##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended August 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 No. 001-34751
 National American University Holdings, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    83-0479936(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)5301 S. Highway 16, Suite 200
    
    57701Rapid City, SD
    
    (Zip Code)(Address of principal executive offices)
 (605) 721-5200  (Registrants telephone number, including area code)
 Yes þ No o
 Yes o
No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 Yes o No þ




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##### 



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES
 INDEX
 Page ofForm 10-QPART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS
    
    
    3Unaudited Condensed Consolidated Balance Sheet as of August
31, 2010 and
Audited Condensed Consolidated Balance Sheet as
of May 31, 2010
    
    
    3Unaudited Condensed Consolidated Statements of Operations for
the three months ended August 31, 2010 and August 31, 2009
    
    
    4Unaudited Condensed Consolidated Statements of Stockholders
Equity for the three months ended August 31, 2010 and August
31, 2009
    
    
    6Unaudited Condensed Consolidated Statements of Cash Flows for
the three months ended August 31, 2010 and August 31, 2009
    
    
    7Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    9ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    19ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    29ITEM 4T. CONTROLS AND PROCEDURES
    
    
    29PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    29ITEM 1A. RISK FACTORS
    
    
    29ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    29ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    30ITEM 4. RESERVED
    
    
    30ITEM 5. OTHER INFORMATION
    
    
    30ITEM 6. EXHIBITS
    
    
    30Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   -2-




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements.
 NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
AND SUBSIDIARIES


UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
AS OF AUGUST 31, 2010 AND AUDITED CONDENSED CONSOLIDATED BALANCE
SHEET AS OF MAY 31, 2010

(In thousands except
share and per share data)
 August 31, 2010
    
    
    May 31, 2010ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    32,328
    
    
    $
    8,695Short term investments
    
    
    7,129
    
    
    
    11,109Student receivables  net of allowance of $366 and $203
at August 31, 2010 and May 31, 2010, respectively
    
    
    3,298
    
    
    
    1,823Other receivables
    
    
    1,590
    
    
    
    952Bookstore inventory
    
    
    970
    
    
    
    920Deferred income taxes
    
    
    1,641
    
    
    
    1,574Prepaid and other current assets
    
    
    988
    
    
    
    1,759Total current assets
    
    
    47,944
    
    
    
    26,832Total Property and Equipment  Net
    
    
    16,943
    
    
    
    15,881OTHER ASSETS:Condominium inventory
    
    
    2,852
    
    
    
    3,046Land held for future development
    
    
    312
    
    
    
    312Course development  net of accumulated amortization of $1,218 and $1,149 at August
31, 2010 and May 31, 2010, respectively
    
    
    805
    
    
    
    768Other
    
    
    479
    
    
    
    4474,448
    
    
    
    4,573TOTAL
    
    $
    69,335
    
    
    $
    47,286LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    
    4,531
    
    
    
    4,315Dividends payable
    
    
    752
    
    
    
    11,116Student accounts payable
    
    
    413
    
    
    
    322Deferred income
    
    
    359
    
    
    
    305Income tax payable
    
    
    512
    
    
    
    231Accrued and other liabilities
    
    
    6,359
    
    
    
    6,109Total current liabilities
    
    
    12,926
    
    
    
    22,398DEFERRED INCOME TAXES
    
    
    1,151
    
    
    
    1,151OTHER LONG-TERM LIABILITIES
    
    
    2,618
    
    
    
    2,380COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common stock (50,000,000 authorized, 26,369,653 issued and outstanding as of August
31, 2010, 21,819,653 issued and outstanding as of May 31, 2010; $0.0001 par value per share)
    
    
    3
    
    
    
    2Additional paid-in capital
    
    
    49,808
    
    
    
    19,165Retained earnings
    
    
    3,004
    
    
    
    2,389Accumulated other comprehensive income
    
    
    112
    
    
    
    96Total National American University Holdings, Inc. stockholders equity
    
    
    52,927
    
    
    
    21,652Non-controlling interest
    
    
    (287
    )
    
    
    (295
    )Total equity
    
    
    52,640
    
    
    
    21,357TOTAL
    
    $
    69,335
    
    
    $
    47,286
   -3-




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NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
AND SUBSIDIARIES


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED AUGUST 31, 2010 AND
AUGUST 31, 2009


(In thousands except share and per share data)
 Three Months EndedAugust 31,2010
    
    
    2009REVENUE:Academic revenue
    
    $
    21,258
    
    
    $
    15,873Auxiliary revenue
    
    
    1,447
    
    
    
    1,140Rental income  apartments
    
    
    243
    
    
    
    251Condominium sales
    
    
    224
    
    
    
    0Total revenue
    
    
    23,172
    
    
    
    17,264OPERATING EXPENSES:Cost of educational services
    
    
    5,239
    
    
    
    4,592Selling, general and administrative
    
    
    14,954
    
    
    
    9,994Auxiliary expense
    
    
    674
    
    
    
    426Cost of condominium sales
    
    
    193
    
    
    
    0Loss on disposition of property
    
    
    10
    
    
    
    0Total operating expenses
    
    
    21,070
    
    
    
    15,012OPERATING INCOME
    
    
    2,102
    
    
    
    2,252OTHER INCOME (EXPENSE):Interest income
    
    
    40
    
    
    
    86Interest expense
    
    
    0
    
    
    
    (157
    )Other income  net
    
    
    26
    
    
    
    24Total other income (expense)
    
    
    66
    
    
    
    (47
    )INCOME BEFORE INCOME TAXES
    
    
    2,168
    
    
    
    2,205INCOME TAX EXPENSE
    
    
    (820
    )
    
    
    (955
    )NET INCOME
    
    
    1,348
    
    
    
    1,250NET (INCOME) LOSS ATTRIBUTABLE TO
NON-CONTROLLING INTEREST
    
    
    (8
    )
    
    
    9NET INCOME ATTRIBUTABLE TO NATIONAL
AMERICAN UNIVERSITY HOLDINGS, INC. AND
SUBSIDIARIES
    
    
    1,340
    
    
    
    1,259OTHER COMPREHENSIVE INCOME Unrealized gains (losses) on investments
    
    
    16
    
    
    
    (13
    )COMPREHENSIVE INCOMEATTRIBUTABLE TO NATIONAL AMERICAN
UNIVERSITY HOLDINGS, INC.
    
    $
    1,356
    
    
    $
    1,246
   -4-




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NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


FOR THE THREE MONTHS ENDED AUGUST 31, 2010 AND
AUGUST 31, 2009
(In thousands except share and per share data)
 Three Months EndedAugust 31,2010
    
    
    2009Basic EPSClass ADistributed earnings
    
    $
    
    
    
    $
    Undistributed earnings
    
    $
    
    
    
    $
    12.50Total
    
    $
    
    
    
    $
    12.50CommonDistributed earnings
    
    $
    0.03
    
    
    $
    Undistributed earnings
    
    $
    0.02
    
    
    $
    Total
    
    $
    0.05
    
    
    $
    Diluted EPSClass ADistributed earnings
    
    $
    
    
    
    $
    Undistributed earnings
    
    $
    
    
    
    $
    12.50Total
    
    $
    
    
    
    $
    12.50CommonDistributed earnings
    
    $
    0.03
    
    
    $
    Undistributed earnings
    
    $
    0.02
    
    
    $
    Total
    
    $
    0.05
    
    
    $
    Weighted Average Shares outstandingBasic EPSClass A
    
    
    
    
    
    
    100,000Common
    
    
    26,242,653
    
    
    
    Diluted EPSClass A
    
    
    
    
    
    
    100,000Common
    
    
    27,083,579
    
    
    
    
   -5-




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NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY 
FOR THE THREE
MONTHS ENDED AUGUST 31, 2010 AND AUGUST 31, 2009


(In thousands except share and per share data)
 Equity attributable to National American University Holdings, Inc. and SubsidiariesAccumulated
    
    
    
    
    
    
    EquityAdditional
    
    
    
    
    
    
    other
    
    
    
    
    
    
    attributable to
    
    
    TotalClass A
    
    
    Common
    
    
    paid-in
    
    
    Retained
    
    
    comprehensive
    
    
    Treasury
    
    
    non-controlling
    
    
    stockholderscommon
    
    
    stock
    
    
    capital
    
    
    Earnings
    
    
    income
    
    
    stock
    
    
    interest
    
    
    equityBalance  May 31, 2009
    
    $
    0
    
    
    $
    0
    
    
    $
    385
    
    
    $
    7,251
    
    
    $
    109
    
    
    $
    (1,869
    )
    
