DeVry Education Group Inc DV
Q4 2011 Earnings Call Transcript
Transcript Call Date 08/11/2011

Operator: Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 DeVry Results Conference Call. My name is Jeff and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will facilitate a question-and-answer session. As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Ms. Joan Bates, Senior Director of Investor and Media Relations. You have the floor, Ms. Bates.

Joan Bates - Senior Director, Investor & Media Relations: Thank you, Jeff. With me today from DeVry management are Daniel Hamburger, President and Chief Executive Officer; Rick Gunst, Senior Vice President and Chief Financial Officer; and Pat Unzicker, Vice President and Controller.

I'll now review the Safe Harbor provisions of these results call. This call may contain forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements reflect, among other things, management's current expectations, plans and strategies, and anticipated financial results, all of which are subject to known and unknown risks, uncertainties, and factors that may cause the actual results to differ materially from those expressed or implied by these forward-looking statements.

Please see our public filings with the Securities and Exchange Commission for more information about forward-looking statements and related risk factors. Telephone and webcast replays of today's results call are available until August 25, 2011. To access the replays, please refer to today's press release for more information.

I'll now turn the call over to Daniel Hamburger.

Daniel Hamburger - President and CEO: Thanks, Joan. Thanks everyone for joining us today. Overall, we're pleased with our performance in fiscal 2011, academically, operationally, and financially speaking as well. This performance was driven by our commitment to academic quality and strong execution of our diversification strategy.

While we delivered strong results for the year, we also continued to make long-term investments in the quality of our programs and services, laying the foundation for continued growth in the future. We now have more than a 119,000 students currently enrolled in our DeVry family of institutions. While we recognize this figure was slightly down for the year, we remain encouraged by the results we were able to achieve in one of the toughest economic environments in history.

Now, it's clear that DeVry, and higher education in general, are facing some headwinds in the current environment caused by a number of factors, and I'll touch on these and then address the steps we're taking to overcome these challenges.

At the start, one thing I'd like to address is something I've been asked about quite often recently which is the impact of increasing admission standards on enrollment growth. Lately, we've heard several universities cite new admission standards as a reason for enrollment decline, as they've turned away students that previously would have been admitted.

That hasn't been the case for DeVry, because we don't have open enrollment institution and have had enrollment standards in place. Some people have been surprised when I tell them this, because there's a perception that all private sector colleges are open enrollment, and that's not the case, and it's not the case at DeVry.

While we continually evaluate and make adjustments to our admission standards, these aren't major wholesale changes to our operating model.

I'll finally turn to the three factors that we do believe are having an impact on our enrollments. First off, after several years of exceptional enrollment growth, we all expected an industry-wide reversion towards more historic levels of enrollment growth.

Google keyword searches in the whole category of education have been trending down in the last few quarters and that's across all of higher education, not just the private sector. Just the other day somebody sent me an article about Eastern Illinois University's new student enrollment's being down about 9% and they're closing a portion of their student housing. So this is affecting public sector state universities as well as those in the private sector.

As we discussed on past results call, we've been anticipating this reversion to the trend and we believe over the long term, enrollment growth will likewise revert back to the long-term trend, which is in the mid-to-high single-digit range. The second factor is the impact of the new regulations governing higher education that went into effect July 1.

Implementation of these new regulations has created an adjustment period that all schools have had to begin working through to some degree or another. One of the main adjustments we've been addressing is reevaluating our marketing affiliates and how they stack up to the new regulation.

In some instances, this may mean no longer working with certain vendors. This doesn't mean these vendors are necessarily doing anything wrong, but if they are unable to demonstrate adherence to our standards, we simply won't work with them until they do and I hope they're listening.

By the way, DeVry University's President, Dave Pauldine, he's played a leadership role for this sector in setting standards for marketing and advertising vendors. So, kudos to Dave. These relationships may take time to replace, but given DeVry's conservative, risk-averse nature, we will be uncompromising where compliance is involved, I can assure you that.

Another adjustment is compliance with the new compensation rules, which apply to all colleges whether private sector, public sector or independent. Again, I'll point out a misperception here. Some people think we're paying commissions before the rule changes and that the rule changes therefore had an impact, but that's not the case. We weren't paying commissions and so that wasn't an impact of the new regulation, but we did need to adjust our performance management systems and our processes for employees whose compensation is covered by these Department of Education rules. We're being careful to ensure we remain in compliance and to properly assess the performance of these employees, and in addition, we're also training all our employees on the new regulations.

We recently brought in 600 of our top managers across our institution for three days of training on what the new regulations mean for our institution, and we rolled out a training program on responsible communications practices to all employees. These are examples DeVry's commitment to compliance.

While we're making these regulatory adjustments, and don't foresee them being a long-term issue, they have been a near-term distraction to our employees and like we have had a bit of a negative impact on our performance. So finally the third factor, the economy, that's the one we believe, has had the greatest influence on our student enrollment.

Basically – and you don't need me to tell you this, but this economy is just awful, and as the sluggishness in the economy has dragged on, it's had an increasing effect on students decisions to pursue a college degree as I'm sure it has in every other economic decision.

It's hard to overstate the increasing level of discouraging economic trends. Just recently it was released that in June consumer spending fell for the first time in two years. It seems slowing growth in itself, and no one really brought a home for me. So when I saw an article recently, that even the dollar stores; Family Dollar, Dollar General, they are experiencing sales declines. They always do well in recession, but this one has dragged down so long and so deep, even the dollar stars are down.

When you combine this declining consumer sentiment with all the uncertainty and the high unemployment rate, it's clear that the average person in the U.S. has become much more risk-adverse and cautious when it comes to spending or committing to anything. It's unrealistic for us to think that education would be immune from this. So clearly, these three sectors have negatively impacted our institutions. We wanted to provide as much color as we could.

So that's the diagnosis, but what are we doing about it? So let me give you an idea of the steps we are taking at two of our institutions that have been most negatively impacted by the current environment, DeVry University undergraduate in Carrington colleges.

The DeVry University is a focal points for our improvement efforts includes; first, investing in the strong DeVry University brand, which we view as one of our greatest assets. We're increasing our emphasis on generating more inquiries through organic and paid search. To illustrate this approach, let me cite what we've been doing to support the brand at Keller Graduate School of Management.

We launched the campaign with targeted TV spots and online media initiatives that underscored the value proposition of a Keller degree. Of course, the practitioner focus, flexible scheduling and having the best of both; the best of both onsite and online course work. We believe these efforts have been the driver of Keller's continued growth and outperformance relative to the graduate market. So, we'll be increasing our focus and this kind of an approach at the undergraduate level as well.

The second step we're taking is improving our student outreach and recruiting processes. We're enhancing our technology tools to provide faster service to prospective student. In particular, we are focusing on a more efficient approach to how we handle inquiries received via social media, and we're increasing our investment in recruitment channels, building relationships with corporations, community colleges and government organizations.

The third element of DeVry University's growth strategy that I want to highlight is adding new locations and new programs. I'll provide some more examples a little later on the call.

Let me turn to Carrington, where we're also actively addressing our underperformance, and I'd like to highlight three elements of our turnaround planned here. First is enhancing our students' academic experience. One way we've been doing this is through something we call our SimLink Experience which we briefly mentioned, I believe, last quarter. This state-of-the-art technology offers students the latest in advanced patient simulation teaching method. It's now fully operational and receiving stellar reviews, I might add, at our Pomona, Mesa, and Albuquerque campuses.

