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PROSPECTUS
444,953 SHARES
APOLLO GROUP, INC.
COMMON STOCK
This Prospectus relates to the resale by The National Endowment for
Financial Education, a Colorado non-profit corporation ("NEFE" or "Selling
Securityholder"), of 444,953 shares of Class A Common Stock, no par value per
share (the "Class A Common Stock") of Apollo Group, Inc., an Arizona corporation
(the "Company"), which were previously acquired by the Selling Securityholder in
connection with the acquisition of certain assets of the Selling Securityholder.
The Selling Securityholder has entered into an agreement to sell all of the
Class A Common Stock registered hereby to BT Alex. Brown Incorporated ("BT Alex.
Brown") as described in "Plan of Distribution." The Company will not receive any
of the proceeds from the sale of Class A Common Stock by the Selling
Securityholder. The Class A Common Stock registered for resale hereby has been
registered pursuant to the Company's obligations contained in a written
agreement with the Selling Securityholder. See "Recent Developments" and "Plan
of Distribution."
The Company's Class A Common Stock is traded on the Nasdaq National Market
("Nasdaq") under the symbol "APOL". On September 22, 1997, the last reported
sales price of the Class A Common Stock, as reported by Nasdaq, was $38.875 per
share.
BT Alex. Brown may reoffer the Class A Common Stock from time to time in
block trades, in ordinary brokers' transactions through the facilities of Nasdaq
or otherwise, in a public offering, or in privately negotiated transactions, at
market prices prevailing at the time of such sale, at prices related to such
prevailing market prices, or at negotiated prices. The Selling Securityholder
will receive the net proceeds from the sale to BT Alex. Brown as described in
"Plan of Distribution." All expenses incurred with the registration of the Class
A Common Stock, other than any underwriting or brokerage discounts, commissions
and selling expenses with respect to the Class A Common Stock being sold by the
Selling Securityholder, will be borne by the Company. See "Plan of Distribution"
and "Selling Securityholder."
SEE "RISK FACTORS" COMMENCING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED HEREBY.
THE SELLING SECURITYHOLDER, BT ALEX. BROWN, AND ANY BROKER-DEALER EXECUTING
SELLING ORDERS ON BEHALF OF OR PURCHASING FROM THE SELLING SECURITYHOLDER MAY BE
DEEMED TO BE AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT.
COMMISSIONS RECEIVED BY ANY SUCH BROKER-DEALER MAY BE DEEMED TO BE UNDERWRITING
COMMISSIONS OR DISCOUNTS UNDER THE SECURITIES ACT OF 1933.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is September 23, 1997
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, information
statements and other information filed by the Company with the Commission can be
inspected and copied at the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at its regional offices located at 7 World Trade
Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
information can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission also maintains a Web site (http://www.sec.gov) that contains reports,
proxy, and information statements and other information regarding registrants,
such as the Company, that file electronically with the Commission. The Company's
Class A Common Stock is listed on the Nasdaq National Market ("Nasdaq") and
similar information can be inspected and copied at Nasdaq at 1735 K Street,
N.W., Washington, D.C. 20006.
This Prospectus constitutes a part of a registration statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). As permitted by
the rules and regulations of the Commission, this Prospectus omits certain of
the information contained in the Registration Statement and reference is hereby
made to the Registration Statement and related exhibits for further information
with respect to the Company and the securities offered hereby. Statements
contained herein concerning the provisions of any documents filed as an exhibit
to the Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of such
document so filed. Each such statement is qualified in its entirety by such
reference.
No person is authorized to give any information or make any representation
other than those contained or incorporated by reference in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized. This Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK. SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES FOLLOWING THE
OFFERING TO COVER A SHORT POSITION OR MAINTAIN THE PRICE OF THE COMMON STOCK.
SEE "PLAN OF DISTRIBUTION."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the Commission
and are hereby incorporated by reference into this Prospectus: (i) Annual Report
on Form 10-K for the fiscal year ended August 31, 1996, (ii) Quarterly Reports
of the Company on Form 10-Q for the quarters ended November 30, 1996, February
28, 1997 and May 31, 1997; (iii) the description of the Common Stock contained
in the Company's Form 8-A filed with the Commission pursuant to Section 12(g) of
the Exchange Act, including all amendments or reports filed for the purpose of
updating such description. All other documents and reports filed pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of this offering, including the
Company's Form 8-K relating to the acquisition of the business described in
"Recent Developments," shall be deemed to be incorporated by reference in this
Prospectus and to be made a part hereof from the date of the filing of such
reports and documents.
