Adtalem Global Education Inc (ATGE) 2006 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q3 2006 DeVry earnings conference call. My name is Tony, and I will be your coordinator for today. At this time all participants are in a listen-only mode, and we will conduct a question-and-answer session towards the end of the conference. (OPERATOR INSTRUCTIONS). I now like to turn the call over to Ms. Joan Bates, Director of Investor Relations. Please proceed.

Thank you, operator. Joining me on the call today are Ronald Taylor, Chief Executive Officer; Daniel Hamburger, President and Chief Operating Officer and Norman Levine, Senior Vice President and Chief Financial Officer. Our call will begin with prepared remarks from management followed by the Q&A session, with our goal being to complete the call in about 40 minutes.

Before we begin please be advised that this call may include forward-looking statements subject to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected or implied by these forward-looking statements. Potential risks, uncertainties and other factors that could cause results to differ are described in the Company's most recent annual report on form 10-K for the year ending June 30, 2005 and filed with the SEC on September 13, 2005. In particular, this information is set forth in the section entitled "forward-looking statements" at the beginning of part 1 and in the subsections of item 1 business, entitled "competition, student recruiting, accreditation and approvals, tuition and fees, financial aid and financing student education, career services and faculty."

As a reminder our press release and preliminary financial statement for the third quarter are available in the Investor Relations section of our website located at www.DeVryInc.com. With that I will turn the call over to Ron Taylor.

Thank you, Joan. Good afternoon, and thanks to all of you for participating in our fiscal 2006 third-quarter conference call. We are pleased to report excellent results for the DeVry third quarter. Our third quarter financial performance reflects significant increases in spring new student enrollment at both DeVry University and at Ross University. And it also reflects the benefits of our focus on expense control. In addition to the positive results at DeVry and Ross, Becker Professional Review posted yet another strong quarter.

These improved results tell us that we are taking the right steps for DeVry and building a strong foundation for future growth and profitability. As you can probably guess, we are very happy with our overall enrollment numbers for the spring. At DeVry University total undergraduate students increased for the first time since spring 2002. Moreover, new campus-based enrollments improved year-over-year for the first time in the last three years.

At Keller Graduate School total course takers in the January end March terms were up nicely over the same periods in 2005. While we are clearly pleased with these results, we would caution you that future enrollment results may vary, especially at the undergraduate level. Our plans for future growth require that we continue to invest in building our management team. This means developing appropriate succession plans and adding new management talent in critical areas. We are doing this across all of our operations and in each of our reporting segments. So during this quarter we added Patrick Unzicker as our Corporate Controller. Patrick is an experienced accountant and financial manager and comes to us from Whitehall Jewelers where he served as Vice President and Controller. Patrick will have day-to-day responsibilities for the Company's accounting functions, including internal control and compliance requirements within our accounting operation. We are very happy to have Patrick join our team.

In addition, as most of you know, during this quarter I announced my planned transition from CEO to senior adviser, effective at the annual meeting on November 15, 2006. In my opinion, we now have put in place the strategic and operational plans and the talented people to take the Company to the next level. In February we adopted a new five-year strategic plan. Our current operating and financial results are significantly improving, and our succession planning over the last several years has provided a smooth transition for our senior management team. I have the utmost confidence in our management team, led by Daniel Hamburger, to guide our organization through its next phase of growth. I will continue to be fully engaged through November and implementing our growth plans, and I will remain actively involved with the Company as a director and senior adviser after November.

This year DeVry University celebrates its 75th anniversary. Some of you may have seen our closing bell ceremony at the New York Stock Exchange in late March. Also, we have developed a special 75th anniversary logo to incorporate into our marketing materials and collateral materials. Since 1931 our goals have been to provide exceptional service to students and to deliver high-quality educational offerings while producing exceptional financial returns. We believe we are well positioned to continue to achieve these goals. We look forward to serving the needs of the global economy with programs in business, technology and health care for the next 75 years and beyond. So today I would like to end my remarks by saying that we were able to achieve the improved financial results and growing enrollments across all of our operations this quarter, through the hard work and diligence of DeVry employees. These employees are committed to achieving our objectives, and we are very appreciative of their efforts.

