Adtalem Global Education Inc (ATGE) 2012 Q4 法說會逐字稿

Good day ladies and gentlemen and welcome to the fourth quarter 2012 DeVry earnings conference call. My name is Caris and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session. (Operator Instructions). As a reminder, this call is being recorded for replay purposes.

I would now like to hand the call over to your host for today, Joan Bates, Senior Director of Investor and Media Relations. Please proceed.

Thank you, Caris. With me today from DeVry management are Daniel Hamburger, President and Chief Executive Officer; Tim Wiggins, our Chief financial Officer; and Patrick Unzicker, our Vice President of Finance. I will now paraphrase our Safe Harbor language.

This call will contain forward-looking statements. Actual results could differ materially from those expressed or implied. We undertake no obligation to publicly update or revise any such forward-looking statements. Please consult our most recent 10-K and 10-Q filings for a more complete description of factors that could affect our financial results.

On today's call we will highlight certain non-GAAP financial measures. Further information about these measures, including reconciliation to US GAAP, can be found in our earnings release which is available as an exhibit to Form 8-K dated August 9, 2012. Telephone and webcast replays of today's call are available until August 29. To access the replay, please refer to today's release for information.

So, before Daniel gives his overview, I would like to quickly walk you through the changes we have made to our enrollment reporting and the new schedule of announcements. In recent months we've spoken with many of the analysts and shareholders that follow DeVry, and one of the biggest pieces of feedback we've heard was that people wanted better alignment of enrollment reporting with the quarterly financial results.

So as you saw in today's release, in addition to new and total student enrollment, we are now reporting student enrollments for each of the six sessions at DeVry University in Chamberlain. We will be reporting enrollment at the end of each quarter for Carrington versus a four-month period. Also in today's release we have included the new schedule for each reporting period, starting with the fiscal first quarter when we will report September enrollment results.

Since there are six sessions, you will see that we will report two sessions in two of the quarters and one session in the other two quarters. We have also included historical enrollment figures dating back to fiscal year 2009, so that you can familiarize yourself with the new format and adjust your models appropriately. We believe this new enrollment reporting structure provides greater alignment with our quarterly financial results and more information that we hope you will find beneficial in your ongoing coverage of DeVry.

So with that, I will turn the call over to Daniel.

Well, thanks, Joan. Thank you all very much for joining us today. I will begin with an overview of the quarter, followed by Tim and Pat who will walk through the financial results before I wrap it up.

Consistent with our announcement a couple of weeks ago, results for both the quarter and the year fell short of our expectations. So on this call, we wanted to answer all your questions, and especially these three. What happened in the fourth quarter? What does it mean in terms of our plan to improve DeVry's performance? And what is the long-term outlook for private sector colleges and universities or PSCUs? And what is the long-term outlook for DeVry specifically?

Let me break down what happened at a high level and then Tim will provide some more detail. Well, revenues for the quarter fell short of our expectations. This wasn't due to an enrollment shortfall. Actually our enrollment totals and credit hours at DeVry University for the period were in line with our expectations.

The main impact on revenue for the quarter was our decision to invest more heavily in scholarships and grants to help our students achieve their academic goals. This decision was made in order to assist our students in difficult economic times and in reaction to recent changes to the Pell Grant program that now provides students with funds for two semesters per year rather than three. And since students weren't going to be receiving the funds they previously had in the spring semester, we made the decision to utilize our financial flexibility to offer scholarships to support those students. We granted about $5 million in additional scholarships this quarter, of which $2.4 million went to our students to supplement that loss of Pell.

Just to give you a sense of the scholarship trend, in fiscal year 2011 scholarships totaled $29 million. In 2012 that number increased to $42.5 million. But while we saw an increase of $13 million in 2012, we don't expect that in 2013. We anticipate scholarships this year being in the mid-$40 million range.

Now the second sector that negatively impacted our results was cost increases. I'm going to ask Tim to get into much more detail, but three categories impacting our cost during this quarter were additions to our cost structure from acquisitions and new campuses, higher-than-expected employee related costs, and then one-time items such as the now resolved issue with Perkins Loan administration and higher costs in advanced academics.

The results for the quarter and the year are clearly unacceptable. And while we have made significant progress in identifying and implementing cost savings, the fourth quarter didn't reflect that, partly due to some of these one-time factors. We do expect to make substantial progress in the quarters to come as we work our performance improvement plan.

It's a five-point plan but I want to focus on the top three, which in order of priority are, one, aligning our cost structure to our enrollment levels two, regaining enrollment growth momentum; and three, making targeted investments to drive growth. Now with regard to our first priority of aligning our cost structure, I wanted to reiterate our commitment to the goal of at least $50 million in cost reductions for 2013. We will accomplish this while maintaining and enhancing academic quality for our students. The majority of the reductions will continue to come from DeVry University in Carrington, part of which is the recently announced elimination of 570 positions.

And while the primary objective is about cost reduction, it is also about creating value in other ways. One example of this is the increased use of electronic course materials. This adds value for our students in terms of quality and price, and at the same time generates additional revenue.

Another example is our new HR service center. We're centralizing our human resource and employee recruiting functions to both improve service to our employees and to lower costs. It's important to note that our management team has a strong sense of urgency and is continue to look for other ways to improve efficiency, effectiveness and service even beyond the $50 million of value creation.

A second priority is regaining enrollment growth through increasing DeVry's awareness and brand reputation, recruiting effectiveness and persistence. Let me be clear that the most important focus has been and will continue to be the academic quality and providing a strong return on our graduates' educational investment. We know that is the most important thing that we do, and in order to grow and to improve our marketing and recruiting results strong, student outcomes must be and are at the center.

We are continuing to execute on our strategy of shifting mix to higher quality inquiry sources, and these efforts have resulted in positive improvements in conversion. We have reduced the share of third party aggregators in our mix by over 20% and we continue to increase organic marketing services like those coming from our website and through paid search.

Our focus on building brand differentiation and reputation is most recently highlighted by our partnership with the US Olympic Committee and the resulting campaign where we have featured some of our student athletes, and how they let nothing stand in their way. Another brand building effort is at DeVry University, where in the next quarter we will unveil new messaging which reinforces our key differentiator of being the career university.

