1. STOCK OWNERSHIP EMPLOYEE PLAN 2014
Welcome to our annual ESOP certificate meeting. This meeting is intended to celebrate the benefits of employee ownership, enjoy a company luncheon, hand out certificates and provide a forum for participants to participate in the meeting and ask questions about our ESOP.
Included in your envelope are your ESOP certificate, the SAR or the Summary Annual Report for 211 which is the basic financial statement of the ESOP.
2014

2. ESOP CHAMPIONS Rene Shirley Nancy Donna Karel Therese
TUCSON COLORADO SPRINGS SEATTLE
Donna Karel Therese
RENTON MESA ALBUQUERQUE
Jennifer Sev Chris
LAS VEGAS CHULA VISTA DENVER
John Dana Kate
EAST VALLEY HOUSTON SOUTH DENVER
Lisa Erin Rich
WEST ALBUQUERQUE MESA CORPORATE CORPORATE
Every campus and corporate has an ESOP champion (you ESOP champions represent members of the Pima ‘family’ that have volunteered to help spread the word and carry the ESOP banner). Rich Almeroth is our Controller and Liby Lentz is our Human Resources Director and both are based in Corporate Tucson, they are the behind the scenes ESOP administrators

3. Past ESOP Share Price Winners
George Borchers Seattle $252.57
Darv Nomann Mesa $267.35
Angie Dolfo C Vista $670.00
Ann King C Vista $1,970.00
Steve Zone Las Vegas $2,000.00
Ann Castillo C Vista $2,000.00
Jed Miles C Vista $1,920.00

4. 2011 ESOP Share Price Winner
Tara Dailey
ALBUQUERQUE CAMPUS
$2,560.00
$1,920 for 2011 is a 4% share drop in price or an $80 decrease in per share value

5. ESOP EMPLOYEE OWNERS 110 New employee owners in 2013
310 Employee owners are 100% vested
In 2011 – we welcomed 121 new plan participants throughout Pima – new plan participants must work a minimum of 1,000 hours.
228 participants or 32% of the plan participants are 100% fully vested in the ESOP.
To become fully vested you must work 1,000 hours each year for SIX years or be 65 years of age or older.
When Pima implemented the plan in 2002, they retroactively vested employees in the plan, so anyone who had been with Pima prior to 2002, received employment credit for years of service. Very nice of the Luebke family to do that.
So currently, as of the end of 2011 we have 704 participants. The 704 participants, include those of us actively employed as well as those former employees who are receiving ESOP benefits (distribution checks!!) or waiting to receive distribution checks in the future.
600 active participants; 704 with account balances
785 Employee owners
(636 employee owners are active, but 785 have an account balance)

6. ESOP AGENDA VALUE OF EMPLOYEE OWNERSHIP EARNING ESOP SHARES VESTING
VALUATION
STOCK APPRECIATION - GROWTH of PMI’s ESOP – ADDING VALUE
Some of the info today will be review for the longer termed employee owners and new info for the new employee owners – review of the basics, plus some exciting news for everyone and some new info for participants who have been on the plan at least 10 years and are at least age 55

7. VALUE OF EMPLOYEE OWNERSHIP
Employees sharing in the success
they are helping to create

8. Employee ownership works through the ESOP via a retirement plan – the benefit to employee owners is created through growth in the company’s stock value.
Employee owners are responsible for working together and improving the growth and performance of their company.
In exchange for growing the company and improving performance, shares are allocated to employees and held in an ESOP Trust until the employee retires or leaves the company

9. ESOP-Owned Companies Practice:
Financially meaningful ownership stake for employees
Average ESOP account value is $105,227
Open Book Management
Employees understand how PMI earns revenue and profit
OBM meetings; review of I/S; sharing campus results of critical numbers and net operating income
Rewarding of employees by sharing profits
Service awards; 401(k) profit sharing match; year end rewards
Education of employees to understand the business
Growth goals; new programs; new campuses; Online degrees

10. EARNING ESOP SHARES

11. Shares of PMI stock…
The ESOP is an investment plan primarily consisting of PMI stock
ESOP has 43, shares or 47.8% ownership
29, have been released to participants and 14,475 are shares in suspense (for future allocations)
Set amount of shares released each year to employees
1,000 shares x $2,560 = $2,560,000 in value
– employee retention plan – employees who stay and help grow Pima may reap the rewards of the growth in the future
– investment plan – it’s a long ter, investment plan that requires daily care to grow in value

12. Shares are released annually to employees who work 1,000 hours in the Plan year and are employed on the last day of the Plan year (12/31/2014) Shares are earned annually based on total compensation

13. VESTING

14. 310 Employee owners are 100% vested
Six year vesting schedule:
year 2 20%
Year 3 40%
Year 4 60%
Year 5 80%
Year 6 100%

15. ESOP is an employee retention tool…
the longer you work for Pima, the more vested you become in the ESOP and the greater the stake you have in the outcome of the ESOP’s performance … for your retirement, for your future
(remember it takes 6 years to become 100% vested)
If you leave early…
you leave $$$ on the table

16. VALUATION

17. HOW IS VALUE DETERMINED?
Appraisal was conducted by an independent appraiser with extensive experience preparing ESOP appraisals
The value of the company stock is determined annually by a professional independent appraiser and is not arbitrarily set by management. The appraiser does not work for Pima – instead he works for the ESOP Trust, in other words for us as employee owners.
The appraiser determines the value of the stock based on various factors such as: historical earnings of the company and future earnings expectations; how close we come each year to meeting our financial and budget goals; how well our industry is doing – private, for profit vocational education – all of his appraisal work determines the value of your ESOP account as shown in your annual ESOP certificate
Value grew by $300 or 13% from the 12/31/12 stock price of $2,260 to $2,560 at 12/31/13
VALUATION

18. FACTORS AFFECTING STOCK PRICE
POSITIVE
A very successful business history of 43 years
Established market presence in 7 states
Well-trained, professional employees and management team
Strong sales growth and profit margins over the past 10 years;
Positive program growth: increased bachelor degree programs, 12 associate degree programs and 11 certificate programs
Enrollment growth due to a highly effective call center (ASC) and marketing initiatives
Revenue in 2013 was $122,393,000 an increase of 11.5% over 2012
Newer campuses accounted for the revenue gains: Houston; Aurora, Online and Albuquerque West
2013 was a year of new monthly records! Every month in 2013 was the BEST of any year for PMI collectively!
VALUATION

19. ADDING AND CREATING VALUE
GROWTH of
PMI’s ESOP
ADDING AND CREATING VALUE

20. PMI Leadership actively seek ways to grow the Company:
GROWTH OF PMI STOCK
PMI Leadership actively seek ways to grow the Company:
Organic Growth: Increase student census through offering more programs (new and transplanted programs)
Growing New Campuses: Houston, West Albuquerque, Aurora
New program offerings at campuses: Paramedic
New online program offerings: BSHCA, BSPTA
PMI growth plans include new campuses, new on ground programs and new online programs
GROWTH

21. GROWTH