##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended February 28, 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. 000-52919
 National American University Holdings, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction 
of incorporation or organization)
    
    83-0479936(I.R.S. Employer
Identification No.)5301 S. Highway 16, Suite 200
Rapid City, SD(Address of principal executive offices)
    
    57701(Zip Code)
 (605) 721-5200  (Registrants telephone number, including area code)
 þ 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 February 28, 2010 and Audited Condensed Consolidated Balance Sheet as of May 31, 2009
    
    
    3Unaudited Condensed Consolidated Statements of Operations for the nine months and three months ended February 28, 2010 and February 28, 2009
    
    
    5Unaudited Condensed Consolidated Statements of Stockholders Equity for the nine months ended February 28, 2010 and February 28, 2009
    
    
    7Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended February 28, 2010 and February 28, 2009
    
    
    8Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    10ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    23ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    39ITEM 4T. CONTROLS AND PROCEDURES
    
    
    39PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    40ITEM 1A. RISK FACTORS
    
    
    40ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    40ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    40ITEM 4. RESERVED
    
    
    40ITEM 5. OTHER INFORMATION
    
    
    40ITEM 6. EXHIBITS
    
    
    41Exhibit 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 FEBRUARY 28, 2010 AND AUDITED CONDENSED
CONSOLIDATED BALANCE SHEET AS OF MAY 31, 2009
(In thousands except per share data)
 February 28,
    
    
    May 31,2010
    
    
    2009ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    8,364
    
    
    $
    3,508Short term investments
    
    
    19,064
    
    
    
    4,417Student receivables  net of allowance of $290 and $115
at February 28, 2010 and May 31, 2009, respectively
    
    
    2,607
    
    
    
    1,207Institutional receivables
    
    
    1,601
    
    
    
    173Student notes receivable  current portion 
net of allowance
    
    
    0
    
    
    
    30Bookstore inventory
    
    
    802
    
    
    
    604Deferred income taxes
    
    
    1,140
    
    
    
    1,090Prepaid and other current assets
    
    
    730
    
    
    
    410Total current assets
    
    
    34,308
    
    
    
    11,439PROPERTY AND EQUIPMENTLand
    
    
    718
    
    
    
    718Land improvements
    
    
    374
    
    
    
    374Buildings and building improvements
    
    
    16,524
    
    
    
    16,147Furniture, vehicles, and equipment
    
    
    16,770
    
    
    
    14,564Total gross property and equipment
    
    
    34,386
    
    
    
    31,803Less accumulated depreciation
    
    
    (20,909
    )
    
    
    ( 19,651
    )Net property and equipment
    
    
    13,477
    
    
    
    12,152OTHER ASSETS:Condominium inventories
    
    
    3,238
    
    
    
    3,802Student notes receivable  net of current portion
and allowance
    
    
    144
    
    
    
    105Land held for future development
    
    
    312
    
    
    
    312Course development  net of accumulated amortization
of $1,071 and $804 at February 28, 2010 and May 31, 2009,
respectively
    
    
    745
    
    
    
    767Restricted investment
    
    
    120
    
    
    
    0Other
    
    
    290
    
    
    
    2884,849
    
    
    
    5,274TOTAL
    
    $
    52,634
    
    
    $
    28,865
    -3-




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NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
AS OF FEBRUARY 28, 2010 AND AUDITED CONDENSED
CONSOLIDATED BALANCE SHEET AS OF MAY 31, 2009
(In thousands except per share data)
 February 28,
    
    
    May 31,2010
    
    
    2009LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Long-term debt  current portion
    
    $
    1,524
    
    
    $
    2,147Lines of credit  real estate
    
    
    2,795
    
    
    
    3,305Accounts payable
    
    
    3,685
    
    
    
    3,564Dividends payable
    
    
    1,926
    
    
    
    0Student accounts payable
    
    
    516
    
    
    
    314Deferred income
    
    
    1,207
    
    
    
    367Income tax payable
    
    
    6
    
    
    
    551Accrued and other liabilities
    
    
    5,787
    
    
    
    4,900Total current liabilities
    
    
    17,446
    
    
    
    15,148LONG-TERM DEBT  Net of current portion
    
    
    3,685
    
    
    
    6,507DEFERRED INCOME TAXES
    
    
    1,081
    
    
    
    1,503OTHER LONG-TERM LIABILITIES
    
    
    917
    
    
    
    815COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Class A Common (100,000 authorized, issued and outstanding;
$0.0001 par value per share)
    
    
    0
    
    
    
    0Common stock (50,000,000 authorized, 6,087,653 issued and 5,018,605
outstanding as of February 28, 2010, 0 issued and
outstanding as of May 31, 2009; $0.0001 par value per share)
    
    
    1
    
    
    
    0Additional
paid-in capital
    
    
    18,302
    
    
    
    385Retained earnings
    
    
    11,392
    
    
    
    7,251Accumulated other comprehensive income
    
    
    95
    
    
    
    10929,790
    
    
    
    7,745Less treasury stock at cost
    
    
    0
    
    
    
    (1,869
    )Total National American University Holdings , Inc.
stockholders equity
    
