25000000
69644000
9302000
45982000
48792000
0
40.24
10000000
100000000
2810000
0.01
0.01
0
16542000
89000
6474000
78942000
6855000
128366000
36762000
22934000
1855000
6605000
4693000
174396000
240000
11095000
432000
16163000
6293000
520000
314317000
9465000
494000
52077000
233368000
58503000
729000
488000
594075000
10412000
989000
88137000
279758000
5790000
252464000
2941000
13000
5441000
49800000
594075000
106816000
63492000
7986000
407365000
17913000
6444000
48145000
328423000
2014-09-30
4806000
85000
115
1392000
139000
1387000
2528000
240000
2810000
-48145000
233368000
48792000
488000
128366000
9465000
1002000
21.14
1673000
14.88
3151000
2251000
14.17
43616000
79918000
29306000
1099000
213703000
18591000
5176000
5310000
62527000
31035000
26196000
14422000
178000
85871000
1808000
30 Day LIBOR less 1.5%
0.015
30 Day LIBOR
30 Day LIBOR
9129000
0.03245
85000
30 Day LIBOR
63477000
63492000
5000
20000
44986909
21189000
11706000
44716000
47136000
0
10000000
100000000
2420000
0.01
0.01
0
17467000
87000
61239000
102133000
14174000
6601000
152727000
-223000
18812000
7405000
587000
234059000
8657000
523000
57745000
170814000
28614000
703000
471000
494923000
7045000
8704000
93100000
260864000
214174000
2941000
225000
3122000
55964000
27000000
494923000
27000000
105111000
7951000
330401000
0
12667000
5481000
39136000
269162000
5299000
225000
-223000
2420000
-39136000
170814000
47136000
471000
102133000
8657000
553000
17.04
14.57
4229000
24930000
1099000
180945000
13294000
3439000
5310000
55734000
22124000
12487000
11039000
390000
225000
75000000
GRAND CANYON EDUCATION, INC.
false
Large Accelerated Filer
2013
10-Q
2013-09-30
0001434588
--12-31
Q3
<div>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The following is a summary of amounts included in investments as of
September 30, 2013. The University considered all investments
as available for sale.</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt" border="0" cellspacing="0" cellpadding="0" width="92%" align="center">
<tr>
<td width="66%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>As of September 30,
2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Adjusted</b><br />
<b>Cost</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Gross</b><br />
<b>Unrealized</b><br />
<b>Gains</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Gross</b><br />
<b>Unrealized</b><br />
<b>(Losses)</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Estimated</b><br />
<b>Fair</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Municipal securities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">63,477</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(5</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">63,492</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b>8. Share-Based Compensation</b></p>
<p style="MARGIN-TOP: 6pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Incentive Plan</i></b></p>
<p style="MARGIN-TOP: 6pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 4%; FONT-SIZE: 10pt">
<i>Restricted Stock</i></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
During the nine months ended September 30, 2013, the
University granted 575 shares of common stock with a service
vesting condition to certain of its executives, officers, faculty
and employees. The restricted shares have voting rights and vest in
five annual installments of 20% starting on March 1, 2014 and
each of the four anniversaries of the vesting date following the
date of grant. In May 2013, the University granted 10 shares of
common stock to certain of the non-employee members of the
University’s board of directors. The restricted shares
granted to these directors have voting rights and vest on the
earlier of (a) the one year anniversary of the date of grant
or (b) immediately prior to the following year’s annual
meeting of stockholders, subject to acceleration in the event of a
change in control. Upon vesting, shares will be held in lieu of
taxes equivalent to the minimum statutory tax withholding required
to be paid when the restricted stock vests. During the nine months
ended September 30, 2013, the University withheld 40 shares of
common stock in lieu of taxes at a cost of $973 on the restricted
stock vesting dates.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
A summary of the activity related to restricted stock granted under
the University’s Incentive Plan since December 31, 2012
is as follows:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="76%" align="center">
<tr>
<td width="73%"></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total<br />
Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted Average<br />
Grant Date<br />
Fair Value per Share</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
<b>Outstanding as of December 31, 2012</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">553</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">17.04</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">585</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">24.16</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Vested</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(119</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">17.13</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Forfeited, canceled or expired</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(17</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">19.88</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
<b>Outstanding as of September 30, 2013</b></p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,002</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">21.14</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; FONT-SIZE: 1px">
 </p>
<p style="MARGIN-TOP: 0pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 4%; FONT-SIZE: 10pt">
<i>Stock Options</i></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
During the nine months ended September 30, 2013, the
University granted time vested options to purchase shares of common
stock with an exercise price equal to the fair market value on the
date of grant to an employee. The time vested options vest ratably
over a period of four years and expire ten years from the date of
grant. No options were granted in 2012. A summary of the activity
related to stock options granted under the University’s
Incentive Plan since December 31, 2012 is as follows:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="92%" align="center">
<tr>
<td width="63%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>Summary of Stock Options
Outstanding</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b><br />
<b>Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average</b><br />
<b>Exercise</b><br />
<b>Price per</b><br />
<b>Share</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average</b><br />
<b>Remaining</b><br />
<b>Contractual</b><br />
<b>Term (Years)</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>Aggregate</b><br />
<b>Intrinsic</b><br />
<b>Value ($)(1)</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
<b>Outstanding as of December 31, 2012</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,229</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">14.57</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">25</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">24.97</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Exercised</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(1,070</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">13.85</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Forfeited, canceled or expired</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(33</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16.37</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
<b>Outstanding as of September 30, 2013</b></p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,151</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">14.88</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6.10</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">79,918</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
<b>Exercisable as of September 30, 2013</b></p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,673</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">14.17</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.73</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">43,616</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
<b>Available for issuance as of September 30, 2013</b></p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,251</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="top" width="4%" align="left">(1)</td>
<td valign="top" align="left">Aggregate intrinsic value represents
the value of the University’s closing stock price on
September 30, 2013 ($40.24) in excess of the exercise price
multiplied by the number of shares underlying options outstanding
or exercisable, as applicable.</td>
</tr>
</table>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Share-based Compensation Expense</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The table below outlines share-based compensation expense for the
nine months ended September 30, 2013 and 2012 related to
restricted stock and stock options granted:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="76%" align="center">
<tr>
<td width="80%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2012</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Instructional costs and services</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,988</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,807</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Admissions advisory and related expenses</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">100</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">121</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Marketing and promotional</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">170</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">160</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
General and administrative</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,410</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,660</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
<b>Share-based compensation expense included in operating
expenses</b></p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,668</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,748</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Tax effect of share-based compensation</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(3,067</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(2,299</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
<b>Share-based compensation expense, net of tax</b></p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,601</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,449</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
A summary of the activity related to restricted stock granted under
the University’s Incentive Plan since December 31, 2012
is as follows:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="76%" align="center">
<tr>
<td width="73%"></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total<br />
Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted Average<br />
Grant Date<br />
Fair Value per Share</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
<b>Outstanding as of December 31, 2012</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">553</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">17.04</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">585</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">24.16</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Vested</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(119</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">17.13</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Forfeited, canceled or expired</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(17</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">19.88</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
<b>Outstanding as of September 30, 2013</b></p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,002</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">21.14</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Recent Accounting Pronouncements</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University has determined no recent accounting pronouncements
apply to its operations or would otherwise have a material impact
on its financial statements.</p>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b>7. Commitments and Contingencies</b></p>
<p style="MARGIN-TOP: 6pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Leases</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University leases certain land, buildings and equipment under
non-cancelable operating leases expiring at various dates through
2021. Future minimum lease payments under operating leases due each
year are as follows at September 30, 2013:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="68%" align="center">
<tr>
<td width="88%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
2013 (remaining three months)</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,855</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
2014</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,855</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
2015</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,474</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
2016</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,790</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
2017</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,693</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Thereafter</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">11,095</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Total minimum payments</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">36,762</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; FONT-SIZE: 1px">
 </p>
<p style="MARGIN-TOP: 0pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Total rent expense and related taxes and operating expenses under
operating leases for the nine months ended September 30, 2013
and 2012 were $5,220 and $5,759, respectively.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Legal Matters</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
From time to time, the University is a party to various lawsuits,
claims, and other legal proceedings that arise in the ordinary
course of business, some of which are covered by insurance. When
the University is aware of a claim or potential claim, it assesses
the likelihood of any loss or exposure. If it is probable that a
loss will result and the amount of the loss can be reasonably
estimated, the University records a liability for the loss. If the
loss is not probable or the amount of the loss cannot be reasonably
estimated, the University discloses the nature of the specific
claim if the likelihood of a potential loss is reasonably possible
and the amount involved could be material. With respect to the
majority of pending litigation matters, the University’s
ultimate legal and financial responsibility, if any, cannot be
estimated with certainty and, in most cases, any potential losses
related to those matters are not considered probable.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Upon resolution of any pending legal matters, the University may
incur charges in excess of presently established reserves.
