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. We offer innovative and distinctive educational programs and services both online and on-campus at the undergraduate, graduate and doctoral levels through our wholly-owned subsidiaries:
• The University of Phoenix, Inc. (“University of Phoenix”);
• Western International University, Inc. (“Western International University”);
• Institute for Professional Development (“IPD”);
• The College for Financial Planning Institutes Corporation (“CFFP”); and
• Meritus University, Inc. (“Meritus”).
In addition to these wholly-owned subsidiaries, in October 2007, we formed a joint venture with The Carlyle Group (“Carlyle”), called Apollo Global, Inc. (“Apollo Global”), to pursue investments primarily in the international education services industry. Apollo Group currently owns 86.1% of Apollo Global, with Carlyle owning the remaining 13.9%. As of August 31, 2009, total cash contributions made to Apollo Global were approximately $511.8 million, of which $440.5 million was funded by us. Apollo Global is consolidated in our financial statements. Apollo Global has completed the following acquisitions:
• BPP Holdings plc (“BPP”) in the United Kingdom,
• Universidad de Artes, Ciencias y Comunicación (“UNIACC”) in Chile, and
• Universidad Latinoamericana (“ULA”) in Mexico.
University of Phoenix. University of Phoenix has been accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools since 1978 and holds other programmatic accreditations. University of Phoenix offers associate’s, bachelor’s, master’s and doctoral degrees in a variety of program areas. University of Phoenix offers its educational programs worldwide through its online education delivery system and at its campus locations and learning centers in 39 states and the District of Columbia, and Puerto Rico. University of Phoenix’s online programs are designed to provide uniformity with University of Phoenix’s on-campus operations, which enhances University of Phoenix’s ability to expand into new markets while maintaining academic quality. University of Phoenix has customized computer programs for academic quality management, faculty recruitment and training, student tracking and marketing, which we believe provides us with a competitive advantage. University of Phoenix’s net revenue represented approximately 95% of our consolidated net revenue for the fiscal year ended August 31, 2009.
Western International University. Western International University has been accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools since 1984. Western International University offers associate’s, bachelor’s and master’s degrees in a variety of program areas as well as certificate programs. Western International University offers its undergraduate program courses at its Arizona campus locations and online at Western International University Interactive Online.
IPD. IPD provides program development, administration and management consulting services to private colleges and universities (“Client Institutions”) to establish or expand their programs for working learners. These services typically include degree program design, curriculum development, market research, student recruitment, accounting, and administrative services.
CFFP. CFFP has been accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools since 1994. CFFP provides financial services education programs, including a Master of Science in three majors, and certification programs in retirement, asset management, and other financial planning areas. CFFP offers these programs online and from its headquarters in Colorado.
Meritus. Meritus was designated by the Government of New Brunswick to grant degrees in May 2008. Meritus offers degree programs online to working learners throughout Canada and abroad and launched its first three programs in the fall of 2008.
BPP. BPP College of Professional Studies is the first proprietary institution to have been granted degree awarding powers in the United Kingdom. BPP, acquired by Apollo Global in July 2009 and headquartered in London, England, is a provider of education and training to professionals in the legal and finance industries. It is organized into the following three divisions:
• Professional Education, which provides exam training and sells published products for external certification training in accounting, tax, financial services, and actuarial qualifications and post qualification professional development;
• College of Professional Studies, which operates four law schools, human resource training and a business school; and
• Mander Portman Woodward, which operates independent fifth and sixth form colleges (similar to preparatory schools in the U.S.).
BPP provides these services through schools located in the United Kingdom, a European network of BPP offices, and the sale of books and other publications in over 150 countries.
UNIACC. UNIACC is accredited by the Chilean Council of Higher Education. UNIACC is an arts and communications university which offers bachelor’s and master’s programs on campuses in Chile and online. UNIACC was acquired by Apollo Global in March 2008.
ULA. ULA carries authorization from the Ministry of Public Education (Secretaría de Educación Publica) in Mexico, from the National Autonomous University of Mexico (Universidad Nacional Autónoma de México) for its high school and undergraduate psychology and law programs and by the Ministry of Education of the State of Morelos (Secretaría de Educación del Estado de Morelos) for its medicine and nutrition programs. ULA offers degree programs at its four campuses throughout Mexico. Apollo Global purchased a 65% ownership interest in ULA in August 2008 and purchased the remaining ownership interest in July 2009.
We also operate online high school programs through our Insight Schools, Inc. (“Insight Schools”) wholly-owned subsidiary, which is included in our Insight Schools reportable segment. Subsequent to our 2009 fiscal year end, we decided to explore the sale of Insight Schools.
Our schools described above are managed in the following five reportable segments:
• University of Phoenix;
• Apollo Global — BPP;
• Apollo Global — Other;
• Insight Schools; and
• Other Schools.
Our operations are generally subject to seasonal trends. We experience, and expect to continue to experience, seasonal fluctuations in our results of operations as a result of seasonal variations in the level of student enrollments. While University of Phoenix enrolls students throughout the year, our net revenue generally is lower in the second quarter (December through February) than the other quarters due to holiday breaks in December and January. Most of our other subsidiaries experience more significant seasonality, as they have limited enrollment during their respective summer breaks.
University of Phoenix degreed enrollment (“Degreed Enrollment”) for the quarter ended August 31, 2009 was 443,000. Degreed Enrollment for a quarter represents individual students enrolled in a University of Phoenix degree program who attended a course during the quarter and did not graduate as of the end of the quarter. Degreed Enrollment also includes any student 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). In addition, Degreed Enrollment includes students participating in University of Phoenix certificate programs of at least 18 credit hours in length with some course applicability into a related degree program.
University of Phoenix combined new degreed enrollment (“New Degreed Enrollment”) for the four quarters in fiscal year 2009 was 355,800. New Degreed Enrollment for a quarter represents any individual student enrolled in a University of Phoenix degree program who is a new student and started a course in the quarter, any individual student who previously graduated from one degree program and started a new degree program in the quarter (for example, a graduate of an associate’s degree program returns for a bachelor’s degree program, or a graduate of a bachelor’s degree program returns for a master’s degree program), as well as any individual student who started a program in the quarter and had been out of attendance for greater than 12 months. In addition, New Degreed Enrollment also includes students who during the quarter started participating in University of Phoenix certificate programs of at least 18 credit hours in length with some course applicability into a related degree program.
Students enrolled in or serviced by Apollo Global’s institutions, Insight Schools and Other Schools (Western International University, IPD, CFFP, and Meritus) are not included in Degreed Enrollment or New Degreed Enrollment.
Our Programs
Our more than 35 years as a provider of education enables us to provide students with quality education and responsive customer service at the undergraduate, graduate and doctoral levels. Our institutions have gained expertise in designing curriculum, recruiting and training faculty, monitoring academic quality, and providing a high level of support services to students. Our institutions offer the following:
• Accredited Degree Programs. University of Phoenix, Western International University and CFFP are accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools. BPP’s College of Professional Studies is a recognized body by order of the United Kingdom’s Privy Council. Our other educational institutions are accredited by appropriate accrediting entities. See Accreditation and Jurisdictional Authorizations, below.
• Professional Examinations Training and Professional Development. BPP provides training and published materials for qualifications in accountancy (including tax), financial services and actuarial science. BPP also provides professional development through continuing education training and supplemental skills courses to post-qualification markets in finance, law, general management and insolvency. University of Phoenix and certain of our other institutions, including CFFP, also provide various training and professional development education.
• Faculty.
• Domestic Postsecondary: Substantially all University of Phoenix faculty possess either a master’s or doctoral degree. Faculty members typically have many years of experience in the field in which they instruct. Our institutions have well-developed methods for hiring and training faculty, which include peer reviews of newly hired instructors by other members of the faculty, training in student instruction and grading, and teaching mentorships with more experienced faculty members.
• International: Our recruitment standards and processes for international faculty are appropriate for the respective markets in which we operate and are consistent with and in compliance with local accreditation and regulatory requirements in these markets.
• Standardized Programs.
• Domestic Postsecondary: Faculty content experts design curriculum for the majority of programs at our domestic postsecondary institutions. This enables us to offer current and relevant standardized programs to our students. We also utilize standardized tests and institution-wide systems to assess the educational outcomes of our students and improve the quality of our curriculum and instructional model. These systems evaluate the cognitive (subject matter) and affective (educational, personal and professional values) skills of our students upon registration and upon conclusion of the program, and also survey students two years after graduation in order to assess the quality of the education they received. Classes are designed to be small and engaging.
• International: Our international institutions typically follow a course development process in which faculty members who are subject matter experts work with instructional designers to develop curriculum materials based on learning objectives provided by school academic officers.
• Benefits to Employers. The employers of students enrolled in our programs often provide input to faculty members in designing curriculum, and class projects are based on issues relevant to the companies that employ our students. Classes are taught by faculty members, many of whom, in our domestic postsecondary institutions, are practitioners and employers who emphasize the skills desired by employers. We conduct focus groups with business professionals, students, and faculty members who provide feedback on the relevancy of course work. Our objective is to gain insight from these groups so that we can develop new courses and offer relevant subject matter that reflect the changing needs of the marketplace and prepare our students for today’s workplace. In addition, the class time flexibility further benefits employers since it minimizes conflict with their employees’ work schedules.
Students
University of Phoenix Degreed Enrollment
University of Phoenix Degreed Enrollment for the quarter ended August 31, 2009 was 443,000.
University of Phoenix New Degreed Enrollment
University of Phoenix combined New Degreed Enrollment for fiscal year 2009 was 355,800.
Employees
We believe that our employee relations are satisfactory. As of August 31, 2009, we had 21.514 full time and 608 part time employees and 31,376 in faculty.