Market Overview

DeVry Inc. Announces Fourth-Quarter and Full-Year 2011 Results

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DOWNERS GROVE, Ill.--(BUSINESS WIRE)--

DeVry Inc. (NYSE: DV), a global provider of educational services, today reported financial results for its fiscal 2011 fourth quarter and full year ended June 30, 2011. DeVry also reported enrollment results at DeVry University, including its Keller Graduate School of Management (KGSM), Chamberlain College of Nursing, Ross University, and Carrington Colleges Group. DeVry continues to execute on its growth and diversification strategy and its unwavering focus on academic quality and successful student outcomes.

Significant recent accomplishments included:

  • The acquisition of the American University of the Caribbean (AUC), a leading provider of medical education based in St. Maarten
  • The acquisition of ATC International, a leading provider of preparation materials for international accreditation exams in the accounting field
  • Rob Paul's succession of George Montgomery as president of Carrington Colleges Group
  • 2011 marked DeVry University's 80th anniversary

Three Months Ended June 30, 2011

  • Revenues increased 8 percent to $546.7 million
  • Net income increased 5 percent to $75.2 million
  • Fully diluted earnings per share increased about 9 percent to $1.08

Twelve Months Ended June 30, 2011

  • Fiscal 2011 revenues increased 14 percent to $2,182 million
  • Net income increased 18 percent to $330.4 million
  • Fully diluted earnings per share increased about 21 percent to $4.68

“We were not satisfied with our short-term enrollment performance this quarter as total students declined to around 119,000, but we believe in our long-term opportunities for growth,” said Daniel Hamburger, DeVry's president and chief executive officer. “Recently we have been experiencing a challenging external environment characterized by a prolonged tough economy and new regulatory changes. We believe that by remaining focused on our strategy of quality and diversification, we will return to a long-term growth trend.”

Segment Highlights

Business, Technology and Management Segment

DeVry University

New undergraduate enrollments for the summer period at DeVry University decreased 25.6 percent to 15,566 compared to 20,935 last year. Total undergraduate student enrollments were down 5.8 percent to 64,317 students versus 68,290 in the prior year. Following an extended period of double digit new undergraduate student enrollment growth, some reversion to more historical levels of growth was expected. Also, employee distractions caused by the roll out of new processes related to the implementation of new regulations governing the education sector likely had a near-term negative impact on performance. Enrollment has been most impacted by the prolonged economic downturn and continued high unemployment, which has led some potential students to defer or refrain from making the commitment to enroll in college.

DeVry University's growth plan includes investing in its strong brand, and in new programs, new locations, and student services. It anticipates offering a new bachelor's degree in healthcare administration in the fall, as well as opening three to five locations in fiscal 2012.

Total graduate coursetakers including Keller Graduate School of Management totaled 23,802 in May 2011, up 7.7 percent compared to the same period in 2010. In July 2011 total coursetakers increased 1.9 percent to 21,576 from the prior year. Throughout fiscal 2011, Keller has been investing in brand awareness, and earlier in the year launched its first ever combined DeVry University/Keller branding campaign, as part of its celebration of DeVry University's 80th anniversary.

The total number of online undergraduate and graduate coursetakers was 69,617 in July 2011, a decrease of 0.7 percent compared to July 2010.

Medical and Healthcare Segment

On August 4, 2011, DeVry announced the acquisition of the American University of the Caribbean (AUC). AUC is a leading international provider of medical degrees with a campus based in St. Maarten. The acquisition further positions DeVry as the leader in international medical education. AUC is one of only three Caribbean-based medical schools whose students are eligible for Title IV financial aid (Ross University School of Medicine is also one of the three).

Ross University

In the May 2011 term, new students increased 37.9 percent to 469, compared to 340 students last year. Total students rose 6.2 percent to 4,825 compared to 4,542 students in the same term last year.

Ross University School of Medicine continues to make investments to enhance academic quality and to add capacity. It is in the process of completing campus master plans to build out capacity to support anticipated enrollment increases. In May 2011, Ross University School of Veterinary Medicine recorded the highest enrollment in its history.

Chamberlain College of Nursing

Chamberlain's new student enrollment in summer 2011 increased 16.1 percent to 2,805 students, compared to 2,416 students in summer 2010. Total student enrollment rose 40 percent to 9,954 students compared with 7,108 during the same period last year.

