Covista Inc. (CVSA) Q4 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2012 DeVry Earnings Conference Call. My name is Charis, and I will be your coordinator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. And 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, Charis. With me today from DeVry management are Daniel Hamburger, President and Chief Executive Officer; Tim Wiggins, our Chief Financial Officer; and Pat Unzicker, our Vice President of Finance. I'll 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'll highlight certain non-GAAP financial measures. Further information about these measures, including reconciliation to U.S. 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 replays, please refer to today's release for information. So before Daniel gets his overview, I'd like to quickly walk you through the changes we've 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're now reporting student enrollment for each of the 6 sessions at DeVry University and Chamberlain. We'll be reporting enrollment at the end of each quarter for Carrington versus the 4-month period. Also in today's release, we've included the new schedule for each reporting period, starting with the fiscal first quarter when we'll report September enrollment results. Since there are 6 sessions, you'll see that we'll report 2 sessions in 2 of the quarters and 1 session in the other 2 quarters. We've also included historical enrollment figures dating back to fiscal year 2009 so that you can familiarize yourself with the 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'll find beneficial in your ongoing coverage of DeVry. So with that, I'll turn the call over to Dan.

Well, thanks, Joan. Thank you, all, very much for joining us today. I'll begin with an overview of the quarter, followed by Tim and Pat, who will walk through the financial results before I wrap it up. Now 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 want 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's the long-term outlook for private sector colleges and universities or PSCUs? And what's the long-term outlook for DeVry specifically? So let me breakdown what happened at the 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 in the 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 2 semesters per year rather than 3. 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 at Pell. And 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 factor that negatively impacted our results was cost increases. I'm going to ask to Tim to get into much more detail, but 3 categories impacting this -- our cost during this quarter were additions to our cost structure from acquisitions in new campuses, higher-than-expected employee-related costs and then onetime items, such as the now-resolved issue with Perkins loan administration and higher cost in Advanced Academics. So the results for the quarter and the year are clearly unacceptable. And while we've made significant progress in identifying and implementing cost savings, the fourth quarter didn't reflect that, partly due to some of these onetime factors. We do expect to make substantial progress in the quarters to come, as we work our performance improvement plan. It's a 5-point plan but I want to focus on the top 3, 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 want to reiterate our commitment of the goal of at least $50 million in cost reductions for 2013. We'll accomplish this while maintaining and enhancing academic quality for our students. The majority of the reductions will continue to come from DeVry University and Carrington, part of which is the recently announced elimination of 570 positions. And while the primary objective is about cost reduction, it's 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 [indiscernible]. It's important to note that our management team has a strong since of urgency and is continuing to look for other ways to improve efficiency, effectiveness and service, even beyond the $50 million of value creation. Our 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's the most important thing that we do and in order to grow and so improve our marketing and recruiting results, strong student outcomes must be and are at the center. We're continuing to execute in our strategy of shifting mix to higher-quality inquiry sources, and these efforts have resulted in positive improvements in conversion. We've reduced the share of third-party aggregators in our mix by over 20%, and we continue to increase organic marketing sources 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 U.S. Olympic Committee and the resulting campaign where we've 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'll unveil new messaging, which reinforces our key differentiator of being the career University. 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've adapted to new regulations 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 3 most effective 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 that we're about 20% to 30% up from the bottom. And 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 2 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 wanted 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 compares candidates for medical exams. Per our stated strategy, Falcon further diversifies Becker into the health care market. In addition to pursuing strategic acquisitions, we're also selectively investing in new programs in campuses. At Chamberlain, we recently launched a new masters of science in nursing health care policy. Chamberlain also just completed a site visit from our accreditor, the Higher Learning Commission. This was for our new doctor of nursing practice degree program. Provided approval's 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. And Chamberlain is a great example of why we are as it grew revenue 26% in fiscal 2012. And looking to fiscal 2013, the majority of Chamberlain's growth will come from new campuses we opened in the last 2 years. We've also made significant progress growing clinical capacity for our 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. And so you can see how we're focusing on the top 3 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'd just like to comment on the status of Project DELTA. As you know, Project DELTA was a 3-year $100 million investment in upgrading our information systems. During the quarter, we launched the final major module, which went very smoothly. This is a terrific accomplishment, as we all know the risks of large systems projects. We're so pleased with the results and I'd 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 this effort, including increased productivity, improved student service, also better data analytics and reporting capabilities. In fact, the more frequent enrollment reporting that Joan just announced is facilitated by the new system. So that's an overview. And 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 the year in perspective. There are several dynamics at play, and several different ways you can look at it. But the 3 announcements I thought you might find most useful are mix of institutions, costs for the quarter sequentially and costs for the quarter year-over-year. Let me start with mix. DeVry's 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 cost and expenses at our institutions and transitions -- 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're addressing costs and value creation. We expect these projects to drive the $50 million savings we've committed to for fiscal '13. Operating cost and expenses at our growing institutions 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 cost from acquisitions. The 4 acquisitions driving these costs are AUC, FBV, ATC and Falcon. About 1/3 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 to 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 cost on a sequential basis. Total cost 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 cost in the quarter. Second, was the onetime impact of $6 million related to the administration of our Perkins loan program at DeVry University, which I'll 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 start-up 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've 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 onetime 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 onetime 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 and 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 the dollar rate last year. The results of the quarter were impacted by 2 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 continued 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've reduced just under 10% of the July 1, 2011 workforce. Excluding these 2 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 of fiscal 2011. The tax rate on continuing operation remains lower compared to last year due to the mix of income sources coming 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 that our 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 at Advanced Academics is not comparable to our effective tax rate and 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% per versus the prior year in the quarter, and about 5% for the year. More than 2/3 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 1/3 of this cost increase in the quarter was driven by acquisitions. The remainder of the increase was for inquiry generation or 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've opened in the past 2 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 at Chamberlain and Ross, along with the addition of AUC earnings, were more than offset by the operating loss at Carrington. Finally, 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 to significantly narrow these losses in fiscal '13 on modest revenue growth and tight expense control. Looking at the first quarter of fiscal 2013, total operating cost 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 initiatives. Total DeVry-wide operating cost and expenses for the first quarter are expected to be down slightly on a sequential basis but up slightly year-over-year. For the full year 2013, we expect DeVry-wide total cost 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 cost reductions at DeVry University, Carrington and AAI while maintaining the academic quality and successful student outcomes we're known for. I'll now turn the call over to Pat to talk more about our balance sheet and financial position. Pat?