    
    29,790
    
    
    
    5,876Non-controlling interest
    
    
    (285
    )
    
    
    (984
    )Total equity
    
    
    29,505
    
    
    
    4,892TOTAL
    
    $
    52,634
    
    
    $
    28,865
    -4-




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##### Table of Contents



NATIONAL
AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS AND THREE MONTHS ENDED FEBRUARY 28, 2010 AND FEBRUARY 28, 2009
(In thousands except per share data)
 Nine Month Period Ended
    
    
    Three Month Period EndedFebruary 28,
    
    
    February 28,2010
    
    
    2009
    
    
    2010
    
    
    2009REVENUE:Academic revenue
    
    $
    59,021
    
    
    $
    40,028
    
    
    $
    21,685
    
    
    $
    14,925Auxiliary revenue
    
    
    3,893
    
    
    
    2,873
    
    
    
    1,249
    
    
    
    955Rental income  apartments
    
    
    703
    
    
    
    682
    
    
    
    220
    
    
    
    204Condominium sales
    
    
    694
    
    
    
    644
    
    
    
    456
    
    
    
    433Total revenue
    
    
    64,311
    
    
    
    44,227
    
    
    
    23,610
    
    
    
    16,517OPERATING EXPENSES:Cost of educational services
    
    
    11,508
    
    
    
    9,352
    
    
    
    4,123
    
    
    
    3,372Selling, general and administrative
    
    
    37,491
    
    
    
    29,779
    
    
    
    13,928
    
    
    
    10,646Auxiliary expense
    
    
    1,454
    
    
    
    1,158
    
    
    
    418
    
    
    
    369Cost of condominium sales
    
    
    564
    
    
    
    458
    
    
    
    398
    
    
    
    282Total operating expenses
    
    
    51,017
    
    
    
    40,747
    
    
    
    18,867
    
    
    
    14,669OPERATING INCOME
    
    
    13,294
    
    
    
    3,480
    
    
    
    4,743
    
    
    
    1,848OTHER INCOME (EXPENSE):Interest income
    
    
    160
    
    
    
    213
    
    
    
    41
    
    
    
    84Interest expense
    
    
    (440
    )
    
    
    (635
    )
    
    
    (125
    )
    
    
    (197
    )Other income  net
    
    
    176
    
    
    
    73
    
    
    
    128
    
    
    
    (90
    )Total other income (expense)
    
    
    (104
    )
    
    
    (349
    )
    
    
    44
    
    
    
    (203
    )INCOME BEFORE INCOME TAXES
    
    
    13,190
    
    
    
    3,131
    
    
    
    4,787
    
    
    
    1,645INCOME TAX EXPENSE
    
    
    (5,241
    )
    
    
    (1,118
    )
    
    
    (1,785
    )
    
    
    (588
    )NET INCOME
    
    
    7,949
    
    
    
    2,013
    
    
    
    3,002
    
    
    
    1,057NET (INCOME) LOSS ATTRIBUTABLE TO
NON-CONTROLLING INTEREST
    
    
    (14
    )
    
    
    (8
    )
    
    
    (30
    )
    
    
    24NET INCOME ATTRIBUTABLE TO NATIONAL
AMERICAN UNIVERSITY HOLDINGS, INC. AND
SUBSIDIARIES
    
    
    7,935
    
    
    
    2,005
    
    
    
    2,972
    
    
    
    1,081OTHER COMPREHENSIVE INCOME Unrealized gains (losses) on investments
    
    
    (14
    )
    
    
    190
    
    
    
    (23
    )
    
    
    19COMPREHENSIVE INCOMEATTRIBUTABLE TO NATIONAL AMERICAN
UNIVERSITY HOLDINGS, INC.
    
    $
    7,921
    
    
    $
    2,195
    
    
    $
    2,949
    
    
    $
    1,100
 
   -5-




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NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.  AND SUBSIDIARIES
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS AND THREE MONTHS ENDED FEBRUARY 28, 2010 AND 
FEBRUARY 28, 2009
(In thousands except per share data)
 Nine Month Period Ended
    
    
    Three Month Period EndedFebruary 28,
    
    
    February 28,2010
    
    
    2009
    
    
    2010
    
    
    2009Basic EPSClass ADistributed earnings
    
    $
    34.61
    
    
    $
    
    
    
    $
    17.30
    
    
    $
    Undistributed earnings
    
    $
    37.03
    
    
    $
    20.05
    
    
    $
    8.08
    
    
    $
    10.81Total
    
    $
    71.64
    
    
    $
    20.05
    
    
    $
    25.38
    
    
    $
    10.81CommonDistributed earnings
    
    $
    0.15
    
    
    $
    
    
    
    $
    0.03
    
    
    $
    Undistributed earnings
    
    $
    0.24
    
    
    $
    
    
    
    $
    0.05
    
    
    $
    Total
    
    $
    0.39
    
    
    $
    
    
    
    $
    0.08
    
    
    $
    Diluted EPSClass ADistributed earnings
    
    $
    34.61
    
    
    $
    
    
    