Secondly, we're optimizing the marketing and recruiting process at Carrington. Previous quarter, we successfully relocated our student qualification center in Phoenix. We're currently training the new staff and processes to enhance student service. We expect consistent improvement in our responsiveness to prospective students, as this team gets oriented to the new processes and begins to hit its stride. Our marketing team has also been hard at work making changes to improve the efficiencies and inquiry quality. We're seeing early indications of an increase in traffic at our Carrington website. We're seeing more overall inquiries and a shift in our inquiry mix that reduces our dependence on outside vendors.

Third at Carrington, we're launching new programs in new locations. We're developing programs beyond healthcare to include business and networking technology. We recently opened a campus in Pomona, California that provides an opportunity for incremental growth. This is a collocation with DeVry University. So, the efficiency is higher than a standalone campus.

We're also in development on our first Carrington campus in Texas, in the Dallas suburb of Mesquite, Texas. In terms of new locations, here we would also include the virtual location if you will of online delivery. Carrington currently only has a small online presence, so we believe there is a lot of opportunity here. So while we are not satisfied with enrollment results at DeVry University undergraduate and at Carrington, we believe we have solid plans in place to address the issues. It's also important to note that even though we had these two institutions underperformed in this difficult environment, our other institutions performed quite well and displayed strong growth.

So while there is currently softness within DeVry University undergraduate and at Carrington, the growth at Chamberlain, Ross Medical, Ross Veterinary, Keller, and DeVry Brasil, all these growth offsets the weakness and this observation gets to the heart of our diversification strategy. When one institution is down, others are often up.

DeVry's diverse family of institution allows us to mitigate the impact of economic and curricular cycles. It keeps us on a path of long-term growth. So the DeVry formula is quality, plus diversification, people's growth are focused to keep investing in educational quality and to continue to position ourselves across a diverse array of educational segment, especially those that are in high demand, a technology and in healthcare and a great example of this, of course, is the acquisition of American University of the Caribbean that we announced last week.

AUC's high quality curriculum, faculty and facilities make this a perfect addition to DeVry's growing Healthcare Group. We believe there is a compelling strategic rationale for this transaction. AUC has excellent academic quality and is one of only three Caribbean medical schools whose students are titled for eligible, of course Ross being another. AUC offers us the opportunity to have a firm number one position in international medical education and to further help meet the growing demand for well trained physicians in the U.S. Secondly; the execution risk of this acquisition is relatively low. We know medical education DeVry and AUC have highly compatible cultures, and those cultures are focused on quality programs, integrity and compliance, and excellent student service.

Thirdly, we expect excellent financial returns, well in excess of our cost of capital. The transaction will be highly accretive, accretive academically, accretive to our society as we help address the physician shortage and accretive financially. So as we move forward, we have a thorough integration plan in place.

In summary, our game plan includes the following priorities. Priority number 1, 2 and 3 quality. While AUC's academic delivery is already of high quality, we'll continue to invest here including upgrading the labs, investing in patient simulation, investing in the clinical network, curriculum and faculty development. Next priority, build growth capacity, we have already developed a master plan working with the prior owner and this is about a $20 million investment.

Finally, work on synergies. AUC will continue to be a separate institution and at the same time, we see many opportunities to share best practices. Things like clinical training, faculty development, purchasing, and technological improvements, all like those that we developed at DeVry University and at Ross University School of Medicine over the years.

Earlier this week Bill Hughson, who heads our Healthcare Group, and I had a chance to visit with the employees and the students of AUC, we had a chance to welcome to the DeVry family. In fact, the students are really impressive, the staff is dedicated to student service, faculty is outstanding and we have a great relationship with the government there.

In fact, we were honored to have the St. Maarten Prime Minister and many other public officials joined us for a public celebration of the transaction. We look forward to continuing the strong partnership AUC has enjoyed there over the years.

So, before I turn it over to Rick and Pat, I'd like to highlight a few developments in the public policy arena.

First and foremost, the period of regulatory uncertainty is behind us and we have a set of rules in place that we can work from. We firmly believe in strong metrics that can improve institutional quality, accountability and transparency. While we don't see the current gainful employment rule, I think the best way to measure institutional quality or even the best way to measure whether graduates are gainfully employed, we think we can work with it and of course we will be complying with all rules and regulations.

We've begun work on analyzing our programs under these new metrics, and our initial analysis is yet to find any programs that failed to meet the new parameters. However, we do believe there's room for improvement in these regulations and we want to be a part of the dialogue to get it right.

So, it's great that we now have certainty, and while the process of the last two years wasn't always pleasant, they were a number of positive outcomes. So one thing a lot of policymakers are much better educated now, and there's strong bipartisan understanding that given our huge need for education and a shortages of resources in the public sector to meet this need, the private sector will continue to play an important role. That's huge.

There's also an increasing recognition that the laws and regulations ensuring quality must protect all students, whether they attain private sector, public sector or independent colleges. Again, that's huge. Something we've been advocating for years.

So, we see the opportunity for a new dialogue, one that says, clean sheet of paper, how should we regulate, how should we oversee higher education. We think there's the opportunity for a complete policy reform and if this dialogue unfolds on Capitol Hill, we look forward to being a part of improving the overall policy framework.

Along these lines, DeVry recently had an opportunity to participate in The Senate Health, Education, Labor and Pensions Committee roundtable to discuss policy solutions and ways to improve private sector education. Our presence at this meeting was an important step as we continued to build an ongoing and constructive dialogue even with those who've been critical of this sector. We thank Senator Harkin for hosting this discussion and for enabling DeVry to have a seat at the table as a thought leader in the sector and across all of higher education.

In summary, our concept is to base the new policy framework on two pillars, metrics of accountability and standards of best practice, and to apply the framework to all colleges and universities. If you'd like to read our proposed two-pillar solution to college accountability, we've posted my written testimony from the roundtable on the DeVry website.

So, thank you for your indulgence for that unusually long overview, but with that, I'd like to turn the call over to Rick and Pat for the financial and enrollment results.

Richard M. Gunst - CFO and Treasurer: Thanks, Daniel, and good afternoon, everyone. Another fiscal year has come to a close, and overall, we delivered solid results within a challenging external environment. Full year revenue was $2,182 million, up 14% versus prior year; net income for fiscal 2011 was about $330 million, up 18% versus last year; and earnings per share were $4.68, up 21%. For the year, we provided over $160 million in taxes and invested about $136 million of capital in our various educational institutions.

Fourth quarter results reflect a slowdown of top line growth driven by lower enrollments, but continued operating leverage and focused on reinvesting in academic quality and long-term growth initiatives. Fourth quarter revenue of about $547 million was up 8% versus prior year.

Total enrollment across our degree-granting educational institutions was down about 1% for the most recent period, about 119,000 students. Net income of $75 million in the quarter increased 5% versus prior year and earnings per share of $0.08, up about 9%.

Our overall effective tax rate was 30.8% for the quarter and 33.1% for the year as compared to 32.1% for the full fiscal 2010. The tax rate was lower in the fourth quarter due to the lower mix of domestic source income and the true-up of state approvals and reserves.

Cost of educational service expense increased by 12% for the year and student service and administrative expense increased by 12.5% for the year. We continue to invest resources to improve academic quality and enhance student services, consistent with our philosophy of quality plus diversification equals growth. In the quarter, cost of educational services was up 9% and student service and administrative expense up 6% versus prior year.