Management does not believe that any such charges would,
individually or in the aggregate, have a material adverse effect on
the University’s financial condition, results of operations
or cash flows.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Tax Reserves, Non-Income Tax Related</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
From time to time the University has exposure to various non-income
tax related matters that arise in the ordinary course of business.
At September 30, 2013 and December 31, 2012, the
University reserved approximately $729 and $703, respectively, for
tax matters where its ultimate exposure is considered probable and
the potential loss can be reasonably estimated.</p>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Revenue Recognition</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Net revenues consist primarily of tuition and fees derived from
courses taught by the University online, on ground at its
traditional campus in Phoenix, Arizona, and onsite at facilities it
leases and at facilities owned by third party employers, as well as
from related educational resources that the University provides to
its students, such as access to online materials. Tuition revenue
and most fees from related educational resources are recognized
pro-rata over the applicable period of instruction, net of
scholarships provided by the University. For the nine months ended
September 30, 2013 and 2012, the University’s revenue
was reduced by approximately $75,668 and $65,563, respectively, as
a result of scholarships that the University offered to students.
The University maintains an institutional tuition refund policy,
which provides for all or a portion of tuition to be refunded if a
student withdraws during stated refund periods. Certain states in
which students reside impose separate, mandatory refund policies,
which override the University’s policy to the extent in
conflict. If a student withdraws at a time when only a portion, or
none, of the tuition is refundable, then in accordance with its
revenue recognition policy, the University continues to recognize
the tuition that was not refunded pro-rata over the applicable
period of instruction. Since the University recognizes revenue
pro-rata over the term of the course and because, under its
institutional refund policy, the amount subject to refund is never
greater than the amount of the revenue that has been deferred,
under the University’s accounting policies revenue is not
recognized with respect to amounts that could potentially be
refunded. Sales tax collected from students is excluded from net
revenues. Collected but unremitted sales tax is included as an
accrued liability in the consolidated balance sheets. The
University also charges online students an upfront learning
management fee, which is deferred and recognized over the average
expected term of a student. Costs that are direct and
incremental to new online students are also deferred and recognized
ratably over the average expected term of a student. Deferred
revenue and student deposits in any period represent the excess of
tuition, fees, and other student payments received as compared to
amounts recognized as revenue on the income statement and are
reflected as current liabilities in the accompanying consolidated
balance sheet. The University’s educational programs have
starting and ending dates that differ from its fiscal quarters.
Therefore, at the end of each fiscal quarter, a portion of revenue
from these programs is not yet earned. Other revenues may be
recognized as sales occur or services are performed.</p>
</div>
1.36
45936000
<div>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
A summary of the activity related to stock options granted under
the University’s Incentive Plan since December 31, 2012
is as follows:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="92%" align="center">
<tr>
<td width="63%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>Summary of Stock Options
Outstanding</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b><br />
<b>Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average</b><br />
<b>Exercise</b><br />
<b>Price per</b><br />
<b>Share</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average</b><br />
<b>Remaining</b><br />
<b>Contractual</b><br />
<b>Term (Years)</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>Aggregate</b><br />
<b>Intrinsic</b><br />
<b>Value ($)(1)</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
<b>Outstanding as of December 31, 2012</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,229</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">14.57</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">25</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">24.97</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Exercised</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(1,070</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">13.85</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Forfeited, canceled or expired</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(33</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">16.37</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
<b>Outstanding as of September 30, 2013</b></p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,151</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">14.88</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6.10</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">79,918</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
<b>Exercisable as of September 30, 2013</b></p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,673</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">14.17</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.73</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">43,616</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
<b>Available for issuance as of September 30, 2013</b></p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,251</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="top" width="4%" align="left">(1)</td>
<td valign="top" align="left">Aggregate intrinsic value represents
the value of the University’s closing stock price on
September 30, 2013 ($40.24) in excess of the exercise price
multiplied by the number of shares underlying options outstanding
or exercisable, as applicable.</td>
</tr>
</table>
</div>
1305000
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Restricted Cash and Cash Equivalents</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
A significant portion of the University’s revenue is received
from students who participate in government financial aid and
assistance programs. Restricted cash and cash equivalents primarily
represent amounts received from the federal and state governments
under various student aid grant and loan programs, such as Title
IV. The University receives these funds subsequent to the
completion of the authorization and disbursement process and holds
them for the benefit of the student. The U.S. Department of
Education (“Department of Education”) requires Title IV
funds collected in advance of student billings to be segregated in
a separate cash or cash equivalent account until the course begins.
The University records all of these amounts as a current asset in
restricted cash and cash equivalents until the cash is no longer
restricted, at which time such amounts are reclassified as cash and
cash equivalents. The majority of these funds remain as restricted
cash and cash equivalents for an average of 60 to 90 days from the
date of receipt.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
In addition, the counterparty to the University’s interest
rate swap made a collateral call in 2010 and the pledged collateral
is classified as restricted cash. The pledged collateral was $85
and $225 as of September 30, 2013 and December 31, 2012,
respectively. The University reports changes in restricted cash
related to derivative collateral as investing cash flows in its
consolidated statement of cash flows.</p>
</div>
<div>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Property and equipment, net consist of the following:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="76%" align="center">
<tr>
<td width="72%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>September 30,<br />
2013</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>December 31,<br />
2012</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Land</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">18,591</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">13,294</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Land improvements</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,176</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,439</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Buildings</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">213,703</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">180,945</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Equipment under capital leases</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,310</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,310</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Leasehold improvements</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">29,306</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">24,930</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Computer equipment</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">62,527</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">55,734</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Furniture, fixtures and equipment</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">31,035</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">22,124</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Internally developed software</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">14,422</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">11,039</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Other</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,099</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,099</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Construction in progress</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">26,196</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">12,487</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">407,365</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">330,401</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Less accumulated depreciation and amortization</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(78,942</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(61,239</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Property and equipment, net</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">328,423</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">269,162</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
1.40
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b>6. Property and Equipment, net</b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Property and equipment, net consist of the following:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="76%" align="center">
<tr>
<td width="72%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>September 30,<br />
2013</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>December 31,<br />
2012</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Land</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">18,591</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">13,294</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Land improvements</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,176</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,439</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Buildings</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">213,703</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">180,945</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Equipment under capital leases</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,310</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,310</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Leasehold improvements</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">29,306</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">24,930</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Computer equipment</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">62,527</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">55,734</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Furniture, fixtures and equipment</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">31,035</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">22,124</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Internally developed software</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">14,422</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">11,039</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Other</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,099</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,099</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Construction in progress</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">26,196</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">12,487</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">407,365</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">330,401</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Less accumulated depreciation and amortization</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(78,942</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(61,239</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Property and equipment, net</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">328,423</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">269,162</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Investments</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University considers its investments in municipal securities as
available-for-sale securities. Available-for-sale securities are
carried at fair value, determined using Level 2 of the hierarchy of
valuation inputs, with the use of inputs other than quoted prices
that are observable for the assets, with unrealized gains and
losses, net of tax, reported as a separate component of other
comprehensive income. Unrealized losses considered to be
other-than-temporary are recognized currently in earnings.