All right. 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 for the acquisitions of AUC, FBV and Falcon and for capital expenditures to expand and 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 the solid focus on the receivable collection process with year-to-date bad debt expense of 2.0% versus 2.1% last year. So as you can see, DeVry became the strong focus and 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 universities. Capital spending was lower than planed at $129 million, a decline compared to $136 million at 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 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 Tinley 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're at the trough of the cycle that we've 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 space, we expect to benefit from operating leverage in the investments that we made in quality and growth. This outlook assumes return to modest new student enrollment growth at DeVry University in the second half of fiscal 2013, return to growth in total enrollment and revenue growth at Carrington in fiscal 2013 and a gradual recovery of enrollment 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 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 it was back in 2006. Back then, we just had over $800 million in revenue. Today, we're over $2 billion. We have 53,000 students then. Today, it's over 100,000. Chamberlain only had 1 campus and worked in Brazil. Today our institutions are much more diversified and able to serve the needs of a broader student population. So while it's not acceptable to have our earnings down year-over-year, it's 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're proud of our students' academic results across our institutions. And in fiscal 2012, our institutions graduated nearly 30,000 students into high-demand fields including, for example, we helped nearly 4,000 students realize their dream of becoming a nurse, and more than 1,300 medical students pursued their goal of becoming a physician. And in addition, we helped 50,000 accounting graduates work towards their goal of becoming a CPA. So while our financial outcomes this year were not what we wanted, many of our student outcomes were. They are what will power DeVry to thrive over the long term. And 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 cite 3: First, there's a huge need for skilled employees in the United States and globally. Second, there's 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's 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, which is Senator Harkin in his most recent report said, and I quote, "DeVry has demonstrated a commitment to investing in students and student services and in engaging in a dialogue to improve, steps which distinguish DeVry from others in the sector." DeVry's diversified family of institutions is an advantage with our Health Care Professional Education and international operations helping to mitigate the current domestic underperformance. And DeVry is positioned to transition to recovery and growth, growth in enrollments, revenues and margin expansion as well. DeVry is serving the fastest growing segments in education. We're the only one with medical schools, the only 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 9 of the top 50 US News & 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 our 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 2012, and thanks in advance for all the hard work that is yet to come in helping us meet our objectives and our goals in 2013. So now, we'd 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 1 and maybe 1 follow-up. That would be greatly appreciated. Charis, would you like to give our participants the instructions for the Q&A?