With that overview, let me now shift to our operating segment results, which are further detailed in our release and 8-K filing today. You will note we have realigned our segments to better conform to our organizational structure and strategic focus. Our two largest segments, Business Technology and Management and Medical and Healthcare remain unchanged as our two U.S. postsecondary educational segments.

We combined the Professional Education and Other Educational Services segments into the new International, K-12 and Professional Education segment. This segment is lead by Steve Riehs and represents our educational institutions outside of U.S. postsecondary education.

So, starting with Business Technology and Management segments, revenue was up about 8% versus prior year in the quarter and about 15% year-to-date. The revenue growth continue to come down this quarter due to softening new student enrollments, as undergraduate new student enrollments were down 26% versus prior year and total student enrollment down 6%. As Daniel mentioned earlier, there are several factors we are working through to address these slower growth trends and we'll continue to update you along the way as we progress there.

Enrollment at the graduate level grew about 8% in May and 2% in the July session. Segment earnings were up 7% in the quarter and about 24% for the year. We've been focusing on reducing costs where appropriate, without compromising academics, new program development and new location expansions, the benefit of which we'll see in fiscal 2012 and beyond.

Ross will continue to pursue technological improvements within the organization. You've heard us talk about Project DELTA in the past and how it's been behind schedule and over-budget, but we've been committed to rolling out these modules in the right way and not harming our service to students in the process.

Recently, we launched our new student accounts module. This new module provides students with convenient ways to manage their personal accounts online 24x7. Where there used to be a lag of several days, students now get instant updates to their accounts online as tuition and student aids are posted; and true to our word, we delayed it, we spent more than we originally had planned, and in doing so ensured we did the right thing.

The implementation went very smoothly. In fact, we have contracted with an outside firm to bring on a team of people to staff the phones in case any problems ensuing deluge of helpdesk calls occurred. Thankfully, we ended like the Maytag repairman, and we were able to release them ahead of schedule.

In the coming year, we expect to launch several new modules that will continue to simplify processes and help our students provide great student service while improving efficiency. We are doing so on the heels of this success and the team is feeling very good about Project DELTA.

Within the Medical and Healthcare segment, revenue was up 4% in the quarter and about 10% for the fiscal year, driven primarily by the strong growth within Chamberlain College of Nursing.

Chamberlain's new student enrollment was about 16% in the summer term with total enrollment of 40%. This growth was driven by the impact of enrollment at our three new locations in fiscal 2011, Chicago and Arlington, Virginia which opened in July 2010 and Houston, which started teaching in March 2011. Chamberlain also began teaching in Miramar, Florida just outside of Fort Lauderdale last month. Chamberlain's growth was driven by continued increased enrollment at our existing locations and online due to a strong demand for nursing professionals.

Within Ross University, new student enrollment showed growth as expected for the May class, up 38% versus prior year due to overlapping the lower student enrollment levels last year at the medical school campus in Dominica. Total enrollment was up about 6%.

As we look forward, new student enrollment growth rates are likely to bounce around a bit, mainly the arithmetic of overlapping the uneven classes of last year – the arithmetic of overlapping the uneven classes of last year. You think that I would know that one, but you should expect long-term enrollment trends to be in the mid-single-digit range.

Meanwhile, enrollment at Carrington continued to suffer the effects of the prolonged poor economic environment and hesitancy of prospective students to pursue further education, with new student enrollments down about 34% and total enrollments down around 26%.

Earnings for the Medical and Healthcare segment in the quarter were down 15% versus prior year and down 4% for the year, with strong performance at Chamberlain offset by softer results at Carrington. Cost containment initiatives have helped lessen the impact of the lower enrollments.

Finally, for our new segment, revenue within International, K-12 and Professional Education increased about 21% in the quarter and 13% for the year. Revenue growth for the quarter and year came from each of the institutions. DeVry Brasil is benefiting from the double-digit new and total enrollment growth in the most recent term. Advanced Academics rebounded with stronger growth on the heels of new school district enrollments, and Becker saw improving trends within accounting and finance. Segment earnings were up 82% in the quarter and 64% for the year versus a softer performance in the year ago periods.

So fiscal 2011 was a year where we met our goals of delivering double-digit revenue growth and roughly 20% earnings growth despite the challenging external environment. We feel very good about that. Looking ahead to fiscal 2012, despite the recent enrollment declines at DeVry University undergrad and Carrington, we expect fiscal 2012 total revenue to be up versus 2011 organically with the acquisitions of AUC and ATC adding to that growth.

Earnings growth, however, also possible will be more challenging. First half earnings will be below prior year given the impact of the enrollment deceleration and tougher year-over-year overlaps. We expect second half earnings to be backed up versus prior year with the full year likely to be plus or minus to 2011 level. We need to achieve improved enrollment trends at DeVry University undergraduate and Carrington to be able to show earnings growth for the year. Accretion from the AUC acquisition will likely add about a $0.05 to EPS for the year.

So, I'll now turn the call over to Pat to review our cash flow and balance sheet results. Pat?

Patrick J. Unzicker - Corporate Controller: Thanks, Rich. Good afternoon, everyone. Our cash flow from operations for the fiscal year was $408 million versus $391 million last year. This strong cash generation drove our cash and marketable security balance to $450 million at the end of the year compared to $323 million last year. We also remained debt free.

During May, we replaced our $175 million revolving credit agreement, which was set to expire in January 2012 with the new $400 million five-year facility and we have the option to expand that facility to $550 million. This facility will provide us with the flexibility to finance acquisitions at market competitive interest rates.

Our net accounts receivable balance was about $115 million versus $119 million last year. This lower accounts receivable balance was the result of our continued focus on student service and collections management as well as our students' ability to pay back their accounts based on their positive student outcomes.

Our bad debt rates continue to reflect the focus on the receivable collection process, with bad debt expense for the fiscal year actually down to 2.1% of revenue as compared to 2.6% last year, again an indicator of our students paying back their accounts and the strong value proposition of our programs.

Capital spending for the year was $136 million versus $131 million spent last year. We came in a bit lower than expected that some of the project spending will carry over in the first quarter of fiscal year 2012. The spending was driven by facility improvements to better serve students across all of our schools and for new occasions at DeVry University and expansion within Ross University and Chamberlain College of Nursing, so that we can educate more doctors and nurses in this great time of need. For fiscal year 2012, we anticipate spend to be in the $170 million to $180 million range, which includes investment for our newly acquired AUC medical school.

Finally, during the quarter, we repurchased 518,000 shares of our common stock for about $28 million, or on average, $54.39 per share. We completed our fifth share repurchase program in the quarter and began executing on our sixth program which is $100 million program. Also, since the inception of our share repurchase program back in November 2006, we have repurchased approximately 5.1 million shares for just about $243 million or at an average price of about $47.50 per share.

Now let me turn the call back over to Daniel for some more color on our operating results.

Daniel Hamburger - President and CEO: Thank you, Pat. I'll start here with our Business, Technology and Management segment which, of course, consists of DeVry University and its Keller Graduate School of Management. I'd like to emphasize that despite the softening enrollment, we are continuing to make significant investments and expanding our programs and locations for DeVry University. I have talked quite a bit about this segment earlier, so let me just add a little color to this point.

We plan on introducing a bachelors degree in healthcare administration in November this year. We just opened new locations in Oxnard, California and Lynnwood, Washington in July as we started this new fiscal year.

