“We're Only Limited by the Size of Our Goals.”

Career Education Corporation

2002 SUMMARY ANNUAL REPORT

“We’re only limited by the size of our goals.” Career Education Corporation

Mission Statement Career Education Corporation is the world’s We are a dynamic educational largest on-campus provider of private, for-profit services company committed to quality, career-focused learning postsecondary education and has a rapidly- led by passionate professionals who inspire individual worth and growing presence in online education. lifelong achievement.

Turning Dreams Into Futures CEC’s 51 schools, colleges and universities provide students with the on-site and online education they need for long and satisfying careers, and prospective employers with a highly qualified pool of workers from which to choose. CEC offers postsecondary associate, bachelor’s and master’s degree programs and non-degree diploma and certificate programs in five core Letter to Shareholders 2 Operations Review 6 curricula: Financial Information 14 Corporate and Stockholder visual communication and design Information 18 Career Education Corporation technologies Campuses 19 Directors and Management 20 information technology business studies culinary arts Contents health education Schools of Choice

Career Education Corporation’s 51 schools, colleges and universities are leaders in their markets, have long operating histories, sterling reputations and well-known brand names. They are “schools of choice”— selected by students who have many other educational options. Students choose CEC schools because they deliver a premier education that prepares them for successful and rewarding careers in five high growth areas — visual communication and design technologies, information technology, business studies, culinary arts and health education.

AMERICAN INTERCONTINENTAL UNIVERSITY ORLANDO CULINARY ACADEMY BROOKS INSTITUTE OF PHOTOGRAPHY Fort Lauderdale, Florida Orlando, Florida Santa Barbara, California www.aiufortlauderdale.com www.orlandoculinary.com www.brooks.edu INTERNATIONAL ACADEMY OF DESIGN GIBBS COLLEGE INTERNATIONAL ACADEMY OF DESIGN AND TECHNOLOGY Montclair, New Jersey AND TECHNOLOGY Orlando, Florida www.gibbsmontclair.com Ottawa, Canada www.iadt.edu www.iadtottawa.com

CALIFORNIA SCHOOL OF CULINARY ARTS ALLENTOWN BUSINESS SCHOOL AMERICAN INTERCONTINENTAL UNIVERSITY Pasadena, California Allentown, Pennsylvania Los Angeles, California www.scsca.com www.chooseabs.com www.aiulosangeles.com

KATHARINE GIBBS SCHOOL INTERNATIONAL ACADEMY OF DESIGN AMERICAN INTERCONTINENTAL UNIVERSITY New York, New York AND TECHNOLOGY London, England www.gibbsny.com Tampa, Florida www.aiulondon.ac.uk www.academy.edu *BEFORE EXTRAORDINARY ITEMANDCUMULATIVE*BEFORE EFFECT OFCHANGEINACCOUNTINGPRINCIPLE Media Source CEC 2002Startsby PER SHARE Diluted Earnings $ INMILLIONS Revenue 8 90*0 02 01 00* 99 98* $0.08 02 01 00 99 98 $149.2 MAIL: DIRECT TV: INTERNET:

20% $0.34 $223.5 9% $0.57 $334.5 27% $0.85 $547.1 2002 OTHER: PRINT: REFERRAL: SCHOOL: HIGH $1.42 $780.1 5% 8% 10% 21%

NUMBER OF CAMPUSES by DegreeGrantingStatus* CEC StudentPopulation AS OFOCTOBER31 Student Population $ INMILLIONS Net Income 8 90*0 02 01 00* 99 98* 02 03 43 39 02 30 01 25 00 20 99 98 15,900 $2.1 CERTIFICATE /DIPLOMA: BACHELOR’S /MASTER’S: ASSOCIATE: 22,500 $10.9

29,000 $22.2 60% 41,100 $38.4 $67.5 50,400 Financial 13% 27% Highlights $1,000 NASDAQ: CECO $100 $200 $300 $400 $500 $600 $700 $800 $900 $0 $100.00 by CoreCurriculum* CEC StudentPopulation FROM JANUARY 28,1998(IPO)—DECEMBER31,2002 Comparison ofCumulativeTotal ShareholderReturn *PEER INDEXINCLUDESAPOLLO GROUPINC.,CORINTHIANCOLLEGES,DEVRY INC., *PEER /89 23/81/19 23/01/10 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 1/28/98 HEALTH EDUCATION: CULINARY ARTS: INFORMATION TECHNOLOGY: BUSINESS STUDIES: AND DESIGNTECHNOLOGIES: VISUAL COMMUNICATION EDUCATION, INC. EDUCATION MANAGEMENTCORPORATION, ITTEDUCATIONAL SERVICES, INC.ANDSTRAYER PEER INDEX* S&P 500 CECO 15% $187.50 $125.76 22% 2% $140.89 18% 43% $83.89 $239.84 $150.31 by AgeGroup* CEC StudentPopulation OVER 30 UNDER 21 21-30 $187.39 $489.06 $135.07 : 53% : 17% *AS OFOCTOBER 31,2002 *AS : 30% $857.00 $215.34 $117.46 $1,000.00 $275.17 $90.01 To Our Shareholders

2002 was another We again achieved new in 1998 we have delivered a ten-fold highs for all key return to our shareholders. great year for Career performance metrics. While our success is centered on delivering a quality education, our Education Corporation. CEC achieved these milestones ability to do so is rooted in a business We achieved our goal by consistently delivering on the strategy that emphasizes growth and fundamental promise of education. is based on a business model that of becoming the world’s During 2002, we enrolled, educated, creates virtually unlimited potential. graduated and placed in career During 2002, we pushed forward largest on-campus positions more students than on every front, broadening our provider of private, ever before. investments in core areas and More than 94 percent of our opening new avenues to growth. for-profit postsecondary students found employment in their We achieved outstanding growth career field within six months of without sacrificing profitability — education and created graduating last year. This outcome — reaping the benefits of our highly a clear and critical measure of the scalable structure. On a same-school a world-class online quality of education we provide — basis, student population increased education group. helped drive record numbers of 22 percent and revenues were up 35 students through our doors. percent. EBITDA rose by 42 percent, As a result we delivered record demonstrating how we leverage our revenues and earnings again in investments in education, staff and 2002—our fifth consecutive year of facilities to continually enhance record performance as a public com- operating margins. pany. Since our initial public offering

2 JOHN M. LARSON Chairman, President and CEO

FOR CEC, 2002 WAS MARKED BY Continued our marketing start-ups is proven, and adds a significant achievements. Among excellence. CEC generated 1.7 major new plank to our growth the highlights of the year, we: million leads in 2002, a dramatic platform. 60 percent increase over 2001. In a Raised the bar in E-learning. difficult economy, our marketing Extended our leadership in Through American InterContinental message resonated more than ever the four core curricula of visual University (AIU) Online, CEC has among the four segments we target: communication and design staked a significant position in recent high school graduates, young technologies, information online education. Since its launch adults, older students and interna- technology, business studies in April 2001, AIU Online has set tional students. While CEC uses a and culinary arts. Throughout the example, participating in the full marketing mix, the Internet is the year, CEC transplanted 15 new Department of Education’s Distance becoming a major source of low curricular programs to campuses Education Demonstration Program cost, high quality leads. throughout our system. Each pro- and creating the “virtual campus”— gram was designed in cooperation a fully integrated learning environ- with employers to be certain our Broadened our organic growth ment that allows students to access students are ready to contribute on platform. In 2002, CEC opened everything they need at one site. the job from day one. Transplants two new campuses — a Le Cordon The market recognizes our leader- help fuel organic growth on an Bleu culinary school in Orlando and ship in online education and is ongoing basis. responding. AIU Online experi- a Brooks College campus in north- enced an eleven-fold increase in ern California. Both have been CEC EXPANDED ITS DOMINANCE as the student population during 2002. successful, performing well ahead world’s largest provider of culinary of expectations. CEC has opened arts education, as enrollments in our four successful start-ups since Le Cordon Bleu programs continued 2001. Our approach to campus

“During 2002, we pushed forward on every front, broadening our investments in core areas and opening new avenues to growth.” PICTURED FROM THE LEFT ARE (top row) Jacob P. Gruver, President, Colleges, Schools and Universities Group, and Assistant Secretary; Patrick K. Pesch, Executive Vice President, Chief Financial Officer, Treasurer and Secretary; Nick Fluge, President, Online Education Group; (second row) Todd H. Steele, Executive Vice President of Strategic Planning and Development; Steve B. Sotraidis, Executive Vice President of Administration; Dr. Patricia A. Kapper, Senior Vice President of Education; (third row) Paul R. Ryan, Senior Vice President of Operations, Colleges, Schools and Universities Group; Jeffrey S. Tice, Senior Vice President of Student Finance; Dr. Jon R. Coover, Senior Vice President of Marketing

While it is important to acknowledge the major events of 2002, our focus is forward. We believe we’ve only just begun.

