Greetings, ladies and gentlemen, and welcome to the ITT Educational Services 2012 Third Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. Joining us today from the management of ITT Educational Services, we have Kevin Modany, Chief Executive Officer and Chairman; and Dan Fitzpatrick, Executive Vice President and Chief Financial Officer. Before we begin, ITT Educational Services Inc. wishes to remind you that this conference call may include forward-looking information. Actual results may differ from the information presented during this call. For additional information, please review the section on forward-looking information contained in today's news release or in the company's public filings with the Securities and Exchange Commission. Thank you. Mr. Modany, you may begin.

Thank you, operator. Good morning, ladies and gentlemen, and thank you for joining us on our conference call to review our 2012 third quarter results. Dan Fitzpatrick, our Executive Vice President and Chief Financial Officer, is on the call with me this morning. We'll spend a little more time this morning on our prepared remarks, as we have a lot of information that we'd like to cover. However, we expect to provide you with about 30 minutes for your questions during the Q&A session at the conclusion of our prepared comments. I'll begin by providing you with a quick overview of the topics we'd like to address this morning. We will provide some color on the enrollment results for the third quarter as well as our thoughts on the enrollment outlook for the final quarter of 2012. Then, we'll provide you with our typical update on a few of the other key third quarter operating metrics for the business including student retention, year-over-year graduation information and graduate employment measures. Next, we'll provide an update on our strategic plan. It's here we will spend a little additional time today, as we hope to provide insight into how we're thinking about our business over the long term, taking into consideration sector changes over the past couple of years. We will discuss our current thinking on topics such as perspective student behavior, program costs, student value proposition and more. Dan will conclude our prepared remarks by providing additional color on the financial results reported in this morning's press release as well as an update on our risk share agreement under the private student loan programs. Then, we will open the lines for your questions. Before we begin reviewing the third quarter results, we should note that we will not provide an outlook on…

Thanks, Kevin. First, I'd like to provide a few brief comments on the financial results that we released this morning. Revenue per student increased 3.5% in the 3 months ended September 30, 2012, compared to the same period in the prior year primarily because of the continued impact of the rollout of the new programs at a portion of our schools as Kevin mentioned earlier. Moving onto scholarship and award activity for the quarter. In the 3 months ended September 30, 2012, our students received approximately $16.6 million in scholarships and awards compared to approximately $22.5 million in the third quarter of 2011. The decrease was the result of a 15.7% year-over-year decline in total student enrollment as of June 30, 2012, compared to June 30, 2011, as well as the reduction in some of the awards that have been made available to students in prior periods towards the end of their programs of study. The reduction in the institutional scholarships and awards is indirectly tied to the testing of the new recruitment communication campaign that Kevin discussed. If the test is effective and expanded to all additional locations, we would expect to have the amount of the awards granted to students during the last few quarters of the programs of study would be reduced, and these amounts would be reallocated to institutional scholarships that would be awarded to students more evenly throughout their programs of study. That said, the reduction in the total amount of scholarships and awards granted to our students in the third quarter of 2012 contributed to increases in accounts receivable and corresponding our bad debt expense in the quarter. Days sales outstanding increased 11.8 days to 26.1 days as of September 30, 2012, compared to 14.3 days as of the same date in 2011. Bad…

Thanks, Dan. At this time, I'd like to ask the operator to open the lines, so we can entertain your questions.

[Operator Instructions] Our first question comes from Jeff Volshteyn at JPMorgan.

In your strategic review, when you look at the average net program cost, what is an average number that you're coming up with? And what level of scholarship does that include?

Well, we're not getting into the specifics just yet on that, Jeff, but generally what you're looking at is a communication of a cost today that is roughly in the range of about $45,000, let's say, for an associate degree program. That communication of a net program cost, we believe, on average will go to about $27,000. That's not to say that, that difference is all increased expense or increased scholarship because we're already providing a significant amount of scholarship. There are already significant amount of grants received by our students. A large percentage of those students, roughly 65% to 70% of them participate in the Pell program, so the incremental component is much smaller. And again, we're not giving the details on that. But I would just give you a range of the communication differences between what we're saying today to a student and what we will say on average as a part of this test.

Our next question comes from Sara Gubins at Bank of America Merrill Lynch.

Based on what you're seeing in terms of applications and conversions so far, do you think it's reasonable to think that the start declines get worse in the fourth quarter versus the third? And also if you could give us some examples of cost-cutting initiatives and maybe magnitude given that it's not coming from campus closures?

Sure. Two things there. The first question with regard to fourth quarter enrollment and whether we think the year-over-year comparisons could get worse, at this point, Sara, we're not projecting that. We would not project the fourth quarter would be worse. It does not look like we're going to be able to get flat or over prior year at this point just based on the trending that we're seeing. But it looks like it will not be at the current levels in terms of year-over-year. We were 15.8% down in the third quarter. It looks like we can do better than that but again, not yet getting to the point of being flat or positive on prior year. The second part of the question I believe related to cost cutting and whether or not we can give specifics. And I speak in generalities here. Generally, the cost-cutting initiative opportunities going forward are in and around our student services process areas, just the way in which we process transactions if I can describe it in a more generic sense. Now we think there are opportunities for us to implement some technologies in those areas that, a, should make us more efficient in the way in which we serve our student needs but I think probably even more importantly, make us more effective, as we look at some of the operating metrics that we judge ourselves by and the quality of service that we provide in terms of communication and support to our students. We think we can actually increase those with the use of technology while being more efficient. So it's generally in and around that area. If we were to estimate an annualized impact at this point, I would say it's probably in the $50 million range just based upon some early preliminary work we've done to try to size the opportunity.

The next question comes from James Samford at Citigroup.

Just wanted to sort of broadly speaking about margin trends. I mean, it looks like based on your guidance, you're looking for another 1,000 basis points of margin deleverage in Q4. Where -- how quickly can you stop the bleed in terms of cost cutting? And are we really talking about a 2014 kind of stabilization of margins given some of the plans that you have right now?

Well, we're not giving any specific guidance over and above what we provided for 2012, and obviously, you come back into what that means from a cost and revenue and margin perspective. We do think there are opportunities for us to manage that cost construct, but at the end of the day, this is about the leveraging. And we are seeing deleveraging right now. We've been able to manage that deleveraging a bit, I would say, from a cost perspective, as we look at fourth quarter, even versus third quarter. If you adjust for seasonality, I think we're going to see a similar type level of cost. What we hopefully will see as we start seeing a decline in the rate of year-over-year new student enrollment changes that we'll start to see an improvement and a change in the total enrollment. So total enrollment on a year-over-year basis, we should be able to close that gap as we move forward. But as you've mentioned, it does take time for that to play itself out. Again, we're going to be mindful of costs. We're going to manage our costs as efficiently as we can, but it's going to take us a little bit of time to turn the enrollment trend. Once we do, we see a significant amount of leverage on every incremental student at this point. We're probably looking at upwards of 90% of each one of the incremental revenue dollars working its way down to the bottom, to the operating line. So -- and I think we're probably managing it on the deleveraging side at about $0.60 if you do the math. So we've got some opportunity to close that gap, and I think we will. And again, we're going to be as efficient as we possibly can going forward and have identified some additional opportunities over and above what you're seeing in the current numbers to enable us to do that.

Our next question comes from Corey Greendale at First Analysis.

On the kind of strategic plan side, I guess 2 things. First of all,, obviously, there's a big difference between a $45,000 cost and a $27,000 cost, but the $27,000 is still above what students can get at community colleges. So what gives you confidence that, that will make the difference? And secondly, I realize it's too early to say what the impact would be if you do rollout enough scholarships that you wouldn't need the third-party private loans anymore, but I was hoping you could just at a high level talk us through kind of what the impact would be on revenue, cost, bad debt, that sort of thing.

Sure, Corey. With regard to our confidence in our test and in the ultimate outcome, I don't think we can give you any assurances one way or the other as to what will happen here. I think it's reasonable to expect that there is some level of price elasticity in post-secondary education today. We may not have seen that as recent as 5 years ago, but it exists today. To what degree? I don't know that anyone has good data on that. We've certainly done the research, and there are some data out there but nothing that I would say is appropriate to use in this particular scenario. And we have not tested this. So it's hard for me to give you any specific information as to the level of elasticity and the type of demand conversion increases we could potentially see as a result of that change in pricing. That's why we're testing it, and we'll see what the test shows us. But again, intuitively, you would think that the elasticity exists and some level of price reduction in terms of the way we communicate it, which here it is substantial. I think you would agree it's substantial, should have some level of increased impact on the conversion of what we're seeing for being very strong demand. I would -- now we don't position ourselves to compete with community colleges and we never have. And we're not trying to do that with this initiative. We are trying to demonstrate to students the value proposition more clearly and communicate that to them with a higher degree of transparency, and hopefully, that will enable them to make a good decision and see that there's an opportunity here for a very strong return on their investment. So it's a change in communication. And again, I don't know that we can, absolutely with a high degree of confidence, tell you what will ultimately happen as a result of this. The second part of the question was revenue impact and the rollout of the test. Since we won't see much of that in 2012 because the test schools -- it's about 15% of our schools where we're testing this right now. It's not going to have a big impact on the fourth quarter, and we're not providing any guidance on '13 just yet. So I'm going to stop short of providing any color on that. But as soon as we get some good data, get a good sense of what the impact is, we're able to correlate the results and project forward a potential impact one way or the other, we'll communicate that to the market and again, probably communicate or communicate it and include it in our 2013 guidance that we expect to provide in our January call.

Our next question comes from Gary Bisbee at Barclays.

Two questions if I could. The first one, it sounds to me like the right thing to do to consider this. I wonder why you don't just cut price. You're still going to have the blist price in some of the DOE disclosures. You've got a lot of room on 90/10. It would clean up the accounting with less lending to students and make the net income much closer to cash flow. It just seems to me like it would be cleaner and you'd probably get a bigger boost. And then the second question, would just love a little more color on the weaker repayment performance. Can you give us a sense how much that's been? And if that trend continues ultimately, have you reserved enough? Or what does it mean for the financials?

Thanks, Gary. I think that's a great question in terms of how we think about pricing and the communication of that pricing. And certainly, we spent a fair amount of time on this, and a significant amount of time, I should say, more than a fair amount, looking at it and analyzing the different approaches that we could take to it. And we feel as if we've taken the best approach where we customize that pricing communication to the student. So we feel like this is going to give us the best return dynamic for the institution and also be as transparent as possible to students. Right now, we feel like this is the way to go. Obviously, we're going to test it. We're going to collect some data, and we'll see what happens. But right now, we think like this is -- we feel like this is the best approach to go with. And ultimately, the result, if it works out, we will get the same result that you talked about. I mean it does clean up some of those issues that are out there hanging and certainly, would present a situation where this would be a cash business at the end of the day. The net income would principally be all cash. So we still think we get to those same points, and based upon the research that we've done, we think that this customized pricing per student is likely going to give us the optimal result. But again, the test will tell, and we'll adjust accordingly. In terms of the private lending and the repayment, I think what the -- recording of the reserves, obviously the repayment rates haven't been where we wanted them to be. I wouldn't say that we've seen any material degradation in that. It hasn't really changed materially. It's just not where we want it to be. And so I guess, with today's communication, we're basically saying we want to step up the monitoring and do everything that we can to try to impact the results here. But again, we've not seen a major negative change in the trending. Again, it's just not where we want it, and that's evidenced by the accrual that we have. The accrual we have on the books today contemplates that trending and contemplates our expectation over the lifetime of the program. So that all goes into your accrual analysis and went into our estimating process that led to the current accrual and the adjustment in the reserve for the current quarter.

Our next question comes from Paul Ginocchio at Deutsche Bank.

Two maybe questions. Just could you talk about the average internal loan balance or private loan balance of students, when graduating with recently? And then second is there -- could -- can you give us any update to your free cash flow guidance or free cash flow for the fourth quarter?

Sure. In terms of debt balances, we talked about this a little bit, maybe about a year or so ago when gainful employment was one of the prominent topics of discussion. We had seen prior to, let's say, the 2011 year graduate balances, median balances around 30,000, the debt balances. With the scholarships that we had put forth and the increased level of scholarships that continue through to today, those balances have come down to about 26,000 or 27,000, the median debt. That's a rough average based upon our analysis of the graduate debt data that we have available to us. Now that's just the most current information we have. Of course, if the test proves effective and we do increase institutional scholarships, that could be impacted further. So we'll, have to continue to analyze that and see what the impact is. In terms of free cash flow -- yes, go ahead, Dan.

No, I -- the free cash flow, we really haven't changed the guidance or not the guidance but how we've talked about in the past. We talked about a range of $50 million to $75 million this year, and that's still the expectation at this point.

Free cash flow is a non-GAAP metric. That's -- is reconciled on our website, so we are obligated to say that.

The next question comes from Kelly Flynn at Credit Suisse.

I just wanted to ask you about the private loan agreement. Last quarter, I think you used the language preliminary agreement and I think perhaps talked about documentation stage. Can you just clarify whether or not you still have that preliminary agreement and what, in fact, has changed since last call on this front?

Sure, Kelly. Nothing has changed. Non-binding term sheet is still in play. Discussions are ongoing. Documentation processes ongoing. The only thing that has changed is as we think about our strategic planning and look at the future of the business, we are changing the way in which we communicate pricing as I discussed in the prepared remarks. So nothing's changed on the private lending front. Our strategic planning process and our decision to go forward with this communications campaign has not been influenced at all by our ability to secure private lending. That has absolutely nothing to do with it. There's no lack of interest there. We've -- again, discussions are ongoing. This is a separate and an exclusive decision relative to strategic planning and really relates to our review of a very strong level of demand for our brand, our widely recognized brand and the decline in the conversion of that demand to new students and for reasons that based on our research, we believe relate to the introduction of price elasticity and the post-secondary market. So it's really related to that strategic planning, but nothing has changed on the private lending front at this point other than what we've said in the prepared remarks. Our strategic planning has informed our thinking in that regard, and it's changed the priority of that initiative for the organization and likely will change the timing of it. But aside from that, nothing has changed.

Our next question comes from Peter Appert at Piper Jaffray.

So, Kevin, maybe I'm just not understanding this, but in the context of what would -- could be, I guess, effectively pretty significant price reductions, I don't see how that doesn't translate into some further significant pressure on margins. What am I missing?

Well, I think what we're talking about today is the way in which we communicate our pricing construct to students. And today, we basically communicate a gross price, and tomorrow, we want to make sure that we incorporate a discussion of net pricing. So that's a big change relative to what's already out there in the terms of grants, scholarships, benefits, awards to students. We are saying that there could be an increase in the level of institutional scholarships that go along with this. So there could be a cost associated with it. However, if in fact this proves to be an effective communication strategy, there is the possibility that, that strong level of demand that we keep talking about in terms of the number of inquiries that we're seeing from prospective students, the conversion of that demand could increase as a result of this. If in fact our research is correct in that, the reason for the decline in conversion has something to do with price elasticity. So we changed that communication. We may see an improvement in the conversion, and the conversion rate on a strong demand could drive a higher level of units or students that enter our system and therefore, give us an opportunity to positively impact the bottom line. So there is a cost certainly included with additional institutional scholarships, but it could be more than offset by a potential corresponding increase in conversion rate. That's basically what we're saying. And then in the prepared remarks we said, the ultimate success of this initiative will be determined by an ROI. And it's simple math in that regard. So it absolutely presents an opportunity for some upside for us, but again, the test will tell. We will run the test in the 20 or so markets. We'll collect data, and we'll see what it shows us against the baseline, and then we'll be able to project forward what the expected impact is of this initiative. And that will then lead to a communication of our 2013 expectations. But hopefully, that description gives you a little more color on how we're thinking about it and how it could have a very positive impact on the business.

Our next question comes from Jeff Meuler at Robert W. Baird.

The question that's getting asked, but can you, I guess, just try to compare the economics of this new model that you're piloting relative to the economics to you of the model you've been operating of on-balance-sheet lending over the last couple of quarters because I get that it'll be lower revenue per student. But if we look at your bad debt expense, it seems like you're probably already charging off a lot of that revenue. And then if we look at your cash flow, you're not getting paid up front. So I guess if you could just compare and contrast the economics of the 2 different models.

No, Jeff, that's absolutely correct. I think you're thinking about it the right way. And again, we're going to stop short of giving specifics on 2013 guidance, which I would have to get into if I got into the specific numbers that we're looking at as we analyze this. But certainly, you have to take into consideration the bad debt expense that we are recording as a result of having on-balance-sheet financing for our students. Also the scholarships, institutional scholarships that we're providing, those dollars, that funding pool that already is included in our financial statements and the results that we're reporting basically gets reallocated. So we reallocate that and do it in a way that enables us to provide a better picture to the student relative to the value proposition. Over and above that, there is potentially a slight increase in those expenses if we increase the institutional scholarships. So there's a -- and again, I'm just speaking generally here. I'm not giving dollar numbers. But there could be a slight increase in that expense over and above what is currently bad debt and what is already recorded as scholarships. We would do that and continue to do it and expand it throughout the network of our campuses if, in fact, it generated a positive return in terms of the number of students that converted as a result. So -- and you're thinking about it correctly. We're thinking about it the same way. And we'll provide a little more specifics when we get in our January call when we start talking about 2013 outlook. But hopefully, you all can appreciate it's very difficult for us to do that until we actually collect some data from this test to see the degree of price elasticity that exists in the marketplace and how our prospective students react to this change in communications.

Our next question comes from Jerry Herman at Stifel, Nicolaus.

I appreciate the comments about demand levels being high, but the shortness or the declining conversion rates, it -- isn't that -- where are they falling out? And I guess my question is, are they in fact falling out because of price? And if it is price, isn't that enough evidence to make the move? And maybe just to expand the question a little bit more than that, from a shareholder perspective, the stock seems to already be reflecting a very heavy discounting effect. And I'm wondering strategically if there's something that you guys have thought about that would enhance not only the value to the student but also to the shareholder?

Thanks, Jerry. I appreciate that. The first question being kind of where we think people fall out of the process, and if you go back the last couple of years and we just say from lead to start, we're seeing degradation in each one of the major steps in the process. But principally, where we've seen the majority of the decline is between a student application and a student start. And that for us, an application is when a student actually physically comes to our campus, tours the campus and initially receives specific information about tuition costs. That's the first time we really get into that. And up to this point, prior to the test, we have always communicated a gross tuition cost there. So -- and there's more detail that goes into this, but generally speaking, we're seeing that degradation from the time in which they first receive a communication of costs and when they start. And yes, there is a good bit of anecdotal information that suggests that's pricing. We've also done surveying as others have done. But there is really no specific statistically valid data that could support it as a price issue and as the existence of elasticity of price in our current model. It isn't overly complicated or difficult for us to test this and collect some data. We'll be able to do that in a relatively short period of time. And so once we collect that data, then we can better expand the initiative and better execute on this, and it gets the best result for us and for our students and ultimately, for our shareholders. So we're thinking about it that way strategically. We'll adjust accordingly based on the information we get from the test, but I think this is the right thing to do. All data points are suggesting this is the right thing. We want to substantiate that data with some very specific statistically valid information. But again, it seems to be the right thing to do for all constituents involved here and ultimately, will drive higher levels of returns for our shareholders. We believe that if we see the right kind of correlation between the change in price and the conversion of demand.

Our next question comes from Trace Urdan at Wells Fargo Securities.

Kevin, I wondered if you could talk about the -- whether you're going to be testing a range of scholarships at the various schools and whether there's going to be any variability in terms of which programs they're offered to or which degree levels they may be offered to?

Sure, Trace. From the discipline perspective or type of degree, we're not really using this scholarship/communications campaign initiative as a way to move student decision making. We have made some decisions on programmatic disciplines, as we've communicated in previous calls, where we don't see the right level of outcome. So if we don't see the right employment level, if we don't see the right salary level, we've made those changes exclusive of anything we're trying to do in terms of converting demand. So the scholarships will be available to all programs that are being offered at the schools or all disciplines, I should say. At this point, it's focused on the associate degree level student, but that doesn't mean that we wouldn't expand it to bachelors as well. We have a separate scholarship program that we apply to our bachelor students. That we'll continue to keep in place right now, and that has been in place for quite some time. Depending upon the results that we see with the program at the associate level, it could very well be expanded to the bachelor level. But at this point, it's all disciplines, and it's associate degree level students only at this point. But again, based on results, that could change.

Our next question comes from Thomas Allen at Morgan Stanley.

Two part question. First, x bad debt, 3Q costs were down substantially on a sequential basis. Was that seasonality all the lower marketing spend? Or did you take other costs out of the system already? And then the second part, last call, I believe you said that you were going to increase marketing slightly in the second half of '12, and you said that in 3Q, you cut it substantially. What drove that decision?

Sure. In terms of just a general discussion of costs and what's happening in the quarter, certainly the marketing expense reduction on a year-over-year basis is reflected in that total cost reduction, but we did adjust other costs. We are being very mindful of the current environment, very mindful of our cost construct and have been adjusting our costs accordingly. And that's on all fronts, on all levels of the business. We're a service business, so when we adjust costs, that also means personnel, and we've adjustments there. We've got a pretty established construct in terms of the staffing levels at our school relative to the student census. And we've been applying that. Obviously, we've seen declines in total enrollment, and accordingly, we've been adjusting our staffing levels. And you're seeing some of that reflected in the total cost. When you think about the marketing spend and the fact that there was an anticipation of an increase in spend, we've done a great job. The team has done a fantastic job in managing that spend and getting us a better result with fewer dollars. And so we've seen a pretty substantial decline, 17% on a year-over-year basis in the current quarter. That's reflective of the changes in mix that are generating good returns for us, that are generating good conversions to the application, which is really how you need to judge a marketing or advertising spend. Can you convert somebody to the point where they will come to your physical location? And we're getting good results in that regard. Looking into the fourth quarter, we'll probably see another decline in marketing spend, probably not to this degree, quite frankly, that we saw in the third quarter, but in the fourth quarter, we expect to be down year-over-year. And again, that's just a part of what we're seeing as the result of a mix change there. And then other cost adjustments that we mentioned, some of the optimization efforts, we'll start to see some of that bleed in, not a bunch in the fourth quarter but definitely into 2013 to where we get to the end of the year. We hope that we have all of those optimization initiatives fully executed and in effect and reflective in the financial results.

Our next question comes from Timo Connor at William Blair.

At the schools where you're testing out the net cost reduction, what kind of reaction or questions are you getting from existing students? And then how would this -- how might that impact how you think about tuition levels for existing students?

I appreciate the question. I'll have to say that it's relatively recent in the implementation. Literally, we're talking about a week, not even a full week quite frankly. So the ink's not yet dry on the paper here, and the feedback at this point is probably not relevant. But nothing unexpected. I think we need another week or 2 before we can really start thinking about it, but it's just very, very early on in the process. So unfortunately, I don't have a lot of good color I can give you on that regard.

Well, I guess, quick follow-up, so what -- does any of this change how you're thinking about tuition levels for existing students? Any other changes that you're talking about for net cost reductions for new students?

I think you mean for current students, and what we're talking about doing here is really changing this construct across the entire census. So it's not just for new students, as our students are -- basically this is -- the change is initiated by the packaging process, so when a student comes through and gets packaged, they get packaged when they initially start, and then they get repackaged 9 months later. And so as students are repackaged, they'll be repackaged with this new construct in play. So it'll sort of work its way through the system if, in fact, it's successful. So with the current schools that have it, they're working with students and any students that are existing that are getting repackaged.

[Operator Instructions] And our next question comes from Paul Ginocchio at Deutsche Bank.

Kevin, I just wanted to go back to my previous question. I didn't ask you correctly. Just I'm looking for recent grads and students about to graduate, what their average loan balance is for just ITT internal loans and PEAK are all private loans. Just what's the balance of all those, so we can better -- excluding the federal loans?

Yes, thanks, Paul. Unfortunately, we don't break out that detail because of the NDAs that we have in place with the various third-party lenders, so it's -- yes, we're not able to give that kind of information unfortunately. You probably could back into it a little bit. I would just say this much that the majority of the students are going to fully exhaust all of their Title IV before they would ever enter into a private lending program. So you could take some rough estimates, 85% -- 80% to 85% of the students are associate degree level. You can look at the availability of lending for Title IV programs for the Stafford loan. See what that cap is in our typical student profile as an independent student. So that'll kind of aid in your thinking in that regard. And then you can kind of back into it in terms of that $26,000 to $27,000 median number that is all inclusive. But again, we can't speak to the specifics of what it is for just the third-party programs due to the non-disclosure agreements.

And one very minor point, the -- we really don't have any internal institutional loans. So if somebody did not get a private loan, it is just credit. It's not been formalized into an interest-bearing loan.

Our next question comes from at Alex Paris with Barrington Research.

Just a clean-up question or 2. I did called away from this call, so I might have missed it. But did you comment at all on plans for share purchases. I noticed that you didn't repurchase anything in the third quarter. Yet, you repurchased 3 million shares for the first 2 quarters. And then the second question is related to revenue per student. Should we anticipate a similar increase in the fourth quarter? That's all.

Thanks, Alex. So we did not comment on either of those, so allow us to do that now. Our fourth quarter -- or let's just say the 2012 revised internal goals that we provided this morning do not include any additional share repurchases. And then from a revenue per student perspective, we talked before about our expectation that for the full year, we expect to end in the range of around 3%. And we continue to think that, that'll be the case for the revenue per student.

That's all the time we have for questions today. I would like to turn the conference back over to Kevin Modany for closing remarks.

Operator, thank you, and thank you, everyone, for your time today. We appreciate your questions and look forward to talking to you in our January 2013 conference call. Thank you again. Have a great day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.