UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2007

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 0-23245

CAREER EDUCATION CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		36-3932190
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

2895 Greenspoint Parkway, Suite 600,
Hoffman Estates, Illinois		60169
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (847) 781-3600

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer x

Accelerated filer o

Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Number of shares of registrant’s common stock, par value $0.01, outstanding as of May 1, 2007: 95,014,040

CAREER EDUCATION CORPORATION
INDEX

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Unaudited Condensed Consolidated Balance Sheets	3
	Unaudited Condensed Consolidated Statements of Income	4
	Unaudited Condensed Consolidated Statement of Stockholders’ Equity	5
	Unaudited Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	64
Item 4.	Controls and Procedures	65
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	67
Item 1A.	Risk Factors	67
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 5.	Other Information	67
Item 6.	Exhibits	68
SIGNATURES		69

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

	March 31, 2007			December 31, 2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	165,593		$	188,058
Investments	284,234			259,766
Total cash and cash equivalents and investments	449,827			447,824
Receivables:
Students, net of allowance for doubtful accounts of $26,791 and $28,532 as of March 31, 2007, and December 31, 2006, respectively	45,063			48,160
Other, net	7,768			8,084
Prepaid expenses	42,188			29,457
Inventories	18,318			16,713
Deferred income tax assets	6,705			10,970
Assets held for sale	64,455			69,171
Other current assets	16,822			32,064
Total current assets	651,146			662,443
PROPERTY AND EQUIPMENT, net	341,606			349,414
GOODWILL	379,454			349,703
INTANGIBLE ASSETS, net	45,708			33,984
OTHER ASSETS	28,432			30,119
TOTAL ASSETS	$	1,446,346		$	1,425,663
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	12,840		$	12,098
Accounts payable	27,468			29,861
Accrued expenses:
Payroll and related benefits	23,804			26,678
Income taxes	19,588			—
Other	79,728			78,513
Deferred tuition revenue	143,507			131,651
Liabilities held for sale	32,008			33,702
Total current liabilities	338,943			312,503
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities	3,293			2,763
Deferred rent obligations	89,710			90,013
Deferred income tax liabilities	16,244			16,527
Other	8,946			7,979
Total long-term liabilities	118,193			117,282
SHARE-BASED AWARDS SUBJECT TO REDEMPTION	12,084			13,477
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued or outstanding	—			—
Common stock, $0.01 par value; 300,000,000 shares authorized; 107,391,662 and 106,923,310 shares issued, 94,974,490 and 96,148,825 shares outstanding as of March 31, 2007, and December 31, 2006, respectively	1,074			1,069
Additional paid-in capital	678,945			666,780
Accumulated other comprehensive income	6,774			5,683
Retained earnings	706,619			675,188
Cost of 12,417,172 and 10,774,485 shares in treasury as of March 31, 2007, and December 31, 2006, respectively	(416,286		)	(366,319		)
Total stockholders’ equity	977,126			982,401
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,446,346		$	1,425,663

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

CAREER EDUCATION CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)

	For the Three Months Ended March 31,
	2007		2006
REVENUE:
Tuition and registration fees	$	405,054	$	465,281
Other	18,954		19,360
Total revenue	424,008		484,641