##### 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 November 30, 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)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




---



##### 



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 November 30, 2010 and Audited Condensed Consolidated Balance Sheet as of May 31, 2010
    
    
    3Unaudited Condensed Consolidated Statements of Operations for the six months ended and three months ended November 30, 2010 and November 30, 2009
    
    
    4Unaudited Condensed Consolidated Statements of Stockholders Equity for the six months ended November 30, 2010 and November 30, 2009
    
    
    6Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended November 30, 2010 and November 30, 2009
    
    
    7Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    8ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    20ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    37ITEM 4. CONTROLS AND PROCEDURES
    
    
    37PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    37ITEM 1A. RISK FACTORS
    
    
    37ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    38ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    38ITEM 4. RESERVED
    
    
    38ITEM 5. OTHER INFORMATION
    
    
    38ITEM 6. EXHIBITS
    
    
    38Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   -2-




---



##### 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
 NOVEMBER 30, 2010 AND AUDITED CONDENSED CONSOLIDATED BALANCE
 SHEET AS OF MAY 31, 2010
 (In thousands except share and per share data)
 November 30,
    
    
    May 31,2010
    
    
    2010ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    31,864
    
    
    $
    8,695Short term investments
    
    
    7,113
    
    
    
    11,109Student receivables  net of allowance of $546 and $203 at November 30, 2010 and May 31, 2010, respectively
    
    
    4,916
    
    
    
    1,823Other receivables
    
    
    886
    
    
    
    952Bookstore inventory
    
    
    916
    
    
    
    920Deferred income taxes
    
    
    1,641
    
    
    
    1,574Prepaid and other current assets
    
    
    851
    
    
    
    1,759Total current assets
    
    
    48,187
    
    
    
    26,832Total Property and Equipment  Net
    
    
    19,106
    
    
    
    15,881OTHER ASSETS:Condominium inventory
    
    
    2,852
    
    
    
    3,046Land held for future development
    
    
    312
    
    
    
    312Course development  net of accumulated amortization of $1,281 and $1,149 at November 30, 2010 and May 31, 2010, respectively
    
    
    853
    
    
    
    768Other
    
    
    652
    
    
    
    4474,669
    
    
    
    4,573TOTAL
    
    $
    71,962
    
    
    $
    47,286LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    3,793
    
    
    $
    4,315Dividends payable
    
    
    822
    
    
    
    11,116Student accounts payable
    
    
    647
    
    
    
    322Deferred income
    
    
    351
    
    
    
    305Income tax payable
    
    
    552
    
    
    
    231Accrued and other liabilities
    
    
    5,828
    
    
    
    6,109Total current liabilities
    
    
    11,993
    
    
    
    22,398DEFERRED INCOME TAXES
    
    
    1,370
    
    
    
    1,151OTHER LONG-TERM LIABILITIES
    
    
    3,652
    
    
    
    2,380COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common stock (50,000,000 authorized, 26,369,653 issued and outstanding as of November 30, 2010, 21,819,653 issued and
outstanding as of May 31, 2010)
    
    
    3
    
    
    
    2Additional paid-in capital
    
    
    50,166
    
    
    
    19,165Retained earnings
    
    
    4,959
    
    
    
    2,389Accumulated other comprehensive income
    
    
    95
    
    
    
    96Total National American University Holdings, Inc. stockholders equity
    
    
    55,223
    
    
    
    21,652Non-controlling interest
    
    
    (276
    )
    
    
    (295
    )Total equity
    
    
    54,947
    
    
    
    21,357TOTAL
    
    $
    71,962
    
    
    $
    47,286
   -3-




---



##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 FOR THE SIX MONTHS AND THREE MONTHS ENDED NOVEMBER 30, 2010 AND
 NOVEMBER 30, 2009
 (In thousands except share and per share data)
 Six Months Ended
    
    
    Three Months EndedNovember 30,
    
    
    November 30,2010
    
    
    2009
    
    
    2010
    
    
    2009REVENUE:Academic revenue
    
    $
    47,080
    
    
    $
    37,336
    
    
    $
    25,822
    
    
    $
    21,463Auxiliary revenue
    
    
    3,213
    
    
    
    2,644
    
    
    
    1,766
    
    
    
    1,504Rental income  apartments
    
    
    495
    
    
    
    483
    
    
    
    252
    
    
    
    232Condominium sales
    
    
    224
    
    
    
    238
    
    
    
    0
    
    
    
    238Total revenue
    
    
    51,012
    
    
    
    40,701
    
    
    
    27,840
    
    
    
    23,437OPERATING EXPENSES:Cost of educational services
    
    
    10,782
    
    
    