We are also making strides to improve our recruiting efforts. Key actions include increased training for our admissions advisors and managers, making adjustments to the process as we have adapted to new regulation, and deploying new technology to enhance recruiting efficiency. Our efforts are beginning to pay off as conversion rates, while still behind prior peak levels, are beginning to improve in the three most affected institutions, DeVry University undergrad, Carrington and our RN to BSN program at Chamberlain.

I know you're going to ask me where we are in the process. My sense of things is we are up 20% to 30% up from the bottom.

The third part of regaining our enrollment growth is persistence, which is every bit as important as new student growth. Examples of the actions we're taking here are improving the quality of our students' academic and service experience, targeted use of scholarships, implementing our enhanced first-year retention program and focusing on service excellence. This includes the best of both on-site and online, serving students where they want to be served.

After our first two huge priorities, our third priority is making targeted investments in future growth and diversification. One of our best growth opportunities is DeVry Brasil, where in fiscal 2012 we expanded and also acquired FBV. DeVry Brasil continues to show strong growth, and is definitely an area I want to encourage you to keep an eye on as it becomes an increasingly larger part of the DeVry family.

During the fourth quarter we also acquired Falcon Physician Reviews, which prepares candidates for medical exams. Per our stated strategy, Falcon further diversifies Becker into the healthcare market.

In addition to pursuing strategic acquisitions, we're also selectively investing in new programs and campuses. At Chamberlain we recently launched a new Master's of Science in Nursing Healthcare Policy. Chamberlain also just completed the site visit from our accreditor, the Higher Learning Commission. This is for our new Doctor of Nursing Practice degree program. Provided approval is received, we expect to launch this new program early next year.

And at Chamberlain's Phoenix campus, based on strong academic outcomes the State Board of Nursing recently raised our enrollment cap. These are great examples of DeVry's operating philosophy of quality leads to growth.

Somebody asked me why DeVry is still investing in growth during this down period. Chamberlain is a great example of why we are, as it grew revenue 26% from fiscal 2012. And looking to fiscal 2013, the majority of Chamberlain's growth will come from new campuses we opened in the last two years.

We have also made significant progress growing clinical capacity for medical institutions. During the quarter, Ross University School of Medicine signed a 10-year agreement with Kern Medical Center in California to secure clinical rotation spots for Ross medical students. So you can see how we are focusing on the top three priorities of our performance improvement plan, and especially the first two, aligning our cost structure with enrollment and regaining enrollment growth.

But before I turn it over to Tim and Pat, I just would like to comment on the status of Project Delta. As you know, Project Delta was a three-year, $100 million investment in upgrading our information systems. During the quarter we launched the final major module which went very smoothly, a terrific accomplishment, as we all know the risks of large systems projects.

We are so pleased with the results and I would like to congratulate and thank the entire Project Delta team for their hard work and tremendous results. And now we're excited to realize the benefits of that effort including increased productivity, improved student service, and also better data analytics and reporting capabilities. In fact, the more frequent enrollment reporting that Joan just announced was facilitated by the new system.

That is an overview. Now let me turn it over to Tim for further discussion of the financial results. Tim?

Thanks, Daniel. Good afternoon everyone. Before I review our results in detail, I'd like to offer some analysis to try to put the quarter and year in perspective. There's several dynamics at play and several different ways you can look at it. But the three analyses I thought you might find most useful are mix of institutions, cost for the quarter sequentially and cost for the quarter year on year.

Let me start with mix. DeVry is a diversified organization and institutional mix is important to keep in mind. Our fourth quarter and fiscal year results reflect a mix of institutions that are growing and delivering solid earnings results, combined with those that are in transition phase experiencing enrollment declines. Let me give you some perspective on each of these.

For institutions that are in transition -- DeVry University, Carrington and Advanced Academics -- revenues were down 12% for the year to $1.47 billion. This was offset by our other institutions which saw revenues increase 24% year-over-year to $614 million. Operating costs and expenses at our institutions in transition declined by $12 million or 1% to $1.30 billion. This reverses an 11% increase in cost experienced in the prior year.

Our team continues to focus on operational excellence initiatives and has identified more than 30 projects where we are addressing costs and value creation. We expect these projects to drive the $50 million savings we've committed to for fiscal '13. Operating costs and expenses at our growing institution increased year-over-year by $104 million or 27% to $483 million.

If you look at this increase, nearly half of it or $48 million was related to costs from acquisitions. The four acquisitions driving these costs are AUC, FBV, ATC and Falcon. About one-third or $38 million supported the strong revenue growth and expansion at Chamberlain. The balance supported growth at our other institutions -- Ross, Becker and DeVry Brasil.

I hope this helps clarify that cost increases for fiscal 2012 are tied directly to supporting growth at these institutions.

The second way I want to look at this is to consider costs on a scheduled basis. Total costs from the third quarter to the fourth quarter increased $19 million to $464 million. There were several key drivers.

First was the impact of acquisitions and new campus openings, which added about $6 million of costs in the quarter. Second was the one-time impact of $6 million related to the administration of our Perkins loan program at DeVry University, which I will explain more fully in a minute. Third, we experienced higher wage costs in Brazil and higher employee costs related to lower than expected turnover, which increased these expenses by about $2 million.

And finally, Advanced Academics accelerated its summer marketing campaign into June from July and experienced higher school district startup costs in the quarter, totaling about $3 million.

Let me take a minute and explain the Perkins issue in greater detail. There was a problem transmitting the enrollment data for about 10% of our students in this program to our third-party service provider. These students were not being moved into repayment mode when they should have been, and the fund was not accruing interest or collecting the principal it should have.

As a result, we have incurred a cost of about $6 million for the lost interest and the estimated difference between the value of the loans and the projected recoveries. The underlying issue has been fixed, so we expect this to be a one-time cost.

Costs compared on a year-over-year basis provide a third perspective on the quarter. Cost on this basis increased $27 million. Acquisitions accounted for over half of the increase or about $16 million.

Campus expansions at Chamberlain increased expenses by about $7 million and the one-time Perkins adjustment added approximately $6 million to our costs year-over-year. Costs at our other growing institutions like Ross, Becker and DeVry Brasil increased by $4 million versus the prior year. These costs offset the $12 million in year-over-year cost savings realized at DeVry University in Carrington.

Now let's turn to our reported results. Our fourth-quarter and full-year results reflect the continued revenue deceleration at DeVry University in Carrington and the resulting impact on earnings. Fourth-quarter revenue of $506 million was down 7.5% versus the prior year and down about 4% year to date.

