Welcome to ceocfointerviews.com!

A bi-weekly Internet and Print Media publication featuring:
breaking news and corporate changes with CEO, CFO and Analyst interviews

"To print this page go to file and left click on print"

Real life business scenarios

wpe32.gif (23516 bytes)

Services
Education
(OTC: RUSS)

Whitney Information Network

4818 Coronado Parkway
Cape Coral, FL 33904
Phone: 941-542-0643

Russell A. Whitney
Chairman and
Chief Executive Officer

Interview conducted by:
Diane Reynolds, Co Publisher

CEOCFOinterviews.com
October 2002

Bio of Russell A. Whitney
Chairman and Chief Executive Officer

Russ Whitney, Chairman and CEO of Whitney Information Network, Inc. is a recognized worldwide leader in the real estate investment and financial training fields. Whitney has put into place an experienced management team. Promoting products in the self-help industry since 1984, Whitney's companies have trained thousands of individuals throughout the United States, Canada, the United Kingdom and Central America with his wealth-building techniques. At age 20, while working in a slaughterhouse, Mr. Whitney bought his first investment property. By age 23 he was financially independent and by age 27 he was written up as one of America's youngest self-made millionaires.

The story of this accomplishment formed the basis of his financial best seller, "Building Wealth", published by Simon & Schuster in 1995. The book was re-released in paperback and became No. 2 on Amazon.com's financial bestseller list for 1998-99. Mr. Whitney has since gone on to organize eight subsidiaries, which operate under the Whitney Information Network, Inc. banner.

CEOCFOinterviews: Whitney Information Network: Please explain to my readers about the company.

Mr. Whitney: Whitney Information Network is a holding company. It has 6 wholly owned subsidiaries, largest of those being the Whitney Education Group. The Whitney Education Group is a post-secondary career related company and the core business of the holding company. We teach people. About 28,000 people a month register for our trainings and 12,000 people a month attend one of our trainings in the U.S., Canada, United Kingdom and England. The subject matter is a variety of real-life business scenarios. Example, our core business is real estate investment. We teach a full curriculum from how a beginner or newcomer who wants to be a homeowner purchases their first home, right on up to a commercial training program which is taught by
CCIM, the highest level of real estate license there is. We teach how to buy and syndicate commercial shopping centers and skyscrapers and so forth. So, we start with the most basic and go to the most sophisticated with education type trainings. We have a stock training business where we teach people everything from value investing to an actual live training programming on the floor of an exchange. We also have a domestic and international asset protection and planning division. This division teaches a wide range of techniques and strategies for incorporating and using multiple corporations and subsidiaries for segregation of liability and tax savings. Our programs are basically the reality version of business school. In business school you learn a lot of theory. In our training programs, we are actually working with what works in the real world and the practical applications.

CEOCFOinterviews: You mentioned there were 6 subsidiaries under the holding company. What are the other 5 and if they aren't important to the Company then why are they still holding on to them?

Mr. Whitney: Oh no, they are still important, but they're actually part of a wealth and liability strategy. Whitney UK, which is a training division in England, is a wholly owned subsidiary. Canada is also a wholly owned subsidiary. We have a consulting division, which is an outbound outreach phone support service in Utah. I didn't mean to allude that they weren't important. The Utah division last year was a $5-$6 million dollar revenue division and this year we are projecting about $10 million dollars from that division. In Whitney UK, a wholly owned subsidiary, we had been planning and doing the research and development for eight or nine months. We just opened up about a month ago in the UK. We projected about a million and a half gross revenues for the year. But, we got over a million in revenues in our first month. So, I can tell you that will be a significant division as well. We also have an Internet division which is interactive learning on the web and that is also a wholly owned subsidiary. I didn't mean to allude to the fact that they weren't important because they are.

CEOCFOinterviews: Is this strictly classroom education or is it the type you can send away for and work at home?

Mr. Whitney: No, we use hotel and ballroom facilities worldwide. We have about ten free preview training classes per week that host about 4,000 people per week in various cities and towns throughout the US, Canada and UK. Then, we have 11 regional trainings that go on every single week in various locations. We have one in Cape Coral, Florida and one in Fort Worth, Texas and one in Albany, New York, Las Vegas, Los Angeles, and one in Seattle etc. These are all various specialty courses. For example, in our core real estate curriculum, we have one specialty training strictly on foreclosure and pre-foreclosure methods and law. We have a wholesale training program, which is held in Texas. Our commercial and syndication program is held in Orlando. So, students from all over the US in our domestic programs will travel to those locations to take classes much like a lawyer or doctor will travel for continuing education.

CEOCFOinterviews: Because each law is different in each state as far as real estate is concerned, how are you able to generalize?

Mr. Whitney: Well, the laws in real estate are pretty general. There are some specific things that are exclusive to California for example. Contracts or foreclosure law is really the only thing that changes from state to state. However, there are two methods in foreclosure law; one is judicial foreclosure and one is non-judicial foreclosure. So, you have half your states as trustee states and half of your states as mortgage states, some of those operate pretty similar. There are small nuances such as redemption time periods etc. and there is a manual that depicts those differences in each state.

