Good day, ladies and gentlemen, and welcome to the Q2 2014 American Public Education Inc earnings conference call. My name is Whitley. I’ll be your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this call is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Chris Symanoskie, Vice President of Investor Relations. Please proceed, sir.

Thank you, operator. Good evening and welcome to American Public Education’s conference call to discuss financial and operating results for the second quarter of 2014. Presentation materials for today’s call are available in the webcast section of our investor relations website and are included as an exhibit to our current report on Form 8-K filed earlier today. Please note that statements made in this conference call regarding American Public Education or its subsidiaries that are not historically 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 can cause actual future events or results to differ materially from such statements. Forward-looking statements can be identified by words such as anticipate, believe, seek, could, estimate, expect, intend, made, should will and would. These forward-looking statements include, without limitation statements regarding expected growth, expected registration and enrollments, expected revenues, expected earnings and plans with respect to recent future investments and partnerships. Actual results could differ materially from those expressed or implied by these forward-looking statements as a result of various risk factors, including the risk factors described in the risk factors section and elsewhere in the company’s annual report on Form 10-K filed with the SEC and the company’s other SEC filings. The company undertakes no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future. This evening, it’s my pleasure to introduce Dr. Wallace Boston, our President and CEO, and Rick Sunderland, our Executive Vice President and CFO. Also available for questions today is Harry Wilkins, Executive Vice President, Chief Development Officer and CEO of Hondros College of Nursing. Now, at this time, I’ll turn the call over to Dr. Boston.

Thank you, Chris, and good evening, everyone. I’ll begin using Slide 3 our call with an overview of our second quarter results, provide a brief update on the progress we’re making with respect to our strategic goals. Then Rick Sunderland, our CFO will discuss our financial results and provide perspective on our outlook for the third quarter of 2014. At American Public University System, overall net course registrations declined 3% in the second quarter of 2014 compared to the prior year period. Net course registrations by students using Department of Defense, or DOD, voluntary education tuition assistance programs, also called TA programs, declined 1% year over year. While the prior year comparison was adversely impacted by a temporary suspension of TA programs occurring in April of 2013, the results of the most recent second quarter represent a sequential improvement in the rate of decline compared to a more significant 10% decline in net course registrations by students using TA in the first quarter of 2014. We believe that American Military University, or AMU, continued to enjoy a strong leadership position among the military community in 2013, a time of significant administrative and programmatic change in the military’s voluntary education programs. Despite these changes, the fundamental needs for higher education in the military remain. The military continues to use education as an important component of its recruitment efforts. Educational attainment is required for advancement within the military and the trained and highly skilled fighting force is still a national security priority. Moreover, we’ve been told by officials within the DOD that funding of TA programs is expected to remain at current levels through 2015. However, tuition assistance can be changed at any time as we saw last year. That said, future changes to the military’s voluntary education program may continue to…

Thanks, Wally. Moving on to Slide 5, financial results summary, American Public Education’s second quarter 2014 financial results include a 6% increase in revenues to $85.5 million compared to $80.9 million in the prior period. The increase in revenue was due to the inclusion of Hondros College of Nursing or our Hondros segment, which earned revenue of $7.2 million in the second quarter of 2014. In the quarter, our API segment revenues declined to $78.3 million from $80.9 million, a decrease of 3% compared to the prior year period. This decline in revenue was primarily a result of a year-over-year decrease in net course registrations at APUS. As previously discussed, we believe that the volatility and softness in military enrollment is in part related to marketplace confusion over changes to TA eligibility as well as other administrative changes in the military TA program. In addition, we believe the volatility we are experiencing in FSA enrollment is in part related to strong prior year growth in net course registrations which makes for a difficult year-over-year growth comparison, the initiatives we have undertaken to improve our quality mix of students and the broader marketplace headwinds impacting online higher education in general. In the quarter, on a consolidated basis, our costs and expenses increased 9% to $69.6 million compared to $63.7 million in the prior year period. The increase was due to the inclusion of the results of our Hondros segment, which was partially offset by a decrease in expenses in our API segment resulting from lower net course registrations and lower payroll costs. Overall, our margins were impacted by the inclusion of our Hondros segment in the 2014 period. Our Hondros segment has a lower operating margin than our APEI segment largely because Hondros offers the majority of its courses at physical…

(Operator Instructions) Your first question comes from the line of Corey Greendale with First Analysis. Please proceed. Corey Greendale – First Analysis: Hi, good afternoon.

