form10q.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
ý |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2009
or
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____ to _____
Commission File Number 000-51371
LINCOLN EDUCATIONAL SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey |
57-1150621 |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
|
|
200 Executive Drive, Suite 340 |
07052 |
West Orange, NJ |
(Zip Code) |
(Address of principal executive offices) |
|
(973) 736-9340
(Registrant’s telephone number, including area code)
No change
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o |
Accelerated filerý |
|
|
Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý
As of August 3, 2009, there were 26,847,065 shares of the registrant’s common stock outstanding.
LINCOLN EDUCATIONAL SERVICES CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2009
PART I. |
|
FINANCIAL INFORMATION |
|
Item 1. |
|
|
1 |
|
|
|
1 |
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|
3 |
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|
4 |
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|
5 |
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|
7 |
Item 2. |
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14 |
Item 3. |
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21 |
Item 4. |
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22 |
PART II. |
|
OTHER INFORMATION |
22 |
Item 1. |
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22 |
Item 4. |
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22 |
Item 6. |
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23 |
PART I – FINANCIAL INFORMATION
|
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|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
12,638 |
|
|
$ |
15,234 |
|
|
|
|
368 |
|
|
|
383 |
|
|
|
|
28,188 |
|
|
|
22,857 |
|
|
|
|
3,661 |
|
|
|
3,374 |
|
|
|
|
7,222 |
|
|
|
5,627 |
|
|
|
|
- |
|
|
|
828 |
|
|
|
|
3,628 |
|
|
|
- |
|
|
|
|
7,496 |
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|
2,958 |
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|
|
63,201 |
|
|
|
51,261 |
|
|
|
|
|
|
|
|
|
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|
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|
141,037 |
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108,567 |
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|
|
|
|
|
|
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|
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|
3,822 |
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|
|
3,326 |
|
|
|
|
429 |
|
|
|
632 |
|
|
|
|
8,380 |
|
|
|
7,080 |
|
|
|
|
111,926 |
|
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|
91,460 |
|
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|
|
9,768 |
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|
5,716 |
|
|
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|
134,325 |
|
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|
108,214 |
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$ |
338,563 |
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$ |
268,042 |
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|
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$ |
5,502 |
|
|
$ |
130 |
|
|
|
|
40,740 |
|
|
|
38,806 |
|
|
|
|
15,720 |
|
|
|
12,349 |
|
|
|
|
21,026 |
|
|
|
16,239 |
|
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|
|
75 |
|
|
|
- |
|
|
|
|
- |
|
|
|
3,263 |
|
|
|
|
637 |
|
|
|
314 |
|
|
|
|
83,700 |
|
|
|
71,101 |
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,101 |
|
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|
10,044 |
|
|
|
|
4,196 |
|
|
|
4,335 |
|
|
|
|
6,172 |
|
|
|
5,972 |
|
|
|
|
1,960 |
|
|
|
1,641 |
|
|
|
|
133,129 |
|
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|
93,093 |
|
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|
|
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- |
|
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|
- |
|
Common stock, no par value - authorized 100,000,000 shares at June 30, 2009 and December 31, 2008, issued and outstanding 27,445,064 shares at June 30, 2009 and 26,088,261 shares at December 31, 2008 |
|
|
136,701 |
|
|
|
120,597 |
|
|
|
|
16,008 |
|
|
|
15,119 |
|
|
|
|
(3,377 |
) |
|
|
(3,619 |
) |
|
|
|
(6,584 |
) |
|
|
(6,584 |
) |
|
|
|
68,469 |
|
|
|
55,219 |
|
|
|
|
(5,783 |
) |
|
|
(5,783 |
) |
|
|
|
205,434 |
|
|
|
174,949 |
|
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|
$ |
338,563 |
|
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$ |
268,042 |
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$ |
128,110 |
|
|
$ |
85,056 |
|
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$ |
246,709 |
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$ |
169,103 |
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51,120 |
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|
35,927 |
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|
99,418 |
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|
72,555 |
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|
|
63,573 |
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|
46,440 |
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|
123,187 |
|
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|
92,573 |
|
|
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|
(12 |
) |
|
|
3 |
|
|
|
(14 |
) |
|
|
40 |
|
|
|
|
114,681 |
|
|
|
82,370 |
|
|
|
222,591 |
|
|
|
165,168 |
|
|
|
|
13,429 |
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|
|
2,686 |
|
|
|
24,118 |
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3,935 |
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7 |
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|
18 |
|
|
|
9 |
|
|
|
63 |
|
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|
(1,098 |
) |
|
|
(582 |
) |
|
|
(2,103 |
) |
|
|
(1,086 |
) |
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|
|
8 |
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|
|
- |
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|
17 |
|
|
|
- |
|
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|
12,346 |
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|
|
2,122 |
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|
22,041 |
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|
2,912 |
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|
|
4,920 |
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|
881 |
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|
|
8,791 |
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|
|
1,187 |
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|
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$ |
7,426 |
|
|
$ |
1,241 |
|
|
$ |
13,250 |
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|
$ |
1,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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$ |
0.28 |
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$ |
0.05 |
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$ |
0.51 |
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$ |
0.07 |
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|
|
|
|
|
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|
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|
|
|
|
|
|
|
$ |
0.27 |
|
|
$ |
0.05 |
|
|
$ |
0.49 |
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$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,477 |
|
|
|
25,341 |
|
|
|
26,093 |
|
|
|
25,500 |
|
|
|
|
27,217 |
|
|
|
26,059 |
|
|
|
26,834 |
|
|
|
26,154 |
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,088,261 |
|
|
$ |
120,597 |
|
|
$ |
15,119 |
|
|
$ |
(3,619 |
) |
|
$ |
(6,584 |
) |
|
$ |
55,219 |
|
|
$ |
(5,783 |
) |
|
$ |
174,949 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
13,250 |
|
|
|
- |
|
|
|
13,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,288 |
|
|
|
- |
|
|
|
320 |
|
|
|
242 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
562 |
|
|
|
|
- |
|
|
|
- |
|
|
|
502 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
502 |
|
|
|
|
- |
|
|
|
- |
|
|
|
122 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
122 |
|
|
|
|
1,150,000 |
|
|
|
14,932 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
14,932 |
|
|
|
|
(5,013 |
) |
|
|
- |
|
|
|
(55 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(55 |
) |
|
|
|
192,528 |
|
|
|
1,172 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,172 |
|
|
|
|
27,445,064 |
|
|
$ |
136,701 |
|
|
$ |
16,008 |
|
|
$ |
(3,377 |
) |
|
$ |
(6,584 |
) |
|
$ |
68,469 |
|
|
$ |
(5,783 |
) |
|
$ |
205,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
13,250 |
|
|
$ |
1,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11,374 |
|
|
|
8,936 |
|
|
|
|
99 |
|
|
|
97 |
|
|
|
|
(1,643 |
) |
|
|
(1,221 |
) |
|
|
|
(14 |
) |
|
|
40 |
|
|
|
|
15,890 |
|
|
|
9,569 |
|
|
|
|
280 |
|
|
|
- |
|
|
|
|
1,064 |
|
|
|
1,171 |
|
|
|
|
(122 |
) |
|
|
(5 |
) |
|
|
|
194 |
|
|
|
271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,113 |
) |
|
|
(9,372 |
) |
|
|
|
(144 |
) |
|
|
(256 |
) |
|
|
|
(82 |
) |
|
|
203 |
|
|
|
|
903 |
|
|
|
5,935 |
|
|
|
|
(236 |
) |
|
|
255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,434 |
) |
|
|
402 |
|
|
|
|
(113 |
) |
|
|
(903 |
) |
|
|
|
(6,769 |
) |
|
|
(3,225 |
) |
|
|
|
1,601 |
|
|
|
569 |
|
|
|
|
(4,153 |
) |
|
|
(5,834 |
) |
|
|
|
(3,418 |
) |
|
|
6,632 |
|
|
|
|
9,832 |
|
|
|
8,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
377 |
|
|
|
- |
|
|
|
|
(5,828 |
) |
|
|
(12,560 |
) |
|
|
|
90 |
|
|
|
- |
|
|
|
|
(27,552 |
) |
|
|
- |
|
|
|
|
(32,913 |
) |
|
|
(12,560 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
44,000 |
|
|
|
23,000 |
|
|
|
|
(39,000 |
) |
|
|
(7,000 |
) |
|
|
|
1,172 |
|
|
|
67 |
|
|
|
|
122 |
|
|
|
5 |
|
|
|
|
(55 |
) |
|
|
- |
|
|
|
|
(686 |
) |
|
|
(105 |
) |
|
|
|
- |
|
|
|
(6,375 |
) |
|
|
|
14,932 |
|
|
|
- |
|
|
|
|
20,485 |
|
|
|
9,592 |
|
|
|
|
(2,596 |
) |
|
|
5,389 |
|
|
|
|
15,234 |
|
|
|
3,502 |
|
|
|
$ |
12,638 |
|
|
$ |
8,891 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,476,957 |
|
|
|
25,340,562 |
|
|
|
26,092,785 |
|
|
|
25,500,263 |
|
|
|
|
739,912 |
|
|
|
718,502 |
|
|
|
741,710 |
|
|
|
653,908 |
|
|
|
|
27,216,869 |
|
|
|
26,059,064 |
|
|
|
26,834,495 |
|
|
|
26,154,171 |
|
For the three months ended June 30, 2009 and 2008, options to acquire 202,500 and 813,208 shares, respectively, and for the six months ended June 30, 2009 and 2008, options to acquire 229,000 and 555,208 shares, respectively, were excluded from the above table as the effect of their inclusion on reported earnings per share would
have been antidilutive.
