American Public Education
Annual Report 2007

Plain-text annual report

111 west congress street charles town, wv 25414 Phone: (304)724-3700 www.AmericanPublicEducation.com 2007 Annual Report EducAting thosE who sERvE tM Corporate Information corporate headquarters American Public Education, inc. 111 west congress street charles town, wv 25414 Phone: (304)724-3700 Fax: (877) 468-6268 Administrative and Marketing offices American Public university system, inc. 10110 Battleview Parkway, suite 200 Manassas, vA 20109 Phone: (703) 330-5398 Fax: (877) 468-6268 stock Exchange Listing Listed on the nAsdAQ global Market under Accountants Mcgladrey & Pullen, LLP 8000 towers crescent drive, suite 500 vienna, vA 22182 Phone: (703)336-6400 transfer Agent American stock transfer & trust company 59 Maiden Lane new York, nY 10038 Attn: shareholder services toll Free: (800) 937-5449 Legal hogan & hartson LLP Michael J. silver the symbol “APEi”. 111 south calvert street, suite 1600 Annual shareholder Meeting Baltimore, Md 21202 Phone: (410) 659-2700 the annual meeting of American Public corporate website: www.hhlaw.com Education shareholders will be held at the westfields Marriott washington dulles, 14750 conference center drive, chantilly, vA 20151 online information investor information at 8 a.m. (Et) on May 16, 2008. www.AmericanPublicEducation.com investor Relations chris symanoskie director of investor Relations American Public Education, inc. 111 west congress street charles town, wv 25414 Phone: (703)334-3880 E-mail: csymanoskie@apus.edu American Public university system www.apus.edu American Military university www.amu.apus.edu American Public university www.apu.apus.edu Our Mission We educate the nation’s military and public service communities by providing  respected, relevant, affordable, and student-focused online programs that  prepare them for service and leadership in a diverse, global society. Photo courtesy of DoD American Public Education, Inc. (NASDAQ: APEI) is a and American Public University (APU). Regionally leading provider of online post-secondary education and nationally accredited, APUS serves more than focused primarily on serving the military and public 30,000 students worldwide; and offers over 50 degree service communities. American Public University programs in fields ranging from homeland security System (APUS), wholly owned by APEI, comprises and intelligence studies to business administration two universities—American Military University (AMU) and liberal arts. n 1 Wallace E. Boston, Jr., President and Chief Executive Officer Wallace E. Boston, Jr., President and Chief Executive Officer Dear Shareholders: At American Public Education, Inc. (APEI), our success undergraduate programs in the field of information derives from three core strengths: dedication to our technology. In addition, on November 8, 2007, American academic mission, the ability to serve a broad spectrum Public Education, Inc. (APEI) became a public company of students in the military and public service sectors, with a listing on the NASDAQ stock exchange. and our financial well-being. Over the past year, we Our initial public offering (IPO) was a tremendous achieved a series of milestones that build on each of success, ranking among the top three domestic IPOs for these core strengths and stand to benefit all of our stake- 2007.* In preparation for going public, we made additional holders—students, faculty, staff, and shareholders. In investments in systems and processes that make us 2007, we experienced a greater interest in our programs stronger, more efficient, and better able to serve the and higher enrollment than ever before—which trans- needs of our students. And, by going public, we further lates into a broadening curriculum and more opportunities for students. We obtained regulatory approval from our regional and national accrediting agencies to offer seven new degree programs—three master’s programs in the field of education and four Our success derives from our three core strengths— academic quality, a focus on the military and public service sectors, and financial well-being. strengthen our ability to fulfill our mission through greater visibility and increased transparency. It’s been an exciting and busy year for our organization, and I want to thank our faculty and staff for their hard work. Their efforts have directly 2 *Based on the price of the initial public offering and the price at year-end 2007. American Public Education, Inc. contributed to our success and have helped thousands of aspiring Net Course Registrations 94,846 students reach their academic and lifetime goals. 54,828 37,506 32,558 25,567 2003 2004 2005 2006 2007 Net course registrations represent the aggregate number of classes in which students remain enrolled after the date by which they may drop the course without financial penalty. A Strong Performance Our financial strength enables us to better serve our students and to offer greater opportunities for advancement to our faculty and staff. In 2007, net course registrations increased to 94,846, up 73% from 54,828 in 2006. Revenues increased by 73% to $69.1 million during the year, while at the same time we became stronger and more efficient with no increases in undergraduate tuition. It is also important to note that, due to the affordability of our programs, we believe we have low exposure to the risks related to tuition financing. While we do not provide tuition financing to