-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GYG/WGHepZQxyl+zccncJnIiIogqA9wgXQmI+VxEiFLAzzfnOhQg5QpKCX/Nmr1P f5Tw7D8XTOPyls/Wx/OEiA== 0000950136-05-006720.txt : 20051027 0000950136-05-006720.hdr.sgml : 20051027 20051027072858 ACCESSION NUMBER: 0000950136-05-006720 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20051027 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051027 DATE AS OF CHANGE: 20051027 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STRAYER EDUCATION INC CENTRAL INDEX KEY: 0001013934 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 521975978 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-21039 FILM NUMBER: 051158395 BUSINESS ADDRESS: STREET 1: 1100 WILSON BLVD., SUITE 2500 CITY: ARLINGTON STATE: VA ZIP: 22209 BUSINESS PHONE: 703-247-2500 MAIL ADDRESS: STREET 1: 1100 WILSON BLVD., SUITE 2500 CITY: ARLINGTON STATE: VA ZIP: 22209 8-K 1 file001.htm FORM 8-K




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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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)          OCTOBER 27, 2005
                                                   -----------------------------


            0-21039                                  52-1975978
- --------------------------------------------------------------------------------
    (Commission File Number)             (IRS Employer Identification No.)


  1100 WILSON BOULEVARD, #2500, ARLINGTON, VA                           22209
- --------------------------------------------------------------------------------
   (Address of principal executive offices)                           (Zip Code)


                                 (703) 247-2500
- --------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


- --------------------------------------------------------------------------------
          (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

     |_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)

     |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)

     |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))

     |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02. Results of Operations and Financial Condition.

On October 27, 2005, Strayer Education, Inc. announced third quarter 2005
enrollment, revenues and earnings. The October 27, 2005 press release is
attached hereto as an exhibit and incorporated herein by reference. The
information contained in the October 27, 2005 press release is deemed furnished
under this Item; and should not be deemed "filed" for purposes of Section 18 of
the Securities Exchange Act, as amended (the "Exchange Act"), or otherwise
subject to that section, nor shall it be deemed incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the Exchange Act.


Item 9.01.      Financial Statements and Exhibits.

Exhibit 99.01   Press Release dated October 27, 2005. (The information contained
                in the October 27, 2005 press release is deemed furnished under
                Item 2.02.)








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                                       2




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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:
October 27, 2005              By: /s/ Mark C. Brown
                              ----------------------
                              Mark C. Brown
                              Senior Vice President and Chief Financial Officer




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                                       3





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                                  EXHIBIT INDEX



     EXHIBIT                        DESCRIPTION
- -----------------                -----------------
      99.01            Press Release dated October 27, 2005








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                                       4

EX-99.1 2 file002.htm PRESS RELEASE DATED 10/27/05

- --------------------------------------------------------------------------------
EXHIBIT 99.01
- --------------------------------------------------------------------------------

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
THIRD QUARTER 2005 ENROLLMENT, REVENUES AND EARNINGS

-- STRAYER THIRD QUARTER REVENUES UP 24% --
-- STRAYER THIRD QUARTER DILUTED EPS OF $0.44, UP 29% --
-- STRAYER FALL 2005 TOTAL ENROLLMENTS UP 16%, NEW STUDENTS UP 15% --
-- STRAYER TO OPEN EIGHT NEW CAMPUSES IN 2006 --
-- STRAYER INCREASING ANNUAL COMMON STOCK DIVIDEND FROM $0.50 TO $1.00 --

ARLINGTON, Va., October 27, 2005 - Strayer Education, Inc. (Nasdaq: STRA) today
announced financial results for the three months ended September 30, 2005.
Financial highlights are as follows:

THREE MONTHS ENDED SEPTEMBER 30

o Revenues for the three months ended September 30, 2005 increased 24% to
$47.1 million, compared to $38.0 million for the same period in 2004, due
to increased enrollment and a 5% tuition increase which commenced in
January 2005.

o Income from operations rose 22% to $9.6 million from $7.8 million for the
same period in 2004. Operating income margin was 20.3% compared to 20.6%
for the same period in 2004.

o Net income rose 26% to $6.4 million compared to $5.1 million for the same
period in 2004. Earnings per diluted share rose 29% to $0.44 compared to
$0.34 for the same period in 2004, as diluted weighted average shares
outstanding decreased to 14,637,000 from 15,021,000 for the same period in
2004.

NINE MONTHS ENDED SEPTEMBER 30

o Revenues for the nine months ended September 30, 2005 increased 21% to
$158.5 million, compared to $130.9 million for the same period in 2004, due
to increased enrollment and a 5% tuition increase effective for 2005.

o Income from operations rose 15% to $51.6 million from $44.7 million for the
same period in 2004. Operating income margin was 32.5%, compared to 34.1%
for the same period in 2004 as the Company continues to invest for growth.

o Net income rose 18% to $33.1 million compared to $28.0 million for the same
period in 2004. Earnings per diluted share rose 21% to $2.23 compared to
$1.85 for the same period in 2004, as diluted weighted average shares
outstanding decreased to 14,792,000 from 15,092,000 for the same period in
2004.

"We are pleased with our solid financial and student enrollment results for the
third quarter," said Robert S. Silberman, Chairman and Chief Executive Officer
of Strayer Education, Inc. "The 16% enrollment growth for the fall term and the
opening of our five new campuses in 2005 reflect our continued commitment to
high-quality, accessible adult education. We are excited about the successful
opening of our third Atlanta campus for the fall term and look forward to
opening a total of eight new campuses in 2006."

BALANCE SHEET AND CASH FLOW

At September 30, 2005, the Company had cash, cash equivalents and marketable
securities (a diversified, no load, short-term, tax exempt bond fund) of $112.3
million and no debt. The Company generated $34.9 million from operating
activities in the first nine months of 2005. Capital expenditures were $9.7
million for the same period.

During the three months ended September 30, 2005, the Company spent $5.0 million
for the repurchase of 50,391 shares of common stock at an average price of
$99.13 per share as part of a previously announced common stock repurchase
authorization.

In the third quarter 2005, bad debt expense as a percentage of revenue remained
unchanged at 2.5% compared to the same period in 2004. Days sales outstanding,
adjusted to exclude tuition receivable related to future quarters, decreased to
eight days at the end of the third quarter 2005, compared to nine days at the
end of the same period in 2004.

STUDENT ENROLLMENT

Enrollment at Strayer University for the 2005 fall term increased 16% to 27,305
students compared to 23,539 students for the same term in 2004. For the 2005
fall term, as compared to the 2004 fall term, Strayer University's rate of
growth of continuing students was 17% and its rate of growth of new students was
15%. Out-of-area online students increased 39%, while students taking 100% of
their classes at Strayer University Online (including campus based students)
increased 29%. The total number of students taking any courses online (including

students at brick and mortar campuses taking at least one online course) in the
2005 fall term increased to 18,087.

STUDENT ENROLLMENT

Fall Fall %
2004 2005 Change
---- ---- ------

Campus Based Students:
New Campuses (15 in operation 3 or less years)
Classroom 1,174 2,164 84%
Online 1,547 2,732 77%
------ ------
Total New Campus Students 2,721 4,896 80%
------ ------

Mature Campuses (20 in operation more than 3 years)
Classroom 10,696 10,111 -5%
Online 7,884 9,186 17%
------ ------
Total Mature Campus Students 18,580 19,297 4%
------ ------

Total Campus Based Students 21,301 24,193 14%

Online Based Students (out-of-area) 2,238 3,112 39%
------ ------

Total Students 23,539 27,305 16%
====== ======

Total Students Taking 100% of Courses Online 11,669 15,030 29%

Total Students Taking at Least 1 Course Online 14,347 18,087 26%

NEW CAMPUS OPENINGS

The Company announced today that it intends to open eight new campuses in 2006.
Of the planned eight campus openings, two are under construction in preparation
for a winter term 2006 opening. One campus is in downtown Philadelphia,
Pennsylvania, the Company's fourth campus in that metropolitan area, and the
other is in Wilmington, Delaware, the Company's first campus in that state.

FISCAL YEAR 2003 COHORT DEFAULT RATE

During the third quarter of 2005, the Company received notification from the
U.S. Department of Education that its Cohort Default Rate for fiscal year 2003
(the most recent annual period for which data is available) had declined to 2.7%
from 3.7% for the fiscal year 2002.

