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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended: December 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from [] to []
 Commission file number: 001-34211
 GRAND CANYON EDUCATION, INC.
 (Exact name of registrant as specified in its charter)
 DELAWARE
    
    20-3356009(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 3300 W. CAMELBACK ROAD, PHOENIX, ARIZONA 85017  (Address of principal executive offices, including zip code)
 Registrants telephone number, including area code:
(602) 639-7500
 Securities registered pursuant to Section 12(b) of the Act:
 (Title of Each Class)
    
    (Name of Each Exchange on Which Registered)Grand Canyon Education, Inc.
    
    The NASDAQ Global MarketCommon stock, $.01 par value
 Securities registered pursuant to Section 12(g) of the Act:
None  (Title of class)
 Yes o No þ
 Yes o No þ
 þ o
 Yes o No o
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



PagePART ISpecial Note Regarding Forward-Looking Statements
    
    
    3Item 1. Business
    
    
    4Item 1A. Risk Factors
    
    
    36Item 1B. Unresolved Staff Comments
    
    
    61Item 2. Properties
    
    
    61Item 3. Legal Proceedings
    
    
    61Item 4. Submission of Matters to a Vote of Security Holders
    
    
    62PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    63Item 6. Selected Consolidated Financial Data
    
    
    66Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    69Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    85Item 8. Financial Statements and Supplementary Data
    
    
    86Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    125Item 9A. Controls and Procedures
    
    
    125Item 9B. Other Information
    
    
    126PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    126Item 11. Executive Compensation
    
    
    126Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    126Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    126Item 14. Principal Accounting Fees and Services
    
    
    126PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    127SIGNATURES
    
    
    130Exhibit Index
    
    
    131Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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Special Note Regarding Forward-Looking Statements
 Business Risk Factors Managements Discussion and Analysis of Financial Condition and Results of Operations
  
    
    our failure 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 commission requirements;
    
    the results of the ongoing investigation by the Department of Educations Office
of Inspector General and the pending qui tamaction regarding the manner in which we
have compensated our enrollment personnel, and possible remedial actions or other
liability resulting therefrom;
    
    the ability of our students to obtain federal Title IV funds, state financial
aid, and private financing;
    
    risks associated with changes in applicable federal and state laws and
regulations and accrediting commission standards;
    
    risks associated with a change in control under applicable regulatory or
accrediting standards, and our inability to obtain appropriate approvals for such an
event in a timely manner, or at all;
    
    our ability to hire and train new, and develop and train existing, enrollment
counselors;
    
    the pace of growth of our enrollment;
    
    our ability to convert prospective students to enrolled students and to retain
active students;
    
    our success in updating and expanding the content of existing programs and
developing new programs in a cost-effective manner or on a timely basis;
    
    industry competition, including competition for qualified executives and other
personnel;
    
    risks associated with the competitive environment for marketing our programs;
    
    failure on our part to keep up with advances in technology that could enhance the
online experience for our students;
    
    the extent to which obligations under our loan agreement, including the need to
comply with restrictive and financial covenants and to pay principal and interest
payments, limits our ability to conduct our operations or seek new business
opportunities;
    
    our ability to manage future growth effectively;
    
    general adverse economic conditions or other developments that affect job
prospects in our core disciplines; and
    
    other factors discussed under the headings Risk Factors, Managements
Discussion and Analysis of Financial Condition and Results of Operations, Business,
and Regulation.
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Part I
 
 Item 1. Business
 Overview
       4




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History
    Our Approach to Academic Quality
  
    
    Academically rigorous, career oriented curricula.We create academically rigorous
curricula that are designed to enable all students to gain the foundational knowledge,
professional competencies, and demonstrable skills required to be successful in their
chosen fields. Our curriculum is designed and delivered by faculty that are committed to
delivering a high quality, rigorous education. We design our curricula to address
specific career-oriented objectives that we believe working adult students in the
disciplines we serve are seeking. Through this combination, we believe that we produce
graduates that can compete and become leaders in their chosen fields.
    
    Qualified faculty.We demonstrate our commitment to high quality education by
hiring qualified faculty with relevant practical experience. Substantially all of our
current faculty members hold at least a masters degree in their respective field and
28% of our faculty members hold a doctoral degree. Many of our faculty members are able
to integrate relevant, practical experiences from their professional careers into the
courses they teach. We invest in the professional development of our faculty members by
providing training in traditional and online teaching techniques, hosting events and
discussion forums that foster sharing of best practices, and continually assessing
teaching effectiveness through peer reviews and student evaluations.
    
    Standardized course design.We employ a standardized curriculum development
process to ensure a consistent learning experience with frequent faculty-student
interaction in our courses. We thereafter continuously review our programs in an effort
to ensure that they remain consistent, up-to-date, and effective in producing the
desired learning outcomes. We also regularly review student surveys to identify
opportunities for course modifications and upgrades.
    
    Effective student services.We establish teams comprised of enrollment, academic
and finance personnel that act as the primary support contact point for each of our
students, beginning at the application stage and continuing through graduation. In
recent years, we have also concentrated on improving the technology used to support
student learning, including enhancing our online learning platform and further
improving student services through the implementation of online interfaces. As a result,
many of our support services, including academic, administrative, library, and career
services, are accessible online, generally allowing users to access these services at a
time and in a manner that is generally convenient to them.
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
    
    Continual academic oversight.We have centralized the assessment functions for
all of our programs through our Office of Assessment, which continuously evaluates the
desired learning outcomes for each of our programs. We continuously assess outcomes data
to determine whether our students graduate with the knowledge, competencies, and skills
that are necessary to succeed in the workplace. The Office of Assessment also initiates
and manages periodic examinations of our curricula by internal and external reviewers to
evaluate and verify program quality and workplace applicability. Based on these
processes and student feedback, we determine whether to modify or discontinue programs
that do not meet our standards or market needs, or to create new programs. The Office of
Assessment also oversees assessment of mission-based competencies.
  
    
    Flexibility in program delivery.We also seek to meet market demands by providing
students with the flexibility to take courses exclusively online or to combine online
coursework with various campus and onsite options. For example, based on market demand,
particularly in connection with our nursing programs, we have established satellite
locations at multiple hospitals that allow nursing students to take clinical courses
onsite while completing other course work online. We have established similar onsite
arrangements with other major employers, including schools and school districts through
which students can pursue student teaching opportunities. This flexibility raises our
profile among employers, encourages students to take and complete courses and eliminates
inconveniences that tend to lessen student persistence.
    
    Small class size.At December 31, 2009, 90% of our online classes had 25 or fewer
students. These class sizes provide each student with the opportunity to interact
directly with course faculty and to receive individualized feedback and attention while
also affording our faculty with the opportunity to engage proactively with a manageable
number of students. We believe this interaction enhances the academic quality of our
programs by promoting opportunities for students to participate actively and thus build
the requisite knowledge, competencies, and skills.
 Accreditation and Program Approvals
  Specialized Accreditations and ProgramCollege
    
    Approvals
    
    Current PeriodCollege of Education
    
         The Arizona State
Board of Education
approves our College of Education to
offer Institutional Recommendations for
the certification of elementary,
secondary, and special education teachers
and school administrators.
    
    2008  2010Ken Blanchard College of Business
    
         The Association of
Collegiate Business
Schools and Programs accredits our
Executive Master of Business
Administration degree program, Master of
Business Administration degree program,
and our Bachelor of Science degree
programs in Accounting, Business
Administration, Marketing and
Entrepreneurship.
    
    2007  2017
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Specialized Accreditations and ProgramCollege
    
    Approvals
    
    Current PeriodCollege of Nursing and Health
Sciences
    
         The Commission on
Collegiate Nursing Education accredits
our Bachelor of
Science in Nursing and Master of Science
in Nursing degree programs.
    
    2006  2016 (B.S.) 
2006  2011 (M.S.)     The Arizona State
Board of Nursing
approves our Bachelor of Science in
Nursing and Master of Science in Nursing
degree programs.
    
    2006  2016 (B.S.) 
2006  2011 (M.S.)     The Commission on
Accreditation of
Athletic Training Education accredits our
Athletic Training Program.
    
    2008  2013
  Curricula
   
    
    the College of Education, which has a 60-year history as one of Arizonas leading
teachers colleges and consistently graduates teachers who meet or exceed state averages
on the Arizona Educator Proficiency Assessment exams;
    
    the Ken Blanchard College of Business, which has a well-known brand among our
target student population, an advisory board that includes nationally recognized
business leaders, and a reputation for offering career-oriented degree programs,
including an Executive MBA and programs in leadership, business, and entrepreneurship;
    
    the College of Nursing and Health Sciences, which has a strong reputation within
the Arizona healthcare community and is the second largest nursing program in Arizona;
and
    
    the College of Liberal Arts, which develops and provides many of the general
education course requirements in our other colleges and also serves as one of the
vehicles through which we offer programs in additional targeted disciplines.
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College of Education
    
    Ken Blanchard College of BusinessDegree Program
    
    Emphasis
    
    Degree Program
    
    EmphasisDoctor of Education      Organizational Leadership  Organizational
Development      Organizational Leadership  Higher Education
Leadership      Organizational Leadership  Effective Schools      Organizational Leadership  Behavioral Health      Organizational Leadership  Instructional
LeadershipMaster of Arts
    
          Teaching  Professional Learning Communities
      Teaching  Teaching Leadership
    
    Ken Blanchard Executive
MBAMaster of Education
    
          Education Administration  Institutional
Recommendation (IR)
    
    Master of Business
Administration
    
          Accounting
      General      Education Administration  Organizational
Leadership  Non-IR
    
    
    
          Finance
      Health Systems Management      Elementary Education  IR
    
    
    
          Marketing      Elementary Education  Non-IR
    
    
    
          Leadership      Curriculum and Instruction: Reading Elementary
      Curriculum and Instruction: Reading  Secondary
    
    
    
          Strategic Human Resources
Management      Curriculum and Instruction: Technology      Secondary Education  IR      Secondary Education  Non-IR
    
    Master of Science
    
          Leadership      Special Education for Certified Special Educators
      Teaching English to Speakers of Other Languages
    
    
    
          Leadership  Disaster
Preparedness & Executive Fire Leadership      Special Education  IR      Special Education  Non-IR
    
    Bachelor of Science
    
          Accounting      Business Administration      Applied Management      Finance and Economics      Entrepreneurial Studies      Marketing      Public Safety Administration      Public Safety and Emergency
ManagementBachelor of Science
    
          Elementary/Special Education      Elementary Education  Early Childhood Education      Elementary Education  English      Elementary Education  Math      Elementary Education  Science      Secondary Education  Biology*      Secondary Education  Business Education      Secondary Education  Chemistry*      Secondary Education  Mathematics      Secondary Education  Social Studies      Secondary Education  Physical Education*      Secondary Education  English
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College of Nursing and Health Sciences
    
    College of Liberal ArtsDegree Program
    
    Emphasis
    
    Degree Program
    
    EmphasisMaster of Science
    
          Nursing  Family Nurse Practitioner*      Nursing  Leadership in Healthcare
Systems
    
    Bachelor of Science
    
          Justice Studies      Nursing  Clinical Nurse Specialist
(Education Focus)*
    
    
    
          Psychology
      Sociology      Nursing  Clinical Nurse Specialist*      Nursing  Nursing Education
    
    Bachelor of Arts
    
          Communications      Professional Counseling
    
    
    
          English Literature      Addiction Counseling
    
    
    

      Interdisciplinary Studies      Marriage and Family Therapy
    
    
    
          Christian Studies      Health Care Administration
    
    
    
          HistoryBachelor of Science
    
          Nursing*
    
    Master of Science
    
          Criminal Justice      PsychologyBachelor of Science
    
          Biology  Pre-Medicine*      Biology  Pre-Pharmacy*
    
    Master of Arts
    
          Christian Studies      Biology  Pre-Physician Assistant*      Health Science: Professional Development
and Advanced Patient Care      Respiratory Care      Medical Imaging Sciences      Athletic Training*      Addiction Counseling      Exercise Science  Athletic Coaching      Exercise Science  Health Education      Exercise Science  Physical Education      Exercise Science  Pre-Physical TherapyUndergraduate Minors      Athletic Coaching*
    
          Christian Studies      Behavioral Sciences*
    
          Communication      Business
    
          English Literature      Health Education*
    
          Justice Studies      History
    
          Psychology      Sociology
 
 *
    
    Indicates program was offered on ground only   New Program Development
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Assessment
  Faculty
   Student Support Services
  Academic services.
 Administrative services.
  10




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Library services.
 Career services.
 Technology support services.
 Marketing, Recruitment, and Retention
 Marketing.
   
    
    Internet and affiliate advertising, which generates the majority of our leads and
which includes purchasing leads from aggregators and also engaging in targeted, direct
email advertising campaigns, and coordinated campaigns with various affiliates;
    
    search engine optimization techniques, through which we seek to obtain high
placement in search engine results in response to key topic and word searches and drive
traffic to our website;
    
    seminar and event marketing, in which our marketing and enrollment personnel host
group events at various venues, including community colleges, corporations, and
hospitals;
    
    referrals from existing students, alumni, and employees;
    
    a national accounts program that seeks to develop relationships with employers in
our core disciplines, including healthcare providers, school districts, emergency
services providers, and large corporations, that may be interested in providing
dedicated and customized online and onsite educational opportunities to their employees,
and to encourage senior executives to participate in executive training programs; and
    
    print and direct mail advertising campaigns, and other public relations and
communications efforts, including promoting our athletic programs and student and alumni
events.
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Recruitment.
  Retention.
 Admissions
  Enrollment
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December 31, 2009
    
    
    December 31, 2008# of Students
    
    
    % of Total
    
    
    # of Students
    
    
    % of TotalGraduate degree (1)
    
    
    16,097
    
    
    
    42.7
    %
    
    
    13,031
    
    
    
    52.9
    %Undergraduate degree
    
    
    21,612
    
    
    
    57.3
    %
    
    
    11,605
    
    
    
    47.1
    %Total
    
    
    37,709
    
    
    
    100.0
    %
    
    
    24,636
    
    
    
    100.0
    %
 December 31, 2009
    
    
    December 31, 2008# of Students
    
    
    % of Total
    
    
    # of Students
    
    
    % of TotalOnline(2)
    
    
    34,596
    
    
    
    91.7
    %
    
    
    21,955
    
    
    
    89.1
    %Ground (3)
    
    
    3,113
    
    
    
    8.3
    %
    
    
    2,681
    
    
    
    10.9
    %Total
    
    
    37,709
    
    
    
    100.0
    %
    
    
    24,636
    
    
    
    100.0
    %
 (1)
    
    Includes 315 and 56 students pursuing doctoral degrees at December 31, 2009 and 2008, respectively.(2)
    
    As of December 31, 2009, 44.5% of our online students are pursuing graduate or doctoral degrees.(3)
    
    Includes our traditional on-campus students, as well as our professional studies students. Tuition and Fees
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Sources of Student Financing
  Title IV programs.
  
    
    FFEL.Under the FFEL Program, banks and other lending institutions make loans to
students. The FFEL Program includes the Federal Stafford Loan Program, the Federal PLUS
Program (which provides loans to graduate and professional studies students as well as
parents of dependent undergraduate students), and the Federal Consolidation Loan
Program. If a student defaults on an FFEL loan, payment to the lender is guaranteed by a
federally recognized guaranty agency, which is then reimbursed by the Department of
Education. Students who demonstrate financial need may qualify for a subsidized Stafford
loan. With a subsidized Stafford loan, the federal government pays the interest on the
loan while the student is in school and during grace periods and any approved periods of
deferment, until the students obligation to repay the loan begins. Unsubsidized
Stafford loans are not based on financial need, and are available to students who do not
qualify for a subsidized Stafford loan or, in some cases, in addition to a subsidized
Stafford loan. Loan funds are disbursed to us, and we in turn disburse the amounts in
excess of tuition and fees to students. Effective July 1, 2008, under the Federal
Stafford Loan Program, a dependent undergraduate student can borrow up to $5,500 for the
first academic year, $6,500 for the second academic year, and $7,500 for each of the
third and fourth academic years. Students classified as independent, and dependent
students whose parents were denied a parent loan for undergraduate students, can obtain
up to an additional $4,000 for each of the first and second academic years and an
additional $5,000 for each of the third and fourth academic years. Students enrolled in
graduate programs can borrow up to $20,500 per academic year. Students enrolled in
certain graduate-level health programs can receive an additional $12,500 per academic
year.
    