With that, I will turn the call over to Norm who will provide additional details on our third-quarter financial performance.

Thank you, Ron, and good afternoon to everyone on the call. Revenues in the quarter increased by more than 9% with all three of the segments contributing to the total gain in revenue. While most of the revenue growth was in the tuition revenue line, other educational revenue grew at an even faster pace because of higher sales in the Becker CPA review course on CD ROM and the expanding sale of E-books for undergraduate online and on-site courses. We also have higher interest revenue on undergraduate accounts receivable under our EDUCARD student financing program.

Net income for the quarter of $15.7 million increased 44% from the third quarter of last year, and increased similarly from the second quarter of this year. Our revenue growth produced margin improvements at both the cost of education services level and at the operating level before interest and taxes. Both cost of educational services and student services and administrative expense increased at rates less than the rate of revenue growth with expense controls remaining in place throughout the Company. At the cost of educational services level our gross margin increased from 45% in last year's third quarter to 47.6% in the third quarter of this year. The improved margin reflects in part previously implemented cost reductions and favorable operating leverage from increasing enrollments.

Included in our 2006 third-quarter financial statements is approximately $800,000 of expense net of tax associated with share-based payments. For the first three quarters this expense totals approximately $2.4 million, net of tax. We estimate the impact on fiscal year 2006 will be approximately $0.05 per share. To improve comparability of our financial statements we have restated each of the first, second and third quarters from the prior year. For the third quarter of last year we included approximately $1.1 million of share-based payment expense and approximately $4.4 million for the nine months of last year.

Now I would like to make a few brief comments about the performance of each of our segments and their contribution to the improved performance in this quarter. First, in the DeVry University segment revenues increased by more than $6.5 million or just under 4% compared to last year's third quarter. And the operating margins in this segment were essentially unchanged. Third-quarter revenues are driven largely by the fall undergraduate total student enrollments, which were below the total fall enrollments in the prior year. And as a reminder, fourth-quarter revenues in this segment will be largely driven by total enrollments for the spring.

In our professional and training segment Becker Professional Review's financial performance improved from the prior year on the strength of its increasingly popular CPA and CFA review courses. Revenues were up approximately $4.3 million or nearly 40% from the third quarter of last year, and operating margin improvement as well. In our medical and health care segment Ross University's performance continued to improve with revenues up about $6 million from the prior year, driven by the strong January class. Revenues at Deaconess College of Nursing were approximately $1.5 million in the third quarter, and because Deaconess was acquired at the end of March 2005 it was no revenue or income reported in the third quarter of last year.

Operating income from the medical and health care segment was a strong contributor to the overall third quarter company performance, up approximately $3.1 million from the third quarter of last year. Even with the introduction of Deaconess results into this segment, operating margins were maintained at almost identical levels as last year. Student services and administrative expense increased by almost 9% in the quarter compared to last year. As we increase our commitment to future student enrollment growth through more and better marketing in all of our operations. However, for the first three quarters spending increases were more modest, up 5.1%. The benefits of this spending are evidenced in the revenue gains we are reporting.

Although we have reduced our debt to $145 million as of the end of March, higher interest rates caused our interest expense to increase a bit in the third quarter compared to last year. For the first nine months interest expense increased by more than $1.3 million because of higher rates on our floating-rate debt. Our effective tax rate on pretax income was 26.1% in the third quarter and about the same rate for the first nine months. We expect that at the effective tax rate will move in a fairly narrow range around this level for the fiscal year.

And turning to the balance sheet a couple of points worth noting; compared to last year at this time we have more cash, lower net receivables, less net investment in facilities and equipment and $50 million less debt. That concludes my review of the financial statement, so I will turn the call over to Daniel for an update on our operations.

