Bridgepoint Education

Main Color

Palette

Building Business Acumen®

5 Business Drivers

Cash

Assets

Growth ProfitPeople

5 Business Drivers

Cash

Cash – Bridgepoint

2007 2008 2009 2010

Net Sales $86 $218 $454 $713

Cash

Cash $7 $57 $171 $299

Peformance Measure

BridgePoint

“As of September 30, 2011, the company had cash, cash equivalents and marketable securities of $344.7 million.”

.

In 2010, we repurchased 3 million shares at an average cost of $14.05 per share, for a total purchase price of $42.2 million.

For the first 9 months of the 2011, the company has spent $88 million in buying back stock which brings to an end the current stock buy-back authorized by the board of directors.

Buying back stock:

Companies ought to keep just enough cash to cover their interest, expenses and capital expenditures; plus they should hold a little bit more in case of emergencies.

Investopedia

How Much Cash Should You Have?

Cash – Bridgepoint

8% 26% 38% 42%

2007 2008 2009 2010

Net Sales $86 $218 $454 $713

Cash

Cash $7 $57 $171 $299

Peformance Measure

BridgePoint

Bridgepoint / Benchmark Companies

42% 26% 21% 17% 15% 12%

Apollo Group

Career Education

CorpDeVry, Inc.

Education Man. Corp.

Strayer Education

2010 2010 2010 2010 2010 2010

Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637

Cash

Cash $299 $1,301 $449 $323 $374 $76

Peformance Measure

BridgePoint

Cash – Bridgepoint

2007 2008 2009 2010

Net Sales $86 $218 $454 $713

Cash

Cash $7 $57 $171 $299

Cash From Operating Act. $10 $71 $132 $190

Peformance Measure

BridgePoint

“Cash From Operating Activities for the first 9 months of 2011 = $149 million.

.

5 Business Drivers

Cash

Profit

Revenue (Sales) $100 100 100

- Instr. costs & ser. $ 26 26 30- Marketing & Promo $ 30 27 26 - General & Admin. $ 14 14 12.5

= Operating Income $ 30 33 32+ Interest Income net $ 1 -

= Net Income $ 18 21

- Income Tax $ 13 13

2010 2011 Target

YTD

High Profit Margins

S&P Average is: 13%

Who has much higher profit margins?

Qualcomm 30%

Oracle 24%

Apple 22%

Facebook 20%

Coca Cola 20%

Why the high margins?

Low Profit MarginsS&P Average is: 13%

Who has much lower profit margins?

Exxon Mobile 8%

Ford 5%

Wal-Mart 3.5%

Whole Foods 3.4%

Costco 1.8%

Amazon 1.3%

Why the low margins?

Profit – Bridgepoint

First 9 month of 2011:Operating Margin = 33%

Net Income Margin = 21%

2007 2008 2009 2010

Net Sales $86 $218 $454 $713

Net Income $3 $24 $47 $128

Profit

Operating Margin % 4.6% 15.3% 18.0% 30.3%

Net Income % 3.5% 11.2% 10.2% 17.9%

Peformance Measure

BridgePoint

Bridgepoint / Benchmark Companies

Apollo Group

Career Education

CorpDeVry, Inc.

Education Man. Corp.

Strayer Education

2010 2010 2010 2010 2010 2010

Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637

Net Income $128 $553 $158 $280 $169 $131

Profit

G&A as % of Revenues 13.7% 6.4% 51.6% 35.4% 26.6% 16.0%

Operating Margin % 30.3% 20.5% 12.2% 21.5% 14.8% 33.9%

Net Income % 17.9% 11.2% 7.8% 14.6% 6.7% 20.6%

Peformance Measure

BridgePoint

5 Business Drivers

Cash

Assets

Profit

Assets (read from page 16)

Balancing…

Asset Asset StrengthStrength

Asset Asset UtilizationUtilization&

Cash, ratings, property plan & equipment

Assets – Bridgepoint

2007 2008 2009 2010

Net Sales $86 $218 $454 $713

Net Income $3 $24 $47 $128

Assets

Return on Assets 8.4% 20.4% 15.7% 27.1%

Equity Ratio 12.6% 25.7% 45.6% 50.6%

Peformance Measure

BridgePoint

First 9 month of 2011:Return on Assets = 26.5%

Equity Ratio = 57%

Bridgepoint / Benchmark Companies

Apollo Group

Career Education

CorpDeVry, Inc.

Education Man. Corp.

Strayer Education

2010 2010 2010 2010 2010 2010

Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637

Net Income $128 $553 $158 $280 $169 $131

Assets

Return on Assets 27.1% 15.4% 25.5% 17.2% 3.7% 31.8%

Equity Ratio 50.6% 37.7% 59.8% 72.4% 46.0% 42.6%

Peformance Measure

BridgePoint

5 Business Drivers

Cash

Assets

Growth Profit

Growth – Bridgepoint

2007 2008 2009 2010 2011 Est.

