SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 3, 2002
STRAYER EDUCATION, INC.
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(Exact name of registrant as specified in its charter)
Maryland 000-21039 52-1975978
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(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
1100 Wilson Blvd Suite 2500, Alington VA 22209
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 247-2500
Not applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events.
On May 3, 2002, Strayer Education, Inc. announced record first quarter 2002
enrollment, revenues and operating income and raised its full year EPS estimate.
The May 3, 2002 Press Release is attached hereto as an exhibit and incorporated
herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
99.01 Press Release dated May 3, 2002
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Strayer Education, Inc.
Date: May 3, 2002 By: /s/ Mark C. Brown
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Mark C. Brown
Senior Vice President and Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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99.01 Press Release dated May 3, 2002.
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EXHIBIT 99.01
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For more information contact:
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MARK C. BROWN, CHIEF FINANCIAL OFFICER
Strayer Education, Inc.
(703) 247-2514
STRAYER EDUCATION, INC. REPORTS RECORD
FIRST QUARTER 2002 ENROLLMENT, REVENUES, AND OPERATING INCOME
AND RAISES FULL YEAR EPS ESTIMATE
-- STRAYER FIRST QUARTER REVENUES UP 26% --
-- STRAYER FIRST QUARTER DILUTED EPS OF $0.52 --
-- STRAYER SPRING 2002 TOTAL ENROLLMENTS INCREASE 19% --
-- STRAYER SPRING 2002 ONLINE ENROLLMENTS RISE 92% --
-- STRAYER RAISING FULL YEAR EPS GUIDANCE TO $1.74-$1.78 --
WASHINGTON, DC, May 3, 2002---Strayer Education, Inc. (Nasdaq:STRA) today
announced financial results for the three months ended March 31, 2002. Financial
highlights are as follows:
THREE MONTHS ENDED MARCH 31
o Revenues for the three months ended March 31, 2002 increased 26% to $29.7
million, compared to $23.6 million for the same period in 2001, due to
increased enrollment and a 5% tuition increase commencing with the Winter
quarter.
o Operating income (EBIT) grew 3% to $11.8 million from $11.5 million for the
same period in 2001. Operating income margin was 39.8%, compared to 48.5%
for the same period in 2001, reflecting operating expenses associated with
the opening of the three campuses in 2001 and the funding of the Company's
announced growth strategy.
o Net income was $7.4 million compared to $8.1 million for the same period in
2001. This decrease was largely attributable to a $1.5 million reduction in
investment income associated with the successful recapitalization of the
Company, which decreased the Company's cash position, and a lower interest
rate environment. Earnings per diluted share were $0.52, compared to $0.53
for the same period in 2001, as diluted weighted average shares outstanding
decreased to 14,381,000 from 15,470,000 for the same period in 2001.
Commenting on the first quarter financial results, Robert S. Silberman,
President and Chief Executive Officer of Strayer Education, Inc. stated, "We are
very pleased with our revenue growth and EPS for the first quarter, as our
course load per student and our drop rate were both better than we expected. In
addition, strong operating margin performance at our mature campuses offset
accelerated expenditures on the opening of our three new campuses in North
Carolina."
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Mr. Silberman continued, "Our 19% enrollment growth for the Spring
term is a record for the University for any term. The enrollment growth was
strong for both new and continuing students, and across all areas of our
academic curriculum. We are pleased with the continued strong performance of our
ONLINE organization as our new asynchronous offerings are proving very
attractive to our students."
BALANCE SHEET
At March 31, 2002, the Company had cash and cash equivalents of $54.4 million
and no debt. The Company generated $11.4 million from operating activities in
the first quarter. Capital expenditures for the quarter were $12.8 million, of
which $12.0 million was for the purchase of three campus facilities. Bad debt
expense declined from 1.6% of revenue in the first quarter 2001 to 1.5% for the
same period in 2002. Days sales outstanding, adjusted to exclude tuition
receivable related to future quarters, also improved from 8 days in the first
quarter of 2001 to 6 days for the same period in 2002.
STUDENT ENROLLMENT
The Company reported that Spring 2002 Quarter total enrollment at its
subsidiary, Strayer University, increased 19% to 14,335 students compared to
12,044 for the same quarter in 2001. Enrollment at mature campuses (those in
operation greater than three years) was up slightly to 9,275 students from
9,273. Enrollments at new campuses (those in operation three years or less)
increased 59% to 1,288 students from 810. Strayer ONLINE enrollments increased
92% to 3,772 students from 1,961. Total students taking courses online
(including students at brick and mortar campuses taking at least one ONLINE
course) in the Spring 2002 Quarter is 4,970. Across the Strayer University
campus network, new student enrollments increased 17.4% and continuing student
enrollments increased 19.4%.
EXPANDED ONLINE COURSE OFFERINGS
Strayer University began an asynchronous course pilot program in 2001 which
featured five classes in the initial Summer 2001 Quarter rollout, increasing to
18 classes in the Fall 2001 Quarter and 63 in the Winter 2002 Quarter. The
University is offering 153 asynchronous classes in the current Spring 2002
Quarter, and all required courses for its degree programs will be available
asynchronously by the Fall 2002 Quarter.
NORTH CAROLINA EXPANSION
During the first quarter, the Company received regulatory approval to offer its
programs in the state of North Carolina from the University of North Carolina
Board of Governors, the applicable post-secondary regulatory authority in North
Carolina, and the Middle States Commission on Higher Education. Strayer
University plans to open three new campuses in North Carolina in 2002, two of
which will be located in Charlotte and one in Raleigh-Durham.