COMMON STOCK CASH DIVIDEND

The Company announced today that the Company's Board of Directors is increasing
the Company's annual common stock dividend to $1.00 per share from $0.50 per
share. This increase in annual dividend will result in a quarterly dividend
payment of $0.25 per share. Accordingly, the Company's Board of Directors has
declared that the Company will pay a quarterly common stock dividend of $0.25
per share on December 12, 2005 to shareholders of record as of November 28,
2005.

SHARE REPURCHASE PLAN

The Company announced today that the Company's Board of Directors amended the
share repurchase program to authorize the repurchase of an additional $20
million in value of the Company's common stock over the next 14 months. As a
result, the total remaining amount authorized for share repurchases under this
program is now $40 million. These share repurchases, if made, will be in the
form of open market purchases from time to time at the discretion of the
Company's management, depending on market conditions and other corporate
considerations. The Company intends to effect 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.

2005 BUSINESS OUTLOOK

Based on the strong enrollment growth announced for the 2005 fall term, offset
by the increased expenses related to the accelerated opening of two new campuses
for the winter 2006 term, the Company estimates fourth quarter 2005 diluted EPS
will be in the range of $0.98 - $1.00. Based on its fourth quarter 2005
estimates, the Company expects its full year 2005 diluted EPS will be in the
range of $3.21 - $3.23.

2006 BUSINESS MODEL

The Company announced that it intends to open eight new campuses in 2006, and
that under the following enrollment growth assumptions, the Company would expect
the following full year 2006 results before the impact of adopting FAS 123(R):

Enrollment: 15% - 18% growth

Revenue: 18% - 21% growth

Operating Margin: 32.5% - 33.0%

Diluted EPS: $3.75 - $3.90

Diluted Shares Outstanding: 14,750,000

As a result of adopting FAS 123(R), the Company estimates that it will incur
additional compensation expense of approximately $4.2 million before tax, or
approximately $0.18 per share after tax, without giving effect to any new grants
of stock options or restricted shares that may occur in 2006.

STOCK-BASED COMPENSATION ACTIVITY

In the third quarter 2005, the Company granted 50,000 stock options which have
an exercise price of $83.81 (the fair market value on the date of grant), vest
in four years, and expire eight years from the date of grant. The Company also
granted 4,500 shares of restricted stock which vest four years from the date of
grant. The Company's stock price closed at $100.58 on the date of the restricted
stock grant.

The following assumptions were used in the third quarter to estimate fair value
as of the date of grant using the Black-Scholes option pricing model:

For the three months
ended September 30,
-------------------
2004 2005
---- ----
Dividend yield ................................. 0.24% 0.48%
Risk-free interest rate ........................ 3.78% 3.99%
Volatility ..................................... 34% 34%
Expected option term (years) ................... 6.1 6.1
Weighted average fair value of options
granted during the year ...................... $37.20 $32.50

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 $5.5 million and $0.37 per share, respectively, for the three
months ended September 30, 2005, and $31.0 million and $2.08 per share,
respectively, for the nine months ended September 30, 2005.

CONFERENCE CALL WITH MANAGEMENT

Strayer Education, Inc. will host a conference call to discuss its third quarter
2005 earnings at 10:00 a.m. (ET) today. 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 365652) starting at 1:00 p.m. (ET) today and will be
available through Monday, October 31, 2005 and then 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 27,000 working adult students at 37 campuses in 9 states in the eastern
United States and worldwide via the Internet through Strayer University Online.
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 (the "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.
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,
--------------------- --------------------
2004 2005 2004 2005
------- ------- -------- --------

Revenues ......................................... $38,009 $47,087 $130,926 $158,489
Costs and expenses:
Instruction and educational support .......... 14,889 18,084 46,613 56,575
Selling and promotion ........................ 9,159 13,009 21,564 30,325
General and administration ................... 6,124 6,422 18,041 20,037
------- ------- -------- --------
Income from operations ................... 7,837 9,572 44,708 51,552
Investment and other income ...................... 376 686 1,058 2,091
------- ------- -------- --------
Income before income taxes ............... 8,213 10,258 45,766 53,643
Provision for income taxes ....................... 3,123 3,820 17,808 20,589
------- ------- -------- --------
Net income ............................... 5,090 6,438 27,958 33,054
Preferred stock dividends and accretion .......... -- -- 1,389 --
------- ------- -------- --------
Net income available to common stockholders $ 5,090 $ 6,438 $ 26,569 $ 33,054
======= ======= ======== ========
Net income per share:
Basic ........................................ $ 0.35 $ 0.45 $ 1.99 $ 2.28
Diluted ...................................... $ 0.34 $ 0.44 $ 1.85 $ 2.23
Weighted average shares outstanding:
Basic ........................................ 14,743 14,374 13,340 14,521
Diluted ...................................... 15,021 14,637 15,092 14,792

