Good afternoon, ladies and gentlemen, and welcome to the fourth quarter 2009 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I will now turn the call over to Mr. John Springer. Mr. Springer, you may begin.

Thank you, John, and thank for joining us on our fourth quarter 2009 earnings call. With me on the call this afternoon are Gary McCullough, our President and Chief Executive Officer, and Mike Graham, our Chief Financial Officer. Following remarks made by management, the call will be opened for analyst and investor questions. This conference call is being webcast live on the investor relations section of our website at careered.com. A replay will also be available on our site. Now, let me remind you that today’s press release and remarks made by our executives may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on information currently available to us and involve risks and uncertainties that could cause our actual future results, performance and business prospects, and opportunities to differ materially from those expressed in or implied by these statements. These risks and uncertainties include, but are not limited to those factors identified in our quarterly earnings releases, our annual report on Form 10-K for the year ended December 31, 2008 and our quarterly and other filings with the Securities & Exchange Commission. Except as expressly required by the securities laws, we undertake no obligation to update those risk factors or to publically announce the results of any of these forward-looking statements to reflect future events, developments or changed circumstances, or for any other reason. Please note that in the fourth quarter, we completed the teachout of six campuses that had been reported within our transitional segment. Accordingly, the results of operations for these six campuses are now reported within discontinued operations. We adjusted quarterly financials for 2008 and 2009 for continuing operations on this new basis have been provided as an appendix in this afternoon’s release. In addition, the financial operating for the fourth quarter and full year 2009 and 2008 include significant items that impact year-over-year comparability. As a result, unless otherwise noted, the operating and financial measures discussed on this call reflect results from continuing operations excluding these significant items. A reconciliation of the non-GAAP discussion to our announced GAAP results can be found as an exhibit in last night’s news release, which is also available on our website under the Investor Relations tab. Finally, as a reminder, we will be hosting an analyst and investor day tomorrow, February 18, starting at approximately 1:00 p.m. Presentation materials and live webcast will be available and can be accessed by visiting the Investor Relations section of our website. With that out of the way, now let me turn the call over to Gary McCullough.

Thank you, John. Good afternoon everyone and thank you for joining us on this afternoon’s call. In keeping with the way we historically handle these calls, I’m going to start with a brief overview of our fourth quarter and full year 2009 results. When my remarks are concluded, I’ll turn the call over to Mike Graham, Executive Vice President and Chief Financial Officer who will provide more detail. I want to give a couple minutes of a bit of perspective as we enter 2010. We’ve made great strides and have repositioned the company for sustainable growth and we’ve overcome a number of challenges along the way. A number of changes across our organization, changes that have impacted each and every one of our institutions; however, one thing hasn’t changed. That is the commitment of each one of our nearly 13,000 employees toward our purpose of changing lives through education. In 2009 alone, we enhanced the lives of more than 116,000 students and last year we graduated over 47,000 students, the highest number of graduates in one year in our company’s history. By this time next year, we would have graduated more than 500,000 students since the company’s founding. As I approach my third (thirtieth?) anniversary with the company, I can tell you this is the legacy that makes me proud and makes each one of our employees proud. A few years ago, we developed and adopted a set of core values by which we would strive to operate. The first will be students that are employee focused. Inaudible…hold their values more closely. The employee-focused approach has enabled us to reduce turnover by 68% since 2007 and it’s our collective student incentive approach coupled with the adaptability we have shown as an organization that are behind the strong financial performance we’re…

Thanks, Gary. Results for the fourth quarter and the full year 2009, let me begin to remind you that in the fourth quarter we completed teach out of the six campuses that have been reported within the transitional segment. The results in operations for these six campuses, including a non-cash charge of $44.1 million, which is our estimate of the aggregate remaining real estate obligation which we paid over the next nine years are now reported within discontinued operations. Discontinued operations also reflects the results of operations for campuses that had ceased operations or sold prior to the fourth quarter of 2009. (?) schools which expand over $200 million dollars of operating losses in the past five years. As Gary mentioned earlier, our AIU LA campus remains the only school operating within the transitional segment. Also, as you review our results, there are a number of items impacting our year-over-year comparability for the fourth quarter and our full year 2009, which are highlighted in our table in the press release and available on our website careered.com under the Investor Relation’s tab. For the fourth quarter 2009, GAAP operating income of $97 million included unused base charges of $14.3 million or $0.11 per share. $5.3 million of this charge was in our transitional segment. $3 million was in our AIU segment our university segment, and the remainder across the business units. $2.2 million or $0.02 per share benefit resulting from the finalization of our estimated annual incentive plan payout due to our operating plan over performance, which we discussed in the third quarter. The reversal of $2 million is spread similarly to the details we gave you in our third quarter for the original charge. Finally, the $12 million or $0.09 per share of benefits, payment we received for the termination…

