Fitch Rates Sarah Lawrence College Ed Facilities Rev Bnds 'BBB+'

NEW YORK--(Business Wire)--
Fitch Ratings assigns a 'BBB+' rating to the following series of bonds issued by
the City of Yonkers Industrial Development Agency on behalf of Sarah Lawrence
College (SLC):

---$43,885,000 civic facility revenue bonds, series A (Sarah Lawrence College
Project);

---$1,565,000 civic facility revenue bonds, taxable series 2001B (Sarah Lawrence
College Project).

The series A bonds and taxable series 2001B bonds (the bonds), which essentially
represent a general obligation of SLC, were issued in 2001 and 2004 to finance
various capital projects and refund then outstanding civic facility revenue
bonds (series 1995, 1997, and 2000). On or about Dec. 1, 2009, the interest rate
on the bonds will be converted from an auction-rate mode to a fixed-rate mode
and the bonds will be remarketed. The Rating Outlook is Stable.

The 'BBB+' rating reflects SLC's historically sound, though recently pressured,
financial cushion; overall stable demand trends anchored by a unique educational
delivery model and strong reputation; increasingly conservative leverage profile
following the interest rate conversion; and highly focused management team which
seeks to the bolster SLC's competitive position for the long-term.
Counterbalancing credit factors include SLC's track record of volatile operating
performance(audited, accrual basis); revenue concentration in student generated
fees, which is further compounded by a relatively high cost of attendance; and
continuing vulnerability of SLC's balance sheet to further financial market
turbulence.

In most years, SLC's level of available funds, defined by Fitch to include cash
and investments not permanently restricted, serves to counterbalance its
volatile operating profile and would potentially suggest a rating in the 'A'
category. Between fiscal 2004 and fiscal 2008, SLC's operating margin fluctuated
from a low of -8.0% to a high of 6.7%, while available funds as a percentage of
expenses and debt ranged solidly between 76.4% and 90.1%, and 99.3% and 125.5%,
respectively. However, in fiscal 2009, a second year of a large operating
deficit (-6.7%), and financial market related investment losses (-25.7% between
fiscal 2008 and fiscal 2009) lowered available funds to just 45.2% of expenses
and 67.4% of debt.

While the aforementioned fiscal 2009 balance sheet metrics, which do not
incorporate additional reductions for non-marketable, less liquid instruments
(approximately 26.9% of the total portfolio), highlight a significant reduction
in historical financial flexibility, Fitch recognizes that at least a portion of
the deterioration in SLC's resource base is market related and largely outside
of its control. More important, SLC's management is now focusing on stabilizing
its operating profile through improved efficiencies and development of new
revenue streams, including those related to selective growth at both the
undergraduate and graduate level. Successful execution of these strategies will
enable SLC to become less reliant upon its balance sheet for annual operating
support and could result in rating improvement over time. While SLC has only
limited additional debt capacity at the current rating level, no additional
issuance is planned through at least the intermediate term. SLC's debt burden is
currently moderate, though manageable, at approximately 6.0%.

Founded in 1926, SLC is a private, liberal arts college located in Yonkers, NY,
approximately 20 miles north of midtown Manhattan. For the fall 2009 enrollment
cycle, SLC enrolled 1,204 undergraduate and 330 graduate students. In general,
SLC's enrollment has been stable over time, with its demand profile reflecting
strong student selectivity and a healthy market position. As one of the most
expensive institutions of higher education in the nation, SLC must actively
manage its applicant pool as well as its tuition discounting. For fall 2009,
tuition, fees, and room and board totaled $55,336. While approximately 40% of
incoming freshmen paid this full rate, tuition discounting has increased
slightly over the past five years to 29%. In response to the national economic
recession, SLC plans to limit future tuition increases as well as increase
fundraising for scholarships.

Additional information is available at 'www.fitchratings.com'.

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Fitch Ratings, New York
Cindy Stoller, +1-212-908-0526
cindy.stoller@fitchratings.com
Douglas J. Kilcommons, +1-212-908-0740

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