Apollo Group, Inc. Reports Fiscal 2005 Second Quarter Results.PHOENIX -- Apollo Group Apollo Group, Inc. NASDAQ: APOL is an S&P 500 corporation based in Phoenix, Arizona. Apollo Group, Inc., through its subsidiaries, provides higher education to working adults. , Inc. (Nasdaq:APOL APOL Asia Pacific Online APOL Alternate Person on Line ) today reported fiscal 2005 financial results for the second quarter ended February February: see month. 28, 2005. Net income attributed to Apollo Apollo (əpŏl`ō), in Greek religion and mythology, one of the most important Olympian gods, concerned especially with prophecy, medicine, music and poetry, archery, and various bucolic arts, particularly the care of flocks and herds. Education Group common stock for the three months ended February 28, 2005, was $87.1 million, or $.47 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to $63.0 million, or $.35 per diluted share reported for the same period last year. Net income attributed to Apollo Education Group common stock for the six months ended February 28, 2005, was $196.6 million, or $1.04 per diluted share, compared to $141.4 million, or $.79 per diluted share reported for the same period last year. Todd S Todd , Sir Alexander Robertus 1907-1997. British chemist. He won a 1957 Nobel Prize for his study of nucleic acids and nucleotide structures. . Nelson, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , said, "We are pleased with our financial performance and overall enrollment growth this quarter. While we continue to invest in lead generation, the rate of increase in selling and promotional expenses Noun 1. promotional expense - the cost of promoting a product business expense, trade expense - ordinary and necessary expenses incurred in a taxpayer's business or trade declined from 48% in the first quarter of fiscal 2005 to 38% in the second quarter of fiscal 2005. During the quarter, we experienced a positive migration from our onground campuses of students with limited previous college experience to our online program designed for these students. Results to date indicate that retention of students in this academic program, which includes more faculty contact hours, is positive. We plan to implement this program at our onground University of Phoenix campuses during the fourth quarter of fiscal 2005. We believe that this migration of students to our online program is why our online enrollment is slightly ahead of our expectations and our onground enrollment is slightly below our expectations. The second quarter proved to be a strong quarter for campus openings. The University of Phoenix entered into a new state with a campus in Des Moines, Iowa “Des Moines” redirects here. For other uses, see Des Moines (disambiguation). Des Moines (pronounced /dɪˈmɔɪn/ in English, and opened three new campuses in existing states; Richmond Richmond, cities, United States Richmond. 1 City (1990 pop. 87,425), Contra Costa co., W Calif., on San Pablo Bay, an inlet of San Francisco Bay; inc. 1905. , VA; Raleigh Raleigh (rôl`ē, räl`ē), city (1990 pop. 207,951), state capital, and seat of Wake co., central N.C.; the site was selected for the capital in 1788, and the city was laid out and inc. 1792. , NC; and Austin Austin. 1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum , TX." Mr. Nelson continued, "The board of directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: a program allocating an additional $250 million in company funds to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. shares of Apollo Education Group Class A common stock." Total consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenues for Apollo Group, Inc. for the three months ended February 28, 2005, rose 27.4% to $505.7 million, compared with $396.9 million in the second quarter of fiscal 2004. The University of Phoenix accounted for 90.8% of the $467.6 million in net tuition For tuition fees in the United Kingdom, see . Tuition means instruction, teaching or a fee charged for educational instruction especially at a formal institution of learning or by a private tutor usually in the form of one-to-one tuition. revenues from students enrolled in degree programs for the quarter ended February 28, 2005. Total consolidated revenues for Apollo Group, Inc. for the six months ended February 28, 2005, rose 28.7% to $1.041 billion, compared with $808.7 million in the same period last year. The University of Phoenix accounted for 92.5% of the $961.1 million in net tuition revenues from students enrolled in degree programs for the six months ended February 28, 2005. Consolidated net income for Apollo Group, Inc. for the three months ended February 28, 2005, increased 27.2% to $87.1 million, compared to $68.5 million for the same period last year. Consolidated net income for Apollo Group, Inc. for the six months ended February 28, 2005, increased 28.7% to $196.6 million, compared to $152.8 million for the same period last year. Consolidated degree enrollments for all of the Apollo Group, Inc. institutions at February 28, 2005, increased by 25% to 283,800 students compared to 227,800 students at February 29, 2004. Online degree enrollments at February 28, 2005, increased by 45% to 143,900 students compared to 99,500 students at February 29, 2004. Enrollments at onground campuses at February 28, 2005, increased by 9% to 140,000 students compared to 128,400 students at February 29, 2004. Business Outlook Apollo Group, Inc. --We expect revenue for the quarter ending May 31, 2005, to be between $622 million and $626 million and to be between $2.290 billion and $2.294 billion for fiscal 2005. --Operating margin is expected to be between 35.5% and 36.0% for the quarter ending May 31, 2005, and to be between 32.5% and 33.0% for fiscal 2005. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of are expected to be $.74 for the quarter ending May 31, 2005. Excluding non-cash stock-based compensation charges related to the conversion in 2004 of University of Phoenix Online stock options into Apollo Education Group Class A stock options anticipated to occur when the options vest in the fourth quarter of fiscal 2005, we are increasing our fiscal 2005 diluted earnings per share expectation from $2.42 to $2.46. The company will hold a conference call to discuss these earnings results at 11:00 AM Eastern time, 9:00 AM Phoenix time, on Tuesday Tuesday: see week. , March 29, 2005. The call may be accessed by dialing 877-292-6888 (domestic) or 706-634-1393 (internationally). The conference ID number is 3293327. A live webcast of this event may be accessed by visiting the company website at: www.apollogrp.edu See .edu. (networking) edu - ("education") The top-level domain for educational establishments in the USA (and some other countries). E.g. "mit.edu". The UK equivalent is "ac.uk". . A replay of the call will be available on our website or at 706-645-9291 (conf. ID #3293327) until April 15, 2005. Apollo Group, Inc. has been providing higher education higher education Study beyond the level of secondary education. Institutions of higher education include not only colleges and universities but also professional schools in such fields as law, theology, medicine, business, music, and art. programs to working adults for over 25 years. Apollo Group, Inc., operates through its subsidiaries: The University of Phoenix, Inc., Institute for Professional Development, The College for Financial Planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against Institutes Corporation, and Western International University, Inc. The consolidated enrollment in its educational programs makes it the largest private institution of higher education in the United States Higher education in the United States refers to colleges and universities within the United States. Overview The American university system, like the American educational system in general, is highly decentralized because the U.S. . It offers educational programs and services at 89 campuses and 150 learning centers in 39 states, Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , and Vancouver Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. , British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography . For more information about Apollo Group, Inc. and its subsidiaries, call 800-990-APOL or visit Apollo on the company website at: www.apollogrp.edu. This press release includes statements that constitute "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 (the "Reform Act"). Apollo Group, Inc. claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by the terms "may," "believes," "projects," "expects," or "anticipates," and do not reflect historical facts. Specific forward-looking statements contained in this press release relate, among other matters, to the business outlook of Apollo Group, Inc. Forward-looking statements involve risks, uncertainties, and other factors which may cause actual results, performance, or achievements of Apollo Group, Inc. to be materially different from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Factors that could affect Apollo Group, Inc.'s results and cause them to materially differ from those contained in the forward-looking statements include, without limitation: --the failure to maintain or renew required regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals, accreditation accreditation, n a process of formal recognition of a school or institution attesting to the required ability and performance in an area of education, training, or practice. , or state authorizations; --the failure to obtain authorizations from states in which University of Phoenix does not currently provide degree programs; --the failure to obtain the Higher Learning higher learning n. Education or academic accomplishment at the college or university level. Commission's approval for University of Phoenix to operate in new states; --our ability to continue to attract and retain students; --our ability to successfully manage economic conditions, including stock market volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the ; --risk factors and cautionary statements made in Apollo Group, Inc.'s Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the period ended August 31, 2004; and --other factors that Apollo Group is currently unable to identify or quantify Quantify - A performance analysis tool from Pure Software. , but may arise or become known in the future. These forward-looking statements are based on estimates, projections, beliefs, and assumptions of Apollo Group, Inc. and its management and speak only as of the date made and are not guarantees of future performance. Apollo Group, Inc. undertakes no obligation to publicly update or revise any forward-looking statements, or any facts, events, or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" that may bear upon forward-looking statements. You are advised, however, to consult any further disclosures Apollo Group, Inc. makes in its reports filed with the Securities and Exchange Commission. -Table to Follow-
APOLLO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(Unaudited)
For the Three Months For the Six Months
Ended Ended
February February February February
28, 29, 28, 29,
2005 2004 2005 2004
--------- -------- ---------- --------
(In thousands, except per
share amounts)
Revenues:
Tuition and other, net $ 505,693 $396,862 $1,040,619 $808,671
--------- -------- ---------- --------
Costs and expenses:
Instructional costs and
services 221,635 181,104 439,052 355,991
Selling and promotional 121,016 87,390 241,601 169,029
General and
administrative 23,499 20,087 44,687 40,695
--------- -------- ---------- --------
366,150 288,581 725,340 565,715
--------- -------- ---------- --------
Income from operations 139,543 108,281 315,279 242,956
Interest income and other,
net 3,855 4,574 8,417 8,731
--------- -------- ---------- --------
Income before income taxes 143,398 112,855 323,696 251,687
Provision for income taxes 56,284 44,352 127,051 98,913
--------- -------- ---------- --------
Net income $ 87,114 $ 68,503 $ 196,645 $152,774
========= ======== ========== ========
Net income attributed to:
Apollo Education Group
common stock $ 87,114 $ 63,044 $ 196,645 $141,399
========= ======== ========== ========
University of Phoenix
Online common stock $ 5,459 $ 11,375
======== ========
Earnings per share
attributed to:
Apollo Education Group
common stock:
Diluted net income per
share $ 0.47 $ 0.35 $ 1.04 $ 0.79
========= ======== ========== ========
Diluted weighted average
shares outstanding 187,007 178,924 188,419 178,825
========= ======== ========== ========
University of Phoenix
Online common stock:
Diluted net income per
share $ 0.32 $ 0.66
======== ========
Diluted weighted average shares
outstanding 17,149 17,167
======== ========
APOLLO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
February 28, August 31,
2005 2004
----------- ----------
(Dollars in thousands)
Assets:
Current assets
Cash and cash equivalents $ 7,878 $ 156,669
Restricted cash 142,049 78,413
Auction-rate securities--restricted 85,650 106,050
Marketable securities 255,442 336,193
Receivables, net 171,238 146,497
Deferred tax assets, net 11,198 10,020
Income tax receivable 14,220
Other current assets 22,946 20,842
----------- ----------
Total current assets 710,621 854,684
Property and equipment, net 234,220 213,535
Marketable securities 176,165 316,743
Cost in excess of fair value of assets
purchased, net 37,096 37,096
Deferred tax assets, net 29,296 47,520
Other assets 28,923 26,853
----------- ----------
Total assets $ 1,216,321 $1,496,431
=========== ==========
Liabilities and Shareholders' Equity:
Current liabilities
Current portion of long-term liabilities $ 13,608 $ 12,703
Accounts payable 38,174 50,895
Accrued liabilities 50,884 69,481
Income taxes payable 11,856
Student deposits and current portion of
deferred revenue 376,718 330,020
----------- ----------
Total current liabilities 479,384 474,955
Deferred tuition revenue, less current portion 470 528
Long-term liabilities, less current portion 67,730 63,807
----------- ----------
Total liabilities 547,584 539,290
----------- ----------
Commitments and contingencies
Shareholders' equity
Preferred stock, no par value, 1,000,000
shares authorized; none issued
Apollo Education Group Class A nonvoting
common stock, no par value, 400,000,000
shares authorized; 181,944,000 and
187,567,000 issued and outstanding
at February 28, 2005 and August 31, 2004,
respectively 103 103
Apollo Education Group Class B voting common
stock, no par value, 3,000,000 shares
authorized; 477,000 issued and outstanding
at February 28, 2005 and August 31, 2004 1 1
Additional paid-in capital 28,787
Apollo Education Group Class A treasury stock,
at cost, 6,058,000 shares at February 28, 2005 (445,184)
Retained earnings 1,114,738 928,815
Accumulated other comprehensive loss (921) (565)
----------- ----------
Total shareholders' equity 668,737 957,141
----------- ----------
Total liabilities and shareholders' equity $ 1,216,321 $1,496,431
=========== ==========
APOLLO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months
Ended
February February
28, 29,
2005 2004
--------- ---------
(In thousands)
Cash flows provided by (used for) operating
activities:
Net income $ 196,645 $ 152,774
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 25,093 21,241
Amortization of investment premiums 2,196 3,026
Provision for uncollectible accounts 18,919 13,788
Deferred income taxes 17,046 (3,872)
Tax benefits of stock options exercised 24,430 28,395
Cash received for tenant improvements 1,263 1,314
Changes in assets and liabilities
Restricted cash (63,636) (23,909)
Receivables (43,660) (22,259)
Other assets (4,132) (2,589)
Accounts payable and accrued liabilities (30,112) 10,193
Income taxes (26,076) 4,264
Student deposits and deferred revenue 46,640 49,343
Other liabilities 1,689 1,787
--------- ---------
Net cash provided by operating activities 166,305 233,496
--------- ---------
Cash flows provided by (used for) investing
activities:
Net additions to property and equipment (43,897) (29,538)
Purchase of land and buildings related to
future Online expansion (28,428)
Purchase of marketable securities (18,961) (486,145)
Maturities of marketable securities 238,094 293,402
Purchase of auction-rate securities--restricted (46,000) (31,000)
Maturities of auction-rate securities--
restricted 66,400 24,160
Purchase of other assets (1,253) (1,606)
--------- ---------
Net cash provided by (used for) investing
activities 194,383 (259,155)
--------- ---------
Cash flows provided by (used for) financing
activities:
Purchase of Apollo Education Group Class A
common stock (542,988) (20,843)
Issuance of Apollo Education Group Class A
common stock 33,865 26,476
Purchase of University of Phoenix Online common
stock (17,175)
Issuance of University of Phoenix Online common
stock 10,927
--------- ---------
Net cash used for financing activities (509,123) (615)
--------- ---------
Currency translation loss (356) (151)
--------- ---------
Net decrease in cash and cash equivalents (148,791) (26,425)
Cash and cash equivalents at beginning of period 156,669 52,383
--------- ---------
Cash and cash equivalents at end of period $ 7,878 $ 25,958
========= =========
Supplemental disclosure of non-cash investing
activities
Tenant improvement allowances $ 7,795 $ 9,366
This press release includes statements which may constitute forward-looking statements made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. 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. |
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