STRAYER EDUCATION, INC. REPORTS RECORD
SECOND QUARTER 2005 ENROLLMENT, REVENUES AND EARNINGS
ARLINGTON, Va., July 28, 2005 —Strayer Education, Inc. (Nasdaq: STRA) today announced financial results for the three months ended June 30, 2005. Financial highlights are as follows:
"We are pleased with our financial results and our strong enrollment for the summer term," said Robert Silberman, Chairman and Chief Executive Officer of Strayer Education, Inc. "During the second quarter, we successfully opened two new campuses, one in Greensboro, North Carolina and the other in Columbia, South Carolina. We now look forward to the opening of our third Atlanta campus for the fall term."
Balance Sheet and Cash Flow
At June 30, 2005, the Company had cash, cash equivalents and marketable securities (a diversified, no load, short-term, tax exempt bond fund) of $111.3 million and no debt. The Company generated $25.0 million from operating activities in the first six months of 2005. Capital expenditures were $7.8 million for the same period.
During the three months ended June 30, 2005, the Company spent $22.0 million for the repurchase of 251,238 shares of common stock at an average price of $87.59 per share as part of a previously announced common stock repurchase authorization.
In the second quarter 2005, bad debt expense as a percentage of revenue was 2.5% compared to 2.2% for the same period in 2004. Days sales outstanding, adjusted to exclude tuition receivable related to future quarters, was eight days at the end of the second quarter 2005, compared to nine days for the same period in 2004.
Student Enrollment
Enrollment at Strayer University for the 2005 summer term increased 22% to 20,757 students compared to 17,028 for the same term in 2004. For the 2005 summer term, as compared to the 2004 summer term, Strayer University's rate of growth of continuing students was 21% and its rate of growth of new students was 27%. Out-of-area online students increased 47%, while students taking 100% of their classes at Strayer University Online (including campus based students) increased 33%. The total number of students taking any courses online (including students at brick and mortar campuses taking at least one online course) in the 2005 summer term is 14,137.
Student Enrollment

 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Summer 2004 |  | Summer 2005 |  | % Change |
Campus Based Students: |  |
New Campuses (14 in operation 3 or less years) |  |
Classroom |  | | 677 | |  | | 1,470 | |  | | 117 | % |
Online |  | | 955 | |  | | 1,928 | |  | | 102 | % |
Total New Campus Students |  | | 1,632 | |  | | 3,398 | |  | | 108 | % |
Mature Campuses (20 in operation 4 or more years) |  |
Classroom |  | | 7,387 | |  | | 7,393 | |  | | 0 | % |
Online |  | | 6,420 | |  | | 7,633 | |  | | 19 | % |
Total Mature Campus Students |  | | 13,807 | |  | | 15,026 | |  | | 9 | % |
Total Campus Based Students |  | | 15,439 | |  | | 18,424 | |  | | 19 | % |
Online Based Students (out of area) |  | | 1,589 | |  | | 2,333 | |  | | 47 | % |
Total Students |  | | 17,028 | |  | | 20,757 | |  | | 22 | % |
Total Students Taking 100% of Courses Online |  | | 8,964 | |  | | 11,894 | |  | | 33 | % |
Total Students Taking at Least 1 Course Online |  | | 10,775 | |  | | 14,137 | |  | | 31 | % |
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New Campus Openings
The Company reported today that it opened one new campus in Atlanta, Georgia for the fall term, its third campus in that area and its fifth new campus opening in 2005. This new campus increases the total number of Strayer University campuses to 35.
Common Stock Cash Dividend
The Company announced today that its Board of Directors has declared a quarterly common stock cash dividend of $0.125 per share. This dividend will be paid on September 12, 2005 to shareholders of record as of August 29, 2005.
