Strategic Education, Inc. · NASDAQ:STRA
Strategic Education — Strayer Education — Investor Day (May 2004)
134 slides from Strategic Education's investor day presentation, May 4, 2004
Slide 1: Making Education Achievable for Working Adults Investor Day
Making Education Achievable for Working Adults Investor Day May 3, 2004
Slide 2: Safe Harbor Language
Safe Harbor Language This presentation 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
Slide 3: Robert Silberman, Chairman and CEO
Robert Silberman Chairman and Chief Executive Officer Joined Strayer Education, Inc. in 2001 as Chief Executive Officer Previously served as the President and Chief Operating Officer of CalEnergy Company, Inc. and was the Assistant to the Chairman and Chief Executive Officer of International Paper S
Slide 4: Agenda
Agenda Academics Overview Marketing Overview Operations Overview Campus Management & Faculty Development Overview Strayer University Online Overview Financial Overview Tour of Washington D.C. campus Dinner
Slide 5: Our Mission
Our Mission Making Education Achievable for Working Adults
Slide 6: Our Vision: To Build a Nationwide University
Our Vision: To Build a Nationwide University Internal Growth Ensure Stable Performance in Our Mature Markets External Growth Open New Campuses Expand Strayer University Online Develop Corporate / Institutional Alliances Careful Deployment of Excess Cash Maintain High Academic Quality
Slide 7: Strayer Education, Inc. Leadership
Strayer Education, Inc. Leadership Board of Directors Strayer Education, Inc. NASDAQ: STRA Chief Executive Officer Board of Trustees Strayer University Pres. Strayer Univ. VP Online Ops. VP Campus Ops. SR VP& General Counsel SR VP & CFO VP Mktg. & Admin. VP & CTO VP HR VP Corp. Comm.
Slide 8: Strayer Education, Inc. Board of Directors
Strayer Education, Inc. Board of Directors Audit Committee Chair: Gary Gensler Former U.S. Under Secretary of the Treasury Thomas Waite CFO, Humane Society of the United States Todd Milano President and CEO, Central Pennsylvania College Compensation Committee Chair: David Coulter Vice Chairman, J.P.
Slide 9: Strayer University Board of Trustees
Strayer University Board of Trustees Chair: Scott W. Steffey Former Vice Chancellor of the State University of New York Vice Chair: Donald R. Stoddard, Ph.D. (University of Pennsylvania) Former President Strayer University Charlotte Beason, Ed.D. (Harvard University) Former Chair, Commission on Coll
Slide 10: Strayer University: Serving Students
Strayer University: Serving Students Strayer Education, Inc. CEO Vice President Operations Strayer University President Regional Director Regional Dean Campus Manager Campus Dean S T U D E N T S Business Functions Academic Functions
Slide 11: Four Operating Units
Four Operating Units Region I: Pennsylvania, Maryland, Washington D.C. Region II: Virginia Region III: North Carolina, South Carolina, Tennessee, Georgia Strayer University Online: Worldwide
Slide 12: Building a Management Team
Building a Management Team Vision Leadership Seminar Goals: To identify potential candidates for upward mobility into key management positions (Campus Deans, Campus Managers, Corporate Managers) To meet and observe candidates Provide insight and information into the industry, Strayer University’s st
Slide 13: Academic Overview
Academic Overview J. Chris Toe, Ph.D. Strayer University President Making Education Achievable for Working Adults
Slide 14: J. Chris Toe, Ph.D., President, Strayer University
J. Chris Toe, Ph.D. President, Strayer University Joined Strayer University in 1993 as an adjunct professor and was named president in April 2003 Has held positions including Director of Graduate Programs, Campus Dean, Regional Dean, and Provost Began career as an economist in the Republic of Liberi
Slide 15: Agenda
Agenda Brief History, Mission and Locations Academic Programs The Strayer University Experience Assuring A Quality Education What Our Students Say About Us
Slide 16: Strayer University
Strayer University Serves working adults Founded in 1892 20,000 students Accredited by Middle States Commission on Higher Education Authorized to operate in 7 states and the District of Columbia
Slide 17: Strayer University Campuses
Strayer University Campuses 29 physical campuses, 7 states and the District of Columbia Strayer University Online classes offered worldwide
Slide 18: Strayer University – Academic Governance
Strayer University – Academic Governance Educational standards ensured by strong academic governance structure Board of Trustees President Regional Deans Deans of Academic Development and Training, and Student Affairs Directors of Graduate Studies, Programs/Policy, Institutional Research and Assessm