Amortization of premiums, accretion of discounts, interest and
dividend income and realized gains and losses are included in
interest and other income.</p>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b>10. Treasury Stock</b></p>
<!-- xbrl,body -->
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
On April 25, 2013, the Board of Directors authorized the
University to repurchase up to an additional $25,000 ($75,000
total) of common stock, from time to time, depending on market
conditions and other considerations. The Board of Directors also
extended the expiration date on the repurchase authorization to
September 30, 2014. Repurchases occur at the
University’s discretion. Repurchases may be made in the open
market or in privately negotiated transactions, pursuant to the
applicable Securities and Exchange Commission rules. The amount and
timing of future share repurchases, if any, will be made as market
and business conditions warrant. Since its approval of the share
repurchase plan, the University has purchased 2,743 shares of
common stock at an aggregate cost of $47,173, which includes 333
shares of common stock at an aggregate cost of $8,036 during the
nine months ended September 30, 2013, which are recorded at
cost in the accompanying September 30, 2013 consolidated
balance sheet and statement of stockholders’ equity. At
September 30, 2013, there remained $27,827 available under its
share repurchase authorization. Shares repurchased in lieu of taxes
are not included in the repurchase plan totals as they were
approved in conjunction with the restricted share awards.</p>
</div>
<div>
<p style="MARGIN-TOP: 6pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Principles of Consolidation</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The consolidated financial statements include the accounts of the
University and its wholly-owned subsidiaries. Intercompany
transactions have been eliminated in consolidation.</p>
</div>
101786000
44631000
<div>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Future minimum lease payments under operating leases due each year
are as follows at September 30, 2013:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="68%" align="center">
<tr>
<td width="88%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
2013 (remaining three months)</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,855</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
2014</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,855</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
2015</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,474</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
2016</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,790</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
2017</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,693</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Thereafter</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">11,095</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Total minimum payments</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">36,762</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b>5. Allowance for Doubtful Accounts</b></p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt" border="0" cellspacing="0" cellpadding="0" width="92%" align="center">
<tr>
<td width="60%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Balance at</b><br />
<b>Beginning of</b><br />
<b>Period</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Charged to</b><br />
<b>Expense</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>Deductions<sup style="FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Balance at</b><br />
<b>End of</b><br />
<b>Period</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Nine months ended September 30, 2013</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8,657</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">14,881</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(14,073</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,465</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Nine months ended September 30, 2012</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11,706</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">13,492</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(15,896</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,302</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
</table>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="top" width="4%" align="left">(1)</td>
<td valign="top" align="left">Deductions represent accounts written
off, net of recoveries.</td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-TOP: 0pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Commitments and Contingencies</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University accrues for contingent obligations when it is
probable that a liability has been incurred and the amount is
reasonably estimable. When the University becomes aware of a claim
or potential claim, the likelihood of any loss exposure is
assessed. If it is probable that a loss will result and the amount
of the loss is estimable, the University records a liability for
the estimated loss. If the loss is not probable or the amount of
the potential loss is not estimable, the University will disclose
the claim if the likelihood of a potential loss is reasonably
possible and the amount of the potential loss could be material.
Estimates that are particularly sensitive to future changes include
tax, legal, and other regulatory matters, which are subject to
change as events evolve, and as additional information becomes
available during the administrative and litigation process. The
University expenses legal fees as incurred.</p>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Instructional Costs and Services</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Instructional costs and services consist primarily of costs related
to the administration and delivery of the University’s
educational programs. This expense category includes salaries,
benefits and share-based compensation for full-time and adjunct
faculty and administrative personnel, information technology costs,
bad debt expense, curriculum and new program development costs
(which are expensed as incurred) and costs associated with other
support groups that provide services directly to the students. This
category also includes an allocation of depreciation, amortization,
rent, and occupancy costs attributable to the provision of
educational services, primarily at the University’s Phoenix,
Arizona campus.</p>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b>4. Net Income Per Common Share</b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Basic net income per common share is calculated by dividing net
income available to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted
earnings per common share reflects the assumed conversion of all
potentially dilutive securities, consisting of stock options and
restricted stock awards, for which the estimated fair value exceeds
the exercise price, less shares which could have been purchased
with the related proceeds, unless anti-dilutive. For employee
equity awards, repurchased shares are also included for any
unearned compensation adjusted for tax.</p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; FONT-SIZE: 1px">
 </p>
<p style="MARGIN-TOP: 0pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The table below reflects the calculation of the weighted average
number of common shares outstanding, on an as if converted basis,
used in computing basic and diluted earnings per common share.</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="92%" align="center">
<tr>
<td width="72%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center">
<b>Three Months Ended</b><br />
<b>September 30,</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Nine Months Ended</b><br />
<b>September 30,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2012</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2012</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Denominator:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Basic weighted average shares outstanding</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">44,963</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">44,365</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">44,631</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">44,395</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Effect of dilutive stock options and restricted stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,461</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">974</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,305</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">825</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Diluted weighted average shares outstanding</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">46,424</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">45,339</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">45,936</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">45,220</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Diluted weighted average shares outstanding exclude the incremental
effect of shares that would be issued upon the assumed exercise of
stock options. For the nine months ended September 30, 2013
and 2012, approximately 179 and 2,009, respectively, of the
University’s stock options outstanding were excluded from the
calculation of diluted earnings per share as their inclusion would
have been anti-dilutive. These options could be dilutive in the
future.</p>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Segment Information</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University operates as a single educational delivery operation
using a core infrastructure that serves the curriculum and
educational delivery needs of both its ground and online students
regardless of geography. The University’s Chief Executive
Officer manages the University’s operations as a whole and no
expense or operating income information is generated or evaluated
on any component level.</p>
</div>
<div>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt" border="0" cellspacing="0" cellpadding="0" width="92%" align="center">
<tr>
<td width="60%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Balance at</b><br />
<b>Beginning of</b><br />
<b>Period</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Charged to</b><br />
<b>Expense</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>Deductions<sup style="FONT-SIZE: 85%; VERTICAL-ALIGN: top">(1)</sup></b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Balance at</b><br />
<b>End of</b><br />
<b>Period</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Nine months ended September 30, 2013</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8,657</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">14,881</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(14,073</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,465</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Nine months ended September 30, 2012</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11,706</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">13,492</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(15,896</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,302</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
</table>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="top" width="4%" align="left">(1)</td>
<td valign="top" align="left">Deductions represent accounts written
off, net of recoveries.</td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b>2. Summary of Significant Accounting Policies</b></p>
<!-- xbrl,body -->
<p style="MARGIN-TOP: 6pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Principles of Consolidation</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The consolidated financial statements include the accounts of the
University and its wholly-owned subsidiaries. Intercompany
transactions have been eliminated in consolidation.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Unaudited Interim Financial Information</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The accompanying unaudited interim consolidated financial
statements of the University have been prepared in accordance with
U.S. generally accepted accounting principles, consistent in all
material respects with those applied in its financial statements
included in its Annual Report on Form 10-K for the fiscal year
ended December 31, 2012. Accordingly, they do not include all
of the information and footnotes required by U.S. generally
accepted accounting principles for complete financial statements.