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Share Repurchase Plan
The Company announced today that, since it had utilized the remaining authorization under its $65 million common share repurchase program during the second quarter of 2005, the Company's Board of Directors amended the share repurchase program to authorize the repurchase of an additional $25 million in value of the Company's common stock over the next 17 months. These share repurchases, if made, will be in the form of open market purchases from time to time at the discretion of the Company's management, depending on market conditions and other corporate considerations. The Company intends to effect such purchases, if any, in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. This share repurchase program may be modified, suspended or terminated at any time by the Company without notice.
Business Outlook
Based on the enrollment growth announced for the 2005 summer term, the Company estimates third quarter 2005 diluted EPS will be in the range of $0.41 - $0.43.
Stock Option Activity
The Company uses the intrinsic-value-based method of accounting for its stock option plan. Under this method, compensation expense is the excess, if any, of the quoted market price of the stock at grant date over the amount an employee must pay to acquire the stock. Had compensation expense been determined based on the fair value of the options at grant dates computed by the Black-Scholes methodology, the Company estimates net income and diluted net income per share would have been $11.9 million and $0.80 per share, respectively, for the three months ended June 30, 2005, and $25.4 million and $1.71 per share, respectively, for the six months ended June 30, 2005.
The following assumptions were used to estimate fair value as of the date of grant using the Black-Scholes option pricing model:

 |  |  |  |  |  |  |  |  |  |  |
|  | 2004 |  | 2005 |
Dividend yield |  | | 0.24 | % |  | | 0.48 | % |
Risk-free interest rates |  | | 3.8 | % |  | | 3.8 | % |
Volatility |  | | 34 | % |  | | 34 | % |
Expected option term (years) |  | | 6.1 | |  | | 6.1 | |
Weighted average fair value of options granted during the year |  | $ | 47.70 | |  | $ | 41.18 | |
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Calculation of Total Potential Share Issuance
The table below sets forth the Company's total current and potential common shares outstanding (in thousands):

 |  |  |  |  |  |  |
Current |  |
Common shares issued and outstanding at 6/30/05 |  | | 14,391 | |
Issued stock options using Treasury Stock Method |  | | 260 | |
Total current |  | | 14,651 | |
Potential |  |
Total issued stock options, less options accounted for using the Treasury Stock Method above |  | | 822 | |
Authorized but unissued options |  | | 549 | |
Total potential |  | | 1,371 | |
Total current and potential common shares |  | | 16,022 | |
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Conference Call with Management
Strayer Education, Inc. will host a conference call to discuss its second quarter 2005 earnings at 10:00 a.m. (ET) today. To participate on the live call, investors should dial (800) 289-0468 10 minutes prior to the
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start time. In addition, the call will be available via live Webcast over the Internet. To access the live Webcast of the conference call, please go to www.strayereducation.com 15 minutes prior to the start time of the call to register. An archived replay of the conference call will be available at (888) 203-1112 (pass code 902675) starting at 1:00 p.m. (ET) today and will be available through Tuesday, August 2, 2005 and then archived at www.strayereducation.com for 90 days.
Strayer Education, Inc. (Nasdaq: STRA) is an education services holding company that owns Strayer University and certain other assets. Strayer's mission is to make higher education achievable and convenient for working adults in today's economy. Strayer University is a proprietary institution of higher learning that offers undergraduate and graduate degree programs in business administration, accounting, information technology, education, and public administration to more than 23,000 working adult students at 35 campuses in 8 states in the eastern United States and worldwide via the Internet through Strayer University Online. Strayer University is committed to providing an education that prepares working adult students for advancement in their careers and professional lives. Founded in 1892, Strayer University is accredited by the Middle States Commission on Higher Education.
For more information on Strayer Education, Inc. visit www.strayereducation.com and for Strayer University visit www.strayer.edu.
