Strayer Education, Inc. Reports Record Third Quarter 2009 Revenues and Earnings; and Record Fall Term 2009 Enrollments -- Strayer Third Quarter Revenues Up 31% --

ARLINGTON, Va., Oct 29, 2009 (BUSINESS WIRE) -- -- Strayer Third Quarter Diluted EPS $1.21, Up 46% -- -- Strayer Fall 2009 Total Enrollments Up 22% / New Students up 20% -- -- Strayer Approved in Arkansas, Louisiana, Mississippi and Texas -- -- Strayer to Open 13 New Campuses in 2010 -- -- Strayer Increasing Annual Dividend from $2.00 to $3.00 -- -- Share Repurchase Authorization Increased to $100 Million -- Strayer Education, Inc. (Nasdaq:STRA) today announced financial results for the three months ended September 30, 2009. Financial highlights are as follows: Three Months Ended September 30 -- Revenues for the three months ended September 30, 2009 increased 31% to $114.4 million, compared to $87.0 million for the same period in 2008, due to increased enrollment and a 5% tuition increase which commenced in January 2009.

-- Income from operations was $27.3 million compared to $18.3 million for the same period in 2008, an increase of 49%. Operating income margin was 23.8% compared to 21.0% for the same period in 2008.

-- Net income was $16.7 million compared to $11.8 million for the same period in 2008, an increase of 42%. Diluted earnings per share was $1.21 compared to $0.83 for the same period in 2008, an increase of 46%. Diluted weighted average shares outstanding decreased to 13,780,000 from 14,240,000 for the same period in 2008.

Nine Months Ended September 30 -- Revenues for the nine months ended September 30, 2009 increased 29% to $364.8 million, compared to $282.0 million for the same period in 2008, due to increased enrollment and a 5% tuition increase which commenced in January 2009.

-- Income from operations was $120.0 million compared to $87.4 million for the same period in 2008, an increase of 37%. Operating income margin was 32.9% compared to 31.0% for the same period in 2008.

-- Net income was $73.2 million compared to $56.6 million for the same period in 2008, an increase of 29%. Diluted earnings per share was $5.29 compared to $3.97 for the same period in 2008, an increase of 33%. Diluted weighted average shares outstanding decreased to 13,850,000 from 14,275,000 for the same period in 2008.

"We are pleased with our solid financial results for the third quarter and our strong student enrollment for the fall term," said Robert S. Silberman, Chairman and CEO of Strayer Education, Inc. "We look forward to opening 13 new campuses in 2010. For the 2010 winter term, we will add three new Strayer markets with new campuses in New Brunswick and Lawrenceville, New Jersey and Little Rock, Arkansas." Balance Sheet and Cash Flow At September 30, 2009, the Company had cash, cash equivalents and marketable securities of $93.4 million and no debt. The Company generated $89.8 million from operating activities in the first nine months of 2009 compared to $63.0 million during the same period in 2008. Capital expenditures were $22.1 million for the nine months ended September 30, 2009 compared to $15.3 million for the same period in 2008.

During the three months ended September 30, 2009, the Company invested $5.0 million to repurchase 24,528 shares of stock at an average price of $202.13 as part of a previously announced stock repurchase authorization. During the nine months ended September 30, 2009, the Company had invested $70.1 million for share repurchases. During the nine months ended September 30, 2009, the Company paid regular, quarterly dividends of $21.1 million ($0.50 per share for each quarterly dividend).

For the third quarter 2009, bad debt expense as a percentage of revenues was 4.5% compared to 3.7% for the same period in 2008. Days sales outstanding, adjusted to exclude tuition receivable related to future quarters, was 15 days at the end of the third quarter of 2009, compared to 13 days at the end of the third quarter of 2008.

Student Enrollment Enrollment at Strayer University for the 2009 fall term increased 22% to 54,317 students compared to 44,564 students for the same term in 2008. Across the Strayer University campus and online system, continuing student enrollments increased 23%, while new student enrollments increased 20%. Global online students increased 43%. Students taking 100% of their classes online (including campus based students) increased 21%. The total number of students taking at least one class online increased 22% to 39,128.

