-----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, WvZkJNaaYUV//Y6gOERrKnegyG3ns6NNYl3lRrWvkLdZ8CfSxMWVRGSKD2affQRC dOQksQyXmbM559Iy4vDekg== 0000730464-99-000014.txt : 19991108 0000730464-99-000014.hdr.sgml : 19991108 ACCESSION NUMBER: 0000730464-99-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991105 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: 99741855 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 September 30, 1999 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 October 29, 1999: 69,441,740 Total number of pages: 12 2 DeVRY INC. FORM 10-Q INDEX For the Quarter ended September 30, 1999 Page No. PART I. Financial Information Item 1. Financial Statements: Consolidated Balance Sheets at September 30, 1999, June 30, 1999, and September 30, 1998 3-4 Consolidated Statements of Income for the quarter ended September 30, 1999, and 1998 5 Consolidated Statements of Cash Flows for the quarter ended September 30, 1999, and 1998 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 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12 3 PART I - Financial Information Item 1 - Financial Statements DEVRY INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
September 30, June 30, September 30, 1999 1999 1998 ------------ ------------ ------------ (Unaudited) (Unaudited) ASSETS Current Assets Cash and Cash Equivalents $34,871 $31,848 $24,331 Restricted Cash 26,193 20,766 24,643 Accounts Receivable, Net 41,324 14,217 29,914 Inventories 4,765 6,592 3,570 Deferred Income Taxes 4,536 4,536 1,550 Prepaid Expenses and Other 2,614 982 1,351 ---------- ---------- ---------- Total Current Assets 114,303 78,941 85,359 ---------- ---------- ---------- Land, Buildings and Equipment Land 38,419 37,833 35,297 Buildings 78,595 73,175 64,405 Equipment 99,455 92,304 76,985 Construction In Progress 16,248 12,741 6,614 ---------- ---------- ---------- 232,717 216,053 183,301 Accumulated Depreciation (85,456) (80,842) (68,003) ---------- ---------- ---------- Land, Buildings and Equipment, Net 147,261 135,211 115,298 ---------- ---------- ---------- Other Assets Intangible Assets, Net 75,872 37,841 37,500 Perkins Program Fund, Net 7,375 7,375 6,813 Other Assets 1,517 1,323 1,446 ---------- ---------- ---------- Total Other Assets 84,764 46,539 45,759 ---------- ---------- ---------- TOTAL ASSETS $346,328 $260,691 $246,416 ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 4 DEVRY INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
September 30, June 30, September 30, 1999 1999 1998 ------------ ------------ ------------ (Unaudited) (Unaudited) LIABILITIES Current Liabilities Accounts Payable $26,033 $29,080 $16,303 Accrued Salaries, Wages & Benefits 22,677 22,339 18,677 Accrued Expenses 15,398 5,500 12,504 Advance Tuition Payments 8,656 11,979 5,727 Deferred Tuition Revenue 45,233 5,145 36,333 ---------- ---------- ---------- Total Current Liabilities 117,997 74,043 89,544 ---------- ---------- ---------- Other Liabilities Revolving Loan 29,000 - - Deferred Income Tax Liability 2,137 2,137 3,695 Deferred Rent and Other 11,927 9,206 8,867 ---------- ---------- ---------- Total Other Liabilities 43,064 11,343 12,562 ---------- ---------- ---------- TOTAL LIABILITIES 161,061 85,386 102,106 ---------- ---------- ---------- SHAREHOLDERS' EQUITY Common Stock, $0.01 par value, 200,000,000 Shares Authorized, 69,432,273, 69,414,020 and 69,320,520, Shares Issued and Outstanding at September 30, 1999, June 30, 1999 and September 30, 1998, Respectively 695 694 693 Additional Paid-in Capital 61,015 60,948 60,646 Retained Earnings 123,122 113,215 82,201 Accumulated Other Comprehensive Income 435 448 770 ---------- ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 185,267 175,305 144,310 ---------- ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $346,328 $260,691 $246,416 ========== ========== ==========
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 Ended September 30, 1999 1998 -------- -------- REVENUES: Tuition $106,863 $ 84,753 Other Educational 11,115 8,868 Interest 304 237 ------- ------- Total Revenues 118,282 93,858 ------- ------- COSTS AND EXPENSES: Cost of Educational Services 71,227 56,586 Student Services and Administrative Expense 30,266 24,307 Interest Expense 574 170 ------- ------- Total Costs and Expenses 102,067 81,063 ------- ------- Income Before Income Taxes 16,215 12,795 Income Tax Provision 6,308 4,977 ------- ------- NET INCOME $ 9,907 $ 7,818 ======= ======= EARNINGS PER COMMON SHARE Basic $0.14 $0.11 ======= ======= Diluted $0.14 $0.11 ======= =======
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 September 30, 1999 1998 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $9,907 $7,818 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 4,608 3,338 Amortization 915 415 Provision for Refunds and Uncollectible Accounts 6,009 4,897 Deferred Income Taxes - 83 Loss on Disposals and Adjustments to Land, Buildings and Equipment 32 191 Changes in Assets and Liabilities: Restricted Cash (5,282) (7,768) Accounts Receivable (32,691) (22,890) Inventories 1,910 1,648 Prepaid Expenses And Other (522) 703 Perkins Program Fund Contribution and Other - (196) Accounts Payable (5,343) (7,813) Accrued Salaries, Wages, Expenses and Benefits 9,614 5,387 Advance Tuition Payments (4,772) (3,475) Deferred Tuition Revenue 40,088 30,598 ------ ------ NET CASH PROVIDED BY OPERATING ACTIVITIES 24,473 12,936 ------ ------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital Expenditures (12,319) (10,722) Payments for Purchases of Businesses, Net of Cash Acquired (38,186) - ------ ------ NET CASH USED IN INVESTING ACTIVITIES: (50,505) (10,722) ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds From Exercise of Stock Options 68 36 Proceeds From Revolving Credit Facility 40,000 - Repayments Under Revolving Credit Facility (11,000) (10,000) ------ ------ NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 29,068 (9,964) Effects of Exchange Rate Differences (13) 200 ------ ------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,023 (7,550) Cash and Cash Equivalents at Beginning of Period 31,848 31,881 ------ ------ Cash and Cash Equivalents at End of Period $34,871 $24,331 ====== ====== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest Paid During the Period $490 $116 Income Taxes Paid During the Period, Net 286 11
The accompanying notes are an integral part of these consolidated financial statements. 7 DEVRY INC. Notes to Consolidated Financial Statements For the Quarter Ended September 30, 1999 ---------- 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 as filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1999. The results of operations for the three months ended September 30, 1999, are not necessarily indicative of results to be expected for the entire fiscal year. 2. Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" established standards for reporting and display of comprehensive income and its components in the financial statements. The Company's only item that meets the definition for adjustment to arrive at comprehensive income is the change in cumulative translation adjustment. This amount was immaterial for the quarter ended September 30, 1999. 3. On July 1, 1999, the Company acquired substantially all of the tangible operating assets, trademarks and trade names and assumed certain liabilities of the Denver Technical College ("DTC"). These assets were purchased, for cash, from Educational Development Corporation and its stockholders. On this same date, the Company acquired certain land and buildings used by DTC from Niagara Limited Partnership for cash. DTC is one of the largest technical colleges in Colorado. The college offers undergraduate and post-graduate degree programs in electronics, computer technology, business and medical technology at campuses in Denver and Colorado Springs. On July 2, 1999, Becker CPA acquired certain tangible operating assets, trademarks and trade names of Conviser Duffy CPA Review Course ("Conviser Duffy"). These assets were purchased, for cash, from a unit of Harcourt General, Inc. Conviser Duffy is a nationally known training firm preparing students to pass the CPA exam. Funding for the above acquisitions was obtained through borrowings under the Company's revolving credit facility. The acquisitions are accounted for under the purchase method of accounting. Accordingly, the purchase prices have been allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The amounts recorded relating to the acquisitions are currently subject to adjustment as the Company has not yet completed the final allocation of the purchase prices. The intangible assets, consisting primarily of goodwill, are being amortized using the straight line method over a 25-year period for financial reporting purposes and will be deducted for tax reporting purposes over shorter statutory lives. 4. In July and August 1999, the Company granted options to purchase up to 232,000 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 Certain information contained in this quarterly report may constitute forward looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may involve risks and uncertainty that could cause actual results to differ materially from the forward-looking statements. Potential risks and uncertainties include, but are not limited to, dependence on student financial aid, state and provincial approval and licensing requirements, and the other factors detailed in the Company's SEC filings, including those discussed under the heading entitled "Risk Factors" in the Company's Registration Statement on Form S-3 (No. 333-22457) filed with the Securities and Exchange Commission 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 as included in the Company's annual report on Form 10-K for the fiscal year ended June 30, 1999, as filed with the Securities and Exchange Commission. All references to per share amounts have been restated to reflect the June 19, 1998, 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's management 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. Because of 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 first quarter increased by $22.1 million, or 26.1%, compared to the first quarter of last year. The increase in tuition revenue was produced by several positive factors. Enrollments at the Company's undergraduate schools increased by 15.9% from last summer. This was the 26th consecutive term that exceeds prior-year results in total student enrollment. The total student enrollment includes DeVry Institutes and the newly acquired Denver Technical College. Also contributing to the enrollment and revenue growth was the opening of a DeVry Institute campus in New York last November for which there was no enrollment or revenue in the summer quarter a year ago. At Keller Graduate School, enrollment for the term which began in June increased by 19.9% from last June. Compared to June of last year, Keller conducted classes in five new sites, bringing the total to 31, including the distance education program. Tuition increases approximating 5-6% were implemented by both DeVry Institutes and Keller during the past year, contributing further to the tuition revenue growth. Another contribution to the revenue growth came from increased enrollments in the Becker CPA review course and the July acquisition of the Conviser Duffy CPA Review course, bringing to approximately 30,000 the number of students enrolling annually. 9 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 Review course on CD-ROM, which are included in this revenue category, continued their increase from the prior year. Interest income on the Company's short-term investments increased slightly from the first quarter of last year, reflecting higher cash balances which were held through most of the quarter as a result of higher cash flow from operations this year than last. Cost of Educational Services increased by $14.6 million, or 25.9%, from the first quarter of last year. The increase reflects the instructional costs associated with the acquisitions of Denver Technical College and Conviser Duffy as well as the cost of additional facilities, faculty, staff, service and supply costs associated with the new DeVry Institute and Keller Graduate School sites. Increased enrollments at the previously existing sites also caused spending at these locations to increase. Depreciation expense, included in the Cost of Educational Services, increased by nearly $1.3 million from last year. This increase reflects the record investment last year, continuing into the first quarter, for the expansion and upgrading of facilities and teaching equipment throughout the system. Student Services and Administrative Expense increased by almost $6.0 million, or 24.5%, from the first quarter of last year. This increase reflects the marketing and administrative costs associated with the acquired operations and the marketing costs associated with student recruitment for the Company's new teaching sites, including the West Hills, California, DeVry Institute campus which opens in November. Amortization expense of intangible assets, which is included in the Student Services and Administrative Expense category, increased by $0.5 million, reflecting the amortization of goodwill from the two acquisitions which were completed at the beginning of the quarter. Administrative efforts and all required remediation activities associated with correcting Y2K computer processing deficiencies are nearly complete. The Company is also nearing completion of its contingency planning for unexpected difficulties that it or its suppliers may encounter. All incremental spending on these efforts has been charged to expense as incurred and is not material relative to the overall level of revenues or expenses in the period. Compared to last year, these costs were not an increased element of spending in the quarter. The Company's earnings from operations, before interest and taxes, were a record for any first quarter period. Operating margins, which have been steadily rising over the corresponding year-ago periods, increased again from 13.8% to 14.2%. This increase was achieved by higher operating leverage on continued growth at the Company's previously existing locations and cost controls over all areas of spending, offsetting the effect of the new location startups at DeVry Institutes and Keller Graduate School. 10 Interest expense increased by $0.4 million from last year because of borrowings under the Company's revolving term loan agreement used to complete the acquisitions of Denver Technical College and Conviser Duffy CPA Review. Net income of $9.9 million, or $0.14 per share, increased by more than 26% from last year, continuing the pattern of year-over-year earnings increases in excess of 20%. Liquidity and Capital Resources - ------------------------------- Cash generated from operations reached $24.3 million, substantially more than the $12.9 million generated in the first quarter of last year. Higher net income, increased non-cash charges for depreciation and amortization, higher accrued wages and expenses and increased accounts payable were the primary contributors to the increased cash flow. Although accounts receivable increased from last year because of somewhat slower processing of student financial aid under federal loan programs, this was offset by higher deferred tuition revenues, reflecting the increase in student enrollments and revenues that also contributed to the increased receivables. Capital spending was more than $12.3 million in the quarter, reflecting such major projects as completion of construction at the DeVry Institute campus in West Hills, California, and the addition at the urban Chicago DeVry campus, plus renovation and expansion at the Columbus DeVry campus. During the first quarter, the Company borrowed $40 million under its revolving term loan to complete the acquisitions of Denver Technical college and Conviser Duffy CPA review. Subsequent to this borrowing, the Company repaid $11 million of borrowings from cash on hand and cash generated from operations. The Company remains highly dependent upon the timely receipt of financial aid funds. If funds flow is temporarily delayed because of Y2K processing difficulties, the Company could use its available cash resources and its revolving term loan agreement until such time as funds flow was restored. The U.S. Department of Education and most aid processing agencies report that they are Y2K compliant. The Company believes that current balances of unrestricted cash, cash generated from operations and its revolving term loan agreement will be sufficient to fund its operations for the foreseeable future. 11 PART II - Other Information Item 5 - Other Information - -------------------------- During the first quarter, the Company completed the acquisitions, for cash, of the Denver Technical College and Conviser Duffy CPA Review. Denver Technical College operates two campuses in the Denver, Colorado, area offering programs in electronics, computer technology, business and medical technology. Conviser Duffy CPA Review is a nationally known training firm preparing students to pass the CPA exam. Funding for both of these acquisitions was obtained through borrowings under the Company's revolving term loan. Both acquisitions were accounted for under the purchase method of accounting. 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 September 30, 1999. 12 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: NOVEMBER 5, 1999 /s/ Ronald L. Taylor -------------------- Ronald L. Taylor President and Chief Operating Officer Date: NOVEMBER 5, 1999 /s/Norman M. Levine ------------------- Norman M. Levine Vice President Finance, Controller, Chief Financial and Accounting Officer EX-27 2
5 1000 3-MOS JUN-30-2000 SEP-30-1999 61064 0 49654 8330 4765 114303 232717 85456 346328 117997 29000 0 0 695 184572 346328 0 118282 0 71227 30266 6009 574 16215 6308 9907 0 0 0 9907 .14 .14
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