-----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, Eo5gzu19l+q+2k4+Gd3g1mtnaGQ0ePA47CBouY1/4X0j37hv4UqsWanCrv9aX0Mg AY179gzSLcif8ded9ceakQ== 0000730464-97-000004.txt : 19970509 0000730464-97-000004.hdr.sgml : 19970509 ACCESSION NUMBER: 0000730464-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970508 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: 97598145 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 March 31, 1997 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 April 30, 1997: 34,501,814 Total number of pages: 13 2 DeVRY INC. FORM 10-Q INDEX For the period ended March 31, 1997 Page No. ------- PART I. Financial Information Item 1. Financial Statements: Consolidated Balance Sheets at March 31, 1997, June 30, 1996 and March 31, 1996 3-4 Consolidated Statements of Income for the quarter and nine months ended March 31, 1997 and 1996 5 Consolidated Statements of Cash Flows for the nine months ended March 31, 1997 and 1996 6 Notes to Consolidated Financial Statements 7-8 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 9-11 Part II. Other Information 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)
March 31, June 30, March 31, 1997 1996 1996 (Unaudited) (Unaudited) ----------- -------- ----------- ASSETS Current Assets Cash and Cash Equivalents $ 34,424 $ 29,948 $ 31,360 Restricted Cash 35,295 16,590 27,198 Accounts Receivable, Net 46,638 9,684 37,639 Inventories 1,786 3,290 1,376 Prepaid Expenses and Other 2,161 2,055 2,779 ------- ------- ------- Total Current Assets 120,304 61,567 100,352 ------- ------- ------- Land, Buildings and Equipment Land 18,965 18,956 18,952 Buildings 50,536 50,570 40,788 Equipment 60,280 51,198 48,963 Construction In Progress 325 7,613 ------- ------- ------- 130,106 120,724 116,316 Accumulated Depreciation (56,087) (49,283) (47,120) ------- ------- ------- Land, Buildings and Equipment, Net 74,019 71,441 69,196 ------- ------- ------- Other Assets Intangible Assets, Net 37,912 37,709 1,976 Perkins Program Fund, Net 5,888 5,483 5,025 Other Assets 1,896 1,889 1,745 ------- ------- ------- Total Other Assets 45,696 45,081 8,746 ------- ------- ------- TOTAL ASSETS $240,019 $178,089 $178,294 ======= ======= =======
The accompanying notes are an integral part of these consolidated financial statements. 4 DEVRY INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
March 31, June 30, March 31, 1997 1996 1996 (Unaudited) (Unaudited) ----------- -------- ----------- LIABILITIES Current Liabilities Accounts Payable $ 19,858 $ 18,859 $ 21,148 Accrued Salaries, Wages & Benefits 16,018 14,735 13,243 Accrued Expenses 7,091 7,640 6,064 Advance Tuition Payments 6,096 7,617 6,507 Deferred Tuition Revenue 67,136 3,609 56,372 ------- ------- ------- Total Current Liabilities 116,199 52,460 103,334 ------- ------- ------- Other Liabilities Revolving Loan 41,000 61,500 15,029 Deferred Income Tax Liability 2,126 2,207 2,856 Deferred Rent and Other 5,028 4,635 4,496 ------- ------- ------- Total Other Liabilities 48,154 68,342 22,381 ------- ------- ------- TOTAL LIABILITIES 164,353 120,802 125,715 ------- ------- ------- SHAREHOLDERS' EQUITY Common Stock, $0.01 par value, 75,000,000 Shares Authorized, 33,295,094, 33,243,704, and 33,243,304 Shares Issued and Outstanding at March 31, 1997, June 30, 1996 and March 31, 1996, Respectively. 333 333 333 Additional Paid-in Capital 36,870 36,694 36,694 Retained Earnings 38,016 19,820 15,053 Cumulative Translation Adjustment 447 440 499 ------- ------- ------- TOTAL SHAREHOLDERS' EQUITY 75,666 57,287 52,579 ------- ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $240,019 $178,089 $178,294 ======= ======= =======
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 Nine Months Ended March 31, Ended March 31, ------------------ ------------------ 1997 1996 1997 1996 ---- ---- ---- ---- REVENUES: Tuition $ 72,983 $ 61,303 $208,491 $175,096 Other Educational 7,914 6,893 22,517 19,257 Interest 236 216 636 838 ------- ------- ------- ------- Total Revenues 81,133 68,412 231,644 195,191 ------- ------- ------- ------- COSTS AND EXPENSES: Cost of Educational Services 47,035 41,377 136,691 118,076 Student Services and Administrative Expense 22,788 18,213 62,654 51,575 Interest Expense 732 205 2,423 772 ------- ------- ------- ------- Total Costs and Expenses 70,555 59,795 201,768 170,423 ------- ------- ------- ------- Income Before Income Taxes 10,578 8,617 29,876 24,768 Income Tax Provision 4,124 3,555 11,681 10,290 ------- ------- ------- ------- NET INCOME $ 6,454 $ 5,062 $ 18,195 $ 14,478 ======= ======= ======= ======= EARNINGS PER COMMON SHARE $0.19 $0.15 $0.54 $0.43