    $
    (984
    )
    
    $
    4,892Comprehensive income:Net income (loss)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    1,259
    
    
    
    0
    
    
    
    0
    
    
    
    (9
    )
    
    
    1,250Unrealized loss on
investments
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (13
    )
    
    
    0
    
    
    
    0
    
    
    
    (13
    )Balance  August 31,
2009
    
    $
    0
    
    
    $
    0
    
    
    $
    385
    
    
    $
    8,510
    
    
    $
    96
    
    
    $
    (1,869
    )
    
    $
    (993
    )
    
    $
    6,129Balance  May 31, 2010
    
    $
    0
    
    
    $
    2
    
    
    $
    19,165
    
    
    $
    2,389
    
    
    $
    96
    
    
    $
    0
    
    
    $
    (295
    )
    
    $
    21,357Issuance of 4,550,000
shares common stock
net of issuance cost
of $1,628
    
    
    0
    
    
    
    1
    
    
    
    30,448
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    30,449Share based compensation expense
    
    
    0
    
    
    
    0
    
    
    
    195
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    195Dividends declared
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (725
    )
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (725
    )Comprehensive income:Net income
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    1,340
    
    
    
    0
    
    
    
    0
    
    
    
    8
    
    
    
    1,348Unrealized gain on
investments
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    16
    
    
    
    0
    
    
    
    0
    
    
    
    16Balance  August 31,
2010
    
    $
    0
    
    
    $
    3
    
    
    $
    49,808
    
    
    $
    3,004
    
    
    $
    112
    
    
    $
    0
    
    
    $
    (287
    )
    
    $
    52,640
   -6-




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NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS
ENDED AUGUST 31, 2010 AND AUGUST 31, 2009

(In
thousands except share and per share data)
 Three Months EndedAugust 31,
    
    
    August 31,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net Income
    
    $
    1,348
    
    
    $
    1,250Adjustments to reconcile net income to net cash flows provided
by operating activities:Depreciation and amortization
    
    
    637
    
    
    
    547Loss on disposition of property and equipment
    
    
    10
    
    
    
    0Provision for uncollectable tuition
    
    
    675
    
    
    
    505Noncash compensation expense
    
    
    195
    
    
    
    0Deferred income taxes
    
    
    (67
    )
    
    
    (66
    )Changes in assets and liabilities:Accounts and other receivables
    
    
    (2,788
    )
    
    
    (1,134
    )Student notes
    
    
    (11
    )
    
    
    3Bookstore inventory
    
    
    (50
    )
    
    
    (74
    )Prepaid and other current assets
    
    
    (167
    )
    
    
    (886
    )Condominium inventories
    
    
    194
    
    
    
    0Accounts payable
    
    
    (91
    )
    
    
    142Deferred income
    
    
    54
    
    
    
    6Other long-term liabilities
    
    
    1
    
    
    
    20Income tax receivable/payable
    
    
    281
    
    
    
    317Accrued and other liabilities
    
    
    250
    
    
    
    518Net cash flows provided by operating activities
    
    
    471
    
    
    
    1,148CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of investments
    
    
    (1
    )
    
    
    0Proceeds from sale of investments
    
    
    3,997
    
    
    
    1,149Purchases of property and equipment
    
    
    (1,006
    )
    
    
    (377
    )Course development
    
    
    (105
    )
    
    
    (93
    )Other
    
    
    (21
    )
    
    
    5Net cash flows provided by investing activities
    
    
    2,864
    
    
    
    684CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings of long-term debt
    
    
    0
    
    
    
    15Repayments of long-term debt
    
    
    0
    
    
    
    (631
    )Issuance of common stock
    
    
    32,077
    
    
    
    0Cash paid for stock issuance
    
    
    (690
    )
    
    
    0Dividends paid
    
    
    (11,089
    )
    
    
    0Net cash flows provided by (used in) financing activities
    
    
    20,298
    
    
    
    (616
    )
    -7-




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NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
AND SUBSIDIARIES
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
FOR

THE THREE MONTHS ENDED AUGUST 31, 2010 AND AUGUST 31, 2009 
(In
thousands except share and per share data)
 Three months endedAugust 31,
    
    
    August 31,2010
    
    
    2009NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    $
    23,633
    
    
    $
    1,216CASH AND CASH EQUIVALENTS  Beginning of year
    
    
    8,695
    
    
    
    3,508CASH AND CASH EQUIVALENTS  End of period
    
    $
    32,328
    
    
    $
    4,724SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest during the three months ended August 31, 2010
and August 31, 2009 respectively
    
    $
    0
    
    
    $
    161Cash paid for income taxes
    
    $
    606
    
    
    $
    953Dividends declared at August 31, 2010 and August 31, 2009
    
    $
    725
    
    
    $
    
  The accompanying notes are an integral part of these condensed
consolidated financial statements.
  -8-




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NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE THREE MONTHS ENDED AUGUST 31, 2010 AND AUGUST 31, 2009
(Dollar amounts, except share and per share data, in thousands)
 1.
    
    BASIS OF PRESENTATION
   Estimates
 2.
    
    NATURE OF OPERATIONS
    -9-




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3.
    
    RECLASSIFICATION
  4.
    
    EARNINGS PER SHARE
   -10-




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##### Table of Contents



For the three
    
    
    For the threemonths ended
    
    
    months endedAugust 31,
    
    
    August 31,2010
    
    
    2009Numerator:Net income
    
    $
    1,348
    
    
    $
    1,250Distributed earnings (DE)
    
    
    725
    
    
    
    Undistributed earnings (UE)
    
    
    623
    
    
    
    1,250UE attributable to Class A  basic
    
    
    
    
    
    
    1,250UE attributable to Common  basic
    
    
    623
    
    
    
    DE attributable to Class A  basic
    
    
    
    
    
    
    Denominator:Class A shares
    
    
    
    
    
    
    100,000Weighted average shares outstanding
used to compute basic net income per
common share
    
    
    26,242,653
    
    
    
    Incremental shares issuable upon
assumed exercise of restricted shares
    
    
    21,470
    
    
    
    Incremental shares issuable upon the
assumed exercise of warrants
    
    
    819,457
    
    
    
    Common Shares used to compute diluted net
income per share
    
    
    27,083,579
    
    
    
    Basic net income per Class A share
    
    
    
    
    
    
    0.01Basic net income (loss) per common share
    
    
    0.05
    
    
    
    Diluted net income per Class A share
    
    
    
    
    
    
    12.50Diluted net income (loss) per common share
    
    
    0.05
    
    
    
    
  5.
    
    RECENTLY ADOPTED AND NEW ACCOUNTING PRONOUNCEMENTS
 Consolidation
  -11-




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##### Table of Contents



Fair Value Measurement and
Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.
 6.
    
    STOCKHOLDERS EQUITY
     -12-




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##### Table of Contents



Stock-Based Compensation
  WeightedAverageGrant DateRestricted Shares Outstanding
    
    Shares
    
    
    Fair ValueBalance, May 31, 2010
    
    
    110,333
    
    
    $
    8.64Granted RSUs
    
    
    53,000
    
    
    
    5.52Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Restricted Stock and RSUOutstanding, August 31, 2010
    
    
    163,333
    
    
    $
    7.63
   Stock Options
  August 31, 2010Expected volatility
    
    
    45.59
    %Expected dividend yield
    
    
    1.20
    %Expected life (term)
    
    5.75 yearsRisk-free interest rate
    
    
    0.50
    %Exercise price during the quarter
    
    
    9.35
  -13-




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Weighted-Weighted-
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual Term
    
    
    Aggregate IntrinsicShares
    
    
    Price
    
    
    (in years)
    
    
    ValueBalance at June 1, 2010
    
    
    0
    
    
    $
    n/aGranted
    
    
    110,000
    
    
    
    9.35
    
    
    
    9.7Forfeited/cancelled
    
    
    0
    
    
    
    n/aExpired
    
    
    0
    
    
    
    n/aExercised
    
    
    0
    
    
    
    n/aBalance at August 31, 2010
    
    
    110,000
    
    
    $
    9.35
    
    
    
    9.7
    
    
    $
    n/a
  Dividends
  7.
    
    INCOME TAXES
  8.
    
