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Corinthian Colleges, Inc.
Sales
$517
million
Corinthian Colleges, Inc. is one of the largest for-profit, post-secondary
education companies in the United States, with more than 43,200 students
enrolled as of June 30, 2003. As of June 30, 2003, we operated 69 colleges
and two training centers in 21 states, including 18 in California and 12 in
Florida, and serve the large and growing segment of the population seeking
to acquire career-oriented education. Our schools generally enjoy long
operating histories and strong franchise value in their local markets.
The company's website is www.cci.edu and
the relevant contact information for Corinthian is (714) 427-3000, 6 Hutton
Centre Drive, Suite 400, Santa Ana, CA 92707.
We offer a variety of master’s, bachelor’s and associate’s degrees and
diploma programs through three principle operating divisions. As of June 30,
2003, the Corinthian Schools division (“CSI”) operated 40 primarily
diploma-granting schools with curricula primarily in the healthcare,
business, electronics and information technology fields and seeks to provide
its students a solid base of training for a variety of entry-level
positions. The Rhodes Colleges division (“RCI”) operated 27 primarily
degree-granting colleges and offers curricula principally in the healthcare,
business, criminal justice, and information technology and electronics. The
Titan School division (“TSI”) operated two campuses which offer diploma and
degree programs in the technology and automotive repair and diesel
technician fields. Our colleges receive strategic direction and operational
support from division and regional management and corporate staff.
Additionally, our Learning Tree University (“LTU”) training centers offer
continuing professional education, short duration certificate programs,
comprehensive corporate training and customized learning solutions.
We have grown our business through acquisitions as well as through organic
growth. Organic growth consists of opening new branch campuses, remodeling,
expanding or relocating existing campuses and adopting curricula into
existing colleges. Since 1999 and through June 30, 2003, we have opened 18
branch campuses and acquired 18 colleges and two training centers. Since the
Company’s formation in 1995, and including the August 2003 acquisitions of
ECAT, Career and CDI, we have acquired 107 colleges and 17 training centers
and we have opened 18 branch campuses.
Corinthian is led by David G. Moore, our Chairman of the Board and Chief
Executive Officer, and an experienced executive management team. Our team of
13 executives, including Mr. Moore, have an average of approximately 15
years experience in various fields of education and an average of
approximately 13 years in the for-profit, post-secondary education industry.
Our operational structure consists of three divisions, led by division
presidents with oversight responsibility of our diploma-granting schools
division, our degree-granting schools division, and our technical schools
division. Below the division level are nine regions, each lead by a regional
vice president of operations and a regional vice president of admissions,
which report to their respective division presidents. Our operations
structure is supported by our management information system, which links all
of our schools, colleges and training centers to a centralized
administrative database and provides management with real-time access to
marketing reports, lead tracking, academic records, grades, transcripts and
placement information. We expect to provide operational oversight at CDI
through two divisions in Canada; post secondary colleges and corporate
education training centers.
Programs of Study
Corinthian Colleges' diploma programs are intended to provide students with
the requisite knowledge and job skills for entry-level positions in their
chosen career. Our degree programs are primarily designed for
career-oriented adults and to assist them in enhancing their skills. Our
curriculum development team has the responsibility of maintaining high
quality, market driven curricula. Our colleges also utilize advisory boards
to help evaluate and improve the curriculum for each program offered. These
advisory boards are requested to meet at least twice a year and are
comprised of local industry and business professionals. Advisory board
members provide valuable input regarding changes in the program and suggest
new technologies and other factors that may enhance curriculum.
Among the diploma-granting colleges, the curricula principally includes
medical assisting, dental assisting, medical office management, information
technology, business operation, medical administrative assisting, surgery
technology, dialysis technology, respiratory therapy technology, automotive
and diesel technology, HVAC, and electronics and computer technology. The
curriculum at our degree-granting colleges includes accounting, business
administration, computer information systems, hospitality management,
marketing, criminal justice, medical assisting, paralegal, court reporting,
and film and video. Most programs lead to an associate’s degree, except at
our FMU campuses, where most programs may also lead to a bachelor’s degree.