We are targeting further expansion with a new location in Cherry Hill, New Jersey in November. We are on schedule for our second location in San Diego in the second half of fiscal year 2012. We are also investing in the Keller Graduate School of Management, developing a new website dedicated solely to Keller and that's going to feature more as user-friendly navigation tools and dynamic content that we anticipate will drive increased traffic and inquiries. This project is on track to launch the new website in the spring of 2012.

Moving to the Medical and Healthcare segment, at Ross University School of Medicine, we continue to experience significant demand as the need for physicians continues to grow. Capacity constraints remain an issue, but we're making progress and plan to build out further capacity while continuing to enhance academic quality and outcomes.

At Ross University School of Veterinary Medicine, demand has never been greater and we reached an all-time high in total enrollment in the most recent period. Of course, the highlight of fiscal 2011 was earning accreditation from the American Veterinary Medical Association, the AVMA. Ross is the only AVMA accredited private sector vet school – and I stumbled there, let me say that again. Ross is the only AVMA accredited private sector vet school.

During the quarter, we also opened a tri-location, so it's a three-way collocation in Miramar, Florida. It's a unique location that's housing clinical facilities for Ross University School of Medicine, campuses for DeVry University in Chamberlain College of Nursing. At Chamberlain, we are continuing to see strong demand across all our programs. In response, we're working hard on new Chamberlain campuses in Indianapolis and in Atlanta. We expect them to be opened in the second half of fiscal 2012.

During the quarter, we also made investments into Chamberlain's academic quality. One example is the hiring of a new Vice President of Academic Affairs, Dr. Richard Cowling. Dr. Cowling brings an impressive depth of experience in nursing education and research. I'm sure he's going to be a huge asset to Chamberlain going forward.

I'd like to take a moment to highlight how we're delivering on our commitment of doing well by doing good. Recently, a group of Chamberlain and Ross Medical students spent several weeks in Nairobi, Kenya as part of an inter-professional global healthcare initiative. The group provided healthcare and education to impoverished local communities, and by the end of the trip, it treated over 2,000 patients. Programs like this provide invaluable real world experience to our students and much needed medical attention to the local population. So, that truly is doing well by doing good.

Lastly, in our Medical and Healthcare segment, while we remain focused at our Carrington colleges and implementing the initiatives that I mentioned earlier, we're also investing in academic and service quality through new hires, like a new Dean of Curriculum at Carrington College, California; new Dean of Career Services at Carrington College; and as of July 1, we officially congratulate Rob Paul on his promotion as Carrington's President, and we promoted Rob from DeVry University. It's great to have a deep bench.

Finally, on to our new International, K-12, and Professional Education segment, and here we saw Becker Professional Education produce positive full year result. The way I think of it is the same way that we began ramping up our Healthcare group several years ago. We're expanding in Professional Education by finding new vertical and geographic markets that build on our core strengths.

Our recent acquisition of ATC International is great example of this strategy as we're broadening our reach to include the population of more than 400,000 candidates for the ACCA exam. That's the Association of Chartered Certified Accountants; the accreditation typically found in the Commonwealth countries, former British Commonwealth, so, whereas there is 100,000 CPA exam candidates every year roughly of 400,000 ACCA exam candidates. We view international exam review as a growth opportunity, and we're excited at the long-term possibilities.

We move to Advanced Academics just briefly to say that we're beginning to see some increased traction despite constrained state budget. This last quarter was a profitable period as we experienced growing success in Arizona, Texas, and New York. We're also in a process of gearing up for expansion into Florida and at DeVry Brasil, we're continuing to benefit from sizable organic enrollment growth, largely in our high demand engineering and healthcare programs.

Growth at DeVry Brasil demonstrates the power of incorporating best practices and investing in infrastructure throughout and across our system of colleges and universities. For example, we just recently arranged a joint project with DeVry Brasil students and students from our DeVry University's Addison, Illinois campus.

The project focused on students researching the difference in similarities between the two countries in terms of fossil fuel production and conservation. The result was very impressive. The students freely collaborated to create a wonderful international learning experience. Plans are currently underway to replicate this experience in the fall and it could lead to a dedicated exchange program in the future.

We've been very pleased with the results at DeVry Brasil and we remain focused on driving future growth there. We're continuing to build out our Ruy Barbosa campus and our first organic expansion to a new city Sao Luis. That one remains on track to open next year.

So overall, I believe we have the right equation in place to continue executing on our plan towards successful student outcomes and long-term growth. So both way I can describe that equation is quality plus diversification equals growth for DeVry and that means success for our students. We're confident that equation will continue to see us through this challenging environment as we focus on our students first in everything we do.

Our priorities in fiscal year '12 are aligned with our enterprise strategy, which, as you know, we summarized as achieve, grow, build. Achieve our academic quality goals including student exam results, persistence and supporting student services. Grow means grow and diversify our educational offerings, improve results at DeVry University, expand our healthcare offerings while continuing to improve student outcome and expand beyond our core U.S. postsecondary offerings in Professional, K-12 and International areas.

Third, build the infrastructure to support this growth over the long-term, accelerate our online services that support all our institutions, further implement Project DELTA, enhance our reputation as the Employer of Choice in education and build our bench strength in talent management and succession planning and leverage DeVry's reputation to work with government in developing a long-term policy framework for higher education.

So before I turn the call back to Joan, I want to recognize and thank all of our colleagues at DeVry for their hard work in fiscal year '11. Their commitment to our students is the foundation of our success.

Joan Bates - Senior Director, Investor & Media Relations: Okay, great. Before we open the call for your questions, I would like to point out that we changed the date of fall enrollment release because the original date conflicts with an internal meeting that we are having. The new date of the release is Monday, December 12. So Jeff, if you would give our participants the instructions, we would like to begin.

Transcript Call Date 08/11/2011

Operator: James Samford, Citigroup.

James Samford - Citigroup: Quick arithmetic question for Rick. Operating margins looks like they were down slightly this quarter at the university level on the Business, Technology and Management, actually their lowest levels in years. I was wondering how much of that deleverage was really a function of enrollment or was that most impacted by the procedural changes and anything else that might have driven that and margin decline?

Richard M. Gunst - CFO and Treasurer: The margin was actually up a little bit, because we had revenue growth of about 8% in the quarter and earnings growth of about less 7%. So it was down slightly I guess, yeah. It was down slightly I guess, yeah. It's down slightly. Again, for the year, we still had really good operating leverage and expect it to be that way when we have decelerating enrollments and as we did in the quarter, it's not surprising that we had a slight did in margin.

Daniel Hamburger - President and CEO: Yeah. I will just jump in and say I think that we saw some opportunities to make some investments in the quarter as well that there's always timing, could happen this quarter, could happen next quarter.

James Samford - Citigroup: But over the long term that should be a (indiscernible) kind of business under accelerating I guess the normal trends?

Richard M. Gunst - CFO and Treasurer: Okay.

Operator: Suzi Stein, Morgan Stanley.

Suzanne Stein - Morgan Stanley: We appreciate the guidance for fiscal '12 and you went into lot of detail about some of the initiatives to drive enrollments, but can give you a sense of what's embedded in that guidance as far as any cost cutting and where there could be some levers going forward in terms of cost cutting?

Daniel Hamburger - President and CEO: Suzi, thanks for that. I don't think it's – cost cutting is never going to be our driver. We are growth organization, growth oriented set of colleges and universities and so that's always going to be the dominant. We are always at the same time looking for opportunities to be more efficient and typically that ends up looking like may be a slower growth in the rate of cost as the (core) grows slower than revenue. So, where you could you see that is in some of the functional areas as Project DELTA continues to rollout and fully mature that can give us a better productivity. So, you might not see it as cost cutting, but restraining the growth of expenditure and not (beginning) to hire as many new people, but we have also been careful stewards of capital and of resources and clearly there has been opportunities. We're very mindful and don't hesitate to take those kinds of actions. So, we're very mindful of those and I think that's what you see going forward.