Chamberlain continues to make investments in new locations, programs and services. It has submitted applications for new locations in Indianapolis and Atlanta to be opened in spring 2012, pending approvals. To enhance student services, during the quarter Chamberlain hired Dr. William Cowling as vice president of academic affairs and Karilyn Van Oosten as director of strategic alliances.

Carrington Colleges Group

New student enrollment at Carrington declined 33.6 percent to 2,850 compared with 4,291 last year. Total student enrollment decreased 25.6 percent to 8,363 from 11,234 students in the prior year. In addition to the regulatory changes and economic factors noted above, new student enrollments during the period were negatively impacted by transition issues from the Carrington name change. Carrington is executing a performance improvement plan that centers on enhancing students' academic experience, optimizing its marketing process, new programs and new locations.

An example of enhancing students' academic experience in the quarter at Carrington was its SimLink ExperienceTM now operational in its Pomona, Calif.; Mesa, Ariz.; and Albuquerque, N.M. locations. Carrington anticipates opening its new Dallas location in the second half of fiscal 2012.

On July 1, 2011, Rob Paul succeeded George Montgomery as president of Carrington Colleges Group.

International, K-12 and Professional Education Segment

DeVry has realigned its financial reporting segments to better conform to its organizational structure and strategic focus. The two largest segments, Business, Technology & Management and Medical & Healthcare, remained unchanged and represent the two U.S. postsecondary educational segments. Professional Education and Other Educational Services segments have been combined into the new International, K-12 and Professional Education segment. This segment is led by Steve Riehs and represents the educational institutions outside of U.S. postsecondary education.

DeVry Brasil

During the quarter, DeVry Brasil continued to focus on enhancing the quality of its student programs and services. DeVry Brasil made significant investments in a new building at the Ruy Barbosa location in Salvador and broke ground on a new campus in Sao Luis. Its performance benefitted from the 16 percent increase in total enrollment reported last quarter.

Advanced Academics

Advanced Academics (AAI) continued to expand its geographical footprint during the quarter, adding school districts in Texas and New York. AAI also recently received authorization from Arizona to become a state-wide program.

Becker Professional Education

Becker's revenues grew 9 percent during the quarter, benefitting from the recent acquisition of ATC International (ATC). Revenue for the full year increased 11 percent. In addition, performance at Becker in the quarter was driven by preparation for the CPA Exam to be offered in five new international locations beginning in August. Becker is well-positioned to support candidates preparing for the exam in these new locations through long-term, local partnerships. Integration of ATC is proceeding smoothly and will enhance Becker's position in preparing students for international accreditation exams in the accounting field.

Balance Sheet/Cash Flow

For fiscal 2011, DeVry generated $ 407.9 million of operating cash flow, primarily driven by the continuation of strong operating results. As of June 30, 2011, cash, marketable securities and investment balances totaled $449.7 million with no outstanding debt.

Share Repurchase Plan

During the fourth quarter of fiscal 2011, DeVry repurchased 518,317 shares of its common stock at a cost of approximately $28.2 million, or $54.39 per share. DeVry also completed its fifth stock repurchase program of $50 million and began executing its sixth program, authorized for $100 million.

Conference Call and Webcast Information

DeVry will host a conference call on August 11, 2011, at 3:30 p.m. Central Daylight Time (4:30 p.m. Eastern Daylight Time) to discuss its fiscal 2011 fourth-quarter and year-end results. The conference call will be led by Daniel Hamburger, president and chief executive officer, Rick Gunst, chief financial officer, and Pat Unzicker, controller.

For those wishing to participate by telephone, dial 866.825.3209 (domestic) or 617.213.8061 (international). Use passcode 81372021 or say "DeVry Call". DeVry will also broadcast the conference call live via the Internet. Interested parties may access the webcast or its replay through the Investor Relations section of the company's website, or http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=93880&eventID=3270252.

Please access the website 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 August 25, 2011. To access the replay, dial 888.286.8010 (domestic) or 617.801.6888 (international), passcode: 24745028. http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=93880&eventID=3270252.

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, American University of the Caribbean, Becker Professional Education, Carrington College, Carrington College California, Chamberlain College of Nursing, DeVry Brasil, DeVry University, and Ross University Schools of Medicine and Veterinary Medicine. These institutions offer a wide array of programs in business, healthcare and technology. DeVry's institutions serve students in secondary through postsecondary education and professionals in accounting and finance. 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, 2010 and filed with the Securities and Exchange Commission on August 25, 2010.