Slide 19: Academic Programs: Graduate
Academic Programs Master of Business Administration Master of Education* Master of Health Services Administration* Master of Public Administration* Master of Science Communications Technology Information Systems Management Information Systems Professional Accounting Executive Graduate Certificate Pr
Slide 20: Academic Programs: Undergraduate
Academic Programs Bachelor of Science Accounting Business Administration Computer Information Systems Computer Networking Database Technology Economics International Business Internetworking Technology Associate in Arts Accounting Acquisition and Contract Management Business Administration Computer
Slide 21: The Strayer University Experience
The Strayer University Experience Non-program 4% Diploma/ Certificate 2%
Slide 22: The Strayer University Experience
The Strayer University Experience
Slide 23: The Strayer University Experience: Length of Study and Graduation
The Strayer University Experience Average Length of Study Average length of study is 8 quarters (as our students usually have some prior credit) Average student takes 2 classes per quarter Graduation Rates Approximately 62% of Strayer University’s full-time students graduate and approximately 80% of
Slide 24: The Strayer University Experience: Faculty Profile
The Strayer University Experience Faculty Profile Full-time: 146; Adjunct: 755 All full-time have graduate degrees Significantly diverse Teach, advise students, develop programs and curricula and render professional and community service Subject-area expertise Classes Taught Full-time faculty 37% Pa
Slide 25: Assuring A Quality Education
Assuring A Quality Education Strategy Embed learning outcomes in all courses Hire, train and mentor faculty Evaluate faculty and audit classes Internal and external peer review Solicit accreditor feedback Solicit employer feedback via Curriculum Advisory Boards Survey alumni, non-returning and curre
Slide 26: Assuring A Quality Education: Key Staff
Assuring A Quality Education Key Staff Regional Deans Dean of Academic Development and Training Director of Institutional Research and Assessment Campus Deans Department Heads Faculty
Slide 27: Assuring A Quality Education: Curriculum Development Input
Assuring A Quality Education Input to Curriculum Development Process Students Faculty Curriculum Advisory Board University State Discipline
Slide 28: Assuring A Quality Education: Student Learning
Assuring A Quality Education Student Learning Student Learning Outcomes Assessment Program Student Opinion Poll Program Academic Program Review University Student Satisfaction Survey Alumni Survey Non-Returning Student Survey Faculty End of Course Survey Graduating Senior Survey Employee Satisfactio
Slide 29: What Our Students Say About Us
What Our Students Say About Us 90% of Current Students Rate their overall experience as good or excellent Indicate the University is having a substantial impact on meeting their educational goals Indicate the University is having a substantial impact on meeting their professional goals Would recomme
Slide 30: What Our Students Say About Us: Alumni
What Our Students Say About Us Alumni 84% rate their overall experience as good or excellent Over 75% indicate their preparation in research and problem- solving skills was good or excellent 68% obtained a new professional position or promotion since graduation On average, AA graduates earn $48,333
Slide 31: What Our Students Say About Us: Non-returning Students
What Our Students Say About Us Non-returning Students 83% agree the education they received at the University was of a high quality 73% would recommend Strayer University to friends and colleagues Personal and professional commitments are the most common reasons for not returning
Slide 32: Commitment to Academic Quality
Commitment to Academic Quality
Slide 33: Academic Overview
Academic Overview J. Chris Toe, Ph.D. Strayer University President Making Education Achievable for Working Adults
Slide 34: Marketing Overview
Making Education Achievable for Working Adults Marketing Overview Lysa Hlavinka Vice President of Marketing and Administration
Slide 35: Lysa Hlavinka, Vice President of Marketing
Lysa Hlavinka Vice President of Marketing Joined Strayer Education, Inc. in 2001 as Vice President of Marketing Began career as account executive at an advertising agency and joined University of Phoenix in 1990 While at the University of Phoenix she held positions as Marketing Manager, Director of
Slide 36: Agenda
Agenda Strayer University’s Marketing Objectives The Strayer University Brand Our Students Marketing Mix Lead Generation and Management Corporate Alliances
Slide 37: Marketing Objectives
Marketing Objectives Strong branding and messaging Sharpened focus on working adults Targeted marketing Monitoring of leads Develop actionable data on marketing sources, aging of leads, and conversion rates Respond mid-cycle to market conditions
Slide 38: Defining the Brand
Defining the Brand University Adult students Convenient locations Flexible structure Efficient to earn a degree Professional environment Solid reputation Business and technology Fair cost
Slide 39: Strayer University Brand Positioning
Strayer University Brand Positioning Combines quality of a traditional university education with flexibility and convenience Exists for one purpose – to provide adults with a higher education that opens the door to opportunity Accomplished through delivery of a tailored university experience combine
Slide 40: The Strayer University Logo/Tag Line
The “Strayer University” Logo/Tag Line Shield = stability, strength 1892 = year of founding, reliability Column = academics Strayer not used without the word University Used in brochures, ads, web site, campuses “We Fit Your Life”
Slide 41: Applying the Brand: Marketing
Applying the Brand: Marketing Consistent messaging across all media and all customer contacts All ads, even direct response ads, contribute to brand awareness and credibility
Slide 42: Advertising examples
T want to Tm treated show my child like that earning a degree I've received a C a promotion. adult here. is possible. rive received every year ‘promotion since We fityour lite graduating. We fit your lite. (@fSTRAYE! Wak Investor Day STRAYER EDUCATION, ING. May 3/2004
Slide 43: Applying the Brand: Service
Applying the Brand: Service Customers evaluate the brand with each interaction they have with a Strayer University faculty or staff member All staff and faculty must believe in and support the brand Vision Training Management and staff training Communication Physical facilities are also important to
Slide 44: Who are our students?
Who are our students? Adults, not due to age, but due to place in life Diverse in age, income, ethnicity, marital status Demographics of average student: Average age is 34 At least high school/some college education (master’s leads have bachelor’s degree) Employed; average income $35K Family Takes t
Slide 45: What we know about our students
What we know about our students Challenged by demands of work, family Careful – consider lots of options, want reassurance Motivated – desire to seek opportunity Consider the decision to return to school for many years When they finally contact schools, they’re ready to act
Slide 46: Marketing Mix: Broadcast and Print
Marketing Mix Broadcast Network TV Cable TV Radio Newspaper advertising Major market papers: main news and business section, special education sections Community College papers Military papers Out of Home advertising (metro stations, buses, billboards)
Slide 47: Marketing Mix: Internet and Direct Mail
Marketing Mix Internet Web site listings (i.e., Yahoo, FastWeb, ClassesUSA) Search engines Banner ads (local sites) Pop-up ads (ad networks) Direct Mail Outreach Exhibitions at expos, conferences, career fairs Corporate outreach through Corporate Liaisons
Slide 48: Applying the Marketing Mix
Applying the Marketing Mix Varies by Market Objectives Awareness Ease of generating leads in market Expense of market Flexible Within quarter to respond to lead flow Quarter to quarter depending on results Market to market depending on above factors
Slide 49: Basic Approach to New Markets
Basic Approach to New Markets Introduction/Name Awareness TV (network or cable) Radio Outdoor Lead Generation Direct mail Internet Outreach Advertising creative is specific to new market
Slide 50: Lead Generation
Lead Generation Lead = someone who requests information Methods of contact 70% come through the Internet 15% from direct mail 10% phone calls 5% walk-in Distributed to the campuses Entered, tracked, analyzed
Slide 51: Lead Management
Lead Management Telephone responses through toll-free numbers are routed to campuses Direct mail and internet leads are distributed centrally from the Marketing Department Walk-ins, outreach, referrals, personally developed leads go directly to campuses Admissions officers follow up with leads As le
Slide 52: Marketing Costs