Hi, Corey. Corey Greendale – First Analysis: Hey. So first, on the guidance, you gave a lot of color around the trends by segment in Q2. Can you talk a little bit about that in… elaborate on that topic in Q3 and kind of what’s driving the continued declines?

Sure. Rick, you want to take that?

Yeah. So the overweight there in terms of what’s driving the decline’s going to be in the TA market, kind of mid teens in terms of that decline, FSA down low double digits. And we see positives in both VA, which we’ve been experiencing and potentially in the cash business. So the non-TA and VA’s likely going to be positive, slightly positive. Corey Greendale – First Analysis: And just kind of building on that, and what do you think is driving the accelerated declines in FSA for example?

We continue to try to tweak our attention to marketing in order to find more qualified FSA students, Corey. So I think we’ve talked on previous calls about how we’ve combined the detailed demographics analysis with our ability to pinpoint that from internet advertising perspective as well as combining it in some markets with radio and TV. So we continue to work on that. It’s providing us… while the results are mixed overall, we did have improved retention and lower failure and withdrawal rates primarily because we’re seeking as hard as we can to find better students. Corey Greendale – First Analysis: Okay. And similarly on the TA side, but can you just give us kind of the current lay of the land on what’s changing in Q3 relative to Q2?

Well, I think on the TA side, DOD is going through a lot of changes. They’ve implemented this new MOU, which I think we’re currently on the third version and there are discussions, which goes effective on September 5th and there have been rumors that maybe Version 4 will come out before the third version’s effective. So they’ve done things like in the Army. They’ve implemented a manual form that has to be signed before anybody can enter the automated system that cost tens of millions of dollars to develop years ago. So I would say that a number of these issues are politically designed and a number of these issues are designed possibly to save money. But nonetheless it’s created a little havoc with the process that people were used to before and providers will have to adjust and students will have to adjust. But it makes predicting enrollments pretty difficult.

And I would add to that. So there have been various version of the new MOU. We just got several weeks ago change three and the result of that is it has to be signed by September 5th and, as Wally said earlier, we’ve signed it. We’re waiting for a counter signature from Department of Defense. But interestingly enough, so there’s a listing online of schools that participate and the listing represents those that have signed the MOU and while we are currently under an active MOU, meaning the prior version, all schools were deleted from that list and as they’ve signed the new MOU, they’ve been added back. So if you go online and look at the list of schools that are under the MOU, we’re not actually listed currently, which I just think is flat out incorrect that they would do it that way. But I think that’s created some headwinds in the market where students have looked online to find us listed and we’re not currently listed. We expect to be back on that listing shortly because we’ve signed. But I think that’s created… that’s depressed TA enrollment going into the third quarter. Corey Greendale – First Analysis: That’s helpful. And then on the class side, you’ve done a nice job of managing costs in the current environment. I don’t think you’ve made any real wholesale changes, so can you help us think through if enrollments continue to decline, what opportunities there may be to impact the cost structure more significantly and, specifically, how we should think about ICS expense in a declining enrollment environment.

Well, our ICS expense is… we have a mix of part-time faculty along with full-time faculty and we try to assign our course registrations appropriately through a very elaborate scheduling program that we developed in partnership with another company about two years ago. So we think we can head off changes there by being very adept schedulers and keeping our cost close to variable even though we do have 400 and something full-time faculty members. As far as the other things, we have service level attainments for our various departments, whether it’s financial aid or student services and if the number of students we serve drops, then we’ll look at how we manage those departments. Corey Greendale – First Analysis: Thank you.

Your next question comes from the line of Adrienne Colby with Deutsche Bank. Please proceed. Adrienne Colby – Deutsche Bank: Hi, thanks for taking my question. I was wondering in terms of your marketing expense, I know in the first quarter there had been some delayed spend. Just wondering if, again, the second quarter there were unusual changes there or if that’s kind of a run rate we should be looking for for the back half of the year.

I think there was… as we talked about in our last call, we had some marketing costs from Q1 that rolled into April. And so many times, particularly when we are utilizing the target market approach, which is what we’re calling our review of demographics for civilian marketing that sometimes we can have a delay of two or three weeks before an order for media’s put in and so towards the end of the quarter, whether that money gets spent or not is really a matter of the advertising orders being executed on time. So ideally if you ignore the carryover from the first quarter into April, I would say that we continue to try to spend, to cap our spending around 20% but at the same time, modeling that precisely when we can’t predict exactly what the enrollments are going to be, particularly now in both the tuition assistance as well as the FSA market, makes it not exactly an exact science. But we’ll continue to try to manage it along that 20% perspective. But if we get a little higher, it’s probably due to timing more than anything else. Adrienne Colby – Deutsche Bank: Okay. You mentioned some improvements and persistence in your FSA students. Just wondering if you could talk about what you think is driving that. And I know you mentioned piloting some orientation programs you can offer in the beginning of student’s tenure, so I don’t… where you’re at in terms of the rollout of those mandatory orientations.

We’ve always had a mandatory orientation for someone who transfers in with no credits. So we’ve actually gone through a review of our top five volume general education courses as well as our required orientation course, College 100. We’ve put together teams of faculty members and program directors who have looked at the engagement of students in those courses in the first two weeks and we’ve reduced our DWIFs which is sort of an industry standard term, grades of Ds, of withdrawals, incompletes and failure rates. And we’ve been able to reduce those through increasing engagement upfront in the first two weeks of the class. Adrienne Colby – Deutsche Bank: If I can just ask one last one, can you update us on what the enrollment was in your MOOC? I think you said you’re six weeks into that.

That’s a good question. I’ll ask somebody to try to find that. It was… I think we intended to cap it at about 1250 and I think we ended up going over a little bit to around 1400. Adrienne Colby – Deutsche Bank: Thank you.

Your next question comes from the line of Peter Appert with Piper Jaffray. Please proceed. John Crowther – Piper Jaffray: Yes, you’ve got John Crowther on for Peter. Just have a question about the nursing school. I wonder if you could maybe talk a little bit if there’s any seasonality to that business in the back half of the year and talk about the capacity that you have there right now versus how many students are enrolled and what demand trends might mean for additional capacity down the road.

Sure, Harry?

Yeah. It is a little bit seasonal. The fall quarter is usually a little bit better than the others. And the key there in terms of limitation… it isn’t necessarily class size or the building size. It’s the clinicals. We really… that’s why we’re trying to establish these new relationships. We have 13 new relationships this year. We need to get more clinical spots so we can place our students. As part of the curriculum they have to do clinical. So that’s the limiting factor right now but we certainly think we can have good growth. We’re projecting 6% growth in the third quarter and we’re looking to continue to grow. We still have the Department of Ed has not yet given us final approval on our change of ownership, which currently limits us from expanding to other sites. But certainly that’s part of the long-term strategy of growing the business, too. We also are launching evening and weekend classes for the first time in the fall and we’re anticipating that that’ll have a positive impact on enrollment going forward. John Crowther – Piper Jaffray: Great. And then just you’ve talked a lot about the efforts you’ve made on the APUS side in terms of improving persistence. Just looking at 3Q guidance, it looked like the total course registration number is a little bit lower than I would expect given even the pressures you’ve seen on new students there. I’m wondering if there’s any sort of one-time items there or if some of those benefits to persistence might take a couple quarters before they really start to show up in the numbers.

I think they will take a couple of quarters. For example, the positive results we discussed were really results from students who took courses in the second quarter and so we didn’t have all those initiatives in place in the first quarter or the last two quarters of 2013. So as we continue to roll through the initiatives with the new students primarily, we should see results but we aren’t going to see them obviously in the third quarter of this year.

Your next question comes from the line of Jeff Silber with BMO Capital Markets. Please proceed. Jeff Silber – BMO Capital Markets: Thanks so much. Just wanted to circle back to Hondros. Was there a specific reason why new student enrollment declined in the second quarter on a year-over-year basis?

Yeah, we’re… again, we’re comparing it with a time when the company was owned by two individuals as a private company and the enrollments were not really consistent from one quarter to the next. If they spent money on marketing, they got enrollment. If they didn’t, they didn’t. It wasn’t… I think what you’re seeing now is more consistent enrollment and we’re having to deal with the fluctuations year over year of the times in the past when it wasn’t necessarily consistent. So they had good quarters and bad quarters in the past. We’re trying to be much more consistent with our enrollment. I think you’ll see those trends, they won’t be as unusual. You won’t see those unusual fluctuations going forward. I think you’ll see more steady growth. Jeff Silber – BMO Capital Markets: Okay. And you had mentioned that you had not gotten change of ownership approval from the Department of Education. Is there anything else kind of limiting your expansion of Hondros in terms of going into other markets?