The primary contributors for the fourth-quarter decline were lower enrollments than the prior year and the use of scholarships to help our students. Reported net income of $8 million in the quarter compared to $75 million last year. And earnings per share of $0.12 was down versus $1.08 last year. The results of the quarter were impacted by two discrete items a -- non-cash after-tax impairment charge of approximately $18 million or $0.28 per share for Advanced Academics, and an after-tax restructuring charge of approximately $4 million or $0.07 per share related to workforce reductions.

During the quarter revenue in Advanced Academics continue to be below management's expectations and costs were higher. As such, we updated its near-term and long-term projections. This resulted in a lower estimated fair market value for Advanced Academics.

During the quarter we initiated a workforce reduction plan that will impact 570 employees. Looking at workforce reductions since the fourth quarter of fiscal 2011, we have reduced just under 10% of the July 1, 2011 workforce. Excluding these two discrete items, net income of $31 million in the quarter was down 59% versus prior year and earnings per share of $0.47 was down 56%. A reconciliation of these earnings results is included in the financial section of today's release.

Our overall effective tax rate on income from operations was 23.7% in the quarter and 28.1% for the year compared to 33.1% for the full year fiscal 2011. The tax rate on continuing operations remains lower compared to last year due to the mix of income sources stemming from earnings declines at DeVry University, operating losses at Carrington and Advanced Academics, combined with earnings growth at DeVry Brasil and the addition of AUC.

We expect the effective tax rate and the income from operations for fiscal year 2013 will be in the 29% range. The tax benefit associated with the impairment charge in Advanced Academics is not comparable to our effective tax rate on income from continuing operations because of the impact of nondeductible acquisition goodwill. As a result, the tax benefit from the impairment charge carries an effective tax rate of only 4.8%.

Turning to our costs for the quarter and the year, costs of educational services increased 7% versus the prior year in the quarter and about 5% for the year. More than two-thirds of the cost increase for both the quarter and the full year was driven by the acquisitions of AUC, FBV, ATC and Falcon.

For the quarter, SS&A costs increased 5% versus the prior year and 6% for the full year. About one-third of this cost increase in the quarter driven by acquisition. The remainder of the increase was for inquiry generation and recruiting primarily to support new location growth at Chamberlain.

With that overview, let's now shift to our operating segment results. Starting with business technology and management, revenue was down about 16% versus the prior year in the quarter and 11% for the year. This revenue decline has been principally driven by declines in total undergraduate enrollments. Enrollments continue to be impacted by weak economic conditions and the resulting hesitation on the part of some students to enroll in college, as well as adjustments to the new regulations.

Excluding the restructuring charge, segment earnings of $22.2 million in the quarter were down 71% versus the prior year driven by the enrollment and revenue declines, spending on inquiry generation to support enrollments and resulting margin compression. Earnings for the year were down 43% excluding the restructuring charge, ending the year at 15.4% of revenue.

Within the medical and healthcare segment, revenue was up about 10% for both the quarter and year to date with varying performance among institutions. Chamberlain College of Nursing delivered revenue growth of 19% in the quarter and about 26% year to date. The growth is primarily being driven by new locations that we have opened in the past two years.

DeVry Medical International, which includes Ross medical and veterinary programs and AUC, delivered solid revenue growth of 31% in fiscal 2012 largely driven by the acquisition of AUC. Excluding AUC though, Ross revenues grew 7% for the full year.

Meanwhile Carrington results reflect the effects of double-digit enrollment declines reported last period. Carrington revenues declined 21.5% during the quarter and 24% for the full year. As a result, Carrington generated an operating loss of $33 million in fiscal year 2012 as compared to operating income of $9 million in fiscal 2011.

Earnings for the medical and healthcare segment in the quarter were down 23% versus the prior year and 19% for the year, excluding the fourth-quarter restructuring charge and the Carrington impairment charge from the second quarter. Operating income growth that Chamberlain and Ross, along with the addition of AUC earnings, were more than offset by the operating loss at Carrington.

Finally, rather revenue within the International, K-12 and Professional Education segment was up 3.5% in the quarter and grew 6% for the year. Solid enrollment growth at DeVry Brasil and the addition of FBV contributed to drive segment growth.

Becker's revenue was up 3% during the quarter versus prior year, benefiting from the acquisition of Falcon, which we purchased in April. This growth was partially offset by revenue declines at Advanced Academics.

Excluding the asset impairment and restructuring charges, segment operating income for the quarter declined to $8.6 million from $16.8 million as a result of revenue declines and increased expenses at Advanced Academics. Excluding the asset impairment and restructuring charges, Advanced Academics generated an operating loss of $14 million as compared to an operating loss of $8.3 million in fiscal 2011.

We expect Advanced Academics is significantly narrow these losses in fiscal 2013 on modest revenue growth and tight expense control. Looking at the first quarter of fiscal 2013, total operating costs and expenses at our transition institutions are expected to be down on both a year-over-year and sequential basis. For the year, we expect total cost for these institutions to be down, reflecting savings from the $50 million cost savings initiative.

Total DeVry-wide operating costs and expenses for the first quarter are expected to be down slightly on a scheduled basis, but up slightly gear over year. For the full year 2013 we expect DeVry-wide total costs and expenses will be up slightly, as cost increases at our growth institutions more than offset the savings at our transition institutions.

So to wrap up, this was a difficult quarter and year for DeVry. Accomplishments at our growing institutions have been overshadowed by enrollment declines at DeVry University and Carrington. We will continue to support our growing institutions where we see attractive opportunities. However, our main focus is on restarting enrollment growth and delivering significant costs reductions at DeVry University, Carrington and AAI while maintaining the academic quality and successful student outcomes we're known for.

I will now turn the call over to Pat to talk more about our balance sheet and financial position.

Alright, well, thank you, Tim, and good afternoon everyone. Cash flow from operations for the year was $277 million versus $408 million last year, reflecting our lower earnings. This cash and marketable securities balance was $177 million at the end of the year as compared to $450 million last year and we continue to remain debt-free.

We reinvested nearly $384 million through the acquisitions of AUC, FBV and Falcon and for capital expenditures to expand and/or enhance our existing institutions. The cash and marketable securities balance was also impacted by our share repurchase and dividend programs.

During the quarter we repurchased about 1.13 million shares of our common stock for $33.9 million, and for the full year, we repurchased about 4.26 million shares of our common stock for approximately $158.1 million.

Our net accounts receivable balance was $114 million versus $115 million last year.