    FDL Program.In addition to FFEL loans made by private lenders, the Department of
Education also administers the FDL Program, which eliminated the private financial
institution as the lender. Under the FDL Program, the federal government makes the
loans directly to the students with terms consistent with FFEL loans. The types of
loans, the maximum annual loan amounts and other terms of the loans made under the FDL
Program are similar to those for loans made under the FFEL Program. During fiscal year
2009, we began participating in the FDL Program for a portion of our Title IV eligible
students. In U.S. President Barack Obamas 2010 budget request delivered to Congress on
February 26, 2009, the Department of Education proposed to eliminate FFEL loans and
instead require all Title IV student loans to be administered through the FDL Program
commencing July 1, 2010. We expect to be able to fully transition from the FFEL Program
to the FDL Program by September 2010.
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
    
    Pell.Under the Pell Program, the Department of Education makes grants to
undergraduate students who demonstrate financial need. Effective July 1, 2008, the
maximum annual grant a student can receive under the Pell Program is $4,731, and
effective July 1, 2009, the maximum annual amount increased to $5,350. Under the August
2008 reauthorization of the Higher Education Act, students are able for the first time
to receive Pell Grant funds for attendance on a year-round basis, which means that the
amount a student can receive in a given year is more than the traditionally defined
maximum annual amount.
  Other financial aid programs.
 Private loans.
 Other sources.
 Technology Systems and Management
  Online course delivery and management.
 Internal administration.
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Infrastructure.
 Ground Campus
     Employees
  Competition
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
    
    availability of career-oriented and accredited program offerings;
    
    the types of degrees offered and marketability of those degrees;
    
    reputation, regulatory approvals, and compliance history of the school;
    
    convenient, flexible and dependable access to programs and classes;
    
    qualified and experienced faculty;
    
    level of student support services;
    
    cost of the program;
    
    marketing and selling effectiveness; and
    
    the time necessary to earn a degree.
 Available Information
 www.gcu.edu
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REGULATION
     State Education Licensure and Regulation
    18




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State Professional Licensure
  
    
    whether the institution and the program were approved by the state in
which the graduate seeks licensure, or by a professional association;
    
    whether the program from which the student graduated meets all
requirements for professional licensure in that state;
    
    whether the institution and the program are accredited and, if so, by
what accrediting commissions; and
    
    whether the institutions degrees are recognized by other states in
which a student may seek to work.
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Accreditation
      
    
    The Association of Collegiate Business Schools and Programs accredits
our Executive Master of Business Administration degree program, Master
of Business Administration degree program and our Bachelor of Science
degree programs in Accounting, Business Administration, Marketing, and
Entrepreneurship;
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
    
    The Commission on Collegiate Nursing Education accredits our Bachelor
of Science in Nursing and Master of Science in Nursing degree
programs; and
    
    The Commission on Accreditation of Athletic Training Education
accredits our Athletic Training Program.
  Regulation of Federal Student Financial Aid Programs
    Congressional action.
  21




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Pending regulatory changes.
  Eligibility and certification procedures.
  22




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qui tam
 Administrative capability.
 
    
    comply with all applicable Title IV program requirements;
    
    have an adequate number of qualified personnel to administer the Title IV programs;
    
    have acceptable standards for measuring the satisfactory academic progress of its
students;
    
    not have student loan cohort default rates above specified levels;
    
    have various procedures in place for awarding, disbursing and safeguarding
Title IV funds and for maintaining required records;
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
    
    administer the Title IV programs with adequate checks and balances in its system
of internal controls;
    
    not be, and not have any principal or affiliate who is, debarred or suspended from
federal contracting or engaging in activity that is cause for debarment or
suspension;
    
    provide financial aid counseling to its students;
    
    refer to the Department of Educations Office of Inspector General any credible
information indicating that any student, parent, employee, third-party servicer or
other agent of the institution has engaged in any fraud or other illegal conduct
involving the Title IV programs;
    
    submit all required reports and financial statements in a timely manner; and
    
    not otherwise appear to lack administrative capability.
  
    
    require the institution to repay Title IV funds its students previously received;
    
    transfer the institution from the advance method of payment of Title IV funds to
heightened cash monitoring status or the reimbursement system of payment;
    
    place the institution on provisional certification status; or
    
    commence a proceeding to impose a fine or to limit, suspend or terminate the
institutions participation in the Title IV programs.
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Financial responsibility.
 
    
    equity ratio, which measures the institutions capital resources,
financial viability and ability to borrow;
    
    primary reserve ratio, which measures the institutions ability to
support current operations from expendable resources; and
    
    net income ratio, which measures the institutions ability to operate
at a profit or within its means.
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Return of Title IV funds for students who withdraw.
 The 90/10 Rule.
   26




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Student loan defaults.
      27




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Incentive compensation rule.
 qui tam qui tam
 qui tam qui tam
 qui tam qui tam
  28




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Risk Factors  The Office of Inspector General of the Department of
Education has commenced an investigation of Grand Canyon University, which is ongoing and which may
result in fines, penalties, other sanctions, and damage to our reputation in the industry
 qui tam
   Compliance reviews.
 Privacy of student records.
  29




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Potential effect of regulatory violations.
   Uncertainties, increased oversight, and changes in student loan environment.
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
    
    authorized the Department of Education to purchase Title IV loans from
lenders, thereby providing capital to the lenders to enable them to
continue making Title IV loans to students; and
    
    permitted the Department of Education to designate institutions
eligible to participate in a lender of last resort program, under
which federally recognized student loan guaranty agencies would be
required to make Title IV loans to all otherwise eligible students at
those institutions.
  Regulatory Standards that May Restrict Institutional Expansion or Other Changes
  Adding teaching locations, implementing new educational programs, and increasing
enrollment.
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Acquiring other schools.
 Provisional certification.
    32




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Change in ownership resulting in a change in control.
    33




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qui tam
   34




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Additional state regulation.
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Item 1A. Risk Factors
 You should carefully consider the risks and uncertainties described below and all other
information contained in this Annual Report on Form 10-K . In order to help assess the major risks
in our business, we have identified many, but not all, of these risks. Due to the scope of our
operations, a wide range of factors could materially affect future developments and performance.
 Managements Discussion and Analysis of Financial Condition and
Results of Operations Financial Statements and Supplementary Data, .
 Risks Related to the Regulation of Our Industry
 Our failure to comply with the extensive regulatory requirements governing our school could result
in financial penalties, restrictions on our operations or growth, or loss of external financial aid
funding for our students.
   If the Department of Education does not recertify us to continue participating in the Title IV
programs, our students would lose their access to Title IV program funds, or we could be
recertified but required to accept significant limitations as a condition of our continued
participation in the Title IV programs.
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Business  Regulation  Regulation of Federal Student Financial Aid
Programs  Eligibility and certification procedures qui tam Risk Factors The Office
of Inspector General of the Department of Education has commenced an investigation of Grand Canyon
University, which is ongoing and which may result in fines, penalties, other sanctions, and damage
to our reputation in the industry; A qui tam lawsuit has been filed against us alleging,
among other things, that we have improperly compensated certain of our enrollment counselors, and
we may incur liability, be subject to sanctions, or experience damage to our reputation as a result
of this lawsuit
 The Office of Inspector General of the Department of Education has commenced an investigation of
Grand Canyon University, which is ongoing and which may result in fines, penalties, other
sanctions, and damage to our reputation in the industry.
 Business  Regulation  Regulation of Federal Student Financial Aid Programs 
Incentive compensation rule
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Business  Regulation  Regulation of
Federal Student Financial Aid Programs  Potential effect of regulatory violations
 A qui tam lawsuit has been filed against us alleging, among other things, that we have improperly
compensated certain of our enrollment counselors, and we may incur liability, be subject to
sanctions, or experience damage to our reputation as a result of this lawsuit.
 qui tam qui tam qui tam qui tam
 qui tam Business  Regulation  Regulation of Federal Student Financial Aid Programs 
Incentive compensation rule qui tam qui tam
 qui tam qui tam
  38




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Congress may change the eligibility standards or reduce funding for the Title IV programs, which
could reduce our student population, revenue, and profit margin.
 Business 
Regulation  Regulation of Federal Student Financial Aid Programs
 If we do not meet specific financial responsibility standards established by the Department of
Education, we may be required to post a letter of credit or accept other limitations in order to
continue participating in the Title IV programs, or we could lose our eligibility to participate in
the Title IV programs.
  If we do not comply with the Department of Educations administrative capability standards, we
could suffer financial penalties, be required to accept other limitations in order to continue
participating in the Title IV programs, or lose our eligibility to participate in the Title IV
programs.
   39




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We would lose our ability to participate in the Title IV programs if we fail to maintain our
institutional accreditation, and our student enrollments could decline if we fail to maintain any
of our accreditations or approvals.
   If we do not maintain our state authorization in Arizona, we may not operate or participate in the
Title IV programs.
   40




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If any of the education regulatory agencies that regulate us do not approve or delay their approval
of any transaction involving us that constitutes a change in control, our ability to operate or
participate in the Title IV programs may be impaired.
     41




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qui tam Business  Regulation  Regulatory Standards that
May Restrict Institutional Expansion or Other Changes  Change in ownership resulting in a change
in control
  If a substantial number of our students cannot secure Title IV loans as a result of decreased
lender participation in the Title IV programs or if lenders increase the costs or reduce the
benefits associated with the Title IV loans they provide, we could be materially adversely
affected.
  
    
    authorized the Department of Education to purchase Title IV program
loans from lenders, thereby providing capital to the lenders to enable
them to continue making Title IV program loans to students; and
  42




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
    
    permitted the Department of Education to designate institutions
eligible to participate in a lender of last resort program, under
which federally recognized student loan guaranty agencies would be
required to make Title IV program loans to all otherwise eligible
students at those institutions.
  Our failure to comply with new regulations promulgated by the Department of Education could result
in financial penalties, or the limitation, suspension, or termination of our continued
participation in the Title IV programs.
   43




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Business  Regulation  Regulation of Student Financial Aid Programs  The 90/10
Rule
 An increase in interest rates could adversely affect our ability to attract and retain students.
 Risk Factors  We may lose our
eligibility to participate in the Title IV programs if our student loan default rates are too high
 Our failure to comply with the regulatory requirements of states other than Arizona could result in
actions taken by those states that could have a material adverse effect on our enrollments.
     44




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The inability of our graduates to obtain a professional license or certification in their chosen
field of study could reduce our enrollments and revenues, and potentially lead to student claims
against us that could be costly to us.
  Increased scrutiny and regulation by various governmental agencies of relationships between student
loan providers and educational institutions and their employees have produced significant
uncertainty concerning restrictions applicable to the administration of both Title IV and private
student loan programs and the funding for those programs which, if not satisfactorily or timely
resolved, could result in increased regulatory burdens and costs for us and could adversely affect
our student enrollments.
    45




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Government agencies, regulatory agencies, and third parties may conduct compliance reviews, bring
claims, or initiate litigation against us based on alleged violations of the extensive regulatory
requirements applicable to us, which could cause us to pay monetary damages, be sanctioned or
limited in our operations, and expend significant resources to defend against those claims.
 qui tam Risk Factors  The Office of Inspector
General of the Department of Education has commenced an investigation of Grand Canyon University,
which is ongoing and which may result in fines, penalties, other sanctions, and damage to our
reputation in the industry Risk Factors  A qui tam lawsuit has been filed against us
alleging, among other things, that we have improperly compensated certain of our enrollment
counselors, and we may incur liability, be subject to sanctions, or experience damage to our
reputation as a result of this lawsuit Business  Regulation  Regulation of Federal
Student Financial Aid Programs  Incentive compensation rule
 A decline in the overall growth of enrollment in postsecondary institutions, or in the number of
students seeking degrees online or in our core disciplines, could cause us to experience lower
enrollment at our schools, which could negatively impact our future growth.
  If our students were unable to obtain private loans from third-party lenders, our business could be
adversely affected given our students reliance on such loans to satisfy their educational
expenses.
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We are subject to sanctions if we pay impermissible commissions, bonuses, or other incentive
payments to persons involved in certain recruiting, admissions, or financial aid activities.
   Risk Factors  The Office of Inspector General of the Department of
Education has commenced an investigation of Grand Canyon University, which is ongoing and which may
result in fines, penalties, other sanctions, and damage to our reputation in the industry Business  Regulation  Regulation of Federal Student Financial Aid Programs  Incentive
compensation rule qui tam Risk Factors  A
qui tam lawsuit has been filed against us alleging, among other things, that we have improperly
compensated certain of our enrollment counselors, and we may incur liability, be subject to
sanctions, or experience damage to our reputation as a result of this lawsuit qui tam
 Our reputation and our stock price may be negatively affected by adverse publicity or by the
actions of other postsecondary educational institutions.
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If the percentage of our revenue that is derived from the Title IV programs is too high, we may
lose our eligibility to participate in those programs.
  We may lose our eligibility to participate in the Title IV programs if our student loan default
rates are too high.
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We are subject to sanctions if we fail to correctly calculate and timely return Title IV program
funds for students who withdraw before completing their educational program.
  We cannot offer new programs, expand our operations into certain states, or acquire additional
schools if such actions are not timely approved by the applicable regulatory agencies, and we may
have to repay Title IV funds disbursed to students enrolled in any such programs, schools, or
states if we do not obtain prior approval.
  Risks Related to Our Business
 Our success depends, in part, on the effectiveness of our marketing and advertising programs in
recruiting new students.
  
    
    the reduced availability of, or higher interest rates and other costs
associated with, Title IV loan funds or other sources of financial aid;
    
    the emergence of more successful competitors;
    
    factors related to our marketing, including the costs and effectiveness
of Internet advertising and broad-based branding campaigns and
recruiting efforts;
    
    performance problems with our online systems;
    
    failure to maintain institutional and specialized accreditations;
    
    the requirements of the education agencies that regulate us which
restrict schools initiation of new programs and modification of
existing programs;
  49




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
    
    the requirements of the education agencies that regulate us which
restrict the ways schools can compensate their recruitment personnel;
    
    increased regulation of online education, including in states in which
we do not have a physical presence;
    
    restrictions that may be imposed on graduates of online programs that
seek certification or licensure in certain states;
    
    student dissatisfaction with our services and programs;
    
    the results of the ongoing investigation by the Department of
Educations Office of Inspector General and the pending qui tamaction
regarding the manner in which we have compensated our enrollment
personnel, and possible remedial actions or other liability resulting
therefrom;
    
    damage to our reputation or other adverse effects as a result of
negative publicity in the media, in industry or governmental reports, or
otherwise, affecting us or other companies in the for-profit
postsecondary education sector;
    
    price reductions by competitors that we are unwilling or unable to match;
    
    a decline in the acceptance of online education;
    
    an adverse economic or other development that affects job prospects in
our core disciplines; and
    
    a decrease in the perceived or actual economic benefits that students
derive from our programs.
  If we are unable to hire and train new and existing employees responsible for student recruitment,
the effectiveness of our student recruiting efforts would be adversely affected.
  We operate in a highly competitive industry, and competitors with greater resources could harm our
business.
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Capacity constraints, system disruptions, or security breaches in our online computer networks
could have a material adverse effect on our ability to attract and retain students.
  The implementation of our new back office systems could impact our ability to timely and accurately
admit students to the university and register them for classes, bill students, certify and disburse
financial aid, prepare financial reports, or impact the effectiveness of our internal controls over
financial reporting.
 Risk Factors  If we do not comply with the Department of
Educations administrative capability standards, we could suffer financial penalties, be required
to accept other limitations in order to continue participating in the Title IV programs, or lose
our eligibility to participate in the Title IV programs
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We may not be able to successfully implement our growth strategy if we are not able to improve the
content of our existing academic programs or to develop new programs on a timely basis and in a
cost-effective manner, or at all.
    Our failure to keep pace with changing market needs and technology could harm our ability to
attract students.
  If we do not maintain existing, and develop additional, relationships with employers, our future
growth may be impaired.
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Our failure to effectively manage our growth could harm our business.
  We may be unable to finance our expansion activities, and interest and other expenses may increase.
   If we fail to maintain proper and effective disclosure controls and procedures and internal
controls over financial reporting, our ability to produce accurate financial statements could be
impaired, which could adversely affect our stock price, our ability to operate our business and
investors views of us.
  Our success depends upon our ability to recruit and retain key personnel.
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The protection of our operations through exclusive proprietary rights and intellectual property is
limited, and from time to time we encounter disputes relating to our use of intellectual property
of third parties, any of which could harm our operations and prospects.
    We are subject to laws and regulations as a result of our collection and use of personal
information, and any violations of such laws or regulations, or any breach, theft, or loss of such
information, could adversely affect our reputation and operations.
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We are incurring increased costs as a result of being a public company, and the requirements of
being a public company may divert management attention from our business.
  At present we derive a significant portion of our revenues and operating income from our graduate
programs.
  We may incur liability for the unauthorized duplication or distribution of class materials posted
online for class discussions.
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The provider of third-party software for our online classroom has been acquired by a competitor,
and we may have difficulty maintaining the software required for our online classroom or updating
it for future technological changes, which could adversely affect our performance.
  Seasonal and other fluctuations in our results of operations could adversely affect the trading
price of our common stock.
  Our loan agreement may restrict our operations and our ability to complete certain transactions.
  
    
    incur additional indebtedness or liens;
    
    sell, assign, lease, transfer or otherwise dispose of any part of our assets other
than in the ordinary course of business;
    
    make investments or capital contributions to any individual or entity;
    
    enter into any consolidation, merger, or other combination, or become a partner in
a partnership, a member of a joint venture, or a member of a limited liability
company;
    
    acquire or purchase a business or all or substantially all of the assets of a
business in an aggregate amount exceeding an amount equal to 25% of our tangible
net worth; and
    
    engage in any business activities substantially different from our present business.
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Our current success and future growth depend on the continued growth in users seeking educational
services on the Internet.
  
    
    inadequate Internet infrastructure;
    
    security and privacy concerns;
    
    the unavailability of cost-effective Internet service and other technological factors; and
    
    changes in government regulation of Internet use.
  Government regulations relating to the Internet could increase our cost of doing business, affect
our ability to grow or otherwise have a material adverse effect on our business.
  We may incur significant costs complying with the Americans with Disabilities Act and similar laws.
  Our failure to comply with environmental laws and regulations governing our activities could result
in financial penalties and other costs.
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Our failure to obtain additional capital in the future could adversely affect our ability to grow.
  If we are not able to integrate acquired schools, our business could be harmed.
  
    
    inability to maintain uniform standards, controls, policies, and procedures;
    
    distraction of managements attention from normal business operations
during the integration process;
    
    inability to obtain, or delay in obtaining, approval of the acquisition
from the necessary regulatory agencies, or the imposition of operating
restrictions or a letter of credit requirement on us or on the acquired
school by any of those regulatory agencies;
    
    expenses associated with the integration efforts; and
    
    unidentified issues not discovered in our due diligence process, including
legal contingencies.
  Risks Related to Owning our Common Stock
 Our executive officers, directors, and principal existing stockholders own a large percentage of
our voting stock, which may allow them to collectively control substantially all matters requiring
stockholder approval and, in the case of certain of our principal stockholders, will have other
unique rights that may afford them access to our management.
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Your percentage ownership in us may be diluted by future issuances of capital stock, which could
reduce your influence over matters on which stockholders vote.
  Provisions in our charter documents and the Delaware General Corporation Law could make it more
difficult for a third party to acquire us and could discourage a takeover and adversely affect
existing stockholders.
  The price of our common stock may be volatile, and as a result returns on an investment in our
common stock may be volatile.
   
    
    our quarterly or annual earnings or earnings of other companies in our industry;
    
    the publics reaction to our press releases, our other public announcements,
and our filings with the SEC;
    
    changes in earnings estimates or recommendations by research analysts who track
our common stock or the stocks of other companies in our industry;
    
    changes in our number of enrolled students;
    
    new or proposed laws or regulations or new or proposed interpretations of laws
or regulations applicable to our business;
    
    seasonal variations in our student population;
    
    damage to our reputation or other adverse effects as a result of negative publicity in the
media, in industry or governmental reports, or otherwise, affecting us or other companies
in the for-profit postsecondary education sector;
    
    the availability and cost of Title IV funds, other student financial aid, and private loans;
    
    the failure to maintain or keep in good standing our regulatory approvals and
accreditations;
    
    changes in accounting standards, policies, guidance, interpretations, or principles;
    
    changes in general conditions in the U.S. and global economies or financial markets,
including those resulting from war, incidents of terrorism, or responses to such events;
    
    an adverse economic or other development that affects job prospects in our core disciplines;
    
    litigation involving our company, or investigations or audits by regulators into the
operations of our company or our competitors, including the investigation of Grand Canyon
University currently being conducted by the Office of Inspector General of the Department
of Education, and the pending qui tamaction regarding the manner in which we have
compensated our enrollment personnel; and
    
    sales of common stock by our directors, executive officers, and significant stockholders.
  59




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If securities analysts do not publish research or reports about our business or if they downgrade
their evaluations of our stock, the price of our stock could decline.
  We currently do not intend to pay dividends on our common stock and, consequently, your only
opportunity to achieve a return on your investment is if the price of our common stock appreciates.
   60




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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  
 Item 3. Legal Proceedings
  qui tam qui tam
  61




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qui tam qui tam
 qui tam
  
 Item 4. Submission of Matters to a Vote of Security Holders
   62




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PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 Market Information
   High
    
    
    Low2008Fourth Quarter
    
    $
    19.12
    
    
    $
    9.492009First Quarter
    
    $
    20.80
    
    
    $
    12.53Second Quarter
    
    $
    17.35
    
    
    $
    12.74Third Quarter
    
    $
    19.52
    
    
    $
    15.69Fourth Quarter
    
    $
    19.88
    
    
    $
    15.96
 Holders
  Dividends
    63




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Securities Authorized for Issuance under Equity Compensation Plans
 Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 Company Stock Performance
  
  64




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##### Table of Contents



11/08
    
    
    11/08
    
    
    12/08
    
    
    1/09
    
    
    2/09
    
    
    3/09
    
    
    4/09
    
    
    5/09Grand Canyon Education, Inc.
    
    
    100.00
    
    
    
    125.23
    
    
    
    158.48
    
    
    
    146.24
    
    
    
    143.63
    
    
    
    145.65
    
    
    
    137.97
    
    
    
    114.43S&P 500
    
    
    100.00
    
    
    
    92.83
    
    
    
    93.81
    
    
    
    85.91
    
    
    
    76.76
    
    
    
    83.48
    
    
    
    91.47
    
    
    
    96.59NASDAQ Composite
    
    
    100.00
    
    
    
    89.99
    
    
    
    92.81
    
    
    
    87.08
    
    
    
    81.62
    
    
    
    89.96
    
    
    
    100.59
    
    
    
    104.30Old Peer Group
    
    
    100.00
    
    
    
    115.66
    
    
    
    112.62
    
    
    
    117.80
    
    
    
    103.71
    
    
    
    111.15
    
    
    
    94.79
    
    
    
    89.95New Peer Group
    
    
    100.00
    
    
    
    112.86
    
    
    
    110.37
    
    
    
    114.62
    
    
    
    103.04
    
    
    
    91.28
    
    
    
    77.84
    
    
    
    74.49
 6/09
    
    
    7/09
    
    
    8/09
    
    
    9/09
    
    
    10/09
    
    
    11/09
    
    
    12/09Grand Canyon Education, Inc.
    
    
    141.60
    
    
    
    147.76
    
    
    
    146.84
    
    
    
    150.46
    
    
    
    136.88
    
    
    
    161.77
    
    
    
    160.42S&P 500
    
    
    96.78
    
    
    
    104.10
    
    
    
    107.86
    
    
    
    111.88
    
    
    
    109.80
    
    
    
    116.39
    
    
    
    118.64NASDAQ Composite
    
    
    108.02
    
    
    
    116.39
    
    
    
    118.59
    
    
    
    125.08
    
    
    
    120.89
    
    
    
    126.96
    
    
    
    134.06Old Peer Group
    
    
    107.61
    
    
    
    104.86
    
    
    
    100.14
    
    
    
    110.55
    
    
    
    91.52
    
    
    
    91.33
    
    
    
    97.22New Peer Group
    
    
    89.68
    
    
    
    87.84
    
    
    
    84.18
    
    
    
    91.49
    
    
    
    76.19
    
    
    
    75.97
    
    
    
    80.07
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Item 6. Selected Financial and Other Data
 Financial Statements and Supplementary Data Managements Discussion and Analysis of
Financial Condition and Results of Operations
 Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands, except per share data)Statement of Operations Data:Net revenue
    
    $
    261,902
    
    
    $
    161,309
    
    
    $
    99,326
    
    
    $
    72,111
    
    
    $
    51,793Costs and expenses:Instructional costs and services
    
    
    87,592
    
    
    
    54,450
    
    
    
    39,050
    
    
    
    31,287
    
    
    
    28,063Selling and promotional
    
    
    85,405
    
    
    
    65,551
    
    
    
    35,148
    
    
    
    20,093
    
    
    
    14,047General and administrative
    
    
    35,619
    
    
    
    26,825
    
    
    
    17,001
    
    
    
    15,011
    
    
    
    12,968Estimated litigation loss
    
    
    5,200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Estimated exit costs
    
    
    1,218
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Royalty to former owner
    
    
    296
    
    
    
    1,686
    
    
    
    3,782
    
    
    
    2,678
    
    
    
    1,619Total costs and expenses
    
    
    215,330
    
    
    
    148,512
    
    
    
    94,981
    
    
    
    69,069
    
    
    
    56,697Operating income (loss)
    
    
    46,572
    
    
    
    12,797
    
    
    
    4,345
    
    
    
    3,042
    
    
    
    (4,904
    )Interest expense
    
    
    (1,613
    )
    
    
    (2,897
    )
    
    
    (2,975
    )
    
    
    (2,827
    )
    
    
    (3,098
    )Interest income
    
    
    324
    
    
    
    640
    
    
    
    1,172
    
    
    
    912
    
    
    
    276Income (loss) before income taxes
    
    
    45,283
    
    
    
    10,540
    
    
    
    2,542
    
    
    
    1,127
    
    
    
    (7,726
    )Income tax expense (benefit)
    
    
    17,979
    
    
    
    3,855
    
    
    
    1,016
    
    
    
    529
    
    
    
    (3,440
    )Net income (loss)
    
    
    27,304
    
    
    
    6,685
    
    
    
    1,526
    
    
    
    598
    
    
    
    (4,286
    )Preferred dividends
    
    
    
    
    
    
    (938
    )
    
    
    (349
    )
    
    
    (527
    )
    
    
    Net income available (loss
attributable) to common
stockholders
    
    $
    27,304
    
    
    $
    5,747
    
    
    $
    1,177
    
    
    $
    71
    
    
    $
    (4,286
    )Earnings (loss) per common shareBasic
    
    $
    0.60
    
    
    $
    0.26
    
    
    $
    0.06
    
    
    $
    0.00
    
    
    $
    (0.23
    )Diluted
    
    $
    0.60
    
    
    $
    0.17
    
    
    $
    0.03
    
    
    $
    0.00
    
    
    $
    (0.23
    )Shares used in computing earnings
(loss) per common shareBasic
    
    
    45,184
    
    
    
    22,185
    
    
    
    18,923
    
    
    
    18,853
    
    
    
    18,470Diluted
    
    
    45,503
    
    
    
    33,430
    
    
    
    35,143
    
    
    
    36,858
    
    
    
    18,470
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Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands)Other Data:Capital expenditures
    
    $
    24,760
    
    
    $
    8,374
    
    
    $
    7,406
    
    
    $
    2,387
    
    
    $
    817Purchase of campus land and
buildings
    
    $
    35,505
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Depreciation and amortization
    
    $
    7,960
    
    
    $
    5,095
    
    
    $
    3,300
    
    
    $
    2,396
    
    
    $
    1,879Adjusted EBITDA(1)
    
    $
    65,119
    
    
    $
    25,675
    
    
    $
    11,723
    
    
    $
    9,074
    
    
    $
    (895
    )Period end enrollment:Online
    
    
    34,596
    
    
    
    21,955
    
    
    
    12,497
    
    
    
    8,406
    
    
    
    6,212Ground
    
    
    3,113
    
    
    
    2,681
    
    
    
    2,257
    
    
    
    2,256
    
    
    
    2,210
 As of December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Unaudited)(In thousands)Balance Sheet Data:Cash and cash
equivalents and
marketable securities
 unrestricted
    
    $
    63,101
    
    
    $
    35,627
    
    
    $
    18,930
    
    
    $
    11,535
    
    
    $
    544Cash, cash
equivalents and
investments 
restricted
    
    
    3,233
    
    
    
    5,125
    
    
    
    7,578
    
    
    
    5,900
    
    
    
    2,035Total assets
    
    
    174,738
    
    
    
    116,990
    
    
    
    88,568
    
    
    
    61,232
    
    
    
    51,859Capital lease
obligations
(including
short-term)
    
    
    1,619
    
    
    
    30,509
    
    
    
    29,228
    
    
    
    29,728
    
    
    
    24,789Notes payable and
other (including
short-term)
    
    
    27,555
    
    
    
    1,816
    
    
    
    2,408
    
    
    
    2,462
    
    
    
    2,635Preferred stock
    
    
    
    
    
    
    
    
    
    
    31,948
    
    
    
    21,390
    
    
    
    25,590Total
stockholders/member
s equity (deficit)
    
    
    86,028
    
    
    
    53,590
    
    
    
    (10,386
    )
    
    
    (11,723
    )
    
    
    (12,111
    )
 
 (1)
    
    Adjusted EBITDA is defined as net income (loss) plus interest expense
net of interest income, plus income tax expense (benefit), and plus
depreciation and amortization (EBITDA), as adjusted for (i) royalty
payments incurred pursuant to an agreement with our former owner that
was terminated as of April 15, 2008, as discussed in Item 7,
Managements Discussion and Analysis of Financial Condition and
Results of Operations Factors affecting comparability Settlement
with former owner, and Note 2 to our financial statements that are
included in Item 8, Financial Statements and Supplementary Data; (ii)
management fees and expenses that are no longer paid; (iii)
contributions made to Arizona school tuition organizations in lieu of
payments of state income taxes; (iv) estimated litigation loss; (v)
exit costs; and (vi) share-based compensation.   67




