Bridgepoint Education Reports Third Quarter 2009 Results

79.7% year-over-year enrollment growth

SAN DIEGO, Nov. 4 /PRNewswire-FirstCall/ -- Bridgepoint Education (NYSE: BPI),
a provider of postsecondary education services, announced today the results
for its third quarter ended September 30, 2009.

Highlights for the third quarter ended September 30, 2009:
-- Total student enrollment increased 79.7% year-over-year to 54,894 at
the
end of the quarter.
-- Revenue increased 111.3% to $127.4 million from $60.3 million for the
same period in 2008.
-- Operating income increased 233.2% to $38.8 million from $11.7 million
for the same period in 2008.
-- Net income was $22.4 million, an increase of 155.5% compared with net
income of $8.8 million for the same period in 2008.

-- Fully diluted earnings per common share increased 428.6% to $0.37 from
$0.07 for the same period in 2008.

"For the past three consecutive quarters we have reported strong results, and
I am extremely pleased with our continued solid operational performance," said
Andrew Clark, Chief Executive Officer of Bridgepoint Education. "Growth across
all of our highlighted categories demonstrates that prospective students are
increasingly drawn to our value proposition - a combination of affordability,
transferability, heritage and accessibility."

Student Enrollment
Total student enrollment at Bridgepoint Education's academic institutions,
Ashford University and University of the Rockies, increased 79.7% to 54,894
students at September 30, 2009, compared with 30,547 students at the end of
the third quarter of 2008. As of September 30, 2009, 99% of the total student
population accessed their classes exclusively online.

Combined new student enrollments for the third quarter of 2009 at both of
Bridgepoint Education's academic institutions were approximately 19,500, an
increase of 55%, compared with combined new student enrollments of
approximately 12,600 for the third quarter of 2008.

Financial Results
Revenue for the third quarter of 2009 was $127.4 million, an increase of
111.3%, compared with revenue of $60.3 million for the third quarter of 2008.
Revenue for the nine months ended September 30, 2009, was $322.6 million, an
increase of 116.2% compared with revenue of $149.2 million for the same period
in 2008.

Operating income for the third quarter of 2009 was $38.8 million, an increase
of 233.2% compared with $11.7 million for the same period in 2008. Operating
income for the nine months ended September 30, 2009, was $47.8 million, an
increase of 81.8% compared with $26.3 million for the same period in 2008.

Non-GAAP operating income for the nine months ended September 30, 2009, which
excludes (1) an $11.1 million charge taken in the first quarter related to the
settlement of a stockholder claim (of which $10.6 million was non-cash) and
(2) a non-cash charge of $30.4 million taken in the second quarter related to
the acceleration of certain exit options in connection with the Company's
initial public offering, was $89.3 million, a 239.4% increase from the same
period in 2008. See "About Non-GAAP Financial Measures" and "Reconciliation
of Non-GAAP Measures" below.

Net income for the third quarter of 2009 was $22.4 million, an increase of
155.5% compared with net income of $8.8 million for the third quarter of 2008.
Net income for the nine months ended September 30, 2009, was $27.5 million, an
increase of 32.4%, compared with net income of $20.8 million for the same
period in 2008.

Non-GAAP net income for the third quarter of 2009 was $22.5 million, which
reflects a $0.1 million increase in the net income effect of the $11.1 million
settlement charge taken in the first quarter of 2009 based on management's
current estimate of the tax impact thereof. Non-GAAP net income for the nine
months ended September 30, 2009, which excludes (1) the net income effect of
$17.1 million related to the $30.4 million option acceleration charge taken in
the second quarter of 2009 and (2) the net income effect of $8.5 million
related to the $11.1 million settlement charge taken in the first quarter of
2009, was $53.1 million, a 155.6% increase from the same period in 2008. See
"About Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Measures"
below.

Fully diluted earnings per common share for the third quarter of 2009 was
$0.37, an increase of 428.6% compared with fully diluted earnings per common
share of $0.07 for the third quarter of 2008. Fully diluted earnings per
common share for the nine months ended September 30, 2009, was $0.42, an
increase of 223.1% compared with fully diluted earnings per common share of
$0.13 for the same period in 2008.

