10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended: August 31, 2009
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from [          ] to [          ]

Commission file number: 0-25232

APOLLO GROUP, INC.

(Exact name of registrant as specified in its charter)

ARIZONA
(State or other jurisdiction of
incorporation or organization) 86-0419443
(I.R.S. Employer
Identification No.)

4025 S. RIVERPOINT PARKWAY, PHOENIX, ARIZONA 85040

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code:

(480) 966-5394

Securities registered pursuant to Section 12(b) of the Act:

(Title of Each Class)	(Name of Each Exchange on Which Registered)
Apollo Group, Inc. Class A common stock, no par value	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  YES þ    NO o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  YES o    NO þ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES þ     NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES o     NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).  YES o     NO þ

No shares of Apollo Group, Inc. Class B common stock, its voting stock, are held by non-affiliates. The holders of Apollo Group, Inc. Class A common stock are not entitled to any voting rights. The aggregate market value of Apollo Group Class A common stock held by non-affiliates as of February 28, 2009 (last day of the registrant’s most recently completed second fiscal quarter), was approximately $9.9 billion.

The number of shares outstanding for each of the registrant’s classes of common stock as of October 16, 2009 is as follows:

Apollo Group, Inc. Class A common stock, no par value	154,359,000 Shares
Apollo Group, Inc. Class B common stock, no par value	475,000 Shares

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Information Statement for the 2010 Annual Meeting of Shareholders (Part III)

APOLLO GROUP, INC. AND SUBSIDIARIES

FORM 10-K

INDEX

		Page
PART I
Special Note Regarding Forward-Looking Statements			3
Item 1.	Business		4
Item 1A.	Risk Factors		28
Item 1B.	Unresolved Staff Comments		47
Item 2.	Properties		48
Item 3.	Legal Proceedings		48
Item 4.	Submission of Matters to a Vote of Security Holders		49
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		49
Item 6.	Selected Consolidated Financial Data		52
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		53
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		77
Item 8.	Financial Statements and Supplementary Data		80
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		139
Item 9A.	Controls and Procedures		139
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		142
Item 11.	Executive Compensation		142
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		142
Item 13.	Certain Relationships and Related Transactions, and Director Independence		142
Item 14.	Principal Accounting Fees and Services		142
PART IV
Item 15.	Exhibits, Financial Statement Schedules		143
SIGNATURES			149
EX-10.3
EX-10.20
EX-10.23C
EX-10.23D
EX-10.46
EX-10.47
EX-10.49
EX-10.50
EX-21
EX-23.1
EX-31.1
EX-31.2
EX-31.3
EX-32.1
EX-32.2
EX-32.3

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Special Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K, including Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact may be forward-looking statements. Such forward-looking statements include, among others, those statements regarding future events and future results of Apollo Group, Inc. (the “Company,” “Apollo Group,” “Apollo,” “APOL,” “we,” “us” or “our”) that are based on current expectations, estimates, forecasts, and the beliefs and assumptions of us and our management, and speak only as of the date made and are not guarantees of future performance or results. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “predict,” “target,” “potential,” “continue,” “objectives,” or the negative of these terms or other comparable terminology. Such forward-looking statements are necessarily estimates based upon current information and involve a number of risks and uncertainties. Such statements should be viewed with caution. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include but are not limited to:

•  changes in regulation of the education industry, including the regulatory and other requirements discussed in Item 1, Business, under “Accreditation and Jurisdictional Authorizations,” “Financial Aid Programs,” and “Regulatory Environment;”

•  each of the factors discussed in Item 1A, Risk Factors; and

•  those factors set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The cautionary statements referred to above also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no obligation to publicly update or revise any forward-looking statements, for any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements.

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Part I

Item 1 — Business

Overview

Apollo Group, Inc. is one of the world’s largest private education providers and has been in the education business for more than 35 years. We offer innovative and distinctive educational programs and services both online and on-campus at the undergraduate, graduate and doctoral levels through our wholly-owned subsidiaries:

•  The University of Phoenix, Inc. (“University of Phoenix”);

•  Western International University, Inc. (“Western International University”);

•  Institute for Professional Development (“IPD”);

•  The College for Financial Planning Institutes Corporation (“CFFP”); and

•  Meritus University, Inc. (“Meritus”).

In addition to these wholly-owned subsidiaries, in October 2007, we formed a joint venture with The Carlyle Group (“Carlyle”), called Apollo Global, Inc. (“Apollo Global”), to pursue investments primarily in the international education services industry. Apollo Group currently owns 86.1% of Apollo Global, with Carlyle owning the remaining 13.9%. As of August 31, 2009, total cash contributions made to Apollo Global were approximately $511.8 million, of which $440.5 million was funded by us. Apollo Global is consolidated in our financial statements. Apollo Global has completed the following acquisitions:

•  BPP Holdings plc (“BPP”) in the United Kingdom,

•  Universidad de Artes, Ciencias y Comunicación (“UNIACC”) in Chile, and

•  Universidad Latinoamericana (“ULA”) in Mexico.

University of Phoenix.  University of Phoenix has been accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools since 1978 and holds other programmatic accreditations. University of Phoenix offers associate’s, bachelor’s, master’s and doctoral degrees in a variety of program areas. University of Phoenix offers its educational programs worldwide through its online education delivery system and at its campus locations and learning centers in 39 states and the District of Columbia, and Puerto Rico. University of Phoenix’s online programs are designed to provide uniformity with University of Phoenix’s on-campus operations, which enhances University of Phoenix’s ability to expand into new markets while maintaining academic quality. University of Phoenix has customized computer programs for academic quality management, faculty recruitment and training, student tracking and marketing, which we believe provides us with a competitive advantage. University of Phoenix’s net revenue represented approximately 95% of our consolidated net revenue for the fiscal year ended August 31, 2009.

Western International University.  Western International University has been accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools since 1984. Western International University offers associate’s, bachelor’s and master’s degrees in a variety of program areas as well as certificate programs. Western International University offers its undergraduate program courses at its Arizona campus locations and online at Western International University Interactive Online.

IPD.  IPD provides program development, administration and management consulting services to private colleges and universities (“Client Institutions”) to establish or expand their programs for working learners. These services typically include degree program design, curriculum development, market research, student recruitment, accounting, and administrative services.

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CFFP.  CFFP has been accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools since 1994. CFFP provides financial services education programs, including a Master of Science in three majors, and certification programs in retirement, asset management, and other financial planning areas. CFFP offers these programs online and from its headquarters in Colorado.

Meritus.  Meritus was designated by the Government of New Brunswick to grant degrees in May 2008. Meritus offers degree programs online to working learners throughout Canada and abroad and launched its first three programs in the fall of 2008.

BPP.  BPP College of Professional Studies is the first proprietary institution to have been granted degree awarding powers in the United Kingdom. BPP, acquired by Apollo Global in July 2009 and headquartered in London, England, is a provider of education and training to professionals in the legal and finance industries. It is organized into the following three divisions:

•  Professional Education, which provides exam training and sells published products for external certification training in accounting, tax, financial services, and actuarial qualifications and post qualification professional development;

•  College of Professional Studies, which operates four law schools, human resource training and a business school; and

•  Mander Portman Woodward, which operates independent fifth and sixth form colleges (similar to preparatory schools in the U.S.).

BPP provides these services through schools located in the United Kingdom, a European network of BPP offices, and the sale of books and other publications in over 150 countries.

UNIACC.  UNIACC is accredited by the Chilean Council of Higher Education. UNIACC is an arts and communications university which offers bachelor’s and master’s programs on campuses in Chile and online. UNIACC was acquired by Apollo Global in March 2008.

ULA.  ULA carries authorization from the Ministry of Public Education (Secretaría de Educación Publica) in Mexico, from the National Autonomous University of Mexico (Universidad Nacional Autónoma de México) for its high school and undergraduate psychology and law programs and by the Ministry of Education of the State of Morelos (Secretaría de Educación del Estado de Morelos) for its medicine and nutrition programs. ULA offers degree programs at its four campuses throughout Mexico. Apollo Global purchased a 65% ownership interest in ULA in August 2008 and purchased the remaining ownership interest in July 2009.

We also operate online high school programs through our Insight Schools, Inc. (“Insight Schools”) wholly-owned subsidiary, which is included in our Insight Schools reportable segment. Subsequent to our 2009 fiscal year end, we decided to explore the sale of Insight Schools.

Our schools described above are managed in the following five reportable segments:

•  University of Phoenix;

•  Apollo Global — BPP;

•  Apollo Global — Other;

•  Insight Schools; and

•  Other Schools.

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The Apollo Global — Other segment includes UNIACC, ULA and Apollo Global corporate operations. The Other Schools segment includes Western International University, IPD, CFFP, and Meritus. The Corporate caption, as detailed in the table below, includes adjustments to reconcile segment results to consolidated results, which primarily consist of net revenue and corporate charges that are not allocated to our reportable segments. The following table presents the net revenue for fiscal years 2009, 2008 and 2007 for each of our reportable segments:

	Year Ended August 31,
($ in millions)	2009		2008		2007
University of Phoenix	$	3,766.6	$	2,987.7	$	2,537.8
Apollo Global:
BPP		13.1		—		—
Other		54.3		13.4		—
Total Apollo Global		67.4		13.4		—
Insight Schools		20.6		7.5		2.0
Other Schools		116.8		122.5		182.6
Corporate		2.8		9.8		1.4
Net Revenue	$	3,974.2	$	3,140.9	$	2,723.8

See Note 19, Segment Reporting, in Item 8, Financial Statements and Supplementary Data, for the segment and related geographic information required by Items 101(b) and 101(d) of Regulation S-K, which information is incorporated by this reference.

Our operations are generally subject to seasonal trends. We experience, and expect to continue to experience, seasonal fluctuations in our results of operations as a result of seasonal variations in the level of student enrollments. While University of Phoenix enrolls students throughout the year, our net revenue generally is lower in the second quarter (December through February) than the other quarters due to holiday breaks in December and January. Most of our other subsidiaries experience more significant seasonality, as they have limited enrollment during their respective summer breaks.

University of Phoenix degreed enrollment (“Degreed Enrollment”) for the quarter ended August 31, 2009 was 443,000. Degreed Enrollment for a quarter represents individual students enrolled in a University of Phoenix degree program who attended a course during the quarter and did not graduate as of the end of the quarter. Degreed Enrollment also includes any student 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 or a bachelor’s degree graduate returns for a master’s degree). In addition, Degreed Enrollment includes students participating in University of Phoenix certificate programs of at least 18 credit hours in length with some course applicability into a related degree program.

University of Phoenix combined new degreed enrollment (“New Degreed Enrollment”) for the four quarters in fiscal year 2009 was 355,800. New Degreed Enrollment for a quarter represents any individual student enrolled in a University of Phoenix degree program who is a new student and started a course in the quarter, any individual student who previously graduated from one degree program and started a new degree program in the quarter (for example, a graduate of an associate’s degree program returns for a bachelor’s degree program, or a graduate of a bachelor’s degree program returns for a master’s degree program), as well as any individual student who started a program in the quarter and had been out of attendance for greater than 12 months. In addition, New Degreed Enrollment also includes students who during the quarter started participating in University of Phoenix certificate programs of at least 18 credit hours in length with some course applicability into a related degree program.

Students enrolled in or serviced by Apollo Global’s institutions, Insight Schools and Other Schools (Western International University, IPD, CFFP, and Meritus) are not included in Degreed Enrollment or New Degreed Enrollment.

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We incorporated in Arizona in 1981 and maintain our principal executive offices at 4025 S. Riverpoint Parkway, Phoenix, Arizona 85040. Our telephone number is (480) 966-5394. Our website addresses are as follows:

                  • Apollo Group
     • University of Phoenix
     • Apollo Global
       • BPP
       • UNIACC
       • ULA
     • Insight Schools
     • Western International University
     • IPD
     • CFFP
     • Meritus www.apollogrp.edu
www.phoenix.edu
www.apolloglobal.us
www.bpp.com
uniacc08eng.uniacc.cl
www.ula.edu.mx
www.insightschools.net
www.west.edu
www.ipd.org
www.cffp.edu
www.meritusu.ca

Our fiscal year is from September 1 to August 31. Unless otherwise stated, references to the years 2009, 2008, 2007, 2006 and 2005 relate to fiscal years 2009, 2008, 2007, 2006 and 2005, respectively.

Strategy

Our goal is to strengthen and capitalize on our position as a leading provider of high quality, accessible education for individuals around the world by affording strong returns for all of our stakeholders: students, faculty, employees, and investors. Our principal focus is to provide high quality educational products and services to our students in order for them to maximize the benefit of their educational experience. We believe that a superior student experience, enabled by our engaged and energized faculty and employees, is essential for our shareholders to achieve attractive returns on their capital over time. We intend to pursue our goal in a manner that is consistent with our core organizational values: 1) operate with integrity and social responsibility; 2) change lives through education; 3) be the employer of choice and 4) build long-term value. These values provide the foundation for everything we do as a business.

In late fiscal year 2009, we embarked on a company-wide initiative to refresh and validate our strategic plan to further enhance our competitive situation and position the Company for continued growth into the future. The key themes of the plan are presented below:

•  Maximize the value of our University of Phoenix business.  This is our highest priority over the next several years and we believe that investing in the University of Phoenix will continue to produce the highest return on our capital. We believe that we can strengthen our position and produce solid growth in revenue and cash flow by increasing our penetration in target markets, enhancing our current product offerings, improving our brand and continuing to deliver a high value experience to our students. In addition, we will strive to improve operating efficiency and will re-invest excess capital into key strategic initiatives.

•  Expand intelligently beyond University of Phoenix.  We believe we can capitalize on opportunities to utilize our core expertise and organizational capabilities to grow in areas outside of the University of Phoenix, both domestically and internationally. In particular, we have observed a growing demand for high quality postsecondary and other education services outside of the U.S., including in Europe, Latin America and Asia, and believe that we have the capabilities and expertise to provide these services beyond our current reach. We intend to actively pursue quality opportunities to partner with and/or acquire existing institutions of higher learning where we can best position ourselves for longer-term attractive growth and value creation.

We intend to use our expertise to enhance the quality, delivery and student outcomes associated with the respective curricula across our entire group of owned and operated institutions and companies. We believe we can leverage our organizational capabilities to offer innovative products, optimize our cost structure and create new growth opportunities. Finally, we intend to continue to invest in our people, systems and organization, as

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they are the foundation for our future success. In our opinion, these efforts are the basis for enabling us to meet and exceed our customer’s expectations and further differentiate us from our competition.

Industry Background

Domestic Postsecondary Education

The domestic non-traditional education sector is a significant and growing component of the postsecondary degree-granting education industry, which was estimated to be a $386 billion industry in 2007, according to the Digest of Education Statistics published in 2009 by the U.S. Department of Education’s National Center for Education Statistics. According to the same study, in 2007, over 6.9 million, or 38%, of all students enrolled in higher education programs were over the age of 24, and enrollment in degree-granting institutions between 2008 and 2017 is expected to increase 19% for students over age 25. These students would not be classified as traditional (i.e., 18 to 24 years of age, living on campus, supported by parents, and not working full-time). The non-traditional students typically are looking to improve their skills and enhance their earnings potential within the context of their careers. We believe that the demand for non-traditional education will continue to increase, reflecting the knowledge-based economy in the U.S.

Many working learners seek accredited degree programs that provide flexibility to accommodate the fixed schedules and time commitments associated with their professional and personal obligations. The education formats offered by our institutions enable working learners to attend classes and complete coursework on a more convenient schedule than traditional universities offer. Although more colleges and universities are beginning to address some of the needs of working learners, many universities and institutions do not effectively address the needs of working learners for the following reasons:

•  Traditional universities and colleges were designed to fulfill the educational needs of conventional, full-time students ages 18 to 24, and that industry sector remains the primary focus of these universities and institutions. This focus has resulted in a capital-intensive teaching/learning model that may be characterized by:

•  a high percentage of full-time, tenured faculty;

•  physical classrooms, library facilities and related full-time staff;

•  dormitories, student unions, and other significant physical assets to support the needs of younger students; and

•  an emphasis on research and related laboratories, staff, and other facilities.

•  The majority of accredited colleges and universities continue to provide the bulk of their educational programming on an agrarian calendar with time off for traditional breaks. The traditional academic year runs from September to mid-December and from mid-January to May. As a result, most full-time faculty members only teach during that limited period of time. While this structure may serve the needs of the full-time, resident, 18- to 24-year-old student, it limits the educational opportunity for working learners who must delay their education for up to four months during these traditional breaks.

•  Traditional universities and colleges may also be limited in their ability to provide the necessary customer service for working learners because they lack the necessary administrative and enrollment infrastructure.

•  Diminishing financial support for public colleges and universities has required them to focus more tightly on their existing student populations and missions, which has reduced access to education.

International Education

There were approximately 153 million students enrolled in postsecondary education worldwide in 2007 according to the Global Education Digest 2009 published in 2009 by the United Nations Educational, Scientific and Cultural Organization Institute for Statistics.

We believe that private education is playing a critical role in advancing the development of education, specifically higher education and lifelong learning, in many countries around the world. While primary and

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secondary education outside the U.S. are still funded mainly through government expenditures, we believe that postsecondary education outside of the U.S. is experiencing governmental funding constraints that create opportunities for a broader private sector role. The International Finance Corporation of the World Bank reported in May 2008 that governments around the world are embracing private sector participation as a way to increase quality and efficiency.

We believe that the following key trends are driving the growth in private education worldwide:

•  unmet demand for education;

•  insufficient public funding to meet demand for education;

•  shortcomings in the quality of higher education offerings, resulting in the rise of supplemental training to meet industry demands in the developing world;

•  worldwide appreciation of the importance that knowledge plays in economic progress;

•  globalization of education; and

•  increased availability and role of technology in education, broadening the accessibility and reach of education.

Our Programs

Our more than 35 years as a provider of education enables us to provide students with quality education and responsive customer service at the undergraduate, graduate and doctoral levels. Our institutions have gained expertise in designing curriculum, recruiting and training faculty, monitoring academic quality, and providing a high level of support services to students. Our institutions offer the following:

•  Accredited Degree Programs.  University of Phoenix, Western International University and CFFP are accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools. BPP’s College of Professional Studies is a recognized body by order of the United Kingdom’s Privy Council. Our other educational institutions are accredited by appropriate accrediting entities. See Accreditation and Jurisdictional Authorizations, below.

•  Professional Examinations Training and Professional Development.  BPP provides training and published materials for qualifications in accountancy (including tax), financial services and actuarial science. BPP also provides professional development through continuing education training and supplemental skills courses to post-qualification markets in finance, law, general management and insolvency. University of Phoenix and certain of our other institutions, including CFFP, also provide various training and professional development education.

•  Faculty.

•  Domestic Postsecondary:  Substantially all University of Phoenix faculty possess either a master’s or doctoral degree. Faculty members typically have many years of experience in the field in which they instruct. Our institutions have well-developed methods for hiring and training faculty, which include peer reviews of newly hired instructors by other members of the faculty, training in student instruction and grading, and teaching mentorships with more experienced faculty members.

•  International:  Our recruitment standards and processes for international faculty are appropriate for the respective markets in which we operate and are consistent with and in compliance with local accreditation and regulatory requirements in these markets.

•  Standardized Programs.

•  Domestic Postsecondary:  Faculty content experts design curriculum for the majority of programs at our domestic postsecondary institutions. This enables us to offer current and relevant standardized programs to our students. We also utilize standardized tests and institution-wide systems to assess the educational outcomes of our students and improve the quality of our curriculum and instructional model. These systems evaluate the cognitive (subject matter) and affective (educational, personal and professional values) skills of our students upon registration and upon conclusion of the program, and

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also survey students two years after graduation in order to assess the quality of the education they received. Classes are designed to be small and engaging.

•  International:  Our international institutions typically follow a course development process in which faculty members who are subject matter experts work with instructional designers to develop curriculum materials based on learning objectives provided by school academic officers.

•  Benefits to Employers.  The employers of students enrolled in our programs often provide input to faculty members in designing curriculum, and class projects are based on issues relevant to the companies that employ our students. Classes are taught by faculty members, many of whom, in our domestic postsecondary institutions, are practitioners and employers who emphasize the skills desired by employers. We conduct focus groups with business professionals, students, and faculty members who provide feedback on the relevancy of course work. Our objective is to gain insight from these groups so that we can develop new courses and offer relevant subject matter that reflect the changing needs of the marketplace and prepare our students for today’s workplace. In addition, the class time flexibility further benefits employers since it minimizes conflict with their employees’ work schedules.

Teaching Model and Degree Programs and Services

Domestic Postsecondary

Teaching Model

While students over the age of 24 comprise approximately 38% of all higher education enrollments in the U.S., the primary mission of most accredited four-year colleges and universities is to serve 18- to 24-year-old students and conduct research. The teaching/learning models used by University of Phoenix were designed specifically to meet the educational needs of working learners, who seek accessibility, curriculum consistency, time- and cost-effectiveness, and learning that has immediate application to the workplace. The models are structured to enable students who are employed full-time to earn their degrees and still meet their personal and professional responsibilities. Our focus on working, non-residential students minimizes the need for capital-intensive facilities and services like dormitories, student unions, food service, personal and employment counseling, health care, sports and entertainment.

University of Phoenix online classes employ a proprietary online learning system. Online classes are small and have mandatory participation requirements for both the faculty and the students. Each class is instructionally designed so that students have learning outcomes that are consistent with the outcomes of their on-campus counterparts. All class materials are delivered electronically.

Components of our teaching/learning models at University of Phoenix for both online and on-campus classes include:

Curriculum

Curriculum is designed by teams of academicians and practitioners to integrate academic theory and professional practice and their application to the workplace. The curriculum provides for the achievement of specified educational outcomes that are based on input from faculty, students, and students’ employers.

Faculty

All faculty applicants participate in a rigorous selection and training process. For substantially all University of Phoenix faculty positions, the faculty member must have earned a master’s or doctoral degree from a regionally accredited institution or international equivalent and have recent professional experience in a field related to the relevant course. With courses designed to facilitate the application of knowledge and skills to the workplace, faculty members are able to share their professional knowledge and skills with the students.

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Accessibility	Our academic programs may be accessed through a variety of delivery modes (electronically delivered, campus-based or a blend of both), which make our educational programs accessible and even portable, regardless of where the students work and live.
Class Schedule and Active Learning Environment	Courses are designed to encourage and facilitate collaboration among students and interaction with the instructor. The curriculum requires a high level of student participation for purposes of enhancing learning and increasing the student’s ability to work as part of a team. University of Phoenix students (excluding associate’s degree students) are enrolled in five- to eight-week courses year round and complete classes sequentially, rather than concurrently. This permits students to focus their attention and resources on one subject at a time and creates a better balance between learning and ongoing personal and professional responsibilities. In addition to attending class, University of Phoenix students (excluding associate’s degree students) meet weekly (online or in-person) as part of a three- to five-person learning team. Learning team sessions are an integral part of each University of Phoenix course to facilitate in-depth review of and reflection on course materials. Members work together to complete assigned group projects and develop communication and teamwork skills. In the associate’s degree programs, the courses are nine weeks and classes are offered in pairs to complement each other.
Library and Other Learning Resource Services	Students and faculty members are provided with electronic and other learning resources for their information and research needs. Students access these services directly through the Internet or with the help of a learning resource services research librarian.
Academic Quality	Over the last few years, University of Phoenix implemented an academic quality assessment plan with the purpose of measuring whether the institution meets its mission and purposes. A major component of this plan is the assessment of student learning. To assess student learning, University of Phoenix measures whether graduates meet its programmatic and learning goals. The measurement is composed of the following four ongoing and iterative steps:

1. preparing an annual assessment plan for academic programs;

2. preparing an annual assessment result report for academic programs, based on student learning outcomes;

3. implementing improvements based on assessment results; and

4. monitoring effectiveness of implemented improvements.

By achieving programmatic competencies, University of Phoenix graduates are expected to become proficient in the following areas:

• critical thinking and problem solving;

• collaboration;

• information utilization;

• communication; and

• professional values.

We have developed an assessment matrix which outlines specific learning outcomes to measure whether students are meeting

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University of Phoenix learning goals. Multiple methods have been identified to assess each outcome.

Degree Programs

University of Phoenix offers degrees in the following program areas:

Associate’s	Bachelor’s	Master’s	Doctoral
•   Arts and Sciences  •   Business and Management  •   Criminal Justice and Security  •   Education  •   Health Care  •   Human Services  •   Psychology  •   Technology	•   Arts and Sciences •   Business and Management •   Criminal Justice and Security •   Education •   Health Care •   Human Services •   Nursing •   Psychology •   Technology	•   Business and Management •   Counseling •   Criminal Justice and Security •   Education •   Health Care •   Nursing •   Psychology •   Technology	•   Business and Management •   Education •   Health Care •   Nursing •   Psychology •   Technology

Academic Annual Report

In 2008, University of Phoenix published its first Academic Annual Report which contains a transparent look at a variety of comparative performance measures related to student outcomes and university initiatives related to quality and accountability. The report was created within the framework set forth in the 2006 report commissioned by former U.S. Secretary of Education Margaret Spellings, entitled “A Test of Leadership: Charting the Future of U.S. Higher Education,” which focused on access, accountability, quality, and affordability. The Academic Annual Report is available on the University of Phoenix website at www.phoenix.edu.

International

Teaching Model

Our international operations include full-time, part-time and distance learning courses for professional examination preparation, professional development training and various degree programs. Our international operations faculty members consist of both full-time and part-time professors.

Degree Programs and Services

Our international operations offer bachelor’s, master’s and doctoral degrees, which include a variety of degree programs and related areas of specialization. Additionally, we offer training and published materials for qualifications in specific markets for accountancy (including tax), financial services and actuarial science. We also provide professional development through continuing education training and supplemental skills courses primarily in the legal and finance industries.

Admissions Standards

Domestic Postsecondary

To gain admission to undergraduate programs at University of Phoenix, students must have a high school diploma or a Certificate of General Educational Development, commonly referred to as GED, and satisfy employment requirements, if applicable, for their field of study. Applicants whose native language is not English must take and pass the Test of English as a Foreign Language or Test of English for International Communication. Non-U.S. citizens attending a campus located in the U.S. are required to hold an approved visa or to have been granted permanent residency. Additional requirements may apply to individual programs or to students who are attending a specific campus. Students already in undergraduate programs at other schools may petition to be

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admitted to University of Phoenix on a provisional status if they do not meet certain criteria. Some programs have work requirements (e.g. nursing) such that students must have a certain amount of experience in given areas in order to be admitted. These vary by program, and not all programs have them.

To gain admission to graduate programs at University of Phoenix, students must have an undergraduate degree from a regionally or nationally accredited college or university, satisfy the minimum grade point average requirement, and have relevant work and employment experience, if applicable for their field of study. Applicants whose native language is not English must take and pass the Test of English as a Foreign Language or Test of English for International Communication. Non-U.S. citizens attending a campus located in the U.S. are required to hold an approved visa or have been granted permanent residency. Additional requirements may apply to individual programs or to students who are attending a specific campus. Students in graduate programs at other schools may be admitted to University of Phoenix on provisional status if they do not meet grade point average admission requirements.

To gain admission to doctoral programs at University of Phoenix, students must generally have a master’s degree from a regionally accredited college or university, satisfy the minimum grade point average requirement, satisfy employment requirements as appropriate to the program applied for, have a laptop computer and have membership in a research library. Applicants whose native language is not English must take and pass the Test of English as a Foreign Language, Test of English for International Communication or Berlitz^® Online English Proficiency Exam.

The admission requirements for our Other Schools are similar to University of Phoenix and vary depending on the respective degree program.

International

In general, postsecondary students in our international institutions must have obtained a high school or equivalent diploma from an approved school. Other requirements apply for graduate and other programs. Admissions requirements for our international institutions are appropriate for the respective markets in which we operate.

Students

University of Phoenix Degreed Enrollment

University of Phoenix Degreed Enrollment for the quarter ended August 31, 2009 was 443,000. See Item 1, Business, “Overview,” for a description of the manner in which we calculate Degreed Enrollment. The following table details Degreed Enrollment for the respective periods:

	Quarter Ended August 31,				%
(Rounded to the nearest hundred)	2009		2008		Change
Associate’s		201,200		146,500		37.3	%
Bachelor’s		163,600		141,800		15.4	%
Master’s		71,200		67,700		5.2	%
Doctoral		7,000		6,100		14.8	%
Total		443,000		362,100		22.3	%

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The following chart details quarterly Degreed Enrollment by degree type for the respective periods:

University of Phoenix New Degreed Enrollment

University of Phoenix combined New Degreed Enrollment for fiscal year 2009 was 355,800. See Item 1, Business, “Overview,” for a description of the manner in which we calculate New Degreed Enrollment. The following table details University of Phoenix combined New Degreed Enrollment for the respective fiscal years:

	Year Ended August 31,				%
(Rounded to the nearest hundred)	2009		2008		Change
Associate’s		191,700		143,400		33.7	%
Bachelor’s		108,900		92,400		17.9	%
Master’s		51,900		49,400		5.1	%
Doctoral		3,300		3,000		10.0	%
Total		355,800		288,200		23.5	%

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The following chart details quarterly New Degreed Enrollment by degree type for the respective periods:

We have a diverse student population. During fiscal years 2009 and 2008, approximately 66% of students enrolled in University of Phoenix degree programs who attended a course were women. Approximately 69% and 70% during fiscal years 2009 and 2008, respectively, of the students enrolled in University of Phoenix degree programs who attended a course provided us information on their race/ethnicity. The relative percentages by race/ethnicity category for those students who responded during the respective periods are as follows:

Race/Ethnicity	2009			2008
African-American		27.7	%		25.0	%
Asian/Pacific Islander		3.6	%		4.1	%
Caucasian		52.2	%		53.8	%
Hispanic		11.6	%		12.0	%
Native American/Alaskan		1.3	%		1.3	%
Other/Unknown		3.6	%		3.8	%
		100.0	%		100.0	%

The relative percentages by age of incoming students that comprise New Degreed Enrollment during fiscal years 2009 and 2008 are as follows:

Age	2009			2008
22 and under		14.9	%		14.0	%
23 to 29		34.3	%		34.0	%
30 to 39		31.0	%		31.0	%
40 to 49		14.5	%		15.0	%
50 and over		5.3	%		6.0	%
		100.0	%		100.0	%

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Marketing

In October 2007, we acquired Aptimus, Inc., an online advertising company, which has been successfully integrated into our marketing organization. Our primary purpose in acquiring Aptimus was to help us more effectively monitor, manage, and control our marketing investments and brands by leveraging its industry-specific knowledge and technology platform. Our marketing strategy is to increase awareness of and access to quality and affordable education through improved messaging and sharpened focus on our different communication channels and to attract students who are more likely to persist in our programs.

We engage in a broad range of marketing activities to inform potential students about our teaching/learning model and the programs offered, including online advertising, broadcast, outdoor advertising, print, and direct mail. In fiscal year 2009, we launched a national marketing campaign called “I am a Phoenix” to develop and strengthen our brand identity.

Internet Marketing

We advertise on the Internet using search engine keywords, banners, and custom advertising placements on targeted sites, such as education portals, career sites, and industry-specific websites. Our Internet and non-Internet advertising activities have improved the quality of the consumer traffic and interest on our owned and operated website, website www.phoenix.edu, which provides prospective students with relevant information and resources about University of Phoenix’s degrees and programs.

We intend to continue to leverage the unique qualities of the Internet and its emerging technologies to enhance our brand awareness among prospective students, and to improve our ability to deliver relevant messages to satisfy prospective students’ specific needs and requirements. New media technologies that we have begun to use to communicate with our current and prospective students include online social networks, search engine marketing and emerging video advertising.

Broadcast and Print

We utilize non-Internet marketing, primarily through broadcast and print advertising, to reach new prospects and to establish brand recognition among key segments of prospective students. Broadcast advertising includes advertisements on cable, local and national television networks. In addition, we advertise in select print publications, including national and local newspapers and publications with focused areas of content, to target programs and fields in which we provide classes and degrees.

Direct Mail

Direct mail is effective at reaching targeted individuals in specific career fields of interest including Accounting, Business, Education, Technology, Criminal Justice and Nursing. Direct mail also allows us to reach specific metropolitan areas for focused local marketing efforts. We currently purchase education-related mailing lists from various sources that specialize in this area. In addition, we track student prospects for every direct mail campaign by variety of methods including postage-paid reply cards, a specific toll-free number and dedicated online links.

Sponsorships and Other Advertising

We selectively sponsor and provide advertising to support specific activities, including local and national sports and entertainment events. We also utilize outdoor advertising, including billboards, to communicate the quality and affordability of our on campus educational offerings in regional markets.

Stadium Naming Rights

In 2006, we obtained naming and sponsorship rights on a stadium in Glendale, Arizona, which is home to the Arizona Cardinals team in the National Football League. These naming and sponsorship rights are in effect until 2026 with options to extend and include opportunities for signage, advertising, and other promotional rights and benefits to enhance the University of Phoenix brand awareness.

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Relationships with Employers

We work closely with many businesses and governmental agencies to meet their specific educational and training needs either by modifying existing programs or, in some cases, by developing customized programs. These programs are often held at the employers’ offices or on site at select military bases. University of Phoenix has formed educational partnerships with various corporations to provide programs specifically designed for their employees. BPP enrolls the majority of its students through relationships with employers. We consider the employers that provide tuition assistance to their employees through tuition reimbursement plans or direct bill arrangements to be our secondary customers.

Referrals

Referrals continue to be an important source of new students, including those from employers, co-workers, current students, alumni, family members and friends.

Competition

Domestic Postsecondary

The higher education industry is highly fragmented with no single private or public institution enjoying a significant market share. We compete primarily with traditional four- and two-year degree-granting public and private regionally accredited colleges and universities. While students over the age of 24 comprise approximately 38% of all higher education enrollments in the U.S., the primary mission of most accredited four-year colleges and universities is to serve 18- to 24-year-old students and conduct research. University of Phoenix acknowledges the differences in educational needs between working learners and traditional students and provides programs and services that allow students to earn their degrees without major disruption to their personal and professional lives.

An increasing number of colleges and universities enroll working learners in addition to the traditional 18- to 24-year-old students, and we expect that these colleges and universities will continue to modify their existing programs to serve working learners more effectively, including by offering more distance learning programs. We believe that the primary factors on which we compete are the following:

•  the ability to provide flexible and convenient access to programs and classes;

•  cost of the program;

•  breadth of programs offered;

•  active and relevant curriculum development that considers needs of employers;

•  the time necessary to earn a degree;

•  reliable and high-quality products and services;

•  qualified and experienced faculty;

•  reputation of programs and classes; and

•  comprehensive student support services.

In our offerings of non-degree programs, we compete with a variety of business and information technology providers, primarily those in the for-profit training sector. Many of these competitors have significantly more market share in given geographical regions and longer-term relationships with key employers of potential students.

International

Competitive factors for our international schools vary by country and generally include the following:

•  breadth of programs offered;

•  active and relevant curriculum development that considers the needs of employers; and

•  reputation of programs and classes.

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In addition, BPP competes with other training providers, public and private colleges, and universities primarily in the United Kingdom. The primary factors on which BPP competes with these institutions include the following:

•  reputation of programs and classes;

•  examination success;

•  reliable and high-quality products and services;

•  qualified and experienced faculty;

•  flexible learning programs;

•  active and relevant curriculum development that considers the needs of employers;

•  relationships with employers; and

•  degree awarding powers.

Employees

We believe that our employee relations are satisfactory. As of August 31, 2009, we had the following numbers of employees:

	Non-Faculty
	Full-Time		Part-Time		Faculty(1)
University of Phoenix		15,725		291		27,361
Apollo Global:
BPP		1,273		249		647
Other		1,244		—		1,080
Total Apollo Global		2,517		249		1,727
Insight Schools		140		15		376
Other Schools		741		7		1,912
Corporate(2)		2,391		46		—
Total		21,514		608		31,376

(1)	Includes both full-time and part-time faculty. Also includes 1,113 employees counted as non-faculty that serve in both roles.
(2)	Consists primarily of employees in executive management, information systems, accounting and finance, financial aid, and corporate human resources.

Accreditation and Jurisdictional Authorizations

Domestic Postsecondary

Accreditation

University of Phoenix is covered by regional accreditation, which provides the following:

•  recognition and acceptance by employers, other higher education institutions and governmental entities of the degrees and credits earned by students;

•  qualification to participate in Title IV programs (in combination with state higher education operating and degree granting authority); and

•  qualification for authorization in certain states.

Regional accreditation is accepted nationally as the basis for the recognition of earned credit and degrees for academic purposes, employment, professional licensure and, in some states, authorization to operate as a degree-granting institution. Under the terms of a reciprocity agreement among the six senior regional accrediting associations, representatives of each region in which a regionally accredited institution operates may participate in the evaluations for reaffirmation of accreditation of which the North Central Association of Colleges and Schools is a member.

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Accreditation information for University of Phoenix and applicable programs is described in the chart below:

Institution/Program	Accrediting Body (Year Accredited)	Status
University of Phoenix	— The Higher Learning Commission of the North Central Association of Colleges and Schools (1978, reaffirmed in 1982, 1987, 1992, 1997, and 2002)	— Next comprehensive evaluation visit by The Higher Learning Commission is scheduled to be conducted in 2012 (maximum period of reaffirmation is 10 years) — North Central Association of Colleges and Schools may require focused visits between comprehensive visits as part of normal and continuing relationship
— Business programs	— Association of Collegiate Business Schools and Programs (2007)	— Next reaffirmation visit expected in 2017, with interim focus report to be submitted by us in 2011
— Bachelor of Science in Nursing	— Commission on Collegiate Nursing Education (2005) — Previously accredited by National League for Nursing Accrediting Commission from 1989 to 2005	— Reaccreditation due in 2010 by Commission on Collegiate Nursing Education
— Master of Science in Nursing	— Commission on Collegiate Nursing Education (2005) — Previously accredited by National League for Nursing Accrediting Commission from 1996 to 2005	— Reaccreditation due in 2010 by Commission on Collegiate Nursing Education
— Master of Counseling in Community Counseling (Phoenix and Tucson, Arizona campuses)	— Council for Accreditation of Counseling and Related Educational Programs (1995, reaffirmed in 2002)	— Reaffirmation visit expected in 2010
— Master of Counseling in Mental Health Counseling Salt Lake City, Utah campus	— Council for Accreditation of Counseling and Related Educational Programs (2001)	— Reaffirmation visit expected in 2009
— Master of Arts in Education with options in Elementary Teacher Education and Secondary Teacher Education	— Teacher Education Accreditation Council (preaccredited in 2007)	— Reaccreditation due in 2012

The schools in our Other Schools segment maintain the requisite accreditations for their respective operations.

Jurisdictional Authorizations

In addition to accreditation by independent accrediting bodies, our schools must be authorized to operate by the appropriate regulatory authorities in many of the jurisdictions in which they operate.

In the U.S., institutions that participate in Title IV programs must be authorized to operate by the appropriate postsecondary regulatory authority in each state where the institution has a physical presence, or

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be exempt from such regulatory authorization, usually based on recognized accreditation. As of August 31, 2009, University of Phoenix is authorized to operate and has a physical presence in 39 states and the District of Columbia. University of Phoenix has held these authorizations for periods ranging from less than two years to over 25 years. As of August 31, 2009, University of Phoenix has also been approved to operate in Alaska, Mississippi, Montana and South Dakota, but does not yet have a physical presence in these states.

All regionally accredited institutions, including University of Phoenix, are required to be evaluated separately for authorization to operate in Puerto Rico. University of Phoenix obtained authorization from the Puerto Rico Commission on Higher Education, and that authorization remains in effect.

Some states assert authority to regulate all degree-granting institutions if their educational programs are available to their residents, whether or not the institutions maintain a physical presence within those states. University of Phoenix has obtained licensure in these states.

The schools in our Other Schools segment maintain the requisite authorizations in the jurisdictions in which they operate.

International

Our international schools must be authorized by the relevant regulatory authorities under applicable local law, which in some cases requires accreditation, as described in the chart below:

School	Accrediting Body	Operational Authority
BPP	— BPP Professional Education and BPP College of Professional Studies operate under a number of professional body accreditations to offer training towards professional body certifications — BPP has additional accreditations by country and/or program as necessary	— The Privy Council for the United Kingdom has designated BPP College of Professional Studies Limited as an awarding body for qualifications (including degrees) in the United Kingdom  — BPP College of Professional Studies’ reauthorization will be due when its current authority expires in August 2013
UNIACC	— Council for Higher Education (Consejo Superior de Educación) — National Commission on Accreditation (Comisión Nacional de Acreditación)	— Chilean Ministry of Education (Ministerio de Educación de Chile)  — Reaccreditation due in 2011
ULA	— N/A	— Mexico’s Secretary of Public Education (Secretaria de Educación Pública) — Ministry of Education of the State of Morelos (Secretaria de Educación del Estado de Morelos) — National Autonomous University of Mexico (Universidad Nacional Autónoma de México)

Financial Aid Programs

Domestic Postsecondary

The Higher Education Act of 1965 and the related regulations govern all higher education institutions participating in U.S. Title IV federal financial aid programs. In August 2008, the Higher Education Act was

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reauthorized through September 30, 2013 by the Higher Education Opportunity Act. Financial aid under Title IV of the Higher Education Act, as reauthorized (which we refer to generally as Title IV), is awarded every academic year to eligible students. Certain types of U.S. federal student aid are awarded on the basis of financial need, generally defined as the difference between the cost of attending an educational institution and the amount the student and/or the student’s family, as the case may be, can reasonably be expected to contribute to that cost. The amount of financial aid awarded per academic year is based on many factors, including, but not limited to, program of study, grade level, Title IV annual loan limits, and financial need. All recipients of Title IV program funds must maintain satisfactory academic progress within the guidelines published by the U.S. Department of Education.

We collected the majority of our fiscal year 2009 total consolidated net revenue from receipt of Title IV financial aid program funds, principally from federal Stafford loans, also known as Federal Family Education Loan Program (“FFELP”) loans, and Pell Grants. University of Phoenix represented approximately 95% of our fiscal year 2009 total consolidated net revenue and University of Phoenix generated 86% of its cash basis revenue for eligible tuition and fees during fiscal year 2009 from the receipt of Title IV financial aid program funds, as calculated under the 90/10 Rule, excluding the benefit from the temporary relief for loan limit increases, described further below.

FFELP loans are currently the most significant source of U.S. federal student aid and are low interest, federally guaranteed loans made by private lenders. Annual and aggregate loan limits apply based on the student’s grade level. There are two types of Stafford loans: subsidized Stafford loans, which are based on the U.S. federal statutory calculation of student need, and unsubsidized Stafford loans, which are not need-based. Neither type of Stafford loan is based on creditworthiness. The U.S. federal government pays the interest on subsidized Stafford loans while the student is enrolled in school; the borrower is responsible for the interest on unsubsidized Stafford loans regardless of school attendance. The student has the option to defer payment on the principal and interest while enrolled in school. Repayment on Stafford loans begins six months after the date the student ceases enrollment. The loan may be paid back to the lender over the course of up to 10 years or longer. Both graduate and undergraduate students may apply for Stafford loans. During fiscal year 2009, Stafford loans represented approximately 85% of the gross Title IV funds received by University of Phoenix.

In addition to FFELP loans made by private lenders, the U.S. Department of Education also administers the Federal Direct Loan Program (“FDLP”), which eliminates the private financial institution as the lender. Under the FDLP, the federal government makes the loans directly to the students with terms consistent with FFELP loans. During fiscal year 2009, we began participating in the FDLP for a small portion of our Title IV eligible students. During fiscal year 2009, FDLP loans represented less than 1% of the gross Title IV funds received by University of Phoenix. In U.S. President Barack Obama’s 2010 budget request delivered to Congress on February 26, 2009, the U.S. Department of Education proposed to eliminate FFELP loans and instead require all Title IV student loans to be administered through the FDLP commencing July 1, 2010. We expect to be able to fully transition from the FFELP program to the FDLP by the proposed July 1, 2010 phase-out date, if necessary. If this proposal is adopted, the transition would require us to develop and implement administrative capabilities and procedures for volume processing of loans under the FDLP. If we experience a disruption in our ability to process student loans through the FDLP, either because of administrative challenges on our part or the inability of the U.S. Department of Education to process the increased volume of direct loans on a timely basis, our results of operations and cash flows could be adversely and materially affected.

Federal Pell Grants are generally awarded based on need only to undergraduate students who have not earned a bachelor’s or professional degree. Unlike loans, Pell Grants do not have to be repaid. During fiscal year 2009, Pell Grants represented approximately 14% of the gross Title IV funds received by University of Phoenix.

Funding from student loans not guaranteed by the federal government represented approximately 1% of the cash basis revenue for eligible tuition and fees for University of Phoenix during fiscal year 2009. See Item 1A, Risk Factors — Risks Related to the Highly Regulated Industry in Which We Operate.

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International

Government financial aid funding for students enrolled in our international institutions is not widely available.

Regulatory Environment

Domestic Postsecondary

Our domestic postsecondary operations are subject to significant regulations. New or revised interpretations of regulatory requirements could have a material adverse effect on us. In addition, changes in existing or new interpretations of applicable laws, rules, or regulations could have a material adverse effect on our accreditation, authorization to operate in various states, permissible activities, and operating costs. The failure to maintain or renew any required regulatory approvals, accreditation, or state authorizations could have a material adverse effect on us. See Item 1A, Risk Factors — Risks Related to the Highly Regulated Industry in Which We Operate.

The Higher Education Act, as reauthorized, and the related regulations govern all higher education institutions participating in U.S. Title IV federal financial aid programs, and provide for a regulatory triad by mandating specific regulatory responsibilities for each of the following:

•  the accrediting agencies recognized by the U.S. Department of Education;

•  the federal government through the U.S. Department of Education; and

•  state higher education regulatory bodies.

To be eligible to participate in Title IV programs, a postsecondary institution must be accredited by an accrediting body recognized by the U.S. Department of Education and must comply with the Higher Education Act, as reauthorized, and all applicable regulations thereunder. University of Phoenix and Western International University currently meet the requirements for Title IV participation. The most significant regulatory requirements applicable to our domestic postsecondary operations are summarized below.

Eligibility and Certification Procedures.  The Higher Education Act, as reauthorized, specifies the manner in which the U.S. Department of Education reviews institutions for eligibility and certification to participate in Title IV programs. Every educational institution involved in Title IV programs must be certified to participate and is required to periodically renew this certification. University of Phoenix was recertified in June 2003 and its current certification for the Title IV programs expired in June 2007. In March 2007, University of Phoenix submitted its Title IV recertification application to the U.S. Department of Education. We have been collaborating with the U.S. Department of Education since that date and continue to supply additional follow-up information based on requests from the U.S. Department of Education. Our eligibility continues on a month-to-month basis until the U.S. Department of Education issues its decision on the application. We have no reason to believe that our application will not be renewed in due course.

In February 2009, unrelated to our recertification application, the U.S. Department of Education performed an ordinary course, focused program review of University of Phoenix’s policies and procedures involving Title IV programs. We have not yet received the program review report.

Western International University was recertified in October 2003 and its current certification for participation in Title IV programs expired on June 30, 2009. In March 2009, Western International University submitted its Title IV recertification application to the U.S. Department of Education and Western International University’s eligibility continues on a month-to-month basis until the U.S. Department of Education completes its review of the application and issues its decision. As with University of Phoenix, we have no reason to believe that the application will not be renewed in due course.

The “90/10 Rule.”  A requirement of the Higher Education Act, as reauthorized by the Higher Education Opportunity Act, commonly referred to as the “90/10 Rule,” applies only to proprietary institutions of higher education, which includes University of Phoenix and Western International University. Under this rule, a proprietary institution will be ineligible to participate in Title IV programs if for any two consecutive fiscal years it derives more than 90% of its cash basis revenue, as defined in the rule, from Title IV programs. An

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institution that derives more than 90% of its revenue from Title IV programs for any single fiscal year will be placed on provisional certification for two fiscal years and will be subject to possible additional sanctions determined to be appropriate under the circumstances by the U.S. Department of Education in the exercise of its broad discretion. An institution that derives more than 90% of its revenue from Title IV programs for two consecutive fiscal years will be ineligible to participate in Title IV programs. University of Phoenix and Western International University are required to calculate this percentage at the end of each fiscal year. If an institution violates the 90/10 Rule and becomes ineligible to participate in Title IV programs, any disbursements of Title IV program funds while ineligible must be repaid to the U.S. Department of Education.

The 90/10 Rule percentage for University of Phoenix has increased materially over the past several fiscal years and we expect the trend will continue in fiscal year 2010. The increase has been driven primarily by the following factors:

•  Increased student loan limits.  In May 2008, the Ensuring Continued Access to Student Loans Act of 2008 increased the annual loan limits on federal unsubsidized student loans by $2,000 for the majority of our students enrolled in associate’s and bachelor’s degree programs, and also increased the aggregate loan limits (over the course of a student’s education) on total federal student loans for certain students. This increase in student loan limits, together with increases in Pell Grants, has increased the amount of Title IV program funds available to and used by our students to satisfy tuition, fees and other costs, which has increased the proportion of our revenue deemed to be from Title IV programs.

•  Increased associate’s degree enrollment.  The proportion of our revenue from associate’s degree programs is composed of a higher percentage of Title IV funds than is the case for our bachelor’s and other degree programs. As a result, our 90/10 Rule percentage tends to increase as associate’s degree enrollment increases relative to other programs. Because our associate’s degree enrollment continues to grow at a higher rate than our other programs, this growth has contributed to the increase in the 90/10 Rule percentages for the University of Phoenix.

The Higher Education Opportunity Act provides temporary relief from the impact of the loan limit increases by excluding from the 90/10 Rule calculation any amounts received between July 1, 2008 and July 1, 2011 that are attributable to the increased annual loan limits. The implementing regulations for this temporary relief are being developed in a negotiated rulemaking process involving the U.S. Department of Education, industry representatives and other interested parties. The proposed rules were published for comment by the U.S. Department of Education in August 2009, and are expected to be published in final form by November 1, 2009. There is uncertainty about the manner and extent in which the temporary relief will apply to University of Phoenix and Western International University, which have atypical academic calendars. We continue to monitor the rulemaking process, as the resolution of the interpretive issues and subsequent guidance from the U.S. Department of Education could have an impact on the benefit derived from the temporary relief. The application of this temporary relief will decrease the 90/10 Rule percentages for University of Phoenix and Western International University for fiscal year 2009. However, at present given the evolving rule-making process as well as the complexity of such a calculation given our atypical academic calendars, we are unable to quantify precisely the benefit that we will derive in the 90/10 Rule percentage from the temporary relief. As such, our reported rates below exclude the benefits from the temporary relief, which we currently estimate will reduce our University of Phoenix rate between 50 and 300 basis points.

The 90/10 Rule percentages, excluding the benefit from the temporary relief for loan limit increases, for University of Phoenix and Western International University for fiscal year 2009 were 86% and 57%, respectively.

University of Phoenix is taking various measures to reduce the percentage of its cash basis revenue attributable to Title IV funds, including emphasizing employer-paid and other direct-pay education programs, encouraging students to carefully evaluate the amount of necessary Title IV borrowing, and increasing the focus on professional development and continuing education programs. Although we expect that these measures will favorably impact the 90/10 Rule calculation in the future, there is no assurance that these initiatives will be effective in reducing the 90/10 Rule calculation, or that they will be adequate to prevent the

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90/10 Rule calculation from exceeding 90% in fiscal year 2010 or future fiscal years. We do not believe that these measures significantly impacted our 90/10 Rule calculation for fiscal year 2009.

In addition, we intend to consider other measures to favorably impact the 90/10 Rule calculation for University of Phoenix, including appropriate domestic acquisitions and tuition price increases. These efforts, and our other long-term initiatives to impact this calculation, may increase our operating expenses and/or reduce our revenue and may have a materially adverse effect on our results of operations, cash flows and financial condition.

Student Loan Defaults.  To remain eligible to participate in Title IV programs, educational institutions must maintain an appropriate student loan cohort default rate. The U.S. Department of Education reviews an educational institution’s cohort default rate annually as a measure of administrative capability. The cohort is the group of students who first enter into student loan repayment during a federal fiscal year (ending September 30). The currently applicable cohort default rate for each cohort is the percentage of the students in the cohort who default on their student loans prior to the end of the following federal fiscal year. The cohort default rates are published by the U.S. Department of Education approximately 12 months after the end of the measuring period. Thus, in September 2009 the U.S. Department of Education published the cohort default rates for the 2007 cohort, which measured the percentage of students who first entered into repayment during the year ended September 30, 2007 and defaulted prior to September 30, 2008. As discussed below, the measurement period for the cohort default rate has been increased to three years starting with the 2009 cohort.

If an educational institution’s cohort default rate exceeds 10% for any one of the three preceding years, it must delay for 30 days the release of the first disbursement of U.S. federal student loan proceeds to first time borrowers enrolled in the first year of an undergraduate program. Western International University implemented a 30 day delay for such disbursements in fiscal year 2007, and University of Phoenix proactively implemented a 30 day delay for such disbursements in July 2009. If an institution’s cohort default rate exceeds 25% for three consecutive years or exceeds 40% in any one year, it will be ineligible to participate in Title IV programs and, as a result, its students would not be eligible for federal student financial aid.

The cohort default rates for University of Phoenix, Western International University and for all proprietary postsecondary institutions for the federal fiscal year periods 2007, 2006 and 2005 were as follows:

	Cohort Year Ended September 30,
	2007			2006			2005
University of Phoenix		9.3	%		7.2	%		7.3	%
Western International University		18.5	%		27.4	%		11.4	%
All proprietary postsecondary institutions(1)		11.0	%		9.7	%		8.2	%

(1) Information published by the U.S. Department of Education.

The University of Phoenix cohort default rate has ranged from approximately 4% to 9.3% over the past several years. The increase in the rate is, in large measure, the result of our transitioning associate’s degree students from Western International University to University of Phoenix beginning in April 2006 and the general expansion of the University of Phoenix associate’s degree program. Student loan default rates tend to be higher in our associate’s degree student population than in our bachelor’s and graduate degree student populations. We believe that the 2008 University of Phoenix cohort default rate for the period ending September 30, 2009 will exceed 10%, although we do not expect that this will have a material impact on our business as we have already implemented a 30 day delay in the disbursement of Title IV loan proceeds for first time borrowers enrolled in the first year of an undergraduate program.

The increase in Western International University’s cohort default rate from 2005 to 2006 is due to the enrollment of associate’s degree students in Western International University from September 2004 through March 2006. The transition of the associate’s degree program to University of Phoenix in April 2006 has resulted in a decrease in Western International University’s cohort default rate from 2006 to 2007. We anticipate a further decrease in student loan defaults for Western International University based on this transition.

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We have implemented initiatives to mitigate the increased risk of student loan defaults for University of Phoenix and Western International University students. We have dedicated resources focused on assisting the students who are at risk of default. These dedicated resources contact students and offer assistance, which includes providing students with specific loan repayment information, lender contact information and attempts to transfer these students to the lender to resolve their delinquency. In addition, we have refined and improved our student retention programs, resulting in improved student retention rates. Accordingly, we believe that the increase in cohort default rates for University of Phoenix arising from the increased proportion of associate’s degree students will be significantly less pronounced than it was for Western International University.

The cohort default rate calculation was modified by the Higher Education Opportunity Act enacted in August 2008. As modified, effective for the federal fiscal year 2009 cohort, the measuring period for the cohort default rate will be extended to the end of the second year after a student first enters repayment, rather than the end of the first year following the commencement of repayment. Accordingly, the cohort default rate for the 2009 cohort will measure the percentage of students entering student loan repayment during the year ended September 30, 2009 who default on their student loans on or before September 30, 2011 (rather than September 30, 2010).

The Higher Education Opportunity Act also modified several provisions to counterbalance the extended measurement period with increased threshold cohort default rates that trigger penalties along with the penalties imposed based on an institution’s cohort default rate effective with the federal fiscal year 2009 cohort as follows:

•  The trigger based on a single cohort default rate of 10%, which would result in a required 30-day delay in disbursing Title IV loan proceeds to first year, first time borrowers, will be increased to 15%;

•  The trigger based on cohort default rates of more than 25% for three consecutive cohorts, which would result in Title IV ineligibility, will be increased to 30%; and

•  The trigger based on a single cohort default rate of more than 40%, which would result in Title IV ineligibility, is unchanged.

At this time we are unable to forecast the impact of these modifications on our business due to the uncertain impact on student loan defaults of the current adverse economic conditions.

Administrative Capability.  The Higher Education Opportunity Act directs the U.S. Department of Education to assess the administrative capability of each institution to participate in Title IV programs. The failure of an institution to satisfy any of the criteria used to assess administrative capability may allow the U.S. Department of Education to determine that the institution lacks administrative capability and, therefore, may be subject to additional scrutiny or denied eligibility for Title IV programs.

Standards of Financial Responsibility.  Pursuant to the Title IV regulations, as revised, each eligible higher education institution must satisfy the minimum standard established for three tests which assess the financial condition of the institution at the end of the institution’s fiscal year. The three tests measure primary reserve, equity, and net income ratios by using information from the institution’s audited financial statements. These ratios take into account the total financial resources of the school. The Primary Reserve Ratio is a measure of an institution’s financial viability and liquidity. The Equity Ratio is a measure of an institution’s capital resources and its ability to borrow. The Net Income Ratio is a measure of an institution’s profitability. These tests provide three individual scores which are converted into a single composite score. The maximum composite score is 3.0. If the institution achieves a composite score of at least 1.5, it is considered financially responsible. A composite score from 1.0 to 1.4 is considered financially responsible, subject to additional monitoring and other consequences, and the institution may continue to participate as a financially responsible institution for up to three years. If an institution does not achieve a composite score of at least 1.0, it can be transferred from the “advance” system of payment of Title IV funds to cash monitoring status or to the “reimbursement” system of payment, under which the institution must disburse its own funds to students and document the students’ eligibility for Title IV program funds before receiving such funds from the U.S. Department of Education. The composite scores for Apollo Group, University of Phoenix and Western International University exceed the required minimum of 1.5.

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Limits on Title IV Program Funds.  The Title IV regulations place restrictions on the types of programs offered and the amount of Title IV program funds that a student is eligible to receive in any one academic year. Only certain types of educational programs offered by an institution qualify for Title IV program funds. For students enrolled in qualified programs, the Title IV regulations place limits on the amount of Title IV program funds that a student is eligible to receive in any one academic year, as defined by the U.S. Department of Education. An academic year must consist of at least 30 weeks of instructional time and a minimum of 24 credit hours. Most of University of Phoenix’s and Western International University’s degree programs meet the academic year minimum definition of 30 weeks of instructional time and 24 credit hours. Substantially all of University of Phoenix’s degree programs qualify for Title IV program funds. The programs that do not qualify for Title IV program funds consist primarily of corporate training programs and certain certificate and continuing professional education programs. These programs are paid directly by the students or their employers.

Restricted Cash.  The U.S. Department of Education places restrictions on excess Title IV program funds collected for unbilled tuition and fees transferred to University of Phoenix, Western International University or IPD Client Institutions. If an institution holds excess Title IV program funds with student authorization, the institution must maintain, at all times, cash in its bank account (not an escrow account) in an amount at least equal to the amount of funds the institution holds for students.

Compensation of Representatives.  The Higher Education Opportunity Act prohibits an institution from providing any commission, bonus or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any person or entity engaged in any student recruitment, admission, or financial aid awarding activity. Title IV regulations provide safe harbors for activities and arrangements that an institution may carry out without violating the Higher Education Act, as reauthorized, which include, but are not limited to, the payment of fixed compensation (annual salary), as long as that compensation is not adjusted up or down more than twice during any 12-month period, and any adjustment is not based solely on the number of students recruited, admitted, enrolled, or awarded financial aid. University of Phoenix, Western International University, and IPD believe that their current methods of compensating enrollment counselors and financial aid staff comply with the Title IV regulations. See Note 18, Commitments and Contingencies, in Item 8, Financial Statements and Supplementary Data, regarding the Incentive Compensation False Claims Act lawsuit.

Authorizations for New Locations and Programs.  University of Phoenix, Western International University and CFFP are required to have authorization to operate as degree-granting institutions in each state where they physically provide educational programs. Certain states accept accreditation as evidence of meeting minimum state standards for authorization or for exempting the institution entirely from formal state licensure or approval. Other states require separate evaluations for authorization. Depending on the state, the addition of a degree program not offered previously or the addition of a new location must be included in the institution’s accreditation and be approved by the appropriate state authorization agency. University of Phoenix, Western International University and CFFP are currently authorized to operate in all states in which they have physical locations.

University of Phoenix, Western International University and CFFP also must obtain the prior approval of The Higher Learning Commission before expanding into new locations to conduct instructional activities.

Branching and Classroom Locations.  The Title IV regulations contain specific requirements governing the establishment of new main campuses, branch campuses and classroom locations at which the eligible institution offers, or could offer, 50% or more of an educational program. In addition to classrooms at campuses and learning centers, locations affected by these requirements include the business facilities of client companies, military bases and conference facilities used by University of Phoenix and Western International University. The U.S. Department of Education requires that the institution notify the U.S. Department of Education of each location offering 50% or more of an educational program prior to disbursing Title IV program funds to students at that location. University of Phoenix and Western International University have procedures in place to ensure timely notification and acquisition of all necessary location approvals prior to disbursing Title IV funds to students attending any new location. In addition, The Higher Learning

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Commission requires that each new campus or learning center of University of Phoenix or Western International University be approved before offering instruction. States in which the two universities operate have varying requirements for approval of branch and classroom locations.

Change of Ownership or Control.  A change of ownership or control, depending on the type of change, may have significant regulatory consequences for University of Phoenix, Western International University and CFFP. Such a change of ownership or control could trigger recertification by the U.S. Department of Education, reauthorization by state licensing agencies, or the reevaluation of the accreditation by The Higher Learning Commission.

The U.S. Department of Education has adopted the change of ownership and control standards used by the U.S. federal securities laws for institutions owned by publicly-held corporations. If a change of ownership and control occurs that requires us to file a Form 8-K with the Securities and Exchange Commission, or there is a change in the identity of a controlling shareholder of Apollo Group, the University of Phoenix and/or Western International University may become ineligible to participate in Title IV programs until recertified by the U.S. Department of Education. Under some circumstances, the U.S. Department of Education may continue an institution’s participation in Title IV programs on a temporary provisional basis pending completion of the change in ownership approval process. In addition, some states where University of Phoenix, Western International University or CFFP are presently licensed have requirements governing change of ownership or control that require approval of the change to remain authorized to operate in those states. See Item 1A, Risk Factors — Our Executive Chairman and Vice Chairman of the Board control 100% of our voting stock and control substantially all actions requiring the vote or consent of our shareholders. Moreover, University of Phoenix, Western International University and CFFP are required to report any material change in stock ownership to The Higher Learning Commission. In the event of a material change in stock ownership, The Higher Learning Commission may seek to evaluate the effect of such a change on the continuing operations of University of Phoenix, Western International University and CFFP.

New U.S. Department of Education Reporting and Disclosure requirements.  The Higher Education Opportunity Act includes various provisions aimed at the rising cost of postsecondary education and other efforts for more transparency. Beginning July 1, 2011, the U.S. Department of Education will publish national lists disclosing the top five percent in each of nine institutional categories with the highest college costs and largest percentage increases. Additional consumer information disclosures required of all Title IV eligible institutions, include, but are not limited to, plans for improving the academic program, institutional policies and sanctions related to the unauthorized distribution of copyrighted material, retention rates, placement information, completion and graduation rates and campus/student safety awareness provisions.

U.S. Department of Education Audits and Other Matters.  From time to time as part of the normal course of business, University of Phoenix and Western International University are subject to program reviews and audits by regulating bodies as a result of their participation in Title IV programs. In February 2009, the U.S. Department of Education performed an ordinary course, focused program review of University of Phoenix’s policies and procedures involving Title IV programs. We have not received the program review report resulting from this visit.

U.S. Department of Education regulations require institutions and third-party servicers to submit annually to the Secretary of Education their student financial aid compliance audit, prepared by an independent auditor, no later than six months after the last day of the institution’s or third-party servicer’s fiscal year. University of Phoenix, Western International University and IPD have timely submitted their respective fiscal year 2008 annual student financial aid compliance audits.

During a previous internal review of certain Title IV policies and procedures, it came to our attention that certain Satisfactory Academic Progress calculations performed by University of Phoenix and Western International University failed to properly identify students who should have been placed on financial aid disqualification status and therefore were ineligible to participate in Title IV financial aid programs. Additionally, we determined that University of Phoenix was incorrectly disbursing certain funds under a grant program. These matters were self-reported to the U.S. Department of Education in October 2008. In February 2009, after completing our review of these practices, we reported to the U.S. Department of Education the

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results of our review and paid the U.S. Department of Education our best estimate of the liability, which was $8.4 million. Approximately half of this amount was recorded in our Consolidated Statements of Income in fiscal year 2008, which was our best estimate based on the information available when we identified the matter. We recorded the remaining amount in our Consolidated Statements of Income in the first half of fiscal year 2009 following completion of our review. The U.S. Department of Education has informed us that this matter has been resolved.

International

Governmental regulations in foreign countries significantly affect our international operations. New or revised interpretations of regulatory requirements could have a material adverse effect on us. Changes in existing or new interpretations of applicable laws, rules, or regulations in the foreign jurisdictions in which we operate could have a material adverse effect on our accreditation, authorization to operate, permissible activities, and costs of doing business outside of the U.S. The failure to maintain or renew any required regulatory approvals, accreditation, or state authorizations could have a material adverse effect on our international operations. See Item 1A, Risk Factors — Risks Related to the Highly Regulated Industry in Which We Operate.

Other Matters

We file annual, quarterly and current reports with the Securities and Exchange Commission. You may read and copy any document we file at the Securities and Exchange Commission’s Public Reference Room at 100 F Street N.E., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for information on the Public Reference Room. The Securities and Exchange Commission maintains a website that contains annual, quarterly and current reports that issuers file electronically with the Securities and Exchange Commission. The Securities and Exchange Commission’s website is http://www.sec.gov.

Our website address is www.apollogrp.edu. We make available free of charge on our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Information Statements on Schedule 14C, Forms 3, 4, and 5 filed on behalf of directors and executive officers, and all amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the Securities and Exchange Commission.

Item 1A — Risk Factors

You should carefully consider the risks and uncertainties described below and all other information contained in this Annual Report on Form 10-K. In order to help assess the major risks in our business, we have identified many, but not all, of these risks. Due to the scope of our operations, a wide range of factors could materially affect future developments and performance.

If any of the following risks are realized, our business, financial condition, cash flow or results of operations could be materially and adversely affected, and as a result, the trading price of our Class A common stock could be materially and adversely impacted. These risk factors should be read in conjunction with other information set forth in this Annual Report, including Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 8, Financial Statements and Supplementary Data, including the related Notes to Consolidated Financial Statements.

Risks Related to the Control Over Our Voting Stock

Our Executive Chairman and Vice Chairman of the Board control 100% of our voting stock and control substantially all actions requiring the vote or consent of our shareholders.

Dr. John G. Sperling, our Executive Chairman of the Board and Founder, and his son, Mr. Peter V. Sperling, our Vice Chairman of the Board, control the John Sperling Voting Stock Trust and the Peter Sperling

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Voting Stock Trust. Dr. Sperling, Mr. Sperling and the two trusts collectively own 100% of our voting securities, the Apollo Group Class B common stock. Through their individual holdings and their control of these trusts, Dr. Sperling and Mr. Sperling together control the election of all members of our Board of Directors and substantially all other actions requiring a vote of our shareholders, except in certain limited circumstances. Holders of our outstanding Apollo Group Class A common stock do not have the right to vote for the election of directors or for substantially any other action requiring a vote of shareholders, except in certain limited circumstances. In the event of Dr. Sperling’s passing, control of the John Sperling Voting Stock Trust, which holds a majority of the outstanding Apollo Group Class B common stock, will be exercised by a majority of three successor trustees: Mr. Sperling, Terri Bishop, who is an executive officer and Director of Apollo, and Darby Shupp, an employee of an entity affiliated with Dr. Sperling. No assurances can be given that the Apollo Group Class B shareholders will exercise their control of Apollo Group in the same manner that a majority of the outstanding Class A shareholders would if they were entitled to vote on actions currently reserved exclusively for our Class B shareholders. In addition, the control of 100% of our voting stock by Dr. Sperling and Mr. Sperling makes it impossible for a third party to acquire voting control of us without Dr. Sperling’s consent.

We are a “Controlled Company” as defined in Rule 5615(c)(1) of the NASDAQ Listing Rules, since more than 50% of the voting power of Apollo Group is held by the John Sperling Voting Stock Trust. As a consequence, we are exempt from certain requirements of NASDAQ Listing Rule 5605, including that:

•  our Board be composed of a majority of Independent Directors (as defined in NASDAQ Listing Rule 5605(a)(2));

•  the compensation of our officers be determined by a majority of the independent directors or a compensation committee composed solely of independent directors; and

•  nominations to the Board of Directors be made by a majority of the independent directors or a nominations committee composed solely of independent directors.

However, NASDAQ Listing Rule 5605(b)(2) does require that our independent directors have regularly scheduled meetings at which only independent directors are present (“executive sessions”). In addition, Internal Revenue Code Section 162(m) requires that a compensation committee of outside directors (within the meaning of Section 162(m)) approve stock option grants to executive officers in order for us to be able to claim deductions for the compensation expense attributable to such stock options. Notwithstanding the foregoing exemptions, we do have a majority of independent directors on our Board of Directors and we do have an Audit Committee, a Compensation Committee and a Nominating and Governance Committee composed entirely of independent directors.

The charters for the Compensation, Audit and Nominating and Governance Committees have been adopted by the Board of Directors and are available on our website, www.apollogrp.edu. These charters provide, among other items, that each member must be independent as such term is defined by the applicable rules of the NASDAQ Stock Market LLC and the Securities and Exchange Commission.

Risks Related to the Highly Regulated Industry in Which We Operate

U.S. Operations

If we fail to comply with the extensive regulatory requirements for our business, we could face significant monetary liabilities, fines and penalties, including loss of access to U.S. federal student loans and grants for our students.

As a provider of higher education, we are subject to extensive U.S. regulation on both the federal and state levels. In particular, the Higher Education Act, as reauthorized by the Higher Education Opportunity Act in August 2008, and related regulations impose significant regulatory scrutiny on University of Phoenix and Western International University, and all other higher education institutions that participate in the various federal student financial aid programs under Title IV of the Higher Education Act (“Title IV programs”). We collected the majority of our fiscal year 2009 total consolidated net revenue from receipt of Title IV financial

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aid program funds. University of Phoenix represented approximately 95% of our fiscal year 2009 total consolidated net revenue and University of Phoenix generated 86% of its cash basis revenue for eligible tuition and fees during fiscal year 2009 from receipt of Title IV financial aid program funds, as calculated under the 90/10 Rule, excluding the benefit from the temporary relief for loan limit increases.

These regulatory requirements cover virtually all phases of our U.S. operations, including educational program offerings, facilities, instructional and administrative staff, administrative procedures, marketing and recruiting, financial operations, payment of refunds to students who withdraw, maintenance of restricted cash, acquisitions or openings of new schools, commencement of new educational programs and changes in our corporate structure and ownership.

The Higher Education Act, as reauthorized, mandates specific regulatory responsibilities for each of the following components of the higher education regulatory triad: (1) the U.S. federal government through the U.S. Department of Education; (2) independent accrediting agencies recognized by the U.S. Secretary of Education; and (3) state education regulatory bodies.

The regulations, standards and policies of these regulatory agencies frequently change and are subject to interpretation, particularly where they are crafted for traditional, academic term-based schools rather than our non-term academic delivery model. Changes in, or new interpretations of, applicable laws, regulations, or standards could have a material adverse effect on our accreditation, authorization to operate in various states, permissible activities, receipt of funds under Title IV programs, or costs of doing business. We cannot predict with certainty how all of the requirements applied by these agencies will be interpreted or whether our schools will be able to comply with these requirements in the future.

From time to time, we identify inadvertent compliance deficiencies that we must address and, where appropriate, report to the U.S. Department of Education. Such reporting, even in regard to a minor compliance issue, could result in a more significant compliance review by the U.S. Department of Education or even a full recertification review, which may require the expenditure of substantial administrative time and resources to address. If the U.S. Department of Education concluded that these reported deficiencies reflect a lack of administrative capability, we could be subject to additional sanctions or even lose our eligibility to participate in Title IV programs. See “A failure to demonstrate “administrative capability” or “financial responsibility” may result in the loss of eligibility to participate in Title IV programs,” below.

If we are found to be in noncompliance with any of these regulations, standards or policies, any one of the relevant regulatory agencies may be able to do one or more of the following:

•  impose monetary fines or penalties;

•  limit or terminate our operations or ability to grant degrees and diplomas;

•  restrict or revoke our accreditation, licensure or other approval to operate;

•  limit, suspend or terminate our eligibility to participate in Title IV programs or state financial aid programs;

•  require repayment of funds received under Title IV programs or state financial aid programs;

•  require us to post a letter of credit with the U.S. Department of Education;

•  subject our schools to heightened cash monitoring by the U.S. Department of Education;

•  transfer us from the U.S. Department of Education’s advance system of receiving Title IV program funds to its reimbursement system, under which a school must disburse its own funds to students and document the students’ eligibility for Title IV program funds before receiving such funds backed by the U.S. Department of Education;

•  subject us to other civil or criminal penalties; and/or

•  subject us to other forms of censure.

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In addition, in some circumstances of noncompliance or alleged noncompliance, we may be subject to qui tam lawsuits under the Federal False Claims Act. In these actions, private plaintiffs seek to enforce remedies under the Act on behalf of the U.S. and, if successful, are entitled to recover their costs and to receive a portion of any amounts recovered by the U.S. in the lawsuit. These lawsuits can be prosecuted by a private plaintiff in respect of some action taken by us, even if the Department of Education does not agree with plaintiff’s theory of liability.

Any of the penalties, injunctions, restrictions or other forms of censure listed above could have a material adverse effect on our business, financial condition, results of operations and cash flows. If we lose our Title IV eligibility, we would experience a dramatic and adverse decline in revenue and we would be unable to continue our business as it currently is conducted.

The reauthorization of the federal Higher Education Act in August 2008 includes substantially increased reporting and other requirements which may impair our reputation and adversely affect our enrollments. In addition, not all of these new requirements are clear on their face. Our failure to accurately interpret these new requirements may subject us to penalties and other sanctions imposed by the U.S. Department of Education.

The Higher Education Opportunity Act, enacted on August 14, 2008, extends the Higher Education Act through September 30, 2013. Among other things, the Higher Education Opportunity Act imposes more than 100 new reporting requirements. Beginning July 1, 2011, the U.S. Department of Education will publish national lists disclosing various statistics including the top five percent of schools in each of nine institutional categories with the highest college costs and largest percentage increases. If University of Phoenix or Western International University is highlighted negatively on one or more of these lists, our reputation may be impaired and our enrollments may be adversely affected. In addition, many of the Higher Education Opportunity Act provisions will be further specified in regulations promulgated by the U.S. Department of Education. The U.S. Department of Education currently is evaluating which provisions in the law should be the subject of regulation. This regulatory process may impose additional or apparently different reporting and other requirements on institutions that participate in Title IV programs. Some period will elapse before the U.S. Department of Education determines which provisions of the Higher Education Opportunity Act will be the subject of administrative rulemaking and issues final rules. In the interim, the uncertainty about various requirements of the Higher Education Opportunity Act will remain. Any failure by us to properly interpret the effect of the Higher Education Opportunity Act could subject us to the consequences, penalties and other sanctions imposed by the U.S. Department of Education discussed in the preceding risk factor, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. The prospect of such sanctions may cause us to conservatively interpret the Higher Education Opportunity Act’s requirements pending interpretive guidance, which may limit our flexibility in operating or growing our business.

Our schools and programs would lose their eligibility to participate in federal student financial aid programs if the percentage of our revenues derived from those programs is too high.

