þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State or other jurisdiction of incorporation or organization) |
83-0479936 (I.R.S. Employer Identification No.) |
|
5301 S. Highway 16, Suite 200 Rapid City, SD (Address of principal executive offices) |
57701 (Zip Code) |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Page of | ||||||||
Form 10-Q | ||||||||
4 | ||||||||
8 | ||||||||
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39 | ||||||||
39 | ||||||||
39 | ||||||||
40 | ||||||||
40 | ||||||||
40 | ||||||||
40 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
-2-
Item 1. | Financial Statements. |
November 30, | May 31, | |||||||
2011 | 2011 | |||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 18,190 | $ | 25,716 | ||||
Available for sale investments |
22,958 | 19,085 | ||||||
Student receivables net of allowance of $983 and $223 at November 30, 2011 and
May 31, 2011, respectively |
4,896 | 2,010 | ||||||
Other receivables |
1,213 | 425 | ||||||
Bookstore inventory |
897 | 1,057 | ||||||
Income tax receivable |
0 | 1,260 | ||||||
Deferred income taxes |
1,981 | 1,723 | ||||||
Prepaid and other current assets |
421 | 559 | ||||||
Total current assets |
50,556 | 51,835 | ||||||
Total Property and Equipment Net |
36,831 | 21,265 | ||||||
OTHER ASSETS: |
||||||||
Condominium inventory |
2,664 | 2,664 | ||||||
Land held for future development |
312 | 312 | ||||||
Course development net of accumulated amortization of $1,556 and $1,415 at
November 30, 2011 and May 31, 2011, respectively |
1,110 | 956 | ||||||
Other |
1,061 | 906 | ||||||
5,147 | 4,838 | |||||||
TOTAL |
$ | 92,534 | $ | 77,938 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Current portion of capital lease payable |
$ | 106 | $ | 0 | ||||
Accounts payable |
6,204 | 4,430 | ||||||
Dividends payable |
898 | 831 | ||||||
Student accounts payable |
793 | 400 | ||||||
Income tax payable |
157 | 0 | ||||||
Deferred income |
296 | 294 | ||||||
Accrued and other liabilities |
5,107 | 6,403 | ||||||
Total current liabilities |
13,561 | 12,358 | ||||||
DEFERRED INCOME TAXES |
2,827 | 2,827 | ||||||
OTHER LONG-TERM LIABILITIES |
4,879 | 4,248 | ||||||
CAPITAL LEASE PAYABLE, NET OF CURRENT PORTION |
12,133 | 0 | ||||||
COMMITMENTS AND CONTINGENCIES (Note 7) |
||||||||
STOCKHOLDERS EQUITY: |
||||||||
Common stock, $0.0001 par value (50,000,000 authorized; 28,057,419 issued and 26,914,658
outstanding as of November 30, 2011; 27,546,499 issued and 26,546,499 outstanding as of May 31,
2011 |
3 | 3 | ||||||
Additional paid-in capital |
56,998 | 56,643 | ||||||
Retained earnings |
10,830 | 9,549 | ||||||
Treasury stock, at cost (1,142,761 shares at November 30, 2011 and 1,000,000 shares at May 31, 2011) |
(8,577 | ) | (7,505 | ) | ||||
Accumulated other comprehensive income |
39 | 72 | ||||||
Total National American University Holdings, Inc. stockholders equity |
59,293 | 58,762 | ||||||
Non-controlling interest |
(159 | ) | (257 | ) | ||||
Total equity |
59,134 | 58,505 | ||||||
TOTAL |
$ | 92,534 | $ | 77,938 | ||||
-3-
Six Months Ended | Three Months Ended | |||||||||||||||
November 30, | November 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
REVENUE: |
||||||||||||||||
Academic revenue |
$ | 52,303 | $ | 47,080 | $ | 28,603 | $ | 25,822 | ||||||||
Auxiliary revenue |
3,002 | 3,213 | 1,575 | 1,766 | ||||||||||||
Rental income apartments |
537 | 495 | 267 | 252 | ||||||||||||
Condominium sales |
0 | 224 | 0 | 0 | ||||||||||||
Total revenue |
55,842 | 51,012 | 30,445 | 27,840 | ||||||||||||
OPERATING EXPENSES: |
||||||||||||||||
Cost of educational services |
13,270 | 10,782 | 6,918 | 5,543 | ||||||||||||
Selling, general and administrative |
36,162 | 31,790 | 19,387 | 16,836 | ||||||||||||
Auxiliary expense |
1,521 | 1,540 | 881 | 866 | ||||||||||||
Cost of condominium sales |
0 | 193 | 0 | 0 | ||||||||||||
(Gain) loss on disposition of property |
(131 | ) | 51 | 1 | 41 | |||||||||||
Total operating expenses |
50,822 | 44,356 | 27,187 | 23,286 | ||||||||||||
OPERATING INCOME |
5,020 | 6,656 | 3,258 | 4,554 | ||||||||||||
OTHER INCOME (EXPENSE): |
||||||||||||||||
Interest income |
74 | 74 | 33 | 34 | ||||||||||||
Interest expense |
(81 | ) | 0 | (81 | ) | 0 | ||||||||||
Other income net |
60 | 71 | 29 | 45 | ||||||||||||
Total other income (expense) |
53 | 145 | (19 | ) | 79 | |||||||||||
INCOME BEFORE INCOME TAXES |
5,073 | 6,801 | 3,239 | 4,633 | ||||||||||||
INCOME TAX EXPENSE |
(2,009 | ) | (2,696 | ) | (1,281 | ) | (1,876 | ) | ||||||||
NET INCOME |
3,064 | 4,105 | 1,958 | 2,757 | ||||||||||||
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST |
(98 | ) | (19 | ) | (15 | ) | (11 | ) | ||||||||
NET INCOME ATTRIBUTABLE TO NATIONAL
AMERICAN UNIVERSITY HOLDINGS, INC.
