8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): March 29, 2010

Apollo Group, Inc.

(Exact name of registrant as specified in its charter)

Arizona	0-25232	86-0419443
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

4025 S. Riverpoint Parkway, Phoenix, Arizona	85040
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (480) 966-5394

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 – Financial Information

Item 2.02 Results of Operations and Financial Condition.

     On March 29, 2010, Apollo Group, Inc. issued a press release announcing its financial results for the three and six months ended February 28, 2010. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

     The information in Item 2.02 of this Form 8-K and the exhibit furnished herewith shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibit is furnished herewith:

Exhibit Number	Description
99.1	Text of press release of Apollo Group, Inc. dated March 29, 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Apollo Group, Inc.
March 29, 2010	By:	/s/ Brian L. Swartz
		Name:	Brian L. Swartz
		Title:	Senior Vice President and Chief Financial Officer

Exhibit Index

Exhibit No.	Description
99.1	Text of press release of Apollo Group, Inc. dated March 29, 2010.

EX-99.1

Exhibit 99.1

		Apollo Group, Inc. News Release
APOLLO GROUP, INC. REPORTS FISCAL 2010 SECOND QUARTER RESULTS

Phoenix, Arizona, March 29, 2010 — Apollo Group, Inc. (NASDAQ: APOL) (“Apollo Group,” “Apollo” or the “Company”) today reported financial results for the three and six months ended February 28, 2010.

“We are pleased with our second quarter results, particularly with respect to the continued mix shift in student enrollments towards bachelor degree level students,” said Apollo Group Co-Chief Executive Officer Chas Edelstein. “We have set forth a strategy to transition the University of Phoenix to focus on better identifying and enrolling students who have a reasonable chance to succeed in our rigorous programs, and we are delivering on that plan.”

Apollo Group Co-Chief Executive Officer and Apollo Global Chairman Greg Cappelli added, “Through our refined marketing efforts focused on identifying students who are better prepared for our programs, as well as the positive early results we are seeing from our University Orientation pilot, we are beginning to see the shift in student mix that we have been targeting, which we believe over time will result in more consistent, higher quality growth and profitability and will positively impact a number of our key metrics.”

Unaudited Second Quarter of Fiscal 2010 Results of Operations

Consolidated net revenue for the three months ended February 28, 2010, totaled $1,070.3 million, which represents a 23.1% increase over the second quarter of fiscal 2009. Contributing to the growth in the second quarter was a 15.3% year-over-year increase in University of Phoenix total Degreed Enrollment to 458,600 as well as $53.6 million in revenue from recently acquired BPP Holdings. The Company reported income from continuing operations attributable to Apollo Group for the three months ended February 28, 2010, of $103.2 million, or $0.67 per share (155.2 million weighted average diluted shares outstanding), compared to income from continuing operations attributable to Apollo Group of $128.8 million, or $0.79 per share (162.8 million weighted average diluted shares outstanding) for the three months ended February 28, 2009.

The second quarter of fiscal 2010 results contain a pre-tax charge of $44.5 million ($26.9 million net of tax), which represents an accrual related to a securities class action lawsuit. Excluding this special item, income from continuing operations attributable to Apollo Group for the three months ended February 28, 2010, was $130.1 million, or $0.84 per share, compared to income from continuing operations attributable to Apollo Group of $128.8 million, or $0.79 per share for the three months ended February 28, 2009. (See the reconciliation of GAAP financial information to non-GAAP financial information in the tables section of this press release.) In the second quarter of fiscal 2010, BPP’s operations contributed $53.6 million to revenue and due to the seasonality of its business, decreased Apollo Group’s diluted earnings per share from

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continuing operations by approximately $0.06. (See the supplemental schedule detailing BPP’s financial results in the tables section of this press release.)

