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, 2013
OR
¨	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 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 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 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 (Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the 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, 2013 (last business day of the registrant’s most recently completed second fiscal quarter), was approximately $1.6 billion.

The number of shares outstanding for each of the registrant’s classes of common stock as of October 14, 2013 is as follows:

Apollo Group, Inc. Class A common stock, no par value	112,954,000 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 2013 Annual Meeting of Class B Shareholders (Part III)

APOLLO GROUP, INC. AND SUBSIDIARIES

FORM 10-K

FOR THE FISCAL YEAR ENDED AUGUST 31, 2013

INDEX

		Page
Special Note Regarding Forward-Looking Statements		3
	PART I
Item 1.	Business	4
Item 1A.	Risk Factors	24
Item 1B.	Unresolved Staff Comments	41
Item 2.	Properties	42
Item 3.	Legal Proceedings	42
Item 4.	Mine Safety Disclosures	42
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	42
Item 6.	Selected Consolidated Financial Data	46
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	69
Item 8.	Financial Statements and Supplementary Data	71
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	114
Item 9A.	Controls and Procedures	114
Item 9B.	Other Information	116
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	116
Item 11.	Executive Compensation	116
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	116
Item 13.	Certain Relationships and Related Transactions, and Director Independence	116
Item 14.	Principal Accounting Fees and Services	116
	PART IV
Item 15.	Exhibits, Financial Statement Schedules	117
SIGNATURES		123

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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 U.S. education industry and eligibility of proprietary schools to participate in U.S. federal student financial aid programs, including the factors 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. and its wholly-owned subsidiaries, collectively referred to herein as “the Company,” “Apollo Group,” “Apollo,” “APOL,” “we,” “us” or “our” has been an educational provider since 1973. We offer educational programs and services, online and on-campus, at the undergraduate, master’s and doctoral levels. Our learning platforms include the following:

• The University of Phoenix, Inc. (“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. In July 2013, University of Phoenix’s accreditation was reaffirmed for a ten-year period by The Higher Learning Commission and the University was placed on Notice status for a two-year period. Refer to Accreditation and Jurisdictional Authorizations below. 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 throughout the United States, including the Commonwealth of Puerto Rico. University of Phoenix represented 90% of our total consolidated net revenue and generated more than 100% of our operating income in fiscal year 2013.

• Apollo Global, Inc. (“Apollo Global”) - Apollo Global was formed in 2007 to make investments primarily in the international education services sector. Apollo Global’s education network principally includes the following:

• BPP Holdings Limited (“BPP”) - BPP is headquartered in London, England and offers professional training through schools located in the United Kingdom (“U.K.”), a European network of BPP offices and the sale of books and other publications globally. BPP University, principally composed of BPP Law School and BPP Business School, has been granted degree awarding powers in the U.K. and was awarded the title of “University” by the U.K. in July 2013.

• Universidad Latinoamericana (“ULA”) - ULA carries authorization from Mexico’s Ministry of Public Education (Secretaría de Educación Publica), 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 campuses throughout Mexico.

• Universidad de Artes, Ciencias y Comunicación (“UNIACC”) - UNIACC is an arts and communications university which offers bachelor’s and master’s degree programs at campuses in Chile and online.

• Indian Education Services Private Ltd. - Apollo Global is developing a 50:50 joint venture with HT Media Limited, an Indian media company, to provide educational services and programs in India.

• Western International University, Inc. (“Western International University,” or “WIU”) - Western International University has been accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools since 1984. In July 2013, Western International University’s accreditation was reaffirmed for a ten-year period by The Higher Learning Commission and WIU was placed on Notice status for a two-year period. Refer to Accreditation and Jurisdictional Authorizations below. WIU offers associate’s, bachelor’s and master’s degrees in a variety of program areas primarily online. During fiscal year 2013, WIU announced a shift in its pricing structure along with a new course delivery method designed to provide students with a more manageable and affordable higher education solution.

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

• The College for Financial Planning Institutes Corporation (“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.

• Carnegie Learning, Inc. (“Carnegie Learning”) - Carnegie Learning is a publisher of research-based math curricula and adaptive learning software for middle school, high school and postsecondary students. University of Phoenix has incorporated adaptive learning into its curricula to offer an individualized approach to learning.

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• Apollo Lightspeed - Apollo Lightspeed is focused on developing innovative educational offerings and services, including proprietary learning models and third-party courseware. Apollo Lightspeed’s initial offering, Innovator’s Accelerator, provides insights and tools through a multimedia, collaborative learning platform intended to teach business executives and managers how to cultivate innovation within their organizations.

Net Revenue

The following presents net revenue for each of our reportable segments for the respective periods:

	Year Ended August 31,
($ in thousands)	2013		2012		2011
University of Phoenix	$	3,304,464	$	3,873,098	$	4,322,670
Apollo Global	275,768		269,541		272,935
Other	101,078		110,698		115,444
Net revenue	$	3,681,310	$	4,253,337	$	4,711,049

Refer to 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. For a discussion of the risks attendant to our foreign operations, refer to Part I, Item 1A, Risk Factors - Risks Related to our Business - Our expansion into new markets outside the U.S. subjects us to risks inherent in international operations.

University of Phoenix represents the substantial majority of our net revenue and the University’s net revenue is principally a function of student enrollment, which is detailed below for the past three years:

	Average Degreed Enrollment(1)			Aggregate New Degreed Enrollment(1), (5)
	Year Ended August 31,			Year Ended August 31,
(Rounded to the nearest hundred)	2013(2)	2012(3)	2011(4)	2013	2012	2011
Associate’s	90,500	119,900	163,500	68,900	88,100	90,500
Bachelor’s	160,100	179,200	186,000	73,400	93,700	94,900
Master’s	44,100	50,600	61,700	28,300	32,000	33,600
Doctoral	6,400	7,200	7,500	2,300	2,900	2,900
Total	301,100	356,900	418,700	172,900	216,700	221,900

⁽¹⁾ Refer to Students below for a description of the manner in which we calculate Degreed Enrollment and New Degreed Enrollment.

⁽²⁾ Represents the average of Degreed Enrollment for the quarters ended August 31, 2012, November 30, 2012, February 28, 2013, May 31, 2013 and August 31, 2013. 

⁽³⁾ Represents the average of Degreed Enrollment for the quarters ended August 31, 2011, November 30, 2011, February 29, 2012, May 31, 2012 and August 31, 2012. 

⁽⁴⁾ Represents the average of Degreed Enrollment for the quarters ended August 31, 2010, November 30, 2010, February 28, 2011, May 31, 2011 and August 31, 2011. 

⁽⁵⁾ Represents the sum of the four quarters of New Degreed Enrollment in the respective fiscal years.

General

University of Phoenix was founded in 1976 and Apollo Group, Inc. was incorporated in Arizona in 1981. Apollo maintains its 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:	www.apollo.edu	•  Apollo Global:	www.apolloglobal.us
•  University of Phoenix:	www.phoenix.edu	•  BPP:	www.bpp.com
•  WIU:	www.west.edu	•  ULA:	www.ula.edu.mx
•  IPD:	www.ipd.org	•  UNIACC:	www.uniacc.cl
•  CFFP:	www.cffp.edu
•  Carnegie Learning:	www.carnegielearning.com

Our fiscal year is from September 1 to August 31. Unless otherwise noted, references to particular years or quarters refer to our fiscal years and the associated quarters of those fiscal years.

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Strategy

Our mission is to provide flexible, effective higher education opportunities to students that offer the tools and skills they need to achieve their professional goals. Our goal is to be a recognized leader in connecting students to the careers they want through innovative and effective education programs that produce desired career outcomes.

The key themes of our strategic plan are as follows:

• Achieve significant improvements in completion and career outcomes. We are actively focused on increasing student retention across all our institutions and ensuring students achieve their desired career outcomes through education and training.

• Increase organic growth through new education offerings. We are exploring new opportunities for growth in higher education and service offerings.

• Expand education opportunities and career outcomes for learners worldwide. We believe that learners worldwide can benefit from our career-focused education offerings and we are working to expand our global operations so that they become an increasingly significant portion of our consolidated operating results.

To implement our strategy, we are focused on a number of important initiatives including:

• Realigning the organization to directly support efforts to connect education to careers;

• Developing new education offerings that are well connected to the careers that our students seek;

• Offering scholarships and other targeted tuition discounts to improve affordability of our education programs;

• Forming employer relationships to create a pipeline of well-prepared future employees;

• Upgrading our education delivery, learning and data platforms to better support student learning;

• Redesigning curriculum at the program and course level, including modified entry course sequence and structure;

• Implementing improved support methods across our institutions including, but not limited to, increasing our use of full-time faculty in students’ initial courses at University of Phoenix and piloting a new orientation format; and

• Streamlining administrative processes to more efficiently deliver critical services and create a more nimble organization.

Industry Background

Domestic Postsecondary

The domestic postsecondary degree-granting education industry was estimated to be a $559 billion industry in 2011, according to the Digest of Education Statistics published in 2013 by the U.S. Department of Education’s National Center for Education Statistics (the “NCES”). We believe that the majority of undergraduates are in some way non-traditional (defined as a student who delays enrollment, attends part-time, works full-time, is financially independent for purposes of financial aid eligibility, has dependents other than a spouse, is a single parent, or does not have a high school diploma). The non-traditional students (whom we generally refer to as working learners) typically are looking to improve their skills and enhance their earnings potential within the context of their careers.

The education formats offered by our institutions enable working learners to attend classes and complete coursework on a more flexible schedule than many traditional universities offer. Although an increasing proportion of colleges and universities are addressing the needs of working learners as discussed in Competition below, some traditional universities and institutions are not able to address the needs of working learners.

International

We believe private education is playing an important role in advancing the development of education, specifically higher education and lifelong learning, in many countries around the world. In addition, we believe the following key trends are driving growth in private education worldwide:

• Unmet demand for education in part due to insufficient public funding;

• 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; and

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

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Our Programs

Our experience as an education provider enables us to deliver quality education and responsive customer service to students at the undergraduate, master’s 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 (“HLC”) of the North Central Association of Colleges and Schools. In July 2013, University of Phoenix and Western International University’s accreditations were reaffirmed for a ten-year period and both institutions were placed on Notice status for a two-year period by HLC. Refer to Accreditation and Jurisdictional Authorizations below. In addition to the institutional accreditation by HLC, certain of our academic programs are accredited on a programmatic basis by appropriate accrediting entities.

University of Phoenix offers degrees in the following program areas:

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

Our international operations offer bachelor’s, master’s and doctoral degrees in a variety of degree programs and related areas of specialization. This includes degrees from BPP University, which is principally comprised of BPP Law School and BPP Business School, and has been granted degree-awarding powers by the United Kingdom’s Privy Council. Certain of BPP’s programs also have additional programmatic accreditations.

• Professional Examinations Training and Professional Development. BPP provides training and published materials for qualifications in specific markets in accountancy (including tax), financial services, actuarial science, insolvency, human resources, marketing, management and law. University of Phoenix and certain of our other institutions also provide professional development education.

• Employers. University of Phoenix and our Workforce Solutions team, which establishes relationships with employers, has formed more than 2,000 relationships. The University works closely with employers to meet their specific educational needs through modification of our existing programs and, in some cases, provides programs specifically selected for their employees.

Teaching/Learning Model

Domestic Postsecondary

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 or have other commitments to earn their degrees and still meet their personal and professional responsibilities. Our focus on working, non-traditional, non-residential students minimizes the need for capital-intensive facilities and services like dormitories, student unions, food service, health care, sports and entertainment.

University of Phoenix has campus locations and learning centers throughout the United States, including the Commonwealth of Puerto Rico, and offers students the flexibility to attend both on-campus and online classes. The majority of University of Phoenix students study exclusively online. The University’s online classes employ a proprietary online learning system, are small and have mandatory participation requirements for both the faculty and the students. Each online course is instructionally designed so that students have learning outcomes that are consistent with the outcomes of their on-campus counterparts. All online class materials are delivered electronically.

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

• Curriculum. Faculty content experts design the curriculum for the University’s programs, which enables it to offer current and relevant standardized programs to its students. The curricula are designed to integrate academic theory and professional practice and their application to the workplace, and to provide for the achievement of specified educational outcomes that are based on input from faculty, students and employers. University of Phoenix has incorporated adaptive learning into its curricula to offer an individualized approach to learning.

• Faculty. 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, and most teach on an adjunct basis. The University has 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. 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.

As part of our strategy to achieve significant improvements in student retention, we have recently increased our use of full-time faculty in the initial courses students take at the University.

• Accessibility. Most of University of Phoenix’s academic programs may be accessed through a choice of delivery mode (electronically delivered, campus-based or a blend of both), which make its educational programs accessible, 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 are enrolled in five-to-nine week courses year-round and may complete classes sequentially or concurrently depending on their degree level. All courses involve collaborative learning activities.

• Student Education Services.The following services are available to students and faculty, as applicable:

• Electronic and other learning resources for their information and research needs;

• Tutoring;

• Centers for Math and Writing Excellence;

• Adaptive learning tools;

• Student workshops;

• Career resources; and

• PhoenixConnect, the University’s proprietary academic social media network, which is used to support students in their academic programs. Each college has an online community manager who provides oversight and guidance with respect to college-related conversations in the network.

University of Phoenix is actively working to improve its major learning platform in order to deliver highly personalized learning to students, ease the administrative burden on faculty, improve overall student and faculty experiences, and lead to better educational outcomes. In addition, the University is further developing its services, such as diagnostic tools and individual learning plans, to specifically assist students who have limited or no higher education experience or otherwise may be unprepared to succeed in its academic programs.

• Academic Quality.University of Phoenix has an academic quality assessment plan that measures whether the institution provides consistent quality and academic rigor through its delivery of educational programs online and on geographically dispersed campuses. 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:

• Preparing an annual assessment plan for academic programs;

• Preparing an annual assessment result report for academic programs, based on student learning outcomes;

• Implementing improvements based on assessment results; and

• Monitoring effectiveness of implemented improvements.

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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 competence and values.

University of Phoenix has developed an assessment matrix that outlines specific learning outcomes to measure whether students are meeting the University’s learning goals. Multiple methods have been identified to assess each outcome.

International

Our international operations include full-time and part-time courses, delivered on-campus or online, for professional examination preparation, professional development training and various degree/certificate/diploma programs. Our international operations faculty members consist of both full-time and part-time professors and our recruitment standards and processes are appropriate for the respective markets in which we operate.

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. Curricula are tailored to the relevant standards applicable to the respective markets.

Admissions

To gain admission to our undergraduate programs, students must generally have a high school diploma or equivalent, and for admission to our domestic institutions, must be proficient in English. University of Phoenix currently requires substantially all of its prospective associate’s and bachelor’s students with fewer than 24 incoming credits to participate in University Orientation. This program is a free, three-week orientation designed to help inexperienced prospective students better understand the time commitments and rigors of higher education prior to enrollment. Students practice using the University of Phoenix learning system, learn techniques to be successful in college, and identify useful university services and resources.

The University is currently piloting a new format of the University Orientation program for certain new students, which integrates elements of University Orientation into these students’ first for-credit course.

To gain admission to our master’s and doctoral programs, students must have an undergraduate degree, and generally for doctoral programs, a master’s degree, from a regionally or nationally accredited college or university, satisfy the minimum grade point average requirement, and have relevant work experience, if applicable for their field of study.

Students

University of Phoenix Degreed Enrollment

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

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The following details University of Phoenix Degreed Enrollment by degree type for the indicated periods:

(Rounded to the nearest hundred)
Quarter	Associate’s		Bachelor’s		Master’s		Doctoral		Total
Q1 2011	177,200	40.4%	187,300	42.8%	66,000	15.1%	7,600	1.7%	438,100
Q2 2011	155,500	38.4%	181,200	44.7%	61,200	15.1%	7,400	1.8%	405,300
Q3 2011	147,900	37.1%	184,500	46.3%	58,500	14.7%	7,500	1.9%	398,400
Q4 2011	136,300	35.8%	183,100	48.1%	54,000	14.2%	7,400	1.9%	380,800
Q1 2012	130,300	34.9%	182,500	48.9%	52,900	14.2%	7,400	2.0%	373,100
Q2 2012	118,100	33.2%	179,400	50.4%	51,000	14.3%	7,300	2.1%	355,800
Q3 2012	112,100	32.4%	178,300	51.5%	48,900	14.1%	7,000	2.0%	346,300
Q4 2012	102,600	31.2%	172,600	52.6%	46,400	14.1%	6,800	2.1%	328,400
Q1 2013	99,100	31.0%	168,000	52.5%	46,000	14.4%	6,600	2.1%	319,700
Q2 2013	89,900	29.9%	159,600	53.1%	44,900	14.9%	6,400	2.1%	300,800
Q3 2013	84,300	29.3%	154,100	53.6%	42,900	14.9%	6,200	2.2%	287,500
Q4 2013	76,400	28.4%	146,100	54.3%	40,600	15.1%	5,900	2.2%	269,000

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University of Phoenix New Degreed Enrollment

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

The following details University of Phoenix New Degreed Enrollment by degree type for the indicated periods:

(Rounded to the nearest hundred)
Quarter	Associate’s		Bachelor’s		Master’s		Doctoral		Total
Q1 2011	24,000	42.5%	22,800	40.3%	8,900	15.8%	800	1.4%	56,500
Q2 2011	18,900	39.2%	20,900	43.4%	7,800	16.2%	600	1.2%	48,200
Q3 2011	23,400	41.8%	24,000	42.9%	7,900	14.1%	700	1.2%	56,000
Q4 2011	24,200	39.5%	27,200	44.5%	9,000	14.7%	800	1.3%	61,200
Q1 2012	27,800	43.6%	26,100	41.0%	8,900	14.0%	900	1.4%	63,700
Q2 2012	18,500	38.0%	22,000	45.2%	7,500	15.4%	700	1.4%	48,700
Q3 2012	21,400	41.5%	22,100	42.9%	7,400	14.4%	600	1.2%	51,500
Q4 2012	20,400	38.7%	23,500	44.5%	8,200	15.5%	700	1.3%	52,800
Q1 2013	22,900	42.3%	22,500	41.6%	8,000	14.8%	700	1.3%	54,100
Q2 2013	14,900	38.3%	16,700	42.9%	6,700	17.2%	600	1.6%	38,900
Q3 2013	15,800	40.6%	16,400	42.2%	6,200	15.9%	500	1.3%	38,900
Q4 2013	15,300	37.3%	17,800	43.4%	7,400	18.1%	500	1.2%	41,000

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University of Phoenix Student Demographics

We have a diverse student population. The following provides the demographic characteristics of the students attending University of Phoenix courses:

Gender(1)	2013		2012		2011
Female	66.4	%	67.2	%	67.7	%
Male	33.6	%	32.8	%	32.3	%
	100.0	%	100.0	%	100.0	%
Race/Ethnicity(2)
African-American	29.0	%	28.8	%	28.0	%
Asian/Pacific Islander	3.3	%	3.2	%	3.2	%
Caucasian	47.5	%	48.7	%	50.7	%
Hispanic	14.3	%	13.3	%	12.4	%
Native American/Alaskan	1.0	%	1.2	%	1.2	%
Other/Unknown	4.9	%	4.8	%	4.5	%
	100.0	%	100.0	%	100.0	%
Age(1)
22 and under	11.2	%	12.3	%	12.3	%
23 to 29	31.8	%	31.9	%	32.0	%
30 to 39	33.4	%	32.9	%	32.8	%
40 to 49	16.9	%	16.5	%	16.4	%
50 and over	6.7	%	6.4	%	6.5	%
	100.0	%	100.0	%	100.0	%

⁽¹⁾ Based on students included in aggregate New Degreed Enrollment, which represents the sum of the four quarters of New Degreed Enrollment in the respective fiscal years.

⁽²⁾ Based on voluntary reporting by students included in New Degreed Enrollment. For 2013, 2012 and 2011, 67%, 71% and 68%, respectively, of the students attending University of Phoenix courses provided this information.

Marketing

We engage in a broad range of advertising and marketing activities to educate students about the options they have in higher learning and convey our value proposition and offerings to connect education to careers. We are focused on enhancing our brand perception and utilizing our different communication channels, which are discussed below, to attract students who are more likely to persist in our programs.

Brand

Brand advertising is intended to increase potential students’ understanding of our academic quality, commitment to service, academic outcomes, academic community achievements and connection of education to careers. Our brand is advertised primarily through national and regional broadcast, radio and print media. Brand advertising also serves to expand the addressable market and establish brand recognition and familiarity with our schools, colleges and programs on both a national and a local basis.

Internet

Many prospective students identify their education opportunities online through search engines, information and social network sites, various education portals on the Internet and school-specific sites such as our own phoenix.edu. 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. We have reduced our use of third-party operated sites and increased our use of branded media channels because we believe this approach will help us better identify students who are more likely to persist in our educational programs. Our website, phoenix.edu, provides prospective students with relevant information about University of Phoenix and will continue to evolve with in-depth programmatic and education to careerscontent.

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Sponsorships, Corporate Social Responsibility and Other

We build our presence in communities through sponsorships, advertising and event marketing to support specific activities, including local and national career events, academic lecture series, workshops and symposiums on various current topics of interest and through our corporate social responsibility outreach program.

Relationships with Employers and Community Colleges

We work closely with businesses and governmental agencies to meet their specific educational needs through modification of our existing programs or development of customized programs. These programs can be offered on-site at the employers’ offices or at select military bases.

Our Workforce Solutions team establishes relationships with employers and community colleges that we believe will lead to increased enrollment from those sources. The relationships with community colleges consist of connecting associate’s degree student graduates at community colleges with University of Phoenix bachelor’s degree programs. Where appropriate, we also help community college students gain access to specific courses they need to complete their degrees through a reverse articulation program. We also work with community colleges to, where possible, connect education to careers by providing students with a course of study relevant to local employers.

BPP enrolls the majority of its students through relationships with employers.

Phoenix Prep Center

The Phoenix Prep Center serves prospective students by providing online tools, information, and resources that answer key questions and concerns for prospective students, including assessments of a potential student’s learning style, academic abilities and readiness to pursue higher education, a tuition calculator and information on careers.

Phoenix Career Services

Through Phoenix Career Services, we are working to expand the traditional concept of career services to include the career exploration and planning during the pre-enrollment phase and the student’s academic journey. Our recently launched Phoenix Career Guidance System allows students to clarify their career aspirations in the pre-enrollment process, and then create personalized career plans upon enrollment that will help them develop, through their academic journeys, the skills and competencies aligned to their desired careers.

Students and alumni can also access our Phoenix Career Services online portal where they will find career preparation tools such as resume and cover letter development services, interview preparation services and a collection of content and videos to help prepare for a career change or advancement opportunity. Once students are ready to search for a career, Phoenix Career Services also provides personal assistance through a nationwide network of career coaches and an online job board from which students can access current career opportunities at a selection of companies across the U.S.

Competition

Domestic Postsecondary

The U.S. higher education industry is highly fragmented with no single private or public institution having a significant market share. We compete primarily with traditional public and private two-year and four-year degree-granting regionally accredited colleges and universities, other proprietary degree-granting regionally accredited schools and alternatives to higher education. In addition, we face increasing competition from various emerging non-traditional, credit-bearing and noncredit-bearing education programs, offered by both proprietary and not-for-profit providers. These include massive open online courses (so-called MOOCs) offered worldwide without charge by traditional educational institutions, synchronous massive online courses (SMOCs) offered worldwide for credit by traditional educational institutions, and other direct-to-consumer education services. Some of our competitors have greater financial and nonfinancial resources than we have and are able to offer programs similar to ours at a lower tuition level for a variety of reasons, including the availability of direct and indirect government subsidies, government and foundation grants, large endowments, tax-deductible contributions and other financial resources not available to proprietary institutions, or by providing fewer student services or larger class sizes.

The higher education industry is also experiencing unprecedented, rapidly developing changes due to technological developments, evolving needs and objectives of students and employers, economic constraints affecting educational institutions and students, price competition, increased focus on affordability and other factors that challenge many of the core principles underlying the industry. Related to this, a substantial proportion of traditional colleges and universities and community colleges now offer some form of distance learning or online education programs, including programs geared towards the needs of working learners. As a result, we continue to face increasing competition, including from colleges with well-established brand names. As the online and distance learning segment of the postsecondary education market matures, we believe that the intensity of the competition we face will continue to increase.

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We are working to accelerate the enhancement of our offerings to remain competitive and to more effectively deliver a quality student experience at the right value. In addition, we have increased our use of scholarships and discounts to improve our value proposition to prospective students.

We believe that the primary factors on which we compete are the following:

• Breadth of reliable and high-quality products and services;

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

• Career assessment and planning, and connecting career opportunities at leading companies to our students and alumni;

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

• Comprehensive and differentiated student support services such as academic social networking;

• Reputation of the institution and its programs;

• Qualified and experienced faculty;

• Size of alumni network;

• Relationships with community colleges; and

• The variety of geographic locations of campuses.

International

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

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

• Breadth of reliable and high-quality programs and classes; and

• Reputation of programs and classes.

Employees

As of August 31, 2013, we had approximately 15,000 non-faculty employees, with less than 1,000 of the employees part-time. We also have approximately 29,000 faculty members as of August 31, 2013, which principally represents University of Phoenix faculty who have taught in the last twelve months and are eligible to teach future courses. Most of our faculty are adjunct part-time faculty. We believe that our employee relations are satisfactory.

In recent years, we have implemented workforce reductions as we reengineer our business processes and refine our educational delivery systems. We have continued restructuring our business subsequent to August 31, 2013, which includes workforce reductions of approximately 500 non-faculty personnel.

Accreditation and Jurisdictional Authorizations

Domestic Postsecondary

Accreditation

University of Phoenix is regionally accredited by the Higher Learning Commission (“HLC”) of the North Central Association of Colleges and Schools, 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 authority to operate 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. The six regional accrediting associations, including HLC, have a reciprocity agreement that allows representatives of each region in which a regionally accredited institution operates to participate in the institution’s evaluation for reaffirmation of accreditation.

In July 2013, the accreditation of University of Phoenix was reaffirmed by the HLC through the 2022-2023 academic year. At the same time, HLC placed the University on Notice status for a two-year period due to concerns regarding governance, student assessment and faculty scholarship/research for doctoral programs. Notice status is a sanction that means that HLC has determined that an institution is on a course of action that, if continued, could lead the institution to be out of compliance with one or more of the HLC Criteria for Accreditation or Core Components. The University was assigned by HLC to the Standard

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Pathway reaffirmation process, pursuant to which the University will host a comprehensive evaluation visit in 2016-2017 and will undergo its next reaffirmation visit and process in 2022-2023.

The University is required to submit a Notice Report to the HLC by Fall of 2014 providing evidence that the University meets the Criteria for Accreditation, Core Components and Minimum Expectations (Assumed Practices after January 1, 2013) identified as the basis for the Notice sanction and that it has ameliorated the issues that led to the Notice sanction. In addition, in the Notice Report the University is also required to report on its progress in other areas of concern not included in the Notice sanction, including retention and graduation rates, three-year student loan cohort default rates, and credit hour policies and practices relating to learning teams. The University also will be required to host a focused visit by the HLC no later than January 2015, to validate the contents of the Notice Report. The HLC Board of Trustees will review the University’s Notice Report, together with a report of the focused visit, at a meeting in 2015. During the Notice period, the University is required to disclose its Notice status in connection with any statements regarding its HLC accreditation.

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, 2002 and 2013)	- Refer above for discussion of Notice status and upcoming reports, evaluations and visits
- Business programs	- Association of Collegiate Business Schools and Programs (2007)	- Reaffirmation visit expected in 2017
- Bachelor of Science in Nursing	- Commission on Collegiate Nursing Education (2005) - Previously accredited by National League for Nursing Accrediting Commission from 1989 to 2005	- Reaffirmation visit expected in 2020
- Master of Science in Nursing	- Commission on Collegiate Nursing Education (2005) - Previously accredited by National League for Nursing Accrediting Commission from 1996 to 2005	- Reaffirmation visit expected in 2020
- Master of Counseling in Clinical Mental Health (Phoenix and Tucson, Arizona campuses)	- Council for Accreditation of Counseling and Related Educational Programs (2012)	- Reaffirmation visit expected in 2017 or 2018
- Master of Counseling in Mental Health Counseling (Salt Lake City, Utah campus)	- Council for Accreditation of Counseling and Related Educational Programs (2001, reaffirmed in 2010, and in 2012)	- Reaffirmation visit expected in 2015 or 2016
- Master of Arts in Education with options in Elementary Teacher Education and Secondary Teacher Education - Candidate for Accreditation in Utah and Hawaii (mandatory for operation)	- Teacher Education Accreditation Council (“TEAC”) (reaffirmed in 2007) - National Council for Accreditation of Teacher Education (“NCATE”)	- The University’s programmatic accreditation from TEAC will expire at the end of 2013. TEAC and NCATE have merged and become the Council for the Accreditation of Educator Preparation (“CAEP”). CAEP is finalizing its new accreditation processes. The University has elected to allow the programmatic accreditation from TEAC to expire, will pursue NCATE programmatic accreditation in those states where it is mandatory for operation (Utah and Hawaii) in the interim, and will consider the new CAEP options as they emerge.

Western International University has been accredited by HLC since 1984. In July 2013, the accreditation of WIU was reaffirmed by the HLC through the 2022-2023 academic year. At the same time, HLC placed WIU on Notice status for a two-year period due to concerns relating to governance, student assessment and faculty.

Our other domestic institutions maintain the requisite accreditations for their respective operations.

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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. University of Phoenix is specifically authorized to operate in all but two of the domestic jurisdictions in which it operates. In Hawaii and New Mexico, University of Phoenix has a physical presence and is qualified to operate through July 1, 2014 without specific state regulatory approval due to available state exemptions and annual waivers from the U.S. Department of Education. Refer to Part I, Item 1A, Risk Factors - Risks Related to the Highly Regulated Industry in Which We Operate - 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.

All regionally accredited institutions, including University of Phoenix, are required to be evaluated separately for authorization to operate in the Commonwealth of Puerto Rico. University of Phoenix has 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 and Western International University have obtained licensure in states which require such licensure and where students are enrolled.

Our other domestic institutions 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 University 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 University of Professional Studies Limited as an awarding body for qualifications (including degrees) in the United Kingdom. - BPP University of Professional Studies’ accreditation review during 2018-2019 school year.
ULA	- Federation of Private Mexican Institutions of Higher Education (Federación de Instituciones Mexicanas Particulares de Educación Superior)	- Mexico’s Ministry 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)
UNIACC(1)	- Council for Higher Education (Consejo Superior de Educación)	- Chilean Ministry of Education (Ministerio de Educación de Chile)

⁽¹⁾ Prior to November 2011, UNIACC was accredited by the National Accreditation Commission of Chile. In November 2011, the National Accreditation Commission elected not to renew the accreditation, which therefore lapsed. The loss of accreditation from the National Accreditation Commission does not impact UNIACC’s ability to operate or confer degrees and does not directly affect UNIACC’s programmatic accreditations. However, this institutional accreditation is necessary for new UNIACC students to participate in government loan programs and for existing students to begin to participate in such programs for the first time. We expect to consider pursuing re-accreditation with the National Accreditation Commission in fiscal year 2014 when regulations permit.

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Financial Aid Programs

Domestic Postsecondary

The principal source of federal student financial aid in the U.S. is Title IV of the Higher Education Act, as it is amended and reauthorized from time to time by the U.S. Congress, and the related regulations adopted by the U.S. Department of Education. We refer to the financial aid programs under this Act as “Title IV” programs. In 2008, the Higher Education Act was reauthorized through September 30, 2013 by the Higher Education Opportunity Act. Congress has begun Higher Education Act reauthorization hearings and there is currently an automatic one year extension that continues the current authorization through September 30, 2014.

Financial aid under Title IV is awarded annually to eligible students. Some Title IV programs award financial aid 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 to a student each 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. We have substantially no control over the amount of Title IV student loans or grants sought by or awarded to our students. All recipients of Title IV program funds must maintain satisfactory academic progress within the guidelines published by the U.S. Department of Education to remain eligible. Refer to Part I, Item 1A, Risk Factors - Risks Related to the Highly Regulated Industry in Which We Operate - Action by the U.S. Congress to revise the laws governing federal student financial aid programs or reduce funding for those programs, including changes applicable only to proprietary educational institutions, could reduce our enrollment and increase our costs of operation.

In addition to Title IV student financial aid, qualifying U.S. active military and veterans and their family members are eligible for federal student aid from various Department of Defense programs, including under the Post-9/11 GI Bill. We refer to the financial aid programs administered by the Department of Defense as “military benefit” programs.

We collected the substantial majority of our fiscal year 2013 total consolidated net revenue from receipt of Title IV financial aid program funds, principally from federal student loans and Pell Grants. University of Phoenix represented 90% of our fiscal year 2013 total consolidated net revenue and University of Phoenix generated 83% of its cash basis revenue for eligible tuition and fees during fiscal year 2013 from the receipt of Title IV financial aid program funds, as calculated under the 90/10 Rule described below.

Student loans currently are the most significant component of Title IV financial aid and are administered through the Federal Direct Loan Program. Annual and aggregate loan limits apply based on the student’s grade level and other factors. Currently, the maximum annual loan amounts range from $3,500 to $12,500 for undergraduate students and $20,500 for graduate students. There are two types of federal student loans: subsidized loans, which are based on the statutory calculation of student need, and unsubsidized loans, which are not based on student need. Neither type of student loan is based on creditworthiness. Students are not responsible for interest on subsidized loans while enrolled in school. Graduate and professional students are not eligible for subsidized loans. Students are responsible for the interest on unsubsidized loans while enrolled in school, but have the option to defer payment while enrolled. Repayment on federal student loans begins six months after the date the student ceases to be enrolled. The loans are repayable over the course of 10 years and, in some cases, longer. During fiscal year 2013, student loans (both subsidized and unsubsidized) represented approximately 77% of the gross Title IV funds received by University of Phoenix.

Federal Pell Grants are awarded based on need and 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 2013, Pell Grants represented approximately 23% of the gross Title IV funds received by University of Phoenix. The eligibility for and maximum amount of Pell Grants have increased over recent years. Since the 2006-2007 award year, the maximum annual Pell Grant award has increased from $4,050 to $5,645 for the 2013-2014 award year. Because the federal Pell Grant program is one of the largest non-defense discretionary spending programs in the federal budget, it is a target for reduction as Congress addresses the U.S. budget deficits. A reduction in the maximum annual Pell Grant amount or changes in eligibility could negatively impact enrollment and could result in increased student borrowing, which would make it more difficult for us to comply with other important regulatory requirements such as maintaining student loan cohort default rates below specified levels.

The remaining funding for tuition and other fees paid by our students primarily consists of state-funded student financial aid, tuition assistance from employers and personal funds.

International

Although students enrolled at certain of our international institutions receive government financial aid funding, such funding is not a material component of our net revenue from international institutions.

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Regulatory Environment

Domestic Postsecondary

Our domestic postsecondary institutions are subject to extensive federal and state regulations. The Higher Education Act, as reauthorized, and the related U.S. Department of Education regulations govern all higher education institutions participating in Title IV 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, must comply with the Higher Education Act, as reauthorized, and all applicable regulations thereunder, and must be authorized to operate by the appropriate regulatory authority in each state where the institution maintains a physical presence. We have summarized below recent material activity in the regulatory environment affecting our business and the most significant regulatory requirements applicable to our domestic postsecondary operations.

Changes in or new interpretations of applicable laws, rules, or regulations could have a material adverse effect on our eligibility to participate in Title IV programs, 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. Refer to Part I, Item 1A, Risk Factors - Risks Related to the Highly Regulated Industry in Which We Operate.

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 November 2009 and entered into a new Title IV Program Participation Agreement which expired on December 31, 2012. University of Phoenix has submitted necessary documentation for re-certification and its eligibility continues on a month-to-month basis until the Department issues its decision on the application. We have no reason to believe that the University’s application will not be renewed in due course, and it is not unusual to be continued on a month-to-month basis until the Department completes its review. However, we cannot predict whether, or to what extent, the imposition of the Notice sanction by The Higher Learning Commission might have on this process.

Western International University was recertified in May 2010 and entered into a new Title IV Program Participation Agreement which expires on September 30, 2014.

U.S. Department of Education Rulemaking Initiative. Negotiated rulemaking public hearings were held by the U.S. Department of Education in May and June 2013. Topics included cash management of Title IV program funds, state authorization for programs offered through distance education or correspondence education, and gainful employment, among others. The negotiated rulemaking process is expected to produce new regulations which will be published this fall and may be effective as soon as July 1, 2014. More information can be found at

http://www2.ed.gov/policy/highered/reg/hearulemaking/2012/index.html.

A negotiated rulemaking committee was convened by the Department in September 2013 specifically on the topic of gainful employment. Prior to the September 2013 committee meeting, the Department released draft regulations on gainful employment. The draft regulations provide for two metrics: an annual debt-to-earnings ratio, and a debt service-to-discretionary income ratio. As proposed, a program would become ineligible for Title IV funding if it fails both metrics in two out of any three consecutive years, or is in a specified “warning zone” for either metric in any four consecutive years. The timing and substance of final regulations dealing with gainful employment cannot be predicted at this time. More information can be found at http://www2.ed.gov/policy/highered/reg/hearulemaking/2012/gainfulemployment.html.

Refer to Part I, Item 1A, Risk Factors - Risks Related to the Highly Regulated Industry in Which We Operate -Rulemaking by the U.S. Department of Education could materially and adversely affect our business.

90/10 Rule. University of Phoenix and Western International University, and all other proprietary institutions of higher education, are subject to the so-called “90/10 Rule” under the Higher Education Act, as reauthorized. Under this rule, a proprietary institution will be ineligible to participate in Title IV programs for at least two fiscal years 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. If an institution is determined to be ineligible, any disbursements of Title IV program funds made while ineligible must be repaid to the Department. An institution that derives more than 90% of its cash basis revenue from Title IV programs for any single fiscal year will be automatically 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. While the Department

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has broad discretion to impose additional sanctions on such an institution, there is only limited precedent available to predict what those sanctions might be, particularly in the current regulatory environment. For example, the Department could impose conditions in the provisional certification such as:

• Restrictions on the total amount of Title IV program funds that may be disbursed to students;

• Restrictions on programmatic and geographic expansion;

• Requirements to obtain and post letters of credit;

• Additional reporting requirements such as interim financial reporting; or

• Any other conditions deemed appropriate by the Department.

In addition, if an institution is subject to a provisional certification at the time that its current program participation agreement expired, the effect on recertification of the institution or continued eligibility in Title IV programs pending recertification is uncertain.

The 90/10 Rule percentages for University of Phoenix and Western International University were the following for the respective periods:

	Year Ended August 31,
	2013	2012	2011(1)
University of Phoenix	83%	84%	86%
Western International University	66%	68%	66%

⁽¹⁾ Calculated excluding the temporary relief from the impact of loan limit increases, which was allowable for amounts received and applied to eligible charges between July 1, 2008 and June 30, 2011 that were attributable to the increased annual loan limits.

The decrease in the University of Phoenix 90/10 Rule percentage is attributable to changes in student mix and their associated available sources of tuition funding. As the University’s enrollment has declined in recent years, the proportion of its student body that uses a lower percentage of Title IV funds for eligible tuition and fees, such as students that receive tuition assistance from employers or that participate in military benefit programs, has increased. The University has also implemented various other measures in recent years intended to reduce the percentage of its cash basis revenue attributable to Title IV funds, including encouraging students to carefully evaluate the amount of necessary Title IV borrowing and continued focus on professional development and continuing education programs. The University has substantially no control over the amount of Title IV student loans and grants sought by or awarded to its students.

Based on recent trends, we do not expect the 90/10 Rule percentage for University of Phoenix to exceed 90% for fiscal year 2014. However, the 90/10 Rule percentage for University of Phoenix remains high and could exceed 90% in the future depending on the degree to which its various initiatives are effective, the impact of future changes in its enrollment mix, and regulatory and other factors outside our control, including any reduction in military benefit programs or changes in the treatment of such funding for purposes of the 90/10 Rule calculation.

Various legislative proposals have been introduced in Congress that would heighten the requirements of the 90/10 Rule, including proposals that would reduce the 90% maximum under the rule to the pre-1998 level of 85%, cause tuition derived from military benefit programs to be included in the 85% portion under the rule instead of the 10% portion as is the case today, and impose Title IV ineligibility after one year of noncompliance rather than two. If these or similar proposals are adopted, University of Phoenix may be required to increase efforts and resources dedicated to reducing the percentage of cash basis revenue attributable to Title IV funds.

Any necessary further efforts to reduce the 90/10 Rule percentage for University of Phoenix, especially if the percentage exceeds 90% for a fiscal year, may involve taking measures which reduce our revenue, increase our operating expenses, or both, in each case perhaps significantly. In addition, we may be required to make structural changes to our business in the future in order to remain in compliance, which changes may materially alter the manner in which we conduct our business and materially and adversely impact our business, financial condition, results of operations and cash flows. Furthermore, these required changes could make it more difficult to comply with other important regulatory requirements, such as the student loan cohort default rate regulations, which are discussed below.

Student Loan Cohort Default Rates. To remain eligible to participate in Title IV programs, an educational institution’s student loan cohort default rates must remain below certain specified levels. Each cohort is the group of students who first enter into student loan repayment during a federal fiscal year (ending September 30). The cohort default rates are published by the U.S. Department of Education approximately 12 months after the end of the applicable measuring period. Thus, in September 2013, the Department published the two-year cohort default rates for the 2011 cohort and the three-year cohort default rates for the 2010 cohort. As discussed below, the measurement period for the student loan cohort default rates has been increased from two

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to three years starting with the 2009 cohort; however both three-year and two-year cohort default rates are currently published until the transition to the three-year rate is completed.

For the two-year requirements that are effective through the 2011 cohort published in September 2013, educational institutions lose eligibility to participate in Title IV programs if their two-year cohort default rate equals or exceeds 25% for three consecutive cohort years or 40% for any given year. The Department began publishing the official three-year cohort default rates with the publication of the 2009 cohort default rate in September 2012. If an institution’s three-year cohort default rate equals or exceeds 30% for any given year, it must establish a default prevention task force and develop a default prevention plan with measurable objectives for improving the cohort default rate. We believe that our current repayment management efforts meet these requirements. Beginning with the three-year cohort default rate for the 2011 cohort published in September 2014, only the three-year rates will be applied for purposes of measuring compliance. Educational institutions will lose eligibility to participate in Title IV programs if their three-year cohort default rate equals or exceeds 40% for any given year or 30% for three consecutive years.

The cohort default rates for University of Phoenix, Western International University and for all proprietary postsecondary institutions for the applicable federal fiscal years were as follows:

	Two-Year Cohort Default Rates for Cohort Years Ended September 30,			Three-Year Cohort Default Rates for Cohort Years Ended September 30,
	2011	2010	2009	2010	2009	2008
University of Phoenix(1)	14.3%	17.9%	18.8%	26.0%	26.4%	21.1%
Western International University(1)	7.5%	7.7%	9.3%	10.8%	13.7%	16.3%
All proprietary postsecondary institutions(1)	13.6%	12.9%	15.0%	21.8%	22.7%	22.4%

⁽¹⁾ Based on information published by the U.S. Department of Education. The 2008 three-year cohort default rates are trial rates published by the Department for informational purposes only.

We believe that our efforts to shift our student mix to a higher proportion of bachelor’s and graduate level students and our investment in student protection initiatives and repayment management services will continue to stabilize and over time favorably impact our rates. As part of our repayment management initiatives, effective with the 2009 cohort, we engaged third-party service providers to assist our students who are at risk of default. These service providers contact students and offer assistance, which includes providing students with specific loan repayment information such as repayment options and loan servicer contact information, and they attempt to transfer these students to the relevant loan servicer to resolve their delinquency. In addition, we are intensely focused on student retention and enrolling students who have a reasonable chance to succeed in our programs, in part because the rate of default is higher among students who do not complete their degree program compared to students who graduate.

Based on our most recent trends, we expect that our 2011 three-year cohort default rates will be lower than our 2010 three-year cohort default rates. However, if our student loan default rates approach the applicable limits, we may be required to increase efforts and resources dedicated to improving these default rates. This is challenging because most borrowers who are in default or at risk of default are no longer students, and we may have only limited contact with them. Furthermore, recently there has been increased attention by members of Congress and others on default aversion activities of proprietary education institutions. If such attention leads to congressional or regulatory action restricting the types of default aversion assistance that educational institutions are permitted to provide, the default rates of our former students may be negatively impacted. Accordingly, there is 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 experience a substantial increase in our student loan default rates.

State Authorization. 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. Prior to July 1, 2011, such authorization was not specifically required for the institution’s students to become eligible for Title IV programs. Under the program integrity rules adopted by the Department effective July 1, 2011, institutions are required to obtain specific regulatory approval to operate in such states. University of Phoenix is specifically authorized to operate in all but two of the domestic jurisdictions in which it operates. In Hawaii and New Mexico, University of Phoenix has a physical presence and is qualified to operate through July 1, 2014 without specific state regulatory approval due to available state exemptions and annual waivers from the U.S. Department of Education. Each of these states must implement additional statutes or regulations in order for the University and other institutions to remain eligible for Title IV funds in respect of operations within the states.

Gainful Employment. Under the Higher Education Act, as reauthorized, proprietary schools are generally eligible to participate in Title IV programs only in respect of educational programs that lead to “gainful employment in a recognized occupation.” In connection with this requirement, proprietary postsecondary institutions are required to provide prospective students with each eligible program’s recognized occupations, cost, completion rate, job placement rate, and median loan debt of program

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completers. These reporting requirements could adversely impact student enrollment, persistence and retention if our reported program information compares unfavorably with other reporting educational institutions. A negotiated rulemaking committee was convened by the U.S. Department of Education in September 2013 specifically on the topic of gainful employment. Refer to U.S. Department of Education Rulemaking Initiative above.

Incentive Compensation. The incentive compensation regulations prohibit the payment of any incentive compensation to persons involved in enrollment and financial aid functions. These regulations also prohibit any revenue sharing arrangements between education services providers, such as our IPD business, and institutions that participate in Title IV programs. The Department clarified the scope of these regulations in a Dear Colleague letter in March 2011, in which among other things the Department indicated that these revenue sharing arrangements would be permissible, but only if the services provider is not an affiliate of an institution that participates in Title IV programs. As a result, we have restructured IPD’s commercial arrangements with its client educational institutions, which has adversely impacted IPD’s business. Unless the Department favorably clarifies its interpretive position on this issue, the interpretation is reversed through judicial action or Congress addresses the problem through legislation, we believe these regulations present a significant competitive disadvantage for our IPD business.

U.S. Department of Education Program Reviews. The U.S. Department of Education periodically reviews institutions participating in Title IV programs for compliance with applicable standards and regulations. University of Phoenix’s most recent program review by the Department was completed in fiscal year 2012. The review covered federal financial aid years 2010-2011 and 2011-2012 and there were no findings in the program review.

Office of the Inspector General of the U.S. Department of Education (“OIG”). In October 2011, the OIG notified us that it was conducting a nationwide audit of the Department’s program requirements, guidance, and monitoring of institutions of higher education offering distance education. In connection with the OIG’s audit of the Department, the OIG examined a sample of University of Phoenix students who enrolled during the period from July 1, 2010 to June 30, 2011. The OIG subsequently notified the University that in the course of this review it identified certain conditions that the OIG believes are Title IV compliance exceptions at University of Phoenix. Although the University is not the direct subject of the OIG’s audit of the Department, the OIG has asked the University to respond so that it may consider the University’s views in formulating its audit report of the Department. In September 2013, the OIG provided to University of Phoenix, among other institutions, a draft appendix to its audit report. The draft appendix again identifies compliance exceptions at University of Phoenix. University of Phoenix has responded to the appendix. These exceptions relate principally to the calculation of the amount of Title IV funds returned after student withdrawals and the process for confirming student eligibility prior to disbursement of Title IV funds.

Administrative Capability. The Higher Education Act, as reauthorized, 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 cause the Department to determine that the institution lacks administrative capability and, therefore, subject the institution to additional scrutiny or deny eligibility for Title IV programs. Refer to Part I, Item 1A, Risk Factors - Risks Related to the Highly Regulated Industry in Which We Operate - A failure to demonstrate “administrative capability” or “financial responsibility” may result in the loss of eligibility to participate in Title IV programs, which would materially and adversely affect our business.

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Standards of Financial Responsibility. Pursuant to the Title IV regulations, each eligible higher education institution must satisfy a measure of financial responsibility that is based on a weighted average of three annual tests which assess the financial condition of the institution. The three tests measure primary reserve, equity, and net income ratios. 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 also considered financially responsible, and the institution may continue to participate as a financially responsible institution for up to three years, subject to additional monitoring and other consequences. 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 fiscal year 2013 composite scores for Apollo Group, University of Phoenix and Western International University were as follows:

	Fiscal Year 2013 Composite Score
Apollo Group	2.6
University of Phoenix	2.5
Western International University	1.7

Refer to Part I, Item 1A, Risk Factors - Risks Related to the Highly Regulated Industry in Which We Operate - A failure to demonstrate “administrative capability” or “financial responsibility” may result in the loss of eligibility to participate in Title IV programs, which would materially and adversely affect our business.

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 credits. University of Phoenix and Western International University’s degree programs meet the academic year minimum definition of 30 weeks of instructional time and 24 credits and qualify for Title IV program funds. Our institutions also have corporate training programs and certain certificate and continuing professional education programs that do not qualify for Title IV program funds.

Restricted Cash. The U.S. Department of Education places restrictions on Title IV financial aid program funds held for students for unbilled educational services. As a trustee of these Title IV financial aid funds, we are required to maintain and restrict these funds pursuant to the terms of our program participation agreement with the U.S. Department of Education. These funds are included in restricted cash and cash equivalents in our Consolidated Balance Sheets in Item 8, Financial Statements and Supplementary Data.

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

There are also certain regulatory requirements associated with closing locations. During fiscal year 2013, University of Phoenix initiated a plan to realign its ground locations throughout the U.S., which includes closing 115 locations. Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Change of Ownership or Control. A change of ownership or control of Apollo Group, 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 require recertification by the U.S. Department of Education, the reevaluation of accreditation by The Higher Learning Commission and/or reauthorization by state licensing agencies. If we experience a change of ownership and control sufficient to require 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, then University of Phoenix and Western International University may

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cease to be eligible to participate in Title IV programs until recertified by the Department of Education. There is no assurance that such recertification would be obtained on a timely basis. Under some circumstances, the Department may continue an institution’s participation in Title IV programs on a provisional basis pending completion of the change in ownership approval process.

In addition, University of Phoenix, Western International University and CFFP would be required to report any material change in stock ownership to their principal institutional accrediting body, The Higher Learning Commission, and would be required to obtain approval prior to undergoing any transaction that affects, or may affect, their corporate control or governance. In the event of a material change in ownership of Apollo Group Class B common stock, The Higher Learning Commission may undertake an evaluation of the effect of the change on the continuing operations of University of Phoenix, Western International University and CFFP for purposes of determining if continued accreditation is appropriate, which evaluation may include a comprehensive review.

Also, some states in which University of Phoenix, Western International University or CFFP are licensed require approval (in some cases, advance approval) of changes in ownership or control in order to remain authorized to operate in those states, and participation in grant programs in some states may be interrupted or otherwise affected by a change in ownership or control.

Refer to Part I, Item 1A, Risk Factors - Risks Related to the Control Over Our Voting Stock - 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 and state grant programs may be impaired, which could materially and adversely affect our business.

Executive Order on Military and Veterans Benefits Programs. In April 2012, President Obama issued an executive order regarding the establishment of principles for educational institutions receiving funding from federal military and veterans educational benefits programs, including those provided by the Post-9/11 Veterans Educational Assistance Act of 2008, as amended (the “Post-9/11 GI Bill”) and the Department of Defense Tuition Assistance Program. The executive order requires the Departments of Defense, Veterans Affairs and Education to establish and implement “Principles of Excellence” to apply to educational institutions receiving such funding. The goals of the Principles are broadly stated in the order and relate to disclosures of costs and amounts of costs covered by federal educational benefits, marketing standards, state authorization, accreditation approvals, standard institutional refund policies, educational plans and academic and financial advising. Various implementation mechanisms are included and the Secretaries of Defense and Veterans Affairs, in consultation with the Secretary of Education and the Director of the Consumer Financial Protection Bureau, submitted a plan to strengthen enforcement and compliance in July 2012. These Principles could increase the cost of delivering educational services to our military and veteran students.

U.S. Department of Education Reporting and Disclosure Requirements. Based on the rising cost of postsecondary education and an effort for more transparency, the U.S. Department of Education publishes national lists annually disclosing the top five percent in each of nine institutional categories with the highest college costs and largest percentage cost increases. Institutions published on such lists may receive negative media attention that may cause some prospective students to choose educational alternatives. University of Phoenix and Western International University have not been on these lists.

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.

Available Information

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 NE, 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 www.sec.gov.

Our website address is www.apollo.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.

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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 flows 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 Class A common stock has no voting rights. Our Chairman of the Board and our Chairman Emeritus control 100% of our voting stock and control substantially all actions requiring the vote or consent of our shareholders, which may have an adverse effect on the trading price of our Class A common stock and may discourage a takeover.

All of the Apollo Group Class B common stock, our only class of voting stock, is controlled by Dr. John G. Sperling, our founder and Chairman Emeritus, and his son, Mr. Peter V. Sperling, the Chairman of our Board of Directors. Specifically, approximately 51% of our Class B common stock is owned by a revocable grantor trust, of which Dr. Sperling is the sole trustee (the “JGS Trust”). During his lifetime, Dr. Sperling has the power to remove or replace all trustees of the JGS Trust and to direct the disposition of the Class B common stock held by the trust, including upon his death, subject to certain limitations, including the limitations on transfers set forth in the Shareholders Agreement, as amended, among the Class B shareholders and us. The remainder of our Class B common stock is owned by Mr. Sperling, also through a revocable grantor trust.

Accordingly, 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 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.

Upon Dr. Sperling’s death or incompetency, the JGS Trust will become irrevocable and Mr. Sperling, Ms. Terri Bishop and Ms. Darby Shupp, all of whom are members of our board of directors, will automatically be appointed as successor trustees. Following Dr. Sperling’s death, the trustees of the JGS Trust shall have the sole power to appoint successor and additional trustees.

The control of a majority of our voting stock by Dr. Sperling makes it impossible for a third-party to acquire voting control of us without Dr. Sperling’s consent. After Dr. Sperling’s death or incompetency, it will be impossible for a third-party to acquire voting control of us without the approval of a majority of the trustees of the JGS Trust. There is no assurance that the Apollo Group Class B shareholders, or the trustees of the JGS Trust, 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.

We are a “Controlled Company” under the NASDAQ Listing Rules and therefore are exempt from certain corporate governance requirements, which could reduce the influence of independent directors on our management and strategic direction.

We are a “Controlled Company” as defined in Rule 5615(c)(1) of the NASDAQ Listing Rules, because more than 50% of the voting power of our outstanding stock is controlled by Dr. John G. Sperling. 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

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

If in the future our Board of Directors elects to rely on the exemptions permitted by the NASDAQ Listing Rules and reduce the number or proportion of independent directors on our Board and its key committees, the influence of independent directors on our management and strategy would be reduced and the influence of the holders of our Class B voting common stock on our management and strategy would increase.

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

A change of ownership or control of Apollo Group, depending on the type of change, may have significant regulatory consequences for University of Phoenix. Such a change of ownership or control could require recertification by the U.S. Department of Education, the reevaluation of accreditation by The Higher Learning Commission and reauthorization by state licensing agencies. If we experience a change of ownership and control sufficient to require 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, then University of Phoenix may cease to be eligible to participate in Title IV programs until recertified by the Department of Education. There is no assurance that such recertification would be obtained on a timely basis. Under some circumstances, the Department may continue an institution’s participation in Title IV programs on a provisional basis pending completion of the change in ownership approval process. The continuing participation of University of Phoenix in Title IV programs is critical to its business. Any disruption in its eligibility to participate in Title IV programs would materially and adversely impact our business, financial condition, results of operations and cash flows.

In addition, University of Phoenix would be required to report any material change in stock ownership to its principal institutional accrediting body, The Higher Learning Commission, and would be required to obtain approval prior to undergoing any transaction that affects, or may affect, its corporate control or governance. In the event of a material change in the ownership of Apollo Group Class B common stock, The Higher Learning Commission may undertake an evaluation of the effect of the change on the continuing operations of University of Phoenix for purposes of determining if continued accreditation is appropriate, which evaluation may include a comprehensive review. If the Commission determines that the change is such that prior approval by the Commission was required, but was not obtained, the Commission’s policies require it to consider withdrawal of accreditation. Because a majority of our Class B voting shares is held by the John G. Sperling voting stock trust, of which Dr. Sperling is the sole trustee, we believe that The Higher Learning Commission will consider the death or incompetency of Dr. Sperling to be a change of control, because such event would result in the appointment of three new trustees of the voting stock trust, as discussed in the preceding risk factor. If accreditation by The Higher Learning Commission is suspended or withdrawn, University of Phoenix would not be eligible to participate in Title IV programs until the accreditation is reinstated by the Commission or is obtained from another appropriate accrediting body. There is no assurance that reinstatement of accreditation could be obtained on a timely basis, if at all, and accreditation from a different qualified accrediting authority, if available, would require a significant amount of time. Any material disruption in accreditation would materially and adversely impact our business, financial condition, results of operations and cash flows.

Also, some states in which University of Phoenix is licensed require approval (in some cases, advance approval) of changes in ownership or control in order to remain authorized to operate in those states, and participation in grant programs in some states may be interrupted or otherwise affected by a change in ownership or control.

All of the Apollo Group Class B common stock, our only class of voting stock, is controlled by Dr. John G. Sperling, our founder and Chairman Emeritus, and his son, Mr. Peter V. Sperling, the Chairman of our Board of Directors. Specifically, approximately 51% of our Class B common stock is owned by a revocable grantor trust (the “JGS Trust”), of which Dr. Sperling is the sole trustee. We cannot prevent a change of ownership or control that would arise from a transfer of voting stock by Dr. Sperling, Mr. Sperling or the JGS Trust, including a transfer that may occur or be deemed to occur upon the death or incompetency of one or both of Dr. Sperling or Mr. Sperling or a transfer effected through an amendment of the JGS Trust.

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Risks Related to the Highly Regulated Industry in Which We Operate

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.

We are subject to extensive U.S. federal and state regulation as a provider of postsecondary education. The principal federal regulatory regime is established under the Higher Education Act of 1965, as it is amended and reauthorized from time to time, and the regulations promulgated under the Act by the U.S. Department of Education. Among other matters, these regulations govern the participation by University of Phoenix and Western International University in federal student financial aid programs under Title IV of the Higher Education Act (“Title IV”), which is the principal source of funding for students at these universities. We collected the substantial majority of our fiscal year 2013 total consolidated net revenue from receipt of Title IV financial aid program funds.

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

The applicable regulatory requirements cover virtually all phases of our U.S. operations, including educational program offerings, branching and classroom locations, 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 or cessation of existing educational programs and changes in our corporate structure and ownership.

The applicable regulations, standards and policies of the various regulatory agencies frequently change and often are subject to interpretative challenges, 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, standards or policies could have a material adverse effect on our accreditation, authorization to operate in various states, permissible activities, receipt of funds under Title IV programs, costs of doing business and our ability to implement beneficial changes in our academic or business model. We cannot predict how the requirements administered by these agencies will be applied or interpreted in the future, or whether our schools will be able to comply with any future changes in these requirements.

If we are found to have violated any applicable regulations, standards or policies, we may be subject to the following sanctions imposed by any one or more of the relevant regulatory agencies:

• Monetary fines or penalties;

• Limitation or termination of our operations or ability to grant degrees, diplomas and certificates;

• Restriction or revocation of our accreditation, licensure or other operating authority;

• Limitation, suspension or termination of our eligibility to participate in Title IV programs or state financial aid programs;

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

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

• Requirement of heightened cash monitoring by the U.S. Department of Education;

• Transfer 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 from the Department;

• Other civil or criminal penalties; and/or

• Other forms of censure.

In addition, in some circumstances of noncompliance or alleged noncompliance, we may be subject to qui tam lawsuits under the Federal False Claims Act or various, similar state false claim statutes. In these actions, private plaintiffs seek to enforce remedies under the Act on behalf of the U.S. federal government and, if successful, are entitled to recover their costs and to receive a portion of any amounts recovered by the U.S. federal government in the lawsuit. These lawsuits can be prosecuted by a private plaintiff, even if the Department does not agree with plaintiff’s theory of liability. In 2009, we settled a qui tam lawsuit relating to alleged payment of incentive compensation to our enrollment counselors for a total payment of $80.5 million, and we currently are subject to a another qui tam lawsuit alleging payment of improper incentive compensation in subsequent periods. For more information about the pending qui tam case, refer to Note 17, Commitments and Contingencies, in Part II, Item 8, Financial Statements and Supplementary Data.

In October 2011, the Office of the Inspector General of the U.S. Department of Education (“OIG”) notified us that it was conducting a nationwide audit of the Department’s program requirements, guidance, and monitoring of institutions of higher education offering distance education. In connection with the OIG’s audit of the Department, the OIG examined a sample of

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University of Phoenix students who enrolled during the period from July 1, 2010 to June 30, 2011. The OIG subsequently notified University of Phoenix that in the course of this review it identified certain conditions that the OIG believes are Title IV compliance exceptions at University of Phoenix. Although University of Phoenix is not the direct subject of the OIG’s audit of the Department, the OIG has asked University of Phoenix to respond so that it may consider University of Phoenix’s views in formulating its audit report of the Department. In September 2013, the OIG provided to University of Phoenix, among other institutions, a draft appendix to its audit report. The draft appendix again identifies compliance exceptions at University of Phoenix. University of Phoenix has responded to the appendix. These exceptions relate principally to the calculation of the amount of Title IV funds returned after student withdrawals and the process for confirming student eligibility prior to disbursement of Title IV funds.

Any of the penalties, injunctions, restrictions, lawsuits 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 decline in revenue and we would be unable to continue our business as it currently is conducted.

University of Phoenix’s certification to participate in Title IV programs expired in December 2012 and continues on a month-to-month basis. If University of Phoenix is not recertified to participate in Title IV programs by the U.S. Department of Education, University of Phoenix would not be eligible to participate in Title IV programs and we could not conduct our business as it is currently conducted.

University of Phoenix and Western International University are certified by the U.S. Department of Education to participate in Title IV programs. University of Phoenix was recertified in November 2009 and its current certification expired in December 2012. University of Phoenix has submitted necessary documentation for re-certification and its eligibility continues on a month-to-month basis until the Department issues its decision on the application. We have no reason to believe that the University’s application will not be renewed in due course, and it is not unusual to be continued on a month-to-month basis until the Department completes its review. However, we cannot predict whether, or to what extent, the imposition of Notice status on University of Phoenix by The Higher Learning Commission might have on this process. Western International University was recertified in May 2010 and its current certification expires in September 2014.

Generally, the recertification process includes a review by the Department of the institution’s educational programs and locations, administrative capability, financial responsibility, and other oversight categories. The Department 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.

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.

Action by the U.S. Congress to revise the laws governing federal student financial aid programs or reduce funding for these programs, including changes applicable only to proprietary educational institutions, could reduce our enrollment 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. Congress has begun Higher Education Act reauthorization hearings and there is currently an automatic one year extension that continues the current authorization through September 30, 2014. Changes to the Higher Education Act, including changes in eligibility and funding for Title IV programs, are likely to occur in connection with this reauthorization, but we cannot predict the scope or substance of any such changes.

In April 2011, Congress permanently eliminated year-round Pell Grant awards beginning with the 2011-2012 award year as part of the fiscal year 2011 Continuing Resolution spending bill. This change, which did not reduce the maximum annual grant level, did not have a material impact on our business. However, because the Pell Grant program is one of the largest non-defense discretionary spending programs in the federal budget, it is a target for reduction as Congress addresses the unprecedented U.S. budget deficit. A reduction in the maximum annual Pell Grant amount or changes in eligibility could result in increased student borrowing, which would make more difficult our ability to comply with other important regulatory requirements, such as the student loan cohort default rate regulations, which are discussed below, and could negatively impact enrollment.

In addition to Congress’s focus on the federal government’s funding challenges, in recent years, there has been increased focus by Congress on the role that proprietary educational institutions play in higher education. Beginning in 2010, various Congressional hearings have been held, including a series of hearings by the U.S. Senate Committee on Health, Education, Labor and Pensions (“HELP Committee”). In July 2012, the staff of Senator Tom Harkin, the Chairman of the HELP Committee, released a report entitled, “For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success.” The report, which was highly critical of the for-profit education sector, was not adopted by the full

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committee and the minority committee staff criticized it for relying on discredited sources and refusing to examine similar concerns in the non-profit education sector. Nonetheless, the report may be influential as Congress begins the process of reauthorizing the Higher Education Act as discussed above. The report advocates significant changes in the requirements governing participation by for-profit educational institutions in Title IV student financial aid programs, including the following:

• Condition access to federal student financial aid on meeting minimum student outcomes;

• Prohibit institutions from funding marketing, advertising and recruiting activities with federal financial aid dollars;

• Increase student loan cohort default rate tracking periods beyond the current three years;

• Require that proprietary colleges receive at least 15 percent of revenues from sources other than federal funds, including non-Title IV funding such as military benefit programs; and

• Impose criteria beyond accreditation and state authorization for access to federal student financial aid.

These changes, if adopted, could have a significant negative impact on our business and the proprietary education sector generally. In addition, other Congressional hearings and roundtable discussions may be held regarding various aspects of the education industry that may affect our business. We cannot predict what legislation, if any, may emanate from these Congressional committee hearings or what impact any such legislation might have on the proprietary education sector and our business in particular.

The confluence of the increasing scrutiny in Congress of the proprietary education sector and the unprecedented federal budget deficits increases the likelihood of legislation that will adversely impact our business. Any action by Congress that significantly reduces Title IV program funding, whether through across-the-board funding reductions, sequestration or otherwise, or materially impacts the eligibility of our institutions or students to participate in Title IV programs would have a material adverse effect on our enrollment, financial condition, results of operations and cash flows. Congressional action also could require us to modify our practices in ways that increase our administrative costs and reduce our operating income.

If Congress reduced the amount of available Title IV program funding, we would attempt to arrange for alternative sources of financial aid for our students, which may include lending funds directly to our students, but private sources would not be able to provide as much funding to our students or on terms comparable to Title IV. In addition, private funding sources 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, and would not be a practical alternative in the case of a significant reduction in Title IV financial aid.

If our institutional accrediting body loses recognition by the U.S. Department of Education, we could lose our ability to participate in Title IV programs, which would materially and adversely affect our business.

University of Phoenix and Western International University are institutionally accredited by The Higher Learning Commission (“HLC”) of the North Central Association of Colleges and Schools, one of the six regional accrediting agencies recognized by the U.S. Department of Education. Refer below for discussion of Notice status. Accreditation by an accrediting agency recognized by the Department is required in order for an institution to become and remain eligible to participate in Title IV programs.

If the Department ceased to recognize HLC for any reason, University of Phoenix and Western International University would not be eligible to participate in Title IV programs beginning 18 months after the date such recognition ceased unless HLC was again recognized or our institutions were accredited by another accrediting body recognized by the Department. In June 2013, the National Advisory Committee on Institutional Quality and Integrity, a Committee that advises the Secretary of Education on matters related to postsecondary accreditation and eligibility, recommended to the Secretary that HLC have continuing recognition as an eligible accreditor with certain conditions and required reports.

In the event of a loss of recognition of HLC by the Department, it would, among other things, render our schools and programs ineligible to participate in Title IV programs, affect our authorization to operate and to grant degrees in certain states and decrease student demand. If University of Phoenix became ineligible to participate in Title IV 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.

Ifwe fail to maintain our institutional accreditation, we could lose our ability to participate in Title IV programs, which would materially and adversely affect our business.

In July 2013, the accreditation of University of Phoenix was reaffirmed by the HLC through the 2022-2023 academic year. At the same time, HLC placed the University on Notice status for a two-year period due to concerns regarding governance, student assessment and faculty scholarship/research for doctoral programs. Notice status is a sanction that means that HLC has determined that an institution is on a course of action that, if continued, could lead the institution to be out of compliance with one or more of the HLC Criteria for Accreditation or Core Components. The University was assigned by HLC to the Standard

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Pathway reaffirmation process, pursuant to which the University will host a comprehensive evaluation visit in 2016-2017 and will undergo its next reaffirmation visit and process in 2022-2023.

The University is required to submit a Notice Report to the HLC by Fall of 2014 providing evidence that the University meets the Criteria for Accreditation, Core Components and Minimum Expectations (Assumed Practices after January 1, 2013) identified as the basis for the Notice sanction and that it has ameliorated the issues that led to the Notice sanction. In addition, in the Notice Report the University is also required to report on its progress in other areas of concern not included in the Notice sanction, including retention and graduation rates, three-year student loan cohort default rates, and credit hour policies and practices relating to learning teams. The University also will be required to host a focused visit by HLC no later than January 2015, to validate the contents of the Notice Report. The HLC Board of Trustees will review the University’s Notice Report, together with a report of the focused visit, at a meeting in 2015.

We believe that the imposition of the sanction of notice could adversely impact the reputation of University of Phoenix and its ability to attract and retain students, faculty and employees, and therefore could materially and adversely impact our business, financial condition, results of operations and cash flows. If, after the Notice period, HLC determines that University of Phoenix is not in compliance with one or more of HLC’s Criteria for Accreditation, HLC may elect to impose probation, which would have further, more prominent consequences for the University and our business. In addition, the changes made by University of Phoenix to its corporate governance and administrative structure could increase our operating costs and/or decrease our managerial flexibility to address the rapidly evolving and challenging postsecondary education market.

Continued institutional accreditation is critical to University of Phoenix’s business. If the University should lose its institutional accreditation, our business would be substantially impaired and we would not be able to continue our business as it is presently conducted.

Rulemaking by the U.S. Department of Education could materially and adversely affect our business.

The U.S. Department of Education has promulgated a substantial number of new regulations in the past three years that impact our business, including the following:

• Effective during 2011:

• Regulations removing certain “safe harbors” that previously defined the limits of the prohibition on the payment of incentive compensation to persons involved in enrollment and financial aid functions, and regulations prohibiting revenue sharing arrangements between education services providers that are affiliates of institutions that participate in Title IV programs and other institutions that participate in Title IV programs;

• Regulations requiring institutions that participate in Title IV programs to be authorized to operate by the appropriate postsecondary regulatory authority in each state where the institution has a physical presence;

• Regulations defining for the first time the standards to measure “preparation for gainful employment,” instituting consequences of failing the standards, and requiring reporting of certain data to the Department of Education (such regulations were vacated by the U.S. District Court for the District of Columbia in 2012); and

• Regulations expanding the definition of misrepresentation and the sanctions that the Department may impose for engaging in a substantial misrepresentation (such regulations were partially remanded and vacated in 2012).

• Effective during 2012:

• Regulations requiring certain disclosures to students related to gainful employment.

These regulations have increased our operating cost and in some cases required us to change the manner in which we operate our business. New or amended regulations in the future, particularly regulations focused on the proprietary sector, could further negatively impact our business.

Our schools and programs would lose their eligibility to participate in federal student financial aid programs if the percentage of revenues derived from those programs is too high, in which event we could not conduct our business as it is currently conducted.

University of Phoenix and Western International University, and all other proprietary institutions of higher education, are subject to the so-called “90/10 Rule” under the Higher Education Act, as reauthorized. Under this rule, a proprietary institution will be ineligible to participate in Title IV programs for at least two fiscal years 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. If an institution is determined to be ineligible, any disbursements of Title IV program funds made while ineligible must be repaid to the Department. An institution that derives more than 90% of its cash basis revenue from Title IV programs for any single fiscal year will be automatically placed on provisional certification for two fiscal years and will be subject to possible additional sanctions determined to be

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appropriate under the circumstances by the U.S. Department of Education. While the Department has broad discretion to impose additional sanctions on such an institution, there is only limited precedent available to predict what those sanctions might be, particularly in the current regulatory environment. For example, the Department could impose conditions in the provisional certification such as:

• Restrictions on the total amount of Title IV program funds that may be disbursed to students;

• Restrictions on programmatic and geographic expansion;

• Requirements to obtain and post letters of credit;

• Additional reporting requirements such as interim financial reporting; or

• Any other conditions deemed appropriate by the Department.

In addition, if an institution is subject to a provisional certification at the time that its current program participation agreement expired, the effect on recertification of the institution or continued eligibility in Title IV programs pending recertification is uncertain.

The 90/10 Rule percentages for University of Phoenix and Western International University were the following for the respective periods:

	Year Ended August 31,
	2013	2012	2011(1)
University of Phoenix	83%	84%	86%
Western International University	66%	68%	66%

⁽¹⁾ Calculated excluding the temporary relief from the impact of loan limit increases, which was allowable for amounts received and applied to eligible charges between July 1, 2008 and June 30, 2011 that were attributable to the increased annual loan limits.

Although the University of Phoenix 90/10 Rule percentage has decreased in recent years, University of Phoenix’s percentage increased materially over the years prior to fiscal year 2010. This prior increase was primarily attributable to the increase in student loan limits effected by the Ensuring Continued Access to Student Loans Act of 2008 and expanded eligibility for and increases in the maximum amount of Pell Grants.

The decrease in the University of Phoenix 90/10 Rule percentage is attributable to changes in student mix and their associated available sources of tuition funding. As the University’s enrollment has declined in recent years, the proportion of its student body that uses a lower percentage of Title IV funds for eligible tuition and fees, such as students that receive tuition assistance from employers or that participate in military benefit programs, has increased. The University has also implemented various other measures in recent years intended to reduce the percentage of its cash basis revenue attributable to Title IV funds, including encouraging students to carefully evaluate the amount of necessary Title IV borrowing and continued focus on professional development and continuing education programs. The University has substantially no control over the amount of Title IV student loans and grants sought by or awarded to its students.

Based on recent trends, we do not expect the 90/10 Rule percentage for University of Phoenix to exceed 90% for fiscal year 2014. However, the 90/10 Rule percentage for University of Phoenix remains high and could exceed 90% in the future depending on the degree to which its various initiatives are effective, the impact of future changes in its enrollment mix, and regulatory and other factors outside our control, including any reduction in military benefit programs or changes in the treatment of such funding for purposes of the 90/10 Rule calculation.

Various legislative proposals have been introduced in Congress that would heighten the requirements of the 90/10 Rule. For example, in January 2012, the Protecting Our Students and Taxpayers Act was introduced in the U.S. Senate and, if adopted, would reduce the 90% maximum under the rule to the pre-1998 level of 85%, cause tuition derived from military benefit programs to be included in the 85% portion under the rule instead of the 10% portion as is the case today, and impose Title IV ineligibility after one year of noncompliance rather than two. If these or similar proposals are adopted, University of Phoenix may be required to increase efforts and resources dedicated to reducing the percentage of cash basis revenue attributable to Title IV funds.

Any necessary further efforts to reduce the 90/10 Rule percentage for University of Phoenix, especially if the percentage exceeds 90% for a fiscal year, may involve taking measures which reduce our revenue, increase our operating expenses, or both, in each case perhaps significantly. In addition, we may be required to make structural changes to our business in the future in order to remain in compliance, which changes may materially alter the manner in which we conduct our business and materially and adversely impact our business, financial condition, results of operations and cash flows. Furthermore, these required changes could make it more difficult to comply with other important regulatory requirements, such as the student loan cohort default rate regulations, which are discussed below.

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An increase in student loan default rates could result in the loss of eligibility to participate in Title IV programs, which would materially and adversely affect our business.

To remain eligible to participate in Title IV programs, an educational institution’s student loan cohort default rates must remain below certain specified levels. Each cohort is the group of students who first enter into student loan repayment during a federal fiscal year (ending September 30). The cohort default rates are published by the U.S. Department of Education approximately 12 months after the end of the applicable measuring period. Thus, in September 2013, the Department published the two-year cohort default rates for the 2011 cohort and the three-year cohort default rates for the 2010 cohort. As discussed below, the measurement period for the student loan cohort default rates has been increased from two to three years starting with the 2009 cohort; however both three-year and two-year cohort default rates are currently published until the transition to the three-year rate is completed.

For the two-year requirements that are effective through the 2011 cohort published in September 2013, educational institutions lose eligibility to participate in Title IV programs if their two-year cohort default rate equals or exceeds 25% for three consecutive cohort years or 40% for any given year. The Department began publishing the official three-year cohort default rates with the publication of the 2009 cohort default rate in September 2012. If an institution’s three-year cohort default rate equals or exceeds 30% for any given year, it must establish a default prevention task force and develop a default prevention plan with measurable objectives for improving the cohort default rate. We believe that our current repayment management efforts meet these requirements. Beginning with the three-year cohort default rate for the 2011 cohort published in September 2014, only the three-year rates will be applied for purposes of measuring compliance. Educational institutions will lose eligibility to participate in Title IV programs if their three-year cohort default rate equals or exceeds 40% for any given year or 30% for three consecutive years.

The cohort default rates for University of Phoenix, Western International University and for all proprietary postsecondary institutions for the applicable federal fiscal years were as follows:

	Two-Year Cohort Default Rates for Cohort Years Ended September 30,			Three-Year Cohort Default Rates for Cohort Years Ended September 30,
	2011	2010	2009	2010	2009	2008
University of Phoenix(1)	14.3%	17.9%	18.8%	26.0%	26.4%	21.1%
Western International University(1)	7.5%	7.7%	9.3%	10.8%	13.7%	16.3%
All proprietary postsecondary institutions(1)	13.6%	12.9%	15.0%	21.8%	22.7%	22.4%

⁽¹⁾ Based on information published by the U.S. Department of Education. The 2008 three-year cohort default rates are trial rates published by the Department for informational purposes only.

We believe that our efforts to shift our student mix to a higher proportion of bachelor’s and graduate level students and our investment in student protection initiatives and repayment management services will continue to stabilize and over time favorably impact our rates. As part of our repayment management initiatives, effective with the 2009 cohort, we engaged third-party service providers to assist our students who are at risk of default. These service providers contact students and offer assistance, which includes providing students with specific loan repayment information such as repayment options and loan servicer contact information, and they attempt to transfer these students to the relevant loan servicer to resolve their delinquency. In addition, we are intensely focused on student retention and enrolling students who have a reasonable chance to succeed in our programs, in part because the rate of default is higher among students who do not complete their degree program compared to students who graduate.

Based on our most recent trends, we expect that our 2011 three-year cohort default rates will be lower than the 2010 three-year cohort default rates. However, if our student loan default rates approach the applicable limits, we may be required to increase efforts and resources dedicated to improving these default rates. This is challenging because most borrowers who are in default or at risk of default are no longer students, and we may have only limited contact with them. Furthermore, recently there has been increased attention by members of Congress and others on default aversion activities of proprietary education institutions. If such attention leads to congressional or regulatory action restricting the types of default aversion assistance that educational institutions are permitted to provide, the default rates of our former students may be negatively impacted. Accordingly, there is 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 experience a substantial increase in our student loan default rates.

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.

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. Prior to July 1, 2011, such authorization was not

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specifically required for the institution’s students to become eligible for Title IV programs. Under the program integrity rules adopted by the Department effective July 1, 2011, institutions are required to obtain specific regulatory approval to operate in such states. University of Phoenix is specifically authorized to operate in all but two of the domestic jurisdictions in which it operates. In Hawaii and New Mexico, University of Phoenix has a physical presence and is qualified to operate through July 1, 2014 without specific state regulatory approval due to available state exemptions and annual waivers from the U.S. Department of Education. Each of these states must implement additional statutes or regulations in order for the University and other institutions to remain eligible for Title IV funds in respect of operations within the states.

If such implementation is not completed by the respective states, University of Phoenix could continue to operate in these states without specific state approval through July 1, 2014 or beyond if the U.S. Department of Education provides for additional waivers to take effect on and after July 1, 2014 and University of Phoenix obtains such further annual waivers. However, if we cannot obtain either specific authorization or an additional annual waiver for the period after July 1, 2014, our business could be adversely impacted.

The U.S. Department of Education gainful employment regulations may limit the programs we can offer students and increase our cost of operations.

Under the Higher Education Act, as reauthorized, proprietary schools are generally eligible to participate in Title IV programs only in respect of educational programs that lead to “gainful employment in a recognized occupation.” Historically, this concept has not been defined in detailed regulations. On October 29, 2010 and June 13, 2011, the Department published final regulations on gainful employment.

The final gainful employment rules defined - for the first time - the standards to measure “preparation for gainful employment in a recognized occupation.” The rules established three annual standards related to student loan borrowing by which gainful employment was to be measured for each academic program of study: (i) percentage of the program’s former students who entered repayment during the cohort period and are current in their student loan repayment, (ii) ratio of discretionary income to total student loan debt for the program’s completers and (iii) ratio of actual earnings to total student loan debt for the program’s completers. As adopted, the rules provided that an academic program that passed any one standard for a given year would be considered to be providing training leading to gainful employment. If an academic program failed all three metrics for a given year, the institution would be required to disclose the failure to existing and prospective students including the amount by which the program did not meet the minimum standards and describe the program’s plan for improvement. After two failures within three years, the institution would be required to inform students in the failing program that their debts may be unaffordable, that the program may lose eligibility, and what transfer options exist. After three failures within four years, the academic program would lose eligibility to participate in Title IV programs for at least three years.

In addition, the rules as adopted required institutions to notify the Department at least 90 days before the commencement of new educational programs leading to gainful employment in recognized occupations, and in some cases, would require that the Department approve the program.

These rules were vacated by the U.S. District Court for the District of Columbia on June 30, 2012. The court also vacated the rules requiring reporting to the Department of information about students who complete a program leading to gainful employment in a recognized occupation, including the amount of debt incurred under private loans or institutional finance plans, matriculation information, and end of year enrollment information. On July 30, 2012, the Department filed a motion asking the court to reinstate the requirement that institutions report information about student loan-repayment rates and debt-to-income ratios. The motion was denied on March 19, 2013.

The Court did not vacate the portion of the rules requiring proprietary postsecondary institutions to provide prospective students with each eligible program’s recognized occupations, cost, completion rate, job placement rate, and median loan debt of program completers beginning July 1, 2011. The disclosure requirements and the requirements for reporting information relating to our programs to the Department and to our students have increased our administrative burdens. These reporting requirements could adversely impact student enrollment, persistence and retention if our reported program information compares unfavorably with other reporting educational institutions.

A negotiated rulemaking committee was convened by the U.S. Department of Education in September 2013 specifically on the topic of gainful employment. Prior to the September 2013 committee meeting, the Department released draft regulations on gainful employment. The draft regulations provide for two metrics: an annual debt-to-earnings ratio, and a debt service-to-discretionary income ratio. As proposed, a program would become ineligible for Title IV funding if it fails both metrics in two out of any three consecutive years, or is in a specified “warning zone” for either metric in any four consecutive years. The timing and substance of final regulations dealing with gainful employment cannot be predicted at this time. If the final rules regarding gainful employment metrics are reinstated on appeal or the new draft rules are promulgated by the Department in a manner that withstands challenge, the continuing eligibility of our educational programs for Title IV funding would be at risk due to factors beyond our control, such as changes in the actual or deemed income level of our graduates, changes in student

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borrowing levels, increases in interest rates, changes in the federal poverty income level relevant for calculating discretionary income, changes in the percentage of our former students who are current in repayment of their student loans, and other factors. The exposure to these external factors could reduce our ability to confidently offer or continue certain types of programs for which there is market demand, and therefore would impact our ability to maintain or grow our business.

A failure to demonstrate “administrative capability” or “financial responsibility” may result in the loss of eligibility to participate in Title IV programs, which would materially and adversely affect our business.

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. The failure of an institution to satisfy any of the criteria used to assess administrative capability may cause the Department to determine that the institution lacks administrative capability and, therefore, subject the institution to additional scrutiny or deny eligibility for Title IV programs. These criteria require, among other things, that the institution:

• Comply with all applicable Title IV program regulations;

• 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 student loan cohort default rates 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 Department, or post a letter of credit in favor of the Department and possibly accept other conditions on its participation in Title IV programs. Pursuant to the Title IV regulations, each eligible higher education institution must satisfy a measure of financial responsibility that is based on a weighted average of three annual tests which assess the financial condition of the institution. The three tests measure primary reserve, equity, and net income ratios. 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 also considered financially responsible, and the institution may continue to participate as a financially responsible institution for up to three years, subject to additional monitoring and other consequences. 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 fiscal year 2013 composite scores for Apollo Group, University of Phoenix and Western International University were as follows:

	Fiscal Year 2013 Composite Score
Apollo Group	2.6
University of Phoenix	2.5
Western International University	1.7

Under some circumstances, particularly if our composite scores approach 1.5 in the future, which could result from acquisitions, declines in our institutions’ profitability or other factors, we may be limited in our ability to deploy capital to effect one or more desirable transactions or initiatives due to the impact on our composite scores.

If we, or our schools eligible to participate in Title IV programs fail to maintain administrative capability or financial responsibility, as defined by the Department, our 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.

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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.

Our subsidiary, Institute for Professional Development, Inc. (“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.

Non-U.S. Operations

Our non-U.S. operations are subject to risks not inherent in our U.S. operations, which could adversely affect our business.

We operate physical and online educational institutions in the United Kingdom, Europe, Mexico, Chile and elsewhere, and we are actively seeking further expansion in other countries, including India, where we are developing a joint venture. Our operations in each of the relevant foreign jurisdictions are subject to regulatory requirements relating to education providers, as well as foreign businesses. Many foreign countries have not fully embraced the proprietary education model, and in other countries, proprietary education remains controversial. As a result, our foreign operations are subject to the political risk that existing regulations will be interpreted unfavorably or new regulations will be adopted that render our business model impractical. In addition, our non-U.S. operations are subject to the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act which require extensive compliance vigilance on our part and, in some cases, puts our foreign operations at a competitive disadvantage with local companies. If one or more of our foreign operations ceases to be economically practical, we may be forced to discontinue such operations or seek a buyer, either of which might result in a substantial loss of value to Apollo Group.

Risks Related to Our Business

We face intense and increasing 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 and is becoming increasingly so. We compete with traditional public and private two-year and four-year degree-granting regionally accredited colleges and universities, other proprietary degree-granting regionally accredited schools and alternatives to higher education. In addition, we face increasing competition from various emerging non-traditional, credit-bearing and noncredit-bearing education programs, provided by both proprietary and not-for-profit providers, including massive open online courses (so-called MOOCs) offered worldwide without charge by traditional educational institutions, synchronous massive online courses (SMOCs) offered worldwide for credit by traditional educational institutions, and other direct-to-consumer education services. Some of our competitors have greater financial and nonfinancial resources than we have and are able to offer programs similar to ours at a lower tuition level for a variety of reasons, including the availability of direct and indirect government subsidies, government and foundation grants, large endowments, tax-deductible contributions and other financial resources not available to proprietary institutions, or by providing fewer student services or larger class sizes. For example, a typical community college is subsidized by local or state government and, as a result, tuition rates for associate’s degree programs are much lower at community colleges than at University of Phoenix. Also, like University of Phoenix, other proprietary educational institutions have begun to deploy pricing incentives to impact demand. We believe that price competition through targeted programs involving student scholarships and otherwise will increase throughout the industry in the future. We have implemented scholarships and discounts which reduce the amount of tuition we receive, and further downward pressure on our tuition rates may cause us to implement further pricing incentives, which will adversely affect our revenue.

In addition, an increasing number of traditional colleges and community colleges are offering distance learning and other online education programs, including programs that are geared towards the needs of working learners. This trend has been accelerated by private companies that provide and/or manage online learning platforms for traditional colleges and community colleges. As the proportion of traditional colleges providing alternative learning modalities increases, we continue to face increasing competition from traditional colleges, including colleges with well-established reputations. Already, this type of competition is significant. As the online and distance learning segment of the postsecondary education market matures, we believe that the intensity of the competition we face will continue to increase.

Furthermore, the total postsecondary student population has recently declined, with the for-profit share disproportionately affected. Enrollment in Title IV postsecondary degree-granting institutions in spring 2013 decreased 2.3%, compared to spring 2012, with the largest decrease of 8.7% taking place among four-year for-profit institutions. Although the U.S. Department of Education projects that enrollment in degree-granting, postsecondary institutions will grow 13% over the ten-year period ending in the fall of 2021 to approximately 24.1 million students, this projected growth compares with a 33.7% increase

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reported in the prior ten-year period ended in 2011, when enrollment increased from 15.9 million students in 2001 to approximately 21.3 million students in 2011.

