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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, 2010
 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
 Yes þ No o
 Yes
o No o
 o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



PagePART ISpecial Note Regarding Forward-Looking Statements
    
    
    3Item 1. Business
    
    
    5Item 1A. Risk Factors
    
    
    39Item 1B. Unresolved Staff Comments
    
    
    63Item 2. Properties
    
    
    63Item 3. Legal Proceedings
    
    
    63Item 4. (Removed and Reserved)
    
    
    65PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    66Item 6. Selected Financial and Other Data
    
    
    70Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    73Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    91Item 8. Financial Statements and Supplementary Data
    
    
    92Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    129Item 9A. Controls and Procedures
    
    
    129Item 9B. Other Information
    
    
    130PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    130Item 11. Executive Compensation
    
    
    130Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    130Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    130Item 14. Principal Accounting Fees and Services
    
    
    130PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    131SIGNATURES
    
    
    134Exhibit Index
    
    
    135Exhibit 10.18EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
   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 program review being conducted by the Department of
Education of our compliance with Title IV program requirements, and possible fines or
other administrative sanctions resulting therefrom;
 
    
    the ability of our students to obtain federal Title IV funds, state financial
aid, and private financing;
 
    
    potential damage to our reputation or other adverse effects as a result of
negative publicity in the media, in the industry or in connection with governmental
reports or investigations or otherwise, affecting us or other companies in the
for-profit postsecondary education sector;
 
    
    risks associated with changes in applicable federal and state laws and
regulations and accrediting commission standards including pending rulemaking by the
Department of Education;
 
    
    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;
  3




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
    
    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;
 
    
    potential decreases in enrollment, the payment of refunds or other negative
impacts on our operating results as a result of our change from a term-based financial
aid system to a borrower-based, non-term or BBAY financial aid system;
 
    
    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.
   4




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Part I
 
 Item 1.
    
    Business
 Overview
       5




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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
30% of our faculty members hold a doctoral degree. 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 assessment, 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.
  6




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
    
    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.
 
    
    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, 2010, over 98.0% 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.
  7




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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 (B.S./M.Ed.) and
school principals (M.Ed.).
    
    2010  2013
(teacher) 2010-2012
(principal)Ken 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, Finance
and Economics, and Entrepreneurial
Studies.
    
    2007  2017College 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 Doctoral Studies, which utilizes innovative technology,
collaboration, and learning communities to develop expert practitioners and researchers
who can become leaders in the disciplines and communities they serve;
 
    
    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;
  8




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
    
    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;
 
    
    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; and
 
    
    the College of Fine Arts and Production, which was reintroduced in 2010 and which
continues the long and highly regarded tradition that the University has in the Fine
Arts.
   College of Doctoral StudiesDegree Program
    
    EmphasisDoctor of Education
    
        Organizational Leadership 
Organizational Development    Organizational Leadership  Higher
Education Leadership    Organizational Leadership 
Effective Schools    Organizational Leadership 
Behavioral Health    Organizational Leadership 
Instructional Leadership
 College of Education
    
    Ken Blanchard College of BusinessDegree Program
    
    Emphasis
    
    Degree Program
    
    EmphasisMaster of Arts
    
        Teaching  Professional Learning
Communities
    
    Ken Blanchard
Executive MBA    Teaching  Teaching LeadershipMaster of Education
    
        Education Administration 
Institutional Recommendation (IR)
    
    Master of Business
Administration
    
        Accounting
    Corporate    Educational Leadership  Non-IR
    
    
    
        Finance    Health Systems Management    Elementary Education  IR
    
    
    
        Marketing    Elementary Education  Non-IR
    
    
    
        Leadership    Curriculum and Instruction: Reading
Elementary
    
    
    
        Strategic Human Resources Management    Curriculum and Instruction: Reading
 Secondary
    
    Master of Public
Administration
    
        Government and Policy    Curriculum and Instruction: Technology
    
    
    
        Health Care Management    Secondary Education  IR    Secondary Education  Non-IR
    
    Master of Science
    
        Leadership    Special Education for Certified
Special Educators
    
    
    
        Leadership  Disaster
Preparedness & Executive Fire Leadership    Teaching English to Speakers of Other
Languages    Special Education  IR    Special Education  Non-IR
    
    Bachelor of Science
    
        Accounting    Early Childhood Education  IR
    
    
    
        Business Administration    Early Childhood Education  Non-IR
    
    
    
        Applied Management    Finance and Economics    Entrepreneurial Studies    Marketing    Public Safety Administration    Sports Management    Public Safety and Emergency
Management
  9




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College of Education
    
    College of Fine Arts and ProductionDegree Program
    
    Emphasis
    
    Degree Program
    
    EmphasisBachelor of Science
    
        Elementary/Special Education
    
    Bachelor of Arts
    
        Dance Education*    Elementary Education  Early Childhood
    
    
    
        Digital Film  Production*Education
    
    
    
        Digital Film  Screenwriting*    Elementary Education  English
    
    
    
        Music Education*    Elementary Education  Math
    
    
    
        Music  Piano*    Elementary Education  Science
    
    
    
        Music  Voice*    Secondary Education  Biology*
    
    
    
        Theatre and Drama*    Secondary Education  Business
Education    Secondary Education  Chemistry*    Secondary Education  Mathematics    Secondary Education  Social Studies    Secondary Education  Physical
Education*    Secondary Education  English    Early Childhood Education
 College of Nursing and Health Sciences
    
    College of Liberal ArtsDegree Program
    
    Emphasis
    
    Degree Program
    
    EmphasisMaster of Science
    
        Nursing  Family Nurse Practitioner*
    
    Master of Science
    
        Criminal Justice  Law Enforcement    Nursing  Acute Care Nurse
Practitioner    Nursing  Leadership in Healthcare
Systems
    
    
    
        Criminal Justice  Legal Studies    Nursing  Clinical Nurse Specialist
(Education Focus)*
    
    
    
        Psychology  Industrial and
Organizational Psychology    Nursing  Clinical Nurse Specialist*
    
    
    
        Psychology  General Psychology    Nursing  Nursing Education    Professional Counseling
    
    Master of Arts
    
        Christian Studies    Addiction Counseling
    
    
    
        Christian Studies  Pastoral
Ministry    Marriage and Family Therapy
    
    
    
        Christian Studies  Urban Ministry    Health Care Administration
    
    
    
        Christian Studies  Youth Ministry    Health Care Informatics
    
    
    
        Christian Studies  Christian
LeadershipMaster of Public Health
ScienceBachelor of Science
    
        Nursing*
    
    Bachelor of Science
    
        Justice Studies    Biology  Pre-Medicine*
    
    
    
        Psychology    Biology  Pre-Pharmacy*
    
    
    
        Sociology    Biology  Pre-Physician Assistant*    Health Science: Professional
Development and Advanced Patient Care    Respiratory Care
    
    Bachelor of Arts
    
        Communications    Medical Imaging Sciences
    
    
    
        English Literature    Athletic Training*
    
    
    
        Interdisciplinary Studies    Addiction Counseling
    
    
    
        Christian Studies    Exercise Science  Athletic Coaching
    
    
    
        History    Exercise Science  Health Education    Exercise Science  Physical Education    Exercise Science  Pre-Physical
Therapy    Health Care Administration
 
 *
    
    Indicates program was offered on ground only    10




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New Program Development
  Assessment
  Faculty
   Student Support Services
  Academic services.
  11




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Administrative services.
 Library services.
 Career services.
 Technology support services.
 Marketing, Recruitment, and Retention
 Marketing.
 Recruitment.
 Retention.
  12




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Admissions
  Enrollment
   December 31, 2010(1)
    
    
    December 31, 2009# of Students
    
    
    % of Total
    
    
    # of Students
    
    
    % of TotalGraduate degree (2)
    
    
    17,732
    
    
    
    42.7
    %
    
    
    16,097
    
    
    
    42.7
    %Undergraduate degree
    
    
    23,750
    
    
    
    57.3
    %
    
    
    21,612
    
    
    
    57.3
    %Total
    
    
    41,482
    
    
    
    100.0
    %
    
    
    37,709
    
    
    
    100.0
    %
 December 31, 2010(1)
    
    
    December 31, 2009# of Students
    
    
    % of Total
    
    
    # of Students
    
    
    % of TotalOnline(3)
    
    
    37,734
    
    
    
    91.0
    %
    
    
    34,596
    
    
    
    91.7
    %Ground (4)
    
    
    3,748
    
    
    
    9.0
    %
    
    
    3,113
    
    
    
    8.3
    %Total
    
    
    41,482
    
    
    
    100.0
    %
    
    
    37,709
    
    
    
    100.0
    %
 (1)
    
    Enrollment at December 31, 2010 represents individual students who attended a course
during the last two months of the calendar quarter. Prior to our transition to BBAY,
enrollment had been defined as individual students that attended a course in a term that was
in session as of the end of the quarter.(2)
    
    Includes 1,186 and 315 students pursuing doctoral degrees at December 31, 2010 and
2009, respectively.(3)
    
    As of December 31, 2010 and 2009, 45.5% and 44.5%, respectively, of our online
students were pursuing graduate or doctoral degrees.(4)
    
    Includes our traditional on-campus students, as well as our professional studies
students.  13




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Tuition and Fees
    Sources of Student Financing
  Title IV programs.
  14




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Other financial aid programs.
 Private loans.
 Other sources.
 Technology Systems and Management
   15




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Online course delivery and management.
 Internal administration.
 Infrastructure.
 Ground Campus
      16




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Employees
  Competition
     
    
    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.
  17




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Proprietary Rights
  Available Information
 www.gcu.edu
  18




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REGULATION
     State Education Licensure and Regulation
    19




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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.
   20




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Accreditation
      21




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
    
    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;
    
    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.
  22




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Pending regulatory changes.
  23




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Eligibility and certification procedures.
   24




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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;
    
    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.
  25




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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.
    26




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Return of Title IV funds for students who withdraw.
   The 90/10 Rule.
  27




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Student loan defaults.
   28




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Incentive compensation rule.
 qui tam qui tam qui tam qui tam
 qui tam qui tam
  29




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Compliance reviews.
  qui tam qui tam
   30




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Privacy of student records.
 Potential effect of regulatory violations.
   31




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New and Pending Regulations
 Revised incentive compensation rule
 qui tam
  32




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Misrepresentation.
 State authorization.
 Approval of new programs.
 Additional final rules
  33




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Proposed gainful employment rule.
 