Excluded from continuing operations are the operating results for Insight Schools, which is now presented as discontinued operations, for all periods presented because the business is not longer consistent with the Company’s long-term strategic objectives. The loss from discontinued operations, net of tax, associated with Insight Schools was $10.6 million for the second quarter of fiscal 2010 compared to a loss from discontinued operations, net of tax, of $3.5 million for the second quarter of fiscal 2009. Included in the $10.6 million loss for the second quarter of fiscal 2010 is a goodwill impairment charge of $9.4 million. The Company recorded this charge to reduce the carrying value of Insight Schools based on inputs from advisors which includes consideration of non-binding offers the Company recently received from third parties to purchase Insight Schools.

Instructional costs and services increased by $152.9 million, or 42.0% to $517.3 million for the three months ended February 28, 2010, compared to the three months ended February 28, 2009. As a percentage of net revenue, instructional costs and services increased 640 basis points to 48.3% versus 41.9% in the prior year’s second quarter. The increase, as a percentage of revenue, was primarily due to the addition of BPP, as its cost structure is more heavily weighted towards instructional costs and services, as well as higher bad debt expense for University of Phoenix. Bad debt expense, as a percentage of revenue, increased 280 basis points to 6.9% in the second quarter of fiscal 2010 versus 4.1% in the prior year’s second quarter. BPP’s operations favorably impacted overall bad debt expense as a percentage of revenue by 40 basis points in the second quarter of fiscal 2010. The higher bad debt expense, as a percentage of revenue, is due to lower collection rates. Collection rates have declined as a result of the economic downturn, the effects of certain operational changes and increases in receivables from students enrolled in associate’s degree programs. Students enrolled in associate’s degree programs generally persist at lower rates than those in bachelor’s and graduate level programs, resulting in higher bad debts when these students withdraw.

Selling and promotional expenses increased by $38.9 million, or 17.3%, to $263.5 million for the three months ended February 28, 2010, compared to the three months ended February 28, 2009. The increase was due in part to greater investments in the University of Phoenix’s non-internet long-term branding initiatives. As a percentage of net revenue, selling and promotional expenses declined 120 basis points to 24.6% versus 25.8% in the prior year’s second quarter. The decrease, as a percentage of revenue, was driven by the impact of BPP’s operations in the second quarter of fiscal 2010 as BPP incurs lower selling and promotional costs as a percentage of revenue compared to the Company’s other businesses. The remaining decrease as a percentage of revenue was a result of continued improvement in enrollment counselor effectiveness at University of Phoenix.

General and administrative (“G&A”) expenses increased by $2.6 million, or 3.7%, to $72.0 million, for the three months ended February 28, 2010, compared to the three months ended February 28, 2009. As a percentage of net revenue, G&A expenses declined 130 basis points to 6.7% versus 8.0% in the prior year’s second quarter. The decrease, as a percentage of revenue, is primarily attributable to expense in the second quarter of fiscal 2009 resulting from an internal

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review of certain Satisfactory Academic Progress calculations, as well as lower share-based compensation expense, as a percentage of revenue, in the second quarter of fiscal 2010 as compared with the prior year period. BPP’s operations had little impact on G&A expenses as a percentage of net revenue in the second quarter of fiscal 2010.

Financial and Operating Metrics

Below are Apollo Group’s unaudited financial data and operating metrics for the second quarter of fiscal 2010 versus the prior year period.

	Q2 2010			Q2 2009
Revenues (in thousands)
Degree Seeking Gross Revenues (1)	$	1,022,817		$	854,771
Less: Discounts and other		(55,893	)		(38,949	)
Degree Seeking Net Revenues (1)		966,924			815,822
Non-degree Seeking Revenues (2)		9,589			9,184
Other, net of discounts (3)		93,823			44,537
	$	1,070,336		$	869,543
Revenue by Degree Type (in thousands) (1)
Associates	$	379,932		$	302,278
Bachelors		436,565			361,195
Masters		186,104			174,080
Doctoral		20,216			17,218
Less: Discounts and other		(55,893	)		(38,949	)
	$	966,924		$	815,822
Degreed Enrollment (rounded to hundreds) (4)
Associates		201,300			170,500
Bachelors		178,000			150,200
Masters		71,800			70,500
Doctoral		7,500			6,500
		458,600			397,700
Degree Seeking Gross Revenues per Degreed Enrollment (1) (4)
Associates	$	1,887		$	1,773
Bachelors		2,453			2,405
Masters		2,592			2,469
Doctoral		2,695			2,649
All degrees (after discounts)		2,108			2,051
New Degreed Enrollment (rounded to hundreds) (5)
Associates		43,100			41,700
Bachelors		31,300			25,100
Masters		12,200			12,500
Doctoral		900			700
		87,500			80,000

