##### 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 February 28, 2011
 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




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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, 2011 and Audited Condensed Consolidated Balance Sheet as
of May 31, 2010Unaudited Condensed Consolidated Statements of Operations for
the nine months ended and three months ended February 28,
2011 and February 28, 2010Unaudited Condensed Consolidated Statements of Stockholders
Equity for the nine months ended February 28, 2011 and
February 28, 2010Unaudited Condensed Consolidated Statements of Cash Flows for
the nine months ended February 28, 2011 and February 28, 2010Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    9ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    21ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    39ITEM 4. CONTROLS AND PROCEDURES
    
    
    39PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    39ITEM 1A. RISK FACTORS
    
    
    40ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    40ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    41ITEM 4. RESERVED
    
    
    41ITEM 5. OTHER INFORMATION
    
    
    41ITEM 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, 2011 AND
AUDITED CONDENSED CONSOLIDATED BALANCE
SHEET AS OF MAY 31, 2010
(In thousands except share and per share data)
 February 28,
    
    
    May 31,2011
    
    
    2010ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    30,640
    
    
    $
    8,695Short term investments
    
    
    11,095
    
    
    
    11,109Student receivables  net of allowance of $268 and $203 at February
28, 2011 and
May 31, 2010, respectively
    
    
    2,408
    
    
    
    1,823Other receivables
    
    
    1,494
    
    
    
    952Bookstore inventory
    
    
    1,032
    
    
    
    920Deferred income taxes
    
    
    1,641
    
    
    
    1,574Prepaid and other current assets
    
    
    1,090
    
    
    
    1,759Total current assets
    
    
    49,400
    
    
    
    26,832Total Property and Equipment  Net
    
    
    19,550
    
    
    
    15,881OTHER ASSETS:Condominium inventory
    
    
    2,852
    
    
    
    3,046Land held for future development
    
    
    312
    
    
    
    312Course development  net of accumulated amortization of $1,350 and
$1,149 at
February 28, 2011 and May 31, 2010, respectively
    
    
    899
    
    
    
    768Other
    
    
    789
    
    
    
    4474,852
    
    
    
    4,573TOTAL
    
    $
    73,802
    
    
    $
    47,286LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    3,648
    
    
    $
    4,315Dividends payable
    
    
    828
    
    
    
    11,116Student accounts payable
    
    
    650
    
    
    
    322Deferred income
    
    
    470
    
    
    
    305Income tax payable
    
    
    1,043
    
    
    
    231Accrued and other liabilities
    
    
    5,345
    
    
    
    6,109Total current liabilities
    
    
    11,984
    
    
    
    22,398DEFERRED INCOME TAXES
    
    
    1,370
    
    
    
    1,151OTHER LONG-TERM LIABILITIES
    
    
    3,778
    
    
    
    2,380COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common stock (50,000,000 authorized; 27,438,040 issued and 26,438,040
outstanding as of
February 28, 2011; 21,819,653 issued and outstanding as of May 31,
2010)
    
    
    3
    
    
    
    2Additional paid-in capital
    
    
    56,337
    
    
    
    19,165Retained earnings
    
    
    8,032
    
    
    
    2,389Treasury stock, at cost (1,000,000 shares at February 28, 2011)
    
    
    (7,505
    )
    
    
    0Accumulated other comprehensive income
    
    
    67
    
    
    
    96Total National American University Holdings, Inc. stockholders equity
    
    
    56,934
    
    
    
    21,652Non-controlling interest
    
    
    (264
    )
    
    
    (295
    )Total equity
    
    
    56,670
    
    
    
    21,357TOTAL
    
    $
    73,802
    
    
    $
    47,286
   -3-




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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, 2011 AND FEBRUARY 28, 2010
(In thousands except share and per share data)
 Nine Months Ended
    
    
    Three Months EndedFebruary 28,
    
    
    February 28,2011
    
    
    2010
    
    
    2011
    
    
    2010REVENUE:Academic revenue
    
    $
    73,199
    
    
    $
    59,021
    
    
    $
    26,119
    
    
    $
    21,685Auxiliary revenue
    
    
    4,583
    
    
    
    3,893
    
    
    
    1,370
    
    
    
    1,249Rental income  apartments
    
    
    739
    
    
    
    703
    
    
    
    244
    
    
    
    220Condominium sales
    
    
    224
    
    
    
    694
    
    
    
    0
    
    
    
    456Total revenue
    
    
    78,745
    
    
    
    64,311
    
    
    
    27,733
    
    
    
    23,610OPERATING EXPENSES:Cost of educational services
    
    
    16,391
    
    
    
    15,180
    
    
    
    5,609
    
    
    
    5,428Selling, general and administrative
    
    
    47,062
    
    
    
    33,819
    
    
    
    15,272
    
    
    
    12,623Auxiliary expense
    
    
    2,119
    
    
    
    1,454
    
    
    
    579
    
    
    
    418Cost of condominium sales
    
    
    193
    
    
    
    564
    
    
    
    0
    
    
    
    398Loss on disposition of property
    
    
    70
    
    
    
    0
    
    
    
    19
    
    
    
    0Total operating expenses
    
    
    65,835
    
    
    
    51,017
    
    
    
    21,479
    
    
    
    18,867OPERATING INCOME
    
    
    12,910
    
    
    
    13,294
    
    
    
    6,254
    
    
    
    4,743OTHER INCOME (EXPENSE):Interest income
    
    
    112
    
    
    
    160
    
    
    
    38
    
    
    
    41Interest expense
    
    
    0
    
    
    
    (440
    )
    
    
    0
    
    
    
    (125
    )Other income  net
    
    
    96
    
    
    
    176
    
    
    
    25
    
    
    
    128Total other income (expense)
    
    
    208
    
    
    
    (104
    )
    
    
    63
    
    
    
    44INCOME BEFORE INCOME TAXES
    
    
    13,118
    
    
    
    13,190
    
    
    
    6,317
    
    
    
    4,787INCOME TAX EXPENSE
    
    
    (5,134
    )
    
    
    (5,241
    )
    
    
    (2,438
    )
    
    
    (1,785
    )NET INCOME
    
    
    7,984
    
    
    
    7,949
    
    
    
    3,879
    
    
    
    3,002NET INCOME ATTRIBUTABLE TO
NON-CONTROLLING INTEREST
    
    
    (31
    )
    
    
    (14
    )
    
    
    (12
    )
    
    
    (30
    )NET INCOME ATTRIBUTABLE TO NATIONAL
AMERICAN UNIVERSITY HOLDINGS, INC. AND
SUBSIDIARIES
    
    
    7,953
    
    
    
    7,935
    
    
    
    3,867
    
    
    
    2,972OTHER COMPREHENSIVE INCOME Unrealized losses on investments
    
    
    (29
    )
    
    
    (14
    )
    
    
    (28
    )
    
    
    (23
    )COMPREHENSIVE INCOME ATTRIBUTABLE TO NATIONAL AMERICAN
UNIVERSITY HOLDINGS, INC.
    
