UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): November 4, 2005
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Lincoln Educational Services Corporation
(Exact Name of Registrant as Specified in Charter)
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New Jersey 000-51371 57-1150621
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) File No.)
200 Executive Drive, Suite 340
West Orange, New Jersey 07052 07052
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 736-9340
Not Applicable
(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02. Results of Operations and Financial Condition
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On November 4, 2005, Lincoln Educational Services Corporation issued a press
release announcing, among other things, its results of operations for the third
quarter and nine months ended September 30, 2005. A copy of the press release is
furnished herewith as Exhibit 99.1 and attached hereto.
Item 9.01. Financial Statements and Exhibits
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(c) Exhibits
99.1 Press release of Lincoln Educational Services Corporation dated
November 4, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LINCOLN EDUCATIONAL SERVICES CORPORATION
Date: November 4, 2005
By: /s/ Cesar Ribeiro
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Name: Cesar Ribeiro
Title: Vice President, Chief
Financial Officer and Treasurer
Exhibit 99.1
PRESS RELEASE
Lincoln Educational Services Corporation Reports Strong 3rd Quarter Results
West Orange, New Jersey, November 4, 2005 - Lincoln Educational Services
Corporation (Nasdaq: LINC) ("Lincoln") today reported strong results for the
third quarter of 2005. The Company also updated guidance for fiscal 2005.
Highlights:
o Revenue growth of 13.3% to $78.4 million
o Average enrollment growth of 8.6% to 18,029
o Third quarter 2005 diluted EPS of $0.21. Excluding a charge of $0.01
per share of stock based compensation expense in accordance with SFAS
No. 123 "Accounting for Stock Based Compensation", our earnings per
diluted share would have been $0.22.
o For fiscal 2005, we are reaffirming our diluted EPS guidance we
previously provided of $0.73 to $0.81, representing year over year
growth of 30% to 45%. Before accounting for stock based compensation
expense of approximately $0.05 per fully diluted share, the Company
expects EPS of $0.78 to $0.86.
Comment and Outlook
David F. Carney, Lincoln's Chairman and CEO, commented, "We are pleased with our
third quarter results as we continue to deliver on our financial commitments
despite operating in a more difficult environment than anticipated. Third
quarter revenue, net income and earnings per share were all within our guidance,
despite a challenging environment. We have made adjustments to our business
model and cost structure across the Company and we remain focused on improving
our marketing approach and maximizing the allocation of our resources.
Mr. Carney added, "Overall, we continue to make progress in improving our
operations and strengthening our foundation for long-term growth. Specifically,
we are prudently expanding capacity in areas where there is strong demand. We
recently closed on a 100,000 square foot facility which will allow us to triple
the size of our campus in Grand Prairie, Texas and are very pleased with
enrollment trends at our recently expanded Indianapolis facility. We also
continue to make progress in expanding our associate degree offerings, which
serve to extend the length of time students remain in our programs. During the
third quarter, the percentage of our students who were enrolled in associate
degree programs increased from 10.7% to 15.0% (1,700 to 2,900 students) of our
overall student population. In addition, The Center for Automotive Education and
Training facility in Queens formally opened this week and our first class on
that campus is expected to begin in the first quarter of 2006. Combined with our
growth initiatives, including small acquisitions, our online initiative, and our
ongoing focus on enhancing our program offerings, we are well positioned to
deliver profitable growth for years to come."
Mr. Carney concluded, "Based on our growth initiatives we remain confident in
our ability to achieve our long term goal of generating annual revenue growth of
15%, with margin improvements translating into EPS earnings growth substantially
in excess of our revenue growth. The significant progress we have made on our
strategic initiatives supports our optimism."
For the full year 2005, Mr. Carney added that the company expects revenue growth
of approximately 15% and EPS of $0.73 to $0.81, representing an EPS growth rate
of 30% to 45%. Before accounting for stock based compensation expense of
approximately $0.05 per fully dilutive share, the Company expects EPS of $0.78
to $0.86.
Operating Performance
Revenue for third quarter of 2005 was $78.4 million, a 13.3% increase from $69.2
million from the same quarter of last year. Excluding the acquisition of New
England Technical Institute on January 11, 2005, revenues would have increased
6.6% over the same period last year. The primary driver of this growth was
higher average student enrollment which increased 8.6% from the same quarter
last year as well as from tuition increases. Excluding the acquisition of New
England Technical Institute, average student enrollments increased 2.2% from the
same quarter last year.
Operating income for the third quarter of 2005 was $7.9 million as compared to
$8.3 million for the third quarter of 2004. This decrease was due to 17.5% and
14.2% increases, respectively, in educational services and facilities expenses
and selling, general and administrative expenses.
The increase in educational services and facilities expenses for the third
quarter of this year as compared to the 2004 quarter was due primarily to an
increase in facilities expense associated with our new Queens, New York facility
as well as due to other expanded facilities. Facilities expense also increased
during the quarter by $0.2 million, which represents the depreciation catch-up
of the accounting reclassification of our property previously listed as "held
for sale" in Indianapolis, Indiana back into property, equipment and facilities.
The facility is still for sale. The increase in educational services and
facilities expenses is also attributed to increases in instructional costs and
books and tools expenses to service the increase in student enrollment.
The increase in selling, general and administrative expenses for the third
quarter of 2005 as compared to the 2004 quarter was primarily due to higher
marketing expenses. Marketing expenses increased 25.5% due to increased cost of
advertising (television, print and Internet) as well as increases to drive new
student enrollments.
