APOLLO EDUCATION GROUP INC Apollo Education Group, Inc. (NASDAQ: APOL) today reported financial results for the three and six months ended February 28, 2015, with second quarter revenue of $578.6 million and a $0.31 diluted loss per share, or $0.10 loss per share, excluding special items.
“While we faced challenges in the second quarter, we believe Apollo Education Group has the right long-term strategy in place,” said Greg Cappelli, Chief Executive Officer, Apollo Education Group. “In a time of unprecedented change in the higher education industry, we are focused on enhancing outcomes through a deep understanding of student and employer needs. This includes differentiating University of Phoenix through its program-based colleges and diversifying our organization with the expansion of Apollo Global and other targeted growth initiatives. We are aligning education to careers, offering students tangible skills and helping employers develop a high-performance workforce.”
Second Quarter 2015 Results of Operations
Apollo Education Group (the “Company”) reported net revenue for the second quarter 2015 of $578.6 million, compared to $672.8 million for the second quarter 2014. Second quarter 2015 University of Phoenix New Degreed Enrollment was 28,300 and Degreed Enrollment was 213,800. Operating loss for the second quarter 2015 was $54.5 million, compared to operating income of $10.3 million for the second quarter 2014. Loss from continuing operations attributable to Apollo Education Group for the second quarter 2015 was $33.6 million, or $0.31 per share, compared to income of $16.6 million, or $0.15 per share for the prior year second quarter.
Excluding special items, operating loss was $17.1 million for the second quarter 2015, compared to operating income of $47.5 million for the second quarter 2014, and loss from continuing operations attributable to Apollo Education Group for the second quarter 2015 was $10.4 million, or $0.10 per share, compared to income of $34.1 million, or $0.30 per share, for the second quarter 2014. (Special items for the second quarter 2015 and 2014 are included in the reconciliation of GAAP to non-GAAP financial information tables of this press release.)
First Six Months of 2015 Results of Operations
Net revenue for the first six months of fiscal year 2015 totaled $1.3 billion, compared to $1.5 billion in the first six months of fiscal year 2014. In the first six months of 2015, University of Phoenix Average Degreed Enrollment was 224,900. Operating income for the first six months of 2015 was $6.0 million, compared to $180.7 million in the prior year period. Income from continuing operations attributable to Apollo Education Group for the first six months of 2015 was $0.2 million, or $0.00 per share, compared to $115.9 million, or $1.02 per share, for the first six months of 2014.
Excluding special items, operating income was $65.6 million for the first six months of 2015, compared to $249.8 million for the first six months of 2014, and income attributable to Apollo Education Group for the first six months of 2015, was $37.4 million, or $0.34 per share, compared to $153.2 million, or $1.35 per share, for the first six months of 2014. (Special items for the first six months of 2015 and 2014 are included in the reconciliation of GAAP to non-GAAP financial information tables of this press release.)
Balance Sheet and Cash Flow
As of February 28, 2015, the Company’s unrestricted cash and cash equivalents and short-term marketable securities totaled $759.8 million, compared to $1.4 billion as of August 31, 2014. The decrease was primarily attributable to $595.4 million of net payments on borrowings, $43.3 million for capital expenditures, $38.7 million of share repurchases (which includes $2.2 million of share repurchases for tax withholding requirements on restricted stock units), $34.5 million paid for contingent consideration, and $21.2 million for acquisitions. These items were partially offset by cash provided by operations.
Total debt outstanding (including short-term borrowings and the current portion of long-term debt) was $60.8 million as of February 28, 2015.
Business Outlook
The Company offers the following outlook for fiscal year 2015 based on the business trends observed during the second quarter of fiscal year 2015, as well as management’s current expectations of future trends.
- Net revenue of $2.63 to $2.68 billion; and
- Operating income of $200 to $230 million, excluding the impact of special items.
The Company also provides the following outlook for the third quarter of fiscal year 2015.
- Net revenue of $690 to $705 million; and
- Operating income of $85 to $95 million, excluding the impact of special items
Conference Call Information
The Company will hold a conference call to discuss these earnings results at 8:30 a.m. (ET), 5:30 a.m. (MT), today, Wednesday, March 25, 2015.
