Adtalem Global Education Inc (ATGE) 2002 Q4 法說會逐字稿

Good afternoon my name is [Corey] and I will be your conference facilitator. At this time I would like to welcome everyone to the DeVry fourth quarter earnings release call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, press star and then the number 2 on your telephone keypad. Thank you ladies and gentlemen. At this time, I would now like to turn the conference over to Ms. Joanne Bates, Director of Investor Relations for DeVry. Ms. Bates, you may begin.

Thank you operator and on line from DeVry management today is Dennis Keller, Chairman and CEO, Ron Taylor, President and COO, and Norman Levine, CFO. Before the call begins, we read by that the call may include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act, 1995. [audio gap] essential risks and uncertainties as filed of the company's filings with SEC. [audio gap] also that management [indiscernible] in the consent of this caller copyrighted by under the DeVry Inc. sole protection of DeVry Inc, genuine production and sale of such content for transcription with such content not specifically offered by DeVry is strictly prohibited. I will now turn the call over to Dennis Keller.

Thanks Joanne and thank you all. Good afternoon everyone. Welcome to our conference call to discuss our fiscal 2002 fourth quarter and year end results and our summer enrollments. Norman and I will have 15 minutes of comments before we turn it to [indiscernible] to open the call for questions. Those of you who have had a chance to read our press release know net income increased 16.1 percent for fiscal 2002 to 67.1 million or 97 cents per share compared to 57.8 million or 82 cents per share last year. Revenue for the year increased 14.1 percent to 648.1 million up from 568.2 million a year ago. Turning to our enrollment results, at the undergraduate level, total student enrollments for the 2002 summer semester was 43,342 compared with 45,204 in the same period last year, a 4.1 percent decline. New undergraduate student enrollment declined 14.2 percent to 10,345 compared to 12,060 in the summer semester last year. Keller Graduate School management reported an increase of 22.8 percent in the number of course takers for the 2002 June term to 8209 versus 6683 in the 2001 June term. As you will recall we saw sluggish results in enrollment in both the 2001 fall term and the 2002 spring term. We anticipated a similar result for the summer term. Our actual results are definitely not what we anticipated. For the July class, the metrics that normally provide us with indications of anticipated enrollments were encouraging although the number of summer term applicants declined. The percentage of applicants who completed their applications for financial aid and who completed their entrance examinations increased. Over the past year we implemented a math review course across the system designed to refresh math skills for those students who would be taking our entrance test. As we roll this out, we saw increase in acceptance rates and we believe which we believe as attributable to students being better prepared for the exam. By the 2002 summer term, every campus in the DeVry system has implemented this review course and we anticipated that this too would have a positive impact on our summer enrollments. Additionally we increased our advertising expenditures in the fourth quarter, the result was that lead flow increased in the last several weeks leading up to the summer term. Notwithstanding these encouraging metrics, the percentage of applicants who started classes was significantly lower than we expected. We believe that the current undergraduate enrollment results are caused by several factors including a recession that is concentrated in the technology sector, uncertainty about the future of careers in technology and an increase in competition and advertising by other providers. We thought continuation of these results is unacceptable to us. We are taking a number of actions. First, we announced in February 2002 the merger of DeVry institutes and Keller graduate school management into a single educational institution with the name DeVry University. To support the DeVry University brand and in response to enrollment results

