The discussion below contains "forward-looking statements," as defined in
Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our current expectations regarding our future growth, results of operations, cash flows, performance and business prospects, and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward-looking statements by using words such as "anticipate," "believe," "plan," "expect," "intend," "project," "will," "potential" and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to us and are subject to various risks, uncertainties, and other factors, including, but not limited to, those matters discussed in Item 1A "Risk Factors" in Part I of this Annual Report on Form 10-K that could cause our actual growth, results of operations, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances, or for any other reason.

As used in this Annual Report on Form 10-K, the terms "we," "us," "our," "the Company," and "CEC" refer to Career Education Corporation and our wholly-owned subsidiaries. The terms "school" and "university" each refer to an individual, branded, proprietary educational institution, owned by us and including its campus locations. The term "campus" refers to an individual main or branch campus operated by one of our school or universities.

Overview

We are an industry leader whose institutions are recognized globally. Those institutions include, among others, American InterContinental University ("AIU"); Brooks Institute; Colorado Technical University ("CTU"); Harrington College of Design; INSEEC Group ("INSEEC") Schools; International University of Monaco ("IUM"); International Academy of Design & Technology ("IADT"); Le Cordon Bleu North America ("LCB"); and Sanford-Brown Institutes and Colleges. Through our schools, we are committed to providing high-quality education, enabling students to graduate and pursue rewarding career opportunities.

During 2012, we reduced the number of strategic business units from six to four:
University Schools, Career Schools, International and Transitional Schools. The creation of the Transitional Schools business unit was a result of the decision made in the fourth quarter of 2012 to teach out a number of campuses, which are now included in our Transitional Schools reporting segment, along with certain additional campuses which were previously in the process of being taught out. These campuses employ a gradual teach-out process, enabling them to continue to operate while current students complete their course of study; they no longer enroll new students. The results of operations for schools within the Transitional Schools segment will be reported within continuing operations for all periods presented until they complete their teach-out. As schools within Transitional Schools cease operations, the results of operation for all periods presented will be reflected within discontinued operations. In addition, during the fourth quarter of 2012, we completed the teach-out of Le Cordon Bleu Pittsburgh. Accordingly, the results of operations for this school are now reported within discontinued operations. All prior period results have been recast to reflect our reporting segments on a comparable basis.

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the Company's consolidated financial statements and the notes thereto appearing elsewhere in this Annual Report on Form 10-K. The MD&A is intended to help investors understand the results of operations, financial condition and present business environment. The MD&A is organized as follows:

• 2012 Overview

• Consolidated Results of Operations

• Summary of Critical Accounting Policies and Estimates

• Liquidity, Financial Position and Capital Resources

2012 Overview

Throughout 2012, we continued to experience declining revenues and deleveraging of our operations which resulted in reporting a 20.5% decline in revenue and an operating loss of $183.8 million for the year ended December 31, 2012. The operating loss includes goodwill and asset impairment charges of $127.0 million. We believe the decline in operating performance can be attributed to a number of factors including ongoing regulatory scrutiny of the postsecondary education industry, weak economic conditions, initiatives such as the capping of enrollment in certain programs, implementation of new entrance requirements and the decision to teach out certain programs and campuses as well as lengthening of the student decision-making process. To address the decline in operating performance, we made progress in a number of key areas which we believe will position the Company for a return to profitable growth in the future. Many of the actions taken in 2012 were foundational in nature; focused, on repositioning the Company to be more competitive in the ever-changing postsecondary education industry.

The areas of focus in 2012, included:

• resolving current regulatory challenges across our institutions,

• simplifying the organization, and

• creating advantage in the marketplace through differentiating our very strong education brands.

Regulatory Challenges

In May 2012, we received notification from ACICS that it acted to immediately vacate the show-cause directive with respect to our past determination of placement rates applicable to all 71 CEC campuses accredited by ACICS. This decision allowed our campuses to request to submit new program applications for consideration by ACICS. In November 2012, the Company reported its placement rates for the 2012 ACICS reporting year. As of the date of this filing, a number of campuses have varying levels of additional reporting and other actions required as a result of reporting placement rates and/or retention rates below the required levels. See Item 1, "Business," for additional information.

Throughout 2012, we continued to take action towards improving the placement of our graduates. Those actions included adding additional career services personnel within our campuses. These individuals are focused on assisting our students with finding jobs following completion of their academic program. We continue to use the tools and outreach resources made available to career services advisors, including agreements with two career search providers, and increased interactions with local businesses in order to identify job opportunities and forge partnerships with our campuses to improve employment outcomes. We have also placed enrollment caps on certain of our programs. We believe these efforts will help improve the pace of placements for our graduates; however, the challenging employment environment remains. We entered 2012 at a lower than anticipated pace in helping our students achieve job placements for the 2012 reporting year due to a transition period while the changes mentioned above were implemented. This transition period affected our overall annual rates reported for the 2011-2012 reporting year.