Such interim financial information is unaudited but reflects all
adjustments that in the opinion of management are necessary for the
fair presentation of the interim periods presented. Interim results
are not necessarily indicative of results for a full year. These
consolidated financial statements should be read in conjunction
with the University’s audited financial statements and
footnotes included in its Annual Report on Form 10-K for the fiscal
year ended December 31, 2012 from which the December 31,
2012 balance sheet information was derived.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Restricted Cash and Cash Equivalents</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
A significant portion of the University’s revenue is received
from students who participate in government financial aid and
assistance programs. Restricted cash and cash equivalents primarily
represent amounts received from the federal and state governments
under various student aid grant and loan programs, such as Title
IV. The University receives these funds subsequent to the
completion of the authorization and disbursement process and holds
them for the benefit of the student. The U.S. Department of
Education (“Department of Education”) requires Title IV
funds collected in advance of student billings to be segregated in
a separate cash or cash equivalent account until the course begins.
The University records all of these amounts as a current asset in
restricted cash and cash equivalents until the cash is no longer
restricted, at which time such amounts are reclassified as cash and
cash equivalents. The majority of these funds remain as restricted
cash and cash equivalents for an average of 60 to 90 days from the
date of receipt.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
In addition, the counterparty to the University’s interest
rate swap made a collateral call in 2010 and the pledged collateral
is classified as restricted cash. The pledged collateral was $85
and $225 as of September 30, 2013 and December 31, 2012,
respectively. The University reports changes in restricted cash
related to derivative collateral as investing cash flows in its
consolidated statement of cash flows.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Investments</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University considers its investments in municipal securities as
available-for-sale securities. Available-for-sale securities are
carried at fair value, determined using Level 2 of the hierarchy of
valuation inputs, with the use of inputs other than quoted prices
that are observable for the assets, with unrealized gains and
losses, net of tax, reported as a separate component of other
comprehensive income. Unrealized losses considered to be
other-than-temporary are recognized currently in earnings.
Amortization of premiums, accretion of discounts, interest and
dividend income and realized gains and losses are included in
interest and other income.</p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; FONT-SIZE: 1px">
 </p>
<p style="MARGIN-TOP: 0pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Note Receivable</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University purchased a note receivable from a financial
institution at fair market value in the fourth quarter of 2012 for
$27,000. The note bore interest at 11%, which represented the
6% rate of the loan plus the 5% default rate. The principal
and most of the interest due on the note was paid in March 2013
resulting in the full return on investment of the note receivable
and an additional gain in interest income and other income of
$2,187 on the loan. However, the borrower has disputed certain
amounts remaining due under the note agreement, including default
interest in the amount of $432, a late payment penalty in the
amount of $1,392, and a statutory trustee’s fee in the amount
of $139. The funds disputed by the borrower, plus interest thereon,
were deposited into an escrow account with the clerk of the
Maricopa County Superior Court pending resolution of the disputed
issues. In the third quarter of 2013, the court ruled in favor
of the University with respect to the late penalty and default
interest accrued thereon. Accordingly, the University recorded an
other asset and interest and other income of $1,459 for the three
months ended September 30, 2013. The remaining default
interest and statutory trustee’s fee components of the
original disputed amount, plus interest accruing thereon at 11%,
continue a resolution process through the court, have been treated
as a gain contingency and will not be recorded as a receivable or
income until resolution is reached.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Derivatives and Hedging</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Derivative financial instruments are recorded on the balance sheet
as assets or liabilities and re-measured at fair value at each
reporting date. For derivatives designated as cash flow hedges, the
effective portion of the gain or loss on the derivative is reported
as a component of other comprehensive income and reclassified into
earnings in the same period or periods during which the hedged
transaction affects earnings. Gains and losses on the derivative
representing either hedge ineffectiveness or hedge components
excluded from the assessment of effectiveness are recognized in
current earnings.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Derivative financial instruments enable the University to manage
its exposure to interest rate risk. The University does not engage
in any derivative instrument trading activity. Credit risk
associated with the University’s derivatives is limited to
the risk that a derivative counterparty will not perform in
accordance with the terms of the contract. Exposure to counterparty
credit risk is considered low because these agreements have been
entered into with institutions with strong credit ratings, and they
are expected to perform fully under the terms of the
agreements.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
On June 30, 2009 and February 27, 2013, respectively, the
University entered into an interest rate swap and an interest rate
corridor to manage its 30 Day LIBOR interest exposure related to
its variable rate debt. The fair value of the interest rate
corridor instrument as of September 30, 2013 was $1,808, which
is included in other assets. The fair value of the interest rate
swap is a liability of $178 as of September 30, 2013, which is
included in accrued liabilities, and $390 as of December 31,
2012, which is included in other noncurrent liabilities. The fair
values of each derivative instrument were determined using a
hypothetical derivative transaction and Level 2 of the hierarchy of
valuation inputs. These derivative instruments were originally
designated as cash flow hedges of variable rate debt obligations.
The adjustment of $448 and $95 for the nine months ended
September 30, 2013 and 2012, respectively, for the effective
portion of the gain/loss on the derivatives is included as a
component of other comprehensive income, net of taxes.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The interest rate corridor instrument reduces variable interest
rate risk starting March 1, 2013 through December 20,
2019 with a notional amount of $85,871 as of September 30,
2013. The corridor instrument’s terms permits the University
to hedge its interest rate risk at several thresholds; the
University pays variable interest monthly based on the 30 Day LIBOR
rates until that index reaches 1.5%. If 30 Day LIBOR is equal to
1.5% through 3.0%, the University pays 1.5%. If 30 Day LIBOR
exceeds 3.0%, the University pays actual 30 Day LIBOR less
1.5%.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The interest rate swap commenced on May 1, 2010 and continues
each month thereafter until April 30, 2014 and has a notional
amount of $9,129 as of September 30, 2013. Under the terms of
the agreement, the University receives 30 Day LIBOR and pays 3.245%
fixed interest on the amortizing notional amount. Therefore, the
University has hedged its exposure to future variable rate cash
flows through April 30, 2014. The interest rate swap is not
subject to a master netting arrangement and collateral has been
called by the counterparty and reflected in a restricted cash
account as of September 30, 2013 and December 31, 2012 in
the amount of $85 and $225, respectively.</p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; FONT-SIZE: 1px">
 </p>
<p style="MARGIN-TOP: 0pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
As of September 30, 2013 no derivative ineffectiveness was
identified for the interest rate swap. Any ineffectiveness in the
University’s derivative instrument designated as a hedge is
reported in interest expense in the income statement. For the nine
months ended September 30, 2013, $8 of credit risk was
recorded in interest expense for the interest rate corridor and
interest rate swap. At September 30, 2013, the University does
not expect to reclassify gains or losses on derivative instruments
from accumulated other comprehensive income (loss) into earnings
during the next 12 months.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Fair Value of Financial Instruments</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
As of September 30, 2013, the carrying value of cash and cash
equivalents, investments, accounts receivable, account payable and
accrued compensation and benefits and accrued liabilities expenses
approximate their fair value based on the liquidity or the
short-term maturities of these instruments. The carrying value of
notes payable approximates fair value as it is based on variable
rate index. The carrying value of capital lease obligations
approximate fair value based upon market interest rates available
to the University for debt of similar risk and maturities.
Derivative financial instruments are carried at fair value,
determined using Level 2 of the hierarchy of valuation inputs, with
the use of inputs other than quoted prices that are observable for
the asset or liability.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The fair value of investments, primarily municipal securities, was
determined using Level 2 of the hierarchy of valuation inputs, with
the use of inputs other than quoted prices that are observable for
the assets. The municipal securities are comprised of city and
county bonds related to schools, water and sewer, utilities,
transportation and housing. Because these securities are held by
the University as investments, assessment of non-performance risk
is not applicable as such considerations are only applicable in
evaluating the fair value measurements for liabilities.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Revenue Recognition</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Net revenues consist primarily of tuition and fees derived from
courses taught by the University online, on ground at its
traditional campus in Phoenix, Arizona, and onsite at facilities it
leases and at facilities owned by third party employers, as well as
from related educational resources that the University provides to
its students, such as access to online materials. Tuition revenue
and most fees from related educational resources are recognized
pro-rata over the applicable period of instruction, net of
scholarships provided by the University. For the nine months ended
September 30, 2013 and 2012, the University’s revenue
was reduced by approximately $75,668 and $65,563, respectively, as
a result of scholarships that the University offered to students.