    COMMITMENTS AND CONTINGENCIES
    -14-




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##### Table of Contents



9.
    
    CONDOMINIUM PROJECT
   10.
    
    FAIR VALUE MEASUREMENTS
  Level 1
 Level 2 
 Level 3 
  -15-




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##### Table of Contents



QuotedPrices in
    
    
    OtherActive
    
    
    Observable
    
    
    UnobservableMarkets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Fair ValueAugust 31, 2010InvestmentsCDs and money market accounts
    
    $
    1,581
    
    
    $
    412
    
    
    $
    
    
    
    $
    1,993US treasury bills and notes
    
    
    6,474
    
    
    
    
    
    
    
    
    
    
    
    6,474Total assets at fair value
    
    $
    8,055
    
    
    $
    412
    
    
    $
    
    
    
    $
    8,467May 31, 2010InvestmentsCDs and money market accounts
    
    $
    1,547
    
    
    $
    411
    
    
    $
    
    
    
    $
    1,948US treasury bills and notes
    
    
    10,456
    
    
    
    
    
    
    
    
    
    
    
    10,456Total assets at fair value
    
    $
    12,003
    
    
    $
    411
    
    
    $
    
    
    
    $
    12,414
 11.
    
    SEGMENT REPORTING
      -16-




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Three Months Ended August 31, 2010
    
    
    Three Months Ended August 31, 2009Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedNAU
    
    
    Other
    
    
    Total
    
    
    NAU
    
    
    Other
    
    
    TotalRevenue:Academic revenue
    
    $
    21,258
    
    
    $
    0
    
    
    $
    21,258
    
    
    $
    15,873
    
    
    $
    0
    
    
    $
    15,873Auxiliary revenue
    
    
    1,447
    
    
    
    0
    
    
    
    1,447
    
    
    
    1,140
    
    
    
    0
    
    
    
    1,140Rental income  apartments
    
    
    0
    
    
    
    243
    
    
    
    243
    
    
    
    0
    
    
    
    251
    
    
    
    251Condominium sales
    
    
    0
    
    
    
    224
    
    
    
    224
    
    
    
    0
    
    
    
    0
    
    
    
    0Total revenue
    
    
    22,705
    
    
    
    467
    
    
    
    23,172
    
    
    
    17,013
    
    
    
    251
    
    
    
    17,264Operating expenses:Cost of educational services (1)
    
    
    5,239
    
    
    
    0
    
    
    
    5,239
    
    
    
    4,592
    
    
    
    0
    
    
    
    4,592Selling, general and administrative (1)
    
    
    14,545
    
    
    
    409
    
    
    
    14,954
    
    
    
    9,584
    
    
    
    410
    
    
    
    9,994Auxiliary expense
    
    
    674
    
    
    
    0
    
    
    
    674
    
    
    
    426
    
    
    
    0
    
    
    
    426Cost of condominium sales
    
    
    0
    
    
    
    193
    
    
    
    193
    
    
    
    0
    
    
    
    0
    
    
    
    0Loss on disposition of property
    
    
    10
    
    
    
    0
    
    
    
    10
    
    
    
    0
    
    
    
    0
    
    
    
    0Total operating expenses
    
    
    20,468
    
    
    
    602
    
    
    
    21,070
    
    
    
    14,602
    
    
    
    410
    
    
    
    15,012Income (loss) from operations
    
    
    2,237
    
    
    
    (135
    )
    
    
    2,102
    
    
    
    2,411
    
    
    
    (159
    )
    
    
    2,252Other income (expense):Interest income
    
    
    40
    
    
    
    0
    
    
    
    40
    
    
    
    86
    
    
    
    0
    
    
    
    86Interest expense (2)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (46
    )
    
    
    (111
    )
    
    
    (157
    )Other income  net
    
    
    0
    
    
    
    26
    
    
    
    26
    
    
    
    0
    
    
    
    24
    
    
    
    24Total other expense
    
    
    40
    
    
    
    26
    
    
    
    66
    
    
    
    40
    
    
    
    (87
    )
    
    
    (47
    )Income (loss) before taxes
    
    $
    2,277
    
    
    $
    (109
    )
    
    $
    2,168
    
    
    $
    2,451
    
    
    $
    (246
    )
    
