EX-99.1 3 p67958exv99w1.txt EX-99.1 APOLLO GROUP, INC. 4615 E. ELWOOD ST. PHOENIX, AZ 85040 (800) 990-APOL (480) 379-3503 FAX INTERNET: WWW.APOLLOGRP.EDU WWW.PHOENIX.EDU WWW.UOPXONLINE.COM WWW.IPD.ORG WWW.FP.EDU WWW.WINTU.EDU COMPANY CONTACT: Kenda B. Gonzales Chief Financial Officer (800) 990-APOL Email: kenda.gonzales@apollogrp.edu INVESTOR RELATIONS CONTACT: Janess Pasinski Apollo Group, Inc. (800) 990-APOL, option 7 Email: janess.pasinski@apollogrp.edu PRESS CONTACT: Ayla Dickey Apollo Group, Inc (480) 557-2952 Email: ayla.dickey@apollogrp.edu [LOGO] News Release APOLLO GROUP, INC. REPORTS FISCAL 2003 THIRD QUARTER RESULTS Phoenix, Arizona, June 23, 2003 -- Apollo Group, Inc. today reported fiscal 2003 financial results for Apollo Education Group (Nasdaq:APOL) and University of Phoenix Online (Nasdaq:UOPX) for the third quarter ended May 31, 2003. Net income attributed to Apollo Education Group for the three months ended May 31, 2003 was $69.8 million, or $.39 per diluted share, compared to $48.4 million, or $.27 per diluted share, reported for the same period last year. Net income attributed to University of Phoenix Online for the three months ended May 31, 2003, was $4.4 million, or $.27 per diluted share, compared to $2.4 million or $.16 per diluted share, reported for the same period last year. Net income attributed to Apollo Education Group for the nine months ended May 31, 2003 was $166.2 million, or $.94 per diluted share, compared to $106.6 million, or $.61 per diluted share, reported for the same period last year. Net income attributed to University of Phoenix Online for the nine months ended May 31, 2003, was $10.4 million, or $.64 per diluted share, compared to $5.3 million or $.35 per diluted share, reported for the same period last year. Todd S. Nelson, President and CEO, said, "We are pleased to report another strong quarter in both enrollment and earnings. During the third quarter, the University of Phoenix received state licensure in Indiana and plans to open the first campus in the Indianapolis area. Also, the Institute for Professional Development signed a new contract with St. Gregory University in Shawnee, Oklahoma." Total consolidated revenues for Apollo Group, Inc. for the three months ended May 31, 2003 rose 31.8% to $364.2 million, compared with $276.3 million in the third quarter of fiscal 2002. The University of Phoenix accounted for 94.9% of the $342.6 million in net tuition revenues from students enrolled in degree programs for the quarter ended May 31, 2003. Total revenues for University of Phoenix Online for the three months ended May 31, 2003 rose 60.2% to $145.8 million, compared with $91.0 million in the third quarter of fiscal 2002. Total consolidated revenues for Apollo Group, Inc. for the nine months ended May 31, 2003 rose 33.2% to $968.2 million, compared with $727.1 million in the same period last year. The University of Phoenix accounted for 94.4% of the $911.3 million in net tuition revenues from students enrolled in degree programs for the nine months ended May 31, 2003. Total revenues for University of Phoenix Online for the nine months ended May 31, 2003 rose 63.9 % to $373.0 million, compared with $227.5 million in the same period last year. Consolidated net income for Apollo Group, Inc. for the three months ended May 31, 2003 increased 46.2% to $74.3 million, compared to $50.8 million for the same period last year. Net income for University of Phoenix Online for the three months ended May 31, 2003 increased 61.1% to $31.7 million, compared to $19.7 million for the same period last year. Consolidated net income for Apollo Group, Inc. for the nine months ended May 31, 2003 increased 57.9% to $176.6 million, compared to $111.9 million for the same period last year. Net income for University of Phoenix Online for the nine months ended May 31, 2003 increased 75.5% to $76.0 million, compared to $43.3 million for the same period last year. Net cash provided by operating activities for Apollo Group, Inc. for the three months ended May 31, 2003 was $97.5 million, compared to $93.7 million