Sonya G. Udler - Senior Vice President of Corporate Communications Robert S. Silberman - Chairman of the Board and Chief Executive Officer Mark C. Brown - Chief Financial Officer, Principal Accounting Officer and Executive Vice President Karl McDonnell - President, Chief Operating Officer and Director

Corey Greendale - First Analysis Securities Corporation, Research Division Robert L. Craig - Stifel, Nicolaus & Co., Inc., Research Division Andrew C. Steinerman - JP Morgan Chase & Co, Research Division Sara Gubins - BofA Merrill Lynch, Research Division Gary E. Bisbee - Barclays Capital, Research Division Jeffrey M. Silber - BMO Capital Markets U.S. Peter Wahlstrom - Morningstar Inc., Research Division Jeffrey P. Meuler - Robert W. Baird & Co. Incorporated, Research Division Kelly A. Flynn - Crédit Suisse AG, Research Division Peter P. Appert - Piper Jaffray Companies, Research Division Brandon Burke Dobell - William Blair & Company L.L.C., Research Division Suzanne E. Stein - Morgan Stanley, Research Division

Good morning, everyone, and welcome to Strayer Education Inc.'s First Quarter Earnings Results Conference Call. This call is being recorded. [Operator Instructions] At this time, for opening remarks and introductions, I would like to turn the call over to Strayer Education Senior Vice President of Corporate Communications, Ms. Sonya Udler. Ms. Udler, please go ahead.

Thank you, operator. With us today to discuss the results are Robert Silberman, Chairman and Chief Executive Officer for Strayer Education; Karl McDonnell, President and Chief Operating Officer; and Mark Brown, Executive Vice President and Chief Financial Officer. For those of you that wish to listen to the conference via the Internet, please go to strayereducation.com, where the call will be archived for 90 days. If you are unable to listen to the call in real time, a replay will be available beginning today at 1 p.m. Eastern through Thursday, May 3. The replay is available at (855) 859-2056, conference ID, 39822016. Following Strayer's remarks, we will open the call for questions and answers. I would like to remind everyone that today's press release contains, and certain information on this call may contain statements that are forward-looking and are made pursuant to the Safe Harbor Provision of the Private Securities Litigation Reform Act. The statements are based on the company's current expectations and are subject to a number of uncertainties and risks that the company has identified in the paragraph on forward-looking statements at the end of its press release and that could cause the company's actual results to differ materially. Further information about these and other relevant uncertainties may be found in the company's annual report on Form 10-K and its other filings with the Securities and Exchange Commission. Copies of these filings and the full press release are available online and upon request from the company's Corporate Communications department. And now, I'd like to turn the call over to Rob. Rob, please go ahead.

Thank you, Sonya, and good morning, ladies and gentlemen. As is our custom, I'd like to begin this morning with a brief overview of both our company and our business model for any listeners who are new to Strayer. I'll then ask Mark to report on our first quarter financial results and Karl to comment on our operational results, including our enrollment statistics for the spring academic term, which we have just started. Finally, I'll provide an update on our growth strategy and the company's earnings outlook for Q2. Strayer Education is an education service company whose primary asset is Strayer University, a 50,000-student, 94-campus, post-secondary education institution founded in 1892, which offers bachelors, masters and associates degrees in Business Administration, Accounting, Computer Science, Public Administration and Education. Unlike traditional universities, Strayer University students are working adults, who are returning to college and graduate school to further their careers and improve their lives. Our revenue comes from tuition payments and associated fees. Approximately 75% of that revenue comes to us from Federal Title IV loans issued to our students. Our expenses at Strayer Education include the cost of our University's professors, our admissions and administrative staff, marketing expenses and facilities and supplies costs. We serve students in 23 states through 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. Mark, do you want to run them through financials?