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
    
    in developing our internal budgets and strategic plan;
    
    as a measurement of operating performance;
    
    as a factor in evaluating the performance of our management for compensation
purposes;
    
    to, in part, assess compliance with our loan agreement; and
    
    in presentations to the members of our board of directors to enable our board to
have the same measurement basis of operating performance as are used by management to
compare our current operating results with corresponding prior periods and with the
results of other companies in our industry.
 Managements Discussion
and Analysis of Financial Condition and Results of Operations Non-GAAP Discussion
  Year Ended December 31,(In thousands)
    
    2009
    
    
    2008
    
    
    2007Net income
    
    $
    27,304
    
    
    $
    6,685
    
    
    $
    1,526Plus: interest expense net of interest income
    
    
    1,289
    
    
    
    2,257
    
    
    
    1,803Plus: income tax expense
    
    
    17,979
    
    
    
    3,855
    
    
    
    1,016Plus: depreciation and amortization
    
    
    7,664
    
    
    
    5,095
    
    
    
    3,300EBITDA
    
    
    54,236
    
    
    
    17,892
    
    
    
    7,645Plus: royalty to former owner(a)
    
    
    296
    
    
    
    1,686
    
    
    
    3,782Plus: management fees and expenses(b)
    
    
    
    
    
    
    356
    
    
    
    296Plus: contributions made in lieu of state income taxes(c)
    
    
    750
    
    
    
    750
    
    
    
    Plus: estimated litigation loss(d)
    
    
    5,200
    
    
    
    
    
    
    
    Plus: exit costs(e)
    
    
    1,218
    
    
    
    
    
    
    
    Plus: share-based compensation(f)
    
    
    3,419
    
    
    
    4,991
    
    
    
    Adjusted EBITDA
    
    $
    65,119
    
    
    $
    25,675
    
    
    $
    11,723
 
 (a)
    
    Reflects the royalty fee arrangement with the former owner of Grand
Canyon University in which we agreed to pay a stated percentage of
cash revenue generated by our online programs. As a result of a 2008
settlement of a dispute with the former owner, we are no longer
obligated to pay this royalty, although the settlement included a
prepayment of future royalties that we amortize over time. See Item 7,
Managements Discussion and Analysis of Financial Condition and
Results of Operations Factors affecting comparability Settlement
with former owner, and Note 2 to our financial statements that are
included in Item 8, Financial Statements and Supplementary Data.(b)
    
    Reflects management fees and expenses to the general partner of
Endeavour Capital Fund IV, L.P., one of our significant stockholders.
Concurrent with the completion of the initial public offering in
November 2008, the professional services agreement pursuant to which
these fees and expenses were paid terminated by its terms.(c)
    
    Reflects contributions made to various Arizona school tuition
organizations to assist with funding for education. In connection with
such contributions made we received a dollar-for-dollar state income
tax credit, which resulted in a reduction in our effective income tax
rate to 39.7% and 36.6% for the years ended December 31, 2009 and
2008, respectively. Had these contributions not been made, our
effective tax rate would have been 40.7% and 40.8%, for 2009 and 2008,
respectively. Such contributions are viewed by our management to be
made in lieu of payments of state income taxes and are therefore
excluded from evaluation of our core operating performance.(d)
    
    Reflects an accrual of $5.2 million for an estimated litigation
settlement that has been reached in principle but is conditioned upon
obtaining governmental approval and finalizing settlement terms. See
Item 8, Financial Statements and Supplementary Data, and Part I, Item
3, Legal Proceedings.(e)
    
    Represents exit costs related to the closure of a student services
facility in Utah, including termination benefits, relocation expenses
and the future lease payments, net of estimated sublease rentals, plus
the write off of leasehold improvements associated with the leased
space.(f)
    
    Reflects share-based compensation expense relating to stock and option
grants made to employees and directors in connection with our initial
public offering and thereafter.  68




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Financial Statements and Supplementary Data Risk Factors Forward-Looking Statements
 Executive Overview
   
    
    Enrollment, Net Revenue, and Operating Income Growth  We achieved 53.1%
growth in enrollment for the fiscal year ended December 31, 2009 as compared to fiscal
year ended December 31, 2008, which was the primary factor contributing to a 62.4%
increase in net revenue over the same period. In addition, we increased tuition for
students in our online and professional studies programs from 2.3% to 15.5%, depending
on the program, with an estimated blended rate increase of 5.0% for our 2009-10 academic
year as compared to 5.0% to 5.3% for our 2008-09 academic year. Tuition for our
traditional ground programs increased 6.6% for our 2009-10 academic year, as compared to
11.2% for the prior academic year. The enrollment and tuition price increases were
partially offset by the continuing mix shift towards online programs, which have a lower
tuition price per credit hour and with respect to which our online students take fewer
credit hours per semester than our traditional ground students. Operating income was
$46.6 million for the fiscal year ended December 31, 2009, an increase of 264% over the
$12.8 million in operating income for 2008.
 
    
    Spirit transaction and related borrowings  On April 28, 2009, we acquired the
land and buildings that comprise our ground campus and 909,348 shares of our common stock
from Spirit for an aggregate purchase price of $50 million. Prior to the acquisition, we
had leased the land and buildings from Spirit. To finance a portion of the purchase, we
entered into a note agreement with a financial institution pursuant to which we borrowed
$25.7 million. Under the terms of the loan agreement, we make principal payments in equal
monthly installments of approximately $143,000 plus accrued interest at 30 day LIBOR plus
3.5% (approximately 3.7% at December 31, 2009). All remaining unpaid principal is due on
April 30, 2014. We allocated $14.5 million to the repurchase of our common stock and the
remaining $35.5 million to the land and buildings. Additionally, we removed the building
and improvement assets and related capital lease obligations of $30.0 million and applied
the deferred gain of $1.4 million as a reduction to the new building value. Accordingly,
beginning in May 2009, our interest expense became lower as the effective interest rate for
the capital lease obligations was approximately 8.7% as compared to the 3.8% variable rate
on our note payable.
  69




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
    
    Change in Online Faculty Effective July 1, 2009, all faculty were
converted from independent contractors to part-time employees. Previously, we
classified our pool of online faculty as independent contractors. As a result, our
employer taxes included in faculty compensation within instructional costs and services
increased in the third and fourth quarter of 2009 as compared to 2008 by approximately
$0.8 million.
 
    
    Secondary Offering  In September 2009, we sold 6,900,000 shares of
common stock, consisting of 1,000,000 shares sold by us and 5,900,000 shares sold by
certain selling stockholders. Total net proceeds to us were $14.9 million, net of
underwriting discounts and commissions and offering expenses. We did not receive any of
the proceeds from the sale of common stock sold by the selling shareholders. We expect
to use the net proceeds from the offering for general corporate purposes.
 
    
    Exit Costs  On November 5, 2009, we finalized a plan to centralize our
student services operations in Arizona and, as a result, decided to close our student
services facility in Utah. This decision resulted in a reduction in force of
approximately 50 employees. The exit costs, which related to the closure of our student
services facility in Utah, include termination benefits, relocation of employees, and
future lease payments, net of estimated sublease rentals, plus the write off of
leasehold improvements associated with the leased space. Exit costs of approximately
$1.2 million were recorded in the fourth quarter of 2009.
 
    
    Appointment of Director  On October 8, 2009 and November 6, 2009, the
Board of Directors appointed Jerry Colangelo to our Board of Directors and Audit
Committee, respectively, for a term expiring at the 2010 annual meeting of stockholders,
or until his respective successor is elected or qualified or his earlier resignation or
removal. With the addition of Mr. Colangelo to our Audit Committee, we have a total of
three independent directors on this committee.
 
    
    Estimated litigation loss OIG Investigation and Qui Tam Law Suit  In
recent years, several for-profit education companies have been faced with whistleblower
lawsuits, known as qui tamcases, brought by current or former employees alleging that
their institution had made impermissible incentive payments to admissions employees. In
this regard, on September 11, 2008, we were served with a qui tamlawsuit that had been
filed against us in August 2007 in the United States District Court for the District of
Arizona by a then-current employee on behalf of the federal government. During the third
quarter of fiscal year 2009, we recorded an accrual of $5.2 million for a litigation
settlement that has been reached in principle but is conditioned upon obtaining
governmental approval and finalizing settlement terms. See Item 8, Financial Statements
and Supplementary Data, and Part I, Item 3, Legal Proceedings.
 
    
    Strategic decision to implement new back office systems  During 2009, we
decided to transition our online programs from a term-based financial aid system
(where all students including online students, begin programs and are eligible to
receive financial aid at periodic start dates pursuant to a calendar-based term system)
to a borrower-based financial aid system (where each student may begin a program and
be eligible to receive financial aid at any time throughout the year). As part of this
transition, we are converting our back office system from Datatel, Inc. to a series of
programs developed by Campus Management Corp., including CampusVue and CampusPortal, and
also implementing Microsofts Great Plains accounting system. These new systems are
intended to allow us to manage our non-traditional online students with greater ease and
flexibility by providing for rolling and flexible start dates. We incurred
approximately $3.6 million of capital expenditures during 2009 in connection with these
implementations which are expected to be completed in the second quarter of 2010.
  70




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Key financial metrics
 Net revenue
     December 31,2009
    
    
    2008
    
    
    2007# of Students
    
    
    % of Total
    
    
    # of Students
    
    
    % of Total
    
    
    # of Students
    
    
    % of TotalGraduate degree(1)
    
    
    16,097
    
    
    
    42.7
    %
    
    
    13,031
    
    
    
    52.9
    %
    
    
    9,156
    
    
    
    62.1
    %Undergraduate degree
    
    
    21,612
    
    
    
    57.3
    %
    
    
    11,605
    
    
    
    47.1
    %
    
    
    5,598
    
    
    
    37.9
    %Total
    
    
    37,709
    
    
    
    100.0
    %
    
    
    24,636
    
    
    
    100.0
    %
    
    
    14,754
    
    
    
    100.0
    %
 December 31,2009
    
    
    2008
    
    
    2007# of Students
    
    
    % of Total
    
    
    # of Students
    
    
    % of Total
    
    
    # of Students
    
    
    % of TotalOnline(2)
    
    
    34,596
    
    
    
    91.7
    %
    
    
    21,955
    
    
    
    89.1
    %
    
    
    12,497
    
    
    
    84.7
    %Ground(3)
    
    
    3,113
    
    
    
    8.3
    %
    
    
    2,681
    
    
    
    10.9
    %
    
    
    2,257
    
    
    
    15.3
    %Total
    
    
    37,709
    
    
    
    100.0
    %
    
    
    24,636
    
    
    
    100.0
    %
    
    
    14,754
    
    
    
    100.0
    %
 
 (1)
    
    Includes 315 and 56 students pursuing doctoral degrees at December 31, 2009 and 2008,
respectively.(2)
    
    As of December 31, 2009, 44.5% of our online students are pursuing graduate or doctoral degrees.(3)
    
    Includes our traditional on-campus students, as well as our professional studies students.  71




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Costs and expenses
 Instructional cost and services
  72




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Selling and promotional
   General and administrative
 Interest expense
  73




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Factors affecting comparability
  Spirit transaction and related borrowings
 Public company expenses
 Share-based compensation
 General and administrative expenses and tax expense
  Estimated litigation loss . Financial Statements
and Supplementary Data Legal Proceedings
 Exit costs .
 Management fees and expenses
  74




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Settlement with former owner
 Critical Accounting Policies and Estimates
   Revenue recognition
  75




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Allowance for doubtful accounts
 Long-Lived Assets
 Loss Contingencies
 Income taxes
  76




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Results of Operations
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Net revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expensesInstructional cost and services
    
    
    33.4
    
    
    
    33.8
    
    
    
    39.3Selling and promotional
    
    
    32.6
    
    
    
    40.6
    
    
    
    35.4General and administrative
    
    
    13.6
    
    
    
    16.6
    
    
    
    17.1Estimated litigation loss
    
    
    2.0
    
    
    
    0.0
    
    
    
    0.0Exit costs
    
    
    0.5
    
    
    
    0.0
    
    
    
    0.0Royalty to former owner
    
    
    0.1
    
    
    
    1.0
    
    
    
    3.8Total operating expenses
    
    
    82.2
    
    
    
    92.1
    
    
    
    95.6Operating income
    
    
    17.8
    
    
    
    7.9
    
    
    
    4.4Interest expense
    
    
    (0.6
    )
    
    
    (1.8
    )
    
    
    (3.0
    )Interest income
    
    
    0.1
    
    
    
    0.4
    
    
    
    1.2Income before income taxes
    
    
    17.3
    
    
    
    6.5
    
    
    
    2.6Income tax expense
    
    
    6.9
    
    
    
    2.4
    
    
    
    1.0Net income
    
    
    10.4
    
    
    
    4.1
    
    
    
    1.6
 Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
 Net revenue
 Instructional cost and services expenses
 Selling and promotional expenses
  77




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General and administrative expenses
 Estimated litigation loss. Financial Statements and Supplementary Data Legal Proceedings
 Exit costs.
 Royalty to former owner
 Interest expense
 Interest income
 Income tax expense
 Net income
  78




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Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
 Net revenue
 Instructional cost and services expenses
 Selling and promotional expenses
  79




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General and administrative expenses qui tam Legal
Proceedings
 Royalty to former owner
 Interest expense
 Interest income
 Income tax expense
 Net income
  80




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Seasonality
  Liquidity, Capital Resources, and Financial Position
 Liquidity
     81




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Cash Flows
 Operating Activities
 Investing Activities
 Financing Activities
  82




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Contractual Obligations
  Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    2-3 Years
    
    
    4-5 Years
    
    
    5 YearsLong term notes payable(1)
    
    $
    26.1
    
    
    $
    2.1
    
    
    $
    3.9
    
    
    $
    19.7
    
    
    $
    0.4Capital lease obligations(2)
    
    
    1.6
    
    
    
    0.7
    
    
    
    0.9
    
    
    
    0.0
    
    
    
    0.0Purchase obligations
    
    
    28.4
    
    
    
    26.4
    
    
    
    1.6
    
    
    
    0.4
    
    
    
    0.0Operating lease obligations(3)
    
    
    30.3
    
    
    
    3.7
    
    
    
    7.1
    
    
    
    6.9
    
    
    
    12.6Total contractual obligations
    
    $
    86.4
    
    
    $
    32.9
    
    
    $
    13.5
    
    
    $
    27.0
    
    
    $
    13.0
 (1)
    
    See Note 7, Notes Payable and Other, to our financial statements,
included in Item 8, Financial Statements and Supplementary Data, for a
discussion of our long term notes payable and other obligations.(2)
    
    See Note 8, Capital Lease Obligations, to our financial statements,
included in Item 8, Financial Statements and Supplementary Data, for a
discussion of our capital lease obligations.(3)
    
    See Note 9, Commitments and Contingencies, to our financial
statements, included in Item 8, Financial Statements and Supplementary
Data, for a discussion of our operating lease obligations.  Off-Balance Sheet Arrangements
  Non-GAAP Discussion
  Financial Statements and Supplementary Data
   83




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
    
    cash expenditures for capital expenditures or contractual commitments;
    
    changes in, or cash requirements for, our working capital requirements;
    
    interest expense, or the cash requirements necessary to service interest or
principal payments on our indebtedness;
    
    the cost or cash required to replace assets that are being depreciated or
amortized; and
    
    the impact on our reported results of earnings or charges resulting from (i)
royalties to our prior owner, including amortization of royalties prepaid in connection
with our settlement, (ii) management fees and expenses that were payable until
completion of our public offering, (iii) contributions to Arizona school tuition
organizations in lieu of the payment of state income taxes; (iv) estimated litigation
loss; (v) exit costs; and (vi) share-based compensation.
   Year Ended December 31,(In thousands)
    
    2009
    
    
    2008
    
    
    2007Net income
    
    $
    27,304
    
    
    $
    6,685
    
    
    $
    1,526Plus: interest expense net of interest income
    
    
    1,289
    
    
    
    2,257
    
    
    