Dial-In Numbers:
877-292-6888
(Domestic)
973-200-3381 (International)
Conference ID: 86330045
A live webcast of this event may be accessed by visiting the Company’s website at www.apollo.edu. A webcast replay will be available approximately one hour following the conclusion of the call at the same link.
A telephone replay will be available approximately two hours following the conclusion of the call until April 1, 2015.
Dial-In Numbers:
855-859-2056
(Domestic)
404-537-3406 (International)
Conference ID: 86330045
About Apollo Education Group, Inc.
Apollo Education Group, Inc. is one of the world’s largest private education providers, serving students since 1973. Through its subsidiaries, Apollo Education Group offers undergraduate, graduate, professional development and other nondegree educational programs and services, online and on-campus principally to working learners. Its educational programs and services are offered throughout the United States and in Europe, Australia, Latin America, Africa and Asia, as well as online throughout the world.
For more information about Apollo Education Group, Inc. and its subsidiaries, call (800) 990-APOL or visit the Company’s website at www.apollo.edu.
| Apollo Education Group, Inc. and Subsidiaries | ||||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||||||||||
| (In thousands, except per share data) | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
| Net revenue | $ | 578,572 | $ | 672,754 | $ | 1,297,624 | $ | 1,520,902 | ||||||||||||
| Costs and expenses: | ||||||||||||||||||||
| Instructional and student advisory | 293,073 | 316,577 | 617,337 | 653,779 | ||||||||||||||||
| Marketing | 127,421 | 139,272 | 256,214 | 273,101 | ||||||||||||||||
| Admissions advisory | 57,840 | 53,121 | 114,925 | 102,819 | ||||||||||||||||
| General and administrative | 70,598 | 67,275 | 142,965 | 142,054 | ||||||||||||||||
| Depreciation and amortization | 34,819 | 37,465 | 71,223 | 73,803 | ||||||||||||||||
| Provision for uncollectible accounts receivable | 11,969 | 11,534 | 29,367 | 25,512 | ||||||||||||||||
| Restructuring and impairment charges | 35,536 | 15,209 | 54,564 | 47,172 | ||||||||||||||||
| Acquisition and other related costs | 1,742 | 13,005 | 4,961 | 13,005 | ||||||||||||||||
| Litigation charges | 100 | 9,000 | 100 | 9,000 | ||||||||||||||||
| Total costs and expenses | 633,098 | 662,458 | 1,291,656 | 1,340,245 | ||||||||||||||||
| Operating (loss) income | (54,526 | ) | 10,296 | 5,968 | 180,657 | |||||||||||||||
| Interest income | 740 | 599 | 1,329 | 1,167 | ||||||||||||||||
| Interest expense | (1,739 | ) | (1,983 | ) | (3,401 | ) | (4,069 | ) | ||||||||||||
| Other (loss) income, net | (1,146 | ) | 107 | (2,431 | ) | 914 | ||||||||||||||
| (Loss) income from continuing operations before income taxes | (56,671 | ) | 9,019 | 1,465 | 178,669 | |||||||||||||||
| Benefit from (provision for) income taxes | 20,533 | 5,130 | (5,134 | ) | (65,088 | ) | ||||||||||||||
| (Loss) income from continuing operations | (36,138 | ) | 14,149 | (3,669 | ) | 113,581 | ||||||||||||||
| Loss from discontinued operations, net of tax | — | (1,972 | ) | — | (2,363 | ) | ||||||||||||||
| Net (loss) income | (36,138 | ) | 12,177 | (3,669 | ) | 111,218 | ||||||||||||||
| Net loss attributable to noncontrolling interests | 2,528 | 2,428 | 3,844 | 2,278 | ||||||||||||||||
| Net (loss) income attributable to Apollo | $ | (33,610 | ) | $ | 14,605 | $ | 175 | $ | 113,496 | |||||||||||
| Earnings (loss) per share - Basic: | ||||||||||||||||||||
| Continuing operations attributable to Apollo | $ | (0.31 | ) | $ | 0.15 | $ | — | $ | 1.03 | |||||||||||
| Discontinued operations attributable to Apollo | — | (0.02 | ) | — | (0.02 | ) | ||||||||||||||
| Basic (loss) income per share attributable to Apollo | $ | (0.31 | ) | $ | 0.13 | $ | — | $ | 1.01 | |||||||||||
| Earnings (loss) per share - Diluted: | ||||||||||||||||||||
