<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 23, 1997
--------------------------------
APOLLO GROUP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Arizona 0-25232 86-0419443
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4615 East Elwood Street, Phoenix, Arizona 85040
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 966-5394
------------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 23, 1997, Apollo Group, Inc. (the "Company"), through a
wholly owned subsidiary, College for Financial Planning, Inc. ("College"),
purchased from National Endowment for Financial Education ("NEFE") the assets
and related business operations of the College for Financial Planning and
related divisions, including 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, 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 Class
A Common Stock 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 at the Closing Date, which at
June 30, 1997, was approximately $17.2 million. Based on the calculation of the
Share Determination 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.
NEFE is a not-for-profit organization that owned and operated the
College for Financial Planning and the other divisions described above. 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.
The Company financed the cash portion of the purchase price for the
acquisition described above from cash from operations.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS FOR COLLEGE FOR FINANCIAL PLANNING AND RELATED
INSTITUTES (COMPONENTS OF THE NATIONAL ENDOWMENT FOR FINANCIAL
EDUCATION)
- Independent Auditors' Report
- Statement of Financial Position - September 30, 1996
- Statement of Activities - Year Ended September 30, 1996
- Statement of Cash Flows - Year Ended September 30, 1996
- Notes to Financial Statements - Year Ended September 30, 1996
- Statement of Financial Position (unaudited) - June 30, 1997
- Statement of Cash Flows (unaudited) - Nine Months ended June 30, 1997
- Statement of Activities (unaudited) - Nine Months ended June 30, 1997
- Notes to Financial Statements - (unaudited) - Nine Months ended June
30, 1997
(b) PRO FORMA FINANCIAL STATEMENTS
- Introduction
- Pro Forma Combined Balance Sheet (unaudited) as of May 31, 1997
- Pro Forma Combined Statement of Income (unaudited) for the Nine
Months ended May 31, 1997
- Pro Forma Combined Statement of Income (unaudited) for the Year Ended
August 31, 1996
(c) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C> <C>
1 Letter Agreement between NEFE and BT Incorporated by reference
Alex. Brown Incorporated, dated September to Exhibit 1 of Amendment
23, 1997 and related Indemnity Agreements No. 1 to the Company's
Registration Statement No.
333-35465 on Form S-3
filed on September 23,
1997
2.1 Asset Purchase Agreement by and among Incorporated by reference
National Endowment for Financial Educa- to Exhibit 10.1 of the
tion,(R) College for Financial Planning, Inc., Company's Registration
as assignee of Apollo Online, Inc., as Buyer, Statement No. 333-35465
and Apollo Group, Inc. dated August 21, 1997 on Form S-3 filed
September 11, 1997
2.2 Assignment and Amendment of Asset Purchase Incorporated by reference
Agreement by and among National Endowment to Exhibit 10.2 of the
for Financial Education, Inc., the College Company's Registration
of Financial Planning, Inc., Apollo Online, Statement on Form S-3
Inc., and Apollo Group, Inc., dated filed September 11, 1997
September 23, 1997
99 Press Release dated September 23, 1997 Filed herewith
</TABLE>
3
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees
of the National Endowment for
Financial Education
We have audited the accompanying statement of financial position of the College
for Financial Planning and Related Institutes, (Components of the National
Endowment of Financial Education) as of September 30, 1996, and the related
statements of activities and of cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the College for Financial Planning and
Related Institutes as of September 30, 1996, and the changes in their net assets
and their cash flows for the year then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared from the separate
records maintained by the College for Financial Planning and Related Institutes
and may not necessarily be indicative of the conditions that would have existed
or the results of operations if the College for Financial Planning and Related
Institutes had been operated as unaffiliated entities. Portions of certain
expenses represent allocations made from items applicable to the National
Endowment for Financial Education as a whole.
