UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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 ended February 28, 1998
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 MARCH 20, 1998
Class A Common Stock, no par 50,954,627 Shares
Class B Common Stock, no par 547,819 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 . . . . . . . . . . . . . . .10
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . .17
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . .17
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . .17
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . .17
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . .17
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . .17
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
2 <PAGE>
PART I -- FINANCIAL INFORMATION
Item 1 -- Financial Statements
<TABLE>
Apollo Group, Inc. and Subsidiaries
Consolidated Statement of Operations
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
February 28, February 28,
------------------ ------------------
1998 1997 1998 1997
-------- -------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Tuition and other, net $85,078 $60,696 $172,953 $126,789
Interest income 1,386 956 2,711 1,846
------- ------- -------- --------
Total net revenues 86,464 61,652 175,664 128,635
------- ------- -------- --------
Costs and expenses:
Instruction costs and services 53,436 38,089 105,299 77,697
Selling and promotional 10,770 8,492 21,336 16,971
General and administrative 9,460 6,586 18,666 13,334
------- ------- -------- --------
Total costs and expenses 73,666 53,167 145,301 108,002
------- ------- -------- --------
Income before income taxes 12,798 8,485 30,363 20,633
Less provision for income taxes 5,068 3,393 12,024 8,252
------- ------- -------- --------
Net income $ 7,730 $ 5,092 $ 18,339 $ 12,381
======= ======= ======== ========
Basic net income per share $ .15 $ .10 $ .36 $ .25
======= ======= ======== ========
Diluted net income per share $ .15 $ .10 $ .35 $ .24
======= ======= ======== ========
Basic weighted average shares
outstanding 51,447 50,363 51,310 50,229
Diluted weighted average shares
outstanding 52,690 51,806 52,574 51,706
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
3 <PAGE>
<TABLE>
Apollo Group, Inc. and Subsidiaries
Consolidated Balance Sheet
(Dollars in thousands)
<CAPTION>
February 28, August 31,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Assets:
Current assets --
Cash and cash equivalents $ 51,395 $ 58,928
Restricted cash 25,924 19,927
Investments 30,704 27,182
Receivables, net 46,997 32,040
Inventory 2,997 2,220
Deferred tax assets, net 3,633 2,873
Prepaids and other current assets 1,523 633
-------- --------
Total current assets 163,173 143,803
Property and equipment, net 30,028 25,251
Investments 14,100 14,747
Educational program production costs, net 1,867 1,836
Non-operating property 5,636 5,611
Cost in excess of fair value of assets purchased, net 47,757 2,283
Deposits and other assets 3,157 1,379
-------- --------
Total assets $265,718 $194,910
======== ========
Liabilities and Shareholders' Equity:
Current liabilities --
Current portion of long-term liabilities $ 299 $ 295
Accounts payable 6,667 7,714
Other accrued liabilities 15,797 11,449
Income taxes payable 653 253
Student deposits and current portion of deferred revenue 62,242 47,683
-------- --------
Total current liabilities 85,658 67,394
-------- --------
Long-term liabilities, less current portion 2,528 2,494
-------- --------
Deferred tax liabilities, net 1,282 705
-------- --------
Deferred tuition revenue 10,877 --
-------- --------
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, 400,000,000 shares authorized;
50,955,000 and 50,227,000 issued and outstanding at February 28, 1998 and
August 31, 1997, respectively 67 66
Class B voting common stock, no par value, 3,000,000 shares authorized;
548,000 issued and outstanding at February 28, 1998 and August 31,
1997 1 1
Additional paid-in capital 74,233 51,521
Retained earnings 91,072 72,729
-------- --------
Total shareholders' equity 165,373 124,317
-------- --------
Total liabilities and shareholders' equity $265,718 $194,910
======== ========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
4 <PAGE>
<TABLE>
Apollo Group, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
(In thousands)
<CAPTION>
Six Months Ended
February 28,
---------------------
1998 1997
--------- --------
(Unaudited)
<S> <C> <C>
Net cash received from (used for) operating activities:
Cash received from customers $166,221 $126,728
Cash paid to employees and suppliers (138,689) (99,803)
Interest received 2,786 1,793
Interest paid (26)
Net income taxes paid (12,052) (7,543)
-------- --------
Net cash received from operating activities 18,240 21,175
-------- --------
Net cash received from (used for) investing activities:
Cash paid at acquisition of the College, net of
cash acquired (19,378) --
Purchase of property and equipment (9,312) (5,130)
Purchase of non-operating property (25) (1,262)
Purchase of investments (15,838) (12,376)
Proceeds from investment maturities 12,730 5,428
Additions to educational program production costs (691) (652)
Proceeds from sale of assets 18 44
-------- --------
Net cash used for investing activities (32,496) (13,948)
-------- --------
Net cash received from (used for) financing activities:
Tax benefits related to disqualifying dispositions and
exercise of options 3,523 3,876
Issuance of stock 3,246 1,399
Principal payments on long-term debt (50) (50)
-------- --------
Net cash received from financing activities 6,719 5,225
-------- --------
Effect of exchange rate changes on cash 4 --
-------- --------
Net increase (decrease) in cash and cash equivalents (7,533) 12,452
Cash and cash equivalents, beginning of period 58,928 51,982
-------- --------
Cash and cash equivalents, end of period $ 51,395 $ 64,434
======== ========
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"), Western International
University, Inc. ("WIU") and the College for Financial Planning (the
"College"). 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 1998 and 1997 refer to the
periods ended February 28, 1998 and 1997, 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, 1997 included in the Company's Form 10-K as
filed with the Securities and Exchange Commission. The interim financial
information for 1998 and 1997 was reviewed by Price Waterhouse LLP (see
"Review by Independent Accountants").