Thank you Norm. We think we're definitely moving in the right direction across our operations. At DeVry University we believe that the major factors driving positive results in spring new undergraduate student enrollments were integration of our marketing and recruiting functions, improved overall marketing communication plan, and better management of our lead flow -- all under the leadership of Dave Pauldine, Paul Eppen and John Holbrook. In addition, we've made great strides in improving our internal systems and processes to provide better control of our marketing expenditures overall.

As Ron indicated earlier, demand for technology graduates continues to improve. While more than 50% of new students in the spring enrolled in business programs, new students in technology programs increased over 37% from the prior year. I would, however, like to emphasize that even though new students enrolling in our campuses increased 11% compared to last year, total students at the campuses still declined. The majority of our growth continues to come from DVUCs and online.

We are also continuing to diversify our programs and delivery methods. Let me provide just one example. Recently DeVry University announced a new online specialty within its bachelor of science and technical management degree program called the health information management program. This new specialty provides an opportunity for those who hold an associate degree in health information, such as graduates of DeVry's HIT programs to move seamlessly to a bachelor's degree and advance within this growing field.

At Keller, total course takers were up over 9% in the January session and up over 12% in the March session. Our efforts at Keller to create new brand awareness through improved messaging has produced good results thus far and continue to be an area of focus for us. DeVry University now encompasses 81 locations. The classes scheduled to begin during the fourth quarter at new locations in the Salt Lake City area and in Southern California in Colton. And this fall of '07 in Dayton, Ohio -- I'm sorry, fall of '06 in Dayton, Ohio.

Turning to Ross University, we continue to see strong interest in our medical and veterinary programs. New students were up 67.5% in January. But recall this is compared to an unacceptable new student recruiting performance last year. Total students were up 4.5% in January over the same period last year. During the quarter we added capacity at the medical school by leasing additional space adjacent to our campus which we use as an additional auditorium for about 400 students. Of the three class starts at Ross the January term has historically been the smallest contributor. So we are pleased with the progress we've made this year. We will continue to invest in order to grow and to provide excellent educational programs at Ross University.

At Deaconess College of Nursing, last quarter we reported that the Missouri State Board had withdrawn approval for the online associate degree program. I am pleased to tell you that this program now has conditional approval status pending final approval, and we continue to offer the program. At Becker Professional Review revenue continued its strong growth as demand for CPAs has increased. During the quarter we continue to enhance our management team following last quarter's addition of [Stephen Show] as Director of International Operations. Recently we've added two directors of business operations responsible for sales and marketing of all Becker products in Canada and on the East Coast.

So in summary, we feel we are starting to see the results of focused execution of our plan by an energized team across all of our operations. Let me now turn the call back to Joan.

Terrific. Thanks, Daniel. We have just about fifteen minutes to take your questions. So if the operator would give the instructions, we are going to try to end the call today by 10 or 15 minutes past the hour.

(OPERATOR INSTRUCTIONS) Matt Litfin, William Blair & Company.

Good afternoon. Congratulations. You mentioned, Ron, that enrollment results in future periods may vary. Is that a note of general caution, or are you seeing some trends in summer or fall lead flow that give you pause? What I am really trying to get at is if it would even be possible to see 16% new student growth again this summer or fall.

I think it is both a general caution. One point lines are infinite, so using one point as an extrapolation device just doesn't seem to us to be smart. And we are -- the trends that we are seeing or the things that we're seeing in the marketplace are a revived interest in IT which we have mentioned; a continuing interest in business, strong interest in our medical programs. But in each case we are in competitive marketplaces. There are lots of opportunities for students to go other places. And I just would sound a general note of caution that we are trying to be good, long-term managers of this process and no one should expect us to be pushing at the extreme of short-term growth at the expense of longer-term, high-quality growth.

Can you just touch on pricing? That all I have. Thanks.

Pricing continues to be conducted under the philosophy that we have had in the past. We price generally under the average of what traditional schools increase their prices each year as recorded in the Chronicle of Higher Education. But we want to make sure that we don't change the positioning of DeVry and Ross and our other operations just because of the operation of price. So we're sensitive to that. We have in the past been increasing prices in the 4 to 6% -- excuse me -- the 5 to 6% range, and this summer I think we've announced a 5% increase for all DeVry University.

