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Six analysts and top management from eight sector firms examine the Education & e-Learning sector in this 65-page Education & e-Learning Issue from The Wall Street Transcript, available at (212/952-7433) or www.twst.com

TWST: Jennifer, what has gone on in this space year to date in terms of the market?

Ms. Childe: I only follow a couple of the names, but I can speak broadly about trends. The group has continued to perform very well, up 60% YTD following a 25% rise in 2002, 38% in 2001, and more than 100% in 2000. Fundamentals continue to be very strong, including robust and increasing demand, which has translated to double-digit enrollment growth, sustainable pricing power, healthy margin expansion opportunities and superior earnings visibility. Additionally, the companies are benefiting from the problems that state schools and community colleges are having, which is causing double-digit tuition increases. High unemployment is also boosting enrollment growth as many unemployed individuals are rethinking their skills.

TWST: So as a result they’ve gone back to school.

Ms. Childe: In many cases, but the economy has perhaps also convinced some still-employed workers to improve their skills to enhance their job security.

TWST: What’s going on at Sylvan at this point?

Ms. Childe: Sylvan (SLVN, 26, Peer Perform) has gone through a tremendous transformation and is now emerging as a pure play in the postsecondary space. The difference is that Sylvan is focusing largely on the international postsecondary space. It owns nine universities in five countries, which comprise nearly 80% of its total revenue. The balance is generated from domestic distance learning programs.

TWST: What was the transition? What did they move away from?

Ms. Childe: They previously generated about 30% of their revenue from their domestic K-12 tutoring business. They also had a venture capital subsidiary that had investments in a number of e-learning businesses.

TWST: Has that all been cleaned out now?

Ms. Childe: Nearly all of those assets were divested earlier this summer.

TWST: What would it take to get you to boost your rating on Sylvan?

Ms. Childe: I have a Peer Perform rating on Sylvan, which is our second highest rating. The shares have had a nice run — they’re up more than 50% year to date. While I believe the international market is very attractive and that Sylvan has strong first mover advantage, there are certainly some unique risks. The company is still relatively new to this market and I think that execution risk is proportionately higher.

TWST: As we look at this area, are there any regulatory issues that investors have to worry about?

Ms. Childe: Not in my opinion. In fact, I believe the regulatory environment has never been more favorable. There have been some threats by certain Congressmen to penalize schools that raise their tuition by more than twice the rate of inflation for two years in a row, which could certainly hurt the for-profit players. But I think the odds of anything like that being passed are pretty low.

TWST: How about from a governmental point of view? Is educational funding there to support some of these guys?

Ms. Childe: Increases in federal funding (both grants and loans) have not kept pace with tuition increases, but there are plenty of third-party providers — such as government-sponsored entities such as Sallie Mae — that have stepped in to fill the void.

This special issue includes:

1) Education & e-Learning - In an in-depth (8,400 words) Roundtable Forum, Gary E. Bisbee III, a Vice President and Senior Research Analyst at Lehman Brothers, Gerald Odening, Jefferies & Company, a Managing Director of and Jeffrey M. Silber, a Managing Director and Research Analyst at Harris Nesbitt Gerard, examine the outlook for the sector and share specific stock recommendations.

2) Outlook for Education Companies - In an in-depth (2,500 words) Analyst Interview, Abigail Callahan, Director of Eduventures' advisory services, examines the outlook for the sector and shares specific stock recommendations.

3) Postsecondary Education Companies - In an in-depth (3,200 words) Analyst Interview, Jennifer Childe, an Associate Director at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

4) Outlook for e-Learning - In an in-depth (3,700 words) Analyst Interview, Claire Schooley, a Senior Industry Analyst at Forrester Research, examines the outlook for the sector and shares specific stock recommendations.

5) CEO interviews (average 2,500 words). Top management of eight - sector firms examine the outlook for their firm and the sector. Firms include:

Career Education Corporation, Concorde Career Colleges, FranklinCovey Co., Global Knowledge Network, HealthStream, INVESTools Inc., KC Distance Learning, Scientific Learning Corporation