IN 2003, WE WILL BUILD ON THE PROGRESS to grow at a strong pace throughout sionals is soaring and opportunities of the past year and take our company the year. Our Academy, College, for rewarding careers abound. As in to the next level. Major initiatives for Gibbs and University divisions expe- each of our other areas of curricular the coming year include: rienced growth across the board. excellence, CEC intends to be a The ongoing growth and develop- leader in the health education arena. Launched a fifth core curricu- ment of AIU Online. Additional curricular and degree programs lum — health education. In Enhanced our infrastructure, and innovations will be introduced September 2002, CEC acquired evolving CEC’s management throughout the year as AIU Online Missouri College, located in St. Louis, structure into two operating targets its goal of at least $60 as its first entry into the $1.4 trillion groups—the Colleges, Schools million in revenues in 2003 — a health care industry. Missouri College and Universities Group and remarkable success story given its has a 40-year tradition of excellence the Online Education Group. founding just two years ago. in health education, providing CEC This alignment emphasizes the with the opportunity to transplant depth of CEC’s leadership team and Additional acquisitions, with spe- this new curriculum to campuses provides the strategic focus and cial emphasis in health education across the system, and a starting management oversight required and high potential international point for additional acquisitions to sustain and accelerate the growth markets. Already in 2003, we have in the health education field. The of our on-campus and online completed the acquisition of demand for trained health profes- businesses. INSEEC Group, operator of nine

4 “While our success is centered on delivering a quality education, our ability to do so is rooted in a business strategy that emphasizes growth and is based on a business model that creates virtually unlimited potential.”

postsecondary education schools Broader educational opportunities The involvement of employers, in France. This acquisition pro- for students as a number of our who work hand-in-hand with our vides a ready platform for our campuses pursue higher degree- schools to develop academic European expansion plans. granting status and regional programs that are relevant and accreditation. translate into meaningful careers In March, we also announced a for our graduates. definitive merger agreement Enhanced infrastructure, including under which CEC would acquire all capital expenditures in facilities The energy, intelligence and spirit the shares of Whitman Education and equipment to meet campus of faculty and staff throughout our Group, Inc. We expect this trans- growth needs, and in information system; they are dedicated to action to close in July 2003 and technology and operating systems meeting students’ needs. significantly enhance CEC’s posi- to ensure the integration of all CEC The enduring commitment of our tion in health education. campuses. shareholders, who partner with us A dramatic increase in the number to help turn dreams into futures. AT CAREER EDUCATION CORPORATION, OUR of program transplants to at least GOAL is to become the world’s largest 50 in 2003. CEC’s five core curric- provider of quality postsecondary Sincerely, ula are among the hot growth educational services. We are well on career fields of the 21st century. our way to achieving that goal and New curricular offerings represent owe our success to… a renewable growth opportunity JOHN M. LARSON for CEC. The dreams of our students, who Chairman, President and seek a better life through education. Double the number of campus Chief Executive Officer start-ups to expand our presence in Atlanta and open new markets in Las Vegas, Detroit and Houston.

5 “The programs we transplant already are proven winners that typically require minimal modification. At campus after campus, program transplants have produced a jump in student population.”

Program Transplants Leverage Proven Success to Drive Growth

In recent years, growth in Why the dramatic upturn? “Because employment trends and job market the number of successful program transplants are a cost- demands, and use that information curricular programs effective means of driving growth at to help drive program transplant established campuses,” says Jacob P. decisions.” transplanted to additional Gruver, President of the Colleges, The program transplant process campuses throughout the Schools and Universities Group. can be initiated at either the corpo- CEC system has been steady: “The programs we transplant rate or school level. Corporate staff nine in 1999, 10 in 2000, 12 in already are proven winners that suggest specific program transplants typically require minimal modifi- to schools that might be a good fit. 2001 and 15 in 2002. That pace cation. At campus after campus, Increasingly, however, transplants will accelerate dramatically program transplants have produced are initiated by the schools. in 2003, however, as more a jump in student population.” A required step in the transplant than 50 transplants already Another factor contributing to the process is soliciting Advisory Board acceleration in program transplants input regarding the proposed pro- are completed, underway or is the continually evolving needs of gram. “As working professionals in scheduled in all five of the workplace. “As employers the field, Advisory Board members CEC’s core curricula. demand new knowledge and skills, provide a realistic assessment of the our schools have to prepare students program’s likelihood of success and to meet these changing needs,” also help fine-tune the course Gruver says. “We make a concerted content to meet local market needs,” effort at the corporate level to identify Gruver says. “If the proposed

“Stitching-In” Weaves Fabric of CEC’s Admissions Success

FOR NEW CEC STUDENTS, “Admissions is a and support prospects leads, followed by high provide the student the first day of classes three-step process — need to begin their CEC school recruiting (30 with additional informa- is a much-anticipated generating leads, con- education.” percent), TV infomer- tion as needed and event that launches verting those leads into CEC’s outstanding cials and commercials arrange a personal their educational jour- enrollments and finally success in generating (13 percent) and direct interview on campus. ney toward a fulfilling turning enrollments into leads — the 2002 total mail (10 percent). CEC has approximately career. For CEC’s starts,” says Dr. Jon R. of 1.7 million leads was Referrals, print media 1,000 admissions admissions team, Coover, Senior Vice up 60 percent from the advertising and other professionals in five however, the day marks President of Marketing prior year — results sources accounted for specialties: local area, a culmination rather for CEC. “From our first from using a tailored the balance. high school, out-of- than a beginning, the contact with prospec- marketing mix at each For most prospects area, international and successful conclusion tive students, every- school. In 2002, the who express an interest Internet. Students also of a process that began thing we do as a team Internet (including in a CEC school, the can elect to conduct weeks or months focuses on a single advertising and school next step is a personal part or all of the admis- earlier. objective: providing Web sites) accounted contact from an admissions process online at whatever assistance for 36 percent of total sions advisor who will CEC’s Automated program falls outside the expertise “Our goal is to have 75 percent of “The three-fold increase in new of the school’s existing Advisory course content consistent from and transplanted programs sched- Board, an ad hoc board is assembled campus to campus and the remainder THE THREE-FOLD uled for 2003 will further broaden to review the program before it is specific to the unique needs of each INCREASE IN the wide-ranging educational oppor- approved for transplant.” campus.” NEW AND tunities available at CEC schools and To facilitate the program trans- Not all new programs at CEC cam- TRANSPLANTED underscore our continuing commit- plant process, the corporate education puses are transplants. “Developing PROGRAMS WILL ment to curricular expansion,” FURTHER department has developed model new programs from scratch is becom- Gruver says. CEC02 curricula. The models include a ing a significant part of our curricular BROADEN THE master course outline that identifies expansion efforts,” Gruver says. WIDE-RANGING the textbooks and other resources Today’s new program often EDUCATIONAL needed to teach each course. Using becomes tomorrow’s transplant. OPPORTUNITIES the model as a starting point, schools In 2002, for example, AIU Online AVAILABLE AT can make necessary modifications to developed and launched a Master’s CEC SCHOOLS meet state requirements or accredit- degree in Education with an empha- AND UNDERSCORE ing standards and respond to local sis in instructional technology. Based OUR COMMITMENT workplace needs. on the excellent student response TO CURRICULAR “The pre-packaged model to this new program, it will be EXPANSION. curricula also contribute to greater transplanted to all of the American uniformity in program content InterContinental University across the CEC system,” Gruver says. campuses in 2003.

