ITT EDUCATIONAL SERVICES INC, 11-K, 2000-06-27

ITT EDUCATIONAL SERVICES INC
11-K, 2000-06-27
EDUCATIONAL SERVICES

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 11-K

ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1999

o	TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 1-13144

A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

ESI 401(k) PLAN

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

ITT EDUCATIONAL SERVICES, INC.

5975 Castle Creek Parkway N. Drive
P.O. Box 50466
Indianapolis, Indiana 46250-0466
(317) 594-9499

ESI 401(k) PLAN

Annual Report to the Securities and Exchange Commission
December 31, 1999

Item 4.

The ESI 401(k) Plan (the "Plan") is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and the Plan's financial statements and schedules have been prepared in accordance with the financial reporting requirements of ERISA. Such financial statements and schedules are included in this Report in lieu of the information required by Items 1 - 3 of Form 11-K.

FINANCIAL STATEMENTS AND EXHIBIT.

INDEX

		Page

Report of Independent Accountants		3

Statement of Net Assets Available for Plan Benefits, with Fund Information, at December 31, 1999 and 1998		4

Statement of Changes in Net Assets Available for Plan Benefits, with Fund Information, for the year ended December 31, 1999		6

Notes to Financial Statements		8

Supplemental Schedules:

	Schedule of Assets Held for Investment Purposes at December 31, 1999	13

	Schedule of Reportable (5%) Transactions for the year ended December 31, 1999	14

Signature		S-1

Index to Exhibit		S-2

Report of Independent Accountants

To the Participants and Administrator of
the ESI 401(k) Plan

In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the ESI 401(k) Plan (the "Plan") at December 31, 1999 and December 31, 1998, and the changes in net assets available for benefits for the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. ESI 401(k) Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1999 and 1998

	Fund Information at December 31, 1999
	American Century Ultra Fund	American Century Real Estate Fund	American Century Value Fund	American Century International Growth Fund	American Century Strategic Allocation Fund:
	American Century Ultra Fund	American Century Real Estate Fund	American Century Value Fund	American Century International Growth Fund	Conservative	Moderate	Aggressive
Investments, at fair value:
Registered investment company	$7,286,051	$18,923	$219,180	$1,608,547	$200,434	$7,152,008	$358,060
Common/collective fund	—	—	—	—	—	—	—
Employer securities	—	—	—	—	—	—	—
Cash and cash equivalents	—	—	—	—	—	—	—

Contributions receivable:
Employer	—	—	—	—	—	—	—
Participant	27,239	408	3,268	6,959	916	36,211	5,545

Participant loans	—	—	—	—	—	—	—

Net assets available for plan benefits	$7,313,290	$19,331	$222,448	$1,615,506	$201,350	$7,188,219	$363,605


	Fund Information at December 31, 1998
	American Century Ultra Fund	American Century Real Estate Fund	American Century Value Fund	American Century International Growth Fund	American Century Strategic Allocation Fund:
	American Century Ultra Fund	American Century Real Estate Fund	American Century Value Fund	American Century International Growth Fund	Conservative	Moderate	Aggressive
Investments, at fair value:
Registered investment company	$4,076,269	$ 5,998	$161,005	$1,282,943	$135,250	$5,856,365	$ 60,684
Common/collective fund	—	—	—	—	—	—	—
Employer securities	—	—	—	—	—	—	—
Cash and cash equivalents	—	—	—	—	—	—	—

Contributions receivable:
Employer	—	—	—	—	—	—	—
Participant	17,647	138	1,109	6,787	500	34,091	2,018

Participant loans	—	—	—	—	—	—	—

Net assets available for plan benefits	$4,093,916	$ 6,136	$162,114	$1,289,730	$135,750	$5,890,456	$ 62,702

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

ESI 401(k) Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information, Continued
December 31, 1999 and 1998

	Fund Information at December 31, 1999						Total
	American Century Income and Growth Fund	JPM Pierpont U.S. Small Company Fund	JPM Pierpont Bond Fund	SEI Trust Stable Asset Fund	ESI Stock Fund	Loan Fund	Total
Investments, at fair value:
Registered investment company	$13,345,651	$211,343	$585,027	$ —	$ —	$ —	$30,985,224
Common/collective fund	—	—	—	6,159,213	—	—	6,159,213
Employer securities	—	—	—	—	11,816,335	—	11,816,335
Cash and cash equivalents	—	—	—	—	107,801	—	107,801
							—
Contributions receivable:							—
Employer	—	—	—	—	92,971	—	92,971
Participant	43,535	2,332	2,295	19,235	31,443	—	179,386