    
    Programs with at least 45% of their former students paying down the
principal on their federal loans, or with graduates having a
debt-to-earnings ratio of less than 20% of discretionary income or 8%
of total income, would be deemed fully eligible for Title IV funding.
These programs would be required to disclose both their repayment
rates and debt-to-earnings ratios unless they pass both of the
preceding tests.
    
    Programs with less than 35% of their former students paying down the
principal on their federal loans, and with graduates having a
debt-to-earnings ratio above 30% of discretionary income and 12% of
total income, would be deemed ineligible for Title IV funding. Such
programs would have lost Title IV eligibility as of July 1, 2012,
although institutions would have been required to warn students in the
programs about the high debt-to-earnings ratio effective July 1, 2011.
In order to mitigate against large and immediate displacements of
students as of the July 1, 2012 deadline, the Department of Education
further proposed that no more than 5% of a single institutions
programs would be declared ineligible as of that date, with the
lowest-performing programs immediately losing eligibility and the
remaining non-compliant programs losing eligibility one year later.
    
    Programs that are not fully eligible or ineligible under the above
standards would be restricted programs and subject to limits on
enrollment growth. Such institutions also would be required to
demonstrate employer support for the program and warn consumers and
current students of high debt levels.
    34




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Regulatory Standards that May Restrict Institutional Expansion or Other Changes
  Adding teaching locations, implementing new educational programs, and increasing enrollment.
  Acquiring other schools.
 Provisional certification.
  35




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Change in ownership resulting in a change in control.
   36




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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.
   39




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Business  Regulation  Regulation of Federal Student Financial Aid Programs  Eligibility and
certification procedures Risk
Factors  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.
 The Department of Education is conducting a program review of Grand Canyon University, which may
result in the repayment of a substantial amount of Title IV funds and may lead to fines, penalties,
or other sanctions, and damage to our reputation in the industry.
  qui tam qui tam
  40




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Rulemaking by the U.S. Department of Education has resulted in regulatory changes that materially
and adversely affect our business.
  
    
    A proposal to modify the standards relating to the payment of
incentive compensation to employees involved in student recruitment
and enrollment;
    
    A proposal to modify the standards relating to misrepresentations by
employees and third parties on behalf of institutions;
  41




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
    
    A proposal to modify state authorization of online programs; and
    
    A proposal to adopt a definition of gainful employment for purposes
of the requirement placed on proprietary schools that participate in
Title IV student financial aid programs that a program of study
prepare students for gainful employment in a recognized occupation.
 Incentive compensation rule.
  qui tam
  42




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##### Table of Contents



Misrepresentation.
 State Authorization.
 Approval of new programs.
  43




---



##### Table of Contents



Additional final rules
 Proposed gainful employment rule.
  
    
    Programs with at least 45% of their former students paying down the
principal on their federal loans, or with graduates having a
debt-to-earnings ratio of less than 20% of discretionary income or 8%
of total income, would be deemed fully eligible for Title IV funding.
These programs would be required to disclose both their repayment
rates and debt-to-earnings ratios unless they pass both of the
preceding tests.
    
    Programs with less than 35% of their former students paying down the
principal on their federal loans, and with graduates having a
debt-to-earnings ratio above 30% of discretionary income and 12% of
total income, would be deemed ineligible for Title IV funding. Such
programs would have lost Title IV eligibility as of July 1, 2012,
although institutions would have been required to warn students in the
programs about the high debt-to-earnings ratio effective July 1, 2011.
In order to mitigate against large and immediate displacements of
students as of the July 1, 2012 deadline, the Department of Education
further proposed that no more than 5% of a single institutions
programs would be declared ineligible as of that date, with the
lowest-performing programs immediately losing eligibility and the
remaining non-compliant programs losing eligibility one year later.
    
    Programs that are not fully eligible or ineligible under the above
standards would be restricted programs and subject to limits on
enrollment growth. Such institutions also would be required to
demonstrate employer support for the program and warn consumers and
current students of high debt levels.
  44




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Increased disclosure and recordkeeping requirements could result in lower enrollment or growth
rates in a manner that materially and adversely affects our business.
  The U.S. Congress has recently commenced an examination of the for-profit education sector that
could result in legislation or further U.S. Department of Education rulemaking restricting Title IV
program participation by proprietary schools in a manner that materially and adversely affects our
business.
   45




---



##### Table of Contents



Proposed legislation, additional rulemaking or additional examinations from US Congress may impact
general public perception of the industry in a negative manner resulting in a material and adverse
impact on our business.
  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.
   46




---



##### Table of Contents



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.
  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.
   47




---



##### Table of Contents



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.
     48




---



##### Table of Contents



Business 
Regulation  Regulatory Standards that May Restrict Institutional Expansion or Other Changes 
Change in ownership resulting in a change in control
 Our failure to comply with the regulatory requirements of states other than Arizona could result in
actions taken by those states or the Department of Education that could have a material adverse
effect on our enrollments.
 Business  Regulation  New and Pending
Regulations  State authorization
  49




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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.
  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.
 Business 
Regulation  Regulation of Federal Student Financial Aid Programs. Risk Factors  The Department of Education is
conducting a program review of Grand Canyon University, which may result in fines, penalties, other
sanctions, and damage to our reputation in the industry.
  50




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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, or the costs for such
loans increase, our business could be adversely affected given our students reliance on such loans
to satisfy their educational expenses.
   51




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Our reputation and our stock price may be negatively affected by adverse publicity or by the
actions of other postsecondary educational institutions.
  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.
   52




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We may lose our eligibility to participate in the Title IV programs if our student loan default
rates are too high.
  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.
   53




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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.
  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;
 
    
    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 program review by the Department of Education, 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.
  54




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Our business may be adversely affected by a general economic slowdown or recession in the U.S. or
abroad or by an economic recovery in the U.S.
  We operate in a highly competitive industry, and competitors with greater resources could harm our
business.
   55




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##### Table of Contents



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.
  Our conversion to a borrower-based, non-term financial aid system has resulted in lower enrollments
in a manner that materially and adversely affects our business.
  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.
    56




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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.
  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.
   57




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Our success depends upon our ability to recruit and retain key personnel.
  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.
     58




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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.
    We may incur liability for the unauthorized duplication or distribution of class materials posted
online for class discussions.
  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;
  59




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
    
    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.
  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.
  Our failure to comply with environmental laws and regulations governing our activities could result
in financial penalties and other costs.
  Our failure to obtain additional capital in the future could adversely affect our ability to grow.
   60




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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
 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.
   61




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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 University, or investigations or audits by regulators
into the operations of our University or our competitors, including the ongoing program
review being conducted by the Department of Education; and
 
    
    sales of common stock by our directors, executive officers, and significant
stockholders.
    62




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##### Table of Contents



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.
  
 Item 1B.
    
    Unresolved Staff Comments
  
 Item 2.
    
    Properties
  
 Item 3.
    
    Legal Proceedings
 qui tam
 qui tam qui tam qui tam qui
tam
  63




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qui tam
 qui tam qui tam
 qui tam qui tam
   64




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qui
tam
  
 Item 4.
    
    (Removed and Reserved)
  65




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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
    
    
    Low2009First Quarter
    
    $
    20.80
    
    
    $
    12.53Second Quarter
    
    $
    17.35
    
    
    $
    12.74Third Quarter
    
    $
    19.52
    
    
    $
    15.69Fourth Quarter
    
    $
    19.88
    
    
    $
    15.962010First Quarter
    
    $
    27.23
    
    
    $
    18.15Second Quarter
    
    $
    28.46
    
    
    $
    22.83Third Quarter
    
    $
    24.70
    
    
    $
    15.33Fourth Quarter
    
    $
    23.26
    
    
    $
    16.90
 Holders
  Dividends
    66




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##### Table of Contents



Recent Sales of Unregistered Securities
  Securities Authorized for Issuance under Equity Compensation Plans
 Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 Purchases of Equity Securities by the Issuer and Affiliated Purchasers
   67




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University Stock Performance
  
 *
    
    $100 invested on 11/20/08 in stock or 10/31/08 in index, including reinvestment of dividends. Fiscal year ending December 31.   68




---



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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
    
    
    
    104.30New 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
    
    
    
    134.06New Peer Group
    
    
    89.68
    
    
    
    87.84
    
    
    
    84.18
    
    
    
    91.49
    
    
    
    76.19
    
    
    
    75.97
    
    
    
    80.07
 1/10
    
    
    2/10
    
    
    3/10
    
    
    4/10
    
    
    5/10
    
    
    6/10
    
    
    7/10Grand Canyon Education, Inc.
    
    
    168.52
    
    
    
    183.54
    
    
    
    220.59
    
    
    
    204.05
    
    
    
    207.26
    
    
    
    197.72
    
    
    
    204.81S&P 500
    
    
    114.37
    
    
    
    117.91
    
    
    
    125.03
    
    
    
    127.00
    
    
    
    116.86
    
    
    
    110.74
    
    
    
    118.50NASDAQ Composite
    
    
    127.40
    
    
    
    132.92
    
    
    
    142.25
    
    
    
    145.46
    
    
    
    133.36
    
    
    
    125.34
    
    
    
    133.98New Peer Group
    
    
    77.94
    
    
    
    80.92
    
    
    
    86.97
    
    
    
    84.01
    
    
    
    79.13
    
    
    
    64.69
    
    
    
    71.06
 8/10
    
    
    9/10
    
    
    10/10
    
    
    11/10
    
    
    12/10Grand Canyon Education, Inc.
    
