10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended: November 30, 2014
OR
o	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 EDUCATION GROUP, INC.

(Exact name of registrant as specified in its charter)

ARIZONA (State or other jurisdiction of incorporation or organization) 86-0419443 (I.R.S. Employer Identification No.)

4025 S. RIVERPOINT PARKWAY, PHOENIX, ARIZONA 85040

(Address of principal executive offices)

(480) 966-5394

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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 þ     NO o

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 þ     NO o

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.

Large accelerated filer þ Accelerated filer o Non-accelerated filer o (Do not check if smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES o     NO þ

As of January 2, 2015, the following shares of stock were outstanding:

Apollo Education Group, Inc. Class A common stock, no par value	107,900,000 Shares
Apollo Education Group, Inc. Class B common stock, no par value	475,000 Shares

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTER ENDED NOVEMBER 30, 2014

INDEX

		Page
Special Note Regarding Forward-Looking Statements		3
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Income	5
	Condensed Consolidated Statements of Comprehensive Income	6
	Condensed Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interests	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
SIGNATURES		40

2

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact may be forward-looking statements. Such forward-looking statements include, among others, those statements regarding future events and future results of Apollo Education Group, Inc. that are based on current expectations, estimates, forecasts, and the beliefs and assumptions of us and our management, and speak only as of the date made and are not guarantees of future performance or results. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “predict,” “target,” “potential,” “continue,” “objectives,” or the negative of these terms or other comparable terminology. Such forward-looking statements are necessarily estimates based upon current information and involve a number of risks and uncertainties. Such statements should be viewed with caution. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include, but are not limited to:

• Changes in regulation of the U.S. education industry and eligibility of proprietary schools to participate in U.S. federal student financial aid programs, including the factors discussed in Item 1, Business, of our Annual Report on Form 10-K for the year ended August 31, 2014, under “Accreditation and Jurisdictional Authorizations,” “Financial Aid Programs” and “Regulatory Environment;”

• Each of the factors discussed in Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended August 31, 2014; and

• Those factors set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended August 31, 2014 and Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in this Form 10-Q.

The cautionary statements referred to above also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no obligation to publicly update or revise any forward-looking statements for any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements.

In this report, we refer to Apollo Education Group, Inc. as “the Company,” “Apollo Education Group,” “Apollo,” “APOL,” “we,” “us” or “our”.

3

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	As of
($ in thousands)	November 30, 2014			August 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	584,976		$	1,228,813
Restricted cash and cash equivalents	226,921			224,135
Marketable securities	205,687			187,472
Accounts receivable, net	251,518			225,398
Prepaid taxes	13,917			34,006
Deferred tax assets	76,968			83,871
Other current assets	61,229			58,855
Total current assets	1,421,216			2,042,550
Marketable securities	73,560			87,811
Property and equipment, net	418,088			435,733
Goodwill	248,932			259,901
Intangible assets, net	173,786			189,365
Deferred tax assets	36,137			37,335
Other assets	50,569			40,240
Total assets	$	2,422,288		$	3,092,935
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	15,902		$	609,506
Accounts payable	68,405			63,907
Student deposits	252,448			280,562
Deferred revenue	248,887			225,818
Accrued and other current liabilities	285,105			363,607
Total current liabilities	870,747			1,543,400
Long-term debt	46,990			47,590
Deferred tax liabilities	19,093			22,674
Other long-term liabilities	235,053			233,942
Total liabilities	1,171,883			1,847,606
Commitments and contingencies
Redeemable noncontrolling interests	58,229			64,527
Shareholders’ equity:
Preferred stock, no par value	—			—
Apollo Class A nonvoting common stock, no par value	103			103
Apollo Class B voting common stock, no par value	1			1
Additional paid-in capital	—			—
Apollo Class A treasury stock, at cost	(3,947,352		)	(3,936,607		)
Retained earnings	5,179,412			5,143,949
Accumulated other comprehensive loss	(40,618		)	(27,320		)
Total Apollo shareholders’ equity	1,191,546			1,180,126
Noncontrolling interests	630			676
Total equity	1,192,176			1,180,802
Total liabilities, redeemable noncontrolling interests and shareholders’ equity	$	2,422,288		$	3,092,935

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

CONDENSEDCONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended November 30,
(In thousands, except per share data)	2014			2013
Net revenue	$	719,052		$	848,148
Costs and expenses:
Instructional and student advisory	324,264			337,202
Marketing	128,793			133,829
Admissions advisory	57,085			49,698
General and administrative	72,367			74,779
Depreciation and amortization	36,404			36,338
Provision for uncollectible accounts receivable	17,398			13,978
Restructuring and other charges	19,028			31,963
Acquisition costs and contingent consideration charges	3,219			—
Total costs and expenses	658,558			677,787
Operating income	60,494			170,361
Interest income	589			568
Interest expense	(1,662		)	(2,086		)
Other (loss) income, net	(1,285		)	807
Income from continuing operations before income taxes	58,136			169,650
Provision for income taxes	(25,667		)	(70,218		)
Income from continuing operations	32,469			99,432
Loss from discontinued operations, net of tax	—			(391		)
Net income	32,469			99,041
Net loss (income) attributable to noncontrolling interests	1,316			(150		)
Net income attributable to Apollo	$	33,785		$	98,891
Earnings (loss) per share - Basic:
Continuing operations attributable to Apollo	$	0.31		$	0.88
Discontinued operations attributable to Apollo	—			(0.01		)
Basic income per share attributable to Apollo	$	0.31		$	0.87
Earnings per share - Diluted:
Continuing operations attributable to Apollo	$	0.31		$	0.87
Discontinued operations attributable to Apollo	—			—
Diluted income per share attributable to Apollo	$	0.31		$	0.87
Basic weighted average shares outstanding	108,581			113,326
Diluted weighted average shares outstanding	109,378			113,960

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

CONDENSEDCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended November 30,
($ in thousands)	2014			2013
Net income	$	32,469		$	99,041
Other comprehensive income (loss) (net of tax):
Currency translation (loss) gain(1)	(17,780		)	2,835
Unrealized loss on available-for-sale securities(1)	(74		)	—
Comprehensive income	14,615			101,876
Comprehensive loss (income) attributable to noncontrolling interests	5,872			(249		)
Comprehensive income attributable to Apollo	$	20,487		$	101,627

⁽¹⁾ The tax effect on each component of other comprehensive income during the three months ended November 30, 2014 and 2013, respectively, is not significant.

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

CONDENSEDCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

(Unaudited)

	Common Stock						Additional Paid-in Capital			Apollo Class A Treasury Stock								Accumulated Other Comprehensive Loss			Total Apollo Shareholders’ Equity			Noncontrolling Interests
	Class A Nonvoting			Class B Voting											Retained Earnings												Total Equity			Redeemable Noncontrolling Interests
(In thousands)	Shares	Stated Value		Shares	Stated Value					Shares		Cost
Balance as of August 31, 2014	188,007	$	103	475	$	1	$	—		79,585		$	(3,936,607	)	$	5,143,949		$	(27,320	)	$	1,180,126		$	676		$	1,180,802		$	64,527
Share repurchases	—	—		—	—		—			755		(20,064		)	—			—			(20,064		)	—			(20,064		)	—
Share reissuances	—	—		—	—		(10,308		)	(227	)	9,319			1,206			—			217			—			217			—
Net tax effect for stock incentive plans	—	—		—	—		(2,067		)	—		—			—			—			(2,067		)	—			(2,067		)	—
Share-based compensation	—	—		—	—		10,711			—		—			—			—			10,711			—			10,711			—
Currency translation adjustment, net of tax	—	—		—	—		—			—		—			—			(13,224		)	(13,224		)	(90		)	(13,314		)	(4,466		)
Available-for-sale securities adjustment, net of tax	—	—		—	—		—			—		—			—			(74		)	(74		)	—			(74		)	—
Redemption value adjustments	—	—		—	—		—			—		—			472			—			472			—			472			(472		)
Net income (loss)	—	—		—	—		—			—		—			33,785			—			33,785			44			33,829			(1,360		)
Other	—	—		—	—		1,664			—		—			—			—			1,664			—			1,664			—
Balance as of November 30, 2014	188,007	$	103	475	$	1	$	—		80,113		$	(3,947,352	)	$	5,179,412		$	(40,618	)	$	1,191,546		$	630		$	1,192,176		$	58,229
Balance as of August 31, 2013	188,007	$	103	475	$	1	$	—		75,182		$	(3,824,758	)	$	4,978,815		$	(36,563	)	$	1,117,598		$	411		$	1,118,009
Share repurchases	—	—		—	—		—			665		(16,871		)	—			—			(16,871		)	—			(16,871		)
Share reissuances	—	—		—	—		(7,135		)	(281	)	11,669			(3,738		)	—			796			—			796
Net tax effect for stock incentive plans	—	—		—	—		(4,838		)	—		—			—			—			(4,838		)	—			(4,838		)
Share-based compensation	—	—		—	—		11,973			—		—			—			—			11,973			—			11,973
Currency translation adjustment, net of tax	—	—		—	—		—			—		—			—			2,736			2,736			99			2,835
Net income	—	—		—	—		—			—		—			98,891			—			98,891			150			99,041
Balance as of November 30, 2013	188,007	$	103	475	$	1	$	—		75,566		$	(3,829,960	)	$	5,073,968		$	(33,827	)	$	1,210,285		$	660		$	1,210,945

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended November 30,
($ in thousands)	2014			2013
Operating activities:
Net income	$	32,469		$	99,041
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation	10,711			11,973
Excess tax benefits from share-based compensation	(229		)	—
Depreciation and amortization	36,404			36,338
Accelerated depreciation included in restructuring	3,086			2,806
Loss on asset dispositions and write-offs	972			—
Non-cash foreign currency loss (gain), net	535			(1,099		)
Provision for uncollectible accounts receivable	17,398			13,978
Deferred income taxes	2,938			4,738
Changes in assets and liabilities:
Restricted cash and cash equivalents	(3,298		)	(26,438		)
Accounts receivable	(50,331		)	(11,148		)
Prepaid taxes	19,989			64,469
Other assets	(13,032		)	(11,190		)
Accounts payable	5,156			(8,835		)
Student deposits	(26,138		)	(805		)
Deferred revenue	29,822			8,076
Accrued and other liabilities	(48,153		)	(53,007		)
Net cash provided by operating activities	18,299			128,897
Investing activities:
Purchases of property and equipment	(20,337		)	(34,366		)
Purchases of marketable securities	(59,490		)	(146,333		)
Maturities and sales of marketable securities	53,974			57,412
Other	405			—
Net cash used in investing activities	(25,448		)	(123,287		)
Financing activities:
Payments on borrowings	(596,789		)	(615,925		)
Proceeds from borrowings	3,563			—
Share repurchases	(20,064		)	(16,871		)
Share reissuances	217			796
Excess tax benefits from share-based compensation	229			—
Payment for contingent consideration	(21,371		)	—
Net cash used in financing activities	(634,215		)	(632,000		)
Exchange rate effect on cash and cash equivalents	(2,473		)	35
Net decrease in cash and cash equivalents	(643,837		)	(626,355		)
Cash and cash equivalents, beginning of period	1,228,813			1,414,485
Cash and cash equivalents, end of period	$	584,976		$	788,130
Supplemental disclosure of cash flow and non-cash information:
Cash paid for income taxes, net of refunds	$	3,214		$	—
Cash paid for interest	1,701			1,891
Restricted stock units vested and released	5,499			5,113

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Nature of Operations and Significant Accounting Policies

Apollo Education Group, Inc. is one of the world’s largest private education services providers, serving students since 1973. Through our subsidiaries, we offer undergraduate, graduate, professional development and other non-degree educational programs and services, online and on-campus, principally to working learners in the U.S. and abroad. Refer to Note 15, Segment Reporting, for further information regarding our education platforms.

Our fiscal year is from September 1 to August 31. Unless otherwise stated, references to particular years or quarters refer to our fiscal years and the associated quarters of those fiscal years.

Basis of Presentation

These unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission and, in our opinion, contain all adjustments, consisting of normal, recurring adjustments, necessary to fairly present the financial condition, results of operations and cash flows for the periods presented. These unaudited interim condensed consolidated financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements. Therefore, this information should be read in conjunction with the audited consolidated financial statements and related notes included in our 2014 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on October 21, 2014. We consistently applied the accounting policies described in the notes to our consolidated financial statements included in our 2014 Annual Report on Form 10-K in preparing these unaudited interim condensed consolidated financial statements.

Principles of Consolidation

The unaudited interim condensed consolidated financial statements include the assets, liabilities, revenues and expenses of Apollo Education Group, Inc., our wholly-owned subsidiaries, and other subsidiaries that we control. We eliminate intercompany transactions and balances in consolidation.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires certain estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results may differ from these estimates.

Seasonality

Our operations are generally subject to seasonal trends, which vary depending on subsidiary. We have historically experienced, and expect to continue to experience, fluctuations in our results of operations as a result of seasonal variations in the level of our institutions’ enrollments.

• University of Phoenix - Although University of Phoenix enrolls students throughout the year, its net revenue is generally lower in our second fiscal quarter (December through February) than the other quarters due to holiday breaks.

• Apollo Global - Our Apollo Global subsidiaries experience seasonality associated with the timing of when courses begin, exam dates, the timing of their respective holidays and other factors. These factors have historically resulted in lower net revenue in our second and fourth fiscal quarters, particularly for BPP, which also results in substantially lower operating results during these quarters due to BPP’s relatively fixed cost structure.

Because of the seasonal nature of our business and other factors, the results of operations for the three months ended November 30, 2014 are not necessarily indicative of the results to be expected for the entire fiscal year.

Reclassifications

We reclassified prior periods for the following to conform to our current presentation:

• During the second quarter of fiscal year 2014, we began presenting share reissuances in the aggregate on our Condensed Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interests, which consists of reissuances attributable to our employee stock purchase plan and our equity compensation plans that were previously reported separately; and

9

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

• During the fourth quarter of fiscal year 2014, we began presenting Institute for Professional Development’s operating results as discontinued operations on our Condensed Consolidated Statements of Income.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”(“ASU 2014-09”). The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is not permitted. Accordingly, the standard is effective for us on September 1, 2017 using either a full retrospective or a modified retrospective approach. We are currently evaluating which transition approach to use and the impact that the standard will have on our financial statements.

In April 2014, the FASB issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). The standard raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. ASU 2014-08 is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2014, and early adoption is permitted. We do not expect to early adopt ASU 2014-08, which will be effective for us on September 1, 2015 and will apply to disposals that have not yet been reported in our financial statements as of the adoption date. Accordingly, the standard will not impact our previously reported disposals, and we will evaluate the impact of the standard on any disposals that occur after adoption.

Subsequent Event

On December 4, 2014, Apollo Global acquired a 75% interest in Sociedade Técnica Educacional da Lapa S.A., which provides postsecondary educational programs in Brazil under the name Faculdade da Educacional da Lapa (“FAEL”), for an initial cash payment of R$73.8 million (equivalent to $28.9 million on the acquisition date), plus a future contingent payment. The contingent payment is principally based on FAEL’s calendar year 2018 net revenue, has a maximum of approximately R$34 million (equivalent to $13.3 million on the acquisition date), and its fair value on the acquisition date was not significant. In addition, we have the option to buy the remaining noncontrolling interests, and the noncontrolling shareholders have the option to sell their shares to us, beginning in calendar year 2019, or earlier in limited circumstances. The price for the options is based on a formula specified at the acquisition date and is principally based on a multiple of FAEL’s operating results as defined in the acquisition agreement. There is no minimum or maximum price for these options.

This acquisition provides access to a new market and supports our strategy to diversify and expand our global operations. FAEL’s operating results are not material to our consolidated financial statements and they will be included in our Apollo Global operating segment from the date of acquisition. We have not yet completed the purchase price allocation for this acquisition principally due to the recent acquisition date.

Note 2. Restructuring and Other Charges

The U.S. higher education industry is experiencing unprecedented, rapidly developing changes that challenge many of the core principles underlying the industry. We began initiating restructuring activities in fiscal year 2011 to reengineer and simplify our business processes and refine our educational delivery systems to improve the efficiency and effectiveness of our services to students. We have continued restructuring activities in fiscal year 2015 as we further reduce the size of our services infrastructure and associated operating expenses to align with our reduced enrollment and revenue.

