of the Plan or this Award Agreement, if any provision of this Award Agreement or the Plan contravenes Section 409A or could cause the Participant to incur any tax, interest or penalties under Section 409A, the Committee may, in its sole discretion and without the Participant’s consent, modify such provision to (i) comply with, or avoid being subject to, Section 409A, or to avoid the incurrence of any taxes, interest and penalties under Section 409A, and/or (ii) maintain, to the maximum extent practicable, the original intent and economic benefit to the Participant of the applicable provision without materially increasing the cost to the Company or contravening the provisions of Section 409A. This Section (H)(3) does not create an obligation on the part of the Company to modify the Plan or this Award Agreement and does not guarantee that the Restricted Shares will not be subject to taxes, interest and penalties under Section 409A.
|
|
(4)
|
Vesting of the Restricted Shares shall be subject to the Participant satisfying all applicable federal, state, local and foreign taxes (including the Participant’s FICA obligation). The Company shall have the power and the right to (i) deduct or withhold from all amounts payable to the Participant in connection with the Restricted Shares or otherwise, or (ii) require the Participant to remit to the Company, an amount sufficient to satisfy any applicable taxes required by law. Further, the Company may permit or require the Participant to satisfy, in whole or in part, the tax obligations by withholding Shares that would otherwise be received upon vesting of the Restricted Shares.
|
|
(5)
|
This Award Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required, or the Committee determines are advisable. The Participant agrees to take all steps the Company determines are necessary to comply with all applicable provisions of federal and state securities law in exercising his rights under this Award Agreement.
|
|
(6)
|
All obligations of the Company under the Plan and this Award Agreement, with respect to the Restricted Shares, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
|
|
(7)
|
To the extent not preempted by federal law, this Award Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
|
LINCOLN EDUCATIONAL SERVICES CORPORATION
|
|||
By:
|
|||
Name:
|
|||
Title:
|
|
(a)
|
prior to a Change in Control, (i) the Participant’s willful failure to perform the duties of his employment in any material respect, (ii) malfeasance or gross negligence in the performance of the Participant’s duties of employment, (iii) the Participant’s conviction of a felony under the laws of the United States or any state thereof (whether or not in connection with his employment), (iv) the Participant’s intentional or reckless disclosure of protected information respecting any member of the Company Group’s business to any individual or entity which is not in the performance of the duties of his employment, (v) the Participant’s commission of an act or acts of sexual harassment that would normally constitute grounds for termination, or (vi) any other act or omission by the Participant (other than an act or omission resulting from the exercise by the Participant of good faith business judgment), which is materially injurious to the financial condition or business reputation of any member of the Company Group;
provided
,
however
, that in the case of (i) and (ii) above, the Participant shall not be deemed to have been terminated for cause unless he has received written notice of the alleged basis therefor from the Company, and fails to remedy the matter within 30 days after he has received such notice, except that no such “cure opportunity” shall be required in the case of two separate episodes occurring within any 12-month period that give the Company the right to terminate for cause for such reason; or
|
|
(b)
|
on or after a Change in Control, (i) the Participant’s willful failure to perform the duties of his employment in any material respect, (ii) malfeasance or gross negligence in the performance of the Participant’s duties of employment, (iii) the Participant’s conviction of a felony under the laws of the United States or any state thereof (whether or not in connection with his employment), or (iv) the Participant’s intentional or reckless disclosure of protected information respecting any member of the Company Group’s business to any individual or entity which is not in the performance of the duties of his employment;
provided
,
however
, that in the case of (i) and (ii) above, the Participant shall not be deemed to have been terminated for cause unless he has received written notice of the alleged basis therefor from the Company, and fails to remedy the matter within 30 days after he has received such notice, except that no such “cure opportunity” shall be required in the case of two separate episodes occurring within any 12-month period that give the Company the right to terminate for cause for such reason.
|
|
(a)
|
when a “person” (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, the “Exchange Act”), including a “group” (as defined in Section 13(d) and 14(d) of the Exchange Act), either directly or indirectly becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of 25% or more of either (i) the then outstanding Common Stock, or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors;
provided
,
however
,
that the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company; (2) any acquisition by the Company; or (3) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company;
|
|
(b)
|
when, during any period of 24 consecutive months of employment, the individuals who, at the beginning of such period, constitute the Board (the “
Company Incumbent Directors”
) cease for any reason other than death to constitute at least a majority thereof;
provided
,
however
, that a director who was not a director at the beginning of such 24-month period shall be deemed to be a Company Incumbent Director if such director was elected by, or on the recommendation of or with the approval of at least two-thirds of the directors of the Company, who then qualified as Company Incumbent Directors;
|
|
(c)
|
when the stockholders of the Company approve a reorganization, merger or consolidation of the Company without the consent or approval of a majority of the Company Incumbent Directors;
|
|
(d)
|
consummation of a merger, amalgamation or consolidation of the Company with any other corporation, the issuance of voting securities of the Company in connection with a merger, amalgamation or consolidation of the Company or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation (each, a “
Business Combination
”), unless, in each case of a Business Combination, immediately following such Business Combination, all or substantially all of the individuals and entities who were the beneficial owners of the Common Stock outstanding immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then outstanding shares of common stock and 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Common Stock; or
|
|
(e)
|
a complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company;
|
Name
|
Jurisdiction
|
Lincoln Technical Institute, Inc. (wholly owned)
|
New Jersey
|
New England Acquisition LLC (wholly owned through Lincoln Technical Institute, Inc.)
|
Delaware
|
Southwestern Acquisition LLC (wholly owned through Lincoln Technical Institute, Inc.)
|
Delaware
|
Nashville Acquisition, LLC (wholly owned through Lincoln Technical Institute, Inc.)
|
Delaware
|
Euphoria Acquisition, LLC (wholly owned through Lincoln Technical Institute, Inc.)
|
Delaware
|
New England Institute of Technology at Palm Beach, Inc. (wholly owned through Lincoln Technical Institute, Inc.)
|
Florida
|
LTI Holdings, LLC (wholly owned through Lincoln Technical Institute, Inc.)
|
Colorado
|
LCT Acquisition, LLC (wholly owned through Lincoln Technical Institute, Inc.)
|
Delaware
|
ComTech Services Group Inc. (wholly owned through Lincoln Technical Institute, Inc.)
|
New Jersey
|
/s/ DELOITTE & TOUCHE LLP
|
Parsippany, New Jersey
|
March 11, 2013
|
1.
|
I have reviewed this Annual Report on Form 10-K of Lincoln Educational Services Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
Date: March 12, 2013
|
|
/s/ Shaun McAlmont
|
|
Shaun McAlmont
|
|
Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Lincoln Educational Services Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 12, 2013
|
|
/s/ Cesar Ribeiro
|
|
Cesar Ribeiro
|
|
Chief Financial Officer
|
Date: |
March 12, 2013
|
|
/s/ Shaun McAlmont
|
||
Shaun McAlmont
|
||
Chief Executive Officer
|
||
/s/ Cesar Ribeiro
|
||
Cesar Ribeiro
|
||
Chief Financial Officer
|