##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549


Form 10-Q

|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|  
|   |  | For the quarterly period ended
    December 31, 2002                                        
|  
|or
|  
|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 0-25283

Corinthian Colleges, Inc.

(Exact name of registrant as specified in its
charter)


|                                                                                                        |  |                                         
|------------------------------------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                                                |  | 33-0717312                              
|(State or other jurisdiction of
    Incorporation or organization)                                      |  | (I.R.S. Employer
    Identification No.)
|                                                                                                       
|6 Hutton Centre Drive, Suite 400,
    Santa Ana, California(Address of principal executive
    offices) |  | 92707(Zip Code)                         

(714) 427-3000

(Registrants telephone number, including
area code)


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 þ          No o

At February 6, 2003, there were 43,613,060
shares of Common Stock of the Registrant outstanding.



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TABLE OF CONTENTS



|                                |                                                                                                                             |  |  |  |  |  |  | 
|------------------------------- | --------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I -- FINANCIAL INFORMATION
|                                | Item 1. Financial Statements                                                                                               
|                                | CORINTHIAN COLLEGES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2002
|                                | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations                              
|                                | Item 3. Quantitative and Qualitative Disclosure about Market Risk                                                          
|                                | Item 4. Controls and Procedures                                                                                            
|PART II -- OTHER INFORMATION   
|                                | Item 1. Legal Proceedings                                                                                                  
|                                | Item 2. Changes in Securities and Use of Proceeds                                                                          
|                                | Item 3. Defaults Upon Senior Securities                                                                                    
|                                | Item 4. Submission of Matters to a Vote of Security Holders                                                                
|                                | Item 5. Other Information                                                                                                  
|                                | Item 6. Exhibits and Reports on Form 8-K                                                                                   
|SIGNATURES                     
|CERTIFICATION                  
|CERTIFICATION                  
|INDEX TO EXHIBITS              
|EXHIBIT 10.66                  



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##### Table of Contents



CORINTHIAN COLLEGES, INC. AND
SUBSIDIARIES

INDEX TO FORM 10-Q

For the Second Quarter Ended December 31,
2002


|                                         |         |                                                                                                                                   |                                                                                           |      |   |    | 
|---------------------------------------- | ------- | --------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ---- | - | -- | 
|                                         |         |                                                                                                                                   |                                                                                           | Page
|                                         |         |                                                                                                                                   |                                                                                           | No. 
|                                         |         |                                                                                                                                   |                                                                                           |     
|PART I  FINANCIAL
    INFORMATION       |         |                                                                                                                                   |                                                                                           |     
|                                         | Item 1. |                                                                                                                                   | Financial Statements                                                                      |      |   |    | 
|                                         |         | Condensed Consolidated Balance Sheets at
    June 30, 2002 and December 31, 2002 (Unaudited)                                      |                                                                                           |      | 2 |   
|                                         |         | Condensed Consolidated Statements of Operations
    (Unaudited) for the three and six months ended December 31,
    2001 and 2002 |                                                                                           |      | 3 |   
|                                         |         | Condensed Consolidated Statements of Cash Flows
    (Unaudited) for the six months ended December 31, 2001 and
    2002           |                                                                                           |      | 4 |   
|                                         |         | Notes to Unaudited Condensed Consolidated
    Financial Statements                                                                |                                                                                           |      | 5 |   
|                                         | Item 2. |                                                                                                                                   | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |      |   | 8  | 
|                                         | Item 3. |                                                                                                                                   | Quantitative and Qualitative Disclosure about
    Market Risk                             |      |   | 12 | 
|                                         | Item 4. |                                                                                                                                   | Controls and Procedures                                                                   |      |   | 13 | 
|PART II  OTHER
    INFORMATION          |         |                                                                                                                                   |                                                                                           |     
|                                         | Item 1. |                                                                                                                                   | Legal Proceedings                                                                         |      |   | 14 | 
|                                         | Item 2. |                                                                                                                                   | Changes in Securities and Use of Proceeds                                                 |      |   | 14 | 
|                                         | Item 3. |                                                                                                                                   | Defaults Upon Senior Securities                                                           |      |   | 14 | 
|                                         | Item 4. |                                                                                                                                   | Submission of Matters to a Vote of Security
    Holders                                   |      |   | 14 | 
|                                         | Item 5. |                                                                                                                                   | Other Information                                                                         |      |   | 15 | 
|                                         | Item 6. |                                                                                                                                   | Exhibits and Reports on Form 8-K                                                          |      |   | 15 | 
|SIGNATURES                               |         |                                                                                                                                   | 16                                                                                        |     
|CERTIFICATION OF CHIEF EXECUTIVE OFFICER |         |                                                                                                                                   | 17                                                                                        |     
|CERTIFICATION OF CHIEF FINANCIAL OFFICER |         |                                                                                                                                   | 18                                                                                        |     

1



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##### Table of Contents






PART I  FINANCIAL
INFORMATION




Item 1.     Financial
Statements

CORINTHIAN COLLEGES, INC. AND
SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE
SHEETS