CEOCFOinterviews: Well, I know that real estate can be pretty tricky now and then because they keep changing things.

Mr. Whitney: It can be tricky only if you are not educated. Much like anything else, it can be tricky but if you are educated and you know how to do it and you have good training, it is a post secondary career. It is no different from learning doctoring or becoming a lawyer or anything else.

CEOCFOinterviews: How are you addressing this in the international market?

Mr. Whitney: The same. Canada's laws are different than in the US. We send up a research team and they learn the laws. We apply the trade up there to be sure that our technique works and then we will generally employ and train Canadians so our trainers and staff are all Canadians. In general, they are trained and supported by our US staff but run by Canadians. The same in the UK, we send a US team over. We send our US lawyers and accountants to interact and work with the attorneys, solicitors and accountants in the UK. Then we draft our courses to comply with those laws. Over in the UK, most of our higher end and advanced trainers are all British; they are all from England and the UK.

CEOCFOinterviews: So there is a lot of preparation you need to do before you move into an area?

Mr. Whitney: Absolutely. It takes, for example in the UK, eight or nine months, almost a year. Then, we of course did some research in advance of sending the team. You are talking about a good eight to nine months to open up a market like that. We were very successful in Canada and obviously our first month in the UK. Our programs were welcomed. We did a year's worth of projected revenues in one month of enrollment in the UK.

CEOCFOinterviews: And how much of a strain is this on the company financially?

Mr. Whitney: I'd say we had about half a million dollars into the research and development in the UK. In our first month we did about a million dollars on a $65,000 marketing budget. We recouped our entire R&D and possibly moved into a profit in our first month. Also, the Company has zero debt. If you look from the time we did our first merger and went public in 1998 we did $5 million. In our second year 1999, we did $13 million and then went to $26 million. Last year we did $42 million and $32 million the year before that. You will notice in our financials; we had an after tax profit of $2.5 million last year. In our first quarter this year, we have a $3.5 million after tax profit. So, we beat last year by about a million dollars in the first quarter of this year. The Company has zero debt and about $12 million in the bank. The Company has never raised one nickel of equity even when it went public. We did a merge but we never raised any money at all. Going public was to create stocks so our long-term managers and executives could have equity positions and we could create some currency for the equity positions. The Company has boot strapped itself in the last five years from $5 million to $42 million with $15 million in the first quarter of this year with no debt and $12 million dollars in the bank. I would say we have not much of a drain at all as our research and development has proved to be very profitable for us.

CEOCFOinterviews: As far as offering new types of educational courses, is it being addressed?

Mr. Whitney: Yes, in fact the Company's core expertise was in the real estate and general business area. So then we wanted to add a stock training and trading investment product. What we did was search around the country for the best training companies offering that type of training program. We acquired one, the company is called "Teach me to Trade" which has a fantastic product and reputation. We are right now in the midst of looking at a legal continuing education company that provides continuing education for lawyers. We are adding that to our acquisition gun sites. What we are doing now is looking for companies. Although Whitney is the Cadillac of our industry in our core business of education, our content is very good and our products and training are very good but keep in mind the whole business is about acquiring students. That is what we are very good at. So, we are now looking for companies like this attorney continuing education company. It has been around for fifteen years but they are only doing about $3 or $4 million a year in revenue. They have a high profit potential. However, they do not know how to acquire students. We feel very strongly that we can work with companies like this, acquire them, put our marketing edge to it and really build a better student base. We are also looking for companies that have the potential for cross promotion of education. In other words, some of our real estate training programs would be ideal for attorney continuing education programs especially attorneys dealing with closing and real estate contracts. Not all of them are investment experts, so adding that type of training mix can be helpful. We also see the possibility of cross promoting some of our students into that program as well.

CEOCFOinterviews: Do you see yourselves expanding into other countries?

Mr. Whitney: Absolutely. I'm working right now with a division of Morgan Stanley that has very strong ties into Russia and in the Ukraine. We have made some advances and plan to go to Russia and work with several business entities and government entities to provide capitalist training over there. Right now with the Soviet Union and the Ukraine coming out of communism, the government still owns 70% of all the real estate. They are trying to develop programs to sell that off to the public. However, the citizens don't understand capitalism. So, they are looking for some business and real estate training programs. They are basically capitalist oriented so they need training programs to educate the people. Hopefully the next for us internationally will be into that area with some government business contracts for the Company.

CEOCFOinterviews: You talked about all the companies you acquired in the past and the other company you are looking into for legal continuing ed: Will you continue to bring in acquisitions and mergers or do you want to sit back a little bit and develop what you have?