DELOITTE & TOUCHE LLP
Denver, Colorado
November 18, 1996 (September 23, 1997 as to Note 1)
4
<PAGE> 5
COLLEGE FOR FINANCIAL PLANNING AND RELATED INSTITUTES
(COMPONENTS OF THE NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION)
STATEMENT OF FINANCIAL POSITION
SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS:
Student notes receivable (Note 2) $4,756,000
Inventory of program materials 324,300
Prepaid expenses and other 415,800
----------
Total current assets 5,495,300
----------
OTHER ASSETS:
Long-term portion of student notes receivable 536,400
Other 3,000
----------
Total other assets 539,400
----------
PROPERTY AND EQUIPMENT:
Furniture, fixtures and equipment, less accumulated
depreciation of $2,376,900 880,500
----------
TOTAL $6,915,200
==========
</TABLE>
See notes to financial statements.
5
<PAGE> 6
COLLEGE FOR FINANCIAL PLANNING AND RELATED INSTITUTES
(COMPONENTS OF THE NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION)
STATEMENT OF FINANCIAL POSITION
SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
LIABILITIES AND DEFICIENCY IN ASSETS
<TABLE>
<CAPTION>
CURRENT LIABILITIES:
<S> <C>
Accounts payable $ 325,600
Accrued expenses 184,700
Salaries, wages and employee benefits 501,800
Current portion of capitalized lease obligations 40,800
------------
Total current liabilities 1,052,900
------------
DEFERRED TUITION 16,896,000
------------
CAPITALIZED LEASE OBLIGATIONS - Net of current portion 97,600
------------
DEFICIENCY IN ASSETS:
Board designated funds:
Property, plant and equipment 880,500
Undesignated funds (deficit) (12,011,800)
------------
(11,131,300)
------------
TOTAL $ 6,915,200
============
</TABLE>
See notes to financial statements.
6
<PAGE> 7
COLLEGE FOR FINANCIAL PLANNING AND RELATED INSTITUTES
(COMPONENTS OF THE NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION)
STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
REVENUES:
<S> <C>
Tuition and examination fees $ 10,645,800
Enrollment fees 4,589,900
Re-examination and reinstatement fees 818,900
Book sales 813,900
Other fees 96,600
------------
Total revenues 16,965,100
------------
EXPENSES:
Program costs 4,329,100
Salaries and contract labor 4,383,800
Salary-related expenses 1,288,400
Public awareness 947,500
Office expense 891,700
Professional services 298,500
Depreciation and amortization 298,500
Other 404,000
------------
Total expenses 12,841,500
------------
INCREASE IN NET ASSETS: 4,123,600
NET ASSETS RETAINED BY NEFE (4,177,100)
DEFICIENCY IN NET ASSETS, beginning of year (11,077,800)
------------
DEFICIENCY IN NET ASSETS, end of year $(11,131,300)
============
</TABLE>
See notes to financial statements.
7
<PAGE> 8
COLLEGE FOR FINANCIAL PLANNING AND RELATED INSTITUTES
(COMPONENTS OF THE NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION)
STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CASH FLOWS FORM OPERATING ACTIVITIES:
<S> <C>
Increase in net assets $ 4,123,600
Adjustments to reconcile increase in net assets to net cash provided by
operations
Loss on disposal of property and equipment 4,300
Depreciation and amortization 298,500
Changes in operating assets and liabilities:
Student notes receivable (107,100)
Inventory of program materials (19,000)
Prepaid expenses and other assets (22,500)
Accounts payable and other current liabilities (25,300)
Deferred tuition 456,400
-----------
Net cash provided by operations 4,708,900
-----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (189,500)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments of capital lease obligation (39,500)
Cash retained by NEFE (4,479,900)
-----------
Net cash used in financing activities (4,519,400)
-----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 0
CASH AND CASH EQUIVALENTS, beginning of year 0
-----------
CASH AND CASH EQUIVALENTS, end of year $ 0
===========
</TABLE>
See notes to financial statements
8
<PAGE> 9
COLLEGE FOR FINANCIAL PLANNING AND RELATED INSTITUTES
(COMPONENTS OF THE NATIONAL ENDOWMENT FOR FINANCIAL POSITION)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION - The College for Financial Planning and related institutes (CFP)
are components of the National Endowment for Financial Education (NEFE). CFP
is a non-traditional provider of educational and testing services for the
financial services industry. CFP's primary purpose is to promote professional
levels of competence among those who are or will be employed in financial
planning or related fields for individuals and businesses. NEFE's Articles of
Incorporation do not provide for the issuance of certificates of capital stock
and state that no part of the net assets shall inure to the benefit of, or be
distributable to NEFE's Board of Trustees, officers or other private persons.
