8-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

DATE OF REPORT (Date of earliest event reported): July 17, 2003

ITT EDUCATIONAL SERVICES, INC.
(Exact name of registrant as specified in its charter)

Delaware	1-13144	36-2061311
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

13000 North Meridian Street
Carmel, Indiana 46032-1404
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (317) 706-9200

5975 Castle Creek Parkway, North Drive
P.O. Box 50466
Indianapolis, Indiana 46250-0466
(Former name or former address, if changed since last report)

Item 9.    Regulation FD Disclosure. (information in this Item 9. is being furnished under "Item 12. Results of Operations and Financial Condition.")

        In accordance with Securities and Exchange Commission Release No. 33-8216, the following information, which is intended to be furnished under Item 12, "Results of Operations and Financial Condition," is being provided under Item 9, "Regulation FD Disclosure." This information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

        The Press Release issued by the Registrant dated July 17, 2003 reporting the Registrant's results of operations and financial condition for the Registrant's fiscal quarter ended June 30, 2003, is incorporated herein by reference and furnished to the Securities and Exchange Commission with this report as Exhibit 99.1.

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SIGNATURE

        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 hereunto duly authorized.

Date: July 17, 2003

ITT Educational Services, Inc.
By:	/s/  CLARK D. ELWOOD
	Name:	Clark D. Elwood
	Title:	Senior Vice President, General Counsel and Secretary

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INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Text of Press Release issued by the Registrant dated July 17, 2003.

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Item 9. Regulation FD Disclosure. (information in this Item 9. is being furnished under "Item 12. Results of Operations and Financial Condition.")

SIGNATURE
INDEX TO EXHIBITS

EX-99.1

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Exhibit 99.1

News Release

FOR FURTHER INFORMATION:

COMPANY:		WEB SITE:
Martin Grossman	Nancy Brown	www.ittesi.com
Senior Vice President	Director Corporate Relations
(317)706-9207	(317)706-9260

ITT EDUCATIONAL SERVICES, INC. REPORTS 50 PERCENT INCREASE IN EPS IN SECOND
QUARTER 2003, NEW STUDENT INCREASE OF 15.8 PERCENT

INDIANAPOLIS, IN, July 17, 2003—ITT Educational Services, Inc. (NYSE: ESI), a leading provider of technology-oriented postsecondary degree programs, today reported that earnings per share ("EPS") in the second quarter of 2003 increased 50.0 percent to $0.21 compared to $0.14 in the second quarter of 2002. New student enrollment in the second quarter of 2003, excluding international enrollments and enrollments at two of its institutes that have stopped recruiting new students and are gradually ceasing operations, increased 15.8 percent to 8,665 compared to 7,485 in the same period of 2002. Total student enrollment as of June 30, 2003, excluding international enrollments and enrollments at the two institutes that are gradually ceasing operations, increased 6.6 percent to 33,153 compared to 31,113 as of June 30, 2002. The Company provided the following information for the three and six months ending June 30, 2003:

Three Months Ending June 30th Financial and Operating Results
(Dollars in millions, except earnings per share and revenue per student)

	2003			2002			Increase/ (Decrease)
Revenues(1)	$	124.8		$	108.3		15.2%
Operating Income	$	15.5		$	10.1		52.8%
Operating Margin		12.4	%		9.3	%	310 basis points
Net Income	$	9.8		$	6.8		45.8%
EPS (diluted)	$	0.21		$	0.14		50.0%
Return on Equity (TTM)(2)		57.3	%		52.7	%	460 basis points
New Student Enrollment(3)		8,665			7,485		15.8%
Continuing Students(3)		24,488			23,628		3.6%
Total Student Enrollment as of June 30th(3)		33,153			31,113		6.6%
Online Course Registrations(4)		868	(5)		97	(6)	895.0%
Revenue Per Student	$	3,863		$	3,496		10.5%
Cash, Cash Equivalents and Marketable Debt Securities as of June 30th	$	168.4		$	125.1		34.7%
Bad Debt Expense as a Percent of Revenues		1.2	%		1.3	%	(10) basis points
Days Sales Outstanding as of June 30th		6.1			9.4		(3.3) days
Deferred Tuition Revenue as of June 30th	$	95.0		$	77.4		22.8%
Debt	$	0.0		$	0.0		—
Fully Diluted Shares of Common Stock Outstanding		45,921,000			47,155,000		—
Shares of Common Stock Repurchased		28,000	(7)		0		—
Land and Building Purchases	$	9.7	(8)	$	0.0		—
Number of New Colleges Opened		1	(9)		1	(10)	—
Capital Expenditures	$	4.3		$	6.2		(31.1)%

ITT Educational Services, Inc.
13000 North Meridian Street, Carmel, IN 46032

Six Months Ending June 30th Financial and Operating Results
(Dollars in millions, except earnings per share)

	2003			2002			Increase/ (Decrease)
Revenues(1)	$	243.8		$	213.4		14.2%
Operating Income	$	29.1		$	20.0		45.6%
Operating Margin		12.0	%		9.4	%	260 basis points
Net Income	$	18.5		$	13.2		40.8%
EPS (diluted)	$	0.40		$	0.28		42.9%
Shares of Common Stock Repurchased		1,078,000	(11)		1,150,000	(12)	—
Land and Building Purchases	$	17.3	(13)	$	0.0		—
Capital Expenditures	$	6.0		$	9.3		(35.5)%
New Student Enrollment(14)		15,878			14,199		11.8%

(1)

In an effort to improve revenue comparability to its peers, the Company reported that, effective June 30, 2003, it began classifying tuition and fee refunds resulting from student withdrawals as a reduction of revenue. Previously, the Company included tuition and fees from withdrawing students in Revenues and recorded an offsetting expense in Cost of educational services. The new classification had no impact on the Company's Net income.

(2)

Represents return on equity for the trailing 12 months.

(3)

Excludes international enrollments and enrollments at the two ITT Technical Institutes that are gradually ceasing operations. In the three months ending June 30, 2003, there were 12 new student enrollments at those two colleges compared to 88 in the three months ending June 30, 2002. As of June 30, 2003, the combined total student enrollment at those two colleges was 290 compared to 444 as of June 30, 2002.

(4)

Represents the number of online courses that students were registered to take.

(5)

As of June 30, 2003.

(6)

As of June 30, 2002.

(7)

For approximately $0.8 million or at an average price of $27.28 per share.

(8)

Represents one of the Company's colleges and its corporate offices.

(9)

Duluth (Atlanta), Georgia commenced its first class in June 2003.

(10)

Springfield, Virginia (Washington, D.C.) commenced its first class in June 2002.

(11)

For approximately $28.7 million or at an average price of $26.65 per share.

(12)

For approximately $24.6 million or at an average price of $21.35 per share.

(13)

Represents three of the Company's colleges and its corporate offices.

(14)

Excludes international enrollments and enrollments at the two ITT Technical Institutes that are gradually ceasing operations. In the six months ending June 30, 2003, the combined new student enrollment at those two colleges was 32 compared to 192 in the same period in 2002.

        Rene R. Champagne, chairman and CEO of ITT/ESI said, "We experienced yet another strong financial performance in the second quarter of 2003 that resulted in a 50.0 percent increase in EPS. Our EPS of $0.21 in the second quarter of 2003 exceeded analysts' consensus estimates by 2 cents per share. This performance was driven primarily by increased total student enrollment, tuition increases and greater leveraging of the Company's operating costs. Lead generation in the second quarter remained strong and our lead conversion rate continued to improve, as evidenced by a 15.8 percent increase in new student enrollment. New student enrollment and total student enrollment in the first six months of 2003, excluding international enrollments and enrollments at the two institutes that are gradually ceasing operations, increased 11.8 percent compared to the same period in 2002 and 5.9 percent, respectively."

        Omer Waddles, president and COO of ITT/ESI said, "We continue to both increase the number of our colleges that are approved to award bachelor degrees and introduce new bachelor degree programs of study. As of June 30, 2003, a total of 44 ITT Technical Institutes were approved to offer bachelor degree programs and we continue to receive regulatory approvals to offer new bachelor degree programs at these colleges. In

the first six months of 2003, we received 89 new program approvals. We plan to open our 76^th college in Hilliard (Columbus), Ohio in September 2003 and our 77^th college in Eden Prairie (Minneapolis), Minnesota in December 2003, assuming all of the required regulatory approvals are obtained in a timely fashion. Our 2+1 hybrid delivery model is now being used at 15 of our colleges. Under this model, full-time students take two courses in traditional classroom and lab settings on campus and a third course online during an academic quarter. In addition to increasing the appeal of our programs to working adults, the 2+1 model increases the capacity of our facilities, leading to improvements in our operating margin. As of June 30, 2003, 51 of our colleges had received the requisite regulatory approvals to offer the 2+1 hybrid delivery model. Our new master's degree program in business administration has received all of the requisite regulatory approvals and we have begun marketing this program for a fall class. We can offer this online MBA program in 34 states at this time."

        Kevin M. Modany, senior vice president and CFO said, "In the second quarter of 2003, operating margin increased 310 basis points primarily as a result of our greater leveraging of overhead costs, increased student enrollment, tuition price increases and various cost containment projects. We currently believe that we will achieve or exceed the high end of our previously announced goal of increasing 2003 operating margin in the range of 120 to 150 basis points over our operating margin of 14.7 percent for the full year of 2002. Other key metrics to note in the second quarter of 2003 include a 10.5 percent increase in revenue per student and a 460 basis point improvement of our Return on Equity over the trailing twelve months."

        Champagne concluded, "Based on our strong student enrollment increases and financial performance in the first six months of 2003, we are increasing our internal EPS goal for the full year of 2003 to a range of $1.20 to $1.21 from our previous goal of $1.16 to $1.19. We are also announcing that it is our internal goal for 2004 EPS to be in the range of $1.44 to $1.48 compared to current analysts' consensus estimates of $1.39."

        ITT/ESI intends to conduct a conference call and a live webcast open to the public today at 11:00 a.m. EDT to discuss this release. The webcast may be accessed on ITT/ESI's web site, located at www.ittesi.com and will also be available for replay.

Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are made based upon the current expectations and beliefs of the company's management concerning future developments and their potential effect on the Company. There can be no assurance that future developments affecting the Company will be those anticipated by its management. These forward-looking statements involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: business conditions and growth in the postsecondary education industry and in the general economy; changes in federal and state governmental regulations with respect to education and accreditation standards, or the interpretation or enforcement thereof, including, but not limited to, the level of government funding for, and the Company's eligibility to participate in, student financial aid programs utilized by the Company's students; the results of the qui tam action brought under the False Claims Act, 31 U.S.C. Section 3730, in which the Company is a defendant which, if adversely determined, could result in a demand for repayment of federal student financial aid funds, trebled under the False Claims Act, and penalties; effects of any change in ownership of the Company resulting in a change in control of the Company, including, but not limited to, the consequences of such changes on the accreditation and federal and state regulation of the institutes; the Company's ability to implement its growth strategies; receptivity of students and employers to the Company's existing program offerings and new curricula; loss of lender access to the Company's students for student loans; and other risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking information, whether as a result of new information, future developments or otherwise.

ITT EDUCATIONAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share and operating data)
(unaudited)

		Three Months Ended June 30,						Six Months Ended June 30,
		2003			2002			2003			2002
Revenues (a)		$	124,831		$	108,325		$	243,831		$	213,437
Costs and Expenses (a)
Cost of educational services			72,449			65,508			140,782			128,963
Student services and administrative expenses			36,924			32,698			73,922			64,475
	Total costs and expenses		109,373			98,206			214,704			193,438
Operating income			15,458			10,119			29,127			19,999
Interest income, net			550			808			998			1,295
Income before income taxes			16,008			10,927			30,125			21,294
Income taxes			6,163			4,174			11,598			8,134
Net income		$	9,845		$	6,753		$	18,527		$	13,160
Earnings per common share (b):
	Basic	$	0.22		$	0.15		$	0.41		$	0.29
	Diluted	$	0.21		$	0.14		$	0.40		$	0.28
Supplemental Data:
Cost of educational services			58.0	%		60.5	%		57.7	%		60.4	%
Student services and administrative expenses			29.6	%		30.2	%		30.3	%		30.2	%
Operating margin			12.4	%		9.3	%		12.0	%		9.4	%
Student enrollment at end of period			33,443			31,557			33,443			31,557
Technical institutes at end of period			75			71			75			71
Shares for earnings per share calculation (b):
	Basic		44,830			45,925			44,922			46,037
	Diluted		45,921			47,155			45,982			47,199

(a)

The reclassification with respect to withdrawing students reduced revenues and costs and expenses by $2,681 and $6,080 in the three and six month periods ended June 30, 2003, and by $2,505 and $4,936 in the three and six month periods ended June 30, 2002.

(b)

Earnings per common share and the number of shares in all prior periods have been restated to reflect the two-for-one stock split declared on May 10, 2002 that became effective on June 6, 2002.