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Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all documents which are incorporated herein by
reference (not including the exhibits to such documents, unless such exhibits
are specifically incorporated by reference in the document which this Prospectus
incorporates). Requests should be directed to Mr. James W. Hoggatt, Chief
Financial Officer, at the Company's principal executive offices located at 4615
East Elwood Street, Phoenix, Arizona 85040, telephone number (602) 966-5394.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including all documents incorporated by reference,
includes "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. All statements other than
statements of historical facts included in this Prospectus, including without
limitation, statements under "The Company," "Recent Developments," and "Risk
Factors," regarding the Company's financial position, business strategy, and
plans and objectives of management of the Company for future operations, are
forward-looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct. Important
factors that could cause actual results to differ materially from the Company's
expectations are disclosed under "Risk Factors" and elsewhere in this
Prospectus, including without limitation in conjunction with the forward-looking
statements included in this Prospectus. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this section.
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THE COMPANY
Apollo Group, Inc. ("Apollo" or the "Company"), through its
subsidiaries, the University of Phoenix, Inc. ("UOP"), the Institute for
Professional Development ("IPD"), and Western International University, Inc.
("WIU"), is a leading provider of higher education programs for working adults
based on the number of working adults enrolled in its programs. The consolidated
enrollment in the Company's educational programs would make it the largest
private institution of higher education in the United States. The Company
currently offers its programs and services at over 93 campuses and learning
centers in 29 states, Puerto Rico, and London, England. The Company's enrollment
has increased to 53,137 at May 31, 1997 from 21,163 at August 31, 1992.
Based on its enrollment of over 38,000 adult students, UOP is currently
one of the largest regionally accredited private universities in the United
States and has one of the nation's largest private business schools. UOP has
been accredited by the Commission on Institutions of Higher Education of the
North Central Association of Colleges and Schools ("NCA") since 1978 and has
successfully replicated its teaching/learning model while maintaining
educational quality at over 50 campuses and learning centers in Arizona,
California, Colorado, Florida, Hawaii, Louisiana, Michigan, Nevada, New Mexico,
Utah, and Puerto Rico. UOP has developed specialized systems for student
tracking, marketing, faculty recruitment and training, financial aid,
accounting, and academic quality management. These systems enhance UOP's ability
to expand into new markets while still maintaining academic quality. Currently,
approximately 75% of UOP's students receive some level of tuition reimbursement
from their employers, many of which are Fortune 500 companies.
The Online(TM) campus was established by UOP in 1989 to provide
group-based, faculty-led instruction through computer-mediated communications.
The Online(TM) campus currently serves approximately 2,700 degree-seeking
students. Students can access their Online(TM) classes with a computer and modem
from anywhere in the world, on schedules that meet their individual needs.
Online's(TM) degree programs can be accessed though direct-dial, local Internet
providers or CompuServe(R). The Online(TM) faculty receive specialized training
to enable them to teach effectively in the electronic learning environment. The
same academic quality management standards applied to campus-based programs,
including the assessment of student learning outcomes, are applied to programs
delivered through Online(TM).
IPD provides program development and management services under
long-term contracts that meet the guidelines of the client institutions'
respective regional accrediting associations. IPD provides these services to 18
regionally accredited private colleges and universities at over 38 campuses and
learning centers in 20 states and shares in the tuition revenues generated from
these programs. IPD is able to assist these colleges and universities in
expanding and diversifying their programs for working adults. IPD places a
priority on institutions that: (i) are interested in developing or expanding
off-campus degree programs for working adults; (ii) recognize that working
adults require a different teaching/learning model than the 18 to 24 year old
student; (iii) desire to increase enrollments with a limited investment in
institutional capital and (iv) recognize the unmet educational needs of the
working adult students in their market. More than 13,000 students are currently
enrolled in IPD-assisted programs.
WIU currently offers graduate, undergraduate, and certificate degree
programs to approximately 1,200 students and has a total of four campuses and
learning centers in Phoenix, Fort Huachuca and Douglas, Arizona, and London,
England.
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The Company was incorporated in Arizona in 1981 and maintains its
principal executive offices at 4615 East Elwood Street, Phoenix, Arizona 85040.
The Company's telephone number is (602) 966-5394. The Company's Internet Web
Site addresses are as follows:
- Apollo and IPD - http://www.apollogrp.com
- UOP-http://www.uophx.edu
- WIU-http://www.wintu.edu
RECENT DEVELOPMENTS
ACQUISITION OF CERTAIN ASSETS OF NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION
On August 22, 1997, Apollo Group, Inc. (the "Company") announced that
it had reached an agreement with NEFE to purchase the assets and related
business operations of the College for Financial Planning and related divisions
that include the Institute for Wealth Management, the Institute for Retirement
Planning, the American Institute for Retirement Planners, Inc., and the
Institute for Tax Studies (collectively the "Acquired Business"). The purchase
price was $35,000,000, subject to certain adjustments, consisting of (i) $17.5
million of the Company's Class A Common Stock, based on the average of the
closing bid price of the shares made by certain specified market makers (the
"Share Determination Price") on the fourth business day prior to the Closing
Date of the acquisition; and (ii) cash in an amount equal to $35 million less
the value of the number of shares of Common Stock determined in (i) above based
on the Share Determination Price as of the Closing Date, plus the assumption by
the Company of certain liabilities, including deferred tuition income. Based on
the determination of the purchase price described above, the Company issued
444,953 shares of its Class A Common Stock to the Selling Securityholder on the
Closing Date. For the fiscal year ended September 30, 1996, the Acquired
Business had positive earnings, and had revenues of approximately $17 million,
excluding investment income earned on assets not being acquired by the Company
in the acquisition. The Company does not anticipate that the acquisition will be
material to the Company's fiscal 1998 earnings. For additional information
regarding the acquisition, see the Company's current report on Form 8-K filed
with the Securities and Exchange Commission relating to the acquisition, which
includes certain pro forma and historical financial information relating to the
Acquired Business.
The Company anticipates closing the purchase from NEFE on the date of
this Prospectus, which is expected to be on or before September 23, 1997. The
agreement is subject to standard closing conditions. NEFE is a not-for-profit
organization that owned and operated the College for Financial Planning and the
other divisions acquired by the Company in this transaction. NEFE currently owns
the NEFE High School Financial Planning Program, the Public Education Center and
the NEFE Press, which NEFE will continue to own and operate subsequent to the
acquisition.
With current enrollments of over 20,000 students, the College for
Financial Planning is one of the largest providers of financial planning
education programs in the United States, including the Certified Financial
Planner (CFP) Professional Education Program. For the past 25 years, the College
for Financial Planning has been a leader in educating financial services
professionals to better serve the financial planning needs of the general
public.
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ACCREDITATION
In the Fall of 1996, NCA conducted its five-year reaffirmation visit of
UOP. The recommendations of the visiting NCA team (the "Team Report") included
the reaffirmation of UOP's continuing accreditation, approval of a planned
doctoral degree program in management, and the elimination of required prior
approval for all future geographic expansion by UOP.
On June 23, 1997, the Review Committee of NCA reviewed the Team Report.
The Review Committee recommended that NCA adopt the Team Report's
recommendations to reaffirm UOP's continuing accreditation and to permit UOP's
expansion into two new states (Oregon and Washington). The Review Committee also
recommended, however, that NCA not adopt the Team Report's recommendations to
approve a planned doctoral program in management and to eliminate the
requirement of prior approval for all future geographic expansion by UOP. The
Review Committee further recommended that a focus visit of UOP be conducted in
two years.
On August 8, 1997, NCA reaffirmed UOP's continuing accreditation,
approved UOP's expansion into Oregon and Washington, and recommended that a
focus visit of UOP be conducted in two years. NCA, however, did not adopt the
Team Report's recommendations to approve a planned doctoral program in
management and to eliminate the requirement of prior approval for all future
geographic expansion by UOP. The Company continues to believe that the planned
doctoral program in management merits approval and that NCA should eliminate the
requirement of prior approval for geographic expansion. The Company is committed
to geographic expansion and will continue to evaluate its alternatives to reduce
any restraints on growth imposed by various regulatory bodies to the extent it
believes such restraints to be unnecessary.
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RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should carefully consider the factors discussed below in
evaluating the Company and its business before purchasing any of the shares of
Class A Common Stock offered hereby. This Prospectus contains forward-looking
statements which involve risks and uncertainties. The Company's actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth in the
following risk factors and elsewhere in this Prospectus. See "Disclosure
Regarding Forward-Looking Statements."
UNCERTAIN AND CHANGING REGULATORY ENVIRONMENT
UOP, WIU and IPD client institutions are subject to extensive state and
federal regulations. The Higher Education Act of 1965, as amended (the "HEA"),
and the regulations promulgated thereunder (the "Regulations"), subject UOP, WIU
and IPD client institutions and all other higher education institutions eligible
to participate in federal financial aid programs under Title IV of the HEA
("Title IV Programs") to increased regulatory scrutiny. The HEA mandates
specific regulatory responsibilities for each of the following components of the
higher education regulatory triad: (i) the accrediting associations recognized
by the United States Department of Education (the "DOE"); (ii) the federal
government through the DOE and (iii) state higher education regulatory bodies.
All higher education institutions participating in Title IV Programs must first
be accredited by an association recognized by the DOE. Under the HEA,
accrediting associations are required to include the monitoring of certain
aspects of Title IV Program compliance as part of their accreditation
evaluations. The DOE reviews all such participating institutions for compliance
with all applicable HEA standards and regulations.
The most recent DOE program review began in March 1997 and, to date,
most of the fieldwork has been completed. UOP has not yet received any official
notification as to the results of the program review, but expects to receive
notification in the Fall of 1997. Because the DOE may not approve new locations
while a program review is in process, the financial aid for new students in new
campuses and learning centers may be affected until such time as the program
review is completed. The Company believes that such expected delays will not
have a material adverse affect on its results of operations because of the
availability of alternative financing and employer tuition reimbursement to many
of these students. However, should the DOE not complete its review for an
extended period of time, such a delay may have a material adverse affect on the
Company's ability to expand UOP's business.
New or revised interpretations of regulatory requirements could have a
material adverse effect on the Company. In addition, changes in or new
interpretations of other applicable laws, rules or regulations could have a
material adverse effect on the accreditation, authorization to operate in
various states, permissible activities and costs of doing business of UOP, WIU
and one or more of the IPD client institutions. The failure to maintain or renew
any required regulatory approvals, accreditation or state authorizations by UOP
or certain of the IPD client institutions could have a material adverse effect
on the Company.
FAILURE TO MAINTAIN ACCREDITATION
UOP, WIU and IPD client institutions are accredited by regional
accrediting associations recognized by the DOE. Accreditation provides the basis
for: (i) the recognition and acceptance by employers, other higher education
institutions and governmental entities of the degrees and credits earned by
students; (ii) the qualification to participate in Title IV Programs and (iii)
the qualification for authorization in certain states.
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UOP was granted accreditation by NCA in 1978. UOP's accreditation was reaffirmed
in 1982, 1987, 1992 and 1997. The next focus evaluation visit is scheduled to
begin in 1999, and the next NCA reaffirmation visit is scheduled to begin in
2002. IPD-assisted programs offered by the IPD client institutions are evaluated
by the client institutions' respective regional accrediting associations. WIU is
accredited by NCA and is scheduled to have its next reaffirmation visit in the
Spring of 1998. The withdrawal of accreditation from UOP or certain IPD client
institutions would have a material adverse effect on the Company.
LIMITS ON TITLE IV PROGRAM FUNDING
Most UOP, WIU and IPD client institution students participate in Title
IV Programs. UOP and WIU derive approximately 44% and 8% of their net revenues
from students who participate in Title IV Programs, respectively. The IPD
percentages are estimated to be similar to those at UOP. The respective IPD
client institutions administer their own Title IV Programs. The Company's
students are eligible to receive Title IV financial aid because: (i) UOP, WIU
and IPD client institutions are accredited by an accrediting association
recognized by the DOE; (ii) the DOE has certified UOP's, WIU's and IPD client
institutions' Title IV Program eligibility and (iii) UOP, WIU and IPD client
institutions have applicable state authorization to operate and their operating
sites have been approved by the DOE.
The Regulations define the types of educational programs offered by an
institution that qualify for Title IV Program funds. For students enrolled in
qualified programs, the Regulations place limits on the amount of Title IV
Program funds that a student is eligible to receive in any one academic year (as
defined by the DOE). The Regulations also specify that, for undergraduate
programs, an academic year must consist of at least an equivalent 30 weeks of
instruction and a minimum of 24 credit hours. Because the Regulations define an
equivalent "week of instruction" as 12 hours of regularly scheduled instruction,
examinations or preparation for examinations (the "12-Hour Rule"), an academic
year would require a minimum of 360 hours (30 weeks multiplied by 12 hours per
week). Most of the Company's programs meet this 360 hour minimum and, therefore,
qualify for Title IV Program funds. The programs that do not qualify for Title
IV Program funds consist primarily of certificate, corporate and continuing
professional education programs. If the DOE determined that UOP's programs did
not qualify for Title IV Program funds, such determination would have a material
adverse effect on the Company.
UNCERTAINTY INVOLVING DOE AUDIT OF TITLE IV PROGRAMS
Effective September 1, 1995, the Company, through its newly formed WIU
subsidiary, completed the acquisition of Western International University
("Western"). In connection with the acquisition, the Company assumed the Title
IV liabilities of Western, which liabilities were subject to change based on the
results of the DOE's audit of Western's Title IV Programs. Although much of the
fieldwork was completed in early 1996, the final audit results and the amount
that the Company is responsible for had not been determined by the DOE as of the
date of this Prospectus. The original acquisition price of $2.1 million was
adjusted to $3.0 million at August 31, 1996 to reflect an increase in the
estimated liability to the DOE related to Western's processing of Title IV
financial aid and other related liabilities. Depending on the interpretation of
the various regulatory requirements, the final audit results and the Company's
liability may differ materially from the estimates currently recorded. Any
difference between the final amount and the estimates currently recorded will be
recorded as an increase or decrease, as applicable, to expense.
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FAILURE TO OBTAIN AUTHORIZATION TO EXPAND INTO NEW STATES
UOP, WIU and IPD client institutions are required to have authorization
to operate as degree-granting institutions in each state where they physically
provide educational programs. Certain states accept accreditation as evidence of
meeting minimum state standards for authorization. Other states, including
California, require separate evaluations for authorization. Depending on the
state, the addition of a degree program not offered previously or the addition
of a new location must be included in the institution's accreditation and be
approved by the appropriate state authorization agency. UOP, WIU and IPD client
institutions are currently authorized to operate in all states in which they
have physical locations. If UOP is unable to obtain authorization to operate in
certain new states, it may have a material adverse effect on the Company's
ability to expand UOP's business.
In addition, NCA requires UOP to obtain NCA's prior approval before UOP
is permitted to expand into new states. Although NCA recently approved UOP's
expansion into Oregon and Washington, NCA refused to adopt its visitation team's
recommendation to eliminate the requirement that UOP obtain prior approval for
all future geographic expansion by UOP. If UOP is unable to obtain NCA's
approval for any future geographic expansion, it may have a material adverse
effect on the Company's ability to expand UOP's business.
RELIANCE ON CURRENT MANAGEMENT
Dr. John Sperling, the founder of the Company, has been instrumental in
the development of the Company. The Company's development and operations to date
have been, and its continuing operations will be, substantially dependent on the
efforts of Dr. Sperling and the other members of current management. Dr.
Sperling's employment agreement allows him to terminate his employment at any
time upon 30 days notice. The loss of the services of any one or more members of
current management could have a material adverse effect on the Company's
business and results of operations.
REGULATORY CONSEQUENCES OF A CHANGE OF OWNERSHIP OR CONTROL
A change of ownership or control of the Company, depending on the type
of transaction that gives rise to a change, may have significant regulatory
consequences for UOP and WIU. Such a change of ownership or control could
trigger recertification by the DOE, reauthorization by certain state licensing
agencies or the evaluation of UOP's and WIU's accreditation by NCA. The DOE has
adopted the change of ownership or control standards used by the federal
securities laws. Upon a change of ownership or control sufficient to require the
Company to file a Form 8-K with the Commission, UOP and WIU would cease to be
eligible to participate in Title IV Programs until recertified by the DOE. This
recertification would not be required, however, if the transfer of ownership or
control was made upon a person's retirement or death and was made either to a
member of the person's immediate family or to a person with an ownership
interest in the Company who had been involved in its management for at least two
years preceding the transfer. In addition, certain states where UOP is presently
authorized have requirements governing change of ownership or control.
Currently, Arizona and California would require UOP and WIU, as applicable, to
be reauthorized upon a 20% and 25% change of ownership or control of the
Company, respectively. These states require a new application to be filed for
state authorization if such a change of ownership or control occurs. Moreover,
the Company is required to report to NCA any change in stock ownership of UOP,
WIU or Apollo. At that time, NCA may seek to evaluate the effect of such a
change of stock ownership on the continuing operations of UOP and WIU. If UOP is
not recertified by the DOE, does not obtain reauthorization from the necessary
state agencies or has
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its accreditation withdrawn as a consequence of any change in ownership or
control, it would have a material adverse effect on the Company.
VOTING CONTROL BY CURRENT MANAGEMENT
The holders of Class A Common Stock are not entitled to any voting
rights, while the holders of Class B Common Stock are entitled to one vote per
share on all matters on which the shareholders of the Company are entitled to
vote. As a result, the holders of the Company's Class B Common Stock, who
currently consist of the management of the Company, control the election of all
directors to the Company's Board of Directors and thereby control the policies
and operations of the Company without the vote of the holders of Class A Common
Stock. This concentration of voting control may have the effect of delaying,
deferring or preventing a change of control of the Company, including any
business combination with an unaffiliated party, or of impeding the ability of
the shareholders to replace management even if factors warrant such a change.
This concentration of voting control may also affect the price that investors
might be willing to pay in the future for shares of the Company's Class A Common
Stock.
SEASONALITY IN RESULTS OF OPERATIONS
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
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. Historically, the third quarter of each fiscal year is
the highest in terms of operating profits and net income.
USE OF PROCEEDS
The Selling Securityholder will receive all of the proceeds from the
sale of the Class A Common Stock offered hereby. The Company will not receive
any of the proceeds from such sale.
SELLING SECURITYHOLDER
The shares to be sold by the Selling Securityholder were acquired in
connection with the Company's acquisition of certain assets of the Selling
Securityholder. See "Recent Developments." Following the closing of the
acquisition, the Selling Securityholder beneficially will own 444,953 shares of
the Class A Common Stock, which represents approximately 1% of the total
shares of Class A Common Stock outstanding on that date. After the completion
of this offering, and assuming that the Selling Securityholder disposes of all
of the shares of Class A Common Stock covered by this Prospectus and does not
acquire any additional shares, the Selling Securityholder will not own any
shares of Class A Common Stock.
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PLAN OF DISTRIBUTION
This Prospectus relates to the resale of 444,953 shares of Class A
Common Stock previously acquired by the Selling Securityholder. The Selling
Securityholder anticipates reselling the shares as soon as practicable after the
closing of the acquisition described in "Recent Developments." In this regard,
the Selling Securityholder has entered into an agreement whereby the Selling
Securityholder has agreed, subject to the terms of the agreement, to sell
the Class A Common Stock registered hereunder to BT Alex. Brown Incorporated
("BT Alex. Brown"). The price at which the Selling Securityholder will sell
shares to BT Alex. Brown will be the same as the Share Determination Price for
the business day on which the Closing Date occurs. See "Recent Developments --
Acquisition of Certain Assets of National Endowment for Financial Education". BT
Alex. Brown is a market maker in the Company's Class A Common Stock, and its
closing bid price will be averaged with the closing bid prices of two other
dealers in determining the Share Determination Price.
Subject to applicable limitations, BT Alex. Brown, in connection with
the resale of the Class A Common Stock, may place bids for or make purchases of
the Common Stock in the open market or otherwise, for long or short account, or
cover short positions incurred, to stabilize, maintain or otherwise affect the
price of the Class A Common Stock, which may be higher than the price that might
otherwise prevail in the open market. There can be no assurance that the price
of the Class A Common Stock will be stabilized, or that stabilizing, if
commenced, will not be discontinued at any time. Subject to applicable
limitations, BT Alex. Brown may also place bids or make purchases to reduce a
short position created in connection with this offering. BT Alex. Brown is not
required to engage in these activities and may end these activities at any time.
The Company and the Selling Securityholder have agreed to indemnify BT
Alex. Brown against certain liabilities, including liabilities under the
Securities Act.
BT Alex. Brown may reoffer the shares covered by this Prospectus from
time to time in block trades, in ordinary brokers' transactions through the
facilities of Nasdaq or otherwise, in a public offering, or in privately
negotiated transactions, at market prices prevailing at the time of such sale,
at prices related to such prevailing market prices, or at negotiated prices. In
effecting sales, BT Alex. Brown may also arrange for other brokers or dealers to
participate. Such brokers or dealers may receive commissions or discounts from
BT Alex. Brown in amounts to be negotiated. Such other participating brokers or
dealers may be deemed to be "underwriters" within the meaning of the Securities
Act in connection with such sales. The Company has advised the Selling
Securityholder that Regulation M may apply to its sales in the market and has
informed it of the need for delivery of copies of this Prospectus. The Selling
Securityholder, BT Alex. Brown and any other broker-dealers that participate
with the Selling Securityholder in the distribution of the Class A Common Stock
may be deemed to be "underwriters" within the meaning of the Securities Act, in
which case any commissions or discounts received by such broker-dealers and any
profit on resale of the Class A Common Stock sold by them might be deemed to be
underwriting discounts or commissions under the Securities Act.
All expenses of registration incurred in connection with this offering
are being borne by the Company, except for brokerage commissions and other
similar expenses incurred by the Selling Securityholder, which will be borne by
the Selling Securityholder. The Selling Securityholder has agreed to pay its
financial advisor engaged in connection with the acquisition the amount of $.06
per share in connection with the consummation of the transaction in addition to
a financial advisory fee.
In order to comply with certain states' securities laws, if applicable,
the shares of Class A Common Stock offered hereby may be sold in such
jurisdiction only through registered or licensed brokers or dealers.
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BT Alex. Brown is not restricted as to the price or prices at which it
may sell the Class A Common Stock. Sales of shares of the Class A Common Stock
at less than market prices may depress the market price of the Company's Class A
Common Stock. BT Alex. Brown may elect to sell all, a portion or none of the
Class A Common Shares registered hereunder.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 400,000,000
shares of Class A Common Stock, no par value ("Class A Common Stock"); 3,000,000
shares of Class B Common Stock, no par value ("Class B Common Stock"); and
1,000,000 shares of preferred stock, no par value ("Preferred Stock").
CLASS A COMMON STOCK
As of August 31, 1997, there were 50,226,803 shares of the Class A
Common Stock outstanding. The holders of Class A Common Stock do not have any
voting rights with respect to shares of the Class A Common Stock. The holders of
the Class A Common Stock have no preemptive, subscription or additional
conversion rights. Upon a liquidation or dissolution of the Company, holders of
Class A Common Stock are entitled to share ratably with the holders of Class B
Common Stock in any corporate assets remaining after the payment of all debts,
subject to any preferential rights of any outstanding Preferred Stock. The Class
A Common Stock is not subject to assessment or further calls, has no redemption
provisions and is entitled only to such dividends as may be declared from time
to time by the Board of Directors out of funds legally available therefor.
CLASS B COMMON STOCK
As of August 31, 1997, there were 547,819 shares of the Class B Common
Stock outstanding. The holders of Class B Common Stock are entitled to one vote
for each share held of record on all matters on which shareholders are entitled
to vote. The holders of the Class B Common Stock have no preemptive,
subscription or conversion rights except as described below. Upon a liquidation
or dissolution of the Company holders of Class B Common Stock are entitled to
share ratably with the holders of Class A Common Stock in any corporate assets
remaining after the payment of all debts, subject to any preferential rights of
any outstanding Preferred Stock. The Class B Common Stock is not subject to
assessment or further calls, has no redemption provisions and is entitled only
to such dividends as may be declared from time to time by the Board of Directors
out of funds legally available therefor. Each share of Class B Common Stock is
freely convertible into one share of Class A Common Stock at the option of the
Class B shareholder. All shares of Class B Common Stock will automatically
convert to shares of Class A Common Stock (on a share-for-share basis) at such
time as the number of shares of Class B Common Stock outstanding is less than
115,154, in which case holders of Class A Common Stock will be entitled to one
vote per share (including the Class A Common Stock issued upon the conversion of
the Class B Common Stock). No additional shares of Class B Common Stock may be
issued by the Company except pursuant to a recapitalization or stock split. All
of the Class B Common Stock is currently held by the Company's management and is
subject to a Shareholders' Agreement, dated as of September 7, 1994 (the
"Shareholders' Agreement"). Subject to the Shareholders' Agreement, shares of
the Class B Common Stock must first be offered to the Company and then to the
other holders of the Class B Common Stock before such shares may be transferred,
except in the case of transfers to existing holders of Class B Common Stock,
executive officers of the Company or to a trust created by a shareholder of
Class B Common Stock. Upon transfer to any party, other than an existing holder
of Class B Common Stock or an executive officer of the Company, shares of Class
B Common Stock must be converted to shares of Class A Common Stock (on a
share-for-share basis). Upon the death of any holder of Class B Common Stock,
that
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person's shares must be offered first to the Company and then to the other Class
B shareholders at the then fair market value. In addition, parties to the
Shareholders' Agreement agreed not to amend such agreement before December 5,
1999 without the prior consent of Smith Barney Inc.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
shareholders, to issue from time to time up to 1,000,000 shares of Preferred
Stock in one or more series and to fix the number of shares, designations,
voting powers, preferences, optional and other special rights and the
restrictions or qualifications thereof. The rights, preferences, privileges and
restrictions or qualifications of different series of Preferred Stock may differ
with respect to dividend rates, amounts payable on liquidation, voting rights,
conversion rights, redemption provisions, sinking fund provisions and other
matters. The issuance of Preferred Stock could decrease the amount of earnings
and assets available for distribution to holders of Class A Common Stock or
Class B Common Stock or could adversely affect the rights and powers, including
voting rights, if applicable, of holders of Class A Common Stock or Class B
Common Stock and could have the effect of delaying, deferring or preventing a
change in control of the Company. As of the date of this Prospectus there are no
shares of Preferred Stock outstanding. The Company has no present intention to
issue any shares of Preferred Stock.
CERTAIN CHARTER PROVISIONS
The Company's Articles of Incorporation limit personal liability of
directors, to the Corporation or its shareholders, for monetary damages for
breach of their fiduciary duty as a director except to the extent such
limitation of liability is not permitted under Arizona law. Arizona law provides
that the liability of a director may not be eliminated or limited for: (i)
transactions in which a director receives a financial benefit to which the
director is not entitled; (ii) an intentional infliction of harm on the
corporation or the shareholders; (iii) liability for unlawful distributions in
violation of Arizona law or the Articles of Incorporation or (iv) an intentional
violation of criminal law. In addition, the Company's Bylaws provide that the
Company may indemnify any and all of its directors and officers, or former
directors and officers, to the fullest extent permitted by law or by the
Articles of Incorporation against claims and liabilities to which such persons
may become subject. Arizona law generally provides that indemnification is
permissible only when the director or officer acted in good faith and in a
manner reasonably believed to be in the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe the conduct was unlawful. Subject to that standard of care,
indemnification is mandatory under Arizona law for "outside directors" as
defined under Arizona law. Indemnification of directors is precluded in
connection with a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation or in connection with any other
proceeding charging improper personal benefit to the director, whether or not
involving action in the director's official capacity, in which the director was
adjudged liable on the basis that personal benefit was improperly received by
the director.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Class A Common Stock is First
Chicago Trust Corporation of New York.
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SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have 50,671,756
shares of Class A Common Stock outstanding, all of which will be freely
tradeable except 20,533,960 shares which are held by persons who are
"affiliates" of the Company for purposes of Rule 144.
In general, as Rule 144 currently provides, a person (or persons whose
shares are aggregated) who has beneficially owned "restricted" shares for at
least one year, including persons who may be deemed "affiliates" of the Company,
as that term is defined under Rule 144, would be entitled to sell (in accordance
with the provisions specified in the rule) within any three month period a
number of shares that does not exceed the greater of 1% of the then outstanding
shares of the Class A Common Stock (approximately 506,718 shares immediately
following this offering) or the average weekly trading volume of each class of
such shares in the over-the-counter market during the four calendar weeks
preceding the date on which notice of the sale is filed with the Commission. An
"affiliate" of the Company may sell securities that are not "restricted" without
regard to the period of beneficial ownership but subject to the volume
limitations described above and other conditions of Rule 144, subject to
restrictions on affiliates. A person who is not deemed an "affiliate" of the
Company (and has not been for at least 90 days) and who has beneficially owned
his or her shares for at least two years, would be entitled to sell such shares
under Rule 144 without regard to the volume limitations described above, manner
of sale provisions, notice requirements or availability of public information.
No prediction can be made of the effect, if any, that sales of shares
or the availability of such shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales by the existing shareholders
of substantial amounts of the Class A Common Stock in the public market could
adversely affect prevailing market conditions.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
the Company by Snell & Wilmer L.L.P., One Arizona Center, Phoenix, Arizona
85004-0001, counsel to the Company.
EXPERTS
The consolidated financial statements of the Company as of August 31,
1996 and 1995 and for each of the three years in the period ended August 31,
1996 incorporated by reference in this Prospectus have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting. The
financial statements of the Acquired Business as of September 30, 1996, and for
the year then ended, incorporated in this Prospectus by reference from the
Company's Report on Form 8-K, dated September 23, 1997, have been audited by
Deloitte & Touche LLP, independent accountants, as stated in their report
which is incorporated herein by reference and has been so incorporated in
reliance upon the report of such firm given upon their authority in auditing
and accounting.
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NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH
THIS OFFERING TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PAGE
Available Information....................................2
Incorporation of Certain Documents by
Reference............................................2
Disclosure Regarding Forward-Looking
Statements...........................................3
The Company..............................................4
Recent Developments......................................5
Risk Factors.............................................7
Use of Proceeds.........................................10
Selling Securityholder..................................10
Plan of Distribution....................................11
Description of Capital Stock............................12
Shares Eligible for Future Sale.........................14
Legal Matters...........................................14
Experts.................................................14
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APOLLO GROUP, INC.
444,953
SHARES
OF
CLASS A
COMMON STOCK
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PROSPECTUS
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September 23, 1997
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