School Biz: are tough times good for Indianapolis-based ITT Educational Services? Investors seem to think so.

• Author: Mckimmie, Kathy
• Position: Cover Story

Want to learn a highly marketable skill in a reasonable timeframe, on a schedule that caters to your current job? Students across the country are saying "yes" and are turning to for-profit post-secondary institutions-even though they can be pricier than publicly supported ones.

As a result, between 1989 and 1999 for-profit institutions grew from 19 percent of the two-year college market to 28 percent, and from 3 percent to more than 8 percent among four-year colleges. With some 1.1 million jobs lost in the past year, for-profit schools have gained attention on Wall Street as many laid-off workers are expected to head back to school.

The ability to take the pulse of employers and structure programs to meet real-life jobs has allowed Indianapolis-based ITT Educational Services Inc. to become one of the leading technical training institutions in the country, with 70 locations in 28 states. At year-end, ITT Educational Services had a student enrollment of 30,778, up 11.4 percent. The company's stock (NYSE:ESI) jumped 67.6 percent in 2001, while revenues were up by 18 percent to $410.6 million.

For the second year, the company made it to the Forbes 200 Best Small Companies list, at No. 82 in 2001, up from 122 the prior year. Two competitors also made the list in 2001: Education Management of Pennsylvania and Strayer Education of the District of Columbia, ranking 58 and 130, respectively. Another indicator of the strength of ITT Educational Services in 2001 was its inclusion in the S&P SmalICap 600 Index.

Rene R. Champagne, 60, was recruited as president and CEO in 1985, from his job as COO at Canadian-owned Continental Pharma in Massachusetts. "I was always interested in education. I saw an opportunity to really contribute to a community while still being able to produce a reasonable profit from a corporate point of view."

ITT Corp., the New York City-based conglomerate with holdings in everything from hotels to casinos to defense machinery, entered the training field in 1966 with the purchase of Howard W. Sams, an Indianapolis book publisher and owner of three trade schools. ITT Educational Services was incorporated in 1968, grew quickly through acquisitions of trade schools throughout the U.S., and eventually brought each of them under the same moniker: ITT Technical Institute. The book publishing business was sold back to Sams in the '80s.

Seventeen percent of IIT Educational Services was sold in an IPO in 1994, and in 1998, after Starwood Hotels and Resorts acquired ITT Corp., it sold the remaining interest. Champagne is now chairman and CEO of ITT Educational Services, relinquishing the title of president last month to Omer Waddles, who had held the title of executive vice president. He also assumes the role of COO.

A board of directors that is focused on...