Apollo Group Inc : Apollo Group, Inc. Reports Fiscal Year 2012 Third Quarter Results
06/25/2012| 04:10pm US/Eastern
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Apollo Group, Inc. (NASDAQ: APOL) ("Apollo Group," "Apollo" or the
"Company") today reported financial results for the three and nine
months ended May 31, 2012.
Third Quarter 2012 Highlights
Net revenue of $1,130.8 million, with net income attributable to
Apollo of $134.0 million
Earnings per share attributable to Apollo of $1.13 per share, or $1.20
per share excluding special items
University of Phoenix Degreed Enrollment at 346,300 and New Degreed
Enrollment at 51,500
Launched initial release of Phoenix
Career Services?, an innovative approach, including an online
career portal, to support student success and the Company's commitment
to connect education to careers
"We are focused on delivering the best possible experience and service
to support working adults, to address workforce needs, and to strengthen
the connection to careers for our students," said Apollo Group Co-Chief
Executive Officer Chas Edelstein. "Evaluating key touch points, we are
creating programs and support services that allow our students to focus
on learning, experiencing achievements along the way to help inspire
them and enhance their long-term outcomes."
Apollo Group Co-Chief Executive Officer and Apollo Global Chairman Greg
Cappelli added, "We are committed to being part of the solution to
empower our country by providing access to affordable education and
helping students develop the skills they need to succeed. We are
investing in innovation to create new and better ways, enhanced by
technology, to support adult learners and to connect our students'
academic path to their career aspirations."
Unaudited Third Quarter of Fiscal Year 2012
Results of Operations
Net revenue for the third quarter of fiscal year 2012 totaled $1,130.8
million, which represents an 8.5% decrease compared to the third quarter
of fiscal year 2011. The decrease was the result of a 9.1% decrease in
University of Phoenix net revenue, due principally to lower University
of Phoenix enrollment, partially offset by selective tuition price and
other fee changes. For the quarter, University of Phoenix Degreed
Enrollment decreased 13.1% to 346,300. New Degreed Enrollment decreased
8.0%, or 5.3% adjusting for available start dates, as compared to the
third quarter of fiscal year 2011.
The Company reported income from continuing operations attributable to
Apollo Group for the three months ended May 31, 2012, of $134.0 million,
or $1.13 per share (118.8 million weighted average diluted shares
outstanding), compared to income from continuing operations attributable
to Apollo Group of $211.9 million, or $1.51 per share (140.3 million
weighted average diluted shares outstanding) for the three months ended
May 31, 2011.
Results for the third quarter of fiscal year 2012 included the following:
Restructuring and other charges of $7.6 million ($5.4 million net of
tax and the portion attributable to noncontrolling interests)
associated with a series of restructuring activities to reengineer
business processes and refine the Company's educational delivery
structure in order to increase operating efficiencies and
effectiveness, and enhance students' educational experience and
outcomes.
Litigation charge of $4.7 million ($2.9 million net of tax) reflecting
a rejected settlement offer made by the Company and estimated future
legal costs that may be incurred in connection with that legal matter.
Results for the third quarter of fiscal year 2011 included the following:
A $2.0 million charge ($1.2 million net of tax) related to the Policeman's
Annuity and Benefit Fund of Chicago securities class action
lawsuit.
A $9.6 million tax benefit resulting from the resolution with the
Internal Revenue Service regarding the deductibility of payments made
to settle a lawsuit in fiscal year 2010.
Excluding the special items noted above, income from continuing
operations attributable to Apollo Group for the three months ended May
31, 2012, was $142.3 million, or $1.20 per share, compared to income
from continuing operations attributable to Apollo Group of $203.5
million, or $1.45 per share for the three months ended May 31, 2011.
(See the reconciliation of GAAP financial information to non-GAAP
financial information in the tables section of this press release.)
Operating Expenses
Instructional and student advisory increased $12.0 million, or 2.6%, to
$470.1 million in the third quarter of fiscal year 2012 compared to the
third quarter of fiscal year 2011, which represents a 450 basis point
increase as a percentage of net revenue. The expense increase was
primarily related to the Company's initiatives, including technology, to
more effectively support students and improve their educational
outcomes. This was partially offset by a decrease in costs that are more
variable in nature such as faculty and certain advisory functions.
Marketing decreased $2.2 million, or 1.3%, to $158.9 million in the
third quarter of fiscal year 2012 compared to the third quarter of
fiscal year 2011, which represents a 110 basis point increase as a
percentage of net revenue. The decrease in expense was principally
attributable to lower advertising costs, offset by costs attributable to
establishing relationships with employers and community colleges.
Admissions advisory decreased $4.6 million, or 4.6%, to $95.3 million in
the third quarter of fiscal year 2012 compared to the third quarter of
fiscal year 2011, which represents a 30 basis point increase as a
percentage of net revenue. While admissions advisory headcount
decreased, the cost savings was partially offset by higher average
employee compensation costs.
General and administrative increased $0.2 million, or 0.3%, to $88.1
million in the third quarter of fiscal year 2012 compared to the third
quarter of fiscal year 2011, which represents a 70 basis point increase
as a percentage of net revenue.
Depreciation and amortization increased $4.0 million, or 9.8%, to $45.2
million in the third quarter of fiscal year 2012 compared to the third
quarter of fiscal year 2011, which represents a 70 basis point increase
as a percentage of net revenue. The increase was principally
attributable to $3.1 million of intangible asset amortization in the
third quarter of fiscal year 2012 as a result of acquiring Carnegie
Learning in the first quarter of fiscal year 2012.
Provision for uncollectible accounts receivable ("bad debt expense")
decreased $3.8 million, or 9.7%, to $35.4 million in the third quarter
of fiscal year 2012 compared to the third quarter of fiscal year 2011,
which represents a 10 basis point decrease as a percentage of net
revenue. The decrease was primarily attributable to reductions in gross
accounts receivable principally resulting from decreases in University
of Phoenix Degreed Enrollment.
Financial and Operating Metrics
Below are Apollo Group's unaudited financial data and operating metrics
for the third quarter of fiscal year 2012 versus the prior-year period.
Q3 2012
Q3 2011
Revenues (in thousands)
Degree Seeking Gross Revenues(1)
$
1,063,755
$
1,166,880
Less: Discounts and other
(65,173
)
(66,888
)
Degree Seeking Net Revenues(1)
998,582
1,099,992
Non-degree Seeking Revenues(2)
10,648
11,365
Other, net of discounts(3)
121,578
124,480
$
1,130,808
$
1,235,837
Revenue by Degree Type (in thousands)(1)
Associate's
$
269,566
$
356,344
Bachelor's
600,823
592,258
Master's
170,041
194,365
Doctoral
23,325
23,913
Less: Discounts and other
(65,173
)
(66,888
)
$
998,582
$
1,099,992
Degreed Enrollment (rounded to hundreds)(4)
Associate's
112,100
147,900
Bachelor's
178,300
184,500
Master's
48,900
58,500
Doctoral
7,000
7,500
346,300
398,400
Degree Seeking Gross Revenues per Degreed Enrollment(1), (4)
Associate's
$
2,405
$
2,409
Bachelor's
3,370
3,210
Master's
3,477
3,322
Doctoral
3,332
3,188
All degrees (after discounts)
$
2,884
$
2,761
New Degreed Enrollment (rounded to hundreds)(5)
Associate's
21,400
23,400
Bachelor's
22,100
24,000
Master's
7,400
7,900
Doctoral
600
700
51,500
56,000
(1) Represents revenue from tuition and other fees for
students enrolled in University of Phoenix degree programs. Also
includes revenue from tuition and other fees for students
participating in University of Phoenix certificate programs of at
least 18 credits in length with some course applicability into a
related degree program.
(2) Represents revenue from tuition and other fees for
students participating in University of Phoenix certificate programs
less than 18 credits in length, certificate programs with no
applicability into a related degree program, single course and
continuing education courses.
(3) Represents revenues from IPD, CFFP, Apollo Global --
BPP, Apollo Global -- Other and Other.
(4) Represents:
- students enrolled in a University of Phoenix 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 (for example, a
graduate of the associate's degree program returns for a
bachelor's degree or a bachelor's degree graduate returns for a
master's degree); and
- students participating in certain certificate programs of at
least 18 credits with some course applicability into a related
degree program.
(5) Represents:
- new students and students who have been out of attendance for
more than 12 months who enroll in a University of Phoenix 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.
Unaudited First Nine Months of Fiscal Year 2012
Results of Operations
Net revenue for the first nine months of fiscal year 2012 totaled $3.3
billion, which represents a 9.2% decrease compared to the first nine
months of fiscal year 2011. The decrease in net revenue was primarily
attributable to University of Phoenix's 9.7% decrease in net revenue
principally due to lower University of Phoenix enrollment, partially
offset by selective tuition price and other fee changes. In the first
nine months of fiscal year 2012, University of Phoenix's Average Degreed
Enrollment decreased 15.0% as compared to the first nine months of
fiscal year 2011. The Company reported income from continuing operations
attributable to Apollo Group for the nine months ended May 31, 2012, of
$347.2 million, or $2.77 per share, (125.3 million weighted average
diluted shares outstanding), and $381.3 million, or $2.66 per share,
(143.2 million weighted average diluted shares outstanding) for the nine
months ended May 31, 2011.
Results for the first nine months of fiscal year 2012 included the
following:
Restructuring and other charges of $29.3 million ($18.7 million net of
tax and the portion attributable to noncontrolling interests)
primarily associated with a real estate rationalization plan and other
restructuring activities to reengineer business processes and refine
the Company's educational delivery structure in order to increase
operating efficiencies and effectiveness, and enhance our students'
educational experience and outcomes.
Goodwill and other intangible asset impairment charges of $16.8
million at the UNIACC subsidiary of Apollo Global ($14.4 million net
of the portion attributable to noncontrolling interests). The Company
did not record a tax benefit associated with the goodwill and other
intangible asset impairment, as they are not deductible for tax
purposes.
Litigation charge of $4.7 million ($2.9 million net of tax) reflecting
a rejected settlement offer made by the Company and estimated future
legal costs that may be incurred in connection with that legal matter.
Results for the first nine months of fiscal year 2011 included the
following:
Goodwill and other intangible asset impairment charges of $219.9
million for the BPP subsidiary of Apollo Global ($188.3 million net of
the portion attributable to noncontrolling interests). The Company did
not record a tax benefit associated with the goodwill portion of the
impairment charge, as it is not deductible for tax purposes.
$4.5 million of charges related to the Policeman's Annuity and
Benefit Fund of Chicago securities class action lawsuit.
Restructuring and other charges of $3.8 million associated with a
strategic reduction in force, primarily at University of Phoenix.
A $9.6 million tax benefit resulting from the resolution with the
Internal Revenue Service regarding the deductibility of payments made
to settle a lawsuit in fiscal year 2010 and $7.7 million of tax
benefits, net of noncontrolling interests, associated with the charges
noted above.
Excluding the special items noted above, income from continuing
operations attributable to Apollo Group for the nine months ended May
31, 2012, was $383.3 million, or $3.06 per share, compared to income
from continuing operations attributable to Apollo Group of $560.6
million, or $3.91 per share for the nine months ended May 31, 2011. (See
the reconciliation of GAAP financial information to non-GAAP financial
information in the tables section of this press release.)
Unaudited Balance Sheet
As of May 31, 2012, the Company's cash and cash equivalents, excluding
restricted cash, totaled $602.1 million, compared to $1,571.7 million as
of August 31, 2011. The decrease was primarily attributable to share
repurchases, payments on borrowings, capital expenditures, and the
purchase of Carnegie Learning, partially offset by cash generated from
operations.
As of May 31, 2012, accounts receivable decreased to $191.7 million from
$215.6 million at August 31, 2011. Excluding accounts receivable and the
related net revenue for Apollo Global, the Company's days sales
outstanding was 20 days as of May 31, 2012, as compared to 23 days as of
August 31, 2011 and May 31, 2011.
Total debt outstanding (including short-term borrowings and the current
portion of long-term debt) decreased by $473.0 million to $126.0 million
as of May 31, 2012, from $599.0 million as of August 31, 2011 due to the
repayment of borrowings.
Share Repurchases
The Company repurchased approximately 9.0 million and 17.1 million
shares of its common stock at a weighted average purchase price of
$36.41 and $43.02 per share for a total cost of $329.0 million and
$736.0 million during the three and nine months ended May 31, 2012,
respectively. Additionally, subsequent to May 31, 2012, the Company
repurchased approximately 0.5 million shares at a total cost of $15.0
million, resulting in $48.5 million remaining of the current share
repurchase authorization.
Business Outlook
The Company offers the following commentary regarding the outlook for
fiscal year 2012 based on the business trends observed during the third
quarter of fiscal year 2012, as well as management's current
expectations of future trends.
Net revenue of $4.2-$4.3 billion; and
Operating income, excluding the impact of special items, of $700-$740
million.
Conference Call Information
The Company will hold a conference call to discuss these earnings
results at 5:00 p.m. Eastern, 2:00 p.m. Phoenix time, today, Monday,
June 25, 2012.
A live webcast of this event may be accessed by visiting the Company's
website at www.apollogrp.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 July 9, 2012.
Apollo Group, Inc. is one of the world's largest private education
providers and has been in the education business for more than 35 years.
The Company offers innovative and distinctive educational programs and
services both online and on-campus at the undergraduate, master's and
doctoral levels through its subsidiaries: University of Phoenix, Apollo
Global, Institute for Professional Development and College for Financial
Planning. The Company offers programs and services throughout the United
States and in Latin America and Europe, as well as online throughout the
world.
For more information about Apollo Group, Inc. and its subsidiaries, call
(800) 990-APOL or visit the Company's website at www.apollogrp.edu.
Forward-Looking Statements Safe Harbor
Statements about Apollo Group and its business in this release which are
not statements of historical fact, including statements regarding Apollo
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) changes in the overall U.S. or global economy, (ii) the
impact of increased competition from traditional public universities and
proprietary educational institutions, (iii) the impact of changes in
marketing channels and other recruiting practices to better identify
students who are more likely to succeed at University of Phoenix, (iv)
the impact of the Company's restructuring initiatives to increase
operating efficiency and better align its operations with its business
strategy, (v) changes in enrollment or student mix, (vi) the impact of
the Company's initiatives to improve the student experience, (vii)
changes in law or regulation affecting the Company's eligibility to
participate in or the manner in which it participates in U.S. federal
and state student financial aid programs, and (viii) changes in the
Company's business necessary to remain in compliance with existing, new,
or amended U.S. federal student financial aid program regulations,
including the so-called 90/10 Rule and the limitations on cohort default
rates, and to remain in compliance with the accrediting criteria of the
relevant accrediting bodies. 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 Group's Form 10-K for fiscal year 2011 and
subsequent Forms 10-Q, and other filings with the Securities and
Exchange Commission, all of which are available on the Company's website
at www.apollogrp.edu.
Use of Non-GAAP Financial Information
This press release and the related conference call contain non-GAAP
financial measures, which 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.