Fiscal Year 2015 Restructuring

During the first quarter of fiscal year 2015, we incurred $8.4 million of restructuring expense associated with new restructuring activities initiated after fiscal year 2014. The expense consisted of $4.6 million of severance and other employee separation costs associated with the elimination of approximately 200 positions. The substantial majority of the remaining restructuring expense during the first quarter of fiscal year 2015 represented costs associated with termination of a curriculum-based contract. The expense associated with these activities is reflected in our segment reporting as follows: $0.3 million in University of Phoenix and $8.1 million in Other.

We do not expect to incur material future charges related to these restructuring activities; however, we intend to further reduce the size of our services infrastructure and associated operating expenses to align with our reduced enrollment and revenue, and expect to incur material charges associated with future restructuring activities.

10

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Prior Fiscal Year Restructuring

Our restructuring activities initiated prior to fiscal year 2015 principally include rationalizing our administrative real estate facilities, closing 115 University of Phoenix ground locations, which at the time was intended to result in 110 remaining ground locations, and workforce reductions. University of Phoenix began closing its ground locations during fiscal year 2013 and has maintained locations throughout the U.S. and Puerto Rico. However, University of Phoenix continues to evaluate the extent, functionality and location of its ground facilities and to close facilities that are underutilized or unnecessary.

During the first quarter of fiscal year 2015, we incurred $10.6 million of expense associated with restructuring activities initiated prior to fiscal year 2015. The substantial majority of the expense represents an increase in our estimated future cash payments associated with certain lease obligations included in the University of Phoenix ground location rationalization discussed above. We do not expect to incur material charges related to the remaining space expected to be vacated. However, we will incur interest accretion and may record additional adjustments associated with the estimated lease obligations, which involves significant judgment, in future periods.

Restructuring Liability Changes

The following details the changes in our restructuring liabilities during the three months ended November 30, 2014:

	Lease and Related Costs, Net					Severance and Other Employee Separation Costs						Other Restructuring Related Costs						Total
($ in thousands)	2015 Restructuring		Prior Year Restructuring(1)			2015 Restructuring			Prior Year Restructuring(1)			2015 Restructuring			Prior Year Restructuring(1)
August 31, 2014	$	—	$	96,204		$	—		$	5,687		$	—		$	1,192		$	103,083
Expense	—		10,094			4,643			167			3,767			357			19,028
Other	—		(2,605		)	(752		)	—			—			—			(3,357		)
Payments	—		(13,562		)	(346		)	(5,687		)	(617		)	(389		)	(20,601		)
November 30, 2014(2)	$	—	$	90,131		$	3,545		$	167		$	3,150		$	1,160		$	98,153

⁽¹⁾ We have incurred $355 million of cumulative costs associated with prior year restructuring as of November 30, 2014, which includes lease exit, employee separation, and other related costs of $230 million, $83 million and $42 million, respectively. These cumulative costs have been reflected in our segment reporting as follows: $274 million in University of Phoenix, $18 million in Apollo Global, and $63 million in Other.

⁽²⁾ The gross, undiscounted obligation associated with our restructuring liabilities as of November 30, 2014 was approximately $163 million, which principally represents non-cancelable leases that will be paid over the respective lease terms through fiscal year 2023.

Note 3. Discontinued Operations

During the fourth quarter of fiscal year 2014, we sold the assets of our subsidiary Institute for Professional Development (“IPD”) for $4 million. IPD had insignificant assets and liabilities as of the date of sale and as a result, we realized an immaterial gain on sale. We sold IPD because its business was no longer consistent with our long-term strategic objectives due to recent operating losses and limitations on our ability to further develop and expand the domestic business. We do not have significant continuing involvement with IPD after the sale and, accordingly, IPD’s operating results are presented as discontinued operations on our Condensed Consolidated Statements of Income. We determined cash flows from our discontinued operations are not material and are included with cash flows from continuing operations on our Condensed Consolidated Statements of Cash Flows. IPD was previously included in Other in our segment reporting.

The following summarizes IPD’s operating results for the three months ended November 30, 2013, which are presented in loss from discontinued operations, net of tax on our Condensed Consolidated Statements of Income:

($ in thousands)
Net revenue	$	8,187
Costs and expenses	(8,754		)
Loss from discontinued operations before income taxes	(567		)
Benefit from income taxes	176
Loss from discontinued operations, net of tax	$	(391	)

11

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The operating results of our discontinued operations only include revenues and costs directly attributable to the discontinued operations. Accordingly, no interest expense or general corporate overhead have been allocated to IPD. IPD did not meet the held for sale criteria until the period it was sold.

Note 4. Financial Instruments

We invest our excess cash in a variety of marketable securities, which are all classified as available-for-sale. The following summarizes our cash and cash equivalents, restricted cash and cash equivalents and marketable securities by significant financial instrument category as of the respective periods:

	November 30, 2014
($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents(1)		Current Marketable Securities		Noncurrent Marketable Securities
Cash	$	657,747	$	—	$	—		$	657,747	$	657,747	$	—	$	—
Level 1:
Money market funds	128,952		—		—			128,952		128,952		—		—
Level 2:
Corporate bonds	120,639		94		(93		)	120,640		140		78,314		42,186
Tax-exempt municipal bonds	95,653		113		(29		)	95,737		—		75,903		19,834
Time deposits	50,141		—		—			50,141		25,058		25,083		—
Other	31,973		9		(1		)	31,981		—		26,387		5,594
Level 3:
Auction-rate securities	6,850		—		(904		)	5,946		—		—		5,946
Total	$	1,091,955	$	216	$	(1,027	)	$	1,091,144	$	811,897	$	205,687	$	73,560

	August 31, 2014
($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents(1)		Current Marketable Securities		Noncurrent Marketable Securities
Cash	$	1,295,395	$	—	$	—		$	1,295,395	$	1,295,395	$	—	$	—
Level 1:
Money market funds	132,508		—		—			132,508		132,508		—		—
Level 2:
Tax-exempt municipal bonds	106,543		155		(11		)	106,687		—		78,443		28,244
Corporate bonds	106,575		123		(52		)	106,646		—		56,837		49,809
Time deposits	50,100		—		—			50,100		25,041		25,059		—
Commercial paper	11,793		1		—			11,794		—		11,794		—
Other	19,155		1		(1		)	19,155		4		15,339		3,812
Level 3:
Auction-rate securities	6,850		—		(904		)	5,946		—		—		5,946
Total	$	1,728,919	$	280	$	(968	)	$	1,728,231	$	1,452,948	$	187,472	$	87,811

⁽¹⁾ Cash and cash equivalents includes restricted cash and cash equivalents.

12

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We measure our financial instruments at fair value on a recurring basis as follows:

• Money market funds - We use Level 1 inputs that primarily consist of real-time quotes for transactions in active exchange markets involving identical assets.

• Auction-rate securities - We use a discounted cash flow model encompassing Level 3 significant unobservable inputs such as estimated interest rates, credit spreads, timing and amount of cash flows, credit quality of the underlying securities and illiquidity considerations. There were no changes in the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended November 30, 2014.

• All other securities - We use a market approach with Level 2 observable inputs including quoted prices for similar assets in active markets, or quoted prices for identical or similar assets in markets that are not active.

Substantially all of our marketable securities have maturities that occur within three years. We may sell certain of our available-for-sale securities prior to their stated maturities for strategic reasons including, but not limited to, investment yield and credit risk management. We have not recognized significant gains or losses related to such sales.

Note 5. Accounts Receivable, Net

Accounts receivable, net consist of the following as of the respective periods:

($ in thousands)	November 30, 2014			August 31, 2014
Student accounts receivable	$	291,680		$	255,134
Less allowance for doubtful accounts	(52,682		)	(50,145		)
Net student accounts receivable	238,998			204,989
Other receivables	12,520			20,409
Total accounts receivable, net	$	251,518		$	225,398

Student accounts receivable is composed primarily of amounts due related to tuition and educational services. The following summarizes the activity in allowance for doubtful accounts for the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014			2013
Beginning allowance for doubtful accounts	$	50,145		$	59,744
Provision for uncollectible accounts receivable	17,398			13,978
Write-offs, net of recoveries	(14,861		)	(17,827		)
Ending allowance for doubtful accounts	$	52,682		$	55,895

Note 6. Fair Value Measurements

We measure and disclose certain financial instruments at fair value as described in Note 4, Financial Instruments.Liabilities measured at fair value on a recurring basis, all of which are included in other liabilities on our Condensed Consolidated Balance Sheets, consist of the following as of November 30, 2014 and August 31, 2014:

			Fair Value Measurements at Reporting Dates Using
	Fair Value as of Respective Reporting Dates		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
($ in thousands)
Contingent consideration as of November 30, 2014	$	6,292	$	—	$	—	$	6,292
Contingent consideration as of August 31, 2014	$	41,893	$	—	$	—	$	41,893

13

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following summarizes changes in liabilities measured at fair value on a recurring basis for the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014			2013
Beginning balance	$	41,893		$	5,277
Change in fair value included in net income	(1,121		)	466
Payment for contingent consideration	(34,480		)	—
Ending balance	$	6,292		$	5,743

Our contingent consideration liabilities are classified within Level 3 and valued using discounted cash flow valuation methods encompassing significant unobservable inputs. The inputs include estimated operating results scenarios for the applicable performance periods, probability weightings assigned to operating results scenarios and the discount rates applied. Our contingent consideration liabilities relate to the following:

• Open Colleges - As a result of our acquisition of Open Colleges during fiscal year 2014, we had contingent consideration that was based on Open Colleges’ operating results through June 2014, as defined in the acquisition agreement. We initially measured the contingent consideration at $21.4 million based on information available as of the acquisition date. During the first quarter of fiscal year 2015, we settled the contingent consideration and paid $34.5 million, which includes $21.4 million in financing activities and the remaining portion is included in operating activities on our Condensed Consolidated Statements of Cash Flows.

• Apollo Global - As a result of our purchase of the noncontrolling interest in Apollo Global during fiscal year 2013, we have contingent consideration that is based on a portion of Apollo Global’s operating results through the fiscal years ending August 31, 2017. As of November 30, 2014, the estimated fair value for this contingent consideration was $6.3 million.

We did not change our valuation techniques associated with recurring fair value measurements from prior periods.

Note 7. Accrued and Other Liabilities

Accrued and other current liabilities consist of the following as of the respective periods:

($ in thousands)	November 30, 2014		August 31, 2014
Salaries, wages and benefits	$	69,844	$	125,165
Student refunds, grants and scholarships	45,019		20,072
Restructuring obligations	42,630		43,339
Accrued legal and other professional obligations	38,800		33,651
Accrued advertising	24,043		33,853
Deferred rent and other lease liabilities	12,323		12,384
Curriculum materials	11,684		12,069
Contingent consideration	—		35,239
Other	40,762		47,835
Total accrued and other current liabilities	$	285,105	$	363,607

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APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Other long-term liabilities consist of the following as of the respective periods:

($ in thousands)	November 30, 2014		August 31, 2014
Deferred revenue	$	62,665	$	51,831
Restructuring obligations	55,523		59,744
Deferred rent and other lease liabilities	55,244		57,788
Deferred gains on sale-leasebacks	21,273		21,641
Uncertain tax positions	9,429		9,770
Other	30,919		33,168
Total other long-term liabilities	$	235,053	$	233,942

Note 8. Debt

Debt and short-term borrowings consist of the following as of the respective periods:

($ in thousands)	November 30, 2014			August 31, 2014
Revolving Credit Facility	$	—		$	585,000
Capital lease obligations	24,902			32,806
Other	37,990			39,290
Total debt	62,892			657,096
Less short-term borrowings and current portion of long-term debt	(15,902		)	(609,506		)
Long-term debt	$	46,990		$	47,590

In fiscal year 2012, we entered into a syndicated $625 million unsecured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility is used for general corporate purposes, which may include acquisitions and share repurchases. The term is five years and will expire in April 2017. The Revolving Credit Facility may be used for borrowings in certain foreign currencies and letters of credit, in each case up to specified sublimits.

We borrowed $585.0 million and had approximately $24 million of outstanding letters of credit under the Revolving Credit Facility as of August 31, 2014. We repaid the entire amount borrowed under the Revolving Credit Facility during the first quarter of fiscal year 2015. As of November 30, 2014, we have approximately $46 million of outstanding letters of credit under the Revolving Credit Facility.

The Revolving Credit Facility fees are determined based on a pricing grid that varies according to our leverage ratio. The Revolving Credit Facility fee ranges from 25 to 40 basis points. Incremental fees for borrowings under the facility generally range from LIBOR + 125 to 185 basis points. The weighted average interest rate on outstanding short-term borrowings under the Revolving Credit Facility at August 31, 2014 was 3.5%.

The Revolving Credit Facility contains various customary representations, covenants and other provisions, including a material adverse event clause and the following financial covenants: maximum leverage ratio, minimum interest and rent expense coverage ratio, and U.S. Department of Education financial responsibility composite score requirements. We were in compliance with all applicable covenants related to the Revolving Credit Facility at November 30, 2014 and August 31, 2014.

Other debt principally includes debt at subsidiaries of Apollo Global and the present value of an obligation payable over a 10-year period associated with our purchase of technology in fiscal year 2012. The weighted average interest rate on our outstanding other debt at November 30, 2014 and August 31, 2014 was 5.6% and 5.8%, respectively.

The carrying value of our debt, excluding capital leases, approximates fair value based on the nature of our debt, which includes consideration of the portion that is variable-rate.

15

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 9. Income Taxes

We determine our interim income tax provision by applying our estimated effective income tax rate expected to be applicable for the full fiscal year to our income before income taxes for the period. Our effective income tax rate is dependent upon several factors, such as tax rates in state and foreign jurisdictions and the relative amount of income we earn in such jurisdictions. In determining our full year estimate, we do not include the estimated impact of unusual and/or infrequent items, which may cause significant variations in the customary relationship between income tax expense and income before income taxes. We exercise significant judgment in determining our income tax provision due to transactions, credits and calculations where the ultimate tax determination is uncertain.

Our U.S. federal income tax return for fiscal year 2013 is currently open for review by the Internal Revenue Service (“IRS”) and we are participating in the IRS’s Compliance Assurance Process for fiscal years 2014 and 2015, which is a voluntary program in which taxpayers seek to resolve all or most issues with the IRS prior to or soon after filing their U.S. federal income tax returns. We are also subject to numerous ongoing audits by state, local and foreign tax authorities with various tax years as early as 2007 that remain subject to examination. Although we believe our tax accruals are reasonable, the final determination of tax returns under review or returns that may be reviewed in the future and any related litigation could result in tax liabilities that materially differ from our historical income tax provisions and accruals.

Note 10. Shareholders’ Equity and Redeemable Noncontrolling Interests

Share Repurchases

Our Board of Directors has authorized us to repurchase outstanding shares of our Class A common stock from time to time depending on market conditions and other considerations. During fiscal year 2013, our Board of Directors authorized an increase in the amount available under our share repurchase program up to an aggregate amount of $250 million, of which $72.2 million remained available as of November 30, 2014. There is no expiration date on the repurchase authorizations and the amount and timing of future share repurchase authorizations and repurchases, if any, will be made as market and business conditions warrant. Repurchases occur at our discretion and may be made on the open market through various methods including but not limited to accelerated share repurchase programs, or in privately negotiated transactions, pursuant to the applicable Securities and Exchange Commission rules, and may include repurchases pursuant to Securities and Exchange Commission Rule 10b5-1 nondiscretionary trading programs.

We also repurchase shares in connection with tax withholding requirements associated with the release of vested shares of restricted stock units, which do not fall under the repurchase program described above.