The combination of flat or declining postsecondary student population and increased capacity in the postsecondary education sector will further intensify competition.

This intense competition makes it more challenging for us to enroll students who are likely to succeed in our educational programs, which has contributed to the decline in recent years in our enrollment levels and put further downward pressure on our tuition rates. If we are not successful in adapting our business to meet these competitive challenges, our enrollment may continue to decline, which could materially and adversely affect our business, financial condition, results of operations and cash flows.

Changes we are making to our business to improve the student experience and more cost-effectively deliver services to our students may adversely affect our enrollment and operating results.

We are evaluating and making changes across a broad spectrum of our business and systems to improve the student experience and more cost-effectively deliver services to our students. In furtherance of this, we are implementing several important initiatives, including the following:

• Incorporating career resources such as career planning tools and faculty support directly into the student learning experience to enhance the connection between education and careers;

• Upgrading our learning and data platforms;

• Piloting a new format of University of Phoenix’s University Orientation program;

• Increasing use of full-time faculty in initial University of Phoenix courses; and

• Streamlining and automating administrative processes, including student-facing processes.

These initiatives require significant time, energy and resources, and involve many significant interrelated and simultaneous changes in our processes and programs. We may not succeed in achieving our objectives of improving our services to students and reducing the cost of delivering services, due to organizational, operational, regulatory or other constraints. If our reengineering efforts are not successful, we may experience reduced enrollment, increased expense or other impacts on our business that materially and adversely impact our operating results and cash flows.

The reduction in the number of our on-ground locations could negatively impact our enrollment and operating results.

We are evaluating substantially all of our business processes, and reengineering them as necessary, to more efficiently support our business needs and objectives. In connection with this, University of Phoenix initiated a plan during fiscal year 2013 to close 115 locations. In part due to this reduction in locations, our non-faculty employee headcount decreased approximately 3,000 during fiscal year 2013 compared to the prior year. The closures will continue into fiscal year 2014 and beyond as University of Phoenix obtains the necessary regulatory approvals and completes its teach-out obligations. Because of the rapidly evolving and transformational changes in higher education, the University continues to evaluate the extent, functionality and location of its ground facilities, and may close additional facilities in the future.

We have continued restructuring our business subsequent to August 31, 2013, which includes workforce reductions of approximately 500 non-faculty personnel.

We have recorded charges associated with this business optimization and will record further charges as we complete our plan to close on-ground locations. However, the actual costs that we will incur could be higher than expected and the benefits could be less than anticipated due to a number of factors, including:

• Unanticipated requirements or expense of teach-out obligations for the ground facilities not yet closed;

• Higher than expected lease exit costs, which are principally dependent on the amount and timing of sublease income associated with the facilities;

• Employment claims associated with the reduction in workforce;

• Higher costs than anticipated to deliver our core and other services after the closures; and

• Unexpected costs or delays associated with regulatory compliance.

These restructuring activities may adversely impact our ability to grow our business, deliver services, enroll new students, retain key employees or comply with applicable laws and regulations, and may negatively impact employee morale or have other adverse consequences for our business which cannot now be predicted, any of which could materially and adversely impact our business, financial condition, results of operations and cash flows.

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Our financial performance depends on our ability to continue to develop awareness among, and enroll and retain students; adverse publicity may negatively impact demand for our programs.

Building awareness of our schools and the programs we offer is critical to our ability to attract prospective students. Over the last several fiscal years, we have expended significant resources on marketing and we expect to do so in the future. 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. It is also critical to our success that we convert these prospective students to enrolled students in a cost-effective manner and that these enrolled students remain active in our programs.

The proprietary postsecondary education sector is under regulatory and other scrutiny which has led to media attention that has portrayed the sector in an unflattering light. This negative media attention may cause some prospective students to choose educational alternatives outside of the proprietary sector or may cause them to choose proprietary alternatives other than University of Phoenix, either of which could negatively impact our new enrollments.

Some of the additional factors that could prevent us from successfully enrolling and retaining students in our programs include:

• Increased competition from schools offering distance learning and other online educational programs;

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

• Regulatory investigations that may damage our reputation;

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

• Litigation that may damage our reputation;

• 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;

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

• A decline in the acceptance of online education;

• Unavailability of ground locations where students want to attend or concern about recent closures of ground campuses; and

• Disruptions to our information technology systems.

If one or more of these factors reduces demand for our programs, our enrollment could be negatively affected or our costs associated with each new enrollment could increase, or both, either of which could have a material adverse impact 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 education market needs and technology; if we fail to keep pace or fail in implementing or adapting to new educational offerings and technologies, our business may be adversely affected.

Increasingly, employers demand that their new employees possess appropriate technological skills and also appropriate “soft” skills, such as communication, critical thinking and teamwork. The nature of the skills required can evolve rapidly in today’s changing economic and technological environment. Accordingly, it is important for our schools’ educational programs to evolve in response to 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, incur marketing expenses and reallocate other resources. We may have 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,

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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.

If the proportion of our students who enroll with, and accumulate, fewer than 24 credits increases, we may experience increased cost and reduced profitability.

Prior to fiscal year 2010, a substantial proportion of our overall growth arose from an increase in associate’s degree students enrolled in University of Phoenix. As a result of this, the proportion of our Degreed Enrollment composed of students who enroll with fewer than 24 credits increased. We experienced certain adverse effects from this shift, such as increases in student loan default rates. Although the proportion of our Degreed Enrollment composed of associate’s degree students decreased in recent fiscal years, the proportion of our bachelor’s degree students who enroll with fewer than 24 incoming credits has increased. If the proportion of our students with fewer than 24 incoming credits continues to increase, we may experience adverse 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, an increase in our student loan default rates, an increase in our bad debt expense, more limited ability to implement tuition price increases and other effects that may adversely affect our business, financial condition, results of operations and cash flows.

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

The performance and reliability of our computer network and phone systems infrastructure at our schools, including our online programs, is critical to our operations, reputation and ability to attract and retain students. From time to time we experience intermittent outages of the information technology systems used by our students and by our employees, including system-wide outages. Any computer system error or failure, regardless of cause, could result in a substantial outage that materially disrupts our online and ground operations. Not all of our critical systems are protected by a validated formal disaster recovery plan and redundant disaster recovery infrastructure at a geographically remote data center. We are continuing execution of our plan to implement disaster recovery infrastructure for our remaining critical systems to allow timely recovery from catastrophic failure. For those systems not yet protected, a catastrophic failure or unavailability for any reason of our principal data center may require us to replicate the function of this data center at our existing remote data facility or elsewhere, and could result in the loss of data. An event such as this may require service restoration activities that could take up to several weeks to complete.

We have upgraded or are in the process of upgrading a substantial portion of our key IT systems, including our student learning system, student services platform and corporate applications, and retiring the related legacy systems. Although these new systems are expected to improve the productivity, scalability, reliability and sustainability of our IT infrastructure, the transition from the legacy systems entails risk of unanticipated disruption or failure to fully replicate all necessary data processing and reporting functions, including in our core business functions.

Any disruption in our IT systems, including any disruptions and system malfunctions that may arise from our upgrade initiative, could significantly impact our operations, reduce student and prospective student confidence in our educational institutions, adversely affect our compliance with applicable regulations and accrediting body standards and have a material adverse effect on our business, financial condition, results of operations and cash flows. We do not maintain material amounts of insurance in respect of some types of these disruptions, and there is no assurance that insurance proceeds, if available, would be adequate to compensate us for damages sustained due to these disruptions.

In addition, we face an ever increasing number of threats to our computer systems, including unauthorized activity and access, malicious penetration, system viruses, malicious code and organized cyber-attacks, which could breach our security and disrupt our systems. These risks increase when we are making changes to our IT system, such as our substantial IT upgrade initiative currently underway and our frequent updates to enable instructional innovation and address new student populations. From time to time we experience security events and incidents, and these reflect an increasing level of sophistication, organization and innovation. 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 and personally identifiable information or cause interruptions or malfunctions in operations, perhaps over an extended period of time prior to detection. As a result, we may be required to expend significant additional resources to protect against the threat of or alleviate problems caused by these system disruptions and security breaches. Any of these events could have a material adverse effect on our business, financial condition, results of operations and cash flows. Although we maintain insurance in respect of these types of events, there is no assurance that available insurance proceeds would be adequate to compensate us for damages sustained due to these events.

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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, programs in which employers directly pay tuition 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 further develop our existing relationships, if our existing relationships deteriorate or end, or if we are unable to offer programs that teach skills demanded by employers, 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.

If we cannot attract qualified new personnel or retain our existing senior management team, our business could be adversely affected.

Our future performance depends on the continued services and continuing contributions of our senior management to execute on our business plan and to identify and pursue new opportunities. Our future success also depends in large part on our continued ability to attract and retain qualified personnel. The loss of the services of our senior management for any reason could adversely affect our business and results of operations.

The President of University of Phoenix announced his retirement in September 2013, which will be effective upon the naming of his successor. In addition, since the March 2013 retirement of Apollo’s President and Chief Operating Officer, that role has been filled in an acting capacity, and since early in fiscal year 2013, the Provost of University of Phoenix has been filled in an acting capacity. We and University of Phoenix are in the process of conducting comprehensive searches to fill these positions. Competition for such personnel can be intense, and our ability to attract, select and hire new candidates may prove difficult, take more time than anticipated, and be costly. A lack of management continuity could also result in operational and administrative inefficiencies, make achievement of our strategic and management objectives more challenging and may make recruiting for future management positions more difficult. If we are unable to effectively manage our business through these management transitions our business and results of operation could be adversely affected.

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 various lawsuits.

In November 2010, the District Court for the District of Arizona consolidated three securities class action complaints into a single action entitled, In re Apollo Group, Inc. Securities Litigation and appointed the “Apollo Institutional Investors Group” consisting of the Oregon Public Employees Retirement Fund, the Mineworkers’ Pension Scheme, and Amalgamated Bank as lead plaintiffs. The consolidated complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and asserts a putative class period of May 21, 2007 to October 13, 2010.

On May 25, 2011, we were notified that a qui tam complaint had been filed against us by private relators under the Federal False Claims Act and California False Claims Act. The complaint alleges, among other things, that University of Phoenix has violated the Federal False Claims Act since December 12, 2009 and the California False Claims Act for the preceding ten years by falsely certifying to the U.S. Department of Education and the State of California that University of Phoenix was in compliance with various regulations that require compliance with federal rules regarding the payment of incentive compensation to admissions personnel, in connection with University of Phoenix’s participation in student financial aid programs. In addition to injunctive relief and fines, the relators seek significant damages on behalf of the Department of Education and the State of California, including all student financial aid disbursed by the Department to our students since December 2009 and by the State of California to our students during the preceding ten years.

During fiscal year 2011, we received notices from the Attorney General’s Office of each of Florida, Massachusetts and Delaware regarding their investigations under applicable consumer protection laws of the business practices at University of Phoenix. We received an additional notice from Massachusetts in fiscal year 2013. We believe that there may be an informal coalition of states considering investigations into recruiting practices and the financing of education at proprietary educational institutions, which may or may not include these three states. The consumer protection laws of states are broad and subject to substantial interpretation. If our past or current business practices at University of Phoenix are found to violate applicable consumer protection laws, we could be subject to monetary fines or penalties and possible limitations on the manner in which we conduct our business, which could materially and adversely affect our business, financial condition, results of operations and cash flows. To the extent that more states commence such investigations or multiple states act in a concerted manner, the cost of responding to these inquiries and investigations could increase significantly and the potential impact on our business would be substantially greater.

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We are also subject to various other lawsuits, investigations and claims, covering a range of matters. Refer to Note 17, Commitments and Contingencies, in Part II, Item 8, Financial Statements and Supplementary Data, which is incorporated herein by reference, for further discussion of pending litigation and other proceedings. In addition, changes in our business and pending actions by regulators and accreditors may increase the risk of claims by our shareholders.

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. An adverse outcome in any of these matters could also materially and adversely affect our licenses, accreditations and eligibility to participate in Title IV programs.

Our acquisitions may not be successful and may result in additional debt or dilution to our shareholders, which could adversely affect our business.

As part of our growth strategy, we are actively considering acquisition opportunities 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;

• Inability to successfully operate and grow the acquired businesses, including, with respect to BPP, risks related to:

• Damage to BPP’s reputation, including as a result of unfavorable public opinion in the United Kingdom regarding proprietary schools and ownership of BPP by a U.S. company; and

• Uncertainty of future enrollment relating to BPP’s recently established Business School, reduced demand for professional degrees, increased competition for professional examinations training, changes in the content of or procedures for professional examinations or other factors.

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

• Challenges retaining the key employees of the acquired operation;

• Operating, market or other challenges causing operating results to be less than projected;

• 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 have experienced many challenges in connection with our previous acquisitions and cannot be certain that any 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 business, 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 and could negatively impact our compliance with the U.S. Department of Education composite score measure of financial responsibility. 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.

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

As part of our growth strategy, we have acquired 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, including laws and regulations hindering for-profit education enterprises;

• Changes in existing laws to prohibit or restrict for-profit education, whether arising from public discontent or otherwise;

• Currency exchange rate fluctuations and/or price controls or restrictions on exchange of foreign currencies;

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

• Potential political and economic instability in the countries in which we operate, including potential student uprisings such as the 2011 student protests in London against tuition increases and the recent student protests in Chile against for-profit education;

• Expropriation of assets by local governments;

• Multiple and possibly overlapping and conflicting tax laws;

• Compliance with anti-corruption regulations such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act of 2010;

• 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.

Any one or more of these risks could negatively impact our non-U.S. operations and materially and adversely impact 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 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 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. Refer to Note 17, Commitments and Contingencies, in Part II, Item 8, Financial Statements and Supplementary Data, for a description of pending patent litigation.

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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 including Facebook, PhoenixConnect, University of Phoenix’s proprietary social media network, and other social networks. The laws governing the fair use of these third-party materials are imprecise and adjudicated on a case-by-case basis, which makes it challenging to adopt and implement appropriately balanced institutional policies governing these practices. As a result, we could 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.

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, and the increased availability and use of mobile data devices by our employees and students increases the risk of unintentional disclosure of personal information. 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 ensure 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 may have unanticipated tax liabilities that could adversely impact our results of operations and financial condition.

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 involves various judgments, and therefore the ultimate tax determination is subject to uncertainty. In addition, changes in tax laws, regulations, or rules may adversely affect our future reported financial results, may impact the way in which we conduct our business, or may increase the risk of audit by the Internal Revenue Service or other tax authorities.

Our U.S. federal income tax return for fiscal year 2011 is currently under review by the Internal Revenue Service. In addition, 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 result in tax liabilities that materially differ from our historical income tax provisions and accruals.

In addition, an increasing number of states are adopting new laws or changing their interpretation of existing laws regarding the apportionment of service revenues for corporate income tax purposes in a manner that could result in a larger proportion of our income being taxed by the states into which we sell services. These legislative and administrative changes could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Item 1B - Unresolved Staff Comments

None.

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Item 2 - Properties

Our corporate headquarters are principally located in Phoenix, Arizona. As of August 31, 2013, we used 328 facilities representing 8.5 million square feet as follows:

	Leased		Owned
	Square Feet	# of Properties	Square Feet	# of Properties
University of Phoenix(1)	6,079,775	209	—	—
Apollo Global(2)	443,499	49	598,245	16
Other(3)	1,343,265	54	—	—
	7,866,539	312	598,245	16

⁽¹⁾ University of Phoenix has campus locations and learning centers throughout the U.S., including the Commonwealth of Puerto Rico.

⁽²⁾ Apollo Global’s properties are principally located in the United Kingdom, Mexico and Chile.

⁽³⁾ The substantial majority of Other properties is office space located in the U.S.

Our properties consist of both office and dual purpose space, which includes classroom and office facilities. 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 our educational facilities and projected enrollment to determine facility needs.

During fiscal year 2013, University of Phoenix initiated a plan to realign its ground locations throughout the U.S., which includes closing 115 locations (approximately two million square feet). As of August 31, 2013, the University has closed approximately two-thirds of the locations included in the plan, with the remaining locations expected to be closed as regulatory approvals are obtained and as teach-out obligations are satisfied. The properties in the above table include locations in the University of Phoenix realignment plan for which we still have a remaining lease obligation as of August 31, 2013. These properties represent approximately 1.1 million of the square feet in the above table.

Because of the rapidly evolving and transformational changes in higher education, University of Phoenix continues to evaluate the extent, functionality and location of its ground facilities, and may close additional facilities in the future. Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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.

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 17, Commitments and Contingencies, in Item 8, Financial Statements and Supplementary Data, which is incorporated herein by reference.

Item 4 - Mine Safety Disclosures

Not applicable.

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.

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The following 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:

	2013				2012
	High		Low		High		Low
First Quarter	$	30.41	$	18.36	$	50.02	$	37.08
Second Quarter	$	22.48	$	16.80	$	58.29	$	42.29
Third Quarter	$	21.91	$	15.98	$	43.80	$	30.93
Fourth Quarter	$	22.91	$	16.89	$	38.34	$	25.77

Holders

As of August 31, 2013, there were approximately 228 registered holders of record of Apollo Class A common stock and four registered holders of record of Apollo 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 Class A and Apollo Class B common stock, 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 Class A and Apollo Class B common stock in an identical manner as follows: holders of our Apollo Class A common stock and Apollo 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 near-term. 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.

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, which is incorporated herein by reference.

Purchase of Equity Securities

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. During the third quarter of fiscal year 2013, our Board of Directors authorized an increase in the amount available under our share repurchase program up to an aggregate amount of $250 million. There is no expiration date on the repurchase authorizations and repurchases occur at our discretion.

As of August 31, 2013, $250 million remained available under our share repurchase authorization. The amount and timing of future share repurchase authorizations and repurchases, if any, will be made as market and business conditions warrant. Repurchases may be made on the open market through various methods including but not limited to accelerated share repurchase programs, 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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The following details changes in our treasury stock during the three months ended August 31, 2013:

(In thousands, except per share data)	Total Number of Shares Repurchased		Average Price Paid per Share		Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs		Maximum Value of Shares Available for Repurchase Under the Plans or Programs
Treasury stock as of May 31, 2013	75,653		$	50.87	75,653		$	250,000
New authorizations	—		—		—		—
Shares repurchased	—		—		—		—
Shares reissued	(5	)	50.87		(5	)	—
Treasury stock as of June 30, 2013	75,648		$	50.87	75,648		$	250,000
New authorizations	—		—		—		—
Shares repurchased	—		—		—		—
Shares reissued	(424	)	50.87		(424	)	—
Treasury stock as of July 31, 2013	75,224		$	50.87	75,224		$	250,000
New authorizations	—		—		—		—
Shares repurchased	—		—		—		—
Shares reissued	(42	)	50.87		(42	)	—
Treasury stock as of August 31, 2013	75,182		$	50.87	75,182		$	250,000

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Company Stock Performance

The following graph compares the five-year cumulative total return attained by shareholders on Apollo 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 Corporation, 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 S&P 500 Index, and in the peer group on August 31, 2008, and its relative performance is tracked through August 31, 2013. The stock price performance included in this graph is not necessarily indicative of future stock price performance.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*

Among Apollo Group, Inc., the S&P 500 Index and a Peer Group

* $100 invested on August 31, 2008 in stock and index, including reinvestment of dividends. Fiscal year ending August 31.

Source: Standard & Poor’s.

	8/08	8/09	8/10	8/11	8/12	8/13
Apollo Group, Inc.	100	102	67	74	42	29
S&P 500 Index	100	82	86	102	120	142
Peer Group	100	113	69	71	33	36

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.

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Item 6 - Selected Consolidated Financial Data

The following selected consolidated financial data is 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 consolidated balance sheets data as of August 31, 2013 and 2012 and the consolidated statements of income data for fiscal years 2013, 2012 and 2011 were derived from the audited consolidated financial statements, included herein. The consolidated balance sheets data as of August 31, 2011, 2010 and 2009 and the consolidated statements of income data for fiscal years 2010 and 2009 are derived from our audited consolidated financial statements that are not included in this Annual Report on Form 10-K. The historical results are not necessarily indicative of the results to be expected in any future period.

Consolidated Balance Sheets Data:

	As of August 31,
($ in thousands)	2013		2012		2011		2010		2009
Cash and cash equivalents	$	1,414,485	$	1,276,375	$	1,571,664	$	1,284,769	$	968,246
Restricted cash and cash equivalents	259,174		318,334		379,407		444,132		432,304
Marketable securities	105,809		—		—		—		—
Long-term restricted cash and cash equivalents	—		—		—		126,615		—
Total assets	2,997,947		2,868,322		3,269,706		3,601,451		3,263,377
Current liabilities	1,570,315		1,655,039		1,655,287		1,793,511		1,755,278
Long-term debt	64,004		81,323		179,691		168,039		127,701
Long-term liabilities	245,619		207,637		190,739		251,161		155,785
Total equity	1,118,009		924,323		1,243,989		1,388,740		1,224,613

Consolidated Statements of Income Data:

	Year Ended August 31,
(In thousands, except per share data)	2013		2012		2011		2010			2009
Net revenue	$	3,681,310	$	4,253,337	$	4,711,049	$	4,906,613		$	3,953,566
Operating income(1)	427,414		676,337		955,858		1,008,715			1,065,935
Income from continuing operations	248,965		383,183		529,087		535,467			610,207
Net income	248,965		417,006		535,796		521,581			593,830
Net income attributable to Apollo	248,526		422,678		572,427		553,002			598,319
Earnings (loss) per share - Basic:
Continuing operations attributable to Apollo	$	2.20	$	3.24	$	4.01	$	3.73		$	3.90
Discontinued operations attributable to Apollo	—		0.24		0.04		(0.09		)	(0.11		)
Basic income per share attributable to Apollo	$	2.20	$	3.48	$	4.05	$	3.64		$	3.79
Earnings (loss) per share - Diluted:
Continuing operations attributable to Apollo	$	2.19	$	3.22	$	4.00	$	3.71		$	3.85
Discontinued operations attributable to Apollo	—		0.23		0.04		(0.09		)	(0.10		)
Diluted income per share attributable to Apollo	$	2.19	$	3.45	$	4.04	$	3.62		$	3.75
Basic weighted average shares outstanding	112,712		121,607		141,269		151,955			157,760
Diluted weighted average shares outstanding	113,285		122,357		141,750		152,906			159,514

⁽¹⁾ Operating income includes:

• Restructuring and other charges of $198.6 million, $38.7 million and $22.9 million in fiscal years 2013, 2012 and 2011, respectively;

• Litigation (credit) charge, net of $(24.6) million, $4.7 million, $(12.0) million, $178.0 million and $80.5 million in fiscal years 2013, 2012, 2011, 2010 and 2009, respectively; and

• Goodwill and other intangibles impairment of $16.8 million, $219.9 million and $184.6 million in fiscal years 2012, 2011 and 2010, respectively.

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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.

Overview

Apollo is one of the world’s largest private education providers and has been a provider of education services since 1973. We believe that our success depends on providing high quality educational products and services to students at the right value to maximize the benefits of their educational experience. We offer educational programs and services, online and on-campus, at the undergraduate, master’s and doctoral levels. Our principal learning platforms include the following:

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

• Apollo Global, Inc. (“Apollo Global”):

• BPP Holdings Limited (“BPP”);

• Universidad Latinoamericana (“ULA”);

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

• Indian Education Services Private Ltd.

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

• Institute for Professional Development (“IPD”);

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

• Carnegie Learning, Inc. (“Carnegie Learning”); and

• Apollo Lightspeed.

Substantially all of our net revenue is composed of tuition and fees for educational services. In fiscal year 2013, University of Phoenix represented 90% of our total consolidated net revenue and generated more than 100% of our operating income, and 83% of the University’s cash basis revenue for eligible tuition and fees was derived from U.S. federal financial aid programs established by Title IV of the Higher Education Act and regulations promulgated thereunder (“Title IV”), as calculated under the 90/10 Rule.

Key Trends, Developments and Challenges

The following developments and trends present opportunities, challenges and risks as we work toward our goal of providing attractive returns for all of our stakeholders:

• Rapidly Evolving and Highly Competitive Education Industry. The U.S. higher education industry, including the proprietary sector, is experiencing unprecedented, rapidly developing changes due to technological developments, evolving needs and objectives of students and employers, economic constraints affecting educational institutions and students, rising costs of education and increased focus on affordability, price competition and other factors that challenge many of the core principles underlying the industry. We believe University of Phoenix enrollment has been adversely impacted by these changes as discussed below in Results of Operations of this MD&A.

We are adapting our business to meet these rapidly evolving developments. We are working to accelerate the enhancement of our offerings to remain competitive and to more effectively deliver a quality student experience at the right value. In addition, we have increased our use of scholarships and discounts to improve our value proposition to prospective students. Certain of our initiatives under consideration, including some of those described below, could adversely impact our operating results, especially in the short-term.

• Education to Careers Value Proposition. We believe it is critical that we demonstrate a compelling and cost-effective relationship between our educational offerings and improvement in our graduates’ prospects for employment in their field of choice or advancement within their existing careers. This is our key value proposition to prospective students. Our goal is to provide programs that offer specialized skills in high-growth industries and careers. We have launched career-oriented tools and continue to increase career connections and relationships to meet student and employer needs. To ensure we offer relevant workforce skills, we are working with industry experts and employers to develop and incorporate curriculum changes. We are also redesigning our programs to allow students to earn credentials and/or certificates they can use in the workplace as they are earning their ultimate degree goal.

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• Student Retention. We are focused on improving student retention by tailoring our programs to more effectively attract those students who can succeed in our educational programs. In addition, we are implementing several initiatives to improve retention, including:

• Increasing use of full-time faculty in initial University of Phoenix courses;

• Piloting a new format of University of Phoenix’s University Orientation program;

• Modified entry course structure and sequencing;

• Enhancement of our adaptive learning math tools for students;

• Targeted scholarships; and

• Redesigning our programs to allow students to earn credentials and/or certificates they can use in the workplace as they are earning their ultimate degree goal.

A number of these initiatives depend on successful implementation of multiple significant information technology system upgrades and changes, which may require more time or resources than we currently anticipate for full deployment. Any such delays or increased funding requirements could impact our ability to improve our student retention rates in the near-term.

• Business Process Reengineering. We remain focused on continuing the reengineering of our business processes and refining our educational delivery systems to improve the effectiveness of our services to students, and to reduce the size of our services infrastructure and associated operating expenses to align with our reduced enrollment. These activities include the following:

• University of Phoenix Campus Closures. Beginning in fiscal year 2013, University of Phoenix began implementing a plan to close 115 of its ground locations, after which the University will operate ground campus facilities in 111 locations in 36 states, the District of Columbia and the Commonwealth of Puerto Rico. As of August 31, 2013, University of Phoenix has closed nearly two-thirds of the locations included in these plans and the remaining closures will continue into fiscal year 2014 and beyond as University of Phoenix obtains the necessary regulatory approvals and completes its teach-out obligations. Because of the rapidly evolving and transformational changes in higher education, the University continues to evaluate the extent, functionality and location of its ground facilities, and may close additional facilities in the future.

• Services. In addition to the ground facility closures, we have begun multiple initiatives to streamline, automate where appropriate, and enhance our administrative and student-facing student services.

As of August 31, 2013, we have incurred $260.2 million of cumulative restructuring and other charges associated with our restructuring activities. We have continued restructuring our business subsequent to August 31, 2013, which includes workforce reductions of approximately 500 non-faculty personnel. We expect to incur approximately $50 million of future restructuring charges for the initiatives announced to date. The majority of these charges represent lease related costs associated with closing University of Phoenix campuses, and will be incurred as the University obtains the necessary regulatory approvals and completes its teach-out obligations. We expect to incur the majority of the $50 million in fiscal year 2014 and the remainder in future years.

Our costs that are more variable in nature represent approximately 14% of our net revenue and are included in Instructional and student advisory on our Consolidated Statements of Income. Due principally to our cost optimization and restructuring activities in recent years, our fiscal year 2013 operating costs that have historically been more fixed in nature decreased approximately $350 million compared to fiscal year 2012. In fiscal year 2014, we expect to further reduce our fixed operating costs by a minimum of $300 million, which would result in a total decline of $650 million, or 18%, from the our fiscal year 2012 cost base.

Refer to Results of Operations in this MD&A and Part I, Item 1A, Risk Factors - Risks Related to Our Business - The reduction in the number of our on-ground locations could negatively impact our enrollment and operating results, for further discussion.

• Expansion into New Markets. We believe that learners worldwide can benefit from our career-focused education offerings. We are working to expand our global operations so that they become an increasingly significant portion of our consolidated operating results, and are exploring new opportunities for growth in other non-traditional higher education and service offerings. To date, we have acquired educational institutions in the United Kingdom, Mexico and Chile, and are developing a joint venture intended to provide educational services and programs in India. The integration and operation of acquired businesses in foreign jurisdictions entails substantial regulatory, market and execution risks and such acquisitions may not be accretive for an extended period of time, if at all, depending on the circumstances.

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• Information Technology. We are upgrading a substantial portion of our key IT systems, including our student learning system, student services platform and corporate applications, and retiring the related legacy systems. We believe that these new systems will improve the productivity, scalability, reliability and sustainability of our IT infrastructure and improve the student experience. However, the transition from our legacy systems entails risk of unanticipated disruption, including disruptions in our core business functions that could adversely impact our business. Refer to Part I, Item 1A, Risk Factors - Risks Related to Our Business - System disruptions and security threats to our computer networks or phone systems could have a material adverse effect on our business.

• Regulatory Environment. The following summarizes significant regulatory matters applicable to our business. For a more detailed discussion of the regulatory environment and related risks, refer to Part I, Item 1, Business, and Item 1A, Risk Factors.

• The Higher Learning Commission Accreditation Reaffirmation. In July 2013, the accreditation of University of Phoenix was reaffirmed by The Higher Learning Commission, its institutional accreditor (“HLC”), through the 2022-2023 academic year. At the same time, HLC placed the University on Notice status for a two-year period, due to concerns regarding governance, student assessment and faculty scholarship/research for doctoral programs. Notice status is a sanction that means that HLC has determined that an institution is on a course of action that, if continued, could lead the institution to be out of compliance with one or more of the HLC Criteria for Accreditation or Core Components. We believe the imposition of the sanction of Notice on University of Phoenix could adversely impact our business. See discussion of these risks in Part I, Item 1A, Risk Factors - Risks Related to the Highly Regulated Industry in Which We Operate - Ifwe fail to maintain our institutional accreditation, we could lose our ability to participate in Title IV programs, which would materially and adversely affect our business.

In July 2013, the accreditation of Western International University also was reaffirmed by HLC through the 2022-2023 academic year, and Western International University was placed on Notice status for a two-year period due to concerns relating to governance, student assessment and faculty.

• U.S. Congressional Hearings and Financial Aid Funding. In recent years, there has been increased focus by members of the U.S. Congress on the role that proprietary educational institutions play in higher education and we expect this focus to continue. Congressional hearings and roundtable discussions have been held regarding various aspects of the education industry, and reports have been issued that are highly critical of proprietary institutions and include a number of recommendations to be considered by Congress in connection with the next required reauthorization of the federal Higher Education Act. The current reauthorization expired September 30, 2013, but was extended automatically to September 30, 2014. In addition, financial aid programs are a potential target for reduction as Congress addresses the historic U.S. budget deficit. Any action by Congress that significantly reduces Title IV program funding, whether through across-the-board funding reductions, sequestration or otherwise, or materially impacts the eligibility of our institutions or students to participate in Title IV programs would have a material adverse effect on our enrollment, financial condition, results of operations and cash flows. Congressional action could also require us to modify our practices in ways that could increase our administrative costs and reduce our operating income. Refer to Part I, Item 1A, Risk Factors - Risks Related to the Highly Regulated Industry in Which We Operate - Action by the U.S. Congress to revise the laws governing federal student financial aid programs or reduce funding for those programs, including changes applicable only to proprietary educational institutions, could reduce our enrollment and increase our costs of operation.

In addition to possible reductions in federal student financial aid, certain military financial aid may be reduced as military branches address decreased funding. Reductions and/or changes in military financial aid could result in increased student borrowing, decreased enrollment and adverse impacts on our 90/10 Rule percentage.

• Program Participation Agreement. University of Phoenix’s Title IV Program Participation Agreement expired December 31, 2012. The University has submitted necessary documentation for re-certification and its eligibility continues on a month-to-month basis until the Department issues its decision on the application. We have no reason to believe that the University’s application will not be renewed in due course, and it is not unusual to be continued on a month-to-month basis until the Department completes its review. However, we cannot predict whether, or to what extent, the imposition of the Notice sanction by The Higher Learning Commission might have on this process.

• U.S. Department of Education Rulemaking Initiative. Negotiated rulemaking public hearings were held by the U.S. Department of Education in May and June 2013. Topics included cash management of Title IV program funds, state authorization for programs offered through distance education or correspondence education, and

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gainful employment, among others. The negotiated rulemaking process is expected to produce new regulations which could be effective as soon as July 1, 2014. More information can be found at

http://www2.ed.gov/policy/highered/reg/hearulemaking/2012/index.html.

A negotiated rulemaking committee was convened by the Department in September 2013 specifically on the topic of gainful employment. Prior to the September 2013 committee meeting, the Department released new draft regulations on gainful employment. Under the draft regulations, programs would have to pass one of two metrics: the annual debt-to-earnings ratio, or the debt-to-discretionary income ratio. If either of the metrics is within a specified zone, students would receive debt warnings. As proposed, a program would become ineligible for Title IV funding if it fails two out of three years or does not pass in any one of four years. More information can be found at

http://www2.ed.gov/policy/highered/reg/hearulemaking/2012/gainfulemployment.html

• 90/10 Rule. To remain eligible to participate in Title IV programs, proprietary institutions of higher education must comply with the so-called “90/10 Rule” under the Higher Education Act, as reauthorized, and must derive 90% or less of their cash basis revenue, as defined in the rule, from Title IV programs. The 90/10 Rule percentages for University of Phoenix were the following for the respective periods:

	Year Ended August 31,
	2013	2012	2011(1)
University of Phoenix	83%	84%	86%

⁽¹⁾ Calculated excluding the temporary relief from the impact of loan limit increases, which was allowable for amounts received and applied to eligible charges between July 1, 2008 and June 30, 2011 that were attributable to the increased annual loan limits.

Based on recent trends, we do not expect the 90/10 Rule percentage for University of Phoenix to exceed 90% for fiscal year 2014. However, the 90/10 Rule percentage for University of Phoenix remains high and could exceed 90% in the future depending on the degree to which its various initiatives are effective, the impact of future changes in its enrollment mix, and regulatory and other factors outside our control, including any reduction in military benefit programs or changes in the treatment of such funding for purposes of the 90/10 Rule calculation. Refer to Part I, Item 1A, Risk Factors - Risks Related to the Highly Regulated Industry in Which We Operate - Our schools and programs would lose their eligibility to participate in federal student financial aid programs if the percentage of revenues derived from those programs is too high, in which event we could not conduct our business as it is currently conducted.

• Student Loan Cohort Default Rates. To remain eligible to participate in Title IV programs, an educational institution’s student loan cohort default rates must remain below certain specified levels. Educational institutions will lose eligibility to participate in Title IV programs if their three-year cohort default rate equals or exceeds 40% for any given year or 30% for three consecutive years. The three-year cohort default rates for University of Phoenix for the applicable federal fiscal years were as follows:

	Three-Year Cohort Default Rates for Cohort Years Ended September 30,
	2010	2009	2008
University of Phoenix(1)	26.0%	26.4%	21.1%

⁽¹⁾ Based on information published by the U.S. Department of Education. The 2008 three-year cohort default rate is a trial rate published by the Department for informational purposes only.

Based on our most recent trends, we expect that our 2011 three-year cohort default rate will be lower than the 2010 three-year cohort default rate. However, if our student loan default rates approach the applicable limits, we may be required to increase efforts and resources dedicated to improving these default rates. Refer to Part I, Item 1A, Risk Factors - Risks Related to the Highly Regulated Industry in Which We Operate -An increase in student loan default rates could result in the loss of eligibility to participate in Title IV programs, which would materially and adversely affect our business.

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

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Fiscal Year 2013 Significant Events

In addition to the items mentioned above, we experienced the following significant events during fiscal year 2013 and to date:

1. Purchase of Noncontrolling Interest. During the first quarter of fiscal year 2013, we purchased the 14.4% noncontrolling ownership interest in Apollo Global from The Carlyle Group. We paid $42.5 million cash, plus a contingent payment based on a portion of Apollo Global’s operating results through the fiscal years ending August 31, 2017. As a result of the transaction, Apollo Group owns 100% of Apollo Global. Refer to Note 14, Shareholders’ Equity in Item 8, Financial Statements and Supplementary Data.

2. Executive Management Changes. We experienced the following executive management changes:

• Joseph L. D’Amico resigned as President in March 2013 and retired from his position of Executive Vice President and Advisor to the Chief Executive Officer in September 2013; and

• Curtis M. Uehlein was appointed as our Acting Chief Operating Officer in April 2013, and also serves as President of Apollo Global.

• William J. Pepicello announced his retirement from his position as President of the University of Phoenix, effective upon the naming of a successor.

3. Board of Directors Changes. We experienced the following changes on our Board of Directors during fiscal year 2013:

• Dr. John Sperling, our founder and Executive Chairman, announced his retirement as Executive Chairman and a director effective December 31, 2012;

• Our Board of Directors elected Peter Sperling, formerly Vice Chairman of the Board of Directors, to succeed Dr. John Sperling as Chairman of our Board of Directors, effective December 31, 2012;

• Our Board of Directors elected Terri Bishop, a member of the Board of Directors and formerly Executive Vice President, Integrated Academic Strategies and Senior Advisor to the Chief Executive Officer, to succeed Peter Sperling as Vice Chair of the Board of Directors, effective December 31, 2012;

• Matthew Carter, Jr. was appointed to our Board of Directors on December 13, 2012 and sits on the audit and finance committees of the Board of Directors;

• K. Sue Redman, a member of our Board of Directors and Audit Committee Chair, chose not to stand for reelection at the annual meeting of our Class B shareholders and therefore her term of service ended on January 8, 2013;

• George A. Zimmer, a member of our Board of Directors, resigned on March 21, 2013; and

• Margaret Spellings, a member of our Board of Directors, resigned effective August 31, 2013.

4. BPP Accreditation and University Status. In March 2013, the Quality Assurance Agency for Higher Education in the U.K. approved BPP University of Professional Studies’ accreditation for the next six years, which is the maximum allowable period. The next accreditation review is scheduled during the 2018-2019 school year. Additionally, BPP University was awarded the title of “University” by the U.K. in July 2013.

5. Western International University. In June 2013, WIU announced a shift in its pricing structure along with a new online course delivery method designed to provide students with a more manageable and affordable higher education solution. The new pricing structure allows WIU students to complete programs at half the cost previously incurred by WIU students, and allows prospective students to test the academic experience before they formally enroll. The education delivery method incorporates multimedia content delivery, knowledge checks and enhanced engagement with instructors and other students to put the learning in practical context. We believe this shift will improve the student experience and further differentiate WIU.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires management to make certain estimates, assumptions and judgments 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. Our critical accounting policies involve a higher degree of judgments, estimates and complexity, and are detailed below.

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Revenue Recognition

Our educational programs, primarily composed of University of Phoenix programs, are designed to 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 loans and/or grants from U.S. federal financial aid programs established by Title IV of the Higher Education Act and regulations promulgated thereunder (“Title IV”), military benefit programs, tuition assistance from their employers, or personal funds.

Net revenue consists principally of tuition and fees associated with different educational programs and related educational materials, and is presented net of discounts. Tuition benefits for our employees and their eligible dependents are included in net revenue and instructional and student advisory expenses, and were $53.4 million, $71.1 million and $97.0 million during fiscal years 2013, 2012 and 2011, respectively. The following presents the components of our net revenue, and each component as a percentage of total net revenue, for the respective periods:

	Year Ended August 31,
($ in thousands)	2013					2012					2011
Tuition and educational services revenue	$	3,622,767		99	%	$	4,124,629		97	%	$	4,549,010		96	%
Educational materials revenue	252,441			7	%	294,499			7	%	320,780			7	%
Services revenue	45,602			1	%	56,981			1	%	76,500			2	%
Other revenue	42,816			1	%	33,192			1	%	23,139			—	%
Gross revenue	3,963,626			108	%	4,509,301			106	%	4,969,429			105	%
Discounts	(282,316		)	(8	)%	(255,964		)	(6	)%	(258,380		)	(5	)%
Net revenue	$	3,681,310		100	%	$	4,253,337		100	%	$	4,711,049		100	%

We recognize revenue when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, our fees or price to the customer is fixed and determinable, and collectibility is reasonably assured.

• Tuition and educational services revenue encompasses both online and on-campus delivery modes. We recognize tuition and educational services revenue over the period of instruction as services are delivered to students, which varies depending on the program structure.

• Educational materials revenue encompasses online course materials delivered to students over the period of instruction and the sale of various books, study texts, course notes, and CDs. We recognize revenue associated with online materials over the period of the related course to correspond with delivery of the materials to students. We recognize revenue for the sale of other educational materials when they have been delivered to and accepted by students or other customers.

• Services revenue represents net revenue generated by IPD, which provides program development, administration and management consulting services to private colleges and universities (“IPD Client Institutions”) to establish or expand their programs for working learners. These services typically include degree program design, curriculum development, market research, certain student admissions services, accounting, and administrative services. Prior to July 1, 2011, IPD was typically paid a portion of the tuition revenue generated from these programs, and the portion of service revenue to which IPD was entitled under the terms of the contract was recognized as the services were provided. As a result of U.S. Department of Education regulations that became effective on July 1, 2011, IPD’s revenue is generated based on fixed fee contracts with IPD Client Institutions and is recognized in accordance with the terms of the respective agreements as services are provided. The term for IPD’s contracts range up to ten years with provisions for renewal thereafter.

• Other revenue includes net revenue generated by Carnegie Learning since its acquisition in fiscal year 2012, fees students pay when submitting an enrollment application and non-tuition generating revenues such as renting classroom space. Enrollment application fees are deferred and recognized over the average length of time a student remains enrolled in a program of study along with the related application costs associated with processing the applications.

• Discounts reflect reductions in charges for tuition or other fees from our standard rates and include military, corporate, and other employer discounts, along with institutional scholarships, grants and promotions. Discounts are generally recognized over the period of instruction in the same manner as the related revenue to which the discount relates.

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University of Phoenix’s refund policy permits students who attend 60% or less of a course to be eligible for a refund for the portion of the course they did not attend. Refunds result in a reduction in deferred revenue during the period that a student drops or withdraws from a class because associated tuition revenue is recognized over the period of instruction as the services are delivered. This refund policy applies to students in most, but not all states, as some states require different policies.

Net revenue generally 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.

Sales tax collected from students is excluded from net revenue. Collected but unremitted sales tax is included as a liability on our Consolidated Balance Sheets and is not material to our consolidated financial statements.

Allowance for Doubtful Accounts

Our accounts receivable is reduced by an allowance for amounts that we expect to become uncollectible in the future. We use estimates that are subjective and require judgment in determining the allowance for doubtful accounts, which are principally based on historical collection experience, historical write-offs of our receivables and current trends. Our accounts receivable are written off once the account is deemed to be uncollectible, which typically occurs after outside collection agencies have pursued collection for approximately six months.

When a student with Title IV loans withdraws, Title IV rules determine if we are required to return a portion of Title IV funds to the lender. 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.

Our estimation methodology uses a statistical model that considers a number of factors that we believe impact whether receivables will become uncollectible based on our collections experience. These factors include, but are not limited to, the student’s academic performance and previous college experience as well as other student characteristics such as degree level and method of payment. We also monitor and consider external factors such as changes in the economic and regulatory environment. We routinely evaluate our estimation methodology for adequacy and modify it as necessary. In doing so, we believe our allowance for doubtful accounts reflects the amount of receivables that will become uncollectible by considering our most recent collections experience, changes in trends and other relevant facts.

We recorded bad debt expense of $83.8 million, $146.7 million and $181.3 million during fiscal years 2013, 2012 and 2011, respectively. Our allowance for doubtful accounts was $59.7 million and $107.2 million as of August 31, 2013 and 2012, respectively, which approximated 25% and 37% of gross student receivables as of the respective dates. 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, 2013 would have resulted in a pre-tax change in income of $2.4 million; and

• if our bad debt expense were to change by one percent of net revenue for the fiscal year ended August 31, 2013, we would have recorded a pre-tax change in income of approximately $36.8 million.

For a discussion of the decrease in bad debt expense in recent years, refer to Results of Operations below.

Goodwill and Intangibles

Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed. At the time of an acquisition, we allocate the goodwill and related assets and liabilities to our respective reporting units. We identify our reporting units by assessing whether the components of our operating segments constitute businesses for which discrete financial information is available and segment management regularly reviews the operating results of those components.

Our intangibles are recorded at fair market value on their acquisition date and principally include trademarks, technology, customer relationships and foreign regulatory accreditations and designations. We assign indefinite lives to intangibles 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; and we intend to renew the respective intangible and renewal can be accomplished at little cost. Finite-lived intangibles are amortized on either a straight-line basis or using an accelerated method to reflect the pattern in which the economic benefits of the asset are consumed. The weighted average original useful life of our $30.1 million of finite-lived intangibles as of August 31, 2013 was 4.9 years.

We assess goodwill and indefinite-lived intangibles at least annually for impairment or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit or indefinite-lived intangible below its carrying amount. We perform our annual indefinite-lived intangibles impairment tests on the same dates that we perform our annual goodwill impairment tests for the respective reporting units. In performing our impairment tests, we first consider the option to assess qualitative factors to determine whether it is more likely than not that

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the fair value of a reporting unit or intangible, as applicable, is less than its carrying amount. If we conclude that it is more likely than not that the fair value is less than the carrying amount based on our qualitative assessment, or that a qualitative assessment should not be performed, we proceed with the following quantitative impairment tests:

• Goodwill - We compare the estimated fair value of the reporting unit 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. If the carrying value of the net assets of the reporting unit exceeds the fair value of the reporting unit, we perform a hypothetical purchase price allocation 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.

• Indefinite-lived intangibles - We compare the estimated fair value of the intangible with its carrying value. If the carrying value of the intangible exceeds its fair value, an impairment loss is recognized in the amount of that excess.

Our goodwill and indefinite-lived intangibles by reporting unit are summarized below:

($ in thousands)	Annual Impairment Test Date	Goodwill as of August 31,				Indefinite-lived Intangibles as of August 31,
		2013		2012		2013		2012
University of Phoenix(1)	May 31	$	71,812	$	71,812	$	—	$	14,100
Apollo Global
BPP	July 1	—		—		84,739		86,410
ULA	May 31	14,917		14,642		2,342		2,352
UNIACC	May 31	—		—		951		998
Other
CFFP	August 31	15,310		15,310		—		—
Western International University	May 31	1,581		1,581		—		—
Carnegie Learning(1)	May 31	—		—		14,100		—
Total		$	103,620	$	103,345	$	102,132	$	103,860

⁽¹⁾ During the fourth quarter of fiscal year 2013, we revised our internal management reporting structure and determined Carnegie Learning is an operating segment based on the changes. Accordingly, Carnegie Learning is no longer included in our University of Phoenix reporting unit. We did not allocate any of the University of Phoenix reporting unit goodwill to Carnegie Learning because Carnegie Learning’s fair value is immaterial compared to University of Phoenix. Additionally, we evaluated University of Phoenix’s goodwill for impairment following the change and concluded that it was more likely than not that the fair value of University of Phoenix was greater than its carrying value.

The process of evaluating goodwill and indefinite-lived intangibles for impairment is subjective and requires significant judgment at many points during the analysis. If we elect to perform an optional qualitative analysis, we consider many factors including, but not limited to, general economic conditions, industry and market conditions, our market capitalization, financial performance and key business drivers, long-term operating plans, and potential changes to significant assumptions used in the most recent fair value analysis for either the reporting unit or respective intangible.

When performing a quantitative goodwill impairment test, we determine the fair value of reporting units using an income-based approach consisting of a discounted cash flow valuation method, a market-based approach or a combination of both methods. The fair value determination consists primarily of using unobservable inputs under the fair value measurement standards, and we believe our related assumptions are consistent with a reasonable market participant view while employing the concept of highest and best use of the asset.

We believe the most critical assumptions and estimates in determining the estimated fair value of our reporting units include, but are not limited to, the amounts and timing of expected future cash flows for each reporting unit, the discount rate applied to those cash flows, terminal growth rates, selection of comparable market multiples and applying weighting factors when multiple valuation methods are used. The assumptions used in determining our expected future cash flows consider various factors such as historical operating trends particularly in student enrollment and pricing and long-term operating strategies and initiatives. The discount rate used by each reporting unit is based on our assumption of a prudent investor’s required rate of return of assuming the risk of investing in a particular company in a specific country. The terminal growth rate reflects the sustainable operating income a reporting unit could generate in a perpetual state as a function of revenue growth, inflation and future margin expectations.

We use the relief-from-royalty method to determine the fair value of our trademark intangibles. This method estimates the benefit of owning the intangibles rather than paying royalties for the right to use a comparable asset. This method incorporates

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the use of significant judgment in determining the projected revenues attributable to the asset, the discount rate and the royalty rate. The fair value determination of our indefinite-lived intangibles consists primarily of using unobservable inputs under the fair value measurement standards.

Fiscal Year 2013 Impairment Testing

We completed our fiscal year 2013 annual goodwill impairment tests and determined there was no impairment. We performed a qualitative assessment for ULA’s goodwill that considered the factors discussed above, including the significant excess of ULA’s fair value over its carrying value approximating 25% in its most recent test. We performed quantitative goodwill impairment tests for University of Phoenix, Western International University and CFFP using the fair value methods discussed above. The fair values of University of Phoenix and Western International University exceeded their carrying values by significant margins representing at least 50% of their respective fair values. The excess as a percentage of fair value for CFFP was approximately 13%.

We completed our fiscal year 2013 annual indefinite-lived intangibles impairment tests and determined there was no impairment. The substantial majority of our indefinite-lived intangibles consist of the BPP and Carnegie Learning trademarks. We performed quantitative impairment tests for both trademarks using the relief-from-royalty valuation method discussed above, which resulted in fair values that exceeded their carrying values.

If critical assumptions used in our impairment testing deteriorate or are adversely impacted, a lower fair value assessment may result, which could lead to potential goodwill and indefinite-lived intangible impairments in the future.

Other Long-Lived Asset Impairments

We evaluate the carrying amount of our major other long-lived assets, including property and equipment and finite-lived intangibles, whenever changes in circumstances or events indicate that the value of such assets may not be recoverable. During fiscal year 2013, we recorded $20.4 million of long-lived asset impairments, which includes $12.2 million resulting from our restructuring activities. Refer to Results of Operations in this MD&A.

As of August 31, 2013, we believe the carrying amounts of our remaining other long-lived assets are recoverable and no impairment exists. However, we are continuing to adapt our business in fiscal year 2014 to the rapidly developing changes in our industry, which includes further restructuring of our business. Changes to our business or other circumstances could lead to potential impairments of our other long-lived assets in the future.

Restructuring and Other Charges

Restructuring and other charges principally consist of non-cancelable lease obligations, severance and other employee separation costs, and other related costs. We recognize restructuring obligations and liabilities for other exit and disposal activities at fair value in the period the liability is incurred. The process of measuring fair value and recognizing the associated liabilities is subjective and requires significant judgment. For our non-cancelable lease obligations, we record the obligation when we terminate the contract in accordance with the contract terms or when we cease using the right conveyed by the contract. Our employee severance costs are expensed on the date we notify the employee, unless the employee must provide future service, in which case the benefits are expensed over the future service period.

We generally estimate the fair value of restructuring obligations using significant unobservable inputs (Level 3) based on the best available information. For non-cancelable lease obligations, the fair value estimate is based on the contractual lease costs over the remaining terms of the leases, partially offset by estimated future sublease rental income. Our estimate of the amount and timing of sublease rental income considers subleases we expect to execute, current commercial real estate market data and conditions, comparable transaction data and qualitative factors specific to the facilities. The estimates are subject to adjustment as market conditions change or as new information becomes available, including the execution of sublease agreements.

Changes to restructuring obligations in periods subsequent to the initial fair value measurement are not measured at fair value. We record a cumulative adjustment resulting from changes in the estimated timing or amount of cash flows associated with restructuring obligations in the period of change using the same discount rate that was initially used to measure the obligation’s fair value. Changes in restructuring obligations resulting from the passage of time are recorded as accretion expense. The adjustments to restructuring obligations, including accretion expense, are included in restructuring and other charges on our Consolidated Statements of Income.

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The following details the changes in our restructuring obligations by type of cost during the fiscal year 2013:

($ in thousands)	Lease and Related Costs, Net			Severance and Other Employee Separation Costs			Other Restructuring Related Costs			Total
Balance at August 31, 2012	$	26,024		$	2,998		$	1,411		$	30,433
Expense incurred	137,263			34,293			27,069			198,625
Non-cash adjustments	(31,114		)	(2,008		)	(12,221		)	(45,343		)
Payments	(28,125		)	(27,660		)	(8,129		)	(63,914		)
Balance at August 31, 2013	$	104,048		$	7,623		$	8,130		$	119,801

Loss Contingencies

We are subject to various claims and contingencies 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. The liability excludes any anticipated loss recoveries from third parties such as insurers, which we record as a receivable if we determine recovery is probable. 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, we expense legal fees as incurred. The assessment of the likelihood of a potential loss and the estimation of the amount of a loss are subjective and require judgment.

Share-Based Compensation

Our outstanding share-based awards principally consist of restricted stock units, performance share awards and stock options, and restricted stock units represent the majority of our share-based compensation expense in recent years. We measure and recognize compensation expense for all share-based awards based on their estimated fair values on the grant date. We record compensation expense, net of forfeitures, for all share-based awards over the requisite service period using the straight-line method for awards with only a service condition, and the graded vesting attribution method for awards with service and performance conditions.

For share-based awards with performance conditions, we measure the fair value of such awards as of the grant date and amortize share-based compensation expense for our estimate of the number of shares expected to vest. Our estimate of the number of shares that will vest is based on our determination of the probable outcome of the performance condition, which may require considerable judgment. We record a cumulative adjustment to share-based compensation expense in periods that we change our estimate of the number of shares expected to vest. Additionally, we ultimately adjust the expense recognized to reflect the actual vested shares following the resolution of the performance conditions.

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 requisite service period. Rather, different forfeiture assumptions only impact the timing of expense recognition over the requisite service period. If the actual forfeitures differ from management estimates, additional adjustments to compensation expense are recorded.

We typically use the Black-Scholes-Merton option pricing model to estimate the fair value of stock options. The Black-Scholes-Merton option pricing model requires us to estimate key assumptions based on both historical information and management judgment regarding market factors and trends. The following represents our key weighted average assumptions for stock options granted in the respective fiscal years:

	Year Ended August 31,
	2013			2012			2011
Weighted average fair value	$	5.84		$	14.10		$	16.71
Expected volatility	44.4		%	46.6		%	46.8		%
Expected term	3.4			4.3			4.2
Risk-free interest rate	0.7		%	0.6		%	1.4		%
Dividend yield	0.0		%	0.0		%	0.0		%

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We estimate expected volatility based on a weighted average of our historical volatility and the implied volatility of long-lived call options. We estimate the expected term of our stock options based primarily on the vesting period of the awards and historical exercise behavior. For the risk-free interest rate, we use the U.S. constant maturity treasury rates interpolated between the years commensurate with the expected life assumptions. Our dividend yield assumption considers that we have not historically paid dividends and we have no current plan to pay dividends in the near-term.

The assumptions that have the most significant effect on the fair value of our stock options and the associated expense are the expected term and expected volatility. The following table illustrates how changes to these assumptions would affect the weighted average fair value per option for the 945,000 options granted during fiscal year 2013:

	Expected Volatility
Expected Term (Years)	39.9%		44.4%		48.8%
2.9	$	4.90	$	5.41	$	5.90
3.4	$	5.30	$	5.84	$	6.36
3.9	$	5.66	$	6.23	$	6.79

Income Taxes

We are subject to the income tax laws of the U.S. and the foreign jurisdictions in which we have significant business operations. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. As a result, significant judgments and interpretations are required in determining our provision for income taxes and evaluating our uncertain tax positions.

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 record a valuation allowance to reduce deferred tax assets to the amount that we believe is more likely than not to be realized.

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 classify interest and penalties accrued in connection with unrecognized tax benefits as income tax expense on our Consolidated Statements of Income. Our total unrecognized tax benefits, excluding interest and penalties, were $44.1 million, $32.2 million and $25.8 million as of August 31, 2013, 2012 and 2011, respectively.

Recent Accounting Pronouncements

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 explaining the material changes in our operating results during fiscal years 2013, 2012 and 2011.

As discussed in the Overview of this MD&A, the U.S. higher education industry, including the proprietary sector, is experiencing unprecedented, rapidly developing changes. We believe University of Phoenix enrollment has been adversely impacted by these changes, and we are working to accelerate the enhancement of our offerings to remain competitive and to more effectively deliver a quality student experience at the right value. Certain of our initiatives under consideration could adversely impact our operating results, especially in the short-term.

Our operations are generally subject to seasonal trends. We experience, and expect to continue to experience, fluctuations in our results of operations as a result of seasonal variations in the level of our institutions’ enrollments. Although University of Phoenix enrolls students throughout the year, its net revenue is generally lower in our second fiscal quarter (December through February) than the other quarters due to holiday breaks.

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We categorize our operating expenses as follows:

• Instructional and student advisory - consist primarily of costs related to the delivery and administration of our educational programs and include costs related to faculty, student advisory and administrative compensation, classroom and administration lease expenses (including facilities that are shared and support both instructional and admissions functions), financial aid processing costs, costs related to the development and enhancement of our educational programs and other related costs. Tuition costs for all employees and their eligible family members are recorded as an expense within instructional and student advisory.

• Marketing - the substantial majority of costs consist of advertising expenses, compensation for marketing personnel, including personnel responsible for establishing relationships with selected employers, and production of marketing materials. The category also includes other costs directly related to marketing functions.

• Admissions advisory - the substantial majority of costs consist of compensation for admissions personnel. The category also includes other costs directly related to admissions advisory functions.

• General and administrative - consist primarily of corporate compensation, rent expense, legal and professional fees, and other related costs.

• Depreciation and amortization - consist of depreciation expense on our property and equipment and amortization of our finite-lived intangibles.

• Provision for uncollectible accounts receivable - consist of expense charged to reduce our accounts receivable to our estimate of the amount we expect to collect.

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Analysis of Consolidated Statements of Income

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

	Year Ended August 31,															Percentage Change 2013 versus 2012		Percentage Change 2012 versus 2011
										Percent of Net Revenue
($ in thousands)	2013			2012			2011			2013		2012		2011
Net revenue	$	3,681,310		$	4,253,337		$	4,711,049		100.0	%	100.0	%	100.0	%	(13.4	)%	(9.7	)%
Costs and expenses:
Instructional and student advisory	1,579,464			1,800,569			1,759,986			42.9	%	42.3	%	37.4	%	(12.3	)%	2.3	%
Marketing	661,693			663,442			654,399			18.0	%	15.6	%	13.9	%	(0.3	)%	1.4	%
Admissions advisory	263,934			383,935			415,386			7.2	%	9.0	%	8.8	%	(31.3	)%	(7.6	)%
General and administrative	329,249			344,300			355,548			8.9	%	8.1	%	7.5	%	(4.4	)%	(3.2	)%
Depreciation and amortization	161,733			177,804			157,686			4.4	%	4.2	%	3.3	%	(9.0	)%	12.8	%
Provision for uncollectible accounts receivable	83,798			146,742			181,297			2.3	%	3.5	%	3.9	%	(42.9	)%	(19.1	)%
Restructuring and other charges	198,625			38,695			22,913			5.4	%	0.9	%	0.5	%	*		68.9	%
Litigation (credit) charge, net	(24,600		)	4,725			(11,951		)	(0.7	)%	0.1	%	(0.3	)%	*		*
Goodwill and other intangibles impairment	—			16,788			219,927			—	%	0.4	%	4.7	%	*		*
Total costs and expenses	3,253,896			3,577,000			3,755,191			88.4	%	84.1	%	79.7	%	(9.0	)%	(4.7	)%
Operating income	427,414			676,337			955,858			11.6	%	15.9	%	20.3	%	(36.8	)%	(29.2	)%
Interest income	1,913			1,187			2,884			—	%	0.1	%	—	%	61.2	%	(58.8	)%
Interest expense	(8,745		)	(11,745		)	(8,931		)	(0.2	)%	(0.3	)%	(0.2	)%	(25.5	)%	31.5	%
Other, net	2,407			476			(1,588		)	0.1	%	—	%	—	%	*		*
Income from continuing operations before income taxes	422,989			666,255			948,223			11.5	%	15.7	%	20.1	%	(36.5	)%	(29.7	)%
Provision for income taxes	(174,024		)	(283,072		)	(419,136		)	(4.7	)%	(6.7	)%	(8.9	)%	(38.5	)%	32.5	%
Income from continuing operations	248,965			383,183			529,087			6.8	%	9.0	%	11.2	%	(35.0	)%	(27.6	)%
Income from discontinued operations, net of tax	—			33,823			6,709			—	%	0.8	%	0.2	%	*		*
Net income	248,965			417,006			535,796			6.8	%	9.8	%	11.4	%	(40.3	)%	(22.2	)%
Net (income) loss attributable to noncontrolling interests	(439		)	5,672			36,631			—	%	0.1	%	0.8	%	*		*
Net income attributable to Apollo	$	248,526		$	422,678		$	572,427		6.8	%	9.9	%	12.2	%	(41.2	)%	(26.2	)%

*Not meaningful

Net Revenue

Our net revenue decreased$572.0 million and $457.7 million, or 13.4% and 9.7%, in fiscal year 2013 compared to fiscal year 2012, and in fiscal year 2012 compared to fiscal year 2011, respectively. The decreases were primarily attributable to net revenue declines at University of Phoenix of 14.7% and 10.4% during the respective periods principally due to lower enrollment. Refer to further discussion of net revenue by reportable segment below at Analysis of Operating Results by Reportable Segment.

Instructional and Student Advisory

Instructional and student advisory decreased$221.1 million, or 12.3%, in fiscal year 2013 compared to fiscal year 2012, which represented a 60 basis point increase as a percentage of net revenue. The decrease in expense was primarily due to reductions in costs associated with lower enrollment, and lower costs including rent and compensation attributable to our restructuring activities (refer to Restructuring and Other Charges below). The decrease was partially offset by the assessment of approximately $10 million of foreign indirect taxes in fiscal year 2013 associated with certain instructional materials.

Instructional and student advisory increased$40.6 million, or 2.3%, in fiscal year 2012 compared to fiscal year 2011, which represented a 490 basis point increase as a percentage of net revenue. The increase in expense was primarily related to our various initiatives to more effectively support our students and enhance their educational outcomes, including investments in adaptive learning, curriculum development, the new learning and service platforms, and initiatives to connect education to careers. This was partially offset by a decrease in costs that are more variable in nature such as faculty and certain student advisory functions.

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Marketing

Marketing decreased$1.7 million, or 0.3%, in fiscal year 2013 compared to fiscal year 2012, which represented a 240 basis point increase as a percentage of net revenue. The decrease in expense was principally attributable to lower advertising costs associated with reduced use of third-party operated Internet sites. This was partially offset by increased costs associated with investments in non-Internet branding.

Marketing increased$9.0 million, or 1.4%, in fiscal year 2012 compared to fiscal year 2011, which represented a 170 basis point increase as a percentage of net revenue. The increase in expense was principally attributable to higher employee compensation costs and other costs, including expense related to building employer relationships. This was partially offset by lower advertising costs attributable in part to reducing our use of third-party operated Internet sites.

Admissions Advisory

Admissions advisory decreased$120.0 million, or 31.3%, in fiscal year 2013 compared to fiscal year 2012, which represented a 180 basis point decrease as a percentage of revenue. The decrease in expense was principally attributable to a decline in admissions advisory headcount due in part to our restructuring activities. Refer to Restructuring and Other Charges below.

Admissions advisory decreased $31.5 million, or 7.6%, in fiscal year 2012 compared to fiscal year 2011, which represented a 20 basis point increase as a percentage of net revenue. The decrease in expense was principally attributable to a decline in admissions advisory headcount due in part to our restructuring activities, which was partially offset by higher average employee compensation costs.

General and Administrative

General and administrative decreased$15.1 million, or 4.4%, in fiscal year 2013 compared to fiscal year 2012, which represented an 80 basis point increase as a percentage of net revenue. The decrease in expense was principally attributable to lower share-based compensation expense, and a decline in headcount due in part to our restructuring activities. Refer to Restructuring and Other Charges below. This was partially offset by a $5.0 million retirement bonus in fiscal year 2013.

General and administrative decreased $11.2 million, or 3.2%, in fiscal year 2012 compared to fiscal year 2011, which represented a 60 basis point increase as a percentage of net revenue. The decrease in expense was principally attributable to lower employee compensation costs and a reduction in legal costs in connection with defending ourselves in various legal matters.

Depreciation and Amortization

Depreciation and amortization decreased$16.1 million, or 9.0%, in fiscal year 2013 compared to fiscal year 2012, which represented a 20 basis point increase as a percentage of net revenue. The decrease in expense was principally attributable to lower depreciation due in part to the decline in depreciable assets resulting from our restructuring activities. Refer to Restructuring and Other Charges below. The decrease was also due to lower intangibles amortization.

Depreciation and amortization increased$20.1 million, or 12.8%, in fiscal year 2012 compared to fiscal year 2011, which represented a 90 basis point increase as a percentage of net revenue. The increase was principally attributable to $12.0 million of amortization for Carnegie Learning intangibles following the acquisition in fiscal year 2012, and increased capital expenditures and capital leases primarily related to information technology. The increase was partially offset by a decrease in amortization of BPP intangibles.

Provision for Uncollectible Accounts Receivable

Provision for uncollectible accounts receivable decreased$62.9 million and $34.6 million, or 42.9% and 19.1%, in fiscal year 2013 compared to fiscal year 2012, and in fiscal year 2012 compared to fiscal year 2011, respectively. This represented decreases as a percentage of net revenue of 120 and 40 basis points, respectively. The decreases were primarily due to a reduction in our gross student receivables from lower enrollment, and ongoing process improvements that significantly contributed to lowering our gross student receivables associated with students no longer enrolled in our programs. Additionally, our collection rates have increased due in part to changes in the relative composition of our student receivables including a higher proportion attributable to students in higher degree level programs.

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Restructuring and Other Charges

The U.S. higher education industry, including the proprietary sector, is experiencing unprecedented, rapidly developing changes that challenge many of the core principles underlying the industry. We are reengineering our business processes and refining our educational delivery systems to improve the effectiveness of our services to students, and to reduce the size of our services infrastructure and associated operating expenses to align with our reduced enrollment. We have incurred the following restructuring and other charges associated with these activities during the respective periods:

	Year Ended August 31,						Cumulative Costs as of August 31, 2013
($ in thousands)	2013		2012		2011
Lease and related costs, net	$	137,263	$	15,981	$	19,067	$	172,311
Severance and other employee separation costs	34,293		12,887		3,846		51,026
Other restructuring related costs	27,069		9,827		—		36,896
Restructuring and other charges	$	198,625	$	38,695	$	22,913	$	260,233

The following summarizes the restructuring and other charges in our segment reporting format:

	Year Ended August 31,						Cumulative Costs as of August 31, 2013
($ in thousands)	2013		2012		2011
University of Phoenix	$	158,757	$	20,002	$	22,913	$	201,672
Apollo Global	6,053		5,712		—		11,765
Other	33,815		12,981		—		46,796
Restructuring and other charges	$	198,625	$	38,695	$	22,913	$	260,233

• Lease and Related Costs, Net - Beginning in fiscal year 2011, University of Phoenix began rationalizing its administrative real estate facilities. In addition to continuing to rationalize its administrative facilities, University of Phoenix began implementing a plan during fiscal year 2013 to close 115 of its ground locations. As of August 31, 2013, University of Phoenix has closed nearly two-thirds of the locations included in these plans and the remaining closures will continue into fiscal year 2014 and beyond as University of Phoenix obtains the necessary regulatory approvals and completes its teach-out obligations. We have recorded $123.6 million of initial aggregate charges representing the estimated fair value of future contractual operating lease obligations, which were recorded in the periods we ceased using the respective facilities. We measure lease obligations at fair value using a discounted cash flow approach encompassing significant unobservable inputs (Level 3). The estimation of future cash flows includes non-cancelable contractual lease costs over the remaining terms of the leases, partially offset by estimated future sublease rental income, which involves significant judgment. Our estimate of the amount and timing of sublease rental income considers subleases that we have executed and subleases we expect to execute, current commercial real estate market data and conditions, comparable transaction data and qualitative factors specific to the facilities. The estimates will be subject to adjustment as market conditions change or as new information becomes available, including the execution of additional sublease agreements. As of August 31, 2013, we have recorded immaterial adjustments to our initial aggregate lease obligations for changes in estimated sublease income and interest accretion.

Lease and related costs, net also includes $50.1 million of accelerated depreciation during fiscal year 2013. This depreciation resulted from revising the useful lives of the fixed assets at the facilities discussed above through their expected closure dates. Prior to revising the estimated useful lives, we performed a recoverability analysis for the facilities’ fixed assets by comparing the estimated undiscounted cash flows of the locations through their expected closure dates to the carrying amount of the locations’ fixed assets. Based on our analysis, we recorded immaterial impairment charges during fiscal year 2013.

• Severance and Other Employee Separation Costs -Beginning in fiscal year 2011 and continuing through fiscal year 2013, we have implemented workforce reductions as we reengineer our business processes and refine our educational delivery systems. We incurred severance and other employee separation costs of $34.3 million, $12.9 million and $3.8 million in fiscal years 2013, 2012 and 2011, respectively. These costs are included in the reportable segments in which the respective personnel were employed.

• Other Restructuring Related Costs -We incurred $27.1 million of other restructuring related costs during fiscal year 2013 that principally include fixed asset impairment charges related to software and equipment we are no longer using, and costs for services from a consulting firm related to our restructuring initiatives. During fiscal year 2012, we incurred other restructuring related costs that principally represent services from a consulting firm associated with our

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restructuring initiatives. The majority of our other restructuring related costs in both fiscal years are included in “Other” in our segment reporting because they pertain to all areas of our business.

We have continued restructuring our business subsequent to August 31, 2013, which includes workforce reductions of approximately 500 non-faculty personnel. We expect to incur approximately $50 million of future restructuring charges for the initiatives announced to date. The majority of these charges represent lease related costs associated with closing University of Phoenix campuses, and will be incurred as the University obtains the necessary regulatory approvals and completes its teach-out obligations. We expect to incur the majority of the $50 million in fiscal year 2014 and the remainder in future years.

Our costs that are more variable in nature represent approximately 14% of our net revenue and are included in Instructional and student advisory on our Consolidated Statements of Income. Due principally to our cost optimization and restructuring activities in recent years, our fiscal year 2013 operating costs that have historically been more fixed in nature decreased approximately $350 million compared to fiscal year 2012. In fiscal year 2014, we expect to further reduce our fixed operating costs by a minimum of $300 million, which would result in a total decline of $650 million, or 18%, from the our fiscal year 2012 cost base.

Litigation (Credit) Charge, Net

During fiscal year 2013, we recorded a net credit of $24.6 million principally resulting from resolution in certain of our legal matters.

During fiscal year 2012, we recorded a $4.7 million charge reflecting a rejected settlement offer we made in connection with the Patent Infringement Litigation and estimated future legal costs that we may incur in this matter.

During fiscal year 2011, we recorded a net credit of $16.2 million principally due to an agreement in principle to settle the Securities Class Action (Policeman’s Annuity and Benefit Fund of Chicago). This was partially offset by a charge of an immaterial amount associated with another legal matter.

Refer to Note 17, Commitments and Contingencies, in Item 8, Financial Statements and Supplementary Data.

Goodwill and Other Intangibles Impairment

During fiscal year 2012, we recorded impairment charges of UNIACC’s goodwill and other intangibles of $11.9 million and $4.9 million, respectively. During fiscal year 2011, we recorded impairment charges of BPP’s goodwill and other intangibles of $197.7 million and $22.2 million, respectively.

Provision for Income Taxes

Our effective income tax rate for continuing operations was 41.1%, 42.5% and 44.2% for fiscal years 2013, 2012 and 2011, respectively.

The decrease in our effective tax rate in fiscal year 2013 compared to fiscal year 2012 was principally attributable to the nondeductible UNIACC goodwill and other intangibles impairment recorded in fiscal year 2012 and the recognition of $4.9 million of previously unrecognized tax benefits in fiscal year 2013. This was partially offset by an increase in the impact of foreign losses for which we cannot take a tax benefit on our effective tax rate.

The decrease in our effective tax rate in fiscal year 2012 compared to fiscal year 2011 was primarily attributable to the BPP goodwill and other intangibles impairment in fiscal year 2011 discussed above. This was partially offset by the following:

• A $43.3 million tax benefit realized in fiscal year 2011 due to resolution with the Arizona Department of Revenue regarding the apportionment of income for Arizona corporate income tax purposes. The realized benefit encompassed fiscal year 2011 and prior years. Refer to Note 13, Income Taxes, in Item 8, Financial Statements and Supplementary Data;

• A $9.6 million tax benefit recorded in fiscal year 2011 associated with resolution with the Internal Revenue Service regarding the deductibility of payments made to settle a lawsuit in fiscal year 2010;

• A $7.3 million tax benefit related to the closure of Meritus University, Inc. in fiscal year 2011; and

• The $16.8 million nondeductible UNIACC goodwill and other intangibles impairment in fiscal year 2012 discussed above.

Income from Discontinued Operations, Net of Tax

Income from discontinued operations, net of tax, during fiscal year 2012 represents the $26.7 million gain on sale of BPP’s subsidiary Mander Portman Woodward (“MPW”) and its operating results through the date of sale in the fourth quarter of fiscal year 2012. We did not record any tax expense on the gain because it was not taxable under United Kingdom tax law. The income, net of tax, during fiscal year 2011 represents MPW’s operating results and the Insight Schools business through its date

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of sale in the second quarter of fiscal year 2011. Refer to Note 4, Discontinued Operations, in Item 8, Financial Statements and Supplementary Data.

Net (Income) Loss Attributable to Noncontrolling Interests

As discussed in the Overview of this MD&A, we purchased the 14.4% noncontrolling ownership interest in Apollo Global from The Carlyle Group in the first quarter of fiscal year 2013.

The decrease in net loss attributable to noncontrolling interests during fiscal year 2012 compared to fiscal year 2011 was principally attributable to Apollo Global’s former noncontrolling shareholder’s portion of the following:

• BPP’s $219.9 million goodwill and other intangibles impairment in fiscal year 2011; and

• the $26.7 million gain on sale of BPP’s subsidiary MPW in fiscal year 2012.

The decrease in fiscal year 2012 compared to fiscal year 2011 was partially offset by Apollo Global’s former noncontrolling shareholder’s portion of UNIACC’s $16.8 million goodwill and other intangibles impairment in fiscal year 2012.

Analysis of Operating Results by Reportable Segment

The following details our operating results by reportable segment for the periods indicated:

	Year Ended August 31,									2013 versus 2012					2012 versus 2011
($ in thousands)	2013			2012			2011			$ Change			% Change		$ Change			% Change
Net revenue
University of Phoenix	$	3,304,464		$	3,873,098		$	4,322,670		$	(568,634	)	(14.7	)%	$	(449,572	)	(10.4	)%
Apollo Global	275,768			269,541			272,935			6,227			2.3	%	(3,394		)	(1.2	)%
Other	101,078			110,698			115,444			(9,620		)	(8.7	)%	(4,746		)	(4.1	)%
Total net revenue	$	3,681,310		$	4,253,337		$	4,711,049		$	(572,027	)	(13.4	)%	$	(457,712	)	(9.7	)%
Operating income (loss)
University of Phoenix	$	579,670		$	846,840		$	1,270,468		$	(267,170	)	(31.5	)%	$	(423,628	)	(33.3	)%
Apollo Global	(59,936		)	(66,964		)	(259,487		)	7,028			10.5	%	192,523			74.2	%
Other	(92,320		)	(103,539		)	(55,123		)	11,219			10.8	%	(48,416		)	(87.8	)%
Total operating income	$	427,414		$	676,337		$	955,858		$	(248,923	)	(36.8	)%	$	(279,521	)	(29.2	)%

University of Phoenix

Our University of Phoenix segment’s net revenue decreased $568.6 million and $449.6 million, or 14.7% and 10.4%, in fiscal years 2013 and 2012 compared to the respective prior years. The decreases were principally attributable to lower enrollment. During fiscal year 2013, we increased our use of targeted discounts and grants, which also reduced net revenue compared to fiscal year 2012. The revenue declines in each period were partially offset by selective tuition price and other fee increases implemented in July 2012 and 2011 that were generally in the range of 3-5%, and a favorable shift in enrollment mix toward higher degree-level programs, which generally provide higher net revenue per student. University of Phoenix did not increase tuition prices during fiscal year 2013.

Future net revenue will be impacted by tuition price and other fee changes, changes in enrollment and student mix within programs and degree levels, and discounts. During fiscal year 2014, University of Phoenix expects to continue its use of scholarships and discounts to improve its value proposition to prospective students and help ensure affordability is not a barrier to accessing its programs.

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The following details University of Phoenix enrollment for the respective periods:

	Average Degreed Enrollment(1)							Aggregate New Degreed Enrollment(1), (5)
(Rounded to the nearest hundred)	Year Ended August 31,			% Change				Year Ended August 31,			% Change
	2013(2)	2012(3)	2011(4)	2013-2012		2012-2011		2013	2012	2011	2013-2012		2012-2011
Associate’s	90,500	119,900	163,500	(24.5	)%	(26.7	)%	68,900	88,100	90,500	(21.8	)%	(2.7	)%
Bachelor’s	160,100	179,200	186,000	(10.7	)%	(3.7	)%	73,400	93,700	94,900	(21.7	)%	(1.3	)%
Master’s	44,100	50,600	61,700	(12.8	)%	(18.0	)%	28,300	32,000	33,600	(11.6	)%	(4.8	)%
Doctoral	6,400	7,200	7,500	(11.1	)%	(4.0	)%	2,300	2,900	2,900	(20.7	)%	—	%
Total	301,100	356,900	418,700	(15.6	)%	(14.8	)%	172,900	216,700	221,900	(20.2	)%	(2.3	)%

⁽¹⁾ Refer to Item 1, Business, for definitions of Degreed Enrollment and New Degreed Enrollment.

⁽²⁾ Represents the average of Degreed Enrollment for the quarters ended August 31, 2012, November 30, 2012, February 28, 2013, May 31, 2013 and August 31, 2013.

⁽³⁾ Represents the average of Degreed Enrollment for the quarters ended August 31, 2011, November 30, 2011, February 29, 2012, May 31, 2012 and August 31, 2012.

⁽⁴⁾ Represents the average of Degreed Enrollment for the quarters ended August 31, 2010, November 30, 2010, February 28, 2011, May 31, 2011 and August 31, 2011.

⁽⁵⁾ Represents the sum of the four quarters of New Degreed Enrollment in the respective fiscal years.

University of Phoenix Average Degreed Enrollment decreased 15.6% and 14.8%, in fiscal years 2013 and 2012 compared to the respective prior periods. We believe University of Phoenix enrollment has been adversely impacted by unprecedented, rapidly developing changes and increasing competition in the U.S. higher education industry as further discussed in the Overview of this MD&A. We are working to accelerate the enhancement of our offerings to remain competitive and to more effectively deliver a quality student experience at the right value. Certain of our initiatives under consideration could adversely impact our operating results, especially in the short-term.

Our University of Phoenix segment’s operating income decreased $267.2 million, or 31.5%, in fiscal year 2013 compared to fiscal year 2012. The decrease was principally attributable tolower net revenue and increases in restructuring charges. This was partially offset by a decrease in faculty and curriculum costs associated with lower enrollment, a decrease in bad debt expense, and reduced operating costs resulting from our restructuring activities.

Our University of Phoenix segment’s operating income decreased $423.6 million, or 33.3%, in fiscal year 2012 compared to fiscal year 2011. The decrease was principally attributable lower net revenue, expenses associated with various initiatives to more effectively support our students and enhance their educational outcomes, and higher marketing employee compensation costs and other costs. This was partially offset by a decrease in faculty and curriculum costs associated with lower enrollment, a decrease in bad debt expense, and lower headcount in admissions advisory and certain other functions.

Apollo Global

Apollo Global net revenue increased $6.2 million in fiscal year 2013 compared to fiscal year 2012 principally due to increased enrollment at ULA. The $7.0 million decrease in Apollo Global’s operating loss in fiscal year 2013 compared to fiscal year 2012 was primarily due to UNIACC’s $16.8 million goodwill and other intangibles impairment charge in fiscal year 2012, and reduced operating expenses resulting from our restructuring activities. This was partially offset by the assessment of approximately $10 million of foreign indirect taxes in fiscal year 2013 associated with certain instructional materials.

Apollo Global net revenue decreased $3.4 million in fiscal year 2012 compared to fiscal year 2011, which was primarily due to the unfavorable impact of foreign exchange rates and lower enrollment at UNIACC. The decreased operating loss in fiscal year 2012 compared to fiscal year 2011 was due to the BPP $219.9 million goodwill and other intangibles impairment charge in fiscal year 2011 and lower intangibles amortization at BPP in fiscal year 2012. These factors were partially offset by the following in fiscal year 2012:

• UNIACC’s $16.8 million goodwill and other intangibles impairment;

• $5.7 million of restructuring and other charges; and

• Increased costs associated with initiatives at BPP to expand and enhance certain educational offerings, particularly at BPP University College.

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Other

Other net revenue decreased $9.6 million in fiscal year 2013 compared to fiscal year 2012 principally attributable to declines at IPD and WIU. The IPD decline principally resulted from a decrease in the number of its Client Institutions and the WIU decline was due to lower enrollment and the launch of its new strategy as discussed in the Overview of this MD&A We expect WIU’s new strategy to continue to reduce its revenue in the near-term due to the new pricing structure that allows prospective WIU students to test the academic experience before they formally enroll. The net revenue decrease was partially offset by an increase in Carnegie Learning revenue.

The decreased operating loss in fiscal year 2013 compared to fiscal year 2012 was principally attributable to the litigation credits discussed above and reduced operating costs resulting from our restructuring activities. This was partially offset by higher restructuring charges, a decrease in IPD’s operating income and a $5.0 million retirement bonus in fiscal year 2013.

Other net revenue decreased $4.7 million in fiscal year 2012 compared to fiscal year 2011 principally attributable to a decline at IPD resulting from a decrease in the number of its Client Institutions. This was partially offset by revenue from Carnegie Learning, which we acquired in the first quarter of fiscal year 2012.

The increased operating loss in fiscal year 2012 compared to fiscal year 2011 was principally attributable to the $16.2 million net litigation credit in fiscal year 2011 discussed above, $13.0 million of restructuring and other charges in fiscal year 2012, and an operating loss from Carnegie Learning in fiscal year 2012, which includes the amortization of acquired intangibles.

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 initiatives to achieve significant improvements in student retention and career outcomes, investments in opportunities to increase organic growth through new education offerings, expansion of our global operations through acquisitions or other initiatives, and share repurchases.

Although we currently have substantial available liquidity, our ability to access the credit markets and other sources of liquidity may be adversely affected if we experience regulatory compliance challenges, including, but not limited to, maintaining a U.S. Department of Education financial responsibility composite score of at least 1.5, reduced availability of Title IV funding, or other adverse effects on our business from regulatory or legislative changes. Refer to Part I, Item 1A, Risk Factors - Risks Related to the Highly Regulated Industry in Which We Operate.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents and Marketable Securities

The substantial majority of our cash and cash equivalents, including restricted cash and cash equivalents, are held by our domestic operations and placed with high-credit-quality financial institutions. The following provides a summary of our cash and cash equivalents, restricted cash and cash equivalents and current marketable securities at August 31, 2013 and 2012:

					% of Total Assets at August 31,
	August 31,								% Change
($ in thousands)	2013		2012		2013		2012
Cash and cash equivalents	$	1,414,485	$	1,276,375	47.2	%	44.5	%	10.8	%
Restricted cash and cash equivalents	259,174		318,334		8.7	%	11.1	%	(18.6	)%
Marketable securities(1)	105,809		—		3.5	%	—	%	*
Total	$	1,779,468	$	1,594,709	59.4	%	55.6	%	11.6	%

* not meaningful

⁽¹⁾ Represents current marketable securities. We also have $43.9 million of long-term marketable securities that principally includes held-to-maturity securities maturing in less than two years.

Cash and cash equivalents (excluding restricted cash) increased $138.1 million due to $478.0 million of cash provided by operations. This was partially offset by $143.8 million of marketable securities purchases (net of maturities), none of which have maturities exceeding two years, $119.3 million used for capital expenditures, $42.5 million used for the purchase of noncontrolling interests, and $26.2 million of payments on borrowings (net of proceeds from borrowings).

We consider the unremitted earnings attributable to certain of our foreign subsidiaries to be permanently reinvested. As of August 31, 2013, the earnings from these operations are not significant.

We measure our money market funds included in cash and restricted cash equivalents at fair value. At August 31, 2013, we had money market funds of $732.5 million. The money market funds were valued primarily using real-time quotes for transactions

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in active exchange markets involving identical assets. We did not record any material adjustments to reflect these instruments at fair value.

As of August 31, 2013, our current marketable securities principally includes tax-exempt municipal bonds and corporate bonds that have original maturities to us greater than three months, but less than one year. Our current marketable securities are classified as held-to-maturity because we have the intent and ability to hold them until maturity. They are reported at amortized cost, which approximates fair value.

Debt

Revolving Credit Facility - In fiscal year 2012, we entered into a syndicated $625 million unsecured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility is used for general corporate purposes, which may include acquisitions and share repurchases. The term is five years and will expire in April 2017. The Revolving Credit Facility may be used for borrowings in certain foreign currencies and letters of credit, in each case up to specified sublimits.

We borrowed $605.0 million and $615.0 million under the Revolving Credit Facility as of August 31, 2013 and 2012, respectively. We also had approximately $14 million and $8 million of outstanding letters of credit under the Revolving Credit Facility as of the respective dates. We repaid the entire amount borrowed under the Revolving Credit Facility subsequent to the respective fiscal year ends. We have classified our Revolving Credit Facility borrowings as short-term borrowings and the current portion of long-term debt on our Consolidated Balance Sheets because they were repaid subsequent to the respective fiscal year-ends.

The Revolving Credit Facility fees are determined based on a pricing grid that varies according to our leverage ratio. The Revolving Credit Facility fee ranges from 25 to 40 basis points. Incremental fees for borrowings under the facility generally range from LIBOR + 125 to 185 basis points. The weighted average interest rate on outstanding short-term borrowings under the Revolving Credit Facility at August 31, 2013 and 2012 was 3.5%.

The Revolving Credit Facility contains various customary representations, covenants and other provisions, including a material adverse event clause and 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. We were in compliance with all applicable covenants related to the Revolving Credit Facility at August 31, 2013.

Other - Other principally includes debt at subsidiaries of Apollo Global and the present value of an obligation payable over a 10-year period associated with our purchase of technology in fiscal year 2012. The weighted average interest rate on our outstanding other debt at August 31, 2013 and 2012 was 5.3% and 5.7%, respectively.

During the second quarter of fiscal year 2013, we terminated our £39.0 million secured credit agreement at BPP.

Cash Flows

Operating Activities

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

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Net income	$	248,965		$	417,006		$	535,796
Non-cash items	311,536			418,719			671,790
Changes in assets and liabilities, excluding the impact of acquisition and dispositions	(82,453		)	(284,425		)	(310,464		)
Net cash provided by operating activities	$	478,048		$	551,300		$	897,122

Fiscal Year 2013 - Our non-cash items primarily consisted of $161.7 million of depreciation and amortization, a $83.8 million provision for uncollectible accounts receivable, $62.3 million of restructuring accelerated depreciation and impairments, and $49.5 million of share-based compensation. These items were partially offset by $29.5 million of deferred income taxes, and $24.6 million of net litigation credits principally resulting from resolution in certain of our legal matters.

The changes in assets and liabilities primarily consisted of a $103.4 million use of cash related to the change in accounts receivable, excluding the provision for uncollectible accounts receivable, and decreases in student deposits and deferred revenue of $52.6 million and $39.1 million, respectively, principally attributable to the enrollment decline at University of Phoenix. This was partially offset by a $78.7 million increase in accrued and other liabilities principally attributable to an increase in our restructuring liabilities, and a $59.2 million decrease in restricted cash and cash equivalents primarily due to the enrollment decline at University of Phoenix.

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Fiscal Year 2012 - Our non-cash items primarily consisted of $178.2 million of depreciation and amortization, a $146.7 million provision for uncollectible accounts receivable, $78.7 million of share-based compensation, $21.9 million of deferred income taxes and $16.8 million of goodwill and other intangibles impairments. These items were partially offset by a $26.7 million gain on the sale of MPW. The changes in assets and liabilities primarily consisted of the following:

• a $129.8 million use of cash related to the change in accounts receivable, excluding the provision for uncollectible accounts receivable;

• a $128.1 million decrease in accrued and other liabilities principally attributable to our $145.0 million payment to settle the Securities Class Action (Policeman’s Annuity and Benefit Fund of Chicago), which was partially offset by an increase in our restructuring liabilities; and

• decreases in student deposits and deferred revenue of $58.7 million and $39.2 million, respectively, principally attributable to the enrollment decline at University of Phoenix.

The above changes were partially offset by a $61.1 million decrease in restricted cash and cash equivalents principally attributable to the enrollment decline at University of Phoenix.

Fiscal Year 2011 - Our non-cash items primarily consisted of $219.9 million of goodwill and other intangibles impairments, a $181.3 million provision for uncollectible accounts receivable, $159.0 million of depreciation and amortization, $70.0 million of share-based compensation and $55.8 million of deferred income taxes. The changes in assets and liabilities primarily consisted of the following:

• a $121.1 million use of cash related to the change in accounts receivable, excluding the provision for uncollectible accounts receivable;

• decreases in deferred revenue and student deposits of $79.5 million and $70.1 million, respectively, principally attributable to the enrollment decline at University of Phoenix; and

• a $65.4 million decrease in accrued and other liabilities principally attributable to a decrease in our uncertain tax positions.

The above changes were partially offset by a $64.7 million decrease in restricted cash and cash equivalents principally attributable to the enrollment decline at University of Phoenix.

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, 2013, excluding accounts receivable and the related net revenue for Apollo Global, our days sales outstanding was essentially flat at 21 days compared to 22 days as of August 31, 2012.

Investing Activities

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

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Capital expenditures	$	(119,348	)	$	(115,187	)	$	(162,573	)
(Purchases) maturities of marketable securities, net	(143,804		)	—			10,000
Acquisition, net of cash acquired	—			(73,736		)	—
Proceeds from sale-leaseback, net	—			—			169,018
Proceeds from dispositions, net	—			76,434			21,251
Collateralization of letter of credit	—			—			126,615
Other	(1,500		)	(1,694		)	—
Net cash (used in) provided by investing activities	$	(264,652	)	$	(114,183	)	$	164,311

Fiscal Year 2013 - Cash used in investing activities primarily consisted of $143.8 million used for marketable securities purchases (net of maturities) and $119.3 million used for capital expenditures.

We expect our fiscal year 2014 capital expenditures to be less than the amount in fiscal year 2013.

Fiscal Year 2012 - Cash used in investing activities primarily consisted of $115.2 million used for capital expenditures that primarily related to investments in our information technology, and $73.7 million used to acquire Carnegie Learning. This was partially offset by $76.4 million of proceeds from dispositions, the substantial majority of which relates to our sale of MPW.

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Fiscal Year 2011 - Cash provided by investing activities consisted of $169.0 million of proceeds from the sale-leaseback of office buildings in Phoenix, Arizona, $126.6 million from the return of collateral resulting from the release of a letter of credit, $21.3 million of proceeds from our sale of Insight Schools, and $10.0 million from marketable securities maturities. This was partially offset by $162.6 million used for capital expenditures that primarily related to investments in our information technology, network infrastructure, and software.

Financing Activities

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

	Year Ended August 31,
($ in thousands)	2013			2012			2011
(Payments) proceeds related to borrowings, net	$	(26,151	)	$	66,876		$	(27,874	)
Purchase of noncontrolling interest	(42,500		)	—			—
Purchases of stock for treasury	(9,537		)	(811,913		)	(783,168		)
Issuances of stock	3,867			11,949			24,903
Noncontrolling interest contributions	—			—			6,875
Other	17			1,150			4,014
Net cash used in financing activities	$	(74,304	)	$	(731,938	)	$	(775,250	)

Fiscal Year 2013 - Cash used in financing activities primarily consisted of $42.5 million used for the purchase of the noncontrolling ownership interest in Apollo Global, $26.2 million used for payments on borrowings (net of proceeds from borrowings), and $9.5 million used for share repurchases in connection with the release of vested shares of restricted stock.

Fiscal Year 2012 - Cash used in financing activities primarily consisted of $811.9 million used for share repurchases. This was partially offset by $66.9 million of proceeds from borrowings (net of payments on borrowings) and $11.9 million of cash received from stock issuances.

Fiscal Year 2011 - Cash used in financing activities primarily consisted of $783.2 million used for share repurchases and $27.9 million used for payments on borrowings (net of proceeds from borrowings). This was partially offset by $24.9 million of cash received from stock issuances.

During the third quarter of fiscal year 2013, our Board of Directors authorized an increase in the amount available under our share repurchase program up to an aggregate amount of $250 million. The amount and timing of future share repurchase authorizations and repurchases, if any, will be made as market and business conditions warrant. Repurchases may be made on the open market through various methods including but not limited to accelerated share repurchase programs, 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.

Contractual Obligations and Other Commercial Commitments

The following lists our contractual obligations and other commercial commitments as of August 31, 2013:

	Payments Due by Fiscal Year
($ in thousands)	2014		2015-2016		2017-2018		Thereafter		Total
Debt(1)	$	613,411	$	19,184	$	7,515	$	9,165	$	649,275
Operating lease obligations	180,605		307,566		206,923		353,899		1,048,993
Capital lease obligations	18,170		29,197		5,103		1,194		53,664
Stadium naming rights(2)	7,125		14,898		15,804		70,718		108,545
Uncertain tax positions(3)	8,332		—		—		33,637		41,969
Other obligations(4)	36,904		37,216		16,669		6,758		97,547
Total	$	864,547	$	408,061	$	252,014	$	475,371	$	1,999,993

⁽¹⁾ Amounts include expected future interest payments. Refer to Note 12, Debt, in Item 8, Financial Statements and Supplementary Data, for additional information on our outstanding debt.

⁽²⁾ Represents an agreement for naming rights to the Glendale, Arizona Sports Complex until 2026.

⁽³⁾ Represents our liability for unrecognized tax positions, including interest and penalties, as of August 31, 2013. We are uncertain as to if or when such amounts may be settled.

⁽⁴⁾ Represents unconditional purchase obligations and other obligations.

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In addition to the commitments included in the above table, we have contingent payment as a result of our purchase of the noncontrolling interest in Apollo Global. Refer to Note 14, Shareholders’ Equity, in Item 8, Financial Statements and Supplementary Data.

We have no other material commercial commitments not described above.

Off-Balance Sheet Arrangements

As part of our normal operations, our insurers issue surety bonds for us that are required by various states where we operate. We are obligated to reimburse our insurers for any surety bonds that are paid. As of August 31, 2013, the total face amount of these surety bonds was $41.5 million. We also had approximately $14 million of outstanding letters of credit as of August 31, 2013 that are required as part of our normal operations.

Certain other off-balance sheet obligations, such as operating leases, are included in the Contractual Obligations and Other Commercial Commitments table above.

Item 7A - Quantitative and Qualitative Disclosures about Market Risk

We are exposed to economic risk from inflation, foreign currency exchange rates, and interest rates.

Inflation

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

Foreign Currency Exchange Risk

The substantial majority of our revenue, expense and capital expenditure activities are transacted in U.S. dollars. However, because a portion of our operations consists of activities outside of the U.S., we have transactions in other currencies, primarily the British pound, Mexican peso and Chilean peso.

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 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 on our Consolidated Statements of Income.

In fiscal year 2013, we recorded $2.5 million of net foreign currency translation losses, net of tax, that are included in other comprehensive income. These losses are primarily the result of the general strengthening of the U.S. dollar relative to the currencies of our foreign operations during fiscal year 2013. The following 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 for foreign currencies in which we have significant assets and/or liabilities as of August 31:

($ in thousands)	2013		2012
British pound sterling	$	87,784	$	107,610
Mexican peso	$	22,034	$	22,588
Chilean peso	$	6,721	$	6,409

We generally have not used derivative contracts to hedge foreign currency exchange rate fluctuations.

69

Interest Rate Risk

Our interest income and interest expense is sensitive to fluctuations in interest rates in the U.S. and certain international countries. Changes in interest rates affect the interest earned on our cash and cash equivalents, restricted cash and cash equivalents, and marketable securities, and the cost associated with our debt.

Interest Income

As of August 31, 2013, we had $1.8 billion of cash and cash equivalents, restricted cash and cash equivalents, and marketable securities. During fiscal year 2013, our interest rate yields were less than 1%, and we earned interest income of $1.9 million. A reduction in interest rates would not have a material impact on our interest income.

Interest Expense

We have exposure to changing interest rates primarily associated with our variable rate debt. As of August 31, 2013, we had $692.1 million of outstanding debt and the following presents the weighted-average interest rates and our scheduled principal maturities by fiscal year:

($ in thousands, except percentages)	2014		2015		2016		2017		2018		Thereafter		Total
Fixed-rate debt	$	19,924	$	20,051	$	13,435	$	6,640	$	3,919	$	9,382	$	73,351
Average interest rate													4.9		%
Variable-rate debt	$	608,126	$	10,577	$	—	$	—	$	—	$	—	$	618,703
Average interest rate													3.5		%

Subsequent to August 31, 2013, we repaid $605.0 million of our variable rate debt borrowed under the Revolving Credit Facility. Accordingly, we do not believe a change in interest rates would have a material impact on our interest expense.

70

Item 8 - Financial Statements and Supplementary Data

	Page
Report of Independent Registered Public Accounting Firm	72
Consolidated Balance Sheets	73
Consolidated Statements of Income	74
Consolidated Statements of Comprehensive Income	75
Consolidated Statements of Changes in Shareholders’ Equity	76
Consolidated Statements of Cash Flows	77
Notes to Consolidated Financial Statements	78

71

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, 2013 and 2012, 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, 2013. 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, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended August 31, 2013, 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, 2013, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated October 22, 2013 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Phoenix, Arizona

October 22, 2013

72

APOLLO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of August 31,
(In thousands)	2013			2012
ASSETS:
Current assets
Cash and cash equivalents	$	1,414,485		$	1,276,375
Restricted cash and cash equivalents	259,174			318,334
Marketable securities	105,809			—
Accounts receivable, net	215,401			198,279
Prepaid taxes	30,359			26,341
Deferred tax assets	60,294			69,052
Other current assets	64,134			49,609
Total current assets	2,149,656			1,937,990
Marketable securities	43,941			5,946
Property and equipment, net	472,614			571,629
Goodwill	103,620			103,345
Intangible assets, net	132,192			149,034
Deferred tax assets	63,894			77,628
Other assets	32,030			22,750
Total assets	$	2,997,947		$	2,868,322
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities
Short-term borrowings and current portion of long-term debt	$	628,050		$	638,588
Accounts payable	73,123			74,872
Student deposits	309,176			362,143
Deferred revenue	213,260			254,555
Accrued and other current liabilities	346,706			324,881
Total current liabilities	1,570,315			1,655,039
Long-term debt	64,004			81,323
Deferred tax liabilities	12,177			15,881
Other long-term liabilities	233,442			191,756
Total liabilities	1,879,938			1,943,999
Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value, 1,000 shares authorized; none issued	—			—
Apollo Group Class A nonvoting common stock, no par value, 400,000 shares authorized; 188,007 issued as of August 31, 2013 and 2012, and 112,825 and 111,768 outstanding as of August 31, 2013 and 2012, respectively	103			103
Apollo Group Class B voting common stock, no par value, 3,000 shares authorized; 475 issued and outstanding as of August 31, 2013 and 2012	1			1
Additional paid-in capital	—			93,770
Apollo Group Class A treasury stock, at cost, 75,182 and 76,239 shares as of August 31, 2013 and 2012, respectively	(3,824,758		)	(3,878,612		)
Retained earnings	4,978,815			4,743,150
Accumulated other comprehensive loss	(36,563		)	(30,034		)
Total Apollo shareholders’ equity	1,117,598			928,378
Noncontrolling interests (deficit)	411			(4,055		)
Total equity	1,118,009			924,323
Total liabilities and shareholders’ equity	$	2,997,947		$	2,868,322

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

73

APOLLO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	Year Ended August 31,
(In thousands, except per share data)	2013			2012			2011
Net revenue	$	3,681,310		$	4,253,337		$	4,711,049
Costs and expenses:
Instructional and student advisory	1,579,464			1,800,569			1,759,986
Marketing	661,693			663,442			654,399
Admissions advisory	263,934			383,935			415,386
General and administrative	329,249			344,300			355,548
Depreciation and amortization	161,733			177,804			157,686
Provision for uncollectible accounts receivable	83,798			146,742			181,297
Restructuring and other charges	198,625			38,695			22,913
Litigation (credit) charge, net	(24,600		)	4,725			(11,951		)
Goodwill and other intangibles impairment	—			16,788			219,927
Total costs and expenses	3,253,896			3,577,000			3,755,191
Operating income	427,414			676,337			955,858
Interest income	1,913			1,187			2,884
Interest expense	(8,745		)	(11,745		)	(8,931		)
Other, net	2,407			476			(1,588		)
Income from continuing operations before income taxes	422,989			666,255			948,223
Provision for income taxes	(174,024		)	(283,072		)	(419,136		)
Income from continuing operations	248,965			383,183			529,087
Income from discontinued operations, net of tax	—			33,823			6,709
Net income	248,965			417,006			535,796
Net (income) loss attributable to noncontrolling interests	(439		)	5,672			36,631
Net income attributable to Apollo	$	248,526		$	422,678		$	572,427
Earnings per share - Basic:
Continuing operations attributable to Apollo	$	2.20		$	3.24		$	4.01
Discontinued operations attributable to Apollo	—			0.24			0.04
Basic income per share attributable to Apollo	$	2.20		$	3.48		$	4.05
Earnings per share - Diluted:
Continuing operations attributable to Apollo	$	2.19		$	3.22		$	4.00
Discontinued operations attributable to Apollo	—			0.23			0.04
Diluted income per share attributable to Apollo	$	2.19		$	3.45		$	4.04
Basic weighted average shares outstanding	112,712			121,607			141,269
Diluted weighted average shares outstanding	113,285			122,357			141,750

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

74

APOLLO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Net income	$	248,965		$	417,006		$	535,796
Other comprehensive income (loss) (net of tax):
Currency translation (loss) gain(1)	(2,545		)	(8,281		)	7,643
Change in fair value of marketable securities(1)	—			—			463
Comprehensive income	246,420			408,725			543,902
Comprehensive loss attributable to noncontrolling interests	463			7,680			35,940
Comprehensive income attributable to Apollo	$	246,883		$	416,405		$	579,842

⁽¹⁾ The tax effect on each component of other comprehensive income during fiscal years 2013, 2012 and 2011 is not significant.

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

75

APOLLO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

	Common Stock
	Apollo Group						Additional Paid-in Capital			Treasury Stock								Accumulated Other Comprehensive Loss			Total Apollo Shareholders’ Equity			Noncontrolling Interests (Deficit)
	Class A Nonvoting			Class B Voting						Apollo Group Class A					Retained Earnings												Total Equity
(In thousands)	Shares	Stated Value		Shares	Stated Value					Shares		Cost
Balance as of August 31, 2010	188,007	$	103	475	$	1	$	46,865		40,714		$	(2,407,788	)	$	3,748,045		$	(31,176	)	$	1,356,050		$	32,690		$	1,388,740
Treasury stock purchases	—	—		—	—		—			18,503		(783,168		)	—			—			(783,168		)	—			(783,168		)
Treasury stock issued under stock purchase plans	—	—		—	—		(1,995		)	(136	)	7,747			—			—			5,752			—			5,752
Treasury stock issued under stock incentive plans	—	—		—	—		(38,883		)	(1,078	)	58,034			—			—			19,151			—			19,151
Net tax effect for stock incentive plans	—	—		—	—		(7,303		)	—		—			—			—			(7,303		)	—			(7,303		)
Share-based compensation	—	—		—	—		70,040			—		—			—			—			70,040			—			70,040
Currency translation adjustment, net of tax	—	—		—	—		—			—		—			—			6,952			6,952			691			7,643
Change in fair value of marketable securities, net of tax	—	—		—	—		—			—		—			—			463			463			—			463
Noncontrolling interest contributions	—	—		—	—		—			—		—			—			—			—			6,875			6,875
Net income (loss)	—	—		—	—		—			—		—			572,427			—			572,427			(36,631		)	535,796
Balance as of August 31, 2011	188,007	$	103	475	$	1	$	68,724		58,003		$	(3,125,175	)	$	4,320,472		$	(23,761	)	$	1,240,364		$	3,625		$	1,243,989
Treasury stock purchases	—	—		—	—		—			19,420		(811,913		)	—			—			(811,913		)	—			(811,913		)
Treasury stock issued under stock purchase plans	—	—		—	—		(1,712		)	(132	)	6,907			—			—			5,195			—			5,195
Treasury stock issued under stock incentive plans	—	—		—	—		(44,815		)	(1,052	)	51,569			—			—			6,754			—			6,754
Net tax effect for stock incentive plans	—	—		—	—		(7,132		)	—		—			—			—			(7,132		)	—			(7,132		)
Share-based compensation	—	—		—	—		78,705			—		—			—			—			78,705			—			78,705
Currency translation adjustment, net of tax	—	—		—	—		—			—		—			—			(6,273		)	(6,273		)	(2,008		)	(8,281		)
Net income (loss)	—	—		—	—		—			—		—			422,678			—			422,678			(5,672		)	417,006
Balance as of August 31, 2012	188,007	$	103	475	$	1	$	93,770		76,239		$	(3,878,612	)	$	4,743,150		$	(30,034	)	$	928,378		$	(4,055	)	$	924,323
Treasury stock purchases	—	—		—	—		—			475		(9,537		)	—			—			(9,537		)	—			(9,537		)
Treasury stock issued under stock purchase plans	—	—		—	—		(6,241		)	(198	)	10,108			—			—			3,867			—			3,867
Treasury stock issued under stock incentive plans	—	—		—	—		(40,422		)	(1,334	)	53,283			(12,861		)	—			—			—			—
Net tax effect for stock incentive plans	—	—		—	—		(48,026		)	—		—			—			—			(48,026		)	—			(48,026		)
Share-based compensation	—	—		—	—		49,462			—		—			—			—			49,462			—			49,462
Currency translation adjustment, net of tax	—	—		—	—		—			—		—			—			(1,643		)	(1,643		)	(902		)	(2,545		)
Purchase of noncontrolling interest	—	—		—	—		(48,543		)	—		—			—			(4,886		)	(53,429		)	4,929			(48,500		)
Net income	—	—		—	—		—			—		—			248,526			—			248,526			439			248,965
Balance as of August 31, 2013	188,007	$	103	475	$	1	$	—		75,182		$	(3,824,758	)	$	4,978,815		$	(36,563	)	$	1,117,598		$	411		$	1,118,009

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

76

APOLLO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Operating activities:
Net income	$	248,965		$	417,006		$	535,796
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation	49,462			78,705			70,040
Excess tax benefits from share-based compensation	(17		)	(1,150		)	(4,014		)
Depreciation and amortization	161,733			178,234			159,006
Accelerated depreciation and impairments included in restructuring	62,267			—			—
Loss on fixed asset write-offs	8,190			—			—
Goodwill and other intangibles impairment	—			16,788			219,927
Non-cash foreign currency loss (gain), net	220			(497		)	1,662
Gain on sale of discontinued operations	—			(26,678		)	—
Provision for uncollectible accounts receivable	83,798			146,742			181,297
Litigation (credit) charge, net	(24,600		)	4,725			(11,951		)
Deferred income taxes	(29,517		)	21,850			55,823
Changes in assets and liabilities, excluding the impact of acquisition and business dispositions:
Restricted cash and cash equivalents	59,160			61,073			64,725
Accounts receivable	(103,369		)	(129,773		)	(121,120		)
Prepaid taxes	(3,985		)	9,303			(25,241		)
Other assets	(19,514		)	(11,568		)	(9,900		)
Accounts payable	(1,775		)	12,525			(3,913		)
Student deposits	(52,587		)	(58,740		)	(70,120		)
Deferred revenue	(39,091		)	(39,154		)	(79,488		)
Accrued and other liabilities	78,708			(128,091		)	(65,407		)
Net cash provided by operating activities	478,048			551,300			897,122
Investing activities:
Purchases of property and equipment	(119,348		)	(115,187		)	(162,573		)
Purchases of marketable securities	(208,878		)	—			—
Maturities of marketable securities	65,074			—			10,000
Acquisition, net of cash acquired	—			(73,736		)	—
Proceeds from sale-leaseback, net	—			—			169,018
Proceeds from dispositions, net	—			76,434			21,251
Collateralization of letter of credit	—			—			126,615
Other investing activities	(1,500		)	(1,694		)	—
Net cash (used in) provided by investing activities	(264,652		)	(114,183		)	164,311
Financing activities:
Payments on borrowings	(636,387		)	(562,269		)	(437,925		)
Proceeds from borrowings	610,236			629,145			410,051
Purchases of stock for treasury	(9,537		)	(811,913		)	(783,168		)
Issuances of stock	3,867			11,949			24,903
Purchase of noncontrolling interest	(42,500		)	—			—
Noncontrolling interest contributions	—			—			6,875
Excess tax benefits from share-based compensation	17			1,150			4,014
Net cash used in financing activities	(74,304		)	(731,938		)	(775,250		)
Exchange rate effect on cash and cash equivalents	(982		)	(468		)	712
Net increase (decrease) in cash and cash equivalents	138,110			(295,289		)	286,895
Cash and cash equivalents, beginning of year	1,276,375			1,571,664			1,284,769
Cash and cash equivalents, end of year	$	1,414,485		$	1,276,375		$	1,571,664
Supplemental disclosure of cash flow and non-cash information
Cash paid for income taxes, net of refunds	$	201,055		$	246,824		$	464,701
Cash paid for interest	7,869			9,794			10,972
Restricted stock units vested and released	27,054			36,182			21,470
Credits received for tenant improvements	6,049			27,009			25,538
Capital lease additions	3,500			44,145			31,818
Debt incurred for acquired technology	—			14,389			—

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

77

APOLLO GROUP, INC. AND SUBSIDIARIES

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 since 1973. We offer educational programs and services, online and on-campus, at the undergraduate, master’s and doctoral levels. Our learning platforms include the following:

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

• Apollo Global, Inc. (“Apollo Global”):

• BPP Holdings Limited (“BPP”) in the United Kingdom (“U.K.”);

• Universidad Latinoamericana (“ULA”) in Mexico;

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

• Indian Education Services Private Ltd. in India;

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

• Institute for Professional Development (“IPD”);

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

• Carnegie Learning, Inc. (“Carnegie Learning”); and

• Apollo Lightspeed.

During the first quarter of fiscal year 2013, we purchased the 14.4% noncontrolling ownership interest in Apollo Global from The Carlyle Group (“Carlyle”). We paid $42.5 million cash, plus a contingent payment based on a portion of Apollo Global’s operating results through the fiscal years ending August 31, 2017. As a result of the transaction, Apollo Group owns all of Apollo Global. Refer to Note 14, Shareholders’ Equity.

Our fiscal year is from September 1 to August 31. Unless otherwise stated, references to particular years or quarters refer to our fiscal years and the associated quarters of those fiscal years.

Note 2. Significant Accounting Policies

Basis of Presentation

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Principles of Consolidation

The consolidated financial statements include the assets, liabilities, revenues and expenses of Apollo Group, Inc., its wholly-owned subsidiaries, and subsidiaries that we control. 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, are designed to 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 loans and/or grants from U.S. federal financial aid programs established by Title IV of the Higher Education Act and regulations promulgated thereunder (“Title IV”), military benefit programs, tuition assistance from their employers, or personal funds.

78

APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net revenue consists principally of tuition and fees associated with different educational programs and related educational materials, and is presented net of discounts. Tuition benefits for our employees and their eligible dependents are included in net revenue and instructional and student advisory expenses, and were $53.4 million, $71.1 million and $97.0 million during fiscal years 2013, 2012 and 2011, respectively.

We recognize revenue when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, our fees or price to the customer is fixed and determinable, and collectibility is reasonably assured. The following describes the components of our net revenue, which are generally consistent on a percentage basis for all periods presented:

• Tuition and educational services revenue represents approximately 92% of our gross consolidated revenue before discounts, and encompasses both online and on-campus delivery modes. We recognize tuition and educational services revenue over the period of instruction as services are delivered to students, which varies depending on the program structure.

• Educational materials revenue represents approximately 6% of our gross consolidated revenue before discounts, and encompasses online course materials delivered to students over the period of instruction and the sale of various books, study texts, course notes, and CDs. We recognize revenue associated with online materials over the period of the related course to correspond with delivery of the materials to students. We recognize revenue for the sale of other educational materials when they have been delivered to and accepted by students or other customers.

• Services revenue represents approximately 1% of our gross consolidated revenue before discounts. Service revenue represents net revenue generated by IPD, which provides program development, administration and management consulting services to private colleges and universities (“IPD Client Institutions”) to establish or expand their programs for working learners. These services typically include degree program design, curriculum development, market research, certain student admissions services, accounting, and administrative services. Prior to July 1, 2011, IPD was typically paid a portion of the tuition revenue generated from these programs, and the portion of service revenue to which IPD was entitled under the terms of the contract was recognized as the services were provided. As a result of U.S. Department of Education regulations that became effective on July 1, 2011, IPD’s revenue is generated based on fixed fee contracts with IPD Client Institutions and is recognized in accordance with the terms of the respective agreements as services are provided. The term for IPD’s contracts range up to ten years with provisions for renewal thereafter.

• Other revenue represents approximately 1% of our gross consolidated revenue before discounts. Other revenue includes net revenue generated by Carnegie Learning since its acquisition in fiscal year 2012, fees students pay when submitting an enrollment application and non-tuition generating revenues such as renting classroom space. Enrollment application fees are deferred and recognized over the average length of time a student remains enrolled in a program of study along with the related application costs associated with processing the applications.

• Discounts represent approximately 8% of our net revenue. Discounts reflect reductions in charges for tuition or other fees from our standard rates and include military, corporate, and other employer discounts, along with institutional scholarships, grants and promotions. Discounts are generally recognized over the period of instruction in the same manner as the related revenue to which the discount relates.

University of Phoenix’s refund policy permits students who attend 60% or less of a course to be eligible for a refund for the portion of the course they did not attend. Refunds result in a reduction in deferred revenue during the period that a student drops or withdraws from a class because associated tuition revenue is recognized over the period of instruction as the services are delivered. This refund policy applies to students in most, but not all states, as some states require different policies.

Net revenue generally 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.

Sales tax collected from students is excluded from net revenue. Collected but unremitted sales tax is included as a liability on our Consolidated Balance Sheets and is not material to our consolidated financial statements.

Allowance for Doubtful Accounts

Our accounts receivable is reduced by an allowance for amounts that we expect to become uncollectible in the future. We use estimates that are subjective and require judgment in determining the allowance for doubtful accounts, which are principally based on historical collection experience, historical write-offs of our receivables and current trends. Our accounts receivable are written off once the account is deemed to be uncollectible, which typically occurs after outside collection agencies have pursued collection for approximately six months.

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APOLLO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

When a student with Title IV loans withdraws, Title IV rules determine if we are required to return a portion of Title IV funds to the lender. 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.

Our estimation methodology uses a statistical model that considers a number of factors that we believe impact whether receivables will become uncollectible based on our collections experience. These factors include, but are not limited to, the student’s academic performance and previous college experience as well as other student characteristics such as degree level and method of payment. We also monitor and consider external factors such as changes in the economic and regulatory environment. We routinely evaluate our estimation methodology for adequacy and modify it as necessary. In doing so, we believe our allowance for doubtful accounts reflects the amount of receivables that will become uncollectible by considering our most recent collections experience, changes in trends and other relevant facts. Refer to Note 7, Accounts Receivable, Net.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with an original maturity to us of three months or less to be cash equivalents. Cash and cash equivalents may include money market funds, bank overnight deposits, time deposits and commercial paper, which are all placed with high-credit-quality financial institutions in the U.S. and internationally. Only a negligible portion of these deposits are insured by the Federal Deposit Insurance Corporation. We have not experienced any losses on our cash and cash equivalents.

Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents primarily represents funds held for students for unbilled educational services that were received from Title IV financial aid program funds. As a trustee of these Title IV financial aid funds, we are required to maintain and restrict these funds pursuant to the terms of our program participation agreement with the U.S. Department of Education. Restricted cash and cash equivalents are excluded from cash and cash equivalents on our Consolidated Balance Sheets and Consolidated Statements of Cash Flows. Changes in restricted cash and cash equivalents are included in cash flows from operating activities on our Consolidated Statements of Cash Flows because these restricted funds are a core activity of our operations. Our restricted cash and cash equivalents are primarily held in money market funds.

During fiscal year 2011, we also had restricted cash related to the collateralization of a letter of credit which was posted in fiscal year 2010 in favor of the U.S. Department of Education as required in connection with a program review of University of Phoenix by the Department. The letter of credit was released in fiscal year 2011 and the changes in the associated restricted cash are included in cash flows from investing activities on our Consolidated Statements of Cash Flows.

Marketable Securities

We invest our excess cash balances in instruments that may include tax-exempt municipal bonds, corporate bonds, time deposits, commercial paper, agency bonds and other marketable securities. We classify such instruments with original maturities to us greater than three months as marketable securities on our Consolidated Balance Sheets. The substantial majority of our marketable securities are classified as held-to-maturity because we have the intent and ability to hold them until maturity. Our held-to-maturity securities are reported at amortized cost. Refer to Note 6, Marketable Securities.

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 3 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. 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 we capitalize in the application development stage primarily include the costs of designing the application, coding, installation of hardware, and testing. Refer to Note 8, Property and Equipment, Net.

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Goodwill and Intangibles

Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed. At the time of an acquisition, we allocate the goodwill and related assets and liabilities to our respective reporting units. We identify our reporting units by assessing whether the components of our operating segments constitute businesses for which discrete financial information is available and segment management regularly reviews the operating results of those components.

Our intangibles are recorded at fair market value on their acquisition date and principally include trademarks, technology, customer relationships and foreign regulatory accreditations and designations. We assign indefinite lives to intangibles 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; and we intend to renew the respective intangible and renewal can be accomplished at little cost. Finite-lived intangibles are amortized on either a straight-line basis or using an accelerated method to reflect the pattern in which the economic benefits of the asset are consumed. The weighted average original useful life of our $30.1 million of finite-lived intangibles as of August 31, 2013 was 4.9 years.

We assess goodwill and indefinite-lived intangibles at least annually for impairment or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit or indefinite-lived intangible below its carrying amount. We perform our annual indefinite-lived intangibles impairment tests on the same dates that we perform our annual goodwill impairment tests for the respective reporting units. In performing our impairment tests, we first consider the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit or intangible, as applicable, is less than its carrying amount. If we conclude that it is more likely than not that the fair value is less than the carrying amount based on our qualitative assessment, or that a qualitative assessment should not be performed, we proceed with the following quantitative impairment tests:

• Goodwill - We compare the estimated fair value of the reporting unit 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. If the carrying value of the net assets of the reporting unit exceeds the fair value of the reporting unit, we perform a hypothetical purchase price allocation 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.

• Indefinite-lived intangibles - We compare the estimated fair value of the intangible with its carrying value. If the carrying value of the intangible exceeds its fair value, an impairment loss is recognized in the amount of that excess.

The process of evaluating goodwill and indefinite-lived intangibles for impairment is subjective and requires significant judgment at many points during the analysis. If we elect to perform an optional qualitative analysis, we consider many factors including, but not limited to, general economic conditions, industry and market conditions, our market capitalization, financial performance and key business drivers, long-term operating plans, and potential changes to significant assumptions used in the most recent fair value analysis for either the reporting unit or respective intangible.

When performing a quantitative goodwill impairment test, we determine the fair value of reporting units using an income-based approach consisting of a discounted cash flow valuation method, a market-based approach or a combination of both methods. We use the relief-from-royalty method to determine the fair value of our trademark intangibles. This method estimates the benefit of owning the intangibles rather than paying royalties for the right to use a comparable asset. The fair value determination of our reporting units and indefinite-lived intangibles consists primarily of using unobservable inputs under the fair value measurement standards, and we believe our related assumptions are consistent with a reasonable market participant view while employing the concept of highest and best use of the asset.

Refer forNote 9, Goodwill and Intangible Assets.

Other Long-Lived Asset Impairments

We evaluate the carrying amount of our major other long-lived assets, including property and equipment and finite-lived intangibles, whenever changes in circumstances or events indicate that the value of such assets may not be recoverable. During fiscal year 2013, we recorded $20.4 million of long-lived asset impairments, which includes $12.2 million resulting from our restructuring activities. Refer to Note 3, Restructuring and Other Charges and Note 8, Property and Equipment, Net.

As of August 31, 2013, we believe the carrying amounts of our remaining other long-lived assets are recoverable and no impairment exists. However, we are continuing to adapt our business in fiscal year 2014 to the rapidly developing changes in our industry, which includes further restructuring of our business. Changes to our business or other circumstances could lead to potential impairments of our other long-lived assets in the future.

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Leases

We enter into various lease agreements in conducting our business. We evaluate the lease agreement at the inception of the lease 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 our 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 our Consolidated Statements of Cash Flows. Credits received against rent for tenant improvement allowances are reflected as a component of non-cash investing activities on our 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 generally 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). Refer to Note 17, Commitments and Contingencies.

We are also required to make additional payments under lease terms for taxes, insurance, and other operating expenses incurred during the 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.

Restructuring and Other Charges

Restructuring and other charges principally consist of non-cancelable lease obligations, severance and other employee separation costs, and other related costs. We recognize restructuring obligations and liabilities for other exit and disposal activities at fair value in the period the liability is incurred. The process of measuring fair value and recognizing the associated liabilities is subjective and requires significant judgment. For our non-cancelable lease obligations, we record the obligation when we terminate the contract in accordance with the contract terms or when we cease using the right conveyed by the contract. Our employee severance costs are expensed on the date we notify the employee, unless the employee must provide future service, in which case the benefits are expensed over the future service period.

We generally estimate the fair value of restructuring obligations using significant unobservable inputs (Level 3) based on the best available information. For non-cancelable lease obligations, the fair value estimate is based on the contractual lease costs over the remaining terms of the leases, partially offset by estimated future sublease rental income. Our estimate of the amount and timing of sublease rental income considers subleases we expect to execute, current commercial real estate market data and conditions, comparable transaction data and qualitative factors specific to the facilities. The estimates are subject to adjustment as market conditions change or as new information becomes available, including the execution of sublease agreements.

Changes to restructuring obligations in periods subsequent to the initial fair value measurement are not measured at fair value. We record a cumulative adjustment resulting from changes in the estimated timing or amount of cash flows associated with restructuring obligations in the period of change using the same discount rate that was initially used to measure the obligation’s fair value. Changes in restructuring obligations resulting from the passage of time are recorded as accretion expense. The adjustments to restructuring obligations, including accretion expense, are included in restructuring and other charges on our Consolidated Statements of Income. Refer to Note 3, Restructuring and Other Charges.

Loss Contingencies

We are subject to various claims and contingencies 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. The liability excludes any anticipated loss recoveries from third parties such as insurers, which we record as a receivable if we determine recovery is probable. 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, we expense legal fees as incurred. The assessment of the likelihood of a potential loss and the estimation of the amount of a loss are subjective and require judgment. Refer to Note 17, Commitments and Contingencies.

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Share-Based Compensation

Our outstanding share-based awards principally consist of restricted stock units, performance share awards and stock options, and restricted stock units represent the majority of our share-based compensation expense in recent years. We measure and recognize compensation expense for all share-based awards based on their estimated fair values on the grant date. We record compensation expense, net of forfeitures, for all share-based awards over the requisite service period using the straight-line method for awards with only a service condition, and the graded vesting attribution method for awards with service and performance conditions.

For share-based awards with performance conditions, we measure the fair value of such awards as of the grant date and amortize share-based compensation expense for our estimate of the number of shares expected to vest. Our estimate of the number of shares that will vest is based on our determination of the probable outcome of the performance condition, which may require considerable judgment. We record a cumulative adjustment to share-based compensation expense in periods that we change our estimate of the number of shares expected to vest. Additionally, we ultimately adjust the expense recognized to reflect the actual vested shares following the resolution of the performance conditions.

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 requisite service period. Rather, different forfeiture assumptions only impact the timing of expense recognition over the requisite service period. If the actual forfeitures differ from management estimates, additional adjustments to compensation expense are recorded.

We typically use the Black-Scholes-Merton option pricing model to estimate the fair value of stock options. The Black-Scholes-Merton option pricing model requires us to estimate key assumptions based on both historical information and management judgment regarding market factors and trends. The following represents our key weighted average assumptions for stock options granted in the respective fiscal years:

	Year Ended August 31,
	2013			2012			2011
Weighted average fair value	$	5.84		$	14.10		$	16.71
Expected volatility	44.4		%	46.6		%	46.8		%
Expected term	3.4			4.3			4.2
Risk-free interest rate	0.7		%	0.6		%	1.4		%
Dividend yield	0.0		%	0.0		%	0.0		%

We estimate expected volatility based on a weighted average of our historical volatility and the implied volatility of long-lived call options. We estimate the expected term of our stock options based primarily on the vesting period of the awards and historical exercise behavior. For the risk-free interest rate, we use the U.S. constant maturity treasury rates interpolated between the years commensurate with the expected life assumptions. Our dividend yield assumption considers that we have not historically paid dividends and we have no current plan to pay dividends in the near-term.

Income Taxes

We are subject to the income tax laws of the U.S. and the foreign jurisdictions in which we have significant business operations. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. As a result, significant judgments and interpretations are required in determining our provision for income taxes and evaluating our uncertain tax positions.

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 record a valuation allowance to reduce deferred tax assets to the amount that we believe is more likely than not to be realized.

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

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recognized would occur when we subsequently determine that a tax position no longer meets the more likely than not threshold of being sustained. We classify interest and penalties accrued in connection with unrecognized tax benefits as income tax expense on our Consolidated Statements of Income. Our total unrecognized tax benefits, excluding interest and penalties, were $44.1 million, $32.2 million and $25.8 million as of August 31, 2013, 2012 and 2011, respectively. Refer to Note 13, Income Taxes.

Marketing Costs

We expense marketing costs, the substantial majority of which includes advertising, as incurred.

Earnings per Share

Our outstanding shares consist of Apollo Group Class A and Class B common stock issued, net of shares held in treasury. 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. 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 share-based awards under our stock compensation plans by applying the treasury stock method. Our share-based awards with performance conditions are contingently issuable and are included in the calculation of diluted income per share based on our evaluation of the performance criteria as of the end of the respective period. The amount of any tax benefit to be credited to additional paid-in capital related to our share-based awards, and unrecognized share-based compensation expense is included when applying the treasury stock method in the computation of diluted income per share. Refer to Note 15, Earnings Per Share.

Foreign Currency Translation

We use the U.S. dollar as our reporting currency. The functional currency of our entities operating outside the United States is the currency of the primary economic 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 loss or noncontrolling interests (deficit), as applicable. 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 on our Consolidated Statements of Income. These items represented a net $0.2 million loss, net $0.5 million gain and net $1.7 million loss in fiscal years 2013, 2012 and 2011, respectively.

Fair Value

The carrying amount of certain assets and liabilities reported on our Consolidated Balance Sheets, including accounts receivable and accounts payable, 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, 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 is 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.

We categorize each of our fair value measurements for disclosure purposes in one of the above three levels based on the lowest level input that is significant to the fair value measurement in its entirety. 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

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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 fair value of certain assets and liabilities and their placement within the fair value hierarchy. Refer to Note 10, Fair Value Measurements.

Discontinued Operations

Assets and liabilities expected to be sold or disposed of are presented separately on our Consolidated Balance Sheets as assets or liabilities held for sale. If we determine we will not have significant continuing involvement with components that are classified as held for sale or otherwise sold or disposed, the results of operations of these components are presented separately on our Consolidated Statements of Income as income from discontinued operations, net of tax, in the current and prior periods. Refer to Note 4, Discontinued Operations.

Reclassifications

During fiscal year 2013, we began presenting amortization of deferred gains on sale-leasebacks and amortization of lease incentives as a component of the change in accrued and other liabilities on our Consolidated Statements of Cash Flows. We have reclassified prior periods to conform to our current presentation.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”), which provides guidance on disclosure requirements for items reclassified out of accumulated other comprehensive income. The standard requires entities to present (either on the face of the income statement or in the notes to the financial statements) the effects of amounts reclassified out of accumulated other comprehensive income on income statement line items. ASU 2013-02 was effective prospectively for reporting periods beginning after December 15, 2012. We adopted ASU 2013-02 on March 1, 2013, which did not materially impact our disclosures.

In July 2013, the FASB issued ASU No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”). The standard provides that a liability related to an unrecognized tax benefit would be offset against a deferred tax asset instead of presented gross for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. ASU 2013-11 is effective for fiscal years beginning after December 15, 2013, with early adoption permitted, and may be applied either retrospectively or on a prospective basis to all unrecognized tax benefits that exist at the adoption date. Effective September 1, 2013, we early adopted ASU 2013-11 on a prospective basis, which resulted in the offsetting of an immaterial amount of our uncertain tax positions against deferred tax assets.

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Note 3. Restructuring and Other Charges

The U.S. higher education industry, including the proprietary sector, is experiencing unprecedented, rapidly developing changes that challenge many of the core principles underlying the industry. We are reengineering our business processes and refining our educational delivery systems to improve the effectiveness of our services to students, and to reduce the size of our services infrastructure and associated operating expenses to align with our reduced enrollment. We have incurred the following restructuring and other charges associated with these activities during the respective periods:

	Year Ended August 31,						Cumulative Costs as of August 31, 2013
($ in thousands)	2013		2012		2011
Lease and related costs, net	$	137,263	$	15,981	$	19,067	$	172,311
Severance and other employee separation costs	34,293		12,887		3,846		51,026
Other restructuring related costs	27,069		9,827		—		36,896
Restructuring and other charges	$	198,625	$	38,695	$	22,913	$	260,233

The following summarizes the restructuring and other charges in our segment reporting format:

	Year Ended August 31,						Cumulative Costs as of August 31, 2013
($ in thousands)	2013		2012		2011
University of Phoenix	$	158,757	$	20,002	$	22,913	$	201,672
Apollo Global	6,053		5,712		—		11,765
Other	33,815		12,981		—		46,796
Restructuring and other charges	$	198,625	$	38,695	$	22,913	$	260,233

The following details the changes in our restructuring liabilities by type of cost during the fiscal years 2013 and 2012:

($ in thousands)	Lease and Related Costs, Net			Severance and Other Employee Separation Costs			Other Restructuring Related Costs			Total
Balance at August 31, 2011	$	17,802		$	—		$	—		$	17,802
Restructuring and other charges	15,981			12,887			9,827			38,695
Non-cash adjustments	2,248			(1,323		)	—			925
Payments	(10,007		)	(8,566		)	(8,416		)	(26,989		)
Balance at August 31, 2012(1)	26,024			2,998			1,411			30,433
Restructuring and other charges	137,263			34,293			27,069			198,625
Non-cash adjustments(2)	(31,114		)	(2,008		)	(12,221		)	(45,343		)
Payments	(28,125		)	(27,660		)	(8,129		)	(63,914		)
Balance at August 31, 2013(1)	$	104,048		$	7,623		$	8,130		$	119,801

⁽¹⁾ The current portion of our restructuring liabilities was $55.2 million and $11.3 million as of August 31, 2013 and 2012, respectively. The substantial majority of these balances are included in accrued and other current liabilities on our Consolidated Balance Sheets and the long-term portion is included in other long-term liabilities. The gross obligation associated with our restructuring liabilities as of August 31, 2013 is approximately $185 million, which principally represents non-cancelable leases that will be paid over the respective lease terms through fiscal year 2023.

⁽²⁾ Non-cash adjustments for lease and related costs, net represents $50.1 million of accelerated depreciation, partially offset by the release of certain associated liabilities such as deferred rent. Non-cash adjustments for severance and other employee separation costs represents share-based compensation and for other restructuring related costs represents asset impairments.

• Lease and Related Costs, Net - Beginning in fiscal year 2011, University of Phoenix began rationalizing its administrative real estate facilities. In addition to continuing to rationalize its administrative facilities, University of Phoenix began implementing a plan during fiscal year 2013 to close 115 of its ground locations. As of August 31, 2013, University of Phoenix has closed nearly two-thirds of the locations included in these plans and the remaining closures will continue into fiscal year 2014 and beyond as University of Phoenix obtains the necessary regulatory approvals and completes its teach-out obligations. We have recorded $123.6 million of initial aggregate charges

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representing the estimated fair value of future contractual operating lease obligations, which were recorded in the periods we ceased using the respective facilities. We measure lease obligations at fair value using a discounted cash flow approach encompassing significant unobservable inputs (Level 3). The estimation of future cash flows includes non-cancelable contractual lease costs over the remaining terms of the leases, partially offset by estimated future sublease rental income, which involves significant judgment. Our estimate of the amount and timing of sublease rental income considers subleases that we have executed and subleases we expect to execute, current commercial real estate market data and conditions, comparable transaction data and qualitative factors specific to the facilities. The estimates will be subject to adjustment as market conditions change or as new information becomes available, including the execution of additional sublease agreements. As of August 31, 2013, we have recorded immaterial adjustments to our initial aggregate lease obligations for changes in estimated sublease income and interest accretion.

Lease and related costs, net also includes $50.1 million of accelerated depreciation during fiscal year 2013. This depreciation resulted from revising the useful lives of the fixed assets at the facilities discussed above through their expected closure dates. Prior to revising the estimated useful lives, we performed a recoverability analysis for the facilities’ fixed assets by comparing the estimated undiscounted cash flows of the locations through their expected closure dates to the carrying amount of the locations’ fixed assets. Based on our analysis, we recorded immaterial impairment charges during fiscal year 2013.

• Severance and Other Employee Separation Costs -Beginning in fiscal year 2011 and continuing through fiscal year 2013, we have implemented workforce reductions as we reengineer our business processes and refine our educational delivery systems. We incurred severance and other employee separation costs of $34.3 million, $12.9 million and $3.8 million in fiscal years 2013, 2012 and 2011, respectively. These costs are included in the reportable segments in which the respective personnel were employed.

• Other Restructuring Related Costs - We incurred $27.1 million of other restructuring related costs during fiscal year 2013 that principally include fixed asset impairment charges related to software and equipment we are no longer using, and costs for services from a consulting firm related to our restructuring initiatives. During fiscal year 2012, we incurred other restructuring related costs that principally represent services from a consulting firm associated with our restructuring initiatives. The majority of our other restructuring related costs in both fiscal years are included in “Other” in our segment reporting because they pertain to all areas of our business.

We have continued restructuring our business subsequent to August 31, 2013, which includes workforce reductions of approximately 500 non-faculty personnel. We expect to incur approximately $50 million of future restructuring charges for the initiatives announced to date. The majority of these charges represent lease related costs associated with closing University of Phoenix campuses, and will be incurred as the University obtains the necessary regulatory approvals and completes its teach-out obligations. We expect to incur the majority of the $50 million in fiscal year 2014 and the remainder in future years.

Note 4. Discontinued Operations

During fiscal year 2012, BPP completed the sale of its subsidiary, Mander Portman Woodward (“MPW”), a U.K.-based secondary education institution for £54.8 million (equivalent to $85.3 million as of the date of sale). In fiscal year 2011, we sold all of Insight Schools’ issued and outstanding shares for $6.3 million, plus $3.0 million that was held in escrow for one year following the sale, and $15.3 million of additional estimated working capital consideration. We have received all consideration from the sale of Insight Schools, including the funds held in escrow.

The sales of MPW and Insight Schools reflect our strategy to focus on the postsecondary education market and we do not have significant continuing involvement with either business after the sale. The operating results of the sold businesses are presented as discontinued operations on our Consolidated Statements of Income for all periods presented. MPW was included in the Apollo Global reportable segment and Insight Schools was presented as its own reportable segment.

We realized a gain on the sale of MPW of $26.7 million, net of transaction costs, in fiscal year 2012, with no tax expense associated with the gain because it was not taxable under U.K. tax law. We realized a $0.1 million loss on sale, net of transaction costs, associated with the Insight Schools sale in fiscal year 2011. These amounts are included in income from discontinued operations, net of tax on our Consolidated Statements of Income.

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We determined cash flows from our discontinued operations individually and in the aggregate are not material and are included with cash flows from continuing operations on our Consolidated Statements of Cash Flows. The following summarizes the operating results for our discontinued operations for the respective periods, which are presented in income from discontinued operations, net of tax on our Consolidated Statements of Income:

	Year Ended August 31,
($ in thousands)	2012			2011
Net revenue	$	24,209		$	42,468
Gain (loss) on sale	26,678			(98		)
Costs and other	(14,594		)	(35,748		)
Income from discontinued operations before income taxes	36,293			6,622
(Provision) benefit from income taxes(1)	(2,470		)	87
Income from discontinued operations, net of tax	33,823			6,709
Income from discontinued operations, net of tax, attributable to noncontrolling interests(2)	(4,871		)	(608		)
Income from discontinued operations, net of tax, attributable to Apollo	$	28,952		$	6,101

⁽¹⁾ There was no tax expense associated with the gain on sale of MPW as discussed above. The tax benefit in fiscal year 2011 includes a $1.6 million tax benefit as a result of the Insight Schools sale generating a capital loss for tax purposes.

⁽²⁾ The noncontrolling interest represents the portion of MPW’s operating results attributable to Apollo Global’s former noncontrolling shareholder.

The operating results of discontinued operations summarized above only includes revenues and costs directly attributable to the discontinued operations, and not those attributable to our continuing operations. Accordingly, no interest expense or general corporate overhead have been allocated to MPW or Insight Schools. We ceased depreciation and amortization on property and equipment and finite-lived intangibles at Insight Schools in fiscal year 2010 when we determined it was held for sale, and MPW did not meet the held for sale criteria until the period it was sold.

Note 5. Acquisitions

On September 12, 2011, we acquired all of the outstanding stock of Carnegie Learning, a publisher of research-based math curricula and adaptive learning software for a cash purchase price of $75.0 million. In a separate transaction completed on the same date, we acquired related technology from Carnegie Mellon University for $21.5 million payable over a 10-year period.

We accounted for the Carnegie Learning acquisition as a business combination and Carnegie Learning’s operating results are included in our consolidated financial statements from the date of acquisition. We have not provided pro forma information because Carnegie Learning’s results of operations are not significant to our consolidated results of operations.

The acquisition purchase price allocation is summarized below:

($ in thousands)
Tangible assets (net of acquired liabilities)	$	(10,894	)
Finite-lived intangibles	37,000
Indefinite-lived intangibles	14,100
Goodwill	34,794
Allocated purchase price	75,000
Less: Cash acquired	(1,264		)
Acquisition, net of cash acquired	$	73,736

We accounted for the related technology acquired from Carnegie Mellon University as an asset purchase. Accordingly, we recorded a $14.4 million asset and corresponding liability representing the present value of the future cash payments on the acquisition date using our incremental borrowing rate. The asset is included in intangible assets, net on our Consolidated Balance Sheets and is being amortized on a straight-line basis over a five-year useful life. The liability is included in debt on our Consolidated Balance Sheets and is being accreted over the 10-year period, with the accretion recorded in interest expense on our Consolidated Statements of Income.

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Note 6. Marketable Securities

Marketable securities consist of the following as of August 31:

	Current				Noncurrent
($ in thousands)	2013		2012		2013		2012
Tax-exempt municipal bonds	$	69,621	$	—	$	24,070	$	—
Corporate bonds	24,503		—		13,925		—
Other(1)	11,685		—		—		—
Total held-to-maturity securities	105,809		—		37,995		—
Available-for-sale auction-rate securities	—		—		5,946		5,946
Total marketable securities	$	105,809	$	—	$	43,941	$	5,946

⁽¹⁾ Other principally consists of commercial paper and certificates of deposit.

We have the intent and ability to hold our held-to-maturity marketable securities until maturity and all of our contractual maturities occur within two years. Our held-to-maturity securities are reported at amortized cost, which approximates fair value. We have not recorded gains or losses on our held-to-maturity investments.

Our auction-rate-securities are classified as available-for-sale and reported at fair value. We have classified our auction-rate securities as noncurrent due to illiquidity considerations. Refer to Note 10, Fair Value Measurements.

Note 7. Accounts Receivable, Net

Accounts receivable, net consist of the following as of August 31:

($ in thousands)	2013			2012
Student accounts receivable	$	243,660		$	287,619
Less allowance for doubtful accounts	(59,744		)	(107,230		)
Net student accounts receivable	183,916			180,389
Other receivables	31,485			17,890
Total accounts receivable, net	$	215,401		$	198,279

Student accounts receivable is composed primarily of amounts due related to tuition and educational services. 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.

The following summarizes the activity in allowance for doubtful accounts for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Beginning allowance for doubtful accounts	$	107,230		$	128,897		$	192,857
Provision for uncollectible accounts receivable	83,798			146,742			181,297
Write-offs, net of recoveries	(131,284		)	(168,409		)	(245,257		)
Ending allowance for doubtful accounts	$	59,744		$	107,230		$	128,897

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8. Property and Equipment, Net

Property and equipment, net consist of the following as of August 31:

($ in thousands)	2013			2012
Land	$	30,562		$	31,184
Buildings	62,852			67,602
Furniture and equipment	428,441			498,253
Leasehold improvements (includes tenant improvement allowances)	353,548			370,171
Internally developed software	121,137			71,511
Software	128,746			132,835
Construction in progress	52,097			49,721
Gross property and equipment	1,177,383			1,221,277
Accumulated depreciation and amortization	(704,769		)	(649,648		)
Property and equipment, net	$	472,614		$	571,629

The following amounts, which are included in the above table, represent capital leases as of August 31:

($ in thousands)	2013			2012
Buildings and land	$	5,307		$	5,573
Furniture and equipment	53,826			65,138
Software	14,264			13,835
Accumulated depreciation and amortization	(33,301		)	(17,916		)
Capital lease assets, net	$	40,096		$	66,630

Depreciation expense was $196.7 million, $158.0 million and $144.3 million for fiscal years 2013, 2012 and 2011, respectively. During fiscal year 2013, depreciation expense includes $50.1 million of accelerated depreciation associated with our restructuring activities that is included in restructuring and other charges on our Consolidated Statements of Income. The remaining depreciation expense in fiscal year 2013 and all of the depreciation expense in fiscal years 2012 and 2011 is included in depreciation and amortization on our Consolidated Statements of Income. Depreciation expense includes capitalized internally developed software depreciation of $12.1 million, $10.1 million and $15.0 million for the fiscal years 2013, 2012 and 2011, respectively.

During fiscal year 2013, we recorded $20.4 million of fixed asset impairment charges, which includes $12.2 million resulting from our restructuring activities. Refer to Note 3, Restructuring and Other Charges.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9. Goodwill and Intangible Assets

The following details changes in the carrying amount of our goodwill by reportable segment during fiscal years 2013 and 2012:

	University of Phoenix		Apollo Global(1)			Other(1)		Total
($ in thousands)
Goodwill as of August 31, 2011	$	37,018	$	79,388		$	16,891	$	133,297
Goodwill acquired in Carnegie Learning acquisition	34,794		—			—		34,794
UNIACC impairment	—		(11,912		)	—		(11,912		)
Sale of MPW(2)	—		(45,266		)	—		(45,266		)
Currency translation adjustment	—		(7,568		)	—		(7,568		)
Goodwill as of August 31, 2012	71,812		14,642			16,891		103,345
Currency translation adjustment	—		275			—		275
Goodwill as of August 31, 2013	$	71,812	$	14,917		$	16,891	$	103,620

⁽¹⁾ During to fiscal year 2013, we began presenting WIU in Other in our segment reporting. As a result, we have included WIU in Other for all periods presented. WIU was previously included in our Apollo Global reportable segment. Refer to Note 19,Segment Reporting.

⁽²⁾ This represented all of our BPP reporting unit’s remaining goodwill which we allocated to MPW in determining our gain on sale. Refer to Note 4, Discontinued Operations. We allocated the goodwill based on the fair values of MPW and BPP’s remaining business with consideration for how these units were operated.

The following presents the components of the net carrying amount of our goodwill by reportable segment as of August 31, 2013 and 2012:

	University of Phoenix		Apollo Global(1)			Other			Total
($ in thousands)
Gross carrying amount(1)	$	71,812	$	27,185		$	37,096		$	136,093
Accumulated impairments(1)	—		(8,712		)	(20,205		)	(28,917		)
Foreign currency translation	—		(3,556		)	—			(3,556		)
Net carrying amount at August 31, 2013	$	71,812	$	14,917		$	16,891		$	103,620

	University of Phoenix		Apollo Global(1)			Other			Total
($ in thousands)
Gross carrying amount(1)	$	71,812	$	38,036		$	37,096		$	146,944
Accumulated impairments(1)	—		(20,624		)	(20,205		)	(40,829		)
Foreign currency translation	—		(2,770		)	—			(2,770		)
Net carrying amount at August 31, 2012	$	71,812	$	14,642		$	16,891		$	103,345

⁽¹⁾ UNIACC’s entire goodwill balance was impaired in fiscal year 2012. Accordingly, we removed the gross carrying amount and related accumulated impairments associated with UNIACC from Apollo Global in fiscal year 2013. In addition, we have recorded $354 million of accumulated impairments associated with our BPP reporting unit, which did not have any goodwill as of August 31, 2013 and 2012.

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Intangible assets consist of the following as of August 31:

	2013										2012
($ in thousands)	Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation Loss			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation Loss			Net Carrying Amount
Software and technology	$	42,389	$	(16,673	)	$	—		$	25,716	$	42,389	$	(8,197	)	$	—		$	34,192
Student and customer relationships	12,026		(7,727		)	(1,363		)	2,936		14,109		(6,731		)	(1,395		)	5,983
Copyrights	20,891		(18,706		)	(777		)	1,408		20,891		(16,277		)	(741		)	3,873
Other(1)	—		—			—			—		12,878		(10,556		)	(1,196		)	1,126
Total finite-lived intangibles	75,306		(43,106		)	(2,140		)	30,060		90,267		(41,761		)	(3,332		)	45,174
Trademarks	100,736		—			(5,347		)	95,389		100,736		—			(3,778		)	96,958
Accreditations and designations	7,260		—			(517		)	6,743		7,260		—			(358		)	6,902
Total indefinite-lived intangibles	107,996		—			(5,864		)	102,132		107,996		—			(4,136		)	103,860
Total intangible assets, net	$	183,302	$	(43,106	)	$	(8,004	)	$	132,192	$	198,263	$	(41,761	)	$	(7,468	)	$	149,034

⁽¹⁾ The decrease in gross carrying amount as of August 31, 2013 compared to August 31, 2012 was due to the removal intangibles that were fully amortized during fiscal year 2013.

Finite-lived intangibles are amortized on either a straight-line basis or using an accelerated method to reflect the pattern in which the benefits of the asset are consumed. Amortization expense for intangibles for fiscal years 2013, 2012 and 2011 was $15.1 million, $20.2 million and $14.7 million, respectively. The weighted average original useful life of our finite-lived intangibles as of August 31, 2013 is 4.9 years and estimated future amortization expense of finite-lived intangibles is as follows:

($ in thousands)
2014	$	11,670
2015	9,605
2016	8,502
2017	283
Total estimated amortization expense(1)	$	30,060

⁽¹⁾ Estimated future amortization expense may vary as acquisitions and dispositions occur in the future and as a result of foreign currency translation adjustments.

We perform our annual goodwill and indefinite-lived intangibles impairment tests, as applicable, for our reporting units on the following dates:

• University of Phoenix - May 31

• Apollo Global:

• BPP - July 1

• UNIACC - May 31

• ULA - May 31

• CFFP - August 31

• Western International University - May 31

• Carnegie Learning - May 31

We completed our fiscal year 2013 annual goodwill and indefinite-lived intangibles impairment tests for applicable reporting units and assets and determined there was no impairment.

During fiscal year 2012, UNIACC was advised by the National Accreditation Commission of Chile that its institutional accreditation would not be renewed and therefore had lapsed. The loss of accreditation reduced new enrollment in UNIACC’s degree programs and, accordingly, we revised our cash flow estimates and performed an interim goodwill impairment analysis. Based on our estimated fair value of the UNIACC reporting unit and a hypothetical purchase price allocation, we determined that the UNIACC reporting unit would have no implied goodwill. We also tested UNIACC’s trademark and accreditation intangibles and determined they had minimal or no fair value. Accordingly, we determined UNIACC’s entire goodwill balance and the trademark and accreditation indefinite-lived intangibles totaling $11.9 million and $3.9 million, respectively, were impaired. We also recorded a $1.0 million impairment for certain finite-lived intangibles. We did not record an income tax benefit associated with these charges as UNIACC’s goodwill and other intangibles are not deductible for tax purposes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During fiscal year 2011, BPP experienced lower than expected rates of enrollment for its accounting and finance professional training programs. As a result, we revised our outlook for BPP and reduced forecasted revenues and operating cash flows for the remainder of fiscal year 2011 and reduced our forecasts for future years from what we had previously anticipated. For these reasons, we performed an interim goodwill impairment analysis and determined BPP’s fair value was lower than its carrying value. Using the estimated fair value of BPP in a hypothetical purchase price allocation, we recorded impairment charges during fiscal year 2011 for BPP’s goodwill and trademark of $197.7 million and $22.2 million, respectively. These impairment charges aggregated to $213.9 million (net of $6.0 million benefit for income taxes associated with the other intangibles impairment charge). As BPP’s goodwill is not deductible for tax purposes, we did not record a tax benefit associated with the goodwill impairment charge.

Note 10. Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis consist of the following as of August 31, 2013:

			Fair Value Measurements at Reporting Date Using
	August 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
($ in thousands)
Assets:
Cash equivalents (including restricted cash equivalents):
Money market funds	$	732,530	$	732,530	$	—	$	—
Marketable securities:
Auction-rate securities	5,946		—		—		5,946
Total assets at fair value on a recurring basis	$	738,476	$	732,530	$	—	$	5,946
Liabilities:
Other long-term liabilities:
Contingent payment	$	5,277	$	—	$	—	$	5,277
Total liabilities at fair value on a recurring basis	$	5,277	$	—	$	—	$	5,277

Assets measured at fair value on a recurring basis consist of the following as of August 31, 2012:

			Fair Value Measurements at Reporting Date Using
	August 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
($ in thousands)
Assets:
Cash equivalents (including restricted cash equivalents):
Money market funds	$	629,166	$	629,166	$	—	$	—
Marketable securities:
Auction-rate securities	5,946		—		—		5,946
Total assets at fair value on a recurring basis	$	635,112	$	629,166	$	—	$	5,946

We measure the above items on a recurring basis at fair value as follows:

• Money market funds - Classified within Level 1 and valued primarily using real-time quotes for transactions in active exchange markets involving identical assets. As of August 31, 2013 and 2012, our remaining cash and cash equivalents not disclosed in the above tables approximate fair value because of the short-term nature of the financial instruments.

• Auction-rate securities - Classified within Level 3 due to the illiquidity of the market and valued using a discounted cash flow model encompassing significant unobservable inputs such as estimated interest rates, credit spreads, timing and amount of cash flows, credit quality of the underlying securities and illiquidity considerations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Contingent payment - As a result of our purchase of the noncontrolling interest in Apollo Global, we have a contingent payment based on a portion of Apollo Global’s operating results through the fiscal years ending August 31, 2017. This contingent payment is classified within Level 3 and valued using a discounted cash flow valuation method encompassing significant unobservable inputs. The inputs include estimated operating results scenarios for the applicable performance period, probability weightings assigned to operating results scenarios and the discount rate applied.

At August 31, 2013 and 2012, the carrying value of our debt, excluding capital leases, was $642.4 million and $649.7 million, respectively. Substantially all of our debt as of both dates was variable interest rate debt and the carrying amount approximates fair value.

Excluding the contingent payment obligation recorded during fiscal year 2013, we did not change our valuation techniques associated with recurring fair value measurements from prior periods.

There were no changes in the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during fiscal years 2013 and 2012. The following summarizes the changes in liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during fiscal year 2013:

($ in thousands)
Balance at August 31, 2012	$	—
Purchase of noncontrolling interest	6,000
Change in fair value included in net income	(723		)
Balance at August 31, 2013	$	5,277

Liabilities measured at fair value on a nonrecurring basis during fiscal years 2013 and 2012, all of which are included in other liabilities on our Consolidated Balance Sheets, consist of the following:

			Fair Value Measurements at Measurement Dates Using
($ in thousands)	Fair Value at Measurement Dates		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Losses for Respective Fiscal Years
Fiscal year 2013 restructuring obligations	$	92,151	$	—	$	—	$	92,151	$	92,151
Fiscal year 2012 restructuring obligations	$	20,082	$	—	$	—	$	20,082	$	20,082

During fiscal years 2013 and 2012, we recorded $92.2 million and $20.1 million, respectively, of aggregate initial lease and other contract exit obligations at fair value associated with our restructuring activities. We recorded obligation liabilities on the dates we ceased using the right conveyed by the respective contracts, and we measured the liabilities at fair value using Level 3 inputs included in the valuation method. Refer to Note 3, Restructuring and Other Charges.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11. Accrued and Other Liabilities

Accrued and other current liabilities consist of the following as of August 31:

($ in thousands)	2013		2012
Salaries, wages and benefits	$	144,086	$	117,432
Restructuring lease and other contract exit obligations	46,658		6,902
Accrued advertising	45,850		45,737
Accrued legal and other professional obligations	31,310		57,476
Deferred rent and other lease liabilities	14,001		19,868
Curriculum materials	10,764		13,004
Student refunds, grants and scholarships	7,180		11,181
Other	46,857		53,281
Total accrued and other current liabilities	$	346,706	$	324,881

Other long-term liabilities consist of the following as of August 31:

($ in thousands)	2013		2012
Deferred rent and other lease liabilities	$	67,641	$	88,164
Restructuring lease obligations	64,610		19,122
Uncertain tax positions	33,637		27,223
Deferred gains on sale-leasebacks	22,894		25,692
Other	44,660		31,555
Total other long-term liabilities	$	233,442	$	191,756

Note 12. Debt

Debt and short-term borrowings consist of the following as of August 31:

($ in thousands)	2013			2012
Revolving Credit Facility, see terms below	$	605,000		$	615,000
Capital lease obligations	49,628			70,215
Other, see terms below	37,426			34,696
Total debt	692,054			719,911
Less short-term borrowings and current portion of long-term debt	(628,050		)	(638,588		)
Long-term debt	$	64,004		$	81,323

Aggregate debt maturities for each of the years ended August 31 are as follows:

($ in thousands)
2014	$	628,050
2015	30,628
2016	13,435
2017	6,640
2018	3,919
Thereafter	9,382
	$	692,054

• Revolving Credit Facility - In fiscal year 2012, we entered into a syndicated $625 million unsecured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility is used for general corporate purposes, which may include acquisitions and share repurchases. The term is five years and will expire in April 2017. The Revolving

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Credit Facility may be used for borrowings in certain foreign currencies and letters of credit, in each case up to specified sublimits.

We borrowed $605.0 million and $615.0 million under the Revolving Credit Facility as of August 31, 2013 and 2012, respectively. We also had approximately $14 million and $8 million of outstanding letters of credit under the Revolving Credit Facility as of the respective dates. We repaid the entire amount borrowed under the Revolving Credit Facility subsequent to the respective fiscal year ends. We have classified our Revolving Credit Facility borrowings as short-term borrowings and the current portion of long-term debt on our Consolidated Balance Sheets because they were repaid subsequent to the respective fiscal year-ends.

The Revolving Credit Facility fees are determined based on a pricing grid that varies according to our leverage ratio. The Revolving Credit Facility fee ranges from 25 to 40 basis points. Incremental fees for borrowings under the facility generally range from LIBOR + 125 to 185 basis points. The weighted average interest rate on outstanding short-term borrowings under the Revolving Credit Facility at August 31, 2013 and 2012 was 3.5%.

The Revolving Credit Facility contains various customary representations, covenants and other provisions, including a material adverse event clause and 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. We were in compliance with all applicable covenants related to the Revolving Credit Facility at August 31, 2013.

• Other - Other principally includes debt at subsidiaries of Apollo Global and the present value of an obligation payable over a 10-year period associated with our purchase of technology in fiscal year 2012, which is discussed further at Note 5, Acquisitions. The weighted average interest rate on our outstanding other debt at August 31, 2013 and 2012 was 5.3% and 5.7%, respectively.

During the second quarter of fiscal year 2013, we terminated our £39.0 million secured credit agreement at BPP.

Refer to Note 10, Fair Value Measurements, for discussion of the fair value of our debt.

Note 13. Income Taxes

Geographic sources of income (loss) from continuing operations before income taxes are as follows for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
United States	$	461,760		$	727,934		$	1,213,353
Foreign	(38,771		)	(61,679		)	(265,130		)
Income from continuing operations before income taxes	$	422,989		$	666,255		$	948,223

Income tax (expense) benefit consists of the following for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Current:
U.S. Federal	$	(171,702	)	$	(212,058	)	$	(350,640	)
State and local	(30,135		)	(47,024		)	(11,372		)
Foreign	(1,704		)	(2,140		)	373
Total current	(203,541		)	(261,222		)	(361,639		)
Deferred:
U.S. Federal	20,389			(28,964		)	(62,474		)
State and local	3,163			(1,074		)	(10,214		)
Foreign	5,965			8,188			15,191
Total deferred	29,517			(21,850		)	(57,497		)
Provision for income taxes	$	(174,024	)	$	(283,072	)	$	(419,136	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred tax assets and liabilities consist of the following as of August 31:

($ in thousands)	2013			2012
Deferred tax assets:
Allowance for doubtful accounts	$	16,479		$	32,659
Leasing transactions	86,946			62,389
Net operating loss carry-forward	25,055			19,804
Share-based compensation	35,123			74,540
Other	51,929			55,573
Gross deferred tax assets	215,532			244,965
Valuation allowance	(17,998		)	(11,282		)
Deferred tax assets, net of valuation allowance	197,534			233,683
Deferred tax liabilities:
Fixed assets	42,485			52,469
Intangibles	35,109			41,203
Other	7,929			9,212
Gross deferred tax liabilities	85,523			102,884
Net deferred income taxes	$	112,011		$	130,799

As of August 31, 2013 and 2012, we have recorded a valuation allowance related to a portion of our net operating losses and other deferred tax assets of certain of our foreign subsidiaries because it is more likely than not that these deferred tax assets will not be utilized. During fiscal year 2013, the valuation allowance increased primarily as a result of an increase in net operating losses of certain foreign subsidiaries. We have concluded that it is more likely than not that we will ultimately realize the full benefit of our other deferred tax assets principally based on our history of profitable operations.

The net operating loss carry-forward in the above table represents $29.4 million of U.S. net operating losses that will begin to expire August 31, 2018. We also have $58.4 million of net operating losses in various foreign jurisdictions that do not expire.

We have not provided deferred taxes on unremitted earnings attributable to international companies that have been considered permanently reinvested. As of August 31, 2013, the earnings from these operations are not significant.

The following tabular reconciliation summarizes the activity in our unrecognized tax benefits, excluding interest and penalties, for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Beginning unrecognized tax benefits	$	32,207		$	25,811		$	166,048
Additions based on tax positions taken in the current year	13,095			7,708			4,503
Additions for tax positions taken in prior years	5,953			813			15,570
Settlement with tax authorities	(197		)	(733		)	(110,980		)
Reductions for tax positions of prior years	(2,635		)	—			(45,231		)
Reductions due to lapse of applicable statute of limitations	(4,366		)	(1,392		)	(4,099		)
Ending unrecognized tax benefits	$	44,057		$	32,207		$	25,811

As of August 31, 2013 and 2012, our liabilities for unrecognized tax benefits are included in accrued and other current liabilities and other long-term liabilities on our Consolidated Balance Sheets. The decrease in our unrecognized tax benefits during fiscal year 2011 was principally attributable to resolution with the Arizona Department of Revenue regarding the apportionment of income for Arizona corporate income tax purposes. Refer to Arizona Department of Revenue Audit below for further discussion. The decrease was also due to a $9.6 million benefit from resolution with the Internal Revenue Service regarding the deductibility of payments made related to the settlement of a qui tam lawsuit in fiscal year 2010.

We classify interest and penalties related to uncertain tax positions as a component of provision for income taxes on our Consolidated Statements of Income. We recognized $0.1 million and $0.4 million of expense in fiscal years 2013 and 2012, respectively, and a benefit of $1.7 million in fiscal year 2011, related to interest and penalties. The $1.7 million benefit in fiscal

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year 2011 is primarily attributable to the reduction of accrued interest related to the resolution with the Arizona Department of Revenue noted above. The total amount of interest and penalties included on our Consolidated Balance Sheets was $4.2 million and $4.1 million as of August 31, 2013 and 2012, respectively.

It is reasonably possible that approximately $15 million of our unrecognized tax benefits associated with the deductibility of certain costs for our foreign subsidiaries will be reduced in the next twelve months due to settlement with the IRS and expiration of the applicable statute of limitations. We do not anticipate significant changes to our other unrecognized tax benefits.

As of August 31, 2013, $38.4 million of our total unrecognized tax benefits would favorably affect our effective tax rate if recognized. If amounts accrued are less than amounts ultimately assessed by the taxing authorities, we would record additional income tax expense.

Our U.S. federal income tax return for fiscal year 2011 is currently under review by the Internal Revenue Service (“IRS”). During fiscal year 2013, the IRS completed its review of our federal income tax returns for fiscal years 2006 through 2010, which did not result in a significant adjustment to our provision for income taxes. Various state tax years from 2004 and tax years from 2007 related to our foreign taxing jurisdictions 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 the respective periods:

	Year Ended August 31,
	2013		2012		2011
Statutory U.S. federal income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit(1)	4.4	%	4.2	%	1.8	%
Non-deductible compensation, net	0.1	%	0.2	%	0.3	%
Foreign taxes	2.2	%	1.4	%	0.9	%
Litigation charge(2)	—	%	—	%	(1.0	)%
Goodwill impairments	—	%	0.9	%	7.4	%
Meritus University, Inc. closure	—	%	—	%	(0.8	)%
Other, net	(0.6	)%	0.8	%	0.6	%
Effective income tax rate	41.1	%	42.5	%	44.2	%

⁽¹⁾ In fiscal year 2011, we realized a $43.3 million benefit associated with our resolution with the Arizona Department of Revenue. Refer to further discussion below.

⁽²⁾ In fiscal year 2011, we realized a $9.6 million benefit from resolution with the Internal Revenue Service regarding the deductibility of payments made related to the settlement of a qui tam lawsuit.

Arizona Department of Revenue Audit

In fiscal year 2011, we executed a Closing Agreement with the Arizona Department of Revenue to settle an audit principally associated with our method of sourcing services income for sales factor apportionment purposes. The settlement resolved the sales factor sourcing issue for the audit period covering our Arizona income tax returns for fiscal years 2003 through 2009 and provided an agreed upon sales factor sourcing methodology for fiscal years 2010 through 2020.

Based on the settlement, we have foregone our refund claims of $51.5 million, paid $57.9 million, and made applicable adjustments to our deferred taxes. These amounts were previously included in our unrecognized tax benefits, and the settlement resulted in a $43.3 million benefit. The benefit includes state tax accrued throughout fiscal year 2011 based on the uncertainty prior to settlement.

In addition to the audits discussed above, we are subject to numerous ongoing audits by federal, 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.

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Note 14. Shareholders’ Equity

Purchase of Noncontrolling Interest

During the first quarter of fiscal year 2013, we purchased the 14.4% noncontrolling ownership interest in Apollo Global from Carlyle. We paid $42.5 million cash, plus a contingent payment based on a portion of Apollo Global’s operating results through the fiscal years ending August 31, 2017. On the purchase date, we estimated the fair value of the contingent payment to be $6.0 million using a discounted cash flow valuation method encompassing significant unobservable inputs. Refer to Note 10, Fair Value Measurements, for further discussion of the valuation and subsequent changes in the estimated fair value. The contingent payment liability is included in other long-term liabilities on our Consolidated Balance Sheets. As a result of the transaction, Apollo Group owns all of Apollo Global. This purchase was accounted for as an equity transaction resulting in the removal of Carlyle’s noncontrolling interest from our Consolidated Balance Sheets. Accordingly, we recorded an adjustment to additional paid-in capital of $48.5 million, which principally represents the difference between the fair value of the consideration discussed above and the carrying amount of the noncontrolling interest acquired. The adjustment to additional paid-in capital also includes an adjustment to accumulated other comprehensive loss to reflect the change in Apollo’s proportionate interest.

The remaining noncontrolling interest on our Consolidated Balance Sheets following the above purchase represents an ownership interest in a subsidiary of BPP.

Share Reissuances

During fiscal years 2013, 2012 and 2011, we issued 1.5 million, 1.2 million and 1.2 million shares, respectively, of our Apollo Group Class A common stock from our treasury stock. These reissuances are a result of stock option exercises, release of shares covered by vested restricted stock units, and purchases under our employee stock purchase plan.

Share Repurchases

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. During the third quarter of fiscal year 2013, our Board of Directors authorized an increase in the amount available under our share repurchase program up to an aggregate amount of $250 million. There is no expiration date on the repurchase authorization and repurchases occur at our discretion.

We did not repurchase shares of our Apollo Group Class A common stock during fiscal year 2013. During fiscal years 2012 and 2011, we repurchased 19.1 million and 18.3 million shares of our Apollo Group Class A common stock at a total cost of $799.5 million and $775.8 million, respectively. The weighted average purchase price for fiscal years 2012 and 2011 was $41.82 and $42.30 per share, respectively.

As of August 31, 2013, $250 million remained available under our share repurchase authorization. The amount and timing of future share repurchase authorizations and repurchases, if any, will be made as market and business conditions warrant. Repurchases may be made on the open market through various methods including but not limited to accelerated share repurchase programs, 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.

In connection with the release of vested shares of restricted stock, we repurchased 0.5 million, 0.3 million and 0.2 million shares of Class A common stock for $9.5 million, $12.4 million and $7.4 million during fiscal years 2013, 2012 and 2011, respectively. These repurchases relate to tax withholding requirements on the restricted stock units and do not fall under the repurchase program described above.

Accumulated Other Comprehensive Loss

The following summarizes the components of accumulated other comprehensive loss at August 31:

($ in thousands)	2013			2012
Foreign currency translation losses	$	(36,032	)	$	(29,503	)
Unrealized loss on marketable securities	(531		)	(531		)
Accumulated other comprehensive loss(1)	$	(36,563	)	$	(30,034	)

⁽¹⁾ Accumulated other comprehensive loss is net of $0.6 million and $0.4 million of taxes as of August 31, 2013 and 2012, respectively. The tax effect on each component of other comprehensive income during fiscal years 2013, 2012 and 2011 is not significant.

The increase in foreign currency translation losses is primarily the result of an adjustment to accumulated other comprehensive loss resulting from our purchase of the noncontrolling interest in Apollo Global discussed above.

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Note 15. Earnings Per Share

The following are the components of basic and diluted earnings per share for the respective periods:

	Year Ended August 31,
($ in thousands)	2013		2012		2011
Net income attributable to Apollo (basic and diluted)	$	248,526	$	422,678	$	572,427
Basic weighted average shares outstanding	112,712		121,607		141,269
Dilutive effect of stock options	—		4		99
Dilutive effect of restricted stock units and performance share awards	573		746		382
Diluted weighted average shares outstanding	113,285		122,357		141,750
Earnings per share:
Basic income per share attributable to Apollo	$	2.20	$	3.48	$	4.05
Diluted income per share attributable to Apollo	$	2.19	$	3.45	$	4.04

During fiscal years 2013, 2012 and 2011, 7.0 million, 8.8 million and 9.3 million, respectively, of our stock options outstanding and 1.4 million, less than 0.1 million, and 0.4 million, respectively, of our restricted stock units and performance share awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. These share-based awards 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 the opportunity to make pre-tax 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 the lesser of 15% of his or her gross compensation or the maximum participant contribution permitted under the Internal Revenue Code. We are also permitted to make additional discretionary contributions for certain eligible employees. Our contributions were $20.0 million, $13.6 million and $12.6 million for fiscal years 2013, 2012 and 2011, respectively.

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 for shares purchased under the plan.

Share-Based Awards

We currently have outstanding awards under the Apollo Group, Inc. Amended and Restated 2000 Stock Incentive Plan (“Plan”). Under this Plan, we may grant non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock units, performance share awards (“PSAs”), and other share-based awards covering shares of our Class A common stock to officers, certain employees and faculty members, and the non-employee members of our Board of Directors. In general, the awards granted under the Plan vest over periods ranging from one to four years and stock options have contractual terms of 10 years or less. Restricted stock units issued under the Plan may have both performance-vesting and service-vesting components or service-vesting only. PSAs have both performance-vesting and service-vesting components tied to a defined performance period. The majority of our restricted stock units and PSAs contain rights to receive dividends or dividend equivalents, but these rights are forfeitable and Apollo has not historically issued dividends.

Approximately 28.6 million shares of our Class A common stock have been reserved for issuance over the term of the Plan. The shares may be issued from treasury shares or from authorized but unissued shares of our Class A common stock. As of August 31, 2013, approximately 15.4 million authorized and unissued shares of our Class A common stock were available for issuance under the Plan, including the shares subject to outstanding equity awards.

Under the Plan, 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 generally equal to the vesting period.

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Restricted Stock Units and PSAs

We granted restricted stock units during fiscal years 2013, 2012 and 2011 with both service-vesting and performance-vesting conditions, and with only service vesting. The vesting period of the restricted stock units granted generally ranges from one to four years. We also granted PSAs during fiscal years 2013, 2012 and 2011 that vest based on performance and service vesting conditions. The level at which the performance condition is attained will determine the actual number of shares of our Class A common stock into which the PSAs will be converted. The conversion percentage generally ranges from 0% up to 300% of the target level based on the performance condition attainment. The award holder will vest in one-third of the shares of our Class A common stock into which his or her PSAs are so converted for each fiscal year the award holder remains employed during the three year performance period. However, the PSAs will immediately convert into fully-vested shares of our Class A common stock at target level or above upon certain changes in control or ownership. The shares of our Class A common stock into which the PSAs are converted will be issued upon the completion of the applicable performance period.

The following provides a summary of activity for our restricted stock units and PSAs (granted PSAs are assumed to convert into shares of our Class A common stock at the target level):

	Restricted Stock Units				Performance Share Awards(1)
	Number of Shares (in thousands)		Weighted Average Grant Date Fair Value		Number of Shares (in thousands)		Weighted Average Grant Date Fair Value
Nonvested at August 31, 2010	1,481		$	51.12	69		$	42.27
Granted	2,072		44.14		191		46.98
Vested and released	(469	)	54.01		—		—
Forfeited	(152	)	49.94		—		—
Nonvested at August 31, 2011	2,932		$	45.78	260		$	45.74
Granted	1,692		36.81		145		37.50
Vested and released	(905	)	46.97		—		—
Forfeited	(193	)	47.12		(6	)	44.89
Nonvested at August 31, 2012	3,526		$	41.10	399		$	42.76
Granted	2,301		20.10		47		19.80
Vested and released	(1,334	)	42.25		—		—
Forfeited	(527	)	39.99		(81	)	37.45
Nonvested at August 31, 2013	3,966		$	28.68	365		$	40.97

⁽¹⁾ The vesting of PSAs is subject to the achievement of the specified performance goals and the number of common shares that will ultimately be issued is calculated by multiplying the number of performance shares by a payout percentage that generally ranges from 0% up to 300%.

As of August 31, 2013, we have $78.2 million and $1.2 million of unrecognized share-based compensation cost, net of forfeitures, related to unvested restricted stock units and PSAs, respectively. These costs are expected to be recognized over a weighted average period of 2.84 years. The fair value of restricted stock units that vested during fiscal years 2013, 2012 and 2011 was $56.4 million, $42.5 million and $25.5 million, respectively.

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Stock Options

We have granted stock options during fiscal years 2013, 2012 and 2011 with a service vesting condition that generally ranges from one to four years. The following provides a summary of our stock option activity:

	Options Outstanding
	Number of Shares (in thousands)		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($)(1) (in thousands)
Balance at August 31, 2010	10,149		$	56.62
Granted	650		43.49
Exercised	(608	)	31.41
Forfeited, canceled or expired	(915	)	58.38
Balance at August 31, 2011	9,276		$	57.18
Granted	176		36.89
Exercised	(157	)	43.57
Forfeited, canceled or expired	(736	)	58.53
Balance at August 31, 2012	8,559		$	56.90
Granted	945		17.95
Exercised	—		—
Forfeited, canceled or expired	(5,381	)	57.69
Balance at August 31, 2013	4,123		$	46.94	2.61	$	1,092
Vested and expected to vest as of August 31, 2013	4,055		$	47.35	2.55	$	1,092
Exercisable as of August 31, 2013	2,761		$	57.65	1.85	$	—
Available for future grant as of August 31, 2013	6,163

⁽¹⁾ Aggregate intrinsic value represents the sum of the differences between our closing stock price of $18.57 on August 31, 2013 and the exercise prices of all of our options with an exercise price less than $18.57.

As of August 31, 2013, we have $8.9 million of unrecognized share-based compensation cost, net of forfeitures, related to unvested stock options. These costs are expected to be recognized over a weighted average period of 2.10 years. The fair value of stock options that vested during fiscal years 2013, 2012 and 2011 was $10.6 million, $22.8 million, and $37.8 million, respectively.

The following summarizes information related to outstanding and exercisable options at August 31, 2013:

	Outstanding				Exercisable
Range of Exercise Prices	Number of Shares (in thousands)	Weighted Average Contractual Life Remaining (Years)	Weighted Average Exercise Price per Share		Number of Shares (in thousands)	Weighted Average Exercise Price per Share
$16.75 to $16.75	600	3.53	$	16.75	—	$	—
$19.62 to $39.88	759	4.75	$	30.06	204	$	38.23
$40.03 to $47.47	696	2.98	$	44.05	496	$	43.86
$48.30 to $55.46	714	1.73	$	53.46	707	$	53.50
$56.49 to $67.90	807	1.38	$	63.91	807	$	63.91
$68.47 to $97.49	545	1.09	$	73.19	545	$	73.18
$169.47 to $169.47	2	1.66	$	169.47	2	$	169.47
	4,123				2,761

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The following summarizes information related to stock options exercised during the respective periods:

	Year Ended August 31,
($ in thousands)	2013		2012		2011
Intrinsic value realized	$	—	$	1,498	$	9,207
Actual tax benefit realized by Apollo for tax deductions	$	—	$	573	$	1,771
Cash received by Apollo	$	—	$	6,754	$	19,151

Refer to Note 2, Significant Accounting Policies, for discussion of stock option valuation and related assumptions.

Share-based Compensation Expense

The following details share-based compensation expense for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Instructional and student advisory	$	20,060		$	27,731		$	27,012
Marketing	5,182			6,807			5,306
Admissions advisory	849			1,691			2,109
General and administrative	21,363			41,153			35,613
Restructuring and other charges	2,008			1,323			—
Share-based compensation expense	49,462			78,705			70,040
Tax effect of share-based compensation	(18,986		)	(29,874		)	(26,715		)
Share-based compensation expense, net of tax	$	30,476		$	48,831		$	43,325

Note 17. 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. Based on the significant uncertainty associated with our pending as well as possible future litigation, settlements and other proceedings relative to our insurance policy coverage, the fair value of these indemnification agreements, if any, cannot be estimated.

Lease Commitments

The following details our future minimum commitments for capital and operating leases as of August 31, 2013:

($ in thousands)	Capital Leases			Operating Leases(1)
2014	$	18,170		$	180,605
2015	18,082			164,950
2016	11,115			142,616
2017	4,120			115,458
2018	983			91,465
Thereafter	1,194			353,899
Total future minimum lease obligation(1), (2)	$	53,664		$	1,048,993
Less: imputed interest on capital leases	(4,036		)
Net present value of capital lease obligations	$	49,628

⁽¹⁾ The total future minimum lease obligation excludes non-cancelable sublease rental income of $16.7 million.

⁽²⁾ We have initiated restructuring activities that have included ceasing use of a significant number of our operating leases. Refer to Note 3, Restructuring and Other Charges. The total future minimum operating lease obligation includes $168.4 million of future contractual lease payments associated with locations for which we no longer expect to receive an economic benefit. The total future minimum operating lease obligation also includes $31.9 million of future contractual lease payments associated with locations that we expect to close as University of Phoenix obtains the necessary regulatory approvals and completes its teach-out obligations.

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Rent expense was $184.6 million, $207.5 million and $219.3 million for fiscal years 2013, 2012 and 2011, respectively.

We have entered into sale-leaseback agreements related to properties that we currently use to support our operations. We received $200.9 million for the sale of these properties, which generated a combined gain of approximately $41.7 million that is being deferred over the respective lease terms. We recognized gain amortization associated with sale-leasebacks of $2.8 million, $2.8 million and $2.2 million in fiscal years 2013, 2012 and 2011, respectively, on our Consolidated Statements of Income. The total deferred gain included on our Consolidated Balance Sheets was $25.7 million and $28.5 million as of August 31, 2013 and 2012, respectively.

Naming Rights to Glendale, Arizona Sports Complex

In September 2006, we entered into an 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 increases 3% per year until 2026. As of August 31, 2013, our remaining contractual obligation pursuant to this agreement is $108.5 million. 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.

Surety Bonds

As part of our normal operations, our insurers issue surety bonds for us that are required by various states where we operate. We are obligated to reimburse our insurers for any surety bonds that are paid. As of August 31, 2013, the face amount of these surety bonds was $41.5 million.

Letters of Credit

As of August 31, 2013, we had approximately $14 million of outstanding letters of credit that are required as part of our normal operations.

Litigation and Other Matters

We are subject to various claims and contingencies that arise from time to time 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.

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.

Securities Class Action (Apollo Institutional Investors Group)

On August 13, 2010, a securities class action complaint was filed in the U.S. District Court for the District of Arizona by Douglas N. Gaer naming us, John G. Sperling, Gregory W. Cappelli, Charles B. Edelstein, Joseph L. D’Amico, Brian L. Swartz and Gregory J. Iverson as defendants for allegedly making false and misleading statements regarding our business practices and prospects for growth. That complaint asserted a putative class period stemming from December 7, 2009 to August 3, 2010. A substantially similar complaint was also filed in the same Court by John T. Fitch on September 23, 2010 making similar allegations against the same defendants for the same purported class period. Finally, on October 4, 2010, another purported securities class action complaint was filed in the same Court by Robert Roth against the same defendants as well as Brian Mueller, Terri C. Bishop and Peter V. Sperling based upon the same general set of allegations, but with a defined class period of February 12, 2007 to August 3, 2010. The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On October 15, 2010, three additional parties filed motions to consolidate the related actions and be appointed the lead plaintiff.

On November 23, 2010, the Fitch and Roth actions were consolidated with Gaer and the Court appointed the “Apollo Institutional Investors Group” consisting of the Oregon Public Employees Retirement Fund, the Mineworkers’ Pension Scheme, and Amalgamated Bank as lead plaintiffs. The case is now entitled, In re Apollo Group, Inc. Securities Litigation, Lead Case Number CV-10-1735-PHX-JAT. On February 18, 2011, the lead plaintiffs filed a consolidated complaint naming Apollo, John G. Sperling, Peter V. Sperling, Joseph L. D’Amico, Gregory W. Cappelli, Charles B. Edelstein, Brian L. Swartz, Brian E. Mueller, Gregory J. Iverson, and William J. Pepicello as defendants. The consolidated complaint asserts a putative class period of May 21, 2007 to October 13, 2010. On April 19, 2011, we filed a motion to dismiss and oral argument on the motion was held before the Court on October 17, 2011. On October 27, 2011, the Court granted our motion to dismiss and granted plaintiffs leave to amend. On December 6, 2011, the lead plaintiffs filed an Amended Consolidated Class Action

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Complaint, which alleges similar claims against the same defendants. On January 9, 2012, we filed a motion to dismiss the Amended Consolidated Class Action Complaint. On June 22, 2012, the Court granted our motion to dismiss and entered a judgment in our favor. On July 20, 2012, the plaintiffs filed a Notice of Appeal with the U.S. Court of Appeals for the Ninth Circuit, and their appeal remains pending before that Court. If the plaintiffs are successful in their appeal, we anticipate they will seek substantial damages.

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 the information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

Securities Class Action (Teamsters Local 617 Pensions and Welfare Funds)

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. On September 11, 2007, the Court appointed The Pension Trust Fund for Operating Engineers as lead plaintiff. 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 April 30, 2009, plaintiffs filed their Second Amended Complaint, which alleges similar claims for alleged securities fraud against the same defendants.

On March 31, 2011, the U.S. District Court for the District of Arizona dismissed the case with prejudice and entered judgment in our favor. Plaintiffs filed a motion for reconsideration of this ruling, and the Court denied this motion on April 2, 2012. On April 27, 2012, the plaintiffs filed a Notice of Appeal with the U.S. Court of Appeals for the Ninth Circuit, and their appeal remains pending before that Court. If the plaintiffs are successful in their appeal, we anticipate they will seek substantial damages.

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 the information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not recorded a loss associated with this action.

Incentive Compensation False Claims Act Lawsuit

On May 25, 2011, we were notified that a qui tam complaint had been filed against us in the U.S. District Court, Eastern District of California, by private relators under the Federal False Claims Act and California False Claims Act, entitled USA and State of California ex rel. Hoggett and Good v. University of Phoenix, et al, Case Number 2:10-CV-02478-MCE-KJN. 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 successful, they are entitled to receive a portion of the federal government’s recovery.

The complaint alleges, among other things, that University of Phoenix has violated the Federal False Claims Act since December 12, 2009 and the California False Claims Act for the preceding ten years by falsely certifying to the U.S. Department of Education and the State of California that University of Phoenix was in compliance with various regulations that require compliance with federal rules regarding the payment of incentive compensation to admissions personnel, in connection with University of Phoenix’s participation in student financial aid programs. In addition to injunctive relief and fines, the relators seek significant damages on behalf of the Department of Education and the State of California, including all student financial aid disbursed by the Department to our students since December 2009 and by the State of California to our students during the preceding ten years. On July 12, 2011, we filed a motion to dismiss and on August 30, 2011, relators filed a motion for leave to file a Second Amended Complaint, which the Court granted. On November 2, 2011, we filed a motion to dismiss relators’ Second Amended Complaint, which was denied by the Court on July 6, 2012. On August 1, 2012, we filed a motion for certification of an interlocutory appeal, which was denied by the Court on March 7, 2013. Discovery in this matter has commenced, and trial is scheduled for January 2015.

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 the information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

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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, since transferred on plaintiff’s motion to the Eastern District of Virginia. The case is entitled, Digital Vending Services International, LLC vs. The University of Phoenix, et al, Case Number 2:09cv555 (JBF-TEM). 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 and seeks injunctive relief and substantial damages, including royalties as a percentage of our net revenue over a multi-year period. We filed an answer to the complaint on May 27, 2008, in which we denied 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.

On January 7, 2011, the Court granted our motion for summary judgment and dismissed the case with prejudice, citing plaintiff’s failure to point to admissible evidence that could support a finding of infringement. Plaintiff appealed the order granting summary judgment to the United States Court of Appeals for the Federal Circuit, which held oral argument on December 5, 2011. On March 7, 2012, a divided three-judge panel of the Federal Circuit issued an opinion affirming in part and reversing in part the order granting summary judgment, and it remanded a portion of the plaintiff’s claims to the district court for further proceedings. We filed a Petition for Rehearing with the Federal Circuit regarding the portion of the decision reversing the grant of summary judgment, which the Federal Circuit denied on May 25, 2012. Accordingly, the case was remanded to the U.S. District Court for the Eastern District of Virginia for further proceedings. In July 2013, we filed another motion for summary judgment based on non-infringement. On October 4, 2013, the Court granted our motion and dismissed each of plaintiff’s remaining claims with prejudice. Plaintiff has thirty days in which it can appeal that ruling.

As of August 31, 2013,we have accrued an immaterial amount associated with this matter. 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 the information available to us at present, we cannot reasonably estimate a range of loss for this action in excess of our accrual as of August 31, 2013.

Himmel Derivative Action

On November 12, 2010, we received a shareholder demand to investigate, address and commence proceedings against each of our directors and certain of our officers for violation of any applicable laws, including in connection with the subject matter of the report of the Government Accountability Office prepared for the U.S. Senate in August 2010, our withdrawal of the outlook we previously provided for our fiscal year 2011, the investigation into possible unfair and deceptive trade practices associated with certain alleged practices of University of Phoenix by the State of Florida Office of the Attorney General in Fort Lauderdale, Florida, the participation by the State of Oregon Office of the Attorney General in the Securities Class Action (Apollo Institutional Investors Group), and the informal inquiry by the Enforcement Division of the Securities and Exchange Commission commenced in October 2009.

On March 24, 2011, a shareholder derivative complaint was filed in the Superior Court for the State of Arizona, Maricopa County by Daniel Himmel, the foregoing shareholder who previously made a demand for investigation. In the complaint, the plaintiff asserts a derivative claim on our behalf against certain of our current and former officers and directors for breach of fiduciary duty, waste of corporate assets, and unjust enrichment. The complaint alleges that the individual defendants made improper statements and engaged in improper business practices that caused our stock price to drop, led to securities class actions against us, and enhanced regulation and scrutiny by various government entities and regulators. The case is entitled, Himmel v. Bishop, et al, Case Number CV2011-005604. Pursuant to a stipulation between all parties, on August 31, 2011, the Court ordered this action stayed during the pendency of the underlying Securities Class Action (Apollo Institutional Investors Group) matter.

K.K. Modi Investment and Financial Services Pvt. Ltd.

On November 8, 2010, a suit was filed by K.K. Modi Investment and Financial Services Pvt. Ltd. (“Modi”) in the High Court of Delhi at New Delhi against defendants Apollo Group, Inc., Western International University, Inc., University of Phoenix, Inc., Apollo Global, Inc., Modi Apollo International Group Pvt. Ltd., Apollo International, Inc., John G. Sperling, Peter V. Sperling and Jorge Klor De Alva, seeking to permanently enjoin the defendants from making investments in the education industry in the Indian market in breach of an exclusivity and noncompete provision which plaintiff alleges is applicable to Apollo Group and its subsidiaries. The case is entitled, K.K. Modi Investment and Financial Services Pvt. Ltd. v. Apollo International, et. al. We believe that the relevant exclusivity and noncompete provision is inapplicable to us and our affiliates, we have sought to dismiss this action on those grounds, and our application for such relief remains pending before the Court. On December 14, 2010, the Court declined to enter an injunction, but the matter is set for a further hearing on October 28,

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2013. If plaintiff ultimately obtains the requested injunctive relief, our ability to conduct business in India, including through our joint venture with HT Media Limited, may be adversely affected. It is also possible that in the future K.K. Modi may seek to expand existing litigation in India or commence litigation in the U.S. in which it may assert a significant damage claim against us.

Attorney General Investigations

During fiscal year 2011, we received notices from the Attorney General Offices in three states that they were investigating business practices at the University of Phoenix, as described below. We believe there may be an informal coalition of states considering investigatory or other inquiries into recruiting practices and the financing of education at proprietary educational institutions, which may or may not include these three states.

• State of Florida. On October 22, 2010, University of Phoenix received notice that the State of Florida Office of the Attorney General in Fort Lauderdale, Florida had commenced an investigation into possible unfair and deceptive trade practices associated with certain alleged practices of the University. The notice included a subpoena to produce documents and detailed information for the time period of January 1, 2006 to the present about a broad spectrum of the University’s business. We are cooperating with the investigation, but also filed a suit to quash or limit the subpoena and to protect information sought that constitutes propriety or trade secret information. We cannot predict the eventual scope, duration or outcome of the investigation at this time.

• State of Massachusetts. In May 2011 and January 2013, University of Phoenix received Civil Investigative Demands from the State of Massachusetts Office of the Attorney General. The Demands relate to an investigation of possible unfair or deceptive methods, acts, or practices by for-profit educational institutions in connection with the recruitment of students and the financing of education. The Demands seek documents, information and testimony regarding a broad spectrum of the University’s business for the time period of January 1, 2002 to the present. We are cooperating with the investigation. We cannot predict the eventual scope, duration or outcome of the investigation at this time.

• State of Delaware. On August 3, 2011, University of Phoenix received a subpoena from the Attorney General of the State of Delaware to produce detailed information regarding the University’s students residing in Delaware. The time period covered by the subpoena was January 1, 2006 to the present. On October 11, 2013, we received a letter from the Delaware Attorney General’s office informing us that it is closing this investigation and will be taking no further action in the matter.

UNIACC Investigations

UNIACC was advised by the National Accreditation Commission of Chile in November 2011 that its institutional accreditation would not be renewed and therefore had lapsed. Subsequently, in June 2012, a prosecutor’s office in Santiago, Chile requested that UNIACC provide documents relating to UNIACC’s relationship with a former employee and consultant who served as a member of the National Accreditation Commission until March 2012, and we have since received requests for additional information in connection with this investigation. Furthermore, in August 2012, the prosecutor’s office began requesting that UNIACC provide information about UNIACC’s business structure and operations and its relationship with other Apollo entities, in connection with an additional investigation regarding UNIACC’s compliance with applicable laws concerning the generation of profit by universities such as UNIACC. The prosecutor’s office is also requesting additional information from UNIACC regarding certain government funding received by the institution. In November 2012, UNIACC learned that the Ministry of Education was commencing a formal investigation into related profit issues and concerning the official recognition of UNIACC as a university under Chilean law. We are cooperating with these investigations. At this time, we cannot predict the eventual scope, course or outcome of these investigations.

Securities Class Action (Policeman’s Annuity and Benefit Fund of Chicago)

In January 2008, a jury returned an adverse verdict against us and two remaining individual co-defendants in a securities class action lawsuit entitled, In re Apollo Group, Inc. Securities Litigation, Case No. CV04-2147-PHX-JAT, filed in the U.S. District Court for the District of Arizona. In September 2011, we entered into a settlement agreement with the plaintiffs to settle the litigation for $145.0 million, which was approved by the Court on April 20, 2012. Under the settlement agreement and during fiscal year 2012, the $145.0 million we had previously deposited into a common fund account in December 2011 was paid to the plaintiffs.

During fiscal year 2013, we resolved the dispute with our insurers regarding the previously advanced defense costs for this action. As a result, we reversed previously recorded charges associated with this dispute, which are included in litigation credit on our Consolidated Statements of Income during fiscal year 2013. We do not believe we have any exposure associated with this matter in the future.

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AdomaWage and Hour Class Action

On January 8, 2010, Diane Adoma filed an action in United States District Court, Eastern District of California alleging wage and hour claims under the Fair Labor Standards Act and California law for failure to pay overtime and other violations, entitled Adoma et al. v. University of Phoenix, et al, Case Number 2:10-cv-00059-LKK. On April 12, 2010, plaintiff filed a motion for conditional collective action certification. The Court denied class certification under the Fair Labor Standards Act and transferred these claims to the District Court in Pennsylvania. On August 31, 2010, the U.S. District Court in California granted plaintiff’s motion for class action certification of the California claims. In August 2011, the parties agreed to settle the case for an immaterial amount, which was accrued in our financial statements during fiscal year 2011. The agreement, in which we do not admit any liability, was approved by the Court on December 17, 2012.

Putative Class Action under the Telephone Consumer Protection Act

On March 12, 2013, Del-Rio Swink filed a class action complaint against University of Phoenix and Receivable Management Services Corporation alleging violations of the Telephone Consumer Protection Action (“TPCA”). The complaint, which is captioned Swink v. University of Phoenix et al., 4:13-cv-00461 and which was filed in U.S. District Court for the Eastern District of Missouri, alleges that defendants, in seeking to collect tuition debt, violated the TCPA by using automatic dialing systems to place unsolicited telephone calls to the cellular telephones of plaintiff and other former students. It seeks to recover damages on behalf of plaintiff and other similarly situated individuals. On April 9, 2013, plaintiff voluntarily dismissed her complaint, and we do not believe we have any exposure associated with this matter in the future.

Securities and Exchange Commission

During April 2012, we received notification from the Enforcement Division of the Securities and Exchange Commission requesting documents and information relating to certain stock sales by company insiders and our February 28, 2012 announcement filed with the Commission on Form 8-K regarding revised enrollment forecasts. On January 17, 2013, we were informed in writing that the Enforcement Division had completed its investigation into this matter and did not intend to recommend any enforcement action by the Commission.

Refer to Note 13, Income Taxes, for discussion of Internal Revenue Service audits.

Note 18. Regulatory Matters

In fiscal year 2013, University of Phoenix generated 90% of our total consolidated net revenue and more than 100% of our operating income, and 83% of the University’s cash basis revenue for eligible tuition and fees was derived from Title IV financial aid program funds, as calculated under the 90/10 Rule described below.

All U.S. federal financial aid programs are established by Title IV of the Higher Education Act and regulations promulgated thereunder. 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. Congress has begun Higher Education Act reauthorization hearings and there is currently an automatic one year extension that continues the current authorization through September 30, 2014. Changes to the Higher Education Act, including changes in eligibility and funding for Title IV programs, are likely to occur in connection with this reauthorization, but we cannot predict the scope or substance of any such changes.

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 November 2009 and entered into a new Title IV Program Participation Agreement which expired on December 31, 2012. University of Phoenix has submitted necessary documentation for re-certification and its eligibility continues on a month-to-month basis until the Department issues its decision on the application. We have no reason to believe that the University’s application will not be renewed in due course, and it is not unusual to be continued on a month-to-month basis until the Department completes its review. However, we cannot predict whether, or to what extent, the imposition of the Notice sanction by The Higher Learning Commission, as described below, might have on this process.

Western International University was recertified in May 2010 and entered into a new Title IV Program Participation Agreement which expires September 30, 2014.

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Higher Learning Commission (“HLC”)

University of Phoenix and Western International University are accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools (“HLC”). This accreditation 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 authority to operate in certain states.

In July 2013, the accreditation of University of Phoenix was reaffirmed by HLC through the 2022-2023 academic year. At the same time, HLC placed the University on Notice status for a two-year period, due to concerns regarding governance, student assessment and faculty scholarship/research for doctoral programs. Notice status is a sanction that means that HLC has determined that an institution is on a course of action that, if continued, could lead the institution to be out of compliance with one or more of the HLC Criteria for Accreditation or Core Components. The University was assigned by HLC to the Standard Pathway reaffirmation process, pursuant to which the University will host a comprehensive evaluation visit in 2016-2017 and will undergo its next reaffirmation visit and process in 2022-2023. We believe the imposition of the sanction of Notice on University of Phoenix could adversely impact our business.

In July 2013, the accreditation of Western International University also was reaffirmed by HLC through the 2022-2023 academic year, and it was placed on Notice status for a two-year period due to concerns relating to governance, student assessment and faculty.

90/10 Rule

To remain eligible to participate in Title IV programs, proprietary institutions of higher education must comply with the so-called “90/10 Rule” under the Higher Education Act, as reauthorized, and must derive 90% or less of their cash basis revenue, as defined in the rule, from Title IV programs. The 90/10 Rule percentage for University of Phoenix for fiscal year 2013 was 83%. The 90/10 Rule percentage for University of Phoenix remains high and could exceed 90% in the future depending on the degree to which its various initiatives are effective, the impact of future changes in its enrollment mix, and regulatory and other factors outside our control, including any reduction in military benefit programs or changes in the treatment of such funding for purposes of the 90/10 Rule calculation.

Student Loan Cohort Default Rates

To remain eligible to participate in Title IV programs, an educational institution’s student loan cohort default rates must remain below certain specified levels. Educational institutions will lose eligibility to participate in Title IV programs if their three-year cohort default rate equals or exceeds 40% for any given year or 30% for three consecutive years. The University of Phoenix three-year cohort default rates for the 2010 and 2009 federal fiscal years were 26.0% and 26.4%, respectively. If our student loan default rates approach the applicable limits, we may be required to increase efforts and resources dedicated to improving these default rates.

Office of the Inspector General of the U.S. Department of Education (“OIG”)

In October 2011, the OIG notified us that it was conducting a nationwide audit of the Department’s program requirements, guidance, and monitoring of institutions of higher education offering distance education. In connection with the OIG’s audit of the Department, the OIG examined a sample of University of Phoenix students who enrolled during the period from July 1, 2010 to June 30, 2011. The OIG subsequently notified University of Phoenix that in the course of this review it identified certain conditions that the OIG believes are Title IV compliance exceptions at University of Phoenix. Although University of Phoenix is not the direct subject of the OIG’s audit of the Department, the OIG has asked University of Phoenix to respond so that it may consider University of Phoenix’s views in formulating its audit report of the Department. In September 2013, the OIG provided to University of Phoenix, among other institutions, a draft appendix to its audit report. The draft appendix again identifies compliance exceptions at University of Phoenix. University of Phoenix has responded to the appendix. These exceptions relate principally to the calculation of the amount of Title IV funds returned after student withdrawals and the process for confirming student eligibility prior to disbursement of Title IV funds. We are not the direct subject of the OIG’s audit of the Department, and we have not accrued any liability associated with this matter.

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Note 19. Segment Reporting

We operate primarily in the education industry. Our reportable segments have been determined based on the method by which management evaluates performance and allocates resources. Our seven operating segments are presented in the following reportable segments:

• University of Phoenix;

• Apollo Global; and

• Other.

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 throughout the United States, including the Commonwealth of Puerto Rico.

Apollo Global includes BPP, ULA, UNIACC and the Apollo Global corporate operations. BPP offers professional training and education through schools located in the United Kingdom, a European network of BPP offices, and the sale of books and other publications globally. ULA offers degree programs at its campuses throughout Mexico. UNIACC offers bachelor’s and master’s degree programs at campuses in Chile and online.

Other includes Western International University, IPD, CFFP, Carnegie Learning, Apollo Lightspeed, and corporate activities. Western International University offers associate’s, bachelor’s and master’s degrees in a variety of program areas primarily 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 a Master of Science in three majors, and certification programs in retirement, asset management and other financial planning areas. Carnegie Learning is a publisher of research-based math curricula and adaptive learning software for middle school, high school and postsecondary students. Apollo Lightspeed is focused on developing innovative educational offerings and services, including proprietary learning models and third-party courseware.

During the fourth quarter of fiscal year 2013, we revised our internal management reporting structure and determined Carnegie Learning and Western International University are operating segments. Accordingly, Carnegie Learning is no longer included in our University of Phoenix reportable segment, and Western International University is no longer included in our Apollo Global reportable segment. These operating segments are included in Other in our segment reporting and we have changed our presentation for all periods presented to reflect our revised segment reporting.

Management evaluates performance based on reportable segment profit. This measure of profit includes allocating corporate support costs to each segment as part of transfer pricing arrangements and/or a general allocation, but excludes taxes, interest income and expense, 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.

No individual customer accounted for more than 10% of our consolidated net revenue in fiscal years 2013, 2012 and 2011.

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A summary of financial information by reportable segment is as follows:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Net revenue
University of Phoenix	$	3,304,464		$	3,873,098		$	4,322,670
Apollo Global	275,768			269,541			272,935
Other	101,078			110,698			115,444
Net revenue	$	3,681,310		$	4,253,337		$	4,711,049
Operating income (loss)(1):
University of Phoenix	$	579,670		$	846,840		$	1,270,468
Apollo Global(2)	(59,936		)	(66,964		)	(259,487		)
Other(3)	(92,320		)	(103,539		)	(55,123		)
Total operating income	427,414			676,337			955,858
Reconciling items:
Interest income	1,913			1,187			2,884
Interest expense	(8,745		)	(11,745		)	(8,931		)
Other, net	2,407			476			(1,588		)
Income from continuing operations before income taxes	$	422,989		$	666,255		$	948,223
Depreciation and amortization(4)
University of Phoenix(4)	$	53,562		$	64,643		$	53,681
Apollo Global	25,982			24,297			30,004
Other	82,189			89,294			75,321
Total depreciation and amortization(4)	$	161,733		$	178,234		$	159,006
Capital expenditures
University of Phoenix	$	6,992		$	20,133		$	53,801
Apollo Global	33,627			36,523			20,565
Other	78,729			58,531			88,207
Total capital expenditures	$	119,348		$	115,187		$	162,573

⁽¹⁾ University of Phoenix, Apollo Global and Other include charges associated with our restructuring activities. Refer to Note 3, Restructuring and Other Charges.

⁽²⁾ The operating loss for Apollo Global in fiscal years 2012 and 2011 includes goodwill and other intangibles impairment charges of $16.8 million and $219.9 million, respectively. Refer to Note 9, Goodwill and Intangible Assets.

⁽³⁾ The operating loss for Other in fiscal years 2013 and 2011 includes net credits of $23.2 million and $16.2 million, respectively, resulting from the resolution of certain of our legal matters.

⁽⁴⁾ Depreciation and amortization in fiscal year 2013 excludes $50.1 million of accelerated depreciation associated with our restructuring activities. Refer to Note 3, Restructuring and Other Charges.

A summary of our consolidated assets by reportable segment is as follows:

	As of August 31,
($ in thousands)	2013		2012		2011
University of Phoenix	$	790,537	$	901,180	$	1,016,005
Apollo Global	359,903		376,071		435,009
Other(1)	1,847,507		1,591,071		1,818,692
Total assets	$	2,997,947	$	2,868,322	$	3,269,706

⁽¹⁾ The majority of assets included in Other consists of corporate cash and cash equivalents and marketable securities.

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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)	2013		2012		2011
Net revenue
United States	$	3,405,702	$	3,983,796	$	4,437,079
United Kingdom	205,662		198,408		200,759
Latin America	53,837		50,426		50,725
Other	16,109		20,707		22,486
Net revenue	$	3,681,310	$	4,253,337	$	4,711,049

	As of August 31,
($ in thousands)	2013		2012		2011
Long-lived assets(1)
United States	$	472,811	$	580,457	$	471,703
United Kingdom	169,371		174,229		214,073
Latin America	62,702		65,856		86,103
Other	3,542		3,466		35,562
Total long-lived assets	$	708,426	$	824,008	$	807,441

⁽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)

Our operations are generally subject to seasonal trends. We experience, and expect to continue to experience, fluctuations in our results of operations as a result of seasonal variations in the level of our institutions’ enrollments. Although University of Phoenix enrolls students throughout the year, its net revenue is generally lower in our second fiscal quarter (December through February) than the other quarters due to holiday breaks.

The following unaudited consolidated quarterly financial information should be read in conjunction with other information included in our consolidated financial statements, and reflects all adjustments, consisting of normal, recurring adjustments, necessary for the fair presentation of the results of interim periods:

	(Unaudited)
	2013								2012
	Q1 Nov. 30		Q2 Feb. 28		Q3 May 31		Q4 Aug. 31		Q1 Nov. 30		Q2 Feb. 29		Q3 May 31		Q4 Aug. 31
(In thousands, except per share data)
Net revenue	$	1,055,183	$	834,372	$	946,774	$	844,981	$	1,171,900	$	962,682	$	1,122,258	$	996,497
Operating income(1), (2)	230,946		29,780		131,953		34,735		261,668		103,705		221,409		89,555
Income from continuing operations	133,740		13,659		80,170		21,396		145,136		59,241		131,278		47,528
Net income	133,740		13,659		80,170		21,396		147,284		61,171		134,382		74,169
Net income attributable to Apollo	133,495		13,527		79,953		21,551		149,314		63,882		134,034		75,448
Earnings per share - Basic:(3)
Continuing operations attributable to Apollo	$	1.19	$	0.12	$	0.71	$	0.19	$	1.13	$	0.50	$	1.11	$	0.47
Discontinued operations attributable to Apollo	—		—		—		—		0.02		0.01		0.02		0.20
Basic income per share attributable to Apollo	$	1.19	$	0.12	$	0.71	$	0.19	$	1.15	$	0.51	$	1.13	$	0.67
Earnings per share - Diluted:(3)
Continuing operations attributable to Apollo	$	1.18	$	0.12	$	0.71	$	0.19	$	1.13	$	0.49	$	1.11	$	0.46
Discontinued operations attributable to Apollo	—		—		—		—		0.01		0.02		0.02		0.20
Diluted income per share attributable to Apollo	$	1.18	$	0.12	$	0.71	$	0.19	$	1.14	$	0.51	$	1.13	$	0.66
Basic weighted average shares outstanding	112,420		112,573		112,742		113,105		130,318		125,298		118,134		112,815
Diluted weighted average shares outstanding	112,849		113,068		113,372		113,740		130,874		126,467		118,793		113,539

⁽¹⁾ Operating income includes the following for fiscal year 2013:

• Restructuring and other charges of $24.1 million, $44.1 million, $63.1 million and $67.3 million in the first, second, third and fourth quarters, respectively; and

• Litigation net credits of $16.9 million, $6.3 million, and $1.4 million in the first, second and fourth quarters, respectively.

⁽²⁾ Operating income includes the following for fiscal year 2012:

• Goodwill and other intangibles impairment of $16.8 million in the first quarter;

• Restructuring and other charges of $5.6 million, $16.1 million, $7.6 million and $9.4 million in the first, second, third and fourth quarters, respectively; and

• Litigation charges of $4.7 million in the third quarter.

⁽³⁾ Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted income per share may not equal annual basic and diluted income per share.

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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 Chief Executive Officer (“Principal Executive Officer”) and our Senior Vice President and Chief Financial Officer (“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 Officer 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.

Attached as exhibits to this Annual Report on Form 10-K are certifications of our Principal Executive Officer 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 Officer 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.

Management performed an assessment of the effectiveness of our internal control over financial reporting as of August 31, 2013, utilizing the criteria described in the “Internal Control - Integrated Framework (1992)” 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, 2013. Based on our assessment, management believes that, as of August 31, 2013, 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, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

114

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, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. 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, 2013, based on the criteria established in Internal Control - Integrated Framework (1992) 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 financial statements as of and for the year ended August 31, 2013 of the Company, and our report dated October 22, 2013 expressed an unqualified opinion on those financial statements.

/s/ DELOITTE & TOUCHE LLP

Phoenix, Arizona

October 22, 2013

115

Item 9B - Other Information

None.

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, 2013) 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 Ethics. We require full compliance with this policy from all designated employees including our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer. We publish the policy, and any amendments or waivers to the policy, on our website located at www.apollo.edu.

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, 2013) 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, 2013) and such information is incorporated herein by reference.

Item 13 - Certain Relationships and Related Transactions, and Director Independence

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, 2013) 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, 2013) and such information is incorporated herein by reference.

116

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	72
Consolidated Balance Sheets	73
Consolidated Statements of Income	74
Consolidated Statements of Comprehensive Income	75
Consolidated Statements of Changes in Shareholders’ Equity	76
Consolidated Statements of Cash Flows	77
Notes to Consolidated Financial Statements	78

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 on the Consolidated Financial Statements and Notes thereto.

117

3. Exhibits

Index to Exhibits

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit Number	Filing Date	Filed Herewith
2.1	Agreement and Plan of Merger by and among Carnegie Learning, Inc., Apollo Group, Inc., BHCL Acquisition Co. and CLI Shareholder Representative, LLC, dated August 2, 2011(1)	10-K	No. 000-25232	2.1	October 20, 2011
2.2	First Amendment to Agreement and Plan of Merger by and among Carnegie Learning, Inc., Apollo Group, Inc., BHCL Acquisition Co. and CLI Shareholder Representative, LLC, dated August 31, 2011	10-K	No. 000-25232	2.2	October 20, 2011
2.3	Technology Assignment and License Agreement by and between Apollo Group, Inc., Carnegie Mellon University and Carnegie Learning, Inc., dated August 2, 2011(1)	10-K	No. 000-25232	2.3	October 20, 2011
2.4	Stock Purchase Agreement by and among Apollo Group, Inc., an Arizona corporation, Apollo Global, Inc., a Delaware corporation, Carlyle U.S. Growth Fund III, L.P. /f/k/a Carlyle Venture Partners III, L.P., a Delaware limited partnership and CVP III Coinvestments, L.P., dated October 12, 2012	10-Q	No. 000-25232	2.1	January 8, 2013
3.1	Amended and Restated Articles of Incorporation of Apollo Group, Inc., as amended through June 20, 2007	10-Q	No. 000-25232	3.1	January 7, 2010
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*	10-K	No. 000-25232	10.3	October 27, 2009
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
10.6	Apollo Group, Inc. 2000 Stock Incentive Plan (as amended and restated June 25, 2009)*	10-Q	No. 000-25232	10.3	June 29, 2009
10.7	Apollo Group, Inc. 2000 Stock Incentive Plan Amendment (effective June 24, 2010)*	8-K	No. 000-25232	10.3	June 30, 2010
10.8	Apollo Group, Inc. Amended and Restated 2000 Stock Incentive Plan Amendment (effective October 6, 2011)*	10-K	No. 000-25232	10.8	October 20, 2011
10.9	Apollo Group, Inc. Amended and Restated 2000 Stock Incentive Plan Amendment (effective December 8, 2011)*	10-Q	No. 000-25232	10.2	March 26, 2012
10.10	Apollo Group, Inc. Amended and Restated 2000 Stock Incentive Plan Amendment (effective December 13, 2012)*					X
10.11	Form of Performance Share Award Agreement* (used for awards in 2010)	8-K	No. 000-25232	10.2	June 30, 2010
10.12	Form of Performance Share Award Agreement (Apollo Global Metrics)* (used for awards from 2011-2012)	10-K	No. 000-25232	10.21	October 20, 2011

118

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit Number	Filing Date	Filed Herewith
10.13	Form of Performance Share Award Agreement (Apollo Global Metrics) (revised June 25, 2013)* (used for awards in and after August 2013)	10-Q	No. 000-25232	10.4	June 25, 2013
10.14	Form of Performance Share Award Agreement (Apollo Group Metrics)* (used for awards from 2011-2012)	10-K	No. 000-25232	10.22	October 20, 2011
10.15	Form of Performance Share Award Agreement (Apollo Group Metrics) (revised June 25, 2013)* (used for awards in and after August 2013)	10-Q	No. 000-25232	10.5	June 25, 2013
10.16	Form of Cash Retention Award Agreement*	10-Q	No. 000-25232	10.1	January 8, 2013
10.17	Form of Special Cash Retention Award Agreement*	10-Q	No. 000-25232	10.6	June 25, 2013
10.18	Form of Apollo Group, Inc. Non-Employee Director Stock Option Agreement* (used for awards prior to July 2011)	10-Q	No. 000-25232	10.6	June 28, 2007
10.19	Form of Apollo Group, Inc. Non-Employee Director Stock Option Agreement With Limited Transferability* (used for awards in and after July 2011)	10-K	No. 000-25232	10.10	October 20, 2011
10.20	Form of Apollo Group, Inc. Non-Employee Director Restricted Stock Unit Award Agreement*	10-Q	No. 000-25232	10.7	June 28, 2007
10.21	Form of Apollo Group, Inc. Stock Option Agreement (for officers with an employment agreement)* (used for awards prior to July 2011 and for July 2012 award)	10-Q	No. 000-25232	10.3	January 8, 2009
10.22	Form of Apollo Group, Inc. Stock Option Agreement With Limited Transferability (for officers with an employment agreement)* (used for July 2011 and March 2013 awards)	10-K	No. 000-25232	10.15	October 20, 2011
10.23	Form of Apollo Group, Inc. Stock Option Agreement With Limited Transferability (for officers with an employment agreement) (revised June 25, 2013)* (used for awards in and after August 2013)	10-Q	No. 000-25232	10.2	June 25, 2013
10.24	Form of Non-Statutory Stock Option Agreement (for officers without an employment agreement)* (used for awards prior to July 2011)	10-Q	No. 000-25232	10.4	January 8, 2009
10.25	Form of Non-Statutory Stock Option Agreement With Limited Transferability (for officers without an employment agreement)* (used for awards from July 2011 to July 2013)	10-K	No. 000-25232	10.14	October 20, 2011
10.26	Form of Apollo Group, Inc. Stock Option Agreement With Limited Transferability (for officers without an employment agreement) (revised June 25, 2013)* (used for awards in and after August 2013)	10-Q	No. 000-25232	10.1	June 25, 2013
10.27	Form of Apollo Group, Inc. Restricted Stock Unit Award Agreement (for officers with an employment agreement)* (used for awards in July 2009)	10-Q	No. 000-25232	10.1	January 8, 2009
10.28	Form of Apollo Group, Inc. Restricted Stock Unit Award Agreement (for officers without an employment agreement)* (used for awards in July 2009)	10-Q	No. 000-25232	10.2	January 8, 2009
10.29	Form of Restricted Stock Unit Award Agreement (Special Retention Award - Form A)*	10-Q	No. 000-25232	10.1	March 29, 2011

119

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit Number	Filing Date	Filed Herewith
10.30	Form of Restricted Stock Unit Award Agreement (Special Retention Award - Form B)*	10-Q	No. 000-25232	10.2	March 29, 2011
10.31	Form of Restricted Stock Unit Award Agreement With Performance Condition and Partial Service Vesting Acceleration* (used for awards from 2010 to July 2013)	10-K	No. 000-25232	10.20	October 20, 2011
10.32	Form of Restricted Stock Unit Award Agreement With Performance Condition and Partial Service Vesting Acceleration (revised June 25, 2013)* (used for awards in and after August 2013)	10-Q	No. 000-25232	10.3	June 25, 2013
10.33	Aptimus, Inc. 2001 Stock Plan*	S-8	No. 333-147151	99.1	November 5, 2007
10.34	Apollo Group, Inc. Stock Option Assumption Agreement Aptimus, Inc. 2001 Stock Plan*	S-8	No. 333-147151	99.2	November 5, 2007
10.35	Apollo Group, Inc. Stock Appreciation Right Assumption Agreement Aptimus, Inc. 2001 Stock Plan*	S-8	No. 333-147151	99.3	November 5, 2007
10.36	Aptimus, Inc. 1997 Stock Option Plan, as amended*	S-8	No. 333-147151	99.4	November 5, 2007
10.37	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
10.38	Apollo Group, Inc. Executive Officer Performance Incentive Plan (as amended and restated effective as of October 6, 2011)*	10-K	No. 000-25232	10.28	October 20, 2011
10.39	Amendment to Apollo Group, Inc. Executive Officer Performance Incentive Plan (as amended and restated effective as of October 6, 2011) (effective December 8, 2011)*	10-Q	No. 000-25232	10.2	January 5, 2012
10.40	Amendment to Apollo Group, Inc. Executive Officer Performance Incentive Plan (as amended and restated effective as of October 6, 2011) (effective December 13, 2012)*					X
10.41	Apollo Group, Inc. Deferral Election Program for Non-Employee Board Members*	10-K	No. 000-25232	10.20	October 27, 2009
10.42	Apollo Group, Inc. Deferred Compensation Plan*	10-Q	No. 000-25232	10.1	March 25, 2013
10.43	Apollo Group, Inc. Senior Executive Severance Pay Plan (as amended and restated effective as of September 1, 2013)*					X
10.44	Form of Indemnification Agreement - Employee Director*	10-K	No. 000-25232	10.23	October 21, 2010
10.45	Form of Indemnification Agreement - Outside Director*	10-K	No. 000-25232	10.24	October 21, 2010
10.46	Letter from Apollo Group, Inc. to John G. Sperling Regarding Post-Retirement Benefits Arrangements Dated January 14, 2013 (as amended August 23, 2013)*					X
10.47	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
10.48	Shareholder Agreement among Apollo Group, Inc. and holders of Apollo Group Class B common stock, dated September 7, 1994	S-1	No. 33-83804	10.1	September 9, 1994

120

		Incorporated by Reference
ExhibitNumber	Exhibit Description	Form	File No.	Exhibit Number	Filing Date	Filed Herewith
10.49	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
10.50	Amendment to Shareholder Agreement among Apollo Group, Inc. and holders of Apollo Group Class B common stock, dated June 23, 2006	10-K	No. 000-25232	10.23c	October 27, 2009
10.51	Amendment to Shareholder Agreement among Apollo Group, Inc. and holders of Apollo Group Class B common stock, dated May 19, 2009	10-K	No. 000-25232	10.23d	October 27, 2009
10.52	Amended and Restated Employment Agreement between Apollo Group, Inc. and Gregory W. Cappelli, dated April 2, 2011*	10-Q	No. 000-25232	10.3	June 30, 2011
10.53	Letter Agreement between Apollo Group, Inc. and Gregory W. Cappelli, dated September 5, 2012*	10-K	No. 000-25232	10.40	October 22, 2012
10.54	Amended and Restated Employment Agreement between Apollo Group, Inc. and Joseph L. D’Amico, dated May 18, 2010*	8-K	No. 000-25232	10.2	May 20, 2010
10.55	Letter Agreement between Apollo Group, Inc. and Joseph L. D’Amico (for extension of Employment Agreement), dated June 27, 2012*					X
10.56	Separation Agreement and General Release and Waiver of Claims between Apollo Group, Inc. and Joseph L. D’Amico, dated September 16, 2013*					X
10.57	Consultant Services Agreement between Apollo Group, Inc. and Joseph L. D’Amico dated September 1, 2013*					X
10.58	Employment Agreement between Apollo Group, Inc. and Rob Wrubel, dated August 7, 2007*	10-K	No. 000-25232	10.31	October 28, 2008
10.59	Amendment to Employment Agreement between Apollo Group, Inc. and Rob Wrubel, dated October 31, 2008*	10-Q	No. 000-25232	10.50	January 8, 2009
10.60	Offer letter between Apollo Group, Inc. and Sean Martin, dated August 23, 2010*	10-Q	No. 000-25232	10.1	January 10, 2011
10.61	Clarification letter between Apollo Group, Inc. and Sean Martin, dated September 20, 2010*	10-Q	No. 000-25232	10.2	January 10, 2011
10.62	Transition Agreement between Apollo Group, Inc. and William J. Pepicello, dated September 5, 2013*					X
10.63	Consultant Services Agreement between Apollo Group, Inc. and Charles B. Edelstein, dated March 1, 2013*					X
10.64	Letter extending Consultant Services Agreement between Apollo Group, Inc. and Charles B. Edelstein, dated October 3, 2013*					X
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 Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X

121

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit Number	Filing Date	Filed Herewith
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 Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
101.INS	XBRL Instance Document					X
101.SCH	XBRL Taxonomy Extension Schema Document					X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document					X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document					X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document					X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document					X

* Indicates a management contract or compensation plan.

⁽¹⁾ Portions of this exhibit have been omitted pursuant to a request for confidential treatment from the Securities and Exchange Commission.

122

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/ Brian L. Swartz
	Brian L. Swartz Senior Vice President and Chief Financial Officer (Principal Financial Officer)

By:	/s/ Gregory J. Iverson
	Gregory J. Iverson Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)

Date: October 22, 2013

123

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/ Peter V. Sperling	Chairman and Director	October 22, 2013
Peter V. Sperling
/s/ Terri C. Bishop	Vice Chairman and Director	October 22, 2013
Terri C. Bishop
/s/ Gregory W. Cappelli	Chief Executive Officer and Director (Principal Executive Officer)	October 22, 2013
Gregory W. Cappelli
/s/ Brian L. Swartz	Senior Vice President and Chief Financial Officer (Principal Financial Officer)	October 22, 2013
Brian L. Swartz
/s/ Gregory J. Iverson	Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)	October 22, 2013
Gregory J. Iverson
/s/ Matthew Carter, Jr.	Director	October 22, 2013
Matthew Carter, Jr.
/s/ Richard H. Dozer	Director	October 22, 2013
Richard H. Dozer
/s/ Roy A. Herberger, Jr.	Director	October 22, 2013
Roy A. Herberger, Jr.
/s/ Ann Kirschner	Director	October 22, 2013
Ann Kirschner
/s/ Robert S. Murley	Director	October 22, 2013
Robert S. Murley
/s/ Manuel F. Rivelo	Director	October 22, 2013
Manuel F. Rivelo
/s/ Darby E. Shupp	Director	October 22, 2013
Darby E. Shupp
/s/ Allen R. Weiss	Director	October 22, 2013
Allen R. Weiss

124

EX-10.10

Exhibit 10.10

APOLLO GROUP, INC.

2000 STOCK INCENTIVE PLAN

PLAN AMENDMENT

The Apollo Group, Inc. 2000 Stock Incentive Plan, as previously amended and restated (the “Plan”), is hereby further amended, effective December 13, 2012, as follows:

Section 3.1(r) of the Plan is hereby amended in its entirety to read as follows:

“(r) “Performance Criteria” means the criteria that the Committee selects for purposes of establishing the Performance Goals for a Participant for a Performance Period. The Performance Criteria that will be used to establish Performance Goals are limited to the following: (i) pre-tax or after-tax net earnings or net income, (ii) sales or revenue growth or other revenue or sales objectives, (iii) cash flow, operating cash flow or free cash flow objectives, (iv) return on assets or net assets, (v) return on stockholder equity, (vi) return on capital or invested capital, (vii) Stock price per share or growth in Stock price per share, (viii) total stockholder return, (ix) operating margin or gross or net profit margin, (x) earnings per share, (xi) market share, (xii) operating income or pre-tax or after-tax net operating income, (xiii) operating profit or pre-tax or after-tax net operating profit, (xiv) operating earnings or pre-tax or after-tax net operating earnings, (xv) earnings or operating income before interest, taxes, depreciation, amortization and/or charges for stock-based compensation, (xvi) economic value-added models, (xvii) cost reductions, (xviii) budget objectives, (xix) litigation and regulatory resolution goals, (xx) expense control goals, (xxi) measures of student academic success, (xxii) measures of student satisfaction at one or more of the Company’s universities or throughout the Company’s university system as a whole, as formulated by the Committee and validated in one or more instances through one or more independently-conducted surveys, (xxiii) measures of faculty performance at one or more of the Company’s universities or throughout the Company’s university system as a whole, (xxiv) measures of faculty satisfaction at one or more of the Company’s universities or throughout the Company’s university system as a whole, as formulated by the Committee and validated in one or more instances through one or more independently-conducted surveys, (xxv) measures to enhance student protection or student service at one or more of the Company’s universities or throughout the Company’s university system as a whole, and (xxvi) measures of employee productivity. Any of the foregoing criteria may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group or as measured in terms of one or more business units or Subsidiaries of the Company. The Committee shall, within the time prescribed by Section 162(m) of the Code, define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such Performance Period for such Participant.”

Section 3.1(s) of the Plan is hereby amended in its entirety to read as follows:

“(s)“Performance Goals” means, for a Performance Period, the goals established in writing by the Committee for the Performance Period based upon the Performance Criteria. The Committee, in its discretion, may, within the time prescribed by Section 162(m) of the Code for establishing the Performance Goal or Goals, specify one or more of the following adjustments or modifications to be made in the calculation of such Performance Goal or Goals: (i) asset impairments or write-downs, including impairment charges related to goodwill, intangible assets or other long-lived assets, (ii) litigation verdicts, judgments or claim settlements, (iii) the effect of changes in tax law,

accounting principles or other laws, regulations or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and other related expenses, (v) extraordinary nonrecurring items, including those addressed in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year, and any other item that is either unusual or infrequent in nature, as determined in accordance with Accounting Standards Codification Topic 225-20 “Extraordinary and Unusual Items”, (vi) the operations of any business acquired by the Company (or any Subsidiary) or of any joint venture in which the Company (or any Subsidiary) participates, (vii) the divestiture of one or more business operations or the assets of the Company or (any Subsidiary) or of any joint venture in which the Company (or any Subsidiary) participates, (viii) the costs incurred in connection with such acquisitions or divestitures, (ix) the financial results of any businesses classified as discontinued operations for all or a portion of the applicable performance or measurement period, (x) items of income, gain, loss or expense attributable to the operations of any business acquired or divested by the Company or any Subsidiary, (xi) stock-based compensation, (xii) cash payments made in settlement of incentive awards under the Plan or any other plan or program implemented by the Company or any Subsidiary, (xiii) intercompany transactions between or among the Company and one or more of its Subsidiaries, (xiv) the impact of foreign exchange gains and losses and (xv) employee separation costs not in the ordinary course of business.

In addition to the foregoing adjustments, should the Performance Goal be tied to cash flow, operating cash flow or free cash flow objectives, then the Committee may, in establishing the applicable targets, authorize adjustments, deductions and/or exclusions with respect to one or more of the following items to the extent those items are to be utilized in the calculation of cash flow, operating cash flow or free cash flow for any or all of the fiscal years within the applicable Performance Period or any other fiscal year that serves as a base or comparative measurement year: (i) cash amounts expended in the acquisition of property, plant and equipment, (ii) cash amounts paid in connection with actual or proposed acquisitions of one or more businesses or the assets of one or more businesses or in connection with start-up enterprises, (iii) cash flows or adjusted cash flows attributable to any businesses or assets acquired or divested during the Performance Period (or other relevant measurement period), (iv) cash amounts paid as interest expense, (v) cash amounts received as interest income, (vi) cash amounts paid in connection with judgments, verdicts and settlements with respect to specified litigation matters, (vii) increases or decreases in restricted cash attributable to Title IV student funding, (viii) increases or decreases in working capital or other working capital adjustments, (ix) cash flows or adjusted cash flows attributable to new businesses or entities begun by the Company or any Subsidiary, (x) cash flow impact of intercompany transactions between or among the Company and one or more Subsidiaries involving the acquisition, licensing or cost sharing of intangible assets, (xi) cash flow impact of costs or charges related to internal corporate services, (xii) capital expenses, (xiii) capital leases, (xiv) items of income, gain (or credit) or expense or loss associated with intercompany transactions and (xv) debt obligations.

In further clarification of the various adjustments that may be made to one or more Performance Goals in accordance with this Section 3.1(s) and without limiting the scope or generality of those permissible adjustments, should the Performance Goal be tied to any net income, operating income or operating profit objectives, then the Committee may, in establishing the applicable net income, operating income or operating profit target, authorize one or more of the following adjustments to net income, operating income or operating profit for any fiscal year within the applicable Performance Period:

(i) the exclusion of all acquisition costs expensed for the applicable fiscal year, whether relating to acquisitions effected during that year or any prior fiscal year,

(ii) the exclusion of all income, gain or loss attributable to companies or other entities acquired during the applicable fiscal year,

(iii) the exclusion of impairment charges related to goodwill, intangible assets or other long-lived assets,

(iv) the exclusion of amounts expensed in connection with judgments, verdicts and settlements with respect to specified litigation matters,

(v)the exclusion of stock-based compensation expense or costs, as computed in accordance with applicable accounting principles, and

(vi)any other applicable adjustments authorized in accordance with the foregoing provisions of this Section 3.1(s).”

Except as modified by this Plan Amendment, all the terms and provisions of the Apollo Group, Inc. 2000 Stock Incentive Plan, as previously amended and restated, 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 officer on this 13th day of December 2012.

APOLLO GROUP, INC.
By:	/s/ Frederick J. Newton___________________________
Title:	Senior Vice President and Chief Human Resources Officer

EX-10.40

Exhibit 10.40

APOLLO GROUP, INC.

EXECUTIVE OFFICER PERFORMANCE INCENTIVE PLAN

PLAN AMENDMENT

The Apollo Group, Inc. Executive Officer Performance Incentive Plan, as previously amended and restated (the “Plan”), is hereby further amended, effective December 13, 2012, as follows:

Section V.B. of the Plan is hereby amended in its entirety to read as follows:

“B. For each Performance Period, the performance objectives may be based on one or more of the following criteria: (i) pre-tax or after-tax net earnings or net income, (ii) sales or revenue growth or other revenue or sales objectives, (iii) cash flow, operating cash flow or free cash flow objectives, (iv) return on assets or net assets, (v) return on stockholder equity, (vi) return on capital or invested capital, (vii) Stock price per share or growth in Stock price per share, (viii) total stockholder return, (ix) operating margin or gross or net profit margin, (x) earnings per share, (xi) market share, (xii) operating income or pre-tax or after-tax net operating income, (xiii) operating profit or pre-tax or after-tax net operating profit, (xiv) operating earnings or pre-tax or after-tax net operating earnings, (xv) earnings or operating income before interest, taxes, depreciation, amortization and/or charges for stock-based compensation, (xvi) economic value-added models, (xvii) cost reductions, (xviii) budget objectives, (xix) litigation and regulatory resolution goals, (xx) expense control goals, (xxi) measures of student academic success, (xxii) measures of student satisfaction at one or more of the Company’s universities or throughout the Company’s university system as a whole, as formulated by the Committee and validated in one or more instances through one or more independently-conducted surveys, (xxiii) measures of faculty performance at one or more of the Company’s universities or throughout the Company’s university system as a whole, (xxiv) measures of faculty satisfaction at one or more of the Company’s universities or throughout the Company’s university system as a whole, as formulated by the Committee and validated in one or more instances through one or more independently-conducted surveys, (xxv) measures to enhance student protection or student service at one or more of the Company’s universities or throughout the Company’s university system as a whole, and (xxvi) measures of employee productivity. Any of the foregoing criteria may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group or as measured in terms of one or more business units or Subsidiaries of the Company. The Committee shall, within the time prescribed by Section 162(m) of the Code, define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such Performance Period for such Participant.”

Section V. C. of the Plan is hereby amended in its entirety to read as follows:

“C.Each applicable performance objective may be structured at the time of establishment to provide for appropriate adjustments for one or more of the following items: (i) asset impairments or write-downs, including impairment charges related to goodwill, intangible assets or other long-lived assets, (ii) litigation verdicts, judgments or claim settlements, (iii) the effect of changes in tax law, accounting principles or other laws, regulations or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and other related expenses, (v) extraordinary nonrecurring items, including those addressed in management’s discussion and analysis of financial condition and results of

operations appearing in the Company’s annual report to stockholders for the applicable year, and any other item that is either unusual or infrequent in nature, as determined in accordance with Accounting Standards Codification Topic 225-20 “Extraordinary and Unusual Items”, (vi) the operations of any business acquired by the Company (or any Subsidiary) or of any joint venture in which the Company (or any Subsidiary) participates, (vii) the divestiture of one or more business operations or the assets of the Company or (any Subsidiary) or of any joint venture in which the Company (or any Subsidiary) participates, (viii) the costs incurred in connection with such acquisitions or divestitures, (ix) the financial results of any businesses classified as discontinued operations for all or a portion of the applicable performance or measurement period, (x) items of income, gain, loss or expense attributable to the operations of any business acquired or divested by the Company or any Subsidiary, (xi) stock-based compensation, (xii) cash payments made in settlement of incentive awards under the Plan or any other plan or program implemented by the Company or any Subsidiary, (xiii) intercompany transactions between or among the Company and one or more of its Subsidiaries, (xiv) the impact of foreign exchange gains and losses and (xv) employee separation costs not in the ordinary course of business.”

Section V. D. of the Plan is hereby amended in its entirety to read as follows:

“D.In addition to the foregoing adjustments set forth in Paragraph V.C above, should the performance objective be tied to cash flow, operating cash flow or free cash flow objectives, then the Plan Administrator may, in establishing the applicable targets, authorize adjustments, deductions and/or exclusions with respect to one or more of the following items to the extent those items are to be utilized in the calculation of cash flow, operating cash flow or free cash flow for any or all of the fiscal years within the applicable Performance Period or any other fiscal year that serves as a base or comparative measurement year: (i) cash amounts expended in the acquisition of property, plant and equipment, (ii) cash amounts paid in connection with actual or proposed acquisitions of one or more businesses or the assets of one or more businesses or in connection with start-up enterprises, (iii) cash flows or adjusted cash flows attributable to any businesses or assets acquired or divested during the Performance Period (or other relevant measurement period), (iv) cash amounts paid as interest expense, (v) cash amounts received as interest income, (vi) cash amounts paid in connection with judgments, verdicts and settlements with respect to specified litigation matters, (vii) increases or decreases in restricted cash attributable to Title IV student funding, (viii) increases or decreases in working capital or other working capital adjustments, (ix) cash flows or adjusted cash flows attributable to new businesses or entities begun by the Company or any Subsidiary, (x) cash flow impact of intercompany transactions between or among the Company and one or more Subsidiaries involving the acquisition, licensing or cost sharing of intangible assets, (xi) cash flow impact of costs or charges related to internal corporate services, (xii) capital expenses, (xiii) capital leases, (xiv) other items of income, gain (or credit) or expense or loss associated with intercompany transactions and (xv) debt obligations.”

Except as modified by this Plan Amendment, all the terms and provisions of the Apollo Group, Inc. Executive Officer Performance Incentive Plan, as previously amended and restated, 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 officer on this 13th day of December 2012.

APOLLO GROUP, INC.
By:	/s/ Frederick J. Newton__________________________
Title:	Senior Vice President and Chief Human Resources Officer

EX-10.43

Exhibit 10.43

APOLLO GROUP, INC.

SENIOR EXECUTIVE SEVERANCE PAY PLAN

(As Amended And Restated Effective September 1, 2013)

APOLLO GROUP, INC.

SENIOR EXECUTIVE SEVERANCE PAY PLAN

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS	2
ARTICLE II	PLAN BENEFITS	6
ARTICLE III	DELAYED COMMENCEMENT DATE FOR SEVERANCE BENEFITS	13
ARTICLE IV	NON-ALIENATION OF PLAN BENEFITS	15
ARTICLE V	FUNDS FROM WHICH PLAN BENEFITS ARE PAYABLE	16
ARTICLE VI	CLAIM PROCEDURE	17
ARTICLE VII	THE ADMINISTRATOR	18
ARTICLE VIII	ACCOUNTS AND RECORDS	19
ARTICLE IX	INTERPRETATION OF PROVISIONS	20
ARTICLE X	AMENDMENT OF PLAN	21
ARTICLE XI	DISCONTINUANCE OF PLAN	22
ARTICLE XII	NO CONTRACT OF EMPLOYMENT	23
ARTICLE XIII	FORMS; COMMUNICATIONS	24
ARTICLE XIV	GOVERNING LAW	25
EXHIBIT A	WINDOW BENEFITS	A-1
EXHIBIT B	STOCK PLAN PROVISIONS	B-1

APOLLO GROUP, INC.

SENIOR EXECUTIVE SEVERANCE PAY PLAN

The Apollo Group, Inc. Senior Executive Severance Pay Plan as hereinafter set forth shall be effective with respect to Eligible Employees who incur an Involuntary Termination on or after September 1, 2013 (the “Effective Date”). The right of any former Eligible Employee whose employment was terminated prior to the Effective Date to receive any severance pay or similar benefit was governed by the provisions of the version of the Apollo Group, Inc. Severance Pay Plan applicable to such former Eligible Employee on the date of his termination of employment, and such former Eligible Employee shall not be entitled to any severance benefits under this Plan.

This September 1, 2013 amendment and restatement of the Senior Executive Severance Pay Plan was adopted and approved by the Compensation Committee of the Apollo Group, Inc. Board of Directors on July 29, 2013.

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ARTICLE I

DEFINITIONS

The following terms as used herein shall have the meanings set forth below:

(a)“Administrator” or “Plan Administrator” shall mean Apollo Group, Inc.

(b)“Average Annual Bonus” shall mean the average of the actual incentive bonuses earned by the Participant for the three (3) fiscal years (or fewer number of fiscal years of employment with the Company) immediately preceding the fiscal year in which his or her Involuntary Termination occurs.

(c)“Base Pay” shall mean a Participant’s gross weekly base salary calculated on the basis of the annual rate of base salary in effect for him or her at the time of his or her Involuntary Termination. “Base Pay” shall not include any forms of extra compensation, such as bonuses, cost-of-living and other allowances, any award paid to the Participant under any incentive compensation plan of the Company, any compensation attributable to stock options, restricted stock units or other equity or equity-based awards and any other contribution or payment by the Company pursuant to any retirement, profit-sharing, disability or survivor income plan, health or welfare plan, life insurance plan, fringe benefits plan or similar plan.

(d) “COBRA Coverage Costs” shall mean the lump sum amount calculated and payable pursuant to Article II, Section B of the Plan to a Participant.

(e)“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(f)“Company” shall mean Apollo Group, Inc. and its domestic subsidiaries, including (without limitation) The University of Phoenix, Inc., The College for Financial Planning Institutes Corporation, the Institute for Professional Development and Western International University, Inc.

(g)“Effective Date” shall mean September 11, 2013, the date on which the amended and restated Plan becomes effective. The Plan was originally effective June 24, 2010.

(h)“Employee” shall mean an individual who is in the employ of at least one member of the Employer Group, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

(i)“Employer Group” shall mean the Company and each member of the group of commonly controlled corporations or other businesses that include the Company, as determined in accordance with Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder, except that in applying Sections 1563(1), (2) and (3) of the Code for purposes of determining the controlled group of corporations under Section 414(b) of the Code, the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in such sections, and in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or businesses that are under common control for purposes

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of Section 414(c) of the Code, the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in Section 1.414(c)-2 of the Treasury Regulations.

(j)“Eligible Employee” shall mean an Employee who is: (a) a Chief Executive or Chief Operating Officer of Apollo Group, Inc., (b) a Grade 17-22 Employee who is a member of the executive leadership team.

(k)“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

(l)“Involuntary Termination” shall mean the unilateral termination of the Participant’s employment by the Company for any reason other than a Termination for Cause; provided, however, in no event shall an Involuntary Termination be deemed to incur in the event the Participant’s employment terminates by reason of his or her death or disability. In addition, an Involuntary Termination shall not be deemed to occur if a Participant’s employment is terminated by the Company by reason of the Participant’s failure to accept an alternate position offered by the Company if (i) the principal place of employment for such alternate position is less than 25 miles from his former principal place of employment with the Company; (ii) the Participant’s Base Pay in the alternate position is not less than 90% of the Participant’s Base Pay in the former position; or (iii) the Administrator has determined, in its sole discretion prior to the time the Participant is offered the alternate position, that the alternate position will not result in a material reduction in the Participant’s duties and responsibilities. The Administrator shall determine, in its sole discretion, all of the terms and conditions of a Participant’s alternate position, the time at which the alternate position is offered (which may be after the Participant’s employment has been severed), and the period the Participant has to consider the alternate position.

(m)“Participant” shall mean an individual who at the time of his or her Involuntary Termination is an Eligible Employee. An Eligible Employee whose employment with the Company terminates for any reason other than an Involuntary Termination, including (without limitation) any of the following reasons, shall not be a Participant in the Plan and shall not be entitled to any severance benefits hereunder: (1) transfer to employment with another member of the Employer Group, (2) a voluntary resignation, (3) a Termination for Cause, (4) death or disability, (5) retirement (other than a retirement which is a direct result of an Involuntary Termination) or (6) temporary layoff or a military leave of absence, except that if (during such absence from work) an Involuntary Termination of his or her Eligible Employee status occurs, then the Eligible Employee shall be eligible for Severance Pay as a result of such Involuntary Termination. A Participant ceases to be such on the date he or she ceases to be eligible for any further Severance Pay pursuant to the provisions of Article II hereof.

(n)“Plan” shall mean the Apollo Group, Inc. Senior Executive Severance Pay Plan, as amended from time to time.

(o)“Plan Year” shall mean the calendar year or such other period as the Company shall from time to time determine.

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(p) “Separation from Service” shall mean the Participant’s cessation of Employee status and shall be deemed to occur for purposes of the Plan at such time as the level of his or her bona fide services to be performed as an Employee (or non-employee consultant) permanently decreases to a level that is not more than twenty percent (20%) of the average level of services he or she rendered as an Employee during the immediately preceding thirty-six (36) months (or such shorter period for which he or she may have rendered such service). Any such determination as to Separation from Service, however, shall be made in accordance with the applicable standards of the Treasury Regulations issued under Code Section 409A. In addition to the foregoing, a Separation from Service will not be deemed to have occurred while an Employee is on military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six (6) months or any longer period for which such Employee is, either by statute or contract, provided with a right to reemployment with one or more members of the Employer Group; provided, however, that in the event of an Employee’s leave of absence due to any medically determinable physical or mental impairment that can be expected to result in death or to last for a continuous period of not less than six (6) months and that causes such individual to be unable to perform his or her duties as an Employee, no Separation from Service shall be deemed to occur during the first twenty-nine (29) months of such leave. If the period of leave exceeds six (6) months (or twenty-nine (29) months in the event of disability as indicated above) and the Employee is not provided with a right to reemployment either by statute or contract, then such Employee will be deemed to have a Separation from Service on the first day immediately following the expiration of such six (6)-month or twenty-nine (29)-month period.

(q)“Severance Pay” shall mean the amount payable pursuant to Article II, Section A of the Plan to a Participant who ceases employment with the Company by reason of an Involuntary Termination. Severance Pay shall be paid to such Participant in installments in accordance with the provisions of Article II, Section F.

(r)“Specified Employee” shall mean a Participant who is, pursuant to procedures established by the Plan Administrator in accordance with the applicable standards of Code Section 409A and the Treasury Regulations thereunder and applied on a consistent basis for all non-qualified deferred compensation plans of the Employer Group subject to Code Section 409A, deemed at the time of his or her Separation from Service to be a “specified employee” under Code Section 409A. The Specified Employees shall be identified on December 31 of each calendar year and shall include each Participant who is a “key employee” (within the meaning of that term under Code Section 416(i)) at any time during the twelve (12)-month period ending with such date. A Participant who is so identified as a Specified Employee will have that status for the twelve (12)-month period beginning on April 1 of the following calendar year.

(s)“Termination for Cause” shall mean the termination of an Eligible Employee’s service or employment with the Company for one or more of the following reasons:

(i)repeated dereliction of the material duties and responsibilities of his or her position with the Company;

(ii)misconduct, insubordination or failure to comply with Company policies governing employee conduct and procedures;

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(iii)excessive lateness or absenteeism;

(iv)conviction of or pleading guilty or nolo contendere to any felony involving theft, embezzlement, dishonesty or moral turpitude;

(v)commission of any act of fraud against, or the misappropriation of property belonging to, the Company;

(vi)commission of any act of dishonesty in connection with his or her responsibilities as an Employee that is intended to result in his or her personal enrichment or the personal enrichment of his or her family or others;

(vii)any other misconduct adversely affecting the business or affairs of the Company; or

(viii)a material breach of any agreement he or she may have at the time with the Company, including (without limitation) any proprietary information, non-disclosure or confidentiality agreement.

(t)“Pro-Rata Vesting of Equity Awards” shall mean the process set forth in Article II, Section C of the Plan pursuant to which a Participant may be eligible to vest on a limited pro-rata basis in Company stock or stock-based awards that are made to him or her with an effective grant date on or after the Effective Date of the Plan and at a time when he or she is employed in a position with the Company at Grade 17 level or above, including (without limitation) stock option grants, restricted stock unit awards, performance share awards and any other equity or equity-based awards.

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ARTICLE II

PLAN BENEFITS

A. Severance Pay. The amount of Severance Pay to which an Eligible Employee may become entitled under this Plan upon his or her Involuntary Termination shall be as follows:

(1) Grade 17 Eligible Employee. A Grade 17 Eligible Employee shall be eligible to receive Severance Pay equal to six (6) months of his/her Base Pay.

(2) Grade 18 Eligible Employee. A Grade 18 Eligible Employee shall be eligible to receive Severance Pay equal to nine (9) months of his/her Base Pay.

(3) Grade 19 Eligible Employee. A Grade 19 Eligible Employee shall be eligible to receive Severance Pay equal to (i) twelve (12) months of his/her Base Pay plus (ii) fifty percent (50%) of his or her Average Annual Bonus.

(4) Grade 20-21 Eligible Employees. A Grade 20-21 Eligible Employee shall be eligible to receive Severance Pay equal to (i) eighteen (18) months of his/her Base Pay plus (ii) one times his or her Average Annual Bonus.

(5) Grade 22 Eligible Employee. A Grade 22 Eligible Employee shall be eligible to receive Severance Pay equal to (i) twenty-four (24) months of his/her Base Pay plus(ii) one times his or her Average Annual Bonus.

(6) Installment Payments. The Severance Pay to which a Participant becomes entitled under this Section A of Article II shall be paid in successive equal installments in accordance with the provisions of Article II, Section F below. Each such payment shall be subject to the Company’s collection of all applicable withholding taxes, and the Participant shall receive only the portion of such payment remaining after such withholding taxes have been collected.

(7) Severance Offsets. The amount of Severance Pay payable to a Participant under Article II, Section A(1)-(5) hereof shall be reduced, to the extent permitted by applicable law and not otherwise in contravention of any applicable acceleration prohibition imposed under Code Section 409A, by (i) any monies a Participant owes to the Company, (ii) by the amount of any statutory benefit payable to the Participant by reason of his or her termination of employment, and (iii) by the amount of severance pay or other severance benefits payable to the Participant pursuant to any other plan of the Company

6

or any agreement in effect between the Company and the Participant so that there shall be no duplication of severance benefits under such plan or agreement and this Plan. Statutory benefits which reduce the benefits payable under this Plan shall include, but not be limited to, benefits paid pursuant to the Worker Adjustment and Retaining Notification Act in connection with the Participant’s termination. In further clarification of the foregoing offset provisions, should there be any other severance benefit arrangement in effect for a Participant on the Effective Date of this Plan or should any other severance benefit arrangement be established for a Participant in connection with his or her commencement of employment with the Company, whether before or after such Effective Date, then the terms and provisions of that other severance benefit arrangement (including without limitation the form of payment and the commencement or payment date) shall supersede and replace the terms and provisions of this Plan to the extent that other arrangement provides for severance benefits at the time of the Participant’s Involuntary Termination that are equal to or greater than the amount of Severance Pay payable under the Plan, and no benefits shall be provided under this Plan that would duplicate those other severance benefits.

(8) Nonduplication. No Participant shall be entitled to benefits under more than one subsection of Article II, Section A.

B. COBRA Coverage Costs. The Company shall make a lump sum cash payment to each Participant at Grade Level 20 or above who becomes entitled to Severance Pay under the Plan. The lump sum cash payment will be in an amount determined by multiplying (X) the amount by which (i) the monthly cost that would be payable by the Company, as measured as of the date of his or her Involuntary Termination, to obtain continued medical, dental and vision care coverage for the Participant and his or her spouse and eligible dependents under the Company’s employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of such Involuntary Termination exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level by (Y) the number of months of Base Pay for which such Participant will receive Severance Pay under the Plan. The Company shall pay such lump sum amount to the Participant on the same date the first installment of his or her Severance Pay is paid in accordance with Article II, Section F below. Notwithstanding the foregoing, such lump sum payment shall be subject to the delayed commencement date provisions of Article III, Section A of the Plan, to the extent applicable. Such lump sum shall constitute taxable income to the Participant and shall be subject to the Company’s collection of all applicable

7

withholding taxes, and the Participant shall receive only the portion of such payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company’s group health care plan.

C. Pro-Rata Vesting of Equity Awards. An Eligible Employee who becomes entitled to Severance Pay under Article II, Section A shall also be entitled to pro-rata vesting of a portion of the equity awards that are made to him or her with an effective grant date on or after the Effective Date of the Plan and at a time when he or she is employed in a position with the Company at Grade 17 level or above, as follows:

(1) For each such eligible equity award with a service-vesting requirement, the Participant shall vest in a pro-rated portion of the number of shares in which he or she would have otherwise vested in the twelve (12)-month service-vesting installment period in effect under that award at the time of his or her Involuntary Termination had he or she continued in the Company’s employ through the end of that installment period, with the pro-rated portion to be determined by multiplying that number of shares by a fraction, the numerator of which is the number of months of employment with the Company completed by the Participant during that installment period (rounded up to the next whole month) and the denominator of which is twelve (12).

(2) For each such equity award with a performance-vesting component, the pro-rated service credit calculated in accordance with Section II C.(1) will only be applied to the number of shares (if any) that would otherwise vest in that twelve (12)-month installment period based upon the attained level of the applicable performance goal(s). The Company shall have sole discretion to determine the level at which such performance goals have been attained or satisfied. No shares that vest on such a pro-rata basis under this Section II C.(2) shall be issued until such determination is made following the end of the applicable performance measurement period.

(3) Such pro-rata vesting of equity awards applies only to equity awards that are made to the Participant with an effective grant date on or after the Effective Date of the Plan and at a time when he or she is employed in a position with the Company at Grade 17 level or above. Such pro-rata vesting provisions of the Plan shall also be incorporated into the terms and provisions of the award agreements evidencing those qualifying equity awards.

(4) The shares of stock underlying any such equity award subject to Section 409A

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of the Code that vests on such a pro-rated basis in accordance with this Section II C. shall be issued in accordance with the terms of the applicable award agreement and the applicable provisions of Article III of the Plan. All other shares of stock that vest on such a pro-rated basis hereunder in connection with the Participant’s Involuntary Termination shall be issued no later than the fifteenth day of the third calendar month following the date of such Involuntary Termination; provided, however, that such issuance shall be subject to the applicable provisions of Section II C.(2) above and any shares subject to stock option grants shall not be issued until the exercise date.

D. Outplacement. Outplacement shall be provided under this Plan as follows:

(1) Outplacement in General. A Participant in this Plan may be eligible for outplacement. The outplacement services provided and the duration of such outplacement services shall be determined from time to time by the Plan Administrator.

(2) Limitation. No outplacement services will be provided beyond the close of the calendar year following the calendar year in which the Participant’s Involuntary Termination occurs.

E. Requirement of Complete And Permanent Release and Restrictive Covenants.Notwithstanding any provision of the Plan to the contrary, a Participant’s entitlement to Severance Pay, COBRA Coverage Costs, Pro-Rata Vesting of Equity Awards and Outplacement is contingent upon the Participant’s timely signing, delivery and non-revocation of a complete and permanent general release of all claims against the Company and its affiliates and related parties (the “Release”). The Release will also subject the Participant to certain confidentiality, non-solicitation, non-disparagement and non-compete covenants in such form and substance as the Company deems appropriate. A Participant’s failure to comply on a timely basis with such Release requirement shall render such individual ineligible to receive any severance pay or other benefits under the Plan.

On the date of the Participant’s Involuntary Termination or within fifteen (15) days thereafter, the Company shall furnish such Participant with a letter which describes the benefits of the Plan as applicable to the Participant (the “Severance Letter”). With the Severance Letter the Company shall also forward the appropriate form of Release to be executed by the Participant.

If age 40 or older, the Participant shall have twenty-one (21) calendar days from the date the Participant is provided with the form Release to review, sign and return that Release to the Company. However, if the Severance Pay is provided under this Plan

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in connection with an event which the Company in its discretion determines is a program affecting a group or class of Eligible Employees within the meaning of 29 USC Section 626(f)(1)(F)(ii), the Participant shall have forty-five (45) calendar days from the date the Participant is provided with the form Release to review, sign and return that Release to the Company. In either case, the Participant will have seven (7) days from the date the Participant returns the signed Release to revoke and void the Release by giving written notice of his or her intent to do so to the Company. The Release does not become effective or enforceable until the seven (7)-day revocation period has expired.

If under age 40, the Participant shall have fourteen (14) calendar days from the date the Participant is provided with the form Release to review, sign and return that Release to the Company, and such Release shall be effective and enforceable immediately upon delivery of the signed Release to the Company without any applicable revocation period.

F. Terms of Payment. Provided the Participant returns, within the applicable time period provided under Article II, Section E, the Release required to receive benefits under the Plan and does not revoke that release during the applicable revocation period, the Severance Pay will be paid in successive equal installments over a period of months equal to the total number of months taken into account in calculating the Base Pay component of the Severance Pay to which such Participant is entitled. Such installments shall be payable over the applicable period on the regularly scheduled pay dates in effect for the Company’s salaried employees, with the first such installment to be paid on the first such pay date within the seventy-five (75)-day period measured from the date of the Participant’s Separation from Service due to his or her Involuntary Termination on which the Release delivered by the Participant in accordance with Article II, Section E is effective following the expiration of the applicable maximum review/delivery/return and revocation periods to which the Participant is entitled under the Plan and any applicable law with respect to such Release, or to begin on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall the first such installment be paid later than the fifteenth day of the third calendar month following the date of the Participant’s Separation from Service. For purposes of Section 409A of the Code, the Severance Pay payable pursuant to this Section II F shall be deemed to be a series of separate payments, with each installment of the Severance Pay to be treated as a separate payment, and any such separate payments made during the period commencing with date of the Participant’s Involuntary Termination and ending with March 15 of the calendar year immediately following the calendar year in which such Involuntary Termination occurs shall constitute the Participant’s “Short-Term Deferral Payments” for purposes of Article

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III of the Plan. In no event shall the Participant have any right to control or designate the calendar year in which the payment of his or her Separation Pay shall commence.

G. Confidentiality, Non-Competition, Non-Solicitation and Non-Disparagement. In the event that the Participant violates any confidentiality, non-compete, non-solicitation or non-disparagement provisions in the Release or any other agreement between the Company and the Participant, the Participant shall not be entitled to Severance Pay, COBRA Coverage Costs, Pro-Rata Vesting of Equity Awards or Outplacement. If the Participant violates any Confidentiality, Non-Competition, Non-Solicitation or Non-Disparagement provisions in the Release or other agreement between the Company and the Participant, the Participant shall repay or return all Severance Pay, COBRA Coverage Costs and the number of shares of the Company’s common stock attributable to the Pro-Rata Vesting of Equity Awards (or the gain realized from the sale of such shares) paid or issued to the Participant, along with the value of any Outplacement provided to the Participant.

H. Other Benefits. Except as provided in this Plan or to the extent required by law or the applicable provisions of an employee benefit program, coverage under all employee benefit programs maintained by Company will cease on the date of the Participant’s termination of employment. The Participant shall, however, have such rights as are required by law or the applicable provision of an employee benefit program with respect to the Company’s employee benefit programs, including the right to elect “COBRA” coverage under the Company health benefit programs.

I. Window Benefits.The Company may establish window benefits which shall be applicable for limited periods of time and may be applicable to limited groups of Eligible Employees. The provisions of such window benefit may be more favorable or less favorable than the provision which would otherwise be applicable to the Participant in the absence of such window benefit. The window benefit provisions shall, during the period for which they are in effect, supersede any other Plan provisions. Window benefit provisions shall be contained in attached Exhibit A.

J Stock Plan Provisions. Any special provisions with respect to any Company plan which provides for the issuance or acquisition of shares of the Company’s Class A common stock (whether through stock option grants, restricted stock units, performance share unit awards or other stock-based awards) shall be provided in attached Exhibit B.

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K. Cessation of Severance Pay Upon Reemployment. A Participant who experiences a Separation from Service on or after July 1, 2012 and who is reemployed by the Company prior to the date the Participant ceases to be eligible for any further Severance Pay by reason of such Separation from Service shall receive no further Severance Pay in connection with that Separation from Service.

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ARTICLE III

DELAYED COMMENCEMENT DATE FOR SEVERANCE BENEFITS

A.Notwithstanding any provision to the contrary in Article II or any other Article of the Plan, other than Sections III B and III C below, no severance benefit payable under the Plan (or component thereof) that is deemed to constitute an item of “nonqualified deferred compensation” within the meaning of Section 409A of the Code and that is otherwise payable in connection with a Participant’s Separation from Service shall be paid to the Participant until the earlier of (i) the first day of the seventh (7th) month following the date of such Participant’s Separation from Service or (ii) the date of his or her death, if the Participant is deemed at the time of such Separation from Service to be a Specified Employee and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). Upon the expiration of the applicable delay period, all payments delayed pursuant to this Section III A, whether they were otherwise payable in installments or a lump sum, shall be paid in a lump sum to the Participant, and any remaining severance benefits shall be paid in accordance with the applicable provisions of Article II.

B.Notwithstanding Section A of this Article III, the delayed commencement date provisions of such Section III A shall not be applicable to (i) any severance payments under Article II that qualify as Short-Term Deferral Payments exempt from Code Section 409A or any other severance benefits hereunder that qualify for such exemption and (ii) the portion of a Participant’s Severance Pay, COBRA Coverage Costs and the Pro-Vesting of Equity Awards otherwise subject to Code Section 409A that does not in the aggregate exceed the dollar limit described below and that is otherwise scheduled to be paid in connection with such Participant’s Separation from Service but not later than the last day of the second calendar year following the calendar year in which such Separation from Service occurs. Accordingly, the foregoing clause (i) and (ii) payments shall be paid to the Participant as they become due and payable in accordance with the payment provisions of Article II. For purposes of clause (ii) of this Section III B, the applicable dollar limitation will be equal to two (2) times the lesser of (A) the Participant’s annualized compensation (based on his or her annual rate of pay for the taxable year preceding the taxable year of his or her Separation from Service, adjusted to reflect any increase during that taxable year which was expected to continue indefinitely had such Separation from Service not occurred) or (B) the compensation limit under Section 401(a)(17) of the Code as in effect in the year of the Separation from Service.

C.Sections A and B of this Article III shall not apply to the lump sum payment of COBRA Coverage Costs to the extent the dollar amount of that payment does not exceed the applicable dollar amount in effect under Section 402(g)(1)(B) of the Code for the calendar year in which the Participant’s Separation form Service occurs.

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D.Notwithstanding any other provision of the Plan to the contrary, no distribution shall be made from the Plan that would constitute an impermissible acceleration of payment as defined in Section 409A(3) of the Code and the Treasury Regulations thereunder.

E. No interest shall be paid on any Severance Pay or COBRA Coverage Costs for which a delayed commencement date is required in accordance with the foregoing provisions of this Article III.

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ARTICLE IV

NON-ALIENATION OF PLAN BENEFITS

Except as provided by applicable law, no Severance Pay, COBRA Coverage Costs or Pro-Rata Vesting of Equity Awards payable to any Participant under the provisions of the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be void, nor shall any such Severance Pay, COBRA Coverage Costs or Pro-Rata Vesting of Equity Awards be in any manner liable for or subject to the debts, contracts, liabilities, engagements, or torts of any Participant.

If any Participant is, in the judgment of the Administrator, unable to take care of his or her affairs for any reason whatsoever, including mental condition, illness or accident, any Severance Pay, COBRA Coverage Costs or Pro-Rata Vesting of Equity Awards payable under the Plan may be paid to the guardian or other legal representative of such Participant or to such other person or institution who, in the opinion of the Administrator, is then maintaining or has custody of such Participant. Such payment shall constitute a full discharge with respect thereto and the Administrator shall have sole discretion in determining to whom such payment shall be made and in changing the payee from time to time.

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ARTICLE V

FUNDS FROM WHICH PLAN BENEFITS ARE PAYABLE

The Plan shall be unfunded. All Severance Pay and COBRA Coverage Costs intended to be provided under the Plan shall be paid from time to time from the general assets of the Company and paid in accordance with the provisions of the Plan.

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ARTICLE VI

CLAIM PROCEDURE

The plan administrator shall establish a claims procedure which satisfies the requirements of 29 CFR Section 2560.503-1 as applicable to a severance pay plan subject to ERISA. The Plan Administrator has full and complete discretionary authority to decide any matter presented through the claims procedure and the final decision by the Plan Administrator shall be binding on all parties to the maximum extent allowed by law.

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ARTICLE VII

THE ADMINISTRATOR

The general administration of the Plan shall be vested in the Administrator who shall be the Plan Administrator for purposes of ERISA.

The Administrator may employ counsel, actuaries and agents and engage such clerical, medical and actuarial services as the Administrator deems expedient.

All expenses incurred by the Administrator in the administration of the Plan, including compensation of the counsel, agents and agencies as the Administrator may appoint or employ, shall be paid by the Company.

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ARTICLE VIII

ACCOUNTS AND RECORDS

The Administrator shall keep such accounts and records as it may deem necessary or proper in the performance of its duties as administrator of the Plan.

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ARTICLE IX

INTERPRETATION OF PROVISIONS

The Administrator shall have full and complete discretionary power and authority to determine the amount of any Severance Pay, COBRA Coverage Costs and Pro-Rata Vesting of Equity Awards, if any, payable under the Plan and all other matters arising in the administration, interpretation and application of the Plan.

The Plan is intended to comply with the applicable requirements of Code Section 409A and the Treasury Regulations thereunder. Payments to Plan Participants are also intended, where possible, to comply with the “short term deferral exception” and the “involuntary separation pay exception” to Code Section 409A. Accordingly, the provisions of the Plan applicable to Severance Pay, COBRA Coverage Costs and Pro-Rata Vesting of Equity Awards and the determination of the Participant’s Separation form Service due to his or her Involuntary Termination shall be applied, construed and administered so that those benefits qualify for one or both of those exceptions, to the maximum extent allowable. However, to the extent any payment or benefit under the Plan is deemed to constitute an item of deferred compensation subject to the requirements of Code Section 409A, the provisions of the Plan applicable to that payment or benefit shall be applied, construed and administered so that such payment or benefit is made or provided in compliance with the applicable requirements of Code Section 409A. In addition, should there arise any ambiguity as to whether any other provisions of the Plan would contravene one or more applicable requirements or limitations of Code Section 409A and the Treasury Regulations thereunder, such provisions shall be interpreted, administered and applied in a manner that complies with the applicable requirements of Code Section 409A and the Treasury Regulations thereunder.

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ARTICLE X

AMENDMENT OF PLAN

The Company’s Board of Directors or an authorized Board committee may, from time to time and at any time, amend the Plan and any of the benefits set forth in the Plan.

Any amendment to the Plan may effect a substantial change in the Plan and may include (but shall not be limited to) (1) a reduction to the level of Severance Pay, COBRA Coverage Costs, Pro-Rata Vesting of Equity Awards and/or other benefits payable under the Plan, (2) a provision for the participation in the Plan by any subsidiary of the Company, (3) a change in the class or classes of persons to whom any Severance Pay, COBRA Coverage Costs and/or Pro-Rata Vesting of Equity Awards may be or become payable, and (4) any change deemed by the Company to be necessary or desirable to make the Plan conform to, or to enable Participants to obtain tax benefits under, any existing or future laws or rules or regulations thereunder.

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ARTICLE XI

DISCONTINUANCE OF PLAN

The Plan may be terminated at any time and for any reason by action of the Company’s Board of Directors or an authorized Board committee.

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ARTICLE XII

NO CONTRACT OF EMPLOYMENT

The adoption and maintenance of the Plan shall not be deemed to constitute a contract between the Company and any Eligible Employee or to be a consideration for, or an inducement or condition of, the employment of any person. Nothing herein contained shall be deemed to give any Eligible Employee the right to be retained in the service of the Company or to interfere with the rights of the Company to discharge any Eligible Employee at any time. No Eligible Employee shall, because of the Plan, become entitled to any offer of relocation, lateral transfer, downgrade with pay protection, or any other term of employment.

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ARTICLE XIII

FORMS; COMMUNICATIONS

A.The Administrator shall provide such appropriate forms as it may deem expedient in the administration of the Plan.

B.All communications concerning the Plan shall be in writing addressed to the Administrator at such address as the Administrator may from time to time designate, and no such communication shall be effective for any purpose unless received by the Administrator.

C.The Administrator shall issue a summary plan description to the Eligible Employees describing the Plan. In the event of any conflict between the terms of the Plan, as set forth in the Plan and as set forth in the summary plan description, the Plan shall control.

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ARTICLE XIV

GOVERNING LAW

The Plan shall be governed by and construed in accordance with the laws of the State of Arizona, except to the extent that the laws of the United States (including ERISA) take precedence and preempt state laws.

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EXHIBIT A

WINDOW BENEFITS

Window Benefits. Any Participant whose Involuntary Termination occurs on or after July 1, 2012 and on or prior to August 31, 2014 due to a Reduction in Force (as defined below) and who otherwise satisfies all the requirements to receive benefits pursuant to this Plan (including, but not limited to, the execution of a complete and permanent release and the fulfillment of any confidentiality, non-solicitation or non-disparagement obligations) shall receive the following benefits pursuant to this Plan:

(1)Increased Weeks of Severance Pay. Each Participant covered by these window benefit provisions who has completed more than ten (10) Years of Full Time Continuous Service shall receive one additional week of Severance Pay for each Year of Full Time Continuous Service, over ten (10), completed by the Participant at Separation from Service. Years of Full Time Continuous Service shall exclude any periods prior to the beginning of the Participant’s most recent period of continuous full time service. Years of Full Time Continuous Service shall be measured in full Years of Full Time Continuous Service only and partial Years of Full Time Continuous Service shall be disregarded for purposes of this Plan.

(2)COBRA Coverage Costs. Each Participant covered by these window benefit provisions who is a Grade 17, 18 or 19 Eligible Employee shall receive the COBRA Coverage Costs benefit provided by Subsection B of this Article II in the same manner and subject to the same conditions as a Participant who is Grade 20 or above. The COBRA Coverage Costs for Participants shall be based on the number of full months of Base Pay received, with each four (4) weeks of Base Pay received pursuant to this Exhibit A equaling one month.

(3)Bonus. A Participant covered by these window benefit provisions shall be entitled to a cash bonus based on the actual Company results for the financial and non-financial measures applicable to that bonus and based at target-level attainment for department measures, prorated for the period the Participant actually works during the measurement period applicable to that bonus. Payment of bonus (if any) shall occur at the time the bonus is ordinarily paid to similarly situated active employees after the results on which the bonus is based have been determined and shall be subject to the Company’s collection of all applicable withholding taxes.

(4)Restricted Stock Units. Each Participant covered by these window benefit provisions shall, solely for purposes of the service-vesting provisions in effect for any restricted stock units issued by the Company to such Participant and outstanding at the time of his or her Separation from Service, receive additional service credit of sufficient magnitude that, when added to any other service-vesting credit to which the Participant becomes entitled under each such outstanding restricted stock unit award upon his or her Separation from Service, will result in a cumulative service credit under that award such that the Participant will be deemed to have completed an additional year (365 days)

A-1

of service at the time of the Participant’s Separation from Service. The shares of the Company’s Class A common stock subject to the restricted stock units which become vested pursuant to this Subsection shall be issued in accordance with the applicable provisions of Section C.(4) of Article II of the Plan. However, such service-vesting credit shall not apply to any restricted stock units that are still subject to any performance-vesting condition or conditions at the time of Participant’s Separation from Service.

For purposes of the foregoing window benefits, a Reduction in Force shall mean the reduction in work force due to lack of work, reorganization, elimination of position(s), permanent shutdown of a facility, office, department or subdivision of the Company, permanent reduction of a significant number of jobs within a facility that results in layoffs with no anticipation of recall to work, or economic conditions, including a sale of all or a portion of the assets of the Company or other business sale transaction by the Company. However, a former Eligible Employee shall not be treated as having incurred a Termination of Employment due to a Reduction in Work Force:

(1)if, in connection with an asset sale or other business sale transaction, the Eligible Employee is offered employment by the purchaser of such assets or business unless the distance between the principal place of his employment with the purchaser and his principal residence is 25 miles or more greater than the distance between his former principal place of employment with the Company and his principal residence; or

(2)if the Eligible Employee has been offered an alternate position by the Company unless the distance between the alternate position’s principal place of employment and his principal residence is 25 miles or more greater than the distance between his former principal place of employment with the Company and his principal residence.

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EXHIBIT B

STOCK PLAN PROVISIONS

A Participant in the Plan shall be subject to such special provisions with respect to Company plans which provide for the issuance or acquisition of shares of the Company’s Class A common stock (whether pursuant to stock option grants, restricted stock units, performance share unit awards and other stock-based awards) as are determined from time to time by the Compensation Committee of the Company’s Board of Directors in its sole discretion.

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EX-10.46

Exhibit 10.46

January 14, 2013 (As Amended August 23, 2013)

Dr. John G. Sperling

Dear John:

This letter describes the post-retirement benefit arrangements that we have put in place in connection with your retirement from your employment with Apollo Group, Inc. (the “Company”) on December 31, 2012 that are, or potentially could be, covered by IRS Code Section 409A.

Medical Care/Dental Care Coverage

The Company has agreed to provide you with reimbursement, on a fully-taxable basis, for the reasonable out-of-pocket costs you incur to obtain continued medical and dental care coverage under the Company’s self-insured employee group health plan.

To obtain the reimbursement, you will need to submit appropriate documentation of each payment you make for such health care/dental care coverage within sixty (60) days after payment, and the Company shall reimburse you for each such payment with thirty (30) days after receiving the appropriate documentation for that payment. The reimbursements will be reported as W-2 wages and will be subject to the Company’s collection of all applicable withholding taxes.

This reimbursement arrangement will Continue in effect until your death, unless the arrangement would otherwise result in penalties, excise taxes or other substantial liability to the Company, the Company’s employees or to you due to changes to applicable tax laws, regulations or guidance issued under the new Patient Care and Affordable Care Act or any other applicable law or regulation, in which event we will meet and reasonably discuss the manner in which this reimbursement arrangement may be continued, if at all, in a mutually agreeable manner without resulting in penalties, excise taxes or other substantial liability to the Company, the Company’s employees or to you.

Chairman Emeritus Status

The Board has designated you as Chairman Emeritus following your retirement as Executive Chairman and Board member on December 31, 2012. In your role as Chairman Emeritus, you will not have any job duties or responsibilities, but you will have the right to attend all Board meetings and to have access to the materials provided Board members in connection with those meetings.

Business-Related Travel Expenses

As Chairman Emeritus, you are entitled to reimbursement for certain business-related travel expenses, including aircraft travel to Board meetings and Chairman’s meetings, provided that the travel for which such expenses are incurred has been pre-approved by the Chief Executive Officer of the Company. In order to obtain the business travel reimbursement, you will need to submit appropriate documentation supporting each expense for which you are seeking reimbursement within sixty (60) days after such expense was incurred, and the Company will reimburse you for each such approved expense with thirty (30) days after receipt of the appropriate documentation for that expense.

Conditions to Reimbursements

The following conditions shall govern any reimbursements that are to be made to you pursuant to the terms of this letter:

- Any reimbursement amounts to which you may become entitled pursuant to this letter in each calendar year shall not reduce the amounts to which you may become entitled hereunder in any other calendar year.

- None of your rights to reimbursement hereunder may be liquidated or exchanged for any other benefit.

- In no event shall any expense be reimbursed later than the close of the calendar year following the calendar year in which that expense is incurred.

If you have any questions concerning these post-retirement benefit arrangements, please feel free to contact me.

Sincerely,

Fred Newton

cc: Sean Martin

EX-10.55

Exhibit 10.55

Apollo Group, Inc.

Gregory W. Cappelli

Co-CEO

June 25, 2012

Joseph L. D’Amico

[Address Redacted.]

Dear Joe:

I am very pleased to inform you that in recognition of the valuable services you have rendered and the significant contribution you have made during this important transition period, the Company has decided to extend the term of your Amended and Restated Employment dated May 18, 2010 (the “Employment Agreement”) for the additional one-year extension period through August 31, 2013 (the “Extension Period”).

Your compensation during the Extension Period will be as follows:

Cash Compensation: Your rate of annual base salary will remain at the current rate of $525,000, and your target annual bonus for the Company’s 2013 fiscal year will remain at 100% of such base salary.

Long-Term Equity Compensation: For the 2013 fiscal year, you will also be granted long­ term equity incentive compensation with an aggregate grant date value that will bring your total direct compensation for such year (salary, target bonus and such equity award value) to at least $5,000,000. Your equity award will be comprised of stock option grants, restricted stock units tied to an after-tax net income goal for the 2013 fiscal year and performance share units tied to adjusted free cash flow and net revenue growth over a three year performance period coincident with the Company’s 2013, 2014 and 2015 fiscal years. The actual mix of your equity award among those three components and the applicable performance goals will be determined by the Compensation Committee of the Company’s Board of Directors at its July 2, 2012 meeting and will, in general, track the same mix and performance goals in effect for the equity awards to be made at that time to the Company’s other senior executive officers. In addition, your equity awards will have the same special vesting and exercisability provisions that are in effect for the equity awards made to you for the 2012 fiscal year, as required pursuant to the terms of your Employment Agreement.

4025 SOUTH RIVERPOINT PARKWAY PHOENIX, ARIZONA 85040 PHONE 312-660-2020 GREGCAPPELLI@APOLLOGRP.EDU

Joseph L. D’Amico

June 25, 2012

Page 2

The terms and provisions of your Employment Agreement will continue in full force and effect during the Extension Period. However, please note that in accordance with the terms of your Employment Agreement, you will not be entitled to any cash severance benefits upon the termination of your employment for any reason following the expiration of the Extension Period.

All of us at Apollo Group look forward to working with you during the Extension Period. Should you have any questions or concerns regarding your continued employment during the Extension Period, please feel free to discuss them with me.

Sincerely

/s/ Gregory W. Cappelli

GREGORY W. CAPPELLI

CO-CHIEF EXECUTIVE OFFICER

ACCEPTANCE

I hereby acknowledge receipt of the foregoing notice of the one-year extension of my May 18, 2010 Amended and Restated Employment Agreement with Apollo Group, Inc. and the terms and provisions that will govern my continued employment during that extension period. I hereby accept and agree to those terms and provisions.

/s/ Joseph L. D’Amico

JOSEPH L. D’AMICO

DATED: JUNE 27, 2012

EX-10.56

Exhibit 10.56

SEPARATION AGREEMENT

And

GENERAL RELEASE AND WAIVER OF CLAIMS

This SEPARATION AGREEMENT AND GENERAL RELEASE AND WAIVER OF CLAIMS (hereinafter “Agreement”) is entered into between Joseph D’Amico (hereinafter “Employee”) and the Apollo Group, Inc., University of Phoenix, Inc., and each of their corporate affiliates, subsidiaries, owners, directors, officers, agents, employees and assigns (collectively referred to herein as “Company” or “Apollo Group”).

Employee’s employment with the Company is hereby terminated unilaterally by the Company without Cause (as defined in Employee’s Amended and Restated Employment Agreement, with the effective date of May 18, 2010, and the letter dated June 25, 2012, under which Employee’s agreement was extended through August 31, 2013 (collectively, the “EmploymentAgreement”)) effective on August 31, 2013 (the “Separation Date”). Upon Employee’s separation from the Company, Employee shall be paid all earned but unpaid base salary and all accrued but unpaid vacation pay. The Separation Date shall be Employee’s last day as an employee of the Company, and Employee will no longer perform any further job duties with the Company or render services in any other capacity to the Company other than in a limited consulting role under which Employee is to render services that will not exceed twenty percent (20%) of the average level of services Employee rendered the Company during the immediately preceding thirty-six (36) months of employment with the Company prior to termination. Accordingly, on the Separation Date, Employee shall incur a separation from service for purposes of Section 409A of the Internal Revenue Code (“Section 409A”) on the Separation Date. Any compensation deferred by Employee pursuant to one or more non-qualified deferred compensation plans of the Company subject to Section 409A shall be paid at such time and in such form of payment as set forth in each applicable plan governing the payment of any such deferred amounts.

Employee hereby acknowledges and agrees that the severance benefits set forth in Attachment A to this Agreement are being provided pursuant to the terms of Employee’s Employment Agreement, in exchange for the general release and other promises and covenants of Employee set forth in this Agreement and that in the absence of such release, promises and covenants, Employee would not otherwise be entitled to those severance benefits. Employee further acknowledges and agrees that the additional benefits set forth in Attachment A, other than the severance benefits, are also being provided in exchange for the general release and other promises and covenants of Employee set forth in this Agreement and that in the absence of such release, promises and covenants, Employee would not otherwise be entitled to those other benefits.

Accordingly, in consideration of the severance benefits and the other benefitsthat Employee will receive, as set forth in Attachment A, the sufficiency of which Employee hereby acknowledges, except as set forth below, Employeehereby agrees to waive any and all potential claims against Apollo Group and/or any of its corporate affiliates, subsidiaries, owners, directors, officers, agents, employees and assigns arising out of any event occurring prior to Employee’s execution of this Agreement including, without limitation, any event associated with Employee’s employment by Apollo Group and Employee’s separation from that employment.

This FULL RELEASE AND WAIVER OF CLAIMS (the “Release”) includes, without limitation, any claim arising under the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Older Workers Benefit Protection Act, the Civil Rights Acts of 1991, the Arizona Civil Rights Act, the Illinois Human Rights Act, the Labor Management Relations Act, the Americans with Disabilities Act, as amended, the Pregnancy Discrimination Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, the Worker Adjustment and Retraining Notification Act,

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and any other federal, state or local statute or common law cause of action including, without limitation, claims for breach of contract, compensation or wages, wrongful discharge, retaliation, tort, violation of public policy, infliction of emotional distress, personal injury or any claim for attorneys’ fees and/or costs. Except as set forth below, this Release also includes, without limitation, any claim arising under any employee compensation or benefit plan, policy, program or arrangement (whether written or oral), including, but not limited to the Senior Executive Severance Pay Plan and the Employment Agreement (except as specifically set forth in Attachment A. Employee understands that this Release precludes Employee from recovering any monetary relief as a result of any charge, lawsuit, or other proceeding brought by Employee or on Employee’s behalf arising out of or related to Employee’s employment with Apollo Group and separation from that employment.

The waiver and release contained in this General Release does not apply to any claim which, as a matter of law, cannot be released by private agreement. If any provision of the waiver and release contained in this General Release is found to be unenforceable, it shall not affect the enforceability of the remaining provisions and a court shall enforce all remaining provisions to the full extent permitted by law.

The following claims are specifically and expressly excluded from the foregoing Release: (i) claims for workers’ compensation benefits; (ii) claims for unemployment compensation; (iii) health insurance benefits under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”); (iv) claims with respect to vested benefits under a retirement plan governed by the Employee Retirement Income Security Act (“ERISA”) or any other vested and accrued benefits under the terms of any other Apollo Group employee benefit plan, (v) claims with respect to any Accrued Obligations (as defined in the Employment Agreement) or the bonus payable for the 2013 fiscal year under the Executive Officer Performance Incentive Plan; (vi) claims with respect to the Employee’s right to indemnification pursuant to Section 15 of the Employment Agreement or rights under Section 13(c) of the Employment Agreement; or (vii) claims that do not arise until after the date of the execution of this Agreement, whether such claim is under this Agreement, the Employment Agreement, or otherwise.

Employee understands and affirms that this FULL RELEASE AND WAIVER OF CLAIMS applies to any claims that may arise under the Age Discrimination in Employment Act (“ADEA”). Employee acknowledges that Employee is knowingly and voluntarily waiving and releasing any rights Employee may have under the ADEA. Employee also acknowledges that the consideration given for the waiver and release contained in this Agreement is in addition to anything of value to which Employee was already entitled. Employee acknowledges that the Company has advised Employee to consult with an attorney and discuss this Agreement and the Release set forth herein prior to executing this Agreement. Employee further acknowledges that Employee has been advised by this writing, as required by the Older Workers’ Benefit Protection Act (“OWBPA”), that this waiver and release do not apply to any rights or claims that may arise after the Effective Date (defined below) of this Agreement.

Pursuant to the OWBPA, Employee understands and affirms that, by signing this Agreement, Employee has been given twenty-one (21) calendar days measured from the Separation Date within which to consider this Agreement and the Release set forth herein. Should Employee decide not to use the full twenty-one (21)-calendar day review period, then Employee knowingly and voluntarily waives any claims that Employee was not in fact given that period of time or did not use the entire twenty-one (21) calendar days to consult an attorney and/or consider this Agreement and Release. Employee further understands that Employee may revoke this Agreement at any time within seven (7) calendar days following Employee’s execution of the Agreement. Written revocation is to be provided within the seven (7) calendar day revocation period to Apollo Group, Inc., Attn: Chief Human Resources Officer, 4025 South Riverpoint Parkway, Phoenix, Arizona 85040. This Agreement shall not become binding and enforceable until the seven (7) calendar day revocation period has expired.

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Employee may not sign this Agreement prior to Employee’s Separation Date. Additionally, in order for this Agreement to become effective and for Employee to become entitled to receive the pay and benefits set forth in Attachment A, Employee must sign and return this Agreement to the Company not later than twenty-one (21) calendar days following Employee’s Separation Date set forth above and not revoke it.

Employee further covenants and agrees not to disclose to anyone the negotiations, conditions or terms of this Agreement or the fact that this Agreement exists, except to Employee’s attorney, immediate family, tax advisor, or as may be required by law.

Employee agrees to comply with his or her obligations not to use or disclose the Trade Secrets and Proprietary Information of the Company as set forth below:

a. “Trade Secrets” shall be defined as information belonging to the Company or licensed by it, including, but not limited to, technical or non-technical data, formulae, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans, or lists of actual or potential customers or suppliers which: (1) derive economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons or entities who can obtain economic value from their disclosure or use; and (2) are the subject of efforts that are reasonable under the circumstances to maintain their secrecy.

b. “Proprietary Information” shall be defined as any information that was or will be developed, created, or discovered by or on behalf of the Company, or which became or will become known by, or was or is conveyed to the Company. “Proprietary Information” includes information concerning the organization, business and finances of the Company or of any third party which the Company is under an obligation to keep confidential or that is maintained by the Company as confidential, including (without limitation):

(i) the Company’s Lead List which is comprised of prospective students;

(ii) data and information on current and prospective corporate accounts, including, but not limited to, the identity of the corporate accounts, the decision makers or decision influencers, the buying criteria of the accounts and programs for those accounts;

(iii) information with respect to past, current and prospective merger, acquisition, disposition, joint venture and other transactions and opportunities, including, but not limited to, the identity of the transaction targets or prospects, the decision makers or decision influencers with respect to the transactions, the proposed terms and conditions of any such past, current or prospective transactions or opportunities, including the status thereof, the management process, training materials, scripts, programs and preferred responses to features and benefits provided to enrollment counselors, academic counselors and finance counselors;

(iv) the management process, training materials, scripts, programs and preferred responses to features and benefits provided to enrollment counselors, academic counselors and finance counselors;

(v) the certification training materials and processes for the certification of the Company’s student advisors (known as the ACU online learning system program), including, but not limited to, the tests taken, materials provided and course work;

(vi) the information and data contained in the Company’s enrollment data system, including all

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monthly enrollment reports;

(vii) salary, terms of employment, length of employment and performance review information on the faculty members and other employees of the Company, all business models and financial information, data and materials of the Company not otherwise available to the general public through the Company’s Annual Report or otherwise;

(viii) all market research or works for hire materials, including, but not limited to, industry data, demographics, company profiles and/or specific consumer behavior information, all monthly financial, statistical and operational information and reports, and all other information concerning enrollment by campus, profit and loss per campus and the terms of any lease;

(ix) all monthly financial statements, including, but not limited to, any materials prepared for the Board of Directors;

(x) all internally developed source code and the techniques and processes embodied therein, including, but not limited to, modifications to existing source codes for student information systems (such as Galaxy, Campus Tracking, OSIRIS and eCampus), academic systems (such as rEsource and OnLine Learning System (OLS), proprietary modifications to packaged applications (such as PeopleSoft, Oracle Financials and ADP HRizon) and all future internally developed source code;

(xi) information provided to the Company from a third party under a non-disclosure agreement; and

(xii) the “Personally Identifiable Information” of any individual that is known or accessible as a result of employment with the Company. “Personally Identifiable Information” includes, but is not limited to information that is directly associated with a specific person such as a name, address, telephone number, e-mail address, or information about activities directly linked to that person. It also includes, but is not limited to, “Education Records” as that term is defined in the Family Educational Rights and Privacy Act of 1974, as amended.

c. Employee will treat as confidential and will not, without the prior written approval of the Company, use, publish, disclose, copyright or authorize anyone else to use, publish, disclose or copyright, any information which constitutes Trade Secrets of the Company, whether or not the Trade Secrets are in written or tangible form.

d. Employee will treat as confidential and will not, without the prior written approval of the Company, use, publish, disclose, copyright or authorize anyone else to use, publish, disclose or copyright, any Proprietary Information for three (3) years following the Separation Date, whether or not the Proprietary Information is in written or other tangible form.

Employee acknowledges and agrees that he is obligated to comply, and will comply, with all post-termination restrictive covenants set forth in Paragraph 10 of his Employment Agreement, which covenants are hereby incorporated into this Agreement by reference.

If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable for whatever reason, the remaining provisions of this Agreement shall nevertheless continue in full force and effect without being impaired in any manner whatsoever.

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Except to the extent otherwise provided in the Employment Agreement, Employee is and shall be solely responsible for any federal, state and local taxes that may be owed by Employee by virtue of the receipt of any portion of the monetary payment and other benefits provided under this Agreement.

Employee agrees that Employee will not make any disparaging, negative or untrue statements about Apollo Group, including, without limitation, any statements about Apollo Group, its products, business affairs or officers, directors or employees. The Company agrees that it will not make, and agrees to use its best efforts to cause the officers, directors and spokespersons of the Company to refrain from making, any public statements (or authorizing any statements to be reported as being attributed to the Company), that are derogatory or which may tend to injure the reputation or business of Employee, and the Company shall instruct such officers, directors and spokespersons to refrain from making such statements.

Employee also agrees that if any claim is asserted by or against the Company as to which Employee has relevant knowledge, Employee will reasonably cooperate with the Company in the prosecution or defense of that claim, including by providing truthful information and testimony as reasonably requested by the Company. In that regard, the Company agrees to reimburse Employee for any reasonable expenses actually incurred by Employee in providing such cooperation and, in situations where Employee is not a named defendant in the claim, the Company agrees to provide Employee a reasonable rate of pay per hour for time spent in providing such services. The following conditions shall govern any reimbursements that are to be made to Employee pursuant to the terms of this Agreement:

- Any such expenses must be approved in advance by the Company before they are incurred by Employee.

- Any reimbursement amounts to which Employee may become entitled pursuant to this Agreement in each calendar year shall not reduce the amounts to which Employee may become entitled hereunder in any other calendar year.

- None of Employee’s rights to reimbursement hereunder may be liquidated or exchanged for any other benefit.

- In no event shall any expense be reimbursed later than the close of the calendar year following the calendar year in which that expense is incurred.

Additionally, the Company shall indemnify Employee to the maximum extent permitted by Section 10-856 of the Arizona Revised Statutes, Article 5 of the University of Phoenix Bylaws, and Section 5.14 of the Apollo Bylaws in regard to Employee’s service as an officer and employee of the Company.

Within seven (7) days of the Separation Date, Employee shall return to the Company all Company property in Employee’s possession or control including, but not limited to, identification badges, business cards, credit cards, telephone cards, cell phones, BlackBerrys, pagers and all copies of all records, papers and documents made or kept by Employee relating to the business of the Company, provided that Employee may retain his lap top computer and mobile phone, subject to: (i) Consultant changing his mobile account service over to a personal account, and (ii) removal of any Company confidential or proprietary information and any programs or applications as may be required by the Company’s license for such program or application, at the time his Consulting Agreement ends.

The construction, interpretation and performance of this Agreement shall be governed by the laws of the State of Arizona. The arbitration provisions of Section 20 of the Employment Agreement shall also apply to any disputes under this Agreement, except that any claims related to a breach of Employee’s obligations

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under this Agreement not to use or disclose the Trade Secrets and Proprietary Information of the Company will be handled as provided in Section 16 of the Employment Agreement.

This Agreement and the Employment Agreement constitute the sole and entire agreement between the parties regarding the subject matter hereof, and supersede any and all understandings and agreements made prior hereto, if any. Nothing in this Agreement supersedes or replaces any of Employee’s rights under his Employment Agreement that survive termination pursuant to Section 17 of the Employment Agreement. There are no collateral understandings, representations, or agreements other than those contained therein. No provision of this Agreement shall be amended, waived or modified except by an instrument in writing, signed by the parties hereto. It is understood and agreed that the offering of this Agreement by Apollo Group is not to be construed as an admission of any liability on its part to Employee, other than to comply with the terms of this Agreement.

Employee has read and understands the contents of this Agreement and affirms that no representations other than those contained herein have been made to induce or influence Employee’s execution of the Agreement, and that Employee executes this Agreement knowingly and voluntarily and upon independent advice of Employee’s own choosing.

/s/ Joseph L. D’Amico		9/12/2013
JOSEPH L. D’AMICO		Date
APPROVED AND ACCEPTED:
APOLLO GROUP, INC.
By:	/s/ Fred Newton	9/16/2013
	FRED NEWTON	Date
	SVP HUMAN RESOURCES

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ATTACHMENT A

In exchange for executing the attached Separation Agreement and General Release and Waiver of Claims and not revoking such Separation Agreement and General Release and Waiver of Claims during the applicable seven (7)-day revocation period so that such agreement and release become effective and enforceable, Employee understands that Employee will receive the following separation benefits:

A. SEVERANCE BENEFITS PURSUANT TO THE EMPLOYMENT CONTRACT

1. Severance Pay. Employee shall be entitled to Severance Pay in the gross amount of Two Million Six Hundred Forty-One Thousand Dollars and 00/100 Cents ($2,641,000.00), less lawfully required withholdings and any other agreed to deductions, which represents two (2) times Employee’s base salary in the aggregate amount of $1,050,000, plus two (2) times the average of Employee’s actual annual bonuses for the three fiscal years immediately preceding the fiscal year in which Employee’s termination of employment occurs in the aggregate amount of $1,591,000, as calculated pursuant to the terms of Employee’s Employment Agreement.

Such Severance Pay will be paid to Employee in a series of successive equal installments over the one-year period measured from the date of Employee’s Separation Date, beginning with the first regular pay day following the expiration of the maximum twenty-one (21)-day review period and seven (7)-day revocation period in effect for the general release Employee is required to deliver pursuant to the attached Separation Agreement and General Release and Waiver of Claims as a condition for the severance benefits set forth in this Attachment A (such payment timing to be independent of when the Separation Agreement and General Release and Waiver of Claims actually becomes effective within such periods), but subject to any required holdback under Section 13(b) of Employee’s Employment Agreement. Subsequent installments will be paid on successive regular pay days for the Company’s salaried employees during the remainder of such one-year period.

2. COBRA Reimbursement. Provided Employee and/or his spouse and dependents are eligible and timely elect to continue their health care coverage under the Company’s group health plan pursuant to their rights under COBRA, the Company will reimburse Employee for the costs he incurs to obtain such continued coverage for himself and his spouse and eligible dependents (collectively, the “Coverage Costs”) until the earliest of (A) the end of the eighteen (18)-month period measured from the Separation Date, (B) the date that Employee and/or his eligible dependents are no longer eligible for COBRA coverage, and (C) the date that Employee becomes eligible for such coverage under the health plan of any new employer (Employee agrees to provide the Company with written notice of such eligibility within ten (10) calendar days). In order to obtain reimbursement for such Coverage Costs, Employee must submit appropriate evidence to the Company of each periodic payment within sixty (60) days after the required payment date for those Coverage Costs, and the Company shall, within thirty (30) days after such submission, reimburse Employee for that payment. During the period such medical care coverage remains in effect hereunder, the following provisions shall govern the arrangement: (a) the amount of Coverage Costs eligible for reimbursement in any one calendar year of such coverage shall not affect the amount of Coverage Costs eligible for reimbursement in any other calendar year for which such reimbursement is to be provided hereunder; (ii) no Coverage Costs shall be reimbursed after the close of the calendar year following the calendar year in which those Coverage Costs were incurred; and (iii) Employee’s right to the reimbursement of such Coverage Costs cannot be liquidated or exchanged for any other benefit. To the extent the reimbursed Coverage Costs constitute taxable income to Employee, the Company shall report the reimbursement as taxable W-2 wages and collect the

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applicable withholding taxes, and any remaining tax liability shall be Employee’s sole responsibility.

B. OTHER BENEFITS

1. Bonus. Employee shall be entitled to a cash bonus for the 2013 fiscal year under the Executive Officer Performance Incentive Plan based on the actual Company results for the financial and non-financial measures applicable to that bonus. Payment of such bonus shall occur at the time the bonus for the 2013 fiscal year is ordinarily paid to similarly situated active employees after the results on which the bonus for the 2013 fiscal year is based have been determined, but in no event later than November 15, 2013, and shall be subject to the Company’s collection of all applicable withholding taxes.

2. No Repayment Obligation. Under the terms of Employee’s special cash retention award agreement dated March 29, 2013 and accepted by Employee (“Award”), Employer agrees that Employee is not obligated to repay the $100,000 first installment payment that he received under that Award; provided that Employee has executed the attached Separation Agreement and General Release and Waiver of Claims and not revoked it within the applicable time frames set forth in that Agreement.

3. Payment of Unvested Cash Retention Bonuses. Employee will receive a lump sum cash payment of $450,000.00 under the terms of Employee’s special cash retention award agreements dated November 2, 2012 and March 29, 2013 and accepted by Employee (“Award”). Such payment will be made within sixty (60) days following Employee’s Separation Date; provided that Employee has executed the attached Separation Agreement and General Release and Waiver of Claims and not revoked it within the applicable time frames set forth in that Agreement.

4. Legal Fees. The Company will reimburse Employee for reasonable legal fees incurrent in connection with this Agreement, the Employment Agreement and the proposed consulting agreement between Employee and the Company up to a maximum dollar amount of $15,000. Employee must submit documentation of such legal fees no later than sixty (60) days following his Separation Date and the legal fees reimbursement will be payable no later than thirty (30) following the submission of such documentation.

5. Equity Awards. Employee’s existing equity awards will continue to vest and, in the case of stock option awards, continue to be eligible for exercise, on their existing terms as governed by the 2000 Stock Incentive Plan, as amended and restated from time to time, and the terms of Employee’s award agreements.

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/s/ Joseph L. D’Amico		9/12/2013
JOSEPH L. D’AMICO		Date
APPROVED AND ACCEPTED:
APOLLO GROUP, INC.
By:	/s/ Fred Newton	9/16/2013
	FRED NEWTON	Date
	SVP HUMAN RESOURCES

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EX-10.57

Exhibit 10.57

CONSULTING AGREEMENT

This Consulting Agreement (the “Agreement”) is between Joseph D’Amico (“Consultant”) and Apollo Group, Inc., an Arizona corporation (“the “Company”).

WHEREAS, Company desires to retain the services of Consultant as an independent contractor so that his professional skills, abilities and experience will be available to Company for a defined, limited period,

WHEREAS, Consultant is willing to perform in such a capacity on the terms and conditions hereinafter set forth; and

WHEREAS, Consultant represents that he has the requisite skills, abilities and experience to provide the services desired by Company;

NOW, THEREFORE, IN CONSIDERATION for the mutual promises and covenants contained herein, the parties to this Agreement hereby agree as follows:

1.Consulting Services.Effective as of September 1, 2013 (the “Effective Date”), the Company hereby engages Consultant as an independent contractor to provide the following services: Developing new senior level relationships within Fortune 500 companies, assisting the Company in maintaining strong relationships with senior political and regulatory leaders throughout the world, and other advisory and consulting services as may be requested by the Chief Executive Officer and/or other senior executive officers of the Company from time to time (the “Services”).

2.Term of Agreement.This Agreement shall commence as of the Effective Date and shall continue until August 31, 2014 (the “Consultancy Period”), unless: (i) earlier terminated pursuant to a right of termination specified in this Agreement or (ii) extended pursuant to a written agreement or amendment executed by each party hereto. Consultant’s transition from an employee of the Company to a consultant shall constitute a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended.

3.Compensation for Consulting Services.

(a)    During the Consultancy Period, Consultant shall be paid $500.00 per hour for each hour spent in providing the Services under this Agreement and a pro-rated hourly amount for partial hours so spent; providedthat Consultant complies with the terms, conditions and restrictions of this Agreement. For the avoidance of doubt, travel time is not considering time spent in providing Services and Consultant will not receive a fee for those hours.

(b)    The level of services that Consultant will be required to perform under this Agreement shall be determined by the Company and will not exceed twenty percent (20%) of the average level of services Consultant provided to the Company as an employee during thirty-six (36) month period immediately preceding Consultant’s termination of employment as an employee of the Company.

(c)    The fees shall be paid to Consultant within ten (10) business days after the end of each calendar month of services. Consultant shall issue invoices to the Company for services provided and business-related out-of-pocket expenses incurred under this Agreement.

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4.Compensation for Services as a Non-Employee Board Member.Consultant shall continue to serve as a non-employee director of the University of Phoenix, Inc. Board of Trustees and the Western International University Board of Trustees. The Company shall compensate Consultant for his services to these boards consistent with the amount of compensation paid to other non-employee members of these boards and payable in the same manner as compensation is paid to other non-employee members of these boards.

5.Reimbursement of Expenses.

(a)    The Company shall reimburse Consultant for all reasonable out-of-pocket business expenses actually incurred by Consultant in providing the services required of him pursuant to this Agreement. In order to facilitate Consultant’s provision of services under this Agreement and to obtain cost efficiencies in relation to those services, the Company will, during the Consulting Period, provide Consultant with (i) an office at its offices located at 227 West Monroe, Suite 3600, Chicago, Illinois 60606 and 4025 S. Riverpoint Parkway, Phoenix, Arizona 85040, and (ii) reasonable access to executive level administrative support and technical support. Additionally, the Company agrees that Consultant will be eligible for reimbursement of airline travel expenses incurred in providing services under this Agreement at the same class of service as Consultant was eligible to travel as an employee of the Company.

(b)    As to each such expense for which Consultant seeks reimbursement, Consultant must furnish detailed receipts and other valid documentation within forty-five (45) calendar days following the later of: (i) the date on which that expense is incurred or (ii) the date on which Consultant receives the invoice or billing statement for such expense for the incurred. The Company shall provide Consultant with each reimbursement to which he is entitled hereunder within thirty (30) business days after his submission of the requisite invoice. In no event, however, will any expense be reimbursed later than the close of the calendar year following the calendar year in which that expense is incurred.

(c)    In addition, the following provisions shall apply to such reimbursement arrangement hereunder: (i) the amount of expenses eligible for reimbursement in any one calendar year will not affect the amount of expenses eligible for reimbursement in any other calendar year for which such reimbursement is to be provided hereunder; and (ii) Consultant’s right to the reimbursement of such expenses cannot be liquidated or exchanged for any other benefit.

6.Confidential Information. Currently with the execution of this Agreement, Consultant shall execute and deliver to the Company the Proprietary Information and Intellectual Property Agreement attached as Exhibit A to this Agreement and shall abide by all the terms and provisions of that agreement.

7.Nature of Relationship.

(a)    Nothing in this Agreement shall be interpreted or construed as continuing any employment relationship between Consultant and the Company during the Consultancy Period. Accordingly, Consultant shall not represent himself as an officer, employee or agent of the Company to any third party, and Consultant’s services under this Agreement shall be rendered solely as a non-employee independent contractor.

(b)    Without limiting the generality of the foregoing, Consultant hereby agrees and confirms that during the Consultancy Period, he will not be entitled to participate in any employee benefit plans, policies or programs of the Company, including (without limitation) group term life insurance or group health benefit plans, workers’ compensation, disability insurance, vacation, sick pay, profit-sharing, cash

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incentive plans, the Employee Stock Purchase Plan, stock option or other stock-based compensation plans, retirement benefits or 401(k) plan. Notwithstanding the foregoing, nothing in this Agreement is intended, nor shall it be construed to restrict Consultant’s rights to COBRA benefits in accordance with federal law and the terms of Consultant’s Separation Agreement and General Release and Waiver of Claims or to change any terms of Consultant’s equity award agreements with the Company.

(c)    Consultant shall be solely responsible for the payment of all taxes that become due and payable on any amounts paid to him by the Company pursuant to this Agreement, and the Company shall not withhold or otherwise collect any taxes from such payments. The Company’s understanding is that Consultant’s tax home is Illinois.

8.Indemnity.The Company agrees to indemnify and hold harmless Consultant from and against, and the Company agrees that Consultant shall not have any liability to the Company for, any losses, claims, damages or liabilities (including actions or proceedings in respect thereof) (collectively, "Liabilities"):

(a)    related to or arising out of: (i) the Company’s actions or failures to act (including statements or omissions made or information provided by the Company or its agents) or (ii) Consultant’s actions or failures to act with the Company’s consent or in reliance on the Company’s actions or failures to act, or

(b)    otherwise related to or arising out of the engagement, Consultant’s performance thereof or any other services Consultant is asked to provide to the Company with respect to the engagement (in each case, including related activities prior to the date hereof), except that this clause (B) shall not apply to any Liabilities to the extent that they are finally determined by a court of competent jurisdiction to have resulted primarily from the fraud, bad faith or gross negligence of Consultant.

9.Termination of Agreement.

(a)    Consultant may, at any time, terminate this Agreement time upon thirty (30) business days prior written notice to the Company and, in such case, the Company’s obligation to pay compensation for any further services pursuant to Paragraphs 3 and 4 of this Agreement shall immediately cease. In that event, Company’s liability to Consultant shall be limited to payment for services actually furnished prior to termination plus reimbursable business-related expenses incurred.

(b)    The Company may, at any time, terminate this Agreement upon thirty (30) business days’ prior written notice to Consultant. In such case, the Company agrees to pay Consultant the any remaining unpaid fees for services provided prior to the termination of the Agreement in a lump sum within thirty (30) days following the termination date of the Agreement.

(c)    Notwithstanding Paragraph 9(b) above, in the event that Consultant breaches any of his obligations under this Agreement, the Company shall have the right, exercisable in its sole discretion, to terminate this Agreement immediately, provided that the Company shall give written notice to Consultant of the actions or omissions deemed to constitute the grounds for such a termination, and Consultant shall have a period of not less than fifteen (15) business days after the receipt of such notice in which to cure the specified breach. In such case, the Company’s obligation to pay compensation for any further services pursuant to Paragraphs 3 and 4 of this Agreement shall immediately cease and the Company’s liability to Consultant shall be limited to payment for services actually furnished prior to termination plus reimbursable business-related expenses incurred prior to termination.

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(d)    Unless sooner terminated in accordance with the foregoing provisions of this Paragraph 9, the consulting relationship established under this Agreement shall terminate upon the completion of the Consultancy Period, and any amounts due and payable to Consultant at that time shall be paid to him in accordance with the foregoing terms and conditions of this Agreement.

10.Conflicting Agreements.Consultant represents and warrants that he is not contractually prohibited from engaging in any type of work and that he is not a party to any agreement or under any obligation which conflicts with the terms of this Agreement or which prohibits him from carrying out his responsibilities under this Agreement.

11.Waiver.Any failure on the part of any party hereto to comply with any of its obligations, agreements or conditions hereunder may be waived in writing by the other party to whom such compliance is owed. Absent such written waiver, no forbearance or other failure to insist on prompt compliance with any obligations, agreements or conditions hereunder shall be deemed to constitute a waiver of the rights of the party to whom compliance is owed.

12.Notices.All notices required or permitted hereunder shall be given in writing and (i) personally delivered to the other party, (ii) sent by certified mail, return receipt requested, to the other party, or (iii) sent via facsimile to the other party with a copy sent via U.S. Mail to the following address:

To Consultant:	To Company:
Mr. Joseph D’Amico	Mr. Fred Newton
[Address redacted.]	4025 S. Riverpoint Parkway
	Phoenix, AZ 85040
With a Copy to:
Keith H. Berk
Horwood Marcus & Berk Chartered
500 West Madison, Suite 3700
Chicago, IL 60661

13.Severability.If any provision of this Agreement is held illegal or unenforceable by any court or other authority of competent jurisdiction, such provision shall be deemed severable from the remaining provisions of this Agreement and shall not affect or impair the validity or enforceability of the remaining provisions of this Agreement.

14.Governing Law.This Agreement is entered into in Arizona and the laws of such State shall apply to it without resort to such State’s conflict-of-laws rules.

15.Binding Agreement. This Agreement, including Exhibit A, sets forth the entire agreement between the parties as to the Services and shall be binding upon and inure to the benefit of the parties and the heirs, legal or personal representatives of Consultant and successors and assigns of the Company.

EXECUTED this 12th day of September 2013, in Phoenix, Arizona.

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	APOLLO GROUP, INC.	CONSULTANT
By:	/s/ Fred Newton	/s/ Joseph L. D’Amico
	Fred Newton	Joseph D’Amico
	SVP Human Resources

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EXHIBIT A

PROPRIETARY INFORMATION AND INTELLECTUAL PROPERTY AGREEMENT

This Proprietary Information and Intellectual Property Agreement (“PIIPA”) confirms certain terms of my consulting services to Apollo Group, Inc., is a condition of my consulting relationship with the Company, and is a material part of the consideration for the Company’s engagement of my services as a consultant. The headings contained in this PIIPA are for convenience only, have no legal significance, and are not intended to change or limit this PIIPA in any matter whatsoever. Capitalized terms not defined in this PIIPA have the meanings ascribed to them in the Company’s Intellectual Property Policy. I have read and agree to comply with such policy. If there is any conflict between the terms of such policy and this PIIPA, the terms of this PIIPA will prevail.

A.Definitions

1.The “Company”

As used in this PIIPA, the “Company” refers to Apollo Group, Inc., each of its subsidiaries, parent companies, and successors and assigns. A subsidiary is any company that is directly or indirectly, wholly or partially, owned by Apollo Group, Inc. I recognize and agree that my obligations under this PIIPA and all terms of this PIIPA apply to me regardless of whether I am engaged to provide consulting services to Apollo Group, Inc. or any subsidiary, parent company, successor or assign of Apollo Group, Inc.

2.“Proprietary Information”

I understand that the Company possesses and will possess Proprietary Information which is important to its business. For purposes of this PIIPA, “Proprietary Information” is information that was or will be developed, created, or discovered by or on behalf of the Company, or which became or will become known by, or was or is conveyed to the Company. “Proprietary Information” includes information concerning the organization, business and finances of the Company or of any third party which the Company is under an obligation to keep confidential or that is maintained by the Company as confidential, including (without limitation):

a.the Company’s Lead List which is comprised of prospective students;

b.data and information on current and prospective corporate accounts, including, but not limited to, the identity of the corporate accounts, the decision makers or decision influencers, the buying criteria of the accounts and programs for those accounts;

c.information with respect to past, current and prospective merger, acquisition, disposition, joint venture and other transactions and opportunities, including, but not limited to, the identity of the transaction targets or prospects, the decision makers or decision influencers with respect to the transactions, the proposed terms and conditions of any such past, current or prospective transactions or opportunities, including the status thereof;

d.the management process, training materials, scripts, programs and preferred responses to features and benefits provided to enrollment counselors, academic counselors and finance counselors;

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e.the certification training materials and processes for the certification of the Company’s student advisors (known as the ACU online learning system program), including, but not limited to, the tests taken, materials provided and course work;

f.the information and data contained in the Company’s enrollment data system, including all monthly enrollment reports;

g.salary, terms of employment, length of employment and performance review information on the faculty members and other employees of the Company;

h.all business models and financial information, data and materials of the Company not otherwise available to the general public through the Company’s Annual Report or otherwise;

i.all market research or works for hire materials, including, but not limited to, industry data, demographics, company profiles and/or specific consumer behavior information;

j.all monthly financial, statistical and operational information and reports and all other information concerning enrollment by campus, profit and loss per campus and the terms of any lease;

k.all monthly financial statements, including, but not limited to, any materials prepared for the Board of Directors;

l.all internally developed source code and the techniques and processes embodied therein, including, but not limited to, modifications to existing source codes for student information systems (such as Galaxy, Campus Tracking, OSIRIS and eCampus), academic systems (such as rEsource and OnLine Learning System (OLS)), proprietary modifications to packaged applications (such as PeopleSoft, Oracle Financials and ADP HRizon) and all future internally developed source code;

m.information provided to the Company from a third party under a non-disclosure agreement;

n.the “Personally Identifiable Information” of any individual that is known or accessible as a result of either my prior employment with the Company or my current consultancy with the Company. “Personally Identifiable Information” includes, but is not limited to information that is directly associated with a specific person such as a name, address, telephone number, e-mail address, or information about activities directly linked to that person. It also includes, but is not limited to, “Education Records” as that term is defined in the Family Educational Rights and Privacy Act of 1974, as amended.

I understand and agree that my engagement as a consultant to the Company creates a relationship of confidence and trust between the Company and me with respect to Proprietary Information.

3.“Company Documents and Materials”

I understand that the Company possesses or will possess “Company Documents and Materials” which are important to its business. For purposes of this PIIPA, “Company Documents and Materials” are documents or other media or tangible items that contain or embody Proprietary Information or any other information concerning the business, operations or plans of the Company, whether such documents, media or items have been prepared by me or by others.

“Company Documents and Materials” include (without limitation) blueprints, drawings, photographs, charts, graphs, notebooks, customer lists, computer disks, tapes, computer hard drives, floppy disks, CD ROMS, or printouts, sound recordings and other printed, typewritten or handwritten documents, sample products,

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prototypes and models and any information recorded in any other form whatsoever. “Company Documents and Materials” also include copies of any of the foregoing.

B.Assignment of Rights and Confidentiality Requirements

All Proprietary Information is and shall be the sole property of the Company. I hereby grant and assign, and agree to grant and assign, to the Company any and all rights, title and interest I may have or acquire in such Proprietary Information.

At all times, both during the period of my consulting relationship with the Company and after its termination, I will keep in confidence and trust and will not use or disclose any Proprietary Information or anything relating to it without the prior written consent of an officer of the Company as specified in the Company’s Delegation of Authority (“DOA”), except as may be necessary in the ordinary course of performing my duties as a consultant to the Company. I acknowledge that, without prejudice to any and all rights of the Company, an injunction is the only effective remedy to protect the Company’s rights and property as set out herein.

C.Maintenance and Return of Company Documents and Materials

I agree to make and maintain adequate and current written records, in a form specified by the Company, of all inventions, trade secrets and works of authorship assigned or to be assigned to the Company pursuant to this PIIPA. All Company Documents and Materials are and shall be the sole property of the Company.

I agree that during the period of my consulting relationship with the Company, I will not remove any Company Documents and Materials from the business premises of the Company or deliver any Company Documents and Materials to any person or entity outside the Company, except in connection with performing my duties as a consultant to the Company. I further agree that, immediately upon the termination of my consulting relationship with the Company for any reason, or at any time during the period of my engagement as a consultant if so requested by the Company, I will return all Company Documents and Materials, apparatus, equipment and other physical property, or any reproduction of such property, excepting only (i) my personal copies of records relating to my compensation; (ii) my personal copies of any materials previously distributed generally to stockholders of the Company; and (iii) my copy of this PIIPA.

D.Disclosure of Intellectual Property to the Company

I will promptly disclose in accordance with the Company’s Intellectual Property Policy, all Company Intellectual Property (as defined below) which includes (without limitation) all software programs or subroutines, source or object code, algorithms, improvements, inventions, works of authorship, trade secrets, technology, designs, formulas, ideas, processes, techniques, know-how and data, whether or not patentable, and any other property subject to legal protection by patents, copyrights, trademarks, and/or trade secrets, or which may become subject to legal protection hereafter, whether or not they were, are, or will be so protected, which are made or discovered or conceived or reduced to practice or developed by me, either alone or jointly with others, during the term of my engagement as a consultant to the Company.

I will also disclose in accordance with the Company’s Intellectual Property Policy, all Company Intellectual Property made, discovered, conceived, reduced to practice, or developed by me within six (6) months after the termination of my consulting relationship with the Company which resulted, in whole or in part, from my engagement by the Company. Such disclosures shall be received by the Company in confidence (to the extent such Company Intellectual Property are not assigned to the Company pursuant to Section (E) below) and do not extend the assignment made in Section (E) below.

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I agree to disclose Company Intellectual Property to the Company upon the first to occur of:

1.    Creation;

2.    A request by Intellectual Property (“IP”) Counsel, as appointed by the Company’s General Counsel, or a designee of IP Counsel;

3.    As required by any applicable External Sponsor contract, by this Agreement, or by any other Company policy;

4.    A determination is made by me that the Company or an External Sponsor may have an interest in the Intellectual Property.

I understand and agree that my disclosure of the creation of Company Intellectual Property must occur prior to any discussions or actions involving the Commercial Application of Company Intellectual Property and prior to any non-confidential presentation or other public release of the Company Intellectual Property. “Commercial Application of Intellectual Property” means any application of Intellectual Property in which an employee or service provider to the Company or the Company itself intends to obtain, or is likely to receive, economic gain from the use or disposition of the Intellectual Property.

I further agree to disclose promptly to IP Counsel any potentially unauthorized use of Company Intellectual Property by a third party.

Notwithstanding any other provision of this Agreement to the contrary, this Agreement does not obligate me to assign to the Company any of my rights in Intellectual Property that does not qualify as Company Intellectual Property. “Company Intellectual Property” is Intellectual Property that: (a) is created in the scope of my engagement as a consultant to the Company; (b) is developed, in whole or in part, by the use of Company Resources (excluding resources accessed and used entirely as part of a student or faculty academic endeavor at any subsidiary); (c) relates to the business of the Company or to the Company’s actual or demonstratably anticipated strategies, plans or research and development; or (d) contains Company Proprietary Information. Company Resources include, but are not limited to the following resources owned or controlled by Apollo Group, Inc., or a subsidiary: facilities, computers, research funding, resources for asynchronous or distance learning programs, paid time within the period of my engagement as a consultant to the Company, assistance of support staff, telecommunication services, central computing resources, instructional or graphic design or other production services, Company trade secret information, and any other equipment, technologies or facilities.

E.Right to New Ideas

1.Assignment of Company Intellectual Property to the Company

I agree that all Company Intellectual Property that I make, discover, conceive, reduce to practice or develop (in whole or in part, either alone or jointly with others) during the period of my engagement as a consultant to the Company shall be the sole property of the Company to the maximum extent permitted by applicable law. However, any Intellectual Property that I make, discover, conceive, reduce to practice or develop (in whole or in part, either alone or jointly with others) during the period of my engagement as a consultant to the Company shall not be the sole property of the Company so long as such Intellectual Property does not qualify as Company Intellectual Property.

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The Company shall be the sole owner of all patents, patent rights, copyrights, trade secret rights, trademark rights and all other intellectual property or other rights in connection with Company Intellectual Property. I hereby assign and agree to assign to the Company any and all rights, title and interest I may have or acquire in Company Intellectual Property.

I agree to receive written approval from IP Counsel prior to incorporating, in any manner or fashion, any Intellectual Property not fully-owned by the Company into Company Intellectual Property.

If I incorporate any Intellectual Property in which I have an interest into Company Intellectual Property or any Company product, service, or process, I hereby grant and agree to grant to the Company a royalty-free, fully paid-up, irrevocable, perpetual, sublicensable, worldwide license to make, have made, modify, use, market, sell and distribute any such Intellectual Property as part of or in connection with Company Intellectual Property or Company product, service or process in any media now known or later developed.

Furthermore, if I incorporate, without prior written approval, any Intellectual Property in which any party other than the Company has an interest into Company Intellectual Property or any Company product, service, or process, I agree to indemnify the Company for any consequences of such incorporation.

2.Works Made for Hire

I further acknowledge and agree that Company Intellectual Property, including (without limitation) any computer programs, programming documentation, and other works of authorship, are “works made for hire” for purposes of the Company’s rights under copyright laws. I hereby assign and agree to assign to the Company any and all rights, title and interest I may have or acquire in such works made for hire.

3.Cooperation

I agree to perform, during and after the period of my engagement as a consultant to the Company, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company’s expense, in further evidencing and perfecting the assignments made to the Company under this PIIPA and in obtaining, maintaining, defending and enforcing patents, patent rights, copyrights, trademark rights, trade secret rights or any other rights in connection with Company Intellectual Property and improvements thereto in any and all jurisdictions. Such acts may include (without limitation) execution of documents and assistance or cooperation in legal proceedings. I hereby irrevocably designate and appoint and agree to appoint the Company and its duly authorized officers and agents, as my agents and attorneys to act for and on my behalf and instead of me, to execute and file any documents, applications or related findings and to do all other lawfully permitted acts in the same manner as I could do to further the purposes set forth above in this Subsection 3, including (without limitation) the perfection of assignment and the prosecution and issuance of patents, patent applications, copyright applications and registrations, trademark applications and registrations or other rights in connection with Company Intellectual Property and improvements thereto with the same legal force and effect as if executed by me.

4.Assignment or Waiver of Moral Rights

Any assignment of copyright hereunder (and any ownership of a copyright as a work made for hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights” in applicable copyright or other legislation (collectively “Moral Rights”). To the extent such Moral Rights cannot be assigned under applicable law of a jurisdiction, and to the extent the

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following is allowed by the laws in the various jurisdictions where Moral Rights exist, I hereby waive the whole of my Moral Rights in any work and warrant that any work created by me is original.

5.List of Intellectual Property

I have attached hereto as Appendix A a complete list of all Intellectual Property or improvements to which I claim ownership and that I desire to remove from the operation of this PIIPA (except for the license granted in Section (E)(1) above), and I acknowledge and agree that such list is complete. If no such list is attached to this PIIPA, I represent that I have no such Intellectual Property at the time of signing this PIIPA.

F.Company Authorization for Publication

Prior to my submitting or disclosing for possible non-confidential publication or dissemination outside the Company any material prepared by me that incorporates information that concerns the Company’s Intellectual Property or its business or anticipated research, I agree to deliver a copy of such material to an officer of the Company as specified in the DOA for his or her review and written consent. I agree to make such deletions and revisions as are reasonably requested by the Company to protect its Proprietary Information and Intellectual Property.

G.Former Employer’s, Client’s and Others’ Information

I represent that my performance of all the terms of this PIIPA does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired or developed by me in confidence or in trust prior to my engagement as a consultant to the Company. I agree that I will not disclose to the Company, or use in the performance of my duties and responsibilities as a consultant to the Company, any trade secrets or confidential or proprietary information or material belonging to any previous employers (other than the Company), clients or other person or entity.

H.Non-Solicitation of Employees

During the period of my consulting relationship with the Company and for a period of one year thereafter, I agree that I will not, directly or indirectly or by action in conjunction with any other person, company, partnership, corporation or entity, in any manner whatsoever, seek to hire, solicit, induce, influence or seek to influence, any Company employee to terminate his or her employment with the Company. If there is a conflict between this provision and any restrictive covenants contained in any consulting agreement executed by me and the Company, the provisions of the consulting agreement will govern.

I.Independent Contractor Status.

I agree that this Agreement is not an employment contract and that I will not, at any time, be an employee of the Company. Furthermore, I agree that, during the term of my engagement as a consultant to the Company, I will not provide consulting services to or become an employee of, any other firm or person engaged in a business in any way competitive with the Company, without first informing the Company of the existence of such proposed relationship and obtaining the prior written consent of the Company representative responsible for the organization in which I am providing consulting services.

J.Reformation and Severability

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I agree that if any provision, or portion of a provision, of this Agreement is deemed unenforceable by reason of the scope, extent or duration of its coverage, then such provision shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and enforceable. Should any provision, or portion of a provision, of this Agreement be deemed unenforceable for any other reason, such unenforceability will not affect any other provision, or portion of a provision, of this Agreement and this Agreement shall be construed as if such unenforceable provision, or portion of provision, had never been contained herein.

K.Authorization for Post-Termination Notification of Obligations under PIIPA

I hereby authorize the Company to notify any person or entity with whom I become employed, or to whom I provide services, following the termination of my consulting relationship with the Company of my ongoing obligations under this PIIPA.

L.Entire Agreement

This PIIPA sets forth the entire agreement and understanding between the Company and me relating to the subject matters covered therein with respect to my consulting relationship with the Company, and this PIIPA merges, cancels, supersedes and replaces all prior discussions between us, including (without limitation) any and all statements, representations, negotiations, promises or agreements relating to the subject matters covered by this PIIPA that may have been made by any officer, employee or representative of the Company. Furthermore, any subsequent change(s) to the terms or conditions of my consulting relationship with the Company, including (without limitation) the number of hours of consulting services required of me or the hourly rate of compensation for my consulting services, shall not affect the validity or scope of this Agreement which shall remain in full force and effect notwithstanding any such change(s).

M.Effective Date

This Agreement shall be effective as of the first day of my engagement by the Company as a consultant and shall be binding upon me, my heirs, executors, assigns and administrators and shall inure to the benefit of the Company.

N. Governing Law

Although I may perform consulting services for the Company outside of Arizona or the United States, I understand and agree that this Agreement will be interpreted and enforced in accordance with the laws of the State of Arizona.

[continued on next page]

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I HAVE READ THIS PIIPA CAREFULLY, AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS THAT IT IMPOSES UPON ME WITHOUT RESERVATION.

I SIGN THIS PIIPA FREELY AND VOLUNTARILY, WITHOUT COERCION OR DURESS.

Date: 9/12/2013	/s/ Joseph L. D’Amico
	Joseph D’Amico
For Apollo Group, Inc.:
/s/ Fred Newton
Fred Newton
SVP Human Resources

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APPENDIX A

1. The following is a complete list of all Intellectual Property relevant to the subject matter of my consulting relationship with the Company that have been made or discovered or conceived or first reduced to practice by me or jointly with others prior to my engagement as a consultant by the Company that I desire to remove from the operation of the Company’s Proprietary Information and Intellectual Property Agreement (“PIIPA”), except for the license granted in Section (E)(2) of the PIIPA:

X No Intellectual Property.

See below:

See _____ (#) additional sheets attached.

2. I propose to bring to my consulting relationship the following materials and documents of a former client, employer or other person/entity:

X No materials or documents

See below:

See ____ (#) additional sheet(s) attached:

Date: 9/12/2013	/s/ Joseph L. D’Amico
	Joseph D’Amico

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EX-10.62

Exhibit 10.62

4025 S. Riverpoint Parkway

Phoenix, AZ 85040

University of Phoenix

September 3, 2013

Dr. William J. Pepicello

Dear Bill:

This letter (the “Transition Agreement”) will confirm and set forth the terms of the transition arrangements that have been agreed to by University of Phoenix, Inc. (“UOPX”), Apollo Group, Inc. (“Apollo”) (collectively, “the Company”) and you in connection with your voluntary retirement from UOPX.

1. You have agreed to remain in your current position of President of University of Phoenix on a full-time basis while UOPX conducts a search to find your successor, in order to ensure a smooth and orderly transition of your job duties and responsibilities to your successor (collectively, the “Transition Period”). Your voluntary retirement from your employment with UOPX will be effective on the hire date of your successor as President of University of Phoenix (your “Retirement Date”).

2. During the Transition Period:

(a) you will continue to be compensated by UOPX based on your current annual salary and annual bonus target percentage;

(b) you will continue to be eligible to participate in Apollo’s employee benefit plans, in accordance with the terms of those plans;

(c) you will remain eligible to receive your special cash retention award payments that are scheduled to vest on September 15, 2013 and March 29, 2014 (which has already been paid to you but is subject to a repayment obligation until it vests on March 29, 2014), provided that you meet the service-vesting and other requirements for payment of those awards, as set forth in the relevant award agreement; and

(d) Your existing equity awards will continue to vest and, in the case of stock option awards, continue to be eligible for exercise, on their existing terms as governed by the 2000 Stock Incentive Plan, as amended and restated from time to time, and the terms of your award agreements.

3. Once the Transition Period ends and your employment with UOPX terminates on the Retirement Date, subject to approval by the UOPX Board of Trustees (“UOPX Board”) and the Compensation Committee

Dr. William J. Pepicello

September 3, 2013

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of the Apollo Group, Inc. Board of Directors (the “Compensation Committee”), you will be entitled the following benefits, provided that you meet the eligibility conditions set forth in paragraph 4 below:

(a) A cash severance payment of $977,863.00¹ (the “Cash Severance Benefit”), which is comparable to eighteen (18) months of current base salary in the aggregate dollar amount of $577,500.00 plus an additional dollar amount of $400,363.00 representing the average of your actual annual bonus payments for the Company’s 2011, 2012, and 2013 fiscal years. This Cash Severance Benefit will be paid to you in successive equal installments over the applicable eighteen (18) month period following your separation from service (within the meaning of Section 409A of the Internal Revenue Code) on the regularly scheduled pay dates in effect for the Company’s salaried employees, with the first such installment to be paid on the first such pay date - within the seventy-five (75)-day period measured from your separation form service - on which the Required Release, discussed in paragraph 4 below, is effective following the expiration of the applicable maximum review/delivery/return and revocation periods to which you are entitled under any applicable law with respect to such Required Release, or to begin on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall the first such installment be paid later than the fifteenth (15^th) day of the third (3^rd) calendar month following your separation from service. Each such payment shall be subject to the Company’s collection of all applicable withholding taxes, and the Participant shall receive only the portion of such payment remaining after such withholding taxes have been collected. For purposes of Section 409A of the Code, the Cash Severance Benefit shall be deemed to be a series of separate payments, with each installment of the Cash Severance Benefit to be treated as a separate payment. In no event shall you have any right to control or designate the calendar year in which the payment of your Cash Separation Benefit shall commence.

(b) A COBRA lump sum payment in the gross amount of $10,464 (which is equal to eighteen (18) months of Company contributions), payable at the same time as the first installment described in paragraph 3(a) above. The COBRA Lump Sum Payment is considered supplemental wages and subject to the Company’s collection of all applicable withholding taxes.

(c) A cash bonus for the 2014 fiscal year, based on the actual Company’s results for the financial and non-financial measures applicable to that bonus and based at target-level attainment for department measures, prorated for the period you actually work during the

______________________

¹ This is an estimated severance amount. The final amount will be determined using the actual payout of the 2013 fiscal year bonus. This severance amount is based on our current best estimate of what the 2013 fiscal year bonus payment will be.

Dr. William J. Pepicello

September 3, 2013

Page 3 of 5

2014 fiscal year prior to your Retirement Date. Payment of this cash bonus (if any) shall occur at the time the bonus is ordinarily paid to similarly situated active employees after the results on which the bonus is based have been determined, but in no event later than November 15, 2014, and shall be subject to the Company’s collection of all applicable withholding taxes.

(d) A lump sum payment of $255,360, payable at the same time as the first installment described in paragraph 3(a) above and subject to the Company’s collection of all applicable withholding taxes.

(e) You will be provided with the opportunity to enter into a consulting agreement substantially in the form of attached Schedule A with such changes requested by the Company in its sole discretion (the “Consulting Agreement”) with the Company for a period of eighteen (18) months following your Retirement Date with a total monthly consulting fee of $51,770.83, and containing terms agreeable to the Company, including but not limited to a non-competition agreement for the 18-month period following the Retirement Date. The

level of services that you would be required to perform under this consulting agreement shall be determined by the Company and will not exceed twenty percent (20%) of the

average level of services you provided to UOPX as an employee during thirty-six (36) month period immediately preceding your Retirement Date.

4. Your eligibility to receive the benefits set forth in paragraph 3 above is contingent upon: (i) approval of those benefits by the UOPX Board and the Compensation Committee, and (ii) you meeting each of the following conditions:

(a) You must not resign from your employment with UOPX or be terminated by UOPX for Cause (as that term is defined in the Senior Executive Severance Pay Plan) prior to the Retirement Date,

(b) You must execute and deliver to the Company a general release substantially in the form of attached Schedule B with such changes requested by the Company in its sole discretion (the “Required Release”) within twenty-one (21) days (or forty-five (45) days if such longer period is required under applicable law) after your separation from service, and

(c) the Required Release becomes effective and enforceable in accordance with applicable law,

As a condition of the benefits under this letter, you covenant and agree not to disclose to anyone the negotiations, conditions or terms of this letter or the fact that this letter exists, except to your attorney, immediate family, tax advisor, or as may be required by law.

Dr. William J. Pepicello

September 3, 2013

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We look forward to continuing to work with you as you assist with the orderly transition of your job duties and responsibilities. We thank you for your service to UOPX and wish you the best in retirement.

Sincerely,

/s/ Merrilee Engel

MERRILEE ENGEL

CHAIR OF THE BOARD OF TRUSTEES

UNIVERSITY OF PHOENIX, INC.

/s/ Gregory W. Cappelli

GREGORY W. CAPPELLI

CHIEF EXECUTIVE OFFICER

APOLLO GROUP, INC.

Dr. William J. Pepicello

September 3, 2013

Page 5 of 5

ACCEPTANCE

Without limiting the foregoing, I hereby accept and agree to the terms set forth in this Transition Agreement. In accepting the terms of this letter agreement, I acknowledge that I have not relied upon any statement made by Apollo, UOPX, or any of their respective directors, officers, employees, or representatives, with regard to the terms of my employment unless the representation is specifically included in this Transition Agreement. Moreover, this Transition Agreement contains the entire understanding regarding the subject matter of this letter agreement. I am entering into this Transition Agreement knowingly and voluntarily.

/s/ William J. Pepicello

WILLIAM J. PEPICELLO

9/15/13

DATE

SCHEDULE A

CONSULTING AGREEMENT

This Consulting Agreement (the “Agreement”) is between Dr. William J. Pepicello (“Consultant”) and University of Phoenix, Inc. and Apollo Group, Inc., an Arizona corporation (collectively, “the Company”).

WHEREAS, Company desires to retain the services of Consultant as an independent contractor so that his professional skills, abilities and experience will be available to Company for a defined, limited period,

WHEREAS, Consultant is willing to perform in such a capacity on the terms and conditions hereinafter set forth; and

WHEREAS, Consultant represents that he has the requisite skills, abilities and experience to provide the services desired by Company;

NOW, THEREFORE, IN CONSIDERATION for the mutual promises and covenants contained herein, the parties to this Agreement hereby agree as follows:

1.Consulting Services. Effective as of ______________________ (the “Effective Date”), the Company hereby engages Consultant as an independent contractor to provide the following services:

[INSERT DESCRIPTION OF SERVICES] (the “Services”).

2.Term of Agreement. This Agreement shall commence as of the Effective Date and shall continue until _____________________[DRAFTING NOTE: THIS DATE USED SHOULD BE THE DATE THAT IS 18 MONTHS AFTER THE EFFECTIVE DATE] (the “Consultancy Period”), unless: (i) earlier terminated pursuant to a right of termination specified in this Agreement or (ii) extended pursuant to a written agreement or amendment executed by each party hereto. Consultant’s transition from an employee of the Company to a consultant shall constitute a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended.

3.Compensation for Consulting Services.

(a)During the Consultancy Period, Consultant shall be paid $51,770.83 per month for each month spent in providing the Services under this Agreement and a pro-rated monthly amount for partial months so spent; providedthatConsultant complies with the terms, conditions and restrictions of this Agreement.

(b)The level of services that Consultant will be required to perform under this consulting agreement shall be determined by the Company and will not exceed twenty percent (20%) of the average

Schedule A - Page 1 of 15

level of services Consultant provided to the Company as an employee during thirty-six (36) month period immediately preceding Consultant’s termination of employment as an employee of the Company.

(c)The fees shall be paid to Consultant within ten (10) business days after the end of the applicable calendar month of services.

4.Reimbursement of Expenses.

(a)The Company shall reimburse Consultant for all reasonable out-of-pocket business expenses actually incurred by Consultant in providing the services required of him pursuant to this Agreement. However, Consultant must obtain pre-authorization from the Company’s Chief Executive Officer, or his designee, for any business expense for which Consultant seeks reimbursement under this Agreement. As to each such expense for which Consultant seeks reimbursement, Consultant must furnish detailed receipts and other valid documentation within forty-five (45) calendar days following the later of: (i) the date on which that expense is incurred or (ii) the date on which Consultant receives the invoice or billing statement for such expense for the incurred. The Company shall provide Consultant with each reimbursement to which he is entitled hereunder within thirty (30) business days after his submission of the requisite invoice. In no event, however, will any expense be reimbursed later than the close of the calendar year following the calendar year in which that expense is incurred.

(b)In addition, the following provisions shall apply to such reimbursement arrangement hereunder: (i) the amount of expenses eligible for reimbursement in any one calendar year will not affect the amount of expenses eligible for reimbursement in any other calendar year for which such reimbursement is to be provided hereunder; and (ii) Consultant’s right to the reimbursement of such expenses cannot be liquidated or exchanged for any other benefit.

5.Confidential Information. Currently with the execution of this Agreement, Consultant shall execute and deliver to the Company the Proprietary Information and Intellectual Property Agreement attached as Exhibit A to this Agreement and shall abide by all the terms and provisions of that agreement.

6.Nature of Relationship.

(a)Nothing in this Agreement shall be interpreted or construed as continuing any employment relationship between Consultant and the Company during the Consultancy Period. Accordingly, Consultant shall not represent himself as an officer, employee or agent of the Company to any third party, and Consultant’s services under this Agreement shall be rendered solely as a non-employee independent contractor.

(b)Without limiting the generality of the foregoing, Consultant hereby agrees and confirms that during the Consultancy Period, he will not be entitled to participate in any employee benefit plans, policies or programs of the Company, including (without limitation) group term life insurance or group health benefit plans, workers’ compensation, disability insurance, vacation, sick pay, profit-sharing, cash

Schedule A - Page 2 of 15

incentive plans, the Employee Stock Purchase Plan, stock option or other stock-based compensation plans, retirement benefits or 401(k) plan.

(c)Consultant shall be solely responsible for the payment of all taxes that become due and payable on any amounts paid to him by the Company pursuant to this Agreement, and the Company shall not withhold or otherwise collect any taxes from such payments.

7.Termination of Agreement.

(a)Consultant may, at any time, terminate this Agreement time upon _____ (___) business days’ prior written notice to the Company and, in such case, the Company’s obligation to pay compensation for any further services pursuant to Paragraph 3 of this Agreement shall immediately cease. In that event, Company’s liability to Consultant shall be limited to payment for services actually furnished prior to termination plus reimbursable business-related expenses incurred.

(b)The Company may, at any time, terminate this Agreement upon _____ (___)business days’ prior written notice to Consultant. In such case, the Company agrees to pay the any remaining unpaid Monthly Fees under this Agreement in a lump sum to Consultant within thirty (30) days following the termination date of the Agreement.

(c)Notwithstanding Paragraph 7(b) above, in the event that Consultant breaches any of his obligations under this Agreement, the Company shall have the right, exercisable in its sole discretion, to terminate this Agreement immediately upon written notice to Consultant and, in such case, the Company’s obligation to pay compensation for any further services pursuant to Paragraph 3 of this Agreement shall immediately cease. In that event, Company’s liability to Consultant shall be limited to payment for services actually furnished prior to termination plus reimbursable business-related expenses incurred.

(d)Unless sooner terminated in accordance with the foregoing provisions of this Paragraph 7, the consulting relationship established under this Agreement shall terminate upon the completion of the Consultancy Period, and any amounts due and payable to Consultant at that time shall be paid to him in accordance with the foregoing terms and conditions of this Agreement.

8.Conflicting Agreements. Consultant represents and warrants that he is not contractually prohibited from engaging in any type of work and that he is not a party to any agreement or under any obligation which conflicts with the terms of this Agreement or which prohibits him from carrying out his responsibilities under this Agreement.

9.Restrictive Covenants. Consultant shall comply with the following restrictions during the period this Agreement is in effect, provided that if this Agreement is terminated prior to ___________[DRAFTING NOTE: THIS DATE USED SHOULD BE THE DATE THAT IS 18 MONTHS AFTER THE EFFECTIVE DATE] by Consultant or by the Company due to a breach of this Agreement by Consultant, the following restrictions will remain in effect for a period of six (6) months following such termination or

Schedule A - Page 3 of 15

through ___________, whichever is earlier:[DRAFTING NOTE: THIS DATE USED SHOULD BE THE DATE THAT IS 18 MONTHS AFTER THE EFFECTIVE DATE]

(a)Consultant shall not directly or indirectly solicit any vendor, supplier, licensor, licensee or other business affiliate of the Company (or any affiliated company) with respect to products or services competitive with those offered by the Company or directly or indirectly induce any such person to terminate its existing business relationship with the Company (or affiliated company) or interfere in any other manner with any existing business relationship between the Company (or any affiliated company) and any such vendor, supplier, licensor, licensee or other business affiliate.

(b)Consultant shall not, on his own or as an employee, agent, promoter, consultant, advisor, independent contractor, general partner, officer, director, investor, lender or guarantor or in any other capacity, directly or indirectly:

(i)conduct, engage in, be connected with, have any interest in, or assist any person or entity engaged in, any business, whether in the United States, any possession of the United States or any foreign country or territory, that competes with any of the businesses or programs conducted by the Company in the education industry during the period of his employment with the Company (hereafter collectively referred to as the “Businesses”); or

(ii)permit his name to be used in connection with a business which is competitive or substantially similar to the Businesses.

Notwithstanding the foregoing: (i) Consultant may own, directly or indirectly, solely as an investment, up to one percent (1%) of any class of publicly traded securities of any business that is competitive or substantially similar to any of the Businesses and (ii) Consultant’s employment with any consulting firm, investment banking firm, private equity fund, hedge fund or similar investment fund following the termination of his employment with the Company shall not be deemed a breach of Consultant’s restrictive covenant under this Section 10(b).

10.Waiver. Any failure on the part of any party hereto to comply with any of its obligations, agreements or conditions hereunder may be waived in writing by the other party to whom such compliance is owed. Absent such written waiver, no forbearance or other failure to insist on prompt compliance with any obligations, agreements or conditions hereunder shall be deemed to constitute a waiver of the rights of the party to whom compliance is owed.

11.Notices.All notices required or permitted hereunder shall be given in writing and (i) personally delivered to the other party, (ii) sent by certified mail, return receipt requested, to the other party, or (iii) sent via facsimile to the other party with a copy sent via U.S. Mail to the following address:

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To Consultant:	To Company:
Dr. William Pepicello	Mr. Fred Newton
[INSERT ADDRESS]	4025 S. Riverpoint Parkway
	Phoenix, AZ 85040

12.Severability. If any provision of this Agreement is held illegal or unenforceable by any court or other authority of competent jurisdiction, such provision shall be deemed severable from the remaining provisions of this Agreement and shall not affect or impair the validity or enforceability of the remaining provisions of this Agreement.

13.Governing Law. This Agreement is entered into in Arizona and the laws of such State shall apply to it without resort to such State’s conflict-of-laws rules.

14.Binding Agreement. This Agreement, including Exhibit A, sets forth the entire agreement between the parties as to the Services and shall be binding upon and inure to the benefit of the parties and the heirs, legal or personal representatives of Consultant and successors and assigns of the Company.

EXECUTED this ___ day of _____________ 201__, in Phoenix, Arizona.

UNIVERSITY OF PHOENIX, INC.		CONSULTANT
By:
	Merrilee Engel	William J. Pepicello
	Chair of the Board of Trustees
APOLLO GROUP, INC.
By:
	Fred Newton
	SVP Human Resources

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EXHIBIT A (TO SCHEDULE A)

PROPRIETARY INFORMATION AND INTELLECTUAL PROPERTY AGREEMENT

This Proprietary Information and Intellectual Property Agreement (“PIIPA”) confirms certain terms of my consulting services to University of Phoenix, Inc. and Apollo Group, Inc., is a condition of my consulting relationship with the Company, and is a material part of the consideration for the Company’s engagement of my services as a consultant. The headings contained in this PIIPA are for convenience only, have no legal significance, and are not intended to change or limit this PIIPA in any matter whatsoever. Capitalized terms not defined in this PIIPA have the meanings ascribed to them in the Company’s Intellectual Property Policy. I have read and agree to comply with such policy. If there is any conflict between the terms of such policy and this PIIPA, the terms of this PIIPA will prevail.

1.Definitions

(a)The “Company”

As used in this PIIPA, the “Company” refers to University of Phoenix, Inc., Apollo Group, Inc., each of their respective subsidiaries, parent companies, and successors and assigns. A subsidiary is any company that is directly or indirectly, wholly or partially, owned by Apollo Group, Inc. I recognize and agree that my obligations under this PIIPA and all terms of this PIIPA apply to me regardless of whether I am engaged to provide consulting services to Apollo Group, Inc. or any subsidiary, parent company, successor or assign of Apollo Group, Inc.

(b)“Proprietary Information”

I understand that the Company possesses and will possess Proprietary Information which is important to its business. For purposes of this PIIPA, “Proprietary Information” is information that was or will be developed, created, or discovered by or on behalf of the Company, or which became or will become known by, or was or is conveyed to the Company. “Proprietary Information” includes information concerning the organization, business and finances of the Company or of any third party which the Company is under an obligation to keep confidential or that is maintained by the Company as confidential, including (without limitation):

(i)the Company’s Lead List which is comprised of prospective students;

(ii)data and information on current and prospective corporate accounts, including, but not limited to, the identity of the corporate accounts, the decision makers or decision influencers, the buying criteria of the accounts and programs for those accounts;

(iii)information with respect to past, current and prospective merger, acquisition, disposition, joint venture and other transactions and opportunities, including, but not limited to, the identity of the transaction targets or prospects, the decision makers or decision influencers with respect to the transactions, the proposed terms and conditions of any such past, current or prospective transactions or opportunities, including the status thereof;

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(iv)the management process, training materials, scripts, programs and preferred responses to features and benefits provided to enrollment counselors, academic counselors and finance counselors;

(v)the certification training materials and processes for the certification of the Company’s student advisors (known as the ACU online learning system program), including, but not limited to, the tests taken, materials provided and course work;

(vi)the information and data contained in the Company’s enrollment data system, including all monthly enrollment reports;

(vii)salary, terms of employment, length of employment and performance review information on the faculty members and other employees of the Company,

(viii)all business models and financial information, data and materials of the Company not otherwise available to the general public through the Company’s Annual Report or otherwise;

(ix)all market research or works for hire materials, including, but not limited to, industry data, demographics, company profiles and/or specific consumer behavior information,

(x)all monthly financial, statistical and operational information and reports and all other information concerning enrollment by campus, profit and loss per campus and the terms of any lease;

(xi)all monthly financial statements, including, but not limited to, any materials prepared for the Board of Directors;

(xii)all internally developed source code and the techniques and processes embodied therein, including, but not limited to, modifications to existing source codes for student information systems (such as Galaxy, Campus Tracking, OSIRIS and eCampus), academic systems (such as rEsource and OnLine Learning System (OLS)), proprietary modifications to packaged applications (such as PeopleSoft, Oracle Financials and ADP HRizon) and all future internally developed source code;

(xiii)information provided to the Company from a third party under a non-disclosure agreement;

(xiv)the “Personally Identifiable Information” of any individual that is known or accessible as a result of either my prior employment with the Company or my current consultancy with the Company. “Personally Identifiable Information” includes, but is not limited to information that is directly associated with a specific person such as a name, address, telephone number, e-mail address, or information about activities directly linked to that person. It also includes, but is not limited to, “Education Records” as that term is defined in the Family Educational Rights and Privacy Act of 1974, as amended.

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I understand and agree that my engagement as a consultant to the Company creates a relationship of confidence and trust between the Company and me with respect to Proprietary Information.

(c)“Company Documents and Materials”

I understand that the Company possesses or will possess “Company Documents and Materials” which are important to its business. For purposes of this PIIPA, “Company Documents and Materials” are documents or other media or tangible items that contain or embody Proprietary Information or any other information concerning the business, operations or plans of the Company, whether such documents, media or items have been prepared by me or by others.

“Company Documents and Materials” include (without limitation) blueprints, drawings, photographs, charts, graphs, notebooks, customer lists, computer disks, tapes, computer hard drives, floppy disks, CD ROMS, or printouts, sound recordings and other printed, typewritten or handwritten documents, sample products, prototypes and models and any information recorded in any other form whatsoever. “Company Documents and Materials” also include copies of any of the foregoing.

2.Assignment of Rights and Confidentiality Requirements

All Proprietary Information is and shall be the sole property of the Company. I hereby grant and assign, and agree to grant and assign, to the Company any and all rights, title and interest I may have or acquire in such Proprietary Information.

At all times, both during the period of my consulting relationship with the Company and after its termination, I will keep in confidence and trust and will not use or disclose any Proprietary Information or anything relating to it without the prior written consent of an officer of the Company as specified in the Company’s Delegation of Authority (“DOA”), except as may be necessary in the ordinary course of performing my duties as a consultant to the Company. I acknowledge that, without prejudice to any and all rights of the Company, an injunction is the only effective remedy to protect the Company’s rights and property as set out herein.

3.Maintenance and Return of Company Documents and Materials

I agree to make and maintain adequate and current written records, in a form specified by the Company, of all inventions, trade secrets and works of authorship assigned or to be assigned to the Company pursuant to this PIIPA. All Company Documents and Materials are and shall be the sole property of the Company.

I agree that during the period of my consulting relationship with the Company, I will not remove any Company Documents and Materials from the business premises of the Company or deliver any Company Documents and Materials to any person or entity outside the Company, except in connection with performing my duties as a consultant to the Company. I further agree that, immediately upon the termination of my consulting relationship with the Company for any reason, or at any time during the period of my engagement as a consultant if so requested by the Company, I will return all Company Documents and Materials, apparatus, equipment and other physical property, or any reproduction of such property, excepting only (i)

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my personal copies of records relating to my compensation; (ii) my personal copies of any materials previously distributed generally to stockholders of the Company; and (iii) my copy of this PIIPA.

4.Disclosure of Intellectual Property to the Company

I will promptly disclose in accordance with the Company’s Intellectual Property Policy, all Company Intellectual Property (as defined below) which includes (without limitation) all software programs or subroutines, source or object code, algorithms, improvements, inventions, works of authorship, trade secrets, technology, designs, formulas, ideas, processes, techniques, know-how and data, whether or not patentable, and any other property subject to legal protection by patents, copyrights, trademarks, and/or trade secrets, or which may become subject to legal protection hereafter, whether or not they were, are, or will be so protected, which are made or discovered or conceived or reduced to practice or developed by me, either alone or jointly with others, during the term of my engagement as a consultant to the Company.

I will also disclose in accordance with the Company’s Intellectual Property Policy, all Company Intellectual Property made, discovered, conceived, reduced to practice, or developed by me within six (6) months after the termination of my consulting relationship with the Company which resulted, in whole or in part, from my engagement by the Company. Such disclosures shall be received by the Company in confidence (to the extent such Company Intellectual Property are not assigned to the Company pursuant to Section (E) below) and do not extend the assignment made in Section (E) below.

I agree to disclose Company Intellectual Property to the Company upon the first to occur of:

1.Creation;

2.A request by Intellectual Property (“IP”) Counsel, as appointed by the Company’s General Counsel, or a designee of IP Counsel;

3.As required by any applicable External Sponsor contract, by this Agreement, or by any other Company policy;

4.A determination is made by me that the Company or an External Sponsor may have an interest in the Intellectual Property.

I understand and agree that my disclosure of the creation of Company Intellectual Property must occur prior to any discussions or actions involving the Commercial Application of Company Intellectual Property and prior to any non-confidential presentation or other public release of the Company Intellectual Property. “Commercial Application of Intellectual Property” means any application of Intellectual Property in which an employee or service provider to the Company or the Company itself intends to obtain, or is likely to receive, economic gain from the use or disposition of the Intellectual Property.

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I further agree to disclose promptly to IP Counsel any potentially unauthorized use of Company Intellectual Property by a third party.

Notwithstanding any other provision of this Agreement to the contrary, this Agreement does not obligate me to assign to the Company any of my rights in Intellectual Property that does not qualify as Company Intellectual Property. “Company Intellectual Property” is Intellectual Property that: (a) is created in the scope of my engagement as a consultant to the Company; (b) is developed, in whole or in part, by the use of Company Resources (excluding resources accessed and used entirely as part of a student or faculty academic endeavor at any subsidiary); (c) relates to the business of the Company or to the Company’s actual or demonstratably anticipated strategies, plans or research and development; or (d) contains Company Proprietary Information. Company Resources include, but are not limited to the following resources owned or controlled by Apollo Group, Inc., or a subsidiary: facilities, computers, research funding, resources for asynchronous or distance learning programs, paid time within the period of my engagement as a consultant to the Company, assistance of support staff, telecommunication services, central computing resources, instructional or graphic design or other production services, Company trade secret information, and any other equipment, technologies or facilities.

5.Right to New Ideas

(a)Assignment of Company Intellectual Property to the Company

I agree that all Company Intellectual Property that I make, discover, conceive, reduce to practice or develop (in whole or in part, either alone or jointly with others) during the period of my engagement as a consultant to the Company shall be the sole property of the Company to the maximum extent permitted by applicable law. However, any Intellectual Property that I make, discover, conceive, reduce to practice or develop (in whole or in part, either alone or jointly with others) during the period of my engagement as a consultant to the Company shall not be the sole property of the Company so long as such Intellectual Property does not qualify as Company Intellectual Property.

The Company shall be the sole owner of all patents, patent rights, copyrights, trade secret rights, trademark rights and all other intellectual property or other rights in connection with Company Intellectual Property. I hereby assign and agree to assign to the Company any and all rights, title and interest I may have or acquire in Company Intellectual Property.

I agree to receive written approval from IP Counsel prior to incorporating, in any manner or fashion, any Intellectual Property not fully-owned by the Company into Company Intellectual Property.

If I incorporate any Intellectual Property in which I have an interest into Company Intellectual Property or any Company product, service, or process, I hereby grant and agree to grant to the Company a royalty-free, fully paid-up, irrevocable, perpetual, sublicensable, worldwide license to make, have made, modify, use, market, sell and distribute any such Intellectual Property as part of or in connection with Company Intellectual Property or Company product, service or process in any media now known or later developed.

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Furthermore, if I incorporate, without prior written approval, any Intellectual Property in which any party other than the Company has an interest into Company Intellectual Property or any Company product, service, or process, I agree to indemnify the Company for any consequences of such incorporation.

(b)Works Made for Hire

I further acknowledge and agree that Company Intellectual Property, including (without limitation) any computer programs, programming documentation, and other works of authorship, are “works made for hire” for purposes of the Company’s rights under copyright laws. I hereby assign and agree to assign to the Company any and all rights, title and interest I may have or acquire in such works made for hire.

(c)Cooperation

I agree to perform, during and after the period of my engagement as a consultant to the Company, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company’s expense, in further evidencing and perfecting the assignments made to the Company under this PIIPA and in obtaining, maintaining, defending and enforcing patents, patent rights, copyrights, trademark rights, trade secret rights or any other rights in connection with Company Intellectual Property and improvements thereto in any and all jurisdictions. Such acts may include (without limitation) execution of documents and assistance or cooperation in legal proceedings. I hereby irrevocably designate and appoint and agree to appoint the Company and its duly authorized officers and agents, as my agents and attorneys to act for and on my behalf and instead of me, to execute and file any documents, applications or related findings and to do all other lawfully permitted acts in the same manner as I could do to further the purposes set forth above in this Subsection 3, including (without limitation) the perfection of assignment and the prosecution and issuance of patents, patent applications, copyright applications and registrations, trademark applications and registrations or other rights in connection with Company Intellectual Property and improvements thereto with the same legal force and effect as if executed by me.

(d)Assignment or Waiver of Moral Rights

Any assignment of copyright hereunder (and any ownership of a copyright as a work made for hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights” in applicable copyright or other legislation (collectively “Moral Rights”). To the extent such Moral Rights cannot be assigned under applicable law of a jurisdiction, and to the extent the following is allowed by the laws in the various jurisdictions where Moral Rights exist, I hereby waive the whole of my Moral Rights in any work and warrant that any work created by me is original.

(e)List of Intellectual Property

I have attached hereto as Appendix A a complete list of all Intellectual Property or improvements to which I claim ownership and that I desire to remove from the operation of this PIIPA (except for the license granted

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in Section (E)(1) above), and I acknowledge and agree that such list is complete. If no such list is attached to this PIIPA, I represent that I have no such Intellectual Property at the time of signing this PIIPA.

6.Company Authorization for Publication

Prior to my submitting or disclosing for possible non-confidential publication or dissemination outside the Company any material prepared by me that incorporates information that concerns the Company’s Intellectual Property or its business or anticipated research, I agree to deliver a copy of such material to an officer of the Company as specified in the DOA for his or her review and written consent. I agree to make such deletions and revisions as are reasonably requested by the Company to protect its Proprietary Information and Intellectual Property.

7.Former Employer’s, Client’s and Others’ Information

I represent that my performance of all the terms of this PIIPA does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired or developed by me in confidence or in trust prior to my engagement as a consultant to the Company. I agree that I will not disclose to the Company, or use in the performance of my duties and responsibilities as a consultant to the Company, any trade secrets or confidential or proprietary information or material belonging to any previous employers (other than the Company), clients or other person or entity.

8.Non-Solicitation of Employees

During the period of my consulting relationship with the Company and for a period of one year thereafter, I agree that I will not, directly or indirectly or by action in conjunction with any other person, company, partnership, corporation or entity, in any manner whatsoever, seek to hire, solicit, induce, influence or seek to influence, any Company employee to terminate his or her employment with the Company. If there is a conflict between this provision and any restrictive covenants contained in any consulting agreement executed by me and the Company, the provisions of the consulting agreement will govern.

9.Independent Contractor Status.

I agree that this Agreement is not an employment contract and that I will not, at any time, be an employee of the Company. Furthermore, I agree that, during the term of my engagement as a consultant to the Company, I will not provide consulting services to or become an employee of, any other firm or person engaged in a business in any way competitive with the Company, without first informing the Company of the existence of such proposed relationship and obtaining the prior written consent of the Company representative responsible for the organization in which I am providing consulting services.

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10.Reformation and Severability

I agree that if any provision, or portion of a provision, of this Agreement is deemed unenforceable by reason of the scope, extent or duration of its coverage, then such provision shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and enforceable. Should any provision, or portion of a provision, of this Agreement be deemed unenforceable for any other reason, such unenforceability will not affect any other provision, or portion of a provision, of this Agreement and this Agreement shall be construed as if such unenforceable provision, or portion of provision, had never been contained herein.

11.Authorization for Post-Termination Notification of Obligations under PIIPA

I hereby authorize the Company to notify any person or entity with whom I become employed, or to whom I provide services, following the termination of my consulting relationship with the Company of my ongoing obligations under this PIIPA.

12.Entire Agreement

This PIIPA sets forth the entire agreement and understanding between the Company and me relating to the subject matters covered therein with respect to my consulting relationship with the Company, and this PIIPA merges, cancels, supersedes and replaces all prior discussions between us, including (without limitation) any and all statements, representations, negotiations, promises or agreements relating to the subject matters covered by this PIIPA that may have been made by any officer, employee or representative of the Company. Furthermore, any subsequent change(s) to the terms or conditions of my consulting relationship with the Company, including (without limitation) the number of hours of consulting services required of me or the hourly rate of compensation for my consulting services, shall not affect the validity or scope of this Agreement which shall remain in full force and effect notwithstanding any such change(s).

13.Effective Date

This Agreement shall be effective as of the first day of my engagement by the Company as a consultant and shall be binding upon me, my heirs, executors, assigns and administrators and shall inure to the benefit of the Company.

14.Governing Law

Although I may perform consulting services for the Company outside of Arizona or the United States, I understand and agree that this Agreement will be interpreted and enforced in accordance with the laws of the State of Arizona.

[continued on next page]

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I HAVE READ THIS PIIPA CAREFULLY, AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS THAT IT IMPOSES UPON ME WITHOUT RESERVATION.

I SIGN THIS PIIPA FREELY AND VOLUNTARILY, WITHOUT COERCION OR DURESS.

Date:
		William J. Pepicello
FOR UNIVERSITY OF PHOENIX, INC.
	Merrilee Engel
	Chair of the Board of Trustees
FOR APOLLO GROUP, INC.
	Fred Newton
	SVP Human Resources

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APPENDIX A

(TO EXHIBIT A OF SCHEDULE A)

1. The following is a complete list of all Intellectual Property relevant to the subject matter of my consulting relationship with the Company that have been made or discovered or conceived or first reduced to practice by me or jointly with others prior to my engagement as a consultant by the Company that I desire to remove from the operation of the Company’s Proprietary Information and Intellectual Property Agreement (“PIIPA”), except for the license granted in Section (E)(2) of the PIIPA:

No Intellectual Property.

See below:

See _____ (#) additional sheets attached.

2. I propose to bring to my consulting relationship the following materials and documents of a former client, employer or other person/entity:

No materials or documents

See below:

See ____ (#) additional sheet(s) attached:

Date:	___________, 201__
		William J. Pepicello

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SCHEDULE B

FORM OF GENERAL RELEASE

SEPARATION AGREEMENT

and

GENERAL RELEASE AND WAIVER OF CLAIMS

This SEPARATION AGREEMENT AND GENERAL RELEASE AND WAIVER OF CLAIMS (hereinafter “Agreement”) is entered into between William J. Pepicello (hereinafter “Employee”) and the Apollo Group, Inc. (“Apollo Group”), University of Phoenix, Inc., and each of their corporate affiliates, subsidiaries, owners, directors, officers, agents, employees and assigns (collectively referred to herein as “Company”).

Employee’s employment with the Company shall terminate on _____________________ (the “Retirement Date”). Upon Employee’s separation from the Company, Employee shall be paid all earned but unpaid base salary and all accrued but unpaid vacation pay. The Retirement Date shall be Employee’s last day as an employee of the Company. On the Retirement Date, Employee shall incur a separation from service for purposes of Section 409A of the Internal Revenue Code (“Section 409A”). Any compensation deferred by Employee pursuant to one or more non-qualified deferred compensation plans of the Company subject to Section 409A shall be paid at such time and in such form of payment as set forth in each applicable plan governing the payment of any such deferred amounts.

Employee hereby acknowledges and agrees that the severance benefits set forth in Attachment A to this Agreement are being provided pursuant to the terms of the Company’s Senior Executive Severance Pay Plan (the “Severance Plan”) and the Employee’s letter agreement with the Company dated _________________ (the “Letter Agreement”), in exchange for the general release and other promises and covenants of Employee set forth in this Agreement and that in the absence of such release, promises and covenants, Employee would not otherwise be entitled to those severance benefits.

Accordingly, in consideration of the severance benefits that Employee will receive, as set forth in Attachment A, the sufficiency of which Employee hereby acknowledges, Employeehereby agrees to waive any and all potential claims against the Company and/or any of its corporate affiliates, subsidiaries, owners, directors, officers, agents, employees and assigns arising out of any event occurring prior to Employee’s execution of this Agreement including, without limitation, any event associated with Employee’s employment by the Company and Employee’s separation from that employment.

This FULL RELEASE AND WAIVER OF CLAIMS (the “Release”) includes, without limitation, any claim arising under the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Older Workers Benefit Protection Act, the Civil Rights Acts of 1991, the Arizona Civil Rights Act, the Illinois Human Rights Act, the Labor Management Relations Act, the Americans with Disabilities Act, as amended, the Pregnancy Discrimination Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, the Worker Adjustment and Retraining Notification Act,

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and any other federal, state or local statute or common law cause of action including, without limitation, claims for breach of contract, compensation or wages, wrongful discharge, retaliation, tort, violation of public policy, infliction of emotional distress, personal injury or any claim for attorneys’ fees and/or costs. This Release also includes, without limitation, any claim arising under any employee compensation or benefit plan, policy, program or arrangement (whether written or oral), including, but not limited to the Severance Plan. Employee understands that this Release precludes Employee from recovering any monetary relief as a result of any charge, lawsuit, or other proceeding brought by Employee or on Employee’s behalf arising out of or related to Employee’s employment with the Company and separation from that employment.

The waiver and release contained in this General Release does not apply to any claim which, as a matter of law, cannot be released by private agreement. If any provision of the waiver and release contained in this General Release is found to be unenforceable, it shall not affect the enforceability of the remaining provisions and a court shall enforce all remaining provisions to the full extent permitted by law.

The following claims are specifically and expressly excluded from the foregoing Release: (i) claims for workers’ compensation benefits; (ii) claims for unemployment compensation; (iii) health insurance benefits under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”); and (iv) claims with respect to vested benefits under a retirement plan governed by the Employee Retirement Income Security Act (“ERISA”) or any other vested and accrued benefits under the terms of any other Apollo Group employee benefit plan.

Employee understands and affirms that this FULL RELEASE AND WAIVER OF CLAIMS applies to any claims that may arise under the Age Discrimination in Employment Act (“ADEA”). Employee acknowledges that Employee is knowingly and voluntarily waiving and releasing any rights Employee may have under the ADEA. Employee also acknowledges that the consideration given for the waiver and release contained in this Agreement is in addition to anything of value to which Employee was already entitled. Employee acknowledges that the Company has advised Employee to consult with an attorney and discuss this Agreement and the Release set forth herein prior to executing this Agreement. Employee further acknowledges that Employee has been advised by this writing, as required by the Older Workers’ Benefit Protection Act (“OWBPA”), that this waiver and release do not apply to any rights or claims that may arise after the Effective Date (defined below) of this Agreement.

Pursuant to the OWBPA, Employee understands and affirms that, by signing this Agreement, Employee has been given ______________ (___) calendar days measured from the Retirement Date within which to consider this Agreement and the Release set forth herein. Should Employee decide not to use the full ______________ (___)-calendar day review period, then Employee knowingly and voluntarily waives any claims that Employee was not in fact given that period of time or did not use the entire ______________ (___) calendar days to consult an attorney and/or consider this Agreement and Release. Employee further understands that Employee may revoke this Agreement at any time within seven (7) calendar days following Employee’s execution of the Agreement. Written revocation is to be provided within the seven (7) calendar

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day revocation period to Apollo Group, Inc., Attn: Chief Human Resources Officer, 4025 South Riverpoint Parkway, Phoenix, Arizona 85040. This Agreement shall not become binding and enforceable until the seven (7) calendar day revocation period has expired.

Employee may not sign this Agreement prior to Employee’s Retirement Date. Additionally, in order for this Agreement to become effective and for Employee to become entitled to receive the pay and benefits set forth in Attachment A, Employee must sign and return this Agreement to the Company not later than ______________ (___) calendar days following Employee’s Retirement Date set forth above and not revoke it.

Employee further covenants and agrees not to disclose to anyone the negotiations, conditions or terms of this Agreement or the fact that this Agreement exists, except to Employee’s attorney, immediate family, tax advisor, or as may be required by law.

Employee agrees to comply with his or her obligations not to use or disclose the Trade Secrets and Proprietary Information of the Company as set forth below:

a. “Trade Secrets” shall be defined as information belonging to the Company or licensed by it, including, but not limited to, technical or non-technical data, formulae, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans, or lists of actual or potential customers or suppliers which: (1) derive economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons or entities who can obtain economic value from their disclosure or use; and (2) are the subject of efforts that are reasonable under the circumstances to maintain their secrecy.

b. “Proprietary Information” shall be defined as any information that was or will be developed, created, or discovered by or on behalf of the Company, or which became or will become known by, or was or is conveyed to the Company. “Proprietary Information” includes information concerning the organization, business and finances of the Company or of any third party which the Company is under an obligation to keep confidential or that is maintained by the Company as confidential, including (without limitation):

(i) the Company’s Lead List which is comprised of prospective students;

(ii) data and information on current and prospective corporate accounts, including, but not limited to, the identity of the corporate accounts, the decision makers or decision influencers, the buying criteria of the accounts and programs for those accounts;

(iii) information with respect to past, current and prospective merger, acquisition, disposition, joint venture and other transactions and opportunities, including, but not limited to, the identity of the transaction targets or prospects, the decision makers or decision influencers with respect to the transactions, the proposed terms and conditions of any such past, current or prospective transactions or opportunities, including the status thereof, the management process, training

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materials, scripts, programs and preferred responses to features and benefits provided to enrollment counselors, academic counselors and finance counselors;

(iv) the management process, training materials, scripts, programs and preferred responses to features and benefits provided to enrollment counselors, academic counselors and finance counselors;

(v) the certification training materials and processes for the certification of the Company’s student advisors (known as the ACU online learning system program), including, but not limited to, the tests taken, materials provided and course work;

(vi) the information and data contained in the Company’s enrollment data system, including all monthly enrollment reports;

(vii) salary, terms of employment, length of employment and performance review information on the faculty members and other employees of the Company, all business models and financial information, data and materials of the Company not otherwise available to the general public through the Company’s Annual Report or otherwise;

(viii) all market research or works for hire materials, including, but not limited to, industry data, demographics, company profiles and/or specific consumer behavior information, all monthly financial, statistical and operational information and reports, and all other information concerning enrollment by campus, profit and loss per campus and the terms of any lease;

(ix) all monthly financial statements, including, but not limited to, any materials prepared for the Board of Directors;

(x) all internally developed source code and the techniques and processes embodied therein, including, but not limited to, modifications to existing source codes for student information systems (such as Galaxy, Campus Tracking, OSIRIS and eCampus), academic systems (such as rEsource and OnLine Learning System (OLS), proprietary modifications to packaged applications (such as PeopleSoft, Oracle Financials and ADP HRizon) and all future internally developed source code;

(xi) information provided to the Company from a third party under a non-disclosure agreement; and

(xii) the “Personally Identifiable Information” of any individual that is known or accessible as a result of employment with the Company. “Personally Identifiable Information” includes, but is not limited to information that is directly associated with a specific person such as a name, address, telephone number, e-mail address, or information about activities directly linked to

Schedule B - Page 4 of 8

that person. It also includes, but is not limited to, “Education Records” as that term is defined in the Family Educational Rights and Privacy Act of 1974, as amended.

c. Employee will treat as confidential and will not, without the prior written approval of the Company, use, publish, disclose, copyright or authorize anyone else to use, publish, disclose or copyright, any information which constitutes Trade Secrets of the Company, whether or not the Trade Secrets are in written or tangible form.

d. Employee will treat as confidential and will not, without the prior written approval of the Company, use, publish, disclose, copyright or authorize anyone else to use, publish, disclose or copyright, any Proprietary Information for three (3) years following the Retirement Date, whether or not the Proprietary Information is in written or other tangible form.

During Employee’s employment and for a period of one (1) year following the Retirement Date, Employee agrees that he or she will not, either directly or indirectly, solicit, attempt to solicit, or assist in the solicitation of any employee, independent contractor, or consultant of the Company for whom Employee had managerial responsibility, to whom Employee reported, with whom Employee participated on Company teams or projects, or about whom Employee gained confidential salary or performance information, to terminate his or her relationship with the Company.

If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable for whatever reason, the remaining provisions of this Agreement shall nevertheless continue in full force and effect without being impaired in any manner whatsoever.

Employee is and shall be solely responsible for any federal, state and local taxes that may be owed by Employee by virtue of the receipt of any portion of the monetary payment and other benefits provided under this Agreement. Employee agrees to indemnify and hold the Company harmless from any and all liability, including, without limitation, all penalties, interest and other costs that may be imposed by the Internal Revenue Service or other governmental agencies regarding any tax obligations that may arise from the monetary consideration made to Employee under this Agreement.

Employee agrees that Employee will not make any disparaging, negative or untrue statements about the Company, including, without limitation, any statements about the Company, its products, business affairs or officers, directors or employees. Employee acknowledges and agrees that any of the benefits payable to Employee under this Agreement may, without prior notice, terminate immediately upon Employee’s failure to abide by the terms of this Agreement. The Company agrees that it will not make, and agrees to use its best efforts to cause the officers, directors and spokespersons of the Company to refrain from making, any public statements (or authorizing any statements to be reported as being attributed to the Company), that are derogatory or which may tend to injure the reputation or business of Employee, and the Company shall instruct such officers, directors and spokespersons to refrain from making such statements.

Schedule B - Page 5 of 8

Employee also agrees that if any claim is asserted by or against the Company as to which Employee has relevant knowledge, Employee will reasonably cooperate with the Company in the prosecution or defense of that claim, including by providing truthful information and testimony as reasonably requested by the Company. In that regard, the Company agrees to reimburse Employee for any reasonable expenses actually incurred by Employee in providing such cooperation; provided that the following conditions shall govern any reimbursements that are to be made to Employee pursuant to the terms of this Agreement:

- Any such expenses must be approved in advance by the Company before they are incurred by Employee.

- Any reimbursement amounts to which Employee may become entitled pursuant to this Agreement in each calendar year shall not reduce the amounts to which Employee may become entitled hereunder in any other calendar year.

- None of Employee’s rights to reimbursement hereunder may be liquidated or exchanged for any other benefit.

- In no event shall any expense be reimbursed later than the close of the calendar year following the calendar year in which that expense is incurred.

Additionally, the Company shall indemnify Employee to the maximum extent permitted by Section 10-856 of the Arizona Revised Statutes, Article 5 of the University of Phoenix Bylaws, and Section 5.14 of the Apollo Bylaws in regard to Employee’s service as an officer and employee of the Company.

Except to the extent it is reasonably necessary for Employee to keep such property in order to perform the contemplated services under Employee’s Consulting Agreement with the Company, within seven (7) days of the Retirement Date, Employee shall return to the Company all Company property in Employee’s possession or control including, but not limited to, identification badges, business cards, credit cards, telephone cards, cell phones, BlackBerrys, pagers and all copies of all records, papers and documents made or kept by Employee relating to the business of the Company.

The construction, interpretation and performance of this Agreement shall be governed by the laws of the State of Arizona.

This Agreement constitutes the sole and entire agreement between the parties hereto, and supersedes any and all understandings and agreements made prior hereto, if any. There are no collateral understandings, representations, or agreements other than those contained therein. No provision of this Agreement shall be amended, waived or modified except by an instrument in writing, signed by the parties hereto. It is understood and agreed that the offering of this Agreement by the Company is not to be construed as an admission of any liability on its part to Employee, other than to comply with the terms of this Agreement.

Schedule B - Page 6 of 8

Employee has read and understands the contents of this Agreement and affirms that no representations other than those contained herein have been made to induce or influence Employee’s execution of the Agreement, and that Employee executes this Agreement knowingly and voluntarily and upon independent advice of Employee’s own choosing.

William J. Pepicello		Date
APPROVED AND ACCEPTED:
UNIVERSITY OF PHOENIX, INC.
By:
	[UOPX REPRESENTATIVE]	Date
	[TITLE]
APOLLO GROUP, INC.
By:
	[APOLLO REPRESENTATIVE]	Date
	[TITLE]

Schedule B - Page 7 of 8

ATTACHMENT A (TO SCHEDULE B)

In exchange for executing the attached Separation Agreement and General Release and Waiver of Claims and not revoking such Separation Agreement and General Release and Waiver of Claims during the applicable seven (7)-day revocation period so that such agreement and release become effective and enforceable, Employee understands that Employee will receive the following separation benefits:

[INSERT DESCRIPTION OF SEPARATION BENEFITS AND TERMS OF PAYMENT]

EMPLOYEE NAME (Employee ID)		Date
APPROVED AND ACCEPTED:
UNIVERSITY OF PHOENIX, INC.
By:
	[UOPX REPRESENTATIVE]	Date
	[TITLE]
APOLLO GROUP, INC.
By:
	[APOLLO REPRESENTATIVE]	Date
	[TITLE]

Schedule B - Page 8 of 8

EX-10.63

Exhibit 10.63

CONSULTANT SERVICES AGREEMENT

THIS AGREEMENT is entered into as of March 1, 2013 (the “Effective Date”), between Charles B. Edelstein (hereinafter referred to as “Consultant”) and Apollo Group, Inc. or its successor in interest (which together with its parent, subsidiaries or other affiliated entities is hereinafter referred to as “Company”);

WHEREAS, Company desires to retain the services of Consultant as a consultant in order that his professional skills, abilities and experience will be available to Company for a defined, limited period, and Consultant is willing to perform in such a capacity on the terms and conditions hereinafter set forth; and

WHEREAS, Consultant represents that he has the requisite skills, abilities and experience to provide the services desired by Company;

NOW, THEREFORE, in consideration of the premises and other mutual covenants and agreements herein contained, the parties hereby mutually covenant and agree as follows:

1.SERVICES

During the period commencing on the Effective Date and ending on August 31, 2013 (the “Consulting Period”), Consultant shall provide advice and counsel to Company at such time and places and in such manner as reasonably requested from time to time from the Chief Executive Officer. Consultant understands that the Chief Executive Officer must authorize and approve any services provided by Consultant and agrees to perform faithfully the duties assigned to him to the best of his abilities and in the best interests of Company. The terms of Consultant’s service during the Consulting Period are determined hereunder and no employee manual, policy statement or similar item issued from time to time by Company to its employees shall constitute part of this Agreement or modify, affect or govern the terms of the engagement of Consultant during the Consulting Period.

2.TERM OF AGREEMENT

This Agreement shall become effective on the date first set forth above and shall continue in effect until August 31, 2013, unless terminated in accordance with the provisions hereof. This Agreement may only be extended by mutual agreement of the parties in writing. This Agreement shall terminate immediately in the event of Consultant’s death.

3.FEES AND EXPENSES

During the Consulting Period, Consultant shall be paid a fee of seven hundred dollars ($700) per hour for each full hour spent providing services to the Company under this Agreement and a pro-rated hourly amount for partial hours so spent.

The Company shall reimburse Consultant for business-related out-of-pocket expenses incurred, provided that all such expenses: (i) are reasonable and necessary, (ii) related to the provision of services under the Agreement, and (iii) to the extent an individual expense exceeds $1,500, are authorized in advance in writing by the Chief Executive Officer.

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Such reimbursable expenses shall include:

A. Business Air Travel - First class commercial or private air between Consultants’ office location and/or residence location(s) and Apollo business locations or other locations to which Consultant is required to travel in order to provide services under this Agreement;

B. Business Ground Travel - Premium rental car or car service used for airport transfers or while traveling out-of-town to provide services under this Agreement. For purposes of this Agreement, “out-of-town” is understood to mean a location for the conduct of services under this Agreement that is a location other than one of the three communities in which Consultant maintains a residence;

C. Business Lodging - A standard room at a premium hotel while providing services under this Agreement out-of-town (as defined above);

D. Business Meals - Reasonable executive costs incurred for food and beverage while providing services under this Agreement out-of-town (as defined above); and

E. Other reasonable incidental expenses incurred in the performance of services under this Agreement (e.g., visa fees, gratuities).

Additionally, in order to facilitate Consultant’s provision of services under this Agreement and to obtain cost efficiencies in relation to those services, the Company will, during the Consulting Period, provide Consultant with (i) an executive office at its offices located at 227 West Monroe, Suite 3600, Chicago, Illinois 60606, and (ii) reasonable access to executive level administrative support and technical support.

Any such reimbursements that are taxable to Consultant shall be reimbursed no later than the expiration of the short-term deferral deadline under the meaning of Section 409A.

Consultant shall issue invoices to the Company on a monthly basis for services provided and business-related out-of-pocket expenses incurred under this Agreement. Such invoices shall contain sufficient descriptions of activities that have or shall be performed in the billing period and include an itemization of reimbursable business-related expenses incurred, with supporting data, receipts and reports, as applicable, and such other information, all as reasonably required by the Company for its internal accounting purposes and specified by the Company to Consultant from time to time. Unless otherwise set forth in writing between the parties, the Company will pay all undisputed invoices within sixty (60) calendar days of the Company’s receipt of such invoice.

4.CONFIDENTIAL INFORMATION AND TRADE SECRETS

Concurrently with the execution of this Agreement, Consultant shall execute and deliver to the Company the Proprietary Information and Intellectual Property Agreement attached as Exhibit A to this Agreement and shall abide by all the terms and provisions of that agreement.

5.STATUS OF CONTRACTOR

A. Nothing in this Agreement shall be interpreted or construed as continuing any employment relationship between Consultant and the Company during the Consultancy Period. Accordingly, Consultant shall not represent himself as an officer, employee or agent of the

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Company to any third party, and Consultant’s services under this Agreement shall be rendered solely as a non-employee independent contractor.

B. Without limiting the generality of the foregoing, Consultant hereby agrees and confirms that during the Consultancy Period, he will not be entitled to participate in any employee benefit plans, policies or programs of the Company, including (without limitation) group term life insurance or group health benefit plans, workers’ compensation, disability insurance, vacation, sick pay, profit-sharing, cash incentive plans, the Employee Stock Purchase Plan, stock option or other stock-based compensation plans, retirement benefits or 401(k) plan.

C. Consultant shall be solely responsible for the payment of all taxes that become due and payable on any amounts paid to him by the Company pursuant to this Agreement, and the Company shall not withhold or otherwise collect any taxes from such payments.

6.PROHIBITION OF ASSIGNMENT AND SUBCONTRACTING

No rights under this Agreement may be assigned by Consultant and no obligations of Consultant may be assumed by any person other than Consultant without the prior express written approval of Company.

7.INDEMNITY

The Company agrees to indemnify and hold harmless Consultant from and against, and the Company agrees that Consultant shall not have any liability to the Company for, any losses, claims, damages or liabilities (including actions or proceedings in respect thereof) (collectively, "Liabilities"):

A. related to or arising out of:

(i) the Company’s actions or failures to act (including statements or omissions made or information provided by the Company or its agents) or

(ii) Consultant’s actions or failures to act with the Company’s consent or in reliance on the Company’s actions or failures to act, or

B. otherwise related to or arising out of the engagement, Consultant’s performance thereof or any other services Consultant is asked to provide to the Company with respect to the engagement (in each case, including related activities prior to the date hereof), except that this clause (B) shall not apply to any Liabilities to the extent that they are finally determined by a court of competent jurisdiction to have resulted primarily from the fraud, bad faith or gross negligence of Consultant.

If such indemnification is for any reason not available or insufficient to hold Consultant harmless, the Company agrees to contribute to the Liabilities involved in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and by Consultant, on the other hand, with respect to the engagement or, if such allocation is determined by a court of competent jurisdiction to be unavailable, in such proportion as is appropriate to reflect other equitable considerations such as the relative fault of the Company on the one hand and of Consultant on the other hand; provided, however, that, to the extent permitted by applicable law, Consultant shall not be responsible for expenses and Liabilities which in the aggregate are in excess of the amount of all fees actually received by Consultant from the Company in connection with the engagement.

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The Company will not permit any settlement or compromise to include, or consent to the entry of any judgment that includes, a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of Consultant, without Consultant’s prior written consent. If Consultant becomes involved in any capacity in any action, claim, suit, investigation or proceeding, actual or threatened, brought by or against any person, including stockholders of the Company, in connection with or as a result of the engagement or any matter referred to in the engagement the Company also agrees to reimburse Consultant for his expenses (including, without limitation, reasonable legal fees and other costs and expenses incurred in connection with investigating, preparing for and responding to third party subpoenas or enforcing the engagement) as such expenses are incurred. The Company’s obligations pursuant to this paragraph are in addition to any rights that Consultant may have at common law or otherwise.

8.TERMINATION

Either party shall have the right to terminate this Agreement at any time upon ten (10) days’ written notice to the other. The Company shall further have the right to terminate this Agreement immediately at any time by written notice to Consultant in the event of a breach by Consultant of his obligations hereunder. In the event of termination of this Agreement, Company’s liability to Consultant shall be limited to payment for services actually furnished prior to termination plus reimbursable business-related expenses incurred.

9.CONFLICTING AGREEMENTS

Consultant represents and warrants that he has no other existing obligation to assign rights to Work Product and/or Developments to any other party, that he is not contractually prohibited from engaging in any type of work and that he is not a party to any agreement or under any obligation which conflicts with the terms of this Agreement or which prohibits him from carrying out his responsibilities under this Agreement.

10.WAIVER

Any failure on the part of any party hereto to comply with any of its obligations, agreements or conditions hereunder may be waived in writing by the other party to whom such compliance is owed. Absent such written waiver, no forbearance or other failure to insist on prompt compliance with any obligations, agreements or conditions hereunder shall be deemed to constitute a waiver of the rights of the party to whom compliance is owed.

11.NOTICES

All notices required or permitted hereunder shall be given in writing and (i) personally delivered to the other party, (ii)sent by certified mail, return receipt requested, to the other party, or (iii) sent via facsimile to the other party with a copy sent via U.S. Mail to the following address:

To Consultant:	To Company:
Mr. Charles B. Edelstein	Mr. Fred Newton
227 West Monroe, Suite 3600	4025 S. Riverpoint Parkway
Chicago, IL 60606	Phoenix, AZ 85040

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12.ENTIRE AGREEMENT

This Agreement represents the full and final understanding between the parties hereto and merges and supersedes any and all other promises, understandings or agreements with respect to the subject matter hereof. It may only be modified by a written instrument signed by both parties and expressly referring to this Agreement.

13.SEVERABILITY

If any provision of this Agreement is held illegal or unenforceable by any court or other authority of competent jurisdiction, such provision shall be deemed severable from the remaining provisions of this Agreement and shall not affect or impair the validity or enforceability of the remaining provisions of this Agreement.

14.APPLICABLE LAW

This Agreement shall be governed by and interpreted in accordance with the laws of the state of Arizona, excluding its provisions regarding conflicts of laws.

AGREED:
CONSULTANT		APOLLO GROUP, INC.
/s/ Charles B. Edelstein	By:	/s/ Fred Newton
Charles B. Edelstein		Fred Newton
		Senior Vice President-Human Resources
March 1, 2013	March 7, 2013
Date	Date

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EXHIBIT A

PROPRIETARY INFORMATION AND INTELLECTUAL PROPERTY AGREEMENT

This Proprietary Information and Intellectual Property Agreement (“PIIPA”) confirms certain terms of my service with Apollo Group, Inc., is a condition of my consulting relationship with the Company, and is a material part of the consideration for the Company’s engagement of my services as a consultant. The headings contained in this PIIPA are for convenience only, have no legal significance, and are not intended to change or limit this PIIPA in any matter whatsoever. Capitalized terms not defined in this PIIPA have the meanings ascribed to them in the Company’s Intellectual Property Policy. I have read and agree to comply with such policy. If there is any conflict between the terms of such policy and this PIIPA, the terms of this PIIPA will prevail.

A.Definitions

1.The “Company”

As used in this PIIPA, the “Company” refers to Apollo Group, Inc., each of its subsidiaries, parent companies, and successors and assigns. A subsidiary is any company that is directly or indirectly, wholly or partially, owned by Apollo Group, Inc. I recognize and agree that my obligations under this PIIPA and all terms of this PIIPA apply to me regardless of whether I am engaged to provide consulting services to Apollo Group, Inc. or any subsidiary, parent company, successor or assign of Apollo Group, Inc.

2.“Proprietary Information”

I understand that the Company possesses and will possess Proprietary Information which is important to its business. For purposes of this PIIPA, “Proprietary Information” is information that was or will be developed, created, or discovered by or on behalf of the Company, or which became or will become known by, or was or is conveyed to the Company. “Proprietary Information” includes information concerning the organization, business and finances of the Company or of any third party which the Company is under an obligation to keep confidential or that is maintained by the Company as confidential, including (without limitation):

a.the Company’s Lead List which is comprised of prospective students;

b.data and information on current and prospective corporate accounts, including, but not limited to, the identity of the corporate accounts, the decision makers or decision influencers, the buying criteria of the accounts and programs for those accounts;

c.the management process, training materials, scripts, programs and preferred responses to features and benefits provided to enrollment counselors, academic counselors and finance counselors;

d.the certification training materials and processes for the certification of the Company’s student advisors (known as the ACU online learning system program), including, but not limited to, the tests taken, materials provided and course work;

e.the information and data contained in the Company’s enrollment data system, including all monthly enrollment reports;

f.salary, terms of employment, length of employment and performance review information on the faculty members and other employees of the Company, all business models and financial

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information, data and materials of the Company not otherwise available to the general public through the Company’s Annual Report or otherwise;

g.all market research or works for hire materials, including, but not limited to, industry data, demographics, company profiles and/or specific consumer behavior information, all monthly financial, statistical and operational information and reports including but not limited to the “Yellow Book”, and all other information concerning enrollment by campus, profit and loss per campus and the terms of any lease;

h.all monthly financial statements, including, but not limited to, the “Board Book”;

i.all internally developed source code and the techniques and processes embodied therein, including, but not limited to, modifications to existing source codes for student information systems (such as Galaxy, Campus Tracking, OSIRIS and eCampus), academic systems (such as rEsource and OnLine Learning System (OLS)), proprietary modifications to packaged applications (such as PeopleSoft, Oracle Financials and ADP HRizon) and all future internally developed source code;

j.information provided to the Company from a third party under a non-disclosure agreement;

k.the “Personally Identifiable Information” of any individual that is known or accessible as a result of engagement with the Company. “Personally Identifiable Information” includes, but is not limited to information that is directly associated with a specific person such as a name, address, telephone number, e-mail address, or information about activities directly linked to that person. It also includes, but is not limited to, “Education Records” as that term is defined in the Family Educational Rights and Privacy Act of 1974, as amended.

I understand and agree that my engagement as a consultant to the Company creates a relationship of confidence and trust between the Company and me with respect to Proprietary Information.

3.“Company Documents and Materials”

I understand that the Company possesses or will possess “Company Documents and Materials” which are important to its business. For purposes of this PIIPA, “Company Documents and Materials” are documents or other media or tangible items that contain or embody Proprietary Information or any other information concerning the business, operations or plans of the Company, whether such documents, media or items have been prepared by me or by others.

“Company Documents and Materials” include (without limitation) blueprints, drawings, photographs, charts, graphs, notebooks, customer lists, computer disks, tapes, computer hard drives, floppy disks, CD ROMS, or printouts, sound recordings and other printed, typewritten or handwritten documents, sample products, prototypes and models and any information recorded in any other form whatsoever. “Company Documents and Materials” also include copies of any of the foregoing.

B.Assignment of Rights and Confidentiality Requirements

All Proprietary Information is and shall be the sole property of the Company. I hereby grant and assign, and agree to grant and assign, to the Company any and all rights, title and interest I may have or acquire in such Proprietary Information.

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At all times, both during the period of my consulting relationship with the Company and after its termination, I will keep in confidence and trust and will not use or disclose any Proprietary Information or anything relating to it without the prior written consent of an officer of the Company as specified in the Company’s Delegation of Authority (“DOA”), except as may be necessary in the ordinary course of performing my duties as a consultant to the Company. I acknowledge that, without prejudice to any and all rights of the Company, an injunction is the only effective remedy to protect the Company’s rights and property as set out herein.

C.Maintenance and Return of Company Documents and Materials

I agree to make and maintain adequate and current written records, in a form specified by the Company, of all inventions, trade secrets and works of authorship assigned or to be assigned to the Company pursuant to this PIIPA. All Company Documents and Materials are and shall be the sole property of the Company.

I agree that during the period of my consulting relationship with the Company, I will not remove any Company Documents and Materials from the business premises of the Company or deliver any Company Documents and Materials to any person or entity outside the Company, except in connection with performing my duties as a consultant to the Company. I further agree that, immediately upon the termination of my consulting relationship with the Company for any reason, or at any time during the period of my engagement as a consultant if so requested by the Company, I will return all Company Documents and Materials, apparatus, equipment and other physical property, or any reproduction of such property, excepting only (i) my personal copies of records relating to my compensation; (ii) my personal copies of any materials previously distributed generally to stockholders of the Company; and (iii) my copy of this PIIPA.

D.Disclosure of Intellectual Property to the Company

I will promptly disclose in accordance with the Company’s Intellectual Property Policy, all Company Intellectual Property (as defined below) which includes (without limitation) all software programs or subroutines, source or object code, algorithms, improvements, inventions, works of authorship, trade secrets, technology, designs, formulas, ideas, processes, techniques, know-how and data, whether or not patentable, and any other property subject to legal protection by patents, copyrights, trademarks, and/or trade secrets, or which may become subject to legal protection hereafter, whether or not they were, are, or will be so protected, which are made or discovered or conceived or reduced to practice or developed by me, either alone or jointly with others, during the term of my engagement as a consultant to the Company.

I will also disclose in accordance with the Company’s Intellectual Property Policy, all Company Intellectual Property made, discovered, conceived, reduced to practice, or developed by me within six (6) months after the termination of my consulting relationship with the Company which resulted, in whole or in part, from my engagement by the Company. Such disclosures shall be received by the Company in confidence (to the extent such Company Intellectual Property are not assigned to the Company pursuant to Section (E) below) and do not extend the assignment made in Section (E) below.

I agree to disclose Company Intellectual Property to the Company upon the first to occur of:

1.Creation;

2.A request by Intellectual Property (“IP”) Counsel, as appointed by the Company’s General Counsel, or a designee of IP Counsel;

3.As required by any applicable External Sponsor contract, by this PIIPA, or by any other Company policy;

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4.A determination is made by me that the Company or an External Sponsor may have an interest in the Intellectual Property.

I understand and agree that my disclosure of the creation of Company Intellectual Property must occur prior to any discussions or actions involving the Commercial Application of Company Intellectual Property and prior to any non-confidential presentation or other public release of the Company Intellectual Property. “Commercial Application of Intellectual Property” means any application of Intellectual Property in which an employee or service provider to the Company or the Company itself intends to obtain, or is likely to receive, economic gain from the use or disposition of the Intellectual Property.

I further agree to disclose promptly to IP Counsel any potentially unauthorized use of Company Intellectual Property by a third party.

Notwithstanding any other provision of this PIIPA to the contrary, this PIIPA does not obligate me to assign to the Company any of my rights in Intellectual Property that does not qualify as Company Intellectual Property. “Company Intellectual Property” is Intellectual Property that: (a) is created in the scope of my engagement as a consultant to the Company; (b) is developed, in whole or in part, by the use of Company Resources (excluding resources accessed and used entirely as part of a student or faculty academic endeavor at any subsidiary); (c) relates to the business of the Company or to the Company’s actual or demonstrably anticipated strategies, plans or research and development; or (d) contains Company Proprietary Information. Company Resources include, but are not limited to the following resources owned or controlled by Apollo Group, Inc., or a subsidiary: facilities, computers, research funding, resources for asynchronous or distance learning programs, paid time within the period of my engagement as a consultant to the Company, assistance of support staff, telecommunication services, central computing resources, instructional or graphic design or other production services, Company trade secret information, and any other equipment, technologies or facilities.

E.Right to New Ideas

1.Assignment of Company Intellectual Property to the Company

I agree that all Company Intellectual Property that I make, discover, conceive, reduce to practice or develop (in whole or in part, either alone or jointly with others) during the period of my engagement as a consultant to the Company shall be the sole property of the Company to the maximum extent permitted by applicable law. However, any Intellectual Property that I make, discover, conceive, reduce to practice or develop (in whole or in part, either alone or jointly with others) during the period of my engagement as a consultant to the Company shall not be the sole property of the Company so long as such Intellectual Property does not qualify as Company Intellectual Property.

The Company shall be the sole owner of all patents, patent rights, copyrights, trade secret rights, trademark rights and all other intellectual property or other rights in connection with Company Intellectual Property. I hereby assign and agree to assign to the Company any and all rights, title and interest I may have or acquire in Company Intellectual Property.

I agree to receive written approval from IP Counsel prior to incorporating, in any manner or fashion, any Intellectual Property not fully-owned by the Company into Company Intellectual Property.

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If I incorporate any Intellectual Property in which I have an interest into Company Intellectual Property or any Company product, service, or process, I hereby grant and agree to grant to the Company a royalty-free, fully paid-up, irrevocable, perpetual, sublicensable, worldwide license to make, have made, modify, use, market, sell and distribute any such Intellectual Property as part of or in connection with Company Intellectual Property or Company product, service or process in any media now known or later developed.

Furthermore, if I incorporate, without prior written approval, any Intellectual Property in which any party other than the Company has an interest into Company Intellectual Property or any Company product, service, or process, I agree to indemnify the Company for any consequences of such incorporation.

2.Works Made for Hire

I further acknowledge and agree that Company Intellectual Property, including (without limitation) any computer programs, programming documentation, and other works of authorship, are “works made for hire” for purposes of the Company’s rights under copyright laws. I hereby assign and agree to assign to the Company any and all rights, title and interest I may have or acquire in such works made for hire.

3.Cooperation

I agree to perform, during and after the period of my engagement as a consultant to the Company, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company’s expense, in further evidencing and perfecting the assignments made to the Company under this PIIPA and in obtaining, maintaining, defending and enforcing patents, patent rights, copyrights, trademark rights, trade secret rights or any other rights in connection with Company Intellectual Property and improvements thereto in any and all jurisdictions. Such acts may include (without limitation) execution of documents and assistance or cooperation in legal proceedings. I hereby irrevocably designate and appoint and agree to appoint the Company and its duly authorized officers and agents, as my agents and attorneys to act for and on my behalf and instead of me, to execute and file any documents, applications or related findings and to do all other lawfully permitted acts in the same manner as I could do to further the purposes set forth above in this Subsection 3, including (without limitation) the perfection of assignment and the prosecution and issuance of patents, patent applications, copyright applications and registrations, trademark applications and registrations or other rights in connection with Company Intellectual Property and improvements thereto with the same legal force and effect as if executed by me.

4.Assignment or Waiver of Moral Rights

Any assignment of copyright hereunder (and any ownership of a copyright as a work made for hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights” in applicable copyright or other legislation (collectively “Moral Rights”). To the extent such Moral Rights cannot be assigned under applicable law of a jurisdiction, and to the extent the following is allowed by the laws in the various jurisdictions where Moral Rights exist, I hereby waive the whole of my Moral Rights in any work and warrant that any work created by me is original.

5.List of Intellectual Property

I have attached hereto in the Appendix to this Exhibit A of this PIIPA a complete list of all Intellectual Property or improvements to which I claim ownership and that I desire to remove from the operation of this PIIPA (except for the license granted in Section (E)(1) above), and I acknowledge and agree that such list is complete. If no such list is attached to this PIIPA, I represent that I have no such Intellectual Property at the time of signing this PIIPA.

10

F.Company Authorization for Publication

Prior to my submitting or disclosing for possible non-confidential publication or dissemination outside the Company any material prepared by me that incorporates information that concerns the Company’s Intellectual Property or its business or anticipated research, I agree to deliver a copy of such material to an officer of the Company as specified in the SEA for his or her review and written consent. I agree to make such deletions and revisions as are reasonably requested by the Company to protect its Proprietary Information and Intellectual Property.

G.Former Employer’s, Client’s and Others’ Information

I represent that my performance of all the terms of this PIIPA does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired or developed by me in confidence or in trust prior to my engagement as a consultant to the Company.

I agree that I will not disclose to the Company, or use in the performance of my duties and responsibilities as a consultant to the Company, any trade secrets or confidential or proprietary information or material belonging to any previous employers, clients or other person or entity.

H.Independent Contractor Status

I agree that this PIIPA is not an employment contract and that I will not, at any time, be an employee of the Company.

I.Reformation and Severability

I agree that if any provision, or portion of a provision, of this PIIPA is deemed unenforceable by reason of the scope, extent or duration of its coverage, then such provision shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and enforceable. Should any provision, or portion of a provision, of this PIIPA be deemed unenforceable for any other reason, such unenforceability will not affect any other provision, or portion of a provision, of this PIIPA and this PIIPA shall be construed as if such unenforceable provision, or portion of provision, had never been contained herein.

J.Authorization for Post-Termination Notification of Obligations under PIIPA

I hereby authorize the Company to notify any person or entity with whom I become employed, or to whom I provide services, following the termination of my consulting relationship with the Company of my ongoing obligations under this PIIPA.

K.Entire Agreement

This PIIPA; the Employment Agreement dated July 7, 2008, and subsequently amended on December 12, 2008, February 23, 2009 and April 24, 2009 and further clarified on September 29, 2010 (collectively, the “Employment Agreement”); the Transition Agreement dated January 5, 2012 (the “Transition Agreement”); and the General Release Agreement dated February 21, 2013 (the “Release Agreement”) constitute the entire understanding and agreement between me and the Company in connection with the matters described, and replaces and cancels all previous agreements and commitments, whether spoken or written, with respect to such matters. Nothing in this PIIPA supersedes or replaces any of my or the Company’s obligations under my Employment Agreement, Transition Agreement, or Release Agreement that survived my termination of employment with the Company on February 28, 2013, including, but not limited to (i) my (and the Company’s) agreement to arbitrate disputes, and (ii) my restrictive covenants under Section 10 of the Employment

11

Agreement. Furthermore, any subsequent change(s) to the terms or conditions of my consulting relationship with the Company, including (without limitation) the number of hours of consulting services required of me or the hourly rate of compensation for my consulting services, shall not affect the validity or scope of this PIIPA which shall remain in full force and effect notwithstanding any such change(s).

L.Effective Date

This PIIPA shall be effective as of the first day of my engagement by the Company as a consultant and shall be binding upon me, my heirs, executors, assigns and administrators and shall inure to the benefit of the Company.

M. Governing Law

Although I may perform consulting services for the Company outside of Arizona or the United States, I understand and agree that this PIIPA will be interpreted and enforced in accordance with the laws of the State of Arizona.

I HAVE READ THIS PIIPA CAREFULLY, AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS THAT IT IMPOSES UPON ME WITHOUT RESERVATION.

I SIGN THIS PIIPA FREELY AND VOLUNTARILY, WITHOUT COERCION OR DURESS.

Date:	March 1, 2013	/s/ Charles B. Edelstein
		Charles B. Edelstein

12

APPENDIX TO EXHIBIT A

1. The following is a complete list of all Intellectual Property relevant to the subject matter of my consulting relationship with the Company that have been made or discovered or conceived or first reduced to practice by me or jointly with others prior to my engagement as a consultant by the Company that I desire to remove from the operation of the Company’s Proprietary Information and Intellectual Property Agreement (“PIIPA”), except for the license granted in Section (E)(2) of the PIIPA:

 X  No Intellectual Property.

See below:

See _____ (#) additional sheets attached.

2. I propose to bring to my consulting relationship the following materials and documents of a former client, employer or other person/entity:

 X  No materials or documents

See below:

See ____ (#) additional sheet(s) attached:

Date:	March 1, 2013	/s/ Charles B. Edelstein
		Charles B. Edelstein

13

EX-10.64

Exhibit 10.64

APOLLO GROUP

October 3, 2013

Mr. Charles B. Edelstein

[Address redacted.]

Re:Extension of Consultant Services Agreement

Dear Chas:

Reference is made to the Consulting Agreement between Charles B. Edelstein (“Consultant”) and Apollo Group, Inc. (the “Company”) dated March 1, 2013 (the “Agreement”). Pursuant to Section 2 of the Agreement, the Company and Consultant hereby agree to amend the Agreement as follows:

Effective as of September 1, 2013, Section 2 of the Agreement is hereby amended to read as follows:

2. TERM OF AGREEMENT

This Agreement shall become effective on the date first set forth above and shall continue in effect until February 28, 2014, unless terminated in accordance with the provisions hereof. This Agreement may only be extended by mutual agreement of the parties in writing. This Agreement shall terminate immediately in the event of Consultant’s death.

Additionally, also effective as of September 1, 2013, the first paragraph of Section 3 of the Agreement is hereby amended to read as follows:

3. FEES AND EXPENSES

During the Consulting Period, Consultant shall be paid a fee of seven hundred dollars ($700) per hour for each full hour spent providing services to the Company under this Agreement and a pro-rated hourly amount for partial hours so spent. Unless otherwise mutually agreed between the parties, Consultant shall not spend more than eighteen (18) hours per month in providing services under this Agreement.

Mr. Charles B. Edelstein

October 3, 2013

Page 2

Other than the terms and conditions that have been expressly modified by this letter agreement, all terms and conditions of the Agreement remain in full force and effect.

Sincerely,
APOLLO GROUP, INC.
By:	/s/ Fred Newton
	Fred Newton
	SVP Human Resources
SO AGREED:
	/s/ Charles B. Edelstein	Oct. 3, 2013
	Charles B. Edelstein	Date

EX-21

Exhibit 21

Subsidiaries of Apollo Group, Inc.
Entity	Jurisdiction of Incorporation or Formation
Apollo Development Corp.	Arizona
Apollo Global, Inc.	Delaware
Apollo Group China, LLC	Arizona
Apollo Investments, Inc.	Arizona
Apollo NB Holding Company	Arizona
Aptimus, Inc.	Washington
Institute for Professional Development	California
The College for Financial Planning Institutes Corporation	Arizona
The University of Phoenix, Inc.	Arizona
Apollo Education Services, LLC	Delaware
Carnegie Learning, Inc.	Pennsylvania
Apollo Lightspeed LLC	Delaware

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.	California, Connecticut, Missouri, New Jersey, Wisconsin
Institute for Professional Development	Institute for Professional Development, Inc.	Arizona, Florida, Illinois, Indiana, Kentucky, North Carolina, Oklahoma, Pennsylvania, Tennessee, Virginia
Institute for Professional Development	Institute for Professional Development Corporation	Iowa
Institute for Professional Development	Institute for Professional Development Incorporated	Oregon
Institute for Professional Development	Apollo Group, Inc.	Texas

Subsidiaries of Apollo Global, Inc.
Entity	Jurisdiction of Incorporation or Formation
Western International University, Inc	Arizona, USA
Apollo Global Dutch GP, LLC	Delaware, USA
Helios International (Netherlands) C.V.	Netherlands

Subsidiaries of Helios International (Netherlands) C.V.
Entity	Jurisdiction of Incorporation or Formation
Cooperatieve Apollo Global Netherlands U.A.	Netherlands
Apollo Global Dutch Coop, LLC	Delaware, USA

Subsidiaries of Cooperatieve Apollo Global Netherlands U.A.
Entity	Jurisdiction of Incorporation or Formation
Apollo Global Chile, S.A.	Chile
Apollo Global Mexico, S. de R.L. de C.V.	Mexico
Apollo Global Singapore Holdings Pte. Ltd	Singapore
Apollo UK Acquisition Company Limited	United Kingdom

Subsidiaries of Apollo UK Acquisition Company Limited
Entity	Jurisdiction of Incorporation or Formation
BPP Holdings Limited	United Kingdom

Subsidiaries of Apollo Global Chile, S.A.
Entity	Jurisdiction of Incorporation or Formation
Apollo Chile Comunicaciones, Limitada	Chile
Universidad de Artes, Ciencias y Comunicación 1	Chile
Instituto Superior de Artes y Ciencias de la Comunicación S.A. (“I.A.C.C”)	Chile
Sociedad de Transportes Trans-Guil Limitada (“Trans-Guil”)	Chile

Subsidiaries of Apollo Global Mexico, S. de R.L. de C.V.
Entity	Jurisdiction of Incorporation or Formation
Apollo Global Mexico Sub, S. de R.L. de C.V.	Mexico

Subsidiaries of Apollo Global Mexico Sub, S. de R.L. de C.V.
Entity	Jurisdiction of Incorporation or Formation
Universidad Latinoamericana, S.C. (“ULA”)	Mexico

Subsidiaries of BPP Holdings Limited
Entity	Jurisdiction of Incorporation or Formation
BPP Services Limited	United Kingdom
BPP University Limited	United Kingdom
BPP Dublin Limited	Ireland
Happy Café Limited	United Kingdom
BPP International Limited	United Kingdom
BPP Netherlands, BV	Netherlands

Subsidiaries of BPP Services Limited
Entity	Jurisdiction of Incorporation or Formation
BPP Learning Media Limited	United Kingdom
BPP Professional Education Limited	United Kingdom

¹ UNIACC is a non-profit entity; its members are I.A.C.C. and Apollo Global Chile, S.A.

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, 33-87638 and 333-180355 on Form S-8 of our reports dated October 22, 2013, relating to the consolidated financial statements of Apollo Group, Inc. and subsidiaries and 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. for the year ended August 31, 2013.

/s/ DELOITTE & TOUCHE LLP

Phoenix, Arizona

October 22, 2013

EX-31.1

EXHIBIT 31.1

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 22, 2013

/s/ Gregory W. Cappelli  

Gregory W. Cappelli 

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, 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 22, 2013

/s/ Brian L. Swartz  

Brian L. Swartz 

Senior Vice President and Chief Financial Officer

(Principal Financial Officer) 

EX-32.1

EXHIBIT 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

In connection with the Annual Report of Apollo Group, Inc. (the “Company”) on Form 10-K for the year ended August 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory W. Cappelli, 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 22, 2013

/s/ Gregory W. Cappelli  

Gregory W. Cappelli 

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 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, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian L. Swartz, Senior Vice President and Chief Financial 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 22, 2013

/s/ Brian L. Swartz  

Brian L. Swartz 

Senior Vice President and Chief Financial Officer

(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.

XML

Fair Value Measurements

12 Months Ended

Aug. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis consist of the following as of August 31, 2013:

			Fair Value Measurements at Reporting Date Using
	August 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
($ in thousands)
Assets:
Cash equivalents (including restricted cash equivalents):
Money market funds	$	732,530	$	732,530	$	—	$	—
Marketable securities:
Auction-rate securities	5,946		—		—		5,946
Total assets at fair value on a recurring basis	$	738,476	$	732,530	$	—	$	5,946
Liabilities:
Other long-term liabilities:
Contingent payment	$	5,277	$	—	$	—	$	5,277
Total liabilities at fair value on a recurring basis	$	5,277	$	—	$	—	$	5,277

Assets measured at fair value on a recurring basis consist of the following as of August 31, 2012:

			Fair Value Measurements at Reporting Date Using
	August 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
($ in thousands)
Assets:
Cash equivalents (including restricted cash equivalents):
Money market funds	$	629,166	$	629,166	$	—	$	—
Marketable securities:
Auction-rate securities	5,946		—		—		5,946
Total assets at fair value on a recurring basis	$	635,112	$	629,166	$	—	$	5,946

We measure the above items on a recurring basis at fair value as follows:

• Money market funds - Classified within Level 1 and valued primarily using real-time quotes for transactions in active exchange markets involving identical assets. As of August 31, 2013 and 2012, our remaining cash and cash equivalents not disclosed in the above tables approximate fair value because of the short-term nature of the financial instruments.

• Auction-rate securities - Classified within Level 3 due to the illiquidity of the market and valued using a discounted cash flow model encompassing significant unobservable inputs such as estimated interest rates, credit spreads, timing and amount of cash flows, credit quality of the underlying securities and illiquidity considerations.

• Contingent payment - As a result of our purchase of the noncontrolling interest in Apollo Global, we have a contingent payment based on a portion of Apollo Global’s operating results through the fiscal years ending August 31, 2017. This contingent payment is classified within Level 3 and valued using a discounted cash flow valuation method encompassing significant unobservable inputs. The inputs include estimated operating results scenarios for the applicable performance period, probability weightings assigned to operating results scenarios and the discount rate applied.

At August 31, 2013 and 2012, the carrying value of our debt, excluding capital leases, was $642.4 million and $649.7 million, respectively. Substantially all of our debt as of both dates was variable interest rate debt and the carrying amount approximates fair value.

Excluding the contingent payment obligation recorded during fiscal year 2013, we did not change our valuation techniques associated with recurring fair value measurements from prior periods.

There were no changes in the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during fiscal years 2013 and 2012. The following summarizes the changes in liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during fiscal year 2013:

($ in thousands)
Balance at August 31, 2012	$	—
Purchase of noncontrolling interest	6,000
Change in fair value included in net income	(723		)
Balance at August 31, 2013	$	5,277

Liabilities measured at fair value on a nonrecurring basis during fiscal years 2013 and 2012, all of which are included in other liabilities on our Consolidated Balance Sheets, consist of the following:

			Fair Value Measurements at Measurement Dates Using
($ in thousands)	Fair Value at Measurement Dates		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Losses for Respective Fiscal Years
Fiscal year 2013 restructuring obligations	$	92,151	$	—	$	—	$	92,151	$	92,151
Fiscal year 2012 restructuring obligations	$	20,082	$	—	$	—	$	20,082	$	20,082

During fiscal years 2013 and 2012, we recorded $92.2 million and $20.1 million, respectively, of aggregate initial lease and other contract exit obligations at fair value associated with our restructuring activities. We recorded obligation liabilities on the dates we ceased using the right conveyed by the respective contracts, and we measured the liabilities at fair value using Level 3 inputs included in the valuation method. Refer to Note 3, Restructuring and Other Charges.

XML

Accounts Receivable, Net (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Accounts receivable, net [Abstract]
Student accounts receivable	$ 243,660	$ 287,619
Less allowance for doubtful accounts	(59,744)	(107,230)	(128,897)
Net student accounts receivable	183,916	180,389
Other receivables	31,485	17,890
Total accounts receivable, net	215,401	198,279
Allowance for doubtful accounts [Abstract]
Allowance for doubtful accounts	107,230	128,897	192,857
Provision for uncollectible accounts receivable	83,798	146,742	181,297
Write-offs, net of recoveries	(131,284)	(168,409)	(245,257)
Allowance for doubtful accounts	$ 59,744	$ 107,230	$ 128,897

XML

Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Income Statement [Abstract]
Net revenue	$ 3,681,310	$ 4,253,337	$ 4,711,049
Instructional and student advisory	1,579,464	1,800,569	1,759,986
Marketing	661,693	663,442	654,399
Admissions advisory	263,934	383,935	415,386
General and administrative	329,249	344,300	355,548
Depreciation and amortization	161,733	177,804	157,686
Provision for uncollectible accounts receivable	83,798	146,742	181,297
Restructuring and other charges	198,625	38,695	22,913
Litigation (credit) charge, net	(24,600)	4,725	(11,951)
Goodwill and other intangibles impairment	0	16,788	219,927
Total costs and expenses	3,253,896	3,577,000	3,755,191
Operating income	427,414	676,337	955,858
Interest income	1,913	1,187	2,884
Interest expense	(8,745)	(11,745)	(8,931)
Other, net	2,407	476	(1,588)
Income from continuing operations before income taxes	422,989	666,255	948,223
Provision for income taxes	(174,024)	(283,072)	(419,136)
Income from continuing operations	248,965	383,183	529,087
Income from discontinued operations, net of tax	0	33,823	6,709
Net income	248,965	417,006	535,796
Net (income) loss attributable to noncontrolling interests	(439)	5,672	36,631
Net income attributable to Apollo	$ 248,526	$ 422,678	$ 572,427
Earnings per share - Basic:
Continuing operations attributable to Apollo (in dollars per share)	$ 2.20	$ 3.24	$ 4.01
Discontinued operations attributable to Apollo (in dollars per share)	$ 0.00	$ 0.24	$ 0.04
Basic income per share attributable to Apollo (in dollars per share)	$ 2.20	$ 3.48	$ 4.05
Earnings per share - Diluted:
Continuing operations attributable to Apollo (in dollars per share)	$ 2.19	$ 3.22	$ 4.00
Discontinued operations attributable to Apollo (in dollars per share)	$ 0.00	$ 0.23	$ 0.04
Diluted income per share attributable to Apollo (in dollars per share)	$ 2.19	$ 3.45	$ 4.04
Basic weighted average shares outstanding (in shares)	112,712	121,607	141,269
Diluted weighted average shares outstanding (in shares)	113,285	122,357	141,750

XML

Restructuring and Other Charges

12 Months Ended

Aug. 31, 2013

Restructuring and Related Activities [Abstract]

Restructuring and Other Charges

Restructuring and Other Charges

The U.S. higher education industry, including the proprietary sector, is experiencing unprecedented, rapidly developing changes that challenge many of the core principles underlying the industry. We are reengineering our business processes and refining our educational delivery systems to improve the effectiveness of our services to students, and to reduce the size of our services infrastructure and associated operating expenses to align with our reduced enrollment. We have incurred the following restructuring and other charges associated with these activities during the respective periods:

	Year Ended August 31,						Cumulative Costs as of August 31, 2013
($ in thousands)	2013		2012		2011
Lease and related costs, net	$	137,263	$	15,981	$	19,067	$	172,311
Severance and other employee separation costs	34,293		12,887		3,846		51,026
Other restructuring related costs	27,069		9,827		—		36,896
Restructuring and other charges	$	198,625	$	38,695	$	22,913	$	260,233

The following summarizes the restructuring and other charges in our segment reporting format:

	Year Ended August 31,						Cumulative Costs as of August 31, 2013
($ in thousands)	2013		2012		2011
University of Phoenix	$	158,757	$	20,002	$	22,913	$	201,672
Apollo Global	6,053		5,712		—		11,765
Other	33,815		12,981		—		46,796
Restructuring and other charges	$	198,625	$	38,695	$	22,913	$	260,233

The following details the changes in our restructuring liabilities by type of cost during the fiscal years 2013 and 2012:

($ in thousands)	Lease and Related Costs, Net			Severance and Other Employee Separation Costs			Other Restructuring Related Costs			Total
Balance at August 31, 2011	$	17,802		$	—		$	—		$	17,802
Restructuring and other charges	15,981			12,887			9,827			38,695
Non-cash adjustments	2,248			(1,323		)	—			925
Payments	(10,007		)	(8,566		)	(8,416		)	(26,989		)
Balance at August 31, 2012(1)	26,024			2,998			1,411			30,433
Restructuring and other charges	137,263			34,293			27,069			198,625
Non-cash adjustments(2)	(31,114		)	(2,008		)	(12,221		)	(45,343		)
Payments	(28,125		)	(27,660		)	(8,129		)	(63,914		)
Balance at August 31, 2013(1)	$	104,048		$	7,623		$	8,130		$	119,801

⁽¹⁾ The current portion of our restructuring liabilities was $55.2 million and $11.3 million as of August 31, 2013 and 2012, respectively. The substantial majority of these balances are included in accrued and other current liabilities on our Consolidated Balance Sheets and the long-term portion is included in other long-term liabilities. The gross obligation associated with our restructuring liabilities as of August 31, 2013 is approximately $185 million, which principally represents non-cancelable leases that will be paid over the respective lease terms through fiscal year 2023.

⁽²⁾ Non-cash adjustments for lease and related costs, net represents $50.1 million of accelerated depreciation, partially offset by the release of certain associated liabilities such as deferred rent. Non-cash adjustments for severance and other employee separation costs represents share-based compensation and for other restructuring related costs represents asset impairments.

• Lease and Related Costs, Net - Beginning in fiscal year 2011, University of Phoenix began rationalizing its administrative real estate facilities. In addition to continuing to rationalize its administrative facilities, University of Phoenix began implementing a plan during fiscal year 2013 to close 115 of its ground locations. As of August 31, 2013, University of Phoenix has closed nearly two-thirds of the locations included in these plans and the remaining closures will continue into fiscal year 2014 and beyond as University of Phoenix obtains the necessary regulatory approvals and completes its teach-out obligations. We have recorded $123.6 million of initial aggregate charges representing the estimated fair value of future contractual operating lease obligations, which were recorded in the periods we ceased using the respective facilities. We measure lease obligations at fair value using a discounted cash flow approach encompassing significant unobservable inputs (Level 3). The estimation of future cash flows includes non-cancelable contractual lease costs over the remaining terms of the leases, partially offset by estimated future sublease rental income, which involves significant judgment. Our estimate of the amount and timing of sublease rental income considers subleases that we have executed and subleases we expect to execute, current commercial real estate market data and conditions, comparable transaction data and qualitative factors specific to the facilities. The estimates will be subject to adjustment as market conditions change or as new information becomes available, including the execution of additional sublease agreements. As of August 31, 2013, we have recorded immaterial adjustments to our initial aggregate lease obligations for changes in estimated sublease income and interest accretion.

Lease and related costs, net also includes $50.1 million of accelerated depreciation during fiscal year 2013. This depreciation resulted from revising the useful lives of the fixed assets at the facilities discussed above through their expected closure dates. Prior to revising the estimated useful lives, we performed a recoverability analysis for the facilities’ fixed assets by comparing the estimated undiscounted cash flows of the locations through their expected closure dates to the carrying amount of the locations’ fixed assets. Based on our analysis, we recorded immaterial impairment charges during fiscal year 2013.

• Severance and Other Employee Separation Costs -Beginning in fiscal year 2011 and continuing through fiscal year 2013, we have implemented workforce reductions as we reengineer our business processes and refine our educational delivery systems. We incurred severance and other employee separation costs of $34.3 million, $12.9 million and $3.8 million in fiscal years 2013, 2012 and 2011, respectively. These costs are included in the reportable segments in which the respective personnel were employed.

• Other Restructuring Related Costs - We incurred $27.1 million of other restructuring related costs during fiscal year 2013 that principally include fixed asset impairment charges related to software and equipment we are no longer using, and costs for services from a consulting firm related to our restructuring initiatives. During fiscal year 2012, we incurred other restructuring related costs that principally represent services from a consulting firm associated with our restructuring initiatives. The majority of our other restructuring related costs in both fiscal years are included in “Other” in our segment reporting because they pertain to all areas of our business.

We have continued restructuring our business subsequent to August 31, 2013, which includes workforce reductions of approximately 500 non-faculty personnel. We expect to incur approximately $50 million of future restructuring charges for the initiatives announced to date. The majority of these charges represent lease related costs associated with closing University of Phoenix campuses, and will be incurred as the University obtains the necessary regulatory approvals and completes its teach-out obligations. We expect to incur the majority of the $50 million in fiscal year 2014 and the remainder in future years.

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Commitments and Contingencies

12 Months Ended

Aug. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

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. Based on the significant uncertainty associated with our pending as well as possible future litigation, settlements and other proceedings relative to our insurance policy coverage, the fair value of these indemnification agreements, if any, cannot be estimated.

Lease Commitments

The following details our future minimum commitments for capital and operating leases as of August 31, 2013:

($ in thousands)	Capital Leases			Operating Leases(1)
2014	$	18,170		$	180,605
2015	18,082			164,950
2016	11,115			142,616
2017	4,120			115,458
2018	983			91,465
Thereafter	1,194			353,899
Total future minimum lease obligation(1), (2)	$	53,664		$	1,048,993
Less: imputed interest on capital leases	(4,036		)
Net present value of capital lease obligations	$	49,628

⁽¹⁾ The total future minimum lease obligation excludes non-cancelable sublease rental income of $16.7 million.

⁽²⁾ We have initiated restructuring activities that have included ceasing use of a significant number of our operating leases. Refer to Note 3, Restructuring and Other Charges. The total future minimum operating lease obligation includes $168.4 million of future contractual lease payments associated with locations for which we no longer expect to receive an economic benefit. The total future minimum operating lease obligation also includes $31.9 million of future contractual lease payments associated with locations that we expect to close as University of Phoenix obtains the necessary regulatory approvals and completes its teach-out obligations.

Rent expense was $184.6 million, $207.5 million and $219.3 million for fiscal years 2013, 2012 and 2011, respectively.

We have entered into sale-leaseback agreements related to properties that we currently use to support our operations. We received $200.9 million for the sale of these properties, which generated a combined gain of approximately $41.7 million that is being deferred over the respective lease terms. We recognized gain amortization associated with sale-leasebacks of $2.8 million, $2.8 million and $2.2 million in fiscal years 2013, 2012 and 2011, respectively, on our Consolidated Statements of Income. The total deferred gain included on our Consolidated Balance Sheets was $25.7 million and $28.5 million as of August 31, 2013 and 2012, respectively.

Naming Rights to Glendale, Arizona Sports Complex

In September 2006, we entered into an 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 increases 3% per year until 2026. As of August 31, 2013, our remaining contractual obligation pursuant to this agreement is $108.5 million. 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.

Surety Bonds

As part of our normal operations, our insurers issue surety bonds for us that are required by various states where we operate. We are obligated to reimburse our insurers for any surety bonds that are paid. As of August 31, 2013, the face amount of these surety bonds was $41.5 million.

Letters of Credit

As of August 31, 2013, we had approximately $14 million of outstanding letters of credit that are required as part of our normal operations.

Litigation and Other Matters

We are subject to various claims and contingencies that arise from time to time 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.

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.

Securities Class Action (Apollo Institutional Investors Group)

On August 13, 2010, a securities class action complaint was filed in the U.S. District Court for the District of Arizona by Douglas N. Gaer naming us, John G. Sperling, Gregory W. Cappelli, Charles B. Edelstein, Joseph L. D’Amico, Brian L. Swartz and Gregory J. Iverson as defendants for allegedly making false and misleading statements regarding our business practices and prospects for growth. That complaint asserted a putative class period stemming from December 7, 2009 to August 3, 2010. A substantially similar complaint was also filed in the same Court by John T. Fitch on September 23, 2010 making similar allegations against the same defendants for the same purported class period. Finally, on October 4, 2010, another purported securities class action complaint was filed in the same Court by Robert Roth against the same defendants as well as Brian Mueller, Terri C. Bishop and Peter V. Sperling based upon the same general set of allegations, but with a defined class period of February 12, 2007 to August 3, 2010. The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On October 15, 2010, three additional parties filed motions to consolidate the related actions and be appointed the lead plaintiff.

On November 23, 2010, the Fitch and Roth actions were consolidated with Gaer and the Court appointed the “Apollo Institutional Investors Group” consisting of the Oregon Public Employees Retirement Fund, the Mineworkers’ Pension Scheme, and Amalgamated Bank as lead plaintiffs. The case is now entitled, In re Apollo Group, Inc. Securities Litigation, Lead Case Number CV-10-1735-PHX-JAT. On February 18, 2011, the lead plaintiffs filed a consolidated complaint naming Apollo, John G. Sperling, Peter V. Sperling, Joseph L. D’Amico, Gregory W. Cappelli, Charles B. Edelstein, Brian L. Swartz, Brian E. Mueller, Gregory J. Iverson, and William J. Pepicello as defendants. The consolidated complaint asserts a putative class period of May 21, 2007 to October 13, 2010. On April 19, 2011, we filed a motion to dismiss and oral argument on the motion was held before the Court on October 17, 2011. On October 27, 2011, the Court granted our motion to dismiss and granted plaintiffs leave to amend. On December 6, 2011, the lead plaintiffs filed an Amended Consolidated Class Action Complaint, which alleges similar claims against the same defendants. On January 9, 2012, we filed a motion to dismiss the Amended Consolidated Class Action Complaint. On June 22, 2012, the Court granted our motion to dismiss and entered a judgment in our favor. On July 20, 2012, the plaintiffs filed a Notice of Appeal with the U.S. Court of Appeals for the Ninth Circuit, and their appeal remains pending before that Court. If the plaintiffs are successful in their appeal, we anticipate they will seek substantial damages.

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 the information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

Securities Class Action (Teamsters Local 617 Pensions and Welfare Funds)

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. On September 11, 2007, the Court appointed The Pension Trust Fund for Operating Engineers as lead plaintiff. 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 April 30, 2009, plaintiffs filed their Second Amended Complaint, which alleges similar claims for alleged securities fraud against the same defendants.

On March 31, 2011, the U.S. District Court for the District of Arizona dismissed the case with prejudice and entered judgment in our favor. Plaintiffs filed a motion for reconsideration of this ruling, and the Court denied this motion on April 2, 2012. On April 27, 2012, the plaintiffs filed a Notice of Appeal with the U.S. Court of Appeals for the Ninth Circuit, and their appeal remains pending before that Court. If the plaintiffs are successful in their appeal, we anticipate they will seek substantial damages.

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 the information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not recorded a loss associated with this action.

Incentive Compensation False Claims Act Lawsuit

On May 25, 2011, we were notified that a qui tam complaint had been filed against us in the U.S. District Court, Eastern District of California, by private relators under the Federal False Claims Act and California False Claims Act, entitled USA and State of California ex rel. Hoggett and Good v. University of Phoenix, et al, Case Number 2:10-CV-02478-MCE-KJN. 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 successful, they are entitled to receive a portion of the federal government’s recovery.

The complaint alleges, among other things, that University of Phoenix has violated the Federal False Claims Act since December 12, 2009 and the California False Claims Act for the preceding ten years by falsely certifying to the U.S. Department of Education and the State of California that University of Phoenix was in compliance with various regulations that require compliance with federal rules regarding the payment of incentive compensation to admissions personnel, in connection with University of Phoenix’s participation in student financial aid programs. In addition to injunctive relief and fines, the relators seek significant damages on behalf of the Department of Education and the State of California, including all student financial aid disbursed by the Department to our students since December 2009 and by the State of California to our students during the preceding ten years. On July 12, 2011, we filed a motion to dismiss and on August 30, 2011, relators filed a motion for leave to file a Second Amended Complaint, which the Court granted. On November 2, 2011, we filed a motion to dismiss relators’ Second Amended Complaint, which was denied by the Court on July 6, 2012. On August 1, 2012, we filed a motion for certification of an interlocutory appeal, which was denied by the Court on March 7, 2013. Discovery in this matter has commenced, and trial is scheduled for January 2015.

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 the information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we 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, since transferred on plaintiff’s motion to the Eastern District of Virginia. The case is entitled, Digital Vending Services International, LLC vs. The University of Phoenix, et al, Case Number 2:09cv555 (JBF-TEM). 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 and seeks injunctive relief and substantial damages, including royalties as a percentage of our net revenue over a multi-year period. We filed an answer to the complaint on May 27, 2008, in which we denied 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.

On January 7, 2011, the Court granted our motion for summary judgment and dismissed the case with prejudice, citing plaintiff’s failure to point to admissible evidence that could support a finding of infringement. Plaintiff appealed the order granting summary judgment to the United States Court of Appeals for the Federal Circuit, which held oral argument on December 5, 2011. On March 7, 2012, a divided three-judge panel of the Federal Circuit issued an opinion affirming in part and reversing in part the order granting summary judgment, and it remanded a portion of the plaintiff’s claims to the district court for further proceedings. We filed a Petition for Rehearing with the Federal Circuit regarding the portion of the decision reversing the grant of summary judgment, which the Federal Circuit denied on May 25, 2012. Accordingly, the case was remanded to the U.S. District Court for the Eastern District of Virginia for further proceedings. In July 2013, we filed another motion for summary judgment based on non-infringement. On October 4, 2013, the Court granted our motion and dismissed each of plaintiff’s remaining claims with prejudice. Plaintiff has thirty days in which it can appeal that ruling.

As of August 31, 2013,we have accrued an immaterial amount associated with this matter. 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 the information available to us at present, we cannot reasonably estimate a range of loss for this action in excess of our accrual as of August 31, 2013.

Himmel Derivative Action

On November 12, 2010, we received a shareholder demand to investigate, address and commence proceedings against each of our directors and certain of our officers for violation of any applicable laws, including in connection with the subject matter of the report of the Government Accountability Office prepared for the U.S. Senate in August 2010, our withdrawal of the outlook we previously provided for our fiscal year 2011, the investigation into possible unfair and deceptive trade practices associated with certain alleged practices of University of Phoenix by the State of Florida Office of the Attorney General in Fort Lauderdale, Florida, the participation by the State of Oregon Office of the Attorney General in the Securities Class Action (Apollo Institutional Investors Group), and the informal inquiry by the Enforcement Division of the Securities and Exchange Commission commenced in October 2009.

On March 24, 2011, a shareholder derivative complaint was filed in the Superior Court for the State of Arizona, Maricopa County by Daniel Himmel, the foregoing shareholder who previously made a demand for investigation. In the complaint, the plaintiff asserts a derivative claim on our behalf against certain of our current and former officers and directors for breach of fiduciary duty, waste of corporate assets, and unjust enrichment. The complaint alleges that the individual defendants made improper statements and engaged in improper business practices that caused our stock price to drop, led to securities class actions against us, and enhanced regulation and scrutiny by various government entities and regulators. The case is entitled, Himmel v. Bishop, et al, Case Number CV2011-005604. Pursuant to a stipulation between all parties, on August 31, 2011, the Court ordered this action stayed during the pendency of the underlying Securities Class Action (Apollo Institutional Investors Group) matter.

K.K. Modi Investment and Financial Services Pvt. Ltd.

On November 8, 2010, a suit was filed by K.K. Modi Investment and Financial Services Pvt. Ltd. (“Modi”) in the High Court of Delhi at New Delhi against defendants Apollo Group, Inc., Western International University, Inc., University of Phoenix, Inc., Apollo Global, Inc., Modi Apollo International Group Pvt. Ltd., Apollo International, Inc., John G. Sperling, Peter V. Sperling and Jorge Klor De Alva, seeking to permanently enjoin the defendants from making investments in the education industry in the Indian market in breach of an exclusivity and noncompete provision which plaintiff alleges is applicable to Apollo Group and its subsidiaries. The case is entitled, K.K. Modi Investment and Financial Services Pvt. Ltd. v. Apollo International, et. al. We believe that the relevant exclusivity and noncompete provision is inapplicable to us and our affiliates, we have sought to dismiss this action on those grounds, and our application for such relief remains pending before the Court. On December 14, 2010, the Court declined to enter an injunction, but the matter is set for a further hearing on October 28, 2013. If plaintiff ultimately obtains the requested injunctive relief, our ability to conduct business in India, including through our joint venture with HT Media Limited, may be adversely affected. It is also possible that in the future K.K. Modi may seek to expand existing litigation in India or commence litigation in the U.S. in which it may assert a significant damage claim against us.

Attorney General Investigations

During fiscal year 2011, we received notices from the Attorney General Offices in three states that they were investigating business practices at the University of Phoenix, as described below. We believe there may be an informal coalition of states considering investigatory or other inquiries into recruiting practices and the financing of education at proprietary educational institutions, which may or may not include these three states.

• State of Florida. On October 22, 2010, University of Phoenix received notice that the State of Florida Office of the Attorney General in Fort Lauderdale, Florida had commenced an investigation into possible unfair and deceptive trade practices associated with certain alleged practices of the University. The notice included a subpoena to produce documents and detailed information for the time period of January 1, 2006 to the present about a broad spectrum of the University’s business. We are cooperating with the investigation, but also filed a suit to quash or limit the subpoena and to protect information sought that constitutes propriety or trade secret information. We cannot predict the eventual scope, duration or outcome of the investigation at this time.

• State of Massachusetts. In May 2011 and January 2013, University of Phoenix received Civil Investigative Demands from the State of Massachusetts Office of the Attorney General. The Demands relate to an investigation of possible unfair or deceptive methods, acts, or practices by for-profit educational institutions in connection with the recruitment of students and the financing of education. The Demands seek documents, information and testimony regarding a broad spectrum of the University’s business for the time period of January 1, 2002 to the present. We are cooperating with the investigation. We cannot predict the eventual scope, duration or outcome of the investigation at this time.

• State of Delaware. On August 3, 2011, University of Phoenix received a subpoena from the Attorney General of the State of Delaware to produce detailed information regarding the University’s students residing in Delaware. The time period covered by the subpoena was January 1, 2006 to the present. On October 11, 2013, we received a letter from the Delaware Attorney General’s office informing us that it is closing this investigation and will be taking no further action in the matter.

UNIACC Investigations

UNIACC was advised by the National Accreditation Commission of Chile in November 2011 that its institutional accreditation would not be renewed and therefore had lapsed. Subsequently, in June 2012, a prosecutor’s office in Santiago, Chile requested that UNIACC provide documents relating to UNIACC’s relationship with a former employee and consultant who served as a member of the National Accreditation Commission until March 2012, and we have since received requests for additional information in connection with this investigation. Furthermore, in August 2012, the prosecutor’s office began requesting that UNIACC provide information about UNIACC’s business structure and operations and its relationship with other Apollo entities, in connection with an additional investigation regarding UNIACC’s compliance with applicable laws concerning the generation of profit by universities such as UNIACC. The prosecutor’s office is also requesting additional information from UNIACC regarding certain government funding received by the institution. In November 2012, UNIACC learned that the Ministry of Education was commencing a formal investigation into related profit issues and concerning the official recognition of UNIACC as a university under Chilean law. We are cooperating with these investigations. At this time, we cannot predict the eventual scope, course or outcome of these investigations.

Securities Class Action (Policeman’s Annuity and Benefit Fund of Chicago)

In January 2008, a jury returned an adverse verdict against us and two remaining individual co-defendants in a securities class action lawsuit entitled, In re Apollo Group, Inc. Securities Litigation, Case No. CV04-2147-PHX-JAT, filed in the U.S. District Court for the District of Arizona. In September 2011, we entered into a settlement agreement with the plaintiffs to settle the litigation for $145.0 million, which was approved by the Court on April 20, 2012. Under the settlement agreement and during fiscal year 2012, the $145.0 million we had previously deposited into a common fund account in December 2011 was paid to the plaintiffs.

During fiscal year 2013, we resolved the dispute with our insurers regarding the previously advanced defense costs for this action. As a result, we reversed previously recorded charges associated with this dispute, which are included in litigation credit on our Consolidated Statements of Income during fiscal year 2013. We do not believe we have any exposure associated with this matter in the future.

AdomaWage and Hour Class Action

On January 8, 2010, Diane Adoma filed an action in United States District Court, Eastern District of California alleging wage and hour claims under the Fair Labor Standards Act and California law for failure to pay overtime and other violations, entitled Adoma et al. v. University of Phoenix, et al, Case Number 2:10-cv-00059-LKK. On April 12, 2010, plaintiff filed a motion for conditional collective action certification. The Court denied class certification under the Fair Labor Standards Act and transferred these claims to the District Court in Pennsylvania. On August 31, 2010, the U.S. District Court in California granted plaintiff’s motion for class action certification of the California claims. In August 2011, the parties agreed to settle the case for an immaterial amount, which was accrued in our financial statements during fiscal year 2011. The agreement, in which we do not admit any liability, was approved by the Court on December 17, 2012.

Putative Class Action under the Telephone Consumer Protection Act

On March 12, 2013, Del-Rio Swink filed a class action complaint against University of Phoenix and Receivable Management Services Corporation alleging violations of the Telephone Consumer Protection Action (“TPCA”). The complaint, which is captioned Swink v. University of Phoenix et al., 4:13-cv-00461 and which was filed in U.S. District Court for the Eastern District of Missouri, alleges that defendants, in seeking to collect tuition debt, violated the TCPA by using automatic dialing systems to place unsolicited telephone calls to the cellular telephones of plaintiff and other former students. It seeks to recover damages on behalf of plaintiff and other similarly situated individuals. On April 9, 2013, plaintiff voluntarily dismissed her complaint, and we do not believe we have any exposure associated with this matter in the future.

Securities and Exchange Commission

During April 2012, we received notification from the Enforcement Division of the Securities and Exchange Commission requesting documents and information relating to certain stock sales by company insiders and our February 28, 2012 announcement filed with the Commission on Form 8-K regarding revised enrollment forecasts. On January 17, 2013, we were informed in writing that the Enforcement Division had completed its investigation into this matter and did not intend to recommend any enforcement action by the Commission.

Refer to Note 13, Income Taxes, for discussion of Internal Revenue Service audits.

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Stock and Savings Plans (Details 3) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Share-based compensation expense [Line Items]
Share-based compensation	$ 49,462	$ 78,705	$ 70,040
Tax effect of share-based compensation	(18,986)	(29,874)	(26,715)
Share-based compensation expense, net of tax	30,476	48,831	43,325
Instructional and student advisory [Member]
Share-based compensation expense [Line Items]
Share-based compensation	20,060	27,731	27,012
Marketing [Member]
Share-based compensation expense [Line Items]
Share-based compensation	5,182	6,807	5,306
Admissions advisory [Member]
Share-based compensation expense [Line Items]
Share-based compensation	849	1,691	2,109
General and administrative [Member]
Share-based compensation expense [Line Items]
Share-based compensation	21,363	41,153	35,613
Restructuring and other charges [Member]
Share-based compensation expense [Line Items]
Share-based compensation	$ 2,008	$ 1,323	$ 0

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Goodwill and Intangible Assets (Details 2) (USD $)					3 Months Ended											3 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013 Finite-lived intangible assets [Member]	Aug. 31, 2012 Finite-lived intangible assets [Member]	Nov. 30, 2011 Finite-lived intangible assets [Member] Uniacc [Member]	Aug. 31, 2013 Software and technology [Member]	Aug. 31, 2012 Software and technology [Member]	Aug. 31, 2013 Student and customer relationships [Member]	Aug. 31, 2012 Student and customer relationships [Member]	Aug. 31, 2013 Copyrights [Member]	Aug. 31, 2012 Copyrights [Member]	Aug. 31, 2013 Other finite-lived intangibles [Member]	Aug. 31, 2012 Other finite-lived intangibles [Member]	Aug. 31, 2013 Indefinite-lived intangible assets [Member]	Aug. 31, 2012 Indefinite-lived intangible assets [Member]	Nov. 30, 2011 Indefinite-lived intangible assets [Member] Uniacc [Member]	Feb. 28, 2011 Trademarks [Member]	Aug. 31, 2013 Trademarks [Member]	Aug. 31, 2012 Trademarks [Member]	Aug. 31, 2013 Accreditations and designations [Member]	Aug. 31, 2012 Accreditations and designations [Member]
Intangible Assets [Line Items]
Gross carrying amount	$ 183,302,000	$ 198,263,000	$ 75,306,000	$ 90,267,000		$ 42,389,000	$ 42,389,000	$ 12,026,000	$ 14,109,000	$ 20,891,000	$ 20,891,000	$ 0	$ 12,878,000	$ 107,996,000	$ 107,996,000			$ 100,736,000	$ 100,736,000	$ 7,260,000	$ 7,260,000
Accumulated amortization	(43,106,000)	(41,761,000)	(43,106,000)	(41,761,000)		(16,673,000)	(8,197,000)	(7,727,000)	(6,731,000)	(18,706,000)	(16,277,000)	0	(10,556,000)	0	0			0	0	0	0
Effect of foreign currency translation loss	(8,004,000)	(7,468,000)	(2,140,000)	(3,332,000)		0	0	(1,363,000)	(1,395,000)	(777,000)	(741,000)	0	(1,196,000)	(5,864,000)	(4,136,000)			(5,347,000)	(3,778,000)	(517,000)	(358,000)
Intangible assets, net	132,192,000	149,034,000	30,060,000	45,174,000		25,716,000	34,192,000	2,936,000	5,983,000	1,408,000	3,873,000	0	1,126,000	102,132,000	103,860,000			95,389,000	96,958,000	6,743,000	6,902,000
Intangible assets impairment					$ 1,000,000											$ 3,900,000	$ 22,200,000

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Accrued and Other Liabilities

12 Months Ended

Aug. 31, 2013

Payables and Accruals [Abstract]

Accrued and other liabilities

Accrued and other current liabilities consist of the following as of August 31:

($ in thousands)	2013		2012
Salaries, wages and benefits	$	144,086	$	117,432
Restructuring lease and other contract exit obligations	46,658		6,902
Accrued advertising	45,850		45,737
Accrued legal and other professional obligations	31,310		57,476
Deferred rent and other lease liabilities	14,001		19,868
Curriculum materials	10,764		13,004
Student refunds, grants and scholarships	7,180		11,181
Other	46,857		53,281
Total accrued and other current liabilities	$	346,706	$	324,881

Other long-term liabilities consist of the following as of August 31:

($ in thousands)	2013		2012
Deferred rent and other lease liabilities	$	67,641	$	88,164
Restructuring lease obligations	64,610		19,122
Uncertain tax positions	33,637		27,223
Deferred gains on sale-leasebacks	22,894		25,692
Other	44,660		31,555
Total other long-term liabilities	$	233,442	$	191,756

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Significant Accounting Policies (Details) (USD $)	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2010
Accounting Policies [Abstract]
Employee tuition benefits	$ 53,400,000	$ 71,100,000	$ 97,000,000
Significant Accounting Policies [Line Items]
Long-lived asset impairments	20,400,000
Finite-lived intangibles weighted-average useful life	4 years 10 months 24 days
Weighted average fair value	$ 5.84	$ 14.10	$ 16.71
Expected volatility	44.40%	46.60%	46.80%
Expected term	3 years 4 months 24 days	4 years 3 months 18 days	4 years 2 months 12 days
Risk-free interest rate	0.70%	0.60%	1.40%
Dividend yield	0.00%	0.00%	0.00%
Unrecognized tax benefits	44,057,000	32,207,000	25,811,000	166,048,000
Foreign currency (loss) gain, net	(220,000)	497,000	(1,662,000)
Restructuring Charges [Member]
Significant Accounting Policies [Line Items]
Long-lived asset impairments	$ 12,200,000
Minimum [Member]
Significant Accounting Policies [Line Items]
Property and equipment useful life	3 years
Maximum [Member]
Significant Accounting Policies [Line Items]
University of Phoenix course completion percentage refund eligibility	60.00%
Property and equipment useful life	40 years
Tuition And Educational Services Revenue [Member]
Significant Accounting Policies [Line Items]
Percent of total gross consolidated revenue before discounts	92.00%
Educational Materials Revenue [Member]
Significant Accounting Policies [Line Items]
Percent of total gross consolidated revenue before discounts	6.00%
Services Revenue [Member]
Significant Accounting Policies [Line Items]
Percent of total gross consolidated revenue before discounts	1.00%
Other Revenue [Member]
Significant Accounting Policies [Line Items]
Percent of total gross consolidated revenue before discounts	1.00%
Discounts [Member]
Significant Accounting Policies [Line Items]
Percentage of consolidated net revenue	8.00%

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Fair Value Measurements (Details) (USD $)	3 Months Ended								12 Months Ended
	Aug. 31, 2013	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	Aug. 31, 2012	May 31, 2012	Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Assets and liabilities measured on a recurring and nonrecurring basis [Line Items]
Contingent payment (other long-term liabilities)	$ 5,277,000			$ 6,000,000	$ 0				$ 5,277,000	$ 0
Carrying value of debt, excluding capital leases	642,400,000				649,700,000				642,400,000	649,700,000
Losses for period	67,300,000	63,100,000	44,100,000	24,100,000	9,400,000	7,600,000	16,100,000	5,600,000	198,625,000	38,695,000	22,913,000
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance			6,000,000	0					0
Purchase of noncontrolling interest									6,000,000
Change in fair value included in net income									(723,000)
Balance	5,277,000			6,000,000	0				5,277,000	0
Recurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring and nonrecurring basis [Line Items]
Money market funds (cash and cash equivalents)	732,530,000				629,166,000				732,530,000	629,166,000
Auction-rate securities (marketable securities)	5,946,000				5,946,000				5,946,000	5,946,000
Total assets at fair value on a recurring basis	738,476,000				635,112,000				738,476,000	635,112,000
Contingent payment (other long-term liabilities)	5,277,000								5,277,000
Total liabilities at fair value on a recurring basis	5,277,000								5,277,000
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	5,277,000								5,277,000
Nonrecurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring and nonrecurring basis [Line Items]
Initial lease obligations	92,151,000				20,082,000				92,151,000	20,082,000
Losses for period									92,151,000	20,082,000
Quoted Prices in Active Markets for Identical Assets/Liabilities(Level 1) [Member] | Recurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring and nonrecurring basis [Line Items]
Money market funds (cash and cash equivalents)	732,530,000				629,166,000				732,530,000	629,166,000
Auction-rate securities (marketable securities)	0				0				0	0
Total assets at fair value on a recurring basis	732,530,000				629,166,000				732,530,000	629,166,000
Contingent payment (other long-term liabilities)	0								0
Total liabilities at fair value on a recurring basis	0								0
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	0								0
Quoted Prices in Active Markets for Identical Assets/Liabilities(Level 1) [Member] | Nonrecurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring and nonrecurring basis [Line Items]
Initial lease obligations	0				0				0	0
Significant Other Observable Inputs (Level 2) [Member] | Recurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring and nonrecurring basis [Line Items]
Money market funds (cash and cash equivalents)	0				0				0	0
Auction-rate securities (marketable securities)	0				0				0	0
Total assets at fair value on a recurring basis	0				0				0	0
Contingent payment (other long-term liabilities)	0								0
Total liabilities at fair value on a recurring basis	0								0
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	0								0
Significant Other Observable Inputs (Level 2) [Member] | Nonrecurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring and nonrecurring basis [Line Items]
Initial lease obligations	0				0				0	0
Significant Unobservable Inputs (Level 3) [Member] | Recurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring and nonrecurring basis [Line Items]
Money market funds (cash and cash equivalents)	0				0				0	0
Auction-rate securities (marketable securities)	5,946,000				5,946,000				5,946,000	5,946,000
Total assets at fair value on a recurring basis	5,946,000				5,946,000				5,946,000	5,946,000
Contingent payment (other long-term liabilities)	5,277,000								5,277,000
Total liabilities at fair value on a recurring basis	5,277,000								5,277,000
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	5,277,000								5,277,000
Significant Unobservable Inputs (Level 3) [Member] | Nonrecurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring and nonrecurring basis [Line Items]
Initial lease obligations	$ 92,151,000				$ 20,082,000				$ 92,151,000	$ 20,082,000

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Accrued and Other Liabilities (Tables)

12 Months Ended

Aug. 31, 2013

Payables and Accruals [Abstract]

Accrued and other current liabilities

Accrued and other current liabilities consist of the following as of August 31:

($ in thousands)	2013		2012
Salaries, wages and benefits	$	144,086	$	117,432
Restructuring lease and other contract exit obligations	46,658		6,902
Accrued advertising	45,850		45,737
Accrued legal and other professional obligations	31,310		57,476
Deferred rent and other lease liabilities	14,001		19,868
Curriculum materials	10,764		13,004
Student refunds, grants and scholarships	7,180		11,181
Other	46,857		53,281
Total accrued and other current liabilities	$	346,706	$	324,881

Other long-term liabilities

Other long-term liabilities consist of the following as of August 31:

($ in thousands)	2013		2012
Deferred rent and other lease liabilities	$	67,641	$	88,164
Restructuring lease obligations	64,610		19,122
Uncertain tax positions	33,637		27,223
Deferred gains on sale-leasebacks	22,894		25,692
Other	44,660		31,555
Total other long-term liabilities	$	233,442	$	191,756

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Quarterly Results of Operations (Unaudited)

12 Months Ended

Aug. 31, 2013

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results of Operations (Unaudited)

Quarterly Results of Operations (Unaudited)

Our operations are generally subject to seasonal trends. We experience, and expect to continue to experience, fluctuations in our results of operations as a result of seasonal variations in the level of our institutions’ enrollments. Although University of Phoenix enrolls students throughout the year, its net revenue is generally lower in our second fiscal quarter (December through February) than the other quarters due to holiday breaks.

The following unaudited consolidated quarterly financial information should be read in conjunction with other information included in our consolidated financial statements, and reflects all adjustments, consisting of normal, recurring adjustments, necessary for the fair presentation of the results of interim periods:

	(Unaudited)
	2013								2012
	Q1 Nov. 30		Q2 Feb. 28		Q3 May 31		Q4 Aug. 31		Q1 Nov. 30		Q2 Feb. 29		Q3 May 31		Q4 Aug. 31
(In thousands, except per share data)
Net revenue	$	1,055,183	$	834,372	$	946,774	$	844,981	$	1,171,900	$	962,682	$	1,122,258	$	996,497
Operating income(1), (2)	230,946		29,780		131,953		34,735		261,668		103,705		221,409		89,555
Income from continuing operations	133,740		13,659		80,170		21,396		145,136		59,241		131,278		47,528
Net income	133,740		13,659		80,170		21,396		147,284		61,171		134,382		74,169
Net income attributable to Apollo	133,495		13,527		79,953		21,551		149,314		63,882		134,034		75,448
Earnings per share - Basic:(3)
Continuing operations attributable to Apollo	$	1.19	$	0.12	$	0.71	$	0.19	$	1.13	$	0.50	$	1.11	$	0.47
Discontinued operations attributable to Apollo	—		—		—		—		0.02		0.01		0.02		0.20
Basic income per share attributable to Apollo	$	1.19	$	0.12	$	0.71	$	0.19	$	1.15	$	0.51	$	1.13	$	0.67
Earnings per share - Diluted:(3)
Continuing operations attributable to Apollo	$	1.18	$	0.12	$	0.71	$	0.19	$	1.13	$	0.49	$	1.11	$	0.46
Discontinued operations attributable to Apollo	—		—		—		—		0.01		0.02		0.02		0.20
Diluted income per share attributable to Apollo	$	1.18	$	0.12	$	0.71	$	0.19	$	1.14	$	0.51	$	1.13	$	0.66
Basic weighted average shares outstanding	112,420		112,573		112,742		113,105		130,318		125,298		118,134		112,815
Diluted weighted average shares outstanding	112,849		113,068		113,372		113,740		130,874		126,467		118,793		113,539

⁽¹⁾ Operating income includes the following for fiscal year 2013:

• Restructuring and other charges of $24.1 million, $44.1 million, $63.1 million and $67.3 million in the first, second, third and fourth quarters, respectively; and

• Litigation net credits of $16.9 million, $6.3 million, and $1.4 million in the first, second and fourth quarters, respectively.

⁽²⁾ Operating income includes the following for fiscal year 2012:

• Goodwill and other intangibles impairment of $16.8 million in the first quarter;

• Restructuring and other charges of $5.6 million, $16.1 million, $7.6 million and $9.4 million in the first, second, third and fourth quarters, respectively; and

• Litigation charges of $4.7 million in the third quarter.

⁽³⁾ Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted income per share may not equal annual basic and diluted income per share.

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Segment Reporting

12 Months Ended

Aug. 31, 2013

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

We operate primarily in the education industry. Our reportable segments have been determined based on the method by which management evaluates performance and allocates resources. Our seven operating segments are presented in the following reportable segments:

• University of Phoenix;

• Apollo Global; and

• Other.

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 throughout the United States, including the Commonwealth of Puerto Rico.

Apollo Global includes BPP, ULA, UNIACC and the Apollo Global corporate operations. BPP offers professional training and education through schools located in the United Kingdom, a European network of BPP offices, and the sale of books and other publications globally. ULA offers degree programs at its campuses throughout Mexico. UNIACC offers bachelor’s and master’s degree programs at campuses in Chile and online.

Other includes Western International University, IPD, CFFP, Carnegie Learning, Apollo Lightspeed, and corporate activities. Western International University offers associate’s, bachelor’s and master’s degrees in a variety of program areas primarily 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 a Master of Science in three majors, and certification programs in retirement, asset management and other financial planning areas. Carnegie Learning is a publisher of research-based math curricula and adaptive learning software for middle school, high school and postsecondary students. Apollo Lightspeed is focused on developing innovative educational offerings and services, including proprietary learning models and third-party courseware.

During the fourth quarter of fiscal year 2013, we revised our internal management reporting structure and determined Carnegie Learning and Western International University are operating segments. Accordingly, Carnegie Learning is no longer included in our University of Phoenix reportable segment, and Western International University is no longer included in our Apollo Global reportable segment. These operating segments are included in Other in our segment reporting and we have changed our presentation for all periods presented to reflect our revised segment reporting.

Management evaluates performance based on reportable segment profit. This measure of profit includes allocating corporate support costs to each segment as part of transfer pricing arrangements and/or a general allocation, but excludes taxes, interest income and expense, 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.

No individual customer accounted for more than 10% of our consolidated net revenue in fiscal years 2013, 2012 and 2011.

A summary of financial information by reportable segment is as follows:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Net revenue
University of Phoenix	$	3,304,464		$	3,873,098		$	4,322,670
Apollo Global	275,768			269,541			272,935
Other	101,078			110,698			115,444
Net revenue	$	3,681,310		$	4,253,337		$	4,711,049
Operating income (loss)(1):
University of Phoenix	$	579,670		$	846,840		$	1,270,468
Apollo Global(2)	(59,936		)	(66,964		)	(259,487		)
Other(3)	(92,320		)	(103,539		)	(55,123		)
Total operating income	427,414			676,337			955,858
Reconciling items:
Interest income	1,913			1,187			2,884
Interest expense	(8,745		)	(11,745		)	(8,931		)
Other, net	2,407			476			(1,588		)
Income from continuing operations before income taxes	$	422,989		$	666,255		$	948,223
Depreciation and amortization(4)
University of Phoenix(4)	$	53,562		$	64,643		$	53,681
Apollo Global	25,982			24,297			30,004
Other	82,189			89,294			75,321
Total depreciation and amortization(4)	$	161,733		$	178,234		$	159,006
Capital expenditures
University of Phoenix	$	6,992		$	20,133		$	53,801
Apollo Global	33,627			36,523			20,565
Other	78,729			58,531			88,207
Total capital expenditures	$	119,348		$	115,187		$	162,573

⁽¹⁾ University of Phoenix, Apollo Global and Other include charges associated with our restructuring activities. Refer to Note 3, Restructuring and Other Charges.

⁽²⁾ The operating loss for Apollo Global in fiscal years 2012 and 2011 includes goodwill and other intangibles impairment charges of $16.8 million and $219.9 million, respectively. Refer to Note 9, Goodwill and Intangible Assets.

⁽³⁾ The operating loss for Other in fiscal years 2013 and 2011 includes net credits of $23.2 million and $16.2 million, respectively, resulting from the resolution of certain of our legal matters.

⁽⁴⁾ Depreciation and amortization in fiscal year 2013 excludes $50.1 million of accelerated depreciation associated with our restructuring activities. Refer to Note 3, Restructuring and Other Charges.

A summary of our consolidated assets by reportable segment is as follows:

	As of August 31,
($ in thousands)	2013		2012		2011
University of Phoenix	$	790,537	$	901,180	$	1,016,005
Apollo Global	359,903		376,071		435,009
Other(1)	1,847,507		1,591,071		1,818,692
Total assets	$	2,997,947	$	2,868,322	$	3,269,706

⁽¹⁾ The majority of assets included in Other consists of corporate cash and cash equivalents and marketable securities.

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)	2013		2012		2011
Net revenue
United States	$	3,405,702	$	3,983,796	$	4,437,079
United Kingdom	205,662		198,408		200,759
Latin America	53,837		50,426		50,725
Other	16,109		20,707		22,486
Net revenue	$	3,681,310	$	4,253,337	$	4,711,049

	As of August 31,
($ in thousands)	2013		2012		2011
Long-lived assets(1)
United States	$	472,811	$	580,457	$	471,703
United Kingdom	169,371		174,229		214,073
Latin America	62,702		65,856		86,103
Other	3,542		3,466		35,562
Total long-lived assets	$	708,426	$	824,008	$	807,441

⁽¹⁾ Long-lived assets include property and equipment, net, goodwill, and intangible assets, net.

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Quarterly Results of Operations (Unaudited) (Tables)

12 Months Ended

Aug. 31, 2013

Quarterly Financial Information Disclosure [Abstract]

Quarterly results of operations

The following unaudited consolidated quarterly financial information should be read in conjunction with other information included in our consolidated financial statements, and reflects all adjustments, consisting of normal, recurring adjustments, necessary for the fair presentation of the results of interim periods:

	(Unaudited)
	2013								2012
	Q1 Nov. 30		Q2 Feb. 28		Q3 May 31		Q4 Aug. 31		Q1 Nov. 30		Q2 Feb. 29		Q3 May 31		Q4 Aug. 31
(In thousands, except per share data)
Net revenue	$	1,055,183	$	834,372	$	946,774	$	844,981	$	1,171,900	$	962,682	$	1,122,258	$	996,497
Operating income(1), (2)	230,946		29,780		131,953		34,735		261,668		103,705		221,409		89,555
Income from continuing operations	133,740		13,659		80,170		21,396		145,136		59,241		131,278		47,528
Net income	133,740		13,659		80,170		21,396		147,284		61,171		134,382		74,169
Net income attributable to Apollo	133,495		13,527		79,953		21,551		149,314		63,882		134,034		75,448
Earnings per share - Basic:(3)
Continuing operations attributable to Apollo	$	1.19	$	0.12	$	0.71	$	0.19	$	1.13	$	0.50	$	1.11	$	0.47
Discontinued operations attributable to Apollo	—		—		—		—		0.02		0.01		0.02		0.20
Basic income per share attributable to Apollo	$	1.19	$	0.12	$	0.71	$	0.19	$	1.15	$	0.51	$	1.13	$	0.67
Earnings per share - Diluted:(3)
Continuing operations attributable to Apollo	$	1.18	$	0.12	$	0.71	$	0.19	$	1.13	$	0.49	$	1.11	$	0.46
Discontinued operations attributable to Apollo	—		—		—		—		0.01		0.02		0.02		0.20
Diluted income per share attributable to Apollo	$	1.18	$	0.12	$	0.71	$	0.19	$	1.14	$	0.51	$	1.13	$	0.66
Basic weighted average shares outstanding	112,420		112,573		112,742		113,105		130,318		125,298		118,134		112,815
Diluted weighted average shares outstanding	112,849		113,068		113,372		113,740		130,874		126,467		118,793		113,539

⁽¹⁾ Operating income includes the following for fiscal year 2013:

• Restructuring and other charges of $24.1 million, $44.1 million, $63.1 million and $67.3 million in the first, second, third and fourth quarters, respectively; and

• Litigation net credits of $16.9 million, $6.3 million, and $1.4 million in the first, second and fourth quarters, respectively.

⁽²⁾ Operating income includes the following for fiscal year 2012:

• Goodwill and other intangibles impairment of $16.8 million in the first quarter;

• Restructuring and other charges of $5.6 million, $16.1 million, $7.6 million and $9.4 million in the first, second, third and fourth quarters, respectively; and

• Litigation charges of $4.7 million in the third quarter.

⁽³⁾ Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted income per share may not equal annual basic and diluted income per share.

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Accounts Receivable, Net (Tables)

12 Months Ended

Aug. 31, 2013

Receivables [Abstract]

Accounts receivable, net

Accounts receivable, net consist of the following as of August 31:

($ in thousands)	2013			2012
Student accounts receivable	$	243,660		$	287,619
Less allowance for doubtful accounts	(59,744		)	(107,230		)
Net student accounts receivable	183,916			180,389
Other receivables	31,485			17,890
Total accounts receivable, net	$	215,401		$	198,279

Allowance for doubtful accounts

The following summarizes the activity in allowance for doubtful accounts for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Beginning allowance for doubtful accounts	$	107,230		$	128,897		$	192,857
Provision for uncollectible accounts receivable	83,798			146,742			181,297
Write-offs, net of recoveries	(131,284		)	(168,409		)	(245,257		)
Ending allowance for doubtful accounts	$	59,744		$	107,230		$	128,897

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Income Taxes (Tables)

12 Months Ended

Aug. 31, 2013

Income Tax Disclosure [Abstract]

Pretax income by geographical source

Geographic sources of income (loss) from continuing operations before income taxes are as follows for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
United States	$	461,760		$	727,934		$	1,213,353
Foreign	(38,771		)	(61,679		)	(265,130		)
Income from continuing operations before income taxes	$	422,989		$	666,255		$	948,223

Income tax (expense) benefit

Income tax (expense) benefit consists of the following for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Current:
U.S. Federal	$	(171,702	)	$	(212,058	)	$	(350,640	)
State and local	(30,135		)	(47,024		)	(11,372		)
Foreign	(1,704		)	(2,140		)	373
Total current	(203,541		)	(261,222		)	(361,639		)
Deferred:
U.S. Federal	20,389			(28,964		)	(62,474		)
State and local	3,163			(1,074		)	(10,214		)
Foreign	5,965			8,188			15,191
Total deferred	29,517			(21,850		)	(57,497		)
Provision for income taxes	$	(174,024	)	$	(283,072	)	$	(419,136	)

Deferred tax assets and liabilities

Deferred tax assets and liabilities consist of the following as of August 31:

($ in thousands)	2013			2012
Deferred tax assets:
Allowance for doubtful accounts	$	16,479		$	32,659
Leasing transactions	86,946			62,389
Net operating loss carry-forward	25,055			19,804
Share-based compensation	35,123			74,540
Other	51,929			55,573
Gross deferred tax assets	215,532			244,965
Valuation allowance	(17,998		)	(11,282		)
Deferred tax assets, net of valuation allowance	197,534			233,683
Deferred tax liabilities:
Fixed assets	42,485			52,469
Intangibles	35,109			41,203
Other	7,929			9,212
Gross deferred tax liabilities	85,523			102,884
Net deferred income taxes	$	112,011		$	130,799

Unrecognized tax benefits

The following tabular reconciliation summarizes the activity in our unrecognized tax benefits, excluding interest and penalties, for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Beginning unrecognized tax benefits	$	32,207		$	25,811		$	166,048
Additions based on tax positions taken in the current year	13,095			7,708			4,503
Additions for tax positions taken in prior years	5,953			813			15,570
Settlement with tax authorities	(197		)	(733		)	(110,980		)
Reductions for tax positions of prior years	(2,635		)	—			(45,231		)
Reductions due to lapse of applicable statute of limitations	(4,366		)	(1,392		)	(4,099		)
Ending unrecognized tax benefits	$	44,057		$	32,207		$	25,811

Income tax rate reconciliation

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 the respective periods:

	Year Ended August 31,
	2013		2012		2011
Statutory U.S. federal income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit(1)	4.4	%	4.2	%	1.8	%
Non-deductible compensation, net	0.1	%	0.2	%	0.3	%
Foreign taxes	2.2	%	1.4	%	0.9	%
Litigation charge(2)	—	%	—	%	(1.0	)%
Goodwill impairments	—	%	0.9	%	7.4	%
Meritus University, Inc. closure	—	%	—	%	(0.8	)%
Other, net	(0.6	)%	0.8	%	0.6	%
Effective income tax rate	41.1	%	42.5	%	44.2	%

⁽¹⁾ In fiscal year 2011, we realized a $43.3 million benefit associated with our resolution with the Arizona Department of Revenue. Refer to further discussion below.

⁽²⁾ In fiscal year 2011, we realized a $9.6 million benefit from resolution with the Internal Revenue Service regarding the deductibility of payments made related to the settlement of a qui tam lawsuit.

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Restructuring and Other Charges (Details) (USD $)	3 Months Ended								12 Months Ended			36 Months Ended	2 Months Ended	12 Months Ended			36 Months Ended	12 Months Ended			36 Months Ended	12 Months Ended			36 Months Ended	12 Months Ended			36 Months Ended	12 Months Ended	36 Months Ended	12 Months Ended			36 Months Ended	12 Months Ended			36 Months Ended
	Aug. 31, 2013	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	Aug. 31, 2012	May 31, 2012	Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2013	Oct. 21, 2013 Subsequent Event [Member] Positions	Aug. 31, 2013 University Of Phoenix [Member] Facilities	Aug. 31, 2012 University Of Phoenix [Member]	Aug. 31, 2011 University Of Phoenix [Member]	Aug. 31, 2013 University Of Phoenix [Member]	Aug. 31, 2013 Apollo Global [Member]	Aug. 31, 2012 Apollo Global [Member]	Aug. 31, 2011 Apollo Global [Member]	Aug. 31, 2013 Apollo Global [Member]	Aug. 31, 2013 Other [Member]	Aug. 31, 2012 Other [Member]	Aug. 31, 2011 Other [Member]	Aug. 31, 2013 Other [Member]	Aug. 31, 2013 Lease and related costs, net [Member]	Aug. 31, 2012 Lease and related costs, net [Member]	Aug. 31, 2011 Lease and related costs, net [Member]	Aug. 31, 2013 Lease and related costs, net [Member]	Aug. 31, 2013 Lease and related costs, net [Member] University Of Phoenix [Member]	Aug. 31, 2013 Lease Abandonment Obligation [Member] University Of Phoenix [Member]	Aug. 31, 2013 Severance and other employee separation costs [Member]	Aug. 31, 2012 Severance and other employee separation costs [Member]	Aug. 31, 2011 Severance and other employee separation costs [Member]	Aug. 31, 2013 Severance and other employee separation costs [Member]	Aug. 31, 2013 Other restructuring related costs [Member]	Aug. 31, 2012 Other restructuring related costs [Member]	Aug. 31, 2011 Other restructuring related costs [Member]	Aug. 31, 2013 Other restructuring related costs [Member]
Restructuring [Line Items]
Restructuring and other charges	$ 67,300,000	$ 63,100,000	$ 44,100,000	$ 24,100,000	$ 9,400,000	$ 7,600,000	$ 16,100,000	$ 5,600,000	$ 198,625,000	$ 38,695,000	$ 22,913,000			$ 158,757,000	$ 20,002,000	$ 22,913,000		$ 6,053,000	$ 5,712,000	$ 0		$ 33,815,000	$ 12,981,000	$ 0		$ 137,263,000	$ 15,981,000	$ 19,067,000				$ 34,293,000	$ 12,887,000	$ 3,846,000		$ 27,069,000	$ 9,827,000	$ 0
Cumulative costs for restructuring activities												260,233,000					201,672,000				11,765,000				46,796,000				172,311,000		123,600,000				51,026,000				36,896,000
Balance	119,801,000				30,433,000				119,801,000	30,433,000	17,802,000	119,801,000														104,048,000	26,024,000	17,802,000	104,048,000			7,623,000	2,998,000	0	7,623,000	8,130,000	1,411,000	0	8,130,000
Non-cash adjustments									(45,343,000)	925,000																(31,114,000)	2,248,000					(2,008,000)	(1,323,000)			(12,221,000)	0
Payments									(63,914,000)	(26,989,000)																(28,125,000)	(10,007,000)					(27,660,000)	(8,566,000)			(8,129,000)	(8,416,000)
Balance	119,801,000				30,433,000				119,801,000	30,433,000	17,802,000	119,801,000														104,048,000	26,024,000	17,802,000	104,048,000			7,623,000	2,998,000	0	7,623,000	8,130,000	1,411,000	0	8,130,000
Accelerated depreciation																														50,100,000
Expected number of facilities abandoned														115
Number of positions eliminated													500
Expected future restructuring charges									50,000,000
Restructuring liability, current	55,200,000				11,300,000				55,200,000	11,300,000		55,200,000														46,658,000	6,902,000		46,658,000
Restructuring gross obligation	$ 185,000,000								$ 185,000,000			$ 185,000,000

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Discontinued Operations (Tables)

12 Months Ended

Aug. 31, 2013

Discontinued Operations (Tables) [Abstract]

Discontinued operations

The following summarizes the operating results for our discontinued operations for the respective periods, which are presented in income from discontinued operations, net of tax on our Consolidated Statements of Income:

	Year Ended August 31,
($ in thousands)	2012			2011
Net revenue	$	24,209		$	42,468
Gain (loss) on sale	26,678			(98		)
Costs and other	(14,594		)	(35,748		)
Income from discontinued operations before income taxes	36,293			6,622
(Provision) benefit from income taxes(1)	(2,470		)	87
Income from discontinued operations, net of tax	33,823			6,709
Income from discontinued operations, net of tax, attributable to noncontrolling interests(2)	(4,871		)	(608		)
Income from discontinued operations, net of tax, attributable to Apollo	$	28,952		$	6,101

⁽¹⁾ There was no tax expense associated with the gain on sale of MPW as discussed above. The tax benefit in fiscal year 2011 includes a $1.6 million tax benefit as a result of the Insight Schools sale generating a capital loss for tax purposes.

⁽²⁾ The noncontrolling interest represents the portion of MPW’s operating results attributable to Apollo Global’s former noncontrolling shareholder.

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Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Aug. 31, 2013	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	Aug. 31, 2012	May 31, 2012	Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Earnings Per Share [Abstract]
Net income attributable to Apollo (basic and diluted)	$ 21,551	$ 79,953	$ 13,527	$ 133,495	$ 75,448	$ 134,034	$ 63,882	$ 149,314	$ 248,526	$ 422,678	$ 572,427
Basic weighted average shares outstanding (in shares)	113,105,000	112,742,000	112,573,000	112,420,000	112,815,000	118,134,000	125,298,000	130,318,000	112,712,000	121,607,000	141,269,000
Anti-dilutive securities [Line Items]
Diluted weighted average shares outstanding (in shares)	113,740,000	113,372,000	113,068,000	112,849,000	113,539,000	118,793,000	126,467,000	130,874,000	113,285,000	122,357,000	141,750,000
Basic income per share attributable to Apollo (in dollars per share)	$ 0.19	$ 0.71	$ 0.12	$ 1.19	$ 0.67	$ 1.13	$ 0.51	$ 1.15	$ 2.20	$ 3.48	$ 4.05
Diluted income per share attributable to Apollo (in dollars per share)	$ 0.19	$ 0.71	$ 0.12	$ 1.18	$ 0.66	$ 1.13	$ 0.51	$ 1.14	$ 2.19	$ 3.45	$ 4.04
Stock options [Member]
Anti-dilutive securities [Line Items]
Dilutive effect of share-based awards (in shares)									0	4,000	99,000
Anti-dilutive securities excluded from earnings per share computation									7,000,000	8,800,000	9,300,000
Restricted stock units and performance share awards [Member]
Anti-dilutive securities [Line Items]
Dilutive effect of share-based awards (in shares)									573,000	746,000	382,000
Anti-dilutive securities excluded from earnings per share computation									1,400,000		400,000
Restricted stock units and performance share awards [Member] | Maximum [Member]
Anti-dilutive securities [Line Items]
Anti-dilutive securities excluded from earnings per share computation										100,000

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Segment Reporting (Details) (USD $)	3 Months Ended								12 Months Ended
	Aug. 31, 2013	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	Aug. 31, 2012	May 31, 2012	Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2013 Customers Segments2	Aug. 31, 2012 Customers	Aug. 31, 2011 Customers
Segment Reporting [Abstract]
Number of operating segments									7
Customers accounting for more than 10% of revenue									0	0	0
Segment reporting [Line Items]
Net revenue	$ 844,981,000	$ 946,774,000	$ 834,372,000	$ 1,055,183,000	$ 996,497,000	$ 1,122,258,000	$ 962,682,000	$ 1,171,900,000	$ 3,681,310,000	$ 4,253,337,000	$ 4,711,049,000
Operating income	34,735,000	131,953,000	29,780,000	230,946,000	89,555,000	221,409,000	103,705,000	261,668,000	427,414,000	676,337,000	955,858,000
Interest income									1,913,000	1,187,000	2,884,000
Interest expense									(8,745,000)	(11,745,000)	(8,931,000)
Other, net									2,407,000	476,000	(1,588,000)
Income from continuing operations before income taxes									422,989,000	666,255,000	948,223,000
Depreciation and amortization									161,733,000	178,234,000	159,006,000
Capital expenditures									119,348,000	115,187,000	162,573,000
Goodwill and other intangibles impairment								16,788,000	0	16,788,000	219,927,000
Litigation credit, net	1,400,000		6,300,000	16,900,000		(4,725,000)			24,600,000	(4,725,000)	11,951,000
Assets	2,997,947,000				2,868,322,000				2,997,947,000	2,868,322,000	3,269,706,000
University Of Phoenix [Member]
Segment reporting [Line Items]
Net revenue									3,304,464,000	3,873,098,000	4,322,670,000
Operating income									579,670,000	846,840,000	1,270,468,000
Depreciation and amortization									53,562,000	64,643,000	53,681,000
Capital expenditures									6,992,000	20,133,000	53,801,000
Goodwill and other intangibles impairment									0
Assets	790,537,000				901,180,000				790,537,000	901,180,000	1,016,005,000
University Of Phoenix [Member] | Lease and related costs, net [Member]
Segment reporting [Line Items]
Accelerated depreciation									50,100,000
Apollo Global [Member]
Segment reporting [Line Items]
Net revenue									275,768,000	269,541,000	272,935,000
Operating income									(59,936,000)	(66,964,000)	(259,487,000)
Depreciation and amortization									25,982,000	24,297,000	30,004,000
Capital expenditures									33,627,000	36,523,000	20,565,000
Goodwill and other intangibles impairment										16,788,000	219,927,000
Assets	359,903,000				376,071,000				359,903,000	376,071,000	435,009,000
Other [Member]
Segment reporting [Line Items]
Net revenue									101,078,000	110,698,000	115,444,000
Operating income									(92,320,000)	(103,539,000)	(55,123,000)
Depreciation and amortization									82,189,000	89,294,000	75,321,000
Capital expenditures									78,729,000	58,531,000	88,207,000
Litigation credit, net									23,200,000		16,200,000
Assets	$ 1,847,507,000				$ 1,591,071,000				$ 1,847,507,000	$ 1,591,071,000	$ 1,818,692,000

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Shareholders' Equity (Details 2) (USD $)	3 Months Ended	12 Months Ended
	May 31, 2013	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Share repurchases [Line Items]
Treasury stock purchases, cost		$ 9,537,000	$ 811,913,000	$ 783,168,000
Accumulated other comprehensive loss [Abstract]
Foreign currency translation losses		(36,032,000)	(29,503,000)
Unrealized loss on marketable securities		(531,000)	(531,000)
Accumulated other comprehensive loss		(36,563,000)	(30,034,000)
Tax in accumulated other comprehensive loss		(600,000)	(400,000)
Apollo Group Class A nonvoting common stock [Member]
Share repurchases [Line Items]
Treasury stock reissued, shares		1,500,000	1,200,000	1,200,000
Aggregate share repurchase program	250,000,000
Amount remaining on repurchase authorization		250,000,000
Apollo Group Class A nonvoting common stock [Member] | Share Repurchases [Member]
Share repurchases [Line Items]
Treasury stock purchases (in shares)		0	19,100,000	18,300,000
Treasury stock purchases, cost			799,500,000	775,800,000
Treasury stock purchases, average price per share			41.82	42.30
Apollo Group Class A nonvoting common stock [Member] | Repurchases Related To Restricted Stock Units [Member]
Share repurchases [Line Items]
Treasury stock purchases (in shares)		500,000	300,000	200,000
Treasury stock purchases, cost		$ 9,537,000	$ 12,400,000	$ 7,400,000

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Stock and Savings Plans (Tables)

12 Months Ended

Aug. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of restricted stock units and performance share awards activity

The following provides a summary of activity for our restricted stock units and PSAs (granted PSAs are assumed to convert into shares of our Class A common stock at the target level):

	Restricted Stock Units				Performance Share Awards(1)
	Number of Shares (in thousands)		Weighted Average Grant Date Fair Value		Number of Shares (in thousands)		Weighted Average Grant Date Fair Value
Nonvested at August 31, 2010	1,481		$	51.12	69		$	42.27
Granted	2,072		44.14		191		46.98
Vested and released	(469	)	54.01		—		—
Forfeited	(152	)	49.94		—		—
Nonvested at August 31, 2011	2,932		$	45.78	260		$	45.74
Granted	1,692		36.81		145		37.50
Vested and released	(905	)	46.97		—		—
Forfeited	(193	)	47.12		(6	)	44.89
Nonvested at August 31, 2012	3,526		$	41.10	399		$	42.76
Granted	2,301		20.10		47		19.80
Vested and released	(1,334	)	42.25		—		—
Forfeited	(527	)	39.99		(81	)	37.45
Nonvested at August 31, 2013	3,966		$	28.68	365		$	40.97

⁽¹⁾ The vesting of PSAs is subject to the achievement of the specified performance goals and the number of common shares that will ultimately be issued is calculated by multiplying the number of performance shares by a payout percentage that generally ranges from 0% up to 300%.

Summary of stock options

The following provides a summary of our stock option activity:

	Options Outstanding
	Number of Shares (in thousands)		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($)(1) (in thousands)
Balance at August 31, 2010	10,149		$	56.62
Granted	650		43.49
Exercised	(608	)	31.41
Forfeited, canceled or expired	(915	)	58.38
Balance at August 31, 2011	9,276		$	57.18
Granted	176		36.89
Exercised	(157	)	43.57
Forfeited, canceled or expired	(736	)	58.53
Balance at August 31, 2012	8,559		$	56.90
Granted	945		17.95
Exercised	—		—
Forfeited, canceled or expired	(5,381	)	57.69
Balance at August 31, 2013	4,123		$	46.94	2.61	$	1,092
Vested and expected to vest as of August 31, 2013	4,055		$	47.35	2.55	$	1,092
Exercisable as of August 31, 2013	2,761		$	57.65	1.85	$	—
Available for future grant as of August 31, 2013	6,163

⁽¹⁾ Aggregate intrinsic value represents the sum of the differences between our closing stock price of $18.57 on August 31, 2013 and the exercise prices of all of our options with an exercise price less than $18.57.

Stock options by exercise price range

The following summarizes information related to outstanding and exercisable options at August 31, 2013:

	Outstanding				Exercisable
Range of Exercise Prices	Number of Shares (in thousands)	Weighted Average Contractual Life Remaining (Years)	Weighted Average Exercise Price per Share		Number of Shares (in thousands)	Weighted Average Exercise Price per Share
$16.75 to $16.75	600	3.53	$	16.75	—	$	—
$19.62 to $39.88	759	4.75	$	30.06	204	$	38.23
$40.03 to $47.47	696	2.98	$	44.05	496	$	43.86
$48.30 to $55.46	714	1.73	$	53.46	707	$	53.50
$56.49 to $67.90	807	1.38	$	63.91	807	$	63.91
$68.47 to $97.49	545	1.09	$	73.19	545	$	73.18
$169.47 to $169.47	2	1.66	$	169.47	2	$	169.47
	4,123				2,761

Information related to options exercised

The following summarizes information related to stock options exercised during the respective periods:

	Year Ended August 31,
($ in thousands)	2013		2012		2011
Intrinsic value realized	$	—	$	1,498	$	9,207
Actual tax benefit realized by Apollo for tax deductions	$	—	$	573	$	1,771
Cash received by Apollo	$	—	$	6,754	$	19,151

Share-based compensation expense

Share-based Compensation Expense

The following details share-based compensation expense for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Instructional and student advisory	$	20,060		$	27,731		$	27,012
Marketing	5,182			6,807			5,306
Admissions advisory	849			1,691			2,109
General and administrative	21,363			41,153			35,613
Restructuring and other charges	2,008			1,323			—
Share-based compensation expense	49,462			78,705			70,040
Tax effect of share-based compensation	(18,986		)	(29,874		)	(26,715		)
Share-based compensation expense, net of tax	$	30,476		$	48,831		$	43,325

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Commitments and Contingencies (Details 2) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2013
Restructuring Cost and Reserve [Line Items]
Future minimum lease obligation	$ 1,048,993
Leased Facilities Abandoned [Member]
Restructuring Cost and Reserve [Line Items]
Future minimum lease obligation	168,400
Leased Facilities We Expect to Abandon [Member]
Restructuring Cost and Reserve [Line Items]
Future minimum lease obligation	$ 31,900

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Regulatory Matters

12 Months Ended

Aug. 31, 2013

Notes to Consolidated Financial Statements [Abstract]

Regulatory Matters

Regulatory Matters

In fiscal year 2013, University of Phoenix generated 90% of our total consolidated net revenue and more than 100% of our operating income, and 83% of the University’s cash basis revenue for eligible tuition and fees was derived from Title IV financial aid program funds, as calculated under the 90/10 Rule described below.

All U.S. federal financial aid programs are established by Title IV of the Higher Education Act and regulations promulgated thereunder. 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. Congress has begun Higher Education Act reauthorization hearings and there is currently an automatic one year extension that continues the current authorization through September 30, 2014. Changes to the Higher Education Act, including changes in eligibility and funding for Title IV programs, are likely to occur in connection with this reauthorization, but we cannot predict the scope or substance of any such changes.

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 November 2009 and entered into a new Title IV Program Participation Agreement which expired on December 31, 2012. University of Phoenix has submitted necessary documentation for re-certification and its eligibility continues on a month-to-month basis until the Department issues its decision on the application. We have no reason to believe that the University’s application will not be renewed in due course, and it is not unusual to be continued on a month-to-month basis until the Department completes its review. However, we cannot predict whether, or to what extent, the imposition of the Notice sanction by The Higher Learning Commission, as described below, might have on this process.

Western International University was recertified in May 2010 and entered into a new Title IV Program Participation Agreement which expires September 30, 2014.

Higher Learning Commission (“HLC”)

University of Phoenix and Western International University are accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools (“HLC”). This accreditation 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 authority to operate in certain states.

In July 2013, the accreditation of University of Phoenix was reaffirmed by HLC through the 2022-2023 academic year. At the same time, HLC placed the University on Notice status for a two-year period, due to concerns regarding governance, student assessment and faculty scholarship/research for doctoral programs. Notice status is a sanction that means that HLC has determined that an institution is on a course of action that, if continued, could lead the institution to be out of compliance with one or more of the HLC Criteria for Accreditation or Core Components. The University was assigned by HLC to the Standard Pathway reaffirmation process, pursuant to which the University will host a comprehensive evaluation visit in 2016-2017 and will undergo its next reaffirmation visit and process in 2022-2023. We believe the imposition of the sanction of Notice on University of Phoenix could adversely impact our business.

In July 2013, the accreditation of Western International University also was reaffirmed by HLC through the 2022-2023 academic year, and it was placed on Notice status for a two-year period due to concerns relating to governance, student assessment and faculty.

90/10 Rule

To remain eligible to participate in Title IV programs, proprietary institutions of higher education must comply with the so-called “90/10 Rule” under the Higher Education Act, as reauthorized, and must derive 90% or less of their cash basis revenue, as defined in the rule, from Title IV programs. The 90/10 Rule percentage for University of Phoenix for fiscal year 2013 was 83%. The 90/10 Rule percentage for University of Phoenix remains high and could exceed 90% in the future depending on the degree to which its various initiatives are effective, the impact of future changes in its enrollment mix, and regulatory and other factors outside our control, including any reduction in military benefit programs or changes in the treatment of such funding for purposes of the 90/10 Rule calculation.

Student Loan Cohort Default Rates

To remain eligible to participate in Title IV programs, an educational institution’s student loan cohort default rates must remain below certain specified levels. Educational institutions will lose eligibility to participate in Title IV programs if their three-year cohort default rate equals or exceeds 40% for any given year or 30% for three consecutive years. The University of Phoenix three-year cohort default rates for the 2010 and 2009 federal fiscal years were 26.0% and 26.4%, respectively. If our student loan default rates approach the applicable limits, we may be required to increase efforts and resources dedicated to improving these default rates.

Office of the Inspector General of the U.S. Department of Education (“OIG”)

In October 2011, the OIG notified us that it was conducting a nationwide audit of the Department’s program requirements, guidance, and monitoring of institutions of higher education offering distance education. In connection with the OIG’s audit of the Department, the OIG examined a sample of University of Phoenix students who enrolled during the period from July 1, 2010 to June 30, 2011. The OIG subsequently notified University of Phoenix that in the course of this review it identified certain conditions that the OIG believes are Title IV compliance exceptions at University of Phoenix. Although University of Phoenix is not the direct subject of the OIG’s audit of the Department, the OIG has asked University of Phoenix to respond so that it may consider University of Phoenix’s views in formulating its audit report of the Department. In September 2013, the OIG provided to University of Phoenix, among other institutions, a draft appendix to its audit report. The draft appendix again identifies compliance exceptions at University of Phoenix. University of Phoenix has responded to the appendix. These exceptions relate principally to the calculation of the amount of Title IV funds returned after student withdrawals and the process for confirming student eligibility prior to disbursement of Title IV funds. We are not the direct subject of the OIG’s audit of the Department, and we have not accrued any liability associated with this matter.

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Consolidated Statements of Changes in Shareholders' Equity (USD $) In Thousands, except Share data		Total USD ($)		Apollo Group Class A nonvoting common stock [Member]	Apollo Group Class B voting common stock [Member]	Common stock [Member] Apollo Group Class A nonvoting common stock [Member] USD ($)	Common stock [Member] Apollo Group Class B voting common stock [Member] USD ($)	Additional paid-in capital [Member] USD ($)	Apollo Group Class A treasury stock [Member] USD ($)	Retained earnings [Member] USD ($)	Accumulated other comprehensive loss [Member] USD ($)	Total Apollo shareholders' equity [Member] USD ($)	Noncontrolling interests (deficit) [Member] USD ($)
Balance at Aug. 31, 2010		$ 1,388,740				$ 103	$ 1	$ 46,865	$ (2,407,788)	$ 3,748,045	$ (31,176)	$ 1,356,050	$ 32,690
Treasury stock outstanding (in shares) at Aug. 31, 2010									40,714,000
Shares at Aug. 31, 2010				188,007,000	475,000
Treasury stock purchases (in shares)									18,503,000
Treasury stock purchases		(783,168)							(783,168)			(783,168)
Treasury stock issued under stock purchase plans (in shares)									(136,000)
Treasury stock issued under stock purchase plan		5,752						(1,995)	7,747			5,752
Treasury stock issued under stock incentive plans (in shares)									(1,078,000)
Treasury stock issued under stock incentive plans		19,151						(38,883)	58,034			19,151
Net tax effect for stock incentive plans		(7,303)						(7,303)				(7,303)
Share-based compensation		70,040						70,040				70,040
Currency translation adjustment, net of tax		7,643	[1]								6,952	6,952	691
Change in fair value of marketable securities, net of tax		463	[1]								463	463
Noncontrolling interest contributions		6,875											6,875
Net income (loss)		535,796								572,427		572,427	(36,631)
Balance at Aug. 31, 2011		1,243,989				103	1	68,724	(3,125,175)	4,320,472	(23,761)	1,240,364	3,625
Treasury stock outstanding (in shares) at Aug. 31, 2011									58,003,000
Shares at Aug. 31, 2011				188,007,000	475,000
Treasury stock purchases (in shares)									19,420,000
Treasury stock purchases		(811,913)							(811,913)			(811,913)
Treasury stock issued under stock purchase plans (in shares)									(132,000)
Treasury stock issued under stock purchase plan		5,195						(1,712)	6,907			5,195
Treasury stock issued under stock incentive plans (in shares)									(1,052,000)
Treasury stock issued under stock incentive plans		6,754						(44,815)	51,569			6,754
Net tax effect for stock incentive plans		(7,132)						(7,132)				(7,132)
Share-based compensation		78,705						78,705				78,705
Currency translation adjustment, net of tax		(8,281)	[1]								(6,273)	(6,273)	(2,008)
Change in fair value of marketable securities, net of tax	[1]	0
Net income (loss)		417,006								422,678		422,678	(5,672)
Balance at Aug. 31, 2012		924,323				103	1	93,770	(3,878,612)	4,743,150	(30,034)	928,378	(4,055)
Treasury stock outstanding (in shares) at Aug. 31, 2012		76,239,000							76,239,000
Shares at Aug. 31, 2012				188,007,000	475,000
Purchase of noncontrolling interest								48,543
Net income (loss)		133,740
Balance at Nov. 30, 2012
Balance at Aug. 31, 2012		924,323				103	1	93,770	(3,878,612)	4,743,150	(30,034)	928,378	(4,055)
Treasury stock outstanding (in shares) at Aug. 31, 2012		76,239,000							76,239,000
Shares at Aug. 31, 2012				188,007,000	475,000
Treasury stock purchases (in shares)									475,000
Treasury stock purchases		(9,537)							(9,537)			(9,537)
Treasury stock issued under stock purchase plans (in shares)									(198,000)
Treasury stock issued under stock purchase plan		3,867						(6,241)	10,108			3,867
Treasury stock issued under stock incentive plans (in shares)									(1,334,000)
Treasury stock issued under stock incentive plans		0						(40,422)	53,283	(12,861)
Net tax effect for stock incentive plans		(48,026)						(48,026)				(48,026)
Share-based compensation		49,462						49,462				49,462
Currency translation adjustment, net of tax		(2,545)	[1]								(1,643)	(1,643)	(902)
Change in fair value of marketable securities, net of tax	[1]	0
Purchase of noncontrolling interest		48,500						48,543			4,886	53,429	4,929
Net income (loss)		248,965								248,526		248,526	439
Balance at Aug. 31, 2013		$ 1,118,009				$ 103	$ 1	$ 0	$ (3,824,758)	$ 4,978,815	$ (36,563)	$ 1,117,598	$ 411
Treasury stock outstanding (in shares) at Aug. 31, 2013		75,182,000							75,182,000
Shares at Aug. 31, 2013				188,007,000	475,000

[1] The tax effect on each component of other comprehensive income during fiscal years 2013, 2012 and 2011 is not significant.

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Nature of Operations

12 Months Ended

Aug. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations

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 since 1973. We offer educational programs and services, online and on-campus, at the undergraduate, master’s and doctoral levels. Our learning platforms include the following:

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

• Apollo Global, Inc. (“Apollo Global”):

• BPP Holdings Limited (“BPP”) in the United Kingdom (“U.K.”);

• Universidad Latinoamericana (“ULA”) in Mexico;

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

• Indian Education Services Private Ltd. in India;

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

• Institute for Professional Development (“IPD”);

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

• Carnegie Learning, Inc. (“Carnegie Learning”); and

• Apollo Lightspeed.

During the first quarter of fiscal year 2013, we purchased the 14.4% noncontrolling ownership interest in Apollo Global from The Carlyle Group (“Carlyle”). We paid $42.5 million cash, plus a contingent payment based on a portion of Apollo Global’s operating results through the fiscal years ending August 31, 2017. As a result of the transaction, Apollo Group owns all of Apollo Global. Refer to Note 14, Shareholders’ Equity.

Our fiscal year is from September 1 to August 31. Unless otherwise stated, references to particular years or quarters refer to our fiscal years and the associated quarters of those fiscal years.

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Discontinued Operations

12 Months Ended

Aug. 31, 2013

Notes to Consolidated Financial Statements [Abstract]

Discontinued Operations

Discontinued Operations

During fiscal year 2012, BPP completed the sale of its subsidiary, Mander Portman Woodward (“MPW”), a U.K.-based secondary education institution for £54.8 million (equivalent to $85.3 million as of the date of sale). In fiscal year 2011, we sold all of Insight Schools’ issued and outstanding shares for $6.3 million, plus $3.0 million that was held in escrow for one year following the sale, and $15.3 million of additional estimated working capital consideration. We have received all consideration from the sale of Insight Schools, including the funds held in escrow.

The sales of MPW and Insight Schools reflect our strategy to focus on the postsecondary education market and we do not have significant continuing involvement with either business after the sale. The operating results of the sold businesses are presented as discontinued operations on our Consolidated Statements of Income for all periods presented. MPW was included in the Apollo Global reportable segment and Insight Schools was presented as its own reportable segment.

We realized a gain on the sale of MPW of $26.7 million, net of transaction costs, in fiscal year 2012, with no tax expense associated with the gain because it was not taxable under U.K. tax law. We realized a $0.1 million loss on sale, net of transaction costs, associated with the Insight Schools sale in fiscal year 2011. These amounts are included in income from discontinued operations, net of tax on our Consolidated Statements of Income.

We determined cash flows from our discontinued operations individually and in the aggregate are not material and are included with cash flows from continuing operations on our Consolidated Statements of Cash Flows. The following summarizes the operating results for our discontinued operations for the respective periods, which are presented in income from discontinued operations, net of tax on our Consolidated Statements of Income:

	Year Ended August 31,
($ in thousands)	2012			2011
Net revenue	$	24,209		$	42,468
Gain (loss) on sale	26,678			(98		)
Costs and other	(14,594		)	(35,748		)
Income from discontinued operations before income taxes	36,293			6,622
(Provision) benefit from income taxes(1)	(2,470		)	87
Income from discontinued operations, net of tax	33,823			6,709
Income from discontinued operations, net of tax, attributable to noncontrolling interests(2)	(4,871		)	(608		)
Income from discontinued operations, net of tax, attributable to Apollo	$	28,952		$	6,101

⁽¹⁾ There was no tax expense associated with the gain on sale of MPW as discussed above. The tax benefit in fiscal year 2011 includes a $1.6 million tax benefit as a result of the Insight Schools sale generating a capital loss for tax purposes.

⁽²⁾ The noncontrolling interest represents the portion of MPW’s operating results attributable to Apollo Global’s former noncontrolling shareholder.

The operating results of discontinued operations summarized above only includes revenues and costs directly attributable to the discontinued operations, and not those attributable to our continuing operations. Accordingly, no interest expense or general corporate overhead have been allocated to MPW or Insight Schools. We ceased depreciation and amortization on property and equipment and finite-lived intangibles at Insight Schools in fiscal year 2010 when we determined it was held for sale, and MPW did not meet the held for sale criteria until the period it was sold.

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Segment Reporting (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Aug. 31, 2013	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	Aug. 31, 2012	May 31, 2012	Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenue	$ 844,981	$ 946,774	$ 834,372	$ 1,055,183	$ 996,497	$ 1,122,258	$ 962,682	$ 1,171,900	$ 3,681,310	$ 4,253,337	$ 4,711,049
Long-lived assets	708,426				824,008				708,426	824,008	807,441
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenue									3,405,702	3,983,796	4,437,079
Long-lived assets	472,811				580,457				472,811	580,457	471,703
United Kingdom [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenue									205,662	198,408	200,759
Long-lived assets	169,371				174,229				169,371	174,229	214,073
Latin America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenue									53,837	50,426	50,725
Long-lived assets	62,702				65,856				62,702	65,856	86,103
Other Geographical Areas [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenue									16,109	20,707	22,486
Long-lived assets	$ 3,542				$ 3,466				$ 3,542	$ 3,466	$ 35,562

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Significant Accounting Policies

12 Months Ended

Aug. 31, 2013

Accounting Policies [Abstract]

Significant Accounting Policies

Basis of Presentation

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Principles of Consolidation

The consolidated financial statements include the assets, liabilities, revenues and expenses of Apollo Group, Inc., its wholly-owned subsidiaries, and subsidiaries that we control. 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, are designed to 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 loans and/or grants from U.S. federal financial aid programs established by Title IV of the Higher Education Act and regulations promulgated thereunder (“Title IV”), military benefit programs, tuition assistance from their employers, or personal funds.

Net revenue consists principally of tuition and fees associated with different educational programs and related educational materials, and is presented net of discounts. Tuition benefits for our employees and their eligible dependents are included in net revenue and instructional and student advisory expenses, and were $53.4 million, $71.1 million and $97.0 million during fiscal years 2013, 2012 and 2011, respectively.

We recognize revenue when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, our fees or price to the customer is fixed and determinable, and collectibility is reasonably assured. The following describes the components of our net revenue, which are generally consistent on a percentage basis for all periods presented:

• Tuition and educational services revenue represents approximately 92% of our gross consolidated revenue before discounts, and encompasses both online and on-campus delivery modes. We recognize tuition and educational services revenue over the period of instruction as services are delivered to students, which varies depending on the program structure.

• Educational materials revenue represents approximately 6% of our gross consolidated revenue before discounts, and encompasses online course materials delivered to students over the period of instruction and the sale of various books, study texts, course notes, and CDs. We recognize revenue associated with online materials over the period of the related course to correspond with delivery of the materials to students. We recognize revenue for the sale of other educational materials when they have been delivered to and accepted by students or other customers.

• Services revenue represents approximately 1% of our gross consolidated revenue before discounts. Service revenue represents net revenue generated by IPD, which provides program development, administration and management consulting services to private colleges and universities (“IPD Client Institutions”) to establish or expand their programs for working learners. These services typically include degree program design, curriculum development, market research, certain student admissions services, accounting, and administrative services. Prior to July 1, 2011, IPD was typically paid a portion of the tuition revenue generated from these programs, and the portion of service revenue to which IPD was entitled under the terms of the contract was recognized as the services were provided. As a result of U.S. Department of Education regulations that became effective on July 1, 2011, IPD’s revenue is generated based on fixed fee contracts with IPD Client Institutions and is recognized in accordance with the terms of the respective agreements as services are provided. The term for IPD’s contracts range up to ten years with provisions for renewal thereafter.

• Other revenue represents approximately 1% of our gross consolidated revenue before discounts. Other revenue includes net revenue generated by Carnegie Learning since its acquisition in fiscal year 2012, fees students pay when submitting an enrollment application and non-tuition generating revenues such as renting classroom space. Enrollment application fees are deferred and recognized over the average length of time a student remains enrolled in a program of study along with the related application costs associated with processing the applications.

• Discounts represent approximately 8% of our net revenue. Discounts reflect reductions in charges for tuition or other fees from our standard rates and include military, corporate, and other employer discounts, along with institutional scholarships, grants and promotions. Discounts are generally recognized over the period of instruction in the same manner as the related revenue to which the discount relates.

University of Phoenix’s refund policy permits students who attend 60% or less of a course to be eligible for a refund for the portion of the course they did not attend. Refunds result in a reduction in deferred revenue during the period that a student drops or withdraws from a class because associated tuition revenue is recognized over the period of instruction as the services are delivered. This refund policy applies to students in most, but not all states, as some states require different policies.

Net revenue generally 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.

Sales tax collected from students is excluded from net revenue. Collected but unremitted sales tax is included as a liability on our Consolidated Balance Sheets and is not material to our consolidated financial statements.

Allowance for Doubtful Accounts

Our accounts receivable is reduced by an allowance for amounts that we expect to become uncollectible in the future. We use estimates that are subjective and require judgment in determining the allowance for doubtful accounts, which are principally based on historical collection experience, historical write-offs of our receivables and current trends. Our accounts receivable are written off once the account is deemed to be uncollectible, which typically occurs after outside collection agencies have pursued collection for approximately six months.

When a student with Title IV loans withdraws, Title IV rules determine if we are required to return a portion of Title IV funds to the lender. 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.

Our estimation methodology uses a statistical model that considers a number of factors that we believe impact whether receivables will become uncollectible based on our collections experience. These factors include, but are not limited to, the student’s academic performance and previous college experience as well as other student characteristics such as degree level and method of payment. We also monitor and consider external factors such as changes in the economic and regulatory environment. We routinely evaluate our estimation methodology for adequacy and modify it as necessary. In doing so, we believe our allowance for doubtful accounts reflects the amount of receivables that will become uncollectible by considering our most recent collections experience, changes in trends and other relevant facts. Refer to Note 7, Accounts Receivable, Net.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with an original maturity to us of three months or less to be cash equivalents. Cash and cash equivalents may include money market funds, bank overnight deposits, time deposits and commercial paper, which are all placed with high-credit-quality financial institutions in the U.S. and internationally. Only a negligible portion of these deposits are insured by the Federal Deposit Insurance Corporation. We have not experienced any losses on our cash and cash equivalents.

Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents primarily represents funds held for students for unbilled educational services that were received from Title IV financial aid program funds. As a trustee of these Title IV financial aid funds, we are required to maintain and restrict these funds pursuant to the terms of our program participation agreement with the U.S. Department of Education. Restricted cash and cash equivalents are excluded from cash and cash equivalents on our Consolidated Balance Sheets and Consolidated Statements of Cash Flows. Changes in restricted cash and cash equivalents are included in cash flows from operating activities on our Consolidated Statements of Cash Flows because these restricted funds are a core activity of our operations. Our restricted cash and cash equivalents are primarily held in money market funds.

During fiscal year 2011, we also had restricted cash related to the collateralization of a letter of credit which was posted in fiscal year 2010 in favor of the U.S. Department of Education as required in connection with a program review of University of Phoenix by the Department. The letter of credit was released in fiscal year 2011 and the changes in the associated restricted cash are included in cash flows from investing activities on our Consolidated Statements of Cash Flows.

Marketable Securities

We invest our excess cash balances in instruments that may include tax-exempt municipal bonds, corporate bonds, time deposits, commercial paper, agency bonds and other marketable securities. We classify such instruments with original maturities to us greater than three months as marketable securities on our Consolidated Balance Sheets. The substantial majority of our marketable securities are classified as held-to-maturity because we have the intent and ability to hold them until maturity. Our held-to-maturity securities are reported at amortized cost. Refer to Note 6, Marketable Securities.

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 3 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. 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 we capitalize in the application development stage primarily include the costs of designing the application, coding, installation of hardware, and testing. Refer to Note 8, Property and Equipment, Net.

Goodwill and Intangibles

Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed. At the time of an acquisition, we allocate the goodwill and related assets and liabilities to our respective reporting units. We identify our reporting units by assessing whether the components of our operating segments constitute businesses for which discrete financial information is available and segment management regularly reviews the operating results of those components.

Our intangibles are recorded at fair market value on their acquisition date and principally include trademarks, technology, customer relationships and foreign regulatory accreditations and designations. We assign indefinite lives to intangibles 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; and we intend to renew the respective intangible and renewal can be accomplished at little cost. Finite-lived intangibles are amortized on either a straight-line basis or using an accelerated method to reflect the pattern in which the economic benefits of the asset are consumed. The weighted average original useful life of our $30.1 million of finite-lived intangibles as of August 31, 2013 was 4.9 years.

We assess goodwill and indefinite-lived intangibles at least annually for impairment or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit or indefinite-lived intangible below its carrying amount. We perform our annual indefinite-lived intangibles impairment tests on the same dates that we perform our annual goodwill impairment tests for the respective reporting units. In performing our impairment tests, we first consider the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit or intangible, as applicable, is less than its carrying amount. If we conclude that it is more likely than not that the fair value is less than the carrying amount based on our qualitative assessment, or that a qualitative assessment should not be performed, we proceed with the following quantitative impairment tests:

• Goodwill - We compare the estimated fair value of the reporting unit 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. If the carrying value of the net assets of the reporting unit exceeds the fair value of the reporting unit, we perform a hypothetical purchase price allocation 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.

• Indefinite-lived intangibles - We compare the estimated fair value of the intangible with its carrying value. If the carrying value of the intangible exceeds its fair value, an impairment loss is recognized in the amount of that excess.

The process of evaluating goodwill and indefinite-lived intangibles for impairment is subjective and requires significant judgment at many points during the analysis. If we elect to perform an optional qualitative analysis, we consider many factors including, but not limited to, general economic conditions, industry and market conditions, our market capitalization, financial performance and key business drivers, long-term operating plans, and potential changes to significant assumptions used in the most recent fair value analysis for either the reporting unit or respective intangible.

When performing a quantitative goodwill impairment test, we determine the fair value of reporting units using an income-based approach consisting of a discounted cash flow valuation method, a market-based approach or a combination of both methods. We use the relief-from-royalty method to determine the fair value of our trademark intangibles. This method estimates the benefit of owning the intangibles rather than paying royalties for the right to use a comparable asset. The fair value determination of our reporting units and indefinite-lived intangibles consists primarily of using unobservable inputs under the fair value measurement standards, and we believe our related assumptions are consistent with a reasonable market participant view while employing the concept of highest and best use of the asset.

Refer forNote 9, Goodwill and Intangible Assets.

Other Long-Lived Asset Impairments

We evaluate the carrying amount of our major other long-lived assets, including property and equipment and finite-lived intangibles, whenever changes in circumstances or events indicate that the value of such assets may not be recoverable. During fiscal year 2013, we recorded $20.4 million of long-lived asset impairments, which includes $12.2 million resulting from our restructuring activities. Refer to Note 3, Restructuring and Other Charges and Note 8, Property and Equipment, Net.

As of August 31, 2013, we believe the carrying amounts of our remaining other long-lived assets are recoverable and no impairment exists. However, we are continuing to adapt our business in fiscal year 2014 to the rapidly developing changes in our industry, which includes further restructuring of our business. Changes to our business or other circumstances could lead to potential impairments of our other long-lived assets in the future.

Leases

We enter into various lease agreements in conducting our business. We evaluate the lease agreement at the inception of the lease 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 our 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 our Consolidated Statements of Cash Flows. Credits received against rent for tenant improvement allowances are reflected as a component of non-cash investing activities on our 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 generally 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). Refer to Note 17, Commitments and Contingencies.

We are also required to make additional payments under lease terms for taxes, insurance, and other operating expenses incurred during the 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.

Restructuring and Other Charges

Restructuring and other charges principally consist of non-cancelable lease obligations, severance and other employee separation costs, and other related costs. We recognize restructuring obligations and liabilities for other exit and disposal activities at fair value in the period the liability is incurred. The process of measuring fair value and recognizing the associated liabilities is subjective and requires significant judgment. For our non-cancelable lease obligations, we record the obligation when we terminate the contract in accordance with the contract terms or when we cease using the right conveyed by the contract. Our employee severance costs are expensed on the date we notify the employee, unless the employee must provide future service, in which case the benefits are expensed over the future service period.

We generally estimate the fair value of restructuring obligations using significant unobservable inputs (Level 3) based on the best available information. For non-cancelable lease obligations, the fair value estimate is based on the contractual lease costs over the remaining terms of the leases, partially offset by estimated future sublease rental income. Our estimate of the amount and timing of sublease rental income considers subleases we expect to execute, current commercial real estate market data and conditions, comparable transaction data and qualitative factors specific to the facilities. The estimates are subject to adjustment as market conditions change or as new information becomes available, including the execution of sublease agreements.

Changes to restructuring obligations in periods subsequent to the initial fair value measurement are not measured at fair value. We record a cumulative adjustment resulting from changes in the estimated timing or amount of cash flows associated with restructuring obligations in the period of change using the same discount rate that was initially used to measure the obligation’s fair value. Changes in restructuring obligations resulting from the passage of time are recorded as accretion expense. The adjustments to restructuring obligations, including accretion expense, are included in restructuring and other charges on our Consolidated Statements of Income. Refer to Note 3, Restructuring and Other Charges.

Loss Contingencies

We are subject to various claims and contingencies 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. The liability excludes any anticipated loss recoveries from third parties such as insurers, which we record as a receivable if we determine recovery is probable. 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, we expense legal fees as incurred. The assessment of the likelihood of a potential loss and the estimation of the amount of a loss are subjective and require judgment. Refer to Note 17, Commitments and Contingencies.

Share-Based Compensation

Our outstanding share-based awards principally consist of restricted stock units, performance share awards and stock options, and restricted stock units represent the majority of our share-based compensation expense in recent years. We measure and recognize compensation expense for all share-based awards based on their estimated fair values on the grant date. We record compensation expense, net of forfeitures, for all share-based awards over the requisite service period using the straight-line method for awards with only a service condition, and the graded vesting attribution method for awards with service and performance conditions.

For share-based awards with performance conditions, we measure the fair value of such awards as of the grant date and amortize share-based compensation expense for our estimate of the number of shares expected to vest. Our estimate of the number of shares that will vest is based on our determination of the probable outcome of the performance condition, which may require considerable judgment. We record a cumulative adjustment to share-based compensation expense in periods that we change our estimate of the number of shares expected to vest. Additionally, we ultimately adjust the expense recognized to reflect the actual vested shares following the resolution of the performance conditions.

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 requisite service period. Rather, different forfeiture assumptions only impact the timing of expense recognition over the requisite service period. If the actual forfeitures differ from management estimates, additional adjustments to compensation expense are recorded.

We typically use the Black-Scholes-Merton option pricing model to estimate the fair value of stock options. The Black-Scholes-Merton option pricing model requires us to estimate key assumptions based on both historical information and management judgment regarding market factors and trends. The following represents our key weighted average assumptions for stock options granted in the respective fiscal years:

	Year Ended August 31,
	2013			2012			2011
Weighted average fair value	$	5.84		$	14.10		$	16.71
Expected volatility	44.4		%	46.6		%	46.8		%
Expected term	3.4			4.3			4.2
Risk-free interest rate	0.7		%	0.6		%	1.4		%
Dividend yield	0.0		%	0.0		%	0.0		%

We estimate expected volatility based on a weighted average of our historical volatility and the implied volatility of long-lived call options. We estimate the expected term of our stock options based primarily on the vesting period of the awards and historical exercise behavior. For the risk-free interest rate, we use the U.S. constant maturity treasury rates interpolated between the years commensurate with the expected life assumptions. Our dividend yield assumption considers that we have not historically paid dividends and we have no current plan to pay dividends in the near-term.

Income Taxes

We are subject to the income tax laws of the U.S. and the foreign jurisdictions in which we have significant business operations. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. As a result, significant judgments and interpretations are required in determining our provision for income taxes and evaluating our uncertain tax positions.

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 record a valuation allowance to reduce deferred tax assets to the amount that we believe is more likely than not to be realized.

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 classify interest and penalties accrued in connection with unrecognized tax benefits as income tax expense on our Consolidated Statements of Income. Our total unrecognized tax benefits, excluding interest and penalties, were $44.1 million, $32.2 million and $25.8 million as of August 31, 2013, 2012 and 2011, respectively. Refer to Note 13, Income Taxes.

Marketing Costs

We expense marketing costs, the substantial majority of which includes advertising, as incurred.

Earnings per Share

Our outstanding shares consist of Apollo Group Class A and Class B common stock issued, net of shares held in treasury. 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. 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 share-based awards under our stock compensation plans by applying the treasury stock method. Our share-based awards with performance conditions are contingently issuable and are included in the calculation of diluted income per share based on our evaluation of the performance criteria as of the end of the respective period. The amount of any tax benefit to be credited to additional paid-in capital related to our share-based awards, and unrecognized share-based compensation expense is included when applying the treasury stock method in the computation of diluted income per share. Refer to Note 15, Earnings Per Share.

Foreign Currency Translation

We use the U.S. dollar as our reporting currency. The functional currency of our entities operating outside the United States is the currency of the primary economic 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 loss or noncontrolling interests (deficit), as applicable. 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 on our Consolidated Statements of Income. These items represented a net $0.2 million loss, net $0.5 million gain and net $1.7 million loss in fiscal years 2013, 2012 and 2011, respectively.

Fair Value

The carrying amount of certain assets and liabilities reported on our Consolidated Balance Sheets, including accounts receivable and accounts payable, 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, 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 is 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.

We categorize each of our fair value measurements for disclosure purposes in one of the above three levels based on the lowest level input that is significant to the fair value measurement in its entirety. 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 fair value of certain assets and liabilities and their placement within the fair value hierarchy. Refer to Note 10, Fair Value Measurements.

Discontinued Operations

Assets and liabilities expected to be sold or disposed of are presented separately on our Consolidated Balance Sheets as assets or liabilities held for sale. If we determine we will not have significant continuing involvement with components that are classified as held for sale or otherwise sold or disposed, the results of operations of these components are presented separately on our Consolidated Statements of Income as income from discontinued operations, net of tax, in the current and prior periods. Refer to Note 4, Discontinued Operations.

Reclassifications

During fiscal year 2013, we began presenting amortization of deferred gains on sale-leasebacks and amortization of lease incentives as a component of the change in accrued and other liabilities on our Consolidated Statements of Cash Flows. We have reclassified prior periods to conform to our current presentation.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”), which provides guidance on disclosure requirements for items reclassified out of accumulated other comprehensive income. The standard requires entities to present (either on the face of the income statement or in the notes to the financial statements) the effects of amounts reclassified out of accumulated other comprehensive income on income statement line items. ASU 2013-02 was effective prospectively for reporting periods beginning after December 15, 2012. We adopted ASU 2013-02 on March 1, 2013, which did not materially impact our disclosures.

In July 2013, the FASB issued ASU No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”). The standard provides that a liability related to an unrecognized tax benefit would be offset against a deferred tax asset instead of presented gross for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. ASU 2013-11 is effective for fiscal years beginning after December 15, 2013, with early adoption permitted, and may be applied either retrospectively or on a prospective basis to all unrecognized tax benefits that exist at the adoption date. Effective September 1, 2013, we early adopted ASU 2013-11 on a prospective basis, which resulted in the offsetting of an immaterial amount of our uncertain tax positions against deferred tax assets.

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Shareholders' Equity (Tables)

12 Months Ended

Aug. 31, 2013

Equity [Abstract]

Accumulated other comprehensive loss

The following summarizes the components of accumulated other comprehensive loss at August 31:

($ in thousands)	2013			2012
Foreign currency translation losses	$	(36,032	)	$	(29,503	)
Unrealized loss on marketable securities	(531		)	(531		)
Accumulated other comprehensive loss(1)	$	(36,563	)	$	(30,034	)

⁽¹⁾ Accumulated other comprehensive loss is net of $0.6 million and $0.4 million of taxes as of August 31, 2013 and 2012, respectively. The tax effect on each component of other comprehensive income during fiscal years 2013, 2012 and 2011 is not significant.

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Significant Accounting Policies (Policies)

12 Months Ended

Aug. 31, 2013

Policy Text Block [Abstract]

Basis of Presentation Policy

Basis of Presentation

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Principles of Consolidation Policy

Principles of Consolidation

The consolidated financial statements include the assets, liabilities, revenues and expenses of Apollo Group, Inc., its wholly-owned subsidiaries, and subsidiaries that we control. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates Policy

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 Policy

Revenue Recognition

Our educational programs, primarily composed of University of Phoenix programs, are designed to 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 loans and/or grants from U.S. federal financial aid programs established by Title IV of the Higher Education Act and regulations promulgated thereunder (“Title IV”), military benefit programs, tuition assistance from their employers, or personal funds.

Net revenue consists principally of tuition and fees associated with different educational programs and related educational materials, and is presented net of discounts. Tuition benefits for our employees and their eligible dependents are included in net revenue and instructional and student advisory expenses, and were $53.4 million, $71.1 million and $97.0 million during fiscal years 2013, 2012 and 2011, respectively.

We recognize revenue when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, our fees or price to the customer is fixed and determinable, and collectibility is reasonably assured. The following describes the components of our net revenue, which are generally consistent on a percentage basis for all periods presented:

• Tuition and educational services revenue represents approximately 92% of our gross consolidated revenue before discounts, and encompasses both online and on-campus delivery modes. We recognize tuition and educational services revenue over the period of instruction as services are delivered to students, which varies depending on the program structure.

• Educational materials revenue represents approximately 6% of our gross consolidated revenue before discounts, and encompasses online course materials delivered to students over the period of instruction and the sale of various books, study texts, course notes, and CDs. We recognize revenue associated with online materials over the period of the related course to correspond with delivery of the materials to students. We recognize revenue for the sale of other educational materials when they have been delivered to and accepted by students or other customers.

• Services revenue represents approximately 1% of our gross consolidated revenue before discounts. Service revenue represents net revenue generated by IPD, which provides program development, administration and management consulting services to private colleges and universities (“IPD Client Institutions”) to establish or expand their programs for working learners. These services typically include degree program design, curriculum development, market research, certain student admissions services, accounting, and administrative services. Prior to July 1, 2011, IPD was typically paid a portion of the tuition revenue generated from these programs, and the portion of service revenue to which IPD was entitled under the terms of the contract was recognized as the services were provided. As a result of U.S. Department of Education regulations that became effective on July 1, 2011, IPD’s revenue is generated based on fixed fee contracts with IPD Client Institutions and is recognized in accordance with the terms of the respective agreements as services are provided. The term for IPD’s contracts range up to ten years with provisions for renewal thereafter.

• Other revenue represents approximately 1% of our gross consolidated revenue before discounts. Other revenue includes net revenue generated by Carnegie Learning since its acquisition in fiscal year 2012, fees students pay when submitting an enrollment application and non-tuition generating revenues such as renting classroom space. Enrollment application fees are deferred and recognized over the average length of time a student remains enrolled in a program of study along with the related application costs associated with processing the applications.

• Discounts represent approximately 8% of our net revenue. Discounts reflect reductions in charges for tuition or other fees from our standard rates and include military, corporate, and other employer discounts, along with institutional scholarships, grants and promotions. Discounts are generally recognized over the period of instruction in the same manner as the related revenue to which the discount relates.

University of Phoenix’s refund policy permits students who attend 60% or less of a course to be eligible for a refund for the portion of the course they did not attend. Refunds result in a reduction in deferred revenue during the period that a student drops or withdraws from a class because associated tuition revenue is recognized over the period of instruction as the services are delivered. This refund policy applies to students in most, but not all states, as some states require different policies.

Net revenue generally 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.

Sales tax collected from students is excluded from net revenue. Collected but unremitted sales tax is included as a liability on our Consolidated Balance Sheets and is not material to our consolidated financial statements.

Allowance for Doubtful Accounts Policy

Allowance for Doubtful Accounts

Our accounts receivable is reduced by an allowance for amounts that we expect to become uncollectible in the future. We use estimates that are subjective and require judgment in determining the allowance for doubtful accounts, which are principally based on historical collection experience, historical write-offs of our receivables and current trends. Our accounts receivable are written off once the account is deemed to be uncollectible, which typically occurs after outside collection agencies have pursued collection for approximately six months.

When a student with Title IV loans withdraws, Title IV rules determine if we are required to return a portion of Title IV funds to the lender. 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.

Our estimation methodology uses a statistical model that considers a number of factors that we believe impact whether receivables will become uncollectible based on our collections experience. These factors include, but are not limited to, the student’s academic performance and previous college experience as well as other student characteristics such as degree level and method of payment. We also monitor and consider external factors such as changes in the economic and regulatory environment. We routinely evaluate our estimation methodology for adequacy and modify it as necessary. In doing so, we believe our allowance for doubtful accounts reflects the amount of receivables that will become uncollectible by considering our most recent collections experience, changes in trends and other relevant facts. Refer to Note 7, Accounts Receivable, Net.

Cash and Cash Equivalents Policy

Cash and Cash Equivalents

We consider all highly liquid investments purchased with an original maturity to us of three months or less to be cash equivalents. Cash and cash equivalents may include money market funds, bank overnight deposits, time deposits and commercial paper, which are all placed with high-credit-quality financial institutions in the U.S. and internationally. Only a negligible portion of these deposits are insured by the Federal Deposit Insurance Corporation. We have not experienced any losses on our cash and cash equivalents.

Restricted Cash and Cash Equivalents Policy

Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents primarily represents funds held for students for unbilled educational services that were received from Title IV financial aid program funds. As a trustee of these Title IV financial aid funds, we are required to maintain and restrict these funds pursuant to the terms of our program participation agreement with the U.S. Department of Education. Restricted cash and cash equivalents are excluded from cash and cash equivalents on our Consolidated Balance Sheets and Consolidated Statements of Cash Flows. Changes in restricted cash and cash equivalents are included in cash flows from operating activities on our Consolidated Statements of Cash Flows because these restricted funds are a core activity of our operations. Our restricted cash and cash equivalents are primarily held in money market funds.

During fiscal year 2011, we also had restricted cash related to the collateralization of a letter of credit which was posted in fiscal year 2010 in favor of the U.S. Department of Education as required in connection with a program review of University of Phoenix by the Department. The letter of credit was released in fiscal year 2011 and the changes in the associated restricted cash are included in cash flows from investing activities on our Consolidated Statements of Cash Flows.

Marketable Securities Policy

Marketable Securities

We invest our excess cash balances in instruments that may include tax-exempt municipal bonds, corporate bonds, time deposits, commercial paper, agency bonds and other marketable securities. We classify such instruments with original maturities to us greater than three months as marketable securities on our Consolidated Balance Sheets. The substantial majority of our marketable securities are classified as held-to-maturity because we have the intent and ability to hold them until maturity. Our held-to-maturity securities are reported at amortized cost. Refer to Note 6, Marketable Securities.

Property and Equipment, Net Policy

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 3 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. 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 we capitalize in the application development stage primarily include the costs of designing the application, coding, installation of hardware, and testing. Refer to Note 8, Property and Equipment, Net.

Goodwill and Intangibles Policy

Goodwill and Intangibles

Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed. At the time of an acquisition, we allocate the goodwill and related assets and liabilities to our respective reporting units. We identify our reporting units by assessing whether the components of our operating segments constitute businesses for which discrete financial information is available and segment management regularly reviews the operating results of those components.

Our intangibles are recorded at fair market value on their acquisition date and principally include trademarks, technology, customer relationships and foreign regulatory accreditations and designations. We assign indefinite lives to intangibles 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; and we intend to renew the respective intangible and renewal can be accomplished at little cost. Finite-lived intangibles are amortized on either a straight-line basis or using an accelerated method to reflect the pattern in which the economic benefits of the asset are consumed. The weighted average original useful life of our $30.1 million of finite-lived intangibles as of August 31, 2013 was 4.9 years.

We assess goodwill and indefinite-lived intangibles at least annually for impairment or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit or indefinite-lived intangible below its carrying amount. We perform our annual indefinite-lived intangibles impairment tests on the same dates that we perform our annual goodwill impairment tests for the respective reporting units. In performing our impairment tests, we first consider the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit or intangible, as applicable, is less than its carrying amount. If we conclude that it is more likely than not that the fair value is less than the carrying amount based on our qualitative assessment, or that a qualitative assessment should not be performed, we proceed with the following quantitative impairment tests:

• Goodwill - We compare the estimated fair value of the reporting unit 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. If the carrying value of the net assets of the reporting unit exceeds the fair value of the reporting unit, we perform a hypothetical purchase price allocation 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.

• Indefinite-lived intangibles - We compare the estimated fair value of the intangible with its carrying value. If the carrying value of the intangible exceeds its fair value, an impairment loss is recognized in the amount of that excess.

The process of evaluating goodwill and indefinite-lived intangibles for impairment is subjective and requires significant judgment at many points during the analysis. If we elect to perform an optional qualitative analysis, we consider many factors including, but not limited to, general economic conditions, industry and market conditions, our market capitalization, financial performance and key business drivers, long-term operating plans, and potential changes to significant assumptions used in the most recent fair value analysis for either the reporting unit or respective intangible.

When performing a quantitative goodwill impairment test, we determine the fair value of reporting units using an income-based approach consisting of a discounted cash flow valuation method, a market-based approach or a combination of both methods. We use the relief-from-royalty method to determine the fair value of our trademark intangibles. This method estimates the benefit of owning the intangibles rather than paying royalties for the right to use a comparable asset. The fair value determination of our reporting units and indefinite-lived intangibles consists primarily of using unobservable inputs under the fair value measurement standards, and we believe our related assumptions are consistent with a reasonable market participant view while employing the concept of highest and best use of the asset.

Refer forNote 9, Goodwill and Intangible Assets.

Other Long-Lived Asset Impairments Policy

Other Long-Lived Asset Impairments

We evaluate the carrying amount of our major other long-lived assets, including property and equipment and finite-lived intangibles, whenever changes in circumstances or events indicate that the value of such assets may not be recoverable. During fiscal year 2013, we recorded $20.4 million of long-lived asset impairments, which includes $12.2 million resulting from our restructuring activities. Refer to Note 3, Restructuring and Other Charges and Note 8, Property and Equipment, Net.

As of August 31, 2013, we believe the carrying amounts of our remaining other long-lived assets are recoverable and no impairment exists. However, we are continuing to adapt our business in fiscal year 2014 to the rapidly developing changes in our industry, which includes further restructuring of our business. Changes to our business or other circumstances could lead to potential impairments of our other long-lived assets in the future.

Leases Policy

Leases

We enter into various lease agreements in conducting our business. We evaluate the lease agreement at the inception of the lease 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 our 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 our Consolidated Statements of Cash Flows. Credits received against rent for tenant improvement allowances are reflected as a component of non-cash investing activities on our 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 generally 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). Refer to Note 17, Commitments and Contingencies.

We are also required to make additional payments under lease terms for taxes, insurance, and other operating expenses incurred during the 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.

Restructuring and Other Charges Policy

Restructuring and Other Charges

Restructuring and other charges principally consist of non-cancelable lease obligations, severance and other employee separation costs, and other related costs. We recognize restructuring obligations and liabilities for other exit and disposal activities at fair value in the period the liability is incurred. The process of measuring fair value and recognizing the associated liabilities is subjective and requires significant judgment. For our non-cancelable lease obligations, we record the obligation when we terminate the contract in accordance with the contract terms or when we cease using the right conveyed by the contract. Our employee severance costs are expensed on the date we notify the employee, unless the employee must provide future service, in which case the benefits are expensed over the future service period.

We generally estimate the fair value of restructuring obligations using significant unobservable inputs (Level 3) based on the best available information. For non-cancelable lease obligations, the fair value estimate is based on the contractual lease costs over the remaining terms of the leases, partially offset by estimated future sublease rental income. Our estimate of the amount and timing of sublease rental income considers subleases we expect to execute, current commercial real estate market data and conditions, comparable transaction data and qualitative factors specific to the facilities. The estimates are subject to adjustment as market conditions change or as new information becomes available, including the execution of sublease agreements.

Changes to restructuring obligations in periods subsequent to the initial fair value measurement are not measured at fair value. We record a cumulative adjustment resulting from changes in the estimated timing or amount of cash flows associated with restructuring obligations in the period of change using the same discount rate that was initially used to measure the obligation’s fair value. Changes in restructuring obligations resulting from the passage of time are recorded as accretion expense. The adjustments to restructuring obligations, including accretion expense, are included in restructuring and other charges on our Consolidated Statements of Income. Refer to Note 3, Restructuring and Other Charges.

Loss Contingencies Policy

Loss Contingencies

We are subject to various claims and contingencies 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. The liability excludes any anticipated loss recoveries from third parties such as insurers, which we record as a receivable if we determine recovery is probable. 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, we expense legal fees as incurred. The assessment of the likelihood of a potential loss and the estimation of the amount of a loss are subjective and require judgment. Refer to Note 17, Commitments and Contingencies.

Share-Based Compensation Policy

Share-Based Compensation

Our outstanding share-based awards principally consist of restricted stock units, performance share awards and stock options, and restricted stock units represent the majority of our share-based compensation expense in recent years. We measure and recognize compensation expense for all share-based awards based on their estimated fair values on the grant date. We record compensation expense, net of forfeitures, for all share-based awards over the requisite service period using the straight-line method for awards with only a service condition, and the graded vesting attribution method for awards with service and performance conditions.

For share-based awards with performance conditions, we measure the fair value of such awards as of the grant date and amortize share-based compensation expense for our estimate of the number of shares expected to vest. Our estimate of the number of shares that will vest is based on our determination of the probable outcome of the performance condition, which may require considerable judgment. We record a cumulative adjustment to share-based compensation expense in periods that we change our estimate of the number of shares expected to vest. Additionally, we ultimately adjust the expense recognized to reflect the actual vested shares following the resolution of the performance conditions.

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 requisite service period. Rather, different forfeiture assumptions only impact the timing of expense recognition over the requisite service period. If the actual forfeitures differ from management estimates, additional adjustments to compensation expense are recorded.

We typically use the Black-Scholes-Merton option pricing model to estimate the fair value of stock options. The Black-Scholes-Merton option pricing model requires us to estimate key assumptions based on both historical information and management judgment regarding market factors and trends. The following represents our key weighted average assumptions for stock options granted in the respective fiscal years:

	Year Ended August 31,
	2013			2012			2011
Weighted average fair value	$	5.84		$	14.10		$	16.71
Expected volatility	44.4		%	46.6		%	46.8		%
Expected term	3.4			4.3			4.2
Risk-free interest rate	0.7		%	0.6		%	1.4		%
Dividend yield	0.0		%	0.0		%	0.0		%

We estimate expected volatility based on a weighted average of our historical volatility and the implied volatility of long-lived call options. We estimate the expected term of our stock options based primarily on the vesting period of the awards and historical exercise behavior. For the risk-free interest rate, we use the U.S. constant maturity treasury rates interpolated between the years commensurate with the expected life assumptions. Our dividend yield assumption considers that we have not historically paid dividends and we have no current plan to pay dividends in the near-term.

Income Taxes Policy

Income Taxes

We are subject to the income tax laws of the U.S. and the foreign jurisdictions in which we have significant business operations. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. As a result, significant judgments and interpretations are required in determining our provision for income taxes and evaluating our uncertain tax positions.

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 record a valuation allowance to reduce deferred tax assets to the amount that we believe is more likely than not to be realized.

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 classify interest and penalties accrued in connection with unrecognized tax benefits as income tax expense on our Consolidated Statements of Income. Our total unrecognized tax benefits, excluding interest and penalties, were $44.1 million, $32.2 million and $25.8 million as of August 31, 2013, 2012 and 2011, respectively. Refer to Note 13, Income Taxes.

Marketing Costs Policy

Marketing Costs

We expense marketing costs, the substantial majority of which includes advertising, as incurred.

Earnings per Share Policy

Earnings per Share

Our outstanding shares consist of Apollo Group Class A and Class B common stock issued, net of shares held in treasury. 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. 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 share-based awards under our stock compensation plans by applying the treasury stock method. Our share-based awards with performance conditions are contingently issuable and are included in the calculation of diluted income per share based on our evaluation of the performance criteria as of the end of the respective period. The amount of any tax benefit to be credited to additional paid-in capital related to our share-based awards, and unrecognized share-based compensation expense is included when applying the treasury stock method in the computation of diluted income per share. Refer to Note 15, Earnings Per Share.

Foreign Currency Translation Policy

Foreign Currency Translation

We use the U.S. dollar as our reporting currency. The functional currency of our entities operating outside the United States is the currency of the primary economic 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 loss or noncontrolling interests (deficit), as applicable. 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 on our Consolidated Statements of Income. These items represented a net $0.2 million loss, net $0.5 million gain and net $1.7 million loss in fiscal years 2013, 2012 and 2011, respectively.

Fair Value Policy

Fair Value

The carrying amount of certain assets and liabilities reported on our Consolidated Balance Sheets, including accounts receivable and accounts payable, 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, 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 is 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.

We categorize each of our fair value measurements for disclosure purposes in one of the above three levels based on the lowest level input that is significant to the fair value measurement in its entirety. 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 fair value of certain assets and liabilities and their placement within the fair value hierarchy. Refer to Note 10, Fair Value Measurements.

Discontinued Operations Policy

Discontinued Operations

Assets and liabilities expected to be sold or disposed of are presented separately on our Consolidated Balance Sheets as assets or liabilities held for sale. If we determine we will not have significant continuing involvement with components that are classified as held for sale or otherwise sold or disposed, the results of operations of these components are presented separately on our Consolidated Statements of Income as income from discontinued operations, net of tax, in the current and prior periods. Refer to Note 4, Discontinued Operations.

Reclassifications, Policy

Reclassifications

During fiscal year 2013, we began presenting amortization of deferred gains on sale-leasebacks and amortization of lease incentives as a component of the change in accrued and other liabilities on our Consolidated Statements of Cash Flows. We have reclassified prior periods to conform to our current presentation.

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Acquisitions (Tables)

12 Months Ended

Aug. 31, 2013

Business Combinations [Abstract]

Purchase price allocation

The acquisition purchase price allocation is summarized below:

($ in thousands)
Tangible assets (net of acquired liabilities)	$	(10,894	)
Finite-lived intangibles	37,000
Indefinite-lived intangibles	14,100
Goodwill	34,794
Allocated purchase price	75,000
Less: Cash acquired	(1,264		)
Acquisition, net of cash acquired	$	73,736

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Regulatory Matters (Details)	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012
Three Year Measuring Period [Member]
Cohort default rate measuring period	3 years
Maximum [Member]
Title IV percentage	90.00%
Maximum [Member] | Three Year Measuring Period [Member] | Title IV Ineligibility [Member] | Three Consecutive Cohorts [Member]
Cohort default rate	30.00%
Maximum [Member] | Three Year Measuring Period [Member] | Title IV Ineligibility [Member] | One Cohort [Member]
Cohort default rate	40.00%
University Of Phoenix [Member]
Percentage of consolidated net revenue	90.00%
Title IV percentage	83.00%
University Of Phoenix [Member] | Three Year Measuring Period [Member]
Cohort default rate	26.00%	26.40%
University Of Phoenix [Member] | Minimum [Member]
Percentage of consolidated operating income	100.00%

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Fair Value Measurements (Tables)

12 Months Ended

Aug. 31, 2013

Fair Value Disclosures [Abstract]

Fair value assets and liabilities measured on recurring basis

Assets and liabilities measured at fair value on a recurring basis consist of the following as of August 31, 2013:

			Fair Value Measurements at Reporting Date Using
	August 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
($ in thousands)
Assets:
Cash equivalents (including restricted cash equivalents):
Money market funds	$	732,530	$	732,530	$	—	$	—
Marketable securities:
Auction-rate securities	5,946		—		—		5,946
Total assets at fair value on a recurring basis	$	738,476	$	732,530	$	—	$	5,946
Liabilities:
Other long-term liabilities:
Contingent payment	$	5,277	$	—	$	—	$	5,277
Total liabilities at fair value on a recurring basis	$	5,277	$	—	$	—	$	5,277

Assets measured at fair value on a recurring basis consist of the following as of August 31, 2012:

			Fair Value Measurements at Reporting Date Using
	August 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
($ in thousands)
Assets:
Cash equivalents (including restricted cash equivalents):
Money market funds	$	629,166	$	629,166	$	—	$	—
Marketable securities:
Auction-rate securities	5,946		—		—		5,946
Total assets at fair value on a recurring basis	$	635,112	$	629,166	$	—	$	5,946

Fair value liabilities measured on recurring basis, unobservable input reconciliation

The following summarizes the changes in liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during fiscal year 2013:

($ in thousands)
Balance at August 31, 2012	$	—
Purchase of noncontrolling interest	6,000
Change in fair value included in net income	(723		)
Balance at August 31, 2013	$	5,277

Fair value liabilities measured on non-recurring basis

Liabilities measured at fair value on a nonrecurring basis during fiscal years 2013 and 2012, all of which are included in other liabilities on our Consolidated Balance Sheets, consist of the following:

			Fair Value Measurements at Measurement Dates Using
($ in thousands)	Fair Value at Measurement Dates		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Losses for Respective Fiscal Years
Fiscal year 2013 restructuring obligations	$	92,151	$	—	$	—	$	92,151	$	92,151
Fiscal year 2012 restructuring obligations	$	20,082	$	—	$	—	$	20,082	$	20,082

During fiscal years 2013 and 2012, we recorded $92.2 million and $20.1 million, respectively, of aggregate initial lease and other contract exit obligations at fair value associated with our restructuring activities. We recorded obligation liabilities on the dates we ceased using the right conveyed by the respective contracts, and we measured the liabilities at fair value using Level 3 inputs included in the valuation method. Refer to Note 3, Restructuring and Other Charges.