Richard M. Gunst - CFO and Treasurer: Yeah, and we look at it institution by institution and location by location for that matter. So, across DeVry University, as an example, we have about 100 locations. Some are growing, some are about flat, and others might be declining. So, you have opportunities in different areas to invest, and other opportunities maybe to rightsize the organization.

Operator: Peter Appert, Piper Jaffray.

George Tom - Piper Jaffray: This is (George Tom) for Peter Appert. We spoke at length about long-term investments you're making. Will those investments weigh on margins going forward, assuming we don't see any operating leverage in 2012, or should we see some improvements in margin in the context of less investment spending in fiscal '12 versus '11?

Daniel Hamburger - President and CEO: Just in general, the investments that we're making we see as highly accretive as that will pay dividend, because as we invest in student services, academic qualities, we invest in building our reputation and our brand, that leads to growth and they have positive return. So, you might see – and in the near-term, sometimes because of timing, one quarter, another quarter, this year, that year, it can depress margins, and we've done that historically over the years many times. Chamberlain is a great example of that. When we first acquired Chamberlain College of Nursing, we purposely told everybody that margins would go down because we'd be investing in the academic technology. We redid the dorm. I remember taking as best set of dorm on many projects like that. So, in the near-term there was a depression. In effect, that's been supplanted by investments in new campuses. Chamberlain still in very much of growth mode and as we roll out several new campuses on the base of nine or 10 we have now, we'll have three new campuses. You're going to see a depression in the near-term but that's a project, that's a great return on educational investment, great return on capital. So that's the way we look at it.

George Tom - Piper Jaffray: I guess what I'm trying to get at is, when do you expect that investment spend to end?

Richard M. Gunst - CFO and Treasurer: Never.

Daniel Hamburger - President and CEO: Never, yeah.

Richard M. Gunst - CFO and Treasurer: Hopefully never; when it starts to end, then that's not a very good sign.

Daniel Hamburger - President and CEO: We're not a growth organization anymore.

George Tom - Piper Jaffray: You talked a bit about launching campaign on TV and media to emphasize degree benefits. Do you see rising media costs as being prohibitive to you return on those efforts?

Daniel Hamburger - President and CEO: Not prohibitive. We're seeing some increases but it's not dramatic and not unexpected. So I put it in that sort of order of magnitude for you.

Operator: Andrew Steinerman, JPMorgan.

Andrew Steinerman - JPMorgan: My question is about the Keller School, the graduate business school, which seems to be fairing a lot better than the undergraduate business school at DeVry. Could you give us some sense on what's different about Keller? From the (course taken) account, it definitely seems like it continues to grow nicely. If you were looking at new enrollment, is that also the direction for Keller?

Daniel Hamburger - President and CEO: It's more challenging environment for all the reasons that I tried to elaborate on, and give as much color as we could. At the graduate level we do seem to be – we're pretty proud and grateful for the recent performance, which, relative to the best data that we can get on the market, seems to be an outperformance. Maybe we're taking a little bit share there. One of the things that I would point to is; we have known, our market research has shown that Keller has very high consideration but not as high awareness as we would like. In other words, once you know about Keller you really like it, but not enough people know about it. So we just won't get into the plate enough times I guess, but our batting average was pretty good when we did. So, we instituted a marketing approach to try to build the awareness and the brand of Keller. You may have seen some of the television ads. I mean, it's not just television, believe me, it's plenty of other media and so forth. We got really good response to that. So, I think that might be one example of the driver there.

Andrew Steinerman - JPMorgan: Also, Daniel the other part was about, do you feel like new enrollment at Keller are in the same direction as total enrollments?

Daniel Hamburger - President and CEO: It's softening a little bit, and that's why you've seen the total growth which is what we show. Total course taken growth, you've seen that come down. So that has been a function of both new and in graduations.

Operator: Gary Bisbee, Barclays Capital.

Gary Bisbee - Barclays Capital: I guess; a two-part question. What gives you confidence in the ability to say you expect revenue to be up year-over-year organically in fiscal 2012? Just given the trend in enrollment here, particularly at DeVry University which we know is the largest business by a wide margin. I guess, I am struggling to figure out how you can say that confidently. Maybe the second part of the question is what from an enrollment perspective is baked into that comment?

Richard M. Gunst - CFO and Treasurer: I'll start off, Gary; maybe Dan will add on. But, if you look at DeVry University, we have had now three consecutive periods of new student declines after having, I think 10 consecutive periods of pretty sizable increases, but if you look at it over the long term over the past two, three, four years the compound growth is very strong in like the 10%, 11%, 12% range. So we view what's happened here, near term has not been a long-term friend, but due to lot of the matters that Daniel talked about earlier and as we start to have now easier overlaps, easier comparisons to prior year and both new and total students come in the fall and spring next year, we expect to see that improve and therefore that will drive improvements in the growth rates on both the top and down line.

Gary Bisbee - Barclays Capital: Don't you need – doesn't the three straight terms of pretty significant year-over-over decline and starts have to flow through and doesn't that take a while? I mean, this term you just gave us was August enrollment for DeVry University, right? So last quarter which drove – last term enrollment, which drove the 7% or 8% revenue increase at DeVry University was actually still a positive number for total undergrad enrollment. It was up 6%, now you've got a down 6%. I guess I still struggle with how you could get positive. I'm not trying to give you a hard time. I'm just trying to – thinking about the math wrong?

Richard M. Gunst - CFO and Treasurer: Well, the math is, you're looking at one piece of it, and DeVry University is the new – for the first half, you are going to have some challenges that we hope to see some improvements in trends as we go into the back half of the year, but again DeVry Inc. is not just DeVry University, that's part of the quality plus diversification equals growth. When we look across our portfolio, we do have other pieces of our portfolio of our institutions that are growing and will help offset some of that flatness or slight decline at DeVry University. So that overall organically, we would still see a positive on the revenue line and then when you add in the acquisitions that just adds to that.

Gary Bisbee - Barclays Capital: If I could sneak in one other? Is there anything you could tell us about AUC, like what the margins were, or does that have been abnormally low tax rate, like Ross did when you bought it, any sense what the amortization might be and I will stop there?

Daniel Hamburger - President and CEO: From a tax perspective, it's quite similar to what you'd be familiar with, and I'll be back to give you some color there. Margins, I don't think we're disclosing. In terms of amortization – Pat I think you want to say about amortization?

Patrick J. Unzicker - Corporate Controller: I think amortization, if you look back, kind of similar from a purchase price perspective when we acquired Ross University. There will be a large amount of amortization attributable to the existing student enrollments, when we expect that to be $8 million, $8.5 million for the first couple of years and then trailing off after that about a five-year life on that. So, that will be the biggest chunk of amortization, but even incorporating the amortization and our integration costs, we still expect it to be about $0.05 accretive for FY 2012.

Operator: Paul Ginocchio, Deutsche Bank.

