-----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, KiJF7f5u1lD6fZZroTSxuVD8uPnYYKOH/QKHp7zc5Xnu0dhmYN8GA0jLuUJgFdLQ aXktyTYG+UXH8cErYXASPQ== 0000730464-98-000002.txt : 19980212 0000730464-98-000002.hdr.sgml : 19980212 ACCESSION NUMBER: 0000730464-98-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980211 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: SEC FILE NUMBER: 001-13988 FILM NUMBER: 98530449 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, 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 uch 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 30, 1998: 34,543,127 Total number of pages: 14 2 DEVRY INC. FORM 10-Q INDEX For the Quarter ended December 31, 1997 Page No. -------- PART I. Financial Information Item 1. Financial Statements: Consolidated Balance Sheets at December 31, 1997, June 30, 1997, and December 31, 1996 3-4 Consolidated Statements of Income for the quarter and six months ended December 31, 1997 and 1996 5 Consolidated Statements of Cash Flows for the six months ended December 31, 1997 and 1996 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, 1997 1997 1996 ------------ -------- ------------ (Unaudited) (Unaudited) ASSETS Current Assets Cash and Cash Equivalents $ 36,108 $ 38,865 $ 27,543 Restricted Cash 33,466 12,104 28,479 Accounts Receivable, Net 22,816 12,322 28,438 Inventories 1,795 4,549 1,087 Prepaid Expenses and Other 3,339 2,676 2,313 -------- -------- -------- Total Current Assets 97,524 70,516 87,860 -------- -------- -------- Land, Buildings and Equipment Land 35,148 34,348 18,722 Buildings 51,304 50,906 50,101 Equipment 69,023 63,609 58,639 Construction In Progress 3,400 91 387 -------- -------- -------- 158,875 148,954 127,849 Accumulated Depreciation (62,582) (58,266) (53,072) -------- -------- -------- Land, Buildings and Equipment, Net 96,293 90,688 74,777 -------- -------- -------- Other Assets Intangible Assets, Net 36,992 37,770 37,859 Perkins Program Fund, Net 6,256 6,075 5,885 Other Assets 1,581 1,654 1,764 -------- -------- -------- Total Other Assets 44,829 45,499 45,508 -------- -------- -------- TOTAL ASSETS $238,646 $206,703 $208,145 ======== ======== ========
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, 1997 1997 1996 ------------ -------- ------------ (Unaudited) (Unaudited) LIABILITIES Current Liabilities Accounts Payable $ 19,599 $ 22,301 $ 16,164 Accrued Salaries, Wages & Benefits 15,381 16,077 15,378 Accrued Expenses 7,328 7,620 6,520 Advance Tuition Payments 5,381 6,594 5,823 Deferred Tuition Revenue 50,630 5,701 44,097 -------- -------- -------- Total Current Liabilities 98,319 58,293 87,982 -------- -------- -------- Other Liabilities Revolving Loan 10,000 33,000 44,000 Deferred Income Tax Liability 3,043 3,060 2,142 Deferred Rent and Other 7,276 7,080 4,936 -------- -------- -------- Total Other Liabilities 20,319 43,140 51,078 -------- -------- -------- TOTAL LIABILITIES 118,638 101,433 139,060 -------- -------- -------- SHAREHOLDERS' EQUITY Common Stock, $0.01 par value, 75,000,000 Shares Authorized, 34,536,627, 34,504,214 and 33,265,244, Shares Issued and Outstanding at December 31, 1997, June 30, 1997 and December 31, 1996, Respectively 345 345 333 Additional Paid-in Capital 60,548 60,482 36,744 Retained Earnings 58,632 44,006 31,561 Cumulative Translation Adjustment 483 437 447 -------- -------- -------- TOTAL SHAREHOLDERS' EQUITY 120,008 105,270 69,085 -------- -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $238,646 $206,703 $208,145 ======== ======== ========
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, ------------------ ------------------- 1997 1996 1997 1996 ------------------ ------------------- REVENUES: Tuition $80,697 $73,030 $153,670 $135,508 Other Educational 9,290 7,999 16,392 14,603 Interest 355 233 701 400 ------- ------- -------- -------- Total Revenues 90,342 81,262 170,763 150,511 ------- ------- -------- -------- COSTS AND EXPENSES: Cost of Educational Services 49,469 46,837 98,179 89,656 Student Services and Administrative Expense 26,950 22,470 47,965 39,866 Interest Expense 248 805 648 1,691 ------- ------- -------- -------- Total Costs and Expenses 76,667 70,112 146,792 131,213 ------- ------- -------- -------- Income Before Income Taxes 13,675 11,150 23,971 19,298 Income Tax Provision 5,328 4,369 9,345 7,557 ------- ------- -------- -------- NET INCOME $ 8,347 $ 6,781 $ 14,626 $ 11,741 ======= ======= ======== ======== EARNINGS PER COMMON SHARE $0.24 $0.20 $0.42 $0.35 (Basic and Diluted) ===== ===== ===== =====
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 Quarter Ended December 31, ------------------- 1997 1996 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $14,626 $11,741 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 4,999 4,155 Amortization 792 788 Provision for Refunds and Uncollectible Accounts 8,789 9,356 Deferred Income Taxes (17) 253 Loss on Disposals and Adjustments to Land, Buildings and Equipment 124 (145) Changes in Assets and Liabilities: Restricted Cash (21,362) (11,889) Accounts Receivable (19,222) (27,997) Inventories 2,754 2,203 Prepaid Expenses And Other (183) (986) Perkins Program Fund Contribution and Other (242) (515) Accounts Payable (2,702) (2,695) Accrued Salaries, Wages, Expenses and Benefits (1,213) (579) Advance Tuition Payments (1,213) (1,794) Deferred Tuition Revenue 44,929 40,488 ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 30,859 22,384 ------- ------- CASH FLOWS USED IN INVESTING ACTIVITIES: Capital Expenditures (10,728) (7,346) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds From Exercise of Stock Options 66 50 Repayments Under Revolving Credit Facility (23,000) (17,500) ------- ------- NET CASH USED IN FINANCING ACTIVITIES (22,934) (17,450) Effects of Exchange Rate Differences 46 7 ------- ------- NET DECREASE IN CASH AND CASH EQUIVALENTS (2,757) (2,405) Cash and Cash Equivalents at Beginning of Period 38,865 29,948 ------- ------- Cash and Cash Equivalents at End of Period $36,108 $27,543 ======= ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest Paid During the Year $ 663 $ 1,709 Income Taxes Paid During the Year 9,129 8,568
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, 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, 1997 and in conjunction with the Company's Quarterly report on Form 10-Q for the quarter ended September 30, 1997, each as filed with the Securities and Exchange Commission. The results of operations for the three months and six months ended December 31, 1997, are not necessarily indicative of results to be expected for the entire fiscal year. 2. In July and August 1997, the Company granted options to purchase up to 129,800 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. 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, 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 second quarter increased by $7.7 million, or 10.5%. For the first six months, the increase in tuition revenues was $18.2 million, or 13.4%. These increases in tuition revenue were produced by several positive factors. Enrollment at the DeVry Institutes for the summer term, which began in July, increased by 6.9% from last summer. For the fall term at the DeVry Institutes, which began in November, enrollments increased by 9.0%. These increases in enrollments represented the twentieth and twenty-first consecutive terms of higher total student enrollment as compared to the corresponding prior year period. Contributing to the increased enrollment at DeVry was the opening of its fifteenth Institute in Alpharetta, Georgia, for the summer term. Enrollments at Keller Graduate School for the term which began in June increased by over 20%. For the term which began in November, enrollments at Keller increased by 16.8%. During the first half of fiscal 1998, Keller opened three new teaching centers, bringing the total to 23. In addition, tuition increases of approximately five percent were implemented at DeVry and Keller while a somewhat smaller increase was implemented at Becker CPA. Other educational revenues, composed primarily of sales of books and supplies, increased because of sales to the increased number of students attending the Company's educational programs. Sales of the Becker CPA course recently introduced on CD-ROM are also included in this revenue category. Interest income on the Company's short-term investments increased in the second quarter and first six months as a strong pace of student receivable collections provided cash available for investment in larger amounts than in the previous year. Cost of Educational Services increased by $2.6 million, or 5.6% from the second quarter of last year. For the first half, the increase in cost was $8.5 million, or 9.5%. The increase in cost reflects the additional facility, faculty and staff associated with the new DeVry Institute and Keller Graduate School centers. In addition, there were higher costs associated with the higher enrollments at the previously existing locations at DeVry and Keller. The provision for refunds and doubtful accounts has declined from the level of 9 that expense realized in the first half of last year. The Company believes that the reduction, which began to occur in the second quarter, reflects the beginnings of results from continuing efforts to raise new student admission standards and provide expanded academic services to students needing additional help with their educational program. Depreciation expense increased by over $0.8 million in the first half, reflecting further capital spending for expansion and upgrading of school laboratories and teaching equipment throughout the system. Student Services and Administrative Expense increased by approximately 20% from the second quarter and first half of last year. The increase primarily reflects the marketing costs associated with the Company's newly opened operating locations and the costs associated with generating the higher student enrollments at the previously opened locations. Student recruiting expenses are also being incurred for the planned July 1998 opening of the new DeVry Institute in Fremont, California, and the planned November 1998 opening of the DeVry Institute in New York City. Administrative expenses have also increased from the prior year to support the expanded Company operations. In addition, implementation efforts and spending are underway for the Company's new accounting system. This new system, which was purchased rather than internally developed, will enhance reporting and analysis and overcome year 2000 deficiencies in the current system. The Company's earnings from operations, before interest expense and taxes, were a record for second quarter and six months. Operating margins, which have been increasing consistently each quarter over the comparable year-ago period, increased again in the second quarter to 15.4% from 14.7% last year. For the half, operating margins reached 14.4% compared to 13.9% for the same period last year. The improved operating margins reflect the expanded enrollments and continued cost control. Interest expense for both the quarter and half have decreased substantially from the previous year. The lower interest expense results from the application of the net proceeds from the April 1997 stock offering to debt reduction and from the continued strong cash flow from operations, in excess of needs for expansion and other investment, which is also being applied to debt reduction. Compared to December 31st of last year, debt has been reduced by $34 million. Net income of $8.3 million for the quarter and $14.6 million for the half has increased by more than 20% from the same period last year. Earnings per share for both periods has also increased by 20%, including the effect of the higher number of shares outstanding after the April 1997 stock offering. Liquidity and Capital Resources - ------------------------------- Cash generated from operations in the first half increased by more than $8 million from the first half of last year. The higher level of cash generated reflects the higher net income and higher non-cash charges for depreciation. Also contributing to the higher cash flow is the earlier collection of student receivables this year at the DeVry Institute campus in Atlanta where the start of the summer term last year, and the receivable collection cycle, were delayed by the summer Olympics. 10 For the half, total reductions in the Company's long-term debt equaled $23 million, up from $17.5 million last year. Future borrowings and/or repayments will be based upon the Company's seasonal cash flow cycle and payment requirements for construction of new facilities and other capital spending. Capital spending remains high with construction of the Fremont, California, campus underway and continued investments in technology and other improvements throughout all the Company's operations. For the first half, total capital expenditures were $10.7 million, up $3.4 million from last year. The level of capital spending is expected to remain high as construction of the Fremont campus continues and work begins on the improvements to the leased New York City campus. 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 plans for the foreseeable future. 11 PART II - Other information - --------------------------- Item 4 - Submission of Matters of Vote of Security Holders - ---------------------------------------------------------- The Company's regular annual meeting of stockholders was held in Chicago, Illinois, on Tuesday, November 18, 1997. Proxies for the meeting were solicited in accordance with the Securities Exchange Act of 1934 and there was no solicitation in opposition to those of management. At the meeting, four Directors of the Company were elected to serve as Class III Directors to hold office until 2000 and one Director of the Company was elected to serve as a Class I Director to hold office until 1998 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 Withheld Class I: Ewen M. Akin 30,676,406 168,480 Class III: Charles A. Bowsher 30,686,473 158,412 Robert C. McCormack 30,692,826 152,060 Julie A. McGee 30,691,196 153,690 Ronald L. Taylor 30,692,506 152,379 The terms of office of the following Directors continued after the meeting: David S. Brown, Ann I. Gannon, Dennis J. Keller, Robert E. King, Frederick A. Krehbiel, Thurston E. Manning, and Hugo J. Melvoin. Also 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 result of the stockholders' vote on this matter: For Against Withheld 30,824,050 14,796 6,040 12 Item 5 - Other Information - -------------------------- In connection with the law suit filed by a former student at the DeVry Institute in North York, Ontario, Canada, oral arguments were made on January 23rd on the pending motion to certify the suit as a class action lawsuit. The Company is awaiting the judge's ruling on the matter, the timing of which is presently unknown. Although the outcome cannot be predicted with certainty, the Company believes the resolution of this matter will not have a material effect on the Company's financial position, results of operations or liquidity. In conjunction with the early 1999 expiration of the DeVry Institutes' lease on its North York, Ontario, Canada, facility, all classes and operations at that campus will be relocated to the Scarborough and Mississauga campuses. The Scarborough and Mississauga campuses have the flexibility to accommodate this move while maintaining the level of service to students. 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, 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: FEBRUARY 9, 1998 /s/ Ronald L. Taylor -------------------- Ronald L. Taylor President and Chief Operating Officer Date: FEBRUARY 9, 1998 /s/Norman M. Levine ------------------- Norman M. Levine Vice President Finance, Controller, Chief Financial and Accounting Officer EX-27 2
5 1000 3-MOS JUN-30-1998 DEC-31-1997 69574 0 30277 7461 1795 97524 158875 62582 238646 98319 10000 0 0 345 119663 238646 0 90342 0 49469 26950 4207 248 13675 5328 8347 0 0 0 8347 .24 .24
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