The following summarizes our share repurchase activity for the respective periods:

	Three Months Ended November 30,
(In thousands, except per share data)	2014		2013
Share repurchases under share repurchase program:
Number of shares repurchased	677		577
Weighted average purchase price per share	$	26.72	$	26.02
Cost of share repurchases	$	18,092	$	15,000
Share repurchases related to vesting of restricted stock units and performance share awards:
Number of shares repurchased	78		88
Cost of share repurchases	$	1,972	$	1,871

Share Reissuances

We reissue our Class A common stock from our treasury stock as a result of the release of shares covered by vested restricted stock units, performance share awards, stock option exercises and purchases under our employee stock purchase plan. Share reissuances were as follows for the respective periods:

	Three Months Ended November 30,
(In thousands)	2014	2013
Number of shares reissued	227	281

16

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 11. Earnings Per Share

Our outstanding shares consist of Apollo Class A and Class B common stock. Our Articles of Incorporation treat the declaration of dividends on the Class A and Class B common stock in an identical manner. As such, both the Class A and Class B common stock are included in the calculation of our earnings per share.

Diluted weighted average shares outstanding includes the incremental effect of shares that would be issued upon the assumed exercise of stock options and the vesting and release of restricted stock units and performance share awards. The components of basic and diluted earnings per share are as follows:

	Three Months Ended November 30,
(In thousands, except per share data)	2014		2013
Numerator:
Net income attributable to Apollo (basic and diluted)	$	33,785	$	98,891
Denominator:
Basic weighted average shares outstanding	108,581		113,326
Dilutive effect of restricted stock units and performance share awards	618		44
Dilutive effect of stock options	179		590
Diluted weighted average shares outstanding	109,378		113,960
Basic income per share attributable to Apollo	$	0.31	$	0.87
Diluted income per share attributable to Apollo	$	0.31	$	0.87
Anti-dilutive securities excluded from diluted earnings per share:
Anti-dilutive restricted stock units and performance share awards outstanding	316		1,012
Anti-dilutive stock options outstanding	2,476		3,240

Note 12. Share-Based Compensation

The following details share-based compensation expense for the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014		2013
Instructional and student advisory	$	2,982	$	3,533
Marketing	836		1,108
Admissions advisory	261		102
General and administrative	5,880		5,368
Restructuring and other charges	752		1,862
Share-based compensation expense	$	10,711	$	11,973

In accordance with our Amended and Restated 2000 Stock Incentive Plan, we granted 54,000 restricted stock units and performance share awards during the three months ended November 30, 2014. The granted awards had a weighted average grant date fair value of $29.55. As of November 30, 2014, we had $68.0 million and $3.5 million of unrecognized share-based compensation cost, net of forfeitures, related to unvested restricted stock units and performance share awards, respectively. These costs are expected to be recognized over a weighted average period of 2.6 years.

We did not grant any stock options during the three months ended November 30, 2014. As of November 30, 2014, we had $8.4 million of unrecognized share-based compensation cost, net of forfeitures, related to unvested stock options. These costs are expected to be recognized over a weighted average period of 2.4 years.

17

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 13. Commitments and Contingencies

Surety Bonds

As part of our normal operations, our insurers issue surety bonds for us that are required by various states where we operate. We are obligated to reimburse our insurers for any surety bonds that are paid. As of November 30, 2014, the face amount of these surety bonds was approximately $34 million.

Letters of Credit

As of November 30, 2014, we had approximately $46 million of outstanding letters of credit, which principally support certain guarantees provided by our subsidiaries as part of our normal operations for which fair value is not material.

Litigation and Other Matters

We are subject to various claims and contingencies that arise from time to time in the ordinary course of business, including those related to regulation, litigation, business transactions, employee-related matters and taxes, among others. We do not believe any of these are material for separate disclosure.

The following is a description of pending litigation, settlements, and other proceedings that fall outside the scope of ordinary and routine litigation incidental to our business.

Securities Class Action (Apollo Institutional Investors Group)

On August 13, 2010, a securities class action complaint was filed in the U.S. District Court for the District of Arizona by Douglas N. Gaer naming us, John G. Sperling, Gregory W. Cappelli, Charles B. Edelstein, Joseph L. D’Amico, Brian L. Swartz and Gregory J. Iverson as defendants for allegedly making false and misleading statements regarding our business practices and prospects for growth. That complaint asserted a putative class period stemming from December 7, 2009 to August 3, 2010. A substantially similar complaint was also filed in the same Court by John T. Fitch on September 23, 2010 making similar allegations against the same defendants for the same purported class period. Finally, on October 4, 2010, another purported securities class action complaint was filed in the same Court by Robert Roth against the same defendants as well as Brian Mueller, Terri C. Bishop and Peter V. Sperling based upon the same general set of allegations, but with a defined class period of February 12, 2007 to August 3, 2010. The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On October 15, 2010, three additional parties filed motions to consolidate the related actions and be appointed the lead plaintiff.

On November 23, 2010, the Fitch and Roth actions were consolidated with Gaer and the Court appointed the “Apollo Institutional Investors Group” consisting of the Oregon Public Employees Retirement Fund, the Mineworkers’ Pension Scheme, and Amalgamated Bank as lead plaintiffs. The case is now entitled, In re Apollo Group, Inc. Securities Litigation, Lead Case Number CV-10-1735-PHX-JAT. On February 18, 2011, the lead plaintiffs filed a consolidated complaint naming Apollo, John G. Sperling, Peter V. Sperling, Joseph L. D’Amico, Gregory W. Cappelli, Charles B. Edelstein, Brian L. Swartz, Brian E. Mueller, Gregory J. Iverson, and William J. Pepicello as defendants. The consolidated complaint asserts a putative class period of May 21, 2007 to October 13, 2010. On April 19, 2011, we filed a motion to dismiss and oral argument on the motion was held before the Court on October 17, 2011. On October 27, 2011, the Court granted our motion to dismiss and granted plaintiffs leave to amend. On December 6, 2011, the lead plaintiffs filed an Amended Consolidated Class Action Complaint, which alleges similar claims against the same defendants. On January 9, 2012, we filed a motion to dismiss the Amended Consolidated Class Action Complaint. On June 22, 2012, the Court granted our motion to dismiss and entered a judgment in our favor.

On July 20, 2012, the plaintiffs filed a Notice of Appeal with the U.S. Court of Appeals for the Ninth Circuit. On December 16, 2014, the U.S. Court of Appeals for the Ninth Circuit issued an opinion affirming the District Court’s dismissal of plaintiffs’ complaint.

Securities Class Action (Teamsters Local 617 Pensions and Welfare Funds)

On November 2, 2006, the Teamsters Local 617 Pension and Welfare Funds filed a class action complaint purporting to represent a class of shareholders who purchased our stock between November 28, 2001 and October 18, 2006. The complaint, filed in the U.S. District Court for the District of Arizona, is entitled Teamsters Local 617 Pension & Welfare Funds v. Apollo Group, Inc. et al., Case Number 06-cv-02674-RCB, and alleges that we and certain of our current and former directors and officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by purportedly making misrepresentations concerning our stock option granting policies and practices and related accounting. The defendants are Apollo, J. Jorge Klor de Alva, Daniel E. Bachus, John M. Blair, Dino J. DeConcini, Kenda B. Gonzales, Hedy F. Govenar, Brian E. Mueller, Todd S. Nelson, Laura Palmer Noone, John R. Norton III, John G. Sperling and Peter V. Sperling. On September 11,

18

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2007, the Court appointed The Pension Trust Fund for Operating Engineers as lead plaintiff. Lead plaintiff filed an amended complaint on November 23, 2007, asserting the same legal claims as the original complaint and adding claims for violations of Section 20A of the Securities Exchange Act of 1934 and allegations of breach of fiduciary duties and civil conspiracy. On April 30, 2009, plaintiffs filed their Second Amended Complaint, which alleges similar claims for alleged securities fraud against the same defendants.

On March 31, 2011, the U.S. District Court for the District of Arizona dismissed the case with prejudice and entered judgment in our favor. Plaintiffs filed a motion for reconsideration of this ruling, and the Court denied this motion on April 2, 2012. On April 27, 2012, the plaintiffs filed a Notice of Appeal with the U.S. Court of Appeals for the Ninth Circuit. During the pendency of this appeal, the parties reached an agreement in principle to settle this matter and, at the request of the parties, the Ninth Circuit issued an order staying the appeal on April 30, 2014. The parties plan to present a stipulation of settlement to the district court for approval in the near term.

As of November 30, 2014, we have accrued an immaterial amount reflecting the agreed-upon settlement. We intend to pursue reimbursement of the settlement amount from our insurance carriers, although the outcome of any such recovery efforts is uncertain at this point.

Class Action under the Telephone Consumer Protection Act

On September 25, 2014, Mundy Gonzalez filed a class action complaint against University of Phoenix alleging violations of the Telephone Consumer Protection Act (“TCPA”). The complaint, which is captioned Gonzalez v. The University of Phoenix, 3:14-cv-02279 and which was filed in U.S. District Court for the Southern District of California, alleges that University of Phoenix violated the TCPA by using automatic dialing systems to place unsolicited telephone calls to the cellular telephones of plaintiff and other individuals. The complaint seeks to recover damages on behalf of plaintiff and other similarly situated individuals.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

Class Action Alleging Unfair and Deceptive Practices

On November 13, 2014, Ashley Paredes filed a class action complaint against University of Phoenix and Apollo Education Group, Inc. alleging unfair and deceptive business practices in violation of California law. The complaint, which is captioned Paredes v. The University of Phoenix, Inc. and was filed in California Superior Court in San Bernadino County, purports to assert claims on behalf of the class of students who enrolled in the University’s educational programs for Psychology, Education, Nursing, Health Administration and Criminal Justice, and Technology from November 10, 2011 through November 10, 2014. The complaint alleges that the University misled class members regarding transferability of credits earned at the University and by promising or guaranteeing employment upon completion of studies. The complaint seeks to recover damages on behalf of plaintiff and other members of the class.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

Class Action Alleging Violations of the California Labor Code

On December 24, 2014, Carmin Tandy, who was previously employed as a faculty member at University of Phoenix, filed a class action complaint against Apollo Education Group, Inc. and University of Phoenix alleging violations of the California Labor Code pertaining to the manner in which University of Phoenix faculty in California were compensated. The complaint, which is captioned Tandy v. Apollo Education Group, Inc., et al., was filed in California Superior Court in San Diego County, purports to assert claims on behalf of faculty who were employed by defendants in California within either four, three, or one years of the filing of the complaint, and seeks to recover repayment of wages and other damages and relief under California law. 

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

19

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Incentive Compensation False Claims Act Lawsuit

On May 25, 2011, we were notified that a qui tam complaint had been filed against us in the U.S. District Court, Eastern District of California, by private relators under the Federal False Claims Act and California False Claims Act, entitled USA and State of California ex rel. Hoggett and Good v. University of Phoenix, et al, Case Number 2:10-CV-02478-MCE-KJN. When the federal government declines to intervene in a qui tam action, as it has done in this case, the relators may elect to pursue the litigation on behalf of the federal government and, if successful, they are entitled to receive a portion of the federal government’s recovery.

The complaint alleges, among other things, that University of Phoenix has violated the Federal False Claims Act since December 12, 2009 and the California False Claims Act for the preceding ten years by falsely certifying to the U.S. Department of Education and the State of California that University of Phoenix was in compliance with various regulations that require compliance with federal rules regarding the payment of incentive compensation to admissions personnel, in connection with University of Phoenix’s participation in student financial aid programs. In addition to injunctive relief and fines, the relators seek significant damages on behalf of the Department of Education and the State of California, including all student financial aid disbursed by the Department to our students since December 2009 and by the State of California to our students during the preceding ten years. On July 24, 2014, the Court granted our motion to dismiss for lack of jurisdiction and dismissed relators’ complaint with prejudice. On December 14, 2014, relators filed a Notice of Appeal with the U.S. Court of Appeals for the Ninth Circuit.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on the information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

Himmel Derivative Action

On November 12, 2010, we received a shareholder demand to investigate, address and commence proceedings against each of our directors and certain of our officers for violation of any applicable laws, including in connection with the subject matter of the report of the Government Accountability Office prepared for the U.S. Senate in August 2010, our withdrawal of the outlook we previously provided for our fiscal year 2011, the investigation into possible unfair and deceptive trade practices associated with certain alleged practices of University of Phoenix by the State of Florida Office of the Attorney General in Fort Lauderdale, Florida, the participation by the State of Oregon Office of the Attorney General in the Securities Class Action (Apollo Institutional Investors Group), and the informal inquiry by the Enforcement Division of the Securities and Exchange Commission that commenced in October 2009.

On March 24, 2011, a shareholder derivative complaint was filed in the Superior Court for the State of Arizona, Maricopa County by Daniel Himmel, the foregoing shareholder who previously made a demand for investigation. In the complaint, the plaintiff asserts a derivative claim on our behalf against certain of our current and former officers and directors for breach of fiduciary duty, waste of corporate assets, and unjust enrichment. The complaint alleges that the individual defendants made improper statements and engaged in improper business practices that caused our stock price to drop, led to securities class actions against us, and enhanced regulation and scrutiny by various government entities and regulators. The case is entitled, Himmel v. Bishop, et al, Case Number CV2011-005604. Pursuant to a stipulation between all parties, on August 31, 2011, the Court ordered this action stayed during the pendency of the underlying Securities Class Action (Apollo Institutional Investors Group) matter.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on the information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

20

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

K.K. Modi Investment and Financial Services Pvt. Ltd.

On November 8, 2010, a suit was filed by K.K. Modi Investment and Financial Services Pvt. Ltd. (“Modi”) in the High Court of Delhi at New Delhi against defendants Apollo, Western International University, Inc., University of Phoenix, Inc., Apollo Global, Inc., Modi Apollo International Group Pvt. Ltd., Apollo International, Inc., John G. Sperling, Peter V. Sperling and Jorge Klor De Alva, seeking to permanently enjoin the defendants from making investments in the education industry in the Indian market in breach of an exclusivity and noncompete provision which plaintiff alleges is applicable to Apollo and its subsidiaries. The case is entitled, K.K. Modi Investment and Financial Services Pvt. Ltd. v. Apollo International, et. al. We believe that the relevant exclusivity and noncompete provision is inapplicable to us and our affiliates. On October 31, 2014, the Court denied the Apollo defendants’ initial applications to have the case dismissed, concluding that plaintiffs’ complaint raised factual issues that needed to be resolved through the submission of evidence. Defendants have appealed that ruling to the Division Bench of the High Court, and that appeal remains pending. If plaintiff ultimately obtains the requested injunctive relief, our ability to conduct business in India, including through our joint venture with HT Media Limited, may be adversely affected. It is also possible that in the future K.K. Modi may seek to expand existing litigation in India or commence litigation in the U.S. in which it may assert a significant damage claim against us.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on the information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

Attorney General Investigations

On October 22, 2010, University of Phoenix received notice that the State of Florida Office of the Attorney General in Fort Lauderdale, Florida had commenced an investigation into possible unfair and deceptive trade practices associated with certain alleged practices of the University. The notice included a subpoena to produce documents and detailed information for the time period of January 1, 2006 to the present about a broad spectrum of the University’s business. We are cooperating with the investigation, but also filed a suit to quash or limit the subpoena and to protect information sought that constitutes proprietary or trade secret information. We cannot predict the eventual scope, duration or outcome of the investigation at this time.

In May 2011 and January 2013, University of Phoenix received Civil Investigative Demands from the State of Massachusetts Office of the Attorney General. The Demands relate to an investigation of possible unfair or deceptive methods, acts, or practices by proprietary educational institutions in connection with the recruitment of students and the financing of education. The Demands seek documents, information and testimony regarding a broad spectrum of the University’s business for the time period of January 1, 2002 to the present. We are cooperating with the investigation. We cannot predict the eventual scope, duration or outcome of the investigation at this time.

Because of the many questions of fact and law that may arise, the outcome of these investigative proceedings is uncertain at this point. Based on the information available to us at present, we cannot reasonably estimate a range of loss for these matters and, accordingly, we have not accrued any liability associated with these matters.

In addition, from time to time, we receive informal requests from state Attorneys General and other government agencies relating to specific complaints they have received from students or former students and seeking information about the student, our programs, and other matters relating to our activities in the relevant state. These requests can be broad and time consuming to respond to, and there is a risk that they could expand and/or lead to a formal inquiry or investigation into our practices in a particular state.