Our bad debt rates continue to reflect solid focus on the receivable collection process, with the year to date bad debt expense of 2.0% versus 2.1% last year. So as you can see, DeVry maintains a strong focus in operating discipline around receivables and bad debt management, and I believe this bad debt percentage is one of the lowest of any publicly held private sector colleges and university.

Capital spending was lower than planned at $129 million and declined compared to $136 million spent last year. Fiscal 2012 spending was focused on expansion at Ross University and AUC, new campus openings at Chamberlain College of Nursing and DeVry Brasil, and the final module of Project Delta, which was successfully launched in early July 2012.

For fiscal 2013 we anticipate CapEx to be approximately $150 million. This year-over-year increase will be largely driven by capacity expansion at Ross University's School of Medicine and Veterinary Medicine, the American University of the Caribbean and new campus openings for Chamberlain. In fact, Chamberlain has set a goal of 13 in '13, 13 campuses by the end of fiscal 2013, and we're definitely on track to meet that goal with two new campuses in Cleveland and Tenley Park, Illinois set to open in January of next year pending all approvals.

Now, with that, let me turn the call back to Daniel.

Okay, thanks. And we think that we are at the trough of the cycle that we have been expecting here in fiscal '12 and '13, and the Q4 results obviously reflect that. We continue to believe that fiscal '14 to '16 will be the recovery and growth phase, and we have a solid plan in place to accomplish that. And in this phase, we expect to benefit from operating leverage in the investments that we have made in quality and growth.

This outlook assumes a return to modest new student enrollment growth at DeVry University in the second half of fiscal 2013, a return to growth in total enrollment and revenue growth at Carrington in fiscal 2013, and a gradual recovery of enrollments to 2011 levels. And lastly it assumes that our other institutions maintain their growth momentum.

I've been with DeVry long enough to remember another down period that we went through. In the early 2000s, we went through a period that was actually much worse than what we're going through right now. I don't anticipate we're going to experience anything as bad as that.

I find it interesting that the market is valuing DeVry at the same level as it was back in 2006. Back then we had just over $800 million in revenue. Today we are over $2 billion. We had 53,000 students then. Today it is over 100,000.

Chamberlain only had one campus and we weren't in Brasil. Today our institutions are much more diversified and able to serve the needs of a broader student population. So while it is not acceptable to have our earnings down year-over-year, it is important to keep things in perspective.

DeVry's after-tax margin of 10.4% is on par with our long-term average and better than the majority of other S&P 500 firms. Most importantly we provide a strong value proposition that meets a fundamental need for our students. We are proud of our students' academic results across our institutions.

In fiscal 2012 our institutions graduated nearly 30,000 students into high demand fields including, for example, we helping nearly 4000 students realize their dream of becoming a nurse and more than 1300 medical students pursue their goal of becoming a physician. In addition we helped 50,000 accounting graduates work toward their goal of becoming a CPA. So while our financial outcomes this year were not what we wanted, many of our student outcomes were, and they are what will power DeVry to thrive over the long-term.

So, let me talk about the long-term. Overall we're very bullish on the mid to long-term outlook for career oriented education and for DeVry for many reasons, but let me say three.

First, there is a huge need for skilled employees in the United States and globally. Second, there is a strong return on investment for students who graduate from college -- 23% to 29% ROI according to a new Goldman Sachs study. And third, filling that need for career oriented education is where DeVry excels.

And so within this large global opportunity, what is the particular thesis on DeVry? Well, the answer is that quality plus diversification equals growth. DeVry's reputation for quality is a differentiator among students, regulators and accreditors who know our value proposition for high-quality career oriented education, for excellence in student services and for innovative educational technology.

At a time when PSCUs have been under scrutiny, DeVry stands apart. Even the most vocal critics of PSCUs, such as Sen. Harkin in his most recent report, has said, and I quote, DeVry has demonstrated a commitment to investing in students and student services and is engaging in dialogue to improve, steps which distinguish DeVry from others in the sector. End quote.

DeVry's diversified family of institutions is an advantage with our healthcare, professional education and international operations helping to mitigate the current domestic underperformance. And DeVry's positioned to transition to recovery and growth -- growth in enrollment, revenues and margin expansion as well. DeVry is serving the fastest growing segments in education. We are the only one with medical schools, the only one with veterinary school, one of the largest nursing schools in the United States and a growing international presence.

And DeVry programs present strong value propositions for our students. In fact in recent pay scale rankings that measured 30-year ROIs. DeVry University outperformed nine of the top 50 US News and World Report universities.

And so as we enter fiscal 2013 we are intently focused on the driving objectives of our performance improvement plan. First, aligning our cost structure to enrollment levels. Second, regaining enrollment growth momentum. And third, making targeted investments to drive mid and long-term growth.

Let me conclude with a thank you to all the members of the DeVry family for their hard work in fiscal '12, and thanks in advance for all of the hard work that is yet to come in helping us meet our objectives and our goals in 2013. So now we would be happy to take your questions.

Thanks, Daniel. I understand we have a number of people in the queue, so we're going to ask that you hold your number of questions to one and maybe one follow-up. That would be greatly appreciated. Caris, would you like to give our participants the instructions for the Q&A?

(Operator Instructions) Sara Gubins, BofA Merrill Lynch.

I wanted to start off by asking about scholarships and the increased level in the fourth quarter. Could you talk about what drove that decision? And you mentioned that it's not going to be higher next year. But I'm wondering if it might be more helpful to ramp scholarships to try to drive new student growth.

Thanks, Sara. We do intend to stand behind our students. I mean, I think over the mid to long-term we continued to see the opportunity for tuition increases. But in the near-term given this economy, we're going to stand behind our students both to protect persistence and to protect our share.

I think it's interesting that a recent Wall Street Journal article talked about how many schools are decreasing the use of their scholarships because of their budget constraints. So we are prepared to use our financial flexibility to do that. We took a pretty sizable increase in this past year and we think that a more modest increase in this new fiscal '13 is going to do it.

And we're running a number of pilot programs to assess the impact, and so we're not going to roll that out in a broad-based way until we have assessed those pilots. That is a very important part of how we operate is to do a test to control and then roll it out in a bigger way.

So that is our outlook, is a relatively modest increase from '12 to '13. But I wanted to add that because I know the sizable increase in the quarter, and perhaps we could've done a better job of communicating that, took people by surprise. And we acknowledge that. But we don't view that as setting the trend or setting the pace for next year.