[Operator Instructions] Your first question comes from the line of Sara Gubins, Bank of America Merrill Lynch.

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

Well, we do intend to stand behind our students. I mean I think over the mid- to long-term, we continue 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. And it's interesting that a recent Wall Street Journal article talked about how many schools are decreasing 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 just -- 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 that's -- so we're not going to roll that out in a broad-based way until we've assessed those pilots, that's a very important part of how we operate is to do a test and control and then roll it out in a bigger way. So that's our outlook. It's a relatively modest increase from '12 to '13, but I wanted to add that because I know the sizable increase in the quarter, perhaps we could have done a better job of communicating that, took people by surprise and we acknowledge that. So we don't view that as setting the trend or setting the pace for next year.

And then hopefully this is quick, but would it be possible with the new reporting structure to just help us map the 6 periods that you're going to be reporting into the quarters?

This is Pat. So, Sara, the first 2 sessions of the year, July and September, you'll have obviously both month of July, July and August, that session and then half of September in the first quarter. Then you'd pick up the second half, and the second quarter of September and then the November session. And then for our third quarter, you would have all of the January session and 1 month of March. And then, of course, at the fourth quarter, you would have the second half of March and both months in the May session. So we feel that this will give us the near [ph] perspective as an analyst, our institutional investors a much better alignment of our enrollments with how we report the quarterly revenue.

Your next question comes from the line of James Samford with Citigroup.

I wonder if 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 the -- for maybe next quarter. Will the trends get worse before they get better? Are we at the trough at this point on to the new enrollment declines?

Overall, I think it's just -- it's 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'll remind us is that there's a bit of a lag effect that we saw in July and you'll see it again September. Those are our bigger high school where we recruit directly from high schools the traditional college-age student and the seeds were sown for that back 3 quarters ago, when we were at pretty much the depth of the distractions and disruptions from the adjustments to the new regulations. So there's 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 activities reflects well in the value proposition that students are seeing in our institutions, so that they're inquiring and then they're converting to an application. But then the start rate, the yield rate that some colleges might call it, that's 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're seeing in terms of improving quality -- of increase in quality conversions.

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

Yes, well, we did see new student growth in the July session, of 14.7%, and you're pointing to the May, a slight decline of less than 1%. Just remember that May basically is not the campuses, it's 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's going to impact, but we'll -- so we'll talk about it then. But it's going to go more towards the January, May and September timeframe for starts. So it won't impact growth, it won't impact anything other than a little of bit of timing on a onetime basis.

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

I guess the first question, just given that the struggles at Advanced Academics and at Carrington, when -- what would lead you to take more decisive action? It seems to me you're sort of subscale in Advanced Academics, it's not going to move the numbers one way or another. So I would wonder if you'd 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?

That's not a decision that we've taken in Advanced Academics. What we have done, the 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 and fairly modest revenue growth in this new year. In terms of Carrington, we're very focused on reducing our cost structure and we have taken tough decisions there, on improving the marketing and improving the recruiting. At Carrington, remember that there, we're focusing on certificates of associate degrees, which is actually the largest segment of post-secondary education. So it's big. It's growing, that segment, over the long term. We're in a bit of a dip right now because of the economy, and it's 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 degree 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.

And then the quick follow-up, it looks like trends at DeVry University and also at Carrington got -- or I guess DeVry University got worse in July from May. The comparison there looks like it's beginning to get easier. So should we read into that, that things continue to get quite a bit worse there? I know you commented you think you're 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 now changed 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. So I don't want to belabor that because less negative is hardly the kind of thing I want to be talking about, but it was an improvement from that sequential perspective.

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

Daniel, I let me go back to the question on scholarships. I just wondered what percentage of DeVry undergrad new enrollment in this maybe the last couple periods got new -- got scholarships? What percent of the enrollment was driven by the scholarships and what is the level of that scholarship? 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're proud to be stepping up and support our students. Due to the average award amounts, about in the $1,000 range, so it gives you a flavor for that. It's helpful, it's not sort of the giant trend here.

And how about for the new enrollment? Are you -- 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.

Overage.

Yes, the overage. Yes, I'm sorry, thank you. The overage that we talked about was all for continuing students.

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

No, I wouldn't say that was a driver of it.

And I think also ad growth was up. Maybe I missed that in your earlier comments, but can you talk about where you're spending it or how you're spending that additional money in advertising? And what was ad spend growth in the fourth quarter?