On January 20, 2009, the Company completed the acquisition of six of the seven schools comprising Baran Institute of Technology, Inc. (“BAR”), for approximately $24.9 million in cash, net of cash acquired, subject to further customary post closing adjustments. BAR consists of seven schools serving approximately 1,900
students as of June 30, 2009 and offers associate and diploma programs in the fields of automotive, skilled trades, health sciences and culinary arts. On April 20, 2009, the Company acquired the seventh BAR school, Clemens College (“Clemens”), for $2.7 million, in cash, net of cash acquired. In connection with these acquisitions, the Company incurred approximately $1.3 million of expenses for the six months ended June 30, 2009 related to the acquisitions that were incurred in
2009, pursuant to SFAS No. 141R.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
362 |
|
|
$ |
- |
|
|
|
|
7,947 |
|
|
|
195 |
|
|
|
|
36,739 |
|
|
|
1,265 |
|
|
|
|
19,189 |
|
|
|
10,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,138 |
|
|
|
460 |
|
|
|
|
510 |
|
|
|
- |
|
|
|
|
1,040 |
|
|
|
960 |
|
|
|
|
710 |
|
|
|
- |
|
|
|
|
1,980 |
|
|
|
- |
|
|
|
|
3,612 |
|
|
|
21 |
|
|
|
|
(19,225 |
) |
|
|
(1,539 |
) |
|
|
|
(27,450 |
) |
|
|
(816 |
) |
|
|
$ |
27,552 |
|
|
$ |
10,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 |
|
|
$ |
4,813 |
|
|
$ |
2,999 |
|
|
$ |
1,814 |
|
|
$ |
2,563 |
|
|
$ |
2,230 |
|
|
$ |
333 |
|
|
|
|
|
|
|
990 |
|
|
|
- |
|
|
|
990 |
|
|
|
1,270 |
|
|
|
- |
|
|
|
1,270 |
|
|
|
|
6 |
|
|
|
509 |
|
|
|
40 |
|
|
|
469 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
2,307 |
|
|
|
- |
|
|
|
2,307 |
|
|
|
1,307 |
|
|
|
- |
|
|
|
1,307 |
|
|
|
|
10 |
|
|
|
1,410 |
|
|
|
340 |
|
|
|
1,070 |
|
|
|
2,000 |
|
|
|
289 |
|
|
|
1,711 |
|
|
|
|
3 |
|
|
|
2,181 |
|
|
|
428 |
|
|
|
1,753 |
|
|
|
201 |
|
|
|
105 |
|
|
|
96 |
|
|
|
|
|
|
|
$ |
12,210 |
|
|
$ |
3,807 |
|
|
$ |
8,403 |
|
|
$ |
7,341 |
|
|
$ |
2,624 |
|
|
$ |
4,717 |
|
Under the LTIP, certain employees received an award of restricted shares of common stock totaling 200,000 shares, valued at $2.9 million, on October 30, 2007; 80,000 shares, valued at $1.0 million, on February 29, 2008; 8,000 shares, valued at $0.1 million, on May 2, 2008; and 8,000 shares, valued at $0.1 million, on May 5, 2008. As
of June 30, 2009, there were a total of 296,000 restricted shares awarded and 59,200 shares vested under the LTIP. The restricted shares vest ratably on the first through fifth anniversary of the grant date; however, there is no vesting period on the right to vote or the right to receive dividends on these restricted shares. The recognized restricted stock expense for the three months ended June 30, 2009 and 2008 was $0.2 million and $0.2 million, respectively, and for the six months ended
June 30, 2009 and 2008 was $0.4 million and $0.2 million, respectively. The deferred compensation or unrecognized restricted stock expense under the LTIP as of June 30, 2009 and December 31 2008 was $2.8 million and $3.2 million, respectively.
