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Lehman BrothersLehman Brothers
June 15, 2005June 15, 2005
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Lehman BrothersLehman Brothers
Will EthridgeWill EthridgePresident and CEOPresident and CEO
Higher Education, International Higher Education, International and Professional Group and Professional Group
June 15, 2005June 15, 2005
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Agenda
Overview of our Higher Education business
Opportunities in Workforce Education
Our plan
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Our Higher Education business
USUSUSUSUSUSUSUS79%79%79%79%79%79%79%79%
Int’l Int’l Int’l Int’l 21%21%21%21%
2004 revenues : $1,360.2m
#1 in the U.S. and around the world
Outperformed the industry for 6 consecutive years
Six year revenue CAGR of 7%
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Pearson is the market leader
Source: Monument Information Resources (MIR)US College Bookstore Sales. Excludes Trade and Reference Books
Others9%McGraw-Hill (#3)
19%
Thomson (#2)25%
Houghton Mifflin (#4) 7%
Wiley (#5) 5%
(#1)Pearson Education35%
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Pearson’s competitive advantage
Leading brands:
Custom leader
Multi-channel sales and marketing reach
Leader in innovative products and services;
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Growing demand for Higher Education
Growth in College Enrollment: 1967-2012
Source: NCES
Projected
Strong demographics
Rising participation rates
Postsecondary graduates earn almost twice as much as High School graduates
Rising cost of Higher Education
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
200
0
200
3
200
6E
200
9E
2012
E
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Technology and accountability
Course management infrastructure in place
Students are digital natives
College readiness
Retraining and life-long learning
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What is Workforce Education?
Pearson’s market position
Growth drivers
What our customers need
Our plan
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This is Workforce Education
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Pearson portfolio view (2000-2005)
Taking share in a down market
#1TechnicalComputer ScienceEngineering
Strong market; increased investment
#2Workforce Education
Steady market growth; Outstanding market performance
#1TraditionalArts & SciencesBusiness
GrowthOur PositionHigher Ed Markets
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Why is it growing?Job growth fuels enrollment (through 2010)
66%
15%
36%
10%
30%
0% 10% 20% 30% 40% 50% 60% 70%
Teacher Education
Hospitality
Criminal Justice/Homeland Security
Construction and Trades
Allied Health
*
*Due to attrition and retirement
Source: Bureau of Labor Statistics; Eduventures
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Workforce Education market dynamics
For-profit chains
• 1,400 companies run 2,500 schools
• 1.6M students
Strong growth at Community Colleges
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For-profit college growth continues to climb
Combined Revenues of Leading For-profit Colleges
2000 2001 2002 2003 2004 2005e 2006e
Cal
enda
rized
reve
nue,
$m
Apollo Group, Corinthian, Strayer.
CAGR: 20%
Source: Multex
$1,000
$5,000
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For-profit chains
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Traditional Higher Education vs. Workforce Education
Degree and/or certification; job placement 75-100%
College DegreeBenefit to Student
All ages, generally older; minimum on-campus time
All ages, about 18-22; mainly on campus
Student Demographics
600-1,000 hours4+ yearsLength of Degree Program
Frequent starts; often every 6 weeks
Semester/trimester/quarterFrequency of Course
Shorter courses (6, 8, 12 weeks)
Semester/trimester/quarter Course Length
Workforce EducationTraditional College
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What our customers need
Quality materials for students and faculty• Academic credibility• Accreditation issues
Customized content• Career-specific programs• Competitive differentiation
Print and digital• Enrollment in online courses growing at 44%
Highly responsive services and support
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The customer
PEARSONPEARSONPEARSONPEARSONLEARNINGLEARNINGLEARNINGLEARNING
SOLUTIONSSOLUTIONSSOLUTIONSSOLUTIONS
Wealth of Content
Pearson Partners• Audible• Safari• NY Times• Blackboard
Technology & Assessment Capabilities
Technical,Business &
TradeCareers
GeneralEd
PearsonCustom
PHHealth
TeacherEd
Services• Tutoring• Teacher Prof.
Development
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The Pearson Teach & Learn Cycle™
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Where it works
William F. WeldChief Executive Officer
Decker College[Former Governor of Massachusetts, 1991-1997]
A unique distance education program customized by Pearson Prentice Hall
Based on the National Center for Construction Education and Research certification and accountability standards
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Where it works
Patrick MayersVice President of Academic Affairs
DeVry University
Customized MyMathLab online courses aligned with DeVry's mastery learning strategy
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Where it works
Mary Barry Executive Vice President, Academic Affairs and Compliance
Jack AbbottVice President, Curriculum and Instruction
Corinthian Colleges, Inc.
A customized student and instructor program perfectly aligned with Corinthian’s Medical Assisting curriculum
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Summary
Growing Workforce Education market
Pearson market share opportunity
Pearson Advantage: Integrated, customized Learning Solutions
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