|                                                               |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |         |         | 
|-------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ | ------------ | ------- |  | ------ | ------- | ------- | 
|                                                               |                                                                                                                                                  | June 30,                                                                                                                                                |        | December 31,
|                                                               |                                                                                                                                                  | 2002                                                                                                                                                    |        | 2002        
|                                                               |                                                                                                                                                  |                                                                                                                                                         |        |             
|                                                               |                                                                                                                                                  |                                                                                                                                                        
|                                                               |                                                                                                                                                  | (Amounts in thousands)                                                                                                                                 
|                                                               |                                                                                                                                                  | (Unaudited)                                                                                                                                            
|ASSETS                                                         |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |        
|CURRENT ASSETS:                                                |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |        
|                                                               | Cash and cash equivalents                                                                                                                        |                                                                                                                                                         | $      | 40,761       |         |  | $      | 6,687   |        
|                                                               | Restricted cash                                                                                                                                  |                                                                                                                                                         |        | 267          |         |  |        | 267     |        
|                                                               | Marketable investments                                                                                                                           |                                                                                                                                                         |        | 25,706       |         |  |        | 18,413  |        
|                                                               | Accounts receivable, net of allowance for
    doubtful accounts of $7,297 and $9,797 at June 30, 2002 and
    December 31, 2002, respectively    |                                                                                                                                                         |        | 24,043       |         |  |        | 26,577  |        
|                                                               | Student notes receivable, net of allowance for
    doubtful accounts of $320 and $304 at June 30, 2002 and
    December 31, 2002, respectively   |                                                                                                                                                         |        | 726          |         |  |        | 925     |        
|                                                               | Deferred tax assets                                                                                                                              |                                                                                                                                                         |        | 6,142        |         |  |        | 7,031   |        
|                                                               | Prepaid expenses and other current assets                                                                                                        |                                                                                                                                                         |        | 11,482       |         |  |        | 11,587  |        
|                                                               |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |        
|                                                               |                                                                                                                                                  | Total current assets                                                                                                                                    |        |              | 109,127 |  |        |         | 71,487  | 
|PROPERTY AND EQUIPMENT, net                                    |                                                                                                                                                  |                                                                                                                                                         | 36,956 |              |         |  | 56,807 |        
|OTHER ASSETS:                                                  |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |        
|                                                               | Goodwill, net                                                                                                                                    |                                                                                                                                                         |        | 45,340       |         |  |        | 125,214 |        
|                                                               | Other intangibles, net                                                                                                                           |                                                                                                                                                         |        | 12,085       |         |  |        | 11,678  |        
|                                                               | Student notes receivable, net of allowance for
    doubtful accounts of $434 and $1,082 at June 30, 2002 and
    December 31, 2002, respectively |                                                                                                                                                         |        | 1,218        |         |  |        | 1,528   |        
|                                                               | Deposits and other assets                                                                                                                        |                                                                                                                                                         |        | 3,080        |         |  |        | 4,198   |        
|                                                               |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |        
|                                                               |                                                                                                                                                  | TOTAL ASSETS                                                                                                                                            |        | $            | 207,806 |  |        | $       | 270,912 | 
|                                                               |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |        
|LIABILITIES AND STOCKHOLDERS
    EQUITY                       |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |        
|CURRENT LIABILITIES:                                           |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |        
|                                                               | Accounts payable                                                                                                                                 |                                                                                                                                                         | $      | 14,371       |         |  | $      | 8,357   |        
|                                                               | Accrued compensation and related liabilities                                                                                                     |                                                                                                                                                         |        | 15,800       |         |  |        | 20,959  |        
|                                                               | Accrued expenses                                                                                                                                 |                                                                                                                                                         |        | 2,671        |         |  |        | 7,375   |        
|                                                               | Income tax payable                                                                                                                               |                                                                                                                                                         |        | 2,304        |         |  |        | 1,111   |        
|                                                               | Prepaid tuition                                                                                                                                  |                                                                                                                                                         |        | 13,332       |         |  |        | 23,584  |        
|                                                               | Current portion of capital lease obligation                                                                                                      |                                                                                                                                                         |        |             |         |  |        | 127     |        
|                                                               | Current portion of long-term debt                                                                                                                |                                                                                                                                                         |        | 585          |         |  |        | 135     |        
|                                                               |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |        
|                                                               |                                                                                                                                                  | TOTAL CURRENT LIABILITIES                                                                                                                               |        |              | 49,063  |  |        |         | 61,648  | 
|LONG-TERM CAPITAL LEASE OBLIGATION, net of
    current portion |                                                                                                                                                  |                                                                                                                                                         |       |              |         |  | 6,511  |        
|LONG-TERM DEBT, net of current portion                         |                                                                                                                                                  |                                                                                                                                                         | 1,515  |              |         |  | 5,448  |        
|DEFERRED INCOME                                                |                                                                                                                                                  |                                                                                                                                                         | 147    |              |         |  | 74     |        
|DEFERRED TAX LIABILITY                                         |                                                                                                                                                  |                                                                                                                                                         | 5,920  |              |         |  | 6,618  |        
|OTHER LIABILITIES                                              |                                                                                                                                                  |                                                                                                                                                         | 107    |              |         |  | 135    |        
|STOCKHOLDERS EQUITY:                                          |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |        
|                                                               | Common Stock, $0.0001 par value:                                                                                                                 |                                                                                                                                                         |        |              |         |  |        |         |        
|                                                               |                                                                                                                                                  | Common Stock, 80,000 shares authorized and 42,954
    shares and 43,573 issued and outstanding at June 30, 2002
    and December 31, 2002, respectively |        |              | 4       |  |        |         | 4       | 
|                                                               | Additional paid-in capital                                                                                                                       |                                                                                                                                                         |        | 67,023       |         |  |        | 76,560  |        
|                                                               | Retained earnings                                                                                                                                |                                                                                                                                                         |        | 84,027       |         |  |        | 113,914 |        
|                                                               |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |        
|                                                               |                                                                                                                                                  | TOTAL STOCKHOLDERS EQUITY                                                                                                                              |        |              | 151,054 |  |        |         | 190,478 | 
|                                                               |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |        
|                                                               |                                                                                                                                                  | TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                              |        | $            | 207,806 |  |        | $       | 270,912 | 
|                                                               |                                                                                                                                                  |                                                                                                                                                         |        |              |         |  |        |        

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

2



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CORINTHIAN COLLEGES, INC. AND
SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                          |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |         |         | 
|--------------------------------------------------------- | ------------------------------ | -------------------------------------------- | ------ | ---------------- | ------ | ---- | ------- | ------ | ------- | - | ------- | ------ | ------- | - | ------- | ------- | ------- | 
|                                                          |                                |                                              |        |                 
|                                                          |                                | Three Months Ended                           |        | Six Months Ended
|                                                          |                                | December 31,                                 |        | December 31,    
|                                                          |                                |                                              |        |                 
|                                                          |                                | 2001                                         |        | 2002             |        | 2001 |         | 2002  
|                                                          |                                |                                              |        |                  |        |      |         |       
|                                                          |                                |                                             
|                                                          |                                | (Amounts in thousands except per share data)
|                                                          |                                |                                             
|                                                          |                                | (Unaudited)                                 
|NET REVENUE                                               |                                | $                                            | 81,565 |                  |        | $    | 127,191 |        |         | $ | 155,261 |        |         | $ | 242,816 |        
|                                                          |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |        
|OPERATING EXPENSES:                                       |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |        
|                                                          | Educational services           |                                              |        | 43,264           |        |      |         | 60,283 |         |   |         | 83,149 |         |   |         | 118,179 |        
|                                                          | General and administrative     |                                              |        | 6,972            |        |      |         | 14,578 |         |   |         | 12,980 |         |   |         | 24,820  |        
|                                                          | Marketing and advertising      |                                              |        | 16,669           |        |      |         | 25,323 |         |   |         | 34,009 |         |   |         | 49,631  |        
|                                                          |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |        
|                                                          |                                | Total operating expenses                     |        |                  | 66,905 |      |         |        | 100,184 |   |         |        | 130,138 |   |         |         | 192,630 | 
|                                                          |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |        
|INCOME FROM OPERATIONS                                    |                                |                                              | 14,660 |                  |        |      | 27,007  |        |         |   | 25,123  |        |         |   | 50,186  |        
|                                                          | Interest (income) expense, net |                                              |        | (356             | )      |      |         | 6      |         |   |         | (776   | )       |   |         | 207     |        
|                                                          | Other (income)                 |                                              |        | (612             | )      |      |         |       |         |   |         | (612   | )       |   |         |        |        
|                                                          |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |        
|INCOME BEFORE PROVISION FOR INCOME TAXES                  |                                |                                              | 15,628 |                  |        |      | 27,001  |        |         |   | 26,511  |        |         |   | 49,979  |        
|                                                          | Provision for income taxes     |                                              |        | 6,298            |        |      |         | 10,855 |         |   |         | 10,707 |         |   |         | 20,092  |        
|                                                          |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |        
|NET INCOME                                                |                                | $                                            | 9,330  |                  |        | $    | 16,146  |        |         | $ | 15,804  |        |         | $ | 29,887  |        
|                                                          |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |        
|Income per share:                                         |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |        
|                                                          | Basic                          |                                              | $      | 0.22             |        |      | $       | 0.37   |         |   | $       | 0.37   |         |   | $       | 0.69    |        
|                                                          |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |        
|                                                          | Diluted                        |                                              | $      | 0.21             |        |      | $       | 0.35   |         |   | $       | 0.35   |         |   | $       | 0.65    |        
|                                                          |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |        
|Weighted average number of common shares
    outstanding: |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |        
|                                                          | Basic                          |                                              |        | 42,560           |        |      |         | 43,384 |         |   |         | 42,512 |         |   |         | 43,203  |        
|                                                          |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |        
|                                                          | Diluted                        |                                              |        | 44,272           |        |      |         | 46,008 |         |   |         | 44,192 |         |   |         | 45,825  |        
|                                                          |                                |                                              |        |                  |        |      |         |        |         |   |         |        |         |   |         |        