in the fall and spring terms, we performed an extensive advertising agency review. In April of 2002, we selected Draft Worldwide to be our new advertising and marketing partners. Draft has been charged with strengthening the brand recognition of the DeVry University and developing an effective direct response program to enhance our lead generation. We have tailored our messages in advertising to better target our market segments. We believe these new messages will do a better job of helping prospective new students understand the benefits of the DeVry University education and the long-term prospects for careers in technology and business. The first of our new commercials began running on August 8 in 10 markets and they are running in the remaining markets as of today. We anticipate the new campaign will have a positive impact on our fall class and begin to help us return to growth in undergraduate enrollment. We are not stopping with just our new marketing campaign, we continue to forge new and build upon existing relationships with employers to maintain the historic DeVry edge in education-related employment. DeVry University Center pilot is now complete and we have four centers offering both graduate and undergraduate programs in an adult-learner format. Our plans are to open six to eight new DeVry University centers each year while converting existing Keller Graduate Schools to DeVry University centers at the rate of about 10 per year. In this way, we intend to capture our share of the growing adult-learner market. In fiscal 2002, we opened six centers in Columbus, San Francisco, Houston, Charlotte, and Seattle and the Philadelphia areas. In addition, we opened undergraduate campuses in the Seattle and Washington DC areas. Our plans for fiscal 2003 are well underway. Last month, we opened a Philadelphia area DeVry University campus with plans to open campuses in the Miami Fort Laerdal area in the fall of 2002 this year, in Denver in the spring of 2003 and in Houston in the fall of 2003. We continue to grow our undergraduate online course offerings in fiscal 2002. DeVry University currently has approval to offer three undergraduate degrees online; Bachelor of Science in Business Administration, Bachelor of Science in Information Technology, and Bachelor of Science in Technical management. As part of our recent North Central accreditation business, which by the way ended just this morning, with an extremely positive exit interview. We asked for approval to offer all the remaining DeVry University undergraduate degrees online. As many of you may know, Keller Graduate School already offers all its degree programs online.

Our focus remains on the long-term opportunities in educating students for careers in technology, business and management. In fact the Bureau of Labor Statistics recently reported that the number of jobs in the US is expected to rise by 15 percent from now to 2010. The biggest advances are projected to occur in technology-related careers. According to the Business Week article covering the story, much of the escalation is due to the retirement of the baby-boomer generation and then I quote, "the never-ending demand for people who know how to integrate new technologies into business and other organizations." Our leadership in career-focused education puts us in a strong position to serve an increasing number of first generation commerce students, adults seeking career advancement, ethnic minorities and students from working families. DeVry will continue to manage its considerable resources to produce quality educational outcomes for its students as well as the earnings growth that will result from success in that vision. To give additional detail on our yearend financial status, I will now turn the call over to Norman Levine.

Good afternoon everyone. I would like to spend just a few minutes to take everyone for some of the many highlights of our financial performance during this fourth quarter and total of the year. Dennis has already mentioned the few of the highlights and complete details of the financial statements including an income statement for the quarter and the total year, our balance sheet, and a cash flow statement are [represented] in the press release on our web site, so that you can access from there.

First, earnings for the fourth quarter and total year were records in their respective billions. Net income was up 16.9 percent and 16.1 percent for the fourth quarter and total year respectively. As we said in the press release, we reduced expenses consistent with our revenue growth and as a consequence operating margin which we define as pre-tax income before interest expense increased again to 17.2 percent for the year compared to 17.0 percent last year. Our cash rate on income is 39.4 percent. Our pre-tax income this year was a bit lower than last year's rate of 39.8 percent. Remember that last year's tax rate was adversely affected by a year-end adjustment to our Canadian tax assets and for those of you want to refresh your memories about the details of that transaction, we included a complete description of that in last year's annual report.

In these times of suspect corporate earnings, the only real proof of earnings is cash flow. And once again we got it. Cash flow from operations reached a record $115 million, an increase of more than 31 percent from fiscal 2001 and actually after increasing by more than 20 percent the year before. Capital spending which is our reinvestment in the business also reached a new record of almost $86 million. Remember that about 38 million of that was for the first quarter purchase of two campuses formerly occupied under lease in [Palmona and Dupage]. Having cash flow gave us the resources to take advantage of this purchase opportunity. Even after record capital spending, we had unrestricted cash balances of almost $60 million at year-end, more than ample to allow us to take advantage of investment opportunities as they present themselves. Now I know that many of you focus on receivable levels as an indicator of financial health. Our net receivables were up barely more than 1 percent while the revenues that generated those receivables increased by more than 14 percent. Even in these tight economic times, we did a better job of collecting from students and administering financial aid. And as a part of the process by which our financial statements are prepared and audited, Ronald, Dennis, Marilynn and I have each signed a representation letter for PriceWaterhouse Coopers as we have every year, a testing to our belief in the completeness and correctness of these statements and yes, Dennis and I expect to be signing the certification required by the [Serbain's Auxley Bill] in conjunction with our 10-K submission in late September. No matter which of our financial statements you look at, you'll see new records and a financial strength that would be the envy of any company in your research coverage.