Net Sales $86 $218 $454 $713 $923

Net Income $3 $26 $47 $128 $169

Driver: Growth

Revenue Growth na 153.5% 108.3% 57.0% 30.0%

Net Income Growth na 766.7% 80.8% 172.3% 32.0%

Peformance Measure

BridgePoint

Revenue in Q3 growing due to the 5% tuition increase on April 1st of 2011 and increased enrollment.

Guidance for 2011:

- Total student enrollment of 83,000 to 85,000

- Revenue of $920 to $926 million

- Net income of $168.5 to $170.3 million

- Diluted EPS of $2.95 to $2.98.

(i) The continued availability of Title IV funds to finance student tuition payments,

(ii) Increased demand for postsecondary education resulting from a deteriorating labor market and

(iii) Efficiencies in advertising costs.

Page 72, 10-K

We believe that the performance of our company has been resilient in the current economic environment due to:

Bridgepoint / Benchmark Companies

Apollo Group

Career Education

CorpDeVry, Inc.

Education Man. Corp.

Strayer Education

2010 2010 2010 2010 2010 2010

Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637

Net Income $128 $553 $158 $280 $169 $131

Growth

Revenue Growth 57% 25% 16% 31% 25% 24%

Net Income Growth 175% -8% 94% 69% 61% 25%

Diluted EPS Growth 189% -3% 107% 70% 40% 28%

Peformance Measure

BridgePoint

5 Business Drivers

Cash

Assets

Growth ProfitPeopleCustomers & Employees

Employees

“A’s hire A+’s and B’s hire C’s”

The #1 reason a person will leave their job?

38% of current employees believe they will be somewhere else in 18 months.

Airplane

People – Bridgepoint

2007 2008 2009 2010

Net Sales $86 $218 $454 $713

Net Income $3 $24 $47 $128

People

Number of students enrolled 12,623 31,558 53,688 77,892

Peformance Measure

BridgePoint

Enrollment forecasted to be 83,000 to 85,000 students for year-end 2011.

Bridgepoint / Benchmark Companies

Apollo Group

Career Education

CorpDeVry, Inc.

Education Man. Corp.

Strayer Education

2010 2010 2010 2010 2010 2010

Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637

Net Income $128 $553 $158 $280 $169 $131

People

Number of students enrolled 77,892 470,500 117,000 80,000 136,000 60,700

Peformance Measure

BridgePoint

“He skates to where the puck is going to be…”

Walter Gretzky

Anticipation

“If I would have asked my customers what they wanted, they would have said a faster horse”

Henry Ford

5 Business Drivers

Cash

Assets

Growth ProfitPeople

Description

Includes the Notes

5 Business Drivers

Cash

Assets

Growth ProfitPeople

Statement of Cash Flows

Profit & Loss

Balance Sheet

Becomes Cash < 1 year

Most Liquid

Least Liquid

Due First

Due Last Due in < 1 year

Asset StrengthB

alanceAssets = Liabilities + Equity

Equity ratio = 51%

Current ratio =

1.7

1.Plenty of cash

2.Current ratio at 1.7

3.Trends are good

4.Strong equity position, 51%.

Strong Balance Sheet

For Title IV, one financial responsibility standard is based on the institution's composite score, which is derived from a formula established by the Department that is a weighted average of three financial ratios:

• equity ratio, which measures the institution's capital resources, financial viability and ability to borrow;

• primary reserve ratio, which measures the institution's ability to support current operations from expendable

resources; and

• net income ratio, which measures the institution's ability to operate at a profit or within its means.

The composite score is a number between negative 1.0 and positive 3.0 and it must be at least 1.5. We expect our scores for 2010 to be 3.0. Financial responsibility section, Item 1, Form 10-K

Net Income / Number of Shares

Profit(P&L)

Top Line

Bottom Line

Sales –Expenses =Net Income

57%

189%

56%45%

-8%33%

-

Operating Margin = 30%

Net Profit Margin = 18% 175%

165%

26%30%14%

09-10 Var.

Increase Sales by 100K

+100

26

+ 44

18 for taxes

+ 26

30

56

+ 44

If your team cuts $100 thousand from the “General and Administrative” line item, what would be the

impact on the P&L?

Assume quality is the same.

Work Team Impact on the 5 Elements(Table Activity)

Decrease by 100K

- 100

+ 100

41 for taxes

+ 59

+ 100

- 100

Which is better, increasing sales by $100K or cutting

costs by $100K?

Increasing sales increases Net Income by $26K.

Cutting costs increases Net Income by $59K.