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

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##### Table of Contents



CORINTHIAN COLLEGES, INC. AND
SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                            |                                                                                                     |                                                                        |                                   |         |         |        |         |         |         |        |  
|--------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | --------------------------------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | -
|                                                                            |                                                                                                     |                                                                       
|                                                                            |                                                                                                     | Six Months Ended                                                      
|                                                                            |                                                                                                     | December 31,                                                          
|                                                                            |                                                                                                     |                                                                       
|                                                                            |                                                                                                     | 2001                                                                   |                                   | 2002   
|                                                                            |                                                                                                     |                                                                        |                                   |        
|                                                                            |                                                                                                     |                                                                       
|                                                                            |                                                                                                     | (Amounts in thousands)                                                
|                                                                            |                                                                                                     |                                                                       
|                                                                            |                                                                                                     | (Unaudited)                                                           
|CASH FLOWS FROM OPERATING ACTIVITIES:                                       |                                                                                                     |                                                                        |                                   |         |         |        |         |        
|                                                                            | Net income                                                                                          |                                                                        | $                                 | 15,804  |         |        | $       | 29,887  |        
|                                                                            | Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:     |                                                                        |                                   |         |         |        |         |         |        
|                                                                            |                                                                                                     | Depreciation and amortization                                          |                                   |         | 3,083   |        |         |         | 5,779   |       
|                                                                            |                                                                                                     | Deferred income taxes                                                  |                                   |         | 1,806   |        |         |         |        |       
|                                                                            |                                                                                                     | Loss (gain) on disposal of assets                                      |                                   |         | 25      |        |         |         |        |       
|                                                                            |                                                                                                     | Changes in assets and liabilities, net of effects
    of acquisitions: |                                   |         |         |        |         |         |         |       
|                                                                            |                                                                                                     |                                                                        | Accounts receivable               |         |         | 407    |         |         |         | (2,041 | )
|                                                                            |                                                                                                     |                                                                        | Student notes receivable          |         |         | 490    |         |         |         | (509   | )
|                                                                            |                                                                                                     |                                                                        | Prepaid expenses and other assets |         |         | (1,487 | )       |         |         | (285   | )
|                                                                            |                                                                                                     |                                                                        | Accounts payable                  |         |         | 392    |         |         |         | (6,091 | )
|                                                                            |                                                                                                     |                                                                        | Accrued expenses                  |         |         | 1,927  |         |         |         | 6,231  |  
|                                                                            |                                                                                                     |                                                                        | Income tax payable                |         |         | 980    |         |         |         | (1,193 | )
|                                                                            |                                                                                                     |                                                                        | Prepaid tuition                   |         |         | 2,200  |         |         |         | 5,730  |  
|                                                                            |                                                                                                     |                                                                        | Other long-term liabilities       |         |         | (623   | )       |         |         | (45    | )
|                                                                            |                                                                                                     |                                                                        |                                   |         |         |        |         |        
|                                                                            |                                                                                                     | Net cash provided by operating activities                              |                                   |         | 25,004  |        |         |         | 37,463  |       
|                                                                            |                                                                                                     |                                                                        |                                   |         |         |        |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                       |                                                                                                     |                                                                        |                                   |         |         |        |         |        
|                                                                            | Acquisition of schools and colleges, net of cash
    acquired                                       |                                                                        |                                   |        |         |        |         | (80,788 | )      
|                                                                            | Sales of (investments in) marketable securities,
    net                                            |                                                                        |                                   | (23,029 | )       |        |         | 7,293   |        
|                                                                            | Capital expenditures                                                                                |                                                                        |                                   | (10,667 | )       |        |         | (10,992 | )      
|                                                                            | Proceeds from sale of assets                                                                        |                                                                        |                                   | 805     |         |        |         |        |        
|                                                                            |                                                                                                     |                                                                        |                                   |         |         |        |         |        
|                                                                            |                                                                                                     | Net cash (used in) investing activities                                |                                   |         | (32,891 | )      |         |         | (84,487 | )     
|                                                                            |                                                                                                     |                                                                        |                                   |         |         |        |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                       |                                                                                                     |                                                                        |                                   |         |         |        |         |        
|                                                                            | Proceeds from borrowings                                                                            |                                                                        |                                   |        |         |        |         | 58,600  |        
|                                                                            | Principal repayments on long-term debt and
    capital lease obligation                             |                                                                        |                                   | (587    | )       |        |         | (55,187 | )      
|                                                                            | Proceeds from exercise of stock options and
    Employee Stock Purchase Plan, including tax benefit |                                                                        |                                   | 2,960   |         |        |         | 9,537   |        
|                                                                            |                                                                                                     |                                                                        |                                   |         |         |        |         |        
|                                                                            |                                                                                                     | Net cash provided by financing activities                              |                                   |         | 2,373   |        |         |         | 12,950  |       
|                                                                            |                                                                                                     |                                                                        |                                   |         |         |        |         |        
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                   |                                                                                                     |                                                                        | (5,514                            | )       |         |        | (34,074 | )      
|CASH AND CASH EQUIVALENTS, beginning of period                              |                                                                                                     |                                                                        | 19,738                            |         |         |        | 40,761  |        
|                                                                            |                                                                                                     |                                                                        |                                   |         |         |        |         |        
|CASH AND CASH EQUIVALENTS, end of period                                    |                                                                                                     | $                                                                      | 14,224                            |         |         | $      | 6,687   |        
|                                                                            |                                                                                                     |                                                                        |                                   |         |         |        |         |        
|SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND
    FINANCING ACTIVITIES: |                                                                                                     |                                                                        |                                   |         |         |        |         |        
|                                                                            | Acquisitions of various schools and colleges                                                        |                                                                        |                                   |         |         |        |         |         |        
|                                                                            |                                                                                                     | Fair value of assets acquired                                          |                                   | $       |        |        |         | $       | 96,425  |       
|                                                                            |                                                                                                     | Net cash used in acquisitions                                          |                                   |         |        |        |         |         | (80,788 | )     
|                                                                            |                                                                                                     |                                                                        |                                   |         |         |        |         |        
|                                                                            |                                                                                                     | Liabilities assumed or incurred                                        |                                   | $       |        |        |         | $       | 15,637  |       
|                                                                            |                                                                                                     |                                                                        |                                   |         |         |        |         |        

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

4



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##### Table of Contents






CORINTHIAN COLLEGES, INC. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

December 31, 2002


Note 1  The Company and Basis
of Presentation

At December 31, 2002, Corinthian Colleges,
Inc. (the Company) operated 65 schools in the for
profit, post-secondary education industry. All of the
Companys schools are accredited and grant either degrees
(Associates, Bachelor and Master) or diplomas and offer
educational opportunities from an extensive and diverse
curricula library with an emphasis on four primary
concentrations: allied health, business, technology, and
criminal justice. Additionally, the Company has an online
learning alternative available to students pursuing education
exclusively online and is approved to offer eight accredited
degrees to exclusively online students. Effective
January 1, 2003, the Company acquired all of the assets of
Learning Tree University, Inc. and LTU Extension, Inc.
(collectively LTU or Learning Tree
University). Learning Tree University operates two
training centers and offers continuing professional education,
short duration certification programs, corporate training and
custom learning solutions.