for the three months ended May 31, 2002. Net additions to property and equipment for Apollo Group, Inc. for the three months ended May 31, 2003 were $11.9 million, compared to $11.5 million for the three months ended May 31, 2002. Net cash provided by operating activities for Apollo Group, Inc. for the nine months ended May 31, 2003 was $248.6 million, compared to $181.3 million for the nine months ended May 31, 2002. Net additions to property and equipment for Apollo Group, Inc. for the nine months ended May 31, 2003 were $41.2 million, compared to $27.7 million for the nine months ended May 31, 2002. Consolidated degree enrollments for all of the Apollo Group, Inc. institutions at May 31, 2003 increased by 26.6% to 187,500 students compared to 148,100 students at May 31, 2002. Degree enrollments at The University of Phoenix (excluding University of Phoenix Online) were 91,400 students at May 31, 2003 compared to 80,200 students at May 31, 2002 representing a 14% increase. Degree enrollments for University of Phoenix Online at May 31, 2003 increased by 60% to 72,200 students compared to 45,200 students at May 31, 2002. BUSINESS OUTLOOK Apollo Group, Inc. - We expect revenue for the quarter ending August 31, 2003 to be between $365 million and $368 million and to be between $1.333 billion and $1.336 billion for fiscal 2003. - Operating margin is expected to be between 28.5% and 29.0% for the quarter ending August 31, 2003 and to be between 28.5% and 29.0% for fiscal 2003. University of Phoenix Online - We expect revenue for the quarter ending August 31, 2003 to be between $154 million and $155 million and to be between $527 million and $528 million for fiscal 2003. - Operating margin is expected to be between 34.0% and 34.5% for the quarter ending August 31, 2003 and to be between 33.0% and 33.5% for fiscal 2003. Diluted earnings per share attributed to Apollo Education Group are expected to be $.33 for the quarter ending August 31, 2003 and to be $1.27 for fiscal 2003. Diluted earnings per share attributed to University of Phoenix Online are expected to be $.26 for the quarter ending August 31, 2003 and to be $.90 for fiscal 2003. Based on lead flow, we expect degree enrollments at The University of Phoenix (excluding University of Phoenix Online) to continue to grow between 12% and 14% over the prior year at the end of the fourth quarter of fiscal 2003. We expect University of Phoenix Online degree enrollments to continue to grow in excess of 50% over the prior year at the end of the fourth quarter of fiscal 2003. The company will hold a conference call to discuss these earnings results at 11:00 AM Eastern time, 8:00 AM Phoenix time, on Monday, June 23, 2003. The call may be accessed by dialing (877) 292-6888 (domestic) or (706) 634-1393 (internationally). The conference ID number is 950076. A live webcast of this event may be accessed by visiting the company web site at: http://www.apollogrp.edu/Company_News. A replay of the call will be available on our website or at (706) 645-9291 (conf. ID #950076) until June 30, 2003 Apollo Group, Inc. has been providing higher education programs to working adults for over 25 years. Apollo Group, Inc., operates through its subsidiaries The University of Phoenix, Inc., Institute for Professional Development, The College for Financial Planning Institutes Corporation, and Western International University, Inc. The consolidated enrollment in its educational programs makes it the largest private institution of higher education in the United States. It offers educational programs and services at 67 campuses and 118 learning centers in 37 states, Puerto Rico and Vancouver, British Columbia. Combined degree enrollment was 187,500 students as of May 31, 2003. For more information about Apollo Group, Inc. and its subsidiaries, call (800) 990-APOL or visit Apollo on the World Wide Web at http://www.apollogrp.edu. This press release includes statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Apollo Group, Inc. claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms "may," "believes," "projects," "expects," or "anticipates," and do not reflect historical facts. Specific forward-looking statements contained in this press release relate, among other matters, to the business outlook of Apollo Group, Inc. and University of Phoenix Online. Forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of Apollo Group, Inc. and University of Phoenix Online to be materially different from those expressed or implied by such forward-looking statements. Factors that could affect Apollo Group, Inc.'s or University of Phoenix Online's results and cause them to materially differ from those contained in the forward-looking statements include: - the failure to maintain or renew required regulatory approvals, accreditation or state authorizations; - the failure to obtain authorizations from states in which University of Phoenix does not currently provide degree programs; - the failure to obtain the Higher Learning Commission's approval for University of Phoenix to operate in new states; - any adverse changes in student enrollment; - risk factors and cautionary statements made in Apollo Group, Inc.'s Annual Report on Form 10-K for the period ended August 31, 2002; and - other factors that Apollo Group is currently unable to identify or quantify, but may arise or become known in the future. These forward-looking statements are based on estimates, projections, beliefs, and assumptions of Apollo Group, Inc. and its management and speak only as of the date made and are not guarantees of future performance. Apollo Group, Inc. undertakes no obligation to publicly update or revise any forward-looking statements, or any facts, events or circumstances after the date hereof that may bear upon forward-looking statements. You are advised, however, to consult any further disclosures Apollo Group, Inc. makes in its reports filed with the Securities and Exchange Commission. -Table to Follow- APOLLO GROUP, INC. AND SUBSIDIARIES SELECTED FINANCIAL AND OPERATING DATA (Dollars in thousands, except per share amounts)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED MAY 31, MAY 31, 2003 2002 2003 2002 ------------------------ ------------------------ REVENUES: Tuition and other, net $364,166 $276,349 $968,244 $727,146 -------- -------- -------- -------- COSTS AND EXPENSES: Instructional costs and services 159,345 129,764 444,697 365,302 Selling and promotional 70,990 50,546 195,801 142,851 General and administrative 17,015 15,260 49,864 43,247 -------- -------- -------- -------- 247,350 195,570 690,362 551,400 -------- -------- -------- -------- INCOME FROM OPERATIONS 116,816 80,779 277,882 175,746 Interest income, net 3,853 3,068 10,896 8,847 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 120,669 83,847 288,778 184,593 Provision for income taxes 46,412 33,048 112,146 72,742 -------- -------- -------- -------- NET INCOME $ 74,257 $ 50,799 $176,632 $111,851 ======== ======== ======== ======== NET INCOME ATTRIBUTED TO: APOLLO EDUCATION GROUP COMMON STOCK $ 69,816 $ 48,369 $166,193 $106,599 ======== ======== ======== ======== UNIVERSITY OF PHOENIX ONLINE COMMON STOCK $ 4,441 $ 2,430 $ 10,439 $ 5,252 ======== ======== ======== ======== EARNINGS PER SHARE ATTRIBUTED TO: APOLLO EDUCATION GROUP COMMON STOCK: DILUTED NET INCOME PER SHARE $ 0.39 $ 0.27 $ 0.94 $ 0.61 ======== ======== ======== ======== DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 177,931 176,040 177,375 175,462 ======== ======== ======== ======== UNIVERSITY OF PHOENIX ONLINE COMMON STOCK: DILUTED NET INCOME PER SHARE $ 0.27 $ 0.16 $ 0.64 $ 0.35 ======== ======== ======== ======== DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 16,742 15,291 16,374 14,928 ======== ======== ======== ========
AT MAY 31, 2003 2002 ---------------------- OPERATING DATA Students enrolled in degree programs 187,495 148,111 Number of locations: Campuses 67 63 Learning Centers 118 109 ------- ------- 185 172
~continued~ APOLLO GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollars in thousands)
MAY 31, AUGUST 31, 2003 2002 ----------- ----------- (Unaudited) ASSETS: CURRENT ASSETS Cash and cash equivalents $ 418,892 $ 295,237 Restricted cash 135,477 100,252 Marketable securities 243,055 214,547 Receivables, net 115,044 99,282 Deferred tax assets, net 9,270 7,415 Other current assets 14,691 13,714 ----------- ----------- TOTAL CURRENT ASSETS 936,429 730,447 Property and equipment, net 115,247 104,292 Marketable securities 157,714 78,619 Cost in excess of fair value of assets purchased, net 37,096 37,096 Deferred tax assets, net 4,529 5,062 Other assets 24,955 24,126 ----------- ----------- TOTAL ASSETS $ 1,275,970 $ 979,642 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY: CURRENT LIABILITIES Current portion of long-term liabilities $ 3,255 $ 7,510 Accounts payable 23,288 22,478 Accrued liabilities 42,286 39,855 Income taxes payable 9,754 7,974 Student deposits and current portion of deferred tuition revenue 231,928 186,497 ----------- ----------- TOTAL CURRENT LIABILITIES 310,511 264,314 Deferred tuition revenue, less current portion 740 827 Long-term liabilities, less current portion 15,376 15,508 ----------- ----------- TOTAL LIABILITIES 326,627 280,649 ----------- ----------- Commitments and contingencies SHAREHOLDERS' EQUITY Preferred stock, no par value, 1,000,000 shares authorized; none issued Apollo Education Group Class A nonvoting common stock, no par value, 400,000,000 shares authorized; 175,053,000 and 173,221,000 issued and outstanding at May 31, 2003 and August 31, 2002, respectively 103 103 Apollo Education Group Class B voting common stock, no par value, 3,000,000 shares authorized; 477,000 and 484,000 issued and outstanding at May 31, 2003 and August 31, 2002, respectively 1 1 University of Phoenix Online nonvoting common stock, no par value, 400,000,000 shares authorized; 15,592,000 and 14,256,000 issued and outstanding at May 31, 2003 and August 31, 2002, respectively Additional paid-in capital 283,117 227,155 Apollo Education Group Class A treasury stock, at cost, 2,336,000 and 4,162,000 shares at May 31, 2003 and August 31, 2002, respectively (28,324) (46,029) University of Phoenix Online treasury stock, at cost, 24,000 shares at August 31, 2002 (526) Retained earnings 694,818 518,186 Accumulated other comprehensive income (loss) (372) 103 ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 949,343 698,993 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,275,970 $ 979,642 =========== ===========
~continued~ APOLLO GROUP, INC. AND SUBSIDIARIES DEGREE ENROLLMENTS
MAY 31, 2003 2002 ------- ------- University of Phoenix: Campuses established prior to May 1998 143,803 113,431 Campuses established after May 1998 19,824 11,933 ------- ------- TOTAL UNIVERSITY OF PHOENIX 163,627 125,364 ------- ------- Institute for Professional Development 21,283 20,578 Western International University 1,926 1,668 College for Financial Planning 659 501 ------- ------- TOTAL DEGREE ENROLLMENT 187,495 148,111 ======= =======
~continued~ UNIVERSITY OF PHOENIX ONLINE SELECTED FINANCIAL DATA (in thousands)
FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED MAY 31, ENDED MAY 31, 2003 2002 2003 2002 -------- -------- -------- -------- REVENUES: Tuition and other, net $145,819 $ 91,048 $372,986 $227,545 -------- -------- -------- -------- COSTS AND EXPENSES: Instructional costs and services 55,558 35,348 146,117 93,466 Selling and promotional 32,572 19,133 85,852 51,764 General and administrative 6,312 4,675 17,990 12,712 -------- -------- -------- -------- 94,442 59,156 249,959 157,942 -------- -------- -------- -------- INCOME FROM OPERATIONS 51,377 31,892 123,027 69,603 Interest income, net 1,242 752 3,262 2,313 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 52,619 32,644 126,289 71,916 Provision for income taxes 20,942 12,976 50,263 28,587 -------- -------- -------- -------- NET INCOME $ 31,677 $ 19,668 $ 76,026 $ 43,329 ======== ======== ======== ========
This press release includes statements which may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. This information may involve risk and uncertainties that could cause actual results to differ materially from the forward-looking statements.