UNIACC Investigations

UNIACC was advised by the National Accreditation Commission of Chile in November 2011 that its institutional accreditation would not be renewed and therefore had lapsed. Subsequently, in June 2012, a prosecutor’s office in Santiago, Chile requested that UNIACC provide documents relating to UNIACC’s relationship with a former employee and consultant who served as a member of the National Accreditation Commission until March 2012, and we received requests for additional information in connection with this investigation. Furthermore, in August 2012, the prosecutor’s office began requesting that UNIACC provide information about UNIACC’s business structure and operations and its relationship with other Apollo entities, in connection with an additional investigation regarding UNIACC’s compliance with applicable laws concerning the generation of profit by universities such as UNIACC. The prosecutor’s office has also requested additional information from UNIACC regarding certain government funding received by the institution. UNIACC is cooperating with these investigations. At this time, we cannot predict the eventual scope, duration or outcome of these investigations.

21

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In November 2012, UNIACC learned that the Ministry of Education was commencing a formal investigation into profit related issues and concerning the official recognition of UNIACC as a university under Chilean law. On November 18, 2013, we were notified by the Ministry of Education that it declined to pursue any charges against UNIACC and closed its investigation without imposing any sanction on UNIACC. In closing its investigation, the Ministry forwarded certain of its files for review by the Chilean tax authorities and the criminal prosecutor conducting the profit investigation referenced above.

Because of the many questions of fact and law that may arise, the outcome of these investigative proceedings is uncertain at this point. Based on the information available to us at present, we cannot reasonably estimate a range of loss for these matters and, accordingly, we have not accrued any liability associated with these matters.

Office of the Inspector General of the U.S. Department of Education (“OIG”) Subpoena

On March 21, 2014, University of Phoenix received a subpoena from the Mid-Atlantic Region of the OIG. The subpoena seeks the production by the University of documents and detailed information regarding a broad spectrum of the activities conducted in the University’s Centralized Service Center for the Northeast Region located in Columbia, Maryland, for the time period of January 1, 2007 to the present, including information relating to marketing, recruitment, enrollment, financial aid processing, fraud prevention, student retention, personnel training, attendance, academic grading and other matters. We are cooperating with these requests but cannot at this time predict the eventual scope, duration or outcome of this matter.

Because of the many questions of fact and law that may arise, the outcome of this matter is uncertain at this point. Based on the information available to us at present, we cannot reasonably estimate a range of loss and, accordingly, we have not accrued any liability associated with this matter.

Securities Class Action (Nader Saleh)

On April 24, 2014, a securities class action complaint was filed in the U.S. District Court for the District of Arizona by Nader Saleh naming Apollo Education Group, Inc., Gregory W. Cappelli, and Brian L. Swartz as defendants and asserting a putative class period stemming from October 19, 2011 to April 1, 2014. The complaint is entitled Saleh v. Apollo Education Group, Inc., 2:14-cv-00877-SRB and alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, among other complaints. On November 12, 2014, plaintiff voluntarily dismissed the complaint, and the district court subsequently terminated the case on November 13, 2014.

Note 14. Regulatory Matters

All U.S. federal financial aid programs are established by Title IV of the Higher Education Act and regulations promulgated thereunder. The U.S. Congress must periodically reauthorize the Higher Education Act and annually determine the funding level for each Title IV program. In 2008, the Higher Education Act was reauthorized through September 30, 2013 by the Higher Education Opportunity Act and an automatic one year extension continued the authorization through September 30, 2014. Congress continues to engage in Higher Education Act reauthorization hearings and although the one year automatic extension has expired, Title IV student financial aid programs remain authorized and functioning. Changes to the Higher Education Act, including changes in eligibility and funding for Title IV programs, are likely to occur in connection with the next reauthorization, but we cannot predict the scope or substance of any such changes.

The Higher Education Act, as reauthorized, specifies the manner in which the U.S. Department of Education reviews institutions for eligibility and certification to participate in Title IV programs. Every educational institution involved in Title IV programs must be certified to participate and is required to periodically renew this certification.

University of Phoenix was recertified in November 2009 and entered into a new Title IV Program Participation Agreement which expired on December 31, 2012. University of Phoenix has submitted necessary documentation for re-certification and its eligibility continues on a month-to-month basis until the Department issues its decision on the application. We have no reason to believe that the University’s application will not be renewed in due course, and it is not unusual to be continued on a month-to-month basis until the Department completes its review. Additionally, in August 2014, the Department commenced an ordinary course program review of University of Phoenix’s administration of Title IV programs covering federal financial aid years 2012-2013 and 2013-2014, as well as compliance with the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act, the Drug-Free Schools and Communities Act and related regulations. We cannot predict whether, or to what extent, the imposition of the Notice sanction by The Higher Learning Commission, discussed below, or the pendency of the ordinary course program review, might have on the process for renewal of University of Phoenix’s Program Participation Agreement.

The Department has notified us that it has completed its review of Western International University’s application for a new Title IV Program Participation Agreement and that it has been approved with an expiration date of June 30, 2018.

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APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Gainful Employment

Under the Higher Education Act, as reauthorized, proprietary schools are generally eligible to participate in Title IV programs only in respect of educational programs that lead to “gainful employment in a recognized occupation.” In connection with this requirement, proprietary postsecondary institutions are required to provide information to prospective students about each eligible program, including the relevant recognized occupations, cost, completion rate, job placement rate, and median loan debt of program completers.

On October 31, 2014, the U.S. Department of Education published final regulations, effective July 1, 2015, on the metrics for determining whether an academic program prepares students for gainful employment in a recognized occupation. These final regulations expand upon the existing gainful employment disclosure requirements discussed above, implement program level annual reporting for all proprietary institutions participating in Title IV programs, require program eligibility certification as part of the institution’s program participation agreement and establish minimum standards related to the debt-to-earnings ratios of the program’s graduates.

Higher Learning Commission Accreditation

University of Phoenix is accredited by The Higher Learning Commission (“HLC”) of the North Central Association of Colleges and Schools. This accreditation provides the following:

• Recognition and acceptance by employers, other higher education institutions and governmental entities of the degrees and credits earned by students;

• Qualification to participate in Title IV programs (in combination with state higher education operating and degree granting authority); and

• Qualification for authority to operate in certain states.

In July 2013, the accreditation of University of Phoenix was reaffirmed by HLC through the 2022-2023 academic year. At the same time, HLC placed the University on Notice status for a two-year period. Notice status is a sanction that means that HLC has determined that an institution is on a course of action that, if continued, could lead the institution to be out of compliance with one or more of the HLC Criteria for Accreditation or Core Components. University of Phoenix was assigned by HLC to the Standard Pathway reaffirmation process, pursuant to which the University will host a comprehensive evaluation visit in 2016-2017 and will undergo its next reaffirmation visit and process in 2022-2023.

The University submitted a Notice Report to HLC in November 2014 providing evidence that the University has ameloriated those conditions that led to the Notice status and continues to meet the Criteria for Accreditation, Core Components and Assumed Practices associated with those conditions. In addition, in the Notice Report the University reported on its progress in other areas of concern not included as a basis for the Notice sanction, including retention and graduation rates, three-year student loan cohort default rates, and credit hour policies and practices relating to learning teams. The University is required to host a focused visit by the HLC in January 2015, to validate the contents of the Notice Report. The HLC Board of Trustees will review the University’s Notice Report, together with a report of the focused visit, at a meeting in 2015. During the Notice period, the University is required to disclose its Notice status in connection with any statements regarding its HLC accreditation. If, after the Notice period, HLC determines that University of Phoenix is not in compliance with one or more of HLC’s Criteria for Accreditation, HLC may elect to impose probation, which would have further, more significant consequences for the University and our business.

In addition to the above, as a condition of HLC’s approval of the July 2014 changes to the voting stock trust which holds approximately 51% of Apollo’s outstanding Class B common shares, the only class of Apollo voting stock, University of Phoenix hosted a visit by HLC in December 2014 focused on ascertaining the appropriateness of the approval, implications for succession planning, and the effect, if any, of the change in trust arrangements on Apollo and the respective institutions and their ability to continue to meet HLC’s Criteria for Accreditation and Assumed Practices. The report from this visit is pending.

OIG Audit of the U.S. Department of Education

In October 2011, the Office of the Inspector General of the U.S. Department of Education (“OIG”) notified us that it was conducting a nationwide audit of the Department’s program requirements, guidance, and monitoring of institutions of higher education offering distance education. In connection with the OIG’s audit of the Department, the OIG examined a sample of University of Phoenix students who enrolled during the period from July 1, 2010 to June 30, 2011. The OIG subsequently notified University of Phoenix that in the course of this review it identified certain conditions that the OIG believed were Title IV program compliance exceptions at University of Phoenix. In February 2014, the OIG released a final audit report on this subject, which identified exceptions based on select student records related principally to the calculation of the amount of Title IV program funds returned after student withdrawals and the process for confirming student eligibility prior to disbursement of

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APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Title IV program funds. While the OIG recommended follow-up action with regard to some schools, University of Phoenix was not among them. We were not the direct subject of the OIG’s audit of the Department, and we have not accrued any liability associated with this matter.

Note 15. Segment Reporting

We operate in the education industry and our operating segments have been determined based on the method by which our chief operating decision maker evaluates performance and allocates resources. We have not aggregated any of our operating segments, which are presented in our segment reporting as follows:

• University of Phoenix;

• Apollo Global; and

• Other.

University of Phoenix offers undergraduate and graduate degrees in a wide range of program areas as well as various non-degree programs. The University’s students attend classes online and at ground campus locations throughout the U.S. and Puerto Rico. The majority of students attend classes exclusively online.

Apollo Global includes:

• BPP Holdings Limited (“BPP”);

• Open Colleges Australia Pty Ltd (“Open Colleges”);

• Universidad Latinoamericana (“ULA”);

• Milpark Education (Pty) Ltd. (“Milpark Education”);

• Apollo Global Chile S.A. (“Apollo Global Chile”);

• India Education Services Private Ltd (“India Education Services”); and

• Apollo Global corporate operations.

Apollo Global acquired Open Colleges and Milpark Education during fiscal year 2014. The operating results of Open Colleges and Milpark Education are included in our Apollo Global operating segment from the date of each respective acquisition. Additionally, as discussed in Subsequent Event in Note 1, Nature of Operations and Significant Accounting Policies, Apollo Global acquired a 75% interest in FAEL in December 2014, and its operating results will be included in our Apollo Global operating segment from the date of acquisition.

Other includes:

• The College for Financial Planning Institutes Corporation (“College for Financial Planning”);

• Carnegie Learning, Inc.;

• Western International University, Inc.;

• Apollo Lightspeed; 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 Condensed Consolidated Statements of Income for all periods presented, we have revised our financial information by segment to exclude IPD’s operating results.

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APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

	Three Months Ended November 30,
($ in thousands)	2014			2013
Net revenue:
University of Phoenix	$	592,853		$	744,863
Apollo Global	115,140			91,159
Other	11,059			12,126
Net revenue	$	719,052		$	848,148
Operating income (loss)(1):
University of Phoenix	$	93,511		$	183,473
Apollo Global(2)	(4,842		)	2,217
Other(2)	(28,175		)	(15,329		)
Operating income	60,494			170,361
Reconciling items:
Interest income	589			568
Interest expense	(1,662		)	(2,086		)
Other (loss) income, net	(1,285		)	807
Income from continuing operations before income taxes	$	58,136		$	169,650

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

⁽²⁾ During the three months ended November 30, 2014, Apollo Global and Other incurred $1.7 million and $1.5 million of acquisition costs and contingent consideration charges, respectively.

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

($ in thousands)	November 30, 2014		August 31, 2014
University of Phoenix	$	814,470	$	824,895
Apollo Global	684,019		680,363
Other(1)	923,799		1,587,677
Total assets	$	2,422,288	$	3,092,935

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

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help provide an understanding of our results of operations, financial condition and present business environment. The MD&A is provided as a supplement to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended August 31, 2014 and our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1, Financial Statements in this Form 10-Q.

Overview

Apollo Education Group, Inc. is one of the world’s largest private education services providers, serving students since 1973. We believe that our success depends on providing high quality education and career pathways, tools and services to students to maximize the benefits of their educational experience. Through our subsidiaries, we offer undergraduate, graduate, professional development and other non-degree educational programs and services, online and on-campus, principally to working learners in the U.S. and abroad.

Substantially all of our net revenue is composed of tuition and fees for educational services. In fiscal year 2014, University of Phoenix represented 87% of our total consolidated net revenue and generated more than 100% of our total consolidated operating income. Further information regarding our education platforms is included in Note 15, Segment Reporting, in Part I, Item 1, Financial Statements.

Key Trends, Developments and Challenges

The following developments and trends present opportunities, challenges and risks relating to our business:

• Rapidly Evolving and Highly Competitive Education Industry.The U.S. higher education industry is experiencing unprecedented, rapidly developing changes due to technological developments, evolving needs and objectives of students and employers, economic constraints affecting educational institutions and students, price competition, increased focus on affordability and other factors that challenge many of the core principles underlying the industry. In addition, the sector in which we operate has experienced significant and increasing competition from traditional public and private colleges and universities as these institutions are increasing their distance learning and other online education programs, including programs that are geared towards the needs of working learners. We believe these changes have contributed to the decline in University of Phoenix enrollment since 2010, and the 5.0% decline in New Degreed Enrollment in the first quarter of fiscal year 2015 compared to the prior year. See further discussion of enrollment in Results of Operations below.

We are adapting our business to meet these rapidly evolving developments and to stabilize University of Phoenix enrollment. In furtherance of this, we are implementing several initiatives including emphasizing the distinctiveness of University of Phoenix’s colleges, through which we seek to more effectively address the specific needs of the students and the employers they serve. Additionally, we are working to enhance our offerings to remain competitive and to more effectively deliver a quality student experience. This includes increased use of targeted scholarships and discounts that attract students and reward persistence. These initiatives, along with some of those described below, could adversely impact our operating results, especially in the short-term.

• Education to Careers Value Proposition.We believe it is critical that we maximize the value our students garner from their education. Our goal is to deliver, and to continually improve, educational programs that give our students the skills they need to increase their employment opportunities within their field of study or to advance within their existing careers. This is our key value proposition to prospective students. We have launched the Phoenix Career Guidance System, which includes various career-oriented tools, and continue to increase career connections and relationships to connect students to the careers they want and connect employers with the talent they need. We also intend to focus on areas of high demand for qualified employees and to tailor our programs to meet the needs of students and employers in these areas, including through the increased offering of professional development and other non-degree programs.

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• Student Retention.We are focused on improving student retention. In furtherance of this, we are implementing several initiatives, including:

• Increasing use of full-time faculty in initial University of Phoenix courses;

• Modifying course structure and sequencing;

• Targeted use of scholarships to reward persistence; and

• Implementing a new student relationship and communications management platform designed to streamline student support services and assist students who have limited or no higher education experience or otherwise may be unprepared to succeed in University of Phoenix’s academic programs.

• Information Technology.We have upgraded or are in the process of upgrading a substantial portion of our key IT systems, including our online student classroom, student relationship and communications management platform, and corporate applications, and retiring the related legacy systems. The transition from the legacy systems entails risk of unanticipated disruption, including in our core business functions. University of Phoenix’s new online student classroom, which was fully implemented in late June 2014, has experienced technical challenges that in many cases have adversely impacted the user experience for our students. We believe that these disruptions contributed to the decline in student retention we experienced in the first quarter of fiscal year 2015. We have developed and are implementing corrective measures and anticipate that the substantial majority of the measures will be implemented during the second quarter of fiscal year 2015. However, we expect remediation and the monitoring of our corrective measures to continue through the remainder of fiscal year 2015.

• Business Process Reengineering and Simplification.As discussed in Results of Operations below, we remain focused on reengineering and simplifying our business processes and refining our educational delivery systems to improve the efficiency and effectiveness of our services to students, and on further reducing the size of our services infrastructure and associated operating expenses to align with our reduced enrollment and revenue. These activities include rationalizing University of Phoenix campus locations and streamlining, automating where appropriate, and enhancing our administrative and student facing services. University of Phoenix continues to evaluate the extent, functionality and location of its ground facilities and to close facilities that are underutilized or unnecessary.