The accompanying unaudited condensed consolidated
financial statements have been prepared on a basis consistent
with the consolidated financial statements for the fiscal year
ended June 30, 2002 and, in the opinion of management,
reflect all adjustments, which include only normal recurring
adjustments, necessary to present fairly the consolidated
financial position, the results of operations, and cash flows
for the three months and the six months ended December 31,
2002. These condensed consolidated financial statements and
notes thereto are unaudited and should be read in conjunction
with the Companys audited financial statements included in
the Companys Annual Report on Form 10-K for the year
ended June 30, 2002, as filed with the Securities and
Exchange Commission (the SEC) on September 16,
2002. The results of operations for the three months and the six
months ended December 31, 2002 are not necessarily indicative of
results that could be expected for the entire fiscal year.

The condensed consolidated financial statements
as of December 31, 2002 and for the three months and six
months then ended are consolidated and include the accounts of
the Company and its wholly-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in
consolidation.

Note 2  Marketable
Securities

Marketable investments include primarily interest
bearing available-for-sale securities with a maturity date of
less than one year.

Statement of Financial Accounting Standards
(SFAS) No. 115, Accounting For Certain
Debt and Equity Securities requires that all applicable
investments be classified as trading securities,
available-for-sale securities or held-to-maturity securities.
The Company does not currently have any trading securities or
held-to-maturity securities.

Securities classified as available-for-sale may
be sold in response to changes in interest rates, liquidity
needs and for other purposes. Available-for-sale securities are
carried at fair value and include all debt and equity securities
not classified as held-to-maturity or trading. Unrealized
holding gains and losses from available-for-sale securities are
excluded from earnings and reported, net of any income tax
effect, as a separate component of stockholders equity.
Realized gains and losses for securities classified as
available-for-sale are reported in earnings. At
December 31, 2002, there were no material unrealized gains
or losses from available-for-sale securities.

Note 3  Weighted Average
Number of Common Shares Outstanding

Basic net income per share is calculated by
dividing net income by the weighted average number of common
shares outstanding for the period. Diluted net income per share
reflects the assumed conversion of all dilutive securities,
consisting of stock options.

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##### Table of Contents



CORINTHIAN COLLEGES, INC. AND
SUBSIDIARIES


NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The table below reflects the calculation of the
weighted average number of common shares outstanding used in
computing basic and diluted net income per common share (in
thousands and restated to reflect the two for one stock split
effected in the form of a stock dividend on May 28, 2002):

|                                   |               |              |        |                  |  |      |        |       |  |  |        |       |  |  |        |       | 
|---------------------------------- | ------------- | ------------ | ------ | ---------------- |  | ---- | ------ | ----- |  |  | ------ | ----- |  |  | ------ | ----- | 
|                                   |               |              |        |                  |  |     
|                                   |               | Three Months |        |                 
|                                   |               | Ended        |        | Six Months Ended
|                                   |               | December 31, |        | December 31,    
|                                   |               |              |        |                 
|                                   |               | 2001         |        | 2002             |  | 2001 |        | 2002 
|                                   |               |              |        |                  |  |      |        |      
|Basic common shares outstanding    |               |              | 42,560 |                  |  |      | 43,384 |       |  |  | 42,512 |       |  |  | 43,203 |      
|Effects of dilutive securities:    |               |              |        |                  |  |      |        |       |  |  |        |       |  |  |        |      
|                                   | Stock options |              |        | 1,712            |  |      |        | 2,624 |  |  |        | 1,680 |  |  |        | 2,622 | 
|                                   |               |              |        |                  |  |      |        |       |  |  |        |       |  |  |        |      
|Diluted common shares outstanding: |               |              | 44,272 |                  |  |      | 46,008 |       |  |  | 44,192 |       |  |  | 45,825 |      
|                                   |               |              |        |                  |  |      |        |       |  |  |        |       |  |  |        |      

Note 4  New Accounting
Pronouncements

In June 2001, Financial Accounting Standards
Board (FASB) issued SFAS No. 141,
Business Combinations and SFAS No. 142,
Goodwill and Other Intangible Assets. SFAS
No. 141 addresses financial accounting and reporting for
business combinations and is effective for all business
combinations after June 30, 2001. SFAS No. 142
addresses financial accounting and reporting for acquired
goodwill and other intangible assets. The Company adopted SFAS
No. 142, Accounting for Business Combinations, Goodwill and
Other Intangible Assets, in its entirety effective July 1,
2002. Accordingly, under SFAS No. 142, goodwill is no
longer amortized on a periodic basis, but instead is subject to
an impairment test to be performed at least on a annual basis.
If the test indicates that goodwill is impaired, the goodwill
will be written down to its fair value and a corresponding
charge to earnings will be recorded. Separable intangible assets
that are not deemed to have indefinite lives will continue to be
amortized over their useful lives. As a result of the adoption
of SFAS No. 142 on July 1, there was no goodwill
amortization for the first six months of fiscal 2003 compared to
approximately $411,000 of goodwill amortization (pre-tax) in the
first six months of fiscal 2002. Additionally, there was
approximately $206,000 of goodwill amortization (pre-tax) in the
second quarter of fiscal 2002. No impairment losses were
recorded upon the initial adoption of SFAS No. 142. The
adoption of SFAS No. 141 and SFAS No. 142 did not have
an adverse material impact on our consolidated financial
position, results of operations or earnings per share.

In October 2002, the FASB issued SFAS
No. 147, Acquisitions of Certain Financial
Institutions  An Amendment of FASB Statements
No. 72 and 144 and FASB Interpretation No. 9,
which provides guidance on the accounting for the acquisition of
a financial institution. SFAS No. 147 is effective for
acquisitions on or after October 1, 2002. The adoption of
SFAS No. 147 is not expected to have a material impact on
our consolidated financial position or results of operations.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure 
An Amendment of FASB Statement No. 123. SFAS
No. 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting
for stock-based employee compensation and amends the disclosure
requirements of SFAS No. 123 to improve the clarity and
prominence of disclosures about the pro forma effects of
accounting for stock based compensation on the financial
statements. The transition guidance and annual disclosure
provisions of SFAS No. 148 are effective for fiscal years
ending after December 15, 2002 with earlier application
permitted in certain circumstances. The interim disclosure
provisions are effective for financial reports for interim
periods beginning after December 15, 2002. The adoption of
SFAS No. 148 is not expected to have a material impact on
our consolidated financial position or results of operations.

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CORINTHIAN COLLEGES, INC. AND
SUBSIDIARIES


NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Note 5  Pro Forma Summary
Financial Information

Effective July 1, 2002, the Company acquired
all of the outstanding stock of Wyo-Tech Acquisition Corp.
(Wyo-Tech) for approximately $84.4 million. The
acquisition was financed with approximately $41.4 million
in available cash and $43.0 million borrowed pursuant to a
three year $100 million credit facility. Wyo-Tech operates
two campuses under the Wyoming Technical Institute name in
Laramie, Wyoming and Blairsville, Pennsylvania.

