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EXHIBIT 99.01
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FOR IMMEDIATE RELEASE
FOR MORE INFORMATION CONTACT:
Mark C. Brown, Senior Vice President and
Chief Financial Officer
(703) 247-2514
Sonya Udler, Vice President,
Corporate Communications
(703) 247-2517
sonya.udler@strayer.edu
STRAYER EDUCATION, INC. REPORTS RECORD
FIRST QUARTER 2003 ENROLLMENT, REVENUES AND EARNINGS
-- STRAYER FIRST QUARTER REVENUES UP 24% --
-- STRAYER FIRST QUARTER DILUTED EPS OF $0.61, UP 17% --
-- STRAYER SPRING 2003 TOTAL ENROLLMENTS UP 17% --
-- STRAYER UNIVERSITY ONLINE ENROLLMENTS UP 69% --
-- STRAYER ON TRACK TO OPEN 5 NEW CAMPUSES IN 2003 --
ARLINGTON, Va., May 9, 2003 - Strayer Education, Inc. (Nasdaq: STRA) today
announced financial results for the three months ended March 31, 2003. Financial
highlights are as follows:
THREE MONTHS ENDED MARCH 31
o Revenues for the three months ended March 31, 2003 increased 24% to $36.7
million, compared to $29.7 million for the same period in 2002, due to
increased enrollment and a 5% tuition increase which commenced in January
2003.
o Operating income (EBIT) rose 19% to $14.1 million from $11.8 million for
the same period in 2002. Operating income margin was 38.4% compared to
39.8% for the same period in 2002. The decrease in operating margin was
primarily due to the opening of two new campuses for the spring term of
this year compared to the prior year in which all three new campuses were
opened for the summer term.
o Net income rose 19% to $8.9 million compared to $7.4 million for the same
period in 2002. Earnings per diluted share rose 17% to $0.61 compared to
$0.52 for the same period in 2002, as diluted weighted average shares
outstanding increased to 14,639,000 from 14,381,000 for the same period in
2002.
"We are pleased with Strayer's financial performance for the first quarter as
well as our enrollment results for the spring term," said Robert Silberman,
Chairman and Chief Executive
Officer of Strayer Education, Inc. "Our financial results for the quarter
reflect the positive contribution of our three new campuses in North Carolina,
which reached profitability in only three quarters, well ahead of our model. Our
Memphis and Nashville campuses successfully opened for the spring term, and we
are on schedule to open our North Raleigh, N.C. campus for the summer term and
two campuses in Philadelphia, Pa. for the fall term. We are committed to
supporting the continued strong growth of Strayer University Online, through
which we serve both our out-of-area markets, as well as provide additional
convenience to our campus-based students. Overall, we are executing our growth
strategy on or ahead of plan, and are excited about the opportunities to
continue our expansion into new states with favorable demographics for our
business model."
BALANCE SHEET AND CASH FLOW
At March 31, 2003, the Company had cash, cash equivalents and marketable
securities of $78.5 million and no debt. In the first quarter, as part of its
cash management activities, the Company invested an additional $6 million in a
diversified, no load, short-term investment grade corporate bond fund. As of
March 31, 2003, the Company had $24.2 million invested in this fund.
The Company generated $13.4 million from operating activities in the first
quarter of 2003. Capital expenditures were $0.7 million for the same period.
For the first quarter 2003, bad debt expense as a percentage of revenue was 1.6%
compared to 1.5% for the same period in 2002. Days sales outstanding, adjusted
to exclude tuition receivable related to future quarters, was seven days at the
end of the first quarter 2003, compared to six days for the same period in 2002.
STUDENT ENROLLMENT
Enrollment at Strayer University for the 2003 spring term increased 17% to
16,772 students compared to 14,335 for the same term in 2002. Across the Strayer
University campus network, new student enrollments increased 16% and continuing
student enrollments increased 18%. Students taking 100% of their classes at
Strayer University Online increased 69% to 6,372 students from 3,772. The total
number of students taking any courses online (including students at brick and
mortar campuses taking at least one online course) in the spring 2003 quarter is
8,033.
STUDENT ENROLLMENT
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Spring Spring %
2002 2003 Change
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New Campuses (9 in operation 3 or less years)
Classroom Based Students 938 1,395 49%
Online Based Students 505 1,400 177%
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Total New Campus Students 1,443 2,795 94%
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Mature Campuses (13 in operation 4 or more years)
Classroom Based Students 9,625 9,005 - 6%
Online Based Students 2,563 3,767 47%
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Total Mature Campus Students 12,188 12,772 5%
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Out-of-Area Online Students 704 1,205 71%
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Total University Enrollment 14,335 16,772 17%
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Total Students Taking 100% Courses Online 3,772 6,372 69%
Total Students Taking At Least 1 Course Online 4,970 8,033 62%
NEW CAMPUS OPENINGS
Memphis/Nashville, Tennessee
Strayer University successfully opened its Memphis and Nashville, Tenn. campuses
for the spring 2003 term, with classes commencing at both locations on March 31.
Raleigh, North Carolina
Strayer University will open its second campus in Raleigh, N.C., for the summer
2003 term. Campus operations commenced as of May 1, and classes will begin on
June 30.
Philadelphia, Pennsylvania
Strayer University remains on track to open two campuses in the Philadelphia
area for the fall 2003 term commencing on September 22. One campus will be
located north of the city in Lower Bucks County and one in the Springfield area.
Leases have been executed on both facilities and classroom fitouts are under
way. Marketing will commence during the third quarter 2003.
EXPANDED ONLINE COURSE OFFERINGS
Strayer University Online is offering 381 asynchronous class sections in the
spring 2003 quarter, with all academic programs now available asynchronously.
BUSINESS OUTLOOK
Based on the strong enrollment growth announced for the spring 2003 term,
partially offset by increased expenses associated with the openings of new
campuses in Memphis and Nashville, Tenn., as well as Raleigh, N.C., the Company
estimates second quarter 2003 diluted EPS will be in the range of $0.57 - $0.59.
Also, based on the earnings outperformance in the first quarter, the Company
believes it will be at the upper end of its full year guidance for diluted
earnings per share of $2.00 - $2.04 (before a potential $.08 to $.10 one-time
gain associated with the planned sale of its Washington, D.C. campus building).
STOCK OPTION ACTIVITY AND CALCULATION OF TOTAL POTENTIAL SHARE ISSUANCE
In the first quarter of 2003, the Company granted 235,000 additional stock
options to key executives. These options had an exercise price of $53.61 per
share (the fair market value on the date of the grant), vest over three to four
years, and expire six to eight years from the date of grant. In the second
quarter, an additional 10,000 stock options will be granted to a new director,
Robert Johnson, in accordance with the Company's Stock Option Plan.
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 $7.9 million and $0.54 per share, respectively, for the quarter
ended March 31, 2003.
The following assumptions were used to estimate fair value as of the date of
grant using The Black-Scholes option pricing model:
2001 2002 2003
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Dividend yield..................................................... 0.7% 0.5% 0.5%
Risk-free interest rates........................................... 4.8% 4.8% 3.0%
Volatility......................................................... 47% 43% 43%
Expected option term (years)....................................... 5.3 5.9 5.2
Weighted average fair value of options granted during the year..... $16.68 $23.65 $21.77
Shares used to compute diluted earnings per share include common shares issued
and outstanding, the assumed conversion of Series A Convertible Redeemable
Preferred Stock outstanding, and the assumed exercise of issued stock options
using the Treasury Stock Method.
Our total current and potential common shares outstanding are as follows:
Current
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Common shares issued and outstanding at 3/31/03..................... 10,652,412
Series A Convertible Redeemable Preferred Stock, convertible on a
1:1 basis (outstanding or recorded) at 3/31/03.................. 3,792,913
Issued stock options using Treasury Stock Method.................... 193,243
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Total current................................................. 14,638,568
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Potential
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Accrual of required PIK dividends on Series A Convertible
Redeemable Preferred Stock through May 2006..................... 529,044(a)
Total issued stock options, less options accounted for using
the Treasury Stock Method above................................. 1,011,757
Authorized but unissued options..................................... 344,405
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Total potential............................................... 1,885,206
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Total current and potential common shares..................... 16,523,774
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(a) This number may be smaller as it does not reflect that the Company has the
right to force conversion of all remaining Series A Convertible Redeemable
Preferred Stock into common stock after May 15, 2004 if the Company's
common stock price trades above $52.00 per share for twenty consecutive
trading days.
CONFERENCE CALL WITH MANAGEMENT
Strayer Education, Inc. will host a conference call to discuss its first quarter
2003 earnings on May 9 at 10:00 a.m. ET. To participate on the live call,
investors should dial (800) 289-0468 10 minutes prior to the start time. In
addition, the call will be available via live web cast over the Internet. To
access the live web cast 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 208036) starting at 3:00 p.m. ET on Friday, May 9 and will
be available through Tuesday, May 13 and archived at www.strayereducation.com
for 90 days.
Strayer Education, Inc. (Nasdaq: STRA) is an education services holding company
which 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, and information technology. The University has more than 16,700
working adult students at 23 campuses in Maryland, Washington, D.C., Virginia,
North Carolina, and Tennessee and worldwide via the Internet through Strayer
University Online. Strayer University is committed to providing high quality
education that prepares working adult students for advancement in their careers
and professional lives. By adapting to the latest techniques and technologies
used in business, Strayer provides our graduates with practical skills and a
competitive edge in the changing marketplace.
Strayer University is accredited by the Middle States Commission on Higher
Education. Founded in 1892, Strayer attracts students from around the country
and throughout the world.
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 "(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.
STRAYER EDUCATION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
For the three months ended March 31,
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2002 2003 % Change
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Revenues.......................................... $29,698 $36,694 23.6%
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Costs and expenses:
Instruction and educational support............... 9,641 12,831 33.1%
Selling and promotion............................. 3,733 4,889 31.0%
General and administration........................ 4,506 4,877 8.2%
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17,880 22,597 26.4%
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Income from operations............................ 11,818 14,097 19.3%
Operating income margin........................... 39.8% 38.4%
Investment and other income....................... 363 574 58.1%
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Income before income taxes........................ 12,181 14,671 20.4%
Provision for income taxes........................ 4,751 5,799 22.1%
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Net income........................................ 7,430 8,872 19.4%
Preferred stock dividends and accretion........... 2,016 1,275 -36.8%
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Net income available to common stockholders....... $5,414 $7,597 40.3%
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Basic net income per share........................ $0.65 $0.71 9.2%
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Diluted net income per share...................... $0.52 $0.61 17.3%
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STRAYER EDUCATION, INC.
(AMOUNTS IN THOUSANDS)
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
At December 31, At March 31,
2002 2003
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Current assets:
Cash and cash equivalents....................... $49,135 $54,330
Investment in marketable securities............. 18,121 24,181
Tuition receivable - net........................ 25,759 29,838
Other current assets............................ 773 1,355
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Total current assets.......................... 93,788 109,704
Student loan receivable - net..................... 9,453 9,792
Property & equipment - net........................ 36,571 36,251
Other assets...................................... 312 313
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Total assets.................................. $140,124 $156,060
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LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................ $3,534 $4,088
Accrued expenses................................ 1,181 510
Dividends payable............................... 1,507 1,507
Income taxes payable............................ 1,812 5,607
Unearned tuition................................ 29,853 34,626
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Total current liabilities..................... 37,887 46,338
Deferred income taxes............................. 70 92
Long-term liabilities............................. 1,985 2,048
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Total liabilities............................. 39,942 48,478
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Series A Convertible Redeemable Preferred Stock... 93,807 94,267
Stockholders' equity:
Common stock.................................... 107 107
Additional paid-in capital...................... 58,868 58,868
Retained earnings (accumulated deficit)......... (52,674) (45,769)
Accumulated other comprehensive income.......... 74 109
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Total stockholders' equity........................ 6,375 13,315
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Total liabilities & stockholders' equity.......... $140,124 $156,060
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STRAYER EDUCATION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(AMOUNTS IN THOUSANDS)
For the three months
ended March 31,
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2002 2003
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Cash flows from operating activities:
Net income................................................ $7,430 $8,872
Adjustments to reconcile net income to net cash:
Amortization of deferred rent........................... -- 63
Depreciation and amortization........................... 790 1,012
Provision for students loans............................ 50 46
Deferred income taxes................................... 14 (36)
Changes in assets and liabilities:
Tuition receivable, net................................. (2,203) (4,079)
Other current assets.................................... (560) (548)
Other assets............................................ (12) (1)
Accounts payable........................................ (472) 554
Accrued expenses........................................ 692 (671)
Income taxes payable.................................... 3,310 3,794
Unearned tuition........................................ 2,953 4,773
Student loans originated.................................. (2,290) (2,459)
Collections on student loans receivable................... 1,714 2,074
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Net cash provided by operating activities............... 11,416 13,394
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Cash flows from investing activities:
Purchases of property and equipment....................... (12,785) (692)
Purchases of marketable securities........................ -- (6,000)
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Net cash used in investing activities................... (12,785) (6,692)
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Cash flows from financing activities:
Common dividends paid..................................... (543) (692)
Preferred dividends paid.................................. (1,312) (815)
Issuance cost of preferred stock.......................... (28) --
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Net cash used in financing activities................... (1,883) (1,507)
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Net increase in cash and cash equivalents............... (3,252) 5,195
Cash and cash equivalents -- beginning of period............ 58,705 49,135
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Cash and cash equivalents -- end of period.................. $55,453 $54,330
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