Thank you. And then hopefully this is quick, but would it be possible with the new reporting structure to help us map the six periods that you're going to be reporting into the quarters?

Sure. This is Pat. So the first two sessions of the year, July and September, you will have obviously the whole month of July, July and August, so that session, and then half of September in the first quarter. Then you pick up the second half in the second quarter of September and then the November session, and then for our third quarter, you would have all the January session and one month of March.

And of course with the fourth quarter you would have the second half of March and both the months in the May session. So we feel that this will give us -- from your perspective as an analyst, our institutional investors, a much better alignment of our enrollments with how we report the quarterly revenue.

Okay, thank you.

James Samford, Citigroup.

Great, thank you for the enrollment detail and I guess my associate thanks you for all the modeling she's going to do this evening (laughter). But I wonder if I could stretch a little bit here and see if you could provide us maybe with a little bit more on sort of the direction, or when -- the direction of enrollment outlook for maybe next quarter. Will the trends get worse before they get better or are we at the trough at this point on the new enrollment declines?

Thanks, James. And overall I think it is too early to call the turn here for DeVry undergrad Carrington, which is really where the focus is. This is not applying to the medical schools and DeVry Brasil and so forth. And so I think we're probably going to see a similar kind of pattern bumping along the bottom. I don't think it gets worse before it gets better but I think we're still going to be unhappy here in the fall.

One thing I will remind us is that it is a big of a lag effect that we saw in July, and you will see it again in September. Those are our bigger high school that we recruit directly from high school, the traditional college-age student. And the seeds were sown for that back in three quarters ago, when we were at pretty much the depth of the distractions and disruptions from the adjustments to the new regulations. So there is a lag effect that we're feeling now on those periods.

On the positive side we are seeing conversion rates improving which I think that really reflects well. That part of the stream of activity reflects well in the value proposition that students are seeing in our institutions. They are inquiring and converting to an application.

But the start rate or the yield rate as some colleges might call it, that is down, which I think is more of a reflection of the consumer sentiment and the economy. So overall similar patterns, but we like what we are seeing in terms of improving quality of inquiries and quality of conversions.

And maybe a quick follow up on Chamberlain, a look at -- obviously you've invested a lot in growing that part of the business, and yet, through new students -- and I think that is in aggregate including all the new campuses is down year over year. How should we think about that direction? I would have thought that would be the high demand segment and we would see new student growth there?

Well, we did see new student growth in the July session of 14.7% and you are pointing to the May, a slight decline of less than 1%. Just remember that May basically is not the campuses. It is basically just the online. There is going to be -- and so we are growing at Chamberlain, in total students, in the 15% range.

I do want to bridge there. It gives me the opportunity to just mention that Chamberlain is going to be transitioning its academic calendar. We'll talk more about this in the first quarter. It's nothing that is going to impact, so we will talk about it then. But it's going to go more toward the January, May and September timeframe for starts.

So it won't impact growth. It won't impact anything other than a little bit of timing on a one-time basis.

That's great, thank you.

Gary Bisbee, Barclays.

I guess the first question, given that the struggles at Advanced Academics and at Carrington, what would lead you to take more decisive action? It seems to me you are sort of subscale in Advanced Academics. It's not going to move the numbers one way or another. So I would wonder if you would consider exiting that asset to focus on your other assets. And how bad would it get to lead you to decide to close campuses in your more vocational brand?

Okay, well thanks. That is not a decision we have taken in Advanced Academics. But what we have done, decisions we have taken, are to change the leadership there, focusing on improving course completion rates and really focusing on growth in our existing states versus penetrating new states, which really brings down the cost structure quite a bit. So we do expect a very significant improvement in the bottom line of Advanced Academics on fairly modest revenue growth in this new year.

In terms of Carrington, we're very focused on reducing our cost structure and we have made tough decisions there, on improving the marketing and improving the recruiting. At Carrington, remember, there we're focusing on certificates and associate degrees, which is actually the largest segment of postsecondary education. So it's big. It is growing, that segment, over the long term. We are in a bit of a dip right now because of the economy.

And it is actually expected to have the fastest job growth. Jobs requiring an associate degree or certificate are expected to grow faster than jobs requiring bachelor's degrees. Also, it leads to the ladder of learning as the graduates of those associate and certificate programs have the opportunity to move to the bachelor's degrees level at a Chamberlain or at a DeVry University, for example, bachelor's degree program. And we're starting to see more of that.

So, we expect to see improved results at Carrington this year in '13 and then get back to growth and profitability in the '14 to '16 period.

Okay, and then the quick follow-up, it looks like trends at DeVry University and also at Carrington -- or I guess DeVry University got worse in July from May. The comparison there looks like it is beginning to get easier. Should we read into that that things continue to get quite a bit worse there? I know you have commented you think you are near the trough, but I guess I'm looking for some evidence to support that statement.

No, actually I think the better way to look at it is, I know we've just not change the reporting to give you more granularity and give you the succession. But if you go back to the traditional way that we looked at it, spring to summer, sequentially as we said there would be, there was a sequential improvement from about [negative 20 to negative 15.6]. I don't want to be labor that because the less negative is hardly the kind of thing I'd want to be talking about, but it was an improvement from that sequential perspective.

Okay, thank you.

Paul Ginocchio, Deutsche Bank.

Thanks Daniel. I wanted go back to the question on scholarships. I just wondered what percentage of DeVry undergrad new enrollment in this -- maybe the last couple of periods got scholarships. What percent of new enrollment was driven by the scholarships and what is the level of that scholarship? And then maybe the split between scholarships between existing students and new students.

Okay. Let me give that a shot, and then jump in Pat or Tim, if I miss a piece of that. About 25% of students at DeVry University got a scholarship. Just to give you a comparison, about 35% of students in colleges and universities in the United States get scholarships, which is down from 45% about a decade ago. So while others are pulling back, we are proud to be stepping up and support our students.

In terms of the average award amounts, it's about in the $1000 range, so it gives you a flavor for that. It is helpful. It is not a giant trend here.

And how about for the new enrollment? Is it mainly for existing students or is it for new students?

I think for the fourth quarter, that addition that we talked about was all attributed to continuing students as that Pell replacement (multiple speakers) -- yes, the overage that we talked about was all for continuing students.

And so basically the improvement from spring into summer, the less declines, was that you didn't get that by offering more scholarships to new students.