Master’s degrees are also offered at FMU in business administration and
criminal justice.
Diploma programs generally have a duration of 6-19 months, depending on the
course of study. Associate’s degree programs have a duration of 18-24
months, bachelor’s degree programs last 36-48 months and master’s degree
programs have a duration of 21 months. As of June 30, 2003, we had 17,104
(39%) students enrolled in associate’s programs, 2,630 (6%) enrolled in
bachelor’s programs, 680 (2%) enrolled in master’s programs, and 22,815
(53%) enrolled in diploma programs.
Admissions
As of June 30, 2003, we employed approximately 610 admissions
representatives who work directly with prospective students to facilitate
the enrollment process. These representatives interview and advise students
interested in specific careers and are a key component of our effort to
generate interest in our educational services. We conduct quarterly student
satisfaction surveys in which students have consistently given high marks to
our admissions personnel for helpfulness, courtesy and accuracy of
information. Because our success is highly dependent on the efficiency and
effectiveness of our admissions process, we invest considerable resources to
training our admissions representatives in product knowledge, regulatory
compliance, and customer service. We also employ various admissions
supervisory and monitoring programs, and conduct student surveys which, we
believe, helps us ensure compliance with both government regulations and our
corporate policies.
One of our objectives in the admissions process is to identify students who
have appropriate qualifications to succeed in our schools. Candidates for
admission into most of our degree-granting colleges must have either a high
school diploma or a GED and all prospective students must pass a
standardized admissions test. In addition, most of our diploma-granting
colleges may accept non-high school graduates who can demonstrate an ability
to benefit (“ATB students”) from the program by passing certain tests which
are required by the U.S. Department of Education. We believe that ATB
students can successfully complete many of our diploma programs and our
colleges have demonstrated success in graduating and placing these students
over the years. As of June 30, 2003, ATB students accounted for
approximately 6.4% of total enrollments in our schools.
Placement
Corinthian's placement success is critical to its colleges’ reputations and
their ability to continue to successfully recruit new students. We maintain
a placement department at each college and, as of June 30, 2003, employed
approximately 186 professionals in this capacity. In many cases, our
placement staff work with students from the time they begin their courses of
study until they are successfully placed in a job for which they are
trained. We believe our placement departments are a key component of our
success and we view them as essentially in-house employment agencies,
assisting students with resumes, conducting practice interview sessions, and
recruiting prospective employers for the colleges’ graduates.
We believe the efforts we devote to place our graduates have achieved
excellent results. Based on information received from graduating students
and employers for calendar year 2002, approximately 82% of our graduates who
were “available for placement” were placed in a job for which they were
trained within six months after graduation. In accordance with accrediting
standards, the term “available for placement” includes all graduates except
those who are continuing their education, are in active military service or
are deceased or disabled, and foreign students who are ineligible to work in
the United States after graduation.
Tuition
Typical tuition for our diploma programs range from $6,000 to $27,700,
depending upon the nature and length of the program. Tuition for degree
programs is charged on a credit hour basis and varies by college, typically
ranging from $193 to $270 per undergraduate credit hour, depending upon the
program of study. Tuition for graduate programs ranges from $297 to $312 per
credit hour. On average, an undergraduate degree candidate can expect
tuition of approximately $7,800 per academic year, while a master’s degree
candidate can expect tuition of approximately $9,500 per academic year. In
addition to tuition, students at our schools must also typically purchase
textbooks and other supplies as part of their educational programs. We
anticipate increasing tuition based on the market conditions prevailing at
our individual colleges. Our tuition ranges are competitive with similar
institutions, but like many proprietary institutions, are somewhat higher
than public institutions such as community colleges and state universities.
