UNITED STATES
SECURITIES AND EXCHANGE
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ending: May 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 0-25232
APOLLO GROUP, INC.
------------------
(Exact name of registrant as specified in its charter)
ARIZONA 86-0419443
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4615 EAST ELWOOD STREET, PHOENIX, ARIZONA 85040
(Address of principal executive offices, including zip code)
(602) 966-5394
(Registrant's telephone number, including area code)
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.
[X] Yes [ ] No
SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK
AS OF JUNE 21, 1996
Class A Common Stock, no par 49,284,831 Shares
Class B Common Stock, no par 575,769 Shares
1 <PAGE>
APOLLO GROUP, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
PAGE
PART I -- FINANCIAL INFORMATION ----
Item 1. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . .11
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . .15
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . .15
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . .15
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . .15
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . .15
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . .15
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
2 <PAGE>
PART I -- FINANCIAL INFORMATION
Item 1 -- Financial Statements
Apollo Group, Inc. and Subsidiaries
Consolidated Statement of Operations
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
May 31, May 31,
------------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net revenues $ 58,991 $ 45,502 $155,076 $117,996
-------- -------- -------- --------
Costs and expenses:
Instruction costs and services 33,978 26,188 93,231 73,830
Selling and promotional 7,431 5,518 20,399 15,610
General and administrative 4,641 4,856 15,941 13,665
-------- -------- -------- --------
Total costs and expenses 46,050 36,562 129,571 103,105
-------- -------- -------- --------
Income before income taxes 12,941 8,940 25,505 14,891
Less provision for income taxes 5,241 3,892 10,330 6,449
-------- -------- -------- --------
Net income $ 7,700 $ 5,048 $ 15,175 $ 8,442
======== ======== ======== ========
Net income per share $ .15 $ .10 $ .30 $ .19
======== ======== ======== ========
Weighted average shares outstanding 51,457 50,457 51,054 44,601
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
3 <PAGE>
Apollo Group, Inc. and Subsidiaries
Consolidated Balance Sheet
(Dollars in thousands)
<TABLE>
<CAPTION> May 31, August 31,
1996 1995
------------ ----------
(Unaudited)
<S> <C> <C>
Assets:
Current assets --
Cash and cash equivalents $ 47,393 $ 50,726
Restricted cash 12,443 11,875
Short-term investments 11,832
Receivables, net 19,872 15,883
Inventory 2,903 2,723
Deferred tax asset, net 2,813 2,352
Prepaids and other current assets 769 485
-------- --------
Total current assets 98,025 84,044
Property and equipment, net 16,642 13,390
Educational program production costs, net 1,785 1,963
Other assets 6,782 2,735
-------- --------
Total assets $123,234 $102,132
======== ========
Liabilities and Shareholders' Equity:
Current liabilities --
Current portion of long-term liabilities $ 175 $ 118
Accounts payable 3,122 6,261
Other accrued liabilities 10,089 9,962
Income taxes payable 1,225 96
Student deposits and deferred tuition 34,271 28,628
-------- --------
Total current liabilities 48,882 45,065
-------- --------
Long-term liabilities, less current portion 1,738 1,201
-------- --------
Deferred tax liability, net 327 514
-------- --------
Commitments and contingencies -- --
-------- --------
Shareholders' equity --
Preferred stock, no par value, 1,000,000 shares authorized, none issued -- --
Class A nonvoting common stock, no par value, 65,000,000 shares authorized;
49,285,000 and 49,077,000 issued and outstanding at May 31, 1996 and
August 31, 1995, respectively 65 18
Class B voting common stock, no par value, 3,000,000 shares authorized;
576,000 issued and outstanding 1 1
Additional paid-in capital 39,091 37,378
Retained earnings 33,130 17,955
-------- --------
Total shareholders' equity 72,287 55,352
-------- --------
Total liabilities and shareholders' equity $123,234 $102,132
======== ========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
4 <PAGE>
Apollo Group, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
May 31,
----------------------
1996 1995
--------- ---------
(Unaudited)
<S> <C> <C>
Net cash received from (used for)
