-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TLMXf2OJWp/HltID2jRWmQt4ZIsund2h8KuZ8iejqm1uLXZ1UzC0R1KJq8juk89g BbIP/RmYV9bA7H6Vs9rxLg== 0000730464-97-000002.txt : 19970221 0000730464-97-000002.hdr.sgml : 19970221 ACCESSION NUMBER: 0000730464-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970210 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEVRY INC CENTRAL INDEX KEY: 0000730464 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 363150143 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13988 FILM NUMBER: 97521685 BUSINESS ADDRESS: STREET 1: ONE TOWER LN STREET 2: SUITE 1000 CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 BUSINESS PHONE: 7085717700 MAIL ADDRESS: STREET 1: ONE TOWER LANE CITY: OAKBROOK STATE: IL ZIP: 60181 10-Q 1 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________________ [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1996 Commission file number 0-12751 DeVRY INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 36-3150143 ------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Tower Lane, Oakbrook Terrace, Illinois 60181 ----------------------------------------------------- (Address of principal executive offices) (Zip Code) (630) 571-7700 ---------------------------------------------------- (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 X --- Number of shares of Common Stock, $0.01 par value, outstanding at January 31, 1997: 33,288,424 Total number of pages: 13 2 DeVRY INC. FORM 10-Q INDEX For the period ended December 31, 1996 Page No. -------- PART I. Financial Information Item 1. Financial Statements: Consolidated Balance Sheets at December 31, 1996, June 30, 1996 and December 31, 1995 3-4 Consolidated Statements of Income for the quarter and six months ended December 31, 1996 and 1995 5 Consolidated Statements of Cash Flows for the six months ended December 31, 1996 and 1995 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 8-10 Part II. Other Information Item 4. Submission of Matters to a Vote Of Security Holders 11 Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 3 PART I - Financial Information Item 1 - Financial Statements DEVRY INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
December 31, June 30, December 31, 1996 1996 1995 (Unaudited) (Unaudited) ----------- -------- ----------- ASSETS Current Assets Cash and Cash Equivalents $ 27,543 $ 29,948 $ 22,760 Restricted Cash 28,479 16,590 26,852 Accounts Receivable, Net 28,438 9,684 23,629 Inventories 1,087 3,290 1,155 Prepaid Expenses and Other 2,313 2,055 2,936 ------- ------- ------- Total Current Assets 87,860 61,567 77,332 ------- ------- ------- Land, Buildings and Equipment Land 18,722 18,956 18,952 Buildings 50,101 50,570 40,492 Equipment 58,639 51,198 47,109 Construction In Progress 387 6,272 ------- ------- ------- 127,849 120,724 112,825 Accumulated Depreciation (53,072) (49,283) (45,062) ------- ------- ------- Land, Buildings and Equipment, Net 74,777 71,441 67,763 ------- ------- ------- Other Assets Intangible Assets, Net 37,859 37,709 1,991 Perkins Program Fund, Net 5,885 5,483 4,951 Other Assets 1,764 1,889 1,777 ------- ------- ------- Total Other Assets 45,508 45,081 8,719 ------- ------- ------- TOTAL ASSETS $208,145 $178,089 $153,814 ======= ======= =======
The accompanying notes are an integral part of these consolidated financial statements. 4 DEVRY INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
December 31, June 30, December 31, 1996 1996 1995 (Unaudited) (Unaudited) ----------- -------- ----------- LIABILITIES Current Liabilities Accounts Payable $ 16,164 $ 18,859 $ 14,677 Accrued Salaries, Wages & Benefits 15,378 14,735 12,895 Accrued Expenses 6,520 7,640 5,307 Advance Tuition Payments 5,823 7,617 10,607 Deferred Tuition Revenue 44,097 3,609 38,825 ------- ------- ------- Total Current Liabilities 87,982 52,460 82,311 ------- ------- ------- Other Liabilities Revolving Loan 44,000 61,500 17,029 Deferred Income Tax Liability 2,142 2,207 2,641 Deferred Rent and Other 4,936 4,635 4,426 ------- ------- ------- Total Other Liabilities 51,078 68,342 24,096 ------- ------- ------- TOTAL LIABILITIES 139,060 120,802 106,407 ------- ------- ------- SHAREHOLDERS' EQUITY Common Stock, $0.01 par value, 75,000,000 Shares Authorized, 33,265,244, 33,243,704 (16,621,852 Pre-split) and 33,235,304 (16,617,652 Pre-split), Shares Issued and Outstanding at December 31, 1996, June 30, 1996 and December 31, 1995, Respectively. 333 166 166 Additional Paid-in Capital 36,744 36,694 36,638 Retained Earnings 31,561 19,987 10,158 Cumulative Translation Adjustment 447 440 445 ------- ------- ------- TOTAL SHAREHOLDERS' EQUITY 69,085 57,287 47,407 ------- ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $208,145 $178,089 $153,814 ======= ======= =======
The accompanying notes are an integral part of these consolidated financial statements. 5 DEVRY INC. CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands Except for Per Share Amounts) (Unaudited)