In addition, during 2012 we made changes to improve our 90-10 position across certain campuses. Those changes include the introduction of pre-enrollment testing, increasing tuition levels within all Health Education campuses, counseling students to carefully evaluate the amount of necessary Title IV Program borrowing, emphasizing employer-paid and other direct-pay education programs, and for certain programs, instituting

program caps and discontinuations. In addition, as of December 31, 2012, we had delayed the disbursement and subsequent receipt of Title IV funds until the first quarter of 2013, of approximately $24.3 million for certain campuses. As a result of our initiatives, we expect that all of our institutions will be in compliance with the 90-10 Rule as of December 31, 2012. Also, to participate in Title IV Programs, our schools must either satisfy standards of financial responsibility prescribed by ED, or be subjected to additional oversight, required to post a letter of credit in favor of ED or placed on provision certification. These regulations require each eligible higher education institution to, among other things, satisfy a quantitative standard of financial responsibility that is a weighted average composite score of three annual tests which assesses the financial condition of the institution. Our preliminary calculation of the composite score for the consolidated entity for the year ended December 31, 2012 is 1.6.

In the third quarter, the U.S. Department of Veterans Affairs concluded its review of all of the CTU campuses and assessed an aggregate potential student liability of approximately $3.6 million related to this compliance review. We had previously recorded an estimated liability of $5.0 million related to this matter. We paid $3.6 million on behalf of students during the year and we believe this matter is now resolved.

In January 2013, CTU announced that the principal accreditor of the university and its programs, HLC, acted to continue its accreditation. The next reaffirmation of accreditation is scheduled for 2022-2023. CTU will have a comprehensive review in 2016-17 and was asked to provide two interim monitoring reports to HLC, which will be completed by July 2013.

While we are pleased with the progress that has been made during 2012, we remain committed to continuously improving our relations with our accrediting bodies, ED and the states in which we operate as well as to remain compliant in the execution of our mission. Teri Cotton Santos who joined the Company as Senior Vice President, Chief Ethics and Compliance Officer in 2012 along with the efforts of our Regulatory Affairs Department will lead the Company's continued commitment to a culture of compliance across the organization.

Simplified Organization

During 2012, our simplification efforts included the continued centralization of certain functions, including admissions, financial aid and administrative support functions into our shared services organization, most notably within Health Education. We continue to seek opportunities across all of our ground campuses to leverage the use of shared services where possible. In addition, we reduced the number of strategic business units from six to four: University, Career Schools, Transitional Schools and International. Under the leadership of Dan Hurdle, Chief Career Schools Officer, and Jason Friesen, Chief University Education Officer, we will concentrate and enhance resources on academic focus, consolidate and align similar institutions and ultimately better position the company in a competitive marketplace through fewer, stronger institutional brands.

On November 5, 2012, we made the decision to eliminate approximately 900 positions across our domestic campuses and campus support center. This action is a result of further simplifying the organization through the implementation of standardized operating structures, increased efficiencies in how student support services are provided and eliminating redundancies across the organization. As previously disclosed, we have focused on reducing costs throughout the organization in response to declining student populations throughout the year. This workforce reduction was not only focused on ensuring our cost structure aligns with the current levels of student population, but also represents a change to the underlying operating structure of our ground campuses, most notably within our career schools. The eliminated positions affected current employees as well as unfilled positions. We recorded a pretax charge of $7.7 million in the fourth quarter of 2012 related to these actions, which were completed in January 2013, and are expected to result in annual savings of approximately $45 - $55 million.

In addition, on November 5, 2012, we made the decision to teach out 23 domestic campuses. This decision furthers our strategic imperative of investing in a smaller number of ground-based campuses; focusing on those

locations that have the strongest likelihood of delivering strong student outcomes, operational efficiency and strength in the market. These campuses, along with an additional five domestic campuses which were in the process of being taught out, comprise the Transitional Schools reporting segment. The 23 campuses were identified after careful analysis of a number of factors including operating performance, student outcomes and strategic implications. Consistent with our commitment to students, we are working with each of the campuses affected to ensure that existing students are afforded the ability to complete their course of study. We anticipate that a majority of the campus closures will be completed by the second quarter of 2014. A portion of these campuses will have remaining lease obligations following the completion of the teach-out, with the longest lease term being through 2021. The total gross remaining lease obligations for the Transitional schools once they complete the close process is expected to be approximately $78 million. At the time each campus completes the close process, a charge will be recorded representing the net present value of the remaining lease obligation reduced by an estimated amount for sublease income. The final amount related to each campus will be finalized at the campus closure date. Pretax asset impairment charges of $29.3 million and $6.6 million of pretax charges related to severance and related benefits were recorded during 2012 related to the decisions to close these campuses.

