Welcome to the Career Education Corporation Third Quarter 2013 Earnings Conference Call. My name is John, and I will be your operator for today's call. [Operator Instructions] Please note that the conference is being recorded. And I'll now turn the call over to Doug Craney. You may begin, Doug.

Thank you, John. Good morning, everyone, and thank you for joining us on our third quarter 2013 earnings call. With me on the call this morning are Scott Steffey, our President and Chief Executive Officer; and Colleen O'Sullivan, our Senior Vice President and Chief Financial Officer. Following remarks made by management, the call will be open for analyst questions. This conference call is being webcast live within the Investor Relations section of our website at careered.com. A replay of this call will be available on our site. You can also contact our Investor Relations Department at (847) 585-3899. I would like to remind you that as we reported in yesterday's 10-Q filing and press release, our international business segment is now being reported as a component of discontinued operations. Results for all periods presented have been recast to reflect this change and the comments made on the call today will focus on continuing operations. Before I turn the call over to Scott, let me remind you that yesterday's press release and remarks made today by our executives may include forward-looking statements as defined in Section 21E of the Securities Exchange Act. 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 annual report on Form 10-K for the year ended December 31, 2012, and our other filings with the Securities and Exchange Commission. Except as expressly required by the securities laws, we undertake no obligation to update those risk factors or to publicly announce the results of any of these forward-looking statements to reflect future events, developments or changed circumstances or for any other reason. In addition, the remarks today may refer to non-GAAP financial measures, which are intended to supplement, but not substitute for the most directly comparable GAAP measures. Our press release, which contains financial and other quantitative information to be discussed today, is available within the Investor Relations section of our website at careered.com Now let me turn the call over to Scott.

Thanks very much, Doug. Good morning and thank you for joining us. It's been a extremely busy quarter and I have a lot to cover with you to help you connect the dots with all the progress that we're making. I will first start off with a brief discussion of our quarterly results, including providing an update on actions we've been focusing on throughout the quarter and then share with you key aspects of the strategy which was reviewed with our Board of Directors last month. Following my comments, Colleen will provide additional detail and color on the third quarter results and then we'll be happy to take your questions. Looking at our results for the third quarter, overall, we are seeing steady progress on arresting the decline of our performance. We posted total revenue of $251 million and an operating loss of $69 million in the third quarter of 2013. Our operating loss continues to be in line with our expectations as we make progress in our turnaround strategy. In discussing our performance, I'll cover things in the order in which we continue to emphasize our priorities with our internal people. We use the phrases enroll, educate and place, we have definitions around that, but I'll just use that to discuss improvement that we're making in each of those segments. Let me start with how we're enrolling improvements that we're seeing there. We're continue to see positive trends in new enrollments with year-over-year declines growing smaller as the year has progressed. Overall, new enrollments across our continuing operations excluding transitional campuses were down 10% from the same quarter last year. That compares to a decline of 19% in the second quarter and 20% in the first quarter. We also continue to see positive trends in the number of applications…

Thanks Scott. Good morning, everyone. Let me first start by reminding you that the third quarter results include a few items that impact comparability to the prior year quarter. The first was $11.6 million or $0.11 per share in noncash impairment charges primarily related to our Le Cordon Bleu trade name. In addition, the third quarter also included cost related to exiting office space and severance, which together were approximately $3.8 million or $0.04 per share. Scott spoke about the rationale behind our pending international sale, but let me take a minute to talk about the financial elements of that transaction. As the company is committed to have planned to sell our international assets during the third quarter, the earnings associated with the business could no longer be considered permanently reinvested overseas. As a result, we reported a $39.9 million or $0.60 per diluted share tax expense in the third quarter. This tax expense and all other accountings for the transaction will be reflected within discontinued operation. Through movement of cash from an international operations, prior to the closure of the transaction, along with the payment expected to be received at closing, we anticipate that our domestic cash position will increase by approximately $290 million. We are estimating the gain on sale to be approximately $120 million to $130 million. From a tax perspective, the taxes attributable to the expected gain on sale will largely offset the tax benefit recognized in 2013, related to our domestic operating losses reported in the year. We do, however, believe that we may ultimately have a slight tax payment related to the year end of 2013, assuming the transaction closes before year end. Given that the closing date has not yet been set, the estimates above are subject to change. Now let me provide…

[Operator Instructions] And our first question is from Jason Anderson from Stifel, Nicolaus. Jason P. Anderson - Stifel, Nicolaus & Co., Inc., Research Division: Quick question on the cost reductions. If I hear your right, it sounds like a good chunk of that is from the kind of the run-out of the Transitional Schools, is that -- one is that correct? And I guess if you could provide any additional color on the break-out of that. If there are any other operational improvements, obviously, you did announce, you talked about some of the changes in the Career School segment too, so if you could.

Sure. Jason, I would say that well over half of the cost that we spoke to in the prepared remarks are attributable to both -- to your points of run-off and the Transitional Schools as well as permanent reductions in our cost structure. So we look at those as a permanent cost coming out of the organization. Jason P. Anderson - Stifel, Nicolaus & Co., Inc., Research Division: Okay, great. I know you touched a little bit about pricing for AIU and announcing more later on, I guess. Is there anything, maybe if you could recap if there has been any pricing changes overall, maybe a summary of the various segments? And any further color maybe what the plans might include there on AIU or if you're complicating anything on CTU also, that in light of what a lot -- what you're seeing across a lot of the sectors, a lot of pricing/scholarship changing, addressing the affordability issue.

