Of the Graduate

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theyear of the graduate

CAREER EDUCATION CORPORATION SUMMARY ANNUAL REPORT: 2005 78646 Output3/23/065:35PMPageifc1 OUR FACULTY ANDSTAFF ARECOMMITTEDTOPROMOTINGSTUDENT SUCCESSASMEASUREDBYGRADUATION ANDCAREERACHIEVEMENT. THEIR INDIVIDUALWORTH ANDPROFESSIONALPOTENTIAL,BYDELIVERINGQUALITYEDUCATIONAL PROGRAMSANDSERVICES. MISSION STATEMENT FORLEARNING: OURMISSIONISTOSERVE STUDENTSFROMDIVERSEBACKGROUNDS,SEEKING TOENHANCE CORPORATE ANDSTOCKHOLDERINFORMATION … DIRECTORS ANDMANAGEMENT… LETTERS TOSHAREHOLDERS… FINANCIAL INFORMATION … CAREER EDUCATION CORPORATION OPERATIONS REVIEW…06 CAMPUSES … CONTENTS: 24 22 18 02 23 France, located 86 students in and of provider founding passionate quality, Information Health Communication disciplines: programs and degree, CEC’s rewarding CEC our worth educational Career online private, campuses, goal has non-degree

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Graduation day! It’s the goal that each student at a Career Education Corporation institution points toward from the day they begin classes. It celebrates the successful completion of their preparation for the career of their dreams. And it marks the next step in their effort to put their passion to work and turn their dream into a rewarding and fulfilling future. All of us at CEC are proud to play a role in their success. That’s our passion, and our privilege. 78646 Output 3/23/06 5:38 PM Page 2

OUR COMPETITIVE ADVANTAGES We take great pride in the quality of our brands, in our technology, and in our Letter to our shareholders ability to anticipate the needs of future students and employers. We are proud of our prominent educational brands: American InterContinental University, the Brooks Institute of Photography, Colorado Technical University, Harrington College of Design, International Academy of Design and Technology, Katherine Gibbs Schools, Le Cordon Bleu Schools of North America, and Sanford-Brown. These brands and this kind of heritage make us unique in our industry and demonstrate our commitment to quality. Our technology platforms are second to none, offering ease of access for our students and attractive, logical entry and navigation. We believe this technology continues to be a key enabler, both for our students and our company. We believe that our schools are well positioned to quickly adapt to the changing needs of the marketplace that they serve. For example, our schools’ online campuses continue to expand, responding to lifestyle 02 demands and the needs of parents and working professionals. In addition, we have introduced a hybrid learning model that allows maximum flexibility for students choosing to pursue their education both online and in a traditional classroom setting. Our intent is to meet students wherever they are – and take them wherever they want to go. Our schools will continue to be innovative in their academic program offerings, methods of delivery, and in target markets.

JOHN M. LARSON, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER: “CAREER EDUCATION CORPORATION PROVIDES STUDENTS THE SKILLS THEY NEED TO GET A JOB ADDRESSING OUR CHALLENGES, LEVERAGING OUR OPPORTUNITIES IN THE FIELD THEY LOVE. GRADUATES ENTER THEIR INDUSTRY PREPARED NOT ONLY FOR During 2005, we were successful in taking aggressive steps to address areas TODAY, BUT READY TO ENJOY SUCCESSES THROUGHOUT THEIR CAREER. ” of challenge and capitalize on important opportunities: CEC and certain of our schools were faced with legal and federal, state, and accrediting body regulatory matters. We continue to strengthen our CareerFor Career Education Corporationeducation (CEC), 2005 was a year of accomplishment… compliance corporatio infrastructure to promote a strong compliance culture n significant challenge…and positive change. Once again we achieved record throughout our organization. We are dedicated to working cooperatively revenues, cash flow and earnings – even as we focused on strengthening our with applicable federal and state agencies and accrediting bodies to processes and our infrastructure and laying a foundation for future growth. resolve existing regulatory matters. providesWe made changes to our corporate governancestudents policies and practices in the In December the 2005, we were notified skills that the Commission on Colleges interest of our shareholders, and we moved forward with confidence into the of the Southern Association of Colleges and Schools (SACS) had placed next stage of our corporate life. AIU on probation status for one year. A status review of AIU’s probation theyAt CEC,need education is our passion. We opento doors for studentsget – many of astatus is currentlyjob scheduled for thein December 2006 the meeting of SACS. whom might not otherwise have access to quality education – and we sup- AIU has put in place a strong action plan to address SACS’ recommen- port our students throughout the educational process. Our goal is to enable dations and is fully committed to resolving all issues identified. 2005 students to graduate and then to pursue careers which are rewarding, sat- Our Colleges, Schools and Universities (CSU) segment experienced fieldisfying andthey fulfilling. We provide hope andlove. opportunity and enhance lives graduatesa softening of revenue and population growth during 2005, which we Fand build futures. attribute primarily to adverse publicity at a few of our schools, overall Along the way, we continue to achieve exceptional business results. During market conditions, and a strategic and appropriate tightening of our 2005, we set new records and expanded our business in several key areas: credit standards. In tightening credit standards for our students, enter Overall revenuetheir grew 18 percent and our studentindustry population grew to we believe we are layingprepared the foundation for long-term, high-quality, over 104,000. sustainable growth. We have addressed any internal challenges that Our Online Education Group (OEG) segment, which represents the results have led to adverse publicity about our company and are working hard not onlyof the online campuses of Americanfor InterContinental today, University (AIU), to communicate but the successes of ourready company, our schools, and our Colorado Technical University (CTU) and Stonecliffe College Online (an students. We believe that we have an outstanding story to tell, that academic division of CTU), set the pace, with a 70 percent increase in positive outreach will make a significant difference, and that current revenues and a 65 percent increase in income from operations. challenges are being addressed. to enjoy successes Our CSU segment through- of schools also executed a wide range of operational We successfully launched new academic programs to meet the needs of additional interested student groups – for example, Kitchen Academy, a initiatives during the year focused on five key objectives which make up shorter-duration culinary program focused on students seeking entry our student lifecycle: defining and communicating a selling premise out theirlevel positions; and Stonecliffe Collegecareer. Online, which leverages our that resonates with prospective students; converting more leads into state-of-the-art online capabilities and caters to students seeking a enrollments; improving the percentage of enrollees who begin classes; slower-paced associate degree program. and improving student retention, all of which lead to increased operating margins. Our ultimate goal with all of these initiatives is to open Our goal is to be market-responsive and flexible, adapting quickly to changing market needs with new and innovative offerings of quality education programs. 78646 Output 3/23/06 5:42 PM Page 3