    $
    17.30
    
    
    $
    Undistributed earnings
    
    $
    36.03
    
    
    $
    20.05
    
    
    $
    7.59
    
    
    $
    10.81Total
    
    $
    70.64
    
    
    $
    20.05
    
    
    $
    24.89
    
    
    $
    10.81CommonDistributed earnings
    
    $
    0.12
    
    
    $
    
    
    
    $
    0.02
    
    
    $
    Undistributed earnings
    
    $
    0.23
    
    
    $
    
    
    
    $
    0.05
    
    
    $
    Total
    
    $
    0.35
    
    
    $
    
    
    
    $
    0.07
    
    
    $
    Weighted Average Shares
outstandingBasic EPSClass A
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000Common
    
    
    1,868,858
    
    
    
    n/a
    
    
    
    5,206,105
    
    
    
    n/aDiluted EPSClass A
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000Common
    
    
    2,354,081
    
    
    
    n/a
    
    
    
    6,557,798
    
    
    
    n/a
    -6-




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##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 FOR THE NINE MONTHS ENDED FEBRUARY 28, 2010 AND FEBRUARY 28, 2009
(In thousands except 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, 2008
    
    $
    0
    
    
    $
    0
    
    
    $
    385
    
    
    $
    4,187
    
    
    $
    28
    
    
    $
    (1,869
    )
    
    $
    (971
    )
    
    $
    1,760Comprehensive income:Net income
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    2,005
    
    
    
    0
    
    
    
    0
    
    
    
    8
    
    
    
    2,013Unrealized gain on
investments
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    94
    
    
    
    0
    
    
    
    0
    
    
    
    94Balance  February 28,
2009
    
    $
    0
    
    
    $
    0
    
    
    $
    385
    
    
    $
    6,192
    
    
    $
    122
    
    
    $
    (1,869
    )
    
    $
    (963
    )
    
    $
    3,867Balance  May 31, 2009
    
    $
    0
    
    
    $
    0
    
    
    $
    385
    
    
    $
    7,251
    
    
    $
    109
    
    
    $
    (1,869
    )
    
    $
    (984
    )
    
    $
    4,892Recapitalization of Dlorah, Inc.
    
    
    0
    
    
    
    1
    
    
    
    22,508
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    22,509Retirement of Treasury Stock
    
    
    0
    
    
    
    0
    
    
    
    (1,869
    )
    
    
    0
    
    
    
    0
    
    
    
    1,869
    
    
    
    0
    
    
    
    0Merger costs associated
with reverse merger
    
    
    0
    
    
    
    0
    
    
    
    (3,359
    )
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (3,359
    )Contributed capital from
non-controlling interest
holders
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    685
    
    
    
    685Share based
compensation expense
    
    
    0
    
    
    
    0
    
    
    
    637
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    637Dividends declared
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (3,794
    )
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (3,794
    )Comprehensive income:Net income
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    7,935
    
    
    
    0
    
    
    
    0
    
    
    
    14
    
    
    
    7,949Unrealized loss on
investments
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (14
    )
    
    
    0
    
    
    
    0
    
    
    
    (14
    )Balance  February 28, 2010
    
    $
    0
    
    
    $
    1
    
    
    $
    18,302
    
    
    $
    11,392
    
    
    $
    95
    
    
    $
    0
    
    
    $
    (285
    )
    
    $
    29,505
   -7-




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##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2010 AND FEBRUARY 28, 2009
(In thousands except per share data)
 Nine Months EndedFebruary 28,
    
    
    February 28,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net Income
    
    $
    7,949
    
    
    $
    2,013Adjustments to reconcile net income to net cash flows
provided
by operating activities:Depreciation and amortization
    
    
    1,685
    
    
    
    1,624Gain on disposition of property and equipment
    
    
    (104
    )
    
    
    (116
    )Gain on sale of investments
    
    
    0
    
    
    
    (1
    )Provision for uncollectible tuition
    
    
    1,429
    
    
    
    1,036Non cash compensation expense
    
    
    637
    
    
    
    0Deferred income taxes
    
    
    (94
    )
    
    
    540Changes in assets and liabilities:Accounts and other receivables
    
    
    (4,257
    )
    
    
    (1,674
    )Student notes
    
    
    (9
    )
    
    
    0Bookstore inventory
    
    
    (198
    )
    
    
    (16
    )Prepaid and other current assets
    
    
    (320
    )
    
    
    162Condominium inventories
    
    
    564
    
    
    
    357Accounts payable
    
    
    (12
    )
    
    
    (1,234
    )Deferred income
    
    
    840
    
    
    
    392Other long-term liabilities
    
    
    102
    
    
    
    0Income tax receivable/payable
    
    
    (545
    )
    
    
    801Accrued and other liabilities
    
    
    887
    
    
    
    707Net cash flows provided by operating activities
    
    
    8,554
    
    
    
    4,591CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of investments
    
    
    (16,396
    )
    
    
    (1,688
    )Proceeds from sale of investments
    
    
    1,615
    
    
    
    770Purchases of property and equipment
    
    
    (2,409
    )
    
    
    (686
    )Proceeds from sale of property and equipment
    
    
    143
    
    
    
    196Course development
    
    
    (244
    )
    