    $
    2,205
 (1)
    
    As discussed in Note 3, $1,185 of rent expense has been reclassified from selling,
general, and administrative to cost of educational services to conform to the current presentation.
A portion of these amounts were previously allocated to the Other segment in error. As such, the
amount for the three months ended August 31, 2009 has been restated to properly reflect the entire
balance within the NAU segment.(2)
    
    An error in the allocation of $13 of interest expense to the NAU operating segment has been
corrected to present the interest expense in the Other operating segment. Three Months Ended August 31, 2010
    
    
    Year Ended May 31, 2010Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedNAU
    
    
    Other
    
    
    Total
    
    
    NAU
    
    
    Other
    
    
    TotalTotal Assets
    
    $
    50,039
    
    
    $
    19,296
    
    
    $
    69,335
    
    
    $
    33,085
    
    
    $
    14,201
    
    
    $
    47,286
  -17-




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##### Table of Contents



12.
    
    SUBSEQUENT EVENTS
   -18-




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Certain of the statements included in this Managements Discussion and Analysis of Financial
Condition and Results of Operations as well as elsewhere in this quarterly report on Form 10-Q are
forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995
(Reform Act). These statements are based on the Companys current expectations and are subject to
a number of assumptions, risks and uncertainties. In accordance with the Safe Harbor provisions of
the Reform Act, the Company has identified important factors that could cause its actual results to
differ materially from those expressed in or implied by such statements. The assumptions,
uncertainties and risks include the pace of growth of student enrollment, our continued compliance
with Title IV of the Higher Education Act, and the regulations thereunder, as well as regional
accreditation standards and state regulatory requirements, competitive factors, risks associated
with the opening of new campuses and hybrid learning centers, risks associated with the offering of
new educational programs and adapting to other changes, risks associated with the acquisition of
existing educational institutions, risks relating to the timing of regulatory approvals, our
ability to continue to implement our growth strategy, risks associated with the ability of our
students to finance their education in a timely manner, and general economic and market conditions.
Further information about these and other relevant risks and uncertainties may be found in the
Companys Annual Report on Form 10-K filed on August 18, 2010 and its other filings with the
Securities and Exchange Commission (the SEC). The Company undertakes no obligation to update or
revise any forward looking statement, except as may be required by law.
 Background
     -19-




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##### Table of Contents



Key Financial Results Metrics
 Revenue.
  
    
    the number of students who are enrolled and who remain enrolled in courses throughout
the term;
 
    
    the number of credit hours per student;
 
    
    the students degree and program mix;
 
    
    changes in tuition rates;
 
    
    the affiliates with which NAU is working as well as the number of students at the
affiliates; and
 
    
    the amount of scholarships for which students qualify.
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##### Table of Contents



August 31, 2010
    
    
    August 31, 2009
    
    
    % Growth for(Summer 10 Qtr)
    
    
    (Summer 09 Qtr)
    
    
    same quarterNumber of Students
    
    
    Number of Students
    
    
    over prior yearGraduate
    
    
    342
    
    
    
    226
    
    
    
    51.3
    %Undergraduate and Diploma
    
    
    7,913
    
    
    
    5,833
    
    
    
    35.7
    %Total
    
    
    8,255
    
    
    
    6,059
    
    
    
    36.2
    %On-Campus
    
    
    3,283
    
    
    
    2,738
    
    
    
    19.9
    %Online
    
    
    3,584
    
    
    
    2,340
    
    
    
    53.2
    %Hybrid
    
    
    1,388
    
    
    
    981
    
    
    
    41.5
    %Total
    
    
    8,255
    
    
    
    6,059
    
    
    
    36.2
    %
   Expenses.
  -21-




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##### Table of Contents



Factors affecting comparability
  Introduction of new programs and specializations.
 Introduction of new physical locations.
 Public company expenses.
 Stock-based compensation.
 Seasonality.
 Department of Education Rulemaking
   -22-




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##### Table of Contents



Results of Operations  Three Months Ended August 31, 2010 Compared to Three Months Ended August
31, 2009
 National American University Holdings, Inc.
  Three Months Ended
    
    
    Three Months EndedAugust 31, 2010
    
    
    August 31, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    22.6
    
    
    
    26.6Selling, general and administrative
    
    
    64.5
    
    
    