If a student fails to complete the period of enrollment such as a quarter,
trimester, semester, academic year, or program, the institution may be
required to refund tuition previously collected to the originating or
disbursing agency. Refunds are calculated in accordance with the applicable
state, federal or institutional refund policy.
Campus Administration
We establish policy, implement these policies, and monitor the performance
of our schools through the coordination of the executive vice president of
operations, the division presidents, our regional vice presidents of
operations, the regional vice presidents of admissions and through our
internal audit department. The college presidents, in consultation with
their respective management teams, have the responsibility for the
day-to-day operation of the schools. Each college employs the following
management personnel which report to the college president:
• an academic dean or education director;
• an admissions director;
• a placement director, and
• a finance director.
Corporate, or headquarters, personnel manage several key functions,
including financial aid, information technology, treasury, accounting,
marketing and advertising, purchasing, human resources, payroll, curriculum
development, leads management, staff training and development, internal
audit, and provide academic and instructional support for online learning.
Among the principal oversight functions performed by corporate personnel, in
cooperation with our division, region and college management, is the annual
operating budget, strategic planning and forecasting processes. These
processes establish goals for each college, assist in implementing
strategies and establish performance expectations and corresponding
incentives. Our senior management team monitors operating performance and
profitability of each college and has access to operational data through our
sophisticated information systems and conducts weekly conference calls with
the college presidents to review key performance indicators such as lead
flow, starts, student population, and other operating results to determine
the proper course of action.
Faculty
The faculty members at our colleges are industry professionals and hold
appropriate credentials in their respective disciplines. We choose faculty
carefully and encourage them to pursue professional development activities.
We believe the skill and dedication of our faculty have a significant impact
on the placement and success of our students following their graduation. As
of June 30, 2003, we employed 3,139 faculty, 1,476 of whom were full-time
employees. Faculty represents approximately 51% of our employees.
Competition
The post-secondary education market, consisting of approximately 6,800
accredited institutions, is highly fragmented and competitive, with no
institution having a significant market share. Many of the programs offered
by our colleges are also offered by public and private non-profit
institutions, as well as by many of the approximately 2,500 private,
for-profit colleges and schools. Typically, the tuition charged by public
institutions is less than tuition we charge for comparable programs because
public institutions receive state subsidies, donations and government
research and other grants that are not available to our colleges. However,
tuition at private non-profit institutions is typically higher than the
tuition charged at our colleges.
We compete in most markets with other private, for-profit institutions
offering similar programs. We believe that the long operating history of
many of our colleges, the qualifications of our faculty, our facilities, and
our emphasis on student services and placement allows us to compete
effectively. In addition, many of our colleges have been operating in their
markets for many years, which has led to a substantial number of graduates
who are working in the community and validate the quality of the colleges’
programs. For example, the Bryman Colleges have been well known in the
healthcare education field in California for over 37 years. We believe that
many physicians and dentists in California view Bryman as their best source
of qualified medical and dental assistants.
Facilities
Corinthian Colleges' corporate office is located in Santa Ana, California.
The 69 campuses and two training centers that we operated as of June 30,
2003 are located in 21 states. Each campus provides our students with
lecture rooms, instructional labs, libraries, internet access and an
administrative staff led by a college president.
We actively monitor the capacity at our facilities and the expected future
facilities capacity required to accommodate campus growth initiatives. We
provide for expansion and future growth at each campus through relocations
to larger facilities and by expanding or remodeling existing facilities.
From the beginning of fiscal 1999 through fiscal 2003, approximately 27% of
the campuses have been relocated and an additional 55% of total campuses
have been either expanded or remodeled.