Paul Ginocchio - Deutsche Bank: Just going back to the guidance, I think last quarter you said you're going to grow revs and EPS. Again, I don't want to belabor the points, but I think you said plus or minus. Is there a slight change, and if so, is that really because of the DeVry new enrollment we just saw? Maybe Dan, could you may be just disaggregate may be what's market-driven as in the tough comps and the economy versus any adjustments you're making to the admission criteria, I know they're minor, or just the new regulatory environment, any way to disaggregate for at least DeVry itself the impact of both of those?

Daniel Hamburger - President and CEO: Rick, why don't you go ahead and get the first part and I'll take the second part.

Richard M. Gunst - CFO and Treasurer: Yeah, I guess, honestly, you're right. It is a slight change in terms of that perspective on earnings. As we've said in the beginning of the call, our enrollments at DeVry University undergrad and Carrington were a bit softer than we anticipated and that's going to flow through as Gary said earlier throughout the year, but so we previously had a little more confidence in terms of earnings growth. Now, as I said, likely plus or minus where we're going to be this year.

Daniel Hamburger - President and CEO: Then you asked to disaggregate the various factors and you asked how much of it was due to having new admission standards? For us, I would say zero because we had admission standards. Again, that's something that when I mention that to people, sometimes they are surprised, so they don't realize, it is the perception that all private sector colleges and universities are open enrollment. By the way, there is absolutely nothing wrong in many things – it is a great thing to be open enrollment, if I open access. Many public sector colleges, universities, community colleges are open enrollment, that's great. We've just chosen to have admission standards, and so while we always are adjusting those and looking at those, it's an adjustment. It's not on wholesale change or turning ourselves upside down or over operating model. So for us, that really was not an explanatory factor in the results. In terms of the economy, I would parse that out to say that's the biggest factor. I mean that is you got to put yourself in the shoes of the prospective students and the prospective students that our institutions are serving. It's really tough out there. I mean I remember '81, '82. I'm from Detroit, 25% unemployment in Flint, I thought that was bad, that's what I grew up with, but this is worse, I mean, maybe not quite that level of unemployment, although it is reasonable in some areas like my hometown, Detroit, but it is really bad. I think the psychology – it's really the psychologies out there. I mean I was just listening the other night to the pundits and cable and everything, they were talking about how people aren't, just not buying a house even. That's probably a very smart rationale thing to do would be to buy a house right now while prices are down and rates are all time low, but they are not doing it just because the psychology is, I just don't want to commit. I am not confident in what the future is going to hold. So, people are just frozen or deferring delaying decisions to go-to-school and we are seeing that impact across the board. So that's by far the biggest factor as far as we can tell.

Paul Ginocchio - Deutsche Bank: So just to be, and so when it comes to sort of the new regulatory stuff and any adjustments you're making that's not really having an impact and everything – 80%, 90% what we are seeing is tough comp stand or economy?

Daniel Hamburger - President and CEO: I'd like to put a number on it, but yes I would say that adjustments to the new regulations are a factor, and again, I want to be clear, some people – and I have seen this misreported so many times in the general media that I want to – even though I know everyone on this call I am sure knows, but it's been misreported. Oh, you are paying commission and now they are not allowed to pay commission. So, that's just completely misinformation and misreporting. First of all, it was not lawful to pay commission before July 1, and we did not pay commission before July 1, we certainly don't, now either, but we certainly didn't before July 1. So that's not a change. But what I am saying is a factor, it's just adjusting to the new regulations in terms of the advertising world, and I mentioned holding some of our marketing vendors to very high standards and having to demonstrate their adherence to those standards. So even if they didn't do anything wrong or they just couldn't show us or demonstrate compliance with our standards, we took the high ground and cut them off. So that means some inquiries that might have been totally valid inquiries from a prospective student would not have flowed through to us. So then, that's an adjustment to the regulations that it's an example and some color for you; that could have had a bit of an impact By the way another example of that was before you could reflect graduation in compensation. You could hold people accountable for student academic outcomes like graduations which makes sense; like you see in K-12, holding teachers or principals accountable, including, even holding their compensation accountable, so those kinds of outcomes. In the new rule, we can't do that in higher education. We disagree with that, we'll continue to point that out to people who – the more we pointed out people seem to think; wait a minute, that doesn't make sense, but in the mean time we will absolutely be compliant with that, we'll work within the rules while continuing to have see the table to get them right in the long-term.

Operator: Sara Gubins, Bank of America Merrill Lynch

Sara Gubins - Bank of America Merrill Lynch: Just more on the thoughts on 2012. If the starts are down largely due to the economy, then, is guidance assuming under the – almost lower unemployment rate in the second half of 2012, just I'm wondering what would drive starts backup aside from much easier comparisons?

Daniel Hamburger - President and CEO: Well, that's certainly one of the drivers and we are taking a number of actions. We see the market situation; the external market, we understand that, we embraced that reality, but we don't just accept that. I mean, it's our job as managers to go ahead and compete with our competition in the public sector, in the private sector, independent colleges and universities and show prospective students and their families our value proposition, whether it's a Chamberlain College of Nursing or Ross University School of Medicine or it is DeVry University or at Carrington College. I mean, we're out there fighting among the beaches and so that's what we intend to do and we intend to turn that situation around.

Sara Gubins - Bank of America Merrill Lynch: Then, can give us an update on the CFO search?

Daniel Hamburger - President and CEO: Yes, that continues, and we are seeing some excellent, excellent candidates, and we'll keep you posted as it goes forward. There is a lot of interest – it's pretty hot job. A lot of people would love to compete for it and are. So, we're really pleased with how it's going. It's a very inclusive diverse search, and pleased with how it's going, and we'll keep you posted as we get more information.

Operator: Jeff Silber, BMO Capital.

Jeff Silber - BMO Capital: Just wanted to focus a little bit more on the DeVry undergraduate enrollment trends. I know you guys don't give specific guidance, but considering that the comps are getting a little bit easier as the year rolls on, do you think the decline in the summer is the worst we're going to see for that specific unit for the rest of the year?

Richard M. Gunst - CFO and Treasurer: I would anticipate that would be the bottom, and that's why I'm saying – it's based upon our perspective on revenue and earnings. To hit the numbers that we talked about, we need to see some improvement in those trends, and thankfully, the overlap for comparisons do get easier, and the absolute numbers we can work off of this base.

Jeff Silber - BMO Capital: Just a quick follow-up numbers question on the tax rate for this year. Does it make sense the tax rate will go down once you add AUC and considering the trends at DeVry undergrad and if so, if can you give us an order of magnitude, that'll be great?

Richard M. Gunst - CFO and Treasurer: There is a lot of moving pieces in that tax rate. I think with the addition of AUC that we'll have a slight downward impact on the rate, but offsetting that, we have some increases in other. So, it's a mix of domestic and international. I would expect the rate to be up a little bit based upon our current thinking, but not dramatically.

Operator: Amy Junker, Robert W. Baird.

Amy Junker - Robert W. Baird: Since there are two pieces of the equation to enrollment. Can you maybe talk a little bit about retention and persistence that you're seeing in DeVry? I'd be curious to hear your comments on underlying retention trends, if you were to strip out the graduation rates and the fact that we're seeing lower starts, and wondering if it's fair to assume continued persistence pressure given those lower starts and high graduation rate, but just wondering how does underlying retention rates look?

Daniel Hamburger - President and CEO: Yeah, I think there is some cause for that. In the context of, over the past several periods, we've driven higher rates of persistence by investing in the academic quality initiatives, the student services, the surrounding student services like our student central concept. So retention rates are at a very high level and of late, I think starting to ease off in the similar sort of fashion here not the amount of magnitude that we've talked about the arithmetic around enrollment. So there is a little bit of that going on and I don't know you want to comment on graduation.