    
    143.88
    
    
    
    185.06
    
    
    
    158.73
    
    
    
    160.68
    
    
    
    165.32S&P 500
    
    
    113.15
    
    
    
    123.25
    
    
    
    127.94
    
    
    
    127.96
    
    
    
    136.51NASDAQ Composite
    
    
    126.21
    
    
    
    141.37
    
    
    
    149.55
    
    
    
    148.93
    
    
    
    158.26New Peer Group
    
    
    52.47
    
    
    
    66.91
    
    
    
    51.37
    
    
    
    50.97
    
    
    
    60.29
 Copyright© 2011 Standard & Poors, a division of The McGraw-Hill Companies Inc. All rights
reserved. (www.researchdatagroup.com/S&P.htm)
    69




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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 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands, except per share data)Income Statement Data:Net revenue
    
    $
    385,825
    
    
    $
    261,902
    
    
    $
    161,309
    
    
    $
    99,326
    
    
    $
    72,111Costs and expenses:Instructional costs and services
    
    
    140,037
    
    
    
    87,592
    
    
    
    54,450
    
    
    
    39,050
    
    
    
    31,287Selling and promotional
    
    
    112,493
    
    
    
    85,405
    
    
    
    65,551
    
    
    
    35,148
    
    
    
    20,093General and administrative
    
    
    49,980
    
    
    
    35,619
    
    
    
    26,825
    
    
    
    17,001
    
    
    
    15,011Contract termination fee
    
    
    9,233
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Litigation loss
    
    
    
    
    
    
    5,200
    
    
    
    
    
    
    
    
    
    
    
    Estimated exit costs
    
    
    258
    
    
    
    1,218
    
    
    
    
    
    
    
    
    
    
    
    Royalty to former owner
    
    
    296
    
    
    
    296
    
    
    
    1,686
    
    
    
    3,782
    
    
    
    2,678Total costs and expenses
    
    
    312,297
    
    
    
    215,330
    
    
    
    148,512
    
    
    
    94,981
    
    
    
    69,069Operating income
    
    
    73,528
    
    
    
    46,572
    
    
    
    12,797
    
    
    
    4,345
    
    
    
    3,042Interest expense
    
    
    (889
    )
    
    
    (1,613
    )
    
    
    (2,897
    )
    
    
    (2,975
    )
    
    
    (2,827
    )Interest income
    
    
    168
    
    
    
    324
    
    
    
    640
    
    
    
    1,172
    
    
    
    912Income before income taxes
    
    
    72,807
    
    
    
    45,283
    
    
    
    10,540
    
    
    
    2,542
    
    
    
    1,127Income tax expense
    
    
    28,442
    
    
    
    17,979
    
    
    
    3,855
    
    
    
    1,016
    
    
    
    529Net income
    
    
    44,365
    
    
    
    27,304
    
    
    
    6,685
    
    
    
    1,526
    
    
    
    598Preferred dividends
    
    
    
    
    
    
    
    
    
    
    (938
    )
    
    
    (349
    )
    
    
    (527
    )Net income available to common stockholders
    
    $
    44,365
    
    
    $
    27,304
    
    
    $
    5,747
    
    
    $
    1,177
    
    
    $
    71Earnings per common shareBasic
    
    $
    0.97
    
    
    $
    0.60
    
    
    $
    0.26
    
    
    $
    0.06
    
    
    $
    0.00Diluted
    
    $
    0.96
    
    
    $
    0.60
    
    
    $
    0.17
    
    
    $
    0.03
    
    
    $
    0.00Shares used in computing earnings per
common shareBasic
    
    
    45,722
    
    
    
    45,184
    
    
    
    22,185
    
    
    
    18,923
    
    
    
    18,853Diluted
    
    
    46,396
    
    
    
    45,503
    
    
    
    33,430
    
    
    
    35,143
    
    
    
    36,858
 Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands)Other Data:Capital expenditures
    
    $
    62,627
    
    
    $
    60,265
    
    
    $
    8,374
    
    
    $
    7,406
    
    
    $
    2,387Depreciation and amortization
    
    $
    11,812
    
    
    $
    7,664
    
    
    $
    5,095
    
    
    $
    3,300
    
    
    $
    2,396Adjusted EBITDA(1)
    
    $
    101,176
    
    
    $
    65,119
    
    
    $
    25,675
    
    
    $
    11,723
    
    
    $
    9,074Period end enrollment(2):Online
    
    
    37,734
    
    
    
    34,596
    
    
    
    21,955
    
    
    
    12,497
    
    
    
    8,406Ground
    
    
    3,748
    
    
    
    3,113
    
    
    
    2,681
    
    
    
    2,257
    
    
    
    2,256
  70




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As of December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands)Balance Sheet Data:Cash and cash equivalents and marketable
securities
    
    $
    33,637
    
    
    $
    63,101
    
    
    $
    35,627
    
    
    $
    18,930
    
    
    $
    11,535Restricted cash, cash equivalents and investments
    
    
    52,938
    
    
    
    3,233
    
    
    
    5,125
    
    
    
    7,578
    
    
    
    5,900Total assets
    
    
    284,255
    
    
    
    174,738
    
    
    
    116,990
    
    
    
    88,568
    
    
    
    61,232Capital lease obligations (including short-term)
    
    
    1,824
    
    
    
    1,619
    
    
    
    30,509
    
    
    
    29,228
    
    
    
    29,728Notes payable (including short-term)
    
    
    23,907
    
    
    
    26,088
    
    
    
    1,744
    
    
    
    2,408
    
    
    
    2,462Preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,948
    
    
    
    21,390Total stockholders/member s equity (deficit)
    
    
    136,660
    
    
    
    86,028
    
    
    
    53,590
    
    
    
    (10,386
    )
    
    
    (11,723
    )
 
 (1)
    
    Adjusted EBITDA is defined as net income plus interest expense net of interest income,
plus income tax expense, and plus depreciation and amortization (EBITDA), as adjusted for
(i) the amortization of prepaid royalty payments recorded in conjunction with a settlement
of a dispute with our former owner, as discussed in 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 the payment of state income taxes, which we typically make in the
fourth quarter of a fiscal year; (iv) litigation losses, if any; (v) exit costs, if any;
(vi) contract termination fees, if any; and (vii) share-based compensation.(2)
    
    Enrollment at December 31, 2010 represents individual students who attended a course
during the last two months of the calendar quarter. Prior to our transition to BBAY,
enrollment had been defined as individual students that attended a course in a term that
was in session as of the end of the quarter.   
    
    cash expenditures for capital expenditures or contractual commitments;
    
    changes in, or cash requirement for, our working capital requirements;
  71




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
    
    interest expense, or the cash required to replace assets that are being
depreciated or amortized; and
 
    
    the impact on our reported results of earnings or charges resulting from the
items for which we make adjustments to our EBITDA, as described above and set forth in
the table below.
   Year Ended December 31,(In thousands)
    
    2010
    
    
    2009
    
    
    2008Net income
    
    $
    44,365
    
    
    $
    27,304
    
    
    $
    6,685Plus: interest expense net of interest income
    
    
    721
    
    
    
    1,289
    
    
    
    2,257Plus: income tax expense
    
    
    28,442
    
    
    
    17,979
    
    
    
    3,855Plus: depreciation and amortization
    
    
    11,812
    
    
    
    7,664
    
    
    
    5,095EBITDA
    
    
    85,340
    
    
    
    54,236
    
    
    
    17,892Plus: royalty to former owner(a)
    
    
    296
    
    
    
    296
    
    
    
    1,686Plus: management fees and expenses(b)
    
    
    
    
    
    
    
    
    
    
    356Plus: contributions made in lieu of state income taxes(c)
    
    
    1,000
    
    
    
    750
    
    
    
    750Plus: litigation loss(d)
    
    
    
    
    
    
    5,200
    
    
    
    Plus: exit costs(e)
    
    
    258
    
    
    
    1,218
    
    
    
    Plus: contract termination fee(f)
    
    
    9,233
    
    
    
    
    
    
    
    Plus: share-based compensation(g)
    
    
    5,049
    
    
    
    3,419
    
    
    
    4,991Adjusted EBITDA
    
    $
    101,176
    
    
    $
    65,119
    
    
    $
    25,675
 
 (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 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 39.1%, 39.7% and 36.6% for the years ended December 31, 2010, 2009 and
2008, respectively. Had these contributions not been made, our effective tax rate would have
been 39.9%, 40.7% and 40.8%, for 2010, 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 the litigation settlement on our qui tammatter,
which became final in December 2010. 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, plus the
write off of leasehold improvements associated with the leased space.(f)
    
    Represents contract termination fees related to the termination of our Mind Streams revenue
sharing arrangement, which was reached in December 2010. See Item 8, Financial Statements and
Supplementary Data.(g)
    
    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.  72




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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
  Key Trends, Developments and Challenges
  Evolving Postsecondary Education Market
 Regulation and Oversight.
 Final Rules Adopted by the Department of Education.
 Revised incentive compensation rule
  73




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qui tam
 Misrepresentation.
 State authorization.
  74




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Approval of new programs.
 Additional final rules
 Pending gainful employment rule.
 
    
    Programs with at least 45% of their former students paying down the
principal on their federal loans, or with graduates having a
debt-to-earnings ratio of less than 20% of discretionary income or 8%
of total income, would be deemed fully eligible for Title IV funding.
These programs would be required to disclose both their repayment
rates and debt-to-earnings ratios unless they pass both of the
preceding tests.
    
    Programs with less than 35% of their former students paying down the
principal on their federal loans, and with graduates having a
debt-to-earnings ratio above 30% of discretionary income and 12% of
total income, would be deemed ineligible for Title IV funding. Such
programs would have lost Title IV eligibility as of July 1, 2012,
although institutions would have been required to warn students in the
programs about the high debt-to-earnings ratio effective July 1, 2011.
In order to mitigate against large and immediate displacements of
students as of the July 1, 2012 deadline, the Department of Education
further proposed that no more than 5% of a single institutions
programs would be declared ineligible as of that date, with the
lowest-performing programs immediately losing eligibility and the
remaining non-compliant programs losing eligibility one year later.
    
    Programs that are not fully eligible or ineligible under the above
standards would be restricted programs and subject to limits on
enrollment growth. Such institutions also would be required to
demonstrate employer support for the program and warn consumers and
current students of high debt levels.
  75




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Department of Education Program Review
 qui tam qui tam
  76




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Congressional Hearings
  77




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Conversion to Borrower Based, Non-Term Financial Aid System
    78




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Fiscal Year 2010 Events
  
    
    Enrollment, Net Revenue, and Operating Income Growth  We achieved
significant enrollment growth for the fiscal year ended December 31, 2010 as compared
to the fiscal year ended December 31, 2009 despite a change in our enrollment
calculation that reduces our reported enrollment count. As part of our transition to
BBAY, we calculate period end enrollment as including only individual students who
attended a course during the last two months of the calendar quarter. Prior to our
transition to BBAY, enrollment had been defined as individual students that attended a
course in a term that was in session as of the end of the quarter. Another factor
contributing to the 47.3% increase in net revenue over the same period was the
significant increase in the revenue per student as a result of the number of students
taking four credit courses between years, which was slightly offset by lower tuition
increases. For our 2010-11 academic year, which began in May 2010, we increased tuition
for students in our online and professional studies programs from 0.0% to 5.7%,
depending on the program, with an estimated blended rate increase of 3.5% as compared
to increases of 2.3% to 15.5%, depending on the program, with an estimated blended rate
increase of 5.0% for the prior academic year. Tuition for our traditional ground
programs had no increase for our 2010-11 academic year, as compared to 6.6% increase
for the prior academic year. Tuition increases have not historically been, and may not
in the future be, consistent across our programs due to market conditions and
differences in operating costs of individual programs. Operating income was $73.5
million for the fiscal year ended December 31, 2010, an increase of 57.9% over the
$46.6 million in operating income for 2009.
 
