- The Washington Times - Tuesday, January 23, 2001

Computer Learning Centers Inc. (CLC) suspended classes yesterday and said it was close to filing for bankruptcy as its shares stopped trading.
The Manassas, Va., chain of 25 technology vocational schools said in a statement it has given up on finding a buyer and that employees have been told not to report to work.
"We've told our employees that we have no ability to pay them," said Susan Luster, vice president of operations. She said a few workers remain at each school.
The moves come five days after CLC's lender, First Union National Bank, stopped honoring its checks. The week before, the U.S. Department of Education ordered the company to return $187 million for commission CLC paid its admissions officers for nearly seven years.
Industry analysts saw this as a final blow to CLC following two years of federal and state investigations. Among the charges were that the company misrepresented the earnings of its graduates, provided its pupils with obsolete equipment, kept inaccurate records and failed to document student eligibility.
"It looks like this company just basically dies, unfortunately," said Alexander Paris Jr., an industry analyst with Barrington Research in Chicago. "I say unfortunately, because they are delivering a service that's in high demand by students right now, and with the outcome being a degree instead of just taking classes."
CLC, which awards diplomas and certificates for its computer classes, had $2.4 million of unrestricted cash as of Oct. 31. It also had nearly 1,900 employees and more than 3,800 students in cities across the country.
Shares of CLC closed on Nasdaq on Friday at 25 cents, a price it had kept almost all of last week. Nasdaq halted trading on the stock yesterday morning following the news.
The regulatory challenges of CLC led to its financial trouble.
In fiscal 1998, three years after it went public, CLC was profitable, making $9.58 million (56 cents per diluted share). But by the following year the company was losing money it reported a net loss of $570,000 (0.03 cents) in 1999.
Diluted shares reflect the value of options, warrants and other securities convertible into common stock.
Meanwhile, sales steadily increased because of high demand for computer skills, but CLC never returned to profitability.
"From what I've heard, there were certainly some management oversights," said an industry analyst in New York who didn't want to be identified. "But on the whole, they didn't really do anything wrong. The way the regulations are set up [in this field], if your business begins to deteriorate, you'll be forced out of business …."
The Department of Education notified CLC on Jan. 16 that it no longer qualified for financial aid. That type of aid made up nearly 70 percent of the company's business, it said in a subsequent statement.
"If you want to compete in this arena, you have to be regulatory compliant. This is an extreme example of what could happen otherwise," said Mr. Paris.
For its third fiscal quarter ended Oct. 30, the company said sales fell 2.5 percent to $32.01 million from $32.82 million for the like quarter in fiscal 2000.
But losses improved to $1.30 million (7 cents per share) from $1.58 million (9 cents).
"They've been beaten down by lawsuits and investigations, the morale is lowered, there are internal problems, and all of these things are exacerbated with the environment and all the bad news all around them," the analyst said.
This article is based in part on wires service reports.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide