Good day ladies and gentlemen and welcome to the first quarter 2008 American Public Education Incorporated earnings conference call. My name is Akeia and I’ll be your operator for today. At this time all participants are in a listen only mode. We will conduct a question and answer session towards the end of the call. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call Mr. Chris Symanoskie.

Good morning everyone and welcome. Before we begin, please note that an electronic copy of the PowerPoint presentation that accompanies this conference call is available in the webcast section of our investor relations website and is included as an exhibit to our current report on Form 8K filed earlier today. Also, please note that statements made in this conference call regarding American Public Education or its subsidiaries that are not historical facts are forward-looking statements based on current expectations, assumptions, estimates and projections about American Public Education and the industry. These forward-looking statements are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Forward-looking statements can be identified by words such as anticipates, believes, could, estimate, expect, intend, may, should, will and would. These forward-looking statements include, without limitation, statements about the second quarter and full year 2008 outlook and statements regarding expected growth. Actual results could differ materially from those expressed or implied by these forward-looking statements as a results of various factors including the various risks described in the risk factors section and elsewhere in the company’s annual report on Form 10K filed with the SEC. The company undertakes no obligation to update publically any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. Today, our speakers are Wally Boston, CEO of American Public Education and Harry Wilkins, Executive Vice President and CFO. Now, at this time I’d like to turn control of the call over to Wally Boston.

Good morning everyone. I’m pleased to report another quarter of strong financial and operational performance of American Public Education. During the first quarter of this year our revenues increased 65% to $23.2 million. This growth was driven by continued strong registration growth, improving student retention and increases in the number returning disenrolled students. Our operating margins increased to 23.5% in the first quarter compared to 19.1% in the same quarter of last year. We were able to increase margins despite staffing increases, new public company expenses and the need to expand facilities to accommodate our current and future staffing needs. In this quarter our net income increased to $3.4 million, a year-over-year increase of 122%. Our reported earnings of $0.18 per diluted shares, $0.04 above the high end of our previously issued earnings guidance range. The earnings upside is mostly attributable to higher than expected revenues. These solid results give us the confidence to raise our full year guidance. Today we announced that we are increasing our full year 2008 earnings outlook to between $0.67 and $0.72 per diluted share. We are also excited to announce that we have signed a memorandum of understanding or MOU with the Navy effectively completing the process for full acceptance in to the Navy College Partnership Distance Learning Program or NCPDLP. The MOU is simply an agreement that details the requirements for participation in the program. Our membership in the Navy’s program will give us broader access to Navy bases and greater visibility on Navy websites. That opportunity is important to us as the Navy is the second largest branch of the military but ranks fourth as a percent of total [APUS] military enrollment. This development is likely to help us expand our success with Navy students and allow us to increase our market share with the military overall. In the near future we expect to be listed as a member institution on the Navy’s education websites and printed material for service members and in communications to educational service officers. We’ve been told by the Navy that all of these events will happen after each of the new schools accepted into the program sign their MOUs. This process is nearing completion. We have also launched efforts to deepen our relationships with ESO on Navy bases and we have created a custom landing page with our approved programs that will link from the Navy programs website. With the completion of another quarter of record results behind us and our continued success in expanding in both the civilian and military markets, we have greater visibility and confidence in our expected performance in 2008. Our CFO, Harry Wilkins is here today to tell us more about our recent performance and expectations for the remainder of the year.

I’m going to speak to the Slides that are in the PowerPoint presentation. I’m going to start with the fourth Slide which goes over our first quarter financial results. This quarter’s record number of registrations represents the 9th consecutive quarter we’ve had year-over-year growth and that’s because that’s how many quarters we’ve published. It’s actually been more than that but we can’t talk to the things we haven’t published. Net course registrations for the first quarter 2008 increased 59% over the comparable period of the previous year, roughly 33,100 net course registrations for the period. That was driven by stronger than anticipated growth from returning students. We actually had a retention increase, about 4% over the comparable period last year. We had more returning students taking more courses. In addition to that, we had a 34% increase in a number of new course registrations from new students. That ended up increasing our total enrollment to our university to over 33,000 students which is about a 70% increase over the same time last year. That increase in registrations as we go in to the financials led in to the increase in revenues. We had a 65% increase in our top line growth revenues, roughly $23,200,000. That was a little more than we had anticipated but it was good. At the same time, we kept our expenses in line so our margins growth went from 19% in the previous comparable period to over 23%, nearly 24% for this first quarter. That all works out to a net income of about $3.4 million, up 122% over the comparable quarter and last year our EPS of about $0.18 which is about $0.04 higher than we had given in the upper range of our guidance. That $0.04 mostly relates as Wally said to additional revenue…

At a time when tax revenues to support higher education are decreasing Federal and state governments are looking for ways to curb the rising costs of higher ed. These issues probably are going to become more prominent during a time of recession and during election year where citizens are looking to elected officials for action on the matter. Unfortunately the political solution to these problems will likely be complicated. However APEI is at the forefront of providing affordable higher education programs at a distance. We have an answer if it’s challenges of affordability. Our success can be seen in our most recent results with Title IV registrations as Harry said, up 166% in the quarter to approximately 4,000. We view this is a great sign that we are growing in the civilian market and fulfilling our mission of affordability. Recent developments in the military market are a great indication of our continued expansion in that market. We completed the process to be part of the Navy’s college program Distance Learning Partnership. We also signed and MOU with the Marine Corps Chemical Biological Incident Response Force further strengthening our presence in the military. Our plan is to launch new programs over the next two years are on track. Our faculty has been working on designing new PhD programs. This process has been proceeding has planned. We anticipate submitting them to our crediting bodies this fall. Investors can expect the public launch of doctoral programs in late 2009. The addition of these degrees will be a great complement to our existing program. Given the fact that 25% of our graduates return to us for a second degree and that our students have been asking us for doctoral programs we see tremendous opportunities to provide current and potential students affordable PhD programs at…

(Operator Instructions) Your first question comes from Trace Urdan – Signal Hill. Trace Urdan – Signal Hill: It looked like selling and promotional costs came in much lower than the 12% that you all had guided for the year. I’m wondering if you’re still thinking in terms of that 12% in the costs or maybe just more back end loaded or how you’re thinking about the spending in that line now?

I think we do have some back load of costs in there, Trace. But we actually spent about what we had anticipated in terms of dollars but we got a lot more revenue related to that. So the change in percentage was more that our revenue increased than it was that we didn’t do the spend that we anticipated. I still think 12% is probably about the most we will spend in marketing and I think we will get there. We did delay some of the marketing for our graduate programs in education because we really didn’t launch them until the second quarter and we didn’t want to get ahead of ourselves in advertising that. Also the Navy took a little bit longer to get the MOU established and some of the advertising we were going to do in the Navy that we had planned in the first quarter we’re going to do now in the second quarter. So I think that we will increase our selling as we go forward. I don’t think it’ll get more than 12% of revenue. I think we’ll spend what we need to spend to make our top line growth come in. Trace Urdan – Signal Hill: That actually leads pretty well into the next question I had which is it sounds as though you have something anticipated in your budget our your guidance for increased share in the Navy. I wonder if that’s the case and the fact that you said things were delayed a little bit, does that change your outlook for what you might be able to do with the Navy this year?

I think a lag of three or fourth months isn’t really that big of a deal. We try to not to get so granular to look at absolutes by any branch of the service but from a big picture perspective the Navy is the second largest branch in terms of manpower and our enrollment in the Navy is actually below our enrollment in the Marine Corps which is smallest. We think that now that we’ll get a lot of exposure on their website once all the new participants have signed their MOUs. It will put us all up at the same time. We’re already gaining access to bases as the ESOs hear about who’s been admitted into the program and who signed the MOU. We’ll build these enrollments and I think we’re confident that achieving this along with our new education degrees will hit the numbers that we’ve given guidance on for the year. Trace Urdan – Signal Hill: Wally, one of your competitors have on ground and online base schools has suggested that the Department of Defense was moving towards, I gather there maybe are slightly different requirements of ground based schools and online schools and that there was some suggestion that maybe standards for online schools would be raised, presumably not impacting you but maybe some of the lower quality folks that operate in the online sphere. Does any of that ring true? I wonder if you could elaborate on that?

Sure it does. You have a pretty good source. The online schools have to go through a process called MIVER and I can’t tell you what the acronym stands for but essentially their programs are reviewed and that’s how they get qualified to teach the programs on the base. Well for about two and a half, three years now there has been a process to include work on policies and procedures to include distance learning schools and the MIVER process as you might imagine some plan base schools have said if we have to go through this process why shouldn’t the distance learning schools? American Public University system actually had one of our employees, Jim Herhusky, on the MIVER committee to review all that. So we’ve been an active participant. We’re pretty proud of our programs particularly since we achieved regional accreditation. We think our programs stand out there as being high quality programs and we’re fully prepared that with the new proposed MIVER process that we’ll not only conform but as you implied that some folks running lesser quality programs by distance probably won’t get approved.

Your next question is from Mark Marostica – Piper Jaffray. Mark Marostica – Piper Jaffray: My first question relates to the trending we’ve been noticing in average revenue per student which seems to be showing an improving growth rate as you look at that metric sequentially either on a trailing 12 month basis or just the raw metric itself. Can you give us a sense why that’s starting to show improvement and if that’s sustainable?

The revenue per student is going to be better as we get more Title IV students in the mix because they’re taking more courses than the traditional. The Title IV students have to take at least six courses a year to qualify for Title IV. Our traditional military students still average about two courses a year. The revenue per student will increase as our mix changes. Last year we were for the first quarter about 7% of our registrations for Title IV students. This year it’s about 12% of our students on a much bigger base too. I think that’s the trend that will continue. Mark Marostica – Piper Jaffray: On that point what courses and programs are you seeing these students who tap into Title IV take?

It runs across the board. We actually have had a very large increase in our Liberal Arts courses since we were eligible for Title IV funds. History was one of our fastest growing programs last year. So we’re finding that there’s not a lot of online Liberal Arts degrees available to these students and the combination of our affordability and the different program offerings we have seems to be very popular with civilians. But it really does run the gamut. The like our IT programs which we launched last year and a lot of Liberal Arts courses and then a number of the civilians are in defense related industries or in fire and safety and our First Responder market and they like our traditional military courses.

I echo with Harry that the Fire Safety and Criminal Justice is coming from law enforcement and emergency management subjects are pretty popular with the FSA student.

There is one point that may not be obvious and that’s we offer courses in both eight and 16 week lengths and it does seem like the eight week courses are becoming much more popular and we’re offering more of them. There is a bit of a mix change and a little bit of revenue compression which could be impacting the revenue per student numbers on any one quarter. Obviously we recognize faster in eight week courses than we do in the 16 week courses so some of that revenue compression may be impacting your number also. Mark Marostica – Piper Jaffray: Presumably these civilian students are taking more Masters programs I believe?

Yes, that’s true but our growth in the military is still very strong and most of them are undergraduates, but yes. We’re finding that the civilians also like our undergraduate programs. There’s no question the civilians are taking more graduate programs than the military students. About 35% to 40% of our civilian students are in our graduate programs. That is true but they still are taking a lot of undergraduate courses also. Mark Marostica – Piper Jaffray: One last question and I’ll turn it over relative to the guidance. For fiscal 08 we noticed of course that you increased your total net course registration guidance up a couple thousand students, yet you held firm your new course registration guidance of 33,500. Is that because of the returning student phenomena that you’re seeing increase? Or what’s driving that nuance?

That’s exactly right. We really have tried to put in some academic improvements that we thought would enhance our retention and it’s coming to fruition. Our retention is up about between 4% and 6% a month over the same period last year and that is driving the new increase in registration’s outlook that we’ve given. We’re getting a lot for registrations from returning students and students who formerly been dis-enrolled who are coming back now that we have regional accreditation students that may have dropped out in the past now want to come back and complete their degrees as we’re a regionally accredited program.

Your next question comes from Jeff Silber – BMO Capital Markets. Jeff Silber – BMO Capital Markets: Just a follow up on the comments regarding the returning students and retention, re you doing anything differently? Are you specifically marketing towards those students a little bit harder than you have in the past?

We identified a few years back that the initial course was probably the key place to work with our undergraduate students so we sort of have an intro to college course that prepares them for the rigors of an online education, time management, the fact that if you’re in an eight week course and you miss your time in week one, next week you’ve got to make up a fourth of the course and assignments in one week and so planning is pretty important. But we’ve also as we’ve gotten more into learning outcomes assessments we put testing in there both writing and reading as well as math that allows us to triage the students so that we don’t have a student who goes in there thinking well I had trig in high school and I’m ready to take calculus in college when one high school’s trig program may be different than another high school’s trig program. We do the assessments, the triages if the results are such that we think the student’s chance for failure are pretty high if they don’t go into a remedial course in math, we make that recommendation. We’ve seen a kick up as we improve that first course which we call our Q295 where we’re getting many more students coming back than we did in the days prior to doing assessments. Jeff Silber – BMO Capital Markets: Going back to your guidance for the current quarter on your new student net course registration, I’m not going to take just a little bit here, but it looks like you’re looking for growth to accelerate in the second quarter relative to the growth you had in the first quarter. I’m not sure if my numbers are exactly right. If that’s the case is there any specific reason for that?

I think we grew 59% over the corresponding period in the first quarter and we’re projecting to grow 53%. Jeff Silber – BMO Capital Markets: I’m actually looking at the new student numbers, I’m sorry.

New student numbers. Yes, there is a reason for that. And the reason is that we are improving our Title IV processing. Last year we put systems in place that could get about 500 registrations through the process every month. We’ve improved that this year. We have about 1,400 registrations we’re getting through the process for financial aid students every month now but we still need to improve that and we really have not been getting the students through the process quickly enough. There were some students who should have gotten in March who we didn’t get through the process in time and they’re coming in April and May and what you’re seeing I think is that these process improvements we’re making are going to allow more and more students to register. It’s not a question that the students aren’t out there, it’s the question of we literally haven’t been able to get them through the process quickly enough. Jeff Silber – BMO Capital Markets: Speaking of Title IV with the potential increase in Title IV loan limits, do you think that will have any potential benefit to you? I know you’re one of the lower priced schools out there but I’m just wondering what your thoughts are on that.

I don’t think it will really help us that much. It certainly won’t hurt us but it will help other schools more than it will help us. Right now the minimum loan requirements are enough to fund our program. Now it may make a difference if somebody wants to go to school full time and have to quit their job and needs to borrow more money for living expenses and things like that, obviously our students will be able to do that and as we move into a civilian marketplace where we have more full time students maybe and maybe even some traditional college age students that might make a bigger difference to them. They may need more money for living expenses even beyond what they would currently get now with us. So it certainly can’t hurt us at all, it probably won’t help us as much as it’ll help other schools.

Your next question is from Bob Craig – Stifel Nicolaus. Bob Craig – Stifel Nicolaus: First question is how do you think about what’s ultimately necessary in terms of new registration growth in order to achieve your growth targets which I believe was in 40% registration in revenue growth?

I think the continued guidance that we gave in new student numbers for the year I think it was 33,500, I think that’ll more than help us meet our numbers guidance that we’ve given for 2008. One of the benefits we’re picking up here is this up tick in retention. We’d have to go through and measure process. Looking at our mission, Bob, we really value our accreditation and the quality that we put forth. We’re constantly recycling, evaluating outcomes assessments and reevaluating the programs and ways we can improve them. We’re always sensitive to how fast we grow. On our road show we made the comment that in the second quarter of last year when were growing at about 90% of new students we just backed off the Internet advertising because we felt that that was too high and so we’re really comfortable giving you the guidance in that new student registrations for the year and when we do out math and our projections and look at what our returning rates are we think we can hit the guidance we gave you for the year at that number.

With us, Bob, that is a key measure because again we don’t have any price increase built in. So when you look at our 65% revenue growth in the first quarter that’s all volume increase. We try to do through a combination of improving retention and new students and certainly our projected growth of 36% new students in 08 will get us to where we want to be. We do have one additional benefit though. We have a pretty long tail for our students. Those students that take six or seven years to graduate, they’re going part time. So the students who are graduating this year were enrolled six or seven years ago. So we don’t have a lot of graduates in the pipeline but just because we didn’t have that many students enrolling in the program six years ago. We may have to bump that number up in future years. We have may to bump new student growth up a little bit more as we have more people graduating. Right now 36% new student growth certainly gets us to where we want to be. Bob Craig – Stifel Nicolaus: A couple of times, Harry, you’ve mentioned the retention improvement, do you care to say what that’s gone from and to? I think at one point you mentioned you wanted to wait four quarters as a public company before outlining that a little bit in more detail. Is that still the case?

We don’t give that number out and it’s very inconsistent with the way schools measure. There is no standard measurement for retention. There’s no standard definition of what a student is. Is a student somebody who takes one course? Is a student somebody who’s been there for at least one quarter? Some people measure it who have completed one semester successfully. Since there’s no standardized measurement we’re a little hesitant, and nobody else publishes that number that I’m aware of either, so we’re a little hesitant to put a number out there. But I think we will once we get a better handle on it. We’re going through process improvements, we’re in a very dynamic environment. We’re growing 65% this year on top of 70% growth last year and we want to make sure we have good numbers to put, that we’re comfortable with and we can improve on before we share them with the world. Bob Craig – Stifel Nicolaus: Do you guys plan on building up your outreach staff? Is that still at 13 people?

No, we’ve increased the outreach staff and we have plans with the Navy, some of that’s already happened and we also have plans to do that in our criminal justice area and some other areas. Bob Craig – Stifel Nicolaus: Last question, any changes in thinking on uses for cash and cash flow? Thinking about share repurchase and/or acquisitions?

I would say that eventually we’ll have to do one or the other. We’ll have to figure out some way to maximize the value of that cash for our shareholders. Right now it’s not enough money for us to worry too much about it. We’re about $32 million or so and that number continues to increase obviously. But yes, at some point we certainly will consider acquisitions and at some point we probably would consider distributing that cash to our shareholders if we don’t have a better use for it. But right now it’s not something we lose a lot of sleep worrying about.

Your next question is from Brandon Dobell – William, Blair & Company. Brandon Dobell – William, Blair & Company: Harry, I wonder if you could reconcile something for me? Are we safe to assume that the delta between the new registrations in the quarter of 7,500 and your previous guidance of 7,800 which I think was just end of January timeframe, that the delta there was just a systems issue? You couldn’t get people processed quickly enough or was there any kind of either a deterioration in the visibility that your pad system provides you on a two, three month basis?

No, I think it was a couple of things. First of all we had a lot more returning student registrations than we had anticipated. We schedule classes five months in advance and those returning students took a lot of those classes but yes, we are continuing to make process improvements. It’s taken a little bit longer to get those students registered and that timing difference is the reason why we have 38% new student guidance for the second quarter and 36% for the year. Yes, some of those students who didn’t get in the first quarter, we’re going to make sure they get in the second quarter. Brandon Dobell – William, Blair & Company: As you think about lead flow or the success of the dollars you’re spending looking back into the first quarter or here early in the second quarter, you guys still satisfied with the flow of leads, the quality of leads, those kind of things?

I think we are. As anyone who knows about Web 2.0 and Internet marketing you’re always trying new and different things so we constantly will try new key words and throw some of them out and then ones that work, we’ll put more money behind them and we’re doing a lot more branding on Internet key words this year under American Public University because of our goal to increase the civilian side of the population and that requires some tinkering there. We’re actually happy. Do 100% of our words hit? No, but nobody else’s do either. So we’re satisfied with the flow that’s coming from the work that we’re doing?

And we’ve done some things too, we’re experimenting with some things. We had closed off international leads through our website in the past because we hadn’t found them to be quality leads. We’ve opened that back up because there seems to be more international interest in our courses. We have actually assigned one admissions person to handle in international lead flow. That’s pretty much what they do. We’re getting a little more things like that as we don’t increase tuition as the dollar becomes more declining in value compared to international marketplace, suddenly our regionally accredited US education online seems to be a little bit more popular internationally. Those are some things that are changing that we’re doing. But other than that we’re pretty much happy with the progress we’re making. Everything seems to be flowing as expected or a little bit better than we thought. Brandon Dobell – William, Blair & Company: Final question, within the originally launched education programs are you guys happy with the progress you’ve made there so far with the type of students you’re getting, sources of students? Those kind of things?

Brandon, we’re happy. We’ve had a very low profile launch on the first two degrees that we launched for a couple of reasons, one of which is that we really wanted to leverage our marketing spend once all the degrees were out there. We’re doing something that’s a little different than a lot of schools which is the goals to offer licensed programs here and a lot of people leave the students on their own to work out the licensure issues. We’re going through the process with the State of West Virginia who has the reciprocity with the other states and once we’re confident that we are going to be able to get all the paperwork done and with the approvals there we’ll put through a big marketing blitz and I think as we said either in my script or in the announcement we think we’ll begin all the degrees in September. Brandon Dobell – William, Blair & Company: Final question maybe for you Harry, any take aways from the new systems efforts that are going on in terms of how we should think about bad debt, collection periods, that kind of stuff?

No, one of the things that nobody has asked about that is going to impact us a little bit is the whole financing thing with Federal student loans. We use Sallie Mae and we have lenders that we deal with. If we decided to go to direct lending which is something everybody should be considering I think. That could conceivably have a little bit delay. I think it takes a little bit longer to get the money through direct lending than it does through Sallie Mae right now. When I came on board as chief financial officer, we had 58 days of revenue in receivables; we’re down to 22 days so we’ve really speeded up the cash collection process. That might slow a little bit if we went to direct lending, other than that I don’t really see any problems. Bad debt has not been a problem with us. We make sure that we know how we’re going to collect the money before students get in to classes. We don’t let them in to class unless we’re pretty sure we can collect so historically that expense has been very minimal here and I expect that to continue. One of my concerns with direct lending is managing default risk. I think there’s more risk of defaults on federal student loans if the government is trying to collect than the lending institutions and the guarantee agencies are trying to collect it. So, if those are the kind of concerns I have they’re more two or three years out there than short term.

Your next question comes from Clifford Greenberg – Baron Capital. Clifford Greenberg – Baron Capital: Just a couple of things further, the plans to market the education degrees is still going to be done on a local basis? Or is it a more national effort in the fall? And secondly, you mentioned that you’re trying to get your associates degrees qualified for Title IV. Please explain what we do in associate degrees now and if we do get them or as we get them qualified for Title IV, what that could mean, or could that be a big piece of the business?

On the education degrees we said that we continue to plan with our relationship marketing where we have program managers who focus is on the education degrees and they’ll focus on basically some door-to-door introductions in the states of West Virginia, Maryland and Virginia. At the same time, we’ll back that up with brochures and local advertising and as we generate students we’ll begin to increase our Internet marketing spend. Its worked for us in the past when we’ve launched programs and that’s the way we’ll do it. Clifford Greenberg – Baron Capital: So when would we go to the Internet? By the end of this year maybe? Or, is that next year sometime?

Well, it all depends on flow but one of the things you also want to do when you start a program is make sure you have enough qualified teachers to handle the enrollment so it’s going to be a slow and gradual process rather than a big, spend $2 million and bring in a lot of people and then wonder about how the heck you’re going to teach them. So, I think we will ramp it up gradually and we’ll leave it to Carol Gilbert, our very capable marketing vice president to figure that out with her team. On the associates degrees, our associate degrees have been eligible for military tuition assistance and we did not know, we actually had created an associates degree in general studies with 20 some concentrations figuring that worked out really nicely for moving up in to a bachelors degree but unbeknownst to us, since we function without Title IV for many years, if you are a for profit institution, a degree in general studies is not eligible for Title IV simply because it theoretically doesn’t lead to a job. So, you have to have associates degrees with the actual degree itself in a format that leads to a job so our academic faculty went through and restructured the degrees. We’ve put that application forth to the Higher Learning Commission and we expect to hear over the next couple of months from the. I think they’ll be fine with it namely because we’re really not changing the programs, we’re just restructuring it in to multiple degrees instead of multiple concentrations and they understand that as a for profit we have this issue with Title IV access for our students. I can’t really tell you what the outcome of that will be other than our assumption has been that it will make the associates degrees attractive to federal student aid students who have not found them attractive because we fought them for registering for those degrees because they were not Title IV eligible. If we weren’t going to change our student population and still have a bunch of military folks, I would tell you that probably that enrollment is not going to change but certainly we anticipate that there will probably be some folks from the public sector once we take the block off that will find these attractive. Clifford Greenberg – Baron Capital: And do you offer discounted online degrees in associates versus competitors like you do in some of the higher degrees?