For The Quarter For The Six Months Ended December 31, Ended December 31, ------------------ ------------------ 1996 1995 1996 1995 ---- ---- ---- ---- REVENUES: Tuition $ 73,030 $ 59,471 $135,508 $113,793 Other Educational 7,999 7,160 14,603 12,364 Interest 233 309 400 622 ------- ------- ------- ------- Total Revenues 81,262 66,940 150,511 126,779 ------- ------- ------- ------- COSTS AND EXPENSES: Cost of Educational Services 46,837 40,353 89,656 76,699 Student Services and Administrative Expense 22,470 17,251 39,866 33,362 Interest Expense 805 218 1,691 567 ------- ------- ------ ------ Total Costs and Expenses 70,112 57,822 131,213 110,628 ------- ------- ------- ------- Income Before Income Taxes 11,150 9,118 19,298 16,151 Income Tax Provision 4,369 3,733 7,557 6,735 ------- ------- ------- ------- NET INCOME $ 6,781 $ 5,385 $ 11,741 $ 9,416 ======= ======= ======= ======= EARNINGS PER COMMON SHARE $0.20 $0.16 $0.35 $0.28
The accompanying notes are an integral part of these consolidated financial statements. 6 DeVRY INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
For The Six Months Ended December 31, ------------------ 1996 1995 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $11,741 $ 9,416 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 4,155 3,140 Amortization 788 31 Provision for Refunds and Uncollectible Accounts 9,356 8,186 Deferred Income Taxes 253 876 (Gain) Loss on Disposal and Adjustments to Land, Buildings and Equipment (145) 21 Changes in Assets and Liabilities: Restricted Cash (11,889) (6,673) Accounts Receivable (27,997) (25,498) Inventories 2,203 2,398 Prepaid Expenses and Other (986) (396) Perkins Program Fund Contribution and Other (515) (557) Accounts Payable (2,695) (280) Accrued Salaries, Wages, Expenses and Benefits (579) 805 Advance Tuition Payments (1,794) (3,375) Deferred Tuition Revenue 40,488 35,057 ------ ------ NET CASH PROVIDED BY OPERATING ACTIVITIES 22,384 23,151 ------ ------ CASH FLOWS USED IN INVESTING ACTIVITIES Capital Expenditures (7,346) (10,666) ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Exercise of Stock Options 50 28 Repayments Under Revolving Credit Facility (17,500) (16,000) ------ ------ NET CASH USED IN FINANCING ACTIVITIES (17,450) (15,972) ------ ------ Effects of Exchange Rate Differences 7 (5) ------ ------ NET DECREASE IN CASH AND CASH EQUIVALENTS ( 2,405) ( 3,492) Cash and Cash Equivalents at Beginning of Period 29,948 26,252 ------ ------ Cash and Cash Equivalents at End of Period $27,543 $22,760 ====== ====== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest Paid During the Period $1,709 $802 Income Taxes Paid During the Period $8,568 $7,183
The accompanying notes are an integral part of these consolidated financial statements. 7 DeVRY INC. Notes to Consolidated Financial Statements For the Quarter and Six Months Ended December 31, 1996 1. The interim consolidated financial statements include the accounts of DeVry Inc. (the Company) and its wholly-owned subsidiaries. These financial statements are unaudited but, in the opinion of management, contain all adjustments, consisting only of normal, recurring adjustments, necessary to present fairly the financial condition and results of operations of the Company. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996 and in conjunction with the Company's Quarterly report on Form 10-Q for the quarter ended September 30, 1996, each as filed with the Securities and Exchange Commission. The results of operations for the three months and six months ended December 31, 1996, are not necessarily indicative of results to be expected for the entire fiscal year. Certain reclassifications have been made to the December 1995 financial statements to conform with the June 1996 and December 1996 presentation. 2. In July and August 1996, the Company granted options to purchase up to 142,500 shares of the Company's common stock under the Amended and Restated Stock Incentive Plan, the 1991 Stock Incentive Plan and the 1994 Stock Incentive Plan. 3. On November 19, 1996, the Company's board of directors authorized a two-for-one spilt of the Company's common shares in the form of a 100 percent stock dividend. The stock split was paid on December 18, 1996, to shareholders of record on December 2, 1996. The par value of the additional shares arising from the split has been reclassified from retained earnings to common stock. In addition, all references in the financial statements to the number of shares outstanding, per share amounts, stock option data and market prices of the Company's common stock have been restated to reflect the stock split. 