Student Enrollment Fall Fall % 2008 2009 Change Campus Based Students: New Campuses (28 in operation 3 years or less) Classroom Students 1,487 3,714 150% Online Students 2,809 4,676 66% Total New Campus Based Students 4,296 8,390 95% Mature Campuses (43 in operation more than 3 years) Classroom Students 15,795 17,622 12% Online Students 20,435 22,549 10% Total Mature Campus Based Students 36,230 40,171 11% Total Campus Based Students 40,526 48,561 20% Global Online Students 4,038 5,756 43% Total University Enrollment 44,564 54,317 22% Total Students Taking 100% of Courses Online 27,282 32,981 21% Total Students Taking at Least 1 Course Online 32,204 39,128 22% New State Approvals The Company announced today that Strayer University has received approval to operate in the states of Arkansas, Louisiana, Mississippi and Texas.

New Campus Openings The Company announced today that Strayer University intends to open 13 new campuses in 2010. The first three campuses, which will be located in Lawrenceville and New Brunswick, New Jersey and in Little Rock, Arkansas, will open for the winter term 2010 start of classes.

2009 Business Outlook Based on the strong enrollment growth announced for the 2009 fall term and the planned investments in opening new campuses, the Company estimates fourth quarter 2009 diluted earnings per share will be in the range of $2.28 to $2.30.

Based on its fourth quarter 2009 estimates, the Company expects its full year 2009 diluted earnings per share will be in the range of $7.56 to $7.58.

2010 Business Model The Company announced today that Strayer University is implementing a 5% tuition increase effective January 2010. The Company also announced today that Strayer University intends to open 13 new campuses in 2010. Taking into account this accelerated investment plan for 2010, and assuming a 20% increase in annual student enrollment at Strayer University in 2010, the Company would then expect a 24-25% increase in revenue, roughly stable operating margins, and diluted earnings per share in the $9.30 to $9.50 range for 2010. Included in this range is the Company's estimate of approximately $0.52 per share after tax stock-based compensation expense and an effective tax rate of 39.5%.

Quarterly Common Stock Cash Dividends The Company also announced today that its Board of Directors is increasing the Company's annual dividend to $3.00 per share from $2.00 per share. This annual dividend will be paid quarterly in the amount of $0.75 per share. Accordingly, the Company's Board of Directors has declared that the Company will pay a dividend of $0.75 per share on December 10, 2009 to shareholders of record as of November 24, 2009.

Share Repurchase Plan The Company announced today that the Company's Board of Directors amended the share repurchase program to authorize the repurchase of up to $100 million in value of the Company's common stock over the next 14 months. The Company intends to conduct 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.

Shares and Options Outstanding At September 30, 2009, the Company had 14,008,796 common shares issued and outstanding, and 106,667 stock options outstanding with a weighted average exercise price of $104.81 and a remaining weighted average contractual life of 2.2 years.