The following table provides unaudited pro forma
financial data for the Company reflecting the completion of the
Wyo-Tech acquisition as if it occurred July 1, 2001. These
unaudited pro forma results have been prepared for comparative
purposes only and include certain pro forma adjustments. Such
pro forma amounts are not necessarily indicative of what actual
results of operations might have been or will be in the future.
Pro forma results of operations for the prior period exclude
consulting and management fees paid by Wyo-Tech to its parent
company and goodwill amortization and reflect a decrease in
interest income and an increase in interest expense related to
the combination of cash and debt used to fund the acquisition.

|                             |  |                    |        |                  |  |      |         |      |  |   |         |  |  |   |         | 
|---------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                             |  |                    |        |                 
|                             |  | Three Months Ended |        | Six Months Ended
|                             |  | December 31,       |        | December 31,    
|                             |  |                    |        |                 
|                             |  | 2001               |        | 2002             |  | 2001 |         | 2002
|                             |  |                    |        |                  |  |      |         |     
|Net revenue                  |  | $                  | 91,436 |                  |  | $    | 127,191 |      |  | $ | 172,288 |  |  | $ | 242,816 | 
|Net income                   |  |                    | 10,287 |                  |  |      | 16,146  |      |  |   | 17,351  |  |  |   | 29,887  | 
|Earnings per share  basis   |  | $                  | 0.24   |                  |  | $    | 0.37    |      |  | $ | 0.41    |  |  | $ | 0.69    | 
|Earnings per share  diluted |  | $                  | 0.23   |                  |  | $    | 0.35    |      |  | $ | 0.39    |  |  | $ | 0.65    | 

Note 6  Subsequent
Events

Effective January 1, 2003, the Company
acquired substantially all of the assets of Learning Tree
University, Inc. and LTU Extension, Inc. LTU offers continuing
professional education, short duration certificate programs,
comprehensive corporate training and customized learning
solutions at two training centers in Southern California,
seminars in 40 cities nationwide and offers both
instructor-led and online training. The purchase price of
approximately $5.3 million, subject to certain working
capital adjustments, includes deferred payments over the next
two years of up to $2.0 million that will be paid to the
sellers only if certain operating results benchmarks are
achieved by LTU during that time period.

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Item 2.     Managements
Discussion and Analysis of Financial Condition and Results of
Operations

This Quarterly Report on Form 10-Q contains
statements that may constitute forward-looking
statements as defined by the U.S. Private Securities
Litigation Reform Act of 1995. Such forward-looking statements
can be identified by the use of forward-looking terminology such
as believes, estimates,
anticipates, continues,
contemplates, expects, may,
will, could, should or
would, or the negatives thereof. Those statements
are based on the intent, belief or expectation of the Company as
of the date of this Quarterly Report. Any such forward-looking
statements are not guarantees of future performance and may
involve risks and uncertainties that are outside the control of
the Company. Results may differ materially from the
forward-looking statements contained herein as a result of
changes in governmental regulations, including those governing
student financial aid, the effect of competitive pressures on
the Companys tuition pricing, integration risks associated
with acquired campuses and other factors, including those
discussed under the headings entitled Governmental
Regulation and Financial Aid and Risks Related to
Our Business in the Companys Annual Report on
Form 10-K (File No. 0-25283) and other documents
periodically filed with the Securities and Exchange Commission.
The Company expressly disclaims any obligation to release
publicly any updates or revisions to any forward-looking
statement contained herein to reflect any change in the
Companys expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement
is based. The following discussion of the Companys results
of operations and financial condition should be read in
conjunction with the interim unaudited condensed financial
statements of the Company and the notes thereto included herein
and in conjunction with the information contained in the Annual
Report on Form 10-K.

Critical Accounting Policies and
Estimates

Our discussions and analysis of our financial
condition and results of operations are based upon our
consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements
requires us to make estimates and judgments that affect the
reported amounts on those financial statements. On an on-going
basis, we evaluate our estimates, including those related to
allowance for doubtful accounts, intangible assets, income
taxes, and litigation. We base our estimates on historical
experience and on various other assumptions that are believed to
be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under
different conditions or if our assumptions change.

We believe the following critical accounting
policies affect our more significant judgments and estimates
used in the preparation of our financial statements:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Revenue Recognition.We maintain a revenue recognition policy. Revenues consist
    primarily of tuition and fees derived from courses taught in our
    colleges. Revenue from tuition and fees are recognized pro-rata
    (on a straight-line basis) over the term of the applicable
    course or program. If a student withdraws from a course or
    program, the paid but unearned portion of the student tuition is
    refunded. Textbook sales and other revenues are recognized as
    sales occur or services are performed and represent less than
    10% of total revenues. Prepaid tuition is the portion of
    payments received but not earned and is reflected as a current
    liability in the accompanying condensed consolidated balance
    sheets as such amount is expected to be earned within the next
    year.
|
| | Marketing and Advertising
    Expense.We maintain an advertising
    expense recognition policy. Marketing and advertising costs are
    expensed as incurred. We have significant marketing and
    advertising expenses consisting primarily of payroll and payroll
    related expenses, direct-response and other advertising,
    promotional materials and other related marketing costs.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | Allowance for Doubtful
    Accounts.We maintain an allowance for
    doubtful accounts for estimated losses resulting from the
    inability, failure or refusal of our students to make required
    payments. We offer a variety of payment plans to help students
    pay that portion of their education expense not covered by
    financial aid programs. These balances are unsecured and not
    guaranteed. We believe our reserves are                                                                                                                                                                                                                                                                                                                                                                                            

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| |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | adequate; however, losses related to unpaid
    student balances could exceed the amounts we have reserved for
    bad debts.                                                                                                                                                                                                                                                                                                
|
| | Intangible Assets.We have significant intangible assets, including goodwill. The
    determination of related estimated useful lives and whether or
    not these assets are impaired involves significant judgments.
    Although we believe our intangible assets are fairly stated,
    changes in strategy or market conditions could significantly
    impact these judgments and require adjustments to asset balances.
|
| | Deferred Taxes.We
    currently have deferred tax assets which are subject to periodic
    recoverability assessments. Realization of our deferred tax
    assets is principally dependent upon achievement of projected
    future taxable income offset by deferred tax liabilities. We
    evaluate the realizability of our deferred tax assets annually.                                                                

Results of Operations

Comparisons of results of operations between the
first six months of fiscal 2003 and the first six months of
fiscal 2002 are difficult due to the acquisitions of NST and its
three campuses on April 1, 2002 and Wyo-Tech and its two
campuses on July 1, 2002 and the opening of four branch
campuses since the second quarter of fiscal 2002. At
December 31, 2002 we operated 65 campuses, compared to
57 campuses at December 31, 2001. The following table
summarizes our operating results as a percentage of net revenue
for the periods indicated:

|                              |                            |                          |       |              |      |      |       |      |      |   |       |      |      |   |       |      |      |  
|----------------------------- | -------------------------- | ------------------------ | ----- | ------------ | ---- | ---- | ----- | ---- | ---- | - | ----- | ---- | ---- | - | ----- | ---- | ---- | -
|                              |                            |                          |       |             
|                              |                            | Three Months             |       | Six Months  
|                              |                            | Ended                    |       | Ended       
|                              |                            | December 31,             |       | December 31,
|                              |                            |                          |       |             
|                              |                            | 2001                     |       | 2002         |      | 2001 |       | 2002
|                              |                            |                          |       |              |      |      |       |     
|Statement of Operations Data: |                            |                          |       |              |      |      |       |      |      |   |       |      |      |   |       |     
|Net revenue                   |                            |                          | 100.0 | %            |      |      | 100.0 | %    |      |   | 100.0 | %    |      |   | 100.0 | %   
|                              |                            |                          |       |              |      |      |       |      |      |   |       |      |      |   |       |     
|Operating expenses:           |                            |                          |       |              |      |      |       |      |      |   |       |      |      |   |       |     
|                              | Educational services       |                          |       | 53.0         |      |      |       | 47.4 |      |   |       | 53.5 |      |   |       | 48.7 |     
|                              | General and administrative |                          |       | 8.6          |      |      |       | 11.5 |      |   |       | 8.4  |      |   |       | 10.2 |     
|                              | Marketing and advertising  |                          |       | 20.4         |      |      |       | 19.9 |      |   |       | 21.9 |      |   |       | 20.4 |     
|                              |                            |                          |       |              |      |      |       |      |      |   |       |      |      |   |       |     
|                              |                            | Total operating expenses |       |              | 82.0 |      |       |      | 78.8 |   |       |      | 83.8 |   |       |      | 79.3 |  
|Income from operations        |                            |                          | 18.0  |              |      |      | 21.2  |      |      |   | 16.2  |      |      |   | 20.7  |     
|                              | Interest (income), net     |                          |       | (0.4         | )    |      |       |     |      |   |       | (0.5 | )    |   |       | 0.1  |     
|                              | Other (income)             |                          |       | (0.7         | )    |      |       |     |      |   |       | (0.4 | )    |   |       |     |     
|                              |                            |                          |       |              |      |      |       |      |      |   |       |      |      |   |       |     
|Income before income taxes    |                            |                          | 19.1  |              |      |      | 21.2  |      |      |   | 17.1  |      |      |   | 20.6  |     
|                              | Provision for income taxes |                          |       | 7.7          |      |      |       | 8.5  |      |   |       | 6.9  |      |   |       | 8.3  |     
|                              |                            |                          |       |              |      |      |       |      |      |   |       |      |      |   |       |     
|                              |                            | Net income               |       |              | 11.4 | %    |       |      | 12.7 | % |       |      | 10.2 | % |       |      | 12.3 | %
|                              |                            |                          |       |              |      |      |       |      |      |   |       |      |      |   |       |     