Thanks, Mike. Before we get into the question-and-answer portion of the call, I want to do what my peers have done and say a few words about the recently completed negotiated will making process engaged in by the Department of Education and a variety of other parties. I do this recognizing there’s little I can add that most of you haven’t already heard. …dedicated team studying each of the rules. We see two areas where significantly more work needs to be done. Compensation and gainful employment. I think it’s important to reinforce several things. We’re still early in the process. There’s still time before the Department of Education propose rules for comment and the final rules won’t be in effect until at least July of 2011. The rules as proposed are complex and maybe difficult to implement. Our company full supports the long-term interest of students. Accordingly, we’ll use whatever means is necessary to share our ideas and our concerns with the department before they publish the proposed rules. As I’ve said, once the idea is proposed, complex draft rules are better understood, we’ll be open with you regarding any potential business impact we see. On compensation, our hope is that criteria will be established that are clear and consistent and achieve a level playing field across the range of secondary providers. We believe our current practices are sound and focused on positive student outcomes and graduation. We do not believe the elimination of safe harbors without replacement to provide some level of (?) is helpful. In fact, doing so, we believe we create an environment of increased stan(?) and the actual increase differences in practice due to interpretations of the statute from institution to institution. We will work cooperatively with other institutions to help develop a solution that is…

(Operator Instructions) Your first question comes from Bob Craig - Stifel Nicolaus & Company, LLC

Just one question regarding the gainful employment issue. Have you guys computed or have hand graduate CDRs in areas like culinary and art and design?

We’ve got some visibility to the two-year rates. We’ve looked across our portfolio. Very encouraged that other people have disclosed the same thing. Our two-year rate on culinary is approximately 1.7% for those students to graduate and overall our culinary probably dropped by about 60% as a company when you look at the graduate only rates.

You mentioned increase marketing spend. Could you take a little bit of forward look into 2010 and what are your plans there and also where are you at the end of the year in terms of rep force size and turnover in productivity?

Sure. I won’t give you too much on 2010, because we do intend to share some milestones with you. I’ll remind you that this is the first year that we’ve really spent heavily on the fourth quarter and so our run rate in the fourth quarter going into the first will be more normalized. You’ll get some view on that. I think going forward we’ll continue to see some savings.

Our next question comes from Jeff M. Silber - BMO Capital Markets-US

In your prepared remarks you talked a little bit about the new credit hour structure. Can you just remind us exactly what that entails.

Sure. The credit hour structure, AIU had consistently had for the past six or eight years was a nine credit hour course structure. So there was some questions about how that translated and how it’s compared to other institutions. What we’ve done is we’ve gone from nine credit hour core structure to a four and a half hour credit hour structure. So we’ve broken up the nine hour credit course. More comparable. One of the reasons we did that, frankly, and we’ve been working on is because we saw the transfer of credit issues. We have been working on making the changes to that four and a half credit. It’s just an easier transfer of credit situation. This is something identified as a student dis-satisfier some time ago. So we were working on it. It has nothing to do with some things happening more recently.

Can you comment on the letter the DOIG sent regarding your AIU’s re-creditation and some of the issues involved?

I’d urge you to go back to the press release that AIU put out. It’s an issue that exists between the commission and the OIG and so at the end of the day, as I said in prepared remarks, AIU stands by the way it operates and we’ll help them hash that out.

Your next question comes from Sara Gubins - Bank of America Merrill Lynch.

In your G&A expense, it was down sequentially quite a bit and wondering if there were a lot of administrative cost cut out there, if that’s something that might be seasonal?

Third to fourth quarter?

I’d go back and normalize the third quarter for the bonus that we spoke of last quarter. The last quarter we had in our normalization table the bonus charge of approximately $20 million I believe that if you normalize out, the sequential change is not as large.

Have you been able to do any work to understand what the use of deferral and forbearance is by your graduates?

We’re taking a comprehensive view. We’re looking at every program, all the data we have, to the extent we have that data, we’ll look at it, but we’ve just begun the process program-by-program and I don’t have the data on deferments or forbearance.

