Apollo Group, Inc. Reports Second Quarter 2013 Results

Mon Mar 25, 2013 7:05am EDT

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PHOENIX--(Business Wire)--
Apollo Group, Inc. (NASDAQ: APOL) today reported financial results for the three
and six months ended February 28, 2013, with second quarter revenue of $834.4
million and diluted earnings per share of $0.12 per share, or $0.34 per share
excluding special items. 

"Higher education is rapidly evolving as workforce demands and technological
innovations drive change in our global economy," said Apollo Group Chief
Executive Officer Greg Cappelli. "We are further positioning our organization
and brand with our continued commitment to help students acquire real workplace
skills, achieve their academic goals, and - through the power of education -
realize their career aspirations." 

Second Quarter 2013 Results of Operations

* Net revenue for the second quarter 2013 was $834.4 million, compared to $962.7
million in the second quarter 2012. 
* University of Phoenix Degreed Enrollment was 300,800, a 15.5% decrease from
the prior year second quarter, and New Degreed Enrollment was 38,900, down 20.1%
from second quarter 2012. 
* Operating income was $29.8 million, compared to $103.7 million from the prior
year second quarter. 
* Income from continuing operations attributable to Apollo Group was $13.5
million, or $0.12 per share, compared to $62.2 million, or $0.49 per share in
the second quarter 2012.

Results for the second quarter 2013 included restructuring and other charges of
$44.1 million attributable to optimization efforts and $6.4 million of credits
associated with the favorable resolution of certain legal matters. (See the
reconciliation of GAAP financial information to non-GAAP financial information
in the tables section of this press release for second quarter 2013 and 2012
special items). 

Excluding the special items noted above, income from continuing operations for
the second quarter 2013 was $38.0 million, or $0.34 per share, compared to $72.2
million, or $0.57 per share, for the second quarter 2012. The decrease in income
from continuing operations was attributable to lower enrollment and an increase
in marketing costs primarily due to higher advertising expense, which was
partially offset by a reduction in certain costs associated with the Company`s
restructuring activities and lower bad debt expense. 

First Six Months of 2013 Results of Operations

Net revenue for the first six months of fiscal year 2013 totaled $1.9 billion,
which represents an 11.5% decrease compared to the first six months of fiscal
year 2012 principally due to lower enrollment. In the first six months of 2013,
University of Phoenix Average Degreed Enrollment decreased 14.5% to 316,300 as
compared to the same period a year ago. The Company reported income from
continuing operations attributable to Apollo Group for the six months ended
February 28, 2013, of $147.0 million, or $1.30 per share, compared to $209.7
million, or $1.63 per share, for the six months ended February 29, 2012. 

Results for the first six months of 2013 included restructuring and other
charges of $68.2 million attributable to the Company`s optimization efforts and
$23.2 million of credits associated with the favorable resolution of certain
legal matters. (See the reconciliation of GAAP financial information to non-GAAP
financial information in the tables section of this press release for the first
six months of 2013 and 2012 special items.) 

Excluding the special items noted above, income from continuing operations for
the six months ended February 28, 2013, was $175.8 million, or $1.56 per share,
compared to $237.5 million, or $1.84 per share, for the six months ended
February 29, 2012. 

Balance Sheet and Cash Flow

As of February 28, 2013, cash and cash equivalents, excluding restricted cash,
totaled $821.2 million compared to $1.3 billion as of August 31, 2012. The
decrease was primarily due to $629.5 million used for payments on borrowings,
$49.0 million for capital expenditures, $42.5 million cash payment for the
purchase of the noncontrolling interest in Apollo Global, and $39.4 million used
for the purchase of short-term investments. These items were partially offset by
$299.0 million of cash provided by operations. 

Accounts receivable were $177.6 million as of February 28, 2013, compared to
$198.3 million at August 31, 2012. Excluding accounts receivable and the related
net revenue for Apollo Global, the Company`s days sales outstanding was 19 days
as of February 28, 2013, as compared to 22 days as of February 29, 2012. 

Share Repurchase Authorization

On March 22, 2013, the Apollo Group Board of Directors approved a share
repurchase authorization up to an aggregate amount of $250 million. There is no
expiration date on the repurchase authorization and repurchases, if any, will be
made at the discretion of management. 

Business Outlook

The Company offers the following outlook for fiscal year 2013 based on the
business trends observed during the second quarter 2013, as well as management`s
current expectations of future trends.

* Net revenue of $3.65 - $3.75 billion; and 
* Operating income of $500.0 - $550.0 million, excluding the impact of special
items and restructuring and other charges.

The Company continues initiatives to reengineer business processes and refine
its educational delivery structure. These restructuring activities are expected
to favorably impact annual operating expenses by at least $350 million by fiscal
year 2014, when compared to fiscal year 2012. This is a $50 million increase in
anticipated savings from the Company`s previous outlook. 

Conference Call Information

The Company will hold a conference call to discuss these earnings results at
8:00 a.m. ET, 5:00 a.m. PT, today, Monday, March 25, 2013. 

Dial-In Numbers:
877-292-6888 (Domestic)
973-200-3381 (International)
Conference ID: 12434663 

A live webcast of this event may be accessed by visiting the Company`s website
at www.apollo.edu. A webcast replay will be available approximately one hour
following the conclusion of the call at the same link. 

A telephone replay will be available approximately two hours following the
conclusion of the call until April 12, 2013. 

Dial-In Numbers:
855-859-2056 (Domestic)
404-537-3406 (International)
Conference ID: 12434663 

About Apollo Group, Inc.

Apollo Group, Inc. is one of the world`s largest private education providers and
has been in the education business since 1973. The Company offers innovative and
distinctive educational programs and services both online and on-campus at the
undergraduate, master`s and doctoral levels through its subsidiaries: University
of Phoenix, Apollo Global, Institute for Professional Development and College
for Financial Planning. The Company offers programs and services throughout the
United States and in Latin America and Europe, as well as online throughout the
world. 

For more information about Apollo Group, Inc. and its subsidiaries, call (800)
990-APOL or visit the Company`s website at www.apollo.edu. 

Forward-Looking Statements Safe Harbor

Statements about Apollo Group and its business in this release which are not
statements of historical fact, including statements regarding Apollo Group`s
future strategy and plans and commentary regarding future results of operations
and prospects, are forward-looking statements and are subject to the Safe Harbor
provisions created by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on current information and
expectations and involve a number of risks and uncertainties. Actual plans
implemented and actual results achieved may differ materially from those set
forth in or implied by such statements due to various factors, including without
limitation: (i) the outcome of the current accreditation reaffirmation review of
University of Phoenix by its principal institutional accreditor, The Higher
Learning Commission, including the possible imposition of the sanction of
probation as recommended in the peer review team`s draft report; (ii) the impact
of any sanctions, up to and including probation, imposed or proposed to be
imposed on University of Phoenix by The Higher Learning Commission, including
any impact on the University`s pending recertification by the U.S. Department of
Education for participation in Title IV student financial aid programs; (iii)
the impact of any reduction in student financial aid available to students,
particularly active and retired military personnel, due to the U.S. government
budget sequestration; (iv) the impact of increased competition from traditional
public universities and proprietary educational institutions; (v) the impact of
the Company`s recent restructuring initiatives and the operational, governance
and other changes to increase University of Phoenix autonomy in response to
governance concerns expressed by The Higher Learning Commission; (vi) the impact
of changes in marketing channels and other recruiting practices to better
identify students who are more likely to succeed at University of Phoenix; (vii)
the impact of University of Phoenix initiatives to improve the student
experience, improve student outcomes and enhance the connection between
education and careers; (viii) changes in University of Phoenix enrollment or
student mix; (ix) changes in the overall U.S. or global economy; (x) changes in
law or regulation affecting the University of Phoenix`s eligibility to
participate in or the manner in which it participates in U.S. federal and state
student financial aid programs; and (xi) changes in the University of Phoenix`s
business necessary to remain in compliance with existing, new, or amended U.S.
federal student financial aid program regulations, including the so-called 90/10
Rule and the limitations on cohort default rates, and to remain in compliance
with the accrediting criteria of the relevant accrediting bodies. For a
discussion of the various factors that may cause actual plans implemented and
actual results achieved to differ materially from those set forth in the
forward-looking statements, please refer to the risk factors and other
disclosures contained in Apollo Group`s Form 10-K for fiscal year 2012 and
subsequent Forms 10-Q, and other filings with the Securities and Exchange
Commission, all of which are available on the Company`s website at
www.apollo.edu. 

Use of Non-GAAP Financial Information

This press release and the related conference call contain non-GAAP financial
measures, which are intended to supplement, but not substitute for, the most
directly comparable GAAP measures. Management uses, and chooses to disclose to
investors, these non-GAAP financial measures because (i) such measures provide
an additional analytical tool to clarify the Company`s results from operations
and help to identify underlying trends in its results of operations; (ii) as to
the non-GAAP earnings measures, such measures help compare the Company`s
performance on a consistent basis across time periods; and (iii) these non-GAAP
measures are employed by the Company`s management in its own evaluation of
performance and are utilized in financial and operational decision-making
processes, such as budgeting and forecasting. Exclusion of items in the non-GAAP
presentation should not be construed as an inference that these items are
unusual, infrequent or non-recurring. Other companies, including other companies
in the education industry, may calculate non-GAAP financial measures
differently, limiting their usefulness as a comparative measure across
companies. 

Financial and Operating Metrics

Below are Apollo Group`s unaudited financial data and operating metrics for the
second quarter 2013 compared to the second quarter 2012.

                                                                   Degreed Enrollment(1)                           New Degreed Enrollment(2)                             
 Enrollment (rounded to hundreds)                                  Q2 2013                    Q2 2012              Q2 2013                          Q2 2012              
 Associate`s                                                       89,900                     118,100                    14,900                           18,500         
 Bachelor`s                                                        159,600                    179,400                    16,700                           22,000         
 Master`s                                                          44,900                     51,000                     6,700                            7,500          
 Doctoral                                                          6,400                      7,300                      600                              700            
                                                                   300,800                    355,800                    38,900                           48,700         
                                                                                                                                                                         
 Revenues (in thousands)                                                                                                                                                 
 Degree Seeking Gross Revenues(3)                                                                                  $     800,863                    $     931,610        
 Less: Discounts and other                                                                                               (56,700  )                       (56,508  )     
 Degree Seeking Net Revenues(3)                                                                                          744,163                          875,102        
 Non-degree Seeking Revenues                                                                                             8,492                            8,885          
 Other, net of discounts                                                                                                 81,717                           78,695         
                                                                                                                   $     834,372                    $     962,682        
                                                                                                                                                                         
 Revenue by Degree Type (in thousands)(3)                                                                                                                                
 Associate`s                                                                                                       $     187,815                    $     245,771        
 Bachelor`s                                                                                                              463,490                          516,028        
 Master`s                                                                                                                132,461                          148,867        
 Doctoral                                                                                                                17,097                           20,944         
 Less: Discounts and other                                                                                               (56,700  )                       (56,508  )     
                                                                                                                   $     744,163                    $     875,102        
                                                                                                                                                                         
 Degree Seeking Gross Revenues per Degreed Enrollment(1), (3)                                                                                                            
 Associate`s                                                                                                       $     2,089                      $     2,081          
 Bachelor`s                                                                                                        $     2,904                      $     2,876          
 Master`s                                                                                                          $     2,950                      $     2,919          
 Doctoral                                                                                                          $     2,671                      $     2,869          
 All degrees (after discounts)                                                                                     $     2,474                      $     2,460          
                                                                                                                                                                         


(1) Represents students enrolled in a University of Phoenix degree program who
attended a credit bearing course during the quarter and had not graduated as of
the end of the quarter; students who previously graduated from one degree
program and started a new degree program in the quarter (for example, a graduate
of the associate`s degree program returns for a bachelor`s degree); and students
participating in certain certificate programs of at least 18 credits with some
course applicability into a related degree program. 

(2) Represents new students and students who have been out of attendance for
more than 12 months who enroll in a University of Phoenix degree program and
start a credit bearing course in the quarter; students who have previously
graduated from a degree program and start a new degree program in the quarter;
and students who commence participation in certain certificate programs of at
least 18 credits with some course applicability into a related degree program. 