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, Pat.

Year-on-year it was up on the fourth quarter, about 9%. The majority of that driving and supporting Chamberlain in their continued growth and 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. No, really it's not -- and I know some people have worried about, oh my gosh, our advertising cost's 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 it sort of cost per inquiry. Pretty flat within the range that we're seeing. Even though we're in an election year and in an Olympics year and all of that. So we're -- and that's partly by tighter management within the marketing function and managing our vendors, so we feel pretty comfortable there.

Your next question comes from the line of Peter Appert, Piper Jaffray.

So, Tim or Pat, I was hoping you might be able to help us understand the phasing of earnings in fiscal '13. 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 the -- just the enrollment pattern and cost pattern. Do I have that right?

Yes. We -- 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 depressioning impact on earnings during the first quarter and then a lessening impact as we move through the balance of Q2 through 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?

Yes.

Okay. And then 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 stage again. Is it a mid-teens margin business?

I don't think that, structurally, there's any reason we can't return to where we were, to the range where we were. So even high teens, 20-plus percent.

I think one of the potential benefits of the work that we're doing and the operational excellence and these cost reductions is, 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 cost don't come on. So we think, when you look kind of where we are trading from a EBITDA basis and you think about some of the work we're doing and the leverage that exists, and I'm convinced that we'll be more productive on the backside, I think we can get the kind of leverage that Daniel's talking about, even on growth rates, but maybe not as robust as we saw going back a couple of years.

And your next question comes from the line of Bob Craig with Stifel, Nicolaus. Robert L. Craig - Stifel, Nicolaus & Co., Inc., Research Division: Tim, I just want to clarify, a statement you made earlier indicated that the total operating expenses, and I take it you're 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 -- if you think -- we try to put them in these 2 categories of institutions in transition and institutions that are growing and so, as we look at that, the institutions that are in transition are where we're focusing the operational excellence in 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 see -- continue to see a 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're targeting in these transition institutions. So we've talked about total cost and expenses for '13 being up slightly on a full year basis. Robert L. Craig - Stifel, Nicolaus & Co., Inc., Research Division: And the $25 million in cost savings that you folks achieved in -- from prior workforce reductions in '12, does that factor in here anywhere?

It does. Good question. If you think about what we're trying to accomplish in fiscal '13, there are a couple of 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 onetime, so now you should be thinking about $56 million. And there's probably $4 million or $5 million of additional savings that's rolling over from the programs we started last year. So think about $60 50 million. But we know also next year that there are a couple of 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's kind of a $6 million, $7 million number. So if you think about the $60 million that we're targeting kind of as impacted by these $15 million of adjustments, kind of get us back to this $50 million give or take target that we're shooting to save in next year, in these transition institutions. I hope that's helpful. Jason P. Anderson - Stifel, Nicolaus & Co., Inc., Research Division: Very helpful. Wanted to -- just one follow-up. Could give us some guidance on RPS for the year, revenue per student?

Well, I wish I knew. I think this goes to the question earlier about what's the impact of some of the factors, for example, of the scholarship. Daniel said, we anticipate some up scholarships there. That gets into course loads and, I think, that's a little bit beyond our visibility at this point. If you think about it in Q1 though, we think we'll see some improvement there, particularly 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.

And before we turn it over, I just want to clarify Peter's question, the prior one, talking about low-single-digit margin for the full year next year and then we said mid, I mean mid double-digit not...

Yes, those were for the first quarter.

First quarter, yes. Okay. Yes. First quarter only.

Your next question comes from the line of Kelly Flynn, Credit Suisse. Kelly A. Flynn - Crédit Suisse AG, Research Division: 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 digit.

Yes, for Q1. Kelly A. Flynn - Crédit Suisse AG, Research Division: Okay, mid-single digit for Q1.

Yes, I got confused, I thought that was asked for the year as a whole, and that's going would be higher than that for the year as a whole. Kelly A. Flynn - Crédit Suisse AG, Research Division: Okay, got it. So I guess, my first question is the -- can you talk about PLUS loans? As you may heard, another company today talked about students who are dependent on their parents, reporting that the PLUS loan credit standards had changed and it's making it harder for a parent 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 kind of for the fall enrollment related to the high school students?

No, we're not seeing it, and no we don't think there's implication. At least we don't have any data that says there's an implication for the fall. Kelly A. Flynn - Crédit Suisse AG, Research Division: Okay, got it. And then last quick question. All that color you gave on Carrington operating losses is really good to help us figure out sort of what's 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. Yes, if you think about the transition institutions and subtract out the Business, Technology Management, which is DeVry, the only things that's going to be left in there would be Carrington and AAI, so you should be able to get pretty close.