    
    Capital Expenditures  Our capital expenditures in 2010 of $62.6 million
were primarily related to the expansion of our physical campus and significant
investments in technology innovation to support our students and staff. In 2010, we
completed construction on our 55,000 square foot recreation center for both
student-athletes and on-campus students, a new dormitory that can hold up to 600
students, and a new College of Education classroom building. We started development on
a 140,000 square foot arena that will open in September 2011, a new 500-bed dormitory
and a food court restaurant that will be completed in August 2011. These investments
are to support our growing on-campus student population as well as enhance the brand of
the University.
 
    
    Investing in Innovative Educational Tools  During 2010, we entered into an
agreement with an affiliated entity to develop a new learning management system for use
by Grand Canyon University. Through this agreement we prepaid perpetual license fees,
acquired source code rights for the software developed, and prepaid maintenance and
service fees for the first seven years of use for an aggregate amount of $4.9 million.
We anticipate the conversion to this new learning management platform for our online
delivered coursework by the third quarter of 2011.
 
    
    Conversion to Borrower Based, Non-Term Financial Aid System  In the second
quarter of 2010, we completed the conversion of our students records system from
DataTel to Campus Vue. As described above, the move to BBAY has, in some
circumstances, significantly reduced the amount of living expenses a student is
eligible to receive, while allowing our students to take more frequent breaks between
classes. We estimate that the conversion to BBAY resulted in lower net revenues
between
approximately $30 million to $37 million during the second half of 2010. In connection
with this conversion, we incurred approximately $4.0 million of costs due to
unanticipated delays in information processing which are included in instructional costs
and services in 2010. In addition as a result of our move to BBAY, we receive a greater
proportion of student financial aid prior to the time courses have begun, which has
resulted in the shift of unrestricted cash to restricted cash and caused a significant
increase in our restricted cash amount between December 31, 2009 and December 31, 2010.
  79




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
    
    Settlement of 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 accrued $5.2 million for the proposed settlement of this
litigation, which became final in December 2010. Subject to the distribution of the
settlement amount from escrow in accordance with the terms of the settlement agreement,
this matter is now resolved. See Item 8, Financial Statements and Supplementary Data,
and Part I, Item 3, Legal Proceedings.
 
    
    Contract termination fees with a related party  We were a party to a
Collaboration Agreement with Mind Streams, L.L.C., which is a company owned and
operated, in part, by Gail Richardson, the father of Brent D. Richardson, the
Universitys Executive Chairman, and Christopher C. Richardson, the Universitys
General Counsel and a director. Under this agreement, Mind Streams identified
qualified applicants for admission to the University in return for which it was paid a
stated percentage of the net revenue (calculated as tuition actually received, less
scholarships, refunds, and allowances) derived by us from those identified applicants
that matriculated at the University. As a result of new rules adopted by the U.S.
Department of Education and effective July 1, 2011, we determined that revenue sharing
arrangement like the Collaboration Agreement, and the manner in which we pay amounts
due Mind Streams under the Collaboration Agreement, will most likely no longer be
permitted. Accordingly, we and Mind Streams entered into a termination agreement,
dated December 30, 2010. The amount paid by us settles both the future amounts that
would have been due to Mind Streams under the original terms of the agreement as well
as the value of an acquired database of student leads. In the aggregate, we expensed
$9.2 million in 2010 relating to the termination of this contract.
 Key financial metrics
 Net revenue
    80




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December 31,2010(1)
    
    
    2009
    
    
    2008# of Students
    
    
    % of Total
    
    
    # of Students
    
    
    % of Total
    
    
    # of Students
    
    
    % of TotalGraduate degree(2)
    
    
    17,732
    
    
    
    42.7
    %
    
    
    16,097
    
    
    
    42.7
    %
    
    
    13,031
    
    
    
    52.9
    %Undergraduate
degree
    
    
    23,750
    
    
    
    57.3
    %
    
    
    21,612
    
    
    
    57.3
    %
    
    
    11,605
    
    
    
    47.1
    %Total
    
    
    41,482
    
    
    
    100.0
    %
    
    
    37,709
    
    
    
    100.0
    %
    
    
    24,636
    
    
    
    100.0
    %
 December 31,2010(1)
    
    
    2009
    
    
    2008# of Students
    
    
    % of Total
    
    
    # of Students
    
    
    % of Total
    
    
    # of Students
    
    
    % of TotalOnline(3)
    
    
    37,734
    
    
    
    91.0
    %
    
    
    34,596
    
    
    
    91.7
    %
    
    
    21,955
    
    
    
    89.1
    %Ground(4)
    
    
    3,748
    
    
    
    9.0
    %
    
    
    3,113
    
    
    
    8.3
    %
    
    
    2,681
    
    
    
    10.9
    %Total
    
    
    41,482
    
    
    
    100.0
    %
    
    
    37,709
    
    
    
    100.0
    %
    
    
    24,636
    
    
    
    100.0
    %
 
 (1)
    
    Enrollment at December 31, 2010 represents individual students who attended a course
during the last two months of the calendar quarter. Prior to our transition to BBAY,
enrollment had been defined as individual students that attended a course in a term that was
in session as of the end of the quarter.(2)
    
    Includes 1,186, 315 and 56 students pursuing doctoral degrees at December 31, 2010,
2009 and 2008, respectively.(3)
    
    As of December 31, 2010 and 2009, 45.5% and 44.5%, respectively, of our online
students were pursuing graduate or doctoral degrees.(4)
    
    Includes our traditional on-campus students, as well as our professional studies
students.    81




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Costs and expenses
 Instructional cost and services
 Selling and promotional
 General and administrative
  82




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Interest expense
 Critical Accounting Policies and Estimates
   Revenue recognition
 Allowance for doubtful accounts
  83




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Long-Lived Assets (other than goodwill)
 Loss Contingencies
 Income taxes
 Results of Operations
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Net revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expensesInstructional cost and services
    
    
    36.3
    
    
    
    33.4
    
    
    
    33.8Selling and promotional
    
    
    29.2
    
    
    
    32.6
    
    
    
    40.6General and administrative
    
    
    13.0
    
    
    
    13.6
    
    
    
    16.6Litigation loss
    
    
    0.0
    
    
    
    2.0
    
    
    
    0.0Contract termination fees to related party
    
    
    2.4
    
    
    
    0.0
    
    
    
    0.0Exit costs
    
    
    0.1
    
    
    
    0.5
    
    
    
    0.0Royalty to former owner
    
    
    0.1
    
    
    
    0.1
    
    
    
    1.0Total operating expenses
    
    
    80.9
    
    
    
    82.2
    
    
    
    92.1Operating income
    
    
    19.1
    
    
    
    17.8
    
    
    
    7.9Interest expense
    
    
    (0.2
    )
    
    
    (0.6
    )
    
    
    (1.8
    )Interest income
    
    
    0.0
    
    
    
    0.1
    
    
    
    0.4Income before income taxes
    
    
    18.9
    
    
    
    17.3
    
    
    
    6.5Income tax expense
    
    
    7.4
    
    
    
    6.9
    
    
    
    2.4Net income
    
    
    11.5
    
    
    
    10.4
    
    
    
    4.1
  84




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Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
 Net revenue
 Instructional costs and services expenses
 Selling and promotional expenses
 General and administrative expenses
  85




---



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Contract termination fees to related party.
 Litigation loss. qui tam Financial Statements and Supplementary Data Legal
Proceedings
 Exit costs.
 Interest expense
 Income tax expense
 Net income
  86




---



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Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
 Net revenue
 Instructional cost and services expenses
 Selling and promotional expenses
 General and administrative expenses
  87




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Litigation loss. qui tam Financial Statements and Supplementary Data Legal Proceedings
 Exit costs.
 Royalty to former owner
 Interest expense
 Interest income
 Income tax expense
 Net income
 Seasonality
   88




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##### Table of Contents



Liquidity, Capital Resources, and Financial Position
 Liquidity
    Cash Flows
 Operating Activities
 Investing Activities
  89




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##### Table of Contents



Financing Activities
 Contractual Obligations
  Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    2-3 Years
    
    
    4-5 Years
    
    
    5 YearsLong term notes payable(1)
    
    $
    23.9
    
    
    $
    2.0
    
    
    $
    3.5
    
    
    $
    18.0
    
    
    $
    0.4Capital lease obligations(2)
    
    
    1.8
    
    
    
    1.7
    
    
    
    0.1
    
    
    
    0.0
    
    
    
    0.0Purchase obligations
    
    
    44.2
    
    
    
    42.2
    
    
    
    1.8
    
    
    
    0.2
    
    
    
    0.0Operating lease obligations(3)
    
    
    53.6
    
    
    
    4.8
    
    
    
    12.7
    
    
    
    12.1
    
    
    
    24.0Total contractual obligations
    
    $
    123.5
    
    
    $
    50.7
    
    
    $
    18.1
    
    
    $
    30.3
    
    
    $
    24.4
 (1)
    
    See Note 7, Notes Payable and Other Noncurrent Liabilities, 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
 Selected Financial and Other Data,
 Recent Accounting Pronouncements
 Financial Statements and
Supplementary Data
  90




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Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
 Impact of inflation.
 Market risk
  Interest rate risk
  91




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Item 8.
    
    Financial Statements and Supplementary Data
 PageReport of Independent Registered Public Accounting Firm
    
    
    93Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
    
    
    94Balance Sheets as of December 31, 2010 and 2009
    
    
    95Income Statements for the years ended December 31, 2010, 2009 and 2008
    
    
    96Statements of Comprehensive Income for the years ended December 31, 2010, 2009 and 2008
    
    
    97Statements of Preferred Stock and Stockholders Equity (Deficit) for the years ended December 31,
2010, 2009 and 2008
    
    
    98Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008
    
    
    99Notes to Financial Statements
    
    
    101
  92




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Report of Independent Registered Public Accounting Firm
 
     /s/ Ernst & Young LLP
 
  93




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##### Table of Contents



Report of Independent Registered Public Accounting Firm on Internal Control Over Financial
Reporting
        /s/ Ernst & Young LLP
 
  94




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Grand Canyon Education, Inc.
 