Non-GAAP fully diluted earnings per common share for the third quarter of 2009
and the nine months ended September 30, 2009, were $0.38 and $0.92,
respectively. Non-GAAP fully diluted earnings per share is defined to mean
non-GAAP net income, less accretion for preferred dividends, divided by fully
diluted weighted average shares outstanding assuming the conversion of all
redeemable convertible preferred stock into common stock as if the conversion
happened on January 1, 2009, for the applicable period. See "About Non-GAAP
Financial Measures" and "Reconciliation of Non-GAAP Measures" below.

The Company's effective tax rate for the nine months ended September 30, 2009,
was 42.8%. Before taking into account the settlement charge taken in the
first quarter of 2009, the effective tax rate for the nine months ended
September 30, 2009, was 40.4%.

Balance Sheet and Cash Flow
As of September 30, 2009, Bridgepoint had cash, cash equivalents and
marketable securities of $156.3 million, compared with $56.5 million as of
December 31, 2008. The Company generated $115.7 million of cash from
operating activities for the nine months ended September 30, 2009, compared
with $39.4 million for the same period in 2008.

2009 Outlook
The Company is updating its previously-provided guidance for the year ending
December 31, 2009. This guidance includes non-GAAP financial measures, which
(1) exclude charges related to the settlement of a stockholder claim in the
first quarter of 2009 and the acceleration of vesting of certain stock options
in connection with the closing of the Company's initial public offering in the
second quarter of 2009, and (2) reflect in the fully diluted weighted average
share count the conversion of the redeemable convertible preferred stock into
common stock as if the conversion happened on January 1, 2009. See
"Forward-Looking Statements," "About Non-GAAP Financial Measures" and
"Reconciliation of Non-GAAP Measures" below.
-- Total student enrollment is expected to be between 52,500 and 54,500
at
December 31, 2009.
-- GAAP revenue is expected to be between $443.0 million and $448.0
million.
-- GAAP net income is expected to be between $40.6 million and $41.8
million.
-- Non-GAAP net income is expected to be between $66.2 million and $67.4
million.
-- GAAP fully diluted earnings per common share is expected to be between
$0.65 and $0.67, based on an estimated fully diluted weighted average
share count of 45.0 million for the year ending December 31, 2009, as
discussed below.

-- Non-GAAP fully diluted earnings per common share is expected to be
between $1.15 and $1.17, based on an estimated fully diluted weighted
average share count of 57.6 million for the year ending December 31,
2009.

Weighted Average Share Count Estimate. At the closing of the Company's
initial public offering, all shares of redeemable convertible preferred stock
were converted into common shares, increasing the common shares outstanding on
April 20, 2009, by 44.7 million shares. The Company's expectations for fully
diluted weighted average shares outstanding for the quarter and year ending
December 31, 2009, are 60.6 million and 45.0 million, respectively.

Estimated 2009 Tax Rate. The Company's effective tax rate for 2009 is
estimated to be 42.7%. Before taking into account the settlement charge taken
in the first quarter of 2009, the Company estimates the effective tax rate
would have been 40.4%.

About Non-GAAP Financial Measures

To supplement its consolidated financial statements, which statements are
prepared and presented in accordance with GAAP, the Company uses the following
non-GAAP financial measures: non-GAAP instructional costs and services,
non-GAAP marketing and promotional expenses, non-GAAP general and
administrative expenses, non-GAAP operating income, non-GAAP net income and
non-GAAP fully diluted earnings per common share.

The Company uses these non-GAAP financial measures for financial and
operational decision making and as a means to evaluate period-to-period
comparisons. Management believes that these non-GAAP financial measures
provide meaningful supplemental information regarding the Company's
performance by excluding certain expenses that may not be indicative of its
recurring core business operating results and may help in comparing its
current-period results with those of prior periods. Management believes that
they and investors benefit from referring to these non-GAAP financial measures
in assessing the Company's performance and when planning, forecasting and
analyzing future periods. Management believes these non-GAAP financial
measures are useful to investors because (1) they allow for greater
transparency with respect to key metrics used by management in its financial
and operational decision making and (2) they are used by institutional
investors and the analyst community to help them analyze the results of the
Company's business.

