26.01.2010 21:01:00

DeVry Inc. Announces Second-Quarter Results

DeVry Inc. (NYSE:DV), a global provider of educational services, today reported results for its fiscal 2010 second-quarter and six-month period ended Dec. 31, 2009. DeVry’s strong financial performance was driven by continued solid execution of its growth and diversification strategy and ongoing focus on academic quality.

Three Months Ended Dec. 31, 2009:

  • Revenues increased 28 percent to $473.0 million
  • Net income increased 69 percent to $72.5 million
  • Diluted earnings per share increased 69 percent to $1.00

Six Months Ended Dec. 31, 2009:

  • Revenues rose 34 percent to $904.1 million
  • Net income increased 64 percent to $127.2 million
  • Diluted earnings per share increased 64 percent to $1.76

"At a time when state budget cuts and shrinking endowments are making it difficult for colleges and universities to meet the increasing demand for quality education in this country, the private sector is playing an important role in helping to educate our country’s workforce and ensuring that we remain competitive in the global marketplace,” said Daniel Hamburger, DeVry’s president and chief executive officer. "We are proud to be a part of the solution and are committed to helping our students meet their career aspirations.”

Business Highlights

Business, Technology, and Management Segment

DeVry University

As previously announced in December 2009, DeVry University new undergraduate enrollment increased 19.4 percent and total undergraduate enrollment rose 22.7 percent. At Keller Graduate School of Management, the number of coursetakers in November 2009 increased 16.5 percent to an all-time record of more than 20,000 coursetakers. DeVry University’s strong results and execution continue to position it well for the remainder of fiscal 2010. DeVry University continues to make strategic investments in its career services and financial services operations to assist students in achieving their career goals.

Medical and Healthcare Segment

Chamberlain College of Nursing

During the quarter, Chamberlain received Higher Learning Commission (HLC) approval for its programs in Jacksonville, Fla., and preliminary approval in Crystal City, Va. Programs at the new Crystal City campus will begin in summer 2010 pending other approvals. Chamberlain’s new Chicago campus is also expected to open in summer 2010 pending approvals. In addition, Chamberlain will move from its current St. Louis campus to a new, state-of the-art location in nearby Maryland Heights. All four of these Chamberlain campuses are co-locations with DeVry University.

In July Chamberlain will begin offering an online Registered Nurse (RN) to Master of Nursing in Science (MSN) program providing greater flexibility for students to achieve an MSN degree.

Apollo College/Western Career College (U.S. Education)

With the integration of Apollo College and Western Career College essentially complete, the focus now centers on other areas of value creation. Apollo College launched a physical therapy assistant (PTA) program in its Mesa, Ariz., campus during the quarter. Recently, call center operations were moved to its Phoenix location, and accounting functions were consolidated in Mission Viejo, Calif.

Professional Education Segment

Becker Professional Education

Although conditions in the accounting and finance fields are not expected to materially improve in 2010, Becker continues to make investments to position itself for long term growth. During the quarter, Becker launched a pilot program targeting recent college graduates who have been most affected by the current job market. The new program offers zero percent financing for the Becker CPA Review. Becker also signed an exclusive agreement in December to distribute its CPA preparation materials in China through China Distance Education Holdings Limited, the largest CPA training provider in the country.

Other Educational Services Segment

DeVry Brasil

DeVry is in the midst of organizing its schools under the DeVry Brasil group platform to integrate operations and leverage best practices across Fanor, Ruy Barbosa and Area 1. During the quarter, Fanor’s Fortaleza campus received approval for two new programs in environmental engineering and physical education, while Ruy Barbosa received approvals for five new bachelor’s degree programs, including nursing, physiotherapy and nutrition.

Balance Sheet/Cash Flow

For the first half of fiscal 2010, DeVry generated $267.3 million of operating cash flow, driven by the continuation of strong operating results and working capital management. As of Dec. 31, 2009, cash, marketable securities and investment balances totaled $334.2 million and outstanding borrowings were $44.7 million.