 Balance Sheets
 As of December 31,(In thousands, except par value)
    
    2010
    
    
    2009ASSETS:Current assetsCash and cash equivalents
    
    $
    33,637
    
    
    $
    62,571Restricted cash, cash equivalents and investments (of which $170 is
unrestricted at December 31, 2009)
    
    
    52,178
    
    
    
    3,403Accounts receivable, net of allowance for doubtful accounts of $14,961 and
$7,553 at December 31, 2010 and 2009, respectively
    
    
    33,334
    
    
    
    13,802Income taxes receivable
    
    
    8,415
    
    
    
    Deferred income taxes
    
    
    9,886
    
    
    
    6,685Other current assets
    
    
    4,834
    
    
    
    3,785Total current assets
    
    
    142,284
    
    
    
    90,246Property and equipment, net
    
    
    123,999
    
    
    
    67,370Restricted cash
    
    
    760
    
    
    
    Investments
    
    
    
    
    
    
    360Prepaid royalties
    
    
    6,579
    
    
    
    7,311Goodwill
    
    
    2,941
    
    
    
    2,941Deferred income taxes
    
    
    2,800
    
    
    
    5,956Other assets
    
    
    4,892
    
    
    
    554Total assets
    
    $
    284,255
    
    
    $
    174,738LIABILITIES AND STOCKHOLDERS EQUITY:Current liabilitiesAccounts payable
    
    $
    15,693
    
    
    $
    8,762Accrued compensation and benefits
    
    
    13,633
    
    
    
    11,898Accrued liabilities
    
    
    9,477
    
    
    
    6,205Accrued litigation loss
    
    
    5,200
    
    
    
    5,200Accrued exit costs
    
    
    64
    
    
    
    832Income taxes payable
    
    
    829
    
    
    
    2,261Student deposits
    
    
    48,873
    
    
    
    5,149Deferred revenue
    
    
    15,034
    
    
    
    18,055Due to related parties
    
    
    10,346
    
    
    
    1,174Current portion of capital lease obligations
    
    
    1,673
    
    
    
    751Current portion of notes payable
    
    
    2,026
    
    
    
    2,105Total current liabilities
    
    
    122,848
    
    
    
    62,392Capital lease obligations, less current portion
    
    
    151
    
    
    
    868Other noncurrent liabilities
    
    
    2,715
    
    
    
    1,467Notes payable, less current portion and other
    
    
    21,881
    
    
    
    23,983Total liabilities
    
    
    147,595
    
    
    
    88,710Commitments and contingenciesStockholders equityPreferred stock, $0.01 par value, 10,000 shares authorized; 0 shares issued
and outstanding at December 31, 2010 and 2009
    
    
    
    
    
    
    Common stock, $0.01 par value, 100,000 shares authorized; 45,811 and 45,658
shares issued and 45,761 and 45,658 shares outstanding at December 31, 2010
and 2009, respectively
    
    
    458
    
    
    
    457Treasury stock, at cost, 50 and 0 shares of common stock at December 31,
2010 and 2009, respectively
    
    
    (782
    )
    
    
    Additional paid-in capital
    
    
    77,449
    
    
    
    70,100Accumulated other comprehensive loss
    
    
    (445
    )
    
    
    (144
    )Accumulated earnings
    
    
    59,980
    
    
    
    15,615Total stockholders equity
    
    
    136,660
    
    
    
    86,028Total liabilities and stockholders equity
    
    $
    284,255
    
    
    $
    174,738
   95




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Grand Canyon Education, Inc.
 
 Income Statements
 Year Ended December 31,(In thousands, except per share amounts)
    
    2010
    
    
    2009
    
    
    2008Net revenue
    
    $
    385,825
    
    
    $
    261,902
    
    
    $
    161,309Costs and expenses:Instructional costs and services
    
    
    140,037
    
    
    
    87,592
    
    
    
    54,450Selling and promotional, including $8,777
in 2010; $6,736 in 2009; and $5,895 in
2008, to related parties
    
    
    112,493
    
    
    
    85,405
    
    
    
    65,551General and administrative
    
    
    49,980
    
    
    
    35,619
    
    
    
    26,825Litigation loss
    
    
    
    
    
    
    5,200
    
    
    
    Contract termination fees to related party
    
    
    9,233
    
    
    
    
    
    
    
    Exit costs
    
    
    258
    
    
    
    1,218
    
    
    
    Royalty to former owner
    
    
    296
    
    
    
    296
    
    
    
    1,686Total costs and expenses
    
    
    312,297
    
    
    
    215,330
    
    
    
    148,512Operating income
    
    
    73,528
    
    
    
    46,572
    
    
    
    12,797Interest expense
    
    
    (889
    )
    
    
    (1,613
    )
    
    
    (2,897
    )Interest income
    
    
    168
    
    
    
    324
    
    
    
    640Income before income taxes
    
    
    72,807
    
    
    
    45,283
    
    
    
    10,540Income tax expense
    
    
    28,442
    
    
    
    17,979
    
    
    
    3,855Net income
    
    
    44,365
    
    
    
    27,304
    
    
    
    6,685Preferred dividends
    
    
    
    
    
    
    
    
    
    
    (938
    )Net income available to common stockholders
    
    $
    44,365
    
    
    $
    27,304
    
    
    $
    5,747Earnings per share:Basic income per share
    
    $
    0.97
    
    
    $
    0.60
    
    
    $
    0.26Diluted income per share
    
    $
    0.96
    
    
    $
    0.60
    
    
    $
    0.17Basic weighted average shares outstanding
    
    
    45,722
    
    
    
    45,184
    
    
    
    22,185Diluted weighted average shares outstanding
    
    
    46,396
    
    
    
    45,503
    
    
    
    33,430
   96




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##### Table of Contents



Grand Canyon Education, Inc.
 
 Statements of Comprehensive Income
 Year Ended December 31,(In thousands)
    
    2010
    
    
    2009
    
    
    2008Net income
    
    $
    44,365
    
    
    $
    27,304
    
    
    $
    6,685Other comprehensive income (loss), net of tax:Unrealized losses on hedging derivatives
    
    
    (278
    )
    
    
    (167
    )
    
    
    Unrealized gains (losses) on available for sale securities
    
    
    (4
    )
    
    
    7
    
    
    
    (63
    )Realized gains on available for sale securities
    
    
    (19
    )
    
    
    
    
    
    
    Comprehensive income
    
    $
    44,064
    
    
    $
    27,144
    
    
    $
    6,622
   97




---



##### Table of Contents



Grand Canyon Education, Inc.
 
 Statements of Preferred Stock and Stockholders Equity (Deficit)
(In thousands)
 Preferred Stock
    
    
    Stockholders (Deficit) EquityAccumulatedSeries A Convertible
    
    
    Series C
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    OtherPreferred Stock
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    Treasury Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Income (Loss)
    
    
    Earnings (Deficit)
    
    
    TotalBalance at December 31, 2007
    
    
    6
    
    
    $
    18,610
    
    
    
    4
    
    
    $
    13,338
    
    
    
    19,036
    
    
    $
    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
    )Undeclared dividends on Series C Preferred
Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (938
    )
    
    
    
    
    
    
    
    
    
    
    (938
    )Issuance of Blanchard shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2,994
    
    
    
    
    
    
    
    
    
    
    
    2,996Cancellation of IAS warrant, net of $2,316
deferred taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,684
    )
    
    
    
    
    
    
    
    
    
    
    (3,684
    )Exercise of warrant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    909
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    517
    
    
    
    
    
    
    
    
    
    
    
    526Conversion of Series A and Series C Convertible
Preferred Stock to Common Stock
    
    
    (6
    )
    
    
    (18,610
    )
    
    
    (4
    )
    
    
    (14,276
    )
    
    
    13,104
    
    
    
    131
    
    
    
    
    
    
    
    
    
    
    
    32,755
    
    
    
    
    
    
    
    
    
    
    
    32,886Stock issued in initial public offering, net of
issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,075
    
    
    
    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
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1,310
    
    
    
    
    
    
    
    
    
    
    
    1,311Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,563
    
    
    
    
    
    
    
    
    
    
    
    3,563Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    591
    
    
    
    
    
    
    
    
    
    
    
    592Excess tax benefit from share-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    21Balance at December 31, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    45,465
    
    
    $
    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
    
    
    
    
    
    
    
    7Repurchase and retirement of the Companys common
stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (909
    )
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    (14,486
    )
    
    
    
    
    
    
    
    
    
    
    (14,495
    )Stock issued in offering, net of issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    14,870
    
    
    
    
    
    
    
    
    
    
    
    14,880Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,419
    
    
    
    
    
    
    
    
    
    
    
    3,419Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1,225
    
    
    
    
    
    
    
    
    
    
    
    1,226Excess tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    264
    
    
    
    
    
    
    
    
    
    
    
    264Balance at December 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    45,658
    
    
    $
    457
    
    
    
    
    
    
    $
    
    
    
    $
    70,100
    
    
    $
    (144
    )
    
    $
    15,615
    
    
    $
    86,028Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,365
    
    
    
    44,365Unrealized losses on hedging derivatives, net of
taxes of $273
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (278
    )
    
    
    
    
    
    
    (278
    )Unrealized losses on available for-sale securities,
net of taxes of $3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    (4
    )Realized gains on available for-sale securities,
net of taxes of $12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    
    
    
    
    (19
    )Common stock purchased for treasury
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50
    
    
    
    (782
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (782
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,049
    
    
    
    
    
    
    
    
    
    
    
    5,049Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1,746
    
    
    
    
    
    
    
    
    
    
    
    1,747Excess tax benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    554
    
    
    
    
    
    
    
    
    
    
    
    554Balance at December 31, 2010
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    45,811
    
    
    $
    458
    
    
    
    50
    
    
    $
    (782
    )
    
    $
    77,449
    
    
    $
    (445
    )
    
    $
    59,980
    
    
    $
    136,660
   98




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##### Table of Contents



Grand Canyon Education, Inc.
 