    1,803Plus: income tax expense
    
    
    17,979
    
    
    
    3,855
    
    
    
    1,016Plus: depreciation and amortization
    
    
    7,664
    
    
    
    5,095
    
    
    
    3,300EBITDA
    
    
    54,236
    
    
    
    17,892
    
    
    
    7,645Plus: royalty to former owner(a)
    
    
    296
    
    
    
    1,686
    
    
    
    3,782Plus: management fees and expenses(b)
    
    
    
    
    
    
    356
    
    
    
    296Plus: contributions made in lieu of state income taxes(c)
    
    
    750
    
    
    
    750
    
    
    
    Plus: estimated litigation loss(d)
    
    
    5,200
    
    
    
    
    
    
    
    Plus: exit costs(e)
    
    
    1,218
    
    
    
    
    
    
    
    Plus: share-based compensation(f)
    
    
    3,419
    
    
    
    4,991
    
    
    
    Adjusted EBITDA
    
    $
    65,119
    
    
    $
    25,675
    
    
    $
    11,723
 (a)
    
    Reflects the royalty fee arrangement with the former owner of Grand
Canyon University in which we agreed to pay a stated percentage of
cash revenue generated by our online programs. As a result of the
settlement of a dispute with the former owner, we are no longer
obligated to pay this royalty, although the settlement includes a
prepayment of future royalties that we amortize over time. See Note 2
to our financial statements included in Item 8, Financial Statements
and Supplementary Data.(b)
    
    Reflects management fees and expenses to the general partner of
Endeavour Capital Fund IV, L.P., one of our significant stockholders.
Concurrent with the completion of the initial public offering in
November 2008, the professional services agreement pursuant to which
we paid such fees and expenses was terminated by its terms.(c)
    
    Reflects contributions made to various Arizona school tuition
organizations to assist with funding for education. In connection with
such contributions made we received a dollar-for-dollar state income
tax credit, which resulted in a reduction in our effective income tax
rate to 39.7% and 36.6% for the years ended December 31, 2009 and
2008, respectively. Had this payment not been made our effective tax
rate would have been 40.7% and 40.8%, for 2009 and 2008, respectively.
Such contributions are viewed by our management to be made in lieu of
payments of state income taxes and are therefore excluded from
evaluation of our core operating performance.(d)
    
    Reflects an accrual of $5.2 million for an estimated litigation
settlement that has been reached in principle but is conditioned upon
obtaining governmental approval and finalizing settlement terms. See
Item 8, Financial Statements and Supplementary Data, and Part I, Item
3, Legal Proceedings.(e)
    
    Represents exit costs as a result of the closure of the student
services facility in Utah, including termination benefits, relocation
expenses and the future lease payments, net of estimated sublease
rentals, plus the write off of leasehold improvements associated with
the leased space.(f)
    
    Reflects share-based compensation expense relating to stock and option
grants made to employees and directors in connection with our initial
public offering and thereafter.  84




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Recent Accounting Pronouncements
 Financial Statements and Supplementary
Data
 
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk
 Impact of inflation.
 Market risk
  Interest rate risk
  85




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Item 8. Financial Statements and Supplementary Data
 PageReport of Independent Registered Public Accounting Firm
    
    
    87Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
    
    
    88Balance Sheets as of December 31, 2009 and 2008
    
    
    89Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    
    90Statements of Preferred Stock and Stockholders Equity (Deficit) for the years ended December 31,
2009, 2008, and 2007
    
    
    91Statements of Cash Flows for the years ended December 31, 2009, 2008, and 2007
    
    
    92Notes to Financial Statements
    
    
    94
  86




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Report of Independent Registered Public Accounting Firm
 
      
  87




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Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
         
  88




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Grand Canyon Education, Inc.
 
 Balance Sheets
 As of December 31,($ in thousands, except share data)
    
    2009
    
    
    2008ASSETS:Current assetsCash and cash equivalents
    
    $
    62,571
    
    
    $
    35,152Restricted cash, cash equivalents and
investments (of which $170 is unrestricted
at December 31, 2009)
    
    
    3,403
    
    
    
    2,197Accounts receivable, net of allowance for
doubtful accounts of $7,553 and $6,356 at
December 31, 2009 and 2008
    
    
    13,802
    
    
    
    9,442Income taxes receivable
    
    
    
    
    
    
    1,576Deferred income taxes
    
    
    6,685
    
    
    
    2,603Other current assets
    
    
    3,785
    
    
    
    2,629Total current assets
    
    
    90,246
    
    
    
    53,599Property and equipment, net
    
    
    67,370
    
    
    
    41,399Restricted cash and investments (of which
$2,928 is restricted at December 31, 2008)
    
    
    360
    
    
    
    3,403Prepaid royalties
    
    
    7,311
    
    
    
    8,043Goodwill
    
    
    2,941
    
    
    
    2,941Deferred income taxes
    
    
    5,956
    
    
    
    7,404Other assets
    
    
    554
    
    
    
    201Total assets
    
    $
    174,738
    
    
    $
    116,990LIABILITIES AND STOCKHOLDERS EQUITY:Current liabilitiesAccounts payable
    
    $
    8,762
    
    
    $
    5,770Accrued liabilities
    
    
    18,103
    
    
    
    9,674Accrued estimated litigation loss
    
    
    5,200
    
    
    
    Accrued exit costs
    
    
    832
    
    
    
    Income taxes payable
    
    
    2,261
    
    
    
    172Deferred revenue and student deposits
    
    
    23,204
    
    
    
    14,262Due to related parties
    
    
    1,174
    
    
    
    1,197Current portion of capital lease obligations
    
    
    751
    
    
    
    1,125Current portion of notes payable
    
    
    2,105
    
    
    
    357Total current liabilities
    
    
    62,392
    
    
    
    32,557Capital lease obligations, less current portion
    
    
    868
    
    
    
    29,384Notes payable, less current portion and other
    
    
    25,450
    
    
    
    1,459Total liabilities
    
    
    88,710
    
    
    
    63,400Commitments and contingenciesStockholders equityPreferred stock, $0.01 par value, 10,000,000
shares authorized; 0 shares issued and
outstanding at December 31, 2009 and 2008
    
    
    
    
    
    
    Common stock, $0.01 par value, 100,000,000
shares authorized; 45,657,946 and 45,465,160
shares issued and outstanding at December 31,
2009 and 2008, respectively
    
    
    457
    
    
    
    455Additional paid-in capital
    
    
    70,100
    
    
    
    64,808Accumulated other comprehensive (loss) income
    
    
    (144
    )
    
    
    16Accumulated earnings (deficit)
    
    
    15,615
    
    
    
    (11,689
    )Total stockholders equity
    
    
    86,028
    
    
    
    53,590Total liabilities and stockholders equity
    
    $
    174,738
    
    
    $
    116,990
   89




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##### Table of Contents



Grand
Canyon Education, Inc.
  
 Statements of Operations
 Year Ended December 31,($ in thousands, except per share data)
    
    2009
    
    
    2008
    
    
    2007Net revenue
    
    $
    261,902
    
    
    $
    161,309
    
    
    $
    99,326Costs and expenses:Instructional costs and services
    
    
    87,592
    
    
    
    54,450
    
    
    
    39,050Selling and promotional, including
$6,736 in 2009; $5,895 in 2008; and
$4,293 in 2007, to related parties
    
    
    85,405
    
    
    
    65,551
    
    
    
    35,148General and administrative
    
    
    35,619
    
    
    
    26,825
    
    
    
    17,001Estimated litigation loss
    
    
    5,200
    
    
    
    
    
    
    
    Exit costs
    
    
    1,218
    
    
    
    
    
    
    
    Royalty to former owner
    
    
    296
    
    
    
    1,686
    
    
    
    3,782Total costs and expenses
    
    
    215,330
    
    
    
    148,512
    
    
    
    94,981Operating income
    
    
    46,572
    
    
    
    12,797
    
    
    
    4,345Interest expense
    
    
    (1,613
    )
    
    
    (2,897
    )
    
    
    (2,975
    )Interest income
    
    
    324
    
    
    
    640
    
    
    
    1,172Income before income taxes
    
    
    45,283
    
    
    
    10,540
    
    
    
    2,542Income tax expense
    
    
    17,979
    
    
    
    3,855
    
    
    
    1,016Net income
    
    
    27,304
    
    
    
    6,685
    
    
    
    1,526Preferred dividends
    
    
    
    
    
    
    (938
    )
    
    
    (349
    )Net income available to common stockholders
    
    $
    27,304
    
    
    $
    5,747
    
    
    $
    1,177Earnings per share:Basic income per share
    
    $
    0.60
    
    
    $
    0.26
    
    
    $
    0.06Diluted income per share
    
    $
    0.60
    
    
    $
    0.17
    
    
    $
    0.03Basic weighted average shares outstanding
    
    
    45,184
    
    
    
    22,185
    
    
    
    18,923Diluted weighted average shares outstanding
    
    
    45,503
    
    
    
    33,430
    
    
    
    35,143
   90




---



##### Table of Contents



Grand Canyon Education, Inc.
 
 Statements of Preferred Stock and Stockholders Equity (Deficit)
($ in thousands, except share data)
 Preferred Stock
    
    
    Stockholders (Deficit) EquityAccumulatedSeries A Convertible
    
    
    Series B Convertible
    
    
    Series C
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    OtherPreferred Stock
    
    
    Preferred Stock
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Par Value
    
    
    Capital
    
    
    Income (Loss)
    
    
    Earnings (Deficit)
    
    
    TotalBalance at December 31, 2006
    
    
    5,953
    
    
    
    18,610
    
    
    
    865
    
    
    
    2,780
    
    
    
    
    
    
    
    
    
    
    
    18,853,450
    
    
    
    189
    
    
    
    7,953
    
    
    
    35
    
    
    
    (19,900
    )
    
    
    (11,723
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,526
    
    
    
    1,526Unrealized gains on available-for-sale securities, net of taxes
of $30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    44Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,570Conversion of Series B Convertible Preferred Stock to Series C Preferred Stock
    
    
    
    
    
    
    
    
    
    
    (865
    )
    
    
    (2,780
    )
    
    
    800
    
    
    
    2,780
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Payment of amounts due to related party with Series C Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of Series C Preferred Stock for cash, net of issuance costs of $36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,995
    
    
    
    10,409
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of Blanchard shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    182,600
    
    
    
    1
    
    
    
    115
    
    
    
    
    
    
    
    
    
    
    
    116Dividend on Series B Convertible Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (320
    )
    
    
    
    
    
    
    
    
    
    
    (320
    )Accretion of Series C Preferred Stock Dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    (29
    )
    
    
    
    
    
    
    
    
    
    
    (29
    )Balance at December 31, 2007
    
    
    5,953
    
    
    
    18,610
    
    
    
    
    
    
    
    
    
    
    
    3,829
    
    
    
    13,338
    
    
    
    19,036,050
    
    
    
    190
    
    
    
    7,719
    
    
    
    79
    
    
    
    (18,374
    )
    
    
    (10,386
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,685
    
    
    
    6,685Unrealized losses on available for-sale securities, net of taxes
of $42
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63
    )
    
    
    
    
    
    
    (63
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,622Undeclared dividends on Series C Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    
    
    
    
    (938
    )
    
    
    
    
    
    
    
    
    
    
    (938
    )Issuance of Blanchard shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    182,600
    
    
    
    2
    
    
    
    2,994
    
    
    
    
    
    
    
    
    
    
    
    2,996Cancellation of IAS warrant, net of $2,316 deferred taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,684
    )
    
    
    
    
    
    
    
    
    
    
    (3,684
    )Exercise of warrant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    909,348
    
    
    
    9
    
    
    
    517
    
    
    
    
    
    
    
    
    
    
    
    526Conversion of Series A and Series C Convertible Preferred Stock to Common Stock
    
    
    (5,953
    )
    
    
    (18,610
    )
    
    
    
    
    
    
    
    
    
    
    (3,829
    )
    
    
    (14,276
    )
    
    
    13,103,511
    
    
    
    131
    
    
    
    32,755
    
    
    
    
    
    
    
    
    
    
    
    32,886Stock issued in initial public offering, net of issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,075,000
    
    
    
    121
    
    
    
    128,635
    
    
    
    
    
    
    
    
    
    
    
    128,756Special distribution to stockholders from initial public offering proceeds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (108,675
    )
    
    
    
    
    
    
    
    
    
    
    (108,675
    )Restricted stock granted to Chief Executive Officer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109,329
    
    
    
    1
    
    
    
    1,310
    
    
    
    
    
    
    
    
    
    
    
    1,311Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,563
    
    
    
    
    
    
    
    
    
    
    
    3,563Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,322
    
    
    
    1
    
    
    
    591
    
    
    
    
    
    
    
    
    
    
    
    592Excess tax benefit from share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    21Balance at December 31, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    45,465,160
    
    
    $
    455
    
    
    $
    64,808
    
    
    $
    16
    
    
    $
    (11,689
    )
    
    $
    53,590Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,304
    
    
    
    27,304Unrealized losses on hedging derivatives, net of taxes
of $111
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (167
    )
    
    
    
    
    
    
    (167
    )Unrealized gains on available for-sale securities, net of taxes
of $5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    7Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,144Repurchase and retirement of the Companys common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (909,348
    )
    
    
    (9
    )
    
    
    (14,486
    )
    
    
    
    
    
    
    
    
    
    
    (14,495
    )Stock issued in offering, net of issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000
    
    
    
    10
    
    
    
    14,870
    
    
    
    
    
    
    
    
    
    
    
    14,880Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,419
    
    
    
    
    
    
    
    
    
    
    
    3,419Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102,134
    
    
    
    1
    
    
    
    1,225
    
    
    
    
    
    
    
    
    
    
    
    1,226Excess tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    264
    
    
    
    
    
    
    
    
    
    
    
    264Balance at December 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    45,657,946
    
    
    $
    457
    
    
    $
    70,100
    
    
    $
    (144
    )
    
    $
    15,615
    
    
    $
    86,028
  91




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##### Table of Contents



Grand Canyon Education, Inc.
 
