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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 SECOND QUARTER 2003
ENROLLMENT, REVENUES AND EARNINGS
-- STRAYER SECOND QUARTER REVENUES UP 24% --
-- STRAYER SECOND QUARTER DILUTED EPS OF $0.60, UP 18% --
---- STRAYER UNIVERSITY SUMMER 2003 TOTAL ENROLLMENTS UP 25%/
NEW STUDENT ENROLLMENTS UP 31% --
-- STRAYER UNIVERSITY SUMMER 2003 ONLINE ENROLLMENTS UP 68% --
-- SECOND RALEIGH, N.C. CAMPUS OPENS/
COMPANY ON TRACK TO OPEN 5 NEW CAMPUSES IN 2003 --
-- STRAYER FULL YEAR EPS ESTIMATE RAISED TO $2.04 TO $2.08
(EXCLUDING ONE-TIME GAINS) --
ARLINGTON, Va., August 1, 2003 - Strayer Education, Inc. (Nasdaq: STRA) today
announced financial results for the three and six months ended June 30, 2003.
Financial highlights are as follows:
THREE MONTHS ENDED JUNE 30
o Revenues for the three months ended June 30, 2003 increased 24% to $37.0
million, compared to $29.8 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 20% to $14.0 million from $11.7 million for
the same period in 2002. Operating income margin was 38.0%, compared to
39.3% 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 20% to $8.8 million compared to $7.4 million for the same
period in 2002. Earnings per diluted share rose 18% to $0.60 compared to
$0.51 for the same period in 2002, as diluted weighted average shares
outstanding increased to 14,779,000 from 14,515,000 for the same period in
2002.
SIX MONTHS ENDED JUNE 30
o Revenues for the six months ended June 30, 2003 increased 24% to $73.7
million, compared to $59.5 million for the same period in 2002, due to
increased enrollment and a 5% tuition increase effective for 2003.
o Operating income (EBIT) rose 20% to $28.1 million from $23.5 million for
the same period in 2002. Operating income margin was 38.2%, compared to
39.5% for the same period in 2002. The decrease in operating income margin
is primarily attributable to the earlier timing of two new campus openings
compared to 2002.
o Net income rose 20% to $17.7 million compared to $14.8 million for the same
period in 2002. Earnings per diluted share rose 17% to $1.20 compared to
$1.03 for the same period in 2002, as diluted weighted average shares
outstanding increased to 14,709,000 from 14,448,000 for the same period in
2002.
"We are pleased with both our financial results for the second quarter, as well
as our strong enrollment growth for the summer term," said Robert Silberman,
Chairman and Chief Executive Officer of Strayer Education, Inc. "Our online
program continues to provide high academic quality and convenience to both our
campus-based and out-of-area students. Our second campus in Raleigh, N.C. will
allow us to better serve that growing market, and we remain on track to open two
additional campuses that will commence offering classes in Philadelphia this
fall."
BALANCE SHEET AND CASH FLOW
At June 30, 2003, the Company had cash, cash equivalents and marketable
securities of $83.8 million and no debt. In the second quarter, as part of its
cash management activities, the Company invested an additional $2 million in a
diversified, no load, short-term investment grade corporate bond fund. As of
June 30, 2003, the Company had $26.4 million invested in this fund.
The Company generated $19.6 million from operating activities in the first six
months of 2003. Capital expenditures were $2.4 million for the same period.
In the second quarter 2003, bad debt expense as a percentage of revenue was 1.9%
compared to 1.3% 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 second quarter 2003, compared to seven days for the same period in
2002.
STUDENT ENROLLMENT
Enrollment at Strayer University for the 2003 summer term increased 25% to
13,928 students compared to 11,171 for the same term in 2002. Across the Strayer
University campus network, new student enrollments increased 31% and continuing
student enrollments increased 24%. Students taking 100% of their classes at
Strayer University Online increased 68% to 6,082 students from 3,612. The total
number of students taking any courses online (including students at brick and
mortar campuses taking at least one online course) in the summer 2003 quarter
was 7,503.
