Apollo Group, Inc. Reports Fiscal Year 2012 Second Quarter Results

Marketing increased $2.0 million, or 1.3%, to $159.3 million in the second quarter of fiscal year 2012 compared to the second quarter of fiscal year 2011, which represents a 140 basis point increase as a percentage of net revenue. Marketing expense included costs attributable to establishing relationships with employers and community colleges.

Admissions advisory decreased $0.9 million, or 0.9%, to $101.4 million in the second quarter of fiscal year 2012 compared to the second quarter of fiscal year 2011, which represents a 60 basis point increase as a percentage of net revenue. While admissions advisory head count decreased, the cost savings was offset by higher average employee compensation costs.

General and administrative decreased $0.3 million, or 0.4%, to $84.0 million in the second quarter of fiscal year 2012 compared to the second quarter of fiscal year 2011, which represents a 70 basis point increase as a percentage of net revenue.

Depreciation and amortization increased $2.8 million, or 7.3%, to $42.0 million in the second quarter of fiscal year 2012 compared to the second quarter of fiscal year 2011, which represents a 60 basis point increase as a percentage of net revenue. The increase is principally attributable to $3.1 million of intangible asset amortization in the second quarter of fiscal year 2012 as a result of the Carnegie Learning acquisition.

The provision for uncollectible accounts receivable (“bad debt expense”) decreased $14.5 million, or 31.9%, to $31.0 million in the second quarter of fiscal year 2012 compared to the second quarter of fiscal year 2011, which represents a 110 basis point decrease as a percentage of net revenue. The decrease was primarily attributable to reductions in gross accounts receivable associated with decreased University of Phoenix Degreed Enrollment; a decrease in the proportion of receivables that are attributable to students enrolled in associate’s degree programs, as collection rates for these students are generally lower compared to students in more advanced level programs; and improved collection rates due, in part, to process initiatives implemented in fiscal year 2011.

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