Finally, in February 2013, the Company engaged a third party to help re-engineer our organizational structure to align with our expected student population levels. This project is about looking at our systems, procedures, processes and interdependencies to determine how we can become a more efficient organization better aligned with current and anticipated student enrollment levels. As of the date of this filing, we are in the early stages of the process, but expect the outcome of the project to provide additional savings in both 2013 and beyond but more importantly to position the organizational structure in support of the Company's strategic vision.

Creating advantage in the marketplace through differentiating our very strong education brands

As it pertains to the differentiation of our institutions, during the first quarter of 2012, CTU rolled out its "Are You In?" brand campaign and we began utilizing a number of new marketing and admissions initiatives, including social media and viral marketing within AIU. We have defined the addressable market segmentation for both AIU and CTU as a result of considerable market research. We intend to provide program offerings and an overall student experience which is relevant to the student segment that each institution is addressing. As it relates to Career Schools, we remain committed to reduce the number of brands by which we operate over the next few years; focusing on those brands which can be more prominently established in the marketplace and more strongly differentiated. Within our International business, we continue to increase our student offerings both through organic growth as well as with the addition of two acquisitions, Luxury Attitude and Ecoles Superieures de Commerce Chambery.

Strategically, we remain committed to providing students with program offerings which will allow them to further advance their career aspirations. In doing so, we are mindful to offer programs which match market demands so as to meet both internal and external standards for student outcomes and other regulatory requirements.

We have also introduced steps to improve our ability to identify students who are more likely to be interested in and ultimately successful in completing their program of study. A part of our strategy also includes improving our ability to identify prospective students directly through our institutions' websites and channels other than through our current level of reliance on lead aggregators. Our investment in the CTU branding campaign and the use of viral campaigns within AIU represent examples of actions taken in the recent past to shift how prospective students are made aware of our program offerings. We also are working with a third party consultant to provide insights into other ways in which we can reach prospective students, assist in their decision to enroll in one of our institutions and ultimately successfully complete their respective course of study.

In addition, as previously disclosed, the Company was one of several educational institutions who joined the Foundation for Education Success. The Foundation was charged with developing and monitoring codes of conduct for the for-profit postsecondary education industry. One of the keystone codes of conduct included a 21-day free trial period for new student starts to allow students time to assess the curriculum, faculty and learning methods without incurring any financial obligation during this trial period. Beginning in November 2012, AIU Online and CTU Online rolled out the 21-day free trial period for all new student starts. The introduction of this free trial period exemplifies our commitment to student success by ensuring that students are ready, motivated and capable of succeeding at our universities. We expect to roll out the 21-day trial period at our ground campuses and career schools in the coming months, capitalizing on our experience and learnings from our online University students' experience.

Finally, consistent with our belief that learning is dependent upon instructional methodologies that facilitate student engagement with the instructor, with other students and with course content, whether instruction occurs within a physical or virtual classroom, we continue to invest in our methods for delivering education. Our investment in leading technology and its application to provide superior online education continues. During the fourth quarter of 2012 we began to pilot certain strategies that focus on the concept of personalized learning which recognizes and addresses the student's individual strengths, knowledge and readiness, and adjusts the course content and timing to match these individual characteristics as the student progresses through the course. We believe this application of technology will improve student outcomes.

Our vision remains clear: to be a premier, respected, large-scale provider of postsecondary educational services based on leading edge technology, distinguished pedagogy, differentiated institutional offerings and superior student outcomes. We believe these actions will provide the platform for which to return our business to its profitable growth over the long-term. However, in the near future, we continue to operate in a very challenging environment as new student demand continues to slow; new students become more hesitant to take on debt given the uncertainty in the labor market; we implement a number of program changes in response to the regulatory environment; and our industry continues to remain in the forefront of negative publicity. All of these factors have negatively impacted our results of operations for 2012, most notably affecting our domestic career education ground-based institutions, comprised of Career Schools and Transitional Schools, which collectively reported a thirty-eight percent decline in student population as compared to the prior year. As discussed previously, our Design & Technology and Health Education reporting segments, which are components of the Career Schools business unit, have experienced an elevated level of risk of exposure to goodwill impairment due to the current regulatory environment, reduced new student interest and changes to their business models. During 2012, we recorded a goodwill impairment charge of $82.7 million related to these two reporting segments. In addition, in connection with our annual impairment testing of indefinite-lived intangible assets, we recorded trade name impairment charges of $12.1 million in the fourth quarter of 2012, primarily related to our Le Cordon Bleu and Sanford Brown trade names.

