For-profit education provider Corinthian Colleges
Corinthian did offer general details of its quarterly and full-year filing, including much higher operating expenses for the year, but lower impairment costs related to the closing of educational facilities and related headcount reductions.
In any case, Corinthian is a shadow of its former self. Its stock price increased nearly tenfold from 2000 to 2004 as it aggressively absorbed educational facilities into its corporate structure. Today, it runs about 100 U.S. colleges, with another 34 post-secondary colleges in Canada. So why has the stock fallen from an all-time high of more than $36 to a current $11.59?
For starters, Corinthian has been tripped up by a number of operational miscues over the past couple of years. In 2005, it was fined for not verifying information in student financial aid applications, and its accreditation status in Georgia was jeopardized by low placement and completion rates for students. Back in June, the state of Florida also sent subpoenas to the company's Floridian university regarding its advertising and marketing practices, placement data, and school policies.
The above missteps, and others regarding the integration of 2004 acquisitions, have led to student and faculty woes, including lower enrollment and higher staff turnover. The company still generates significant levels of operating cash flows and has low debt levels, but its capital-expenditure needs have increased over the past two reported fiscal years as the company spends to fix its problems. It sounds as though those costs will be high again this year.
Given the added stock-options probe, I think there's too much uncertainty to determine Corinthian's sustainable long-term cash flow growth rate. Competitor Apollo
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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.