operating activities:
Cash received from customers $151,162 $114,010
Cash paid to employees and suppliers (125,707) (96,708)
Interest received 2,145 1,410
Interest paid (58) (76)
Net income taxes paid (9,714) (5,633)
--------- ---------
Net cash received from operating activities 17,828 13,003
--------- ---------
Net cash used for investing activities:
Purchase of property and equipment (6,671) (5,521)
Purchase of non-operating assets (2,911)
Additions to educational program production costs (922) (734)
Purchase of short-term investments (11,832)
Cash paid at acquisition of Western,
net of cash acquired (585)
--------- ---------
Net cash used for investing activities (22,921) (6,255)
--------- ---------
Net cash received from (used for)
financing activities:
Principal payments on long-term debt (181)
Issuance of stock 935 35,060
Tax benefits related to exercise of options 825
--------- ---------
Net cash received from financing activities 1,760 34,879
--------- ---------
Net increase (decrease) in cash and cash equivalents (3,333) 41,627
Cash and cash equivalents, beginning of period 50,726 4,722
--------- ---------
Cash and cash equivalents, end of period $ 47,393 $ 46,349
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
5 <PAGE>
Apollo Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
1. The interim consolidated financial statements include the accounts of
Apollo Group, Inc. ("Apollo" or the "Company") and its wholly-owned
subsidiaries, which include the University of Phoenix, Inc. ("UOP"), the
Institute for Professional Development ("IPD") and Western International
University, Inc. ("WIU"). This financial information reflects all
adjustments, consisting only of normal recurring adjustments, that are, in
the opinion of management, necessary for a fair statement of the results for
the interim periods presented. Unless otherwise noted, references to 1996
and 1995 refer to the periods ended May 31, 1996 and 1995, respectively.
2. The interim consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto for
the fiscal year ended August 31, 1995 included in the Company's Form 10-K as
filed with the Securities and Exchange Commission. The 1996 and 1995 interim
financial information was reviewed by Price Waterhouse LLP (see "Review by
Independent Accountants").
3. The results of operations for the three-month and nine-month periods
ended May 31, 1996 are not necessarily indicative of the results to be
expected for the entire fiscal year or any future period.
4. Accounting policies.
Short-term investments. During the quarter ended May 31, 1996 the
Company began investing in securities with maturities in excess of 90 days.
These investments consist primarily of U.S. treasury notes and municipal
bonds and are stated at amortized cost, adjusted for amortization of premiums
and accretion of discounts to maturity according to Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Since all short-term investment maturities are
within one year, the carrying amount approximates fair value. All short-term
investments are classified as held-to-maturity because the Company has the
positive intent and ability to hold the securities to maturity.
New accounting pronouncement. SFAS No. 123, "Accounting for Stock-Based
Compensation" was issued in October 1995 and is effective for fiscal years
beginning after December 15, 1995. SFAS No. 123 encourages, but does not
require, a fair value based method of accounting for employee stock options
or similar equity instruments. It also allows an entity to elect to continue
to measure compensation cost under Accounting Principals Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB No. 25"), but requires
pro forma disclosures of net income and earnings per share as if the fair
value based method of accounting had been applied. The Company will adopt
SFAS No. 123 in fiscal 1997. While the Company is still evaluating SFAS No.
123, it currently expects to elect to continue to measure compensation cost
under APB No. 25 and comply with the pro forma disclosure requirements. As
such, the election would not change the Company's current accounting
treatment for stock-based compensation.
6<PAGE>
5. Effective September 1, 1995, the Company completed the acquisition of
certain assets of Western International University ("Western"). Western was
a private non-profit educational institution incorporated in 1978 that was
accredited by the North Central Association of Colleges and Schools ("NCA").
The Company formed a new wholly-owned subsidiary called Western International
University, Inc. ("WIU") as the holding company for the net assets acquired
from Western. WIU acquired accounts receivable, notes receivable, furniture,
fixtures, equipment, certain contracts and student agreements, copyrights,
trademarks, securities, cash, goodwill and certain other assets of Western.
In exchange, WIU paid Western $237,000 in cash, including amounts advanced to
Western prior to the closing, and assumed an additional $1.8 million in
liabilities. The liabilities consisted of $1.3 million of current
liabilities, $393,000 of which was paid on the acquisition date, and $503,000
of long-term debt. The excess of costs over the fair value of the assets
acquired was $1.6 million and is being amortized on a straight-line basis
over fifteen years.
In connection with the acquisition, WIU assumed the Title IV liabilities
of Western, originally estimated to be $210,000. This amount and the
goodwill recorded related to the acquisition is subject to change based on
the results of the U.S. Department of Education's (the "DOE") audit of
Western's Title IV programs that commenced in January 1996. Based on the
results of the audit of Western to date, the Company expects that the Title
IV liability will be higher than the original estimate. The increase in the
liability will be recorded as an adjustment to goodwill, which is being
amortized over a fifteen-year period. The Company has not yet received the
final results of the DOE's audit.
The acquisition was accounted for under the purchase method and,
accordingly, the results of operations related to this new subsidiary are
included with those of the Company for periods subsequent to the date of
acquisition. Results of operations for periods prior to the acquisition were
immaterial. Western had consolidated net revenues of $4.3 million and pretax
income of $216,000 for the year ended August 31, 1995.
On February 29, 1996, WIU received approval from the DOE to resume
participation in Title IV programs. WIU has received approval to operate
under new ownership by the Arizona State Board for Post-Secondary Education
and has also received approval from NCA for the transfer of accreditation to
WIU.
WIU has historically offered its programs and services in London,
England through an agreement with a London-based institution of higher
education. Effective in the fourth quarter of 1996, WIU will begin offering
its programs and services in its own leased facilities and will discontinue
the relationship with this third party institution. This change is not
expected to have any adverse affect on the Company's results of operations.
6. In March 1996, the Company renewed its $4.0 million line of credit,
which bears interest at prime. There are no amounts borrowed under this line
of credit at May 31, 1996. Any amounts borrowed under the line of credit are
payable upon its termination in December 1997.
7<PAGE>
7. On May 8, 1996, the Company authorized a 3-for-2 stock split of its
Common Stock effected in the form of a stock dividend that was distributed on
May 31, 1996 to shareholders of record at the close of business on May 21,
1996. The shareholders of the Company's Common Stock received a stock
dividend at the rate of one-half share of Class A Common Stock for each share
of Class A or Class B Common Stock owned. All Common Stock, Common Stock
prices and earnings per share figures for periods prior to the stock split
have been restated to reflect this and previous stock splits effected in the
form of stock dividends.
8 <PAGE>
Review by Independent Accountants
The financial information as of May 31, 1996, and for the three-month
and nine-month periods then ended, included in Part I pursuant to Rule 10-01
of Regulation S-X, has been reviewed by Price Waterhouse LLP ("Price
Waterhouse"), the Company's independent accountants, in accordance with
standards established by the American Institute of Certified Public
Accountants. Price Waterhouse's report is included in this quarterly report.
Price Waterhouse does not carry out any significant or additional audit
tests beyond those that would have been necessary if its report had not been
included in this quarterly report. Accordingly, such report is not a
"report" or "part of a registration statement" within the meaning of Sections
7 and 11 of the Securities Act of 1933 and the liability provisions of
Section 11 of such Act do not apply.
9 <PAGE>
Report of Independent Accountants
To the Board of Directors and
Shareholders of Apollo Group, Inc.:
We have reviewed the accompanying consolidated balance sheet of Apollo Group,
Inc. and its subsidiaries as of May 31, 1996, and the related consolidated
statement of operations for the three-month and nine-month periods ended May
31, 1996 and the consolidated statement of cash flows for the nine-month
period ended May 31, 1996. These financial statements are the responsibility
of Apollo Group, Inc.'s management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing
standards, the consolidated balance sheet as of August 31, 1995, and the
related consolidated statements of operations, of changes in shareholders'
equity and of cash flows for the year then ended (not presented herein), and
in our report dated October 12, 1995 we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated balance sheet information as of August
31, 1995, is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.
/s/ PRICE WATERHOUSE LLP
Phoenix, Arizona
June 25, 1996
10 <PAGE>
PART I -- FINANCIAL INFORMATION
Item 2 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following information should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the consolidated financial statements and notes thereto for
the fiscal year ended August 31, 1995 included in the Company's Form 10-K as
filed with the Securities and Exchange Commission, as well as in conjunction
with the consolidated financial statements for the three-month and nine-month
periods ended May 31, 1996 included in Item 1.
RESULTS OF OPERATIONS
The following table sets forth consolidated statement of operations data
of the Company expressed as a percentage of net revenues for the periods
indicated:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended May 31, Ended May 31,
------------------ -----------------
1996 1995 1996 1995
------ ------ ------ ------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net revenues 100.0% 100.0% 100.0% 100.0%
------ ------ ------ ------
Costs and expenses:
Instruction costs and services 57.6 57.6 60.1 62.6
Selling and promotional 12.6 12.1 13.2 13.2
General and administrative 7.9 10.7 10.2 11.6
------ ------ ------ ------
Total costs and expenses 78.1 80.4 83.5 87.4
------ ------ ------ ------
Income before income taxes 21.9 19.6 16.5 12.6
Less provision for income taxes 8.9 8.6 6.7 5.4
------ ------ ------ ------
Net income 13.0% 11.0% 9.8% 7.2%
====== ====== ====== ======
</TABLE>
THREE MONTHS ENDED MAY 31, 1996 (THIRD QUARTER OF 1996) COMPARED
WITH THREE MONTHS ENDED MAY 31, 1995 (THIRD QUARTER OF 1995)
Net revenues increased by 29.6% to $59.0 million in 1996 from $45.5
million in 1995 due primarily to a 24.1% increase in average student
enrollments from 1995 to 1996, tuition price increases averaging four to five
percent and the acquisition of WIU. All UOP campuses, which include their
respective learning centers, and most of the IPD contract sites had increases
in net revenues and average student enrollments from 1995 to 1996. Average
student enrollments increased to 44,071 in 1996 from 35,518 in 1995. Ending
student enrollments at May 31, 1996 and 1995 were 44,311 and 36,136,
respectively. WIU had average student enrollments of 1,129 and revenues of
$1.2 million in 1996. Interest income, which is included in net revenues,
decreased to $754,000 in 1996 from $769,000 in 1995 due primarily to lower
pretax yield rates, offset in part by higher cash and investment levels.
11 <PAGE>
Instruction costs and services increased by 29.7% to $34.0 million in
1996 from $26.2 million in 1995 due primarily to the direct costs necessary
to support the increase in average student enrollments. These costs
consisted primarily of faculty compensation, classroom lease expense and
related staff salaries. These costs as a percentage of net revenues have
remained at 57.6% in 1996 and 1995.
Selling and promotional expenses increased by 34.7% to $7.4 million in
1996 from $5.5 million in 1995 due primarily to an increased focus on
marketing the Company's distance education programs and increased costs
related to new campuses and learning centers opened in the past two years.
These expenses as a percentage of net revenues have remained relatively
stable, increasing to 12.6% in 1996 from 12.1% in 1995.
General and administrative expenses decreased by 4.4% to $4.6 million in
1996 from $4.9 million in 1995 due primarily to $237,000 in nonrecurring
costs in the third quarter of 1995 related to land held for sale and other
development projects. These expenses as a percentage of net revenues
decreased to 7.9% in 1996 from 10.7% in 1995 due primarily to greater net
revenues being spread over fixed costs related to various centralized
functions.
Costs related to the startup of new campuses and learning centers are
expensed as incurred and totaled approximately $861,000 in 1996 and $201,000
in 1995. Interest expense, which is allocated among all categories of costs
and expenses, was less than $35,000 in 1996 and 1995.
The Company's effective tax rate decreased to 40.5% in 1996 from 43.5%
in 1995. The decrease is due primarily to an increase in tax-exempt interest
income and the relative impact of expenses that are non-deductible for tax
purposes.
Net income increased to $7.7 million in 1996 from $5.0 milion in 1995
due primarily to increased enrollments, increased tuition rates and improved
utilization of general and administrative expenses.
NINE MONTHS ENDED MAY 31, 1996 COMPARED WITH NINE MONTHS ENDED MAY 31, 1995
Net revenues increased by 31.4% to $155.1 million in 1996 from $118.0
million in 1995 due primarily to a 24.2% increase in average student
enrollments from 1995 to 1996, tuition price increases averaging four to five
percent and the acquisition of WIU. All UOP campuses, which include their
respective learning centers, and most of the IPD contract sites had increases
in net revenues and average student enrollments from 1995 to 1996. Average
student enrollments increased to 41,707 in 1996 from 33,589 in 1995. WIU had
average enrollments of 1,011 and revenues of $3.4 million in 1996. Interest
income, which is included in net revenues, increased to $2.2 million in 1996
from $1.6 million in 1995 due primarily to increased cash levels that were
generated from operations and the Company's initial public offering of its
Class A Common Stock in the second quarter of fiscal 1995.
12 <PAGE>
Instruction costs and services increased by 26.3% to $93.2 million in
1996 from $73.8 million in 1995 due primarily to the direct costs necessary
to support the increase in average student enrollments. These costs as a
percent of net revenues decreased to 60.1% in 1996 from 62.6% in 1995 due to
greater net revenues being spread over fixed costs related to centralized
student services. As the Company expands into new markets, it may not be
able to leverage these costs to the same extent.
Selling and promotional expenses increased by 30.7% to $20.4 million in
1996 from $15.6 million in 1995 due primarily to an increased focus on
marketing the Company's distance education programs and increased costs
related to new campuses and learning centers opened in the past two years.
These expenses as a percent of net revenues have remained at 13.2% in 1996
and 1995.
General and administrative expenses increased by 16.7% to $15.9 million
in 1996 from $13.7 million in 1995 due primarily to costs required to support
the increased number of campuses and learning centers and increased
administrative compensation. These expenses as a percent of net revenues
decreased to 10.2% in 1996 from 11.6% in 1995 due to larger net revenues
being spread over the fixed costs related to various centralized functions.
Costs related to the startup of new campuses and learning centers
totaled approximately $2.4 million in 1996 and $755,000 in 1995. Interest
expense, which is allocated among all categories of costs and expenses, was
less than $80,000 in 1996 and 1995.
The Company's effective tax rate decreased to 40.5% in 1996 from 43.3%
in 1995. The decrease is due primarily to an increase in tax-exempt interest
income and the relative impact of expenses that are non-deductible for tax
purposes.
Net income increased to $15.2 million in 1996 from $8.4 million in 1995
due primarily to increased enrollments, increased tuition rates and improved
utilization of fixed instructional costs and general and administrative
expenses.
SEASONALITY
The Company experiences seasonality in its results of operations
primarily as a result of changes in the level of student enrollments. While
the Company enrolls students throughout the year, second quarter (December to
February) average enrollments and related revenues generally are lower than
other quarters due to the holiday breaks in December and January. Second
quarter costs and expenses historically increase as a percentage of net
revenues as a result of certain fixed costs not significantly affected by the
seasonal second quarter declines in net revenues.