Operating Strategy
We have increased our student enrollment and improved profitability through
the successful implementation of our operating strategy. Key elements of our
operating strategy include the following components:
Emphasize Student Outcomes. We believe that positive student outcomes are a
critical component of our long-term success. Accordingly, we devote
substantial resources to maintaining and improving our retention and
placement rates. Modest increases in student retention can have a
significant impact on our profitability and high graduation and placement
rates enhance a school’s reputation and marketability, increases referrals
and improves cohort default rates. We have implemented a variety of
programs, including extended orientation and tutoring, academic and personal
advising, ride-sharing and referral programs, all of which are designed to
improve student retention. We utilize a curriculum development team which is
assisted by advisory boards comprised of local business professionals to
help insure that our curricula provide our students with the skills required
by local employers. We also maintain dedicated, full-time placement
personnel at our schools that undertake extensive placement efforts,
including recruiting prospective employers, helping students prepare
resumes, conducting practice interviews, establishing internship programs
and tracking students’ placement success on a monthly basis. As a result of
our efforts in this area, approximately 82% of our graduates in calendar
year 2002 who were “available for placement,” as defined by accreditation
standards, were placed in a job for which they were trained within six
months after graduation.
Create a Supportive and Friendly Learning Environment. We view our students
as customers and seek to provide a supportive and convenient learning
environment where student satisfaction is achieved. We offer a flexible
schedule of classes, providing our students with the opportunity to attend
classes throughout the day, as well as nights and weekends. Schools operate
year-round, permitting students to complete their course of study more
quickly. We limit class sizes and focus the efforts of our faculty on
teaching students rather than research. Personal interaction between
students and faculty is encouraged and we offer several support programs,
such as on-campus advising and tutoring, which are designed to help students
successfully complete their course of study. We also maintain a toll-free
student hotline to address and help resolve student concerns.
Focus on Attractive Markets. We design our educational programs to benefit
from favorable demographic trends. Our diploma-granting colleges provide
programs in healthcare and technology related fields, allowing us to
capitalize on the growth in job opportunities in these industries. Our
degree-granting colleges, with their business focus, and modern facilities
and equipment and excellent faculty, seek to provide students with specific
knowledge and skills necessary to advance in business and industry. Our
training centers focus on skills development training which is attractive to
corporate and governmental employers. Our geographic strategy is to build a
strong competitive position in attractive and growing local markets where we
can take advantage of operating efficiencies and benefit from favorable
demographic trends. We are well positioned, with 80 colleges and two
training centers in the USA, including, 16 schools and two training centers
in California, 12 schools in Florida, and 45 schools and 15 training centers
in Canada.
Centralize Key Functions. In order to capitalize on the experience of our
senior management team and to encourage best practices, we have established
a regional management organization consisting of local school
administrators, regional vice presidents of operations and admissions and
divisional presidents, which are supported by centralized functions
supervised by senior management at our corporate headquarters.
Local school administrators retain control of, and accountability for, the
day-to-day academic, operational and financial performance of their
individual schools and receive appropriate financial incentives. The
corporate management team controls centralized key operational functions
such as accounting, IT, financial aid management, marketing, curriculum
development, staff training, human resources and purchasing, which we
believe enables us to achieve significant operating efficiencies. For
example, our corporate management team controls the advertising function and
utilizes our information technology system to analyze the effectiveness of
our marketing efforts and to make timely and efficient decisions regarding
the allocation of marketing resources at individual colleges.
Growth Strategy
We intend to achieve continued growth in revenues and profitability by
pursuing our growth strategy:
Enhance Growth at Existing Campuses
Curriculum Expansion and Development. We have acquired, developed, and
refined curricula based on market research and recommendations from our
faculty, advisory board members and our curriculum development team. We
believe considerable opportunities exist for curriculum adoption and we
expect to continue to acquire and develop new curricula and selectively
adopting existing curricula into both existing and new locations. In fiscal
2003, we successfully adopted 50 programs into existing schools. We expect
to adopt between 50 and 70 programs into existing schools in fiscal 2004.