I want to correct an error I think that a mis-spoken amount that Dennis I think had included in his earlier remarks. Our earnings for the year - our record earnings for the year were 95 cents per diluted share, I think Dennis had referred to them as 97 cents.

One last comment here. You may recall that we talked about introducing an improved student enrollment metric for this summer term and many of you counselled us to perceive with caution. As a part of DeVry University, both the undergraduate and graduate operations, we will be adopting a common academic calendar, effective next summer, which provides a better basis for a more meaningful metric when we have common term start dates. That marks the best point of introduction for an improved metric. That about sums it up for me and now I will turn the call over to Ron.

Okay, thanks Norm what we would like to do is to try to keep this call to about a half-an-hour so that gives us give or take 12 to 15 minutes and for questions what we would also like to do is to try to focus on questions that would be of general interest to people on the call, if you have specific questions about your model as it relates to any piece of information could you do that directly with Norm or with me in an hour but directly of off line and we will try to give those answers in that way. So, Mr. Operator, if you have these people queued, any questions, we will be happy to respond to.

At this time, I would like to remind everyone, if you would like to ask your question, please press star then the number 1 on your telephone keypad. We will pause for a just moment to compile the Q and A roster.

Okay, excuse me, a chance to say apologize from my usual thinking if I did mention 7 cents instead of 95 cents.

I like it, that's the - it is just couple of some sort of may have wrong.

Your first question comes from Mr. Bob Craig with [Leg Maycin].

Now looking me, good afternoon everybody.

Hi, Bob.

You mentioned the NCA visit that just ended in seeking approval for all degrees to be offered under graduate online. Could you give us some idea of potentially of the timing of approval there and then how quickly could you rule out these programs?

First of all, we just completed the visit today. So, the team has to write there, report and then it has to be acted on through the North Central process. We think that North Central and while we are waiting we go through that process will give us staff approval to extend our programs. But, if we get staff approval, which I would expect to be in the next 3 4 months, say, we would probably look at expanding the undergraduate offerings online probably beginning after the first of the year and we would do that in a pretty restrained manner, because one of the things that we are working on is how to deliver the hands on experience that DeVry is known for, you know, you know, location independent way. We have some very creative things that are going on, right faculty have done a great job of dealing with that, but the timeframe for this is probably in the next calendar year.

Right. Ron other quick question and I will jump back into the queue. You mentioned starting the new ad campaign on in all the states and certain territories, did you notice any pick up in lead flow just through [indiscernible]?

Actually, we have been very happy that you know we give an agency review and so like that drafted world wide and we had an agreement with them that they would initially start with their purchasing and immediate placement which has been good, but the new adds which we have just begun running the response of them has been very good and it looks as if lead flow for the most recent periods is -

Could you quantify?

Well, I think, it's a really big to quantifying it. We will try to give people some guidance on that as we go forward.

Okay, super, thanks a lot.

Your next question comes from Mr. Jeff [Filder] with [Jurade Clever].

Good afternoon, there was an article, you know, I think it was the Wall Street Journal that talked about your company increasing your marketing and advertising budget, I think the numbers were 35 to $40 million for the current fiscal year can you give us a guide what it was in the year that just ended so we just could compare with the increases?