No, I would not say that was a driver of it.

And I think also ad growth was up. Maybe I missed that in earlier comments. But can you talk about where you are spending or how you are spending that additional money in advertising? And what was ad spend growth in the fourth quarter? Thanks.

Ad spending was pretty flat in the quarter. Do you want to comment some more on that, Pat?

Sure. Ad spending sequentially third quarter to fourth quarter was pretty flat.

But year on year it was up.

Year on year it was up on the fourth quarter about 9%, the majority of that driving and supporting Chamberlain in their continued growth in new campus openings, along with the advertising shift at Advanced Academics that would normally occur in July/August. We accelerated that to better fit with the decision-making timeframe of prospective students for that institution as well as some increases in DeVry University.

So, again, it didn't sound like you had to spend more at DeVry undergrad to get that lesser decline in the summer term.

No, really it's not -- and I know some people have worried about -- oh my gosh, are advertising costs are going to skyrocket or something. We don't see that being the case either in total, in aggregate, or if you want to look at cost per inquiry; pretty flat within the range that we are seeing, even though we are in an election year and an Olympics year and all of that. That is partly by tighter management within the marketing function and managing our vendors, so we feel pretty comfortable there.

Thank you.

Peter Appert, Piper Jaffray.

Thanks, so Tim or Pat, I was hoping you might be able to help us understand the phasing of earnings in fiscal '13. And I ask this in the context of trying to think about in the early part of the year, profitability I assume will be pretty significantly depressed given just the enrollment pattern and cost pattern. Do I have that right?

Yes, as we move into the first quarter, as Tim said, while expenses will be down sequentially, they will be up slightly on a year-over-year basis in total. But we'll still continue to see the flow-through or the deceleration of revenue at DeVry University in Carrington, which will have more of a depression in impact on earnings during the first quarter and then a lessening effect as we move through the balance of Q2 and Q4.

So we hope to see some improvement in enrollments. Daniel mentioned DeVry University second-half seeing some improvements at Carrington. And also the $50 million of cost reductions will begin to pick up momentum as we move through the year, and so hopefully we'll see some operating leverage on tight expense control and see some improvement as the year progresses.

Should we be thinking maybe low single-digit operating margins in the first quarter?

Mid.

Okay. And my follow-up sort of related to that is, Daniel, I'm really more interested I guess in terms of your thinking about appropriate levels of profitability or achievable levels of profitability in the business mix as it currently exists over the next several years when you get to the growth phase again. Is it a mid-teens margin business?

I don't think structurally there is any reason we can't return to where we were, to the range where we were, so even high teens, 20%-plus.

I think one of the potential benefits of the work we are doing and the operational excellence and these cost reductions, if the pattern holds that you've seen in some other industrial companies that these down periods force a lot of redesign. And when you come back out, you're more productive and so the costs don't come on.

So we think when you look at kind of where we are trading from an EBITDA basis and you think about some of the work we are doing and the leverage that exists, and I'm convinced that we will be more productive on the back side, I think we can get the kind of leverage that Daniel is talking about even on growth rates that may not be as robust as we saw going back a couple of years.

Great, thank you.

Bob Craig, Stifel Nicolaus.

Good afternoon guys. Tim, I just want to clarify a statement you made earlier, indicated that total operating expenses -- and I take it you are talking the $1.78 billion in total op expenses for the year excluding charges -- would be up slightly year to year. Is that what you indicated?

That's right. We're looking for -- we tried to put them in these two categories of institutions in transition and institutions that are growing. So as we look at that, the institutions that are and transition are where we are focusing the operational excellence and the $50 million program. Most of it will be there.

So we talked about expenses in those institutions, total costs and expenses of $1.30 billion. And so you should look to see those costs down by the $50 million, give or take, next year.

Having said that, we also expect to continue to see significant growth in these other institutions that are growing. And those costs are going to grow at a rate faster than the savings that we are targeting in these transition institutions. So we have talked about total costs and expenses for '13 being up slightly on a full-year basis.

And the $25 million in cost savings that you folks achieved from prior workforce reductions in '12, does that factor in anywhere in here anywhere?

It does. Good question. If you think about what we're trying to accomplish in fiscal '13, there are a couple things going on. One is that we do have some residual savings that are rolling over from the $25 million program that we started last year. So if you think about it, think about $50 million of savings.

We know that the Perkins matter was a one-time, so now you should be thinking about $56 million. And there's probably $4 million or $5 million of additional savings that is rolling over from the programs we started last year. So think about $60 million.

But we know also next year that there are a couple things that are going to drive costs up. For example, we do have some increase in wages for the people in those transition institutions. Think about $10 million. And then we do anticipate increasing some of our full-time faculty, and that is kind of a $6 million, $7 million number.

So if you think about the $60 million that we are targeting as impacted by these [$15 million] of adjustments kind of get us back to this $50 million, give or take, target that we are shooting to save in next year in these transition institutions. I hope that is helpful.

Very helpful, thank you. One follow-up, could you give us some guidance on RPS for the year, revenue per student?

I wish I knew. I think this goes to the question earlier on about what is the impact of some of the factors, for example the scholarships. Daniel said we anticipate some up scholarships there. That gets into course loads. And I think that is a little bit beyond our visibility at this point.

If you think about it in Q1, though, we think we will see some improvement there, particularly at DeVry University where we had the Pell situation which will not repeat itself. Our scholarships hopefully are running at about the same level. And then we have some tuition increase. So I think when you net all of that out, we should see some modest improvement in revenue per student in Q1 at DeVry University.

Great. Thank you.

Yes, and before we turn it over, I just want to clarify Peter's question, the prior one talking about low single-digit margins for the full year next year, and we said mid -- mid double-digit, not (multiple speakers)

This was for the first quarter (multiple speakers)

Yes, first-quarter only.

Next question please.

Kelly Flynn, Credit Suisse.

Hopefully you won't count this as a question, but I'm just confused by what you just said, Daniel, about the Q1 margin. I thought you said mid-single digits.

Yes, for Q1. But for the year (multiple speakers)

Okay, mid-single digit for Q1.

Yes I got confused. I thought that was asked for the year as a whole, and it's going to be higher than that for the year as a whole.

Okay, got it, thanks. So I guess my first question is, can you talk about PLUS loans? As you may have heard, another company today talked about students who are dependent on their parents reporting that PLUS loan credit standards have changed and it is making it harder for parents to get PLUS loans, which is hurting demand and causing them to fund students more directly. Are you seeing that at all, and if so, is there any implication for the fall enrollment related to the high school students?

No, we're not seeing it, and no, we don't think there is implication. At least we don't have any data that says there is an implication for the fall.

Okay, got it. Last quick question, all the color you gave on Carrington operating losses was really good to help us figure out sort of what is really going on at Ross and Chamberlain. Can you tell us what Carrington's revenue was for the year?

Kelly, I think you can get pretty close. If you think about the transition institutions and subtract out the business technology management which is DeVry, the only thing that is going to be left in there is Carrington and AAI, so you should be able to get pretty close.

Okay, got it. That's all. Thanks a lot.

Corey Greendale, First Analysis.

You've put a lot of helpful information on the cost side. I just wanted to focus specifically on the international K-12 professional segment for a second. And Tim, I know you outlined a couple of things that drove it up, like the acceleration of the Advanced Academics marketing.

But at least in my model, I had not anticipated a $10 million increase in their cost structure both sequentially and year-over-year. So I was just hopeful you could give us a sense of what the go-forward cost structure is there and kind of what the long-term margins are in that segment.

Let me work on the cost structure and maybe punt a little on the second one while I think about it. A couple of things happened in one of my sequential analysis. We did see higher sequential costs at AAI. They moved some advertising costs into June from July. It works better in terms of how they run and attract students.

The second thing is there were some development costs related to starting up new operations. Those landed. And so the sum of those was $3 million. So, we wouldn't expect a reoccurrence of those as we go forward.

And then the other thing we said in there was that we saw some higher costs at Brasil for some wages that was in one of the sequential analysis. Pat, can you add some additional color there?

Corey, in addition to that we would have had the acquisition of FBV. That occurred on -- we closed the deal February 29, so we would've only had one month reflected in our trend rate during the third quarter, but of course then a full quarter of expenses in 4Q. And then we acquired Falcon on the first day of the month of the fourth quarter.

And Falcon's business, just given the nature of the USMLE, a test press is pretty lumpy as well as its costs, so there is a significant amount of course delivery in students taking the USMLE in the fiscal fourth quarter of our year. So you've got the double impact of the acquisition and of FBV and Falcon, and then Falcon being heavier than it normally is during that time of the year.

I'm glad this came up because it just feels like -- that maybe -- probably our fault we didn't communicate it well enough. But it feels like the community -- just FBV and Falcon seemed to have slipped by some people's models.

I think we described that impact as around $4 million sequentially.

Okay, I appreciate it. And just quickly, Daniel, I really appreciate the comment about -- [RFD], the communication of the expectation that new students go positive in the back half of the fiscal year at DeVry University. Can you just give us a little bit on what you are seeing in terms of real-time trends that lead you to that conclusion? And if you just kind of have total inertia in the current trends stay where they are at, do you get deposits or does something have to continue improving?

We need to continue to improve in the marketing awareness building efforts that we are doing to improve the mix of high quality inquiries. We're having some good success there. We also need to improve the -- also the cost position there.

So, we're being much more draconian with the vendors. I can think of one vendor recently we just said you are gone. And interestingly they came back with a much lower price, so that allows us to improve our stance in that way.

And then in terms of the recruiting effectiveness, it has been a lot of training, reassuring our recruiting advisors that hey, you were compliant before and you are compliant now. You don't really need to change what you are doing and what you are saying to your students.

We tried some new metrics. They didn't work. It led to an over-focus on the metric, when you just need to focus on serving the student right in front of you.

So -- and our managers sort of froze up in many cases, not quite sure how to coach or what to say in this new environment. Just -- people saw so much of this negative publicity out there and were just very protective of DeVry, wanted to do the right thing for DeVry, wanted to make sure they don't make mistake. And so all of that frozen-ness is starting to thought out and we're seeing improved conversion rates, so looking to continue that trend.

Also, as you pointed out, at some point you get to easier comparables and a lower base. And so there's no guarantees in life, but that is our plan and that is what we're looking for is to start to see modest, but to start to see positive in the second half of the year.

Thank you.

Jeff Silber, BMO Capital Markets.

Thank you so much. I'm not sure if you've talked about placement rates at all in your comments. I was wondering if you could specifically address what is going on at DeVry University, Carrington and Chamberlain, thanks.

Yes. We will be coming up with that in our annual report of employment statistics -- we don't say placement statistics, we say employment statistics -- in October. So we didn't have an update. And you're right, we did not comment on it.

And just in terms of color from what I've been seeing, I'm encouraged. It's interesting. As much as prospective students seem to be discouraged, which I've been concerned about for our country, let alone DeVry, and fewer are going to college, those who are coming in and doing their homework and graduating are actually finding there is a lot of open jobs out there.

And that is the sort of skills gap that I know many people have talked about and reported on that employers are looking for skilled employees in nursing and in engineering and in accounting for sure. So, our career services offices are very busy helping our students and graduates, and we're very confident about that. And we're flexible on the fundamental value proposition. So, thanks for that question.

And actually just to follow-up, in terms of the cost reduction that you put in place at DeVry and at Carrington, were any of those in the career services area or is that an area where we are actually in investing more?

Really not in that area, but we already invested quite a bit more over the last couple of years, so we feel pretty -- there is some investments I'm thinking of, an interesting partnership with Career Builder you will hear some more about, but fairly steady in terms of the cost structure in the career services office.

Thanks so much.

Suzi Stein, Morgan Stanley.

This is [Keith Paxton] on for Suzi. Just wondering if you guys have done any thinking about the impact from Cal Grants cut off next year; for I guess Carrington and DeVry it might be relevant.

Yes. It is a concern our students because it means that they will have relatively more loans as a percentage of their total financial package that they put together to finance their education. Carrington already took the brunt of that impact in the prior year, so, if you will, we have sort of anniversaried that impact to a large extent. It will be hitting DeVry University in a bigger way for new students. For current students there is more of a transition period.

So it is a factor. Hard to say what the impact would be, but I don't anticipate that that would be something that would show up in your model.

I would and then you we do have in our scholarship budget of the [mid-40s] we have money specifically set aside for kind of replacement of that. I think we call it DeVry Cares.

Yes, that's a good -- thank you. The Cal Grant went away so we put the Care Grants in its place.

Okay, that's great. Thank you. And just I wanted to just confirm something you said earlier. I think you said you have reduced the share of leads you are getting from aggregators by 20%, and I just wanted to make sure that is correct and then see is that systemwide. And if you could maybe give a little bit of color of where you are before, where you are now, are you going to keep reducing that -- the use of aggregators?

Yes, we're going to continue on that strategy so I think there's more to come there. And just to confirm, yes, we have reduced the share of that in our mix by a little over 20% at DeVry University for sure and also with Carrington and the Chamberlain. I just don't know if that number is the same. That is a DeVry University number.

Okay, great. Thank you.

Trace Urdan, Wells Fargo.

Thank you. I hate to take us back here, but I just wanted to be sure I understood exactly what you said with respect to the year-round tail falling out and replacing that with a scholarship. So, are we to understand, then, that the scholarship grant is then seasonal to when that third Pell Grant hole exists for the student? And is there any expectation on the part of the student, then, that that hole would continue to be filled in future years that they are enrolled at DeVry?

Thanks, Trace. And I'd say generally, yes. There is always exceptions, but it is more in the spring because it has gone back to more of the traditional academic calendar. Because we've got this trimester system which provides that wonderful value proposition, you get a four-year degree in three years, it is that third tranche that seems to hit this time of year.

So I think that trend would probably continue next year. It's relatively new for us. I don't have as much grist under my fingernails as I would like on that but (multiple speakers) we will keep you posted on that.

And this is the reason why sequentially you would expect that the scholarships would then not be as significant in the next quarter, is that right?

Yes, I think so. And sequentially why it did hit us there in the fourth quarter and surprised everybody with that.

Okay, thank you.

Peter Wahlstrom, Morningstar Investment Research.

Good afternoon, thanks for taking my question. So given your increase in exposure to the Brazilian market, could you talk just for a minute about your expectations for that economy given some of the recent trends? Whether it is short-term interest rate cuts or still an inflationary environment there, just how concerned are you about potential slowdown in Brazil?

That's an excellent question and we look at that and run that through our enterprise risk management function with our Board as well. So we have yet to see the impact of that. We worry about it, but we haven't seen it yet.

And in fact, DeVry Brasil has been able to grow faster than the higher education market in Brazil organically, and then adding the acquisition on top of that. So, I think we feel pretty comfortable that the value proposition we are offering there, that the improvements we're making to our operations by sharing best practices globally from our operations in North America, for example, are helping to perhaps offset maybe any drag that is coming from the market.

Okay, and as a quick follow-up, how are you thinking about tuition trends in Brazil?

We're thinking about it in the mid-single-digit range.

Okay, thank you very much.

We have time for just a couple more questions.

Brandon Dobell, William Blair.

I was wondering if we could get a little color on what might change you -- or what might cause you to change your outlook or perspective on scholarships? Are we thinking that this quarter is kind of already in the bag in terms of what you expect to offer, but looking out to Q2, Q3, Q4 (inaudible) milestones we should think about that might change your guy's behavior I guess?

The economy, and again, it's not -- we don't view it at this stage as a permanent downdraft in net effective pricing. We believe that we can continue to add tuition increases, which generally have been more modest than that from the public sector colleges and universities, and so at the lower end of the 2% to 5% range that we traditionally talked about.

And (inaudible) the medical schools are certainly higher than that and Brazil is a little bit different. And so -- but if the economy got worse, God forbid, then it makes sense to protect and support your students and to protect your economics as well. So that might be what would change. But we're giving you the best guess we have with our expectations.

Right. Okay, and then I just want to make sure I understand, as you look at comparing Q4 with Q3 and the trends within undergrad in terms of conversion rates and show rates, do you see improvement as you work through those kind of four intake periods in those two quarters or (multiple speakers) okay.

So we've seen the improvement in the conversion rate which is the part of the process which that we think best reflects the students' perception of the value proposition. In other words, it's a top of the funnel if you want to call it, the beginning of the process. That's an inquiry. Okay, I'm interested.

So that seems to reflect that a lot of things, like as in desire to go back to school, consumer confidence, all of that. Then you get into, okay, now I've interviewed and now I've made application. That is much more directly tied to -- I like what I see. I like what I see in this institution, the value proposition.

Then the back end, the show rate that you mentioned, again it kind of comes back to the economy sort of in the same way that -- I want to buy a house, I need to buy a house, mortgage rates are 30-year lows, but I can't quite sign on the dotted line. It's that final process kind of flips back to a little bit more of a function of the economy and consumer confidence.

So we've seen an improvement in the conversion rate. It's very encouraging but we have not seen an improvement at the show rate or start rate.

Okay, thanks a lot guys.

Operator we're going to take one last caller.

Jeff Goldstein, JPMorgan.

Thank you for squeezing me in. I will be quick. How should we think about the conversion and retention rate between your online and on ground programs?

Online and on ground programs -- I think that the conversion rate has improved a little bit better in the online programs in the recent period. That has recovered a little bit more quickly, and I don't know if we can extrapolate that to the broader world. It is a little bit easier to manage the group that is more centralized, and so I think some of the training and some of the improvements we have made might come a little quicker. Might not be unexpected to see that happen there in the online environment.

And retention rates?

In terms of retention rates, we have seen that come off of the prior peak that we saw in, let's say, one year ago. Over this past year it has slipped down a little bit at DeVry University undergrad, a little bit better at the graduate school level, very strong at Chamberlain College of Nursing. We think some of these same factors that impact new students and their propensity to sign up to go to college are also impacting current students. With the economy being so bad that has impacted some students that say, oh boy, I don't want to continue right now just because of the way I am feeling about the economy.

As a follow-up, given all of these moving parts, what is your appetite for additional acquisitions at this point?

Our appetite for additional acquisitions continues particularly in our international professional education, those areas. Those continue to be areas of focus for us as we, for example, just did the FBV acquisition in Brazil; looking at more acquisitions like that, look very attractive.

We have become pretty much the acquirer of choice in northeast Brazil. We feel like we are seeing pretty much everything that anybody was thinking about maybe making a transition, and we would love to inherit their institution, in some cases even outside of an auction which was the case with FBV. So that is very much a value additive process, so, still active.

Thank you Jeff and thanks everyone for all your questions. But I do know we have some appointments to get to, so we are going to cut it off. But we did try to go over to get in as many as we could.

Our next quarterly results call is scheduled for October 25 and then we will be announcing our first quarter 2013 results as well. So thank you all for your continued support of DeVry. Good afternoon, everybody.

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