What are the other considerations of increasing sales vs. cutting costs?

Work Team Impact on the 5 Elements

Cash from Operations + Cash from Investing + Cash from Financing = Change in Cash

Cash Flow

Bridgepoint Education

Main Color

Palette

INCOME STATEMENT Revenues $713,233 - COGS = Gross Margin - Operating Costs = Operating Income - Interest & Taxes

Net Income $ 127,580CASH FLOW STATEMENT Net Income $ 127,580 + Non-cash transactions = Cash from Ops +/- Cash from Investing +/- Cash from Financing = Change in Cash + Beginning Cash Balance

Cash & Cash Equivalents $ 188,518BALANCE SHEET Cash & Cash Equivalents $ 188,518 + Other Assets = Total Assets

Total Liabilities

Total Equity $ 238,241

STARTS with CustomersThis statement shows how much the company generated in sales (revenues) from it’s customers. Then expenses are subtracted, and Net Income is shown.

STARTS with CustomersThis statement shows how much the company generated in sales (revenues) from it’s customers. Then expenses are subtracted, and Net Income is shown.

Expenses

This statement shows how much cash actually flowed into the company (cash inflows) and the cash that flowed out of the company (cash outflows) during the statement year, and finally the cash amount left over at the end of the year.

This statement shows how much cash actually flowed into the company (cash inflows) and the cash that flowed out of the company (cash outflows) during the statement year, and finally the cash amount left over at the end of the year.

Financial Statements: Inter-relationship

Finding our performance on the 5 Drivers

Cash

Assets

Growth ProfitPeople

ComponentBalance Sheet

P & LStatement

of Cash Flows

CalculationEnter Results

HereMetric

Cash None $ Cash

Cash from operating act. None $

Cash Flow from operating Act.

Revenue None $ Revenue

Net Income None $ Net Income

Operating Income %

Operating Income Margin (%)

Net Income %Net Income Margin

(%)

Total Assets % Return on Assets

Total Stockholder's

Equity % Equity Ratio

Revenue % Revenue growth

Net Income % Net Income growth

Diluted Earnings Per Share %

Diluted EPS Growth

Pe

op

le

Student Enrollment

None Student Enrollment

Ca

sh

Pro

fit

As

se

tG

row

th

From Internal Data or Market Research

Location in annual report

Revenue

Last year's revenuesThis year's revenues- 1 100 =

This year's Net Income

Navigating The Financials (NTF)

100 =

Total Assets

Earnings

www.acumenlearning.com

100 =

This Last year's Net Income

This

- 1 100 =

Total Stockholders' Equity

Net Income

100 =

RevenueNet Income

100 =

Operating income

Total Assets

This year's Diluted EPS- 1 100 =

Last year's diluted EPSThis

299

190

713

Cash + Marketable Securities

128

30

18

27

51

57

175

189

77,892

1) What is the role of the stock market?

2) Why did Bridgepoint go public?

3) Who cares about your stock price and why?a. Investorsb. Analysts

The Role of the Stock Market

Analyst Ratings

1) What is the role of the stock market?

2) Why did you go public?

3) Who cares about your stock price and why?a. Investorsb. Analystsc. Andrew Clarkd. Employees

4) What are the benefits of a higher stock price?

The Role of the Stock Market

1) Treasury stock worth more.

2) Secondary offering brings more cash.

3) Better credit ratings = more access to cash at a cheaper rate.

4) More acquisition power.

5) Can attract talented people.

6) More expensive in a buy-out.

6 Benefits of a Higher Stock Price:(Page 41)

Market Cap = Share Price X Number of Shares

Apollo Group

Career Education

CorpDeVry, Inc.

Education Man. Corp.

Strayer Education

2010 2010 2010 2010 2010 2010

Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637

Net Income $128 $553 $158 $280 $169 $131

Market Capitalization 1.3 Bil. 6.7 Bil. 843 Mil. 2.6 Bil. 3.3 Bil. 1.4 Bil.

Peformance Measure

BridgePoint

Price (of one share of stock)

Earnings Per Share (for last 12 months)

Price $ 25.95

EPS $ 3.05

= 8.5 P/E ratio

The P/E Ratio (Page 42, 43)

P/E Ratios

Apollo Group

Career Education

CorpDeVry, Inc.

Education Man. Corp.

Strayer Education

2010 2010 2010 2010 2010 2010

Net Sales $713 $4,926 $2,124 $1,915 $2,509 $637

Net Income $128 $553 $158 $280 $169 $131

P/E Ratio 8.5 15 5.5 12 16 13

Peformance Measure

BridgePoint

External Factors – Stock price

External Factors—Stock price vs. Dow and S&P

Engage your teams:

People will work hard for a paycheck,harder for a person,

and hardest for a reason.