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 Nine Months Ended March 31, ------------------ 1997 1996 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $18,195 $14,478 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 6,920 5,280 Amortization 1,181 46 Provision for Refunds and Uncollectible Accounts 14,317 12,615 Deferred Income Taxes 415 954 Gain on Disposal and Adjustments to Land, Buildings and Equipment (91) (2) Changes in Assets and Liabilities: Restricted Cash (18,705) (7,019) Accounts Receivable (51,157) (43,894) Inventories 1,504 2,177 Prepaid Expenses and Other (1,600) (1,357) Perkins Program Fund Contribution and Other (519) (674) Accounts Payable 999 6,191 Accrued Salaries, Wages, Expenses and Benefits 734 3,267 Advance Tuition Payments (1,521) (7,475) Deferred Tuition Revenue 63,527 52,604 ------ ------ NET CASH PROVIDED BY OPERATING ACTIVITIES 34,199 37,191 ------ ------ CASH FLOWS USED IN INVESTING ACTIVITIES Capital Expenditures (9,407) (14,216) ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Exercise of Stock Options 177 84 Repayments Under Revolving Credit Facility (20,500) (18,000) ------ ------ NET CASH USED IN FINANCING ACTIVITIES (20,323) (17,916) ------ ------ Effects of Exchange Rate Differences 7 49 ------ ------ NET INCREASE IN CASH AND CASH EQUIVALENTS 4,476 5,108 Cash and Cash Equivalents at Beginning of Period 29,948 26,252 ------ ------ Cash and Cash Equivalents at End of Period $34,424 $31,360 ====== ====== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest Paid During the Period $2,440 $1,140 Income Taxes Paid During the Period $12,861 $10,332
The accompanying notes are an integral part of these consolidated financial statements. 7 DeVRY INC. Notes to Consolidated Financial Statements For the Quarter and Nine Months Ended March 31, 1997 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 reports on Form 10-Q for the quarters ended September 30, 1996 and December 31, 1996, each as filed with the Securities and Exchange Commission. The results of operations for the three months and nine months ended March 31, 1997, are not necessarily indicative of results to be expected for the entire fiscal year. Certain reclassifications have been made to the March 1996 financial statements to conform with the June 1996 and March 1997 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 split 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 nine 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 operating 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 March 31, 1997 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 5. In April 1997, the Company and certain existing shareholders completed an offering of the Company's common stock. In this offering, the Company sold 1,200,000 shares of its common stock. The Company's proceeds of the offering, net of underwriting discounts and commissions and other related expenses, were approximately $23,640,000. Substantially all of the net proceeds were used to repay indebtedness. The Company did not receive any proceeds from the sale of the shares by the existing shareholders. The following presents selected actual consolidated financial information as of March 31, 1997 and pro-forma financial information which reflects the application of the net proceeds of the stock offering as if it were completed as of March 31, 1997: March 31, 1997 ------------------------- Actual Pro Forma ------------------------- Cash and Cash Equivalents $34,424,000 $35,064,000 Revolving Loan $41,000,000 $18,000,000 Total Shareholders' Equity $75,666,000 $99,306,000 Common Shares Issued and Outstanding 33,295,094 34,495,094 6. As of March 31, 1997, the Company had achieved certain financial ratios included in its revolving loan agreement which will reduce its interest rate on borrowings under this loan agreement to a Eurodollar rate plus 0.50%. The new interest rate becomes effective on July 1, 1997. 9 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, two-for-one stock split. Because of the somewhat seasonal pattern of the Company's enrollments and its term starting dates, which affect the results of operations and the timing of cash inflows, the Company believes that comparisons of its results of operations should be made to the corresponding period in the preceding year. Comparisons of financial position should be made to both the end of the previous fiscal year and to the end of the corresponding period in the preceding year. Typically, due to the seasonality of student enrollments, the Company's second and third quarters have historically represented the periods of highest revenues and net income within a fiscal year. Results of Operations - --------------------- Tuition revenues