Pursuant to the Non-Employee Directors Plan, each non-employee director of the Company receives an annual award of restricted shares of common stock on the date of the Company’s annual meeting of shareholders. The number of shares granted to each non-employee director is based on the fair market value of a share
of common stock on that date. The restricted shares vest ratably on the first through third anniversary of the grant date; however, there is no vesting period on the right to vote or the right to receive dividends on these restricted shares. As of June 30, 2009, there were a total of 104,242 shares awarded and 58,716 shares vested under the Non-Employee Directors Plan. The recognized restricted stock expense for the three months ended June 30, 2009 and 2008 was $0.1 million and $0.1 million, respectively,
and for the six months ended June 30, 2009 and 2008 was $0.2 million and $0.2 million, respectively. The deferred compensation or unrecognized restricted stock expense under the Non-Employee Directors Plan as of June 30, 2009 and December 31, 2008 was $0.6 million and $0.4 million, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,474,215 |
|
|
$ |
9.98 |
|
|
|
|
|
$ |
6,808 |
|
|
|
|
27,000 |
|
|
|
14.36 |
|
|
|
|
|
|
|
|
|
|
|
(21,833 |
) |
|
|
15.38 |
|
|
|
|
|
|
|
|
|
|
|
(192,528 |
) |
|
|
6.10 |
|
|
|
|
|
|
2,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,286,854 |
|
|
|
10.56 |
|
|
|
|
|
|
13,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,077,907 |
|
|
|
9.96 |
|
|
|
|
|
|
12,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3.10 |
|
|
|
489,746 |
|
|
|
2.54 |
|
|
$ |
3.10 |
|
|
|
489,746 |
|
|
$ |
3.10 |
|
$ |
4.00-$13.99 |
|
|
|
271,900 |
|
|
|
8.07 |
|
|
|
11.88 |
|
|
|
138,417 |
|
|
|
11.79 |
|
$ |
14.00-$19.99 |
|
|
|
412,708 |
|
|
|
5.78 |
|
|
|
15.20 |
|
|
|
345,044 |
|
|
|
14.99 |
|
$ |
20.00-$25.00 |
|
|
|
112,500 |
|
|
|
5.14 |
|
|
|
22.90 |
|
|
|
104,700 |
|
|
|
23.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,286,854 |
|
|
|
4.97 |
|
|
|
10.56 |
|
|
|
1,077,907 |
|
|
|
9.96 |
|
We are a leading and diversified provider of career-oriented post-secondary education. We offer recent high school graduates and working adults degree and diploma programs in five areas principal of study: automotive technology, health sciences, skilled trades, business and information technology and hospitality services. Each
area of study is specifically designed to appeal to and meet the educational objectives of our student population, while also satisfying the criteria established by industry and employers and state and federal accrediting bodies. We believe that diversification limits our dependence on any one industry for enrollment growth or placement opportunities and broadens our opportunity to introduce new programs. As of June 30, 2009, 26,035 students were enrolled at our 43 campuses across 17 states. Our campuses primarily
attract students from their local communities and surrounding areas, although our destination schools attract students from across the United States, and in some cases, from abroad.
Revenue recognition. Revenues are derived primarily from programs taught at our schools. Tuition revenues, textbook sales and one-time fees, such as nonrefundable application fees and course material fees, are recognized on a straight-line basis
over the length of the applicable program, which is the period of time from a student’s start date through his or her graduation date, including internships or externships that take place prior to graduation. If a student withdraws from a program prior to a specified date, any paid but unearned tuition is refunded. Refunds are calculated and paid in accordance with federal, state and accrediting agency standards. Other revenues, such as tool sales and contract training revenues are recognized
as goods are delivered or services are performed. On an individual student basis, tuition earned in excess of cash received is recorded as accounts receivable, and cash received in excess of tuition earned is recorded as unearned tuition.
Allowance for uncollectible accounts. Based upon our experience and judgment, we establish an allowance for uncollectible accounts with respect to tuition receivables. We use an internal group of collectors, augmented by third-party collectors
as deemed appropriate, in our collection efforts. In establishing our allowance for uncollectible accounts, we consider, among other things, a student’s status (in-school or out-of-school), whether or not additional financial aid funding will be collected from Title IV Programs or other sources, whether or not a student is currently making payments and overall collection history. Changes in trends in any of these areas may impact the allowance for uncollectible accounts. The receivables
balances of withdrawn students with delinquent obligations are reserved based on our collection history. Although we believe that our reserves are adequate, if the financial condition of our students deteriorates, resulting in an impairment of their ability to make payments, additional allowances may be necessary, which will result in increased selling, general and administrative expenses in the period such determination is made.
Our bad debt expense as a percentage of revenues for the three months ended June 30, 2009 and 2008 was 6.7% and 6.5%, respectively, and for the six months ended June 30, 2009 and 2008 was 6.4% and 5.7%, respectively. Our exposure to changes in our bad debt expense could impact our operations. A 1% increase in our bad
debt expense as a percentage of revenues for the three months ended June 30, 2009 and 2008 would have resulted in an increase in bad debt expense of $1.3 million and $0.9 million, respectively, and for the six months ended June 30, 2009 and 2008 would have resulted in an increase in bad debt expense of $2.5 million and $1.7 million, respectively.
Goodwill. We test our goodwill for impairment annually, or whenever events or changes in circumstances indicate impairment may have occurred, by comparing the fair value of our reporting units to their carrying value. Impairment may result from, among
other things, deterioration in the performance of the acquired business, adverse market conditions, adverse changes in applicable laws or regulations, including changes that restrict the activities of the acquired business, and a variety of other circumstances. If we determine that impairment has occurred, we are required to record a write-down of the carrying value and charge the impairment as an operating expense in the period the determination is made. In evaluating the recoverability of the carrying value
of goodwill and other indefinite-lived intangible assets, we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the acquired assets. Changes in strategy or market conditions could significantly impact these judgments in the future and require an adjustment to the recorded balances.