• Expansion into New Markets.We believe that our significant experience pioneering and delivering effective, flexible education to working learners can be utilized to successfully offer education in significant and underserved international markets. We have operations on six continents and are working to expand our global operations, including exploring new opportunities for growth in other areas of non-traditional higher education. The integration and operation of acquired businesses in foreign jurisdictions entails substantial regulatory, market and execution risks and, consistent with our experience to date, such acquisitions may not be accretive for an extended period of time.

• Regulatory Environment.The following summarizes significant regulatory matters applicable to our business. For a more detailed discussion of the regulatory environment and related risks, refer to Part I, Item 1, Business, and Item 1A, Risk Factors, in our 2014 Annual Report on Form 10-K filed with the Securities and Exchange Commission on October 21, 2014.

• Financial Aid Funding. In recent years, there has been increased focus by members of the U.S. Congress and federal agencies such as the Consumer Financial Protection Bureau and the Federal Trade Commission on the role that proprietary educational institutions play in higher education. Congressional hearings and roundtable discussions have been held regarding various aspects of the education industry, and reports have been issued that are highly critical of proprietary institutions and include a number of recommendations to be considered by Congress in connection with the upcoming reauthorization of the federal Higher Education Act. The current reauthorization expired September 30, 2013 and an automatic one year extension continued the authorization through September 30, 2014. Congress continues to engage in Higher Education Act reauthorization hearings and although the one year automatic extension has expired, Title IV student financial aid programs remain authorized and functioning.

In addition, Title IV program funding is a potential target for reduction as Congress seeks to reduce the U.S. budget deficit. Because a substantial portion of our revenue is derived from Title IV programs, any action by Congress that reduces Title IV program funding, whether through across-the-board funding reductions, sequestration or otherwise, or alters the eligibility of our institutions or students to participate in Title IV programs could have a material adverse effect on our enrollment and financial condition. Action by Congress or federal agencies could also require us to modify our practices in ways that increase our administrative costs and reduce our operating income.

In addition to possible reductions in Title IV program funding, certain military financial aid may be reduced as military branches address decreased funding. Reductions and/or changes in military financial aid could

27

result in increased student borrowing, decreased enrollment and adverse impacts on our 90/10 Rule percentage.

• Gainful Employment. Under the Higher Education Act, as reauthorized, proprietary schools are generally eligible to participate in Title IV programs only in respect of educational programs that lead to “gainful employment in a recognized occupation.” In connection with this requirement, proprietary postsecondary institutions are required to provide information to prospective students about each eligible program, including the relevant recognized occupations, cost, completion rate, job placement rate, and median loan debt of program completers.

On October 31, 2014, the U.S. Department of Education published final regulations, effective July 1, 2015, on the metrics for determining whether an academic program prepares students for gainful employment in a recognized occupation. These final regulations expand upon the existing gainful employment disclosure requirements discussed above, implement program level annual reporting for all proprietary institutions participating in Title IV programs, require program eligibility certification as part of the institution’s program participation agreement and establish minimum standards related to the debt-to-earnings ratios of the program’s graduates.

• U.S. Department of Education Program Participation Agreement. University of Phoenix’s Title IV Program Participation Agreement expired December 31, 2012. The University has submitted necessary documentation for re-certification and its eligibility continues on a month-to-month basis until the Department issues its decision on the application. We have no reason to believe that the University’s application will not be renewed in due course, and it is not unusual to be continued on a month-to-month basis until the Department completes its review. Additionally, in August 2014, the Department commenced an ordinary course program review of University of Phoenix’s administration of Title IV programs covering federal financial aid years 2012-2013 and 2013-2014, as well as compliance with the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act, the Drug-Free Schools and Communities Act and related regulations. We cannot predict whether, or to what extent, the imposition of the Notice sanction by The Higher Learning Commission, discussed below, or the pendency of the ordinary course program review, might have on the process for renewal of University of Phoenix’s Program Participation Agreement.

The Department has notified us that it has completed its review of Western International University’s application for a new Title IV Program Participation Agreement and that it has been approved with an expiration date of June 30, 2018.

• U.S. Department of Education Rulemaking. In December 2014, the U.S. Department of Education issued a Notice of Proposed Rulemaking (“NPRM”) that would amend teacher preparation accountability regulations under Title II of the Higher Education Act, and regulations governing the Teacher Assistance for College and Higher Education (“TEACH”) Grant programs under Title IV of the Higher Education Act. The proposed regulations seek to develop and distribute more meaningful data on teacher preparation program quality, and establish TEACH Grant program funding based on teacher preparation program quality. The public comment period on the NPRM ends on February 2, 2015. The effective date of any such regulations cannot be determined at this time. Additional details are available at

http://www2.ed.gov/policy/highered/reg/hearulemaking/2011/teacherprep.html.

In addition to rulemaking, the Department has also conducted listening tours to solicit public feedback building on President Obama’s call for a national college rating system. In December 2014, the Department released the draft ratings framework which is intended to provide increased transparency regarding access, affordability, and student outcomes. The public comment period on the draft ratings framework ends on February 17, 2015, and the Department intends to release the final ratings system for use by students and others in advance of the 2015-2016 school year. Additional details are available at

http://www.ed.gov/news/press-releases/public-feedback-college-ratings-framework.

• The Higher Learning Commission Accreditation Reaffirmation. In July 2013, the accreditation of University of Phoenix was reaffirmed by The Higher Learning Commission, its institutional accreditor (“HLC”), through the 2022-2023 academic year. At the same time, HLC placed the University on Notice status for a two-year period. Notice status is a sanction that means that HLC has determined that an institution is on a course of action that, if continued, could lead the institution to be out of compliance with one or more of the HLC Criteria for Accreditation or Core Components. We submitted the required report to HLC in connection with this matter and will host a site visit in January 2015 to validate the report. Refer to Note 14, Regulatory Matters, in Item 1, Financial Statements. We believe the imposition of the sanction of Notice has adversely

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impacted the reputation of University of Phoenix, may have contributed to the University’s continuing decline in enrollment and could adversely impact our business in the future.

In addition to the above, as a condition of HLC’s approval of the July 2014 changes to the voting stock trust which holds approximately 51% of Apollo’s outstanding Class B common shares, the only class of Apollo voting stock, University of Phoenix hosted a visit by HLC in December 2014 focused on ascertaining the appropriateness of the approval, implications for succession planning, and the effect, if any, of the change in trust arrangements on Apollo and the respective institutions and their ability to continue to meet HLC’s Criteria for Accreditation and Assumed Practices. The report from this visit is pending.

For a more detailed discussion of our business, industry and risks, refer to our 2014 Annual Report on Form 10-K filed with the Securities and Exchange Commission on October 21, 2014.

Other Fiscal Year 2015 Events

In addition to the items mentioned above, we experienced the following other events during fiscal year 2015 to date:

1. Hilton Military Internship Program.During the first quarter of fiscal year 2015, Apollo Education Group, Hilton Worldwide and Goodwill Industries International launched a new program designed to connect veterans with careers in the hospitality industry. This program links a certificate in hospitality management from University of Phoenix with a paid internship at a Hilton Worldwide property and other veteran services.

2. Acquisition of FAEL.On December 4, 2014, Apollo Global acquired a 75% interest in Sociedade Técnica Educacional da Lapa S.A., which provides postsecondary educational programs in Brazil under the name Faculdade da Educacional da Lapa (“FAEL”). Refer to Note 1, Nature of Operations and Significant Accounting Policies, in Item 1, Financial Statements.

3. Apollo Education Ventures.During the second quarter of fiscal year 2015, we announced the formation of Apollo Education Ventures, LLC, a new platform designed to support entrepreneurial ventures and emerging companies that are developing innovations in higher education, professional development and human capital management.

Critical Accounting Policies and Estimates

Refer to our 2014 Annual Report on Form 10-K for our critical accounting policies and estimates.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, refer to Note 1, Nature of Operations and Significant Accounting Policies, in Item 1, Financial Statements.

Results of Operations

We have included below a discussion of our operating results and significant items explaining the material changes in our operating results during the three months ended November 30, 2014 compared to the three months ended November 30, 2013.

As discussed in the Overview of this MD&A, the U.S. higher education industry is experiencing unprecedented, rapidly developing changes. We believe University of Phoenix enrollment has been adversely impacted by these changes, and we are working to enhance our offerings to remain competitive and to more effectively deliver a quality student experience. Certain of our initiatives under consideration could adversely impact our operating results, especially in the short-term.

Our operations are generally subject to seasonal trends, which vary depending on the subsidiary. We have historically experienced, and expect to continue to experience, fluctuations in our results of operations as a result of seasonal variations in the level of our institutions’ enrollments.

• University of Phoenix - Although University of Phoenix enrolls students throughout the year, its net revenue is generally lower in our second fiscal quarter (December through February) than the other quarters due to holiday breaks.

• Apollo Global - Our Apollo Global subsidiaries experience seasonality associated with the timing of when courses begin, exam dates, the timing of their respective holidays and other factors. These factors have historically resulted in lower net revenue in our second and fourth fiscal quarters, particularly for BPP, which also results in substantially lower operating results during these quarters due to BPP’s relatively fixed cost structure.

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Analysis of Condensed Consolidated Statements of Income

The following details our consolidated results of operations. For a more detailed discussion of our operating results by reportable segment, refer to Analysis of Operating Results by Reportable Segment below.

	Three Months Ended November 30,
	2014			2013			% of Net Revenue
($ in thousands)							2014		2013
Net revenue	$	719,052		$	848,148		100.0	%	100.0	%
Costs and expenses:
Instructional and student advisory	324,264			337,202			45.1	%	39.7	%
Marketing	128,793			133,829			17.9	%	15.8	%
Admissions advisory	57,085			49,698			7.9	%	5.9	%
General and administrative	72,367			74,779			10.1	%	8.8	%
Depreciation and amortization	36,404			36,338			5.1	%	4.3	%
Provision for uncollectible accounts receivable	17,398			13,978			2.4	%	1.6	%
Restructuring and other charges	19,028			31,963			2.6	%	3.8	%
Acquisition costs and contingent consideration charges	3,219			—			0.5	%	—	%
Total costs and expenses	658,558			677,787			91.6	%	79.9	%
Operating income	60,494			170,361			8.4	%	20.1	%
Interest income	589			568			0.1	%	0.1	%
Interest expense	(1,662		)	(2,086		)	(0.2	)%	(0.3	)%
Other (loss) income, net	(1,285		)	807			(0.2	)%	0.1	%
Income before continuing operations before income taxes	58,136			169,650			8.1	%	20.0	%
Provision for income taxes	(25,667		)	(70,218		)	(3.6	)%	(8.3	)%
Income from continuing operations	32,469			99,432			4.5	%	11.7	%
Loss from discontinued operations, net of tax	—			(391		)	—	%	—	%
Net income	32,469			99,041			4.5	%	11.7	%
Net loss (income) attributable to noncontrolling interests	1,316			(150		)	0.2	%	—	%
Net income attributable to Apollo	$	33,785		$	98,891		4.7	%	11.7	%

Net Revenue

Our net revenue decreased$129.1 million, or 15.2%, in the three months ended November 30, 2014 compared to the prior year. The decrease was primarily attributable to a 20.4% net revenue decline at University of Phoenix principally due to lower enrollment, which was partially offset by an increase in Apollo Global net revenue. Refer to further discussion of net revenue by reportable segment below at Analysis of Operating Results by Reportable Segment.

Instructional and Student Advisory

Instructional and student advisory decreased$12.9 million, or 3.8%, in the three months ended November 30, 2014 compared to the prior year, which represented a 540 basis point increase as a percentage of net revenue. The decrease in expense was primarily due to lower costs from the enrollment decline and lower costs including rent and compensation from our restructuring activities. This was partially offset by costs attributable to Open Colleges and Milpark Education, which were acquired in December 2013 and May 2014, respectively.

Marketing

Marketing decreased$5.0 million, or 3.8%, in the three months ended November 30, 2014 compared to the prior year, which represented a 210 basis point increase as a percentage of net revenue. The decrease in expense was principally attributable to lower advertising costs, and lower headcount due in part to our restructuring activities. This was partially offset by advertising costs attributable to Open Colleges. Refer to further discussion of Open Colleges’ cost structure in Apollo Global below.

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Admissions Advisory

Admissions advisory increased$7.4 million, or 14.9%, in the three months ended November 30, 2014 compared to the prior year, which represented a 200 basis point increase as a percentage of net revenue. The increase in expense was principally attributable to higher average employee compensation and employee costs attributable to Open Colleges. The increase in average employee compensation is primary due to reorganizing certain admissions advisory functions, which includes retaining qualified personnel in support of our initiatives to adapt our business and improve student retention as discussed in the Overview of this MD&A.

General and Administrative

General and administrative decreased$2.4 million, or 3.2%, in the three months ended November 30, 2014 compared to the prior year, which represented a 130 basis point increase as a percentage of net revenue. The decrease in expense was primarily due to lower costs including compensation and rent attributable to our restructuring activities.

Depreciation and Amortization

Depreciation and amortization increased$0.1 million, or 0.2%, in the three months ended November 30, 2014 compared to the prior year, which represented an 80 basis point increase as a percentage of net revenue. The increase in expense was principally attributable to $3.9 million of intangibles amortization as a result of the Open Colleges and Milpark Education acquisitions. This was substantially offset by lower depreciation due in part to the decline in depreciable assets resulting from our restructuring activities.

Provision for Uncollectible Accounts Receivable

Provision for uncollectible accounts receivable increased$3.4 million, or 24.5%, in the three months ended November 30, 2014 compared to the prior year, which represented an 80 basis point increase as a percentage of net revenue. The increase in expense reflects our current estimate of receivables that will become uncollectible based on most recent trends and bad debt. The increase was also due to expense attributable to Open Colleges. The increase was partially offset by lower University of Phoenix enrollment and associated receivables.

In addition to the above factors, bad debt as a percentage of revenue for University of Phoenix generally increases as the proportion of its student body representing New Degreed Enrollment increases.

Restructuring and Other Charges

The U.S. higher education industry is experiencing unprecedented, rapidly developing changes that challenge many of the core principles underlying the industry. We began initiating restructuring activities in fiscal year 2011 to reengineer and simplify our business processes and refine our educational delivery systems to improve the efficiency and effectiveness of our services to students. We have continued restructuring activities in fiscal year 2015 as we further reduce the size of our services infrastructure and associated operating expenses to align with our reduced enrollment and revenue.

We incurred $19.0 million of restructuring expense in the three months ended November 30, 2014. This consisted of $8.4 million attributable to new restructuring activities initiated after fiscal year 2014, and the remaining portion relates to activities initiated prior to fiscal year 2015.

• Fiscal Year 2015 Restructuring - The expense associated with new restructuring activities initiated after fiscal year 2014 consisted of $4.6 million of severance and other employee separation costs associated with the elimination of approximately 200 positions. The substantial majority of the remaining restructuring expense during the first quarter of fiscal year 2015 represented costs associated with termination of a curriculum-based contract. The expense associated with these activities is reflected in our segment reporting as follows: $0.3 million in University of Phoenix and $8.1 million in Other.

We do not expect to incur material future charges related to these restructuring activities; however, we intend to further reduce the size of our services infrastructure and associated operating expenses to align with our reduced enrollment and revenue, and expect to incur material charges associated with future restructuring activities.

• Prior Fiscal Year Restructuring - Our restructuring activities initiated prior to fiscal year 2015 principally include rationalizing our administrative real estate facilities, closing 115 University of Phoenix ground locations, which at the time was intended to result in 110 remaining ground locations, and workforce reductions. University of Phoenix began closing its ground locations during fiscal year 2013 and has maintained locations throughout the U.S. and Puerto Rico. However, University of Phoenix continues to evaluate the extent, functionality and location of its ground facilities and to close facilities that are underutilized or unnecessary.

The substantial majority of the expense associated with restructuring activities initiated prior to fiscal year 2015 represents an increase in our estimated future cash payments associated with certain lease obligations included in the

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University of Phoenix ground location rationalization discussed above. We do not expect to incur material charges related to the remaining space expected to be vacated. However, we will incur interest accretion and may record additional adjustments associated with the estimated lease obligations, which involves significant judgment, in future periods.