NEFE has been granted tax-exempt status under Internal Revenue Code Section
501(c)(3).
BASIS OF PRESENTATION - On August 21, 1997 NEFE entered into an agreement to
sell the operations of CFP to Apollo Group, Inc. (Apollo). The transaction
closed on September 23, 1997. The accompanying financial statements
include the assets and liabilities and the revenues and expenses that relate
to the operations of CFP that were purchased or assumed by Apollo pursuant
to the agreement. The financial statements are not necessarily indicative of
conditions that would have existed or the results of activities if CFP were
operated as a stand alone entity. Portions of certain expenses represent
allocations made from items applicable to NEFE as a whole.
2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
ACCOUNTING CHANGE - Effective October 1, 1995, CFP adopted Statement of
Financial Accounting Standards ("SFAS") No. 117, " Financial Statements of
Not-for-Profit Organizations." There was no significant impact on CFP's
financial statements as a result of adopting SFAS No. 117.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The following disclosure of the
estimated fair value of CFP's financial instruments is made in accordance with
the requirements of Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments." The estimated fair
value amounts have been determined by CFP using available market information
and appropriate valuation methodologies. However, considerable judgment is
required to interpret market data in order to develop the estimates of fair
value.
Accordingly, the estimates herein are not necessarily indicative of the
amounts CFP could realize in a current market exchange. The use of different
market assumptions and/or estimation methodologies may have a material effect
on the estimated fair value amounts.
9
<PAGE> 10
At September 30, 1996, for CFP's financial instruments (including student
notes receivable, accounts payable and accrued expenses, and salaries, wages,
and employee benefits) management believes that the carrying amounts
approximate fair value due to their short maturities.
INVENTORY - Inventory of program materials is stated at the lower of cost,
using the first-in, first-out method, or market.
PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost. The cost
and accumulated depreciation and amortization of property and equipment sold
or otherwise disposed of are removed from the accounts and the resulting gain
or loss is included in revenue or expense in the period realized.
DEPRECIATION - Depreciation is computed on the straight-line method based on
estimated useful lives of seven years for furniture, fixtures and equipment;
and three to five years for computer equipment.
TUITION - Tuition fees are collected in advance, deferred and recognized as
revenue upon enrollment and as each student receives program materials or
schedules program examinations.
Tuition fee refunds (excluding any non-refundable enrollment portion) are
based on declining percentages for a period of up to 33 weeks following
enrollment, depending upon the program.
When a student terminates enrollment, the differences between the student's
refund, note balance, if any, and the related deferred tuition balance is
recorded as revenue or expense.
3. STUDENT NOTES RECEIVABLE
The student notes receivable are unsecured, bear interest at 12%, and are
payable in equal monthly installments of principal and interest generally over
8 months, commencing 30 days after the date of enrollment.
4. CAPITALIZED LEASE OBLIGATION
A long-term capital lease for a Xerox Document copier was entered into during
1995.
The following table sets forth future minimum lease payments and the present
value of minimum lease payments as of September 30, 1996:
10
<PAGE> 11
<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30
<S> <C>
1997 $ 48,900
1998 48,900
1999 48,900
2000 12,900
--------
Total minimum lease payments 159,600
Less: Executory costs 11,100
--------
Net minimum lease payments 148,500
Less: Interest 10,100
--------
Present value of net minimum lease payments 138,400
Less: Current portion of capitalized lease obligation 40,800
--------
Capitalized lease obligation net of current portion $ 97,600
========
</TABLE>
Included in property, plan and equipment at September 30, 1996 is equipment
acquired under this lease of $206,500, less accumulated depreciation of
$73,500.
5. PENSION PLAN
A noncontributory defined benefit pension plan has been established for
substantially all employees who meet certain eligibility requirements. Under
the plan, a contribution, which is determined by an independent actuarial
firm, is made annually for the amount needed to fund projected future pension
benefits. Approximately $200,000 was charged to expense during the year ended
September 30, 1996 for costs related to the plan.
6. EMPLOYEE BENEFIT PLAN
Effective January 1, 1996, a 403(b) retirement savings plan was established
which covers substantially all employees. Employees may voluntarily contribute
up to a maximum of $9,500 of their total compensation to the plan. CFP matches
contributions up to 3% of the employee's salary. CFP's salary matching expense
for the plan was $73,300 in 1996.
7. RELATED PARTY TRANSACTIONS
CFP had a nonexclusive royalty-free worldwide license for the Certified
Financial Planner Board of Standards (CFPBS) formerly known as the
International Board of Standards and Practices for Certified Financial
Planners, Inc. (IBCFP) to use the [marks] "Certified Financial Planner" and
"CFP," in connection with CFP's professional education programs and had the
right to elect or appoint at least 25% of the total voting membership of the
CFPBS Board of Directors through May 1996. In addition, the CFPBS had retained
CFP, under the terms of an exclusive management contract, to prepare,
administer, and grade all CFP examinations through February 1996. For these
services, CFP was entitled to a fee based on the amount of the non-refundable
examination fees paid by the students.
During the year ended September 30, 1996, CFP earned $336,400 under the terms
of the management contract with CFPBS.
* * * * *
11
<PAGE> 12
COLLEGE FOR FINANCIAL PLANNING AND RELATED INSTITUTES
(COMPONENTS OF THE NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION)
STATEMENT OF FINANCIAL POSITION
JUNE 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS:
<S> <C>
Student notes receivable $4,486,600
Inventory of program materials 538,900
Prepaid expenses and other 597,900
----------
Total current assets 5,623,401
----------
OTHER ASSETS:
Long-term portion of student notes receivable 498,500
Other 232,000
----------
Total other assets 730,500
----------
PROPERTY AND EQUIPMENT:
Furniture, fixtures and equipment, less accumulated
depreciation of $2,322,500 912,900
----------
TOTAL $7,266,800
==========
</TABLE>
See notes to financial statements.
12
<PAGE> 13
COLLEGE FOR FINANCIAL PLANNING AND RELATED INSTITUTES
(COMPONENTS OF THE NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION)
STATEMENT OF FINANCIAL POSITION
JUNE 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
LIABILITIES AND DEFICIENCY IN ASSETS
<TABLE>
<CAPTION>
CURRENT LIABILITIES:
<S> <C>
Accounts payable and accrued expenses $ 557,000
Salaries, wages and employee benefits 653,400
Current portion of capitalized lease obligations 42,700
------------
Total current liabilities 1,253,100
------------
DEFERRED TUITION 17,231,600
------------
CAPITALIZED LEASE OBLIGATIONS - Net of current portion 65,200
------------
DEFICIENCY IN ASSETS:
Board designated funds:
Property, plant and equipment 912,900
Undesignated funds (deficit) (12,196,000)
------------
(11,283,100)
------------
TOTAL $ 7,266,800
============
</TABLE>
See notes to financial statements.
13
<PAGE> 14
COLLEGE FOR FINANCIAL PLANNING AND RELATED INSTITUTES
(COMPONENTS OF THE NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION)
STATEMENT OF ACTIVITIES
NINE MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
REVENUES:
<S> <C>
Tuition and examination fees $ 7,621,400
Enrollment fees 2,856,300
Re-examination and reinstatement fees 621,300
Book sales 614,500
Other fees 65,300
------------
Total revenues 11,778,800
------------
EXPENSES:
Program costs 3,028,600
Salaries and contract labor 3,466,900
Salary-related expenses 1,033,900
Public awareness 873,000
Office expenses 734,200
Professional services 229,900
Depreciation and amortization 210,800
Other 234,600
------------
Total expenses 9,811,900
------------
INCREASE IN NET ASSETS: 1,966,900
NET ASSETS RETAINED BY NEFE (2,118,700)
DEFICIENCY IN NET ASSETS, September 30, 1996 (11,131,300)
------------
DEFICIENCY IN NET ASSETS, June 30, 1997 $(11,283,100)
============
</TABLE>
See notes to financial statements.
14
<PAGE> 15
COLLEGE FOR FINANCIAL PLANNING AND RELATED INSTITUTES
(COMPONENTS OF THE NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION)
STATEMENT OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CASH FLOWS FORM OPERATING ACTIVITIES:
<S> <C>
Increase in net assets $ 1,966,900
Adjustments to reconcile increase in net assets to net cash provided by
operations
Depreciation 210,800
Changes in operating assets and liabilities:
Student notes receivable 307,300
Inventory of program materials (214,600)
Prepaid expenses and other assets (411,100)
Accounts payable and other current liabilities 198,300
Deferred tuition 335,600
-----------
Net cash provided by operations 2,393,200
-----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plan and equipment (219,800)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments of capital lease obligation (30,500)
Cash retained by NEFE (2,142,900)
-----------
Net cash used in financing activities (2,173,400)
-----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 0
CASH AND CASH EQUIVALENTS, beginning of period 0
-----------
CASH AND CASH EQUIVALENTS, end of period $ 0
===========
</TABLE>
See notes to financial statements
15
<PAGE> 16
COLLEGE FOR FINANCIAL PLANNING AND RELATED INSTITUTES
(COMPONENTS OF THE NATIONAL ENDOWMENT FOR FINANCIAL POSITION)
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION - The College for Financial Planning and related institutes (CFP)
are components of the National Endowment for Financial Education (NEFE). CFP
is a non-traditional provider of educational and testing services for the
financial services industry. CFP's primary purpose is to promote professional
levels of competence among those who are or will be employed in financial
planning or related fields for individuals and businesses. NEFE's Articles of
Incorporation do not provide for the issuance of certificates of capital stock
and state that no part of the net assets shall inure to the benefit of, or be
distributable to NEFE's Board of Trustees, officers or other private persons.
NEFE has been granted tax-exempt status under Internal Revenue Code Section
501(c)(3).
BASIS OF PRESENTATION - One August 21, 1997, NEFE entered into an agreement to
sell the operations of CFP to Apollo Group, Inc. (Apollo). The transaction
closed on September 23, 1997. The accompanying financial statements include
the assets and liabilities, and the revenues and expenses that relate to the
operations of CFP that were purchased or assumed by Apollo pursuant to the
agreement. The financial statements are not necessarily indicative of
conditions that would have existed or the results of activities if CFP were
operated as a stand alone entity. Portions of certain expenses represent
allocations made from items applicable to NEFE as a whole.
The financial statements included herein include the results of CFP in
accordance with generally accepted accounting principles. These interim
financial statements should be read in conjunction with the financial
statements and notes for the year ended September 30, 1996. In the opinion of
management of CFP, these financial statements contain all adjustments
(consisting of normal, recurring accruals) necessary to present fairly the
financial position, results of operations and cash flows of CFP for the
interim period presented.
* * * * *
16
<PAGE> 17
APOLLO GROUP, INC.
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information combines the historical
consolidated balance sheets and statements of operations of Apollo Group, Inc.
(Apollo) and College for Financial Planning and Related Institutes (CFP or the
Acquired Business) after giving effect to the acquisition by Apollo of selected
assets and related business operations from the National Endowment for Financial
Education. The unaudited pro forma balance sheet as of May 31, 1997 includes
Apollo's balance sheet as of that date as well as the balance sheet of the
Acquired Business as of June 30, 1997 adjusted to reflect the acquisition as of
May 31, 1997. The unaudited pro forma statements of operations for the fiscal
year ended August 31, 1996 and the nine months ended May 31, 1997 include the
operating results of Apollo for those respective periods as well as the
operating results of the Acquired Business for its fiscal year ended September
30, 1996 and for the nine months ended June 30, 1997 as if the acquisition of
the Acquired Business had occurred at the beginning of each period. The pro
forma financial information has been prepared using the purchase method of
accounting for the acquisition and is based on the assumptions set forth in the
notes thereto.
The unaudited pro forma financial information may not be indicative of the
results that would have occurred if the acquisition of the Acquired Business had
been consummated as of the dates indicated or the operating results which may be
achieved by Apollo in the future. The unaudited pro forma financial information
should be read in conjunction with the consolidated financial statements and
other financial information included in the Company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1996 and in the Company's Quarterly Report
on Form 10-Q for the three and nine month periods ended May 31, 1997; and the
financial statements of the Acquired Business for the fiscal year ended
September 30, 1996 and for the nine months ended June 30, 1997 which are
included elsewhere in this report on Form 8-K.
17
<PAGE> 18
APOLLO GROUP, INC.
PRO FORMA COMBINED BALANCE SHEET
AS OF MAY 31, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
----------------------- ------------------------
HISTORICAL PRO FORMA
----------------------- ------------------------
APOLLO CFP ADJUSTMENTS COMBINED
----------------------- ------------------------
<S> <C> <C> <C> <C>
Assets:
Current assets -
Cash, cash equivalents & restricted cash $ 87,726 $(17,500) (a) $ 70,226
Short-term investments 22,308 22,308
Receivables, net 28,912 $ 4,487 33,399
Other current assets 6,941 1,136 8,077
-------- -------- -------- --------
Total current assets 145,887 5,623 (17,500) 134,010
Property and equipment, net 22,880 913 23,793
Other assets 11,773 731 12,504
Goodwill 2,327 46,283 (b) 48,610
-------- -------- -------- --------
Total assets $182,867 $ 7,267 $ 28,783 $218,917
======== ======== ======== ========
Liabilities and shareholders' equity:
Current liabilities -
Accounts payable, accrued and other
current liabilities $ 18,393 $ 1,253 $ 19,646
Student deposits and deferred tuition 49,537 $ 10,000 (c) 59,537
-------- -------- -------- --------
Total current liabilities 67,930 1,253 10,000 79,183
Long-term liabilities, less current portion 2,490 65 2,555
Deferred tax liabilities, net 817 817
Deferred tuition 17,232 (10,000) (c) 7,232
Shareholders' equity
Preferred Stock -- --
Class A Non-Voting Common Stock 65 1 (d) 66
Class B Voting Common Stock 1 1
Additional paid-in-capital 48,260 17,499 (d) 65,759
Retained earnings (deficit) 63,304 (11,283) 11,283 (e) 63,304
-------- -------- -------- --------
Total shareholders' equity 111,630 (11,283) 28,783 129,130
-------- -------- -------- --------
Total liabilities and shareholders' equity $182,867 $ 7,267 $ 28,783 $218,917
======== ======== ======== ========
</TABLE>
- ---------------
(a) To reduce invested assets for the approximate amount necessary to fund
the cash portion of the purchase price.
18
<PAGE> 19
(b) To reflect the estimated excess of the purchase price (i.e., $17.5
million of cash, $17.5 million of stock and $18.5 million of liabilities
assumed) over the estimated fair value of assets acquired of $7.3
million.
(c) To reclassify from noncurrent, the portion of deferred tuition of the
Acquired Business which is expected to be recognized during the
succeeding twelve months.
(d) To reflect the issuance of approximately 445,000 shares of $.0013 par
value Class A common stock in connection with the acquisition.
(e) To eliminate the net deficit of the Acquired Business.
19
<PAGE> 20
APOLLO GROUP, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED MAY 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
---------------------- -------------------------
HISTORICAL PRO FORMA
---------------------- -------------------------
APOLLO CFP ADJUSTMENTS COMBINED
---------------------- -------------------------
<S> <C> <C> <C> <C>
Revenues:
Tuition and other, net $203,422 $11,779 (a) $215,201
Interest income 3,055 $(523) (b) 2,532
-------- ------- ----- --------
Total net revenues 206,477 11,779 (523) 217,733
-------- ------- ----- --------
Costs and expenses:
Instruction costs and services 121,269 4,198 125,467
Selling and promotional 25,463 2,234 27,697
General and administrative 19,856 3,380 992 (c) 24,228
-------- ------- ----- --------
Total costs and expenses 166,588 9,812 992 177,392
-------- ------- ----- --------
Income before income taxes 39,889 1,967 (1,515) 40,341
Less provision for income taxes 15,954 181 (d) 16,135
-------- ------- ----- --------
Net income $ 23,935 $ 1,967 $(1,696) $ 24,206
======== ======= ===== ========
Net income per share $ 0.46 $ 0.46
Weighted average shares outstanding 51,747 445 (e) 52,192
</TABLE>
- ------------------
(a) Amount excludes investment income earned on assets not being acquired by
the Company in the acquisition.
(b) To eliminate interest income on $17.5 million of invested assets assumed
to fund the cash portion of the purchase price.
(c) To reflect amortization of $46.3 million of goodwill resulting from the
acquisition on a straight-line basis over a period of 35 years.
(d) To provide income taxes on the incremental operating results of the
Acquired Business for the period at a combined federal and state tax rate
of 40% which rate approximates Apollo's actual effective income tax rate
for the period.
(e) To increase the weighted average number of shares outstanding for the
approximate number of shares to be issued to fund the stock portion of
the purchase price.
20
<PAGE> 21
APOLLO GROUP, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED AUGUST 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
---------------------- ------------------------
HISTORICAL PRO FORMA
---------------------- ------------------------
APOLLO CFP ADJUSTMENTS COMBINED
---------------------- ------------------------
<S> <C> <C> <C> <C>
Revenues:
Tuition and other, net $211,247 $16,965(a) $228,212
Interest Income 3,028 $ (744) (b) 2,284
-------- ------- ------ --------
Total net revenues 214,275 16,965 (744) 230,496
-------- ------- ------ --------
Costs and expenses:
Instruction costs and services 130,039 6,112 136,151
Selling and promotional 27,896 3,077 30,973
General and administrative 21,343 3,653 1,322 (c) 26,318
-------- ------- ------ --------
Total costs and expenses 179,278 12,842 1,322 193,442
-------- ------- ------ --------
Income before income taxes 34,997 4,123 (2,066) 37,054
Less provision for income taxes 13,605 823 (d) 14,428
-------- ------- ------ --------
Net income $ 21,392 $ 4,123 $(2,889) $ 22,626
======== ======= ======= ========
Net income per share $ 0.42 $ 0.44
Weighted average shares outstanding 51,194 445 (e) 51,639
</TABLE>
- --------------------
(a) Amount excludes investment income earned on assets not being acquired by
the Company in the acquisition.
(b) To eliminate interest income on $17.5 million of invested assets assumed
to fund the cash portion of the purchase price.
(c) To reflect amortization of $46.3 million of goodwill resulting from the
acquisition on a straight line basis over a period of 35 years.
(d) To provide income taxes on the incremental operating results of the
Acquired Business for the period at a combined federal and state tax rate
of 40% which rate approximates Apollo's actual effective income tax rate
for the period.
(e) To increase the weighted average number of shares outstanding for the
approximate number of shares to be issued to fund the stock portion of
the purchase price.
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
APOLLO GROUP, INC.
Date: September 23, 1997 By:/s/ James W. Hoggatt
--------------------
James W. Hoggatt
Vice President of Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
22
<PAGE> 1
Exhibit 99
APOLLO GROUP, INC. COMPLETES THE ACQUISITION OF THE COLLEGE FOR FINANCIAL
PLANNING AND RELATED DIVISIONS
Phoenix, Arizona, September 23, 1997 -- Apollo Group, Inc. (Nasdaq:APOL) today
announced that it has completed the acquisition of the assets and related
business operations of the College for Financial Planning (CFP) 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. The transaction includes a cash payment of $19.1
million, 444,953 shares of Apollo Group, Inc. Class A Common Stock valued at
approximately $15.9 million based on the average of three closing bid prices on
September 23, 1997, and the assumption by Apollo Group, Inc. of certain
liabilities, including deferred tuition income.
With current enrollments of over 20,000 students, the College for Financial
Planning is one of the largest U.S. providers of financial planning education
programs, including the Certified Financial Planner 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. For the fiscal year ended
September 30, 1996, CFP had positive earnings, and had revenues of
approximately $17 million, excluding investment income earned on assets not
being acquired by Apollo in the acquisition. The acquisition is not expected to
be material to Apollo's fiscal 1998 earnings, but is expected to be accretive.
Apollo Group, Inc., through its subsidiaries the University of Phoenix, the
Institute for Professional Development and Western International University, is
one of the largest providers of higher education programs for working adults in
the United States. Educational programs and services are offered at more than
100 campuses and learning centers in 30 states, Puerto Rico and London, England.
For more information about Apollo Group, Inc. and its subsidiaries, call (800)
990-APOL or visit Apollo on the World Wide Web at http://www.apollogrp.edu.
This press release includes statements which may constitute forward-looking
statements made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. This information may involve risk and
uncertainties that could cause actual results to differ materially from the
forward-looking statements.