The material limitations of these non-GAAP financial measures are as follows:
non-GAAP instructional costs and services, non-GAAP marketing and promotional
expenses, non-GAAP general and administrative expenses, non-GAAP operating
income, non-GAAP net income and non-GAAP fully diluted earnings per common
share are not recognized terms under GAAP and do not purport to be
alternatives to instructional costs and services, marketing and promotional
expenses, general and administrative expenses, operating income, net income or
fully diluted earnings per common share, respectively, as indicators of
operating performance or any other GAAP measures.
Moreover, because not all companies use identical measures and calculations,
the presentation of these non-GAAP financial measures may not be comparable to
other similarly titled measures of other companies. The Company compensates
for these limitations by using non-GAAP financial measures in conjunction with
traditional GAAP financial measures.

The following is a description of the non-GAAP financial measures referenced
above:

Non-GAAP operating income. Non-GAAP operating income is defined as operating
income, plus (1) the charge of $11.1 million taken in the first quarter of
2009 related to the settlement of a stockholder claim (of which $10.6 million
was non-cash), and (2) the non-cash expense of $30.4 million taken in the
second quarter of 2009 related to the acceleration of certain exit options in
connection with the Company's initial public offering, in each case as
discussed below.

-- Settlement of stockholder claim. In February 2009, certain holders of
common stock and warrants to purchase common stock asserted various
claims against the Company, its directors and officers and its
majority
stockholder. In March 2009, the Company reached a settlement with the
claimants regarding these claims. The Company recorded a total expense
of $11.1 million related to the settlement, of which $10.6 million was
a
non-cash expense, in the first quarter of 2009.

-- Acceleration of exit options. In March 2009, the Company's board of
directors amended certain exit options awarded to members of the
management team to add an additional vesting condition so that the
number of shares underlying the options that would not have vested
upon
the closing of the Company's initial public offering, under the
original
terms of the options, would vest in full upon the closing of the
offering. The amendment to the exit options resulted in additional
compensation expense of $30.4 million, a non-cash expense which was
recorded upon the completion of the offering in the second quarter of
2009.

Non-GAAP instructional costs and services. Non-GAAP instructional costs and
services is defined as instructional costs and services less the portion of
the $30.4 million option acceleration charge taken in the second quarter of
2009 attributable to instructional costs and services ($2.1 million).

Non-GAAP marketing and promotional expenses. Non-GAAP marketing and
promotional expenses is defined as marketing and promotional expenses less the
portion of the $30.4 million option acceleration charge taken in the second
quarter of 2009 attributable to marketing and promotional expenses ($5.0
million).

Non-GAAP general and administrative expenses. Non-GAAP general and
administrative expenses is defined as general and administrative expenses less
(1) the $11.1 million settlement charge taken in the first quarter of 2009 and
(2) the portion of the $30.4 million option acceleration charge taken in the
second quarter of 2009 attributable to general and administrative expenses
($23.3 million).

Non-GAAPnet income. Non-GAAP net income is defined as net income plus (1) the
net income effect of the $11.1 million settlement charge taken in the first
quarter of 2009, and (2) the net income effect of the $30.4 million option
acceleration charge taken in the second quarter of 2009.

Non-GAAPfully diluted earnings per common share. Non-GAAP fully diluted
earnings per common share is defined to mean non-GAAP net income, less
accretion for preferred dividends, divided by fully diluted weighted average
shares outstanding assuming the conversion of redeemable convertible preferred
stock into common stock as if the conversion happened on January 1, 2009, for
the applicable period. Management believes non-GAAP fully diluted earnings per
common share provides a meaningful comparison to future results because all
redeemable convertible preferred stock was converted to common stock at the
closing of the Company's initial public offering.

These non-GAAP financial measures have been reconciled to the related GAAP
financial measures as required under the rules and regulations promulgated by
the U.S. Securities and Exchange Commission. See "Reconciliation of Non-GAAP
Measures" below.

Earnings Conference Call and Webcast
Bridgepoint Education will host a conference call at 11:30 a.m. ET (8:30 a.m.
PT) today to discuss its latest financial results and recent highlights. The
dial-in number for callers in the United States is (888) 576-4391 and for
international callers is (719) 785-1749. The access code for all callers is
3184840. A live webcast will also be available on the Company's website at
http://ir.bridgepointeducation.com/index.cfm.