No. Jeff Silber – BMO Capital Markets: Okay, great. And then just quick numbers questions. What tax rate and share count are embedded in your EPS guidance?

So the tax rate, the year-to-date tax rate you should use going forward, the share count would be 176177 I think is the number.

And the tax rate’s 38.2%. Jeff Silber – BMO Capital Markets: All right, thanks so much. Appreciate it.

Your next question comes from the line of Jerry Herman with Stifel. Please proceed. Jerry Herman – Stifel: Thanks, everybody. Wally, I was wondering if the bad debt expense is a reasonable run rate number.

Well, I wish it wasn’t. But if you recall, when we did our recent conversion, we had a number of hiccups with that and so typically bad debt is a sequential recognition that if we can’t collect it over the course of the next 12 months, we need to reserve for that. And while we’ve improved tremendously with the interaction with that software, it’ll take us a while to get that bubble out. Jerry Herman – Stifel: Great, thanks. And then the last couple of quarters you guys broke out the operating income coming from Hondros. Can you give us that number from the quarter?

Sure. The operating income from the quarter was $783,000, year to date is $1.41 million. Jerry Herman – Stifel: And now that I’ve got my voice back I’ll ask a longer question. With regard to funding, appreciate the comments about the stability in funding. But in the past, you’ve talked about some of the eligibility changes and I’m wondering, realizing there’s confusion in the market for would-be students, I’m wondering if you can have updated thoughts on how those eligibility changes might impact your traditional student profile. In other words, what percentage of students may not be eligible based on sort of the legacy profile that enroll?

I assume you’re talking about tuition assistance, Jerry. Jerry Herman – Stifel: Correct. I’m sorry. Yes, absolutely, Wally. Thank you.

The eligibility that changed primarily was most of the branches said that… enlisted in their first enrollment term would not be allowed to use TA. That’s really not our profile of our student. Our average undergrad student is about 29.8 last time I looked at the precise number. And our average grad student’s approximately 36.5. So we’re not normally seeing students of that age and, in fact, our outreach people would tell you that typically a good ESO wouldn’t allow someone in their first enlistment to enroll because they’re busy training. So they changed the rule but it really wouldn’t impact who was our traditional student. Our traditional student’s generally been someone who’s an E5, which is a mid-tier sergeant, who’s in their second or third enrollment, who’s looking at enhancing their promotability as well as preparing for their career once they discharge. So I don’t think that’s as impactful as some of the other changes, particularly relating to the end consistency in funding and issues like manual forms. And probably possibly also the complexity that there will be draw downs with some of the services with the withdrawal from Afghanistan, so. Jerry Herman – Stifel: Great. Thanks, guys. I’ll turn it over.

Your next question comes from the line of Jeff Goldstein with JPMorgan. Please proceed. Jeff Goldstein – JPMorgan: Thank you for taking my question. I wanted to ask about your thoughts beyond the third quarter as you… without giving guidance, as we look at the year-over-year comparable, last year it’s getting a lot easier because the challenges. How should we think about the fourth quarter of 2014, again, just sort of directionally?

Well, we haven’t looked at the fourth quarter. And what we’ve been telling you for a while now is that pretty much all the military bases are only allowed to register 30 days out. So we have less insight to that. But if you just want to… if you recall the fourth quarter of last year, October, we had a total freeze on TA students, so we have no TA students enrolled as new or returning students starting in the month of October. We did have some students in place but…

Right. That was because of the partial government shutdown…

Right. And we’re hopeful that that’s not going to happen this year. But I guess that’s just from a comparable perspective. I think that’s the big picture evaluation of a year ago and we really have no insight towards this year’s fourth quarter. Jeff Goldstein – JPMorgan: That’s helpful. For this third quarter guidance, what is implied for Hondros as far as revenue contribution or, in other words, what’s ex-Hondros? How do you break it up between the two?

I would say the number is slightly higher than what was reported in the second quarter. We reported $7.168 million, so. Take that number a couple, $300,000. Jeff Goldstein – JPMorgan: When I do that, is it reasonable to think that revenue per registration at APUS might turn slightly negative?

Revenue per registration shouldn’t turn negative. I mean, we’ve talked about the number of net registrations declining but not the revenue per registration changing.

It has been stable. Jeff Goldstein – JPMorgan: Okay. One more question, if I may. You graduated the 10,000 students this year. When you look at graduations going forward, is that a tailwind or is it more of a headwind for your total registrations or total enrollments?

