Apollo Group Inc. Reports Fiscal 2004 Second Quarter Results.Business Editors/Education Writers PHOENIX--(BUSINESS WIRE)--March 12, 2004 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. today reported fiscal 2004 financial results for 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 (Nasdaq:APOL APOL Asia Pacific Online APOL Alternate Person on Line ) and University of Phoenix Online (Nasdaq:UOPX UOPX University of Phoenix ) for the second quarter ended Feb. 29, 2004. Net income attributed to Apollo Education Group for the three months ended Feb. 29, 200, was $63.0 million, or $.35 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 $42.6 million, or $.24 per diluted share, reported for the same period last year. Net income attributed to University of Phoenix Online for the three months ended Feb. 29, 2004, was $5.5 million, or $.32 per diluted share, compared to $3.1 million or $.19 per diluted share, reported for the same period last year. Net income attributed to Apollo Education Group for the six months ended Feb. 29, 2004, was $141.4 million, or $.79 per diluted share, compared to $96.4 million, or $.54 per diluted share, reported for the same period last year. Net income attributed to University of Phoenix Online for the six months ended Feb. 29, 2004, was $11.4 million, or $.66 per diluted share, compared to $6.0 million or $.37 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, president 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 the strong financial performance this quarter. We are also pleased to see continued strong growth in enrollments, both local and online. We also reached a new milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. in enrollment at University of Phoenix, exceeding the 200,000 mark." 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 Feb. 29, 2004, rose 34.4% to $396.9 million, compared with $295.2 million in the second quarter of fiscal 2003. The University of Phoenix accounted for 95.5% of the $372.2 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 Feb. 29, 2004. Total revenues for University of Phoenix Online for the three months ended Feb. 29, 2004, rose 57.4% to $184.1 million, compared with $117.0 million in the second quarter of fiscal 2003. Total consolidated revenues for Apollo Group Inc. for the six months ended Feb. 29, 2004, rose 33.9% to $808.7 million, compared with $604.1 million in the same period last year. The University of Phoenix accounted for 95.2% of the $759.8 million in net tuition revenues from students enrolled in degree programs for the six months ended Feb. 29, 2004. Total revenues for University of Phoenix Online for the six months ended Feb. 29, 2004, rose 59.3% to $361.8 million, compared with $227.2 million in the same period last year. Consolidated net income for Apollo Group Inc. for the three months ended Feb. 29, 2004, increased 49.9% to $68.5 million, compared to $45.7 million for the same period last year. Net income for University of Phoenix Online for the three months ended Feb. 29, 2004, increased 70.0% to $38.0 million, compared to $22.4 million for the same period last year. Consolidated net income for Apollo Group Inc. for the six months ended Feb. 29, 2004, increased 49.2% to $152.8 million, compared to $102.4 million for the same period last year. Net income for University of Phoenix Online for the six months ended Feb. 29, 2004, increased 78.7% to $79.2 million, compared to $44.3 million for the same period last year. Net cash provided by operating activities for Apollo Group Inc. for the three months ended Feb. 29, 2004, was $91.1 million, compared to $73.3 million for the three months ended Feb. 28, 2003. Net additions to property and equipment for Apollo Group Inc. for the three months ended Feb. 29, 2004, were $30.7 million, compared to $15.1 million for the three months ended Feb. 28, 2003. Net cash provided by operating activities for Apollo Group Inc. for the six months ended Feb. 29, 2004, was $225.3 million, compared to $151.1 million for the six months ended Feb. 28, 2003. Net additions to property and equipment for Apollo Group Inc. for the six months ended Feb. 29, 2004, were $56.7 million, compared to $29.2 million for the six months ended Feb. 28, 2003. Consolidated degree enrollments for all of the Apollo Group Inc. institutions at Feb. 29, 2004, increased by 29.0% to 227,800 students compared to 176,700 students at Feb. 28, 2003. Degree enrollments at The University of Phoenix (excluding University of Phoenix Online) were 101,900 