Revenues. Revenues increased by $43.1 million, or 50.6%, to $128.1 million for the quarter ended June 30, 2009 from $85.1 million for the quarter ended June 30, 2008. Approximately $13.3 million, or 31.0%, of this
increase was a result of our acquisitions of Briarwood College on December 1, 2008, six of the seven schools comprising Baran Institute of Technology (“BAR”) on January 20, 2009 and Clemens College (“Clemens”) on April 20, 2009 (the “Acquisitions”). Excluding the Acquisitions, the increase in revenues was primarily attributable to a 28.8% increase in average student population, which increased to 23,877 for the quarter ended June 30, 2009 from 18,540 for the quarter
ended June 30, 2008. Average revenue per student on a same school basis increased 4.8% for the quarter ended June 30, 2009 from the quarter ended June 30, 2008 primarily from tuition increases which ranged from 3% to 5% annually and by a shift in student population to students enrolled in higher tuition programs. For a general discussion of trends in our student enrollment, see “Seasonality and Trends” below.
Educational services and facilities expenses. Our educational services and facilities expenses increased by $15.2 million, or 42.3%, to $51.1 million for the quarter ended June 30, 2009 from $35.9 million for the quarter
ended June 30, 2008. The Acquisitions accounted for $8.2 million, or 53.9%, of this increase. Excluding the Acquisitions, the increase in educational services and facilities expenses was primarily due to instructional expenses which increased by $4.1 million, or 21.1%, and books and tools expenses, which increased by $2.0 million, or 49.2%, respectively, over the same quarter in 2008. This increase was attributable to a 33.0% increase in student starts for the second quarter of 2009 as compared to the second
quarter of 2008 and the overall increase in student population and higher tool sales during the second quarter of 2009 compared to the second quarter of 2008. On a same school basis, we began the second quarter of 2009 with approximately 4,500 more students than we had on April 1, 2008, and as of June 30, 2009 our population on a same school basis was approximately 5,400 higher than as of June 30, 2008. The remainder of the increase was due to facilities expenses, which increased by approximately $0.9
million over the same quarter in 2008. This increase was attributable to: (a) a $0.4 million increase in rent expense resulting from the expansion of our Melrose Park, Illinois and Vine Street, Ohio campuses, our new campus in Toledo, Ohio and lease extensions at our existing campuses; (b) a $0.2 million increase in repairs and maintenance costs due to higher common area charges relating to our lease expansions and new locations; and (c) a $0.3 million increase in real-estate taxes
due to additional campus space as well as annual property value and tax rate increases. Educational services and facilities expenses as a percentage of revenues decreased to 39.9% for the second quarter of 2009 from 42.2% for the second quarter of 2008.
Selling, general and administrative expenses. Our selling, general and administrative expenses for the quarter ended June 30, 2009 were $63.6 million, an increase of $17.1 million, or 36.9%, from $46.4 million for the quarter
ended June 30, 2008. Approximately $7.4 million, or 43.3%, of this increase was attributable to the Acquisitions. Excluding the Acquisitions, the increase in our selling, general and administrative expenses for the quarter ended June 30, 2009 was primarily due to: (a) a $0.6 million, or 14.4%, increase in student services; (b) a $1.5 million, or 8.4%, increase in sales and marketing; and (c) a $7.7 million, or 30.8%, increase in administrative expenses as compared to the quarter ended June 30, 2008.
For the quarter ended June 30, 2009, including the Acquisitions, our bad debt expense as a percentage of revenue was 6.7% as compared to 6.5% for the same quarter in 2008. This increase was primarily attributable to higher accounts receivable due to an increase of 28.8% in average student population for the second quarter
of 2009 as compared to the second quarter of 2008. The number of days sales outstanding at June 30, 2009 decreased to 22.7 days, compared to 26.4 days at June 30, 2008. This decrease is primarily attributable to our program to centralize the back office administration of our financial aid department in an effort to improve the effectiveness and timeliness of our financial aid processing. As of June 30, 2009, we had outstanding loan commitments to our students of $24.6 million as compared to $23.6 million
at March 31, 2009 and $24.8 million at December 31, 2008. Loan commitments, net of interest that would be due on the loans through maturity, were $17.0 million at June 30, 2009 as compared to $16.2 million at March 31, 2009 and $17.0 million at December 31, 2008.
Revenues. Revenues increased by $77.6 million, or 45.9%, to $246.7 million for the six months ended June 30, 2009 from $169.1 million for the six months ended June 30, 2008. The Acquisitions accounted for approximately $24.9 million,
or 32.1%, of this increase. Excluding the Acquisitions, the increase in revenues was primarily attributable to a 25.6% increase in average student population, which increased to 23,237 for the six months ended June 30, 2009 from 18,499 for the six months ended June 30, 2008. Average revenue per student on a same school basis increased 4.4% for the six months ended June 30, 2009 from the six months ended June 30, 2008 primarily from tuition increases which ranged from 3% to 5% annually and by a shift
in student population to students enrolled in higher tuition programs. For a general discussion of trends in our student enrollment, see “Seasonality and Trends” below.