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

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 out, like the acceleration of the Advanced Academics marketing, but at least in my model, I hadn't anticipated $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. But a couple of things happened in one of my sequential analysis. We did see higher sequential cost 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 that there was some development costs related to starting up new operations. Those landed and so the sum of those was $3 million. So those, 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 cost at Brazil for some wages that was in one of the sequential analysis. So, Pat, can you add some additional color there?

Sure, Corey, and then, in addition to that, we would have had the acquisition of FBV. That occurred on -- we closed that deal February 29, so we would have only have one month reflected in our trend rate during the third quarter, but, of course, then a full quarter's of expenses in 4Q. And then we acquired Falcon on the first day of the month of the fourth quarter. And Falcon's business, and just given nature of the USMLE, a test [indiscernible], pretty lumpy, as well as its costs. So there's 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 acquisitions 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 I've -- that maybe we didn't -- probably our fault, we didn't communicate it well enough, but it feels like the community, just FBV and Falcon, seem to have slipped by some people's models.

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

And just quickly, Daniel. I really appreciate the comment about -- or the communication, 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're seeing in terms of real time trends that leads you to that conclusion? And what -- does anything -- if you just kind of have total inertia and the current trends stay where they're at, do you get to positive or does something have to continue improving?

Well, we -- thank you. We need to continue to improve in the marketing awareness building efforts that we're doing to improve the mix of high quality inquiries. And we're having some good success there. We also need to improve the -- also the cost position there. And so we're being much more draconian with the vendors. There was -- I can think of one vendor recently, who just said, you're gone. And interestingly they came back with a much lower price, so that allowed us to improve our stance in that way. And then in terms of the recruiting effectiveness, it's been a lot of training, reassuring our recruiting advisors that, hey, you were compliant before and you're compliant now, you really don't need to change what you're doing, what you're saying to our 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. And so as -- and our managers, sort of froze up in many cases. Not quite sure how to culture what to say in this new environment. Just people saw so much of this negative publicity out there and we're just very protective of DeVry, want to do the right thing for DeVry, want to make sure we don't make a mistake. And so all of that frozenness is starting to thaw 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 on a lower base and so there's no guarantees in life but that's our plan and that's what we're looking for is to start to see modest, but to start to see positive in the second half of the year.

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

I'm not sure if you talked about placement rates at all in your comments. I was wondering if you could specifically address what's going on at DeVry University, Carrington and Chamberlain?

Yes, we'll be coming out with that in our annual report of that -- 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 didn't 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'm concerned about for our country, let alone DeVry, and a few are going to college, those who are coming in and doing their homework and graduating, are actually finding there's a lot of open jobs out there. And that's the sort of skills gap that I know many people have talked about and reported on, that the 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 are -- that -- we're very confident about that and we're flexible of the fundamental of the value proposition. So thanks for that question.

And actually just a follow-up. In terms of the cost reductions 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're actually investing more?

Really not in that area. But we've already invested quite a bit more over the last couple of years. So we feel pretty -- there are some investments that 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.

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

This is Keith Paxton on for Suzy. Just wondering if you guys have done any thinking about the impact from Cal Grants being cut off next year for, I guess, Carrington and DeVry that might be relevant?

Yes, it's a concern for our students because it means that they'll 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've sort of anniversary-ed that impact to a large extent. It will be hitting DeVry University in a bigger way for new students. For current students, there's more of a transition period. So it's a factor. Hard to say what the impact would be. But I don't anticipate that that'll be something that would show up in your model.

I would add, Daniel, that we do have, in our scholarship budget at 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 -- yes, the Cal Grant went away, so we put the Care grant in its place.

Okay, that's great. And then I just wanted to confirm something you said earlier. I think you said you've reduced the share of leads you're getting from aggregators by 20%, and I just wanted to make sure that's correct. And then is that system-wide? And if you could maybe like give that a little bit of color of where you were 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 reduced the share of that in our mix by a little over 20% at DeVry University, for sure. And also at Carrington and at Chamberlain, I just don't know if that number's the same, that's a DeVry University number.

And your next question comes from the line of Trace Urdan with Wells Fargo Securities.