doors for students and then to support them all the way through to Our business strategy for 2006 and beyond is based on seven key elements: successful graduation. Results of these efforts, described in detail in The first, and the one at the center of our strategy, is customer service. the Operations Review section of this report, are encouraging. These five While we serve many kinds of customers, our students are our primary initiatives will continue as tactical priorities in 2006 and beyond. customers. Serving these customers well, and better than anyone else in Our Gibbs operating division experienced declines in student population our industry, will be the primary objective for everyone in our company during 2005. We are in the process of re-positioning the brand, adding …absolutely everyone. new and unique programs and expanding our degree offerings. By year- Next is operational and educational excellence. We intend to continue end we achieved trend improvement in many key business metrics. to build on our corporate culture, systems and processes to advance our In addition, we introduced our hybrid learning model, which combines commitment to operational and educational excellence. both online and traditional classroom instruction, providing our students Third is business model discipline. Our business models are designed to with more choices in pursuing their education and greater personal capitalize on our competitive advantages and most effectively meet the scheduling flexibility. needs of our customers. We are maximizing the effectiveness of our Finally, we initiated our reach into the enthusiast market, with the business models through improved customer targeting and enhanced launch of Chefs.com, which combines a wide range of educational service delivery. 03 content with product sales and advertising for culinary enthusiasts Fourth is an intense focus on return on investment. A key goal will who do not necessarily aspire to careers in the field. be to improve our decision-making processes throughout the entire organization so that every part of our business is well aligned with CORPORATE GOVERNANCE the company’s goals and commitments and generates maximum During 2005 and early 2006, we significantly strengthened our corporate shareholder value. governance by making the following corporate governance enhancements: The fifth element of our strategy is market expansion. We remain increased our Board size from seven to nine members, including seven committed to maximizing long-term shareholder value through quality independent directors under SEC and NASDAQ rules; growth that is strategic, targeted, and sustainable. Within the limitations appointed three new independent Board members; and restrictions in which we currently operate, we will expand our markets terminated our shareholder rights plan; through continued growth of our online campuses, the establishment of implemented minimum stock ownership guidelines for Senior new programs at our existing schools, the opening of new start-up or Management; satellite campuses of our existing schools, the expansion of our hybrid implemented minimum stock ownership guidelines for Board of learning model, and the pursuit of international expansion opportunities. Directors; Sixth is the creation of a compliance culture throughout our organization. implemented mandatory continuing education for all Board members; That culture is being built on a shared understanding of the organiza- developed a policy requiring approval for Board members to serve on tion’s goals and values, as well as shared accountability for following other outside boards; appropriate rules and guidelines and adhering to the company’s developed a proposal to stockholders for phased-in declassification of standards for personal and professional ethical behavior. the Board; Finally, we are seeking to become an employer of choice, fully developed a proposal for stockholders to call special meetings with a understanding that it is only through the dedication of our talented two-thirds affirmative vote; and workforce that our students will succeed, our goals will be achieved adopted majority voting for election of directors into our by-laws. and the vision of our company will be realized. These enhancements demonstrate our commitment to the best interests of Career Education Corporation is poised and ready for another major step our shareholders through sound corporate governance. We are gratified by the forward. We are deeply aware that taking that step successfully will involve positive response from shareholders to the steps we have taken, and we will a sincere willingness to change. We have a passionate commitment to continue to evaluate our corporate governance practices to ensure that becoming the world’s leading provider of quality educational services. we remain among the leaders in this area. We also have an extraordinary family of students, schools, employees The Board also accepted the resignation of Wallace O. Laub, who has and educators across the world and a business that continues to operate served Career Education as a director since 1994. His contributions and successfully, quarter after quarter and year after year. wise counsel will be missed. I would like to thank all of you who have continued to support us throughout the unprecedented challenges and the exciting opportunities of the past OUR STRATEGY FOR THE FUTURE year. Our goal is to continue to generate value for you, our shareholders and While we are proud of the exceptional shareholder value generated by our for our students. We have a clear vision for the future and a determination to company over the past decade, we also recognize that we have reached help our students turn their dreams into satisfying and fulfilling lives. a new and important stage in our development. We have turned our attention to strengthening our infrastructure and our compliance culture, laying the SINCERELY, foundation for quality, sustainable long-term growth.

JOHN M. LARSON CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER 78646 Output 3/23/06 7:09 PM Page 4

TO OUR SHAREHOLDERSTHE YEAR OF THE GRADUATE – IT’S ALL ABOUT THE STUDENT

One of the hallmarks of Career Education Corporation is the consistent strength of our financial performance year after year. Along with the record revenues and earnings that shareholders have come to expect, each year we also deliver solid gains in the key areas of profitability, return on investment and cash genera- 04Otion. Our success in meeting those standards once again in 2005, a year of significant change and challenge, provides compelling evidence of our underlying financial strength. PATRICK K. PESCH, EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER Our operating margin increased by AND TREASURER: “CEC’S ABILITY TO CONSISTENTLY PRODUCE OUTSTANDING 120 basis points during 2005 to 18.1% RESULTS IS ENHANCED BY A COMMITMENT AND DEDICATION TO A FINANCIAL from 16.9% a year earlier. This improve- CONTROL ENVIRONMENT.” ment was driven by the strong profitability of our Online Education Group

(OEG) segment campuses, which was 2005 the primary contributor to our earnings growth during 2005. These gains at our OEG segment campuses were partially December 31, 2005, compared to 17 days a year earlier. In addition, capital offset by overall lower margins for our on-ground campuses included in our expenditures decreased to $126 million during 2005 from $143 million Colleges, Schools and Universities (CSU) segment, due to lower-than-expected during 2004. Capital expenditures represented approximately 6.2% of total student population. We believe that the primary factors contributing to student revenue during 2005 versus 8.3% of total revenue during 2004. We expect population declines at our CSU segments schools include adverse publicity continued capital efficiency in 2006 through improved facility utilization at certain schools, a strengthening economy and job market that led some across our network of schools. prospective students to pursue options other than furthering their education In recognition of our solid financial position and strong cash generation and tightening of credit standards for our students. This latter action has limit- capabilities, our Board of Directors authorized the use of up to $300 million for ed the number of students we are able to serve, but we continue to believe the repurchase of shares of our common stock. During the year, we repurchased that it is in the best long-term interest of our students and our shareholders. approximately 5.3 million shares of our common stock for approximately $200 Return on equity during 2005 was 23.1%, an increase from 21.0% during million at an average price of $37.97 per share. In the first quarter of 2006, our 2004. Our return on equity has increased every year since we became a public Board of Directors authorized an additional $200 million for share repurchases. company in 1998. The increase during 2005 was achieved despite continued At CEC and at our schools, the professional and personal standards investment in facilities, technology and personnel that positioned the company of behavior expected of all our employees are defined in our Code of Ethics. to achieve current and future high-quality, sustainable growth. These investments Compliance with the Code of Ethics is monitored and measured through included: two new on-ground campuses and the expansion of several existing stringent control processes and procedures. Our ability to consistently pro- campus locations; the development of Stonecliffe College Online, a division of duce outstanding results is enhanced by our commitment and dedication Colorado Technical University; the introduction of more than 50 new programs to a financial control environment that includes rigorous and ongoing at our existing schools; two new call centers for our OEG segment campuses and evaluation of each school’s performance to ensure the integrity of the additional admissions representatives employed by both our OEG segment and reported information. CSU segment campuses; continued expansion of our compliance, legal and In 2006, our financial operations will remain focused on increasing internal audit infrastructure; and other business and technology improvements. profitability, return on invested capital and cash generation. These key Stronger cash generation in 2005 resulted from our increased profitability, financial indicators form the foundation of our financial strategy for driving continued focus on stricter collection practices and improved working capital sustainable growth and delivering increased shareholder value. management, which significantly reduced overall bad debt expense and strengthened our balance sheet. Cash at year-end, including short-term SINCERELY, investments, totaled $404 million, operating cash flow was $378 million and accounts receivable days sales outstanding decreased to 14 days as of

PATRICK K. PESCH EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER 78646 Output 3/21/06 12:06 PM Page 5

$500 CAREER EDUCATION CORPORATION S&P 500 INDEX PEER GROUP 400 We will remain focused on 300 our financial strategy for 200 driving sustainable growth 100 and delivering increased 0 00 01 02 03 04 05 shareholder value. COMPARISON OF CUMULATIVE TOTAL SHAREHOLDER RETURN YEARS ENDING DECEMBER 31

Financial Highlights

DOCTORAL, MASTER’S, BACHELOR’S: 48% $2.03 BILLION $233.9 ASSOCIATE DEGREE: 38% = $1.73 BILLION = $179.6 CERTIFICATE : 14% $1.18 BILLION $112.8 $770.7 MILLION $61.8 05 $542.1 MILLION $35.3 05 STUDENT POPULATION BY NET INCOME DEGREE GRANTING STATUS YEARS ENDED DECEMBER 31 $ IN MILLIONS AS OF DECEMBER 31, 2005 YEARS ENDED DECEMBER 31

BUSINESS STUDIES: 45% OVER 30: 32% 107,300 $2.26 VISUAL COMMUNICATION AND DESIGN 21 TO 30: 46% = 100,350 = $1.71 TECHNOLOGIES: 23% UNDER 21: 22% 81,900 $1.12 HEALTH EDUCATION: 12% 51,600 $0.65 CULINARY ARTS: 12% 41,100 $0.39 INFORMATION TECHNOLOGY: 8%