Enrollment Center. Coover says. “Our goal tion. Out-of-town “Since students typi- Upon signing an enroll- is to make sure that students receive help cally enroll from two to ment agreement and the student comes in in securing appropriate nine months in advance indicating an intended contact with the school housing. CEC schools of their intended start start date, the student by mail, phone, e-mail also help students find date, the stitch-in is classified as a or in person at least part-time employment process is time and “booked future.” weekly.” and assist with other labor-intensive,” Coover “That point marks As part of the stitch- needs. Enrollees also says. “But the proof the beginning of what in process, students are invited to attend a that it’s working is we call the ‘stitch-in’ are offered a wide campus open house clearly evident in CEC’s process — a continuing range of assistance. All and are required to excellent start rate, pattern of contact with enrollees are contacted participate in a student one of the best in our students intended to by the Financial Aid orientation program. industry.” CEC02 make sure they actually department to finalize begin classes at the arrangements for appointed time,” financing their educa-

OPEN TO READ MORE “INTEREST IN THE CRIMINAL JUSTICE PROGRAM has soared among prospective students,” says Dr. Patricia A. Kapper, Senior Vice President of Education for CEC. “Leads and enrollments turned up sharply in late 2001, and starts continued to climb throughout 2002.”

TRANSPLANT SUCCESS STORY: Criminal Justice

HEN CEC ACQUIRED McIntosh hand, took the program up a notch to the EACH SCHOOL College in 1999, included in the bachelor degree level, to prepare students WILL ADAPT THE W school’s line-up of curricular for professional-level positions in law PROGRAM TO THEIR SPECIFIC programs was a solid performer called enforcement, corrections, probation and the REQUIREMENTS. FOR criminal justice. The associate degree courts. Its version of the program includes EXAMPLE, THE program prepared students for careers in additional communication and general INTERNATIONAL a wide range of public and private service education coursework and also explores the ACADEMY OF DESIGN environments including law enforcement, field of criminal justice from a sociological AND TECHNOLOGY IN probation, insurance, investigation and and psychological perspective.” PITTSBURGH HAS corrections. Coursework helped students The new criminal justice programs MELDED ITS develop needed technical, administrative became immediate smash hits at both TECHNOLOGY EXPERTISE WITH and interpersonal skills while also giving schools. Demand is growing and shows no THE TRANSPLANTED them a strong foundation in the social, sign of letting up, Kapper says. CRIMINAL JUSTICE ethical and legal issues they would confront Success to date with the initial trans- PROGRAM TO on the job. plants of the criminal justice program has CREATE A NEW

Today, however, the criminal justice set the stage for dramatic growth in 2003, PROGRAM program is on a fast track. “Interest in the when additional schools will add the FOCUSING ON program has soared among prospective program to their curricula. CRIMINAL JUSTICE students,” says Dr. Patricia A. Kapper, “Each school will adapt the program to TECHNOLOGY. Senior Vice President of Education for CEC. their specific requirements,” Kapper says. “Leads and enrollments turned up sharply “For example, the International Academy of in late 2001, and starts continued to climb Design and Technology in Pittsburgh has throughout 2002.” melded its technology expertise with the This impressive growth soon caught the transplanted criminal justice program to attention of other CEC schools, and in 2002 create a new program focusing on criminal the successful criminal justice program justice technology. This serves as an excel- began to spread beyond its original home at lent illustration of how program transplants McIntosh. First Allentown Business School contribute to the continuing evolution and and then Brown College launched versions expansion of CEC’s curricular offerings.” CEC02 of the program custom-tailored for their individual needs. “Allentown offered a diploma program structured similarly to the McIntosh original,” Kapper says. “Brown, on the other “We’ve embraced technology to deliver cutting edge education and customer service that’s as personal online as offline. And it’s all available 24/7.”

AIU Online Capitalizes on Explosive Growth of E-Learning

The Department of Education 19 foreign countries. Its 1,100 in 2002 — 95 percent from the predicts online learning percent revenue growth in 2002 was Internet, where the cost-per-lead will grow at least 40 percent spurred, in part, by the addition of is low and leads are plentiful. Low three new online degree programs — student acquisition costs mean more annually well into the a new Master’s degree in Information profit to the bottom line. future, fueled by the Technology, a Master of Business LIGHTNING ENROLLMENT WITH economy’s dependence on Administration degree and a Bachelor’s “ROBO REP.” Everything needed to degree in Business Administration. knowledge-based workers enroll is available online — including “We now offer eight online full- with higher education and full-color catalogs searchable by degree programs, including an early keywords, sample coursework, because millions of people 2003 rollout of a Bachelor’s degree in financial aid forms and an enrollment want more education but Visual Communications and Master’s application. A prospective student degree in Education,” says Nick have limited time to get it. can complete an application in 15 Fluge, President of CEC’s Online minutes, pay the registration fee with Education Group. Industry experts say the market has a credit card, and within minutes Fluge credits AIU Online’s success barely been tapped. American receive an acceptance letter, full to several factors: InterContinental University (AIU) class schedule and a confirmed Online entered the E-learning arena SOPHISTICATED MARKETING AND LOW- start date. less than two years ago but already COST LEAD GENERATION. AIU Online Currently 15-20 percent of all draws students from all 50 states and generated more than 220,000 leads enrollments come through the virtu-

New Core Curriculum to Serve Jobs-Rich Health Care Industry

THE SEPTEMBER 2002 ages and places more “We’ve been watching Setting the Tone. college has strong acquisition of Missouri pressure on health care and researching trends Missouri College was a potential for internal College in St. Louis providers. The demand in healthcare for two fitting choice to launch growth through branch marked CEC’s entry into for dental assistants years,” says Dr. C. the new division and satellite campuses. a fifth core curriculum and massage thera- Ronald Kimberling, Vice because it already offers “Missouri College — health education — pists, for example, is President and programs in these “hot” adapted quickly and and signaled the launch expected to grow 2-3 Managing Director of new career fields and brought real value to of a new Health times faster than the CEC’s Health Education also is a “school of this new division,” says Education Division. overall U.S. employ- Division. “It’s one of the choice”— dominating Kimberling. “It has According to the ment rate. The demand largest growth sectors its career field, having a already beat projections Department of Labor, for medical records and of our economy, but it strong presence in the for new starts, revenues the $1.4 trillion health health information tech- is experiencing critical market and long operat- and net profits.” care industry faces nicians and medical shortages in personnel. ing history, and offering Enrollment is expected severe labor shortages assistants is expected CEC has made a com- programs ripe for to double within the in the next decade as to grow 3-4 times mitment to be part of transplantation to other next few years. America’s population faster than job growth the solution.” CEC schools. Plus, the in general. al enrollment site. Admissions rep- and then come back and study what can jump on it immediately to help resentatives are available to students they did, instead of working the EVERYTHING the student get back on track.” who have further questions or prefer program sequentially. It lets students NEEDED TO Online Live Chat is available in speaking to a live person. customize their education and learn ENROLL IS every department. in the way that works best for them.” AVAILABLE “We’ve embraced technology to MORE THAN 100 DYNAMIC NON-LINEAR ONLINE, deliver cutting edge education and MULTI-MEDIA COURSES. “Only a small FULLY INTEGRATED REAL-TIME STUDENT INCLUDING customer service that’s as personal percentage of schools in the indus- INFORMATION SERVICES. AIU Online’s FULL-COLOR online as offline. And it’s all available try use multi-media coursework,” third generation Virtual Campus, CATALOGS 24/7. We believe AIU Online will says Fluge. “We use it exclusively using its own proprietary platform, SEARCHABLE change the way the world thinks but take it a step further. We call it lets a student access any depart- BY KEYWORDS, about education,” Fluge says. CEC02 Fourth Dimension Learning, or ment with the click of a button and SAMPLE singularity.” get a real-time response. COURSEWORK, Non-linear courses, according to “If a student makes a tuition pay- FINANCIAL AID Fluge, acknowledge that learning ment with their credit card, they will FORMS AND AN doesn’t always happen in a straight see it immediately reflected on their ENROLLMENT line. “A student can start a presenta- online account statement,” Fluge APPLICATION. tion, stop it, ask a question, and says. “They see grades the minute ‘virtually’ take the presentation in a they are posted. Academic advisors different direction. Or a student can can see when a student misses a jump ahead and do the projects first class or the student’s grades slip and