Thank you.

Greg Cappelli, Credit Suisse First Boston.

Hi, Ron. Hi, guys. One quick follow-up on the price, and just a couple quick ones after that. Do you think -- I mean there is obviously a growing gap between what you can borrow, certainly as freshman, sophomore and what you are raising prices at. Is that -- are your programs you think in different areas just less sensitive to that? Is it what you're doing on the third party loan front, what is continuing to allow you to do that comfortably?

Education is the path for virtually all communities to have their young people enter the economic mainstream, and therefore families and students will take the actions that they need, whether it is work a little extra or contribute more from the family to afford to go to programs that they think are high-quality and that will allow them to achieve the objectives that they set. So we are sensitive to that. We do have an EDUCARD program. You heard some reference to that from Norm, and we do a lot to try to assure that financial considerations are not the decision maker for students who are mostly middle and lower income students. But nonetheless, I think people who see the value figure out ways to finance their educational program.

Okay, and Norm I'm sorry if I missed that statistic, but is the EDUCARD program why the bad debt jumped up some this quarter?

In part, yes. We have mentioned on previous calls the increase in student receivables is primarily in the undergraduate level.

Okay. Is there a level that you -- if you want to see that add or that is acceptable for you guys while continuing to lend it to the students?

No. I think we are prepared to -- we have the financial capacity to finance students, and we want to continue to do that to the extent that it makes sense. And that we have qualified students who are interested in using us as a financing source.

Great.

So there is no artificial constraint on that.

Okay, great. One more quick one. Did you -- I understand what you're saying about the growth. It jumped up a lot in the new students, we shouldn't expect that going forward; if you look out over the next few years what would be -- you guys have always talked about having growth but having controlled growth as well. What is the -- what would be your goal? What would be the right number you would like to see going forward or you would like to reach? Although it might not be 16, is it mid to upper single digits? What is kind of the ultimate goal there?

Well, Greg, that is an interesting question. We don't set our goals that way exactly. We do have a budget, and we do have a set of goals, financial goals. We really want to grow. We want to grow at a nice rate. And I don't think there is an estimate that I would want to give you right now on what number we're looking for.

Okay, thanks guys.

Mark Marostica, Piper Jaffray.

Good afternoon. Nice job on the quarter. A question related to Matt's first question on lead flow. I'm wondering as you look at the lead flow or the quantity of leads you currently have right now for the summer and the fall, how is that compared to that metric a year ago at this time? Is it more or less the same? Can you give us some sense there?

Sure, Mark. It is Daniel, and interesting pronunciation of your last name there by the way. Anyway, I would say that we continue to focus on improving both the lead flow and the (indiscernible) in the responsiveness that we have to those leads. And one of the major focus areas is improved integration across the areas of marketing and enrollment management. That has been a major focus for the team under the leadership of Dave Pauldine as well as Paul Eppen and John Holbrook. So I think it is improving, and our focus is on continuing that rate of change.

Okay, great.

I think it is maybe a different more general way to answer that Mark, is to say we think that there is significant and growing interest in the kinds of programs that DeVry offers. And that includes the technology programs, the business and the health care. So the manifestation of that interest of course is lead flow and quality of leads. I know there are other people in the industry that have been talking about changes from their vantage point, but we have been through a period of time where interest in some of our program areas has not been as high. I would say that that is recovering today.

As a follow-up in light of the improving lead flow picture also curious as to whether or not your strategy has changed regarding how you look at capacity utilization. I know you have talked about openness to perhaps shrinking the campus footprint in the past. Perhaps review your current thinking on how you look at your capacity utilization and whether or not you would look at potentially closing down campuses or not going forward. Thanks.

