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DeVry Inc. Announces Second-Quarter 2013 Results

Stocks in this article: DV

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

3. Includes both undergraduate and graduate students.

Chart 1: DeVry Inc. Remaining Calendar 2013 Announcements & Events

April 23, 2013       Fiscal 2013 Third Quarter Results and March Enrollment

DeVry UniversityChamberlain College of NursingCarrington Colleges GroupDeVry Brasil

August 8, 2013 Fiscal 2013 Fourth Quarter and May/July Enrollment

DeVry UniversityChamberlain College of NursingCarrington Colleges GroupDeVry Medical International

October 24, 2013 Fiscal 2014 First Quarter Results and September Enrollment

DeVry UniversityChamberlain College of NursingCarrington Colleges GroupDeVry Medical InternationalDeVry Brasil

November 6, 2013 Annual Shareholder’s Meeting

DEVRY INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)
(Unaudited)
PRELIMINARY
         
December 31, June 30, December 31,
2012 2012 2011
 

ASSETS

 

Current Assets

 
Cash and Cash Equivalents $ 216,259 $ 174,076 $ 285,749
Marketable Securities and Investments 2,752 2,632 2,499
Restricted Cash 3,894 2,498 30,799
Accounts Receivable, Net 139,658 113,911 145,488
Deferred Income Taxes, Net 25,176 27,845 21,760
Refundable Income Taxes 23,827 40,278 7,560
Prepaid Expenses and Other   39,205     39,874     34,925  
 
Total Current Assets   450,771     401,114     528,780  
 

Land, Buildings and Equipment

 
Land 65,963 65,172 61,360
Buildings 388,259 386,028 366,102
Equipment 472,042 433,949 444,851
Construction In Progress   48,143     61,752     47,926  
 
974,407 946,901 920,239
 
Accumulated Depreciation and Amortization   (415,050 )   (387,924 )   (395,331 )
 
Land, Buildings and Equipment, Net   559,357     558,977     524,908  
 

Other Assets

 
Intangible Assets, Net 294,177 285,220 276,448
Goodwill 566,199 549,961 553,456
Perkins Program Fund, Net 13,450 13,450 13,450
Other Assets   30,112     29,894     27,290  
 
Total Other Assets   903,938     878,525     870,644  
 
TOTAL ASSETS $ 1,914,066   $ 1,838,616   $ 1,924,332  

DEVRY INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)
(Unaudited)
PRELIMINARY
         
December 31, June 30, December 31,
2012 2012 2011
 

LIABILITIES

 

Current Liabilities

 
Accounts Payable $ 60,669 $ 63,094 $ 51,413
Accrued Salaries, Wages and Benefits 64,043 77,741 58,792
Accrued Expenses 71,466 76,243 37,217
Advance Tuition Payments 32,159 20,580 19,701
Deferred Tuition Revenue   109,191     77,551     259,967  
 
Total Current Liabilities   337,528     315,209     427,090  
 

Non-Current Liabilities

 
Deferred Income Taxes, Net 63,946 62,276 64,570
Deferred Rent and Other   107,333     96,496     71,001  
 
Total Non-current Liabilities   171,279     158,772     135,571  
 
TOTAL LIABILITIES   508,807     473,981     562,661  
 
NON-CONTROLLING INTEREST 8,901 8,242 7,632
 

SHAREHOLDERS' EQUITY

 
Common Stock, $0.01 par value, 200,000,000 Shares Authorized;
63,287,000, 64,722,000 and 66,569,000 Shares issued
and outstanding at December 31, 2012, June 30, 2012
and December 31, 2011, respectively. 744 741 740
Additional Paid-in Capital 280,901 272,962 260,755
Retained Earnings 1,560,130 1,488,988 1,423,651
Accumulated Other Comprehensive Income (6,696 ) (5,889 ) 4,458
Treasury Stock, at Cost (11,079,000, 9,386,000 and 7,416,000
Shares, Respectively)   (438,721 )   (400,409 )   (335,565 )
 
TOTAL SHAREHOLDERS' EQUITY   1,396,358     1,356,393     1,354,039  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,914,066   $ 1,838,616   $ 1,924,332  

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,
2012 2011 2012 2011
REVENUES:
Tuition $ 476,459 $ 496,294 $ 927,960 $ 982,781
Other Educational   28,785     27,755     60,020     60,306  
 
Total Revenues   505,244     524,049     987,980     1,043,087  
 
OPERATING COSTS AND EXPENSES:
Cost of Educational Services 243,401 241,212 485,946 479,460
Student Services and Administrative Expense 186,454 194,042 380,855 394,967
Restructuring Charges 9,484 - 9,484 -
Asset Impairment Charges   -     75,039     -     75,039  
 
Total Operating Costs and Expenses   439,339     510,293     876,285     949,466  
 
Operating Income 65,905 13,756 111,695 93,621
 
INTEREST AND OTHER INCOME (EXPENSE):
Interest Income 230 226 791 410
Interest Expense (759 ) (481 ) (2,250 ) (1,003 )
Net Gain on Sale of Assets   -     3,695     -     3,695  
 
Net Interest and Other Income (Expense)   (529 )   3,440     (1,459 )   3,102  
 
Income Before Income Taxes 65,376 17,196 110,236 96,723
 
Income Tax Provision   14,152     7,916     27,190     30,131  
 
NET INCOME 51,224 9,280 83,046 66,592
 
Net Income Attributable to Noncontrolling Interest   (938 )   (415 )   (771 )   (243 )
 
NET INCOME ATTRIBUTABLE TO DEVRY INC. $ 50,286   $ 8,865   $ 82,275   $ 66,349  
 
EARNINGS PER COMMON SHARE ATTRIBUTABLE
TO DEVRY INC. SHAREHOLDERS
Basic $ 0.78   $ 0.13   $ 1.27   $ 0.97  
Diluted $ 0.78   $ 0.13   $ 1.27   $ 0.97  
 
Cash Dividend Declared per Common Share $ 0.17   $ 0.15   $ 0.17   $ 0.15  

DEVRY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)
(Unaudited)
PRELIMINARY
 
      For The Six Months
Ended December 31,
2012   2011
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 83,046 $ 66,592
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
 
Stock-Based Compensation Expense 8,370 8,854
Depreciation 42,219 36,959
Amortization 5,019 5,372
Impairment of Goodwill and Intangible Assets - 75,039
Provision for Refunds and Uncollectible Accounts 41,094 48,595
Deferred Income Taxes 2,017 (1,765 )
Loss on Disposals of Land, Buildings and Equipment 2,237 488
Unrealized Loss on Assets Held for Sale 6,250 -
Realized Gain on Sale of Assets - (3,695 )
Changes in Assets and Liabilities, Net of Effects from
Acquisitions and Divestitures of Businesses:
Restricted Cash (1,396 ) (28,491 )
Accounts Receivable (63,462 ) (79,995 )
Prepaid Expenses And Other 25,691 (5,820 )
Accounts Payable (2,426 ) (13,121 )
Accrued Salaries, Wages, Expenses and Benefits (11,510 ) (67,398 )
Advance Tuition Payments 11,416 (2,379 )
Deferred Tuition Revenue   31,640     180,061  
 
NET CASH PROVIDED BY OPERATING ACTIVITIES   180,205     219,296  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (48,185 ) (63,027 )
Marketable Securities Purchased (82 ) (58 )
Marketable Securities Sales - -
Payment for Purchase of Business, Net of Cash Acquired (31,386 ) (225,903 )
Cash Received from Sale of Assets   -     4,475  
 
NET CASH USED IN INVESTING ACTIVITIES   (79,653 )   (284,513 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Exercise of Stock Options 1,139 3,524
Proceeds from Stock issued Under Employee Stock Purchase Plan 756 792
Repurchase of Common Stock for Treasury (38,567 ) (92,033 )
Cash Dividends Paid (20,707 ) (8,285 )
Excess Tax Benefit from Stock-Based Payments 58 272
Payment of Debt Financing Fees   -     (70 )
 
NET CASH USED IN FINANCING ACTIVITIES   (57,321 )   (95,800 )
 
Effects of Exchange Rate Differences   (1,048 )   (379 )
 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 42,183 (161,396 )
 
Cash and Cash Equivalents at Beginning of Period   174,076     447,145  
 
Cash and Cash Equivalents at End of Period $ 216,259   $ 285,749  

DEVRY INC.