Three Months Ended December 31, 2002
Compared to Three Months Ended December 31, 2001

Net Revenues.Net
revenues increased $45.6 million, or 55.9%, from
$81.6 million in the second quarter of fiscal 2002 to
$127.1 million in the second quarter of fiscal 2003, due
primarily to a 38.3% increase in student population and a 11.4%
increase in the average earning rate per student. At
December 31, 2002, student population was 40,057, compared
with 28,973 at December 31, 2001.

Educational Services.Educational services include direct
operating expenses of the schools consisting primarily of
payroll and payroll related expenses, occupancy and supplies
expenses, and bad debt expense. As a percentage of net revenues,
educational services expense decreased from 53.0% of revenues in
the second quarter of fiscal 2002 to 47.4% of revenues for the
second quarter of fiscal 2003. Educational services expense
increased $17.0 million, or 39.3%, from $43.3 million
in the second quarter of fiscal 2002 to $60.3 million in
the second quarter of fiscal 2003. The increase was due
primarily to expenses required to support the 38.3%

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increase in student population, wage increases
for employees, increases in bookstore expenses, increases in
facility rent expense, and additional depreciation and other
expenses of five acquired campuses and four new branch campuses
opened since December 31, 2001. Bad debt expense for the
second quarter of fiscal 2003 amounted to $5.2 million and
decreased to 4.1% of revenues, compared to $4.8 million or
5.9% of revenues for the second quarter of fiscal 2002. During
the second quarter, 12 courses were adopted into various
schools.


General and Administrative.As a percentage of net revenues,
general and administrative expenses increased from 8.6% of
revenues in the second quarter of fiscal 2002 to 11.5% of
revenues for the second quarter of fiscal 2003. General and
administrative expense increased $7.6 million from
$7.0 million in the second quarter of fiscal 2002 to
$14.6 million in the second quarter of fiscal 2003,
primarily as a result of additional performance bonuses earned
as a result of the improved operating results, additional
headquarters staff required to support the 55.9% increase in
revenues and 38.3% increase in student population, wage
increases for employees, expenses incurred to support the
increase in the number of campuses operated by the Company and
increases in outside services which include accounting, legal
and consulting expenses.

Marketing and Advertising.Marketing and advertising expenses
consist primarily of payroll and payroll related expenses,
direct-response and other advertising expenses, promotional
materials and other related marketing costs. As a percentage of
net revenues, marketing and advertising expense decreased from
20.4% of revenues in the second quarter of fiscal 2002 to 19.9%
of revenues for the second quarter of fiscal 2003. Marketing and
advertising expenses increased $8.7 million from
$16.7 million in the second quarter of fiscal 2002 to
$25.3 million in the second quarter of fiscal 2003. The
increase was due primarily to the increased volume of
advertising required to support the five acquired campuses and
four new branch campus openings since the second quarter of
fiscal 2002 and additional admissions and marketing support
staff necessary to support the 31.0% increase in student starts
in the second quarter of fiscal 2003.

Income from Operations.Income from operations in the second
quarter of fiscal 2003 increased 84.2% to $27.0 million, or
21.2% of revenues, compared to $14.7 million, or 18.0% of
revenues in the second quarter of fiscal 2002.

Interest (Income) Expense, net.Interest income amounted to
$0.3 million and interest expense amounted to
$0.3 million in the second quarter of fiscal 2003. In the
same period of the prior year, interest income amounted to
$0.4 million. The change from prior year was due to a
combination of a reduction in marketable securities and
investments due to cash used to fund acquisitions as well as a
decline in the interest rate earned on investments in cash
equivalents and marketable securities.

Provision for Income
Taxes.The effective income tax rate
for the second quarter of fiscal 2003 decreased to 40.2% of
income before taxes compared to 40.3% of income before taxes in
the second quarter of fiscal 2002.

Net Income.Net
income for the second quarter of fiscal 2003 increased 73.1% to
$16.1 million, or 12.7% of revenues, compared to
$9.3 million, or 11.4% of revenues, for the second quarter
of fiscal 2002.

Income per Share.Diluted earnings per common share for the second quarter of
fiscal 2003 increased 66.7% to $0.35 per diluted common share
compared to $0.21 per diluted common share for the second
quarter of fiscal 2002. Diluted earnings per common share for
the second quarter of fiscal 2002 includes $0.01 per share from
a non-recurring gain from the sale of real estate.

Six Months Ended December 31, 2002
Compared to Six Months Ended December 31, 2001

Net Revenues.Net
revenues increased $87.6 million, or 56.4%, from $155.3
million in the first six months of fiscal 2002 to
$242.8 million in the first six months of fiscal 2003, due
primarily to a 38.3% increase in the student population at
December 31, 2002 and a 11.0% increase in average earning
rate per student. At December 31, 2002, the student
population was 40,057, compared with 28,973 at December 31,
2001.

Educational Services.Educational services include direct
operating expenses of the schools consisting primarily of
payroll and payroll related expenses, occupancy and supplies
costs, and bad debt expense. As a percentage of net revenues,
educational services expense decreased from 53.5% of revenues
for the first six

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##### Table of Contents



months of fiscal 2002 to 48.7% of revenues for
the first six months of fiscal 2003. Educational services
expense increased $35.0 million, or 42.1%, from
$83.2 million in the first six months of fiscal 2002 to
$118.2 million in the first six months of fiscal 2003, due
primarily to the expenses required to support the 38.3% increase
in student population, wage increases for employees, increases
in bookstore expenses, additional depreciation expense, and
expenses required to operate the five acquired campuses and four
new branch campuses opened since December 31, 2001. Bad
debt expense for the first six months of fiscal 2003 amounted to
$10.0 million and decreased to 4.1% of revenues, compared
to 6.0% of revenues for fiscal 2002. For the six months year to
date, the Company adopted 21 programs into various schools.


General and Administrative.As a percentage of net revenues,
general and administrative expense increased from 8.4% of
revenues for the first six months of fiscal 2002 to 10.2% of
revenues for the first six months of fiscal 2003. General and
administrative expense increased $11.8 million, from
$13.0 million in the first six months of fiscal 2002 to
$24.8 million in the first six months of fiscal 2003,
primarily as a result of additional performance bonuses earned
as a result of the improved operating results, additional
headquarters staff required to support the 56.4% increase in
revenues, 38.3% increase in student population and expenses
incurred to support the nine additional campuses acquired or
opened since December 31, 2001, wage increases for
employees, and increases in outside services, which includes
accounting, legal and consulting expenses.