This press release contains statements that are forward looking and are made pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). The statements are based on the Company's current expectations and are subject to a number of uncertainties and risks. In connection with the Safe Harbor provisions of the Reform Act, the Company has identified important factors that could cause the Company's actual results to differ materially. The uncertainties and risks include the pace of growth of student enrollment, our continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as state and regional regulatory requirements, competitive factors, risks associated with the opening of new campuses, risks associated with the offering of new educational programs and adapting to other changes, risks associated with the acquisition of existing educational institutions, risks relating to the timing of regulatory approvals, our ability to implement our growth strategy, and general economic and market conditions. Further information about these and other relevant risks and uncertainties may be found in the Company's annual report on Form 10-K and its other filings with the Securities and Exchange Commission, all of which are incorporated herein by reference and which are available from the Commission. We undertake no obligation to update or revise forward looking statements.
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STRAYER EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)

 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | For the three months ended June 30, |  | For the six months ended June 30, |
|  | 2004 |  | 2005 |  | 2004 |  | 2005 |
Revenues |  | $ | 46,811 | |  | $ | 55,249 | |  | $ | 92,917 | |  | $ | 111,402 | |
Costs and expenses: |  |
Instructional and educational support |  | | 16,533 | |  | | 20,032 | |  | | 31,724 | |  | | 38,491 | |
Selling and promotion |  | | 6,320 | |  | | 8,653 | |  | | 12,404 | |  | | 17,316 | |
General and administrative |  | | 5,596 | |  | | 7,072 | |  | | 11,916 | |  | | 13,615 | |
Total costs and expenses |  | | 28,449 | |  | | 35,757 | |  | | 56,044 | |  | | 69,422 | |
Income from operations |  | | 18,362 | |  | | 19,492 | |  | | 36,873 | |  | | 41,980 | |
Operating Income Margin |  | | 39.2 | % |  | | 35.3 | % |  | | 39.7 | % |  | | 37.7 | % |
Investment and other income |  | | 364 | |  | | 795 | |  | | 682 | |  | | 1,405 | |
Income before income taxes |  | | 18,726 | |  | | 20,287 | |  | | 37,555 | |  | | 43,385 | |
Provision for income taxes |  | | 7,323 | |  | | 7,762 | |  | | 14,685 | |  | | 16,769 | |
Net income |  | | 11,403 | |  | | 12,525 | |  | | 22,870 | |  | | 26,616 | |
Preferred stock dividends and accretion... |  | | 279 | |  | | — | |  | | 1,389 | |  | | — | |
Net income available to common stockholders |  | $ | 11,124 | |  | $ | 12,525 | |  | $ | 21,481 | |  | $ | 26,616 | |
Net income per share: |  |
Basic |  | $ | 0.80 | |  | $ | 0.86 | |  | $ | 1.70 | |  | $ | 1.82 | |
Diluted |  | $ | 0.75 | |  | $ | 0.85 | |  | $ | 1.51 | |  | $ | 1.79 | |
Weighted average shares outstanding: |  |
Basic |  | | 13,957 | |  | | 14,531 | |  | | 12,631 | |  | | 14,596 | |
Diluted |  | | 15,164 | |  | | 14,791 | |  | | 15,128 | |  | | 14,870 | |
 |
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STRAYER EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)

 |  |  |  |  |  |  |  |  |  |  |
|  | At December 31, 2004 |  | At June 30, 2005 |
ASSETS |  |
Current assets: |  |
Cash and cash equivalents |  | $ | 97,004 | |  | $ | 85,601 | |
Marketable securities available for sale, at fair value |  | | 25,753 | |  | | 25,670 | |
Income taxes receivable |  | | — | |  | | 858 | |
Tuition receivable, net of allowances for doubtful accounts of $1,301 and $1,376 at December 31, 2004 and June 30, 2005, respectively |  | | 41,669 | |  | | 46,563 | |