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The Company is on schedule to open all three campuses in time for the Summer
Quarter classes commencing July 1st.
CORPORATE/GOVERNMENT SPONSORSHIPS
Also during the first quarter, Strayer University added two new sponsorship
agreements: one with the World Bank, covering both Washington, D.C. based
students and worldwide through Strayer ONLINE, and one with Northrop Grumman
Information Technology. The Company's total number of corporate/government
sponsorship arrangements is now 83.
BUSINESS OUTLOOK
Based on the increased course load per student and decreased drop rate
experienced in the first quarter, as well as the strong enrollment growth
announced for the Spring term, the Company estimates second quarter fully
diluted EPS will be in the range of $0.48-$0.50. In addition, the Company is
raising its estimate of full year fully diluted EPS to $1.74-$1.78 from
$1.71-$1.75.
NEW BOARD MEMBER
During the first quarter, David A. Coulter, Vice Chairman of J.P. Morgan Chase &
Co. and former Chairman and CEO of BankAmerica Corporation joined the Company's
Board of Directors.
CONFERENCE CALL WITH MANAGEMENT
Strayer Education, Inc. will host a conference call to discuss their first
quarter 2002 earnings on May 3rd at 10:00 a.m. EDT. To participate on the live
call, investors should dial (800) 289-0544 approximately ten 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.strayeredu.com approximately 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 638131) for 48 hours and on the web site thereafter.
Strayer Education, Inc. (Nasdaq: STRA) (www.strayeredu.com) 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 (www.strayer.edu) is a proprietary institution of higher
learning which offers undergraduate and graduate degree programs in accounting,
business and information technology to more than 14,000 working adults at 20
campuses in Maryland, Virginia, Washington, DC, North Carolina and via the
Internet through Strayer ONLINE. Strayer University is committed to providing an
education that prepares working adult students for advancement in their careers
and professional lives. By constantly adapting to the latest techniques and
technologies used in business, we provide our graduates with practical skills
and a competitive edge in the changing marketplace.
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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.
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, competitive factors, risks associated with the opening of new
campuses and the timing of related regulatory approvals 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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%
2001 2002 Change
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Revenues $23,644 $29,698 25.6%
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Costs and expenses:
Instruction and educational support 7,509 9,641 28.4%
Selling and promotion 2,259 3,733 65.3%
General and administration 2,417 4,506 86.4%
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12,185 17,880 46.7%
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Income from operations 11,459 11,818 3.1%
Operating Income Margin 48.5% 39.8%
Investment and other income 1,903 363 -80.9%
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Income before income taxes 13,362 12,181 -8.8%
Provision for income taxes 5,225 4,751 -9.1%
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Net income 8,137 7,430 -8.7%
Preferred stock dividends
and accretion -- 2,016
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Net income available to
common stockholders $8,137 $5,414 -33.5%
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Basic net income per share $0.53 $0.65 22.6%
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Diluted net income per share $0.53 $0.52 -1.9%
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STRAYER EDUCATION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
ASSETS
At December 31, At March 31,
2001 2002
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Current assets:
Cash and cash equivalents $57,659 $54,405
Short-term investments - restricted 1,046 1,048
Tuition receivable - net 19,012 21,215
Other current assets 879 1,425
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Total current assets 78,596 78,093
Student loan receivable - net 8,392 8,917
Property & equipment - net 23,100 35,066
Other assets 400 412
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Total assets $110,488 $122,488
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LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $792 $320
Accrued expenses 1,652 2,344
Dividends payable 1,855 1,855
Unearned tuition 23,204 26,157
Income taxes payable 1,247 4,557
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Total current liabilities 28,750 35,233
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Deferred lease incentives 763 734
Mandatorily redeemable preferred stock 148,347 149,050
Stockholders' equity (deficit):
Common stock 83 83
Additional paid-in-capital 1,759 1,759
Retained earnings (accumulated deficit) (69,214) (64,371)
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Total stockholders' equity (deficit) (67,372) (62,529)
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Total liabilities & stockholders' equity $110,488 $122,488
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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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2001 2002
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Cash flows from operating activities:
Net income $8,137 $7,430
Adjustments to reconcile net income to net cash:
Depreciation and amortization 608 790
Changes in assets and liabilities:
Short-term investments - restricted (5) (2)
Tuition receivable, net (2,336) (2,203)
Other current assets (20) (546)
Other assets -- (12)
Accounts payable (64) (472)
Accrued expenses 1,946 692
Income taxes payable 4,952 3,310
Unearned tuition 3,382 2,953
Student loans originated (1,833) (2,290)
Collections on student loans receivable 1,299 1,764
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Net cash provided by operating activities 16,066 11,414
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Cash flows from investing activities:
Purchases of property and equipment (2,527) (12,785)
Maturities of and proceeds from marketable securities 49,497
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Net cash provided by (used in) investing activities 46,970 (12,785)
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Cash flows from financing activities:
Exercise of stock options 1,338
Dividends paid (995) (1,855)
Issuance cost of preferred stock (663) (28)
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Net cash used in financing activities (320) (1,883)
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Net increase (decrease) in cash and cash equivalents 62,716 (3,254)
Cash and cash equivalents -- beginning of period 25,190 57,659
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Cash and cash equivalents -- end of period $87,906 $54,405
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