[indiscernible] the 35 to 45 million was not a number that we gave, what we told our person, I was the one [indiscernible] one of ones on the interview is that the increased sophistication of draft and the increased buying power might allow us to produce leads at a higher rate at about the same level and she concluded from something actually may be was from talking some antenna some where about those numbers would be in that range and she picked 35 to 40. Now, I can't tell you that if the draft activities produce enough more leads will keep the advertising about what we had been, if not we will commit some additional [bowlers] in that area and try to do that on a fairly efficient basis. But, we will know that better you know we just started the new advertising campaign basically last week. So, we will know better after a month or so.

Thanks, just a quick question on the new enrollment numbers. I was wondering if you can tell us how the opening of the [indiscernible] campus where you mentioned that overall was a little bit disappointing. Was it fully disappointing as well?

All of the schools that have technology programs are about equally impacted and its Philadelphia was in satisfactory opening but it wasn't like a couple with the opening starting the hay day.

Okay, one more quick one. In terms of your total enrollment, roughly what percentage of your students are enrolled in technology programs?

Nearly around two-thirds.

Okay, great, [indiscernible] thanks.

Your next question comes from Mr. Fred [McRave] with [Commerce Liable] Partner.

Good afternoon gentlemen.

Good afternoon.

Perhaps you could comment a little bit on persistence rates [indiscernible] markets specific in terms of continue students, how they stack up with [indiscernible] compared over the last two years.

[indiscernible] say that again.

Persistence, you know, comment on the persistence rates?

Oh, retention rates?

Exactly.

Normally, you would expect any period of time like this that retention rate would be half. Ours is about flat and the reason we think is, we have looked at this and we look at it pretty closely, because our students come from middle and lower income families, one of the pressures on them when there is a downturn or if one or two of the principal breadwinners has lost their job, is that they have to contribute financially. And so one of the problems for us with serving a particular market place in this kind of an environment is there is significant pressure on them to withdraw and contribute. So we feel okay with the fact that retention is about flat. And I think as things recover and the pressure on the families goes down that retention will continue to go up. We have had several years before that where the retention rates had improved. So we are feeling okay about that.

Right, thank you.

Your next question comes from Mr. Matt Mitwin from [William Blayer] Company.

Hi Matt.

Good afternoon. May be you could touch on recent experience in placement rates and may be give us a little color on what's going on at [indiscernible] by, you know, CPA and CFA?

[indiscernible] we were talking about that earlier day in some and well, we are pleased to be where we are in the habit to hold our edge to be in the age in a time like this we think its pretty good if you know our long - we publish our long-term average, which for ten years is over 90 percent but in cycles. It cycles from mid-90s in the mid-90 percent range, and in late 90s the cycling have done under the 80s. And on bank account basis you give us a wonderful opportunity that talk about that business, which is relatively small as you know, less than 10 percent in our total picture. But growing rapidly in earnings and in impact and we think that we have a dominant market share as most of you know in CPA review worldwide in 31 countries. And we are very excited about the potential in CFA because we have now since buying [indiscernible] at times were really put it into the proven mode that we use for CPA in terms of teaching way with the way we teach and then various way that students can acces our materials and inspecting of very vigorous addition to our professional review family over the next several years.

This is just a follow-up is that business growing at a faster or slower rate in the company topline overall? Thanks.

Well, yeah it is faster, and as well it is lets say, very nicely on the top line an even nicer than that on the bottom line.

Right, thanks.

Your next question comes from Mr. Gary [Brisbee] with Lehman Brothers.

Hi guys, nice job in a difficult environment. If I could just ask two questions on sort of -get a little more detail on the marketing. I know that you said that you've tried to target some of the campaign for sub-segments for you student population. Could yo give us any sense in terms of what you are doing with the mixed media or what exactly you are changing with this new advertising company other than the actual appearance of the ads themselves?