Share Repurchase Plan

During the quarter, DeVry completed its second share repurchase program, repurchasing $50 million of common stock at an average cost of $48.67 per share. DeVry’s board of directors authorized a third repurchase program in November 2009 of up to $50 million.

Conclusion

"We are pleased with our continued solid performance and acknowledge the significant contributions of our 17,000 colleagues around the world in executing our growth and diversification strategies,” said Hamburger. "As we enter the new calendar year, our primary focus will remain on achieving strong student outcomes. We will continue to put our students first by prudently investing in high quality educational programs and services to help them succeed in their chosen careers.”

Conference Call and Webcast Information

DeVry will host a conference call on Jan. 26, 2010, at 3:30 p.m. Central Standard Time (4:30 p.m. Eastern Standard Time) to discuss its fiscal 2010 second-quarter results. The conference call will be led by Daniel Hamburger, president and chief executive officer, and Rick Gunst, chief financial officer.

For those wishing to participate by telephone, dial (866) 783-2138 (domestic) or (857) 350-1597 (international). Use passcode 27450021 or say "DeVry Call.” DeVry will also broadcast the conference call live via the Internet. Interested parties may access the webcast through the Investor Relations section of the company's Web site, or http://phx.corporate-ir.net/phoenix.zhtml?c=93880&p=irol-EventDetails&EventId=2599577. Please access the Web site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.

DeVry will archive a telephone replay of the call until Feb. 9, 2010. To access the replay, dial (888) 286-8010 (domestic) or (617) 801-6888 (international), passcode: 88987049. To access the Webcast replay, please visit DeVry’s Web site at www.devryinc.com.

About DeVry Inc.

DeVry’s purpose is to empower its students to achieve their educational and career goals. DeVry (NYSE: DV, member S&P 500 Index) is a global provider of educational services and the parent organization of Advanced Academics, Apollo College, Becker Professional Education, Chamberlain College of Nursing, DeVry Brasil, DeVry University, Ross University Schools of Medicine and Veterinary Medicine, and Western Career College. These institutions offer a wide array of programs in business, healthcare and technology and serve students in secondary through postsecondary education as well as accounting and finance professionals. For more information, please call 630.353.3800 or visit http://www.devryinc.com.

Certain statements contained in this release concerning DeVry's future performance, including those statements concerning DeVry's expectations or plans, may constitute forward-looking statements subject to the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as DeVry Inc. or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. Actual results may differ materially from those projected or implied by these forward-looking statements. Potential risks, uncertainties and other factors that could cause results to differ are described more fully in Item 1A, "Risk Factors," in DeVry's most recent Annual Report on Form 10-K for the year ending June 30, 2009 and filed with the Securities and Exchange Commission on August 26, 2009.

Selected Operating Data (in thousands, except per share data)

  Second Quarter
FY 2010   FY 2009   Change
Revenues $473,012   $369,615   +28.0 %
Net Income $72,454 $42,865 +69.0 %
Earnings per Share (diluted) $1.00 $0.59 +69.5 %
Number of common shares (diluted) 72,232 72,662 (0.6 %)
  Six Months
FY 2010   FY 2009   Change
Revenues $904,122   $673,332   +34.3 %
Net Income $127,181 $77,695 +63.7 %
Earnings per Share (diluted) $1.76 $1.07 +64.5 %
Number of common shares (diluted) 72,199 72,606 (0.6 %)

Chart 1: Analysis of 1992-2001 U.S. Unemployment Rate vs. Total Enrollment Growth at DeVry University

(See chart in Multimedia Gallery http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6156096&lang=en)

 

Chart 2: Remaining DeVry Inc. Calendar 2010 Announcements & Events

 
Apr 22, 2010 Fiscal 2010 Third Quarter Earnings and Spring Enrollment
DeVry University (Undergraduate and Graduate)

Chamberlain College of Nursing

Ross University

Apollo College and Western Career College (U.S. Education)

DeVry Brasil

 
Aug 12, 2010 Fiscal 2010 Year-End Earnings and Summer Enrollment
DeVry University, (Undergraduate and Graduate)