 

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

   
Fourth Quarter
FY 2011   FY 2010   Change
Revenues $546,750 $506,674 +7.9%
Net Income $75,196 $71,576 +5.1%
Earnings per Share (diluted) $1.08 $0.99 +9.1%
Number of common shares (diluted) 69,894 72,289 (3.3)%
  Fiscal Year
FY 2011   FY 2010   Change
Revenues $2,182,371 $1,915,181 +14.0%
Net Income $330,403 $279,909 +18.0%
Earnings per Share (diluted) $4.68 $3.87 +20.9%
Number of common shares (diluted) 70,620 72,267 (2.3)%

     

Summer 2011 Enrollment Results

2011   2010   % Change
 
Total DeVry Inc. Student Enrollments1 119,127 120,601 (1.2 )%
 
DeVry University
Undergraduate2
New students 15,566 20,935 (25.6 )%
Total students 64,317 68,290 (5.8 )%
 
Graduate coursetakers2 3
May 23,802 22,103 +7.7 %
July 21,576 21,165 +1.9 %
 

Online coursetakers3 4 July

69,617 70,088 (0.7 )%
 
Chamberlain College of Nursing2
New students 2,805 2,416 +16.1 %
Total students 9,954 7,108 +40.0 %
 
Ross University – May
New students 469 340 +37.9 %
Total students 4,825 4,542 +6.2 %
 

The Carrington Colleges – July

New students 2,850 4,291 (33.6 )%
Total students 8,363 11,234 (25.6 )%
 

DeVry Brasil – March5

New students 3,833 2,718 +41.0 %
Total students 13,688 11,789 +16.1 %
 

1 Total enrollment at DeVry's degree-granting institutions (excludes Advanced Academics and Becker Professional Education).

2 Includes both onsite and online students.

3 The term “coursetaker” refers to the number of courses taken by a student. Thus one student taking two courses equals two coursetakers.

4 Includes all degree levels at DeVry University.

5 Previously reported on April 26, 2011.

 

Chart 1: DeVry Inc. Remaining Calendar 2011 Announcements & Events

   
Oct. 25, 2011 Fiscal 2012 First Quarter Results and Enrollment
 
DeVry University (graduate only)
Ross University
DeVry Brasil
 
Dec. 12, 2011 Most recent enrollment results; press release, no conference call
 
DeVry University
Chamberlain College of Nursing
Carrington Colleges Group

 
DEVRY INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)
(Unaudited)
PRELIMINARY
         
June 30, June 30,
2011 2010
 

ASSETS

 

Current Assets

 
Cash and Cash Equivalents $ 447,145 $ 307,702
Marketable Securities and Investments 2,575 15,666
Restricted Cash 2,308 2,102
Accounts Receivable, Net 114,689 119,210
Deferred Income Taxes, Net 24,457 22,340
Prepaid Expenses and Other   33,476     32,627  
 
Total Current Assets   624,650     499,647  
 

Land, Buildings and Equipment

 
Land 54,404 53,914
Buildings 314,274 283,044
Equipment 402,179 346,979
Construction In Progress   63,310     38,188  
 
834,167 722,125
 
Accumulated Depreciation and Amortization   (365,923 )   (333,988 )
 
Land, Buildings and Equipment, Net   468,244     388,137  
 

Other Assets

 
Intangible Assets, Net 195,462 194,195
Goodwill 523,620 514,864
Perkins Program Fund, Net 13,450 13,450
Other Assets   25,077     17,533  
 
Total Other Assets   757,609     740,042  
 
TOTAL ASSETS $ 1,850,503   $ 1,627,826  

 
DEVRY INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)
(Unaudited)
PRELIMINARY
     
June 30, June 30,
2011 2010
 

LIABILITIES

 

Current Liabilities

 
Accounts Payable $ 63,611 $ 90,364
Accrued Salaries, Wages and Benefits 107,829 92,368
Accrued Expenses 47,097 53,565
Advance Tuition Payments 22,362 20,930
Deferred Tuition Revenue   75,532     86,627  
 