 Statements of Cash Flows
 Year Ended December 31,($ in thousands)
    
    2009
    
    
    2008
    
    
    2007Cash flows provided by operating activities:Net income
    
    $
    27,304
    
    
    $
    6,685
    
    
    $
    1,526Adjustments to reconcile net income to net cash provided by
operating activities:Share-based compensation
    
    
    3,419
    
    
    
    4,991
    
    
    
    Excess tax benefits from share-based compensation
    
    
    (247
    )
    
    
    (21
    )
    
    
    Amortization of notes payable issuance costs
    
    
    42
    
    
    
    
    
    
    
    Provision for bad debts
    
    
    14,016
    
    
    
    8,465
    
    
    
    6,257Depreciation and amortization
    
    
    7,960
    
    
    
    5,095
    
    
    
    3,300Estimated litigation loss
    
    
    5,200
    
    
    
    
    
    
    
    Exit costs
    
    
    832
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    (2,523
    )
    
    
    (245
    )
    
    
    (1,656
    )Other
    
    
    (14
    )
    
    
    (106
    )
    
    
    19Changes in assets and liabilities:Accounts receivable
    
    
    (18,376
    )
    
    
    (10,793
    )
    
    
    (8,573
    )Prepaid expenses and other
    
    
    (377
    )
    
    
    (751
    )
    
    
    (442
    )Due to/from related parties
    
    
    (23
    )
    
    
    468
    
    
    
    (107
    )Accounts payable
    
    
    2,155
    
    
    
    927
    
    
    
    253Accrued liabilities
    
    
    8,928
    
    
    
    3,596
    
    
    
    3,802Income taxes receivable/payable
    
    
    3,929
    
    
    
    (1,624
    )
    
    
    (2,294
    )Deferred revenue and student deposits
    
    
    8,942
    
    
    
    3,893
    
    
    
    4,236Prepaid royalties to former owner
    
    
    
    
    
    
    (5,920
    )
    
    
    Royalty payable to former owner
    
    
    
    
    
    
    (7,428
    )
    
    
    3,782Deposit with former owner
    
    
    
    
    
    
    3,000
    
    
    
    (3,000
    )Net cash provided by operating activities
    
    
    61,167
    
    
    
    10,232
    
    
    
    7,103Cash flows used in investing activities:Capital expenditures
    
    
    (24,760
    )
    
    
    (8,374
    )
    
    
    (7,406
    )Purchase of campus land and buildings
    
    
    (35,505
    )
    
    
    
    
    
    
    Change in restricted cash and cash equivalents
    
    
    1,844
    
    
    
    2,083
    
    
    
    (1,454
    )Purchases of investments
    
    
    
    
    
    
    (2,627
    )
    
    
    Proceeds from sale or maturity of investments
    
    
    
    
    
    
    2,570
    
    
    
    (149
    )Net cash used in investing activities
    
    
    (58,421
    )
    
    
    (6,348
    )
    
    
    (9,009
    )Cash flows provided by financing activities:Principal payments on notes payable and capital lease obligations
    
    
    (2,415
    )
    
    
    (1,357
    )
    
    
    (1,230
    )Repayment on line of credit
    
    
    
    
    
    
    (6,000
    )
    
    
    Proceeds from notes payable and line of credit
    
    
    25,547
    
    
    
    
    
    
    
    6,000Notes payable issuance costs
    
    
    (317
    )
    
    
    
    
    
    
    Repurchase of outstanding shares
    
    
    (14,495
    )
    
    
    
    
    
    
    Repurchase of Institute Warrant
    
    
    
    
    
    
    (6,000
    )
    
    
    Repayment of Institute Note Payable
    
    
    
    
    
    
    (1,250
    )
    
    
    Net proceeds from issuance of preferred stock
    
    
    
    
    
    
    
    
    
    
    4,684Proceeds from related party payable on preferred stock
    
    
    
    
    
    
    5,725
    
    
    
    Dividends on preferred stock
    
    
    
    
    
    
    
    
    
    
    (153
    )Net proceeds from issuance of common stock
    
    
    14,880
    
    
    
    128,756
    
    
    
    Payment of special distribution
    
    
    
    
    
    
    (108,675
    )
    
    
    Proceeds from exercise of warrant
    
    
    
    
    
    
    526
    
    
    
    Net proceeds from exercise of stock options
    
    
    1,226
    
    
    
    592
    
    
    
    Excess tax benefits from share-based compensation
    
    
    247
    
    
    
    21
    
    
    
    Net cash provided by financing activities
    
    
    24,673
    
    
    
    12,338
    
    
    
    9,301Net increase in cash and cash equivalents
    
    
    27,419
    
    
    
    16,222
    
    
    
    7,395Cash and cash equivalents, beginning of year
    
    
    35,152
    
    
    
    18,930
    
    
    
    11,535Cash and cash equivalents, end of year
    
    $
    62,571
    
    
    $
    35,152
    
    
    $
    18,930
  92




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##### Table of Contents



Grand Canyon Education, Inc.
Statement of Cash Flows (continued)
 Year Ended December 31,($ in thousands)
    
    2009
    
    
    2008
    
    
    2007Supplemental disclosure of cash flow informationCash paid during the year for interest
    
    $
    1,802
    
    
    $
    3,709
    
    
    $
    2,645Cash paid during the year for income taxes
    
    $
    16,307
    
    
    $
    5,274
    
    
    $
    4,964Supplemental disclosure of non-cash investing and financing
activitiesPurchase of equipment through notes payable and capital lease
obligations
    
    $
    2,116
    
    
    $
    2,481
    
    
    $
    676Purchases of property and equipment included in accounts
payable and deferred rent
    
    $
    1,098
    
    
    $
    1,292
    
    
    $
    Settlement of capital lease obligation
    
    $
    30,020
    
    
    $
    
    
    
    $
    Removal of Utah leasehold improvements
    
    $
    274
    
    
    $
    
    
    
    $
    Issuance of Series B and Series C convertible preferred stock
for notes receivable
    
    $
    
    
    
    $
    
    
    
    $
    5,725Issuance of Series C convertible preferred stock for
settlement of balances owed
    
    $
    
    
    
    $
    
    
    
    $
    120Accretion of dividends on Series C convertible preferred stock
    
    $
    
    
    
    $
    938
    
    
    $
    29Value assigned to Blanchard shares
    
    $
    
    
    
    $
    2,996
    
    
    $
    116Assumption of future obligations under gift annuities
    
    $
    
    
    
    $
    887
    
    
    $
    Deferred tax on repurchase of Institute Warrant
    
    $
    
    
    
    $
    2,316
    
    
    $
    Conversion of Series A and Series C convertible preferred stock
    
    $
    
    
    
    $
    32,886
    
    
    $
    
   93




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##### Table of Contents



Grand Canyon Education, Inc.
 
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 1. Nature of Business
    2. Summary of Significant Accounting Policies
 Formation and Transactions with Former Owner
   
    
    $26,750 in cash;
 
    
    the assumption of a $1,500 note payable to a third party (the Kirksville Note);
 
    
    the issuance by the Company to the Institute of a warrant (the Institute
Warrant) to purchase a 10.0% non-dilutable equity interest in the Company for an
exercise price of $1 during a one month period beginning in July 1, 2011 subject to a
right for the Company to repurchase the warrant at any time prior to its exercise for
$6,000.
   94




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
    
    
    the satisfaction in full of all past royalties due to the Institute under the
Royalty Agreement and the elimination of the existing obligation to pay royalties for
online student revenues in perpetuity;
 
    
    the repurchase of the Institute Warrant;
 
    
    the acquisition by the Company of the real property and related building located
on the Campus that was owned by the Institute and not transferred in connection with the
Ancillary Agreement;
 
    
    the termination of a sublease agreement pursuant to which the Institute leased
office space on the Campus;
 
    
    the assumption by the Company of all future payment obligations in respect to
certain gift annuities made to the school by donors prior to the acquisition; and
 
    
    the satisfaction in full of the $1,250 Institute Loan (including all accrued and
unpaid interest thereon).
   95




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 Accounting for the April 15, 2008 Settlement of the Standstill Agreement
  Initial Payment
    
    $
    3,000Optional Payment
    
    
    19,500Total Payment to be allocated
    
    $
    22,5001) Obligations settledAccrued royalties due under Royalty Agreement (as of April 15, 2008)
    
    $
    8,730Repurchase of Institute Warrant
    
    
    6,000Repayment of Institute Loan, including accrued interest
    
    
    2,257Other amounts due to the Institute
    
    
    3272) Liabilities assumedAssumption of gift annuities obligation, at fair value
    
    
    (887
    )3) Cost to be allocated to assets acquiredReal property and prepaid royalty asset
    
    
    6,073Total fair value estimates
    
    $
    22,500
   i.e
  Spirit Transaction
    96




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 Use of Estimates
  Reclassifications
  Cash and Cash Equivalents
  Restricted Cash and Cash Equivalents
  Restricted Cash and Investments
  Fair Value of Financial Instruments
    97




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
  Allowance for Doubtful Accounts
  Property and Equipment
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Interest incurred
    
    $
    1,808
    
    
    $
    3,022
    
    
    $
    3,102Interest capitalized
    
    
    195
    
    
    
    125
    
    
    
    127Interest expense
    
    $
    1,613
    
    
    $
    2,897
    
    
    $
    2,975
  Leases
   98




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 Deferred Loan Costs
  Long-Lived Assets
  Goodwill
  Share-Based Compensation
    Derivatives and Hedging
    99




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
  Income Taxes
    Loss Contingencies
  Revenue Recognition
   100




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 Instructional Costs and Services
  Selling and Promotional
   General and Administrative
  Exit Costs
   101




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
  Year Ended December 31,Estimated
    
    
    Payments to
    
    
    RemainingExpense
    
    
    Date
    
    
    ExpenseSeverance payments
    
    $
    615
    
    
    $
    112
    
    
    $
    503Future lease payments, net of estimated sublease rentals
    
    
    288
    
    
    
    
    
    
    
    288Leasehold improvements and other
    
    
    315
    
    
    
    274
    
    
    
    41Exit costs as of December 31, 2009
    
    $
    1,218
    
    
    $
    386
    
    
    
    Accrual for exit costs as of December 31, 2009
    
    
    
    
    
    
    
    
    
    $
    832
 Insurance/Self-Insurance
  Concentration of Credit Risk
   Segment Information
  Recent Accounting Pronouncements
   102




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
      103




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 3. Initial Public Offering, Special Distribution and Secondary Offering
    4. Restricted Cash and Investments
  As of December 31, 2009Gross
    
    
    Gross
    
    
    EstimatedAdjusted
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    (Losses)
    
    
    ValueMoney Market Funds
    
    $
    43
    
    
    $
    
    
    
    $
    
    
    
    $
    43Municipal Securities
    
    
    448
    
    
    
    38
    
    
    
    (1
    )
    
    
    487Total
    
    $
    491
    
    
    $
    38
    
    
    $
    (1
    )
    
    $
    530
 As of December 31, 2008Gross
    
    
    Gross
    
    
    EstimatedAdjusted
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    (Losses)
    
    
    ValueMoney Market Funds
    
    $
    2,928
    
    
    $
    
    
    
    $
    
    
    
    $
    2,928Municipal Securities
    
    
    448
    
    
    
    28
    
    
    
    (1
    )
    
    
    475Total
    
    $
    3,376
    
    
    $
    28
    
    
    $
    (1
    )
    
    $
    3,403
  104




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
  Due in one year or less
    
    $
    170Due in one to five years
    
    
    320Due in five to ten years
    
    
    40Due after ten years
    
    
    $
    530
  5. Property and Equipment
  As of December 31,2009
    
    
    2008Land
    
    $
    7,230
    
    
    $
    Land improvements
    
    
    1,597
    
    
    
    Buildings
    
    
    25,176
    
    
    
    Buildings under capital leases
    
    
    
    
    
    
    22,283Equipment under capital leases
    
    
    3,545
    
    
    
    1,571Leasehold improvements
    
    
    3,692
    
    
    
    12,773Furniture, fixtures and equipment
    
    
    30,077
    
    
    
    14,439Other
    
    
    1,431
    
    
    
    1,222Construction in progress
    
    
    7,712
    
    
    
    2,04980,460
    
    
    
    54,337Less accumulated depreciation and amortization
    
    
    (13,090
    )
    
    
    (12,938
    )Property and equipment, net
    
    $
    67,370
    
    
    $
    41,399
   6. Accrued Liabilities
  As of December 31,2009
    
    
    2008Accrued compensation and benefits
    
    $
    11,898
    
    
    $
    5,340Accrued interest
    
    
    94
    
    
    
    284Deferred rent
    
    
    244
    
    
    
    34Tax reserves, non-income tax related
    
    
    229
    
    
    
    710Uncertain tax positions accrual
    
    
    568
    
    
    
    299Other accrued expenses
    
    
    5,070
    
    
    
    3,007$
    18,103
    
    
    $
    9,674
  105




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 7. Notes Payable and Other
  As of December 31,2009
    
    
    2008Notes PayableNote payable, monthly payment of $143; interest at 30 day LIBOR plus 3.5%
(3.755% at December 31, 2009) through April 30, 2014
    
    $
    24,565
    
    
    $
    Note payable; monthly payments of $20; interest at 3.9% through September 2011
    
    
    407
    
    
    
    628Various Gift Annuities; quarterly payments of $34 extending through 2019;
interest at 10%
    
    
    802
    
    
    
    875Equipment note; monthly payments of $6 extending through December 2011;
interest at 6.6%
    
    
    136
    
    
    
    Notes payable for vehicles requiring monthly payments with interest rates
ranging from 8.8% to 11.0% extending into March 2013
    
    
    178
    
    
    
    24126,088
    
    
    
    1,744Less: Current portion
    
    
    2,105
    
    
    
    357$
    23,983
    
    
    $
    1,387
   December 31,Notes Payable2010
    
    $
    2,1052011
    
    
    2,0562012
    
    
    1,8082013
    
    
    1,7672014
    
    
    17,908Thereafter
    
    
    444$
    26,088
  106




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 8. Capital Lease Obligations
  As of December 31,2009
    
    
    2008Capital Lease ObligationsCapital lease for buildings (monthly payments of
$301 at an implicit interest rate of 8.7% through
April 2009)
    
    $
    
    
    
    $
    30,098Capital leases for equipment (various leases
extending into 2012, with implicit interest rates
ranging from 4.0% to 9.3%, monthly payments
totaling $74)
    
    
    1,619
    
    
    
    4111,619
    
    
    
    30,509Less: Current portion of capital lease obligations
    
    
    751
    
    
    
    1,125$
    868
    
    
    $
    29,384
  December 31, 2009Capital LeaseObligations2010
    
    $
    8202011
    
    
    7462012 and thereafter
    
    
    1521,718Less: Portion representing interest
    
    
    99Present value of minimum lease payments
    
    $
    1,619
 9. Commitments and Contingencies
 Leases
  December 31,20092010
    
    $
    3,6992011
    
    
    3,7702012
    
    
    3,3402013
    
    
    3,5822014
    
    
    3,333Thereafter
    
    
    12,544Total minimum payments
    
    $
    30,268
   107




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 Legal Matters
   qui tam qui tam qui tam qui tam
 qui tam
 qui tam
  108




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
    Tax Reserves, Non-Income Tax Related
  10. Derivative Instruments
   109




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
   11. Earnings Per Share
   Year Ended December 31,2009
    
    
    2008
    
    
    2007Denominator:Basic common shares outstanding
    
    
    45,184,186
    
    
    
    22,184,766
    
    
    
    18,922,838Effect of dilutive preferred stock
    
    
    
    
    
    
    9,559,801
    
    
    
    12,393,062Effect of dilutive warrants
    
    
    
    
    
    
    1,666,312
    
    
    
    3,805,384Effect of contingently issuable common stock
    
    
    
    
    
    
    19,010
    
    
    
    21,912Effect of dilutive stock options and restricted stock
    
    
    318,639
    
    
    
    
    
    
    
    Diluted common shares outstanding
    
    
    45,502,825
    
    
    
    33,429,889
    
    
    
    35,143,196
   110




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 12. Preferred Stock and Equity Transactions
 Preferred Stock
  Series A Convertible Preferred Stock
  Series B Convertible Preferred Stock
   Series C Preferred Stock
    111




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
  Common Stock
   Preferred Stock
  Warrants to Purchase Common Stock
   112




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
  Investor Rights Agreement
  13. Income Taxes
   Year Ended December 31,2009
    
    
    2008
    
    
    2007Current:Federal
    
    $
    16,587
    
    
    $
    3,564
    
    
    $
    2,194State
    
    
    3,515
    
    
    
    432
    
    
    
    47820,102
    
    
    
    3,996
    
    
    
    2,672Deferred:Federal
    
    
    (1,498
    )
    
    
    190
    
    
    
    (1,358
    )State
    
    
    (625
    )
    
    
    (331
    )
    
    
    (298
    )(2,123
    )
    
    
    (141
    )
    
    
    (1,656
    )$
    17,979
    
    
    $
    3,855
    
    
    $
    1,016
  113




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Statutory U.S. federal income tax rate (benefit)
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    34.0
    %State income taxes, net of federal tax benefit
    
    
    5.2
    
    
    
    5.8
    
    
    
    4.7State tax credits, net of federal effect
    
    
    (1.5
    )
    
    
    (5.2
    )
    
    
    Non deductible expenses
    
    
    (0.1
    )
    
    
    0.7
    
    
    
