Laureate Education Inc (LAUR) 2004 Q4 法說會逐字稿

Good day, everyone, and welcome to the Laureate Education fourth quarter and year- end 2004 earnings results conference call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to the Director of Investor Relations and Corporate Communications, Mr. Chris Symanoskie. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and welcome to Laureate Education's fourth quarter and year-end 2004 earnings conference call and webcast. Please note that this call may include information that could constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements may involve risks and uncertainties. Although the Company believes that the expectations reflected in such statements are based upon reasonable assumptions, the Company's actual results could differ materially from those described in the forward-looking statements. The following factors might cause such a difference. The Company's operations can be materially affected by competition in its target markets and among other factors by overall market conditions.

The Company's foreign operations in particular are subject to political, economic, legal, regulatory and currency related risks. Additional information regarding these risk factors and uncertainties is detailed from time to time in the Company's filings with the SEC including but not limited to our most recent Forms 10-K and 10-Q available for viewing on our website. Today our speakers include Sean Creamer, Senior Vice President and Chief Financial Officer, Paula Singer, President of Laureate Online Education, and Bill Dennis, President of Latin America operations. And joining us from Shanghai, China is Douglas Becker, Chairman and Chief Executive Officer of Laureate Education, and Raph Appadoo, President of Laureate Education. Now, at this time, I would like to turn this call over to Sean Creamer. Sean.

Thanks, Chris. Good morning and welcome. I will start things off this morning with a review of our financial results for the year and then pass it on to Doug and Paula for comments and then open it up for question. 2004 was a very successful year for the Company. We had solid enrollment increases, strong performance from our existing campuses. We were able to open multiple new campuses and add some strategic acquisitions. That coupled with continued favorable demographic and secular trends really fueled our rapid growth that we report today. The continued growth of our existing businesses, along with the strategic acquisitions I talked about, allowed us to establish strong presences in really fast growing markets. I'm pleased to report strong results across the Company for the year.

We reported revenues from continuing operations of 648 million for the year, an impressive 37 percent increase over 2003. Fourth quarter revenues increased 37 percent as well from the same quarter last year increasing $57 million to 212 million. In addition, we were able to nearly triple our operating income over last year, up 56 million to $91 million. Operating income in the fourth quarter increased 31 percent versus last year from 36 million to 48 million. Net income from continuing operations was $1.69 per share for the year on 49 million diluted shares outstanding. That excludes 3 nonrecurrent gains that were recognized during the year. Specifically, the net $0.07 gain on the early retainment of our K-12 seller note that was recognized in the second quarter of '04 and discussed at that time;

A $0.09 gain recognized in the fourth quarter on land that was tendered as partial consideration for our UEM minority buyout. As well as a $0.25 tax benefit triggered as a result WSI disposition that was announced today. Excluding those pro forma EPS for the year was $1.28 per share for the year on an apples to apples basis. As you will recall, our initial guidance for the year was $1.22 to $1.24. Following our strong Chilean intake and solid financial performance in the first quarter by our other universities, we increased the guidance at that time to $1.24 to $1.26. We're very pleased to have exceeded that upwardly revised guidance while still making some substantial investments for future growth during the year. For the quarter, net income from continuing ops was $0.92 per diluted share with 51.3 million shares diluted outstanding.

Adjusting out, again, the $0.09 gain on the UEM land and the WSI tax benefit which was $0.23 impact for the quarter versus $0.25 for the year due to the higher count -- share count in the fourth quarter stemming from the shares that were issued in the Walden buyout. Pro forma EPS after adjusting those items out was $0.60 for the quarter, a 25 percent increase over the prior year's pro forma EPS of $0.48. Moving on to some divisional level detail, campus based revenues grew 36 percent over last year to $513 million. Their revenues in the fourth quarter increased 33 percent from last year in what is our seasonally strongest and most important quarter. While some the growth came from acquisitions, we are pleased with continued strong organic growth -- revenue growth from our existing businesses.

Specifically, if you went ahead and excluded the impact of acquisitions, revenues grew 18 percent on a year-over-year basis and 17 percent on a quarter-over-quarter basis. You need to bear in mind that the acquisition activity in 2004 was largely a redeployment of the proceeds we had received during the year from the early retirement of the K-12 seller note. And as a result we were able to convert the interest income we were earning on that note into a higher quality, higher return and more sustainable earnings stream for years to come. In addition to the solid revenue growth during the year, the campus based business also saw significant EBIT growth and margin expansion. On top-line growth of 36 percent EBIT margins expanded 150 basis points from the prior year. Campus based operating profit grew 48 percent over the prior year to $97 million. We continued to execute on a strategy of opening new campuses and expanding existing ones while successfully integrating the recent acquisitions into our network.

Fourth quarter margins in campus base were essentially flat year-over-year as we reinvested some our outperformance and additional campus openings. As well as some consolidating acquisitions in Europe, France in particular that we have spoken about. Those will have a short-term negative impact on margins but are expected to produce significant returns in the future. But despite this reinvestment operating income still grew 30 percent quarter-over-quarter on revenue increase of 33 percent. On the online business revenues increased 41 percent over last year to 135 million. For the quarter revenues increased 54 percent. Excluding the impact of the KIT acquisitions revenues for the year and quarter grew 33 percent and 44 percent respectively. Operating profit grew 59 percent for the year and 70 percent for the quarter. 2004 was a very important year for the online business and Paula will get into this in a little bit more detail.

But, we successfully completed a major transition away from certain third party partners in favor of Walden. We also completed, as you know, the purchase of the remaining 49 percent stake in Walden from our minority shareholder and ended the year as we had forecasted with online the fastest growing part of the Company, in large part due to a 66 percent increase in total Walden students for the year. New student enrollment for the 12 month ended December 31, 2004, was up 39 percent. The impact movements of foreign exchange rates continue to contribute-- or contributed roughly $400,000 to our bottom line for the quarter and approximately $2 million for the year or less than 0.5 of 1 percent of our consolidated 2004 revenues.

For the year, Mexico's revenues were up 21 percent in U.S. dollars but 26 percent in local currency. UDLA's revenues were up 33 percent in U.S. dollar and 22 percent in local currency. Keep in mind, the analysis is not meaningful for UNAB in Chile since we did not own it for the entire period last year. As you may have noted in the fourth quarter, UDLA's revenues were up 16 percent in U.S. dollars and 13 percent in local currency. Frequently, investors ask us about the potential for student financing to become a significant growth opportunity for us. Our efforts to date suggests that the greatest opportunity in the near term is in Chile.