    
    (142
    )Construction of development property with line of credit
borrowings
    
    
    0
    
    
    
    (452
    )Other
    
    
    (2
    )
    
    
    7Net cash flows used in investing activities
    
    
    (17,293
    )
    
    
    (1,995
    )CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings on lines of credit
    
    
    0
    
    
    
    2,400Repayments of lines of credit
    
    
    (510
    )
    
    
    (4,975
    )Increase in outstanding checks in excess of book balance
    
    
    0
    
    
    
    769Repayments of long-term debt
    
    
    (3,445
    )
    
    
    (2,120
    )Construction of development property with line of credit
borrowings
    
    
    0
    
    
    
    452Contributed capital by non-controlling interest members
    
    
    685
    
    
    
    0Cash received in reverse merger
    
    
    22,092
    
    
    
    0Cash paid for merger costs
    
    
    (3,359
    )
    
    
    0Dividends paid
    
    
    (1,868
    )
    
    
    0Net cash flows provided by (used in) financing
activities
    
    
    13,595
    
    
    
    (3,474
    )
    -8-




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##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2010 AND FEBRUARY 28, 2009
(In thousands except per share data)
 February 28,
    
    
    February 28,2010
    
    
    2009NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    $
    4,856
    
    
    $
    (878
    )CASH AND CASH EQUIVALENTS  Beginning of year
    
    
    3,508
    
    
    
    2,108CASH AND CASH EQUIVALENTS  End of period
    
    $
    8,364
    
    
    $
    1,230SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest  net of $-0- and $39 capitalized
during the nine months ended February 28, 2010 and February 28, 2009
respectively
    
    $
    430
    
    
    $
    672Cash paid for income taxes
    
    $
    3,333
    
    
    $
    223Dividends declared at February 28, 2010 and February 28, 2009
    
    $
    1,926
    
    
    $
    
    -9-




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##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. 
AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE NINE MONTHS ENDED FEBRUARY 28, 2010 AND FEBRUARY 28, 2009
(Dollar amounts, except per share, in thousands)
 1.
    
    BASIS OF PRESENTATION
   Estimates
  -10-




---



##### Table of Contents



2.
    
    NATURE OF OPERATIONS
 .
     -11-




---



##### Table of Contents



3.
    
    EARNINGS PER SHARE
  For the nine months
    
    
    For the three monthsended February 28,
    
    
    ended February 28,2010
    
    
    2009
    
    
    2010
    
    
    2009Weighted average shares outstanding used to compute basic net income per share
    
    
    1,868,858
    
    
    
    n/a
    
    
    
    5,206,105
    
    
    
    n/aUnvested compensatory restricted shares
    
    
    68,636
    
    
    
    n/a
    
    
    
    68,636
    
    
    
    n/aIncremental shares issuable upon the assumed exercise of warrants
    
    
    416,587
    
    
    
    n/a
    
    
    
    1,283,057
    
    
    
    n/aShares used to compute diluted net income per share
    
    
    2,354,081
    
    
    
    n/a
    
    
    
    6,557,798
    
    
    
    n/a
 4.
    
    RECENTLY ADOPTED AND NEW ACCOUNTING PRONOUNCEMENTS
 Consolidation
 Fair Value Measurement and
Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.
 Subsequent Events (Topic
855): Amendments to Certain Recognition and Disclosure Requirements.
  -12-




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5.
    
    LONG-TERM DEBT
  Notes Payable
    
    Feb 28, 2010
    
    
    May 31, 2009Note payable to
Great Western Bank;
matures February 2014;
requires monthly
payments of $42,
including principal and
interest; accrues
interest at 6.45%;
secured by real estate
and personally
guaranteed by a Company
stockholder
    
    $
    3,328
    
    
    $
    3,582Note payable to Wells
Fargo Bank; matures June
1, 2011; requires
monthly payments of $30
including principal and
interest; accrues
interest at 6%; secured
by cash, savings, and
investment accounts held
at Wells Fargo
Bank
    
    
    468
    
    
    
    714Note payable to
Great Western Bank;
matures March 26, 2012;
requires monthly
payments of $19,
including principal and
interest; accrues
interest at a variable
rate (a) (3.25% at
February 28, 2010 and
May 31, 2009); secured
by substantially all
assets of NAU and
personally guaranteed by
a Company
stockholder
    
    
    449
    
    
    
    611Note payable to
Great Western Bank;
matures November 28,
2012; requires monthly
payments of $13,
including principal and
interest; accrues
interest at a variable
rate (a) (3.25% at
February 28, 2010 and 4%
at May 31, 2009);
secured by substantially
all assets of NAU and
personally guaranteed by
a Company
stockholder
    
    
    388
    
    
    
    499Note payable to
Great Western Bank;
matures August 17, 2011;
requires monthly
payments of $15,
including principal and
interest; accrues
interest at a variable
rate (a) (3.25% at
February 28, 2010 5% at
May 31, 2009); secured
by substantially all
assets of NAU and
personally guaranteed by
a Company
stockholder
    
    
    236
    
    
    
