EX-99.01 2 file2.htm PRESS RELEASE DATED FEBRUARY 15, 2007

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
FOURTH QUARTER AND FULL YEAR 2006 REVENUES, EARNINGS AND
WINTER TERM 2007 ENROLLMENTS

-- STRAYER FOURTH QUARTER REVENUES UP 20% --
-- STRAYER FOURTH QUARTER DILUTED EPS $1.11/$1.22 EXCLUDING
STOCK-BASED COMPENSATION --
-- STRAYER FULL YEAR DILUTED EPS $3.61/$3.96 EXCLUDING
STOCK-BASED COMPENSATION --
-- STRAYER WINTER 2007 TOTAL ENROLLMENTS UP 16%/NEW STUDENTS
UP 20%/ONLINE UP 26% --
-- TWO ORLANDO, FL CAMPUSES OPENED FOR 2007 SPRING TERM --

ARLINGTON, Va., February 15, 2007 - Strayer Education, Inc. (Nasdaq: STRA) today
announced financial results for the three months and year ended December 31,
2006. Financial highlights are as follows:

THREE MONTHS ENDED DECEMBER 31

o Revenues for the three months ended December 31, 2006 increased 20% to
$74.3 million, compared to $62.0 million for the same period in 2005, due
to increased enrollment and a 5% tuition increase which commenced in
January 2006.

o Income from operations was $24.1 million compared to $23.3 million for the
same period in 2005, an increase of 3%. In 2006, the Company began
recording stock-based compensation expense, which amounted to $2.5 million
before tax for the three months ended December 31, 2006. Excluding
stock-based compensation expense, income from operations was $26.6 million,
an increase of 14% compared to 2005.

o Net income was $16.0 million compared to $15.0 million for the same period
in 2005, an increase of 7%. Net income for the three months ended December
31, 2006 includes the effect of a $1.6 million after tax expense related to
stock-based compensation. Excluding stock-based compensation expense, net
income was $17.6 million, an increase of 17% compared to 2005.

Diluted earnings per share was $1.11 compared to $1.03 for the same period
in 2005, an increase of 8%. Diluted earnings per share for the three months
ended December 31, 2006 includes the effect of a $0.11 per share after tax
expense related to stock-based compensation. Excluding stock-based
compensation expense, diluted earnings per share was $1.22, an increase of
18% compared to 2005. Diluted weighted average shares outstanding decreased
to 14,452,000 from 14,590,000 for the same period in 2005.

YEAR ENDED DECEMBER 31

o Revenues for the year ended December 31, 2006 increased 20% to $263.6
million, compared to $220.5 million for the same period in 2005, due to
increased enrollment and a 5% tuition increase effective for 2006.

o Income from operations was $79.5 million compared to $74.9 million for the
same period in 2005, an increase of 6%. In 2006, the Company began
recording stock-based compensation expense, which amounted to $8.1 million
before tax for the year ended December 31, 2006. Excluding stock-based
compensation expense, income from operations was $87.6 million, an increase
of 17% compared to 2005.

o Net income was $52.3 million compared to $48.1 million for the same period
in 2005, an increase of 9%. Net income for the year ended December 31, 2006
includes the effect of a $5.1 million after tax expense related to
stock-based compensation. Excluding stock-based compensation expense, net
income was $57.4 million, an increase of 19% compared to 2005. Diluted
earnings per share was $3.61 compared to $3.26 for the same period in 2005,
an increase of 11%. Diluted earnings per share for the year ended December
31, 2006 includes the effect of a $0.35 per share after tax expense related
to stock-based compensation. Excluding stock-based compensation expense,
diluted earnings per share was $3.96, an increase of 21% compared to 2005.
Diluted weighted average shares outstanding decreased to 14,492,000 from
14,741,000 for the same period in 2005.

Income from operations, net income and diluted earnings per share for the three
months and year ended December 31, 2006 excluding stock-based compensation (as
presented above) are considered non-GAAP financial measures. The Company
believes these non-GAAP financial measures provide investors, potential
investors, securities analysts and others with useful information to evaluate
the performance of the business, because they exclude stock-based compensation
expense which had not been included in the prior years. Additional information
is contained in the attached financial statements including a reconciliation of
GAAP to these non-GAAP measures.

"We are pleased with both our fourth quarter and year-end financial results,"
said Robert S. Silberman, Chairman and Chief Executive Officer of Strayer
Education, Inc. "We are also pleased with our student enrollment efforts and our
new campus openings in the Kentucky market and look forward to serving students
at our two new Orlando campuses beginning in the spring term."

BALANCE SHEET AND CASH FLOW

At December 31, 2006, the Company had cash, cash equivalents and marketable
securities (a diversified, no load, short-term, tax-exempt bond fund) of $128.4
million and no debt. The Company generated $61.8 million from operating
activities in 2006. Capital expenditures were $13.2 million for the same period.

During the fourth quarter 2006, the Company repurchased 72,300 shares of common
stock at an average price of $110.69 per share under a previously announced
common stock repurchase authorization. During the full year 2006, the Company
repurchased 349,066 shares of common stock at an average price of $100.39 per
share. As of December 31, 2006, the Company had a $32 million authorization
remaining under this plan.

In the fourth quarter 2006, bad debt expense as a percentage of revenue was 3.5%
compared to 2.8% for the same period in 2005. Days sales outstanding, adjusted
to exclude tuition receivable related to future quarters, was 13 days at the end
of the fourth quarter 2006, compared to 10 days at the end of the same period in
2005.

STUDENT ENROLLMENT

Total enrollment at Strayer University for the 2007 winter term increased 16% to
32,150 students compared to 27,621 students for the same term in 2006. Across
the Strayer University campus network, new student enrollments increased 20% and
continuing student enrollments increased 16%. Out-of-area online students
increased 26%, while students taking 100% of their classes at Strayer University
Online (including campus based students) increased 20%. The total number of
students taking any courses online (including students at brick and mortar
campuses taking at least one online course) in the 2007 winter term increased to
22,591.

STUDENT ENROLLMENT

Winter Winter %
2006 2007 Change
------------ ------------ ----------

New Campuses (20 in operation 3 or less years)
Classroom Students 1,247 2,511 101%
Online Students 1,754 3,135 79%
------------ ------------
Total New Campus Based Students 3,001 5,646 88%
------------ ------------

Mature Campuses (25 in operation more than 3 years)
Classroom Students 10,757 10,832 1%
Online Students 11,090 12,185 10%
------------ ------------
Total Mature Campus Based Students 21,847 23,017 5%
------------ ------------
Total Campus Based Students 24,848 28,663 15%
Out of Area Online Students 2,773 3,487 26%
------------ ------------
Total University Enrollment 27,621 32,150 16%
============ ============

Total Students Taking 100% Courses Online 15,617 18,807 20%
Total Students Taking At Least 1 Course Online 18,877 22,591 20%

NEW CAMPUS OPENINGS

The Company announced today that it has opened two new campuses in Orlando,
Florida for the 2007 spring term. Including the two new campuses successfully
opened for the 2007 winter quarter in Lexington and Louisville, Kentucky, the
Company has now opened four of the eight new campuses planned for 2007.

STOCK-BASED COMPENSATION ACTIVITY

In February 2007, the Company's Board of Directors approved a grant of
approximately 20,000 shares of restricted stock to certain employees. The
Company's stock price closed at $113.72 on the date of the restricted stock
grant.

COMMON STOCK CASH DIVIDEND

The Company announced today that its Board of Directors has declared its
regular, quarterly common stock cash dividend of $0.3125 per share. This
dividend will be paid on March 12, 2007 to shareholders of record as of February
28, 2007.

BUSINESS OUTLOOK

Based on the strong enrollment growth announced for the 2007 winter term and the
planned investments in opening new campuses, the Company estimates first quarter
2007 diluted EPS will be in the range of $1.27 to $1.29. The Company estimates
that it will incur stock-based compensation expense for the first quarter of
2007 of approximately $2.5 million before tax or $0.11 per share after tax,
which is included in the Company's EPS estimate.

2007 ANNUAL MEETING OF STOCKHOLDERS

The Company announced today that its 2007 annual meeting of stockholders will
take place on Wednesday, May 2, 2007 in Arlington, Virginia. Tuesday, March 6,
2007 will be the record date for this annual meeting.

CONFERENCE CALL WITH MANAGEMENT

Strayer Education, Inc. will host a conference call to discuss its fourth
quarter earnings and year-end results 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 6851740) starting at 1:00 p.m. (ET) today and will be
available through Monday, February 19, 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 32,000 working adult students at 47 campuses in 11 states in the Eastern
United States

and Washington, D.C. 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 ("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 from those expressed in or implied by such statements. 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
and regional regulatory requirements, competitive factors, our ability to
implement our growth strategy, 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,
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 year
ended December 31, ended December 31,
------------------------------ --------------------------------
2005 2006 2005 2006
------------- ------------- --------------- ------------

Revenues...................................... $62,018 $74,307 $220,507 $263,648
Costs and expenses:
Instruction and educational support........ 20,402 24,750 76,977 91,120
Selling and promotion...................... 10,765 14,258 41,090 52,269
General and administration................. 7,539 11,220 27,576 40,723
------------- ------------- --------------- ------------
Income from operations................. 23,312 24,079 74,864 79,536
Investment and other income................... 891 1,265 2,982 4,542
------------- ------------- --------------- ------------
Income before income taxes............. 24,203 25,344 77,846 84,078
Provision for income taxes.................... 9,192 9,347 29,781 31,771
------------- ------------- --------------- ------------
Net income............................. $15,011 $15,997 $ 48,065 $ 52,307
============= ============= =============== ============
Net income per share:
Basic ..................................... $1.05 $1.13 $3.32 $3.69
Diluted ................................... $1.03 $1.11 $3.26 $3.61
Weighted average shares outstanding:
Basic...................................... 14,328 14,136 14,472 14,187
Diluted.................................... 14,590 14,452 14,741 14,492
Common dividends per share.................... $0.25 $0.31 $0.63 $1.06

--------------------------------------------------------------------------------
In 2006, the Company adopted FAS 123(R) and began recording stock-based
compensation expense for stock options. Prior to the adoption of FAS 123(R), the
Company recorded expense for other forms of stock-based compensation. For the
three months ended December 31, 2006, stock-based compensation expense was $2.5
million, or $1.6 million net of tax, and reduced EPS by $0.11. For the year
ended December 31, 2006, stock-based compensation expense was $8.1 million, or
$5.1 million net of tax, and reduced EPS by $0.35. The table below sets forth
the amount of various forms of stock-based compensation expense recorded in each
of the expense line items.

For the three months For the year
ended December 31, ended December 31,
-------------------- ------------------

2005 2006 2005 2006
---- ---- ---- ----

Instruction and educational support.. $-- $150 $-- $638
Selling and promotion................ -- 136 -- 545
General and administration........... 28 2,232 47 6,866

For the three months ended December 31, 2005, including the pro forma impact of
recording $1.3 million in stock-based compensation expense net of tax, the
Company would have reported net income of approximately $13.7 million and
diluted EPS of $0.94. For the year ended December 31, 2005, including $3.4
million in stock-based compensation expense net of tax, the Company would have
reported net income of approximately $44.7 million and diluted EPS of $3.02. The
pro forma impact of recording stock-based compensation expense for the year
ended December 31, 2005 was disclosed in Note 2 to the Company's Consolidated
Financial Statements included in its Form 10-K.
--------------------------------------------------------------------------------

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

December 31, December 31,
2005 2006
---------------- ----------------

ASSETS
Current assets:
Cash and cash equivalents................................................... $ 74,212 $52,663
Marketable securities available for sale, at fair value..................... 45,594 75,763
Tuition receivable, net of allowances for doubtful accounts of $1,927 and
$3,029 in 2005 and 2006, respectively..................................... 55,935 80,753
Other current assets........................................................ 2,581 4,653
---------- ----------
Total current assets.................................................... 178,322 213,832
Property and equipment, net.................................................... 46,684 52,748
Deferred income taxes.......................................................... -- 3,400
Restricted cash................................................................ 500 500
Other assets................................................................... 339 364
---------- ----------
Total assets............................................................ $225,845 $270,844
========== ==========

LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................ $ 6,402 $10,923
Accrued expenses............................................................ 1,483 1,830
Income taxes payable........................................................ 3,773 4,979
Unearned tuition............................................................ 55,778 73,896
---------- ----------
Total current liabilities............................................... 67,436 91,628
Deferred income taxes.......................................................... 205 --
Long-term liabilities.......................................................... 6,364 7,689
---------- ----------
Total liabilities....................................................... 74,005 99,317
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.01; 20,000,000 shares authorized; 14,292,249 and
14,293,584 shares issued and outstanding,
as of December 31, 2005 and 2006, respectively........................... 143 141
Additional paid-in capital.................................................. 104,923 87,487
Retained earnings........................................................... 47,020 84,043
Accumulated other comprehensive income (loss)............................... (246) (144)
---------- ----------
Total stockholders' equity............................................ 151,840 171,527
---------- ----------
Total liabilities and stockholders' equity............................ $225,845 $270,844
======== ========

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

For the year ended December 31,
------------------------------------
2005 2006
------------ ------------

Cash flows from operating activities:
Net income.................................................................... $ 48,065 $52,307
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss on disposal of assets............................................... 37 --
Amortization of deferred rent............................................ 230 190
Depreciation and amortization............................................ 6,619 7,059
Provision for student loan losses........................................ (162) (120)
Deferred income taxes.................................................... (63) (4,034)
Stock-based compensation................................................. 48 7,413
Changes in assets and liabilities:
Tuition receivable, net.................................................. (14,266) (24,818)
Other current assets..................................................... 630 (1,710)
Other assets............................................................. 4 (25)
Accounts payable......................................................... 1,503 4,581
Accrued expenses......................................................... (835) 347
Income taxes payable..................................................... (2,804) 4,801
Excess tax benefits from stock-based payment arrangements................ -- (3,595)
Unearned tuition......................................................... 13,719 18,118
Deferred lease incentives ............................................... 2,342 1,235
Student loans originated...................................................... (686) (3)
Collections on student loans receivable....................................... 762 23
-------- --------
Net cash provided by operating activities............................ 55,143 61,769
-------- --------
Cash flows from investing activities:
Purchases of property and equipment.......................................... (12,275) (13,183)
Purchases of marketable securities........................................... (20,000) (30,000)
-------- --------
Net cash used in investing activities................................ (32,275) (43,183)
-------- --------
Cash flows from financing activities:
Common dividends paid........................................................ (9,028) (15,284)
Proceeds from exercise of stock options...................................... 1,336 6,595
Excess tax benefits from stock-based payment arrangements.................... -- 3,595
Repurchase of common stock................................................... (37,968) (35,041)
-------- --------
Net cash used in financing activities................................ (45,660) (40,135)
-------- --------
Net increase (decrease) in cash and cash equivalents................. (22,792) (21,549)
Cash and cash equivalents - beginning of period................................. 97,004 74,212
-------- --------
Cash and cash equivalents - end of period....................................... $ 74,212 $ 52,663
======== ========
Non-cash transactions:
Purchases of property and equipment included in accounts payable............ $ 561 $ 501

STRAYER EDUCATION, INC.
RECONCILIATION OF UNAUDITED NON-GAAP FINANCIAL MEASURES TO GAAP
FINANCIAL MEASURES (a)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

For the three months ended December 31, 2006 For the year ended December 31, 2006
-------------------------------------------- ------------------------------------
Stock-based Stock-based
GAAP Compensation Non-GAAP GAAP Compensation Non-GAAP
Results Expense Results Results Expense Results
---------- --------------- ----------- ----------- ---------------- ----------

Revenues................................. $74,307 $ -- $74,307 $263,648 $ -- $263,648
------- -------- ------- -------- -------- --------
Costs and expenses:
Instruction & educational
support........................... 24,750 (150) 24,600 91,120 (638) 90,482
Selling & promotion.................. 14,258 (136) 14,122 52,269 (545) 51,724
General & administration............. 11,220 (2,232) 8,988 40,723 (6,866) 33,857
------- -------- ------- -------- -------- --------
Total costs and expenses................. 50,228 (2,518) 47,710 184,112 (8,049) 176,063
------- -------- ------- -------- -------- --------
Income from operations................... 24,079 2,518 26,597 79,536 8,049 87,585
Investment and other income.............. 1,265 -- 1,265 4,542 -- 4,542
------- -------- ------- -------- -------- --------
Income before income taxes............... 25,344 2,518 27,862 84,078 8,049 92,127
Provision for income taxes............... 9,347 880 10,227 31,771 2,992 34,763
------- -------- ------- -------- -------- --------
Net income............................... $15,997 $ 1,638 $17,635 $ 52,307 $ 5,057 $ 57,364
======= ======= ======= ======== ======== ========
Net income per share:
Basic................................ $1.13 $0.12 $1.25 $3.69 $0.35 $4.04
Diluted.............................. $1.11 $0.11 $1.22 $3.61 $0.35 $3.96
Weighted average shares outstanding:
Basic................................ 14,136 14,136 14,136 14,187 14,187 14,187
Diluted.............................. 14,452 14,452 14,452 14,492 14,492 14,492

-----------------------------
(a) These unaudited non-GAAP financial measures are for informational purposes
only and are not presented in accordance with GAAP. The Company believes these
non-GAAP financial measures provide investors, potential investors, securities
analysts and others with useful information to evaluate the performance of the
business, because they exclude stock-based compensation expense which had not
been included in the prior years. The presentation of this additional
information is not meant to be considered in isolation or as a substitute for
the Company's condensed consolidated statements of income.

Additional Data: December 31, December 31,
---------------- 2005 2006
---- ----

Common shares outstanding at year end 14,292,249 14,293,584
Authorized, issued and outstanding stock options 1,103,334 762,334