Integrated and Centralized Marketing Program. We have increased student
enrollment by employing an integrated marketing program that utilizes an
extensive direct response advertising campaign delivered through television,
newspaper, direct mail and the Internet. A professional marketing staff at
our headquarters coordinates marketing efforts with advertising agencies
through an in-bound call center and our sophisticated real-time leads
tracking capability.
Facilities Enhancement and Expansion. In order to expand facility capacity
to meet our expected enrollment demand, as well as to improve the location
and appearance of our facilities, we remodel, expand, and relocate existing
colleges. We expect to continue to systematically remodel, expand, and
relocate, selected colleges within their respective markets into larger,
enhanced facilities. Since 1999, 19 colleges have been relocated and an
additional 39 campuses have been either remodeled or enlarged. As of June
30, 2003, the total square footage of our campuses was approximately
2,506,000 square feet.
Establish Additional Locations. Since our initial public offering in
February 1999, we have opened and successfully integrated 18 branch campuses
into our operations. Of the 18 branch campuses, two were opened in each of
fiscal 2000 and fiscal 1999, four were opened in each of fiscal 2001 and
fiscal 2002, and six were opened in fiscal 2003. A key advantage of this
strategy is that students attending new campuses branched from existing
campuses have immediate access to federally funded student financial aid. We
believe that opening new branch campuses will allow us to enter new
geographic markets, create additional capacity in existing markets and
effectively leverage our infrastructure and our extensive investment in
curricula. We expect to open between six and eight branch campuses during
fiscal 2004.
Make Strategic Acquisitions. Since our founding in 1995, acquisitions have
been an important part of our growth strategy. Of the 69 campuses and two
training centers operated as of June 30, 2003, 53 have been acquired and
successfully integrated into our operations. During fiscal 2003, we acquired
and successfully integrated two Wyo-Tech Acquisition Corporation (“Wyo-Tech”)
campuses and two LTU training centers. Additionally, subsequent to our
fiscal 2003 year end, we completed the acquisitions of ECAT and Career, and
substantially completed the acquisition of CDI, thereby adding 56 colleges
and 15 training centers to the Corinthian family of colleges. To evaluate
acquisition opportunities, we have established several criteria, such as
demographics, curricula, geographic proximity to our existing campuses and
selected financial measurements.
Expand Distance Learning and Delivery Models. We continue to expand our
distance learning and contract training initiatives.
Distance Learning. Online education, or education delivered via the
internet, has become an increasingly important component of the higher
education market. During fiscal 2003, we experienced a significant increase
in the number of students taking our online courses through the Internet.
Our online learning increased by 82% to 27,273 course registrations in
fiscal 2003. As of June 30, 2003, we offered 136 online courses through 25
campuses. All of the courses necessary to complete an associate’s and
bachelor’s degrees in business, accounting, and criminal justice are now
available online. Additionally, we offer all the courses necessary to
complete masters degrees in business administration and in criminal justice
entirely online. With the recent approval to offer an associate’s degree in
legal assisting, we now offer nine accredited degrees to students enrolled
in exclusively online studies. We believe that online learning will continue
to expand. In fiscal 2004, we expect to continue to grow our online
education by increasing the number of courses offered, adding to the number
of campuses offering online courses, and expanding the type of degrees
offered online. Although the majority of our students participating in
online learning also attend one of our degree-granting colleges, in fiscal
2002, we began enrolling exclusively online students through our nine
Florida Metropolitan University (“FMU”) colleges and during fiscal 2004 we
expect to allocate the resources required to grow this exciting aspect of
our business.
Corporate Training. Although we do not derive a significant portion of our
revenues from contract training, we believe the corporate and governmental
training arena is an attractive market and that our curricula meet the needs
of a variety of employers. The acquisition of CDI and its 15 training
centers in Canada will, we believe, provide a growth platform that will fuel
future growth in corporate training in North America.
Ticker
COCO
SIC Code
8200
- Services-Educational Services
Education & Training -
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