(1)	Represents revenue from tuition and other fees for students enrolled in University of Phoenix degree programs. Also includes revenue from tuition and other fees for students participating in University of Phoenix certificate programs of at least 18 credit hours in length with some course applicability into a related degree program.
(2)	Represents revenue from tuition and other fees for students participating in University of Phoenix certificate programs less than 18 hours in length, certificate programs with no applicability into a related degree program, single course and continuing education courses.
(3)	Represents revenues from IPD, CFFP, Western International University (excluding associates degree students), Apollo Global — BPP (acquired in July 2009), Apollo Global — Other and other.
(4)	Represents individual students enrolled in a University of Phoenix degree program who attended a course during the quarter and did not graduate as of the end of the quarter. Degreed Enrollment for a quarter also includes any student who previously graduated from one degree program and started a new University of Phoenix degree program in the quarter (for example, a graduate of the associate’s degree program returns for a bachelor’s degree or a bachelor’s degree graduate returns for a master’s degree). In addition, Degreed Enrollment includes students participating in University of Phoenix certificate programs of at least 18 credit hours in length with some course applicability into a related degree program.
(5)	Represents any individual student enrolled in a University of Phoenix degree program who is a new student and started a course in the quarter, any individual student who previously graduated from one degree program and started a new degree program in the quarter (for example, a graduate of an associate’s degree program returns for a bachelor’s degree program, or a graduate of a bachelor’s degree program returns for a master’s degree), as well as any individual student who started a degree program in the quarter and had been out of attendance for greater than 12 months. In addition, New Degreed Enrollment includes students who in the quarter started participating in University of Phoenix certificate programs of at least 18 credit hours in length with some course applicability into a related degree program.

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Unaudited Six Months of Fiscal 2010 Results of Operations

Consolidated net revenue for the six months ended February 28, 2010, was $2.3 billion, a 27.1% increase over the comparable period of fiscal 2009. Contributing to this increase was a 16.8% increase in University of Phoenix’s average Degreed Enrollment during the six months ended February 28, 2010, as compared to the six months ended February 28, 2009. The Company reported income from continuing operations attributable to Apollo Group of $343.7 million, or $2.21 per share, (155.6 million weighted average diluted shares outstanding), and $311.1 million, or $1.92 per share, (161.8 million weighted average diluted shares outstanding) for the six months ended February 28, 2010, and February 28, 2009, respectively.

Results for the six months ended February 28, 2010, contain a pre-tax charge of $44.5 million ($26.9 million net of tax), which represents an accrual for a potential settlement of a securities class action lawsuit and a previously announced tax benefit of $11.4 million resulting from the settlement of disputed tax issues with the Internal Revenue Service. Excluding these special items, income from continuing operations attributable to Apollo Group for the six months ended February 28, 2010, was $359.2 million, or $2.31 per share, compared to income from continuing operations attributable to Apollo Group of $311.1 million, or $1.92 per share for the six months ended February 28, 2009. (See the reconciliation of GAAP financial information to non-GAAP financial information in the tables section of this press release.)

BPP’s operations contributed $142.3 million to revenue and decreased earnings per share by approximately $0.02 for the six months ended February 28, 2010. (See the supplemental schedule detailing BPP’s financial results in the tables section of this press release.)

Unaudited Balance Sheet

As of February 28, 2010, the Company’s cash and cash equivalents, excluding restricted cash, totaled $660.8 million as compared to $968.2 million as of August 31, 2009. The decrease is primarily attributable to repayments on the Company’s outstanding debt and share repurchases, as well as settlement payments of the Company’s False Claims Act case and an IRS tax dispute. Restricted cash increased by $74.8 million compared to August 31, 2009, primarily due to increased student deposits at University of Phoenix.

At February 28, 2010, accounts receivable decreased to $261.2 million from $298.3 million at August 31, 2009. Excluding accounts receivable and the associated revenue for Apollo Global, the Company’s days sales outstanding (“DSO”) was 30 days at February 28, 2010, compared to 32 days at August 31, 2009, and to 25 days at February 28, 2009. The increase in DSO versus a year ago is due to increases in gross accounts receivable due to lower collection rates at University of Phoenix. Collection rates have declined as a result of the economic downturn, the effects of certain operational changes and increases in receivables from students enrolled in associate degree programs.

Total debt outstanding (including short-term borrowings and the current portion of long-term debt) decreased by $413.0 million to $176.1 million at February 28, 2010, from $589.1 million at August 31, 2009. The decrease is primarily due to the repayment of US denominated borrowings on the Company’s $500 million credit facility.

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Share Repurchase Authorization

On February 18, 2010, the Board of Directors authorized a $500.0 million increase of the share repurchase program to an aggregate of $1.0 billion. During the second quarter of fiscal 2010, the Company repurchased approximately 3.4 million shares of its common stock at a weighted average purchase price of $59.61 per share for a total expenditure of $200.0 million. As of February 28, 2010, approximately $800.0 million remained available under the share repurchase authorization.

Business Outlook

Given the transition it is undertaking in its business, the Company offers the following commentary regarding the outlook for the third quarter of fiscal 2010 based on current business trends, which could change:

• Consolidated net revenue, including BPP, of approximately $1.3 billion;

• Diluted earnings per share from continuing operations of approximately $1.55 excluding the impact of special items or additional share repurchases but including a contribution from BPP;

• Effective tax rate of approximately 41.0%; and

• Diluted shares outstanding of approximately 153 million.

Based on current business trends, for the fiscal year 2010, the Company should achieve its long-term target of mid-teens operating income growth, excluding the impact of special items and discontinued operations.

Conference Call Information

The Company will hold a conference call to discuss these earnings results at 8:00 AM Eastern, 5:00 AM Phoenix time, today, Monday, March 29, 2010. The call may be accessed by dialing (877) 292-6888 (domestic) or (973) 200-3381 (international) and entering the conference ID number 56178523. A live webcast of this event may be accessed by visiting the Company’s website at www.apollogrp.edu. A replay of the call will be available on the website or by dialing (800) 642-1687 (domestic) or (706) 645-9291 (international) and entering the conference ID number 56178523 until April 9, 2010.

About Apollo Group, Inc.

Apollo Group, Inc. is one of the world’s largest private education providers and has been in the education business for more than 35 years. The Company offers innovative and distinctive educational programs and services both online and on-campus at the high school, undergraduate, masters and doctoral levels through its subsidiaries: University of Phoenix, Institute for Professional Development, College for Financial Planning, Western International University, Meritus University and Apollo Global. The Company’s programs and services are provided in 40 states and the District of Columbia; Puerto Rico; Canada; Latin America; and Europe, as well as online throughout the world (data as of February 28, 2010).

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

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Forward-Looking Statements Safe Harbor

Statements in this press release which are not statements of historical fact, including statements regarding Apollo Group’s business outlook, future financial and operating results, future enrollment, and overall future strategy and plans, are forward-looking statements, and are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current information and expectations and involve a number of risks and uncertainties. Actual results may differ materially from those projected in such statements due to various factors, including changes in the overall global economy, changes in enrollment or student mix, changes in the collectability of receivables, regulatory and litigation developments and the effectiveness of the Company’s integration of its acquired businesses. For a discussion of the various factors that may cause actual results to differ materially from those projected, please refer to the risk factors and other disclosures contained in Apollo Group’s Form 10-K for fiscal year 2009 and subsequent Forms 10-Q, and other filings with the Securities and Exchange Commission, all of which are available on the Company’s website at apollogrp.edu.

Use of Non-GAAP Financial Information

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

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Apollo Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)

	As of
	February 28,			August 31,
($ in thousands)	2010			2009
ASSETS:
Current assets
Cash and cash equivalents	$	660,844		$	968,246
Restricted cash and cash equivalents		507,151			432,304
Accounts receivable, net		261,205			298,270
Deferred tax assets, current portion		102,078			88,022
Prepaid taxes		47,983			57,658
Other current assets		38,926			35,517
Assets held for sale from discontinued operations		24,750			—
Total current assets		1,642,937			1,880,017
Property and equipment, net		573,740			557,507
Marketable securities		19,579			19,579
Goodwill		488,686			522,358
Intangible assets, net		180,155			203,671
Deferred tax assets, less current portion		81,431			66,254
Other assets		14,043			13,991
Total assets	$	3,000,571		$	3,263,377
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities
Short-term borrowings and current portion of long-term debt	$	54,587		$	461,365
Accounts payable		71,718			66,928
Accrued liabilities		218,521			268,418
Student deposits		522,548			491,639
Deferred revenue		344,555			333,041
Other current liabilities		98,630			133,887
Liabilities held for sale from discontinued operations		5,734			—
Total current liabilities		1,316,293			1,755,278
Long-term debt		121,522			127,701
Deferred tax liabilities		53,659			55,636
Other long-term liabilities		109,518			100,149
Total liabilities		1,600,992			2,038,764
Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value		—			—
Apollo Class A nonvoting common stock, no par value		103			103
Apollo Class B voting common stock, no par value		1			1
Additional paid-in capital		52,673			1,139
Apollo Class A treasury stock, at cost		(2,210,792	)		(2,022,623	)
Retained earnings		3,527,791			3,195,043
Accumulated other comprehensive loss		(30,122	)		(13,740	)
Total Apollo shareholders’ equity		1,339,654			1,159,923
Noncontrolling interests		59,925			64,690
Total equity		1,399,579			1,224,613
Total liabilities and shareholders’ equity	$	3,000,571		$	3,263,377

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Apollo Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)

	Three Months Ended February 28,						Six Months Ended February 28,
(in thousands, except per share data)	2010			2009			2010			2009
Net revenue	$	1,070,336		$	869,543		$	2,328,995		$	1,832,825
Costs and expenses:
Instructional costs and services		517,344			364,416			1,036,788			733,392
Selling and promotional		263,549			224,567			537,624			450,930
General and administrative		71,953			69,450			144,034			127,316
Estimated litigation loss		44,500			—			44,500			—
Total costs and expenses		897,346			658,433			1,762,946			1,311,638
Operating income		172,990			211,110			566,049			521,187
Interest income		525			3,430			1,457			8,807
Interest expense		(3,220	)		(621	)		(6,128	)		(2,050	)
Other, net		(79	)		(201	)		(749	)		(2,633	)
Income from continuing operations before income taxes		170,216			213,718			560,629			525,311
Provision for income taxes		(69,064	)		(85,190	)		(219,045	)		(214,535	)
Income from continuing operations		101,152			128,528			341,584			310,776
Loss from discontinued operations, net of tax		(10,638	)		(3,452	)		(10,938	)		(5,392	)
Net income		90,514			125,076			330,646			305,384
Net loss attributable to noncontrolling interests		2,092			270			2,102			322
Net income attributable to Apollo	$	92,606		$	125,346		$	332,748		$	305,706
Earnings (loss) per share — Basic:
Continuing operations attributable to Apollo	$	0.67		$	0.80		$	2.22		$	1.94
Discontinued operations attributable to Apollo		(0.07	)		(0.02	)		(0.07	)		(0.03	)
Basic income per share attributable to Apollo	$	0.60		$	0.78		$	2.15		$	1.91
Earnings (loss) per share — Diluted:
Continuing operations attributable to Apollo	$	0.67		$	0.79		$	2.21		$	1.92
Discontinued operations attributable to Apollo		(0.07	)		(0.02	)		(0.07	)		(0.03	)
Diluted income per share attributable to Apollo	$	0.60		$	0.77		$	2.14		$	1.89
Basic weighted average shares outstanding		154,119			160,153			154,473			159,643
Diluted weighted average shares outstanding		155,168			162,757			155,621			161,806

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Apollo Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
From Continuing and Discontinued Operations
(Unaudited)

	Six Months Ended February 28,
($ in thousands)	2010			2009
Cash flows provided by (used in) operating activities:
Net income	$	330,646		$	305,384
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation		29,115			31,358
Excess tax benefits from share-based compensation		(338	)		(11,181	)
Depreciation and amortization		64,661			46,338
Goodwill impairment on discontinued operations		9,400			—
Amortization of deferred gain on sale-leaseback		(883	)		(818	)
Non-cash foreign currency losses, net		534			2,599
Provision for uncollectible accounts receivable		136,582			70,913
Securities Class Action		44,500			—
Deferred income taxes		(19,675	)		(12,583	)
Changes in assets and liabilities:
Accounts receivable		(116,879	)		(48,272	)
Other assets		(5,606	)		(9,112	)
Accounts payable and accrued liabilities		(89,675	)		18,137
Income taxes payable		(2,241	)		(51,953	)
Student deposits		31,378			108,216
Deferred revenue		18,443			20,921
Other liabilities		4,902			5,696
Net cash provided by operating activities		434,864			475,643
Cash flows provided by (used in) investing activities:
Additions to property and equipment		(68,032	)		(64,019	)
Maturities of marketable securities		—			1,660
Increase in restricted cash and cash equivalents		(74,847	)		(114,232	)
Net cash used in investing activities		(142,879	)		(176,591	)
Cash flows provided by (used in) financing activities:
Payments on borrowings		(423,850	)		(15,498	)
Proceeds from borrowings		17,819			13,620
Issuance of Apollo Group Class A common stock		8,567			96,486
Class A common stock purchased for treasury		(201,111	)		(2,505	)
Excess tax benefits from share-based compensation		338			11,181
Net cash (used in) provided by financing activities		(598,237	)		103,284
Exchange rate effect on cash and cash equivalents		(1,150	)		(1,107	)
Net (decrease) increase in cash and cash equivalents		(307,402	)		401,229
Cash and cash equivalents, beginning of period		968,246			483,195
Cash and cash equivalents, end of period	$	660,844		$	884,424
Supplemental disclosure of cash flow information
Cash paid during the period for income taxes, net of refunds	$	243,435		$	269,646
Cash paid during the period for interest	$	3,583		$	1,263
Supplemental disclosure of non-cash investing and financing activities
Credits received for tenant improvements	$	8,756		$	7,161
Purchases of property and equipment included in accounts payable	$	6,741		$	5,251
Restricted stock units vested and released	$	2,802		$	7,362
Unrealized loss on auction-rate securities	$	—		$	2,203

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Apollo Group, Inc. and Subsidiaries
Supplemental Schedule — Combined Condensed Statements of Operations
(Unaudited)

	Three Months Ended February 28, 2010									Six Months Ended February 28, 2010
	Apollo						Apollo			Apollo						Apollo
(in thousands, except per share data)	Excluding BPP			BPP			Consolidated			Excluding BPP			BPP			Consolidated
Net revenue	$	1,016,689		$	53,647		$	1,070,336		$	2,186,675		$	142,320		$	2,328,995
Costs and expenses:
Instructional costs and services		461,715			55,629			517,344			916,878			119,910			1,036,788
Selling and promotional		259,657			3,892			263,549			528,959			8,665			537,624
General and administrative		67,034			4,919			71,953			135,098			8,936			144,034
Estimated litigation loss		44,500			—			44,500			44,500			—			44,500
Total costs and expenses		832,906			64,440			897,346			1,625,435			137,511			1,762,946
Operating income (loss)		183,783			(10,793	)		172,990			561,240			4,809			566,049
Interest income		510			15			525			1,360			97			1,457
Interest expense		(867	)		(2,353	)		(3,220	)		(2,492	)		(3,636	)		(6,128	)
Other, net		2,386			(2,465	)		(79	)		4,375			(5,124	)		(749	)
Income (loss) from continuing operations before income taxes		185,812			(15,596	)		170,216			564,483			(3,854	)		560,629
(Provision for) benefit from income taxes		(73,296	)		4,232			(69,064	)		(218,839	)		(206	)		(219,045	)
Income (loss) from continuing operations		112,516			(11,364	)		101,152			345,644			(4,060	)		341,584
Loss from discontinued operations, net of tax		(10,638	)		—			(10,638	)		(10,938	)		—			(10,938	)
Net income (loss)		101,878			(11,364	)		90,514			334,706			(4,060	)		330,646
Net loss attributable to noncontrolling interests		846			1,246			2,092			2,084			18			2,102
Net income (loss) attributable to Apollo	$	102,724		$	(10,118	)	$	92,606		$	336,790		$	(4,042	)	$	332,748
Earnings (loss) per share — Basic:
Continuing operations attributable to Apollo	$	0.74		$	(0.07	)	$	0.67		$	2.25		$	(0.03	)	$	2.22
Discontinued operations attributable to Apollo		(0.07	)		—			(0.07	)		(0.07	)		—			(0.07	)
Basic income (loss) per share attributable to Apollo	$	0.67		$	(0.07	)	$	0.60		$	2.18		$	(0.03	)	$	2.15
Earnings (loss) per share — Diluted:
Continuing operations attributable to Apollo	$	0.73		$	(0.06	)	$	0.67		$	2.23		$	(0.02	)	$	2.21
Discontinued operations attributable to Apollo		(0.07	)		—			(0.07	)		(0.07	)		—			(0.07	)
Diluted income (loss) per share attributable to Apollo	$	0.66		$	(0.06	)	$	0.60		$	2.16		$	(0.02	)	$	2.14
Basic weighted average shares outstanding		154,119			154,119			154,119			154,473			154,473			154,473
Diluted weighted average shares outstanding		155,168			155,168			155,168			155,621			155,621			155,621

10

Apollo Group, Inc. and Subsidiaries
Reconciliation of GAAP financial information to non-GAAP financial information
(Unaudited)

	Three Months Ended February 28,						Six Months Ended February 28,
(in thousands, except per share data)	2010			2009			2010			2009
Net income attributable to Apollo, as reported	$	92,606		$	125,346		$	332,748		$	305,706
Loss from discontinued operations, net of tax (1)		(10,638	)		(3,452	)		(10,938	)		(5,392	)
Income from continuing operations attributable to Apollo		103,244			128,798			343,686			311,098
Reconciling item:
Estimated litigation loss (2)		44,500			—			44,500			—
		44,500			—			44,500			—
Less: tax effects		(17,628	)		—			(17,628	)		—
Tax benefit from IRS settlement (3)		—			—			(11,356	)		—
Income from continuing operations attributable to Apollo adjusted to exclude special items	$	130,116		$	128,798		$	359,202		$	311,098
Diluted income per share from continuing operations attributable to Apollo, as reported	$	0.67		$	0.79		$	2.21		$	1.92
Diluted income per share from continuing operations attributable to Apollo, adjusted to exclude special items	$	0.84		$	0.79		$	2.31		$	1.92
Diluted weighted average shares outstanding		155,168			162,757			155,621			161,806

(1)	The loss from discontinued operations, net of tax includes a $9.4 million charge for goodwill impairment. As Insight Schools’ goodwill is not deductible for tax purposes, the Company did not record a tax benefit associated with the goodwill impairment
(2)	Special item for the three and six months ended February 28, 2010 consisted of a $44.5 million estimated charge related to a securities litigation matter.
(3)	The $11.4 million tax benefit during the six months ended February 28, 2010 resulted from our settlement of disputed tax issues with the Internal Revenue Service.

Investor Relations Contacts:
Allyson Pooley ~ (312) 660-2025 ~ allyson.pooley@apollogrp.edu
Jeremy Davis ~ (312) 660-2071 ~ jeremy.davis@apollogrp.edu

Media Contact:
Sara Jones ~ (818) 326-1871 ~ sara.jones@apollogrp.edu

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