STRAYER EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

At December 31, At September 30,
2004 2005
----------------- -----------------
ASSETS

Current assets:
Cash and cash equivalents ......................................................... $ 97,004 $ 86,698
Marketable securities available for sale, at fair value ........................... 25,753 25,637
Income taxes receivable ........................................................... -- 2,792
Tuition receivable, net of allowances for doubtful accounts of $1,301 and $1,488 at
December 31, 2004 and September 30, 2005, respectively .......................... 41,669 58,223
Student loans receivable - held for sale .......................................... 29 --
Other current assets .............................................................. 3,679 3,712
--------- ---------
Total current assets ......................................................... 168,134 177,062
Property and equipment, net .......................................................... 41,137 46,150
Restricted cash ...................................................................... 500 500
Other assets ......................................................................... 343 337
--------- ---------
Total assets ................................................................. $ 210,114 $ 224,049
========= =========

LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................................................. $ 4,971 $ 7,140
Accrued expenses .................................................................. 2,318 1,150
Income taxes payable .............................................................. 6,060 --
Unearned tuition .................................................................. 42,059 62,782
--------- ---------
Total current liabilities .................................................... 55,408 71,072
Deferred income taxes ............................................................. 1,077 214
Long-term liabilities ............................................................. 4,707 6,274
--------- ---------
Total liabilities ............................................................ 61,192 77,560
--------- ---------
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.01; 20,000,000, shares authorized; 14,669,487 and
14,344,826 shares issued and outstanding at December 31, 2004 and
September 30, 2005, respectively ............................................... 147 144
Additional paid-in capital ........................................................ 140,943 111,406
Unearned compensation - restricted stock .......................................... -- (434)
Retained earnings ................................................................. 7,983 35,593
Accumulated other comprehensive income (loss) ..................................... (151) (220)
--------- ---------
Total stockholders' equity ................................................... 148,922 146,489
--------- ---------
Total liabilities and stockholders' equity ................................... $ 210,114 $ 224,049
========= =========

STRAYER EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)

For the nine months ended September 30,
-----------------------------------------
2004 2005
----------- -----------

Cash flows from operating activities:
Net income ..................................................... $ 27,958 $ 33,054
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred rent ............................. 442 127
Depreciation and amortization ............................. 3,971 4,944
Provision for student loan losses and indemnification ..... (182) (98)
Deferred income taxes ..................................... (69) (45)
Stock-based compensation .................................. -- 19
Changes in assets and liabilities:
Tuition receivable, net ................................... (11,318) (16,554)
Other current assets ...................................... (762) 133
Other assets .............................................. 25 6
Accounts payable .......................................... 908 1,935
Accrued expenses .......................................... (344) (1,168)
Income taxes payable ...................................... 6,271 (9,773)
Unearned tuition .......................................... 12,807 20,723
Deferred lease incentives ...................................... 582 1,531
Student loans originated ....................................... (1,088) (673)
Collections on student loans receivable and held for sale ...... 1,235 709
-------- --------
Net cash provided by operating activities ............. 40,436 34,870
-------- --------
Cash flows from investing activities:
Purchases of property and equipment ........................... (7,631) (9,739)
-------- --------
Net cash used in investing activities ................. (7,631) (9,739)
-------- --------
Cash flows from financing activities:
Common stock dividends paid ................................... (2,564) (5,444)
Preferred stock dividends paid ................................ (1,684) --
Repurchase of common stock .................................... (36,772) (29,993)
Proceeds from exercise of stock options ....................... 11,949 --
-------- --------
Net cash used in financing activities ................. (29,071) (35,437)
-------- --------
Net increase (decrease) in cash and cash equivalents .. 3,734 (10,306)
Cash and cash equivalents - beginning of period .................. 82,089 97,004
-------- --------
Cash and cash equivalents - end of period ........................ $ 85,823 $ 86,698
======== ========

Non-cash transactions:
Purchases of property and equipment included in accounts payable $ 367 $ 234

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