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Apollo Group, Inc. Reports Third Quarter 2013 Results



  Apollo Group, Inc. Reports Third Quarter 2013 Results

Business Wire

PHOENIX -- June 25, 2013

Apollo Group, Inc. (NASDAQ: APOL) today reported financial results for the
three and nine months ended May 31, 2013, with third quarter revenue of $946.8
million and diluted earnings per share of $0.71 per share, or $1.05 per share
excluding special items.

“This is a time of extraordinary change in higher education. At Apollo Group
we are creating a more nimble organization and reengineering our learning
solutions to better support our student’s needs and meet the demands of
employers. We are focused on making the necessary changes to deliver an
improved set of educational offerings,” said Apollo Group Chief Executive
Officer Greg Cappelli. “As education evolves, the transfer of knowledge and
the acquisition of skills for working adults will be delivered in new and
different ways. We are working directly with employers to define the skills
students must bring to the workplace to more effectively compete in a global
economy. The repositioning of higher education—also reflected in Apollo
Group’s mission to create a more educated global workforce—has perhaps never
been more important.”

Third Quarter 2013 Results of Operations

  * Net revenue for the third quarter 2013 was $946.8 million, compared to
    $1.1 billion in the third quarter 2012.
  * University of Phoenix Degreed Enrollment was 287,500, a 17.0% decrease
    from the prior year third quarter, and New Degreed Enrollment was 38,900,
    down 24.5% from third quarter 2012.
  * Operating income was $132.0 million, compared to $221.4 million from the
    prior year third quarter.
  * Income from continuing operations attributable to Apollo Group was $80.0
    million, or $0.71 per share, compared to $131.4 million, or $1.11 per
    share in the third quarter 2012.

Results for the third quarter 2013 included restructuring and other charges of
$63.1 million attributable to the Company’s restructuring activities. (See the
reconciliation of GAAP financial information to non-GAAP financial information
in the tables section of this press release for third quarter 2013 and 2012
special items.)

Excluding special items, income from continuing operations for the third
quarter 2013 was $119.1 million, or $1.05 per share, compared to $139.6
million, or $1.18 per share, for the third quarter 2012. The decrease in
income from continuing operations was attributable to lower net revenue due to
declines in enrollment, partially offset by reduced operating expenses.

First Nine Months of 2013 Results of Operations

Net revenue for the first nine months of fiscal year 2013 totaled $2.8
billion, which represents a 12.9% decrease compared to the first nine months
of fiscal year 2012 principally due to lower enrollment. In the first nine
months of 2013, University of Phoenix Average Degreed Enrollment decreased
15.1% to 309,100 as compared to the same period a year ago. Income from
continuing operations attributable to Apollo Group for the nine months ended
May 31, 2013, was $227.0 million, or $2.01 per share, compared to $341.1
million, or $2.72 per share, for the nine months ended May 31, 2012.

Results for the first nine months of 2013 included restructuring and other
charges of $131.3 million attributable to restructuring activities and $23.2
million of credits associated with the favorable resolution of certain legal
matters. (See the reconciliation of GAAP financial information to non-GAAP
financial information in the tables section of this press release for the
first nine months of 2013 and 2012 special items.)

Excluding special items, income from continuing operations for the nine months
ended May 31, 2013, was $295.0 million, or $2.61 per share, compared to $377.1
million, or $3.01 per share, for the nine months ended May 31, 2012.

Balance Sheet and Cash Flow

As of May 31, 2013, cash and cash equivalents, excluding restricted cash,
totaled $776.7 million compared to $1.3 billion as of August 31, 2012. The
decrease was primarily due to $633.5 million used for payments on borrowings,
$130.2 million used for the purchase of short-term investments, $96.7 million
for capital expenditures, and a $42.5 million cash payment for the purchase of
the noncontrolling interest in Apollo Global. These items were partially
offset by $390.4 million of cash provided by operations.

Accounts receivable were $198.0 million as of May 31, 2013, compared to $198.3
million at August 31, 2012. Excluding accounts receivable and the related net
revenue for Apollo Global, the Company’s days sales outstanding was consistent
at 20 days as of May 31, 2013 and May 31, 2012.

Business Outlook

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

  * Net revenue of $3.65 – $3.70 billion; and
  * Operating income of $525 – $550 million, excluding the impact of special
    items and restructuring and other charges.

