Apollo Education Group

Apollo Education Group, Inc.

Type	Public
Traded as	NASDAQ: APOL S&P 400 Component
Industry	For-profit education
Founded	1973
Founder	John Sperling
Headquarters	Phoenix, Arizona, U.S.
Key people	Peter Sperling (Chairman) Gregory Cappelli (CEO) Mitch Bowling (COO)
Revenue	$ 3.6 billion (FY 2013)[1]
Operating income	$ 427 million (FY 2013)[1]
Net income	$ 249 million (FY 2013)[1]
Total assets	$ 3.0 billion (FY 2013)[1]
Total equity	$ 1.1 billion (FY 2013)[1]
Number of employees	44,000 (part and full-time) (August 2013)[1]
Website	www.apollo.edu

Apollo Education Group, Inc. is an S&P 400 corporation based in the South Phoenix area of Phoenix, Arizona. Apollo Group, Inc., through its subsidiaries, owns several for-profit educational institutions.

The company owns and operates four higher-learning institutions: the University of Phoenix, Western International University, Axia College, and the College for Financial Planning. As of November 2013, the combined enrollment of all the universities was approximately 269,000 students.^[1] Of these, nearly 90% attend the University of Phoenix, which Apollo describes as "the nation's largest regionally accredited private university".^[2]

Additionally, Apollo Education Group, Inc. is the owner of BPP Holdings in the United Kingdom. It formed a joint venture with Carlyle Group, called Apollo Global, to make international acquisitions.^[3] Apollo also purchased UNIACC college in Santiago, Chile, and ULA college in Mexico.^[4]

Founding

Apollo Education Group, Inc. was founded in 1973 by John Sperling.^[5]

Financial performance

Corporate revenues for the year ending August 31, 2005 were $2.251 billion.^[6]

As of 5 October 2011, Apollo Group had a market capitalization of $5.36 billion and a price-to-earnings ratio of 13.22.^[7]

The Apollo Group announced quarterly results on 30 June 2011. The company reported $1.45 in earnings per share for the previous quarter, exceeding the Thomson Reuters estimate of $1.33 by $0.12. Apollo Group's quarterly revenue was down 7.6% on a year-over-year basis.^[8]

In March 2011 the Apollo Group sold its corporate headquarters in Arizona and leased it back in order to raise $170 million in cash. The deal with Cole Real Estate Investments included a 20-year lease requiring Apollo to remain in the complex.^[9]"In our view, it does not change the view of the company. Apollo isn't hungry for cash: It carries little debt but generates $4 billion in revenue and has $650 million in net income and $1.5 billion in cash on its balance sheet," commented Peter Wahlstrom of Morningstar, an investment-research company.^[10]

However, the revenue of the company continued to fall: in the fiscal year ending in August 31, 2011, the net revenue was $4.7 billion; in 2012, $4.2 billion; in 2013, $3.6 billion.^[1] The operating income during this period fell from $956 million in 2011, to $676 million in 2012, to $427 million in 2013. the company attributed this to a decline in enrollment, with degreed enrollment declining from 380,000 in 2011, to 328,000 in 2012, to 269,000 in 2013.^[11]

Schools and subsidiaries

University of Phoenix

The University of Phoenix is a wholly owned subsidiary of the Apollo Education Group. The University of Phoenix is one of the largest higher education providers in North America.^[12] The university has more than 200 campuses worldwide and confers degrees in over 100 degree programs at the associate, bachelor's, master's and doctoral levels.^[13] The University of Phoenix has an open enrollment admission policy only requiring a high-school diploma, GED, or an equivalent qualification.^[14] The school also provides associate or bachelor's degree applicants opportunity for advanced placement through its prior learning assessment, through which, aside from previous coursework, college credit can come from experiential learning essays, corporate training, and certificates or licenses.^[15]

According to USA Today, the University of Phoenix's Detroit campus has a graduation rate of 10%, but a student loan default rate of 26.4%.^[16]

Western International University

Western International University (WIU) is a college for adult learners offering online and evening programs. Founded in 1978 in Phoenix, Arizona, WIU offers associate, bachelor and master degree programs to approximately 3,200 students. WIU claims to provide a broad educational foundation, with a focus on business and technology, designed to prepare students for leadership positions in business. WIU has four campuses locations in the Phoenix area and offers online education through its virtual campus, WIU Interactive OnlineSM.^[17]

Apollo Global

Apollo Group has formed Apollo Global to manage and form subsidiaries, assets, and holdings overseas. As part of their first acquisitions, Apollo Global acquired Universidad de Artes, Ciencias y Comunicacion 'UNIACC' in Chile as well as the now defunct Meritus University in Canada.^[3][18]

Apollo Global is a joint venture between the Apollo Group and the Carlyle Group. The two partners invested $1 billion in Apollo Global. The Apollo Group invested roughly $801 million and owns 80.1% of the new company. Carlyle invested $199 million and controls the remaining shares. Apollo Global replaced Apollo International.^[19][20]

BPP Holdings

BPP Holdings is a holding company of the United Kingdom-based provider of professional and academic education. The Company is divided into BPP Learning Media, BPP Professional Education and BPP University. BPP University is a United Kingdom degree-awarding body with four schools: BPP Business School, BPP Law School, BPP School of Health and BPP School of Foundation and English Language Studies. Apollo Global acquired BPP Holdings (which includes BPP University) in the United Kingdom for $607 million in July 2009.^[21]

Western International University, formerly a direct subsidiary of the Apollo Group was transferred to Apollo Global in April 2010. The Apollo Group says that the transfer of Western International University to Apollo Global would allow it to offer its degrees internationally on a more successful basis. The transfer included a capital contribution from Apollo Global's minority shareholder, the Carlyle Group.^[17]

Meritus University

Apollo Group owned and operated Meritus University in Canada.^[22] On January 24, 2011, citing how "enrollment will continue to be insufficient to sustain the required quality academic and student service infrastructure we and our students demand," Meritus University announced its closure, with their last classes taking place on March 14, 2011.^[23]

Universidad de Artes, Ciencias y Comunicacion

University for the Arts, Sciences, and Communication, Chile.^[24]

Universidad Latinoamericana, Mexico

The Universidad Latinoamericana in Mexico was acquired by the Apollo Group in 2007.^[25]

Open Colleges, Australia

Open Colleges in Australia was acquired for a 70% share agreement by the Apollo Group in 2013.^[26]

Milpark Education

Carnegie Learning

Carnegie Learning Logo

Carnegie Learning is a publisher of math curricula for middle school, high school, and post-secondary students. The company uses a blended approach, with a textbook and software (called Cognitive Tutor) for each subject. The company also produces products for the homeschool and tutoring markets. Based in Pittsburgh, PA, Carnegie Learning was founded by cognitive science researchers from Carnegie Mellon University in conjunction with veteran mathematics teachers.

All of the Cognitive Tutor curricula are based on extensive scientific research from Carnegie Mellon University, along with field tests in schools throughout the United States. The Cognitive Tutors are based on the ACT-R theory of learning, memory and performance. The Tutors themselves were developed using an empirical testing process.^[27]

Apollo Group announced in August 2011 a $75 million deal to buy Carnegie Learning along with a separate agreement to acquire related technology from CMU for $21.5 million, to be paid over 10 years.^[28]

Insight Schools

Insight Schools is an online high school offering classes from 9th to 12th grade. Insight both ran high schools for school districts and operated online schools in several U.S. states.^[29] Apollo Group acquired Insight Schools in 2007; in 2011 Apollo Group sold Insight Schools to Kaplan, Inc. ^[30]

Aptimus Marketing

Aptimus is a full-service, in-house marketing agency for Apollo Group education institutions, including the University of Phoenix, Axia College, the Institute for Professional Development, Olympus High School, and Insight School.^[31]

Orange Lutheran Online

Lutheran High School of Orange County (LHSOC) licenses its name to the Apollo Group to offer online courses.^[32]

Lawsuits and financial reporting

A lawsuit filed in 2003 alleged that the University of Phoenix (owned by Apollo Group) had wrongfully obtained at least $3 billion of federal student aid; in 2009 the Apollo Group agreed to pay $78.5 million to settle the suit, in one of the largest pay-for-performance compensation settlements ever reached.

After a separate investigation in 2004, the Apollo Group paid about $10 million in fines to the U.S. Department of Education, which had criticised UoP's admissions practices: for example, recruiters were paid bonuses depending on the numbers they signed up.^[33] The report by the Department of Education concluded that Phoenix, as The Chronicle of Higher Education put it, had a "high-pressure sales culture" that intimidated recruiters who failed to meet targets and encouraged the enrollment of unqualified students; in short, the report concluded that it rewarded "the recruiters who put the most 'asses in classes'". Apollo illegally withheld the report, but it was leaked and the group's value on the stock market crashed. A suit was brought alleging that its management had "disseminated materially false and misleading financial statements in an effort to inflate its stock price and attract investors".

In 2006, the company's controller and chief accounting officer resigned amid allegations that the books had been cooked; in 2007, the Nasdaq Listing and Hearing Review Council threatened to withdraw Apollo's listing from the stock exchange; in 2008, a U.S. federal jury in Arizona found Apollo guilty of "knowingly and recklessly" misleading investors, and instructed the group to pay shareholders some $280 million in reparations. Apollo's appeal was rejected by the U.S. Supreme Court on 8 March 2011.^[34]

In January 2008, Apollo was found liable for misleading investors by not disclosing a Department of Education report critical of the University of Phoenix's recruitment practices. The jury awarded the plaintiffs $280 million.^[35]

An investigation in 2012 by the United States Senate Committee on Health, Education, Labor and Pensions showed that 60 per cent of Apollo students dropped out within two years; while of those who completed their course, 21 per cent defaulted on paying back their loans within three years of finishing. It also revealed that 89 per cent of Apollo's revenue comes from federal student loans and that it spends twice as much on marketing as on teaching.

References

External links

• Official website