Additional acquisition typically entry-level Missouri College pro- “Missouri College could opportunities are under positions such as grams serve this tier offer nursing education consideration in other medical and dental well.” at some point, since U.S. markets. Near- assistants, technicians Missouri law allows Tier II Jobs. Tier II jobs term, the company will who draw blood and proprietary colleges — involve a higher skill look for schools that give shots, and techni- even at the two-year level and typically educate students in two cians who, in some level — to offer both require some kind of general categories of states, can perform LPN and RN programs. license, certification or health careers: tests like electrocardio- “The future is bound- continuing professional grams. Medical billing less,” says Kimberling. Tier I Jobs. “Tier I jobs education. “These are and records manage- “We believe within five serve patients who are people like surgical ment are two additional years this could become ambulatory and not in technicians, anesthesia ‘front-office’ functions a major revenue division life-threatening situa- techs and vet techs. where qualified employ- for CEC.” CEC02 tions,” according to Nurses are at the top of ees are in short supply. Kimberling. “These are Tier II,” Kimberling says.

OPEN TO READ MORE TOTALLY IN SYNC “Students come to our schools because of our faculty and their world-class credentials in the hospitality industry.”

CULINARY SCHOOLS SOAR UNDER UNIFIED Le Cordon Bleu Umbrella

HE NAME LE CORDON BLEU (which American Culinary Federation’s Certified means “Blue Ribbon”) has been Executive Chef or Certified Master Chef des- T synonymous with culinary excellence ignation),” according to Ryan. “In October since the 16th Century when King Henry III 2002 we held a month-long, division-wide WE ARE CURRENTLY honored the chefs who created the sumptuous Faculty Appreciation celebration honoring EXPANDING THE cuisine for his legendary banquets. Today all chef instructors.” PATISSERIE AND Career Education Corporation carries on BAKING PROGRAM Enhanced curriculum quality. “We are the proud tradition with its Le Cordon Bleu AS WELL AS THE currently expanding the Patisserie and culinary campuses throughout North America. HOSPITALITY AND “With more than 7,000 students currently Baking Program as well as the Hospitality RESTAURANT enrolled in our 10 culinary schools, we are and Restaurant Management Program in MANAGEMENT now the world’s largest provider of quality several of our culinary schools. Several PROGRAM IN SEVERAL OF OUR culinary education,” says Paul Ryan, Senior schools also are working towards a Bachelor’s CULINARY SCHOOLS. Vice President of CEC’s Colleges, Schools degree program in Culinary Arts,” Ryan says. SEVERAL SCHOOLS The payoff for such excellence is and Universities Group. ALSO ARE WORKING In 2001 all CEC culinary schools placement rates for culinary graduates that TOWARDS A mobilized into a new Culinary Arts Division are at an all-time high. “Job opportunities BACHELOR’S and renewed their commitment to several for our students have never been greater,” DEGREE PROGRAM IN CULINARY ARTS. basic guiding principles, including: Ryan says. “It’s strong confirmation that our education is delivering on its promise Student-centered. “We want to excel at to our students which, in turn, will help customer service,” Ryan says, “assisting us deliver an outstanding return to all students with not only their education shareholders.” CEC02 but helping them find part-time jobs while in school, find housing, and deal with a variety of time-consuming stressors, so they can focus on their education.”

Faculty-focused. “Students come to our schools because of our faculty and their world-class credentials in the hospitality industry. We encourage them to pursue additional certifications (such as the “Acquisitions and start-ups each offer unique advantages, and our strategy is to leverage the strengths of both.”

Acquisitions and Campus Start-Ups Create Dual Track to Geographic Expansion

CEC’s rapid ascension to already is proving to be a powerful education and large populations of the top position among growth propellant. prospective students. CEC’s rigorous private, for-profit providers “Acquisitions and start-ups each due diligence process examines a offer unique advantages, and our school’s past and projected financial of on-campus postsecondary strategy is to leverage the strengths of performance, regulatory compliance education has been fueled both,” says Todd H. Steele, Executive history and potential for market lead- in part by acquisitions. Vice President of Strategic Planning ership, and includes a conservative Since 1994, the company has and Development. “Acquiring assessment of the required invest- schools with ‘franchise value’— an ment and long-term growth potential. purchased 25 quality established brand name, a proven “Missouri College, which we educational providers, operating record and an excellent acquired in 2002, fits all of these cri- thereby extending its reputation —is the fastest way to build teria and gives us a solid platform for geographic reach and broad- a CEC presence in a target market. growth in a new market and a new If no such schools exist in a market curricular area — health education,” ening and strengthening its we want to enter, we create one from Steele says. curricular offerings. scratch with a start-up.” Acquisition activity for 2003 CEC’s success in the acquisitions reflects attractive opportunities in While acquisitions remain a major arena is founded on an exacting the pipeline. In February, CEC driver of CEC’s geographic expan- selection process. The company looks announced the acquisition of a nine- sion plans, a new element—campus for “schools of choice” with well- school group in France that will serve start-ups—has joined the mix and established brand names, proven as the foundation for its expansion track records of delivering quality efforts in Europe. In March, CEC also

Orlando Culinary Academy Illustrates Success of CEC’s Start-Up Model

LIKE EACH OF CAREER Shore, formerly for graduates. Based Securing a campus accommodate more Education Corporation’s President of Orlando on this promising came next on the than 1,500 students.” four start-up campuses, Culinary Academy and outlook, CEC decided agenda. “We chose a Regulatory approval Orlando Culinary now Vice President and to bring the prestigious site located in a con- for the new campus Academy owes its suc- Managing Director of Le Cordon Bleu culinary venient suburban set- was received months cess to a comprehensive CEC’s Start-Up Division. arts program to ting just minutes from prior to the scheduled and carefully crafted “CEC began with an Orlando,” he says. downtown Orlando, opening. “At that point, business model. assessment of market After filing for regula- with 60,000 sq. ft. of activity kicked into high “The launch of potential and concluded tory approval to open space for lecture gear on several fronts Orlando Culinary that Orlando was a the new school, CEC rooms, instructional simultaneously — hiring Academy illustrates how high-growth area with began the search for kitchens, the library, key members of the the various elements of no other educational the school’s president. administrative offices management team, pro- the model interrelate to options for serious culi- Shore became Orlando and an on-site restau- ducing the school Web produce a successful nary students, but had Culinary Academy’s rant,” Shore says. “The site and marketing start-up,” says Kenneth many job opportunities first employee. site also can expand to materials, hiring admissions and financial aid announced a definitive agreement targets,” says Steele. “As a result of transition phase of several months under which it would acquire all this initial success, we have doubled CEC’S SUCCESS IN after classes begin. Throughout this the shares of Whitman Education our target for annual start-ups from THE ACQUISITIONS period, the new division will work in Group, Inc., further expanding its two campuses to four.” ARENA IS FOUNDED close cooperation with management health education platform. Start-ups scheduled to open this ON AN EXACTING of the appropriate operating division Start-up campuses provide a year are: Le Cordon Bleu campuses SELECTION and access corporate resources in second means of entry into high- in Las Vegas (Summer) and Atlanta PROCESS. THE areas such as information technology potential geographic markets. They (Fall); International Academy of COMPANY LOOKS and finance. Once the new campus is also enable CEC to leverage the power Design and Technology/Detroit (Fall) FOR “SCHOOLS OF fully operational and running effi- of its well-established and highly- and American InterContinental CHOICE” WITH A ciently, management responsibility regarded brand names. University/Houston (Fall). WELL-ESTABLISHED will transfer to the operating division. CEC’s first two start-up campuses Further evidence of the growing BRAND NAME, Experience with the first four — Katharine Gibbs School/ Phila- importance of campus start-ups in A PROVEN TRACK start-ups led CEC to conclude that delphia and International Academy CEC’s plans for geographic expansion RECORD OF the process can be managed most of Design and Technology (IADT)/ is the creation of the Start-Up Division, DELIVERING effectively by a dedicated team of Orlando — opened in 2001. They headed by Managing Director QUALITY EDUCA- specialists, Steele says. “The Start-Up were joined the following year by Kenneth Shore. TION AND A LARGE Division staff will draw on their deep two additional start-ups — Orlando This new group will direct all POPULATION OF experience to assure that potential Culinary Academy and Brooks aspects of the campus start-up PROSPECTIVE efficiencies and synergies in the start- College/ Sunnyvale, CA. process, beginning with market STUDENTS. up process are fully realized.” CEC02 “The new campuses have exceed- selection and continuing through a ed their revenue and profitability