Mr. Whitney: We've taken our time and moved into the acquisition market very slowly. We went public, as you know in 1998 via a reverse merger. We had no history; the company was an OTC company, so we really didn't get much respect out there. So, we decided to pull back and rebuild the foundation of the Company and not promote the stock at all. And, as you can see, we haven't had much volume. We now are in a position where we have five years of solid growth. Just as you can see from last year and first quarter this year, our earnings have gone through the roof. Our stock is valued at $3.00 and there are only seven and half million shares outstanding with about 800,000 shares in the float. If you take a close look at that, it gives us a $24 million dollar value and we have over $12 million in cash. Our Company is extremely undervalued. Now what we did was we put a $300,000 budget for this half a year to an IR campaign. You can see from January our stock has gone from $1.25 very slowly and steadily up to $3.00. We right now qualify for NASDAQ other than we need 200,000 more shares in the float, which we are doing, and have the stock at $5.00. So, I think we have grown the Company fairly slowly and methodically although our revenues are exciting jumps. I have a core of 15 good management people who have been with me for over 15 years. We have a very mature team. We understand the important part of our business is growing a strong foundation. I don't think we are going to move along any faster than we can manage. Right now, we have built ourselves up in two other countries. We have proven twice that we can survive and build a profitable entity internationally. The second phase of our growth is not only continuing to grow internally on our own but is to start acquiring companies. So, I believe we will be acquiring companies that we know something about. Companies that we think are great content providers but do not know how to grow their student base. I think if we acquire great content and apply our marketing model, we are not getting into anything new that we cannot manage. I think that our growth can continue and grow a little faster.

CEOCFOinterviews: Do the changes in the economy affect your growth?

Mr. Whitney: Well I'll tell you, we've been public 5 years and we've been in this business since 1985. It was a "mom and pop" business and there were not great growth plans until we elected to go public, and changed our business focus and strategy to grow the business. But since 1985 we have been through several cycles of ups and downs. And the economy being up or down has never seemed to hurt us because our demographic is a baby boomer. A post-secondary career baby boomer. People who have been out in the work force from anywhere of 5-20 years who have hit plateaus. They have hit these plateaus in good times and bad times and sometimes they are even a little more motivated in bad times when companies are laying off. In the bad times there are cases of many people looking for ways to make and invest their money. So really, in good and bad times it seems our business stays pretty steady. When we went through the last cycle in 1992 and companies were laying off thousands of workers all over the country, we had people coming with their severance pay and enrolling in our training programs in droves. I was at one of our trainings this past week, just stopping in and checking on it, and there were four people in training who were just let go from WorldCom. WorldCom is a company who just laid off 17,000 people. We had four or five people in our training from WorldCom.

CEOCFOinterviews: What would you say to a potential investor?

Mr. Whitney: I would say to take a look at where we are. The Company has proven itself over and over again. We started in 1998 at $5 million and grew it from $5 million to $13 million to $26, $32, $42 million. Our projection this year is $51 million. In our first quarter, we had over $3.5 million after tax profit. I think the Company has been a sleeper and no one has known about it because we haven't been promoting it. Unless you have stumbled upon it on the Internet or somewhere else, no one would even know about it. I think there are some exciting things: the education industry is a multi billion dollar industry in the for-profit sector. Education is growing in leaps and bounds. If you look at Sylvan Learning Center, The Apollo Group, you will see some very exciting things. Take a look at some good private companies like Knowledge Universe, which Larry Lessen and Michael Milken each put a half a billion dollars into. They grew that in the last three years from zero to $3 million dollars in revenue and they have grown quickly through acquisition. Almost all of that is education and post-secondary career related. So I think it is a sleeper industry right now. There are some that are watching it closely. Is education solid? Yes it is. Look at us with 7.5 million shares outstanding and 800,000 in the float and a value of $3.00 and the Company has $12 million dollars in cash and no debt. Is our model working? Well, for five years it has. The only other bet is our management team and if you look you will see that we have a mature management staff. Ten or fifteen have been with me for fifteen years. This management team can pull it off. Our plan is sound. We are going to continue to grow. Anyone is welcome to call us or send for further information or literature on the Company. We will be glad to send it out and talk to
those interested.

CEOCFOinterviews: You mentioned the Internet: I did visit your website. Do you see doing more information on the Company there other than just the press releases?

Mr. Whitney: Well, the website you are going to is primarily for our student base. It isn't to promote the Company stock. It is an interactive learning community. We have members and bulletin boards for our students to come to. We have interactive software and learning on the Internet. So, I would say probably not. We are not using our Internet presence to push the stock investment with the Company. It is there as a learning tool for students, the other part of our business.

CEOCFOinterviews: Do you have a separate website for the investment part of the Company?

Mr. Whitney: No, you can log on to our website and the first symbol you come to is our stock symbol. You can click on that and get a quote and press releases on the Company. Most of our students understand the kind of Company we are. Each week we ask our students to fill out a card if they are interested in getting any information on the Company and we do in fact send them information.

CEOCFOinterviews: Do you have any closing statements or comments for my readers?

Mr. Whitney: No, I think I made them prior. Thanks to this interview, people will know what we do, who we are and where we are going. I am confident in where we are going. We will be glad to send any information.

CEOCFOinterviews: Thank you.

disclaimers

� CEOCFOinterviews.com – Any reproduction or further distribution of this article without the express written consent of CEOCFOinterviews.com is prohibited.

ceocfointerviews.com does not purchase or make
recommendation on stocks based on the interviews published.