Educational services and facilities expenses. Our educational services and facilities expenses increased by $26.9 million, or 37.0%, to $99.4 million for the six months ended June 30, 2009 from $72.6 million for the six months
ended June 30, 2008. The Acquisitions accounted for $14.6 million, or 54.3%, of this increase. Excluding the Acquisitions, the increase in educational services and facilities expenses was primarily due to instructional expenses which increased by $6.8 million, or 17.5%, and books and tools expenses, which increased by $3.9 million, or 46.2%, respectively, over the same period in 2008. This increase was attributable to a 34.1% increase in student starts for the six months ended June 30, 2009 as compared to the
same period in 2008 and the overall increase in student population and higher tool sales during the six months ended June 30, 2009 compared to the same period in 2008. On a same school basis, we began 2009 with approximately 3,000 more students than we had on January 1, 2008, and as of June 30, 2009, our population on a same school basis was approximately 5,400 higher than as of June 30, 2008. The remainder of the increase was due to facilities expenses, which increased by approximately $1.5 million
over the same period in 2008. This increase was attributable to: (a) a $0.6 million increase in rent expense resulting from the expansion of our Melrose Park, Illinois and Vine Street, Ohio campuses, our new campus in Toledo, Ohio and lease extensions at our existing campuses; (b) a $0.6 million increase in repairs and maintenance costs due to higher common area charges relating to our lease expansions and new locations; and (c) a $0.4 million increase in real-estate taxes due to additional
campus space as well as annual property value and tax rate increases. Educational services and facilities expenses as a percentage of revenues decreased to 40.3% from 42.9% for the six months ended June 30, 2009 compared to the same period in 2008.
Selling, general and administrative expenses. Our selling, general and administrative expenses for the six months ended June 30, 2009 were $123.2 million, an increase of $30.6 million, or 33.1%, from $92.6 million for the quarter
ended June 30, 2008. Approximately $13.8 million, or 45.1%, of this increase was attributable to the Acquisitions. Excluding the Acquisitions, the increase in our selling, general and administrative expenses for the quarter ended June 30, 2009 was primarily due to: (a) a $1.2 million, or 15.3%, increase in student services; (b) a $2.9 million, or 8.2%, increase in sales and marketing; and (c) a $12.7 million, or 25.6%, increase in administrative expenses as compared to the same period in 2008.
The increase in administrative expenses during the six months ended June 30, 2009 as compared to the same period in 2008 was primarily due to: (a) a $5.3 million increase in personnel costs, relating to annual compensation increases, increased number of personnel associated with the opening of our new Toledo, Ohio campus as well
as our higher student population during the six months ended June 30, 2009 as compared to the same period in 2008, increased accruals for incentive compensation and increased cost of benefits provided to employees; (b) a $4.4 million increase in bad debt expense; (c) $0.5 million of legal costs; (d) a $0.4 million increase in software maintenance expenses resulting from increased software licenses for our student management system; (e) $0.3 million incurred due to the re-branding of
our Florida Culinary Institute in West Palm Beach, Florida; (f) $1.3 million of costs incurred related to our acquisition of BAR expensed in accordance with SFAS No. 141R; and (g) $0.4 million related to repairs and maintenance of equipment and general administrative supplies. As a percentage of revenues, selling, general and administrative expenses for the six months ended June 30, 2009 decreased to 49.9% from 54.8% for the same period in 2008.
At June 30, 2009, we had $12.6 million in cash and cash equivalents, representing a decrease of approximately $2.6 million as compared to $15.2 million as of December 31, 2008. Historically, we have financed our operating activities and organic growth primarily through cash generated from operations. We have financed
acquisitions primarily through borrowings under our credit agreement and cash generated from operations. During the first six months of 2009, we borrowed $44.0 million to finance our acquisition of BAR and to finance our working capital needs and subsequently repaid $39.0 million. We currently anticipate that we will be able to meet both our short-term cash needs, as well as our need to fund operations and meet our obligations beyond the next twelve months with cash generated by operations,
existing cash balances and, if necessary, borrowings under our credit agreement. In February 2009, we sold common stock in a public offering and received net proceeds of approximately $14.9 million. The proceeds of this offering were used to repay borrowings under our credit agreement. In addition, we may also consider accessing the financial markets in the future as a source of liquidity for capital requirements, acquisitions and general corporate purposes to the extent such requirements
are not satisfied by cash on hand, borrowings under our credit agreement or operating cash flows. However, we cannot assure you that we will be able to raise additional capital on favorable terms, if at all. At June 30, 2009, we had net borrowings available under our $100 million credit agreement of approximately $89.4 million, including a $14.4 million sub-limit on letters of credit. The credit agreement terminates on February 15, 2010. We intend to
refinance our credit agreement prior to the maturity date; however we cannot assure you that we will be able to do so or that any refinancing would be on terms favorable to us.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,000 |
|
|
$ |
5,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
61,531 |
|
|
|
2,471 |
|
|
|
5,186 |
|
|
|
5,083 |
|
|
|
48,791 |
|
|
|