I mean, we don’t have a forecast available to share but I don’t believe we’re going to see a decline in that just speculating. And we can certainly… if something different than that comes out, we can issue an 8-K on it if we have to. But I would tell you that our good students are our good students and as long as they’re funded they should come back. And one of the things, the statistics that we track, is that of our undergrad graduates, those receiving either an associates or a bachelors degree. We still have a pretty good, steady percentage of students coming back for second degree and right now that’s running about 45%. Jeff Goldstein – JPMorgan: Great. Thank you so much.

Your next question comes from the line of Tim Connor with William Blair. Please proceed. Tim Connor – William Blair: Thank you. I wanted to follow up on Jeff Silber’s question. What’s holding up the Hondros change of ownership and then when do you expect that to go through and when do you expect to be able to grow in the new campuses and locations?

Well, we haven’t given any guidance on new campuses or locations, so we changed our Cleveland location because the lease expired. But Jeff did correctly surmise that if you want to add campuses you’ve got to get the final approval. So we put in all the paperwork within 60 days. They asked for some changes. We gave them additional paperwork and we’re hoping that it’ll be soon. I guess the disadvantage to us is that this is a different region for the Department of Education than the region that we typically deal with. So I guess they’ve got to learn a little more about us than they know and hopefully the paperwork will be processed pretty soon. Tim Connor – William Blair: Okay. And then very low marketing spend in that business. What is marketing spend? What will that look like over time and then what’s the sort of more structural margin profile of that business?

I would ask Harry. I mean, we disclosed for the second quarter that we spent about 6.9% of our revenues on selling and promotionally but, Harry, do you think that’s going to change significantly?

No, I don’t. I mean, I think that that’s the nature of that business. There’s going to be a lot of referral relationships and a lot of presence, physical presence in the community with campuses, so you don’t have to spend as much money, a percentage of revenue on marketing but we spend more on facilities, of course. So I don’t think that… I think we’ll see margin improvements certainly, particularly when we bring the LMS in house and right now we’re using… because we had a contract require us to do so, we’re using an outside party that costs about $75,000 a month, so. We’ll bring that in house as of January 1st when the current contract expires and then we’ll have some… see a margin improvement there. But I think the marketing spend as a percentage of revenue won’t dramatically change. Tim Connor – William Blair: And then having been involved with that business for almost a year now, I guess what are your big picture take aways on the nursing education market in general and how has the business met your expectations so far?

Great management team, great business. The nursing is… healthcare, the nature of healthcare in our country is really changing more and more. The healthcare is being pushed down to nurses and the requirements that healthcare providers are requiring from nurses is increasing, all of which is good for us. More and more nurses are required to be registered nurses. More and more nurses, more and more healthcare providers are seeking nurses with BSM degrees at least. We think that trend’s going to continue to MSM degrees and DNP degrees, doctorate of nurse practitioner degrees. We’ll providing more and more of the healthcare and we think that life nurses will need to be lifelong learners. Those nurses are required to have continuing professional education, which also gives us opportunities to provide… in order to maintain their licenses once they get them, they need to have continuing education courses, which we can provide. So we’re very excited about the opportunity. Nursing is a very fragmented… nursing education in the US is very fragmented. We think there’s great opportunity for us to emerge as a real leader there. Tim Connor – William Blair: Okay. Thank you. And then final one for me, the business as a whole, it’s been going on five, six years of operating margin compression. Obviously the end markets are a little more challenging now than they have been in a while. But is this a kind of temporary dip in margins or a more structural reset toward just a new normal?

I would say that the issue for us really hasn’t been margins as much as it’s been revenues, and choppy revenues and enrollments. Overall, higher education enrollments peaked in the fall of 2011 and with increasing access to online technology, particularly by state schools, all of us have seen increasing competition online and so we’re trying to make the best of areas where we have niches, where we can focus on increased advertising and promotion and where we offer degrees that are offered by everybody else, it’s highly competitive. So I would say that I think we do a great job of managing our costs and trying to maintain the margins and in the periods that we don’t, it’s really because we probably didn’t hit the revenue side that we were hoping to hit.

And we still have the pricing flexibility.

And by the way, we… that’s true. We still have flexibility in pricing by being so low and the real difficulty of implementing a variable pricing strategy is we need to have the systems in place to do that. Tim Connor – William Blair: Okay, really quick follow-up there. So would you consider another… passing on another fee increase in FSA?