I hate to take us back here, but I just wanted to be sure that I understood exactly what you said with respect to the year-round Pell 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 students then that, that hole would continue to be filled in future years that they're enrolled at DeVry?

Yes. Well, thanks, Trace and, I think, generally, yes. I mean there's always exceptions, but that's right. It's more in spring because it's gone back to more of the traditional academic calendar. You get your -- because we've got this trimester system which provides that wonderful value proposition, you get a 4 year degree in 3 years, it's that third tranche that seems to hit this time of year. So that yes, I think that trend would probably continue next year. It's relatively new for us, so I don't have as much grist [ph] under my fingernails as I'd like on that, but yes, we'll keep you posted on that.

And this is the reason why sequentially you would expect that that -- that those 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.

And your next question comes from the line of Peter Wahlstrom with Morningstar Incorporated.

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's short-term interest rates 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 in -- run them 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 impact on top of that. So I think we feel pretty comfortable that the value proposition that we're offering there, that the improvements that 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's 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.

And your next question comes from the line of Brandon Dobell, William Blair. Brandon Burke Dobell - William Blair & Company L.L.C., Research Division: Guys, wondering if we could -- I guess if you can put a little color on what might change you or what might cause you to change your outlook or perspective on scholarships. So 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, what are some of the milestones that we should think about that may change your guys best [ph] behavior I guess?

I think the economy. Again, we think -- we know the -- it's not a -- we don't view it, at this stage, as a sort of a permanent downdraft in net effective pricing. We can -- we believe that we can continue to have tuition increases, which generally have been more modest than that from the public sector colleges and universities. And so more at the lower end of the 2% to 5% range that we've traditionally talked about. And so -- and I'm not talking -- the medical schools are certainly higher than that, and Brazil is a little bit different but -- and so -- but if the economy got worse, kind of 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 punt that we have on what our expectation is. Brandon Burke Dobell - William Blair & Company L.L.C., Research Division: Right, okay. And then I just want to make sure I understand. As you looked at sort of comparing Q4 with Q3 and the trends within DeVry undergrad in terms of conversion rates and show rates, did you see improvement as you work through those 4 intake periods in those 2 quarters or...

Okay, so what we've seen -- we've seen improvement in the conversion rate, which is the part of the process that we think best reflects the students' perception of the value proposition. In other words, it's a top of the funnel, I guess, if you want to call it, the beginning of the process, that's an inquiry. Okay, I'm interested. So that seems to reflect a lot of things, my desire to go back to school, my consumer confidence, all of that. Then you get into, okay, now I've interviewed and now I've made application. That's really very more -- much more directly tied to, I like what I see. I like what I see at this institution, the value proposition. And then the back end, the show rate that you mentioned, again, 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, the mortgage rates are at 30 years lows but I can't quite sign on the dotted line, that says that final process kind of skips 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, very encouraging, but we have not seen that improvement at the show rates or stuff like that.

And our last question comes from the line of Jeff Volshteyn with JPMorgan. Jeffrey Y. Volshteyn - JP Morgan Chase & Co, Research Division: How should we think about the conversion and retention rate between your online and on ground programs?

Between online and on ground programs, I think that the conversion rate has improved a little bit better at the -- in the online programs in the recent period. That should cover it a little bit more quickly. And I don't know if we can extrapolate that to the broader world. It's a little bit easier to manage a group that's more centralized and so I think that some of the training and some of the improvements that we've made, might come a little bit quicker, it might not be unexpected to see that happen there in the online environment. Jeffrey Y. Volshteyn - JP Morgan Chase & Co, Research Division: And retention rates?

In terms of retention rates, we've seen that come off of the prior peak that we saw in, let's say, a year ago. And so 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 the same factors that impact new students and their -- potentially just sign up to go to college are also impacting current students. With the economy being so bad, that has impacted some students who just say, "oh boy, I don't want to continue right now just because of the way I'm feeling about the economy." Jeffrey Y. Volshteyn - JP Morgan Chase & Co, Research Division: As a follow-up, given all these moving parts, what is your appetite for additional acquisitions at this point?

Well, 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. You become pretty much the acquirer of choice. In northeast Brazil, we feel like we're seeing pretty much everything that's -- anybody is thinking about maybe making a transition and we'd love to inherit their institution. In some cases, even outside an auction, which was the case with FBV. So that's really very much a value additive process, so still active. And with that, thank you, Jeff. And thanks to 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'll be announcing our first quarter 2013 results as well. So thank you, all, for your continued support of DeVry. And good afternoon, everybody.

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