Marketing and Advertising.Marketing and advertising expenses
consist primarily of payroll and payroll related expenses,
direct-response and other advertising expenses, promotional
materials and other related marketing costs. As a percentage of
net revenues, marketing and advertising expense decreased from
21.9% of revenues for the first six months of fiscal 2002 to
20.4% of revenues for the first six months of fiscal 2003.
Marketing and advertising expense increased $15.6 million,
or 45.9%, from $34.0 million in the first six months of
fiscal 2002 to $49.6 million in the first six months of
fiscal 2003. The increase was primarily due to the increased
volume of advertising required to support the nine additional
campuses opened or acquired since December 31, 2002, and
additional admissions and marketing staff necessary to support
the 35.2% increase in student starts in the first six months of
fiscal 2003. Also contributing to the increase in marketing and
advertising expense was advertising cost inflation and wage
increases for employees.

Income from Operations.Income from operations for the first
six months of fiscal 2003 increased 100.0% to
$50.2 million, or 20.7% of revenues, compared to
$25.1 million, or 16.2% of revenues in the same period last
year.

Interest (Income) Expense, net.Interest expense (net of interest
income of $0.5 million) amounted to $0.2 million for
the first six months of fiscal 2003. In the same period of the
prior year, interest income (net of interest expense of
$0.1 million) amounted to $0.8 million. The increase
in net interest expense in fiscal 2003 was primarily due to
interest expense related to borrowings of long-term debt
incurred in July 2002 to acquire Wyo-Tech, a decrease in
investments because cash was used to fund acquisitions and a
decline in the interest rate earned on investments.

Provision for Income Taxes.The effective income tax rate for the
first six months of fiscal 2003 decreased to 40.2% of income
before taxes compared to 40.4% of income before taxes in the
first six months of fiscal 2002.

Net Income.Net
income for the first six months of fiscal 2003 increased 89.1%
to $29.9 million, or 12.3% of revenues compared to
$15.8 million, or 10.2% of revenues, for the first six
months of fiscal 2002.

Income per Share.Diluted earnings per common share for
the first six months of fiscal 2003 increased 85.7% to $0.65 per
diluted common share compared to $0.35 per diluted common share
for the first six months of fiscal 2002. Diluted earnings per
common share for the first six months of fiscal 2002 include
$0.01 per share from the non-recurring gain on the sale of real
estate in the second quarter of fiscal 2002.

Seasonality and Other Factors Affecting
Quarterly Results

Our revenues normally fluctuate as a result of
seasonal variations in our business. Student population varies
as a result of new student enrollments and student attrition.
Historically, our colleges have had lower student populations in
the first fiscal quarter than in the remainder of the year. Our
expenses, however, do not

11



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##### Table of Contents



vary as significantly as student population and
revenues. We expect quarterly fluctuations in operating results
to continue as a result of seasonal enrollment patterns. Such
patterns may change, however, as a result of acquisitions, new
school openings, new program introductions and increased high
school enrollments. The operating results for any quarter are
not necessarily indicative of the results for any future period.


Liquidity and Capital Resources

In June 2002, the Company entered into a Credit
Agreement for $100.0 million with a syndication of seven
financial institutions administered by Bank of America, N.A
which expires in July 2005. The Credit Agreement has been
established to provide available funds for business
acquisitions, to fund general corporate purposes, and to provide
for letter of credit issuances of up to $10.0 million.
Borrowings under the agreement bear interest at several pricing
alternatives available to the Company, including LIBOR and
adjusted reference or base rates. The base rate is defined as
the higher of the Federal Funds rate plus  1/2 of 1% or the
Bank of America prime rate, plus a margin of 0.25% to 0.75%
depending on the Companys consolidated leverage ratio as
defined in the agreement. The agreement contains customary
affirmative and negative covenants including financial covenants
requiring the maintenance of consolidated net worth, fixed
charge coverage ratios, leverage ratios, pro forma adjusted
EBITDA, Department of Education financial responsibility
composite score ratio, and limitations on long term student
notes receivables. As of December 31, 2002, the Company was
in compliance with all of these covenants. As of
December 31, 2002, there were $4.0 million in
borrowings outstanding under the credit facility, which was
repaid in January 2003. The Credit Agreement is secured by
substantially all of the Companys real and personal
property including the stock of its significant operating
subsidiaries and guaranteed by the Companys present and
future significant operating subsidiaries.

Working capital amounted to $9.8 million as
of December 31, 2002 and $60.1 million as of
June 30, 2002 and the current ratios were 1.2:1 and 2.2:1,
respectively. During the first quarter of fiscal 2003, we
acquired Wyo-Tech for approximately $84.4 million and
funded the acquisition by using approximately $41.4 million
in cash and borrowing $43.0 million from the credit
facility. All of the acquisition debt was repaid prior to
October 31, 2002. However, from time-to-time we expect to
access the credit facility for borrowings.

Cash flows provided by operating activities
amounted to $37.5 million in the first six months of fiscal
2003 compared to $25.0 million provided by operating
activities in the same period of fiscal 2002. The increase in
cash provided by operating activities for the first six months
of fiscal 2003 compared to the first six months of fiscal 2002
was primarily due to the increases in earnings, accrued expenses
and prepaid tuition, partially offset by decreases in accounts
payable and accounts receivable.

Cash flows used in investing activities amounted
to $84.5 million in the first six months of fiscal 2003
compared to cash used in investing activities of
$32.9 million in the first six months of fiscal 2002. The
increase in cash used in investing activities was primarily due
to the acquisition of Wyo-Tech for approximately
$80.8 million, net of $3.6 million of cash acquired in
the acquisition, partially offset by the sales of marketable
securities of $7.3 million in the first six months of
fiscal 2003 compared to investments in marketable securities of
$23.0 million for the same period of fiscal 2002. Capital
expenditures increased to approximately $11.0 million in
the first six months of fiscal 2003 compared to
$10.7 million in the same period in fiscal 2002. Capital
expenditures in fiscal 2003 were incurred primarily to fund
relocations, remodels and enlargements of existing campuses, to
construct new branch campuses, as well as to fund information
systems expenditures. We expect capital expenditures to
approximate $30.0 million for fiscal 2003.

Cash flows provided by financing activities for
the first six months of fiscal 2003 amounted to approximately
$13.0 million compared to $2.4 million for the first
six months of fiscal 2002. The increase in cash provided by
financing activities in the first six months of fiscal 2003 was
due to the net increase in borrowings of approximately
$3.4 million and increased proceeds from stock option
exercises and employee stock purchases under the employee stock
purchase plan.




Item 3.     Quantitative and Qualitative Disclosure about Market
Risk

We do not utilize interest rate swaps, forward or
option contracts on foreign currencies or commodities, or other
types of derivative financial instruments. As of
December 31, 2002, our only assets or liabilities subject

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##### Table of Contents



to risks from interest rate changes are
(i) mortgage debt and debt under the credit facility in the
aggregate amount of $5.6 million, (ii) student notes
receivable, net in the aggregate amount of $2.5 million,
and (iii) marketable investments of $18.4 million. Our
mortgage debt, student notes receivable, and the marketable
investments are all at fixed interest rates. We do not believe
we are subject to material risks from reasonably possible
near-term changes in market interest rates.