Participant loans	—	—	—	—	—	1,976,348	1,976,348

Net assets available for plan benefits	$13,389,186	$213,675	$587,322	$6,178,448	$12,048,550	$1,976,348	$51,317,278

	Fund Information at December 31, 1998						Total
	American Century Income and Growth Fund	JPM Pierpont U.S. Small Company Fund	JPM Pierpont Bond Fund	SEI Trust Stable Asset Fund	ESI Stock Fund	Loan Fund	Total
Investments, at fair value:
Registered investment company	$11,897,746	$252,509	$923,227	$ —	$ —	$ —	$24,651,996
Common/collective fund	—	—	—	5,554,066		—	5,554,066
Employer securities	—	—	—	—	13,915,928	—	13,915,928
Cash and cash equivalents	—	—	—	—	145,023	—	145,023

Contributions receivable:
Employer	—	—	—	—	88,198	—	88,198
Participant	40,330	1,074	3,050	20,151	43,462	—	170,357
							—

Participant loans	—	—	—	—	—	2,236,484	2,236,484

Net assets available for plan benefits	$11,938,076	$253,583	$926,277	$5,574,217	$14,192,611	$2,236,484	$46,762,052

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

ESI 401(k) Plan
Statement of Changes in Net Assets Available for Plan Benefits, with Fund Information
for the year ended December 31, 1999

	Fund Information
	American Century Ultra Fund		American Century Real Estate Fund		American Century Value Fund		American Century International Growth Fund		American Century Strategic Allocation Fund:
	American Century Ultra Fund		American Century Real Estate Fund		American Century Value Fund		American Century International Growth Fund		Conservative		Moderate		Aggressive
Additions to net assets:
Transfer in from ITT Plan	$ 104,294		$ —		$ —		$ 8,580		$ —		$ 20,217		$ —
Contributions:
Employer	16,749		179		1,437		5,404		890		9,693		691
Participant	573,033		6,184		54,357		154,673		13,249		836,520		80,915
Rollover	260,963		1,205		9,474		3,294		213		2,238		7,895
Investment income:
Net appreciation (depreciation) in fair value of investments	1,874,658		(1,450	)	(27,294	)	547,563		6,339		1,014,533		59,109
Interest and dividends	218,356		987		18,137		70,524		11,486		287,209		15,553

Deductions from net assets:
Disbursements to participants	(240,541	)	(86	)	(3,827	)	(63,365	)	(301	)	(482,965	)	(6,057	)
Administrative expenses	(7,634	)	(49	)	(406	)	(2,002	)	(188	)	(23,400	)	(730	)

Transfers (to) from other funds	419,496		6,225		8,456		(398,895	)	33,912		(366,282	)	143,527

Net increase (decrease)	3,219,374		13,195		60,334		325,776		65,600		1,297,763		300,903
Net assets available for plan benefits, at December 31, 1998	4,093,916		6,136		162,114		1,289,730		135,750		5,890,456		62,702

Net assets available for plan benefits, at December 31, 1999	$7,313,290		$19,331		$222,448		$1,615,506		$201,350		$7,188,219		$363,605

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

ESI 401(k) Plan
Statement of Changes in Net Assets Available for Plan Benefits, with Fund Information, Continued
for the year ended December 31, 1999

	Fund Information												Total
	American Century Income and Growth Fund		JPM Pierpont U.S. Small Company Fund		JPM Pierpont Bond Fund		SEI Trust Stable Asset Fund		ESI Stock Fund		Loan Fund		Total
Additions to net assets:
Transfer in from ITT Plan	$ 41,450		$ —		$ 3,909		$ 160,178		$ 7,863,735		$ 8,403		$ 8,210,766
Contributions:
Employer	22,669		370		3,122		13,689		2,119,612		—		2,194,505
Participant	1,061,602		39,492		67,033		490,262		908,029		—		4,285,349
Rollover	42,874		4,507		490		14,488		2,401		—		350,042
Investment income:
Net appreciation (depreciation) in fair value of investments	1,917,825		39,593		(49,997	)	—		(12,121,723	)	—		(6,740,844	)
Interest and dividends	163,998		159		42,438		319,872		11,355		172,851		1,332,925