SEGMENT INFORMATION

(Dollars in Thousands)
(Unaudited)
PRELIMINARY
           
For The Quarter For The Six Months
Ended December 31, Ended December 31,
Increase Increase
2012 2011 (Decrease) 2012 2011 (Decrease)
REVENUES:
Business, Technology and Management $ 280,239 $ 325,573 -13.9 % $ 564,853 $ 663,169 -14.8 %
Medical and Healthcare 167,746 153,520 9.3 % 326,103 300,973 8.3 %
International, K-12 and Professional Education   57,259     44,956   27.4 %   97,024     78,945   22.9 %
 
Total Consolidated Revenues   505,244     524,049   -3.6 %   987,980     1,043,087   -5.3 %
 
OPERATING INCOME:
Business, Technology and Management 38,835 57,821 -32.8 % 64,405 119,183 -46.0 %
Medical and Healthcare 26,705 (51,933 ) NM 51,887 (28,644 ) NM
International, K-12 and Professional Education 13,937 10,151 37.3 % 13,628 7,164 90.2 %
Reconciling Items:
Amortization Expense (2,412 ) (2,726 ) -11.5 % (4,690 ) (5,044 ) -7.0 %
Depreciation and Other   (11,160 )   443   NM   (13,535 )   962   NM
 
Total Consolidated Operating Income 65,905 13,756 379.1 % 111,695 93,621 19.3 %
 
INTEREST AND OTHER INCOME (EXPENSE):
Interest Income 230 226 1.8 % 791 410 92.9 %
Interest Expense (759 ) (481 ) 57.8 % (2,250 ) (1,003 ) 124.3 %
Net Gain on Sale of Assets   -     3,695   NM   -     3,695   NM
 
Net Interest and Other Income (Expense)   (529 )   3,440   -115.4 %   (1,459 )   3,102   -147.0 %
 
Total Consolidated Income before Income Taxes $ 65,376   $ 17,196   280.2 % $ 110,236   $ 96,723   14.0 %

Restructuring charges were recorded for the three and six months ended December 31, 2012. These charges are related to DeVry Inc. (not related to any segment), the Business, Technology and Management segment and DeVry's Carrington Colleges Group which is part of the Medical and Healthcare segment. Intangible asset and goodwill impairment charges were recorded for the three and six month periods ended December 31, 2011. These charges are related to DeVry's Carrington Colleges Group, Inc. The following table illustrates the effects of these impairment charges on the operating income of the Business, Technology and Management segment and the Medical and Healthcare segment. Management believes that the non-GAAP disclosure of operating earnings provides investors with useful supplemental information regarding the underlying business trends and performance of DeVry’s ongoing operations and are useful for period-over-period comparisons of such operations given the discrete nature of these restructuring and impairment transactions. DeVry uses these supplemental financial measures internally in its budgeting process. However, the non-GAAP financial measures should be viewed in addition to, and not as a substitute for, DeVry’s reported results prepared in accordance with GAAP. The following table reconciles these items to the relevant GAAP information:

   
For The Quarter For The Six Months
Ended December 31, Ended December 31,
    Increase     Increase
2012 2011 (Decrease) 2012 2011 (Decrease)
Business, Technology and Management Operating Income $ 38,835 $ 57,821 -32.8 % $ 64,405 $ 119,183 -46.0 %
Restructuring Charge   200   -   NM   200   -   NM
Business, Technology and Management Operating Income
Excluding Restructuring Charge $ 39,035 $ 57,821   -32.5 % $ 64,605 $ 119,183   -45.8 %
 
Medical and Healthcare Operating Income $ 26,705 $ (51,933 ) NM $ 51,887 $ (28,644 ) NM
Restructuring Charge 1,416 - NM 1,416 - NM
Asset Impairment Charge   -   75,039   NM   -   75,039   NM
Medical and Healthcare Operating Income
Excluding Charge for Asset Impairments $ 28,121 $ 23,106   21.7 % $ 53,303 $ 46,395   14.9 %




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