| Continuing operations attributable to Apollo | $ | (0.31 | ) | $ | 0.15 | $ | — | $ | 1.02 | |||||||||||
| Discontinued operations attributable to Apollo | — | (0.02 | ) | — | (0.02 | ) | ||||||||||||||
| Diluted (loss) income per share attributable to Apollo | $ | (0.31 | ) | $ | 0.13 | $ | — | $ | 1.00 | |||||||||||
| Basic weighted average shares outstanding | 108,166 | 112,151 | 108,375 | 112,742 | ||||||||||||||||
| Diluted weighted average shares outstanding | 108,166 | 113,380 | 109,337 | 113,676 | ||||||||||||||||
| Apollo Education Group, Inc. and Subsidiaries | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
(Unaudited) | ||||||||||
| As of | ||||||||||
| ($ in thousands) | February 28, |
August 31, | ||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 566,078 | $ | 1,228,813 | ||||||
| Restricted cash and cash equivalents | 224,987 | 224,135 | ||||||||
| Marketable securities | 193,745 | 187,472 | ||||||||
| Accounts receivable, net | 235,453 | 225,398 | ||||||||
| Prepaid taxes | 55,113 | 34,006 | ||||||||
| Deferred tax assets | 82,018 | 83,871 | ||||||||
| Other current assets | 55,344 | 58,855 | ||||||||
| Total current assets | 1,412,738 | 2,042,550 | ||||||||
| Marketable securities | 75,096 | 87,811 | ||||||||
| Property and equipment, net | 402,920 | 435,733 | ||||||||
| Goodwill | 248,632 | 259,901 | ||||||||
| Intangible assets, net | 167,768 | 189,365 | ||||||||
| Deferred tax assets | 50,400 | 37,335 | ||||||||
| Other assets | 48,387 | 40,240 | ||||||||
| Total assets | $ | 2,405,941 | $ | 3,092,935 | ||||||
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Short-term borrowings and current portion of long-term debt | $ | 15,664 | $ | 609,506 | ||||||
| Accounts payable | 72,294 | 63,907 | ||||||||
| Student deposits | 262,387 | 280,562 | ||||||||
| Deferred revenue | 261,428 | 225,818 | ||||||||
| Accrued and other current liabilities | 308,181 | 363,607 | ||||||||
| Total current liabilities | 919,954 | 1,543,400 | ||||||||
| Long-term debt | 45,157 | 47,590 | ||||||||
| Deferred tax liabilities | 25,715 | 22,674 | ||||||||
| Other long-term liabilities | 225,884 | 233,942 | ||||||||
| Total liabilities | 1,216,710 | 1,847,606 | ||||||||
| Commitments and contingencies | ||||||||||
| Redeemable noncontrolling interests | 55,621 | 64,527 | ||||||||
| Shareholders’ equity: | ||||||||||
| Preferred stock, no par value | — | — | ||||||||
| Apollo Class A nonvoting common stock, no par value | 103 | 103 | ||||||||
| Apollo Class B voting common stock, no par value | 1 | 1 | ||||||||
| Additional paid-in capital | — | — | ||||||||
| Apollo Class A treasury stock, at cost | (3,965,057 | ) | (3,936,607 | ) | ||||||
| Retained earnings | 5,152,466 | 5,143,949 | ||||||||
| Accumulated other comprehensive loss | (54,574 | ) | (27,320 | ) | ||||||
| Total Apollo shareholders’ equity | 1,132,939 | 1,180,126 | ||||||||
| Noncontrolling interests | 671 | 676 | ||||||||
| Total equity | 1,133,610 | 1,180,802 | ||||||||
| Total liabilities, redeemable noncontrolling interests and shareholders’ equity | $ | 2,405,941 | $ | 3,092,935 | ||||||
| Apollo Education Group, Inc. and Subsidiaries | ||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
(Unaudited) | ||||||||||
Six Months Ended | ||||||||||
| ($ in thousands) | 2015 | 2014 | ||||||||
| Operating activities: | ||||||||||
| Net (loss) income | $ | (3,669 | ) | $ | 111,218 | |||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||
| Share-based compensation | 21,914 | 22,510 | ||||||||
| Excess tax benefits from share-based compensation | (236 | ) | — | |||||||
| Depreciation and amortization | 71,223 | 73,803 | ||||||||
| Accelerated depreciation included in restructuring | 4,272 | 4,316 | ||||||||
| Loss (gain) on asset dispositions and impairment charges, net | 21,228 | (1,984 | ) | |||||||
| Non-cash foreign currency loss, net | 1,362 | 596 | ||||||||
