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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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Delaware
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01-0724376
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(State or other jurisdiction of
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(I.R.S. Employer
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Incorporation or organization)
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Identification No.)
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Emerging growth company
o
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Page
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As of June 30, 2018
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As of December 31, 2017
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||||
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(Unaudited)
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||||
ASSETS
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||||
Current assets:
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||||
Cash and cash equivalents (Note 2)
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$
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193,597
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$
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179,205
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Accounts receivable, net of allowance of $6,011 in 2018 and $6,276 in 2017
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6,999
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7,136
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Prepaid expenses
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6,312
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4,792
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Income tax receivable
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3,456
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—
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Total current assets
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210,364
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191,133
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Property and equipment, net
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87,460
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92,374
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Investments
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12,309
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12,481
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Goodwill
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33,899
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33,899
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Other assets, net
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7,706
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9,151
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Total assets
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$
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351,738
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$
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339,038
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable
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$
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6,546
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$
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8,844
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Accrued liabilities
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14,896
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13,423
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Deferred revenue
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19,934
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19,374
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Income tax payable
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—
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1,710
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Total current liabilities
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41,376
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43,351
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Deferred income taxes
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7,253
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6,281
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Total liabilities
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48,629
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49,632
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Commitments and contingencies (Note 10)
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Stockholders’ equity:
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Preferred stock, $.01 par value; Authorized shares - 10,000; no shares issued or outstanding
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—
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—
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Common stock, $.01 par value; Authorized shares - 100,000; 16,418 issued and outstanding in 2018; 16,268 issued and outstanding in 2017
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164
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163
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Additional paid-in capital
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183,607
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180,674
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Retained earnings
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119,338
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108,569
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Total stockholders’ equity
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303,109
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289,406
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Total liabilities and stockholders’ equity
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$
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351,738
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$
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339,038
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
||||||||||||
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2018
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2017
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2018
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2017
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||||||||
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(Unaudited)
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(Unaudited)
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||||||||||||
Revenue
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$
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72,798
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$
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72,196
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$
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147,765
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$
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147,884
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Costs and expenses:
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Instructional costs and services
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28,967
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29,834
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58,653
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58,790
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Selling and promotional
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13,284
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14,008
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28,865
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29,443
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General and administrative
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17,594
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16,632
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36,482
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34,388
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Loss on disposals of long-lived assets
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558
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678
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686
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1,168
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Depreciation and amortization
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4,347
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4,726
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8,869
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9,470
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Total costs and expenses
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64,750
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65,878
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133,555
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133,259
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Income from operations before interest income and income taxes
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8,048
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6,318
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14,210
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14,625
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||||
Interest income, net
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661
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15
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1,154
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26
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||||
Income before income taxes
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8,709
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6,333
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15,364
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14,651
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Income tax expense
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2,280
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2,525
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|
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4,145
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6,374
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Equity investment (loss) income
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29
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|
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21
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(172
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)
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|
61
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||||
Net income
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$
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6,458
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$
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3,829
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$
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11,047
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$
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8,338
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Net Income per common share:
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Basic
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$
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0.39
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$
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0.24
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$
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0.67
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$
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0.51
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Diluted
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$
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0.39
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$
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0.23
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$
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0.67
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$
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0.51
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Weighted average number of common shares:
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Basic
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16,408,408
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16,240,955
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16,384,234
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16,214,304
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Diluted
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16,645,863
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16,360,177
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16,611,177
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16,339,919
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Six Months Ended
June 30, |
||||||
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2018
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2017
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||||
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(Unaudited)
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||||||
Operating activities
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Net income
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$
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11,047
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$
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8,338
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Adjustments to reconcile net income to net cash provided by operating activities:
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Depreciation and amortization
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8,869
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9,470
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Stock-based compensation
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3,440
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2,696
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Equity investment loss (income)
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172
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|
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(61
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)
|
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Deferred income taxes
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972
|
|
|
2,073
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Loss on disposals of long-lived assets
|
686
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|
1,168
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Other
|
259
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|
|
28
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|
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Changes in operating assets and liabilities:
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|
|
|
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|||
Accounts receivable, net of allowance for bad debt
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137
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|
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748
|
|
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Prepaid expenses and other assets
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(1,074
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)
|
|
(1,803
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)
|
||
Income tax receivable
|
(3,456
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)
|
|
(3,120
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)
|
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Accounts payable
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(2,298
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)
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(442
|
)
|
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Accrued liabilities
|
2,240
|
|
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(2,428
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)
|
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Income taxes payable
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(1,710
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)
|
|
(559
|
)
|
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Deferred revenue
|
282
|
|
|
163
|
|
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Net cash provided by operating activities
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19,566
|
|
|
16,271
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Investing activities
|
|
|
|
|
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Capital expenditures
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(2,998
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)
|
|
(3,781
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)
|
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Capitalized program development costs and other assets
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(561
|
)
|
|
(1,902
|
)
|
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Proceeds from sale of real property
|
—
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|
|
1,493
|
|
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Net cash used in investing activities
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(3,559
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)
|
|
(4,190
|
)
|
||
Financing activities
|
|
|
|
|
|
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Cash paid for repurchase of common stock
|
(1,615
|
)
|
|
(1,402
|
)
|
||
Cash received from issuance of common stock
|
—
|
|
|
98
|
|
||
Net cash used in financing activities
|
(1,615
|
)
|
|
(1,304
|
)
|
||
Net increase in cash and cash equivalents
|
14,392
|
|
|
10,777
|
|
||
Cash and cash equivalents at beginning of period
|
179,205
|
|
|
146,351
|
|
||
Cash and cash equivalents at end of period
|
$
|
193,597
|
|
|
$
|
157,128
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information
|
|
|
|
|
|
||
Income taxes paid
|
$
|
5,409
|
|
|
$
|
7,980
|
|
•
|
American Public University System, Inc., or APUS, provides online postsecondary education directed primarily at the needs of the military, military-affiliated, and public service communities through American Military University, or AMU, and American Public University, or APU. APUS is regionally accredited by the Higher Learning Commission.
|
•
|
National Education Seminars, Inc., which is referred to herein as Hondros College of Nursing, or HCN, provides nursing education to students at
five
campuses in Ohio, as well as online, to serve the needs of the nursing and healthcare communities. HCN is nationally accredited by the Accrediting Council of Independent Colleges and Schools, or ACICS, and, effective June 11, 2018, the Accrediting Bureau for Health Education Schools, or ABHES, and the RN-to-BSN Program is accredited by the Commission on Collegiate Nursing Education. HCN anticipates enrolling students into a Medical Laboratory Technician program, or MLT Program, at its Cincinnati campus beginning in late 2018, subject to receipt of any required regulatory approvals.
|
•
|
American Public Education Segment, or APEI Segment.
