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Strayer Education's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Strayer Education is an education service company whose primary asset is Strayer University, a 50,000-student, 92-campus, post-secondary education institution, which offers masters, bachelors and associates degrees in Business Administration, Accounting, Computer Science, Public Administration and Education. Unlike traditional universities, Strayer students are working adults who are returning to school to further their careers.

Our revenue comes from tuition payments and associated fees. Approximately 75% of our revenue comes to us from Federal Title IV loans issued to our students. Our expenses at Strayer Education include the cost of our professors, our admissions and administrative staff, marketing expenses and facilities and supplies costs. We serve students in 23 states through our physical campuses, as well as in all 50 states and over 30 foreign countries through our online courses. Strayer University is accredited by the Middle States Commission on Higher Education.

Now, Karl, how about running them through the operational results?

Karl McDonnell

Sure. First, on our enrollment results, total enrollment for the winter academic term was down 12% to 50,432 students. Our new students were down 8%, and our continuing students were down 12%. Our continuation rate was down a couple of hundred basis points, mostly attributable to the fact that over the last year we've had a decline in new students, and so we have a mismatch compared to the number of students who are graduating. However, even net of that this quarter, our continuation rate was down slightly. We also believe that the continued economic downturn has an impact as well. Enrollment at our mature campuses decreased 15%, while enrollment at new campuses increased 18%. Global online students fell 17%.

Turning to our national accounts, we find 5 new agreements during the quarter, including agreements with the U.S. Department of Health and Human Services and Hewlett-Packard. For the winter term, students from our national accounts increased 11% and on a full year basis, national account students grew 8% in 2011. Lastly, in terms of student mix, graduate students grew slightly in the winter term, while our undergraduate students decreased. As a matter of fact, new graduate students grew significantly for the winter academic term. They were up 30%. As a result, graduate students now comprise 32% of our student population, which on a mix basis, is up about 400 basis points from the prior year. Rob?

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