Chamberlain College of Nursing

Ross University

Apollo College and Western Career College (U.S. Education)

 
Oct 26, 2010 Fiscal 2011 First Quarter Earnings and Enrollment
DeVry University (graduate)

Ross University

DeVry Brasil

 
Dec 9, 2010 Most recent enrollment results; press release, no conference call
DeVry University (Undergraduate and Graduate)

Chamberlain College of Nursing

Apollo College and Western Career College (U.S. Education)

 
DEVRY INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)
(Unaudited)
PRELIMINARY
         
December 31, June 30, December 31,
2009 2009 2008
 

ASSETS

 

Current Assets

 
Cash and Cash Equivalents $ 272,550 $ 165,202 $ 203,326
Marketable Securities and Investments 61,608 60,174 1,861
Restricted Cash 54,599 5,339 31,948
Accounts Receivable, Net 135,183 104,413 137,602
Deferred Income Taxes, Net 22,191 21,562 16,312
Prepaid Expenses and Other   32,504     28,756     33,903  
 
Total Current Assets   578,635     385,446     424,952  
 

Land, Buildings and Equipment

 
Land 54,038 53,694 50,797
Buildings 270,727 250,542 235,640
Equipment 356,203 328,637 295,636
Construction In Progress   17,776     10,587     8,209  
 
698,744 643,460 590,282
 
Accumulated Depreciation and Amortization   (352,987 )   (335,889 )   (325,452 )
 
Land, Buildings and Equipment, Net   345,757     307,571     264,830  
 

Other Assets

 
Intangible Assets, Net 198,142 203,195 187,612
Goodwill 514,873 512,568 494,488
Perkins Program Fund, Net 13,450 13,450 13,450
Investments - - 57,757
Other Assets   14,961     12,069     11,798  
 
Total Other Assets   741,426     741,282     765,105  
 
TOTAL ASSETS $ 1,665,818   $ 1,434,299   $ 1,454,887  

 
DEVRY INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)
(Unaudited)
PRELIMINARY
         
December 31, June 30, December 31,
2009 2009 2008
 

LIABILITIES

 

Current Liabilities

 
Current Portion of Debt $ 44,732 $ 104,811 $ 135,124
Accounts Payable 71,246 71,564 40,905
Accrued Salaries, Wages and Benefits 50,009 74,174 54,200
Accrued Expenses 65,605 39,162 41,470
Advance Tuition Payments 70,298 27,642 44,443
Deferred Tuition Revenue   223,615     74,664     181,616  
 
Total Current Liabilities   525,505     392,017     497,758  
 

Non-Current Liabilities

 
Revolving Loan - 20,000 20,000
Deferred Income Taxes, Net 51,790 51,895 56,060
Deferred Rent and Other   39,254     40,257     30,463  
 
Total Non-current Liabilities   91,044     112,152     106,523  
 
TOTAL LIABILITIES   616,549     504,169     604,281  
 
NON-CONTROLLING INTEREST 4,104 3,188 -
 

SHAREHOLDERS' EQUITY

 
Common Stock, $0.01 par value, 200,000,000 Shares Authorized;
71,107,000, 71,233,000 and 71,636,000 Shares issued
and outstanding at December 31, 2009, June 30, 2009
and December 31, 2008, respectively. 731 729 726
Additional Paid-in Capital 207,884 197,096 181,758
Retained Earnings 910,802 791,677 709,464
Accumulated Other Comprehensive Income 11,547 7,157 469
Treasury Stock, at Cost (1,977,000, 1,663,000 and 1,064,000
Shares, Respectively)   (85,799 )   (69,717 )   (41,811 )
 
TOTAL SHAREHOLDERS' EQUITY   1,045,165     926,942     850,606  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,665,818   $ 1,434,299   $ 1,454,887  

 
DEVRY INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands Except for Per Share Amounts)
(Unaudited)
PRELIMINARY
               
