UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] Annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended December 31, 2008
Or
[ ] Transition report pursuant to Section 15(d) of the Securities Exchange Act
of 1934
For the transition period from ____________________ to ____________________
Commission file number 01-0724376
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below.
AMERICAN PUBLIC UNIVERSITY SYSTEM
RETIREMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office.
American Public Education, Inc.
111 West Congress Street
Charles Town, West Virginia 25414
AMERICAN PUBLIC UNIVERSITY SYSTEM
RETIREMENT PLAN
CHARLES TOWN, WEST VIRGINIA
CONTENTS
Report of Independent Registered Public Accounting Firm...................... 1
Statements of Net Assets Available For Benefits ............................. 2
Statement of Changes In Net Assets Available For Benefits ................... 3
Notes to Financial Statements ............................................... 4
Schedule of Assets held at Year End.......................................... 10
Signatures................................................................... 12
Exhibits
Exhibit 23.1 - Consent of McGladrey & Pullen LLP
Report of Independent Registered Public Accounting Firm
To the Trustees, Plan Administrator, and Participants
American Public University System Retirement Plan
Charlestown, West Virginia
We have audited the accompanying statements of net assets available for benefits
of American Public University System Retirement Plan (the Plan) as of December
31, 2008 and 2007, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2008. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2008 and 2007, and the changes in net assets available for benefits
for the year ended December 31, 2008, in conformity with accounting principles
generally accepted in the United States of America.
As described in Note 2, the Plan adopted Financial Accounting Standards Board
Statement of Financial Accounting Standard No. 157, Fair Value Measurements, as
of January 1, 2008.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) as of December 31, 2008, is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the United States
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. This supplemental schedule
is the responsibility of the Plan's management. The supplemental schedule has
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ McGladrey & Pullen LLP
--------------------------
Timonium, Maryland
June 26, 2009
1
American Public University System Retirement Plan
Statements Of Net Assets Available For Benefits
December 31, 2008 And 2007
2008 2007
--------------------------------------------------------------------------------
Assets
Investments at fair value $ 5,452,413 $ 6,084,005
--------------------------
Receivables:
Employer contributions 4,589 27,929
Employee contributions 6,287 47,745
--------------------------
10,876 75,674
--------------------------
Total assets 5,463,289 6,159,679
--------------------------
Liabilities
Refund of excess contributions 9,724 -
--------------------------
Net assets available for benefits $ 5,453,565 $ 6,159,679
==========================
See Notes To Financial Statements.
2
American Public University System Retirement Plan
Statement Of Changes In Net Assets Available For Benefits
Year Ended December 31, 2008
--------------------------------------------------------------------------------
Investment income:
Net depreciation in fair value of investments $ (2,563,482)
Interest and dividends 9,754
-------------
(2,553,728)
-------------
Contributions:
Employer 809,884
Employee 1,638,696
Rollovers 76,661
-------------
2,525,241
-------------
Benefits paid to participants (676,843)
Administrative expenses (784)
-------------
Net decrease (706,114)
Net assets available for benefits:
Beginning 6,159,679
-------------
Ending $ 5,453,565
=============
See Notes To Financial Statements.
3
--------------------------------------------------------------------------------
Notes To Financial Statement
Note 1. Plan Description and Summary of Significant Accounting Policies
-----------------------------------------------------------------------
The following description of the American Public University System Retirement
Plan (the Plan) provides only general information. Participants should refer to
the Plan agreement for a more complete description of the Plan's provisions.
General:
--------
The Plan, a 401(k) profit sharing plan sponsored by American Public University
System, Inc. (the Company), a subsidiary of American Public Education, Inc.
(APEI), covers all eligible employees under the Plan's provisions. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
Eligibility:
------------
All employees of the Company are eligible for participation in the Plan except
for employees covered by a collective bargaining agreement and non-resident
aliens who do not receive income from the employer that constitutes United
States income and residents of Puerto Rico.
Contributions:
--------------
Each year, participants may contribute a specified amount or percentage of
compensation, up to 60% of their gross annual earnings not to exceed ERISA and
Internal Revenue Service (IRS) limits. Participants who have attained the age of
50 before the end of the plan year are eligible to make catch-up contributions.
Participants may also contribute amounts representing distributions from other
qualified plans. Participants direct the investment of their contributions into
various investment options offered by the Plan. The Plan currently offers
various mutual funds and common stock as investment options for participants.
The Company contributes 100% of the first 3% of the participant's eligible
compensation contributed to the Plan and 50% of the next 2% of the participant's
eligible compensation contributed to the Plan. Additional amounts may be
contributed at the discretion of the Company. Contributions are subject to
certain limitations.
Participant Accounts:
---------------------
Each participant's account is credited with the participant's contributions and
allocations of (a) the Company's contribution and (b) Plan earnings, and charged
with an allocation of administrative expenses. Allocations are based on
participant's earnings or account balances, as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
Vesting:
--------
Participants are immediately vested in their voluntary contributions, the safe
harbor non-elective contributions and any non-elective Company contribution to
the Plan, plus actual earnings thereon.
Payment of benefits:
--------------------
Upon termination of service, a participant may elect a lump-sum equal to the
value of his or her account or annual installments over a certain period. If a
participant's account balance is less than $1,000 upon termination of service,
the Plan Administrator will direct the trustee to make a lump- sum distribution.
4
--------------------------------------------------------------------------------
Notes To Financial Statement
Note 1. Plan Description and Summary of Significant Accounting Policies
-----------------------------------------------------------------------
(Continued)
-----------
Hardship withdrawals:
---------------------
Hardship withdrawals shall be allowed in accordance with the Plan provisions,
subject to a $500 minimum.
Forfeited accounts:
-------------------
At December 31, 2008 and 2007, the Plan had forfeiture balances of $60 and $0,
respectively. This account can be used to reduce future employer contributions.
No forfeitures were used during the year ended December 31, 2008.
Administrative expenses:
------------------------
The Plan's administrative expenses are paid by either the Plan or the Plan
Sponsor as provided by the Plan document.
A summary of the Plan's significant accounting policies follows:
Basis of accounting:
--------------------
The accompanying financial statements are prepared under the accrual method of
accounting.
Estimates:
----------
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the Plan Administrator to make estimates
and assumptions that affect certain reported amounts of assets and liabilities
and changes thereon and disclosure of contingent assets and liabilities.
Accordingly, actual results could differ from those amounts.
Investment Valuation and Income Recognition:
--------------------------------------------
Investments are reported at fair value. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. See Note 2 for
discussion of fair value measurements.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date. Net appreciation (depreciation) includes the Plan's gains and
losses on investments bought and sold as well as held during the year.
Payment of Benefits:
--------------------
Benefits are recorded when paid.
5
--------------------------------------------------------------------------------
Notes To Financial Statement
Note 2. Investments
-------------------
The following is a summary of the investment information as of December 31, 2008
and 2007. Single investments representing more than 5% of the Plan's net assets
are separately identified:
2008 2007
--------------------------------------------------------------------------------
Mutual Funds
FID Growth Company $ 214,017 * $ 412,855
Fidelity Investment Group Bond 380,511 328,762
Fidelity Low Price Stock 234,395 * 409,144
FID Diversified International 460,924 608,062
FID Mid Cap Stock 200,704 * 346,539
FID Freedom 2020 291,021 386,579
Fidelity Retirement Money Market 509,375 238,219 *
Other investments 3,161,466 3,353,845
------------------------------
$ 5,452,413 $ 6,084,005
==============================
* Amount was less than 5% of Plan assets in the year indicated.
Effective January 1, 2008, the Plan adopted Statement of Financial Accounting
Standard No. 157, Fair Value Measurements, (SFAS 157) issued by the Financial
Accounting Standards Board (FASB). SFAS No. 157 defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date and
establishes a framework for measuring fair value. This framework provides a fair
value hierarchy that prioritizes the inputs to valuation techniques used to
measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (level 1
measurements) and the lowest priority to unobservable inputs (level 3
measurements). The three levels of the fair value hierarchy under SFAS No. 157
are described below:
Level 1. Inputs to the valuation methodology are unadjusted quoted prices for
identical assets or liabilities in active markets that the Plan has the ability
to access.
Level 2. Inputs to the valuation methodology include:
o Quoted prices for similar assets or liabilities in active markets
o Quoted prices for identical or similar assets or liabilities in
inactive markets
o Inputs other than quoted prices that are observable for the asset or
liability
o Inputs that are derived principally from or corroborated by observable
market data by correlation or other means
If the asset or liability has a specified (contractual) term, the Level 2 input
must be observable for substantially the full term of the asset or liability.
6
--------------------------------------------------------------------------------
Notes To Financial Statement
Note 2. Investments (Continued)
-------------------------------
Level 3. Inputs to the valuation methodology are unobservable and significant to
the fair value measurement.
The asset's or liability's fair value measurement level within the fair value
hierarchy is based on the lowest level of any input that is significant to the
fair value measurement. Valuation techniques used need to maximize the use of
observable inputs and minimize the use of unobservable inputs.
Following is a description of the valuation methodologies used for assets
measured at fair value. There have been no changes in the methodologies used at
December 31, 2008.
Common stocks: Valued at the closing price reported on the active market on
which the individual securities are traded.
Mutual funds: Valued at the net asset value (NAV) of shares held by the Plan at
year end.
The methods described above may produce a fair value calculation that may not be
indicative of net realizable value or reflective of future fair values.
Furthermore, while the Plan believes its valuation methods are appropriate and
consistent with other market participants, the use of different methodologies or
assumptions to determine the fair value of certain financial instruments could
result in a different fair value measurement at the reporting date.
The following table sets forth by level, within the fair value hierarchy, the
Plan's assets at fair value as of December 31, 2008.
Assets at Fair Value as of December 31, 2008
Level 1 Level 2 Level 3 Total
---------------------------------------------
Mutual funds $5,355,728 $ - $ - $5,355,728
Common stock 96,685 - - 96,685
---------------------------------------------
Total assets at fair value $5,452,413 $ - $ - $5,452,413
=============================================
7
--------------------------------------------------------------------------------
Notes To Financial Statement
Note 2. Investments (Continued)
-------------------------------
Changes in Fair Value and Related Gains and Losses:
During 2008, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) depreciated in value by $
2,563,482 as follows:
Mutual funds $ 2,556,445
Common stock 7,037
------------
$ 2,563,482
============
Note 3 Risks and Uncertainties
------------------------------
The Plan invests in equity securities and mutual funds. Such investments are
exposed to various risks such as market and credit. Due to the level of risk
associated with such investments and the level of uncertainty related to changes
in the value of such investments, it is at least reasonably possible that
changes in risks in the near term would materially affect investment balances
and the amounts reported in the financial statements.
During 2008, the credit and liquidity crisis in the United States and throughout
the global financial system has resulted in substantial volatility in financial
markets and the banking system. These and other economic events have had a
significant adverse impact on investment portfolios.
Note 4. Plan Termination
------------------------
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions and terminate the Plan subject
to the provisions of ERISA.
Note 5. Tax Status
------------------
Effective October 9, 2003, the Plan adopted a non-standardized form of a
prototype plan sponsored by Fidelity. The prototype plan has received an opinion
letter from the Internal Revenue Service as to the prototype plan's qualified
status. The prototype plan opinion letter has been relied upon by this Plan. The
Plan has been amended since this date; however, the Plan Administrator believes
the Plan is designed and is being operated in compliance with the applicable
provisions of the Internal Revenue Code.
Note 6. Related Party Transactions
----------------------------------
Certain Plan investments are shares of mutual funds managed by Fidelity
Management Trust Company (Fidelity). Fidelity is the trustee as defined by the
Plan, and therefore, these transactions qualify as party-in-interest
transactions. Fees paid by the Plan for the investment management services
amounted to $784 for the year ended December 31, 2008.
8
--------------------------------------------------------------------------------
Notes To Financial Statement
Note 6. Related Party Transactions (Continued)
----------------------------------------------
The Plan allows participants to have salary deferral contributions as well as
any employer contributions made during the year invested in common stock of
APEI. The Plan Sponsor, which is the Company, is the subsidiary of APEI and
therefore, these transactions qualify as party-in-interest. Participants are not
required to make investments in employer securities.
Note 7. Reconciliation of Financial Statements to Form 5500
-----------------------------------------------------------
The following is a reconciliation of net assets available for benefits based on
the financial statements to the Form 5500 for the years ended December 31, 2008
and 2007:
2008 2007
--------------------------------------------------------------------------------
Net assets available for benefits per the financial
statements $ 5,453,565 $ 6,159,679
Excess contributions refundable 9,724 -
Contributions receivable (10,876) (75,674)
-------------------------
Net assets available for benefits per the Form 5500 $ 5,452,413 $ 6,084,005
=========================
The following is a reconciliation of changes in net assets available for
benefits per the financial statements to the Form 5500 for the year ended
December 31, 2008:
--------------------------------------------------------------------------------
Contributions per the financial statements $ 2,525,241
Employee Contributions Receivable, 2008 (6,287)
Employee Contributions Receivable, 2007 47,745
Excess Contributiions refundable 9,724
Employer Contributions Receivable, 2008 (4,589)
Employer Contributions Receivable, 2007 27,929
------------
Contributions per the Form 5500 $ 2,599,763
============
Note 8. Plan Amendment
----------------------
Effective May 15, 2008, the American Public University System Retirement Plan
trustees approved APEI stock as an investment option for contributions.