The University maintains an institutional tuition refund policy,
which provides for all or a portion of tuition to be refunded if a
student withdraws during stated refund periods. Certain states in
which students reside impose separate, mandatory refund policies,
which override the University’s policy to the extent in
conflict. If a student withdraws at a time when only a portion, or
none, of the tuition is refundable, then in accordance with its
revenue recognition policy, the University continues to recognize
the tuition that was not refunded pro-rata over the applicable
period of instruction. Since the University recognizes revenue
pro-rata over the term of the course and because, under its
institutional refund policy, the amount subject to refund is never
greater than the amount of the revenue that has been deferred,
under the University’s accounting policies revenue is not
recognized with respect to amounts that could potentially be
refunded. Sales tax collected from students is excluded from net
revenues. Collected but unremitted sales tax is included as an
accrued liability in the consolidated balance sheets. The
University also charges online students an upfront learning
management fee, which is deferred and recognized over the average
expected term of a student. Costs that are direct and
incremental to new online students are also deferred and recognized
ratably over the average expected term of a student. Deferred
revenue and student deposits in any period represent the excess of
tuition, fees, and other student payments received as compared to
amounts recognized as revenue on the income statement and are
reflected as current liabilities in the accompanying consolidated
balance sheet. The University’s educational programs have
starting and ending dates that differ from its fiscal quarters.
Therefore, at the end of each fiscal quarter, a portion of revenue
from these programs is not yet earned. Other revenues may be
recognized as sales occur or services are performed.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Allowance for Doubtful Accounts</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
All students are required to select both a primary and secondary
payment option with respect to amounts due to the University for
tuition, fees and other expenses. The most common payment option
for the University’s students is financial aid. In instances
where a student selects financial aid as the primary payment
option, he or she often selects personal cash as the secondary
option. If a student who has selected financial aid as his or her
primary payment option withdraws prior to the end of a course but
after the date that the University’s institutional refund
period has expired, the student will have incurred the obligation
to pay the full cost of the course. If the withdrawal occurs before
the date at which the student has earned 100% of his or her
financial aid, the University will have a return to Title IV
requirement and the student will owe the University all amounts
incurred that are in excess of the amount of financial aid that the
student earned and that the University is entitled to retain. In
this case, the University must collect the receivable using the
student’s second payment option. In instances in which the
students chose to receive living expense funds as part of his or
her financial aid disbursement, the University is required to
return the unearned portion of these funds as well and then collect
these amounts from the student.</p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; FONT-SIZE: 1px">
 </p>
<p style="MARGIN-TOP: 0pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University records an allowance for doubtful accounts for
estimated losses resulting from the inability, failure or refusal
of its students to make required payments, which includes the
recovery of financial aid funds advanced to a student for amounts
in excess of the student’s cost of tuition and related fees.
The University determines the adequacy of its allowance for
doubtful accounts based on an analysis of its historical bad debt
experience, current economic trends, the aging of the accounts
receivable and student status. The University applies reserves to
its receivables based upon an estimate of the risk presented by the
age of the receivables and student status. The University writes
off accounts receivable balances at the earlier of the time the
balances were deemed uncollectible, or one year after the revenue
is generated. However, if a student becomes inactive, the
University writes off the account 150 days after becoming
delinquent. The University reflects accounts receivable with an
offsetting allowance as long as management believes there is a
reasonable possibility of collection. Bad debt expense is recorded
as an instructional costs and services expense in the consolidated
income statement.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Financial Statement Presentation</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Effective during the first quarter of 2013, the University made
changes in its presentation of operating expenses and reclassified
prior periods to conform to the current presentation. The
University determined that these changes would provide more
meaningful information and are consistent with changes recently
made by a number of other regionally accredited for-profit
universities. Additionally, this new presentation better classifies
its costs consistently with the operational changes the University
has made related to the roles and responsibilities of its
admissions personnel. Specifically we separated admissions advisory
and related expenses from advertising, and marketing and
promotional expenses as the admissions personnel role has evolved
into one in which a substantial amount of their time is spent
educating students not only during the admissions process but also
through matriculation and during their program of study.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Instructional Costs and Services</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Instructional costs and services consist primarily of costs related
to the administration and delivery of the University’s
educational programs. This expense category includes salaries,
benefits and share-based compensation for full-time and adjunct
faculty and administrative personnel, information technology costs,
bad debt expense, curriculum and new program development costs
(which are expensed as incurred) and costs associated with other
support groups that provide services directly to the students. This
category also includes an allocation of depreciation, amortization,
rent, and occupancy costs attributable to the provision of
educational services, primarily at the University’s Phoenix,
Arizona campus.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Admissions Advisory and Related</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Admissions advisory and related expenses include salaries and
benefits for admissions advisory personnel and, revenue share
expense as well as an allocation of depreciation, amortization,
rent and occupancy costs attributable to the admissions advisory
personnel.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Advertising</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Advertising expenses include brand advertising, marketing leads and
other branding activities. Advertising costs are expensed as
incurred.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Marketing and Promotional</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Marketing and promotional expenses include salaries, benefits and
share-based compensation for marketing personnel, and other
promotional expenses. This category also includes an allocation of
depreciation, amortization, rent, and occupancy costs attributable
to marketing and promotional activities. Marketing and promotional
costs are expensed as incurred.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>General and Administrative</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
General and administrative expenses include salaries, benefits and
share-based compensation of employees engaged in corporate
management, finance, human resources, compliance, and other
corporate functions. General and administrative expenses also
include an allocation of depreciation, amortization, rent, and
occupancy costs attributable to the departments providing general
and administrative functions.</p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px; FONT-SIZE: 1px">
 </p>
<p style="MARGIN-TOP: 0pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Commitments and Contingencies</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University accrues for contingent obligations when it is
probable that a liability has been incurred and the amount is
reasonably estimable. When the University becomes aware of a claim
or potential claim, the likelihood of any loss exposure is
assessed. If it is probable that a loss will result and the amount
of the loss is estimable, the University records a liability for
the estimated loss. If the loss is not probable or the amount of
the potential loss is not estimable, the University will disclose
the claim if the likelihood of a potential loss is reasonably
possible and the amount of the potential loss could be material.
Estimates that are particularly sensitive to future changes include
tax, legal, and other regulatory matters, which are subject to
change as events evolve, and as additional information becomes
available during the administrative and litigation process. The
University expenses legal fees as incurred.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Use of Estimates</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The preparation of consolidated financial statements in conformity
with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts in the consolidated financial statements and
accompanying notes. Actual results could differ from those
estimates.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Segment Information</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University operates as a single educational delivery operation
using a core infrastructure that serves the curriculum and
educational delivery needs of both its ground and online students
regardless of geography. The University’s Chief Executive
Officer manages the University’s operations as a whole and no
expense or operating income information is generated or evaluated
on any component level.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Recent Accounting Pronouncements</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University has determined no recent accounting pronouncements
apply to its operations or would otherwise have a material impact
on its financial statements.</p>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Allowance for Doubtful Accounts</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
All students are required to select both a primary and secondary
payment option with respect to amounts due to the University for
tuition, fees and other expenses. The most common payment option
for the University’s students is financial aid. In instances
where a student selects financial aid as the primary payment
option, he or she often selects personal cash as the secondary
option. If a student who has selected financial aid as his or her
primary payment option withdraws prior to the end of a course but
after the date that the University’s institutional refund
period has expired, the student will have incurred the obligation
to pay the full cost of the course. If the withdrawal occurs before
the date at which the student has earned 100% of his or her
financial aid, the University will have a return to Title IV
requirement and the student will owe the University all amounts
incurred that are in excess of the amount of financial aid that the
student earned and that the University is entitled to retain. In
this case, the University must collect the receivable using the
student’s second payment option. In instances in which the
students chose to receive living expense funds as part of his or
her financial aid disbursement, the University is required to
return the unearned portion of these funds as well and then collect
these amounts from the student.</p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; FONT-SIZE: 1px">
 </p>
<p style="MARGIN-TOP: 0pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University records an allowance for doubtful accounts for
estimated losses resulting from the inability, failure or refusal
of its students to make required payments, which includes the
recovery of financial aid funds advanced to a student for amounts
in excess of the student’s cost of tuition and related fees.