For The Quarter For The Six Months
Ended December 31, Ended December 31,
 
2009 2008 2009 2008
 
REVENUES:
Tuition $ 448,977 $ 342,044 $ 850,348 $ 621,171
Other Educational   24,035     27,571     53,774     52,161  
 
Total Revenues   473,012     369,615     904,122     673,332  
 
OPERATING COSTS AND EXPENSES:
Cost of Educational Services 199,965 167,107 396,448 306,720
Student Services and Administrative Expense   164,118     139,968     319,360     257,260  
 
Total Operating Costs and Expenses   364,083     307,075     715,808     563,980  
 
Operating Income 108,929 62,540 188,314 109,352
 
INTEREST AND OTHER INCOME (EXPENSE):
Interest Income 574 1,710 1,074 3,852
Interest Expense (495 ) (1,176 ) (917 ) (1,529 )
Net Investment Gain (Loss)   313     (1,718 )   1,144     (1,718 )
 
Net Interest and Other Income (Expense)   392     (1,184 )   1,301     605  
 
Income Before Income Taxes 109,321 61,356 189,615 109,957
 
Income Tax Provision   36,731     18,491     62,454     32,262  
 
NET INCOME 72,590 42,865 127,161 77,695
 
Net (Income) Loss Attributable to Noncontrolling Interest   (136 )   -     20     -  
 
NET INCOME ATTRIBUTABLE TO DEVRY INC. $ 72,454   $ 42,865   $ 127,181   $ 77,695  
 
EARNINGS PER COMMON SHARE ATTRIBUTABLE
TO DEVRY INC. SHAREHOLDERS
Basic $ 1.02   $ 0.60   $ 1.78   $ 1.09  
Diluted $ 1.00   $ 0.59   $ 1.76   $ 1.07  
 
Cash Dividend Declared per Common Share $ 0.10   $ 0.08   $ 0.10   $ 0.08  

 
DEVRY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
PRELIMINARY
     
For The Six Months
Ended December 31,
2009   2008
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $127,181 $77,695
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
 
Stock-Based Compensation Charge 5,717 4,809
Depreciation 25,124 19,200
Amortization 7,653 3,904
Provision for Refunds and Uncollectible Accounts 46,215 34,056
Deferred Income Taxes (889 ) (503 )
Loss (Gain) on Disposals of Land, Buildings and Equipment 352 (7 )
Unrealized Net (Gain) Loss on Investments (1,144 ) 1,718
Changes in Assets and Liabilities, Net of Effects from
Acquisitions of Businesses:
Restricted Cash (49,250 ) (27,712 )
Accounts Receivable (76,422 ) (87,520 )
Prepaid Expenses And Other (8,834 ) (592 )
Accounts Payable (349 ) (31,143 )
Accrued Salaries, Wages, Expenses and Benefits 424 5,525
Advance Tuition Payments 42,555 22,716
Deferred Tuition Revenue 148,951   116,627  
 
NET CASH PROVIDED BY OPERATING ACTIVITIES 267,284   138,773  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (61,629 ) (25,208 )
Payments for Purchases of Businesses, Net of Cash Acquired - (286,500 )
Marketable Securities Purchased (39 ) (37 )
Other (27 ) -  
 
NET CASH USED IN INVESTING ACTIVITIES (61,695 ) (311,745 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Exercise of Stock Options 3,739 7,764
Proceeds from Stock issued Under Employee Stock Purchase Plan 470 1,570
Repurchase of Common Stock for Treasury (16,316 ) (5,358 )
Cash Dividends Paid (5,716 ) (4,282 )
Excess Tax Benefit from Stock-Based Payments 1,157 2,095
Borrowings Under Revolving Credit Facility 70,000 210,000
Repayments Under Revolving Credit Facility (150,000 ) (100,000 )
Borrowings Under Collateralized Line of Credit 173 46,187
Repayments Under Collateralized Line of Credit (252 ) (1,063 )
 
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (96,745 ) 156,913  
 
Effects of Exchange Rate Differences (1,496 ) 2,186  
 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 107,348 (13,873 )
 
Cash and Cash Equivalents at Beginning of Period 165,202   217,199  
 
Cash and Cash Equivalents at End of Period $272,550   $203,326  
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest $553 $1,057
Income Taxes, Net 48,297 18,119
 
Non-cash Investing Activity:
Declaration of Cash Dividends to be Paid 7,109 5,732
Accretion of Noncontrolling Interest Put Option 936 -

 
DEVRY INC.