Deductions from net assets:
Disbursements to participants	(1,071,698	)	(1,064	)	(188,380	)	(1,370,545	)	(1,401,323	)	(151,415	)	( 4,981,567	)
Administrative expenses	(14,550	)	(294	)	(852	)	(14,086	)	(31,759	)			(95,950	)

Transfers (to) from other funds	(713,060	)	(122,671	)	(216,718	)	990,373		505,612		(289,975	)	—

Net increase (decrease)	1,451,110		(39,908	)	(338,955	)	604,231		(2,144,061	)	(260,136	)	4,555,226
Net assets available for plan benefits, at December 31, 1998	11,938,076		253,583		926,277		5,574,217		14,192,611		2,236,484		46,762,052

Net assets available for plan benefits, at December 31, 1999	$13,389,186		$ 213,675		$587,322		$6,178,448		$12,048,550		$1,976,348		$51,317,278

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

ESI 401(k) Plan
Notes to Financial Statements

1.      Summary of Plan Provisions

The following description of the ESI 401(k) Plan (the "Plan") provides only general information. Participants should refer to the Summary Plan Description and the Plan document for more complete descriptions of the Plan's provisions.

General

The Plan is a defined contribution plan covering all salaried employees of ITT Educational Services, Inc. ("ESI") (or an affiliate of ESI that adopts the Plan) who have completed one year of service. It is subject to Section 401(a) of the Internal Revenue Code (the "IRC") and the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The ESI Employee Benefit Plan Administration and Investment Committee (the "Committee") is the plan administrator of the Plan for purposes of ERISA. J.P. Morgan/American Century Retirement Plan Services provides dministrative services under a written agreement with the Committee. UMB Bank, N.A. is a trustee of the trust for the Plan.

The Plan became effective in May 1998, and the first transfer and contribution to the Plan were made in June 1998. Prior to June 1998, ESI employees participated in The ITT 401(k) Retirement Savings Plan (the "ITT Plan") of ITT Corporation, ESI's former parent corporation. During 1998 and 1999, the portion of the ITT Plan assets attributable to ESI employees was transferred to the ESI employees' Plan accounts, which is reflected in the statement of changes in net assets available for plan benefits as "Transfer in from ITT Plan."

Contributions

Each year, a participant may contribute up to 16% of pretax annual base compensation, as defined in the Plan. ESI makes a matching contribution equal to 50% of the first 5% of base compensation that a participant contributes to the Plan during each payroll processing period. In addition, ESI makes a retirement contribution of 1% of a participant's base compensation for each payroll processing period. ESI contributions are made or invested in ESI common stock. Participant contributions are invested among a number of available investment funds as directed by each participant. At age 55, participants may choose to re-allocate existing ESI contribution accounts and allocate all future ESI contributions among all available investment funds. Contributions are subject to certain limitations.

Participant Plan Accounts

Each participant's Plan account is credited with the participant's contributions, the ESI matching and retirement contributions and an allocation of Plan earnings derived from the participant's investment options, and is charged with an allocation of administrative expenses. Earnings and administrative expenses are allocated based on account balances. The benefit to which a participant is entitled is the benefit that can be provided from the vested portion of participant's Plan account. Forfeitures from terminated participants' nonvested accounts are used to reduce future ESI contributions.

ESI 401(k) Plan
Notes to Financial Statements

1.     Summary of Plan Provisions, continued

Vesting

Participants are 100% vested in their contributions and ESI retirement contributions, plus any actual earnings on those contributions. Vesting in the ESI matching contributions and the earnings on those contributions is based on the participant's years of continuous service with ESI in accordance with the following table:

Years of Service
Vested Percent

Less than 1
    0%

At least 1, but less than 2
  20%

At least 2, but less than 3
  40%

At least 3, but less than 4
  60%

At least 4, but less than 5
  80%

At least 5
100%

Loans

A participant may borrow from his or her Plan account, while employed by ESI, up to the lesser of $50,000 or 50% of the vested portion of the Plan account balance. Loan terms cannot exceed five years, unless the loan is to be used in conjunction with the purchase of a participant's primary residence. The loans are secured by the amounts transferred to the Loan Fund (as defined in the Plan) from the participant's Plan account and bear interest at a rate determined by the Committee. Loan principal and interest are paid ratably by payroll deductions, or as otherwise agreed to by the participant and the Committee.

