SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
annual report, including the sections entitled “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” and
“Business,” contains forward-looking statements. We may, in some cases, use
words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “estimate,”
“intend,” “should,” “would,” “could,” “potentially,” “will,” or “may,” or other
words that convey uncertainty of future events or outcomes to identify these
forward-looking statements. Forward-looking statements in this annual report
include statements about:
•
our
ability to comply with the extensive regulatory framework applicable to
our industry, including Title IV of the Higher Education Act and the
regulations thereunder, state laws and regulatory requirements, and
accrediting agency requirements;
our
expectations regarding provisional certification;
the
pace of growth of our enrollment;
our
conversion of prospective students to enrolled students and our retention
of active students;
our
ability to update and expand the content of existing programs and the
development of new programs in a cost-effective manner or on a timely
basis;
our
maintenance and expansion of our relationships with the United States
Armed Forces and various organizations and the development of new
relationships;
the
competitive environment in which we operate;
our
cash needs and expectations regarding cash flow from
operations;
our
ability to manage and grow our business and execution of our business and
growth strategies; and
our
financial performance generally.
Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance,
or achievements. There are a number of important factors that could cause actual
results to differ materially from the results anticipated by these
forward-looking statements, which apply only as of the date of this annual
report. These important factors include those that we discuss in Item 1A
“Risk Factors,” Item 7 “Management’s Discussion and Analysis of Financial
Condition and Results of Operation” and elsewhere. You should read these factors
and the other cautionary statements made in this annual report as being
applicable to all related forward-looking statements wherever they appear in
this annual report. If one or more of these factors materialize, or if any
underlying assumptions prove incorrect, our actual results, performance or
achievements may vary materially from any future results, performance or
achievements expressed or implied by these forward-looking statements. We
undertake no obligation to publicly update any forward-looking statements after
the date of this annual report, whether as a result of new information, future
events or otherwise, except as required by law.
BUSINESS
Company
Overview
American
Public Education, Inc. is a provider of exclusively online postsecondary
education with an emphasis on serving the needs of the military and public
service communities. We operate through two universities, American Military
University, or AMU, and American Public University, or APU, which together
constitute the American Public University System. Our universities share a
common faculty and curriculum, which includes 76 degree programs and 51
certificate programs in disciplines related to national security, military
studies, intelligence, homeland security, criminal justice, technology, business
administration, education and liberal arts. We currently serve over 63,700
students living in all 50 states, the District of Columbia, and many
foreign countries. Our university system is regionally and nationally
accredited.
From 2007
to 2009, our total revenue increased from $69.1 million to
$149.0 million, which represents a compound annual growth rate (CAGR) of
47%. Our net course registrations increased 55% and 41% in 2008 and 2009,
respectively, over the prior periods. We believe our growth is attributable to:
(i) high student satisfaction and referral rates; (ii) regional
accreditation in May 2006; (iii) increasing acceptance of distance learning
within our targeted markets; and (iv) achieving certification to
participate in federal student aid programs under Title IV of the Higher
Education Act of 1965 beginning with classes starting in November 2006. As our
revenue base grows, we expect our growth rate percentages to continue to
decline. However, we expect actual dollar revenue growth to increase. Net income
improved to $23.9 million in 2009 from net income of $8.8 million in
2007.
Approximately 75% of our students serve
in the United States military on active duty, in the reserves, or in the
National Guard or are veterans. Many of our other students
have careers in public service, such as federal, national and local law
enforcement personnel or other first responders. Our programs are generally
designed to help these and other students advance in their current professions
or prepare for their next career. Our online method of instruction is
well-suited to our students, many of whom serve in positions requiring extended
and irregular schedules, are on-call for rapid response missions, participate in
extended deployments and exercises, travel or relocate frequently and have
limited financial resources. Our satisfied students have been a significant
source of referrals for us, which we believe has led to lower marketing
costs among certain of our student populations. Over 50% of our new students in 2009
who responded to our surveys indicated that they inquired about enrolling in
either AMU or APU as the result of a personal
referral.