As a result, we have begun a very targeted and tightly managed pilot program in Chile, experimenting with various financing alternatives in an attempt to develop some history to allow banks and lenders to assess the opportunity and really engage in developing a student financing solution externally. Some of our existing students have opted to take advantage of the financing program and as a result a portion of the income that we generate in Chile is now reported as interest income. So if you adjust for this Chile's revenues were up 22 percent in U.S. dollars and 18 percent in local currency for the quarter on a apples to apples basis. Spain's revenues were up 14 percent in the USD and 4 percent in local currency. Hospitality revenues were 7 percent up in US dollars, down slightly, 1 percent, in local currency.

While it's not a perfect hedge, as we continue to say, our diversified portfolio of currencies really continues to prove to be effective in sheltering us from any significant volatility based on currency movements. However, we were a U.S. company and we earn approximately 80 percent of our revenue in currencies other than the dollar and therefore our earnings do benefit from a weak dollar. It's, however, important to note that the seasonality of our business means that in order for us to benefit from a weak dollar, the timing of that weakness matters. For instance, the Chilean peso is particularly strong right now. But during the first quarter, our universities in Chile are out of session and, in fact, lose money. So, a strong Chilean peso actually hurts us in the first quarter.

We would expect to benefit if the U.S. dollar remains weak against the majority of the currencies in our portfolio throughout the rest of the year and, in fact, could deliver results higher than our current guidance if that fact proves to be the case. However, when we're formulating our guidance, we are sensitive to this delicate balance required to be maintained between the seasonality of our business and its inner play with our FX rate. Moving quickly on to some balance sheet items and other items. We ended the year with a very strong cash position, 110 million. Essentially unchanged from the prior year-end balance. Total debt was approximately 134 million.

We also today announced the sale of our English language instruction subsidiary, Wall Street Institute, to the Carlisle group. The transaction will close today and we will receive $15 million in cash and a $15 million seller note at closing. Ultimately the purchase price will be subject to a true up whereby we will receive an ultimate purchase price equal to 8 times 2004 audited EBITDA. At this point we are estimating WSI 2004 EBITDA to be roughly 5 million which would result in a base purchase price of $40 million. In addition, there is an earn-out opportunity based on W5's performance in '05 and 06 that could yield an additional $10 million in purchase price. But the total purchase price is capped at 51 million. I also -- as I indicated earlier, the transaction itself will generate a tax loss for us that we will carry back to partially offset taxes we payed in 2003 on the capital gain generated for the K-12 sale.

So, there is some additional cash that will be generated from that carryback. I think completing this transaction really represents the final cleanup of the transition to the pure plate post secondary business that we commenced in 2003. Turning quickly to our guidance for the first quarter and full year. We anticipate total revenues of 175 to $190 million for the first quarter of '05 and 820 to 865 million for the year, representing growth of 25 percent or more. General and administrative expenses are expected to be approximately 6 million in the first quarter and between 25 and 26 million for 2005 or roughly 3 percent of our consolidated revenues. As I've mentioned before, the cost of being a public company has definitely gone up. Sarbanes-Oxley was a significant expense for us in 2004, which was the implementation year. We don't anticipate 2004 level cost, which for us were approximately $4 million, however, the ongoing cost of compliance will be significant.

In addition, as an international business, our ability to continue to expand and execute is predicated on having talented, experienced and portable international executives. Today, we announced the addition of a significant hire in Dan Nickel as our EVP of Corporate Operation. And he'll be fast with insuring we have the bench strength and the appropriate talent development processes in place to not only deliver our 2005 results, but to ensure execution of our long-term growth strategies. While we will be adding incremental staff as needs dictate, we think we have a leverageable(ph) corporate overhead infrastructure that can support a much larger organization that we have today. But, I think 2004 was a year where we reinvested not only in business initiatives but people initiatives as well that we should position us very well going forward. In addition, we had a predominantly international footprint and therefore travel is a significant cost for us and we have projected increases in travel costs in '05 versus '04.

Despite these increases, we are confident the operational performance should allow us to meet or exceed our guidance. Company anticipates diluted earnings per share at $0.04 to $0.05 for the first quarter of 2005. Bear in mind that our schools in the southern hemisphere are out of session in the majority of the first quarter. And on a year-over-year basis, our recent acquisition of UPC in Peru amplifies the seasonal impact of the weak first quarter as they are out of session like our Chilean universities. And therefore year-over-year it creates a downward result from a first quarter operating performance. Also, consistent with prior years, Canter has its seasonally weakest quarter in the first quarter as well. For the full year we're expecting earnings per share to be between $1.60 and $1.65 on projected diluted shares outstanding of 52 million. In some divisional level detail. Campus base anticipates total revenues of between 137 and 151 million for the first quarter and between 640 and 675 million for the fiscal year 2005 with expected operating margins to be approximately 8 to 9 percent in the first quarter and between 19 and 20 percent for the year.

Online anticipate total revenues between 38 and $39 million in the first quarter and between 180 and 190 for the year. Expect a slight profit in the first quarter with margins approximately 1 to 2 percent and the year-end 2005 operating results margins of approximately 15 to 16 percent. Consistent with 2004, we expect the second and fourth quarters to remain our strongest operational quarters in 2005. While roughly 55 percent of our revenue is generated in these quarters, they account for close to 75 percent of our operating income. We expect to provide second quarter guidance and the 2006 guidance with our first quarter press release in the April time frame. That concludes my comments and with that I will pass it along to Doug for his thoughts.

Thank you very much, Sean, and thanks, everyone, for joining us for this call. With the announcement of these 2004 results, we can celebrate a truly remarkable year for Laureate. 2004 was for most of us the prove-it year for the Company following the announcement and repositioning of Sylvan in 2003. Just a short list of the many accomplishments in that year. We successfully introduced our new corporate name, Laureate Education, Inc. We grew our student count from 110,000 to 160 -- more than 160,000 driven by our hitting the high-end of our organic expectations of approximately 20 percent in enrollment growth. This comes as a result of strong marketing and increasing numbers of new and proprietary education programs, degree programs and double degree programs that are unique to our international network.

