EXHIBIT 99.1
FOR FURTHER INFORMATION CONTACT:
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
Edward Hartigan George Zagoudis Janine Warell Darcy Bretz
Senior Vice President General Information Analyst Contact Media Contact
(317) 594-9499 x207 (312) 640-6663 (312) 640-6775 (312) 640-6756
FOR IMMEDIATE RELEASE
THURSDAY, APRIL 16, 1998
ITT EDUCATIONAL SERVICES, INC. REPORTS
RECORD FIRST QUARTER RESULTS
INDIANAPOLIS, IN, APRIL 16, 1998 - ITT EDUCATIONAL SERVICES, INC.
(NYSE:ESI), a leading proprietary provider of technology-oriented
postsecondary degree programs, today reported record first quarter
operating income of $11.0 million, a gain of 22 percent over the $9.0
million for the first quarter of 1997. Operating margins for the quarter
increased to 15.2 percent compared with 13.9 percent a year ago. The
Company attributed its strong results to continued gains in total student
enrollment over its increasing college base.
Net income in the first quarter increased to $7.3 million, a gain of 18
percent over the $6.2 million for the first quarter of 1997. Fully diluted
earnings per share for the quarter rose to 27 cents compared with 23 cents
in the prior year period. Revenues increased 12 percent to $72.3 million
from $64.5 million in the first quarter of 1997.
"We are pleased that our strong momentum has continued in 1998 despite
incurring pre-tax expenses of approximately $550,000 in the first quarter
relating to our change in control caused by the merger of Starwood Hotels &
Resorts with ITT Corporation," said Rene R. Champagne, chairman, president
and chief executive officer. "These expenses represent approximately $0.01
per share after tax," said Champagne. "Excluding these expenses, operating
income for the quarter would have increased 27.4%."
According to Champagne, "ESI has obtained all required prior approvals of
the proposed underwritten public offering of 11,000,000 shares together
with a potential over-allotment of 1,650,000 shares of ESI common stock
held by ITT Corporation (the "Offering") from the Company's education
regulators before the offering occurs."
"We see significant long-term opportunities to further capitalize on the
rising demand for technology-oriented programs of study," said Champagne.
"Our 63rd college opened in the first quarter in Burr Ridge (Chicago),
Illinois. We intend to open five additional colleges in 1998 in Albany and
Liverpool (Syracuse), New York, Richmond, Virginia, Richardson, Texas, and
St. Rose (New Orleans), Louisiana. In addition, we continue to plan the
introduction of additional curricula in our colleges this year, including
the rescheduled September introduction of our new curriculum in Computer
Network Systems Technology."
ESI has filed a registration statement with the Securities and Exchange
Commission, which is not yet effective, relating to the proposed Offering.
These securities may not be sold nor may offers to buy be accepted prior to
the time the registration statement becomes effective. This announcement
shall not constitute an offer to sell or the solicitation of an offer to
buy, nor shall there be any sale of these securities in any State in which
such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
When it becomes available, a copy of the written prospectus relating to the
Offering may be obtained from the Prospectus Department -- Credit Suisse
First Boston, 11 Madison Avenue, New York, NY 10010.
ITT Educational Services, Inc. operates 63 ITT Technical Institutes in 27
states which provide career-focused postsecondary programs of study in
fields of technology to approximately 24,000 students.
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
DISCUSSED IN THIS PRESS RELEASE ARE FORWARD LOOKING STATEMENTS THAT 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 COMPANY'S APPEAL IN ELDREDGE, ET AL, V. ITT EDUCATIONAL SERVICES, INC.,
ET AL. AND THE RESULTS OF ANY RELATED LITIGATION; 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;
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; A SUBSTANTIAL INCREASE IN THE SHARES OF COMMON
STOCK AVAILABLE FOR SALE IN THE MARKET IF SOME OR ALL OF ITT CORPORATION'S
COMMON STOCK HOLDINGS ARE DIVESTED; AND OTHER RISKS AND UNCERTAINTIES
DETAILED FROM TIME TO TIME IN THE COMPANY'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION.
ITT EDUCATIONAL SERVICES, INC.
STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
1997 1996
REVENUES
Tuition $62,587 $55,746
Other educational 9,700 8,730
Total revenue 72,287 64,476
COSTS AND EXPENSES
Cost of educational services 41,438 37,984
Student services and administrative 19,436 17,536
expenses
Change of control expenses 443 ---
Total costs and 61,317 55,520
expenses
Operating income 10,970 8,956
Interest income, net 1,244 1,380
Income before income taxes 12,214 10,336
Income taxes 4,886 4,134
Net Income $7,328 $6,202
Earnings per common share (basic and $0.27 $0.23
diluted)
SUPPLEMENTAL DATA:
Cost of educational services 57.3% 58.9%
Student services and administrative 26.9% 27.2%
expenses
Change of control expenses 0.6% ---
Operating margin 15.2% 13.9%
Operating losses from new institutes $636 $578
(after-tax)
Student enrollment at end of period 23,879 22,172
Technical institutes at end of period 63 59
ITT EDUCATIONAL SERVICES, INC.
BALANCE SHEETS
(IN THOUSANDS EXCEPT PER SHARE DATA)
March 31, 1998 December 31, 1997 March 31, 1997
(unaudited) ____________ (unaudited)
ASSETS
Current assets
Cash and cash equivalents $90,217 $29 $62
Restricted cash 6,689 3,860 844
Cash invested with ITT Corporation --- 94,800 85,936
Accounts receivable, net 12,770 9,680 9,797
Deferred income tax 1,843 2,019 1,217
Prepaids and other current assets 3,939 2,570 4,248
Total current assets $115,458 $112,958 $102,104
Property and equipment, net 22,937 22,886 21,429
Direct marketing costs 7,054 6,882 5,969
Other assets 3,338 3,188 1,946
Total assets 148,787 145,914 131,448
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $11,639 $14,974 $14,039
Accrued compensation and benefits 5,054 3,245 3,481
Other accrued liabilities 11,729 6,877 6,617
Deferred tuition revenue 23,041 30,850 30,800
Total current liabilities 51,463 55,946 54,937
Other liabilities 2,181 2,153 1,617
Total liabilities 53,644 58,099 56,554
Shareholders' equity
Preferred stock, $.01 par value, --- --- ---
5,000,000
shares authorized, none issued
or
outstanding
Common stock, $0.1 par value, 270 270 270
50,000,000
shares authorized, 26,999,952
issued
and outstanding
Capital surplus 32,513 32,513 32,513
Retained earnings 62,360 55,032 42,111
Total shareholders' equity 95,143 87,815 74,894
Total liabilities and $148,787 $145,914 $131,448
shareholders' equity
For more information on ITT Educational Services, Inc.
via facsimile at no cost, simply dial 1-800-PRO-INFO
and enter the company code ESI.