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 8, 2008
___________________
Lincoln Educational Services
Corporation
(Exact
Name of Registrant as Specified in Charter)
___________________
|
New
Jersey
(State
or other jurisdiction
of incorporation) |
000-51371
(Commission
File Number)
|
57-1150621
(I.R.S.
Employer
Identification No.) |
|
200
Executive Drive, Suite 340
West
Orange, New Jersey 07052
(Address
of principal executive offices)
|
07052
(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:
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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|
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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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
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Results of Operations
and Financial Condition
|
On May 8, 2008, 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,
2008. 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
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Financial Statements
and Exhibits
|
|
(c)
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Exhibits
|
|
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99.1
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Press
release of Lincoln Educational Services Corporation dated May 8,
2008.
|
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 8, 2008
|
By: | /s/ Cesar Ribeiro | ||
| Name: | Cesar Ribeiro | |||
| Title: | Senior Vice President, Chief Financial | |||
| Officer and Treasurer | ||||
Exhibit 99.1
Lincoln
Educational Services Corporation Reports
Record
First Quarter Revenue
West Orange, New Jersey, May
8, 2008 – Lincoln Educational Services Corporation (Nasdaq: LINC) (“Lincoln”)
today reported first quarter 2008 results.
Highlights:
|
|
·
|
Record
revenue of $84.0 million for the first quarter of 2008, an increase of
10.3% from $76.2 million for the first quarter of
2007.
|
|
|
·
|
Diluted
EPS from continuing operations of $0.02 for the first quarter of 2008
versus a loss of ($0.04) for the first quarter of
2007.
|
|
|
·
|
Student
starts increased by 7.5% over the first quarter of
2007. Student population at March 31, 2008 increased by 10.0%
to 18,600 from 16,902 at March 31,
2007.
|
|
|
·
|
Second
Quarter 2008 Guidance –
|
|
|
Ø
|
For
the second quarter of 2008, historically our weakest quarter, we expect
revenue of $82.0 million to $84.0 million, representing an increase of
approximately 11% over the second quarter of 2007, diluted EPS of $0.02 to
$0.04 and an increase in student starts of 10% to 12% over the second
quarter of 2007.
|
Comment
and Outlook
“We are
very pleased with our financial performance during the first quarter,” said
David Carney, Lincoln’s Chairman and CEO. “The fundamentals of our
business continue to strengthen as reflected in our 10.3% first quarter revenue
increase, as well as our improving margins. Student starts increased
by 7.5% and average student population increased by 9.3% over the first quarter
of 2007. More importantly, we are seeing these trends accelerate as
we entered the second quarter of 2008 with approximately 1,700 more students
enrolled than the prior year comparable period. Based on these
trends, we expect to end the second quarter of 2008 with approximately 2,000
more students than the second quarter of 2007.”
“Our
momentum is being driven by many of the operational initiatives we implemented
over the last year. Program development initiatives have led to the
introduction of new programs in Criminal Justice and Licensed Practical Nursing,
which are enabling us to accelerate our growth. Additionally, we have
received approval for three Bachelor programs to be offered online at the end of
the second quarter and currently have approximately 20% of our students enrolled
in degree granting programs. Overall, our initiatives have resulted in improved
student retention and satisfaction, as well as reduced employee turnover. We
expect to continue to reap the benefits of our operating initiatives and
strengthened
Continued
.. . .
Page 2 of 6
infrastructure
over the balance of 2008 and we remain comfortable with our previously issued
annual guidance.”
Mr.
Carney added: “We have not noticed any impact on student starts to date from the
student lending issues that have affected our industry. All of our
schools are approved for the federal government’s direct lending program and we
currently have six schools that are actively participating in that
program. Additionally, we still have numerous lenders on our
preferred lender list that are continuing to make loans to our
students. We expect that bill H.R. 5715, dealing with student lending
that was signed into law on May 7th, will
benefit incoming students and enable us to accelerate student starts in the
second half of the year.”
Discontinued
Operations
As
previously reported, on July 31, 2007 our Board of Directors approved a plan to
cease operations at three of our campuses. As a result of that
decision, we recognized a non-cash impairment charge related to goodwill at
these three campuses of approximately $2.1 million as of June 30,
2007. Additionally, we determined that certain long-lived assets
would not be recoverable at June 30, 2007 and recorded a non-cash charge of $0.9
million to reduce the carrying value of these assets to their estimated fair
value.
As of
September 30, 2007 all operations had ceased at these campuses, and accordingly,
the results of operations of these campuses have been reflected in the
accompanying statements of operations as “Discontinued Operations” for all
periods presented.
First
Quarter 2008 Operating Performance
Revenues
increased by $7.9 million, or 10.3%, to $84.0 million for the quarter
ended March 31, 2008 from $76.2 million for the quarter ended March 31,
2007. The increase in revenues for the quarter was primarily attributable
to a 9.3% increase in average student population, which increased to 18,459 for
the quarter ended March 31, 2008 from 16,885 for the quarter ended March 31,
2007. The remainder of this increase was due to tuition
increases.