We don't exactly look at it that way. We look at it in terms of markets, and we are going to serve the markets in which we have a presence. But clearly what we have said and what we're going to do is to have an increased emphasis on more flexible delivery systems online and DeVry University centers. And with regard to the large campuses we are taking some that are very attractive from a sale point of view, selling those, but we are not exiting any of the markets in which those large campuses exist. We would be replacing that capacity with DeVry University centers that are more convenient than a single large campus. So we are adapting, but we are not exiting any markets.

Thank you.

Mark Hughes, SunTrust.

Thank you very much. You talked about a better management of lead flow in the quarter. In looking at your improved results, how much of it was that internal improvement versus kind of the external revival of interest in things like IT?

Mark, thanks. Its Daniel0 here. There are both internal and external factors. That is the case for some of the experiences that we had over the last couple of years there were both internal and external factors as the results were not as satisfactory. And conversely as we're improving I would say both internal and external factors. I think internally there is a focus on improved execution, and also on -- we brought in a number of new managers and leaders. And we have also promoted internally some managers and leaders. And that focus on execution and on process discipline is really starting to manifest itself. At the same time externally, and I spoke to it and Ron spoke to it earlier, there is an improving picture in the technology world, improving from an employment perspective and now we are starting to see it improving from a student interest perspective. So it is a bit of both, internal and external.

Very good. Thank you.

Howard Block of Banc of America Securities.

Thank you, operator. Good afternoon, everybody. Ron, a great new student number obviously surprised us a great deal. But obviously it begs the question, which is on the total enrollment side, it was only modestly better. Is there anything in the attrition that was a little bit surprising to you on the negative side?

No, but what you've got to remember, which I know you know but maybe some of the others on the call don't is this as we recruit people generally into three-year programs, with nine semesters in those three years. And when there is year-over-year negative comps as those students go through the system from the first semester to the second to the third, as those negative comps become a greater proportion of the total students, you get a negative momentum. Similarly, if you begin to get positive comps you begin to get positive momentum. And the increase in the last three or four classes, of course is what has begun to give us positive momentum. And you've got to remember that it takes those positive changes in the early semesters of those nine semesters. It takes a while for them to catch up and dominate the entire three years. We used to call it the pig and the python. But no, there has been no change in the retention. Our graduation rates, there is variability, but there has been no significant change. What we're seeing is the natural outcomes that created the downward slide from 2002 to 2005. And now we are going through a period where the positive comps are becoming a greater and greater proportion of the total students. So you get a large change in the new students that ultimately changes the total students from negative to positive. And we are sort of at that inflection point.

Okay, and then Norm, obviously you've done a nice job on controlling the spending. I was just wondering if you were to unbundle the student services line of added costs, maybe advertising and salaries and some other expenses, would we see some material differences in the growth rates there that you might want to offer some color?

The student services and administrative line is dominated by our marketing costs, advertising and selling, and it continues to be in all prior and current periods. There has been no big shift in content.

Okay, so then if we were maybe to take it a step further then, and I don't know if it is to Daniel, what are you seeing in terms of I guess the cost per start if not in numbers at least trends and qualitatively?

I don't think that there is a major trend that we are ready to discuss there. But we are continuing to keep our focus on improving the efficiency with which we manage the enrollment process, its extremely important and a high priority for us.

In my attempt to get maybe a numeric answer before I hang up, the last question would be if we look at the impressive growth in tech of 37%, is that also representative of what occurred in tech on campus or again is there, are there any material differences in enrollment by program on campus?

No. That is not reflective of just the campus; that was not an isolated figure, that is across all of our delivery channels including the large campuses, (technical difficulty) campuses, the DeVry University centers, the online. It is across all of those combined.

Thank you very much.

Gary Bisbee, Lehman Brothers.

I would like to add my congratulations on the enrollment numbers. I think a lot better than anyone thought it would be. I guess a couple of questions. You have continued to generate strong cash flow, and I see Norm paid down another chunk of the debt here. I guess as you look towards fiscal '07, any change in terms of how you think about what you do with your excess cash? And maybe the question is to Daniel, as you think about taking over the top job at the end of the year, would you consider what historically has been policy to not repurchase stock nor to pay a dividend. Any updated thoughts on those?