9
American Public University System Retirement Plan
Schedule Of Assets (Held At End Of Year)
Form 5500, Schedule H, Item 4i
December 31, 2008
--------------------------------------------------------------------------------
Employer Identification Number: 01-0724370
Plan Number: 001
(b)
(a) Identity of Issuer, Borrower, (c) (d) (e)
Lessor, or Similar Party Description Cost ** Current Value
--------------------------------------------------------------------------------
Mutual funds:
* FID Fidelity Mutual Fund $ 43,700
* FID Puritan Mutual Fund 179,777
* FID Value Strategies Mutual Fund 46,334
* FID Contrafund Mutual Fund 180,517
* FID Equity Income Mutual Fund 134,142
* FID Growth Company Mutual Fund 214,017
* Fidelity Investment Group Bond Mutual Fund 380,511
* FID Intermediate Bond Mutual Fund 224,304
* FID Value Mutual Fund 161,668
* FID OTC Portfolio Mutual Fund 18,925
* FID Overseas Mutual Fund 84,120
* FID Leveraged CO Stock Mutual Fund 27,256
* FID Real Estate Investment Mutual Fund 41,119
* FID International Discovery Mutual Fund 3,919
* FID Capital Appreciation Mutual Fund 107
* FID Blue Chip Growth Mutual Fund 243,187
* Fidelity Low Price Stock Mutual Fund 234,395
* FID Equity Income II Mutual Fund 39,942
* Fidelity Aggressive Growth Mutual Fund 142,217
* FID Diversified International Mutual Fund 460,924
* FID Dividend Growth Mutual Fund 189,154
* FID Export & Multination Mutual Fund 81,302
* FID International Capital Appreciation Mutual Fund 1,326
* FID Small Cap Independence Mutual Fund 22
* FID Mid Cap Stock Mutual Fund 200,704
* FID Large Cap Stock Mutual Fund 55,321
* FID Freedon Income Mutual Fund 58,759
* FID Freedom 2000 Mutual Fund 23,892
* FID Freedom 2010 Mutual Fund 105,608
* FID Freedom 2020 Mutual Fund 291,021
* FID Freedom 2030 Mutual Fund 173,736
10
American Public University System Retirement Plan
Schedule Of Assets (Held At End Of Year)(continued)
Form 5500, Schedule H, Item 4i
December 31, 2008
--------------------------------------------------------------------------------
Employer Identification Number: 01-0724370
Plan Number: 001
(b)
(a) Identity of Issuer, Borrower, (c) (d) (e)
Lessor, or Similar Party Description Cost ** Current Value
--------------------------------------------------------------------------------
* FID Small Cap Retirement Mutual Fund 50,067
* Fidelity Spartan Total Market Index Mutual Fund 77,165
* Fidelity Spartan Extended Market Index Mutual Fund 14,148
* FID Short Term Bond Mutual Fund 55,995
* FID Fifty Mutual Fund 139,135
* FID Large Cap Value Mutual Fund 2,151
* FID Freedom 2040 Mutual Fund 153,232
* FID Mid Cap Growth Mutual Fund 210
* FID Total Bond Mutual Fund 52,131
* FID Value Discovery Mutual Fund 872
* FID Freedom 2005 Mutual Fund 2,695
* FID Freedom 2015 Mutual Fund 43,425
* FID Freedom 2025 Mutual Fund 29,085
* FID Freedom 2035 Mutual Fund 93,962
* FID Small Cap Value Mutual Fund 55,304
* FID Freedom 2045 Mutual Fund 19,581
* FID Freedom 2050 Mutual Fund 15,269
* Fidelity Retirement Money Market Mutual Fund 509,375
-------------
Total Mutual Funds 5,355,728
* American Public Education Inc. Common Stock 96,685
-------------
Total Investments $ 5,452,413
=============
* Party-in-interest.
** Historical cost information is not required for participant-directed
investments.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
AMERICAN PUBLIC UNIVERSITY SYSTEM
RETIREMENT PLAN
Dated: June 26, 2009 By: /s/ Harry T. Wilkins
-------------------------------
Name: Harry T. Wilkins
Title: Executive Vice President and
Chief Financial Officer of
American Public Education, Inc.
12
EXHIBITS
Exhibit
Number Description of Exhibit
-------- ----------------------
23.1 Consent of McGladrey & Pullen LLP, Independent Registered
Public Accounting Firm