Sure. Revenues for the 3 months ended March 31, 2012, decreased 13% to $149.5 million compared to $172 million for the same period in 2011, principally due to lower enrollments. Income from operations was $40.9 million compared to $59.2 million for the same period in 2011, a decrease of 31%. Operating income margin was 27.3%, compared to 34.4% for the same period in 2011. Net income was $24 million compared to $35.8 million for the same period in 2011, a decrease of 33%. Diluted earnings per share was $2.09 compared to $2.80 for the same period in 2011, a decrease of 25%. Diluted weighted average shares outstanding decreased 10% to $11,477,000 from $12,794,000 for the same period in 2011. At March 31, 2012, the company had cash and cash equivalents of $52.7 million. The company generated $36.5 million from operating activities in the first quarter of 2012 compared to $67.2 million during the same period in 2011. Capital expenditures were $4.1 million for the 3 months ended March 31, 2012, compared to $11.4 million for the same period in 2011. During the 3 months ended March 31, 2012, the company paid a regular quarterly cash dividend totaling $11.9 million or $1 per share. For the first quarter of 2012, bad debt expense as a percentage of revenues was 3.8% compared to 3.5% for the same period in 2011. Day sales outstanding was 14 days at the end of the first quarter of 2012 compared to 13 days at the end of the first quarter of 2011. Rob?

Thanks, Mark. Karl, how about hitting the operational highlights and also make sure you cover the spring term enrollment?

Sure. For our spring academic term, our total student enrollment declined 9% to 50,896 students. Our continuation rate was flat in the quarter and that led to a 13% decrease in our continuing students. Our new students grew 12%. A couple comments on our new students. New graduate students increased 21% and that represents the third consecutive quarter where we've seen growth there. New students from our national accounts grew 31%, and the growth from our national accounts was fairly widespread meaning we had growth both in new accounts as well as significant growth from our existing accounts. Normally, we would find 3 to 5 new national accounts in any given quarter however, this quarter we signed 7 new agreements, so it was pretty productive from that standpoint. Among the new national accounts that we signed were agreements with Farmers Insurance, Servicemaster and E*TRADE Financial. We also signed 3 new articulation agreements with community colleges, and new students from our articulation agreements grew 20%. Today, we also announced our first 4 new campuses for 2012. All are for the summer academic term, which we're enrolling students for now. Two of these campuses are located in Minneapolis, which is both a new market as well a new state and the other 2 are in the Chicago market, representing our third and fourth new campuses in that market. We will announce the remaining 4 new campuses when they open later this year. Lastly, a couple of comments on student mix. Given our continued growth in our new graduate students, total graduate students now comprise roughly 32% of all students, which is up about 400 basis points over the last year. Students from national accounts and our institutional alliances now comprise over 25% of all students, and that's up about 500 basis points over the last year. No real changes on undergrad. 68% of our students are enrolled in undergraduate programs with business and accounting comprising roughly 2/3 of that population. Rob?

Thanks, Karl. Just back on the financials. Both the revenue and expenses were pretty right on our forecast of 3 months ago. And the quarter sort of went right down the glide path from that standpoint, so I don't think any additional comment is needed there. Turning to a brief update on our growth strategy. Many of you will remember that, that strategy is based on 5 objectives: The first is to maintain enrollment in the company's mature markets; second, invest our human and financial capital in opening new campuses, particularly into new states and markets; third, continue to build our online offerings; fourth, increase our corporate and institutional alliances; and the fifth and final objective is to effectively allocate our owners capital. And Karl has already reported on the first 4 objectives. I would like to add however, that we were delighted to announce this morning the appointment of Dr. Daniel Szpiro as dean of the Jack Welch Management Institute at Strayer University. Dr. Szpiro is currently the associate dean of the Executive MBA program at Cornell University, and he'll be joining us June 1. On capital allocation, we announced this morning, our regular quarterly dividend of $1 per share for the upcoming second quarter. And finally, on our business outlook for the second quarter of 2012, based on the university's enrollment for the spring term, we expect revenue to be down approximately 10% versus the prior year, with approximately 600 basis points of operating margin decrease and earnings per share in $1.84 to $1.86 range. And with that, Sean, we'd be pleased to answer any questions.

[Operator Instructions] Our first question comes from Corey Greendale with First Analysis.