Yeah the, - actually the appearance of the ads flows from marketing strategy really is important and that's a more sophisticated segmentation that we can now do with some of the resources that draft brings to the table. Specifically, among the groups and this is a fairly I could give you long when did but I want you that understand that it's an important thing we certainly target different ethnic groups that have interest in technology careers we are knowlegible about the interest of woman in pursuing careers and that they are large segment of the population that we would like to serve better we are also interested in the fact that today the client that we have seen are the tough [recruiting] in the technology a lot of those kids are going on to community colleges and one of the interesting things about that it's been a year now and community college enrollments have been up. We have another year where community college enrollments are up and for us, we view that as sort of a build in demand potentially for people a year from now, two years after they have started community colleges where they have completed their associate degree, but they still need and their interested in the transition into technology and management careers. So another way to segment it is based upon people, who have entered into associate degree programs and it's one of the reasons why we think the DeVry center approach will be successful and while we are interested in expanding that to the extent we are.

So I think there is a lot of ways to slice the segmentation. We are much better able now pin point both our message and our media [selection] to put our message in front of people, who are likely to enroll. Then we have before, where took a more general approach. The other section in question I would just shortly answer in this way as everybody in this sector is doing. We are getting increasing numbers leads through the internet and that is an important source for the entire education sector and it's an important source for us and that's a relatively new source I would say over the last couple of years to this entire sector.

Ok and then one more if I could over the marketing strategy. I know that high school graduates - people shortly after their high graduation have made up a large component of your enrollment historically. Can you give me in essence are you doing anything or modifying your high school marketing strategies that also attract more of these kids, cause I - I guess, I would wonder if they might not - they would be like the derivative beneficiaries of new direct marketing, where as the working the adult might see the ads more and respond to them and tell me first of all do you think that is right or wrong and then what you are doing to focus on that channel.

We have always focused in recent decades on high school graduates, we visit about half the high schools in the United States and Canada every year with a full time admission officer [indiscernible] who cultivate relationships with principals and guidance counselors as well as individual teachers and in this area, we hope to have one of the biggest positive results from DeVry University merger of the undergraduate and graduate school. We want them to have a long-term program that we are developing and implementing to reach out the guidance counselors in high schools around the country to show them what DeVry University is, in addition to being a wonderful place for technology, it is a university now. We would like them to think of this in the same terms as they think of other four-year universities, but one additional way of thinking about us is that we are the really effective career-focused university. We put a lot of effort into this and we appreciate the question because high school graduates are a large not dominant, but large component and we think there is really opportunity there.

Let me just say, if this conference call is [echoey] on your phone where we are trying to see what we can do to prevent that or reduce it so we just apologize if it sounds real [echoey] to you.

We have a next question from the next [asker].

The next question comes from Mr. [Jerry Odoning] with JP Morgan.

Good afternoon, I wanted to ask, of your online enrollments, however you wanted to sign that, how many do you have at end of June versus a year ago and I am not sure how you want to cut that [out either] is Keller online or DeVry University or what.

We have had a very significant growth in the last year in our online programs, both in the graduate online programs, but more recently in the undergraduate and if you recall one of the things that has caused that growth is that we were limited to one program. We began to expand the programs and we have had very nice interest in our programs, [folks], people who want to complete their degree in total on line and people who are both on site and on line and are mix and match, so we are really quite happy with the growth in on line over the last year.

Okay thank you.

The next question comes from Mr. Howard Black from Bank of America Securities.

Thank you. Good afternoon Dennis, Norman, Ron. The first question is I know you adjust the base year number for overall enrollment growth, some of pro forma number, but is there any adjustment you make to the base year number and then new student growth calculation.

And lets back up to second year, you know that we adjust the base -

On that, i.e to exclude the discontinued programs is there any adjustments that is made to the base year for the new student calculation?

We are now one year from the distant [indiscernible] of the only program we have ever adjusted the base for which is the Denver [Tech] program and so because we didn't count them a year ago we don't count them now so we began its comparison that now its out of there in the new and there were no new current last summer semester, there were no new been recruited since we discontinued in 1991. So I don't know may be Norm may be I can't, I am not thinking of any other distant [indiscernible] program. We mentioned that because we discontinued those programs and recruiting them.

Okay and then is there you are going to begin to offer some of the new student number for graduate versus undergraduate?

