Covista Inc. (CVSA) Q4 2011 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 DeVry Results Conference Call. My name is Jeff, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Joan Bates, Senior Director of Investor and Media Relations. You have the floor, Ms. Bates.

Thank you, Jeff. With me today from DeVry management are Daniel Hamburger, President and Chief Executive Officer; Rick Gunst, Senior Vice President and Chief Financial Officer; and Pat Unzicker, Vice President and Controller. I'll now review the Safe Harbor provisions of this results call. This call may contain forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements reflect, among other things, management's current expectations, plans and strategies and anticipated financial results, all of which are subject to known and unknown risks, uncertainties and factors that may cause the actual results to differ materially from those expressed or implied by these forward-looking statements. Please see our public filings with the Securities and Exchange Commission for more information about forward-looking statements and related risk factors. Telephone and webcast replays of today's results call are available until August 25, 2011. To access the replays, please refer to today's press release for more information. I'll now turn the call over to Daniel Hamburger.

Thanks, Joan. Thanks, everyone, for joining us today. Overall, we're pleased with our performance in fiscal 2011 academically, operationally and financially speaking as well. This performance was driven by our commitment to academic quality and strong execution of our diversification strategy. While we delivered strong results for the year, we're proud that we also continued to make long-term investments in the quality of our programs and services, laying foundation for continued growth in the future. We now have more than 119,000 students currently enrolled in our DeVry family of institutions. While we recognize this figure was slightly down for the year, we remain encouraged by the results we were able to achieve in one of the toughest economic environments in history. Now it's clear that DeVry and higher education in general have faced some headwinds in the current environment caused by a number of factors, and I'll touch on these and then address the steps we're taking to overcome these challenges. And to start, one thing I'd like to address is something I've been asked about quite often recently, which is the impact of increasing admission standards on enrollment growth. Lately, we've heard several universities cite new admission standards as a reason for enrollment decline as they've turned away students that previously would've been admitted. It hasn't been the case for DeVry because we don't have open-enrollment institutions and has had enrollment standards in place. Some people have been surprised when I told them this because there's a perception that all private sector colleges are open-enrollment, and that's not the case, and it's not the case at DeVry. While we continually evaluate and make adjustments to our admission standards, these aren't major wholesale changes to our operating model. So let me turn to the 3 factors that we do believe are having an impact on our enrollment. First off, after several years of exceptional enrollment growth, we all expected an industry-wide reversion toward more of historic levels of enrollment growth. Google keyword searches and the whole category of education have been trending down in the last few quarters, and that's across all of higher education, not just the private sector. Like just the day -- just the other day, somebody sent me an article about Eastern Illinois University's new student enrollment as being down about 9%, and they're closing a portion of their student housing. So this is affecting public sector state universities, as well as those in the private sector. As we've discussed on past results calls, we've been anticipating this reversion to the trend. And we believe, over the long term, enrollment growth will likewise revert back to the long-term trend, which is in the mid- to high-single-digit range. The second factor is the impact of the new regulations governing higher education that went into effect July 1. Implementation of these new regulations has created an adjustment period that all schools have had to begin working through to some degree or another. One of the main adjustments we've been addressing is reevaluating our marketing affiliates and how they stack up to the new regulations. In some instances, this may mean no longer working with certain vendors. This doesn't mean these vendors are necessarily doing anything wrong, but if they're unable to demonstrate adherence to our standard, we simply won't work with them until they do. And I hope they're listening. And by the way, DeVry University's President, Dave Pauldine, he's played a leadership role for the sector in setting standards for marketing and advertising vendors. So kudos to Dave. These relationships may take time to replace, but given DeVry's conservative risk-averse nature, we will be uncompromising where compliance is involved. I can assure you that. Another adjustment is compliance with the new compensation rules, which apply to all colleges whether private sector, public sector or independent. Again, I'll point out a misperception here. Some people think we were paying commissions before -- people think we were paying commission before the rule changes and that the rule changes, therefore, had an impact. But that's not the case. We weren't paying commission until that wasn't an impact on the new regulations. But we did need to adjust our performance management systems and our processes for employees whose compensation was covered by these Department of Education rules. We're being careful to ensure we remain in compliance and to properly assess the performance of these employees. And in addition, we're also training all our employees on the new regulations. We recently brought in 600 of our top managers across our institutions for 3 days of training on what the new regulations mean for our institutions. And we've rolled out a training program on responsible communications practices to all employees. These are examples of DeVry's commitment to compliance. So while we're making these regulatory adjustments and don't foresee them being a long-term issue, they have been a near-term distraction to our employees and likely have had a bit of a negative impact in our performance. So finally, the third factor, the economy. That's the one we believe has had the greatest influence in our student enrollment. Basically, and you don't need me to tell you this, but this economy is just awful. And as the sluggishness in the economy has dragged on, it's had an increasing effect on student decisions to pursue a college degree, as it sure has in every other economic decision. It's hard to overstate the increasing level of discouraging economic trends. Just recently, it was released that, in June, consumer spending fell for the first time in 2 years. We've seen [indiscernible] fell. And what really brought it home for me is when I saw an article recently that even the dollar stores, Family Dollar, Dollar General, they're experiencing sales declines. They always do well in a recession, but this one has dragged on so long and so deep that even the Dollar stores are down. When you combine this declining consumer sentiment with all the uncertainty and the high unemployment rate, it's clear that the average person in the U.S. has become much more risk-averse and cautious when it comes to spending or committing to anything. It's unrealistic for us to think that education would be immune from this. And so clearly, these 3 factors have negatively impacted our institutions. We wanted to provide as much color as we could. So that's the diagnosis. But what are we doing about it? So let me give you an idea of the steps we're taking at 2 of our institutions that have been most negatively impacted by the current environment: DeVry University undergraduate and Carrington Colleges. The DeVry University, as a focal point for our improvement efforts, includes, first, investing in the strong DeVry University brand, which we view as one of our greatest assets. We're increasing our emphasis on generating more inquiries through inorganic and paid search. And to illustrate this approach, let me cite what we’re doing to support the brand at Keller Graduate School of Management. We launched a campaign that targeted TV spots and online media initiatives that underscored the value proposition of a Keller degree: of course, the practitioner focus, flexible scheduling and having the best of both, the best of both on-site and online coursework. We believe these efforts have been a driver of Keller's continued growth and out-performance relative to the graduate market. So we'll be increasing our focus on this kind of an approach at the undergraduate level as well. And the second step we're taking is improving our student outreach and recruiting processes, enhancing our technology tool to provide faster service to prospective students. In particular, we're