Richard M. Gunst - CFO and Treasurer: Yeah, I mean we do. Given the enrollments we had three, four years ago, we are seeing graduates increase. Graduates were up about 15% for the most recent term. So, that you look at the (year end posted) calculation of retention, that's a factor as well.

Amy Junker - Robert W. Baird: So just to clarify though, if you were to adjust for that, you're still seeing retention down a bit?

Richard M. Gunst - CFO and Treasurer: Down a bit yeah, off a high levels.

Operator: Bob Wetenhall, RBC Capital Markets.

Stephen Bachman - RBC Capital Markets: This is (Stephen Bachman) in for Bob. So, do recent developments in the economy that you mentioned and also this past enrollment performance, does it change your thoughts regarding the expectation of the long-term growth rate of 20% or does that target kind of stay in place and this is more of a short-term bump in the road?

Richard M. Gunst - CFO and Treasurer: This is Rick. If you look at that perspective of what we said before mid-single-digit enrollment growth, double-digit revenue growth and roughly 20% earnings growth and take first a look backwards on that scorecard. We have well outperformed that if you look at over a three, four, five-year perspective that growth rate has been 30%, 40%, 50% compounded over those time periods. So I guess we are well ahead of the score looking back. We are going through a change period here without a doubt. As we mentioned next year is going to be a period where we are going to be way under those numbers, but as things in the economy improve and as education continues to be a high priority for our country and the world, we think that those growth rates of mid-single-digit enrollment growth will come back. It was a case in the 90's, it was a case in the early decade of this century and we think it will be the case going forward. With that and with some pricing you get to double-digit revenue and we are not stating a long-term earnings growth number until a lot of the stuff settles out, but we would be able to get back to stronger earnings growth longer term.

Stephen Bachman - RBC Capital Markets: Just an additional question. Have you seen any change in the general competitive environment in this marketplace either from other for-profits or also from the public sector, given the lower number of students that are out there ready to make a decision as you mentioned. Have you noticed anything there?

Daniel Hamburger - President and CEO: Thanks for that. I have been asked that question for the nine years almost that I have been here and the answer is always, yes. We are always seeing more competition globally. This also applies in Brazil for example. It applies throughout our different degree programs. So yes, we do see increased competition. We feel very strong that we have a very strong value proposition in order to compete and to be competitive with those other competitors and yes, those competitors are in the private sector, they are in the public sector or state school and they are among the independent. So, that's how we view the competition.

Operator: Jerry Herman, Stifel Nicolaus.

Jerry Herman - Stifel Nicolaus: The topic of the date 2012 expectations, just again following up on some of the thoughts earlier. It would appear that that would require a pretty abrupt improvement in starts, so as to drive totals, so as to drive the better performance in the second half the year. Is that the current expectation?

Richard M. Gunst - CFO and Treasurer: No, not abrupt. I think the expectation is that we are at a trough, and I think we will begin to see improvements from this point forward for DeVry University, for Carrington Colleges continue to see the benefit of the growth we've seen in Chamberlain Colleges of Nursing. Ross University is, we had some slowdown in enrollments for strategic purposes in the past. We expect that to be back on growth pace. The other, Brazil, advanced academics, back to professional education will add to that growth in our portfolio of intuitions. So, again, when you go across the mix of all that and see improvements occurring, albeit not abrupt but see gradual improvement at DeVry University undergrad and Carrington end up with what we are looking at today.

Jerry Herman - Stifel Nicolaus: Daniel, just a quick follow-up with regard to your comments on the economy. This one certainly does look different than a lot of ones we've seen. In light of that, there seems to be a lot of reluctancy for potential students to sort of pay the price, and the question is about pricing, in fact, and your strategies and theories on pricing in this economy.

Daniel Hamburger - President and CEO: We're not really seeing that being affected very much because our tuition pricing is generally viewed in the context of the competition. Since the competitive comparison is often to the public sector, the colleges and universities, which after all are about 70 plus percent of all colleges out there plus the independent colleges and universities, another 15%. So, about 90% is non-private sector competition and their rates of tuition increase are ranging – I have seen 9%, I have seen 15%, I have seen 20% rates of tuition increase. So, we have raised our tuition in the 3% range at DeVry University undergraduate, or it's a little bit higher than in some of the healthcare schools. By comparison and from a competitive standpoint, that's where we find ourselves. So; no, we don't really see a big difference there in the near-term.

Operator: Corey Greendale, Analysis.

Corey Greendale - First Analysis Securities: The first is actually following up on what Jerry just asked, and it's true that the public schools keep raising their tuition but they're facing a different set of challenges, and obviously, you can keep raising at whatever rates the competition does, but in the meantime, it seems like in this economy it's hard to imagine that people haven't gotten at least somewhat more price sensitive, and so the question is, what would you need to see before you would consider using more scholarships or more aggressively using scholarships or plus in tuition discounting. Second question; going back to the guidance question, it's more philosophical. Historically, DeVry didn't give any guidance to speak of and given that there is still little visibility from our perspective, we appreciate that you're giving more guidance now, but the formula of giving more guidance at a time when it seems like there is less visibility, just makes it hard from our perspective to feel like that we can have a lot of confidence in that, and I think that's lot of why people keep coming back to this. So, if there is anything you could say about what it is that you're seeing, whether it's response rate to your marketing or anything else that gives you confidence that this summer term is the bottom, would be appreciated?

Daniel Hamburger - President and CEO: Corey, we'll also correct your firm's name, its First Analysis, not Analyses, so we'll get that in their too for you while you are on mute. So, the tuition and in terms of scholarship; well, we do offer scholarships. In fact, the last year it was about 10% of our earnings. We gave back in the subsequent year in terms of scholarship, so several tens of millions in scholarship, and we are taking look at the level, but not a dramatic – we wouldn't see a dramatic increase in the local scholarship, but a difference in the way we allocate that. Can we be more strategic and more impactful and help our students finance our education? I'm glad you asked it that way because it's really more helping students with affordability than it is about lowering the tuition level itself. So, that's I think the right way from our experience to look at tuition. In terms of the guidance and giving more comfort here on what we're seeing – Rick may want to add some things here, but I think, part of it is – we did see ourselves in this last period, lose a step at DeVry University undergraduate and at Carrington, the two places where we've talked quite a bit, and the fact that we talked about then in some of internal metrics that you asked about, we did see ourselves lose a step in some of the conversion ratios and some of the inquiry, the levels of inquiries, and so, we do think that internal execution and being more effective and optimizing our marketing and recruiting processes, are part of the formula for improving that performance, as I cited at the beginning of the call. So, that's something that we're putting an effort on, and we have a lot of confidence in our operating managers, and our ability to execute and improve our operations. So, that may give you a little more confidence and comfort. That's going be for you to judge and you have to judge this by our results, all that's accountable.

Richard M. Gunst - CFO and Treasurer: The perspective we provided for the year we don't give guidance for quarter or anything, but we do – coming into a new year we wanted to at least give some thoughts as to what – how we see it. It's based upon our plans and strategies and executional improvements that Daniel mentioned, and it's all incumbent upon that, and also continue to deal with this uncertain and not totally stable economic environment. So, it is, I guess from a confidence level, probably not as confident quite honestly as we were two or three years ago, but it is based upon what we see as our plans and strategies, the risk that we see out there and how we can manage through that. There is some – it's only as good as the forecast can be and there is probably – we can roam up and down from there, but that's why it could be equal to this year's level or a bit below, but we're going to grow best and see some growth.