Refer to Note 2, Restructuring and Other Charges, in Item 1, Financial Statements, which is incorporated herein by reference, for further information on our restructuring activities.

Acquisition Costs and Contingent Consideration Charges

The $3.2 million during the three months ended November 30, 2014 principally represents costs associated with our acquisition of FAEL completed in December 2014 as discussed in the Overview of this MD&A, and diligence costs related to other potential acquisitions that were not completed.

Provision for Income Taxes

Our effective income tax rate for continuing operations was 44.1% and 41.4% for the three months ended November 30, 2014 and 2013, respectively. The decrease in income before income taxes caused our nondeductible items, including foreign losses for which we cannot take a tax benefit, to have a more significant adverse impact on our effective tax rate in the first quarter of fiscal year 2015 compared to the prior year.

Analysis of Operating Results by Reportable Segment

The following details our operating results by reportable segment for the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014			2013			$ Change			% Change
Net revenue
University of Phoenix	$	592,853		$	744,863		$	(152,010	)	(20.4	)%
Apollo Global	115,140			91,159			23,981			26.3	%
Other	11,059			12,126			(1,067		)	(8.8	)%
Net revenue	$	719,052		$	848,148		$	(129,096	)	(15.2	)%
Operating income (loss)
University of Phoenix	$	93,511		$	183,473		$	(89,962	)	(49.0	)%
Apollo Global	(4,842		)	2,217			(7,059		)	*
Other	(28,175		)	(15,329		)	(12,846		)	(83.8	)%
Operating income	$	60,494		$	170,361		$	(109,867	)	(64.5	)%

* Not meaningful

University of Phoenix

University of Phoenix’s net revenue decreased $152.0 million, or 20.4%, during the three months ended November 30, 2014 compared to the prior year, which was principally attributable to lower enrollment. The University’s net revenue also declined as a result of the increased use of discounts, grants and scholarships to attract students and reward persistence, and the decline in student retention that we believe was in part due to technical challenges associated with the new online student classroom. See further discussion in Overview of this MD&A.

In connection with the new emphasis by University of Phoenix on the distinctiveness of its colleges, the University evaluated pricing on a programmatic basis and determined changes were appropriate for a number of its programs. Accordingly, the University implemented selective price changes, including decreases, on a program by program basis, effective near the end of the first quarter of fiscal year 2015. Future net revenue will be impacted by these and other pricing changes, changes in enrollment and student mix within programs, and discounts, grants and scholarships.

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The following details University of Phoenix student enrollment for the respective periods:

	Three Months Ended November 30,
(Rounded to the nearest hundred)	2014	2013	% Change
Degreed Enrollment(1)	227,400	263,000	(13.5	)%
New Degreed Enrollment(2)	39,600	41,700	(5.0	)%
Average Degreed Enrollment(3)	230,500	266,000	(13.3	)%

⁽¹⁾ Represents students enrolled in a degree program who attended a credit bearing course during the quarter and had not graduated as of the end of the quarter; students who previously graduated from one degree program and started a new degree program in the quarter (e.g., a graduate of the associate’s degree program returns for a bachelor’s degree); and students participating in certain certificate programs of at least 18 credits with some course applicability into a related degree program.

⁽²⁾ Represents new students and students who have been out of attendance for more than 12 months who enroll in a degree program and start a credit bearing course in the quarter; students who have previously graduated from a degree program and start a new degree program in the quarter; and students who commence participation in certain certificate programs of at least 18 credits with some course applicability into a related degree program.

⁽³⁾ Represents the average of quarterly Degreed Enrollment from the beginning to the end of the respective periods.

University of Phoenix Average Degreed Enrollment decreased 13.3% in the three months ended November 30, 2014 compared to the prior year. We believe University of Phoenix enrollment has been adversely impacted by unprecedented, rapidly developing changes and increasing competition in the U.S. higher education industry as further discussed in the Overview of this MD&A. We are working to enhance our offerings to remain competitive and to more effectively deliver a quality student experience at the right value. Certain of our initiatives under consideration could adversely impact our operating results, especially in the short-term.

University of Phoenix’s operating income decreased $90.0 million, or 49.0%, in the three months ended November 30, 2014 compared to the prior year. The University’s operating margin was 15.8% and 24.6% in the first quarter of fiscal years 2015 and 2014, respectively, and its operating results were impacted by restructuring and other charges of $10.2 million and $25.4 million in the respective periods. The decrease in operating income was principally attributable to lower net revenue, which was partially offset by decreases in faculty and curriculum costs associated with lower enrollment, lower costs including rent and compensation attributable to our restructuring activities, and lower advertising costs.

Apollo Global

Apollo Global net revenue increased $24.0 million, or 26.3%, during the three months ended November 30, 2014 compared to the prior year. The increase was primarily due to revenue from Open Colleges and Milpark Education, which were acquired in December 2013 and May 2014, respectively, and an increase in enrollment at our other international institutions. This was partially offset by a decrease associated with changes in foreign exchange rates.

Apollo Global’s operating loss was $4.8 million during the three months ended November 30, 2014 compared to operating income of $2.2 million in the prior year. Apollo Global’s operating results include the following during the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014		2013
Depreciation and amortization	$	10,471	$	6,359
Acquisition costs and contingent consideration charges	1,686		—
Restructuring and other charges	58		1,263

The decline in operating results in the first quarter of fiscal year 2015 compared to the prior year was principally due to costs associated with Apollo Global’s recent acquisitions and the negative near term impact of Open Colleges. Open Colleges’ educational offerings generally extend beyond one year and the associated revenue is recognized over the contractual period that students are provided access to complete their program, or the time period it takes students to complete their program, as applicable. However, Open Colleges’ operating costs are period costs that are expensed as incurred and a substantial portion are incurred before, or soon after, the students begin their programs. Accordingly, as a result of Open Colleges’ rapid growth, service model, and cost structure, Apollo Global’s operating results are negatively impacted in the near term. However, these factors do not have the same adverse impact on cash flows generated from Open Colleges. Additionally, Apollo Global’s deferred revenue has increased substantially following the Open Colleges’ acquisition, and we expect its deferred revenue to continue to increase, perhaps rapidly, as Open Colleges continues to grow. Apollo Global’s deferred revenue was approximately $172 million and $85 million as of November 30, 2014 and 2013, respectively.

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Other

Other net revenue decreased $1.1 million during the three months ended November 30, 2014 compared to the prior year. The decrease was principally attributable to lower enrollment at Western International University.

Operating losses increased $12.8 million during the three months ended November 30, 2014 compared to the prior year. This was principally attributable to an increase in restructuring charges and increased losses at Western International University.

Liquidity, Capital Resources and Financial Position

We believe that our cash and cash equivalents and available liquidity will be adequate to satisfy our working capital and other liquidity requirements associated with our existing operations through at least the next 12 months. We believe that the most strategic uses of our cash resources include investments in initiatives to improve student outcomes, investments in opportunities for targeted growth through new education offerings or programs, expansion of our global operations through acquisitions or other initiatives, and share repurchases.

Although we currently have substantial available liquidity, our ability to access the credit markets and other sources of liquidity, including utilization of our Revolving Credit Facility described below, may be adversely affected if we experience regulatory compliance challenges, including, but not limited to, maintaining a U.S. Department of Education financial responsibility composite score of at least 1.5, reduced availability of Title IV program funding, or other adverse effects on our business from regulatory or legislative changes. Additionally, we believe that due to recent developments in the proprietary education sector, capital has become less accessible to, and more expensive for, proprietary education providers like us. For a detailed discussion of the regulatory environment and related risks, refer to Part I, Item 1A, Risk Factors, in our 2014 Annual Report on Form 10-K.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents and Marketable Securities

The substantial majority of our cash and cash equivalents, including restricted cash and cash equivalents, are held by our domestic operations and placed with high-credit-quality financial institutions. The following provides a summary of these financial instruments as of the respective periods:

							% of Total Assets at
($ in thousands)	November 30, 2014		August 31, 2014		% Change		November 30, 2014		August 31, 2014
Cash and cash equivalents	$	584,976	$	1,228,813	(52.4	)%	24.1	%	39.7	%
Restricted cash and cash equivalents	226,921		224,135		1.2	%	9.4	%	7.2	%
Marketable securities(1)	205,687		187,472		9.7	%	8.5	%	6.1	%
Total	$	1,017,584	$	1,640,420	(38.0	)%	42.0	%	53.0	%

⁽¹⁾ Represents current marketable securities. We also have $73.6 million and $87.8 million of long-term marketable securities as of November 30, 2014 and August 31, 2014, respectively, that principally includes securities maturing in less than three years.

Cash and cash equivalents (excluding restricted cash) decreased $643.8 million primarily due to:

• $593.2 million of payments on borrowings (net of proceeds from borrowings);

• $34.5 million paid for contingent consideration associated with our Open Colleges acquisition, which includes $21.4 million and $13.1 million in financing and operating activities, respectively;

• $20.3 million for capital expenditures; and

• $20.1 million for share repurchases.

The above items were partially offset by $18.3 million of cash provided by operations, which was adversely impacted by a portion of the contingent consideration payment as discussed above.

We consider the unremitted earnings attributable to certain of our foreign subsidiaries to be permanently reinvested. As of November 30, 2014, the earnings from these operations were not significant.

As of November 30, 2014, we had $129.0 million of money market funds included in cash and restricted cash equivalents that we measure at fair value. Our remaining cash and cash equivalents included in the above table approximate fair value because of the short-term nature of the financial instruments.

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Our current marketable securities, which principally include corporate bonds, tax-exempt municipal bonds, and time deposits, have original maturities to us greater than three months, and contractual maturities that will occur within one year. Our current marketable securities are classified as available-for-sale and are measured at fair value. We determine the fair value of these investments using a market approach with Level 2 observable inputs including quoted prices for similar assets in active markets, or quoted prices for identical or similar assets in markets that are not active. Refer to Note 4, Financial Instruments, in Item 1, Financial Statements.

Debt

In fiscal year 2012, we entered into a syndicated $625 million unsecured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility is used for general corporate purposes, which may include acquisitions and share repurchases. The term is five years and will expire in April 2017. The Revolving Credit Facility may be used for borrowings in certain foreign currencies and letters of credit, in each case up to specified sublimits.

We borrowed $585.0 million and had approximately $24 million of outstanding letters of credit under the Revolving Credit Facility as of August 31, 2014. We repaid the entire amount borrowed under the Revolving Credit Facility during the first quarter of fiscal year 2015. As of November 30, 2014, we have approximately $46 million of outstanding letters of credit under the Revolving Credit Facility.

The Revolving Credit Facility fees are determined based on a pricing grid that varies according to our leverage ratio. The Revolving Credit Facility fee ranges from 25 to 40 basis points. Incremental fees for borrowings under the facility generally range from LIBOR + 125 to 185 basis points. The weighted average interest rate on outstanding short-term borrowings under the Revolving Credit Facility at August 31, 2014 was 3.5%.

The Revolving Credit Facility contains various customary representations, covenants and other provisions, including a material adverse event clause and the following financial covenants: maximum leverage ratio, minimum interest and rent expense coverage ratio, and U.S. Department of Education financial responsibility composite score requirements. We were in compliance with all applicable covenants related to the Revolving Credit Facility at November 30, 2014 and August 31, 2014.

Other debt principally includes debt at subsidiaries of Apollo Global and the present value of an obligation payable over a 10-year period associated with our purchase of technology in fiscal year 2012. The weighted average interest rate on our outstanding other debt at November 30, 2014 and August 31, 2014 was 5.6% and 5.8%, respectively.

The carrying value of our debt, excluding capital leases, approximates fair value based on the nature of our debt, which includes consideration of the portion that is variable-rate.

Cash Flows

Operating Activities

The following provides a summary of our operating cash flows during the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014			2013
Net income	$	32,469		$	99,041
Non-cash items	71,815			68,734
Changes in assets and liabilities	(85,985		)	(38,878		)
Net cash provided by operating activities	$	18,299		$	128,897

Three Months Ended November 30, 2014 - Our non-cash items primarily consisted of $36.4 million of depreciation and amortization, a $17.4 million provision for uncollectible accounts receivable, and $10.7 million of share-based compensation. The changes in assets and liabilities primarily consisted of the following:

• a $50.3 million use of cash related to the change in accounts receivable, excluding the provision for uncollectible accounts receivable;

• a $48.2 million decrease in accrued and other liabilities principally attributable to the payment of accrued bonuses, the timing of our payroll cycle and the payment of the Open Colleges contingent consideration discussed above; and

• a $26.1 million decrease in student deposits principally attributable to the timing of course starts at BPP.

The above changes were partially offset by a $29.8 million increase in deferred revenue principally attributable to the timing of course starts at BPP, and a $20.0 million decrease in prepaid taxes primarily due to the timing of our quarterly tax payments.

We monitor our accounts receivable through a variety of metrics, including days sales outstanding. We calculate our days sales outstanding by determining average daily student revenue based on a rolling twelve month analysis and divide it into the gross

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student accounts receivable balance as of the end of the period. As of November 30, 2014, excluding accounts receivable and the related net revenue for Apollo Global, our days sales outstanding was 23 days compared to 21 days as of August 31, 2014 and November 30, 2013. The increase in our days sales outstanding was principally attributable to higher University of Phoenix gross student receivables as of November 30, 2014 in part due to the timing of Title IV funds received by the University at the end of the respective fiscal quarters.

Three Months Ended November 30, 2013 - Our non-cash items primarily consisted of $36.3 million of depreciation and amortization, a $14.0 million provision for uncollectible accounts receivable, and $12.0 million of share-based compensation. The changes in assets and liabilities primarily consisted of a $53.0 million decrease in accrued and other liabilities principally attributable to the timing of our payroll cycle and accrued bonus payments, and a $26.4 million increase in restricted cash and cash equivalents. This was partially offset by a $64.5 million increase in income taxes payable principally attributable to the timing of our quarterly tax payments.

Investing Activities

The following provides a summary of our investing cash flows during the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014			2013
Capital expenditures	$	(20,337	)	$	(34,366	)
Purchases of marketable securities, net	(5,516		)	(88,921		)
Other	405			—
Net cash used in investing activities	$	(25,448	)	$	(123,287	)

Financing Activities

The following provides a summary of our financing cash flows during the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014			2013
Payments on borrowings, net	$	(593,226	)	$	(615,925	)
Payment for contingent consideration	(21,371		)	—
Share repurchases	(20,064		)	(16,871		)
Other	446			796
Net cash used in financing activities	$	(634,215	)	$	(632,000	)

Three Months Ended November 30, 2014 - Cash used in financing activities primarily consisted of $593.2 million used for payments on borrowings (net of proceeds from borrowings), $21.4 million representing the financing portion of our Open Colleges contingent consideration payment discussed above, and $20.1 million used for share repurchases. Share repurchases consisted of $18.1 million used to repurchase 0.7 million shares at a weighted average purchase price of $26.72 per share, and additional repurchases related to tax withholding requirements on restricted stock units.

As of November 30, 2014, we had $72.2 million available under our share repurchase authorization. There is no expiration date on the repurchase authorization and the amount and timing of future share repurchase authorizations and repurchases, if any, will be made as market and business conditions warrant. Repurchases occur at our discretion and may be made on the open market through various methods including but not limited to accelerated share repurchase programs, or in privately negotiated transactions, pursuant to the applicable Securities and Exchange Commission rules, and may include repurchases pursuant to Securities and Exchange Commission Rule 10b5-1 nondiscretionary trading programs.

Three Months Ended November 30, 2013 - Cash used in financing activities primarily consisted of $615.9 million used for payments on borrowings, and $16.9 million used for share repurchases. Share repurchases consisted of $15.0 million used to repurchase 0.6 million shares at a weighted average purchase price of $26.02 per share, and additional repurchases related to tax withholding requirements on the restricted stock units.

