National Education Considers Offering of Shares in Its ICS Unit : Finance: Analyst says aim would be to boost stock value. Irvine firm reported a $3.8-million third-quarter loss.
National Education Corp. said Monday that it is considering a public offering of stock in its ICS Learning Systems unit, which sells mail-order vocational correspondence courses.
The offering, if it proceeds, would be similar to one in which NEC recently sold about 20% of its ownership stake in Steck-Vaughn Publishing Corp., which makes and sells books for school libraries.
“Part of what we’re doing here is looking to maximize value for our shareholders, and one way of doing that is to surface the value of these assets,” said J.W. Cwiertnia, chief executive of NEC.
The company, which operates vocational schools across the nation, also reported third-quarter results Monday. For the three months ended Sept. 30, NEC had a loss of $3.8 million, or 13 cents a share.
The loss resulted in part from one-time charges including $23.6 million for the planned closing of 14 vocational schools and $9.2 million for a write-down of assets. The school closures were forced by tougher federal criteria for paying back student loans, Cwiertnia said.
Those one-time losses were partially offset by a gain from the initial public offering of Steck-Vaughn’s stock.
For the third quarter last year, NEC posted a profit of $3.6 million, or 12 cents a share.
Revenue for the latest three months was $87.6 million, down 7.6% from $94.3 million for the third quarter of 1992.
John T. Mahoney, an analyst for the brokerage Raymond, James & Associates in St. Petersburg, Fla., said selling stock in the ICS unit is intended to draw favorable investor attention to NEC.
“Some of the larger shareholders believe the company is undervalued,” Mahoney said. A sale of stock in the more successful units could showcase the rest, he said, and drive up the value of the company as a whole.
The downside is that the strategy risks diluting the value of NEC stock, for the company would end up owning less of its most profitable units, Mahoney said.
NEC’s money-losing training unit, which produces computer training courses for industry and government, continues to be a drag on earnings. Cwiertnia said the unit has updated many of its courses, which should help return it to profitability.
For the nine months ended Sept. 30, NEC had a loss of $11.7 million, or 39 cents a share, contrasted with a profit of $1.2 million for the same period last year. Revenue was $259.8 million, down 4.8% from $273 million a year earlier.
In Monday’s trading on the New York Stock Exchange, NEC’s stock closed unchanged at $5.87 a share.
NEC Posts a Loss
National Education Corp. reported a loss of $3.8 million, or 13 cents a share, for the latest quarter. That contrasted with a profit of $3.6 million, or 12 cents a share, for the same period last year. Figures in thousands of dollars except data per share:
3rd qtr 3rd qtr 9 months 9 months 1992 1993 1992 1993 Revenue $94.3 $87.6 $273.0 $259.8 Net income (loss) $3.6 ($3.8) $1.2 ($11.7) Per share (loss) $0.12 ($0.13) $0.04 ($0.39)
Source: National Education Corp.
