Oct. 29, 2009 (PR Newswire) -- SANTA ANA, Calif., Oct. 29 /PRNewswire-FirstCall/ -- Corinthian Colleges, Inc. (Nasdaq: COCO) reported financial results today for the first quarter ended September 30, 2009. The results exceeded our previous guidance for start growth, revenue and diluted earnings per share.

"Our strong first quarter results primarily reflect the continued success of our initiatives to enhance the student experience and improve operational performance," said Peter Waller, Corinthian's chief executive officer. "We have increased our student population for more than three consecutive fiscal years, resulting in improved leverage of facility and other fixed costs. Increased advertising effectiveness and lower media costs have improved efficiencies in marketing and admissions. Given all of these factors, our operating margin and cash flow increased substantially in the first quarter compared with the prior year."

"During the balance of fiscal 2010 we expect our student population growth to continue to be derived from several sources, including implementation of new programs at existing campuses, online enrollment, facility expansions, new branch campuses, and the high school recruiting program," Waller said.

"In addition, the recession helps drive enrollment growth, but it also creates challenges in terms of career placement and student loan repayment," Waller added. "In the first quarter we continued to make substantial investments in both of these areas, to help graduates achieve their career goals and meet their financial obligations in a difficult economy."

On October 20, 2009, the company announced a definitive agreement to purchase Heald Capital, LLC, the parent company of Heald College, for $395.0 million in cash, subject to certain working capital items. The transaction is expected to close in the third quarter ending March 31, 2010. "When complete, we expect Heald College to generate additional growth beginning in the second half of fiscal 2010," Waller continued. "The acquisition is consistent with our strategy of increasing our presence in markets with high growth potential and expanding our ability to offer regionally accredited programs. Heald is a regionally accredited institution that has been delivering quality career-focused academic programs since 1863. We believe the Heald acquisition will give Corinthian increased market presence, particularly in Northern California; a growth platform for regionally accredited online and campus-based programs; and a third strong brand."

Comparing the first quarter of fiscal 2010 with the same quarter of the prior year:

(Note: Data is for continuing operations only.)

--  Net revenue was $388.5 million versus $289.6 million, up 34.2%.
--  Total student population at September 30, 2009 was 93,493 versus 74,265
at September 30, 2008, an increase of 25.9%.
--  Total student starts were 36,737 versus 30,075, an increase of 22.2%.
--  Operating income was $53.9 million, compared with $10.1 million.
--  Income from continuing operations was $32.9 million, compared with $5.7
million.

--  Diluted earnings per share were $0.37 versus $0.07.

Q1 10 Financial Review

Educational services expenses were 55.3% of revenue in Q1 10 versus 61.1% in Q1 09. The improvement was mainly the result of a higher student population and the resulting leverage of facilities costs and a decrease in bad debt expense. Bad debt expense was 6.4% of revenue in Q1 10, lower than our previous guidance of 6.7% - 7.1%, and down substantially from 8.9% in Q1 09.

Marketing and admissions expenses were 20.6% of revenue in Q1 10 versus 25.3% in Q1 09.