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Contractual Obligations and Other Commercial Commitments

During the three months ended November 30, 2014, we repaid the entire amount borrowed on our Revolving Credit Facility of $585.0 million, and paid $34.5 million of contingent consideration associated with our Open Colleges acquisition. There have been no other material changes in our contractual obligations and other commercial commitments other than in the ordinary course of business since the end of fiscal year 2014 through November 30, 2014. Information regarding our contractual obligations and other commercial commitments is provided in our 2014 Annual Report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes to our market risk since August 31, 2014. For a discussion of our exposure to market risk, refer to our 2014 Annual Report on Form 10-K.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We intend to maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our Chief Executive Officer (“Principal Executive Officer”) and our Senior Vice President and Chief Financial Officer (“Principal Financial Officer”), as appropriate, to allow timely decisions regarding required disclosure. We have established a Disclosure Committee, consisting of certain members of management, to assist in this evaluation. Our Disclosure Committee meets on a quarterly basis and more often if necessary.

Our management, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act), as of the end of the period covered by this report. Based on that evaluation, management concluded that, as of that date, our disclosure controls and procedures were effective at the reasonable assurance level.

Attached as exhibits to this Quarterly Report on Form 10-Q are certifications of our Principal Executive Officer and Principal Financial Officer, which are required in accordance with Rule 13a-14 of the Securities Exchange Act. This Disclosure Controls and Procedures section includes information concerning management’s evaluation of disclosure controls and procedures referred to in those certifications and, as such, should be read in conjunction with the certifications of our Principal Executive Officer and Principal Financial Officer.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting during the quarter ended November 30, 2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Refer to Note 13, Commitments and Contingencies, in Part I, Item 1, Financial Statements, for legal proceedings, which is incorporated into this Item 1 of Part II by this reference.

Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed in our 2014 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchase of Equity Securities

Our Board of Directors has authorized us to repurchase outstanding shares of our Class A common stock from time to time depending on market conditions and other considerations. During the fiscal year 2013, our Board of Directors authorized an increase in the amount available under our share repurchase program up to an aggregate amount of $250 million, of which $72.2 million remained available as of November 30, 2014. There is no expiration date on the repurchase authorizations and repurchases occur at our discretion.

During the three months ended November 30, 2014, we repurchased 0.7 million shares of our Class A common stock at a total cost of $18.1 million, representing a weighted average purchase price of $26.72 per share. The following details changes in our treasury stock during the three months ended November 30, 2014:

(In thousands, except per share data)	Total Number of Shares Repurchased		Average Price Paid per Share		Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs		Maximum Value of Shares Available for Repurchase Under the Plans or Programs
Treasury stock as of August 31, 2014	79,585		$	49.46	79,585		$	90,316
New authorizations	—		—		—		—
Share repurchases	261		26.56		261		(6,946		)
Share reissuances	(18	)	49.39		(18	)	—
Treasury stock as of September 30, 2014	79,828		$	49.39	79,828		$	83,370
New authorizations	—		—		—		—
Share repurchases	283		25.71		283		(7,272		)
Share reissuances	(111	)	49.31		(111	)	—
Treasury stock as of October 31, 2014	80,000		$	49.98	80,000		$	76,098
New authorizations	—		—		—		—
Share repurchases	133		29.16		133		(3,874		)
Share reissuances	(20	)	49.27		(20	)	—
Treasury stock as of November 30, 2014	80,113		$	49.27	80,113		$	72,224

Resales by Directors and Officers

From time to time, our directors and officers enter into written trading plans under Securities and Exchange Commission Rule 10b5-1(c) for the resale of shares of our common stock, including shares to be acquired upon the vesting of restricted stock units and performance share awards, and shares to be acquired pursuant to the exercise of stock options. These plans, which must be entered into during an open trading window and at a time when the director or officer is not in possession of material nonpublic information, provide for sales in accordance with a formula, algorithm or other instructions such that the seller cannot exercise any influence over how, when or whether to effect sales. After adopted, sales may occur in accordance with the plans regardless of whether or not the seller subsequently possesses material nonpublic information or otherwise would then be permitted to trade in our securities. Our insider trading policy permits the adoption of these types of trading plans, and we encourage our directors and officers to utilize such plans, where practical. We do not announce, via Form 8-K or otherwise, the adoption or any termination of such trading plans, if any. Sales under these plans generally must be reported within two business days on Form 4 filed with the SEC, pursuant to Section 16 of the Securities Exchange Act of 1934, as amended.

Sales of Unregistered Securities

We did not have any sales of unregistered equity securities during the three months ended November 30, 2014.

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Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number	Exhibit Description
10.1	Form of Restricted Stock Unit Award Agreement With Performance Condition, Partial Service Vesting Acceleration and Deferral (used for awards to Gregory W. Cappelli in and after August 2016)
10.2	Form of Restricted Stock Unit Award Agreement With Performance Condition, Partial Service Vesting Acceleration and Deferral (used for awards to officers other than Gregory W. Cappelli in and after August 2016)
10.3	Deferral Election Form for Restricted Stock Unit Awards granted in and after August 2016
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

39

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

APOLLO EDUCATION GROUP, INC.

An Arizona Corporation

Date: January 8, 2015

By:	/s/  Brian L. Swartz
	Brian L. Swartz Senior Vice President and Chief Financial Officer (Principal Financial Officer)

By:	/s/  Gregory J. Iverson
	Gregory J. Iverson Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)

40

EX-10.1

FY2016 ANNUAL LTI AWARD – RSUs – PERFORMANCE VESTING WITH DEFERRAL (GREG CAPPELLI)

RESTRICTED STOCK UNIT AWARD AGREEMENT

RECITALS

A.    The Corporation has implemented the Plan as an equity incentive program to encourage key employees and officers of the Corporation and the non-employee members of the Board to remain in the employ or service of the Corporation by providing them with an opportunity to acquire a proprietary interest in the success of the Corporation.

B.    Participant is to render valuable services to the Corporation (or any Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s issuance of shares of Class A Common Stock to Participant under the Plan.

C.    All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix A.

NOW, THEREFORE, it is hereby agreed as follows:

1.    Grant of Restricted Stock Units. The Corporation hereby awards to Participant, as of the Award Date, restricted stock units under the Plan. The number of shares of Class A Common Stock underlying the awarded restricted stock units and the applicable performance vesting requirement for those units and the underlying shares are set forth in the Award Summary below. The remaining terms and conditions governing the Award, including the applicable service vesting requirements, are set forth in the remainder of this Agreement.

AWARD SUMMARY

Participant:	<NAME>
Award Date:	<AWARD DATE>
Number of Shares Subject to Award:	<SHARES> shares of Class A Common Stock (the “Shares”)
Vesting Provisions:	Performance Vesting: None of the Shares subject to this Award shall vest, and this Award shall terminate in its entirety, should the Corporation fail to attain the Performance Goal specified in attached Schedule I for the applicable Performance Period. Service Vesting: If such Performance Goal is attained, then the number of Shares in which Participant may vest hereunder shall be determined in accordance with the service vesting provisions of Paragraph 3. Accelerated Vesting: The Shares subject to this Award shall be subject to accelerated vesting pursuant to the provisions of Paragraph 5.

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2.    Limited Transferability. Prior to the actual issuance of the Shares which vest hereunder, Participant may not transfer any interest in the restricted stock units subject to the Award or the underlying Shares or pledge or otherwise hedge the sale of those units or Shares, including (without limitation) any short sale or any acquisition or disposition of any put or call option or other instrument tied to the value of those Shares. However, any Shares which vest hereunder but otherwise remain unissued at the time of Participant’s death shall be transferred to Participant’s designated beneficiary or beneficiaries of this Award to the extent such designation is valid under applicable law or, in the absence of such designated beneficiaries (including by reason of their death), pursuant to the provisions of Participant’s will or the laws of inheritance. Participant may make a beneficiary designation with respect to this Award at any time by filing the appropriate form with the Plan Administrator or its designee in a form and manner acceptable to the Company and permitted by the Company. Any transferee must furnish the Company with (i) written notice of his or her status as a transferee, and (ii) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to the transfer.

3.    Vesting Requirements. The Shares subject to the Award shall initially be unvested and shall vest only in accordance with the vesting provisions of this Paragraph 3 or the special vesting acceleration provisions of Paragraph 5. The actual number of Shares in which Participant shall vest under this Paragraph 3 shall be determined as follows:

(a)    Performance Vesting: Within seventy-five (75) days following the completion of the Performance Period, the Plan Administrator shall, on the basis of the Corporation’s audited financial statements for the fiscal year coincident with such Performance Period, determine whether the Performance Goal for that period has been attained. If the Performance Goal has not been attained, then the restricted stock units hereby awarded shall be immediately cancelled, and Participant shall thereupon cease to have any right or entitlement to receive any of the Shares underlying those cancelled units. Should the Plan Administrator determine and certify, on the basis of such audited financial statements, that the Performance Goal for the Performance Period has been attained, then the Shares subject to this Award shall be re-designated as Performance Shares, and the number of those Performance Shares in which Participant may vest shall be dependent upon his or her completion of the Service vesting requirements set forth below.

(b)    Service Vesting: Subject to Paragraph 3(d), Participant shall vest in the Performance Shares in a series of three (3) successive equal annual installments on each of the first three (3) one-year anniversaries of the Award Date upon Participant’s continuation in Service through each such annual vesting date.

(c)    Service-Vesting Credit. Should (A) Participant Separate from Service prior to the completion of the Service-vesting schedule set forth in Paragraph 3(b) by reason of (i) an involuntary termination of his employment by the Corporation (or involuntary reduction in his work schedule by the Corporation resulting in a Separation from Service) other than for Cause, (ii) Participant’s death or Disability or (iii) Participant’s resignation for Good Reason, (B) except in the case of Participant’s Separation from Service on account of death or Disability, Participant execute and deliver on a timely basis the general release required pursuant to Section 7 of the 2014 Employment Agreement (which shall be applied by reference to the date of the Participant’s Separation from Service), and (C) such release become effective and enforceable following the expiration of any applicable revocation period, then Participant shall receive additional Service-vesting credit upon such Separation from Service. Such Service-vesting credit shall be twelve (12) months. The Performance Shares that vest by reason of such

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Service-vesting credit shall be issued in accordance with the applicable provisions of Paragraph 7 of this Agreement. In no event, however, shall Participant vest in any of the Shares subject to this Award, if the Corporation fails to attain the Performance Goal specified in attached Schedule I for the applicable Performance Period. In the event that this Paragraph 3(c) applies, Participant shall not vest in any additional Performance Shares following his Separation from Service even if he continues to perform Service thereafter.

(d)    Other Cessation of Service. Subject to Paragraph 3(c) above, Participant shall not vest in any additional Performance Shares following the earlier of (i) the date the Performance Shares are issuable in accordance with Section 7(b) and (ii) Participant’s cessation of Service. Accordingly, thereupon, the Award will, except to the extent otherwise provided in Paragraph 3(c), be immediately cancelled with respect to those unvested Shares, and the number of restricted stock units will be reduced accordingly. Participant shall thereupon cease to have any right or entitlement to receive any Shares under those cancelled units and those Shares shall cease to be subject to this Award.

4.    Stockholder Rights and Dividend Equivalents

(a)    The holder of this Award shall not have any stockholder rights, including voting, dividend or liquidation rights, with respect to the Shares subject to the Award until Participant becomes the record holder of those Shares following their actual issuance upon the Corporation’s collection of the applicable Withholding Taxes.

(b)    Notwithstanding the foregoing, should any dividend or other distribution, whether regular or extraordinary, payable other than in shares of Class A Common Stock, be declared and paid on the Corporation’s outstanding Class A Common Stock in one or more calendar years during which Shares remain subject to this Award (i.e., those Shares are not otherwise issued and outstanding for purposes of entitlement to the dividend or distribution), then a special book account shall be established for Participant and credited with a phantom dividend equivalent to the actual dividend or distribution which would have been paid on the Shares had such Shares been issued and outstanding and entitled to that dividend or distribution; provided, however, that no such phantom dividend equivalent shall be credited with respect to your Performance Shares after they would have been settled absent Participant’s deferral of such Performance Shares unless otherwise determined by the Plan Administrator. As the Shares subsequently vest in one or more installments hereunder, the phantom dividend equivalents credited to those Shares in the book account shall vest, and those vested phantom dividend equivalents shall be distributed to Participant (in cash or such other form as the Plan Administrator may deem appropriate in its sole discretion) concurrently with the issuance of the vested Shares to which they relate. However, each such distribution shall be subject to the Corporation’s collection of the Withholding Taxes applicable to that distribution. In no event shall any phantom dividend equivalents vest or become distributable unless the Shares to which they relate vest in accordance with the terms of this Agreement.

5.    Change in Control. Should a Change in Control be effected during the period of Participant’s Service and at a time when one or more unvested Shares remain subject to this Award, then Participant shall, immediately prior to the closing of that Change in Control transaction, vest in all those unvested Shares. The Shares that so vest shall be converted into the right to receive for each such Share the same consideration per share of Class A Common Stock payable to the other holders of such Class A Common Stock in consummation of the Change in Control. Each distribution following a Change in Control shall be subject to the Corporation’s collection of the applicable Withholding Taxes. This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell

3

or transfer all or any part of its business or assets. For the avoidance of doubt, a Change in Control shall only be considered effected, closed or consummated when the underlying transaction or event is completed and not when shareholder approval or another intermediate step relating to the Change in Control occurs.

6.    Adjustment in Shares. Should any change be made to the Class A Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction, extraordinary dividend or distribution or other change affecting the outstanding Class A Common Stock as a class without the Corporation’s receipt of consideration, or should the value of outstanding shares of Class A Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization, then equitable adjustments shall be made by the Plan Administrator to the total number and/or class of securities issuable pursuant to this Award in order to reflect such change and thereby prevent a dilution or enlargement of benefits hereunder. In making such equitable adjustments, the Plan Administrator shall take into account any amounts credited to Participant’s book account under Paragraph 4(b) in connection with the transaction, and the determination of the Plan Administrator shall be final, binding and conclusive. However, in the event of a Change of Control, the adjustments (if any) shall be made in accordance with the applicable provisions of Section 13.8 of the Plan governing Change of Control transactions. Notwithstanding the above, the conversion of any convertible securities of the Corporation shall not be deemed to have been effected without the Corporation’s receipt of consideration.

7.    Issuance of Shares of Common Stock.

(a)    The vested portion, if any, of the Performance Shares (after giving effect to Paragraphs 3 and 5 hereof) shall be issued upon the earliest of (i) Participant’s Separation from Service (at the time set forth in Section 7(b)), (ii) a Change in Control, provided such event is also a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation under Code Section 409A (at the same time as payments to stockholders but in no event later than seventy-four (74) days following the date of such change), and (iii) the deferred payment date, if any, elected by Participant at the time of deferral (which deferred payment date shall be the first business day of a year no earlier than five (5) years after the year of the Award Date in accordance with procedures approved by the Committee).

(b)    To the extent the Performance Shares are to be issued upon Participant’s Separation from Service pursuant to Paragraph 7(a) hereof, the Performance Shares shall be issued on the Corporation’s first business day following the six-month anniversary of such Separation from Service or, if later in the same calendar year of such anniversary, when the Plan Administrator, in accordance with Section 3(a), determines and certifies whether the Performance Goal has been attained.

(c)    The phantom dividend equivalents credited to Participant’s book account under Paragraph 4(b) shall be distributed concurrently with the issuance of the vested Performance Shares to which they relate.

(d)    Except as otherwise provided in Paragraph 5, no Shares shall be issued prior to the completion of the Performance Period.

(e)    Except as otherwise determined by the Corporation in its sole discretion, the Corporation shall collect the Withholding Taxes with respect to each distribution of phantom dividend

4

equivalents by withholding a portion of that distribution equal to the amount of the applicable Withholding Taxes, with the cash portion of the distribution to be the first portion so withheld.

(f)    Except as otherwise determined by the Corporation in its sole discretion, the Corporation shall collect the applicable Withholding Taxes with respect to all Shares which vest pursuant to the provisions of this Agreement through the following automatic share withholding method.