|
198 |
|
|
|
172 |
|
|
|
26 |
|
|
|
- |
|
|
|
- |
|
|
|
|
161,307 |
|
|
|
19,841 |
|
|
|
35,907 |
|
|
|
32,570 |
|
|
|
72,989 |
|
|
|
|
10,693 |
|
|
|
1,426 |
|
|
|
2,852 |
|
|
|
2,852 |
|
|
|
3,563 |
|
|
|
$ |
238,729 |
|
|
$ |
28,910 |
|
|
$ |
43,971 |
|
|
$ |
40,505 |
|
|
$ |
125,343 |
|
Our net revenues and operating results normally fluctuate as a result of seasonal variations in our business, principally due to changes in total student population. Student population varies as a result of new student enrollments, graduations and student attrition. Historically, our schools have had lower student populations in
our first and second quarters and we have experienced large class starts in the third and fourth quarters and student attrition in the first half of the year. Our second half growth is largely dependent on a successful high school recruiting season. We recruit our high school students several months ahead of their scheduled start dates, and thus, while we have visibility on the number of students who have expressed interest in attending our schools, we cannot predict with certainty the actual number of new student
enrollments and the related impact on revenue. Our expenses, however, do not vary significantly over the course of the year with changes in our student population and net revenues. During the first half of the year, we make significant investments in marketing, staff, programs and facilities to ensure that we meet our second half of the year targets and, as a result, such expenses do not fluctuate significantly on a quarterly basis. To the extent new student enrollments, and related revenues, in the second half
of the year fall short of our estimates, our operating results could suffer. We expect quarterly fluctuations in operating results to continue as a result of seasonal enrollment patterns. Such patterns may change as a result of new school openings, new program introductions, and increased enrollments of adult students and/or acquisitions.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At our annual meeting held on April 30, 2009, the shareholders voted to approve all of management’s proposals as follows:
1. For the election of ten directors to hold office until our next annual meeting, the voting for each nominee was:
|
|
Votes For |
|
|
Votes Withheld |
|
Peter S. Burgess |
|
|
24,981,557 |
|
|
|
393,260 |
|
James J. Burke, Jr. |
|
|
20,781,768 |
|
|
|
4,593,049 |
|
David F. Carney |
|
|
24,936,551 |
|
|
|
438,266 |
|
Celia H. Currin |
|
|
24,981,557 |
|
|
|
393,260 |
|
Paul E. Glaske |
|
|
21,973,159 |
|
|
|
3,401,658 |
|
Charles F. Kalmbach |
|
|
21,982,658 |
|
|
|
3,392,159 |
|
Shaun E. McAlmont |
|
|
24,905,232 |
|
|
|
469,585 |
|
Alexis P. Michas |
|
|
21,158,795 |
|
|
|
4,216,022 |
|
J. Barry Morrow |
|
|
25,011,313 |
|
|
|
363,504 |
|
Jerry G. Rubenstein |
|
|
25,010,092 |
|
|
|
364,725 |
|
2. For the amendment of the Company’s 2005 Non-Employee Directors Restricted Stock Plan:
Votes For |
Votes Against |
Abstained |
Not Voted |
19,874,933 |
3,948,783 |
385,457 |
1,165,644 |
3. For ratifying the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2009:
Votes For |
Votes Against |
Abstained |
24,685,098 |
3,292 |
5,450 |
EXHIBIT INDEX
The following exhibits are filed with or incorporated by reference into this Form 10-Q.
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 |
|
Stockholders’ Agreement, dated as of September 15, 1999, among Lincoln Technical Institute, Inc., Back to School Acquisition, L.L.C. and Five Mile River Capital Partners LLC (1). |
|
|
|
4.2 |
|
Letter agreement, dated August 9, 2000, by Back to School Acquisition, L.L.C., amending the Stockholders’ Agreement (1). |
|
|
|
4.3 |
|
Letter agreement, dated August 9, 2000, by Lincoln Technical Institute, Inc., amending the Stockholders’ Agreement (1). |
|
|
|
4.4 |
|
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). |
|
|
|
4.5 |
|
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 (6). |
|
|
|
4.6 |
|
Registration Rights Agreement between the Company and Back to School Acquisition, L.L.C. (2). |
|
|
|
4.7 |
|
Specimen Stock Certificate evidencing shares of common stock (1). |
|
|
|
10.1 |
|
Credit Agreement, dated as of February 15, 2005, among the Company, the Guarantors from time to time parties thereto, the Lenders from time to time parties thereto and Harris Trust and Savings Bank, as Administrative Agent (1). |
|
|
|
10.2 |
|
Amended and Restated Employment Agreement, dated as of February 1, 2007, between the Company and David F. Carney (3). |
|
|
|
10.3 |
|
Amendment to Amended and Restated Employment Agreement, dated as of January 14, 2009, between the Company and David F. Carney (8). |
|
|
|
10.4 |
|
Separation and Release Agreement, dated as of October 15, 2007, between the Company and Lawrence E. Brown (4). |
|
|
|
10.5 |
|
Amended and Restated Employment Agreement, dated as of February 1, 2007, between the Company and Scott M. Shaw (3). |
|
|
|
10.6 |
|
Amendment to Amended and Restated Employment Agreement, dated as of January 14, 2009, between the company and Scott M. Shaw (8). |
|
|
|
10.7 |
|
Amended and Restated Employment Agreement, dated as of February 1, 2007, between the Company and Cesar Ribeiro (3). |
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10.8 |
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Amendment to Amended and Restated Employment Agreement, dated as of January 14, 2009, between the company and Cesar Ribeiro (8). |
10.9 |
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Amended and Restated Employment Agreement, dated as of February 1, 2007, between the Company and Shaun E. McAlmont (3). |
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10.10 |
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Amendment to Amended and Restated Employment Agreement, dated as of January 14, 2009, between the company and Shaun E. McAlmont (8). |
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10.11 |
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Lincoln Educational Services Corporation 2005 Long Term Incentive Plan (1). |