    57.9Auxiliary expense
    
    
    2.9
    
    
    
    2.5Cost of condominium sales
    
    
    0.8
    
    
    
    0.0Total operating expenses
    
    
    90.8
    
    
    
    87.0Operating income
    
    
    9.2
    
    
    
    13.0Interest expense
    
    
    0.0
    
    
    
    (0.9)Interest income
    
    
    0.2
    
    
    
    0.5Other income
    
    
    0.1
    
    
    
    0.1Income before income taxes
    
    
    9.5
    
    
    
    12.7Income tax expense
    
    
    (3.5
    )
    
    
    (5.5)Net income attributable to non controlling interest
    
    
    0.0
    
    
    
    0.1Net income attributable to the Company
    
    
    6.0
    
    
    
    7.3
   -23-




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##### Table of Contents



NAU
  Three Months Ended
    
    
    Three Months EndedAugust 31, 2010
    
    
    August 31, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    23.1
    
    
    
    27.0Selling, general and administrative
    
    
    64.1
    
    
    
    56.3Auxiliary expense
    
    
    3.0
    
    
    
    2.5Cost of condominium sales
    
    
    0.0
    
    
    
    0.0Total operating expenses
    
    
    90.2
    
    
    
    85.8Operating income
    
    
    9.8
    
    
    
    14.2Interest expense
    
    
    0.0
    
    
    
    (0.3
    )Interest income
    
    
    0.2
    
    
    
    0.5Other income
    
    
    0.0
    
    
    
    0.0Income before non-controlling
interest and taxes
    
    
    10.0
    
    
    
    14.4
  -24-




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##### Table of Contents



Total revenue
  Cost of educational services .
  Q1 - Ended
    
    
    Q2 - Ended
    
    
    Q3 - Ended
    
    
    Q4 - EndedAugust 31,
    
    
    November 30,
    
    
    February 28,
    
    
    May 31,2009
    
    
    2009
    
    
    2010
    
    
    2010
    
    
    TotalReclass of facilities expenses
    
    $
    1,185
    
    
    $
    1,182
    
    
    $
    1,304
    
    
    $
    1,145
    
    
    $
    4,816
 Selling, general and administrative expenses
  -25-




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##### Table of Contents



Auxiliary
 Income before non-controlling interest and taxes .
 Other
  Three Months Ended
    
    
    Three Months EndedAugust 31, 2010
    
    
    August 31, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    0.0
    
    
    
    0.0Selling, general and administrative
    
    
    87.6
    
    
    
    163.3Auxiliary expense
    
    
    0.0
    
    
    
    0.0Cost of condominium sales
    
    
    41.3
    
    
    
    0.0Total operating expenses
    
    
    128.9
    
    
    
    163.3Operating loss
    
    
    (28.9
    )
    
    
    (63.3
    )Interest expense
    
    
    0.0
    
    
    
    (44.2
    )Interest income
    
    
    0.0
    
    
    
    0.0Other income
    
    
    5.6
    
    
    
    9.6Loss before non-controlling interest
and taxes
    
    
    (23.3
    )
    
    
    (97.9
    )
  -26-




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##### Table of Contents



Liquidity and Capital Resources
 Liquidity .
     -27-




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##### Table of Contents



Operating Activities .
 Investing Activities .
 Financing Activities .
 Off-Balance Sheet Arrangements
  Impact of Inflation
   -28-




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##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4.
    
    Controls and Procedures.
   
 PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings.
  
 Item 1A.
    
    Risk Factors.
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
   -29-




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##### Table of Contents



Item 3.
    
    Defaults Upon Senior Securities.
  
 Item 4.
    
    Reserved.
 
 Item 5.
    
    Other Information.
  
 Item 6.
    
    Exhibits.
 31.1
    
    
    Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    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 200232.2
    
    
    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
  -30-




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##### Table of Contents



SIGNATURES
  National American University Holdings, Inc.
(Registrant)Dated: October 13, 2010
    By:
    /s/ Ronald ShapeRonald L. Shape, Ed. D.Chief Executive Officer and
Chief Financial Officer  -31-




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##### Table of Contents



Exhibit Index
 Exhibit
    
    Description31.1
    
    
    Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    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 200232.2
    
    
    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
  -32-