The Company experiences a seasonal increase in new enrollments in August
of each year when most other colleges and universities begin their fall
semesters. As a result, instruction costs and services and selling and
promotional expenses historically increase as a percentage of net revenues in
the fourth quarter due to increased costs in preparation for the August peak
13 <PAGE>
enrollments. These increased costs result in accounts payable levels being
higher in August than in any other month during the year. The Company
anticipates that these seasonal trends in the second and fourth quarters will
continue in the future.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital increased to $49.1 million at May 31, 1996
from $39.0 million at August 31, 1995 due primarily to the $17.8 million in
cash generated from operations during the nine months ended May 31, 1996,
offset in part by capital expenditures and the acquisition of Western. In
conjunction with the acquisition, WIU paid Western $237,000 in cash and
assumed $1.8 million in liabilities. The liabilities consisted of $1.3
million of current liabilities, $393,000 of which was paid on the acquisition
date, and $503,000 of long-term debt. At May 31, 1996, the Company had no
outstanding borrowings on its $4.0 million line of credit, which bears
interest at prime. The line of credit was renewed in March 1996 with terms
extending to December 1997.
Net cash received from operating activities increased to $17.8 million
for the nine months ended May 31, 1996 from $13.0 million for the nine months
ended May 31, 1995 due primarily to a $6.7 million increase in net income.
During the quarter ended May 31, 1996, the Company invested $11.8 million of
cash in short-term investments with maturities of less than one year.
Capital expenditures, including additions to educational program production
costs, increased to $11.1 million from $6.3 million for the nine months ended
May 31, 1996 and 1995, respectively, primarily as a result of the $2.9
million land purchase discussed below and additional capital expenditures
required for the Company's expansion. Total purchases of property, equipment
and land are expected to total approximately $12.0 million for the year ended
August 31, 1996. Additions to educational program production costs are not
expected to exceed $1.5 million for the year ended August 31, 1996. Startup
costs are expected to increase from $1.1 million in fiscal 1995 to
approximately $3.5 million for fiscal 1996 due to planned expansion into new
geographic markets.
The lease on the Company's corporate headquarters, which includes the
UOP Phoenix Main Campus, was renewed in December 1995 for another five-year
term. In December 1995, the Company acquired land for a purchase price of
$2.9 million which it may use in the future for the possible relocation of
its corporate headquarters. The Company does not currently have any material
commitments for any capital expenditures in 1996. The Company leases all of
its educational and administrative facilities.
IMPACT OF INFLATION
Inflation has not had a significant impact on the Company's historical
operations.
14 <PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . .Not Applicable
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . .Not Applicable
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . .Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders . . .Not Applicable
Item 5. Other Information . . . . . . . . . . . . . . . . . . . .Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 15-1, Letter on Unaudited Interim Financial Information
Exhibit 27, Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
May 31, 1996.
15 <PAGE>
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 thereunto duly authorized.
APOLLO GROUP, INC.
(Registrant)
Date: June 25, 1996 By: /s/ James W. Hoggatt
----------------------------------
James W. Hoggatt
Vice President of Finance
and Chief Financial Officer
(Duly Authorized Officer
and Principal Financial
and Accounting Officer)
16 <PAGE>
APOLLO GROUP, INC. AND SUBSIDIARIES
EXHIBIT INDEX
PAGE
15-1 Letter on Unaudited Interim Financial Information. . . . . . . . . . . 18
27 Financial Data Schedule. . . . . . . . . . . . . . . . . . . . . . . . 19
17 <PAGE>
Exhibit 15-1
Letter on Unaudited Interim Financial Information
June 25, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We are aware that Apollo Group, Inc. has incorporated by reference our report
dated June 25, 1996 (issued pursuant to the provisions of Statement on
Auditing Standards No. 71) in the Prospectus constituting part of its
Registration Statement on Form S-3 (Registration No. 33-65211) and in its
Registration Statements on Form S-8 (Registration No. 33-87844, Registration
No. 33-88982, Registration No. 33-88984 and Registration No. 33-63429). We
are also aware of our responsibilities under the Securities Act of 1933.
Yours very truly,
/s/ PRICE WATERHOUSE LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Operations and the Consolidated Balance Sheet and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000929887
<NAME> APOLLO GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
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0
0
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</TABLE>