STUDENT ENROLLMENT
Summer Summer %
2002 2003 Change
---------- ---------- --------
New Campuses (9 in operation 3 or less years)
Campus Based Students 406 1,106 172%
Online Based Students 354 1,137 221%
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Total New Campus Students 760 2,243 195%
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Mature Campuses (14 in operation 4 or more years)
Campus Based Students 7,153 6,740 -6%
Online Based Students 2,591 3,834 48%
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Total Mature Campus Students 9,744 10,574 9%
---------- ----------
Out of Area Online Students 667 1,111 67%
---------- ----------
Total University Enrollment 11,171 13,928 25%
========== ==========
Total Students Taking 100% Courses Online 3,612 6,082 68%
Total Students Taking At Least 1 Course Online 4,527 7,503 66%
NEW CAMPUS OPENINGS
Raleigh, North Carolina
Strayer University successfully opened its second campus in Raleigh, N.C., for
the summer 2003 term, with classes commencing on June 30.
Philadelphia, Pennsylvania
Strayer University will open two campuses in the Philadelphia area for the fall
2003 term. Leases have been executed, and fit out is currently underway for
campus facilities in Springfield, Pa. and Bensalem, Pa. Marketing and recruiting
activities commenced on July 1 in the Philadelphia market. First classes will be
held on September 22.
EXPANDED ONLINE COURSE OFFERINGS
Strayer University Online is offering 493 online classes in the summer 2003
term, with all academic programs now available synchronously and asynchronously.
BUSINESS OUTLOOK
Based on the strong enrollment growth announced for the summer 2003 term, the
Company estimates third quarter 2003 diluted EPS will be in the range of $0.22 -
$0.24. Also, based on the strong enrollment growth for the summer 2003 term, the
Company believes its diluted earnings per share for the full year
will be in the range of $2.04 - $2.08 (before any potential one-time gain
associated with the previously announced planned sale of its Washington, D.C.
campus building).
STOCK OPTION ACTIVITY AND CALCULATION OF TOTAL POTENTIAL SHARE ISSUANCE
In the second quarter of 2003, the Company granted 10,000 stock options to a new
member of the Board of Directors, Robert L. 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 $7.7 million and $0.52 per share, respectively, for the three
months ended June 30, 2003, and $15.6 million and $1.06 per share, respectively
for the six months ended June 30, 2003.
The following assumptions were used to estimate fair value as of the date of
grant using The Black-Scholes option pricing model:
2002 2003
---- ----
Dividend yield.................................................... 0.5% 0.5%
Risk-free interest rates.......................................... 4.8% 3.0%
Volatility........................................................ 43% 40%
Expected option term (years)...................................... 5.9 5.2
Weighted average fair value of options granted during the year.... $23.65 $21.88
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
-------
Weighted average common shares outstanding for the three months ended 6/30/03.. 10,666,147
Convertible Series A Preferred Stock, convertible on a
1:1 basis (outstanding or recorded) at 6/30/03 ............................ 3,827,972
Issued stock options using Treasury Stock Method............................... 284,512
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Total current............................................................ 14,778,631
Potential
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Accrual of required PIK dividends on Convertible Series A
Preferred Stock through May 2006 .......................................... 493,985 (a)
Total issued stock options, less options accounted for using
the Treasury Stock Method above ........................................... 916,753
Authorized but unissued options ............................................... 334,405
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Total potential.......................................................... 1,745,143
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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 preferred shares into common shares after May 15, 2004 if the
Company's common stock price trades above $52.00 per share for
twenty consecutive trading days. Of the 493,985 shares, 129,926
would potentially accrue through May 15, 2004.