Investment Options

The Plan trustee has established and maintains 12 separate investment funds into which participants may direct their contributions. Those 12 separate funds are as follows:

      American Century Ultra Fund-Invests in a diversified portfolio of medium- and large-size companies that fund management considers to have above-average potential for appreciation.

American Century Real Estate Fund-Invests primarily in securities issued by real estate investment trusts with potential for long-term capital appreciation.

American Century Value Fund-Invests in equity securities of well-established companies that fund management believes to be undervalued at the time of purchase.

American Century International Growth Fund-Invests in a diversified range of foreign companies with above-average potential for appreciation.

ESI 401(k) Plan
Notes to Financial Statements

1.     Summary of Plan Provisions, continued

American Century Strategic Allocation Fund: Conservative-Invests in equity securities and some bond and money market securities with the objective of moderate long-term growth.

American Century Strategic Allocation Fund: Moderate-Invests in equity securities and maintains a sizable stake in bonds and money market securities to provide long-term growth and some regular income.

American Century Strategic Allocation Fund: Aggressive-Invests in equity securities and some bonds and money market securities to provide long-term growth and a small amount of income.

American Century Income & Growth Fund-Invests in stocks of companies with strong dividend growth potential and large U.S. companies whose stocks appear under valued.

JPM Pierpont US Small Company Fund-Invests in equity securities of small companies considered to be likely to provide a high total return.

JPM Pierpont Bond Fund-Invests in a diversified portfolio of fixed income securities, including, but not limited to, US government and agency securities, corporate securities, private placements and asset-backed mortgage-related securities.

SEI Trust Stable Asset Fund-Invests exclusively in a diversified pool of high-quality fixed income securities.

ESI Stock Fund-Invests in shares of ESI common stock.

Fund Transfers

Transfers between funds result from participants redirecting their contributions between the funds listed above.

Distributions

A participant is eligible to receive a distribution from the Plan upon the participant's termination of service, death, disability, retirement or demonstration of financial hardship. Payments are normally made in the form of a single lump sum. If the value of the participant's vested Plan account balance exceeds $5,000, however, the participant may elect instead to receive payment in one of the following forms: (a) annual installments; (b) monthly installments; or (c) a nonforfeitable annuity, which will be purchased from an insurance company by the Plan on the participant's behalf.

ESI 401(k) Plan
Notes to Financial Statements

2.       Summary of Significant Accounting Policies

Basis of Accounting

The financial statements of the Plan are prepared under the accrual method of accounting.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Investments and Investment Income

Investments, which are exposed to various risks, such as interest rate, market and credit risks, are stated at fair value as determined by the Plan trustee at the quoted market value or unit values based upon quoted market values as of the last business day of the Plan year. Participant loans are valued at cost, which approximates fair value.

The Plan presents in the statement of changes in net assets available for benefits the net appreciation (depreciation) in the fair value of its investments, which consists of the realized gains and losses and the unrealized appreciation (depreciation) on those investments.

Payment of Benefits

Disbursements to participants are recorded when paid.

3.       Investments

The following is a summary of investments that represent 5% or more of net assets available for Plan benefits at December 31, 1999 and 1998:

December 31, 1999

Shares

Fair
Value

SEI Trust Stable Asset Fund

6,159,213

$

6,159,213

American Century Strategic Allocation Fund: Moderate

985,125

7,152,008

American Century Income & Growth Fund

391,943

13,345,651

American Century Ultra Fund

159,154

7,286,051

ESI Stock Fund, includes participant directed and
     non-participant directed

771,882

11,924,136

ESI 401(k) Plan
Notes to Financial Statements

3.       Investments, continued

December 31, 1998

Shares

Fair
Value

SEI Trust Stable Asset Fund

5,554,066

$

5,554,066

American Century Strategic Allocation Fund: Moderate

943,054

5,856,365

American Century Income & Growth Fund

406,761

11,897,747

American Century Ultra Fund

122,007

4,076,269

ESI Stock Fund, includes participant directed and
     non-participant directed

409,292

14,060,951

4.       Administrative Fees

Participant accounts were charged $95,950 and $5,243 for administrative fees related to the Plan for the periods ended December 31, 1999 and 1998, respectively. ESI paid administrative fees of $7,870 and $38,707 for the period ended December 31, 1999 and 1998, respectively.

5.       Related-Party Transactions

Certain Plan investments are shares of mutual funds managed by JP Morgan/American Century or its affiliates and, therefore, these investments qualify as party-in-interest transactions, which are exempt from the ERISA prohibited transaction rules. In addition, participants in the Plan may invest their contributions in the ESI Stock Fund, which primarily holds shares of ESI common stock. At December 31, 1999, the ESI Stock Fund held 771,882 shares with a historical cost of $19,873,361 and a market value of $11,816,335. At December 31, 1998, the ESI Stock Fund held 409,292 shares with a historical cost of $10,224,846 and a market value of $13,915,928.

6.       Plan Termination

Although it has not expressed any intent to do so, ESI has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their Plan accounts.

7.       Income Tax Status

The Internal Revenue Service issued a determination letter on April 13, 1999 stating that the Plan qualifies for tax-exempt status under the applicable provisions of the IRC.

ESI 401(k) Plan
Schedule of Assets Held For Investment Purposes
at December 31, 1999

Identity of Party
     Description of Asset


     Cost
     Current
Value


Participant loans*      Rates range from 6.99%-9.78%      $  1,976,348      $  1,976,348

SEI Trust Stable Asset Fund*      Common/collective fund      6,159,213      6,159,213

American Century Ultra Fund*      Registered investment company      5,390,628      7,286,051

American Century Real Estate Fund*      Registered investment company      20,507      18,923

American Century Value Fund*      Registered investment company      257,448      219,180

American Century International Growth Fund*      Registered investment company      1,124,651      1,608,547

American Century Strategic Allocation Fund:    Conservative*      Registered investment company      195,047      200,434

American Century Strategic Allocation Fund: Moderate*      Registered investment company      6,237,075      7,152,008

American Century Strategic Allocation Fund: Aggressive*      Registered investment company      300,285      358,060

American Century Income & Growth Fund*      Registered investment company      10,909,731      13,345,651

J.P. Morgan Pierpont Small Company Fund*      Registered investment company      157,588      211,343

J.P. Morgan Pierpont Bond Fund*      Registered investment company      617,886      585,027

ESI Stock Fund*      Common stock      19,873,361      11,816,335

ESI Stock Fund*      Cash and cash equivalent      107,801      107,801





          $53,327,569      $51,044,921





*

Denotes party-in-interest

ESI 401(k) PLAN
SCHEDULE OF REPORTABLE (5%) TRANSACTIONS
for the year ended December 31, 1999

Identity of Party
     Description
of Asset
     Purchase Price (P)
Sales Price (S)

Cost of Asset
     Current Value
of Asset on
Transaction
Date
     Net Gain
or (Loss)

ESI Stock Fund
Common stock
     $13,968,504 (P)      $13,968,504      $13,968,504      —

ESI Stock Fund
Common stock
     $  3,559,443 (S)      $  4,069,879      $  3,559,443      ($510,436 )

SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the ESI Employee Benefit Plan Administration and Investment Committee of the ESI 401(k) Plan has duly caused this annual report to be signed on its behalf by the undersigned, hereunto duly authorized.