Item 4.     Controls
and Procedures

Within the 90 days prior to the filing date
of this report, the Companys management, under the
supervision and with the participation of its chief executive
officer and chief financial officer, has performed an evaluation
of the effectiveness of the design and operation of the
Companys disclosure controls and procedures. These
disclosure controls and procedures are designed to ensure that
the information required to be disclosed by the Company in its
periodic reports filed with the SEC is recorded, processed,
summarized and reported, within the time periods specified by
the SECs rules and forms, and that the information is
communicated to the certifying officers on a timely basis. Based
on such evaluation, the Companys chief executive officer
and chief financial officer concluded that the Companys
disclosure controls and procedures are effective. There have
been no significant changes in the Companys internal
controls or in other factors that could significantly affect
internal controls subsequent to December 31, 2002.

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##### Table of Contents






PART II  OTHER
INFORMATION




Item 1.     Legal
Proceedings

In the ordinary conduct of our business, we and
our colleges are subject to occasional lawsuits, investigations
and claims, including, but not limited to, claims involving
students or graduates and routine employment matters. Although
we cannot predict with certainty the ultimate resolution of
lawsuits, investigations and claims asserted against us, we do
not believe that any currently pending legal proceedings to
which we are a party will have a material adverse effect on our
business, results of operations or financial condition.

As disclosed in our report on Form 10-K for
the fiscal year ended June 30, 2002, one of the legal
actions currently pending against us is Aldape, et al. v.
Corinthian Schools, Inc., et al.,filed on July 11,
2002, in Los Angeles Superior Court in Los Angeles, California
by nine former students of the Companys Bryman campus in
Los Angeles, California (the Individual Plaintiffs)
and the Trade School Review Association, a California nonprofit
association.

The written enrollment agreement between the
Company and each of the Individual Plaintiffs (as well as
virtually every student enrolled in our campuses from May 1999
to the present) provides that all disputes between students and
the Company will be resolved through binding arbitration instead
of litigation. Accordingly, we filed a motion in the Los Angeles
Superior Court seeking to compel the plaintiffs to submit their
claims to binding arbitration and to stay the Superior Court
litigation. After hearing arguments on this motion, the Court
deferred its ruling and stayed the entire case until a decision
is rendered in an unaffiliated case with similar
characteristics, Cruz v. Pacificare, currently pending
before the California Supreme Court.




Item 2.     Changes
in Securities and Use of Proceeds

None




Item 3.     Defaults
Upon Senior Securities

None




Item 4.     Submission
of Matters to a Vote of Security Holders

On November 21, 2002, the Company held its
Annual Meeting of Stockholders in Santa Ana, California.
Stockholders approved all the initiatives put forth by the
Companys Board of Directors and elected all nominees for
Directors of the Company. The initiatives were (i) to elect
two individuals as Class I members of the Companys
Board of Directors and (ii) a proposal to ratify the
appointment of Ernst & Young LLP as the Companys
independent auditors for its fiscal year ending June 30,
2003. No other business or actions were proposed at the Annual
Meeting of Stockholders. A total of 34,711,980 shares were
represented, in person or by proxy, and entitled to vote at the
Annual Meeting of Stockholders. Such shares represented 80.38%
of the total number of shares entitled to vote at such meeting.
The following reflects the tabulation of votes for each
initiative placed before the stockholders of the Company:



| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | 1) Nominees for a three year term as
    Class I members of the Companys Board of Directors:

|                 |  |          |  |              |            | 
|---------------- |  | -------- |  | ------------ | ---------- | 
|Nominee          |  |          |  | No. of Votes
|                 |  |          |  |             
|Loyal Wilson     |  | For      |  |              | 33,457,855 | 
|                 |  | Withheld |  |              | 1,254,125  | 
|Michael P. Berry |  | For      |  |              | 33,453,114 | 
|                 |  | Withheld |  |              | 1,258,866  | 



| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | No other persons were nominated or received votes
    to be Class I Directors of the Company.

14



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##### Table of Contents





| |    |                                                                                                                                       
| | -- | --------------------------------------------------------------------------------------------------------------------------------------
| | 2) | To ratify the appointment of Ernst & Young
    LLP as the Companys independent auditors for the fiscal
    year ending June 30, 2003:

|        |  |              |            | 
|------- |  | ------------ | ---------- | 
|        |  | No. of Votes
|        |  |             
|For     |  |              | 34,242,495 | 
|Against |  |              | 461,412    | 
|Abstain |  |              | 8,073      | 




Item 5.     Other
Information

None




Item 6.     Exhibits
and Reports on Form 8-K

(a) Exhibits:

|      |  |                                                                                                                                                                                                                                                                     
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.66 |  | Asset Purchase Agreement, dated as of
    December 17, 2002, by and among Corinthian Colleges, Inc.,
    Learning Tree University, Inc., a California nonprofit public
    benefit corporation, LTU Extension, Inc., a California
    corporation and Michael Gould.

(b) Reports on Form 8-K:

None

15



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##### Table of Contents



CORINTHIAN COLLEGES, INC. AND
SUBSIDIARIES






SIGNATURES

Pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused
this report to be signed on its behalf by the undersigned
thereunto duly authorized.



| |                          
| | -------------------------
| | CORINTHIAN COLLEGES, INC.

February 13, 2003

| |                              
| | -----------------------------
| | /s/ DAVID G. MOORE           
| |                              
| | David G. Moore               
| | Chairman of the Board and    
| | Chief Executive Officer      
| | (Principal Executive Officer)

February 13, 2003

| |                                                 
| | ------------------------------------------------
| | /s/ DENNIS N. BEAL                              
| |                                                 
| | Dennis N. Beal                                  
| | Executive Vice President and                    
| | Chief Financial Officer                         
| | (Principal Financial and Accounting
    Officer)

16



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##### Table of Contents






CERTIFICATION

I, David G. Moore, certify that:

1.     I have reviewed
this quarterly report on Form 10-Q of Corinthian Colleges,
Inc.;

2.     Based on my
knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;

3.     Based on my
knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;

4.     The
registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

5.     The
registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrants auditors and the audit committee of
registrants board of directors (or persons performing the
equivalent functions):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

6.     The
registrants other certifying officers and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

February 13, 2003

| |                                                      
| | -----------------------------------------------------
| | /s/ DAVID G. MOORE                                   
| |                                                      
| | David G. Moore                                       
| | Chairman of the Board and Chief Executive
    Officer
| | (Principal Executive Officer)                        

17



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##### Table of Contents






CERTIFICATION

I, Dennis N. Beal, certify that:

1.     I have reviewed
this quarterly report on Form 10-Q of Corinthian Colleges,
Inc.;

2.     Based on my
knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;

3.     Based on my
knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;

4.     The
registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

5.     The
registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrants auditors and the audit committee of
registrants board of directors (or persons performing the
equivalent functions):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

6.     The
registrants other certifying officers and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

February 13, 2003

| |                                                         
| | --------------------------------------------------------
| | /s/ DENNIS N. BEAL                                      
| |                                                         
| | Dennis N. Beal                                          
| | Executive Vice President and Chief Financial
    Officer
| | (Principal Financial and Accounting
    Officer)        

18



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INDEX TO EXHIBITS

|        |    |     |  |             |  |                                                                                                                                                                                                                                                                     
|------- | -- | --- |  | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |  |            
|Number  |    |     |  | Description
|        |    |     |  |            
|        | 10 | .66 |  |            |  | Asset Purchase Agreement, dated as of
    December 17, 2002, by and among Corinthian Colleges, Inc.,
    Learning Tree University, Inc., a California nonprofit public
    benefit corporation, LTU Extension, Inc., a California
    corporation and Michael Gould.