for the third quarter increased by $11.7 million or 19.1% compared to the same period in fiscal 1996. For the nine months, tuition revenues increased by $33.4 million which is also a 19.1% increase from the nine months of fiscal 1996. The increase in tuition revenues for both periods was produced by several positive factors, including enrollment increases at the DeVry Institutes, where total student enrollment for the summer, fall and spring semesters in fiscal 1997 increased by 4.6%, 4.3% and 4.7%, respectively, from fiscal 1996. The increased DeVry Institute student enrollment in the spring term represents the nineteenth consecutive term of increased total student enrollment as compared to the corresponding prior year period. Additionally, KGSM total enrollment for the term which began in February increased by more than 18% from February 1996. Tuition revenues also increased because of tuition rate increases which became effective at the DeVry Institutes in March 1997 and at KGSM in September 1996. In June 1996, the Company acquired Becker CPA which also contributed to the Companys revenue increase in the quarter and nine months. 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 in the third quarter increased just slightly compared to the same period in fiscal 1996 but, for the nine months remains below the level for the nine months in fiscal 1996 because of lower cash balances available for investment throughout most of the period. Cost of educational services for the third quarter increased by $5.7 million or 13.7% from the third quarter in fiscal 1996. For the nine months, cost of educational services increased by $18.6 million or 15.8% from the same period in fiscal 1996. The increase in cost of educational services for the quarter and nine months reflects the additional facility, faculty and staff costs associated with Becker's operations and the higher wage, benefit, supply and service expenses associated with the growing student enrollments and additional operating locations at the DeVry Institutes and KGSM. For the nine months, depreciation expense has increased by more than $1.6 million from the comparable period in fiscal 1996, as a result of the Companys extensive capital 10 improvement projects, particularly those related to the opening of the new DeVry Institute in North Brunswick, New Jersey, and the continuous upgrading of school laboratories and teaching equipment throughout the system. Student services and administrative expense increased by $4.6 million or 25.1% in the third quarter over the comparable period in fiscal 1996. For the nine months, student services and administrative expense increased by $11.1 million or 21.5% from the nine months of fiscal 1996. The increase in both the quarter and nine months reflects the marketing costs associated with Becker's operations and the marketing costs associated with generating the higher student enrollments at the DeVry Institutes and KGSM which have already been achieved in fiscal 1997 and for the terms which will begin in the coming months and next fiscal year. The increase in expense for the nine months also includes more than $1.1 million in amortization of intangibles and goodwill, primarily associated with the Becker acquisition. The Company's earnings from operations, before interest expense and taxes, were a record for both the third quarter and nine months. Operating margins, which have been increasing consistently each quarter year-over-year, increased again the third quarter of fiscal 1997, climbing to 13.9% from 12.9% in the third quarter of fiscal 1996. Operating margins were favorably affected by the inclusion of Becker results, where operating margins have historically been higher, by higher revenues and by improved facility utilization and other economies of scale from the increased enrollments at the DeVry Institutes and KGSM. Interest expense for the third quarter and nine months increased by $0.5 million and $1.7 million, respectively, from the third quarter and nine months of fiscal 1996 because of higher outstanding debt levels during the year resulting from the acquisition for cash, of Becker in June 1996. At March 31, 1997, long-term debt increased by $26.0 million from March 31, 1996. The provision for income taxes for the third quarter and nine months continued at a lower rate than in the comparable periods in fiscal 1996 because of a different mix in the earnings from domestic and foreign operations and because of a lower effective state income tax rate. Net income of $6.5 million or $0.19 per share for the third quarter of fiscal 1997 is a record for any third quarter, increasing by $1.4 million or $0.04 per share