Yes. We haven't made any pricing adjustments thus far. Everything that we're looking at is really for 2014. We are very, very focused on how we provide a value proposition to our student. And so we're very mindful of that. We have, obviously, the grant program that I talked about today at AIU. We'll see how that plays out. If we like the results, we may expand it into other areas if it appears that it would also help other institutions in a similar fashion. As I mentioned, we also have some program offerings that we're going to bring forth at AIU that we think have some very positive value proposition opportunities for our students and positions us well competitively. We are doing a similar kind of analysis on the Career Schools side. I'm not ready to lead with anything at this time. But it's safe to say that I think the value proposition and how we price ourselves, or utilize grants or other opportunities that we have to differentiate our value proposition to students is something that we'll continue to talk about in future quarters. Jason P. Anderson - Stifel, Nicolaus & Co., Inc., Research Division: Great. And one more if you don't mind. Any chance that you could comment on any consideration of other asset sales?

I see myself as a very responsible CEO. It's -- what I do is I look at how we deployed assets and cash and whether they're deployed appropriately for a time periods that we foresee certain types of operations. So I do that with everything we have and I've said that since day 1. I'm -- at the same time, I'm happy with the portfolio that we are operating right now.

Next question is from Geoff Lee[ph] from Wells Fargo.

Just the performance at CTU this quarter was much better than AIU. Could you talk about what you think might be driving that?

Yes. You popped in and out there a little bit, so just so that I understand the question well, you said that the performance at CTU was better than at AIU, if I heard that[indiscernible].

[indiscernible] starts, student starts.

Yes. I think the correct way for me to answer that is, we're doing some different things at the different institutions on the scaling of our intellipath products and based on how well we're doing that in certain areas and during our training, we're seeing some small results that are impacting some of the margins on that. AIU is also blazing the trail in a couple of areas in some experimental things that we're doing on the inside process. And that sort of the benefit that we have of running the 2 operations that while they're serving distinctly different sets of students, on various operational things, we will experiment at one institution and if we're finding some progress, we'll cascade it over to the other institution. So it's -- at this point, it's not a lot of difference other than different things that we're experimenting with, with regards to student intake process.

And we have a question from Corey Greendale from First Analysis.

I appreciate the clarification on the cash balance and also Scott, I appreciate your sympathy on the challenges in modeling. I just want to clarify on the cash balance, I heard what you're saying about the tax impact, netting out the tax benefit from operating losses. But just to clarify that, the cash balance that you suggested for the end of the year and that's $375 million in domestic, is that already after any tax impact? Or could there be some -- some a meaningful payment in 2014?

Okay. The end of your cash, domestic cash target that we're seeing is $375 million. Our tax exposure on the international deal is quite low. We're -- We have some losses that we can apply to that. We see our exposure -- that will be paid in 2014. We see our exposure there, somewhere between 0 and $15 million.

And then, Scott, you spoke to directionally, what you're expecting to happen on enrollment and the cost savings. But can you give us some sense -- is your expectation that at some point in 2014, you hit kind of a cash -- cash flow breakeven run rate or what are your thoughts on that?

The way that we look at 2014 right now, we're still going to have some negative influence on cash. It's going to significantly different than the 2013 results that we're now looking at. So it's going to be a stair step down in terms of use of cash. We've got some noncash items that will contribute to what we're seeing as a loss in 2014. So it will be a very significant stair step down in terms of cash and it won't impact us in magnitude of 50% less, maybe greater from the standpoint of the impact to us in 2014. So that's the way we're looking at it right now. So it's a significant step down.

Okay. And let me ask a very related question, and I'm not sure if you'll answer this, but a question for the board is asking which is kind of in a reasonable scenario, maybe a little bit discounted from what you think is going to happen, what's the cash flow? How much buffer will you have?

Well, we have -- let me go at that in a couple of different ways. With the $375 million that we're projecting to have in the year, our low point of cash tends to happen around June and July. There's nothing about our cash position in that period -- for the period that we're forecasting that gives me any concern whatsoever.

Okay. And then more granular, given the trends -- the favorable trends you're seeing in applications in the University segment, do you think that starts -- that should be up year-over-year in Q4?

I'm not going to -- I've gone about as far as I want to go in terms of giving any kind of forecast and guidance. Suffice it to say, I've said it now for 2 quarters, our applications are improving. That should read -- that should result in increased enrollments. We're seeing the applications and we're seeing the business behave as it should behave.

Okay. And just one last, the scholarship at AIU, the idea that this is kind of one-time only, you take the first class and then you get the second one free, or would you look at you take the third class, and you get the fourth one free?

As I said in the previous question, we are going to continually look at what our value proposition is to our students and I expect to talk about that over many quarters into the future.

But as of now, it's only a one-time thing?

It's not a one-time thing. It's for people that are moving from one part of the program to the next part of the program.

And that was our final question. I'll turn it back over to Scott Steffey for final remarks.

Great. Hey I want to thank you once again for your time this morning. We are very excited about the strategy we've put forward and all the changes we've implemented. While there remains a lot of work to be done, I believe we are positioning ourselves very well for future success. And I look forward to sharing more about our progress over the course of the next year. Thanks so much.

Thank you, ladies and gentlemen. That concludes today's conference. Thank you for participating, you may all disconnect at this time.