    364Note payable to
Great Western Bank;
matures May 18, 2011;
requires monthly
payments of $13,
including principal and
interest; accrues
interest at a variable
rate (a) (3.25% at
February 28, 2010 and
May 31, 2009); secured
by substantially all
assets of NAU and
personally guaranteed by
a Company
stockholder
    
    
    157
    
    
    
    264(continued)
  -13-




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Notes Payable
    
    Feb 28, 2010
    
    
    May 31, 2009Note payable to Great Western Bank; matures on May 18, 2010;
requires monthly payments of $16, including principal and interest;
accrues interest at a variable rate (a) (3.25% at February 28, 2010
and May 31, 2009); secured by substantially all assets of NAU and
personally guaranteed by a Company stockholder
    
    $
    34
    
    
    $
    175Note payable to Great Western Bank; matures on December 8, 2010;
requires monthly payments of $10, including principal and interest;
accrues interest at a variable rate (a) (3.25% at February 28, 2010
and 4% at May 31, 2009); secured by substantially all assets of
NAU and personally guaranteed by a Company stockholder
    
    
    88
    
    
    
    177Note payable to Great Western Bank; matures on September 25, 2010;
requires monthly payments of $9, including principal and interest;
accrues interest at a variable rate (a) (3.25% at February 28, 2010
and May 31, 2009); secured by substantially all assets of NAU and
personally guaranteed by a Company stockholder
    
    
    55
    
    
    
    137Note payable to Great Western Bank; matures on June 2, 2010;
requires monthly payments of $2, including principal and interest;
accrues interest at a variable rate (a) (3.25% at February 28, 2010
and May 31, 2009); secured by substantially all assets of NAU and
personally guaranteed by a Company stockholder
    
    
    6
    
    
    
    24Notes payable paid in full during nine months ended February 28, 2010
    
    
    0
    
    
    
    2,107Total long-term debt
    
    
    5,209
    
    
    
    8,654Less current portion
    
    
    1,524
    
    
    
    2,147Long-term portion
    
    $
    3,685
    
    
    $
    6,507
 (a)
    
    Variable rates are based on prime rate plus an adjustment, which is specific to each note payable agreement.   2011
    
    $
    1,5242012
    
    
    8842013
    
    
    4002014
    
    
    2,4012015
    
    
    0$
    5,209
  6.
    
    STOCKHOLDERS EQUITY
    -14-




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7.
    
    INCOME TAXES
    -15-




---



##### Table of Contents



8.
    
    COMMITMENTS AND CONTINGENCIES
   9.
    
    RELATED-PARTY TRANSACTIONS
  10.
    
    CONDOMINIUM PROJECT
    -16-




---



##### Table of Contents



11.
    
    FAIR VALUE MEASUREMENTS
  Level 1
 Level 2 
 Level 3 
  QuotedPrices in
    
    
    OtherActive
    
    
    Observable
    
    
    UnobservableMarkets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Fair ValueFebruary 28, 2010InvestmentsCds and money market accounts
    
    $
    317
    
    
    $
    410
    
    
    $
    
    
    
    $
    727US treasury bills and notes
    
    
    18,337
    
    
    
    
    
    
    
    
    
    
    
    18,337Restricted Investments (checking account)
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    120Total assets at fair value
    
    $
    18,774
    
    
    $
    410
    
    
    $
    
    
    
    $
    19,184May 31, 2009InvestmentCds and money market accounts
    
    $
    1,816
    
    
    $
    231
    
    
    $
    
    
    
    $
    2,047US treasury bills and notes
    
    
    2,483
    
    
    
    
    
    
    
    
    
    
    
    2,483Total assets at fair value
    
    $
    4,299
    
    
    $
    231
    
    
    $
    
    
    
    $
    4,530
  -17-




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12.
    
    COMPLETED MERGER
      -18-




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##### Table of Contents



13.
    
    SEGMENT REPORTING
     -19-




---



##### Table of Contents



Nine Months Ended February 28, 2010
    
    
    Nine Months Ended February 28, 2009Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedNAU
    
    
    Other
    
    
    Total
    
    
    NAU
    
    
    Other
    
    
    TotalRevenue:Academic revenue
    
    $
    59,021
    
    
    $
    0
    
    
    $
    59,021
    
    
    $
    40,028
    
    
    $
    0
    
    
    $
    40,028Auxiliary revenue
    
    
    3,893
    
    
    
    0
    
    
    
    3,893
    
    
    
    2,873
    
    
    
    0
    
    
    
    2,873Rental income  apartments
    
    
    0
    
    
    
    703
    
    
    
    703
    
    
    
    0
    
    
    
    682
    
    
    
    682Condominium sales
    
    
    0
    
    
    
    694
    
    
    
    694
    
    
    
    0
    
    
    
    644
    
    
    
    644Total revenue
    
    
    62,914
    
    
    
    1,397
    
    
    
    64,311
    
    
    
    42,901
    
    
    
    1,326
    
    
    
    44,227Operating expenses:Educational services and facilities
    
    
    11,508
    
    
    
    0
    
    
    
    11,508
    
    
    
    9,352
    
    
    
    0
    
    
    