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Commitments and Contingencies (Details 3) (USD $) In Millions, unless otherwise specified	1 Months Ended		3 Months Ended	12 Months Ended
	Oct. 31, 2010 Securities Class Action (Apollo Institutional Investors Group) [Member] Plaintiffs	Jan. 31, 2008 Securities Class Action (Policeman's Annuity and Benefit Fund of Chicago) [Member] Defendants	May 31, 2012 Securities Class Action (Policeman's Annuity and Benefit Fund of Chicago) [Member]	Aug. 31, 2012 Securities Class Action (Policeman's Annuity and Benefit Fund of Chicago) [Member]
Loss Contingencies [Line Items]
Number of plaintiffs	3
Number of defendants		2
Agreement in principle settlement amount				$ 145.0
Settlement payment			$ 145.0

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Goodwill and Intangible Assets (Details) (USD $)	3 Months Ended	12 Months Ended										3 Months Ended	12 Months Ended		3 Months Ended	12 Months Ended
	Nov. 30, 2011	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2013 University Of Phoenix [Member]	Aug. 31, 2012 University Of Phoenix [Member]	Aug. 31, 2013 Apollo Global [Member]	Aug. 31, 2012 Apollo Global [Member]	Aug. 31, 2011 Apollo Global [Member]	Aug. 31, 2013 Other [Member]	Aug. 31, 2012 Other [Member]	Feb. 28, 2011 Bpp [Member]	Aug. 31, 2013 Bpp [Member]	Aug. 31, 2012 Bpp [Member]	Nov. 30, 2011 Uniacc [Member]	Aug. 31, 2013 Uniacc [Member]	Aug. 31, 2013 Ula [Member]	Aug. 31, 2013 Cffp [Member]	Aug. 31, 2013 Western International University [Member]	Aug. 31, 2013 Carnegie Learning [Member]
Goodwill [Line Items]
Goodwill beginning balance	$ 133,297,000	$ 103,345,000	$ 133,297,000		$ 71,812,000	$ 37,018,000	$ 14,642,000	$ 79,388,000		$ 16,891,000	$ 16,891,000		$ 0
Goodwill acquired in Carnegie Learning acquisition			34,794,000			34,794,000		0			0
UNIACC impairment			(11,912,000)			0		(11,912,000)			0	(197,700,000)			(11,912,000)
Sale of MPW			(45,266,000)			0		(45,266,000)			0			(45,266,000)
Currency translation adjustment		275,000	(7,568,000)		0	0	275,000	(7,568,000)		0	0
Goodwill ending balance		103,620,000	103,345,000	133,297,000	71,812,000	71,812,000	14,917,000	14,642,000	79,388,000	16,891,000	16,891,000		0	0
Goodwill net carrying amount [Abstract]
Gross carrying amount		136,093,000	146,944,000		71,812,000	71,812,000	27,185,000	38,036,000		37,096,000	37,096,000
Accumulated impairments		(28,917,000)	(40,829,000)		0	0	(8,712,000)	(20,624,000)		(20,205,000)	(20,205,000)		(354,000,000)
Foreign currency translation		(3,556,000)	(2,770,000)		0	0	(3,556,000)	(2,770,000)		0	0
Goodwill		103,620,000	103,345,000	133,297,000	71,812,000	71,812,000	14,917,000	14,642,000	79,388,000	16,891,000	16,891,000		0	0
Goodwill and other intangibles impairment net of tax														213,900,000
Goodwill and other intangibles impairment	16,788,000	0	16,788,000	219,927,000	0			16,788,000	219,927,000				0			0	0	0	0	0
Tax benefit on intangibles impairment														6,000,000
Tax benefit on goodwill and intangibles impairment															0
Tax benefit on goodwill impairment														0
Intangible assets, net		132,192,000	149,034,000
Amortization expense		15,100,000	20,200,000	14,700,000
Finite-lived intangibles weighted-average useful life		4 years 10 months 24 days
Future intangible amortization [Abstract]
2014		11,670,000
2015		9,605,000
2016		8,502,000
2017		283,000
Total estimated amortization expense		$ 30,060,000

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Discontinued Operations (Details)	12 Months Ended					3 Months Ended	12 Months Ended
	Aug. 31, 2013 USD ($)	Aug. 31, 2012 USD ($)	Aug. 31, 2011 USD ($)	Aug. 31, 2012 Mander Portman Woodward [Member] USD ($)	Aug. 31, 2012 Mander Portman Woodward [Member] GBP (£)	Feb. 29, 2012 Insight Schools [Member] USD ($)	Aug. 31, 2011 Insight Schools [Member] USD ($)
Discontinued Operations [Line Items]
Proceeds from disposition				$ 85,300,000	£ 54,800,000	$ 6,300,000
Proceeds from disposition held in escrow						3,000,000
Estimated working capital consideration						15,300,000
Gain (loss) on sale	0	26,678,000	0	26,678,000			(98,000)
Net revenue		24,209,000	42,468,000
Costs and other		(14,594,000)	(35,748,000)
Income from discontinued operations before income taxes		36,293,000	6,622,000
(Provision) benefit from income taxes		(2,470,000)	87,000
Income from discontinued operations, net of tax	0	33,823,000	6,709,000
Income from discontinued operations, net of tax, attributable to noncontrolling interests		(4,871,000)	(608,000)
Income from discontinued operations, net of tax, attributable to Apollo		28,952,000	6,101,000
Tax expense (benefit) from sale				$ 0			$ 1,600,000

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Segment Reporting (Tables)

12 Months Ended

Aug. 31, 2013

Segment Reporting [Abstract]

Segment reporting information

A summary of financial information by reportable segment is as follows:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Net revenue
University of Phoenix	$	3,304,464		$	3,873,098		$	4,322,670
Apollo Global	275,768			269,541			272,935
Other	101,078			110,698			115,444
Net revenue	$	3,681,310		$	4,253,337		$	4,711,049
Operating income (loss)(1):
University of Phoenix	$	579,670		$	846,840		$	1,270,468
Apollo Global(2)	(59,936		)	(66,964		)	(259,487		)
Other(3)	(92,320		)	(103,539		)	(55,123		)
Total operating income	427,414			676,337			955,858
Reconciling items:
Interest income	1,913			1,187			2,884
Interest expense	(8,745		)	(11,745		)	(8,931		)
Other, net	2,407			476			(1,588		)
Income from continuing operations before income taxes	$	422,989		$	666,255		$	948,223
Depreciation and amortization(4)
University of Phoenix(4)	$	53,562		$	64,643		$	53,681
Apollo Global	25,982			24,297			30,004
Other	82,189			89,294			75,321
Total depreciation and amortization(4)	$	161,733		$	178,234		$	159,006
Capital expenditures
University of Phoenix	$	6,992		$	20,133		$	53,801
Apollo Global	33,627			36,523			20,565
Other	78,729			58,531			88,207
Total capital expenditures	$	119,348		$	115,187		$	162,573

⁽¹⁾ University of Phoenix, Apollo Global and Other include charges associated with our restructuring activities. Refer to Note 3, Restructuring and Other Charges.

⁽²⁾ The operating loss for Apollo Global in fiscal years 2012 and 2011 includes goodwill and other intangibles impairment charges of $16.8 million and $219.9 million, respectively. Refer to Note 9, Goodwill and Intangible Assets.

⁽³⁾ The operating loss for Other in fiscal years 2013 and 2011 includes net credits of $23.2 million and $16.2 million, respectively, resulting from the resolution of certain of our legal matters.

⁽⁴⁾ Depreciation and amortization in fiscal year 2013 excludes $50.1 million of accelerated depreciation associated with our restructuring activities. Refer to Note 3, Restructuring and Other Charges.

A summary of our consolidated assets by reportable segment is as follows:

	As of August 31,
($ in thousands)	2013		2012		2011
University of Phoenix	$	790,537	$	901,180	$	1,016,005
Apollo Global	359,903		376,071		435,009
Other(1)	1,847,507		1,591,071		1,818,692
Total assets	$	2,997,947	$	2,868,322	$	3,269,706

⁽¹⁾ The majority of assets included in Other consists of corporate cash and cash equivalents and marketable securities.

Revenue by geographical area

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)	2013		2012		2011
Net revenue
United States	$	3,405,702	$	3,983,796	$	4,437,079
United Kingdom	205,662		198,408		200,759
Latin America	53,837		50,426		50,725
Other	16,109		20,707		22,486
Net revenue	$	3,681,310	$	4,253,337	$	4,711,049

Long-lived assets by geographical area

	As of August 31,
($ in thousands)	2013		2012		2011
Long-lived assets(1)
United States	$	472,811	$	580,457	$	471,703
United Kingdom	169,371		174,229		214,073
Latin America	62,702		65,856		86,103
Other	3,542		3,466		35,562
Total long-lived assets	$	708,426	$	824,008	$	807,441

⁽¹⁾ Long-lived assets include property and equipment, net, goodwill, and intangible assets, net.

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Consolidated Balance Sheets Parentheticals (Parentheticals)	Aug. 31, 2013	Aug. 31, 2012
Preferred stock authorized (in shares)	1,000,000	1,000,000
Preferred stock issued (in shares)	0	0
Apollo Group Class A treasury stock (in shares)	75,182,000	76,239,000
Apollo Group Class A nonvoting common stock [Member]
Common stock authorized (in shares)	400,000,000	400,000,000
Common stock issued (in shares)	188,007,000	188,007,000
Common stock outstanding (in shares)	112,825,000	111,768,000
Apollo Group Class B voting common stock [Member]
Common stock authorized (in shares)	3,000,000	3,000,000
Common stock issued (in shares)	475,000	475,000
Common stock outstanding (in shares)	475,000	475,000

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Accounts Receivable, Net

12 Months Ended

Aug. 31, 2013

Receivables [Abstract]

Accounts Receivable, Net

Accounts Receivable, Net

Accounts receivable, net consist of the following as of August 31:

($ in thousands)	2013			2012
Student accounts receivable	$	243,660		$	287,619
Less allowance for doubtful accounts	(59,744		)	(107,230		)
Net student accounts receivable	183,916			180,389
Other receivables	31,485			17,890
Total accounts receivable, net	$	215,401		$	198,279

Student accounts receivable is composed primarily of amounts due related to tuition and educational services. 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.

The following summarizes the activity in allowance for doubtful accounts for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Beginning allowance for doubtful accounts	$	107,230		$	128,897		$	192,857
Provision for uncollectible accounts receivable	83,798			146,742			181,297
Write-offs, net of recoveries	(131,284		)	(168,409		)	(245,257		)
Ending allowance for doubtful accounts	$	59,744		$	107,230		$	128,897

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Aug. 31, 2013		Aug. 31, 2012		Aug. 31, 2011
Statement of Comprehensive Income [Abstract]
Net income	$ 248,965		$ 417,006		$ 535,796
Other comprehensive income (net of tax):
Currency translation (loss) gain	(2,545)	[1]	(8,281)	[1]	7,643	[1]
Change in fair value of marketable securities	0	[1]	0	[1]	463	[1]
Comprehensive income	246,420		408,725		543,902
Comprehensive loss attributable to noncontrolling interests	463		7,680		35,940
Comprehensive income attributable to Apollo	$ 246,883		$ 416,405		$ 579,842

[1] The tax effect on each component of other comprehensive income during fiscal years 2013, 2012 and 2011 is not significant.

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Accrued and Other Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2013	Aug. 31, 2012
Salaries, wages and benefits	$ 144,086	$ 117,432
Restructuring lease and other contract exit obligations	55,200	11,300
Accrued advertising	45,850	45,737
Accrued legal and other professional obligations	31,310	57,476
Deferred rent and other lease liabilities	14,001	19,868
Curriculum materials	10,764	13,004
Student refunds, grants and scholarships	7,180	11,181
Other accrued liabilities	46,857	53,281
Total accrued and other current liabilities	346,706	324,881
Deferred rent and other lease liabilties	67,641	88,164
Restructuring lease obligations	64,610	19,122
Uncertain tax positions	33,637	27,223
Deferred gains on sale-leasebacks	22,894	25,692
Other	44,660	31,555
Total other long-term liabilities	233,442	191,756
Lease and related costs, net [Member]
Restructuring lease and other contract exit obligations	$ 46,658	$ 6,902

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Aug. 31, 2013	Aug. 31, 2012
Current assets
Cash and cash equivalents	$ 1,414,485	$ 1,276,375
Restricted cash and cash equivalents	259,174	318,334
Marketable securities	105,809	0
Accounts receivable, net	215,401	198,279
Prepaid taxes	30,359	26,341
Deferred tax assets	60,294	69,052
Other current assets	64,134	49,609
Total current assets	2,149,656	1,937,990
Marketable securities	43,941	5,946
Property and equipment, net	472,614	571,629
Goodwill	103,620	103,345
Intangible assets, net	132,192	149,034
Deferred tax assets	63,894	77,628
Other assets	32,030	22,750
Total assets	2,997,947	2,868,322
Current liabilities
Short-term borrowings and current portion of long-term debt	628,050	638,588
Accounts payable	73,123	74,872
Student deposits	309,176	362,143
Deferred revenue	213,260	254,555
Accrued and other current liabilities	346,706	324,881
Total current liabilities	1,570,315	1,655,039
Long-term debt	64,004	81,323
Deferred tax liabilities	12,177	15,881
Other long-term liabilities	233,442	191,756
Total liabilities	1,879,938	1,943,999
Commitments and contingencies
Shareholders' equity
Preferred stock, no par value, 1,000 shares authorized; none issued
Additional paid-in capital	0	93,770
Apollo Group Class A treasury stock, at cost, 75,182 and 76,239 shares as of August 31, 2013 and 2012, respectively	(3,824,758)	(3,878,612)
Retained earnings	4,978,815	4,743,150
Accumulated other comprehensive loss	(36,563)	(30,034)
Total Apollo shareholders' equity	1,117,598	928,378
Noncontrolling interests (deficit)	411	(4,055)
Total equity	1,118,009	924,323
Total liabilities and shareholders' equity	2,997,947	2,868,322
Common stock [Member] | Apollo Group Class A nonvoting common stock [Member]
Shareholders' equity
Apollo Group common stock	103	103
Total equity	103	103
Common stock [Member] | Apollo Group Class B voting common stock [Member]
Shareholders' equity
Apollo Group common stock	1	1
Total equity	$ 1	$ 1

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Acquisitions (Details) (USD $)	12 Months Ended					12 Months Ended		1 Months Ended	12 Months Ended			12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2013 Other Debt [Member]	Aug. 31, 2012 Other Debt [Member]	Aug. 31, 2012 Carnegie Learning Aquisition [Member]	Sep. 12, 2011 Carnegie Learning Aquisition [Member]	Sep. 30, 2011 Carnegie Mellon Technology Aquisition [Member]	Aug. 31, 2012 Carnegie Mellon Technology Aquisition [Member]	Aug. 31, 2013 Carnegie Mellon Technology Aquisition [Member] Other Debt [Member]	Sep. 12, 2011 Carnegie Mellon Technology Aquisition [Member] Other Debt [Member]	Aug. 31, 2013 Developed Technology Rights [Member] Carnegie Mellon Technology Aquisition [Member]
Purchase price allocation [Line Items]
Amount payable for acquired technology								$ 21,500,000.0
Debt term										10 years
Tangible assets (net of acquired liabilities)							(10,894,000)
Finite-lived intangibles							37,000,000
Indefinite-lived intangibles							14,100,000
Goodwill	103,620,000	103,345,000	133,297,000				34,794,000
Allocated purchase price							75,000,000
Less: Cash acquired							1,264,000
Acquisition, net of acquired cash	0	73,736,000	0			73,736,000
Acquired technology									14,400,000
Total debt	$ 692,054,000	$ 719,911,000		$ 37,426,000	$ 34,696,000						$ 14,400,000
Finite-lived intangible assets, useful life	4 years 10 months 24 days											5 years

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Significant Accounting Policies (Tables)

12 Months Ended

Aug. 31, 2013

Accounting Policies [Abstract]

Stock option valuation assumptions

The following represents our key weighted average assumptions for stock options granted in the respective fiscal years:

	Year Ended August 31,
	2013			2012			2011
Weighted average fair value	$	5.84		$	14.10		$	16.71
Expected volatility	44.4		%	46.6		%	46.8		%
Expected term	3.4			4.3			4.2
Risk-free interest rate	0.7		%	0.6		%	1.4		%
Dividend yield	0.0		%	0.0		%	0.0		%

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Stock and Savings Plans

12 Months Ended

Aug. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock and Savings Plans

Stock and Savings Plans

401(k) Plan

We sponsor a 401(k) plan for eligible employees which provides them the opportunity to make pre-tax 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 the lesser of 15% of his or her gross compensation or the maximum participant contribution permitted under the Internal Revenue Code. We are also permitted to make additional discretionary contributions for certain eligible employees. Our contributions were $20.0 million, $13.6 million and $12.6 million for fiscal years 2013, 2012 and 2011, respectively.

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 for shares purchased under the plan.

Share-Based Awards

We currently have outstanding awards under the Apollo Group, Inc. Amended and Restated 2000 Stock Incentive Plan (“Plan”). Under this Plan, we may grant non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock units, performance share awards (“PSAs”), and other share-based awards covering shares of our Class A common stock to officers, certain employees and faculty members, and the non-employee members of our Board of Directors. In general, the awards granted under the Plan vest over periods ranging from one to four years and stock options have contractual terms of 10 years or less. Restricted stock units issued under the Plan may have both performance-vesting and service-vesting components or service-vesting only. PSAs have both performance-vesting and service-vesting components tied to a defined performance period. The majority of our restricted stock units and PSAs contain rights to receive dividends or dividend equivalents, but these rights are forfeitable and Apollo has not historically issued dividends.

Approximately 28.6 million shares of our Class A common stock have been reserved for issuance over the term of the Plan. The shares may be issued from treasury shares or from authorized but unissued shares of our Class A common stock. As of August 31, 2013, approximately 15.4 million authorized and unissued shares of our Class A common stock were available for issuance under the Plan, including the shares subject to outstanding equity awards.

Under the Plan, 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 generally equal to the vesting period.

Restricted Stock Units and PSAs

We granted restricted stock units during fiscal years 2013, 2012 and 2011 with both service-vesting and performance-vesting conditions, and with only service vesting. The vesting period of the restricted stock units granted generally ranges from one to four years. We also granted PSAs during fiscal years 2013, 2012 and 2011 that vest based on performance and service vesting conditions. The level at which the performance condition is attained will determine the actual number of shares of our Class A common stock into which the PSAs will be converted. The conversion percentage generally ranges from 0% up to 300% of the target level based on the performance condition attainment. The award holder will vest in one-third of the shares of our Class A common stock into which his or her PSAs are so converted for each fiscal year the award holder remains employed during the three year performance period. However, the PSAs will immediately convert into fully-vested shares of our Class A common stock at target level or above upon certain changes in control or ownership. The shares of our Class A common stock into which the PSAs are converted will be issued upon the completion of the applicable performance period.

The following provides a summary of activity for our restricted stock units and PSAs (granted PSAs are assumed to convert into shares of our Class A common stock at the target level):

	Restricted Stock Units				Performance Share Awards(1)
	Number of Shares (in thousands)		Weighted Average Grant Date Fair Value		Number of Shares (in thousands)		Weighted Average Grant Date Fair Value
Nonvested at August 31, 2010	1,481		$	51.12	69		$	42.27
Granted	2,072		44.14		191		46.98
Vested and released	(469	)	54.01		—		—
Forfeited	(152	)	49.94		—		—
Nonvested at August 31, 2011	2,932		$	45.78	260		$	45.74
Granted	1,692		36.81		145		37.50
Vested and released	(905	)	46.97		—		—
Forfeited	(193	)	47.12		(6	)	44.89
Nonvested at August 31, 2012	3,526		$	41.10	399		$	42.76
Granted	2,301		20.10		47		19.80
Vested and released	(1,334	)	42.25		—		—
Forfeited	(527	)	39.99		(81	)	37.45
Nonvested at August 31, 2013	3,966		$	28.68	365		$	40.97

⁽¹⁾ The vesting of PSAs is subject to the achievement of the specified performance goals and the number of common shares that will ultimately be issued is calculated by multiplying the number of performance shares by a payout percentage that generally ranges from 0% up to 300%.

As of August 31, 2013, we have $78.2 million and $1.2 million of unrecognized share-based compensation cost, net of forfeitures, related to unvested restricted stock units and PSAs, respectively. These costs are expected to be recognized over a weighted average period of 2.84 years. The fair value of restricted stock units that vested during fiscal years 2013, 2012 and 2011 was $56.4 million, $42.5 million and $25.5 million, respectively.

Stock Options

We have granted stock options during fiscal years 2013, 2012 and 2011 with a service vesting condition that generally ranges from one to four years. The following provides a summary of our stock option activity:

	Options Outstanding
	Number of Shares (in thousands)		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($)(1) (in thousands)
Balance at August 31, 2010	10,149		$	56.62
Granted	650		43.49
Exercised	(608	)	31.41
Forfeited, canceled or expired	(915	)	58.38
Balance at August 31, 2011	9,276		$	57.18
Granted	176		36.89
Exercised	(157	)	43.57
Forfeited, canceled or expired	(736	)	58.53
Balance at August 31, 2012	8,559		$	56.90
Granted	945		17.95
Exercised	—		—
Forfeited, canceled or expired	(5,381	)	57.69
Balance at August 31, 2013	4,123		$	46.94	2.61	$	1,092
Vested and expected to vest as of August 31, 2013	4,055		$	47.35	2.55	$	1,092
Exercisable as of August 31, 2013	2,761		$	57.65	1.85	$	—
Available for future grant as of August 31, 2013	6,163

⁽¹⁾ Aggregate intrinsic value represents the sum of the differences between our closing stock price of $18.57 on August 31, 2013 and the exercise prices of all of our options with an exercise price less than $18.57.

As of August 31, 2013, we have $8.9 million of unrecognized share-based compensation cost, net of forfeitures, related to unvested stock options. These costs are expected to be recognized over a weighted average period of 2.10 years. The fair value of stock options that vested during fiscal years 2013, 2012 and 2011 was $10.6 million, $22.8 million, and $37.8 million, respectively.

The following summarizes information related to outstanding and exercisable options at August 31, 2013:

	Outstanding				Exercisable
Range of Exercise Prices	Number of Shares (in thousands)	Weighted Average Contractual Life Remaining (Years)	Weighted Average Exercise Price per Share		Number of Shares (in thousands)	Weighted Average Exercise Price per Share
$16.75 to $16.75	600	3.53	$	16.75	—	$	—
$19.62 to $39.88	759	4.75	$	30.06	204	$	38.23
$40.03 to $47.47	696	2.98	$	44.05	496	$	43.86
$48.30 to $55.46	714	1.73	$	53.46	707	$	53.50
$56.49 to $67.90	807	1.38	$	63.91	807	$	63.91
$68.47 to $97.49	545	1.09	$	73.19	545	$	73.18
$169.47 to $169.47	2	1.66	$	169.47	2	$	169.47
	4,123				2,761

The following summarizes information related to stock options exercised during the respective periods:

	Year Ended August 31,
($ in thousands)	2013		2012		2011
Intrinsic value realized	$	—	$	1,498	$	9,207
Actual tax benefit realized by Apollo for tax deductions	$	—	$	573	$	1,771
Cash received by Apollo	$	—	$	6,754	$	19,151

Refer to Note 2, Significant Accounting Policies, for discussion of stock option valuation and related assumptions.

Share-based Compensation Expense

The following details share-based compensation expense for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Instructional and student advisory	$	20,060		$	27,731		$	27,012
Marketing	5,182			6,807			5,306
Admissions advisory	849			1,691			2,109
General and administrative	21,363			41,153			35,613
Restructuring and other charges	2,008			1,323			—
Share-based compensation expense	49,462			78,705			70,040
Tax effect of share-based compensation	(18,986		)	(29,874		)	(26,715		)
Share-based compensation expense, net of tax	$	30,476		$	48,831		$	43,325

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Commitments and Contingencies (Tables)

12 Months Ended

Aug. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Operating lease commitments

The following details our future minimum commitments for capital and operating leases as of August 31, 2013:

($ in thousands)	Capital Leases			Operating Leases(1)
2014	$	18,170		$	180,605
2015	18,082			164,950
2016	11,115			142,616
2017	4,120			115,458
2018	983			91,465
Thereafter	1,194			353,899
Total future minimum lease obligation(1), (2)	$	53,664		$	1,048,993
Less: imputed interest on capital leases	(4,036		)
Net present value of capital lease obligations	$	49,628

⁽¹⁾ The total future minimum lease obligation excludes non-cancelable sublease rental income of $16.7 million.

⁽²⁾ We have initiated restructuring activities that have included ceasing use of a significant number of our operating leases. Refer to Note 3, Restructuring and Other Charges. The total future minimum operating lease obligation includes $168.4 million of future contractual lease payments associated with locations for which we no longer expect to receive an economic benefit. The total future minimum operating lease obligation also includes $31.9 million of future contractual lease payments associated with locations that we expect to close as University of Phoenix obtains the necessary regulatory approvals and completes its teach-out obligations.

Capital lease commitments

The following details our future minimum commitments for capital and operating leases as of August 31, 2013:

($ in thousands)	Capital Leases			Operating Leases(1)
2014	$	18,170		$	180,605
2015	18,082			164,950
2016	11,115			142,616
2017	4,120			115,458
2018	983			91,465
Thereafter	1,194			353,899
Total future minimum lease obligation(1), (2)	$	53,664		$	1,048,993
Less: imputed interest on capital leases	(4,036		)
Net present value of capital lease obligations	$	49,628

⁽¹⁾ The total future minimum lease obligation excludes non-cancelable sublease rental income of $16.7 million.

⁽²⁾ We have initiated restructuring activities that have included ceasing use of a significant number of our operating leases. Refer to Note 3, Restructuring and Other Charges. The total future minimum operating lease obligation includes $168.4 million of future contractual lease payments associated with locations for which we no longer expect to receive an economic benefit. The total future minimum operating lease obligation also includes $31.9 million of future contractual lease payments associated with locations that we expect to close as University of Phoenix obtains the necessary regulatory approvals and completes its teach-out obligations.

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Property and Equipment, Net (Details) (USD $)	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Property and equipment [Line Items]
Gross property and equipment	$ 1,177,383,000	$ 1,221,277,000
Accumulated depreciation and amortization	(704,769,000)	(649,648,000)
Property and equipment, net	472,614,000	571,629,000
Accumulated depreciation and amortization	(33,301,000)	(17,916,000)
Capital lease assets, net	40,096,000	66,630,000
Depreciation expense	196,700,000	158,000,000	144,300,000
Long-lived asset impairments	20,400,000
Restructuring Charges [Member]
Property and equipment [Line Items]
Long-lived asset impairments	12,200,000
Land [Member]
Property and equipment [Line Items]
Gross property and equipment	30,562,000	31,184,000
Buildings [Member]
Property and equipment [Line Items]
Gross property and equipment	62,852,000	67,602,000
Furniture and equipment [Member]
Property and equipment [Line Items]
Gross property and equipment	428,441,000	498,253,000
Capital lease assets	53,826,000	65,138,000
Leasehold improvements (includes tenant improvement allowances) [Member]
Property and equipment [Line Items]
Gross property and equipment	353,548,000	370,171,000
Internally developed software [Member]
Property and equipment [Line Items]
Gross property and equipment	121,137,000	71,511,000
Depreciation expense	12,100,000	10,100,000	15,000,000
Software [Member]
Property and equipment [Line Items]
Gross property and equipment	128,746,000	132,835,000
Capital lease assets	14,264,000	13,835,000
Construction in progress [Member]
Property and equipment [Line Items]
Gross property and equipment	52,097,000	49,721,000
Building and land [Member]
Property and equipment [Line Items]
Capital lease assets	5,307,000	5,573,000
Lease and related costs, net [Member] | University Of Phoenix [Member]
Property and equipment [Line Items]
Accelerated depreciation	$ 50,100,000

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Stock and Savings Plans (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Aug. 31, 2013
Exercise price range [Line Items]
Outstanding options	4,123
Exercisable options	2,761
Range $16.75 to $16.75 [Member]
Exercise price range [Line Items]
Option exercise price range (low)	$ 16.75
Option exercise price range (high)	$ 16.75
Outstanding options	600
Outstanding options weighted average contractual life remaining	3 years 6 months 11 days
Outstanding options weighted average exercise price	$ 16.75
Exercisable options	0
Exercisable options weighted average exercise price	$ 0.00
Range $19.62 to $39.88 [Member]
Exercise price range [Line Items]
Option exercise price range (low)	$ 19.62
Option exercise price range (high)	$ 39.88
Outstanding options	759
Outstanding options weighted average contractual life remaining	4 years 9 months
Outstanding options weighted average exercise price	$ 30.06
Exercisable options	204
Exercisable options weighted average exercise price	$ 38.23
Range $40.03 to $47.47 [Member]
Exercise price range [Line Items]
Option exercise price range (low)	$ 40.03
Option exercise price range (high)	$ 47.47
Outstanding options	696
Outstanding options weighted average contractual life remaining	2 years 11 months 23 days
Outstanding options weighted average exercise price	$ 44.05
Exercisable options	496
Exercisable options weighted average exercise price	$ 43.86
Range $48.30 to $55.46 [Member]
Exercise price range [Line Items]
Option exercise price range (low)	$ 48.30
Option exercise price range (high)	$ 55.46
Outstanding options	714
Outstanding options weighted average contractual life remaining	1 year 8 months 23 days
Outstanding options weighted average exercise price	$ 53.46
Exercisable options	707
Exercisable options weighted average exercise price	$ 53.50
Range $56.49 to $67.90 [Member]
Exercise price range [Line Items]
Option exercise price range (low)	$ 56.49
Option exercise price range (high)	$ 67.90
Outstanding options	807
Outstanding options weighted average contractual life remaining	1 year 4 months 17 days
Outstanding options weighted average exercise price	$ 63.91
Exercisable options	807
Exercisable options weighted average exercise price	$ 63.91
Range $68.47 to $97.49 [Member]
Exercise price range [Line Items]
Option exercise price range (low)	$ 68.47
Option exercise price range (high)	$ 97.49
Outstanding options	545
Outstanding options weighted average contractual life remaining	1 year 1 month 2 days
Outstanding options weighted average exercise price	$ 73.19
Exercisable options	545
Exercisable options weighted average exercise price	$ 73.18
Range $169.47 to $169.47 [Member]
Exercise price range [Line Items]
Option exercise price range (low)	$ 169.47
Option exercise price range (high)	$ 169.47
Outstanding options	2
Outstanding options weighted average contractual life remaining	1 year 7 months 28 days
Outstanding options weighted average exercise price	$ 169.47
Exercisable options	2
Exercisable options weighted average exercise price	$ 169.47

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Debt (Tables)

12 Months Ended

Aug. 31, 2013

Debt Disclosure [Abstract]

Debt

Debt and short-term borrowings consist of the following as of August 31:

($ in thousands)	2013			2012
Revolving Credit Facility, see terms below	$	605,000		$	615,000
Capital lease obligations	49,628			70,215
Other, see terms below	37,426			34,696
Total debt	692,054			719,911
Less short-term borrowings and current portion of long-term debt	(628,050		)	(638,588		)
Long-term debt	$	64,004		$	81,323

Debt maturities

Aggregate debt maturities for each of the years ended August 31 are as follows:

($ in thousands)
2014	$	628,050
2015	30,628
2016	13,435
2017	6,640
2018	3,919
Thereafter	9,382
	$	692,054

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Property and Equipment, Net (Tables)

12 Months Ended

Aug. 31, 2013

Property, Plant and Equipment [Abstract]

Property and equipment, net

Property and equipment, net consist of the following as of August 31:

($ in thousands)	2013			2012
Land	$	30,562		$	31,184
Buildings	62,852			67,602
Furniture and equipment	428,441			498,253
Leasehold improvements (includes tenant improvement allowances)	353,548			370,171
Internally developed software	121,137			71,511
Software	128,746			132,835
Construction in progress	52,097			49,721
Gross property and equipment	1,177,383			1,221,277
Accumulated depreciation and amortization	(704,769		)	(649,648		)
Property and equipment, net	$	472,614		$	571,629

Property and equipment capital leases

The following amounts, which are included in the above table, represent capital leases as of August 31:

($ in thousands)	2013			2012
Buildings and land	$	5,307		$	5,573
Furniture and equipment	53,826			65,138
Software	14,264			13,835
Accumulated depreciation and amortization	(33,301		)	(17,916		)
Capital lease assets, net	$	40,096		$	66,630

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Goodwill and Intangible Assets (Tables)

12 Months Ended

Aug. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in goodwill and goodwill carrying value

The following details changes in the carrying amount of our goodwill by reportable segment during fiscal years 2013 and 2012:

	University of Phoenix		Apollo Global(1)			Other(1)		Total
($ in thousands)
Goodwill as of August 31, 2011	$	37,018	$	79,388		$	16,891	$	133,297
Goodwill acquired in Carnegie Learning acquisition	34,794		—			—		34,794
UNIACC impairment	—		(11,912		)	—		(11,912		)
Sale of MPW(2)	—		(45,266		)	—		(45,266		)
Currency translation adjustment	—		(7,568		)	—		(7,568		)
Goodwill as of August 31, 2012	71,812		14,642			16,891		103,345
Currency translation adjustment	—		275			—		275
Goodwill as of August 31, 2013	$	71,812	$	14,917		$	16,891	$	103,620

⁽¹⁾ During to fiscal year 2013, we began presenting WIU in Other in our segment reporting. As a result, we have included WIU in Other for all periods presented. WIU was previously included in our Apollo Global reportable segment. Refer to Note 19,Segment Reporting.

⁽²⁾ This represented all of our BPP reporting unit’s remaining goodwill which we allocated to MPW in determining our gain on sale. Refer to Note 4, Discontinued Operations. We allocated the goodwill based on the fair values of MPW and BPP’s remaining business with consideration for how these units were operated.

The following presents the components of the net carrying amount of our goodwill by reportable segment as of August 31, 2013 and 2012:

	University of Phoenix		Apollo Global(1)			Other			Total
($ in thousands)
Gross carrying amount(1)	$	71,812	$	27,185		$	37,096		$	136,093
Accumulated impairments(1)	—		(8,712		)	(20,205		)	(28,917		)
Foreign currency translation	—		(3,556		)	—			(3,556		)
Net carrying amount at August 31, 2013	$	71,812	$	14,917		$	16,891		$	103,620

	University of Phoenix		Apollo Global(1)			Other			Total
($ in thousands)
Gross carrying amount(1)	$	71,812	$	38,036		$	37,096		$	146,944
Accumulated impairments(1)	—		(20,624		)	(20,205		)	(40,829		)
Foreign currency translation	—		(2,770		)	—			(2,770		)
Net carrying amount at August 31, 2012	$	71,812	$	14,642		$	16,891		$	103,345

⁽¹⁾ UNIACC’s entire goodwill balance was impaired in fiscal year 2012. Accordingly, we removed the gross carrying amount and related accumulated impairments associated with UNIACC from Apollo Global in fiscal year 2013. In addition, we have recorded $354 million of accumulated impairments associated with our BPP reporting unit, which did not have any goodwill as of August 31, 2013 and 2012.

Intangible assets

Intangible assets consist of the following as of August 31:

	2013										2012
($ in thousands)	Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation Loss			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation Loss			Net Carrying Amount
Software and technology	$	42,389	$	(16,673	)	$	—		$	25,716	$	42,389	$	(8,197	)	$	—		$	34,192
Student and customer relationships	12,026		(7,727		)	(1,363		)	2,936		14,109		(6,731		)	(1,395		)	5,983
Copyrights	20,891		(18,706		)	(777		)	1,408		20,891		(16,277		)	(741		)	3,873
Other(1)	—		—			—			—		12,878		(10,556		)	(1,196		)	1,126
Total finite-lived intangibles	75,306		(43,106		)	(2,140		)	30,060		90,267		(41,761		)	(3,332		)	45,174
Trademarks	100,736		—			(5,347		)	95,389		100,736		—			(3,778		)	96,958
Accreditations and designations	7,260		—			(517		)	6,743		7,260		—			(358		)	6,902
Total indefinite-lived intangibles	107,996		—			(5,864		)	102,132		107,996		—			(4,136		)	103,860
Total intangible assets, net	$	183,302	$	(43,106	)	$	(8,004	)	$	132,192	$	198,263	$	(41,761	)	$	(7,468	)	$	149,034

⁽¹⁾ The decrease in gross carrying amount as of August 31, 2013 compared to August 31, 2012 was due to the removal intangibles that were fully amortized during fiscal year 2013.

Future intangibles amortization

The weighted average original useful life of our finite-lived intangibles as of August 31, 2013 is 4.9 years and estimated future amortization expense of finite-lived intangibles is as follows:

($ in thousands)
2014	$	11,670
2015	9,605
2016	8,502
2017	283
Total estimated amortization expense(1)	$	30,060

⁽¹⁾ Estimated future amortization expense may vary as acquisitions and dispositions occur in the future and as a result of foreign currency translation adjustments.

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Marketable Securities

12 Months Ended

Aug. 31, 2013

Marketable Securities [Abstract]

Marketable Securities

Marketable Securities

Marketable securities consist of the following as of August 31:

	Current				Noncurrent
($ in thousands)	2013		2012		2013		2012
Tax-exempt municipal bonds	$	69,621	$	—	$	24,070	$	—
Corporate bonds	24,503		—		13,925		—
Other(1)	11,685		—		—		—
Total held-to-maturity securities	105,809		—		37,995		—
Available-for-sale auction-rate securities	—		—		5,946		5,946
Total marketable securities	$	105,809	$	—	$	43,941	$	5,946

⁽¹⁾ Other principally consists of commercial paper and certificates of deposit.

We have the intent and ability to hold our held-to-maturity marketable securities until maturity and all of our contractual maturities occur within two years. Our held-to-maturity securities are reported at amortized cost, which approximates fair value. We have not recorded gains or losses on our held-to-maturity investments.

Our auction-rate-securities are classified as available-for-sale and reported at fair value. We have classified our auction-rate securities as noncurrent due to illiquidity considerations. Refer to Note 10, Fair Value Measurements.

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Shareholders' Equity (Details) (USD $)	3 Months Ended	12 Months Ended
	Nov. 30, 2012	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Carlyle ownership in Apollo Global			14.40%
Purchase of noncontrolling interest	$ 42,500,000	$ 42,500,000	$ 0	$ 0
Contingent payment	6,000,000	5,277,000	0
Additional paid-in capital adjustment		48,500,000
Additional paid-in capital [Member]
Additional paid-in capital adjustment	$ 48,543,000	$ 48,543,000

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Restructuring and Other Charges (Tables)

12 Months Ended

Aug. 31, 2013

Restructuring and Related Activities [Abstract]

Restructuring and other charges

We have incurred the following restructuring and other charges associated with these activities during the respective periods:

	Year Ended August 31,						Cumulative Costs as of August 31, 2013
($ in thousands)	2013		2012		2011
Lease and related costs, net	$	137,263	$	15,981	$	19,067	$	172,311
Severance and other employee separation costs	34,293		12,887		3,846		51,026
Other restructuring related costs	27,069		9,827		—		36,896
Restructuring and other charges	$	198,625	$	38,695	$	22,913	$	260,233

The following summarizes the restructuring and other charges in our segment reporting format:

	Year Ended August 31,						Cumulative Costs as of August 31, 2013
($ in thousands)	2013		2012		2011
University of Phoenix	$	158,757	$	20,002	$	22,913	$	201,672
Apollo Global	6,053		5,712		—		11,765
Other	33,815		12,981		—		46,796
Restructuring and other charges	$	198,625	$	38,695	$	22,913	$	260,233

The following details the changes in our restructuring liabilities by type of cost during the fiscal years 2013 and 2012:

($ in thousands)	Lease and Related Costs, Net			Severance and Other Employee Separation Costs			Other Restructuring Related Costs			Total
Balance at August 31, 2011	$	17,802		$	—		$	—		$	17,802
Restructuring and other charges	15,981			12,887			9,827			38,695
Non-cash adjustments	2,248			(1,323		)	—			925
Payments	(10,007		)	(8,566		)	(8,416		)	(26,989		)
Balance at August 31, 2012(1)	26,024			2,998			1,411			30,433
Restructuring and other charges	137,263			34,293			27,069			198,625
Non-cash adjustments(2)	(31,114		)	(2,008		)	(12,221		)	(45,343		)
Payments	(28,125		)	(27,660		)	(8,129		)	(63,914		)
Balance at August 31, 2013(1)	$	104,048		$	7,623		$	8,130		$	119,801

⁽¹⁾ The current portion of our restructuring liabilities was $55.2 million and $11.3 million as of August 31, 2013 and 2012, respectively. The substantial majority of these balances are included in accrued and other current liabilities on our Consolidated Balance Sheets and the long-term portion is included in other long-term liabilities. The gross obligation associated with our restructuring liabilities as of August 31, 2013 is approximately $185 million, which principally represents non-cancelable leases that will be paid over the respective lease terms through fiscal year 2023.

⁽²⁾ Non-cash adjustments for lease and related costs, net represents $50.1 million of accelerated depreciation, partially offset by the release of certain associated liabilities such as deferred rent. Non-cash adjustments for severance and other employee separation costs represents share-based compensation and for other restructuring related costs represents asset impairments.

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Earnings Per Share (Tables)

12 Months Ended

Aug. 31, 2013

Earnings Per Share [Abstract]

Earnings per share

The following are the components of basic and diluted earnings per share for the respective periods:

	Year Ended August 31,
($ in thousands)	2013		2012		2011
Net income attributable to Apollo (basic and diluted)	$	248,526	$	422,678	$	572,427
Basic weighted average shares outstanding	112,712		121,607		141,269
Dilutive effect of stock options	—		4		99
Dilutive effect of restricted stock units and performance share awards	573		746		382
Diluted weighted average shares outstanding	113,285		122,357		141,750
Earnings per share:
Basic income per share attributable to Apollo	$	2.20	$	3.48	$	4.05
Diluted income per share attributable to Apollo	$	2.19	$	3.45	$	4.04

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Goodwill and Intangible Assets

12 Months Ended

Aug. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

The following details changes in the carrying amount of our goodwill by reportable segment during fiscal years 2013 and 2012:

	University of Phoenix		Apollo Global(1)			Other(1)		Total
($ in thousands)
Goodwill as of August 31, 2011	$	37,018	$	79,388		$	16,891	$	133,297
Goodwill acquired in Carnegie Learning acquisition	34,794		—			—		34,794
UNIACC impairment	—		(11,912		)	—		(11,912		)
Sale of MPW(2)	—		(45,266		)	—		(45,266		)
Currency translation adjustment	—		(7,568		)	—		(7,568		)
Goodwill as of August 31, 2012	71,812		14,642			16,891		103,345
Currency translation adjustment	—		275			—		275
Goodwill as of August 31, 2013	$	71,812	$	14,917		$	16,891	$	103,620

⁽¹⁾ During to fiscal year 2013, we began presenting WIU in Other in our segment reporting. As a result, we have included WIU in Other for all periods presented. WIU was previously included in our Apollo Global reportable segment. Refer to Note 19,Segment Reporting.

⁽²⁾ This represented all of our BPP reporting unit’s remaining goodwill which we allocated to MPW in determining our gain on sale. Refer to Note 4, Discontinued Operations. We allocated the goodwill based on the fair values of MPW and BPP’s remaining business with consideration for how these units were operated.

The following presents the components of the net carrying amount of our goodwill by reportable segment as of August 31, 2013 and 2012:

	University of Phoenix		Apollo Global(1)			Other			Total
($ in thousands)
Gross carrying amount(1)	$	71,812	$	27,185		$	37,096		$	136,093
Accumulated impairments(1)	—		(8,712		)	(20,205		)	(28,917		)
Foreign currency translation	—		(3,556		)	—			(3,556		)
Net carrying amount at August 31, 2013	$	71,812	$	14,917		$	16,891		$	103,620

	University of Phoenix		Apollo Global(1)			Other			Total
($ in thousands)
Gross carrying amount(1)	$	71,812	$	38,036		$	37,096		$	146,944
Accumulated impairments(1)	—		(20,624		)	(20,205		)	(40,829		)
Foreign currency translation	—		(2,770		)	—			(2,770		)
Net carrying amount at August 31, 2012	$	71,812	$	14,642		$	16,891		$	103,345

⁽¹⁾ UNIACC’s entire goodwill balance was impaired in fiscal year 2012. Accordingly, we removed the gross carrying amount and related accumulated impairments associated with UNIACC from Apollo Global in fiscal year 2013. In addition, we have recorded $354 million of accumulated impairments associated with our BPP reporting unit, which did not have any goodwill as of August 31, 2013 and 2012.

Intangible assets consist of the following as of August 31:

	2013										2012
($ in thousands)	Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation Loss			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation Loss			Net Carrying Amount
Software and technology	$	42,389	$	(16,673	)	$	—		$	25,716	$	42,389	$	(8,197	)	$	—		$	34,192
Student and customer relationships	12,026		(7,727		)	(1,363		)	2,936		14,109		(6,731		)	(1,395		)	5,983
Copyrights	20,891		(18,706		)	(777		)	1,408		20,891		(16,277		)	(741		)	3,873
Other(1)	—		—			—			—		12,878		(10,556		)	(1,196		)	1,126
Total finite-lived intangibles	75,306		(43,106		)	(2,140		)	30,060		90,267		(41,761		)	(3,332		)	45,174
Trademarks	100,736		—			(5,347		)	95,389		100,736		—			(3,778		)	96,958
Accreditations and designations	7,260		—			(517		)	6,743		7,260		—			(358		)	6,902
Total indefinite-lived intangibles	107,996		—			(5,864		)	102,132		107,996		—			(4,136		)	103,860
Total intangible assets, net	$	183,302	$	(43,106	)	$	(8,004	)	$	132,192	$	198,263	$	(41,761	)	$	(7,468	)	$	149,034

⁽¹⁾ The decrease in gross carrying amount as of August 31, 2013 compared to August 31, 2012 was due to the removal intangibles that were fully amortized during fiscal year 2013.

Finite-lived intangibles are amortized on either a straight-line basis or using an accelerated method to reflect the pattern in which the benefits of the asset are consumed. Amortization expense for intangibles for fiscal years 2013, 2012 and 2011 was $15.1 million, $20.2 million and $14.7 million, respectively. The weighted average original useful life of our finite-lived intangibles as of August 31, 2013 is 4.9 years and estimated future amortization expense of finite-lived intangibles is as follows:

($ in thousands)
2014	$	11,670
2015	9,605
2016	8,502
2017	283
Total estimated amortization expense(1)	$	30,060

⁽¹⁾ Estimated future amortization expense may vary as acquisitions and dispositions occur in the future and as a result of foreign currency translation adjustments.

We perform our annual goodwill and indefinite-lived intangibles impairment tests, as applicable, for our reporting units on the following dates:

• University of Phoenix - May 31

• Apollo Global:

• BPP - July 1

• UNIACC - May 31

• ULA - May 31

• CFFP - August 31

• Western International University - May 31

• Carnegie Learning - May 31

We completed our fiscal year 2013 annual goodwill and indefinite-lived intangibles impairment tests for applicable reporting units and assets and determined there was no impairment.

During fiscal year 2012, UNIACC was advised by the National Accreditation Commission of Chile that its institutional accreditation would not be renewed and therefore had lapsed. The loss of accreditation reduced new enrollment in UNIACC’s degree programs and, accordingly, we revised our cash flow estimates and performed an interim goodwill impairment analysis. Based on our estimated fair value of the UNIACC reporting unit and a hypothetical purchase price allocation, we determined that the UNIACC reporting unit would have no implied goodwill. We also tested UNIACC’s trademark and accreditation intangibles and determined they had minimal or no fair value. Accordingly, we determined UNIACC’s entire goodwill balance and the trademark and accreditation indefinite-lived intangibles totaling $11.9 million and $3.9 million, respectively, were impaired. We also recorded a $1.0 million impairment for certain finite-lived intangibles. We did not record an income tax benefit associated with these charges as UNIACC’s goodwill and other intangibles are not deductible for tax purposes.

During fiscal year 2011, BPP experienced lower than expected rates of enrollment for its accounting and finance professional training programs. As a result, we revised our outlook for BPP and reduced forecasted revenues and operating cash flows for the remainder of fiscal year 2011 and reduced our forecasts for future years from what we had previously anticipated. For these reasons, we performed an interim goodwill impairment analysis and determined BPP’s fair value was lower than its carrying value. Using the estimated fair value of BPP in a hypothetical purchase price allocation, we recorded impairment charges during fiscal year 2011 for BPP’s goodwill and trademark of $197.7 million and $22.2 million, respectively. These impairment charges aggregated to $213.9 million (net of $6.0 million benefit for income taxes associated with the other intangibles impairment charge). As BPP’s goodwill is not deductible for tax purposes, we did not record a tax benefit associated with the goodwill impairment charge.

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Quarterly Results of Operations (Unaudited) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Aug. 31, 2013	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	Aug. 31, 2012	May 31, 2012	Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Quarterly Financial Information Disclosure [Abstract]
Net revenue	$ 844,981	$ 946,774	$ 834,372	$ 1,055,183	$ 996,497	$ 1,122,258	$ 962,682	$ 1,171,900	$ 3,681,310	$ 4,253,337	$ 4,711,049
Costs and expenses:
Restructuring and other charges	67,300	63,100	44,100	24,100	9,400	7,600	16,100	5,600	198,625	38,695	22,913
Litigation (credit) charge, net	(1,400)		(6,300)	(16,900)		4,725			(24,600)	4,725	(11,951)
Goodwill and other intangibles impairment								16,788	0	16,788	219,927
Operating income	34,735	131,953	29,780	230,946	89,555	221,409	103,705	261,668	427,414	676,337	955,858
Income from continuing operations	21,396	80,170	13,659	133,740	47,528	131,278	59,241	145,136	248,965	383,183	529,087
Net income	21,396	80,170	13,659	133,740	74,169	134,382	61,171	147,284	248,965	417,006	535,796
Net income attributable to Apollo	$ 21,551	$ 79,953	$ 13,527	$ 133,495	$ 75,448	$ 134,034	$ 63,882	$ 149,314	$ 248,526	$ 422,678	$ 572,427
Earnings per share - Basic:
Continuing operations attributable to Apollo (in dollars per share)	$ 0.19	$ 0.71	$ 0.12	$ 1.19	$ 0.47	$ 1.11	$ 0.50	$ 1.13	$ 2.20	$ 3.24	$ 4.01
Discontinued operations attributable to Apollo (in dollars per share)	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.20	$ 0.02	$ 0.01	$ 0.02	$ 0.00	$ 0.24	$ 0.04
Basic income per share attributable to Apollo (in dollars per share)	$ 0.19	$ 0.71	$ 0.12	$ 1.19	$ 0.67	$ 1.13	$ 0.51	$ 1.15	$ 2.20	$ 3.48	$ 4.05
Earnings per share - Diluted:
Continuing operations attributable to Apollo (in dollars per share)	$ 0.19	$ 0.71	$ 0.12	$ 1.18	$ 0.46	$ 1.11	$ 0.49	$ 1.13	$ 2.19	$ 3.22	$ 4.00
Discontinued operations attributable to Apollo (in dollars per share)	$ 0.00	$ 0.00	$ 0.00	$ 0.00	$ 0.20	$ 0.02	$ 0.02	$ 0.01	$ 0.00	$ 0.23	$ 0.04
Diluted income per share attributable to Apollo (in dollars per share)	$ 0.19	$ 0.71	$ 0.12	$ 1.18	$ 0.66	$ 1.13	$ 0.51	$ 1.14	$ 2.19	$ 3.45	$ 4.04
Basic weighted average shares outstanding (in shares)	113,105	112,742	112,573	112,420	112,815	118,134	125,298	130,318	112,712	121,607	141,269
Diluted weighted average shares outstanding (in shares)	113,740	113,372	113,068	112,849	113,539	118,793	126,467	130,874	113,285	122,357	141,750

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Acquisitions

12 Months Ended

Aug. 31, 2013

Business Combinations [Abstract]

Acquisitions

Acquisitions

On September 12, 2011, we acquired all of the outstanding stock of Carnegie Learning, a publisher of research-based math curricula and adaptive learning software for a cash purchase price of $75.0 million. In a separate transaction completed on the same date, we acquired related technology from Carnegie Mellon University for $21.5 million payable over a 10-year period.

We accounted for the Carnegie Learning acquisition as a business combination and Carnegie Learning’s operating results are included in our consolidated financial statements from the date of acquisition. We have not provided pro forma information because Carnegie Learning’s results of operations are not significant to our consolidated results of operations.

The acquisition purchase price allocation is summarized below:

($ in thousands)
Tangible assets (net of acquired liabilities)	$	(10,894	)
Finite-lived intangibles	37,000
Indefinite-lived intangibles	14,100
Goodwill	34,794
Allocated purchase price	75,000
Less: Cash acquired	(1,264		)
Acquisition, net of cash acquired	$	73,736

We accounted for the related technology acquired from Carnegie Mellon University as an asset purchase. Accordingly, we recorded a $14.4 million asset and corresponding liability representing the present value of the future cash payments on the acquisition date using our incremental borrowing rate. The asset is included in intangible assets, net on our Consolidated Balance Sheets and is being amortized on a straight-line basis over a five-year useful life. The liability is included in debt on our Consolidated Balance Sheets and is being accreted over the 10-year period, with the accretion recorded in interest expense on our Consolidated Statements of Income.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Operating activities:
Net income	$ 248,965	$ 417,006	$ 535,796
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation	49,462	78,705	70,040
Excess tax benefits from share-based compensation	(17)	(1,150)	(4,014)
Depreciation and amortization	161,733	178,234	159,006
Accelerated depreciation and impairments included in restructuring	62,267	0	0
Loss on fixed asset write-offs	8,190	0	0
Goodwill and other intangibles impairment	0	16,788	219,927
Non-cash foreign currency loss (gain), net	220	(497)	1,662
Gain on sale of discontinued operations	0	(26,678)	0
Provision for uncollectible accounts receivable	83,798	146,742	181,297
Litigation (credit) charge, net	(24,600)	4,725	(11,951)
Deferred income taxes	(29,517)	21,850	55,823
Changes in assets and liabilities, excluding the impact of acquisition and business disposition:
Restricted cash and cash equivalents	59,160	61,073	64,725
Accounts receivable	(103,369)	(129,773)	(121,120)
Prepaid taxes	(3,985)	9,303	(25,241)
Other assets	(19,514)	(11,568)	(9,900)
Accounts payable	(1,775)	12,525	(3,913)
Student deposits	(52,587)	(58,740)	(70,120)
Deferred revenue	(39,091)	(39,154)	(79,488)
Accrued and other liabilities	78,708	(128,091)	(65,407)
Net cash provided by operating activities	478,048	551,300	897,122
Investing activities:
Purchases of property and equipment	(119,348)	(115,187)	(162,573)
Purchases of marketable securities	(208,878)	0	0
Maturities of marketable securities	65,074	0	10,000
Acquisition, net of cash acquired	0	(73,736)	0
Proceeds from sale-leaseback, net	0	0	169,018
Proceeds from dispositions, net	0	76,434	21,251
Collateralization of letter of credit	0	0	126,615
Other investing activities	(1,500)	(1,694)	0
Net cash (used in) provided by investing activities	(264,652)	(114,183)	164,311
Financing activities:
Payments on borrowings	(636,387)	(562,269)	(437,925)
Proceeds from borrowings	610,236	629,145	410,051
Purchases of stock for treasury	(9,537)	(811,913)	(783,168)
Issuances of stock	3,867	11,949	24,903
Purchase of noncontrolling interest	(42,500)	0	0
Noncontrolling interest contributions	0	0	6,875
Excess tax benefits from share-based compensation	17	1,150	4,014
Net cash used in financing activities	(74,304)	(731,938)	(775,250)
Exchange rate effect on cash and cash equivalents	(982)	(468)	712
Net increase (decrease) in cash and cash equivalents	138,110	(295,289)	286,895
Cash and cash equivalents, beginning of year	1,276,375	1,571,664	1,284,769
Cash and cash equivalents, end of year	1,414,485	1,276,375	1,571,664
Supplemental disclosure of cash flow and non-cash information
Cash paid for income taxes, net of refunds	201,055	246,824	464,701
Cash paid for interest	7,869	9,794	10,972
Restricted stock units vested and released	27,054	36,182	21,470
Credits received for tenant improvements	6,049	27,009	25,538
Capital lease additions	3,500	44,145	31,818
Debt incurred for acquired technology	$ 0	$ 14,389	$ 0

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Marketable Securities (Details) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2013	Aug. 31, 2012
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity securities, current	$ 105,809	$ 0
Held-to-maturity securities, noncurrent	37,995	0
Marketable securities, current	105,809	0
Marketable securities, noncurrent	43,941	5,946
US States and Political Subdivisions Debt Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity securities, current	69,621	0
Held-to-maturity securities, noncurrent	24,070	0
Corporate Debt Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity securities, current	24,503	0
Held-to-maturity securities, noncurrent	13,925	0
Other Debt [Member]
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity securities, current	11,685	0
Held-to-maturity securities, noncurrent	0	0
Auction Rate Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Available-for-sale securities, current	0	0
Available-for-sale securities, noncurrent	$ 5,946	$ 5,946

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Nature of Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Nov. 30, 2012	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Carlyle ownership in Apollo Global			14.40%
Purchase of noncontrolling interest	$ 42,500	$ 42,500	$ 0	$ 0

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Marketable Securities (Tables)

12 Months Ended

Aug. 31, 2013

Marketable Securities [Abstract]

Marketable securities

Marketable securities consist of the following as of August 31:

	Current				Noncurrent
($ in thousands)	2013		2012		2013		2012
Tax-exempt municipal bonds	$	69,621	$	—	$	24,070	$	—
Corporate bonds	24,503		—		13,925		—
Other(1)	11,685		—		—		—
Total held-to-maturity securities	105,809		—		37,995		—
Available-for-sale auction-rate securities	—		—		5,946		5,946
Total marketable securities	$	105,809	$	—	$	43,941	$	5,946

⁽¹⁾ Other principally consists of commercial paper and certificates of deposit.

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Stock and Savings Plans (Details 2) (USD $)	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
401(K) plan eligibility, employee years service	1 year
401(K) plan eligibility, employee hours service	0 years 0 months 0 days 1000 hours
401(K) plan employer matching percent	30.00%
401(K) plan maximum annual contribution percent	15.00%
401(K) plan matching contributions	$ 20,000,000	$ 13,600,000	$ 12,600,000
Employee stock purchase plan percentage of fair value purchase price	95.00%
Shares available for future grant	6,163,000
Percentage of award vesting each year	33.30%
Outstanding shares beginning balance	8,559,000	9,276,000	10,149,000
Shares granted	945,000	176,000	650,000
Shares exercised	0	(157,000)	(608,000)
Shares forfeited, canceled or expired	(5,381,000)	(736,000)	(915,000)
Outstanding shares ending balance	4,123,000	8,559,000	9,276,000
Weighted average exercise price of options outstanding beginning balance	$ 56.90	$ 57.18	$ 56.62
Weighted average exercise price of options granted	$ 17.95	$ 36.89	$ 43.49
Weighted average exercise price of options exercised	$ 0.00	$ 43.57	$ 31.41
Weighted average exercise price of options forfeited, canceled or expired	$ 57.69	$ 58.53	$ 58.38
Weighted average exercise price of options outstanding ending balance	$ 46.94	$ 56.90	$ 57.18
Weighted average remaining contractual term of options outstanding (years)	2 years 7 months 10 days
Aggregate intrinsic value of options outstanding ($)	1,092,000
Options vested and expected to vest	4,055,000
Weighted average exercise price per share of options vested and expected to vest	$ 47.35
Weighted average remaining contractual term of options vested and expected to vest (years)	2 years 6 months 18 days
Aggregate intrinsic value of options vested and expected to vest ($)	1,092,000
Exercisable options	2,761,000
Weighted average exercise price per exercisable options	$ 57.65
Weighted average remaining contractual term, exercisable options (years)	1 year 10 months 6 days
Aggregate intrinsic value, exercisable options ($)	0
Closing share price	$ 18.57
Intrinsic value realized	0	1,498,000	9,207,000
Actual tax benefit realized by Apollo for tax deductions	0	573,000	1,771,000
Cash received from stock option exercises	0	6,754,000	19,151,000
Amended And Restated 2000 Stock Incentive Plan [Member] | Apollo Group Class A nonvoting common stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	28,600,000
Shares available for future grant	15,400,000
Minimum [Member] | Amended And Restated 2000 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	1 year
Minimum [Member] | Amended And Restated 2000 Stock Incentive Plan [Member] | Apollo Group Class A nonvoting common stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price percentage of fair value	100.00%
Maximum [Member] | Amended And Restated 2000 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized shared-based compensation cost	8,900,000
Weighted average period unrecognized share-based compensation expected to be recognized	2 years 1 month 6 days
Fair value of options vested	10,600,000	22,800,000	37,800,000
Stock options [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	1 year
Stock options [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Stock options [Member] | Maximum [Member] | Amended And Restated 2000 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term of awards	10 years
Restricted stock units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards nonvested, beginning balance	3,526,000	2,932,000	1,481,000
Awards granted	2,301,000	1,692,000	2,072,000
Awards vested and released	(1,334,000)	(905,000)	(469,000)
Awards forfeited	(527,000)	(193,000)	(152,000)
Awards nonvested, ending balance	3,966,000	3,526,000	2,932,000
Weighted average fair value of nonvested awards, beginning balance	$ 41.10	$ 45.78	$ 51.12
Weighted average fair value of granted awards	$ 20.10	$ 36.81	$ 44.14
Weighted average fair value of vested and released awards	$ 42.25	$ 46.97	$ 54.01
Weighted average fair value of forfeited awards	$ 39.99	$ 47.12	$ 49.94
Weighted average fair value of nonvested awards, ending balance	$ 28.68	$ 41.10	$ 45.78
Unrecognized shared-based compensation cost	78,200,000
Fair value of restricted stock units vested	56,400,000	42,500,000	25,500,000
Restricted stock units [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	1 year
Restricted stock units [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Performance share awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards nonvested, beginning balance	399,000	260,000	69,000
Awards granted	47,000	145,000	191,000
Awards vested and released	0	0	0
Awards forfeited	(81,000)	(6,000)	0
Awards nonvested, ending balance	365,000	399,000	260,000
Weighted average fair value of nonvested awards, beginning balance	$ 42.76	$ 45.74	$ 42.27
Weighted average fair value of granted awards	$ 19.80	$ 37.50	$ 46.98
Weighted average fair value of vested and released awards	$ 0.00	$ 0.00	$ 0.00
Weighted average fair value of forfeited awards	$ 37.45	$ 44.89	$ 0.00
Weighted average fair value of nonvested awards, ending balance	$ 40.97	$ 42.76	$ 45.74
Unrecognized shared-based compensation cost	$ 1,200,000
Performance share awards [Member] | Apollo Group Class A nonvoting common stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term of awards	3 years
Performance share awards [Member] | Minimum [Member] | Apollo Group Class A nonvoting common stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage range performance shares could convert	0.00%
Performance share awards [Member] | Maximum [Member] | Apollo Group Class A nonvoting common stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage range performance shares could convert	300.00%
Restricted stock units and performance share awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average period unrecognized share-based compensation expected to be recognized	2 years 10 months 2 days

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Debt (Details)			2 Months Ended		12 Months Ended		12 Months Ended								12 Months Ended
	Aug. 31, 2013 USD ($)	Aug. 31, 2012 USD ($)	Oct. 21, 2013 Bank Facility [Member] USD ($)	Oct. 19, 2012 Bank Facility [Member] USD ($)	Aug. 31, 2013 Bank Facility [Member] USD ($)	Aug. 31, 2012 Bank Facility [Member] USD ($)	Aug. 31, 2013 Bank Facility [Member] Minimum [Member]	Aug. 31, 2013 Bank Facility [Member] Minimum [Member] London Interbank Offered Rate (LIBOR) [Member]	Aug. 31, 2013 Bank Facility [Member] Maximum [Member]	Aug. 31, 2013 Bank Facility [Member] Maximum [Member] London Interbank Offered Rate (LIBOR) [Member]	Aug. 31, 2013 Capital Lease Obligations [Member] USD ($)	Aug. 31, 2012 Capital Lease Obligations [Member] USD ($)	Aug. 31, 2013 Other Debt [Member] USD ($)	Aug. 31, 2012 Other Debt [Member] USD ($)	Aug. 31, 2013 Technology Purchase Obligation [Member]	Dec. 21, 2012 Credit Facility Bpp [Member] GBP (£)
Debt [Line Items]
Total debt	$ 692,054,000	$ 719,911,000			$ 605,000,000	$ 615,000,000					$ 49,628,000	$ 70,215,000	$ 37,426,000	$ 34,696,000
Less short-term borrowings and current portion of long-term debt	(628,050,000)	(638,588,000)
Long-term debt	64,004,000	81,323,000
Aggregate debt maturities [Abstract]
2014	628,050,000
2015	30,628,000
2016	13,435,000
2017	6,640,000
2018	3,919,000
Thereafter	9,382,000
Total debt	692,054,000	719,911,000			605,000,000	615,000,000					49,628,000	70,215,000	37,426,000	34,696,000
Borrowing capacity					625,000,000											39,000,000.0
Debt term					5 years										10 years
Letters of credit outstanding	14,000,000	8,000,000
Debt repaid			$ 605,000,000	$ 615,000,000
Fees							0.25%		0.40%
Fees for borrowings								1.25%		1.85%
Weighted average interest rate					3.50%	3.50%							5.30%	5.70%

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Debt

12 Months Ended

Aug. 31, 2013

Debt Disclosure [Abstract]

Debt

Debt

Debt and short-term borrowings consist of the following as of August 31:

($ in thousands)	2013			2012
Revolving Credit Facility, see terms below	$	605,000		$	615,000
Capital lease obligations	49,628			70,215
Other, see terms below	37,426			34,696
Total debt	692,054			719,911
Less short-term borrowings and current portion of long-term debt	(628,050		)	(638,588		)
Long-term debt	$	64,004		$	81,323

Aggregate debt maturities for each of the years ended August 31 are as follows:

($ in thousands)
2014	$	628,050
2015	30,628
2016	13,435
2017	6,640
2018	3,919
Thereafter	9,382
	$	692,054

• Revolving Credit Facility - In fiscal year 2012, we entered into a syndicated $625 million unsecured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility is used for general corporate purposes, which may include acquisitions and share repurchases. The term is five years and will expire in April 2017. The Revolving Credit Facility may be used for borrowings in certain foreign currencies and letters of credit, in each case up to specified sublimits.

We borrowed $605.0 million and $615.0 million under the Revolving Credit Facility as of August 31, 2013 and 2012, respectively. We also had approximately $14 million and $8 million of outstanding letters of credit under the Revolving Credit Facility as of the respective dates. We repaid the entire amount borrowed under the Revolving Credit Facility subsequent to the respective fiscal year ends. We have classified our Revolving Credit Facility borrowings as short-term borrowings and the current portion of long-term debt on our Consolidated Balance Sheets because they were repaid subsequent to the respective fiscal year-ends.

The Revolving Credit Facility fees are determined based on a pricing grid that varies according to our leverage ratio. The Revolving Credit Facility fee ranges from 25 to 40 basis points. Incremental fees for borrowings under the facility generally range from LIBOR + 125 to 185 basis points. The weighted average interest rate on outstanding short-term borrowings under the Revolving Credit Facility at August 31, 2013 and 2012 was 3.5%.

The Revolving Credit Facility contains various customary representations, covenants and other provisions, including a material adverse event clause and 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. We were in compliance with all applicable covenants related to the Revolving Credit Facility at August 31, 2013.

• Other - Other principally includes debt at subsidiaries of Apollo Global and the present value of an obligation payable over a 10-year period associated with our purchase of technology in fiscal year 2012, which is discussed further at Note 5, Acquisitions. The weighted average interest rate on our outstanding other debt at August 31, 2013 and 2012 was 5.3% and 5.7%, respectively.

During the second quarter of fiscal year 2013, we terminated our £39.0 million secured credit agreement at BPP.

Refer to Note 10, Fair Value Measurements, for discussion of the fair value of our debt.

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Property and Equipment, Net

12 Months Ended

Aug. 31, 2013

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Property and Equipment, Net

Property and equipment, net consist of the following as of August 31:

($ in thousands)	2013			2012
Land	$	30,562		$	31,184
Buildings	62,852			67,602
Furniture and equipment	428,441			498,253
Leasehold improvements (includes tenant improvement allowances)	353,548			370,171
Internally developed software	121,137			71,511
Software	128,746			132,835
Construction in progress	52,097			49,721
Gross property and equipment	1,177,383			1,221,277
Accumulated depreciation and amortization	(704,769		)	(649,648		)
Property and equipment, net	$	472,614		$	571,629

The following amounts, which are included in the above table, represent capital leases as of August 31:

($ in thousands)	2013			2012
Buildings and land	$	5,307		$	5,573
Furniture and equipment	53,826			65,138
Software	14,264			13,835
Accumulated depreciation and amortization	(33,301		)	(17,916		)
Capital lease assets, net	$	40,096		$	66,630

Depreciation expense was $196.7 million, $158.0 million and $144.3 million for fiscal years 2013, 2012 and 2011, respectively. During fiscal year 2013, depreciation expense includes $50.1 million of accelerated depreciation associated with our restructuring activities that is included in restructuring and other charges on our Consolidated Statements of Income. The remaining depreciation expense in fiscal year 2013 and all of the depreciation expense in fiscal years 2012 and 2011 is included in depreciation and amortization on our Consolidated Statements of Income. Depreciation expense includes capitalized internally developed software depreciation of $12.1 million, $10.1 million and $15.0 million for the fiscal years 2013, 2012 and 2011, respectively.

During fiscal year 2013, we recorded $20.4 million of fixed asset impairment charges, which includes $12.2 million resulting from our restructuring activities. Refer to Note 3, Restructuring and Other Charges.

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Commitments and Contingencies (Details) (USD $)	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Future minimum lease commitments [Abstract]
2014 Operating Leases	$ 180,605,000
2015 Operating Leases	164,950,000
2016 Operating Leases	142,616,000
2017 Operating Leases	115,458,000
2018 Operating Leases	91,465,000
Thereafter Operating Leases	353,899,000
Total Operating Leases	1,048,993,000
2014 Capital Leases	18,170,000
2015 Capital Leases	18,082,000
2016 Capital Leases	11,115,000
2017 Capital Leases	4,120,000
2018 Capital Leases	983,000
Thereafter Capital Leases	1,194,000
Total Capital Leases	53,664,000
Imputed interest on capital leases	(4,036,000)
Net present value of lease obligations	49,628,000
Noncancelable sublease rental income	16,700,000
Rent expense	184,600,000	207,500,000	219,300,000
Sale Leaseback Transaction [Line Items]
Sale leasebacks proceeds	0	0	169,018,000
Sale leasebacks deferred gain	41,700,000
Sale leaseback gains recognized	2,800,000	2,800,000	2,200,000
Deferred gains on sale leasebacks	25,700,000	28,500,000
Glendale, Arizona Sports Complex naming and sponsorship rights	5,800,000.0
Annual percentage increase for naming and sponsorship rights	3.00%
Remaining contractual obligation	108,500,000
Outstanding surety bonds	41,500,000
Letters of credit outstanding	14,000,000	8,000,000
All Sale Leaseback Transactions [Member]
Sale Leaseback Transaction [Line Items]
Sale leasebacks proceeds	$ 200,900,000

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Earnings Per Share

12 Months Ended

Aug. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The following are the components of basic and diluted earnings per share for the respective periods:

	Year Ended August 31,
($ in thousands)	2013		2012		2011
Net income attributable to Apollo (basic and diluted)	$	248,526	$	422,678	$	572,427
Basic weighted average shares outstanding	112,712		121,607		141,269
Dilutive effect of stock options	—		4		99
Dilutive effect of restricted stock units and performance share awards	573		746		382
Diluted weighted average shares outstanding	113,285		122,357		141,750
Earnings per share:
Basic income per share attributable to Apollo	$	2.20	$	3.48	$	4.05
Diluted income per share attributable to Apollo	$	2.19	$	3.45	$	4.04

During fiscal years 2013, 2012 and 2011, 7.0 million, 8.8 million and 9.3 million, respectively, of our stock options outstanding and 1.4 million, less than 0.1 million, and 0.4 million, respectively, of our restricted stock units and performance share awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. These share-based awards could be dilutive in the future.

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Income Taxes

12 Months Ended

Aug. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Geographic sources of income (loss) from continuing operations before income taxes are as follows for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
United States	$	461,760		$	727,934		$	1,213,353
Foreign	(38,771		)	(61,679		)	(265,130		)
Income from continuing operations before income taxes	$	422,989		$	666,255		$	948,223

Income tax (expense) benefit consists of the following for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Current:
U.S. Federal	$	(171,702	)	$	(212,058	)	$	(350,640	)
State and local	(30,135		)	(47,024		)	(11,372		)
Foreign	(1,704		)	(2,140		)	373
Total current	(203,541		)	(261,222		)	(361,639		)
Deferred:
U.S. Federal	20,389			(28,964		)	(62,474		)
State and local	3,163			(1,074		)	(10,214		)
Foreign	5,965			8,188			15,191
Total deferred	29,517			(21,850		)	(57,497		)
Provision for income taxes	$	(174,024	)	$	(283,072	)	$	(419,136	)

Deferred tax assets and liabilities consist of the following as of August 31:

($ in thousands)	2013			2012
Deferred tax assets:
Allowance for doubtful accounts	$	16,479		$	32,659
Leasing transactions	86,946			62,389
Net operating loss carry-forward	25,055			19,804
Share-based compensation	35,123			74,540
Other	51,929			55,573
Gross deferred tax assets	215,532			244,965
Valuation allowance	(17,998		)	(11,282		)
Deferred tax assets, net of valuation allowance	197,534			233,683
Deferred tax liabilities:
Fixed assets	42,485			52,469
Intangibles	35,109			41,203
Other	7,929			9,212
Gross deferred tax liabilities	85,523			102,884
Net deferred income taxes	$	112,011		$	130,799

As of August 31, 2013 and 2012, we have recorded a valuation allowance related to a portion of our net operating losses and other deferred tax assets of certain of our foreign subsidiaries because it is more likely than not that these deferred tax assets will not be utilized. During fiscal year 2013, the valuation allowance increased primarily as a result of an increase in net operating losses of certain foreign subsidiaries. We have concluded that it is more likely than not that we will ultimately realize the full benefit of our other deferred tax assets principally based on our history of profitable operations.

The net operating loss carry-forward in the above table represents $29.4 million of U.S. net operating losses that will begin to expire August 31, 2018. We also have $58.4 million of net operating losses in various foreign jurisdictions that do not expire.

We have not provided deferred taxes on unremitted earnings attributable to international companies that have been considered permanently reinvested. As of August 31, 2013, the earnings from these operations are not significant.

The following tabular reconciliation summarizes the activity in our unrecognized tax benefits, excluding interest and penalties, for the respective periods:

	Year Ended August 31,
($ in thousands)	2013			2012			2011
Beginning unrecognized tax benefits	$	32,207		$	25,811		$	166,048
Additions based on tax positions taken in the current year	13,095			7,708			4,503
Additions for tax positions taken in prior years	5,953			813			15,570
Settlement with tax authorities	(197		)	(733		)	(110,980		)
Reductions for tax positions of prior years	(2,635		)	—			(45,231		)
Reductions due to lapse of applicable statute of limitations	(4,366		)	(1,392		)	(4,099		)
Ending unrecognized tax benefits	$	44,057		$	32,207		$	25,811

As of August 31, 2013 and 2012, our liabilities for unrecognized tax benefits are included in accrued and other current liabilities and other long-term liabilities on our Consolidated Balance Sheets. The decrease in our unrecognized tax benefits during fiscal year 2011 was principally attributable to resolution with the Arizona Department of Revenue regarding the apportionment of income for Arizona corporate income tax purposes. Refer to Arizona Department of Revenue Audit below for further discussion. The decrease was also due to a $9.6 million benefit from resolution with the Internal Revenue Service regarding the deductibility of payments made related to the settlement of a qui tam lawsuit in fiscal year 2010.

We classify interest and penalties related to uncertain tax positions as a component of provision for income taxes on our Consolidated Statements of Income. We recognized $0.1 million and $0.4 million of expense in fiscal years 2013 and 2012, respectively, and a benefit of $1.7 million in fiscal year 2011, related to interest and penalties. The $1.7 million benefit in fiscal year 2011 is primarily attributable to the reduction of accrued interest related to the resolution with the Arizona Department of Revenue noted above. The total amount of interest and penalties included on our Consolidated Balance Sheets was $4.2 million and $4.1 million as of August 31, 2013 and 2012, respectively.

It is reasonably possible that approximately $15 million of our unrecognized tax benefits associated with the deductibility of certain costs for our foreign subsidiaries will be reduced in the next twelve months due to settlement with the IRS and expiration of the applicable statute of limitations. We do not anticipate significant changes to our other unrecognized tax benefits.

As of August 31, 2013, $38.4 million of our total unrecognized tax benefits would favorably affect our effective tax rate if recognized. If amounts accrued are less than amounts ultimately assessed by the taxing authorities, we would record additional income tax expense.

Our U.S. federal income tax return for fiscal year 2011 is currently under review by the Internal Revenue Service (“IRS”). During fiscal year 2013, the IRS completed its review of our federal income tax returns for fiscal years 2006 through 2010, which did not result in a significant adjustment to our provision for income taxes. Various state tax years from 2004 and tax years from 2007 related to our foreign taxing jurisdictions 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 the respective periods:

	Year Ended August 31,
	2013		2012		2011
Statutory U.S. federal income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit(1)	4.4	%	4.2	%	1.8	%
Non-deductible compensation, net	0.1	%	0.2	%	0.3	%
Foreign taxes	2.2	%	1.4	%	0.9	%
Litigation charge(2)	—	%	—	%	(1.0	)%
Goodwill impairments	—	%	0.9	%	7.4	%
Meritus University, Inc. closure	—	%	—	%	(0.8	)%
Other, net	(0.6	)%	0.8	%	0.6	%
Effective income tax rate	41.1	%	42.5	%	44.2	%

⁽¹⁾ In fiscal year 2011, we realized a $43.3 million benefit associated with our resolution with the Arizona Department of Revenue. Refer to further discussion below.

⁽²⁾ In fiscal year 2011, we realized a $9.6 million benefit from resolution with the Internal Revenue Service regarding the deductibility of payments made related to the settlement of a qui tam lawsuit.

Arizona Department of Revenue Audit

In fiscal year 2011, we executed a Closing Agreement with the Arizona Department of Revenue to settle an audit principally associated with our method of sourcing services income for sales factor apportionment purposes. The settlement resolved the sales factor sourcing issue for the audit period covering our Arizona income tax returns for fiscal years 2003 through 2009 and provided an agreed upon sales factor sourcing methodology for fiscal years 2010 through 2020.

Based on the settlement, we have foregone our refund claims of $51.5 million, paid $57.9 million, and made applicable adjustments to our deferred taxes. These amounts were previously included in our unrecognized tax benefits, and the settlement resulted in a $43.3 million benefit. The benefit includes state tax accrued throughout fiscal year 2011 based on the uncertainty prior to settlement.

In addition to the audits discussed above, we are subject to numerous ongoing audits by federal, 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.

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Document and Entity Information (USD $) In Billions, except Share data in Thousands, unless otherwise specified	12 Months Ended
	Aug. 31, 2013	Feb. 28, 2013	Oct. 14, 2013 Apollo Group Class A nonvoting common stock [Member]	Oct. 14, 2013 Apollo Group Class B voting common stock [Member]
Document Information [Line Items]
Document Type	10-K
Document Period End Date	Aug. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Registrant Name	Apollo Group Inc
Entity Central Index Key	0000929887
Current Fiscal Year End Date	--08-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$ 1.6
Entity Common Stock, Shares Outstanding			112,954	475

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Shareholders' Equity

12 Months Ended

Aug. 31, 2013

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

Purchase of Noncontrolling Interest

During the first quarter of fiscal year 2013, we purchased the 14.4% noncontrolling ownership interest in Apollo Global from Carlyle. We paid $42.5 million cash, plus a contingent payment based on a portion of Apollo Global’s operating results through the fiscal years ending August 31, 2017. On the purchase date, we estimated the fair value of the contingent payment to be $6.0 million using a discounted cash flow valuation method encompassing significant unobservable inputs. Refer to Note 10, Fair Value Measurements, for further discussion of the valuation and subsequent changes in the estimated fair value. The contingent payment liability is included in other long-term liabilities on our Consolidated Balance Sheets. As a result of the transaction, Apollo Group owns all of Apollo Global. This purchase was accounted for as an equity transaction resulting in the removal of Carlyle’s noncontrolling interest from our Consolidated Balance Sheets. Accordingly, we recorded an adjustment to additional paid-in capital of $48.5 million, which principally represents the difference between the fair value of the consideration discussed above and the carrying amount of the noncontrolling interest acquired. The adjustment to additional paid-in capital also includes an adjustment to accumulated other comprehensive loss to reflect the change in Apollo’s proportionate interest.

The remaining noncontrolling interest on our Consolidated Balance Sheets following the above purchase represents an ownership interest in a subsidiary of BPP.

Share Reissuances

During fiscal years 2013, 2012 and 2011, we issued 1.5 million, 1.2 million and 1.2 million shares, respectively, of our Apollo Group Class A common stock from our treasury stock. These reissuances are a result of stock option exercises, release of shares covered by vested restricted stock units, and purchases under our employee stock purchase plan.

Share Repurchases

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. During the third quarter of fiscal year 2013, our Board of Directors authorized an increase in the amount available under our share repurchase program up to an aggregate amount of $250 million. There is no expiration date on the repurchase authorization and repurchases occur at our discretion.

We did not repurchase shares of our Apollo Group Class A common stock during fiscal year 2013. During fiscal years 2012 and 2011, we repurchased 19.1 million and 18.3 million shares of our Apollo Group Class A common stock at a total cost of $799.5 million and $775.8 million, respectively. The weighted average purchase price for fiscal years 2012 and 2011 was $41.82 and $42.30 per share, respectively.

As of August 31, 2013, $250 million remained available under our share repurchase authorization. The amount and timing of future share repurchase authorizations and repurchases, if any, will be made as market and business conditions warrant. Repurchases may be made on the open market through various methods including but not limited to accelerated share repurchase programs, 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.

In connection with the release of vested shares of restricted stock, we repurchased 0.5 million, 0.3 million and 0.2 million shares of Class A common stock for $9.5 million, $12.4 million and $7.4 million during fiscal years 2013, 2012 and 2011, respectively. These repurchases relate to tax withholding requirements on the restricted stock units and do not fall under the repurchase program described above.

Accumulated Other Comprehensive Loss

The following summarizes the components of accumulated other comprehensive loss at August 31:

($ in thousands)	2013			2012
Foreign currency translation losses	$	(36,032	)	$	(29,503	)
Unrealized loss on marketable securities	(531		)	(531		)
Accumulated other comprehensive loss(1)	$	(36,563	)	$	(30,034	)

⁽¹⁾ Accumulated other comprehensive loss is net of $0.6 million and $0.4 million of taxes as of August 31, 2013 and 2012, respectively. The tax effect on each component of other comprehensive income during fiscal years 2013, 2012 and 2011 is not significant.

The increase in foreign currency translation losses is primarily the result of an adjustment to accumulated other comprehensive loss resulting from our purchase of the noncontrolling interest in Apollo Global discussed above.

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Income Taxes (Details 2) (USD $)	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2011 IRS (Lawsuit Settlement Deductibility) [Member]	Aug. 31, 2012 Arizona Department of Revenue [Member]	Aug. 31, 2011 Arizona Department of Revenue [Member]	Aug. 31, 2010 Arizona Department of Revenue [Member]
Income tax examination [Line Items]
Income tax benefit	$ 174,024,000	$ 283,072,000	$ 419,136,000	$ (9,600,000)		$ (43,300,000)
Income tax refund claim							51,500,000
Cash paid	$ 201,055,000	$ 246,824,000	$ 464,701,000		$ 57,900,000

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Income Taxes (Details) (USD $)	12 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2011
Geographical sources of income from continuing operations [Abstract]
United States	$ 461,760,000	$ 727,934,000	$ 1,213,353,000
Foreign	(38,771,000)	(61,679,000)	(265,130,000)
Income from continuing operations before income taxes	422,989,000	666,255,000	948,223,000
Current:
U.S. Federal	(171,702,000)	(212,058,000)	(350,640,000)
State and local	(30,135,000)	(47,024,000)	(11,372,000)
Foreign	(1,704,000)	(2,140,000)	373,000
Total current	(203,541,000)	(261,222,000)	(361,639,000)
Deferred:
U.S. Federal	20,389,000	(28,964,000)	(62,474,000)
State and local	3,163,000	(1,074,000)	(10,214,000)
Foreign	5,965,000	8,188,000	15,191,000
Total deferred	29,517,000	(21,850,000)	(57,497,000)
Provision for income taxes	(174,024,000)	(283,072,000)	(419,136,000)
Deferred tax assets:
Allowance for doubtful accounts	16,479,000	32,659,000
Leasing transactions	86,946,000	62,389,000
Net operating loss carry-forward	25,055,000	19,804,000
Share-based compensation	35,123,000	74,540,000
Other	51,929,000	55,573,000
Gross deferred tax assets	215,532,000	244,965,000
Valuation allowance	(17,998,000)	(11,282,000)
Deferred tax assets, net of valuation allowance	197,534,000	233,683,000
Deferred tax liabilities:
Fixed assets	42,485,000	52,469,000
Intangibles	35,109,000	41,203,000
Other	7,929,000	9,212,000
Gross deferred tax liabilities	85,523,000	102,884,000
Net deferred income taxes	112,011,000	130,799,000
Unrecognized tax benefits rollforward [Abstract]
Beginning balance	32,207,000	25,811,000	166,048,000
Additions based on tax positions taken in the current year	13,095,000	7,708,000	4,503,000
Additions for tax positions taken in prior years	5,953,000	813,000	15,570,000
Settlement with tax authorities	(197,000)	(733,000)	(110,980,000)
Reductions for tax positions of prior years	(2,635,000)	0	(45,231,000)
Reductions due to lapse of applicable statute of limitations	(4,366,000)	(1,392,000)	(4,099,000)
Ending balance	44,057,000	32,207,000	25,811,000
Uncertain tax position interest and penalties expense	100,000	400,000	(1,700,000)
Uncertain tax position interest and penalties accrued	4,200,000	4,100,000
Reasonably possible change in unrecognized tax benefits	15,000,000
Unrecognized tax benefits that would impact tax rate	38,400,000
Effective income tax rate reconciliation [Abstract]
Statutory U.S. federal income tax rate	35.00%	35.00%	35.00%
State income taxes, net of federal benefit	4.40%	4.20%	1.80%
Non-deductible compensation, net	0.10%	0.20%	0.30%
Foreign taxes	2.20%	1.40%	0.90%
Litigation charge	0.00%	0.00%	(1.00%)
Goodwill impairments	0.00%	0.90%	7.40%
Meritus University, Inc. closure	0.00%	0.00%	(0.80%)
Other, net	(0.60%)	0.80%	0.60%
Effective income tax rate	41.10%	42.50%	44.20%
United States [Member]
Net operating loss carry-forwards [Line Items]
Net operating loss carry-forwards	29,400,000
Foreign [Member]
Net operating loss carry-forwards [Line Items]
Net operating loss carry-forwards	$ 58,400,000