focusing on a more efficient approach to how we handle inquiries received via social media. And we're increasing our investment in recruitment channels, building relationships with corporations, community colleges and government organizations. And the third element of DeVry University's growth strategy that I want to highlight is adding new locations and new programs. I'll provide some more examples a little later on the call. Now let me turn to Carrington where we're also actively addressing our underperformance. And I'd like to highlight 3 elements of our turnaround plan here. First is enhancing our student's academic experience. One way we've been doing this is through something we call our Symlink experience, which we briefly mentioned, I believe, last quarter. This state-of-the-art technology offers students the latest in advanced patient simulation teaching methods. It's now fully operational and receiving stellar reviews, I might add, at our Pomona, Mesa and Albuquerque campuses. Secondly, we're optimizing the marketing and recruiting process at Carrington. During this quarter, we successfully relocated our student qualification center in Phoenix. We're currently training the new staff on processes to enhance student service. We expect consistent improvement in our responsiveness to prospective students as this team gets oriented to the new processes and begins to hit its stride. Our marketing team has also been hard at work making changes to improve the efficiencies in inquiry quality. We're seeing early indications of an increase in traffic at our Carrington website. We're seeing more overall inquiries and a shift in our inquiry mix that reduces our dependence on outside vendors. And third at Carrington, we're launching new programs and new locations. We're developing programs beyond healthcare to include business and networking technology. We recently opened a campus in Pomona, California, that provides an opportunity for incremental growth. This is a co-location with DeVry University, so the efficiency is higher than a stand-alone campus. We're also in development in our first Carrington campus in Texas, in the Dallas suburb of Mesquite, Texas. And in terms of new locations, we're also -- here we would also include the virtual location, if you will, of online delivery. Carrington currently only has a small online presence, so we believe there's a lot of opportunity here. So while we're not satisfied with enrollment results at DeVry University undergraduate and at Carrington, we believe we have solid plans in place to address the issues. It's also important to note that, even though we had these 2 institutions underperform in this difficult environment, our other institutions performed quite well and displayed strong growth. So while there's currently softness within DeVry University undergraduate and at Carrington, the growth at Chamberlain, Ross Medical, Ross Veterinary, Keller and at DeVry Brasil, all this growth offsets the weakness. And this observation gets to the heart of our diversification strategy. When one institution is down, others are often up. DeVry's diverse family of institution allows us to mitigate the impact of economic and curricular cycles. It keeps us on a path of long-term growth. So the DeVry formula is: Quality plus diversification equals growth. Our focus is to keep investing in educational quality and to continue to position ourselves across a diverse array of educational segments especially those that are in high demand like technology and in healthcare. And a great example of this, of course, is the acquisition of American University of the Caribbean that we announced last week. AUC's high-quality curriculum, faculty and facilities make this a perfect addition to DeVry's growing healthcare group. We believe there's a compelling strategic rationale for this transaction. AUC has excellent academic quality, and is 1 of only 3 Caribbean medical schools whose students are entitled for an eligible -- and of course, Ross, being another. AUC offers us the opportunity to have a firm #1 position in international medical education and to further help meet the growing demand for well-trained physicians in the U.S. Secondly, the execution risk of this acquisition is relatively low. We know medical education. DeVry and AUC have highly compatible cultures, and those cultures are focused on quality program, integrity and compliance and excellent student service. Thirdly, we expect excellent financial returns well in excess of our cost of capital. The transaction will be highly accretive: accretive academically, accretive to our society as we help address the physician shortage and accretive financially. So as we move forward, we have a thorough integration plan in place. In summary, our game plan includes the following priorities. Priority #1, 2, and 3: quality. While AUC's academic delivery is already of high quality, we'll continue to invest here, including upgrading the labs, investing in patient simulation, investing in the clinical network, curriculum and faculty development. Next priority: build growth capacity. We've already developed a master plan, working with the prior owner, and this is about a $20 million investment. And finally: work on synergies. AUC will continue to be a separate institution, and at the same time, we see many opportunities to share best practices, things like clinical training, faculty development, purchasing and technological improvement, all like those that we've developed at DeVry University and at Ross University School of Medicine over the years. Earlier this week, Bill Houston, who heads our healthcare group, and I had a chance to visit with the employees and the students of AUC. We had a chance to welcome them to the DeVry family. I got to say, the students are really impressive, the staff is dedicated to student service, the faculty is outstanding. And we have a great relationship with the government there. In fact, we were honored to have the St. Maarten prime minister and many other public officials join us for a public celebration of the transaction. And we look forward to continuing this strong partnership AUC has enjoyed there over the years. So before I turn it over to Rick and Pat, I'd like to highlight a few developments in the public policy arena. First and foremost, the period of regulatory uncertainty is behind us, and we have a set of rules in place that we can work from. We firmly believe in strong metrics that can improve institutional quality, accountability and transparency. And while we don't see the current gainful employment rule as being the best way to measure institutional quality or even the best way to measure whether graduates are gainfully employed, we think we can work with it, and of course, we will be compliant with all rules and regulations. We've begun work on analyzing our programs under these new metrics, and our initial analysis has yet to find any programs that failed to meet the new parameters. However, we do believe there's room for improvement in these regulations, and we want to be a part of the dialogue to get it right. And so it's great that we now have certainty. And while the process of the 2 last years wasn't always pleasant, there were a number of positive outcomes. For one thing, a lot of policymakers are much better educated now. There's strong, bipartisan understanding that, given our huge need for education and a shortage of resources in the public sector to meet this need, the private sector will continue to play an important role. That's huge. There's also an increasing recognition that the laws and regulations ensuring quality must protect all students, whether they attend private sector, public sector or independent colleges. Again, that's huge, something we've been advocating for years. So we see the opportunity for a new dialogue, one that says, "Clean sheet of paper. How should we regulate, how should we oversee higher education?" We think there's the opportunity for a complete policy reform, and as this dialogue unfolds on Capitol Hill, we look forward to being a part of improving the overall policy framework. Along these lines, DeVry recently had an opportunity to participate in a senate health education, labor and pensions committee roundtable to discuss policy solutions and ways to improve private sector education. Our presence at this meeting was an important step. We continue to build an ongoing and constructive dialogue even with those who've been critical of the sector. We thank Senator Harkin for hosting this discussion and for enabling DeVry to have a seat at the table as a thought leader in the sector and across all of higher education. In summary, our concept is to base the new policy framework on 2 pillars: metrics of accountability and standards of best practice. And to apply the framework to all colleges and universities. If you'd like to read our proposed 2-pillar solution to college accountability, we posted my written testimony from the roundtable on the DeVry website. So, thank you for your indulgence for that, well, unusually long overview. But with that, I'd like to turn the call over to Rick and Pat for the financial and enrollment results.