Total Current Liabilities   316,431     343,854  
 

Non-Current Liabilities

 
Deferred Income Taxes, Net 69,029 41,486
Deferred Rent and Other   68,772     58,098  
 
Total Non-current Liabilities   137,801     99,584  
 
TOTAL LIABILITIES   454,232     443,438  
 
NON-CONTROLLING INTEREST 6,755 5,007
 

SHAREHOLDERS' EQUITY

 
Common Stock, $0.01 par value, 200,000,000 Shares Authorized;
68,635,000 and 71,030,000 Shares issued
and outstanding at June 30, 2011
and 2010, respectively. 738 734
Additional Paid-in Capital 248,418 224,209
Retained Earnings 1,367,972 1,055,591
Accumulated Other Comprehensive Income 15,729 9,896
Treasury Stock, at Cost (5,148,000 and 2,394,000
Shares, Respectively)   (243,341 )   (111,049 )
 
TOTAL SHAREHOLDERS' EQUITY   1,389,516     1,179,381  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,850,503   $ 1,627,826  

 
DEVRY INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands Except for Per Share Amounts)
(Unaudited)
PRELIMINARY
                   
 
For The Quarter For The Year
Ended June 30, Ended June 30,
 
2011 2010 2011 2010 2009
 
REVENUES:
Tuition $ 517,587 $ 477,323 $ 2,045,590 $ 1,795,814 $ 1,354,925
Other Educational   29,163     29,351     136,781     119,367     106,528  
 
Total Revenues   546,750     506,674     2,182,371     1,915,181     1,461,453  
 
OPERATING COSTS AND EXPENSES:
Cost of Educational Services 234,592 215,341 925,504 826,089 669,673
Loss on Real Estate Transactions - - 3,977
Litigation Settlement Reserve - - 4,900
Student Services and Administrative Expense   202,578     190,765     762,692     678,190     548,070  
 
Total Operating Costs and Expenses   437,170     406,106     1,688,196     1,504,279     1,226,620  
 
Operating Income 109,580 100,568 494,175 410,902 234,833
 
INTEREST AND OTHER INCOME (EXPENSE):
Interest Income 300 530 1,539 2,080 5,251
Interest Expense (441 ) (332 ) (1,282 ) (1,585 ) (2,775 )
Net Investment Gain   -     -     -     1,225     43  
 
Net Interest and Other Income (Expense)   (141 )   198     257     1,720     2,519  
 
Income Before Income Taxes 109,439 100,766 494,432 412,622 237,352
 
Income Tax Provision   33,751     28,864     163,602     132,639     71,700  
 
NET INCOME 75,688 71,902 330,830 279,983 165,652
 
Net Income Attributable to Noncontrolling Interest   (492 )   (326 )   (427 )   (74 )   (39 )
 
NET INCOME ATTRIBUTABLE TO DEVRY INC. $ 75,196   $ 71,576   $ 330,403   $ 279,909   $ 165,613  
 
EARNINGS PER COMMON SHARE ATTRIBUTABLE
TO DEVRY INC. SHAREHOLDERS
Basic $ 1.09   $ 1.00   $ 4.73   $ 3.92   $ 2.32  
Diluted $ 1.08   $ 0.99   $ 4.68   $ 3.87   $ 2.28  
 
Cash Dividend Declared per Common Share $ 0.12   $ 0.10   $ 0.24   $ 0.20   $ 0.16  

 
DEVRY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)
(Unaudited)
PRELIMINARY
              For The Year
Ended June 30,
2011   2010   2009
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $330,830 $279,983 $165,613
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
 
Stock-Based Compensation Expense 14,251 10,148 7,550
Depreciation 58,033 51,225 39,825
Amortization 6,538 10,997 10,625
Provision for Refunds and Uncollectible Accounts 90,742 88,202 72,395
Deferred Income Taxes 23,966 (11,431 ) 344
Loss on Disposals of Land, Buildings and Equipment 469 666 2,394
Unrealized Net Gain on Investments - (1,225 ) 1,224
Changes in Assets and Liabilities, Net of Effects from
Acquisitions of Businesses:
Restricted Cash (206 ) 3,247 (1,097 )
Accounts Receivable (84,940 ) (102,588 ) (89,249 )
Prepaid Expenses And Other 375 7,536 7,292
Accounts Payable (26,808 ) 18,776 (3,084 )
Accrued Salaries, Wages, Expenses and Benefits 5,737 30,854 20,130
Advance Tuition Payments 1,291 (6,805 ) 5,889
Deferred Tuition Revenue (12,288 ) 11,963   9,675  
 