05 05 STUDENT POPULATION BY STUDENT POPULATION BY STUDENT POPULATION DILUTED NET INCOME PER SHARE CORE CURRICULUM AGE GROUP AS OF OCTOBER 31 YEARS ENDED DECEMBER 31 AS OF DECEMBER 31, 2005 AS OF DECEMBER 31, 2005 78646 Output 3/21/06 12:06 PM Page 6

“My hero in high school was Francisco Cortina, who did the 3-D modeling for the movie “The Final Fantasy: the Spirits Within.” I fell in love with computer animation, and decided to make it my career. My degree from IADT Tampa helped me land a job at the same company where Francisco works, and he’s even critiqued my work. How great is that!” 78646 Output 3/23/06 9:11 PM Page 7 I fell in love

THE YEAR OF THE GRADUATE – IT’S ALL ABOUT THE STUDENT withIADT TAMPA GRAD USING computerCOMPUTER ANIMATION SKILLS TO MAKE CAREER DREAMS COME ALIVE 07 animation,GRADUATE PROFILE: Four years ago, David Sanchez left and his home in New York City to pursue a bachelor’s degree in computer animation at the International Academy of Design IADT TAMPA HELPED DAVID SANCHEZ POLISH and Technology (IADT) in Tampa, Florida. An internship at HIS RESUME AND DEVELOP STRONG INTERVIEWING decidedDigital Domain, Inc., one of the world’s top companiesto in make SKILLS, WHICH HE USED TO OBTAIN AN INTERNSHIP digital imaging, led to a full-time job after he graduated. THAT HELPED HIM LAUNCH HIS DREAM CAREER IN Today, he is making his career dream a reality. COMPUTER GRAPHICS. itDavid my first connected with career.Digital Domain at an industry event in Los Angeles, where he was representing IADT Tampa. “When I wasn’t on duty in the school’s booth, I walked the floor and handed out my demo reel to prospective employers – Myincluding the headdegree of Digital Domain’s modeling integration from department,” David said. “He liked my reel, especially the animation I did by loading pictures of my face into the IADTmodeling software we used at Tampaschool. When I followed up helped with him after the show, he offered me an internship.” Currently assigned to the digital integration department, meDavid hopes eventually land to do computer graphics modeling. “I love what I’m doing – so far I’ve worked on three movies and two commercials. “IADT Tampa gave me a great start,” he says. “The labs ahad the joblatest hardware and software,at and thethe instructors same were experts in their fields. I use the skills they taught me companyevery day.” where my high school hero works and For the students who successfully completed their education at a Colleges, Schools and Universities (CSU) segment and the two online Career Education Corporation (CEC) school in 2005, graduation marked he’scampuses included even in the Online Education critiqued Group (OEG) segment. the culmination of months of study and hard work that prepared them Once again in 2005, our campuses brought that commitment to life to find their place in the career field of their choice. Their sense of through operational initiatives that helped to improve performance in accomplishment was shared by all CEC employees, whose every effort myeach stage of work.the student lifecycle and allowedHow more students thangreat is focused on helping students arrive at this milestone in their lifelong ever before to realize the joy and satisfaction of graduation. learning journey. isMany that!” of these initiatives resulted from new educational programs Students at CEC schools travel an educational path that spans and ideas associated with our evolving business strategy, while others four distinct stages, leading ultimately to the pursuit of a successful built upon past successes. Together, they provided prospective students and satisfying career. We call this path the student lifecycle. First is with the information and assistance they needed to choose the CEC the inquiry stage, which begins with the student’s initial expression school and program best suited to their career objectives, and helped of interest and ends when the student enrolls in one of our schools. them transition successfully from prospects to students, strengthening Next is the “stitch-in” stage, the period between enrollment and their confidence in their ability to succeed. These initiatives broadened the start of classes. These stages are enablers that open the doors and the range of academic programs and degree options available to stu- offer opportunities but are only considered successful if they lead ulti- dents, eliminated obstacles that otherwise might have prevented a stu- mately to graduation. dent from beginning or completing their education and equipped them These are followed by the most important stage: the education to successfully take the first step on their post-graduation career path. delivery stage, which begins on the student’s first day of school and The task for CEC schools in the first stage of the student lifecycle ends with graduation. Providing a high-quality education is the primary is to generate and manage leads and convert them into enrollments. focus of CEC and its schools. The final stage is post-graduation. The Historically, CEC has excelled at lead generation, producing millions of CEC’s Career Services professionals are available to students throughout leads each year. In early 2005, CEC conducted a major research effort their entire academic program and career. to identify themes that would resonate most powerfully with potential Helping students successfully complete this journey is a commit- students. From this research emerged a new selling premise that was ment shared by each of the 84 on-ground campuses of CEC’s 78646 Output 3/23/06 8:24 PM Page 8

THE YEAR OF THE GRADUATE – IT’S ALL ABOUT THE STUDENT 08

a clear winner among study participants – “Love What You Do for a Living.” This message now is creating a compelling differentiator in advertising and marketing efforts for our CSU segment schools. Admissions representatives employed by our schools play a pivotal role in converting leads by guiding and supporting prospects through the enrollment process. Our CSU segment schools focused on performance of admissions representatives through several initiatives that improved methods of recruiting, training and evaluating admissions representatives including:

New testing methods that allow candidates’ personal characteristics to be compared to those of the “top performing” admissions represen- THROUGH THE LE CORDON BLEU PROGRAM AT WESTERN tatives, to identify those most likely to succeed in this challenging role; CULINARY INSTITUTE, CHRIS BEAL LEARNED BASIC SKILLS AND TECHNIQUES THAT HE CAN APPLY Development of a full on-boarding process, that includes two weeks THROUGHOUT HIS CULINARY CAREER TO ANY TYPE of web-based online training focused on product knowledge, OF CUISINE. compliance and skills necessary for success, followed by an intense five-day hands-on training program at corporate headquarters that provides more in-depth training on regulatory compliance issues and a thorough review of our schools’ admissions policies and procedures; I love using my creativityCEC GRAD USES CULINARY in EDUCATION TOthe A new evaluation system to more accurately measure performance; LAND DREAM JOB AS RESTAURANT CHEF

and GRADUATE PROFILE: When Chris Beal decided to turn his kitchen, Expansion of CEC’sand “mystery shopper” cooking program in which outsiders passionis for cooking great into a career, little did he imagine therapy that within weeks of his graduation from Western Culinary Institute pose as prospective students to help measure the effectiveness (WCI) he would be the chef at a new Mexican restaurant in his of admissions representatives and their compliance with our home town of Portland, Oregon. – when I’m at the stove,Chris’ rapid ascent beganmy during the six-week worries externship admissions policies and procedures. in Los Angeles that completed his culinary arts degree, when Turning enrollments into starts is the challenge that CEC schools by chance he met the owner of several restaurants, including and tackletroubles during the stitch-in stage. During thisjust critical period, whichseem one in Portland. to disappear. “After my externship ended, I spent three days cooking at can last from a few days to several months, CEC schools strive to one of his Los Angeles restaurants,” Chris said. “Two weeks The experiencecontinually strengthen the bonds connecting them toof their future seeing after my ‘mini-audition,’ a he hired merestaurant as his chef in Portland.” students, bonds that will be strengthened and nurtured throughout Fate soon intervened again when the owner decided to close the Portland restaurant and reopen following extensive the entire educational process. renovation as La Vanguardia, a Tanqueria-style restaurant unfold,An educational from decision is one of thethe biggest decisions first that servingnail Mexican cuisine. Chris in went to Los Angelesthe and wall prospective students may make in their lives. We strive to make certain worked with the chef at another of the owner’s restaurants to develop La Vanguardia’s menu, then returned to Portland that all prospective students are well-informed and comfortable when to the first plate of foodto help prepare the restaurantleaving for reopening. the they are making a decision to attend one of our schools. As a part of Since La Vanguardia’s debut, the cuisine produced by those efforts, CEC’s stitch-in process in 2005 relied on frequent contact Chris and his kitchen staff has begun to win a following. by admissions representatives with prospective students, to answer “It’s really exciting to help create a new restaurant from the kitchen, has been trulyground floor,” heamazing. says. their questions and help resolve any issues that arose. The primary “The menu is limited to just a few items to help make sure stitch-in initiative in 2005 was the re-launch of CEC’s Save Our that everything we serve is done perfectly. Thanks to my Students program, which featured a follow-up call to the student within degree from WCI, I’m living my dream.” 78646 Output 3/23/06 5:43 PM Page 9