Apollo Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
As of
($ in thousands)
May 31, 2012
August 31, 2011
ASSETS:
Current assets
Cash and cash equivalents
$
602,144
$
1,571,664
Restricted cash and cash equivalents
353,884
379,407
Accounts receivable, net
191,665
215,567
Prepaid taxes
35,595
35,629
Deferred tax assets, current portion
58,084
124,137
Other current assets
42,732
44,382
Total current assets
1,284,104
2,370,786
Property and equipment, net
559,497
553,027
Marketable securities
5,946
5,946
Goodwill
148,218
133,297
Intangible assets, net
160,562
121,117
Deferred tax assets, less current portion
86,784
70,949
Other assets
24,833
14,584
Total assets
$
2,269,944
$
3,269,706
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities
Short-term borrowings and current portion of long-term debt
$
35,827
$
419,318
Accounts payable
58,710
69,551
Student deposits
387,188
424,045
Deferred revenue
260,167
293,436
Accrued and other current liabilities
311,219
448,937
Total current liabilities
1,053,111
1,655,287
Long-term debt
90,167
179,691
Deferred tax liabilities
21,599
26,400
Other long-term liabilities
203,637
164,339
Total liabilities
1,368,514
2,025,717
Commitments and contingencies
Shareholders' equity
Preferred stock, no par value
--
--
Apollo Group Class A nonvoting common stock, no par value
103
103
Apollo Group Class B voting common stock, no par value
1
1
Additional paid-in capital
103,528
68,724
Apollo Group Class A treasury stock, at cost
(3,835,973
)
(3,125,175
)
Retained earnings
4,667,702
4,320,472
Accumulated other comprehensive loss
(31,673
)
(23,761
)
Total Apollo shareholders' equity
903,688
1,240,364
Noncontrolling (deficit) interests
(2,258
)
3,625
Total equity
901,430
1,243,989
Total liabilities and shareholders' equity
$
2,269,944
$
3,269,706
Apollo Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended May 31,
% of Net Revenue
2012
2011
2012
2011
(In thousands, except per share data)
Net revenue
$
1,130,808
$
1,235,837
100.0
%
100.0
%
Costs and expenses:
Instructional and student advisory
470,112
458,145
41.6
%
37.1
%
Marketing
158,881
161,034
14.1
%
13.0
%
Admissions advisory
95,290
99,923
8.4
%
8.1
%
General and administrative
88,084
87,857
7.8
%
7.1
%
Depreciation and amortization
45,155
41,125
4.0
%
3.3
%
Provision for uncollectible accounts receivable
35,430
39,217
3.1
%
3.2
%
Restructuring and other charges
7,577
--
0.7
%
--
%
Litigation charge
4,725
2,048
0.4
%
0.2
%
Total costs and expenses
905,254
889,349
80.1
%
72.0
%
Operating income
225,554
346,488
19.9
%
28.0
%
Interest income
219
867
--
%
0.1
%
Interest expense
(2,830
)
(2,383
)
(0.2
)%
(0.2
)%
Other, net
(402
)
(1,862
)
--
%
(0.1
)%
Income from continuing operations before income taxes
222,541
343,110
19.7
%
27.8
%
Provision for income taxes
(88,159
)
(130,385
)
(7.8
)%
(10.6
)%
Income from continuing operations
134,382
212,725
11.9
%
17.2
%
Income from discontinued operations, net of tax
--
540
--
%
0.1
%
Net income
134,382
213,265
11.9
%
17.3
%
Net income attributable to noncontrolling interests
(348
)
(825
)
--
%
(0.1
)%
Net income attributable to Apollo
$
134,034
$
212,440
11.9
%
17.2
%
Earnings per share -- Basic:
Continuing operations attributable to Apollo
$
1.13
$
1.52
Discontinued operations attributable to Apollo
--
--
Basic income per share attributable to Apollo
$
1.13
$
1.52
Earnings per share -- Diluted:
Continuing operations attributable to Apollo
$
1.13
$
1.51
Discontinued operations attributable to Apollo
--
--
Diluted income per share attributable to Apollo
$
1.13
$
1.51
Basic weighted average shares outstanding
118,134
139,856
Diluted weighted average shares outstanding
118,793
140,343
Apollo Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
Nine Months Ended May 31,
% of Net Revenue
2012
2011
2012
2011
(In thousands, except per share data)
Net revenue
$
3,279,050
$
3,610,901
100.0
%
100.0
%
Costs and expenses:
Instructional and student advisory
1,356,409
1,335,601
41.4
%
37.0
%
Marketing
483,980
484,392
14.7
%
13.4
%
Admissions advisory
298,083
315,958
9.1
%
8.8
%
General and administrative
252,028
257,075
7.7
%
7.1
%
Depreciation and amortization
133,438
117,369
4.1
%
3.3
%
Provision for uncollectible accounts receivable
108,009
141,666
3.3
%
3.9
%
Restructuring and other charges
29,287
3,846
0.9
%
0.1
%
Goodwill and other intangibles impairment
16,788
219,927
0.5
%
6.1
%
Litigation charge
4,725
4,503
0.1
%
0.1
%
Total costs and expenses
2,682,747
2,880,337
81.8
%
79.8
%
Operating income
596,303
730,564
18.2
%
20.2
%
Interest income
1,085
2,635
--
%
0.1
%
Interest expense
(6,618
)
(6,207
)
(0.2
)%
(0.2
)%
Other, net
(44
)
(1,603
)
--
%
--
%
Income from continuing operations before income taxes
590,726
725,389
18.0
%
20.1
%
Provision for income taxes
(247,889
)
(376,016
)
(7.5
)%
(10.4
)%
Income from continuing operations
342,837
349,373
10.5
%
9.7
%
Income from discontinued operations, net of tax
--
2,487
--
%
--
%
Net income
342,837
351,860
10.5
%
9.7
%
Net loss attributable to noncontrolling interests
4,393
31,955
0.1
%
0.9
%
Net income attributable to Apollo
$
347,230
$
383,815
10.6
%
10.6
%
Earnings per share -- Basic:
Continuing operations attributable to Apollo
$
2.79
$
2.67
Discontinued operations attributable to Apollo
--
0.02
Basic income per share attributable to Apollo
$
2.79
$
2.69
Earnings per share -- Diluted:
Continuing operations attributable to Apollo
$
2.77
$
2.66
Discontinued operations attributable to Apollo
--
0.02
Diluted income per share attributable to Apollo
$
2.77
$
2.68
Basic weighted average shares outstanding
124,560
142,845
Diluted weighted average shares outstanding
125,335
143,222
Apollo Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows From Continuing
and Discontinued Operations
(Unaudited)
Nine Months Ended May 31,
2012
2011
($ in thousands)
Cash flows provided by (used in) operating activities:
Net income
$
342,837
$
351,860
Adjustments to reconcile net income to net cash provided by
operating activities:
Share-based compensation
59,438
50,453
Excess tax benefits from share-based compensation
(1,137
)
(1,214
)
Depreciation and amortization
133,438
117,369
Amortization of lease incentives
(11,604
)
(10,523
)
Amortization of deferred gains on sale-leasebacks
(2,098
)
(1,491
)
Goodwill and other intangibles impairment
16,788
219,927
Non-cash foreign currency loss, net
173
1,767
Provision for uncollectible accounts receivable
108,009
141,666
Litigation charge
4,725
4,503
Deferred income taxes
31,386
(3,327
)
Changes in assets and liabilities, excluding the impact of business
acquisition and disposition:
Restricted cash and cash equivalents
25,523
67,658
Accounts receivable
(85,788
)
(81,215
)
Prepaid taxes
6
21,218
Other assets
(6,260
)
(13,955
)
Accounts payable
(8,174
)
(12,440
)
Student deposits
(35,215
)
(89,944
)
Deferred revenue
(32,667
)
(60,763
)
Accrued and other liabilities
(123,605
)
47,003
Net cash provided by operating activities
415,775
748,552
Cash flows provided by (used in) investing activities:
Additions to property and equipment
(85,702
)
(119,726
)
Maturities of marketable securities
--
10,000
Acquisition, net of cash acquired
(73,736
)
--
Proceeds from sale-leaseback, net
--
169,018
Proceeds from disposition
3,285
9,612
Collateralization of letter of credit
--
126,615
Other investing activities
(1,694
)
--
Net cash (used in) provided by investing activities
(157,847
)
195,519
Cash flows provided by (used in) financing activities:
Payments on borrowings
(508,449
)
(425,325
)
Proceeds from borrowings
2,437
11,682
Apollo Group Class A common stock purchased for treasury
(731,772
)
(408,220
)
Issuance of Apollo Group Class A common stock
10,521
10,240
Noncontrolling interest contributions
--
6,875
Excess tax benefits from share-based compensation
1,137
1,214
Net cash used in financing activities
(1,226,126
)
(803,534
)
Exchange rate effect on cash and cash equivalents
(1,322
)
1,040
Net (decrease) increase in cash and cash equivalents
(969,520
)
141,577
Cash and cash equivalents, beginning of period
1,571,664
1,284,769
Cash and cash equivalents, end of period
$
602,144
$
1,426,346
Supplemental disclosure of cash flow and non-cash information
Cash paid for income taxes, net of refunds
$
211,500
$
326,999
Cash paid for interest
$
7,178
$
8,063
Capital lease additions
$
26,906
$
14,693
Credits received for tenant improvements
$
24,856
$
12,047
Restricted stock units vested and released
$
16,926
$
3,614
Acquired technology
$
14,389
$
--
Unsettled share repurchases
$
10,244
$
11,802
Apollo Group, Inc. and Subsidiaries
Reconciliation of GAAP financial information to non-GAAP
financial information
(Unaudited)
Three Months Ended May 31,
Nine Months Ended May 31,
2012
2011
2012
2011
(In thousands, except per share data)
Net income attributable to Apollo, as reported
$
134,034
$
212,440
$
347,230
$
383,815
Income from discontinued operations, net of tax
--
540
--
2,487
Income from continuing operations attributable to Apollo
134,034
211,900
347,230
381,328
Reconciling items:
Restructuring and other charges, net of noncontrolling interest(1)
7,191
--
28,901
3,846
Litigation charge(2)
4,725
2,048
4,725
4,503
Goodwill and other intangibles impairment, net of noncontrolling
interest(3)
--
--
14,370
188,258
11,916
2,048
47,996
196,607
Less: tax effects
(3,664
)
(801
)
(11,954
)
(7,715
)
Tax benefit from IRS settlement(4)
--
(9,646
)
--
(9,646
)
Income from continuing operations attributable to Apollo, adjusted
to exclude special items
$
142,286
$
203,501
$
383,272
$
560,574
Diluted income per share from continuing operations attributable to
Apollo, as reported
$
1.13
$
1.51
$
2.77
$
2.66
Diluted income per share from continuing operations attributable to
Apollo, adjusted to exclude special items
$
1.20
$
1.45
$
3.06
$
3.91
Diluted weighted average shares outstanding
118,793
140,343
125,335
143,222
(1) Restructuring and other charges represents charges
associated with the Company's series of restructuring activities to
reengineer business processes and refine the Company's educational
delivery structure. The charges for the three and nine months ended
May 31, 2012 include $2.3 million of costs associated with a
reduction in force at UNIACC, net of noncontrolling interest.
(2) The charges for the three and nine months ended May
31, 2012 represent a rejected settlement offer the Company made in
connection with a legal matter and estimated future legal costs that
the Company may incur in this matter. The charges for the three and
nine months ended May 31, 2011 are associated with the
Policeman's Annuity and Benefit Fund of Chicago securities class
action.
(3) The charges for the nine months ended May 31, 2012
represent impairments of UNIACC's goodwill and other intangibles,
net of noncontrolling interest, with no income tax benefit as
UNIACC's goodwill and other intangibles are not deductible for tax
purposes. The charges for the nine months ended May 31, 2011
represent impairments of BPP's goodwill and other intangibles, net
of noncontrolling interest. The Company did not record a tax benefit
associated with BPP's goodwill impairment because the goodwill is
not deductible for tax purposes.
(4) The $9.6 million tax benefit for the three and nine
months ended May 31, 2011 resulted from resolution with the Internal
Revenue Service regarding the deductibility of payments made to
settle a lawsuit in fiscal year 2010.
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