Marketing Costs Average University cost per lead $50-150 Average University cost per student acquisition $500-1500
Slide 53: Corporate Alliances
Corporate Alliances Benefits to the Corporate Alliance Partner Targeted services Employee benefits Job development Benefits to Strayer Education Potential large recurring volume Minimal credit risk, direct payment of tuition Faculty recruitment Direct outreach to nearly 90 corporations and instituti
Slide 54: Marketing Overview
Making Education Achievable for Working Adults Marketing Overview Lysa Hlavinka Vice President of Marketing
Slide 55: Operations Overview
Making Education Achievable for Working Adults Operations Overview Jim McCoy Vice President of Campus Operations
Slide 56: Jim McCoy, Vice President of Campus Operations
Jim McCoy Vice President of Campus Operations Joined Strayer University in 1994 and has been active in proprietary education for past 22 years Since joining Strayer has held positions as Campus Manager, Campus Dean, Director of Compliance, and Regional Director Received undergraduate degree in Polit
Slide 57: Agenda
Agenda Three Geographic Regions Structure of the Regional Office Responsibilities of the Regional Office
Slide 58: Strayer University Regions
Strayer University Regions Region I Philadelphia, Pennsylvania (2) Baltimore, Maryland (3) Washington, D.C. (4) Region II Northern Virginia (5) Richmond, Virginia (3) Norfolk, Virginia (2) Region III Raleigh-Durham, North Carolina (2) Charlotte, North Carolina (2) Greenville, South Carolina (1) Nash
Slide 59: Campus Reporting Model
Campus Reporting Model Regional Director University President Vice President Campus Operations Regional Dean Campus Campus Campus Campus Campus
Slide 60: Role of the Regional Office
Role of the Regional Office Support campus operations Coordinate and provide training to campus personnel (Campus management, admissions and student services staff) Coordinate the implementation of University policies at the campus level Facilitate outreach to area corporations and organizations to
Slide 61: Regional Office Staffing Model
Regional Office Staffing Model Vice President Marketing Vice President IT Vice President Campus Operations
Slide 62: Regional Office Responsibilities
Regional Office Responsibilities Regional Support Officers Bench strength to supplement campus personnel Regional Corporate Liaisons Develop corporate outreach activities Regional Marketing Manager Coordinate quarterly advertising plans
Slide 63: Regional Office Responsibilities
Regional Office Responsibilities Regional Career Development Officer Assist students and graduates to develop career advancement skills Regional IT Coordinator Assist campus management with information technology requirements
Slide 64: Training
Training Quarterly Regional Campus Manager and Campus Dean workshops Regional Student Services workshops Regional LRC Specialist workshops New Employee Orientation workshops On-going Mentoring for new Campus Managers, Campus Deans, and Student Service Officer On-site and off-site training of new Adm
Slide 65: Managing Enrollment Growth
Managing Enrollment Growth Responding to demand Three regions with functional regional support staff – detailed management oversight and support Vary the number of admissions officers at campuses to match lead flow Expanded relationship and outreach to corporations Improved student services Targeted
Slide 66: Notional Campus Growth Rate
Target average student growth rate at year end 1 st year 150 students 2 nd year 300 students 3 rd year 450 students 4 th year 600 students 5 th year 750 students 6 th year 900-1,000 students Notional Campus Growth Rate
Slide 67: New Campuses
New Campuses 11 new campuses in operation 3 years or less 4,100 students during Winter 2004 quarter 127% enrollment growth Winter 2004 24 full-time faculty, 172 adjuncts Work closely with Strayer University Online Start-up capital expenditures: $500,000 to $1,000,000 (leasehold improvements, compute
Slide 68: New Campus Model
New Campus Model Approximately 12,000 square feet 6-8 classrooms that can accommodate 20 students per class 2-3 computer labs
Slide 69: Mature Campuses
Mature Campuses 14 campuses in operation over 3 years 14,000 students 3-10% enrollment growth rate since Q1 2001 127 full-time faculty, 326 adjuncts Facility capacity of 1,000 – 1,500 students
Slide 70: Mature Campus Model
Mature Campus Model 21,000 square feet 16-18 classrooms that can accommodate 20 students per class 4-5 computer labs Average 1,200 students at capacity
Slide 71: Site Selection Strategy
Site Selection Strategy Identify target cities and assess regulatory issues Review demographics, population trends, employers, competition, and educational attainment Map target population and commuting patterns, survey available facilities
Slide 72: 2004 New Sites Update
2004 New Sites Update In the spring term Strayer University opened 2 new campuses One in Greenville, SC; and A second Memphis, TN campus In the summer, we will open two new campuses in Atlanta, GA; and In the fall quarter we plan to open a third campus in Pennsylvania
Slide 73: Operations Summary
Operations Summary In summary, the goal of campus operations is to: Meet the demands of the adult learner We do this by: Locating campuses in convenient locations Providing a practical job oriented curriculum to meet demand; and Ensuring each student’s experience is a quality one
Slide 74: Operations Overview
Making Education Achievable for Working Adults Operations Overview Jim McCoy Vice President of Campus Operations
Slide 75: Campus Management and Faculty Development Overview
Making Education Achievable for Working Adults Campus Management and Faculty Development Overview Kristin Jones Dean of Academic Development and Training
Slide 76: Kristin Jones, Dean of Academic Development and Training
Kristin Jones Dean of Academic Development and Training Has been active in education field for past nine years and joined Strayer in 1998 Prior to joining Strayer University she taught within the Virginia Community College System Since joining Strayer has held positions as Admissions Officer, Campus
Slide 77: Agenda
Agenda Campus Academics Campus Operations Key Departments Daily Campus Activities Case Studies Faculty Development
Slide 78: Campus Model
Campus Model Campus Dean Academic responsibility for the campus Faculty, adjuncts, scheduling, student counseling, class audits, registration support, evaluations and academic committees Reports to Regional Dean Campus Manager P&L responsibility for the campus Admissions officers, student services,
Slide 79: Academic Organizational Chart, Campus Organization
Academic Organizational Chart Campus Organization
Slide 80: Administrative Organizational Chart, Campus Organization
Administrative Organizational Chart Campus Organization
Slide 81: Review of Key Departments: Academics
Review of Key Departments Academics (reports to campus dean) Teaching and Instruction Course Scheduling Academic Advising Faculty Recruitment and Assignment Student Retention
Slide 82: Review of Key Departments: Admissions and Student Services
Review of Key Departments Admissions (reports to campus manager) Recruitment/Registration Community Outreach Student Services (reports to campus manager) Accounts Receivable/Payable Student Aid Programs Library and Computer Lab Resources Facility Maintenance
Slide 83: Daily Campus Activities
Daily Campus Activities Daytime : Recruitment/Retention Collections Activities Student Use of Facilities Daytime Courses (Traditional/Online) Supplementary Facility Usage Evening : Evening Courses (Traditional/Online) Student Use of Facilities
Slide 84: Case Study: Henrico Campus
Case Study: Henrico Campus Henrico Campus – Richmond, Virginia Opened for classes – Fall 1998 (Mature Campus) Facility size 20,800 sq/ft., which supports administrative operations, 12 classrooms, 4 computer labs, and a Learning Resource Center 15 full-time campus administrative personnel, 7 full-tim
Slide 85: Case Study: Cary Campus
Case Study: Cary Campus Cary Campus – Raleigh-Durham, North Carolina Opened for classes – Summer 2002 (New Campus) Facility size 12,900 sq/ft., which supports administrative operations, 7 classrooms, 3 computer labs, and a Learning Resource Center 13 full-time campus administrative personnel, 2 full
Slide 86: Faculty Development Program
Faculty Development Program Objective To support and facilitate the professional growth and correlative personal growth of the faculty. Strategies for Faculty Development Faculty Candidate Teaching Evaluation New Faculty Orientation Mentor Programs Faculty Workshops Faculty Development Resource Cent
Slide 87: Examples of Faculty Development Strategies
Examples of Faculty Development Strategies Faculty Candidate Teaching Demonstration Required element of hiring process for all part-time and full-time faculty Includes 30-minute teaching demonstration Presentation evaluated by campus dean, campus department head, and senior faculty New Faculty Orien
Slide 88: Examples of Faculty Development Strategies