The University determines the adequacy of its allowance for
doubtful accounts based on an analysis of its historical bad debt
experience, current economic trends, the aging of the accounts
receivable and student status. The University applies reserves to
its receivables based upon an estimate of the risk presented by the
age of the receivables and student status. The University writes
off accounts receivable balances at the earlier of the time the
balances were deemed uncollectible, or one year after the revenue
is generated. However, if a student becomes inactive, the
University writes off the account 150 days after becoming
delinquent. The University reflects accounts receivable with an
offsetting allowance as long as management believes there is a
reasonable possibility of collection. Bad debt expense is recorded
as an instructional costs and services expense in the consolidated
income statement.</p>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Derivatives and Hedging</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Derivative financial instruments are recorded on the balance sheet
as assets or liabilities and re-measured at fair value at each
reporting date. For derivatives designated as cash flow hedges, the
effective portion of the gain or loss on the derivative is reported
as a component of other comprehensive income and reclassified into
earnings in the same period or periods during which the hedged
transaction affects earnings. Gains and losses on the derivative
representing either hedge ineffectiveness or hedge components
excluded from the assessment of effectiveness are recognized in
current earnings.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Derivative financial instruments enable the University to manage
its exposure to interest rate risk. The University does not engage
in any derivative instrument trading activity. Credit risk
associated with the University’s derivatives is limited to
the risk that a derivative counterparty will not perform in
accordance with the terms of the contract. Exposure to counterparty
credit risk is considered low because these agreements have been
entered into with institutions with strong credit ratings, and they
are expected to perform fully under the terms of the
agreements.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
On June 30, 2009 and February 27, 2013, respectively, the
University entered into an interest rate swap and an interest rate
corridor to manage its 30 Day LIBOR interest exposure related to
its variable rate debt. The fair value of the interest rate
corridor instrument as of September 30, 2013 was $1,808, which
is included in other assets. The fair value of the interest rate
swap is a liability of $178 as of September 30, 2013, which is
included in accrued liabilities, and $390 as of December 31,
2012, which is included in other noncurrent liabilities. The fair
values of each derivative instrument were determined using a
hypothetical derivative transaction and Level 2 of the hierarchy of
valuation inputs. These derivative instruments were originally
designated as cash flow hedges of variable rate debt obligations.
The adjustment of $448 and $95 for the nine months ended
September 30, 2013 and 2012, respectively, for the effective
portion of the gain/loss on the derivatives is included as a
component of other comprehensive income, net of taxes.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The interest rate corridor instrument reduces variable interest
rate risk starting March 1, 2013 through December 20,
2019 with a notional amount of $85,871 as of September 30,
2013. The corridor instrument’s terms permits the University
to hedge its interest rate risk at several thresholds; the
University pays variable interest monthly based on the 30 Day LIBOR
rates until that index reaches 1.5%. If 30 Day LIBOR is equal to
1.5% through 3.0%, the University pays 1.5%. If 30 Day LIBOR
exceeds 3.0%, the University pays actual 30 Day LIBOR less
1.5%.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The interest rate swap commenced on May 1, 2010 and continues
each month thereafter until April 30, 2014 and has a notional
amount of $9,129 as of September 30, 2013. Under the terms of
the agreement, the University receives 30 Day LIBOR and pays 3.245%
fixed interest on the amortizing notional amount. Therefore, the
University has hedged its exposure to future variable rate cash
flows through April 30, 2014. The interest rate swap is not
subject to a master netting arrangement and collateral has been
called by the counterparty and reflected in a restricted cash
account as of September 30, 2013 and December 31, 2012 in
the amount of $85 and $225, respectively.</p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; FONT-SIZE: 1px">
 </p>
<p style="MARGIN-TOP: 0pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
As of September 30, 2013 no derivative ineffectiveness was
identified for the interest rate swap. Any ineffectiveness in the
University’s derivative instrument designated as a hedge is
reported in interest expense in the income statement. For the nine
months ended September 30, 2013, $8 of credit risk was
recorded in interest expense for the interest rate corridor and
interest rate swap. At September 30, 2013, the University does
not expect to reclassify gains or losses on derivative instruments
from accumulated other comprehensive income (loss) into earnings
during the next 12 months.</p>
</div>
179000
<div>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The table below outlines share-based compensation expense for the
nine months ended September 30, 2013 and 2012 related to
restricted stock and stock options granted:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="76%" align="center">
<tr>
<td width="80%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2012</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Instructional costs and services</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,988</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,807</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Admissions advisory and related expenses</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">100</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">121</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Marketing and promotional</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">170</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">160</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
General and administrative</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,410</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,660</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
<b>Share-based compensation expense included in operating
expenses</b></p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,668</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,748</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Tax effect of share-based compensation</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(3,067</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(2,299</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
<b>Share-based compensation expense, net of tax</b></p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,601</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,449</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Use of Estimates</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The preparation of consolidated financial statements in conformity
with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts in the consolidated financial statements and
accompanying notes. Actual results could differ from those
estimates.</p>
</div>
<div>
<p style="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b>1. Nature of Business</b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
Grand Canyon Education, Inc. (together with its subsidiaries, the
“University”) is a regionally accredited provider of
postsecondary education services focused on offering graduate and
undergraduate degree programs in its core disciplines of education,
healthcare, business, and liberal arts. The University offers
courses online, on ground at its approximately 115 acre traditional
ground campus in Phoenix, Arizona and onsite at facilities it
leases and at facilities owned by third party employers. The
University is accredited by The Higher Learning Commission of the
North Central Association of Colleges and Schools. The
University’s wholly-owned subsidiaries are primarily used to
facilitate expansion of the University campus.</p>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Fair Value of Financial Instruments</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
As of September 30, 2013, the carrying value of cash and cash
equivalents, investments, accounts receivable, account payable and
accrued compensation and benefits and accrued liabilities expenses
approximate their fair value based on the liquidity or the
short-term maturities of these instruments. The carrying value of
notes payable approximates fair value as it is based on variable
rate index. The carrying value of capital lease obligations
approximate fair value based upon market interest rates available
to the University for debt of similar risk and maturities.
Derivative financial instruments are carried at fair value,
determined using Level 2 of the hierarchy of valuation inputs, with
the use of inputs other than quoted prices that are observable for
the asset or liability.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The fair value of investments, primarily municipal securities, was
determined using Level 2 of the hierarchy of valuation inputs, with
the use of inputs other than quoted prices that are observable for
the assets. The municipal securities are comprised of city and
county bonds related to schools, water and sewer, utilities,
transportation and housing. Because these securities are held by
the University as investments, assessment of non-performance risk
is not applicable as such considerations are only applicable in
evaluating the fair value measurements for liabilities.</p>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b>3. Investments</b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University had no investments as of December 31, 2012. The
following is a summary of amounts included in investments as of
September 30, 2013. The University considered all investments
as available for sale.</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt" border="0" cellspacing="0" cellpadding="0" width="92%" align="center">
<tr>
<td width="66%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>As of September 30,
2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Adjusted</b><br />
<b>Cost</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Gross</b><br />
<b>Unrealized</b><br />
<b>Gains</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Gross</b><br />
<b>Unrealized</b><br />
<b>(Losses)</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Estimated</b><br />
<b>Fair</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Municipal securities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">63,477</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(5</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">63,492</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The cash flows of municipal securities are backed by the issuing
municipality’s credit worthiness. All municipal securities
are due in one year or less as of September 30, 2013. For the
nine months ended September 30, 2013, the net unrealized gain
on available-for-sale securities was $15.</p>
</div>
<div>
<p style="MARGIN-TOP: 0pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The table below reflects the calculation of the weighted average
number of common shares outstanding, on an as if converted basis,
used in computing basic and diluted earnings per common share.</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="92%" align="center">
<tr>
<td width="72%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center">
<b>Three Months Ended</b><br />
<b>September 30,</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Nine Months Ended</b><br />
<b>September 30,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2012</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2012</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Denominator:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Basic weighted average shares outstanding</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">44,963</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">44,365</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">44,631</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">44,395</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Effect of dilutive stock options and restricted stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,461</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">974</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,305</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">825</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Diluted weighted average shares outstanding</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">46,424</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">45,339</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">45,936</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">45,220</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>General and Administrative</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
General and administrative expenses include salaries, benefits and
share-based compensation of employees engaged in corporate
management, finance, human resources, compliance, and other
corporate functions. General and administrative expenses also
include an allocation of depreciation, amortization, rent, and
occupancy costs attributable to the departments providing general
and administrative functions.</p>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Advertising</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Advertising expenses include brand advertising, marketing leads and
other branding activities. Advertising costs are expensed as
incurred.</p>
</div>
6695000
3646000
5854000
63017000
14816000
44108000
3678000
448000
2187000
102399000
101040000
1592000
104523000
14916000
5024000
62554000
3067000
9009000
3766000
-6249000
435892000
59168000
-140000
15000
2574000
333493000
26064000
4461000
2404000
8036000
29889000
310000
7668000
14881000
8036000
18602000
1705000
-104542000
-3753000
1635000
-4055000
-5668000
-29000
29187000
715000
14816000
4117000
3678000
37548000
7668000
5220000
45947000
1859000
41969000
6901000
60 to 90 days
-721000
75668000
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Admissions Advisory and Related</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Admissions advisory and related expenses include salaries and
benefits for admissions advisory personnel and, revenue share
expense as well as an allocation of depreciation, amortization,
rent and occupancy costs attributable to the admissions advisory
personnel.</p>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Unaudited Interim Financial Information</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The accompanying unaudited interim consolidated financial
statements of the University have been prepared in accordance with
U.S. generally accepted accounting principles, consistent in all
material respects with those applied in its financial statements
included in its Annual Report on Form 10-K for the fiscal year
ended December 31, 2012. Accordingly, they do not include all
of the information and footnotes required by U.S. generally
accepted accounting principles for complete financial statements.
Such interim financial information is unaudited but reflects all
adjustments that in the opinion of management are necessary for the
fair presentation of the interim periods presented. Interim results
are not necessarily indicative of results for a full year. These
consolidated financial statements should be read in conjunction
with the University’s audited financial statements and
footnotes included in its Annual Report on Form 10-K for the fiscal
year ended December 31, 2012 from which the December 31,
2012 balance sheet information was derived.</p>
</div>
0.11
1.00
333000
70917000
<div>
<p style="MARGIN-TOP: 0pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Note Receivable</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University purchased a note receivable from a financial
institution at fair market value in the fourth quarter of 2012 for
$27,000. The note bore interest at 11%, which represented the
6% rate of the loan plus the 5% default rate. The principal
and most of the interest due on the note was paid in March 2013
resulting in the full return on investment of the note receivable
and an additional gain in interest income and other income of
$2,187 on the loan. However, the borrower has disputed certain
amounts remaining due under the note agreement, including default
interest in the amount of $432, a late payment penalty in the
amount of $1,392, and a statutory trustee’s fee in the amount
of $139. The funds disputed by the borrower, plus interest thereon,
were deposited into an escrow account with the clerk of the
Maricopa County Superior Court pending resolution of the disputed
issues. In the third quarter of 2013, the court ruled in favor
of the University with respect to the late penalty and default
interest accrued thereon. Accordingly, the University recorded an
other asset and interest and other income of $1,459 for the three
months ended September 30, 2013. The remaining default
interest and statutory trustee’s fee components of the
original disputed amount, plus interest accruing thereon at 11%,
continue a resolution process through the court, have been treated
as a gain contingency and will not be recorded as a receivable or
income until resolution is reached.</p>
</div>
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b>9. Regulatory</b></p>
<!-- xbrl,body -->
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The University is subject to extensive regulation by federal and
state governmental agencies and accrediting bodies. In particular,
the Higher Education Act of 1965, as amended (the “Higher
Education Act”), and the regulations promulgated thereunder
by the Department of Education, subject the University to
significant regulatory scrutiny on the basis of numerous standards
that schools must satisfy in order to participate in the various
federal student financial assistance programs under Title IV of the
Higher Education Act.</p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; FONT-SIZE: 1px">
 </p>
<p style="MARGIN-TOP: 0pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
To participate in the Title IV programs, an institution must be
authorized to offer its programs of instruction by the relevant
agency of the state in which it is located, accredited by an
accrediting agency recognized by the Department of Education and
certified as eligible by the Department of Education. The
Department of Education will certify an institution to participate
in the Title IV programs only after the institution has
demonstrated compliance with the Higher Education Act and the
Department of Education’s extensive regulations regarding
institutional eligibility. An institution must also demonstrate its
compliance to the Department of Education on an ongoing basis. As
of September 30, 2013, management believes the University is
in compliance with the applicable regulations in all material
respects.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Because the University operates in a highly regulated industry, it,
like other industry participants, may be subject from time to time
to investigations, claims of non-compliance, or lawsuits by
governmental agencies or third parties, which allege statutory
violations, regulatory infractions, or common law causes of action.
While there can be no assurance that regulatory agencies or third
parties will not undertake investigations or make claims against
the University, or that such claims, if made, will not have a
material adverse effect on the University’s business, results
of operations or financial condition, management believes the
University is in compliance with applicable regulations in all
material respects.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
In connection with its administration of the Title IV federal
student financial aid programs, the Department of Education
periodically conducts program reviews at selected schools that
receive Title IV funds. In July 2010, the Department of
Education initiated a program review of the University covering the
2008-2009 and 2009-2010 award years. As part of this program
review, a Department of Education program review team conducted a
site visit on the University’s campus in July 2010 and
reviewed, and in some cases requested further information
regarding, the University’s records, practices and policies
relating to, among other things, financial aid, enrollment,
enrollment counselor compensation, program eligibility and other
Title IV compliance matters.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
While the University never received a formal exit interview, which
it had understood to be the typical step prior to the Department of
Education’s issuance of a preliminary program review report,
on August 24, 2011, the University received from the
Department of Education a written preliminary program review report
that included five findings, two of which involved individual
student-specific errors concerning the monitoring of satisfactory
academic progress for two students and the certification of one
student’s Federal Family Educational Loan as an unsubsidized
Stafford loan rather than a subsidized Stafford loan. The other
three findings were as follows:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 6pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td width="9%"> </td>
<td valign="top" width="3%" align="left">•</td>
<td valign="top" width="1%"> </td>
<td valign="top" align="left"><i>Incentive compensation issue</i>.
