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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 2004 ENROLLMENT, REVENUES AND EARNINGS
-- STRAYER FIRST QUARTER REVENUES UP 26% --
-- STRAYER FIRST QUARTER DILUTED EPS OF $0.76, UP 25% --
-- STRAYER SPRING 2004 TOTAL ENROLLMENTS UP 23%/
NEW STUDENTS UP 29%/ONLINE UP 74% --
-- TWO ATLANTA, GA CAMPUSES TO BE OPENED FOR SUMMER TERM ---
ARLINGTON, Va., May 6, 2004 - Strayer Education, Inc. (Nasdaq: STRA) today
announced financial results for the three months ended March 31, 2004. Financial
highlights are as follows:
THREE MONTHS ENDED MARCH 31
o Revenues for the three months ended March 31, 2004 increased 26% to $46.1
million, compared to $36.7 million for the same period in 2003, due to
increased enrollment and a 5% tuition increase which commenced in January
2004.
o Operating income (EBIT) rose 31% to $18.5 million from $14.1 million for
the same period in 2003. Operating income margin was 40.2% compared to
38.4% for the same period in 2003.
o Net income rose 29% to $11.5 million compared to $8.9 million for the same
period in 2003. Earnings per diluted share rose 25% to $0.76 compared to
$0.61 for the same period in 2003. Diluted weighted average shares
outstanding increased to 15,091,000 from 14,639,000 for the same period in
2003.
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"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. "We are excited
by the successful opening of our first South Carolina campus and our second
Memphis campus for this spring term, and we look forward to our two new Atlanta
campuses this summer."
BALANCE SHEET AND CASH FLOW
At March 31, 2004, the Company had cash, cash equivalents and marketable
securities (a diversified, no load, short-term, tax exempt bond fund) of $123.9
million and no debt. The Company generated $15.9 million from operating
activities in the first quarter of 2004. Capital expenditures were $2.3 million
for the same period.
For the first quarter 2004, bad debt expense as a percentage of revenue was 1.5%
compared to 1.6% for the same period in 2003. Days sales outstanding, adjusted
to exclude tuition receivable related to future quarters, was nine days at the
end of the first quarter 2004, compared to seven days for the same period in
2003.
STUDENT ENROLLMENT
Enrollment at Strayer University for the 2004 spring term increased 23% to
20,681 students compared to 16,772 for the same term in 2003. Across the Strayer
University campus network, new student enrollments increased 29% and continuing
student enrollments increased 22%. Students taking 100% of their classes at
Strayer University Online increased 55% to 9,887 students from 6,372. The total
number of students taking any courses online (including students at brick and
mortar campuses taking at least one online course) in the 2004 spring term is
12,109.
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STUDENT ENROLLMENT
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Spring Spring %
2003 2004 Change
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Campus Based Students:
Mature Campuses (14 in operation 4 or more years)
Classroom 9,234 8,661 -6%
Online 4,154 5,335 28%
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Total Mature Campus Students 13,388 13,996 5%
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New Campuses (13 in operation 3 or less years)
Classroom 1,166 2,133 83%
Online 1,013 2,454 142%
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Total New Campus Students 2,179 4,587 111%
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Total Campus Based Students 15,567 18,583 19%
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Online Based Students (out of area) 1,205 2,098 74%
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Total Students 16,772 20,681 23%
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Total Students Taking 100% of Courses Online 6,372 9,887 55%
Total Students Taking at Least 1 Course Online 8,033 12,109 51%
NEW CAMPUS/NEW STATE OPENINGS
The Company reported today that it will open two new campuses in the Atlanta,
Georgia metropolitan area for the 2004 summer term. The company also announced
its intention to open its third campus in the Philadelphia, Pennsylvania area
for the 2004 fall term. This will bring the total number of Strayer University
campuses to 30.
EXPANDED ONLINE COURSE OFFERINGS
Strayer University Online is offering 784 online classes in the 2004 spring
term, with all academic programs now available asynchronously.