So first of all, on the new student enrollment side I know, Rob, that, that's variable. I guess we're just not used to seeing variability going from negative 8% to positive 12%. So I was hoping you might be able to just comment a little bit more on maybe I guess in institutional licenses weren't quite robust this quarter, but a little bit more in kind of what might be driving the improvement and anything that you might be able to say about the implications going forward?

Well, it's pretty simple, Corey. Karl's reported over the last several quarters that our graduate students were growing and our institutional alliances were growing. What was shrinking was our unaffiliated bachelor students, and they stopped shrinking compared to the prior year. As a matter of fact, they grew slightly. And so when you add that into the strong growth that we've had really through most of last year on the graduate and affiliated or alliance students, that translates into new student growth. We don't comment on future quarters, but we are obviously delighted to see 12% new student growth. And frankly, we're pretty excited about the rest of the year.

Just on the quarter that you did report though, so on the unaffiliated bachelors side, is there anything you'd point to as changing other than just kind of quarter-to-quarter variability?

Well, it didn't really change. In other words, we gapped down in that area in the winter of 2010, or 2011, and it bottomed. It troughed there, and it stayed there really through most of 2011. And each quarter you add a comparison with the year before, where we had quite a bit of growth, and so you continually saw those negative numbers. And you're comping against that now, plus you have a little bit stronger activity in some of our new campuses that we opened in 2011. And so that compared with strong growth that we had through most of the latter half of 2011, as I said in the graduate and corp alliance area, that translated into the 12% new student growth.

Your next question comes from Bob Craig of Stifel, Nicolaus. Robert L. Craig - Stifel, Nicolaus & Co., Inc., Research Division: Rob, I know that what mentioned in your shareholder letter about the graduate side and the relatively low unemployment rate there, but your performance is flying in the face of what some others are generating these days. Could you maybe just talk about some of the key factors behind your success in grad-relative success?

Well, as you said, I tried to spell that out in the letter to shareholders. I think that the largest impact on demand, at least in the students that we tend to attract, was high rates of unemployment and particularly high rates of unemployment for individuals with a high school degree and no college degree. That certainly affected our enrollment and it's affected graduate students less. We don't mean to be frustrating in terms of how you guys try and understand the space. We just want to be as clear as possible in terms of what we're trying to accomplish, and I really do believe that over time, the one issue that really matters is quality of supply. There's plenty of demand out there. There was less demand in 2011 for individuals, at least in our case, who were unemployed. An unemployed student has never been a particularly solid student for us. The economy hasn't really gotten much worse and so that sort of troughed. When the economy gets better, I expect that source of students to do better and in the meantime, as long as we're doing a great job in the classroom and the quality of our academics and the satisfaction of our existing students remains high, we're going to generate growth. There's really nothing more complicated than that. Robert L. Craig - Stifel, Nicolaus & Co., Inc., Research Division: Are there any curriculum areas or majors within graduate that are stronger than any others?

No, as Karl said, it was pretty even across all of them. Robert L. Craig - Stifel, Nicolaus & Co., Inc., Research Division: Okay. I know what you said last call about scholarships really hasn't increased all that much, but have you quantifed that? If you have, forgive me, I've forgotten it, but as a percentage of students or percentage of revenues?

Well, I'll let Karl answer that directly. But the evidence of it is our revenue per student. But there's also 2 other major contributors to the dampening on revenue per student growth. The most important of which you've already described, which is, as our graduate students are growing at a very fast rate and at the latter half of last year, our bachelor students were not growing and now they're growing but at a slower rate, our total student population shifts. It's mixed towards more graduate students, and those of you, Bob, like I said, that have followed the company for a long time, will remember back in 2004, I think it was March, where we had a similar situation. Because graduate students take less courses, revenue per student from a graduate student is lower and that will have a dampening impact on our revenue per student. The second is, again, the increase on a relative basis in our alliance partners, students that come from our alliance partners, for which most of them we have a modest discount, usually about 5%. On top of that, you've got scholarships. Karl, is there anything specific that...