“I love using my creativity in the kitchen, and cooking is great therapy – when I’m at the stove, my worries and troubles just seem to disappear. The experience of seeing a restaurant unfold, from the first nail in the wall to the first plate of food leaving the kitchen, has been truly amazing.” 78646 Output 3/21/06 12:06 PM Page 10

“What drew me to a career in interior design? It’s the combination of creativity, artistic ability, organizational skills and technical competence. Also, several of my family members are architects, so I grew up in a design-oriented atmosphere. Studying at Harrington helped bring out and develop those qualities in me.” 78646 Output 3/23/06 5:43 PM Page 11

THE YEAR OF THE GRADUATE – IT’S ALL ABOUT THE STUDENT 11

the first 24 hours followed by weekly phone contact with prospective students. The student is then invited to attend pre-orientation activities and other events at the school, such as an open house. Many CEC schools also employed a full-time student coordinator to help future students resolve problems with financial aid, transportation, housing, child care, part-time employment and other issues related to starting school. With the arrival of their first day of classes, new CEC students embark on the education delivery stage of their journey. CEC’s responsibility in this stage is three-fold: to provide students with the best possible education; to help them stay in school; and to assist them in launching their post-graduation career. PASSION FOR INTERIOR DESIGN BROUGHT MRINAL No priority ranked higher for CEC schools in 2005 than the quality of BHATIA TO HARRINGTON COLLEGE OF DESIGN, WHERE HER BACHELOR’S DEGREE PROGRAM PREPARED the education we deliver, as evidenced by the steps each school took to HER TO SUCCESSFULLY LAUNCH HER CAREER upgrade existing curricula; introduce new programs and degree options; AT ONE OF THE TOP ARCHITECTURAL FIRMS IN improve the instructional skills of their faculty; invest in technology to SAN FRANCISCO. aid learning; and create more options for delivering course content. Although all CEC campuses have historically utilized local program advisory boards, during 2005 CEC established a national information Whattechnology drew program advisory boardme which brought to together expertsa from careerHARRINGTON GRAD TAKES LONG PATHin TO BEGIN interior CAREER IN INTERIOR DESIGN across the country and from all sectors of the IT industry. Based on the GRADUATE PROFILE: Mrinal Bhatia’s path to a career in interior success of this initial effort, creation of national program advisory design? It’s the combinationdesign has covered more than 10,000 miles – from herof home in boards in additional academic disciplines is underway. Mumbai, India to Harrington College of Design in Chicago and then New programs offered by CEC schools further enhanced the educa- to San Francisco and a job at one of the city’s leading architectural tional opportunities we provide to students. More than 50 new programs and interior design firms. creativity, artistic ability,“In Mumbai, I earned a diploma in interior design and at credential levels ranging from diplomas to doctoral degrees debuted worked with an architect before deciding to finish my bachelor’s at 30 CSU segment campuses. degree in America,” Mrinal said. “I researched design schools on organizationalImproving faculty members’ instructional skills skills continued to receive theand Internet and was impressed technical with Harrington. Their staff was very approachable, and Chicago’s heritage as an architecture significant attention in 2005. At many schools, “education coaches” center was another plus.” competencedrove the faculty development process. thatTheir efforts were complemented I quiteHarrington lived up liketo Mrinal’s expectations. about“The instructors it. by corporate initiatives including Web-based training sessions, monthly in my program all worked in the profession in addition to teaching, which was very commendable,” she said. “They helped seminars on various aspects of integrity throughout the school, and the me develop my conceptual skills, and several of them became Also,collection several and posting on faculty portals ofof more than 100my “tips” on bestfamilymentors who I’m still in touch withmembers today.” instructional practices. As graduation neared, Mrinal contacted RMW Architecture Technology once again played a major role in enhancing educational & Interiors in San Francisco and arranged an interview. “They are architects, so I grewliked my portfolio, and I hadup some amazing recommendationsin a quality across CEC’s network of schools, particularly at the online from two firms where I had interned. I was hired directly out campuses of American InterContinental University (AIU), AIU Online, and of school.” Colorado Technical University (CTU), CTU Online, for whom technology RMW does mostly corporate architecture and interiors. design-oriented atmosphere.Studying“My job in the tenant improvement department involves making is an important competitive advantage and differentiator. Advances CDs, doing presentation drawings and construction documents at the online campuses were led by the roll-out of a totally revamped and following up with contractors,” she said. at Harringtonversion of their pioneering online virtual campus, helped a fully integrated “Ibring love my job. San Francisco is a greatout city, and I get a lot and of support from everyone at work. Someday I may move back to learning environment that puts all of the elements of a traditional Mumbai, but for now I’m delighted to be here.” developcampus at the students’ those fingertips. Major upgrades qualities included embedding in me. 78646 Output 3/21/06 12:06 PM Page 12 Some people think

THE YEAR OF THE GRADUATE – IT’S ALL ABOUT THE STUDENT of onlineMASTER’S DEGREE IN EDUCATION OPENSeducation NEW CAREER 12 DOORS FOR AIU ONLINE GRADUATE as GRADUATEan PROFILE: easyAfter eight years at Microsoft wayworking as an indexer for Encarta Encyclopedia, Kathryn Shield was ready for a new challenge. When she learned that Encarta planned to FOR KATHRYN SHIELD, THE “ANYWHERE, ANYTIME” hire an education editor, she asked for the job – but it required FLEXIBILITY OFFERED BY AIU ONLINE ENABLEDto HER geta master’s degree in aeducation. So,quickie 25 years after graduating TO EARN A MASTER’S DEGREE IN EDUCATION AND from Yale University, she headed back to school. TAKE HER CAREER IN AN EXCITING NEW DIRECTION. “I thought about taking night courses at a local university, degree.but that would have meant spendingThose a lot less time with my daughter,” Kathryn said. “Convenience initially won me over to AIU Online – I could attend “class” in my p.j.’s while my little girl slept in the next room. But once I started, the quality of peoplethe program kept me comingwould back. AIU Online’s instructional be technology was easy to use, and I enjoyed interacting with other students. I had to say goodbye to spare time and hello wrong.to chronic sleep deprivation, My but it was worth it.”program Although Encarta decided not to hire an education editor, the initiative Kathryn showed in returning to school earned her at AIUa new job as a reference Online editor. “Now I help create content for was the encyclopedia instead of just analyzing it,” she said. “And I’m working with developers on new learning tools for teachers and students. Before I even graduated, I was using what I thelearned real at AIU Online to help developdeal, new Microsoft products and for the education market. “My master’s degree was a great investment in my career,” it tookKathryn said. “But I’ve gainedhard much more than that. Mywork mind has been opened to a world of information and ideas, and I’ve andrediscovered true the joy of learning.” dedication to get through it.

technology that helps direct students to the appropriate section within The year also brought the debut of three learning platforms that the virtual campus depending on their personal needs. In addition, a created new ways to deliver educational programs to students. “virtual tour guide” aids students in navigating all areas of the virtual Kitchen Academy is CEC’s new brand in culinary education that campus, and instant messaging allows students to communicate with serves students seeking a short-duration, skills-focused culinary professors or their classmates in real time. The online campuses also education. Enrollment at the Hollywood, California campus exceeded created a faculty tool to improve instructors’ ability to track the projections for each start in 2005, and expansion to additional loca- progress of their students and more readily identify those who are tions is planned in 2006. struggling or need additional assistance. Presentations and visual aids now can be delivered in real time via With the fourth quarter launch of Stonecliffe College Online, streaming audio and video, and students can use new videoconferencing a division of Colorado Technical University, CEC entered the market capabilities to see and hear their instructors and classmates during for non-accelerated online education. Stonecliffe College Online online class sessions. This unique ability blurs synchronous learning offers associate degrees in business and criminal justice to with asynchronous learning and allows the student to direct their students seeking to complete their online degree at a slower pace learning experience. compared to CTU Online and AIU Online. CSU segment schools, meanwhile, continued to invest in the latest During 2005, CEC made advances in the development of its computer hardware and software, laboratories and other classroom unique hybrid learning model that combines online learning with technology that facilitated learning and enabled students to develop conventional classroom instruction. The hybrid model provides technology-related skills they will need when they enter the workplace. students with greater scheduling flexibility and convenience. In addition, new capabilities and features added to the student and faculty portals enhanced convenience and usability and improved In 2005, CSU segment schools posted improvements in retention communication between students and faculty. through a concerted focus on helping students overcome both academic and personal obstacles to success. These efforts to help students succeed in the classroom start on day one, through testing of incoming students’ aptitude in foundational skills such as reading, writing and math. 78646 Output 3/21/06 12:06 PM Page 13

“Some people think of online education as an easy way to get a quickie degree. Those people would be wrong. My program at AIU Online was the real deal, and it took hard work and true dedication to get through it.” 78646 Output 3/21/06 12:06 PM Page 14

“Moving back to the U.S. from Nigeria and returning to school after so many years was a big step. But whatever I needed – financial aid, extra help from my instructors or assistance in finding a job – the people at SBI Dallas were there for me. They kept every commitment they made and more.” 78646 Output 3/23/06 8:23 PM Page 15 Moving back to the

THE YEAR OF THE GRADUATE – IT’S ALL ABOUT THE STUDENT FORMER TEACHER GETS NEW CAREER U.S.IN HEALTHCARE OFF TOfrom FAST START Nigeria 15

GRADUATE PROFILE: Ure Agbai returned to the U.S. in 2004 andafter more than 20 yearsreturning of teaching high school science in her to native land of Nigeria. When her plan to continue teaching was URE AGBAI ENROLLED AT SBI DALLAS TO PREPARE FOR stymied because she lacked the necessary credentials, Ure A NEW CAREER IN HEALTHCARE. COMPLETING THE decided to change careers. MEDICAL BILLING AND CODING PROGRAM GAVE HER school“My first thought was the healthcare after field, because so THE KNOWLEDGE AND SKILLS NEEDED TO SUCCEED science and medicine always have interested me,” Ure said. IN HER CHOSEN FIELD. “I saw a newspaper ad for Sanford-Brown Institute (SBI) in manyDallas and scheduled an interview. years After considering the was programs they offered, I chose medical billing and coding because I could finish it in less than a year and start working, which I needed to do.” aAfter big graduating, Ure began step. searching for a full-time But position. But everywhere she applied, the answer was the same: you need a year of experience. Frustrated, she turned whateverto the Career Services staff at SBI Dallas for help. TheyI sent needed her to Medical Edge Healthcare Group, a provider of administrative support services for medical practices, which had –previously financial hired graduates of the school. aid, “Medical Edge brought me in as an intern on a trial basis, to give me a chance to prove myself. Three days after I started, they offered me a permanent position in the registration extradepartment. help from “My new career is everything I hoped it would be,” Ure said. “Every day I use the knowledge I gained and the skills I learned myat SBI Dallas, andinstructors that makes the job enjoyable.” or assistance in finding a job – Those needing developmental assistance are provided with support While the OEG segment campuses have enjoyed strong growth, structured around our students’ differing learning styles. Once students theattrition has beenpeople an area of focus in 2005, primarily at for first SBI time begin classes, their academic achievement is monitored closely and students. Studying online eliminates most problems related to trans- tutoring is made available to those who need assistance. portation, scheduling and child care. But since most online In spite of all these efforts, if unaddressed, personal issues also Dallasstudents also work full time, balancingwere work, school andthere family can can hinder a student’s success. One of CEC’s most powerful tools for become a challenging issue. Retention-focused initiatives in 2005 combating these problems and improving retention is the Career forincluded lowering me. the student-to-advisor They ratio during thekept students’ first Success Survey, which CSU segment schools administered to new term, when drops are most likely, offering program-specific courses students prior to each program start in 2005. The survey provides earlier to retain student interest and excitement, and employing a pre- insights into each student’s specific needs in such areas as finances, everydictive model using distinct promise student characteristics to identify at-riskthey transportation, child care and even self-esteem. students even before they start school. Although retention at OEG Most students who leave school do so in the first five to eight segment campuses declined in 2005 from the prior year, improvement weeks after beginning classes. To help students successfully transition made,toward year-end provided evidence and that our retention more.” activities were through this critical period, some CEC schools have begun employing gaining traction. full-time student advisors who have no teaching responsibilities. Each As students at CEC schools near the successful completion of their new student is assigned to a student advisor for their first term. The educational journey, post-graduation plans take on greater urgency for advisor maintains frequent contact with the student, closely monitors those who face the prospect of launching a new career. Ready to sup- their progress, helps resolve any problems that may arise, and serves port and assist them in this daunting task are the Career Services pro- as a liaison to other school support services and personnel. fessionals at each campus and on our corporate staff. Together, they School-level retention efforts were supported in 2005 by corporate pursue a common goal: developing self-directed and self-sufficient initiatives that focused on helping schools to improve their retention students with the knowledge, skills and confidence to successfully rate. Divisional retention symposiums brought together school manage- identify, pursue and obtain a job in their chosen field. ment and divisional oversight staff to examine every aspect of student satisfaction, consider best practices and to develop school-specific strategies for improving retention. 78646 Output 3/23/06 8:24 PM Page 16

THE YEAR OF THE GRADUATE – IT’S ALL ABOUT THE STUDENT 16

Career Services staff interacts with students throughout their academic program and post graduation. The process often begins with helping them secure a part-time job, and many CEC schools employ full-time student employment coordinators to manage this vital task. Another important aspect of the Career Services role is helping students prepare for their job search through skills development seminars, resume writing, individual counseling and interview simulation. They also develop relationships with local and regional area employers and continually monitor current job openings. To create personal interaction opportunities between students and prospective employers for externships or full-time post-graduation jobs, Career Services staff members arrange on-campus recruiting visits, schedule interviews and conduct local job THE CRIMINAL JUSTICE PROGRAM AT GIBBS LIVINGSTON fairs. OPENED THE DOOR FOR MARY D’ANGELO TO A CAREER IN CORRECTIONS THAT OFFERS GREATER PERSONAL CEC’s highly successful Online Job Fair continued to grow in scope SATISFACTION AND FUTURE GROWTH POTENTIAL during 2005. Held each spring and fall, the three-day events allow THAN HER FORMER JOB IN RETAILING. students and alumni at all of the CSU segment schools to view job openings posted by participating employers, submit their resume electronically for jobs that interest them, and interact with prospective employers through public or private live chat sessions and e-mail Workingexchanges. Registration in for thea fall Online prison Job Fair included more than wasn’tCRIMINAL JUSTICE PROGRAM AT GIBBS even COLLEGE LIVINGSTON on HELPS GRAD LAUNCH CAREER AS CORRECTIONS OFFICER 8,900 employers and 12,700 CEC students. Career Services is also GRADUATE PROFILE: Although Mary D’Angelo had a good available to students long after they have graduated from a CEC my radar screen whenjob in retail I management, began she wanted a career that offered my school. The relationship between our students and Career Services is greater personal satisfaction. So she enrolled in the criminal one that continues throughout the student’s career. justice program at Gibbs, and now she’s a corrections officer At graduation ceremonies around the world and online, the proud in New Jersey. criminal justice programThroughout her program at at Gibbs, Mary Gibbs continued to work members of the classes of 2005 at CEC schools received the diplomas, full time and took classes at night. “The school was very certificates and degrees that confirmed the successful completion of flexible in accommodating my schedule, and the faculty and Livingston.their educational journey. Like theBut hundreds of thousands I’ve of CEC alumni foundstaff always were available to helpmy with any problems niche. that came up,” she said. “They helped me pass my civil service who preceded them, they view the future with optimism, confident exam with flying colors.” Eachthat theirday CEC education bringshas equipped them with the knowledge something and One of the high points of her Gibbs experiencenew, was learning skills to realize their career dreams. Their achievement is the ultimate from faculty members who also were active in law enforcement, Mary said. “Their real-world experience gave us insights into measure of our success. what we could expect on the job. I have lots of options “Theyfor also arranged thepresentations by guest future speakers who exposed us to a wide range of career opportunities in the field. A few even brought in inmates to talk about criminal justice and the job is really satisfyingfrom the other side of the coin,” she said. “Dealing with the prison inmates can be a challenge, but my associate degree program taught me valuable skills that help me communicate with them one-on-one. I also learned to because I’m making usea all of thecontribution resources available to me and take things as they come. These are lessons that make me more effective on the that matters. job every day.” 78646 Output 3/23/06 5:44 PM Page 17

“Working in a prison wasn’t even on my radar screen when I began my criminal justice program at Gibbs Livingston. But I’ve found my niche. Each day brings something new, I have lots of options for the future and the job is really satisfying because I’m making a contribution that matters.” 78646 Output 3/21/06 12:07 PM Page 18

CAREER EDUCATION CORPORATION 18 Once again in 2005, Career Education Corporation delivered strong revenues and earnings by providing students with a total educational experience that equipped them with the knowledge and skills needed to succeed in their chosen career field. The company also developed and began implementing a strategy to drive high-quality, sustainable growth in 2006 and beyond. 2005

CONTENTS: CONDENSED CONSOLIDATED STATEMENTS OF INCOME … 19 CONDENSED CONSOLIDATED BALANCE SHEETS … 20 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW … 21 CORPORATE AND STOCKHOLDER INFORMATION … 22 78646 Output 3/21/06 12:07 PM Page 19

THE YEAR OF THE GRADUATE – IT’S ALL ABOUT THE STUDENT 19

Condensed Consolidated Statements of Income

FOR THE YEARS ENDED DECEMBER 31 05 04 03 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

REVENUE Tuition and registration fees ...... $ 1,939,159 $ 1,608,450 $ 1,078,570 Other ...... 95,396 120,082 99,417 Total Revenue ...... 2,034,555 1,728,532 1,177,987

OPERATING EXPENSES Educational services and facilities ...... 628,665 557,144 413,515 General and administrative ...... 958,098 822,358 535,298 Depreciation and amortization ...... 78,720 57,469 43,908 Total operating expenses ...... 1,665,483 1,436,971 992,721 Income from operations ...... 369,072 291,561 185,266

OTHER INCOME (EXPENSE) Interest income ...... 11,967 2,952 1,004 Interest expense ...... (1,841) (2,802) (1,845) Share of affiliate earnings ...... 5,067 4,248 3,354 Miscellaneous income (expense) ...... (982) (290) 1,334 Total other income ...... 14,211 4,108 3,847 Income before provision for income taxes ...... 383,283 295,669 189,113

Provision for income taxes ...... 143,347 116,050 76,309 Income from continuing operations ...... 239,936 179,619 112,804 Loss from discontinued operations ...... (6,058) — — Net income ...... $ 233,878 $ 179,619 $ 112,804

NET INCOME PER SHARE – BASIC Income from continuing operations ...... 2.38 1.77 1.17 Loss from discontinued operations ...... (0.06) — — Net income ...... $ 2.32 $ 1.77 $ 1.17

NET INCOME PER SHARE – DILUTED Income from continuing operations ...... 2.32 1.71 1.12 Loss from discontinued operations ...... (0.06) — — Net income ...... $ 2.26 $ 1.71 $ 1.12

WEIGHTED AVERAGE SHARES OUTSTANDING Basic ...... 100,974 101,629 96,214 Diluted ...... 103,383 105,004 100,522

The consolidated financial statements, auditor reports, and accompanying footnotes are included in the company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 6, 2006. 78646 Output 3/21/06 12:07 PM Page 20

THE YEAR OF THE GRADUATE – IT’S ALL ABOUT THE STUDENT 20

Condensed Consolidated Balance Sheets

AS OF DECEMBER 31 (AMOUNTS IN THOUSANDS) 05 04

ASSETS Current Assets: Cash and cash equivalents ...... $ 132,308 $ 349,458 Investments ...... 272,093 — Total cash, cash equivalents, and investments ...... 404,401 349,458

Receivables: Students, net of allowance for doubtful accounts of $44,839 as of December 31, 2005 and $61,136 as of December 31, 2004 respectively ...... 76,447 85,982 Other, net ...... 5,015 5,378 Prepaid expenses ...... 37,412 29,649 Inventories ...... 14,090 17,347 Deferred income tax assets ...... 10,122 18,806 Other current assets ...... 31,067 5,980 Total current assets ...... 578,554 512,600

Property and equipment, net ...... 411,144 351,140 Goodwill ...... 443,584 448,896 Intangible assets, net ...... 35,286 35,881 Other assets ...... 37,537 38,495 Total assets ...... $ 1,506,105 $ 1,387,012

LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Current maturities of long-term debt ...... $ 627 $ 2,274 Accounts payable ...... 28,627 38,263 Accrued expenses: Payroll and related benefits ...... 39,471 38,193 Income taxes ...... 23,509 4,663 Other ...... 82,513 70,520 Deferred tuition revenue ...... 152,007 166,743 Total current liabilities ...... 326,754 320,656

Long-Term Liabilities: Long-term debt, net of current maturities ...... 16,358 21,591 Deferred rent obligations ...... 89,680 15,293 Deferred income tax liabilities ...... 31,212 39,972 Other long-term liabilities ...... 5,854 4,669 Total long-term liabilities ...... 143,104 81,525

Total stockholders’ equity ...... 1,036,247 984,831 Total liabilities and stockholders’ equity ...... $ 1,506,105 $ 1,387,012

THE YEAR OF THE GRADUATE – IT’S ALL ABOUT THE STUDENT 21

Condensed Consolidated Statements of Cash Flows

FOR THE YEARS ENDED DECEMBER 31 (AMOUNTS IN THOUSANDS) 05 04 03

CASH FLOWS FROM OPERATING ACTIVITIES Net income ...... $ 233,878 $ 179,619 $ 112,804

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Loss from discontinued operations ...... 6,058 — — Depreciation and amortization ...... 78,720 57,469 43,908 Deferred income taxes ...... (76) 7,439 11,489 Loss on disposition of property and equipment ...... 1,245 602 244 Tax benefit associated with option exercises ...... 5,268 43,105 41,897 Other ...... 812 821 991 Changes in operating assets and liabilities, net of acquisitions ...... 52.320 87,099 21,954 Net cash provided by operating activities ...... 378,225 376,154 233,287

CASH FLOWS FROM INVESTING ACTIVITIES Business acquisitions, net of acquired cash ...... (1,019) (17) (83,484) Acquisition transaction costs ...... — (26) (6,680) Purchases of property and equipment, net ...... (125,626) (142,781) (100,272) Purchases of investments ...... (920,163) — — Sales of investments ...... 648,097 — — Other ...... (826) 1,054 (10) Net cash used in investing activities ...... (399,537) (141,770) (190,446)

CASH FLOWS FROM FINANCING ACTIVITIES Purchases of treasury stock ...... (200,158) — — Issuance of common stock ...... 14,801 31,528 27,894 Net proceeds from (payments of) revolving loans ...... (2,477) (78,963) 66,009 Payments of capital lease obligations and other long-term debt ...... (1,869) (3,476) (11,910) Other ...... — (4) (584) Net cash provided by (used in) financing activities ...... (189,703) (50,915) 81,409

Effect of foreign currency exchange rate changes on cash and cash equivalents ...... (6,135) 4,754 3,511 Net increase (decrease) in cash and cash equivalents ...... (217,150) 188,223 127,761 Cash and cash equivalents, beginning of year ...... 349,458 161,235 33,474 Cash and cash equivalents, end of year ...... $ 132,308 $ 349,458 $ 161,235

Corporate and Stockholder Information

SAFE HARBOR STATEMENT COMMON STOCK TRANSFER This Annual Report contains forward looking statements within the meaning of the Private Securities Litigation AGENT AND REGISTRAR Reform Act of 1995. These statements are based upon various assumptions, and certain known and unknown Computershare risks and uncertainties could cause actual results to differ materially from those expressed or implied in our Investor Services 22 forward looking statements. Such risks and uncertainties include, among others, those listed in Part I, Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2005 and its 2 North LaSalle Street other filings with the Securities and Exchange Commission. Career Education Corporation assumes no obliga- Chicago, IL 60602 tion to update its forward looking statements. Attn: Shareholder Services (312) 588-4991 IMPORTANT INFORMATION www.computershare.com Career Education Corporation plans to file with the Securities and Exchange Commission (the “SEC”) and mail to its stockholders a Proxy Statement in connection with its 2006 Annual Meeting, and advises its security CORPORATE HEADQUARTERS holders to read the Proxy Statement relating to the 2006 Annual Meeting when it becomes available because it Career Education Corporation will contain important information. Security holders may obtain a free copy of the Proxy Statement and any 2895 Greenspoint Parkway other relevant documents (when available) that Career Education Corporation files with the SEC at the SEC’s web site at http://www.sec.gov. The Proxy Statement and these other documents may also be obtained for free Suite 600 from Career Education Corporation by directing a request to Career Education Corporation, ATTN: Investor Hoffman Estates, IL 60195 Relations, 2895 Greenspoint Parkway, Suite 600, Hoffman Estates, IL 60195, or to Georgeson Shareholder Phone: (847) 781-3600 Communications Inc. by toll-free telephone at (888) 206-5970, or by mail at 17 State Street, 10th Floor, New Facsimile: (847) 781-3610 York, NY 10004. Web site: www.careered.com

CERTAIN INFORMATION REGARDING PARTICIPANTS INVESTOR RELATIONS Career Education Corporation, its directors and certain of its officers may be deemed to be participants in the Karen M. King solicitation of Career Education Corporation’s security holders in connection with its 2006 Annual Meeting. Vice President of Investor Relations Security holders may obtain information regarding the names, affiliations and interests of such individuals in Career Education Corporation’s Annual Report on Form 10-K for the year ended December 31, 2005 and its (847) 585-3899 proxy statement relating to its 2006 Annual Meeting. [email protected]

COMMON STOCK ANNUAL MEETING OF The Company’s Common Stock trades on the Nasdaq National Market under the symbol CECO. The Company STOCKHOLDERS has not paid any cash dividends to its common stockholders since its inception and does not intend to pay any cash dividends in the foreseeable future. As of March 2, 2006, there were 173 holders of record of our The annual meeting of stockholders of common stock. The following table sets forth the range of high and low sales prices per share for our common Career Education Corporation will be held on stock as reported on the National Market for the periods indicated. The split-adjusted initial public offering Thursday, May 18, 2006. price of our common stock on January 29, 1998, was $2.00 per share. REPORTS AND PUBLICATIONS Copies of CEC’s Form 10-K and Form 10-Q’s as filed with the Securities and Exchange Commission may be obtained without charge 04 HLby accessing the SEC’s Web site at QUARTER ENDED www.sec.gov, or the Company’s Web site at March 31, 2004 ...... $ 58.69 $ 39.75 www.careered.com. June 30, 2004 ...... $ 70.91 $ 40.85 September 30, 2004 ...... $ 46.50 $ 26.89 INDEPENDENT ACCOUNTANTS December 31, 2004...... $ 43.09 $ 26.22 Ernst & Young LLP 233 South Wacker Drive 05 HLChicago, IL 60606 QUARTER ENDED March 31, 2005...... $ 42.05 $ 32.74 June 30, 2005 ...... $ 39.23 $ 29.02 September 30, 2005 ...... $ 41.11 $ 35.56 December 31, 2005...... $ 38.84 $ 32.47 78646 Output 3/23/06 5:45 PM Page 23

BOARD OF DIRECTORS

John M. Larson Chairman, President and Chief Executive Officer of Career Education Corporation

Patrick K. Pesch Executive Vice President, Chief Financial Officer and Treasurer of FINANCIAL ANALYSTS WHO FOLLOW Career Education Corporation CAREER EDUCATION CORPORATION (AS OF MARCH 2006) Dennis H. Chookaszian Former Chairman and Chief Executive Officer of CNA Financial Corporation Howard Block Sara Gubins Banc of America Merrill Lynch Robert E. Dowdell JOHN M. LARSON PATRICK K. PESCH DENNIS H. CHOOKASZIAN Securities 4 World Financial Center Former Chief Executive Officer of 600 Montgomery Street 20th Floor Marshall & Swift, L.P. San Francisco, CA 94111 New York, NY 10080 23 Patrick W. Gross Alexander Paris Jr. Chris Gutek Founder and Chairman of Barrington Research Morgan Stanley The Lovell Group Associates 555 California Street 161 North Clark Street San Francisco, CA 94104 Thomas B. Lally Suite 2950 Former President of Heller Equity Chicago, IL 60601 Mark Marostica Capital Corporation Piper Jaffray ROBERT E. DOWDELL PATRICK W. GROSS THOMAS B. LALLY Steven H. Lesnik Jennifer Childe 800 Nicollet Mall Chairman and Chief Executive Officer Bear Stearns Minneapolis, MN 55402 of KemperSports Inc. 383 Madison Avenue New York, NY 10179 Steven Barlow Keith K. Ogata Prudential Equity Group President of 3-K Financial Corporation Paul Beland 1 New York Plaza CitiGroup Investment New York, NY 10292 Leslie T. Thornton Research Former Chief of Staff to U.S. Secretary 388 Greenwich Street Amy Junker of Education Richard W. Riley and 28th Floor Robert W. Baird & Co Partner, Dickstein Shapiro Marin and STEVEN H. LESNIK KEITH K. OGATA LESLIE T. THORNTON New York, NY 10013 777 East Wisconsin Avenue Oshinsky, LLP Milwaukee, WI 53202 Greg Cappelli Credit Suisse First Boston Bob Craig 227 West Monroe Street Stifel Nicolaus SENIOR MANAGEMENT TEAM Suite 4200 200 Public Square Chicago, IL 60606 Suite 2950 John M. Larson Robert M. McNamara Jr. Cleveland, OH 44114 Chairman of the Board, President Senior Vice President and Corey Greendale and Chief Executive Officer Chief Compliance Officer First Analysis Mark Hughes Securities Corp. SunTrust Robinson Humphrey Patrick K. Pesch Paul R. Ryan One South Wacker Drive 424 Church Street Executive Vice President, Chief President of the Culinary and Suite 3900 Nashville, TN 37219 Financial Officer and Treasurer Health Education Divisions Chicago, IL 60606 Kelly Flynn Janice L. Block Richard Sellers Jeff Silber UBS Warburg Senior Vice President, Chief Legal Senior Vice President of Harris Nesbitt 1285 Avenue of the Americas Officer and Corporate Secretary Marketing and Admissions 529 Fifth Avenue New York, NY 10019 New York, NY 10017 Steven M. Calbi Kenneth D. Shore Matt Litfin Senior Vice President and President of the Gibbs Division Gary Bisbee William Blair & Company Chief Internal Auditor Lehman Brothers 222 West Adams Street Steve B. Sotraidis 745 Seventh Avenue Chicago, IL 60606 Stephen C. Fireng Executive Vice President of 17th Floor President of the University Division Administration New York, NY 10019 Jacob P. Gruver Todd H. Steele President of the Colleges Executive Vice President and Academy Divisions of Strategic Planning and Development and President Dr. Patricia A. Kapper of the International and Senior Vice President Startup Divisions of Education 78646 Output 3/21/06 12:07 PM Page 24

Career Education Corporation Campuses

UNITED STATES Orlando Culinary Academy MICHIGAN Briarcliffe College SOUTH DAKOTA Ecole de Commerce Orlando CA International Academy of Patchogue B, IT, VC Colorado Technical University Européenne ARIZONA www.orlandoculinary.com Design & Technology www.bcpat.com Sioux Falls B, HE, IT Bordeaux B Collins College Troy VC www.ctu-siouxfalls.com www.ece-france.com Sanford-Brown Institute Katharine Gibbs School Tempe & Phoenix B, IT, VC www.iadtdetroit.com Ft. Lauderdale HE Melville B, HE, IT, VC Ecole de Commerce www.collinscollege.edu TENNESSEE www.sbftlauderdale.com MINNESOTA www.gibbsmelville.com International Academy of Européenne 24 Scottsdale Culinary Institute Lyon B Sanford-Brown Institute Brown College Katharine Gibbs School Design & Technology Scottsdale CA www.ece-france.com Jacksonville HE Mendota Heights and New York B, HE, IT, VC Nashville VC www.scichefs.com www.sbjacksonville.com Brooklyn Center B, HE, IT, VC www.gibbsny.com www.iadtnashville.com SUP de Pub www.browncollege.edu Paris VC CALIFORNIA Sanford-Brown Institute Sanford-Brown Institute TEXAS www.inseecfrance.com American InterContinental Tampa HE Le Cordon Bleu College Garden City HE American InterContinental University www.sbtampa.com of Culinary Arts Minneapolis/ www.sbgardencity.com University MBA Institute Los Angeles B, IT, VC St.Paul Houston B, IT, VC Paris B Sanford-Brown Institute www.aiula.com GEORGIA Minneapolis CA www.aiuhouston.com www.imip-mbai-paris.com American InterContinental www.brownculinary.com New York HE Brooks College University www.sbnewyork.com Texas Culinary Academy CEFIRE Long Beach IT, VC MISSOURI Austin CA Paris B Buckhead B,VC Sanford-Brown Institute www.brookscollege.edu Colorado Technical University www.txca.com www.cefire-paris.com www.aiubuckhead.com White Plains HE North Kansas City B, HE, IT, VC Brooks College www.sbiwhiteplains.com HEIG American InterContinental www.ctukansascity.com Sanford-Brown Institute Sunnyvale IT, VC University Dallas HE Bordeaux B www.brookssanjose.com Dunwoody B, IT, VC Missouri College OHIO www.sbdallas.com www.inseecfrance.com St. Louis B, HE, IT Sanford-Brown Institute Brooks Institute of www.aiudunwoody.com Sup Santé www.missouri-college.com Middleburg Heights B, HE Sanford-Brown Institute Photography Le Cordon Bleu College of www.sbccleveland.com Houston HE Paris HE Santa Barbara & Ventura VC Culinary Arts Atlanta Sanford-Brown College www.sbhouston.com www.supsante.com www.brooks.edu Tucker CA Fenton B, HE, IT OREGON www.sbc-fenton.com Sanford-Brown Institute California Culinary Academy www.atlantaculinary.com Western Culinary Institute Houston North Loop HE UNITED KINGDOM San Francisco CA Portland CA Sanford-Brown Institute Sanford-Brown College www.sbhouston.com www.baychef.com www.westernculinary.com American InterContinental Atlanta HE Hazelwood B, HE, IT www.sbc-hazelwood.com VIRGINIA University California School of www.sb-atlanta.com PENNSYLVANIA Gibbs College London B, IT, VC Culinary Arts Sanford-Brown College International Academy of Vienna B, HE, IT, VC www.aiulondon.ac.uk Pasadena CA ILLINOIS St. Charles B, HE, IT Design & Technology www.gibbsschool.com www.scsca.com The Cooking and Hospitality www.sbc-stcharles.com Pittsburgh B, IT, VC Institute of Chicago www.iadtpitt.com ONLINE EDUCATION Kitchen Academy WASHINGTON Chicago CA NEVADA Hollywood CA International Academy of www.chicnet.org Le Cordon Bleu College of Katharine Gibbs School American InterContinental www.kitchenacademy.com Norristown B, HE, IT, VC Design & Technology University B, IT, VC Harrington College of Design Culinary Arts Las Vegas Seattle VC Las Vegas CA www.pagibbs.com www.aiu-online.com COLORADO Chicago VC www.iadtseattle.com www.vegasculinary.com Colorado Technical University www.interiordesign.edu Lehigh Valley College Colorado Technical Colorado Springs B, IT, VC Center Valley B, HE, IT, VC WISCONSIN International Academy of International Academy of University B, IT www.ctu-coloradosprings.com www.lehighvalley.edu Sanford-Brown College Design & Technology Design & Technology www.ctuonline.edu Henderson VC West Allis B, HE, IT Stonecliffe College Online, Colorado Technical University Chicago B, IT, VC Pennsylvania Culinary Institute www.iadtlasvegas.com www.sbcmilwaukee.com an academic division of Denver B, IT, VC www.iadtchicago.com Pittsburgh CA Colorado Technical www.ctu-denver.com www.paculinary.com International Academy of NEW HAMPSHIRE University B, HE, IT, VC CONNECTICUT Design & Technology McIntosh College and Atlantic Sanford-Brown Institute CANADA www.stonecliffe.com Gibbs College Schaumburg B, IT, VC Culinary Academy Trevose HE Norwalk and Farmington B, IT, VC www.iadtschaumburg.com Dover B, CA, HE, IT, VC www.sbphilly.com ONTARIO www.gibbscollege.com www.mcintoshcollege.com Sanford-Brown College Western School of Health and International Academy of PRINCIPAL CURRICULA: Design & Technology FLORIDA Collinsville B, IT, HE Business Careers B = Business Studies NEW JERSEY Toronto B, IT, VC American InterContinental www.sbcollinsville.com Monroeville B, HE, IT CA = Culinary Arts Gibbs College www.iaod.com University www.westernschool.com HE = Health Education Livingston B, HE, IT, VC www.softtrain.com Weston B, IT, VC MARYLAND IT = Information Technology www.gibbsnj.com Western School of Health and www.aiuftlaud.com Sanford-Brown Institute VC = Visual Communication Business Careers Landover HE Katharine Gibbs School and Design Technologies Pittsburgh B, HE, IT International Academy of www.sblandover.com Piscataway B, HE, IT, VC FRANCE www.westernschool.com Design & Technology www.gibbseducation.com Orlando B, IT, VC MASSACHUSETTS Institut des Hautes Estudes www.iadt.edu Gibbs College of Boston, Inc., Sanford-Brown Institute RHODE ISLAND Economiques et Commerciales a private two-year college Iselin B, HE Gibbs College Paris B International Academy of Boston B, IT, VC, HE www.sb-nj.com Cranston B, HE, IT, VC www.inseec-france.com Design & Technology www.kgibbsboston.com www.gibbsri.com Tampa IT, VC NEW YORK Institut des Hautes Estudes www.iadtampa.com Sanford-Brown Institute Briarcliffe College Economiques et Commerciales Springfield B, HE Bordeaux B Le Cordon Bleu College of Bethpage & Queens B, HE, IT, VC www.sbmass.com www.inseec-france.com Culinary Arts Miami www.bcbeth.com Miramar CA www.miamiculinary.com 78646 Output 3/23/06 5:36 PM Page ibc1

Career Education Corporation is a global leader in the field of for-profit postsecondary education. Through its 84 on-site campuses and its two online universities, CEC prepares more than 100,000 students annually for career success in their chosen field. 78646 Output 3/23/06 8:23 PM Page bc1

CAREER EDUCATION CORPORATION

2895 Greenspoint Parkway Suite 600 Hoffman Estates, IL 60195 www.careered.com Nasdaq symbol: CECO