 Statements of Cash Flows
 Year Ended December 31,(In thousands)
    
    2010
    
    
    2009
    
    
    2008Cash flows provided by operating activities:Net income
    
    $
    44,365
    
    
    $
    27,304
    
    
    $
    6,685Adjustments to reconcile net income to net cash provided by
operating activities:Share-based compensation
    
    
    5,049
    
    
    
    3,419
    
    
    
    4,991Excess tax benefits from share-based compensation
    
    
    (736
    )
    
    
    (247
    )
    
    
    (21
    )Amortization of notes payable issuance costs
    
    
    63
    
    
    
    42
    
    
    
    Provision for bad debts
    
    
    23,360
    
    
    
    14,016
    
    
    
    8,465Depreciation and amortization
    
    
    12,108
    
    
    
    7,960
    
    
    
    5,095Non-capitalizable system conversion costs
    
    
    4,013
    
    
    
    
    
    
    
    Litigation loss
    
    
    
    
    
    
    5,200
    
    
    
    Exit costs
    
    
    (768
    )
    
    
    832
    
    
    
    Deferred income taxes
    
    
    179
    
    
    
    (2,523
    )
    
    
    (245
    )Other
    
    
    23
    
    
    
    (14
    )
    
    
    (106
    )Changes in assets and liabilities:Accounts receivable
    
    
    (46,905
    )
    
    
    (18,376
    )
    
    
    (10,793
    )Prepaid expenses and other
    
    
    (4,746
    )
    
    
    (377
    )
    
    
    (751
    )Due to/from related parties
    
    
    9,172
    
    
    
    (23
    )
    
    
    468Accounts payable
    
    
    2,510
    
    
    
    2,155
    
    
    
    927Accrued liabilities
    
    
    5,007
    
    
    
    8,928
    
    
    
    3,596Income taxes receivable/payable
    
    
    (9,293
    )
    
    
    3,929
    
    
    
    (1,624
    )Deferred revenue
    
    
    (3,021
    )
    
    
    7,419
    
    
    
    5,392Student deposits
    
    
    43,724
    
    
    
    1,523
    
    
    
    (1,499
    )Prepaid royalties to former owner
    
    
    
    
    
    
    
    
    
    
    (5,920
    )Royalty payable to former owner
    
    
    
    
    
    
    
    
    
    
    (7,428
    )Deposit with former owner
    
    
    
    
    
    
    
    
    
    
    3,000Net cash provided by operating activities
    
    
    84,104
    
    
    
    61,167
    
    
    
    10,232Cash flows used in investing activities:Capital expenditures
    
    
    (62,627
    )
    
    
    (60,265
    )
    
    
    (8,374
    )Change in restricted cash and cash equivalents
    
    
    (49,666
    )
    
    
    1,844
    
    
    
    2,083Purchases of investments
    
    
    
    
    
    
    
    
    
    
    (2,627
    )Proceeds from sale or maturity of investments
    
    
    487
    
    
    
    
    
    
    
    2,570Net cash used in investing activities
    
    
    (111,806
    )
    
    
    (58,421
    )
    
    
    (6,348
    )Cash flows (used in) provided by financing activities:Principal payments on notes payable and capital lease obligations
    
    
    (2,933
    )
    
    
    (2,415
    )
    
    
    (1,357
    )Repayment on line of credit
    
    
    
    
    
    
    
    
    
    
    (6,000
    )Proceeds from notes payable and line of credit
    
    
    
    
    
    
    25,547
    
    
    
    Notes payable issuance costs
    
    
    
    
    
    
    (317
    )
    
    
    Repurchase of outstanding shares
    
    
    (782
    )
    
    
    (14,495
    )
    
    
    Repurchase of Institute Warrant
    
    
    
    
    
    
    
    
    
    
    (6,000
    )Repayment of Institute Note Payable
    
    
    
    
    
    
    
    
    
    
    (1,250
    )Proceeds from related party payable on preferred stock
    
    
    
    
    
    
    
    
    
    
    5,725Net proceeds from issuance of common stock
    
    
    
    
    
    
    14,880
    
    
    
    128,756Payment of special distribution
    
    
    
    
    
    
    
    
    
    
    (108,675
    )Proceeds from exercise of warrant
    
    
    
    
    
    
    
    
    
    
    526Net proceeds from exercise of stock options
    
    
    1,747
    
    
    
    1,226
    
    
    
    592Excess tax benefits from share-based compensation
    
    
    736
    
    
    
    247
    
    
    
    21Net cash (used in) provided by financing activities
    
    
    (1,232
    )
    
    
    24,673
    
    
    
    12,338Net (decrease) increase in cash and cash equivalents
    
    
    (28,934
    )
    
    
    27,419
    
    
    
    16,222Cash and cash equivalents, beginning of year
    
    
    62,571
    
    
    
    35,152
    
    
    
    18,930Cash and cash equivalents, end of year
    
    $
    33,637
    
    
    $
    62,571
    
    
    $
    35,152
  99




---



##### Table of Contents



Grand Canyon Education, Inc.
 Statement of Cash Flows (continued)
 Year Ended December 31,(In thousands)
    
    2010
    
    
    2009
    
    
    2008Supplemental disclosure of cash flow informationCash paid during the year for interest
    
    $
    769
    
    
    $
    1,802
    
    
    $
    3,709Cash paid during the year for income taxes
    
    $
    37,703
    
    
    $
    16,307
    
    
    $
    5,274Supplemental disclosure of non-cash investing and financing activitiesPurchase of equipment through notes payable and capital lease
obligations
    
    $
    957
    
    
    $
    2,116
    
    
    $
    2,481Purchases of property and equipment included in accounts payable
and deferred rent
    
    $
    4,421
    
    
    $
    1,098
    
    
    $
    1,292Settlement of capital lease obligation
    
    $
    
    
    
    $
    30,020
    
    
    $
    Removal of Utah leasehold improvements
    
    $
    
    
    
    $
    274
    
    
    $
    Accretion of dividends on Series C convertible preferred stock
    
    $
    
    
    
    $
    
    
    
    $
    938Value assigned to Blanchard shares
    
    $
    
    
    
    $
    
    
    
    $
    2,996Assumption of future obligations under gift annuities
    
    $
    
    
    
    $
    
    
    
    $
    887Deferred tax on repurchase of Institute Warrant
    
    $
    
    
    
    $
    
    
    
    $
    2,316Conversion of Series A and Series C convertible preferred stock
    
    $
    
    
    
    $
    
    
    
    $
    32,886
   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)
 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 University to the Institute of a warrant (the Institute
Warrant) to purchase a 10.0% non-dilutable equity interest in the University for an
exercise price of $1 during a one month period beginning in July 1, 2011 subject to a
right for the University to repurchase the warrant at any time prior to its exercise for
$6,000.
    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)
   
    
    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 University 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).
  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
  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)
   i.e
  Spirit Transaction
   Use of Estimates
  Reclassifications
  Cash and Cash Equivalents
   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)
 Restricted Cash and Cash Equivalents
 qui tam
  Investments
  Fair Value of Financial Instruments
     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)
 Allowance for Doubtful Accounts
  Property and Equipment
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Interest incurred
    
    $
    1,283
    
    
    $
    1,808
    
    
    $
    3,022Interest capitalized
    
    
    394
    
    
    
    195
    
    
    
    125Interest expense
    
    $
    889
    
    
    $
    1,613
    
    
    $
    2,897
  Leases
  Deferred Loan Costs
   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)
 Other Assets
  Long-Lived Assets
  Goodwill
  Share-Based Compensation
    Derivatives and Hedging
    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)
  Income Taxes
    Loss Contingencies
  Revenue Recognition
   107




---



##### 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
     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)
 General and Administrative
  Exit Costs
   Accrued Exit
    
    
    
    
    
    
    
    
    
    
    Accrued ExitCosts at
    
    
    
    
    
    
    
    
    
    
    Costs atDecember 31,
    
    
    
    
    
    
    Payments to
    
    
    December 31,2009
    
    
    Exit Costs
    
    
    Date
    
    
    2010Severance payments
    
    $
    503
    
    
    $
    
    
    
    $
    (503
    )
    
    $
    Future lease payments, lease
terminated in October 2010
    
    
    288
    
    
    
    107
    
    
    
    (395
    )
    
    
    Leasehold improvements and other
    
    
    41
    
    
    
    151
    
    
    
    (128
    )
    
    
    64Total
    
    $
    832
    
    
    $
    258
    
    
    $
    (1,026
    )
    
    $
    64
 Accrued Exit
    
    
    
    
    
    
    
    
    
    
    Accrued ExitCosts at
    
    
    
    
    
    
    
    
    
    
    Costs atDecember 31,
    
    
    
    
    
    
    Payments to
    
    
    December 31,2008
    
    
    Exit Costs
    
    
    Date
    
    
    2009Severance payments
    
    $
    
    
    
    $
    615
    
    
    $
    (112
    )
    
    $
    503Future lease payments, net of
estimated sublease rentals
    
    
    
    
    
    
    288
    
    
    
    
    
    
    
    288Leasehold improvements and other
    
    
    
    
    
    
    315
    
    
    
    (274
    )
    
    
    41Total
    
    $
    
    
    
    $
    1,218
    
    
    $
    (386
    )
    
    $
    832
 Insurance/Self-Insurance
  Concentration of Credit Risk
   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)
  Segment Information
  Recent Accounting Pronouncements
       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)
 3. Initial Public Offering, Special Distribution and Secondary Offering
    4. 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, 2010
    
    $
    7,553
    
    
    
    23,360
    
    
    
    (15,952
    )
    
    $
    14,961Year ended December 31, 2009
    
    $
    6,356
    
    
    
    14,016
    
    
    
    (12,819
    )
    
    $
    7,553Year ended December 31, 2008
    
    $
    12,158
    
    
    
    8,465
    
    
    
    (14,267
    )
    
    $
    6,356
 (1)
    
    Deductions represent accounts written off, net of recoveries. 5. Investments
  As of December 31, 2009Gross
    
    
    Gross
    
    
    EstimatedAdjusted
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    (Losses)
    
    
    ValueMoney Market Funds
    
    $
    43
    
    
    $
    
    
    
    $
    
    
    
    $
    43Municipal Securities
    
    
    448
    
    
    
    39
    
    
    
    (1
    )
    
    
    487Total
    
    $
    491
    
    
    $
    39
    
    
    $
    (1
    )
    
    $
    530
   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)
 6. Property and Equipment
  As of December 31,2010
    
