Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Sara Gubins – Bank of America Merrill Lynch.
Sara Gubins – Bank of America Merrill Lynch
I am wondering what persistence levels you are contemplating in your guidance. Do you expect those will go down as the economy improves or would you expect them to increase for any reason?
Kenneth Ord
Our assumption is essentially that persistence will remain flat. There will really be no change as we move forward next year.
Sara Gubins – Bank of America Merrill Lynch
The schools that might go above the 25% in terms of cohort default rates, can you give us any range in terms of what that represents either for your enrolment or revenue as a percentage of the total?
Kenneth Ord
Let me just kind of remind the listeners that when we talk about this issue cohort default rates are calculated by OPEID number which I know you are discussing. Under the current rules, any OPEID number that exceeds that 25% threshold for three consecutive years may become ineligible to receive Title IV funds. At this point, the data really is incredibly kind of very preliminary and immature. Therefore, I think the best way for you to think about it is to potentially look at the disclosure that came out last February and will be included in the 10K we file tomorrow which shows our 2007 cohort default in that you will see we have 5 or so schools presently above 25%. If you look at those relatively high levels of cohort default rates for those OPEIDs, those would be the most likely I think to potentially pass that 25% threshold. Again, just to remind you, overall we have 40 OPEID numbers.
Operator
The next question comes from the line of Trace Urdan – Signal Hill.
Trace Urdan – Signal Hill
I am having a little bit of trouble reconciling the strong guidance you have offered in the first quarter with full year guidance. I am wondering if you believe in the back half of the year that you might actually see your operating margins contract.
Kenneth Ord
No, we don’t anticipate we will see declining margins in the back half of the year. So that we do anticipate the margin improvement year-over-year in each of the quarters. The first quarter last year was very weak. You start seeing slightly harder comps starting with the second, third and fourth quarters.
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