I’m trying to understand the dynamics of revenue per student trends and AIU and CTU. I think you mentioned that tuition increased around 10% and we don’t see that in the revenue per student.

A couple things to consider. One, we talked historically about a mix shift and if you look at it, we continue to have some mix shift toward associate, but it is moderating. We indicated we did take a price increase last year in January between 0 and 10%. Remember, we did also say that that price increase was only for new starts and not for existing cohorts. I think what we’re seeing is a deceleration of the RPS and now it’s starting to increase RPS quarter-over-quarter.

Your next question comes from Gary E. Bisbee - Barclays Capital.

The schedule shift that you have in culinary and in art and design this year, are we likely to be sort of normalized level versus the 09 as we move into 2010 or are we likely to have the change?

If you look at art and design, I think you’ll still have some voids in the first quarter, because it annualizes out on April 1. I believe we did not have any changes from a calendar standpoint for culinary, but we did have a shift from the 15 to 21 program. As Gary said, we now have about 20% of our students there. Every one of our institutions now has a 21-month program, so you’ll continue to see on a RPS basis for culinary, the shift in the 21-program and some de-(?) RPS for 2010.

I think the academic calendar, helped this quarter but hurt last quarter. I guess part of the question is in culinary specifically.

You may be recalling last year in the third to fourth quarter, we did state that we had a non-comparable start date between 2007 and 2008, but the 2008 and 2009 calendar aligned. So last year at our call at this time, we spent a lot of time talking the shift between Q3 and Q4 starts.

I missed the number you gave us for the losses from the start-ups within health care.

The loss for the quarter was about $5.3 million and the cumulative loss for the year was around $19 million.

Do you feel the worse going in such that you need a change strategy around whether what programs you’re going to add to campuses or whether to start new campuses. Is it pretty much business as usual and hopefully we’ll be able to work it out whenever we get more color.

We’re looking at what’s out there at this point in time and our teams are doing assessment and ideally we’ll get to a point that we can influence where thing are at, but we would be prepared to go whatever direction we need to go at the appropriate time.

Our next question comes from Amy Younker - Robert W. Baird & Co.

Gary, if we can go back to the rep force. You’ve made a number of operational improvements there over the last several quarters. Do you feel that you’re where you need to be at this point? Are there still improvements that can be made going forward?

There are always improvements to be made. We’ve made improvements. We see greater productivity. We’ve seen decreases in turnover in our rep forces, we’ve made some of these changes. One of the things we’ve done now is we’ve worked across and are prepared to continue to hire as our population increase and as demand warrants doing so, but for the time being we think we’re in a pretty good place.

Until the economy improves, what can you do to keep the turnover down, because obviously it’s probably a little bit easier in this environment. Do you hire and train a bit more than perhaps you need, thinking you might see greater turnover?

We’ll talk about some of this tomorrow, but I will tell you that as an organization, we have stepped up training. We have looked across the range of things that we think are employee satisfiers and work to do a better job across the board. So we’ll continue to do those things. It’s a challenging environment out there for people to go from, but I would remind you that industry, it’s been a pretty robust environment. We’ve managed to hold our own and keep our turnover down.

I think the other thing to think about from a rep standpoint, within our rep structure we talked about before, our payments to our reps run successful completion of programs and so as these students continue to graduate and you’ve heard the numbers we gave out, our reps will be compensated for the graduation. So we’re hoping as the economy turns up and students continue to graduate the reps will be (?) for outcomes.

Gary, last quarter you talked about reducing the size of some of the culinary schools. How many of those do you think you need to do that for? Is that more on a go-forward basis? I’ll give this to Mike.

We’ll share a little bit tomorrow. I think there is some optimization to culinary and we’ve done a great job on the real estate in the last few years. We continue to look for optimization. If we can spend some money optimizing a campus and reduce some excess square feet, we’ll do that. That said, we do not spend money to simply free up real estate and culinary. With our population growing, you saw the start we have in the population. We’re doing well to fill the existing capacity we have. So we don’t anticipate any large reductions of capacity in culinary, the more optimization in place.

Our next question comes from Corey Greendale - First Analysis

For our own planning purposes, are you going to give specific 2010 guidance tomorrow or just kind of longer term three to five year target?