The first thing is that we are going to make sure that we continue to evaluate our capital expenditures to make sure that we have current equipment and that we are up-to-date on that. And the Board really has not addressed the whole question of stock repurchase or dividends or any of those kinds of things beyond what we said in the past. I don't think until we get to the point that we have too much cash I don't think we are going to be making any big announcements.

And on that note, would there be a desire to make any other acquisitions in the health care area? I know you're rolling it out organically, but build yourself a bigger presence there, or is that something that is more on the back burner at this point?

We see most of the M&A transactions that are proposed, and in today's environment of course, there is a lot of people interested in entities in our space. But we look, and as you can tell, we have done Deaconess and we've done Ross and we've done other acquisitions over the last few years, Stalla's CFA. And so if we find something that fits our strategic posture and that the market hasn't gotten out of whack in terms of valuation, sure, we could be interested in that.

And then a last question maybe for Norm, the growth understand that both Becker and the E-books is driving the other revenue line. Can you give us some guidance on that? Is the E-books now being sold only to online students, or is this actually most of the campus, and would it be safe to assume a substantially faster growth rate in that other revenue line as we look forward over the next few quarters?

Gary, it's Daniel. I'll go ahead and take a shot at that. You're right, the other revenue does include the factor of CD ROM sales as well as the e-books and a few other miscellaneous things, but those are the primary by far. And the e-books are deployed in our -- in a portion of our online courses, not in on-campus courses. So that is correct in what you're assuming there.

We continue to see growth and evolution and improvement in the quality of that capability. I was fortunate enough to have a chance to demonstrate that at the investor day we had out in our Fremont campus last year. And what is important to us as we roll something like that out is to do it in a quality way, in a way that enhances the educational delivery. And you can see some of the implications on our financial statements as well. So we are continuing to focus on that, but I don't expect any major change in the way we have been rolling that out.

Okay, thanks a lot.

Jeff Silber, Harris Nesbitt.

On last quarter's conference call, you spent some time talking about your focus on the associates program. Did that have a major impact on the new student enrollment number this quarter?

No, not particularly. That's something that we are interested in, but the changes were really across the board across all of our programs.

Just a few numbers questions. I believe in prior calls you talked about a CapEx budget for this fiscal year of about 40, $45 million. Is that something we should still be looking for?

No, in light of our spending through the first three quarters. I think I tried to hedge down my estimate a little on the last call. But as you can see from these financial statements, we've spent a whole lot less than that through the third quarter. And I don't think our fourth-quarter spending will be at a rate significantly higher than it has been through the first three.

Okay, great. Then just getting some clarification on the stock-based comp costs, what were they on a gross basis net of taxes? And how were they allocated between the two expense line items?

They are divvied out between the two. In fact, I'm not sure which of the two has the greater expense. The bigger expense, I think, is probably in the SG&A line. The effective tax rate on that stock-based comp is quite low. It is much lower even than the 26% overall tax rate. So again, I don't have -- actually, you can tell in the prior period by simply taking a comparison of the restated financial statements that we presented here in the original as reported. The current periods mirror pretty much the year-ago period.

Okay, that's helpful. And then is any update on the West Hills campus?

We are still continuing with the process as we've announced, and we don't have any new announcements for you right now.

Great, thanks.

Corey Greendale.

Good afternoon. A question for Daniel. As you look at kind of what you initially planned as far as your roadmap for improving your marketing processes, what percent of the way would you say -- (indiscernible) what percent of the way are you towards doing everthing that you intended to do? I know there are kind of any large changes still to come that you would highlight?