As we continue through our transformation, the Transitional Schools are expected to continue to report operating losses as we work with students to complete their programs of study. We are estimating that the 2013 operating loss for Transitional Schools will be approximately $70 - $80 million, excluding the impact of remaining lease obligation charges and other unusual items. The steps we are taking to return the Company to profitability are clear, however, it will take time to have a meaningful impact on our overall operating results. As such, the Company will continue to closely monitor its financial condition, including available cash flows for operations. See "Liquidity, Financial Position, and Capital Resources" below for a discussion of our cash balances and related liquidity considerations.

On February 25, 2013, we received the necessary approvals from our institutional accreditor, HLC, for the pending sale of AIU London. Pursuant to our previously signed purchase agreement, the transaction was contingent upon approval from HLC and notification to the Department of Education. As we have received the necessary approval from HLC, we expect this transaction to be completed during the first half of 2013 and expect to record a pretax charge of approximately $7.0 million within our consolidated statements of income and comprehensive income related to this transaction. A number of factors were considered when agreeing to this

sale, including the enrollment trends at the campus over the last several years and the opportunity the sale would present to faculty, staff and students. We believe this agreement provides AIU London faculty, staff and students a unique opportunity to affiliate with a dynamic British institution.

CONSOLIDATED RESULTS OF OPERATIONS

The summary of selected financial data table below should be referenced in connection with a review of the following discussion of our results of operations for the years ended December 31, 2012, 2011, and 2010.

                                                                For the Year Ended December 31,
                                                        % of                          % of                          % of
                                                       Total                         Total                         Total
                                        2012          Revenue         2011          Revenue         2010          Revenue
                                                                    (Dollars in thousands)
TOTAL REVENUE                        $ 1,489,269                   $ 1,873,369                   $ 2,069,553

OPERATING EXPENSES
Educational services and
facilities                               571,169         38.4%         626,158         33.4%         617,421         29.8%
General and administrative:
Advertising                              310,939         20.9%         287,158         15.3%         298,476         14.4%
Admissions                               176,890         11.9%         190,528         10.2%         209,148         10.1%
Administrative                           366,408         24.6%         400,132         21.4%         458,696         22.2%
Bad debt                                  39,948          2.7%          54,825          2.9%         104,371          5.0%

Total general and
administrative expense                   894,185         60.0%         932,643         49.8%       1,070,691         51.7%
Depreciation and amortization             80,658          5.4%          82,350          4.4%          68,667          3.3%
Goodwill and asset impairment            127,007          8.5%         191,524         10.2%          70,429          3.4%

OPERATING (LOSS) INCOME                 (183,750 )      -12.3%          40,694          2.2%         242,345         11.7%


PRETAX (LOSS) INCOME                    (181,712 )      -12.2%          43,479          2.3%         242,618         11.7%
(BENEFIT FROM) PROVISION FOR
INCOME TAXES                             (46,806 )       -3.1%          46,740          2.5%          78,948          3.8%

Effective tax rate                         25.8%                        107.5%                         32.5%

(LOSS) INCOME FROM CONTINUING
OPERATIONS                              (134,906 )       -9.1%          (3,261 )       -0.2%         163,670          7.9%
(LOSS) INCOME FROM DISCONTINUED
OPERATIONS, net of tax                    (7,890 )       -0.5%          21,834          1.2%          (5,897 )       -0.3%

NET (LOSS) INCOME                    $  (142,796 )       -9.6%     $    18,573          1.0%     $   157,773          7.6%

Educational services and facilities expense includes costs directly attributable to the educational activities of our schools, including: (1) salaries and benefits of faculty, academic administrators, and student support personnel, and
(2) costs of educational supplies and facilities, including rents on school leases, certain costs of establishing and maintaining computer laboratories, costs of student housing, and owned and leased facility costs. Also included in educational services and facilities expense are costs of other goods and services provided by our schools, including costs of textbooks, laptop computers, restaurant services and contract training.

General and administrative expense includes salaries and benefits of personnel in corporate and school administration, marketing, admissions, financial aid, accounting, human resources, legal and compliance. Other expenses within this expense category include costs of advertising and production of marketing materials, occupancy of the corporate offices and bad debt expense.

Year Ended December 31, 2012 as Compared to the Year Ended December 31, 2011

Revenue

The decline in revenue as compared to the prior year was a result of lower revenue across all of our domestic segments, most notably within Transitional, Culinary Arts, Health Education and AIU. This decline was driven by 16% fewer students enrolled within our domestic institutions as of the beginning of the year and 30% fewer new student starts across our domestic institutions in 2012 as compared to 2011. We believe our domestic institutions continue to be impacted by external factors including economic conditions, negative publicity, extended student decision-making timelines and changes in regulatory requirements. These factors, coupled with initiatives such as capping enrollment in certain programs, implementing new entrance requirements and the decision to teach out certain programs and campuses resulted in the continued decline in new . . .