ESI 401(k) PLAN

Date: June 27, 2000
By:
/s/ Joseph B. Rainier

Joseph B. Rainier

Chairperson

INDEX TO EXHIBIT

Exhibit
No
                          Description

23 Consent of Independent Accountants

S-2

	December 31, 1998
	Shares	Fair Value
SEI Trust Stable Asset Fund	5,554,066	$	5,554,066
American Century Strategic Allocation Fund: Moderate	943,054		5,856,365
American Century Income & Growth Fund	406,761		11,897,747
American Century Ultra Fund	122,007		4,076,269
ESI Stock Fund, includes participant directed and non-participant directed	409,292		14,060,951

Identity of Party		Description of Asset		Purchase Price (P) Sales Price (S)		Cost of Asset		Current Value of Asset on Transaction Date		Net Gain or (Loss)
ESI Stock Fund		Common stock		$13,968,504	(P)		$13,968,504		$13,968,504		—
ESI Stock Fund		Common stock		$ 3,559,443	(S)		$ 4,069,879		$ 3,559,443		($510,436	)

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Years of Service			Vested Percent
Less than 1			0%
At least 1, but less than 2			20%
At least 2, but less than 3			40%
At least 3, but less than 4			60%
At least 4, but less than 5			80%
At least 5			100%

		American Century Ultra Fund-Invests in a diversified portfolio of medium- and large-size companies that fund management considers to have above-average potential for appreciation.

		American Century Real Estate Fund-Invests primarily in securities issued by real estate investment trusts with potential for long-term capital appreciation.

		American Century Value Fund-Invests in equity securities of well-established companies that fund management believes to be undervalued at the time of purchase.

		American Century International Growth Fund-Invests in a diversified range of foreign companies with above-average potential for appreciation.


		American Century Strategic Allocation Fund: Conservative-Invests in equity securities and some bond and money market securities with the objective of moderate long-term growth.

		American Century Strategic Allocation Fund: Moderate-Invests in equity securities and maintains a sizable stake in bonds and money market securities to provide long-term growth and some regular income.

		American Century Strategic Allocation Fund: Aggressive-Invests in equity securities and some bonds and money market securities to provide long-term growth and a small amount of income.

		American Century Income & Growth Fund-Invests in stocks of companies with strong dividend growth potential and large U.S. companies whose stocks appear under valued.

		JPM Pierpont US Small Company Fund-Invests in equity securities of small companies considered to be likely to provide a high total return.

		JPM Pierpont Bond Fund-Invests in a diversified portfolio of fixed income securities, including, but not limited to, US government and agency securities, corporate securities, private placements and asset-backed mortgage-related securities.

		SEI Trust Stable Asset Fund-Invests exclusively in a diversified pool of high-quality fixed income securities.

		ESI Stock Fund-Invests in shares of ESI common stock.

	December 31, 1999
	Shares	Fair Value
SEI Trust Stable Asset Fund	6,159,213	$	6,159,213
American Century Strategic Allocation Fund: Moderate	985,125		7,152,008
American Century Income & Growth Fund	391,943		13,345,651
American Century Ultra Fund	159,154		7,286,051
ESI Stock Fund, includes participant directed and non-participant directed	771,882		11,924,136

Identity of Party	Description of Asset
Identity of Party	Description of Asset	Cost	Current Value
Participant loans*	Rates range from 6.99%-9.78%	$ 1,976,348	$ 1,976,348
SEI Trust Stable Asset Fund*	Common/collective fund	6,159,213	6,159,213
American Century Ultra Fund*	Registered investment company	5,390,628	7,286,051
American Century Real Estate Fund*	Registered investment company	20,507	18,923
American Century Value Fund*	Registered investment company	257,448	219,180
American Century International Growth Fund*	Registered investment company	1,124,651	1,608,547
American Century Strategic Allocation Fund: Conservative*	Registered investment company	195,047	200,434
American Century Strategic Allocation Fund: Moderate*	Registered investment company	6,237,075	7,152,008
American Century Strategic Allocation Fund: Aggressive*	Registered investment company	300,285	358,060
American Century Income & Growth Fund*	Registered investment company	10,909,731	13,345,651
J.P. Morgan Pierpont Small Company Fund*	Registered investment company	157,588	211,343
J.P. Morgan Pierpont Bond Fund*	Registered investment company	617,886	585,027
ESI Stock Fund*	Common stock	19,873,361	11,816,335
ESI Stock Fund*	Cash and cash equivalent	107,801	107,801

		$53,327,569	$51,044,921

	ESI 401(k) PLAN


Date: June 27, 2000	By:		/s/ Joseph B. Rainier

			Joseph B. Rainier
		Chairperson