We added approximately 8 new campuses bringing us to 42 campuses in 12 countries. We proved down our online strategy increasing enrollment growth, not including acquisitions, from about 2 percent in the first quarter of 2004 to 23 percent in the fourth quarter of 2004. That was total enrollment growth. That was drive by a tremendous growth in new enrollments in the fourth quarter of 146 percent. This makes Laureate Online the highest growth division in the Company going into 2005. Exactly as we hoped and expected that it would. We increased total corporate revenues in 2004 by 37 percent. That had the results of increasing our pro forma net income by 51 percent. We maintained attrition and bad debt among the lowest levels of the industry.

Our Company wide cost to acquire a student, almost certainly the lowest in the industry, remained flat despite industry and investor concerns about rising lead costs. We implemented the provisions of the landmark corporate governance legislation, Sarbanes-Oxley, across our network all over the world, dedicating substantial financial and human resources to the effort while still managing our business for high rates of growth. We raised what we will expect to be about $120 million between the $60 million repayment of the Educate note and the pending sale and tax benefits of the Wall Street Institute. We filled the $0.10 hole, much discussed $0.10 hole that was in our 2005 guidance attributable to the interest income from the Educate note which was suddenly eliminated with the early repayment of that note.

This was accomplished, this filling of this gap, through -- primarily through a combination of business outperformance and accretive acquisitions. We invested over $200 million in important transactions including buying in the minority share holder interest in Walden and our UEM University in Spain. We also made an investment through a loan in Kendall College in the United States which we do expect through an option agreement to become part of our Company probably sometime in 2006. Of course, a very important investment extending our presence into Peru. I will speak a little bit more about this and new campuses in just a moment. On top of this $200 million or more, $212 million in transactions, we invested about $100 million in CapEx. This is in campus expansions, in openings and certain elements of product development.

I wanted to speak about investments for a moment because it's absolutely critical to understand why we are so excited and optimistic about the future of our business. I know that any CEO's primarily responsibility is allocating capital. And 2004 felt like a great year in which we had the capital that we needed to make important investments and we had a tremendous array of great investment opportunities from which to choose. Just a little bit more color. We opened, in this case it worked out to be as we're counting it now 6 new campuses to just be consistent in the way we count it. It's 2 new campuses from scratch in Mexico -- that's Saltillo and Guadalajara. It was the new startup in China, here in Shanghai where Ralph Appadoo and I are today.

There were 3 campuses, 2 in Mexico and 1 in Panama, where we acquired a small existing school in a buy versus build approach which is a new program which we believe will reduce the horizon, the timeline that it takes for us to get accretion from these types of capital investments. These 3 acquisitions, 2 in Mexico and 1 in Panama, accounted for about $16 million worth of investments. And we went into the year thinking that we were going to open only 2 to 3 new campuses. To get to 6 was a great feeling and shows the acceleration in the underlying business. The $100 million of CapEx is important because you can break it down. Approximately 25 percent of it went towards opening new campuses and acquiring land for another new campus that we intend to open sometime this year or next.

Approximately 25 percent was in nondiscretionary CapEx that we don't expect to deliver a short-term economic return and about 50 percent of our CapEx was in the simple creation of new seats on existing campuses which is perhaps the highest per total(ph) investment activity that we conduct. So that's just a little bit more color in the type of investments that we've made. I want to talk a little bit more about investments. In '04, one of the key themes and focuses of our investment was in simplification. By buying in the minority interest in Walden and UEM in Spain, we improved our efficiencies, created an environment where we can improve efficiencies dramatically going forward. A good example of this will be the merger of NTU and Walden which we think will be great for students, great for strategy and certainly great for efficiency. And, of course, we accomplished this through the increased operating control that comes from owning 100 percent of an asset.

In '04, we added new seats, I mentioned that. We added new campuses, I mentioned that. We entered a new country, Peru. But one thing that you don't see in our numbers that's very important is we spent several $1 million in essence research and development, full time staff and full time consulting resources that we have allowing us to scour the world to allow us to decide which new countries we'er going to enter and when. And we think that this long-term investment in staff and research and information allows us to make very, very careful and good decisions about when and how we will enter a new country. Peru, in this case, had great characteristics that make us think that we can mirror some of the results we've achieved in Chile.

And now through R&D investment, we know that we will be able to find other new countries to enter at the opportune moment. We invested in new programs in our online arena. Probably the biggest area of investment would have been operating expenses devoted to the building out of our engineering curriculum and our engineering programs at NTU. Another 04' investment, we invested in density in our France market. France is one of the largest and most promising markets in which we have one of the smallest presences. And the way we impacted that was through 2 important acquisitions, IFG and ECE. IFG being a fantastic platform for working adult programs and working through corporate relationships and ECE being a top class engineering school in Paris. So that's '04. Of course, also filling that $0.10 hole, all very important in '04.

In '05. Again, we will invest in new campuses. Our current plan is based on 2 to 3 new campuses but we would like to open more and I will talk more about that. Of course, new seats as required. Once we hit in essence 85 percent capacity at any of our campuses, as long as we think that the enrollment trends are positive, we are immediately out constructing more capacity, more seats and we expect to get very high returns for the investment of new seats on an existing campus. We will, I'm sure, be in a position to enter at least one new country in '05.

We will continue to invest in new online programs. A couple new things that will happen in '05 that really didn't happen as much in '04, we will commence a major new investment in branding Walden University and Paula Singer, who is the president of our online division, Laureate Online, will speak a little bit more about that. And in '05, I think you will see continued acceleration in our global investments in programs for working adults. Again, IFG would be a good example, this is a very good attractive economic transaction with a wonderful prestigious company. It does not happen to have material margins at this point. Making the investment in IFG had the effect of bringing margins for the Company down in '05 but positioning -- well, down from what it would have been had we not done it -- margins will certainly still expand. But positions us, we think, for fantastic growth and geographic diversification as we perceive. I mentioned earlier that we would like to open more than 2 to 3 new campus'. For that matter, we would like to do a lot of things. We'd like to add more enrollment advisers in online and new programs across the board.

These things all would have the impact of reducing our profitability and so the way we go is we built a budget based on the things we think we need to do to create momentum for multiple years of growth. And then to the extent that we have outperformance throughout the year, we would like to reinvestment that outperformance. And in 2004, of course, we exceeded the guidance that we provided. We raised it once and then exceeded it in the end. I should tell you this is despite our best efforts to reinvest every penny of access profitability into long-term investments. Now, in 2005 we have a very favorable condition surrounding the weakness of the U.S. dollar which will almost certainly create windfall profits for the Company. But rather than viewing those as short-term or onetime gains, we hope to take as much of those profits as possible and plow them into continued investment in new programs and new campuses so that regardless of the future performance of the US dollar we're positioned for even higher rates of growth going forward.

Now, I would also like to make a comment about the effect of all these investments. Of course, almost any metric that you would measure Laureate, I think we measure beautifully. Except for one and that's return on invested capital. We are extremely aware of this. We feel this is simply a function of the maturity or lack of maturity of the campuses that we have. Approximately half of our campuses being less than 4 years old. And as a result, as those campuses mature out, as the ratio total campuses to new campuses grows, we expect return on invested capital to make important progress, steady progress going forward. At our upcoming investor day, March 31st in Chicago, we plan to provide additional information and specific case studies of what kind of returns we get when we open a campus or invest in expansion of existing campuses. And I think that will give investors great confidence that that sort of last trailing metric will come up to very good levels.

But almost any other metric, as I said earlier, whether it's bad debt, cohort default rate, cost to acquire students, length of stay for students, attrition rate, we would have the best metrics in the industry or just about. So, we are really proud of that and feel well positioned. The last area of investment that I'd bring up is investment in people. Sean mentioned how pleased we are to welcome Dan Nickel in as our Executive Vice President and Dan is going to be our global senior leader in Human Resources, bringing the tremendous experience he had at Motorola building the Latin America business as well as European and Asian businesses to help us. We think that we already have built one of the deepest and broadest management teams in the industry.

But we really are just getting started based on the scale of what we think we can achieve in the growth of our Company. But other important hires beyond the importance of Dan's arrival, we have hired a new Vice President of Information Technology to support our field IT activities. A new Educational Vice President for Educational Technologies focusing on the Latin America market. We hired a new CFO for the campus based division, this is our Corporate Treasure Larry Heinz, who we think is going to do an outstanding job in that role. We were very proud to promote internal a very talented executive, Ed Cabanas(ph), as our new Corporate Controller. This comes from the promotion of Hernandez Ramirez who had been Controller to the Head of Regulatory Compliance and Internal Audit. And I could go on and on about the important organizational decisions that we have made that give us confidence in stability and visibility, integrity of the numbers and tremendous growth going forward.

We're very excited about the positioning of the Company. All of this positions our Company to exceed $800 million in 2005 revenues which, of course, we provided in guidance going back even to April of last year, with every reason to believe that we can cross the $1 billion mark in 2006. And this Company feels to the people inside like we have almost unlimited potential to take our business model all over the globe. Now, one of the key drivers of expected growth in 2005 and expected margin improvements beginning in 2006 is the Laureate Online division and I would like to turn the call over to Paula Singer, who has done an outstanding job in growing that business last year and from several years. And, Paula, please give us some comments on Laureate Online.

Thank you, Doug, appreciate it. As Sean and Doug have indicated Laureate Online ended 2004 with a strong fourth quarter, closing the year with close to 21,000 students, up 33 percent over 2003. This growth was accomplished despite aggressive decommissioning of certain third party relationships in our teacher education program in favor of Walden. Given our now 100 percent ownership of Walden, we are particularly pleased to have accomplished this decommissioning in 2004. And while we were -- we will continue to work with our 3 remaining partners, we will be limiting their expansion into areas of specific tactical need and continuing our emphasis on Walden as a centerpiece of the division.

The student growth experience in 2004 yielded for Laureate Online a 41 percent growth in revenue from 95.8 million in 2003 to 135.1 million in 2004. Even improved 59 percent from 13.3 million to 21.1 million for the year. This 59 percent growth on only 41percent revenue growth was primarily due to an increase in operating profit margins for Walden from 9 percent to 20 percent due to increased efficiencies that resulted from scale. In 2005, you will note that margins are expected to remain relatively constant. This is a direct result of management's decision to invest more heavily in marketing. Specifically marketing related to the launch of new programs and to promoting for the first time ever the Walden brand, something we were very reluctant to do until we owned 100 percent of Walden. It's important to note that despite sector concerns, Walden student acquisition costs did not rise in 2004. Nor do we expect them to increase in 2005.

This positive outcome is primarily due to the differentiated approach we have taken by focusing on graduate degrees and on specific professional niches as well as to our improving conversion rate. However, we do believe it's important to invest in our brand at this time. A time in which online brands are not well differentiated. 100 percent ownership of Walden has provided with us another opportunity. The opportunity to further focus our efforts by merging NTU into Walden University. Work on the merger began in Q4 with final approval received from our crediting body in January allowing the merger to be in effect for the whole of 2005. NTU is now the fifth school within Walden University and it's called the NTU School of Engineering and Applied Science. Along with the merger will come an acceleration of the change in program model making the school's program consistent with the Walden model in terms of quality and profitability.

Most importantly, this merger allows senior Laureate Online management to stay focused on Walden. Allows us to leverage Laureate online resources more effectively. To provide NTU students with improved support. And enhances Walden University as a more comprehensive university able to serve more students. A brief comment regarding new programs. Again, with 100 percent ownership of Walden, we become more aggressive in a number of areas and that includes new program development. And it is our intention to be much more aggressive in developing new programs outside the teacher education market bringing what has made us a leader in that market to our other vertical.

A good example of this is our new masters in nursing or MS in nursing. This program went through the exact same process that is used for all of our teacher education products. National experts, rich media and practical application have all been created -- used to create a program that was launched to very strong inquiries this fall. Strong inquiries coming in in good introductory preliminary program starts. Also of note is our EDD which we are very pleased with. This program launched last summer and this doctoral combines our teacher education product development knowledge with Walden's doctoral degree expertise bringing both those things together. This degree has been so well received that we have over 350 professionals already enrolled in the program. And that was through the end of 2004. In summary, we are pleased with our year-end results. Very happy to have 100 percent of Waldens. And ready to take full advantage of the opportunities for growth that it provides us with. With that, let me just turn it over to Doug.

Thanks. At this point we will be happy to turn it over for any questions.

Thanks you. Our question and answer session is conducted electronically. [Operator Instructions] Our first question comes from Jeff Silber at Harris Nesbitt.

Good morning, thanks a lot. Doug, since you are in China I was wondering if you can give us a little bit of color about your strategy in that region over the next few years.