4. During the first six months of fiscal 1997, the Company signed agreements for the lease of new DeVry Institute facilities in Alpharetta, Georgia and Calgary, Alberta, Canada. The Alpharetta facility is expected to be occupied in the fourth quarter of fiscal 1997 and is a new Institute location. The Calgary facility is expected to be occupied in fourth quarter of fiscal 1998 and will replace the Company's current leased Institute facility in Calgary. With the inclusion of these new agreements, commitments under non-cancelable operating leases at December 31, 1996 are as follows: Year Ended June 30, 1997 $12,490,000 1998 12,780,000 1999 12,540,000 2000 11,440,000 2001 11,320,000 Thereafter 81,850,000 8 Item 2 - Management's Discussion and Analysis of Results of Operations and Financial Condition The following discussion of the Company's results of operations and financial condition should be read in conjunction with the consolidated financial statements of the Company and the notes thereto. All references to per share amounts have been restated to reflect the December 18, 1996, stock split. Results of Operations - --------------------- Tuition revenues, which increased by 15% in the first quarter from the year ago period, increased again in the second quarter, growing nearly 23% from the year ago quarter. The increase in tuition revenues was produced by several positive factors including enrollment increases at the DeVry Institutes where total student enrollment for the summer and fall semesters increased by 4.6% and 4.3%, respectively, from last year. This is the seventeenth and eighteenth consecutive term of increased total student enrollment vs. prior year at the DeVry Institutes. At KGSM, total enrollment for the term which began in November increased more than 22% from last November. Tuition revenues also increased because of tuition rate increases which became effective at the DeVry Institutes in March 1996 and at the Keller Graduate School in September 1996. In June 1996, the Company acquired the Becker CPA Review. Revenues from Becker courses which prepare students to take the national Certified Public Accountant and Certified Management Accountant exams also contributed to the Company's revenue increase in both quarters. Other educational revenues, comprised primarily of sales of books and supplies, increased because of sales to the increased number of students attending the Company's educational programs. Interest income on the Company's short-term investments decreased from last year because of lower cash balances available for investment throughout the period. The cost of educational services for the first half increased by nearly 17% from last year, rising at approximately the same rate in both the first and second quarters. This increase reflects the additional facility, faculty and staff costs associated with the Becker CPA Review and the higher wage, benefit, supply and service expenses associated with growing student enrollments at the DeVry and KGSM locations. Depreciation expense increased by more than $1 million in the six months vs. last year, as a result of extensive capital improvements and additions in the past year, particularly those related to the opening of the new DeVry Institute in North Brunswick, New Jersey, and the upgrading of school laboratories and teaching equipment throughout the system. After increasing by only 8% in the first quarter, spending on student services and administrative expenditures, comprised largely of new student recruitment expenses, increased by 19% from last year for the first two quarters combined. This increase reflects the marketing costs associated with the Becker CPA Review operations and the marketing costs associated with generating the higher new student enrollments at DeVry and KGSM for the terms which have already begun this fiscal year and for the terms which will begin in the coming months. Included in this increase in student services and administrative expense is the nearly $788,000 in amortization of goodwill and intangibles, mostly associated with the Becker CPA acquisition. 9 The Company's pre-tax earnings from operations before interest expense were a record for the second quarter and six months. Operating margins, which have been increasing consistently year over year, increased again in this quarter to 14.7% vs. 13.9% in the prior year period. For the first half, operating margins climbed to 13.9% from 13.2% last year. Operating margins were favorably affected by the inclusion of Becker CPA results, where operating margins have historically been high, by the higher revenues and improved facility utilization from the increased enrollments at the DeVry Institutes and KGSM and by continued cost containment measures. Interest expense in the quarter and the half increased from last year because of higher outstanding debt levels resulting from the acquisition, for cash, of the Becker CPA operations in June. At December 31, 1996, total-funded debt had increased by nearly $27,000,000 from the same date last year. The provision for income taxes in the second quarter continued at a lower rate than last year because of a different mix in the earnings from domestic vs. foreign operations and because of a lower effective state income tax rate. Net income of $6,781,000 or $0.20 per share, was a record for the quarter, increasing by 26% from the same quarter of last year. This continues the unbroken pattern of year-over-year quarterly earnings increases since the first quarter of fiscal 1992. For the first half, net income has increased by nearly 25%. Liquidity and Capital Resources - ------------------------------- Because of the somewhat seasonal pattern