NET CASH PROVIDED BY OPERATING ACTIVITIES 407,990   391,548   249,526  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (135,726 ) (131,009 ) (74,044 )
Payment for Purchase of Business, Net of Cash Acquired (3,027 ) - (315,318 )
Marketable Securities Purchased (101 ) (79 ) (63 )
Marketable Securities Sales 13,495 46,000 -
Other (627 ) (700 ) 39  
 
NET CASH USED IN INVESTING ACTIVITIES (125,986 ) (85,788 ) (389,386 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Exercise of Stock Options 9,098 13,041 12,157
Proceeds from Stock issued Under Employee Stock Purchase Plan 1,460 997 2,066
Repurchase of Common Stock for Treasury (132,940 ) (41,683 ) (33,684 )
Cash Dividends Paid (15,529 ) (12,839 ) (10,015 )
Excess Tax Benefit from Stock-Based Payments 1,012 3,455 3,571
Payment of Debt Financing Fees (3,290 ) - -
Borrowings Under Revolving Credit Facility - 70,000 290,000
Repayments Under Revolving Credit Facility - (150,000 ) (210,000 )
Repayments of Fanor Debt - - (12,740 )
Borrowings Under Collateralized Line of Credit - 300 46,419
Repayments Under Collateralized Line of Credit - (45,111 ) (1,608 )
     
NET CASH USED IN FINANCING ACTIVITIES (140,189 ) (161,840 ) 86,166
     
Effects of Exchange Rate Differences (2,372 ) (1,420 ) 1,697
     
NET INCREASE IN CASH AND CASH EQUIVALENTS 139,443 142,500 (51,997 )
 
Cash and Cash Equivalents at Beginning of Year 307,702 165,202 217,199
     
Cash and Cash Equivalents at End of Year $447,145   $307,702   $165,202  

 
DEVRY INC.

SEGMENT INFORMATION

(Dollars in Thousands)
(Unaudited)
PRELIMINARY
             
For The Quarter For The Year
Ended June 30, Ended June 30,
Increase Increase
2011 2010 (Decrease) 2011 2010 (Decrease)
REVENUES:
Business, Technology and Management $ 357,787 $ 332,188 7.7 % $ 1,460,146 $ 1,263,553 15.6 %
Medical and Healthcare 136,988 131,465 4.2 % 558,335 507,037 10.1 %
International, K-12 and Professional Education   51,975     43,021   20.8 %   163,890     144,591   13.3 %
Total Consolidated Revenues   546,750     506,674   7.9 %   2,182,371     1,915,181   14.0 %
 
OPERATING INCOME (LOSS):
Business, Technology and Management 76,061 71,096 7.0 % 359,403 291,060 23.5 %
Medical and Healthcare 18,550 21,832 (15.0 %) 106,965 111,081 (3.7 %)
International, K-12 and Professional Education 16,826 9,273 81.5 % 32,684 19,882 64.4 %
Reconciling Items:
Amortization Expense (1,654 ) (1,623 ) 1.9 % (6,103 ) (10,812 ) (43.6 %)
Depreciation and Other   (203 )   (10 ) NM   1,226     (309 ) NM
 
Total Consolidated Operating Income   109,580     100,568   9.0 %   494,175     410,902   20.3 %
 
INTEREST AND OTHER (EXPENSE) INCOME:
Interest Income 300 530 (43.4 %) 1,539 2,080 (26.0 %)
Interest Expense (441 ) (332 ) 32.8 % (1,282 ) (1,585 ) (19.1 %)
Net Investment Gain   -     -   NA   -     1,225   (100.0 %)
 
Net Interest and Other (Expense) Income   (141 )   198   (171.2 %)   257     1,720   (85.1 %)
 
Total Consolidated Income before Minority Interest
and Income Taxes $ 109,439   $ 100,766   8.6 % $ 494,432   $ 412,622   19.8 %

DeVry Inc.
Investor Contact:
Joan Bates, (630) 353-3800
jbates@devry.com
or
Media Contact:
Larry Larsen, (312) 895-4717
llarsen@sardverb.com

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