Student loans receivable – held for sale |  | | 29 | |  | | 6 | |
Other current assets |  | | 3,679 | |  | | 4,531 | |
Total current assets |  | | 168,134 | |  | | 163,229 | |
Property and equipment, net |  | | 41,137 | |  | | 45,898 | |
Restricted cash |  | | 500 | |  | | 500 | |
Other assets |  | | 343 | |  | | 343 | |
Total assets |  | $ | 210,114 | |  | $ | 209,970 | |
LIABILITIES & STOCKHOLDERS' EQUITY |  |
Current liabilities: |  |
Accounts payable |  | $ | 4,971 | |  | $ | 6,770 | |
Accrued expenses |  | | 2,318 | |  | | 1,362 | |
Income taxes payable |  | | 6,060 | |  | | — | |
Unearned tuition |  | | 42,059 | |  | | 47,631 | |
Total current liabilities |  | | 55,408 | |  | | 55,763 | |
Deferred income taxes |  | | 1,077 | |  | | 1,107 | |
Long-term liabilities |  | | 4,707 | |  | | 6,256 | |
Total liabilities |  | | 61,192 | |  | | 63,126 | |
Commitments and contingencies |  |
Stockholders' equity: |  |
Common stock, par value $.01; 20,000,000 shares authorized; 14,669,487 and 14,390,717 shares issued and outstanding at December 31, 2004 and June 30, 2005, respectively |  | | 147 | |  | | 144 | |
Additional paid-in capital |  | | 140,943 | |  | | 115,948 | |
Retained earnings |  | | 7,983 | |  | | 30,952 | |
Accumulated other comprehensive income (loss) |  | | (151 | ) |  | | (200 | ) |
Total stockholders' equity |  | | 148,922 | |  | | 146,844 | |
Total liabilities and stockholders' equity |  | $ | 210,114 | |  | $ | 209,970 | |
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STRAYER EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Amounts in thousands)

 |  |  |  |  |  |  |  |  |  |  |
|  | For the six months ended June 30, |
|  | 2004 |  | 2005 |
Cash flow from operating activities: |  |
Net income |  | $ | 22,870 | |  | $ | 26,616 | |
Adjustments to reconcile net income to net cash provided by operating activities: |  |
Amortization of deferred rent |  | | 327 | |  | | 74 | |
Depreciation and amortization |  | | 2,564 | |  | | 3,197 | |
Provision for student loan losses |  | | (147 | ) |  | | (63 | ) |
Deferred income taxes |  | | (124 | ) |  | | (33 | ) |
Changes in assets and liabilities: |  |
Tuition receivable, net |  | | 353 | |  | | (4,894 | ) |
Other current assets |  | | (1,155 | ) |  | | (751 | ) |
Other assets |  | | 10 | |  | | — | |
Accounts payable |  | | 128 | |  | | 1,618 | |
Accrued expenses |  | | (757 | ) |  | | (956 | ) |
Income taxes payable |  | | 3,307 | |  | | (6,906 | ) |
Unearned tuition |  | | (1,954 | ) |  | | 5,572 | |
Deferred lease incentives |  | | — | |  | | 1,531 | |
Student loans originated |  | | (723 | ) |  | | (571 | ) |
Collections on student loans receivable and held for sale |  | | 879 | |  | | 601 | |
Net cash provided by operating activities |  | | 25,578 | |  | | 25,035 | |
Cash flows from investing activities: |  |
Purchases of property and equipment |  | | (4,384 | ) |  | | (7,793 | ) |
Net cash used in investing activities |  | | (4,384 | ) |  | | (7,793 | ) |
Cash flows from financing activities: |  |
Common dividends paid. |  | | (1,600 | ) |  | | (3,647 | ) |
Preferred dividends paid |  | | (1,510 | ) |  | | — | |
Repurchase of common stock |  | | (21,166 | ) |  | | (24,998 | ) |
Proceeds from exercise of stock options |  | | 11,949 | |  | | — | |
Net cash used in financing activities |  | | (12,327 | ) |  | | (28,645 | ) |
Net increase (decrease) in cash and cash equivalents |  | | 8,867 | |  | | (11,403 | ) |
Cash and cash equivalents – beginning of period |  | | 82,089 | |  | | 97,004 | |
Cash and cash equivalents – end of period |  | $ | 90,956 | |  | $ | 85,601 | |
Non-cash transactions: |  |
Purchases of property and equipment included in accounts payable |  | $ | 683 | |  | $ | 181 | |
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