SEGMENT INFORMATION

(Dollars in Thousands)
(Unaudited)
PRELIMINARY
         
For The Quarter For The Six Months
Ended December 31, Ended December 31,
Increase Increase
2009 2008 (Decrease) 2009 2008 (Decrease)
REVENUES:
Business, Technology and Management $ 313,256 $ 249,407 25.6 % $ 596,762 $ 478,154 24.8 %
Medical and Healthcare 125,774 97,979 28.4 % 242,932 151,257 60.6 %
Professional Education 16,834 17,969 -6.3 % 35,995 37,728 -4.6 %
Other Educational Services 17,148   4,260   302.5 % 28,433   6,193   359.1 %
 
Total Consolidated Revenues 473,012   369,615   28.0 % 904,122   673,332   34.3 %
 
OPERATING INCOME:
Business, Technology and Management 78,134 35,322 121.2 % 134,213 62,325 115.3 %
Medical and Healthcare 31,159 26,666 16.8 % 58,298 42,017 38.7 %
Professional Education 3,249 4,526 -28.2 % 9,693 12,249 -20.9 %
Other Educational Services 705 (487 ) NM (5,817 ) (2,202 ) NM
Reconciling Items:
Amortization Expense (3,657 ) (2,919 ) 25.3 % (7,571 ) (3,835 ) 97.4 %
Depreciation and Other (661 ) (568 ) 16.4 % (502 ) (1,202 ) -58.2 %
 
Total Consolidated Operating Income 108,929 62,540 74.2 % 188,314 109,352 72.2 %
 
INTEREST AND OTHER INCOME (EXPENSE):
Interest Income 574 1,710 -66.4 % 1,074 3,852 -72.1 %
Interest Expense (495 ) (1,176 ) -57.9 % (917 ) (1,529 ) -40.0 %
Net Investment Gain (Loss) 313   (1,718 ) NM 1,144   (1,718 ) NM
 
Net Interest and Other Income (Expense) 392   (1,184 ) NM 1,301   605   115.0 %
 
Total Consolidated Income before Income Taxes $ 109,321   $ 61,356   78.2 % $ 189,615   $ 109,957   72.4 %
 
The following table displays the pro forma results of operations for the Medical and Healthcare segment as if U.S. Education was a part of DeVry's business for the entire six month periods ended December 31, 2009 and 2008. No quarterly pro forma information is presented because U.S. Education was a part of DeVry's business for the entire quarterly periods ended December 31, 2009 and 2008. This non-GAAP disclosure of operating results is not preferable to GAAP disclosure but is shown as a supplement to such disclosure to aid comparability between the periods.
 
For The Six Months
Ended December 31,
 
2009 2008 Increase
 
Medical and Healthcare Revenue as Reported $242,932 $151,257 60.6 %
U.S. Education Revenue (1) -   35,907   NM
Pro forma Medical and Healthcare Revenue $242,932   $187,164   29.8 %
 
Medical and Healthcare Operating Income as Reported $58,298 $42,017 38.7 %
U.S. Education Operating Income as Adjusted (1) (2) -   5,350   NM
Pro forma Medical and Healthcare Operating Income $58,298   $47,367   23.1 %
 

(1) For the portion of the period not owned by DeVry. U.S. Education, which was acquired on September 18, 2008, contributed $56 million of revenue growth in the six months ended December 31, 2009.

(2) Adjusted for non-recurring acquisition related charges along with an allocation of home office expenses in the first quarter ended September 30, 2008.

Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6156096&lang=en

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