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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2009
or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: - 001-33810
AMERICAN PUBLIC EDUCATION, INC.
(Exact name of registrant as specified in its charter)
Delaware 01-0724376
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
111 West Congress Street
Charles Town, West Virginia 25414
(Address, including zip code, of principal executive offices)
(304) 724-3700
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
Indicate by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes |_| No |_|
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer, or a smaller reporting
company. See the definition of "large accelerated filer," "accelerated filer"
and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer |_| Accelerated filer |X|
Non-accelerated filer |_| Smaller reporting company |_|
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|
The total number of shares of common stock outstanding as of July 30, 2009
was 18,190,077.
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AMERICAN PUBLIC EDUCATION, INC.
FORM 10-Q
INDEX
Page
----
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Item 4. Controls and Procedures 16
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings 17
Item 1A. Risk Factors 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits 18
SIGNATURES 19
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2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN PUBLIC EDUCATION, INC.
Consolidated Balance Sheets
(In thousands)
As of June 30, As of December 31,
2009 2008
---------------------- ----------------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 57,115 $ 47,714
Accounts receivable, net of allowance of $750 in 2009 and
$537 in 2008 5,219 6,188
Prepaid expenses 2,216 2,156
Income tax receivable 2,685 1,306
Deferred income taxes 1,092 640
---------------------- ----------------------
Total current assets 68,327 58,004
Property and equipment, net 21,434 19,622
Other assets, net 1,596 1,187
---------------------- ----------------------
Total assets $ 91,357 $ 78,813
====================== ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,549 $ 4,946
Accrued liabilities 4,349 5,250
Accrued bonus 1,784 1,825
Deferred revenue and student deposits 10,573 9,626
---------------------- ----------------------
Total current liabilities 20,255 21,647
Deferred income taxes 4,266 3,691
---------------------- ----------------------
Total liabilities 24,521 25,338
---------------------- ----------------------
Commitments and contingencies (Note 2)
Stockholders' equity:
Preferred stock, $.01 par value;
Authorized shares - 10,000; no shares issued or
outstanding - -
Common stock, $.01 par value;
Authorized shares - 100,000; 18,187 issued and
18,187 outstanding in 2009; 18,030 issued and
18,023 outstanding in 2008 182 180
Additional paid-in capital 134,590 132,078
Less cost of 6 shares of treasury stock - (295)
Accumulated deficit (67,936) (78,488)
---------------------- ------------------------
Total stockholders' equity 66,836 53,475
---------------------- ----------------------
Total liabilities and stockholders' equity $ 91,357 $ 78,813
====================== ======================
The accompanying notes are an integral part of these consolidated
financial statements.
3
AMERICAN PUBLIC EDUCATION, INC.
Consolidated Statements of Income
(In thousands, except share and per share amounts)
Three Months Ended Six Months Ended
---------------------------- ---------------------------------
June 30, June 30,
---------------------------- ---------------------------------
2009 2008 2009 2008
------------- ------------- --------------- ----------------
(Unaudited) (Unaudited)
Revenues $ 35,713 $ 24,999 $ 68,874 $ 48,240
------------- ------------- --------------- ----------------
Costs and expenses:
Instructional costs and services 14,373 10,521 27,116 20,433
Selling and promotional 5,156 2,613 9,487 4,790
General and administrative 6,042 5,072 12,098 9,875
Depreciation and amortization 1,360 1,031 2,657 1,929
------------- ------------- --------------- ----------------
Total costs and expenses 26,931 19,237 51,358 37,027
------------- ------------- --------------- ----------------
Income from operations before
interest income and income taxes 8,782 5,762 17,516 11,213
Interest income, net 29 196 40 438
------------- ------------- --------------- ----------------
Income before income taxes 8,811 5,958 17,556 11,651
Income tax expense 3,497 2,033 7,004 4,321
------------- ------------- --------------- ----------------
Net income $ 5,314 $ 3,925 $ 10,552 $ 7,330
============= ============= =============== ================
Net Income per common share:
Basic $ 0.29 $ 0.22 $ 0.58 $ 0.41
============= ============= =============== ================
Diluted $ 0.28 $ 0.21 $ 0.56 $ 0.39
============= ============= =============== ================
Weighted average number of
common shares:
Basic 18,161,700 17,806,884 18,108,649 17,771,396
============= ============= =============== ================
Diluted 18,901,803 18,791,644 18,895,343 18,779,761
============= ============= =============== ================
The accompanying notes are an integral part of these consolidated
financial statements.
4
AMERICAN PUBLIC EDUCATION, INC.
Consolidated Statements of Cash Flows
(In thousands)
Six Months Ended June 30
--------------------------------------------------
2009 2008
------------------------- -----------------------
(Unaudited)
Operating activities
Net income $ 10,552 $ 7,330
Adjustments to reconcile net income to net cash provided by operating activities
Provision for bad debt 213 116
Depreciation and amortization 2,657 1,929
Stock-based compensation 1,087 846
Stock issued for director compensation 89 98
Deferred income taxes 123 729
Changes in operating assets and liabilities:
Accounts receivable 756 415
Prepaid expenses (60) 31
Income tax receivable (1,379) (1,348)
Accounts payable (1,397) (871)
Accrued liabilities (901) 1,587
Accrued bonus (41) (177)
Deferred revenue and student deposits 947 1,365
------------------------- -----------------------
Net cash provided by operating activities 12,646 12,050
------------------------- -----------------------
Investing activities
Capital expenditures (4,394) (4,630)
Capitalized program development costs and other assets (484) (473)
------------------------- -----------------------
Net cash used in investing activities (4,878) (5,103)
------------------------- -----------------------
Financing activities
Cash received from issuance of common stock, net of issuance costs 449 354
Excess tax benefit from stock based compensation 1,184 632
------------------------- -----------------------
Net cash provided by financing activities 1,633 986
------------------------- -----------------------
Net increase in cash and cash equivalents 9,401 7,933
Cash and cash equivalents at beginning of period 47,714 26,951
------------------------- -----------------------
Cash and cash equivalents at end of period $ 57,115 $ 34,884
========================= =======================
Supplemental disclosure of cash flow information
Income taxes paid $ 7,075 $ 4,639
========================= =======================
The accompanying notes are an integral part of these consolidated
financial statements.