I would say that our associates degrees don’t compare in cost to some of the online non-profits like Rio Salado. They’re there because there are students, at least in the military who get promotion points for associate degrees and so that’s really why we’ve had them historically and we don’t have an intention to discount them. Our degrees to compare at the associates level pretty favorably. Last time I checked I think they are $10 or $15 per course less than AXIA. If you look at some of the online for profit associates degrees I think we’re competitive but this is more for convenience for our students. We’re not promoting this as a big source of revenue so if that happens it will be a pleasant surprise.

Your next question is from Corey Greendale – First Analysis Securities. Corey Greendale – First Analysis Securities: Harry, as long as you brought it up on the direct lending, are you currently tied in to do that if you need to or are you going through the process to be tied in for direct lending?

We are already approved for direct lending. It would just be an internal situation where we’d have to work out the changes in processing with our third party loan servicer that we use so it would take about 45 to 60 days. There’s no reason that you can’t do both which is something that we’re also anticipating. It’s a little more complicated but you can actually participate with Sallie Mae and also do direct lending, there’s no restriction on that. We’re already approved for it, it’s just a question do we really want to change the process to do direct lending. It actually will be a little easier for us in the long run once we get these processes in place. The reason we haven’t done it previously is because traditionally Sallie Mae and the financial institutions actually gave the students a better deal. They didn’t have to pay as much in origination fees as they do in direct lending. That environment is changing as we speak and it is hard at this point to gage exactly where it’s going to be six months from now. But, we would be remise if we weren’t planning on making sure we had access to direct lending if we needed it. I still have personal concerns about the government, there’s not enough money for the federal government to fund all those loans, they’d have to raise the money. Plus, Sallie Mae and their guarantee agencies have historically offered a lot of benefits to our students in terms of ability to consolidate loans and just dealing with them. I don’t know whether we’d get the same quality of service for our students from the federal government. We’re still debating internally but we’re moving towards getting direct lending in place if we need it. Corey Greendale – First Analysis Securities: I had a couple of questions about the Title IV market. First would be, it sounds like you’re getting pretty broad interest among your spectrum of programs. Is the interest coming primarily from people in public service professions as you expected? Or, are you seeing even interest outside those areas?

Well, we don’t really market to the broad market. You don’t see our ads on TV. We say our mission is educating those who serve and the substantial number of these are coming from the public service sector, government employees, fire and emergency management, law enforcement. That said, we do have people who find us, that’s the great thing about the Internet, who are teachers, who aren’t looking for an education degree by the way but are looking for that history degree with a concentration in civil war which is one of our areas of expertise. But, we’re not paying to advertise broadly. As I said on our road show, the University of Phoenix spends in two weeks what we spend in a year in marketing. We look at focusing on our niches and focusing on our core markets and at the same time we do get some folks who come in and find us who aren’t in either of those categories and we’re glad to find them.

And, we’re getting better at finding key words, there are a lot of key words that we have experimented with that we would have never thought about really putting advertising dollars in to that are turning out to be pretty good lead generators for us. It is an increasingly larger spectrum of students that are finding us and we’re finding that affordability is becoming a bigger and bigger issue with people with education. They need the education but they can’t afford in other methods so I think that people are finding us and affordability will continue to drive our growth. Corey Greendale – First Analysis Securities: And serving the Title IV market, can you give us a sense of how many admission reps you have doing that and what your hiring plans are for that?