We would consider it if we had the capability to do that. So right now we are in the midst… we talked about it on one of our calls, either the last one or the one before. We’ve got a major reprogramming of our shopping cart, we call it, inside of PAD that will allow us to do flexible pricing by degree program and as soon as we get that capability in place, we may consider some change, particularly on the FSA side, which isn’t as probably sensitive as the military market is. Tim Connor – William Blair: Okay. Thanks very much, guys.

(Operator Instructions) Your next question comes from the line of Trace Urdan with Wells Fargo Securities. Please proceed. Trace Urdan – Wells Fargo Securities: Thanks. I wondered if you guys have seen any increased use of FSA by members of the military, in other words, places where the tap dollars are insufficient. Are people dipping into FSA and can you even see that?

Interesting you ask that question, Trace. I don’t have a quarter by quarter analysis but last year that ran about 30% of our military students used FSA and I would say the vast majority, if not all of that, was enlisted. The officers probably make more than enough to not have to dip into FSA. So I haven’t heard anyone inform me that that percentage has change. But interestingly in the MOU, the DOD made it a requirement that all institutions that want to participate in the MOU have to be participating in the FSA program and there are quite a substantial number of small for profits that don’t participate in FSA that I think have 15 or 18 months to be FSA eligible otherwise they can’t participate. Trace Urdan – Wells Fargo Securities: That is interesting. And then the other thing I wanted to… I don’t think you touched on this. I apologize if you did. Any commentary about differences in demand by program area? Are you seeing any meaningful spread there or maybe give us a sense of the range?

The timing of this… we have a board meeting this week, which is our annual strategic planning meeting, so that hasn’t occurred yet and that’s one of the things we’re looking at. But to the best of my knowledge, we don’t have any major changes one way or the other. We do have some new programs and when we offer new programs they get higher enrollment up front. But I can’t think of any specifics that would be significant one way or other than some brand new programs, which have really enrollment numbers. Trace Urdan – Wells Fargo Securities: Okay. And then maybe more of a big picture question going back a little bit to the discussion you were having with Corey. I definitely appreciate what you’re doing with respect to the FSA in trying to, what I describe it sounds almost tactical in terms of trying to identify pockets of high-quality students and bring them in at a reasonable price. But I’m wondering at some more big picture level about the positioning of your product in the civilian market relative to the competition and I’m thinking specifically of Southern New Hampshire University which has seen such tremendous growth with a very aggressive marketing campaign which they seem to be able to fund somehow even though they have a price point that’s comparable to yours. And I guess I’m just asking you to comment more broadly about sort of where you see you guys positioned in the civilian marketplace and whether there’s a… it’s seems to me that your value proposition should be so strong relative to competition and we’re not seeing evidence of that. And I’m wondering if you feel like there’s a disconnect there in terms of just awareness or I don’t know, something. Sorry for the broad nature of the question, but.

No, I understand. I think if you look at most of the data over the last five years, particularly on the civilian side, higher ed has not been price sensitive. There are a couple of recent studies that have come out. I may have tweeted links to some of those studies over the last 60 days that indicate somewhat more price sensitivity with certain segments of the population overall, either not enrolling or enrolling in less expensive institutions and clearly not inclined to borrow. I think student debt for new students fell in the last year compared to previous years. But it’s been… I would tell you that our sensitivity to pricing stemmed from our familiarity with the military and I think our success in growing that market over the years, well, in addition to quality, also related to being very price sensitive and not increasing tuition to force them to go out of pocket on their expenditures. That really isn’t the case yet if you look at the data. And so as we get the capability to be much more flexible in how we price, which is a systems issue for us, unfortunately, we’re going to take this into a much more in depth study of what the right price is for the civilian marketplace because I do believe and I would actually start this with graduate degrees first because they’re easier to compare, that if you look at how much lower we are on our graduate degrees compared to the in-state grad degree rates, I would say that’s probably negatively influencing us. And so given what I believe is a high-quality faculty who are staffing those graduate programs, to the extent that we can get some flexibility, that’s where I see our biggest flexibility coming first, particularly among civilians. Trace Urdan – Wells Fargo Securities: Okay, that’s really interesting. I’m glad I asked that question. Thanks.

There are no further question in queue. I will now turn the call back over to Mr. Symanoskie. Please proceed, sir.

Great. Thank you, operator. That will conclude our call for today. I wish to thank all of today’s callers for participating and for your interest in American Public Education. Thank you and have a great evening.