AND SUBSIDIARIES |
2,966 | 4,086 | 1,943 | 2,746 | ||||||||||||
OTHER COMPREHENSIVE LOSS
|
||||||||||||||||
Unrealized losses on investments |
(33 | ) | (1 | ) | (21 | ) | (17 | ) | ||||||||
COMPREHENSIVE INCOME ATTRIBUTABLE TO NATIONAL
AMERICAN UNIVERSITY HOLDINGS, INC. |
$ | 2,933 | $ | 4,085 | $ | 1,922 | $ | 2,729 | ||||||||
Basic net earnings attributable to National American University
Holdings, Inc. |
$ | 0.11 | $ | 0.16 | $ | 0.07 | $ | 0.10 | ||||||||
Diluted net earnings attributable to National University
Holdings, Inc. |
$ | 0.11 | $ | 0.15 | $ | 0.07 | $ | 0.10 | ||||||||
Basic weighted average shares outstanding |
26,797,010 | 26,242,653 | 26,884,087 | 26,242,653 | ||||||||||||
Diluted weighted average shares outstanding |
27,045,457 | 26,975,616 | 27,009,979 | 26,814,921 |
-4-
Equity attributable to National American University Holdings, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||
Accumulated | Equity | |||||||||||||||||||||||||||||||
Additional | other | attributable to | Total | |||||||||||||||||||||||||||||
Class A | Common | paid-in | Retained | comprehensive | Treasury | non-controlling | stockholders | |||||||||||||||||||||||||
common | stock | capital | earnings | income | stock | interest | equity | |||||||||||||||||||||||||
Balance May 31, 2010 |
$ | 0 | $ | 2 | $ | 19,165 | $ | 2,389 | $ | 96 | $ | 0 | $ | (295 | ) | $ | 21,357 | |||||||||||||||
Issuance of 4,550,000
shares common stock
net of issuance cost
of $1,578 |
0 | 1 | 30,498 | 0 | 0 | 0 | 0 | 30,499 | ||||||||||||||||||||||||
Share based
compensation expense |
0 | 0 | 503 | 0 | 0 | 0 | 0 | 503 | ||||||||||||||||||||||||
Dividends declared |
0 | 0 | 0 | (1,516 | ) | 0 | 0 | 0 | (1,516 | ) | ||||||||||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||
Net income |
0 | 0 | 0 | 4,086 | 0 | 0 | 19 | 4,105 | ||||||||||||||||||||||||
Unrealized loss on
investments |
0 | 0 | 0 | 0 | (1 | ) | 0 | 0 | (1 | ) | ||||||||||||||||||||||
Balance November 30,
2010 |
$ | 0 | $ | 3 | $ | 50,166 | $ | 4,959 | $ | 95 | $ | 0 | $ | (276 | ) | $ | 54,947 | |||||||||||||||
Balance May 31, 2011 |
$ | 0 | $ | 3 | $ | 56,643 | $ | 9,549 | $ | 72 | $ | (7,505 | ) | $ | (257 | ) | $ | 58,505 | ||||||||||||||
Conversion of 1,516,247
warrants to 510,920
shares common stock |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Purchase of treasury
stock |
0 | 0 | 0 | 0 | 0 | (1,072 | ) | 0 | (1,072 | ) | ||||||||||||||||||||||
Excess tax benefits from
stock based
compensation |
0 | 0 | 75 | 0 | 0 | 0 | 0 | 75 | ||||||||||||||||||||||||
Share based
compensation expense |
0 | 0 | 280 | 0 | 0 | 0 | 0 | 280 | ||||||||||||||||||||||||
Dividends declared |
0 | 0 | 0 | (1,685 | ) | 0 | 0 | 0 | (1,685 | ) | ||||||||||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||
Net income |
0 | 0 | 0 | 2,966 | 0 | 0 | 98 | 3,064 | ||||||||||||||||||||||||
Unrealized loss on
investments |
0 | 0 | 0 | 0 | (33 | ) | 0 | 0 | (33 | ) | ||||||||||||||||||||||
Balance November 30,
2011 |
$ | 0 | $ | 3 | $ | 56,998 | $ | 10,830 | $ | 39 | $ | (8,577 | ) | $ | (159 | ) | $ | 59,134 | ||||||||||||||
-5-
Six Months Ended | ||||||||
November 30, | November 30, | |||||||
2011 | 2010 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net Income |
$ | 3,064 | $ | 4,105 | ||||
Adjustments to reconcile net income to net cash flows provided
by operating activities: |
||||||||
Depreciation and amortization |
1,949 | 1,328 | ||||||
(Gain) loss on disposition of property and equipment |
(131 | ) | 51 | |||||
Provision for uncollectable tuition |
2,159 | 1,723 | ||||||
Noncash compensation expense |
280 | 503 | ||||||
Excess tax benefits from stock based compensation |
(79 | ) | 0 | |||||
Deferred income taxes |
(183 | ) | 152 | |||||
Changes in assets and liabilities: |
||||||||
Accounts and other receivables |
(5,377 | ) | (4,750 | ) | ||||
Student notes |
(84 | ) | (171 | ) | ||||
Bookstore inventory |
160 | 4 | ||||||
Prepaid and other current assets |
138 | (30 | ) | |||||
Condominium inventories |
0 | 194 | ||||||
Accounts payable |
1,688 | (763 | ) | |||||
Deferred income |
2 | 46 | ||||||
Other long-term liabilities |
846 | (86 | ) | |||||
Income tax receivable/payable |
1,417 | 321 | ||||||
Accrued and other liabilities |
(1,296 | ) | (281 | ) | ||||
Net cash flows provided by operating activities |
4,553 | 2,346 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchases of available for sale investments |
(47,997 | ) | (2 | ) | ||||
Proceeds from sale of available for sale investments |
44,091 | 3,997 | ||||||
Purchases of property and equipment |
(5,351 | ) | (2,570 | ) | ||||
Proceeds from sale of property and equipment |
162 | 22 | ||||||
Course development |
(294 | ) | (217 | ) | ||||
Other |
(71 | ) | (34 | ) | ||||
Net cash flows provided by (used in) investing activities |
(9,460 | ) | 1,196 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Repayments of capital lease payable |
(8 | ) | 0 | |||||
Issuance of common stock |
0 | 32,077 | ||||||
Cash paid for stock issuance |
0 | (640 | ) | |||||
Excess tax benefits from stock based compensation |
79 | 0 | ||||||
Purchase of treasury stock |
(1,072 | ) | 0 | |||||
Dividends paid |
(1,618 | ) | (11,810 | ) | ||||
Net cash flows provided by (used in) financing activities |
(2,619 | ) | 19,627 | |||||
-6-
Six months ended | ||||||||
November 30, | November 30, | |||||||
2011 | 2010 | |||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
$ | (7,526 | ) | $ | 23,169 | |||
CASH AND CASH EQUIVALENTS Beginning of year |
25,716 | 8,695 | ||||||
CASH AND CASH EQUIVALENTS End of period |
$ | 18,190 | $ | 31,864 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION: |
||||||||
Cash paid for income taxes |
$ | 775 | $ | 2,223 | ||||
Cash paid for interest |
$ | 81 | $ | | ||||
Capital lease additions |
$ | 12,248 | $ | | ||||
Dividends declared at November 30, 2011 and November 30, 2010 |
$ | 898 | $ | 822 | ||||
-7-
1. | BASIS OF PRESENTATION |
The accompanying unaudited condensed financial statements are presented on a consolidated
basis. The accompanying financial statements include the accounts of National American
University Holdings, Inc. (the Company), its subsidiary, Dlorah, Inc. (Dlorah), and its
divisions, National American University (NAU), and Fairway Hills. The accompanying unaudited
condensed consolidated financial statements have been prepared on a basis substantially
consistent with the Companys audited financial statements. These financial statements are
condensed and do not contain all disclosures required in annual financial statements.
Accordingly, these financial statements should be read in conjunction with the Companys annual
financial statements which were included in the Companys 10-K filed on August 5, 2011.
Furthermore, the results of operations and cash flows for the six month periods ended November
30, 2011 and November 30, 2010, are not necessarily indicative of the results that may be
expected for the full year. These financial statements include consideration of subsequent
events through issuance. All intercompany transactions and balances have been eliminated. |
In the opinion of management, the accompanying condensed consolidated financial statements
contain all adjustments necessary for a fair presentation as prescribed by accounting principles
generally accepted in the United States (GAAP). |
Estimates The preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the amounts and disclosures reported in the
financial statements. On an ongoing basis, the Company evaluates the estimates and assumptions,
including those related to bad debts, income taxes and certain accruals. Actual results could
differ from those estimates. |
2. | NATURE OF OPERATIONS |
The Company, formerly known as Camden Learning Corporation, was incorporated in the State
of Delaware on April 10, 2007. The Company was a special purpose acquisition company formed to
serve as a vehicle for the acquisition of an operating business. On November 23, 2009, Dlorah
became a wholly-owned subsidiary of the Company (the Transaction), pursuant to an Agreement
and Plan of Reorganization between the Company and Dlorah. In connection with the Transaction,
the stockholders of Dlorah received approximately 77% of the equity of the Company, and Dlorah
was deemed to be the acquirer for accounting purposes. The Transaction has been accounted for
as a reverse merger accompanied by a recapitalization. As a result of the Transaction, the
historical results of Dlorah became the historical results of the Company. |
-8-
The Companys common stock is listed on The Nasdaq Global Market. The Company owns
and operates National American University (NAU or the University). NAU is a regionally
accredited, proprietary, multi-campus institution of higher learning, offering Associate,
Bachelors and Masters degree programs in business-related disciplines, such as accounting,
applied management, business administration and information technology, and in
healthcare-related disciplines, such as nursing and healthcare management. Courses are offered
through educational sites, as well as online via the Internet. Operations include educational
sites located in Colorado, Kansas, Minnesota, Missouri, Nebraska, New Mexico, Oklahoma, South
Dakota and Texas, and distance learning operations and central administration offices located in
Rapid City, South Dakota. A substantial portion of NAUs academic income is dependent upon
federal student financial aid programs, employer tuition assistance, online learning programs
and contracts to provide instruction and course materials to other educational institutions. To
maintain eligibility for financial aid programs, NAU must comply with Department of Education
requirements, which include, among other items, the maintenance of certain financial ratios. |
The Company, through its Fairway Hills real estate division, also manages apartment units and
develops and sells multi-family residential real estate in the Rapid City, South Dakota area. |
For the three and six months ended November 30, 2011, 94% of the Companys total revenues was
derived from NAU academic revenue. For the three and six months ended November 30, 2010, 93%
and 92%, respectively, of the Companys total revenues was derived from NAUs academic revenue. |
3. | EARNINGS PER SHARE |
Basic earnings per share (EPS) is computed by dividing net income attributable to
National American University Holdings, Inc. by the weighted average number of shares of common
stock outstanding during the applicable period. Diluted earnings per share reflect the
potential dilution that could occur assuming vesting, conversion or exercise of all dilutive
unexercised options, warrants and restricted stock. |
-9-
The following is a reconciliation of the numerator and denominator for the basic and diluted
EPS computations: |
Six months ended | Three months ended | |||||||||||||||
November 30, | November 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Numerator: |
||||||||||||||||
Net Income attributable to National American
Universtiy Holdings, Inc. |
$ | 2,966,000 | $ | 4,086,000 | $ | 1,943,000 | $ | 2,746,000 | ||||||||
Denominator: |
||||||||||||||||
Weighted average shares outstanding used to compute
basic net income per common share |
26,797,010 | 26,242,653 | 26,884,087 | 26,242,653 | ||||||||||||
Incremental shares issuable upon the assumed
exercise
of stock options |
855 | | | | ||||||||||||
Incremental shares issuable upon the assumed
exercise
of restricted shares |
42,361 | 49,705 | 44,036 | 44,718 | ||||||||||||
Incremental shares issuable upon the assumed
exercise
of warrants |
205,231 | 683,258 | 81,856 | 527,550 | ||||||||||||
Common shares used to compute diluted net income
per
share |
27,045,457 | 26,975,616 | 27,009,979 | 26,814,921 | ||||||||||||
Basic net income per common share |
$ | 0.11 | $ | 0.16 | $ | 0.07 | $ | 0.10 | ||||||||
Diluted net income per common share |
$ | 0.11 | $ | 0.15 | $ | 0.07 | $ | 0.10 |
A total of 249,250 and 237,500 shares of common stock subject to issuance upon exercise of
stock options for the three and six months ended November 30, 2011, respectively, have been
excluded from the calculation of diluted EPS as the effect would have been anti-dilutive. |
Outstanding options of 110,000 were not included in the computation of diluted net income per
common share for the three and six months ended November 30, 2010 because their effect would be
antidilutive. |
4. | RECENTLY ADOPTED AND NEW ACCOUNTING PRONOUNCEMENTS |
In January 2010, the FASB issued Accounting Standards Update (ASU) 2010-06, Fair Value
Measurement and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.
This guidance provides for the following new required disclosures related to fair value
measurements: 1) the amounts of and reasons for significant transfers in and out of level one
and level two inputs and 2) separate presentation of purchases, sales, issuances, and
settlements on a gross basis rather than as one net number for level three reconciliations. The
guidance also clarifies existing disclosures as follows: 1) provide fair value measurement
disclosures for each class of assets and liabilities and 2) provide disclosures about the
valuation techniques and inputs used for both recurring and nonrecurring level two or level
three inputs. The new disclosures and clarifications of existing disclosures were effective for
the Companys fourth quarter ended May 31, 2010. Disclosures about purchases, sales, issuances,
and settlements in the roll forward of activity for level three fair value measurements were
effective for the Companys first quarter ended August 31, 2011. The Company has adopted this
standard, but it did not have a material effect on the Companys consolidated financial
statements. |
-10-
In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to
Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The
new guidance is intended to create a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S.
GAAP and International Financial Reporting Standards (IFRS). The amendments provide
clarification on the application of certain existing fair value measurement guidance and enhance
disclosure requirements, including the disclosure of all transfers between Level 1 and Level 2
of the fair value hierarchy and expanded quantitative and qualitative disclosures for fair value
measurements that are estimated using significant unobservable (Level 3) inputs. The Company
will adopt this standard for the year ending May 31, 2012, although it is not expected to have a
material effect on the Companys consolidated financial statements. |
In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation
of Comprehensive Income which requires comprehensive income to be reported in either a single
statement or in two consecutive statements reporting net income and other comprehensive income.
The amendment does not change what items are reported in other comprehensive income or the U.S.
GAAP requirement to report reclassification of items from other comprehensive income to net
income. In December 2011, the FASB issued ASU No. 2011-12, Deferral of the Effective Date for
Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other
Comprehensive Income in Accounting Standards Update No. 2011-05, which defers the requirement
within ASU 2011-05 to present on the face of the financial statements the effects of
reclassifications out of accumulated other comprehensive income on the components of net income
and other comprehensive income for all periods presented. During the deferral, entities
should continue to report reclassifications out of accumulated other comprehensive income
consistent with the presentation requirements in effect prior to the issuance of ASU 2011-05.
These standards will be effective for the Companys fiscal quarter ending August 31, 2012 with
retrospective application required. As this standard impacts presentation requirements only,
the adoption of this guidance is not expected to have a material impact on the Companys
consolidated financial statements. |
5. | STOCKHOLDERS EQUITY |
The authorized capital stock for the Company is 51,000,000, consisting of (i) 50,000,000
shares of common stock, par value $0.0001 and (ii) 1,000,000 shares of preferred stock, par
value $0.0001, and (iii) 100,000 shares of class A common stock, par value $0.0001. All shares
of class A common stock were converted to common stock during the year ended May 31, 2010 at a
rate of 157.3 shares of common stock for each share of class A common stock. |
Of the authorized shares, 26,914,658 shares of common stock were outstanding as of November 30,
2011 and 26,546,499 shares of common stock were outstanding as of May 31, 2011. No shares of
preferred stock were outstanding. On January 31, 2011, the Companys Board of Directors
authorized the repurchase of up to an additional 1,000,000 shares, not to exceed $10,000, of the
Companys outstanding common stock in open market or privately negotiated transactions. The
Board determined, among other things, that the repurchase program would offset dilution from the
exercise of existing warrants to purchase shares of common stock. During the third quarter
fiscal 2011, the Company repurchased 1,000,000 shares for $7,505. As of March 31, 2011, there
were no remaining shares authorized to be repurchased under this directive. |
-11-
On November 4, 2011, The Companys Board of Directors authorized the repurchase of up to $10,000
of its outstanding common stock in open market or privately negotiated transactions. The timing
and actual number of shares purchased will depend on a variety of factors such as price,
corporate and regulatory requirements, and other prevailing market conditions. The plan has not
been assigned a predetermined date of expiration, but may be limited or terminated without prior
notice. During the second quarter of fiscal 2011, 127,867 shares were repurchased for $1,072 |
During the year ended May 31, 2010, the Company filed a registration statement on Form S-1 with
the Securities and Exchange Commission for the offer and sale of up to 7,000,000 shares of its
common stock (half coming from selling stockholders), plus 1,050,000 shares to cover
over-allotment. The sale of 7,000,000 shares closed on June 1, 2010, and the sale of the
1,050,000 over-allotment shares closed on June 5, 2010. Also, in connection with the
Transaction, the former Dlorah stockholders were issued, in the aggregate, warrants to purchase
up to 2,800,000 shares of common stock at $5.50 per share that expired if not converted by
November 23, 2011. These warrants contained a cashless exercise feature. In fiscal 2011,
1,283,753 warrants were converted into 1,123,846 shares of common stock. In the first quarter
of fiscal 2012, 954,166 warrants were converted into 354,466 shares of stock via the cashless
exercise feature and warrants totaling 562,081 were converted into 156,454 shares of stock in
second quarter of fiscal 2012 via the cashless exercise feature. All 2,800,000 were converted by
November 23, 2011, and there are no warrants outstanding at November 30, 2011 |
||
Share-Based Compensation |
In December 2009, the Company adopted the 2009 Stock Option and Compensation Plan (the Plan)
pursuant to which the Company may grant restricted stock awards, restricted stock units and
stock options to aid in recruiting and retaining employees, officers, directors and other
consultants. Restricted stock awards accrue dividends that are paid when the shares vest.
Restricted stock units awards do not accrue dividends prior to vesting. Grants are issued at
prices determined by the compensation committee, generally equal to the closing price of the
stock on the date of the grant, vest over various terms (generally three years), and expire ten
years from the date of the grant. The Plan allows vesting based upon performance criteria.
Certain option and share awards provide for accelerated vesting if there is a change in control
of the Company (as defined in the Plan). The fair value of stock options granted is calculated
using the Black-Scholes option pricing model. Share options issued under the Plan may be
incentive stock options or nonqualified stock options. At November 30, 2011, all stock options
issued have been nonqualified stock options. A total of 1,300,000 shares were authorized by the
Plan. Shares forfeited or canceled are eligible for reissuance under the Plan. At November 30,
2011, 733,314 shares of Common Stock remain available for issuance under the Plan. |
Restricted stock |
The fair value of restricted stock awards was calculated using the Companys stock price as of
the associated grant date, and the expense is accrued ratably over the vesting period of the
award. |
-12-
During the quarter ended August 31, 2010, the company granted 53,000 restricted stock units
(RSUs) with a grant date fair value of $5.52 per share; these shares vested May 31, 2011 based
on the Companys profitability. |
In August 2011, the Company issued 41,500 RSUs with performance based vesting at a grant date
fair value of $10.59 per share. The number of shares earned will be determined by the Companys
profitability. |
In connection with share based compensation awards with performance requirements, Company
management must estimate the likelihood that the performance criteria will be attained. This
involves assumptions about future performance. Management reviews these estimates to ensure that
the expense associated with performance awards is properly stated at each reporting date. During
the quarter ended November 30, 2011, the management determined achieving the performance level
required under the August 2011 performance share grants was not likely. As a result,
compensation expense totaling $9 recorded in the previous quarter has been reversed. |
In August 2011, the Company also awarded 1,888 restricted stock awards with time based vesting
at a grant date fair value of $10.59 per share to the members of the Board of Directors. Shares
vest one year from the grant date and require board service for the entire year. |
Compensation expense associated with restricted stock awards and restricted stock unit awards
totaled $51 and $159, respectively for the three months ended November 30, 2011 and 2010. For
the six months ended November 30, 2011 and 2010, compensation totaled $116 and $306,
respectively. At November 30, 2011 unamortized compensation cost of restricted stock and
restricted stock unit awards totaled $563. The unamortized cost is expected to be recognized
over a weighted-average period of 2.2 years as of November 30, 2011. |
A summary of restricted shares activity under the Plan as of November 30, 2011 and 2010, and
changes during the six month periods then ended is presented below: |
Weighted Average | ||||||||
Grant Date Fair | ||||||||
Restricted Shares | Shares | Value | ||||||
Nonvested shares at May 31, 2011 |
54,166 | $ | 8.62 | |||||
Granted |
43,388 | 10.59 | ||||||
Vested |
| | ||||||
Forfeited |
| | ||||||
Nonvested shares at November 30, 2011 |
97,554 | $ | 9.49 | |||||
-13-
Weighted Average | ||||||||
Grant Date Fair | ||||||||
Restricted Shares | Shares | Value | ||||||
Nonvested at May 31, 2010 |
110,333 | $ | 8.64 | |||||
Granted |
53,000 | 5.52 | ||||||
Vested |
| | ||||||
Forfeited |
| | ||||||
Nonvested at November 30, 2010 |
163,333 | $ | 7.63 | |||||
Stock options |
The Company accounts for stock option-based compensation by estimating the fair value of options
granted using a Black-Scholes option valuation model. The Company recognizes the expense for
grants of stock options on a straight-line basis in the statement of operations as operating
expense based on their fair value over the requisite service period. There were no stock options
issued during the quarter ended November 30, 2011. |
For stock options issued during the six months ended November 30, 2011 and 2010, the following
assumptions were used to determine fair value: |
For the six months ended | ||||||||
November 30, | ||||||||
Assumptions used: | 2011 | 2010 | ||||||
Expected term (in years) |
6.00 | 5.75 | ||||||
Expected volatility |
50.00 | % | 45.59 | % | ||||
Weighted average risk free interest rate |
1.22 | % | 0.50 | % | ||||
Weighted average expected dividend |
1.13 | % | 1.20 | % | ||||
Weighted average fair value |
$ | 4.56 | $ | 3.52 |
Expected volatilities are based on historic volatilities from traded shares of a selected
publicly traded peer group. The Company has limited historical data to estimate forfeitures. The
expected term of options granted is the safe harbor period. The risk-free interest rate for
periods matching the contractual life of the option is based on the U.S. Treasury yield curve in
effect at the time of grant. Expected dividend is based on the historic dividend of the company. |
A summary of option activity under the Plan as of November 30, 2011 and 2010, and changes during
the six month periods then ended is presented below: |
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Remaining | Aggregate | |||||||||||||||
Weighted | Contractual | Intrinsic | ||||||||||||||
Average | Life (in | Value | ||||||||||||||
Stock Options | Shares | Exercise Price | years) | ($000) | ||||||||||||
Outstanding at May 31, 2011 |
121,750 | $ | 9.17 | |||||||||||||
Granted |
133,500 | 10.59 | ||||||||||||||
Exercised |
| | ||||||||||||||
Forfeited or canceled |
(6,000 | ) | 9.35 | | | |||||||||||
Outstanding at November 30, 2011 |
249,250 | $ | 9.93 | 9.2 | $ | | ||||||||||
Exercisable at November 30, 2011 |
57,875 | $ | 9.16 | 8.6 | $ | | ||||||||||
-14-
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Remaining | Aggregate | |||||||||||||||
Weighted | Contractual | Intrinsic | ||||||||||||||
Average | Life (in | Value | ||||||||||||||
Stock Options | Shares | Exercise Price | years) | ($000) | ||||||||||||
Outstanding at May 31, 2010 |
| $ | | |||||||||||||
Granted |
110,000 | 9.35 | ||||||||||||||
Exercised |
| | ||||||||||||||
Forfeited or canceled |
| | | | ||||||||||||
Outstanding at November 30, 2010 |
110,000 | $ | 9.35 | 9.5 | $ | | ||||||||||
Exercisable at November 30, 2010 |
| $ | | | $ | | ||||||||||
The Company recorded compensation expense of stock options of $101 and $48 for the three months
ended November 30, 2011 and 2010, respectively. For the six months ended November 30, 2011 and
2010, compensation expense of $164 and $97, respectively, was recorded in the statement of
operations. As of November 30, 2011 there was $643 of total unrecognized compensation cost
related to unvested stock option based compensation arrangements granted under the Plan. The
unamortized cost is expected to be recognized over a weighted-average period of 2.3 years as of
November 30, 2011. |
The Company plans to issue new shares as settlement of options exercised. There were no options
exercised during the six months ended November 30, 2011. |
Dividends |
The holders of class A common stock were entitled to a quarterly dividend equal to $0.11 per
quarter (for a total of $0.44 per year) per share of the common stock into which such class A
common stock was convertible, paid when and if declared by the board of directors in accordance
with the merger agreement for the Transaction. When a dividend was paid on the class A common
stock, a dividend equal to one-fourth of the per share amount of any class A common stock
dividend paid was also paid to holders of common stock. On May 10, 2010, the Company announced
that on April 26, 2010, its board of directors declared, subject to the satisfaction of the
condition set forth below, a one-time special cash dividend in the amount of $0.1609694 per
share on each share of the Companys common stock and in the amount of $0.6438774 per share on
each share of the Companys common stock issuable upon conversion of the class A common stock.
This special dividend totaled $11,116 of which $11,108 was paid on June 4, 2010 with the
difference related to the restricted shares which will be payable once the restrictions lapse.
All the dividends required under the merger agreement for the Transaction have been declared and
paid.
|
-15-
Date declared | Record date | Payment date | Per share | |||||||||
August 30, 2010 |
September 30, 2010 | October 8, 2010 | $ | 0.0275 | ||||||||
October 25, 2010 |
December 31, 2010 | January 7, 2011 | $ | 0.0300 | ||||||||
January 31, 2011 |
March 31, 2011 | April 8, 2011 | $ | 0.0300 | ||||||||
May 2, 2011 |
June 30, 2011 | July 8, 2011 | $ | 0.0300 | ||||||||
August 29, 2011 |
September 30, 2011 | October 7, 2011 | $ | 0.0300 | ||||||||
November 4, 2011 |
December 31, 2011 | (est.) January 9, 2012 | $ | 0.0325 |
6. | INCOME TAXES |
The effective tax rates for the six months ended November 30, 2011 and November 30, 2010,
were 39.6%. The effective tax rates for the three months ended November 30, 2011 and November
30, 2010, were 39.5% and 40.5%, respectively. |
7. | COMMITMENTS AND CONTINGENCIES |
From time to time, the Company is a party to various claims, proceedings, or lawsuits
relating to the conduct of its business. Although the outcome of litigation cannot be predicted
with certainty and some lawsuits, claims, or proceedings may be disposed of unfavorably to the
Company, management believes, based on facts presently known, that the outcome of such legal
proceedings and claims will not have a material adverse effect on the Companys consolidated
financial position, cash flows or future results of operations. |
The Company is subject to extensive regulation by federal and state governmental agencies and
accrediting bodies. On an ongoing basis, the Company evaluates the results of internal
compliance monitoring activities and those of applicable regulatory agencies and, when
appropriate, records liabilities to provide for the estimated costs of any necessary
remediation. In March 2011, the Department announced a program review site visit for NAU, which
occurred in April 2011. The periods covered by the program review were the 2008-2009, 2009-2010
and 2010-2011 Title IV award years, (which each award year commencing July 1 and ending June
30). NAU received the Departments preliminary program review report on June 16, 2011, which
contained findings regarding the manner in which NAU calculated returns of Title IV program
funds for online students that withdrew before completing their educational program, certain
discrepancies between NAUs published campus crime statistics and similar information on its
website, and aspects of its written policy on returns of title IV program funds. With respect to
the first finding, NAU was required to perform a full file review for each of the three award
years and, where necessary, revise the last date of attendance and prior returns of Title IV
funds calculations for online students. NAU submitted the results of this file review and its
responses to the program review findings, on October 19, 2011. The Department has not yet
issued a final program review determination with respect to this matter, which when issued may
contain financial liabilities and may be appealed. The Company has accrued $0.4 million as an
estimated liability. Other than this pending program review, there are no current outstanding
regulatory actions, but the Company cannot predict the outcome of future program reviews and any
unfavorable outcomes could have a material adverse effect on the results of the Companys
results of operations, cash flows, and financial position. |
During the quarter, the Company entered into a $3 million unsecured
revolving line of credit with Great Western Bank. Advances under this line bear interest at prime. There were
no advances outstanding against this line at November 30, 2011. |
As part of our ongoing operations, we entered into an arrangement for addition space that will
house the Corporate headquarters, distance learning operations, and the Rapid City |
-16-
campus operations that obligates us to make future payments under a capital lease obligation,
which totaled $25.1 million, had a net present value of $12.2 million as of November 30, 2011
and was recognized as current and non-current capital lease payable of $0.1 million and $12.1
million, respectively, and was included in net property, plant and equipment in our condensed
consolidated balance sheet. |
The following is a schedule of future minimum commitments for the capital lease as of November
30, 2011: |
Capital | ||||
($ in thousands) | Leases | |||
2012 |
$ | 519 | ||
2013 |
1,050 | |||
2014 |
1,071 | |||
2015 |
1,092 | |||
2016 |
1,115 | |||
Thereafter |
20,288 | |||
Total future minimum lease obligation |
$ | 25,135 | ||
Less: Imputed interest on capital leases |
(12,896 | ) | ||
Net present value of lease obligations |
$ | 12,239 | ||
8. | CONDOMINIUM PROJECT |
During 2008, the Company broke ground on a new building designed to contain 24 condominium
units to be sold to the general public that was completed in 2009. These condominium units are
accounted for within condominium inventories within the condensed consolidated balance sheets,
and the sales of the condominium units are recorded within condominium sales within the
condensed consolidated statements of operations. Nine units have been sold as of November 30,
2011. |
In addition, six units of an existing 48-unit apartment building have been sold as condominiums,
with the remaining units available for sale or lease. These condominium units are accounted for
within net property and equipment within the consolidated balance sheets, and the sales of the
condominium units are recorded as a gain on disposition of property within the condensed
consolidated statements of operations. |
9. | FAIR VALUE MEASUREMENTS |
Fair value is defined as the exchange price that would be received for an asset or paid to
transfer a liability (an exit price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants on the measurement date.
Following is a description of each category in the fair value hierarchy and the financial assets
and liabilities of the Company that are included in each category at November 30, 2011 and May
31, 2011: |
Level 1 Quoted prices in active markets for identical assets or liabilities. The types of
assets and liabilities included in Level 1 are highly liquid and actively traded instruments
with
quoted market prices. |
-17-
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for substantially the full term of
the assets or liabilities. The type of assets and liabilities included in Level 2 are typically
either comparable to actively traded securities or contracts or priced with models using
observable inputs. Level 2 assets consist of certificates of deposit that are valued at cost,
which approximates fair value. Level 2 instruments require more management judgment and
subjectivity as compared to Level 1 instruments. For instance: |
| Determining which instruments are most similar to the instrument being priced
requires management to identify a sample of similar securities based on the coupon
rates, maturity, issuer, credit rating and instrument type, and subjectively selecting
an individual security or multiple securities that are deemed most similar to the
security being priced; and |
||
| Determining whether a market is considered active requires management judgment. |
Level 3 Unobservable inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities. The type of assets and liabilities
included in Level 3 are those with inputs requiring significant management judgment or
estimation. The Company does not have any Level 3 assets or liabilities. |
In accordance with the fair value hierarchy, the following table shows the fair value as of
November 30, 2011 and May 31, 2011, of those financial assets that are measured at fair value on
a recurring basis, according to the valuation techniques the Company used to determine their
fair market value. No other financial assets or liabilities are measured at fair value on a
recurring or nonrecurring basis at November 30, 2011 or May 31, 2011. |
Quoted | ||||||||||||||||
Prices in | Other | |||||||||||||||
Active | Observable | |||||||||||||||
Markets | Inputs | Unobservable | ||||||||||||||
(Level 1) | (Level 2) | Inputs (Level 3) | Fair Value | |||||||||||||
November 30, 2011 |
||||||||||||||||
Investments |
||||||||||||||||
CDs and money market accounts |
$ | 1,787 | $ | 418 | $ | | $ | 2,205 | ||||||||
US treasury bills and notes |
22,297 | | | 22,297 | ||||||||||||
Total assets at fair value |
$ | 24,084 | $ | 418 | $ | | $ | 24,502 | ||||||||
May 31, 2011 |
||||||||||||||||
Investments |
||||||||||||||||
CDs and money market accounts |
$ | 1,640 | $ | 417 | $ | | $ | 2,057 | ||||||||
US treasury bills and notes |
18,427 | | | 18,427 | ||||||||||||
Total assets at fair value |
$ | 20,067 | $ | 417 | $ | | $ | 20,484 | ||||||||
-18-
Following is a summary of the valuation techniques for assets and liabilities recorded in
the consolidated condensed balance sheets at fair value on a recurring basis: |
CDs and money market accounts: Investments which have closing prices readily available from an
active market are used as being representative of fair value. The Company classifies these
investments as Level 1. Market prices for certain CDs are obtained from quoted prices for
similar assets. The Company classifies these investments as Level 2. |
U.S. treasury bills and notes: Closing prices are readily available from active markets and are
used as being representative of fair value. The Company classifies these investments as Level
1. |
10. | SEGMENT REPORTING |
Operating segments are defined as business areas or lines of an enterprise about which
financial information is available and evaluated on a regular basis by the chief operating
decision makers, or decision-making groups, in deciding how to allocate capital and other
resources to such lines of business. |
The Company operates two operating and reportable segments: National American University (NAU)
and other. The NAU segment contains the revenues and expenses associated with the University
operations and the allocated portion of corporate overhead. The other segment contains
everything else. These operating segments are divisions of the Company for which separate
financial information is available and evaluated regularly by executive management in deciding
how to allocate resources and in assessing performance. |
General administrative costs of the Company are allocated to specific divisions of the Company. |
The majority of the Companys revenue is derived from the NAU division, which provides
undergraduate and graduate education programs. NAU derives its revenue primarily from student
tuition. The other division operates multiple apartment and condominium complexes and derives
its revenues primarily from condominium sales and rental income (in thousands). |
-19-
Six Months Ended | Six Months Ended | |||||||||||||||||||||||
November 30, 2011 | November 30, 2010 | |||||||||||||||||||||||
Consolidated | Consolidated | |||||||||||||||||||||||
NAU | Other | Total | NAU | Other | Total | |||||||||||||||||||
Revenue: |
||||||||||||||||||||||||
Academic revenue |
$ | 52,303 | $ | 0 | $ | 52,303 | $ | 47,080 | $ | 0 | $ | 47,080 | ||||||||||||
Auxiliary revenue |
3,002 | 0 | 3,002 | 3,213 | 0 | 3,213 | ||||||||||||||||||
Rental income apartments |
0 | 537 | 537 | 0 | 495 | 495 | ||||||||||||||||||
Condominium sales |
0 | 0 | 0 | 0 | 224 | 224 | ||||||||||||||||||
Total revenue |
55,305 | 537 | 55,842 | 50,293 | 719 | 51,012 | ||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Cost of educational services |
13,270 | 0 | 13,270 | 10,782 | 0 | 10,782 | ||||||||||||||||||
Selling, general
&administrative |
35,275 | 887 | 36,162 | 30,874 | 916 | 31,790 | ||||||||||||||||||
Auxiliary expense |
1,521 | 0 | 1,521 | 1,540 | 0 | 1,540 | ||||||||||||||||||
Cost of condominium sales |
0 | 0 | 0 | 0 | 193 | 193 | ||||||||||||||||||
(Gain) loss on disposition of
property |
10 | (141 | ) | (131 | ) | 51 | 0 | 51 | ||||||||||||||||
Total operating expenses |
50,076 | 746 | 50,822 | 43,247 | 1,109 | 44,356 | ||||||||||||||||||
Income (loss) from operations |
5,229 | (209 | ) | 5,020 | 7,046 | (390 | ) | 6,656 | ||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||
Interest income |
69 | 5 | 74 | 74 | 0 | 74 | ||||||||||||||||||
Interest expense |
(81 | ) | 0 | (81 | ) | 0 | 0 | 0 | ||||||||||||||||
Other income net |
0 | 60 | 60 | 0 | 71 | 71 | ||||||||||||||||||
Total other income
(expense) |
(12 | ) | 65 | 53 | 74 | 71 | 145 | |||||||||||||||||
Income (loss) before taxes |
$ | 5,217 | $ | (144 | ) | $ | 5,073 | $ | 7,120 | $ | (319 | ) | $ | 6,801 | ||||||||||
Six Months Ended | Year Ended | |||||||||||||||||||||||
November 30, 2011 | May 31, 2011 | |||||||||||||||||||||||
Consolidated | Consolidated | |||||||||||||||||||||||
NAU | Other | Total | NAU | Other | Total | |||||||||||||||||||
Total assets |
$ | 78,045 | $ | 14,489 | $ | 92,534 | $ | 60,215 | $ | 17,723 | $ | 77,938 | ||||||||||||
-20-
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
November 30, 2011 | November 30, 2010 | |||||||||||||||||||||||
Consolidated | Consolidated | |||||||||||||||||||||||
NAU | Other | Total | NAU | Other | Total | |||||||||||||||||||
Revenue: |
||||||||||||||||||||||||
Academic revenue |
$ | 28,603 | $ | 0 | $ | 28,603 | $ | 25,822 | $ | 0 | $ | 25,822 | ||||||||||||
Auxiliary revenue |
1,575 | 0 | 1,575 | 1,766 | 0 | 1,766 | ||||||||||||||||||
Rental income apartments |
0 | 267 | 267 | 0 | 252 | 252 | ||||||||||||||||||
Condominium sales |
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Total revenue |
30,178 | 267 | 30,445 | 27,588 | 252 | 27,840 | ||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Cost of educational services |
6,918 | 0 | 6,918 | 5,543 | 0 | 5,543 | ||||||||||||||||||
Selling, general &
administrative |
18,919 | 468 | 19,387 | 16,329 | 507 | 16,836 | ||||||||||||||||||
Auxiliary expense |
881 | 0 | 881 | 866 | 0 | 866 | ||||||||||||||||||
Cost of condominium sales |
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Loss on disposition of
property |
1 | 0 | 1 | 41 | 0 | 41 | ||||||||||||||||||
Total operating expenses |
26,719 | 468 | 27,187 | 22,779 | 507 | 23,286 | ||||||||||||||||||
Income (loss) from operations |
3,459 | (201 | ) | 3,258 | 4,809 | (255 | ) | 4,554 | ||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||
Interest income |
31 | 2 | 33 | 34 | 0 | 34 | ||||||||||||||||||
Interest expense |
(81 | ) | 0 | (81 | ) | 0 | 0 | 0 | ||||||||||||||||
Other income net |
0 | 29 | 29 | 0 | 45 | 45 | ||||||||||||||||||
Total other income (expense) |
(50 | ) | 31 | (19 | ) | 34 | 45 | 79 | ||||||||||||||||
Income (loss) before taxes |
$ | 3,409 | $ | (170 | ) | $ | 3,239 | $ | 4,843 | $ | (210 | ) | $ | 4,633 | ||||||||||
-21-
11. | SUBSEQUENT EVENTS |
We evaluated subsequent events after the balance sheet date of November 30, 2011 through
the date the consolidated financial statements were issued. Between the balance sheet date of
November 30, 2011 and December 31, 2011, the Company has settled on shares purchased through its
repurchase plan that totaled 162,255 shares at a price of $1,179 ($7.28 average per share)
with transaction costs totaling $6. |
-22-
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of
Operations. |
-23-
| the number of students who are enrolled and who remain enrolled in courses throughout
the term; |
||
| the number of credit hours per student; |
||
| the students degree and program mix; |
||
| changes in tuition rates; |
||
| the affiliates with which NAU is working as well as the number of students at the
affiliates; and |
||
| the amount of scholarships for which students qualify. |
-24-
November 30, 2011 | November 30, 2010 | % Growth for | ||||||||||
(Fall 11 Qtr) | (Fall 10 Qtr) | same quarter | ||||||||||
Number of Students | Number of Students | over prior year | ||||||||||
Graduate |
385 | 415 | (7.2 | )% | ||||||||
Undergraduate and Diploma |
10,513 | 9,228 | 13.9 | % | ||||||||
Total |
10,898 | 9,643 | 13.0 | % | ||||||||
On-Campus |
3,771 | 3,854 | (2.2 | )% | ||||||||
Online |
5,329 | 4,198 | 26.9 | % | ||||||||
Hybrid |
1,798 | 1,591 | 13.0 | % | ||||||||
Total |
10,898 | 9,643 | 13.0 | % | ||||||||
-25-
-26-
Six Months | Six Months | |||||||
Ended | Ended | |||||||
November 30, | November 30, | |||||||
2011 | 2010 | |||||||
In percentages | In percentages | |||||||
Total revenues |
100.0 | % | 100.0 | % | ||||
Operating expenses: |
||||||||
Cost of educational services |
23.8 | 21.1 | ||||||
Selling, general and administrative |
64.8 | 62.3 | ||||||
Auxiliary expense |
2.6 | 3.0 | ||||||
Cost of condominium sales |
0.0 | 0.4 | ||||||
(Gain) Loss on disposition of property |
(0.2 | ) | 0.1 | |||||
Total operating expenses |
91.0 | 86.9 | ||||||
Operating income |
9.0 | 13.1 | ||||||
Interest expense |
(0.1 | ) | 0.0 | |||||
Interest income |
0.1 | 0.1 | ||||||
Other income |
0.1 | 0.1 | ||||||
Income before income taxes |
9.1 | 13.3 | ||||||
Income tax expense |
(3.6 | ) | (5.3 | ) | ||||
Net income attributable to non controlling interest |
(0.2 | ) | 0.0 | |||||
Net income attributable to the Company |
5.3 | % | 8.0 | % |
-27-
Six Months Ended | Six Months Ended | |||||||
November 30, 2011 | November 30, 2010 | |||||||
In percentages | In percentages | |||||||
Total revenues |
100.0 | % | 100.0 | % | ||||
Operating expenses: |
||||||||
Cost of educational services |
24.0 | 21.4 | ||||||
Selling, general and administrative |
63.8 | 61.4 | ||||||
Auxiliary expense |
2.7 | 3.1 | ||||||
Cost of condominium sales |
0.0 | 0.0 | ||||||
Loss on disposition of property |
0.0 | 0.1 | ||||||
Total operating expenses |
90.5 | 86.0 | ||||||
Operating income |
9.5 | 14.0 | ||||||
Interest expense |
(0.1 | ) | 0.0 | |||||
Interest income |
0.1 | 0.1 | ||||||
Other income |
0.0 | 0.0 | ||||||
Income before non-controlling interest and taxes |
9.5 | % | 14.1 | % |
-28-
-29-
Six months | Six months | |||||||||||
ended | ended | |||||||||||
November | November | |||||||||||
30, 2011 | 30, 2010 | Difference | ||||||||||
($) | ($) | ($) | ||||||||||
Allen, TX |
$ | 1.0 | $ | 0.5 | $ | 0.5 | ||||||
Austin, TX |
| 1.5 | (1.5 | ) | ||||||||
Bellevue, NE |
0.9 | | 0.9 | |||||||||
Burnsville, MN |
0.6 | | 0.6 | |||||||||
Centennial, CO |
0.7 | 0.2 | 0.5 | |||||||||
Colorado Springs South, CO |
0.6 | 0.4 | 0.2 | |||||||||
Georgetown, TX |
0.1 | | 0.1 | |||||||||
Houston, TX |
0.4 | | 0.4 | |||||||||
Indianapolis, IN |
0.3 | | 0.3 | |||||||||
Lees Summit, MO |
| 0.9 | (0.9 | ) | ||||||||
Lewisville, TX |
0.5 | | 0.5 | |||||||||
Mesquite, TX |
0.5 | | 0.5 | |||||||||
Minnetonka, MN |
| 0.9 | (0.9 | ) | ||||||||
Portland, OR |
0.1 | | 0.1 | |||||||||
Richardson, TX |
0.2 | | 0.2 | |||||||||
South Austin, TX |
0.5 | | 0.5 | |||||||||
Tulsa, OK |
1.1 | | 1.1 | |||||||||
Weldon Springs, MO |
0.5 | | 0.5 | |||||||||
Wichita West, KS |
0.9 | 0.3 | 0.6 | |||||||||
Distance Learning |
0.4 | 0.1 | 0.3 | |||||||||
Rapid City Nursing |
| 0.1 | (0.1 | ) | ||||||||
Sioux Falls Nursing |
| 0.1 | (0.1 | ) | ||||||||
Minnesota Nursing |
| 0.3 | (0.3 | ) | ||||||||
Other Nursing |
0.1 | 0.3 | (0.2 | ) | ||||||||
TOTAL |
9.4 | 5.6 | 3.8 | |||||||||
-30-
Six Months Ended | Six Months | |||||||
November 30, | Ended November | |||||||
2011 | 30, 2010 | |||||||
In percentages | In percentages | |||||||
Total revenues |
100.0 | % | 100.0 | % | ||||
Operating expenses: |
||||||||
Cost of educational services |
0.0 | 0.0 | ||||||
Selling, general and administrative |
165.2 | 127.4 | ||||||
Auxiliary expense |
0.0 | 0.0 | ||||||
Cost of condominium sales |
0.0 | 26.8 | ||||||
(Gain) loss on disposition of property |
(26.3 | ) | 0.0 | |||||
Total operating expenses |
138.9 | 154.2 | ||||||
Operating loss |
(38.9 | ) | (54.2 | ) | ||||
Interest expense |
0.0 | 0.0 | ||||||
Interest income |
0.9 | 0.0 | ||||||
Other income |
11.2 | 9.9 | ||||||
Loss before non-controlling interest and taxes |
(26.8 | )% | (44.3 | )% |
-31-
Three Months | Three Months | |||||||
Ended | Ended | |||||||
November 30, | November 30, | |||||||
2011 | 2010 | |||||||
In percentages | In percentages | |||||||
Total revenues |
100.0 | % | 100.0 | % | ||||
Operating expenses: |
||||||||
Cost of educational services |
22.7 | 19.9 | ||||||
Selling, general and administrative |
63.7 | 60.5 | ||||||
Auxiliary expense |
2.9 | 3.1 | ||||||
Cost of condominium sales |
0.0 | 0.0 | ||||||
Loss on disposition of property |
0.0 | 0.1 | ||||||
Total operating expenses |
89.3 | 83.6 | ||||||
Operating income |
10.7 | 16.4 | ||||||
Interest expense |
(0.3 | ) | 0.0 | |||||
Interest income |
0.1 | 0.1 | ||||||
Other income |
0.1 | 0.2 | ||||||
Income before income taxes |
10.6 | 16.7 | ||||||
Income tax expense |
(4.2 | ) | (6.7 | ) | ||||
Net income attributable to non controlling interest |
0.0 | 0.0 | ||||||
Net income attributable to the Company |
6.4 | % | 10.0 | % |
-32-
Three Months Ended | Three Months Ended | |||||||
November 30, 2011 | November 30, 2010 | |||||||
In percentages | In percentages | |||||||
Total revenues |
100.0 | % | 100.0 | % | ||||
Operating expenses: |
||||||||
Cost of educational services |
22.9 | 20.1 | ||||||
Selling, general and administrative |
62.7 | 59.2 | ||||||
Auxiliary expense |
2.9 | 3.1 | ||||||
Cost of condominium sales |
0.0 | 0.0 | ||||||
Loss on disposition of property |
0.0 | 0.1 | ||||||
Total operating expenses |
88.5 | 82.5 | ||||||
Operating income |
11.5 | 17.5 | ||||||
Interest expense |
(0.3 | ) | 0.0 | |||||
Interest income |
0.1 | 0.1 | ||||||
Other income |
0.0 | 0.0 | ||||||
Income before non-controlling interest
and taxes |
11.3 | % | 17.6 | % |
-33-
-34-
Three | Three | |||||||||||
months | months | |||||||||||
ended | ended | |||||||||||
November | November | Difference | ||||||||||
30, 2011 ($) | 30, 2010 ($) | ($) | ||||||||||
Allen, TX |
$ | 0.5 | $ | 0.4 | $ | 0.1 | ||||||
Austin, TX |
| 0.7 | (0.7 | ) | ||||||||
Bellevue, NE |
0.5 | | 0.5 | |||||||||
Burnsville, MN |
0.3 | | 0.3 | |||||||||
Centennial, CO |
0.4 | 0.2 | 0.2 | |||||||||
Colorado Springs South, CO |
0.3 | 0.2 | 0.1 | |||||||||
Georgetown, TX |
0.1 | | 0.1 | |||||||||
Houston, TX |
0.3 | | 0.3 | |||||||||
Indianapolis, IN |
0.3 | | 0.3 | |||||||||
Lees Summit, MO |
| 0.5 | (0.5 | ) | ||||||||
Lewisville, TX |
0.4 | | 0.4 | |||||||||
Mesquite, TX |
0.3 | | 0.3 | |||||||||
Minnetonka, MN |
| 0.4 | (0.4 | ) | ||||||||
Richardson, TX |
0.2 | | 0.2 | |||||||||
South Austin, TX |
0.3 | | 0.3 | |||||||||
Tulsa, OK |
0.6 | | 0.6 | |||||||||
Weldon Springs, MO |
0.4 | 0.4 | ||||||||||
Wichita West, KS |
0.5 | 0.2 | 0.3 | |||||||||
Distance Learning |
0.2 | 0.1 | 0.1 | |||||||||
MN Nursing |
| 0.2 | (0.2 | ) | ||||||||
Other Nursing |
| 0.2 | (0.2 | ) | ||||||||
TOTAL |
5.6 | 3.1 | 2.5 | |||||||||
-35-
Three Months Ended | Three Months Ended | |||||||
November 30, 2011 | November 30, 2010 | |||||||
In percentages | In percentages | |||||||
Total revenues |
100.0 | % | 100.0 | % | ||||
Operating expenses: |
||||||||
Cost of educational services |
0.0 | 0.0 | ||||||
Selling, general and administrative |
175.3 | 201.2 | ||||||
Auxiliary expense |
0.0 | 0.0 | ||||||
Cost of condominium sales |
0.0 | 0.0 | ||||||
Total operating expenses |
175.3 | 201.2 | ||||||
Operating income (loss) |
(75.3 | ) | (101.2 | ) | ||||
Interest expense |
0.0 | 0.0 | ||||||
Interest income |
0.7 | 0.0 | ||||||
Other income (expense) |
10.9 | 17.9 | ||||||
Loss before non-controlling interest and
taxes |
(63.7) | % | (83.3) | % |
-36-
-37-
($ in thousands) | Capital Leases | |||
2012 |
$ | 519 | ||
2013 |
1,050 | |||
2014 |
1,071 | |||
2015 |
1,092 | |||
2016 |
1,115 | |||
Thereafter |
20,288 | |||
Total future minimum lease obligation |
$ | 25,135 | ||
Less: Imputed interest on capital leases |
(12,896 | ) | ||
Net present value of lease obligations |
$ | 12,239 | ||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 4. | Controls and Procedures. |
-38-
Item 1. | Legal Proceedings. |
Item 1A. | Risk Factors. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
-39-
Total Number of | Maximum Number | |||||||||||||||
Shares Purchased | of Shares that May | |||||||||||||||
Total Number | as Part of Publicly | Yet be Purchased | ||||||||||||||
of Shares | Average Price Paid | Announced Plans | Under the Plans or | |||||||||||||
Period | Purchased | per Share | or Programs (1) | Programs (1) | ||||||||||||
September 1,
2011 September
30, 2011 |
0 | | | | ||||||||||||
October 1, 2011
October 31, 2011 |
0 | | | | ||||||||||||
November 1, 2011
November 30, 2011 |
127,867 | $ | 7.26 | 127,867 | 1,249,473 |
(1) | On November 4, 2011, the Company announced that its Board of Directors authorized
the Company to repurchase up to $10 million of its outstanding common stock in open market or
privately negotiated transactions. The maximum number of shares that may yet be purchased under
the plan or program is based on the average price per share of $7.26. Any fluctuation in this
average price will have an impact on the maximum number of shares. |
Item 3. | Defaults Upon Senior Securities. |
Item 4. | Reserved. |
Item 5. | Other Information. |
Item 6. | Exhibits. |
31.1 | Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|||
31.2 | Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
-40-
National American University
Holdings, Inc. (Registrant) |
||||
Dated: January 6, 2012 | By: | /s/ Ronald Shape | ||
Ronald L. Shape, Ed. D. | ||||
Chief Executive Officer |
By: | /s/ Venessa Green | |||
Venessa D. Green, MBA, CPA | ||||
Chief Financial Officer |
-41-
Exhibit | Description | |||
10.1 | Lease agreement, dated as of
September 9, 2011, between Dlorah, Inc. and Rushmore Cedar L.L.C., as amended
by the First Amendment dated as of September 9, 2011 (previously filed) |
|||
31.1 | Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|||
31.2 | Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
-42-