As a result, our overall operating margin was 10.1% for third quarter of 2005 as
compared to 11.9% for the 2004 period.
Net income for the third quarter of 2005 was $5.5 million, or $0.21 per diluted
share, as compared to $4.4 million or $0.19 per diluted share for the comparable
period in 2004. Net income during the period was favorably impacted by the
resolution of a tax contingency. Earnings per share includes a charge of $0.01
and $0.01 per share for the third quarter of 2005 and 2004, respectively,
resulting from our use of the fair value method of accounting for stock based
compensation as prescribed by Statement of Financial Accounting Standards No.
123 "Accounting for Stock-based Compensation".
Revenue for the nine months ended September 30, 2005 was $217.5 million, a 15.7%
increase over the same period in 2004. Excluding our acquisition of New England
Technical Institute, our revenue increased 9.4% over the same period in 2004.
Income from operations for the nine months ended September 30, 2005 was $11.2
million, a decrease of 19.9% as compared to the same period in 2004. Operating
margin for the nine months ended September 30, 2005 was 5.2% as compared to 7.4%
for the same period in 2004.
Balance Sheet
As of September 30, 2005, we had $44.7 million in cash and cash equivalents,
compared to $41.4 million at December 31, 2004.
As of September 30, 2005, our stockholders' equity was $123.3 million, compared
to $58.1 million as of December 31, 2004 with the change resulting primarily
from our stock sale.
Student Enrollment
Average student enrollment for third quarter of 2005 was 18,029 students,
representing an increase of 8.6% from the third quarter last year. Excluding the
acquisition of New England Technical Institute, our average student enrollment
increased 2.2% over last year.
Average student enrollment for the nine months of 2005 was 17,544 students,
representing an increase of 11.3% from the nine months last year. Excluding the
acquisition of New England Technical Institute, our average student enrollment
increased 4.8% over last year.
Conference Call Today
Lincoln will host a conference call today at 10:00 a.m. Eastern Standard Time.
The conference call can be accessed by going to the IR portion of our website at
www.lincolneducationalservices.com. Participants can also listen to the
conference call by dialing (617) 213-8831 (international) or (866) 700-0133
(domestic) and citing code 82940573. Please log-on or dial-in at least 10
minutes prior to the start time to ensure a connection. An archived version of
the webcast will be accessible for 90 days at
www.lincolneducationalservices.com. A replay of the call will also be available
for seven days by calling (617) 801-6888 (international) and (888) 286-8010
(domestic) citing code 47943105.
About Lincoln Educational Services Corporation
Lincoln is a leading and diversified for-profit provider of career-oriented
post-secondary education. The Company offers recent high school graduates and
working adults degree and diploma programs in four principal areas of study:
automotive technology, health sciences (which includes programs for licensed
practical nursing, medical administrative assistants, medical assistants, dental
assistants, pharmacy technicians and massage therapists), skilled trades and
business and information technology. Lincoln has provided the workforce with
skilled technicians since its inception in 1946. Lincoln currently operates 32
campuses in 15 states under seven brands: Lincoln Technical Institute, The
Cittone Institute, CEI, Denver Automotive and Diesel College, Nashville
Auto-Diesel College, Southwestern College and New England Technical Institute.
Lincoln has a combined enrollment of approximately 19,800 students as of
September 30, 2005.
Statements in this press release regarding Lincoln's business which are not
historical facts may be "forward-looking statements" that involve risks and
uncertainties. For a discussion of such risks and uncertainties, which could
cause actual results to differ from those contained in the forward-looking
statements, see "Risk Factors" in Lincoln's registration statement on Form S-1,
as amended. All forward-looking statements are qualified in their entirety by
this cautionary statement, and Lincoln undertakes no obligation to revise or
update this news release to reflect events or circumstances after the date
hereof.
(Please see financial attachments.)
Contacts:
Investors: Press or Media:
John Buckley/Brad Edwards Jennifer Gery
Brainerd Communicators, Inc. Brainerd Communicators, Inc.
212-986-6667 212-986-6667
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LINCOLN EDUCATIONAL SERVICES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2005
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended September 30,
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2004 2005
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REVENUES $ 69,159 $ 78,352
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COSTS AND EXPENSES:
Educational services and facilities 27,666 32,514
Selling, general and administrative 33,237 37,943
Loss (gain) on sale of assets -- (3)
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Total costs and expenses 60,903 70,454
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OPERATING INCOME 8,256 7,898
INTEREST INCOME 32 278
INTEREST EXPENSE (771) (472)
OTHER INCOME 36 243
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INCOME BEFORE INCOME TAXES 7,553 7,947
PROVISION FOR INCOME TAXES 3,160 2,462
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NET INCOME $ 4,393 $ 5,485
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Earnings per share--basic:
Net income available to common shareholders $ 0.20 $ 0.22
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Earnings per share--diluted:
Net income available to common shareholders $ 0.19 $ 0.21
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Weighted average number of common share outstanding:
Basic 21,672 25,037
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Diluted 23,147 25,992
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Other data:
Depreciation and amortization $2,640 $3,469
Number of campuses 28 32
Average population 16,607 18,029
Selected Consolidated Balance Sheet Data September 30,
(unaudited) 2005
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Cash and cash equivalents $44,695
Current assets 69,716
Working capital 14,708
Total assets 192,494
Current liabilities 55,008
Long-term debt and capital lease
Obligations, including current portion 10,845
Total stockholders' equity 123,285
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