CONFERENCE CALL WITH MANAGEMENT
Strayer Education, Inc. will host a conference call to discuss its second
quarter 2003 earnings on August 1 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 648024) starting at 3 p.m. ET on Friday, August 1 and will
be available through Tuesday, August 5 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 25 campuses in Maryland, North Carolina, Pennsylvania,
Tennessee, Virginia and Washington, D.C. 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 For the six months
ended June 30, ended June 30,
---------------------------------- ----------------------------------
%
2002 2003 Change 2002 2003 % Change
--------- --------- --------- --------- --------- ---------
Revenues .......................... $29,823 $36,965 23.9% $59,521 $73,659 23.8%
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Costs and expenses:
Instructional and educational
support ......................... 10,356 13,261 28.1% 19,998 26,092 30.5%
Selling and promotion ............. 3,760 4,947 31.6% 7,493 9,836 31.3%
General and administrative ........ 3,997 4,724 18.2% 8,503 9,601 12.9%
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18,113 22,932 26.6% 35,994 45,529 26.5%
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Income from operations ............ 11,710 14,033 19.8% 23,527 28,130 19.6%
Operating Income Margin ........... 39.3% 38.0% 39.5% 38.2%
Investment and other income ....... 395 587 48.6% 758 1,162 53.3%
--------- --------- --------- ---------
Income before income taxes ........ 12,105 14,620 20.8% 24,285 29,292 20.6%
Provision for income taxes ........ 4,721 5,779 22.4% 9,472 11,579 22.2%
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Net income ........................ 7,384 8,841 19.7% 14,813 17,713 19.6%
Preferred stock dividends and
accretion ....................... 2,025 1,281 (36.7%) 4,041 2,555 (36.8%)
--------- --------- --------- ---------
Net income available to common
stockholders .................... $5,359 $7,560 41.1% $10,772 $15,158 40.7%
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Basic net income per share ........ $0.64 $0.71 10.9% $1.29 $1.42 10.1%
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Diluted net income per share ...... $0.51 $0.60 17.6% $1.03 $1.20 16.5%
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Common dividend per share ......... $0.065 $0.065 -- $0.13 $0.13 --
Weighted average shares outstanding
Basic ..................... 8,352 10,666 27.7% 8,352 10,659 27.6%
Diluted ................... 14,515 14,779 1.8% 14,448 14,709 1.8%
STRAYER EDUCATION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
ASSETS
At December 31, At June 30,
2002 2003
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Current assets:
Cash and cash equivalents ....................... $49,135 $57,415
Investment in marketable securities ............. 18,121 26,401
Tuition receivable - net ........................ 25,759 25,696
Other current assets ............................ 773 961
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Total current assets ............................ 93,788 110,473
Student loan receivable - net ....................... 9,453 9,503
Property & equipment - net .......................... 36,571 36,820
Other assets ........................................ 312 312
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Total assets ........................................ $140,124 $157,108
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LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................ $3,534 $3,814
Accrued expenses ................................ 1,181 920
Dividends payable ............................... 1,507 1,511
Income taxes payable ............................ 1,812 1,689
Unearned tuition ................................ 29,853 28,922
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Total current liabilities ................... 37,887 36,856
Deferred lease incentives and rent obligations ...... 1,985 2,086
Deferred income taxes ............................... 70 65
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Total liabilities ........................... 39,942 39,007
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Series A Convertible Redeemable
Preferred Stock ............................... 93,807 94,733
Stockholders' equity:
Common stock .................................. 107 107
Additional paid-in capital .................... 58,868 61,924
Retained earnings (accumulated deficit) ....... (52,674) (38,905)
Accumulated other comprehensive income ........ 74 242
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Total stockholders' equity .......................... 6,375 23,368
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Total liabilities & stockholders' equity ............ $140,124 $157,108
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STRAYER EDUCATION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(AMOUNTS IN THOUSANDS)
For the six months
ended June 30,
--------------------------------
2002 2003
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Cash flow from operating activities:
Net income $14,813 $17,713
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred rent (84) 101
Depreciation and amortization 1,712 2,136
Provision for student loan losses 81 72
Deferred income taxes (34) (81)
Changes in assets and liabilities:
Tuition receivable, net 1,504 63
Other current assets (953) (224)
Other assets 29 --
Accounts payable (242) 280
Accrued expenses 298 (261)
Income taxes payable (1,229) 822
Unearned tuition (2,000) (931)
Student loans originated (4,027) (4,288)
Collections on student loans receivables 3,752 4,166
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Net cash provided by operating activities 13,620 19,568
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Cash flows from investing activities:
Purchases of property and equipment (14,631) (2,385)
Purchases of marketable securities (6,000) (8,000)
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Net cash used in investing activities (20,631) (10,385)
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Cash flows from financing activities:
Common dividends paid (1,086) (1,384)
Preferred dividends paid (2,624) (1,630)
Deferred lease incentives 250 --
Proceeds from exercise of stock options -- 2,111
Issuance cost of preferred stock (29) --
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Net cash used in financing activities (3,489) (903)
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Net increase in cash and cash equivalents (10,500) 8,280
Cash and cash equivalents -- beginning of period 58,705 49,135
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Cash and cash equivalents -- end of period $48,205 $57,415
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