DeVry (DV)

Headquartered in Oakbrook Terrace, IL, DeVry, Inc. (DV) is a provider of post-secondary education in North America. The company is the holding company for DeVry University (including the Keller Graduate School of Management), Ross University, Chamberlain College of Nursing, Becker Professional Review, and Advanced Academics. DeVry University offers associate's, bachelor's and master's degree programs in technology, healthcare technology, business, and management. Ross University offers doctoral degree programs through its schools of Medicine and Veterinary Medicine while Chamberlain College of Nursing offers associate and bachelor's degree programs in nursing. Becker Professional Review, which includes Becker CPA Review and Stalla Review for the CFA Exams, provides professional education and test preparation services to candidates of the Certified Public Accountant (CPA) and Chartered Financial Analyst (CFA) professional certification examinations. Advanced Academics provides online secondary education to school districts throughout the U.S. In August 2002, DeVry University was re-accredited by the North Central Association of Colleges and Schools (NCA) for 10 years. Accreditation is necessary for students to qualify for federal financial assistance and 70% of DeVry's undergraduate revenue is derived from federal financial assistance. Approximately 93% of DeVry University's students are employed.

DeVry University provides academic preparation for careers in technology, business, and management. The University was founded by Dr. Herman DeVry in 1931 and offers undergraduate and graduate degree programs in technology undergraduate and graduate degree programs in business and healthcare technology and graduate degree programs in management through the Keller Graduate School of Management. DeVry University is a private, degree-granting, regionally accredited, higher educational institution offering courses during three academic periods (Fall, Spring, and Summer) of 16 weeks each. Programs are offered at 86 locations in the United States, Canada, and online. DeVry's 23 large campuses are located in Phoenix, Denver, Pomona, Long Beach, Sherman Oaks (CA), San Francisco, Orlando, Miramar (FL), Alpharetta (GA), Decatur, Chicago, Addison (IL), Tinley Park (IL), Kansas City, North Brunswick (NJ), Long Island City, Columbus, Philadelphia, Dallas, Houston, Arlington (VA), Seattle, and Calgary (Canada). DeVry University's undergraduate programs accounted for 63% of total company revenues in fiscal 2007.

Management's five year strategic plan focuses on long term value creation. The plan encompasses four growth priorities: (1) Achieve full potential market share across all markets by increased investments in marketing and recruiting to build the DeVry University brand. (2) Growth in adjacent vertical curriculum markets. DeVry's curriculum has been diversified not only through expanding into technology, health, and medical programs of study but also through strategic acquisitions. Management now plans to expand into applied arts and teaching degrees. (3) Expansion into adjacent levels of education. Management intends to penetrate the pre-baccalaureate educational field through a strategic acquisition of a career college. (5) Finally, management plans to maintain a strong balance sheet while funding organic growth and acquisitions. Also, management plans to enhance shareholder returns through share repurchases and dividends increases.

DeVry University continues to benefit from strong enrollment growth and increased enrollment of online students. According to the U.S. Census Bureau, the average income of U.S. employees with a bachelor's degree was $51,550, an 80% increase over employees with only a high school education. Total undergraduate enrollment at DeVry University increased 19.7% to 52,146 students for the fall term and graduate enrollment increased 13.7% to 17,803. According to the Census Bureau, the wage gap is even larger for those with graduate degrees. In addition, management has been successful in increasing revenues by implementing annual tuition increases.

Acquisitions have played a major role in the company's top-line growth. Management has embarked on an acquisition strategy that is diversifying the company's educational program offerings. In 1996 the company acquired Becker CPA Review in order to diversify into professional education and training for accounting and finance professions. Founded in 1957, Becker CPA Review prepared candidates for the CPA professional certification examinations. In 1999, DeVry acquired the Conviser Duffy CPA Review, a national program which serves approximately 12,000 students annually at more than 200 locations. With the Conviser Duffy acquisition, Becker gained teaching sites at numerous college campuses throughout the U.S. The CFA program was added with the acquisition of Stalla Seminars in 2001. Now called Stalla Review for the CFA Exams, Stalla is a leading provider of CFA review courses and study materials. Stalla offers live, online, and self-study CFA review programs in nearly 300 locations at DeVry University teaching sites and in 27 foreign countries. Expanding into the CPE marketplace and complementing Becker's existing exam review business, DeVry acquired Gearty CPE in 2005. Gearty provides continuing CPA education programs in the NY/NJ metropolitan area. DeVry's CPA, CFA, and CPE offerings comprise Becker Professional Review, DeVry's Professional and Training segment.