We have the same admissions reps doing military students that are doing Title IV students. We do have, or we have added, and I think the key to increasing our ability to get people through the system is a financial aid help desk. We have a number of people and are actually hiring several more people to do that. We launched that in February and we’re starting to see the benefit. The way Title IV works, it takes about 30 days to get through the process so that launching it in February really doesn’t benefit us until about April and we’re finding that is increasing our conversion rates of Title IV students and we expect to continuing making improvements to increase the conversion rates of Title IV students. We traditionally get about between 70% and 75% of our military student lead convert to students. The Title IV has been more like 28% to 35% of people who express interest converting so we’re hoping to improve those conversion rates on Title IV with these process changes. But yes, we do have a financial help desk now. I think we have six or seven people we started with and we hired another one this month so we continue to grow that. Corey Greendale – First Analysis Securities: Just one other question on the numbers, Wally I think you said that over time sales and promotion probably gets towards 12% of revenue. If you hit the revenue guidance for next quarter do you think that sales and promotion would be around 12% or is it more a slower trend toward that level?

That’s a great question. I think that given it’s the second day of May, it’s tough to answer at this point. We’re trying to spend our budget and at the same time we don’t believe in pushing scholars towards campaigns that would be wasted or not timely.

And we really don’t want to get in to a position of starting to give guidance on individual spent line items at this point so let’s just say that we think our marketing will not exceed 12%. It was 9% for this quarter, I don’t think it will be less than that for next quarter.

Your next question comes from [James Mayor – Bank Tenmore]. [James Mayor – Bank Tenmore]: A couple of my questions have already been addressed but maybe you could elaborate if you would on the Navy program and when you think you might start to see some incremental benefit from the MOU? And also, if you could address historically you’ve had very strong referral rate because you’ve had such a good experience with the other services. Do you think that this is going to be a similar thing with the Navy or that it will take a little bit longer for this to start to ramp up and be effective?

I would tell you that you don’t do any of this overnight. We have had a historical relationship, we actually have a decent number of Navy students it’s just that the number of students compared to their size is not proportionate compared to what we get from the other branches. The importance of being in this program, when they opened it in 2002, they closed it and admission was only open to schools that were regionally accredited at the time and we were not. Once we gained our regional accreditation, we inquired and were told that it wasn’t opened so we waited until they created a process to open it and let other schools in. We weren’t the only ones admitted. By being on that website, that’s a big deal for us and for anyone else who’s on the website because that’s one of the first places that a student will look for if they want a distance learning program. The other thing it does is as ESOs get familiar with the fact that we’re now in that process, our outreach representatives can begin visiting the bases and seeing that our brochures are stocked and the education office – similarity with other branches, if we get a decent number of students usually we’re able to get office hours where perspective students can come and visit with our outreach reps. So, it will take some time, we’re not forecasting that we’re going to double our enrollment with those guys overnight but I do think that we will see the enrollment of the Navy reach about the same percentage that we have with the other branches overtime.

Your next question comes from Corey Armand – Rice Voelker. Corey Armand – Rice Voelker: You may have provided this but of the 33,000 total enrollment, how much of that was military versus non-military at March 31st?

We had not given that information. We do that annual and I think that will be our continually trend to do that. Corey Armand – Rice Voelker: So of the guidance for net course registrations from new students of approximately 33,500, you’re not willing to discuss or comment on what proportion of that might be from the military?

I don’t know the answer off the top of my head anyway because we weren’t really prepared to answer the question. Obviously, we’ve budgeted increasing civilian percentages, with a substantial increase in the first quarter this year with our [FA] registrations which are predominately civilians but it’s not an answer that I could give to you since we said we give it annual. It’s going to continue to improve.

12% of the first quarter registration were from Title IV students, which are mostly civilians. Corey Armand – Rice Voelker: Just so I’m clear, you said 4,000 registrations were from Title IV in the first quarter. I missed whether that was 4,000 of the new student registrations or the overall registrations?

That’s total.

Your next question is from Jeff Silber – BMO Capital Markets. Jeff Silber – BMO Capital Markets: Sorry, just a quick numbers question, did you disclose graduations in the quarter and are you willing to do that?

We do that annually. We don’t do that each quarter.

There are no further questions at this time. I would now like to turn the call back over to Mr. Chris Symanoskie for closing remarks.

That does conclude our conference call for today. We thank you all for your time and your interest in American Public Education. Have a great day.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect.