"We're very pleased that we've been able to bring together representatives from both the American Counseling Association and the American Psychological Association to lead this important discussion," said Christopher Cassirer, ScD, acting president of Capella University. "This is an issue that affects all of us. Since 2001, more than a million and a half troops have been deployed to Iraq, Afghanistan, and other combat zones, and studies suggest that more than a third return with major mental health or cognitive conditions. At Capella, we are particularly interested in this issue because a large proportion of our students are either affiliated with the military or enrolled in our master's and PhD programs in mental health counseling and psychology."

About the discussion leaders

Dr. David Fenell is an expert on military counseling and chair of last year's American Counseling Association Special Committee on Military and Veterans Affairs. He is a colonel (retired) in the U.S. Army Medical Service Corps Reserve and was mobilized to active duty from 2001-2003 and 2005-2006, including tours of duty in Afghanistan and Iraq working as the command psychologist for the Combined Joint Special Operations Task Force. He was awarded a Bronze Star for his service in Afghanistan and a second Bronze Star for his service in Iraq. His son, an officer in the Marine Corps, is currently serving his second tour in Iraq. Dr. Fenell currently works as a professor of Counselor Education and chair of the Department of Counseling and Human Services for the University of Colorado at Colorado Springs.

Dr. Will Wilson is president of the American Psychological Association's Society for Military Psychology and a Capella University faculty chair with the Harold Abel School of Psychology. He is a retired U.S. Army colonel who served in the Special Forces in Vietnam and later as a military psychologist. He also taught at West Point, where his achievements included establishing the Cadet Counseling Center and the Center for Leadership & Personal Development. He moderates an ongoing Internet discussion group on military psychology, and is actively pursuing the establishment of an organization that will ensure that those in the military community, including veterans and family members, have easy access to mental health assistance and information.

About Capella University

Capella University (www.capella.edu) is an accredited(a), fully online university that has built its reputation providing quality graduate education for working adults. Eighty-three percent of Capella students are currently enrolled in master's or doctoral degree programs in business, information technology, education, human services, psychology, public health, and public safety. Capella also offers bachelor's degree programs in business, information technology, and public safety. Within those areas, Capella currently offers 109 graduate and undergraduate specializations and 15 certificate programs. More than 23,700 learners were enrolled as of June 30, 2008, from all 50 states and 45 other countries. Capella is committed to providing high-caliber academic excellence and pursuing balanced business growth. Founded in 1993, Capella University is a wholly-owned subsidiary of Capella Education Company, headquartered in Minneapolis. For more information, please visit http://www.capella.edu or call 1-888-CAPELLA (227-3552).

(a) Capella University is accredited by The Higher Learning Commission and is a member of the North Central Association of Colleges and Schools (NCA), www.ncahlc.org.

Capella University, 225 South Sixth Street, Ninth Floor, Minneapolis, MN 55402, 1-888-CAPELLA (227-3552), www.capella.edu.

Learn more about earning an online degree at Capella University:

online education (http://www.capella.edu/online_education.aspx)

distance learning (http://www.capella.edu/distance_learning.aspx)

online university (http://www.capella.edu/online_university.aspx)

SOURCE: Capella University

Capella University 
Irene Silber, 612-977-4132 
irene.silber@capella.edu

Key findings of the second Measuring the Social report include:

--  Seven of the songs on Networked Insights' top 10 list do not appear in
    Billboard's top 10 songs, indicating a large discrepancy between song
    purchase/airplay and audience interactions online

--  While both lists consist mostly of pop and hip-hop/R&B songs,
    Networked Insights' chart shows a different genre with two songs in the
    "alternative" category: Secondhand Serenade -- "Fall For You" (5) and
    Coldplay -- "Viva La Vida" (7)

--  Secondhand Serenade's lyrics are popular among social network users as
    they lend themselves well to posting as comments and on friends' pages as
    evidenced by "Fall For You" taking the fifth spot on the Networked Insights
    chart

--  During this timeframe, R&B group Brutha released an a capella version
    of Kanye West's song "Love Lockdown" online, generating interest from the
    online audience, and boosting the rank of the original song on the
    Networked Insights chart to number 9. "Love Lockdown" does not appear on
    the Billboard top 10

--  American Idol winner David Archuleta's "Crush" is third on Networked
    Insights' list due to the strong interactive component of the show
    transferring to online interactions

"The second Measuring the Social report proves that across many industries, marketers need to fully understand their online audiences and not just rely on traditional forms of measurement that leave out this massive, influential group of people," said Dan Neely, founder and CEO of Networked Insights. "The way people interact with music now goes far beyond just buying it or listening to it on the radio, and the music industry needs to update the traditional ways they analyze and understand their target audience."

Today, online measurement generally involves listening to the 15% of people that post content online. While this section of the audience is important, the other 85%, which Networked Insights uncovers, is interacting in other ways equally as valuable when analyzing audience behavior online -- reading, rating, sharing, linking and inviting.

In the early days of the Web, when sites were one-way and static, audience measurement was based on eyeballs, then shifted to transactions as the Web became more complex, which painted a more accurate picture of online behavior. Now, understanding true online behavior is about understanding the social, measuring all the different ways people are interacting online. This also includes the important metric of influence for each interaction -- for example, Tiger Woods sharing a golf video carries far more weight than an everyday golf enthusiast taking the same action.

To gather data for this Measuring the Social report, Networked Insights tapped more than 17,000 social media and social networking sites, which included 3.5 million conversations per day and over 120 million unique users. The Networked Insights top 10 chart is compared to Billboard's Hot 100 list for the week of October 28 to November 4, 2008.

For continued insights and access to the full Measuring the Social report, subscribe to the Measuring the Social feed at www.socialsights.com.

About Networked Insights

Networked Insights measures the social to drive more effective marketing, by determining who to target and how to convert them. We tell you where they are, the influence they carry and the language they use. Networked Insights gives companies the ability to discover and act upon real-time Customer Intelligence from a wide variety of social media sources, providing truly customer-driven insight based on both content and social behavior generated from customer-to-customer interactions. Previously, companies gained customer information by asking predetermined questions or proving company-generated hypotheses. Networked Insights puts the customer at the center of the intelligence process so that companies can let the customer decide what's important. Networked Insights is privately held and based in Madison, Wisconsin. For more information, go to www.networkedinsights.com.

Contact:
LaunchSquad
Jeremy Frank or Gavin Skillman
insights@launchsquad.com
212-564-3665

SOURCE: Networked Insights

mailto:insights@launchsquad.com

-- Total active enrollment increased 18.7 percent to 24,063 learners from the same period in 2007.

-- Operating income in the three months ended Sept. 30, 2008, increased 25.5 percent to $7.9 million, compared to $6.3 million during the same period in 2007. The operating margin in the third quarter was 12.2 percent of revenue, an increase of 80 basis points, compared to 11.4 percent of revenue during third quarter 2007.

-- The tax rate for the third quarter of 2008 was 34.2 percent, compared to 33.2 percent for third quarter 2007.

-- Net income for the third quarter of 2008 was $5.8 million, compared to $5.1 million in the third quarter of 2007.

-- Diluted net income per share was $0.34 in the third quarter of 2008, compared to $0.29 in the third quarter of 2007.

-- The company repurchased approximately 84,000 shares for total consideration of $4.2 million during the third quarter under the share repurchase plan authorized by the Board of Directors in July.

For the nine months ended Sept. 30, 2008, the Company reported:

-- Revenues increased 21.1 percent to $196.5 million, compared to $162.3 million for the same period in 2007.

-- Operating income for the nine months ending Sept. 30, 2008, was $23.7 million or 12.1 percent of revenue, compared to $17.3 million or 10.7 percent of revenue during the same period in 2007.

-- Net income year-to-date in 2008 was $17.6 million or $1.01 per weighted average number of diluted shares compared to $13.7 million or $0.80 for the same period in 2007.

"Capella has a solid strategy in place, is well positioned in the current market environment, and has achievable long-term objectives," said Stephen Shank, chairman and chief executive officer of Capella Education Company. "During the third quarter, we made good progress in our recovery from operational challenges impacting new enrollment growth, related to the now completed implementation of our Enterprise Resource Planning (ERP) system," continued Shank. "Our focus now is on increasing productivity levels and beginning to realize the substantial benefits of our best-in-class integrated infrastructure with our new ERP system. Over the last months, it has become clear that we have more opportunities than we previously envisioned for efficiency improvements and to drive growth. We are very excited about our future prospects," concluded Shank.

Balance Sheet and Cash Flow

As of Sept. 30, 2008, the Company had cash, cash equivalents and marketable securities of $113.8 million, compared to $143.8 million at Dec. 31, 2007. The change from year-end 2007 to third quarter 2008 reflects payments related to the repurchase of $54.2 million of common stock, partially offset by increased cash flow from operations. The Company had no debt during the third quarter 2008 or at year-end 2007.

Cash flow from operations was $32.1 million during the first nine months of 2008 compared to $27.7 million in the same period of 2007. Capital expenditures were $9.9 million for the nine months ended Sept. 30, 2008, which compares to $14.1 million in capital expenditures in the first nine months of 2007, a decrease of $4.2 million related to the completion of the multi-year ERP system implementation in July 2008. Depreciation and amortization for the first nine months increased to $9.0 million from $7.3 million for the same period in 2007 primarily due to depreciation of the ERP system.

Outlook

For the full-year 2008 expectations continue to be year-over-year average enrollment growth of 18 to 20 percent, revenue growth of 20 to 22 percent and operating margins in the range of 14 to 15 percent.

For the fourth quarter ending Dec. 31, 2008, total enrollment is expected to grow by 18.0 to 19.0 percent and revenue to increase by 17.0 to 18.0 percent compared to the fourth quarter of 2007. The operating margin is anticipated to be approximately 20.0 to 20.5 percent of total revenue.

"With the continued focus on operational improvements, we expect year-over-year fourth quarter new enrollment growth to be the highest quarterly increase in 2008," said Lois Martin, senior vice president and chief financial officer. "Revenue growth is expected to be slightly lower than enrollment growth in fourth quarter primarily due to timing of colloquia revenue." concluded Martin.

Forward-Looking Statements

Certain information in this news release does not relate to historical financial information, including statements relating to our future prospects and our expectations regarding our revenues, enrollment, and operating performance, and may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The company cautions investors not to place undue reliance on any such forward-looking statements, which are based on information available at the time those statements are made or management's good faith belief as of that time with regard to future events, and should not be read as a guarantee of future performance or results. Such statements are subject to certain risks and uncertainties that could cause the company's actual results in the future to differ materially from its historical results and those presently anticipated or projected. The company undertakes no obligation to update its forward-looking statements to reflect events or circumstances arising after such date.

Among these risks and uncertainties are any failure to materially comply with the extensive regulatory framework applicable to us, including compliance with Title IV of the Higher Education Act and the regulations thereunder; regional accreditation standards and state and regional regulatory requirements; changes in funding and availability for Title IV programs; responding to any additional governmental inquiries into our financial aid practices; attracting and retaining learners; updating and expanding the content of existing programs and developing new programs; the review of our business and financial aid practices by governmental authorities, including action by Federal Student Aid on the final audit report of the Office of Inspector General of the U.S. Department of Education arising out of its ongoing compliance audit of Capella University; changes in applicable federal and state laws and regulations and accrediting agency policies; maintaining and expanding existing commercial relationships with employers and developing new such relationships; our failure to keep up with advances in technology important to the online learner experience; our ability to manage growth effectively; the successful operation and use of our ERP system and our ability to realize expected efficiency improvements from the system; reclassification of our adjunct faculty; unforeseen changes in student enrollment or our expenses; and risks associated with the overall competitive environment and general economic conditions.