    
    2009Land
    
    $
    8,282
    
    
    $
    7,230Land improvements
    
    
    1,597
    
    
    
    1,597Buildings
    
    
    48,323
    
    
    
    25,176Equipment under capital leases
    
    
    4,502
    
    
    
    3,545Leasehold improvements
    
    
    11,407
    
    
    
    3,692Computer equipment
    
    
    36,742
    
    
    
    22,327Furniture, fixtures and equipment
    
    
    11,401
    
    
    
    7,750Internally developed software
    
    
    3,825
    
    
    
    1,011Other
    
    
    998
    
    
    
    420Construction in progress
    
    
    21,349
    
    
    
    7,712148,426
    
    
    
    80,460Less accumulated depreciation and amortization
    
    
    (24,427
    )
    
    
    (13,090
    )Property and equipment, net
    
    $
    123,999
    
    
    $
    67,370
  7. Notes Payable and Other Noncurrent Liabilities
  As of December 31,2010
    
    
    2009Notes PayableNote payable, monthly payment of $143; interest at 30 day LIBOR plus 2.25%
(2.51% at December 31, 2010) through April 30, 2014
    
    $
    22,829
    
    
    $
    24,565Note payable; monthly payments of $20; interest at 3.9% through
September 2011
    
    
    178
    
    
    
    407Various Gift Annuities; quarterly payments of $34 extending through 2019;
interest at 10%
    
    
    744
    
    
    
    802Equipment note; monthly payments of $6 extending through December 2011;
interest at 6.6%
    
    
    67
    
    
    
    136Notes payable for vehicles requiring monthly payments with interest rates
ranging from 8.8% to 11.0% extending into March 2013
    
    
    89
    
    
    
    17823,907
    
    
    
    26,088Less: Current portion
    
    
    2,026
    
    
    
    2,105$
    21,881
    
    
    $
    23,983
  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)
  2011
    
    $
    2,0262012
    
    
    1,7832013
    
    
    1,7502014
    
    
    17,9032015
    
    
    93Thereafter
    
    
    352$
    23,907
  8. Capital Lease Obligations
  As of December 31,2010
    
    
    2009Capital Lease ObligationsCapital leases for equipment (various leases extending into 2012, with implicit
interest rates ranging from 4.0% to 6.9%, monthly payments totaling $62 and
quarterly payments totaling $239)
    
    $
    1,824
    
    
    $
    1,6191,824
    
    
    
    1,619Less: Current portion of capital lease obligations
    
    
    1,673
    
    
    
    751$
    151
    
    
    $
    868
  2011
    
    $
    1,7032012 and thereafter
    
    
    1521,855Less: Portion representing interest
    
    
    31Present value of minimum lease payments
    
    $
    1,824
 9. Commitments and Contingencies
 Leases
  2011
    
    $
    4,7542012
    
    
    5,8742013
    
    
    6,8022014
    
    
    6,5062015
    
    
    5,628Thereafter
    
    
    24,072Total minimum payments
    
    $
    53,636
   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)
 Legal Matters
  qui tam
 qui tam qui tam qui tam qui tam
 qui tam
  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)
 qui tam qui tam
 qui tam qui tam
  qui tam
   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)
 Tax Reserves, Non-Income Tax Related
  10. Derivative Instruments
    11. Earnings Per Share
   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)
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Denominator:Basic common shares outstanding
    
    
    45,721,999
    
    
    
    45,184,186
    
    
    
    22,184,766Effect of dilutive preferred stock
    
    
    
    
    
    
    
    
    
    
    9,559,801Effect of dilutive warrants
    
    
    
    
    
    
    
    
    
    
    1,666,312Effect of contingently issuable common stock
    
    
    
    
    
    
    
    
    
    
    19,010Effect of dilutive stock options and restricted stock
    
    
    673,917
    
    
    
    318,639
    
    
    
    Diluted common shares outstanding
    
    
    46,395,916
    
    
    
    45,502,825
    
    
    
    33,429,889
  12. Preferred Stock and Equity Transactions
 Preferred Stock
  Series A Convertible Preferred Stock
  Series C Preferred Stock
    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)
  Common Stock
   Treasury Stock
  Preferred Stock
   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)
 Warrants to Purchase Common Stock
   Investor Rights Agreement
  13. Income Taxes
   Year Ended December 31,2010
    
    
    2009
    
    
    2008Current:Federal
    
    $
    22,522
    
    
    $
    16,587
    
    
    $
    3,564State
    
    
    5,163
    
    
    
    3,515
    
    
    
    43227,685
    
    
    
    20,102
    
    
    
    3,996Deferred:Federal
    
    
    1,321
    
    
    
    (1,498
    )
    
    
    190State
    
    
    (565
    )
    
    
    (625
    )
    
    
    (331
    )756
    
    
    
    (2,123
    )
    
    
    (141
    )$
    28,441
    
    
    $
    17,979
    
    
    $
    3,855
  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)
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Statutory U.S. federal income tax rate (benefit)
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes, net of federal tax benefit
    
    
    5.5
    
    
    
    5.2
    
    
    
    5.8State tax credits, net of federal effect
    
    
    (1.4
    )
    
    
    (1.5
    )
    
    
    (5.2
    )Non deductible expenses
    
    
    0.3
    
    
    
    (0.1
    )
    
    
    0.7Other
    
    
    (0.3
    )
    
    
    1.1
    
    
    
    0.3Effective income tax rate (benefit)
    
    
    39.1
    %
    
    
    39.7
    %
    
    
    36.6
    %
  As of December 31,2010
    
    
    2009Current deferred tax asset (liability):Accounts receivable allowance for doubtful accounts
    
    $
    8,219
    
    
    $
    3,315State taxes
    
    
    (1,210
    )
    
    
    (135
    )Estimated litigation loss
    
    
    2,275
    
    
    
    2,247Other
    
    
    602
    
    
    
    1,258Current deferred tax asset
    
    
    9,886
    
    
    
    6,685Non-current deferred tax asset (liability):Depreciation and leases
    
    
    (7,719
    )
    
    
    (605
    )Share-based compensation
    
    
    4,561
    
    
    
    2,749Unrealized gains on available for sale securities
    
    
    
    
    
    
    (16
    )Deferred rent
    
    
    543
    
    
    
    376Intangibles
    
    
    4,977
    
    
    
    3,812Other
    
    
    438
    
    
    
    (360
    )Non-current deferred tax asset
    
    
    2,800
    
    
    
    5,956Net deferred tax asset
    
    $
    12,686
    
    
    $
    12,641
   2010
    
    
    2009Unrecognized tax benefits, beginning of year
    
    $
    1,066
    
    
    $
    748Tax positions taken during the current yearIncreases
    
    
    34
    
    
    
    390Decreases
    
    
    
    
    
    
    Tax positions taken during a prior yearIncreases
    
    
    235
    
    
    
    7Decreases
    
    
    (505
    )
    
    
    (4
    )Decreases for settlements during the period
    
    
    (226
    )
    
    
    (75
    )Reductions for lapses of applicable statute of limitations
    
    
    
    
    
    
    Unrecognized tax benefits, end of year
    
    $
    604
    
    
    $
    1,066
  120




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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
      121




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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)
 qui tam qui tam
   15. Share-Based Compensation Plans
 Adoption of Equity Plans
   122




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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)
 Incentive Plan
   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
    
    
    (102,134
    )
    
    
    12.00Forfeited, canceled or expired
    
    
    (12,807
    )
    
    
    12.00Outstanding as of December 31, 2009
    
    
    3,349,996
    
    
    $
    12.30Granted
    
    
    921,550
    
    
    
    21.29Exercised
    
    
    (144,095
    )
    
    
    12.12Forfeited, canceled or expired
    
    
    (101,279
    )
    
    
    17.45Outstanding as of December 31, 2010
    
    
    4,026,172
    
    
    $
    14.24
    
    
    
    8.20
    
    
    $
    21,540Exercisable as of December 31, 2010
    
    
    1,513,916
    
    
    $
    12.11
    
    
    
    7.90
    
    
    $
    11,324Available for issuance as of
December 31, 2010
    
    
    2,034,053
 (1)
    
    Aggregate intrinsic value represents the value of the Universitys closing stock price on
December 31, 2010 ($19.59) in excess of the exercise price multiplied by the number of options
outstanding or exercisable.   2010
    
    
    2009
    
    
    2008Amounts related to options exercised:Intrinsic value realized by optionee
    
    $
    1,407
    
    
    $
    656
    
    
    $
    249Actual tax benefit realized by the University for tax deductions
    
    $
    563
    
    
    $
    262
    
    
    $
    98
   123




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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
  2010
    
    
    2009
    
    
    2008Instructional costs and services
    
    $
    2,034
    
    
    $
    771
    
    
    $
    1,737Selling and promotional
    
    
    233
    
    
    
    116
    
    
    
    1,322General and administrative
    
    
    2,782
    
    
    
    2,532
    
    
    
    619Share-based compensation expense included in operating expenses
    
    
    5,049
    
    
    
    3,419
    
    
    
    3,678Tax effect of share-based compensation
    
    
    (2,020
    )
    
    
    (1,368
    )
    
    
    (1,454
    )Share-based compensation expense, net of tax
    
    $
    3,029
    
    
    $
    2,051
    
    
    $
    2,224
 Share-based Compensation Expense Assumptions
 Fair Value.
 Year Ended December 31,
    
    2010
    
    
    2009
    
    
    2008Weighted average fair value
    
    $
    10.74
    
    
    $
    7.99
    
    
    $
    5.68Expected volatility
    
    
    47.50
    %
    
    
    47.46
    %
    
    
    46.13
    %Expected life (years)
    
    
    6.50
    
    
    
    6.47
    
    
    
    6.14Risk-free interest rate
    
    
    2.87
    %
    
    
    2.81
    %
    
    
    2.44
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
 Expected Volatility.
 Expected Life (years).
 Risk-Free Interest Rate.
 Dividend Yield.
 Forfeitures.
 Expected Vesting Period.
  124




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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)
 Stock Grant
  Restricted Stock Grants
   WeightedAverageGrant DateTotal
    
    
    Fair ValueShares
    
    
    per ShareOutstanding as of December 31, 2007
    
    
    
    
    
    $
    Granted
    
    
    109,329
    
    
    
    12.00Vested
    
    
    109,329
    
    
    
    12.00Forfeited, canceled or expired
    
    
    Outstanding as of December 31, 2008
    
    
    109,329
    
    
    