No, I mean, as we said, we have scholarships, we've had scholarships in the past and we'll continue to offer them in the future. Robert L. Craig - Stifel, Nicolaus & Co., Inc., Research Division: Okay. One other quick one, Rob, does this mix shift, if you will, throw off your notional model?

No.

Our next question comes from Andrew Steinerman with JPMorgan. Andrew C. Steinerman - JP Morgan Chase & Co, Research Division: Could you compare how campuses that were opened at Strayer University in 2011 are doing in 2012 compared to how campuses opened in circa 2010 did during 2011?

A little bit slower, Andrew. Part of that I think is geographic, as I think we've talked in the past, some of the campuses that we opened in 2011, several of them were up in the upper Midwest in areas that were a little harder to hit economically. The campuses that we've opened in Texas in 2011 I think, have done slightly better and more consistent with our 2010 openings. But all of them are -- all of our campuses were affected I think by the increase in unemployment and the downturn in undergraduate enrollments, strictly unaffiliated undergraduate enrollments in 2011. And all of them are being helped on a relative basis by the fact that, that's no longer hurting us and we're getting pretty significant growth in other areas. Andrew C. Steinerman - JP Morgan Chase & Co, Research Division: Right but you did mention new campus openings as being helpful to the inflection in new enrollment growth.

Well, they always are, but we didn't have any yet for this year. In other words, all of our new campuses for 2012 will come online in the second half of the year. Andrew C. Steinerman - JP Morgan Chase & Co, Research Division: No I meant from the campuses in 2011. When you were listing reasons why new enrollments returned to growth, you talked about a lot of things and the last thing you said, and it's helped by the new campuses from 2011. Is that a sign that things are finally kicking in?

Well, I wouldn't describe it as finally kicking in. They were performing fine last year. We were attracting students at a rate, which is very satisfactory to us. We're pretty patient about this, Andrew. The students will come when they decide to come, and if you try and force it any faster than that, you end up with less productive, less academically successful students. So I think this is part of the normal ebb and flow of building out a nationwide university and we're quite pleased with it.

Our next question comes from Sara Gubins of Bank of America Merrill Lynch.

I was hoping to get an update on retention and whether or not you're seeing any change in the academic failure rate.

The academic failure rate was fairly consistent, I mean it was 9%, 9.5%, something like that and Karl, I think you mentioned the retention, didn't you?

The continuation rate was flat.

It was flat and it was in the prior year, so.

Okay. And then secondly, on the last earnings call, I think you had talked about expectation that operating margins would be down 500 basis points year-over-year in the first quarter, and they were down 700. Obviously, it came in line with your expectations but the margin decline was more than expected. And so I'm just wondering were there any costs that ramped more than you might have anticipated?

No actually, Sara, and that's on me. That's my fault. The financials actually performed exactly as we expected. I didn't have Mark on the call last time and I frankly just read the wrong number. I apologize for that. And the worst part about it is, a couple of you called me afterwards and said your models wouldn't work. And I kind of dismissed you because I don't really pay that much attention to the operating margin as a separate number. But it was just a sheer mistake. And Mark has checked my math and the 600 basis points for the Q2 is accurate. So you can count on that.

Our next question comes from Gary Bisbee of Barclays.

I guess just one more quick one on the new students. Can you just give us how much the Jack Welsh Management Institute contributed to that and also how much trailing 12-month new campus openings did? In other words, was this more broad-based felt across the older established campuses as well, or geographies, I should say, not just campuses?

Yes, it was fairly broad-based but again, what's broad-based is particularly strong growth, as Karl described, in certain channels and then a stability in the unaffiliated bachelors, which napped then comps against a lower number. We definitely -- the Jack Welsh Management Institute probably added about 4 points to our graduate growth rate. We had a few hundred of those students, and they would have been maybe a point or so to our overall new student rate.

Okay. And for the second quarter in a row, the cost across most of your lines declined year-over-year and I guess it was more than what we saw last quarter. I understand why you've been doing that and I know you don't want to talk about the future. But if the company was to have new student growth continue or persist throughout the year, which areas would the cost that you've taken out need to come back in more quickly and which areas of this cost reduction you've done is just you being more efficient as a company and might be sort of sustainable at those levels?