STRAYER - UNIVERSITY OF VIRGINIA ALLIANCE
The Company announced today that Strayer University and the University of
Virginia's (UVA) School of Continuing and Professional Studies have entered into
an articulation agreement that will allow students to complete six courses at
UVA and six courses at Strayer University to obtain a master's degree in
Business Administration from Strayer University, as well as a graduate
certificate from UVA. This agreement will provide greater opportunities for
working professionals in the Northern Virginia area who cannot attend UVA's
Charlottesville campus to
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pursue an MBA degree. In addition, Strayer University has articulated University
of Virginia's undergraduate certificates for transfer credit toward
undergraduate degrees at Strayer University.
BUSINESS OUTLOOK
Based on the strong enrollment growth announced for the 2004 spring term partly
offset by the earlier-than-anticipated opening of a second new campus for summer
2004 term, the Company estimates second quarter 2004 diluted EPS will be in the
range of $0.71 - $0.73.
SECONDARY OFFERING
In the first quarter of 2004, the Company completed its previously announced
secondary offering of common stock. The company received none of the proceeds
from the secondary offering except for proceeds related to the exercise of
options by management to fulfill the over-allotment obligation. The 3.45 million
shares sold in the offering were issued following the conversion of convertible
preferred stock and the partial exercise of an option held by New Mountain
Partners, L.P., New Mountain Strayer Trust and MidOcean Capital Investors, L.P.,
as well as the exercise of options held by certain of the Company's management.
STOCK OPTION ACTIVITY
In the first quarter 2004, the Company granted 20,000 additional stock options
to key executives. These options had an exercise price of $118.00 per share (the
fair market value on the date of the grant), vest in four years, and expire
eight years from the date of grant.
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 $10.7 million and $0.71 per share, respectively, for the quarter
ended March 31, 2004.
The following assumptions were used to estimate fair value as of the date of
grant using the Black-Scholes option pricing model:
2002 2003 2004
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Dividend yield.................................................... 0.5% 0.5% 0.24%
Risk-free interest rates.......................................... 4.8% 3.0% 3.4%
Volatility........................................................ 43% 40% 36%
Expected option term (years)...................................... 5.9 5.2 6.1
Weighted average fair value of options granted during the year.... $23.65 $21.88 $47.33
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CALCULATION OF TOTAL POTENTIAL SHARE ISSUANCE
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 (in
thousands):
Current
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Common shares issued and outstanding at 3/31/04..................... 13,920
Series A Convertible Redeemable Preferred Stock, convertible on a
1:1 basis (outstanding or recorded), at 3/31/04................. 859
Issued stock options using Treasury Stock Method.................... 425
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Total current................................................. 15,204
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Potential
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Accrual of required PIK dividends on Series A Convertible
Redeemable Preferred Stock through June 2004..................... 17(a)
Total issued stock options, less options accounted for using
the Treasury Stock Method above.................................. 612
Authorized but unissued options...................................... 314
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Total potential................................................ 943
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Total current and potential common shares...................... 16,147
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(a) This number assumes that the Company will force conversion of all
remaining Series A Convertible Redeemable Preferred Stock into common
stock by the end of the second quarter 2004. An additional 72,000 shares
would potentially accrue should the Series A Convertible Redeemable
Preferred Stock remain outstanding through May 2006.
CONFERENCE CALL WITH MANAGEMENT
Strayer Education, Inc. will host a conference call to discuss its first quarter
2004 earnings on May 6, 2004 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 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 565712) starting at 3:00 p.m. ET on May 6 and will be
available through May 11 and 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 20,000 working adult students at 27 campuses in 7 states in the eastern
United States and worldwide via the Internet through Strayer University Online.