5
AMERICAN PUBLIC EDUCATION, INC.
Notes to Consolidated Financial Statements
1. Nature of the Business
American Public Education, Inc. ("APEI") together with its subsidiary
(the "Company") is a provider of exclusively online postsecondary education
directed primarily at the needs of the military and public service communities
that operates in one reportable segment. APEI has one subsidiary, American
Public University System, Inc. (the "University System"), a West Virginia
corporation, which is a regionally accredited post secondary education
institution operating through two universities, American Military University and
American Public University.
The University System achieved regional accreditation in May 2006 with
The Higher Learning Commission of the North Central Association of Colleges and
Schools and became eligible for federal student aid programs under Title IV for
classes beginning in November 2006.
2. Basis of Presentation
The accompanying unaudited interim consolidated financial statements of
the Company have been prepared in accordance with accounting principles
generally accepted in the United States ("GAAP"). All intercompany transactions
have been eliminated in consolidation. The financial statements do not include
all of the information and footnotes required by GAAP for complete financial
statement presentations. In the opinion of management, these statements include
all adjustments (consisting of normal recurring adjustments) considered
necessary to present a fair statement of our consolidated results of operations,
financial position and cash flows. Operating results for any interim period are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2009. This Quarterly Report on Form 10-Q should be read in
conjunction with the Company's consolidated financial statements and footnotes
in its audited financial statements included in its Annual Report, on Form 10-K,
for the year ended December 31, 2008.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts in the consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates.
Recent Accounting Pronouncements
In June 2009, the FASB issued Statement of Financial Accounting
Standards No. 168, The FASB Accounting Standards CodificationTM and the
Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB
Statement No. 162, ("SFAS 168"). SFAS 168 establishes the FASB Accounting
Standards Codification as the source of authoritative accounting principles
recognized by the FASB to be applied in the preparation of financial statements
in conformity with generally accepted accounting principles. SFAS 168 explicitly
recognizes rules and interpretive releases of the Securities and Exchange
Commission (SEC) under federal securities laws as authoritative GAAP for SEC
registrants. The effective date is for interim and annual periods ending after
September 15, 2009. The adoption of SFAS 168 is not expected to have a material
impact on the Company's financial statements.
In May 2009, the FASB issued Statement of Financial Accounting
Standards No. 165, Subsequent Events, ("SFAS 165"). SFAS 165 establishes general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued. The effective date is for interim and annual periods ending after
June 15, 2009. We have reviewed our business activities through August 4, 2009,
the issue date of our financial statements, and have no subsequent events to
report.
In September 2006, the FASB issued Statement of Financial
Accounting Standards No. 157, Fair Value Measurements ("SFAS 157"). SFAS 157
defines and establishes a framework for measuring fair value. In addition, SFAS
157 expands disclosures about fair value measurements. In February 2009, FASB
issued FASB Staff Position No. (FSP) 157-2 deferring the effective date of SFAS
157 to fiscal years beginning after November 15, 2008, and interim periods
within those fiscal years for items within the scope of this FSP. The effective
date for the Company was January 1, 2009. In April 2009, FASB issued FASB Staff
Position No. (FSP) 157-4, Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly. FSP FAS 157-4 reaffirms SFAS 157's objective
of fair value measurement to reflect how much an asset would be sold for in an
orderly transaction. Its effective date is for interim and annual periods ending
after June 15, 2009 but it may be adopted early for the interim and annual
periods ending after March 15, 2009.
6
In April 2008, FASB issued FASB Staff Position No. (FSP) 142-3,
Determination of the Useful Life of Intangible Assets. This FSP amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under SFAS
No. 142, Goodwill and Other Intangible Assets. The FSP is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. FSP 142-3 was effective for the
Company on January 1, 2009.
In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 141, (revised 2007), Business Combinations ("SFAS
141R") which was amended and clarified in April 2009 when FASB issued FASB Staff
Position No. (FSP) 141(R)-1. The Statement establishes revised principles and
requirements for how the Company will recognize and measure assets and
liabilities acquired in a business combination. The Statement is effective for
business combinations completed on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. In addition, in
December 2007, the FASB issued Statement of Financial Accounting Standards No.
160, Non-controlling Interests in Consolidated Financial Statements -- An
Amendment of ARB No. 51 ("SFAS 160"). SFAS 160 establishes new accounting and
reporting standards for the non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary. SFAS 160 requires non-controlling interests or
minority interests to be treated as a separate component of equity and any
changes in the parent's ownership interest (in which control is retained) are to
be accounted for as equity transactions. However, a change in ownership of a
consolidated subsidiary that results in deconsolidation triggers gain or loss
recognition, with the establishment of a new fair value basis in any remaining
non-controlling ownership interests. SFAS 160 also establishes disclosure
requirements that clearly identify and distinguish between the interests of the
parent and the non-controlling interests. SFAS 141R and 160 were effective for
the Company on January 1, 2009.
The adoption of the above standards did not have a material
impact on the financial statements for the three and six months ended June 30,
2009 and is not expected to have a material impact on the Company's financial
statements.
Commitments and Contingencies
The Company accrues for costs associated with contingencies including,
but not limited to, regulatory compliance and legal matters when such costs are
probable and can be reasonably estimated. Liabilities established to provide for
contingencies are adjusted as further information develops, circumstances
change, or contingencies are resolved. The Company bases these accruals on
management's estimate of such costs, which may vary from the ultimate cost and
expenses, associated with any such contingency.
From time to time the Company may be involved in litigation in the
normal course of its business. In the opinion of management, the Company is not
aware of any pending or threatened litigation matters that will have a material
adverse effect on the Company's business, operations, financial condition or
cash flows. As of June 30, 2009, management believes there were no material
commitments or contingencies requiring disclosure.
Concentration
Approximately 62% and 63% of the Company's revenues for the three and
six months ended June 30, 2009, respectively, were derived from students who
received tuition assistance from tuition assistance programs sponsored by the
United States Department of Defense compared to approximately 65% and 66% of the
Company's revenues for the three and six months ended June 30, 2008,
respectively. A reduction in this program by the United States Department of
Defense could have a significant impact on the Company's operations.
7
3. Net Income Per Common Share
Basic net income per common share is based on the weighted average
number of shares of common stock outstanding during the period. Diluted net
income per common share also increases the shares used in the per share
calculation by the dilutive effects of options and restricted stock. Stock
options and restricted stock are not included in the computation of diluted
earnings per share when their effect is anti-dilutive. There were 84,809
anti-dilutive stock options excluded from the calculation for the three months
ended June 30, 2009 and no anti-dilutive stock options excluded from the
calculation for the six months ended June 30, 2009 or the three months and six
months ended June 30, 2008.
4. Income Taxes
The Company is subject to U.S. Federal income taxes as well as income
taxes of multiple state jurisdictions. For Federal and state tax purposes, tax
years 2005-2008 remain open to examination. Currently, no examinations are open
in any jurisdiction.
The actual combined effective tax rate for the three months and six
months ended June 30, 2009 was 39.7% and 39.9%, respectively. These rates are in
line with the 40.0% effective combined Federal and state statutory rate the
Company was anticipating.
The Company does not anticipate any significant increases or decreases
in unrecognized tax benefits within the next twelve months.
5. Stock Based Compensation
On August 3, 2007, the Board of Directors adopted the American Public
Education, Inc. 2007 Omnibus Incentive Plan (the "new equity plan"), and APEI's
stockholders approved the new equity plan on November 6, 2007. The new equity
plan was effective as of August 3, 2007. Upon adoption of the new equity plan,
APEI ceased making awards under the 2002 Stock Plan. The new equity plan
authorized the grant of up to 1,100,000 shares plus any shares of common stock
remaining available for issuance under the 2002 Stock Plan as of the effective
date of the new equity plan and any shares of APEI common stock that are subject
to outstanding awards under the new equity plan or the 2002 Stock Plan that
expire or are forfeited, canceled or settled for cash without delivery of shares
of APEI common stock after the effective date of the new equity plan. As of
December 31, 2007, there were 3,751 shares available for issuance from the 2002
Stock Plan which were added to the 1,100,000 shares then available for issuance
under the new equity plan. As of June 30, 2009 there were 635,105 shares
available for grant under the plan. Awards under the new equity plan may be
stock options, which may be either incentive stock options or nonqualified stock
options; stock appreciation rights; restricted stock; restricted stock units;
dividend equivalent rights; performance shares; performance units; cash-based
awards; other stock-based awards, including unrestricted shares; or any
combination of the foregoing.
The Company has adopted the provisions of FASB Statement No. 123R --
Share Based Payment, a revision of FASB Statement No. 123 -- Accounting for
Stock Based Compensation ("SFAS 123R"). This standard requires companies to
recognize the expense related to the fair value of their stock-based
compensation awards. The Company elected to use the modified prospective
approach to transition to SFAS 123R, as allowed under the statement; therefore,
the Company has not restated financial results for prior periods.
Stock-based compensation expense related to restricted stock grants is
expensed over the vesting period using the straight-line method for Company
employees and the graded-vesting method for members of the Board of Directors
and is measured using APEI's stock price on the date of grant. The fair value of
each option award is estimated at the date of grant using a Black-Scholes
option-pricing model that uses the assumptions noted in the following table. We
calculate the expected term of stock option awards using the "simplified method"
in accordance with Staff Accounting Bulletins No. 107 and 110 because we lack
historical data and are unable to make reasonable expectations regarding the
future. We also estimate forfeitures of share-based awards at the time of grant
and revise such estimates in subsequent periods if actual forfeitures differ
from original projections. We make assumptions with respect to expected stock
price volatility based on the average historical volatility of peers with
similar attributes. In addition, we determine the risk free interest rate by
selecting the U.S. Treasury three-year and five-year constant maturity, quoted
on an investment basis in effect at the time of grant for that business day.
8
June 30, 2009 June 30, 2008
--------------------------------------------------------
Expected volatility 26.75%-29.20% 26.23%-28.00%
Expected dividends 0.00% 0.00%
Expected term, in years 4.0 - 4.5 4.0 - 4.5
Risk-free interest rate 1.00%-2.46% 2.59% - 3.41%
Weighted-average fair value of options
granted during the year $ 9.10 $ 8.26
Options granted through June 30, 2009 vest ratably over periods of
three to five years and expire in seven to ten years from the date of grant.
Option activity is summarized as follows (unaudited):
Aggregate
Weighted Weighted-Average Intrinsic
Number Average Contractual Value
of Options Exercise Price Life (Yrs) (In thousands)
----------------------------------------------------------------------------------------------------------------
Outstanding, December 31, 2008 1,257,441 $ 7.02
Options granted 88,862 $ 37.16
Awards exercised (155,618) $ 2.98
Awards forfeited (4,665) $ 30.23
---------------------------------------------------------------------------------
Outstanding, June 30, 2009 1,186,020 $ 9.71 $ 6.41 $ 35,386
=================================================================================
Exercisable, June 30, 2009 644,359 $ 5.71 $ 6.48 $ 21,802
=================================================================================
The following table summarizes information regarding stock option
exercises (unaudited):
June 30, 2009 June 30, 2008
(In thousands)
-------------------------------------
Proceeds from stock options exercised $ 463 $ 188
Intrinsic value of stock options exercised $ 5,985 $ 3,421
Tax benefit from exercises $ 1,394 $ 696
The table below summarizes the restricted stock activity for the six
months ended June 30, 2009 (unaudited):
Weighted-Average
Number Grant Price
of Shares and Fair Value
--------------------------------------------
Non vested, December 31, 2008 48,988 $ 22.27
Shares granted 27,677 $ 37.01
Vested shares (6,039) $ 38.91
Shares forfeited (1,050) $ 29.33
--------------------------------------------
Non vested, June 30, 2009 69,576 $ 26.58
============================================
9
Stock based compensation cost charged against income during the three
and six month period ended June 30, 2009 and June 30, 2008 is as follows:
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------- -----------------------------------
2009 2008 2009 2008
----------------- ------------------ ----------------- ----------------
(Unaudited) (Unaudited)
(In thousands) (In thousands)
Instructional costs and services $ 124 $ 56 $ 233 $ 112
Marketing and promotional 41 18 78 35
General and administrative 387 395 776 699
----------------- ------------------ ----------------- ----------------
Stock-based compensation expense in operating income 552 469 1,087 846
Tax benefit (197) (162) (386) (290)
----------------- ------------------ ----------------- ----------------
Stock-based compensation expense, net of tax $ 355 $ 307 $ 701 $ 556
================= ================== ================= ================
As of June 30, 2009, there was $3.1 million of total unrecognized
compensation cost, representing $1.7 million of unrecognized compensation cost
associated with share-based compensation arrangements, and $1.4 million of
unrecognized compensation cost associated with non-vested restricted stock. The
total remaining cost is expected to be recognized over a weighted average period
of .88 years.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion of our historical results of operations and
our liquidity and capital resources should be read in conjunction with the
consolidated financial statements and related notes that appear elsewhere in
this report.
Forward-Looking Statements
Some of the statements contained in this Form 10-Q that are not
historical facts are forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934 (the "Exchange Act"). We intend such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in Section 21E of the Exchange Act. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date this Form 10-Q is filed with the Securities and
Exchange Commission ("SEC"). We may, in some cases, use words such as "project,"
"believe," "anticipate," "plan," "expect," "estimate," "intend," "should,"
"would," "could," "potentially," "will," or "may," or other words that convey
uncertainty of future events or outcomes to identify these forward-looking
statements. The forward-looking statements are based on our beliefs, assumptions
and expectations of our future performance, taking into account information
currently available to us. These beliefs, assumptions and expectations can
change as a result of many possible events or factors, not all of which are
known to us or are within our control. If a change occurs, our business,
financial condition and results of operations may vary materially from those
expressed in our forward-looking statements. There are a number of important
factors that could cause actual results to differ materially from the results
anticipated by these forward-looking statements. These important factors include
those that we discuss in this section of our Form 10-Q and in the "Risk Factors"
section of our annual report on Form 10-K for the fiscal year ended December 31,
2008 (the "Annual Report") and our various filings with the Securities and
Exchange Commission. You should read these factors and the other cautionary
statements made in this Form 10-Q in combination with the more detailed
description of our business in our Annual Report as being applicable to all
related forward-looking statements wherever they appear in this quarterly
report. If one or more of these factors materialize, or if any underlying
assumptions prove incorrect, our actual results, performance or achievements may
vary materially from any future results, performance or achievements expressed
or implied by these forward-looking statements. We undertake no obligation to
publicly update any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by law.
10
Overview
Background
American Public Education, Inc. is a provider of online postsecondary
education directed primarily at the needs of the military and public service
communities. We operate through two universities, American Military University,
or AMU, and American Public University, or APU, which together constitute the
American Public University System.
We were founded as American Military University, Inc. in 1991 and began
offering graduate courses in January 1993. Following initial national
accreditation by the Accrediting Commission of the Distance Education and
Training Council, or DETC, in 1995, American Military University began offering
undergraduate programs primarily directed to members of the armed forces. Over
time, American Military University diversified its educational offerings in
response to demand by military students for post-military career preparation.
With its expanded program offerings, American Military University extended its
outreach to the greater public service community, primarily police, fire,
emergency management personnel and national security professionals. In 2002, we
reorganized into a holding company structure, with American Public Education,
Inc. serving as the holding company of American Public University System, Inc.,
which operates our two universities, AMU and APU. Our university system achieved
regional accreditation in May 2006 with The Higher Learning Commission of the
North Central Association of Colleges and Schools and became eligible for
federal student aid programs under Title IV for classes beginning in November
2006. In September 2007, we received approval from the Higher Learning
Commission to offer seven new degree programs in Education and Information
Technology.
The university system offers terms beginning on the first Monday of
each month in either eight- or sixteen-week formats. Semesters and academic
years are established to manage requirements for participation in Title IV
programs and to assist students who are utilizing Title IV programs in meeting
eligibility requirements.
Summary
Our course enrollments, or net course registrations, representing the
aggregate number of classes in which students remain enrolled after the date by
which they may drop the course without financial penalty, increased at a
compound annual growth rate (CAGR) of 64% from 2006 to 2008. Over that same
time, total revenue increased at a CAGR of 64%, from $40.0 million in 2006 to
$107.1 million in 2008. We believe achieving regional accreditation in May 2006
and gaining access to Title IV programs beginning with classes that started in
November 2006 have been additional factors driving our recent acceleration in
growth. Net course registrations increased 55% in 2008 over 2007. Our revenue
increased from $69.1 million to $107.1 million, or by 55%, over the same time
period and operating margins increased to 24% from 21% over the same time
period. Net course registrations increased 44% and 42% for the three month and
six month period ended June 30, 2009 over the three month and six month period
ended June 30, 2008. Our revenue increased from $25.0 million to $35.7 million,
or by 43%, and $48.2 million to $68.9 million, or by 43% for the three and six
month period ended June 30, 2009 over the three month and six month period ended
June 30, 2008, respectively. Operating margins increased to 24.6% from 23.0% and
25.4% from 23.2% for the three month and six month period ended June 30, 2009
over the three and six month period ended June 30, 2008, respectively.
While we have experienced substantial growth in recent periods, you
should not rely on the results of any prior periods as an indication of our
future growth in net course registrations or revenue as our historical growth
rates may not be sustainable. Similarly, you should not rely on the improvement
in our operating margins in any prior periods as an indication of our future
operating margins. You should also note that our rates of growth in net course
registrations, revenues and earnings from 2007 to 2008 were all lower than our
rate of growth from 2006 to 2007. We do not expect to return to the levels of
growth that we had from 2006 to 2007, when we had a particularly strong growth
rate, which we think is largely as a result of our receipt of regional
accreditation in late 2006.
Our difficulty in forecasting future growth rates and operating margins
is in part due to our inability to fully estimate the actual impact of gaining
access to Title IV programs. We first became eligible to use Title IV funds
beginning with classes that started in November 2006. Because of our limited
history with Title IV programs and because we cannot estimate the growth of new
students that may result from our participation in Title IV programs, estimating
the costs and expenses associated with administering Title IV programs and
complying with the associated regulations is difficult. For the year ended
December 31, 2008, 14% of our net course registrations were from students using
financial aid under Title IV programs. For the three and six months ended June
30, 2009, 18% and 17%, or approximately 8,400 and 15,900, respectively, of our
net course registrations were from students using financial aid under the Title
IV programs compared to 13% and 13%, or approximately 4,200 and 8,200 for the
three and six months ended June 30, 2008, respectively. This represents an
increase of 100.0% and 93.9%, respectively.
11
Our results of operations normally fluctuate as a result of variations
in our business, principally due to changes in enrollment, and we expect that
going forward as our overall growth rate declines we will see a more pronounced
seasonal fluctuation in new enrollments. While our number of enrolled students
has grown in each sequential quarter over the past three years, we believe that
the growth in the number of enrolled students will tend to be slower in the
first half of each year and the growth in the number of enrolled students will
be proportionally greatest in the fourth quarter of each year. Because a
significant portion of our general and administrative expenses do not vary
proportionately with fluctuations in revenues, we expect to see seasonal
fluctuations in our results of operations. Due to our historical growth rates
and our relatively new participation in Title IV programs, these patterns are
hard to predict and may change, including as a result of new program
introductions and increased enrollments of students.
Regulation of our Business
American Public University System is accredited by The Higher Learning
Commission of the North Central Association of Colleges and Schools, one of six
regional accrediting agencies recognized by the Secretary of Education, and by
the Accrediting Commission of the Distance Education and Training Council, or
DETC, which is a national accrediting agency recognized by the Secretary of
Education. To remain accredited, American Public University System must
continuously meet certain criteria and standards and comply with certain
policies relating to, among other things, performance, governance, institutional
integrity, educational quality, faculty, administrative capability, resources
and financial stability. Because the for-profit education sector is growing at
such a rapid pace, it is possible that these accrediting bodies would respond to
that growth by adopting additional criteria, standards and policies that are
intended to monitor, regulate or limit the growth of for-profit institutions
like us. For example, in June 2009, The Higher Learning Commission adopted new
policies related to institutional control, structure and organization. Part of
The Higher Learning Commission's rationale for these changes was to better
define the range of its oversight of transactions related to change of ownership
at institutions. The new policies extend The Higher Learning Commission's
oversight to transactions that change, or have the potential to change, the
control of an institution or its fundamental structure and organization. Under
the new policies, The Higher Learning Commission also now extends its oversight
to defined changes that occur in a parent or controlling entity, and not
necessarily in the institution itself. Actions by, or relating to, an accredited
institution, including a significant acquisition of another institution,
significant changes in board composition or organizational documents, and
accumulations by one stockholder of greater than 25% of the capital stock, could
open up an accredited institution to additional reviews by The Higher Learning
Commission and possible change from an accredited status to candidate status,
which enhances the risks of these types of actions. In particular, the change
from accredited status to candidate status could adversely impact an
institution's ability to participate in Title IV programs. For profit
institutions may also be less attractive acquisition candidates because of the
enhanced scrutiny of change in control transactions, the explicit ability to
move an institution from accredited status to candidate status and The Higher
Learning Commission will now also be looking more closely at entities that own
accredited institutions.
Additional information on the accreditation process and its impact on
our operations is contained in our Annual Report on Form 10-K, including in the
Regulation of Our Business section of Part I, Item 1.
Critical Accounting Policies
Critical accounting policies are disclosed in our consolidated
financial statements and footnotes in the audited financial statements for the
fiscal year ended December 31, 2008 included in our Annual Report on Form 10-K,
for the fiscal year ended December 31, 2008. There have been no significant
changes in our critical accounting policies from those disclosed in the Form
10-K.
12
The following table sets forth statements of operations data as a
percentage of revenues for each of the periods indicated:
Three Months Six Months
Ended June 30, Ended June 30,
----------------------------- ----------------------------------
2009 2008 2009 2008
-------------- ------------- --------------- -----------------
Revenues 100.0% 100.0% 100.0% 100.0%
-------------- ------------- --------------- ----------------
Costs and expenses:
Instructional costs and services 40.2 42.1 39.4 42.4
Selling and promotional 14.4 10.5 13.8 9.9
General and administrative 16.9 20.3 17.6 20.5
Depreciation and amortization 3.8 4.1 3.8 4.0
-------------- ------------- --------------- ----------------
Total costs and expenses 75.3 77.0 74.6 76.8
-------------- ------------- --------------- ----------------
Income from operations before
interest income and income taxes 24.7 23.0 25.4 23.2
Interest income, net 0.0 0.8 0.1 1.0
-------------- ------------ --------------- ---------------
Income from operations
before income taxes 24.7 23.8 25.5 24.2
Income tax expense 9.8 8.1 10.2 9.0
-------------- ------------- --------------- ----------------
Net Income 14.9% 15.7% 15.3% 15.2%
============== ============= =============== ================
Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008
Revenues. Our revenues for the three months ended June 30, 2009 were $35.7
million, an increase of $10.7 million, or 43%, compared to $25.0 million for the
three months ended June 30, 2008. The increase was primarily a result of a 43%
increase in the number of net course registrations.
Costs and Expenses. Costs and expenses were $26.9 million for the three
months ended June 30, 2009, an increase of $7.7 million, or 40%, compared to
$19.2 million for the three months ended June 30, 2008. Costs and expenses as a
percentage of revenues decreased to 75.3% for the three months ended June 30,
2009 from 77.0% for the three months ended June 30, 2008. This increase resulted
from the factors described below.
Instructional costs and services expenses. Our instructional costs and
services expenses for the three months ended June 30, 2009 were $14.4 million,
representing an increase of 37% from $10.5 million for the three months ended
June 30, 2008. This increase was directly related to an increase in the number
of classes offered due to the increase in net course registrations.
Instructional costs and services expenses as a percentage of revenues were 40.2%
for the three months ended June 30, 2009, compared to 42.1% for the three months
ended June 30, 2008. This decrease was primarily due to efficiencies realized
through a higher volume of students and the number of staff and expenses
increasing at a slower rate than enrollment.
Selling and promotional expenses. Our selling and promotional expenses for
the three months ended June 30, 2009 were $5.2 million, representing an increase
of 97% from $2.6 million for the three months ended June 30, 2008. This increase
was primarily due to an increase in civilian outreach, online, and media
advertising expenses. Selling and promotional expenses as a percentage of
revenues increased to 14.4% for the three months ended June 30, 2009 from 10.5%
for the three months ended June 30, 2008. This increase reflects additional
marketing to expand awareness of the APU brand to the civilian market.
General and administrative expenses. Our general and administrative
expenses for the three months ended June 30, 2009 were $6.0 million representing
an increase of 19% from $5.1 million for the three months ended June 30, 2008.
The increase in expense was a result of an increase in expenditures for
stock-based compensation, recruiting, professional services, financial aid
processing fees, and an increase in expenditures for technology, staffing, and
facilities required to support a larger student body. General and administrative
expenses as a percentage of revenues decreased to 16.9% for the three months
ended June 30, 2009 from 20.3% for the three months ended June 30, 2008. The
decrease was primarily due to efficiencies realized through a higher volume of
students and the number of staff and related expenses increasing at a slower
rate than enrollment.
13
Depreciation and amortization. Depreciation and amortization expenses were
$1.4 million for the three months ended June 30, 2009, compared with $1.0
million for the three months ended June 30, 2008. This represents an increase of
32%. This increase resulted from greater capital expenditures and higher
depreciation and amortization on a larger fixed asset base and from the
amortization of a software license related to our learning management system.
Stock-based compensation expenses. Stock-based compensation expenses
included in instructional costs and services, selling and promotional, and
general and administrative expense for the three months ended June 30, 2009 were
$552,000 in the aggregate, representing an increase of 17% from $469,000 for the
three months ended June 30, 2008. The increase in stock-based compensation for
the three months ended June 30, 2009 is primarily attributable to stock options
and restricted stock granted during the three months ended June 30, 2009 and
continued vesting of prior grants.
Interest income, net. Our interest income, net decreased by $167,000 for
the three months ended June 30, 2009 to $29,000 from $196,000 for the three
months ended June 30, 2008, representing a decrease of 85%. This decrease is due
to lower investment returns because of a decline in interest rates and from the
adoption of a more conservative investment strategy offset by increased cash on
hand.
Income tax expense. We recognized income tax expense for the three months
ended June 30, 2009 and 2008 of $3.5 million and $2.0 million, respectively, or
effective tax rates of 39.7% and 34.1%, respectively. The increase was
attributable to the fact that the tax due on the 2007 federal and state tax
returns when filed was approximately $400,000 less than the 2007 tax liability
estimated at December 31, 2007. This adjustment was booked when the tax returns
were finalized in the three months ended June 30, 2008 and resulted primarily
from the effects of changes in the state income tax rates applied.
Net income. Our net income was $5.3 million for the three months ended June
30, 2009, compared to net income of $3.9 million for the three months ended June
30, 2008, an increase of $1.4 million, or 35%. This increase was related to the
factors discussed above.
Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008
Revenues. Our revenues for the six months ended June 30, 2009 were $68.9
million, an increase of $20.7 million, or 43.0%, compared to $48.2 million for
the six months ended June 30, 2008. The increase was primarily a result of an
increase in the number of net course registrations.
Costs and Expenses. Costs and expenses were $51.4 million for the six
months ended June 30, 2009; an increase of $14.4 million, or 39%, compared to
$37.0 million for the six months ended June 30, 2008. Costs and expenses as a
percentage of revenues decreased to 74.6% for the six months ended June 30, 2009
from 76.8% for the six months ended June 30, 2008. This increase resulted from
the factors described below.
Instructional costs and services expenses. Our instructional costs and
services expenses for the six months ended June 30, 2009 were $27.1 million,
representing an increase of 33% from $20.4 million for the six months ended June
30, 2008. This increase was directly related to an increase in the number of
classes offered due to the increase in net course registrations. Instructional
costs and services expenses as a percentage of revenues were 39.4% for the six
months ended June 30, 2009, compared to 42.4% for the six months ended June 30,
2008. The decrease was primarily due to efficiencies realized through a higher
volume of students and the number of staff and expenses increasing at a slower
rate than revenue.
Selling and promotional expenses. Our selling and promotional expenses for
the six months ended June 30, 2009 were $9.5 million, representing an increase
of 98% from $4.8 million for the six months ended June 30, 2008. This increase
was primarily due to an increase in civilian outreach, online, and media
advertising expenses. Selling and promotional expenses as a percentage of
revenues increased to 13.8% for the six months ended June 30, 2009 from 9.9% for
the six months ended June 30, 2008. This increase reflects additional marketing
to expand awareness of the APU brand to the civilian market.
General and administrative expenses. Our general and administrative
expenses for the six months ended June 30, 2009 were $12.1 million representing
an increase of 23% from $9.9 million for the six months ended June 30, 2008. The
increase in expense was a result of an increase in stock-based compensation,
recruiting, professional services, financial aid processing fees, and an
increase in expenditures for technology, staffing, and facilities required to
support a larger student body. General and administrative expenses as a
percentage of revenues decreased to 17.6% for the six months ended June 30, 2009
from 20.5% for the six months ended June 30, 2008. The decrease was primarily
due to efficiencies realized through a higher volume of students and the number
of staff and related expenses increasing at a slower rate than revenue.
14
Depreciation and amortization. Depreciation and amortization expenses were
$2.7 million for the six months ended June 30, 2009, compared with $1.9 million
for the six months ended June 30, 2008. This represents an increase of 38%. This
increase resulted from greater capital expenditures and higher depreciation and
amortization on a larger fixed asset base and from the amortization of a
software license related to our learning management system.
Stock-based compensation expenses. Stock-based compensation expenses
included in instructional costs and services, selling and promotional, and
general and administrative expense for the six months ended June 30, 2009 was
$1.1 million in the aggregate, representing an increase of 28% from $0.8 million
for the six months ended June 30, 2008. The increase in stock-based compensation
for the six months ended June 30, 2009 is primarily attributable to expense for
stock options and restricted stock granted subsequent to June 30, 2008 and
continued vesting of prior grants.
Interest income, net. Our interest income, net decreased by $398,000 for
the six months ended June 30, 2009 to $40,000 from $438,000 for the six months
ended June 30, 2008, representing a decrease of 91%. This decrease is due to
lower investment returns because of a decline in interest rates and from the
adoption of a more conservative investment strategy offset by increased cash on
hand.
Income tax expense. We recognized income tax expense for the six months ended
June 30, 2009 and 2008 of $7.0 million and $4.3 million, respectively, or
effective tax rates of 39.9% and 37.1%, respectively. The increase was
attributable to the fact that the tax due on the 2007 federal and state tax
returns when filed was approximately $400,000 less than the 2007 tax liability
estimated at December 31, 2007. This adjustment was booked when the tax returns
were finalized in the three months ended June 30, 2008 and resulted primarily
from the effects of changes in the state income tax rates applied.
Net income. Our net income was $10.6 million for the six months ended June
30, 2009, compared to net income of $7.3 million for the six months ended June
30, 2008, an increase of $3.3 million, or 44%. This increase was related to the
factors discussed above.
Liquidity and Capital Resources
Liquidity
The Company financed operating activities and capital expenditures
during the six months ended June 30, 2009 and 2008 primarily through cash
provided by operating income and proceeds received from the exercise of stock
options. Cash and cash equivalents were $57.1 million and $34.9 million at June
30, 2009 and June 30, 2008, respectively, representing an increase of $22.2
million, or 64%.
We derive a significant portion of our revenues from tuition assistance
programs from the Department of Defense, or DoD. Generally, these funds are
received within 60 days of the start of the classes to which they relate. A
growing source of revenue is derived from our participation in Title IV
programs, for which disbursements are governed by federal regulations. We have
typically received disbursements under Title IV programs within 30 days of the
start of the applicable class.
These factors, together with the number of classes starting each month,
affect our operational cash flow. As a result, our costs and expenses have
increased with the increase in student enrollment, and we expect to fund these
expenses through cash generated from operations.
We have available to us a line of credit with a maximum borrowing
amount of up to $5.0 million. The line bears interest at LIBOR plus 200 basis
points. The line is secured by substantially all of our assets. We have never
borrowed under this line of credit facility. The terms of our credit facilities
are reviewed on a regular basis.
Based on our current level of operations and anticipated growth, we
believe that our cash flow from operations and other sources of liquidity,
including cash and cash equivalents, will provide adequate funds for ongoing
operations and planned capital expenditures for the foreseeable future.
We continue to evaluate our space needs and opportunities for continued
physical growth; these include considering additions to existing structures and
potential new construction projects. In particular, we have acquired six acres
of land for $0.8 million in Charles Town, West Virginia, with the intent of
constructing a new 40,000 square foot facility on the site. The project should
result in the expenditure of approximately $10.0 million over the next 18 to 30
months.
15
Operating Activities
Net cash provided by operating activities was $12.6 million and $12.0
million for the six months ended June 30, 2009 and 2008, respectively. As
revenue and profits have grown, cash has increased. Cash and cash equivalents
were $57.1 million and $47.7 million at June 30, 2009 and December 31, 2008.
Investing Activities
Net cash used in investing activities was $4.9 million and $5.1
million for the six months ended June 30, 2009 and 2008, respectively. Capital
expenditures remain relatively consistent for the six months ended June 30, 2009
over the six months ended June 30, 2008. Capital expenditures could be
significantly higher in the future as a result of the acquisition of existing
structures or potential new construction projects that arise as a result of our
ongoing evaluation of our space needs and opportunities for physical growth.
Financing Activities
Net cash provided by financing activities for the six months ended June
30, 2009 was $1.6 million from cash received from the issuance of common stock
and the excess tax benefit from stock based compensation. Net cash provided by
financing activities for the six months ended June 30, 2008 was $1.0 million
from cash received from the issuance of common stock including the net proceeds
to us from the public offering, and the excess tax benefit from stock based
compensation.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are subject to risk from adverse changes in interest rates,
primarily relating to our investing of excess funds in cash equivalents bearing
variable interest rates, which are tied to various market indices. Our future
investment income will vary due to changes in interest rates. At June 30, 2009,
a 10% increase or decrease in interest rates would not have a material impact on
our future earnings or cash flows related to investments in cash equivalents. We
have no derivative financial instruments or derivative commodity instruments as
of June 30, 2009.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, we have
evaluated the effectiveness of our disclosure controls and procedures as of June
30, 2009 as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Based upon the
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that the Company's disclosure controls and procedures were effective as of June
30, 2009.
Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by us in reports we file or submit under the Exchange Act, is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commissions rules and forms, and that such
information is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting
identified in connection with the evaluation required by Rule 13a-15(f) and
15d-15(f) of the Exchange Act that occurred during the period covered by this
report that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We currently have no material legal proceedings pending.
Item 1A. Risk Factors
An investment in our stock involves a high degree of risk. You should
carefully consider the risks set forth in the Risk Factors section of our annual
report on Form 10-K for the year ended December 31, 2008, and all of the other
information set forth in this Form 10-Q and our Form 10-K before deciding to
invest in our common stock. In addition, you should also consider the following
risk factor:
If we fail to maintain our institutional accreditation, we would lose our
ability to participate in the tuition assistance programs of the United States
Armed Forces and also to participate in Title IV programs.
American Public University System is accredited by The Higher Learning
Commission of the North Central Association of Colleges and Schools, one of six
regional accrediting agencies recognized by the Secretary of Education, and by
the Accrediting Commission of the Distance Education and Training Council, or
DETC, which is a national accrediting agency recognized by the Secretary of
Education. Accreditation by an accrediting agency that is recognized by the
Secretary of Education is required for participation in the tuition assistance
programs of the United States Armed Forces. In 2008, we derived approximately
65% of our net course registrations from these tuition assistance programs.
Accreditation by an accrediting agency that is recognized by the Secretary of
Education for Title IV purposes is also required for an institution to become
and remain eligible to participate in Title IV programs. American Public
University System achieved regional accreditation from The Higher Learning
Commission in 2006 and has had national accreditation from the Distance
Education and Training Council since 1995. We have identified The Higher
Learning Commission as our primary accreditor for Title IV purposes. Either The
Higher Learning Commission or DETC may impose restrictions on our accreditation
or may terminate our accreditation.
To remain accredited American Public University System must continuously
meet certain criteria and standards and comply with certain policies relating
to, among other things, performance, governance, institutional integrity,
educational quality, faculty, administrative capability, resources and financial
stability. In addition to the stringent criteria, standards and policies that
already apply to us, our accrediting agencies have the ability to adopt new
standards and procedures that could significantly affect our operations and
future prospects. We have limited ability to influence the substance and
adoption of these criteria, standards and policies. Because the for-profit
education sector is growing at such a rapid pace, it is possible that these
accrediting bodies would respond to that growth by adopting criteria, standards
and policies that are intended to monitor, regulate or limit the growth of
for-profit institutions like us. For example, in June 2009, The Higher Learning
Commission adopted new policies related to institutional control, structure and
organization, that we believe would make it more difficult for us to acquire or
merge with other institutions or issue large amount of stock in strategic
transactions. Similarly, these policies make institutions like ours a less
attractive acquisition target, which could prevent takeover attempts that could
be beneficial to our shareholders.
Failure to meet any of the criteria or standards, or comply with the
policies of, our accrediting agencies could result in the loss of accreditation
at the discretion of the accrediting agencies. Furthermore, many prospective
students may view accreditation by a regional accrediting agency to be more
prestigious than accreditation by a national accrediting agency, and we believe
that loss of regional accreditation may reduce the marketability of American
Public University System even if national accreditation were maintained. The
complete loss of accreditation would, among other things, render our students
and us ineligible to participate in the tuition assistance programs of the
United States Armed Forces or Title IV programs and have a material adverse
effect on our enrollments, revenues and results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
17
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
APEI's Annual Meeting of Stockholders was held on May 15, 2009.
Following are descriptions of the matters voted on and the results of such
voting:
Proposal 1: Election of Directors:
The following members were elected to APEI's Board of Directors to hold
office until the next annual meeting of stockholders and until his or her
successor is elected and qualified or until his or her earlier death,
resignation or removal:
Votes For Votes Withheld
========================== =============================
Wallace E. Boston, Jr. 17,072,985 94.4% 41,634 0.2%
Phillip A. Clough 16,914,630 93.6% 199,989 1.1%
J. Christopher Everett 17,081,527 94.5% 33,092 0.2%
General Barabar G. Fast 17,105,614 94.6% 9,005 0.0%
F. David Fowler 17,032,073 94.2% 82,546 0.5%
Jean C. Halle 17,092,495 94.5% 22,124 0.1%
Timothy J. Landon 17,097,350 94.6% 17,269 0.1%
David L. Warnock 11,195,489 61.9% 5,919,130 32.7%
Timothy T. Weglicki 16,953,294 93.8% 161,325 0.9%
Proposal 2: Ratification of the appointment of McGladrey & Pullen, LLP as the
Company's independent registered public accounting firm for the
fiscal year ending December 31, 2009 :
The proposal was approved by the following vote:
Votes For Votes Against Abstentions [Broker Non-Votes]
------------------------------------------------------------------------------------------
17,089,885 94.5% 12,316 0.1% 12,416 0.1% 0 0
------------------------------------------------------------------------------------------
Item 5. Other Information
None.
Item 6. Exhibits
Exhibit No. Exhibit Description
----------- -------------------
31.01 Certification of Chief Executive officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02 Certification of Chief Financial Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.01 Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMERICAN PUBLIC
EDUCATION, INC.
/s/ Wallace E. Boston, Jr. August 4, 2009
--------------------------
Wallace E. Boston, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Harry T. Wilkins August 4, 2009
---------------------
Harry T. Wilkins
Executive Vice President and Chief Financial Officer
(Principal Financial and Principal Accounting Officer)
19