Our
operating income for the quarter ended March 31, 2008 was $1.2 million,
representing an improvement of $2.4 million from a loss from continuing
operations of ($1.2) million for the quarter ended March 31,
2007. The improvement in operating income was due to the increase in
our average student population during the period. The additional
revenue from these students contributed to the increase in operating
margin.
Our
educational services and facilities expenses for the quarter ended March 31,
2008 were $36.6 million, representing an increase of $2.5 million, or 7.3%, as
compared to $34.2 million for the quarter ended March 31, 2007. The
increase in educational services and facilities expenses was due
to instructional expenses and books and tools expenses, which increased by
$1.1 million, or 6.0%, and $0.9 million, or 26.7%, respectively, over the same
quarter in 2007. Increases in instructional expenses and books and
tools expenses were due to a 7.5% increase in student starts during the first
quarter of 2008 as compared to the first quarter of 2007 and as a result of the
overall increase in student population. We began 2008 with
approximately 1,400 more students than we began with on January 1,
2007. The remainder of the increase in educational services and
facilities expenses was due to facilities expenses, which increased by
approximately $0.4 million over the first quarter of 2007 primarily due to
increased depreciation expense of $0.7 million, offset by decreases in repairs
and maintenance during the period.
Page 3 of 6
As a
percentage of revenues, educational services and facilities expenses for the
first quarter of 2008 decreased to 43.6% from 44.8% for the first quarter of
2007.
Our
selling, general and administrative expenses for the quarter ended March 31,
2008 were $46.1 million, representing an increase of $2.9 million, or 6.8%, as
compared to $43.2 million for the quarter ended March 31, 2007. The
increase in our selling, general and administrative expenses during the period
was primarily due to a $0.2 million, or 6.0%, increase in student services and a
$2.6 million, or 11.7%, increase in administrative expenses for the quarter
ended March 31, 2008 over the quarter ended March 31, 2007. The
increase in student services was primarily due to increases in compensation and
benefit expenses attributed to increased financial aid and career services
personnel as a result of larger student population during the first quarter of
2008 as compared to the first quarter of 2007. The increase in
administrative expenses during the first quarter of 2008 as compared to the
first quarter of 2007 was primarily due to (a) a $1.0 million increase in
compensation and benefits, resulting from annual compensation increases and
increased cost of benefits provided to employees; (b) a $0.4 million
increase in bad debt expense; (c) a $0.2 million increase in employee
training expenses; and (d) a $0.2 million increase in software maintenance
expenses resulting from increased software licenses for our student
management system. As a percentage of revenues, selling,
general and administrative expenses for the first quarter of 2008 decreased to
54.9% from 56.7% for the first quarter of 2007.
For the
quarter ended March 31, 2008, our bad debt expense as a percentage of revenue
was 4.8% as compared to 4.7% for the same quarter in 2007. This
increase was primarily attributable to higher accounts receivable due to a 10.3%
increase in revenues during the first quarter of 2008 as compared to the first
quarter of 2007. The number of days sales outstanding at March 31,
2008 increased slightly to 23.9 days compared to 23.5 days at March 31,
2007.
Income
from continuing operations for the quarter ended March 31, 2008 was $0.5
million, or $0.02 per diluted share, as compared to a loss of ($0.9)
million, or ($0.04) per diluted share for the quarter ended March 31,
2007.
Balance
Sheet
At March
31, 2008, we had $5.6 million in cash and cash equivalents, compared to $3.5
million at December 31, 2007. Our borrowings under our credit
facility were $7.0 million at March 31, 2008 as compared to $5.0 million at
December 31, 2007 and $13.0 million at March 31, 2007.
At March
31, 2008, our stockholders’ equity was $163.6 million, compared to $162.5
million at December 31, 2007, with the increase resulting from net income for
the period.
Student
Metrics
|
Three
Months Ended
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||||||||||||
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March
31,
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||||||||||||
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2007
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2008
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Growth
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||||||||||
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Student
starts
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5,237 | 5,629 | 7.5 | % | ||||||||
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Average
student population
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16,885 | 18,459 | 9.3 | % | ||||||||
|
End
of period student population
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16,902 | 18,600 | 10.0 | % | ||||||||
Page 4 of
6
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.lincolnedu.com. Participants
can also listen to the conference call by dialing 866-383-8108 (domestic) or
617-597-5343(international) and citing code 52608177. Please log-in 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.lincolnedu.com. A
replay of the call will also be available for seven days by calling 888-286-8010
(domestic) or 617-801-6888 (international) and citing code
12660248.
About
Lincoln Educational Services Corporation
Lincoln
Educational Services Corporation is a leading and diversified for-profit
provider of career-oriented post-secondary education. Lincoln offers
recent high school graduates and working adults degree and diploma programs in
five principal areas of study: automotive technology, health sciences, skilled
trades, business and information technology and hospitality
services. Lincoln has provided the workforce with skilled technicians
since its inception in 1946. Lincoln currently operates 34 campuses
in 17 states under five brands: Lincoln College of Technology, Lincoln Technical
Institute, Nashville Auto-Diesel College, Southwestern College and Euphoria
Institute of Beauty Arts and Sciences. Lincoln had a combined average
student population of approximately 18,459 as of March 31, 2008.