I think many of you that I've spoken to about the subject know that we clearly believe in the long-term tremendous opportunity in this market and we think that China and really most emerging markets share a lot of characteristics that we find in markets where we've been so successful including the Latin American markets. But, of course, there are also important differences, too. We started to understand the market in China through a joint venture related to our Wall Street Institute business which was very, very successful. In fact, the best part of that business that we just sold. And grew to over 10,000 to 15,000 students in a very short period of time. Then we decided that the most risk averse but important way to learn about the market was to enter through hotel management education, which we did through a partnership with the Jin Jiang group which is the largest hotel owner in China.

China has already been the largest source country for students who come to study with us in our Swiss hotel schools. But we know that our programs are priced well out of reach for the vast majority of applicants. So by opening a school in China, where students can do their first 2 years and then either take a diploma at that point or move on to taking the last 2 years in Switzerland, this, we think, is a perfect example of how the market can really thrive. This is really intended to just be the first of many things that we will do in China. Raph and I are here with a team reviewing a whole series of decisions and investments that we would like to make.

We do think that China, in particular in Asia in general, really reflects an investment environment for us for years to come. It's really not intended to be a source of profits in -- within the next, let's say, even 5 years. It's something where we can invest and grow within our means and when we finally get to the point where sheer size brings our growth rate down in some of our other markets, we think then we'll be very glad that we've made these investments as Asia and China get ready to gear up to a level that, we think, could really be breathtaking. But, it's very exciting but it is not short-term at all.

Okay, fair enough. If I could jump back to the online program. Just 2 questions on that. Just to double-check, the margin guidance for '05 online essentially flat margins. Is that mostly because of the investments that Paula was mentioning?

Yes, that's right. Her margins would have been up in almost any -- in anyway you would have looked at it except for the branding investment that she's going to be making and some technology investments.

Okay. And in terms of your international exposure online, in terms of leveraging the work that you're doing overseas. Have you made any impact there? Do you have a number of international students online?

Well, I'll let Paula comment on that. I know we have about 10 percent, maybe a little under 10 percent of our students are international. A lot of them through this very unique bridge degree product that we have. As we begin to introduce American degrees through Walden as well, we think we can grow that number. I will say, again, international online is an investment spend area for the next couple of years. Designed, I think, to position us for a very, very unique growth opportunity at a time when we think that the U.S. online market is going to become increasingly competitive. And our positioning to endure that and to thrive in that competition in the U.S. is to pick niches such as the graduate niche in general and the specific industry niches in particular.

But the problem with that strategy, it's very good. It keeps all of our margins high and our cost to acquire students low. It gives us strong competitive positioning. But, it doesn't give us absolute market size in the long-term. International gives us absolute market size in the long-term. So, it's another must spend investment area for us. And the fact that we can -- this kind of earnings growth while making all these kinds of investments is just incredibly gratifying for us. Paula, can you add to that?

Sure. I would just echo, frankly, what Doug has said about our strategy. And I would just add for all of you, that I really feel that we're at the same place with our international business that we were 2 years ago with Weldon University or we were with Canter in the first year or so that we had that business. We know exactly what we want to do. We have a very strong plan for marketing for have improved sales and conversion. It's a matter of gaining a little momentum now in executing on that plan. This year it will take some time, energy and investments, but we expect the same kind of results that we have seen in the other businesses that we have acquired for online.

Anything else from Mr Silber?

That's it. Thanks.

We'll now go to Brandon Dobell at Credit Suisse First Boston.

Thanks, guys. Good morning. Wonder if we could focus on Chile for a second for enrollment(ph) perspectives. One, just want to make sure, Sean, that I understand how you talked about the numbers with or without the interest income on the pilot financing and make sure I understand what the right number to think about that -- there is. And secondly, as you guys look out to '05, from an enrollment perspective, new student, total student, working adult impact, maybe just kind of go through the list of usual issues there. Just want to make sure we understand how to think about growth in that country.

Let me make a couple comments and then, Sean, if you like to add or --I know Bill Dennis is also on the line. But I think in general the best way to look at Chile is probably more of a full year rather than the fourth quarter. I think the fourth quarter is a bit of an anomaly. As Sean mentioned and you clearly were listening very carefully, which is great, the issue there we really feel there is only one market in the world where we feel that there is short-term upside associated with student finance. We don't want to be in the student finance business but if we have to do a little bit of investing to develop the technology around how to do it right and then turn it over to commercial partners. Or in the case of Chile there is also some potential government loan programs that might develop. That seems like a good investment and the net result of that is that some of our existing students, such students that would have signed up for us without financing now have signed up for us with financing, which is fine.

It just moves some of the revenue into an interest income category and that's just different on a year-over-year basis. So, the first question, how should you look at that? I would look at it more as full year. And then in terms of '05 and outlook, I do think it's important to note, we think our team in Chile has done a spectacular job. But Chile is a market where we've gone from 50 percent enrollment growth to 40 percent enrollment growth to 30 percent enrollment growth as our market share has come up. I think that there is no question in our mind but that our enrollment growth in Chile over time is going to revert to the growth of the market. The good news is the growth of the market is pretty good. In the past 10 years private university enrollments are up probably about 12 percent per year. And I'm sure that number will also come down.

But, wherever we stabilize out on the lower enrollment basis, I think that Chile will be a very important contributor of economic returns for us for many, many years to come. And then, of course, it's not going to happen all -- that slowdown doesn't happen all at once. I think the way we keep that from happening fast, the reason why it will take longer to happen is the diversification that we've made out into new segments. Working adult segments, the B programs in technical and vocational would be good examples. And, of course, the sort of higher end segment that we pursued through the UNAB acquisitions. But all of that, I think, in the context of Chile's enrollment growth will come down. Mexico enrollment growth has gone up. Other countries such as Peru and new countries in existing countries in central America and new countries in South America I think can more than take up the slack for Chile over time. And that is the big picture as I see it.

Okay. If I can ask one kind follow-up question. There in Chile the working adult impact this past year and how you think about that. Either how many campuses are offering it, how many programs do you have? And then maybe one smaller question on the financing side, how big is that program right now? What kind of time frame do you anticipate for finding somebody or a group of companies to take a look at that and push it toward them versus you guys have to use your balance sheet.

For financing or for working adult?

For financing.

Okay. Do you want to comment on that, Raph?

On financing?

Why don't you comment on working adult.