Examples of Faculty Development Strategies Faculty Workshops: Offered several times a year in a variety of formats Provide faculty with information on the latest higher education issues Professional Development Plans: Annual requirement for part-time and full-time faculty Allow faculty members to de
Slide 89: Summary
Summary Our unique campus model ensures campus managers and campus deans work together to promote quality for the students we serve Strayer focuses on the goal of ensuring academic quality in all aspects of its campus operations
Slide 90: Campus Management and Faculty Development Overview
Making Education Achievable for Working Adults Campus Management and Faculty Development Overview Kristin Jones Dean of Academic Development and Training
Slide 91: Strayer University Online
Strayer University Online Pamela Bell Vice President of Online Operations
Slide 92: Pam Bell, Vice President of Online Operations
Pam Bell Vice President of Online Operations Joined Strayer University in 1995 Since joining Strayer has held positions as Admissions Counselor, Distance Learning Coordinator, Online Academic Dean, and Director of Strayer University Online Experience organizing, establishing and implementing online
Slide 93: Agenda
Agenda Introduction to Strayer University Online Strayer University Online Growth and Academic Quality Asynchronous Demonstration Synchronous Demonstration
Slide 94: Complimentary Educational Program
Complimentary Educational Program Mirror and Compliment Strayer University's Traditional Campus Programs Provide Alternative Educational Delivery Options to meet our Adult Learner Needs Focus on Academic Quality Faculty Training Instructional Designed and Faculty Develop Courses Ongoing Evaluation o
Slide 95: Strayer University Online
Strayer University Online In operation with Synchronous courses since 1997 Introduced Asynchronous in 2001 9,068 full-time Strayer University Online students 74% enrollment growth over last fall (out-of-area) 17 full-time faculty, 259 adjuncts Approximately 631 courses offered this quarter, 517 asyn
Slide 96: Strayer University Online Growth
Strayer University Online Growth
Slide 97: Courseware Delivery Options: Asynchronous
Courseware Delivery Options Asynchronous Course Content Accessible 24/7 Collaborative Interaction Audio and Presentations Discussions and Online Activities Tracking and Monitoring Options Technical Support Provided Degree Programs
Slide 98: Courseware Delivery Options: Asynchronous demonstration
Courseware Delivery Options Asynchronous
Slide 99: Courseware Delivery Options: Synchronous
Courseware Delivery Options Synchronous Real-time Delivery Audio and Chatting Capabilities White Board Recorded Sessions Technical Support Provided Course Information Assessable 24/7 Degree Programs
Slide 100: Courseware Delivery Options: Synchronous demonstration
Courseware Delivery Options Synchronous
Slide 101: Courseware Delivery Options: Synchronous demonstration
Courseware Delivery Options Synchronous
Slide 102: Strayer Education, Inc.
STRAYER EDUCATION, INC.
Slide 103: Summary
Summary Mirror and Compliment Strayer University's Traditional Campus Programs Provide Alternative Educational Delivery Options to meet our Adult Learner Needs Focus on Academic Quality
Slide 104: Strayer University Online
Strayer University Online Pamela Bell Vice President of Online Operations
Slide 105: Financial Overview
Making Education Achievable for Working Adults Financial Overview Mark C. Brown Senior Vice President and Chief Financial Officer
Slide 106: Mark C. Brown, Senior Vice President and CFO
Mark C. Brown Senior Vice President and Chief Financial Officer Joined Strayer Education, Inc. in 2001 as Chief Financial Officer Previously served as the Chief Financial Officer of The Kantar Group, the information and consultancy division of WPP Group Held a variety of management positions at Peps
Slide 107: Agenda
Agenda 2003 Financial Highlights 2003 Financial Statements Review and Discussion New Campus Economics Internal Financial Controls 2004 Guidance
Slide 108: 2003 Review
2003 Review Opened five new campuses Grew Out-of-Area Online at 66% Sold student loan portfolio Sold campus facility Initiated share repurchase program
Slide 109: 2003 Review
2003 Review* 20% $2.17 $1.81 EPS Distributable cash flow (M) Net Income (M) Operating Margin (%) Operating Income (M) Revenue (M) Average Enrollment 24% $33.0 $26.6 23% $32.3 $26.2 (0.8) pts. 34.5% 35.3% 23% $50.5 $41.2 25% $146.4 $116.7 20% 16,849 14,026 % Change 2003 2002 * Excludes 2002 costs rel
Slide 110: Strayer Financial Statements
Strayer Financial Statements Income Statement Balance Sheet Cash Flow Statement