During a portion of the period under review, the University had in
place a compensation plan for its enrollment counselors that was
designed to comply with the regulatory “safe harbor” in
effect during such period that allowed companies to make
adjustments to fixed compensation for enrollment personnel,
provided that any such adjustment (i) was not made more than
twice during any twelve month period, and (ii) was not based
solely on the number of students recruited, admitted, enrolled, or
awarded financial aid. The plan at issue provided for enrollment
counselor performance to be reviewed on a number of non-enrollment
related factors that could account for a substantial portion of any
potential base compensation adjustment. The preliminary program
review report did not appear to set forth any definitive finding
regarding the plan, but the Department of Education requested
additional information from the University regarding its enrollment
counselor compensation practices and policies in effect during the
period under review. The University believes that the plan at
issue, both as designed and as applied, did not base compensation
solely on success in enrolling students in violation of applicable
law.</td>
</tr>
</table>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td width="8%"> </td>
<td valign="top" width="4%" align="left">•</td>
<td valign="top" width="1%"> </td>
<td valign="top" align="left"><i>Gainful employment issue</i>. The
preliminary program review report set forth the Department of
Education’s position that the University’s Bachelor of
Arts in Interdisciplinary Studies program was not an eligible
program under Title IV because it did not provide students with
training to prepare them for gainful employment in a recognized
occupation. This “gainful employment” standard has been
a requirement for Title IV eligibility for programs offered at
proprietary institutions of higher education such as the University
although, pursuant to legislation passed in 2008 and effective as
of July 1, 2010, this requirement no longer applies to
designated liberal arts programs offered by the University and
certain other institutions that have held accreditation by a
regional accrediting agency since a date on or before
October 1, 2007 (we have held a regional accreditation since
1968). The University believes that its Interdisciplinary Studies
program, which it first offered in Fall 2007 in response to a
request by one of its employer-partners, was an eligible program
under the “gainful employment” standard in effect prior
to July 1, 2010.</td>
</tr>
</table>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td width="8%"> </td>
<td valign="top" width="4%" align="left">•</td>
<td valign="top" width="1%"> </td>
<td valign="top" align="left"><i>Inadequate procedures related to
non-passing grades.</i> The preliminary program review report set
forth the Department of Education’s position that, during the
period under review, and prior to the time the University converted
from a term-based financial aid system to a non-term,
borrower-based financial aid system in mid-2010, the University
failed to have an accurate system to determine if students with
non-passing grades for a term had no documented attendance for the
term or should have been treated as unofficial withdrawals for the
term, thereby potentially requiring the University to return all or
a portion of the Title IV monies previously received with respect
to such students. As part of the process of reviewing and
responding to this finding, the Department of Education requested
that the University conduct a further review of student files and
provide additional information to the Department of Education
following the completion of such review. The University completed,
and submitted, the extensive file review requested by the
Department of Education. The University remains confident in the
legal sufficiency of its policies that were in place during the
period under review.</td>
</tr>
</table>
<p style="MARGIN-TOP: 0pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
On September 27, 2013, the University and the Department of
Education entered into an agreement that fully resolves the
findings in the preliminary program review report and closes the
program review. As a result of this agreement, in addition to
amounts previously reserved and disclosed by the University
relating to this matter, the University recorded an additional
reserve of $1,387 during the three months ended September 30,
2013. The majority of the total amount required to be
returned, or paid, in accordance with the terms of the agreement,
relate to the inadequate procedures related to non-passing grade
finding. Specifically, in the course of its file review, the
University determined that certain Pell grants received by the
University for students that later unofficially withdrew should
have been returned under applicable return to Title IV rules, as
those rules are currently being interpreted by the Department of
Education. In addition, the University was not able to demonstrate
in all cases that its faculty followed its established grading
policy as it relates to students that stopped attending prior to
the end of the semester but did not formally
withdraw. Although when the University makes a return to Title
IV the applicable student is obligated to repay the University for
the amounts returned, the University has agreed that it will not
seek reimbursement from these students once the returns are
made. Included in accrued liabilities at September 30,
2013 is $2,528 in return to Title IV payments that the University
anticipates will be paid over the next six months.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Since July 2008, we had been provisionally certified to participate
in the Title IV programs on a month-to-month basis. On
April 8, 2011, following the completion of the Department of
Education’s review of information we had provided in
connection with a deemed change in control that resulted from the
termination in January 2011 of voting agreements that were in
effect among certain of our stockholders, the Department of
Education notified us that it had approved our application for a
change in control and issued to us a new, provisional program
participation agreement to participate in the Title IV programs.
While this certification was provisional, the Department of
Education’s action removed us from month-to-month status,
provided for our continued participation in Title IV programs
through December 31, 2013, and did not impose any conditions
(such as any letter of credit requirement) or other restrictions on
us during the provisional period other than the standard
restrictions applicable to a provisional certification. In
accordance with the terms of the provisional certification, we were
allowed to apply for recertification on a full basis by submitting
a complete application by no later than September 30, 2013. In
July 2013 we submitted our complete application for full
certification and, on October 28, 2013, the University
received a new program participation agreement with full
certification from the Department of Education, which gives the
University the ability to participate in the Title IV programs
through September 30, 2017.</p>
<!-- xbrl,n -->
</div>
3759000
206000
4601000
0.06
201000
P150D
186448000
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Marketing and Promotional</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Marketing and promotional expenses include salaries, benefits and
share-based compensation for marketing personnel, and other
promotional expenses. This category also includes an allocation of
depreciation, amortization, rent, and occupancy costs attributable
to marketing and promotional activities. Marketing and promotional
costs are expensed as incurred.</p>
</div>
0.05
<div>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<b><i>Financial Statement Presentation</i></b></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Effective during the first quarter of 2013, the University made
changes in its presentation of operating expenses and reclassified
prior periods to conform to the current presentation. The
University determined that these changes would provide more
meaningful information and are consistent with changes recently
made by a number of other regionally accredited for-profit
universities. Additionally, this new presentation better classifies
its costs consistently with the operational changes the University
has made related to the roles and responsibilities of its
admissions personnel. Specifically we separated admissions advisory
and related expenses from advertising, and marketing and
promotional expenses as the admissions personnel role has evolved
into one in which a substantial amount of their time is spent
educating students not only during the admissions process but also
through matriculation and during their program of study.</p>
</div>
11209000
575000
P5Y
0.20
4
P90D
P60D
3988000
100000
3410000
170000
27827000
47173000
2743000
463000
17000
40000
333000
-973000
8036000
62554000
1070000
586000
6000
11000
7662000
14805000
3766000
14881000
14073000
17000
585000
19.88
17.13
40000
24.16
119000
973000
P6Y1M6D
25000
P10Y
P4Y
24.97
13.85
33000
P5Y8M23D
1070000
16.37
2013-03-01
2019-12-20
8000
2010-05-01
2014-04-30
8000
One year or less
1.07
45220000
825000
1.09
124734000
44395000
2009000
2671000
48633000
19615000
336000
95000
80805000
-202000
446000
80418000
10552000
1772000
48538000
2299000
4925000
912000
369959000
73619000
-180000
1666000
289154000
23806000
-2022000
-2152000
24956000
72000
5748000
13492000
15784000
48455000
-74257000
9046000
439000
22464000
1328000
101000
7654000
4339000
48000
3047000
336000
5748000
5759000
38015000
-962000
31880000
7636000
612000
65563000
62702000
52000
200000
3449000
199000
161584000
818000
2807000
121000
2660000
160000
13492000
15896000
10000
P1Y
The one year anniversary of the date of grant or immediately prior to the following year’s annual meeting of stockholders, subject to acceleration in the event of a change in control.
0
0.41
45339000
974000
0.42
44365000
18504000
33000
31203000
31065000
18471000
133568000
645000
102365000
8561000
26000
154000
1199000
12909000
12594000
22342000
16000
57354000
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