I'll comment on the working adult. Clearly, the working adult segment is becoming important not just in Chile but in Europe as well as Mexico. In Chile, however, we started there earlier than elsewhere. So we have a bit more traction. To give you a specific number, it's probably not appropriate, it's not big enough in the context of the whole of Laureate to breakout working adult. But it certainly we have made strides in Chile and it's certainly helping us to keep our growth very, very respectable. So, important development for us. We have learned a lot and we've learned a lot from Chile that we have exported to Mexico and elsewhere. So we can't give you specific numbers, but clearly this development is extremely gratifying for us.

And Bill Dennis, would you like to comment a little bit on what you think is going to happen in terms of commercial lenders taking on some of the programs that we are currently underwriting?

Sure, Doug. But let me back up and just add one thing to what Raph was saying about the working adult. We have now spread that product offering in Chile, not only from de Las Americas or UDLA but also to Andres Bello. We have just launched a high-end working adult at our Casona campus. So, we are very excited about that, So we're spreading the working adult concept to all of our campuses in all of Latin America. And part of 2004 was getting ready for -- was in fact carrying out that expansion. The other thing is that we are increasing the number of courses that we are offering in working adult. And that's going to make a difference, too. The content that's being offered.

So, more programs, more contents, spreading it throughout all of our countries, all of our campuses. Last year was a big year for us and Mexico, in particular, taking what we were learning from Chile and taking what we were learning from our existing pilot campuses and spreading that out through Mexico. So that's going to be a big, big factor for us in the future. With respect to financing, we had a very, very good year this past year. We have a lot of relationships. We continue to try to work with world government organizations. They move very slowly. But they've indicated interest in particular markets where they would like to come in and perhaps do some things with local banks.

So, as Doug said, we are trying to chum a little bit there to get these people interested and to get commercial institutions to see and recognize that this is a wonderful opportunity. That there is money to be made here by those financial institutions. And I just think that this year's going to be even stronger. We will report on the success of our financing in Chile. We are right in the middle of our enrollment process in all of our institutions in South America. As we finish that up in our next conference call we will be able to not only report the enrollment but also to give you additional information with respect to the success of these financing programs.

Brandon, it's Sean. Just one additional comment on that. Obviously, we were not a lender, don't intend to get into that business, although we feel like the opportunity in Chile is so compelling and we are so well positioned to be a significant beneficiary of a successful financing program in Chile. What we are doing is a managed program and investment in positioning ourselves very well. We've got self-imposed limitations on what we are going to do each year with respect to that. But feel like the opportunity is so compelling that it's worth us investing sometime and some of our own money to get that started off on the right foot.

Okay, great. I will jump out. Thanks for the color.

If your question has been asked and answered, you can remove yourself from the queue by pressing the star, 2. Star, 2 to remove yourself if your question has been asked and answered. We will go now to Rick Sing at Karch Capital. Your line is open, please go ahead. Mr. Singh? We're not hearing you? Please check your mute button.

Hi, sorry. I had my phone on mute. I apologize. I just want to understand in your guidance, the 2005, you had, just looking at the pieces, you had revenue that seems like it's above your normal historical range of 25 percent long-term guidance and you have a tax rate that might be below what you've had historically. What does that imply for the leverage you have in the EPS line in the business?

Sean, do you want to comment on that?

Sure. I think the guidance for the tax rate to start with is a range this year between 15 and 17 percent. Important part of that is to forecast it for a company with multinational locations, it's not only how much money we earn but where we earn it that has an impact on our rate. And I think, depending on the performance of the individual unit, that rate likely is going to come in between that 15 and 17 percent rate. But, rather than give a single rate this year like we have in the past, we need to provide that level of cushion, if you will. What we ended up looking at this year versus last year, obviously top-line growing at a significant rate, we can't lose track of the fact that in 2004 for at least half of the year, we were earning significant interest income on the seller note and then triggered that big gain. We did a very good job of redeploying that capital.

And we converted that nonoperating income stream into an operating income stream. But some of that is in consolidating acquisitions in Europe that again are going to have a short-term implication on margins. That is, I think, a 2005 phenomenon and the returns on those dollars invested will really kicking in 2006 and beyond. So, I think if there is an anomaly in the guidance with respect to the walkup from revenue to operating income to net income, it's a combination of the nonoperating items as well as the increase numbers of shares that are in our fully diluted as a result of the Walden buyout.

So to understand then it's the Europe that is a lower margin that brings down the delta between the higher revenue and the EPS -- ?

Yes, I think it's the walk through from the higher revenue to the operating income and then from the operating income down to EPS is a combination of share count and its interest income.

You said that in 2006, you said it was just a 2005 phenomenon and you would see the benefit of that in 2006. What changes from '05 to 06 with that regard?

I think the acquisitions -- the key to the acquisitions for us the strategy in Europe is to build scale. And obviously the leverage in our model is to take a fairly fixed cost structure and leverage across the larger number of students. As we build critical mass in Europe and France is a particular example of that strategy, I think the flow through margin becomes much more pronounced.

Okay. Great. Thank you very much.

We'll now go to Mark Marostica at Piper Jaffray.

Good morning. Or good evening, for you, Doug.

It's pretty late.

Understand. First question is for Paula, actually, on the online business. What's your current mix of graduate and PhD doctoral students and how has that changed over the last year?

Well, graduate students -- all of our really -- the vast majority, maybe about 5 percent are undergraduate with bachelor completion, about 25 percent of our population are doctoral students. And that's been -- we probably increased a couple points over the last couple of years. This is where we're really going to be focusing a great deal of our flagship potention(ph) if you will, on that doctoral degree. But as Doug has indicated, we are also concerned about making sure not only do we position ourselves well as a graduate school but that we start looking at where that mass market may be a little bit more. Master degrees are important. We are going to begin looking a little bit more at bachelor's degrees as well. Right now about 25 percent is doctorals, less than 5 percent bachelor completion, the rest at the master's degree level.

Okay. And as you look to your '05 guidance, I believe 45 percent revenue growth, do you anticipate the lion share of that growth coming from going toward more the mass market bachelor degree programs or not?

I think in 2005 we still have a lot -- we believe we still have a lot of opportunity within the master's degree level and with the doctoral level. Right now, 2005 is actually being used to determine what's the best way to enter that bachelor's degree level. Not being part of a kind of a commodity driven situation but where can we add value and specifically attack markets that will give us both the opportunity to add more headcount in the online program but in a way that really helps to keep us differentiated from the mass of other providers out there. I would also add international, of course, is very important to that growth. So, if you think to the what we refer to fondly as the Appadoo pyramid when I think all of you have seem Raph's pyramid about the elite and he goes through his thing. I actually look at online in the same way with the doctoral programs being at the top, masters degree next and then the opportunity for undergraduate and international under that. So, undergraduate and international will be something that will be important for us in 2006, 2007 and we are trying to rev up for that in 2005.