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10.12 |
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Lincoln Educational Services Corporation 2005 Non Employee Directors Restricted Stock Plan (1). |
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10.13 |
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Lincoln Educational Services Corporation 2005 Deferred Compensation Plan (1). |
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10.14 |
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Lincoln Technical Institute Management Stock Option Plan, effective January 1, 2002 (1). |
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10.15 |
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Form of Stock Option Agreement, dated January 1, 2002, between Lincoln Technical Institute, Inc. and certain participants (1). |
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10.16 |
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Form of Stock Option Agreement under our 2005 Long Term Incentive Plan (7). |
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10.17 |
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Form of Restricted Stock Agreement under our 2005 Long Term Incentive Plan (7). |
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10.18 |
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Management Stock Subscription Agreement, dated January 1, 2002, among Lincoln Technical Institute, Inc. and certain management investors (1). |
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10.19 |
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Stockholder’s Agreement among Lincoln Educational Services Corporation, Back to School Acquisition L.L.C., Steven W. Hart and Steven W. Hart 2003 Grantor Retained Annuity Trust (2). |
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10.20 |
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Stock Purchase Agreement, dated as of March 30, 2006, among Lincoln Technical Institute, Inc., and Richard I. Gouse, Andrew T. Gouse, individually and as Trustee of the Carolyn Beth Gouse Irrevocable Trust, Seth A. Kurn and Steven L. Meltzer (5). |
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10.21 |
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Stock Purchase Agreement, dated as of January 20, 2009, among Lincoln Technical Institute, Inc., NN Acquisition, LLC, Brad Baran, Barbara Baran, UGP Education Partners, LLC, UGPE Partners Inc. and Merion Investment Partners, L.P (8). |
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10.22 |
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Stock Purchase Agreement, dated as of January 20, 2009, among Lincoln Technical Institute, Inc., NN Acquisition, LLC, Brad Baran, Barbara Baran, UGP Education Partners, LLC, Merion Investment Partners, L.P. and, for certain limited purposes only, UGPE Partners Inc (8). |
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Certification of President & Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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Certification of President & 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. |
________________________________________________
(1) |
Incorporated by reference to the Company’s Registration Statement on Form S-1 (Registration No. 333-123664). |
(2) |
Incorporated by reference to the Company’s Form 8-K dated June 28, 2005. |
(3) |
Incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2006. |
(4) |
Incorporated by reference to the Company’s Form 8-K dated October 15, 2007. |
(5) |
Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended March 31, 2006. |
(6) |
Incorporated by reference to the Company’s Registration Statement on Form S-3 (Registration No. 333-148406). |
(7) |
Incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2007. |
(8) |
Incorporated by reference to the Company’s Form 10-K for the year ended December 31, 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.
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LINCOLN EDUCATIONAL SERVICES CORPORATION |
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Date: August 5, 2009 |
By: |
/s/ Cesar Ribeiro |
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Cesar Ribeiro |
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Chief Financial Officer |
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(Duly Authorized Officer, Principal Accounting and Financial Officer) |
25
Unassociated Document
EXHIBIT 31.1
CERTIFICATION
I, Shaun E. McAlmont, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q 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;
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: August 5, 2009
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Shaun E. McAlmont |
President & Chief Executive Officer |
Unassociated Document
EXHIBIT 31.2
CERTIFICATION
I, Cesar Ribeiro, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q 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;
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: August 5, 2009
/s/ Cesar Ribeiro |
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Cesar Ribeiro |
Chief Financial Officer |
Unassociated Document
EXHIBIT 32
CERTIFICATION
Pursuant to 18 U.S.C. 1350 as adopted by
Section 906 of the Sarbanes-Oxley Act of 2002
Each of the undersigned, Shaun E. McAlmont, President and Chief Executive Officer of Lincoln Educational Services Corporation (the “Company”), and Cesar Ribeiro, Chief Financial Officer of the Company, has executed this certification in connection with the filing with the Securities and Exchange Commission of the Company’s
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2009 (the “Report”).
Each of the undersigned hereby certifies that, to his respective knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 5, 2009
/s/ Shaun E. McAlmont |
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Shaun E. McAlmont |
President & Chief Executive Officer |
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/s/ Cesar Ribeiro |
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Cesar Ribeiro |
Chief Financial Officer |