A replay of the call will be available via telephone through November 11,
2009. To access the replay, dial (888) 203-1112 in the U.S. and (719) 457-0820
outside the U.S.; then enter the access code 3184840.

About Bridgepoint Education
Bridgepoint Education's postsecondary education services focus on offering
associate's, bachelor's, master's and doctoral programs in such disciplines as
business, education, psychology, social sciences and health sciences.
Bridgepoint Education's regionally accredited academic institutions - Ashford
University and University of the Rockies - deliver their programs online as
well as at traditional campuses located in Clinton, Iowa, and Colorado
Springs, Colorado.

Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements
include information relating to future events, future financial performance,
strategies, expectations, competitive environment, regulation and availability
of financial resources. These forward-looking statements are based on
assumptions and estimates including, without limitation, those regarding: the
Company's value proposition to students; competitiveness of the Company's
tuition; ability to continue to transfer credits from other institutions;
ability to maintain and improve the quality of the Company's education;
management of future growth and scalability; development of military and
corporate channels; estimates of new hires; proposed new programs;
expectations that the Company can effectively manage the business within the
regulatory environment; expectations regarding enrollments, financial
position, results of operations and liquidity; projections, predictions,
expectations, estimates or forecasts as to the Company's business, financial
and operational results and future economic performance; management's goals
and objectives; and other similar matters that are not historical facts.
Words such as "may," "should," "could," "would," "predicts," "potential,"
"continue," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates" and similar expressions, as well as statements in the
future tense, identify forward-looking statements, but their absence does not
mean that a statement is not forward-looking.

Forward-looking statements should not be interpreted as a guarantee of future
performance or results and will not necessarily be accurate indications of the
times at, or by, which such performance or results will be achieved.
Forward-looking statements are based on information available at the time
those statements are made and management's good faith belief as of that time
with respect to future events and are subject to risks and uncertainties that
could cause actual performance or results to differ materially from those
expressed in or suggested by the forward-looking statements. Important
factors that could cause such differences include, but are not limited to: the
Company's inability to influence the U.S. Department of Education's Office of
Inspector General (OIG) to change the findings in the OIG's audit reports; the
Company's inability to address the OIG's preliminary findings or the ultimate
findings of the OIG's audit reports; the imposition of fines or other
corrective measures against the Company's academic institutions; the Company's
failure to comply with the extensive regulatory framework applicable to its
industry, including Title IV of the Higher Education Act and its regulations,
state laws and regulatory requirements and accrediting agency requirements;
unexpected difficulties or delays in implementing the eCollege online learning
platform; failure to achieve the expected benefits from transitioning to the
eCollege online learning platform; the Company's inability to continue to
develop awareness among, to recruit and to retain students; competition in the
postsecondary education market and its potential impact on the Company's
market share, recruiting cost and tuition rates; reputational and other risks
related to potential compliance audits, regulatory actions, negative publicity
or service disruptions; the Company's ability to attract and retain the
personnel needed to sustain and grow its business; the Company's inability to
develop new programs or expand its existing programs in a timely and
cost-effective manner; economic or other developments potentially impacting
demand in the Company's core disciplines or the availability or cost of Title
IV or other funding; and other factors discussed in Part II, Item 1A (Risk
Factors) of the Company's quarterly reports on Form 10-Q filed on May 21,
2009, and August 11, 2009, and in the current report on Form 8-K filed on
September 11, 2009, and in other reports the Company may file with the
Securities and Exchange Commission from time to time.

Forward-looking statements speak only as of the date the statements are made.
You should not put undue reliance on any forward-looking statements. The
Company assumes no obligation to update forward-looking statements to reflect
actual results, changes in assumptions or changes in other factors affecting
forward-looking information, except to the extent required by applicable
securities laws. If the Company does update one or more forward-looking
statements, no inference should be drawn that the Company will make additional
updates with respect to those or other forward-looking statements.

BRIDGEPOINT EDUCATION, INC.
Condensed Consolidated Statements of Income
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
(In thousands, except per share amounts)

Revenue $127,382 $60,277 $322,566 $149,167
Costs and expenses:
Instructional costs and
services 33,120 16,368 83,611 42,050
Marketing and promotional 36,500 21,058 105,260 54,490
General and administrative 18,915 11,191 85,891 26,326
------ ------ ------ ------
Total costs and expenses 88,535 48,617 274,762 122,866
------ ------ ------- -------
Operating income 38,847 11,660 47,804 26,301
Other income (expense), net 162 90 277 (2)
--- --- --- ---
Income before income taxes 39,009 11,750 48,081 26,299
Income tax expense 16,651 2,999 20,575 5,521
------ ----- ------ -----
Net income 22,358 8,751 27,506 20,778
Accretion of preferred dividends - 501 645 1,503
--- --- --- -----
Net income available to common
stockholders $22,358 $8,250 $26,861 $19,275
======= ====== ======= =======
Earnings per common share:
Basic $0.42 $0.16 $0.49 $0.30
Diluted $0.37 $0.07 $0.42 $0.13
Weighted average common shares
outstanding used in computing
earnings per common share:
Basic 53,335 3,335 34,508 3,335
Diluted 59,822 7,836 40,163 7,619

BRIDGEPOINT EDUCATION, INC.
Condensed Consolidated Balance Sheets
(Unaudited)

As of As of
September 30, December 31,
2009 2008
---- ----
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $111,318 $56,483
Restricted cash 25 666
Marketable securities 44,962 -
Accounts receivable, net 53,065 28,946
Inventories 302 288
Current portion of deferred income taxes 2,734 2,734
Prepaid expenses and other current assets 6,629 6,773
----- -----
Total current assets 219,035 95,890
Property and equipment, net 41,364 27,715
Goodwill and intangibles 3,270 1,897
Deferred income taxes 13,524 2,366
Other long term assets 3,564 1,378
----- -----
Total assets $280,757 $129,246
======== ========

LIABILITIES, REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,999 $4,705
Accrued liabilities 19,630 16,543
Income taxes payable 11,663 -
Deferred revenue and student deposits 125,114 67,425
Current portion of leases payable 141 142
Current maturities of notes payable 74 74
Other liabilities 31 40
--- ---
Total current liabilities 162,652 88,929
Leases payable, less current portion 196 308
Notes payable, less current maturities 100 160
Other long term liabilities 3,751 2,740
Rent liability 6,927 3,938
----- -----
Total liabilities 173,626 96,075
Commitments and contingencies - -
Redeemable convertible preferred stock - 27,062
Total stockholders' equity 107,131 6,109
------- -----
Total liabilities, redeemable convertible
preferred stock and stockholders' equity $280,757 $129,246
======== ========

BRIDGEPOINT EDUCATION, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Nine Months Ended
September 30,
2009 2008
---- ----
(In thousands)
Operating activities
Net income $27,506 $20,778
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for bad debts 15,886 8,772
Depreciation and amortization 4,128 1,547
Amortization of premium/discount (40) -
Deferred income taxes (11,158) (5,054)
Stock-based compensation 33,947 125
Stockholder settlement 10,577 -
Loss on disposal of fixed assets 38 -
Changes in operating assets and liabilities:
Accounts receivable (40,005) (24,302)
Inventories (14) (79)
Prepaid expenses and other current assets 144 (1,292)
Other long term assets (2,186) (69)
Accounts payable and accrued liabilities 15,190 9,652
Deferred revenue and student deposits 57,689 29,459
Other liabilities 3,991 (184)
----- ----
Net cash provided by operating activities 115,693 39,353
------- ------

Investing activities
Capital expenditures (16,834) (9,057)
Purchase of marketable securities (44,922) -
Business acquisition (1,500) -
Restricted cash 641 (666)
--- ----
Net cash used in investing activities (62,615) (9,723)
------- ------