    9,752
    
    
    
    5,543
    
    
    
    5,160Selling, general and administrative
    
    
    31,790
    
    
    
    21,196
    
    
    
    16,836
    
    
    
    11,202Auxiliary expense
    
    
    1,540
    
    
    
    1,036
    
    
    
    866
    
    
    
    610Cost of condominium sales
    
    
    193
    
    
    
    166
    
    
    
    0
    
    
    
    166Loss on disposition of property
    
    
    51
    
    
    
    0
    
    
    
    41
    
    
    
    0Total operating expenses
    
    
    44,356
    
    
    
    32,150
    
    
    
    23,286
    
    
    
    17,138OPERATING INCOME
    
    
    6,656
    
    
    
    8,551
    
    
    
    4,554
    
    
    
    6,299OTHER INCOME (EXPENSE):Interest income
    
    
    74
    
    
    
    119
    
    
    
    34
    
    
    
    33Interest expense
    
    
    0
    
    
    
    (315
    )
    
    
    0
    
    
    
    (158
    )Other income  net
    
    
    71
    
    
    
    48
    
    
    
    45
    
    
    
    24Total other income (expense)
    
    
    145
    
    
    
    (148
    )
    
    
    79
    
    
    
    (101
    )INCOME BEFORE INCOME TAXES
    
    
    6,801
    
    
    
    8,403
    
    
    
    4,633
    
    
    
    6,198INCOME TAX EXPENSE
    
    
    (2,696
    )
    
    
    (3,456
    )
    
    
    (1,876
    )
    
    
    (2,501
    )NET INCOME
    
    
    4,105
    
    
    
    4,947
    
    
    
    2,757
    
    
    
    3,697NET (INCOME) LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST
    
    
    (19
    )
    
    
    16
    
    
    
    (11
    )
    
    
    7NET INCOME ATTRIBUTABLE TO NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND
SUBSIDIARIES
    
    
    4,086
    
    
    
    4,963
    
    
    
    2,746
    
    
    
    3,704OTHER COMPREHENSIVE INCOME Unrealized gains (losses) on investments
    
    
    (1
    )
    
    
    9
    
    
    
    (17
    )
    
    
    22COMPREHENSIVE INCOME ATTRIBUTABLE TO NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
    
    $
    4,085
    
    
    $
    4,972
    
    
    $
    2,729
    
    
    $
    3,726
 The accompanying notes are an integral part of these condensed
consolidated financial statements.
    
    (continued)
  -4-




---



##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS AND THREE MONTHS ENDED NOVEMBER 30, 2010 AND
NOVEMBER 30, 2009
(In thousands except share and per share data)
 Six Months Ended
    
    
    Three Months EndedNovember 30,
    
    
    November 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Basic EPSClass ADistributed earnings
    
    $
    
    
    
    $
    17.30
    
    
    $
    
    
    
    $
    17.30Undistributed earnings
    
    $
    
    
    
    $
    30.23
    
    
    $
    
    
    
    $
    17.57Total
    
    $
    
    
    
    $
    47.53
    
    
    $
    
    
    
    $
    34.87CommonDistributed earnings
    
    $
    0.06
    
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    0.03Undistributed earnings
    
    $
    0.10
    
    
    $
    0.19
    
    
    $
    0.07
    
    
    $
    0.11Total
    
    $
    0.16
    
    
    $
    0.22
    
    
    $
    0.10
    
    
    $
    0.14Diluted EPSClass ADistributed earnings
    
    $
    
    
    
    $
    17.30
    
    
    $
    
    
    
    $
    17.30Undistributed earnings
    
    $
    
    
    
    $
    30.16
    
    
    $
    
    
    
    $
    17.49Total
    
    $
    
    
    
    $
    47.46
    
    
    $
    
    
    
    $
    34.79CommonDistributed earnings
    
    $
    0.06
    
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    0.03Undistributed earnings
    
    $
    0.09
    
    
    $
    0.19
    
    
    $
    0.07
    
    
    $
    0.10Total
    
    $
    0.15
    
    
    $
    0.22
    
    
    $
    0.10
    
    
    $
    0.13Weighted Average Shares
outstandingBasic EPSClass A
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    100,000Common
    
    
    26,242,653
    
    
    
    227,589
    
    
    
    26,242,653
    
    
    
    457,680Diluted EPSClass A
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    100,000Common
    
    
    26,975,616
    
    
    
    262,788
    
    
    
    26,814,921
    
    
    
    528,465
 The accompanying notes are an integral part of these
condensed consolidated financial statements.
    
    (concluded)
  -5-




---



##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 FOR THE SIX MONTHS ENDED NOVEMBER 30, 2010 AND NOVEMBER 30, 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
    )
    
    $
    4,892Recapitalization 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
    
    
    
    (3,345
    )
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (3,345
    )Contributed capital from non-controlling interest holders
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    685
    
    
    
    685Dividends declared
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (1,896
    )
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (1,896
    )Comprehensive income:Net income (loss)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    4,963
    
    
    
    0
    
    
    
    0
    
    
    
    (16
    )
    
    
    4,947Unrealized gain on investments
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    9
    
    
    
    0
    
    
    
    0
    
    
    
    9Balance  November 30, 2009
    
    $
    0
    
    
    $
    1
    
    
    $
    17,679
    
    
    $
    10,318
    
    
    $
    118
    
    
    $
    0
    
    
    $
    (315
    )
    
    $
    27,801Balance  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 $1,578
    
    
    0
    
    
    
    1
    
    
    
    30,498
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    30,499Share based compensation expense
    
    
    0
    
    
    
    0
    
    
    
    503
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    503Dividends declared
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (1,516
    )
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (1,516
    )Comprehensive income:Net income
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    4,086
    
    
    
    0
    
    
    
    0
    
    
    
    19
    
    
    
    4,105Unrealized loss on investments
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (1
    )
    
    
    0
    
    
    
    0
    
    
    
    (1
    )Balance  November 30,2010
    
    $
    0
    
    
    $
    3
    
    
    $
    50,166
    
    
    $
    4,959
    
    
    $
    95
    
    
    $
    0
    
    
    $
    (276
    )
    
    $
    54,947
   -6-




---



##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR
THE SIX MONTHS ENDED NOVEMBER 30, 2010 AND NOVEMBER 30, 2009
 (In thousands except share and per share data)
 Six Months EndedNovember 30,
    
    
    November 30,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net Income
    
    $
    4,105
    
    
    $
    4,947Adjustments to reconcile net income to net cash flows
provided by operating activities:Depreciation and amortization
    
    
    1,328
    
    
    
    1,103Loss on disposition of property and equipment
    
    
    51
    
    
    
    0Provision for uncollectable tuition
    
    
    1,723
    
    
    
    1,057Noncash compensation expense
    
    
    503
    
    
    
    0Deferred income taxes
    
    
    152
    
    
    
    (94
    )Changes in assets and liabilities:Accounts and other receivables
    
    
    (4,750
    )
    
    
    (4,674
    )Student notes
    
    
    (171
    )
    
    
    4Bookstore inventory
    
    
    4
    
    
    
    (83
    )Prepaid and other current assets
    
    
    (30
    )
    
    
    10Condominium inventories
    
    
    194
    
    
    
    166Accounts payable
    
    
    (763
    )
    
    
    1,476Deferred income
    
    
    46
    
    
    
    132Other long-term liabilities
    
    
    (86
    )
    
    
    42Income tax receivable/payable
    
    
    321
    
    
    
    1,003Accrued and other liabilities
    
    
    (281
    )
    
    
    (921
    )Net cash flows provided by operating activities
    
    
    2,346
    
    
    
    4,168CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of investments
    
    
    (2
    )
    
    
    (175
    )Proceeds from sale of investments
    
    
    3,997
    
    
    
    1,319Purchases of property and equipment
    
    
    (2,570
    )
    
    
    (943
    )Proceeds from sale property and equipment
    
    
    22
    
    
    
    0Course development
    
    
    (217
    )
    
    
    (155
    )Other
    
    
    (34
    )
    
    
    7Net cash flows provided by investing activities
    
    
    1,196
    
    
    
    53CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings of long-term debt
    
    
    0
    
    
    
    44Repayments of long-term debt
    
    
    0
    
    
    
    (2,299
    )Repayments of lines of credit
    
    
    0
    
    
    
    (170
    )Contributed capital by non-controlling interest members
    
    
    0
    
    
    
    685Cash received in reverse merger
    
    
    0
    
    
    
    22,092Cash paid for merger costs
    
    
    0
    
    
    
    (1,444
    )Issuance of common stock
    
    
    32,077
    
    
    
    0Cash paid for stock issuance
    
    
    (640
    )
    
    
    0Dividends paid
    
    
    (11,810
    )
    
    
    0Net cash flows provided by financing activities
    
    
    19,627
    
    
    
    18,908
 The accompanying notes are an integral part of these condensed
consolidated financial statements.
    
    (Continued)
  -7-




---



##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC.
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2010 AND NOVEMBER 30, 2009
(In thousands except share and per share data)
 Six months endedNovember 30,
    
    
    November 30,2010
    
    
    2009NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    $
    23,169
    
    
    $
    23,129CASH AND CASH EQUIVALENTS  Beginning of year
    
    
    8,695
    
    
    
    3,508CASH AND CASH EQUIVALENTS  End of period
    
    $
    31,864
    
    
    $
    26,637SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest during the six months ended November
30, 2010 and November 30, 2009 respectively
    
    $
    0
    
    
    $
    316Cash paid for income taxes
    
    $
    2,223
    
    
    $
    2,727Dividends declared at November 30, 2010 and November 30, 2009
    
    $
    822
    
    
    $
    1,896
 The accompanying notes are an integral part of these condensed
consolidated financial statements.
    
    (Concluded)
  -8-




---



##### Table of Contents



NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED NOVEMBER 30, 2010 AND NOVEMBER 30, 2009
(Dollar amounts, except share and per share data, in thousands)
 1.
    
    BASIS OF PRESENTATION
   Estimates
 2.
    
    NATURE OF OPERATIONS
    -9-




---



##### Table of Contents



3.
    
    RECLASSIFICATION
  4.
    
    EARNINGS PER SHARE
  For the six months ended
    
    
    For the three months endedNovember 30
    
    
    November 302010
    
    
    2009
    
    
    2010
    
    
    2009Numerator:Net Income
    
    $
    4,086
    
    
    $
    4,963
    
    
    $
    2,746
    
    
    $
    3,704Distributed Earnings (DE)
    
    
    1,516
    
    
    
    1,896
    
    
    
    791
    
    
    
    1,896Undistributed Earnings (UE)
    
    
    2,570
    
    
    
    3,067
    
    
    
    1,955
    
    
    
    1,808UE attributable to Class A  basic
    
    
    
    
    
    
    3,023
    
    
    
    
    
    
    
    1,757UE attributable to Common  basic
    
    
    2,570
    
    
    
    44
    
    
    
    1,955
    
    
    
    51DE attributable to Class A  basic
    
    
    
    
    
    
    1,730
    
    
    
    
    
    
    
    1,730DE attributable to Common  basic
    
    
    1,516
    
    
    
    166
    
    
    
    791
    
    
    
    166
  -10-




---



##### Table of Contents



For the six months ended
    
    
    For the three months endedNovember 30
    
    
    November 302010
    
    
    2009
    
    
    2010
    
    
    2009Denominator:Class A shares
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    100,000Weighted average shares
outstanding used to compute basic
net income per common share
    
    
    26,242,653
    
    
    
    227,589
    
    
    
    26,242,653
    
    
    
    457,680Incremental shares issuable upon
the assumed exercise of
restricted shares
    
    
    49,705
    
    
    
    
    
    
    
    44,718
    
    
    
    Incremental shares issuable upon
the assumed exercise of warrants
    
    
    683,258
    
    
    
    35,199
    
    
    
    527,550
    
    
    
    70,785Common Shares used to compute
diluted net income per share
    
    
    26,975,616
    
    
    
    262,788
    
    
    
    26,814,921
    
    
    
    528,465Basic net income per Class A share
    
    
    
    
    
    
    47.53
    
    
    
    
    
    
    
    34.87Basic net income per common share
    
    
    0.16
    
    
    
    0.22
    
    
    
    0.10
    
    
    
    0.14Diluted net income per Class A
share
    
    
    
    
    
    
    47.46
    
    
    
    
    
    
    
    34.79Diluted net income per common
share
    
    
    0.15
    
    
    
    0.22
    
    
    
    0.10
    
    
    
    0.13
  5.
    
    RECENTLY ADOPTED AND NEW ACCOUNTING PRONOUNCEMENTS
 Consolidation
 Fair Value Measurement and
Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.
  -11-




---



##### Table of Contents



6.
    
    STOCKHOLDERS EQUITY
    Stock-Based Compensation
  Weighted Average Grant DateRestricted Shares Outstanding
    
    Shares
    
    
    Fair ValueBalance, May 31, 2010
    
    
    110,333
    
    
    $
    8.64Granted RSUs
    
    
    53,000
    
    
    
    5.52Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Restricted Stock and RSU
Outstanding, November 30, 2010
    
    
    163,333
    
    
    $
    7.63
   -12-




---



##### Table of Contents



Stock Options
  November 30, 2010Expected volatility
    
    
    45.59
    %Expected dividend yield
    
    
    1.20
    %Expected life (term)