staff, launching the bility with both Academy opened its “The CEC model for student recruitment prospective students doors to an initial campus start-ups is a effort, finalizing the and the local media. student population continually-evolving curriculum design and An April press event more than double the template of best hiring faculty, building resulted in extensive budgeted level. “Each practices that brings out the space in our newspaper coverage successive class start structure and organiza- new facility, installing and a feature on the also has exceeded tion to the process information technology local Fox TV affiliate, projections,” Shore and contributes to the systems and handling and lead volume accel- says. “Although the immediate success that myriad other details,” erated immediately. first class will not has become character- Shore says. After months of complete their studies istic of CEC’s start-up The world-renowned intensive activity, the until this fall, students campuses,” Shore Le Cordon Bleu name start-up process came already are being says. CEC02 gave the school instant to a successful culmi- recruited by major recognition and credi- nation in July 2002 culinary employers in when Orlando Culinary Orlando.

OPEN TO READ MORE SATELLITE CAMPUSES Satellite campuses enable CEC schools to tap a broader pool of potential students within a given geographic market. Many CEC schools in large metropolitan areas ultimately may have one or more satellites. This will make CEC’s unique educational product as broadly accessible as possible while leveraging infrastructure investment.

SATELLITE CAMPUSES ADD NEW DIMENSION TO CEC’S Organic Growth Strategy

AREER EDUCATION CORPORATION’S the space occupied by the film school multi-dimensional strategy for organic facility in Santa Barbara — with two sound C growth gained yet another element in stages and ample classroom and adminis- 2002 with the opening of the company’s first trative space. “We also are the only film FORMERLY THE two satellite campuses at Brooks Institute of school in the country with its own back lot, HEADQUARTERS Photography and Brown College. where the Mike Hammer TV show, the OF A FILM “Satellite campuses enable CEC schools to television series Air America and the movie PRODUCTION COM- tap a broader pool of potential students within Erin Brockovich were shot,” Calman says. PANY, THE 8.5 ACRE a given geographic market and also offer a In addition to Brooks’ film and video CAMPUS HAS 75,000 cost-effective way to grow, since they are production program, the Ventura site houses SQ. FT. OF WORK- SPACE WITH TWO typically smaller than the main campus the school’s visual communications program SOUND STAGES AND and share its management, staff support, and part of its visual journalism program, AMPLE CLASSROOM resources and accreditation,” says Patrick which will complete its transfer there from AND ADMINISTRA- K. Pesch, Executive Vice President and Chief Santa Barbara in September. TIVE SPACE. BROOKS Financial Officer of CEC. “Many of our schools Since the new campus opened in IS ALSO THE ONLY in large metropolitan areas ultimately may January 2002, student population in the FILM SCHOOL IN THE COUNTRY WITH ITS have one or more satellites. This will make film school program has increased more OWN BACK LOT, CEC’s unique educational product as broadly than five-fold. The new facility also has WHERE THE MIKE accessible as possible while leveraging infra- helped Brooks attract high-profile faculty HAMMER TV SHOW, structure investment.” members who formerly taught at other THE TELEVISION Brooks Institute of Photography’s decision major Southern California film schools. SERIES AIR AMERICA to open a satellite campus in Ventura, Proximity of the Ventura campus to the AND THE MOVIE ERIN BROCKOVICH California, 30 miles south of the school’s San Fernando Valley and Los Angeles has WERE SHOT. Santa Barbara base, was driven by different begun to change the student mix, Calman growth concerns. says. “For the first time, we’re attracting “We wanted to significantly expand the commuter students from nearby communities facilities for our film school, which was not a — although our population still is overwhelm- viable option in Santa Barbara, and the ingly residential. Ventura site made that possible,” says John “Our film program has enjoyed an excel- Calman, President of Brooks. lent reputation throughout its 50-year history, Formerly the headquarters of a film but the combination of our unequaled new production company, the 8.5 acre campus facilities and our prestigious new faculty has has 75,000 sq. ft. of workspace — 10 times elevated Brooks into the upper echelon of

U.S. film schools.” CEC02 “Lifelong learning is one of our core values. CEC University gives our management and non-management employees the same opportunity to learn and grow that we give our students.”

Leadership Development Crucial To Long-term Corporate Success

A crucial factor in any leadership development initiative “We created customized curricu- company’s long-term success is a natural extension of its mission. lum with CEC-specific role-play is how well it develops its “Education is our business. Lifelong situations and group simulations that learning is one of our core values. model the kind of corporate culture human capital — including CEC University gives our manage- and leadership style we’re striving for,” its management team. ment and non-management employ- says Deering. ees the same opportunity to learn and “The immediate payoff is that all “A company with strong, well-trained grow that we give our students.” our managers will be speaking the leaders attracts good employees and same language and will be able to LEADERSHIP DEVELOPMENT WORKSHOPS is able to build great teams,” says emulate and impart these desired In September 2002, corporate Steve B. Sotraidis, Executive Vice corporate behaviors to teams in each executives and senior management President of Administration. “The school,” says Deering. inaugurated a new two-day training result is less turnover, a happier Once all current executives program called, “High Achievement and more productive workforce, and managers have completed the Leadership: Principles and and better results to the bottom line. program, the curriculum will be Communications Skills.” By June There’s a strong link between manage- enfolded into a new permanent 2003, more than 400 CEC leaders ment development and a company’s President’s training program and are expected to have completed the financial performance.” a separate ongoing management course. AchieveGlobal, ranked Mari-Ann Deering, Vice President development program, both to be No. 1 by Business Week in tailored of Human Resources, says CEC’s new rolled out in 2003. executive education, developed sweeping management training and the program.

Placement Savvy Gives CEC Students The Edge In Finding Their Dream Jobs

LAYOFFS AND A LINGER- student dreams into prepare our students Global Career “It’s another tool in ING recession forced futures,” says John M. not only by training Services Web Site addition to the other more than 100,000 Larson, CEC Chairman, them for a job, but also To make it easier for conventional strategies Americans a month out President and CEO. “It by giving them the students to network with used by our career of jobs in 2002, but places us at the top of skills to get a job. We potential employers, last services representa- CEC graduates experi- our industry.” teach them how to year CEC’s new global tives, such as aggres- enced unprecedented Kathy Bennicoff, Vice write a resume, how to career services Web site sive marketing of local success in finding full- President of Career create a portfolio and gave students access employers, checking time work in their cho- Services, says the key how to conduct a job to 4,000 employers newspaper ads and sen professions. “We is innovative marketing search. We put them and 5,200 job openings networking in the com- believe our 94 percent of both students and through mock inter- worldwide. The site is munity,” Bennicoff placement rate is a potential employers, views. It’s unusual for only accessible to CEC says. “However, as stu- ‘moral report card’ on along with plain old schools to spend as graduates and regis- dents and employers how well we’re fulfilling hard work. “We just much time on it as tered employers. become more comfort- our mission to turn work harder at it,” we do.” able using the Internet Bennicoff says. “We ONLINE LEARNING To keep learning The Performance Appraisal Process “The feedback from our managers momentum going year-round, the Developing High-Performance IT’S GIVING SOME has been gratifying,” says Deering. company also established a new Teams OF OUR YOUNGER “They say the training prepares them proprietary Web site called the CEC MANAGERS for real-life situations. They can put In addition, over the course of the year, Center for Professional Development IMMEDIATE the skills and behaviors to use right they may take a series of five additional and Organization Effectiveness. CONFIDENCE away. It’s giving some of our younger courses. This training covers: Dubbed Leading You Into Excellence TO DO THEIR managers immediate confidence to Customer Service (“LYNX”), the site offers CEC JOBS BOLDLY. do their jobs boldly. Long-term, we’re Effective Communication managers continuous self-directed LONG-TERM, building bench strength so we’ll have Listening Skills learning from a library of manage- WE’RE BUILDING trained and capable managers ready Time Management ment development courses. BENCH STRENGTH to move up into new positions as the Presentation Skills Each quarter it’s recommended SO WE’LL HAVE company continues to grow.” CEC02 that all CEC executives and managers The training is ongoing. Additional TRAINED AND take at least one of five courses on CEC managers will be invited to take CAPABLE performance management. The the courses in 2003 and five new MANAGERS READY highly interactive courses cover: courses will be added to the curricu- TO MOVE UP INTO Interviewing Skills lum. Participants must demonstrate NEW POSITIONS Establishing a Performance Plan a 90 percent mastery of each subject AS THE COMPANY Addressing Performance Problems to qualify for a completion certificate. CONTINUES TO GROW.

as a matching device, 2,500 local and interna- students, because those What’s next? Online I think we’ll see this tional job postings and were the areas hardest interactive tools stu- become the main way immediately e-mail their hit by the economy,” dents and graduates employers and students resume to prospective Bennicoff says. can utilize to prepare meet each other.” employers. Over 700 “However, because it for their job search. employers registered to was such a huge “Jobs are still out Virtual Interactive Job receive resumes and success, in 2003 we’re there,” Bennicoff says. Fair To further leverage communicate in real making the fair a two- “The better trained our the capabilities of the time with job candidates day event and adding students are in con- Web site, in October in 116 public and students from business, ducting a job search, 2002 CEC hosted a 12- private chat rooms. culinary and health the better their chances hour online job fair “We focused exclu- education programs. of employment.” CEC02 where 4,100 students sively on information We expect it to double and alumni could view technology, visual com- in size.” munication and design

OPEN TO READ MORE CREATING A MORE INTERESTING LEARNING ENVIRONMENT “We’ve created standardized benchmarks and metrics to measure the quality of teaching methods and techniques, and what it takes to achieve optimal student outcomes. At CEC, we’re partnering with faculty to achieve our quality goals.”

FACULTY LEAD THE WAY IN MAXIMIZING STUDENT SUCCESS In and Out of the Classroom

AREER EDUCATION CORPORATION’S “Our faculty also want to keep current on commitment to continually enhance how to best use technology in the classroom,” C the quality of the education it pro- Kapper says. “So we’re teaching PowerPoint vides led to the establishment in 2002 of new presentation development skills and moving system-wide quality assurance standards. toward providing laptops to faculty members “We’ve created standardized benchmarks so they can stay connected to students WE’RE GIVING THEM and metrics to measure the quality of teaching through e-mail. Our faculty see it as a way to ADVANCED TRAINING methods and techniques, and what it takes use technology to create a more interesting IN EVERYTHING to achieve optimal student outcomes,” says learning environment.” FROM HOW TO USE Dr. Patricia A. Kapper, Senior Vice President QUESTIONS MORE of Education. “At CEC, we’re partnering with Student Input Students share in the quality EFFECTIVELY IN THE faculty to achieve our quality goals.” control process. They complete instructor and CLASSROOM TO HOW course evaluations at the end of every course. TO DEVELOP BETTER Faculty Development CEC faculty bring to Ongoing student satisfaction surveys provide TESTS AND TAKE A MORE CROSS- the classroom exceptional knowledge of their additional feedback about their education DISCIPLINARY subjects. The company’s Faculty Development experience. APPROACH TO A Conference and other workshops and semi- SUBJECT. OUR Advisory Boards Every CEC school works nars take teachers to the next level by showing TRAINING RELATES with an Advisory Board of local employers them how to communicate their knowledge COURSE CONTENT who review course content to make sure it’s most effectively. TO A STUDENT’S “We’re giving them advanced training in relevant and meets current industry needs WHOLE EDUCATION PROGRAM. everything from how to use questions more and standards. THE RESULT IS effectively in the classroom to how to develop Regional Accreditation Some state grants MORE EFFECTIVE better tests and take a more cross-disciplinary and employer tuition reimbursement funds INSTRUCTION AND approach to a subject. Our training relates are only available to students attending GREATER STUDENT course content to a student’s whole education regionally accredited institutions. To make SATISFACTION. program. The result is more effective those education funds available to prospec- instruction and greater student satisfaction,” tive students, the company is seeking Kapper says. regional accreditation for more of its The faculty development program schools. Currently about 22 percent of draws upon the talent of designated faculty CEC schools enjoy regional accreditation. “coaches” from each CEC school and teachers “We’ve created a quality template that selected annually as CEC’s Top Ten Educators. ensures all our programs are consistently moving forward toward excellence,” Kapper

says. CEC02 Financial Information Report of Independent Auditors on Condensed Financial Statements To the Board of Directors and Stockholders of Career Education Corporation: Condensed Consolidated Statements We have audited, in accordance with auditing standards generally accepted in the United States, the of Income 15 consolidated balance sheet of Career Education Corporation and Subsidiaries as of December 31, 2002 Condensed Consolidated Balance Sheets 16 and the related consolidated statements of income, stockholders’ equity, and cash flows for the year Condensed Consolidated Statements then ended (not presented separately herein) and in our report dated January 23, 2003 (except for of Cash Flows 17 Note 18, as to which the date is February 18, 2003) we expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph that discussed a change Corporate and Stockholder effective January 1, 2002 in the Company’s method of accounting for goodwill and other intangible Information 18 assets. The consolidated financial statements of Career Education Corporation and Subsidiaries as of December 31, 2001, and for each of the two years in the period then ended (not presented separately herein) were audited by another auditor who has ceased operations and whose report dated January 29, 2002, expressed an unqualified opinion on those statements and included an explanatory paragraph that discussed the change effective January 1, 2000 in the Company’s method of accounting for application and registration fees to comply with the specific provisions and guidance of Staff Accounting Bulletin No. 101, Revenue Recognition. In our opinion, the information set forth in the accompanying condensed consolidated financial statements (on pages 15 through 17) as of December 31, 2002 and for the year then ended is fairly stated in all material respects in relation to the consolidated financial statements from which it has been derived. Contents