Well, Gary, we don't like talking about the future. We don't predict specific enrollment, but our future is fairly well established and planned as we discuss all the time, we're building a nationwide university and we're going to do it deliberately and patiently and what you're seeing is the results of that. In terms of the expenses this quarter versus last year, the reduction in the instructional and education line was just fewer classes. We had fewer students so you end up with fewer classes. In the marketing, I mean it was pretty close, frankly, and I don't really know, Karl, it was like $500,000 less than last year. Do you have anything specific about that?

No, I think it's just the timing seasonality.

Yes. On the admissions advisory line, part of that is variable again because some of the costs in there are fulfillment costs of catalogs and things that when you have students you're going to send to them. But that's actually increasing costs. In general, I guess just better efficiency and then on G&A, again there's nothing really specific that I would point to. It's variability and efficiencies. The part of your question in terms of the future, what I can say is that if we perform in the summer and fall term as we did in the spring, i.e., if we had 10%, 12% new student growth, we would break even in terms of revenue enrollment and revenue and have growth over the prior year in the fourth quarter. If that happens, all of the costs in here that are variable and that go with volume, would go up and most of those are in I&E. I don't expect marketing would be particularly affected and that's probably where you'd see it.

Okay, great. And then just one last one, the corporate alliance continues to be a great channel. We're hearing an awful lot of the peers talk about focusing on that. How do you go to market or how do you sell into these people? What's sort of the competitive advantage? Is it the geographic footprint or are there some other angles that you're taking that's allowing you to continue to win these engagements?

The problem, Gary, is just that we just think about it a different way. I mean we don't think about it as a sale. We've got a number of these relationships that we've had for a long time, long track record, long history. A lot of others develop out of the fact that we end up with students from those organizations that are satisfied and that they go back and they talk to their colleagues. We have a very small group, along with Karl and myself, that are engaged and are involved in talking to heads of HR, training or CEOs that might be interested. And then frankly, we've probably had some advantage in terms of the Jack Welsh Management Institute because it's the first time we've had a focused effort on actual corporate training as opposed to pure providing of university-level education to employees. And so, it's like the rest of our organization, it's going to grow deliberately and patiently as we build out this nationwide university, and we just don't get that wrapped up around wins versus last quarter, differentiating against other people. We're delighted to have other universities providing that. Education is a benefit. I don't see, Gary, this industry as being one which is affected over the long-term, by a paucity of demand. The problem is quality of supply and if we improve quality of supply across the whole educational sector, all of the participants will be benefited, as will the country.

Our next question comes from Jeff Silber with BMO Capital.

I just want to continue focusing on some of the national accounts and the alliances that you mentioned. You mentioned the roughly 5% discount that those folks get. Are there any other nuances or guarantees in these relationships that we should be aware of?

Well, they're all different. I mean you run the gamut from situations where we actually teach on companies' facilities to ones that are merely sort of affiliations and so the only thing that's significant from a financial modeling standpoint is that we do tend to provide discounts of around 5%, and we do that because for the most part, both our marketing and our collection costs, our credit quality is so much higher with these accounts. And so from a margin basis, it doesn't really have any impact but you have slightly lower revenue and slightly lower expenses.

Great and then just shifting gears a bit, I just wanted to clarify something regarding the Jack Welsh Management Institute. If I look at your press release and look at that student enrollment detail, are the Jack Welch Management numbers in there and if so, where?

They're in there and they're -- I think we have them in our global, right?

Yes.

Yes, we have them in the -- we put them in the global because it's a purely online program.

Okay. That's what I thought. I just wanted to double check that. And then just one quick numbers question, what should we be modeling for capital spending for the year?

Jeff, it'll still be in line with our original estimate of $25 million to $30 million.

Our next question comes from Peter Wahlstrom of Morningstar.