| Provision for uncollectible accounts receivable | 29,367 | 25,512 | ||||||||
| Deferred income taxes | (10,434 | ) | (6,255 | ) | ||||||
| Changes in assets and liabilities, excluding the impact of acquisitions and disposition: | ||||||||||
| Restricted cash and cash equivalents | (1,002 | ) | (24,165 | ) | ||||||
| Accounts receivable | (51,199 | ) | (6,469 | ) | ||||||
| Prepaid taxes | (21,440 | ) | 15,230 | |||||||
| Other assets | (3,771 | ) | (11,445 | ) | ||||||
| Accounts payable | 7,870 | (11,454 | ) | |||||||
| Student deposits | (15,873 | ) | 17,409 | |||||||
| Deferred revenue | 47,821 | 32,881 | ||||||||
| Accrued and other liabilities | (42,320 | ) | (48,219 | ) | ||||||
| Net cash provided by operating activities | 55,113 | 193,484 | ||||||||
| Investing activities: | ||||||||||
| Purchases of property and equipment | (43,310 | ) | (58,119 | ) | ||||||
| Purchases of marketable securities | (109,544 | ) | (227,978 | ) | ||||||
| Maturities and sales of marketable securities | 113,651 | 105,237 | ||||||||
| Acquisitions, net of cash acquired | (21,166 | ) | (94,937 | ) | ||||||
| Other | 467 | 3,446 | ||||||||
| Net cash used in investing activities | (59,902 | ) | (272,351 | ) | ||||||
| Financing activities: | ||||||||||
| Payments on borrowings | (599,925 | ) | (619,268 | ) | ||||||
| Proceeds from borrowings | 4,515 | — | ||||||||
| Share repurchases | (38,718 | ) | (72,237 | ) | ||||||
| Share reissuances | 995 | 1,793 | ||||||||
| Excess tax benefits from share-based compensation | 236 | — | ||||||||
| Payment for contingent consideration | (21,371 | ) | — | |||||||
| Net cash used in financing activities | (654,268 | ) | (689,712 | ) | ||||||
| Exchange rate effect on cash and cash equivalents | (3,678 | ) | 34 | |||||||
| Net decrease in cash and cash equivalents | (662,735 | ) | (768,545 | ) | ||||||
| Cash and cash equivalents, beginning of period | 1,228,813 | 1,414,485 | ||||||||
| Cash and cash equivalents, end of period | $ | 566,078 | $ | 645,940 | ||||||
| Supplemental disclosure of cash flow and non-cash information: | ||||||||||
| Cash paid for income taxes, net of refunds | $ | 37,346 | $ | 70,868 | ||||||
| Cash paid for interest | 3,514 | 3,911 | ||||||||
| Restricted stock units vested and released | 6,255 | 7,104 | ||||||||
| Unsettled share repurchases | 1,600 | — | ||||||||
| Apollo Education Group, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||
| Segment Data and University of Phoenix Operating Metrics | ||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended February 28, | |||||||||||||||||||||||||||||||||||||||||||||
| ($ in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||||||||
| Net revenue: | ||||||||||||||||||||||||||||||||||||||||||||||
| University of Phoenix: | ||||||||||||||||||||||||||||||||||||||||||||||
| Degree seeking gross revenues(1) | $ | 542,139 | $ | 642,994 | $ | 1,199,305 | $ | 1,440,734 | ||||||||||||||||||||||||||||||||||||||
| Less: Discounts and other | (64,159 | ) | (58,136 | ) | (139,953 | ) | (120,697 | ) | ||||||||||||||||||||||||||||||||||||||
| Degree seeking net revenues(1) | 477,980 | 584,858 | 1,059,352 | 1,320,037 | ||||||||||||||||||||||||||||||||||||||||||
| Other revenues | 9,789 | 9,223 | 21,270 | 18,907 | ||||||||||||||||||||||||||||||||||||||||||
| Total University of Phoenix | 487,769 | 594,081 | 1,080,622 | 1,338,944 | ||||||||||||||||||||||||||||||||||||||||||
| Apollo Global | 81,100 | 68,634 | 196,240 | 159,793 | ||||||||||||||||||||||||||||||||||||||||||
| Other | 9,703 | 10,039 | 20,762 | 22,165 | ||||||||||||||||||||||||||||||||||||||||||
| Net revenue | $ | 578,572 | $ | 672,754 | $ | 1,297,624 | $ | 1,520,902 | ||||||||||||||||||||||||||||||||||||||
| Operating (loss) income: | ||||||||||||||||||||||||||||||||||||||||||||||
| University of Phoenix | $ | 1,350 | $ | 86,682 | $ | 94,861 | $ | 270,155 | ||||||||||||||||||||||||||||||||||||||
| Apollo Global | (27,541 | ) | (40,004 | ) | (32,383 | ) | (37,787 | ) | ||||||||||||||||||||||||||||||||||||||
| Other | (28,335 | ) | (36,382 | ) | (56,510 | ) | (51,711 | ) | ||||||||||||||||||||||||||||||||||||||
| Operating (loss) income | $ | (54,526 | ) | $ | 10,296 | $ | 5,968 | $ | 180,657 | |||||||||||||||||||||||||||||||||||||
| (1) Represents revenue from tuition and other fees for students enrolled in University of Phoenix degree programs or certificate programs of at least 18 credits in length with some course applicability into a related degree program. | ||||||||||||||||||||||||||||||||||||||||||||||
University of Phoenix Enrollment Data: | ||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
| (Rounded to the nearest hundred, except per degreed enrollment) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||||||||||||||||||||||||||
| Degreed Enrollment(1) | 213,800 | 250,300 | (14.6 | )% | Average Degreed Enrollment(3) | 224,900 | 260,800 | (13.8 | )% | |||||||||||||||||||||||||||||||||||||
| New Degreed Enrollment(2) | 28,300 | 32,500 | (12.9 | )% | ||||||||||||||||||||||||||||||||||||||||||
| Degree seeking net revenues per degreed enrollment | $ | 2,236 | $ | 2,337 | ||||||||||||||||||||||||||||||||||||||||||
| (1) Represents students enrolled in a degree program who attended a credit bearing course during the quarter and had not graduated as of the end of the quarter; students who previously graduated from one degree program and started a new degree program in the quarter (e.g., a graduate of an associate’s degree program returns for a bachelor’s degree); and students participating in certain certificate programs of at least 18 credits with some course applicability into a related degree program. | ||||||||||||||||||||||||||||||||||||||||||||||
| (2) Represents new students and students who have been out of attendance for more than 12 months who enroll in a degree program and start a credit bearing course in the quarter; students who have previously graduated from a degree program and start a new degree program in the quarter; and students who commence participation in certain certificate programs of at least 18 credits with some course applicability into a related degree program. | ||||||||||||||||||||||||||||||||||||||||||||||
| (3) Represents the average of quarterly Degreed Enrollment from the beginning to the end of the respective periods. | ||||||||||||||||||||||||||||||||||||||||||||||
| Apollo Education Group, Inc. and Subsidiaries | ||||||||||||||||||||||||
| Reconciliation of GAAP Financial Information to Non-GAAP Financial Information | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Consolidated Financial Information Reconciliation |
Three Months Ended |
Six Months Ended | ||||||||||||||||||||||
| (In thousands, except per share data) | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||
| Operating (loss) income | $ | (54,526 | ) | $ | 10,296 | $ | 5,968 | $ | 180,657 | |||||||||||||||
| (Loss) income from continuing operations before income taxes | $ | (56,671 | ) | $ | 9,019 | $ | 1,465 | $ | 178,669 | |||||||||||||||
| Benefit from (provision for) income taxes | $ | 20,533 | $ | 5,130 | $ | (5,134 | ) | $ | (65,088 | ) | ||||||||||||||
| Net (loss) income attributable to Apollo | $ | (33,610 | ) | $ | 14,605 | $ | 175 | $ | 113,496 | |||||||||||||||
| Loss from discontinued operations, net of tax | — | 1,972 | — | 2,363 | ||||||||||||||||||||
| (Loss) income from continuing operations attributable to Apollo | $ | (33,610 | ) | $ | 16,577 | $ | 175 | $ | 115,859 | |||||||||||||||
| Diluted (loss) income per share from continuing operations attributable to Apollo | $ | (0.31 | ) | $ | 0.15 | $ | — | $ | 1.02 | |||||||||||||||
| Special items: | ||||||||||||||||||||||||
| Restructuring and impairment charges | $ | 35,536 | $ | 15,209 | $ | 54,564 | $ | 47,172 | ||||||||||||||||
| Acquisition and other related costs | 1,742 | 13,005 | 4,961 | 13,005 | ||||||||||||||||||||
| Litigation charges | 100 | 9,000 | 100 | 9,000 | ||||||||||||||||||||
| Special items before income taxes | 37,378 | 37,214 | 59,625 | 69,177 | ||||||||||||||||||||
| Less: income tax effects of special items | (14,128 | ) | (9,508 | ) | (22,358 | ) | (21,648 | ) | ||||||||||||||||
| Tax benefit from Internal Revenue Service settlement | — | (10,176 | ) | — | (10,176 | ) | ||||||||||||||||||
| Special items, net of income tax | $ | 23,250 | $ | 17,530 | $ | 37,267 | $ | 37,353 | ||||||||||||||||
| Excluding special items: | ||||||||||||||||||||||||
| Operating (loss) income | $ | (17,148 | ) | $ | 47,510 | $ | 65,593 | $ | 249,834 | |||||||||||||||
| (Loss) income from continuing operations before income taxes | $ | (19,293 | ) | $ | 46,233 | $ | 61,090 | $ | 247,846 | |||||||||||||||
| Benefit from (provision for) income taxes | $ | 6,405 | $ | (14,554 | ) | $ | (27,492 | ) | $ | (96,912 | ) | |||||||||||||
| (Loss) income from continuing operations attributable to Apollo | $ | (10,360 | ) | $ | 34,107 | $ | 37,442 | $ | 153,212 | |||||||||||||||
| Diluted (loss) income per share from continuing operations attributable to Apollo | $ | (0.10 | ) | $ | 0.30 | $ | 0.34 | $ | 1.35 | |||||||||||||||
Apollo Global Financial Information Reconciliation |
Three Months Ended |
Six Months Ended | ||||||||||||||||||||||
| ($ in thousands)
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||
|
Apollo Global operating loss:
| $(27,541 | ) | $ | (40,004 | ) | $ | (32,383 | ) | $ | (37,787 | ) | |||||||||||||
|
Depreciation and amortization
| 9,678 | 9,007 | 20,149 | 15,366 | ||||||||||||||||||||
|
Acquisition and other related costs
| 1,012 | 12,997 | 2,698 | 12,997 | ||||||||||||||||||||
|
Restructuring and impairment charges
| 43 | 304 | 101 | 1,567 | ||||||||||||||||||||
| Adjusted Apollo Global Operating Loss (1), (2)
| $(16,808 | ) | $ | (17,696 | ) | $ | (9,435 | ) | $ | (7,857 | ) | |||||||||||||
| (1) Excluding losses from Open Colleges, Adjusted Apollo Global Operating Loss would have been $13.5 million and $12.1 million for the three months ended February 28, 2015 and 2014, respectively. The Adjusted Apollo Global Operating Loss would have been $3.2 million and $2.2 million for the six months ended February 28, 2015 and 2014, respectively. |
| (2) Open Colleges’ educational offerings generally extend beyond one year and the associated revenue is recognized over the contractual period that students are provided access to complete their program, or the time period it takes students to complete their program, as applicable. However, Open Colleges’ operating costs are period costs that are expensed as incurred and a substantial portion are incurred before, or soon after, the students begin their programs. Accordingly, as a result of Open Colleges’ enrollment growth, service model, and cost structure, Apollo Global’s operating results are negatively impacted in the near term. However, these factors do not have the same adverse impact on cash flows generated from Open Colleges. Additionally, Apollo Global’s deferred revenue has increased substantially following the Open Colleges’ acquisition, and we expect its deferred revenue to continue to increase. Apollo Global’s deferred revenue was approximately $177 million and $115 million as of February 28, 2015 and 2014, respectively. |
Use of Non-GAAP Financial Information
The Company’s non-GAAP financial measures are intended to supplement, but not substitute for, the most directly comparable GAAP measures. Management uses, and chooses to disclose to investors, these non-GAAP financial measures because: (i) such measures provide an additional analytical tool to clarify the Company’s results from operations and help to identify underlying trends in its results of operations; (ii) as to the non-GAAP earnings measures, such measures help compare the Company’s performance on a consistent basis across time periods; and (iii) these non-GAAP measures are employed by the Company’s management in its own evaluation of performance and are utilized in financial and operational decision-making processes, such as budgeting and forecasting. Exclusion of items in the non-GAAP presentation should not be construed as an inference that these items are unusual, infrequent or non-recurring. Other companies, including other companies in the education industry, may calculate non-GAAP financial measures differently, limiting their usefulness as a comparative measure across companies.
Adjusted Apollo Global Operating Loss excludes depreciation and amortization and certain other items and is intended to provide an indicator of Apollo Global’s operating performance across time periods due to the impact of acquisitions.
Forward-Looking Statements Safe Harbor
Statements about Apollo Education Group and its business in this release which are not statements of historical fact, including statements regarding Apollo Education Group’s future strategy and plans and commentary regarding future results of operations and prospects, are forward-looking statements and are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current information and expectations and involve a number of risks and uncertainties. Actual plans implemented and actual results achieved may differ materially from those set forth in or implied by such statements due to various factors, including without limitation: (i) the impact of increased competition from traditional public universities and proprietary educational institutions; (ii) the impact on retention from the technical challenges experienced in implementing the new University of Phoenix online student classroom; (iii) the costs and effectiveness of University of Phoenix initiatives to improve student retention, improve student outcomes and demonstrate a compelling and cost effective relationship between a student’s education and career; (iv) changes in law or regulation affecting the University of Phoenix’s eligibility to participate in or the manner in which it participates in U.S. federal and state student financial aid programs, including the recent Department of Education regulations relating to gainful employment, future changes that may be included in the reauthorization of the federal Higher Education Act and the Department of Education’s proposed regulation relating to state authorization; (v) any adverse impact on University of Phoenix’s business arising from the Notice sanction imposed by the University’s principal accreditor, and any associated impact on the University’s pending recertification by the U.S. Department of Education for participation in Title IV student financial aid programs; (vi) the impact of the Company’s ongoing restructuring and cost-reduction initiatives; (vii) the impact of any reduction in financial aid available to students, including active and retired military personnel, due to the U.S. government deficit reduction proposals, debt ceiling limitations, budget sequestration or otherwise; (viii) changes in University of Phoenix enrollment or student mix; and (ix) unexpected expenses or other challenges in integrating acquired businesses, consumer or regulatory impact arising from consummation of such acquisitions, and unexpected changes or developments in the acquired businesses. For a discussion of the various factors that may cause actual plans implemented and actual results achieved to differ materially from those set forth in the forward-looking statements, please refer to the risk factors and other disclosures contained in Apollo Education Group’s Form 10-K for fiscal year 2014, and other filings with the Securities and Exchange Commission which are available at www.apollo.edu.