of the Company's enrollments and its term starting dates which affect the timing of cash inflows, comparisons of financial position should be made to both the end of the previous fiscal year and to the corresponding period of a year ago. Cash generated from operations in the first half was approximately equal to the amount generated in the first half of last year, marking a sharp improvement from the first quarter. Higher earnings, plus the increased non-cash charges for depreciation and amortization, contributed to a higher operating cash flow but were offset by increases in restricted cash and decreases in accounts payable and accrued expenses that exceeded the related benefits from changes in deferred tuition revenue and advance tuition payments. Accounts receivable, net of the related increase in deferred tuition revenue generated by higher enrollment and revenue levels, are approximately equal to the level achieved last year, reflecting a continuation of the good collection performance on balances owed by students similar to the collection experience in the past several years. Included in the accounts receivable were the receivable balances from students attending the Becker CPA classes which were not included in the Company's reported balances last year. Capital expenditures for the half decreased by $3.3 million from last year, reflecting completion of construction payments and June 1996 occupancy of the DeVry Institute New Jersey campus. 10 During the second quarter, the Company repaid $3 million of its revolving loan facility using existing cash balances and cash generated from operations. For the half, debt repayments totaled $17.5 million, an increase of $1.5 million from repayments during the first half of last year. Taking advantage of the financing flexibility from this unsecured revolving line of credit, future borrowings and/or repayments will be based upon the Company's seasonal cash flow cycle and payment requirements for capital spending. The Company believes that current balances of unrestricted cash, cash generated from operations and, if needed, its revolving loan facility will be sufficient to fund its operating needs and capital spending for the foreseeable future. 11 PART II - Other Information - --------------------------- Item 4 - Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ The Company's regular annual meeting of stockholders was held in Chicago, Illinois, on Tuesday, November 19, 1996. Proxies for the meeting were solicited in accordance with the Securities Exchange Act 1934 and there was no solicitation in oppositon to those of management. At the meeting, four Directors of the Company were elected to serve as Class II Directors to hold office until 1999 or until their respective successors are elected and qualified. The results of the voting for Directors, whether in person or by proxy, were as follows: For Against Withheld ---------- ------- -------- Class II: David S. Brown 14,415,375 - 95,615 Dennis J. Keller 14,415,772 - 95,218 Robert E. King 14,416,248 - 94,742 Frederick A. Krehbiel 14,415,351 - 95,639 The terms of office of the following directors continued after the meeting: Ann I. Gannon, Thurston E. Manning, Robert C. McCormack, Julie A. McGee, Hugo J. Melvoin, and Ronald L. Taylor. Also submitted to a vote of the stockholders was a proposal to amend the Companys Restated Certificate of Incorporation to increase the authorized number of shares of Common Stock ($0.01 par value) from 20,000,000 to 75,000,000. The following table presents the results of the stockholders vote on this matter: For Against Withheld ---------- --------- -------- 11,161,532 3,332,852 16,606 The final matter submitted to a vote of the stockholders at this meeting was a proposal for the ratification of the appointment of Price Waterhouse as independent public accountants for the Company for the current fiscal year. The following table presents the results of the stockholders vote on this matter: For Against Withheld ---------- -------- -------- 14,497,551 8,179 5,260 12 Item 5 - Other Information - -------------------------- On November 19, 1996 the Companys Board of Directors authorized a two-for-one stock split in the form of a 100% stock dividend payable on December 18, 1996, to shareholders of record on December 2, 1996. Item 6 - Exhibits and Reports on Form 8-K - ----------------------------------------- (b) Reports on Form 8-K There were no reports on Form 8-K filed by the Company during the quarter ended December 31, 1996. 13 Signatures - ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: FEBRUARY 6, 1997 /s/ Ronald L. Taylor -------------------- Ronald L. Taylor President and Chief Operating Officer Date: FEBRUARY 6, 1997 /s/Norman M. Levine ------------------- Norman M. Levine Vice President Finance, Controller, Chief Financial and Accounting Officer EX-27 2
5 6-MOS JUN-30-1997 DEC-31-1996 56022 0 37494 9056 1087 87860 127849 53072 208145 87982 44000 0 0 333 68752 208145 150111 150511 0 89656 39866 9356 1691 19298 7557 11741 0 0 0 11741 .35 .35
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