The “90/10 Rule.” A requirement of the Higher Education Act, as reauthorized by the Higher Education Opportunity Act, commonly referred to as the “90/10 Rule,” applies only to proprietary institutions of higher education, which includes University of Phoenix and Western International University. Under this rule, a proprietary institution will be ineligible to participate in Title IV programs if for any two consecutive fiscal years it derives more than 90% of its cash basis revenue, as defined in the rule, from Title IV programs. An institution that derives more than 90% of its revenue from Title IV programs for any single fiscal year will be placed on provisional certification for two fiscal years and will be subject to possible additional sanctions determined to be appropriate under the circumstances by the U.S. Department of Education in the exercise of its broad discretion. An institution that derives more than 90% of its revenue from Title IV programs for two consecutive fiscal years will be ineligible to participate in Title IV programs. University of Phoenix and Western International University are required to calculate this percentage at the end of each fiscal year. If an

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institution violates the 90/10 Rule and becomes ineligible to participate in Title IV programs, any disbursements of Title IV program funds while ineligible must be repaid to the U.S. Department of Education.

The 90/10 Rule percentage for University of Phoenix has increased materially over the past several fiscal years and we expect the trend will continue in fiscal year 2010. The increase has been driven primarily by the following factors:

•  Increased student loan limits.  In May 2008, the Ensuring Continued Access to Student Loans Act of 2008 increased the annual loan limits on federal unsubsidized student loans by $2,000 for the majority of our students enrolled in associate’s and bachelor’s degree programs, and also increased the aggregate loan limits (over the course of a student’s education) on total federal student loans for certain students. This increase in student loan limits, together with increases in Pell Grants, has increased the amount of Title IV program funds available to and used by our students to satisfy tuition, fees and other costs, which has increased the proportion of our revenue deemed to be from Title IV programs.

•  Increased associate’s degree enrollment.  The proportion of our revenue from associate’s degree programs is composed of a higher percentage of Title IV funds than is the case for our bachelor’s and other degree programs. As a result, our 90/10 Rule percentage tends to increase as associate’s degree enrollment increases relative to other programs. Because our associate’s degree enrollment continues to grow at a higher rate than our other programs, this growth has contributed to the increase in the 90/10 Rule percentages for the University of Phoenix.

The Higher Education Opportunity Act provides temporary relief from the impact of the loan limit increases by excluding from the 90/10 Rule calculation any amounts received between July 1, 2008 and July 1, 2011 that are attributable to the increased annual loan limits. The implementing regulations for this temporary relief are being developed in a negotiated rulemaking process involving the U.S. Department of Education, industry representatives and other interested parties. The proposed rules were published for comment by the U.S. Department of Education in August 2009, and are expected to be published in final form by November 1, 2009. There is uncertainty about the manner and extent in which the temporary relief will apply to University of Phoenix and Western International University, which have atypical academic calendars. We continue to monitor the rulemaking process, as the resolution of the interpretive issues and subsequent guidance from the U.S. Department of Education could have an impact on the benefit derived from the temporary relief. The application of this temporary relief will decrease the 90/10 Rule percentages for University of Phoenix and Western International University for fiscal year 2009. However, at present given the evolving rule-making process as well as the complexity of such a calculation given our atypical academic calendars, we are unable to quantify precisely the benefit that we will derive in the 90/10 Rule percentage from the temporary relief. As such, our reported rates below exclude the benefits from the temporary relief, which we currently estimate will reduce our University of Phoenix rate between 50 and 300 basis points.

The 90/10 Rule percentages, excluding the benefit from the temporary relief for loan limit increases, for University of Phoenix and Western International University for fiscal year 2009 were 86% and 57%, respectively.

University of Phoenix is taking various measures to reduce the percentage of its cash basis revenue attributable to Title IV funds, including emphasizing employer-paid and other direct-pay education programs, encouraging students to carefully evaluate the amount of necessary Title IV borrowing, and increasing the focus on professional development and continuing education programs. Although we expect that these measures will favorably impact the 90/10 Rule calculation in the future, there is no assurance that these initiatives will be effective in reducing the 90/10 Rule calculation, or that they will be adequate to prevent the 90/10 Rule calculation from exceeding 90% in fiscal year 2010 or future fiscal years. We do not believe that these measures significantly impacted our 90/10 Rule calculation for fiscal year 2009.

In addition, we intend to consider other measures to favorably impact the 90/10 Rule calculation for University of Phoenix, including appropriate domestic acquisitions and tuition price increases. These efforts, and our other long-term initiatives to impact this calculation, may increase our operating expenses and/or

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reduce our revenue and may have a materially adverse effect on our results of operations, cash flows and financial condition.

If the U.S. Congress acts to further increase the student loan limits or to increase the amount of Pell or other grants available to students, the 90/10 Rule percentage for University of Phoenix could increase. Absent corresponding changes in the 90/10 Rule to address the effects of any such increase, such an increase may require us to accelerate our efforts to manage the proportion of our cash basis revenue composed of Title IV funds.

We collected the majority of our fiscal year 2009 total consolidated net revenue from receipt of Title IV financial aid program funds, and continued Title IV eligibility is critical to the operation of our business. If University of Phoenix becomes ineligible to participate in Title IV federal student financial aid programs, we could not conduct our business as it is currently conducted and it would have a material adverse effect on our business, financial condition, results of operations and cash flows. See the discussion of the 90/10 Rule, including the changes enacted by the Higher Education Opportunity Act, in Item 1, Business, Regulatory Environment — Domestic Postsecondary — The “90/10 Rule,” which discussion is incorporated by this reference.

If we are not recertified to participate in Title IV programs by the U.S. Department of Education, we would lose eligibility to participate in Title IV programs.

University of Phoenix and Western International University are eligible and certified to participate in Title IV programs. University of Phoenix was recertified for Title IV programs in June 2003 and its current certification expired in June 2007. In March 2007, University of Phoenix submitted its Title IV recertification application to the U.S. Department of Education. We have been collaborating with the U.S. Department of Education since that date and continue to supply additional follow-up information based on requests from the U.S. Department of Education. Our eligibility continues on a month-to-month basis until the U.S. Department of Education issues its decision on the application. We have no reason to believe that our application will not be renewed in due course.

In February 2009, unrelated to our recertification application, the U.S. Department of Education performed an ordinary course, focused program review of University of Phoenix’s policies and procedures involving Title IV programs. We have not yet received the program review report.

Western International University was recertified in October 2003 and its current certification for participation in Title IV programs expired on June 30, 2009. In March 2009, Western International University submitted its Title IV recertification application to the U.S. Department of Education. Western International University’s eligibility continues on a month-to-month basis until the U.S. Department of Education completes it review of the application and issues its decision. As with University of Phoenix, we have no reason to believe that the application will not be renewed in due course.

Generally, the recertification process includes a review by the U.S. Department of Education of the institution’s educational programs and locations, administrative capability, financial responsibility, and other oversight categories. The U.S. Department of Education could limit, suspend or terminate an institution’s participation in Title IV programs for violations of the Higher Education Act, as reauthorized, or Title IV regulations.

We collected the majority of our fiscal year 2009 total consolidated net revenue from receipt of Title IV financial aid program funds. University of Phoenix represented approximately 95% of our fiscal year 2009 total consolidated net revenue and University of Phoenix generated 86% of its cash basis revenue for eligible tuition and fees during fiscal year 2009 from receipt of Title IV financial aid program funds, as calculated under the 90/10 Rule, excluding the benefit from the temporary relief for loan limit increases. Continued Title IV eligibility is critical to the operation of our business. If University of Phoenix becomes ineligible to participate in Title IV federal student financial aid programs, we could not conduct our business as it is currently conducted and it would have a material adverse effect on our business, financial condition, results of operations and cash flows.

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Our business could be harmed if we experience a disruption in our ability to process student loans because of the proposed phase-out of Family Education Loan Program loans and the corresponding transition to direct student loans under the Federal Direct Loan Program.

Student loans under the Federal Family Education Loan Program (“FFELP”) are currently the most significant source of U.S. federal student aid and are low interest, federally guaranteed loans made by private lenders. We collected the majority of our fiscal year 2009 total consolidated net revenue from receipt of Title IV financial aid program funds, principally from FFELP student loans. In addition to FFELP loans made by private lenders, the U.S. Department of Education also administers the Federal Direct Loan Program (“FDLP”), which eliminates the private financial institution as the lender. Under the FDLP, the federal government makes the loans directly to the students on terms consistent with FFELP loans. During fiscal year 2009, FDLP loans represented less than 1% of the gross Title IV funds received by University of Phoenix.

In U.S. President Barack Obama’s 2010 budget request to Congress, the U.S. Department of Education proposed to eliminate FFELP loans and instead require all Title IV student loans to be administered through the FDLP commencing July 1, 2010. We expect to be able to fully transition from the FFELP program to the FDLP by the proposed July 1, 2010 phase-out date, if necessary. If this proposal is adopted, the transition would require us to develop and implement administrative capabilities and procedures for volume processing of loans under the FDLP. If we experience a disruption in our ability to process student loans through the FDLP, either because of administrative challenges on our part or the inability of the U.S. Department of Education to process the increased volume of direct student loans on a timely basis, our business, financial condition, results of operations and cash flows could be adversely and materially affected.

If regulators do not approve or delay their approval of transactions involving a change of control of our company, our state licenses, accreditation, and ability to participate in Title IV programs may be impaired.

A change of ownership or control of Apollo Group, depending on the type of change, may have significant regulatory consequences for University of Phoenix and Western International University. Such a change of ownership or control could require recertification by the U.S. Department of Education, reauthorization by state licensing agencies, or the reevaluation of the accreditation by The Higher Learning Commission of the North Central Association of Colleges and Schools. The U.S. Department of Education has adopted the change of ownership and control standards used by the federal securities laws for institutions owned by publicly-held corporations. Upon a change of ownership and control sufficient to require us to file a Form 8-K with the Securities and Exchange Commission, or a change in the identity of a controlling shareholder of the Apollo Group, University of Phoenix and/or Western International University may cease to be eligible to participate in Title IV programs until recertified by the U.S. Department of Education. There can be no assurances that such recertification would be obtained on a timely basis. Under some circumstances, the U.S. Department of Education may continue an institution’s participation in the Title IV programs on a temporary provisional basis pending completion of the change in ownership approval process. In addition, some states where University of Phoenix, Western International University or CFFP is presently licensed have requirements governing change of ownership or control that require approval of the change to remain authorized to operate in those states. Moreover, University of Phoenix, Western International University and CFFP are required to report any material change in stock ownership to The Higher Learning Commission. In the event of a material change in stock ownership of Apollo Group, The Higher Learning Commission may seek to evaluate the effect of such a change of stock ownership on the continuing operations of University of Phoenix, Western International University and CFFP.

Substantially all of our voting stock is owned and controlled by Dr. John Sperling and Mr. Peter Sperling. We cannot prevent a change of ownership or control that would arise from a transfer of voting stock by Dr. Sperling or Mr. Sperling, including a transfer that may occur or be deemed to occur upon the death of one or both of Dr. Sperling or Mr. Sperling. Dr. and Mr. Sperling have established voting stock trusts and other agreements with the intent to maintain the Company’s voting stock in such a way as to prevent a change of ownership or control upon either’s death, but we cannot assure you that these arrangements will have the desired effect.

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If regulators do not approve our domestic acquisitions, the acquired schools’ state licenses, accreditation, and ability to participate in Title IV programs may be impaired.

When we acquire an institution, we must seek approval from the U.S. Department of Education, if the acquired institution participates in Title IV programs, and from most applicable state agencies and accrediting agencies because an acquisition is considered a change of ownership or control of the acquired institution under applicable regulatory standards. A change of ownership or control of an institution under the U.S. Department of Education standards can result in the temporary suspension of the institution’s participation in the Title IV programs unless a timely and materially complete application for recertification is filed with the U.S. Department of Education and the U.S. Department of Education issues a temporary provisional certification. If we are unable to obtain approvals from the state agencies, accrediting agencies or U.S. Department of Education for any institution we may acquire in the future, depending on the size of that acquisition, such a failure to obtain approval could have a material adverse effect on our business.

Action by the U.S. Congress to revise the laws governing the federal student financial aid programs or reduce funding for those programs could reduce our student population and increase our costs of operation.

The U.S. Congress must periodically reauthorize the Higher Education Act and annually determine the funding level for each Title IV program. In 2008, the Higher Education Act was reauthorized through September 30, 2013 by the Higher Education Opportunity Act. Changes to the Higher Education Act are likely to result from subsequent reauthorizations, and the scope and substance of any such changes cannot be predicted. Any action by the U.S. Congress that significantly reduces Title IV program funding or the ability of our institutions or students to participate in Title IV programs would have a material adverse effect on our financial condition, results of operations and cash flows. Congressional action may also require us to modify our practices in ways that could increase our administrative costs and reduce our profit margin, which could have a material adverse effect on our financial condition, results of operations and cash flows.

If the U.S. Congress significantly reduced the amount of available Title IV program funding, we would attempt to arrange for alternative sources of financial aid for our students, but it is unlikely that private sources would be able to provide as much funding to our students on as favorable terms as is currently provided by Title IV. In addition, private organizations could require us to guarantee all or part of this assistance and we might incur other additional costs. For these reasons, private, alternative sources of student financial aid would only partly offset, if at all, the impact on our business of reduced Title IV program funding.

Student loan defaults could result in the loss of eligibility to participate in Title IV programs.

Currently, under the Higher Education Act, as reauthorized, an educational institution will lose its eligibility to participate in some or all Title IV programs if its student loan cohort default rate equals or exceeds 25% for three consecutive years or 40% for any given year. If our student loan default rates approach these limits, we may be required to expend substantial effort and resources to improve these default rates. In addition, because there is a lag between the funding of a student loan and a default thereunder, many of the borrowers who are in default or at risk of default are former students with whom we may have only limited contact. Accordingly, there can be no assurance that we would be able to effectively improve our default rates or improve them in a timely manner to meet the requirements for continued participation in Title IV funding if we begin to experience a substantial increase in our student loan default rates.

The cohort default rate requirements were modified by the Higher Education Opportunity Act enacted in August 2008 to increase by one year the measuring period for each cohort and increase some of the threshold rates that trigger penalties. We do not expect the change in the measurement period for the calculation of the cohort default rate and the related thresholds to have a material impact on our business, financial condition, results of operations and cash flows.

If we lose our eligibility to participate in Title IV programs because of high student loan default rates, we could not conduct our business as it is currently being conducted and it would have a material adverse effect on our business, financial condition, results of operations and cash flows. See the discussion of student loan cohort default rates, including the changes enacted by the Higher Education Opportunity Act, in Item 1,

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Business — Regulatory Environment — Domestic Postsecondary — Student Loan Defaults, which discussion is incorporated by this reference.

If any regulatory audit, investigation or other proceeding finds us not in compliance with the numerous laws and regulations applicable to the postsecondary education industry, we may not be able to successfully challenge such finding and our business could suffer.

Due to the highly regulated nature of the postsecondary education industry, we are subject to audits, compliance reviews, inquiries, complaints, investigations, claims of non-compliance and lawsuits by federal and state governmental agencies, regulatory agencies, accrediting agencies, present and former students and employees, shareholders and other third parties, any of whom may allege violations of any of the regulatory requirements applicable to us. If the results of any such claims or actions are unfavorable to us, we may be required to pay monetary fines or penalties, be required to repay funds received under Title IV programs or state financial aid programs, have restrictions placed on or terminate our schools’ or programs’ eligibility to participate in Title IV programs or state financial aid programs, have limitations placed on or terminate our schools’ operations or ability to grant degrees and certificates, have our schools’ accreditations restricted or revoked, or be subject to civil or criminal penalties. Any one of these sanctions could materially adversely affect our business, financial condition, results of operations and cash flows and result in the imposition of significant restrictions on us and our ability to operate.

If we fail to maintain our institutional accreditation, we would lose our ability to participate in Title IV programs.

University of Phoenix and Western International University are institutionally accredited by The Higher Learning Commission, one of the six regional accrediting agencies recognized by the Secretary of Education. Accreditation by an accrediting agency recognized by the U.S. Secretary of Education is required in order for an institution to become and remain eligible to participate in Title IV programs. The loss of accreditation would, among other things, render our schools and programs ineligible to participate in Title IV programs, affect our authorization to operate in certain states and decrease student demand. If University of Phoenix becomes ineligible to participate in Title IV federal student financial aid programs, we could not conduct our business as it is currently conducted and it would have a material adverse effect on our business, financial condition, results of operations and cash flows.

If we fail to maintain any of our state authorizations, we would lose our ability to operate in that state and to participate in Title IV programs there.

University of Phoenix and Western International University are authorized to operate and to grant degrees by the applicable state agency of each state where such authorization is required and where we maintain a campus. In addition, several states require University of Phoenix to obtain separate authorization for the delivery of distance education to residents of those states. Compliance with these state requirements is also necessary for students in the respective states to participate in Title IV programs. The loss of such authorization in one or more states would render students resident in those states ineligible to participate in Title IV programs and could have a material adverse effect on our business, financial condition, results of operations and cash flows. Loss of authorization in one or more states could increase the likelihood of additional scrutiny and potential loss of operating and/or degree granting authority in other states in which we operate, which would further impact our business.

A failure to demonstrate “administrative capability” or “financial responsibility” may result in the loss of eligibility to participate in Title IV programs.

The U.S. Department of Education regulations specify extensive criteria an institution must satisfy to establish that it has the requisite administrative capability to participate in Title IV programs. These criteria require, among other things, that the institution:

•  comply with all applicable Title IV program regulations;

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•  have capable and sufficient personnel to administer the federal student financial aid programs;

•  have acceptable methods of defining and measuring the satisfactory academic progress of its students;

•  not have a student loan cohort default rate above specified levels;

•  have procedures in place for safeguarding federal funds;

•  not be, and not have any principal or affiliate who is, debarred or suspended from federal contracting or engaging in activity that is cause for debarment or suspension;

•  provide financial aid counseling to its students;

•  refer to the Office of Inspector General any credible information indicating that any applicant, student, employee or agent of the institution has been engaged in any fraud or other illegal conduct involving Title IV programs;

•  submit in a timely manner all reports and financial statements required by the regulations; and

•  not otherwise appear to lack administrative capability.

Furthermore, to participate in Title IV programs, an eligible institution must satisfy specific measures of financial responsibility prescribed by the U.S. Department of Education, or post a letter of credit in favor of the U.S. Department of Education and possibly accept other conditions on its participation in Title IV programs. If our schools eligible to participate in Title IV programs fail to maintain administrative capability or financial responsibility, as defined by the U.S. Department of Education, those schools could lose their eligibility to participate in Title IV programs or have that eligibility adversely conditioned, which would have a material adverse effect on our business. Limitations on, or termination of, participation in Title IV programs as a result of the failure to demonstrate administrative capability or financial responsibility would limit students’ access to Title IV program funds, which could significantly reduce the enrollments and revenues of our schools eligible to participate in Title IV programs and materially and adversely affect our business, financial condition, results of operations and cash flows. See the discussion of financial responsibility in Item 1, Business — Regulatory Environment — Domestic Postsecondary — Standards of Financial Responsibility, which discussion is incorporated by this reference.

We will be subject to sanctions if we fail to properly calculate and make timely payment of refunds of Title IV program funds for students who withdraw before completing their educational program.

The Higher Education Act, as reauthorized, and U.S. Department of Education regulations require us to calculate refunds of unearned Title IV program funds disbursed to students who withdraw from their educational program before completing it. If refunds are not properly calculated or timely paid for 5% or more of students sampled in the institution’s annual compliance audit or in a program review, generally within 45 days of the date the school determines that the student has withdrawn, we may have to post a letter of credit in favor of the U.S. Department of Education or otherwise be subject to adverse actions by the U.S. Department of Education, which could increase our cost of regulatory compliance and adversely affect our business, financial condition, results of operations and cash flows.

We are subject to sanctions if we pay impermissible commissions, bonuses, or other incentive payments to individuals involved in certain recruiting, admission, or financial aid activities.

A school participating in Title IV programs may not provide any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any person or entity engaged in any student recruitment or admission activity or in making decisions regarding the awarding of Title IV program funds. The law and regulations governing this requirement do not establish clear criteria for compliance in all circumstances. If the U.S. Department of Education determined that our compensation practices violated these standards, the U.S. Department of Education could subject us to monetary fines, penalties, or other sanctions, which could adversely affect our business, financial condition, results of operations and cash flows.

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If IPD’s Client Institutions are sanctioned due to non-compliance with Title IV requirements, our business could be responsible for any resulting fines and penalties.

IPD provides to its Client Institutions numerous consulting and administrative services, including services that involve the handling and receipt of Title IV funds. As a result of this, IPD may be jointly and severally liable for any fines, penalties or other sanctions imposed by the U.S. Department of Education on the Client Institution for violation of applicable Title IV regulations, regardless of the degree of fault, if any, on IPD’s part. The imposition of such fines, penalties or other sanctions could have a material adverse impact on our business, financial condition, results of operations and cash flows.

Government regulations relating to the Internet could increase our cost of doing business, affect our ability to grow or otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows.

The increasing popularity and use of the Internet and other online services has led and may lead to further adoption of new laws and regulatory practices in the U.S. or foreign countries and to new interpretations of existing laws and regulations. These new laws and interpretations may relate to issues such as online privacy, copyrights, trademarks and service marks, sales taxes, value-added taxes, withholding taxes, allocation and apportionment of income amongst various state, local and foreign jurisdictions, fair business practices and the requirement that online education institutions qualify to do business as foreign corporations or be licensed in one or more jurisdictions where they have no physical location or other presence. New laws, regulations or interpretations related to doing business over the Internet could increase our costs and materially and adversely affect our enrollments, which could have a material adverse affect on our business, financial condition, results of operations and cash flows.

Non-U.S. Operations

Our non-U.S. operations are subject to regulatory requirements of the applicable countries in which we operate, and our failure to comply with these requirements may result in substantial monetary liabilities, fines and penalties and a loss of authority to operate.

We operate physical and online educational institutions in the United Kingdom, Europe, China, India, Canada, Chile, Mexico, and elsewhere, and are actively seeking further expansion in other countries. Our operations in each of the relevant foreign jurisdictions are subject to educational and other regulations, which may differ materially from the regulations applicable to our U.S. operations.

Risks Related to Our Business

Our business may be adversely affected by a further economic slowdown in the U.S. or abroad or by an economic recovery in the U.S.

The U.S and much of the world economy are in the midst of an economic downturn. We believe the current economic downturn has contributed to a portion of our recent enrollment growth as an increased number of working learners seek to advance their education to improve job security or reemployment prospects. This effect cannot be quantified. However, to the extent that the economic downturn has increased demand for our programs, a subsequent economic recovery may eliminate this effect and reduce such demand as fewer potential students seek to advance their education. This reduction could have a material adverse effect on our business, financial condition, results of operations and cash flows. A worsening of the economic downturn may reduce the demand for our programs among students and the willingness of employers to sponsor educational opportunities for their employees, either of which could materially and adversely affect our business, financial condition, results of operations and cash flows. In addition, these events could adversely affect the ability or willingness of our former students to repay student loans, which could increase our bad debt expense and our student loan cohort default rate and require increased time, attention and resources to manage these defaults, either of which could have a material adverse effect on our business. See Risks Related to the Highly Regulated Industry in Which We Operate — Student loan defaults could result in the loss of eligibility to participate in Title IV programs, above.

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If we are unable to successfully conclude pending litigation and governmental inquiries, our business, financial condition, results of operations and cash flows could be adversely affected.

We, certain of our subsidiaries, and certain of our current and former directors and executive officers have been named as defendants in lawsuits alleging violations of the federal securities laws and the federal False Claims Act. In August 2008, the U.S. District Court for the District Court of Arizona vacated a judgment for damages against us in a securities class action, and the plaintiffs have appealed to the Ninth Circuit Court of Appeals. We also are awaiting trial in a separate qui tam action against us alleging violations of the Higher Education Act, as reauthorized, and federal securities laws and the federal False Claims Act. We are also subject to various other lawsuits, investigations and claims, covering a range of matters, including, but not limited to, claims involving shareholders and employment matters and an informal inquiry by the Enforcement Division of the Securities and Exchange Commission regarding our revenue recognition practices. Refer to Note 18, Commitments and Contingencies, in Item 8, Financial Statements and Supplementary Data, for further discussion of pending litigation and other proceedings.

We cannot predict the ultimate outcome of these matters and expect to incur significant defense costs and other expenses in connection with them. Such costs and expenses could have a material adverse effect on our business, financial condition, results of operations and cash flows and the market price of our common stock. We may be required to pay substantial damages or settlement costs in excess of our insurance coverage related to these matters, or may be required to pay substantial fines or penalties, any of which could have a further material adverse effect on our business, financial condition, results of operations and cash flows.

We may not be able to sustain our recent growth rate or profitability, and we may not be able to manage future growth effectively.

Our ability to sustain our current rate of growth or profitability depends on a number of factors, including our ability to obtain and maintain regulatory approvals, our ability to attract and retain students, our ability to maintain operating margins, our ability to recruit and retain high quality academic and administrative personnel and competitive factors. Over the past three years, our growth has been predominately in our associate’s degree programs. If we do not sustain our growth rate in the associate’s degree programs, or fail to transition students to our bachelor’s degree, advanced degree and other potential new programs, our business could be adversely affected. In addition, growth may place a significant strain on our resources and increase demands on our management information and reporting systems, financial management controls, and personnel. Although we have made a substantial investment in augmenting our financial and management information systems and other resources to support future growth, we cannot assure you that we will have adequate capacity to accommodate substantial growth or that we will be able to manage further growth effectively. Failure to do so could adversely affect our business, financial condition, results of operations and cash flows.

In addition, our growth could be adversely impacted by a reduction in the growth rate of overall postsecondary enrollment. According to the U.S. Department of Education, enrollment in degree-granting, postsecondary institutions is projected to grow approximately 10% over the ten-year period ending in 2017, to approximately 20.1 million students. This growth compares with a 25.5% increase reported in the prior ten-year period ended in 2007, when enrollment increased from 14.5 million students in 1997 to 18.2 million students in 2007. This projected reduction in the growth rate of postsecondary enrollment could negatively affect our ability to grow our business in the U.S.

Our financial performance depends on our ability to continue to develop awareness among, and recruit and retain students.

Building awareness of our schools and the programs we offer is critical to our ability to attract prospective students. If our schools are unable to successfully market and advertise their educational programs, our schools’ ability to attract and enroll prospective students in such programs could be adversely affected, and, consequently, our ability to increase revenue or maintain profitability could be impaired. It is also critical to our success that we convert these prospective students to enrolled students in a cost-effective manner and

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that these enrolled students remain active in our programs. Some of the factors that could prevent us from successfully enrolling and retaining students in our programs include:

•  the emergence of more attractive competitors;

•  factors related to our marketing, including the cost and effectiveness of Internet advertising and broad-based branding campaigns;

•  inability to expand program content and develop new programs in a timely and cost-effective manner;

•  performance problems with or capacity constraints of our online education delivery systems;

•  failure to maintain accreditation;

•  inability to continue to recruit, train and retain quality faculty;

•  student or employer dissatisfaction with the quality of our services and programs;

•  student financial, personal or family constraints;

•  adverse publicity regarding us, our competitors or online or for-profit education generally;

•  tuition rate reductions by competitors that we are unwilling or unable to match;

•  a decline in the acceptance of online education;

•  increased regulation of online education, including in states in which we do not have a physical presence;

•  a decrease in the perceived or actual economic benefits that students derive from our programs or education in general; and

•  litigation or regulatory investigations that may damage our reputation.

If the proportion of our students who are enrolled in our associate’s degree programs continues to increase, we may experience increased cost and reduced margins.

In recent years, a substantial proportion of our overall growth has arisen from the increase in associate’s degree students enrolled in University of Phoenix. As a result of this, the proportion of our Degreed Enrollment composed of associate’s degree students has increased and may continue to increase in the future. While this growth has generated significant financial returns, we have experienced certain negative effects from this shift, such as an increase in our student loan cohort default rate. If this mix shift continues, we may experience additional consequences, such as higher cost per New Degreed Enrollment, lower retention rates and/or higher student services costs, an increase in the percentage of our revenue derived from Title IV funding under the 90/10 Rule, more limited ability to implement tuition price increases and other effects that may adversely affect our operating results.

System disruptions and security threats to our computer networks could have a material adverse effect on our business.

The performance and reliability of our computer network infrastructure at our schools, including our online programs, is critical to our operations, reputation and ability to attract and retain students. Any computer system error or failure, regardless of cause, could cause network outages that disrupt our online and on-ground operations. We have only limited redundancies in our core computer network infrastructure, which is concentrated in a single geographic area. If we experience a catastrophic failure or unavailability for any reason of our principal data center, we may need to replicate the function of this data center at our existing remote data facility or elsewhere, which may require equipping and restoring activities that could take a week or more to complete. The disruption from such an event could significantly impact our operations and have a material adverse effect on our business, financial condition, results of operations and cash flows.

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In addition, we face the threat to our computer systems of unauthorized access, computer hackers, computer viruses and other security problems and system disruptions. We have devoted and will continue to devote significant resources to the security of our computer systems, but they may still be vulnerable to these threats. A user who circumvents security measures could misappropriate proprietary information or cause interruptions or malfunctions in operations. As a result, we may be required to expend significant resources to protect against the threat of these system disruptions and security breaches or to alleviate problems caused by these disruptions and breaches, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may not be able to successfully identify, pursue or integrate acquisitions; acquisitions may result in additional debt or dilution to our shareholders.

As part of our growth strategy, we are actively considering acquisition opportunities in the U.S. and worldwide. We have acquired and expect to acquire additional proprietary educational institutions that complement our strategic direction, some of which could be material. Any acquisition involves significant risks and uncertainties, including:

•  inability to successfully integrate the acquired operations, including the information technology systems, into our institutions and maintain uniform standards, controls, policies and procedures;

•  distraction of management’s attention from normal business operations;

•  challenges retaining the key employees of the acquired operation;

•  possibly insufficient revenue generation to offset liabilities assumed;

•  expenses associated with the acquisition;

•  challenges relating to conforming non-compliant financial reporting procedures to those required of a subsidiary of a U.S. reporting company, including procedures required by the Sarbanes-Oxley Act; and

•  unidentified issues not discovered in our due diligence process, including commitments and/or contingencies.

Acquisitions are inherently risky. We cannot be certain that our previous or future acquisitions will be successful and will not materially adversely affect our business, financial condition, results of operations and cash flows. We may not be able to identify suitable acquisition opportunities, acquire institutions on favorable terms, or successfully integrate or profitably operate acquired institutions. Future transactions may involve use of our cash resources, issuance of equity or debt securities, incurrence of other forms of debt or a significant increase in our financial leverage, which could adversely affect our financial condition, results of operations and cash flows, especially if the cash flows associated with any acquisition are not sufficient to cover the additional debt service. If we issue equity securities as consideration in an acquisition, current shareholders’ percentage ownership and earnings per share may be diluted. In addition, our acquisition of an educational institution could be considered a change in ownership and control of the acquired institution under applicable regulatory standards. For such an acquisition in the U.S., we may need approval from the U.S. Department of Education and applicable state agencies and accrediting agencies and possibly other regulatory bodies. Our inability to obtain such approvals with respect to a completed acquisition could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our future operating results and the market price of our common stock could be materially adversely affected if we are required to write down the carrying value of goodwill and other intangible assets associated with any of our reporting units in the future.

We review our goodwill and other indefinite-lived intangible asset balances for impairment on at least an annual basis through the application of a fair-value-based test. In assessing the fair value of our reporting units, we rely primarily on using a discounted cash flow analysis which includes our estimates about the future cash flows of our reporting units that are based on assumptions consistent with our plans to manage the underlying businesses. Other factors we consider include, but are not limited to, significant underperformance

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relative to expected historical or projected future operating results, significant changes in the manner or use of the acquired assets or the overall business strategy, and significant negative industry or economic trends. If our estimates or related assumptions change in the future, we may be required to record non-cash impairment charges for these assets. In the future, if we are required to significantly write down the carrying value of goodwill or other intangible assets associated with any of our reporting units, our operating results and the market price of our common stock may be materially adversely affected.

If we do not maintain existing, and develop additional, relationships with employers, our future growth may be impaired.

We currently have relationships with large employers to provide their employees with the opportunity to obtain degrees through us while continuing their employment. These relationships are an important part of our strategy as they provide us with a steady source of potential working learners for particular programs and also serve to increase our reputation among high-profile employers. In addition, these programs have a beneficial impact on our 90/10 Rule percentage calculation by reducing the proportion of our cash-basis revenues attributable to Title IV funds. If we are unable to develop new relationships, or if our existing relationships deteriorate or end, our efforts to seek these sources of potential working learners may be impaired, and this could materially and adversely affect our business, financial condition, results of operations and cash flows.

Our principal credit agreement limits our ability to take various actions.

Our principal credit agreement limits our ability to take various actions, including paying dividends, repurchasing shares and acquiring and disposing of assets or businesses. Accordingly, to the extent we have outstanding borrowings under our credit agreement, we may be restricted from taking actions that management believes would be desirable and in the best interests of us and our shareholders. Our principal credit agreement also requires us to satisfy specified financial and non-financial covenants. A breach of any covenants contained in our credit agreement could result in an event of default under the agreement and allow the lenders to pursue various remedies, including accelerating the repayment of any indebtedness outstanding under the agreement, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our financial performance depends, in part, on our ability to keep pace with changing market needs and technology; if we fail to keep pace or fail in implementing or adapting to new technologies, our business may be adversely affected.

Increasingly, prospective employers of students who graduate from our schools demand that their new employees possess appropriate technological skills and also appropriate “soft” skills, such as communication, critical thinking and teamwork skills. These skills can evolve rapidly in a changing economic and technological environment. Accordingly, it is important for our schools’ educational programs to evolve in response to these economic and technological changes. The expansion of existing programs and the development of new programs may not be accepted by current or prospective students or the employers of our graduates. Even if our schools are able to develop acceptable new programs, our schools may not be able to begin offering those new programs as quickly as required by prospective employers or as quickly as our competitors offer similar programs. In addition, we may be unable to obtain specialized accreditations or licensures that may make certain programs desirable to students. To offer a new academic program, we may be required to obtain federal, state and accrediting agency approvals, which may be conditioned or delayed in a manner that could significantly affect our growth plans. In addition, to be eligible for Title IV programs, a new academic program may need to be certified by the U.S. Department of Education. If we are unable to adequately respond to changes in market requirements due to regulatory or financial constraints, unusually rapid technological changes, or other factors, our ability to attract and retain students could be impaired, the rates at which our graduates obtain jobs involving their fields of study could suffer, and our business, financial condition, results of operations and cash flows could be adversely affected.

Establishing new academic programs or modifying existing programs requires us to make investments in management and capital expenditures, incur marketing expenses and reallocate other resources. We may have

42

limited experience with the courses in new areas and may need to modify our systems and strategy or enter into arrangements with other educational institutions to provide new programs effectively and profitably. If we are unable to increase the number of students or offer new programs in a cost-effective manner, or are otherwise unable to manage effectively the operations of newly established academic programs, our business, financial condition, results of operations and cash flows could be adversely affected.

We have invested and continue to invest significant resources in information technology, which is a key element of our business strategy. Our information technology systems and tools could become impaired or obsolete due to our action or failure to act. For instance, we could install new information technology without accurately assessing its costs or benefits, or we could experience delayed or ineffective implementation of new information technology. Similarly, we could fail to respond in a timely or sufficiently competitive way to future technological developments in our industry. Should our action or failure to act impair or otherwise render our information technology less effective, this could have a material adverse effect on our business, financial condition, results of operations and cash flows.

A failure of our information systems to properly store, process and report relevant data may reduce our management’s effectiveness, interfere with our regulatory compliance and increase our operating expenses.

We are heavily dependent on the integrity of our data management systems. If these systems do not effectively collect, store, process and report relevant data for the operation of our business, whether due to equipment malfunction or constraints, software deficiencies, or human error, our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations, including the Higher Education Act, as reauthorized, and the regulations thereunder, will be impaired, perhaps materially. Any such impairment could materially and adversely affect our financial condition, results of operations, and cash flows.

The personal information that we collect may be vulnerable to breach, theft or loss that could adversely affect our reputation and operations.

Possession and use of personal information in our operations subjects us to risks and costs that could harm our business. Our educational institutions collect, use and retain large amounts of personal information regarding our students and their families, including social security numbers, tax return information, personal and family financial data and credit card numbers. We also collect and maintain personal information of our employees in the ordinary course of our business. Some of this personal information is held and managed by certain of our vendors. Although we use security and business controls to limit access and use of personal information, a third party may be able to circumvent those security and business controls, which could result in a breach of student or employee privacy. In addition, errors in the storage, use or transmission of personal information could result in a breach of student or employee privacy. Possession and use of personal information in our operations also subjects us to legislative and regulatory burdens that could require notification of data breaches and restrict our use of personal information. We cannot assure you that a breach, loss or theft of personal information will not occur. A breach, theft or loss of personal information regarding our students and their families or our employees that is held by us or our vendors could have a material adverse effect on our reputation and results of operations and result in liability under state and federal privacy statutes and legal actions by state attorneys, general and private litigants, and any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We face intense competition in the postsecondary education market from both public and private educational institutions, which could adversely affect our business.

Postsecondary education in our existing and new market areas is highly competitive. We compete with traditional public and private two-year and four-year colleges, other for-profit schools and alternatives to higher education, such as employment and military service. Some of our competitors, both public and private, have greater financial and other resources than we have. Our competitors, both public and private, may offer programs similar to ours at a lower tuition level as a result of government subsidies, government and foundation grants, tax-deductible contributions and other financial resources not available to for-profit institutions. In addition, many of our competitors have begun to offer distance learning and other online

43

education programs. As the online and distance learning segment of the postsecondary education market matures, the intensity of the competition we face will increase further. This intense competition could adversely affect our business, financial condition, results of operations and cash flows.

Our expansion into new markets outside the U.S. subjects us to risks inherent in international operations.

As part of our growth strategy, through Apollo Global, Inc., our consolidated majority-owned subsidiary, we have acquired additional universities outside the U.S. and we intend to actively pursue further acquisitions. To the extent that we make such acquisitions, we will face risks that are inherent in international operations, including:

•  complexity of operations across borders;

•  compliance with foreign regulatory environments;

•  currency exchange rate fluctuations;

•  monetary policy risks, such as inflation, hyperinflation and deflation;

•  price controls or restrictions on exchange of foreign currencies;

•  potential political and economic instability in the countries in which we operate, including potential student uprisings;

•  expropriation of assets by local governments;

•  multiple and possibly overlapping and conflicting tax laws;

•  compliance with U.S. regulations such as the Foreign Corrupt Practices Act;

•  potential unionization of employees under local labor laws and local labor laws that make it more expensive and complex to negotiate with, retain or terminate employees;

•  greater difficulty in utilizing and enforcing our intellectual property and contract rights;

•  failure to understand the local culture and market;

•  limitations on the repatriation of funds; and

•  acts of terrorism and war, epidemics and natural disasters.

Our acquisition and operation of BPP Holdings plc may not result in increased value.

We acquired BPP in the fourth quarter of fiscal 2009. BPP faces several risks which may adversely impact our ability to successfully operate and grow its businesses, including:

•  BPP’s success is strongly dependent on its reputation, which may be damaged by various factors including unfavorable public opinion in the United Kingdom regarding for-profit schools and ownership of BPP by a U.S. company;

•  BPP’s Business School, is newly established and its future enrollment and success are currently unpredictable with any degree of certainty;

•  the majority of BPP’s business, BPP Professional Education, is geared toward teaching for exams or to a syllabus set by external professional bodies (Test Preparation), and a change in the way in which subjects are examined, or a reduction in the size of the syllabus, could have a detrimental impact on BPP;

•  BPP operates in markets where many of its competitors are charities or government sponsored colleges of higher education, which because of their legal classification do not have to charge sales tax (value added tax or “VAT”) to their students. BPP has legal structures in place that currently provide a similar status, and thus are able not to charge VAT for equivalent services or products. Any change in

44

interpretation of the existing tax or legal regulations could put BPP at a competitive disadvantage and could result in a material tax liability to BPP;

•  BPP has a significant concentration of students in the professional sector, mainly accounting and legal, and adverse changes in the economic environment for these professions could reduce demand for BPP’s services and adversely affect its operations;

•  BPP has a large fixed cost base and may not be able to effectively respond to decreases in revenue; and

•  The BPP College of Professional Studies is the first proprietary postsecondary institution to be granted degree awarding powers in the U.K. and, as such, is likely to be the first to face reauthorization when its current authority expires in August 2013. The criteria for reauthorization have not yet been developed and therefore the nature of the process is uncertain at this point. Any impairment of the College’s degree awarding powers would materially and adversely affect BPP’s business.

We may experience movements in foreign currency exchange rates which could negatively affect our operating results.

We report revenues, costs and earnings in U.S. dollars. Exchange rates between the U.S. dollar and the local currency in the countries where we operate are likely to fluctuate from period to period. Because consolidated financial results are reported in U.S. dollars, we are subject to the risk of translation losses for reporting purposes. When the U.S. dollar appreciates against the applicable local currency in any reporting period, the actual earnings generated by our business in that country are diminished in the translation.

As we continue to expand our international operations, we will conduct more transactions in currencies other than the U.S. Dollar. Additionally, the volume of transactions in the various foreign currencies will continue to increase. To the extent that foreign revenue and expense transactions are not denominated in the local currency and/or to the extent foreign earnings are reinvested in a currency other than their functional currency, we are also subject to the risk of transaction losses. Given the volatility of exchange rates, there is no assurance that we will be able to effectively manage currency transaction and/or translation risks. Fluctuations in foreign currency exchange rates could have a material adverse affect on our business, financial condition, results of operations and cash flows.

We rely on proprietary rights and intellectual property that may not be adequately protected under current laws, and we encounter disputes from time to time relating to our use of intellectual property.

Our success depends in part on our ability to protect our proprietary rights and intellectual property. We rely on a combination of copyrights, trademarks, trade secrets, patents, domain names and contractual agreements to protect our proprietary rights. For example, we rely on trademark protection in the U.S. and various foreign jurisdictions to protect our rights to various marks as well as distinctive logos and other marks associated with our services. We also rely on agreements under which we obtain intellectual property to own or license rights to use intellectual property developed by faculty members, content experts and other third-parties. We cannot assure you that these measures are adequate, that we have secured, or will be able to secure, appropriate permissions or protections for all of the intellectual property rights we use or claim rights to in the U.S. or various foreign jurisdictions, or that third parties will not terminate our license rights or infringe upon or otherwise violate our intellectual property rights or the intellectual property rights of others. Despite our efforts to protect these rights, unauthorized third parties may attempt to use, duplicate or copy the proprietary aspects of our student recruitment and educational delivery methods and systems, curricula, online resource material or other content. Our management’s attention may be diverted by these attempts and we may need to use funds in litigation to protect our proprietary rights against any infringement or violation, which could have a material adverse affect on our business, financial condition, results of operations and cash flows.

We may become party to disputes from time to time over rights and obligations concerning intellectual property, and we may not prevail in these disputes. For example, third parties may allege that we have infringed upon or not obtained sufficient rights in the technologies used in our educational delivery systems, the content of our courses or other training materials or in our ownership or uses of other intellectual property

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claimed by that third party. Some third party intellectual property rights may prove to be extremely broad, and it may not be possible for us to conduct our operations in such a way as to avoid violating those intellectual property rights. Any such intellectual property claim could subject us to costly litigation and impose a significant strain on our financial resources and management personnel regardless of whether such claim has merit. Our various liability insurance coverages, if any, may not cover potential claims of this type adequately or at all, and we may be required to alter the design and operation of our systems or the content of our courses or pay monetary damages or license fees to third parties, which could have a material adverse affect on our business, financial condition, results of operations and cash flows.

We may incur liability for the unauthorized duplication, distribution or other use of materials posted online.

In some instances, our employees, including faculty members, or our students may post various articles or other third-party content online in class discussion boards or in other venues. We may incur liability to third parties for the unauthorized duplication, distribution or other use of this material. Any such claims could subject us to costly litigation and impose a significant strain on our financial resources and management personnel regardless of whether the claims have merit. Our various liability insurance coverages, if any, may not cover potential claims of this type adequately or at all, and we may be required to alter or cease our uses of such material (which may include changing or removing content from our courses) or pay monetary damages, which could have a material adverse affect on our business, financial condition, results of operations and cash flows.

Our Insight Schools business faces regulatory and administrative challenges in various states which may result in the imposition of fines and other penalties and may reduce the value we receive upon disposition of that business.

Most of Insight Schools’ online public high schools have undergone or expect to undergo compliance audits by state regulatory authorities. Adverse audit findings could result in a reduction in the amount of state funding, repayment of previously received state funding or other economic sanctions. In extreme circumstances, adverse findings could result in termination of agreements with Insight Schools by governing authorities or by not-for-profit charter holders. Additionally, materially adverse findings could result in revocation or termination of a charter school’s charter. Each of these events could have a materially adverse effect on Insight Schools’ business.

We have made the decision to explore the disposition of our Insight Schools operations. There is no assurance that we can dispose of these operations on terms acceptable to us or at all, and we may experience a loss upon any such disposition or, in lieu thereof, discontinuation. If we are not successful in correcting Insight Schools’ compliance challenges, the value of Insight Schools may be diminished, perhaps substantially. The reduction in the value of Insight Schools or the disposition or discontinuation of Insight Schools at a loss could have a material adverse effect our financial condition.

We may have unanticipated tax liabilities that could adversely impact our financial position.

We are subject to multiple types of taxes in the U.S., United Kingdom and various other foreign jurisdictions. The determination of our worldwide provision for income taxes and other tax accruals involve various judgments, and therefore the ultimate tax determination is subject to uncertainty. We are currently subject to the following Internal Revenue Service audits:

•  Audit relating to our U.S. federal income tax returns for fiscal years 2003 through 2005 commenced in September 2006. In February 2009, the Internal Revenue Service issued an examination report and proposed to disallow deductions relating to stock option compensation in excess of the limitations of Internal Revenue Code Section 162(m). Under Section 162(m), the amount of such deduction per covered executive officer is limited to $1.0 million per year, except to the extent the compensation qualifies as performance-based. Compensation attributable to options with revised measurement dates may not have qualified as performance-based compensation. The Internal Revenue Service examination report also proposed the additions of penalties and interest. The proposed adjustments, including

46

penalties and interest, are consistent with our prior accruals relating to this issue. In addition, we expensed an additional $2.4 million in fiscal year 2009 related to interest, for a total accrual of $50.0 million as of August 31, 2009 with respect to this uncertain tax position for the taxable years 2003 through 2006. On March 6, 2009, we commenced administrative proceedings with the Office of Appeals of the Internal Revenue Service challenging the proposed adjustments, including penalties and interest. We believe this matter will be settled within 12 months and the accrual is now classified as short-term. In October of 2009, we reached an agreement in principle subject to negotiation of final documentation with the Internal Revenue Service Office of Appeals to settle this matter for less than the $50 million we have accrued at August 31, 2009. The settlement, when finalized, will result in a reduction in the amount currently accrued and a related decrease in our effective tax rate for a portion of that reduced accrual.

•  An audit relating to our U.S. federal income tax returns for the years ended in 2006, 2007 and 2008 commenced in fiscal year 2009.

In addition to the above audits, we are subject to numerous ongoing audits by state, local and foreign tax authorities. Although we believe our tax accruals are reasonable, the final determination of tax audits in the U.S. or abroad and any related litigation could be materially different from our historical income tax provisions and accruals. The results of an audit or litigation could have a material effect on our business, financial condition, results of operations and cash flows.

Changes in tax rules may adversely affect our future reported financial results or the way we conduct our business. In May 2009, President Obama’s administration proposed significant changes to the U.S. international tax laws, including changes that would limit U.S. tax deductions for expenses related to un-repatriated foreign-source income and modify the U.S. foreign tax credit and “check-the-box” rules. We cannot determine whether these proposals will be enacted into law or what, if any, changes may be made to such proposals prior to their being enacted into law. If these or other changes to the U.S. international tax laws are enacted they could have a material effect on our business, financial condition, results of operations and cash flows.

We are subject to the oversight of the Securities and Exchange Commission and other regulatory agencies, and investigations by these agencies could divert management’s focus and have a material adverse impact on our reputation and financial condition.

As a result of this government regulation and oversight, we may be subject to legal and administrative proceedings. For example, during fiscal year 2007, we were the subject of a Securities and Exchange Commission inquiry and a Department of Justice investigation related to our historical stock option grant practices. In addition, during October 2009, we received notification from the Enforcement Division of the Securities and Exchange Commission indicating that they had commenced an informal inquiry into our revenue recognition practices. We devoted a substantial amount of senior executive time and incurred significant legal costs in connection with the 2007 inquiry and, while the scope, duration and outcome of the current inquiry cannot be determined at this time, we may have to devote substantial time and incur substantial legal and other expenses in connection with the current inquiry. The costs of responding to, and the publicity surrounding investigations or enforcement actions by the Securities and Exchange Commission or the Department of Justice, even if ultimately resolved favorably for us, could have a material adverse impact on our business, financial condition, results of operations and cash flows.

Item 1B — Unresolved Staff Comments

None.

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Item 2 — Properties

As of August 31, 2009, we utilized 448 facilities, the majority of which were leased. As of August 31, 2009, we were obligated to lease approximately 7.6 million square feet and owned approximately 1.2 million square feet, as follows:

			Leased				Owned				Total
Reportable Segment	Location	Type	Sq. Ft.		# of Properties		Sq. Ft.		# of Properties		Sq. Ft.		# of Properties
University of Phoenix	United States	Office		769,898		8		—		—		769,898		8
		Dual Purpose		5,308,562		260		—		—		5,308,562		260
				6,078,460		268		—		—		6,078,460		268
	International	Office		3,455		1		—		—		3,455		1
		Dual Purpose		121,487		5		—		—		121,487		5
				124,942		6		—		—		124,942		6
Apollo Global:
BPP	International	Office		1,068		2		—		—		1,068		2
		Dual Purpose		335,918		38		178,525		5		514,443		43
				336,986		40		178,525		5		515,511		45
Other	International	Office		3,557		1		—		—		3,557		1
		Dual Purpose		65,778		11		381,167		23		446,945		34
				69,335		12		381,167		23		450,502		35
Insight Schools	United States	Office		31,322		9		—		—		31,322		9
		Dual Purpose		—		—		—		—		—		—
				31,322		9		—		—		31,322		9
Other Schools	United States	Office		35,192		2		—		—		35,192		2
		Dual Purpose		273,496		64		—		—		273,496		64
				308,688		66		—		—		308,688		66
Corporate	United States	Office		605,757		16		599,664		3		1,205,421		19
	Total			7,555,490		417		1,159,356		31		8,714,846		448

Dual purpose space includes office and classroom facilities. In some cases, classes are held in the facilities of the students’ employers at no charge to us. Leases generally range from five to ten years with one to two renewal options for extended terms. We also lease space from time to time on a short-term basis in order to provide specific courses or programs.

We evaluate current utilization of the educational facilities and projected enrollment growth to determine facility needs. We anticipate that an additional 0.7 million square feet will be leased in 2010.

Item 3 — Legal Proceedings

We are subject to various claims and contingencies which are in the scope of ordinary and routine litigation incidental to our business, including those related to regulation, business transactions, employee-related matters and taxes, among others. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

When we become aware of a claim or potential claim, the likelihood of any loss or exposure is assessed. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, we record a liability for the loss. The liability recorded includes probable and estimable legal costs associated with the claim or potential claim. If the loss is not probable or the amount of the loss cannot be reasonably estimated, we disclose the claim if the likelihood of a potential loss is reasonably possible and the amount is material. For matters where no loss contingency is recorded, our policy is to expense legal fees as incurred.

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A description of pending litigation, settlements, and other proceedings that are outside the scope of ordinary and routine litigation incidental to our business is provided under Note 18, Commitments and Contingencies, Pending Litigation and Settlements and Regulatory and Other Legal Matters, in Item 8, Financial Statements and Supplementary Data, which is incorporated herein by reference.

Item 4 — Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5 — Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our Apollo Group Class A common stock trades on the NASDAQ Global Select Market under the symbol “APOL.” The holders of our Apollo Group Class A common stock are not entitled to any voting rights.

There is no established public trading market for our Apollo Group Class B common stock and all shares of our Apollo Group Class B common stock are beneficially owned by affiliates.

The table below sets forth the high and low bid share prices for our Apollo Group Class A common stock as reported by the NASDAQ Global Select Market.

	High		Low
2008
First Quarter	$	80.75	$	53.71
Second Quarter		81.68		60.77
Third Quarter		62.19		37.92
Fourth Quarter		65.89		43.54
2009
First Quarter	$	76.95	$	48.30
Second Quarter		90.00		70.17
Third Quarter		81.20		55.35
Fourth Quarter		72.50		59.49

Holders

As of August 31, 2009, there were approximately 266 registered holders of record of Apollo Group Class A common stock and four registered holders of record of Apollo Group Class B common stock. A substantially greater number of holders of Apollo Group Class A common stock are “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.

Dividends

Although we are permitted to pay dividends on our Apollo Group Class A and Apollo Group Class B common stock, subject to the satisfaction of applicable financial covenants in our principal credit facility, we have never paid cash dividends on our common stock. Dividends are payable at the discretion of the Board of Directors, and the Articles of Incorporation treat the declaration of dividends on the Apollo Group Class A and Apollo Group Class B common stock in an identical manner as follows: holders of our Apollo Group Class A common stock and Apollo Group Class B common stock are entitled to receive cash dividends, if and to the extent declared by the Board of Directors, payable to the holders of either class or both classes of common stock in equal or unequal per share amounts, at the discretion of the Board of Directors. We have no current plan to pay dividends in the foreseeable future. The decision of our Board of Directors to pay future dividends will depend on general business conditions, the effect of a dividend payment on our financial condition and other factors the Board of Directors may consider relevant.

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Recent Sales of Unregistered Securities

None.

Securities Authorized for Issuance under Equity Compensation Plans

The information required by Item 201(d) of Regulation S-K is provided under Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, “Equity Compensation Plan Information,” which is incorporated herein by reference.

Purchases of Equity Securities

Our Board of Directors has authorized programs to repurchase shares of Apollo Group Class A common stock, from time to time depending on market conditions and other considerations. The share repurchases under these programs for the three months ended August 31, 2009 have been as follows:

						Total Number
						of Shares
						Repurchased as
						Part of			Maximum
						Publicly			Value of
	Total Number of			Average		Announced			Shares
	Shares			Price Paid		Plans or			Available for
(numbers in thousands, except per share data)	Repurchased(1)			per Share		Programs			Repurchase
Treasury stock as of May 31, 2009		34,809		$	59.94		34,809		$	55,618
New authorizations		—			—		—			444,382
Shares repurchased under repurchase program		—			—		—			—
Shares reissued		(26	)		59.94		(26	)		—
Treasury stock as of June 30, 2009		34,783		$	59.94		34,783		$	500,000
New authorizations		—			—		—			—
Shares repurchased under repurchase program		—			—		—			—
Shares reissued		(1,004	)		59.94		(1,004	)		—
Treasury stock as of July 31, 2009		33,779		$	59.94		33,779		$	500,000
New authorizations		—			—		—			—
Shares repurchased under repurchase program		—			—		—			—
Shares reissued		(33	)		59.94		(33	)		—
Treasury stock as of August 31, 2009		33,746		$	59.94		33,746		$	500,000

(1) Shares repurchased in the above table excludes approximately 73,000 shares repurchased for $4.9 million during the three months ended August 31, 2009 related to tax withholding requirements on restricted stock units. These repurchase transactions do not fall under the repurchase program described below, and therefore do not reduce the amount that is available for repurchase under that program. Please refer to Note 14, Stockholders’ Equity, in Item 8, Financial Statements and Supplementary Data, for additional information.

On June 25, 2009, our Board of Directors authorized an increase in the amount available under our stock repurchase program of up to an aggregate amount of $500 million of Apollo Group Class A common stock. There is no expiration date on the repurchase authorizations and repurchases occur at our discretion. The amount and timing of future share repurchases, if any, will be made as market and business conditions warrant. Repurchases may be made on the open market or in privately negotiated transactions, pursuant to the applicable Securities and Exchange Commission rules, and may include repurchases pursuant to Securities and Exchange Commission Rule 10b5-1 nondiscretionary trading programs.

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Company Stock Performance

The following graph compares the cumulative 5-year total return attained by shareholders on Apollo Group Class A common stock relative to the cumulative total returns of the S&P 500 index and a customized peer group of five companies that includes: Career Education Corp., Corinthian Colleges Inc., DeVry Inc., ITT Educational Services Inc., and Strayer Education Inc. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, in the index, and in the peer group on August 31, 2004, and its relative performance is tracked through August 31, 2009.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Apollo Group, Inc.,
The S&P 500 Index and a Peer Group

*$100 invested on 8/31/04 in stock and index-including reinvestment of dividends.

Fiscal year ending August 31.

Source: Standard & Poor’s.

	8/04		8/05		8/06		8/07		8/08		8/09
Apollo Group, Inc.		100		101		64		75		82		83
S&P 500		100		113		123		141		125		103
Peer Group		100		119		107		164		165		185

The information contained in the performance graph shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission nor shall such information be deemed incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

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Item 6 — Selected Consolidated Financial Data

The following selected consolidated financial data and operating statistics are qualified by reference to and should be read in conjunction with Item 8, Financial Statements and Supplementary Data, and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, to fully understand factors that may affect the comparability of the information presented below. The statement of income data for fiscal years 2009, 2008, and 2007, and the balance sheet data as of August 31, 2009 and 2008, were derived from the audited consolidated financial statements, included herein. Diluted income per share and diluted weighted average shares outstanding have been retroactively restated for stock splits. We restated the financial results of prior periods in our Annual Report on Form 10-K for 2006. Our annual report on Form 10-K for 2006 included a restated Consolidated Balance Sheet as of August 31, 2005 and related Consolidated Statement of Income for fiscal year 2005.

	As of August 31,
($ in thousands)	2009		2008		2007		2006		2005
Balance Sheet Data:
Cash and cash equivalents and marketable securities	$	987,825	$	511,459	$	392,681	$	408,728	$	458,646
Restricted cash and cash equivalents		432,304		384,155		296,469		238,267		227,102
Total assets	$	3,263,377	$	1,860,412	$	1,449,863	$	1,283,005	$	1,281,548
Current liabilities	$	1,755,278	$	865,609	$	743,835	$	595,756	$	566,745
Long-term debt		127,701		15,428		—		—		—
Long-term liabilities		155,785		133,210		72,188		82,876		80,583
Minority interest		67,003		11,956		—		—		—
Total shareholders’ equity		1,157,610		834,209		633,840		604,373		634,220
Total liabilities and shareholders’ equity	$	3,263,377	$	1,860,412	$	1,449,863	$	1,283,005	$	1,281,548

	Year Ended August 31,
($ in thousands, except per share data)	2009			2008			2007			2006			2005
Statements of Income Data:
Net revenue	$	3,974,202		$	3,140,931		$	2,723,793		$	2,477,533		$	2,251,114
Cost and expenses:
Instructional costs and services		1,603,701			1,370,878			1,237,491			1,109,584			952,474
Selling and promotional		960,437			805,395			659,059			544,706			485,451
General and administrative		290,104			215,192			201,546			153,004			98,642
Estimated litigation loss		80,500			—			—			—			—
Goodwill impairment		—			—			—			20,205			—
Share-based compensation(1)		—			—			—			—			16,895
Total costs and expenses		2,934,742			2,391,465			2,098,096			1,827,499			1,553,462
Income from operations		1,039,460			749,466			625,697			650,034			697,652
Interest income		12,591			30,079			31,172			18,465			17,109
Interest expense		(4,460	)		(3,450	)		(232	)		(326	)		(298	)
Other, net		(7,776	)		6,759			660			(85	)		(24	)
Income before income taxes and minority interest		1,039,815			782,854			657,297			668,088			714,439
Provision for income taxes		(445,985	)		(306,927	)		(248,487	)		(253,255	)		(286,506	)
Minority interest, net of tax		4,489			598			—			—			—
Net income	$	598,319		$	476,525		$	408,810		$	414,833		$	427,933
Diluted income per share	$	3.75		$	2.87		$	2.35		$	2.35		$	2.30
Diluted weighted average shares outstanding		159,514			165,870			173,603			176,205			186,066

(1) Share-based compensation in fiscal year 2005 is related to the fiscal year 2004 conversion of the University of Phoenix Online stock options into Apollo Group Class A stock options.

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Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help investors understand our results of operations, financial condition and present business environment. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and related notes included in Item 8, Financial Statements and Supplementary Data. The MD&A is organized as follows:

•  Overview: From management’s point of view, we discuss the following:

•  An overview of our business and the sectors of the education industry in which we operate;

•  Key trends, developments and challenges; and

•  Key highlights from the current period.

•  Critical Accounting Policies and Estimates: A discussion of our accounting policies that require critical judgments and estimates.

•  Recent Accounting Pronouncements: A discussion of recently issued accounting pronouncements.

•  Results of Operations: An analysis of our results of operations as reflected in our consolidated financial statements.

•  Liquidity, Capital Resources, and Financial Position: An analysis of cash flows, contractual obligations and other commercial commitments, and discussion of federal and private student loans.

Overview

Apollo is one of the world’s largest private education providers and has been a provider of education services for more than 35 years. We offer innovative and distinctive educational programs and services at the undergraduate, graduate and doctoral levels at our various campuses and learning centers, and online throughout the world. Our wholly and majority-owned subsidiaries include the following:

•  University of Phoenix,

•  Apollo Global:

•  BPP Holdings, plc (“BPP”),

•  Universidad de Artes, Ciencias y Comunicación (“UNIACC”),

•  Universidad Latinoamericana (“ULA”),

•  Western International University,

•  Institute for Professional Development (“IPD”),

•  College for Financial Planning Institutes (“CFFP”), and

•  Meritus University, Inc. (“Meritus”).

We also operate online high school programs through our Insight Schools, Inc. (“Insight Schools”) wholly-owned subsidiary, which is included in our Insight Schools reportable segment. Subsequent to our 2009 fiscal year end, we decided to explore the sale of Insight Schools.

Substantially all of our net revenue is composed of tuition and fees for educational services. In fiscal year 2009, University of Phoenix, which is focused principally on working learners, accounted for approximately 95% of our total consolidated net revenue. University of Phoenix generated 86% of its cash basis revenue for eligible tuition and fees during fiscal year 2009 from receipt of Title IV financial aid program funds, as calculated under the 90/10 Rule, excluding the benefit from the temporary relief for loan limit increases.

We believe that a critical element of generating successful long-term growth and attractive returns for our stakeholders is to provide high quality educational products and services for our students in order for them to maximize the benefits of their educational experience. Accordingly, we are intensely focused on student success. We are continuously enhancing and expanding our current service offerings and investing in academic quality. We have developed customized computer programs for academic quality management, faculty recruitment and training, student tracking, and marketing to help us more effectively manage toward this objective. We believe we utilize one of the most comprehensive learning assessment programs in the U.S. We

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are also focused on improving student retention by enhancing student services, promoting instructional innovation and improving academic support. All of these efforts are designed to help our students stay in school and succeed. In 2008, University of Phoenix published its first Academic Annual Report which contains a transparent look at a variety of comparative performance measures related to student outcomes and university initiatives related to quality and accountability.

Key Trends, Developments and Challenges

Our management team is focused on the following circumstances and trends that present opportunities, challenges and risks as we work toward our goal of providing attractive returns for all of our stakeholders:

•  Evolving Domestic Postsecondary Education Market.  We believe domestic postsecondary education continues to experience a profound shift from traditional undergraduate students (those students living on campus and attending classes full-time) to non-traditional students who work, are raising a family, or are doing both while trying to earn a college degree. This trend continues to provide an opportunity for education providers such as University of Phoenix to provide quality academic programs and services that appeal to non-traditional students. We believe we are well positioned to capitalize on this trend.

•  Economic Downturn.  The U.S. and much of the world economy have been in the midst of an economic downturn. Although not quantifiable, we believe these conditions have contributed to a portion of our recent enrollment growth as an increased number of working learners seek to advance their education to improve their job security or reemployment prospects. One of our primary challenges will be to adequately and effectively service our increased student population without over-building our infrastructure and delivery platform in a manner that might result in excess capacity when the portion of our growth related to the economic downturn subsides. Also, the economic downturn has negatively impacted our bad debt expense and allowance for doubtful accounts, as discussed below under Critical Accounting Policies and Estimates.

•  Regulatory Environment

•  Compliance.  Our domestic business is highly regulated by the U.S. Department of Education, the applicable academic accreditation agencies and state education regulatory authorities. Compliance with these regulatory requirements is a significant part of our administrative effort. In August 2008, the U.S. Congress reauthorized the Higher Education Act through 2013 by enacting the Higher Education Opportunity Act, which resulted in a large number of new and modified requirements that ultimately will be implemented through the U.S. Department of Education rulemaking. Little formal or informal guidance is available for many of these requirements, and we are evaluating their implications and developing appropriate compliance procedures. Because our student body is large and we rely heavily on our computer systems, compliance with new or changed regulations can require significant time and effort on our part.

One requirement of the Higher Education Act, commonly referred to as the “90/10 Rule,” applies to proprietary institutions such as the University of Phoenix and Western International University. Under this rule, a proprietary institution will be ineligible to participate in Title IV programs if for any two consecutive fiscal years it derives more than 90% of its cash basis revenue, as defined in the rule, from Title IV programs. An institution that exceeds this limit for any single fiscal year will be placed on provisional certification for two fiscal years and will be subject to additional sanctions. In recent years, the 90/10 Rule percentages for the University of Phoenix have trended closer to 90% and the percentage was 86%, excluding the benefit from the temporary relief for loan limit increases, for fiscal year 2009. We expect the trend will continue in fiscal year 2010. University of Phoenix is focused on implementing various measures to reduce the percentage of its cash basis revenue attributable to Title IV funds, including emphasizing employer-paid and other direct-pay education programs, encouraging students to carefully evaluate the amount of necessary Title IV borrowing, and increasing the emphasis on professional development and continuing education. Although we expect that these measures will favorably impact the 90/10 Rule calculation in the future, there is no

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assurance that these initiatives will be effective or will be adequate to prevent the 90/10 Rule calculation from exceeding 90%. If this calculation exceeds 90% in fiscal 2010 or future fiscal years, we will need to increase our efforts to reduce the percentage of our cash-basis revenue that is composed of Title IV funding. These efforts, and our other long-term initiatives to impact this calculation, may involve taking measures which increase our operating expenses and/or reduce our revenue. Title IV eligibility is critical to the continued operation of our business. See “Risk Factors — Risks Related to the Highly Regulated Industry in Which We Operate -U.S. Operations -Our schools and programs would lose their eligibility to participate in federal student financial aid programs if the percentage of our revenues derived from those programs is too high.”

•  Certification.  The Higher Education Act, as reauthorized, specifies the manner in which the U.S. Department of Education reviews institutions for eligibility and certification to participate in Title IV programs. Every educational institution involved in Title IV programs must be certified to participate and is required to periodically renew this certification. University of Phoenix was recertified in June 2003 and its current certification for the Title IV programs expired in June 2007. In March 2007, University of Phoenix submitted its Title IV recertification application to the U.S. Department of Education. We have been collaborating with the U.S. Department of Education since that date and continue to supply additional follow-up information based on requests from the U.S. Department of Education. Our eligibility continues on a month-to-month basis until the U.S. Department of Education issues its decision on the application. We have no reason to believe that our application will not be renewed in due course.

In February 2009, unrelated to our recertification application, the U.S. Department of Education performed an ordinary course, focused program review of University of Phoenix’s policies and procedures involving Title IV programs. We have not yet received the program review report.

Western International University was recertified in October 2003 and its current certification for participation in Title IV programs expired on June 30, 2009. In March 2009, Western International University submitted its Title IV recertification application to the U.S. Department of Education and Western International University’s eligibility continues on a month-to-month basis until the U.S. Department of Education completes its review of the application and issues its decision. As with University of Phoenix, we have no reason to believe that the application will not be renewed in due course.

Title IV eligibility is critical to the continued operation of our business. See “Risk Factors — Risks Related to the Highly Regulated Industry in Which We Operate — U.S. Operations — If we are not recertified to participate in Title IV programs by the U.S. Department of Education, we would lose eligibility to participate in Title IV programs.”

•  Federal Direct Loan Program.  In President Barack Obama’s 2010 budget request delivered to Congress on February 26, 2009, the U.S. Department of Education proposed to eliminate the Federal Family Education Loan Program (FFELP) and instead require all Title IV student loans to be administered through the Federal Direct Loan Program (FDLP) commencing July 1, 2010. We expect to be able to fully transition from the FFELP program to the FDLP by the proposed July 1, 2010 phase-out date, if necessary. If this proposal is adopted, the transition would require us to develop and implement administrative capabilities and procedures for volume processing of loans under the FDLP. If we experience a disruption in our ability to process student loans through the FDLP, either because of administrative challenges on our part or the inability of the U.S. Department of Education to process the increased volume of direct loans on a timely basis, our results of operations and cash flows could be adversely and materially affected. During fiscal year 2009, we began participating in the FDLP for a small portion of our Title IV eligible students.

•  Opportunities to Expand into New Markets.  We believe that there is a growing demand for high quality education outside the U.S. and that we have capabilities and expertise that can be useful in providing these services beyond our current reach. We believe we can deploy our key capabilities in student services, technology and marketing to expand into new markets to further our mission of

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providing high quality, accessible education. We intend to actively pursue quality opportunities to partner with and/or acquire existing institutions of higher learning where we believe we can achieve long-term attractive growth and value creation. See discussion of BPP acquisition below in Fiscal Year 2009 Highlights.

•  Focus on Integration.  We expect to strategically add value by integrating our acquisitions and leveraging our experience to enhance the quality, delivery and student outcomes associated with the respective curricula.

For a more detailed discussion of our business, industry and risks, refer to Item 1, Business, and Item 1A, Risk Factors.

Fiscal Year 2009 Highlights

During the fiscal year 2009, we experienced the following significant events:

1.	Degreed Enrollment and New Degreed Enrollment Growth.  We achieved 20.8% growth in average University of Phoenix Degreed Enrollment in fiscal year 2009 compared to fiscal year 2008. University of Phoenix aggregate New Degreed Enrollment increased 23.5% in fiscal year 2009 compared to 2008. We believe the enrollment growth is primarily attributable to continued investments in enhancing and expanding University of Phoenix service offerings and academic quality, which has attracted new students and increased student retention, and to enhancements in our marketing capabilities. We also believe that a portion of the increase in University of Phoenix Degreed Enrollment and New Degreed Enrollment is due to the current economic downturn, as working learners seek to advance their education to improve their job security or reemployment prospects, and that this element of our growth will diminish as the economy and the employment outlook improve in the U.S.
2.	Net Revenue Growth.  Our net revenue increased 26.5% in fiscal year 2009 compared to fiscal year 2008 primarily as a result of University of Phoenix Degreed Enrollment growth and selective tuition price increases.
3.	Income from Operations Growth.  Our income from operations increased 38.7%, or $290.0 million in fiscal year 2009 compared to fiscal year 2008 primarily as a result of University of Phoenix net revenue growth described above and associated economies of scale from certain costs that remain relatively fixed.
4.	Changes in Management and Addition of Directors.  The following changes in management and addition of directors occurred during our fiscal year 2009:

•  On April 24, 2009, our Board of Directors promoted Gregory W. Cappelli to the position of Co-Chief Executive Officer. Mr. Cappelli had previously been serving as the Executive Vice President of Global Strategy and Assistant to the Executive Chairman. Mr. Cappelli continues to serve as Chairman of Apollo Global and Director of Apollo Group.

•  On March 26, 2009, our Board of Directors promoted Joseph L. D’Amico to President and Chief Operating Officer, Brian L. Swartz to Senior Vice President, Chief Financial Officer and Treasurer, and Gregory J. Iverson to Vice President, Chief Accounting Officer and Controller. Mr. D’Amico had previously been serving as President and Chief Financial Officer, Mr. Swartz had previously been serving as Senior Vice President of Finance and Chief Accounting Officer, and Mr. Iverson had previously been serving as Vice President and Corporate Controller.

•  On March 25, 2009, Frederick J. Newton commenced employment as Senior Vice President of Human Resources.

•  On March 11, 2009, our Class B Shareholders reelected our existing ten incumbent directors to the Board of Directors and elected three additional directors: Terri C. Bishop, our Executive

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Vice President of External Affairs, and independent directors, Stephen J. Giusto and Manuel F. Rivelo.

5.

BPP.  On July 30, 2009, our majority-owned subsidiary, Apollo Global, acquired all of the outstanding shares of BPP, a United Kingdom-headquartered provider of education and training to professionals in the legal and finance industries, for a purchase price of $601.6 million. Refer to Note 3, Acquisitions, in Item 8, Financial Statements and Supplementary Data, for additional information.

6.

Incentive Compensation False Claims Act Lawsuit Settlement Discussions.  In September 2009, the parties to the action, along with the U.S. Department of Justice, participated in a private mediation in which the parties reached an agreement in principle regarding the financial terms of a potential settlement. Significant other terms remain to be negotiated, and there is no certainty that a final agreement will be reached. During the fourth quarter of fiscal year 2009, based on the settlement discussions to resolve this matter, we recorded a pre-tax charge of $80.5 million which represents our best estimate of the loss related to this matter. The actual amount of this loss will not be known until a final settlement agreement, if any, is reached. Refer to Note 18, Commitments and Contingencies, in Item 8, Financial Statements and Supplementary Data, for additional information.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Our critical accounting policies involve a higher degree of judgments, estimates and complexity, and are as follows:

Revenue Recognition

Our educational programs, primarily composed of University of Phoenix programs, range in length from one-day seminars to degree programs lasting up to four years. Students in University of Phoenix degree programs generally enroll in a program of study encompassing a series of five- to nine-week courses taken consecutively over the length of the program. Generally, students are billed on a course-by-course basis when the student first attends a session, resulting in the recording of a receivable from the student and deferred revenue in the amount of the billing. University of Phoenix students generally fund their education through grants and/or loans under various Title IV programs, tuition assistance from their employers, or personal funds.

Net revenue consists largely of tuition and fees associated with different educational programs as well as related educational resources such as access to online materials, books, and study texts. Net revenue is shown net of discounts. Tuition benefits for our employees and their eligible dependants are included in net revenue and instructional costs and services. Total employee tuition benefits were $90.5 million, $77.9 million and $63.8 million for fiscal years 2009, 2008 and 2007, respectively.

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The following table presents the most significant components of net revenue, and each component as a percentage of total net revenue, for the fiscal years 2009, 2008 and 2007:

	Year Ended August 31,
($ in millions)	2009					2008					2007
Tuition and educational services revenue	$	3,835.7		96	%	$	2,996.1		95	%	$	2,553.1		94	%
Educational materials revenue		226.4		6	%		184.4		6	%		161.0		6	%
Services revenue		83.2		2	%		77.7		3	%		73.6		2	%
Other revenue		28.3		1	%		43.9		1	%		48.5		2	%
Gross Revenue		4,173.6		105	%		3,302.1		105	%		2,836.2		104	%
Less: Discounts		(199.4	)	(5	)%		(161.2	)	(5	)%		(112.4	)	(4	)%
Net revenue	$	3,974.2		100	%	$	3,140.9		100	%	$	2,723.8		100	%

Tuition and educational services revenue encompasses both online and classroom-based learning. For our University of Phoenix and Western International University operations, tuition revenue is recognized pro rata over the period of instruction as services are delivered to students.

BPP recognizes tuition revenue as services are provided over the course of the program, which varies depending on the program structure. For our remaining Apollo Global operations, tuition revenue is recognized over the length of the course, which is typically over a period of a semester.

For Insight Schools, we generate the majority of our tuition and educational services revenue through long-term contracts with school districts or not-for-profit organizations. The term for these contracts ranges from 5 to 10 years with provisions for renewal thereafter. We recognize revenue under these contracts over the period during which educational services are provided to students, which generally commences in August or September and ends in May or June.

Educational materials revenue relates to online course materials delivered to students over the period of instruction. Revenue associated with these materials is recognized pro rata over the period of the related course to correspond with delivery of the materials to students. Educational materials also includes the sale of various books, study texts, course notes, and CDs for which we recognize revenue when the materials have been delivered to and accepted by students or other customers.

Services revenue consists principally of the contractual share of tuition revenue from students enrolled in IPD programs at private colleges and universities (“Client Institutions”). IPD provides program development, administration and management consulting services to Client Institutions to establish or expand their programs for working learners. These services typically include degree program design, curriculum development, market research, student recruitment, accounting, and administrative services. IPD typically is paid a portion of the tuition revenue generated from these programs. IPD’s contracts with its Client Institutions generally range in length from five to ten years, with provisions for renewal. The portion of service revenue to which we are entitled under the terms of the contracts is recognized as the services are provided.

Other revenue consists of the fees students pay when submitting an enrollment application, which, along with the related application costs associated with processing the applications, are deferred and recognized over the average length of time it takes for a student to complete a program of study. Other revenue also includes non-tuition generating revenues, such as renting classroom space and other student support services. Revenue from these sources is recognized as the services are provided.

Discounts reflect reductions in tuition or other revenue including military, corporate, and other employer discounts, grants, institutional scholarships and promotions.

Effective March 1, 2008, University of Phoenix changed its refund policy whereby students who attend 60% or less of a course are eligible for a refund for the portion of the course they did not attend. Under the prior refund policy, if a student dropped or withdrew after attending one class of a course, University of Phoenix earned 25% of the tuition for the course, and if they dropped or withdrew after attending two classes of a course, University of Phoenix earned 100% of the tuition for the course. Refunds are recorded as a

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reduction in deferred revenue during the period that a student drops or withdraws from a class. This new refund policy applies to students in most, but not all states, as some states require different policies.

Generally, net revenue varies from period to period based on several factors, including the aggregate number of students attending classes, the number of classes held during the period and the tuition price per credit hour.

Net revenue excludes applicable state and city sales taxes. Sales tax collected from students is excluded from net revenue. Collected but unremitted sales tax is included as a liability in our Consolidated Balance Sheets and is not material to our consolidated financial statements.

Allowance for Doubtful Accounts

We reduce accounts receivable by an allowance for amounts that may become uncollectible in the future. Estimates are used in determining the allowance for doubtful accounts and are based on historical collection experience and current trends. In determining these amounts, we consider and evaluate the historical write-offs of our receivables. We monitor our collections and write-off experience to assess whether adjustments are necessary. When a student with Title IV loans withdraws from University of Phoenix or Western International University, Title IV rules determine if we are required to return a portion of Title IV funds to the lenders. We are then entitled to collect these funds from the students, but collection rates for these types of receivables is significantly lower than our collection rates for receivables for students who remain in our educational programs. Management periodically evaluates the standard allowance estimation methodology for propriety and modifies as necessary. In doing so, we believe our allowance for doubtful accounts reflects the most recent collections experience and is responsive to changes in trends. Our accounts receivable are written off once the account is deemed to be uncollectible. This typically occurs once we have exhausted all efforts to collect the account, which include collection attempts by our employees and outside collection agencies.

For the purpose of sensitivity, a one percent change in our allowance for doubtful accounts as a percentage of gross student receivables as of August 31, 2009 would have resulted in a pre-tax change in income of $3.8 million. Additionally, if our bad debt expense were to change by one percent of total net revenue for the fiscal year ended August 31, 2009, we would have recorded a pre-tax change in income of approximately $39.7 million.

Goodwill and Intangible Assets

•  Goodwill — Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the net assets acquired and assumed liabilities. At the time of an acquisition, we allocate the goodwill and related assets to our respective reporting units. Please refer to Note 19, Segment Reporting, in Item 8, Financial Statements and Supplementary Data, for further discussion. Our goodwill by reportable segment is summarized in the table below:

	Annual	August 31, 2009		August 31, 2008
	Impairment	Goodwill		Goodwill
Reportable Segment Goodwill Balance is Recorded in	Test Date	Balance		Balance
($ in thousands)
University of Phoenix	May 31	$	37,018	$	37,018
Apollo Global — BPP(1)	July 1		421,836		—
Apollo Global — Other
UNIACC	May 31		11,197		1,635
ULA	May 31		22,674		17,682
Insight Schools	May 31		12,742		12,742
Other Schools
CFFP	August 31		15,310		15,310
Western International University	May 31		1,581		1,581
		$	522,358	$	85,968

(1)  As BPP was recently acquired on July 30, 2009, we did not perform an annual goodwill impairment test for BPP during fiscal year 2009.

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Goodwill is tested annually for impairment unless events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective asset below its carrying amount. We test for goodwill impairment by applying a two-step test. In the first step, the fair value of the reporting unit is compared to the carrying value of its net assets. If the fair value of the reporting unit exceeds the carrying value of the net assets of the reporting unit, goodwill is not impaired and no further testing is required. If the carrying value of the net assets of the reporting unit exceeds the fair value of the reporting unit, then a second step must be performed in order to determine the implied fair value of the goodwill and compare it to the carrying value of the goodwill. An impairment loss is recognized to the extent the implied fair value of the goodwill is less than the carrying amount of the goodwill.

During fiscal year 2009, we completed our annual goodwill impairment tests for each of our reporting units, with the exception of BPP which was recently acquired on July 30, 2009. To determine the fair value of our reporting units, we rely primarily on using discounted cash flow valuation methods which requires management to make subjective judgments relating to future cash flows based on our knowledge of the business and current plans to operate the business, growth rates, economic and market conditions, and applicable discount rates. Changes in these estimates could materially affect the determination of fair value or goodwill impairment, or both. Generally, our goodwill impairment tests used discount rates ranging from 15.0% to 15.5%, perpetuity growth rates ranging from 1% to 3% and if applicable, terminal values that were calculated based on discounted cash flows. The discount rates were determined based on Apollo Group’s weighted average cost of capital, adjusted for company specific and macro-economic risks inherent in the specific reporting unit. An increase of 100 basis points in the discount rates used in these analyses, with the exception of BPP, would result in an approximate $20 million decrease in the estimated aggregate fair value of those reporting units. We consider the use of this level of sensitivity in the discount rate reasonable considering the strength of Apollo Group’s sustained operations and the probability weighting methodology used in our impairment tests.

For certain of our goodwill impairment tests, we used a combination of the discounted cash flow analysis and market-based approach, and applied a 75%/25% weighting factor to the respective approaches. To assess the reasonableness of our fair value analysis, when appropriate, we may evaluate our results against other measurement indicators such as comparable company public trading values, analyst estimates and values observed in private market transactions.

At the time of the respective reporting unit’s annual impairment test date, the fair value of each of these reporting units exceeded the carrying value of their respective net assets resulting in no goodwill impairment charges recorded. Additionally, for all of our reporting units, the fair value exceeded the carrying value by a sufficient margin, with the exception of CFFP as discussed below. The results of the annual impairment tests indicate that the current economic downturn has not had a significant long-term adverse impact on the fair value of these reporting units, although we observed a narrowing of the margin between fair value and carrying value for certain of our reporting units.

Insight Schools has encountered a number of administrative challenges in its compliance activities in the course of expanding its business. These challenges and start-up expenses have limited its growth rate and resulted in decreased revenue and increased operating expenses. We considered this factor in our annual goodwill impairment test of Insight Schools and determined that the goodwill balance is not impaired. Subsequent to our 2009 fiscal year end, we decided to explore the sale of Insight Schools.

With the exception of CFFP, Apollo Group was not required to perform interim goodwill impairment tests for its other reporting units, including BPP, during fiscal year 2009. We consider certain triggering events when evaluating whether an interim impairment analysis is warranted, including, among others, a significant decrease in the market capitalization of Apollo Group based on events specific to Apollo Group’s operations; adverse changes in the accreditation, regulatory or legal environments and overall business climate; unexpected competition; loss of key management personnel and changes in the market acceptance of our educational programs.

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At August 31, 2009, our CFFP reporting unit had goodwill of approximately $15.3 million. The economic downturn has caused the demand for CFFP’s financial planning education programs and materials to diminish throughout fiscal year 2009 because CFFP’s primary customers come from the financial services industry. Accordingly, we performed interim goodwill impairment tests as of November 30, 2008, February 28, 2009 and May 31, 2009 and evaluated and determined that the CFFP goodwill balance was not impaired. As of August 31, 2009, we performed our annual goodwill impairment test of CFFP using a consistent methodology as our previous interim tests and determined that the fair value of the CFFP reporting unit continued to exceed the carrying value of its net assets by a narrow margin.

•  Indefinite-Lived Intangible Assets — Indefinite-lived intangible assets are recorded at fair market value on their acquisition date and primarily include trademarks and foreign regulatory accreditations and designations as a result of the BPP, UNIACC and ULA acquisitions. At August 31, 2009 and 2008, our indefinite-lived intangible asset balances were $145.5 million and $6.6 million, respectively.

We assign indefinite lives to acquired trademarks, accreditations and designations that we believe have the continued ability to generate cash flows indefinitely; have no legal, regulatory, contractual, economic or other factors limiting the useful life of the respective intangible asset; and when we intend to renew the respective trademark, accreditation or designation and renewal can be accomplished at little cost. Indefinite-lived intangible assets are not amortized, but rather are tested for impairment at least annually, unless events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective asset below its carrying amount. The impairment test for indefinite-lived intangible assets involves a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. To determine the fair value of these intangible assets, we use various valuation models, such as discounted cash flow analysis or the relief-from-royalty method. We perform our annual indefinite-lived intangible asset impairment tests for each reporting unit on the same dates that we perform our annual goodwill impairment tests for the respective reporting units.

During fiscal year 2009, we completed our annual impairment tests for our indefinite-lived intangible assets at ULA and UNIACC totaling $13.3 million and determined there was no impairment. Apollo did not perform an annual impairment test of the indefinite-lived intangible assets recently acquired in the BPP acquisition on July 30, 2009 nor were we required to perform interim impairment tests for any of our indefinite-lived intangible assets during fiscal year 2009.

•  Finite-Lived Intangible Assets — Finite-lived intangible assets that are acquired in business combinations are recorded at fair market value on their acquisition date and are amortized on either a straight-line basis or using an accelerated method to reflect the economic useful life of the asset. The weighted average useful lives range from 2 to 15 years.

At August 31, 2009 and 2008, our finite-lived intangible asset balances were $58.2 million and $16.5 million, respectively. As further discussed in Note 2, Significant Accounting Policies, in Item 8, Financial Statements and Supplementary Data, we will adopt SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), with respect to using fair value measurements in the valuation techniques associated with our annual goodwill and indefinite-lived intangible assets impairment tests effective September 1, 2009.

Other Long-Lived Asset Impairments

We evaluate the carrying amount of our major long-lived assets, including property and equipment and finite-lived intangible assets, whenever changes in circumstances or events indicate that the value of such assets may not be fully recoverable. At August 31, 2009, we believe the carrying amounts of our long-lived assets are fully recoverable and no impairment exists.

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Loss Contingencies

We are subject to various claims and contingencies which are in the scope of ordinary and routine litigation incidental to our business, including those related to regulation, litigation, business transactions, employee-related matters and taxes, among others. When we become aware of a claim or potential claim, the likelihood of any loss or exposure is assessed. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, we record a liability for the loss. The liability recorded includes probable and estimable legal costs incurred to date and future legal costs to the point in the legal matter where we believe a conclusion to the matter will be reached. If the loss is not probable or the amount of the loss cannot be reasonably estimated, we disclose the claim if the likelihood of a potential loss is reasonably possible and the amount of the potential loss could be material. For matters where no loss contingency is recorded, our policy is to expense legal fees as incurred.

Accounting for Income Taxes

The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when the new rate is enacted.

We evaluate and account for uncertain tax positions using a two-step approach. Recognition (step one) occurs when we conclude that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occur when we subsequently determine that a tax position no longer meets the more-likely-than-not threshold of being sustained. We do not use a valuation allowance as a substitute for derecognition of tax positions.

Share-Based Compensation

We measure and recognize compensation expense for all share-based awards issued to faculty, employees and directors based on estimated fair values of the share awards on the date of grant. We record compensation expense for all share-based awards over the vesting period.

We calculate the fair value of share-based awards on the date of grant. For stock options, we typically use the Black-Scholes-Merton option pricing model to estimate fair value. The Black-Scholes-Merton option pricing model requires us to estimate key assumptions such as expected term, volatility, risk-free interest rates and dividend yield to determine the fair value of stock options, based on both historical information and management judgment regarding market factors and trends. We generally use the simplified mid-point method to estimate expected term of stock options. The simplified method uses the mid-point between the vesting term and the contractual term of the share option. We have analyzed the circumstances in which the use of the simplified method is allowed, and we have opted to use this method for stock options granted to management in fiscal years 2009 and 2008 because the options granted in prior fiscal years had different terms, such as contractual lives and acceleration provisions. Thus, historical data is not comparable in order to determine the expected term of awards. We expect to continue to use this method until sufficient reliable historical data is available that will enable us to estimate expected term by a more precise method

We amortize the share-based compensation expense over the period that the awards are expected to vest, net of estimated forfeiture rates. We estimate expected forfeitures of share-based awards at the grant date and recognize compensation cost only for those awards expected to vest. We estimate our forfeiture rate based on several factors including historical forfeiture activity, expected future employee turnover, and other qualitative factors. We ultimately adjust this forfeiture assumption to actual forfeitures. Therefore, changes in the forfeiture assumptions do not impact the total amount of expense ultimately recognized over the vesting period. Rather, different forfeiture assumptions only impact the timing of expense recognition over the vesting

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period. If the actual forfeitures differ from management estimates, additional adjustments to compensation expense are recorded.

We used the following weighted average assumptions in the Black-Scholes-Merton option pricing model for stock options granted in each fiscal year:

	Year Ended August 31,
	2009			2008			2007
Expected volatility		47.7	%		44.2	%		32.7	%
Expected life (years)		4.2			4.2			4.2
Risk-free interest rate		2.2	%		2.9	%		4.9	%
Dividend yield		0.0	%		0.0	%		0.0	%

The assumptions that have the most significant affect on the fair value of the grants and therefore, share-based compensation expense, are the expected life and expected volatility. The following table illustrates how changes to the Black-Scholes-Merton option pricing model assumptions would affect the weighted average per option fair values as of the grant date for grants made during fiscal year 2009:

	Expected Volatility
Expected Life (Years)	42.9%		47.7%		52.5%
3.7	$	23.57	$	25.72	$	27.83
4.2		25.07		27.32		29.52
4.7		26.48		28.81		31.09

Recent Accounting Pronouncements

Please refer to Note 2, Significant Accounting Policies, in Item 8, Financial Statements and Supplementary Data, for recent accounting pronouncements.

Results of Operations

We have included below a discussion of our operating results and significant items which explain the material changes in our operating results during the fiscal years ended August 31, 2009, 2008 and 2007. Our operations are generally subject to seasonal trends. We experience, and expect to continue to experience, seasonal fluctuations in our results of operations as a result of changes in the level of student enrollments. While University of Phoenix enrolls students throughout the year, our net revenue generally is lower in the second quarter (December through February) than the other quarters due to holiday breaks in December and January. Most of our other subsidiaries experience more significant seasonality, as they have limited enrollment during their respective summer breaks.

We categorize our operating expenses as instructional costs and services, selling and promotional, and general and administrative.

•  Instructional costs and services — consist primarily of costs related to the delivery and administration of our educational programs and include costs related to faculty and administrative compensation, classroom and faculty administration lease expenses and depreciation, bad debt expense, financial aid processing costs and other related costs. Tuition costs for all employees and their eligible family members are recorded as an expense within instructional costs and services.

•  Selling and promotional costs — consist primarily of compensation for enrollment counselors, management and support staff and corporate marketing, advertising expenses, production of marketing materials, and other costs directly related to selling and promotional functions. Selling and promotional costs are expensed when incurred.

•  General and administrative costs — consist primarily of corporate compensation, occupancy costs, depreciation and amortization of property and equipment, legal and professional fees, and other related costs.

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For the fiscal year ended August 31, 2009 compared to the fiscal year ended August 31, 2008

Analysis of Consolidated Statements of Income

The table below details our consolidated results of operations. For a more detailed discussion by reportable segment, refer to our Analysis of Operating Results by Segment.

							% of Net Revenue
	Year Ended August 31,						Year Ended August 31,						%
(in millions, except per share data)	2009			2008			2009			2008			Change
Net revenue	$	3,974.2		$	3,140.9			100.0	%		100.0	%		26.5	%
Costs and expenses:
Instructional costs and services		1,603.7			1,370.9			40.3	%		43.6	%		17.0	%
Selling and promotional		960.4			805.4			24.2	%		25.6	%		19.2	%
General and administrative		290.1			215.2			7.3	%		6.9	%		34.8	%
Estimated litigation loss		80.5			—			2.0	%		—				*
Total costs and expenses		2,934.7			2,391.5			73.8	%		76.1	%		22.7	%
Income from operations		1,039.5			749.4			26.2	%		23.9	%		38.7	%
Interest income		12.6			30.1			0.3	%		1.0	%		(58.1	)%
Interest expense		(4.5	)		(3.5	)		(0.1	)%		(0.1	)%		28.6	%
Other, net		(7.8	)		6.8			(0.2	)%		0.2	%			*
Income before income taxes and minority interest		1,039.8			782.8			26.2	%		25.0	%		32.8	%
Provision for income taxes		(446.0	)		(306.9	)		(11.2	)%		(9.8	)%		45.3	%
Minority interest, net of tax		4.5			0.6			0.1	%		—				*
Net income	$	598.3		$	476.5			15.1	%		15.2	%		25.6	%
Diluted income per share	$	3.75		$	2.87				*			*		30.7	%

* not meaningful

Net Revenue

Our net revenue increased $833.3 million, or 26.5%, in fiscal year 2009 compared to fiscal year 2008. University of Phoenix represented approximately 95% of our net revenue during this period, and contributed the majority of the increase primarily due to growth in Degreed Enrollment and selective tuition price and other fee changes. Net revenue also increased $54.0 million primarily from Apollo Global earning a full year of revenue from acquisitions completed in fiscal year 2008. For a more detailed discussion, refer to our Analysis of Operating Results by Segment.

Instructional Costs and Services

Instructional costs and services increased $232.8 million, or 17.0%, in fiscal year 2009 compared to fiscal year 2008, but represents a 330 basis point decrease as a percentage of net revenue. The decrease as a percentage of net revenue is primarily due to University of Phoenix continuing to leverage its fixed costs, such as certain employee wages, classroom space and depreciation expense, and a decrease in financial aid processing costs from the favorable renegotiation, effective September 2008, of our contract with our outsourced financial aid processing vendor. This was partially offset by increases in expense as a percentage of net revenue at Apollo Global associated with its start-up, development and other infrastructure and support costs, as well as an increase as a percentage of net revenue in bad debt expense. Our bad debt expense was 3.8% of net revenue in fiscal year 2009 compared to 3.3% of net revenue in fiscal year 2008.

Selling and Promotional

Selling and promotional expenses increased $155.0 million, or 19.2%, in fiscal year 2009 compared to fiscal year 2008, but represents a 140 basis point decrease as a percentage of net revenue. The decrease as a

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percentage of net revenue is primarily due to University of Phoenix improved enrollment counselor effectiveness. Additionally, investments we have made in our corporate marketing function have resulted in more effective advertising.

General and Administrative

General and administrative expenses increased $74.9 million, or 34.8%, in fiscal year 2009 compared to fiscal year 2008 representing a 40 basis point increase as a percentage of net revenue. The increase as a percentage of net revenue is primarily due to (a) administrative expenses to support our strategic growth initiatives and enhance our corporate governance, (b) increased legal costs in connection with defending ourselves in legal matters described elsewhere in this report, and (c) the write-off of $9.4 million of information technology fixed assets that resulted primarily from our rationalization of software.

Estimated Litigation Loss

In connection with the Incentive Compensation False Claims Act Lawsuit, we recorded an accrual of $80.5 million in fiscal year 2009 based on settlement discussions to resolve this matter. See Note 18, Commitments and Contingencies, in Item 8, Financial Statements and Supplementary Data, for further discussion.

Interest Income

Interest income decreased $17.5 million in fiscal year 2009 compared to fiscal year 2008. The decrease is primarily due to lower interest rate yields, which was partially offset by increases in average cash and cash equivalents balances (including restricted cash) during the respective periods. When the Federal Reserve Bank lowers the Federal Funds Rate, it generally results in a reduction in our interest rates. The reduction of the Federal Funds Rate in December 2008 to the range of 0.0% — 0.25% has lowered our average interest rate yield for fiscal year 2009 below 1%.

Interest Expense

Interest expense increased $1.0 million in fiscal year 2009 compared to fiscal year 2008 due to an increase in average borrowings during the respective periods, principally due to debt incurred by subsidiaries of Apollo Global and borrowings on our syndicated $500 million credit agreement (the “Bank Facility”). Subsequent to August 31, 2009, we repaid the U.S. dollar denominated debt on our Bank Facility of $393 million that was outstanding at August 31, 2009. Refer to Liquidity, Capital Resources, and Financial Position for further discussion.

Other Expense, Net

The loss in fiscal year 2009 was primarily attributable to $6.9 million of expense incurred for the purchase of a call option to hedge against foreign currency fluctuations related to the BPP acquisition. The remaining loss primarily relates to net foreign currency losses related to our international operations. The income in fiscal year 2008 was primarily attributable to other income of $9.5 million from the forfeiture of an escrow deposit provided in connection with a now cancelled agreement to sell and leaseback our headquarters, which was partially offset by net foreign currency losses related to our international operations

Provision for Income Taxes

Our effective income tax rate for the fiscal year ended August 31, 2009 was 42.9% compared to 39.2% for the fiscal year ended August 31, 2008. The increase was primarily attributable to the following items:

•  The estimated tax impact on the estimated litigation loss;

•  An increase in state taxes due to the allocation of our online operations income amongst various U.S. state and local jurisdictions;

•  A reduction in our tax exempt interest income;

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•  An increase in net operating losses for which we cannot currently take a tax benefit; and

•  Certain compensation that may not meet the requirements for deductibility under Internal Revenue Code Section 162(m).

Minority Interest, net of tax

The minority interest increased in fiscal year 2009 compared to fiscal year 2008 due to an increase in Apollo Global’s net losses in fiscal year 2009. For a more detailed discussion, refer to our Analysis of Operating Results by Segment.

Analysis of Operating Results by Segment

	Year Ended August 31,						$			%
($ in millions)	2009			2008			Change			Change
Net revenue
University of Phoenix	$	3,766.6		$	2,987.7		$	778.9			26.1	%
Apollo Global:
BPP		13.1			—			13.1				*
Other		54.3			13.4			40.9			305.2	%
Total Apollo Global		67.4			13.4			54.0			403.0	%
Insight Schools		20.6			7.5			13.1			174.7	%
Other Schools		116.8			122.5			(5.7	)		(4.7	)%
Corporate(1)		2.8			9.8			(7.0	)		(71.4	)%
Total net revenue	$	3,974.2		$	3,140.9		$	833.3			26.5	%
Income (loss) from operations
University of Phoenix	$	1,131.3		$	817.6		$	313.7			38.4	%
Apollo Global:
BPP		(6.6	)		—			(6.6	)			*
Other		(11.5	)		(1.9	)		(9.6	)		(505.3	)%
Total Apollo Global		(18.1	)		(1.9	)		(16.2	)		(852.6	)%
Insight Schools		(28.6	)		(18.9	)		(9.7	)		(51.3	)%
Other Schools		7.0			20.3			(13.3	)		(65.5	)%
Corporate(1)		(52.1	)		(67.7	)		15.6			23.0	%
Total income from operations	$	1,039.5		$	749.4		$	290.1			38.7	%

(1)	The Corporate caption in our segment reporting includes adjustments to reconcile segment results to consolidated results, which primarily consist of net revenue and corporate charges that are not allocated to our segments.
*	not meaningful

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University of Phoenix

The $778.9 million, or 26.1%, increase in net revenue in our University of Phoenix segment was primarily due to enrollment growth as detailed below:

	Degreed Enrollment							Combined New Degreed Enrollment(1)
	Quarter Ended August 31,				%			Year Ended August 31,				%
(rounded to the nearest hundred)	2009		2008		Change			2009		2008		Change
Associate’s		201,200		146,500		37.3	%		191,700		143,400		33.7	%
Bachelor’s		163,600		141,800		15.4	%		108,900		92,400		17.9	%
Master’s		71,200		67,700		5.2	%		51,900		49,400		5.1	%
Doctoral		7,000		6,100		14.8	%		3,300		3,000		10.0	%
Total		443,000		362,100		22.3	%		355,800		288,200		23.5	%

(1) Calculated as the sum of each quarter’s New Degreed Enrollment during the fiscal year.

Enrollment growth in Degreed Enrollment and New Degreed Enrollment is in part the result of investments in enhancing and expanding University of Phoenix academic quality and service offerings, which has attracted new students and increased student retention. Enhancements in our marketing effectiveness have also contributed to the increases. Also, we believe that a portion of the increase is due to the current economic downturn, as working learners seek to advance their education to improve their job security or reemployment prospects, and that this element of our growth may diminish as the economy and the employment outlook improve in the U.S.

In addition to the growth in Degreed Enrollment, net revenue increased due to selective tuition price and other fee changes implemented in July 2009 and July 2008, depending on geographic area, program, and degree level. In the aggregate, the July 2009 selective price and other fee changes, including increases in discounts for military and veteran students, averaged approximately 4%. The July 2008 selective tuition price and other fee changes included an approximate 10% increase in associate’s degree tuition price and increases averaging 4% to 5% for bachelor’s and master’s degree programs. The impact of these price and other fee changes on future net revenue and operating income will continue to be impacted by changes in enrollment, changes in student mix within programs and degree levels, and changes in discounts. The increase in net revenue was partially offset by a continued shift in our student body mix to a higher percentage of students enrolled in associate’s degree programs, which have tuition prices generally lower than other degree programs. Associate’s Degreed Enrollment represented 45.4% of Degreed Enrollment during the quarter ended August 31, 2009, compared to 40.5% during the quarter ended August 31, 2008. In addition, associate’s Degreed Enrollment increased 37.3% in the quarter ended August 31, 2009 compared to the quarter ended August 31, 2008.

Income from operations in our University of Phoenix segment increased $313.7 million, or 38.4%, during fiscal year 2009 compared to fiscal year 2008. The increase in income from operations was positively impacted by the following:

•  Economies of scale associated with the 26.1% increase in University of Phoenix net revenue as many costs remain relatively fixed such as certain employee wages, classroom space and depreciation when University of Phoenix grows its net revenue. Additionally, variable employee headcount has grown at a lower rate than the increase in net revenue;

•  A decrease in financial aid processing costs from the favorable renegotiation, effective September 2008, of our contract with our outsourced financial aid processing vendor;

•  Investments in our corporate marketing function that have produced more effective and efficient advertising resulting in a decrease in advertising expense as a percentage of net revenue; and

•  An increase in enrollment counselor effectiveness as a result of internal initiatives to assist enrollment counselors in their jobs, as well as an increase in the average tenure of enrollment counselors.

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Income from operations was negatively impacted by the $80.5 million estimated litigation loss recorded in connection with the Incentive Compensation False Claims Act Lawsuit. See Note 18, Commitments and Contingencies, in Item 8, Financial Statements and Supplementary Data, for further discussion. Income from operations was also negatively impacted by increased bad debt expense as a percentage of net revenue resulting from the continued economic downturn, the continuing increase in enrollment in our associate’s degree programs and lower collection rates on aged accounts receivable.

Apollo Global

Apollo Global net revenue increased $54.0 million during fiscal year 2009 compared to fiscal year 2008. The net revenue was generated by BPP, which was acquired on July 30, 2009 and UNIACC and ULA, which was acquired in the third and fourth quarters of fiscal year 2008, respectively.

The $18.1 million loss from operations for Apollo Global during fiscal year 2009 was primarily due to the following:

•  General and administrative expenses associated with the pursuit of opportunities to partner with and/or acquire existing institutions of higher learning where we believe we can achieve long-term attractive growth and value creation;

•  Investment in BPP, UNIACC and ULA including, but not limited to, initiatives to expand offerings and enhance academic quality and marketing.

Insight Schools

The $13.1 million increase in net revenue in our Insight Schools segment during fiscal year 2009 compared to fiscal year 2008 was primarily due to an increase in the number of schools served in fiscal year 2009 and an aggregate increase in enrollment in the schools that were in operation during fiscal years 2009 and 2008.

The increase in the loss from operations was primarily due to increased regulatory compliance costs and additional start-up costs for items such as faculty, office space and depreciation, and other infrastructure and support costs to grow this business.

Insight Schools has encountered a number of administrative challenges in its compliance activities in the course of expanding its business. These challenges resulted in a decrease in the number of states in which Insight Schools serves students during fiscal year 2009. These challenges have limited the growth rate of the Insight Schools business and increased its operating expenses. We believe Insight Schools will continue to generate operating losses in the near term.

Subsequent to our 2009 fiscal year end, we decided to explore the sale of Insight Schools. There is no assurance that we will be able to sell these operations on terms acceptable to us or at all. In addition to the costs incurred in connection with such a disposition, we may realize a loss on sale. As of August 31, 2009, the goodwill balance of Insight Schools was $12.7 million. If we are unable to dispose of these operations on terms acceptable to us, we may decide to continue providing some or all of the services now provided by Insight Schools under its service contracts for the remainder of the terms of such contracts, which have remaining terms of 1 to 9 years.

Other Schools

The $5.7 million decrease in net revenue in our Other Schools segment was primarily due to Western International University associate’s degree program students graduating or withdrawing from the program. In April 2006, we began offering associate’s degree programs at University of Phoenix instead of Western International University; however, we have continued to service the existing associate’s degree students at Western International University until graduation, withdrawal or transfer to University of Phoenix. Additionally, CFFP’s net revenue declined due to a decrease in demand for CFFP’s financial planning education programs and materials as a result of the current economic downturn.

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The decrease in income from operations in our Other Schools segment was primarily due to our investments in developing Meritus University and the decrease in net revenue discussed above.

For the fiscal year ended August 31, 2008 compared to the fiscal year ended August 31, 2007

Analysis of Consolidated Statements of Income

							% of Net Revenue
	Year Ended August 31,						Year Ended August 31,						%
(in millions, except per share data)	2008			2007			2008			2007			Change
Net revenue	$	3,140.9		$	2,723.8			100.0	%		100.0	%		15.3	%
Costs and expenses:
Instructional costs and services		1,370.9			1,237.5			43.6	%		45.4	%		10.8	%
Selling and promotional		805.4			659.1			25.6	%		24.2	%		22.2	%
General and administrative		215.2			201.5			6.9	%		7.4	%		6.8	%
Total costs and expenses		2,391.5			2,098.1			76.1	%		77.0	%		14.0	%
Income from operations		749.4			625.7			23.9	%		23.0	%		19.8	%
Interest income		30.1			31.2			1.0	%		1.1	%		(3.5	)%
Interest expense		(3.5	)		(0.2	)		(0.1	)%		—				*
Other, net		6.8			0.6			0.2	%		—				*
Income before income taxes and minority interest		782.8			657.3			25.0	%		24.1	%		19.1	%
Provision for income taxes		(306.9	)		(248.5	)		(9.8	)%		(9.1	)%		23.5	%
Minority interest, net of tax		0.6			—			—			—				*
Net income	$	476.5		$	408.8			15.2	%		15.0	%		16.6	%
Diluted income per share	$	2.87		$	2.35				*			*		22.1	%

* not meaningful

Net Revenue

Our net revenue increased $417.1 million, or 15.3% in fiscal year 2008 compared to fiscal year 2007. University of Phoenix represented approximately 95% of our net revenue during this period, and contributed the majority of the increase primarily due to growth in Degreed Enrollment and selective tuition price increases. Net revenue also increased due to acquisitions by Apollo Global completed during the third and fourth quarters of fiscal year 2008, which contributed $13.4 million in net revenue in fiscal year 2008. For a more detailed discussion, refer to our Analysis of Operating Results by Segment.

Instructional Costs and Services

Instructional costs and services increased $133.4 million, or 10.8%, in fiscal year 2008 compared to fiscal year 2007, but represents a 180 basis point decrease as a percentage of net revenue. The decrease as a percentage of net revenue is primarily due to University of Phoenix leveraging its fixed costs, such as certain employee wages, classroom space and depreciation expense. Additionally, bad debt decreased to 3.3% of net revenue in fiscal year 2008 compared to 4.4% of net revenue in fiscal year 2007 due to increased focus on collections.

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Selling and Promotional

Selling and promotional expenses increased $146.3 million, or 22.2%, in fiscal year 2008 compared to fiscal year 2007 representing a 140 basis point increase as a percentage of net revenue. The increase as a percentage of net revenue is primarily due to increases as a percentage of net revenue in enrollment counselors’ compensation, advertising expenses and additional marketing costs.

General and Administrative

General and administrative expenses increased $13.7 million, or 6.8%, in fiscal year 2008 compared to fiscal year 2007, but represents a 50 basis point decrease as a percentage of net revenue. Additionally, general and administrative expenses in fiscal year 2007 included $33.8 million of expense related to the following items that were unusual in nature: costs associated with the restatement of our financial statements, stock option modifications, and a fair value adjustment for former employee stock options. Excluding these unusual items, general and administrative expenses increased 70 basis points as a percentage of net revenue primarily due to increased costs to support our strategic growth initiatives and enhance our corporate governance, as well as increased legal costs in connection with defending ourselves in legal matters described elsewhere in this report.

Interest Income

Interest income decreased $1.1 million in fiscal year 2008 compared to fiscal year 2007 due to lower average balances and lower yields on our cash and cash equivalents (including restricted cash) and marketable securities.

Interest Expense

Interest expense increased $3.3 million in fiscal year 2008 compared to fiscal year 2007 due to an increase in average borrowings, including capital leases, during the respective periods.

Other Income, Net

The income in fiscal year 2008 was primarily attributable to other income of $9.5 million from the forfeiture of an escrow deposit provided in connection with a now cancelled agreement to sell and leaseback our headquarters, which was partially offset by net foreign currency losses related to our international operations.

Provision for Income Taxes

Our effective income tax rate for fiscal year 2008 was 39.2% compared to 37.8% for fiscal year 2007. This increase was primarily the result of a decrease in tax exempt interest and an increase in non-deductible foreign losses.

Minority Interest, net of tax

The minority interest during fiscal year 2008 was due to Apollo Global’s net losses. For a more detailed discussion, refer to our Analysis of Operating Results by Segment.

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Analysis of Operating Results by Segment

The table below details our operating results by segment for the periods indicated:

	Year Ended August 31,						$			%
($ in millions)	2008			2007			Change			Change
Net revenue
University of Phoenix	$	2,987.7		$	2,537.8		$	449.9			17.7	%
Apollo Global		13.4			—			13.4				*
Insight Schools		7.5			2.0			5.5			275.0	%
Other Schools		122.5			182.6			(60.1	)		(32.9	)%
Corporate(1)		9.8			1.4			8.4			600.0	%
Total net revenue	$	3,140.9		$	2,723.8		$	417.1			15.3	%
Income (loss) from operations
University of Phoenix	$	817.6		$	656.3		$	161.3			24.6	%
Apollo Global		(1.9	)		—			(1.9	)			*
Insight Schools		(18.9	)		(6.3	)		(12.6	)		(200.0	)%
Other Schools		20.3			42.7			(22.4	)		(52.5	)%
Corporate(1)		(67.7	)		(67.0	)		(0.7	)		(1.0	)%
Total income from operations	$	749.4		$	625.7		$	123.7			19.8	%

(1) The Corporate caption in our segment reporting includes adjustments to reconcile segment results to consolidated results, which primarily consist of net revenue and corporate charges that are not allocated to our segments.

* not meaningful

University of Phoenix

The $449.9 million, or 17.7%, increase in net revenue in our University of Phoenix segment was primarily due to enrollment growth as detailed below:

	Degreed Enrollment							Combined New Degreed Enrollment(1)
	Quarter Ended August 31,				%			Year Ended August 31,				%
(rounded to the nearest hundred)	2008		2007		Change			2008		2007		Change
Associate’s		146,500		104,500		40.2	%		143,400		116,000		23.6	%
Bachelor’s		141,800		138,700		2.2	%		92,400		90,900		1.7	%
Master’s		67,700		65,300		3.7	%		49,400		48,800		1.2	%
Doctoral		6,100		5,200		17.3	%		3,000		2,800		7.1	%
Total		362,100		313,700		15.4	%		288,200		258,500		11.5	%

(1) Calculated as the sum of each quarter’s New Degreed Enrollment during the fiscal year.

The increase in net revenue is also a result of selective tuition price increases implemented in July 2008, depending on geographic area, program, and degree level. The selective tuition price increases included an approximate 10% increase in associate’s degree tuition price and increases averaging 4% to 5% for bachelor’s and master’s degree programs. The increase in net revenue was partially offset by a continued shift in student body mix to a higher percentage of students enrolled in associate’s degree programs, which have tuition prices generally lower than other degree programs. Associate’s Degreed Enrollment represented 40.5% of Degreed Enrollment during the quarter ended August 31, 2008, compared to 33.3% during the quarter ended August 31,

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2007. In addition, associate’s Degreed Enrollment increased 40.2% during the quarter ended August 31, 2008 compared to the quarter ended August 31, 2007.

Income from operations in our University of Phoenix segment increased $161.3 million, or 24.6%, during fiscal year 2008 compared to fiscal year 2007. This increase in income from operations was positively impacted by the following:

•  Economies of scale associated with the 17.7% increase in University of Phoenix net revenue as several costs remain relatively fixed such as certain employee wages, classroom space and depreciation when University of Phoenix grows its net revenue; and

•  A decrease as a percent of net revenue in bad debt expense; and

Income from operations was negatively impacted by increases as a percent of net revenue in enrollment counselors’ compensation and related expenses, and additional marketing costs.

Apollo Global

The $13.4 million in net revenue for Apollo Global during fiscal year 2008 was due to net revenue generated by UNIACC, which was acquired by Apollo Global in the third quarter of fiscal year 2008.

The $1.9 million loss from operations for Apollo Global during fiscal year 2008 was primarily due to the following:

•  General and administrative expenses associated with the pursuit of opportunities to partner with and/or acquire existing institutions of higher learning where we believe we can achieve long-term attractive growth and value creation; and

•  Investment in UNIACC including, but not limited to, initiatives to enhance academic quality and marketing.

Insight Schools

The $5.5 million increase in net revenue in our Insight Schools segment during fiscal year 2008 compared to fiscal year 2007 was due to a full year of operating results following the acquisition of Insight Schools and an increase in the number of schools served by Insight Schools.

The increase in the loss from operations was primarily due to additional start-up costs for items such as faculty, office space and depreciation, and other infrastructure and support costs to grow this business.

Other Schools

The $60.1 million decrease in net revenue in our Other Schools segment during fiscal year 2008 compared to fiscal year 2007 was primarily due to Western International University associate’s degree program students graduating or withdrawing from the program. In April 2006, we began offering associate’s degree programs at University of Phoenix instead of Western International University; however, we have continued to service the existing associate’s degree students at Western International University until graduation, withdrawal or transfer to University of Phoenix.

The decrease in income from operations in our Other Schools segment was primarily due to the decrease in net revenue discussed above.

Liquidity, Capital Resources, and Financial Position

We believe that our cash and cash equivalents and available liquidity will be adequate to satisfy our working capital and other liquidity requirements associated with our existing operations through at least the next 12 months. We believe that the most strategic uses of our cash resources include investments in the continued enhancement and expansion of our student offerings, acquisition opportunities including our commitment to Apollo Global, investments in marketing and information technology initiatives, and share repurchases.

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Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

The following table provides a summary of our cash and cash equivalents and restricted cash and cash equivalents at August 31, 2009 and 2008:

					% of Total Assets
	August 31,				August 31,						%
($ in millions)	2009		2008		2009			2008			Change
Cash and cash equivalents	$	968.2	$	483.2		29.7	%		26.0	%		100.4	%
Restricted cash and cash equivalents		432.3		384.1		13.2	%		20.6	%		12.5	%
Total	$	1,400.5	$	867.3		42.9	%		46.6	%		61.5	%

Cash and cash equivalents (excluding restricted cash) increased $485.0 million primarily due to $960.2 million of cash generated from operations, $475.8 million of net proceeds from borrowings, $117.1 million from stock option exercises and $59.0 million from minority interest contributions, which was partially offset by $523.8 million used for acquisitions, $452.5 million used for the repurchase of shares of our Class A common stock, $127.3 million used for capital expenditures, and an increase of $48.2 million in restricted cash.

We measure our money market funds included in cash and restricted cash equivalents at fair value. Our money market funds totaling $1,400.5 million were valued primarily using real-time quotes for transactions in active exchange markets involving identical assets. As of August 31, 2009, we did not record any material adjustments to reflect these instruments at fair value.

Debt

On January 4, 2008, we entered into a syndicated $500 million credit agreement (the “Bank Facility”). The Bank Facility is an unsecured revolving credit facility used for general corporate purposes including acquisitions and stock buybacks. The Bank Facility has an expansion feature for an aggregate principal amount of up to $250 million. The term is five years and will expire on January 4, 2013. The Bank Facility provides a multi-currency sub-limit facility for borrowings in certain specified foreign currencies up to $300 million.

We borrowed our entire credit line under the Bank Facility as of August 31, 2009, which included £63.0 million denominated in British Pounds related to the BPP acquisition, and, accordingly, we did not have any availability under the Bank Facility as of August 31, 2009. We have classified the U.S. dollar denominated debt on our Bank Facility of $393 million within short-term borrowings and current portion of long-term debt on our Consolidated Balance Sheets as it has been repaid subsequent to August 31, 2009.

The Bank Facility fees are determined based on a pricing grid that varies according to our leverage ratio. The Bank Facility fee ranges from 12.5 to 17.5 basis points and the incremental fees for borrowings under the facility range from LIBOR + 50.0 to 82.5 basis points. The weighted average interest rate on outstanding borrowings under the Bank Facility at August 31, 2009 was 1.0%.

The Bank Facility contains affirmative and negative covenants, including the following financial covenants: maximum leverage ratio, minimum coverage interest and rent expense ratio, and a U.S. Department of Education financial responsibility composite score. In addition, there are covenants restricting indebtedness, liens, investments, asset transfers and distributions.

We also have an additional $72.1 million of variable rate debt and $13.6 million of fixed rate debt at the subsidiaries of Apollo Global. The weighted average interest rate of these debt instruments at August 31, 2009 was 2.8%.

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Cash Flows

Operating Activities

The following table provides a summary of our operating cash flows during the respective fiscal years:

	Year Ended August 31,
($ in millions)	2009			2008		2007
Net income	$	598.3		$	476.5	$	408.8
Non-cash items		372.4			212.8		194.2
Changes in certain operating assets and liabilities		(10.5	)		36.7		(14.4	)
Net cash provided by operating activities	$	960.2		$	726.0	$	588.6

Fiscal year 2009 — Our non-cash items primarily consisted of a $152.5 million provision for uncollectible accounts receivable, $100.5 million for depreciation and amortization, $80.5 million for an estimated litigation loss, and $68.0 million for share-based compensation, which was partially offset by $18.5 million of excess tax benefits from share-based compensation. The changes in certain operating assets and liabilities primarily consisted of a $192.3 million increase in accounts receivable, primarily due to increased enrollment, as well as a delay in disbursements of certain Title IV funds prior to year end (see further discussion below). This was partially offset by an $80.3 million increase in deferred revenue and a $59.5 million increase in student deposits, both of which were primarily due to increased enrollment, and an increase of $45.4 million in accounts payable and accrued liabilities.

Fiscal year 2008 — Our non-cash items primarily consisted of a $104.2 million provision for uncollectible accounts receivable, $79.8 million for depreciation and amortization, and $53.6 million for share-based compensation, which was partially offset by $18.6 million of excess tax benefits from share-based compensation. The changes in certain operating assets and liabilities primarily consisted of an $85.3 million increase in student deposits and a $35.3 million increase in deferred revenue, both of which were primarily due to increased enrollment. This was partially offset by a $105.7 million increase in accounts receivable, also primarily due to increased enrollment.

Fiscal year 2007 — Our non-cash items primarily consisted of a $120.6 million provision for uncollectible accounts receivable, $71.4 million for depreciation and amortization, and $54.0 million for share-based compensation, which was partially offset by $46.0 million of deferred income taxes. The changes in certain operating assets and liabilities primarily consisted of a $150.9 million increase in accounts receivable, primarily due to increased enrollment, which was partially offset by a $73.9 million increase in student deposits and a $31.0 million increase in deferred revenue, also primarily due to increased enrollment, and a $31.2 million increase in accounts payable and accrued liabilities.

We monitor our accounts receivable through a variety of metrics, including days sales outstanding. We calculate our days sales outstanding by determining average daily student revenue based on a rolling twelve month analysis and divide it into the gross student accounts receivable balance as of the end of the period.

As of August 31, 2009, excluding accounts receivable and the related net revenue for Apollo Global, our days sales outstanding was 32 days as compared to 29 days as of August 31, 2008. The increase in days sales outstanding is due to our accounts receivable balance increasing at a greater rate than revenue. The increase was due to both temporary as well as structural changes to our operations. Temporary items include the timing of the billing cycle relative to year-end and a more pronounced seasonal increase due to the University of Phoenix annual student financial aid system enhancements and upgrades, which temporarily postpones the processing of student financial aid requests resulting in a delay of the corresponding disbursements of Title IV loan proceeds. Additionally, University of Phoenix has implemented certain operational changes that cause an increase in our accounts receivable balance and days sales outstanding calculation.

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Investing Activities

The following table provides a summary of our investing cash flows during the respective periods:

	Year Ended August 31,
($ in millions)	2009			2008			2007
Acquisitions, net of cash acquired	$	(523.8	)	$	(93.8	)	$	(15.1	)
Capital expenditures		(127.3	)		(104.9	)		(104.6	)
Increase in restricted cash and cash equivalents		(48.2	)		(87.7	)		(58.2	)
Other		8.0			25.6			46.0
Net cash used in investing activities	$	(691.3	)	$	(260.8	)	$	(131.9	)

Fiscal year 2009 — Cash used for investing activities primarily consisted of $523.8 million for Apollo Global’s acquisitions (including $510.1 related to the acquisition of BPP), $127.3 million for capital expenditures, and a $48.2 million increase in restricted cash and cash equivalents. This was partially offset by $8.0 million provided by net maturities of marketable securities.

Fiscal year 2008 — Cash used for investing activities primarily consisted of $104.9 million for capital expenditures (including $12.4 million for our corporate headquarters), $93.8 million for acquisitions, including Aptimus and Apollo Global’s purchases of UNIACC and ULA, and an $87.7 million increase in restricted cash and cash equivalents. This was partially offset by $25.5 million provided by net maturities of marketable securities.

Fiscal year 2007 — Cash used for investing activities primarily consisted of $104.6 million used for capital expenditures (including $43.4 million for our corporate headquarters), a $58.2 million increase in restricted cash and cash equivalents, and $15.1 million used for the purchase of Insight Schools. This was partially offset by $46.0 million provided by net maturities of marketable securities.

Financing Activities

The following table provides a summary of our financing cash flows during the respective periods:

	Year Ended August 31,
($ in millions)	2009			2008			2007
Proceeds (payments) related to borrowings, net	$	475.8		$	(0.4	)	$	—
Issuance of Apollo Group Class A common stock		117.1			103.0			7.7
Minority interest contributions		59.0			12.1			—
Purchase of Apollo Group Class A common stock		(452.5	)		(454.4	)		(437.7	)
Other		18.5			18.7			4.0
Net cash provided by (used in) financing activities	$	217.9		$	(321.0	)	$	(426.0	)

Fiscal year 2009 — Cash provided by financing activities primarily consisted of $475.8 million of net proceeds from borrowings, $117.1 million of cash received for stock option exercises and $59.0 million related to minority interest contributions. This was partially offset by $452.5 million of cash used for the repurchase of 7.2 million shares of our Class A common stock.

Fiscal year 2008 — Cash used for financing activities primarily consisted of $454.4 million of cash used for the repurchase of 9.8 million shares of our Class A common stock. This was partially offset by $103.0 million of cash received for stock option exercises.

Fiscal year 2007 — Cash used for financing activities primarily consisted of $437.7 million of cash used for the repurchase of 7.2 million shares of our Class A common stock.

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Shares of Apollo Group Class A common stock newly authorized for repurchase, repurchased and reissued, and the related total cost, for the last three fiscal years are as follows:

	Total Number								Maximum Value of
	of Shares						Average Price Paid		Shares Available
	Repurchased			Cost			per Share		for Repurchase
(numbers in millions, except per share data)
Treasury stock as of August 31, 2006		15.5		$	1,054.0		$	68.23	$	136.1
New authorizations		—			—			—		363.9
Shares repurchased under repurchase program		7.2			437.7			61.08		(437.7	)
Shares reissued		(0.5	)		(30.3	)		67.31		—
Treasury stock as of August 31, 2007		22.2		$	1,461.4		$	65.94	$	62.3
New authorizations		—			—			—		892.1
Shares repurchased under repurchase program		9.8			454.4			46.25		(454.4	)
Shares reissued		(2.5	)		(158.5	)		64.65		—
Treasury stock as of August 31, 2008		29.5		$	1,757.3		$	59.50	$	500.0
New authorizations		—			—			—		444.4
Shares repurchased under repurchase program		7.2			444.4			61.62		(444.4	)
Other share repurchases(1)		0.1			8.1			68.11		—
Shares reissued		(3.1	)		(187.2	)		59.96		—
Treasury stock as of August 31, 2009		33.7		$	2,022.6		$	59.94	$	500.0

(1) In connection with the release of vested shares of restricted stock, we repurchased approximately 119,000 shares for $8.1 million related to tax withholding requirements on these restricted stock units during the fiscal year 2009. We did not have any such repurchases during fiscal years 2008 and 2007. These repurchase transactions do not fall under the repurchase program described below, and therefore do not reduce the amount that is available for repurchase under that program.

Our Board of Directors has authorized us to repurchase outstanding shares of Apollo Group Class A common stock, from time to time, depending on market conditions and other considerations. There is no expiration date on the repurchase authorizations and repurchases occur at our discretion. Repurchases may be made on the open market or in privately negotiated transactions, pursuant to the applicable Securities and Exchange Commission rules, and may include repurchases pursuant to Securities and Exchange Commission Rule 10b5-1 nondiscretionary trading programs. The amount and timing of future share repurchases, if any, will be made as market and business conditions warrant.

Contractual Obligations and Other Commercial Commitments

The following table lists our contractual cash obligations as of August 31, 2009:

	Payments Due by Fiscal Year
Contractual Obligations	2010		2011-2012		2013-2014		Thereafter		Total
($ in millions)
Debt(1)	$	461.4	$	15.7	$	106.4	$	6.4	$	589.9
Operating lease obligations		147.3		264.2		167.8		177.6		756.9
Capital lease obligations(2)		2.7		10.0		22.0		113.7		148.4
Stadium naming rights(3)		6.3		13.2		14.1		101.6		135.2
Uncertain tax positions(4)		85.7		—		—		11.9		97.6
Other obligations(5)		5.4		—		1.7		1.7		8.8
Total	$	708.8	$	303.1	$	312.0	$	412.9	$	1,736.8

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(1)	Amounts include expected future interest payments. Please refer to Note 11, Debt, in Item 8, Financial Statements and Supplementary Data, for additional information on our Debt.
(2)	The total future minimum lease obligation associated with capital leases includes lease payments for a lease agreement executed in fiscal year 2009 for a building to be constructed and for which we do not have the right to control the use of the property under the lease at August 31, 2009. The future minimum lease payments associated with this lease are $139.5 million, which includes $36.2 million of imputed interest.
(3)	Amounts consist of an agreement for 20-year naming rights to the Glendale, Arizona Sports Complex.
(4)	Amounts consist of unrecognized tax benefits, including interest and penalties, that are included in other current and other long-term liabilities in our August 31, 2009 Consolidated Balance Sheets. We are uncertain as to if or when such amounts may be settled.
(5)	Amount consists of an earn-out obligation associated with Apollo Global’s acquisition of UNIACC and undiscounted deferred compensation payments due to Dr. John G. Sperling, our founder.

We have no other material commercial commitments not included in the above table.

Federal and Private Student Loans

See the discussion of federal and private student loans in Item 1, Business, Financial Aid Programs — Domestic Postsecondary.

Item 7A — Quantitative and Qualitative Disclosures about Market Risk

Impact of Inflation

Inflation has not had a significant impact on our historical operations.

Foreign Currency Exchange Risk

We use the U.S. dollar as our reporting currency. The functional currencies of our foreign subsidiaries are generally the local currencies. Accordingly, our foreign currency exchange risk is related to the following exposure areas:

•  Adjustments resulting from the translation of assets and liabilities of the foreign subsidiaries into U.S. dollars using exchange rates in effect at the balance sheet dates. These translation adjustments are recorded in accumulated other comprehensive income (loss);

•  Earnings volatility from the translation of income and expense items of the foreign subsidiaries using an average monthly exchange rate for the respective periods; and

•  Gains and losses resulting from foreign currency exchange rate changes related to intercompany receivables and payables that are not of a long-term investment nature, as well as gains and losses from foreign currency transactions. These items are recorded in Other, net in our Consolidated Statements of Income.

In fiscal year 2009, we recorded $11.7 million in foreign currency translation losses, net of tax, that are included in other comprehensive income. These losses are the result of general strengthening of the U.S. dollar relative to foreign currencies during fiscal year 2009.

As we expand our international operations, we will conduct more transactions in currencies other than the U.S. Dollar. Additionally, we expect the volume of transactions in the various foreign currencies will continue to increase, thus increasing our exposure to foreign currency exchange rate fluctuations. The following table

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outlines our net asset exposure by foreign currency (defined as foreign currency assets less foreign currency liabilities and excluding intercompany balances) denominated in U.S. dollars as of August 31:

($ in millions)	2009		2008
British Pound Sterling	$	405.6	$	—
Mexican Peso		29.2		25.3
Chilean Peso		18.4		22.3
Other foreign currencies		2.9		2.7

Apollo has not historically used derivative contracts to hedge foreign currency price changes.

In connection with the BPP acquisition, Apollo Global entered into a derivative arrangement to hedge against the variability of foreign currency exchange rate fluctuations between the U.S. Dollar and British Pound. The derivative arrangement, a call option on the British Pound, limited Apollo Global’s foreign currency exposure on the notional value of £235 million (or $390.1 million) at a 1.66 U.S. Dollar to British Pound exchange rate. This arrangement expired on July 30, 2009. To enter into this option, Apollo Global paid a non-refundable option premium of $6.9 million, which was recorded within other, net in our Consolidated Statements of Income.

Interest Rate Risk

Interest Income

As of August 31, 2009, we held $1,420.1 million in cash and cash equivalents, restricted cash and cash equivalents, and marketable securities. During fiscal year 2009, we earned interest income of $12.6 million. When the Federal Reserve Bank lowers the Federal Funds Rate, it generally results in a reduction in our interest rates. The reduction of the Federal Funds Rate in December 2008 to the range of 0.0% — 0.25% has lowered our interest rate yields in fiscal year 2009. Based on the current Federal Funds Rate, we do not believe any further reduction would have a material impact on us.

Interest Expense

We have exposure to changing interest rates primarily associated with our variable rate debt. At August 31, 2009, we had a total outstanding debt balance of $589.1 million. The following table presents the weighted-average interest rates for our scheduled maturities by fiscal year of principal for our outstanding debt at August 31, 2009:

	2010		2011		2012		2013		2014		Thereafter		Total
($ in millions, except percentages)
Fixed-rate debt	$	4.7	$	3.3	$	2.4	$	2.3	$	1.4	$	7.2	$	21.3
Average interest rate														5.1	%
Variable-rate debt	$	456.7	$	—	$	8.5	$	102.6	$	—	$	—	$	567.8
Average interest rate														1.2	%

For the purpose of sensitivity, based on our outstanding variable rate debt as of August 31, 2009, including the $393 million repaid in September 2009, an increase of 100 basis points in our weighted average interest rate would increase interest expense by approximately $5.7 million on an annual basis.

Substantially all of our debt is variable interest rate and the carrying amount approximates fair value. Please refer to Note 9, Fair Value Measurements, in Item 8, Financial Statements and Supplementary Data, for further discussion of our valuation methods.

We have not historically entered into financial arrangements to hedge our interest rate exposure. However, in connection with the BPP acquisition, we acquired an interest rate swap with a notional amount of £30.0 million ($48.9 million) used to minimize the interest rate exposure on a portion of BPP’s variable rate debt. The interest rate swap is used to fix the variable interest rate on the associated debt. As of August 31,

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2009, the fair value of the swap is a liability of $3.5 million and is included in other current liabilities in the Consolidated Balance Sheets.

Auction-Rate Securities Risk

At August 31, 2009, for our auction-rate securities totaling $19.6 million, we used a discounted cash flow model to determine fair value which reflects illiquidity of the market at it encompassed significant unobservable inputs. Our auction-rate securities are insignificant to our total assets that require fair value measurements and thus, the use and possible changes in the use of these unobservable inputs would not have a material impact on our liquidity and capital resources. Please refer to Note 4, Marketable Securities, and Note 9, Fair Value Measurements, in Item 8, Financial Statements and Supplementary Data, for additional information.

We will continue to monitor our investment portfolio. We will also continue to evaluate any changes in the market value of the failed auction-rate securities that have not been liquidated and depending upon existing market conditions, we may be required to record other-than-temporary impairment charges in the future.

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Item 8 — Financial Statements and Supplementary Data

	Page
Report of Independent Registered Public Accounting Firm		81
Consolidated Balance Sheets		82
Consolidated Statements of Income		83
Consolidated Statements of Comprehensive Income		84
Consolidated Statements of Changes in Shareholders’ Equity		85
Consolidated Statements of Cash Flows		86
Notes to Consolidated Financial Statements		87

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Apollo Group, Inc. and Subsidiaries

Phoenix, Arizona

We have audited the accompanying consolidated balance sheets of Apollo Group, Inc. and subsidiaries (the “Company”) as of August 31, 2009 and 2008, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended August 31, 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Apollo Group, Inc. and subsidiaries as of August 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended August 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of August 31, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated October 27, 2009 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/  DELOITTE & TOUCHE LLP

Phoenix, Arizona

October 27, 2009

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APOLLO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of August 31,
($ in thousands, except share data)	2009			2008
ASSETS:
Current assets
Cash and cash equivalents	$	968,246		$	483,195
Restricted cash and cash equivalents		432,304			384,155
Marketable securities, current portion		—			3,060
Accounts receivable, net		298,270			221,919
Deferred tax assets, current portion		88,022			55,434
Prepaid taxes		57,658			—
Other current assets		35,517			21,780
Total current assets		1,880,017			1,169,543
Property and equipment, net		557,507			439,135
Marketable securities, less current portion		19,579			25,204
Goodwill		522,358			85,968
Intangible assets, net		203,671			23,096
Deferred tax assets, less current portion		66,254			89,499
Other assets (2008 includes receivable from related party of $17,762)		13,991			27,967
Total assets	$	3,263,377		$	1,860,412
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities
Short-term borrowings and current portion of long-term debt	$	461,365		$	15,488
Accounts payable		66,928			46,589
Accrued liabilities		268,418			121,200
Income taxes payable		—			6,111
Student deposits		491,639			413,302
Deferred revenue		333,041			231,179
Other current liabilities		133,887			31,740
Total current liabilities		1,755,278			865,609
Long-term debt		127,701			15,428
Deferred tax liabilities		55,636			2,743
Other long-term liabilities		100,149			130,467
Total liabilities		2,038,764			1,014,247
Commitments and contingencies (Note 18)
Minority interest		67,003			11,956
Shareholders’ equity
Preferred stock, no par value, 1,000,000 shares authorized; none issued		—			—
Apollo Group Class A nonvoting common stock, no par value, 400,000,000 shares authorized; 188,007,000 issued as of August 31, 2009 and 2008 and 154,260,000 and 158,471,000 outstanding as of August 31, 2009 and 2008, respectively		103			103
Apollo Group Class B voting common stock, no par value, 3,000,000 shares authorized; 475,000 issued and outstanding as of August 31, 2009 and 2008		1			1
Additional paid-in capital		1,139			—
Apollo Group Class A treasury stock, at cost, 33,746,000 and 29,536,000 shares as of August 31, 2009 and 2008, respectively		(2,022,623	)		(1,757,277	)
Retained earnings		3,195,043			2,595,340
Accumulated other comprehensive loss		(16,053	)		(3,958	)
Total shareholders’ equity		1,157,610			834,209
Total liabilities and shareholders’ equity	$	3,263,377		$	1,860,412

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF INCOME

	Year Ended August 31,
($ in thousands, except per share data)	2009			2008			2007
Net revenue	$	3,974,202		$	3,140,931		$	2,723,793
Costs and expenses:
Instructional costs and services		1,603,701			1,370,878			1,237,491
Selling and promotional		960,437			805,395			659,059
General and administrative		290,104			215,192			201,546
Estimated litigation loss (Note 18)		80,500			—			—
Total costs and expenses		2,934,742			2,391,465			2,098,096
Income from operations		1,039,460			749,466			625,697
Interest income		12,591			30,079			31,172
Interest expense		(4,460	)		(3,450	)		(232	)
Other, net		(7,776	)		6,759			660
Income before income taxes and minority interest		1,039,815			782,854			657,297
Provision for income taxes		(445,985	)		(306,927	)		(248,487	)
Minority interest, net of tax		4,489			598			—
Net income	$	598,319		$	476,525		$	408,810
Earnings per share:
Basic income per share	$	3.79		$	2.90		$	2.37
Diluted income per share	$	3.75		$	2.87		$	2.35
Basic weighted average shares outstanding		157,760			164,109			172,309
Diluted weighted average shares outstanding		159,514			165,870			173,603

The accompanying notes are an integral part of these consolidated financial statements.

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APOLLO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended August 31,
($ in thousands)	2009			2008			2007
Net income	$	598,319		$	476,525		$	408,810
Other comprehensive loss (net of tax):
Currency translation loss		(11,705	)		(1,704	)		(247	)
Unrealized loss on auction-rate securities		(390	)		(973	)		—
Comprehensive income	$	586,224		$	473,848		$	408,563

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

	Common Stock
	Apollo Group								Treasury Stock
	Class A				Class B				Apollo Group											Accumulated
	Nonvoting				Voting				Class A						Additional					Other			Total
			Stated				Stated					Stated			Paid-in			Retained		Comprehensive			Shareholders’
($ in thousands)	Shares		Value		Shares		Value		Shares			Value			Capital			Earnings		Loss			Equity
Balance as of August 31, 2006		188,007	$	103		475	$	1		15,449		$	(1,054,046	)	$	—		$	1,659,349	$	(1,034	)	$	604,373
Treasury stock purchases		—		—		—		—		7,167			(437,735	)		—			—		—			(437,735	)
Treasury stock issued under stock purchase plans		—		—		—		—		(31	)		2,137			(605	)		—		—			1,532
Treasury stock issued under stock option plans		—		—		—		—		(352	)		23,605			(45,625	)		28,226		—			6,206
Tax benefits of stock options exercised		—		—		—		—		—			—			2,021			—		—			2,021
Settlement of liability-classified awards through the issuance of treasury stock		—		—		—		—		(70	)		4,671			2,340			—		—			7,011
Cash settlement of stock options through tender offer repricing		—		—		—		—		—			—			(358	)		—		—			(358	)
Share-based compensation		—		—		—		—		—			—			54,027			—		—			54,027
Reclassification of equity awards to a liability		—		—		—		—		—			—			(11,800	)		—		—			(11,800	)
Currency translation adjustment, net of tax		—		—		—		—		—			—			—			—		(247	)		(247	)
Net income		—		—		—		—		—			—			—			408,810		—			408,810
Balance as of August 31, 2007		188,007	$	103		475	$	1		22,163		$	(1,461,368	)	$	—		$	2,096,385	$	(1,281	)	$	633,840
Treasury stock purchases		—		—		—		—		9,824			(454,362	)		—			—		—			(454,362	)
Treasury stock issued under stock purchase plans		—		—		—		—		(103	)		6,339			(773	)		—		—			5,566
Treasury stock issued under stock option plans		—		—		—		—		(2,348	)		152,114			(77,141	)		22,430		—			97,403
Tax benefits of stock options exercised		—		—		—		—		—			—			5,907			—		—			5,907
Reclassification of liability awards to equity		—		—		—		—		—			—			16,655			—		—			16,655
Share-based compensation		—		—		—		—		—			—			53,570			—		—			53,570
Options assumed through acquisition		—		—		—		—		—			—			1,782			—		—			1,782
Currency translation adjustment, net of tax		—		—		—		—		—			—			—			—		(1,704	)		(1,704	)
Unrealized loss on auction-rate securities, net of tax		—		—		—		—		—			—			—			—		(973	)		(973	)
Net income		—		—		—		—		—			—			—			476,525		—			476,525
Balance as of August 31, 2008		188,007	$	103		475	$	1		29,536		$	(1,757,277	)	$	—		$	2,595,340	$	(3,958	)	$	834,209
Treasury stock purchases		—		—		—		—		7,331			(452,487	)		—			—		—			(452,487	)
Treasury stock issued under stock purchase plans		—		—		—		—		(90	)		5,384			77			—		—			5,461
Treasury stock issued under stock option plans		—		—		—		—		(3,031	)		181,757			(71,526	)		1,384		—			111,615
Tax benefits of stock options exercised		—		—		—		—		—			—			4,550			—		—			4,550
Share-based compensation		—		—		—		—		—			—			68,038			—		—			68,038
Currency translation adjustment, net of tax		—		—		—		—		—			—			—			—		(11,705	)		(11,705	)
Unrealized loss on auction-rate securities, net of tax		—		—		—		—		—			—			—			—		(390	)		(390	)
Net income		—		—		—		—		—			—			—			598,319		—			598,319
Balance as of August 31, 2009		188,007	$	103		475	$	1		33,746		$	(2,022,623	)	$	1,139		$	3,195,043	$	(16,053	)	$	1,157,610

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended August 31,
($ in thousands)	2009			2008			2007
Cash flows provided by (used in) operating activities:
Net income	$	598,319		$	476,525		$	408,810
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation		68,038			53,570			54,027
Excess tax benefits from share-based compensation		(18,543	)		(18,648	)		(4,022	)
Depreciation and amortization		100,543			79,816			71,383
Loss on fixed assets write-off		9,416			—			—
Amortization of deferred gain on sale-leaseback		(1,715	)		(1,786	)		(1,763	)
Non-cash foreign currency (gain) loss, net		(62	)		2,825			—
Provision for uncollectible accounts receivable		152,490			104,201			120,614
Estimated litigation loss (Note 18)		80,500			—			—
Minority interest, net of tax		(4,489	)		(598	)		—
Deferred income taxes		(13,799	)		(6,624	)		(46,040	)
Changes in assets and liabilities, excluding the impact of acquisitions:
Accounts receivable		(192,289	)		(105,726	)		(150,943	)
Other assets		9,945			(7,285	)		(1,912	)
Accounts payable and accrued liabilities		45,406			(14,155	)		31,174
Income taxes payable		(30,848	)		21,667			(2,440	)
Student deposits		59,458			85,294			73,878
Deferred revenue		80,315			35,281			31,003
Other liabilities		17,542			21,649			4,853
Net cash provided by operating activities		960,227			726,006			588,622
Cash flows provided by (used in) investing activities:
Additions to property and equipment		(127,356	)		(104,879	)		(104,551	)
Acquisitions, net of cash acquired		(523,795	)		(93,763	)		(15,079	)
Purchase of marketable securities		—			(875,205	)		(1,575,635	)
Maturities of marketable securities		8,035			900,715			1,621,636
Increase in restricted cash and cash equivalents		(48,149	)		(87,686	)		(58,163	)
Purchase of other assets		—			—			(143	)
Net cash used in investing activities		(691,265	)		(260,818	)		(131,935	)
Cash flows provided by (used in) financing activities:
Payments on borrowings		(37,341	)		(251,435	)		—
Proceeds from borrowings		513,170			250,991			—
Class A common stock purchased for treasury		(452,487	)		(454,362	)		(437,735	)
Issuance of Apollo Group Class A common stock		117,076			102,969			7,738
Minority interest contributions		58,980			12,149			—
Excess tax benefits from share-based compensation		18,543			18,648			4,022
Net cash provided by (used in) financing activities		217,941			(321,040	)		(425,975	)
Exchange rate effect on cash and cash equivalents		(1,852	)		(272	)		(451	)
Net increase in cash and cash equivalents		485,051			143,876			30,261
Cash and cash equivalents, beginning of year		483,195			339,319			309,058
Cash and cash equivalents, end of year	$	968,246		$	483,195		$	339,319
Supplemental disclosure of cash flow information
Cash paid during the year for income taxes	$	472,241		$	289,630		$	293,089
Cash paid during the year for interest	$	3,683		$	2,874		$	231
Supplemental disclosure of non-cash investing and financing activities
Restricted stock units vested and released	$	22,617		$	—		$	—
Credits received for tenant improvements	$	12,674		$	9,604		$	5,378
Purchases of property and equipment included in accounts payable	$	5,081		$	4,072		$	6,169
UNIACC earn-out consideration (Note 3)	$	4,406		$	—		$	—
Unrealized loss on auction-rate securities	$	650		$	1,621		$	—
Settlement and reclassification of liability awards	$	—		$	16,655		$	7,011
Fair value adjustment for liability-classified awards	$	—		$	—		$	6,952

The accompanying notes are an integral part of these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.   Nature of Operations

Apollo Group, Inc. and its wholly-owned subsidiaries and majority-owned subsidiaries, collectively referred to herein as “the Company,” “Apollo Group,” “Apollo,” “APOL,” “we,” “us” or “our,” has been an education provider for more than 35 years. We offer innovative and distinctive educational programs and services both online and on-campus at the undergraduate, graduate and doctoral levels through our wholly-owned subsidiaries:

•  The University of Phoenix, Inc. (“University of Phoenix”);

•  Western International University, Inc. (“Western International University”);

•  Institute for Professional Development (“IPD”);

•  The College for Financial Planning Institutes Corporation (“CFFP”); and

•  Meritus University, Inc. (“Meritus”).

In addition to these wholly-owned subsidiaries, in October 2007, we formed a joint venture with The Carlyle Group (“Carlyle”), called Apollo Global, Inc. (“Apollo Global”), to pursue investments primarily in the international education services industry. Apollo Group currently owns 86.1% of Apollo Global, with Carlyle owning the remaining 13.9%. As of August 31, 2009, total cash contributions made to Apollo Global were approximately $511.8 million, of which $440.5 million was funded by us. Apollo Global is consolidated in our financial statements. Apollo Global has completed the following acquisitions:

•  BPP Holdings plc (“BPP”) in the United Kingdom,

•  Universidad de Artes, Ciencias y Comunicación (“UNIACC”) in Chile, and

•  Universidad Latinoamericana (“ULA”) in Mexico.

We also operate online high school programs through our Insight Schools, Inc. (“Insight Schools”) wholly-owned subsidiary, which is included in our Insight Schools reportable segment. Subsequent to our 2009 fiscal year end, we decided to explore the sale of Insight Schools.

In October 2007, we acquired Aptimus, Inc., an online advertising company, which has been successfully integrated into our marketing organization. Our main purpose in acquiring Aptimus was to help us more effectively monitor, manage, and control our marketing investments and brands by leveraging its industry-specific knowledge and technology platform.

Our fiscal year is from September 1 to August 31. Unless otherwise stated, references to the years 2009, 2008 and 2007 relate to fiscal years 2009, 2008 and 2007, respectively.

Note 2.   Significant Accounting Policies

Basis of Presentation

These financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission and, in the opinion of management, contain all adjustments necessary to fairly present the financial condition, results of operations and cash flows for the periods presented.

Information and note disclosures included in these consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We believe that the disclosures made are adequate to make the information presented not misleading.

Principles of Consolidation

The consolidated financial statements include the accounts of Apollo Group, Inc., its wholly-owned subsidiaries, and subsidiaries that we control. Interests in our subsidiaries that we control are reported using the full-consolidation method. We fully consolidate the results of operations and the assets and liabilities of

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these subsidiaries in our consolidated financial statements. All material intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Revenue Recognition

Our educational programs, primarily composed of University of Phoenix programs, range in length from one-day seminars to degree programs lasting up to four years. Students in University of Phoenix degree programs generally enroll in a program of study encompassing a series of five- to nine-week courses taken consecutively over the length of the program. Generally, students are billed on a course-by-course basis when the student first attends a session, resulting in the recording of a receivable from the student and deferred revenue in the amount of the billing. University of Phoenix students generally fund their education through grants and/or loans under various Title IV programs, tuition assistance from their employers, or personal funds.

Net revenue consists largely of tuition and fees associated with different educational programs as well as related educational resources such as access to online materials, books, and study texts. Net revenue is shown net of discounts. Tuition benefits for our employees and their eligible dependants are included in net revenue and instructional costs and services. Total employee tuition benefits were $90.5 million, $77.9 million and $63.8 million for fiscal years 2009, 2008 and 2007, respectively.

The following table presents the most significant components of net revenue, and each component as a percentage of total net revenue, for the fiscal years 2009, 2008 and 2007:

	Year Ended August 31,
($ in thousands)	2009					2008					2007
Tuition and educational services revenue	$	3,835,681		96	%	$	2,996,072		95	%	$	2,553,075		94	%
Educational materials revenue		226,388		6	%		184,430		6	%		160,973		6	%
Services revenue		83,238		2	%		77,707		3	%		73,577		2	%
Other revenue		28,299		1	%		43,881		1	%		48,614		2	%
Gross revenue		4,173,606		105	%		3,302,090		105	%		2,836,239		104	%
Less: discounts		(199,404	)	(5	)%		(161,159	)	(5	)%		(112,446	)	(4	)%
Net revenue	$	3,974,202		100	%	$	3,140,931		100	%	$	2,723,793		100	%

Tuition and educational services revenue encompasses both online and classroom-based learning. For our University of Phoenix and Western International University operations, tuition revenue is recognized pro rata over the period of instruction as services are delivered to students.

BPP recognizes tuition revenue as services are provided over the course of the program, which varies depending on the program structure. For our remaining Apollo Global operations, tuition revenue is recognized over the length of the course, which is typically over a period of a semester.

For Insight Schools, we generate the majority of our tuition and educational services revenue through long-term contracts with school districts or not-for-profit organizations. The term for these contracts ranges from 5 to 10 years with provisions for renewal thereafter. We recognize revenue under these contracts over the

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period during which educational services are provided to students, which generally commences in August or September and ends in May or June.

Educational materials revenue relates to online course materials delivered to students over the period of instruction. Revenue associated with these materials is recognized pro rata over the period of the related course to correspond with delivery of the materials to students. Educational materials also includes the sale of various books, study texts, course notes, and CDs for which we recognize revenue when the materials have been delivered to and accepted by students or other customers.

Services revenue consists principally of the contractual share of tuition revenue from students enrolled in IPD programs at private colleges and universities (“Client Institutions”). IPD provides program development, administration and management consulting services to Client Institutions to establish or expand their programs for working learners. These services typically include degree program design, curriculum development, market research, student recruitment, accounting, and administrative services. IPD typically is paid a portion of the tuition revenue generated from these programs. IPD’s contracts with its Client Institutions generally range in length from five to ten years, with provisions for renewal. The portion of service revenue to which we are entitled under the terms of the contracts is recognized as the services are provided.

Other revenue consists of the fees students pay when submitting an enrollment application, which, along with the related application costs associated with processing the applications, are deferred and recognized over the average length of time it takes for a student to complete a program of study. Other revenue also includes non-tuition generating revenues, such as renting classroom space and other student support services. Revenue from these sources is recognized as the services are provided.

Discounts reflect reductions in tuition or other revenue including military, corporate, and other employer discounts, grants, institutional scholarships and promotions.

Effective March 1, 2008, University of Phoenix changed its refund policy whereby students who attend 60% or less of a course are eligible for a refund for the portion of the course they did not attend. Under the prior refund policy, if a student dropped or withdrew after attending one class of a course, University of Phoenix earned 25% of the tuition for the course, and if they dropped or withdrew after attending two classes of a course, University of Phoenix earned 100% of the tuition for the course. Refunds are recorded as a reduction in deferred revenue during the period that a student drops or withdraws from a class. This new refund policy applies to students in most, but not all states, as some states require different policies.

Generally, net revenue varies from period to period based on several factors, including the aggregate number of students attending classes, the number of classes held during the period and the tuition price per credit hour.

Net revenue excludes applicable state and city sales taxes. Sales tax collected from students is excluded from net revenue. Collected but unremitted sales tax is included as a liability in our Consolidated Balance Sheets and is not material to our consolidated financial statements.

Concentration of Risk

The majority of credit extended to University of Phoenix students is paid through the students’ participation in various U.S. federal financial aid programs authorized by Title IV of the Higher Education Act of 1965, as reauthorized by the Higher Education Opportunity Act, which we refer to as “Title IV.”

University of Phoenix represented approximately 95% of our fiscal year 2009 total consolidated net revenue. A requirement of the Higher Education Act, as reauthorized by the Higher Education Opportunity Act, commonly referred to as the “90/10 Rule,” applies only to proprietary institutions of higher education, which includes University of Phoenix. Under this rule, the University of Phoenix will be ineligible to participate in Title IV programs if for any two consecutive fiscal years it derives more than 90% of its cash

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basis revenue, as defined in the rule, from Title IV programs. An institution that derives more than 90% of its revenue from Title IV programs for any single fiscal year will be placed on provisional certification for two fiscal years and will be subject to possible additional sanctions determined to be appropriate under the circumstances by the U.S. Department of Education in the exercise of its broad discretion. An institution that derives more than 90% of its revenue from Title IV programs for two consecutive fiscal years will be ineligible to participate in Title IV programs. University of Phoenix generated 86% of its cash basis revenue for eligible tuition and fees during fiscal year 2009 from receipt of Title IV financial aid program funds, as calculated under the 90/10 Rule, excluding the benefit from the temporary relief for loan limit increases. In recent years, the 90/10 Rule percentages for the University of Phoenix have trended closer to 90%. We expect that without changes to aspects of our operations, the trend will continue in fiscal year 2010. University of Phoenix is focused on implementing various measures to reduce the percentage of its cash basis revenue attributable to Title IV funds, including emphasizing employer-paid and other direct-pay education programs, encouraging students to carefully evaluate the amount of necessary Title IV borrowing, and increasing the emphasis on professional development and continuing education.

We maintain our cash and cash equivalents accounts in financial institutions. Accounts at these institutions are insured by the Federal Deposit Insurance Corporation up to $250,000.

The Higher Education Act, as reauthorized, specifies the manner in which the U.S. Department of Education reviews institutions for eligibility and certification to participate in Title IV programs. Every educational institution involved in Title IV programs must be certified to participate and is required to periodically renew this certification. Please refer to Note 18, Commitments and Contingencies, for further discussion.

Our student receivables are not collateralized; however, credit risk is reduced as the amount owed by any individual student is small relative to the total student receivables and the customer base is geographically diverse.

Allowance for Doubtful Accounts

We reduce accounts receivable by an allowance for amounts that may become uncollectible in the future. Estimates are used in determining the allowance for doubtful accounts and are based on historical collection experience and current trends. In determining these amounts, we consider and evaluate the historical write-offs of our receivables. We monitor our collections and write-off experience to assess whether adjustments are necessary. When a student with Title IV loans withdraws from University of Phoenix or Western International University, Title IV rules determine if we are required to return a portion of Title IV funds to the lenders. We are then entitled to collect these funds from the students, but collection rates for these types of receivables is significantly lower than our collection rates for receivables for students who remain in our educational programs. Management periodically evaluates the standard allowance estimation methodology for propriety and modifies as necessary. In doing so, we believe our allowance for doubtful accounts reflects the most recent collections experience and is responsive to changes in trends. Our accounts receivable are written off once the account is deemed to be uncollectible. This typically occurs once we have exhausted all efforts to collect the account, which include collection attempts by our employees and outside collection agencies. Please refer to Note 5, Accounts Receivable, net, for further discussion.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents include money market funds, bank overnight deposits, and tax-exempt commercial paper, which are all placed with high-credit-quality institutions in the U.S. and internationally. We have not experienced any losses on our cash and cash equivalents.

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Restricted Cash and Cash Equivalents

The majority of our revenue is received from students who participate in U.S. government financial aid and assistance programs. Restricted cash and cash equivalents primarily represents amounts received from federal and state governments under various student aid grant and loan programs, such as Title IV program funds, that we are required to maintain pursuant to U.S. Department of Education and other regulations. We also classify as restricted cash and cash equivalents certain additional funds that we may be required to return if a student who receives Title IV program funds withdraws from a program. Restricted cash and cash equivalents are not legally restricted or otherwise segregated from our other assets. Restricted cash and cash equivalents are excluded from cash and cash equivalents in the Consolidated Balance Sheets and Statements of Cash Flows. Our restricted cash and cash equivalents are primarily held in money market funds that are invested in municipal bonds, securities issued by or guaranteed by the U.S. government, and repurchase agreements.

Marketable Securities

Marketable securities consist of auction-rate securities and municipal bonds. Auction-rate securities are investments with interest rates that reset periodically through an auction process. Auction-rate securities are classified as available-for-sale and are stated at fair value, which had historically been consistent with amortized cost or par value due to interest rates which reset periodically, typically between 7 and 35 days. However, beginning in mid-February 2008 and continuing through fiscal year 2009, due to uncertainty in the global credit and capital markets and other factors, auction-rate securities began experiencing failed auctions resulting in a lack of liquidity for these instruments that has reduced the estimated fair market value for these securities below par value. Marketable securities which we have the ability and intent to hold until maturity are classified as held-to-maturity and reported at amortized cost. Marketable securities with a maturity date greater than one year and our auction-rate securities instruments, due to the lack of liquidity, are classified as non-current. Interest, including the amortization of any premium or discount, is included in interest income in our Consolidated Statements of Income. Please refer to Note 4, Marketable Securities, for further discussion.

Property and Equipment, net

Property and equipment is recorded at cost less accumulated depreciation. Property and equipment under capital leases, and the related obligation, is recorded at an amount equal to the present value of future minimum lease payments. Buildings, furniture, equipment, and software, including internally developed software, are depreciated using the straight-line method over the estimated useful lives of the related assets, which range from three to 40 years. Capital leases, leasehold improvements and tenant improvement allowances are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the related assets. Construction in progress, excluding software, is recorded at cost until the corresponding asset is placed into service and depreciation begins. Software is recorded at cost and is amortized once the related asset is ready for its intended use. Maintenance and repairs are expensed as incurred.

We capitalize certain internal software development costs consisting primarily of the direct labor associated with creating the internally developed software. Capitalized costs are amortized using the straight-line method over the estimated lives of the software, not to exceed five years. Software development projects generally include three stages: the preliminary project stage (all costs expensed as incurred), the application development stage (certain costs capitalized, certain costs expensed as incurred), and the post-implementation/operation stage (all costs expensed as incurred). The costs capitalized in the application development stage include the costs of designing the application, coding, installation of hardware, and testing. We capitalize costs incurred during the application development phase of the project as permitted. Please refer to Note 7, Property and Equipment, net, for further discussion.

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Goodwill and Intangible Assets

•  Goodwill — Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the net assets acquired and assumed liabilities. At the time of an acquisition, we allocate the goodwill and related assets to our respective reporting units.

Goodwill is tested annually for impairment unless events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective asset below its carrying amount. We test for goodwill impairment by applying a two-step test. In the first step, the fair value of the reporting unit is compared to the carrying value of its net assets. If the fair value of the reporting unit exceeds the carrying value of the net assets of the reporting unit, goodwill is not impaired and no further testing is required. If the carrying value of the net assets of the reporting unit exceeds the fair value of the reporting unit, then a second step must be performed in order to determine the implied fair value of the goodwill and compare it to the carrying value of the goodwill. To determine the fair value of our reporting units, we rely primarily on using discounted cash flow valuation methods which requires management to make subjective judgments relating to future cash flows based on our knowledge of the business and current plans to operate the business, growth rates, economic and market conditions, and applicable discount rates. An impairment loss is recognized to the extent the implied fair value of the goodwill is less than the carrying amount of the goodwill.

•  Indefinite-Lived Intangible Assets — Indefinite-lived intangible assets are recorded at fair market value on their acquisition date and primarily include trademarks and foreign regulatory accreditations and designations as a result of the BPP, UNIACC and ULA acquisitions.

We assign indefinite lives to acquired trademarks, accreditations and designations that we believe have the continued ability to generate cash flows indefinitely; have no legal, regulatory, contractual, economic or other factors limiting the useful life of the respective intangible asset; and when we intend to renew the respective trademark, accreditation or designation and renewal can be accomplished at little cost. Indefinite-lived intangible assets are not amortized, but rather are tested for impairment at least annually, unless events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective asset below its carrying amount. The impairment test for indefinite-lived intangible assets involves a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. To determine the fair value of these intangible assets, we use various valuation models, such as discounted cash flow analysis or the relief-from-royalty method. We perform our annual indefinite-lived intangible asset impairment tests for each reporting unit on the same dates that we perform our annual goodwill impairment tests for the respective reporting units.

•  Finite-Lived Intangible Assets — Finite-lived intangible assets that are acquired in business combinations are recorded at fair market value on their acquisition date and are amortized on either a straight-line basis or using an accelerated method to reflect the economic useful life of the asset. The weighted average useful lives range from 2 to 15 years.

As further discussed below in Recent Accounting Pronouncements, we adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”) with respect to using fair value measurements in the valuation techniques associated with our annual goodwill and indefinite-lived intangible assets impairment tests on September 1, 2009.

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Other Long-Lived Asset Impairments

We evaluate the carrying amount of our major long-lived assets, including property and equipment and finite-lived intangible assets, whenever changes in circumstances or events indicate that the value of such assets may not be fully recoverable. At August 31, 2009, we believe the carrying amounts of our long-lived assets are fully recoverable and no impairment exists.

Share-Based Compensation

We measure and recognize compensation expense for all share-based awards issued to faculty, employees and directors based on estimated fair values of the share awards on the date of grant. We record compensation expense for all share-based awards over the vesting period.

We calculate the fair value of share-based awards on the date of grant. For stock options, we typically use the Black-Scholes-Merton option pricing model to estimate fair value. The Black-Scholes-Merton option pricing model requires us to estimate key assumptions such as expected term, volatility, risk-free interest rates and dividend yield to determine the fair value of stock options, based on both historical information and management judgment regarding market factors and trends. We generally use the simplified mid-point method to estimate expected term of stock options. The simplified method uses the mid-point between the vesting term and the contractual term of the share option. We have analyzed the circumstances in which the use of the simplified method is allowed, and we have opted to use this method for stock options granted to management in fiscal years 2009 and 2008 because the options granted in prior fiscal years had different terms, such as contractual lives and acceleration provisions. Thus, historical data is not comparable in order to determine the expected term of awards. We expect to continue to use this method until sufficient reliable historical data is available that will enable us to estimate expected term by a more precise method.

We amortize the share-based compensation expense over the period that the awards are expected to vest, net of estimated forfeiture rates. We estimate expected forfeitures of share-based awards at the grant date and recognize compensation cost only for those awards expected to vest. We estimate our forfeiture rate based on several factors including historical forfeiture activity, expected future employee turnover, and other qualitative factors. We ultimately adjust this forfeiture assumption to actual forfeitures. Therefore, changes in the forfeiture assumptions do not impact the total amount of expense ultimately recognized over the vesting period. Rather, different forfeiture assumptions only impact the timing of expense recognition over the vesting period. If the actual forfeitures differ from management estimates, additional adjustments to compensation expense are recorded. Please refer to Note 16, Stock and Savings Plans, for further discussion.

Income Taxes

The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when the new rate is enacted.

We evaluate and account for uncertain tax positions using a two-step approach. Recognition (step one) occurs when we conclude that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occur when we subsequently determine that a tax position no longer meets the more-likely-than-not threshold of being

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sustained. We do not use a valuation allowance as a substitute for derecognition of tax positions. Please refer to Note 13, Income Taxes, for further discussion.

Earnings per Share

Basic income per share is calculated using the weighted average number of Apollo Group Class A and Class B common shares outstanding during the period. Diluted income per share is calculated similarly except that it includes the dilutive effect of the assumed exercise of stock options and release of restricted stock units issuable under our stock option plans. The amount of any tax benefit to be credited to additional paid-in capital related to the exercise of stock options or release of restricted stock units and unrecognized share-based compensation expense is included when applying the treasury stock method in the computation of diluted earnings per share. Please refer to Note 15, Earnings Per Share, for further discussion.

Leases

We lease substantially all of our administrative and educational facilities, with the exception of our corporate headquarters and several Apollo Global facilities, and we enter into various other lease agreements in conducting our business. At the inception of each lease, we evaluate the lease agreement to determine whether the lease is an operating or capital lease. Additionally, most of our lease agreements contain renewal options, tenant improvement allowances, rent holidays, and/or rent escalation clauses. When such items are included in a lease agreement, we record a deferred rent asset or liability on the Consolidated Balance Sheets and record the rent expense evenly over the term of the lease. Leasehold improvements are reflected under investing activities as additions to property and equipment on the Consolidated Statements of Cash Flows. Credits received against rent for tenant improvement allowances are reflected as a component of non-cash investing activities on the Consolidated Statements of Cash Flows. Lease terms generally range from five to ten years with one to two renewal options for extended terms. For leases with renewal options, we record rent expense and amortize the leasehold improvements on a straight-line basis over the initial non-cancelable lease term (in instances where the lease term is shorter than the economic life of the asset) unless we intend to exercise the renewal option. Please refer to Note 18, Commitments and Contingencies, for further discussion.

We are also required to make additional payments under operating lease terms for taxes, insurance, and other operating expenses incurred during the operating lease period, which are expensed as incurred. Rental deposits are provided for lease agreements that specify payments in advance or deposits held in security that are refundable, less any damages at lease end.

Selling and Promotional Costs

We generally expense selling and promotional costs as incurred. We expense the naming and sponsorship rights we have on a stadium in Glendale, Arizona, which is home to the Arizona Cardinals team in the National Football League, on a straight-line basis annually over term of the agreement. These naming and sponsorship rights are in effect until 2026 with options to extend. Please refer to Note 18, Commitments and Contingencies, for further discussion.

Start-Up Costs

We expense costs such as advertising, marketing, temporary services, employee relocation, and supplies related to the start-up of new campuses and learning centers as incurred.

Foreign Currency Translation

The U.S. dollar is the functional currency of our entities operating in the United States. The functional currency of our entities operating outside the United States is the currency of the primary economic

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environment in which the entity primarily generates and expends cash, which is generally the local currency. The assets and liabilities of these operations are translated to U.S. dollars using exchange rates in effect at the balance sheet dates. Income and expense items are translated monthly at the average exchange rate for that period. The resulting translation adjustments and the effect of exchange rate changes on intercompany transactions of a long-term investment nature are included in shareholders’ equity as a component of accumulated other comprehensive income (loss). We report gains and losses from foreign exchange rate changes related to intercompany receivables and payables that are not of a long-term investment nature, as well as gains and losses from foreign currency transactions in other, net in our Consolidated Statements of Income. These items amounted to a net $0.1 million gain, a net $2.8 million loss and zero in fiscal years 2009, 2008 and 2007, respectively.

Fair Value

The carrying amount of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable and accounts payable reported in the Consolidated Balance Sheets approximate fair value because of the short-term nature of these financial instruments.

For fair value measurements of assets and liabilities that are recognized or disclosed at fair value on a recurring basis, we consider fair value to be an exit price, which represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. We use valuation techniques to determine fair value consistent with either the market approach, income approach and/or cost approach, and we prioritize the inputs used in our valuation techniques using the following three-tier fair value hierarchy:

•  Level 1 — Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets;

•  Level 2 — Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and

•  Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities.

In measuring fair value, our valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. We use prices and inputs that are current as of the measurement date, including during periods of market volatility. Therefore, classification of inputs within the hierarchy may change from period to period depending upon the observability of those prices and inputs. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value for certain assets and liabilities and their placement within the fair value hierarchy. Refer to Note 9, Fair Value Measurements, for further discussion.

Loss Contingencies

We are subject to various claims and contingencies which are in the scope of ordinary and routine litigation incidental to our business, including those related to regulation, litigation, business transactions, employee-related matters and taxes, among others. When we become aware of a claim or potential claim, the likelihood of any loss or exposure is assessed. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, we record a liability for the loss. The liability recorded includes probable and estimable legal costs incurred to date and future legal costs to the point in the legal matter where we believe a conclusion to the matter will be reached. If the loss is not probable or the amount of the loss cannot be reasonably estimated, we disclose

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the claim if the likelihood of a potential loss is reasonably possible and the amount of the potential loss could be material. For matters where no loss contingency is recorded, our policy is to expense legal fees as incurred. Please refer to Note 18, Commitments and Contingencies, for further discussion.

Certain Reclassifications

We have separately presented short-term and long-term debt on our Consolidated Balance Sheets. The effects of this reclassification on our August 31, 2008 Consolidated Balance Sheets were increases in short-term borrowings and current portion of long-term debt, and long-term debt of $15.5 million and $15.4 million, respectively, with offsetting decreases in other current liabilities and other long-term liabilities.

We have separately presented interest income, interest expense and other, net on our Consolidated Statements of Income. The effects of this reclassification on our fiscal year 2008 Consolidated Statements of Income were the separate presentation of $30.1 million of interest income, $3.5 million of interest expense and $6.8 million of other, net. The effects of this reclassification on our fiscal year 2007 Consolidated Statements of Income were the separate presentation of $31.2 million of interest income, $0.2 million of interest expense and $0.7 million of other, net.

Subsequent Events

As discussed below in Recent Accounting Pronouncements, we adopted SFAS No. 165, “Subsequent Events” (“SFAS 165”) effective June 1, 2009. We have evaluated events after August 31, 2009, and through October 27, 2009, which is the date the financial statements were issued, and determined that any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these financial statements.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS 157, which provides enhanced guidance for using fair value to measure assets and liabilities. On February 12, 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 157-2, “Effective Date of FASB Statement No. 157,” which provides a one year deferral of the effective date of SFAS 157 for non-financial assets or liabilities that are not required or permitted to be measured at fair value on a recurring basis. Effective September 1, 2008, we partially adopted the provisions in SFAS 157 for fair valuing financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis. With respect to our partial adoption of SFAS 157, we have also considered the guidance of FSP FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” in determining the fair value of our financial assets and liabilities. The partial adoption of SFAS 157 did not have a material impact on our financial condition and results of operations. Effective September 1, 2009, we completed our full adoption of the provisions of SFAS 157 with respect to fair valuing non-financial assets and liabilities not measured on a recurring basis, and we do not believe the adoption will have a material impact on our financial condition, results of operations, and disclosures.

In February 2007, the FASB issued SFAS No. 159, “Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115” (“SFAS 159”). Under SFAS 159, companies have an opportunity to use fair value measurements in financial reporting and may choose to measure many financial instruments and certain other items at fair value. Effective September 1, 2008, we chose not to elect the fair value option for our financial assets and liabilities; therefore, adoption of SFAS 159 did not have a material impact on our financial condition, results of operations, and disclosures.

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In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”), which is a revision of SFAS 141, “Business Combinations” (“SFAS 141”). The primary requirements of SFAS 141(R) are as follows:

•  upon initially obtaining control, the acquiring entity in a business combination must recognize 100% of the fair values of the acquired assets, including goodwill, and assumed liabilities, with only limited exceptions even if the acquirer has not acquired 100% of its target — as a consequence, the current step acquisition model will be eliminated;

•  contingent consideration arrangements will be fair valued at the acquisition date and included in the purchase price consideration — the concept of recognizing contingent consideration at a later date when the amount of that consideration is determinable beyond a reasonable doubt, will no longer be applicable;

•  for prior business combinations, adjustments for recognized changes in acquired tax uncertainties are to be recognized in accordance with the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB No. 109,” and adjustments for recognized changes in the valuation allowance for acquired deferred tax assets are to be recognized in income tax expense in accordance with the provisions of SFAS No. 109, “Accounting for Income Taxes;” and

•  all transaction costs will be expensed as incurred.

In April 2009, the FASB issued FSP No. FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies” (“FSP FAS 141(R)-1”). FSP FAS 141(R)-1 amends and clarifies SFAS 141(R) to address application issues raised about the initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. SFAS 141(R) and FSP FAS 141(R)-1 apply prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We adopted SFAS 141(R) and FSP FAS 141(R)-1 on September 1, 2009. We do not expect that the adoption of SFAS 141(R) and FSP FAS 141(R)-1 will have a material impact on our financial condition, results of operations, and disclosures. Deferred acquisition costs as of the adoption of SFAS 141(R) were not significant and were expensed as of August 31, 2009.

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51” (“SFAS 160”). SFAS 160 establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 requires non-controlling interests or minority interests to be treated as a separate component of equity and any changes in the parent’s ownership interest (in which control is retained) are to be accounted for as equity transactions. However, a change in ownership of a consolidated subsidiary that results in deconsolidation triggers gain or loss recognition, with the establishment of a new fair value basis in any remaining non-controlling ownership interests. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the non-controlling interests. SFAS 160 is effective for fiscal years beginning on or after December 15, 2008. We adopted SFAS 160 on September 1, 2009. The adoption of SFAS 160 will result in the reclassification of our minority interest balance, which is $67.0 million at August 31, 2009, to a separate component of equity. We do not believe that the adoption of SFAS 160 will have a further material impact on our financial condition, results of operations, and disclosures.

In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP FAS 142-3”). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). The intent of the position is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R), and other GAAP. FSP FAS 142-3 is effective for fiscal years beginning after December 15, 2008. We adopted FSP FAS 142-3 on

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September 1, 2009. We do not believe that the adoption of FSP FAS 142-3 will have a material impact on our financial condition, results of operations, and disclosures.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP. This statement was not intended to change existing practices but rather reduce the complexity of financial reporting. This statement was effective 60 days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” Effective November 15, 2008, we adopted the provisions in SFAS 162, which did not have an impact on our financial condition, results of operations, or disclosures.

In June 2008, the FASB issued FSP No. Emerging Issues Task Force (“EITF”) 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 clarifies whether unvested share-based payment awards that entitle holders to receive nonforfeitable dividends or dividend equivalents (whether paid or unpaid) are considered participating securities and should be included in the computation of earnings per share pursuant to the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. FSP EITF 03-6-1 requires retrospective application and is effective for fiscal years beginning after December 15, 2008, and interim periods within those years. We adopted FSP EITF 03-6-1 on September 1, 2009. We do not expect the adoption of FSP EITF 03-6-1 will have a material impact on our calculation of earnings per share and related disclosures.

In April 2009, in response to the current credit crisis, the FASB issued three new FSPs to address fair value measurement concerns as follows:

•  FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”), provides additional guidance on measuring the fair value of financial instruments when market activity has decreased and quoted prices may reflect distressed transactions;

•  FSP No. FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (“FSP FAS 115-2 and 124-2”), amends the other-than-temporary impairment guidance for debt securities. Under FSP FAS 115-2 and 124-2, an other-than-temporary impairment is now triggered when there is intent to sell the security, it is more likely than not that the security will be required to be sold before recovery in value, or the security is not expected to recover the entire amortized cost basis of the security. If an entity does not intend to sell the security, credit related losses on debt securities that exist will be considered an other-than-temporary impairment recognized in earnings, and any other losses due to a decline in fair value relative to the amortized cost deemed not to be other-than-temporary will be recorded in other comprehensive income; and

•  FSP No. FAS 107-1 and APB No. 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB 28-1”), expands the fair value disclosures required for financial instruments to interim reporting periods for publicly traded companies, including disclosure of the significant assumptions used to estimate the fair value of those financial instruments.

On June 1, 2009, we adopted the provisions of FSP 157-4 and FSP FAS 115-2 and 124-2, which did not have a material impact on our financial condition and results of operations. FSP FAS 107-1 and APB 28-1 is effective for interim financial statements on Form 10-Q for periods ending after June 15, 2009 and is effective for us during our interim period ending November 30, 2009. We do not believe that the adoption of FSP FAS 107-1 and APB 28-1 will have a material impact on our disclosures.

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In May 2009, the FASB issued SFAS 165, which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 also requires entities to disclose the date through which subsequent events were evaluated as well as the rationale for why that date was selected. Effective June 1, 2009, we adopted the provisions of SFAS 165.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”), which modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. SFAS 167 clarifies that the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. SFAS 167 requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. SFAS 167 also requires additional disclosures about a company’s involvement in variable interest entities and any significant changes in risk exposure due to that involvement. SFAS 167 is effective for fiscal years beginning after November 15, 2009 and is effective for us on September 1, 2010. We are currently evaluating the impact that the adoption of SFAS 167 will have on our financial condition, results of operations, and disclosures.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162”, which establishes the FASB Accounting Standards Codification (“Codification”) as the single source of authoritative nongovernmental GAAP. The Codification does not change current GAAP, but is intended to simplify user access to all authoritative GAAP by providing all the authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered nonauthoritative. The Codification is effective for interim and annual periods ending after September 15, 2009. The Codification is effective for us during our interim period ending November 30, 2009 and will not have an impact on our financial condition or results of operations.

In October 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-13, “Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements — a consensus of the FASB Emerging Issues Task Force” (“ASU 2009-13”), which provides guidance on whether multiple deliverables exist, how the arrangement should be separated, and the consideration allocated. ASU 2009-13 requires an entity to allocate revenue in an arrangement using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of selling price. ASU 2009-13 is effective for the first annual reporting period beginning on or after June 15, 2010 and may be applied retrospectively for all periods presented or prospectively to arrangements entered into or materially modified after the adoption date. Early adoption is permitted provided that the revised guidance is retroactively applied to the beginning to the year of adoption. ASU 2009-13 is effective for us on September 1, 2011. We do not believe that the adoption of ASU 2009-13 will have a material impact on our financial condition, results of operations, or disclosures.

Note 3.   Acquisitions

Fiscal 2009 Acquisitions

BPP

On July 30, 2009, Apollo Global, through a wholly-owned United Kingdom subsidiary, acquired the entire issued and to be issued ordinary share capital of BPP, a company registered in England and Wales, for a cash purchase price of 620 pence per share. At exchange rates on the date of the acquisition, the purchase price for BPP, including assumed debt and transaction related expenses, was $601.6 million. In connection with the purchase, Apollo Global entered into a derivative arrangement to hedge against the variability of foreign currency exchange rate fluctuations between the U.S. Dollar and British Pound. The derivative

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arrangement, a call option on the British Pound, limited Apollo Global’s foreign currency exposure on the notional value of £235 million (or $390.1 million) at a 1.66 U.S. Dollar to British Pound exchange rate. This arrangement expired on July 30, 2009. To enter into this option, Apollo Global paid a non-refundable option premium of $6.9 million, which was recorded within other, net in our Consolidated Statements of Income.

BPP is a provider of education and training to professionals in the legal and finance industries and the BPP College of Professional Studies is the first proprietary institution to have been granted degree awarding powers in the United Kingdom. BPP is organized into the following three divisions:

•  Professional Education, which provides exam training and sells published products for external certification training in accounting, tax, financial services, and actuarial qualifications and post qualification professional development;

•  College of Professional Studies, which operates four law schools, human resource training and a business school; and

•  Mander Portman Woodward, which operates independent fifth and sixth form colleges (similar to preparatory schools in the U.S.).

BPP provides these services through schools located in the United Kingdom, a European network of BPP offices, and the sale of books and other publications in over 150 countries. The BPP acquisition enables us to establish a European base where we can leverage BPP’s established brand name and education offerings in order to service the large and growing United Kingdom market which has strong student participation rates and an increasing interest in online learning. The acquisition supports our long-term strategy of capitalizing on the significant global demand for education services.

We accounted for the BPP acquisition using the purchase method of accounting pursuant to SFAS 141 prior to our adoption of SFAS 141(R). To value the acquired assets and assumed liabilities, we used the following valuation methodologies:

•  Land and buildings included in property and equipment were valued using the market approach.

•  Trademarks were valued using the relief-from-royalty method, which represents the benefit of owning this intangible asset rather than paying royalties for its use.

•  All other intangible assets were valued using one of the following methods; the income approach, specifically the cost savings method and excess earnings method, or the replacement cost approach.

•  Certain other long-term obligations were valued using the discounted cash flow approach utilizing current discount rates, cost estimates and assumptions.

•  All other net assets and liabilities carrying value approximated fair value at the time of the acquisition.

In connection with the BPP acquisition, the excess of the purchase price over the estimated fair value of the net assets acquired resulted in recording $425.6 million of goodwill, which is not expected to be deductible for tax purposes. Goodwill is primarily attributable to potential strategic and financial benefits expected to be realized associated with future student growth and access to new markets. For goodwill impairment testing purposes, we assigned the goodwill balance to the Apollo Global — BPP reportable segment.

A summary of the purchase price is as follows:

($ in thousands)
Cash paid	$	506,459
Debt assumed		84,306
Transaction-related costs		10,821
Total purchase price	$	601,586

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A summary of the preliminary purchase price allocation is as follows:

($ in thousands)
Net working capital (deficit)	$	(44,015	)
Property and equipment		90,428
Intangibles		191,294
Goodwill		425,638
Deferred taxes, net		(50,201	)
Other long-term liabilities		(10,553	)
Minority interest in BPP subsidiary		(1,005	)
Total allocated purchase price		601,586
Less: Debt assumed		(84,306	)
Less: Cash acquired		(7,214	)
Acquisition, net of cash acquired	$	510,066

The purchase price allocation for the BPP acquisition is preliminary and subject to revision as we finalize the valuation of intangible assets, property and equipment and as additional information about the fair value of other assets and liabilities becomes available.

A summary of the identifiable intangible assets acquired, based on our preliminary purchase price allocation, is as follows:

			Weighted
	Estimated		Average
($ in thousands)	Fair Value		Useful Life
Finite-lived intangible assets
Copyrights	$	20,891	5 years
Student relationships		20,049	3 years
Other		10,364	3 years
Finite-lived intangible assets		51,304
Indefinite-lived intangible assets
Trademarks		134,068	indefinite
Accreditations and designations		5,922	indefinite
Indefinite-lived intangible assets		139,990
Total acquired intangible assets	$	191,294

We are amortizing the acquired finite-lived intangible assets on either a straight-line basis or an accelerated basis that reflects the economic useful life of the respective assets.

We assigned indefinite lives to the acquired trademarks and certain accreditations and designations as we believe that each of these intangible assets has the continued ability to generate cash flows indefinitely. In addition, there are no legal, regulatory, contractual, economic or other factors to limit the useful life of these intangible assets and we intend to renew trademarks and accreditations and designations, which can be accomplished at little cost.

BPP’s operating results are included in the consolidated financial statements from the date of acquisition.

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Unaudited Pro Forma Financial Results

The following unaudited pro forma financial results of operations are presented as if the acquisition of BPP had been completed at the beginning of the respective periods presented:

	(Unaudited)
	Year Ended August 31,
($ in thousands, except per share data)	2009		2008
Pro forma net revenue	$	4,240,934	$	3,463,856
Pro forma net income		616,323		479,593
Pro form earnings per share:
Basic income per share	$	3.91	$	2.92
Diluted income per share		3.86		2.89
Basic weighted average shares outstanding		157,760		164,109
Diluted weighted average shares outstanding		159,514		165,870

The unaudited pro forma financial information is presented for informational purposes and includes certain adjustments that are factual and supportable, such as increased interest expense on debt used to fund the acquisition, adjustments to depreciation expense related to the fair value adjustment for property and equipment, and amortization related to acquired intangible assets, as well as the related tax effect of these adjustments. The unaudited pro forma information is not indicative of the results of operations that would have been achieved if the acquisition and related borrowings had taken place at the beginning of each of the periods presented, or of future results of the consolidated entities.

Fiscal 2008 Acquisitions

The following table summarizes acquisitions during the fiscal year 2008:

($ in thousands)	Aptimus			UNIACC			ULA
Tangible assets (net of acquired liabilities)	$	3,459		$	27,718		$	14,130
Intangible assets		7,600			14,607			3,937
Goodwill		37,018			2,135			17,683
Allocated purchase price	$	48,077		$	44,460		$	35,750
Less: Debt assumed		—			(19,910	)		(11,000	)
Less: Cash acquired		(1,022	)		(1,303	)		(1,289	)
Acquisition, net of cash acquired	$	47,055		$	23,247		$	23,461

UNIACC

In March 2008, Apollo Global purchased 100% of UNIACC for $44.5 million composed of cash and assumed debt, plus a future payment based on a multiple of earnings. UNIACC is an arts and communications university which offers bachelor’s and master’s programs on campuses in Chile and online. In connection with the UNIACC acquisition, we recorded $2.1 million of goodwill.

As noted above, the purchase of UNIACC included a future payment based on a multiple of earnings. In January 2009, we executed an amendment to the purchase agreement with the former owner of UNIACC, which modified both the timing of the future payment and the period of earnings on which the future payment calculation is based. In the second quarter of fiscal year 2009, we recorded the estimated obligation as an

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additional purchase price adjustment increasing goodwill, as the amount became determinable during that period. This obligation is denominated in Chilean Pesos, which translated to $7.1 million based on the exchange rate on the date we recorded the obligation. During the fourth quarter of fiscal year 2009, we paid $2.7 million of the obligation and the remaining amount is due in June 2010.

ULA

In August 2008, Apollo Global acquired a 65% ownership interest in ULA for $35.8 million, composed of cash and assumed debt. ULA is an educational institution that offers degree programs at its four campuses throughout Mexico. In connection with the ULA acquisition, we recorded $17.7 million of goodwill.

In July 2009, Apollo Global purchased the remaining 35% of ULA for $11.0 million, plus a future payment based on a multiple of earnings not to exceed $2.0 million. This transaction was accounted for as a step acquisition in accordance with the purchase method of accounting and resulted in recording $7.0 million of goodwill.

Aptimus

In October 2007, we completed the acquisition of all the outstanding common stock of online advertising company Aptimus for $48.1 million. Prior to the acquisition, Aptimus operated as a results-based advertising company that distributed advertisements for direct marketing advertisers across a network of third-party web sites. The acquisition enables us to more effectively monitor, manage and control our marketing investments and brands, with the goal of increasing awareness of and access to affordable quality education. We have integrated Aptimus as part of our corporate marketing function.

In connection with the Aptimus acquisition, we recorded $37.0 million of goodwill. For goodwill impairment testing purposes, we assigned the goodwill balance to our University of Phoenix segment as Aptimus’ primary function is to monitor, manage, and control University of Phoenix’s marketing investments.

Fiscal 2007 Acquisitions

Insight Schools

In October 2006, we completed the acquisition of Insight Schools by purchasing all of its outstanding common stock for $15.5 million. In connection with the Insight Schools acquisition, we recorded $12.7 million of goodwill that is primarily attributable to potential future student growth.

Note 4.   Marketable Securities

Marketable securities consist of the following as of August 31:

($ in thousands)	2009		2008
Current marketable securities:
Municipal bonds	$	—	$	3,060
Total current marketable securities		—		3,060
Noncurrent marketable securities:
Auction-rate securities		19,579		25,204
Total noncurrent marketable securities		19,579		25,204
Total marketable securities	$	19,579	$	28,264

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Auction-Rate Securities

Auction-rate securities have historically traded on a shorter term than the underlying debt based on an auction bid that resets the interest rate of the security. Investments in auction-rate securities were intended to provide liquidity in an auction process that resets the applicable interest rate at predetermined calendar intervals, generally between 7 and 35 days, allowing investors to either roll over their holdings or gain immediate liquidity by selling such interests at par value. Historically, the fair value of auction-rate securities approximated par value due to the frequent resets through the auction process and have rarely failed since the investment banks and broker dealers have been willing to purchase the security when investor demand was weak. However, beginning in mid-February 2008 and continuing through fiscal year 2009, due to uncertainty in the global credit and capital markets and other factors, auction-rate securities began experiencing failed auctions resulting in a lack of liquidity for these instruments that has reduced the estimated fair market value for these securities below par value.

The table below details our auction-rate securities classified as available-for-sale as of August 31:

	August 31, 2009
								Continuous			Continuous
			Gross			Fair		Unrealized Loss			Unrealized Loss
	Amortized		Unrealized			Market		Position Less than			Position Greater
($ in thousands)	Cost		Losses			Value		12 Months			than 12 Months
Available-for-sale securities
Auction-rate securities	$	21,850	$	(2,271	)	$	19,579	$	(650	)	$	(1,621	)
Total	$	21,850	$	(2,271	)	$	19,579	$	(650	)	$	(1,621	)

	August 31, 2008
								Continuous			Continuous
			Gross			Fair		Unrealized Loss			Unrealized Loss
	Amortized		Unrealized			Market		Position Less than			Position Greater
($ in thousands)	Cost		Losses			Value		12 Months			than 12 Months
Available-for-sale securities
Auction-rate securities	$	26,825	$	(1,621	)	$	25,204	$	(1,621	)	$	—
Total	$	26,825	$	(1,621	)	$	25,204	$	(1,621	)	$	—

As of August 31, 2009, we had $21.9 million of principal invested in auction-rate securities that experienced failed auctions. Approximately $11.9 million of our auction-rate securities are invested in tax-exempt municipal bond funds, which carry at least A-credit ratings for the underlying issuer. The remaining $10.0 million are invested in securities collateralized by federal student loans, which are rated AAA and are guaranteed by the U.S. government. We used a discounted cash flow model to determine the fair value of our auction-rate securities. Please refer to Note 9, Fair Value Measurements, for further discussion of the estimates and unobservable inputs used in our valuation technique. Based on our analysis, we determined that the fair value of our auction-rate securities was $19.6 million as of August 31, 2009.

On June 1, 2009, we adopted FSP FAS 115-2 and 124-2, which amended the other-than-temporary impairment model for debt securities. FSP FAS 115-2 and 124-2 requires an entity to recognize an other-than-temporary impairment in earnings if an investor has the intent to sell the debt security or if it is more likely than not that the investor will be required to sell the debt security before recovery of its amortized cost basis. Additionally, even if we do not expect to sell a debt security, we must evaluate expected cash flows to be received and determine if credit related losses on debt securities exist, which are considered to be an other-than-temporary impairment recognized in earnings. Upon adoption of FSP 115-2 and 124-2, we determined that credit related losses with respect to our auction-rate securities were insignificant. Therefore, upon adoption, we did not recognize credit related losses in earnings and no adjustments were made to the

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cumulative net unrealized loss of $2.3 million ($1.4 million after-tax) included in accumulated other comprehensive loss in our Consolidated Balance Sheets. We consider several factors to differentiate between temporary impairment and other-than-temporary impairment including the projected future cash flows, credit quality of the issuers and of the underlying collateral, as well as the other factors as further described in Note 9, Fair Value Measurements.

As maturity dates for our auction rate securities range from 2018 to 2040, we have continued to classify the entire balance of our auction-rate securities as non-current marketable securities due to the lack of liquidity of these instruments and our continuing inability to determine when these investments will settle.

We will continue to monitor our investment portfolio. Given the uncertainties in the global credit and capital markets, we are no longer investing in auction-rate securities instruments at this time, which may contribute to reduced investment income in the future. We will also continue to evaluate any changes in the market value of the failed auction-rate securities that have not been liquidated and depending upon existing market conditions, we may be required to recognize additional impairment charges in the future.

The cost of liquidated securities is based on the specific identification method. During fiscal years 2009, 2008 and 2007, none of our auction-rate securities have been liquidated below par value, and thus no realized gains or losses have been recognized.

Municipal Bonds

At August 31, 2009, we did not have any municipal bonds. At August 31, 2008, municipal bonds classified as held-to-maturity securities represent debt obligations issued by states, cities, counties, and other governmental entities, which earn federally tax-exempt interest. We have the ability and intention to hold municipal bonds until maturity and therefore classified these investments as held-to-maturity, reported at amortized cost. During fiscal years 2009, 2008 and 2007, municipal bonds matured at par value and, thus, no realized gains or losses have been recorded in connection with liquidating these investments.

Marketable securities are exposed to various risks and rewards, such as interest rate, market and credit risk. Due to the risks and rewards associated with marketable security investments, it is possible that changes in the values of these investments may occur and that such changes could affect the amounts reported in the Consolidated Balance Sheets.

Note 5.   Accounts Receivable, net

Accounts receivable, net consist of the following as of August 31:

($ in thousands)	2009			2008
Student accounts receivable	$	380,226		$	279,841
Less allowance for doubtful accounts		(110,420	)		(78,362	)
Net student accounts receivable		269,806			201,479
Other receivables		28,464			20,440
Total accounts receivable, net	$	298,270		$	221,919

Student accounts receivable is composed primarily of amounts due related to tuition.

Bad debt expense is included in instructional costs and services in our Consolidated Statements of Income. Please refer to Note 2, Significant Accounting Policies, for further discussion of our related accounting policy.

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The following table summarizes the activity in the related allowance for doubtful accounts for the fiscal years 2009, 2008 and 2007:

	August 31,
($ in thousands)	2009			2008			2007
Beginning allowance for doubtful accounts	$	78,362		$	99,818		$	65,184
Provision for uncollectible accounts receivable		152,490			104,201			120,614
Write-offs, net of recoveries		(120,432	)		(125,657	)		(85,980	)
Ending allowance for doubtful accounts	$	110,420		$	78,362		$	99,818

We have experienced a decline in our collection rates for older receivables, which we believe is principally due to the current economic downturn. This has resulted in an increase in our provision for uncollectible accounts receivable in fiscal year 2009 compared to fiscal year 2008.

Note 6.   Other Assets

Other assets consist of the following as of August 31:

($ in thousands)	2009			2008
Prepaid expenses	$	38,126		$	21,789
Related party receivable		—			17,762
Textbook inventories, deposits and other		11,382			10,196
Total other assets		49,508			49,747
Less current portion		(35,517	)		(21,780	)
Total long-term other assets	$	13,991		$	27,967

The related party receivable represents a promissory note due from Dr. John G. Sperling that was repaid during fiscal year 2009. Please refer to Note 17, Related Person Transactions, for further discussion.

Note 7.   Property and Equipment, net

Property and equipment, net consist of the following as of August 31:

($ in thousands)	2009			2008
Furniture and equipment	$	303,872		$	330,481
Land		44,045			30,331
Buildings		198,152			157,010
Leasehold improvements		142,210			105,741
Tenant improvement allowances		114,140			104,901
Internally developed software		75,772			59,354
Software		67,532			71,103
Less accumulated depreciation and amortization		(407,803	)		(434,805	)
Depreciable property and equipment, net		537,920			424,116
Construction in progress		19,587			15,019
Property and equipment, net	$	557,507		$	439,135

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following amounts, which are included in the above table, relate to property and equipment leased under capital leases as of August 31:

($ in thousands)	2009			2008
Buildings	$	6,082		$	7,038
Furniture and equipment		4,459			2,090
Less accumulated depreciation and amortization		(4,342	)		(2,546	)
	$	6,199		$	6,582

Depreciation expense, net of the amortization of tenant improvement allowances, was $90.6 million, $75.0 million and $68.4 million for fiscal years 2009, 2008 and 2007, respectively. Included in these amounts is depreciation of capitalized internally developed software of $12.5 million, $7.9 million and $4.3 million for the fiscal years 2009, 2008 and 2007, respectively. Additionally, we recorded a loss of $9.4 million in fiscal year 2009 that is included in general and administrative expenses on our Consolidated Statements of Income for the write-off of information technology fixed assets resulting primarily from our rationalization of software.

Note 8.   Goodwill and Intangible Assets

Changes in the carrying amount of goodwill by reportable segment during fiscal years 2009 and 2008 are as follows:

			Apollo Global
	University of								Insight		Other		Total
($ in thousands)	Phoenix		BPP			Other			Schools		Schools		Goodwill
Goodwill as of August 31, 2007	$	—	$	—		$	—		$	12,742	$	16,891	$	29,633
Goodwill acquired		37,018		—			19,818			—		—		56,836
Currency translation adjustment		—		—			(501	)		—		—		(501	)
Goodwill as of August 31, 2008		37,018		—			19,317			12,742		16,891		85,968
Goodwill acquired		—		425,638			6,973			—		—		432,611
UNIACC earn-out consideration		—		—			7,135			—		—		7,135
Purchase price allocation adjustments		—		—			4,110			—		—		4,110
Currency translation adjustment		—		(3,802	)		(3,664	)		—		—		(7,466	)
Goodwill as of August 31, 2009	$	37,018	$	421,836		$	33,871		$	12,742	$	16,891	$	522,358

Goodwill represents the excess of the purchase price over the amount assigned to the net assets acquired and liabilities assumed. Any changes in the fair value of the net assets of acquired companies will change the amount of the purchase price allocable to goodwill. During fiscal year 2009, additions to goodwill primarily included the following (for further discussion of each of these items, refer to Note 3, Acquisitions):

•  $425.6 million at our Apollo Global — BPP segment from Apollo Global’s acquisition of BPP completed on July 30, 2009;

•  $7.0 million at our Apollo Global — Other segment from Apollo Global’s acquisition of the minority interest in ULA completed on June 29, 2009;

•  $7.1 million addition to UNIACC’s goodwill, which is included in our Apollo Global - Other segment, for an earn-out payment as the obligation amount and timing became determinable during fiscal year 2009; and

•  $4.1 million in purchase price allocation adjustments primarily related to Apollo Global’s acquisition of ULA as additional information about the valuation of certain acquired assets and liabilities became available during fiscal year 2009. The related purchase price allocation was preliminary as the acquisition was completed in August 2008.

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Goodwill acquired during fiscal year 2008 included the following:

•  $37.0 million at our University of Phoenix segment from our Aptimus acquisition completed in October 2007;

•  $2.1 million at our Apollo Global — Other segment from Apollo Global’s acquisition of UNIACC completed in March 2008; and

•  $17.7 million at our Apollo Global — Other segment from Apollo Global’s acquisition of ULA completed in August 2008.

Intangible assets consist of the following as of August 31:

	2009										2008
	Acquired										Acquired
	Gross					Effect of Foreign			Net		Gross					Effect of Foreign			Net
	Carrying		Accumulated			Currency			Carrying		Carrying		Accumulated			Currency			Carrying
($ in thousands)	Amount		Amortization			Translation Loss			Amount		Amount		Amortization			Translation Loss			Amount
Finite-lived intangible assets
Student and customer relationships	$	26,515	$	(4,224	)	$	(1,282	)	$	21,009	$	7,670	$	(1,208	)	$	(543	)	$	5,919
Copyrights		20,891		(488	)		(198	)		20,205		—		—			—			—
Other		23,317		(5,233	)		(1,117	)		16,967		13,831		(2,671	)		(563	)		10,597
Total finite-lived intangible assets		70,723		(9,945	)		(2,597	)		58,181		21,501		(3,879	)		(1,106	)		16,516
Indefinite-lived intangible assets
Trademarks		140,797		—			(2,441	)		138,356		5,825		—			(539	)		5,286
Accreditations and designations		7,456		—			(322	)		7,134		1,459		—			(165	)		1,294
Total indefinite-lived intangible assets		148,253		—			(2,763	)		145,490		7,284		—			(704	)		6,580
Total intangible assets, net	$	218,976	$	(9,945	)	$	(5,360	)	$	203,671	$	28,785	$	(3,879	)	$	(1,810	)	$	23,096

Finite-lived intangible assets are amortized on either a straight-line basis or using an accelerated method to reflect the economic useful life of the asset. The weighted average useful lives range from 2 to 15 years. Amortization expense for intangible assets for fiscal years 2009, 2008 and 2007 was $9.3 million, $3.4 million and $0.4 million, respectively.

Estimated future amortization expense of intangible assets is as follows:

($ in thousands)
2010	$	26,131
2011		15,728
2012		9,163
2013		4,534
2014		1,527
Thereafter		1,098
Total estimated amortization expense	$	58,181

Estimated future amortization expense may vary as acquisitions and dispositions occur in the future, purchase price allocations are finalized and as a result of foreign currency translation adjustments.

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At August 31, 2009, our CFFP reporting unit had goodwill of approximately $15.3 million, which is included in the Other Schools reportable segment. The economic downturn has caused the demand for CFFP’s financial planning education programs and materials to diminish throughout fiscal year 2009 because CFFP’s primary customers come from the financial services industry. Accordingly, we performed interim goodwill impairment tests as of November 30, 2008, February 28, 2009 and May 31, 2009 and evaluated and determined that the CFFP goodwill balance was not impaired. As of August 31, 2009, we performed our annual goodwill impairment test of CFFP using a consistent methodology as our previous interim tests and determined that the fair value of the CFFP reporting unit continued to exceed the carrying value of its net assets by a narrow margin.

At August 31, 2009, our Insight Schools reporting unit had goodwill of approximately $12.7 million. Insight Schools has encountered a number of administrative challenges in its compliance activities in the course of expanding its business. These challenges and start-up expenses have limited its growth rate and resulted in decreased revenue and increased operating expenses. We considered this factor in our annual goodwill impairment test of Insight Schools and determined that the goodwill balance is not impaired.

Subsequent to our 2009 fiscal year end, we decided to explore the sale of Insight Schools. There is no assurance that we will be able to sell these operations on terms acceptable to us or at all. In addition to the costs incurred in connection with such a disposition, we may realize a loss on sale. If we are unable to dispose of these operations on terms acceptable to us, we may decide to continue providing some or all of the services now provided by Insight Schools under its service contracts for the remainder of the terms of such contracts, which have remaining terms of 1 to 9 years.

During fiscal years 2009, 2008 and 2007, we performed annual impairment tests on all applicable goodwill and indefinite-lived intangible assets and these tests resulted in no impairment charges. Please refer to Note 2, Significant Accounting Policies, for our policy and methodology for evaluating potential impairment of goodwill and indefinite-lived intangible assets.

Note 9.   Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis consist of the following as of August 31, 2009:

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in
			Active Markets for
			Identical Assets/		Significant Other		Significant
	August 31,		Liabilities		Observable Inputs		Unobservable Inputs
($ in thousands)	2009		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents (including restricted cash equivalents):
Money market funds	$	1,400,550	$	1,400,550	$	—	$	—
Marketable securities:
Auction-rate securities		19,579		—		—		19,579
Total assets:	$	1,420,129	$	1,400,550	$	—	$	19,579
Liabilities:
Other liabilities:
Interest rate swap	$	3,542	$	—	$	3,542	$	—
Total liabilities:	$	3,542	$	—	$	3,542	$	—

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In accordance with SFAS 157, we measure our money market funds included in cash and restricted cash equivalents, auction-rate securities included in marketable securities and interest rate swap included in other liabilities at fair value.

•  Money market funds — Classified within Level 1 and were valued primarily using real-time quotes for transactions in active exchange markets involving identical assets.

•  Auction-rate securities — Classified within Level 3 due to the illiquidity of the market and were valued using a discounted cash flow model that encompassed significant unobservable inputs to determine probabilities of default and timing of auction failure, probabilities of a successful auction at par and/or repurchase at par value for each auction period, collateralization of the underlying security and credit worthiness of the issuer. The assumptions used to prepare the discounted cash flows include estimates for interest rates, credit spreads, timing and amount of cash flows, liquidity premiums, expected holding periods and default risk. These assumptions are subject to change as the underlying data sources and market conditions evolve. Additionally, as the market for auction-rate securities continues to be inactive, our discounted cash flow model also factored the illiquidity of the auction-rate securities market by adding a spread of 450 to 500 basis points to the applicable discount rate.

•  Interest rate swap — We acquired the interest rate swap in connection with the BPP acquisition. The swap has a notional amount of £30.0 million ($48.9 million) used to minimize the interest rate exposure on a portion of BPP’s variable rate debt. The interest rate swap is used to fix the variable interest rate on the associated debt. The swap is classified within Level 2 and is valued using readily available pricing sources which utilize market observable inputs including the current variable interest rate for similar types of instruments.

At August 31, 2009, the carrying value of our debt, excluding capital leases, was $581.3 million. Substantially all of our debt is variable interest rate and the carrying amount approximates fair value.

We did not significantly change our valuation techniques associated with fair value measurements from prior periods. Additionally, we did not have any non-recurring fair value measurements during the period that required disclosure.

Changes in the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended August 31, 2009 are as follows:

($ in thousands)
Balance at August 31, 2008	$	25,204
Net unrealized loss in other comprehensive loss		(1,368	)
Reversal of unrealized loss on redemptions		718
Redemptions at par value		(4,975	)
Transfers in (out) of Level 3		—
Balance at August 31, 2009	$	19,579
Net unrealized gains (losses) included in earnings related to assets held as of August 31, 2009	$	—

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Note 10.   Accrued Liabilities

Accrued liabilities consist of the following as of August 31:

($ in thousands)	2009		2008
Estimated litigation loss	$	80,500	$	—
Salaries, wages, and benefits		76,583		39,381
Accrued advertising		35,974		31,780
Accrued professional fees		25,287		22,534
Student refunds, grants and scholarships		11,287		12,658
Other accrued liabilities		38,787		14,847
Total accrued liabilities	$	268,418	$	121,200

Please refer to Note 18, Commitments and Contingencies, for discussion of the estimated litigation loss. Salaries, wages, and benefits represent amounts due to employees, faculty and third parties for salaries, bonuses, vacation pay, and health insurance. Accrued advertising represents amounts due for Internet marketing, direct mail campaigns, and print and broadcast advertising. Accrued professional fees represent amounts due to third parties for outsourced student financial aid processing and other accrued professional and legal obligations. Student refunds, grants and scholarships represent amounts due to students for tuition refunds, federal and state grants payable, scholarships, and other related items. Other accrued liabilities primarily includes sales and business taxes, facilities costs such as rent and utilities, and certain accrued purchases.

Note 11.   Debt

Debt and short-term borrowings consist of the following as of August 31:

($ in thousands)	2009			2008
Bank Facility, see terms below	$	495,608		$	—
Capital lease obligations		7,763			7,771
Other, interest rates ranging from 1.2% to 10.4% with various maturities from 2010 to 2019		85,695			23,145
Total debt		589,066			30,916
Less short-term borrowings and current portion of long-term debt		(461,365	)		(15,488	)
Long-term debt	$	127,701		$	15,428

Aggregate debt maturities for each of the years ended August 31 are as follows:

($ in thousands)
2010	$	461,365
2011		3,329
2012		10,924
2013		104,875
2014		1,350
Thereafter		7,223
	$	589,066

On January 4, 2008, we entered into a syndicated $500 million credit agreement (the “Bank Facility”). The Bank Facility is an unsecured revolving credit facility used for general corporate purposes including acquisitions and stock buybacks. The Bank Facility has an expansion feature for an aggregate principal amount

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of up to $250 million. The term is five years and will expire on January 4, 2013. The Bank Facility provides a multi-currency sub-limit facility for borrowings in certain specified foreign currencies up to $300 million.

We borrowed our entire credit line under the Bank Facility as of August 31, 2009, which included £63.0 million denominated in British Pounds related to the BPP acquisition. We have classified the U.S. dollar denominated debt on our Bank Facility of $393 million within short-term borrowings and current portion of long-term debt on our Consolidated Balance Sheets as it has been repaid subsequent to August 31, 2009.

The Bank Facility fees are determined based on a pricing grid that varies according to our leverage ratio. The Bank Facility fee ranges from 12.5 to 17.5 basis points and the incremental fees for borrowings under the facility range from LIBOR + 50.0 to 82.5 basis points. The weighted average interest rate on outstanding borrowings under the Bank Facility at August 31, 2009 was 1.0%.

The Bank Facility contains affirmative and negative covenants, including the following financial covenants: maximum leverage ratio, minimum coverage interest and rent expense ratio, and a U.S. Department of Education financial responsibility composite score. In addition, there are covenants restricting indebtedness, liens, investments, asset transfers and distributions.

Other debt includes $72.1 million of variable rate debt and $13.6 million of fixed rate debt at the subsidiaries of Apollo Global. The weighted average interest rate of these debt instruments at August 31, 2009 was 2.8%.

Please refer to Note 9, Fair Value Measurements, for discussion of the fair value of our debt.

Note 12.   Other Liabilities

Other liabilities consist of the following as of August 31:

($ in thousands)	2009			2008
Deferred rent and other lease incentives	$	71,579		$	72,512
Reserve for uncertain tax positions		97,619			55,319
Other		64,838			34,376
Total other liabilities		234,036			162,207
Less current portion		(133,887	)		(31,740	)
Total other long-term liabilities	$	100,149		$	130,467

Deferred rent and other lease incentives represent amounts included in lease agreements and are amortized on a straight-line basis over the term of the leases. Refer to Note 13, Income Taxes, for discussion of our uncertain tax positions.

Note 13.   Income Taxes

Geographic sources of income (loss) before income taxes and minority interests are as follows:

($ in thousands)	2009			2008			2007
United States	$	1,058,592		$	790,133		$	658,884
Foreign		(18,777	)		(7,279	)		(1,587	)
Total income (loss) before income taxes and minority interests	$	1,039,815		$	782,854		$	657,297

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Income tax expense (benefit) consists of the following for fiscal years 2009, 2008 and 2007:

($ in thousands)	2009			2008			2007
Current:
Federal	$	369,513		$	271,434		$	253,048
State		91,296			51,894			42,294
Foreign		(1,025	)		786			665
Total current		459,784			324,114			296,007
Deferred:
Federal		(8,916	)		(15,328	)		(43,236	)
State		(4,906	)		(1,859	)		(4,076	)
Foreign		23			—			(208	)
Total deferred		(13,799	)		(17,187	)		(47,520	)
Total provision for income taxes	$	445,985		$	306,927		$	248,487

Deferred tax assets and liabilities result primarily from temporary differences in book versus tax basis accounting. Deferred tax assets and liabilities consist of the following as of August 31:

($ in thousands)	2009			2008
Gross deferred tax assets:
Allowance for doubtful accounts	$	42,602		$	30,936
Deferred rent		8,950			7,647
Deferred tenant improvement allowances		15,087			16,080
Net operating loss carry-forward		14,332			6,277
Reserves		39,686			13,822
Share-based compensation		62,784			66,070
Other		22,619			16,155
Valuation allowance		(11,447	)		(3,245	)
Total gross deferred tax assets		194,613			153,742
Gross deferred tax liabilities:
Fixed assets		35,795			2,909
Intangible assets		54,399			2,222
Other		5,779			6,421
Total gross deferred tax liabilities		95,973			11,552
Net deferred income taxes	$	98,640		$	142,190

During fiscal year 2009, the valuation allowance increased by $8.2 million primarily as a result of an increase in net operating losses of Apollo Global and certain foreign subsidiaries. We have recorded a valuation allowance related to these net operating losses and our foreign tax credit carry-forwards, as it is more likely than not that these carry-forwards will expire unutilized. In light of our history of profitable operations, management has concluded that it is more likely than not that we will ultimately realize the full benefit of our deferred tax assets other than the items mentioned above. Accordingly, we believe that a valuation allowance should not be recorded for our remaining net deferred tax assets.

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As of August 31, 2009, we have foreign tax credits of $2.1 million included in other in the above table. These credits will begin to expire August 31, 2013.

We have U.S. net operating losses of $26.3 million that will begin to expire August 31, 2021. In addition, we have $16.1 million of net operating and capital losses in various foreign jurisdictions of which $10.5 million of these foreign losses will begin to expire on August 31, 2027. The remainder of these losses do not expire. These amounts represent the net operating loss carry-forward in the above table.

We have not provided deferred taxes on unremitted earnings attributable to international companies that have been considered to be permanently reinvested. As of August 31, 2009, any earnings related to the operations of these foreign subsidiaries are not considered to be significant. It is not currently practicable to determine the amount of liability, if any, that would exist if such earnings were not permanently reinvested.

We exercise significant judgment in determining our income tax provision due to transactions, credits and calculations where the ultimate tax determination is uncertain. The following is a tabular reconciliation of the total amount of unrecognized tax benefits, excluding interest and penalties, at the beginning and the end of the period for fiscal year 2009:

($ in thousands)
Balance at September 1, 2007	$	36,453
Additions for tax positions taken in prior years		—
Settlement with tax authorities		—
Reductions for tax positions of prior years		—
Reductions due to lapse of applicable statute of limitations		—
Balance at August 31, 2008		36,453
Additions based on tax positions taken in the current year		41,440
Additions for tax positions taken in prior years		3,007
Additions related to acquisition		4,289
Settlement with tax authorities		—
Reductions for tax positions of prior years		—
Reductions due to lapse of applicable statute of limitations		(328	)
Balance at August 31, 2009	$	84,861

In fiscal year 2009, we accrued $80.5 million as an estimated litigation loss. The deductibility of a portion of this charge is currently uncertain, and so we did not recognize a tax benefit for a portion of the charge recorded in fiscal year 2009. Our unrecognized tax benefits were also increased in fiscal year 2009 for an uncertainty related to allocation and apportionment of income among various states.

We classify interest and penalties related to uncertain tax positions as a component of provision for income taxes in our Consolidated Statements of Income. We recognized $4.4 million and $3.9 million of interest and penalties in the Consolidated Statements of Income for fiscal years 2009 and 2008, respectively. The total amount of interest and penalties included in our Consolidated Balance Sheets is $23.2 million and $18.8 million as of August 31, 2009 and August 31, 2008 respectively.

We have included $85.7 million, inclusive of interest and penalties, of our uncertain tax liability in the current portion of long-term liabilities in our Consolidated Balance Sheets because we believe that it is reasonably possible that this portion of our uncertain tax liability could be resolved or settled within the next 12 months. The current portion of our uncertain tax liabilities primarily relates to certain deductions taken that may be subject to Internal Revenue Code Section 162(m), and allocation and apportionment of income

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amongst the various states in which we operate. Our remaining uncertain tax positions and related accrued interest and penalties are included in other long-term liabilities in our Consolidated Balance Sheets.

As of August 31, 2009, $55.8 million of our total unrecognized tax benefits would favorably affect our effective tax rate, if recognized. However, if amounts accrued are less than amounts ultimately assessed by the taxing authorities, we would record additional income tax expense in our Consolidated Statements of Income.

Our U.S. federal tax years and various state tax years from 2003 remain subject to income tax examinations by tax authorities. In addition, tax years from 2006 related to our foreign taxing jurisdictions also remain subject to examination.

The provision for income taxes differs from the tax computed using the statutory U.S. federal income tax rate as a result of the following items for fiscal years 2009, 2008 and 2007:

	2009			2008			2007
Statutory U.S. federal income tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal benefit		5.1	%		4.1	%		3.6	%
Non-deductible compensation		0.4	%		0.0	%		0.5	%
Tax-exempt interest		(0.1	)%		(0.9	)%		(1.4	)%
Foreign taxes		0.6	%		0.4	%		0.1	%
Estimated litigation loss		1.0	%		0.0	%		0.0	%
Other, net		0.9	%		0.6	%		0.0	%
Effective income tax rate		42.9	%		39.2	%		37.8	%

An audit relating to our U.S. federal income tax returns for fiscal years 2003 through 2005 commenced in September 2006. In February 2009, the Internal Revenue Service issued an examination report and proposed to disallow deductions relating to stock option compensation in excess of the limitations of Internal Revenue Code Section 162(m). Under Section 162(m), the amount of such deduction per covered executive officer is limited to $1.0 million per year, except to the extent the compensation qualifies as performance-based. Compensation attributable to options with revised measurement dates may not have qualified as performance-based compensation. The Internal Revenue Service examination report also proposed the additions of penalties and interest. The proposed adjustments, including penalties and interest, are consistent with our prior accruals relating to this issue. In addition, we expensed an additional $2.4 million in fiscal year 2009 related to interest, for a total accrual of $50.0 million as of August 31, 2009 with respect to this uncertain tax position for the taxable years 2003 through 2006. On March 6, 2009, we commenced administrative proceedings with the Office of Appeals of the Internal Revenue Service challenging the proposed adjustments, including penalties and interest. We believe this matter will be settled within 12 months and the accrual is now classified as short-term. In October of 2009, we reached an agreement in principle subject to negotiation of final documentation with the Internal Revenue Service Office of Appeals to settle this matter for less than the $50 million we have accrued at August 31, 2009. The settlement, when finalized, will result in a reduction in the amount currently accrued and a related decrease in our effective tax rate for a portion of that reduced accrual.

During the third quarter of 2009, we were notified by the Internal Revenue Service that our tax returns for the years ended in 2006, 2007, and 2008 have been selected for examination. This audit commenced during the fourth quarter. In addition, we are subject to numerous ongoing audits by state, local, and foreign tax authorities. Although we believe our tax accruals to be reasonable, the final determination of tax audits in the U.S. or abroad and any related litigation could be materially different from our historical income tax provisions and accruals. The result of an audit or litigation could have a material effect on our business, financial condition, results of operations and cash flows.

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Note 14.   Stockholders’ Equity

Treasury Stock

Shares of Apollo Group Class A common stock newly authorized for repurchase, repurchased and reissued, and the related total cost, for the last three fiscal years are as follows:

									Maximum Value
	Total Number of						Average Price		of Shares
	Shares						Paid per		Available for
(Numbers in thousands, except per share data)	Repurchased			Cost			Share		Repurchase
Treasury stock as of August 31, 2006		15,449		$	1,054,046		$	68.23	$	136,092
New authorizations		—			—			—		363,908
Shares repurchased under repurchase program		7,167			437,735			61.08		(437,735	)
Shares reissued		(453	)		(30,413	)		67.31		—
Treasury stock as of August 31, 2007		22,163			1,461,368			65.94		62,265
New authorizations		—			—			—		892,097
Shares repurchased under repurchase program		9,824			454,362			46.25		(454,362	)
Shares reissued		(2,451	)		(158,453	)		64.65		—
Treasury stock as of August 31, 2008		29,536			1,757,277			59.50		500,000
New authorizations		—			—			—		444,382
Shares repurchased under repurchase program		7,212			444,382			61.62		(444,382	)
Other share repurchases(1)		119			8,105			68.11		—
Shares reissued		(3,121	)		(187,141	)		59.96		—
Treasury stock as of August 31, 2009		33,746		$	2,022,623		$	59.94	$	500,000

(1) In connection with the release of vested shares of restricted stock, we repurchased approximately 119,000 shares for $8.1 million related to tax withholding requirements on these restricted stock units during the fiscal year 2009. We did not have any such repurchases during fiscal years 2008 and 2007. These repurchase transactions do not fall under the repurchase program described below, and therefore do not reduce the amount that is available for repurchase under that program.

Our Board of Directors has authorized us to repurchase outstanding shares of Apollo Group Class A common stock, from time to time, depending on market conditions and other considerations. There is no expiration date on the repurchase authorizations and repurchases occur at our discretion. Repurchases may be made on the open market or in privately negotiated transactions, pursuant to the applicable Securities and Exchange Commission rules, and may include repurchases pursuant to Securities and Exchange Commission Rule 10b5-1 nondiscretionary trading programs. The amount and timing of future share repurchases, if any, will be made as market and business conditions warrant.

During fiscal years 2009, 2008 and 2007, we issued approximately 3.1 million, 2.5 million and 0.5 million shares of our Class A common stock, respectively, as a result of stock option exercises, release of shares covered by vested restricted stock units, and purchases under our employee stock purchase plan.

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Accumulated Other Comprehensive Loss

The following table summarizes the components of accumulated other comprehensive loss, net of $1.5 million and $0.5 million of taxes in fiscal years 2009 and 2008 respectively, at August 31:

($ in thousands)	2009		2008
Foreign currency translation losses	$	14,690	$	2,985
Unrealized loss on auction-rate securities		1,363		973
Accumulated other comprehensive loss	$	16,053	$	3,958

The increase in foreign currency translation losses is the result of a general strengthening of the U.S. dollar relative to foreign currencies during fiscal year 2009.

Note 15.   Earnings Per Share

Our outstanding shares consist of Apollo Group Class A and Class B common stock. Our Articles of Incorporation treat the declaration of dividends on the Apollo Group Class A and Class B common stock in an identical manner. As such, both the Apollo Group Class A and Class B common stock are included in the calculation of our earnings per share.

Diluted weighted average shares outstanding includes the incremental effect of shares that would be issued upon the assumed exercise of stock options and the vesting and release of restricted stock units. The following provides a reconciliation of the basic and diluted earnings per share computations for our common stock for the periods indicated:

	Year Ended August 31,
	2009							2008							2007
			Weighted							Weighted							Weighted
			Average		Per Share					Average		Per Share					Average		Per Share
(in thousands, except per share data)	Income		Shares		Amount			Income		Shares		Amount			Income		Shares		Amount
Basic income per share	$	598,319		157,760	$	3.79		$	476,525		164,109	$	2.90		$	408,810		172,309	$	2.37
Effect of dilutive securities:
Stock options		—		1,482		(0.03	)		—		1,598		(0.03	)		—		1,293		(0.02	)
Restricted stock units		—		272		(0.01	)		—		163		—			—		1		—
Diluted income per share	$	598,319		159,514	$	3.75		$	476,525		165,870	$	2.87		$	408,810		173,603	$	2.35

During fiscal year 2009, approximately 3.6 million of our stock options outstanding and approximately 6,000 of our restricted stock units were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. These options and restricted stock units could be dilutive in the future.

Note 16.   Stock and Savings Plans

401(k) Plan

We sponsor a 401(k) plan for eligible employees which provides them with the opportunity to make pre-tax employee contributions. Such contributions are subject to certain restrictions as set forth in the Internal Revenue Code. Upon a participating employee’s completion of one year of service and 1,000 hours worked, we will match, at our discretion, 30% of such employee’s contributions up to 15% of his or her gross compensation per paycheck. Our matching contributions totaled $9.6 million, $8.1 million and $6.7 million for fiscal years 2009, 2008 and 2007, respectively.

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Employee Stock Purchase Plan

Our Third Amended and Restated 1994 Employee Stock Purchase Plan allows eligible employees to purchase shares of our Class A common stock at quarterly intervals through periodic payroll deductions at a price per share equal to 95% of the fair market value on the purchase date. This plan is deemed to be non-compensatory, and accordingly, we do not recognize any share-based compensation expense with respect to the shares of our Class A common stock purchased under the plan.

Share-Based Compensation Plans

We maintain the following three share-based compensation plans: the Apollo Group, Inc. Second Amended and Restated Director Stock Plan, the Apollo Group, Inc. Long Term Incentive Plan, and the Apollo Group, Inc. Amended and Restated 2000 Stock Incentive Plan.

Under the Second Amended and Restated Director Stock Plan, the non-employee members of our Board of Directors received on September 1 of each year through 2003 options to purchase shares of our Class A common stock. No additional shares are available for issuance under this plan, and no grants have been made under such plan since the 2003 calendar year grants.

The Long Term Incentive Plan authorized us to grant non-qualified stock options, stock appreciation rights, restricted stock units, and other share-based awards covering shares of our Class A common stock to officers, key employees and the non-employee members of our Board of Directors. On June 25, 2009, the remaining unallocated reserve of approximately 1.0 million shares of our Class A common stock was transferred to the Amended and Restated 2000 Stock Incentive Plan. As a result, no additional shares are available for issuance under this plan.

Under the Amended and Restated 2000 Stock Incentive Plan, we may grant non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock units, and other share-based awards covering shares of our Class A common stock to officers, key employees and faculty members, and the non-employee members of our Board of Directors. In general, the awards granted under the Amended and Restated 2000 Stock Incentive Plan vest over periods ranging from six months to four years. Stock options granted have contractual terms of 10 years or less. For certain stock options granted, vesting may be tied to the attainment of prescribed market conditions tied to stock price appreciation. Restricted stock units issued under the Plan may have both performance-vesting and service- vesting components (for grants made to executive officers) or service-vesting only (for other recipients). Approximately 25.1 million shares of our Class A common stock (including the 1.0 million shares transferred from the Long-Term Incentive Plan) have been reserved for issuance over the term of this plan. The shares are issued from treasury shares or our authorized but unissued shares of our Class A common stock. As of August 31, 2009, approximately 16.3 million authorized and unissued shares of our Class A common stock were available for issuance under the Amended and Restated 2000 Stock Incentive Plan, including the shares subject to outstanding equity awards under such plan. In connection with our acquisition of Aptimus approximately 0.1 million shares of assumed stock options and stock appreciation rights to be settled in shares of our Class A common stock were also outstanding as of August 31, 2009.

Under each of the three Apollo Group Plans, the exercise price for stock options may not be less than 100% of the fair market value of our Class A common stock on the date of the grant. The requisite service period for all awards is equal to the vesting period.

Restatement of Share-Based Compensation and Stock Option Modifications

In May 2007, we restated prior period financial results due to errors that occurred in the accounting for share-based compensation. As a result of the restatement, we had to take the following actions with respect to certain outstanding options under our plans.

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Stock Option Modifications

On January 12, 2007, the Compensation Committee of our Board of Directors approved a resolution to modify the terms of the stock option grants for approximately 50 individuals. These modifications extended the normal 90-day post-employment exercise period in effect for options held by former employees, including officers, whose employment terminated on or after November 3, 2006, and allowed those individuals an additional period of time to exercise any of their options that were “in the money” at the end of the initial 90-day post-employment exercise period. We extended the exercise periods of these options because we were unable, during the financial statement restatement process as described in our 2007 Annual Report on Form 10-K, to issue shares of our Class A common stock to such individuals, in compliance with the applicable registration requirements of the Securities Act of 1933, as amended. Absent the extension, the options would have expired before the former employees had the opportunity to exercise their “in the money” options, since the 90-day post-employment exercise period would have expired prior to the completion of our financial statement restatement process.

As a result of these modifications, we recorded a non-cash charge to share-based compensation of $12.1 million during the second quarter of fiscal year 2007. In addition, applicable accounting guidance for the modified awards held by former employees whose employment terminated prior to the January 12, 2007 modification required us to report the awards classified as liabilities at their fair value as of each balance sheet date. Any increase or decrease in this fair value was recorded in general and administrative expense in our Consolidated Statements of Income. Of the $12.1 million in expense recognized upon modification of the awards, $11.8 million related to awards classified as liabilities. The subsequent fair value adjustments recorded as expense for the liability classified awards totaled $2.7 million for the year ended August 31, 2008. As all awards had been exercised as of November 30, 2007, there are no liabilities in our Consolidated Balance Sheets as of August 31, 2009 and 2008 associated with these modifications.

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Stock Options

During fiscal years 2009, 2008, and 2007, we granted stock options with a service vesting condition to the members of our Board of Directors, officers, and certain faculty and management employees. During fiscal year 2009, we also granted stock options with a service and a market vesting condition to certain members of our management team. We measure the fair value of stock options as of the date of grant. We amortize the share-based compensation expense, net of forfeitures, over the expected vesting period using the straight-line method for awards with only a service condition, and the graded vesting attribution method for awards with a service and a market vesting condition. The vesting period of the stock options granted generally ranges from six months to four years. A summary of the activity and changes related to stock options and stock appreciation rights granted under our plans is as follows:

				Weighted		Weighted
				Average		Average
				Exercise		Remaining		Aggregate
	Total			Price per		Contractual		Intrinsic
(numbers in thousands, except per share data)	Shares			Share		Term (Years)		Value ($)(1)
Outstanding as of August 31, 2006		9,324		$	44.96
Granted		7,089			58.48
Exercised		(409	)		26.80
Forfeited, canceled or expired		(2,635	)		64.83
Outstanding as of August 31, 2007		13,369			48.90
Granted		2,508			62.08
Assumed upon acquisition		106			72.15
Exercised		(2,348	)		41.46
Forfeited, canceled or expired		(1,258	)		51.71
Outstanding as of August 31, 2008		12,377			52.41
Granted		1,164			68.08
Exercised		(2,707	)		41.18
Forfeited, canceled or expired		(572	)		64.24
Outstanding as of August 31, 2009		10,262		$	56.49		4.26	$	100,144
Vested and expected to vest as of August 31, 2009		9,837		$	56.32		4.24	$	97,781
Exercisable as of August 31, 2009		5,364		$	53.57		3.95	$	69,319
Available for future grant as of August 31, 2009		5,140

(1) Aggregate intrinsic value represents the value of our closing stock price of $64.84 on August 31, 2009 in excess of the weighted average exercise price multiplied by the number of options outstanding or exercisable with an exercise price less than the closing stock price.

As of August 31, 2009, there was approximately $79.7 million of total unrecognized share-based compensation cost, net of forfeitures, related to unvested stock options and stock appreciation rights. These costs are expected to be recognized over a weighted average period of 2.24 years. The fair value of stock options and stock appreciation rights that vested during fiscal years 2009, 2008 and 2007 was $54.1 million, $35.5 million and $20.7 million, respectively.