        5.75 yearsRisk-free interest rate
    
    
    0.50
    %Exercise price
    
    $
    9.35
  Weighted-Average
    
    
    Weighted-AverageExercise
    
    
    Remaining
    
    
    Aggregate IntrinsicShares
    
    
    Price
    
    
    Contractual Term
    
    
    Value(in years)Balance at June 1, 2010
    
    
    0
    
    
    $
    n/aGranted
    
    
    110,000
    
    
    
    9.35Forfeited/cancelled
    
    
    0
    
    
    
    n/aExpired
    
    
    0
    
    
    
    n/aExercised
    
    
    0
    
    
    
    n/aBalance at November 30, 2010
    
    
    110,000
    
    
    $
    9.35
    
    
    
    9.5
    
    
    $
    0
   -13-




---



##### Table of Contents



Dividends
  7.
    
    INCOME TAXES
  8.
    
    COMMITMENTS AND CONTINGENCIES
    9.
    
    CONDOMINIUM PROJECT
   -14-




---



##### Table of Contents



10.
    
    FAIR VALUE MEASUREMENTS
  Level 1
 Level 2 
 Level 3 
  QuotedPrices in
    
    
    OtherActive
    
    
    ObservableMarkets
    
    
    Inputs
    
    
    Unobservable(Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)
    
    
    Fair ValueNovember 30, 2010InvestmentsCDs and money market accounts
    
    $
    1,594
    
    
    $
    414
    
    
    $
    
    
    
    $
    2,008US treasury bills and notes
    
    
    6,457
    
    
    
    
    
    
    
    
    
    
    
    6,457Total assets at fair value
    
    $
    8,051
    
    
    $
    414
    
    
    $
    
    
    
    $
    8,465May 31, 2010InvestmentsCDs and money market accounts
    
    $
    1,547
    
    
    $
    411
    
    
    $
    
    
    
    $
    1,958US treasury bills and notes
    
    
    10,456
    
    
    
    
    
    
    
    
    
    
    
    10,456Total assets at fair value
    
    $
    12,003
    
    
    $
    411
    
    
    $
    
    
    
    $
    12,414
  -15-




---



##### Table of Contents



11.
    
    SEGMENT REPORTING
      -16-




---



##### Table of Contents



Six Months Ended
    
    
    Six Months EndedNovember 30, 2010
    
    
    November 30, 2009Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedNAU
    
    
    Other
    
    
    Total
    
    
    NAU
    
    
    Other
    
    
    TotalRevenue:Academic revenue
    
    $
    47,080
    
    
    $
    0
    
    
    $
    47,080
    
    
    $
    37,336
    
    
    $
    0
    
    
    $
    37,336Auxiliary revenue
    
    
    3,213
    
    
    
    0
    
    
    
    3,213
    
    
    
    2,644
    
    
    
    0
    
    
    
    2,644Rental income  apartments
    
    
    0
    
    
    
    495
    
    
    
    495
    
    
    
    0
    
    
    
    483
    
    
    
    483Condominium sales
    
    
    0
    
    
    
    224
    
    
    
    224
    
    
    
    0
    
    
    
    238
    
    
    
    238Total revenue
    
    
    50,293
    
    
    
    719
    
    
    
    51,012
    
    
    
    39,980
    
    
    
    721
    
    
    
    40,701Operating expenses:Cost of educational services (1)
    
    
    10,782
    
    
    
    0
    
    
    
    10,782
    
    
    
    9,752
    
    
    
    0
    
    
    
    9,752Selling, general and administrative (1)
    
    
    30,874
    
    
    
    916
    
    
    
    31,790
    
    
    
    20,374
    
    
    
    822
    
    
    
    21,196Auxiliary expense
    
    
    1,540
    
    
    
    0
    
    
    
    1,540
    
    
    
    1,036
    
    
    
    0
    
    
    
    1,036Cost of condominium sales
    
    
    0
    
    
    
    193
    
    
    
    193
    
    
    
    0
    
    
    
    166
    
    
    
    166Loss on disposition of property
    
    
    51
    
    
    
    0
    
    
    
    51
    
    
    
    0
    
    
    
    0
    
    
    
    0Total operating expenses
    
    
    43,247
    
    
    
    1,109
    
    
    
    44,356
    
    
    
    31,162
    
    
    
    988
    
    
    
    32,150Income (loss) from operations
    
    
    7,046
    
    
    
    (390
    )
    
    
    6,656
    
    
    
    8,818
    
    
    
    (267
    )
    
    
    8,551Other income (expense):Interest income
    
    
    74
    
    
    
    0
    
    
    
    74
    
    
    
    119
    
    
    
    0
    
    
    
    119Interest expense (2)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (81
    )
    
    
    (234
    )
    
    
    (315
    )Other income  net
    
    
    0
    
    
    
    71
    
    
    
    71
    
    
    
    0
    
    
    
    48
    
    
    
    48Total other income (expense)
    
    
    74
    
    
    
    71
    
    
    
    145
    
    
    
    38
    
    
    
    (186
    )
    
    
    (148
    )Income (loss) before taxes
    
    $
    7,120
    
    
    $
    (319
    )
    
    $
    6,801
    
    
    $
    8,856
    
    
    $
    (453
    )
    
    $
    8,403
 (1)
    
    As discussed in Note 3, $2,367 of rent expense has been reclassified in FY 2010 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 FY 2010 has been restated to properly reflect the entire balance within the NAU segment.(2)
    
    An error in the allocation of $25 of interest expense to the NAU operating segment has been
corrected to present the interest expense in the Other operating segment in FY 2010. Six Months Ended
    
    
    Year EndedNovember 30, 2010
    
    
    May 31, 2010Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedNAU
    
    
    Other
    
    
    Total
    
    
    NAU
    
    
    Other
    
    
    TotalTotal assets
    
    $
    53,939
    
    
    $
    16,902
    
    
    $
    70,841
    
    
    $
    33,085
    
    
    $
    14,201
    
    
    $
    47,286
  -17-




---



##### Table of Contents



Three Months Ended
    
    
    Three Months EndedNovember 30, 2010
    
    
    November 30, 2009Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedNAU
    
    
    Other
    
    
    Total
    
    
    NAU
    
    
    Other
    
    
    TotalRevenue:Academic revenue
    
    $
    25,822
    
    
    $
    0
    
    
    $
    25,822
    
    
    $
    21,463
    
    
    $
    0
    
    
    $
    21,463Auxiliary revenue
    
    
    1,766
    
    
    
    0
    
    
    
    1,766
    
    
    
    1,504
    
    
    
    0
    
    
    
    1,504Rental income  apartments
    
    
    0
    
    
    
    252
    
    
    
    252
    
    
    
    0
    
    
    
    232
    
    
    
    232Condominium sales
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    238
    
    
    
    238Total revenue
    
    
    27,588
    
    
    
    252
    
    
    
    27,840
    
    
    
    22,967
    
    
    
    470
    
    
    
    23,437Operating expenses:Cost of educational services (1)
    
    
    5,543
    
    
    
    0
    
    
    
    5,543
    
    
    
    5,160
    
    
    
    0
    
    
    
    5,160Selling, general and administrative (1)
    
    
    16,329
    
    
    
    507
    
    
    
    16,836
    
    
    
    10,790
    
    
    
    412
    
    
    
    11,202Auxiliary expense
    
    
    866
    
    
    
    0
    
    
    
    866
    
    
    
    610
    
    
    
    0
    
    
    
    610Cost of condominium sales
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    166
    
    
    
    166Loss on disposition of property
    
    
    41
    
    
    
    0
    
    
    
    41
    
    
    
    0
    
    
    
    0
    
    
    
    0Total operating expenses
    
    
    22,779
    
    
    
    507
    
    
    
    23,286
    
    
    
    16,560
    
    
    
    578
    
    
    
    17,138Income (loss) from operations
    
    
    4,809
    
    
    
    (255
    )
    
    
    4,554
    
    
    
    6,407
    
    
    
    (108
    )
    
    
    6,299Other income (expense):Interest income
    
    
    34
    
    
    
    0
    
    
    
    34
    
    
    
    33
    
    
    
    0
    
    
    
    33Interest expense (2)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (35
    )
    
    
    (123
    )
    
    
    (158
    )Other income  net
    
    
    0
    
    
    
    45
    
    
    
    45
    
    
    
    0
    
    
    
    24
    
    
    
    24Total other income (expense)
    
    
    34
    
    
    
    45
    
    
    
    79
    
    
    
    (2
    )
    
    
    (99
    )
    
    
    (101
    )Income (loss) before taxes
    
    $
    4,843
    
    
    $
    (210
    )
    
    $
    4,633
    
    
    $
    6,405
    
    
    $
    (207
    )
    
    $
    6,198
 (1)
    
    As discussed in Note 3, $1,182 of rent expense has been reclassified in FY2010 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 FY2010 has been restated to properly reflect the entire blaance within the NAU segment.(2)
    
    An error in the allocation of $12 of interest expense to the NAU operating segment has been
corrected to present the interest expense in the Other operating segment in FY2010.  -18-




---



##### Table of Contents



12.
    