    9,352Selling, general and administrative
    
    
    36,220
    
    
    
    1,271
    
    
    
    37,491
    
    
    
    28,619
    
    
    
    1,160
    
    
    
    29,779Auxiliary expense
    
    
    1,454
    
    
    
    0
    
    
    
    1,454
    
    
    
    1,158
    
    
    
    0
    
    
    
    1,158Cost of condominium sales
    
    
    0
    
    
    
    564
    
    
    
    564
    
    
    
    0
    
    
    
    458
    
    
    
    458Total operating expenses
    
    
    49,182
    
    
    
    1,835
    
    
    
    51,017
    
    
    
    39,129
    
    
    
    1,618
    
    
    
    40,747Operating income (loss)
    
    
    13,732
    
    
    
    (438
    )
    
    
    13,294
    
    
    
    3,772
    
    
    
    (292
    )
    
    
    3,480Other income (expense):Interest income
    
    
    160
    
    
    
    0
    
    
    
    160
    
    
    
    213
    
    
    
    0
    
    
    
    213Interest expense
    
    
    (101
    )
    
    
    (339
    )
    
    
    (440
    )
    
    
    (250
    )
    
    
    (385
    )
    
    
    (635
    )Other income  net
    
    
    (14
    )
    
    
    190
    
    
    
    176
    
    
    
    3
    
    
    
    70
    
    
    
    73Total other income (expense)
    
    
    45
    
    
    
    (149
    )
    
    
    (104
    )
    
    
    (34
    )
    
    
    (315
    )
    
    
    (349
    )Income (loss) before taxes
    
    $
    13,777
    
    
    $
    (587
    )
    
    $
    13,190
    
    
    $
    3,738
    
    
    $
    (607
    )
    
    $
    3,131Total assets
    
    $
    33,816
    
    
    $
    18,818
    
    
    $
    52,634Expenditures for long-lived assets
    
    $
    (1,237
    )
    
    $
    (1,172
    )
    
    $
    (2,409
    )
    
    $
    (676
    )
    
    $
    (462
    )
    
    $
    (1,138
    )Depreciation and amortization
    
    $
    1,308
    
    
    $
    377
    
    
    $
    1,685
    
    
    $
    1,370
    
    
    $
    254
    
    
    $
    1,624
  -20-




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##### Table of Contents



Three Months Ended February 28, 2010
    
    
    Three Months Ended February 28, 2009Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedNAU
    
    
    Other
    
    
    Total
    
    
    NAU
    
    
    Other
    
    
    TotalRevenue:Academic revenue
    
    $
    21,685
    
    
    $
    0
    
    
    $
    21,685
    
    
    $
    14,925
    
    
    $
    0
    
    
    $
    14,925Auxiliary revenue
    
    
    1,249
    
    
    
    0
    
    
    
    1,249
    
    
    
    955
    
    
    
    0
    
    
    
    955Rental income  apartments
    
    
    0
    
    
    
    220
    
    
    
    220
    
    
    
    0
    
    
    
    204
    
    
    
    204Condominium sales
    
    
    0
    
    
    
    456
    
    
    
    456
    
    
    
    0
    
    
    
    433
    
    
    
    433Total revenue
    
    
    22,934
    
    
    
    676
    
    
    
    23,610
    
    
    
    15,880
    
    
    
    637
    
    
    
    16,517Operating expenses:Educational services and facilities
    
    
    4,123
    
    
    
    0
    
    
    
    4,123
    
    
    
    3,372
    
    
    
    0
    
    
    
    3,372Selling, general and administrative
    
    
    13,479
    
    
    
    449
    
    
    
    13,928
    
    
    
    10,406
    
    
    
    240
    
    
    
    10,646Auxiliary expense
    
    
    418
    
    
    
    0
    
    
    
    418
    
    
    
    369
    
    
    
    0
    
    
    
    369Cost of condominium sales
    
    
    0
    
    
    
    398
    
    
    
    398
    
    
    
    0
    
    
    
    282
    
    
    
    282Total operating expenses
    
    
    18,020
    
    
    
    847
    
    
    
    18,867
    
    
    
    14,147
    
    
    
    522
    
    
    
    14,669Operating income (loss)
    
    
    4,914
    
    
    
    (171
    )
    
    
    4,743
    
    
    
    1,733
    
    
    
    115
    
    
    
    1,848Other income (expense):Interest income
    
    
    41
    
    
    
    0
    
    
    
    41
    
    
    
    84
    
    
    
    0
    
    
    
    84Interest expense
    
    
    (20
    )
    
    
    (105
    )
    
    
    (125
    )
    
    
    (28
    )
    
    
    (169
    )
    
    
    (197
    )Other income  net
    
    
    (14
    )
    
    
    142
    
    
    
    128
    
    
    
    (2
    )
    
    
    (88
    )
    
    
    (90
    )Total other income (expense)
    
    
    7
    
    
    
    37
    
    
    
    44
    
    
    
    54
    
    
    
    (257
    )
    
    
    (203
    )Income (loss) before taxes
    
    $
    4,921
    
    
    $
    (134
    )
    
    $
    4,787
    
    
    $
    1,787
    
    
    $
    (142
    )
    
    $
    1,645Total assets
    
    $
    33,816
    
    
    $
    18,818
    
    
    $
    52,634Expenditures for long-lived assets
    
    $
    (319
    )
    
    $
    (1,147
    )
    
    $
    (1,466
    )
    
    $
    (371
    )
    
    $
    (446
    )
    
    $
    (817
    )Depreciation and amortization
    
    $
    450
    
    
    $
    132
    
    
    $
    582
    
    
    $
    473
    
    
    $
    81
    
    
    $
    554
 14.
    