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, 2007. 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:
Chris
Plunkett/Brad Edwards
Brainerd
Communicators, Inc.
212-986-6667
Page 5 of 6
LINCOLN EDUCATIONAL SERVICES CORPORATION AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In
thousands, except per share amounts)
|
Three
Months Ended March 31,
(Unaudited)
|
||||||||
|
2008
|
2007
|
|||||||
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REVENUES
|
$ | 84,047 | $ | 76,170 | ||||
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COSTS
AND EXPENSES:
|
||||||||
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Educational
services and facilities
|
36,629 | 34,151 | ||||||
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Selling,
general and administrative
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46,132 | 43,183 | ||||||
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Loss
on disposal of assets
|
37 | - | ||||||
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Total
costs and expenses
|
82,798 | 77,334 | ||||||
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OPERATING
INCOME (LOSS)
|
1,249 | (1,164 | ) | |||||
|
OTHER:
|
||||||||
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Interest
income
|
45 | 48 | ||||||
|
Interest
expense
|
(504 | ) | (484 | ) | ||||
|
INCOME
(LOSS) FROM
CONTINUING
OPERATIONS BEFORE INCOME TAXES
|
790 | (1,600 | ) | |||||
|
PROVISION
(BENEFIT) FOR INCOME TAXES
|
306 | (670 | ) | |||||
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INCOME
(LOSS) FROM CONTINUING OPERATIONS
|
484 | (930 | ) | |||||
|
Loss
from discontinued operations, net of tax
|
- | (688 | ) | |||||
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NET
INCOME (LOSS)
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$ | 484 | $ | (1,618 | ) | |||
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Earnings
per share - Basic -
|
||||||||
|
Earnings
(loss) per share from continuing operations
|
$ | 0.02 | $ | (0.04 | ) | |||
|
Loss
per share from discontinued operations
|
- | (0.02 | ) | |||||
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Net
income (loss) per share
|
$ | 0.02 | $ | (0.06 | ) | |||
|
|
||||||||
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Earnings
per share – Diluted -
|
||||||||
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Earnings
(loss) per share from continuing operations
|
$ | 0.02 | $ | (0.04 | ) | |||
|
Loss
per share from discontinued operations
|
- | (0.02 | ) | |||||
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Net
income (loss) per share
|
$ | 0.02 | $ | (0.06 | ) | |||
|
|
||||||||
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Weighted
average number of common shares outstanding:
|
||||||||
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Basic
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25,660 | 25,460 | ||||||
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Diluted
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26,249 | 25,460 | ||||||
|
|
||||||||
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Other
data:
|
||||||||
|
|
||||||||
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EBITDA
(1)
|
$ | 5,619 | $ | 2,427 | ||||
|
Depreciation
and amortization from continuing operations
|
4,370 | 3,591 | ||||||
|
Cash
flows provided by (used in) operating activities
|
7,547 | (9,092 | ) | |||||
|
Capital
expenditures
|
7,440 | 5,752 | ||||||
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Number
of campuses
|
34 | 34 | ||||||
|
Average
student population
|
18,459 | 16,885 | ||||||
|
Stock
based compensation
|
558 | 411 | ||||||
Page 6 of 6
Selected
Condensed Consolidated Balance Sheet Data: (In thousands)
|
|
March 31,
2008
|
|||
|
(unaudited)
|
||||
|
Cash
and cash equivalents
|
$ | 5,620 | ||
|
Current
assets
|
39,044 | |||
|
Working
capital / (deficit)
|
(17,758 | ) | ||
|
Total
assets
|
244,252 | |||
|
Current
liabilities
|
56,802 | |||
|
Long-term
debt and lease
|
||||
|
obligations,
including current portion
|
17,325 | |||
|
Total
stockholders’ equity
|
$ | 163,573 | ||
(1)
Reconciliation of Non-GAAP Financial Measures
EBITDA is
a measurement not recognized in financial statements presented in accordance
with accounting principles generally accepted in the United States of America
(“GAAP”). We define EBITDA as income from continuing operations
before interest expense (net of interest income), provision for income taxes and
depreciation and amortization. EBITDA is presented because we believe
it is a useful indicator of our performance and our ability to make strategic
acquisitions and meet capital expenditure and debt service
requirements. It is not, however, intended to represent cash flows
from operations as defined by GAAP and should not be used as an alternative to
net income (loss) as an indicator of operating performance or to cash flow as a
measure of liquidity. EBITDA is not necessarily comparable to
similarly titled measures used by other companies. Following is a
reconciliation of income (loss) from continuing operations to
EBITDA:
|
Three
Months Ended March 31,
(Unaudited)
|
||||||||
|
2008
|
2007
|
|||||||
|
Income
(loss) from continuing operations
|
$ | 484 | $ | (930 | ) | |||
|
Interest
expense,
net
|
459 | 436 | ||||||
|
Provision
(benefit) for income taxes
|
306 | (670 | ) | |||||
|
Depreciation
and amortization
|
4,370 | 3,591 | ||||||
|
EBITDA
|
$ | 5,619 | $ | 2,427 | ||||
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