Thanks, Daniel, and good afternoon, everyone. Another fiscal year has come to close, and overall, we delivered solid results within a challenging external environment. Full year revenue was $2,182,000,000, up 14% versus prior year. Net income from fiscal 2011 was about $330 million, up 18% versus last year. And earnings per share were $4.68, up 21%. For the year, we provided over $160 million in taxes and invested about $136 million of capital in our various educational institutions. Fourth quarter results reflect a slowdown of top line growth driven by lower enrollments but continued operating leverage and focus on reinvesting in academic quality and long-term growth initiatives. Fourth quarter revenue of about $547 million was up 8% versus prior year. Total enrollment across our degree-granting educational institutions was down about 1% for the most recent period to about 119,000 students. Net income of $75 million in the quarter increased 5% versus prior year, and earnings per share of $1.08, up about 9%. Our overall effective tax rate was 30.8% for the quarter and 33.1% for the year as compared to 32.1% for the full fiscal 2010. The tax rate was lower in the fourth quarter due to the lower mix of domestic source income and the true-up of safe accruals and reserves. Cost of educational service expense increased by 12% for the year, and student service and administrative expense increased by 12.5% for the year. We continue to invest resources to improve academic quality and enhance student services consistent with our philosophy of "quality plus diversification equals growth." In the quarter, cost of educational services was up 9%, and student service and administrative expense, up 6% versus prior year. With that overview, let me now shift to our operating segment results, which are further detailed in our release and 8-K filing today. You will note we have realigned our segments to better conform to our organizational structure and strategic focus. Our 2 largest segments, Business, Technology and Management; and Medical and Healthcare remain unchanged as our 2 U.S. postsecondary educational segments. We combined the Professional Education and Other Educational Services segments into the new International, K-12 and Professional Educational segment. This segment is led by Steve Riehs and represents our educational institutions outside of U.S. postsecondary education. So, starting with Business, Technology and Management segments, revenue was up about 8% versus prior year in the quarter and about 16% year-to-date. The revenue growth continued to come down this quarter due to softening new student enrollments as undergraduate new student enrollments were down 26% versus prior year and total student enrollment, down 6%. As Daniel mentioned earlier, there are several factors we are working through to address these slower growth trends, and we'll continue to update you along the way as we progress there. Enrollment at the graduate level grew about 8% in May and 2% in the July session. Segment earnings were up 7% in the quarter and about 24% for the year. We've been focusing on reducing costs where appropriate without compromising academics, new program development and new location expansions, the benefit of which we'll see in fiscal 2012 and beyond. We'll also continue to pursue technological improvements within the organization. You've heard us talk about Project DELTA in the past and how it's been behind schedule and over budget, but we've been committed to rolling out these modules in the right way and not harming our service to students in the process. Recently, we launched our new student accounts module. This new module provides students with convenient ways to manage their personal accounts online 24/7. Where there used to be a lag of several days, students now get instant updates through their accounts online as tuition and student aid are posted. And true to our word, we delayed it, we spent more than we originally had planned, and in doing so, ensured we did the right thing. The implementation went very smoothly. In fact, we have contracted with an outside firm to bring on a team of people to staff the phones in case any problems ensuing a deluge of helpdesk calls occurred. Thankfully, they ended up like the Maytag Repairman, and we were able to release them ahead of schedule. In the coming year, we expect to launch several new modules that will continue to simplify processes and help our students provide great student service while improving efficiency. We're doing so on the heels of this success, and the team is feeling very good about Project DELTA. Within the Medical and Healthcare segment, revenue was up 4% in the quarter and about 10% for the fiscal year, driven primarily by the strong growth within Chamberlain College of Nursing. Chamberlain's new student enrollment was up about 16% in the summer term, with total enrollment up 40%. This growth was driven by the impact of enrollment at our 3 new locations in fiscal 2011: Chicago and Arlington, Virginia, which opened in July 2010; and Houston, which started teaching in March 2011. Chamberlain also began teaching in Miramar, Florida, just outside of Fort Lauderdale, last month. Chamberlain's growth was driven by continued increased enrollment at our existing locations and online due to the strong demand for nursing professionals. Within Ross University, new student enrollment showed growth, as expected, for the May class, up 38% versus prior year, due to overlap in the lower student enrollment levels last year at the medical school campus in Dominica. Total enrollment was up about 6%. As we look forward, new student enrollment growth rates are likely to bounce around a bit mainly via arithmetic of overlapping the uneven classes of last year, the arithmetic of overlapping the uneven classes of last year. You would I would know that one. But you should expect long-term enrollment trends to be in the mid-single-digit range. Meanwhile, enrollment at Carrington continued to suffer the effects of the prolonged poor economic environment and hesitancy of prospective students to pursue further education, with new student enrollment down about 34% and total enrollment down around 26%. Earnings for the Medical and Health Care segment in the quarter were down 15% versus prior year and down 4% for the year, with strong performance at Chamberlain offset by softer results at Carrington. Cost containment initiatives have helped lessen the impact of the lower enrollments. Finally, for our new segment, revenue within International, K-12 and Professional Education increased about 21% in the quarter and 13% for the year. Revenue growth for the quarter and year came from each of the institutions. DeVry Brasil is benefiting from the double-digit new and total enrollment growth in the most recent term. Advanced Academics, we've garnered, with stronger growth on the heels of new school district enrollments. And Becker saw improving trends within accounting and finance. Segment earnings were up 82% in the quarter and 64% for the year versus the softer performance in the year-ago periods. So fiscal 2011 was the year where we met our goals of delivering double-digit revenue growth and roughly 20% earnings growth despite the challenging external environment. We feel very good about that. Looking ahead to fiscal 2012, despite the recent enrollment declines at DeVry University undergrad and Carrington, we expect fiscal 2012 total revenue to be up versus 2011 organically, with the acquisitions of AUC and ATC adding to that growth. Earnings growth, however also possible, will be more challenging. First half earnings will be below prior year, given the impact of the enrollment deceleration and tougher year-over-year overlaps. We expect second half earnings to be back up versus prior year, with the full year likely to be plus or minus the 2011 level. We need to achieve improved enrollment trends at DeVry University undergraduate and Carrington to be able to show earnings growth for the year. Accretion from the AUC acquisition will likely add about a $0.05 to EPS for the year. So I'll now turn the call over to Pat to review our cash flow and balance sheet results. Pat?