Chicago, Illinois January 23, 2003

14 Report of Independent Public Accountants* To the Stockholders of Career Education Corporation: We have audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheets of Career Education Corporation and Subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2001 and, in our report dated January 29, 2002, we expressed an unqualified opinion on those statements. As explained in Note 4 to “We achieved outstanding the consolidated financial statements, effective January 1, 2000, the Company changed its method of accounting for application and registration fees to comply with specific provisions and guidance of Staff growth without sacrificing Accounting Bulletin No. 101, Revenue Recognition. In our opinion, the information set forth in the condensed consolidated financial statements on pages 15 through 17, is fairly stated, in all material profitability — reaping the respects, in relation to the consolidated financial statements from which it has been derived. benefits of our highly scalable

structure.” Chicago, Illinois January 29, 2002

*This report is a copy of the previously issued report covering 2001 and 2000. The predecessor auditor has not reissued their report. Condensed Consolidated Statements of Income

FOR THE YEARS ENDED DECEMBER 31 (AMOUNTS IN THOUSANDS, EXCEPT EPS) 02 01 00 Revenue Tuition and registration fees $ 704,172 $ 495,152 $ 304,909 Other 75,887 51,907 29,619 Total revenue 780,059 547,059 334,528

Operating Expenses Educational services and facilities 294,539 213,916 129,628 General and administrative 338,586 233,503 144,926 Depreciation and amortization 33,636 30,818 20,594 Total operating expenses 666,761 478,237 295,148

Income from operations 113,298 68,822 39,380 Interest income 808 734 1,484 Interest expense (2,094) (1,493) (1,358) Share of affiliate earnings 2,348 1,674 — Total other income (expense) 1,062 915 126

Income before provision for income taxes and cumulative effect of change in accounting principle 114,360 69,737 39,506 Provision for income taxes 46,888 31,382 17,322

Income before cumulative effect of change in accounting principle 67,472 38,355 22,184 Cumulative effect of change in accounting principle, net of $587 — — (778) Net income $ 67,472 $ 38,355 $ 21,406

BASIC Income before cumulative effect of change in accounting principle $ 1.49 $ 0.88 $ 0.59 Net income $ 1.49 $ 0.88 $ 0.57

DILUTED Income before cumulative effect of change in accounting principle $ 1.42 $ 0.85 $ 0.57 Net income $ 1.42 $ 0.85 $ 0.55

WEIGHTED AVERAGE SHARES OUTSTANDING Basic 45,407 43,751 37,374 Diluted 47,547 45,390 38,780

The consolidated financial statements and accompanying footnotes are included in the Company’s Form 10-K.

15 Condensed Consolidated Balance Sheets

AS OF DECEMBER 31 (AMOUNTS IN THOUSANDS) 02 01 Assets

CURRENT ASSETS: Cash and cash equivalents $ 33,474 $ 39,675 Receivables, net of allowance for doubtful accounts 82,320 62,813 Inventories, prepaid expenses and other current assets 33,450 28,106 Total current assets 149,244 130,594 Property and equipment, net 177,429 148,044 Intangible assets, net 212,444 204,596 Other assets 47,019 7,555 Total other assets 436,892 360,195 Total Assets $ 586,136 $ 490,789

Liabilities and Stockholders’ Equity

CURRENT LIABILITIES: Current maturities of long-term debt $ 30,083 $ 44,369 Accounts payable 23,410 14,206 Accrued expenses 53,811 20,910 Deferred tuition revenue 52,904 40,888 Total current liabilities 160,208 120,373

LONG-TERM LIABILITIES: Long-term debt, net of current maturities 2,686 45,553 Long-term contractual obligations 9,679 5,144 Deferred income tax liabilities 1,616 8,245 Other long-term liabilities 6,250 5,069 Total long-term liabilities 20,231 64,011 Stockholders’ equity 405,697 306,405 Total liabilities and stockholders’ equity $ 586,136 $ 490,789

The consolidated financial statements and accompanying footnotes are included in the Company’s Form 10-K.

16 Condensed Consolidated Statements of Cash Flows

FOR THE YEARS ENDED DECEMBER 31 (AMOUNTS IN THOUSANDS) 02 01 00 Cash Flows from Operating Activities Net income $ 67,472 $ 38,355 $ 21,406 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation and amortization 33,636 30,818 20,594 Deferred income taxes (383) 13,167 4,363 Cumulative effect of change in accounting principle — — 778 Royalty expense related to stock options 158 — — Compensation expense related to options 52 52 52 Loss on sale of property and equipment 690 10 22 Changes in operating assets and liabilities, net of acquisitions 4,605 (30,421) (21,579) Net cash provided by operating activities 106,230 51,981 25,636

Cash Flows from Investing Activities Business acquisitions, net of acquired cash (5,762) (44,212) (31,651) Acquisition transaction costs (1,291) (1,953) (3,273) Purchases of property and equipment, net (60,871) (54,550) (28,453) Proceeds on sale of property and equipment 49 — — Change in investment in affiliate (212) 23 — Net cash used in investing activities (68,087) (100,692) (63,377)

Cash Flows from Financing Activities Issuance of common stock 14,254 10,971 67,952 Equity and debt financing costs (1,054) (30) (4,125) Payments of long-term debt (880) (16,655) (2,929) Payments of capital lease obligations (5,817) (6,878) (3,509) Net proceeds from (payments of) revolving loans under Credit Agreement (51,000) 67,500 (30,500) Net cash (used by) provided by financing activities (44,497) 54,908 26,889

Effect of foreign currency exchange rate changes on cash and cash equivalents 153 (264) (151) Net increase (decrease) in cash and cash equivalents (6,201) 5,933 (11,003) Cash and cash equivalents, beginning of year 39,675 33,742 44,745 Cash and cash equivalents, end of year $ 33,474 $ 39,675 $ 33,742

The consolidated financial statements and accompanying footnotes are included in the Company’s Form 10-K.

17 Corporate and Stockholder Information

COMMON STOCK TRANSFER AGENT SAFE HARBOR STATEMENT AND REGISTRAR This Annual Report contains various forward looking statements within the meaning of the Private Computershare Investor Services Securities Litigation Reform Act of 1995. These statements are based upon various assumptions, 2 North LaSalle Street and certain risks and uncertainties could cause actual results to differ materially from those stated. Chicago, Illinois 60602 Factors that could cause such differences include risks and other matters disclosed in the Company’s Attn: Shareholder Services annual report on Form 10-K for the year ended December 31, 2002 and its other filings with the (312) 588-4991 Securities and Exchange Commission. Career Education Corporation assumes no obligation to update www.computershare.com its forward looking statements.

CORPORATE HEADQUARTERS COMMON STOCK Career Education Corporation The Company’s Common Stock trades on the Nasdaq National Market System under the symbol 2895 Greenspoint Parkway CECO. The company has not paid any cash dividends to its common stockholders since its inception Suite 600 and does not intend to pay any cash dividends in the foreseeable future. As of March 21, 2003 there Hoffman Estates, IL 60195 were 72 holders of record of CEC’s common stock. The range of high and low closing sale prices for the Phone: (847) 781-3600 last two fiscal years for the Common Stock reflects CEC’s 2 for 1 stock split affected in the form of a Facsimile: (847) 781-3610 stock dividend in September 2001, which is as follows: Web site: www.careered.com

INVESTOR RELATIONS 01 QUARTER ENDED HIGH LOW Tracy K. Lorenz March 31, 2001 $ 25.63 $ 15.47 Director of Investor Relations June 30, 2001 $ 30.68 $ 22.72 (847) 585-3899 [email protected] September 30, 2001 $ 33.61 $ 21.69 December 31, 2001 $ 36.52 $ 22.87 ANNUAL MEETING OF STOCKHOLDERS The annual meeting of stockholders of Career Education Corporation will be held on 02 QUARTER ENDED HIGH LOW May 19, 2003. March 31, 2002 $ 40.23 $ 30.00 REPORTS AND PUBLICATIONS June 30, 2002 $ 48.21 $ 38.00 Copies of CEC’s Form 10-K and Form 10-Q’s September 30, 2002 $ 48.65 $ 33.01 as filed with the Securities and Exchange Commission may be obtained without December 31, 2002 $ 52.50 $ 36.80 charge by accessing the SEC’s Web site at www.sec.gov, or the Company’s Web site at www.careered.com.