Sure, Corey. We're still, I think, in the early stages. I feel like we are making good progress, and as we've noted here this is good, but progress almost never comes in a straight line. And I think that is what Ron was referring to earlier in terms of don't just project from one or two data points even. And we are continuing to be focused on that operating plan, which hits both the revenue growth side of the equation and our cost and asset utilization side. One of the things that we continue to look at is our marketing and advertising. And we are working with our marketing partners on how can we better message and be more relevant in the way that -- I mean the four messages of DeVry are as relevant as they've ever been in terms of the speed to the degree that hands-on professors who know you by name, not a number. All of those great messages, but how can we make those even more relevant in the way that those messages come across? That's something that our chief marketing officer, Paul Eppen and his team are working on in conjunction with our marketing partners and agency. So that is something that we are working on right now and we hope to talk a little bit more about in the future when that is a little bit more fully baked.

Thanks and a quick follow-up for Ron, when you talk about bulking up the management, is that just kind of adding a few people here or there, or what is the magnitude the number of people that you're looking at adding?

Well, we are going to add some senior level people in some of the high-growth areas. We certainly are interested in making sure that our processes, which Daniel and his team is spending a lot of time refurbishing if you want to look at it that way. So we are putting people into new areas of responsibility. And of course with all the internal controls that we've added with Sarbanes-Oxley, some of that takes some compliance and internal audit activities that we have now been in the process of restructuring. So I don't want to give you a number, or there is no number per se, but we are adding people across the board in areas where we think we can get the maximum leverage from their talents.

Thanks very much.

We are going to take just one more question so operator you can let through whoever is next.

Sarah Gubbins, Merrill Lynch.

Thank you. Two quick questions. First, there was very good improvement at Keller, and I am wondering if that was a function of improved demand or better marketing or both.

Sarah, I think it is always a function of both internal factors and external factors. I think we did a good job internally of executing and responding to the prospective students who made inquiries with us, and that is the first factor that I would cite. And we have been also putting, giving Keller graduate school of management its due in terms of resourcing. As mentioned in previous calls we've added personnel who are specifically focused to Brecker in the form of, and think of it as a brand manager, and focused agency resources on the graduate school as well to make sure that it preserves and maintains and enhances its distinct identity. While at the same time it is a part of DeVry University overall. So that is a balancing act that we've been working on over the last couple of years, and I think we did a little bit better job more recently there.

And in terms of demand did you see much uptick there?

I wouldn't cite sort of raging change in the demand for MBAs or other masters degrees. I think there is good, steady progress is what we've seen.

And just last question, could you talk a bit the growth trends that you are seeing among the new undergraduate students and the business and health care programs?

Well, we continue to see good employment opportunities for students who graduate out of those programs. We're seeing increased demand. In the health area we've added programs in the biomedical area, in the health information area at both the bachelors and the associates level. And we are seeing a good interest in some of those programs. At the bachelors, the biggest area that I would cite would be accounting. We're very excited about the renewed interest in accounting over the last couple of years. And I would also cite one of those wonderful programs that is at the intersection of those circles that Ron is always talking about, those unique areas where we can be differentiated and have hard to copy programs. And one of those is the game and simulation program where I think there is good interest on the part of the market, and I think internally we've done a good job in executing across the academic area. We've put together a wonderful curriculum and have a fantastic faculty. And from a marketing perspective some of our new advertising marketing in that area is capturing prospective student's interest and so we're starting to see that as well.

Thank you, I guess what I am trying to understand is if I look at the undergraduate, the new undergraduate enrollment growth, given how much the IT enrollment was up -- I am trying to understand what the growth rates were in the business and health care programs. So maybe if you could talk about what even a year ago what percentage of new students were in IT versus business.

We haven't broken it out that way but we were trying to give you a bit of color there. And perspective on what we're starting to see in the technology area. It is not at the expense of anything else. Sometimes that is all of our tendency is to assume that, and I wouldn't. I would just point out that we continue to see good growth across our business curricula as well as in the technology. Certainly improving with that nice improvement that we saw. In health within DeVry University is growing from admittedly a much, much smaller base.

Okay. Thank you.

Thank you to everyone for taking the time to be with us. And for your questions. Our next call is scheduled for August 17th this year when we will announce fourth-quarter and year-end results and summer enrollment. So thanks to everyone, and have a great evening.

Thank you for your attendance in today's conference. This concludes the presentation. You may now disconnect. Good day.