Career Education Corporation Provides Further Comment on Brooks Institute of Photography and Details Internal Control Procedures

HOFFMAN ESTATES, Ill.--(BUSINESS WIRE)--Dec. 4, 2003--Career Education Corporation (Nasdaq:CECO) provides further comment on reports surrounding allegations raised by a former employee of its Brooks Institute of Photography. CEC also outlines the policies and procedures in place to ensure compliance with applicable laws and regulations and announces a new independent "whistleblower" system.

"Despite media reports to the contrary, no specific allegations of accounting irregularities were made by the former employee," said John M. Larson, CEC chairman, president and chief executive officer. "The allegations, which generally focused on the handling of student information and personnel issues, have been investigated and found to be without merit." In addition, CEC is not aware of any lawsuit that has been filed by this former employee against the school or CEC.

“Company policy requires any employee who has information about a supposed policy violation or other wrongdoing to bring the situation to the attention of management”

CEC also noted that in early November it prepared a response to the former employee's allegations to its accrediting body, the Accrediting Council for Independent Colleges and Schools (ACICS). CEC does not expect that special significance will be attributed to these allegations by ACICS.

Brooks Institute has set the standard for academic excellence in professional photographic education and has an excellent regulatory history. Brooks Institute is an institution with a world-renowned reputation spanning 58 years.

Postsecondary education is highly regulated through a combination of Federal, State, and accrediting agencies which conduct periodic reviews of the schools. To ensure ongoing compliance in its operations, Career Education Corporation engages in the following practices:

-- Reviews the reliability of financial reporting, effectiveness and efficiency of operations and compliance with applicable laws and regulations through its internal audit function.

-- Has annual audits of each school conducted by an independent accounting firm to evaluate compliance with applicable U.S. Department of Education (DOE) rules and regulations. The related audit reports are provided to the DOE.

-- Engages professionals with expertise in regulatory compliance at both the corporate and school levels to ensure that policies and procedures are in effect to maintain compliance with all applicable laws, rules and regulations. For example, Brooks Institute of Photography has a full time Director of Compliance with over 20 years experience in financial aid and compliance.

-- Provides uniform training on a regular basis to school level personnel managing all major functional areas.

Furthermore, company policy, as outlined in the Employee Handbook, explicitly prohibits:

-- The falsification of any company records or submissions to government agencies;

-- The violation of federal, state or local laws; and

-- Violation of rules or guidelines of regulatory agencies.

"Company policy requires any employee who has information about a supposed policy violation or other wrongdoing to bring the situation to the attention of management," Mr. Larson said. "To further support this, the company is instituting a new independent 'whistleblower' system to provide added assurances that its reporting systems are beyond reproach. To enhance the integrity of this reporting process, we are retaining an outside organization to which employees can report suspected incidents of wrongdoing. This will assure that employee anonymity is preserved and that all reported incidents are thoroughly investigated and resolved.

"Career Education Corporation is committed to operating with the utmost integrity and will continue to dedicate the resources necessary to maintain its level of excellence," Mr. Larson said.