students at Feb. 29, 2004, compared to 89,300 students at Feb. 28, 2003, representing a 14.1% increase. Degree enrollments for University of Phoenix Online at Feb. 29, 2004, increased by 57.8% to 99,500 students compared to 63,000 students at Feb. 28, 2003. Business Outlook Apollo Group Inc. -- We expect revenue for the quarter ending May 31, 2004, to be between $476 million and $479 million and to be between $1.770 billion and $1.773 billion for fiscal 2004. -- Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: is expected to be between 32.0% and 32.5% for the quarter ending May 31, 2004, and to be between 30.5% and 31.0% for fiscal 2004. University of Phoenix Online -- We expect revenue for the quarter ending May 31, 2004, to be between $221 million and $222 million and to be between $820 million and $821 million for fiscal 2004. -- Operating margin is expected to be between 35.5% and 36.0% for the quarter ending May 31, 2004, and to be between 35.0% and 35.5% for fiscal 2004. For the quarter ending May 31, 2004, 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 attributed to Apollo Education Group are expected to be $.50 and diluted earnings per share attributed to University of Phoenix Online are expected to be $.40. For fiscal 2004, diluted earnings per share attributed to Apollo Education Group are expected to be $1.77 and diluted earnings per share attributed to University of Phoenix Online are expected to be $1.47. Based on lead flow, we expect degree enrollments at The University of Phoenix (excluding University of Phoenix Online) to continue to grow between 12% and 14% over the prior year at the end of the third quarter of fiscal 2004. We expect University of Phoenix Online degree enrollments to continue to grow 50% over the prior year at the end of the third quarter of fiscal 2004. 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 more than 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 Corp. 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 75 campuses and 125 learning centers in 38 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 . Combined degree enrollment was 227,800 students as of Feb. 29, 2004. 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 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". . 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. and University of Phoenix Online. Forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of Apollo Group Inc. and University of Phoenix Online 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 or University of Phoenix Online's results and cause them to materially differ from those contained in the forward-looking statements include: -- 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; -- any adverse changes in student enrollment; -- 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 Aug. 31, 2003; 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
SELECTED FINANCIAL AND OPERATING DATA
(Dollars in thousands, except per share amounts)
For the Three For the Six
Months Ended Months Ended
February 29 and 28, February 29 and 28,
2004 2003 2004 2003
-------------------- -------------------
(Unaudited)
Revenues:
Tuition and other, net $396,862 $295,181 $808,671 $604,078
---------- --------- --------- ---------
Costs and expenses:
Instructional costs and
services 181,104 143,249 355,991 285,352
Selling and promotional 87,390 64,485 169,029 124,811
General and administrative 20,087 16,702 40,695 32,849
---------- --------- --------- ---------
288,581 224,436 565,715 443,012
---------- --------- --------- ---------
Income from operations 108,281 70,745 242,956 161,066
Interest income, net 4,574 3,509 8,731 7,043
---------- --------- --------- ---------
Income before income taxes 112,855 74,254 251,687 168,109
Provision for income taxes 44,352 28,568 98,913 65,734
---------- --------- --------- ---------
Net income $68,503 $45,686 $152,774 $102,375
========== ========= ========= =========
Net income attributed to:
Apollo Education Group common
stock $63,044 $42,607 $141,399 $96,377
========== ========= ========= =========
University of Phoenix Online
common stock $5,459 $3,079 $11,375 $5,998
========== ========= ========= =========
Earnings per share attributed
to:
Apollo Education Group common
stock:
Diluted net income per share $0.35 $0.24 $0.79 $0.54
========== ========= ========= =========
Diluted weighted average
shares outstanding 178,924 177,309 178,825 177,096
========== ========= ========= =========
University of Phoenix Online
common stock:
Diluted net income per share $0.32 $0.19 $0.66 $0.37
========== ========= ========= =========
Diluted weighted average
shares outstanding 17,149 16,395 17,167 16,190
========== ========= ========= =========
At February 29 and 28,
2004 2003
----------------------
OPERATING DATA
Students enrolled in degree
programs 227,800 176,700
Number of locations:
Campuses 75 66
Learning Centers 125 117
---------- ---------
200 183
========== =========
APOLLO GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
February 29, August 31,
2004 2003
------------- -------------
(Unaudited)
Assets:
Current assets
Cash and cash equivalents $461,597 $416,452
Restricted cash 178,365 147,616
Marketable securities 286,181 235,962
Receivables, net 132,199 123,728
Deferred tax assets, net 10,093 9,098
Income taxes receivable 842
Other current assets 17,829 16,545
------------- -------------
Total current assets 1,086,264 950,243
Property and equipment, net 153,953 119,057
Marketable securities 313,700 245,772
Cost in excess of fair value of assets
purchased, net 37,096 37,096
Deferred tax assets, net 4,032 1,155
Other assets 26,927 24,881
------------- -------------
Total assets $1,621,972 $1,378,204
============= =============
Liabilities and Shareholders' Equity:
Current liabilities
Current portion of long-term
liabilities $3,231 $3,231
Accounts payable 28,562 29,314
Accrued liabilities 60,470 49,525
Income taxes payable 3,422
Student deposits and current portion
of deferred tuition revenue 302,779 253,153
------------- -------------
Total current liabilities 398,464 335,223
Deferred tuition revenue, less current
portion 659 942
Long-term liabilities, less current
portion 15,521 15,114
------------- -------------
Total liabilities 414,644 351,279
------------- -------------
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; 175,988,000
and 175,286,000 issued and outstanding at
February 29, 2004 and August 31, 2003,
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 29, 2004 and
August 31, 2003 1 1
University of Phoenix Online nonvoting
common stock, no par value, 400,000,000
shares authorized; 15,960,000 and
15,659,000 issued and outstanding at
February 29, 2004 and August 31, 2003,
respectively
Additional paid-in capital 338,070 293,650
Apollo Education Group Class A treasury
stock, at cost, 1,402,000 and 2,103,000
shares at February 29, 2004 and August 31,
2003, respectively (31,166) (27,100)
University of Phoenix Online treasury
stock, at cost, 253,000 and 86,000 shares
at February 29, 2004 and August 31, 2003,
respectively (17,175) (4,601)
Retained earnings 917,970 765,196
Accumulated other comprehensive income
(loss) (475) (324)
------------- -------------
Total shareholders' equity 1,207,328 1,026,925
------------- -------------
Total liabilities and shareholders' equity $1,621,972 $1,378,204
============= =============
APOLLO GROUP INC. AND SUBSIDIARIES
DEGREE ENROLLMENTS
February 29 and 28,
2004 2003
------------------------
University of Phoenix:
Campuses established prior to February 1999 180,202 138,270
Campuses established after February 1999 21,179 14,108
------------ -----------
Total University of Phoenix 201,381 152,378
------------ -----------
Institute for Professional Development 23,275 21,672
Western International University 2,304 1,986
College for Financial Planning 887 619
------------ -----------
Total Degree Enrollment 227,847 176,655
============ ===========
UNIVERSITY OF PHOENIX ONLINE
SELECTED FINANCIAL DATA
(in thousands)
For the Three For the Six
Months Ended Months Ended
February 29 and 28, February 29 and 28,
2004 2003 2004 2003
-------------------- -------------------
(Unaudited)
Revenues:
Tuition and other, net $184,066 $116,976 $361,820 $227,167
---------- --------- --------- ---------
Costs and expenses:
Instructional costs and
services 70,665 47,608 136,396 90,559
Selling and promotional 43,084 27,055 79,571 53,280
General and administrative 8,712 6,171 17,184 11,678
---------- --------- --------- ---------
122,461 80,834 233,151 155,517
---------- --------- --------- ---------
Income from operations 61,605 36,142 128,669 71,650
Interest income, net 1,538 998 2,967 2,020
---------- --------- --------- ---------
Income before income taxes 63,143 37,140 131,636 73,670
Provision for income taxes 25,131 14,782 52,391 29,321
---------- --------- --------- ---------
Net income $38,012 $22,358 $79,245 $44,349
========== ========= ========= =========
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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