Slide 111: P&L – Revenue
P&L – Revenue Other Tuition Enrollment Revenue Drivers % growth vs. prior year 12% 19% 26% 25% * Excludes gain from sale of assets. Revenue
Slide 112: Funding a Strayer Education
Funding a Strayer Education Note: approximate percentages; vary by quarter
Slide 113: Revenue - Enrollment
Revenue - Enrollment Growth vs. P.Y. 9% 13% 18% 20% Average Enrollment
Slide 114: Revenue - Tuition
Revenue - Tuition $ Growth vs. P.Y. 2.9% 4.8% 6.2% 4.5% Revenue per Student
Slide 115: Tuition per Course
Tuition per Course Per Course Full-time undergraduate $1,100 Part-time undergraduate $1,150 Graduate $1,460
Slide 116: Revenue – Other Factors
Revenue – Other Factors Seats per student Tuition per seat (i.e., student mix) Drop rate Corporate/military discounts Fee income Interest income on loan portfolio Textbook income Scholarships and awards Employee discounts
Slide 117: Revenue - Reclassification
Revenue - Reclassification Employee discounts and scholarships & awards will be treated as reductions to revenue rather than as operating expenses in 2004, and textbook and related revenue will be treated as revenue instead of as other income. The accounting reclassification of these items are large
Slide 118: P&L – Operating Expenses
P&L – Operating Expenses Instructional & Educational Selling & Promotion General & Administrative
Slide 119: Instructional & Educational Expense
Instructional & Educational Expense Types of I&E Expense Deans Full-time/part-time professors Academic assistants Facility costs Technology licenses Computer labs/LRC Classroom equipment & supplies Datalines I&E as % of revenue
Slide 120: Selling and Promotion Expense
Selling and Promotion Expense Types of S&P Expense Admissions officers & assistants Marketing and business development personnel Advertising Trade shows S&P as % of revenue %
Slide 121: General & Administrative
General & Administrative Expense Types of G&A Expense Student service officers and representatives Corporate staff Public company expenses Business licenses & taxes Bad debt expense G&A as % of revenue 14.7
Slide 122: Operating Margin
5 4 3 2 1 6 7 Operating Margin 34.5%+ Operating Margin New Campuses Opened
Slide 123: Bad Debt Expense
Bad Debt Expense % Bad Debt (% of Revenue)
Slide 124: Cohort Default Rate
Cohort Default Rate % Strayer Cohort Default Rate FFEL Program Loans
Slide 125: Investment Income
Investment Income $M Investment Income 3.8
Slide 126: Income Taxes
Income Taxes % Effective Tax Rate
Slide 127: Balance Sheet
Balance Sheet Student Loan Receivable Sold student loan portfolio in Q4 2003 Liability recorded for potential claims under indemnification agreement but no credit risk assumed May continue to originate loans for resale but will not be in long-term lending business Secondary Offering Converted all bu
Slide 128: Cash Flow
Cash Flow Net Income/Operating Cash Flow (Growth vs. Prior Year) % *Excluding campus building purchases in 2001 and 2002 * Capital Expenditures (% of Revenue) % * * Excluding gains on asset sales *
Slide 129: Redeployment of Excess Cash
Redeployment of Excess Cash 1. Invest as much as possible in organic growth strategy 2. Maintain sufficient liquidity to do acquisitions 3. After 1&2 above, return cash to shareholders Dividends (regular or special) Share buybacks
Slide 130: New Campus Economics
Operating Income New Campus Economics First Year Impact of Opening a New Campus (Amounts in $ millions, except enrollment data) Student Quarters Revenue Operating Costs Operating Loss 125 $0.2 1.1 ($0.9)
Slide 131: Internal Controls
Internal Controls Wide distribution of audit reports including recommended actions, if any Each campus audited 3-4 times per year Dedicated internal audit resources Internal Audit Annual audit by separate independent auditors Third party verifier and processor of financial aid Financial Aid represen
Slide 132: Internal Controls - Systems
Internal Controls - Systems Strayer’s management information system provides a series of controls and automation that affords advantages in terms of efficient staffing, consistency, minimization of risk Fees and tuition Financial Aid refunds Student registrations
Slide 133: 2004 Outlook
2004 Outlook Strayer Business Model 5 New Campuses 15,000,000 Diluted Shares Outstanding $2.60 - $2.65 Diluted EPS 34.5% - 35.0% Operating Margin 20 - 23% growth Revenue 15 - 18% growth Enrollment
Slide 134: Financial Overview
Making Education Achievable for Working Adults Financial Overview Mark C. Brown Senior Vice President and Chief Financial Officer