To further diversify its program offerings into the health sciences area, DeVry initially acquired Ross University in May 2003. The acquisition of Ross provided the DeVry with an additional platform for growth and diversification. Founded in 1978, Ross University provides educational programs that prepare students for general medical and veterinary practice and serve as a foundation for postgraduate specialty training in the U.S. Ross University is comprised of Ross University School of Medicine, located in the Caribbean country of Dominica, and Ross University School of Veterinary Medicine, located in St. Kitts/Nevis. Ross University benefits largely from strong demand trends and insufficient space within U.S. medical and veterinarian schools to supply the fast-growing U.S. healthcare market.

In March 2005, DeVry acquired the Deaconess College of Nursing, now Chamberlain College of Nursing. With campuses in St. Louis, Columbus, and online, Chamberlain College offers the degrees of Associate of Science in Nursing (ASN) and Bachelor of Science in Nursing (BSN). Chamberlain had approximately 1,089 students enrolled in the July 2007 semester. Chamberlain College received approval to establish campuses in Phoenix, Arizona and Addison, Illinois where classes commenced in March 2008. The Ross University and Chamberlain College acquisitions are part of management's strategy to expand its program offerings in health care-related fields of study. The Chamberlain College plans to introduce a Masters of Science Nursing program in fiscal 2009.

Management further diversified into the online education arena by acquiring Advanced Academics (AAI) in November 2007 for $27.5 million in cash. AAI provides online secondary education by partnering with school districts and supplementing traditional high school classroom programs with online course instruction. AAI also operates virtual high schools in partnership with school districts and charter schools in six states. Since its founding in 2000, AAI has delivered online learning programs to more than 20,000 students in more than 200 school districts.

In order to increase the company's presence in healthcare and expand its offerings at the pre-baccalaureate level, management acquired the U.S. Education Corporation (Apollo College and Western Career College) in September 2008. The acquisition extended the company's offerings to a broader base of students seeking healthcare careers. Apollo College and Western Career College prepare students for careers in healthcare through certificate and associate degree programs in nursing, ultrasound and radiography technology, surgical technology, veterinary technology, pharmacy technology, dental hygiene, and medical and dental assisting. The two colleges operate 17 campus locations in the western United States and serve more than 8,700 students. Management expects the acquisition to be marginally dilutive to earnings by about $0.01 per share in fiscal 2009 and accretive to earnings in fiscal 2010.

Management is executing an ongoing real estate optimization strategy. In order to improve capacity utilization and manage costs effectively, facilities and locations have been and are being evaluated to optimize the mix of large campuses, small campuses, and DeVry University centers for each market. Real estate actions have resulted and will result in accounting gains and/or losses in quarterly reports. Actions include reconfiguring campuses, renegotiating leases, sub-leasing excess space, co-locating with other educational offerings at campuses, and relocating to smaller locations. Several examples include the sale of the facility located in West Hills, CA for $36.0 million and relocating to a leased facility in nearby Sherman Oaks the co-location of the Academics Department from corporate headquarters to the campus in nearby Addison, resulting in annual savings of $360,000 the co-location of Chamberlain College of Nursing to DeVry University's existing campus in Columbus resulting in annual savings of $250,000 the sale/leaseback of the Alpharetta campus resulting in annual savings of $200,000 and the sale/leaseback of 60% of the Seattle and Phoenix facilities resulting in proceeds of $28.4 million and annual savings of $1.0 million.

In November 2004, the Board of Directors adopted a shareholder rights plan, presumably to protect the company's shareholders from a hostile takeover. Under the shareholder rights plan, aka poison pill, each outstanding share of common stock received a dividend of one common stock purchase right. The rights are exercisable if a group acquires 15% or more of the company's common stock and entitle existing shareholders to purchase additional shares of common stock at half-price. The adoption of the shareholder rights plan allowed management more time to produce a turnaround from the company's negative enrollment trends that persisted until the Spring 2006 term.

In order to demonstrate the company's turnaround, long-term growth prospects, and expectations for strong cash flow generation, on November 15, 2006, the Board of Directors adopted a dividend policy, declared the company's first dividend, and approved a stock repurchase program. The Board's policy is to declare dividends on a semi-annual basis and the initial annual dividend rate was $0.10 per share. In November 2007, the Board approved a 20% dividend increase, which raised the annual dividend rate to $0.12 per share. In November 2008, the Board raised the annual dividend 33% to $0.16. In November 2006, the Board announced a $35 million stock repurchase plan to be executed over the next two years. In April 2008, the company completed the 2006 share repurchase program. In May 2008, the Board authorized a new share repurchase program to buy back shares worth $50 million through December 31, 2010.

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