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The following table summarizes information related to outstanding and exercisable options and stock appreciation rights as of August 31, 2009:

	Outstanding						Exercisable
			Weighted Avg.		Weighted Avg.				Weighted Avg.
			Contractual		Exercise				Exercise
Range of			Life		Price				Price
Exercise Prices	Outstanding		Remaining		per Share		Exercisable		per Share
(options in thousands)
$3.27 to $30.77		832		1.87	$	21.03		832	$	21.03
$41.92 to $50.68		1,386		3.66	$	47.29		802	$	46.68
$51.33 to $57.54		1,455		5.69	$	53.51		603	$	52.46
$58.03 to $58.03		2,447		3.50	$	58.03		1,109	$	58.03
$58.43 to $70.02		3,190		5.03	$	64.13		1,260	$	62.58
$70.21 to $83.40		939		4.36	$	75.21		746	$	75.14
$91.20 to $173.32		13		5.83	$	121.33		12	$	124.31
$3.27 to $173.32		10,262						5,364

The following table summarizes information related to stock options and stock appreciation rights exercised for fiscal years 2009, 2008 and 2007:

	Year Ended August 31,
($ in thousands)	2009		2008		2007
Amounts related to options exercised:
Intrinsic value realized by optionees	$	94,638	$	65,198	$	10,824
Actual tax benefit realized by Company for tax deductions	$	21,732	$	25,516	$	2,095

The shares issued upon the exercise of stock options and stock appreciation rights were drawn from treasury shares or from our authorized but unissued shares of Class A common stock. Cash received from stock option exercises during fiscal years 2009, 2008, and 2007, totaled approximately $103.5 million, $97.4 million, and $6.2 million, respectively.

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Restricted Stock Units

During fiscal years 2009, 2008, and 2007, we granted restricted stock units covering shares of our Class A common stock with a service and a performance vesting condition to several of our officers. We also granted restricted stock units with only a service vesting condition to the members of our Board of Directors, officers, and certain faculty and management employees. We measure the fair value of restricted stock units as of the date of grant. We amortize the share-based compensation expense, net of forfeitures, over the expected vesting period using the straight-line method for awards with only a service condition, and the graded vesting attribution method for awards with a service and a performance condition. The vesting period of the restricted stock units granted generally ranges from six months to four years. A summary of the activity and changes related to restricted stock units granted under our plans is as follows:

				Weighted
				Average
	Number of			Grant Date
(numbers in thousands, except per share data)	Shares			Fair Value
Nonvested balance at August 31, 2006		—		$	—
Granted		338			58.03
Vested and released		(13	)		58.03
Forfeited		—			—
Nonvested balance at August 31, 2007		325			58.03
Granted		522			58.20
Vested and released		—			—
Forfeited		(132	)		57.95
Nonvested balance at August 31, 2008		715			58.17
Granted		645			69.49
Vested and released		(324	)		60.96
Forfeited		(38	)		57.58
Nonvested balance at August 31, 2009		998		$	62.88

As of August 31, 2009, there was approximately $42.4 million of total unrecognized share-based compensation cost, net of forfeitures, related to unvested restricted stock units. These costs are expected to be recognized over a weighted average period of 2.80 years. The fair value of restricted stock units that vested during fiscal years 2009, 2008 and 2007 was $23.2 million, zero and $0.8 million, respectively.

Share-based Compensation Expense

The table below outlines share-based compensation expense for fiscal years 2009, 2008, and 2007:

	Year Ended August 31,
(numbers in thousands)	2009			2008			2007
Instructional costs and services	$	22,071		$	20,609		$	13,346
Selling and promotional		5,657			3,603			3,069
General and administrative		40,310			29,358			37,612
Share-based compensation expense included in operating expenses		68,038			53,570			54,027
Tax effect of share-based compensation		(26,603	)		(21,013	)		(21,189	)
Share-based compensation expense, net of tax	$	41,435		$	32,557		$	32,838

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Share-based Compensation Expense Assumptions

Fair Value.  We typically use the Black-Scholes-Merton option pricing model to estimate the fair value of our options as of the grant dates using the following weighted average assumptions:

	Year Ended August 31,
	2009			2008			2007
Weighted average fair value	$	27.32		$	23.95		$	18.84
Expected volatility		47.7	%		44.2	%		32.7	%
Expected life (years)		4.2			4.2			4.2
Risk-free interest rate		2.2	%		2.9	%		4.9	%
Dividend yield		0.0	%		0.0	%		0.0	%

Expected Volatility.  We use an average of our historical volatility and the implied volatility of long-lived call options to estimate expected volatility.

Expected Term (years).  We generally use the simplified mid-point method to estimate the expected term of stock options. The simplified method for estimating expected term uses the mid-point between the vesting term and the contractual term of the share option. We have analyzed the circumstances in which the use of the simplified method is appropriate, and we have opted to use this method for options granted to management in fiscal years 2009 and 2008, as historical data is not comparable in order to determine the expected term of current awards.

Risk-Free Interest Rate.  We use the U.S. constant maturity treasury rates as the risk-free rate interpolated between the years commensurate with the expected life assumptions.

Dividend Yield.  The dividend yield assumption is based on the fact that we have not historically paid dividends and do not expect to pay dividends in the future.

Forfeitures.  We estimate expected forfeitures of share-based awards at the time of grant and recognize compensation cost only for those awards expected to vest. We estimate our forfeiture rate based on several factors, including historical forfeiture activity, expected future employee turnover, and other qualitative factors. We ultimately adjust the recognized compensation expense to reflect actual forfeiture activity. As a result, changes in the estimated forfeiture rate do not impact the total share-based compensation expense ultimately recognized over the vesting period; rather, adjustments to the forfeiture assumptions only impact the timing of expense recognition over the vesting period.

Expected Vesting Period.  We amortize the share-based compensation expense, net of forfeitures, over the expected vesting period using the straight-line method for awards with only service conditions, and the graded vesting attribution method for awards with performance or market conditions.

Note 17.   Related Person Transactions

Dr. John G. Sperling Note Receivable

In August 1998, we, together with Hughes Network Systems and Hermes Onetouch, LLC, formed Interactive Distance Learning, Inc., a new corporation, to acquire One Touch Systems, a provider of interactive distance learning solutions. We contributed $10.8 million in October 1999 and $1.2 million in December 1999, in exchange for a 19% interest in Interactive Distance Learning. We accounted for our investment in Interactive Distance Learning under the cost method. Hermes is owned by Dr. John G. Sperling, our Founder, Executive Chairman of the Board and Director.

On December 14, 2001, Hermes acquired our investment in Interactive Distance Learning in exchange for a promissory note in the principal amount of $11.9 million, which represented the related carrying value. The promissory note accrued interest at a fixed annual rate of six percent. The promissory note was repaid in full during fiscal year 2009.

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Governmental Advocates, Inc.

Effective July 1, 1989, we entered into an agreement with Governmental Advocates, Inc. to provide consulting services to us with respect to matters concerning legislation, regulations, public policy, electoral politics, and any other topics of concern to us relating to state government in the state of California. Hedy F. Govenar, who served as a director of Apollo through May 2007, is the founder and Chairwoman of Governmental Advocates, Inc. Pursuant to the agreement, we paid consulting fees to Governmental Advocates, Inc. of $0.1 million in fiscal year 2007, while Ms. Govenar served as a director of Apollo.

Yo Pegasus, LLC

Yo Pegasus, LLC, an entity controlled by Dr. John G. Sperling, leases an aircraft to us as well as to other entities. Payments to Yo Pegasus for the business use of the airplane, including hourly flight charges, fuel, and direct operating expenses during fiscal years 2009, 2008, and 2007 were $0.2 million, $0.4 million, and $0.3 million, respectively. These amounts are included in general and administrative expenses in the Consolidated Statements of Income. Additionally, through May 2007 the pilots were employed by us and the costs of salaries and fringe benefits were paid through our payroll and are included in general and administrative expenses in the Consolidated Statements of Income. The cost to us, including payments made to Yo Pegasus and the cost of pilots’ wages (including fringe benefits) during fiscal years 2009, 2008, and 2007 were $0.2 million, $0.4 million, and $0.5 million, respectively.

TKG Contact Center, Inc.

We entered into a sublease with TKG Contact Center, Inc., an entity controlled by Dr. John G. Sperling, to lease 56,410 square feet of office space in Tempe, Arizona, for the period from July 1, 2006 to November 30, 2007. We extended the lease to December 7, 2007. Payments to this entity during fiscal years 2008 and 2007 were $0.3 million and $0.9 million, respectively.

Sperling Gallery

We lease certain artwork pursuant to a contract between Apollo Group and an art gallery owned by Virginia Sperling. Virginia Sperling is the former wife of Dr. John Sperling and the mother of Mr. Peter Sperling. Lease payments under the contract during fiscal years 2009, 2008, and 2007 were $34,000, $37,000, and $37,000, respectively.

Credit Suisse Share Repurchase Services

During fiscal years 2008 and 2007, Credit Suisse Securities (USA) LLC, an affiliate of the previous employer of Charles B. Edelstein and Gregory W. Cappelli, our Co-Chief Executive Officers, managed a share repurchase program for Apollo. We paid Credit Suisse Securities approximately $196,000 and $143,000 in commissions for this service during fiscal years 2008 and 2007, respectively. Our engagement of Credit Suisse Securities and payment of these fees occurred after Mr. Cappelli joined Apollo in March 2007, and prior to the time Mr. Edelstein accepted employment with Apollo in July 2008.

Earth Day Network

University of Phoenix Foundation, a non-profit entity affiliated with the University of Phoenix, provided grants totaling $100,000 and $50,000 in fiscal years 2009 and 2008, respectively, to Earth Day Network. Art Edelstein, the Director of Development of Earth Day Network, is the brother of Charles B. Edelstein, our Co-Chief Executive Officer.

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Cisco Systems, Inc.

During fiscal year 2009, we purchased goods and services from Cisco Systems, Inc., directly and through third party sellers, in the normal course of our business, and we expect to do so in the future. Manuel F. Rivelo, a member of our Board of Directors, is employed by Cisco Systems, Inc. as Senior Vice President of Enterprise Systems and Operations.

Deferred Compensation Agreement with Dr. John G. Sperling

The deferred compensation agreement relates to an agreement between Apollo and Dr. John G. Sperling. The related $2.5 million liability balance is included in other long-term liabilities in our Consolidated Balance Sheets.

Note 18.   Commitments and Contingencies

Guarantees

We have agreed to indemnify our officers and directors for certain events or occurrences. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have director and officer liability insurance policies that mitigate our exposure and enable us to recover a portion of any future amounts paid. As a result of our insurance policy coverage, management believes the estimated fair value of these indemnification agreements is minimal.

Lease Commitments

We are obligated under property and equipment leases under both capital leases and operating leases. The following is a schedule of future minimum lease commitments as of August 31, 2009:

($ in thousands)	Capital Leases(1)			Operating Leases
2010	$	2,679		$	147,332
2011		2,066			144,263
2012		7,909			119,924
2013		11,026			90,827
2014		10,981			76,931
Thereafter		113,736			177,646
Total future minimum lease obligation(2)	$	148,397		$	756,923
Less: imputed interest on capital leases		(37,868	)
Net present value of lease obligations	$	110,529

(1)

The total future minimum lease obligation associated with capital leases includes lease payments for a lease agreement executed in fiscal year 2009 for a building to be constructed and for which we do not have the right to control the use of the property under the lease at August 31, 2009. The future minimum lease payments associated with this lease are $139.5 million, which includes $36.2 million of imputed interest.

(2)

The total future minimum lease obligation excludes noncancelable sublease rental income of $3.1 million.

Facility and equipment expense under leases totaled $162.5 million, $156.2 million and $150.0 million for fiscal years 2009, 2008 and 2007, respectively.

We have entered into five separate sale-leaseback agreements with unrelated third parties. These agreements were related to property located throughout Phoenix, Arizona, which we currently use to support our operations. The property is subject to ten-year lease terms expiring between 2010 and 2014. In total we

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received approximately $46.2 million in cash for the property, which generated a combined gain of approximately $17.5 million that is being deferred over the respective lease terms. We recognized total gains of $1.7 million, $1.8 million and $1.8 million in fiscal years 2009, 2008 and 2007, respectively, in the Consolidated Statements of Income. The balance of the total deferred gain was $7.0 million as of August 31, 2009 and $8.7 million as of August 31, 2008, included in other liabilities on the Consolidated Balance Sheets.

Naming Rights to Glendale, Arizona Sports Complex

On September 22, 2006, we entered into a Naming and Sponsorship Rights Agreement with New Cardinals Stadium, L.L.C. and B&B Holdings, Inc. doing business as the Arizona Cardinals, third parties unrelated to Apollo, for naming and sponsorship rights on a stadium in Glendale, Arizona, which is home to the Arizona Cardinals team in the National Football League. The agreement includes naming, sponsorship, signage, advertising and other promotional rights and benefits. The initial agreement term is in effect until 2026 with options to extend. Pursuant to the agreement, we were required to pay a total of $5.8 million for the 2006 contract year, which is increased 3% per year until 2026. Other payments apply if certain events occur, such as if the Cardinals play in the Super Bowl or if all of the Cardinals’ regular season home games are sold-out.

Contingencies Related to Litigation and Other Proceedings

The following is a description of pending litigation, settlements, and other proceedings that fall outside the scope of ordinary and routine litigation incidental to our business.

Pending Litigation and Settlements

Incentive Compensation False Claims Act Lawsuit

On August 29, 2003, we were notified that a qui tam action had been filed against us on March 7, 2003, in the U.S. District Court for the Eastern District of California by two then-current employees on behalf of themselves and the federal government. When the federal government declines to intervene in a qui tam action, as it has done in this case, the relators may elect to pursue the litigation on behalf of the federal government and, if they are successful, are entitled to receive a portion of the federal government’s recovery. The qui tam action alleges, among other things, violations of the False Claims Act, 31 U.S.C. § 3729(a)(1) and (2), by University of Phoenix through submission of a knowingly false or fraudulent claim for payment or approval, and submission of knowingly false records or statements to get a false or fraudulent claim paid or approved in connection with federal student aid programs. The qui tam action also asserts that University of Phoenix improperly compensates its employees. Specifically, the relators allege that our entry into Program Participation Agreements with the U.S. Department of Education under Title IV of the Higher Education Act, as reauthorized, constitutes a false claim because we did not intend to comply with the applicable employee compensation requirements and, therefore, we should be required to pay to the U.S. Department of Education treble the amount of costs incurred by the U.S. Department of Education in student loan defaults, student loan subsidies and student financial aid grants from January 1997 to the present, plus statutory penalties and forfeiture amounts. We believe that at all relevant times our compensation programs and practices were in compliance with the applicable legal requirements. Under the District Court’s current Scheduling Order, trial is set for March 2010.

In September 2009, the parties to the action, along with the U.S. Department of Justice, participated in a private mediation in which the parties reached an agreement in principle regarding the financial terms of a potential settlement. Significant other terms remain to be negotiated, and there is no certainty that a final agreement will be reached. Pursuant to a joint request by the parties, on October 2, 2009, the Court granted a stay of all litigation proceedings for 45 days while the parties attempt to negotiate a final settlement. The ultimate dismissal of the action, should a final settlement be reached, is subject to the Court’s approval.

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During the fourth quarter of fiscal year 2009, based on the settlement discussions to resolve this matter, we recorded a pre-tax charge of $80.5 million which represents our best estimate of the loss related to this matter. The actual amount of this loss will not be known until a final settlement agreement, if any, is reached.

If we do not successfully conclude these settlement negotiations, the outcome of this legal proceeding is uncertain because of the many questions of fact and law that may arise. Any subsequent settlement or final disposition of this litigation could be on terms less favorable than our current proposed settlement and could have a material and adverse affect on our business, financial condition, results of operations and cash flows.

Securities Class Action

In October 2004, three class action complaints were filed in the U.S. District Court for the District of Arizona. The District Court consolidated the three pending class action complaints under the caption In re Apollo Group, Inc. Securities Litigation, Case No. CV04-2147-PHX-JAT and a consolidated class action complaint was filed on May 16, 2005 by the lead plaintiff. The consolidated complaint named us, Todd S. Nelson, Kenda B. Gonzales and Daniel E. Bachus as defendants. On March 1, 2007, by stipulation and order of the Court, Daniel E. Bachus was dismissed as a defendant from the case. Lead plaintiff represents a class of our shareholders who acquired their shares between February 27, 2004 and September 14, 2004. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated under the Act by us for defendants’ allegedly material false and misleading statements in connection with our failure to publicly disclose the contents of a preliminary U.S. Department of Education program review report. The case proceeded to trial on November 14, 2007. On January 16, 2008, the jury returned a verdict in favor of the plaintiffs awarding damages of up to $5.55 for each share of common stock in the class suit, plus pre-judgment and post-judgment interest. The class shares are those purchased after February 27, 2004 and still owned on September 14, 2004. The judgment was entered on January 30, 2008, subject to an automatic stay until February 13, 2008. On February 13, 2008, the District Court granted our motion to stay execution of the judgment pending resolution of our motions for post-trial relief, which were also filed on February 13, 2008, provided that we post a bond in the amount of $95.0 million. On February 19, 2008, we posted the $95.0 million bond with the District Court. Oral arguments on our post-trial motions occurred on August 4, 2008, during which the District Court vacated the earlier judgment based on the jury verdict and entered judgment in favor of Apollo and the other defendants. The $95.0 million bond posted in February was subsequently released on August 11, 2008. Plaintiffs’ lawyers filed a Notice of Appeal with the Ninth Circuit Court of Appeals on August 29, 2008. A hearing date for the appeal has not been set. The plaintiffs’ filed their opening brief on May 18, 2009 and we filed our response brief on August 20, 2009.

In the second quarter of fiscal year 2008, we recorded a charge for estimated damages of $168.4 million as a result of the jury verdict awarded in favor of the plaintiffs. The original charge was recorded at the mid-point of the range of $120.5 million to $216.4 million and was estimated for financial reporting purposes, using statistically valid models and a 60% confidence interval which included our estimate of damages based on the verdict, our estimate of potential amounts we expected to reimburse our insurance carriers, our estimate of future defense costs and legal and other professional fees incurred during the second quarter of fiscal year 2008. At that time, we elected to record the mid-point of the range because under statistically valid modeling techniques the mid-point of the range was a more likely estimate than other points in the range, and the point at which there was an equal probability that the ultimate loss could be toward the lower end or the higher end of the range. In the third quarter of fiscal year 2008, we recorded an additional charge of $1.6 million for interest on the estimated damages.

In the fourth quarter of fiscal year 2008, we reversed the original estimated charge and related pre- and post-judgment interest totaling $170.0 million because the District Court vacated the earlier judgment and entered judgment in favor of Apollo. Applying similar assumptions used to estimate the original charge,

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including if the plaintiffs were to prevail in a judgment on appeal, we currently estimate our range of loss for this matter to be between zero and $225.0 million. Damages, if any, will not be known until all court proceedings, including the plaintiffs’ appeal, have been completed. Based on information available to us at present, our management does not expect a material adverse effect on our business to result from this action. We have not accrued any liability associated with this action as of August 31, 2009.

Equal Employment Opportunity Commission v. University of Phoenix

On September 25, 2006, the Equal Employment Opportunity Commission filed a Title VII action against University of Phoenix captioned Equal Employment Opportunity Commission v. University of Phoenix, Inc., No. CV-06-2303-PHX-MHM, in the U.S. District Court for the District of Arizona on behalf of four identified former employees and an asserted class of unidentified former and current employees who were allegedly discriminated against because they were not members of the Church of Jesus Christ of Latter-day Saints. The Complaint also alleged that some of the employees were retaliated against after complaining about the alleged discrimination. University of Phoenix answered the Complaint on December 8, 2006, denying the material allegations asserted. During the course of discovery, the Equal Employment Opportunity Commission identified approximately 48 additional class members on whose behalf it was seeking relief. The parties subsequently reached a settlement resolving this action through a consent decree that was approved by the District Court on November 7, 2008 and the case is now closed. Under the terms of the consent decree, University of Phoenix paid in the first quarter of fiscal year 2009 approximately $1.9 million to the class members and an additional $0.1 million in attorney’s fees, which we accrued for in the third quarter of fiscal year 2008. University of Phoenix will also provide, among other things, additional training and oversight to the Enrollment Department of its online campus. University of Phoenix did not admit any liability or wrongdoing in resolving this matter.

Barnett Derivative Action

On April 24, 2006, Larry Barnett, one of our shareholders, filed a shareholder derivative complaint on behalf of Apollo. The allegations in the complaint pertain to the matters that were the subject of the investigation performed by the U.S. Department of Education that led to the issuance of the U.S. Department of Education’s February 5, 2004 Program Review Report. The complaint was filed in the Superior Court for the State of Arizona, Maricopa County and is entitled Barnett v. John Blair et al, Case Number CV2006-051558. In the complaint, plaintiff asserts a derivative claim, on our behalf, for breaches of fiduciary duty against the following nine of our current or former officers and directors: John M. Blair, Dino J. DeConcini, Hedy F. Govenar, Kenda B. Gonzales, Todd S. Nelson, Laura Palmer Noone, John R. Norton III, John G. Sperling and Peter V. Sperling. Plaintiff contends that we are entitled to recover from these individuals the amount of the settlement that we paid to the U.S. Department of Education and our losses (both litigation expenses and any damages awarded) stemming from the federal securities class actions pending against us in Federal District Court as described above under “Securities Class Action.” On August 21, 2006, we filed a Motion to Stay the case pending the resolution of the federal Securities Class Action.

On October 10, 2006, plaintiff subsequently amended his complaint to include new allegations pertaining to our alleged backdating of stock option grants to Todd S. Nelson, Kenda B. Gonzales, Laura Palmer Noone, John G. Sperling and three additional defendants: J. Jorge Klor de Alva, Jerry F. Noble and Anthony F. Digiovanni. This First Amended Complaint adds allegations that the individual defendants breached their fiduciary duties to us and that certain of them were unjustly enriched by their receipt of backdated stock option grants. The plaintiff seeks, among other things, an award of unspecified damages and reasonable costs and expenses, including attorneys’ fees.

On November 10, 2006, we filed an Amended Motion to Stay the action pending resolution of the federal Securities Class Action and the Special Committee’s investigation into the allegations of stock option

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backdating. On January 29, 2007, the Court granted the Amended Motion to Stay pending the resolution of the trial in the federal Securities Class Action.

On March 7, 2008, following the entry of judgment in the federal Securities Class Action, we filed a motion to stay discovery regarding the U.S. Department of Education claims pending the disposition of post-trial motions in the federal Securities Class Action and informed the Superior Court of an imminent settlement regarding the stock option claims. On March 10, 2008, the Superior Court stayed the stock option claims. On September 17, 2008, the Superior Court dismissed the stock option backdating claims. The settlement does not apply to the U.S. Department of Education claims.

With respect to the U.S. Department of Education claims, on April 10, 2008, the plaintiff filed his Second Amended Complaint. In addition to the damages previously sought, plaintiff added a request that we recover from defendants the expenses associated with the ongoing qui tam action pending in the U.S. District Court for the Eastern District of California. On May 9, 2008, we moved for a continued stay of Counts 1-2 and dismissal of Counts 3-5 added in the Second Amended Complaint. On July 30, 2008, the Superior Court dismissed Counts 3-5, and stayed Counts 1-2, until the next pre-trial conference. At the continued pre-trial conference on October 27, 2008, the Superior Court lifted the discovery stay and set certain long-range deadlines for completion of discovery, dispositive motions, and disclosure of experts, the earliest of which is May 31, 2010. A trial, if any, is not likely to occur until some time in 2011.

On April 3, 2009, we filed a motion seeking the appointment of an independent panel consisting of Dr. Roy A. Herberger, Jr. and Stephen J. Giusto. The Court granted our motion on July 31, 2009.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, our management does not expect a material adverse effect on our business to result from this action. In addition, we cannot reasonably estimate a range of loss for this action and accordingly have not accrued any liability associated with this action.

Bamboo Partners Derivative Action

On August 15, 2006, Bamboo Partners, one of our shareholders, filed a shareholder derivative complaint on our behalf and on behalf of University of Phoenix. The lawsuit was filed in the U.S. District Court for the District of Arizona and is entitled Bamboo Partners v. Nelson et al., Case Number CIV-06-1973-PHX-SRB. The complaint names as defendants Apollo Group, Inc., University of Phoenix, Inc., Todd S. Nelson, Kenda B. Gonzales, Daniel E. Bachus, John G. Sperling, Peter V. Sperling, Laura Palmer Noone, John M. Blair, Dino J. DeConcini, Hedy F. Govenar and John Norton III. The complaint seeks contribution from defendants Nelson, Gonzales and Bachus pursuant to Sections 10(b) and 21D of the Exchange Act for damages incurred by Apollo and University of Phoenix in connection with the federal securities class action described above under “Securities Class Action,” and also alleges that all defendants committed numerous breaches of fiduciary duties associated with the facts underlying the federal Securities Class Action. In addition, the complaint asserts claims relating to Laura Palmer Noone’s sale of our stock and Todd S. Nelson’s separation agreement executed with us in January 2006. In addition to damages, the complaint seeks attorneys’ fees, reasonable costs and disbursements.

On November 13, 2006, we filed a Motion to Stay the case arguing that it is not in our best interest to prosecute plaintiffs’ purported derivative claims prior to resolution of the federal Securities Class Action. The individual defendants joined in the Motion to Stay. The Court granted our motion to stay on May 18, 2007. Following entry of judgment in the federal Securities Class Action, the Court granted our motion to extend the stay of the case pending disposition of the post-trial motions. On August 18, 2008, we notified the Court that judgment had been entered in favor of defendants in the Securities Class Action. Plaintiff filed a response on August 25, 2008 notifying the Court of its intention to file a Second Amended Complaint by September 26, 2008. The Court dissolved the stay on September 25, 2008, and ordered plaintiff to file its Second Amended

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Complaint by October 15, 2008. Plaintiff did not file the Second Amended Complaint. Instead, counsel for plaintiff, by letter dated September 25, 2008, advised the Court and defendants’ counsel of its intention to take the necessary steps to obtain an order dismissing the case. On November 14, 2008, another one of our shareholders filed a motion to intervene in the case and pursue the action in the place of Bamboo Partners. We filed a response in opposition to the shareholder’s motion on December 4, 2008, asking the Court to dismiss the case, and fully briefed that motion on December 16, 2008. On January 13, 2009, the shareholder filed a request for oral argument on her motion, which the Court denied on January 16, 2009. On February 3, 2009 the Court also denied the shareholder’s motion to intervene. On March 17, 2009, the Court dismissed this action with prejudice, without costs to either party.

Teamsters Local Union Putative Class Action

On November 2, 2006, the Teamsters Local 617 Pension and Welfare Funds filed a class action complaint purporting to represent a class of shareholders who purchased our stock between November 28, 2001 and October 18, 2006. The complaint, filed in the U.S. District Court for the District of Arizona, is entitled Teamsters Local 617 Pension & Welfare Funds v. Apollo Group, Inc. et al., Case Number 06-cv-02674-RCB, and alleges that we and certain of our current and former directors and officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by purportedly making misrepresentations concerning our stock option granting policies and practices and related accounting. The defendants are Apollo Group, Inc., J. Jorge Klor de Alva, Daniel E. Bachus, John M. Blair, Dino J. DeConcini, Kenda B. Gonzales, Hedy F. Govenar, Brian E. Mueller, Todd S. Nelson, Laura Palmer Noone, John R. Norton III, John G. Sperling and Peter V. Sperling. Plaintiff seeks unstated compensatory damages and other relief. On January 3, 2007, other shareholders, through their separate attorneys, filed motions seeking appointment as lead plaintiff and approval of their designated counsel as lead counsel to pursue this action. On September 11, 2007, the Court appointed The Pension Trust Fund for Operating Engineers as lead plaintiff and approved lead plaintiff’s selection of lead counsel and liaison counsel. Lead plaintiff filed an amended complaint on November 23, 2007, asserting the same legal claims as the original complaint and adding claims for violations of Section 20A of the Securities Exchange Act of 1934 and allegations of breach of fiduciary duties and civil conspiracy.

On January 22, 2008, all defendants filed motions to dismiss. On March 31, 2009, the Court dismissed the case with prejudice as to Daniel Bachus, Hedy Govenar, Brian E. Mueller, Dino J. DeConcini, and Laura Palmer Noone. The Court also dismissed the case as to John Sperling and Peter Sperling, but granted plaintiffs leave to file an amended complaint against them. Finally, the Court dismissed all of plaintiffs’ claims concerning misconduct before November 2001 and all of the state law claims for conspiracy and breach of fiduciary duty. On April 30, 2009, Plaintiffs filed their Second Amended Complaint, which alleges similar claims for alleged securities fraud against the same defendants. On June 15, 2009, all defendants filed another motion to dismiss the Second Amended Complaint, which is currently pending with the Court.

Discovery in this case has not yet begun. Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of loss for this action and accordingly have not accrued any liability associated with this action.

Patent Infringement Litigation

On March 3, 2008, Digital-Vending Services International Inc. filed a complaint against University of Phoenix and Apollo Group Inc., as well as Capella Education Company, Laureate Education Inc., and Walden University Inc. in the U.S. District Court for the Eastern District of Texas. The complaint alleges that we and the other defendants have infringed and are infringing various patents relating to managing courseware in a shared use operating environment. We filed an answer to the complaint on May 27, 2008, in which we denied

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that Digital-Vending Services International’s patents were duly and lawfully issued, and asserted defenses of non-infringement and patent invalidity, among others. We also asserted a counterclaim seeking a declaratory judgment that the patents are invalid, unenforceable, and not infringed by us. The District Court has scheduled the trial for November 7, 2011. Together with the other defendants, we filed a motion to transfer venue from the Eastern District of Texas to Washington, D.C. on February 27, 2009. Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of loss for this action and accordingly have not accrued any liability associated with this action.

Student Loan Class Action

On December 9, 2008, three former University of Phoenix students filed a complaint against Apollo Group, Inc. and University of Phoenix in the U.S. District Court for the Eastern District of Arkansas. The complaint alleges that with regard to students who dropped from their courses shortly after enrolling, University of Phoenix improperly returned the entire amount of the students’ undisbursed federal loan funds to the lender. The students purport to be bringing the complaint on behalf of themselves and a proposed class of similarly-situated student loan borrowers. On January 21, 2009, the plaintiffs voluntarily filed a dismissal “without prejudice to re-filing.” The plaintiffs then filed a similar complaint in the U.S. District Court for the Central District of California (Western Division — Los Angeles) on February 5, 2009. We filed an answer denying all of the asserted claims on March 30, 2009. Under the District Court’s current Scheduling Order, trial is set for August 2010. The matter is currently in discovery. The plaintiffs filed their motion for class certification and an amended complaint on July 14, 2009. The hearing on class certification is currently set for October 26, 2009.

At this time, we do not know how many students may fall into this category, or whether there is a proper basis for the lawsuit to proceed as a class action lawsuit. Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of loss for this action and accordingly have not accrued any liability associated with this action.

Brodale Employment and False Claims Lawsuit

On August 1, 2008, former employee, Stephen Lee Brodale, filed a lawsuit in Federal District Court in San Diego against Apollo, University of Phoenix, and several individual employees. The complaint alleges various employment claims and also includes claims under the Federal and California false claims acts. The Department of Justice declined to participate in the lawsuit and it was served on the Company on August 10, 2009. On September 16, 2009, the Court dismissed the employment claims without prejudice, upon joint motion by the parties, so that they could proceed to binding arbitration. On September 14, 2009, we filed a motion to dismiss the remaining false claims act allegations that is currently pending with the Court. Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of loss for this action and accordingly have not accrued any liability associated with this action.

Wage and Hour Class Actions

During fiscal year 2009, four lawsuits, each styled as a class action, were commenced by various former employees against Apollo and/or University of Phoenix alleging wage and hour claims for failure to pay minimum wages and overtime and certain other violations. These lawsuits are as follows:

•  Juric.  Action filed April 3, 2009, by former employee Dejan Juric in California State Court in Los Angeles. We filed an answer denying all of the asserted claims on May 4, 2009 and then removed the case to the Federal District Court in Los Angeles. The matter is currently in discovery. Under the

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District Court’s current Scheduling Order, the deadline for Plaintiff’s Motion for Class Certification is January 11, 2010 and the hearing on the motion is set for March 22, 2010.

•  Sabol.  Action filed July 31, 2009, by several former employees in Federal District Court in Philadelphia. We filed an answer denying the asserted claim on September 29, 2009.

•  Tranchiti.  Action filed August 10, 2009, by several former employees in Federal District Court in Chicago. On September 2, 2009, we filed a motion to dismiss, or in the alternative to stay or transfer, the case based on the previously filed Sabol action. The motion is currently pending with the Court.

•  Davis.  Action filed September 28, 2009, by former employee Adonijah Davis in Federal District Court in Tampa, Florida. Our initial response to the complaint is due on November 2, 2009.

Because of the many questions of fact and law that may arise, the outcome of these legal proceedings is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of loss for these actions and, accordingly, we have not accrued any liability associated with these actions.

Other

We are subject to various claims and contingencies in the ordinary course of business, including those related to regulation, litigation, business transactions, employee-related matters and taxes, among others. We do not believe any of these are material for separate disclosure.

Regulatory and Other Legal Matters

Student Financial Aid

All U.S. federal financial aid programs are established by Title IV of the Higher Education Act and regulations promulgated thereunder. In August 2008, the Higher Education Act was reauthorized through September 30, 2013 by the Higher Education Opportunity Act.

The Higher Education Opportunity Act specifies the manner in which the U.S. Department of Education reviews institutions for eligibility and certification to participate in Title IV programs. Every educational institution involved in Title IV programs must be certified to participate and is required to periodically renew this certification.

University of Phoenix was recertified in June 2003 and its current certification for the Title IV programs expired in June 2007. In March 2007, University of Phoenix submitted its Title IV recertification application to the U.S. Department of Education. We have been collaborating with the U.S. Department of Education since that date and continue to supply additional follow-up information based on requests from the U.S. Department of Education. Our eligibility continues on a month-to-month basis until the U.S. Department of Education issues its decision on the application. We have no reason to believe that the application will not be renewed.

Western International University was recertified in October 2003 and its current certification for participation in Title IV programs expired on June 30, 2009. In March 2009, Western International University submitted its Title IV recertification application to the U.S. Department of Education and Western International University’s eligibility continues on a month-to-month basis until the U.S. Department of Education completes it review of the application and issues its decision. As with University of Phoenix, we have no reason to believe that the application will not be renewed in due course.

U.S. Department of Education Audits and Other Matters

All higher education institutions participating in Title IV programs must be accredited by an accrediting body recognized by the U.S. Department of Education. The U.S. Department of Education periodically reviews

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all participating institutions for compliance with all applicable standards and regulations under the Higher Education Opportunity Act. In February 2009, the U.S. Department of Education performed an ordinary course, focused program review of University of Phoenix’s policies and procedures involving Title IV programs. We have not yet received the program review report.

During a previous internal review of certain Title IV policies and procedures, it came to our attention that certain Satisfactory Academic Progress calculations performed by University of Phoenix and Western International University failed to properly identify students who should have been placed on financial aid disqualification status and therefore were ineligible to participate in Title IV financial aid programs. Additionally, we determined that University of Phoenix was inadvertently disbursing certain funds under a grant program. These matters were self-reported to the U.S. Department of Education in October 2008. In February 2009, after completing our review of these practices, we reported to the U.S. Department of Education the results of our review and paid the U.S. Department of Education our best estimate of the liability, which was $8.4 million. Approximately half of this amount was recorded in our Consolidated Statements of Income in fiscal year 2008, which was our best estimate based on the information available when we identified the matter. We recorded the remaining amount in our Consolidated Statements of Income in fiscal year 2009 following completion of our review. The U.S. Department of Education has informed us that this matter has been resolved.

Securities and Exchange Commission Informal Inquiry

During October 2009, we received notification from the Enforcement Division of the Securities and Exchange Commission indicating that they have commenced an informal inquiry into our revenue recognition practices. Based on the information that has been disclosed to us, the scope, duration and outcome of the inquiry cannot be determined at this time. We intend to cooperate fully with the Securities and Exchange Commission in connection with the inquiry.

Internal Revenue Service Audit

Please refer to Note 13, Income Taxes, for discussion of Internal Revenue Service audits.

Note 19.   Segment Reporting

We operate primarily in the education industry. We have organized our segments using a combination of factors primarily focusing on the type of educational services provided and products delivered. Our seven operating segments are managed in the following five reportable segments:

•  University of Phoenix;

•  Apollo Global — BPP;

•  Apollo Global — Other;

•  Insight Schools; and

•  Other Schools.

The University of Phoenix segment offers associate’s, bachelor’s, master’s and doctoral degrees in a variety of program areas. University of Phoenix offers its educational programs worldwide through its online education delivery system and at its campus locations and learning centers.

The Apollo Global — BPP segment offers degree programs through its College of Professional Studies division, provides education and training to professionals in the legal and finance industries through its Professional Education division, and college preparatory education services through its Mander Portman Woodward division. Apollo Global — BPP provides these services through schools located in the United Kingdom and a European network of BPP offices. We began reporting Apollo Global — BPP as a separate

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reportable segment during the fourth quarter of fiscal year 2009 following Apollo Global’s acquisition of BPP on July 30, 2009.

The Apollo Global — Other segment includes the results of operations for UNIACC, ULA and the Apollo Global corporate operations. UNIACC offers bachelor’s and master’s programs on campuses in Chile and online. ULA offers degree programs at its four campuses throughout Mexico.

The Insight Schools segment offers educational and administrative services to public schools to operate full-time online high school programs. Subsequent to our 2009 fiscal year end, we decided to explore the sale of Insight Schools.

The Other Schools segment includes the results of operations of Western International University, IPD, CFFP and Meritus. Western International University offers undergraduate and graduate degree program courses at its Arizona campus locations and online at Western International University Interactive Online. IPD provides program development, administration and management consulting services to private colleges and universities to establish or expand their programs for working learners. CFFP provides financial services education programs, including the Master of Science in three majors and certification programs in retirement, asset management, and other financial planning areas online and from its headquarters in Colorado. Meritus offers degree programs online to students throughout Canada and abroad.

Our reportable segments have been determined based on the method by which management evaluates performance and allocates resources. Management evaluates performance based on reportable segment profit. This measure of profit includes allocating corporate support costs to each segment as part of a general allocation, but excludes taxes, interest income and expense, foreign currency fluctuations and certain revenue and unallocated corporate charges. At the discretion of management, certain corporate costs are not allocated to the subsidiaries due to their designation as special charges because of their infrequency of occurrence, the non-cash nature of the expense and/or the determination that the allocation of these costs to the subsidiaries will not result in an appropriate measure of the subsidiaries’ results. These costs include such items as unscheduled or significant management bonuses, unusual severance pay and stock-based compensation expense attributed to corporate management and administrative employees. The Corporate caption includes adjustments to reconcile segment results to consolidated results which primarily consist of net revenue and corporate charges that are not allocated to our reportable segments.

During fiscal years 2009, 2008, and 2007, no individual customer accounted for more than 10% of our consolidated net revenue.

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A summary of financial information by reportable segment is as follows:

	Year Ended August 31,
($ in thousands)	2009			2008			2007
Net revenue
University of Phoenix	$	3,766,600		$	2,987,656		$	2,537,815
Apollo Global:
BPP		13,062			—			—
Other		54,283			13,435			—
Total Apollo Global		67,345			13,435			—
Insight Schools		20,636			7,495			1,981
Other Schools		116,845			122,495			182,638
Corporate		2,776			9,850			1,359
Net revenue	$	3,974,202		$	3,140,931		$	2,723,793
Income (loss) from operations
University of Phoenix(1)	$	1,131,331		$	817,609		$	656,322
Apollo Global:
BPP		(6,607	)		—			—
Other		(11,450	)		(1,879	)		—
Total Apollo Global		(18,057	)		(1,879	)		—
Insight Schools		(28,637	)		(18,906	)		(6,304	)
Other Schools		6,950			20,336			42,671
Corporate		(52,127	)		(67,694	)		(66,992	)
		1,039,460			749,466			625,697
Reconciling items:
Interest income		12,591			30,079			31,172
Interest expense		(4,460	)		(3,450	)		(232	)
Other, net		(7,776	)		6,759			660
Income before income taxes and minority interest	$	1,039,815		$	782,854		$	657,297
Depreciation and amortization
University of Phoenix	$	47,181		$	41,659		$	38,539
Apollo Global:
BPP		3,115			—			—
Other		6,286			1,929			—
Total Apollo Global		9,401			1,929			—
Insight Schools		3,510			1,682			630
Other Schools		1,451			1,220			4,949
Corporate		38,329			33,236			26,997
Total depreciation and amortization	$	99,872		$	79,726		$	71,115
Capital expenditures(2)
University of Phoenix	$	49,031		$	37,119		$	41,444
Apollo Global:
BPP		504			—			—
Other		5,995			341			—
Total Apollo Global		6,499			341			—
Insight Schools		5,859			3,758			959
Other Schools		1,134			630			456
Corporate		64,833			63,031			61,692
Total capital expenditures	$	127,356		$	104,879		$	104,551

(1)	University of Phoenix income from operations for fiscal year 2009 includes $80.5 million in charges associated with an estimated litigation loss. Please refer to Note 18, Commitments and Contingencies, for further discussion.
(2)	Capital expenditures exclude non-cash fixed asset additions of $17.8 million, $13.7 million and $11.5 million in fiscal years 2009, 2008, and 2007, respectively. Non-cash fixed assets additions include credits received for tenant improvements and accrued purchases in accounts payable.

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A summary of our consolidated assets by reportable segment is as follows:

	As of August 31,
($ in thousands)	2009		2008
Assets
University of Phoenix	$	1,112,002	$	920,553
Apollo Global:
BPP		778,416		—
Other		133,615		123,688
Total Apollo Global		912,031		123,688
Insight Schools		26,590		20,294
Other Schools		52,100		47,736
Corporate		1,160,654		748,141
Total assets	$	3,263,377	$	1,860,412

A summary of financial information by geographical area based on country of domicile for our respective operating locations is as follows:

	Year Ended August 31,
($ in thousands)	2009		2008		2007
Net revenue
United States	$	3,900,251	$	3,122,272	$	2,718,525
United Kingdom		13,062		—		—
Latin America		54,536		13,712		258
Other		6,353		4,947		5,010
Net revenue	$	3,974,202	$	3,140,931	$	2,723,793

	As of August 31,
($ in thousands)	2009		2008
Long-lived assets(1)
United States	$	496,493	$	470,092
United Kingdom		698,273		—
Latin America		86,137		77,247
Other		2,633		860
Total long-lived assets	$	1,283,536	$	548,199

(1) Long-lived assets include property and equipment, net, goodwill, and intangible assets, net.

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Note 20.   Quarterly Results of Operations (Unaudited)

Seasonality

Our operations are generally subject to seasonal trends. We experience, and expect to continue to experience, seasonal fluctuations in our results of operations as a result of seasonal variations in the level of student enrollments. While University of Phoenix enrolls students throughout the year, our net revenue generally is lower in the second quarter (December through February) than the other quarters due to holiday breaks in December and January. Most of our other subsidiaries experience more significant seasonality, as they have limited enrollment during their respective summer breaks.

Quarterly Results of Operations

The following unaudited consolidated interim financial information presented should be read in conjunction with other information included in our consolidated financial statements. The following unaudited consolidated financial information reflects all adjustments necessary for the fair presentation of the results of interim periods. The following tables set forth selected unaudited quarterly financial information for each of our last eight quarters.

	(Unaudited)
	2009
	Q1			Q2			Q3			Q4
($ in thousands, except per share data)	November 30			February 28			May 31			August 31
Consolidated Quarterly Statements of Operations:
Net revenue	$	970,967		$	876,129		$	1,051,343		$	1,075,763
Costs and expenses:
Instructional costs and services		377,296			373,290			400,202			452,913
Selling and promotional		228,585			225,711			243,633			262,508
General and administrative		58,221			71,100			71,518			89,265
Estimated litigation loss (Note 18)		—			—			—			80,500
Total costs and expenses		664,102			670,101			715,353			885,186
Income from operations		306,865			206,028			335,990			190,577
Interest income		5,379			3,430			2,395			1,387
Interest expense		(1,432	)		(627	)		(511	)		(1,890	)
Other, net		(2,431	)		(826	)		1,781			(6,300	)
Income before income taxes and minority interest		308,381			208,005			339,655			183,774
Provision for income taxes		(128,073	)		(82,929	)		(139,043	)		(95,940	)
Minority interest, net of tax		52			270			492			3,675
Net income	$	180,360		$	125,346		$	201,104		$	91,509
Earnings per share:
Basic income per share(1)	$	1.13		$	0.78		$	1.28		$	0.59
Diluted income per share(1)	$	1.12		$	0.77		$	1.26		$	0.59
Basic weighted average shares outstanding		159,138			160,153			157,616			154,201
Diluted weighted average shares outstanding		160,762			162,757			159,305			155,722

(1) The sum of quarterly income per share may not equal annual income per share due to rounding.

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	(Unaudited)
	2008
	Q1			Q2			Q3			Q4
($ in thousands, except per share data)	November 30			February 29			May 31			August 31
Consolidated Quarterly Statements of Operations:
Net revenue	$	780,674		$	693,643		$	835,217		$	831,397
Costs and expenses:
Instructional costs and services		333,289			327,723			347,598			362,268
Selling and promotional		176,909			201,705			203,644			223,137
General and administrative		51,281			55,011			60,910			47,990
Estimated securities litigation loss (Note 18)		—			168,400			1,566			(169,966	)
Total costs and expenses		561,479			752,839			613,718			463,429
Income (loss) from operations		219,195			(59,196	)		221,499			367,968
Interest income		9,190			8,540			7,036			5,313
Interest expense		(77	)		(581	)		(1,988	)		(804	)
Other, net		537			100			(1,719	)		7,841
Income (loss) before income taxes and minority interest		228,845			(51,137	)		224,828			380,318
(Provision) benefit for income taxes		(88,980	)		19,098			(85,951	)		(151,094	)
Minority interest, net of tax		—			—			229			369
Net income (loss)	$	139,865		$	(32,039	)	$	139,106		$	229,593
Earnings (loss) per share:
Basic income (loss) per share(1)	$	0.84		$	(0.19	)	$	0.85		$	1.45
Diluted income (loss) per share(1)	$	0.83		$	(0.19	)	$	0.85		$	1.43
Basic weighted average shares outstanding		167,036			168,005			162,751			158,719
Diluted weighted average shares outstanding		169,289			168,005			163,841			160,118

(1) The sum of quarterly income per share may not equal annual income per share due to rounding and second quarter net loss.

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Item 9 — Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A — Controls and Procedures

Disclosure Controls and Procedures

We intend to maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our Co-Chief Executive Officers (“Principal Executive Officers”) and our Senior Vice President, Chief Financial Officer and Treasurer (“Principal Financial Officer”), as appropriate, to allow timely decisions regarding required disclosure. We have established a Disclosure Committee, consisting of certain members of management, to assist in this evaluation. Our Disclosure Committee meets on a quarterly basis and more often if necessary.

Our management, under the supervision and with the participation of our Principal Executive Officers and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act), as of the end of the period covered by this report. Based on that evaluation, management concluded that, as of that date, our disclosure controls and procedures were effective at the reasonable assurance level.

We acquired BPP Holdings plc (“BPP”) in the fourth quarter of fiscal year 2009. We are not yet required to evaluate, and have not fully evaluated BPP’s internal control over financial reporting and, therefore, any material changes in internal control over financial reporting that may result from this acquisition have not been disclosed in this Annual Report on Form 10-K. We intend to disclose all material changes in internal control over financial reporting resulting from this acquisition prior to or in our Annual Report on Form 10-K for the fiscal year ending August 31, 2010, in which report we will be required for the first time to include BPP in our annual assessment of internal control over financial reporting.

Attached as exhibits to this Annual Report on Form 10-K are certifications of our Principal Executive Officers and Principal Financial Officer, which are required in accordance with Rule 13a-14 of the Securities Exchange Act. This Disclosure Controls and Procedures section includes information concerning management’s evaluation of disclosure controls and procedures referred to in those certifications and, as such, should be read in conjunction with the certifications of our Principal Executive Officers and Principal Financial Officer.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining effective internal control over financial reporting. Management’s intent is to design a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP in the United States of America.

Our internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

139

Management performed an assessment of the effectiveness of our internal control over financial reporting as of August 31, 2009, utilizing the criteria described in the “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. The objective of this assessment was to determine whether our internal control over financial reporting was effective as of August 31, 2009. We have excluded from our assessment the internal control over financial reporting for BPP, which was acquired on July 30, 2009, and whose financial statements reflect total assets and total revenue constituting 24% and less than 1%, respectively, of our consolidated financial statement amounts as of and for the fiscal year ended August 31, 2009. Based on our assessment, management believes that, as of August 31, 2009, the Company’s internal control over financial reporting is effective.

Our independent registered public accounting firm, Deloitte & Touche LLP, independently assessed the effectiveness of the Company’s internal control over financial reporting. Deloitte & Touche LLP has issued a report, which is included at the end of Part II, Item 9A of this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting during the quarter ended August 31, 2009, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

140

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Apollo Group, Inc. and Subsidiaries
Phoenix, Arizona

We have audited the internal control over financial reporting of Apollo Group, Inc. and subsidiaries (the “Company”) as of August 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at BPP Holdings plc, which was acquired on July 30, 2009 and whose financial statements constitute 24% of total assets and less than 1% of revenues, of the consolidated financial statement amounts as of and for the year ended August 31, 2009. Accordingly, our audit did not include the internal control over financial reporting at BPP Holdings plc. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of August 31, 2009 and 2008, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the three years in the period ended August 31, 2009 of the Company, and our report dated October 27, 2009 expressed an unqualified opinion on those financial statements.

/s/  DELOITTE & TOUCHE LLP

Phoenix, Arizona

October 27, 2009

141

PART III

Item 10 — Directors, Executive Officers and Corporate Governance

Information relating to our Board of Directors, Executive Officers, and Corporate Governance required by this item appears in the Information Statement for Apollo Group, Inc., to be filed within 120 days of our fiscal year end (August 31, 2009) and such information is incorporated herein by reference.

Our employees must act ethically at all times and in accordance with the policies in our Code of Business Conduct and Ethics. We require full compliance with this policy from all designated employees including our Co-Chief Executive Officers, Chief Financial Officer, and Chief Accounting Officer. We publish the policy, and any amendments or waivers to the policy, in the Corporate Governance section of our website located at www.apollogrp.edu/CorporateGovernance.

The charters of our Audit Committee, Compensation Committee, Equity Award Subcommittee, and Nominating and Governance Committee are also available in the Corporate Governance section our website located at www.apollogrp.edu/CorporateGovernance.

Item 11 — Executive Compensation

Information relating to this item appears in the Information Statement for Apollo Group, Inc., to be filed within 120 days of our fiscal year end (August 31, 2009) and such information is incorporated herein by reference.

Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information relating to this item appears in the Information Statement for Apollo Group, Inc., to be filed within 120 days of our fiscal year end (August 31, 2009) and such information is incorporated herein by reference.

Item 13 — Certain Relationships and Related Transactions, and Director Independence

See Note 17, Related Person Transactions in Item 8, Financial Statements and Supplementary Data, which is incorporated by reference in this Item 13.

Other information relating to this item appears in the Information Statement for Apollo Group, Inc., to be filed within 120 days of our fiscal year end (August 31, 2009) and such information is incorporated herein by reference.

Item 14 — Principal Accounting Fees and Services

Information relating to this item appears in the Information Statement for Apollo Group, Inc., to be filed within 120 days of our fiscal year end (August 31, 2009) and such information is incorporated herein by reference.

142

PART IV

Item 15 — Exhibits, Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report on Form 10-K:

1.  Financial Statements filed as part of this report

Index to Consolidated Financial Statements	Page
Report of Independent Registered Public Accounting Firm		81
Consolidated Balance Sheets		82
Consolidated Statements of Income		83
Consolidated Statements of Comprehensive Income		84
Consolidated Statements of Changes in Shareholders’ Equity		85
Consolidated Statements of Cash Flows		86
Notes to Consolidated Financial Statements		87

2.  Financial Statement Schedules

All financial statement schedules have been omitted since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements and Notes thereto.

3.  Exhibits

143

Index to Exhibits

		Incorporated by Reference
Exhibit				Exhibit		Filed
Number	Exhibit Description	Form	File No.	Number	Filing Date	Herewith
3.1	Amended and Restated Articles of Incorporation of Apollo Group, Inc.	Proxy Statement	No. 000-25232	Annex B	August 1, 2000
3.1a	Articles of Amendment to the Articles of Incorporation of Apollo Group, Inc.	8-K	No. 000-25232	99.1	June 27, 2007
3.2	Amended and Restated Bylaws of Apollo Group, Inc.	10-Q	No. 000-25232	3.2	April 10, 2006
10.1	Apollo Group, Inc. Long-Term Incentive Plan*	S-1	No. 33-83804	10.3	September 9, 1994
10.2	Apollo Group, Inc. Plan Amendment to Long-Term Incentive Plan*	10-Q	No. 000-25232	10.5	June 28, 2007
10.3	Apollo Group, Inc. Plan Amendment to Long-Term Incentive Plan*					X
10.4	Apollo Group, Inc. Amended and Restated Savings and Investment Plan*	10-Q	No. 000-25232	10.4	January 14, 2002
10.5	Apollo Group, Inc. Third Amended and Restated 1994 Employee Stock Purchase Plan*	10-K	No. 000-25232	10.5	November 14, 2005
10.7	Apollo Group, Inc. 2000 Stock Incentive Plan (as amended and restated June 25, 2009)*	10-Q	No. 000-25232	10.3	June 29, 2009
10.8	Form of Apollo Group, Inc. Non-Employee Director Stock Option Agreement*	10-Q	No. 000-25232	10.6	June 28, 2007
10.9	Form of Apollo Group, Inc. Non-Employee Director Restricted Stock Unit Award Agreement*	10-Q	No. 000-25232	10.7	June 28, 2007
10.10	Form of Apollo Group, Inc. Stock Option Agreement (for officers with an employment agreement)*	10-Q	No. 000-25232	10.3	January 8, 2009
10.11	Form of Non-Statutory Stock Option Agreement (for officers without an employment agreement)*	10-Q	No. 000-25232	10.4	January 8, 2009
10.12	Form of Apollo Group, Inc. Restricted Stock Unit Award Agreement (for officers with an employment agreement)*	10-Q	No. 000-25232	10.1	January 8, 2009
10.13	Form of Apollo Group, Inc. Restricted Stock Unit Award Agreement (for officers without an employment agreement)*	10-Q	No. 000-25232	10.2	January 8, 2009
10.14	Aptimus, Inc. 2001 Stock Plan*	S-8	No. 333-147151	99.1	November 5, 2007
10.15	Apollo Group, Inc. Stock Option Assumption Agreement Aptimus, Inc. 2001 Stock Plan*	S-8	No. 333-147151	99.2	November 5, 2007
10.16	Apollo Group, Inc. Stock Appreciation Right Assumption Agreement Aptimus, Inc. 2001 Stock Plan*	S-8	No. 333-147151	99.3	November 5, 2007
10.17	Aptimus, Inc. 1997 Stock Option Plan, as amended*	S-8	No. 333-147151	99.4	November 5, 2007

144

		Incorporated by Reference
Exhibit				Exhibit		Filed
Number	Exhibit Description	Form	File No.	Number	Filing Date	Herewith
10.18	Apollo Group, Inc. Stock Option Assumption Agreement Aptimus, Inc. 1997 Stock Option Plan, as amended*	S-8	No. 333-147151	99.5	November 5, 2007
10.19	Apollo Group, Inc. Executive Officer Performance Incentive Plan*	10-Q	No. 000-25232	10.1	January 8, 2008
10.20	Apollo Group, Inc. Deferral Election Program for Non-Employee Board Members*					X
10.21	Amended and Restated Employment Agreement between Apollo Group, Inc. and John G. Sperling, dated December 31, 2008*	10-Q	No. 000-25232	10.10	January 8, 2009
10.22	Amended and Restated Deferred Compensation Agreement between Apollo Group, Inc. and John G. Sperling, dated December 31, 2008*	10-Q	No. 000-25232	10.11	January 8, 2009
10.23	Shareholder Agreement among Apollo Group, Inc. and holders of Apollo Group Class B common stock, dated September 7, 1994	S-1	No. 33-83804	10.10	September 9, 1994
10.23b	Amendment to Shareholder Agreement among Apollo Group, Inc. and holders of Apollo Group Class B common stock, dated May 25, 2001	10-K	No. 000-25232	10.10b	November 28, 2001
10.23c	Amendment to Shareholder Agreement among Apollo Group, Inc. and holders of Apollo Group Class B common stock, dated June 23, 2006					X
10.23d	Amendment to Shareholder Agreement among Apollo Group, Inc. and holders of Apollo Group Class B common stock, dated May 19, 2009					X
10.24	Independent Contractor Agreement between Apollo Group, Inc. and Governmental Advocates, Inc., dated June 1, 2006	10-K	No. 000-25232	10.12	May 22, 2007
10.25	Promissory Note from Hermes Onetouch, L.L.C. dated December 14, 2001	10-Q	No. 000-25232	10.14	April 12, 2002
10.25a	Corrected Promissory Note from Hermes Onetouch, L.L.C., dated December 14, 2001	10-K	No. 000-25232	10.13a	May 22, 2007
10.26	Engagement Letter Agreement between Apollo Group, Inc. and FTI Consulting, Inc., dated November 14, 2006*	10-K	No. 000-25232	10.16	May 22, 2007
10.27	Consulting Agreement between Apollo Group, Inc. and Brian L. Swartz, dated February 13, 2007*	10-K	No. 000-25232	10.17	May 22, 2007
10.28	Employment Agreement between Apollo Group, Inc. and Gregory W. Cappelli, dated March 31, 2007*	10-K	No. 000-25232	10.18	May 22, 2007

145

		Incorporated by Reference
Exhibit				Exhibit		Filed
Number	Exhibit Description	Form	File No.	Number	Filing Date	Herewith
10.29	Stock Option Agreement between Apollo Group, Inc. and Gregory W. Cappelli, dated June 28, 2007*	10-Q	No. 000-25232	10.10	June 28, 2007
10.30	Amendment to Employment Agreement between Apollo Group, Inc. and Gregory Cappelli, dated December 12, 2008*	10-Q	No. 000-25232	10.6	January 8, 2009
10.31	Amendment No. 2 to Employment Agreement between Apollo Group, Inc. and Gregory Cappelli, dated April 24, 2009*	8-K	No. 000-25232	10.1	April 27, 2009
10.32	Employment Agreement between Apollo Group, Inc. and Joseph L. D’Amico, dated June 5, 2007*	10-Q	No. 000-25232	10.1	June 28, 2007
10.33	Amendment to Employment Agreement between Apollo Group, Inc. and Joseph L. D’Amico, dated June 5, 2007*	10-Q	No. 000-25232	10.2	June 28, 2007
10.34	Amendment No. 2 to Employment Agreement between Apollo Group, Inc. and Joseph L. D’Amico, dated December 12, 2008*	10-Q	No. 000-25232	10.7	January 8, 2009
10.35	Amendment No. 3 to Employment Agreement between Apollo Group, Inc. and Joseph L. D’Amico, dated February 23, 2009*	10-Q	No. 000-25232	10.1	March 31, 2009
10.36	Employment Agreement between Apollo Group, Inc. and P. Robert Moya, dated August 31, 2007*	10-K	No. 000-25232	10.26	October 29, 2007
10.37	Amendment to Employment Agreement between Apollo Group, Inc. and P. Robert Moya, dated December 12, 2008*	10-Q	No. 000-25232	10.9	January 8, 2009
10.38	Employment Agreement between Apollo Group, Inc. and Charles B. Edelstein, dated July 7, 2008*	8-K	No. 000-25232	10.1	July 8, 2008
10.39	Amendment to Employment Agreement between Apollo Group, Inc. and Charles B. Edelstein, dated December 12, 2008*	10-Q	No. 000-25232	10.8	January 8, 2009
10.40	Amendment No. 2 to Employment Agreement between Apollo Group, Inc. and Charles B. Edelstein, dated February 23, 2009*	10-Q	No. 000-25232	10.2	March 31, 2009
10.41	Amendment No. 3 to Employment Agreement between Apollo Group, Inc. and Charles B. Edelstein, dated April 24, 2009*	8-K	No. 000-25232	10.2	April 27, 2009
10.42	Employment Agreement between Apollo Group, Inc. and Rob Wrubel, dated August 7, 2007*	10-K	No. 000-25232	10.31	October 28, 2008
10.43	Amendment to Employment Agreement between Apollo Group, Inc. and Rob Wrubel, dated October 31, 2008*	10-Q	No. 000-25232	10.5	January 8, 2009

146

		Incorporated by Reference
Exhibit				Exhibit		Filed
Number	Exhibit Description	Form	File No.	Number	Filing Date	Herewith
10.44	Stock Option Repricing Agreement between Apollo Group, Inc. and John G. Sperling, dated August 25, 2008*	10-K	No. 000-25232	10.32	October 28, 2008
10.45	Stock Option Repricing Agreement between Apollo Group, Inc. and Peter V. Sperling, dated August 25, 2008*	10-K	No. 000-25232	10.33	October 28, 2008
10.46	Amended and Restated Capital Contribution Agreement among Apollo Group, Inc., Carlyle Ventures Partners III, L.P. and Apollo Global, Inc., dated July 28, 2009					X
10.47	Amended and Restated Shareholders’ Agreement among Apollo Group, Inc., CVP III Coinvestment, L.P., Carlyle Ventures Partners III, L.P. and Apollo Global, Inc., dated July 28, 2009					X
10.48	Registration Rights Agreement among Apollo Group, Inc., Carlyle Ventures Partners III, L.P. and Apollo Global, Inc., dated October 22, 2007	10-K	No. 000-25232	10.29	October 29, 2007
10.49	Amendment No. 1 to Registration Rights Agreement among Apollo Group, Inc., Carlyle Ventures Partners III, L.P. and Apollo Global, Inc., dated July 28, 2009					X
10.50	Agreement and Plan of Exchange among Apollo Global, Inc., Apollo Group, Inc., Carlyle Ventures Partners III, L.P. and CVP III Coinvestment, L.P., dated July 28, 2009					X
10.51	Credit Agreement among Apollo Group, Inc., the Lenders from time to time party thereto, Bank of America, N.A. and BNP Paribas, as Co-Documentation Agents, Wells Fargo Bank, N.A., as Syndication Agent and JPMorgan Chase Bank, N.A., as Administrative Agent, dated January 4, 2008	10-Q	No. 000-25232	10.2	January 8, 2008
10.52	Rule 62(b) Bond and Supersedeas Bond, dated February 15, 2008	10-Q	No. 000-25232	10.1	March 27, 2008
10.53	Registered Pledge and Master Security Agreement by and between Travelers Casualty and Surety Company of America and Apollo Group, Inc., entered into by Apollo Group, Inc. on February 14, 2008	10-Q	No. 000-25232	10.2	March 27, 2008
10.54	General Contract of Indemnity by Apollo Group, Inc. for the benefit of Travelers Casualty and Surety Company of America, entered into by Apollo Group, Inc. on February 14, 2008	10-Q	No. 000-25232	10.3	March 27, 2008

147

		Incorporated by Reference
Exhibit				Exhibit		Filed
Number	Exhibit Description	Form	File No.	Number	Filing Date	Herewith
10.55	Control Agreement by and among Apollo Group, Inc., Travelers Casualty and Surety Company of America, and Smith Barney Inc., entered into by Apollo Group, Inc. on February 14, 2008	10-Q	No. 000-25232	10.4	March 27, 2008
10.56	Option Agreement by and between Apollo Group, Inc. and Macquarie Riverpoint AZ, LLC, dated June 20, 2006	10-Q	No. 000-25232	10.6	March 27, 2008
10.57	First Amendment to Option Agreement by and between Apollo Group, Inc. and Macquarie Riverpoint AZ, LLC, dated March 7, 2007	10-Q	No. 000-25232	10.7	March 27, 2008
10.59	Second Amendment to Option Agreement by and between Apollo Group, Inc. and Macquarie Riverpoint AZ, LLC, dated March 17, 2008	10-Q	No. 000-25232	10.8	March 27, 2008
10.60	Third Amendment to Option Agreement and Joint Order to Title Company by and between Apollo Group, Inc. and Macquarie Riverpoint AZ, LLC, dated April 28, 2008	10-Q	No. 000-25232	10.1	July 1, 2008
10.61	Implementation Agreement, dated June 7, 2009, by and among Apollo Global, Inc., Apollo UK Acquisition Company Limited and BPP Holdings plc.	8-K	No. 000-25232	2.1	June 8, 2009
10.62	Rule 2.5 Announcement, dated June 8, 2009	8-K	No. 000-25232	2.2	June 8, 2009
21	List of Subsidiaries					X
23.1	Consent of Independent Registered Public Accounting Firm					X
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
31.2	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
31.3	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
32.2	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
32.3	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X

* Indicates a management contract or compensation plan.

148

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

APOLLO GROUP, INC.
An Arizona Corporation

By:  /s/  Charles B. Edelstein

Charles B. Edelstein

Co-Chief Executive Officer and Director

(Principal Executive Officer)

By:  /s/  Gregory W. Cappelli

Gregory W. Cappelli

Co-Chief Executive Officer and Director

(Principal Executive Officer)

Date: October 27, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/  John G. Sperling John G. Sperling	Founder, Executive Chairman of the Board and Director	October 27, 2009
/s/  Peter V. Sperling Peter V. Sperling	Vice Chairman of the Board and Director	October 27, 2009
/s/  Charles B. Edelstein Charles B. Edelstein	Co-Chief Executive Officer and Director (Principal Executive Officer)	October 27, 2009
/s/  Gregory W. Cappelli Gregory W. Cappelli	Co-Chief Executive Officer and Director (Principal Executive Officer)	October 27, 2009
/s/  Terri C. Bishop Terri C. Bishop	Executive Vice President, External Affairs and Director	October 27, 2009
/s/  Brian L. Swartz Brian L. Swartz	Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)	October 27, 2009
/s/  Gregory J. Iverson Gregory J. Iverson	Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)	October 27, 2009

149

Signature	Title	Date
/s/  Dino J. DeConcini Dino J. DeConcini	Director	October 27, 2009
/s/  K. Sue Redman K. Sue Redman	Director	October 27, 2009
/s/  James R. Reis James R. Reis	Director	October 27, 2009
/s/  George A. Zimmer George A. Zimmer	Director	October 27, 2009
/s/  Roy A. Herberger Roy A. Herberger	Director	October 27, 2009
/s/  Ann Kirschner Ann Kirschner	Director	October 27, 2009
/s/  Stephen J. Giusto Stephen J. Giusto	Director	October 27, 2009
/s/  Manuel F. Rivelo Manuel F. Rivelo	Director	October 27, 2009

150

EX-10.3

Exhibit 10.3

APOLLO GROUP, INC.

AMENDED AND RESTATED
LONG TERM INCENTIVE PLAN

PLAN AMENDMENT

     The Apollo Group, Inc. Long Term Incentive Plan, as amended and restated (the “Plan”), is hereby further amended, effective June 25, 2009, as follows:

          1. New Section 5.4 is hereby added to Article 5 of the Plan to read as follows:

               5.4 TRANSFER OF SHARE RESERVE. Notwithstanding any other provision to the contrary in this Article 5, no further Awards shall be made under the Plan after June 24, 2009, and the remaining unallocated share reserve of 975,481 Shares (as adjusted pursuant to the provisions of Section 15 to reflect all splits of the Class A common stock effected through such date) shall be transferred to the Company’s Amended and Restated 2000 Stock Incentive Plan (the “2SIP”), effective June 25, 2009, and shall accordingly increase the number of shares of the Company’s Class A common stock that may be issued under the 2SIP from and after that date. Such transfer shall, however, be subject to the approval of the holders of the Company’s outstanding voting stock, and none of the Shares available for transfer to the 2SIP in accordance with this Section 5.4 shall in fact be so transferred until such stockholder approval is obtained.

          2. Except as modified by this Plan Amendment, all the terms and provisions of the Plan shall continue in full force and effect.

     IN WITNESS WHEREOF, APOLLO GROUP, INC. has caused this Plan Amendment to be executed on its behalf by its duly-authorized officers on this 25 day of June 2009.

APOLLO GROUP, INC.
By:	/s/ Joseph L. D’Amico
	TITLE: President & Chief Operating Officer

EX-10.20

Exhibit 10.20

APOLLO GROUP, INC.
DEFERRAL ELECTION PROGRAM FOR NON-EMPLOYEE BOARD MEMBERS

I.	PURPOSE OF PROGRAM.
	This Deferral Election Program for Non-Employee Board Members (the “Program”) is designed to provide the non-employee members of the Board of Directors (the “Board”) of Apollo Group, Inc. (the “Corporation”) with the opportunity to defer all or a portion of the cash and stock-based compensation earned for their service on the Board. The Program is structured so as to comply with the applicable requirements of Section 409A of the Internal Revenue Code and the final Treasury Regulations thereunder and shall be effective for compensation earned for Board service on and after January 1, 2010.
II.	ELIGIBILITY.
	Each non-employee Board member is eligible to participate in the Program.
III.	DEFERRAL OF CASH FEES
	The following cash fees payable to an eligible Board member for each calendar year of Board service, beginning with the 2010 calendar year, may be deferred under the Program: (i) the annual retainer fee for service as a non-employee Board member and (ii) the annual retainer fee for service as a non-employee member of any Board committee. Such retainer fees for each calendar year for which the Program continues in effect shall hereinafter be collectively referred to as the “Annual Retainer Fee.”
	Each non-employee Board member (“Participant”) may elect to defer the following percentages of the Annual Services Fees for any calendar year by completing and filing a Deferral Election Form for that calendar year with the Corporation:

• up to one hundred percent (100%) of the Annual Retainer Fee for service on the Board and each Board committee on which the Participant serves.

Such deferral election must be filed on or before December 31 of the calendar year preceding the particular calendar year for which the Annual Retainer Fee subject to that election is to be earned. Each such election shall become irrevocable on that December 31 filing deadline and cannot be modified for any reason thereafter, except to the extent otherwise provided in Article VI below with respect to the method of payment. However, any individual who first joins the Board after the start of any calendar year while the Program is in effect will have a thirty (30)-day period measured from his or her commencement of Board service in which to file his or her initial deferral election under the Program with respect to Annual Retainer Fee to be earned for the period of Board or Board committee service measured from the first day of the calendar month following the filing of that election and ending with the last day of that calendar year.

A separate Deferral Election Account shall be established for each calendar year for which the Participant defers all or part of his or her Annual Retainer Fee. Accordingly, the Participant’s Deferral Election Account established for each calendar year shall be credited with the amount of the Annual Retainer Fee the Participant deferred for that year.

The Deferral Election Account established for a particular calendar year shall vest in twelve (12) successive equal monthly installments upon the Participant’s completion of each month of Board service during that calendar year.

Each Deferral Election Account shall be credited with notional investment gains, earnings and losses based on the notional investment funds made available for Participant selection under the Program, and each such Account shall be periodically adjusted to reflect those gains, earnings and loses, but not less frequently than monthly. The Corporation shall be under no obligation to make any such actual investments, and any investments so made shall be subject to the claims of the Corporation’s creditors, and no Participant shall have any ownership or other proprietary interest therein.

The Participant’s right to receive the balance credited to each of his or her Deferral Election Accounts shall at all times be an unfunded and unsecured right of a general creditor and shall accordingly be subject to the claims of the Corporation’s general creditors. The Participant may not transfer, assign, pledge or otherwise encumber his or her right to the Deferral Election Accounts, except that the Participant may designate one or more beneficiaries to receive the outstanding aggregate balance of all his or her Deferral Election Accounts at the time of his or her death.

IV.	DISTRIBUTION OF DEFERRAL ELECTION ACCOUNTS.
	Distribution of each of the Participant’s Deferral Election Accounts shall, to the extent vested, be made or commence on the thirtieth (30th) day following the Participant’s cessation of Board service or as soon as administratively practicable after such scheduled distribution date, but in no event later than the end of the calendar year in which such cessation of Board service occurs or (if later) the fifteenth (15th) day of the third (3rd) calendar month following the date of such cessation of Board service. Each subsequent annual installment of an installment distribution shall be paid on the anniversary date of the initial installment payment.
	The distribution from each separate Deferral Election Account of the Participant shall be made in cash either in the form of a single lump sum or in up to ten (10) annual installments, as the Participant may elect in his or her Deferral Election Form for the calendar year to which that particular Deferral Election Account pertains. If an installment distribution is elected, then the amount of each annual installment shall be determined by dividing the balance credited to the Deferral Election Account immediately prior to the distribution by the number of remaining installments, including the installment to be made at that time. The portion of any Deferral Election Account in which the Participant is not vested at the time of his cessation of Board service will be forfeited.

2

Should the Participant die with an outstanding balance credited to one or more of his or her Deferral Election Accounts, then the aggregate unpaid balance of those Deferral Election Accounts will be paid in a lump sum to the Participant’s designated beneficiary or beneficiaries under the Plan not later than the later of (i) the end of the calendar year in which the Participant’s death occurs or (ii) the 15th day of the third calendar month following the date of the Participant’s death.

V.	DEFERRAL OF RESTRICTED STOCK UNIT AWARDS
	Each non-employee Board member may, prior to the start of any calendar year, beginning with the 2010 calendar year, elect to defer the issuance of the following number of shares of the Corporation’s Class A common stock in which that Board member vests under the restricted stock unit award made to him or her during that calendar year in his or her capacity as a non-employee Board member:

     (i) a designated percentage of the shares of the Corporation’s Corporation Class A common stock underlying that restricted stock unit award that is a multiple of ten percent, up to a maximum of one hundred percent; or

     (ii) the number of shares of the Corporation’s Class A common stock with an aggregate fair market value, as measured on the effective date of the restricted stock unit award, of any multiple of one thousand dollars, with any fractional share resulting from such election to be rounded up to the next whole share.

The shares of the Corporation’s Class A common stock in which the non-employee Board member vests under the portion of the restricted stock unit award subject to his or her deferral election for a particular calendar year shall be issued to such Board member in accordance with the designation made by him or her at the time the deferral election for that calendar year award is filed. The following forms of distribution may be designated:

     (i) lump sum distribution, or

     (ii) payment in a series of successive equal annual installments over a term of years not to exceed ten years.

The lump sum distribution shall be made, or the installment distribution shall commence, on the thirtieth (30th) day following the Participant’s cessation of Board service or as soon as administratively practicable after such scheduled distribution date, but in no event later than the end of the calendar year in which such cessation of Board service occurs or (if later) the fifteenth (15th) day of the third (3rd) calendar month following the date of such cessation of Board service. Each subsequent annual installment of an elected installment distribution will be paid on the anniversary date of the initial installment payment.

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The Participant may designate one or more beneficiaries to receive the deferred and unissued portion of each of his or her restricted stock unit awards deferred under the Program at the time of his or her death. In such event, the shares of the Corporation’s Class A common subject underlying the vested portion of those deferred restricted stock unit awards will be issued in a lump sum to such designated beneficiary or beneficiaries not later than the later of (i) the end of the calendar year in which the Participant’s death occurs or (ii) the 15th day of the third calendar month following the date of his or her death..

VI.	MISCELLANEOUS PROVISIONS
	A Participant may modify the method of payment or distribution in effect for any item of deferred compensation under this Program by filing a new election form, provided that (i) the new election must be made at least twelve (12) months in advance of the date on which such payment or distribution would otherwise be made or commence in the absence of the new election, (ii) the new election shall have no force or effect until the end of the twelve (12)-month period measured from the filing date, and (iii) the payment or distribution pursuant to the new election must be deferred for at least an additional five (5) years beyond the date on which it would otherwise be made or commence in the absence of that new election. For purposes of Section 409A of the Internal Revenue Code, an installment distribution under the Program shall be treated as a right to a single payment, and not as a right to a series of separate payments.
	The Corporation shall not have any obligation to establish any trust, escrow arrangement or other fiduciary relationship for the purpose of segregating funds for the payment of the balances credited to such Accounts, nor shall the Corporation be under any obligation to invest any portion of its general assets in mutual funds, stocks, bonds, securities or other similar investments in order to accumulate funds for the satisfaction of its obligations under the Plan. However, the Corporation may, in its sole discretion, implement a grantor trust under the federal income tax laws to provide a source of funds that the Corporation may utilize in whole or in part to meet its liabilities under the Program.
	The Program is intended to constitute an unfunded deferred compensation arrangement for the non-employee Board members, and all rights hereunder shall be construed, administered and governed in all respects in accordance with the provisions of the Employee Retirement Income Security Act of 1974 (as amended from time to time) applicable to such an arrangement and, to the extent not pre-empted thereby, by the laws of the State of Arizona without resort to its conflict-of-laws provisions. If any provision of this Program shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions of the Program shall continue in full force and effect.

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EX-10.23C

Exhibit 10.23c

AMENDMENT TO SHAREHOLDER AGREEMENT

     This Amendment to Shareholder Agreement is made as of June 23, 2006 by and among John G. Sperling, Peter V. Sperling, and the John Sperling Voting Stock Trust (each a “Shareholder” and collectively the “Shareholders”) and Apollo Group, Inc. (the “Company”).

     Whereas, the Shareholders and the Company are parties to a Shareholders Agreement dated as of September 7, 1994, as previously amended as of May 25, 2001 (the “Agreement”); the other parties to the Agreement (William H. Gibbs, John D. Murphy, James W. Hoggatt, and Jerry F. Noble) no longer own any of the Class B Common Stock of the Company; and the Shareholders wish to further amend the Agreement;

     Now, therefore, it is agreed:

     1. Section 5 of the Agreement is amended in its entirety to read:

     “5. Transfer to a Trust. Notwithstanding the provisions of Section 1 or Section 7 hereof, a Shareholder may transfer Shares to a trust created by the Shareholder (“Shareholder Trust”), provided that such a Shareholder Trust enters into an agreement with the Company acknowledging the existence of this Agreement and agreeing that any disposition of the Shares by the Shareholder Trust (including any transfers to beneficiaries) will be made in compliance with the terms and conditions of this Agreement. All of the trustee(s) of a Shareholder Trust must be (1) a Shareholder, (2) Jon S. Cohen, (3) Terri Bishop, or (4) a person or persons approved by the Board of Directors of the Company. The Shares so transferred shall not be converted into shares of the Company’s Class A Common Stock as a result of such transfer.”

     2. Section 16 of the Agreement is amended in its entirety to read:

     “16. Shareholder Defined. In addition to John G. Sperling, Peter V. Sperling, and the John Sperling Voting Stock Trust, the term Shareholder as used herein shall also include (i) any person, his successors and assigns, and any corporation, partnership, joint venture, association, or other entity, whether or not such individual or entity is a Shareholder as of the date hereof, who acquires any Shares from any Shareholder, directly or indirectly, by any means whatsoever in a transaction permitted by this Agreement, or (ii) any person or entity who acquires Shares from the Company and who agrees (and whose spouse consents, if necessary) to become a party to and be bound by the terms of this Agreement, but any Shareholder who no longer owns any Shares shall not be entitled to any of the benefits of this Agreement.”

     3. Peter V. Sperling represents and warrants that his shares of Class B Common Stock are his sole and separate property.

     4. The Agreement, as hereby amended, is confirmed.

     In witness whereof, the parties have executed this document as of the date stated above.

Shareholders:	The Company:
/s/ John G. Sperling	APOLLO GROUP, INC.
John G. Sperling
/s/ Peter V. Sperling	By:	/s/ John G. Sperling
Peter V. Sperling

JOHN SPERLING VOTING STOCK TRUST
By:	/s/ John G. Sperling
	John G. Sperling, Trustee
By:	/s/ Peter V. Sperling
	Peter V. Sperling, Trustee
By:	/s/ Jon S. Cohen
	Jon S. Cohen, Trustee
By:	/s/ Terri Bishop
	Terri Bishop, Trustee

EX-10.23D

Exhibit 10.23d

AMENDMENT TO SHAREHOLDER AGREEMENT

     This Amendment to Shareholder Agreement is made as of May 19, 2009, by and among John G. Sperling, Peter V. Sperling, the John Sperling Voting Stock Trust, and the Peter Sperling Voting Stock Trust (each a “Shareholder” and collectively the “Shareholders”) and Apollo Group, Inc. (the “Company’’).

     Whereas, the Shareholders and the Company are parties to a Shareholders Agreement dated as of September 7,1994, as previously amended as of May 25, 2001 and June 23, 2006 (the “Agreement”); the other original parties to the Agreement (William H. Gibbs, John D. Murphy, Todd Nelson, James W. Hoggatt, and Jerry F. Noble) no longer own any of the Class B Common Stock of the Company; the John Sperling Voting Stock Trust and Peter Sperling Voting Stock Trust wish to formally join the Agreement as parties; and the Shareholders wish to further amend the Agreement;

     Now, therefore, it is agreed:

     1. Section 5 of the Agreement is amended in its entirety to read:

     “5. Transfer to a Trust. Notwithstanding the provisions of Section 1 or Section 7 hereof, a Shareholder may transfer Shares to a trust created by the Shareholder (“Shareholder Trust”), provided that such a Shareholder Trust enters into an agreement with the Company acknowledging the existence of this Agreement and agreeing that any disposition of the Shares by the Shareholder Trust (including any transfers to beneficiaries) will be made in compliance with the terms and conditions of this Agreement. All of the trustee(s) of a Shareholder Trust must be either (i) a Shareholder, (2) Terri Bishop, (3) Darby Shupp, or (4) a person or persons appointed by a Shareholder or the then current trustees of a Shareholder Trust. The Shares so transferred shall not be converted into shares of the Company’s Class A Common Stock as a result of such transfer.”

     2. The first paragraph of Section 7 of the Agreement is amended in its entirety to read:

     “7. Purchase of Stock Upon Death, Incompetency, or Bankruptcy of Shareholder. Upon the death or incompetency of any Shareholder or the filing of a voluntary or involuntary bankruptcy petition by or against any Shareholder (a “Noncontinuing Shareholder”), the Company and the other Shareholders (the “Continuing Shareholders”) shall have the right to purchase the Shares owned by the Noncontinuing Shareholder (including any Shares or interest therein owned by his or her spouse, if any) in the manner set forth in this Section 7, unless the Noncontinuing Shareholder (i) previously transferred the Shares, pursuant to Section 5, to a Shareholder Trust, (ii) made a transfer, pursuant to Section 5, to a Shareholder Trust, said transfer being effective upon death, incompetency or bankruptcy, (iii) previously transferred the Shares to a

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Shareholder pursuant to Section 2, or (iv) made a transfer to a Shareholder, pursuant to Section 2, said transfer being effective upon death, incompetency, or bankruptcy. In each of the foregoing circumstances, no option to purchase the Shares shall arise and no conversion of the Shares into Class A Common Stock shall occur. For purposes of this Section 7, a Shareholder shall be deemed incompetent if the Shareholder is adjudicated incompetent in an appropriate judicial proceeding.”

     3. Section 16 of the Agreement is amended in its entirety to read:

     “16. Shareholder Defined. In addition to John G. Sperling, Peter V. Sperling, the John Sperling Voting Stock Trust, and the Peter Sperling Voting Stock Trust, the term Shareholder as used herein shall also include (i) any person, his successors and assigns, and any corporation, partnership, joint venture, association, or other entity, whether or not such individual or entity is a Shareholder as of the date hereof, who acquires any Shares from any Shareholder, directly or indirectly, by any means whatsoever in a transaction permitted by this Agreement, or (ii) any person or entity who acquires Shares from the Company and who agrees (and whose spouse consents, if necessary) to become a party to and be bound by the terms of this Agreement, but any Shareholder who no longer owns any Shares shall not be entitled to any of the benefits of this Agreement.”

4. The John Sperling Voting Stock Trust and the Peter Sperling Voting Stock Trust hereby formally join the Agreement as signatories and agree to be bound by the terms and conditions of the Agreement as Shareholders, effective as of the date each such Shareholder Trust received a transfer Shares from a Shareholder.

     5. The Agreement, as hereby amended, is confirmed.

[Signature Page Immediately Follows.]

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     In witness whereof, the parties have executed this document as of the date stated above.

Shareholders:		The Company:
		APOLLO GROUP, INC.
/s/ John G. Sperling		By:	/s/ Charles B. Edelstein
John G. Sperling
/s/ Peter V. Sperling
Peter V. Sperling
JOHN SPERLING VOTING STOCK TRUST		PETER SPERLING VOTING STOCK TRUST
By:	/s/ John G. Sperling	By:	/s/ Peter V. Sperling
	John G. Sperling, Trustee		Peter V. Sperling, Trustee

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EX-10.46

Exhibit 10.46

AMENDED AND RESTATED
CAPITAL CONTRIBUTION AGREEMENT

          THIS AMENDED AND RESTATED CAPITAL CONTRIBUTION AGREEMENT (this “Agreement”) is made and entered into as of July 28, 2009, by and between Apollo Group, Inc., an Arizona corporation (“Apollo”), Carlyle Venture Partners III, L.P., a Delaware limited partnership (“Carlyle”, and together with Apollo and each Affiliate of Apollo and Carlyle that hereafter becomes an owner of shares of the Company’s capital stock, the “Participants”) and Apollo Global, Inc., a Delaware corporation (the “Company”);

          WHEREAS, Apollo and Carlyle have formed the Company under Delaware law (the “Company”) to acquire, own and operate international education services businesses outside of the United States of America (the “Business”);

          WHEREAS, the Participants have previously acquired certain shares of the Company’s Common Stock;

          WHEREAS, the Participants intend that the transactions contemplated hereby shall qualify as part of an exchange of property for equity interests under §351 of the Internal Revenue Code;

          WHEREAS, the Participants desire to amend and restate, in its entirety, that certain Joint Venture Agreement entered into as of October 22, 2007, as amended by Amendment No. 1 on March 5, 2008 (the “Original Agreement”);

          WHEREAS, pursuant to Section 10.4 of the Original Agreement, the Original Agreement may be amended or modified only upon the express written agreement of Carlyle and Apollo;

          WHEREAS, contemporaneously with the execution and delivery of this Agreement, Apollo exchanged, pursuant to the terms and conditions of the Agreement and Plan of Exchange dated as of the date hereof (the “Exchange Agreement”), all of its stock in the Company for the Company’s Class A Common Stock;

          WHEREAS, contemporaneously with the execution and delivery of this Agreement, Carlyle and CVP III Coinvestment, L.P., a Delaware limited partnership (“CVP”) exchanged, pursuant to the terms and conditions of the Exchange Agreement, all of their stock in the Company for the Company’s Class B Common Stock; and

          NOW, THEREFORE, in consideration of the foregoing and for other good and valid consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to amend and restate the Original Agreement in its entirety as follows:

ARTICLE I
DEFINITIONS

1.1 Certain Definitions. As used in this Agreement, the following terms shall have the indicated meanings, unless the context otherwise requires:

“Acquisition” means the acquisition by the Company or any Subsidiary of (i) all or substantially all of the capital stock or other equity interests of another Person, whether by merger, consolidation, direct or indirect purchase or otherwise, and (ii) all or substantially all of the assets of another Person.

“Additional Agreements” means, collectively, the Shareholders’ Agreement, the Master Support Agreement, the Registration Rights Agreement, and the Exchange Agreement.

“Affiliate” of a Person means any other Person, entity or investment or co-investment fund directly or indirectly controlling, controlled by or under common control with the Person and, in the case of a Person which is an entity, any shareholder, member, partner or other equity holder of such Person, which, in each case, beneficially owns at least 10% of the outstanding voting interests of the Person. Each fund managed by Carlyle or an Affiliate of Carlyle shall be an Affiliate of Carlyle for purposes of this Agreement, and no portfolio company of Carlyle or its Affiliates shall be considered an Affiliate of Carlyle or such Affiliate for purposes of this Agreement.

“Apollo Board” means the Board of Directors of Apollo.

“Board” means the Board of Directors of the Company.

“Business Day” means any day other than a Saturday, Sunday or bank holiday in New York.

“Business Plan” shall have the meaning ascribed to it in Section 6.1(f) hereto.

“Carlyle Investment Committee” means the Carlyle Venture Partners Investment Committee.

“Common Stock” means, for periods prior to the effectiveness of this Agreement, the common stock, par value $0.001 per share, of the Company, and for periods from and after the effectiveness of this Agreement, the Class A Common Stock and Class B Common Stock, collectively.

“Expenses” means all fees and out of pocket expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement, including any transfer or sales taxes and related costs associated with the transfer of operations or assets by any Participant to the Company.

“Fair Market Value” means the then current fair market value of shares of Company Stock as determined in good faith by the Board with reference to each of (i) the fair

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market value of Persons which are market comparables of the Company and (ii) a market-based multiple of EBITDA for the Company’s trailing twelve (12) months and anticipated EBITDA for the Company’s following twelve (12) months, in each case with appropriate adjustments for nonrecurring or extraordinary expenses and payments to Affiliates of the Company and without any discount for lack of marketability, restrictions on transfer or minority status of the shares of Company Stock. Notwithstanding the immediately preceding sentence, in the event that the Carlyle Investment Committee has decided not to make additional contributions to the capital of the Company which is the subject of a Call Notice pursuant to Section 3.2(a), then from and after such decision, Fair Market Value shall be determined in accordance with the parameters set forth in this definition by the Valuation Firm, which shall reflect its determination in a written report (a “Valuation Report”) delivered to each of the Company, Carlyle and Apollo, provided however that the Board, not the Valuation Firm, shall determine the fair market value of shares of Company Stock in accordance with the parameters set forth in this definition which are the subject of Call Notices to Carlyle for dollar amounts of less than $2,000,000 so long as the aggregate dollar amounts subject to Call Notices to Carlyle in any twelve (12) month period does not exceed $7,500,000 (and in the event of such excess, the Valuation Firm, not the Board, shall determine the fair market value of shares of Company Stock from and after the date of such excess).

“Initial Closing” means the closing of the sale and purchase of the Initial Shares.

“Initial Closing Date” means the date on which the Initial Closing occurred.

“International Students” means actual or prospective students (including leads for prospective students) who (i) reside outside of the United States of America and its territories; (ii) are not active duty members of the uniformed services of the United States of America and (iii) are not citizens of the United States of America.

“Master Support Agreement” means the agreement referenced in Section 7.5 once executed by the Company and Apollo.

“Person” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, a limited liability company, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

“Prime Rate” means the then-current prime rate as announced by Citibank N.A.

“Purchased Shares” means, with respect to a Participant, any shares of Common Stock purchased by such Participant hereunder (including shares issued by the Company in exchange for any such Purchased Shares); and, generally, all such shares purchased hereunder (including any shares issued by the Company in exchange therefor).

“Shareholders’ Agreement Joinder Agreement” shall mean a joinder agreement in substantially the form attached as Exhibit A to the Shareholders’ Agreement.

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“Specified Fraction” is a fraction (i) the numerator of which is the dollar amount, if any, proposed in a Call Notice to be used to provide additional funds to the Company, or to a Subsidiary of the Company which completed the Acquisition, for working capital, capital expenditures or other obligations or commitments of the target of the Acquisition and (ii) the denominator of which is the total dollar amount reflected in such Call Notice.

“Valuation Firm” means a nationally recognized Person that provides financial advisory or valuation services, has experience in the postsecondary education sector and is acceptable to each of Apollo and Carlyle.

Defined terms which are used in this Agreement but not expressly defined herein shall have the meanings ascribed to such terms in the Shareholders’ Agreement.

1.2 Construction. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause, Schedule or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause, Schedule or Exhibit to, this Agreement, unless otherwise indicated. The Schedules and Exhibits to this Agreement are incorporated herein by reference and shall be deemed a part of this Agreement.

1.3 Certain Conventions. Unless the context of this Agreement otherwise requires, (a) words of any gender include each other gender, (b) words such as “herein”, “hereof”, and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (c) words using the singular shall include the plural, and vice versa and (d) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”

ARTICLE II
FORMATION OF THE COMPANY

     Contemporaneously with the execution and delivery of this Agreement, Apollo and Carlyle are (i) filing with the Secretary of State of the State of Delaware an amended Certificate of Incorporation in the form attached hereto as Exhibit A (the “Certificate of Incorporation”) and (ii) causing the Company to adopt amended Bylaws in the form attached hereto as Exhibit B (the “Bylaws”).

ARTICLE III
CAPITALIZATION OF THE COMPANY

3.1 Initial Shares. Subject to the terms and conditions of the Original Agreement, Apollo purchased from the Company eight thousand (8,000) shares of Common Stock and Carlyle purchased from the Company two thousand (2,000) shares of Common Stock, in each case at a purchase price per share of $1,000 (such shares, with respect to the purchasing Participant, its “Initial Shares”). Each of Apollo and Carlyle purchased its Initial Shares on the Initial Closing Date. Contemporaneously with the execution and delivery of this Agreement, Apollo exchanged each share of Common Stock held by Apollo for one share of Class A Common Stock, and each of Carlyle and CVP exchanged each share of Common Stock held by Carlyle and CVP, respectively, for one share of Class B Common Stock. The purchase price per share of Class A

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Common Stock and Class B Common Stock will be deemed to equal the purchase price per share of the Common Stock tendered in the exchange. For the avoidance of doubt, any Class A Common Stock or Class B Common Stock received in exchange for Initial Shares shall be treated as Initial Shares for purposes of this Agreement, and any Class A Common Stock or Class B Common Stock received in exchange for Obligatory Additional Shares shall be treated as Obligatory Additional Shares for purposes of this Agreement.

3.2 Obligatory Additional Shares. Subject to the terms and conditions of this Agreement, (i) so long as Apollo is a stockholder in the Company, Apollo shall purchase up to the number of additional shares of Class A Common Stock which have an aggregate purchase price of $793,000,000 and (ii) so long as Carlyle is a stockholder in the Company, Carlyle and its Affiliates (provided, that the number of such Affiliates of Carlyle shall not exceed twenty (20)) shall purchase up to the number of additional shares of Class B Common Stock which have an aggregate purchase price of $197,000,000, in each case at a purchase price per share of Fair Market Value on the date of purchase, except as otherwise provided in Section 3.2(d) (such shares, with respect to the purchasing Participant, its “Obligatory Additional Shares”). Notwithstanding the immediately preceding sentence, Apollo shall not be obligated on any date to purchase Obligatory Additional Shares with an aggregate purchase price that exceeds four times the aggregate purchase price of Obligatory Additional Shares purchased by Carlyle and its Affiliates through and including such date. Any purchase by Carlyle or its Affiliates of Obligatory Additional Shares hereunder shall only be required to be made upon the prior approval of the Carlyle Investment Committee, which approval may be given or withheld in its sole discretion. Any purchase by Apollo of Obligatory Additional Shares hereunder shall only be required to be made upon the prior approval of the Apollo Board (or with respect to the purchase of additional shares which have an aggregate purchase price less than or equal to $10,000,000, the investment committee of the Apollo Board), which approval may be given or withheld in its sole discretion. Except as specifically provided in the Shareholders’ Agreement, no rights of Apollo or Carlyle under this Agreement or any Additional Agreement shall be affected by any decision of the Apollo Board or the Carlyle Investment Committee not to purchase Obligatory Additional Shares. Each Participant shall purchase its Obligatory Additional Shares in accordance with the following procedure:

     (a) As and when the growth of the Business requires the Company to make Acquisitions within the Investment Scope and other investments and expenditures which are consistent with both the Investment Scope and the Business Plan (as from time to time in effect), the Board shall deliver to each Participant a written notice in accordance with Section 10.1 specifying the dollar amount (which shall be evenly divisible by $1,000) of the Company’s capital requirements in connection with such purchases or investments and the specific use or uses of such dollar amount by the Company (each such notice, a “Call Notice”), provided however, that no Call Notice relating to a proposed Acquisition that (a) has an enterprise value in excess of the lesser of (i) $150,000,000 or (ii) 33.33% of the Company’s total shareholder equity plus indebtedness for borrowed money, determined in accordance with US GAAP and as reflected in the Company’s most recently completed consolidated balance sheet, and (b) requires the Company to incur incremental debt or equity financing shall be delivered by the Company without the prior written consent of both the holders of a majority of the Class A Common Stock and the holders of a majority of the Class B Common Stock. Each Call Notice shall include

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either a written determination of Fair Market Value per share of Common Stock by the Board or a Valuation Report, as described in the definition of Fair Market Value. Apollo and Carlyle shall cause the Company to issue, and the Company shall issue, a number of shares of Common Stock equal to the dollar amount specified in the Call Notice divided by the then current Fair Market Value per share of Common Stock, provided however, that Apollo shall purchase only Class A Common Stock and Carlyle and its Affiliates shall purchase only Class B Common Stock.

     (b) If the Apollo Board and the Carlyle Investment Committee have each approved the purchase of Obligatory Additional Shares pursuant to corresponding Call Notices, Apollo shall purchase shares of Class A Common Stock issued pursuant to Section 3.2(a) and Carlyle and its Affiliates shall purchase shares of Class B Common Stock issued pursuant to Section 3.2(a) on the basis of 80.1% of the aggregate number of shares of Common Stock and 19.9% of the aggregate number of shares of Common Stock, respectively. If the Apollo Board approves the purchase of Obligatory Additional Shares pursuant to a Call Notice, but the Carlyle Investment Committee does not approve the purchase of Obligatory Additional Shares pursuant to the corresponding Call Notice, then Apollo may, in its sole discretion (i) have the corresponding Call Notice to Apollo rescinded and of no further force or effect, (ii) purchase its Obligatory Additional Shares, or (iii) purchase all of the Obligatory Additional Shares (which shall all be issued as Class A Common Stock). If the Apollo Board does not approve the purchase of Obligatory Additional Shares pursuant to a Call Notice, Carlyle may, in its sole discretion, (i) have the corresponding Call Notice to Carlyle rescinded and of no further force or effect, (ii) purchase its Obligatory Additional Shares, or (iii) purchase all of the Obligatory Additional Shares (which shall all be issued as Class B Common Stock). The Company agrees to rescind each Call Notice described in clause (i) of each of the two preceding sentences promptly upon the request of Apollo or Carlyle as specified in such sentences but in any event before the date for a Subsequent Closing scheduled in the Call Notice. The closing of such purchases (each such closing pursuant to a Call Notice, a “Subsequent Closing”), which shall occur simultaneously, shall occur on or before the tenth (10^th) Business Day following the date of the relevant Call Notice, or on such other date as Carlyle and Apollo may agree upon in writing. The date on which any Subsequent Closing is held is referred to in this Agreement as a “Subsequent Closing Date”.

     (c) For avoidance of doubt, the Participants shall not cause the Company to issue pursuant to Section 3.2(a), and the Participants shall not be required to purchase pursuant to Section 3.2(b), any Obligatory Additional Shares in excess of the number of shares set forth in the first paragraph of this Section 3.2.

     (d) Notwithstanding any other provision of this Agreement, including without limitation Section 3.2(a), in the event that the Carlyle Investment Committee has not approved the purchase of Obligatory Additional Shares which relates to an Acquisition and the Board subsequently issues one or more Call Notices to the Participants which total either (x) $25,000,000 for a single Subsequent Closing or (y) $75,000,000 for all Subsequent Closings in any twelve (12) month period, in each case with the specific use or uses of the dollar amounts that are the subject of such Call Notices being to provide additional funds to the Company, or a Subsidiary of the Company which completed such Acquisition, for working capital, capital expenditures or other obligations or commitments of the target of the Acquisition and the Carlyle

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Investment Committee does not approve, in its sole discretion, the purchase of Obligatory Additional Shares which are the subject of such subsequent Call Notices, then the Specified Fraction of the Obligatory Additional Shares, if any, purchased by Apollo and its Affiliates shall be purchased at a price described in the following sentence, with the remainder of the Obligatory Additional Shares that are the subject of such Call Notice purchased by Apollo and its Affiliates at Fair Market Value. For each subsequent Call Notice described in the preceding sentence, the price at which Apollo and its Affiliates shall purchase the Specified Fraction of the Obligatory Additional Shares shall be one and one-half times the current Fair Market Value per share of Common Stock.

     (e) The obligation of Apollo to purchase its Obligatory Additional Shares shall be the direct obligation of Apollo and shall be enforceable by the Company and Carlyle. The obligation of Carlyle to purchase its Obligatory Additional Shares shall be the direct obligation of Carlyle and shall be enforceable by the Company and Apollo against Carlyle. The failure of a Participant which is required to purchase its Obligatory Additional Shares pursuant to Sections 3.2(b) and 6.2 shall constitute a material breach of this Agreement by such Participant. If a Participant fails to so purchase its Obligatory Additional Shares, all amounts distributable by the Company to such Participant in any capacity (whether by dividend, distribution, payment under an Additional Agreement or otherwise) shall be suspended, and the Participant’s (or Carlyle’s, in the case of a Participant that is an Affiliate of Carlyle) right to receive distributions from the Company shall not be restored until such Participant shall have paid in full to the Company the consideration due in connection with such Obligatory Additional Shares, plus interest thereon at the Prime Rate annually, calculated from the date such consideration should have been paid to the date it is paid by such Participant.

     (f) The Participants acknowledge that the purchase of any Obligatory Additional Shares hereunder may be made through the contribution of assets owned by either Apollo or Carlyle (“Contributed Assets”). Each of Carlyle and Apollo may request that, in addition to the assets of Apollo and its Subsidiaries that are primarily or fully dedicated to enrolling or serving International Students and the university owned by Apollo with half of its campuses presently located outside of the United States of America referred to in Section 10.1, the other consider the advisability of the contribution to the Company of Contributed Assets owned by either of Carlyle or Apollo and, upon the prior written consent of Apollo or Carlyle, as the case may be, Apollo, the Company and Carlyle shall proceed with a due diligence investigation of the Contributed Assets and the valuation thereof. Apollo and Carlyle shall use their good faith efforts to mutually determine the fair market value of any Contributed Assets and, subject to the terms of the Mutual Nondisclosure Agreement between Apollo and Carlyle Investment Management L.L.C. dated August 2, 2007 (the “Confidentiality Agreement”), the Participant contributing assets shall, and shall cause its Subsidiaries to, afford to each other Participant’s officers, directors, employees, accountants, counsel, consultants, advisors and agents reasonable access to and the right to inspect, during normal business hours and with reasonable advance notice, all of the real property, properties, assets, records, contracts and other documents related to the Contributed Assets, and shall permit them to consult, during normal business hours and with reasonable advance notice, with the officers, employees, accountants, counsel and agents of the Participant and its subsidiaries for the purpose of making such investigation of the Contributed Assets as such Participant shall desire to make. Each Participant contributing assets shall make

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available to each other Participant all such documents and copies of documents and records and information with respect to the Contributed Assets as the other Participant may reasonably request. If Apollo and Carlyle agree, the Contributed Assets shall be contributed to the Company at the agreed valuation therefor subject to the prior negotiation and agreement to the terms of definitive documentation which is appropriate for the transfer of such Contributed Assets and which definitive documentation shall contain customary representations and warranties, covenants, indemnification provisions (including customary caps and thresholds) and closing conditions (including compliance with all applicable regulatory requirements). Within five (5) days of the closing of the transfer of Contributed Assets, the Company shall deliver a Call Notice pursuant to Section 10.1 to each Participant which did not transfer Contributed Assets to the Company in such closing, setting forth the agreed upon fair market value of the Contributed Assets times such Participant’s percentage of the aggregate number of shares of Common Stock specified in the first sentence of Section 3.2(b), together with the determination of the Fair Market Value of shares of Common Stock described in the definition of Fair Market Value. Subject to the satisfaction of Section 6.2, each Participant which did not transfer the Contributed Assets to the Company shall within fifteen (15) days of its receipt of the Call Notice, shall make a capital contribution to the Company in an amount equal to the agreed upon fair market value of the Contributed Assets times such Participant’s percentage of the aggregate number of shares of Common Stock specified in the first sentence of Section 3.2(b) and receive the number of shares of Common Stock which is equal to the capital contribution made by such Participant pursuant to this Section 3.2(f) divided by the Fair Market Value of shares of Common Stock.

3.3 Termination and Survival of Rights and Obligations. A Participant’s obligation to pay consideration due to the Company for shares of capital stock purchased under this Article III shall survive (a) the termination, dissolution, liquidation and winding up of the Company, and for purposes of this Article III, the Company shall be treated as continuing in existence, and (b) the purchase of such Participant’s shares of capital stock by the other Participants or a third person, whether pursuant to the Shareholders’ Agreement or otherwise. The Company may pursue and enforce all rights and remedies that it may have against each Participant under this Article III, including, without limitation, instituting a lawsuit to collect such payments with interest.

3.4 Optional Capital Calls. From and after the date that either (i) Apollo and its Affiliates have purchased at least $801,000,000 in aggregate purchase price of shares of Common Stock pursuant to Sections 3.1 and 3.2 or (ii) Carlyle and its Affiliates have purchased at least $199,000,000 in aggregate purchase price of shares of Common Stock pursuant to Sections 3.1 and 3.2, the Board may deliver additional written notices to each Participant who has purchased all of its Obligatory Additional Shares for the purposes, and consistent with the requirements, set forth in Section 3.2(a) of this Agreement and paragraph in 2 of the Shareholders’ Agreement (the “Optional Call Notices”). Each such Participant shall have the right, which it may exercise, in its sole discretion and in whole or in part, but not the obligation, to purchase at one or more Subsequent Closings additional shares of Common Stock (the “Optional Additional Shares”) at the prices and in the manner specified in Sections 3.2(b) and 3.2(d) and subject to the satisfaction of the conditions specified in Section 6.2.

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARTICIPANTS

     Each Participant represents and warrants to each other Participant and the Company as of the date hereof, and will represent and warrant to each other Participant and the Company as of each Subsequent Closing Date, as follows:

4.1 Accredited Investor. Such Participant (a) is an “accredited investor” (as that term is defined in Section 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”)) because it is either (x) a corporation not formed for the specific purpose of acquiring the securities offered, and has total assets in excess of $5,000,000 or (y) an entity in which all of the equity owners are accredited investors, (b) has such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the investment contemplated hereby and (c) has reviewed the merits of such investment with tax and legal counsel and other advisors to the extent deemed advisable. Such Participant will acquire its Purchased Shares for its own account for investment and not with a view to the sale or distribution thereof, and such Participant has no present intention of distribution or selling to others any of such interest.

4.2 Access. Such Participant has had access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the investment in the Purchased Shares under this Agreement. Such Participant further has had the opportunity to obtain all additional information necessary to verify the information to which such Participant has had access.

4.3 Nature of Investment. Such Participant understands that the Purchased Shares are characterized as “restricted securities” under the Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under the Act and related regulations such securities may be resold under the Act only in certain limited circumstances. Such Participant is familiar with and understands such resale limitations imposed by the Act and related regulations and by the Shareholders’ Agreement. Such Participant understands that the Company has no present intention to register any of the Purchased Shares.

4.4 Authorization; Validity; No Conflicts. Such Participant is duly authorized (including by all requisite corporate or stockholder (or equivalent, for entities other than corporations) action on the part of such Participant and its officers and directors and its direct and indirect stockholders (or equivalent equity owners, for entities other than corporations)), and has full power and authority, to execute and perform its obligations under this Agreement and each Additional Agreement to which it is a party, and each such agreement, when executed and delivered by such Participant, constitutes such Participant’s legal, valid and binding obligation enforceable against it in accordance with its terms except (i) as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. The execution, delivery and performance by such Participant of this Agreement and each Additional Agreement

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to which it is a party, and the consummation by such Participant of the transactions contemplated hereby and thereby will not (a) conflict with or constitute a default under any agreement, indenture or instrument to which such Participant is a party, (b) conflict with or violate such Participant’s organizational documents or (c) result in a violation of any order, judgment or decree of any court or governmental or regulatory authority having jurisdiction over such Participant or any of its assets.

4.5 Limitation on Representations. Such Participant understands and agrees that each other Participant is only making the representations and warranties set forth in this Article IV, and no other representations or warranties, express or implied, are made by such other Participant.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to each Participant as of the date hereof, and will represent and warrant to each Participant as of each Subsequent Closing Date as follows:

5.1 Corporate Organization; Authorization.

     (a) The Company is duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all corporate requisite power and authority to carry on its business as now conducted and to own or lease its properties and assets. The Company is duly qualified or licensed to do business as a foreign company in good standing in each state of the United States and in each foreign jurisdiction in which the conduct of its business or the ownership or leasing of its properties require such qualification.

     (b) The Company has full corporate power and authority to enter into this Agreement and the Additional Agreements and to carry out the transactions contemplated hereby and thereby. The Board of Directors and stockholders of the Company have taken all action required to authorize the execution and delivery of this Agreement and the Additional Agreements, the performance of the Company’s obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby. No other corporate proceedings on the part of the Company are necessary to authorize the execution, delivery and performance by it of this Agreement and the Additional Agreements.

     (c) This Agreement and the Additional Agreements to which it is a party have been duly executed and delivered by the Company and constitute legal, valid and binding obligations of the Company, enforceable against it in accordance with the terms of such agreements, except (i) as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

5.2 No Violation.

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     The execution, delivery and performance by the Company of this Agreement and the Additional Agreements and the consummation of the transactions contemplated hereby and thereby does not (a) violate, conflict with or result in the breach of any provisions of the Certificate of Incorporation or Bylaws of the Company, (b) in any material respect, violate, conflict with, result in any breach of, constitute a default under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any lien on any shares of Common Stock or any of the assets or property of the Company pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Company is a party or by which any shares of Common Stock or any of such assets or properties is bound or affected, (c) require the consent of any party to any material agreement or commitment to which the Company is a party, or by which the Company is bound, or (d) in any material respect, conflict with or violate any law or governmental order to which the Company is subject.

5.3 Consents and Approvals of Governmental Authorities.

     The execution, delivery and performance of this Agreement and each Additional Agreement by the Company does not require any consent, approval, authorization or other order of, action by or declaration, filing or registration with or notification to, any governmental authority to be made or obtained by the Company in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby.

5.4 Capitalization.

     The authorized and issued shares of capital stock of the Company, as of immediately prior to the execution and delivery hereof, and as of the execution and delivery hereof, are set forth on Schedule 5.4. All issued and outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable and all shares of Capital Stock to be issued on each Subsequent Closing Date will, assuming payment in full of the amount specified in the Call Notice or the Optional Call Notice, be validly issued, fully paid and nonassessable. Except as set forth in Schedule 5.4, there are no other authorized, issued or outstanding shares of capital stock of the Company, nor any options, warrants or other securities convertible into or exchangeable or exercisable for shares of capital stock of the Company, outstanding. Except as set forth on Schedule 5.4, there are no outstanding options, warrants, rights, contracts, commitments, understandings or arrangements by which the Company is bound to issue, repurchase or otherwise acquire or retire any additional shares of capital stock or other securities of the Company. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any shares of capital stock of the Company other than the Shareholders’ Agreement.

5.5 Subsidiaries.

     Except as set forth on Schedule 5.5, the Company has no Subsidiaries and does not own any capital stock or other equity securities of any other corporation and has no other type of capital or equity interest in any Person (other than the Company). The Company is not subject to

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any obligation or requirement to make any investment (in the form of a loan or capital contribution) in any Person (other than the Company), except as set forth in Schedule 5.5.

ARTICLE VI
CLOSINGS; CONDITIONS TO CLOSINGS

6.1 Initial Closing. The Initial Closing took place on October 22, 2007.

6.2 Subsequent Closings. Each Subsequent Closing under this Agreement shall take place at the offices of Morgan, Lewis & Bockius LLP, One Market Street, San Francisco, CA 94105 (or such other place as the Participants may agree upon in writing) on the relevant Subsequent Closing Date. Notwithstanding the foregoing provisions of this Section 6.2, the obligation of each Participant to purchase the Obligatory Additional Shares or Optional Additional Shares to be purchased by it at a Subsequent Closing shall be subject to the fulfillment of the following conditions:

     (a) The representations and warranties of each other Participant set forth in Article IV shall be true and correct on such Subsequent Closing Date.

     (b) The representations and warranties of the Company set forth in Article V, including updated Schedules 5.4 and 5.5, shall be true and correct on the Subsequent Closing Date.

     (c) The other Participant shall have purchased all of the Initial Shares to be purchased by it at the Initial Closing.

     (d) Each Participant shall have received all required governmental and regulatory approvals, and all waiting periods under any applicable antitrust regulations shall have expired, in connection with the formation of the Company and the consummation of the transactions contemplated by this Agreement.

     (e) The Company shall have developed a written business plan mutually acceptable to the Participants (the “Business Plan”) and in the event that the Business Plan is dated more than twelve months before the date of a Subsequent Closing, the Business Plan shall have been updated on such terms mutually acceptable to the Participants.

     (f) The Company shall have received either (i) payment from each other Participant of the purchase price for the Obligatory Additional Shares or Optional Additional Shares to be purchased by such Participant at such Subsequent Closing by wire transfer of immediately available funds to an account designated by or on behalf of the Company on or prior to the Subsequent Closing, or (ii) transfer of Contributed Assets, pursuant to Section 3.2(f), by such Participant to the Company at their fair market value, as mutually agreed by the Participants pursuant to Section 3.2(f).

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     (g) The Company shall have maintained in full force and effect a directors’ and officers’ liability policy in such amounts and on such terms mutually acceptable to the Participants.

     (h) This Agreement and the Additional Agreements shall be in full force and effect and neither the Company nor any other Participant which is not an Affiliate shall be in material breach of its obligations under this Agreement or under the Additional Agreements.

     (i) Each Participant shall have executed either the Shareholders’ Agreement or a Shareholders’ Agreement Joinder Agreement.

ARTICLE VII
CERTAIN COVENANTS

7.1 Shareholders’ Agreement; Restrictions on Transfer. At or prior to the Initial Closing, the Company, Carlyle and Apollo executed a Shareholders’ Agreement. On the date of this Agreement, the Company, Carlyle and Apollo shall execute an amended and restated Shareholders’ Agreement in the form attached hereto as Exhibit C (the “Shareholders’ Agreement”), pursuant to which the Company, Carlyle and Apollo shall impose certain restrictions on the transfer of Shares (as defined in the Shareholders’ Agreement) and set forth their agreement with respect to certain other matters as described therein. Each of Apollo and Carlyle agrees that no sale, assignment or transfer of its Purchased Shares shall be valid or effective, and the Company shall not be required to give any effect to any such sale, assignment or transfer, unless (a) the sale, assignment or transfer of such Purchased Shares is registered under the Act or (b) such sale, assignment or transfer is otherwise exempt from registration under the Act. In addition, each of Apollo and Carlyle agrees that any sale, assignment or transfer of its Purchased Shares shall be made in compliance with the Shareholders’ Agreement. Each of Apollo and Carlyle acknowledges that the certificate or certificates evidencing its Purchased Shares shall bear a legend stating or referring to the foregoing transfer restrictions.

7.2 Registration Rights Agreement. At or prior to the Initial Closing, the Company, Carlyle and Apollo executed, and caused the Company to execute, a Registration Rights Agreement in the form attached hereto as Exhibit D (the “Registration Rights Agreement”).

7.3 Further Assurances. The Company, Apollo and Carlyle agree to use their best efforts to obtain all necessary consents and approvals and expiration of all waiting periods (including all required governmental and regulatory approvals and waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended), for the consummation of the transactions contemplated by this Agreement. The Company, Apollo and Carlyle further agree to take or cause to be taken all such corporate (or equivalent, for entities other than corporations) and other action, including executing and/or delivering further instruments and documents, as may be necessary to effect the intent and purposes of this Agreement.

7.4 Public Announcements. All press releases and other public disclosure concerning the existence or terms of this Agreement, the Additional Agreements or the transactions contemplated hereby and thereby from and after the date hereof will be subject to review by and approval each of Apollo and Carlyle, which approval shall not be unreasonably withheld;

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provided, that to the extent a Participant shall have received the written advice of counsel that it is required to make an announcement pursuant to any law, regulation, order or stock exchange rule, it shall be permitted to do so even if it has not obtained the approval of the other Participant so long as it has used reasonable efforts to consult with and obtain consent of the other Participant to the content of the announcement and strictly limits such announcement to the minimum disclosure required.

7.5 Master Support Agreement. The Company and Apollo shall use their reasonable efforts to execute and deliver a Master Support Agreement on terms and conditions mutually agreed upon by Apollo and Carlyle, which terms will include the reimbursement of Apollo’s expenses for such services at rates to be mutually agreed upon by Apollo and Carlyle.

7.6 International Students. Apollo and Carlyle expect that from and after the date that the International Assets (as defined in Section 10.1) are transferred to the Company, all educational and other related activities directed toward International Students engaged by Apollo or its Subsidiaries shall be engaged in by the Company (or its Subsidiaries) to the exclusion of Apollo and its other Subsidiaries. Apollo agrees that during the period which commences on the date that the International Assets have been contributed to the Company and ends on the last day of the term of this Agreement, neither Apollo nor any of its Subsidiaries (other than the Company or its Subsidiaries) shall solicit or recruit International Students. Apollo and its Subsidiaries shall use their reasonable best efforts to transfer the International Assets to the Company within eighteen (18) months after the date of this Agreement. In the event that any International Asset is not contributed to the Company notwithstanding the use of reasonable best efforts by Apollo and its Subsidiaries, representatives of Apollo and Carlyle shall meet immediately after the meeting of the board of directors of the Company which follows the eighteen (18) month anniversary of this Agreement and engage in good faith negotiations regarding the reclassification of such International Asset that has not been contributed to the Company as a “Reclassified Asset” for purposes of this Agreement. Apollo agrees that it shall not unreasonably withhold, delay or condition its consent to the reclassification of an International Asset which is not contributed to the Company as a Reclassified Asset. Apollo agrees that commencing on the date that a business(es) or asset(s) become a Reclassified Asset, neither Apollo nor its Subsidiaries (other than the Company or its Subsidiaries) shall directly or indirectly solicit International Students by, through or for the benefit of the Reclassified Asset or any part or division thereof until the last day of the term of this Agreement. In the event that after the date of this Agreement either Apollo or its Subsidiaries (other than the Company or its Subsidiaries) acquire any Person, business or assets that are either (a) within the Investment Scope and the holders of a majority of the Class B Common Stock have not withheld their consent to such acquisition pursuant to paragraph 2(b)(1)(iv) of the Shareholders’ Agreement (if such consent is required under such paragraph) or (b) not within the Investment Scope because the principal operations and facilities of the educational services business of the acquired Person, business or assets are located within the United States but such Person, business or assets also include secondary or ancillary educational services operations and facilities outside of the United States (an “Ancillary International Business”), neither Apollo nor any of its Subsidiaries (other than the Company or its Subsidiaries) shall directly or indirectly solicit International Students by, through or for the benefit of either an International Asset described in clause (a) of this sentence or an Ancillary International Business for a period which commences on the date that such

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International Asset or Ancillary International Business is acquired or controlled by Apollo or its Subsidiaries and ends on the last day of the term of this Agreement. Notwithstanding the first sentence of this Section 7.6 but subject to clause (b) of the fourth sentence of this Section 7.6, neither Apollo nor its Subsidiaries shall be prohibited or restricted in any manner from advertising, promoting or marketing: (I) to students and prospective students generally, including advertising, promoting or marketing via the internet (or using internet search methods) any programs or educational services to students and prospective students (including leads for prospective students) so long as such advertising, promotions or marketing activities are not developed for, intended to target or otherwise directed to, International Students; or (II) any business or assets that:(x) are not within the Investment Scope (as defined in the Shareholders’ Agreement); (y) are not actually engaged in, used for or planned to be engaged in or used for marketing, promoting, soliciting, responding to leads and related activities for, or on behalf of, education or corporate training programs or services for International Students and (z) have been acquired by Apollo or its Subsidiaries in accordance with this Agreement.

ARTICLE VIII
TERM AND TERMINATION

8.1 Term and Termination. This Agreement shall become effective as of the date hereof and thereafter shall remain in full force and effect until terminated in accordance with this Agreement. This Agreement shall be terminated upon the first to occur of the following events: (a) the written agreement of Apollo and Carlyle, (b) the dissolution of the Company, or (c) one Participant holds all the issued and outstanding shares of capital stock of the Company.

8.2 Effect of Termination. The termination of this Agreement for any cause shall not in any way affect or be deemed to affect any obligation of either party having accrued prior to the termination hereof or any right or obligation which, by its terms, is to survive the termination of this Agreement.

ARTICLE IX
DISPUTE RESOLUTION

9.1 Arbitration; Consent to Jurisdiction and Service. Any dispute hereunder shall be settled by arbitration in Wilmington, Delaware in accordance with the commercial arbitration rules then in effect of the American Arbitration Association. The parties consent to the jurisdiction of the state or federal courts of the State of Delaware for all purposes in connection with arbitration, and to service of process by first class United States mail delivered in accordance with the applicable rules of such courts. The award entered by the arbitrator(s) shall be final and binding on all parties to arbitration. Each party shall bear its respective arbitration expenses and shall each pay its pro rata share of the arbitrator’s charges and expenses. All proceedings shall be conducted, and all submissions shall be made, in English.

9.2 Specific Performance. The parties hereby acknowledge and agree that the obligations imposed on them in this Agreement are special, unique and of an extraordinary character, and

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that irreparable damage may result in the event that this Agreement is not specifically enforced (including without limitation any restrictions on transfer of Purchased Shares) and the parties hereto agree that any damages available at law for a breach of this Agreement would not be an adequate remedy. Therefore, the provisions hereof and the obligations of the parties hereunder shall be enforceable by a decree of specific performance, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies and all other remedies provided for in this Agreement shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any party may have under this Agreement or otherwise.

9.3 NO EXTRAORDINARY DAMAGES. NOTWITHSTANDING ANY TERM OR PROVISION OF THIS AGREEMENT, NEITHER PARTY NOR THEIR RESPECTIVE OFFICERS, EMPLOYEES OR AGENTS, SHALL BE LIABLE TO THE OTHER PARTY OR ITS RESPECTIVE OFFICERS, EMPLOYEES OR AGENTS, FOR CLAIMS FOR PUNITIVE, SPECIAL, EXEMPLARY, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, REGARDLESS OF WHETHER A CLAIM IS BASED ON CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, VIOLATION OF ANY APPLICABLE DECEPTIVE TRADE PRACTICES ACT OR ANY OTHER LEGAL OR EQUITABLE PRINCIPLE.

9.4 Governing Law. This Agreement shall be construed according to and governed by the laws of the State of Delaware, without reference to conflicts of laws principles.

ARTICLE X
GENERAL PROVISIONS

10.1 Expected Contributed Assets. Apollo and Carlyle expect that the business, operations, assets and goodwill of each of the assets of Apollo and its Subsidiaries that are primarily or fully dedicated to enrolling or serving International Students (collectively, the “International Assets”) will be contributed to the Company by Apollo in exchange for Obligatory Additional Shares pursuant to and in accordance with Section 3.2(f) after consolidating financial statements have been completed for each of the International Assets.

10.2 Notices. All notices, requests, demands and other communications hereunder shall be in writing and delivered to the relevant party at its address set forth below (or such other address as notified by one party to the other) by any of the following methods: (a) personal delivery, (b) United States mail, postage prepaid, (c) pre-paid, nationally recognized overnight courier or (d) fax with a copy following by any method described in the foregoing clauses (a) to (c). Notices will be deemed to have been given hereunder when delivered personally, five days after deposit in the U.S. mail and one day after deposit with a nationally recognized overnight courier service.

If to the Company:

Apollo Global, Inc.
227 West Monroe
Suite 3600
Chicago, IL 60606

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Attn: Chief Financial Officer
Facsimile: (312) 578-0489

If to Apollo or its Affiliates:

Apollo Group, Inc.
4025 South Riverpoint Parkway
Mail Stop CF-KX01
Phoenix, AZ 85040
Attention: Chief Financial Officer
Facsimile: (602) 557-3898

With a required copy to:

Morgan, Lewis & Bockius LLP
One Market, Spear Street Tower
San Francisco, CA 94105
Attention: William A. Myers, Esq.
Facsimile: (415) 442-1001

If to Carlyle or its Affiliates:

1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC 20004-2505
Attention: Brooke B. Coburn
Facsimile: (202) 347-1818

With a required copy to:

Dickstein Shapiro LLP
1825 Eye Street, NW
Washington, DC 20006-5403
Attention: Neil Lefkowitz
Facsimile: (202) 420-2201

Any party shall have the right to change its address for notice hereunder from time to time to such other address as may hereafter be furnished in writing by such party to the other party

10.3 Relationship. Neither party, nor any of its employees, customers or agents, shall, by virtue of this Agreement, be deemed to be the representative, employee or agent of the other party for any purpose whatsoever, nor shall they or any of them have, by virtue of this Agreement, any authority or right to assume or create an obligation of any kind or nature, expressed or implied, on behalf of the other party, nor to accept service of any legal process of any kind addressed to, or intended for, the other party.

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10.4 Amendments. This Agreement may be amended or modified only upon the express written agreement of Carlyle and Apollo.

10.5 No Waiver of Default. No consent or waiver, express or implied, by any party with respect to any breach or default hereunder by any other shall be deemed or construed to be a consent or waiver with respect to any other breach or default by such other party of the same provision or any other provision of this Agreement. Failure on the part of either party to complain of any act or failure to act of any other party or to declare such party in default shall not be deemed or constitute a waiver by such party of any rights hereunder with respect to such act or failure to act.

10.6 No Third Party Rights. None of the provisions contained in this Agreement shall be for the benefit of or enforceable by any person who is not a party to this Agreement; provided, that, Carlyle Affiliates which own shares of the capital stock of the Company shall be entitled to all rights and benefits of Carlyle under this Agreement. The parties hereto expressly retain any and all rights to amend this Agreement as provided herein, notwithstanding any interest in this Agreement held by the Company or any third person.

10.7 No Assignment; Binding Agreement. No party hereto may assign this Agreement or any of its rights or obligations hereunder, except with the prior written consent of the others; provided, that in the event that either (i) a Participant transfers its shares of capital stock of the Company to a third person in accordance with the Shareholders’ Agreement or (ii) a Carlyle Affiliate purchases from the Company shares of the capital stock of the Company, consent to the assignment of this Agreement to such third person shall be deemed to have been given, so long as such third person agrees in writing to assume all of the obligations of the transferring Participant hereunder. Subject to the foregoing, the provisions of this Agreement shall be binding upon, and, except as otherwise provided herein, shall inure to the benefit of the parties and their respective successors and permitted assigns.

10.8 Severability. In the event any provision of this Agreement is held to be illegal, invalid or unenforceable to any extent, the legality, validity and enforceability of the remainder of this Agreement shall not be affected thereby and shall remain in full force and effect and shall be enforced to the greatest extent permitted by law.

10.9 Fees and Expenses. The reasonable Expenses of each Participant shall be paid by the Company.

10.10 No Election of Remedies. No provision of, or any rights granted or remedies available under, this Agreement or, when executed and delivered, any Additional Agreement shall limit the availability of any other right or remedy for the breach or violation of any of the provisions contained in this Agreement or, when executed and delivered, any Additional Agreement.

10.11 Headings. The headings of the articles and sections of this Agreement are for convenience only and shall not be considered in construing or interpreting any of the terms or provisions hereof.

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10.12 Entire Agreement. This Agreement, the Confidentiality Agreement and, when executed and delivered, the Additional Agreements, and any document required to be executed by any of such agreements, contain the entire agreement between the parties, and supersede all prior writings or agreements, with respect to the subject matter hereof.

10.13 Counterparts. This Agreement may be executed in several counterparts, all of which together shall constitute one agreement binding on all parties, notwithstanding that all the parties have not signed the same counterpart.

[Remainder of page intentionally left blank]

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          IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Capital Contribution Agreement to be duly executed as of the date first written above.

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION
THAT MAY BE ENFORCED BY THE PARTIES.

APOLLO GROUP, INC.
By:	/s/ Brian L. Swartz
	Name:	Brian L. Swartz
	Title:	Chief Financial Officer
CARLYLE VENTURE PARTNERS III, L.P.
By:	TCG VENTURES III, L.P.
	Its General Partner
By:	/s/ Brooke Coburn
	Name:	Brooke Coburn
	Title:	Managing Director
APOLLO GLOBAL, INC.
By:	/s/ Jeffrey Langenbach
	Name:	Jeffrey Langenbach
	Title:	President

[Signature Page to Capital Contribution Agreement]

EXHIBIT A

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF
APOLLO GLOBAL, INC.

     Apollo Global, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify that:

     1. The name of the corporation is Apollo Global, Inc. The original Certificate of Incorporation of the corporation was filed with the Secretary of State of the State of Delaware on October 18, 2007.

     2. This Amended and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Section 242 and 245 of the General Corporation Law of the State of Delaware by the Board of Directors and stockholders of the corporation.

     3. This Amended and Restated Certificate of Incorporation restates and integrates and amends the provisions of the corporation’s original Certificate of Incorporation.

     4. The text of the original Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:

ARTICLE I

     The name of this corporation is: APOLLO GLOBAL, INC.

ARTICLE II

     The address of the registered office of the corporation in the State of Delaware is 2711 Centreville Road, Suite 400, City of Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at such address is Corporation Service Company.

ARTICLE III

     The nature of the business or purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

ARTICLE IV

     The name of the corporation’s incorporator is Peter S. Park, c/o Morgan Lewis & Bockius LLP, One Market, Spear Street Tower, San Francisco, California 94105.

ARTICLE V

     The corporation is authorized to issue two (2) classes of stock to be designated, respectively, “Class A Common Stock” and “Class B Common Stock”. The total number of shares that the corporation is authorized to issue is 651,796 shares. 553,822 shares shall be Class A Common Stock, par value of $0.001 per share and 97,974 shares shall be Class B Common Stock, par value of $0.001 per share. The holders of the Class A Common Stock and the holders of the Class B Common Stock are entitled to one vote for each share of Class A Common Stock and each share of Class B Common Stock held at all meetings of the stockholders (and written actions in lieu of meetings). Except as otherwise provided in Article IX of this Certificate of Incorporation, the powers, preferences, privileges, and relative participating, optional, or other rights, and the qualifications, limitations, and restrictions thereof of the holders of each of the Class A Common Stock and the Class B Common Stock are identical.

ARTICLE VI

     A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derived any improper personal benefit. If the General Corporation Law of the State of Delaware is hereafter amended to authorize corporate action further eliminating or limiting the personal liability of directors then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware as so amended.

     Any repeal or modification of the foregoing provisions of this Article VI by the stockholders of the corporation shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification.

ARTICLE VII

     The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on stockholders herein are granted subject to this reservation.

ARTICLE VIII

     Election of directors need not be by written ballot unless the bylaws of the corporation shall so provide.

ARTICLE IX

     The number of directors which shall constitute the whole Board of Directors of the corporation shall be eight (8). At each election of directors, (i) the holders of a majority of the Class A Common Stock, voting as a separate class, shall be entitled to elect six (6) members of the Board of Directors (the “Class A Common Stock Directors”), and (ii) the holders of a majority of the Class B Common Stock, voting as a separate class, shall be entitled to elect two (2) members of the Board of Directors (the “Class B Common Stock Directors”). A director may be removed during their term of office, either with or without cause, by, and only by, the affirmative vote or written consent of the stockholders holding a majority of the specified class of stock entitled to elect such director pursuant to this Article IX. Any vacancies on the Board of Directors may be filled by the stockholders holding the specified class of stock entitled to vote upon the election of any director from which a vacancy arose.

     At all meetings of the Board of Directors, a majority of the directors then in office shall constitute a quorum for the transaction of business, and a majority vote of the directors present at any meeting at which there is a quorum shall be the act of the Board of the Directors, except as may be otherwise specifically provided by the General Corporation Law of the State of Delaware. Each Class A Common Stock Director shall have two (2) votes and each Class B Common Stock Director shall have one (1) vote on all matters upon which the Board of Directors may vote or otherwise approve.

ARTICLE X

     Meetings of stockholders of the corporation may be held within or without the State of Delaware, as the bylaws of the corporation may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors of the corporation or in the bylaws of the corporation.

ARTICLE XI

     Except as otherwise provided in this Certificate of Incorporation or that certain Amended and Restated Shareholders’ Agreement by and among the corporation and certain stockholders dated on or around July 28, 2009 (as amended to date), in furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the corporation, is expressly authorized to make, repeal, alter, amend and rescind any or all of the bylaws of the corporation.

ARTICLE XII

     To the fullest extent permitted by applicable law, the corporation is also authorized to provide indemnification of (and advancement of expenses to) such agents (and any other persons to which Delaware law permits the corporation to provide indemnification) through bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law of the State of Delaware, subject only to limits created by applicable Delaware law (statutory or non-statutory), with respect to actions for breach of duty to the corporation, its stockholders, and others.

     Any repeal or modification of any of the foregoing provisions of this Article XII shall not adversely affect any right or protection of a director, officer, agent or other person existing at the time of, or increase the liability of any director of the corporation with respect to any acts or omissions of such director, officer or agent occurring prior to such repeal or modification.

IN WITNESS WHEREOF, the Amended and Restated Certificate of Incorporation has been signed this 28 day of July, 2009.

/s/ Jeffrey Langenbach

Jeffrey Langenbach

Name

President

Title

EXHIBIT B

AMENDED AND RESTATED

BYLAWS

AMENDED AND RESTATED

BYLAWS

OF
APOLLO GLOBAL, INC.

ARTICLE I.
OFFICES

     Section 1. Registered Office. The registered office shall be at the office of Corporation Service Company, 2711 Centreville Road, Suite 400, City of Wilmington, County of New Castle, Delaware 19808.

     Section 2. Other Offices. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.

ARTICLE II.
MEETINGS OF STOCKHOLDERS

     Section 1. Annual Meeting. An annual meeting of the stockholders for the election of directors shall be held at such place either within or without the State of Delaware as shall be designated on an annual basis by the Board of Directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Any other proper business may be transacted at the annual meeting.

     Section 2. Notice of Annual Meeting. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting.

     Section 3. Voting List. The officer who has charge of the stock ledger of the corporation shall prepare and make, or cause a third party to prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

     Section 4. Special Meetings. Special meetings of the stockholders of the corporation, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of

Incorporation, shall be called by the President or Secretary at the request in writing of a majority of the members of the Board of Directors or at the request in writing of stockholders owning at least ten (10%) of the total voting power of all outstanding shares of stock of the corporation then entitled to vote, and may not be called absent such a request. Such request shall state the purpose or purposes of the proposed meeting.

     Section 5. Notice of Special Meetings. As soon as reasonably practicable after receipt of a request as provided in Section 4 of this Article II, written notice of a special meeting, stating the place, date (which shall be not less than ten nor more than sixty days from the date of the notice) and hour of the special meeting and the purpose or purposes for which the special meeting is called, shall be given to each stockholder entitled to vote at such special meeting.

     Section 6. Scope of Business at Special Meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

     Section 7. Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the chairman of the meeting or the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting as provided in Section 5 of this Article II.

     Section 8. Qualifications to Vote. The stockholders of record on the books of the corporation at the close of business on the record date as determined by the Board of Directors and only such stockholders shall be entitled to vote at any meeting of stockholders or any adjournment thereof.

     Section 9. Record Date. The Board of Directors may fix a record date for the determination of the stockholders entitled to notice of or to vote at any stockholders’ meeting and at any adjournment thereof, or to express consent to corporate action in writing without a meeting, or to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action. The record date shall not be more than sixty nor less than ten days before the date of such meeting, and not more than sixty days prior to any other action. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to

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any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

     Section 10. Action at Meetings. When a quorum is present at any meeting, the vote of the holders of a majority of the shares of stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of applicable law or of the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question.

     Section 11. Voting and Proxies. Unless otherwise provided in the Certificate of Incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Each proxy shall be revocable unless expressly provided therein to be irrevocable and unless it is coupled with an interest sufficient in law to support an irrevocable power.

     Section 12. Action by Stockholders Without a Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in the State of Delaware (by hand or by certified or registered mail, return receipt requested), to its principal place of business, or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded, provided, however, that action by written consent to elect directors, if less than unanimous, shall be in lieu of holding an annual meeting only if all the directorships to which directors could be elected at an annual meeting held at the effective time of such action are vacant and are filled by such action. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of stockholders to take the action were delivered to the corporation by delivery to its registered office in the State of Delaware (by hand or by certified or registered mail, return receipt requested), to its principal place of business, or to an officer or agent of the corporation having custody of the book in which proceedings or meetings of stockholders are recorded.

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ARTICLE III.
DIRECTORS

     Section 1. Powers. The business of the corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by applicable law or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.

     Section 2. Number; Election; Tenure and Qualification. The number of directors which shall constitute the whole board shall be eight (8). Directors need not be stockholders. Except as provided in Section 3 of this Article III, the directors shall be elected at the annual meeting of the stockholders in accordance with Article IX of the Certificate of Incorporation and each director elected shall hold office until his successor is elected and qualified unless he shall resign, become disqualified, disabled, or otherwise removed.

     Section 3. Vacancies. In the event that any representative designated pursuant to Section 2 of this Article III ceases to serve as a member of the Board of Directors during his term of office for any reason, the resulting vacancy on the Board of Directors will be filled in accordance with Article IX of the Certificate of Incorporation. The directors so chosen shall serve until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced.

     Section 4. Location of Meetings. The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware.

     Section 5. Meeting of Newly Elected Board of Directors. The first meeting of each newly elected Board of Directors shall be held immediately following the annual meeting of stockholders and no notice of such meeting shall be necessary to the newly elected directors in order to legally constitute the meeting, provided a quorum shall be present. In the event such meeting is not held at such time, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors.

     Section 6. Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors; provided that any director who is absent when such a determination is made shall be given notice of such location.

     Section 7. Special Meetings. Special meetings of the Board of Directors may be called by the President on two days’ notice to each director by mail, nationally recognized overnight courier service or facsimile; special meetings shall be called by the President or Secretary in a like manner and on like notice on the written request of two directors unless the Board of Directors consists of only one director, in which case special meetings shall be called by the President or Secretary in a like manner and on like notice on the written request of the sole director. Notice may be waived in accordance with Section 229 of the General Corporation Law of the State of Delaware.

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     Section 8. Quorum and Action at Meetings. At all meetings of the Board of Directors, a majority of the directors then in office shall constitute a quorum for the transaction of business, and an act approved by a majority vote of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation and with the Class A Common Stock Directors each having two (2) votes and the Class B Common Stock Directors each having one (1) vote. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

     Section 9. Action Without a Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee.

     Section 10. Telephonic Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear and communicate with each other, and such participation in a meeting shall constitute presence in person at the meeting.

     Section 11. Committees. The Board of Directors may, by resolution passed by a majority vote of the whole board, designate one or more committees. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

     Section 12. Committee Authority. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to (a) approving, adopting or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of the State of Delaware to be submitted to stockholders for approval, or (b) adopting, amending or repealing any Bylaw of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.

     Section 13. Committee Minutes. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required to do so by the Board of Directors.

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     Section 14. Directors Compensation. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the compensation of directors. The directors shall be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

     Section 15. Resignation. Any director or officer of the corporation may resign at any time. Each such resignation shall be made in writing and shall take effect at the time specified therein, or, if no time is specified, at the time of its receipt by either the Board of Directors, the President or the Secretary. The acceptance of a resignation shall not be necessary to make it effective unless expressly so provided in the resignation.

     Section 16. Removal. Unless otherwise restricted by the Certificate of Incorporation, these Bylaws or applicable law, (a) the removal from the Board of Directors (with or without cause) of any of the Class A Common Stock Directors shall be at the written request of those stockholders holding a majority of the outstanding Class A Common Stock, and only upon such request and under no other circumstances, and (b) the removal from the Board of Directors (with or without cause) of any of the Class B Common Stock Directors shall be at the written request of those stockholders holding a majority of the outstanding Class B Common Stock, and only upon such request and under no other circumstances, provided that the stockholders agree to take such action as is necessary to promptly amend the Certificate of Incorporation to provide that the holders of a majority of the Class B Common Stock, voting as a separate class, shall be entitled to elect one (1) member of the Board of Directors after any date that Carlyle Venture Partners III, L.P. and its Affiliates do not own, in the aggregate, either (i) ten percent (10%) or more of the issued and outstanding Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of one hundred million dollars ($100,000,000) or more.

ARTICLE IV.
NOTICES

     Section 1. Notice to Directors and Stockholders. Whenever, under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail or nationally recognized overnight courier, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given five days after the same shall be deposited in the United States mail or one day after delivery to a nationally recognized overnight courier. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the corporation that the notice has been given shall in the absence of fraud, be prima facie evidence of the facts stated therein. Notice to directors may also be given by telephone or facsimile (with confirmation of receipt).

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     Section 2. Waiver. Whenever any notice is required to be given under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. The written waiver need not specify the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors, or members of a committee of directors. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Attendance at the meeting is not a waiver of any right to object to the consideration of matters required by the General Corporation Law of the State of Delaware to be included in the notice of the meeting but not so included, if such objection is expressly made at the meeting.

ARTICLE V.
OFFICERS

     Section 1. Enumeration. The officers of the corporation shall be chosen by the Board of Directors and shall include a President, a Secretary, a Treasurer or Chief Financial Officer and such other officers with such other titles as the Board of Directors shall determine. The Board of Directors may elect from among its members a Chairman or Chairmen of the Board and a Vice Chairman of the Board. The Board of Directors may also choose one or more Vice-Presidents, Assistant Secretaries and Assistant Treasurers. Any number of offices may be held by the same person, unless the Certificate of Incorporation or these Bylaws otherwise provide.

     Section 2. Election. The Board of Directors at its first meeting after each annual meeting of stockholders shall elect a President, a Secretary, a Treasurer and such other officers with such other titles as the Board of Directors shall determine.

     Section 3. Appointment of Other Agents. The Board of Directors may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

     Section 4. Compensation. The salaries of all officers of the corporation shall be fixed by the Board of Directors or a committee thereof. The salaries of agents of the corporation shall, unless fixed by the Board of Directors, be fixed by the President or any Vice-President of the corporation.

     Section 5. Tenure. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the directors of the Board of Directors. Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors.

     Section 6. Chairman of the Board and Vice-Chairman of the Board. The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which the Chairman shall be present. The Chairman shall have and may exercise

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such powers as are, from time to time, assigned to the Chairman by the Board of Directors and as may be provided by law. In the absence of the Chairman of the Board, the Vice Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which the Vice Chairman shall be present. The Vice Chairman shall have and may exercise such powers as are, from time to time, assigned to such person by the Board of Directors and as may be provided by law.

     Section 7. President. The President shall be the Chief Executive Officer of the corporation unless such title is assigned to another officer of the corporation; in the absence of a Chairman and Vice Chairman of the Board, the President shall preside as the chairman of meetings of the stockholders and the Board of Directors; and the President shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The President or any Vice President shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation.

     Section 8. Vice-President. In the absence of the President or in the event of the President’s inability or refusal to act, the Vice-President, if any (or in the event there be more than one Vice-President, the Vice-Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. The Vice-President shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

     Section 9. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision the Secretary shall be subject. The Secretary shall have custody of the corporate seal of the corporation and the Secretary, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the Secretary’s signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by such officer’s signature.

     Section 10. Assistant Secretary. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the Secretary or in the event of the Secretary’s inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

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     Section 11. Chief Financial Officer. The Chief Financial Officer may also be designated by the alternate title of “Treasurer.” The Chief Financial Officer shall have the custody of all moneys and securities of the Corporation and shall keep regular books of account. Such officer shall disburse funds of the Corporation in payment of the just demands against the Corporation, or as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Board of Directors from time to time as may be required of such officer, an account of all transactions as Chief Financial Officer and of the financial condition of the Corporation. Such officer shall perform all duties incident to such office or that are properly required by the President or by the Board of Directors. If required by the Board of Directors, the Chief Financial Officer shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of such officer’s office and for the restoration to the corporation, in case of such officer’s death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in such officer’s possession or control belonging to the corporation.

     Section 12. Assistant Treasurer. The Assistant Treasurer or the Assistant Treasurers, in the order of their seniority, shall, in the absence or disability of the Chief Financial Officer, or in the event of such officer’s refusal to act, perform the duties and exercise the powers of the Chief Financial Officer, and shall have such powers and discharge such duties as may be assigned from time to time by the President or by the Board of Directors.

ARTICLE VI.
CAPITAL STOCK

     Section 1. Certificates. The shares of the corporation shall be represented by a certificate. Certificates shall be signed by, or in the name of the corporation by, (a) the Chairman of the Board, the Vice-Chairman of the Board, the President or a Vice-President, and (b) the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, certifying the number of shares of a particular class owned by such stockholder in the corporation. Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be specified.

     Section 2. Signature. Any of or all of the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

     Section 3. Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost,

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stolen or destroyed certificate or certificates, or such owner’s legal representative, to indemnify the corporation against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

     Section 4. Transfer of Stock. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

     Section 5. Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholder or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

     Section 6. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VII.
GENERAL PROVISIONS

     Section 1. Dividends. Dividends upon the capital stock of the corporation, subject to the applicable provisions, if any, of the Certificate of Incorporation, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of capital stock, subject to the provisions of the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purposes as the Board of Directors shall think conducive to the interest of the corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.

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     Section 2. Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

     Section 3. Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

     Section 4. Seal. The Board of Directors may adopt a corporate seal having inscribed thereon the name of the corporation, the year of its organization and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

     Section 5. Loans. The Board of Directors of the corporation may, without stockholder approval, authorize loans to, or guaranty obligations of, or otherwise assist, including, without limitation, the adoption of employee benefit plans under which loans and guarantees may be made, any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the Board of Directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation; provided, however, that (a) no material loan may be made to Carlyle Venture Partners III, L.P. or any Affiliate, member, partner, director, officer or employee of Carlyle Venture Partners III, L.P. or any “associate” (as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of any such Person (as defined in the Amended and Restated Shareholders’ Agreement) or Carlyle Venture Partners III, L.P. without the prior consent of Apollo Group, Inc. (which consent may be given or withheld in Apollo Group, Inc.’s sole discretion), except for transactions contemplated by the Amended and Restated Shareholders’ Agreement or the Amended and Restated Capital Contribution Agreement, dated as of July 28, 2009, as the same may be amended from time to time, and (b) no material loan may be made to Apollo Group, Inc. or any Affiliate, member, partner, director, officer or employee of Apollo Group, Inc. or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such Person or Apollo Group, Inc. without the prior consent of Carlyle Venture Partners III, L.P. (which consent may be given or withheld in Carlyle Venture Partners III, L.P.’s sole discretion), except for (i) transactions contemplated by the Amended and Restated Shareholders’ Agreement or the Amended and Restated Capital Contribution Agreement, dated as of July 28, 2009, as the same may be amended from time to time, or (ii) pursuant to the Support Services Agreement, by and between Apollo Group, Inc. and the corporation. The loan, guaranty or other assistance may be with or without interest, and may be unsecured or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation.

ARTICLE VIII.
INDEMNIFICATION

     Section 1. Scope. The corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as that Section may be amended and supplemented from time to time, indemnify any present or former director, officer,

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employee or agent of the corporation, against expenses (including attorneys’ fees), judgments, fines, amounts paid in settlement and/or other matters referred to in or covered by that Section, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

     Section 2. Advancing Expenses. Expenses (including attorneys’ fees) incurred by a present or former director or officer of the corporation in defending a civil, criminal, administrative or investigative action, suit or proceeding by reason of the fact that such person is or was a director, officer, employee or agent of the corporation (or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized by relevant provisions of the General Corporation Law of the State of Delaware; provided, however, the corporation shall not be required to advance such expenses to a director (i) who commences any action, suit or proceeding as a plaintiff unless such advance is specifically approved by a majority vote of the Board of Directors, or (ii) who is a party to an action, suit or proceeding brought by the corporation and approved by a majority vote of the Board of Directors which alleges willful misappropriation of corporate assets by such director, disclosure of confidential information in violation of such director’s fiduciary or contractual obligations to the corporation, or any other willful and deliberate breach in bad faith of such director’s duty to the corporation or its stockholders.

     Section 3. Liability Offset. The corporation’s obligation to provide indemnification under this Article VIII shall be offset to the extent the indemnified party is indemnified by any other source including, but not limited to, any applicable insurance coverage under a policy maintained by the corporation, the indemnified party or any other person.

     Section 4. Continuing Obligation. The provisions of this Article VIII shall be deemed to be a contract between the corporation and each director of the corporation who serves in such capacity at any time while this bylaw is in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts.

     Section 5. Nonexclusive. The indemnification and advancement of expenses provided for in this Article VIII shall (i) not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement or vote of stockholders or disinterested directors or otherwise, both as to action in their official capacities and as to action in another capacity while holding such office, (ii) continue as to a person who has ceased to be a director and (iii) inure to the benefit of the heirs, executors and administrators of such a person.

     Section 6. Other Persons. In addition to the indemnification rights of directors, officers, employees, or agents of the corporation, the Board of Directors in its discretion shall have the power on behalf of the corporation to indemnify any other person made a party to any

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action, suit or proceeding who the corporation may indemnify under Section 145 of the General Corporation Law of the State of Delaware.

     Section 7. Definitions. The phrases and terms set forth in this Article VIII shall be given the same meaning as the identical terms and phrases are given in Section 145 of the General Corporation Law of the State of Delaware, as that Section may be amended and supplemented from time to time.

ARTICLE IX.
AMENDMENTS

     Except as otherwise provided in the Certificate of Incorporation, these Bylaws may be altered, amended or repealed, or new Bylaws may be adopted, by the holders of a majority of each of the outstanding shares of Class A Common Stock and Class B Common Stock, voting separately by class, or by the Board of Directors, when such power is conferred upon the Board of Directors by the Certificate of Incorporation, at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new Bylaws be contained in the notice of such special meeting. If the power to adopt, amend or repeal Bylaws is conferred upon the Board of Directors by the Certificate of Incorporation, it shall not divest or limit the power of the stockholders to adopt, amend or repeal Bylaws.

[Remainder of page intentionally left blank]

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CERTIFICATE OF SECRETARY
OF
APOLLO GLOBAL, INC.

     The undersigned certifies:

          1. That the undersigned is the duly elected and acting Secretary of Apollo Global, Inc., a Delaware corporation (the “Corporation”); and

          2. That the foregoing Bylaws constitute the Bylaws of the Corporation as duly adopted by the Action by Unanimous Written Consent in Lieu of the Organizational Meeting by the Board of Directors of the Corporation, dated the 28 day of July, 2009.

          IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal of the Corporation as of this 28 day of July, 2009.

/s/ P. Robert Moya

P. Robert Moya, Secretary

EXHIBIT C

AMENDED AND RESTATED

SHAREHOLDERS’ AGREEMENT

AMENDED AND RESTATED
SHAREHOLDERS’ AGREEMENT

          THIS AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT (this “Agreement”) is made and entered into as of July 28, 2009, by and among Apollo Global, Inc., a Delaware corporation (the “Company”), Apollo Group, Inc., an Arizona corporation (“Apollo”), CVP III Coinvestment, L.P., a Delaware limited partnership (“CVP”), Carlyle Venture Partners III, L.P., a Delaware limited partnership (“Carlyle” and, together with Apollo, CVP, and each Affiliate of Carlyle and Apollo that hereafter becomes a Shareholder, collectively the “Investor Shareholders”), and the Persons listed on Schedule I attached hereto or who otherwise agree to be bound by the provisions hereof as an Other Shareholder by executing a joinder agreement (the “Other Shareholders”). Apollo, Carlyle, CVP and the Other Shareholders are collectively referred to herein as the “Shareholders.” Unless otherwise indicated herein, capitalized terms used herein are defined in paragraph 14 hereof.

          WHEREAS, Apollo and Carlyle are parties to an Amended and Restated Capital Contribution Agreement dated as of the date hereof (the “Capital Contribution Agreement”);

          WHEREAS, the parties hereto are entering into this Agreement to restrict the sale, assignment, transfer, encumbrance or other disposition of the Shareholder Shares (as defined below) and to provide for certain rights and obligations in respect thereto as hereinafter provided.;

          WHEREAS, the Company and Shareholders desire to amend and restate, in its entirety, that certain Shareholders Agreement entered into as of October 22, 2007 (the “Original Agreement”);

          WHEREAS, the Original Agreement is being amended in accordance with paragraph 16;

          NOW, THEREFORE, in consideration of the foregoing and for other good and valid consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to amend and restate the Original Agreement in its entirety as follows:

          1. Board Observers and Expenses.

          (a) Each of Apollo and Carlyle, for so long as it remains a Shareholder hereunder, shall each have the right to designate and remove two representatives (each such representative, a “Board Observer”) who shall (1) have the right to receive due notice of and to attend and participate in discussions at (but not vote on any matters on which the directors are entitled to vote) all meetings of the Board and all meetings of committees of the Board, (2) have the right to receive copies of all documents and other information, including minutes, consents, business plans, presentation materials, budgets and financial information furnished generally to members of the Board and committees thereof, and (3) be entitled to be indemnified by the Company

pursuant to the Certificate of Incorporation of the Company to the same extent mutatis mutandis as if he or she were a member of the Board (and the Company hereby agrees to so indemnify each Board Observer). Notwithstanding the preceding sentence, on any date that Carlyle and its Affiliates do not own, in the aggregate, either (i) ten percent (10%) (or more) of the issued and outstanding Shareholder Shares or (y) shares of the Company Stock with a Fair Market Value of one hundred million dollars (or more), Carlyle shall have the right to designate and remove only one Board Observer.

          (b) The Company will pay or promptly reimburse the actual reasonable out-of-pocket expenses incurred by each member of the Board and each Board Observer in connection with attending meetings of the Board or any committee of the Board.

          (c) The provisions of this paragraph 1 shall terminate automatically and be of no further force and effect upon the earlier to occur of (i) the consummation of an Approved Sale and (ii) a Public Offering.

          2. Matters Requiring Specific Approval.

          (a) Matters Requiring Approval of the Board. The business and affairs of the Company shall be managed by the Board as described in Section 141 of the Delaware General Corporation Law. Without limiting the generality of the preceding sentence, the Company shall not take any of the following actions without the prior approval of at least a majority of votes cast by the Board approving such actions and as provided in the Company’s Bylaws:

               (i) acquire or sell any interest in any Person or business subject to the limitations set forth in paragraph 2(b)(2)(i) below;

               (ii) incur any Company Indebtedness, or issue or sell any debt securities or other rights to acquire any debt securities of the Company or any of its Subsidiaries, except for transactions between the Company and any of its Subsidiaries; provided, however, that any security interests in connection with such debt arrangements shall be limited solely to the Company’s assets unless otherwise approved by the Investor Shareholders;

               (iii) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock;

               (iv) hire or terminate the employment of the Company’s President, Chief Financial Officer or Chief Operating Officer;

               (v) establish or materially modify the compensation or benefits payable or to become payable by the Company to the Company’s President, Chief Financial Officer or Chief Operating Officer, other than benefits generally provided to senior management or employees on the same terms; or

               (vi) approve the annual operating plan and budget.

          (b) Matters Requiring Approval of Each Class of Common Stock.

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               (1) The Company shall not, without the prior written consent of (i) stockholders holding a majority of the outstanding Class A Common Stock, and (ii) stockholders holding a majority of the outstanding Class B Common Stock (which in each case consent may be given or withheld in such stockholder’s sole discretion):

               (i) (a) dissolve or wind-up the Company, (b) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (c) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition seeking relief under Title 11 of the United States Code, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (d) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or any Subsidiary or for a substantial part of the property or assets of the Company or any Subsidiary, (e) file an answer admitting the material allegations of a petition filed against it in any proceeding described in clause (b) above, (f) make a general assignment for the benefit of creditors, or (g) take any action for the purpose of effecting any of the foregoing.

               (ii) amend, revise, modify, supplement or discontinue the Investment Scope; or

               (iii) amend, modify or restate the Certificate of Incorporation or Bylaws of the Company in any respect.

               (2) On any date that Carlyle and its Affiliates own, in the aggregate, either (i) ten percent (10%) (or more) of the issued and outstanding Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of one hundred million dollars (or more), the Company shall not, without the prior written consent of (i) stockholders holding a majority of the outstanding Class A Common Stock, and (ii) stockholders holding a majority of the outstanding Class B Common Stock (which in each case consent may be given or withheld in such stockholder’s sole discretion):

               (i) acquire or sell any interest in any business or entity with, individually or in the aggregate, an enterprise value in excess of the lesser of (i) $150,000,000 or (ii) 33.33% of the Company’s total shareholder equity plus indebtedness for borrowed money, determined in accordance with US GAAP and as reflected in the Company’s most recently completed consolidated balance sheet, and that requires the Company to incur incremental debt or equity financing;

               (ii) make or commit to make any capital expenditure outside of the ordinary course of business and in excess of the lesser of (i) $50,000,000 or (ii) 10% of the Company’s total shareholder equity plus indebtedness for borrowed money, determined in accordance with US GAAP and as reflected in the Company’s most recently completed consolidated balance sheet, and that requires incremental debt or equity financing; or

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               (iii) except as otherwise provided in Section 5(a) or 5(b) of Article VII of the Bylaws, the Company will not make any loan (other than intercompany loans) to any Person which is outside the ordinary course of business of the Company.

          (c) Matters Requiring Approval of Unaffiliated Investor Shareholders.

               (i) The Company shall not, without the prior written consent or affirmative vote of Apollo, enter into or be a party to any material transaction with Carlyle or any Affiliate, member, partner, director, officer or employee of Carlyle or any “associate” (as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) of any such Person or Carlyle, except for transactions expressly provided for in this Agreement or the Capital Contribution Agreement.

               (ii) The Company shall not, without the prior written consent or affirmative vote of Carlyle, enter into or be a party to any material transaction with Apollo or any Affiliate, member, partner, director, officer or employee of Apollo or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such Person or Apollo, except for (w) transactions contemplated by this Agreement or the Capital Contribution Agreement, (x) the employment of persons currently employed by Apollo, (y) reimbursement of amounts paid by Apollo to professionals after the date of this Agreement and before the execution of the Support Services Agreement for such professionals’ reasonable fees and expenses for the due diligence of potential investments within the Investment Scope, or (z) pursuant to a Support Services Agreement between Apollo and the Company whereby Apollo will provide services to the Company upon terms and conditions satisfactory to Apollo and Carlyle.

          (d) EITF No. 96-16. Apollo and Carlyle acknowledge that the approval rights granted to Carlyle as set forth in paragraph 2(b) above are intended to be “protective rights” rather than “participating rights”, as described in Emerging Issues Task Force Issue No. 96 -16 (“EITF No. 96-16”). Apollo and Carlyle further acknowledge that, unless otherwise agreed by Apollo and Carlyle, none of the approval rights granted to Carlyle hereunder will be in any way amended, terminated or revoked to the extent that at anytime hereafter any of the approval rights granted to Carlyle hereunder are re-characterized as being “participating rights” and not “protective rights” under EITF No. 96-16 or any successor to it, or under any other accounting policy, standard or procedure which may become applicable to the same subject matter as comprehended by EITF No. 96-16.

          (e) The Company’s accounting methods and policies shall be consistent with the accounting methods and policies of Apollo except as required by GAAP;

          3. Restrictions on Transfer of Shareholder Shares.

          (a) Transfer of Shareholder Shares. No holder of Shareholder Shares may sell, transfer, assign, pledge, encumber or otherwise directly or indirectly dispose of (a “Transfer”) any Shareholder Shares or any interest in any Shareholder Shares, including to the Company or any of its Subsidiaries, other than Permitted Transfers, prior to October 22, 2012 and, following such date, may Transfer Shareholder Shares or an interest in Shareholder Shares only pursuant to and in accordance with paragraphs 3(b), 3(c), 3(d), 5 or 9 below.

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          (b) Right of First Offer. Prior to making any Transfer, other than as permitted under paragraph 3(d) below, a holder of Shareholder Shares wishing to transfer such Shareholder Shares (the “Selling Shareholder”) shall deliver written notice in accordance with paragraph 22 (the “Transfer Notice”) to each Investor Shareholder and the Company. The Transfer Notice shall disclose in reasonable detail the number of Shareholder Shares to be transferred, the cash purchase price (the “Offer Price”) at which the Selling Shareholder proposes to sell such number of Shareholder Shares, and the terms and conditions of the proposed Transfer. The Transfer Notice shall constitute a binding offer to sell the subject Shareholder Shares to the Investor Shareholders (other than the Selling Shareholder) and, if and to the extent that any such Shareholder Shares are not purchased by such Selling Shareholders, to the Company, in each case on the terms and conditions set forth in the Transfer Notice and in accordance with this paragraph 3(b). The Investor Shareholders may elect to purchase, pro-rata based on the number of Shareholder Shares held by each, all or any portion of the Shareholder Shares to be transferred upon the same economic terms and conditions as those set forth in the Transfer Notice by delivering a written notice of such election to the Selling Shareholder and the Company within 10 business days after the Transfer Notice has been delivered pursuant to this paragraph 3(b), provided that all elections by Carlyle’s Affiliates shall be made by Carlyle on behalf of its Affiliates. If the Investor Shareholders have not elected to purchase all of the Shareholder Shares to be transferred, the Company may elect to purchase all, but not less than all, of the remaining Shareholder Shares to be transferred upon the same economic terms and conditions as those set forth in the Transfer Notice by delivering written notice in accordance with paragraph 22 of such election to the Selling Shareholder within 15 business days after the Transfer Notice has been delivered pursuant to this paragraph 3(b) (such date, the “Authorization Date”). If the Investor Shareholders and the Company do not elect to purchase all of the Shareholder Shares specified in the Transfer Notice, the Selling Shareholder may Transfer the remaining Shareholder Shares specified in the Transfer Notice at a cash price no less than the Offer Price and on terms no more favorable to the Proposed Purchaser than those specified in the Transfer Notice during the 60 day period immediately following the Authorization Date. If the Investor Shareholders or the Company have elected to purchase Shareholder Shares pursuant to this paragraph 3(b), the Transfer of such shares shall be consummated as soon as practicable after the delivery of the election notice(s) to the Selling Shareholder, but in any event within 30 days after the Authorization Date.

          (c) Participation Rights.

               (i) At least 30 days prior to any Transfer of shares of Company Stock by any of Apollo or any of its Affiliates (the “Transferring Apollo Shareholder”) for value (other than pursuant to a Permitted Transfer or an Approved Sale as to which Carlyle has an independent right to approve under paragraph 5(a) as a consequence of Carlyle and its Affiliates owning, in the aggregate, either (i) seven and one-half percent (7.5%) (or more) of issued and outstanding Shareholders Shares or (ii) shares of the Company Stock with a Fair Market Value of seventy-five million dollars ($75,000,000) (or more)), the Transferring Apollo Shareholder will deliver written notice in accordance with paragraph 22 (the “Sale Notice”) to the Company, the other Investor Shareholders (including Carlyle and its Affiliates) and the Other Shareholders, specifying in reasonable detail the identity of the Proposed Purchaser and the terms and conditions of the Transfer. Notwithstanding any of the restrictions contained in this paragraph 3, any or all of the other Investor Shareholders (including Carlyle and its Affiliates) and Other Shareholders may

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elect to participate in the contemplated Transfer by delivering written notice in accordance with paragraph 22 (a “Tag-Along Notice”) to the Transferring Apollo Shareholder within 15 business days after the date that such Sale Notice is deemed given pursuant to paragraph 22, provided that all Tag-Along Notices of Carlyle’s Affiliates shall be delivered by Carlyle on behalf of its Affiliates. If no Tag-Along Notice is received by the Transferring Apollo Shareholder within such 15 business day period, the other Investor Shareholders and the Other Shareholders shall not have the right to participate in the Transfer, and the Transferring Apollo Shareholder shall have the right, during the succeeding three-month period, to transfer to the Proposed Purchaser up to the number of shares of Common Stock stated in the Sale Notice, on terms and conditions no more favorable to the Transferring Apollo Shareholder than those stated in the Sale Notice. If any of the other Investor Shareholders or Other Shareholders have elected to participate in such Transfer (such Shareholders, “Participating Shareholders”), each of the Transferring Apollo Shareholder and each Participating Shareholder will be entitled to sell in the contemplated Transfer, at the same price and on the same terms, up to a number of shares of Common Stock which is determined by multiplying (i) the number of shares of Common Stock owned by such Participating Shareholder on the date that the Tag-Along Notice is furnished by (ii) a fraction, the numerator of which is the number of shares of Common Stock which the Proposed Purchaser desires to purchase and the denominator of which is the sum of (x) the number of shares of Common Stock which are owned by the Transferring Apollo Shareholder and (y) the aggregate number of shares of Common Stock owned by all of the Participating Shareholders on the date that the Tag-Along Notice is furnished.

               (ii) The Transferring Apollo Shareholder will use reasonable efforts to obtain the agreement of the Proposed Purchaser to the participation of the Participating Shareholders in any contemplated Transfer, and the Transferring Apollo Shareholder will not transfer any of its Common Stock to the Proposed Purchaser unless (A) simultaneously with such Transfer, the Proposed Purchaser purchases from the Participating Shareholders the number of shares of Common Stock which such Participating Shareholders are entitled to sell to the Proposed Purchaser under paragraph 3(c)(i) or (B) simultaneously with such Transfer, the Transferring Apollo Shareholder purchases (at the same price and on the same terms and conditions on which such shares were sold to the Proposed Purchaser) the number of shares of Common Stock from the Participating Shareholders which the Participating Shareholders are entitled to sell to the Proposed Purchaser under paragraph 3(c)(i).

               (iii) The Transferring Apollo Shareholder and the Participating Shareholders will bear their pro-rata share (based upon the number of shares of Common Stock sold by such Person in relation to the number of shares of Common Stock sold by all Persons in such Transfer) of the out-of-pocket costs of any Transfer pursuant to this paragraph 3(c) which are borne by the Transferring Apollo Shareholder to the extent such costs are incurred for the benefit of all Persons participating in the Transfer and are not otherwise paid by the Company or the acquiring party. Costs incurred by the Participating Shareholders participating in the Transfer on their own behalf will not be considered costs of the Transfer hereunder.

               (iv) No Participating Shareholder participating in a sale of shares of the Common Stock pursuant to this paragraph 3(c) shall be required to provide any indemnification other than on a several basis with such Participating Shareholder’s indemnification obligation to the Proposed Purchaser (or Transferring Apollo Shareholder in the event that it purchases shares

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of the Common Stock pursuant to paragraph 3(c)(ii)) limited to the pro rata share of the aggregate purchase price received by all Shareholders that such Participating Shareholder receives at the closing of the Transfer. Notwithstanding the foregoing, if a Participating Shareholder electing to participate does not agree to execute and deliver or does not execute and deliver any documentation required by this paragraph 3(c)(iv) within ten (10) days after receipt thereof in connection with the Transfer, such Participating Shareholder shall be deemed to have withdrawn its request to participate and shall not be entitled to participate in the proposed Transfer.

          (d) Permitted Transfers. The restrictions contained in paragraph 3 will not apply to (i) a Public Sale, (ii) an Approved Sale, (iii) a Transfer of Shareholder Shares by any Shareholder to a trust solely for the benefit of such Shareholder and such Shareholder’s spouse and/or descendants (or a re-Transfer of such Shareholder Shares by such trust back to such Shareholder upon the revocation of any such trust) or pursuant to the laws of descent and distribution, (iv) a Transfer by any Shareholder to an Affiliate of such Shareholder (and subsequent Transfers by such Affiliates to other Affiliates of such Shareholder), so long as such Transfer does not cause the Company to be subject to the reporting requirements of the Exchange Act pursuant to Section 12(g) thereof; provided that the restrictions contained in this Agreement will continue to apply to the Shareholder Shares after any Transfer pursuant to clauses (iii) or (iv) above and the transferees of such Shareholder Shares pursuant to such clauses shall agree in writing to be bound by the provisions of this Agreement. Upon the Transfer of Shareholder Shares pursuant to clauses (iii) or (iv) of this subparagraph 3(d), the transferor will deliver a written notice to the Company and the Investor Shareholders, which notice will disclose in reasonable detail the identity of such transferee.

          (e) Termination of Restrictions. The rights and restrictions set forth in this paragraph 3 will continue with respect to each Shareholder Share until the first to occur of (i): date on which such Shareholder Share has been transferred in a Public Sale; (ii) the consummation of an Approved Sale; (iii) a closing described in paragraph 9(c) or (iv) October 22, 2015.

          4. Preemptive Rights.

          (a) If the Company or any of its Subsidiaries proposes to issue and sell any of its equity securities or any securities containing options or rights to acquire any equity securities or any securities convertible into equity securities for value, the Company will offer in a written notice furnished in accordance with paragraph 22 to sell to each Investor Shareholder a portion of the number or amount of such securities proposed to be sold in any such transaction or series of related transactions equal to the product of the percentage each such Investor Shareholder holds of all Common Stock then held by all of the Shareholders by the number of securities proposed to be issued and sold by the Company in any such transaction or series of related transactions, all for the same price and upon the same economic terms and otherwise on the same terms and conditions as the securities that are being offered in such transaction or series of transactions. If any Investor Shareholder having preemptive rights under this paragraph 4 fails to accept such offer in whole or in part within the period provided below in paragraph 4(c), the Company shall offer in a written notice furnished in accordance with paragraph 22 the securities that were not so accepted to all Investor Shareholders who elected to accept such offer in whole or in part, in the same proportion as the respective Common Stock held by such electing Investor

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Shareholder bears to the aggregate Common Stock held by all Investor Shareholders who elected to accept such initial offer in whole or in part. Each electing Investor Shareholder shall have an additional period of ten days from and after the date of the Company’s re-offer within which to accept such re-offer in whole or in part. If an Investor Shareholder elects to accept such offer in whole or in part, such Investor Shareholder shall so accept by written notice to the Company given within such 10-day period, provided that all acceptances by Carlyle’s Affiliates shall be made by Carlyle on behalf of its Affiliates. No further offer to the Investor Shareholders under this paragraph 4 is then required with respect to the same offering of securities, except as otherwise required in paragraph 4(c).

          (b) Notwithstanding the foregoing, the provisions of this paragraph 4 shall not be applicable to the issuance of equity securities (i) pursuant to the Capital Contribution Agreement, (ii) upon the exercise of warrants or options or upon the conversion of shares of one class of capital stock into shares of another class in accordance with the provisions of the Company’s Certificate of Incorporation, or (iii) as a stock dividend or any stock split or other subdivision or combination of the outstanding equity securities; provided, however, the provisions of this paragraph 4 shall terminate upon completion of a Public Offering.

          (c) The Company will cause to be given to the Investor Shareholders a written notice delivered in accordance with paragraph 22 setting forth in reasonable detail the terms and conditions upon which they may purchase such shares or other securities, including, without limitation, the number of shares or other securities offered by the Company, the price at which such shares or other securities are being offered and the date on which the sale is to be completed (the “Preemptive Notice”). After receiving a Preemptive Notice, if any of the Investor Shareholders wishes to exercise the preemptive rights granted by this paragraph 4 it must give notice to the Company in writing, within 15 business days after the date that such Preemptive Notice is deemed given pursuant to paragraph 22 (subject to extension in the event of a re-offer described in paragraph 3(a) above), stating the quantity of the shares or other securities offered pursuant to this paragraph 4 it agrees to purchase on the terms and conditions set forth in the Preemptive Notice (the “Preemptive Reply”), provided that all Preemptive Replies by Carlyle’s Affiliates shall be made by Carlyle on behalf of its Affiliates. The closing for the sale of the shares or other securities subject to the Preemptive Notice shall occur no earlier than 5 business days after the Preemptive Reply. If the Investor Shareholders fail to make a Preemptive Reply in accordance with this paragraph 4 within the 15-business day period specified in this paragraph 4(c) (subject to extension in the event of a re-offer described in paragraph 3(a) above), shares or other securities offered to it in accordance with this paragraph 4 may thereafter, for a period not exceeding 120 days following the expiration of such 15-business day period, be issued, sold or subjected to rights or options to any purchaser at a price not less than the price at which they were offered to such Investor Shareholders and on other terms and conditions no more favorable to the purchasers thereof than those offered to the Investor Shareholders. Any such shares or other securities not so issued, sold or subjected to rights or options to any purchaser during such 120-day period will thereafter again be subject to the preemptive rights provided for in this paragraph 4.

          5. Sale of the Company.

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          (a) If Shareholders holding a majority of the outstanding Common Stock and Carlyle approve (and, in the case of any sale or other fundamental change which requires the approval of the board of directors of a Delaware corporation pursuant to the Delaware General Corporation Law, the Board shall have approved such sale or other fundamental change) a sale of all or substantially all of the Company’s assets determined on a consolidated basis or a sale of a majority of the Company’s outstanding capital stock (whether by merger, recapitalization, consolidation, reorganization, combination or otherwise) to any Independent Third Party or group of Independent Third Parties (collectively an “Approved Sale”), the Company shall deliver written notice to the Shareholders setting forth in reasonable detail the terms and conditions of the Approved Sale (including, to the extent then determined, the consideration to be paid with respect to each class of the Company’s capital stock), provided however that on any date that Carlyle and its Affiliates do not own, in the aggregate, either (i) seven and one-half percent (7.5%) (or more) of the issued and outstanding Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of seventy-five million dollars ($75,000,000) (or more), Carlyle shall not have an independent right to approve an Approved Sale. Each holder of Shareholder Shares will consent to and raise no objections against such Approved Sale. If the Approved Sale is structured as (i) a merger or consolidation, each holder of Shareholder Shares will waive any dissenter’s rights, appraisal rights or similar rights in connection with such merger or consolidation or (ii) sale of stock (including by recapitalization, consolidation, reorganization, combination or otherwise), each holder of Shareholder Shares will agree to sell all of its Shareholder Shares and rights to acquire Shareholder Shares on the terms and conditions approved by the Board and such Shareholders. Each holder of Shareholder Shares shall be obligated to join, severally and not jointly, on a pro rata basis (based on the number of shares of the applicable class or series of Company Stock to be sold, and, in the case of an asset sale, based upon the number of shares of Company Stock (and the relative liquidation preferences of each class of Company Stock) owned beneficially on a Fully Diluted Basis) in any indemnification or other obligations that the sellers of Shareholder Shares are required to provide in connection with the Approved Sale (other than any such obligations that relate solely to a particular Shareholder, such as indemnification with respect to representations and warranties given by a Shareholder regarding such Shareholder’s title to and ownership of Shareholder Shares being sold, in respect of which only such Shareholder shall be liable); provided, that no holder shall be obligated in connection with such indemnification or other obligations with respect to any amount in excess of the consideration received by such holder in connection with such transfer. Each holder of Shareholder Shares will take all required actions in connection with the consummation of the Approved Sale as reasonably requested. Notwithstanding the provisions of this paragraph 5, neither Carlyle nor its Affiliates shall have any obligation under this paragraph 5 to the extent that Carlyle has an independent right to approve an Approved Sale under this paragraph 5 and Carlyle has not approved such Approved Sale. Notwithstanding the provisions of this paragraph 5, neither Carlyle nor its Affiliates shall be required to provide any indemnification other than on a several basis with the indemnification obligation of Carlyle and its Affiliates limited to the pro rata share of the aggregate purchase price received by all Shareholders at the closing of the Approved Sale.

          (b) The obligations of the holders of Company Stock with respect to an Approved Sale are subject to the satisfaction of the following conditions in addition to the conditions described in paragraph 5(a): (i) upon the consummation of the Approved Sale, each holder of Company Stock will receive the same form of consideration and the same portion of the

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aggregate consideration that such holders of Company Stock would have received if such aggregate consideration had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in the Company’s Certificate of Incorporation as in effect immediately prior to such Approved Sale; (ii) if any holders of a class of Company Stock are given an option as to the form and amount of consideration to be received, each holder of such class of Company Stock will be given the same option; and (iii) each holder of then currently exercisable rights to acquire shares of a class of Company Stock will be given an opportunity to (A) exercise such rights prior to the consummation of the Approved Sale and participate in such sale as holders of such class of Company Stock or (B) make a direct transfer of such rights.

          (c) If the Company or the holders of the Company’s securities enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated by the Securities and Exchange Commission may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), the holders of Shareholder Shares that do not qualify as “accredited investors” (as such term is defined in Rule 501 (or any similar rule then in effect) promulgated by the Securities And Exchange Commission) will, at the request of the Company, appoint a “purchaser representative” (as such term is defined in Rule 501 promulgated by the Securities and Exchange Commission) reasonably acceptable to the Company. If any holder of Shareholder Shares appoints a purchaser representative designated by the Company, the Company will pay the fees of such purchaser representative, but if any holder of Shareholder Shares declines to appoint the purchaser representative designated by the Company, such holder will appoint another purchaser representative, and such holder will be responsible for the fees of the purchaser representative so appointed.

          (d) Each holder of Shareholder Shares will bear its pro-rata share (based upon the number of shares sold by such holder of Company Stock in relation to the number of shares sold by all holders in such Approved Sale of Company Stock) of the out-of-pocket costs of any sale of Shareholder Shares pursuant to an Approved Sale which are borne by either Investor Shareholder to the extent such costs are incurred for the benefit of all holders of Shareholder Shares and are not otherwise paid by the Company or the acquiring party. Costs incurred by holders of Shareholder Shares on their own behalf will not be considered costs of the transaction hereunder.

          (e) In connection with an Approved Sale, each holder of Shareholder Shares (other than Carlyle and its Affiliates) hereby appoints Apollo as its true and lawful proxy and attorney-in-fact, with full power of substitution, to transfer such Shareholder Shares pursuant to the terms of such Approved Sale and to execute any purchase agreement or other documentation required to consummate such Approved Sale to the extent consistent with paragraph 5(a). Each Shareholder agrees to execute and deliver any other documentation reasonably required to consummate the Approved Sale to the extent consistent with paragraph 5(a). The powers granted in this clause (e) shall be deemed to be coupled with an interest, shall be irrevocable and shall survive death, incompetency or dissolution of any such holder of Shareholder Shares.

          (f) The provisions of this paragraph 5 will terminate upon the earlier to occur of (i) the consummation of an Approved Sale and (ii) completion of a Public Offering.

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          6. Employee Phantom Stock Plan.

          The parties agree that phantom stock or similar bonuses will be offered to the management, consultants and key employees of the Company pursuant to a bonus plan or similar arrangement on terms and conditions satisfactory to the Board which will contemplate aggregate payments representing a value of between ten percent (10%) and fifteen percent (15%) of the Company’s Common Stock on a Fully Diluted Basis (after giving effect to the transactions contemplated by the Capital Contribution Agreement).

          7. Public Offering; Apollo Call.

          (a) At any time after October 22, 2011 (or as earlier agreed by Carlyle and Apollo), each of Carlyle and Apollo may notify the other of its intent to explore a public listing of the Common Stock. Following receipt of any such notice, the Company will solicit proposals from one or more nationally recognized investment banks as to the feasibility, expected valuation, structure and terms of the proposed listing of the Common Stock. If, after receiving such proposals, either of Apollo or Carlyle determines in good faith that a public listing of the Company is inadvisable for legitimate business reasons, Apollo or Carlyle may elect to defer the listing process by a period of one (1) year. After the deferral period, if applicable, Carlyle and Apollo shall thereafter again solicit proposals from one or more nationally recognized investment banks as to the feasibility, expected valuation, structure and terms of the proposed public listing of the Common Stock. If either of Apollo or Carlyle determines that the proposed public listing of the Common Stock is then feasible, the parties shall, within sixty (60) days thereafter, pursue in good faith the preparation of an S-1 (or F-1) registration statement (“Registration Statement”) with the Securities and Exchange Commission. If neither Apollo nor Carlyle determines that the proposed public listing is feasible within the time period specified in the preceding sentence, the deferral described in this paragraph 7(a) shall be repeated. Notwithstanding the provisions of this paragraph 7(a), on any date that Carlyle and its Affiliates do not own, in the aggregate, either (i) ten percent (10%) (or more) of the Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of one hundred million dollars ($100,000,000), Carlyle shall not have any rights under this paragraph 7(a).

          (b) At any time prior to the effective date of the Registration Statement, Apollo shall have an option to purchase the Company Stock held by Carlyle and its Affiliates at a price per share equal to the midpoint of the filing range as set forth in the Company’s Registration Statement. If Apollo elects to purchase Carlyle’s and its Affiliates’ Shares pursuant to this paragraph 7(b), the transfer of such shares shall be consummated as soon as practicable after the delivery of the notice(s) to Carlyle, but in any event within 30 days thereafter. Carlyle agrees to execute and deliver any other documentation reasonably required to consummate the transfer pursuant to this paragraph 7; provided that neither Carlyle nor its Affiliates shall be required to provide any representations and warranties (other than those relating to their respective existence, capacity, authorization, execution and delivery and unencumbered title to securities).

          8. Scope of Investments.

          (a) The Company will limit its investments to those exclusively in educational services businesses with the following characteristics and limitations (the “Investment Scope”):

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               (i) principal operations and facilities outside of the United States (to include Latin America, Asia and Europe);

               (ii) provide post-secondary education (both degree and certificate programs), secondary and high school-level education, corporate or vocational training, or services related such educational and training programs, including distance learning services;

               (iii) attractive organic growth characteristics with target growth rates higher than experienced in the United States where possible;

               (iv) ability to generate strong positive cash flows and sustain a reasonable amount of financial leverage, including debt; and

               (v) businesses in which the Company can initially acquire a controlling interest or that have a path to acquiring a controlling interest.

          (b) Neither Carlyle nor Apollo may make any investment exceeding $20,000,000 in any Person whose primary line of business is within the Investment Scope except in accordance with this paragraph 8. Prior to making any such investment, the Investor Shareholder (the “Proposed Investor”), shall deliver written notice in accordance with paragraph 22 (the “Investor Notice”) to the Company and the other Investor Shareholders disclosing in reasonable detail the terms of the prospective investment. The Proposed Investor shall not consummate any such investment until 60 days after the Investor Notice is deemed given to the Company and the other Investor Shareholders pursuant to paragraph 22 (the “Investor Notice Period”). Subject to the provisions of paragraph 2(b)(2)(i) the Company may elect to make such investment upon the same economic terms and conditions as those set forth in the Investor Notice by delivering written notice of such election to the Proposed Investor and the other Investor Shareholder within the Investor Notice Period. If the Company does not for any reason elect to make the investment described in the Investor Notice, then for a period of thirty (30) days after the expiration of the Investor Notice Period, Carlyle may, in its sole discretion, elect by written notice delivered to the Proposed Investor pursuant to paragraph 22 either to (x) make (together with its Affiliates) the investment at a price and on the terms thus described in the Investor Notice or (y) co-invest (together with its Affiliates) in the investment described in the Investor Notice with the Proposed Investor on the basis of 80.1% of the aggregate investment being made by Apollo and its Affiliates and 19.9% of the aggregate investment being made by Carlyle and its Affiliates, in each case at a price and on terms described in the Investor Notice. The parties to each transaction described in clauses (x) and (y) of the preceding sentence shall use commercially reasonable efforts to complete such transaction within ninety (90) days after the expiration of the Investor Notice Period. If the Company elects to make the investment described in the Investor Notice but the stockholders holding a majority of the outstanding Class B Common Stock do not approve the investment pursuant to paragraph 2(b)(2)(i), the Proposed Investor may make the investment at a price and on terms no more favorable to the Proposed Investor than those specified in the Investor Notice during the ninety (90) day period following the Investor Notice Period.

          (c) Carlyle will use its reasonable best efforts to cause its Affiliates to refer equity investment opportunities within the Investment Scope that are sourced by its Affiliates to the

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Company, and will use its reasonable best efforts to cause its Affiliates to allow the Company to co-invest alongside the applicable Carlyle Affiliate in any such transaction. Notwithstanding the preceding sentence, Carlyle shall not have any obligation to use its reasonable best efforts under this paragraph 8 to the extent that the use of such efforts is inconsistent with a fiduciary or other obligation of Carlyle or any of its Affiliates.

          (d) The provisions of this paragraph 8 will terminate upon the earlier to occur of (i) the consummation of an Approved Sale, and (ii) completion of a Public Offering, provided that the provisions of paragraph 8(c) will terminate upon the earlier to occur of (i) the consummation of an Approved Sale, (ii) the completion of a Public Offering or (iii) the first date that Carlyle no longer owns any shares of the Company Stock.

          9. Buy/Sell Agreement.

          (a) Each Shareholder shall have the right, after October 22, 2012 to provide a written notice in accordance with paragraph 22 (an “Offer”) to the other Investor Shareholder (the “Offeree Shareholder”), to offer to sell all, but not less than all, of the interest of the Selling Shareholder and its Affiliates in the Company to the Offeree Shareholder at a per share purchase price and upon the other terms and conditions specified in the Offer. Notwithstanding the immediately preceding sentence, no Shareholder may provide an Offer at any time during the period which commences on the date that a Transfer Notice has been provided pursuant to paragraph 3(b) and ends sixty-one (61) days after the Authorization Date described in paragraph 3(b).

          (b) The Offeree Shareholder must elect by written notice (the “Notice of Election”) to the Selling Shareholder within thirty (30) days after receipt of the Offer, either:

          (i) to sell the Offeree Shareholder’s entire interest in the Company to the Selling Shareholder at the per share purchase price and on the other terms and conditions specified in the Offer, or

          (ii) to purchase the entire interest of the Selling Shareholder and its Affiliates in the Company at a purchase price equal to the price set forth in the Offer and on the other terms and conditions specified in the Offer.

During such sixty (60) day period, subject to the terms of the Mutual Nondisclosure Agreement between Carlyle Investment Management L.L.C. and Apollo dated August 2, 2007 (the “Confidentiality Agreement”), each of the Offeree Shareholder and the Selling Shareholder may perform a confirmatory due diligence evaluation of the Company and its Subsidiaries, and the Company shall, and shall cause its Subsidiaries to, afford to the Offeree Shareholder’s and the Selling Shareholder’s respective officers, directors, employees, accountants, counsel, consultants, advisors and agents reasonable access to and the right to inspect, during normal business hours and with reasonable advance notice, all of the real property, properties, assets, records, contracts and other documents related to the Company and its Subsidiaries, and shall permit them to consult, during normal business hours and with reasonable advance notice, with the officers, employees, accountants, counsel and agents of the Company and its Subsidiaries for the purpose of making such investigation of the Company and its Subsidiaries as the Offeree

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Shareholder and the Selling Shareholder shall desire to make. The parties agree that Carlyle shall act in all respects under this paragraph 9(b) on behalf of all of its Affiliates including without limitation providing Notices of Election.

          (c) If the Offeree Shareholder elects clause (i) of paragraph 9(b), the Investor Shareholders shall, within ninety (90) days after receipt of the Notice of Election, execute such documents and instruments reasonably required by the Selling Shareholder to sell and transfer the Offeree Shareholder’s interest in the Company to the Selling Shareholder at the purchase price and on the other terms and conditions specified in the Offer, which purchase price shall be payable in immediately available funds, and the closing of such sale shall take place at the principal office of the Company as soon as practicable, but in any event within one hundred twenty (120) days after receipt of the Offer. At such closing, the Offeree Shareholder shall sell and transfer its entire interest in the Company, and shall cause its Affiliates to sell and transfer their entitle interest in the Company, to the Selling Shareholder free and clear of pledges, liens, security interests and other encumbrances other than pledges arising out of Company financing.

          (d) If the Offeree Shareholder elects clause (ii) of paragraph 9(b), the Selling Shareholder will sell its entire interest in the Company, and will cause its Affiliates to sell their entire interest in the Company, to the Offeree Shareholder at the purchase price and on the other terms and conditions specified in the Offer, and the Selling Shareholders shall, within ninety (90) days after receipt of the Notice of Election, execute such documents and instruments reasonably required by the Offeree Shareholder to sell and transfer the Selling Shareholder’s interest in the Company to the Offeree Shareholder at the purchase price and on the other terms and conditions specified in the Offer, which purchase price shall be payable in immediately available funds, and the closing of such sale shall take place at the office of the Company as soon as practicable, but in any event within one hundred twenty (120) days after receipt of the Offer. At such closing, the Selling Shareholder shall sell and transfer its entire interest in the Company to the Offeree Shareholder free and clear of pledges, liens, security interests and other encumbrances other than pledges arising out of Company financing.

          10. Representations and Warranties.

          (a) The Company represents and warrants to the Shareholders as follows:

               (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of Delaware with corporate power and authority to own, lease and operate its properties, to conduct its business as currently conducted and as proposed to be conducted and to enter into and perform its obligations under this Agreement.

               (ii) The Company has taken all actions necessary to authorize it (x) to execute, deliver and perform all of its obligations under this Agreement and (y) to consummate the transactions contemplated hereby.

               (iii) This Agreement is a legally valid and binding obligation of the Company, enforceable against it in accordance with its terms, except for (a) the effect thereon of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting

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the rights of creditors generally and (b) limitations imposed by equitable principles upon the specific enforceability of any of the remedies, covenants or other provisions thereof and upon the availability of injunctive relief or other equitable remedies.

               (iv) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by the Company with any of the provisions hereof will (x) violate or conflict with any provisions of the Certificate of Incorporation or Bylaws of the Company, or any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to the Company, or (y) violate, or conflict with, or result in a breach in any provision of, or constitute a default (or any event that, with or without due notice or lapse of time, or both, would constitute such a default) under, or result in the termination of, accelerate the performance required by, or result in the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of the Company under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation of which the Company is a party or by which it or any of its assets are bound.

               (v) No permit, application, notice, transfer, consent, approval, order, qualification, waiver from, or authorization of, or declaration, filing or registration with, any governmental or regulatory authority or third party is necessary in connection with the execution and delivery by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby.

          (b) Each Shareholder represents and warrants to each other Shareholder and to the Company as follows:

               (i) It is a corporation, limited partnership, limited liability company or other entity duly organized and validly existing under the laws of its respective state of organization;

               (ii) It has taken all actions necessary to authorize it (x) to execute, deliver and perform all of its obligations under this Agreement and (y) to consummate the transactions contemplated hereby.

               (iii) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by the Shareholder with any of the provisions hereof will (i) violate or conflict with the organic organizational documents of the Shareholder, or any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to the Shareholder, or (ii) violate, or conflict with, or result in a breach in any provision of, or constitute a default (or any event that, with or without due notice or lapse of time, or both, would constitute such a default) under, or result in the termination of, accelerate the performance required by, or result in the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of the Shareholder under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation of which the Shareholder is a party or by which it or any of its assets are bound.

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               (iv) No permit, application, notice, transfer, consent, approval, order, qualification, waiver from, or authorization of, or declaration, filing or registration with, any governmental or regulatory authority or third party is necessary on the part of the Shareholder in connection with the execution and delivery by the Shareholder of this Agreement or the consummation by the Shareholder of the transactions contemplated hereby.

          11. Legend. Each certificate evidencing Shareholder Shares and each certificate issued in exchange for or upon the Transfer of any Shareholder Shares (if such shares remain Shareholder Shares as defined herein after such Transfer) will be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS PURSUANT TO A SHAREHOLDERS AGREEMENT DATED AS OF OCTOBER 22, 2007, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, BY AND AMONG THE ISSUER OF SUCH SECURITIES (THE “COMPANY”) AND CERTAIN OF THE COMPANY’S SHAREHOLDERS. A COPY OF SUCH SHAREHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

The Company will imprint such legend on certificates evidencing Shareholder Shares. The legend set forth above will be removed from the certificates evidencing any shares which cease to be Shareholder Shares in accordance with the definition of such terms as set forth in paragraph 14 hereof.

          12. Transfer. Prior to Transferring any Shareholder Shares (other than in a Public Sale or in an Approved Sale) to any Person, the transferring Shareholder will cause the prospective transferee to execute and deliver to the Company and the other Shareholders a Joinder Agreement. The provisions of this paragraph 12 shall terminate upon the occurrence of (i) the consummation of an Approved Sale and (ii) a Public Offering.

          13. Redemptions and Capital Contributions.

          (a) Reference is made to the proposed acquisition by the Company (or one of its Subsidiaries) of BPP Holdings plc pursuant to the Scheme of Arrangement under Part 26 of the Companies Act of 2006 posted as of June 22, 2009 (the “BPP Transaction”). As soon as reasonably practicable after the completion of the BPP Transaction, each Shareholder agrees to cause the Certificate of Incorporation to be amended and take any other action necessary so as to cause the authorized Company Stock of each class to equal the amount of Company Stock of such class outstanding upon completion of the BPP Transaction multiplied by 1.05. If the BPP Transaction is not completed on or before September 30, 2009, each Shareholder agrees to cause the Certificate of Incorporation to be amended and take any other action necessary so as to cause the authorized Company Stock of each class to equal the amount of Company Stock of such class outstanding upon the execution and delivery of this Agreement multiplied by 1.05.

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          (b) Each Shareholder hereby agrees as soon as reasonably practicable following any redemption of any Shareholder Shares to cause the Certificate of Incorporation to be amended and take any other action necessary so as to cause the authorized Company Stock of each class to equal (i) the amount of Company Stock of such class outstanding immediately after giving effect to such redemption plus (ii) the amount of Company Stock of such class authorized immediately prior to giving effect to such redemption minus the amount of Company Stock of such class outstanding immediately prior to such redemption.

          (c) Subject to the Shareholders’ rights, if any, under Sections 2(b)(1)(i), 2(b)(1)(ii), or 2(b)(2), each Shareholder hereby agrees to cause the Certificate of Incorporation to be amended and to take any other action necessary to increase the amount of authorized Company Stock to the extent such stock is contemplated to be issued under Section 3.2 or 3.4 of the Capital Contribution Agreement or paragraph 7 of this Agreement (notwithstanding the provisions of Section 2(b)(1)(iii)).

          (d) Each Shareholder hereby agrees not to participate in a non-pro rata stock redemption without the approval of both the stockholders holding a majority of the outstanding Class A Common Stock and the stockholders holding a majority of the outstanding Class B Common Stock.

          14. Definitions.

          “Affiliate” of a Shareholder means any other Person, entity or investment or co-investment fund directly or indirectly controlling, controlled by or under common control with the Shareholder and, in the case of a Shareholder which is an entity, any shareholder, member, partner or other equity holder of such Shareholder, which, in each case, beneficially owns at least 10% of the outstanding voting interests of the Shareholder. Each fund managed by a Carlyle or an Affiliate of Carlyle shall be an Affiliate of Carlyle for purposes of this Agreement, and no portfolio company of Carlyle or its Affiliates shall be considered an Affiliate of Carlyle or such Affiliate for purposes of this Agreement.

          “Board” means the Company’s board of directors.

          “Bylaws” means the Bylaws of the Company in effect at the time as of which any determination is being made.

          “Certificate of Incorporation” means the Company’s certificate of incorporation in effect at the time as of which any determination is being made.

          “Class A Common Stock” means the Company’s Class A Common Stock, par value $.001 per share.

          “Class B Common Stock” means the Company’s Class B Common Stock, par value $.001 per share.

          “Class A Common Stock Directors” means the directors elected by holders of Class A Common Stock in accordance with the Certificate of Incorporation.

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          “Class B Common Stock Directors” means the directors elected by holders of Class B Common Stock in accordance with the Certificate of Incorporation.

          “Common Stock” means the Company’s Class A Common Stock, par value $.001 per share and the Company’s Class B Common Stock, par value $.001 per share, collectively.

          “Company Indebtedness” means all indebtedness of the Company (including without limitation, any loans, advances, letters of credit, bank overdrafts, capital lease obligations and all other indebtedness of any kind including interest, principal and fees).

          “Company Stock” means the Common Stock and any other class or series of shares of capital stock hereafter created by the Company.

          “Fair Market Value” has the meaning ascribed to that term in the Capital Contribution Agreement.

          “Fully Diluted Basis” means, without duplication, all shares of the applicable class of Company Stock issued or issuable directly or indirectly upon the exercise or exchange of all outstanding options, warrants or similar rights, excluding outstanding options or warrants that are Out of the Money or not then exercisable, and all shares of such class of Company Stock issuable upon the conversion of any securities convertible into such class of Company Stock.

          “Independent Third Party” means any Person who (together with its Affiliates), immediately prior to the contemplated transaction, (i) does not own, directly or indirectly, in excess of 5% of any class of the Company Stock on a Fully-Diluted Basis (a “5% Owner”), (ii) is not controlling, controlled by or under common control with any such 5% Owner, (iii) is not the spouse or descendant (by birth or adoption), parent or dependent of any such 5% Owner, (iv) is not a trust for the benefit of such 5% Owner and/or any Person referenced in clause (ii) or (iii), and (v) is not a group consisting of any of the foregoing.

          “Joinder Agreement” means a joinder agreement in substantially the form of Exhibit A hereto pursuant to which transferees of shares of Company Stock which are permitted under this Agreement become parties to this Agreement.

          “Out of the Money” means, in the case of an option or warrant, that the fair market value per share of the shares of Company Stock which the holder thereof is entitled to purchase or subscribe for is less than the exercise price per share of such option or warrant.

          “Person” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, a limited liability company, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

          “Public Offering” means an initial public offering by the Company of its capital stock to the public effected pursuant to an effective registration statement under the Securities Act, or any comparable statement under any similar United States federal statute then in effect.

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          “Public Sale” means any sale of Shareholder Shares to the public pursuant to an offering registered under the Securities Act, to the public through a broker, dealer or market maker pursuant to the provisions of Rule 144 adopted under the Securities Act or pursuant to the provisions of Rule 144(k) or any successor rule adopted under the Securities Act.

          “Securities Act” means the Securities Act of 1933, as amended from time to time.

          “Securities and Exchange Commission” includes any governmental body or agency succeeding to the functions thereof.

          “Shareholder Shares” means any Company Stock owned directly or indirectly by the Shareholders. As to any particular shares constituting Shareholder Shares, such shares will cease to be Shareholder Shares (A) upon the occurrence of a Public Offering, (B) upon the termination of this Agreement, or (C) when they have been (i) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, or (ii) sold to the public through a broker, dealer or market maker pursuant to Rule 144 (or by similar provision then in force) under the Securities Act.

          “Subsidiary” means with respect to any Person, any corporation, partnership, limited liability company, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company, association or other business entity, a majority of the partnership, membership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons shall be allocated a majority of such partnership, limited liability company, association or other business entity gains or losses or shall be or control the managing director or general partner of such partnership, limited liability company, association or business entity.

          “Valuation Firm” has the meaning ascribed to that term in the Capital Contribution Agreement.

          15. Transfers in Violation of Agreement. Any Transfer or attempted Transfer of any Shareholder Shares in violation of any provision of this Agreement will be void, and the Company will not record such Transfer on its books or treat any purported transferee of such Shareholder Shares as the owner of such shares for any purpose.

          16. Amendment and Waiver. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement (including the schedules hereto) will be effective against the Company or the Shareholders unless such modification, amendment or waiver is approved in writing by each of the Company, Carlyle and the holders of at least a majority of the then outstanding Shareholder Shares; provided that if such amendment or waiver would adversely affect a holder or group of holders of Shareholder Shares in a manner

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different than any other holders of Shareholder Shares, then such amendment or waiver will require the consent of such holder or a majority of the Shareholder Shares held by such group of holders adversely affected. The Company will give prompt written notice to the Shareholders of any amendments, modifications, or waivers of the provisions of this Agreement. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

          17. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

          18. Entire Agreement. Except as otherwise expressly set forth herein, this Agreement, the Capital Contribution Agreement, the Confidentiality Agreement and that certain Registration Rights Agreement dated as October 22, 2007 between the Company and certain of its shareholders embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

          19. Successors and Assigns. Except as otherwise provided herein, this Agreement will bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and the Shareholders and any subsequent holders of Shareholder Shares and the respective successors and assigns of each of them, so long as they hold Shareholder Shares.

          20. Counterparts. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together will constitute one and the same agreement.

          21. Remedies. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that the Company and each Shareholder will have the right to injunctive relief, in addition to all of its rights and remedies at law or in equity, to enforce the provisions of this Agreement. Nothing contained in this Agreement will be construed to confer upon any Person who is not a signatory hereto or any successor or permitted assign of a signatory hereto any rights or benefits, as a third party beneficiary or otherwise, except that each member of the Board and each Board Observer will be a third party beneficiary of respect to the indemnification described in paragraph 1(c).

          22. Notices. Any notice provided for in this Agreement will be in writing and will be either (i) personally delivered, (ii) delivered by certified mail, return receipt requested, (iii) sent by nationally recognized overnight courier service (charges prepaid) or (iv) faxed with a copy following by any method described in the foregoing clauses (i) to (iii), to the address set forth below or at any address listed in the Company’s records, or at such address or to the

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attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally, five days after deposit in the U.S. mail and one day after deposit with a nationally recognized overnight courier service.

If to the Company:

Apollo Global, Inc.
227 West Monroe
Suite 3600
Chicago, IL 60606
Attn: Chief Financial Officer
Facsimile: (312) 578-0489

If to Apollo or its Affiliates:

The Apollo Group, Inc.
4025 South Riverpoint Parkway
Mail Stop CF-KX01
Phoenix, AZ 85040
Attn: Chief Financial Officer
Facsimile: (602) 557-3898

With a required copy to:

Morgan, Lewis & Bockius LLP
One Market Street
San Francisco, CA 94105
Attn: William A. Myers, Esq.
Facsimile: (415) 442-1001

If to Carlyle or its Affiliates:

Carlyle Venture Partners III, L.P.
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC 20004-2505
Attention: Brooke B. Coburn
Facsimile: (202) 347-1818

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With a required copy to:

Dickstein Shapiro LLP
1825 Eye Street, NW
Washington, DC 20006-5403
Attn: Neil Lefkowitz
Facsimile: (202) 420-2201

If to any of the Other Shareholders:

At the address listed on Schedule I.

          23. Governing Law. This Agreement shall be construed according to and governed by the laws of the State of Delaware, without reference to conflicts of laws principles.

          24. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

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          IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Shareholders Agreement on the day and year first above written.

COMPANY: APOLLO GLOBAL, INC.
By:	/s/ Jeffrey Langenbach
	Name:	Jeffrey Langenbach
	Title:	President
INVESTOR SHAREHOLDERS: APOLLO GROUP, INC.
By:	/s/ Brian L. Swartz
	Name:	Brian L. Swartz
	Title:	Chief Financial Officer
CARLYLE VENTURE PARTNERS III, L.P.
By:	TCG VENTURES III, L.P.
	Its General Partner
By:	/s/ Brooke Coburn
	Name:	Brooke Coburn
	Title:	Managing Director
CVP III COINVESTMENT L.P.
By:	TCG Ventures III, L.P.,
	as the General Partner
By:	TCG Ventures III, L.L.C.,
	as the General Partner
By:	/s/ Brooke Coburn
	Name:	Brooke Coburn
	Title:	Managing Director

SCHEDULE I

Other Shareholders

Exhibit A

JOINDER AGREEMENT

Apollo Global, Inc.
c/o Apollo Group, Inc.
4615 East Elwood Street
Phoenix, AZ 85040

Ladies and Gentlemen,

Reference is hereby made to that certain Shareholders’ Agreement (the “Shareholders’ Agreement”), dated as of October 22, 2007, as the same may be amended from time to time, by and among Apollo Global, Inc., a Delaware corporation (the “Company”), Apollo Group, Inc., an Arizona corporation, and Carlyle Venture Partners III, L.P., a Delaware limited partnership. Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Shareholders’ Agreement.

By execution and delivery of this Joinder Agreement, the undersigned hereby agrees as follows:

1. Shareholders’ Agreement. The undersigned acknowledges that it is acquiring shares of the Company’s Common Stock (the “Purchased Shares”), subject to the terms and conditions of the Shareholders’ Agreement, and agrees that it shall become, and by execution and delivery of this Agreement does become, and assumes each and every obligation of, a “Shareholder” under and as defined in the Shareholders’ Agreement as of the date set forth below (the “Effective Date”). Notwithstanding the immediately preceding sentence, the undersigned does not hereby assume, and will not otherwise become subject to, any liability resulting from any breach, default or failure to comply with any provision of the Shareholders’ Agreement by or on behalf of any Person other than the undersigned.

2. Representations and Warranties. The undersigned represents and warrants to the Company and the existing Shareholders as of the Effective Date and, to the extent that the undersigned purchases additional shares of Common Stock from the Company on any Subsequent Closing Date (as defined in the Capital Contribution Agreement, by and among the Company, Apollo Group, Inc. and Carlyle Venture Partners III, L.P.), the undersigned will represent and warrant to the Company and the existing Shareholders on such Subsequent Closing Date as follows:

     2.1 Accredited Investor. The undersigned (a) is an “accredited investor” (as that term is defined in Section 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”)) because it is either (x) a corporation not formed for the specific purpose of acquiring the securities offered, and has total assets in excess of $5,000,000 or (y) an entity in which all of the equity owners are accredited investors, (b) has such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the investment contemplated hereby and (c) has reviewed the merits of such investment with tax and legal counsel and other advisors to the extent deemed advisable. The undersigned will acquire

the Purchased Shares for its own account for investment and not with a view to the sale or distribution thereof, and the undersigned has no present intention of distribution or selling to others any of such interest.

     2.2 Access. The undersigned has had access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the investment in the Purchased Shares. The undersigned further has had the opportunity to obtain all additional information necessary to verify the information to which the undersigned has had access.

     2.3 Nature of Investment. The undersigned understands that the Purchased Shares are characterized as “restricted securities” under the Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under the Act and related regulations such securities may be resold under the Act only in certain limited circumstances. The undersigned is familiar with and understands such resale limitations imposed by the Act and related regulations and by the Shareholders’ Agreement. The undersigned understands that the Company has no present intention to register any of the Purchased Shares.

     2.4 Authorization; Validity; No Conflicts. The undersigned is duly authorized (including by all requisite corporate or stockholder (or equivalent, for entities other than corporations) action on the part of the undersigned and its officers and directors and its direct and indirect stockholders (or equivalent equity owners, for entities other than corporations)), and has full power and authority, to execute and perform its obligations under this Joinder Agreement and the Shareholders’ Agreement, and constitutes the undersigned’s legal, valid and binding obligation enforceable against it in accordance with their respective terms except (i) as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. The execution, delivery and performance by the undersigned of this Joinder Agreement, the performance by the undersigned of the Shareholders’ Agreement, and the consummation by the undersigned of the transactions contemplated hereby and thereby will not (a) conflict with or constitute a default under any agreement, indenture or instrument to which the undersigned is a party, (b) conflict with or violate the undersigned’s organizational documents or (c) result in a violation of any order, judgment or decree of any court or governmental or regulatory authority having jurisdiction over the undersigned or any of its assets.

3. Sale of Purchased Shares. In reliance upon the representations and warranties made by the undersigned in this Joinder Agreement and the undersigned’s agreement herein to be bound by the Shareholders’ Agreement as a “Shareholder” (as such term is used in the Shareholders’ Agreement), the Company shall sell to the undersigned, and the undersigned shall purchase from the Company, the following Purchased Shares:

Number of shares:

Price per share:

Total Purchase Price:

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EXHIBIT D

REGISTRATION RIGHTS AGREEMENT

Execution

REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of October 22, 2007, by and among Apollo Global, Inc., a Delaware corporation (the “Company”), Apollo Group, Inc., an Arizona corporation (“Apollo”) and Carlyle Ventures Partners III, L.P., a Delaware limited partnership (“Carlyle” and, together with Apollo and each Affiliate of Carlyle and Apollo that hereafter becomes a shareholder of the Company, the “Shareholders”). Unless otherwise indicated herein, capitalized terms used herein are defined in paragraph 9 hereof.

RECITALS

     The Company, Apollo and Carlyle are parties to (i) a Joint Venture Agreement dated as of the date hereof (the “Joint Venture Agreement”), and (ii) a Shareholders’ Agreement dated as of the date hereof (the “Shareholders’ Agreement”).

     As a condition to the consummation of the transactions contemplated by the Joint Venture Agreement, the parties hereto are entering into this Agreement to provide the registration rights set forth herein and to provide for certain rights and obligations in respect thereto as hereinafter provided.

AGREEMENT

     NOW, THEREFORE, the parties to this Agreement agree as follows:

     1. Demand Registrations.

     (a) Requests for Registration. At any time after the date that is 180 days after an Initial Public Offering, (i) the holders of a majority of the Apollo Registrable Securities or (ii) the holders of a majority of the Carlyle Registrable Securities, each may request registration under the Securities Act of all or part of their Registrable Securities on Form S-1 or any similar long-form registration statement (“Long-Form Registrations”) or, if available, such holders may request registration under the Securities Act of all or part of their Registrable Securities on Form S-3 (including pursuant to Rule 415 under the Securities Act) or any similar short-form registration statement (“Short-Form Registrations”). Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered and the anticipated per share price range for such offering. Within ten days after receipt of any such request, the Company shall give written notice of such requested registration to all other holders of Registrable Securities and, subject to paragraph 1(d) below, will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 10 days after the receipt of the Company’s notice. Subject to paragraph 5(b), a Demand Registration shall not count as a request for registration pursuant to this paragraph 1 if at least 50% of the Registrable Securities that the holders initiating such Demand Registration have requested to be registered in such Demand Registration are not registered for reasons other than their voluntary decision not to do so. All registrations requested pursuant to this paragraph 1(a) are referred to herein as “Demand Registrations.”

     (b) Long-Form Registrations. The holders of a majority of the Apollo Registrable Securities will be entitled to request four Long-Form Registrations in which the Company will pay all Registration Expenses. The holders of a majority of the Carlyle Registrable Securities will be entitled to request two Long-Form Registrations in which the Company will pay all Registration Expenses. Subject to paragraph 5(b), a registration will not count as one of the permitted Long-Form Registrations until it has become effective unless a Shareholder requesting a Long-Form Registration that did not become effective elects to have its Registration Expenses paid by the Company in connection with such Long-Form Registration. Subject to paragraph 5(b), a Company will pay all Registration Expenses in connection with any registration initiated as a Long-Form Registration whether or not it becomes effective. All Long-Form Registrations shall be underwritten registrations.

     (c) Short-Form Registrations. In addition to the Long-Form Registrations provided pursuant to paragraph 1(b), the (i) holders of a majority of the Apollo Registrable Securities, and (ii) holders of a majority of the Carlyle Registrable Securities, will each be entitled, subject to the limitations set forth herein, to request an unlimited number of Short-Form Registrations in which the Company will pay all Registration Expenses; provided that the aggregate offering value of the Registrable Securities requested to be registered by Apollo or Carlyle in any Short-Form Registration must equal at least $[1,000,000] in the aggregate. Subject to paragraph 5(b), the Company will pay all Registration Expenses in connection with any registration initiated as a Short-Form Registration whether or not it becomes effective. Demand Registrations will be Short-Form Registrations whenever the Company is permitted to use any applicable short form. After the Company has become subject to the reporting requirements of the Securities Exchange Act, the Company will use its best efforts to make Short-Form Registrations available for the sale of Registrable Securities, including but not limited to compliance with paragraph 8 hereof.

     (d) Priority on Demand Registrations. The Company will not include in any Demand Registration any securities which are not Registrable Securities without the prior written consent of the holders of a majority of the Registrable Securities included in such Demand Registration. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing (with a copy to each party hereto requesting registration of Registrable Securities) that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold therein without adversely affecting the marketability of the offering, the Company will include in such registration prior to the inclusion of any securities which are not Registrable Securities the number of Registrable Securities requested to be included which in the opinion of such underwriters can be sold without adversely affecting the marketability of the offering, pro rata among the respective holders thereof on the basis of the number of shares of Registrable Securities owned by such Shareholder.

     (e) Restrictions on Demand Registrations. The Company will not be obligated to effect any Demand Registration within three months after the effective date of a previous Demand Registration. The Company may postpone for up to three months the filing or the effectiveness of a registration statement for a Demand Registration if the Company’s board of directors determines in its reasonable good faith judgment that such Demand Registration would

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reasonably be expected to have a material adverse effect on any proposal or plan by the Company or any of its subsidiaries to engage in any acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer or similar transaction; provided that in such event, the holders of a majority of Registrable Securities initially requesting such Demand Registration will be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration will not count as one of the permitted Demand Registrations hereunder and the Company will pay all Registration Expenses in connection with such registration; provided, that the Company may delay a Demand Registration hereunder only once in any twelve-month period.

     (f) Selection of Underwriters. The holders of a majority of the Apollo Registrable Securities included in any Demand Registration will have the right to select the investment banker(s) and manager(s) to administer the offering, subject to the (x) approval of the Board of Directors of the Company, which approval will not be unreasonably withheld or delayed and (y) Carlyle’s right to name a co-manager for the offering if Carlyle Registrable Securities are to be included in the offering. In the event that none of the Apollo Registrable Securities are included in such Demand Registration, Carlyle will have the right to make such selection, subject to the approval of the Board of Directors of the Company, which approval will not be unreasonably withheld or delayed.

     (g) Other Registration Rights. The Company will not grant to any Persons the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable into or exercisable for such securities (whether as a demand registration or a piggyback registration), without the prior written consent of the holders of a majority of the Apollo Registrable Securities and of a majority of the Carlyle Registrable Securities.

     2. Piggyback Registrations.

     (a) Right to Piggyback. Upon completion by the Company of an Initial Public Offering (and any Initial Public Offering that is not a Qualified IPO shall be undertaken only with the prior written consent of Carlyle), whenever the Company proposes to register any of its securities (including any proposed registration of the Company’s securities by any third party) under the Securities Act (other than pursuant to a registration on Form S-4 or S-8 or any successor or similar forms) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), whether or not for sale for its own account, the Company will give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and will include in such registration all Registrable Securities of the same class or series of securities that the Company proposes to register with respect to which the Company has received written requests for inclusion therein within 30 days after the receipt of the Company’s notice.

     (b) Piggyback Expenses. The Registration Expenses of the holders of Registrable Securities will be paid by the Company in all Piggyback Registrations whether or not such registration is consummated.

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     (c) Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing (with a copy to each party hereto requesting registration of Registrable Securities) that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of such offering, the Company will include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of Registrable Securities owned by each such holder and (iii) third, any other securities requested to be included in such registration pro rata among the holders thereof on the basis of the number of such securities owned by each such holder.

     (d) Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company’s securities, and the managing underwriters advise the Company in writing (with a copy to each party hereto requesting registration of Registrable Securities) that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such registration (i) first, the securities requested to be included therein by the holders requesting such registration and the Registrable Securities requested to be included in such registration, pro rata among the holders of such securities on the basis of the number of Registrable Securities owned by each such holder and (ii) second, any other securities requested to be included in such registration.

     (e) Other Registrations. If the Company has previously filed a registration statement with respect to Registrable Securities pursuant to paragraph 1 or pursuant to this paragraph 2, and if such previous registration has not been withdrawn or abandoned, the Company will not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-4 or S-8 or any successor form), whether on its own behalf or at the request of any holder or holders of such securities, until a period of at least three months has elapsed from the effective date of such previous registration.

     3. Holdback Agreements.

     (a) To the extent not inconsistent with applicable law, each holder of Registrable Securities agrees not to effect any public sale or distribution (including sales pursuant to Rule 144) of equity securities of the Company, or any securities, options or rights convertible into or exchangeable or exercisable for such securities, during the seven days prior to and the 180-day period beginning on the effective date of the Company’s Initial Public Offering of Common Stock under the Securities Act or during the seven days prior to and the 90-day period beginning on the effective date of any other underwritten registration filed under the Securities Act (in each case, except as part of such underwritten registration and except for such shorter period as the underwriters managing the registered public offering and the holders of a majority of the Registrable Securities otherwise agree in writing with respect to all holders of Registrable Securities).

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     (b) The Company agrees (i) not to effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and during the 180-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration or pursuant to registrations on Form S-4 or S-8 or any successor form), unless the underwriters managing the registered public offering otherwise agree, and (ii) to cause each holder of its Common Stock, or any securities convertible into or exchangeable or exercisable for Common Stock, purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144) of any such securities during such period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree in writing.

     4. Registration Procedures. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company will use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company will as expeditiously as possible:

     (a) prepare and (within 60 days after the end of the period within which requests for registration may be given to the Company) file with the Securities and Exchange Commission a registration statement with respect to such Registrable Securities and thereafter use its best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to the holders of a majority of the Registrable Securities covered by such registration statement and their counsel and if Carlyle Registrable Securities are covered by such registration statement to Carlyle and its counsel copies of all such documents proposed to be filed, which documents will be subject to the review of such counsel);

     (b) notify each holder of Registrable Securities of the effectiveness of each registration statement filed hereunder and prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of either (i) not less than the number of days until all such securities have been disposed of (subject to extension pursuant to paragraph 7(b)) or, if such registration statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer or (ii) such shorter period as will terminate when all of the securities covered by such registration statement have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement (but in any event not before the expiration of any longer period required under the Securities Act), and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement;

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     (c) furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

     (d) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph (d), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction);

     (e) notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the discovery of the happening of any event as a result of which, the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, at the request of any such seller, the Company will prepare and furnish to such seller a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made;

     (f) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed or quoted;

     (g) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;

     (h) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold and, if Carlyle Registrable Securities are being sold, Carlyle, or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a stock split or a combination of shares);

     (i) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;

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     (j) otherwise use its best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

     (k) notify each seller of such Registrable Securities in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any securities included in such registration statement for sale in any jurisdiction, and use its best efforts promptly to obtain the withdrawal of such order;

     (l) obtain one or more comfort letters, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), signed by the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by comfort letters as the holders of a majority of the Registrable Securities being sold reasonably request and Carlyle, if Carlyle Registrable Securities are also being sold;

     (m) permit any holder of Registrable Securities which holder, in its reasonable judgment, might be deemed to be an underwriter or a controlling Person of the Company, to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included; and

     (n) provide a legal opinion of the Company’s outside counsel, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), with respect to the registration statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in customary form and covering such matters of the type customarily covered by legal opinions of such nature.

The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish the Company such information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing.

     5. Registration Expenses.

     (a) All expenses incident to the Company’s performance of or compliance with this Agreement, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by the Company (all such expenses being herein called “Registration

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Expenses”), will be borne as provided in this Agreement, except that the Company will, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed.

     (b) Notwithstanding anything in this Agreement to the contrary, the Company shall not be required to pay for any Registration Expenses in connection with a registration proceeding begun pursuant to paragraph 1(a) if the registration request is subsequently withdrawn at the request of the initiating holders, unless such initiating holders agree to forfeit their right to one Demand Registration pursuant to paragraph 1(b) (in which case such right shall be forfeited by the holders initiating such request and all holders exercising their Piggyback Registration rights with respect to such request); provided, however, that if at or prior to the time of such withdrawal, such holders have learned of a material adverse change in the condition, business, or prospects of the Company not known to such holders at the time of their request for such registration (it being understood that a change in the Company’s stock price shall not constitute in and of itself a material adverse change) and withdrawn their request for registration with reasonable promptness after learning of such material adverse change, then such holders shall not be required to pay any of such expenses and shall retain their rights pursuant to paragraph 1.

     (c) In connection with each Demand Registration and each Piggyback Registration, the Company will reimburse (i) the holders of Registrable Securities covered by such registration for the reasonable fees and disbursements of (A) one counsel chosen by the holders of a majority of the Registrable Securities included in such registration and (B) any such other counsel retained for the purpose of rendering opinions and reviewing documents on behalf of one or more holders of Registrable Securities on behalf of whom such first counsel does not act and (ii) Carlyle for the reasonable fees and disbursements of counsel to Carlyle in the event that Carlyle Registrable Securities are covered by such registration.

     (d) To the extent Registration Expenses are not required to be paid by the Company, each holder of securities included in any registration hereunder will pay those Registration Expenses allocable to the registration of such holder’s securities so included, and any Registration Expenses not so allocable will be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered for each seller.

     6. Indemnification.

     (a) The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each holder of Registrable Securities, its officers and directors and each Person that controls such holder (within the meaning of the Securities Act) against any losses, claims, damages, liabilities, joint or several, to which such holder or any such director or officer or controlling Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue or alleged untrue

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statement of material fact contained (A) in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or (B) in any application or other document or communication (in this paragraph 6 collectively called an “application”) executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by such registration statement under the “blue sky” or securities laws thereof, or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein under the circumstances which such statements have been made not misleading, and the Company will reimburse such holder and each such director, officer and controlling Person for any legal or any other expenses incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished to the Company by such holder expressly for use therein or by such holder’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has timely furnished such holder with a sufficient number of copies of the same. In connection with an underwritten offering, the Company will indemnify such underwriters, their officers and directors and each Person that controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities.

     (b) In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, will indemnify and hold harmless the Company, its directors and officers and each other Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities, joint or several, to which the Company or any such director or officer or controlling Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or in any application or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is made in such registration statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information prepared and furnished to the Company by such holder expressly for use therein, and such holder will reimburse the Company and each such director, officer and controlling Person for any legal or any other expenses incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the obligation to indemnify will be individual, not joint and several, to each holder and will be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement.

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     (c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give such prompt notice shall not impair any Person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.

     (d) The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of securities. If the indemnification provided for in paragraph 6(a) from the Company is unavailable to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to herein, then the Company, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the Company and the indemnified party, as well as any other relevant equitable considerations. The relative faults of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, the Company or such indemnified party, and the Company’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities or expenses referred to above shall be deemed to include any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this paragraph 6(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding sentences. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this paragraph 6(d).

     7. Participation in Underwritten Registrations.

     (a) No Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s), provided that

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no holder of Registrable Securities will be required to sell more than the number of Registrable Securities that such holder has requested the Company to include in any registration) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; provided that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such holder and such holder’s intended method of distribution) or to undertake any indemnification or “holdback” obligations to the Company or the underwriters with respect thereto, except as otherwise provided in paragraphs 3 and 6 hereof.

     (b) Each Person that is participating in any registration hereunder agrees that, upon receipt of any written notice from the Company of the happening of any event of the kind described in paragraph 4(e) and 4(k) above, such Person will forthwith discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person’s receipt of the copies of a supplemented or amended prospectus as contemplated by such paragraph 4(e). If the Company gives any such written notice, the applicable time period mentioned in paragraph 4(b) during which a registration statement is to remain effective will be extended by the number of days during the period from and including the date of the giving of such written notice pursuant to this paragraph to and including the date when each seller of a Registrable Security covered by such registration statement has received the copies of the supplemented or amended prospectus contemplated by paragraph 4(e).

     8. Current Public Information. At all times after the Company has filed a registration statement with the Securities and Exchange Commission pursuant to the requirements of either the Securities Act or the Securities Exchange Act, the Company will file in a timely manner all reports and other documents required to be filed by it under the Securities Act and the Securities Exchange Act and the rules and regulations adopted by the Securities and Exchange Commission thereunder, and will take such further action as any holder or holders of Registrable Securities may reasonably request, all to the extent required to enable such holders to sell Registrable Securities pursuant to Rule 144 adopted by the Securities and Exchange Commission under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the Securities and Exchange Commission. Without limiting the foregoing, the Company covenants that, at its own expense, it will promptly take such action as any Shareholder may reasonably request, all to the extent required from time to time to enable such Shareholder to transfer its Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rules 144, 144A or Regulation S under the Securities Act or (ii) any similar rule or regulation hereafter adopted by the Securities and Exchange Commission. Upon the request of a Shareholder, the Company, at its own expense, will promptly deliver to such Shareholder (i) a written statement as to whether it has complied with such requirements (and such Shareholder shall be entitled to rely upon the accuracy of such written statement), (ii) a copy of the most recent annual or quarterly report of the Company and (iii) such other reports and documents as such Shareholder may reasonably request in order to avail itself of any rule or regulation of the Securities and Exchange Commission allowing it to transfer its shares without registration.

     9. Definitions.

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     “Affiliate” of a Shareholder means any other Person, entity or investment or co-investment fund directly or indirectly controlling, controlled by or under common control with the Shareholder and, in the case of a Shareholder which is an entity, any shareholder, member, partner or other equity holder of such Shareholder, which, in each case, beneficially owns at least 10% of the outstanding voting interests of the Shareholder. Each fund managed by Carlyle or an Affiliate of Carlyle shall be an Affiliate of Carlyle for purposes of this Agreement and no portfolio company of Carlyle or its Affiliates shall be considered an Affiliate of Carlyle or such Affiliate for purposes of this Agreement.

     “Common Stock” means the common stock of the Company, par value $.001 per share.

     “Apollo Registrable Securities” means (i) any shares of Common Stock issued to Apollo pursuant to the Joint Venture Agreement; (ii) any equity securities issued or issuable directly or indirectly with respect to the securities referred to in clause (i) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization, including a recapitalization or exchange and (iii) any other shares of Common Stock now held or hereafter acquired by Apollo; provided, that in the event that pursuant to such recapitalization or exchange, equity securities are issued which do not participate in the residual equity of the Company (“Non-Participating Securities”), such Non-Participating Securities will not be Registrable Securities. As to any particular shares constituting Apollo Registrable Securities, such shares will cease to be Apollo Registrable Securities when they have (x)  been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, or (y)  been sold to the public through a broker, dealer or market maker pursuant to Rule 144 (or by similar provision then in force) under the Securities Act or (z) have become eligible for sale under Rule 144(k).

     “Carlyle Registrable Securities” means (i) any shares of Common Stock issued to Carlyle or Carlyle Affiliates pursuant to the Joint Venture Agreement; (ii) any equity securities issued or issuable directly or indirectly with respect to the securities referred to in clause (i) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization, including a recapitalization or exchange and (iii) any other shares of Common Stock now held or hereafter acquired by Carlyle or any of Carlyle’s Affiliates; provided, that in the event that pursuant to such recapitalization or exchange, equity securities are issued which do not participate in the residual equity of the Company (“Non-Participating Securities”), such Non-Participating Securities will not be Registrable Securities. As to any particular shares constituting Carlyle Registrable Securities, such shares will cease to be Carlyle Registrable Securities when they have (x)  been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, or (y) been sold to the public through a broker, dealer or market maker pursuant to Rule 144 (or by similar provision then in force) under the Securities Act or (z) have become eligible for sale under Rule 144(k).

     “Initial Public Offering” means an initial public offering by the Company of its Common Stock to the public effected pursuant to an effective registration statement under the Securities Act of 1933, as amended, or any comparable statement under any similar United States federal statute then in effect.

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     “Person” means an individual, a limited liability company, an association, a joint stock company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department, agency or political subdivision thereof.

     “Qualified IPO” means the closing of the sale of shares of Common Stock in a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act, in which the gross aggregate cash proceeds to the Company (before deduction of underwriting discount, commissions and expenses of sale) are at least $50,000,000.

     “Registrable Securities” means the Apollo Registrable Securities and the Carlyle Registrable Securities, including such shares of Common Stock hereafter acquired by transferees of the Apollo Registrable Securities and the Carlyle Registrable, provided that such transfers are effected in accordance with the terms and conditions the Shareholders’ Agreement of even date herewith with respect to transfers of Common Stock.

     “Securities Act” means the Securities Act of 1933, as amended, or any similar federal law then in force.

     “Securities and Exchange Commission” includes any governmental body or agency succeeding to the functions thereof.

     “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal law then in force.

     10. Miscellaneous.

     (a) No Inconsistent Agreements. The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement.

     (b) Adjustments Affecting Registrable Securities. The Company will not take any action, or permit any change to occur, with respect to its securities which would materially and adversely affect the ability of the holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement or which would adversely affect the marketability of such Registrable Securities in any such registration (including, without limitation, effecting a stock split or a combination of shares).

     (c) Remedies. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party hereto will have the right to injunctive relief, in addition to all of its other rights and remedies at law or in equity, to enforce the provisions of this Agreement.

     (d) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only upon the prior written consent of each of the Company, Carlyle and the holders of a majority of the Registrable Securities; provided, that if such amendment or waiver would treat a holder or group of holders of Registrable Securities in a manner different from any other holders of Registrable Securities (other than as already provided herein), then such amendment or waiver will require the consent

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of such holder or the holders of a majority of the Registrable Securities of such group adversely treated. The Company will give prompt written notice to the parties hereto of any amendments, modifications, or waivers of the provisions of this Agreement.

     (e) Successors and Assigns. This Agreement will be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. In addition, and whether or not any express assignment has been made, the provisions of this Agreement that are for the benefit of the holders of Registrable Securities (or any portion thereof) as such will be for the benefit of and enforceable by any subsequent holder of any Registrable Securities (or of such portion thereof), subject to the provisions respecting the minimum numbers or percentages of shares of Registrable Securities (or of such portion thereof) required in order to be entitled to certain rights, or take certain actions, contained herein.

     (f) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

     (g) Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement.

     (h) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

     (i) Governing Law. This Agreement shall be construed according to and governed by the laws of the State of Delaware, without reference to conflicts of laws principles.

     (j) Notices. Any notice provided for in this Agreement will be in writing and will be either (i) personally delivered, (ii) delivered by certified mail, return receipt requested, (iii) sent by a nationally recognized overnight courier service (charges prepaid), or (iv) faxed with a copy following by any method described in the foregoing clauses (i) to (iii), to each Shareholder that is a party hereto at the address indicated in the Shareholders Agreement and to the Company at the address indicated below, or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally, five days after deposit in the U.S. mail and one day after deposit with a nationally recognized overnight courier service.

If to the Company:

Apollo Global, Inc.
c/o Apollo Group, Inc.
4615 East Elwood Street
Phoenix, AZ 85040

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Attention: Chief Financial Officer
Facsimile: (602) 383-5159

[Remainder of page intentionally left blank]

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     IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement on the day and year first above written.

APOLLO GLOBAL, INC.
By:	/s/ Jeff Langenbach
	Name:	Jeff Langenbach
	Title:	President
APOLLO GROUP, INC.
By:	/s/ Joseph L. D’Amico
	Name:	Joseph L. D’Amico
	Title:
CARLYLE VENTURE PARTNERS III, L.P.
By:	TCG VENTURES III, L.P.
	Its General Partner
By:	/s/ Brooke B. Coburn
	Name:	Brooke B. Coburn
	Title:	Managing Director

AMENDED AND RESTATED SCHEDULE 5.4

     This Amended and Restated Schedule 5.4 is being issued to Apollo Group, Inc. (“Apollo”), Carlyle Venture Partners III, L.P. (“Carlyle 1”), and CVP III Coinvestment, L.P. (“Carlyle 2”) by Apollo Global, Inc. (“Company”) pursuant to Section 6.2 of the Amended and Restated Capital Contribution Agreement, dated as of July 28, 2009, by and among the Company, Apollo, and Carlyle 1. This Amended and Restated Schedule 5.4 is dated as of July 28, 2009 and amends and restates in its entirety that certain Amended and Restated Schedule 5.4, dated as of June 20, 2009.

Capitalization Immediately Prior to the Funding of the Capital Call for the Purchase of Equity Interest in Apollo Global Mexico, S. de R.L. de C.V. owned by Carlyle ULA Holdings, L.P.:

Authorized: 1,000,000 shares of Common Stock, par value $0.001 per share

Issued and Outstanding: 71,000 of Common Stock, par value $0.001 per share, of which:

     56,861 shares are owned by Apollo
     13,355 shares are owned by Carlyle 1
          784 shares are owned by Carlyle 2

Capitalization Immediately Following the Funding of the Capital Call for the Purchase of Equity Interest in Apollo Global Mexico, S. de R.L. de C.V. owned by Carlyle ULA Holdings, L.P.:

Authorized: 1,000,000 shares of Common Stock, par value $0.001 per share

Issued and Outstanding: 82,000 of Common Stock, par value $0.001 per share, of which:

     65,672 shares are owned by Apollo
     15,423 shares are owned by Carlyle 1
          905 shares are owned by Carlyle 2

Capitalization Immediately Prior to the Funding of the Capital Call for the Purchase of BPP Holdings plc:

Authorized:	553,822 shares of Class A Common Stock, par value $0.001 per share
	97,974 shares of Class B Common Stock, par value $0.001 per share

Issued and Outstanding:

     65,672 of Class A Common Stock, par value $0.001 per share, of which 65,672 shares are owned by Apollo

     16,328 of Class B Common Stock, par value $0.001 per share, of which:

     15,423 shares are owned by Carlyle 1
          905 shares are owned by Carlyle 2

AMENDED AND RESTATED SCHEDULE 5.5

     This Amended and Restated Schedule 5.5 is being issued to Apollo Group, Inc. (“Apollo”), Carlyle Venture Partners III, L.P. (“Carlyle 1”), and CVP III Coinvestment, L.P. (“Carlyle 2”) by Apollo Global, Inc. (“Company”) pursuant to Section 6.2 of the Amended and Restated Capital Contribution Agreement, dated as of July 28, 2009, by and among the Company, Apollo, and Carlyle 1. This Amended and Restated Schedule 5.5 is dated as of July 28, 2009 and amends and restates in its entirety that certain Amended and Restated Schedule 5.5, dated as of June 20, 2009.

Subsidiaries of Apollo Global Immediately Prior to the Subsequent Closing for the Purchase of Equity Interest in Apollo Global Mexico, S. de R.L. de C.V. owned by Carlyle ULA Holdings, L.P.:

1. GENERAL

     Apollo Global owns 99.9% of the outstanding equity interests of Cooperatieve Apollo Global Netherlands UA (“Apollo Netherlands”). Apollo owns the remaining 0.1% of the outstanding equity interests of Apollo Netherlands.

2. UNIACC

Apollo Global owns Universidad de Artes, Ciencias y Comunicacion (“UNIACC”) through the following ownership structure:

     Apollo Netherlands owns 99.9% of the outstanding equity interests of Apollo Chile Holdco S.A. (“Chile Holdco”). Apollo Global owns the remaining 0.1% of the outstanding equity interests of Chile Holdco.

     Chile Holdco owns 99% of the outstanding equity interests of Trans-Guil (“TG”). Apollo Netherlands owns the remaining 1% of the outstanding equity interests of TG.

     Chile Holdco owns 99% of the outstanding equity interests of Apollo Chile Comunicaciones, Ltda. (“ACCL”). Apollo Netherlands owns the remaining 1% of the outstanding equity interests of ACCL.

     Chile Holdco and IACC SA (“IACC”) are each members of UNIACC.

     Chile Holdco owns 175,763,801 shares of the outstanding equity interests of IACC. Apollo Netherlands owns the remaining 1 share of the outstanding equity interests of IACC.

3. ULA

Apollo Global owns Universidad Latinoamericana, S.C. (“ULA”) through the following ownership structure:

     Apollo Netherlands owns 65% of the outstanding equity interests of Apollo Global Mexico, S. de R.L. de C.V. (“AGM”). Carlyle ULA Holdings, L.P. owns the remaining 35% of the outstanding equity interests of AGM.

     AGM owns 99.9999% of the outstanding equity interests of Apollo Global Mexico Sub, S. de R.L. de C.V. (“AGM Sub”). Apollo Netherlands owns the remaining 0.0001% of the outstanding equity interests of AGM Sub.

     AGM Sub owns 99.99% of the outstanding equity interests of ULA. AGM owns the remaining 0.01% of the outstanding equity interests of ULA.

     ULA owns 99.9920% of the outstanding equity interests of Centro Universitario Indoamericano, S.C. (“CUI”). AGM Sub owns the remaining 0.0080% of the outstanding equity interests of CUI.

Subsidiaries of Apollo Global Immediately Following the Subsequent Closing for the Purchase of Equity Interest in Apollo Global Mexico, S. de R.L. de C.V. owned by Carlyle ULA Holdings, L.P.:

1. GENERAL — No Change.

2. UNIACC — No Change.

3. ULA

     Apollo Global owns Universidad Latinoamericana, S.C. (“ULA”) through the following ownership structure:

     Apollo Netherlands owns 99.9999997% of the outstanding equity interests of Apollo Global Mexico, S. de R.L. de C.V. (“AGM”). Apollo Global owns the remaining .0000003% of the outstanding equity interests of AGM.

     AGM owns 99.9999% of the outstanding equity interests of Apollo Global Mexico Sub, S. de R.L. de C.V. (“AGM Sub”). Apollo Netherlands owns the remaining 0.0001% of the outstanding equity interests of AGM Sub.

     AGM Sub owns 99.99% of the outstanding equity interests of ULA. AGM owns the remaining 0.01% of the outstanding equity interests of ULA.

     ULA owns 99.9920% of the outstanding equity interests of Centro Universitario Indoamericano, S.C. (“CUI”). AGM Sub owns the remaining 0.0080% of the outstanding equity interests of CUI.

Subsidiaries of Apollo Global Immediately Prior to the Subsequent Closing for the Purchase of Equity Interest in BPP Holdings plc.

     1. GENERAL — No Change.

     2. UNIACC — No Change.

     3. ULA — No Change.

     4. APOLLO UK ACQUISITION COMPANY LIMITED

     Apollo Global owns 100% of the outstanding equity interests of Apollo UK Acquisition Company Limited.

EX-10.47

Exhibit 10.47

AMENDED AND RESTATED
SHAREHOLDERS’ AGREEMENT

          THIS AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT (this “Agreement”) is made and entered into as of July 28, 2009, by and among Apollo Global, Inc., a Delaware corporation (the “Company”), Apollo Group, Inc., an Arizona corporation (“Apollo”), CVP III Coinvestment, L.P., a Delaware limited partnership (“CVP”), Carlyle Venture Partners III, L.P., a Delaware limited partnership (“Carlyle” and, together with Apollo, CVP, and each Affiliate of Carlyle and Apollo that hereafter becomes a Shareholder, collectively the “Investor Shareholders”), and the Persons listed on Schedule I attached hereto or who otherwise agree to be bound by the provisions hereof as an Other Shareholder by executing a joinder agreement (the “Other Shareholders”). Apollo, Carlyle, CVP and the Other Shareholders are collectively referred to herein as the “Shareholders.” Unless otherwise indicated herein, capitalized terms used herein are defined in paragraph 14 hereof.

          WHEREAS, Apollo and Carlyle are parties to an Amended and Restated Capital Contribution Agreement dated as of the date hereof (the “Capital Contribution Agreement”);

          WHEREAS, the parties hereto are entering into this Agreement to restrict the sale, assignment, transfer, encumbrance or other disposition of the Shareholder Shares (as defined below) and to provide for certain rights and obligations in respect thereto as hereinafter provided.;

          WHEREAS, the Company and Shareholders desire to amend and restate, in its entirety, that certain Shareholders Agreement entered into as of October 22, 2007 (the “Original Agreement”);

          WHEREAS, the Original Agreement is being amended in accordance with paragraph 16;

          NOW, THEREFORE, in consideration of the foregoing and for other good and valid consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to amend and restate the Original Agreement in its entirety as follows:

          1. Board Observers and Expenses.

          (a) Each of Apollo and Carlyle, for so long as it remains a Shareholder hereunder, shall each have the right to designate and remove two representatives (each such representative, a “Board Observer”) who shall (1) have the right to receive due notice of and to attend and participate in discussions at (but not vote on any matters on which the directors are entitled to vote) all meetings of the Board and all meetings of committees of the Board, (2) have the right to receive copies of all documents and other information, including minutes, consents, business plans, presentation materials, budgets and financial information furnished generally to members of the Board and committees thereof, and (3) be entitled to be indemnified by the Company

pursuant to the Certificate of Incorporation of the Company to the same extent mutatis mutandis as if he or she were a member of the Board (and the Company hereby agrees to so indemnify each Board Observer). Notwithstanding the preceding sentence, on any date that Carlyle and its Affiliates do not own, in the aggregate, either (i) ten percent (10%) (or more) of the issued and outstanding Shareholder Shares or (y) shares of the Company Stock with a Fair Market Value of one hundred million dollars (or more), Carlyle shall have the right to designate and remove only one Board Observer.

          (b) The Company will pay or promptly reimburse the actual reasonable out-of-pocket expenses incurred by each member of the Board and each Board Observer in connection with attending meetings of the Board or any committee of the Board.

          (c) The provisions of this paragraph 1 shall terminate automatically and be of no further force and effect upon the earlier to occur of (i) the consummation of an Approved Sale and (ii) a Public Offering.

          2. Matters Requiring Specific Approval.

          (a) Matters Requiring Approval of the Board. The business and affairs of the Company shall be managed by the Board as described in Section 141 of the Delaware General Corporation Law. Without limiting the generality of the preceding sentence, the Company shall not take any of the following actions without the prior approval of at least a majority of votes cast by the Board approving such actions and as provided in the Company’s Bylaws:

               (i) acquire or sell any interest in any Person or business subject to the limitations set forth in paragraph 2(b)(2)(i) below;

               (ii) incur any Company Indebtedness, or issue or sell any debt securities or other rights to acquire any debt securities of the Company or any of its Subsidiaries, except for transactions between the Company and any of its Subsidiaries; provided, however, that any security interests in connection with such debt arrangements shall be limited solely to the Company’s assets unless otherwise approved by the Investor Shareholders;

               (iii) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock;

               (iv) hire or terminate the employment of the Company’s President, Chief Financial Officer or Chief Operating Officer;

               (v) establish or materially modify the compensation or benefits payable or to become payable by the Company to the Company’s President, Chief Financial Officer or Chief Operating Officer, other than benefits generally provided to senior management or employees on the same terms; or

               (vi) approve the annual operating plan and budget.

          (b) Matters Requiring Approval of Each Class of Common Stock.

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               (1) The Company shall not, without the prior written consent of (i) stockholders holding a majority of the outstanding Class A Common Stock, and (ii) stockholders holding a majority of the outstanding Class B Common Stock (which in each case consent may be given or withheld in such stockholder’s sole discretion):

               (i) (a) dissolve or wind-up the Company, (b) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (c) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition seeking relief under Title 11 of the United States Code, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (d) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or any Subsidiary or for a substantial part of the property or assets of the Company or any Subsidiary, (e) file an answer admitting the material allegations of a petition filed against it in any proceeding described in clause (b) above, (f) make a general assignment for the benefit of creditors, or (g) take any action for the purpose of effecting any of the foregoing.

               (ii) amend, revise, modify, supplement or discontinue the Investment Scope; or

               (iii) amend, modify or restate the Certificate of Incorporation or Bylaws of the Company in any respect.

               (2) On any date that Carlyle and its Affiliates own, in the aggregate, either (i) ten percent (10%) (or more) of the issued and outstanding Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of one hundred million dollars (or more), the Company shall not, without the prior written consent of (i) stockholders holding a majority of the outstanding Class A Common Stock, and (ii) stockholders holding a majority of the outstanding Class B Common Stock (which in each case consent may be given or withheld in such stockholder’s sole discretion):

               (i) acquire or sell any interest in any business or entity with, individually or in the aggregate, an enterprise value in excess of the lesser of (i) $150,000,000 or (ii) 33.33% of the Company’s total shareholder equity plus indebtedness for borrowed money, determined in accordance with US GAAP and as reflected in the Company’s most recently completed consolidated balance sheet, and that requires the Company to incur incremental debt or equity financing;

               (ii) make or commit to make any capital expenditure outside of the ordinary course of business and in excess of the lesser of (i) $50,000,000 or (ii) 10% of the Company’s total shareholder equity plus indebtedness for borrowed money, determined in accordance with US GAAP and as reflected in the Company’s most recently completed consolidated balance sheet, and that requires incremental debt or equity financing; or

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               (iii) except as otherwise provided in Section 5(a) or 5(b) of Article VII of the Bylaws, the Company will not make any loan (other than intercompany loans) to any Person which is outside the ordinary course of business of the Company.

          (c) Matters Requiring Approval of Unaffiliated Investor Shareholders.

               (i) The Company shall not, without the prior written consent or affirmative vote of Apollo, enter into or be a party to any material transaction with Carlyle or any Affiliate, member, partner, director, officer or employee of Carlyle or any “associate” (as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) of any such Person or Carlyle, except for transactions expressly provided for in this Agreement or the Capital Contribution Agreement.

               (ii) The Company shall not, without the prior written consent or affirmative vote of Carlyle, enter into or be a party to any material transaction with Apollo or any Affiliate, member, partner, director, officer or employee of Apollo or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such Person or Apollo, except for (w) transactions contemplated by this Agreement or the Capital Contribution Agreement, (x) the employment of persons currently employed by Apollo, (y) reimbursement of amounts paid by Apollo to professionals after the date of this Agreement and before the execution of the Support Services Agreement for such professionals’ reasonable fees and expenses for the due diligence of potential investments within the Investment Scope, or (z) pursuant to a Support Services Agreement between Apollo and the Company whereby Apollo will provide services to the Company upon terms and conditions satisfactory to Apollo and Carlyle.

          (d) EITF No. 96-16. Apollo and Carlyle acknowledge that the approval rights granted to Carlyle as set forth in paragraph 2(b) above are intended to be “protective rights” rather than “participating rights”, as described in Emerging Issues Task Force Issue No. 96 -16 (“EITF No. 96-16”). Apollo and Carlyle further acknowledge that, unless otherwise agreed by Apollo and Carlyle, none of the approval rights granted to Carlyle hereunder will be in any way amended, terminated or revoked to the extent that at anytime hereafter any of the approval rights granted to Carlyle hereunder are re-characterized as being “participating rights” and not “protective rights” under EITF No. 96-16 or any successor to it, or under any other accounting policy, standard or procedure which may become applicable to the same subject matter as comprehended by EITF No. 96-16.

          (e) The Company’s accounting methods and policies shall be consistent with the accounting methods and policies of Apollo except as required by GAAP;

          3. Restrictions on Transfer of Shareholder Shares.

          (a) Transfer of Shareholder Shares. No holder of Shareholder Shares may sell, transfer, assign, pledge, encumber or otherwise directly or indirectly dispose of (a “Transfer”) any Shareholder Shares or any interest in any Shareholder Shares, including to the Company or any of its Subsidiaries, other than Permitted Transfers, prior to October 22, 2012 and, following such date, may Transfer Shareholder Shares or an interest in Shareholder Shares only pursuant to and in accordance with paragraphs 3(b), 3(c), 3(d), 5 or 9 below.

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          (b) Right of First Offer. Prior to making any Transfer, other than as permitted under paragraph 3(d) below, a holder of Shareholder Shares wishing to transfer such Shareholder Shares (the “Selling Shareholder”) shall deliver written notice in accordance with paragraph 22 (the “Transfer Notice”) to each Investor Shareholder and the Company. The Transfer Notice shall disclose in reasonable detail the number of Shareholder Shares to be transferred, the cash purchase price (the “Offer Price”) at which the Selling Shareholder proposes to sell such number of Shareholder Shares, and the terms and conditions of the proposed Transfer. The Transfer Notice shall constitute a binding offer to sell the subject Shareholder Shares to the Investor Shareholders (other than the Selling Shareholder) and, if and to the extent that any such Shareholder Shares are not purchased by such Selling Shareholders, to the Company, in each case on the terms and conditions set forth in the Transfer Notice and in accordance with this paragraph 3(b). The Investor Shareholders may elect to purchase, pro-rata based on the number of Shareholder Shares held by each, all or any portion of the Shareholder Shares to be transferred upon the same economic terms and conditions as those set forth in the Transfer Notice by delivering a written notice of such election to the Selling Shareholder and the Company within 10 business days after the Transfer Notice has been delivered pursuant to this paragraph 3(b), provided that all elections by Carlyle’s Affiliates shall be made by Carlyle on behalf of its Affiliates. If the Investor Shareholders have not elected to purchase all of the Shareholder Shares to be transferred, the Company may elect to purchase all, but not less than all, of the remaining Shareholder Shares to be transferred upon the same economic terms and conditions as those set forth in the Transfer Notice by delivering written notice in accordance with paragraph 22 of such election to the Selling Shareholder within 15 business days after the Transfer Notice has been delivered pursuant to this paragraph 3(b) (such date, the “Authorization Date”). If the Investor Shareholders and the Company do not elect to purchase all of the Shareholder Shares specified in the Transfer Notice, the Selling Shareholder may Transfer the remaining Shareholder Shares specified in the Transfer Notice at a cash price no less than the Offer Price and on terms no more favorable to the Proposed Purchaser than those specified in the Transfer Notice during the 60 day period immediately following the Authorization Date. If the Investor Shareholders or the Company have elected to purchase Shareholder Shares pursuant to this paragraph 3(b), the Transfer of such shares shall be consummated as soon as practicable after the delivery of the election notice(s) to the Selling Shareholder, but in any event within 30 days after the Authorization Date.

          (c) Participation Rights.

               (i) At least 30 days prior to any Transfer of shares of Company Stock by any of Apollo or any of its Affiliates (the “Transferring Apollo Shareholder”) for value (other than pursuant to a Permitted Transfer or an Approved Sale as to which Carlyle has an independent right to approve under paragraph 5(a) as a consequence of Carlyle and its Affiliates owning, in the aggregate, either (i) seven and one-half percent (7.5%) (or more) of issued and outstanding Shareholders Shares or (ii) shares of the Company Stock with a Fair Market Value of seventy-five million dollars ($75,000,000) (or more)), the Transferring Apollo Shareholder will deliver written notice in accordance with paragraph 22 (the “Sale Notice”) to the Company, the other Investor Shareholders (including Carlyle and its Affiliates) and the Other Shareholders, specifying in reasonable detail the identity of the Proposed Purchaser and the terms and conditions of the Transfer. Notwithstanding any of the restrictions contained in this paragraph 3, any or all of the other Investor Shareholders (including Carlyle and its Affiliates) and Other Shareholders may

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elect to participate in the contemplated Transfer by delivering written notice in accordance with paragraph 22 (a “Tag-Along Notice”) to the Transferring Apollo Shareholder within 15 business days after the date that such Sale Notice is deemed given pursuant to paragraph 22, provided that all Tag-Along Notices of Carlyle’s Affiliates shall be delivered by Carlyle on behalf of its Affiliates. If no Tag-Along Notice is received by the Transferring Apollo Shareholder within such 15 business day period, the other Investor Shareholders and the Other Shareholders shall not have the right to participate in the Transfer, and the Transferring Apollo Shareholder shall have the right, during the succeeding three-month period, to transfer to the Proposed Purchaser up to the number of shares of Common Stock stated in the Sale Notice, on terms and conditions no more favorable to the Transferring Apollo Shareholder than those stated in the Sale Notice. If any of the other Investor Shareholders or Other Shareholders have elected to participate in such Transfer (such Shareholders, “Participating Shareholders”), each of the Transferring Apollo Shareholder and each Participating Shareholder will be entitled to sell in the contemplated Transfer, at the same price and on the same terms, up to a number of shares of Common Stock which is determined by multiplying (i) the number of shares of Common Stock owned by such Participating Shareholder on the date that the Tag-Along Notice is furnished by (ii) a fraction, the numerator of which is the number of shares of Common Stock which the Proposed Purchaser desires to purchase and the denominator of which is the sum of (x) the number of shares of Common Stock which are owned by the Transferring Apollo Shareholder and (y) the aggregate number of shares of Common Stock owned by all of the Participating Shareholders on the date that the Tag-Along Notice is furnished.

               (ii) The Transferring Apollo Shareholder will use reasonable efforts to obtain the agreement of the Proposed Purchaser to the participation of the Participating Shareholders in any contemplated Transfer, and the Transferring Apollo Shareholder will not transfer any of its Common Stock to the Proposed Purchaser unless (A) simultaneously with such Transfer, the Proposed Purchaser purchases from the Participating Shareholders the number of shares of Common Stock which such Participating Shareholders are entitled to sell to the Proposed Purchaser under paragraph 3(c)(i) or (B) simultaneously with such Transfer, the Transferring Apollo Shareholder purchases (at the same price and on the same terms and conditions on which such shares were sold to the Proposed Purchaser) the number of shares of Common Stock from the Participating Shareholders which the Participating Shareholders are entitled to sell to the Proposed Purchaser under paragraph 3(c)(i).

               (iii) The Transferring Apollo Shareholder and the Participating Shareholders will bear their pro-rata share (based upon the number of shares of Common Stock sold by such Person in relation to the number of shares of Common Stock sold by all Persons in such Transfer) of the out-of-pocket costs of any Transfer pursuant to this paragraph 3(c) which are borne by the Transferring Apollo Shareholder to the extent such costs are incurred for the benefit of all Persons participating in the Transfer and are not otherwise paid by the Company or the acquiring party. Costs incurred by the Participating Shareholders participating in the Transfer on their own behalf will not be considered costs of the Transfer hereunder.

               (iv) No Participating Shareholder participating in a sale of shares of the Common Stock pursuant to this paragraph 3(c) shall be required to provide any indemnification other than on a several basis with such Participating Shareholder’s indemnification obligation to the Proposed Purchaser (or Transferring Apollo Shareholder in the event that it purchases shares

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of the Common Stock pursuant to paragraph 3(c)(ii)) limited to the pro rata share of the aggregate purchase price received by all Shareholders that such Participating Shareholder receives at the closing of the Transfer. Notwithstanding the foregoing, if a Participating Shareholder electing to participate does not agree to execute and deliver or does not execute and deliver any documentation required by this paragraph 3(c)(iv) within ten (10) days after receipt thereof in connection with the Transfer, such Participating Shareholder shall be deemed to have withdrawn its request to participate and shall not be entitled to participate in the proposed Transfer.

          (d) Permitted Transfers. The restrictions contained in paragraph 3 will not apply to (i) a Public Sale, (ii) an Approved Sale, (iii) a Transfer of Shareholder Shares by any Shareholder to a trust solely for the benefit of such Shareholder and such Shareholder’s spouse and/or descendants (or a re-Transfer of such Shareholder Shares by such trust back to such Shareholder upon the revocation of any such trust) or pursuant to the laws of descent and distribution, (iv) a Transfer by any Shareholder to an Affiliate of such Shareholder (and subsequent Transfers by such Affiliates to other Affiliates of such Shareholder), so long as such Transfer does not cause the Company to be subject to the reporting requirements of the Exchange Act pursuant to Section 12(g) thereof; provided that the restrictions contained in this Agreement will continue to apply to the Shareholder Shares after any Transfer pursuant to clauses (iii) or (iv) above and the transferees of such Shareholder Shares pursuant to such clauses shall agree in writing to be bound by the provisions of this Agreement. Upon the Transfer of Shareholder Shares pursuant to clauses (iii) or (iv) of this subparagraph 3(d), the transferor will deliver a written notice to the Company and the Investor Shareholders, which notice will disclose in reasonable detail the identity of such transferee.

          (e) Termination of Restrictions. The rights and restrictions set forth in this paragraph 3 will continue with respect to each Shareholder Share until the first to occur of (i): date on which such Shareholder Share has been transferred in a Public Sale; (ii) the consummation of an Approved Sale; (iii) a closing described in paragraph 9(c) or (iv) October 22, 2015.

          4. Preemptive Rights.

          (a) If the Company or any of its Subsidiaries proposes to issue and sell any of its equity securities or any securities containing options or rights to acquire any equity securities or any securities convertible into equity securities for value, the Company will offer in a written notice furnished in accordance with paragraph 22 to sell to each Investor Shareholder a portion of the number or amount of such securities proposed to be sold in any such transaction or series of related transactions equal to the product of the percentage each such Investor Shareholder holds of all Common Stock then held by all of the Shareholders by the number of securities proposed to be issued and sold by the Company in any such transaction or series of related transactions, all for the same price and upon the same economic terms and otherwise on the same terms and conditions as the securities that are being offered in such transaction or series of transactions. If any Investor Shareholder having preemptive rights under this paragraph 4 fails to accept such offer in whole or in part within the period provided below in paragraph 4(c), the Company shall offer in a written notice furnished in accordance with paragraph 22 the securities that were not so accepted to all Investor Shareholders who elected to accept such offer in whole or in part, in the same proportion as the respective Common Stock held by such electing Investor

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Shareholder bears to the aggregate Common Stock held by all Investor Shareholders who elected to accept such initial offer in whole or in part. Each electing Investor Shareholder shall have an additional period of ten days from and after the date of the Company’s re-offer within which to accept such re-offer in whole or in part. If an Investor Shareholder elects to accept such offer in whole or in part, such Investor Shareholder shall so accept by written notice to the Company given within such 10-day period, provided that all acceptances by Carlyle’s Affiliates shall be made by Carlyle on behalf of its Affiliates. No further offer to the Investor Shareholders under this paragraph 4 is then required with respect to the same offering of securities, except as otherwise required in paragraph 4(c).

          (b) Notwithstanding the foregoing, the provisions of this paragraph 4 shall not be applicable to the issuance of equity securities (i) pursuant to the Capital Contribution Agreement, (ii) upon the exercise of warrants or options or upon the conversion of shares of one class of capital stock into shares of another class in accordance with the provisions of the Company’s Certificate of Incorporation, or (iii) as a stock dividend or any stock split or other subdivision or combination of the outstanding equity securities; provided, however, the provisions of this paragraph 4 shall terminate upon completion of a Public Offering.

          (c) The Company will cause to be given to the Investor Shareholders a written notice delivered in accordance with paragraph 22 setting forth in reasonable detail the terms and conditions upon which they may purchase such shares or other securities, including, without limitation, the number of shares or other securities offered by the Company, the price at which such shares or other securities are being offered and the date on which the sale is to be completed (the “Preemptive Notice”). After receiving a Preemptive Notice, if any of the Investor Shareholders wishes to exercise the preemptive rights granted by this paragraph 4 it must give notice to the Company in writing, within 15 business days after the date that such Preemptive Notice is deemed given pursuant to paragraph 22 (subject to extension in the event of a re-offer described in paragraph 3(a) above), stating the quantity of the shares or other securities offered pursuant to this paragraph 4 it agrees to purchase on the terms and conditions set forth in the Preemptive Notice (the “Preemptive Reply”), provided that all Preemptive Replies by Carlyle’s Affiliates shall be made by Carlyle on behalf of its Affiliates. The closing for the sale of the shares or other securities subject to the Preemptive Notice shall occur no earlier than 5 business days after the Preemptive Reply. If the Investor Shareholders fail to make a Preemptive Reply in accordance with this paragraph 4 within the 15-business day period specified in this paragraph 4(c) (subject to extension in the event of a re-offer described in paragraph 3(a) above), shares or other securities offered to it in accordance with this paragraph 4 may thereafter, for a period not exceeding 120 days following the expiration of such 15-business day period, be issued, sold or subjected to rights or options to any purchaser at a price not less than the price at which they were offered to such Investor Shareholders and on other terms and conditions no more favorable to the purchasers thereof than those offered to the Investor Shareholders. Any such shares or other securities not so issued, sold or subjected to rights or options to any purchaser during such 120-day period will thereafter again be subject to the preemptive rights provided for in this paragraph 4.

          5. Sale of the Company.

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          (a) If Shareholders holding a majority of the outstanding Common Stock and Carlyle approve (and, in the case of any sale or other fundamental change which requires the approval of the board of directors of a Delaware corporation pursuant to the Delaware General Corporation Law, the Board shall have approved such sale or other fundamental change) a sale of all or substantially all of the Company’s assets determined on a consolidated basis or a sale of a majority of the Company’s outstanding capital stock (whether by merger, recapitalization, consolidation, reorganization, combination or otherwise) to any Independent Third Party or group of Independent Third Parties (collectively an “Approved Sale”), the Company shall deliver written notice to the Shareholders setting forth in reasonable detail the terms and conditions of the Approved Sale (including, to the extent then determined, the consideration to be paid with respect to each class of the Company’s capital stock), provided however that on any date that Carlyle and its Affiliates do not own, in the aggregate, either (i) seven and one-half percent (7.5%) (or more) of the issued and outstanding Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of seventy-five million dollars ($75,000,000) (or more), Carlyle shall not have an independent right to approve an Approved Sale. Each holder of Shareholder Shares will consent to and raise no objections against such Approved Sale. If the Approved Sale is structured as (i) a merger or consolidation, each holder of Shareholder Shares will waive any dissenter’s rights, appraisal rights or similar rights in connection with such merger or consolidation or (ii) sale of stock (including by recapitalization, consolidation, reorganization, combination or otherwise), each holder of Shareholder Shares will agree to sell all of its Shareholder Shares and rights to acquire Shareholder Shares on the terms and conditions approved by the Board and such Shareholders. Each holder of Shareholder Shares shall be obligated to join, severally and not jointly, on a pro rata basis (based on the number of shares of the applicable class or series of Company Stock to be sold, and, in the case of an asset sale, based upon the number of shares of Company Stock (and the relative liquidation preferences of each class of Company Stock) owned beneficially on a Fully Diluted Basis) in any indemnification or other obligations that the sellers of Shareholder Shares are required to provide in connection with the Approved Sale (other than any such obligations that relate solely to a particular Shareholder, such as indemnification with respect to representations and warranties given by a Shareholder regarding such Shareholder’s title to and ownership of Shareholder Shares being sold, in respect of which only such Shareholder shall be liable); provided, that no holder shall be obligated in connection with such indemnification or other obligations with respect to any amount in excess of the consideration received by such holder in connection with such transfer. Each holder of Shareholder Shares will take all required actions in connection with the consummation of the Approved Sale as reasonably requested. Notwithstanding the provisions of this paragraph 5, neither Carlyle nor its Affiliates shall have any obligation under this paragraph 5 to the extent that Carlyle has an independent right to approve an Approved Sale under this paragraph 5 and Carlyle has not approved such Approved Sale. Notwithstanding the provisions of this paragraph 5, neither Carlyle nor its Affiliates shall be required to provide any indemnification other than on a several basis with the indemnification obligation of Carlyle and its Affiliates limited to the pro rata share of the aggregate purchase price received by all Shareholders at the closing of the Approved Sale.

          (b) The obligations of the holders of Company Stock with respect to an Approved Sale are subject to the satisfaction of the following conditions in addition to the conditions described in paragraph 5(a): (i) upon the consummation of the Approved Sale, each holder of Company Stock will receive the same form of consideration and the same portion of the

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aggregate consideration that such holders of Company Stock would have received if such aggregate consideration had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in the Company’s Certificate of Incorporation as in effect immediately prior to such Approved Sale; (ii) if any holders of a class of Company Stock are given an option as to the form and amount of consideration to be received, each holder of such class of Company Stock will be given the same option; and (iii) each holder of then currently exercisable rights to acquire shares of a class of Company Stock will be given an opportunity to (A) exercise such rights prior to the consummation of the Approved Sale and participate in such sale as holders of such class of Company Stock or (B) make a direct transfer of such rights.

          (c) If the Company or the holders of the Company’s securities enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated by the Securities and Exchange Commission may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), the holders of Shareholder Shares that do not qualify as “accredited investors” (as such term is defined in Rule 501 (or any similar rule then in effect) promulgated by the Securities And Exchange Commission) will, at the request of the Company, appoint a “purchaser representative” (as such term is defined in Rule 501 promulgated by the Securities and Exchange Commission) reasonably acceptable to the Company. If any holder of Shareholder Shares appoints a purchaser representative designated by the Company, the Company will pay the fees of such purchaser representative, but if any holder of Shareholder Shares declines to appoint the purchaser representative designated by the Company, such holder will appoint another purchaser representative, and such holder will be responsible for the fees of the purchaser representative so appointed.

          (d) Each holder of Shareholder Shares will bear its pro-rata share (based upon the number of shares sold by such holder of Company Stock in relation to the number of shares sold by all holders in such Approved Sale of Company Stock) of the out-of-pocket costs of any sale of Shareholder Shares pursuant to an Approved Sale which are borne by either Investor Shareholder to the extent such costs are incurred for the benefit of all holders of Shareholder Shares and are not otherwise paid by the Company or the acquiring party. Costs incurred by holders of Shareholder Shares on their own behalf will not be considered costs of the transaction hereunder.

          (e) In connection with an Approved Sale, each holder of Shareholder Shares (other than Carlyle and its Affiliates) hereby appoints Apollo as its true and lawful proxy and attorney-in-fact, with full power of substitution, to transfer such Shareholder Shares pursuant to the terms of such Approved Sale and to execute any purchase agreement or other documentation required to consummate such Approved Sale to the extent consistent with paragraph 5(a). Each Shareholder agrees to execute and deliver any other documentation reasonably required to consummate the Approved Sale to the extent consistent with paragraph 5(a). The powers granted in this clause (e) shall be deemed to be coupled with an interest, shall be irrevocable and shall survive death, incompetency or dissolution of any such holder of Shareholder Shares.

          (f) The provisions of this paragraph 5 will terminate upon the earlier to occur of (i) the consummation of an Approved Sale and (ii) completion of a Public Offering.

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          6. Employee Phantom Stock Plan.

          The parties agree that phantom stock or similar bonuses will be offered to the management, consultants and key employees of the Company pursuant to a bonus plan or similar arrangement on terms and conditions satisfactory to the Board which will contemplate aggregate payments representing a value of between ten percent (10%) and fifteen percent (15%) of the Company’s Common Stock on a Fully Diluted Basis (after giving effect to the transactions contemplated by the Capital Contribution Agreement).

          7. Public Offering; Apollo Call.

          (a) At any time after October 22, 2011 (or as earlier agreed by Carlyle and Apollo), each of Carlyle and Apollo may notify the other of its intent to explore a public listing of the Common Stock. Following receipt of any such notice, the Company will solicit proposals from one or more nationally recognized investment banks as to the feasibility, expected valuation, structure and terms of the proposed listing of the Common Stock. If, after receiving such proposals, either of Apollo or Carlyle determines in good faith that a public listing of the Company is inadvisable for legitimate business reasons, Apollo or Carlyle may elect to defer the listing process by a period of one (1) year. After the deferral period, if applicable, Carlyle and Apollo shall thereafter again solicit proposals from one or more nationally recognized investment banks as to the feasibility, expected valuation, structure and terms of the proposed public listing of the Common Stock. If either of Apollo or Carlyle determines that the proposed public listing of the Common Stock is then feasible, the parties shall, within sixty (60) days thereafter, pursue in good faith the preparation of an S-1 (or F-1) registration statement (“Registration Statement”) with the Securities and Exchange Commission. If neither Apollo nor Carlyle determines that the proposed public listing is feasible within the time period specified in the preceding sentence, the deferral described in this paragraph 7(a) shall be repeated. Notwithstanding the provisions of this paragraph 7(a), on any date that Carlyle and its Affiliates do not own, in the aggregate, either (i) ten percent (10%) (or more) of the Shareholder Shares or (ii) shares of the Company Stock with a Fair Market Value of one hundred million dollars ($100,000,000), Carlyle shall not have any rights under this paragraph 7(a).

          (b) At any time prior to the effective date of the Registration Statement, Apollo shall have an option to purchase the Company Stock held by Carlyle and its Affiliates at a price per share equal to the midpoint of the filing range as set forth in the Company’s Registration Statement. If Apollo elects to purchase Carlyle’s and its Affiliates’ Shares pursuant to this paragraph 7(b), the transfer of such shares shall be consummated as soon as practicable after the delivery of the notice(s) to Carlyle, but in any event within 30 days thereafter. Carlyle agrees to execute and deliver any other documentation reasonably required to consummate the transfer pursuant to this paragraph 7; provided that neither Carlyle nor its Affiliates shall be required to provide any representations and warranties (other than those relating to their respective existence, capacity, authorization, execution and delivery and unencumbered title to securities).

          8. Scope of Investments.

          (a) The Company will limit its investments to those exclusively in educational services businesses with the following characteristics and limitations (the “Investment Scope”):

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               (i) principal operations and facilities outside of the United States (to include Latin America, Asia and Europe);

               (ii) provide post-secondary education (both degree and certificate programs), secondary and high school-level education, corporate or vocational training, or services related such educational and training programs, including distance learning services;

               (iii) attractive organic growth characteristics with target growth rates higher than experienced in the United States where possible;

               (iv) ability to generate strong positive cash flows and sustain a reasonable amount of financial leverage, including debt; and

               (v) businesses in which the Company can initially acquire a controlling interest or that have a path to acquiring a controlling interest.

          (b) Neither Carlyle nor Apollo may make any investment exceeding $20,000,000 in any Person whose primary line of business is within the Investment Scope except in accordance with this paragraph 8. Prior to making any such investment, the Investor Shareholder (the “Proposed Investor”), shall deliver written notice in accordance with paragraph 22 (the “Investor Notice”) to the Company and the other Investor Shareholders disclosing in reasonable detail the terms of the prospective investment. The Proposed Investor shall not consummate any such investment until 60 days after the Investor Notice is deemed given to the Company and the other Investor Shareholders pursuant to paragraph 22 (the “Investor Notice Period”). Subject to the provisions of paragraph 2(b)(2)(i) the Company may elect to make such investment upon the same economic terms and conditions as those set forth in the Investor Notice by delivering written notice of such election to the Proposed Investor and the other Investor Shareholder within the Investor Notice Period. If the Company does not for any reason elect to make the investment described in the Investor Notice, then for a period of thirty (30) days after the expiration of the Investor Notice Period, Carlyle may, in its sole discretion, elect by written notice delivered to the Proposed Investor pursuant to paragraph 22 either to (x) make (together with its Affiliates) the investment at a price and on the terms thus described in the Investor Notice or (y) co-invest (together with its Affiliates) in the investment described in the Investor Notice with the Proposed Investor on the basis of 80.1% of the aggregate investment being made by Apollo and its Affiliates and 19.9% of the aggregate investment being made by Carlyle and its Affiliates, in each case at a price and on terms described in the Investor Notice. The parties to each transaction described in clauses (x) and (y) of the preceding sentence shall use commercially reasonable efforts to complete such transaction within ninety (90) days after the expiration of the Investor Notice Period. If the Company elects to make the investment described in the Investor Notice but the stockholders holding a majority of the outstanding Class B Common Stock do not approve the investment pursuant to paragraph 2(b)(2)(i), the Proposed Investor may make the investment at a price and on terms no more favorable to the Proposed Investor than those specified in the Investor Notice during the ninety (90) day period following the Investor Notice Period.

          (c) Carlyle will use its reasonable best efforts to cause its Affiliates to refer equity investment opportunities within the Investment Scope that are sourced by its Affiliates to the

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Company, and will use its reasonable best efforts to cause its Affiliates to allow the Company to co-invest alongside the applicable Carlyle Affiliate in any such transaction. Notwithstanding the preceding sentence, Carlyle shall not have any obligation to use its reasonable best efforts under this paragraph 8 to the extent that the use of such efforts is inconsistent with a fiduciary or other obligation of Carlyle or any of its Affiliates.

          (d) The provisions of this paragraph 8 will terminate upon the earlier to occur of (i) the consummation of an Approved Sale, and (ii) completion of a Public Offering, provided that the provisions of paragraph 8(c) will terminate upon the earlier to occur of (i) the consummation of an Approved Sale, (ii) the completion of a Public Offering or (iii) the first date that Carlyle no longer owns any shares of the Company Stock.

          9. Buy/Sell Agreement.

          (a) Each Shareholder shall have the right, after October 22, 2012 to provide a written notice in accordance with paragraph 22 (an “Offer”) to the other Investor Shareholder (the “Offeree Shareholder”), to offer to sell all, but not less than all, of the interest of the Selling Shareholder and its Affiliates in the Company to the Offeree Shareholder at a per share purchase price and upon the other terms and conditions specified in the Offer. Notwithstanding the immediately preceding sentence, no Shareholder may provide an Offer at any time during the period which commences on the date that a Transfer Notice has been provided pursuant to paragraph 3(b) and ends sixty-one (61) days after the Authorization Date described in paragraph 3(b).

          (b) The Offeree Shareholder must elect by written notice (the “Notice of Election”) to the Selling Shareholder within thirty (30) days after receipt of the Offer, either:

          (i) to sell the Offeree Shareholder’s entire interest in the Company to the Selling Shareholder at the per share purchase price and on the other terms and conditions specified in the Offer, or

          (ii) to purchase the entire interest of the Selling Shareholder and its Affiliates in the Company at a purchase price equal to the price set forth in the Offer and on the other terms and conditions specified in the Offer.

During such sixty (60) day period, subject to the terms of the Mutual Nondisclosure Agreement between Carlyle Investment Management L.L.C. and Apollo dated August 2, 2007 (the “Confidentiality Agreement”), each of the Offeree Shareholder and the Selling Shareholder may perform a confirmatory due diligence evaluation of the Company and its Subsidiaries, and the Company shall, and shall cause its Subsidiaries to, afford to the Offeree Shareholder’s and the Selling Shareholder’s respective officers, directors, employees, accountants, counsel, consultants, advisors and agents reasonable access to and the right to inspect, during normal business hours and with reasonable advance notice, all of the real property, properties, assets, records, contracts and other documents related to the Company and its Subsidiaries, and shall permit them to consult, during normal business hours and with reasonable advance notice, with the officers, employees, accountants, counsel and agents of the Company and its Subsidiaries for the purpose of making such investigation of the Company and its Subsidiaries as the Offeree

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Shareholder and the Selling Shareholder shall desire to make. The parties agree that Carlyle shall act in all respects under this paragraph 9(b) on behalf of all of its Affiliates including without limitation providing Notices of Election.

          (c) If the Offeree Shareholder elects clause (i) of paragraph 9(b), the Investor Shareholders shall, within ninety (90) days after receipt of the Notice of Election, execute such documents and instruments reasonably required by the Selling Shareholder to sell and transfer the Offeree Shareholder’s interest in the Company to the Selling Shareholder at the purchase price and on the other terms and conditions specified in the Offer, which purchase price shall be payable in immediately available funds, and the closing of such sale shall take place at the principal office of the Company as soon as practicable, but in any event within one hundred twenty (120) days after receipt of the Offer. At such closing, the Offeree Shareholder shall sell and transfer its entire interest in the Company, and shall cause its Affiliates to sell and transfer their entitle interest in the Company, to the Selling Shareholder free and clear of pledges, liens, security interests and other encumbrances other than pledges arising out of Company financing.

          (d) If the Offeree Shareholder elects clause (ii) of paragraph 9(b), the Selling Shareholder will sell its entire interest in the Company, and will cause its Affiliates to sell their entire interest in the Company, to the Offeree Shareholder at the purchase price and on the other terms and conditions specified in the Offer, and the Selling Shareholders shall, within ninety (90) days after receipt of the Notice of Election, execute such documents and instruments reasonably required by the Offeree Shareholder to sell and transfer the Selling Shareholder’s interest in the Company to the Offeree Shareholder at the purchase price and on the other terms and conditions specified in the Offer, which purchase price shall be payable in immediately available funds, and the closing of such sale shall take place at the office of the Company as soon as practicable, but in any event within one hundred twenty (120) days after receipt of the Offer. At such closing, the Selling Shareholder shall sell and transfer its entire interest in the Company to the Offeree Shareholder free and clear of pledges, liens, security interests and other encumbrances other than pledges arising out of Company financing.

          10. Representations and Warranties.

          (a) The Company represents and warrants to the Shareholders as follows:

               (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of Delaware with corporate power and authority to own, lease and operate its properties, to conduct its business as currently conducted and as proposed to be conducted and to enter into and perform its obligations under this Agreement.

               (ii) The Company has taken all actions necessary to authorize it (x) to execute, deliver and perform all of its obligations under this Agreement and (y) to consummate the transactions contemplated hereby.

               (iii) This Agreement is a legally valid and binding obligation of the Company, enforceable against it in accordance with its terms, except for (a) the effect thereon of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting

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the rights of creditors generally and (b) limitations imposed by equitable principles upon the specific enforceability of any of the remedies, covenants or other provisions thereof and upon the availability of injunctive relief or other equitable remedies.

               (iv) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by the Company with any of the provisions hereof will (x) violate or conflict with any provisions of the Certificate of Incorporation or Bylaws of the Company, or any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to the Company, or (y) violate, or conflict with, or result in a breach in any provision of, or constitute a default (or any event that, with or without due notice or lapse of time, or both, would constitute such a default) under, or result in the termination of, accelerate the performance required by, or result in the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of the Company under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation of which the Company is a party or by which it or any of its assets are bound.

               (v) No permit, application, notice, transfer, consent, approval, order, qualification, waiver from, or authorization of, or declaration, filing or registration with, any governmental or regulatory authority or third party is necessary in connection with the execution and delivery by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby.

          (b) Each Shareholder represents and warrants to each other Shareholder and to the Company as follows:

               (i) It is a corporation, limited partnership, limited liability company or other entity duly organized and validly existing under the laws of its respective state of organization;

               (ii) It has taken all actions necessary to authorize it (x) to execute, deliver and perform all of its obligations under this Agreement and (y) to consummate the transactions contemplated hereby.

               (iii) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by the Shareholder with any of the provisions hereof will (i) violate or conflict with the organic organizational documents of the Shareholder, or any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to the Shareholder, or (ii) violate, or conflict with, or result in a breach in any provision of, or constitute a default (or any event that, with or without due notice or lapse of time, or both, would constitute such a default) under, or result in the termination of, accelerate the performance required by, or result in the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of the Shareholder under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation of which the Shareholder is a party or by which it or any of its assets are bound.

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               (iv) No permit, application, notice, transfer, consent, approval, order, qualification, waiver from, or authorization of, or declaration, filing or registration with, any governmental or regulatory authority or third party is necessary on the part of the Shareholder in connection with the execution and delivery by the Shareholder of this Agreement or the consummation by the Shareholder of the transactions contemplated hereby.

          11. Legend. Each certificate evidencing Shareholder Shares and each certificate issued in exchange for or upon the Transfer of any Shareholder Shares (if such shares remain Shareholder Shares as defined herein after such Transfer) will be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS PURSUANT TO A SHAREHOLDERS AGREEMENT DATED AS OF OCTOBER 22, 2007, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, BY AND AMONG THE ISSUER OF SUCH SECURITIES (THE “COMPANY”) AND CERTAIN OF THE COMPANY’S SHAREHOLDERS. A COPY OF SUCH SHAREHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

The Company will imprint such legend on certificates evidencing Shareholder Shares. The legend set forth above will be removed from the certificates evidencing any shares which cease to be Shareholder Shares in accordance with the definition of such terms as set forth in paragraph 14 hereof.

          12. Transfer. Prior to Transferring any Shareholder Shares (other than in a Public Sale or in an Approved Sale) to any Person, the transferring Shareholder will cause the prospective transferee to execute and deliver to the Company and the other Shareholders a Joinder Agreement. The provisions of this paragraph 12 shall terminate upon the occurrence of (i) the consummation of an Approved Sale and (ii) a Public Offering.

          13. Redemptions and Capital Contributions.

          (a) Reference is made to the proposed acquisition by the Company (or one of its Subsidiaries) of BPP Holdings plc pursuant to the Scheme of Arrangement under Part 26 of the Companies Act of 2006 posted as of June 22, 2009 (the “BPP Transaction”). As soon as reasonably practicable after the completion of the BPP Transaction, each Shareholder agrees to cause the Certificate of Incorporation to be amended and take any other action necessary so as to cause the authorized Company Stock of each class to equal the amount of Company Stock of such class outstanding upon completion of the BPP Transaction multiplied by 1.05. If the BPP Transaction is not completed on or before September 30, 2009, each Shareholder agrees to cause the Certificate of Incorporation to be amended and take any other action necessary so as to cause the authorized Company Stock of each class to equal the amount of Company Stock of such class outstanding upon the execution and delivery of this Agreement multiplied by 1.05.

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          (b) Each Shareholder hereby agrees as soon as reasonably practicable following any redemption of any Shareholder Shares to cause the Certificate of Incorporation to be amended and take any other action necessary so as to cause the authorized Company Stock of each class to equal (i) the amount of Company Stock of such class outstanding immediately after giving effect to such redemption plus (ii) the amount of Company Stock of such class authorized immediately prior to giving effect to such redemption minus the amount of Company Stock of such class outstanding immediately prior to such redemption.

          (c) Subject to the Shareholders’ rights, if any, under Sections 2(b)(1)(i), 2(b)(1)(ii), or 2(b)(2), each Shareholder hereby agrees to cause the Certificate of Incorporation to be amended and to take any other action necessary to increase the amount of authorized Company Stock to the extent such stock is contemplated to be issued under Section 3.2 or 3.4 of the Capital Contribution Agreement or paragraph 7 of this Agreement (notwithstanding the provisions of Section 2(b)(1)(iii)).

          (d) Each Shareholder hereby agrees not to participate in a non-pro rata stock redemption without the approval of both the stockholders holding a majority of the outstanding Class A Common Stock and the stockholders holding a majority of the outstanding Class B Common Stock.

          14. Definitions.

          “Affiliate” of a Shareholder means any other Person, entity or investment or co-investment fund directly or indirectly controlling, controlled by or under common control with the Shareholder and, in the case of a Shareholder which is an entity, any shareholder, member, partner or other equity holder of such Shareholder, which, in each case, beneficially owns at least 10% of the outstanding voting interests of the Shareholder. Each fund managed by a Carlyle or an Affiliate of Carlyle shall be an Affiliate of Carlyle for purposes of this Agreement, and no portfolio company of Carlyle or its Affiliates shall be considered an Affiliate of Carlyle or such Affiliate for purposes of this Agreement.

          “Board” means the Company’s board of directors.

          “Bylaws” means the Bylaws of the Company in effect at the time as of which any determination is being made.

          “Certificate of Incorporation” means the Company’s certificate of incorporation in effect at the time as of which any determination is being made.

          “Class A Common Stock” means the Company’s Class A Common Stock, par value $.001 per share.

          “Class B Common Stock” means the Company’s Class B Common Stock, par value $.001 per share.

          “Class A Common Stock Directors” means the directors elected by holders of Class A Common Stock in accordance with the Certificate of Incorporation.

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          “Class B Common Stock Directors” means the directors elected by holders of Class B Common Stock in accordance with the Certificate of Incorporation.

          “Common Stock” means the Company’s Class A Common Stock, par value $.001 per share and the Company’s Class B Common Stock, par value $.001 per share, collectively.

          “Company Indebtedness” means all indebtedness of the Company (including without limitation, any loans, advances, letters of credit, bank overdrafts, capital lease obligations and all other indebtedness of any kind including interest, principal and fees).

          “Company Stock” means the Common Stock and any other class or series of shares of capital stock hereafter created by the Company.

          “Fair Market Value” has the meaning ascribed to that term in the Capital Contribution Agreement.

          “Fully Diluted Basis” means, without duplication, all shares of the applicable class of Company Stock issued or issuable directly or indirectly upon the exercise or exchange of all outstanding options, warrants or similar rights, excluding outstanding options or warrants that are Out of the Money or not then exercisable, and all shares of such class of Company Stock issuable upon the conversion of any securities convertible into such class of Company Stock.

          “Independent Third Party” means any Person who (together with its Affiliates), immediately prior to the contemplated transaction, (i) does not own, directly or indirectly, in excess of 5% of any class of the Company Stock on a Fully-Diluted Basis (a “5% Owner”), (ii) is not controlling, controlled by or under common control with any such 5% Owner, (iii) is not the spouse or descendant (by birth or adoption), parent or dependent of any such 5% Owner, (iv) is not a trust for the benefit of such 5% Owner and/or any Person referenced in clause (ii) or (iii), and (v) is not a group consisting of any of the foregoing.

          “Joinder Agreement” means a joinder agreement in substantially the form of Exhibit A hereto pursuant to which transferees of shares of Company Stock which are permitted under this Agreement become parties to this Agreement.

          “Out of the Money” means, in the case of an option or warrant, that the fair market value per share of the shares of Company Stock which the holder thereof is entitled to purchase or subscribe for is less than the exercise price per share of such option or warrant.

          “Person” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, a limited liability company, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

          “Public Offering” means an initial public offering by the Company of its capital stock to the public effected pursuant to an effective registration statement under the Securities Act, or any comparable statement under any similar United States federal statute then in effect.

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          “Public Sale” means any sale of Shareholder Shares to the public pursuant to an offering registered under the Securities Act, to the public through a broker, dealer or market maker pursuant to the provisions of Rule 144 adopted under the Securities Act or pursuant to the provisions of Rule 144(k) or any successor rule adopted under the Securities Act.

          “Securities Act” means the Securities Act of 1933, as amended from time to time.

          “Securities and Exchange Commission” includes any governmental body or agency succeeding to the functions thereof.

          “Shareholder Shares” means any Company Stock owned directly or indirectly by the Shareholders. As to any particular shares constituting Shareholder Shares, such shares will cease to be Shareholder Shares (A) upon the occurrence of a Public Offering, (B) upon the termination of this Agreement, or (C) when they have been (i) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, or (ii) sold to the public through a broker, dealer or market maker pursuant to Rule 144 (or by similar provision then in force) under the Securities Act.

          “Subsidiary” means with respect to any Person, any corporation, partnership, limited liability company, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company, association or other business entity, a majority of the partnership, membership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons shall be allocated a majority of such partnership, limited liability company, association or other business entity gains or losses or shall be or control the managing director or general partner of such partnership, limited liability company, association or business entity.

          “Valuation Firm” has the meaning ascribed to that term in the Capital Contribution Agreement.

          15. Transfers in Violation of Agreement. Any Transfer or attempted Transfer of any Shareholder Shares in violation of any provision of this Agreement will be void, and the Company will not record such Transfer on its books or treat any purported transferee of such Shareholder Shares as the owner of such shares for any purpose.

          16. Amendment and Waiver. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement (including the schedules hereto) will be effective against the Company or the Shareholders unless such modification, amendment or waiver is approved in writing by each of the Company, Carlyle and the holders of at least a majority of the then outstanding Shareholder Shares; provided that if such amendment or waiver would adversely affect a holder or group of holders of Shareholder Shares in a manner

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different than any other holders of Shareholder Shares, then such amendment or waiver will require the consent of such holder or a majority of the Shareholder Shares held by such group of holders adversely affected. The Company will give prompt written notice to the Shareholders of any amendments, modifications, or waivers of the provisions of this Agreement. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

          17. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

          18. Entire Agreement. Except as otherwise expressly set forth herein, this Agreement, the Capital Contribution Agreement, the Confidentiality Agreement and that certain Registration Rights Agreement dated as October 22, 2007 between the Company and certain of its shareholders embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

          19. Successors and Assigns. Except as otherwise provided herein, this Agreement will bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and the Shareholders and any subsequent holders of Shareholder Shares and the respective successors and assigns of each of them, so long as they hold Shareholder Shares.

          20. Counterparts. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together will constitute one and the same agreement.

          21. Remedies. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that the Company and each Shareholder will have the right to injunctive relief, in addition to all of its rights and remedies at law or in equity, to enforce the provisions of this Agreement. Nothing contained in this Agreement will be construed to confer upon any Person who is not a signatory hereto or any successor or permitted assign of a signatory hereto any rights or benefits, as a third party beneficiary or otherwise, except that each member of the Board and each Board Observer will be a third party beneficiary of respect to the indemnification described in paragraph 1(c).

          22. Notices. Any notice provided for in this Agreement will be in writing and will be either (i) personally delivered, (ii) delivered by certified mail, return receipt requested, (iii) sent by nationally recognized overnight courier service (charges prepaid) or (iv) faxed with a copy following by any method described in the foregoing clauses (i) to (iii), to the address set forth below or at any address listed in the Company’s records, or at such address or to the

20

attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally, five days after deposit in the U.S. mail and one day after deposit with a nationally recognized overnight courier service.

If to the Company:

Apollo Global, Inc.
227 West Monroe
Suite 3600
Chicago, IL 60606
Attn: Chief Financial Officer
Facsimile: (312) 578-0489

If to Apollo or its Affiliates:

The Apollo Group, Inc.
4025 South Riverpoint Parkway
Mail Stop CF-KX01
Phoenix, AZ 85040
Attn: Chief Financial Officer
Facsimile: (602) 557-3898

With a required copy to:

Morgan, Lewis & Bockius LLP
One Market Street
San Francisco, CA 94105
Attn: William A. Myers, Esq.
Facsimile: (415) 442-1001

If to Carlyle or its Affiliates:

Carlyle Venture Partners III, L.P.
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC 20004-2505
Attention: Brooke B. Coburn
Facsimile: (202) 347-1818

21

With a required copy to:

Dickstein Shapiro LLP
1825 Eye Street, NW
Washington, DC 20006-5403
Attn: Neil Lefkowitz
Facsimile: (202) 420-2201

If to any of the Other Shareholders:

At the address listed on Schedule I.

          23. Governing Law. This Agreement shall be construed according to and governed by the laws of the State of Delaware, without reference to conflicts of laws principles.

          24. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

[Remainder of this page intentionally left blank]

22

          IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Shareholders Agreement on the day and year first above written.

COMPANY: APOLLO GLOBAL, INC.
By:	/s/ Jeffrey Langenbach
	Name:	Jeffrey Langenbach
	Title:	President
INVESTOR SHAREHOLDERS: APOLLO GROUP, INC.
By:	/s/ Brian L. Swartz
	Name:	Brian L. Swartz
	Title:	Chief Financial Officer
CARLYLE VENTURE PARTNERS III, L.P.
By:	TCG VENTURES III, L.P.
	Its General Partner
By:	/s/ Brooke Coburn
	Name:	Brooke Coburn
	Title:	Managing Director
CVP III COINVESTMENT L.P.
By:	TCG Ventures III, L.P.,
	as the General Partner
By:	TCG Ventures III, L.L.C.,
	as the General Partner
By:	/s/ Brooke Coburn
	Name:	Brooke Coburn
	Title:	Managing Director

SCHEDULE I

Other Shareholders

Exhibit A

JOINDER AGREEMENT

Apollo Global, Inc.
c/o Apollo Group, Inc.
4615 East Elwood Street
Phoenix, AZ 85040

Ladies and Gentlemen,

Reference is hereby made to that certain Shareholders’ Agreement (the “Shareholders’ Agreement”), dated as of October 22, 2007, as the same may be amended from time to time, by and among Apollo Global, Inc., a Delaware corporation (the “Company”), Apollo Group, Inc., an Arizona corporation, and Carlyle Venture Partners III, L.P., a Delaware limited partnership. Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Shareholders’ Agreement.

By execution and delivery of this Joinder Agreement, the undersigned hereby agrees as follows:

1. Shareholders’ Agreement. The undersigned acknowledges that it is acquiring shares of the Company’s Common Stock (the “Purchased Shares”), subject to the terms and conditions of the Shareholders’ Agreement, and agrees that it shall become, and by execution and delivery of this Agreement does become, and assumes each and every obligation of, a “Shareholder” under and as defined in the Shareholders’ Agreement as of the date set forth below (the “Effective Date”). Notwithstanding the immediately preceding sentence, the undersigned does not hereby assume, and will not otherwise become subject to, any liability resulting from any breach, default or failure to comply with any provision of the Shareholders’ Agreement by or on behalf of any Person other than the undersigned.

2. Representations and Warranties. The undersigned represents and warrants to the Company and the existing Shareholders as of the Effective Date and, to the extent that the undersigned purchases additional shares of Common Stock from the Company on any Subsequent Closing Date (as defined in the Capital Contribution Agreement, by and among the Company, Apollo Group, Inc. and Carlyle Venture Partners III, L.P.), the undersigned will represent and warrant to the Company and the existing Shareholders on such Subsequent Closing Date as follows:

     2.1 Accredited Investor. The undersigned (a) is an “accredited investor” (as that term is defined in Section 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”)) because it is either (x) a corporation not formed for the specific purpose of acquiring the securities offered, and has total assets in excess of $5,000,000 or (y) an entity in which all of the equity owners are accredited investors, (b) has such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the investment contemplated hereby and (c) has reviewed the merits of such investment with tax and legal counsel and other advisors to the extent deemed advisable. The undersigned will acquire

the Purchased Shares for its own account for investment and not with a view to the sale or distribution thereof, and the undersigned has no present intention of distribution or selling to others any of such interest.

     2.2 Access. The undersigned has had access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the investment in the Purchased Shares. The undersigned further has had the opportunity to obtain all additional information necessary to verify the information to which the undersigned has had access.

     2.3 Nature of Investment. The undersigned understands that the Purchased Shares are characterized as “restricted securities” under the Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under the Act and related regulations such securities may be resold under the Act only in certain limited circumstances. The undersigned is familiar with and understands such resale limitations imposed by the Act and related regulations and by the Shareholders’ Agreement. The undersigned understands that the Company has no present intention to register any of the Purchased Shares.

     2.4 Authorization; Validity; No Conflicts. The undersigned is duly authorized (including by all requisite corporate or stockholder (or equivalent, for entities other than corporations) action on the part of the undersigned and its officers and directors and its direct and indirect stockholders (or equivalent equity owners, for entities other than corporations)), and has full power and authority, to execute and perform its obligations under this Joinder Agreement and the Shareholders’ Agreement, and constitutes the undersigned’s legal, valid and binding obligation enforceable against it in accordance with their respective terms except (i) as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. The execution, delivery and performance by the undersigned of this Joinder Agreement, the performance by the undersigned of the Shareholders’ Agreement, and the consummation by the undersigned of the transactions contemplated hereby and thereby will not (a) conflict with or constitute a default under any agreement, indenture or instrument to which the undersigned is a party, (b) conflict with or violate the undersigned’s organizational documents or (c) result in a violation of any order, judgment or decree of any court or governmental or regulatory authority having jurisdiction over the undersigned or any of its assets.

3. Sale of Purchased Shares. In reliance upon the representations and warranties made by the undersigned in this Joinder Agreement and the undersigned’s agreement herein to be bound by the Shareholders’ Agreement as a “Shareholder” (as such term is used in the Shareholders’ Agreement), the Company shall sell to the undersigned, and the undersigned shall purchase from the Company, the following Purchased Shares:

Number of shares:

Price per share:

Total Purchase Price:

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the undersigned have executed this Joinder Agreement as of the date first set forth below.

Date:

Investor:

Signature:

Printed Name:

Title (if applicable):

Address:

Phone No.:

Facsimile No.:

AGREED AND ACCEPTED: APOLLO GLOBAL, INC., a Delaware corporation
By:
	Name:
	Title:

[Signature Page to Joinder Agreement]

EX-10.49

Exhibit 10.49

AMENDMENT NO. 1 TO
REGISTRATION RIGHTS AGREEMENT

          THIS AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT (this “Amendment”) is made and entered into as of July 28, 2009, by and between Apollo Group, Inc., an Arizona corporation (“Apollo”), Carlyle Venture Partners III, L.P., a Delaware limited partnership (“Carlyle”), Apollo Global, Inc., a Delaware corporation (“Global”).

          WHEREAS, Apollo, Carlyle and Global are parties to that certain Registration Rights Agreement, dated October 22, 2007 (the “Agreement”); and

          WHEREAS, the parties have amended the Joint Venture Agreement dated as of October 22, 2007 and desire to amend the Agreement in accordance with paragraph 10(d) thereof to update certain references to the Joint Venture Agreement in order to correct such references as further described below.

          NOW, THEREFORE, in consideration of the foregoing and for other good and valid consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

          1. The references in the Agreement to “Joint Venture Agreement” are hereby deleted and replaced with “Capital Contribution Agreement”.

          2. Except as amended hereby, the Agreement shall remain in full force and effect. This Amendment may be executed in two or more counterparts and by facsimile, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Signature Page to Amendment No. 1 to Registration Rights Agreement]

          IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1 to Registration Rights Agreement as of the date first set forth above.

APOLLO GLOBAL, INC.
By:	/s/ Jeffrey Langenbach
	Name:	Jeffrey Langenbach
	Title:	President
APOLLO GROUP, INC.
By:	/s/ Brian L. Swartz
	Name:	Brian L. Swartz
	Title:	Chief Financial Officer
CARLYLE VENTURE PARTNERS III, L.P.
By:	TCG VENTURES III, L.P.,
	as the General Partner
By:	TCG VENTURES III, L.L.C.,
	as the General Partner
By:	/s/ Brooke Coburn
	Name:	Brooke Coburn
	Title:	Managing Director

[Signature Page to Amendment No. 1 to Registration Rights Agreement]

EX-10.50

Exhibit 10.50

AGREEMENT AND PLAN OF EXCHANGE
OF
COMMON STOCK
OF
APOLLO GLOBAL, INC.

     THIS AGREEMENT AND PLAN OF EXCHANGE, dated as of July 28, 2009 (the “Agreement”), among Apollo Global, Inc., a Delaware corporation (the “Company”), Apollo Group, Inc., an Arizona corporation (“Apollo”), Carlyle Venture Partners III, L.P., a Delaware limited partnership (“Carlyle”), and CVP III Coinvestment, L.P., a Delaware limited partnership (“CVP” and, collectively together with Apollo and Carlyle, the “Stockholders”).

WITNESSETH:

     WHEREAS, the Board of Directors of the Company and the Stockholders have determined that it is advisable and in the best interest of the Company and Stockholders for the Stockholders to surrender their shares of the Company’s Common Stock (“Common Stock”) in exchange for either Class A Common Stock or Class B Common Stock (the “Exchange”), and have approved and adopted this Agreement;

     WHEREAS, in connection with the Exchange, and contemporaneously with the execution and delivery of this Agreement, the Certificate of Incorporation of the Company is the being amended and restated (the “Amended and Restated Certificate of Incorporation”);

     WHEREAS, the Company has 82,000 shares of Common Stock issued and outstanding;

     WHEREAS, the Company and the holders of the Company’s Common Stock desire to effect an exchange of all of the Company’s outstanding Common Stock for Class A Common Stock and Class B Common Stock;

     WHEREAS, in the Exchange, Apollo shall exchange each share of Common Stock for one share of Class A Common Stock and Carlyle and CVP shall each exchange each share of Common Stock for one share of Class B Common Stock, with, in each case, the Class A Common Stock and Class B Common Stock having the rights and preferences set forth in the Amended and Restated Certificate of Incorporation; and

     WHEREAS, for United States federal income tax purposes, it is intended that the Exchange shall qualify as a tax-free reorganization under Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended (the “Code”), and that this Agreement shall

be, and hereby is, adopted as a plan of reorganization for purposes of Section 368 of the Code.

     NOW THEREFORE, the Board of Directors and the Stockholders of the Company have adopted and approved this Agreement, as follows:

     (1) Contemporaneously with the execution and delivery of this Agreement, the Company shall cause the Amended and Restated Certificate of Incorporation to be filed with the Secretary of State of the State of Delaware.

     (2) Contemporaneously with the acceptance of the Amended and Restated Certificate of Incorporation by the Secretary of State of the State of Delaware, Apollo shall surrender to the Company the certificate or certificates formerly representing shares of Common Stock, and shall receive in exchange therefor a new certificate or certificates evidencing the appropriate number of shares of Class A Common Stock and Carlyle and CVP shall surrender to the Company the certificate or certificates formerly representing shares of Common Stock, and shall each receive in exchange therefor a new certificate or certificates evidencing the appropriate number of shares of Class B Common Stock. The number of shares of Common Stock surrendered by each Stockholder hereunder and the number of shares of Class A Common Stock and Class B Common Stock to be issued in exchange therefor is as set forth on Exhibit A hereto.

     (3) The shares of Class A Common Stock and shares of Class B Common Stock shall have the rights, privileges and other characteristics set forth in the Amended and Restated Certificate of Incorporation.

     (4) From and after the date of this Agreement, each party hereto shall use reasonable efforts to cause the Exchange to qualify, including but not limited to filing any tax or information returns consistent with this Agreement, and shall not knowingly take any actions or cause any actions to be taken which could reasonably be expected to prevent the Exchange from qualifying, as a “reorganization” under Section 368(a)(1)(E) of the Code.

     (5) The Board of Directors of the Company and the proper officers of the Company shall execute, file and deliver all instruments and other writings, and shall use commercially reasonable efforts to do or cause to be done all other acts or things, necessary or appropriate or reasonably requested by any Stockholder, such that no gain or loss shall be recognized by any such Stockholder for United States federal income tax purposes or for purposes of any income tax imposed by a State or political subdivision thereof, upon or by reason of the transactions described in, or contemplated in or by, this Agreement, to the extent the foregoing is consistent with applicable law.

[SIGNATURE PAGE FOLLOWS]

2

     IN WITNESS WHEREOF, the Company and the holders of the Company’s Common Stock have caused this Agreement and Plan of Exchange to be duly executed as of the date first set forth above.

APOLLO GROUP, INC.
By:	/s/ Brian L. Swartz
	Name:	Brian L. Swartz
	Title:	Chief Financial Officer
APOLLO GLOBAL, INC.
By:	/s/ Jeffrey Langenbach
	Name:	Jeffrey Langenbach
	Title:	President
CARLYLE VENTURE PARTNERS III, L.P.
By:	TCG Ventures III, L.P.,
	as the General Partner
By:	TCG Ventures III, L.L.C.,
	as the General Partner
By:	/s/ Brooke Coburn
	Name:	Brooke Coburn
	Title:	Managing Director
CVP III COINVESTMENT, L.P.
By:	TCG Ventures III, L.P.,
	as the General Partner
By:	TCG Ventures III, L.L.C.,
	as the General Partner
By:	/s/ Brooke Coburn
	Name:	Brooke Coburn
	Title:	Managing Director

3

EXHIBIT A

Exchange Table

			Shares of		Shares of
	Shares of		Class A		Class B
	Common		Common		Common
	Stock		Stock		Stock
	Surrendered		Received		Received
APOLLO GROUP, INC.		65,672		65,672		-0-
CARLYLE VENTURE PARTNERS III, L.P.		15,423		-0-		15,423
CVP III COINVESTMENT, L.P.		905		-0-		905

EX-21

EXHIBIT 21

Subsidiaries of Apollo Group, Inc.
Entity	Jurisdiction of Incorporation
Apollo Development Corp.	Arizona
Apollo Education Corporation**	Arizona
Apollo Global, Inc.*	Delaware
Apollo Group International Development, LLC	Arizona
Apollo Investments, Inc.	Arizona
Apollo NB Holding Company	Arizona
Apollo Online, Inc.**	Arizona
Apollo Publishing and Learning Technologies, Inc.**	Arizona
Apollo University and Graduate Institute, Inc.**	Arizona
Aptimus, Inc.	Washington
Computer Aided Learning Corporation, Inc.**	Arizona
Global Education Partner, Inc.	Arizona
Insight Schools, Inc.	Oregon
Institute for Professional Development	California
International Education Partner, Inc.	Arizona
Riverpoint Lot 2, LLC	Arizona
Riverpoint Lots 1/3/5, LLC	Arizona
The College for Financial Planning Institutes Corporation	Arizona
The University of Phoenix, Inc.	Arizona
Western International University, Inc.	Arizona

*	Apollo Group, Inc. owns 86.1% of Apollo Global, Inc.
**	Entities marked with ** were merged into Apollo Investments, Inc. effective September 9, 2009.

Assumed Names
Corporate Name	Assumed Name	State(s) where used
Apollo Group, Inc.	Apollo Education	California
Institute for Professional Development	Institute for Professional Development of California, Inc.	Connecticut, New Jersey
Institute for Professional Development	Institute for Professional Development, Inc.	Arizona, Florida, Illinois, Indiana, Kentucky, North Carolina, Oregon, Pennsylvania, Tennessee, Virginia
Institute for Professional Development	Institute for Professional Development Corporation	Iowa

140

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-160301, 333-149933, 333-147151, 333-144129, 333-46834, 33-63429, 33-88984, 33-88982 and 33-87638 on Form S-8 of our reports dated October 27, 2009 relating to the consolidated financial statements of Apollo Group, Inc. and subsidiaries and on the effectiveness of internal control over financial reporting of Apollo Group, Inc. and subsidiaries, appearing in this Annual Report on Form 10-K of Apollo Group, Inc. and subsidiaries for the year ended August 31, 2009.

/s/ DELOITTE & TOUCHE LLP

Phoenix, Arizona
October 27, 2009

141

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Charles B. Edelstein, certify that:

     1. I have reviewed this Form 10-K of Apollo Group, Inc. (the “registrant”);

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

          a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

          b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

          c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

          d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

          a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

          b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 27, 2009

/s/ Charles B. Edelstein  

Charles B. Edelstein 

Co-Chief Executive Officer and Director
(Principal Executive Officer) 

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory W. Cappelli, certify that:

     1. I have reviewed this Form 10-K of Apollo Group, Inc. (the “registrant”);

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

          a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

          b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

          c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

          d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

          a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

          b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 27, 2009

/s/ Gregory W. Cappelli  

Gregory W. Cappelli 

Co-Chief Executive Officer and Director
(Principal Executive Officer) 

EX-31.3

EXHIBIT 31.3

CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Brian L. Swartz, certify that:

     1. I have reviewed this Form 10-K of Apollo Group, Inc. (the “registrant”);

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

          a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

          b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

          c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

          d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

          a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

          b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 27, 2009

/s/ Brian L. Swartz  

Brian L. Swartz 

Senior Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer) 

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Apollo Group, Inc. (the “Company”) on Form 10-K for the year ended August 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles B. Edelstein, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 27, 2009

/s/ Charles B. Edelstein  

Charles B. Edelstein 

Co-Chief Executive Officer and Director
(Principal Executive Officer) 

     A signed original of this written statement required by Section 906 has been provided to Apollo Group, Inc. and will be retained by Apollo Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Apollo Group, Inc. (the “Company”) on Form 10-K for the year ended August 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory W. Cappelli, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 27, 2009

/s/ Gregory W. Cappelli  

Gregory W. Cappelli 

Co-Chief Executive Officer and Director
(Principal Executive Officer) 

     A signed original of this written statement required by Section 906 has been provided to Apollo Group, Inc. and will be retained by Apollo Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.3

EXHIBIT 32.3

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Apollo Group, Inc. (the “Company”) on Form 10-K for the year ended August 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian L. Swartz, Senior Vice President, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 27, 2009

/s/ Brian L. Swartz  

Brian L. Swartz 

Senior Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer) 

     A signed original of this written statement required by Section 906 has been provided to Apollo Group, Inc. and will be retained by Apollo Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.