Sticking on those on the national accounting, very quickly, are you finding that when you head into a new region, such as Minneapolis, that having relationships with those corporate or national accounts actually helps you gain a little bit of traction more quickly than you otherwise would if you were starting with more of a greenfield operation?

Yes.

And can you help me think about how quickly a campus may reach maturity instead of thinking about it in a 1- to 3-year bucket versus the over the 3-year bucket?

Well, they don't really reach maturity in 3 years. And again, that's an artifact of that in order to try and make things simple, we only have 2 categories. The real way that we think about these campuses is they tend to grow and add about 100 students per year on average for about 10 years, and that's when they've reached the saturation point of about 1,000 students and that's when we actually consider them mature. The presence of corporate partners or government institutions partners in new markets, as I said in the answer to your first question, is helpful. It doesn't really change the dynamic in terms of that growth pattern. Remember, we're talking about just a few dozen students in the first year or so, and it is helpful to maybe get a few half dozen or dozen more when you have those relationships. But it doesn't fundamentally change the investment profile of opening a new campus for us.

Pretty good. And then on the announcements of the new articulation agreements with community colleges, assuming there's a pretty long runway for growth here, how are you thinking about targeting this opportunity?

Well, we find that community colleges are perfect partners with us, and we don't really compete with them. We do offer associates degrees. It's a very small part of our university, and what we've found over time is, those students who go to a community college gain an associates degree and then enroll in Strayer in the third year of a bachelors degree, uniformly perform better academically. And that's what we're all about, is achieving the highest academic outcomes. So our desire is to have a partnership agreement with every community college that would have the appropriate academic rigor that would satisfy our accreditors. Most community colleges are regionally accredited and most of them, I think, will meet that. But we've got a focused academic team underneath Dr. Plater, the President of our university who looks at those. And our objective is to get all that we can.

Pretty good. And finally, I noticed there are a lot of puts and takes that go into this decision but was there an overarching reason behind the decision not to repurchase shares in the quarter?

We never comment on share repurchases until after they're done.

Our next question comes from Jeff Meuler with Baird. Jeffrey P. Meuler - Robert W. Baird & Co. Incorporated, Research Division: Other than having Jack Welch this quarter, are you guys doing anything differently on how you approach corporate alliances or do you have more resources there? I'm just trying to figure out if this is natural variance or a result of Jack Welch or a result of something else in terms of getting the 7 new this quarter?

Well, we like having Jack as a partner but other than that, no, nothing different. Jeffrey P. Meuler - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then I know you don't make the pricing decision until the summer but you obviously called out price in your shareholder letter, Rob, as having more relevance. And now you have a couple of quarters of seeing kind of how enrollments have been trending following the 3% increase instead of a 5% increase. Just wondering if you can comment about how you're thinking about price for next year, both in terms of increasing on existing as well as potentially any discounting?

Well, as I said in the letter, I actually don't think that the pricing is that inelastic and our pricing decisions at the Board of Trustees level are likely to be more affected by the public policy implications than anything to do with our demand. I doubt that at a 5% increase, these new student numbers would be significantly different.

Our next question comes from Kelly Flynn of Credit Suisse. Kelly A. Flynn - Crédit Suisse AG, Research Division: I want to go back to the scholarships question. I mean as you guys probably know, there are a lot of questions in the investment community right now about the $17,000 scholarship that I think you guys launched, maybe this quarter or last quarter. So I was hoping you could just help us think about that. Two questions, and one is, are you saying that did not have a significant impact on new students for the quarter? And then secondly is, it's $1,000 per term, which does seem significant to overall revenue per student but it seems that, that simple math is maybe not the right way to look at it, so can you help us understand why it's not a big deal, if you will?

You bet, Kelly. Well, all of our scholarships are important in terms of attracting the types of students that we want to attract. I think what she's talking about Karl is the continuing student one, right?

It is. It's for students who have prior collegiate experience.