We are going to continue reporting more or less on the same basis as we are today and have been I know last time around, we said we are going to change and we are going to change. We are not going to do that for a year. We decided that the given that we are going to have a change in our academic calendar it didn't make sense for us to confuse everybody with a change in nomenclature right now and then another change when we did the academic calendar. So we are going to report on the same basis as we have been. Everybody's run up numbers would be same but next year, we will give as much guidance as you need and try to make it as clear as we can but we won't change anything until next year.

Okay so then in the Keller numbers, which I, metrics the course takers, can you give us essence for may be the number of students that are there and are you seeing students take an increasing workload or course load may be as a result of the economy or anything else?

The course load per student is about the same as its been actually for a very long period in time. Probably, across the entire organization for everybody, its about 1.2 give or take and it's been best that way for very long time.

Okay, and then in terms of the number of admissions reps that you you have now versus a year ago. That you raised of course that number and you will indicate -

But we are not going to give you the number but we have more admission reps and few are field sales reps and part of the reason for that is the strongest piece of our marketing activity is to have someone come to a DeVry facility and see that and so as we add campuses we added admission representatives at the campus and it means that students within a 50 to 75 mile radius who might have previously been contacted by field representatives now can and do come to the campus and talk to admission reps. So there is little bit of a mix change in the representatives that probably the most salient feature.

Okay, and then in terms of the capitalization of expenses related to the student information system, how much of capitalization in the quarter that you have done capitalizing and when we begin I guess amortizing those expenses, those capitalized cost?

Actually, in this fourth quarter we began to amortize very small piece of some of the early pieces of this project that have been put into service. The amount that was capitalized in the fourth quarter was approximately $2 million, I think.

Okay, and back to there is an earlier question about the percentage in technology you said two-third size imagine that includes sort of the older electronics programs as well as the sort of newer information system programs?

Yes, it includes all but graduate programs in the university which are all in business and management and includes the undergraduate business administration programs just to recall, business and telecommunications management, computer information systems, electronics engineering technology, electronics and computer technology. Those programs are the technology programs.

Right so the business administration programs in undergrad, how are those growing roughly?

They are growing very well. We are, - [indiscernible] very price low.

Okay, quickly. Is Keller is growing?

I am sure the Keller graduate school management at DeVry University are 22.17 percent.

Now then at the end of that business growing as fast as the grad business?

Then probably I don't exactly know your question I have got it here and some are in the huge pile of paper but they are growing in double digit but it may not be exactly what the graduate school is.

Okay, and then in terms of [background], are they most challenging comes behind in terms of the 150 hours rule effect?

Yes, we had the single biggest year was two years ago. And we are on the downhill slighter that. And interestingly enough it takes about a year or the market to recover from there you know year, year and half. We are also Howard getting some data on amortization of [indiscernible] once we call Norm later on he can give you little bit more details.

Actually, our $2 million is approximately the amount that was -

Okay, and then

That was capitalized none of the amortization in the quarter.

And is there any guidance that you are ready to share with us with regards to '03 and if you can comment on that I apologize.

I am just -

We not, when we gave you our projection for '03 you weren't listening?

There was no projections for '03 and we are we have not had enough time to go back to the drawing board and look at the changes in operations we will make in responding to this larger than expected shortfall in new students this term. So we will be but believe me we will be managing our business.

Okay, and then my last question that I really do appreciate your patience. Do you know what the balance is on the educard receivable at the end of the year?

You know most of that $26 million net receivable on books is result of undergraduate enrollment receivables certainly 20 of the 26.

The net then would be about 20 on educard as we don't have educard for the graduates but that's net of the reserve its all in the footnotes of the financial statements.

The next question comes from Miss Jennifer Childs with Bear Sterns.

Any series of why you didn't have the stock rate that you expected?

Yes, sorry we tried to say as much as we can say and no about that and,

we think the biggest issue is uncertainty and just day after day after day's headlines about technology problems and issues and layoffs and bankruptcies.

So, you didn't have the students who were applying and passing the test, they just became increasingly nervous?