The Company continues to reengineer business processes and refine its
educational delivery structure. These restructuring activities are expected to
favorably impact annual operating expenses by at least $400 million beginning
in fiscal year 2014, when compared to fiscal year 2012. This is a $50 million
increase in anticipated savings from the Company’s previous outlook. The
Company expects to realize at least $300 million of these annual cost savings
in fiscal year 2013.

Conference Call Information

The Company will hold a conference call to discuss these earnings results at
5:00 p.m. ET, 2:00 p.m. PT, today, Tuesday, June 25, 2013.

Dial-In Numbers:
877-292-6888 (Domestic)
973-200-3381 (International)
Conference ID: 86623109

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

A telephone replay will be available approximately two hours following the
conclusion of the call until July 3, 2013.

Dial-In Numbers:
855-859-2056 (Domestic)
404-537-3406 (International)
Conference ID: 86623109

About Apollo Group, Inc.

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

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

Forward-Looking Statements Safe Harbor

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

Use of Non-GAAP Financial Information

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

Financial and Operating Metrics

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

                                                   
                      Degreed Enrollment^(1)        New Degreed Enrollment^(2)
Enrollment
(rounded to           Q3 2013       Q3 2012         Q3 2013         Q3 2012
hundreds)
   Associate’s        84,300        112,100         15,800          21,400
   Bachelor’s         154,100       178,300         16,400          22,100
   Master’s           42,900        48,900          6,200           7,400
   Doctoral           6,200         7,000           500             600          
                      287,500       346,300         38,900          51,500       
                                                                     
Revenues (in
thousands)
   Degree
   Seeking                                          $ 907,766       $ 1,063,755
   Gross
   Revenues^(3)
   Less:
   Discounts                                        (76,862   )     (65,173     )
   and other
   Degree
   Seeking Net                                      830,904         998,582
   Revenues^(3)
   Non-degree
   Seeking                                          11,041          10,648
   Revenues
   Other, net                                       104,829         113,028      
   of discounts
                                                    $ 946,774       $ 1,122,258  
                                                                     
Revenue by
Degree Type (in
thousands)^(3)
   Associate’s                                      $ 205,166       $ 269,566
   Bachelor’s                                       529,897         600,823
   Master’s                                         152,875         170,041
   Doctoral                                         19,828          23,325
   Less:
   Discounts                                        (76,862   )     (65,173     )
   and other
                                                    $ 830,904       $ 998,582    
                                                                     
Degree Seeking
Gross Revenues
per Degreed
Enrollment^(1),
(3)
   Associate’s                                      $ 2,434         $ 2,405
   Bachelor’s                                       $ 3,439         $ 3,370
   Master’s                                         $ 3,564         $ 3,477
   Doctoral                                         $ 3,198         $ 3,332
   All degrees
   (after                                           $ 2,890         $ 2,884
   discounts)
                                                                     

^(1) Represents students enrolled in a University of Phoenix degree program
who attended a credit bearing course during the quarter and had not graduated
as of the end of the quarter; students who previously graduated from one
degree program and started a new degree program in the quarter (for example, a
graduate of the associate’s degree program returns for a bachelor’s degree);
and students participating in certain certificate programs of at least 18
credits with some course applicability into a related degree program.
 
^(2) Represents new students and students who have been out of attendance for
more than 12 months who enroll in a University of Phoenix degree program and
start a credit bearing course in the quarter; students who have previously
graduated from a degree program and start a new degree program in the quarter;
and students who commence participation in certain certificate programs of at
least 18 credits with some course applicability into a related degree program.
 
^(3) Represents revenue from tuition and other fees for students enrolled in
University of Phoenix degree programs. Also includes revenue from tuition and
other fees for students participating in University of Phoenix certificate
programs of at least 18 credits in length with some course applicability into
a related degree program.
 
 

                                              
Apollo Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)
                                                
                                               As of
($ in thousands)                               May 31,           August 31,
                                               2013              2012
ASSETS:
Current assets
Cash and cash equivalents                      $ 776,739         $ 1,276,375
Restricted cash and cash equivalents           319,081           318,334
Marketable securities                          114,317           —
Accounts receivable, net                       197,952           198,279
Prepaid taxes                                  4,594             26,341
Deferred tax assets, current portion           60,018            69,052
Other current assets                           59,504            49,609       
Total current assets                           1,532,205         1,937,990
Property and equipment, net                    503,609           571,629
Goodwill                                       104,023           103,345
Intangible assets, net                         133,207           149,034
Deferred tax assets, less current              83,436            77,628
portion
Other assets                                   36,474            28,696       
Total assets                                   $ 2,392,954       $ 2,868,322  
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities
Short-term borrowings and current              $ 20,063          $ 638,588
portion of long-term debt
Accounts payable                               77,033            74,872
Income taxes payable                           19,442            —
Student deposits                               350,642           362,143
Deferred revenue                               222,745           254,555
Accrued and other current liabilities          283,159           324,881      
Total current liabilities                      973,084           1,655,039
Long-term debt                                 67,578            81,323
Deferred tax liabilities                       14,998            15,881
Other long-term liabilities                    223,984           191,756      
Total liabilities                              1,279,644         1,943,999    
Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value                  —                 —
Apollo Group Class A nonvoting common          103               103
stock, no par value
Apollo Group Class B voting common             1                 1
stock, no par value
Additional paid-in capital                     29,281            93,770
Apollo Group Class A treasury stock, at        (3,848,759  )     (3,878,612  )
cost
Retained earnings                              4,970,125         4,743,150
Accumulated other comprehensive loss           (38,584     )     (30,034     )
Total Apollo shareholders’ equity              1,112,167         928,378      
Noncontrolling interests (deficit)             1,143             (4,055      )
Total equity                                   1,113,310         924,323      
Total liabilities and shareholders’            $ 2,392,954       $ 2,868,322  
equity
                                                                              
                                                                              

                                                        
Apollo Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)
                                                                             
                     Three Months Ended                  % of Net Revenue
                     May 31,
(In thousands,
except per           2013            2012                2013         2012
share data)
Net revenue          $ 946,774       $ 1,122,258         100.0 %      100.0 %
Costs and
expenses:
Instructional
and student          393,387         466,117             41.5  %      41.5  %
advisory
Marketing            156,918         158,583             16.6  %      14.1  %
Admissions           65,078          95,290              6.9   %      8.5   %
advisory
General and          82,717          88,085              8.7   %      7.9   %
administrative
Depreciation
and                  38,360          45,042              4.1   %      4.0   %
amortization
Provision for
uncollectible        15,258          35,430              1.6   %      3.2   %
accounts
receivable
Restructuring
and other            63,103          7,577               6.7   %      0.7   %
charges
Litigation           —               4,725               —     %      0.4   %
charge
Total costs          814,821         900,849             86.1  %      80.3  %
and expenses
Operating            131,953         221,409             13.9  %      19.7  %
income
Interest             506             160                 0.1   %      —     %
income
Interest             (1,940    )     (2,830      )       (0.2  )%     (0.2  )%
expense
Other, net           (862      )     (402        )       (0.1  )%     —     %
Income from
continuing
operations           129,657         218,337             13.7  %      19.5  %
before income
taxes
Provision for        (49,487   )     (87,059     )       (5.2  )%     (7.8  )%
income taxes
Income from
continuing           80,170          131,278             8.5   %      11.7  %
operations
Income from
discontinued         —               3,104               —     %      0.3   %
operations,
net of tax
Net income           80,170          134,382             8.5   %      12.0  %
Net income
attributable
to                   (217      )     (348        )       (0.1  )%     (0.1  )%
noncontrolling
interests
Net income
attributable         $ 79,953        $ 134,034           8.4   %      11.9  %
to Apollo
Earnings per
share – Basic:
Continuing
operations           $ 0.71          $ 1.11
attributable
to Apollo
Discontinued
operations           —               0.02         
attributable
to Apollo
Basic income
per share            $ 0.71          $ 1.13       
attributable
to Apollo
Earnings per
share –
Diluted:
Continuing
operations           $ 0.71          $ 1.11
attributable
to Apollo
Discontinued
operations           —               0.02         
attributable
to Apollo
Diluted income
per share            $ 0.71          $ 1.13       
attributable
to Apollo
Basic weighted
average shares       112,742         118,134      
outstanding
Diluted
weighted             113,372         118,793      
average shares
outstanding
                                                                       
                                                                       

                                                          
Apollo Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)
                                                                               
                     Nine Months Ended                     % of Net Revenue
                     May 31,
(In thousands,
except per           2013              2012                2013         2012
share data)
Net revenue          $ 2,836,329       $ 3,256,840         100.0 %      100.0 %
Costs and
expenses:
Instructional
and student          1,209,239         1,345,005           42.6  %      41.3  %
advisory
Marketing            493,104           483,120             17.4  %      14.8  %
Admissions           204,618           298,083             7.2   %      9.2   %
advisory
General and          237,474           251,978             8.4   %      7.7   %
administrative
Depreciation
and                  123,554           133,063             4.4   %      4.1   %
amortization
Provision for
uncollectible        67,566            108,009             2.4   %      3.3   %
accounts
receivable
Restructuring
and other            131,295           29,287              4.6   %      0.9   %
charges
Litigation
(credit)             (23,200     )     4,725               (0.8  )%     0.2   %
charge
Goodwill and
other                —                 16,788              —     %      0.5   %
intangibles
impairment
Total costs          2,443,650         2,670,058           86.2  %      82.0  %
and expenses
Operating            392,679           586,782             13.8  %      18.0  %
income
Interest             1,443             881                 0.1   %      —     %
income
Interest             (6,074      )     (6,618      )       (0.2  )%     (0.2  )%
expense
Other, net           811               (44         )       —     %      —     %
Income from
continuing
operations           388,859           581,001             13.7  %      17.8  %
before income
taxes
Provision for        (161,290    )     (245,346    )       (5.7  )%     (7.5  )%
income taxes
Income from
continuing           227,569           335,655             8.0   %      10.3  %
operations
Income from
discontinued         —                 7,182               —     %      0.2   %
operations,
net of tax
Net income           227,569           342,837             8.0   %      10.5  %
Net (income)
loss
attributable         (594        )     4,393               —     %      0.2   %
to
noncontrolling
interests
Net income
attributable         $ 226,975         $ 347,230           8.0   %      10.7  %
to Apollo
Earnings per
share – Basic:
Continuing
operations           $ 2.02            $ 2.74
attributable
to Apollo
Discontinued
operations           —                 0.05         
attributable
to Apollo
Basic income
per share            $ 2.02            $ 2.79       
attributable
to Apollo
Earnings per
share –
Diluted:
Continuing
operations           $ 2.01            $ 2.72
attributable
to Apollo
Discontinued
operations           —                 0.05         
attributable
to Apollo
Diluted income
per share            $ 2.01            $ 2.77       
attributable
to Apollo
Basic weighted
average shares       112,579           124,560      
outstanding
Diluted
weighted             113,121           125,335      
average shares
outstanding
                                                                         
                                                                         

                                                 
Apollo Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)
                                                   
                                                  Nine Months Ended
                                                  May 31,
($ in thousands)                                  2013            2012
Cash flows provided by (used in) operating
activities:
Net income                                        $ 227,569       $  342,837
Adjustments to reconcile net income to net
cash provided by operating activities:
Share-based compensation                          39,888          59,438
Excess tax benefits from share-based              (14       )     (1,137     )
compensation
Depreciation and amortization                     123,554         133,438
Accelerated depreciation included in              41,581          —
restructuring
Loss on fixed asset write-offs                    3,976           —
Amortization of lease incentives                  (10,077   )     (11,604    )
Amortization of deferred gains on                 (2,098    )     (2,098     )
sale-leasebacks
Goodwill and other intangibles impairment         —               16,788
Non-cash foreign currency loss, net               810             173
Provision for uncollectible accounts              67,566          108,009
receivable
Litigation (credit) charge                        (23,200   )     4,725
Deferred income taxes                             (21,243   )     31,386
Changes in assets and liabilities,
excluding the impact of acquisition and
disposition:
Restricted cash and cash equivalents              (747      )     25,523
Accounts receivable                               (70,761   )     (85,788    )
Other assets                                      (13,842   )     (6,260     )
Accounts payable                                  2,239           (8,174     )
Income taxes payable                              41,205          6
Student deposits                                  (10,430   )     (35,215    )
Deferred revenue                                  (28,672   )     (32,667    )
Accrued and other liabilities                     23,049          (123,605   )
Net cash provided by operating activities         390,353         415,775     
Cash flows provided by (used in) investing
activities:
Additions to property and equipment               (96,735   )     (85,702    )
Purchase of marketable securities                 (130,207  )     —
Maturities of marketable securities               15,890          —
Acquisition, net of cash acquired                 —               (73,736    )
Proceeds from disposition                         —               3,285
Other investing activities                        (1,500    )     (1,694     )
Net cash used in investing activities             (212,552  )     (157,847   )
Cash flows provided by (used in) financing
activities:
Payments on borrowings                            (633,450  )     (508,449   )
Proceeds from borrowings                          2,176           2,437
Purchase of noncontrolling interest               (42,500   )     —
Apollo Group Class A common stock purchased       (5,696    )     (731,772   )
for treasury
Issuance of Apollo Group Class A common           2,993           10,521
stock
Excess tax benefits from share-based              14              1,137       
compensation
Net cash used in financing activities             (676,463  )     (1,226,126 )
Exchange rate effect on cash and cash             (974      )     (1,322     )
equivalents
Net decrease in cash and cash equivalents         (499,636  )     (969,520   )
Cash and cash equivalents, beginning of           1,276,375       1,571,664   
period
Cash and cash equivalents, end of period          $ 776,739       $  602,144  
Supplemental disclosure of cash flow and
non-cash information:
Cash paid for income taxes, net of refunds        $ 134,201       $  211,500
Cash paid for interest                            $ 5,903         $  7,178
Restricted stock units vested and released        $ 15,617        $  16,926
Capital lease additions                           $ 3,500         $  26,906
Credits received for tenant improvements          $ 1,540         $  24,856
Debt incurred for acquired technology             $ —             $  14,389
Unsettled share repurchases                       $ —             $  10,244
                                                                              
                                                                              

                                                      
Apollo Group, Inc. and Subsidiaries

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information

(Unaudited)
                                                        
                     Three Months Ended                Nine Months Ended
                     May 31,                           May 31,
(In thousands,
except per           2013            2012              2013            2012
share data)
Net income
attributable         $ 79,953        $ 134,034         $ 226,975       $ 347,230
to Apollo, as
reported
Income from
discontinued
operations,          —               (2,657    )       —               (6,148    )
net of tax and
noncontrolling
interest
Income from
continuing
operations           79,953          131,377           226,975         341,082
attributable
to Apollo
Reconciling
items:
Restructuring
and other
charges, net         63,103          7,191             131,295         28,901
of
noncontrolling
interest^(1)
Litigation
charge               —               4,725             (23,200   )     4,725
(credit)^(2)
Goodwill and
other
intangibles
impairment,          —               —                 —               14,370     
net of
noncontrolling
interest^(3)
                     63,103          11,916            108,095         47,996
Less: tax            (23,941   )     (3,664    )       (40,110   )     (11,954   )
effects
Income from
continuing
operations
attributable         $ 119,115       $ 139,629         $ 294,960       $ 377,124  
to Apollo,
adjusted to
exclude
special items
                                                                        
Diluted income
per share from
continuing
operations           $ 0.71          $ 1.11            $ 2.01          $ 2.72     
attributable
to Apollo, as
reported
                                                                        
Diluted income
per share from
continuing
operations
attributable         $ 1.05          $ 1.18            $ 2.61          $ 3.01     
to Apollo,
adjusted to
exclude
special items
                                                                        
Diluted
weighted             113,372         118,793           113,121         125,335    
average shares
outstanding
                                                                        

^(1) Restructuring and other charges represent charges associated with the
Company’s restructuring activities.
 
^(2) Litigation credits during the nine months ended May 31, 2013 resulted
from the favorable resolution of certain legal matters. The charges for the
three and nine months ended May 31, 2012 represent a rejected settlement offer
the Company made in connection with a legal matter and estimated future legal
costs.
 
^(3) The charge for the nine months ended May 31, 2012 represents impairments
of UNIACC’s goodwill and other intangibles, net of noncontrolling interest,
with no income tax benefit as UNIACC’s goodwill and other intangibles are not
deductible for tax purposes.

Contact:

Apollo Group, Inc.
Investor Relations Contacts:
Beth Coronelli, 312-660-2059
beth.coronelli@apollogrp.edu
Erin Kelly, 602-557-3830
erin.kelly@apollogrp.edu
Media Contact:
Media Relations Hotline, 602-254-0086
media@apollogrp.edu
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