This segment reflects the operational activities at APUS, other corporate activities, and minority investments; and
|
•
|
Hondros College of Nursing Segment, or HCN Segment.
This segment reflects the operational activities of HCN.
|
|
Balance at December 31, 2017
|
|
Adjustments from adoption of ASC 606
|
|
Balance at January 1, 2018
|
||||||
|
(In thousands)
|
||||||||||
Consolidated Balance Sheet
|
|
|
|
|
|
||||||
Deferred revenue
|
$
|
19,374
|
|
|
$
|
379
|
|
|
$
|
19,753
|
|
Deferred income taxes
|
6,281
|
|
|
(101
|
)
|
|
6,180
|
|
|||
Retained earnings
|
108,569
|
|
|
(278
|
)
|
|
108,291
|
|
|
As of June 30, 2018
|
||||||||||
|
As Reported
|
|
Adjustment
|
|
Balance without adoption
|
||||||
Consolidated Balance Sheet
|
(In thousands)
|
||||||||||
Liabilities
|
|
|
|
|
|
||||||
Deferred revenue
|
$
|
19,934
|
|
|
$
|
(362
|
)
|
|
$
|
19,572
|
|
Deferred income taxes
|
7,253
|
|
|
96
|
|
|
7,349
|
|
|||
Equity
|
|
|
|
|
|
||||||
Retained earnings
|
119,338
|
|
|
266
|
|
|
119,604
|
|
|
Three Months Ended June 30, 2018
|
||||||||||
|
As Reported
|
|
Adjustment
|
|
Balance without adoption
|
||||||
Consolidated Statement of Income
|
(In thousands)
|
||||||||||
Revenue
|
$
|
72,798
|
|
|
$
|
(60
|
)
|
|
$
|
72,738
|
|
Income tax expense
|
2,280
|
|
|
(16
|
)
|
|
2,264
|
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
As Reported
|
|
Adjustment
|
|
Balance without adoption
|
||||||
Consolidated Statement of Income
|
(In thousands)
|
||||||||||
Revenue
|
$
|
147,765
|
|
|
$
|
(16
|
)
|
|
$
|
147,749
|
|
Income tax expense
|
4,145
|
|
|
(4
|
)
|
|
4,141
|
|
|
Three Months Ended June 30, 2018
|
||||||||||
|
(In thousands)
|
||||||||||
|
APEI
|
|
HCN
|
|
Consolidated
|
||||||
Instructional services, net of grants and scholarships
|
$
|
63,204
|
|
|
$
|
7,925
|
|
|
$
|
71,129
|
|
Graduation fees
|
296
|
|
|
—
|
|
|
296
|
|
|||
Textbook and other course materials
|
—
|
|
|
1,055
|
|
|
1,055
|
|
|||
Other fees
|
192
|
|
|
126
|
|
|
318
|
|
|||
Total Revenue
|
$
|
63,692
|
|
|
$
|
9,106
|
|
|
$
|
72,798
|
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
(In thousands)
|
||||||||||
|
APEI
|
|
HCN
|
|
Consolidated
|
||||||
Instructional services, net of grants and scholarships
|
$
|
128,410
|
|
|
$
|
15,986
|
|
|
$
|
144,396
|
|
Graduation fees
|
572
|
|
|
—
|
|
|
572
|
|
|||
Textbook and other course materials
|
—
|
|
|
2,177
|
|
|
2,177
|
|
|||
Other fees
|
378
|
|
|
242
|
|
|
620
|
|
|||
Total Revenue
|
$
|
129,360
|
|
|
$
|
18,405
|
|
|
$
|
147,765
|
|
|
8-Week Course- Tuition Refund Schedule
|
|
|
|
|
|
|
|
Withdrawal Date
|
|
Tuition Refund Percentage
|
|
Before or During Week 1
|
|
100%
|
|
During Week 2
|
|
75%
|
|
During Weeks 3 and 4
|
|
50%
|
|
During Weeks 5 through 8
|
|
No Refund
|
|
|
|
|
|
16-Week Course- Tuition Refund Schedule
|
|
|
|
|
|
|
|
Withdrawal Date
|
|
Tuition Refund Percentage
|
|
Before or During Week 1
|
|
100%
|
|
During Week 2
|
|
100%
|
|
During Weeks 3 and 4
|
|
75%
|
|
During Weeks 5 through 8
|
|
50%
|
|
During Weeks 9 through 16
|
|
No Refund
|
|
Quarterly Term
|
|
|
|
|
|
|
|
Withdrawal Date
|
|
Tuition Refund Percentage
|
|
Before first full calendar week of the quarter
|
|
100%
|
|
During first full calendar week of the quarter
|
|
75%
|
|
During second full calendar week of the quarter
|
|
50%
|
|
During third full calendar week of the quarter
|
|
25%
|
|
During fourth full week of the quarter
|
|
No Refund
|
|
Number
of Shares
|
|
Weighted-Average
Grant Price
and Fair Value
|
|||
Non-vested, December 31, 2017
|
461,262
|
|
|
$
|
20.91
|
|
Shares granted
|
302,123
|
|
|
$
|
26.98
|
|
Vested shares
|
(220,571
|
)
|
|
$
|
21.28
|
|
Shares forfeited
|
(44,247
|
)
|
|
$
|
22.84
|
|
Non-vested, June 30, 2018
|
498,567
|
|
|
$
|
24.22
|
|
|
|
Number
of Options
|
|
Weighted
Average
Exercise Price
|
|
Weighted-Average
Contractual
Life (Years)
|
|
Aggregate
Intrinsic
Value
(In thousands)
|
|||||
Outstanding, December 31, 2017
|
|
109,616
|
|
|
$
|
37.52
|
|
|
0.01
|
|
—
|
|
|
Options granted
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Awards exercised
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Awards forfeited
|
|
(109,616
|
)
|
|
$
|
37.52
|
|
|
|
|
|
||
Outstanding, June 30, 2018
|
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable, June 30, 2018
|
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
|
2017
|
|
||||||
|
(In thousands)
|
||||||||||||||
Instructional costs and services
|
$
|
411
|
|
|
$
|
417
|
|
|
$
|
788
|
|
|
$
|
729
|
|
Selling and promotional
|
22
|
|
|
184
|
|
|
262
|
|
|
359
|
|
||||
General and administrative
|
1,164
|
|
|
849
|
|
|
2,390
|
|
|
1,608
|
|
||||
Stock-based compensation expense in operating income
|
1,597
|
|
|
1,450
|
|
|
3,440
|
|
|
2,696
|
|
||||
Tax benefit
|
(425
|
)
|
|
(574
|
)
|
|
(915
|
)
|
|
(1,068
|
)
|
||||
Stock-based compensation expense, net of tax
|
$
|
1,172
|
|
|
$
|
876
|
|
|
$
|
2,525
|
|
|
$
|
1,628
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
|
2017
|
|
||||||
|
(In thousands)
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
American Public Education Segment
|
$
|
63,692
|
|
|
$
|
64,304
|
|
|
$
|
129,360
|
|
|
$
|
132,433
|
|
Hondros College of Nursing Segment
|
9,106
|
|
|
7,892
|
|
|
18,405
|
|
|
15,451
|
|
||||
Total Revenue
|
$
|
72,798
|
|
|
$
|
72,196
|
|
|
$
|
147,765
|
|
|
$
|
147,884
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
||||||||
American Public Education Segment
|
$
|
3,988
|
|
|
$
|
4,376
|
|
|
$
|
8,156
|
|
|
$
|
8,782
|
|
Hondros College of Nursing Segment
|
359
|
|
|
350
|
|
|
713
|
|
|
688
|
|
||||
Total Depreciation and amortization
|
$
|
4,347
|
|
|
$
|
4,726
|
|
|
$
|
8,869
|
|
|
$
|
9,470
|
|
Income from operations before interest income and income taxes:
|
|
|
|
|
|
|
|
||||||||
American Public Education Segment
|
$
|
7,169
|
|
|
$
|
5,663
|
|
|
$
|
12,299
|
|
|
$
|
13,590
|
|
Hondros College of Nursing Segment
|
879
|
|
|
655
|
|
|
1,911
|
|
|
1,035
|
|
||||
Total Income from operations before interest income and income taxes
|
$
|
8,048
|
|
|
$
|
6,318
|
|
|
$
|
14,210
|
|
|
$
|
14,625
|
|
Interest income, net:
|
|
|
|
|
|
|
|
||||||||
American Public Education Segment
|
$
|
645
|
|
|
$
|
15
|
|
|
$
|
1,130
|
|
|
$
|
26
|
|
Hondros College of Nursing Segment
|
16
|
|
|
—
|
|
|
24
|
|
|
—
|
|
||||
Total Interest income, net
|
$
|
661
|
|
|
$
|
15
|
|
|
$
|
1,154
|
|
|
$
|
26
|
|
Income tax expense:
|
|
|
|
|
|
|
|
||||||||
American Public Education Segment
|
$
|
2,066
|
|
|
$
|
2,279
|
|
|
$
|
3,687
|
|
|
$
|
5,968
|
|
Hondros College of Nursing Segment
|
214
|
|
|
246
|
|
|
458
|
|
|
406
|
|
||||
Total Income tax expense
|
$
|
2,280
|
|
|
$
|
2,525
|
|
|
$
|
4,145
|
|
|
$
|
6,374
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
||||||||
American Public Education Segment
|
$
|
1,434
|
|
|
$
|
1,976
|
|
|
$
|
2,828
|
|
|
$
|
3,542
|
|
Hondros College of Nursing Segment
|
137
|
|
|
135
|
|
|
170
|
|
|
239
|
|
||||
Total Capital expenditures
|
$
|
1,571
|
|
|
$
|
2,111
|
|
|
$
|
2,998
|
|
|
$
|
3,781
|
|
|
As of June 30, 2018
|
|
As of December 31, 2017
|
||||
|
(In thousands)
|
||||||
Assets:
|
|
|
|
||||
American Public Education Segment
|
$
|
299,269
|
|
|
$
|
287,656
|
|
Hondros College of Nursing Segment
|
52,469
|
|
|
51,382
|
|
||
Total Assets
|
$
|
351,738
|
|
|
$
|
339,038
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
DoD tuition assistance programs
|
36%
|
|
36%
|
|
36%
|
|
36%
|
Title IV programs
|
26%
|
|
27%
|
|
26%
|
|
27%
|
VA education benefits
|
24%
|
|
23%
|
|
24%
|
|
23%
|
Cash and other sources
|
14%
|
|
14%
|
|
14%
|
|
14%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2018
|
|
|
2017
|
|
|
|
|
|
||
Title IV programs
|
83
|
%
|
|
82
|
%
|
|
83
|
%
|
|
83
|
%
|
Cash and other sources
|
15
|
%
|
|
16
|
%
|
|
15
|
%
|
|
15
|
%
|
VA education benefits
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
•
|
American Public University System, Inc., or APUS,
provides online postsecondary education directed primarily at the needs of the military, military-affiliated, and public service communities. APUS is an online university system, which includes: American Military University, or AMU, which is focused on educating military students, and American Public University, or APU, which is focused on educating non-military students.
|
•
|
National Education Seminars, Inc., which we refer to as Hondros College of Nursing, or HCN
, provides nursing education to approximately
2,010
students at five campuses in Ohio, as well as online. HCN offers a Diploma in Practical Nursing, or PN Program, and an Associate Degree in Nursing, or ADN Program. The campuses are located in the suburban areas of Cincinnati, Cleveland, Columbus, Dayton, and Toledo. HCN also offers an online Registered Nurse to Bachelor of Science in Nursing completion program, or RN-to-BSN Program, predominately to students in Ohio. HCN anticipates enrolling students into a Medical Laboratory Technician program, or MLT Program, at its Cincinnati campus beginning in late 2018, subject to receipt of any required regulatory approvals.
|
•
|
American Public Education Segment, or APEI Segment.
This segment reflects the operational activities of APUS, other corporate activities, and minority investments; and
|
•
|
Hondros College of Nursing Segment, or HCN Segment.
This segment reflects the operational activities of HCN.
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30, |
||||||||
|
2018
|
|
2017
|
|
2018
|
|
|
2017
|
|
||
Revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||
Instructional costs and services
|
39.8
|
|
|
41.3
|
|
|
39.7
|
|
|
39.8
|
|
Selling and promotional
|
18.2
|
|
|
19.4
|
|
|
19.5
|
|
|
19.9
|
|
General and administrative
|
24.2
|
|
|
23.1
|
|
|
24.7
|
|
|
23.3
|
|
Loss on disposals of long-lived assets
|
0.8
|
|
|
0.9
|
|
|
0.5
|
|
|
0.8
|
|
Depreciation and amortization
|
6.0
|
|
|
6.5
|
|
|
6.0
|
|
|
6.4
|
|
Total costs and expenses
|
89.0
|
|
|
91.2
|
|
|
90.4
|
|
|
90.2
|
|
|
|
|
|
|
|
|
|
||||
Income from operations before interest income and income taxes
|
11.0
|
|
|
8.8
|
|
|
9.6
|
|
|
9.8
|
|
Interest income, net
|
0.9
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
|
|
|
|
|
|
|
||||
Income from operations before income taxes
|
11.9
|
|
|
8.8
|
|
|
10.4
|
|
|
9.8
|
|
Income tax expense
|
3.1
|
|
|
3.5
|
|
|
2.8
|
|
|
4.3
|
|
Equity investment (loss) income
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
Net Income
|
8.8
|
%
|
|
5.3
|
%
|
|
7.5
|
%
|
|
5.5
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
|
2017
|
|
||||||
|
(In thousands)
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
American Public Education Segment
|
$
|
63,692
|
|
|
$
|
64,304
|
|
|
$
|
129,360
|
|
|
$
|
132,433
|
|
Hondros College of Nursing Segment
|
9,106
|
|
|
7,892
|
|
|
18,405
|
|
|
15,451
|
|
||||
Total Revenue
|
$
|
72,798
|
|
|
$
|
72,196
|
|
|
$
|
147,765
|
|
|
$
|
147,884
|
|
Income from operations before interest income and income taxes:
|
|
|
|
|
|
|
|
||||||||
American Public Education Segment
|
$
|
7,169
|
|
|
$
|
5,663
|
|
|
$
|
12,299
|
|
|
$
|
13,590
|
|
Hondros College of Nursing Segment
|
879
|
|
|
655
|
|
|
1,911
|
|
|
1,035
|
|
||||
Total Income from operations before interest income and income taxes
|
$
|
8,048
|
|
|
$
|
6,318
|
|
|
$
|
14,210
|
|
|
$
|
14,625
|
|
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2)(3)
|
|||||||
April 1, 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
1,044,116
|
|
|
$
|
148,008
|
|
April 1, 2018 - April 30, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,044,446
|
|
|
148,008
|
|
||
May 1, 2018 - May 31, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,061,196
|
|
|
148,008
|
|
||
June 1, 2018 - June 30, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,071,516
|
|
|
148,008
|
|
||
Total
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
1,071,516
|
|
|
$
|
148,008
|
|
(1)
|
On December 9, 2011, the Company’s Board of Directors approved a stock repurchase program for its common stock, under which the Company may annually purchase up to the cumulative number of shares issued or deemed issued in that year under the Company’s equity incentive and stock purchase plans. Repurchases may be made from time to time in the open market at prevailing market prices or in privately negotiated transactions based on business and market conditions. The stock repurchase program does not obligate us to repurchase any shares, may be suspended or discontinued at any time, and is funded using the Company’s available cash.
|
(2)
|
On May 14, 2012, the Company’s Board of Directors authorized a program to repurchase up to $20 million of shares of the Company’s common stock. On each of March 14, 2013, June 13, 2014, and June 12, 2015 the Company’s Board of Directors increased the authorization by an additional $15 million of shares, for a cumulative increase of $45 million of shares and a total authorization of $65 million of shares. Subject to market conditions, applicable legal requirements and other factors, the repurchases may be made from time to time in the open market or privately negotiated transactions. The authorization does not obligate the Company to acquire any shares, and purchases may be commenced or suspended at any time based on market conditions and other factors as the Company deems appropriate.
|
(3)
|
During the
six
month period ended
June 30, 2018
, we were deemed to have repurchased
61,215
shares of common stock forfeited by employees to satisfy minimum tax-withholding requirements in connection with the vesting of restricted stock grants. These repurchases were not part of the stock repurchase program authorized by our Board of Directors as described in footnotes 1 and 2 to this table.
|
Exhibit No.
|
Exhibit Description
|
|
|
10.1+
|
|
31.1
|
|
31.2
|
|
32.1
|
|
|
|
EX-101.INS **
|
XBRL Instance Document
|
EX-101.SCH **
|
XBRL Taxonomy Extension Schema Document
|
EX-101.CAL **
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
EX-101.DEF **
|
XBRL Taxonomy Extension Definition Linkbase Document
|
EX-101.LAB **
|
XBRL Taxonomy Extension Label Linkbase Document
|
EX-101.PRE **
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
+
|
Management contract or compensatory plan or arrangement
|
|
|
AMERICAN PUBLIC EDUCATION, INC.
|
|
/s/ Dr. Wallace E. Boston
|
August 8, 2018
|
|
Dr. Wallace E. Boston
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
/s/ Richard W. Sunderland, Jr.
|
August 8, 2018
|
|
Richard W. Sunderland, Jr.
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
a.
|
Base Salary
.
The Company shall pay, or cause to be paid, to the Executive an annual base salary (the “
Base Salary
”) at the rate of $350,000 per year. The Base Salary shall be reviewed no less frequently than annually and may be increased at the discretion of the Compensation Committee (the “
Compensation Committee
”) of the Board of Directors (the “
Board
”) of the Company. If the Executive’s Base Salary is increased, the increased amount shall be the Base Salary for the remainder of the employment term hereunder, except that the Company may reduce the Executive’s Base Salary at any time as part of a general salary reduction applied to all employees of the Company, or the Subsidiary, with annual salaries in excess of $150,000 (the “
Senior Executive Group
”) in which case the Executive’s reduced Base Salary shall be the Base Salary for the remainder of the employment term hereunder. Any such reduction in the Executive’s Base Salary shall be no more than the lesser of the median of the percentage salary reductions applied to the Senior Executive Group or twenty percent (20%). The Base Salary shall be payable biweekly or in such other installments as shall be consistent with the payroll procedures of the Company or the Subsidiary.
|
b.
|
Annual Bonus
. The Executive shall be eligible to receive a bonus of up to fifty percent (50%) of the Executive’s Base Salary for each year as determined by the Compensation Committee in its sole discretion (the “
Annual Bonus
”), based upon the achievement of certain performance goals established by the Compensation Committee for each year. The Executive will also be eligible to receive an additional percentage of up to thirty percent (30%) of the Executive’s Base Salary for each year as determined by the Compensation Committee in its sole discretion, based upon the achievement of certain “stretch” performance goals established by the Compensation Committee for each year. Any such bonus shall be paid by March 15 of the year following the year of performance and shall be paid in accordance with and subject to any policy of the Company or Subsidiary on the payment of bonuses.
|
c.
|
Long Term Incentives
. The Executive shall be eligible to participate in such long term incentive programs applicable to members of the Senior Executive Group.
|
d.
|
Signing Bonus
. The Company shall pay, or cause to be paid, to the Executive, on the first regular payroll date after the Effective Date, a one-time bonus of $50,000, which bonus the Executive shall return to the Company within five (5) business days of the termination of the Executive’s employment within twelve (12) months of the Effective Date, if termination is by Company with Cause or by Executive without Good Reason, each as defined below.
|
e.
|
Equity Award
. The Compensation Committee shall authorize a restricted stock unit grant of shares of the common stock of the Company in an amount equivalent to a number of shares determined by dividing $700,000 by the average closing price of the Company’s common stock for the 60 days ending on the Executive’s first day of employment hereunder, which restricted stock unit shall vest one-third per year over a three-year period, subject to continued service and the terms of the award agreement for the grant.
|
f.
|
Other Benefits
. The Executive shall be entitled to receive such other benefits approved by the Compensation Committee and made available to senior executives of the Company. The Executive also shall be entitled to participate in such plans and to receive such other and additional bonuses, incentive compensation and fringe benefits as may be granted or established by the Company from time to time. Nothing contained in this Agreement shall prevent the Company from changing carriers or from effecting modifications in insurance coverage for the Executive.
|
g.
|
Vacation; Holidays
. The Executive shall be entitled to all public holidays observed by the Company and vacation days in accordance with the applicable vacation policies applicable to senior executives of the Company, which shall be taken at a reasonable time or times.
|
h.
|
Withholding Taxes and Other Deductions
. To the extent required by law, the Company shall withhold, or cause to be withheld, from any payments due Executive under this Agreement any applicable federal, state or local taxes and such other deductions as are prescribed by law or Company policy.
|
a.
|
Obligation of Confidentiality.
The Executive covenants and agrees that the Executive will not ever, without the prior written consent of the Board or a person authorized by the Board or except as may be ordered by a court of competent jurisdiction, publish or disclose to any unaffiliated third party (other than in the Executive’s good faith conduct of his position and duties with the Company and/or Subsidiary and on behalf of the Company, Subsidiary or their affiliates) or use for the Executive’s personal benefit or advantage any confidential information with respect to the Company’s, Subsidiary’s or their affiliates’ past, present, or planned business, including but not limited to all information and materials related to any Company, Subsidiary or their affiliates’ business, business plan, product, service, procedure, method, technique, technology, research, strategy, plan, customer or supplier information, customer or supplier list, financial data, technical data, computer files, and computer software, including any of the foregoing that is in any stage of research, development, or planning, and any other information which the Executive obtained while employed by, or otherwise serving or acting on behalf of, the Company, Subsidiary or their affiliates or which the Executive may possess or have under his control, that is not generally known (except for unauthorized disclosures) to the public or within the industries in which the Company, Subsidiary or their affiliates, respectively, do business.
|
b.
|
Reasonable Restrictions
.
The Executive acknowledges that the restrictions contained in Section 9(a) hereof are reasonable and necessary, in view of the nature of the Company’s or Subsidiary’s business, in order to protect the legitimate interests of the Company or Subsidiary, and that any violation thereof would result in irreparable injury to the Company or Subsidiary. Therefore, the Executive agrees that in the event of a breach or threatened breach by the Executive of the provisions of Section 9(a) hereof, the Company or Subsidiary shall be entitled to obtain from any court of competent jurisdiction, preliminary or permanent injunctive relief restraining the Executive from disclosing or using any confidential information. Nothing herein shall be construed as prohibiting the Company or Subsidiary from pursuing any other remedies available to it for breach or threatened breach, including, without limitation, recovery of damages from the Executive.
|
c.
|
Return of Materials.
The Executive shall deliver promptly to the Company on termination of employment, or at any other time the Company may so request, all confidential materials, memoranda, notes, records, reports and other documents and materials (and all copies thereof), in whatever form or medium, that contain any of the foregoing, including but not limited to computer data, files, software, and hardware, relating to the Company’s, Subsidiary’s or their respective affiliates’ respective businesses that the Executive obtained while employed by, or otherwise serving or acting on behalf of, the Company, Subsidiary or their affiliates or which the Executive may then possess or have under his control.
|
a.
|
Non-Competition
. The Executive covenants and agrees that, during the Executive’s employment hereunder and for a period of eighteen (18) months thereafter (to the extent permitted by law), the Executive will not at any time, in the United States or any other jurisdiction in which the Company, the Subsidiary or their respective corporate controlled affiliates is engaged or has reasonably firm plans to engage in business, whether as a principal, investor, employee, consultant, independent contractor, officer, director, board member, manager, partner, agent, or otherwise, alone or in association with any other person, firm, corporation, or business organization, work for, become employed by, engage in, carry on, provide services to, or assist in any manner (whether or not for compensation or gain) a person or entity that engages in any business in which the Company, the Subsidiary, or any of their corporate controlled affiliates is engaged (a “
Competing Business
”), where Executive’s position or service for such Competing Business relates to Executive’s positions with or the types of services performed by the Executive for the Company, the Subsidiary, or any of their corporate controlled affiliates, or is otherwise competitive with the Company’s, the Subsidiary’s, or any of their corporate controlled affiliates’ products or services;
provided
,
however
, that the foregoing will not prohibit the Executive from serving on a board of directors (or comparable bodies) of other entities where the Company has given prior permission; and
provided
,
further
, that the foregoing covenants and agreements in this Section 10.a. will not be in effect at any time when the Company is in material breach of its obligations under Section 12.d. below. Notwithstanding the foregoing, the ownership by the Executive of less than one percent (1%) of the outstanding stock of any corporation listed on a national securities exchange shall not be deemed a violation of this Section 10(a).
|
b.
|
Injunctive Relief
. The Company shall be entitled to injunctive relief to protect its rights under this Section 10 without the necessity of posting a bond. In the event the restrictions against engaging in a competitive activity contained in Section 10(a) hereof shall be determined by any court of competent jurisdiction to be unenforceable by reason of their extending for too great a period of time or over too great a geographical area or by reason of their being too extensive in any other respect, Section 10(a) hereof shall be interpreted to extend only over the maximum period of time for which it may be enforceable and over the maximum geographical area as to which it may be enforceable and to the maximum extent in all other respects as to which it may be enforceable, all as determined by the court in the action.
|
c.
|
Non-Solicitation
. The Executive covenants and agrees that the Executive will not, during the Executive’s employment and for a period of one (1) year thereafter solicit, induce, entice, or encourage or attempt to solicit, induce, entice, or encourage any employee of the Company or Subsidiary or any of the Company, the Subsidiary, or any of their corporate controlled affiliates to render services for any other person, firm, entity, or corporation or to terminate his employment with the Company, the Subsidiary, or any of their corporate controlled affiliates.
|
a.
|
Death
. The Executive’s employment hereunder shall terminate upon the Executive’s death.
|
b.
|
By the Company
.
The Company may terminate the Executive’s employment hereunder under the following circumstances:
|
i.
|
The Company may terminate the Executive’s employment hereunder for “Disability.” For purposes of this Agreement, “
Disability
” shall mean the Executive shall have been unable to perform all of the Executive’s duties hereunder by reason of illness, physical or mental disability or other similar incapacity, which inability shall continue for more than three (3) consecutive months.
|
ii.
|
The Company may terminate the Executive’s employment hereunder for “Cause.” For purposes of this Agreement, “
Cause
” shall mean (A) refusal by the Executive to follow a lawful written order of the Chief Executive Officer of the Company, Chair of the Board or the Board, (B) the Executive’s engagement in conduct materially injurious to the Company or Subsidiary or their respective reputations, (C) dishonesty of a material nature that relates to the performance of the Executive’s duties under this Agreement, (D) the Executive’s conviction for any crime involving moral turpitude or any felony, or (E) the Executive’s continued failure to perform his duties reasonably assigned to him under this Agreement (except due to the Executive’s incapacity as a result of physical or mental illness) to the satisfaction of the Board for a period of at least thirty (30) consecutive days after written notice is delivered to the Executive specifically identifying the manner in which the Executive has failed to perform his duties.
|
iii.
|
The Company, in the sole discretion of the Board, may terminate the Executive’s employment hereunder at any time other than for Disability or Cause, for any reason or for no reason at all.
|
c.
|
By the Executive
. The Executive may terminate the Executive’s employment hereunder for “Good Reason.” For purposes of this Agreement, “
Good Reason
” shall mean:
|
i.
|
the assignment to the Executive of any duties inconsistent in any material respect with the Executive’s position with the Parent as contemplated by Section 3 of this Agreement, excluding for this purpose an isolated, insubstantial and inadvertent action which is remedied by the Company promptly after receipt of notice thereof given by the Executive;
|
ii.
|
any material failure by the Company to comply with any of the provisions of this Agreement, other than an isolated, insubstantial and inadvertent failure which is remedied by the Company promptly after receipt of notice thereof given by the Executive,
provided
, that in no event will a failure to pay an earned Annual Bonus by March 15 of the year following the performance year be considered a material failure by the Company to comply with this Agreement;
|
iii.
|
after a Change of Control (as defined in Section 13), the Executive does not continue as the Chief Technology Officer, or any other office he holds with the Company at the time of the Change of Control, of the most senior resulting entity succeeding to the business of the Company; or
|
iv.
|
any material failure by the Company to comply with and satisfy Section 17(c) of this Agreement.
|
d.
|
Notice of Termination
. Any termination of the Executive’s employment by the Company or the Executive (other than pursuant to Section 11(a) hereof) shall be communicated by written “Notice of Termination” to the other party hereto in accordance with Section 14 hereof. For purposes of this Agreement, a “
Notice of Termination
” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon, if any, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.
|
e.
|
Date of Termination
. For purposes of this Agreement, the “
Date of Termination
” shall mean (i) if the Executive’s employment is terminated by the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated pursuant to Section 11(b)(i) hereof, thirty (30) days after Notice of Termination,
provided
, that the Executive shall not have returned to the performance of the Executive’s duties on a full-time basis during this thirty (30)-day period; (iii) if the Executive’s employment is terminated pursuant to Section 11(b)(ii) or 11(b)(iii) hereof, the date specified in the Notice of Termination; (iv) if the Executive terminates the Executive’s employment for Good Reason pursuant to Section 11(c) hereof, the date specified in the Notice of Termination,
provided
,
however
, that such date must occur after the cure period provided in Section 11(c); and (v) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination. Notwithstanding the foregoing, the Executive will be deemed to have a Date of Termination for purposes of determining the timing of any payments or benefits hereunder that are classified as deferred compensation only upon a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “
Code
”).
|
a.
|
If the Executive’s employment is terminated by the Executive’s death, the Company shall pay, or cause to be paid, to the Executive’s estate, or as may be directed by the legal representatives of the estate, (i) the Executive’s full Base Salary through the Date of Termination to the extent not theretofore paid, (ii) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon),
provided
that any such deferred compensation shall be paid in accordance with the terms and conditions of any applicable deferred compensation plan, and any accrued vacation pay, in each case, to the extent not theretofore paid, and (iii) all other unpaid amounts, if any, to which the Executive is entitled as of the Date of Termination in connection with any fringe benefits or under any incentive compensation plan or program of the Company pursuant to Section 5(b) “Annual Bonus,” Section 5(d) “Signing Bonus,” Section 5(f) “Other Benefits,” and Section 7 “Relocation Expenses” hereof (the sum of the amounts described in clauses (i), (ii) and (iii) shall be hereinafter referred to as the “
Base Amounts
”), at the time these payments are due and the Company and Parent shall have no further obligations to the Executive under this Agreement.
|
b.
|
If the Company terminates the Executive’s employment for Disability as provided in Section 11(b)(i) hereof, the Company shall pay, or cause to be paid, to the Executive the following amounts and the Company and the Parent shall have no further obligations to the Executive,
provided
, that in the case of payments to be made pursuant to section (ii) and (iii) below, on or before the sixtieth day following the Date of Termination, the Executive executes a release of claims substantially in the form attached hereto as
Appendix A
and all revocation periods applicable to such release have expired without the release being revoked:
|
i.
|
an amount equal to the sum of (A) the Executive’s Base Salary through the Date of Termination to the extent not theretofore paid, (B) the product of (x) the Annual Bonus (to the extent Company and Executive performance were satisfying the performance targets, adjusted for the short period through the Date of Termination, for an Annual Bonus) and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365, and (C) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon),
provided
that any such deferred compensation shall be paid in accordance with the terms and conditions of any applicable deferred compensation plan, and any accrued vacation pay, in each case, to the extent not theretofore paid, (the sum of the amounts described in clauses (A), (B), and (C) shall be hereinafter referred to as the “
Accrued Obligations
”) in a lump sum in cash within thirty (30) days of the Date of Termination; and
|
ii.
|
an amount equal to 1.5 times the Executive’s Base Salary paid in substantially equal proportionate installments in accordance with the Company’s normal payroll practices for a period of eighteen (18) months, commencing within sixty (60) days following Executive’s Date of Termination,
provided
, that if Executive’s Date of Termination occurs within sixty (60) days prior to the end of a calendar year, payments will commence in the year after the Date of Termination, and in all cases, the
|
iii.
|
an amount equal to 1.5 times the Annual Bonus (to the extent Company and Executive performance were satisfying the performance targets, adjusted for the short period, after the Date of Termination to the end of the calendar year for an Annual Bonus and as to the remainder of the eighteen (18)-month period following the Date of Termination, only if net income has increased from the same period in the prior year and the performance targets established for the successor chief technology officer (or, to the extent there is no successor chief technology officer, the most comparable executive selected by the Compensation Committee in its sole discretion) were being satisfied for that period), which amounts will be paid (A) as to the portion of the Annual Bonus attributable to the short period after the Date of Termination to the end of the calendar year in which the Date of Termination occurs, within sixty (60) days of the end of such calendar year, and (B) as to the portion of the Annual Bonus attributable to the remainder of the eighteen (18)-month period following the Date of Termination, within sixty (60) days of the end of such eighteen (18)-month period (the “
Bonus Continuation Payments
”).
|
c.
|
If the Company terminates the Executive’s employment for Cause as provided in Section 11(b)(ii) hereof or if the Executive terminates the Executive’s employment other than for Good Reason, the Company shall pay the Executive the Base Amounts, and the Company shall have no further obligations to the Executive under this Agreement.
|
d.
|
Except where payments are required to be made under Section 12(e), if the Company terminates the Executive’s employment other than for Cause or Disability or the Executive terminates the Executive’s employment for Good Reason as provided in Section 11(c) hereof, the Company shall pay, or cause to be paid to, the Executive the following amounts and the shall have no further obligations to the Executive,
provided
, that, in the case of (ii) through (v), on or before the sixtieth day following the Date of Termination, the Executive executes a release of claims substantially in the form attached hereto as
Appendix A
and all revocation periods applicable to such release have expired without the release being revoked:
|
i.
|
the Accrued Obligations in a lump sum in cash within thirty (30) days of the Date of Termination;
|
ii.
|
the Salary Continuation Payments;
|
iii.
|
the Bonus Continuation Payments;
|
iv.
|
for twelve (12) months after the Date of Termination, or any longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall cause benefits to continue to the Executive and/or the Executive’s family at least equal to those which would have been provided to them in accordance with the welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer employees of the Company and its affiliated companies, as if the Executive’s employment had not been terminated;
provided
,
however
, that the Company may elect, with respect to some or all of such benefits, that in lieu of the continuation of such benefits, the Company may pay, or cause to be paid to, the Executive a lump sum payment, less applicable withholdings for federal, state, and local taxes, equal to twelve (12) months’ premiums (at the rate and level of coverage applicable at the time of the Executive’s termination) under the Company’s welfare benefit plans, practices, policies and programs (at the rate and level of coverage applicable at the time of the Executive’s termination) for the benefits for which this election is made;
provided
,
further
, that if such a lump sum payment is not permissible without incurring taxes under Section 409A of the Code, the Company may elect to make twelve (12) monthly payments to the Executive to aggregate to the amounts that would otherwise have been paid a lump sum; and
provided
,
further
, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under the other plan during the applicable period of eligibility; and
|
v.
|
to the extent not theretofore paid or provided, for twelve (12) months after the Date of Termination, the Company shall timely pay or provide, or cause to be paid or provided, to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (these other amounts and benefits shall be hereinafter referred to as the “
Other Benefits
”).
|
e.
|
If within one hundred and eighty (180) days after a Change of Control (as defined in Section 13), the Company terminates the Executive’s employment other than for Cause or Disability or the Executive terminates the Executive’s employment for Good Reason as provided in Section 10(c) hereof, the Company shall pay, or cause to be paid to, the Executive the following amounts and the Company shall have no further obligations to the Executive,
provided
, that, in the case of (ii) through (v), on or before the sixtieth day following the Date of Termination, the Executive executes a release of claims substantially in the form attached hereto as
Appendix A
and all revocation periods applicable to such release have expired without the release being revoked:
|
i.
|
an amount equal to the sum of (A) the Executive’s Base Salary through the Date of Termination to the extent not theretofore paid, (B) the product of (x) the Annual Bonus (to the extent Company and Executive performance were satisfying the performance targets, adjusted for the short period through the Date of Termination, for an Annual Bonus) multiplied by (y) a fraction, the numerator of which is the number of days in the current fiscal year through the effective date of termination of the Executive’s employment (the “
Change of Control Date of Termination”),
and the denominator of which is 365, and (C) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon)
provided
that any such deferred compensation shall be paid in accordance with the terms and conditions of any applicable deferred compensation plan, and any accrued vacation pay, in each case, to the extent not theretofore paid, in a lump sum in cash within thirty (30) days of the Change of Control Date of Termination;
|
ii.
|
an amount equal to the sum of (A) two (2) times the Executive’s Base Salary and (B) two (2) times the Annual Bonus (to the extent the Company and Executive performance were satisfying the performance targets, adjusted for the short period), in a lump sum in cash within sixty (60) days of the Change of Control Date of Termination,
provided
, that if Executive’s Change of Control Date of Termination occurs within sixty (60) days prior to the end of a calendar year, payments will be paid on the first payroll date in the year after the Change of Control Date of Termination;
|
iii.
|
for twelve (12) months after the Date of Termination, or any longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall cause benefits to continue to the Executive and/or the Executive’s family at least equal to those which would have been provided to them in accordance with the welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer employees of the Company and its affiliated companies, as if the Executive’s employment had not been terminated;
provided
,
however
, that the Company may elect, with respect to some or all of such benefits, that in lieu of the continuation of such benefits, the Company may pay, or cause to be paid, to the Executive a lump sum payment, less applicable withholdings for federal, state, and local taxes, equal to twelve (12) months’ premiums (at the rate and level of coverage applicable at the time of the Executive’s termination) under the Company’s welfare benefit plans, practices, policies and programs (at the rate and level of coverage applicable at the time of the Executive’s termination) for the benefits for which this election is made;
provided
,
further
, that if such a lump sum payment is not permissible without incurring taxes under Section 409A of the Code, the Company may elect to make twelve (12) monthly payments to the Executive to aggregate to the amounts that would otherwise have been paid a lump sum; and
provided
,
further
, that if the Executive becomes reemployed with another
|
iv.
|
to the extent not theretofore paid or provided, for twelve (12) months after the Date of Termination, the Company shall timely pay or provide to the Executive Other Benefits.
|
v.
|
in the event that it is determined that any payment, benefit, or distribution described in this Section 12(e) or in Section 13 made by the Company, by any of its affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company’s assets (within the meaning of Section 280G of the Code) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of this Section 12(e), Section 13 or otherwise (the “
Total Payments
”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties, are collectively referred to as the “
Excise Tax
”),
then the payments due under this Agreement shall be reduced so that the Total Payments will not result in the imposition of such Excise Tax. The payment reduction contemplated by the preceding sentence shall be implemented by determining the “Parachute Payment Ratio” (as defined below) for each “parachute payment” within the meaning of Section 280G of the Code, and then reducing the “parachute payments” in order beginning with the “parachute payment” with the highest Parachute Payment Ratio. For “parachute payments” with the same Parachute Payment Ratio, such “parachute payments” shall be reduced based on the time of payment of such “parachute payments” with amounts having later payment dates being reduced first. For “parachute payments” with the same Parachute Payment Ratio and the same time of payment, such “parachute payments” shall be reduced on a pro rata basis (but not below zero) prior to reducing “parachute payments” with a lower Parachute Payment Ratio. For purposes hereof, the term “
Parachute Payment Ratio
” shall mean a fraction the numerator of which is the value of the applicable “parachute payment” for purposes of Section 280G of the Code and the denominator of which is the intrinsic value of such “parachute payment.” For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) the entire amount of the Total Payments shall be treated as “parachute payments” within the meaning of Code Section 280G(b)(2) and as subject to the Excise Tax, unless and to the extent, in the written opinion of the Company’s independent accountants and reasonably acceptable to Executive, such payments (in whole or in part) are not subject to the Excise Tax; and (B) the value of any noncash benefits or any deferred payment or benefit (constituting a part of the Total Payments) shall be determined by the Company’s independent auditors in accordance with the principles of Code Sections 280G(d)(3) and (4). Notwithstanding the foregoing, if (Y) the Total Payments exceed three (3) times the Executive’s “base amount” as defined
|
f.
|
No Duty to Mitigate
. The Executive shall not be required to mitigate amounts payable pursuant to Section 12 hereof by seeking other employment.
|
g.
|
No Additional Payments
. Notwithstanding anything to the contrary in this Agreement, the Executive acknowledges and agrees that in the event of the termination of his employment, even if in breach of this Agreement, he will be entitled only to those payments specified herein for the circumstances of his termination, and not to any other payments by way of damages or claims of any nature, whether under this Agreement or under any other agreements between the Executive and the Company.
|
a.
|
If to the Company:
|
b.
|
If to the Executive, to the Executive’s address set forth on the signature page to this Agreement, or to the home address of the executive in the official records of the Company; or, in the case of the Company, to such other address as the Company may designate in a notice to the other. Each notice, demand, request or other communication that shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes three (3) days after it is deposited in the U.S. mail, postage prepaid, or at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, the answer back or the affidavit of messenger being deemed conclusive evidence of delivery) or at such time as delivery is refused by the addressee upon presentation.
|
a.
|
This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.
|
b.
|
This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.
|
c.
|
The Company will require any successor or any party that acquires control of the Company (whether direct or indirect, by purchase, merger, consolidation or
|
|
AMERICAN PUBLIC EDUCATION, INC.
|
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||
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||
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||
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||
|
By:
|
/s/ Dr. Wallace E. Boston
|
|
|
|
|
Name:
|
Dr. Wallace E. Boston
|
|
|
|
Title:
|
CEO
|
|
|
|
|
||
|
THE EXECUTIVE:
|
|
||
|
|
|
||
|
|
|
||
|
/s/ Patrik Dyberg
|
|
||
|
Patrik Dyberg
|
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||
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
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|
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|
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|
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|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of American Public Education, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
|
/s/ Dr. Wallace E. Boston
|
|
Name: Dr. Wallace E. Boston
|
|
Title: President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of American Public Education, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
|
/s/ Richard W. Sunderland, Jr.
|
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Name: Richard W. Sunderland, Jr.
|
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Title: Executive Vice President and Chief Financial Officer
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By:
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/s/ Dr. Wallace E. Boston
|
|
Name: Dr. Wallace E. Boston
|
|
Title: President and Chief Executive Officer
|
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August 8, 2018
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By:
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/s/ Richard W. Sunderland, Jr.
|
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Name: Richard W. Sunderland, Jr.
|
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Title: Executive Vice President and Chief Financial Officer
|
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August 8, 2018
|