    SUBSEQUENT EVENTS
   -19-




---



##### 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
     -20-




---



##### 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.
     -21-




---



##### Table of Contents



November 30, 2010
    
    
    November 30, 2009
    
    
    % Growth for
same quarter(Fall 10 Qtr)
    
    
    (Fall 09 Qtr)
    
    
    over prior yearNumber of Students
    
    
    Number of StudentsGraduate
    
    
    415
    
    
    
    305
    
    
    
    36.1
    %Undergraduate and Diploma
    
    
    9,228
    
    
    
    7,468
    
    
    
    23.6
    %Total
    
    
    9,643
    
    
    
    7,773
    
    
    
    24.1
    %On-Campus
    
    
    3,854
    
    
    
    3,505
    
    
    
    10.0
    %Online
    
    
    4,198
    
    
    
    3,054
    
    
    
    37.5
    %Hybrid
    
    
    1,591
    
    
    
    1,214
    
    
    
    31.1
    %Total
    
    
    9,643
    
    
    
    7,773
    
    
    
    24.1
    %
   Expenses.
  -22-




---



##### Table of Contents



Factors affecting comparability
  Introduction of new programs and specializations.
 Introduction of new physical locations.
 Public company expenses.
 Stock-based compensation.
 Seasonality.
  -23-




---



##### Table of Contents



Department of Education Rulemaking
  Incentive compensation.
  qui tam
  -24-




---



##### Table of Contents



State Authorization.
 
    
    the state establishes the institution by name as an educational institution through
a charter, statute, constitutional provision or other action issued by an appropriate
state agency or entity to operate educational programs beyond secondary education,
including programs leading to a degree or certificate; or
 
    
    the institution complies with any applicable state approval or licensure
requirements, except that the state may exempt the institution from any such
requirement based on (1) the institutions accreditation by one or more accrediting
agencies recognized by the Secretary of Education or (2) the institution being in
operation for at least 20 years.
    -25-




---



##### Table of Contents



Misrepresentation. qui tam
 Gainful Employment.
  Additional Final Regulations.
  -26-




---



##### Table of Contents



Results of Operations  Six Months Ended November 30, 2010 Compared to Six Months Ended November
30, 2009
 National American University Holdings, Inc.
  Six Months Ended
    
    
    Six Months EndedNovember 30, 2010
    
    
    November 30, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    21.1
    
    
    
    24.0Selling, general and administrative
    
    
    62.3
    
    
    
    52.1Auxiliary expense
    
    
    3.0
    
    
    
    2.5Cost of condominium sales
    
    
    0.4
    
    
    
    0.4Loss on disposition of property
    
    
    0.1
    
    
    
    0.0Total operating expenses
    
    
    86.9
    
    
    
    79.0Operating income
    
    
    13.1
    
    
    
    21.0Interest expense
    
    
    0.0
    
    
    
    (0.8
    )Interest income
    
    
    0.1
    
    
    
    0.3Other income
    
    
    0.1
    
    
    
    0.1Income before income taxes
    
    
    13.3
    
    
    
    20.6Income tax expense
    
    
    (5.3
    )
    
    
    (8.5
    )Net income attributable to non controlling interest
    
    
    0.0
    
    
    
    0.0Net income attributable to the Company
    
    
    8.0
    %
    
    
    12.2
    %
   -27-




---



##### Table of Contents



NAU
  Six Months Ended
    
    
    Six Months EndedNovember 30, 2010
    
    
    November 30, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    21.4
    
    
    
    24.4Selling, general and administrative
    
    
    61.4
    
    
    
    51.0Auxiliary expense
    
    
    3.1
    
    
    
    2.6Cost of condominium sales
    
    
    0.0
    
    
    
    0.0Loss on disposition of property
    
    
    0.1
    
    
    
    0.0Total operating expenses
    
    
    86.0
    
    
    
    77.9Operating income
    
    
    14.0
    
    
    
    22.1Interest expense
    
    
    0.0
    
    
    
    (0.2
    )Interest income
    
    
    0.2
    
    
    
    0.3Other income
    
    
    0.0
    
    
    
    0.0Income before non-controlling interest and taxes
    
    
    14.2
    %
    
    
    22.2
    %
  -28-




---



##### Table of Contents



Total revenue .
  Cost of educational services .
  Q1 - Ended
    
    
    Q2 - EndedAugust 31,
    
    
    November 30,
    
    
    6 month2009
    
    
    2009
    
    
    TotalReclassification of facilities expenses
    
    $
    1,185
    
    
    $
    1,182
    
    
    $
    2,367
  -29-




---



##### Table of Contents



Selling, general and administrative expenses
  Auxiliary
 Income before non-controlling interest and taxes .
  -30-