    0.5Other
    
    
    1.1
    
    
    
    0.3
    
    
    
    0.8Effective income tax rate (benefit)
    
    
    39.7
    %
    
    
    36.6
    %
    
    
    40.0
    %
  As of December 31,2009
    
    
    2008Current deferred tax asset (liability):Accounts receivable allowance for doubtful accounts
    
    $
    3,315
    
    
    $
    2,668Tax credits
    
    
    
    
    
    
    183State taxes
    
    
    (135
    )
    
    
    (664
    )Estimated litigation loss
    
    
    2,247
    
    
    
    Other
    
    
    1,258
    
    
    
    416Current deferred tax asset
    
    
    6,685
    
    
    
    2,603Non-current deferred tax asset (liability):Depreciation and leases
    
    
    (605
    )
    
    
    1,750Share-based compensation
    
    
    2,749
    
    
    
    1,403Unrealized gains on available for sale securities
    
    
    (16
    )
    
    
    (10
    )Deferred rent
    
    
    376
    
    
    
    45Intangibles
    
    
    3,812
    
    
    
    4,216Other
    
    
    (360
    )
    
    
    Non-current deferred tax asset
    
    
    5,956
    
    
    
    7,404Net deferred tax asset
    
    $
    12,641
    
    
    $
    10,007
    2009
    
    
    2008Unrecognized tax benefits, beginning of year
    
    $
    748
    
    
    $
    404Tax positions taken during the current yearIncreases
    
    
    390
    
    
    
    117Decreases
    
    
    
    
    
    
    Tax positions taken during a prior yearIncreases
    
    
    7
    
    
    
    227Decreases
    
    
    (4
    )
    
    
    Decreases for settlements during the period
    
    
    (75
    )
    
    
    Reductions for lapses of applicable statute of limitations
    
    
    
    
    
    
    Unrecognized tax benefits, end of year
    
    $
    1,066
    
    
    $
    748
  114




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
   14. Regulatory
      115




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
     15. Share-Based Compensation Plans
 Adoption of Equity Plans
  Incentive Plan
   116




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
  Summary of Stock Options OutstandingWeighted
    
    
    WeightedAverage
    
    
    AverageExercise
    
    
    Remaining
    
    
    AggregateTotal
    
    
    Price per
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Share
    
    
    Term (Years)
    
    
    Value ($)(1)Outstanding as of December 31, 2007
    
    
    
    
    
    $
    Granted
    
    
    3,305,108
    
    
    
    12.00Exercised
    
    
    (49,322
    )
    
    
    12.00Forfeited, canceled or expired
    
    
    (8,375
    )
    
    
    12.00Outstanding as of December 31, 2008
    
    
    3,247,411
    
    
    
    12.00Granted
    
    
    217,526
    
    
    
    16.65Exercised
    
    
    (12,807
    )
    
    
    12.00Forfeited, canceled or expired
    
    
    (102,134
    )
    
    
    12.00Outstanding as of December 31, 2009
    
    
    3,349,996
    
    
    $
    12.30
    
    
    
    8.93
    
    
    $
    23,014Exercisable as of December 31, 2009
    
    
    1,093,356
    
    
    $
    12.00
    
    
    
    8.88
    
    
    $
    7,839Available for issuance as of December 31,
2009
    
    
    1,717,049
 (1)
    
    Aggregate intrinsic value represents the value of our closing stock
price on December 31, 2009 ($19.17) in excess of the exercise price
multiplied by the number of options outstanding or exercisable.   2009
    
    
    2008Amounts related to options exercised:Intrinsic value realized by optionee
    
    $
    656
    
    
    $
    249Actual tax benefit realized by Company for tax deductions
    
    $
    262
    
    
    $
    98
  Share-based Compensation Expense
  2009
    
    
    2008Instructional costs and services
    
    $
    771
    
    
    $
    1,737Selling and promotional
    
    
    116
    
    
    
    1,322General and administrative
    
    
    2,453
    
    
    
    619Share-based compensation expense included in operating expenses
    
    
    3,340
    
    
    
    3,678Tax effect of share-based compensation
    
    
    (1,336
    )
    
    
    (1,454
    )Share-based compensation expense, net of tax
    
    $
    2,004
    
    
    $
    2,224
  117




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 Share-based Compensation Expense Assumptions
 Fair Value.
 Year Ended December 31,
    
    2009
    
    
    2008Weighted average fair value
    
    $
    7.99
    
    
    $
    5.68Expected volatility
    
    
    47.46
    %
    
    
    46.13
    %Expected life (years)
    
    
    6.47
    
    
    
    6.14Risk-free interest rate
    
    
    2.81
    %
    
    
    2.44
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
 Expected Volatility.
 Expected Life (years).
 Risk-Free Interest Rate.
 Dividend Yield.
 Forfeitures.
 Expected Vesting Period.
 Stock Grant
  Restricted Stock Grants
   118




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
  WeightedAverageGrant DateTotal
    
    
    Fair ValueShares
    
    
    per ShareOutstanding as of December 31, 2007
    
    
    
    
    
    $
    Granted
    
    
    109,328
    
    
    
    12.00Vested
    
    
    109,328
    
    
    
    12.00Forfeited, canceled or expired
    
    
    Outstanding as of December 31, 2008
    
    
    109,328
    
    
    
    12.00Granted
    
    
    8,737
    
    
    
    14.88Vested
    
    
    Forfeited, canceled or expired
    
    
    Outstanding as of December 31, 2009
    
    
    118,065
    
    
    $
    12.21Exercisable as of December 31, 2009
    
    
    109,328
    
    
    $
    12.00
 401(k) Plan
  16. Related Party Transactions
   Shareholders
 Significant Education Holding, LLC (Sig Ed)
  119




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##### Table of Contents



Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
  Rich Crow Enterprises, LLC (Rich Crow)
 Endeavour Capital Fund IV, LP, Endeavour Associated Fund IV, LP, and Endeavour Capital
Parallel Fund IV, LP (Endeavour)
 Affiliates
 Mind Streams, LLC (Mind Streams) and 21st Century, LLC (21st Century)
 17. Valuation and Qualifying Accounts
 Balance at
    
    
    
    
    
    
    
    
    
    
    Balance atBeginning of
    
    
    Charged to
    
    
    
    
    
    
    End ofYear
    
    
    Expense
    
    
    Deductions(1)
    
    
    YearAllowance for doubtful accounts receivable:Year ended December 31, 2009
    
    $
    6,356
    
    
    
    14,016
    
    
    
    (12,819
    )
    
    $
    7,553Year ended December 31, 2008
    
    $
    12,158
    
    
    
    8,465
    
    
    
    (14,267
    )
    
    $
    6,356Year ended December 31, 2007
    
    $
    7,380
    
    
    
    6,257
    
    
    
    (1,479
    )
    
    $
    12,158
 (1)
    
    Deductions represent accounts written off, net of recoveries.  120




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Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 18. Quarterly Results of Operations (Unaudited)
   2009First Quarter
    
    
    First Quarter
    
    
    Second Quarter
    
    
    Second QuarterAs Reported
    
    
    As Restated
    
    
    As Reported
    
    
    As RestatedNet revenue
    
    $
    58,964
    
    
    $
    55,459
    
    
    $
    59,400
    
    
    $
    62,905Costs and expenses:Instructional costs and services
    
    
    18,332
    
    
    
    17,968
    
    
    
    20,047
    
    
    
    20,411Selling and promotional
    
    
    19,670
    
    
    
    19,575
    
    
    
    20,631
    
    
    
    20,726General and administrative
    
    
    8,833
    
    
    
    8,833
    
    
    
    8,688
    
    
    
    8,688Estimated litigation loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Estimated exit costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Royalty to former owner
    
    
    74
    
    
    
    74
    
    
    
    74
    
    
    
    74Total costs and expenses
    
    
    46,909
    
    
    
    46,450
    
    
    
    49,440
    
    
    
    49,899Operating income
    
    
    12,055
    
    
    
    9,009
    
    
    
    9,960
    
    
    
    13,006Net interest expense
    
    
    (559
    )
    
    
    (558
    )
    
    
    (299
    )
    
    
    (300
    )Income before income taxes
    
    
    11,496
    
    
    
    8,451
    
    
    
    9,661
    
    
    
    12,706Income tax expense
    
    
    4,593
    
    
    
    3,376
    
    
    
    3,846
    
    
    
    5,063Net income available to common
stockholders
    
    $
    6,903
    
    
    $
    5,075
    
    
    $
    5,815
    
    
    $
    7,643Earnings per share:Basic income per share(1)
    
    $
    0.15
    
    
    $
    0.11
    
    
    $
    0.13
    
    
    $
    0.17Diluted income per share(1)
    
    $
    0.15
    
    
    $
    0.11
    
    
    $
    0.13
    
    
    $
    0.17Basic weighted average shares
outstanding
    
    
    45,474
    
    
    
    45,474
    
    
    
    44,846
    
    
    
    44,846Diluted weighted average shares
outstanding
    
    
    45,821
    
    
    
    45,821
    
    
    
    45,051
    
    
    
    45,051
 (1)
    
    The sum of quarterly income per share may not equal annual income per
share due to rounding and second quarter net loss.  121




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Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 2009Third Quarter
    
    
    Fourth QuarterNet revenue
    
    $
    66,084
    
    
    $
    77,454Costs and expenses:Instructional costs and services
    
    
    23,466
    
    
    
    25,747Selling and promotional
    
    
    22,095
    
    
    
    23,009General and administrative
    
    
    8,556
    
    
    
    9,542Estimated litigation loss
    
    
    5,200
    
    
    
    Estimated exit costs
    
    
    
    
    
    
    1,218Royalty to former owner
    
    
    74
    
    
    
    74Total costs and expenses
    
    
    59,391
    
    
    
    59,590Operating income
    
    
    6,693
    
    
    
    17,864Net interest expense
    
    
    (233
    )
    
    
    (198
    )Income before income taxes
    
    
    6,460
    
    
    
    17,666Income tax expense
    
    
    2,969
    
    
    
    6,571Net income available to common
stockholders
    
    $
    3,491
    
    
    $
    11,095Earnings per share:Basic income per share(1)
    
    $
    0.08
    
    
    $
    0.24Diluted income per share(1)
    
    $
    0.08
    
    
    $
    0.24Basic weighted average shares
outstanding
    
    
    44,783
    
    
    
    45,636Diluted weighted average shares
outstanding
    
    
    45,099
    
    
    
    46,041
 (1)
    
    The sum of quarterly income per share may not equal annual income per
share due to rounding and second quarter net loss.  122




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Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 2008First Quarter
    
    
    First Quarter
    
    
    Second Quarter
    
    
    Second QuarterAs Reported
    
    
    As Restated
    
    
    As Reported
    
    
    As RestatedNet revenue
    
    $
    35,709
    
    
    $
    33,389
    
    
    $
    34,566
    
    
    $
    36,945Costs and expenses:Instructional costs and
services
    
    
    11,620
    
    
    
    11,334
    
    
    
    12,408
    
    
    
    12,730Selling and promotional
    
    
    12,586
    
    
    
    12,487
    
    
    
    14,887
    
    
    
    14,984General and administrative
    
    
    4,541
    
    
    
    4,541
    
    
    
    6,419
    
    
    
    6,419Royalty to former owner
    
    
    1,022
    
    
    
    956
    
    
    
    466
    
    
    
    533Total costs and expenses
    
    
    29,769
    
    
    
    29,318
    
    
    
    34,180
    
    
    
    34,666Operating income (loss)
    
    
    5,940
    
    
    
    4,071
    
    
    
    386
    
    
    
    2,279Net interest expense
    
    
    (560
    )
    
    
    (561
    )
    
    
    (515
    )
    
    
    (515
    )Income (loss) before income
taxes
    
    
    5,380
    
    
    
    3,510
    
    
    
    (129
    )
    
    
    1,764Income tax expense (benefit)
    
    
    2,076
    
    
    
    1,355
    
    
    
    (49
    )
    
    
    681Net income (loss)
    
    
    3,304
    
    
    
    2,155
    
    
    
    (80
    )
    
    
    1,083Preferred dividends
    
    
    (253
    )
    
    
    (253
    )
    
    
    (268
    )
    
    
    (268
    )Net income (loss) available
to common stockholders
    
    $
    3,051
    
    
    $
    1,902
    
    
    $
    (348
    )
    
    $
    815Earnings (loss) per share:Basic income (loss) per
share(1)
    
    $
    0.16
    
    
    $
    0.10
    
    
    $
    (0.02
    )
    
    $
    0.04Diluted income (loss) per
share(1)
    
    $
    0.09
    
    
    $
    0.06
    
    
    $
    (0.02
    )
    
    $
    0.03Basic weighted average
shares outstanding
    
    
    19,036
    
    
    
    19,036
    
    
    
    19,142
    
    
    
    19,142Diluted weighted average
shares outstanding
    
    
    33,849
    
    
    
    33,849
    
    
    
    19,142
    
    
    
    31,395
 (1)
    
    The sum of quarterly income per share may not equal annual income per
share due to rounding and second quarter net loss.  123




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Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 2008Third Quarter
    
    
    Third Quarter
    
    
    Fourth Quarter
    
    
    Fourth QuarterAs Reported
    
    
    As Restated
    
    
    As Reported
    
    
    As RestatedNet revenue
    
    $
    39,351
    
    
    $
    40,420
    
    
    $
    51,683
    
    
    $
    50,555Costs and expenses:Instructional costs and
services
    
    
    12,967
    
    
    
    13,097
    
    
    
    17,455
    
    
    
    17,289Selling and promotional
    
    
    18,562
    
    
    
    18,600
    
    
    
    19,516
    
    
    
    19,480General and administrative
    
    
    5,032
    
    
    
    5,032
    
    
    
    10,833
    
    
    
    10,833Royalty to former owner
    
    
    124
    
    
    
    124
    
    
    
    74
    
    
    
    73Total costs and expenses
    
    
    36,685
    
    
    
    36,853
    
    
    
    47,878
    
    
    
    47,675Operating income (loss)
    
    
    2,666
    
    
    
    3,567
    
    
    
    3,805
    
    
    
    2,880Net interest expense
    
    
    (573
    )
    
    
    (573
    )
    
    
    (609
    )
    
    
    (608
    )Income (loss) before income
taxes
    
    
    2,093
    
    
    
    2,994
    
    
    
    3,196
    
    
    
    2,272Income tax expense (benefit)
    
    
    841
    
    
    
    1,193
    
    
    
    987
    
    
    
    627Net income (loss)
    
    
    1,252
    
    
    
    1,801
    
    
    
    2,209
    
    
    
    1,645Preferred dividends
    
    
    (270
    )
    
    
    (270
    )
    
    
    (147
    )
    
    
    (147
    )Net income (loss) available
to common stockholders
    
    $
    982
    
    
    $
    1,531
    
    
    $
    2,062
    
    
    $
    1,498Earnings (loss) per share:Basic income (loss) per
share(1)
    
    $
    0.05
    
    
    $
    0.08
    
    
    $
    0.07
    
    
    $
    0.05Diluted income (loss) per
share(1)
    
    $
    0.03
    
    
    $
    0.05
    
    
    $
    0.06
    
    
    $
    0.04Basic weighted average
shares outstanding
    
    
    19,219
    
    
    
    19,219
    
    
    
    31,240
    
    
    
    31,240Diluted weighted average
shares outstanding
    
    
    30,970
    
    
    
    30,970
    
    
    
    37,488
    
    
    
    37,488
 (1)
    
    The sum of quarterly income per share may not equal annual income per
share due to rounding and second quarter net loss.  124




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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Disclosure Controls and Procedures
    Managements Report on Internal Control Over Financial Reporting
   (i)
    
    pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets;
 (ii)
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that receipts and
expenditures are being made only in accordance with authorizations of our management and
directors; and
 (iii)
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of our assets that could have a material effect on the
financial statements.
   125