Strayer
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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 "(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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
For the three months
ended March 31,
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%
2003 2004 Change
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Revenues ............................................ $ 36,694 $ 46,106 26%
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Costs and expenses:
Instructional and educational support ............... 12,831 15,191 18%
Selling and promotion ............................... 4,889 6,084 24%
General and administration .......................... 4,877 6,319 30%
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Total expenses ...................................... 22,597 27,594 22%
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Income from operations .............................. 14,097 18,512 31%
Operating income margin ............................. 38.4% 40.2%
Investment and other income ......................... 574 318 (45%)
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Income before income taxes .......................... 14,671 18,830 28%
Provision for income taxes .......................... 5,799 7,362 27%
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Net income .......................................... 8,872 11,468 29%
Preferred stock dividends and accretion ............. 1,275 1,110 (13%)
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Net income available to common stockholders ......... $ 7,597 $ 10,358 36%
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Basic net income per share .......................... $ 0.71 $ 0.92 30%
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Diluted net income per share ........................ $ 0.61 $ 0.76 25%
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STRAYER EDUCATION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
At December 31, At March 31,
2003 2004
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ASSETS
Current assets:
Cash and cash equivalents ................................................... $ 82,089 $ 97,965
Marketable securities available for sale, at fair value ..................... 25,951 25,951
Tuition receivable, net of allowances for doubtful accounts ................. 35,997 41,739
Student loans receivable - held for sale .................................... 65 5
Other current assets ........................................................ 1,656 2,508
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Total current assets .................................................... 145,758 168,168
Property and equipment, net .................................................... 35,930 36,968
Restricted cash ................................................................ 500 500
Other assets ................................................................... 368 358
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Total assets ............................................................ $ 182,556 $ 205,994
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LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................................ $ 5,127 $ 4,747
Accrued expenses ............................................................ 2,329 1,552
Income taxes payable ........................................................ 2,898 4,092
Dividends payable ........................................................... 1,510 1,082
Unearned tuition ............................................................ 39,134 45,611
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Total current liabilities .............................................. 50,998 57,084
Deferred income taxes .......................................................... 228 392
Long-term liabilities .......................................................... 2,666 2,821
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Total liabilities ...................................................... 53,892 60,297
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Series A convertible redeemable preferred stock ................................ 95,686 20,979
Stockholders' equity:
Common stock ................................................................ 107 139
Additional paid-in capital .................................................. 59,838 142,073
Retained earnings (accumulated deficit) ..................................... (26,918) (17,464)
Accumulated other comprehensive income ...................................... (49) (30)
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Total stockholders' equity ............................................ 32,978 124,718
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Total liabilities and stockholders' equity ............................ $ 182,556 $ 205,994
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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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2003 2004
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Cash flow from operating activities:
Net income .......................................................... $ 8,872 $ 11,468
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred rent .................................. 63 135
Depreciation and amortization .................................. 1,012 1,242
Provision for student loan losses .............................. 46 (35)
Deferred income taxes .......................................... (36) (18)
Changes in assets and liabilities:
Tuition receivable, net ........................................ (4,079) (5,742)
Other current assets ........................................... (548) (732)
Other assets ................................................... (1) 10
Accounts payable ............................................... 554 (380)
Accrued expenses ............................................... (671) (777)
Income taxes payable ........................................... 3,794 4,177
Unearned tuition ............................................... 4,773 6,477
Student loans originated ............................................ (2,459) (439)
Collections on student loans receivable and held for sale ........... 2,074 554
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Net cash provided by operating activities .................. 13,394 15,940
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Cash flows from investing activities:
Purchases of property and equipment ................................ (692) (2,280)
Purchases of marketable securities ................................. (6,000) --
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Net cash used in investing activities ...................... (6,692) (2,280)
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Cash flows from financing activities:
Common dividends paid .............................................. (692) (695)
Preferred dividends paid ........................................... (815) (1,332)
Proceeds from exercise of stock options ............................ -- 4,243
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Net cash provided by (used in) financing activities ........ (1,507) 2,216
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Net increase (decrease) in cash and cash equivalents ....... 5,195 15,876
Cash and cash equivalents - beginning of period ....................... 49,135 82,089
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Cash and cash equivalents - end of period ............................. $ 54,330 $ 97,965
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