FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

ITT EDUCATIONAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

 

Registrant’s telephone number, including area code:   (317) 706-9200

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                                                                 Yes        ý        No        o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).                                                                        Yes        ý        No        o

 

45,270,295

 

Number of shares of Common Stock, $.01 par value, outstanding at September 30, 2003

 

 

ITT EDUCATIONAL SERVICES, INC.

Carmel, Indiana

 

Quarterly Report to Securities and Exchange Commission
September 30, 2003

 

PART I

FINANCIAL INFORMATION

 

Item 1.  FINANCIAL STATEMENTS.

 

Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2003 and 2002

Consolidated Balance Sheets as of September 30, 2003 and 2002 (unaudited) and December 31, 2002

Consolidated Statements of Cash Flows (unaudited) for the three and nine months ended September 30, 2003 and 2002

Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2003, June 30, 2003 and September 30, 2003 (unaudited) and the year ended December 31, 2002

Notes to Consolidated Financial Statements

 

1

 

ITT EDUCATIONAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(unaudited)

 

		Three Months Ended September 30,						Nine Months Ended September 30,
		2003			2002			2003			2002
Revenues (a)		$	134,382		$	117,746		$	378,213		$	331,183
Costs and Expenses (a)
Cost of educational services		69,681			64,743			210,463			193,705
Student services and administrative expenses		39,495			34,166			113,417			98,642
Total costs and expenses		109,176			98,909			323,880			292,347
Operating income		25,206			18,837			54,333			38,836
Interest income, net		551			755			1,549			2,050
Income before income taxes		25,757			19,592			55,882			40,886
Income taxes		9,916			7,491			21,514			15,625
Net income		$	15,841		$	12,101		$	34,368		$	25,261
Earnings per common share (b):
Basic		$	0.35		$	0.26		$	0.76		$	0.55
Diluted		$	0.34		$	0.26		$	0.75		$	0.54

 

(a)          Certain reclassifications have been made to conform to the 2003 presentation.  See note 3.

 

(b)         Earnings per common share and the number of shares in all prior periods have been restated to reflect the two-for-one stock split declared on May 10, 2002 that became effective on June 6, 2002.

 

The accompanying notes are an integral part of these financial statements.

 

2

 

ITT EDUCATIONAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

 

		September 30, 2003			December 31, 2002			September 30, 2002
		(unaudited)						(unaudited)
Assets
Current assets
Cash and cash equivalents		$	159,749		$	123,934		$	94,496
Restricted cash		—			7,103			—
Short-term investments		37,912			25,671			32,080
Accounts receivable, net		9,943			8,973			12,780
Deferred and prepaid income tax		2,950			1,988			3,621
Prepaids and other current assets		4,409			5,597			3,884
Total current assets		214,963			173,266			146,861
Investments		6,455			—			—
Property and equipment, net		78,910			62,584			66,054
Direct marketing costs		10,470			10,609			10,432
Other assets		811			1,248			1,313
Total assets		$	311,609		$	247,707		$	224,660
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable		$	41,297		$	18,162		$	25,893
Accrued compensation and benefits