ITT Announces Delay in Financial Reporting
Carmel-based ITT Educational Services Inc. (NYSE: ESI) is reporting preliminary first quarter new student enrollment of more than 16,700 compared to around 17,400 during the same period the previous year. The for-profit education provider says it must wait for guidance from federal regulators on a lawsuit regarding a student loan program before a full quarterly financial statement can be released. You can view ITT's earnings release by clicking here.
May 22, 2014
News Release
CARMEL, Ind. – ITT Educational Services, Inc. (NYSE: ESI), a leading proprietary provider of postsecondary degree programs in the United States, today reported that new student enrollment in the first quarter of 2014 decreased 3.8 percent to 16,746 compared to 17,412 in the same period in 2013. Total student enrollment decreased 6.4 percent to 57,125 as of March 31, 2014 compared to 61,039 as of March 31, 2013.
As previously disclosed, the company has submitted an inquiry to the Office of the Chief Accountant (the “OCA”) of the Securities and Exchange Commission (the “SEC”) related to the company's accounting treatment of the variable interest entity (the “PEAKS Trust”) involved in the PEAKS Private Student Loan Program (the “PEAKS Program”), and has not yet received the OCA's determination regarding that treatment. The company has been consulting with the OCA related to whether the financial results of the PEAKS Trust should be consolidated into the company's financial statements and, if so, during which periods, as well as matters related to the company's accounting for its guarantee obligations under the PEAKS Program. In addition, the company's independent registered public accounting firm has not completed its audit of the company's financial statements for the fiscal year ended December 31, 2013 and has not completed its review of the company's financial statements for the fiscal quarter ended March 31, 2014. Further, until the financial statements for those periods can be finalized following receipt of the OCA's determination, certain additional information related to the performance of the private student loan programs that becomes available to the company must be taken into account.
As a result of the pending OCA determination, certain of the operating data in this release are preliminary and subject to change. The company also reiterates that the preliminary financial and operating information included in the company's press release issued on January 30, 2014 and provided during the conference call on that same day (collectively, the “January 2014 Release”) were preliminary and remain subject to change. The finalized, reviewed financial and operating data that will be included in the company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2014 (the “First Quarter 2014 Form 10-Q”) and the finalized, audited financial and operating data that will be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (the “2013 Form 10-K”) when filed with the SEC may be materially different from the data included in this release and in the January 2014 Release, based on the OCA's determination, the company's auditor's review and audit and other factors.
In addition, due to the uncertainties related to the accounting treatment of the PEAKS Trust and the company's guarantee obligations under the PEAKS Program, the company is withdrawing its previously-disclosed internal goals for the twelve months ending December 31, 2014, and investors should not rely on those internal goals. The company expects to disclose its revised internal goals for the twelve months ending December 31, 2014 at a later date, following the finalization of its financial statements for the year ended December 31, 2013 and the quarter ended March 31, 2014.
Our inquiry to the OCA relating to the accounting treatment of the PEAKS Trust has caused delays associated with completing the company's financial statements, footnotes and related disclosures for the 2013 Form 10-K and the First Quarter 2014 Form 10-Q. As a result, the company was not able to timely file the 2013 Form 10-K or the First Quarter 2014 Form 10-Q with the SEC. Following receipt of the OCA's determination, the company plans to work diligently to complete its financial statements, footnotes and related disclosures, and to have its independent registered public accounting firm complete the related audit and review. The company's goal is to file the 2013 Form 10-K and First Quarter 2014 Form 10-Q with the SEC as soon as reasonably practicable.
ITT Educational Services, Inc. will conduct a conference call with financial analysts to discuss its preliminary, select operational data and the other matters discussed in this release at 11:00 am (ET) this morning. The public is invited to listen to a live webcast of the conference call. The webcast may be accessed by following the “Live Webcast” directions on ITT/ESI's website at www.ittesi.com.
Source: ITT Educational Services Inc.