Apollo Group’s Net Income Dips

Apollo Group Inc. (APOL - Analyst Report), one of the world’s largest private education providers, reported net revenues of $1075.8 million in the fourth quarter of fiscal 2009, compared to net revenues of $831.4 million in the year-earlier quarter. Net income for the quarter was $91.5 million, or 59 cents per share, compared to $229.6 million or $1.43 per share in the year-ago period. 

The decrease in year-over-year quarterly earnings was primarily due to one-time non-recurring pre-tax charges of $95.4 million. Excluding the one-time items, net income for the quarter was $165.6 million or $1.06 per share vis-à-vis $120.5 million or 75 cents per share in the year-earlier quarter. 

For fiscal 2009, net income was $598.3 million or $3.75 per share on net revenues of approximately $4.0 billion compared to net income of $476.5 million or $2.87 per share on revenues of $3.1 billion in the previous fiscal. The 26.5% growth in fiscal 2009 revenue was driven by a 23.5% and a 20.8% increase in combined New Degree Enrollment and averaged Degree Enrollment, respectively in the University of Phoenix, a subsidiary of Apollo Group. Excluding the one-time items, net income for fiscal 2009 was $672.4 million or $4.22 per share vis-à-vis $470.7 million or $2.84 per share in fiscal 2008. 

During the quarter, Apollo Group completed the acquisition of BPP, an U.K. based provider of education and training services, for $602 million. Instructional costs and services increased to $452.9 million during the quarter, from $362.3 million in the year-ago quarter. In addition, both selling and promotional expenses and G&A expenses increased 17.6% and 86% respectively, year-over-year. 

At quarter end, Apollo Group had cash and cash equivalents of $987.8 million, compared to $511.5 million in the year-earlier quarter. The increase in liquidity is primarily due to the utilization of the entire $500 million credit facility, partially offset by funds used for the acquisition of BPP. Consequently, total debt outstanding increased to $589.1 million at quarter end from $30.9 million in the year-ago quarter. Subsequent to the end of the quarter, Apollo Group repaid approximately $393 million of its debt under its credit facility.

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