students, approximately 1% of our revenues are related to student loans from private financial institutions, and approximately 11% of our revenues are related to Federal Student Aid (FSA). We are proud to end 2007 with no long-term debt and ample Revenues (In millions) cash to fund our current development plans for new degrees, programs, $69.1 and student services. We strive to maintain the affordability of our $40.0 $28.2 $23.1 $17.8 2003 2004 2005 2006 2007 Income from Continuing Operations before Interest Income and Income Tax (In millions) $14.7 programs and provide textbook grants to most of our degree-seeking undergraduate students—a unique proposition in the marketplace. Serving More Students Enrollment at American Public University System is higher than at any time in our history, reflecting the quality and affordability of our programs, and our ability to expand into new civilian and public service markets. In 2007, total student enrollment increased 68% to more than 30,100 students. That growth means we’re helping more students than ever achieve their dreams. Our success as an institu- tion of higher learning depends upon the quality of our programs and our ability to produce successful graduates—in this regard, we are on the path to an exciting future. Over the past year, we continued to experience high referral rates and high levels of student satisfaction. More than 50% of our new students were referred by others in 2007. We continue to work $6.1(1) to attract and reach new students. In 2007, we launched several new $3.6 $1.8 $2.2 articulation agreements with community colleges, making it easier to transfer credits to our institution. We also have developed strong relationships with, and focused much attention on, each branch of 2003 2004 2005 2006 2007 the military and certain segments of the civilian marketplace. In 2008, (1) Excludes a $3.1 million write-off of software development costs. 3 American Public University System was provisionally accepted into the Navy College APUS enrollments are higher than at any time in our history, reflecting the quality and affordability of our pro- develop doctoral programs in key fields of study. Partnership Distance Learning grams, and our ability to expand into Fulfilling Our Mission Program (NCPDLP). Our partici- new civilian and public service markets. Academic quality is the pation will significantly increase our visibility within the U.S. Navy. cornerstone of our success. We have built a unique community Today, we offer a wide range of academic programs of like-minded learners, with a distinct public service- that attract a mix of students, both military and civilian. minded culture and programs that set us apart from other As examples, we offer homeland security degrees to institutions of higher learning. We’re able to keep class sizes the intelligence community; national security degrees small, promote interaction among faculty and students, to those in the military; and emergency and disaster and offer the courses and degree programs that our management programs to first responders. As of year end students want. Our faculty members have deep experience 2007, 53% of our students were enrolled in our School of in the fields in which they now teach, and strong academic Public Safety, National Security, and Homeland Security. and professional backgrounds. APUS has a promising future. Recruits across all branches of the military are attracted by the educational opportunities that military service offers. We will continue to serve that market, which is 2.1 million strong, and focus on expanding access to higher education for more service members, even as we move into civilian markets that complement our core mission. Our 2007 graduating class was the largest in our history, with 1,580 graduates, up 44% from the prior year. In the years ahead, we will continue to serve our students by building on our core strengths. Above all, that means maintaining our emphasis on academic quality and launching new programs that meet their unique needs and exceed their expectations. I look forward to reporting on our continued progress in the year ahead. n We are unique among distance learning institutions in that we have a School of Arts and Sciences that offers 14 Sincerely, liberal arts degrees. We are also expanding in the field of education. In 2007, we introduced three master’s degree programs in education and added four new degree programs in information technology. In addition, many of our graduates have told us they would like to return Wallace E. Boston, Jr. to pursue their doctoral studies. We have begun to President and Chief Executive Officer 4 Providing access to opportunity When Michael Liesmann contracted a severe eye infection during a deployment to Iraq, he faced a long recovery. “I needed a purpose, so I decided to immerse myself in my education at AMU,” he says. Monthly class starts enabled him to adjust his workload throughout his recovery, and to complete 27 credit hours in 12 months. An active duty and reserve officer for 14 years, Liesmann now works daily with the Counterterrorism Intelligence Group of the FBI’s Houston field office, training local law enforcement on homeland security issues. His goal: A career with the Houston Police Department’s Criminal Intelligence Division. n “When an eye injury put my career plans in jeopardy, getting my degree through AMU opened up new opportunities for me.” Capt. Michael Liesmann Master’s Student, Homeland