    12.00Granted
    
    
    8,737
    
    
    
    14.88Vested
    
    
    Forfeited, canceled or expired
    
    
    Outstanding as of December 31, 2009
    
    
    118,066
    
    
    $
    12.21Granted
    
    
    4,173
    
    
    
    25.16Vested
    
    
    8,737
    
    
    
    14.88Forfeited, canceled or expired
    
    
    Outstanding as of December 31, 2010
    
    
    122,239
    
    
    $
    12.66Vested as of December 31, 2010
    
    
    118,066
    
    
    $
    12.21
 401(k) Plan
  16. Related Party Transactions
   125




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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)
  Shareholders
 Significant Education Holding, LLC (Sig Ed) 
 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), 21st Century, LLC (21st Century) and Lifetime Learning
 
 Other
 Young Life Southwest Region (YLSW) 
  126




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Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 17. Quarterly Results of Operations (Unaudited)
  2010First Quarter
    
    
    Second Quarter
    
    
    Third Quarter
    
    
    Fourth QuarterNet revenue
    
    $
    89,326
    
    
    $
    97,522
    
    
    $
    98,946
    
    
    $
    100,031Costs and expenses:Instructional costs and services
    
    
    31,812
    
    
    
    36,169
    
    
    
    35,923
    
    
    
    36,133Selling and promotional
    
    
    26,876
    
    
    
    28,976
    
    
    
    28,103
    
    
    
    28,538General and administrative
    
    
    10,878
    
    
    
    11,675
    
    
    
    12,681
    
    
    
    14,746Litigation loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Contract termination fees with
a related party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,233Estimated exit costs
    
    
    89
    
    
    
    116
    
    
    
    27
    
    
    
    26Royalty to former owner
    
    
    74
    
    
    
    74
    
    
    
    74
    
    
    
    74Total costs and expenses
    
    
    69,729
    
    
    
    77,010
    
    
    
    76,808
    
    
    
    88,750Operating income
    
    
    19,597
    
    
    
    20,512
    
    
    
    22,138
    
    
    
    11,281Net interest expense
    
    
    (283
    )
    
    
    (125
    )
    
    
    (143
    )
    
    
    (170
    )Income before income taxes
    
    
    19,314
    
    
    
    20,387
    
    
    
    21,995
    
    
    
    11,111Income tax expense
    
    
    7,834
    
    
    
    7,991
    
    
    
    9,077
    
    
    
    3,540Net income available to common
stockholders
    
    $
    11,480
    
    
    $
    12,396
    
    
    $
    12,918
    
    
    $
    7,571Earnings per share:Basic income per share(1)
    
    $
    0.25
    
    
    $
    0.27
    
    
    $
    0.28
    
    
    $
    0.17Diluted income per share(1)
    
    $
    0.25
    
    
    $
    0.27
    
    
    $
    0.28
    
    
    $
    0.16Basic weighted average
shares outstanding
    
    
    45,674
    
    
    
    45,724
    
    
    
    45,746
    
    
    
    45,743Diluted weighted average shares
outstanding
    
    
    46,325
    
    
    
    46,557
    
    
    
    46,351
    
    
    
    46,346
 (1)
    
    The sum of quarterly income per share may not equal annual income per share due to rounding
and second quarter net loss.  127




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Grand Canyon Education, Inc.
 Notes to Financial Statements
(In thousands of dollars, except share and per share data)
 2009First Quarter
    
    
    Second Quarter
    
    
    Third Quarter
    
    
    Fourth QuarterNet revenue
    
    $
    55,459
    
    
    $
    62,905
    
    
    $
    66,084
    
    
    $
    77,454Costs and expenses:Instructional costs and
services
    
    
    17,968
    
    
    
    20,411
    
    
    
    23,466
    
    
    
    25,747Selling and promotional
    
    
    19,575
    
    
    
    20,726
    
    
    
    22,095
    
    
    
    23,009General and administrative
    
    
    8,833
    
    
    
    8,688
    
    
    
    8,556
    
    
    
    9,542Litigation loss
    
    
    
    
    
    
    
    
    
    
    5,200
    
    
    
    Estimated exit costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,218Royalty to former owner
    
    
    74
    
    
    
    74
    
    
    
    74
    
    
    
    74Total costs and expenses
    
    
    46,450
    
    
    
    49,899
    
    
    
    59,391
    
    
    
    59,590Operating income
    
    
    9,009
    
    
    
    13,006
    
    
    
    6,693
    
    
    
    17,864Net interest expense
    
    
    (558
    )
    
    
    (300
    )
    
    
    (233
    )
    
    
    (198
    )Income before income taxes
    
    
    8,451
    
    
    
    12,706
    
    
    
    6,460
    
    
    
    17,666Income tax expense
    
    
    3,376
    
    
    
    5,063
    
    
    
    2,969
    
    
    
    6,571Net income available to
common stockholders
    
    $
    5,075
    
    
    $
    7,643
    
    
    $
    3,491
    
    
    $
    11,095Earnings per share:Basic income per share(1)
    
    $
    0.11
    
    
    $
    0.17
    
    
    $
    0.08
    
    
    $
    0.24Diluted income per share(1)
    
    $
    0.11
    
    
    $
    0.17
    
    
    $
    0.08
    
    
    $
    0.24Basic weighted average
shares outstanding
    
    
    45,474
    
    
    
    44,846
    
    
    
    44,783
    
    
    
    45,636Diluted weighted average
shares outstanding
    
    
    45,821
    
    
    
    45,051
    
    
    
    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.  128




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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.
   129




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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
   130




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##### Table of Contents



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
    
    
    93Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
    
    
    94Balance Sheets as of December 31, 2010 and 2009
    
    
    95Income Statements for the years ended December 31, 2010, 2009 and 2008
    
    
    96Statements of Comprehensive Income for the years ended December 31, 2010, 2009 and 2008
    
    
    97Statements of Preferred Stock and Stockholders Equity (Deficit) for the years ended December 31,
2010, 2009 and 2008
    
    
    98Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008
    
    
    99Notes to Financial Statements
    
    
    101
 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 Universitys Registration
Statement on Form S-1 filed with
the SEC on November 12, 2008.3.2
    
    
    Second Amended and Restated Bylaws
    
    Incorporated by reference to
Exhibit 3.1 to the Universitys
Current Report on Form 8-K filed
with the SEC on August 2, 2010.4.1
    
    
    Specimen of Stock Certificate
    
    Incorporated by reference to
Exhibit 4.1 to Amendment No. 2 to
the University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 Universitys Registration
Statement on Form S-1 filed with
the SEC on September 29, 2008.
  131




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##### Table of Contents



Number

    
    Description
    
    Method of Filing10.1
    
    
    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 University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 University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 University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 University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 University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 University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 University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 University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 University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 University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 University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 Universitys Registration
Statement on Form S-1 filed with
the SEC on August 13, 2008.
  132




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##### Table of Contents



Number

    
    Description
    
    Method of Filing10.13
    
    
    Form of Director and Officer
Indemnity Agreement
    
    Incorporated by reference to
Exhibit 10.21 to Amendment No. 2
to the University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 University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 University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 Universitys
Quarterly Report on Form 10-Q
filed with the SEC on November 4,
2009.10.17
    
    
    Amendment No. 1 to Loan
Agreement, dated June 9, 2010,
between Grand Canyon Education,
Inc. and Bank of America, N.A.
    
    Incorporated by reference to
Exhibit 10.1 to the Universitys
Quarterly Report on Form 10-Q
filed with the SEC on August 9,
2010.10.18
    
    
    Asset Purchase Agreement, dated
December 30, 2010, between Grand
Canyon Education, Inc. and Mind
Streams, L.L.C.
    
    Filed herewith.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.
 
  
    
    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 University, whether made before or
after the date hereof, regardless of any general
incorporation language in such filing.
  133




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##### Table of Contents



SIGNATURES
  GRAND CANYON EDUCATION, INC.By:
    
    /s/ Brian E. Mueller

Name: 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 22, 2011/s/ Daniel E. Bachus

Daniel E. Bachus
    
    Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
    
    February 22, 2011/s/ Brent D. Richardson

Brent D. Richardson
    
    Executive Chairman
    
    February 22, 2011/s/ Christopher C. Richardson

Christopher C. Richardson
    
    Director
    
    February 22, 2011/s/ David J. Johnson

David J. Johnson
    
    Director
    
    February 22, 2011/s/ Jack A. Henry

Jack A. Henry
    
    Director
    
    February 22, 2011/s/ Gerald J. Colangelo

Gerald J. Colangelo
    
    Director
    
    February 22, 2011/s/ D. Mark Dorman
    
    Director
    
    February 22, 2011D. Mark Dorman/s/ Chad N. Heath

Chad N. Heath
    
    Director
    
    February 22, 2011
  134




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##### Table of Contents



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 Universitys Registration
Statement on Form S-1 filed with
the SEC on November 12, 2008.3.2
    
    
    Second Amended and Restated Bylaws
    
    Incorporated by reference to
Exhibit 3.1 to the Universitys
Current Report on Form 8-K filed
with the SEC on August 2,2010.4.1
    
    
    Specimen of Stock Certificate
    
    Incorporated by reference to
Exhibit 4.1 to Amendment No. 2 to
the University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 University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 University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 University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 University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 University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 University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 University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 University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 Universitys
Registration Statement on Form S-1
filed with the SEC on May 13, 2008.
  135




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##### Table of Contents



Number

    
    Description
    
    Method of Filing10.9
    
    
    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 University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 University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 University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 University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 University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 University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 University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 Universitys
Quarterly Report on Form 10-Q filed
with the SEC on November 4, 2009.10.17
    
    
    Amendment No. 1 to Loan
Agreement, dated June 9, 2010,
between Grand Canyon Education,
Inc. and Bank of America, N.A.
    
    Incorporated by
reference to
Exhibit 10.1 to the
Universitys
Quarterly Report on
Form 10-Q filed
with the SEC on
August 9, 2010.10.18
    
    
    Asset Purchase Agreement, dated
December 30, 2010, between Grand
Canyon Education, Inc. and Mind
Streams, L.L.C.
    
    Filed herewith.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.
  136




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##### Table of Contents



Number

    
    Description
    
    Method of Filing31.2
    
    
    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.
 
  
    
    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 University, whether made before or
after the date hereof, regardless of any general incorporation language in such filing.  137