    SUBSEQUENT EVENTS
   -21-




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-22-




---



##### 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 Form 8-K filed on November 30, 2009 and its other filings with the Securities and
Exchange Commission. The Company undertakes no obligation to update or revise any forward looking
statement, except as may be required by law.
 Background
     -23-




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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 students 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.
     -24-




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##### Table of Contents



February 28, 2010
    
    
    February 28, 2009(Winter 10 Qtr)
    
    
    (Winter 09 Qtr)
    
    
    % Growth overNumber of
    
    
    Number of
    
    
    same quarterStudents
    
    
    Students
    
    
    prior yearGraduate
    
    
    323
    
    
    
    239
    
    
    
    35.1
    %Undergraduate
    
    
    7,666
    
    
    
    5,516
    
    
    
    39.0
    %Total
    
    
    7,989
    
    
    
    5,755
    
    
    
    38.8
    %On-Campus
    
    
    3,667
    
    
    
    3,060
    
    
    
    19.8
    %Online
    
    
    3,198
    
    
    
    2,040
    
    
    
    56.8
    %Hybrid
    
    
    1,124
    
    
    
    655
    
    
    
    71.6
    %Total
    
    
    7,989
    
    
    
    5,755
    
    
    
    38.8
    %
    -25-




---



##### Table of Contents



Expenses
 Factors affecting comparability
  Introduction of new programs and specializations
 Public company expenses
 Stock-based compensation
 Seasonality
  -26-




---



##### Table of Contents



Critical Accounting Policies and Estimates
  Revenue recognition
 Allowance for doubtful accounts
 Regulation of Federal Student Financial Aid Programs
   -27-




---



##### Table of Contents



Results of Operations  Nine Months Ended February 28, 2010 Compared to Nine Months Ended February
28, 2009
 National American University Holdings, Inc.
  Nine Months
    
    
    Nine MonthsEnded February
    
    
    Ended February28, 2010
    
    
    28, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    17.9
    
    
    
    21.1Selling, general and administrative
    
    
    58.3
    
    
    
    67.3Auxiliary expense
    
    
    2.3
    
    
    
    2.6Cost of condominium sales
    
    
    0.9
    
    
    
    1.0Total operating expenses
    
    
    79.3
    
    
    
    92.1Operating income
    
    
    20.7
    
    
    
    7.9Interest expense
    
    
    (0.7
    )
    
    
    (1.4
    )Interest income
    
    
    0.2
    
    
    
    0.5Other income
    
    
    0.3
    
    
    
    0.2Income before income taxes
    
    
    20.5
    
    
    
    7.1Income tax expense
    
    
    (8.1
    )
    
    
    (2.5
    )Net income attributable to non controlling interest
    
    
    0.0
    
    
    
    0.0Net income attributable to the Company
    
    
    12.3
    
    
    
    4.5
  -28-




---



##### Table of Contents



NAU
  Nine Months
    
    
    Nine MonthsEnded February
    
    
    Ended February28, 2010
    
    
    28, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    18.3
    
    
    
    21.8Selling, general and administrative
    
    
    57.6
    
    
    
    66.7Auxiliary expense
    
    
    2.3
    
    
    
    2.7Cost of condominium sales
    
    
    0.0
    
    
    
    0.0Total operating expenses
    
    
    78.2
    
    
    
    91.2Operating income
    
    
    21.8
    
    
    
    8.8Interest expense
    
    
    (0.2
    )
    
    
    (0.6
    )Interest income
    
    
    0.3
    
    
    
    0.5Other income
    
    
    0.0
    
    
    
    0.0Income before non-controlling interest and taxes
    
    
    21.9
    
    
    
    8.7
  -29-




---



##### Table of Contents



Total revenue .
  Cost of educational services
 Selling, general, and administrative expenses .
  -30-




---



##### Table of Contents



Auxiliary
 Interest expense
 Interest income
 Income before non-controlling interest and taxes .
   -31-




---



##### Table of Contents



Other
  Nine Months
    
    
    Nine MonthsEnded February
    
    
    Ended February28, 2010
    
    
    28, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    0.0
    
    
    
    0.0Selling, general and administrative
    
    
    91.0
    
    
    
    87.5Auxiliary expense
    
    
    0.0
    
    
    
    0.0Cost of condominium sales
    
    
    40.4
    
    
    
    34.5Total operating expenses
    
    
    131.4
    
    
    
    122.0Operating loss
    
    
    (31.4
    )
    
    
    (22.0
    )Interest expense
    
    
    (24.3
    )
    