    $
    7,924
    
    
    $
    7,921
    
    
    $
    3,839
    
    
    $
    2,949
    -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, 2011 AND 
FEBRUARY 28, 2010  (In thousands except share and per share data)
 Nine Months Ended
    
    
    Three Months EndedFebruary 28,
    
    
    February 28,2011
    
    
    2010
    
    
    2011
    
    
    2010Basic EPSClass ADistributed earnings
    
    $
    
    
    
    $
    34.61
    
    
    $
    
    
    
    $
    17.30Undistributed earnings
    
    $
    
    
    
    $
    37.17
    
    
    $
    
    
    
    $
    8.16Total
    
    $
    
    
    
    $
    71.78
    
    
    $
    
    
    
    $
    25.46CommonDistributed earnings
    
    $
    0.09
    
    
    $
    0.06
    
    
    $
    0.03
    
    
    $
    0.03Undistributed earnings
    
    $
    0.21
    
    
    $
    0.24
    
    
    $
    0.12
    
    
    $
    0.05Total
    
    $
    0.30
    
    
    $
    0.30
    
    
    $
    0.15
    
    
    $
    0.08Diluted EPSClass ADistributed earnings
    
    $
    
    
    
    $
    34.61
    
    
    $
    
    
    
    $
    17.30Undistributed earnings
    
    $
    
    
    
    $
    36.19
    
    
    $
    
    
    
    $
    7.66Total
    
    $
    
    
    
    $
    70.80
    
    
    $
    
    
    
    $
    24.96CommonDistributed earnings
    
    $
    0.09
    
    
    $
    0.06
    
    
    $
    0.03
    
    
    $
    0.03Undistributed earnings
    
    $
    0.21
    
    
    $
    0.23
    
    
    $
    0.11
    
    
    $
    0.05Total
    
    $
    0.30
    
    
    $
    0.29
    
    
    $
    0.14
    
    
    $
    0.08Weighted Average Shares
outstandingBasic EPSClass A
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    100,000Common
    
    
    26,202,893
    
    
    
    1,801,551
    
    
    
    26,122,047
    
    
    
    5,018,605Diluted EPSClass A
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    100,000Common
    
    
    26,956,077
    
    
    
    2,276,277
    
    
    
    26,846,982
    
    
    
    6,370,298
    -5-




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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, 2011 AND FEBRUARY 28, 2010
(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
    
    
    
    (3,359
    )
    
    
    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
    )
    
    $
    29,505Balance  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
    
    
    
    30,499Conversion of warrants to
1,068,687 shares common
stock
    
    
    0
    
    
    
    0
    
    
    
    5,876
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    5,876Purchase of 1,000,000
shares common stock for the treasury
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (7,505
    )
    
    
    0
    
    
    
    (7,505
    )Share based
compensation expense
    
    
    0
    
    
    
    0
    
    
    
    798
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    798Dividends declared
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (2,310
    )
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (2,310
    )Comprehensive income:Net income
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    7,953
    
    
    
    0
    
    
    
    0
    
    
    
    31
    
    
    
    7,984Unrealized loss on
investments
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (29
    )
    
    
    0
    
    
    
    0
    
    
    
    (29
    )Balance  February 28,
2011
    
    $
    0
    
    
    $
    3
    
    
    $
    56,337
    
    
    $
    8,032
    
    
    $
    67
    
    
    $
    (7,505
    )
    
    $
    (264
    )
    
    $
    56,670
   -6-




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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, 2011 AND FEBRUARY 28, 2010
(In thousands except share and per share data)
 Nine Months EndedFebruary 28,
    
    
    February 28,2011
    
    
    2010CASH FLOWS FROM OPERATING ACTIVITIES:Net Income
    
    $
    7,984
    
    
    $
    7,949Adjustments to reconcile net income to net cash flows provided
by operating activities:Depreciation and amortization
    
    
    2,067
    
    
    
    1,685(Gain)loss on disposition of property and equipment
    
    
    70
    
    
    
    (104
    )Provision for uncollectable tuition
    
    
    2,447
    
    
    
    1,429Noncash compensation expense
    
    
    798
    
    
    
    637Deferred income taxes
    
    
    152
    
    
    
    (94
    )Changes in assets and liabilities:Accounts and other receivables
    
    
    (3,574
    )
    
    
    (4,257
    )Student notes
    
    
    (300
    )
    
    
    (9
    )Bookstore inventory
    
    
    (112
    )
    
    
    (198
    )Prepaid and other current assets
    
    
    (269
    )
    
    
    (320
    )Condominium inventories
    
    
    194
    
    
    
    564Accounts payable
    
    
    (478
    )
    
    
    (12
    )Deferred income
    
    
    165
    
    
    
    840Other long-term liabilities
    
    
    535
    
    
    
    102Income tax receivable/payable
    
    
    812
    
    
    
    (545
    )Accrued and other liabilities
    
    
    (764
    )
    
    
    887Net cash flows provided by operating activities
    
    
    9,727
    
    
    
    8,554CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of investments
    
    
    (15,998
    )
    
    
    (16,396
    )Proceeds from sale of investments
    
    
    15,983
    
    
    
    1,615Purchases of property and equipment
    
    
    (4,604
    )
    
    
    (2,409
    )Proceeds from sale property and equipment
    
    
    1
    
    
    
    143Course development
    
    
    (332
    )
    
    
    (244
    )Other
    
    
    (42
    )
    
    
    (2
    )Net cash flows used in investing activities
    
    
    (4,992
    )
    
    
    (17,293
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repayments of lines of credit
    
    
    0
    
    
    
    (510
    )Repayments of long-term debt
    
    
    0
    
    
    
    (3,445
    )Contributed capital by non-controlling interest members
    
    
    0
    
    
    
    685Cash paid for treasury stock
    
    
    (7,505
    )
    
    
    0Cash received for warrants
    
    
    5,876
    
    
    
    0Issuance of common stock
    
    
    32,077
    
    
    
    0Cash paid for stock issuance
    
    
    (640
    )
    
    
    0Cash received in reverse merger
    
    
    0
    
    
    
    22,092Cash paid for merger costs
    
    
    0
    
    
    
    (3,359
    )Dividends paid
    
    
    (12,598
    )
    
    
    (1,868
    )Net cash flows provided by financing activities
    
    
    17,210
    
    
    
    13,595
    -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, 2011 AND FEBRUARY 28, 2010
(In thousands except share and per share data)
 Nine months endedFebruary 28,
    
    
    February 28,2011
    
    
    2010NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    $
    21,945
    
    
    $
    4,856CASH AND CASH EQUIVALENTS  Beginning of year
    
    
    8,695
    
    
    
    3,508CASH AND CASH EQUIVALENTS  End of period
    
    $
    30,640
    
    
    $
    8,364SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest during the nine months ended February
28, 2011
and February 28, 2010, respectively
    
    $
    0
    
    
    $
    430Tenant improvements paid by Lessor
    
    $
    1,121
    
    
    $
    0Cash paid for income taxes
    
    $
    4,169
    
    
    $
    3,333Dividends declared at February 28, 2011 and February 28, 2010
    
    $
    828
    
    
    $
    1,926
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NATIONAL AMERICAN UNIVERSITY HOLDINGS, INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts, except share and per share data, in thousands)
 1.
    
    BASIS OF PRESENTATION
 The accompanying unaudited condensed financial statements are presented on a consolidated
basis. The accompanying financial statements include the accounts of National American
University Holdings, Inc. (the Company), its subsidiary, Dlorah, Inc. (Dlorah), and its
divisions, National American University, and Fairway Hills. The accompanying unaudited
condensed consolidated financial statements have been prepared on a basis substantially
consistent with the Companys audited financial statements. These financial statements are
condensed and do not contain all disclosures required in annual financial statements.
Accordingly, these financial statements should be read in conjunction with the Companys annual
financial statements which were included in the Companys Form 10-K filed on August 18, 2010.
Furthermore, the results of operations and cash flows for the nine month periods ended February
28, 2011 and February 28, 2010, are not necessarily indicative of the results that may be
expected for the full year. These financial statements include consideration of subsequent
events through issuance. All intercompany transactions and balances have been eliminated.
 In the opinion of management, the accompanying condensed consolidated financial statements
contain all adjustments necessary for a fair presentation as prescribed by accounting principles
generally accepted in the United States (GAAP).
 Estimates The preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the amounts and disclosures reported in the
financial statements. On an ongoing basis, the Company evaluates the estimates and assumptions,
including those related to bad debts, income taxes, and certain accruals. Actual results could
differ from those estimates.
 2.
    
    NATURE OF OPERATIONS
 The Company, formerly known as Camden Learning Corporation, was incorporated in the State
of Delaware on April 10, 2007. The Company was a special purpose acquisition company formed to
serve as a vehicle for the acquisition of an operating business. On November 23, 2009, Dlorah
became a wholly-owned subsidiary of the Company (the Transaction), pursuant to an Agreement
and Plan of Reorganization between the Company and Dlorah. In connection with the Transaction,
the stockholders of Dlorah received approximately 77% of the equity of the Company, and Dlorah
was deemed to be the acquirer for accounting purposes. The Transaction has been accounted for
as a reverse merger accompanied by a recapitalization. As a result of the Transaction, the
historical results of Dlorah became the historical results of the Company. The accompanying
consolidated statements of operations for the nine months and three months ended February 28,
2010, and stockholders equity and cash flows for the nine months ended February 28, 2010 have
been updated to reflect the effects of the recapitalization on common stock, stockholders
equity accounts and earnings per share.
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The Companys common stock is listed on The Nasdaq Global Market. The Company owns and operates
National American University (NAU or the University). NAU is a regionally accredited,
proprietary, multi-campus institution of higher learning, offering Associate, Bachelors and
Masters degree programs in business-related disciplines, such as accounting, applied
management, business administration and information technology, and in healthcare-related
disciplines, such as nursing and
healthcare management. Courses are offered through educational sites, as well as online via the
Internet. Operations include educational sites located in Colorado, Kansas, Minnesota,
Missouri, Nebraska, New Mexico, Oklahoma, South Dakota and Texas, and distance learning
operations and central administration offices located in Rapid City, South Dakota. A substantial
portion of NAUs academic income is dependent upon federal student financial aid programs,
employer tuition assistance, online learning programs and contracts to provide instruction and
course materials to other educational institutions. To maintain eligibility for financial aid
programs, NAU must comply with Department of Education requirements, which include, among other
items, the maintenance of certain financial ratios.
 The Company, through its Fairway Hills real estate division, also manages apartment units and
develops and sells multi-family residential real estate in the Rapid City, South Dakota area.
 Approximately 93% and 92% of the Companys total revenues for the nine months ended February 28,
2011 and February 28, 2010, respectively, were derived from NAUs academic revenue.
Approximately 94% and 92% of the Companys total revenues for each of the three months ended
February 28, 2011 and 2010 were derived from NAUs academic revenue.
 3.
    
    RECLASSIFICATION
 Certain items have been reclassified within operating expenses in the three and nine months
ended February 28, 2010 statements of operations in order to conform with the current
presentation. Specifically, rent expense (which included rent, common area maintenance fees,
and property taxes) was reclassified from selling, general and administrative to cost of
education. The reclassification totaled $1,185 in the first quarter of fiscal year 2010, $1,182
in the second quarter of 2010, and $1,305 in the third quarter of 2010, for a total of $3,672
for the nine months ended February 28, 2010. There was no impact to operating income or net
income as previously reported.
 4.
    
    EARNINGS PER SHARE
 Basic earnings per share is computed by dividing net income available to common
stockholders by the weighted average number of shares of common stock outstanding during the
applicable period. Diluted earnings per share reflect the potential dilution that could occur
assuming vesting, conversion or exercise of all dilutive unexercised warrants and restricted
stock. As described in Note 6, the Company had one class of common stock outstanding as of
February 28, 2011. All issued and outstanding shares of the class A common stock were converted
to common stock on May 27, 2010.
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For the nine months ended
    
    
    For the three months endedFebruary 28,
    
    
    February 28,2011
    
    
    2010
    
    
    2011
    
    
    2010Numerator:Net Income Attributable to National American University Holdings, Inc.
    
    $
    7,953
    
    
    $
    7,935
    
    
    $
    3,867
    
    
    $
    2,972Distributed Earnings (DE)
    
    $
    2,309
    
    
    $
    3,792
    
    
    $
    793
    
    
    $
    1,896Undistributed Earnings (UE)
    
    $
    5,644
    
    
    $
    4,143
    
    
    $
    3,074
    
    
    $
    1,076UE attributable to Class A  basic
    
    $
    
    
    
    $
    3,717
    
    
    $
    
    
    
    $
    816UE attributable to Common  basic
    
    $
    5,644
    
    
    $
    426
    
    
    $
    3,074
    
    
    $
    260DE attributable to Class A  basic
    
    $
    
    
    
    $
    3,461
    
    
    $
    
    
    
    $
    1,730DE attributable to Common  basic
    
    $
    2,309
    
    
    $
    332
    
    
    $
    793
    
    
    $
    166Denominator:Class A Shares
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    100,000Weighted average shares outstanding used to compute
basic net income per common share
    
    
    26,202,893
    
    
    
    1,801,551
    
    
    
    26,122,047
    
    
    
    5,018,605Incremental shares issuable upon the assumed exercise
of restricted shares
    
    
    83,467
    
    
    
    68,636
    
    
    
    83,166
    
    
    
    68,636Incremental shares issuable upon the assumed exercise
of warrants
    
    
    669,717
    
    
    
    406,090
    
    
    
    641,769
    
    
    
    1,283,057Common shares used to compute diluted net income
per share
    
    
    26,956,077
    
    
    
    2,276,277
    
    
    
    26,846,982
    
    
    
    6,370,298Basic net income per Class A share
    
    $
    
    
    
    $
    71.78
    
    
    $
    
    
    
    $
    25.46Basic net income per common share
    
    $
    0.30
    
    
    $
    0.30
    
    
    $
    0.15
    
    
    $
    0.08Diluted net income per Class A share
    
    $
    
    
    
    $
    70.80
    
    
    $
    
    
    
    $
    24.96Diluted net income per common share
    
    $
    0.30
    
    
    $
    0.29
    
    
    $
    0.14
    
    
    $
    0.08
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For the nine months ended
    
    
    For the three months endedFebruary 28, 2010
    
    
    February 28, 2010Basic EPS
    
    As reported
    
    
    As corrected
    
    
    As reported
    
    
    As correctedClass ADistributed earnings
    
    $
    17.30
    
    
    
    17.30
    
    
    
    34.61
    
    
    $
    34.61Undistributed earnings
    
    $
    8.08
    
    
    
    8.16
    
    
    
    37.03
    
    
    $
    37.17Total
    
    $
    25.38
    
    
    $
    25.46
    
    
    $
    71.64
    
    
    $
    71.78CommonDistributed earnings
    
    $
    0.03
    
    
    
    0.03
    
    
    
    0.15
    
    
    $
    0.06Undistributed earnings
    
    $
    0.05
    
    
    
    0.05
    
    
    
    0.24
    
    
    $
    0.24Total
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.39
    
    
    $
    0.30Diluted EPSClass ADistributed earnings
    
    $
    17.30
    
    
    $
    17.30
    
    
    $
    34.61
    
    
    $
    34.61Undistributed earnings
    
    $
    7.59
    
    
    $
    7.66
    
    
    $
    36.03
    
    
    $
    36.19Total
    
    $
    24.89
    
    
    $
    24.96
    
    
    $
    70.64
    
    
    $
    70.80CommonDistributed earnings
    
    $
    0.02
    
    
    $
    0.03
    
    
    $
    0.12
    
    
    $
    0.06Undistributed earnings
    
    $
    0.05
    
    
    $
    0.05
    
    
    $
    0.23
    
    
    $
    0.23Total
    
    $
    0.07
    
    
    $
    0.08
    
    
    $
    0.35
    
    
    $
    0.29Weighted Average Shartes outstandingBasic EPSClass A
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000Common
    
    
    5,206,105
    
    
    
    5,018,605
    
    
    
    1,868,858
    
    
    
    1,801,551Diluted EPSClass A
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000Common
    
    
    6,557,798
    
    
    
    6,370,298
    
    
    
    2,354,081
    
    
    
    2,276,277
 5.
    
    RECENTLY ADOPTED AND NEW ACCOUNTING PRONOUNCEMENTS
 In June 2009, the Financial Accounting Standards Board (FASB) issued a new standard to
update FASB ASC Topic 810, Consolidation. This standard is intended to improve financial
reporting by enterprises involved with variable interest entities. This standard is effective as
of the beginning of each reporting entitys first annual reporting period that begins after
November 15, 2009, for interim periods within the first annual reporting period, and for interim
and annual reporting periods thereafter. This standard was adopted by the Company on June 1,
2010 and had no impact on its consolidated financial statements.
 In January 2010, the FASB issued Accounting Standards Update 2010-06 Fair Value Measurement and
Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.This guidance
provides for the following new required disclosures related to fair value measurements: 1) the
amounts of and reasons for significant transfers in and out of level one and level two inputs
and 2) separate presentation of purchases, sales, issuances, and settlements on a gross basis
rather than as one net number for level three reconciliations. The guidance also clarifies
existing disclosures as follows: 1) provide fair value measurement disclosures for each class of
assets and liabilities and 2) provide disclosures about the valuation techniques and inputs used
for both recurring and nonrecurring level two or level three inputs. The new disclosures and
clarifications of existing disclosures were effective for the Companys fourth quarter ended May
31, 2010. Disclosures about purchases, sales, issuances, and settlements in the roll forward of
activity for level three fair value measurements will be effective for the Companys fourth
quarter ended May 31, 2011. The Company has adopted this standard, but it did not have a
material effect on the Companys financial statements.
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6.
    
    STOCKHOLDERS EQUITY
 The authorized capital stock for the Company is 51,100,000 shares, consisting of (i)
50,000,000 shares of common stock, par value $0.0001, and (ii) 1,000,000 shares of preferred
stock, par value $0.0001, and (iii) 100,000 shares of class A common stock, par value $0.0001.
All shares of class A common stock were converted to common stock during the year ended May 31,
2010 at a rate of 157.3 shares of common stock for each share of class A common stock.
 Of the authorized shares, 27,438,040 shares of common stock were issued and 26,438,040 shares
were outstanding as of February 28, 2011. No shares of preferred stock were outstanding. On
January 31, 2011, the Companys Board of Directors authorized the repurchase of up to an
additional 1,000,000 shares, not to exceed $10,000, of the Companys outstanding common stock in
open market or privately negotiated transactions. The Board determined, among other things, that
the repurchase program would offset dilution from the exercise of existing warrants to purchase
shares of common stock. During the
third quarter fiscal 2011, NAUH repurchased 1,000,000 shares for $7,505. As of March 31, 2011,
there were zero remaining shares authorized to be repurchased.
 During the year ended May 31, 2010, the Company filed a registration statement on Form S-1 with
the Securities and Exchange Commission for the offer and sale of up to 7,000,000 shares of its
common stock (half coming from selling stockholders), plus 1,050,000 shares to cover
over-allotment. The sale of 7,000,000 shares closed on June 1, 2010, and the sale of the
1,050,000 over-allotment shares closed on June 5, 2010. Also, in connection with the
Transaction, the former Dlorah stockholders were issued, in the aggregate, warrants to purchase
up to 2,800,000 shares of common stock at $5.50 per share that will expire if not converted by
November 23, 2011. These warrants contain a cashless exercise feature. During February 2011,
portions of these warrants were converted to 1,068,387 shares of common stock for total
consideration of $5,876. The remaining warrants have not been exercised as of February 28,
2011.
 Stock-Based Compensation
 The following tables summarize activity under our 2009 Stock Option and Compensation Plan, which
allows for the granting of stock options, restricted stock and restricted stock units (RSUs).
 Weighted Average GrantRestricted Stock and RSUs Outstanding
    
    Shares
    
    
    Date Fair ValueBalance, May 31, 2010
    
    
    110,333
    
    
    $
    8.64Granted RSUs
    
    
    53,000
    
    
    
    5.52Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Restricted Stock and RSU Outstanding, February 28, 2011
    
    
    163,333
    
    
    $
    7.63
 The Company granted restricted stock awards in November 2009, December 2009, March 2010,
and April 2010 to promote the long-term interests of the Company and its stockholders by using
such awards as a means for attracting and retaining directors and key employees. The fair value
of restricted stock awards was calculated using the Companys stock price as of the associated
grant date and accrued ratably as compensation expense over the vesting period of the award.
The amounts recognized in compensation expense were $457 and $152, respectively for the nine
months and three months ended February 28, 2011. As of February 28, 2011 there was $369 of
total unrecognized compensation cost related to the restricted stock awards discussed above that
will be recognized over a period extending to May 31, 2012.
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During the quarter ended August 31, 2010, the company granted restricted stock units (RSUs)
that vest May 31, 2011 based on the performance metric of an earnings before interest and taxes
margin of 18% for the Company. The amounts recognized in compensation expense were $195 and $95,
respectively for the nine months and three months ended February 28, 2011. As of February 28,
2011 there was $97 of total unrecognized compensation cost related to the restricted stock units
discussed above that will be recognized over a period extending to May 31, 2011.
 Stock Options
 During the quarter ended August 31, 2010, the Company granted stock options that vest in
incremental installments of one-half per year commencing on the first anniversary of the date of
grant with a 10 year life. The amounts recognized in compensation expense were $145 and $48,
respectively for the nine months and three months ended February 28, 2011. The fair value of
the stock options used to compute stock-based compensation is the estimated present value at the
date of grant using the Black-Scholes
option pricing model. The weighted average fair values of options granted during the first
quarter of 2011 were $3.52 per share using the following weighted average assumptions for
grants:
 February 28, 2011Expected 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
    
    
    
    
    
    
    n/aGranted
    
    
    110,000
    
    
    
    9.35Forfeited / cancelled
    
    
    
    
    
    
    n/aExpired
    
    
    
    
    
    
    n/aExercised
    
    
    
    
    
    
    n/aBalance at February 28, 2011
    
    
    110,000
    
    
    
    9.35
    
    
    
    9.25
    
    
    $
    0
 As of February 28, 2011, none of the options were vested and therefore none were exercised.
 Dividends
 The holders of class A common stock were entitled to a quarterly dividend equal to $0.11 per
quarter (for a total of $0.44 per year) per share of the common stock into which such class A
common stock was convertible, paid when and if declared by the board of directors in accordance
with the merger agreement for the Transaction. If a dividend was paid on the class A common
stock, a dividend equal to one-fourth of the per share amount of any class A common stock
dividend paid also had to be paid to holders of common stock. A dividend totaling $1,896 was
declared on November 30, 2009, and $1,868 was paid in January and February 2010 with the
difference related to restricted shares which will be payable once the restrictions lapse. A
dividend totaling $1,896 was declared on January 27, 2010 and $1,868 was paid in March 2010 with
the difference related to restricted
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shares which will be payable once the restrictions lapse. On May 10, 2010, the Company announced that on April 26, 2010, its board of directors declared,
subject to the satisfaction of the condition set forth below, a one-time special cash dividend
in the amount of $0.1609694 per share on each share of the Companys common stock and in the
amount of $0.6438774 per share on each share of the Companys common stock issuable upon
conversion of the class A common stock. This special dividend totaled $11,116 of which $11,089
was paid on June 4, 2010 with the difference related to restricted shares which will be payable
once the restrictions lapse. Therefore, all the dividends in accordance with the merger
agreement for the Transaction have been declared. In August 2010, the Company declared a
dividend totaling $0.0275 per share which was paid on October 8, 2010. In October 2010, the
Company declared a dividend totaling $0.03 per share which was paid on January 7, 2011. On
January 31, 2011, the Company declared a dividend totaling $0.03 per share on all shares of
common stock outstanding and of record as of the close of business on March 31, 2011, to be paid
on April 8, 2011.
 7.
    
    INCOME TAXES
 The effective tax rates for the nine months ended February 28, 2011 and February 28, 2010,
were 39.1% and 39.7%, respectively. The effective tax rates for the three months ended February 28, 2011
and February 28, 2010, were 38.6% and 37.3%, respectively.
 8.
    
    COMMITMENTS AND CONTINGENCIES
 From time to time, the Company is a party to various claims, proceedings, or lawsuits
relating to the conduct of its business. Although the outcome of litigation cannot be predicted
with certainty and some lawsuits, claims, or proceedings may be disposed of unfavorably to the
Company, management believes, based on facts presently known, that the outcome of such legal
proceedings and claims will not have a material adverse effect on the Companys consolidated
financial position, cash flows or future results of operations.
 The Company is subject to extensive regulation by federal and state governmental agencies and
accrediting bodies. On an ongoing basis, the Company evaluates the results of internal
compliance monitoring activities and those of applicable regulatory agencies and, when
appropriate, records liabilities to provide for the estimated costs of any necessary
remediation. There are no current outstanding regulatory actions, but the Company cannot predict
the outcome of future program reviews and any unfavorable outcomes could have a material adverse
effect on the results of the Companys results of operations, cash flows, and financial
position.
 During the quarter ended August 31, 2010, the Company received a request for information from
the U.S. Senate Committee on Health, Education, Labor and Pensions relating to the Committees
ongoing hearings relating to for-profit colleges receiving Title IV student financial aid. The
Company has incurred a total of $2.2 million in additional legal fees for this request which
includes $0.6 million in the first quarter, $1.5 million in the second quarter, and an
additional $0.1 million in expenses in the third quarter.
 9.
    
    CONDOMINIUM PROJECT
 During 2008, the Company broke ground on a new building designed to contain 24 condominium
units to be sold to the general public. The project was funded by a construction line of credit
and was completed in 2009. These condominium units are accounted for within condominium
inventories within the condensed consolidated balance sheets, and the sales of the condominium
units are recorded within condominium sales within the condensed consolidated statements of
operations. Eight units have been sold as of February 28, 2011. One additional unit is under
contract and is scheduled to close in April 2011.
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In addition, five units of an existing 48-unit apartment building have been sold as
condominiums, with the remaining units available for sale or lease. These condominium units are
accounted for within net property and equipment within the consolidated balance sheets, and the
sales of the condominium units are recorded within other income  net within the condensed
consolidated statements of operations.
 10.
    
    FAIR VALUE MEASUREMENTS
 Fair value is defined as the exchange price that would be received for an asset or paid to
transfer a liability (an exit price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants on the measurement date.
Following is a description of each category in the fair value hierarchy and the financial assets
and liabilities of the Company that are included in each category at February 28, 2011 and May
31, 2010:
 Level 1 Quoted prices in active markets for identical assets or liabilities. The types of
assets and liabilities included in Level 1 are highly liquid and actively traded instruments
with quoted market prices.
 Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for substantially the full term of
the assets or liabilities. The type of assets and liabilities included in Level 2 are typically
either comparable to actively traded securities or contracts or priced with models using
observable inputs.
 Level 3 Unobservable inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities. The type of assets and liabilities
included in Level 3 are those with inputs requiring significant management judgment or
estimation. The Company does not have any Level 3 assets or liabilities.
 In accordance with the fair value hierarchy, the following table shows the fair value as of
February 28, 2011 and May 31, 2010, of those financial assets that are measured at fair value on
a recurring basis, according to the valuation techniques the Company used to determine their
fair market value. No other financial assets or liabilities are measured at fair value on a
recurring or nonrecurring basis at February 28, 2010 or May 31, 2010.
 QuotedPrices in
    
    
    OtherActive
    
    
    Observable
    
    
    UnobservableMarkets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Fair ValueFebruary 28, 2011InvestmentsCDs and money market accounts
    
    $
    1,627
    
    
    $
    415
    
    
    $
    
    
    
    $
    2,042US treasury bills and notes
    
    
    10,437
    
    
    
    
    
    
    
    
    
    
    
    10,437Total assets at fair value
    
    $
    12,064
    
    
    $
    415
    
    
    $
    
    
    
    $
    12,479May 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
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11.
    
    SEGMENT REPORTING
 Operating segments are defined as business areas or lines of an enterprise about which
financial information is available and evaluated on a regular basis by the chief operating
decision makers, or decision-making groups, in deciding how to allocate capital and other
resources to such lines of business.
 The Company operates two operating and reportable segments: NAU and other. The NAU segment
contains the revenues and expenses associated with the University operations and the allocated
portion of corporate overhead. The other segment contains everything else. These operating
segments are divisions
of the Company for which separate financial information is available and evaluated regularly by
executive management in deciding how to allocate resources and in assessing performance.
 General administrative costs of the Company are allocated to specific divisions of the Company.
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The majority of the Companys revenue is derived from the NAU division, which provides
undergraduate and graduate education programs. NAU derives its revenue primarily from student
tuition. The other division operates multiple apartment and condominium complexes and derives
its revenues primarily from condominium sales and rental income.
 Nine Months Ended
    
    
    Nine Months EndedFebruary 28, 2011
    
    
    February 28, 2010Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedNAU
    
    
    Other
    
    
    Total
    
    
    NAU
    
    
    Other
    
    
    TotalRevenue:Academic revenue
    
    $
    73,199
    
    
    $
    0
    
    
    $
    73,199
    
    
    $
    59,021
    
    
    $
    0
    
    
    $
    59,021Auxiliary revenue
    
    
    4,583
    
    
    
    0
    
    
    
    4,583
    
    
    
    3,893
    
    
    
    0
    
    
    
    3,893Rental income  apartments
    
    
    0
    
    
    
    739
    
    
    
    739
    
    
    
    0
    
    
    
    703
    
    
    
    703Condominium sales
    
    
    0
    
    
    
    224
    
    
    
    224
    
    
    
    0
    
    
    
    694
    
    
    
    694Total revenue
    
    
    77,782
    
    
    
    963
    
    
    
    78,745
    
    
    
    62,914
    
    
    
    1,397
    
    
    
    64,311Operating expenses:Cost of educational services (1)
    
    
    16,391
    
    
    
    0
    
    
    
    16,391
    
    
    
    15,180
    
    
    
    0
    
    
    
    15,180Selling, general and administrative
(1)
    
    
    45,774
    
    
    
    1,288
    
    
    
    47,062
    
    
    
    32,548
    
    
    
    1,271
    
    
    
    33,819Auxiliary expense
    
    
    2,119
    
    
    
    0
    
    
    
    2,119
    
    
    
    1,454
    
    
    
    0
    
    
    
    1,454Cost of condominium sales
    
    
    0
    
    
    
    193
    
    
    
    193
    
    
    
    0
    
    
    
    564
    
    
    
    564Loss on disposition of property
    
    
    70
    
    
    
    0
    
    
    
    70
    
    
    
    0
    
    
    
    0
    
    
    
    0Total operating expenses
    
    
    64,354
    
    
    
    1,481
    
    
    
    65,835
    
    
    
    49,182
    
    
    
    1,835
    
    
    
    51,017Income (loss) from operations
    
    
    13,428
    
    
    
    (518
    )
    
    
    12,910
    
    
    
    13,732
    
    
    
    (438
    )
    
    
    13,294Other income (expense):Interest income
    
    
    112
    
    
    
    0
    
    
    
    112
    
    
    
    160
    
    
    
    0
    
    
    
    160Interest expense
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (101
    )
    
    
    (339
    )
    
    
    (440
    )Other income  net
    
    
    0
    
    
    
    96
    
    
    
    96
    
    
    
    (14
    )
    
    
    190
    
    
    
    176Total other income (expense)
    
    
    112
    
    
    
    96
    
    
    
    208
    
    
    
    45
    
    
    
    (149
    )
    
    
    (104
    )Income (loss) before taxes
    
    $
    13,540
    
    
    $
    (422
    )
    
    $
    13,118
    
    
    $
    13,777
    
    
    $
    (587
    )
    
    $
    13,190
 (1)
    
    As discussed in Note 3, $3,672 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. As such, the amount
for FY 2010 has been restated
to properly reflect the balance within the NAU segment. Nine Months Ended
    
    
    Year EndedFebruary 28, 2011
    
    
    May 31, 2010Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedNAU
    
    
    Other
    
    
    Total
    
    
    NAU
    
    
    Other
    
    
    TotalTotal assets
    
    $
    57,932
    
    
    $
    15,870
    
    
    $
    73,802
    
    
    $
    33,085
    
    
    $
    14,201
    
    
    $
    47,286
  -18-




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##### Table of Contents



Three Months Ended
    
    
    Three Months EndedFebruary 28, 2011
    
    
    February 28, 2010Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedNAU
    
    
    Other
    
    
    Total
    
    
    NAU
    
    
    Other
    
    
    TotalRevenue:Academic revenue
    
    $
    26,119
    
    
    $
    0
    
    
    $
    26,119
    
    
    $
    21,685
    
    
    $
    0
    
    
    $
    21,685Auxiliary revenue
    
    
    1,370
    
    
    
    0
    
    
    
    1,370
    
    
    
    1,249
    
    
    
    0
    
    
    
    1,249Rental income  apartments
    
    
    0
    
    
    
    244
    
    
    
    244
    
    
    
    0
    
    
    
    220
    
    
    
    220Condominium sales
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    456
    
    
    
    456Total revenue
    
    
    27,489
    
    
    
    244
    
    
    
    27,733
    
    
    
    22,934
    
    
    
    676
    
    
    
    23,610Operating expenses:Cost of educational services (1)
    
    
    5,609
    
    
    
    0
    
    
    
    5,609
    
    
    
    5,428
    
    
    
    0
    
    
    
    5,428Selling, general and administrative (1)
    
    
    14,900
    
    
    
    372
    
    
    
    15,272
    
    
    
    12,174
    
    
    
    449
    
    
    
    12,623Auxiliary expense
    
    
    579
    
    
    
    0
    
    
    
    579
    
    
    
    418
    
    
    
    0
    
    
    
    418Cost of condominium sales
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    398
    
    
    
    398Loss on disposition of property
    
    
    19
    
    
    
    0
    
    
    
    19
    
    
    
    0
    
    
    
    0
    
    
    
    0Total operating expenses
    
    
    21,107
    
    
    
    372
    
    
    
    21,479
    
    
    
    18,020
    
    
    
    847
    
    
    
    18,867Income (loss) from operations
    
    
    6,382
    
    
    
    (128
    )
    
    
    6,254
    
    
    
    4,914
    
    
    
    (171
    )
    
    
    4,743Other income (expense):Interest income
    
    
    38
    
    
    
    0
    
    
    
    38
    
    
    
    41
    
    
    
    0
    
    
    
    41Interest expense
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (20
    )
    
    
    (105
    )
    
    
    (125
    )Other income  net
    
    
    0
    
    
    
    25
    
    
    
    25
    
    
    
    (14
    )
    
    
    142
    
    
    
    128Total other income (expense)
    
    
    38
    
    
    
    25
    
    
    
    63
    
    
    
    7
    
    
    
    37
    
    
    
    44Income (loss) before taxes
    
    $
    6,420
    
    
    $
    (103
    )
    
    $
    6,317
    
    
    $
    4,921
    
    
    $
    (134
    )
    
    $
    4,787
 (1)
    
    As discussed in Note 3, $1,305 of rent expense has been reclassified in FY2010 from
selling, general, and administrative to cost of educational services to conform to the current
presentation. As such the amount for FY2010 has been restated to properly reflect the entire
balance within the NAU segment.  -19-




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12.
    
    SUBSEQUENT EVENTS
   -20-




---



##### 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
     -21-




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Key Financial Results Metrics
 Revenue.
  
    
    the number of students who are enrolled and who remain enrolled in courses throughout
the term;
 
    
    students choices of degree or program;
 
    
    changes in tuition rates;
 
    
    the number of other institutions for which NAU provides courseware development,
technical support and online class hosting services, as well as the number of students
enrolled by those institutions in programs supported by such services; and
 
    
    the amount of scholarships for which students qualify.
     -22-




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February 28, 2011
    
    
    February 28, 2010
    
    
    % Growth for(Winter 11 Qtr)
    
    
    (Winter 10 Qtr)
    
    
    same quarterNumber of Students
    
    
    Number of Students
    
    
    over prior yearGraduate
    
    
    393
    
    
    
    323
    
    
    
    21.7
    %Undergraduate and Diploma
    
    
    9,537
    
    
    
    7,666
    
    
    
    24.4
    %Total
    
    
    9,930
    
    
    
    7,989
    
    
    
    24.3
    %On-Campus
    
    
    3,619
    
    
    
    3,667
    
    
    
    -1.3
    %Online
    
    
    4,624
    
    
    
    3,198
    
    
    
    44.6
    %Hybrid
    
    
    1,687
    
    
    
    1,124
    
    
    
    50.1
    %Total
    
    
    9,930
    
    
    
    7,989
    
    
    
    24.3
    %
   Expenses.
  -23-




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##### Table of Contents



Factors affecting comparability
  Introduction of new programs and specializations.
 Introduction of new physical locations.
 Public company expenses.
 Stock-based compensation.
 Seasonality.
  -24-




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##### Table of Contents



Department of Education Rulemaking
  Incentive compensation.
  qui tam
  -25-




---



##### 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.
    -26-




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##### Table of Contents



Misrepresentation. qui tam
 Gainful Employment.
  Additional Final Regulations.
  -27-




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##### Table of Contents



Pending Department of Education Program Review
  Results of Operations  Nine Months Ended February 28, 2011 Compared to Nine Months Ended
February 28, 2010
 National American University Holdings, Inc.
  Nine Months
    
    
    Nine MonthsEnded February 28,
    
    
    Ended February 28,2011
    
    
    2010In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    20.8
    
    
    
    23.6Selling, general and administrative
    
    
    59.8
    
    
    
    52.6Auxiliary expense
    
    
    2.7
    
    
    
    2.3Cost of condominium sales
    
    
    0.2
    
    
    
    0.9Loss on disposition of property
    
    
    0.1
    
    
    
    0.0Total operating expenses
    
    
    83.6
    
    
    
    79.3Operating income
    
    
    16.4
    
    
    
    20.7Interest expense
    
    
    0.0
    
    
    
    (0.7
    )Interest income
    
    
    0.1
    
    
    
    0.2Other income
    
    
    0.1
    
    
    
    0.3Income before income taxes
    
    
    16.6
    
    
    
    20.5Income tax expense
    
    
    (6.5
    )
    
    
    (8.1
    )Net income attributable to non controlling interest
    
    
    0.0
    
    
    
    0.0Net income attributable to the Company
    
    
    10.1
    %
    
    
    12.3
    %
  -28-




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-29-




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##### Table of Contents



NAU
  Nine Months
    
    
    Nine MonthsEnded February 28,
    
    
    Ended February 28,2011
    
    
    2010In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    21.1
    
    
    
    24.1Selling, general and administrative
    
    
    58.8
    
    
    
    51.7Auxiliary expense
    
    
    2.7
    
    
    
    2.3Loss on disposition of property
    
    
    0.1
    
    
    
    0.0Total operating expenses
    
    
    82.7
    
    
    
    78.2Operating income
    
    
    17.3
    
    
    
    21.8Interest expense
    
    
    0.0
    
    
    
    (0.2
    )Interest income
    
    
    0.1
    
    
    
    0.3Other income
    
    
    0.0
    
    
    
    0.0Income before non-controlling interest and taxes
    
    
    17.4
    %
    
    
    21.9
    %
 Total revenue .
   -30-




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##### Table of Contents



Cost of educational services .
  Q1 - Ended
    
    
    Q2 - Ended
    
    
    Q3 - EndedAugust 31,
    
    
    November 30,
    
    
    February 28,
    
    
    9 months(in thousands)
    
    2009
    
    
    2009
    
    
    2010
    
    
    TotalReclassification of facilities expenses
    
    $
    1,185
    
    
    $
    1,182
    
    
    $
    1,304
    
    
    $
    3,671
 Selling, general and administrative expenses
  -31-




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##### Table of Contents



Nine
    
    
    Ninemonths
    
    
    monthsended
    
    
    endedFebruary 28,
    
    
    February 28,2011
    
    
    2010
    
    
    Difference(in millions)
    
    
    (in millions)
    
    
    (in millions)Austin TX Campus
    
    $
    2.2
    
    
    $
    1.6
    
    
    $
    0.6Lees Summit MO Education Center
    
    
    1.5
    
    
    
    0.4
    
    
    
    1.1Minnetonka MN Education Center
    
    
    1.4
    
    
    
    0.6
    
    
    
    0.8Wichita KS Education Center
    
    
    0.7
    
    
    
    
    
    
    
    0.7Colorado Springs CO Education Center
    
    
    0.7
    
    
    
    
    
    
    
    0.7Centennial CO Education Center
    
    
    0.5
    
    
    
    0.1
    
    
    
    0.4Allen TX Recruitment Center
    
    
    0.9
    
    
    
    
    
    
    
    0.9Tulsa OK Education Center
    
    
    0.2
    
    
    
    
    
    
    
    0.2Distance Learning converions to D2L
    
    
    0.1
    
    
    
    
    
    
    
