1
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000
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Commission file number 0-12751
DeVRY INC.
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(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
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(Address of principal executive offices) (Zip Code)
(630) 571-7700
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(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
January 31, 2001: 69,703,484
Total number of pages: 15
2
DeVRY INC.
FORM 10-Q INDEX
For the Quarter Ended December 31, 2000
Page No.
--------
PART I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets at
December 31, 2000, June 30, 2000,
and December 31, 1999 3-4
Consolidated Statements of Income
for the quarter and six months ended
December 31, 2000, and 1999 5
Consolidated Statements of Cash Flows
for the six months ended
December 31, 2000, and 1999 6
Notes to Consolidated Financial
Statements 7-8
Item 2. Management's Discussion and
Analysis of Results of Operations
and Financial Condition 9-12
Part II. Other Information
Item 4. Submission of Matters to a Vote of
Security Holders 13
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
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PART I - Financial Information
Item 1 - Financial Statements
DEVRY INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
December 31, June 30, December 31,
2000 2000 1999
------------ ----------- ------------
(Unaudited) (Unaudited)
ASSETS
Current Assets
Cash and Cash Equivalents $ 47,144 $ 25,851 $ 39,806
Restricted Cash 21,944 19,395 36,400
Accounts Receivable, Net 85,207 25,362 53,419
Inventories 3,354 6,371 3,590
Deferred Income Taxes 3,526 3,526 2,656
Prepaid Expenses and Other 2,658 1,459 4,545
-------- -------- --------
Total Current Assets 163,833 81,964 140,416
-------- -------- --------
Land, Buildings and Equipment
Land 42,087 38,516 38,420
Buildings 116,206 101,689 97,096
Equipment 132,387 113,586 104,974
Construction In Progress 6,527 6,403 1,326
-------- -------- --------
297,207 260,194 241,816
Accumulated Depreciation (113,146) (101,393) (90,886)
-------- -------- --------
Land, Buildings and
Equipment, Net 184,061 158,801 150,930
-------- -------- --------
Other Assets
Intangible Assets, Net 72,306 74,134 76,057
Deferred Income Taxes 2,035 2,032 -
Perkins Program Fund, Net 9,603 8,316 7,375
Other Assets 2,656 1,832 1,455
-------- -------- --------
Total Other Assets 86,600 86,314 84,887
-------- -------- --------
TOTAL ASSETS $434,494 $327,079 $376,233
======== ======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
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DEVRY INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
December 31, June 30, December 31,
2000 2000 1999
------------ ----------- ------------
(Unaudited) (Unaudited)
LIABILITIES
Current Liabilities
Accounts Payable $ 39,861 $ 31,827 $ 35,935
Accrued Salaries, Wages &
Benefits 24,912 24,715 20,459
Accrued Expenses 5,543 7,041 9,114
Advance Tuition Payments 8,664 15,507 8,901
Deferred Tuition Revenue 90,088 10,095 71,563
-------- -------- --------
Total Current Liabilities 169,068 89,185 145,972
-------- -------- --------
Other Liabilities
Revolving Loan - - 20,000
Deferred Income Tax Liability - - 178
Deferred Rent and Other 11,687 12,755 11,929
-------- -------- --------
Total Other Liabilities 11,687 12,755 32,107
-------- -------- --------
TOTAL LIABILITIES 180,755 101,940 178,079
-------- -------- --------
SHAREHOLDERS' EQUITY
Common Stock, $0.01 par value,
200,000,000 Shares Authorized,
69,696,333, 69,642,087 and
69,572,363, Shares Issued and
Outstanding at December 31,
2000, June 30, 2000 and
December 31, 1999,
Respectively 697 697 695
Additional Paid-in Capital 63,555 63,012 61,251
Retained Earnings 188,884 160,996 135,913
Accumulated Other Comprehensive
Income 603 434 295
-------- -------- --------
TOTAL SHAREHOLDERS' EQUITY 253,739 225,139 198,154
-------- -------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $434,494 $327,079 $376,233
======== ======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
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DEVRY INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except for Per Share Amounts)
(Unaudited)
For The Quarter For The Six Months
Ended December 31, Ended December 31,
-------------------- --------------------
2000 1999 2000 1999
-------------------- --------------------
REVENUES:
Tuition $138,319 $118,973 $262,353 $225,836
Other Educational 11,726 13,971 22,856 25,086
Interest 320 304 575 608
-------- -------- -------- --------
Total Revenues 150,365 133,248 285,784 251,530
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of Educational Services 81,414 72,537 159,723 143,764
Student Services and
Administrative Expense 43,353 39,347 80,568 69,613
Interest Expense 76 435 189 1,009
-------- -------- -------- --------
Total Costs and Expenses 124,843 112,319 240,480 214,386
-------- -------- -------- --------
Income Before Income Taxes 25,522 20,929 45,304 37,144
Income Tax Provision 9,800 8,138 17,416 14,446
-------- -------- -------- --------
NET INCOME $ 15,722 $ 12,791 $ 27,888 $ 22,698
======== ======== ======== ========
EARNINGS PER COMMON SHARE
Basic $0.23 $0.18 $0.40 $0.33
===== ===== ===== =====
Diluted $0.22 $0.18 $0.39 $0.32
===== ===== ===== =====
The accompanying notes are an integral part these consolidated
financial statements.
6
DEVRY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
For The Six Months
Ended December 31,
-------------------
2000 1999
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $27,888 $22,698
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation 13,109 9,887
Amortization 1,864 1,849
Provision for Refunds and
Uncollectible Accounts 14,299 11,939
Deferred Income Taxes (3) (79)
Loss(Gain) on Disposals and Adjustments to
Land, Buildings and Equipment 113 (36)
Changes in Assets and Liabilities, Net of
Effects from Acquisitions of Businesses:
Restricted Cash (2,549) (15,489)
Accounts Receivable (73,998) (50,716)
Inventories 3,017 3,085
Prepaid Expenses And Other (3,127) (400)
Perkins Program Fund Contribution
and Other (1,433)
Accounts Payable 8,034 4,559
Accrued Salaries, Wages,
Expenses and Benefits (1,301) (1,495)
Advance Tuition Payments (6,843) (4,527)
Deferred Tuition Revenue 79,993 66,418
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 59,063 47,693
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (38,482) (21,199)
Payments for Purchases of Businesses, Net
of Cash Acquired (38,687)
------- -------
NET CASH USED IN INVESTING ACTIVITIES (38,482) (59,886)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds From Exercise of Stock Options 543 304
Proceeds From Revolving Credit Facility 12,000 40,000
Repayments Under Revolving Credit Facility (12,000) (20,000)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 543 20,304
Effects of Exchange Rate Differences 169 (153)
------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 21,293 7,958
Cash and Cash Equivalents at Beginning
of Period 25,851 31,848
------- -------
Cash and Cash Equivalents at End of Period $47,144 $39,806
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest Paid During the Period $154 $949
Income Taxes Paid During the Period 20,461 17,246
The accompanying notes are an integral part of these consolidated
financial statements.
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DEVRY INC.
Notes to Consolidated Financial Statements
For the Quarter and Six Months Ended December 31, 2000
----------
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 for
the fiscal year ended June 30, 2000 and in conjunction with the
Company's quarterly report on Form 10-Q for the quarter ended
September 30, 2000, each as filed with the Securities and Exchange
Commission.
The results of operations for the six months ended December 31,2000,
are not necessarily indicative of results to be expected for the
entire fiscal year.
2. On January 5, 2001, using its available cash balances, the Company
acquired substantially all of the tangible operating assets,
trademarks and trade names of Argentum Inc. and Xerxes Inc.,
which do business as Stalla Seminars ("Stalla"). Stalla, which
is based outside of Cleveland, Ohio, develops and markets exam
preparation materials for the Chartered Financial Analyst
professional certification as administered by the Association
for Investment Management and Research.
This acquisition will be accounted for under the purchase method
of accounting. Accordingly, the purchase price will be allocated
to the tangible and identifiable intangible assets acquired
based on their estimated fair values, with any residual purchase
price allocated to goodwill. The intangible assets will be
amortized using the straight line method primarily over a 25-year
period for financial reporting purposes and will be deducted for
tax reporting purposes over shorter statutory lives.
3. Basic earnings per share is computed by dividing net income by
the weighted average number of common shares outstanding during the
period. Shares used in this computation were 69,688,000 and 69,456,000
for the second quarters ended December 31, 2000 and 1999,
respectively. Shares used in this computation were 69,674,000 and
69,439,000 for the six months ended December 31, 2000 and 1999,
respectively. Diluted earnings per share is computed by dividing net
income by the weighted average number of shares assuming dilution.
Dilutive shares reflect the additional shares that would be
outstanding if dilutive stock options were exercised during the
period. Shares used in this computation were 70,716,000 and
70,300,000 for the second quarters ended December 31, 2000 and 1999,
respectively. Shares used in this computation were 70,677,000 and
70,326,000 for the six months ended December 31, 2000 and 1999,
respectively.
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4. In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin 101 ("SAB 101"). SAB 101 requires deferral
of certain revenue items over the period that the related service is
provided. Adoption of SAB 101 is required by the Company's
fourth quarter of fiscal 2001. The SEC has recently issued
interpretive guidance on the implementation of this bulletin, and
the Company is completing an evaluation of its effects. SAB 101
requires the deferral of certain fees and other charges over the
period of service (student enrollment) but permits the deferral
and subsequent amortization of certain expenses related to these
fees. Based on preliminary analysis, the Company does not expect
SAB 101 to have a significant effect on its consolidated results
of operations, financial position and cash flows.
5. In October, the Company and its banks renegotiated the revolving loan
agreement; extending the term of the agreement to February 1, 2003,
increasing the permissible level of capital spending and adjusting
one of the financial covenants.
6. The Company capitalizes certain internal software development costs
which are amortized using the straight line method over the
estimated lives of the software not to exceed 5 years. Capitalized
costs include external direct costs of materials and services
consumed in developing or obtaining internal-use software, payroll
and payroll related costs for employees who are directly associated
with the internal-use software project and interest expense, if any.
Capitalization of such costs ceases no later than the point at which
the project is substantially complete and ready for its intended
purpose.
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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 uncertainties 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, 2000, and in
conjunction with the Company's quarterly report on Form 10-Q for the quarter
ended September 30, 2000, each 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 second quarter increased by $19.3 million, or 16.3%,
compared to the second quarter of last year. For the first six months, the
increase in tuition revenues was $36.5 million, or 16.2%. These increases in
tuition revenue were produced by several positive factors. Enrollments for the
summer term at the Company's undergraduate schools increased by 13.1% from last
summer and enrollments for the fall term increased by 9.3% from last year.
These were the 29th and 30th consecutive terms in which total enrollments
exceeded the level of a year ago. Contributing to the record enrollments and
revenues in the first half was the opening of a new DeVry Institute campus in
Tinley Park, Illinois, a suburb of Chicago. This is the third campus in the
Chicago-area. In November, another new DeVry Institute campus opened in
Orlando, Florida.
At Keller Graduate School, total course enrollment for the term that began in
late June increased by 11.1% from last year. For the September term,
enrollment was 7,149, an increase of 15.7% from last year.
10
Tuition rates were increased by DeVry Institutes in July by approximately 6%
and by a similar amount at Keller Graduate School in September. The
enrollment and tuition rate increases at DeVry Institutes and Keller Graduate
School produced a combined 18.1% increase in first half tuition revenues for
these operations.
The Becker Conviser Professional Review tuition revenues for the first six
months decreased somewhat from the prior year because of the effect of
numerous state implementations of the "150 hour rule", requiring CPA candidates
in those states to complete a fifth year of college before they are eligible to
sit for the examination.
Other Educational Revenues is composed primarily of sales of books and supplies
to students enrolled in the Company's undergraduate, graduate and Becker
Conviser Professional Review programs. This category of revenue declined by
$2.2 million in the second quarter and first half from the corresponding
periods of a year ago. Last fiscal year, DeVry Institutes entered into an
agreement with Follett Higher Education Group ("Follett") to outsource the
running of several of the on-campus DeVry Institute bookstores. At the end
of fiscal 2000, Follett was running 4 stores. During the first and second
quarter, additional DeVry Institute bookstores were transitioned to Follett
and by the end of December, Follett was running 9 of the institute bookstores.
Follett provides to students at DeVry Institutes a wider range of ancillary
merchandise plus online ordering capability. The expanded range of offerings
should provide an improved level of service to students. At those bookstores
that Follett is running, DeVry Institutes no longer report the sales revenue
nor cost of sales expense. In their place, DeVry Institutes receive a
commission from Follett based upon the level of sales at these stores. Because
the bookstores have historically operated at a lower margin than the primary
educational operation, the lower revenue and cost of sales has the effect of
increasing operating margins but with no significant effect on income.
Responsibility for the running of additional DeVry Institute bookstores may be
transferred to Follett in future quarters as it meets the needs of DeVry
Institutes.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101 entitled "Revenue Recognition in Financial Statements"
("SAB 101"). This bulletin provides the SEC staff's views on applying
generally accepted accounting principles to selected revenue recognition
issues, including the recognition of fee income. The SEC has subsequently
issued interpretive guidance on SAB 101 and must be implemented by the fourth
quarter of the Company's current fiscal year. The Company is completing an
evaluation of the effects of SAB 101, including the deferral of certain fees
and other charges over the period of service (student enrollment) and the
possible deferral and subsequent amortization of certain expenses related to
its enrollment fee income. Enrollment fees provide only a relatively small
portion of the Company's revenues each period and the Company does not expect
the adoption of SAB 101 to have a significant effect on its consolidated
results of operations, financial position and cash flows.
Interest income for both the second quarter and first half of the year were
approximately equal to the level of the corresponding year-ago periods as cash
in excess of that needed for daily transactions is invested in short-term
securities.
Cost of Educational Services for the second quarter increased by $8.9 million,
or 12.2%. For the first half, these expenses increased by $16.0 million, or
11.1%. In part, these expenses have increased at a lesser rate than revenues
this year because of lower cost of sales at those DeVry Institutes whose
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bookstore is run by Follett. Also contributing to the lower rate of cost
increase is the consolidation of additional Conviser Duffy CPA Review sites
into the Becker system. The Conviser sites were acquired at the start of last
fiscal year and many of them continued to run independently for the
November 1999 exam review cycle because classes had already begun. By the
start of the current fiscal year, the remaining duplicate operating locations
and costs had largely been eliminated. Cost increases, offsetting the
reduction in bookstore cost of sales and Becker consolidation, include facility
costs for new operating locations, additional faculty, staff, student services,
supplies, tuition refunds and provision for uncollectible accounts from the
higher level of enrollments compared to last year. Compared to last year,
there are two additional DeVry Institutes and five additional Keller teaching
centers.
Depreciation expense, most of which is included in Cost of Educational
Services, increased by $1.7 million for the second quarter and $3.2 million
for the first six months of this year. The increase in depreciation expense
reflects the continued high level of capital spending on expansion and
improvement throughout all of the Company's operations.
Student Services and Administrative Expense for the quarter increased by $4.0
million, or 10.2%, from last year. For the first half, these expenses
increased by almost $11.0 million, or 15.7%, from last year. These increases
reflect the marketing, administrative and curriculum development costs
associated with the Company's expanding operations. Marketing efforts for
the new DeVry campus in Orlando Florida, that opened in November, and for the
new campus that is scheduled to open in the Seattle area next July have
contributed to the increased costs. In addition, marketing and administrative
costs have increased because of the five new Keller centers that opened in the
past year.
In response to the growing size and complexity of its operations, the Company
has begun design and development efforts on a new student information system
to serve the needs of the varied educational programs and supporting
activities. Information system development costs in support of this project
and other initiatives, including the cost of increased staffing and outside
services, have increased from last year. In accordance with accounting
principles for software development costs, certain wage and outside service
costs are being capitalized. At the end of December, total capitalized cost
was less than $1 million. This cost will be amortized in future periods as
portions of the project become operational.
The Company's earnings from operations, before interest expense and taxes
("EBIT"), were a record for any second quarter or six month period. Operating
margins, which have been increasing steadily over year-ago periods, continued
to increase, reflecting cost controls and economies of scale as the Company
grows. In addition, operating margins were enhanced by the reduced level of
historically low margin bookstore sales as discussed above.
The reduced interest expense for the second quarter and first half compared to
last year reflects the Company's debt free operations in the current year.
Except for short periods of seasonal borrowing in the first and second quarter,
the Company has generated enough cash to finance its operations and expansion.
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Net income of $15.7 million, or $0.22 per diluted share, increased by 22.9%
from the second quarter of last year. For the first half, net income of
$27.9 million, or $0.39 per diluted share, also increased by 22.9% from last
year. This continues the pattern of year-over-year earning growth at a 20+%
rate.
Liquidity and Capital Resources
- -------------------------------
Cash generated from operations reached $59.1 million for the first six months,
up 23.8% from the same period a year ago. Higher net income, the increased
non-cash charge for depreciation included in this net income, an increase in
accounts payable and a decrease in restricted cash all contributed to the
higher cash flow from operations. Partly offsetting these higher sources
of cash was a net increase of almost $10 million in the level of accounts
receivable related items (i.e. net of the provision for refunds, advanced
tuition payments and deferred tuition revenue). The increased accounts
receivable level reflects the higher student enrollments at DeVry University
and an increase in receivable level per student caused by higher tuition rates,
particularly at DeVry institutes, for the summer and fall terms.
The increase in accounts receivable also reflects an increase of approximately
$13 million owed to the Company under various state and federal financial aid
programs. Much of this increase is due to an increase in amounts owed by
several states under state grant and loan programs. State governments have
historically been slower to remit payment for these amounts than has the
Department of Education for federal programs. Most of the amount owed as of
December 31, 2000, has subsequently been received. Federal and state aid
programs represent over 60% of the collections for U.S. Institute revenues.
Capital spending for the first six months reached a record high of $38.5
million. Included in this total is the completion of construction and
furnishing of the new DeVry Institute Tinley Park, Illinois, campus,
furnishing of the Orlando, Florida campus, continued renovation and expansion
of the Columbus, Ohio, campus and construction of the new campus in the
Seattle, Washington, area that is scheduled to open in July, 2001. Although
the rate of capital spending for the remainder of the year will slow somewhat,
the rate of future spending may remain at historically high levels if future
campus openings will be in Company owned rather than leased properties. The
decision to own rather than lease is based upon an analysis of the costs and
benefits from various financing alternatives at each new location.
During both the first and second quarter, the Company borrowed $6.0 million
under its revolving line of credit agreement to meet cyclical operating needs
prior to the cash inflows from the start of DeVry Institutes' summer and fall
term. These temporary borrowings were fully repaid by the end of each quarter.
The Company believes that the current balances of unrestricted cash, cash
generated from operations and, if needed, its revolving loan facility will
be sufficient to fund its operations for the foreseeable future.
At the beginning of January, 2001 the Company completed an acquisition of the
business operations of Stalla Seminars, a Chartered Financial Analyst (CFA)
exam review course provider. This purchase was made for cash and paid for
from existing cash balances.
13
PART II - Other information
- ---------------------------
Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The Company's regular annual meeting of stockholders was held in Chicago,
Illinois, on Tuesday, November 14, 2000, pursuant to notice duly given.
Proxies for the meeting were solicited in accordance with the Securities
Exchange Act of 1934 and there was no solicitation in opposition to those of
management.
At the meeting, four Directors of the Company were elected to serve as
Class III Directors to hold office until 2003 or until their respective
successors are elected and qualified. The results of the voting for Directors,
whether in person or by proxy, were as follows:
Class III For Against Withheld
- -------------------- ---------- ------- ----------
Charles A. Bowsher 58,858,715 - 208,321
Robert C. McCormack 58,818,997 - 248,039
Julie A. McGee 58,678,151 - 388,885
Ronald L. Taylor 48,679,193 - 10,387,843
The terms of office of the following Directors continued after the meeting:
Ewen M. Akin, David S. Brown, Dennis J. Keller, Robert E. King, Frederick A.
Krehbiel, Thurston E. Manning and Hugo J. Melvoin.
Also submitted to a vote of the stockholders at this meeting was a proposal
for the ratification of the appointment of PricewaterhouseCoopers LLP as
independent public accountants for the Company for the current fiscal year.
The following table presents the results of the stockholders' vote on this
matter:
For Against Withheld
---------- ------- --------
59,002,681 23,479 40,876
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Item 5 - Other Information
- --------------------------
In October, 2000 the Company and its banks renegotiated the revolving loan
agreement, extending the term of the agreement to February 1, 2003, increasing
the permissible level of capital spending and adjusting one of the financial
convenants. Additional changes and adjustments to this agreement may be
required in the future to meet the Company's expanding operating needs.
In November, 2000 three graduates of DeVry Institute's Chicago campus filed a
class-action complaint that alleges DeVry graduates do not have appropriate
skills for employability in the computer information systems field. The
Company believes that this lawsuit is frivolous and completely without merit.
The Company has made no provision in its financial statements for the cost of
the lawsuit and believes that such costs will not have a material effect on
its results of operations or financial position.
In January, 2001 the Company acquired, for cash, the Stalla Seminars CFA Review
business as a complement to its Becker Conviser Professional Review.
In January, 2001 the Company announced several key management promotions
designed to provide the organizational resources necessary to accomplish the
Company's growth and quality goals. These promotions included:
O. John Skubiak to executive vice president
Michael J. LaForte, Jr. to senior vice president
Norman M. Levine to senior vice president.
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 December 31, 2000.
15
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: FEBRUARY 9, 2001 /s/ Ronald L. Taylor
--------------------
Ronald L. Taylor
President and Chief Operating
Officer
Date: FEBRUARY 9, 2001 /s/Norman M. Levine
-------------------
Norman M. Levine
Senior Vice President Finance
and Chief Financial Officer