That's the most logical conclusion at this point in time. It's, you know, even when you are talking about big numbers of applicants, thousands, many of that 20,000 applicants, 20,000 plus, just a one or couple of point change in the matriculation rate, there is a lot of students.

Jennifer, I also speculate - we also speculate that some of those students for financial reasons are choosing to go to the cheapest alternative where they can live at home and that's a community college and community college in enrollment, in fact are -

What that means is that we are not going to really make serious efforts to continue to explain to those students why an investment in a DeVry education has been such a great payoff over the years to the students, is that we're - we're just - times change, cycles change and we will respond.

Do you expect to provide guidance '03, maybe at the next earnings call?

We will try to give you some guidance, although we historically have not been overly aggressive on providing a lot of guidance, but we will try to give some guidance. Part of the reason for not saying too much right now is we really want to focus on doing some of the programs that we have already started, the marketing programs in particular and how we respond as Dennis said is going to impact what kind of guidance we would give you. So, we would be giving you some guidance today that really may change, but I think on the other hand, the one piece of guidance that I might give you is we're a technology-oriented school and to the extent that there is concern in the student populations about availability of careers, it's going to be a tough recruiting cycle for us. We will do what we can and I think we will do it very effectively and I think it will be okay, but how that translates into a financial bottom line that reflect both what we do in enrollments, what we do with regard to our expenses and how we manage the business on a broader scale and I think you can see that in this past year, which also was a tough year for recruitment that we managed the business to come out with a pretty good result. We have a very robust business model and we are trying to operate that in the best way that we can for the long-term value creation for our shareholders.

And if you go back over many years, you will see a history of larger percentage increases in earnings than percentage increases in revenues.

Great, thanks.

Your next question comes from Mr. Mark Ferrano with First Analysis.

Good afternoon. You made a point earlier about going to a common academic calendar for DeVry and Keller, it is just how I understood it to be, is that so, and could you tell us - will the common calendar be quarters or trimesters, you know, a little bit about the thinking behind that? Thank you.

Yes, it is Mark, going to the same calendar and it will give us an opportunity for interim starts because it will allow us to program in 8-week schedule into 16-week semesters, so that we can start both at the beginning of the semester and mid-semester, and the thinking is that by doing that we may be able to have additional recruitment periods and additional flexibility that will provide our students with opportunities to come without having to wait for the start of the new semester. So we anticipate this to be a positive for us, a positive for our students and to have a positive effect on our financial results.

Will you be a semester school, but with two cycles, so that?

In effect - let me try it again a different way, and for Keller we started with 8-week terms, we went to 10-weeks early early on, almost 30 years ago, we have been 10-weeks ever since. With DeVry, we are on 15-week semesters, but we have 16 weeks to do it because we have added one week for [Backley] at the end of the 15 weeks. So in that 16-week semester, we will remain as semester school or semester university, but we will have 8-week terms more accelerated courses, the graduate courses are accelerated and more and more of the adult-learner under graduate courses are accelerated and we will work on accelerated 8-week terms, but speedily in time to degree for students who are older, more mature and can handle that acceleration. I think it is going to be a big positive.

Okay, alright, thanks a lot.

Your next question comes from Mr. [Greg Propelli] with First Boston.

Good afternoon, it's Eric on for Greg. There has been a lot of pressure regarding price increases at traditional universities, hoping that you are giving out your pricing strategy as far as Keller and DeVry?

Pricing strategy has been consistent and that it is that we view the traditional school price increases each year as creating an umbrella. We try to assure that we price each year just under the average of what traditional schools increase their prices and that's reported each year in the [Chronicle Higher Ed]. This year it is a little bit unusual, in that the decline in state financial resources and the cost pressures on institutions has caused many of the state schools to raise their tuition significantly higher than the rates that they have been going in the last years, which has been around 6 percent, because tuition pricing is such and important component of the positioning of educational institutions, we will look very carefully at our pricing this year to assure that there is not a change, which seems to imply a change in positioning and what that means is if on average most people go up more than what we had otherwise planned, we will probably go up more than what we had otherwise planned.

