Apollo Group, Inc. 2011 AnnuAL RePORt be... engaged focused committed accountable dedicated educated innovative informed connected supported empowered inquisitive valued effective impactful Since 1973, Apollo Group has been creating oppor- tunities for students and employees to reach their full potential, while enriching society as a whole. Today, Apollo Group continues to strengthen its position as a leading provider of high quality, accessible education for individuals around the world. Apollo Group has estab- be engaged lished itself as a leading provider of quality academic offerings by Apollo Group’s institutions offer both online engaging, educating and campus-based classroom settings, flexible and empowering today’s course scheduling, small class sizes and an innovative academic atmosphere that is chal- workforce, one graduate lenging, rewarding and industry-focused. at a time. Personalized attention from instructors and interactive classroom participation between students and faculty facilitates a collaborative, professional learning environment that draws upon the experiences of others with rich and varied backgrounds. university of Phoenix’s mobile application enables participation in classroom activities to students “on-the-go” from virtually anywhere. In addition, PhoenixConnectSM, a private, academically-focused social network, provides students, alumni and faculty tools for greater collaboration, discussion and learning support beyond the classroom. be educated be empowered Our degree programs are designed in collabo- We are committed to helping individuals ration with academic and industry professionals achieve their educational, professional and to ensure quality, relevance and rigor. We offer personal objectives through our quality aca- degree programs across a range of high-demand demic programs, engaging instruction and fields at the associate, bachelor and graduate innovative content delivery. Our institutions levels. Course curriculum is developed and are focused on aligning our degree programs continuously updated to reflect the latest with the needs of the workforce and equipping standards and practices in today’s industries. students with skills relevant in a globally com- petitive economy. Students are taught by a team of more than 35,000 talented faculty members and sup- Apollo Group’s flagship institution, university ported by a network of committed academic of Phoenix, graduated more than 100,000 advisors. Our faculty hold advanced degrees in students in fiscal 2011 in the critical areas of and have experience working in the fields they teaching, nursing, criminal justice, information teach, providing our students a balanced edu- technology and business, among others. these cation that includes theory and application. graduates join an alumni network of nearly 700,000 individuals. We are empowering our students to compete in today’s workforce. Apollo Group, Inc. was founded in response to a continuing shift in higher education demographics from a student population dominated by youth to a more diverse population. It began with the belief that the era of lifelong employment with a single employer was ending, and workers would have to become lifelong learners to stay competitive in a global economy. Lifelong learning requires an institution dedicated to meeting the educational needs of the working learner. p.2 Apollo group, inc. // 2011 Annual report letter to our Shareholders Fiscal 2011 was a year of unprecedented change for Apollo Group, and was also a year in which we made significant strides in advancing our long-term strategic plan and positioning our organi- zation for continued success. Our commitment is to provide a high-quality education to our students to help them attain the skills needed to succeed in today’s competitive workforce. We believe that delivering superior experiences, achieved by doing the right thing for the student, is key to building value for our shareholders. At the beginning of fiscAl 2011 we set out to: 1) Implement additional leading-edge student protections that enable students to make better informed decisions regarding their education options so that they have a higher likelihood of academic success; 2) Differentiate University of Phoenix, our flagship institution, within the U.S. higher education landscape through innovative technology advancements, engaging instruction and curriculum, and industry-relevant academic programs; and 3) Expand our growth opportunities intelligently beyond University of Phoenix. We are pleased with the progress we have made in each of these areas during the past year. Our accomplishments include enhancing our student-centric approach to admissions, launching University Orientation, investing in our learning platform and adaptive learning capabilities, and further aligning our educational offerings to the needs of today’s workforce. In addition, we continue to build the foundation for a global education network through the educational institutions of Apollo Global. 2011 Annual report // Apollo group, inc. p.3 A year in review5. In fiscal 2011, we committed to the implemDeilnutatetiodn EoPf sSe vfreomra Cl oknetiyn usitnrga tegic Revenue ($ in billions) initiatives aimed at enhancing the student experience and improviOnpge rsattiuondse Anttt roibuuttacbolem teo sA.p Tolhloe (s$e) initiatives were the right things to do—both for our students and for our business—but they did have an impact on st4udent enrollment at University of Phoenix. $3.85 $4.02 $4.9 $4.7 5 $3.72 While these initiatives have resulted in a period of transition for our business, we believe they have positioned us for more sustainable growth over time. $4.0 4 3 $2.94 For the year, Apollo Group delivered consolidated revenue of $4.7 billion, a 4 percent decrease $3.1 from the prior year. At the same time, we focused on managing ou$2r. 3c8ost structure to appropriately 3 $2.7 align it with the needs of the business. Net income from continuing operations attributable to 2 Apollo was $569.9 million, or $4.02 per diluted share, representing an 8 percent increase from the 2 prior year on a per share basis. 1 Implementing leading-edge student protections. One of our primary areas of 1 focus has been on cultivating an organizational culture that is, first and foremost, centered around always doing what’s right for our students. 0 0 We have encouraged our advisors to develop relationships with prospective and current students ’07 ’08 ’09 ’10 2011 ’07 ’08 ’09 ’10 2011 to more effectively support them. At the beginning of the year, we aligned our admissions practices to better support our students’ success by eliminating enrollment measures as a factor in the evaluation and compensation of our admissions advisory teams. We have better empowered our advisors to provide high-quality service and to make decisions that are in the best interests of students. To further support this student-centric approach, we implemented additional tools University of Phoenix is regionally accredited by the Higher Learning and procedures to help ensure that prospec- Commission and is a member of the North Central Association, one of tive students can make informed decisions six regional accrediting bodies considered to be the gold standard of as they pursue their edu cational goals. At accreditation. In addition, University of Phoenix holds programmatic University of Phoenix, we introduced the Phoenix Prep Center to provide prospective accreditations in nursing, counseling, business and education. Other students with self awareness and assessment schools and institutions within Apollo Global are also accredited or resources that help them understand their authorized by various local accrediting bodies within their respective individual learning style and academic geographic or programmatic areas of instruction. strengths, which we believe facilitates improved student readiness in the classroom. University of Phoenix also launched a free, three-week program called University Orientation. This program is mandatory for students with limited college experience and is designed to help them understand the commitment required for success in our academic programs. Importantly, University Orientation has enabled prospective students to experience the University of Phoenix learning environment and determine if our offering is right for them prior to enrolling and taking on debt. Together, these efforts are focused on helping students make better informed decisions regarding their education options so they have a higher likelihood of success. Differentiating University of Phoenix. During fiscal 2011, we continued to invest in areas we believe will further distinguish the academic quality and learning experience provided at University of Phoenix. Innovation is a driving force in our efforts to enhance our learning platform. Over the past year, we rolled out our new academically-focused social network, PhoenixConnectSM, to all of the colleges within University of Phoenix. PhoenixConnectSM creates an online community that con- nects students, faculty and alumni and fosters enhanced academic collaboration. We also devel- oped and introduced mobile applications to expand access opportunities for students “on-the-go.” p.4 Apollo group, inc. // 2011 Annual report We augmented our curriculum with the introduction of the Phoenix Lecture Series, which provides unique course content from highly distinguished academicians and guest lecturers. We further inte- grated industry-relevant skills and competencies into our degree program offerings to continue to meet the needs of today’s employers by addressing the evolving demands for a skilled workforce. From the creation of degree programs to meet the needs of working During the year, we announced the acquisition of adults in the 1970s to pioneering online education in the late 1980s Carnegie Learning, which provides the Company with and eBooks in the 1990s, Apollo Group has a history of innovation an industry leading adaptive learning engine, which within higher education. The Company is focused on identifying the we intend to further develop and integrate into the changing needs of students and society, incorporating new technologies University of Phoenix classroom experience in the and learning techniques to more effectively serve students. This lead- years ahead. We believe this technology can provide ership continues today with the introduction of mobile functionality, a better and more effective learning environment by social media capabilities and adaptive learning methodologies into delivering educational content and curriculum in a the student experience. personalized way that is most effective for each individual student. Together, these efforts are focused on delivering a 5 Diluted EPS from Continuing high-vRaeluvee, ennueerg i(z$i ning b aillniodn sc)ompelling learning experience to our students through high-quality, Operations Attributable to Apollo ($) convenient and relevant academic programs, engaging instruction and innovative content delivery. 4 $3.85 $4.02 Expanding o$4u.9r g $4ro.7wth opportunitie5s. We continue to build the foundation for a global $3.72 education network through the educational institutions of Apollo Global. During fiscal 2011, we invested in the infrastructure and talent at Apollo Global and we continue to expand the offerings of $4.0 4 BPP in the U.K. In addition, shortly after the end of the fiscal year, we announced global expansion 3 $2.94 with a joint venture in India with HT Media. $3.1 $2.38 3 During$2 .t7he year, we also began to lay the groundwork for a broader services platform to help address 2 the needs of traditional colleges and universities. 2 By leveraging the organizational capabilities developed during Apollo Group’s more than 35-year history and applying them to the institutions within Apollo Global and expanding our service offerings 1 to other traditional institutions, we have the opp1ortunity to reach a broad population of students across the large and growing global education sector in the years to come. 0 Looking forward. Following a period of co0nsiderable change in 2011, we enter the new year ’07 ’08 ’09 ’10 2011 focuse’0d7 o’n0 8ex’e09cu’t1i0ng t2h0e1 1strategic plan we’ve set forth to position Apollo Group for continued success within the global higher education market. Ultimately, this means continuing to differentiate University of Phoenix, while at the same time investing in the expansion opportunities of tomorrow. We will continue to enhance our academic offerings, deliver innovation in the classroom experience, further align our educational programs to meet the needs of employers, and provide additional career-oriented resources to students and alumni. We believe these initiatives will support the success of our students during their time at our universities and beyond graduation. We also are committed to aligning our people, technology and organizational structure to effectively support the needs of our students, while identifying opportunities to refine our operations and improve the student experience. We believe the successful execution of our strategy will deliver long-term returns for our shareholders. Gregory W. Cappelli Charles B. Edelstein Co-Chief Executive Officer Co-Chief Executive Officer Chairman of Apollo Global, Inc. Form 10-K Apollo Group, Inc. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: August 31, 2011 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from [ ] to [ ] Commission file number: 0-25232 APOLLO GROUP, INC. (Exact name of registrant as specified in its charter) ARIZONA 86-0419443 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 4025 S. RIVERPOINT PARKWAY, PHOENIX, ARIZONA 85040 (Address of principal executive offices, including zip code) Registrant’s telephone number, including area code: (480) 966-5394 Securities registered pursuant to Section 12(b) of the Act: (Title of Each Class) (Name of Each Exchange on Which Registered) Apollo Group, Inc. The NASDAQ Stock Market LLC Class A common stock, no par value Securities registered pursuant to Section 12(g) of the Act: None (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES NO Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES NO Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES NO Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Non-accelerated filer Large accelerated filer Accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO No shares of Apollo Group, Inc. Class B common stock, its voting stock, are held by non-affiliates. The holders of Apollo Group, Inc. Class A common stock are not entitled to any voting rights. The aggregate market value of Apollo Group Class A common stock held by non-affiliates as of February 28, 2011 (last day of the registrant’s most recently completed second fiscal quarter), was approximately $5.5 billion. The number of shares outstanding for each of the registrant’s classes of common stock as of October 12, 2011 is as follows: Apollo Group, Inc. Class A common stock, no par value 130,108,000 Shares Apollo Group, Inc. Class B common stock, no par value 475,000 Shares DOCUMENTS INCORPORATED BY REFERENCE Portions of the Information Statement for the 2012 Annual Meeting of Class B Shareholders (Part III)