Other factors that could cause the company's results to differ materially from those contained in its forward-looking statements are included under, among others, the heading "Risk Factors" in our most recent Form 10-K and Form 10-Qs on file with the Securities and Exchange Commission and other documents filed by the company with the Securities and Exchange Commission.

Conference Call

Capella will discuss its third quarter 2008 results and fourth quarter 2008 outlook during a conference call scheduled today, Nov. 6, at 9:00 a.m. Eastern time (ET). To participate in the live call, investors should dial (888) 205-6439 (domestic) or (913) 312-0962 (international) at 8:50 a.m. (ET). The webcast will be available on the Capella Education Company Web site at www.capellaeducation.com. A replay of the call will be available from November 6 through November 12, 2008, by calling (888) 203-1112 (domestic) or (719) 457-0820 (international), passcode 3470650. It will also be archived at www.capellaeducation.com in the investor relations section for 60 days.

About Capella Education Company

Founded in 1991, Capella Education Company (NASDAQ: CPLA) is a national leader in online education and parent company of Capella University, a regionally accredited(a) online university. Capella University offers graduate degree programs in business, information technology, education, human services, psychology, public health, and public safety, and bachelor's degree programs in business, information technology, and public safety. These academic programs are designed to meet the needs of working adults, combining high quality, competency-based curricula with the convenience and flexibility of an online learning format. Currently, Capella University offers 22 graduate and undergraduate degree programs with 111 specializations and more than 1,020 courses. More than 24,000 learners were enrolled as of September 30, 2008. For more information about Capella Education Company, please visit http://www.capellaeducation.com. For more information about Capella University, please visit http://www.capella.edu or call 1.888.CAPELLA (227.3552).

(a) Capella University is accredited by The Higher Learning Commission and is a member of the North Central Association of Colleges and Schools (NCA), www.ncahlc.org.

Capella University, 225 South Sixth Street, Ninth Floor, Minneapolis, MN 55402, 1-888-CAPELLA (227-3552), www.capella.edu.

CAPELLA EDUCATION COMPANY
Consolidated Balance Sheets
(In thousands, except par value)
                                                                       As of                     As of
                                                                       September 30,             December 31,
                                                                       2008                      2007
                                                                       (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                                              $     20,280              $     60,600
Marketable securities                                                        93,536                    83,167
Accounts receivable, net of allowance of $1,854 at September 30,             11,318                    7,557
2008 and $951 at December 31, 2007
Prepaid expenses and other current assets                                    8,267                     12,593
Deferred income taxes                                                        1,876                     1,896
Total current assets                                                         135,277                   165,813
Property and equipment, net                                                  34,105                    34,462
Total assets                                                           $     169,382             $     200,275
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                                                       $     5,451               $     6,089
Accrued liabilities                                                          19,932                    23,826
Deferred revenue                                                             10,900                    6,476
Total current liabilities                                                    36,283                    36,391
Deferred rent                                                                1,262                     1,167
Other liabilities                                                            335                       335
Deferred income taxes                                                        4,269                     5,508
Total liabilities                                                            42,149                    43,401
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares -- 100,000
Issued and outstanding shares -- 16,581 at                                   166                       173
September 30, 2008 and 17,363 at December 31, 2007
Additional paid-in capital                                                   150,121                   196,643
Accumulated other comprehensive income (loss)                                (539     )                195
Retained earnings (accumulated deficit)                                      (22,515  )                (40,137  )
Total shareholders' equity                                                   127,233                   156,874
Total liabilities and shareholders' equity                             $     169,382             $     200,275

CAPELLA EDUCATION COMPANY
Consolidated Statements of Income
(In thousands, except per share amounts)
                                                            Three Months Ended                  Nine Months Ended
                                                            September 30,                       September 30,
                                                            2008              2007              2008               2007
                                                            (Unaudited)
                                                            (In thousands, except per share amounts)
Revenues                                                    $    65,239       $    55,530       $    196,539       $    162,272
Costs and expenses:
Instructional costs and services                                 29,568            24,759            89,428             72,869
Marketing and promotional                                        20,828            17,583            61,794             52,753
General and administrative                                       6,907             6,865             21,605             19,364
Total costs and expenses                                         57,303            49,207            172,827            144,986
Operating income                                                 7,936             6,323             23,712             17,286
Other income, net                                                839               1,253             3,236              3,477
Income before income taxes                                       8,775             7,576             26,948             20,763
Income tax expense                                               2,999             2,514             9,326              7,074
Net income                                                  $    5,776        $    5,062        $    17,622        $    13,689
Net income per common share:
Basic                                                       $    0.35         $    0.30         $    1.04          $    0.83
Diluted                                                     $    0.34         $    0.29         $    1.01          $    0.80
Weighted average number of common shares outstanding:
Basic                                                            16,626            16,810            16,893             16,411
Diluted                                                          17,077            17,611            17,424             17,177

CAPELLA EDUCATION COMPANY
Unaudited Other Information
(In thousands, except enrollment amounts)
Enrollment by Degree(a):         September 30,
                                 2008           2007           % Change
PhD/Doctoral                     9,023          8,037          12.3   %
Master's                         11,095         9,105          21.9   %
Bachelor's                       3,834          3,027          26.7   %
Other                            111            99             12.1   %
Total                            24,063         20,268         18.7   %

(a) Enrollment as of September 30, 2008 and 2007 is the enrollment as of the last day of classes for the quarter ended September 30, 2008 and 2007, respectively.

                                                  Nine Months Ended
                                                  September 30,
                                                  2008              2007
Depreciation and amortization                     $    9,049        $    7,277
Net cash flow provided by operating activities         32,145            27,744
Capital expenditures                                   9,891             14,070

SOURCE: Capella Education Company

Capella Education Company 
Investor Contact: 
Heide Erickson, 612-977-5172 
Heide.Erickson@capella.edu 
or 
Media Contact: 
Irene Silber, 612-977-4132 
Irene.Silber@capella.edu

The webcast of the presentation will be posted on Capella Education Company's website at www.capellaeducation.com, in the investor relations section.

About Capella Education Company

Founded in 1991, Capella Education Company (NASDAQ: CPLA) is a national leader in online education and parent company of Capella University, a regionally accredited(a) online university. Capella University offers graduate degree programs in business, information technology, education, human services, psychology, public health, and public safety, and bachelor's degree programs in business, information technology, and public safety. These academic programs are designed to meet the needs of working adults, combining high quality, competency-based curricula with the convenience and flexibility of an online learning format. Currently, Capella University offers 21 graduate and undergraduate degree programs with 109 specializations and more than 970 courses. More than 23,700 learners were enrolled as of June 30, 2008. For more information about Capella Education Company, please visit http://www.capellaeducation.com. For more information about Capella University, please visit http://www.capella.edu or call 1.888.CAPELLA (227.3552).

(a) Capella University is accredited by The Higher Learning Commission and is a member of the North Central Association of Colleges and Schools (NCA), www.ncahlc.org.

Capella University, 225 South Sixth Street, Ninth Floor, Minneapolis, MN 55402, 1-888-CAPELLA (227-3552), www.capella.edu.

SOURCE: Capella Education Company

Capella Education Company 
Investor Contact: 
Heide Erickson, 612-977-5172 
Heide.Erickson@capella.edu 
or 
Media Contact: 
Irene Silber, 612-977-4132 
Irene.Silber@capella.edu