Financing activities
Proceeds from the issuance of common stock, net 28,104 -
Proceeds from exercise of stock options 38 -
Excess tax benefit of option exercises 429 -
Proceeds from issuance of stock under employee
stock purchase plan 93 -
Proceeds from exercise of warrants 973 -
Payment of notes payable (60) (4,871)
Payment made on conversion of preferred stock (27,707) -
Payments of capital lease obligations (113) (118)
---- ----
Net cash provided by (used in) financing activities 1,757 (4,989)
----- ------
Net increase in cash and cash equivalents 54,835 24,641
Cash and cash equivalents at beginning of period 56,483 7,351
------ -----
Cash and cash equivalents at end of period $111,318 $31,992
======== =======

Supplemental disclosure of noncash transactions:
Purchase of equipment included in accounts
payable and accrued liabilities $854 $1,128
==== ======

Reconciliation of Non-GAAP Measures - Historical

Effect
of Assumed
Conversion of
Preferred
Adjustment Adjustment Stock
for for Exit as of
GAAP As Settlement Option January Non-
Reported Charge Charge 1, 2009 GAAP
-------- ------ ------ ------- ----
(Unaudited, in thousands)
For the Three Months Ended
September 30, 2009
Instructional costs and
services $33,120 $- $- $- $33,120
Marketing and promotional 36,500 - - - 36,500
General and administrative 18,915 - - - 18,915
Operating income 38,847 - - - 38,847
Net income 22,358 112 - - 22,470
Net income available to
common stockholders 22,358 112 - - 22,470
Net income used in earnings
per common share
calculation 22,358 112 - - 22,470

For the Nine Months Ended
September 30, 2009
Instructional costs and
services $83,611 $- $(2,143) $- $81,468
Marketing and promotional 105,260 - (5,009) - 100,251
General and administrative 85,891 (11,060) (23,240) - 51,591
Operating income 47,804 11,060 30,392 - 89,256
Net income 27,506 8,508 17,104 - 53,118
Net income available to
common stockholders 26,861 8,508 17,104 - 52,473
Net income used in earnings
per common share
calculation 17,012 5,388 10,833 19,240 52,473

For the For the
Three Months Nine Months
Ended Ended
September September
30, 2009 30, 2009
-------- --------
Diluted earnings per common share $0.37 $0.42
Adjustment for settlement charge $0.01 $0.13
Adjustment for exit option charge $- $0.27
Effect of assumed conversion of preferred stock
as of January 1, 2009 $- $0.10
----- -----
Non-GAAP fully diluted earnings per common share $0.38 $0.92

Weighted average common shares outstanding
used in computing diluted earnings per share 59,822 40,163
Effect of assumed conversion of preferred
stock as of January 1, 2009 - 16,862
----- ------
Non-GAAP dilutive shares outstanding 59,822 57,025

Reconciliation of Non-GAAP Measures - Forward-Looking

GAAP Adjustment Adjustment
Year Ended for for Exit
December 31, Settlement Option
2009 Charge Charge
---- ------ ------
(Unaudited, in thousands, except per
share amounts)

Revenue $443,000 - $448,000

Net income $40,588 - $41,788 $8,508 $17,104
====== ====== ===== ======
Net income used in
earnings per common
share calculation $29,179 - $30,042 $6,116 $12,296

Earnings per common share:
Basic $0.74 - $0.76 $0.15 $0.31
Diluted $0.65 - $0.67 $0.14 $0.27

Pro-forma weighted average shares
Basic 39,508 - -
Diluted 45,018 - -

Assumed
Conversion of
Preferred Non-GAAP
Stock as of Year Ended
January 1, 2009 December 31, 2009
--------------- -----------------
(Unaudited, in thousands, except per
share amounts)

Revenue $443,000 - $448,000

Net income $- $- $66,200 - $67,400

Net income used in
earnings per common
share calculation $18,609 - $18,946 $66,200 - $67,400

Earnings per common share:
Basic $- - $- $1.27 - $1.29
Diluted $- - $- $1.15 - $1.17

Pro-forma weighted average
shares
Basic 12,612 52,120
Diluted 12,612 57,630

SOURCE Bridgepoint Education, Inc.

Contact: Diane Salucci, Vice President, Corporate Communications and Investor
Relations, +1-858-668-2586, ext. 3690, or Spencer Davis, Director of Investor
Relations, +1-858-668-2586, ext. 4190,
investorrelations@bridgepointeducation.com, both of Bridgepoint Education