Daniel Hamburger - President and CEO: In terms of earnings, I think Rick was mentioning, we do think we can grow revenues, but it's not (indiscernible) life either.

Operator: (Arvind Bhatia), Sterne Agee.

Arvind Bhatia - Sterne Agee: I just wanted to go back to AUC for a second. I'm wondering if you can provide some color on what kind of growth rate and top line is experiencing, enrollment growth rate et cetera? Then I guess just backing into the numbers from the $0.05 accretion you're talking about tax rate and amortization, et cetera. It looks like that the margins might be in the high 20s, so I wanted to see if we are kind on the right track. Then in terms of the multiple of EBITDA, it looks like you might have paid mid-to-high teens. Even if you don't want to be specific, can you help us get some help there, that's on the right track? Then second question is on, we're all trying to figure out the growth et cetera, where that's coming from? The Business, Tech and Management section is that also – do you expect growth in that segment as well I guess as part of the revenue growth you are talking about?

Daniel Hamburger - President and CEO: Let me try the AUC and then may be turn it over to Rick to talk about and Pat will jump in too if you like on the growth BTM. So, AUC, we are not going to give a percentage or specific number forecasted growth rate, but AUC is growing. We expect continue to grow because there's such a tremendous need to serve the need for solving the physician shortage. So we do expect growth, but it will be growth – I think relatively the kind of enrollment growth that historically for the long-term trend you've seen at Ross University School of Medicine as well would be, one market you could look to. The most important thing is that we will continue to increase and invest in the resources, the academic resources and support resources needed to support whatever level of growth that we have. The margin, the number that you had was quite a bit low, but whatever it is, I would expect it in the near term to come down, because we're going to be investing in academic quality, just like we did it, as I mentioned earlier, at our Chamberlain College of Nursing, and then actually just as we did in Ross University School of Medicine and Ross University School of Veterinary Medicine. Many people will remember that in '03, when we made that acquisition, we told everybody, just like I told you now, you see the margins, they're coming down because we're investing in academic quality, and by investing in quality that leads to higher levels of student success and that leads to more applications and that leads to growth of quality plus diversification equals growth. In terms of the acquisition price that we paid, I hold this here in my hand the first and only case in recorded human history of an analyst going back and saying we got it wrong. This one says, taking another look at the acquisition price of Ross University. Now that we take another look at it, it was about a year after – I'm not going to name because I know you're on the call who wrote this, but it really does not appear that the expenses, when you look at the strong financial results, put it in the context of the income tax, and look at the low cost of debt, in this case no cost of debt used to fund the acquisition. So I think you'll find that in this case as well, it will be returns we expect to be well in excess of our cost of capital. So, let's you see in terms of growth in the BTM segment, Pat?

Patrick J. Unzicker - Corporate Controller: Sure. In terms of BTM, for full year revenue, we still expect that to be up year-over-year based on the enrollment trends in the second half of the year improving as well as our year-over-year tuition price increase. But if you split the year, revenue will be down in the first half of the year.

Operator: Brandon Dobell, William Blair & Company.

Brandon Dobell - William Blair & Company: May be Rick or Dan, any sense as we look at fiscal 2011 of the magnitude of the dollar spend on some of the initiatives that kind of ramped up during fiscal '10, such as Project DELTA, the student services and issue those kind of things. I guess I'm just trying to get a sense of what the year-over-year comparison on that spend may look like for the P&L, excluding obviously what capital spend you made? I was trying to get a better sense of what the incremental spend or lower spending may look like in fiscal '12?

Daniel Hamburger - President and CEO: May be I'll just clarify that question. Are you talking about from '10 to '11 or from '11 to '12?

Brandon Dobell - William Blair & Company: I think there is a kind of ramp up in spend from '10 to '11. So I am trying to sense of, as you look at comparing 2012 versus 2011, some of those bigger initiatives that were decent drags on the P&L for you in 2011, how much of an abatement and spending could we expect in 2012?

Daniel Hamburger - President and CEO: So, things like DELTA, things like new campuses.

Richard M. Gunst - CFO and Treasurer: Yeah, I mean DELTA is largely capital and we've seen the impact of that really now going to next two years and increased depreciation expense.

Brandon Dobell - William Blair & Company: You set that aside, I'm just looking at the operating margins for BTM year-over-year. We ended fiscal 2011 at 24.6% compared to fiscal 2010 at 23%. So despite the new campus openings locational things et cetera, we more than offset that with operating leverage and revenue growth. If you move down to Medical and Healthcare you see some compression in the operating margin, which was largely driven by Carrington, and despite some new campus openings in Chamberlain, we're able to improve our operating margins there. So, based on from '10 to '11 we were able to more than offset that increased investment and going into '11 to '12, we would necessarily expect that same improvement due to lesser effective operating leverage because of the declining enrollments.

Brandon Dobell - William Blair & Company: Then just a quick one. You mentioned how many locations you expect to add in the BTM segment. How do we think about capacity expansion within Chamberlain and Carrington, or if any in Carrington this year?

Daniel Hamburger - President and CEO: Yeah. I think, Carrington we've got the new Pomona campus that opened at the latter part of this past year '11, so we expect – we certainly would hope to see that to be an incremental growth opportunity as we move into this new year, fiscal'12 and then we have Mesquite, Texas on the horizon. Chamberlin has the new camp – late in the year was Houston and now we've just started up in Miramar, and I mentioned a couple of others; Indianapolis, Atlanta later in year, and then, I think I mentioned the DeVry University once earlier. So, you have got what is that seven or eight or nine across – plus DeVry Brasil at Sao Luis, working on that and also a new campus building at Ruy Barbosa So seven, eight nine something like that this year for our new campuses across the family.

Brandon Dobell - William Blair & Company: Then final question from me, within the online business; probably it's both the Keller, as well as the undergrad online. Any sense of new program rollouts or introductions or just a continuation of the programs you already have?

Daniel Hamburger - President and CEO: What was that?

Richard M. Gunst - CFO and Treasurer: For online.

Daniel Hamburger - President and CEO: For online; yeah, pretty much all the programs that we roll out, we roll out online. There is exceptions, but in general, it really does add to the online – which is a great opportunity and it also give us great information and regionally where is the most of the interest from and that helps us – sort of the best real-time market research you could have to help identify which campus rollouts to take those programs to as well; so, online will be getting more programs as well.

Operator: All right. Ladies and gentlemen, that will conclude the question-and-answer portion of today's events. I'd now like to turn the presentation back over to Mr. Daniel Hamburger for closing remarks.

Daniel Hamburger - President and CEO: Okay. Well, by the way, one of the things that I probably should have mentioned in response to one of the questions is, there is still a great long-term value proposition here for going to college. The jobless rate for college grads is still like half the jobless rate for people without college and so forth. You all know those statistics. So, while we are in this near-term discontinuity the long-term value proposition is very strong, and it's interesting that even with all of the craziness around the debt ceiling, coming out of that one thing you might have noticed was bipartisan agreement put a need to support higher education because without an educated workforce, we have no economic growth, that's for sure. So, I would like to thank everyone for all your questions. We did run long to try to get in all the questions that we could. Our next results call is scheduled – our quarterly results call is scheduled for October 25 and we will be announcing first quarter results and enrollments for the period. So, thank you all for your continued support of DeVry. Have a great afternoon.

Operator: Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a wonderful day.