Thanks, Rick. Good afternoon, everyone. Our cash flow from operations for the fiscal year was $408 million versus $391 million last year. The strong cash generation drove our cash and marketable security balance to $450 million at the end of the year compared to $323 million last year. We also remained debt-free. During May, we replaced our $175 million revolving credit agreement, which was set to expire in January 2012, with the new $400 million 5-year facility. And we have the option to expand that facility to $550 million. This facility will provide us with the flexibility to finance acquisitions at market-competitive interest rates. Our net accounts receivable balance was about $115 million versus $119 million last year. This lower accounts receivable balance was the result of our continued focus on student service and collections management as well as our student’s ability to pay back their accounts based on their positive student outcomes. Our bad debt rates continue to reflect the focus on the receivable collection process, with bad debt expense for the fiscal year actually down to 2.1% of revenue, as compared to 2.6% last year. Again, an indicator of our students paying back their accounts and the strong value proposition of our programs. Capital spending for the year was $136 million versus $131 million spent last year. We came in a bit lower than expected, as some of the project spending will carry over in the first quarter of fiscal year 2012. The spending was driven by facility improvements to better serve students across all of our schools and for new locations at DeVry University and expansion within Ross University and Chamberlain College of Nursing so that we can educate more doctors and nurses in this great time of need. For fiscal year 2012, we anticipate spending to be in the $170 million to $180 million range, which includes investment for our newly acquired AUC Medical School. Finally, during the quarter, we repurchased 518,000 shares of our common stock for about $28 million or, on average, $54.39 per share. We completed our fifth share repurchase program in the quarter and began executing on our sixth program, which is a $100 million program. Also, since the inception of our share repurchase program back in November 2006, we have repurchased approximately 5.1 million shares for just about $243 million or at an average price of about $47.50 per share. Now let me turn the call back over to Daniel for some more color on our operating results.

Thank you, Pat. I'll start here with our Business, Technology and Management segment, which, of course, consists of DeVry University and its Keller Graduate School of Management. I'd like to emphasize that, despite softening enrollments, we're continuing to make significant investments in expanding our programs and locations for DeVry University. I talked quite a bit about this segment earlier, so let me just add a little color to this point. We plan in introducing a bachelor's degree in healthcare administration in November this year. We just opened new locations in Oxnard, California and Lynnwood, Washington, in July as we start this new fiscal year. We're targeting further expansion with a new location in Cherry Hill, New Jersey, in November. We're on schedule for our second location in San Diego in the second half of fiscal 2012. We're also investing in the Keller Graduate School of Management, developing a new website dedicated solely to Keller, and that's going to feature more user-friendly navigation tools and dynamic content that we anticipate will drive increased traffic and inquiries. And this project's on track to launch the new website in the spring of 2012. Moving to the Medical and Healthcare segment. At Ross University School of Medicine, we continue to experience significant demand as the need for physicians continues to grow. Capacity constraints remain an issue, but we're making progress and plan to build out further capacity while continuing to enhance academic quality and outcomes. At Ross University School of Veterinary Medicine, demand has never been greater, and we reached an all-time high in total enrollment in the most recent period. Of course, the highlight of fiscal 2011 was earning accreditation from the American Veterinary Medical Association or the AVMA. Ross is the only AVMA-accredited private sector vet school. I stumbled down, let me say again: Ross is the only AVMA-accredited private sector vet school. During the quarter, we also opened a tri-location. So it's a 3-way co-location in Miramar, Florida. It's a unique location of housing clinical facilities for Ross University School of Medicine, campuses for DeVry University and Chamberlain College of Nursing. And at Chamberlain, we're continuing to see strong demand across all our programs and responsible [ph] working hard on new Chamberlain campuses in Indianapolis and in Atlanta. We expect them to be open in the second half of fiscal 2012. During the quarter, we also made investments into Chamberlain's academic quality. One example is the hiring of a new Vice President of Academic Affairs, Dr. Richard Cowling. Dr. Cowling brings an impressive depth of experience in nursing education and research. I'm sure he's going to be a huge asset to Chamberlain going forward. I'd like to take a moment to highlight how we're delivering on our commitment of doing well by doing good. Recently, a group of Chamberlain and Ross Medical students spent several weeks in Nairobi, Kenya, as part of an interprofessional global healthcare initiative. The group provided healthcare and education to impoverished local communities, and by the end of the trip, they treated over 2,000 patients. Programs like this provide invaluable, real-world experience to our students and much needed medical attention to the local population. So that truly is doing well by doing good. And lastly in our Medical and Healthcare segment, while we remain focused at our Carrington Colleges in implementing the initiatives that I mentioned earlier, we're also investing in academic and service quality through new hires like a new Dean of Curriculum at Carrington College California, new Dean of Career Services at Carrington College, and as of July 1, we officially congratulate Rob Paul on his promotion as Carrington's President. We've promoted Rob from DeVry University. It's great to have a deep bench. Finally, onto our new International, K-12 and Professional Education segment. We [indiscernible] saw Becker Professional Education produce positive full year results. The way I think of it is the same way that we began ramping up our healthcare group several years ago. We're expanding in professional education by finding new vertical and geographic markets that build on our core strengths. Our recent acquisition of ATC International is an example of this strategy. As we're broadening our reach to include the population of more than 400,000 candidates for the ACCA exam. That's the Association of Chartered Certified Accountants, the accreditation typically found in the commonwealth countries, former British Commonwealth. So where there's 100,000 CPA exam candidates every year, roughly of 400,000 ACCA exam candidates. We view international exam review as a growth opportunity, and we are excited for long-term possibilities. We move to Advanced Academics just briefly to say that we're beginning to see some increased traction despite constrained state budgets. Last quarter was a profitable period as we experienced growing success in Arizona, Texas and New York. We're also in the process of gearing up for expansion into Florida. And at DeVry Brasil, we are continuing to benefit from sizable organic enrollment growth largely in our high-demand engineering and healthcare programs. Growth at DeVry Brasil demonstrates the power of incorporating best practices and investing in infrastructure throughout and across our system of colleges and universities. For example, we just recently arranged a joint project with DeVry Brasil students and students from our DeVry University's Addison, Illinois campus. The project focused on students researching the differences and similarities between the 2 countries in terms of fossil fuel production and conservation. The result was very impressive as students freely collaborated to create a wonderful international learning experience. Plans are currently underway to replicate this experience in the fall, and it could lead to a dedicated exchange program in the future. So we've been very pleased with the results at DeVry Brasil, and we remain focused on driving future growth there. We're continuing to build out our Ruy Barbosa campus and our first organic expansion to a new city, Sao Luiz. That one remains on track to open next year. So overall, I believe we have the right equation in place to continue executing on our plan toward successful student outcomes and long-term growth. The simplest way I can describe that equation is, "quality plus diversification equals growth" for DeVry, and that means success for our students. I'm confident that equation will continue to see us through this challenging environment as we focus on our students first in everything we do. Our priorities in fiscal year '12 are aligned with our enterprise strategy, which as you know, we summarize as "Achieve, grow, build." Achieve our academic quality goals, including student exam result, persistence and supporting student services. Grow means grow and diversify our educational offerings, improve results at DeVry University, expand our healthcare offerings while continuing to improve student outcome and expand beyond our core U.S. postsecondary offerings in professional, K-12 and international areas. And third, build; build the infrastructure to support this growth over the long term, accelerate our online services that support all our institutions, further implement Project DELTA, enhance our reputation as the employer of choice in education and build our bench strength in talent management and succession planning and leverage DeVry's reputation to work with government in developing a long-term policy framework for higher education. Before I turn the call back to Joan, I want to recognize and thank all of our colleagues at DeVry for their hard work in fiscal year '11. Their commitment to our students is the foundation of our success.

Okay, great. Before we open the call for your questions, I'd like to point out that we've changed the date of our fall enrollment release because the original date conflicts with an internal meeting that we're having. The new date of the release is Monday, December 12. So, Jeff, if you would give our participants the instructions, we'd like to begin.

[Operator Instructions] Our first question comes from the line of James Samford with Citigroup.

Quick arithmetic question for Rick. Operating margins, looks like they were down slightly this quarter at the university level on the Business and Technology and Management. Actually, they're the lowest level in years. I was wondering, how much of that deleverage was really a function of enrollment? Or was that most impacted by the procedural changes than anything else that might have driven that margin decline?

The margin was actually up a little bit because we had revenue growth of about 8% in the quarter and earnings growth of about 7%. So it was down slightly, I guess, yes. It's down slightly. But again, for the year, we still had really good operating leverage and expect it to be that way. I mean, when you have decelerating enrollments as we did in the quarter, it's not surprising that we had a slight dip in margin.

Okay, fair enough.

Yes, I'll just jump in to say I think we saw some opportunities to make some investments in the quarter, as well, that -- there's always timing. It could happen in quarter, could happen next quarter.

Right.

But over the long term, that should be a margin interlude expanding kind of business under-accelerating, I guess, enrollment trends.

Yes.

Our next question comes from the line of Suzi Stein with Morgan Stanley.

We appreciate the guidance for fiscal '12, and you went into a lot of detail about some of the initiatives to drive enrollment. But can you give us a sense of what's embedded in that guidance as far as any cost cutting and where there could be some levers going forward in terms of cost cutting?

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

Yes, and we look at it institution by institution and location by location, for that matter. So across DeVry University, as an example, we have about 100 locations. Some are growing, some are about flat, and others might be declining. So we have opportunities in different areas to invest and other opportunities maybe to right-size the organization.

Our next question comes from the line of Peter Appert with Piper Jaffray.

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

Just in general, the investments that we're making, we see as highly accretive investments. We'll pay dividends to get -- we invest in student services, academic qualities. We invest in building our reputation and our brand. That leads to growth, and they have positive return. So you might see in the near term, sometimes because of timing, one quarter, another quarter, this year, that year, it can depress margin. And we've done that historically over the years many times. I mean, Chamberlain is a great example of that. When we first acquired Chamberlain College of Nursing, we purposely and told everybody that margins would go down because we'd be investing in the academic technology. We redid the dorms. I remember taking asbestos of the dorms, many projects like that. In the near term, there was the depression. In fact, that's been planted by investments in new campuses. Chamberlain's still in very much a growth mode, and as you roll out new -- several new campuses -- on the base of 9 or 10 we have now, you roll out 3 new campuses, and you're going to see a depression in the near term, but that's a project that's a great return on educational investment, great return on capital. So those are the -- that's the way we look at it.

I guess what I'm trying to get at is, when do you expect that investment spend to end?

Never.

Never, yes...

Hopefully, never. And when it starts to end, then that's not a very good sign.

And we're not a growth organization anymore.

Okay. And you talked a bit about launching campaign on TV and media to emphasize degree benefits. Do you see rising media costs as being prohibitive to your return on those efforts?

Thanks. Not prohibitive. We are seeing some increases, but it's not dramatic and not unexpected. So I'd put it in that sort of order of magnitude for you. Thanks, Peter (sic) [George].

Our next question comes from the line of Andrew Steinerman with JPMorgan. Andrew Steinerman - JP Morgan Chase & Co: My question is about the Keller school, the graduate business school, which seems to be faring a lot better than the undergraduate business school at DVU. Could you give us some sense on what's different about Keller? From the coursetaker account, it definitely seems like it continues to grow nicely. If you were looking at new enrollments, is that also the direction for Keller?

Yes, certainly it's a more challenging -- and thank you, Andrew, for that, it's a more challenging environment for all the reasons that I've tried to elaborate on, to give you as much color as we could. At the graduate level, we do seem to be, we're pretty proud and grateful for the recent performance, which relative to the best data that we can get on the market, seems to be an outperformance. Maybe we're taking a little share there. And one of the things that I would point to is we've known, our market researcher has shown, that Keller has very high consideration but not as high awareness as we'd like. In other words, once you know about Keller, you really like it. But not enough people know about it, so we just weren't getting to the plate enough times, I guess, but our batting average was pretty good when we did. So we instituted a marketing approach to try to build the awareness and the brand of Keller. And you have seen some of the television ads. I mean, it's not just television. Really, it's plenty of other media and so forth. We've had really good response to that. So I think that might be one example of a driver there. Andrew Steinerman - JP Morgan Chase & Co: Also, Daniel, the other part was about, do you feel like new enrollments at Keller are in the same direction as total enrollments?

It's softening a little bit, and that's why you've seen the total growth, which is what we show, total course-taker growth, you've seen that come down. So that has been a function of both new and graduations.

Our next question comes from the line of Gary Bisbee with Barclays Capital.

What -- I guess, a 2-part question. What gives you confidence in the ability to say you expect revenue to be up year-over-year organically in fiscal '12, just given the trend in enrollment here, particularly at DeVry University, which we know is the largest business by a wide margin? I guess I'm having, I'm struggling to figure out how you can say that confidently. Maybe the second part of the question is, what, from an enrollment perspective, is baked into that comment?

I'll start out here, and maybe Daniel will add on. But if you look at DeVry University, we have had now 3 consecutive periods of new student declines after having, I think, 10 consecutive periods of pretty sizable increases. But if you look at it over the long term, over the past 2, 3, 4 years, the compound growth is still very strong in like the 10%, 11%, 12% range. And so we view what's happened here near-term as not being a long-term trend but due to a lot of the matters that Daniel talked about earlier. And as we start to have now easier overlaps, easy comparisons to prior year on both new and total students coming to fall and spring next year, we expect to see that improve. And therefore, that will drive improvements in the growth rates on both the top and bottom line.

But don't you need -- doesn't the 3 straight terms of pretty significant year-over-year decline and starts have to flow-through, and doesn't that take a while? I mean, this term you just gave us was August enrollment for DeVry University, right? So last quarter, which drove last, last term, excuse me, enrollment, which drove the 7% or 8% revenue increase at DeVry University was actually still a positive number for total undergrad enrollment. It was up 6%. Now you've got it down 6%. I guess I still struggle with how you could get positive -- I'm trying to give you a hard time. I'm just trying to understand if I'm thinking about the math wrong.

Yes, well, the math is you're looking at one piece of it, and DeVry University is going to -- for the first half of the year, you're going to have some challenges, so we hope to see some improvements in trends as we go into the back half of the year. But again, DeVry, Inc., is not just DeVry University. That's part of the "quality plus diversification equals growth." When we look across our portfolio, we do have other pieces of our portfolio, of our institutions that are growing, and will help offset some of that flatness or slight decline at DeVry University so that overall, organically, we still see a positive on the revenue line. And then when you add in the acquisition, that just adds to that.

Okay. And if I could sneak in one other, is there anything you could tell us about AUC, like what the margins were? Does that have an abnormally low tax rate, like Ross did when you bought it? Any sense what the amortization might be? And I'll stop there.

Sure. Yes, the -- from the tax perspective, quite similar to what you'd be familiar with, and that -- coming back gives you some color there. Margins, I don't think we're disclosing. In terms of -- Pat, are you going to say on amortization?

I think, amortization, if you go back kind of similar from a purchase price perspective when we acquired Ross University, there'd be a large amount of amortization attributable to the existing student enrollments when we expect that to be $8 million, $8.5 million for the first couple of years and then trailing off after that, about a 5-year life on that. So that will be the biggest slunk of amortization. But even incorporating the amortization and our integration costs, we still expect to see this to be about $0.05 accretive for FY 2012.

Our next question comes from the line of Paul Ginocchio with Deutsche Bank.

Just going back to the guidance. I just, I think, last quarter, you said you're going to grow revs and EPS. I don't want to belay the point. This time, I think you said plus or minus. Is that a slight change? And if so, is that really because of the DeVry new enrollment we just saw? And maybe, Daniel, could you maybe just disaggregate maybe what's market-driven as in the tough comps and the economy versus adjustments to, any adjustments you're making to the admission criteria? I know they're minor. Or just the new regulatory environment? Any way to kind of disaggregate for, at least, DeVry itself, the impact of both of those?

Right. Rick, why don't you go ahead and address the first part, and I'll address the second part.

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

And then you asked to disaggregate the various factors, and you asked how much of it was due to new, having new admission standards. And for us, I would say 0, because we had admission standards. Again, that's something that -- I mentioned that to people, sometimes, they're surprised, and they don't realize that there's a misperception that all private sector colleges and universities are open-enrollment. And by the way, there's absolutely not wrong -- in many things, it's a very great thing to be open-enrollment, provide open access. Many public sector colleges and universities, community colleges are open-enrollment, that's great. We've just chosen to have admission standards. And so while we've always are adjusting those and looking at those, it's an adjustment. It's not a wholesale change or turning ourselves upside down or our operating model. So for us, that really was not an explanatory factor in the results. In terms of the economy, I would parse that out to say that's the biggest factor. I mean, that is -- you got to put yourselves in the shoes of the perspective students and the prospective students that our institutions are serving. It's really tough out there. I mean, I remember '81, '82. I'm from Detroit, it's 25% unemployment in Flint. I thought that was bad, that's what I grew up with. This is worse. I mean, maybe not quite that level in Flint, although it is reasonably in some areas like my hometown, Detroit. But it is really bad. And I think, the psychology -- it's really the psychology that's out there. I mean, I was just listening the other night to the pundits on cable and everything. They were talking about how people aren't just not buying a house even. That's probably a very smart, rational thing to do, to buy a house right now while prices are down and rates are all-time low. But they're not doing it just because of psychology that "I just don't want to commit. I'm not confident in what the future is going to hold." So people are just frozen or deferring, delaying decisions to go to school. And we're seeing that across, that impact across the board. So like that's by far the biggest factor as far as we can tell.

So just to be -- so when it comes to sort of the new regulatory stuff and any adjustments you're making, that's not really having an impact in everything -- 80% or 90% of what we're seeing is tough comps and/or economy?

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

Our next question comes from the line of Sara Gubins with Bank of America Merrill Lynch.

Just more on the thoughts on 2012. If the starts are down largely due to the economy, then is the guidance assuming under the -- a much lower unemployment rate in the second half of 2012? I guess I'm wondering what would drive starts back up aside from much easier comparisons.

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

Okay, great. And then can you give us an update on the CFO search?

Yes. That continues, and we are seeing some excellent, excellent candidates. And we'll keep you posted as it goes forward. There's a lot of interest in this pretty hot job. A lot of people would love to compete for it and are. And so we're really pleased with how it's going. It's a very inclusive, diverse search. And I'm pleased with how it's going, and we'll keep you posted as we get more information.

Our next question comes from the line of Jeff Silber with BMO Capital.

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

This is Rick. I would anticipate that would be the bottom, and that's why I'm saying, based upon our perspective on revenue and earnings, with the numbers that we talked about, we need to see some improvement in those trends. And thankfully, the overlap, the comparisons still get easier, and the absolute numbers would come more off this base.

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

There's a lot of moving pieces in that tax rate. I think, with the addition of AUC, that will have a slight downward impact on the rate. But offsetting that, we have some increases in other, so it's a mix of domestic and international. I would expect the rate to be up a little bit based upon our current thinking, but not dramatically.

Our next question comes from the line of Amy Junker with Robert W. Baird. Amy Junker - Robert W. Baird & Co. Incorporated: Since there are 2 pieces to the equation to enrollment, can you maybe talk a little bit about retention and persistence that you're seeing in DeVry? And I'd be curious to hear your comments on underlying retention trends if you were to strip out the graduation rates and the fact that we're seeing lower starts and wondering if it's fair to assume continued persistence pressure, given those lower starts in higher graduation rates. I'm just wondering how those underlying retention rates look.

Yes, I think there is some cause for that. We've, in the context of over the past several periods, we've driven higher rates of persistence by investing in the academic quality initiatives, the student services, the surrounding student services like our Student Central concept. So the retention rates are at a very high level and, of late, I think, starting to ease off in a similar sort of fashion here, not similar in magnitude that we talked about the arithmetic around enrollment. So there's a little bit of that going on. And I don't know if you'd like to comment on graduation?

Yes. I mean, we do, given the enrollments we had 3, 4 years ago, we are seeing graduates increase. Graduates were up about 15% for the most recent term. So that when you look at the year and puts it a calculation of retention, that's a factor as well. Amy Junker - Robert W. Baird & Co. Incorporated: And so just to clarify though, if you were to adjust for that, you're still seeing retention down a bit?

Down a bit, yes. Up a high levels.

And our next question comes from the line of Bob Wetenhall with RBC Capital.

This is Steven Bachman for Bob. So to recent developments in the economy that you've mentioned and also this past enrollment performance, does it change your thoughts regarding the expectation of a long-term growth rate of 20%? Or does that target kind of stay in place, and this is more of a short-term bump in the road?

Yes, this is Rick. I mean, if you look at that perspective of what we said before, mid-single digit enrollment growth, double-digit revenue growth and roughly 20% earnings growth, and take first a look backwards on that scorecard, we have well-outperformed that. If you look at over a 3-, 4-, 5-year perspective, that growth rate has been 30%, 40%, 50% compounded over those time periods. So I guess we're well ahead of the score, looking back. We're going through a change period here, without a doubt. And as we mentioned, next year is going to be a period where we'll going to be way under those numbers. But as things in the economy improve and as education continues to be a high priority for our country and the world, we think that those growth rates of mid-single digit enrollment growth will come back. It was the case in the '90s. It was the case in this early decade of this century and, we think, will be the case going forward. And with that, and with some pricing, you get to double-digit revenue. And we're not stating a long-term earnings growth number in total. A lot of this settles out, but we would be able to get back to stronger earnings growth longer-term.

Okay, great. And just an additional question, have you seen any change in the general competitive environment in this marketplace either from other poor profits or also from the public sector? Given the lower number student that are out there ready to make a decision, as you mentioned, have you noticed anything there?

Thanks for that. I've been asked that question for the 9 years, almost, that I've been here. And the answer's always yes. We're always seeing more competition globally. This also applies in Brazil, for example, applies throughout our different degree programs. So yes, we do see increased competition. We feel very strongly that we have a very strong value proposition in order to compete and to be competitive with those other competitors. And yes, those competitors are in the private sector. So there in the public sector are state schools and are among the independents. So that's how we view the competition.

Our next question comes from the line of Jerry Herman with Stifel, Nicolaus. Jerry Herman - Stifel, Nicolaus & Co., Inc.: The topic of the day, 2012 expectations, just again following up on some of the thoughts earlier. It would appear that, that would require a pretty abrupt improvement in starts so as to drive total, so as to drive the better performance in the second half of the year. Is that the current expectation?

No, not abrupt. I think the expectation is that we're at a trough and that we'll begin to see improvements from this point forward for DeVry University, for Carrington Colleges, continue to see the benefit of the growth we've seen in Chamberlain College of Nursing, Ross Universities. We had some slowdown in enrollments for strategic purposes in the past. We expect that to be back in the growth pace. The other, Brasil, Advanced Academics, Becker Professional Education will add to that growth in our portfolio of institutions. And so again, when you go across the mix of all that and see improvement occurring, albeit not abrupt, but see gradual improvement at DeVry University undergrad and at Carrington, and you end up with what we're looking at today. Jerry Herman - Stifel, Nicolaus & Co., Inc.: Okay, great. And Daniel, just a quick follow-up with regard to your comments on the economy. This one certainly does look different than a lot ones we've seen. And in light of that, there seems to be a lot of reluctancy for potential students to sort of pay the price. And the question is about pricing, in fact, and your strategies and theories on pricing in this economy.

We're not really seeing that being affected very much because our tuition pricing is generally viewed in the context of the competition. And since the competitive comparison is often to the public sector, the colleges and universities, which after all, are about 90, 80 or 70-plus percent of all colleges out there, plus the independent colleges and universities, another 15%. So that 90% is non-private sector competition, and their rates of tuition increase are ranging, I've seen 9%, I've seen 15%, I've seen 20% rates of tuition increase. So we have raised our tuition in the 3% range at DeVry University undergrad or maybe a little bit higher than that in some of the healthcare schools. By comparison from a competitive standpoint, that's where we find ourselves. So no, we don't really see a big difference there in the near term.

Our next question comes from the line of Corey Greendale with Analysis.

I apologize, it's a little noisy where I am. So I'm going to ask a couple of questions then go on mute, so hopefully the questions will be clear. The first is actually following up on what Jerry just asked. And it's true that the public schools keep raising their tuition, but they were facing a different set of challenges. And obviously, you can keep raising it at whatever rate the competition does, but in the meantime, it seems like, in this economy, it's hard to imagine that people having gotten at least somewhat more price-sensitive. And so the question is, what would you need to see before you would consider using more scholarships or more aggressive using scholarships or selective tuition discounting? Second question, going back to the guidance question, it's more philosophical. Historically, DeVry didn't give any guidance to speak of, and given that there's so little visibility from our perspective, we appreciate that you're giving more guidance now. But the formula of giving more guidance at a time when it seems like there's less visibility, it just makes it hard from our perspective to feel like that we can have a lot of confidence in that. I think that's a lot of why people keep coming back to this. So if there's anything you could say about what it is that you're seeing, whether it's a funds rate to your marketing or anything else that gives you confidence that this summer term is the bottom will be appreciated.

Okay. And Corey, we'll also correct, your firm's name is First Analysis, not Analysis. So we'll get that in there, too, for you while you're on mute. So the tuition and in terms of scholarships, well, we do offer scholarships. In fact, last year, it was about 10% of our earnings we gave back in the subsequent year in terms of scholarships, so several tens of millions in scholarships. And we are taking a look at the level, but also, but not a, I wouldn't say a dramatic increase in the local scholarship but a difference in the way we allocate that. Can we be more strategic and more impactful and help our students finance their education? And I'm glad you asked that, that way because it's really more of helping students with affordability than it is about lowering the tuition level itself. So that's, I think, the right way, from our experience, to look at tuition. And so the guidance and giving more comfort here on what we're seeing -- Rick, you may want to add some things here. But I think that part of it is, we did see ourselves in this last period lose a step at DeVry University undergraduate and at Carrington, the 2 places where we've talked quite a bit. And the fact that we talk about them and some of the internal metrics that you act -- asks about, we did see ourselves lose a step in the some of the conversion ratios and some of the inquiry, the levels inquiries. And so we do think that internal execution and being more effective in optimizing our marketing and recruiting processes are a part of the formula for improving that performance, as I cited at the beginning of the call. So that's something that we bring effort on. And we have a lot of confidence in our operating managers and our ability to execute and improve our operations. So that may give you a little more confidence and comfort. That's going to be for you to judge, and you have to judge us by our results, hold us accountable.

Yes. And the perspective we provided for the year, we don't give guidance per quarter or anything, but we do -- coming into a new year, we want to at least give some thoughts as to what, how we see it. It's based upon our plans and strategies and executional improvements that Daniel mentioned. And it's all incumbent upon that and also continue to deal with this uncertain and not totally stable economic environment. So it is, I guess, from a confidence level, probably not as confident, quite honestly, as we were 2 or 3 years ago, but it is based upon what we see as our plans and strategies, the risks that we see out there and how we can manage through that. And there is some -- it's only as good as a forecast can be, and there's probably wiggle room up and down from there. But that's why it could be equal to this year's level or a bit below. But we're going to do our best to see some growth. Earnings, yes.

In terms of earnings, I think, Rick was mentioning. But we do think we can grow revenues.

Yes.

But there's no guarantees in life, either. Okay.

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

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

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

Our next question comes from the line of Brandon Dobell with William Blair. Brandon Dobell - William Blair & Company L.L.C.: Maybe Rick or Daniel, any sense, as we look at fiscal 2011, of the magnitude of the dollar spend on some of the initiatives that kind of ramped up during fiscal '10, such as Project DELTA, the student services initiatives, those kinds of things? I guess I'm just trying to get a sense of what the year-over-year comparison on that spend may look like for the P&L, excluding obviously what capital spend you made. But I'm just trying to get a better sense of what the incremental spend or lower spending may look like in fiscal '12.

Let me just clarify that question a little bit, are you talking about from '10 to '11 or from '11 to '12? Brandon Dobell - William Blair & Company L.L.C.: Well, obviously there's a kind of ramp-up in spend from '10 to '11, so I'm trying to get a sense of as you look at, comparing 2012 versus 2011, some of those bigger initiatives that were kind of decent drags on the P&L for you in 2011, how much of an abatement in spending could we expect in 2012?

Okay, so things like DELTA, things like new campuses in terms of that?

Yes, I mean, DELTA is largely capital, and we've seen the impact of that really now go into the next few years, an increased depreciation expense. But you set that aside, I'm just looking at the operating margins for BTM year-over-year. We ended fiscal 2011 at 24.6% compared to fiscal 2010 at 23%. So despite the new campus openings, locational things, et cetera, we more than offset that with operating leverage and revenue growth. If you move down to Medical and Health Care, you see some compression in the operating margin, which was largely driven by Carrington, and despite some new campus openings in Chamberlain, we're able to improve our operating margins there. So based on from '10 to '11, we were able to more than offset that increased investment. And going in to '11 to '12, we wouldn't necessarily expect that same improvement due to a lesser effect of operating leverage because of declining enrollments. Brandon Dobell - William Blair & Company L.L.C.: Okay, fair enough. And then just a quick one. You mentioned how many locations you expect to add in the BTM segment. How do we think about capacity expansion within Chamberlain and Carrington or if any in Carrington this year?

Yes. I think, Carrington, we've got the new Pomona campus that opened at the latter part of this past year, '11. So we expect, we certainly would hope to see that to be the incremental growth opportunity as you move into this new year, fiscal '12. And then we have Mesquite, Texas, on the horizon. Chamberlain has the new -- late in the year was Houston, and now we've just started up in Miramar, and I mentioned a couple of others, Indianapolis, Atlanta later in the year. And then I think I mentioned the DeVry University ones earlier. So you've got, what is that, 7 or 8 or 9 across -- plus DeVry Brasil at Sao Luiz, working on that, and also a new campus building Faculdade Barbosa. So 7, 8, 9, something like that this year for new campuses across the family. Brandon Dobell - William Blair & Company L.L.C.: Okay. And then final question for me within the online business probably as both to color as well the undergrad online. Any sense of new program rollouts or introductions? Or is it just a continuation of the programs you already have?

New program -- what was that?

For online.

Oh, for online? Yes, pretty much all of the programs that we roll out, we roll out online. There's exceptions, but in general, it really does add to the online, which is a great opportunity. And it also gives us great information in regionally where is most of the interest coming from, and that helps us, sort of the best market -- realtime market research you could have to help identify which campus rollouts to take those programs to, as well. So online will be getting more programs as well.

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

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

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