Will that be a, you know, one-time price increase or will that occur on the usual price increase date?

Well, we increase annually and that will continue to be the case.

Okay.

It just might be a little larger increase than our average increase over the last five years for example.

Okay, can you also give an update on Denver and the remaining Canadian campuses?

The new DeVry facility in Denver is under construction and will be occupied in February. It is in a great location in West Minister, which is at the North West part of Denver. It is just off of one main thoroughfare in North Denver and we are very happy with the progress we are seeing there, we think we will be at the Denver Market and the Colorado Market will be an important one for us. The shift or the change in our position from the old [BPC] to DeVry University in Denver I think will be a significant positive for us on a going forward basis.

And in Canada, as you all know from the first release, we are teaching out the three semester programs we were offering in Scarborough and we will consolidate in the [Missagha] in the Toronto area, that will leave us with one campus in the Toronto area and one campus in Calberry area. The Calberry campus now offers a series of bachelor degrees, first such authority for private investment capital driven institutions in the province and I think may be in the country and we, so we are and that is doing very well in Toronto as you know we just have not been satisfied with our ability to offer the kind of programs we want to offer because of the reluctance of ministry as the farewell and comparable to the rest of DeVry, we continue to work with them, we continue to work on programs that will fit better in Toronto. We as you will see when you read the footnotes in this year's report, the financial picture in Toronto and Canada as a whole, whether as well driven by Toronto has increased very much in past year, so we are stubborn but we are going to do or we have to do that will be profitable and give the servicing in Toronto or we just, if need be, if there is, we have a lot of other option in lot of other places. My guess and my belief is that we will be back in Toronto as we have been since 1955 serving Canadian Students with quality and profitability.

Just one last thought, I was hoping if you can quantify the class earnings from [indiscernible] to campuses.

Norman doesn't want to do that right now, he is shaking his head and he is saying wait as you were as we are still going to have a year of [indiscernible] in two places that we are teaching our three semester program that will finish next summer and that if we win the turn if we sit and think it was an important financial move and the right move for us in Toronto. So can we take one last question because the way I make it we got less than five minutes to go before we are one hour, I think we will run into say as we wanted to keep this to an hour and we do want to keep in to an hour.

Your final question comes from Ms. Eve Glat with Merrill Lynch.

Hi thank you. In your press release you mentioned that you expect the technology involvement will improve as the economy improves and I am just curious what your current expectations are for recovery in the economy with regards to the strength and time?

Eve, we were going to ask you the same question. When are we going to have a recovery?

What's your opinion on that? Since you are linking it to your involvement, so I think you are really interested in your answer.

Well, our answer is, we don't know, but we hope that it won't be long and you, I read the newspaper just like you do and The New York Times, the [Indiscernible], and The Wall Street Journal, I think I see some bad things happening, but I also see more, probably more moderate things for the economy as a whole, what we are of course more driven by is the specifics of how the technology industry that the technology sector is viewed by parents of our students and perspective students and by the students themselves and it maybe that the shallow financial recession will even maybe outlived by the technology difficulties we just don't know. We certainly are, make the moves that were the [indiscernible] design to get it to be better whether or not we get a technology comeback quickly.

I just add one last thought on that, even that is that of course we are interested in technology careers solidifies, we are interested in enrollments for the fall time and for the spring time, and for next summer time, but we really view ourselves as building, continuing to build the foundation for the future on which we can create value going forward both in the short term, but more particularly over the extended future which we, where we see a lot of opportunity. So thanks to everyone for being on the call. We appreciate it and we will talk to you later. We will all be talking to you as we always do and look forward to seeing meetings around and just look forward to stay in close touch as we work ahead on the programs we tried to outline for you and believe me we are working hard and we are going to continue on and we appreciate your support. So, bye, bye everybody.

This concludes today's fourth quarter earnings release conference call, you may now disconnect.