from the third quarter of fiscal 1996. Similarly, for the nine months, net income of $18.2 million or $0.54 share is also a record for any comparable previous nine month period. Liquidity and Capital Resources - ------------------------------- Cash generated from operations during the first nine months of fiscal 1997 decreased by nearly $3.0 million from the comparable period in fiscal 1996. This decrease is attributable to the rate of financial aid processing during the first three weeks of the DeVry Institutes spring term which began on March 10. The transfer of Restricted Cash from these financial aid loan and grant programs to the Company's unrestricted operating accounts after this aid has been disbursed to student's accounts is particularly high during the early weeks of each new term. Normal variances in the rate of reporting and transferring these funds resulted in some of these transactions being processed in the early weeks of April, after the end of the quarter. Operating cash balances, however, remained higher than they were at the same time last year and were sufficient to meet all of the Company's operating and capital investment needs. 11 During the third quarter of this fiscal year, the Company repaid $3.0 million of its revolving loan facility using existing cash balances and cash generated from operations. This brings to $20.5 million the total repayments made in this fiscal year, an increase of $2.5 million from the total of repayments made in the first nine months of fiscal 1996. Future borrowings and/or repayments will be based upon the Company's seasonal cash flow cycle and payment requirements for construction of new facilities. Capital expenditures for the first nine months of this fiscal year declined by $4.8 million from the comparable period in fiscal 1996, reflecting completion of construction payments and June 1996 occupancy of the DeVry Institute New Jersey campus. Capital expenditures for the fourth quarter of fiscal 1997 and for the fiscal year 1998 are expected to increase from the level of prior comparable periods as the Company undertakes expansion in the number of DeVry Institute and KGSM operating locations. In early April, the Company paid $7.5 million to complete the purchase of land in Fremont, California. In the fourth quarter, the Company expects to pay $6.2 million to complete the purchase of land in West Hills, California. Both land purchases are being funded, in part, from existing operating cash balances resulting from the seasonally heavy cash inflows at the start of the DeVry Institutes spring term. In April, the Company received proceeds, net of underwriting discounts, commissions and other related expenses, of approximately $23.6 million from its 1.2 million share common stock offering, applying $23.0 million to the revolving loan facility and reducing total borrowings in early April to $18.0 million. 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. 12 PART II - Other information - --------------------------- Item 5 - Other Information - -------------------------- In April, the Company completed a 1.2 million offering of its common stock. Substantially all of the net proceeds to the Company from the offering were used to repay indebtedness. In addition, certain shareholders sold 0.8 million shares, including the over-allotment option which was exercised by the underwriters. In April, the Company completed the purchase of land in Fremont, California. DeVry expects to construct a 100,000 square-foot building on the site, with plans to offer classes at this location in 1998. In April, the Company opened a KGSM center in Irvine, California. This is the third KGSM center in the Los Angeles area and the 20th center in the KGSM system. The Company has also signed a letter of intent and deposited funds into escrow to purchase property for a new campus in West Hills, California, which would be the third DeVry Institute in the Los Angeles area. The property purchase is expected to be completed in the fourth quarter of this fiscal year. 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 March 31, 1997. 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: MAY 8, 1997 /s/ Ronald L. Taylor -------------------- Ronald L. Taylor President and Chief Operating Officer Date: MAY 8, 1997 /s/Norman M. Levine --------------------- Norman M. Levine Vice President Finance, Controller, Chief Financial and Accounting Officer EX-27 2
5 9-MOS JUN-30-1997 MAR-31-1997 69719 0 58110 11472 1786 120304 130106 56087 240019 116199 41000 0 0 333 75333 240019 231644 231644 0 136691 62654 14317 2423 29876 11681 18195 0 0 0 18195 .54 .54
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