Right. I don't think that, that has a significant impact on the new student growth numbers, but what it is helpful for is getting students who we think are most likely to have academic success, which again at the end of the day is really the only metric that's important in the long term because as I said before, I'm fairly confident in the overall demand. We're not that concerned about adjusting it on a quarter-to-quarter basis. But your graduation rates are going to be improved by having students who come in with significant academic credit already and so I think that's why Karl and his team have that particular one in place. Kelly A. Flynn - Crédit Suisse AG, Research Division: Okay. And then, I mean does it, as we think about how the year progresses, I know you don't give guidance, but as more and more students take this on, I think the investment community may come to the conclusion that you're going to see a big revenue per student hit and I just want to give you the chance to explain why that would not be the case.

Well, we're delighted to have the investment community draw whatever conclusion they do in the aggregate based on their own judgment. As Mark and I said at the beginning of the year, we would expect that we were not going to have significant revenue per student growth during the year, not really because of the scholarships but because of the mixed shift towards graduate and corporate alliance students that already have that 5% discount in there. So beyond that, we're happy to answer any specific questions that individual members of the investment community have. But I think our view on revenue per student is fairly well stated.

Our next question comes from Peter Appert with Piper Jaffray.

Rob, so a lot of your peers have talked about a changing competitive dynamics and more intense competitive environment, and it sure seems like to me, these numbers you're posting today that maybe you're seeing less of that. So could you just give us your big-picture commentary on what you're seeing from a competitive standpoint?

Delighted, Peter. It's always been a very competitive marketplace. In the last 10 years that I've been here, that is a constant. There are a number of opportunities for working adults who are going back to college in most of the markets that we operate, to choose from. So I don't think it's gotten significantly better or worse, it's always been a full slate of competitive offerings. But as I said in the answer to Gary's question, I think it was Gary's question, I don't think over the long term, that this is a sector, which is significantly impacted or its prospects are determined by demand. I think there's very high demand there. The value of a college degree I think, is fairly well established. And in the short term, I hope it's the short term, you've got a sort of Great Depression level recessionary impact, which certainly has impacted everybody's enrollment in what I believe, is a limited period of time. But over the long term, what's going to affect your ability to operate in an institution like this is not demand, it's the quality of supply. If we do a good job in the classroom, there are plenty of people who are benefited by going back to college, and that's what we try and stay focused on.

Yet the number of choices students have, I would argue, is potentially, substantially more today than it was 3, 5 years ago. What do you hear back from students in terms of why they're choosing Strayer versus alternative universities?

Well, we hope they've done significant research. Again, the most effective students that we find are the ones that have done the most work and have self-selected to be at Strayer. And so what we hear is that they started the process when they decided to go back to school. They've generally had some name recognition, which is -- of a number of institutions, which have caused them to do research. That research tends to be both visiting websites and Internet-based research, as well as talking to students and alumni and faculty. And over time, I think that is what's really going to drive students decisions and is precisely where we're focused in terms of making sure that we have a high-quality academic product and offering and one, which will be attractive over time to the type of students that want to work hard.

And one last thing, Rob, on the national accounts again, do you have a thought in terms of the scale the opportunity is there in terms of how big maybe as a percent of enrollments do you think that opportunity could be?

Well, it's always been around 20%, say, between 15% and 25%. It's increasing now, but it's not because it is growing faster than it did in the past. It's maintained this high growth rate, and it's always been at this rate. What's happened is the unaffiliated students have fallen off precipitously and that's just the simple math.

But it would suggest that it's going to grow as a percent -- or it has grown as a percent of the total, right?

It certainly has and if the impact of the economy remains safe for the next 10 years, then I would expect higher percentage of our students to have come from corporate affiliations or -- remember, a lot of these are government agencies as well, not just corporations. But I have a high degree of confidence in the resilience of the American economy, without regard to political leadership. I mean this country has gone through a lot, and I don't expect that we're going to have these levels of unemployment over a decade-long period. So our planning horizon is things get better.

So as a matter of strategy, growing national accounts as a percent of the total is not really the focus then?

No. As a matter of strategy, serving all of our students the best way we can with the highest quality academics and particularly with national accounts where you got an influencer that if you serve badly, it has a amplifying impact on the negative reputational impact. So as a strategy, serving them well is important but not growing them as a percent in that manner.

