UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
ITT EDUCATIONAL SERVICES, INC.
------------------------------------------
(Name of Issuer)
COMMON STOCK, $.01 par value
-------------------------------------
(Title of Class of Securities)
4506B109
---------
(CUSIP Number)
Gregory D. Hitchan
Blum Capital Partners, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133
(415) 434-1111
-------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 2, 2004
-----------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
Page 1 of 12
CUSIP NO. 4506B109 SCHEDULE 13D Page 2 of 12
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1. NAME OF REPORTING PERSON BLUM CAPITAL PARTNERS, L.P.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 94-3205364
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [x]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS* See Item 3
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION California
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7. SOLE VOTING POWER -0-
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER 2,481,400**
BENEFICIALLY
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER -0-
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER 2,481,400**
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,481,400**
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.4%**
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14. TYPE OF REPORTING PERSON PN, IA
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** See Item 5
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 4506B109 SCHEDULE 13D Page 3 of 12
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1. NAME OF REPORTING PERSON RICHARD C. BLUM & ASSOCIATES, INC.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 94-2967812
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [x]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS* See Item 3
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION California
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7. SOLE VOTING POWER -0-
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER 2,481,400**
BENEFICIALLY
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER -0-
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER 2,481,400**
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,481,400**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.4%**
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14. TYPE OF REPORTING PERSON CO
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** See Item 5
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 4506B109 SCHEDULE 13D Page 4 of 12
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1. NAME OF REPORTING PERSON BLUM STRATEGIC GP II, L.L.C.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 94-3395150
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [x]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS* See Item 3
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
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7. SOLE VOTING POWER -0-
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER 2,481,400**
BENEFICIALLY
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER -0-
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER 2,481,400**
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,481,400**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.4%**
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14. TYPE OF REPORTING PERSON OO (Limited Liability Company)
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** See Item 5
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 4506B109 SCHEDULE 13D Page 5 of 12
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1. NAME OF REPORTING PERSON RICHARD C. BLUM
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [x]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS* See Item 3
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A.
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7. SOLE VOTING POWER -0-
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER 2,481,400**
BENEFICIALLY
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER -0-
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER 2,481,400**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,481,400**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.4%**
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14. TYPE OF REPORTING PERSON IN
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** See Item 5
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 4506B109 SCHEDULE 13D Page 6 of 12
Item 1. Security and Issuer
----------------------------
This Schedule 13D relates to shares of Common Stock, $.01 par value (the
"Common Stock") of ITT Educational Services, Inc., a Delaware corporation
(the "Issuer"). The principal executive office and mailing address of the
Issuer is 13000 North Meridian Street, Carmel, Indiana 46032-1404.
Item 2. Identity and Background
--------------------------------
This Schedule 13D is being filed by Blum Capital Partners, L.P., a California
limited partnership, ("Blum L.P."); Richard C. Blum & Associates, Inc., a
California corporation ("RCBA Inc."); Blum Strategic GP II, L.L.C., a
Delaware limited liability company ("Blum GP II"); and Richard C. Blum, the
Chairman and a substantial shareholder of RCBA Inc. and a managing member of
Blum GP II (collectively, the "Reporting Persons").
Blum L.P. is a California limited partnership whose principal business is
acting as general partner for investment partnerships and providing
investment advisory services. Blum L.P. is an investment advisor registered
with the Securities and Exchange Commission. The sole general partner of
Blum L.P. is RCBA Inc.
The principal business office address of Blum L.P. and RCBA Inc. is 909
Montgomery Street, Suite 400, San Francisco, California 94133. The names of
the executive officers and directors of RCBA Inc., their addresses,
citizenship and principal occupations are as follows:
Name and Business Citizenship Principal Occupation
Office Held Address or Employment
-------------------- ----------------------- --------- --------------------
Richard C. Blum 909 Montgomery St. USA President & Chairman,
President, Suite 400 Blum L.P.
Chairman & Director San Francisco, CA 94133
Nils Colin Lind 909 Montgomery St. Norway Managing Partner,
Managing Partner Suite 400 Blum L.P.
& Director San Francisco, CA 94133
John C. Walker 909 Montgomery St. USA Partner,
Partner Suite 400 Blum L.P.
San Francisco, CA 94133
Jose S. Medeiros 909 Montgomery St. Brazil Partner,
Partner Suite 400 Blum L.P.
San Francisco, CA 94133
CUSIP NO. 4506B109 SCHEDULE 13D Page 7 of 12
Name and Business Citizen- Principal Occupation
Office Held Address ship or Employment
-------------------- ----------------------- --------- -------------------
Kerry L. Nelson 909 Montgomery St. USA Partner,
Partner Suite 400 Blum L.P.
San Francisco, CA 94133
Gregory L. Jackson 909 Montgomery St. USA Partner,
Partner Suite 400 Blum L.P.
San Francisco, CA 94133
Jeffrey A. Cozad 909 Montgomery St. USA Partner,
Partner Suite 400 Blum L.P.
San Francisco, CA 94133
Marc T. Scholvinck 909 Montgomery St. USA Partner & Chief
Partner, Chief Suite 400 Financial Officer,
Financial Officer, San Francisco, CA 94133 Blum L.P.
Assistant Secretary
& Director
Gregory D. Hitchan 909 Montgomery St. USA General Counsel
General Counsel Suite 400 & Secretary,
& Secretary San Francisco, CA 94133 Blum L.P.
Blum GP II is a Delaware limited liability company whose principal business
is acting as the sole general partner of Blum Strategic Partners II, L.P.
("Blum Strategic II") and also as managing limited partner of Blum Strategic
Partners II GmbH & Co. KG ("Blum Strategic KG").
The principal business office address of Blum GP II is 909 Montgomery Street,
Suite 400, San Francisco, CA 94133. The names of the managing members and
members of Blum GP II, their addresses, citizenship and principal occupations
are as follows:
Name and Business Citizen- Principal Occupation
Office Held Address ship or Employment
-------------------- ----------------------- --------- -------------------
Richard C. Blum 909 Montgomery St. USA President & Chairman,
Managing Member Suite 400 Blum L.P.
San Francisco, CA 94133
Nils Colin Lind 909 Montgomery St. Norway Managing Partner,
Managing Member Suite 400 Blum L.P.
San Francisco, CA 94133
John C. Walker 909 Montgomery St. USA Partner,
Managing Member Suite 400 Blum L.P.
San Francisco, CA 94133
Jose S. Medeiros 909 Montgomery St. Brazil Partner,
Managing Member Suite 400 Blum L.P.
San Francisco, CA 94133
CUSIP NO. 4506B109 SCHEDULE 13D Page 8 of 12
Name and Business Citizen- Principal Occupation
Office Held Address ship or Employment
-------------------- ---------------------- --------- -------------------
Kerry L. Nelson 909 Montgomery St. USA Partner,
Member Suite 400 Blum L.P.
San Francisco, CA 94133
Gregory L. Jackson 909 Montgomery St. USA Partner,
Member Suite 400 Blum L.P.
San Francisco, CA 94133
Jeffrey A. Cozad 909 Montgomery St. USA Partner,
Managing Member Suite 400 Blum L.P.
San Francisco, CA 94133
Marc T. Scholvinck 909 Montgomery St. USA Partner & Chief
Managing Member Suite 400 Financial Officer,
San Francisco, CA 94133 Blum L.P.
Gregory D. Hitchan 909 Montgomery St. USA General Counsel
General Counsel Suite 400 & Secretary,
San Francisco, CA 94133 Blum L.P.
To the best knowledge of the Reporting Persons, none of the entities or
persons identified in this Item 2 has, during the past five years, been
convicted of any criminal proceeding (excluding traffic violations or similar
misdemeanors), nor been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration
----------------------------------------------------------
The source of funds for the purchases of securities was the working capital
of Blum L.P.'s limited partnerships and investment advisory clients and each
of the partnerships for which Blum GP II serves as the sole general partner
and managing limited partner.
Item 4. Purpose of Transaction
-------------------------------
The purpose of the acquisition of the Common Stock is for investment, and the
acquisitions of the Common Stock were made in the ordinary course of business
and were not made for the purpose of acquiring control of the Issuer.
Although no Reporting Person has any specific plan or proposal to acquire or
dispose of the Common Stock, consistent with its investment purpose, each
Reporting Person at any time and from time to time may acquire additional
Common Stock or dispose of any or all of its Common Stock depending upon an
ongoing evaluation of the investment in the Common Stock, prevailing market
CUSIP NO. 4506B109 SCHEDULE 13D Page 9 of 12
conditions, other investment opportunities, liquidity requirements of the
Reporting Persons and/or other investment considerations.
Also, consistent with the investment purpose, the Reporting Persons may
engage in communications with one or more shareholders of the Issuer, one or
more officers of the Issuer and/or one or more members of the board of
directors of the Issuer and/or one or more representatives of the Issuer
regarding the Issuer, including but not limited to its operations. The
Reporting Persons may discuss ideas that, if effected may result in any of
the following: the acquisition by persons of additional Common Stock of the
Issuer, an extraordinary corporate transaction involving the Issuer, and/or
changes in the board of directors or management of the Issuer.
Except to the extent the foregoing may be deemed a plan or proposal, none of
the Reporting Persons has any plans or proposals which relate to, or could
result in, any of the matters referred to in paragraphs (a) through (j),
inclusive, of the instructions to Item 4 of Schedule 13D. The Reporting
Persons may, at any time and from time to time, review or reconsider their
position and/or change their purpose and/or formulate plans or proposals with
respect thereto.
Item 5. Interest in Securities of the Issuer
---------------------------------------------
(a),(b) According to the Issuer's Definitive Proxy Statement filed on
Schedule 14A, there were 45,704,951 shares of Common Stock issued and
outstanding as of March 5, 2004. Based on such information, after taking
into account the transactions described in Item 5(c) below, the Reporting
Persons report beneficial ownership of the following shares of Common Stock:
(i) 1,305,400 shares of Common Stock held by Blum L.P. and RCBA Inc. on
behalf of the limited partnerships for which Blum L.P. serves as the general
partner, or on behalf of an entity for which Blum L.P. serves as investment
advisor, which represents 2.9% of the outstanding shares of the Common Stock;
(ii) 1,083,400 shares of the Common Stock held by Blum GP II on behalf of the
limited partnership for which it serves as the general partner and on behalf
of the limited partnership for which it serves as the managing limited
partner, which represents 2.4% of the outstanding shares of the Common Stock;
and (iii) 46,300 shares of the Common Stock that are legally owned by The
Nuclear Decommissioning Trust of Dominion Nuclear Connecticut, Inc.
("Dominion Connecticut") and 46,300 shares of the Common Stock that are
legally owned by Virginia Electric and Power Company Qualified Nuclear
Decommissioning Trust ("Virginia Electric")(collectively, the "Investment
Advisory Clients"), with respect to which Blum L.P. has voting and investment
power. Each Investment Advisory Client has entered into an investment
management agreement with Blum L.P., but neither Investment Advisory Client
has any contract, arrangement or understanding with the other Investment
Advisory Client, or any other Reporting Person, with respect to the
acquisition, ownership, disposition or voting of any shares of the Common
Stock. Each Investment Advisory Client disclaims membership in a group with
any Reporting Person or with the other Investment Advisory Client, and each
disclaims beneficial ownership of any shares beneficially owned by the
Reporting Persons other than for their own account.
Voting and investment power concerning the above shares are held solely by
Blum L.P. and Blum GP II. The Reporting Persons therefore may be
CUSIP NO. 4506B109 SCHEDULE 13D Page 10 of 12
deemed to be members in a group, in which case the group would be deemed to
have beneficial ownership of an aggregate of 2,481,400 shares of the Common
Stock, which is 5.4% of the outstanding Common Stock. As the sole general
partner of Blum L.P., RCBA Inc. is deemed the beneficial owner of the
securities over which Blum L.P. has voting and investment power. As Chairman,
director and a substantial shareholder of RCBA Inc., Richard C. Blum might be
deemed to be the beneficial owner of the securities beneficially owned by
RCBA Inc. Additionally, Mr. Blum may be deemed to be the beneficial owner of
the securities over which Blum GP II has voting and investment power.
Although Mr. Blum is joining in this Schedule as a Reporting Person, the
filing of this Schedule shall not be construed as an admission that he, or
any of the other shareholders, directors or executive officers of RCBA Inc.,
managing members and members of Blum GP II, is, for any purpose,
the beneficial owner of any of the securities that are beneficially owned by
RCBA Inc. or Blum GP II.