Great. And just a follow-up question on Chile. I think, Sean, you mentioned that the strong Chilean peso hurt you in Q1 because of the seasonality of the business. I was wondering if you could quantify for the FX impact for us in Q1 because of the Chilean peso.

At this point, we won't know until the quarter is over. But obviously -- .

Assuming no change in the exchange rate.

I'm not sure I have done the calculation that way. It's given the sizes of the loss, my estimation it's maybe a $0.01 or $0.02 impact in the first quarter.

Okay. That's helpful. Thank you.

We'll now go to Trace Urdan at Robert W Baird.

Good morning and evening and everything else. Sean, I'm not sure you actually put a hard number on this but I'm wonder if you are able to quantify what the impact of currency on the fourth quarter was and then what sort of assumption do you make about what the dollar is doing as you put forward your guidance for next year.

I did in my comments indicate that it was roughly around $400,000 impact favorable in the fourth quarter as a result of currency. And relative to assumptions, I think we don't have crystal balls. I think we take a lot of input from people who know a great deal more about the intricacies of the foreign exchange markets and get their forecast. But suffice it to say, we never assume that the international currencies need to further strengthen from where they are in order for us to hit our numbers. I think there is an embedded conservatism because we can't control FX but we never issue guidance assuming things will have to work if our direction in order for us to hit our numbers.

Understood. And then just one question again. You kind of hit at this but I want to ask it more specifically. In the first quarter it looks like the revenue increase that you're projecting is anywhere between 43 and $58 million versus the prior year. Yet, the $0.01 additional at the bottom line implies a very, very marginal return on that incremental revenue. I know there is additional spending in the online business, but I'm wondering if you could sort of help us understand why that would be.

It's a combination of Chile and Peru. When they lose money in Chile, which we had last year, it's a growing business and the cost structure increases as it grows. But when they're not earning any revenues, that obviously has a negative impact year-over-year in your margins and we are adding to the mix Peru which we didn't have in the first quarter of last year which, again, is in the same hemisphere as Chile and is losing money in the first quarter. And I think the combination of those 2 really is the answer.

Okay. And then the last question and I will get off. Again, I'm not sure I heard this explicitly, but can you tell us what the on ground campus revenue growth was exclusive of acquisitions in the fourth quarter?

Exclusive of acquisitions in the fourth quarter, yes, I think it was 20 percent.

Okay. Great. Thank you.

We will go now to Bob Craig at Legg Mason.

Couple of questions for you. Sean, I take it 123R is not included in guidance. Is that correct?

That's right.

Okay.

And the impact of that will be affective beginning with the third quarter's results.

Okay. Overall, blended tuition increases in '04 and what you are banking on in '05?

Overall blended in both online and campus base was 5 percent.

Was 5 percent in '04 and you estimating that as well in '05?

We are assuming comparable. I think what we've said is sort of 15 to 20 percent volume and 5 percent pricing is embedded in the guidance.

And, Sean, is it possible to give some sort of guidance percent of revenue, however you want to do it on minority interest in '05?

Yes. I think what we said as a result of the Walden buyout and the UEM buyout the minority interest as a percentage of EBIT has come down from what was, I think, previously in the 22 percent range down to 18 or 19 percent.

Okay, that's helpful.

And just to be clear on that. There is again the seasonality with respect to the quarterization of that. It doesn't work out perfectly that way each quarter but on a full year basis that's a good proxy.

Okay, that's helpful. Campus openings, you mentioned at lease 2 or 3. I take it those will again focus on Mexico?

Yes, it's Doug. Mexico and to a lesser extent perhaps something more in Central America.

Okay. And is it possible to indicate, you mentioned a planned marketing spend increase especially in online in '05, how much you are budgeting for marketing costs not only in online but the total Company as a percentage increase year-over-year in '05?

I think we want to be a little cautious about what new data sets we're reporting out and will need to always report out on. But we were trying to be very thoughtful about what investors need to understand us. In fact, I'm sure you noticed that this release for the first time we actually broke out operating results by sort of continent, by region with Europe and Latin America broken apart for campus base. So, our plan is definitely to move towards increased disclosure to the extent that we think it actually provides meaningful information to investors. So we will work on that. It's a good question.

Would it be likely greater, Doug, than the percentage increase in revenue?

No. I can't answer that for online, but I can tell you for the Company as a whole, certainly not.

Okay, great. Thanks, guys.

Now go to Howard Block at Banc of America Securities.

Good morning and good evening, everybody. Congratulations. Really solid year. I had a couple of questions and I apologize, Sean, if any of these are asking you to repeat answers you have given. But just some maintenance. One is have you given CapEx guidance for '05?

We have not given CapEx guidance for 05. For 04' I think we reported that we had roughly $100 million of CapEx. Our guidance has been more formulated around the concept of reinvesting close to 100 percent of our EBITDA each year by country into predominantly capacity growing projects. 25 percent would be in the areas of maintenance and nondiscretionary CapEx. But the balance would be in capacity growing.

Okay. And then I noted that on the press release there was, I guess, a bit of an update to the enrollment number that had been released in the fall, 138 versus 134 or so. What is that sequential change and are the causes of it the sort of the same sequential change we saw in sort of the prior years press releases?

I mean, from my perspective it's a sort of true up for any numbers that we gave at the end of a primary intake that were marked estimate at the time we announced them. I think the campus base number we gave was actually a census number as of December 31st. And I think that growth rate sequentially is comparable to the growth rate on the primary intake information we provided to you in the end of the third quarter.

Okay. Because it does look like that the sequential change this year, I think, in relative terms was a little less than in the prior year. I just didn't know if it was about in a sense restating or trueing up, as we say, or just offering a little incremental insight into interim enrollment.

I think that's the answer. We certainly were intending to try and give a realtime census data point but our analysis just indicated that that was very comparable in terms of growth rate as compared to the way we presented it at the end of the third quarter.

Okay. And then did you offer new students in online, I guess, with and without KIT as you have in prior quarters?

We had -- I think we announced 146 percent new student growth for the quarter on an organic basis. It would have been 162 percent including KIT.

Okay. And it looks as though -- just the last question -- look as though that the attrition rate, at least in terms of the data we have and what we're left in terms of deriving it. It looks pretty impressive. I don't know if Paula can comment. But I say it's -- looks like it's somewhere in the 20 percentage range. Any color on attrition or persistence or guidance on how to think about that?

Do you mean overall, Howard, or specifically?

I'm sorry, in online.

I don't think we have broken up the number specific to online. I don't think we've broken up that number specific to Online. Although, again, I think we should consider it because we really do want to provide as much helpful information as we can. Paula have we disclosed anything like that?

We haven't, I don't believe, done it separately but I do think we have in the past, Howard, and it holds true that all of our teacher education programs continue to have excellent retention rates in the mid-90s. And we have had improvement by applying some of the things that we know from the teacher market into our traditional Walden market. So, it really is becoming apparent that we can translate that into other programs. But, I don't believe we have broken it out.

What we have given, Howard, is overall attrition assumptions indicating that our overall attrition rate is roughly 11 percent. That contemplated o-line and campus based in total.

Okay. Great. Thank you very much.

We'll now go to Gary Bisbee at Lehman Brothers.

Thanks. Good morning and my congratulations as well on a strong finish to the year. A couple of questions, I guess. Can you give us a bit more color on the brand building investments you're going to make in online and specifically I'm wonder is this going to be like a national TV and radio advertising? Or more spending on the internet? How are you thinking about that?

Paula, do you want to comment on that? I'm sure it won't be national TV.

Sure won't be national TV. It's not consistent with our specific focus on professional sectors and verticals and so forth. What you're going to be seeing is we have absolutely -- up until now what we have been doing is what I would call lead generation. All of our efforts have been on the web. Kind of duking it out with other folks for position. But not without much focus on what does it mean to be a Walden student. And I think what you will see -- we have spent a lot of time looking at that. Trying to figure out how to position ourselves to really differentiate ourselves in the marketplace.

And you'll be seeing -- we're beginning that launch at the end of March. And it will include things like radio and PR, which is a very well targeted place for us to be as that our identifying how we see ourselves as being a bit different from the rest of the group, beautifully done, I believe. In papers that would be focused on psychology or in the major business periodicals and so forth. So, again, we are taking the approach of focusing on our verticals, but we are expanding that push to differentiate ourselves. That's really what the plans are based around.

So it sounds like it's just more of what you have been doing in the past and can you differentiate this from leads?

In the past we didn't actually use any national publications. You're going to see us in more national publications. You will see us using more radio and actually just stepping up direct mail, for instance, and using a much better -- more of a campaign mix. In the past, again, we've focused mostly either on the web for the traditional Walden program or our direct mail for our teacher education program. What we are doing this year is more of a campaign effect where we are putting everything together including things like going to our association meetings, holding our residencies there, having alumni meetings there. Doing radio when we're in that market. It's much more of a marketing campaign, true campaign, than what we have been doing in the past.

Okay.

Obviously I think the key for us is that we are experimenting with some things in ways that we haven't done it before and we have not built into our budget the assumption that it actually pays off as well as our ordinary marketing spending. And if it doesn't, we won't do that much more of it or we'll react accordingly. If it does, obviously that represents a lot of upside for us.

Okay, great. And then just a couple cleanup questions. Can you give us the terms of the seller note as part of the sale of WSI?

It is a 5 year note. We will be in a situation with a lender. As the lender we built in mechanisms that would encourage a early refinancing out of that seller note. So we would expect to have that paid back in advance of the -- in advance of the 5 year maturity and I don't remember if I mentioned or not, but it's a 8 percent coupon on the note to start.

Okay. So, we could see something like we did earlier this year if they prepay that where you have a onetime -- ?

No, because I think this note will not be considered -- he will be considered at a arm's length rate at 8 percent. The issue with the K-12 seller note was that it was a 12 percent face and the yield to maturity would have suggested it would have had to been at a 17 to 18 percent rate. This one you won't have that.

Okay. And can you give us any cash flow metrics for this year? I guess you said CapEx around 100 million, what would cash flow from operations have been?

Cash flow from operations is about 125 million. Depreciation and amortization included in that was about a little over $40 million.

Okay. And then in terms of the expected options expensing beginning this summer, can you give us any sense as to what you think that expense will end up being? Are you doing any -- planning any changes at all to your option issuance plans or programs going forward as a result of that pending?

I will talk to sort of the accounting side of it and then, Doug, if you want you can add color. Certainly, we have them moved to and are currently reflecting a not in any significant number on our P&L for non-cash compensation charge which is largely a result of us moving towards use of more restrictive stock grants for senior executives and I think that creates a better alignment. We have done the analysis. We need to continue to work through whether or not we will adopt the lattice model without getting too technical which is a much more involved exercise but generally yields a slightly smaller net impact.

Our expectation based on current Black-Scholes is that the second half of the year the additional charge, and this is just based on information we have now, would be about $800,000 net of tax. And in 2006 I think that ramps up based on -- to about 1.4 million to 1.5 million. So I think a big chunk of our equity based comp is already running through our P&L so it won't have a disproportionately large impact, I think, versus, perhaps, our peer group because of that move.

I wouldn't add a lot more than that. We have been very modest equity users in the past year or 2 because we had really come to the end of the plan that was out -- that had been approved by shareholders. I think at this point we will be likely looking for a new equity plan to be approved. But I think our expectations are we understand what kind of growth we can deliver for investors and what kind of growth investors expect of us. And anything that we adopt would be designed to allow us to achieve that, not to keep us from achieving that.

Okay, great. Thanks a lot.

Operator, if one more question we can take it otherwise we're going to probably call it a night.

I do have a question and it comes from Mark Hughes at SunTrust Robinson Humphrey.

How much outstanding do you have specifically on the student financing program in Chile? Could you give us that?

Sean, how do you want to handle that?

As of the end -- what we have done is sort of self-imposed a limitation. I think the total accumulated balance as of the end of the year was in the $20 million range.

Okay. Thank you very much.

With that I think we're going to call it an evening for those of us here in China. And I guess late morning to the rest of you. Thank you very much for your time and attention and interest in Laureate and I know Sean and Chris will be in the office in Baltimore if they can be of assistance to you. Thank you very much.

Thank you, that does conclude our call. We do appreciate your participation. At this time the conference is concluded.