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CAREER EDUCATION CORPORATION.
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(Name of Registrant as Specified in Its Charter)
BOSTIC R STEVEN
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Steve Bostic issued the following press release on May 17, 2006:
FOR IMMEDIATE RELEASE
Steve Bostic Urges Career Education Corporation Management to Address
Unanswered Questions
Urges Fellow Stockholders to Vote the BLUE Proxy Card to Protect the Value of
their Investment
SEA ISLAND, GA, May 17, 2006 -- Steve Bostic, the beneficial owner of
approximately 1% of the outstanding stock of Career Education Corporation (CEC
or NASDAQ: CECO), today issued the following letter to his fellow stockholders.
The letter urges Career Education Corporation's management to address numerous
unanswered questions and urges stockholders to vote for the alternative slate of
directors, comprised of James Copeland, William Ide and himself, in order to
ensure effective Board oversight, and restore integrity and sound educational
values to the company:
Dear Fellow Stockholder,
Ever since American InterContinental University ("AIU") was placed on probation
by the Southern Association of Colleges and Schools ("SACS") in December 2005,
management of Career Education Corporation ("CEC") have maintained that they are
working diligently to resolve AIU's accreditation troubles. Jack Larson has told
stockholders that a third-party assessment addressing SACS' recommendations
would be completed by March 2006.
Then how can it be that, as reported in The London Times on April 28, 2006, AIU
London, a SACS accredited institution, became the only institution in history to
fail a Quality Assurance Agency ("QAA") routine inspection? How can the Board
explain the discrepancy between the measures they claim to be taking and results
like AIU London's historic failed audit?
The bottom line is that AIU remains on probation, threatening its accreditation
and jeopardizing CEC's principal asset. In light of this, stockholders must ask
themselves whether Jack Larson and his Board will be able to regain the trust of
SACS and save AIU's accreditation.
On February 8, 2006, I sent a letter to Jack Larson asking seven questions:
(1) What changes do you plan to make in the oversight structure of CEC,
and its constituent institutions, and in their operating practices,
in order to correct past regulatory violations; assure regulatory
compliance going forward; and instill and maintain an ethical
corporate culture consistent with the Sarbanes-Oxley Act of 2002?
(2) What changes have you made or do you plan to make specifically in
the areas of marketing, admissions and financial aid with respect
to: (i)
operating policies and practices; (ii) personnel working in those
areas; (iii) reporting relationships; (iv) regulatory audits or
reviews; and (v) disciplinary actions?
(3) What are the specific steps that AIU is taking in its "comprehensive
action plan", which was mentioned in CEC's January 17, 2006 press
release, to meet the Commission on Colleges of SACS criteria in each
of the core academic and operational areas that have been identified
as being deficient?
(4) What changes do you plan to make to CEC's administration of its
private loan programs to curb the loss of loan repayment revenue and
to improve the accuracy of the reporting of loan status and bad debt
expense?
(5) What changes do you plan to make to the systems and practices that
CEC uses to capture data and prepare reports to regulatory bodies
and the public on key educational measures, in order to ensure
accuracy in CEC's reported enrollment, retention, graduation and
placement statistics?
(6) What changes do you plan to make in CEC's academic and operational
practices, including student services, to improve student retention
and graduation rates?
(7) What changes do you plan to make in CEC's human resources management
policies and practices to improve employee morale, provide faculty
and employee training and development and to build loyalty and
increase the retention of valuable employees?
Jack Larson publicly stated that CEC intended to address many of my questions
during its February 15th earnings call. Yet despite this undertaking, and
despite all of CEC's communications with its stockholders during the last
several months, including not one but two earnings calls and hundreds of
thousands of dollars of stockholders' money spent on a recent media blitz, Jack
Larson and his Board have not specifically answered the questions that I posed
over three months ago.
Moreover, regardless of what management may be telling stockholders about U.S.
Department of Education ("DOE") Title IV financial aid issues, DOE restrictions
against CEC expanding with new campuses are "substantially still in place
today," as stated by a DOE spokeswoman in the Wall Street Journal on May 8,
2006.
Jack Larson and his Board have dismissed these serious threats to the health and
value of CEC with the same spin that allowed Jack Larson to state "[w]e have
received a great deal of positive feedback from investors about our operation
performance, and there has been a clear expression of support for our current
management and board of directors," just six days after CEC's stockholders cast
what ISS called the "highest ever recorded" withhold vote against management's
director nominees at CEC's 2005 Annual Meeting. Stockholders should be insulted
by the fact that Jack Larson and his Board believe they
are so gullible. However, from personally working with SACS for years, I can
assure you that the regulators will not be fooled by meaningless rhetoric.
DO NOT PLAY RUSSIAN ROULETTE WITH THE VALUE OF YOUR INVESTMENT!
During my tenure as President of AIU, the university was fully accredited by
SACS, and at no time did SACS take negative action against AIU as it has done in
the past with AIU's former "warning" status and now with AIU's probation status,
the most severe action short of revocation of membership - all of which occurred
under the watch of Jack Larson and his Board. My past record of managing AIU's
relationship with SACS demonstrates that I have the credibility and judgment
that is needed to help guide CEC through a Board-initiated transformation effort
that can resolve the problems identified by SACS and restore its trust in AIU.
James E. Copeland, Jr. is the former CEO of Deloitte & Touche LLP, and his
extensive accounting experience would benefit the Company in light of recent
restatements and deficiencies in internal controls.
R. William Ide is the former President of the American Bar Association and is a
current member of the board of trustees of Clark-Atlanta University, a SACS
accredited institution, which makes him well-placed to restore sound educational
values at CEC.
VOTE TO PROTECT THE VALUE OF YOUR INVESTMENT
SIGN, DATE AND RETURN YOUR BLUE PROXY CARD TODAY
Even if you have already returned a white management card, you have every right
to change your vote by sending in a later-dated BLUE proxy. Only your latest
dated proxy will count.
Thank you for your support.
Sincerely,
/s/
Steve Bostic
IMPORTANT
If your shares are held in your own name, please sign, date and return the
BLUE proxy card today. If your shares are held in "Street-Name," only your
broker or bank can vote your shares and only upon your specific
instructions. Please return the BLUE proxy card to your broker or bank and
contact the person responsible for your account to ensure that a BLUE proxy
is voted on your behalf.
Do not sign any White proxy card you may receive from CEC.
If you have any questions, or need assistance in voting your shares, please
contact the firm assisting us in the solicitation of proxies:
INNISFREE M&A INCORPORATED
TOLL-FREE: (877) 750-9499
Banks and Brokers call collect: (212) 750-5833
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