(3) Represents revenue from tuition and other fees for students enrolled in
University of Phoenix degree programs. Also includes revenue from tuition and
other fees for students participating in University of Phoenix certificate
programs of at least 18 credits in length with some course applicability into a
related degree program.

                                                                                                                            
 Apollo Group, Inc. and Subsidiaries                                                                                        
 Condensed Consolidated Balance Sheets                                                                                      
 (Unaudited)                                                                                                                
                                                                                                                            
                                                                    As of                                                   
                                                                    February 28,                    August 31,              
 ($ in thousands)                                                   2013                            2012                    
 ASSETS:                                                                                                                    
 Current assets                                                                                                             
 Cash and cash equivalents                                          $      821,163                  $     1,276,375         
 Restricted cash and cash equivalents                                      329,772                        318,334           
 Marketable securities                                                     31,804                         -                 
 Accounts receivable, net                                                  177,557                        198,279           
 Prepaid taxes                                                             10,216                         26,341            
 Deferred tax assets, current portion                                      49,870                         69,052            
 Other current assets                                                      45,813                         49,609            
 Total current assets                                                      1,466,195                      1,937,990         
 Property and equipment, net                                               502,702                        571,629           
 Goodwill                                                                  103,829                        103,345           
 Intangible assets, net                                                    137,252                        149,034           
 Deferred tax assets, less current portion                                 89,706                         77,628            
 Other assets                                                              40,380                         28,696            
 Total assets                                                       $      2,340,064                $     2,868,322         
 LIABILITIES AND SHAREHOLDERS` EQUITY:                                                                                      
 Current liabilities                                                                                                        
 Short-term borrowings and current portion of long-term debt        $      20,080                   $     638,588           
 Accounts payable                                                          76,017                         74,872            
 Student deposits                                                          363,721                        362,143           
 Deferred revenue                                                          260,669                        254,555           
 Accrued and other current liabilities                                     291,820                        324,881           
 Total current liabilities                                                 1,012,307                      1,655,039         
 Long-term debt                                                            71,203                         81,323            
 Deferred tax liabilities                                                  13,750                         15,881            
 Other long-term liabilities                                               205,263                        191,756           
 Total liabilities                                                         1,302,523                      1,943,999         
 Commitments and contingencies                                                                                              
 Shareholders` equity                                                                                                       
 Preferred stock, no par value                                             -                              -                 
 Apollo Group Class A nonvoting common stock, no par value                 103                            103               
 Apollo Group Class B voting common stock, no par value                    1                              1                 
 Additional paid-in capital                                                43,600                         93,770            
 Apollo Group Class A treasury stock, at cost                              (3,860,036  )                  (3,878,612  )     
 Retained earnings                                                         4,890,172                      4,743,150         
 Accumulated other comprehensive loss                                      (37,246     )                  (30,034     )     
 Total Apollo shareholders` equity                                         1,036,594                      928,378           
 Noncontrolling interests (deficit)                                        947                            (4,055      )     
 Total equity                                                              1,037,541                      924,323           
 Total liabilities and shareholders` equity                         $      2,340,064                $     2,868,322         
                                                                                                                            


                                                                                                                                                                     
 Apollo Group, Inc. and Subsidiaries                                                                                                                                 
 Condensed Consolidated Statements of Income                                                                                                                         
 (Unaudited)                                                                                                                                                         
                                                                                                                                                                     
                                                                 Three Months Ended                                                % of Net Revenue                  
 (In thousands, except per share data)                           February 28, 2013                  February 29, 2012              2013                  2012        
 Net revenue                                                     $       834,372                    $       962,682                100.0  %              100.0  %    
 Costs and expenses:                                                                                                                                                 
 Instructional and student advisory                                      383,702                            425,607                46.0   %              44.2   %    
 Marketing                                                               173,313                            158,973                20.8   %              16.5   %    
 Admissions advisory                                                     68,232                             101,405                8.2    %              10.6   %    
 General and administrative                                              81,218                             83,994                 9.7    %              8.7    %    
 Depreciation and amortization                                           41,499                             41,854                 5.0    %              4.4    %    
 Provision for uncollectible accounts receivable                         18,902                             30,996                 2.2    %              3.2    %    
 Restructuring and other charges                                         44,076                             16,148                 5.3    %              1.6    %    
 Litigation credit                                                       (6,350   )                         -                      (0.8   )%             -           
 Total costs and expenses                                                804,592                            858,977                96.4   %              89.2   %    
 Operating income                                                        29,780                             103,705                3.6    %              10.8   %    
 Interest income                                                         388                                215                    -                     -           
 Interest expense                                                        (2,092   )                         (1,789   )             (0.3   )%             (0.2   )%   
 Other, net                                                              (126     )                         218                    -                     -           
 Income from continuing operations before income taxes                   27,950                             102,349                3.3    %              10.6   %    
 Provision for income taxes                                              (14,291  )                         (43,108  )             (1.7   )%             (4.4   )%   
 Income from continuing operations                                       13,659                             59,241                 1.6    %              6.2    %    
 Income from discontinued operations, net of tax                         -                                  1,930                  -                     0.2    %    
 Net income                                                              13,659                             61,171                 1.6    %              6.4    %    
 Net (income) loss attributable to noncontrolling interests              (132     )                         2,711                  -                     0.2    %    
 Net income attributable to Apollo                               $       13,527                     $       63,882                 1.6    %              6.6    %    
                                                                                                                                                                     
 Earnings per share - Basic:                                                                                                                                         
 Continuing operations attributable to Apollo                    $       0.12                       $       0.50                                                     
 Discontinued operations attributable to Apollo                          -                                  0.01                                                     
 Basic income per share attributable to Apollo                   $       0.12                       $       0.51                                                     
                                                                                                                                                                     
 Earnings per share - Diluted:                                                                                                                                       
 Continuing operations attributable to Apollo                    $       0.12                       $       0.49                                                     
 Discontinued operations attributable to Apollo                          -                                  0.02                                                     
 Diluted income per share attributable to Apollo                 $       0.12                       $       0.51                                                     
                                                                                                                                                                     
 Basic weighted average shares outstanding                               112,573                            125,298                                                  
 Diluted weighted average shares outstanding                             113,068                            126,467                                                  
                                                                                                                                                                     


                                                                                                                                                                              
 Apollo Group, Inc. and Subsidiaries                                                                                                                                          
 Condensed Consolidated Statements of Income                                                                                                                                  
 (Unaudited)                                                                                                                                                                  
                                                                                                                                                                              
                                                                   Six Months Ended                                                         % of Net Revenue                  
 (In thousands, except per share data)                             February 28, 2013                    February 29, 2012                   2013                  2012        
 Net revenue                                                       $       1,889,555                    $       2,134,582                   100.0  %              100.0  %    
 Costs and expenses:                                                                                                                                                          
 Instructional and student advisory                                        815,852                              878,888                     43.2   %              41.2   %    
 Marketing                                                                 336,186                              324,537                     17.8   %              15.2   %    
 Admissions advisory                                                       139,540                              202,793                     7.4    %              9.5    %    
 General and administrative                                                154,757                              163,893                     8.2    %              7.7    %    
 Depreciation and amortization                                             85,194                               88,021                      4.5    %              4.1    %    
 Provision for uncollectible accounts receivable                           52,308                               72,579                      2.7    %              3.4    %    
 Restructuring and other charges                                           68,192                               21,710                      3.6    %              1.0    %    
 Litigation credit                                                         (23,200    )                         -                           (1.2   )%             -           
 Goodwill and other intangibles impairment                                 -                                    16,788                      -                     0.8    %    
 Total costs and expenses                                                  1,628,829                            1,769,209                   86.2   %              82.9   %    
 Operating income                                                          260,726                              365,373                     13.8   %              17.1   %    
 Interest income                                                           937                                  721                         -                     -           
 Interest expense                                                          (4,134     )                         (3,788     )                (0.2   )%             (0.1   )%   
 Other, net                                                                1,673                                358                         0.1    %              -           
 Income from continuing operations before income taxes                     259,202                              362,664                     13.7   %              17.0   %    
 Provision for income taxes                                                (111,803   )                         (158,287   )                (5.9   )%             (7.4   )%   
 Income from continuing operations                                         147,399                              204,377                     7.8    %              9.6    %    
 Income from discontinued operations, net of tax                           -                                    4,078                       -                     0.2    %    
 Net income                                                                147,399                              208,455                     7.8    %              9.8    %    
 Net (income) loss attributable to noncontrolling interests                (377       )                         4,741                       -                     0.2    %    
 Net income attributable to Apollo                                 $       147,022                      $       213,196                     7.8    %              10.0   %    
                                                                                                                                                                              
 Earnings per share - Basic:                                                                                                                                                  
 Continuing operations attributable to Apollo                      $       1.31                         $       1.64                                                          
 Discontinued operations attributable to Apollo                            -                                    0.03                                                          
 Basic income per share attributable to Apollo                     $       1.31                         $       1.67                                                          
                                                                                                                                                                              
 Earnings per share - Diluted:                                                                                                                                                
 Continuing operations attributable to Apollo                      $       1.30                         $       1.63                                                          
 Discontinued operations attributable to Apollo                            -                                    0.03                                                          
 Diluted income per share attributable to Apollo                   $       1.30                         $       1.66                                                          
                                                                                                                                                                              
 Basic weighted average shares outstanding                                 112,496                              127,808                                                       
 Diluted weighted average shares outstanding                               112,984                              128,729                                                       
                                                                                                                                                                              


                                                                                                                                                          
 Apollo Group, Inc. and Subsidiaries                                                                                                                      
 Condensed Consolidated Statements of Cash Flows                                                                                                          
 (Unaudited)                                                                                                                                              
                                                                                                                                                          
                                                                                              Six Months Ended                                            
                                                                                              February 28,                       February 29,             
 ($ in thousands)                                                                             2013                               2012                     
 Cash flows provided by (used in) operating activities:                                                                                                   
 Net income                                                                                   $      147,399                     $      208,455           
 Adjustments to reconcile net income to net cash provided by operating activities:                                                                        
 Share-based compensation                                                                            27,515                             40,492            
 Excess tax benefits from share-based compensation                                                   -                                  (1,137     )      
 Depreciation and amortization                                                                       85,194                             88,283            
 Accelerated depreciation included in restructuring                                                  30,641                             -                 
 Amortization of lease incentives                                                                    (7,114     )                       (7,668     )      
 Amortization of deferred gains on sale-leasebacks                                                   (1,399     )                       (1,399     )      
 Goodwill and other intangibles impairment                                                           -                                  16,788            
 Non-cash foreign currency loss (gain), net                                                          146                                (295       )      
 Provision for uncollectible accounts receivable                                                     52,308                             72,579            
 Litigation credit                                                                                   (23,200    )                       -                 
 Deferred income taxes                                                                               (4,100     )                       (9,843     )      
 Changes in assets and liabilities, excluding the impact of acquisition and disposition:                                                                  
 Restricted cash and cash equivalents                                                                (11,438    )                       6,454             
 Accounts receivable                                                                                 (33,919    )                       (64,093    )      
 Prepaid taxes                                                                                       16,143                             27,529            
 Other assets                                                                                        (3,939     )                       (9,789     )      
 Accounts payable                                                                                    1,094                              20,365            
 Student deposits                                                                                    2,551                              (13,777    )      
 Deferred revenue                                                                                    8,632                              8,551             
 Accrued and other liabilities                                                                       12,436                             2,984             
 Net cash provided by operating activities                                                           298,950                            384,479           
 Cash flows provided by (used in) investing activities:                                                                                                   
 Additions to property and equipment                                                                 (49,024    )                       (62,357    )      
 Purchase of marketable securities                                                                   (39,444    )                       -                 
 Maturities of marketable securities                                                                 7,470                              -                 
 Restricted funds held for legal matter                                                              -                                  (145,000   )      
 Acquisition, net of cash acquired                                                                   -                                  (73,736    )      
 Proceeds from disposition                                                                           -                                  3,285             
 Other investing activities                                                                          (1,500     )                       (1,694     )      
 Net cash used in investing activities                                                               (82,498    )                       (279,502   )      
 Cash flows provided by (used in) financing activities:                                                                                                   
 Payments on borrowings                                                                              (629,544   )                       (498,895   )      
 Proceeds from borrowings                                                                            2,176                              -                 
 Purchase of noncontrolling interest                                                                 (42,500    )                       -                 
 Apollo Group Class A common stock purchased for treasury                                            (3,881     )                       (386,716   )      
 Issuance of Apollo Group Class A common stock                                                       2,131                              9,336             
 Excess tax benefits from share-based compensation                                                   -                                  1,137             
 Net cash used in financing activities                                                               (671,618   )                       (875,138   )      
 Exchange rate effect on cash and cash equivalents                                                   (46        )                       (770       )      
 Net decrease in cash and cash equivalents                                                           (455,212   )                       (770,931   )      
 Cash and cash equivalents, beginning of period                                                      1,276,375                          1,571,664         
 Cash and cash equivalents, end of period                                                     $      821,163                     $      800,733           
 Supplemental disclosure of cash flow and non-cash information:                                                                                           
 Cash paid for income taxes, net of refunds                                                   $      100,713                     $      141,047           
 Cash paid for interest                                                                       $      4,010                       $      4,859             
 Restricted stock units vested and released                                                   $      10,825                      $      14,640            
 Capital lease additions                                                                      $      2,755                       $      19,440            
 Credits received for tenant improvements                                                     $      1,540                       $      22,671            
 Unsettled share repurchases                                                                  $      -                           $      25,461            
 Debt incurred for acquired technology                                                        $      -                           $      14,389            
                                                                                                                                                          


                                                                                                                                                                                                                                                
 Apollo Group, Inc. and Subsidiaries                                                                                                                                                                                                            
 Reconciliation of GAAP Financial Information to Non-GAAP Financial Information                                                                                                                                                                 
 (Unaudited)                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                
                                                                                                                    Three Months Ended                                              Six Months Ended                                            
 (In thousands, except per share data)                                                                              February 28, 2013                  February 29, 2012            February 28, 2013                  February 29, 2012        
 Net income attributable to Apollo, as reported                                                                     $       13,527                     $       63,882               $       147,022                    $       213,196          
 Income from discontinued operations, net of tax and noncontrolling interest                                                -                                  (1,652   )                   -                                  (3,491   )       
 Income from continuing operations attributable to Apollo                                                                   13,527                             62,230                       147,022                            209,705          
 Reconciling items:                                                                                                                                                                                                                             
 Restructuring and other charges(1)                                                                                         44,076                             16,148                       68,192                             21,710           
 Litigation credit(2)                                                                                                       (6,350   )                         -                            (23,200  )                         -                
 Goodwill and other intangibles impairment, net of noncontrolling interest(3)                                               -                                  -                            -                                  14,370           
                                                                                                                            37,726                             16,148                       44,992                             36,080           
 Less: tax effects                                                                                                          (13,292  )                         (6,199   )                   (16,169  )                         (8,290   )       
 Income from continuing operations attributable to Apollo, adjusted to exclude special items                        $       37,961                     $       72,179               $       175,845                    $       237,495          
                                                                                                                                                                                                                                                
 Diluted income per share from continuing operations attributable to Apollo, as reported                            $       0.12                       $       0.49                 $       1.30                       $       1.63             
                                                                                                                                                                                                                                                
 Diluted income per share from continuing operations attributable to Apollo, adjusted to exclude special items      $       0.34                       $       0.57                 $       1.56                       $       1.84             
                                                                                                                                                                                                                                                
 Diluted weighted average shares outstanding                                                                                113,068                            126,467                      112,984                            128,729          


(1) Restructuring and other charges represent charges associated with the
Company`s optimization efforts. 

(2) Litigation credits during the three and six months ended February 28, 2013
resulting from the favorable resolution of certain legal matters. 

(3) The charges for the six months ended February 29, 2012 represent impairments
of UNIACC`s goodwill and other intangibles, net of noncontrolling interest, with
no income tax benefit as UNIACC`s goodwill and other intangibles are not
deductible for tax purposes.

Apollo Group, Inc.
Investor Relations Contact:
Beth Coronelli, 312-660-2059
beth.coronelli@apollogrp.edu
Media Contact:
Media Relations Hotline, 602-254-0086
media@apollogrp.edu

Copyright Business Wire 2013

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