ITT EDUCATIONAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)

			June 30, 2003			December 31, 2002			June 30, 2002
			(unaudited)						(unaudited)
Assets
Current assets
	Cash and cash equivalents		$	156,212		$	123,934		$	99,817
	Restricted cash			—			7,103			—
	Marketable debt securities			12,188			25,671			25,235
	Accounts receivable, net			8,322			8,973			11,191
	Deferred and prepaid income tax			3,125			1,988			3,139
	Prepaids and other current assets			5,619			5,597			8,292
		Total current assets		185,466			173,266			147,674
Property and equipment, net				74,885			62,584			48,140
Direct marketing costs				10,618			10,609			10,918
Other assets				789			1,248			882
	Total assets		$	271,758		$	247,707		$	207,614
Liabilities and Shareholders' Equity
Current liabilities
	Accounts payable		$	41,531		$	18,162		$	26,642
	Accrued compensation and benefits			10,979			9,196			6,197
	Other accrued liabilities			17,785			12,140			6,592
	Deferred revenue			95,027			102,997			77,384
		Total current liabilities		165,322			142,495			116,815
Deferred income tax				3,895			6,204			6,365
Minimum pension liability				8,041			8,041			3,022
Other liabilities				2,561			1,943			1,583
	Total liabilities			179,819			158,683			127,785
Shareholders' equity
	Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued or outstanding			—			—			—
	Common stock, $.01 par value, 150,000,000 shares authorized, 54,068,904 issued			540			540			540
	Capital surplus			45,657			40,393			40,065
	Retained earnings			190,342			184,409			154,288
	Accumulated other comprehensive income (loss)			(4,888	)		(4,888	)		(1,837	)
	Treasury stock, 9,214,990, 8,986,267 and 8,056,264 shares, at cost			(139,712	)		(131,430	)		(113,227	)
		Total shareholders' equity		91,939			89,024			79,829
		Total liabilities and shareholders' equity	$	271,758		$	247,707		$	207,614

ITT EDUCATIONAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

				Three Months Ended June 30,						Six Months Ended June 30,
				2003			2002			2003			2002
Cash flows provided by (used for) operating activities:
	Net income			$	9,845		$	6,753		$	18,527		$	13,160
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			5,597			5,503			11,013			10,765
		Provision for doubtful accounts			1,540			1,457			3,542			3,520
		Deferred taxes			(1,939	)		134			(3,446	)		537
		Increase/decrease in operating assets and liabilities:
			Marketable debt securities		16,076			(9,725	)		13,483			15,833
			Accounts receivable		(700	)		(1,089	)		(2,891	)		(2,032	)
			Direct marketing costs		(63	)		(435	)		(9	)		(398	)
			Accounts payable and accrued liabilities		31,917			298			31,424			11,519
			Prepaids and other assets		3,531			4,414			437			(788	)
			Deferred revenue		(3,296	)		(495	)		(7,970	)		232
Net cash provided by (used for) operating activities					62,508			6,815			64,110			52,348
Cash flows provided by (used for) investing activities:
	Facility purchases				(9,662	)		—			(17,303	)		—
	Capital expenditures, net				(4,254	)		(6,174	)		(6,011	)		(9,312	)
Net cash provided by (used for) investing activities					(13,916	)		(6,174	)		(23,314	)		(9,312	)
Cash flows provided by (used for) financing activities:
	Purchase of treasury stock				(768	)		—			(28,726	)		(24,551	)
	Exercise of stock options				1,937			3,869			13,105			12,168
Net cash provided by (used for) financing activities					1,169			3,869			(15,621	)		(12,383	)
Net increase (decrease) in cash, cash equivalents and restricted cash					49,761			4,510			25,175			30,653
Cash, cash equivalents and restricted cash at beginning of period					106,451			95,307			131,037			69,164
Cash, cash equivalents and restricted cash at end of period				$	156,212		$	99,817		$	156,212		$	99,817

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ITT EDUCATIONAL SERVICES, INC. REPORTS 50 PERCENT INCREASE IN EPS IN SECOND QUARTER 2003, NEW STUDENT INCREASE OF 15.8 PERCENT
ITT EDUCATIONAL SERVICES, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share and operating data) (unaudited)
ITT EDUCATIONAL SERVICES, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data)
ITT EDUCATIONAL SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited)