UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
Form 8-K
____________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): May 4, 2006
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Lincoln Educational Services Corporation
(Exact Name of Registrant as Specified in Charter)
____________________
New Jersey 000-51371 57-1150621
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification 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)
____________________
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 May 4, 2006, Lincoln Educational Services Corporation (the
"Company") issued a press release announcing, among other things, its results of
operations for the first quarter ended March 31, 2006. A copy of the press
release is furnished herewith as Exhibit 99.1 and attached hereto. The
information contained under this Item 2.02 in this Current Report on Form 8-K,
including the exhibit attached hereto, is being furnished and shall not be
deemed to be "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934, as amended, or otherwise subject to the liabilities of that
Section. Furthermore, the information contained under this Item 2.02 in this
Current Report on Form 8-K shall not be deemed to be incorporated by reference
into any registration statement or other document filed pursuant to the
Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits
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(c) Exhibits
99.1 Press release of Lincoln Educational Services Corporation dated
May 4, 2006
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: May 4, 2006
By: /s/ Cesar Ribeiro
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Name: Cesar Ribeiro
Title: Vice President,
Chief Financial Officer and
Treasurer
Exhibit 99.1
Lincoln Educational Services Corporation Reports
Record First Quarter 2006 Results
West Orange, New Jersey, May 4, 2006 - Lincoln Educational Services Corporation
(Nasdaq: LINC) ("Lincoln") today reported record first quarter results for 2006
and reaffirmed guidance for full-year 2006.
First Quarter Highlights:
o Diluted EPS of $0.11 increased nearly four-fold from $0.03 in the
first quarter of 2005. Excluding a charge of $0.01 per share of stock
based compensation expense in accordance with SFAS No. 123R
"Share-Based Payment," earnings per diluted share would have been
$0.12.
o Revenue growth of 6.6% to $75.5 million from $70.9 million in the
first quarter of 2005.
o Operating income margin expanded significantly to 6.2% of revenues
from 3.5% in the first quarter of 2005.
o Anticipate completing the acquisition of New England Institute of
Technology at Palm Beach, Florida in May.
o Queens Auto School officially opened in late March and now has an
enrollment of 115.
Comment and Outlook
David F. Carney, Lincoln's Chairman and CEO, commented, "For the period ended
March 31, 2006, we delivered record first quarter revenue and net income as we
remained focused on implementing our growth strategy and disciplined approach to
cost controls, in the face of a continued challenging environment. Although we
started the year with fewer students versus prior year, we experienced an
improving environment during the first quarter of 2006, which represented a
reversal of the negative trends we experienced in the second half of 2005.
Overall, we are diligently pursuing a very robust, yet concerted business plan
and we are confident that our efforts will continue to generate tangible
operating and financial returns."
"We continue to prudently expand our campus footprint and program offerings
through selective acquisitions that enhance our ability to generate profitable
growth over the long-term," added Mr. Carney. "During the first quarter, we
successfully launched our innovative automotive education facility in Queens,
New York, representing our 35th campus. The 48,000 square foot facility located
at the newly created Center for Automotive Education and Training, which houses
the Greater New York Automotive Dealers Association, provides us with the
capacity to instruct up to 800 students. In addition, during the first quarter,
we entered into a definitive agreement to acquire New England Institute of
Technology at Palm Beach, Inc. This is a highly complementary transaction that
will allow us to build a substantial presence in one of the nation's fastest
growing markets. Further, construction is well underway on our new 101,000
square foot facility in Grand Prairie Texas and we expect this facility to be
open for business in the third quarter of 2006."
Mr. Carney concluded, "Given our proven track record, strong balance sheet,
profitable results and cash flow, we will continue to consider additional
attractive acquisition opportunities that have the potential to increase the
overall value of our company to the benefit of our shareholders."
Operating Performance
Revenues increased by $4.6 million, or 6.6%, to $75.5 million in the first
quarter of 2006 from $70.9 million for the comparable period in 2005. Of this
increase, approximately $1.4 million, or 2.1%, was attributable to the
acquisition of Euphoria Institute LLC ("Euphoria") on December 1, 2005, while
the remainder of the increase was due to tuition increases, which range between
2% and 5% annually depending on the program.
Our operating income for the quarter was $4.7 million, which represented an
88.3% increase compared to the first quarter of 2005. The improvement in
operating income is due to operating efficiencies as well as to the leverage
that we are able to obtain from our cost structure as we grow our revenues.
On an overall basis, our educational services and facilities expenses increased
by $3.0 million, or 10.5%, to $32.1 million in the first quarter of 2006 from
$29.1 million in the first quarter of 2005. Our acquisition of Euphoria
accounted for 3.0%, or $0.9 million, of this increase. Instructional expenses
increased by 4.6% over the comparable period in 2005 primarily due to increases
in compensation and benefits. Books and tools expenses increased 20.0% over the
first quarter of 2005 primarily due to the timing of class starts as compared to
the prior year. The remainder of the increase in educational services and
facilities expenses was primarily due to facilities expenses, which increased
$0.9 million for the year. Educational services and facilities expenses as a
percentage of revenues increased to 42.6% of revenues for the first quarter of
2006 from 41.0% for the first quarter of 2005.
Our selling, general and administrative expenses for the first quarter of 2006
were $38.7 million, a decrease of $0.6 million, or 1.6% from $39.3 million in
the first quarter of 2005. Included in selling, general and administrative
expenses for the three months ended March 31, 2006 is $0.4 million attributable
to our acquisition of Euphoria in December 2005. This decrease in selling,
general and administrative expenses is primarily due to: (a) a $0.6 million, or
3.4%, decrease in sales and marketing expenses as a result of efficiencies
gained through the better utilization of technology and due to a shift in our
advertising from television to Internet, which is more cost effective; and (b) a
$0.4 million, or 1.9%, decrease in administrative costs primarily due to
decreased expenses associated with the timing and efficiencies gained from the
roll-out of our new student software and management reporting system at some of
our schools during the first quarter of 2006.
As a result of the above, our operating margin for the first quarter of 2006
increased to 6.2% from 3.5% in the first quarter of 2005.
Net income for the first quarter of 2006 was $2.8 million, or $0.11 per diluted
share, as compared to $0.8 million or $0.03 per diluted share for the comparable
period in 2005. Earnings per share includes a charge of $0.01 per share for the
first quarter of 2006 and 2005, 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. 123R "Share-Based Payment".
Balance Sheet
At March 31, 2006, we had $41.4 million in cash and cash equivalents, compared
to $50.3 million at December 31, 2005.
At March 31, 2006, our stockholders' equity was $139.4 million, compared to
$136.0 million at December 31, 2005, with the increase resulting primarily from
net income from the period and stock-based compensation expense.
Student Enrollment
Average student enrollment for first quarter of 2006 was 17,676 students,
representing a decrease of 0.1% from the first quarter of 2005. Excluding the
acquisition of Euphoria, our average student enrollment decreased 1.6% as
compared to the first quarter of 2005.
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) 597-5343 (international) or (866) 383-8108
(domestic) and citing code 23788599. 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 93948686.
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 five principal areas of study:
automotive technology, health sciences (which includes programs for licensed
practical nursing, medical administrative assistants, medical assistants, dental
assistants, and pharmacy technicians), skilled trades, business and information
technology and spa and culinary. Lincoln has provided the workforce with skilled
technicians since its inception in 1946. Lincoln currently operates 35 campuses
in 16 states under eight brands: Lincoln Technical Institute, The Cittone
Institute, CEI, Denver Automotive and Diesel College, Nashville Auto-Diesel
College, Southwestern College, New England Technical Institute and Euphoria.
Lincoln has a combined average enrollment of approximately 17,700 students as of
March 31, 2006.
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 Form 10-K for the year ended
December 31, 2005. 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:
Chris Plunkett/Brad Edwards Jennifer Gery
Brainerd Communicators, Inc. Brainerd Communicators, Inc.
212-986-6667 212-986-6667
LINCOLN EDUCATIONAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
2006 2005
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REVENUES $ 75,513 $ 70,869
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COSTS AND EXPENSES
Educational services and facilities 32,137 29,084
Selling, general and administrative 38,668 39,284
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Total costs & expenses 70,805 68,368
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OPERATING INCOME 4,708 2,501
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OTHER:
Interest income 471 8
Interest expense (474) (1,194)
Other income 16 -
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INCOME BEFORE INCOME TAXES 4,721 1,315
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PROVISION FOR INCOME TAXES 1,959 543
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NET INCOME $ 2,762 $ 772
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Earnings per share - basic:
Net income available to common shareholders $ 0.11 $ 0.04
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Earnings per share - diluted:
Net income available to common shareholders $ 0.11 $ 0.03
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Other data:
Depreciation and amortization $3,464 $3,082
Number of campuses 35 32
Average enrollment 17,676 17,692
Stock based compensation $ 353 $399
Selected Consolidated Balance Sheet Data: March 31,
(unaudited) 2006
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Cash and cash equivalents $41,427
Current assets 65,390
Working capital 12,422
Total assets 207,684
Current liabilities 52,968
Long-term debt and capital lease
Obligations, including current portion 10,434
Total stockholders' equity $139,385
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