---



##### Table of Contents



Other
  Six Months Ended
    
    
    Six Months EndedNovember 30, 2010
    
    
    November 30, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    0.0
    
    
    
    0.0Selling, general and administrative
    
    
    127.4
    
    
    
    114.0Auxiliary expense
    
    
    0.0
    
    
    
    0.0Cost of condominium sales
    
    
    26.8
    
    
    
    23.0Total operating expenses
    
    
    154.2
    
    
    
    137.0Operating loss
    
    
    (54.2
    )
    
    
    (37.0
    )Interest expense
    
    
    0.0
    
    
    
    (32.5
    )Other income
    
    
    9.9
    
    
    
    6.7Loss before non-controlling interest and taxes
    
    
    (44.3)
    %
    
    
    (62.8
    )%
   -31-




---



##### Table of Contents



Results of Operations  Three Months Ended November 30, 2010 Compared to Three Months Ended
November 30, 2009
 National American University Holdings, Inc.
  Three Months Ended
    
    
    Three Months EndedNovember 30, 2010
    
    
    November 30, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    19.9
    
    
    
    22.0Selling, general and administrative
    
    
    60.5
    
    
    
    47.8Auxiliary expense
    
    
    3.1
    
    
    
    2.6Cost of condominium sales
    
    
    0.0
    
    
    
    0.7Loss on disposition of property
    
    
    0.1
    
    
    
    0.0Total operating expenses
    
    
    83.6
    
    
    
    73.1Operating income
    
    
    16.4
    
    
    
    26.9Interest expense
    
    
    0.0
    
    
    
    (0.7
    )Interest income
    
    
    0.1
    
    
    
    0.1Other income
    
    
    0.2
    
    
    
    0.1Income before income taxes
    
    
    16.7
    
    
    
    26.4Income tax expense
    
    
    (6.7
    )
    
    
    (10.7
    )Net income attributable to non controlling interest
    
    
    0.0
    
    
    
    0.0Net income attributable to the Company
    
    
    10.0
    %
    
    
    15.8
    %
   -32-




---



##### Table of Contents



NAU
  Three Months Ended
    
    
    Three Months EndedNovember 30, 2010
    
    
    November 30, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    20.1
    
    
    
    22.5Selling, general and administrative
    
    
    59.2
    
    
    
    47.0Auxiliary expense
    
    
    3.1
    
    
    
    2.7Cost of condominium sales
    
    
    0.0
    
    
    
    0.0Loss on disposition of property
    
    
    0.1
    
    
    
    0.0Total operating expenses
    
    
    82.5
    
    
    
    72.1Operating income
    
    
    17.5
    
    
    
    27.9Interest expense
    
    
    0.0
    
    
    
    (0.2
    )Interest income
    
    
    0.1
    
    
    
    0.1Other income
    
    
    0.0
    
    
    
    0.0Income before non-controlling interest
and taxes
    
    
    17.6
    %
    
    
    27.9
    %
 Total revenue
  Cost of educational services .
  -33-




---



##### Table of Contents



Selling, general and administrative expenses
  Auxiliary
 Income before non-controlling interest and taxes .
  -34-




---



##### Table of Contents



Other
  Three Months Ended
    
    
    Three Months EndedNovember 30, 2010
    
    
    November 30, 2009In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    0.0
    
    
    
    0.0Selling, general and administrative
    
    
    201.2
    
    
    
    87.7Auxiliary expense
    
    
    0.0
    
    
    
    0.0Cost of condominium sales
    
    
    0.0
    
    
    
    35.3Total operating expenses
    
    
    201.2
    
    
    
    123.0Operating income (loss)
    
    
    (101.2
    )
    
    
    (23.0
    )Interest expense
    
    
    0.0
    
    
    
    (26.2
    )Interest income
    
    
    0.0
    
    
    
    0.0Other income (expense)
    
    
    17.9
    
    
    
    5.1Loss before non-controlling interest and
taxes
    
    
    (83.3)
    %
    
    
    (44.0)
    %
  Liquidity and Capital Resources
 Liquidity .
  -35-




---



##### Table of Contents



Operating Activities .
 Investing Activities .
 Financing Activities .
 Off-Balance Sheet Arrangements
  Impact of Inflation
   -36-




---



##### 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.
   -37-




---



##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
    
 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
  -38-




---



##### Table of Contents



SIGNATURES
  National American University
Holdings, Inc.
(Registrant)Dated: January 7, 2011
    By:
    /s/ Ronald ShapeRonald L. Shape, Ed. D.Chief Executive Officer and
Chief Financial Officer  -39-




---



##### 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
  -40-