Segment Reporting

We operate in the education industry and our reportable segments have been determined based on the method by which our chief operating decision maker evaluates performance and allocates resources. Our operating segments are presented in the following reportable segments:


•	University of Phoenix;


•	Apollo Global; and


•	Other.

University of Phoenix is composed of eight colleges and offers undergraduate and graduate degrees in a wide range of program areas including business, education and nursing. The University’s students attend classes online and at 110 ground campus locations throughout the U.S. and Puerto Rico. The majority of students attend classes exclusively online. In addition, the University offers a range of non-degree education programs for lifelong learners and students interested in developing skills and knowledge to improve their prospects of employment in their field of choice or advancement within their existing careers.

Apollo Global includes:


•	BPP Holdings Limited (“BPP”), which is headquartered in London, England and offers professional training and exam preparation programs in a variety of areas and qualification training, undergraduate and graduate degrees through BPP University, which principally includes BPP Law School and BPP Business School;


•	Open Colleges Australia Pty Ltd (“Open Colleges”), which is headquartered in Sydney, Australia and offers nationally recognized and government approved certificates, diplomas and other qualifications in a diverse range of disciplines and industries, including health and wellness, business management and services, and community services;


•	Universidad Latinoamericana (“ULA”), which is headquartered in Mexico City, Mexico and offers graduate and undergraduate degrees, high school and executive education in a variety of program areas and disciplines;


•	Milpark Education (Pty) Ltd. (“Milpark Education”), which is headquartered in Cape Town, South Africa and offers postsecondary education, including undergraduate and graduate degrees primarily in business, and non-degree programs;

•

Apollo Global Chile S.A. (“Apollo Global Chile”), which includes Universidad de Artes, Ciencias y Comunicación (“UNIACC”) and Instituto Superior de las Artes y Comunicaciones (“IACC”). UNIACC offers undergraduate and graduate degree programs in a variety of program areas principally at its campus in Santiago, Chile. IACC primarily offers degree and non-degree programs that are delivered online;


•	India Education Services Private Ltd (“India Education Services”), which is a joint venture that offers non-degree management and business programs delivered in a mix of online and on-ground teaching; and


•	Apollo Global corporate operations.

Apollo Global acquired Open Colleges and Milpark Education during the second and third quarters of fiscal year 2014, respectively. The operating results of Open Colleges and Milpark Education are included in our Apollo Global operating segment from the date of each respective acquisition. Refer to Note 4, Acquisitions.

Other includes:


•	Western International University, Inc., which offers undergraduate and graduate degrees in a variety of program areas, including business, information technology and behavioral science;


•	The College for Financial Planning Institutes Corporation (“College for Financial Planning”), which provides online financial services education programs, including graduate degrees in three majors, certificate programs, Financial Industry Regulatory Authority securities license training, and continuing education courses.


•	Carnegie Learning, Inc. publishes innovative, research-based math curricula and adaptive learning software for middle school and high school students;


•	Apollo Lightspeed, which is focused on developing innovative educational offerings and services that enable motivated learners to acquire in-demand job skills via non-degree learning solutions; and


•	Apollo Corporate activities.

During the fourth quarter of fiscal year 2014, we sold the assets of IPD and began presenting it as discontinued operations. IPD was previously included in Other in our segment reporting. As IPD’s operating results are presented as discontinued operations on our Consolidated Statements of Income for all periods presented, we have revised our financial information by segment to exclude IPD’s operating results.

Management evaluates performance based on reportable segment profit. This measure of profit includes allocating corporate support costs to each segment as part of transfer pricing arrangements and/or a general allocation, but excludes taxes, interest income and expense, and certain revenue and unallocated corporate charges. At the discretion of management, certain corporate costs are not allocated to the subsidiaries due to their designation as special charges because of their infrequency of occurrence, the non-cash nature of the expense and/or the determination that the allocation of these costs to the subsidiaries will not result in an appropriate measure of the subsidiaries’ results.

No individual customer accounted for more than 10% of our consolidated net revenue in fiscal years 2014, 2013 and 2012.

A summary of financial information by reportable segment is as follows:



	Year Ended August 31,
($ in thousands)	2014			2013			2012
Net revenue:
University of Phoenix	$	2,632,949		$	3,304,464		$	3,873,098
Apollo Global	338,008			275,768			269,541
Other	53,221			55,692			50,551
Net revenue	$	3,024,178		$	3,635,924		$	4,193,190
Operating income (loss)⁽¹⁾:
University of Phoenix	$	488,217		$	579,670		$	846,840
Apollo Global⁽²⁾	(74,189		)	(59,936		)	(66,964		)
Other⁽³⁾	(75,057		)	(85,342		)	(103,508		)
Operating income	338,971			434,392			676,368
Reconciling items:
Interest income	2,230			1,913			1,187
Interest expense	(7,914		)	(8,745		)	(11,745		)
Other (loss) income, net	(547		)	2,407			476
Income from continuing operations before income taxes	$	332,740		$	429,967		$	666,286
Depreciation and amortization⁽⁴⁾:
University of Phoenix⁽⁴⁾	$	35,261		$	53,562		$	64,643
Apollo Global	38,168			25,982			24,297
Other	77,146			82,189			89,294
Depreciation and amortization⁽⁴⁾	$	150,575		$	161,733		$	178,234
Capital expenditures:
University of Phoenix	$	8,280		$	6,992		$	20,133
Apollo Global	22,231			33,627			36,523
Other	70,155			78,729			58,531
Capital expenditures	$	100,666		$	119,348		$	115,187

⁽¹⁾ University of Phoenix, Apollo Global and Other include charges associated with our restructuring activities. Refer to Note 2, Restructuring and Other Charges.

⁽²⁾ The operating loss for Apollo Global in fiscal year 2014 includes contingent consideration charges and acquisition costs. Refer to Note 4, Acquisitions, and Note 9, Fair Value Measurements. The operating loss also includes the reversal of approximately $11 million of foreign indirect taxes following resolution with the taxing authority. These taxes were originally assessed in fiscal year 2013. The operating loss in fiscal year 2012 includes goodwill and other intangibles impairment charges of $16.8 million. Refer to Note 8, Goodwill and Intangibles.

⁽³⁾ The operating loss for Other in fiscal year 2014 includes $13.9 million of charges associated with our legal matters. The operating loss in fiscal year 2013 includes credits of $23.2 million associated with our legal matters.

⁽⁴⁾ Depreciation and amortization in fiscal years 2014 and 2013 excludes $7.6 million and $50.1 million, respectively, of accelerated depreciation associated with our restructuring activities. Refer to Note 2, Restructuring and Other Charges.

A summary of our consolidated assets by reportable segment is as follows:



	As of August 31,
($ in thousands)	2014		2013		2012
University of Phoenix	$	824,895	$	790,537	$	901,180
Apollo Global	680,363		359,903		376,071
Other⁽¹⁾	1,587,677		1,847,507		1,591,071
Total assets	$	3,092,935	$	2,997,947	$	2,868,322

⁽¹⁾The majority of assets included in Other consists of corporate cash and cash equivalents and marketable securities.

A summary of financial information by geographical area based on country of domicile for our respective operating locations is as follows:



	Year Ended August 31,
($ in thousands)	2014		2013		2012
Net revenue:
United States	$	2,686,571	$	3,360,316	$	3,923,649
United Kingdom	229,508		205,662		198,408
Other	108,099		69,946		71,133
Net revenue	$	3,024,178	$	3,635,924	$	4,193,190



	As of August 31,
($ in thousands)	2014		2013		2012
Long-lived assets⁽¹⁾:
United States	$	430,641	$	472,811	$	580,457
United Kingdom	172,485		169,371		174,229
Australia	191,393		—		—
Other	90,480		66,244		69,322
Long-lived assets	$	884,999	$	708,426	$	824,008

⁽¹⁾Long-lived assets include property and equipment, net, goodwill, and intangible assets, net.