    
    (29.0
    )Interest income
    
    
    0.0
    
    
    
    0.0Other income
    
    
    13.6
    
    
    
    5.3Loss before non-controlling interest and taxes
    
    
    (42.0
    )
    
    
    (45.8
    )
   -32-




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##### Table of Contents



Results of Operations  Three Months Ended February 28, 2010 Compared to Three Months Ended
February 28, 2009
 National American University Holdings, Inc.
  Three Months
    
    
    Three MonthsEnded February
    
    
    Ended February28, 2010
    
    
    28, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    17.5
    
    
    
    20.4Selling, general and administrative
    
    
    59.0
    
    
    
    64.5Auxiliary expense
    
    
    1.8
    
    
    
    2.2Cost of condominium sales
    
    
    1.7
    
    
    
    1.7Total operating expenses
    
    
    79.9
    
    
    
    88.8Operating income
    
    
    20.1
    
    
    
    11.2Interest expense
    
    
    (0.5
    )
    
    
    (1.2
    )Interest income
    
    
    0.2
    
    
    
    0.5Other income
    
    
    0.5
    
    
    
    (0.5
    )Income before income taxes
    
    
    20.3
    
    
    
    10.0Income tax expense
    
    
    (7.6
    )
    
    
    (3.6
    )Net income attributable to non controlling interest
    
    
    (0.1
    )
    
    
    0.1Net income attributable to the Company
    
    
    12.6
    
    
    
    6.5
   -33-




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##### Table of Contents



NAU
  Three Months
    
    
    Three MonthsEnded February 
28, 2010
    
    
    Ended February 
28, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    18.0
    
    
    
    21.2Selling, general and administrative
    
    
    58.8
    
    
    
    65.5Auxiliary expense
    
    
    1.8
    
    
    
    2.3Cost of condominium sales
    
    
    0.0
    
    
    
    0.0Total operating expenses
    
    
    78.6
    
    
    
    89.1Operating income
    
    
    21.4
    
    
    
    10.9Interest expense
    
    
    (0.1
    )
    
    
    (0.2
    )Interest income
    
    
    0.2
    
    
    
    0.5Other income
    
    
    (0.1
    )
    
    
    0.0Income before non-controlling interest
and taxes
    
    
    21.5
    
    
    
    11.3
 Total revenue
  Cost of educational services .
  -34-




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##### Table of Contents



Selling, general and administrative expenses
  Auxiliary
 Interest expense
 Interest income
  -35-




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##### Table of Contents



Income before non-controlling interest and taxes .
   Other
  Three Months
    
    
    Three MonthsEnded February 
28, 2010
    
    
    Ended February 
28, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    0.0
    
    
    
    0.0Selling, general and administrative
    
    
    66.4
    
    
    
    37.7Auxiliary expense
    
    
    0.0
    
    
    
    0.0Cost of condominium sales
    
    
    58.9
    
    
    
    44.3Total operating expenses
    
    
    125.3
    
    
    
    81.9Operating income (loss)
    
    
    (25.3
    )
    
    
    18.1Interest expense
    
    
    (15.5
    )
    
    
    (26.5
    )Interest income
    
    
    0.0
    
    
    
    0.0Other income (expense)
    
    
    21.0
    
    
    
    (13.8
    )Loss before non-controlling interest and taxes
    
    
    (19.8
    )
    
    
    (22.3
    )
   -36-




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##### Table of Contents



Liquidity and Capital Resources
 Liquidity .
       -37-




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##### Table of Contents



Operating Activities .
 Investing Activities .
 Financing
Activities .
 Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
 Consolidation
  -38-




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##### Table of Contents



Fair Value Measurement
and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.
 Subsequent Events (Topic
855): Amendments to Certain Recognition and Disclosure Requirements.
 Impact of Inflation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4T. Controls and Procedures.
    -39-




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Reserved.
 
 Item 5. Other Information.
   -40-




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##### Table of Contents



Item 6. Exhibits.
 10.1
    
    
    Joinder to Registration Rights Agreement, dated as of January 12, 2010 between National
American University Holdings, Inc. and T. Rowe Price Associates, Inc. on behalf of its
investment advisory clients T. Rowe Price Small-Cap Value Fund, Inc. and T. Rowe Price U.S.
Equities Trust (incorporated by reference to the registrants
Registration Statement on Form S-1 filed on March 23, 2010)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
  -41-




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##### Table of Contents



SIGNATURES
  National American University Holdings, Inc.
(Registrant)Dated: April 13, 2010
    By:
    /s/ Ronald ShapeRonald L. Shape, Ed. D.Chief Executive Officer and
Chief Financial Officer  -42-




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##### Table of Contents



Exhibit Index
 Exhibit
    
    Description10.1
    
    
    Joinder to Registration Rights Agreement, dated as of January 12, 2010 between National
American University Holdings, Inc. and T. Rowe Price Associates, Inc. on behalf of its
investment advisory clients T. Rowe Price Small-Cap Value Fund, Inc. and T. Rowe Price U.S.
Equities Trust (incorporated by reference to the registrants
Registration Statement on Form S-1 filed on March 23, 2010)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
  -43-