Consistent on what we did two years ago, we will definitely give you long-term guidance and milestones for which you model against. We think we did a good last time and as you know we beat those a year ahead and delivered on our commitment. I think we’ll also give you more color on 2010 given our population and some of the strength of our business model.

I wanted to revisit the question Jeff asked about the change in the AIU credit hours. Is there any change resulting from that, either from the point of view of students. Anything that would make the program more or less attractive because of the change or simply a function splitting a single class into two classes and doesn’t affect (?) or cost or anything?

There’s no material impact to our financial statements in terms of revenue or recognition of revenue or the amount of revenue that would be involved that Gary did speak to, there is a better ability to potentially transfer credits, which could translate into more students for university. There’s also a program within the four and a half structure a bit easier to decelerate. It gives you more flexibility from a course load, from a deceleration, which could also help the institution continue to grow its population.

Balance sheet, long-term receivables, is that just the amount of internal provided net of reserve?

When we first starting using this program, the amounts were immaterial and we did not have good clarity in terms of the tenure of loans. Now that we’ve been through the program for over a year, we have good clarity on what is current and due.

Your next question comes from Kelly Flynn - Credit Suisse.

As we look ahead, should we expect any more charges related to transitional schools that is still operating?

Yes, you will see charges in 2010 to shut our AIU LA campus and then as we go forward over the nine years, as we talked about before, what you’ll have is you will take that liability from a discounted basis to a full value in a pre-pact. In our guidance in 2010, we talked about that being some place between a $5 and $10 million dollar number every year. After 2011, there should be nothing in transitional and everything below the line in discount.

Can you provide color on average student at levels and how that varies at the different schools generally or if it’s proportionate to cost?

Again, I think we’re working on the details as it relates to neg (?) and that to us is an issue about the neg (?). The process is early. I don’t think right now we’re in a position to show that. We’ll be transparent with you and we’ll give you some more information about different information about placement outcomes of our students tomorrow at the investor day.

Our next question comes from Bob Wedenhall - Royal Bank of Canada

You’ve done a very strong job in improving your operating margins and pretty comprehensive job in managing through the turnaround program, do you expect a 19% operating margin to be sustainable going forward?

Let’s save that for tomorrow. What I would ask you to do is as you look at your models that you look at the seasonality of our business and our fourth quarter margins typically different from the rest of our quarters. Seasonality that may not make the fourth quarter operating margin a consistent one based on the modeling you need to do by quarter.

You said first quarter got off to a strong optimistic start in terms of enrollment. Can you put some parameters around that?

As Gary said, we see accelerating growth over the numbers that AIU and CTU experienced in the fourth quarter and AIU is about a 14% start and CTU about a 30% start.

Your next question comes from Analyst for Mark A. Marostica - Piper Jaffray.

Quick follow-up on the marketing spend directed at online. Just curious, how does that trend through 2010? It sounds like the back half of 2009, you’ve been spending incrementally more there and I think you mentioned that spend would come off in Q1. Just curious if you’re looking at specifically online and maybe more specifically AIU? What is that trend line of spend look there as directed at that program?

More normalized. Fourth quarter was abnorm on a comparative basis versus the previous year. I think on a absolute basis, it’s more normalized as we go into 2010 we’ll see that normal spend level again.

As that drops off, do you anticipate seeing a sustainable trend on starts? I mean how do you send the spend correlating with the start growth that you’re seeing there?

I don’t think I see a drop off. I think what we had traditionally done was to drop off the fourth quarter advertising and pull back based on holidays based on student interest and calendars and this quarter based on the high amount of student interest we had in our institutions. We continue to invest and we continue to believe that was a great investment, because of the results we’re seeing. So I wouldn’t say it’s a drop off. I would just say that we have picked up the spending on a non-comparable basis in the fourth quarter, which will carry into 2010.

Your next question comes from Susan Stein - Morgan Stanley

Would you mind giving us a little bit of color around student financing. Particular for higher debt. Do you know of any programs where they have cash payments or more corporate reimbursements than average, that sort of thing.

We answered that a bit earlier. Pretty complicated detail question, premature, and get into tomorrow. So let me defer that one for now.

We have no further questions at this time.

I just want to thank you all for joining us on this call. As I said, I look forward to seeing many of you tomorrow at our investor day. Again, we intend to share information on our strategic initiatives and we’ll probably provide updated financials and people interested in short-term and longer term that we intend to give you some color on that. So we appreciate the time you spent with us this evening and we’ll see you tomorrow. Thank you.

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.