    0.1Nursing Programs
    
    
    1.2
    
    
    
    1.4
    
    
    
    (0.2
    )Total
    
    $
    9.4
    
    
    $
    4.1
    
    
    $
    5.3
 Auxiliary
 Income before non-controlling interest and taxes .
  -32-




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##### Table of Contents



Other
  Nine Months
    
    
    Nine MonthsEnded February 28,
    
    
    Ended February 28,2011
    
    
    2010In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Selling, general and administrative
    
    
    133.8
    
    
    
    91.0Cost of condominium sales
    
    
    20.0
    
    
    
    40.4Total operating expenses
    
    
    153.8
    
    
    
    131.4Operating loss
    
    
    (53.8
    )
    
    
    (31.4
    )Interest expense
    
    
    0.0
    
    
    
    (24.3
    )Other income
    
    
    10.0
    
    
    
    13.6Loss before non-controlling interest and taxes
    
    
    (43.8
    )%
    
    
    (42.0
    )%
   -33-




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##### Table of Contents



Results of Operations  Three Months Ended February 28, 2011 Compared to Three Months Ended
February 28, 2010
 National American University Holdings, Inc.
  Three Months
    
    
    Three MonthsEnded February 28,
    
    
    Ended February 28,2011
    
    
    2010In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    20.2
    
    
    
    23.0Selling, general and administrative
    
    
    55.1
    
    
    
    53.5Auxiliary expense
    
    
    2.0
    
    
    
    1.8Cost of condominium sales
    
    
    0.0
    
    
    
    1.7Loss on disposition of property
    
    
    0.1
    
    
    
    0.0Total operating expenses
    
    
    77.4
    
    
    
    79.9Operating income
    
    
    22.6
    
    
    
    20.1Interest expense
    
    
    0.0
    
    
    
    (0.5
    )Interest income
    
    
    0.1
    
    
    
    0.2Other income
    
    
    0.1
    
    
    
    0.5Income before income taxes
    
    
    22.8
    
    
    
    20.3Income tax expense
    
    
    (8.9
    )
    
    
    (7.6
    )Net income attributable to non controlling interest
    
    
    0.0
    
    
    
    (0.1
    )Net income attributable to the Company
    
    
    13.9
    %
    
    
    12.6
    %
   -34-




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##### Table of Contents



NAU
  Three Months Ended
    
    
    Three Months EndedFebruary 28, 2011
    
    
    February 28, 2010In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of educational services
    
    
    20.4
    
    
    
    23.7Selling, general and administrative
    
    
    54.2
    
    
    
    53.1Auxiliary expense
    
    
    2.1
    
    
    
    1.8Loss on disposition of property
    
    
    0.1
    
    
    
    0.0Total operating expenses
    
    
    76.8
    
    
    
    78.6Operating income
    
    
    23.3
    
    
    
    21.4Interest expense
    
    
    0.0
    
    
    
    (0.1
    )Interest income
    
    
    0.1
    
    
    
    0.2Other income
    
    
    0.0
    
    
    
    (0.1
    )Income before non-controlling interest
and taxes
    
    
    23.4
    %
    
    
    21.5
    %
 Total revenue
  Cost of educational services .
  -35-




---



##### Table of Contents



Selling, general and administrative expenses
  Three
    
    
    Threemonths
    
    
    monthsended
    
    
    endedFebruary 28,
    
    
    February 28,2011
    
    
    2010
    
    
    Difference(in millions)
    
    
    (in millions)
    
    
    (in millions)Austin TX Campus
    
    $
    0.8
    
    
    $
    0.6
    
    
    $
    0.2Lees Summit MO Education Center
    
    
    0.6
    
    
    
    0.3
    
    
    
    0.3Minnetonka MN Education Center
    
    
    0.5
    
    
    
    0.4
    
    
    
    0.1Wichita KS Education Center
    
    
    0.4
    
    
    
    
    
    
    
    0.4Colorado Springs CO Education Center
    
    
    0.3
    
    
    
    
    
    
    
    0.3Centennial CO Education Center
    
    
    0.2
    
    
    
    
    
    
    
    0.2Allen TX Recruitment Center
    
    
    0.3
    
    
    
    
    
    
    
    0.3Tulsa OK Education Center
    
    
    0.2
    
    
    
    
    
    
    
    0.2Nursing Programs
    
    
    0.5
    
    
    
    0.5
    
    
    
    Total
    
    $
    3.8
    
    
    $
    1.8
    
    
    $
    2.0
  -36-




---



##### Table of Contents



Auxiliary
 Income before non-controlling interest and taxes .
 Other
  Three Months Ended
    
    
    Three Months EndedFebruary 28, 2011
    
    
    February 28, 2010In percentages
    
    
    In percentagesTotal revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Selling, general and administrative
    
    
    152.5
    
    
    
    66.4Cost of condominium sales
    
    
    0.0
    
    
    
    58.9Total operating expenses
    
    
    152.5
    
    
    
    125.3Operating income (loss)
    
    
    (52.4
    )
    
    
    (25.3
    )Interest expense
    
    
    0.0
    
    
    
    (15.5
    )Interest income
    
    
    0.0
    
    
    
    0.0Other income (expense)
    
    
    10.2
    
    
    
    21.0Loss before non-controlling interest and
taxes
    
    
    (42.2
    )%
    
    
    (19.8
    )%
   -37-




---



##### Table of Contents



Liquidity and Capital Resources
 Liquidity .
   Operating Activities .
 Investing Activities .
 Financing Activities .
  -38-




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Impact of Inflation
  
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4.
    
    Controls and Procedures.
   
 PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings.
   -39-




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##### Table of Contents



Item 1A.
    
    Risk Factors.
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
    Issuer Purchases of Equity Securities
 Total Number of
    
    
    Maximum NumberShares Purchased
    
    
    of Shares that MayTotal Number
    
    
    
    
    
    
    as Part of Publicly
    
    
    Yet be Purchasedof Shares
    
    
    Average Price Paid
    
    
    Announced Plans
    
    
    Under the Plans orPeriod
    
    Purchased
    
    
    per Share
    
    
    or Programs (1)
    
    
    Programs (1)December 1, 2010  December 31, 2010
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    January 1, 2011  January 31, 2011
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    February 1, 2011  February 28, 2011
    
    
    1,000,000
    
    
    $
    7.51
    
    
    
    1,000,000
    
    
    
    0
 (1)
    
    On January 31, 2011, the Board of Directors approved a stock repurchase of up
to 1,000,000 shares of the Companys common stock in both open market and privately negotiated
transactions for aggregate consideration not to exceed $10,000.  -40-




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##### Table of Contents



Item 3.
    
    Defaults Upon Senior Securities.
  
 Item 4.
    
    Reserved.
 
 Item 5.
    
    Other Information.
  
 Item 6.
    
    Exhibits.
 31.1
    
    
    Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  -41-




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##### Table of Contents



SIGNATURES
  National American University Holdings, Inc.(Registrant)Dated: April 8, 2011
    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
    
    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
 
  -43-