Security 5 Placing specialized programs in reach For Olga Mokrova, AMU offers affordable, specialized programs that will enable her to advance in security management. Her courses cover such issues as security design, risk and threat assessment, and crisis management and prevention. A working mother who lives in New York City, Mokrova is currently a security coordination officer at the United Nations, where she plans to continue her career. AMU provides a degree option that meets her academic needs, and accommodates her schedule and her budget. “Since I’m paying for my degree and raising two daughters,” she says, “AMU’s affordability and scheduled payment options make continuing my education possible.” n Olga Mokrova Master’s Student, Security Management “The convenience and affordability AMU offers has made it possible for me to continue my education, and advance my knowledge of security issues.” 6 Offering relevant programs for today’s challenges A technician with the U.S. government in Washington, D.C. and former U.S. Marine, Dwayne Locket’s job responsibilities include guarding against enemy attacks. His AMU courses—from the psychology of disaster to Arabic language courses—helped prepare him to fulfill that mission. For example, in one AMU class, he worked with local emer- gency planners to devise a warning system that integrates federal procedures and the city’s resources. The father of three and first member of his family to earn a college degree, Locket notes: “Being a citizen is about being an active participant, not just a bystander.” n “My AMU education gives me the edge to meet the evolving homeland security challenges I face every day—and to fulfill my mission.” Dwayne Locket Bachelor’s Degree, Homeland Security 7 Front Row, left to right: Mr. Philip A. McNair, Mr. James H. Herhusky, Mr. Mark L. Leuba, Mr. Peter W. Gibbons, Mr. James M. Sweizer, Mr. Wallace E. Boston, Jr. Back Row, left to right: Dr. Karan H. Powell, Ms. Lisa G. Kessler, Ms. Carol S. Gilbert, Dr. Frank B. McCluskey, Ms. Lyn M. Geer, Mr. James H. Wilkinson, Mr. Harry T. Wilkins, CPA Senior Management Mr. Wallace E. Boston, Jr.* President and Chief Executive Officer; Member, Board of Trustees; Member, Board of Directors Mr. Harry T. Wilkins, CPA* Executive Vice President and Chief Financial Officer Ms. Lyn M. Geer Vice President, Student Services and University Registrar Mr. Peter W. Gibbons* Senior Vice President, Chief Administrative Officer Ms. Carol S. Gilbert* Senior Vice President, Programs and Marketing Mr. James H. Herhusky* Executive Vice President, Institutional Advancement *Denotes our executive officers. 8 Ms. Lisa G. Kessler Senior Vice President, Finance Mr. Mark L. Leuba* Senior Vice President, Chief Information Officer Dr. Frank B. McCluskey* Executive Vice President and Provost Mr. Philip A. McNair Vice President, Academic Services Dr. Karan H. Powell Vice President and Academic Dean Mr. James M. Sweizer Vice President, Military Programs Mr. James H. Wilkinson Vice President, Operations Board of Directors Mr. Phillip A. Clough, Chairman Managing General Partner, ABS Capital Partners Mr. Wallace E. Boston, Jr., Director President and Chief Executive Officer, American Public Education, Inc. Mr. J. Christopher Everett, Director Independent Consultant Mr. F. David Fowler, Director Director, Liquidity Services, Inc. Ms. Jean C. Halle, Director President and Chief Executive Officer, Calvert Education Services Mr. David L. Warnock, Director Founding Partner, Camden Partners Mr. Timothy T. Weglicki, Director Founding Partner, ABS Capital Partners Corporate Information corporate headquarters American Public Education, inc. 111 west congress street charles town, wv 25414 Phone: (304)724-3700 Fax: (877) 468-6268 Administrative and Marketing offices American Public university system, inc. 10110 Battleview Parkway, suite 200 Manassas, vA 20109 Phone: (703) 330-5398 Fax: (877) 468-6268 stock Exchange Listing Listed on the nAsdAQ global Market under Accountants Mcgladrey & Pullen, LLP 8000 towers crescent drive, suite 500 vienna, vA 22182 Phone: (703)336-6400 transfer Agent American stock transfer & trust company 59 Maiden Lane new York, nY 10038 Attn: shareholder services toll Free: (800) 937-5449 Legal hogan & hartson LLP Michael J. silver the symbol “APEi”. 111 south calvert street, suite 1600 Annual shareholder Meeting Baltimore, Md 21202 Phone: (410) 659-2700 the annual meeting of American Public corporate website: www.hhlaw.com Education shareholders will be held at the westfields Marriott washington dulles, 14750 conference center drive, chantilly, vA 20151 online information investor information at 8 a.m. (Et) on May 16, 2008. www.AmericanPublicEducation.com investor Relations chris symanoskie director of investor Relations American Public Education, inc. 111 west congress street charles town, wv 25414 Phone: (703)334-3880 E-mail: csymanoskie@apus.edu American Public university system www.apus.edu American Military university www.amu.apus.edu American Public university www.apu.apus.edu Our Mission We educate the nation’s military and public service communities by providing  respected, relevant, affordable, and student-focused online programs that  prepare them for service and leadership in a diverse, global society. 111 west congress street charles town, wv 25414 Phone: (304)724-3700 www.AmericanPublicEducation.com 2007 Annual Report EducAting thosE who sERvE tM 

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