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
  
 Item 9B. Other Information
  
 PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
    
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accounting Fees and Services
   126




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PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
 (a) The following documents are filed as part of this Annual Report on Form 10-K:
 Financial Statements filed as part of this report
 Index to Consolidated Financial Statements
    
    PageReport of Independent Registered Public Accounting Firm
    
    87Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
    
    88Balance Sheets as of December 31, 2009 and 2008
    
    89Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    90Statements of Preferred Stock and Stockholders Equity (Deficit) for the years ended December 31,
2009, 2008 and 2007
    
    91Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
    
    92Notes to Financial Statements
    
    94
 Financial Statement Schedules
  Exhibits
 Number
    
    Description
    
    Method of Filing3.1
    
    
    Amended and Restated Certificate
of Incorporation
    
    Incorporated by reference to Exhibit
3.1 to Amendment No. 6 to the
Companys Registration Statement on
Form S-1 filed with the SEC on
November 12, 2008.3.2
    
    
    Amended and Restated Bylaws
    
    Incorporated by reference to Exhibit
3.2 to Amendment No. 6 to the
Companys Registration Statement on
Form S-1 filed with the SEC on
November 12, 2008.4.1
    
    
    Specimen of Stock Certificate
    
    Incorporated by reference to Exhibit
4.1 to Amendment No. 2 to the
Companys Registration Statement on
Form S-1 filed with the SEC on
September 29, 2008.4.2
    
    
    Amended and Restated Investor
Rights Agreement, dated September
17, 2008, by and among Grand
Canyon Education, Inc. and the
other parties named therein
    
    Incorporated by reference to Exhibit
4.2 to Amendment No. 2 to the
Companys Registration Statement on
Form S-1 filed with the SEC on
September 29, 2008.10.1
    
    
    Amended and Restated Executive
Employment Agreement, dated
September 10, 2008, by and between
Grand Canyon Education, Inc. and
Brent Richardson
    
    Incorporated by reference to Exhibit
10.1 to Amendment No. 2 to the
Companys Registration Statement on
Form S-1 filed with the SEC on
September 29, 2008.10.2
    
    
    Amended and Restated Executive
Employment Agreement, dated
September 10, 2008, by and between
Grand Canyon Education, Inc. and
Christopher Richardson
    
    Incorporated by reference to Exhibit
10.2 to Amendment No. 2 to the
Companys Registration Statement on
Form S-1 filed with the SEC on
September 29, 2008.10.3
    
    
    Executive Employment Agreement,
dated September 1, 2008, by and
between Grand Canyon Education,
Inc. and Kathy Player
    
    Incorporated by reference to Exhibit
10.1 to the Companys Current Report
on Form 8-K filed with the SEC on
March 25, 2009.
  127




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##### Table of Contents



Number
    
    Description
    
    Method of Filing10.4
    
    
    2008 Equity Incentive Plan
    
    Incorporated by reference to Exhibit
10.4 to Amendment No. 2 to the
Companys Registration Statement on
Form S-1 filed with the SEC on
September 29, 2008.10.5
    
    
    2008 Employee Stock Purchase Plan
    
    Incorporated by reference to Exhibit
10.5 to Amendment No. 2 to the
Companys Registration Statement on
Form S-1 filed with the SEC on
September 29, 2008.10.6
    
    
    License Agreement, dated June 30,
2004, by and between Blanchard
Education, LLC and Significant
Education, LLC
    
    Incorporated by reference to Exhibit
10.15 to the Companys Registration
Statement on Form S-1 filed with the
SEC on May 13, 2008.10.7
    
    
    Letter Agreement, dated February
6, 2006, by and between The Ken
Blanchard Companies and Grand
Canyon University
    
    Incorporated by reference to Exhibit
10.16 to the Companys Registration
Statement on Form S-1 filed with the
SEC on May 13, 2008.10.8
    
    
    Amendment to License Agreement,
dated May 8, 2008, by and between
Blanchard Education, LLC and Grand
Canyon Education, Inc.
    
    Incorporated by reference to Exhibit
10.17 to the Companys Registration
Statement on Form S-1 filed with the
SEC on May 13, 2008.10.9
    
    
    Collaboration Agreement, dated
July 11, 2005, by and between Mind
Streams, LLC and Significant
Education, LLC (as supplemented by
Project One and Project Two)
    
    Incorporated by reference to Exhibit
10.18 to Amendment No. 1 to the
Companys Registration Statement on
Form S-1 filed with the SEC on August
13, 2008.10.10
    
    
    Executive Employment Agreement,
dated June 25, 2008, by and
between Grand Canyon Education,
Inc. and Daniel E. Bachus
    
    Incorporated by reference to Exhibit
10.19 to Amendment No. 1 to the
Companys Registration Statement on
Form S-1 filed with the SEC on August
13, 2008.10.11
    
    
    Executive Employment Agreement,
dated June 25, 2008, by and
between Grand Canyon Education,
Inc. and Brian E. Mueller
    
    Incorporated by reference to Exhibit
10.20 to Amendment No. 1 to the
Companys Registration Statement on
Form S-1 filed with the SEC on August
13, 2008.10.12
    
    
    Executive Employment Agreement,
dated June 25, 2008, by and
between Grand Canyon Education,
Inc. and W. Stan Meyer
    
    Incorporated by reference to Exhibit
10.21 to Amendment No. 1 to the
Companys Registration Statement on
Form S-1 filed with the SEC on August
13, 2008.10.13
    
    
    Form of Director and Officer
Indemnity Agreement
    
    Incorporated by reference to Exhibit
10.21 to Amendment No. 2 to the
Companys Registration Statement on
Form S-1 filed with the SEC on
September 29, 2008.10.14
    
    
    Purchase and Sale Agreement, dated
April 27, 2009, by and among Grand
Canyon Education, Inc., Spirit
Master Funding, LLC, and Spirit
Management Company
    
    Incorporated by reference to Exhibit
10.1 to the Companys Quarterly Report
on Form 10-Q filed with the SEC on
August 3, 2009.10.15
    
    
    Loan Agreement, dated April 27,
2009, by and between Grand Canyon
Education, Inc. and Bank of
America, N.A.
    
    Incorporated by reference to Exhibit
10.2 to the Companys Quarterly Report
on Form 10-Q filed with the SEC on
August 3, 2009.10.16
    
    
    Employment Agreement, dated
September 16, 2009, by and between
Grand Canyon Education, Inc. and
Joseph N. Mildenhall
    
    Incorporated by reference to Exhibit
10.1 to the Companys Quarterly Report
on Form 10-Q filed with the SEC on
November 4, 2009.23.1
    
    
    Consent of Independent Registered
Public Accounting Firm
    
    Filed herewith.24.1
    
    
    Power of Attorney
    
    See signature page.
  128




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Number
    
    Description
    
    Method of Filing31.1
    
    
    Certification of the Chief
Executive Officer Pursuant to Rule
13a-14(a) and 15d-14(a) as Adopted
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith.31.2
    
    
    Certification of the Chief
Financial Officer Pursuant to Rule
13a-14(a) and 15d-14(a) as Adopted
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith.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
    
    Filed herewith.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
    
    Filed herewith.
 
 Significant Education, LLC is the predecessor to Significant Education, Inc., which is the former
name of Grand Canyon Education, Inc.
    
    Indicates a management contract or any compensatory plan, contract or arrangement.
    
    This certification is being furnished solely to accompany this report pursuant to 18 U.S.C.
Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act, and is
not to be incorporated by reference into any filings of the Company, whether made before or
after the date hereof, regardless of any general incorporation language in such filing. 
  129




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SIGNATURES
  GRAND CANYON EDUCATION, INC.By:
    /s/ Brian E. MuellerName:
    Brian E. MuellerTitle:
    Chief Executive Officer   Signature
    
    Title
    
    Date/s/ Brian E. Mueller

Brian E. Mueller
    
    Chief Executive Officer and Director
(Principal Executive Officer)
    
    February 18, 2010/s/ Daniel E. Bachus

Daniel E. Bachus
    
    Chief Financial Officer
(Principal Financial Officer and 
Principal Accounting Officer)
    
    February 18, 2010/s/ Brent D. Richardson

Brent D. Richardson
    
    Executive Chairman
    
    February 18, 2010/s/ Christopher C. Richardson

Christopher C. Richardson
    
    Director
    
    February 18, 2010/s/ David J. Johnson

David J. Johnson
    
    Director
    
    February 18, 2010/s/ Jack A. Henry

Jack A. Henry
    
    Director
    
    February 18, 2010/s/ Jerry Colangelo

Jerry Colangelo
    
    Director
    
    February 18, 2010/s/ D. Mark Dorman

D. Mark Dorman
    
    Director
    
    February 18, 2010/s/ Chad N. Heath

Chad N. Heath
    
    Director
    
    February 18, 2010
  130




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EXHIBIT INDEX
 Number
    
    Description
    
    Method of Filing3.1
    
    
    Amended and Restated Certificate of
Incorporation
    
    Incorporated by reference to
Exhibit 3.1 to Amendment No. 6 to
the Companys Registration
Statement on Form S-1 filed with
the SEC on November 12, 2008.3.2
    
    
    Amended and Restated Bylaws
    
    Incorporated by reference to
Exhibit 3.2 to Amendment No. 6 to
the Companys Registration
Statement on Form S-1 filed with
the SEC on November 12, 2008.4.1
    
    
    Specimen of Stock Certificate
    
    Incorporated by reference to
Exhibit 4.1 to Amendment No. 2 to
the Companys Registration
Statement on Form S-1 filed with
the SEC on September 29, 2008.4.2
    
    
    Amended and Restated Investor Rights
Agreement, dated September 17, 2008, by and
among Grand Canyon Education, Inc. and the
other parties named therein
    
    Incorporated by reference to
Exhibit 4.2 to Amendment No. 2 to
the Companys Registration
Statement on Form S-1 filed with
the SEC on September 29, 2008.10.1
    
    
    Amended and Restated Executive Employment
Agreement, dated September 10, 2008, by and
between Grand Canyon Education, Inc. and
Brent Richardson
    
    Incorporated by reference to
Exhibit 10.1 to Amendment No. 2 to
the Companys Registration
Statement on Form S-1 filed with
the SEC on September 29, 2008.10.2
    
    
    Amended and Restated Executive Employment
Agreement, dated September 10, 2008, by and
between Grand Canyon Education, Inc. and
Christopher Richardson
    
    Incorporated by reference to
Exhibit 10.2 to Amendment No. 2 to
the Companys Registration
Statement on Form S-1 filed with
the SEC on September 29, 2008.10.3
    
    
    Executive Employment Agreement, dated
September 1, 2008, by and between Grand
Canyon Education, Inc. and Kathy Player
    
    Incorporated by reference to
Exhibit 10.1 to the Companys
Current Report on Form 8-K filed
with the SEC on March 25, 2009.10.4
    
    
    2008 Equity Incentive Plan
    
    Incorporated by reference to
Exhibit 10.4 to Amendment No. 2 to
the Companys Registration
Statement on Form S-1 filed with
the SEC on September 29, 2008.10.5
    
    
    2008 Employee Stock Purchase Plan
    
    Incorporated by reference to
Exhibit 10.5 to Amendment No. 2 to
the Companys Registration
Statement on Form S-1 filed with
the SEC on September 29, 2008.10.6
    
    
    License Agreement,
dated June 30,
2004, by and
between Blanchard
Education, LLC and
Significant
Education, LLC
    
    Incorporated by reference to Exhibit 10.15 to the Companys
Registration Statement on Form S-1 filed with the SEC on
May 13, 2008.10.7
    
    
    Letter Agreement,
dated February 6,
2006, by and
between The Ken
Blanchard Companies
and Grand Canyon
University
    
    Incorporated by reference to Exhibit 10.16 to the Companys
Registration Statement on Form S-1 filed with the SEC on
May 13, 2008.10.8
    
    
    Amendment to
License Agreement,
dated May 8, 2008,
by and between
Blanchard
Education, LLC and
Grand Canyon
Education, Inc.
    
    Incorporated by reference to Exhibit 10.17 to the Companys
Registration Statement on Form S-1 filed with the SEC on
May 13, 2008.10.9
    
    
    Collaboration
Agreement, dated
July 11, 2005, by
and between Mind
Streams, LLC and
Significant
Education, LLC (as
supplemented by
Project One and
Project Two)
    
    Incorporated by reference to Exhibit 10.18 to Amendment No.
1 to the Companys Registration Statement on Form S-1 filed
with the SEC on August 13, 2008.
  131




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##### Table of Contents



Number
    
    Description
    
    Method of Filing10.10
    
    
    Executive
Employment
Agreement, dated
June 25, 2008, by
and between Grand
Canyon Education,
Inc. and Daniel E.
Bachus
    
    Incorporated by reference to Exhibit 10.19 to Amendment No.
1 to the Companys Registration Statement on Form S-1 filed
with the SEC on August 13, 2008.10.11
    
    
    Executive
Employment
Agreement, dated
June 25, 2008, by
and between Grand
Canyon Education,
Inc. and Brian E.
Mueller
    
    Incorporated by reference to Exhibit 10.20 to Amendment No.
1 to the Companys Registration Statement on Form S-1 filed
with the SEC on August 13, 2008.10.12
    
    
    Executive
Employment
Agreement, dated
June 25, 2008, by
and between Grand
Canyon Education,
Inc. and W. Stan
Meyer
    
    Incorporated by reference to Exhibit 10.21 to Amendment No.
1 to the Companys Registration Statement on Form S-1 filed
with the SEC on August 13, 2008.10.13
    
    
    Form of Director
and Officer
Indemnity Agreement
    
    Incorporated by reference to Exhibit 10.21 to Amendment No.
2 to the Companys Registration Statement on Form S-1 filed
with the SEC on September 29, 2008.10.14
    
    
    Purchase and Sale
Agreement, dated
April 27, 2009, by
and among Grand
Canyon Education,
Inc., Spirit Master
Funding, LLC, and
Spirit Management
Company
    
    Incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q filed with the SEC on August
3, 2009.10.15
    
    
    Loan Agreement,
dated April 27,
2009, by and
between Grand
Canyon Education,
Inc. and Bank of
America, N.A.
    
    Incorporated by reference to Exhibit 10.2 to the Companys
Quarterly Report on Form 10-Q filed with the SEC on August
3, 2009.10.16
    
    
    Employment
Agreement, dated
September 16, 2009,
by and between
Grand Canyon
Education, Inc. and
Joseph N.
Mildenhall
    
    Incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q filed with the SEC on
November 4, 2009.23.1
    
    
    Consent of
Independent
Registered Public
Accounting Firm
    
    Filed herewith.24.1
    
    
    Power of Attorney
    
    See signature page.31.1
    
    
    Certification of
the Chief Executive
Officer Pursuant to
Rule 13a-14(a) and
15d-14(a) as
Adopted Pursuant to
Section 302 of the
Sarbanes-Oxley Act
of 2002
    
    Filed herewith.31.2
    
    
    Certification of
the Chief Financial
Officer Pursuant to
Rule 13a-14(a) and
15d-14(a) as
Adopted Pursuant to
Section 302 of the
Sarbanes-Oxley Act
of 2002
    
    Filed herewith.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
    
    Filed herewith.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
    
    Filed herewith.
 
 Significant Education, LLC is the predecessor to Significant Education, Inc., which is the former
name of Grand Canyon Education, Inc.
    
    Indicates a management contract or any compensatory plan, contract or arrangement.
    
    This certification is being furnished solely to accompany this report pursuant to 18 U.S.C.
Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act, and is
not to be incorporated by reference into any filings of the Company, whether made before or after the date hereof, regardless of any
general incorporation language in such filing.  132