Our next question comes from Brandon Dobell with William Blair. Brandon Burke Dobell - William Blair & Company L.L.C., Research Division: First thing, I just want to, I guess, a definitional question, readmit students for you guys, I would imagine those don't show up in the new enrollment number but they would show up in a continuing population number. Is that the right way to think about that definition?

It depends how long they've been out. And what is the criteria, Karl?

If they've been out a year, they would be a readmit. Less than a year, it's a reinstate.

Which is a continuing student. So if you're over a year, you count as a new student?

Correct. Brandon Burke Dobell - William Blair & Company L.L.C., Research Division: Okay. Was there any, I guess, within the undergrad population in particular, any change in I guess students coming back into the institution after being out for a year or more?

No, not significantly. Brandon Burke Dobell - William Blair & Company L.L.C., Research Division: Okay. And then in your conversations with the national accounts and community colleges, have you gotten any sense that they feel there is more price sensitivity from their students. So community college advisers or HR personnel saying, we're looking to get more out of our tuition reimbursement. We're looking to get the best deal we can for our students. And I guess the correlate of that, the summer scholarship programs you guys are going to be putting in place, how would that interact with the national account pricing that you have in place right now?

I don't know the answer to that second question, Karl. How does that work?

Typically, a student qualifies for one benefit. It's either the program we have with their employer or one of our scholarships.

And I wouldn't say that we've heard a significant amount of price sensitivity from the employers, so to speak. Again, in answer to your previous question, I think there's a general price sensitivity to the cost of education in a period where the economy is really taking a lack. And as a public policy matter, I think it's more important than ever that academic institutions don't reap the entire amount of pricing power that they have. That they do so on a prudent and conservative manner, which is really focused on providing the highest value to students. Brandon Burke Dobell - William Blair & Company L.L.C., Research Division: Okay. And then final one for me, given that I think the implied revenue guidance, I think you said kind of down 10% this quarter, looks about like the first quarter's revenue results with the EPS guide, let's call it $0.20 or so below the first quarter number. Is there a particular line item, marketing or instructional, in that support because the new campus openings that we should think about as being up materially quarter-on-quarter?

It's got to be I&E, doesn't it, Mark?

Yes.

Because you got 4 new campuses. And there would be a little bit of marketing because you got one new geographic market, too.

[Operator Instructions] Our next question comes from Suzy Stein with Morgan Stanley.

I know you won't be specific on this, but can you give us any guidance on marketing spend just for the rest of the year? And I guess the question is, were you conservative with your marketing spend just given the uncertainty in the environment? And would you possibly be more aggressive with that just given what you saw this quarter as the rest of the year rolls out? And then maybe what you do expect as far as channel mix?

I'm happy to be specific on this, Suzy, because it really is, it's not the way we think about business. We do not surge these marketing dollars in response to what we would see as higher enrollment nor do we cut it based on lower enrollment. We set a budget at the beginning of the year based on the amount of advertising dollars that we want to expend in each geographic market to build brand, build name share, and then that's what we stick with. We don't really touch it during that year. It will rise or fall as a percent of revenue based on how many students we enroll, and we're very happy with that volatility. In terms of mix, I think we've talked about this before, we don't really dictate that at a central level. We have regional marketing managers who are very effective underneath the very solid central marketing team and we obviously want to be as efficient as possible but we change it a little bit in each market all the time. And so I can't really tell you that there's a specific switch towards one channel or the other. We want to be effective in all the channels that we use, and we want to really be based on building a brand recognition that then allows students, or prospective students, applicants, to just know us, know us as an opportunity and then do a lot of real hard research and decide where they want to go to school.

I'm not showing any other questions in the queue at this time. I'd like to turn it back over to Mr. Silberman for closing comments.

Thank you, Sean. Thanks everybody for participating. As I said, we're looking forward to the rest of the year and looking forward to speaking with you again in July when we do our third quarter conference call. Thank you very much.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the conference. You may now disconnect. Good day.