INDEPENDENT ACCOUNTANTS Ernst & Young LLP 233 South Wacker Drive Chicago, Illinois 60606

18 Career Education Corporation Campuses

AS OF MARCH 2003

UNITED STATES American InterContinental Katharine Gibbs School B, IT, VC QUEBEC International Academy of ARIZONA University IT, VC, B New York Collins College IT, VC* Atlanta (Location: Dunwoody) www.gibbsny.com Design and Technology VC, IT Tempe www.aiudunwoody.com Montreal www.collinscollege.edu OREGON www.internationalacademy.ca ILLINOIS Western Culinary Institute CA Scottsdale Culinary Institute CA The Cooking and Hospitality Portland FRANCE Scottsdale Institute of Chicago CA www.westernculinary.com Institut des Hautes Estudes www.scichefs.com Chicago Economiques et Commerciales B www.chicnet.org PENNSYLVANIA Paris and Bordeaux CALIFORNIA Allentown Business American InterContinental Harrington Institute School B, IT, VC Ecole de Commerce Européenne B University B, IT, VC of Interior Design VC Allentown Bordeaux and Lyon Los Angeles Chicago www.chooseabs.com www.aiulosangeles.com www.interiordesign.edu Sup de Pub VC International Academy of Design Paris Brooks College VC, B International Academy of and Technology B, IT, VC Long Beach Design and Technology B, VC, IT Pittsburgh MBA Institute B www.brookscollege.edu Chicago www.iadtpitt.com Paris www.iadtchicago.com Brooks College VC, IT Katharine Gibbs School IT, VC CEFIRE B Sunnyvale MASSACHUSETTS Philadelphia (Location: Norristown) Paris www.brookssanjose.com Gibbs College of Boston B, IT, VC www.pagibbs.com Boston HEIG B Brooks Institute of www.kgibbsboston.com Pennsylvania Culinary Institute CA Bordeaux Photography VC Pittsburgh Santa Barbara MINNESOTA www.paculinary.com Sup Santé HE www.brooks.edu Brown College IT, VC, B Paris Le Cordon Bleu at RHODE ISLAND California Culinary Academy CA Brown College CA Katharine Gibbs School B, IT, VC San Francisco Mendota Heights Providence UNITED ARAB EMIRATES www.baychef.com www.browncollege.edu www.kgibbsprovidence.com American University of Dubai B, IT, VC California School of MISSOURI TEXAS Dubai Texas Culinary Academy CA Culinary Arts CA Missouri College HE, IT, VC www.aud.edu Pasadena Austin St. Louis www.txca.com www.scsca.com www.missouri-college.com UNITED KINGDOM VIRGINIA American InterContinental CONNECTICUT NEW HAMPSHIRE University B, VC, IT Gibbs College B, IT, VC Gibbs College B, IT, VC McIntosh College B, IT, VC, HE Vienna LONDON Norwalk www.aiulondon.ac.uk www.gibbscollege.com Atlantic Culinary Academy at www.gibbsschool.com McIntosh College CA Dover WEST VIRGINIA FLORIDA ONLINE EDUCATION American InterContinental www.mcintoshcollege.com International Academy of University B, IT, VC Design and Technology B, IT, VC American InterContinental Ft. Lauderdale NEW JERSEY Fairmont University Online B, IT, VC www.aiufortlauderdale.com Gibbs College B, IT, VC www.iadtwv.com Hoffman Estates, Illinois Montclair www.aiuonline.com International Academy of www.gibbsmontclair.com Design and Technology IT, VC INTERNATIONAL Orlando Katharine Gibbs School B, IT, VC www.iadt.edu Piscataway www.gibbseducation.com CANADA ONTARIO International Academy of International Academy of Design and Technology B, VC, IT NEW YORK Briarcliffe College B, IT, VC Design and Technology VC, IT Tampa Ottawa www.academy.edu Bethpage www.bcbeth.com www.iadtottawa.com Orlando Culinary Academy CA Briarcliffe College B, IT, VC International Academy of Orlando Design and Technology VC, IT www.orlandoculinary.com Patchogue www.bcpat.com Toronto www.iaod.com GEORGIA American InterContinental Katharine Gibbs School B, IT, VC University B, VC Long Island (Location: Melville) Atlanta (Location: Buckhead) www.gibbsmelville.com www.aiubuckhead.com

19 * PRINCIPAL CURRICULA: B = Business Studies CA = Culinary Arts HE = Health Education IT = Information Technology VC = Visual Communication and Design Technologies Directors and Management

BOARD OF DIRECTORS SENIOR MANAGEMENT TEAM Matthew Litfin William Blair and Company John M. Larson John M. Larson Dr. Patricia A. Kapper 222 West Adams Street Chairman, President and Chairman, President and Senior Vice President of Education Chicago, IL 60606 Chief Executive Officer of Career Chief Executive Officer Education Corporation Paul R. Ryan Gregory Cappelli Patrick K. Pesch Senior Vice President of Credit Suisse First Boston Patrick K. Pesch Executive Vice President, Operations, Colleges, Schools 227 West Monroe Street Executive Vice President, Chief Financial Officer, and Universities Group Suite 4200 Chief Financial Officer, Treasurer and Secretary Chicago, IL 60606 Treasurer and Secretary of Career Jeffrey S. Tice Education Corporation Nick Fluge Senior Vice President of Student Mark Farano President, Online Education Group Finance First Analysis Securities Corporation Dennis H. Chookaszian 9500 Sears Tower Former Chairman and Jacob P. Gruver Chicago, IL 60606 Chief Executive Officer of CNA President, Colleges, Schools and FINANCIAL ANALYSTS WHO FOLLOW Financial Corporation Universities Group, and Assistant CAREER EDUCATION CORPORATION Jeff Silber Secretary (AS OF APRIL 2003) Gerard Klauer Mattison Robert E. Dowdell 529 Fifth Avenue Chief Executive Officer of Steve B. Sotraidis Howard Block New York, NY 10017 Marshall & Swift, L.P. Executive Vice President of Banc of America Securities Administration 600 Montgomery Street Brad Safalow Thomas B. Lally San Francisco, CA 94111 JPMorgan Former President of Heller Equity Todd H. Steele 270 Park Avenue Capital Corporation Executive Vice President of Alexander Paris, Jr. 44th Floor Strategic Planning and Barrington Research Associates New York, NY 10017 Wallace O. Laub Development 161 North Clark Street Former Executive Vice President Suite 2950 Bob Craig/Jerry Herman of National Education Centers, Inc. Dr. Jon R. Coover Chicago, IL 60601 Legg Mason Wood Walker Senior Vice President of Marketing 200 Public Square Keith K. Ogata Suite 2950 President of 3-K Financial Cleveland, OH 44114 Corporation Gary Bisbee Lehman Brothers 20 745 Seventh Avenue 17th Floor New York, NY 10019

Richard Close SunTrust Robinson Humphrey 800 Nashville City Center Nashville, TN 37219

Trace Urdan ThinkEquity Partners 343 Sansome Street Suite 800 San Francisco, CA 94104

Fred McCrea Thomas Weisel Partners One Montgomery Street San Francisco, CA 94104

Kelly Flynn UBS Warburg 1285 Avenue of the Americas New York, NY 10019

Mark Marostica US Bancorp Piper Jaffray BOARD OF DIRECTORS 800 Nicollet Mall (From left to right) Dennis H. Chookaszian, Keith K. Ogata, Minneapolis, MN 55402 Patrick K. Pesch, Wallace O. Laub, John M. Larson, Thomas B. Lally, Robert E. Dowdell CAREER EDUCATION CORPORATION

“At Career Education Corporation, our goal is to become the world’s largest provider of quality postsecondary educational services. We are well on our way to achieving that goal.” Career Education Corporation 2895 Greenspoint Parkway Suite 600 Hoffman Estates, Illinois 60195 www.careered.com Nasdaq symbol: CECO