3. The results of operations for the three-month and six-month periods
ended February 28, 1998 are not necessarily indicative of the results to be
expected for the entire fiscal year or any future period.
4. In September 1997, the Company acquired 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. The purchase price consisted of $19.1 million in
cash, $15.9 million in stock and the assumption of approximately $17.3
million in liabilities, consisting primarily of deferred tuition revenue.
The excess of cost over the value of tangible assets of $45.9 million is
being amortized over 35 years.
5. In November 1997, the Company increased its line of credit from $4.0 to
$10.0 million. At February 28, 1998, the Company had no outstanding
borrowings on the line of credit, which bears interest at prime. In February
1998, the Company modified its line of credit agreement to extend the
termination date to February 1, 2000. Any amounts borrowed under the line of
credit are payable upon its termination in February 2000.
6. In November 1997, the Department of Education ("DOE") released amended
regulations relating to the DOE's Standards of Financial Responsibility.
These regulations are intended to provide a more comprehensive measure of an
institution's financial condition. The revised regulations take effect on
July 1, 1998 and apply to UOP and WIU. Based on an application of the
standards to the August 31, 1997 financial statements of UOP and WIU, the
Company believes that UOP and WIU currently meet the requirements under the
amended regulations and anticipates meeting the requirements when they become
effective on July 1, 1998.
6 <PAGE>
7. In February 1998, the Company adopted Statement of Financial Accounting
Standards 128, "Earnings Per Share". As a result, earnings per share
calculations for all prior periods have been restated.
A reconciliation of the basic and diluted per share computations for
1997 and 1998 are as follows:
<TABLE>
<CAPTION>
For the Three Months Ended February 28,
(in thousands, except per share amounts)
----------------------------------------------------------
1998 1997
--------------------------- ----------------------------
Weighted Weighted
Avg. Per Share Avg. Per Share
Income Shares Amount Income Shares Amount
-------- -------- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Basic net income
per share $7,730 51,447 $ .15 $5,092 50,363 $ .10
===== =====
Effect of dilutive
securities:
Stock options 1,243 1,443
------ ------ ------ ------
Diluted net income
per share $7,730 52,690 $ .15 $5,092 51,806 $ .10
====== ====== ===== ====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
For the Six Months Ended February 28,
(in thousands, except per share amounts)
----------------------------------------------------------
1998 1997
--------------------------- ----------------------------
Weighted Weighted
Avg. Per Share Avg. Per Share
Income Shares Amount Income Shares Amount
-------- -------- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Basic net income
per share $18,339 51,310 $ .36 $12,381 50,229 $ .25
===== =====
Effect of dilutive
securities:
Stock options 1,264 1,477
------- ------ ------- ------
Diluted net income
per share $18,339 52,574 $ .35 $12,381 51,706 $ .24
======= ====== ===== ======= ====== =====
</TABLE>
7 <PAGE>
Review by Independent Accountants
The financial information as of February 28, 1998, and for the three-
month and six-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.
8 <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 February 28, 1998, and the related
consolidated statement of operations for the three-month and six-month
periods ended February 28, 1998 and 1997 and the consolidated statement of
cash flows for the six-month periods ended February 28, 1998 and 1997. 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, 1997, 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 13, 1997 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, 1997, 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
March 20, 1998
9 <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, 1997 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 and notes thereto for the three-
month and six-month periods ended February 28, 1998 included in Item 1.
This quarterly report on Form 10-Q contains forward-looking statements.
Additional written or oral forward-looking statements may be made by the
Company from time to time in filings with the Securities and Exchange
Commission or otherwise. The words "believe," "plan," "expect,"
"anticipate," "project" and similar expressions identify forward-looking
statements, which speak only as of the date the statement was made. Such
forward-looking statements are within the meaning of that term in Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such statements may include, but are not
limited to, projections of revenues, income or loss, expenses, capital
expenditures, plans for future operations, financing needs or plans, the
impact of inflation and plans relating to products or services of the
Company, as well as assumptions relating to the foregoing. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, or
otherwise.
Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Future
events and actual results could differ materially from those set forth in,
contemplated by, or underlying the forward-looking statements. Statements in
this quarterly report, including "Notes to Consolidated Financial Statements"
and "Management's Discussion and Analysis of Financial Condition and Results
of Operations," describe factors, among others, that could contribute to or
cause such differences. Additional factors that could cause actual results
to differ materially from those expressed in such forward-looking statements
include, without limitation, new or revised interpretations of regulatory
requirements, changes in or new interpretations of other applicable laws,
rules and regulations, failure to maintain or renew required regulatory
approvals, accreditation or state authorizations by UOP or certain IPD
institutions, failure to obtain authorizations from states in which UOP does
not currently provide degree programs, failure to obtain the North Central
Association of Colleges and Schools'("NCA") approval for UOP to operate in
new states, changes in student enrollment, and other factors set forth in
"Business" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Company's Annual Report on Form 10-K for
the year ended August 31, 1997.
MANAGEMENT CHANGES
On February 17, 1998, the Company announced the appointment of Todd S.
Nelson to President. Mr. Nelson has been a key member of the Apollo Group
management team for twelve years. Most recently, he held the post of Vice
President of Apollo Group and Executive Vice President of the University of
Phoenix. Dr. John G. Sperling will remain Chairman and Chief Executive
Officer.
10 <PAGE>
In addition, Dr. Jorge Klor de Alva was appointed President of the
University of Phoenix, filling the post previously held by Mr. William H.
Gibbs. Dr. Jorge Klor de Alva has been affiliated with Apollo Group for
seven years as a Board Member, and most recently, as Vice President of
Business Development for the Company.
The Company also announced that James W. Hoggatt has resigned as Chief
Financial Officer of the Company for personal reasons. Mr. Hoggatt will
continue to work on special projects for Apollo Group through the end of
October 1998.
RESULTS OF OPERATIONS
<TABLE>
The following table sets forth consolidated statement of operations data
of the Company expressed as a percentage of net revenues for the periods
indicated:
<CAPTION>
Three Months Six Months
Ended February 28, Ended February 28,
----------------- -----------------
1998 1997 1998 1997
------ ------ ------ ------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Tuition and other, net 98.4% 98.4% 98.5% 98.6%
Interest income 1.6 1.6 1.5 1.4
------ ------ ------ ------
Total net revenues 100.0 100.0 100.0 100.0
------ ------ ------ ------
Costs and expenses:
Instruction costs and services 61.8 61.8 60.0 60.4
Selling and promotional 12.5 13.7 12.2 13.2
General and administrative 10.9 10.7 10.6 10.4
------ ------ ------ ------
Total costs and expenses 85.2 86.2 82.8 84.0
------ ------ ------ ------
Income before income taxes 14.8 13.8 17.2 16.0
Less provision for income taxes 5.9 5.5 6.8 6.4
------ ------ ------ ------
Net income 8.9% 8.3% 10.4% 9.6%
====== ====== ====== ======
</TABLE>
THREE MONTHS ENDED FEBRUARY 28, 1998 (SECOND QUARTER OF 1998) COMPARED
WITH THREE MONTHS ENDED FEBRUARY 28, 1997 (SECOND QUARTER OF 1997)
Net revenues increased by 40.2% to $86.5 million in the three months
ended February 28, 1998 from $61.7 million in the three months ended February
28, 1997. This is due primarily to an increase in student enrollments from
1997 to 1998, tuition price increases averaging four to five percent and a
higher concentration of enrollments at locations that charge a higher rate
per credit hour. All UOP campuses, which include their respective learning
centers, and most WIU and IPD campuses had increases in net revenues and
student enrollments from 1997 to 1998.
11 <PAGE>
Tuition and other net revenues for the three months ended February 28,
1998 and 1997 consists primarily of $72.2 and $53.3 million, respectively, of
net tuition revenues from students enrolled in degree programs and $5.8 and
$2.6 million, respectively, of net tuition revenues from students enrolled in
non-degree programs. Average degree-program enrollments increased over 26%
to 63,000 in 1998 from 50,000 in 1997.
Interest income for the three months ended February 28, 1998 increased
to $1.4 million in the three months ended February 28, 1998 from $956,000 in
the three months ended February 28, 1997 due primarily to the increase in
cash and investments from 1997 to 1998.
Instruction costs and services increased by 40.3% to $53.4 million in
the three months ended February 28, 1998 from $38.1 million in the three
months ended February 28, 1997 due primarily to the direct costs necessary to
support the increase in average student enrollments and the added costs
related to the acquisition of the College in September 1997. These costs
consist primarily of faculty compensation, classroom lease expenses and
related staff salaries. These costs as a percentage of net revenues remained
the same at 61.8% in the three months ended February 28, 1998 and 1997.
Selling and promotional expenses increased by 26.8% to $10.8 million in
the three months ended February 28, 1998 from $8.5 million in the three
months ended February 28, 1997 due primarily to increased marketing and
advertising at the Company's campuses and learning centers and at the
College. These expenses as a percentage of net revenues decreased to 12.5%
in the three months ended February 28, 1998 from 13.7% in the three months
ended February 28, 1997 due to the Company's ability to increase enrollments
in existing markets and to open new learning centers with a proportionately
lower increase in selling and promotional expenses. As the Company expands
into new markets, it may not be able to leverage its existing selling and
promotional expenses to the same extent.
General and administrative expenses increased by 43.6% to $9.5 million
in the three months ended February 28, 1998 from $6.6 million in the three
months ended February 28, 1997 due primarily to increased costs required to
support the increased number of UOP and IPD campuses and learning centers,
increases in administrative compensation and additional costs related to the
administration of the College. These expenses as a percentage of net
revenues remained relatively the same at 10.9% in the three months ended
February 28, 1998 and 10.7% in the three months ended February 28, 1997.
Costs related to the startup of new UOP and IPD campuses and learning
centers are expensed as incurred and totaled approximately $1.8 million in
the three months ended February 28, 1998 and $1.1 million in the three months
ended February 28, 1997. Interest expense, which is allocated among all
categories of costs and expenses, was less than $25,000 in the three months
ended February 28, 1998 and 1997.
The Company's effective tax rate remained relatively the same at 39.6%
and 40.0% in the three months ended February 28, 1998 and 1997, respectively.
Net income increased to $7.7 million in the three months ended February
28, 1998 from $5.1 million in the three months ended February 28, 1997 due
primarily to increased enrollments, increased tuition rates and improved
utilization of selling and promotional costs and fixed instruction costs and
services.
12 <PAGE>
SIX MONTHS ENDED FEBRUARY 28, 1998 COMPARED WITH SIX MONTHS ENDED FEBRUARY
28, 1997
Net revenues increased by 36.6% to $175.7 million in the six months
ended February 28, 1998 from $128.6 million in the six months ended February
28, 1997. This is due primarily to an increase in student enrollments from
1997 to 1998, tuition price increases averaging four to five percent and a
higher concentration of enrollments at locations that charge a higher rate
per credit hour. All UOP campuses, which include their respective learning
centers, and most WIU and IPD campuses had increases in net revenues and
student enrollments from 1997 to 1998.
Tuition and other net revenues for the six months ended February 28,
1998 and 1997 consists primarily of $149.4 and $111.5 million, respectively,
of net tuition revenues from students enrolled in degree programs and $10.0
and $5.2 million, respectively, of net tuition revenues from students
enrolled in non-degree programs. Average degree-program enrollments
increased over 25% to 61,000 in 1998 from 48,500 in 1997.
Interest income for the six months ended February 28, 1998 increased to
$2.7 million in the six months ended February 28, 1998 from $1.8 million in
the six months ended February 28, 1997 due primarily to the increase in cash
and investments from 1997 to 1998.
Instruction costs and services increased by 35.5% to $105.3 million in
the six months ended February 28, 1998 from $77.7 million in the six months
ended February 28, 1997 due primarily to the direct costs necessary to
support the increase in average student enrollments and the added costs
related to the acquisition of the College in September 1997. These costs
consist primarily of faculty compensation, classroom lease expenses and
related staff salaries. These costs as a percentage of net revenues decreased
to 60.0% in the six months ended February 28, 1998 from 60.4% in the six
months ended February 28, 1997 due to greater net revenues being spread over
the fixed costs related to centralized student services. As the Company
expands into new markets, it may not be able to leverage its existing
instruction costs and services to the same extent.
Selling and promotional expenses increased by 25.7% to $21.3 million in
the six months ended February 28, 1998 from $17.0 million in the six months
ended February 28, 1997 due primarily to increased marketing and advertising
at the Company's campuses and learning centers and at the College. These
expenses as a percentage of net revenues decreased to 12.2% in the six months
ended February 28, 1998 from 13.2% in the six months ended February 28, 1997
due to the Company's ability to increase enrollments in existing markets and
to open new learning centers with a proportionately lower increase in selling
and promotional expenses. As the Company expands into new markets, it may
not be able to leverage its existing selling and promotional expenses to the
same extent.
General and administrative expenses increased by 40.0% to $18.7 million
in the six months ended February 28, 1998 from $13.3 million in the six
months ended February 28, 1997 due primarily to increased costs required to
support the increased number of UOP and IPD campuses and learning centers,
increases in administrative compensation and additional costs related to the
administration of the College. These expenses as a percentage of net
revenues remained relatively the same at 10.6% in the six months ended
February 28, 1998 and 10.4% in the six months ended February 28, 1997.
13 <PAGE>
Costs related to the startup of new UOP and IPD campuses and learning
centers are expensed as incurred and totaled approximately $3.5 million in
the six months ended February 28, 1998 and $2.3 million in the six months
ended February 28, 1997. Interest expense, which is allocated among all
categories of costs and expenses, was less than $30,000 in the six months
ended February 28, 1998 and 1997.
The Company's effective tax rate remained relatively the same at 39.6%
and 40.0% in the six months ended February 28, 1998 and 1997, respectively.
Net income increased to $18.3 million in the six months ended February
28, 1998 from $12.4 million in the six months ended February 28, 1997 due
primarily to increased enrollments, increased tuition rates and improved
utilization of selling and promotional costs and fixed instruction costs and
services.
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 for degree-seeking students and the 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 degree
programs 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.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital increased to $77.5 million at February 28,
1998 from $76.4 million at August 31, 1997 due primarily to $18.2 million in
cash generated from operations during the six months ended February 28, 1998
and a $9.5 million increase in restricted cash and investments, offset by the
$19.4 million in cash used in the acquisition of the College, capital
expenditures, and an increase in deferred revenue.
In November 1997, the Company increased its line of credit from $4.0 to
$10.0 million. At February 28, 1998, the Company had no outstanding
borrowings on the line of credit, which bears interest at prime. The line of
credit is renewable annually and any amounts borrowed under the line are
payable upon its termination in February 2000.
Net cash received from operating activities decreased to $18.2 million
in the six months ended February 28, 1998 from $21.2 million in the six
months ended February 28, 1997 due primarily to the timing of receipts from
14 <PAGE>
customers and payments to suppliers offset in part by a $6.0 million increase
in net income from 1997 to 1998. Capital expenditures, including additions
to educational program production costs, increased to $10.0 million in the
six months ended February 28, 1998 from $7.0 million in the six months ended
February 28, 1997 due primarily to purchases made to support the increase in
student enrollments and number of locations. Total purchases of property,
equipment and land for the year ended August 31, 1998 are expected to range
from $24.0 to $27.0 million. The increase from 1997 is due to: (1) hardware
and software related to the Company's planned conversion to new student
records and human resource systems; (2) a greater number of planned new
campuses and learning centers compared to 1997; (3) improvements to the
Company's computer facilities and telecommunications equipment at the
corporate level and (4) increases in normal recurring capital expenditures
due to the overall increase in student and employee levels resulting from the
growth in the business and the acquisition of the College. Additions to
educational program production costs are not expected to exceed $2.5 million
for the year ended August 31, 1998. Startup costs relating to new campuses
and learning centers are expected to range from $6.0 to $9.0 million in 1998,
as compared to $3.6 million for the year ended August 31, 1997, due to recent
and planned expansion into new geographic markets.
Net receivables at February 28, 1998 totaled $47.0 million, or 54.4% of
second quarter 1998 net revenues. This compares to $32.0 million in net
receivables at August 31, 1997, or 41.6% of fourth quarter 1997 net revenues
and $28.0 million in net receivables at February 28, 1997, or 45.3% of second
quarter 1997 net revenues. The increase in receivables as a percentage of
net revenues from February 1997 to February 1998 was due primarily to a
backlog in collections and in processing new financial aid loans to students
as a result of the significant increase in students and related financial aid
applications during the six months ending February 28, 1998.
The DOE requires that Title IV Program funds collected by an institution
for unbilled tuition be kept in a separate cash or cash equivalent account
until the students are billed for the portion of their program related to
these Title IV Program funds. In addition, all funds transferred to the
Company through electronic funds transfer programs are held in a separate
cash account until certain conditions are satisfied. As of February 28,
1998, the Company had approximately $25.9 million in these separate accounts,
which are reflected as restricted cash, to comply with these requirements.
These funds generally remain in these separate accounts for an average of 60-
75 days from the date of collection. These restrictions on cash have not
affected the Company's ability to fund daily operations.
In March 1997, the Company began offering an alternative student loan
program on a test basis at two of its campuses. The program, offered by a
commercial lender, allows students to finance their tuition and related
educational costs at a rate of prime plus 1.5%, until the proceeds, if any,
from employer reimbursement or financial aid programs are available. Loans
for students that do not meet certain credit requirements are guaranteed by
the Company, subject to certain limitations. At February 28, 1998, the
Company has guaranteed approximately $4.1 million in available credit,
approximately $2.5 million of which was borrowed by the students at that
date. To date, there have been no material defaults by students whose loans
are guaranteed by the Company, although the program has not been in place for
a sufficient period of time to assess the overall collection rate. During
1998, this program was expanded to WIU and three additional UOP campuses.
15 <PAGE>
DEPARTMENT OF EDUCATION REVIEWS
Effective September 1, 1995, the Company, through its newly formed WIU
subsidiary, completed the acquisition of Western International University
("Western"). As previously disclosed, the Company assumed the Title IV
liabilities of Western which 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 has not been determined by the DOE at the
current time. 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 to expense.
UOP's most recent DOE program reviews and audits began in March 1997 and
the fieldwork was recently completed. Routine exit interviews with the DOE
teams indicated certain issues to be further evaluated, but the Company is
unable to quantify these matters until it receives additional information
from DOE. UOP expects to receive notification as to their results of the
program reviews and audits during 1998.
YEAR 2000 COMPLIANCE
The Company has and will continue to make certain investments in its
software systems and applications to ensure the Company is year 2000
compliant. The financial impact to the Company to ensure year 2000
compliance has not been and is not anticipated to be material to its
financial position or results of operations.
IMPACT OF INFLATION
Inflation has not had a significant impact on the Company's historical
operations.
16 <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 10.1d Modification Agreement between Apollo Group, Inc. and
Wells Fargo Bank, National Association
Exhibit 15.1 Letter on Unaudited Interim Financial Information
Exhibit 27 Financial Data Schedule
Exhibit 27.1 Restated Financial Data Schedule for the period ending
November 30, 1997
Exhibit 27.2 Restated Financial Data Schedule for the period ending
August 31, 1997
Exhibit 27.3 Restated Financial Data Schedule for the period ending
May 31, 1997
Exhibit 27.4 Restated Financial Data Schedule for the period ending
February 28, 1997
Exhibit 27.5 Restated Financial Data Schedule for the period ending
November 30, 1996
Exhibit 27.6 Restated Financial Data Schedule for the period ending
August 31, 1996
Exhibit 27.7 Restated Financial Data Schedule for the period ending
May 31, 1996
Exhibit 27.8 Restated Financial Data Schedule for the period ending
February 29, 1996
Exhibit 27.9 Restated Financial Data Schedule for the period ending
November 30, 1995
17 <PAGE>
Exhibit 27.10 Restated Financial Data Schedule for the period ending
August 31, 1995
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended February
28, 1998.
18 <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: March 26, 1998 By: /s/ Junette C. West
---------------------------------
Junette C. West
Vice President-Controller
(Chief Accounting Officer)
By: /s/ Todd S. Nelson
----------------------------------
Todd S. Nelson
President
(Duly Authorized Officer)
19 <PAGE>
APOLLO GROUP, INC. AND SUBSIDIARIES
EXHIBIT INDEX
PAGE
10.1d Modification Agreement between Apollo Group, Inc. and Filed herewith
Wells Fargo Bank, National Association
15.1 Letter on Unaudited Interim Financial Information Filed herewith
27 Financial Data Schedule Filed herewith
27.1 Restated Financial Data Schedule for the period ending Filed herewith
November 30, 1997
27.2 Restated Financial Data Schedule for the period ending Filed herewith
August 31, 1997
27.3 Restated Financial Data Schedule for the period ending Filed herewith
May 31, 1997
27.4 Restated Financial Data Schedule for the period ending Filed herewith
February 28, 1997
27.5 Restated Financial Data Schedule for the period ending Filed herewith
November 30, 1996
27.6 Restated Financial Data Schedule for the period ending Filed herewith
August 31, 1996
27.7 Restated Financial Data Schedule for the period ending Filed herewith
May 31, 1996
27.8 Restated Financial Data Schedule for the period ending Filed herewith
February 29, 1996
27.9 Restated Financial Data Schedule for the period ending Filed herewith
November 30, 1995
27.10 Restated Financial Data Schedule for the period ending Filed herewith
August 31, 1995
20 <PAGE>
MODIFICATION AGREEMENT
BY THIS MODIFICATION AGREEMENT (the "Agreement"), made and
entered into as of the 5th day of February, 1998, WELLS FARGO
BANK, NATIONAL ASSOCIATION, a national banking association, whose
address is 100 West Washington, Post Office Box 29742, MAC #4101-
251, Phoenix, Arizona 85038-9742 (hereinafter called "Lender"),
and APOLLO GROUP, INC., an Arizona corporation, whose address is
4615 East Elwood Street, Suite 400, Phoenix, Arizona 85040
(hereinafter called "Company"), in consideration of the mutual
covenants herein contained and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby confirm and agree as follows:
SECTION 1. RECITALS.
1.1 Company and Lender entered into a Loan Agreement dated
November 17, 1997 (the "Loan Agreement"), which provided for,
among other things, a revolving line of credit (the "RLC") in the
amount of $10,000,000.00, evidenced by a Revolving Promissory Note
dated November 17, 1997, executed by the Company (the "RLC Note"),
all upon the terms and conditions contained therein. All
undefined capitalized terms used herein shall have the meaning
given them in the Loan Agreement.
1.2 As of the date hereof, prior to the effect of the
modifications contained herein, the outstanding principal balance
of the RLC is $0.00. Lender has issued for the account of the
Company two (2) standby letters of credit in the amount of
$6,459.06 and $1,250,500.00, dated November 13, 1997.
1.3 Company and Lender desire to modify the Loan Documents
as set forth herein.
SECTION 2. LOAN AGREEMENT.
2.1 The following definition in Section 2.1 of the Loan
Agreement is hereby amended to read as follows:
"Maturity Date" means February 1, 2000.
SECTION 3. OTHER MODIFICATIONS, RATIFICATIONS AND AGREEMENTS.
3.1 All references to the Loan Agreement in the Loan
Documents are hereby amended to refer to the Loan Agreement as
hereby amended.
3.2 Company acknowledges that the indebtedness evidenced by
the RLC Note is just and owing, that the balance thereof is
correctly shown in the records of Lender as of the date hereof,
and Company agrees to pay the indebtedness evidenced by the RLC
Note according to the terms thereof, as herein modified.
3.3 Company hereby reaffirms to Lender each of the
representations, warranties, covenants and agreements of Company
set forth in the RLC Note and the Loan Agreement, with the same
force and effect as if each were separately stated herein and made
as of the date hereof.
3.4 Company hereby ratifies, reaffirms, acknowledges, and
agrees that the RLC Note and the Loan Agreement, represent valid,
enforceable and collectible obligations of Company, and that there
are no existing claims, defenses, personal or otherwise, or rights
of setoff whatsoever with respect to any of these documents or
instruments. In addition, Company hereby expressly waives,
releases and absolutely and forever discharges Lender and its
present and former shareholders, directors, officers, employees
and agents, and their separate and respective heirs, personal
representatives, successors and assigns, from any and all
liabilities, claims, demands, damages, action and causes of
action, whether known or unknown and whether contingent or
matured, that Company may now have, or has had prior to the date
hereof, or that may hereafter arise with respect to acts,
omissions or events occurring prior to the date hereof. To the
best of Company's knowledge, Company further acknowledges and
represents that no event has occurred and no condition exists
that, after notice or lapse of time, or both, would constitute a
default under this Agreement, the RLC Note or the Loan Agreement.
3.5 All terms, conditions and provisions of the RLC Note and
the Loan Agreement are continued in full force and effect and
shall remain unaffected and unchanged except as specifically
amended hereby. The RLC Note and the Loan Agreement, as amended
hereby, are hereby ratified and reaffirmed by Company, and Company
specifically acknowledges the validity and enforceability thereof.
SECTION 4. GENERAL.
4.1 This Agreement in no way acts as a release or
relinquishment of those rights securing payment of the RLC. Such
rights are hereby ratified, confirmed, renewed and extended by
Company in all respects.
4.2 The modifications contained herein shall not be binding
upon Lender until Lender shall have received all of the following:
(a) An original of this Agreement fully executed
by the Company.
(b) Such resolutions or authorizations and such
other documents as Lender may reasonably require
relating to the existence and good standing of the
Company and the authority of any person executing this
Agreement or other documents on behalf of the Company.
4.3 Company shall execute and deliver such additional
documents and do such other acts as Lender may reasonably require
to fully implement the intent of this Agreement.
4.4 Company shall pay all costs and expenses, including, but
not limited to, reasonable attorneys' fees incurred by Lender in
connection herewith, whether or not all of the conditions
described in Paragraph 4.2 above are satisfied. Lender, at its
option, but without any obligation to do so, may advance funds to
pay any such costs and expenses that are the obligation of the
Company, and all such funds advanced shall bear interest at the
highest rate provided in the RLC Note and shall be due and payable
upon demand.
4.5 Notwithstanding anything to the contrary contained
herein or in any other instrument executed by Company or Lender,
or in any other action or conduct undertaken by Company or Lender
on or before the date hereof, the agreements, covenants and
provisions contained herein shall constitute the only evidence of
Lender's consent to modify the terms and provisions of the Loan
Agreement. Accordingly, no express or implied consent to any
further modifications involving any of the matters set forth in
this Agreement or otherwise shall be inferred or implied by
Lender's execution of this Agreement. Further, Lender's execution
of this Agreement shall not constitute a waiver (either express or
implied) of the requirement that any further modification of the
RLC or of the RLC Note or the Loan Agreement, shall require the
express written approval of Lender; no such approval (either
express or implied) has been given as of the date hereof.
4.6 Time is hereby declared to be of the essence hereof of
the RLC, of the RLC Note and of the Loan Agreement, and Lender
requires, and Company agrees to, strict performance of each and
every covenant, condition, provision and agreement hereof, of the
RLC Note and the Loan Agreement.
4.7 This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their heirs, personal
representatives, successors and assigns.
4.8 This Agreement is made for the sole protection and
benefit of the parties hereto, and no other person or entity shall
have any right of action hereon.
4.9 This Agreement shall be governed by and construed
according to the laws of the State of Arizona.
IN WITNESS WHEREOF, these presents are executed as of the
date indicated above.
WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking association
By: /s/ Karen Maher
--------------------------------------
Name: Karen Maher
--------------------------------------
Its: Vice President
--------------------------------------
LENDER
APOLLO GROUP, INC., an Arizona corporation
By: /s/ John G. Sperling
--------------------------------------
Name: John G. Sperling
--------------------------------------
Its: President and CEO
--------------------------------------
COMPANY
Exhibit 15.1
Letter on Unaudited Interim Financial Information
March 26, 1998
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 March 20, 1998 (issued pursuant
to the provisions of Statement on Auditing Standards No. 71)
in its Registration Statements on Form S-8 (Nos. 33-87844,
33-88982, 33-88984 and 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>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<CASH> 77,319
<SECURITIES> 30,704
<RECEIVABLES> 54,986
<ALLOWANCES> 7,989
<INVENTORY> 2,997
<CURRENT-ASSETS> 163,173
<PP&E> 50,222
<DEPRECIATION> 20,194
<TOTAL-ASSETS> 265,718
<CURRENT-LIABILITIES> 85,658
<BONDS> 0
0
0
<COMMON> 68
<OTHER-SE> 165,305
<TOTAL-LIABILITY-AND-EQUITY> 265,718
<SALES> 5,803
<TOTAL-REVENUES> 175,664
<CGS> 5,888
<TOTAL-COSTS> 126,635
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,633
<INTEREST-EXPENSE> 26
<INCOME-PRETAX> 30,363
<INCOME-TAX> 12,024
<INCOME-CONTINUING> 18,339
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,339
<EPS-PRIMARY> .36
<EPS-DILUTED> .35
</TABLE>
<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>
<RESTATED>
<CIK> 0000929887
<NAME> APOLLO GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> NOV-30-1997
<CASH> 73,227
<SECURITIES> 31,851
<RECEIVABLES> 49,204
<ALLOWANCES> 7,021
<INVENTORY> 2,713
<CURRENT-ASSETS> 155,319
<PP&E> 46,064
<DEPRECIATION> 18,341
<TOTAL-ASSETS> 252,809
<CURRENT-LIABILITIES> 83,233
<BONDS> 0
0
0
<COMMON> 68
<OTHER-SE> 154,851
<TOTAL-LIABILITY-AND-EQUITY> 252,809
<SALES> 2,820
<TOTAL-REVENUES> 89,200
<CGS> 2,916
<TOTAL-COSTS> 62,429
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,906
<INTEREST-EXPENSE> 3
<INCOME-PRETAX> 17,565
<INCOME-TAX> 6,956
<INCOME-CONTINUING> 10,609
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,609
<EPS-PRIMARY> .21
<EPS-DILUTED> .20
</TABLE>
<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>
<RESTATED>
<CIK> 0000929887
<NAME> APOLLO GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<CASH> 78,855
<SECURITIES> 27,182
<RECEIVABLES> 36,561
<ALLOWANCES> 4,521
<INVENTORY> 2,220
<CURRENT-ASSETS> 143,803
<PP&E> 40,976
<DEPRECIATION> 15,725
<TOTAL-ASSETS> 194,910
<CURRENT-LIABILITIES> 67,394
<BONDS> 0
0
0
<COMMON> 67
<OTHER-SE> 124,250
<TOTAL-LIABILITY-AND-EQUITY> 194,910
<SALES> 11,703
<TOTAL-REVENUES> 283,536
<CGS> 12,019
<TOTAL-COSTS> 202,907
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,525
<INTEREST-EXPENSE> 167
<INCOME-PRETAX> 54,981
<INCOME-TAX> 21,602
<INCOME-CONTINUING> 33,379
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,379
<EPS-PRIMARY> .66
<EPS-DILUTED> .64
</TABLE>
<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>
<RESTATED>
<CIK> 0000929887
<NAME> APOLLO GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> MAY-31-1997
<CASH> 87,726
<SECURITIES> 22,308
<RECEIVABLES> 33,521
<ALLOWANCES> 4,609
<INVENTORY> 2,940
<CURRENT-ASSETS> 145,887
<PP&E> 36,823
<DEPRECIATION> 13,943
<TOTAL-ASSETS> 182,867
<CURRENT-LIABILITIES> 67,930
<BONDS> 0
0
0
<COMMON> 66
<OTHER-SE> 111,564
<TOTAL-LIABILITY-AND-EQUITY> 182,867
<SALES> 9,044
<TOTAL-REVENUES> 206,477
<CGS> 8,630
<TOTAL-COSTS> 146,732
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,878
<INTEREST-EXPENSE> 50
<INCOME-PRETAX> 39,889
<INCOME-TAX> 15,954
<INCOME-CONTINUING> 23,935
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,935
<EPS-PRIMARY> .48
<EPS-DILUTED> .46
</TABLE>
<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>
<RESTATED>
<CIK> 0000929887
<NAME> APOLLO GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> FEB-28-1997
<CASH> 79,821
<SECURITIES> 20,221
<RECEIVABLES> 33,143
<ALLOWANCES> 5,191
<INVENTORY> 3,034
<CURRENT-ASSETS> 134,543
<PP&E> 33,465
<DEPRECIATION> 12,278
<TOTAL-ASSETS> 166,638
<CURRENT-LIABILITIES> 64,802
<BONDS> 0
0
0
<COMMON> 66
<OTHER-SE> 98,292
<TOTAL-LIABILITY-AND-EQUITY> 166,638
<SALES> 5,927
<TOTAL-REVENUES> 128,635
<CGS> 5,380
<TOTAL-COSTS> 94,668
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,221
<INTEREST-EXPENSE> 30
<INCOME-PRETAX> 20,633
<INCOME-TAX> 8,252
<INCOME-CONTINUING> 12,381
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,381
<EPS-PRIMARY> .25
<EPS-DILUTED> .24
</TABLE>
<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>
<RESTATED>
<CIK> 0000929887
<NAME> APOLLO GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> NOV-30-1996
<CASH> 74,224
<SECURITIES> 14,537
<RECEIVABLES> 33,454
<ALLOWANCES> 5,574
<INVENTORY> 2,821
<CURRENT-ASSETS> 122,812
<PP&E> 31,340
<DEPRECIATION> 11,153
<TOTAL-ASSETS> 153,328
<CURRENT-LIABILITIES> 60,218
<BONDS> 0
0
0
<COMMON> 66
<OTHER-SE> 89,939
<TOTAL-LIABILITY-AND-EQUITY> 153,238
<SALES> 3,171
<TOTAL-REVENUES> 66,983
<CGS> 3,046
<TOTAL-COSTS> 47,908
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,092
<INTEREST-EXPENSE> 11
<INCOME-PRETAX> 12,148
<INCOME-TAX> 4,859
<INCOME-CONTINUING> 4,289
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,289
<EPS-PRIMARY> .15
<EPS-DILUTED> .14
</TABLE>
<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>
<RESTATED>
<CIK> 0000929887
<NAME> APOLLO GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<CASH> 63,267
<SECURITIES> 13,273
<RECEIVABLES> 29,679
<ALLOWANCES> 3,694
<INVENTORY> 3,112
<CURRENT-ASSETS> 109,141
<PP&E> 28,900
<DEPRECIATION> 9,975
<TOTAL-ASSETS> 137,850
<CURRENT-LIABILITIES> 54,804
<BONDS> 0
0
0
<COMMON> 66
<OTHER-SE> 80,548
<TOTAL-LIABILITY-AND-EQUITY> 137,850
<SALES> 9,339
<TOTAL-REVENUES> 214,275
<CGS> 9,600
<TOTAL-COSTS> 157,935
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,704
<INTEREST-EXPENSE> 77
<INCOME-PRETAX> 34,997
<INCOME-TAX> 13,605
<INCOME-CONTINUING> 21,392
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,392
<EPS-PRIMARY> .43
<EPS-DILUTED> .42
</TABLE>
<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>
<RESTATED>
<CIK> 0000929887
<NAME> APOLLO GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> MAY-31-1996
<CASH> 59,836
<SECURITIES> 11,832
<RECEIVABLES> 23,537
<ALLOWANCES> 3,665
<INVENTORY> 2,903
<CURRENT-ASSETS> 98,025
<PP&E> 25,350
<DEPRECIATION> 8,708
<TOTAL-ASSETS> 123,234
<CURRENT-LIABILITIES> 48,882
<BONDS> 0
0
0
<COMMON> 66
<OTHER-SE> 72,221
<TOTAL-LIABILITY-AND-EQUITY> 123,234
<SALES> 6,481
<TOTAL-REVENUES> 155,076
<CGS> 6,591
<TOTAL-COSTS> 113,630
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,136
<INTEREST-EXPENSE> 58
<INCOME-PRETAX> 25,505
<INCOME-TAX> 10,330
<INCOME-CONTINUING> 15,175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,175
<EPS-PRIMARY> .31
<EPS-DILUTED> .30
</TABLE>
<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>
<RESTATED>
<CIK> 0000929887
<NAME> APOLLO GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> FEB-29-1996
<CASH> 64,572
<SECURITIES> 0
<RECEIVABLES> 22,342
<ALLOWANCES> 3,628
<INVENTORY> 2,949
<CURRENT-ASSETS> 90,065
<PP&E> 24,463
<DEPRECIATION> 8,542
<TOTAL-ASSETS> 114,718
<CURRENT-LIABILITIES> 48,923
<BONDS> 0
0
0
<COMMON> 44
<OTHER-SE> 63,732
<TOTAL-LIABILITY-AND-EQUITY> 114,718
<SALES> 4,086
<TOTAL-REVENUES> 96,085
<CGS> 4,072
<TOTAL-COSTS> 72,221
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,018
<INTEREST-EXPENSE> 39
<INCOME-PRETAX> 12,564
<INCOME-TAX> 5,089
<INCOME-CONTINUING> 7,475
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,475
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
<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>
<RESTATED>
<CIK> 0000929887
<NAME> APOLLO GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> NOV-30-1995
<CASH> 63,406
<SECURITIES> 0
<RECEIVABLES> 20,822
<ALLOWANCES> 3,436
<INVENTORY> 2,813
<CURRENT-ASSETS> 87,544
<PP&E> 23,243
<DEPRECIATION> 8,400
<TOTAL-ASSETS> 108,476
<CURRENT-LIABILITIES> 46,137
<BONDS> 0
0
0
<COMMON> 29
<OTHER-SE> 60,284
<TOTAL-LIABILITY-AND-EQUITY> 108,476
<SALES> 0
<TOTAL-REVENUES> 49,727
<CGS> 1,997
<TOTAL-COSTS> 29,959
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 761
<INTEREST-EXPENSE> 20
<INCOME-PRETAX> 7,845
<INCOME-TAX> 3,256
<INCOME-CONTINUING> 4,589
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,589
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
<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>
<RESTATED>
<CIK> 0000929887
<NAME> APOLLO GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> AUG-31-1995
<CASH> 62,601
<SECURITIES> 0
<RECEIVABLES> 18,336
<ALLOWANCES> 2,453
<INVENTORY> 2,723
<CURRENT-ASSETS> 84,044
<PP&E> 21,072
<DEPRECIATION> 7,682
<TOTAL-ASSETS> 102,132
<CURRENT-LIABILITIES> 45,065
<BONDS> 0
0
0
<COMMON> 19
<OTHER-SE> 55,333
<TOTAL-LIABILITY-AND-EQUITY> 102,132
<SALES> 0
<TOTAL-REVENUES> 163,429
<CGS> 0
<TOTAL-COSTS> 123,138
<OTHER-EXPENSES> 18,462
<LOSS-PROVISION> 1,849
<INTEREST-EXPENSE> 96
<INCOME-PRETAX> 21,829
<INCOME-TAX> 9,229
<INCOME-CONTINUING> 12,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,600
<EPS-PRIMARY> .28
<EPS-DILUTED> .27
</TABLE>