Conference Call with Management Strayer Education, Inc. will host a conference call to discuss its third quarter 2009 earnings at 10:00 a.m. (ET) today. To participate on the live call, investors should dial [phone] 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 [phone] (pass code 1914628) starting at 1:00 p.m. (ET) today and will be available through Thursday, November 5, 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, health care, and public administration to approximately 54,000 working adult students at 71 campuses in 15 states and Washington, D.C. and worldwide via the Internet. 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 ("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 regional accreditation standards and state 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, risks associated with the ability of our students to finance their education in a timely manner, 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. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except per share data) For the three months For the nine months ended September 30, ended September 30, 2008 2009 2008 2009 Revenues $ 86,993 $ 114,351 $ 281,995 $ 364,760 Costs and expenses: Instruction and educational support 30,548 40,110 95,099 120,127 Marketing and admissions 22,985 27,398 54,809 67,295 General and administration 15,209 19,583 44,671 57,388 Income from operations 18,251 27,260 87,416 119,950 Investment and other income 905 287 3,726 1,153 Income before income taxes 19,156 27,547 91,142 121,103 Provision for income taxes 7,394 10,881 34,536 47,884 Net income $ 11,762 $ 16,666 $ 56,606 $ 73,219 Earnings per share: Basic $ 0.84 $ 1.22 $ 4.03 $ 5.33 Diluted $ 0.83 $ 1.21 $ 3.97 $ 5.29 Weighted average shares outstanding: Basic 14,001 13,659 14,035 13,728 Diluted 14,240 13,780 14,275 13,850 Common dividends per share: Regular $ 0.38 $ 0.50 $ 1.13 $ 1.50 Special -- -- $ 2.00 -- The table below sets forth the amount of stock-based compensation expense recorded in each of the expense line items. For the three months For the nine months ended September 30, ended September 30, 2008 2009 2008 2009 Instruction and educational support $ 263 $ 459 $ 955 $ 1,315 Marketing and admissions 215 30 652 97 General and administration 2,285 2,351 7,195 6,647 Total stock-based compensation expense $ 2,763 $ 2,840 $ 8,802 $ 8,059 STRAYER EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) December 31, September 30, 2008 2009 ASSETS Current assets: Cash and cash equivalents $ 56,379 $ 41,036 Marketable securities available for sale, at fair value 50,952 52,347 Tuition receivable, net of allowances for doubtful accounts of $4,776 and $5,278 at December 31, 2008 and September 30, 2009, respectively 131,458 157,877 Income taxes receivable 3,534 6,825 Other current assets 7,175 6,633 Total current assets 249,498 264,718 Property and equipment, net 66,304 78,132 Deferred income taxes 7,799 10,216 Restricted cash 500 500 Other assets 462 1,303 Total assets $ 324,563 $ 354,869 LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 17,099 $ 16,532 Accrued expenses 4,567 8,185 Unearned tuition 114,872 142,639 Other current liabilities 281 281 Total current liabilities 136,819 167,637 Long-term liabilities 11,663 11,707 Total liabilities 148,482 179,344 Commitments and contingencies Stockholders' equity: Common stock, par value $0.01; 20,000,000 shares authorized; 14,089,189 and 14,008,796 shares issued and outstanding at December 31, 2008 and September 30, 2009, respectively 141 141 Additional paid-in capital 17,185 4,528 Retained earnings 158,834 170,551 Accumulated other comprehensive (loss) income (79 ) 305 Total stockholders' equity 176,081 175,525 Total liabilities and stockholders' equity $ 324,563 $ 354,869 STRAYER EDUCATION, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) For the nine months ended September 30, 2008 2009 Cash flows from operating activities: Net income $ 56,606 $ 73,219 Adjustments to reconcile net income to net cash provided by operating activities: Loss on disposal of assets -- 155 Amortization of gain on sale of assets (211 ) (211 ) Amortization of deferred rent (289 ) (121 ) Gain on sale of marketable securities (785 ) -- Depreciation and amortization 7,720 10,119 Deferred income taxes (3,558 ) (3,082 ) Stock-based compensation 8,244 8,059 Changes in assets and liabilities: Tuition receivable, net (26,469 ) (26,419 ) Other current assets (2,124 ) 1,070 Other assets (64 ) (841 ) Accounts payable 2,244 (569 ) Accrued expenses 912 3,618 Income taxes payable/receivable 6,286 (305 ) Excess tax benefits from stock-based payment arrangements (11,498 ) (2,986 ) Unearned tuition 24,544 27,767 Deferred lease incentives 1,400 376 Net cash provided by operating activities 62,958 89,849 Cash flows from investing activities: Purchases of property and equipment (15,332 ) (22,100 ) Purchases of marketable securities (50,561 ) (874 ) Proceeds from the sale of marketable securities 76,785 -- Net cash provided by (used in) investing activities 10,892 (22,974 ) Cash flows from financing activities: Regular common dividends paid (16,031 ) (21,147 ) Special common dividends paid (28,853 ) -- Proceeds from exercise of stock options 10,633 6,027 Excess tax benefits from stock-based payment arrangements 11,498 2,986 Repurchase of common stock (79,267 ) (70,084 ) Net cash used in financing activities (102,020 ) (82,218 ) Net decrease in cash and cash equivalents (28,170 ) (15,343 ) Cash and cash equivalents - beginning of period 95,036 56,379 Cash and cash equivalents - end of period $ 66,866 $ 41,036 Non-cash transactions: Purchases of property and equipment included in accounts payable $ 308 $ 813 SOURCE: Strayer Education, Inc.

CONTACT: Strayer Education, Inc. Mark C. Brown, Executive Vice President and Chief Financial Officer 703-247-2514 or Sonya Udler, Senior Vice President, Corporate Communications 703-247-2517 [e-mail] Copyright Business Wire 2009 -0- KEYWORD: United States

North America

Virginia INDUSTRY KEYWORD: Education

University

Continuing SUBJECT CODE: Earnings

Conference Call

Webcast