c) During the last 60 days, the Reporting Persons purchased the following
shares of Common Stock in the open market:
Entity Trade Date Shares Price/Share
------ ---------- ------ ------------
Investment partnerships for 02-26-04 250,000 38.7688
which Blum L.P. serves as the 03-01-04 23,200 37.9384
general partner and on behalf 03-02-04 93,500 37.0235
of an entity for which Blum L.P. 03-03-04 301,100 34.8739
serves as investment advisor. 03-04-04 25,700 35.0000
03-05-04 56,200 34.9578
03-08-04 74,800 34.9182
03-09-04 247,800 33.0574
03-10-04 131,000 31.4914
03-11-04 56,200 29.2833
03-26-04 600 29.9000
03-31-04 12,500 30.9204
04-01-04 20,700 31.4615
04-07-04 5,400 32.2329
04-08-04 6,700 33.6319
Entity Trade Date Shares Price/Share
------ ---------- ------- ----------
The limited partnerships for 02-26-04 270,000 38.7688
which Blum GP II serves as the 03-01-04 25,000 37.9384
general partner and the managing 03-02-04 101,600 37.0235
limited partner. 03-03-04 322,500 34.8739
03-04-04 27,500 35.0000
03-05-04 5,000 34.9578
03-26-04 1,700 29.9000
03-31-04 34,800 30.9204
04-01-04 59,100 31.4615
04-02-04 68,100 32.9415
04-05-04 80,200 32.4094
04-06-04 13,500 32.4999
04-07-04 31,100 32.2329
04-08-04 43,300 33.6319
CUSIP NO. 4506B109 SCHEDULE 13D Page 11 of 12
Entity Trade Date Shares Price/Share
------ ---------- ------ ------------
The Investment Advisory 02-26-04 20,000 38.7688
Clients for which Blum L.P. 03-01-04 1,800 37.9384
serves as investment advisor. 03-02-04 8,000 37.0235
03-03-04 21,400 34.8739
03-04-04 1,800 35.0000
03-05-04 3,800 34.9578
03-08-04 5,200 34.9182
03-09-04 17,200 33.0574
03-10-04 9,000 31.4914
03-11-04 3,800 29.2833
03-26-04 200 29.9000
03-31-04 200 30.9204
04-01-04 200 31.4615
(d) and (e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
-----------------------------------------------------------------------------
None of the Reporting Persons or, to the best knowledge of the Reporting
Persons, the other persons named in Item 2, is a party to any contract,
arrangement, understanding or relationship with respect to any securities of
the Issuer, including but not limited to the transfer or voting of any
securities of the Issuer, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or
loss, or the giving or withholding of proxies, except (i) as previously
disclosed, or (ii) as noted above, Blum L.P. has voting and investment power
of the shares held by it for the benefit of The Investment Advisory Clients.
Item 7. Material to be Filed as Exhibits
-----------------------------------------
Exhibit A Joint Filing Undertaking.
CUSIP NO. 4506B109 SCHEDULE 13D Page 12 of 12
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: April 12, 2004
RICHARD C. BLUM & ASSOCIATES, INC. BLUM CAPITAL PARTNERS, L.P.
By: Richard C. Blum & Associates, Inc.
its general partner
By: /s/ Gregory D. Hitchan By: /s/ Gregory D. Hitchan
------------------------------- -----------------------------------
Gregory D. Hitchan Gregory D. Hitchan
General Counsel and Secretary General Counsel and Secretary
BLUM STRATEGIC GP II, L.L.C. RICHARD C. BLUM
By: /s/ Gregory D. Hitchan By: /s/ Gregory D. Hitchan
------------------------------- ------------------------------------
Gregory D. Hitchan Gregory D. Hitchan, Attorney-in-Fact
General Counsel
CUSIP NO. 4506B109 SCHEDULE 13D Page 1 of 1
Exhibit A
JOINT FILING UNDERTAKING
The undersigned, being duly authorized thereunto, hereby execute this
agreement as an exhibit to this Schedule 13D to evidence the agreement of the
below-named parties, in accordance with the rules promulgated pursuant to the
Securities Exchange Act of 1934, to file this Schedule jointly on behalf of
each such party.
Dated: April 12, 2004
RICHARD C. BLUM & ASSOCIATES, INC. BLUM CAPITAL PARTNERS, L.P.
By: Richard C. Blum & Associates, Inc.
its general partner
By: /s/ Gregory D. Hitchan By: /s/ Gregory D. Hitchan
------------------------------- -----------------------------------
Gregory D. Hitchan Gregory D. Hitchan
General Counsel and Secretary General Counsel and Secretary
BLUM STRATEGIC GP II, L.L.C. RICHARD C. BLUM
By: /s/ Gregory D. Hitchan By: /s/ Gregory D. Hitchan
------------------------------- -------------------------------------
Gregory D. Hitchan Gregory D. Hitchan, Attorney-in-Fact
General Counsel