-    On the applicable withholding dates, the Corporation shall withhold, from vested Shares, a portion of those Shares with a Fair Market Value (measured as of the issuance date) equal to the applicable Withholding Taxes; provided, however, that the number of Shares which the Corporation shall be required to so withhold shall not exceed in Fair Market Value (other than by reason of the rounding up of any fractional share to the next whole share) the amount necessary to satisfy the Corporation’s required tax withholding obligations using the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to supplemental taxable income. Participant hereby expressly authorizes the Corporation to withhold any such additional fractional share that is needed to round up the share withholding to the next whole Share, with the Fair Market Value of that additional fractional share to be added to the amount of taxes withheld by the Corporation from his or her wages for the calendar year in which the issuance date occurs, and to report that additional tax withholding as part of his or her W-2 tax withholdings for such year.

(g)    Except as otherwise provided in Paragraph 5 or this Paragraph 7, the settlement of all restricted stock units which vest under the Award shall be made solely in shares of Class A Common Stock. No fractional share of Class A Common Stock shall be issued pursuant to this Award, and any fractional share resulting from any calculation made in accordance with the terms of this Agreement shall be rounded down to the next whole share of Class A Common Stock.

8.    Compliance with Laws and Regulations. The issuance of shares of Class A Common Stock pursuant to the Award shall be subject to compliance by the Corporation and Participant with all applicable requirements of law relating thereto and with all applicable regulations of any Stock Exchange on which the Common Stock may be listed for trading at the time of such issuance.

9.    Notices. Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the most recent address then on file for Participant in the Corporation’s Human Resources Department. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

10.    Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Participant and the legal representatives, heirs and legatees of Participant’s estate and any beneficiaries of the Award designated by Participant.

11.    Code Section 409A

(a)    To the extent there is any ambiguity as to whether one or more provisions of this Agreement would contravene the requirements or limitations of Code Section 409A and the Treasury Regulations, then those provisions shall be interpreted and applied in a manner that does not

5

result in a violation of the requirements or limitations of Code Section 409A and the Treasury Regulations thereunder.

(b)    In no event shall Participant have the right to determine the calendar year in which any such issuance or distribution is to occur.

(c)    Participant’s right to a series of Share installments pursuant to the terms of this Award or a series of installment distributions of any other amounts to which Participant may become entitled hereunder shall in each instance be treated as a right to a series of separate payments.

12.    Construction. This Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the Award.

13.    Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Arizona without resort to that State’s conflict-of-laws rules.

14.    Proprietary Information and Intellectual Property Agreement. Participant accepts and agrees to comply with the terms of his Proprietary Information and Intellectual Property Agreement (“PIIPA”), attached as Appendix A to Participant’s 2014 Employment Agreement and incorporated herein by reference.

15.    Participant Acceptance. Participant must accept the terms and conditions of this Agreement either electronically through the electronic acceptance procedure established by the Corporation or through a written acceptance delivered to the Corporation in a form satisfactory to the Corporation. In no event shall any shares of Class A Common Stock be issued under this Agreement in the absence of such acceptance.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

APOLLO EDUCATION GROUP, INC.

By:

Title:

PARTICIPANT:

_____________________________________

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APPENDIX A

DEFINITIONS

The following definitions shall be in effect under the Agreement:

A.Agreement shall mean this Restricted Stock Unit Issuance Agreement.

B.Award shall mean the award of restricted stock units made to Participant pursuant to the terms of this Agreement.

C.Award Date shall mean the date the restricted stock units are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

D.Board shall mean the Corporation’s Board of Directors.

E.Cause shall have the meaning assigned to such term in Section 6(b) of Participant’s 2014 Employment Agreement, as in effect on the Award Date.

F.Change in Control shall have the meaning assigned to such term in Section 3.1(e) of the Plan.

G.Code shall mean the Internal Revenue Code of 1986, as amended.

H.Class A Common Stock shall mean shares of the Corporation’s Class A common stock.

I.Corporation shall mean Apollo Education Group, Inc., an Arizona corporation, and any successor corporation to Apollo Education Group, Inc. which shall by appropriate action adopt the Plan

J.Disability shall have the meaning assigned to such term in Section 6(d) of Participant’s 2014 Employment Agreement, as in effect on the Award Date.

K.Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

L.Fair Market Value per share of Class A Common Stock on any relevant date shall be the closing price per share of such Class A Common Stock on the date in question on the Stock Exchange serving as the primary market for the Class A Common Stock, as such price is reported by the National Association of Securities Dealers (if primarily traded on the Nasdaq Global or Global Select Market) or as officially quoted in the composite tape of transactions on any other Stock Exchange on which the Class A Common Stock is then primarily traded. If there is no closing selling price for the Class A Common Stock on the date in question, then the Fair Market Value shall be the closing price on the last preceding date for which such quotation exists.

M.Good Reason shall have the meaning assigned to such term in Section 6(c) of Participant’s 2014 Employment Agreement, as in effect on the Award Date.

N.1934 Act shall mean the Securities Exchange Act of 1934, as amended from time to time.

O.Participant shall mean the person to whom the Award is made pursuant to the Agreement.

A-1

P.Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

Q.Performance Goal shall mean the performance goal specified in Schedule I to this Agreement.

R.Performance Period shall mean the period specified on attached Schedule I to this Agreement over which the attainment of the Performance Goal is to be measured.

S.Performance Shares shall mean the Shares in which Participant can vest under this Agreement if the Performance Goal is attained.

T.Plan shall mean the Corporation’s 2000 Stock Incentive Plan, as amended or restated from time to time.

U.Plan Administrator shall mean the Compensation Committee of the Board acting in its capacity as administrator of the Plan.

V.Separation from Service shall mean Participant’s cessation of Employee status by reason of death, retirement or termination of employment. Participant shall be deemed to have terminated employment for such purpose at such time as the level of his or her bona fide services to be performed as an Employee (or as a consultant or independent contractor) permanently decreases to a level that is not more than twenty percent (20%) of the average level of services he or she rendered as an Employee during the immediately preceding thirty-six (36) months. Any such determination as to Separation from Service shall be made in accordance with the applicable standards of the Treasury Regulations issued under Section 409A of the Code.

W.Service shall mean Participant’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee. For purposes of this Agreement, Participant shall be deemed to cease Service immediately upon the occurrence of the either of the following events: (i) Participant no longer performs services in an Employee capacity for the Corporation (or any Parent or Subsidiary) or (ii) the entity for which Participant renders services in an Employee capacity ceases to remain a Parent or Subsidiary of the Corporation, even though Participant may subsequently continue to perform services for that entity. Service as an Employee shall not be deemed to cease during a period of military leave, sick leave or other personal leave approved by the Corporation; provided, however, that except to the extent otherwise required by law or expressly authorized by the Plan Administrator or by the Corporation’s written policy on leaves of absence, no Service credit shall be given for vesting purposes for any period Participant is on a leave of absence.

X.Shares shall mean the shares of Class A Common Stock which may vest and become issuable under the Award pursuant to the terms of this Agreement.

Y.Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

Z.Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent

A-2

(50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

AA.2014 Employment Agreementshall mean the Amended and Restated Employment Agreement between the Corporation and Participant dated June 5, 2014.

BB.Withholding Taxes shall mean the federal, state and local income taxes and the employee portion of the federal, state and local employment taxes required to be withheld by the Corporation in connection with the vesting and issuance of the shares of Common Stock which vest under of the Award and any phantom dividend equivalents distributed with respect to those shares.

A-3

SCHEDULE I

PERFORMANCE PERIOD AND PERFORMANCE GOAL

The Performance Period shall be coincident with the Corporation’s ______ fiscal year and shall accordingly commence on ________________ and end on ____________________.

[SPECIFY PERFORMANCE GOAL]

Schedule I-1

EX-10.2

FY2016 ANNUAL LTI AWARD – RSUs – PERFORMANCE VESTING GRADE LEVEL 17 AND ABOVE (SECTION 16 OFFICERS OTHER THAN CEO)

RESTRICTED STOCK UNIT AWARD AGREEMENT

RECITALS

A.    The Corporation has implemented the Plan as an equity incentive program to encourage key employees and officers of the Corporation and the non-employee members of the Board to remain in the employ or service of the Corporation by providing them with an opportunity to acquire a proprietary interest in the success of the Corporation.

B.    Participant is to render valuable services to the Corporation (or any Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s issuance of shares of Class A Common Stock to Participant under the Plan.

C.    All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix A.

NOW, THEREFORE, it is hereby agreed as follows:

1.    Grant of Restricted Stock Units. The Corporation hereby awards to Participant, as of the Award Date, restricted stock units under the Plan. The number of shares of Class A Common Stock underlying the awarded restricted stock units and the applicable performance vesting requirement for those units and the underlying shares are set forth in the Award Summary below. The remaining terms and conditions governing the Award, including the applicable service vesting requirements, are set forth in the remainder of this Agreement.

AWARD SUMMARY

Participant:	<NAME>
Award Date:	<AWARD_DATE>
Number of Shares Subject to Award:	<SHARES> shares of Class A Common Stock (the “Shares”)
Vesting Provisions:	Performance Vesting: None of the Shares subject to this Award shall vest, and this Award shall terminate in its entirety, should the Corporation fail to attain the Performance Goal specified in attached Schedule I for the applicable Performance Period. Service Vesting: If such Performance Goal is attained, then the number of Shares in which Participant may vest hereunder shall be determined in accordance with the service vesting provisions of Paragraph 3. Accelerated Vesting: The Shares subject to this Award shall be subject to accelerated vesting pursuant to the provisions of Paragraph 5.

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2.    Limited Transferability. Prior to the actual issuance of the Shares which vest hereunder, Participant may not transfer any interest in the restricted stock units subject to the Award or the underlying Shares or pledge or otherwise hedge the sale of those units or Shares, including (without limitation) any short sale or any acquisition or disposition of any put or call option or other instrument tied to the value of those Shares. However, any Shares which vest hereunder but otherwise remain unissued at the time of Participant’s death shall be transferred to Participant’s designated beneficiary or beneficiaries of this Award to the extent such designation is valid under applicable law or, in the absence of such designated beneficiaries (including by reason of their death), pursuant to the provisions of Participant’s will or the laws of inheritance. Participant may make a beneficiary designation with respect to this Award at any time by filing the appropriate form with the Plan Administrator or its designee in a form and manner acceptable to the Company and permitted by the Company. Any transferee must furnish the Company with (i) written notice of his or her status as a transferee, and (ii) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to the transfer.

3.    Vesting Requirements. The Shares subject to the Award shall initially be unvested and shall vest only in accordance with the vesting provisions of this Paragraph 3 or the special vesting acceleration provisions of Paragraph 5. The actual number of Shares in which Participant shall vest under this Paragraph 3 shall be determined as follows:

(a)    Performance Vesting: Within seventy-five (75) days following the completion of the Performance Period, the Plan Administrator shall, on the basis of the Corporation’s audited financial statements for the fiscal year coincident with such Performance Period, determine whether the Performance Goal for that period has been attained. If the Performance Goal has not been attained, then the restricted stock units hereby awarded shall be immediately cancelled, and Participant shall thereupon cease to have any right or entitlement to receive any of the Shares underlying those cancelled units. Should the Plan Administrator determine and certify, on the basis of such audited financial statements, that the Performance Goal for the Performance Period has been attained, then the Shares subject to this Award shall be re-designated as Performance Shares, and the number of those Performance Shares in which Participant may vest shall be dependent upon his or her completion of the Service vesting requirements set forth below.

(b)    Service Vesting: Participant shall vest in the Performance Shares in four (4) separate installments as follows:

(i)    Subject to Paragraph 3(d), Participant shall vest in twenty-five percent (25%) of the Performance Shares upon his or her continuation in Service through the completion of the Performance Period.

(ii)    Subject to Paragraph 3(d), Participant shall vest in the remaining Performance Shares in a series of three (3) successive equal annual installments on the second, third and fourth one-year anniversaries of the Award Date, respectively, upon his or her continuation in Service through each such annual vesting date.

(c)    Involuntary Termination. Should Participant Separate from Service after the start of the Performance Period and prior to the completion of the Service-vesting schedule set forth in Paragraph 3(b) by reason of an Involuntary Termination (which shall be determined in accordance with the definition of such term set forth in the Senior Executive Severance Pay Plan except without

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regard to whether or not such Separation from Service results in a termination employment) during one of the four (4) applicable installment vesting periods comprising that schedule (each, an “Annual Installment Vesting Period”) and Participant deliver an effective and enforceable general release to the Corporation in accordance with the requirements of the Senior Executive Severance Pay Plan (which shall be applied by reference to the date of the Participant’s Separation from Service instead of the date of the Participant’s termination of employment), then Participant shall thereupon vest in a portion of the Performance Shares (if any) in which Participant would have vested upon the completion of the particular Annual Installment Vesting Period under Paragraph 3(b) in which such Separation from Service occurs had Participant in fact continued in Service through the completion of that Annual Installment Vesting Period (the “Performance Share Installment”). Such pro-ration shall be applied by multiplying the Performance Share Installment by a fraction, the numerator of which is the number of months of Service actually completed by Participant during that Annual Installment Vesting Period prior to the Participant’s Separation from Service (rounded up to the next whole month), and the denominator of which is the total number of calendar months in that Annual Installment Vesting Period. In no event, however, shall Participant vest in any Performance Shares prior to the completion of the Performance Period and the Plan Administrator’s certification of the level at which the Performance Goal has been attained. For the avoidance of doubt, the calculation of the pro-rata vesting under this paragraph shall use the number of months in the Performance Period as the denominator for the first Annual Installment Vesting Period under this Award and the numerator for such first installment shall in that case be the number of months of Service actually completed by Participant during the Performance Period (rounded up to the next whole month) prior to Participant’s Separation from Service. Notwithstanding anything in this Paragraph 3(c), if Participant becomes entitled to greater acceleration benefits under the Senior Executive Severance Pay Plan, this Paragraph 3(c) shall be of no force or effect. In the event that this Paragraph 3(c) applies, Participant shall not vest in any additional Performance Shares following his Separation from Service even if Participant continues to perform Service thereafter.

(d)    Other Cessation of Service. Subject to Paragraph 3(c) above, Participant shall not vest in any additional Performance Shares following the earlier of (i) the date the Performance Shares are issuable in accordance with Section 7(b) and (ii) Participant’s cessation of Service. Accordingly, thereupon, the Award will, except to the extent otherwise provided in Paragraph 3(c), be immediately cancelled with respect to those unvested Shares, and the number of restricted stock units will be reduced accordingly. Participant shall thereupon cease to have any right or entitlement to receive any Shares under those cancelled units and those Shares shall cease to be subject to this Award.

4.    Stockholder Rights and Dividend Equivalents

(a)    The holder of this Award shall not have any stockholder rights, including voting, dividend or liquidation rights, with respect to the Shares subject to the Award until Participant becomes the record holder of those Shares following their actual issuance upon the Corporation’s collection of the applicable Withholding Taxes.

(b)    Notwithstanding the foregoing, should any dividend or other distribution, whether regular or extraordinary, payable other than in shares of Class A Common Stock, be declared and paid on the Corporation’s outstanding Class A Common Stock in one or more calendar years during which Shares remain subject to this Award (i.e., those Shares are not otherwise issued and outstanding for purposes of entitlement to the dividend or distribution), then a special book account shall be established for Participant and credited with a phantom dividend equivalent to the actual dividend or distribution which would have been paid on the Shares had such Shares been issued and outstanding and entitled to that dividend or distribution; provided, however, that no such phantom dividend equivalent

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shall be credited with respect to your Performance Shares after they would have been settled absent Participant’s deferral of such Performance Shares unless otherwise determined by the Plan Administrator. As the Shares subsequently vest in one or more installments hereunder, the phantom dividend equivalents credited to those Shares in the book account shall vest, and those vested phantom dividend equivalents shall be distributed to Participant (in cash or such other form as the Plan Administrator may deem appropriate in its sole discretion) concurrently with the issuance of the vested Shares to which they relate. However, each such distribution shall be subject to the Corporation’s collection of the Withholding Taxes applicable to that distribution. In no event shall any phantom dividend equivalents vest or become distributable unless the Shares to which they relate vest in accordance with the terms of this Agreement.

5.    Change in Control. Should a Change in Control be effected during the period of Participant’s Service and at a time when one or more unvested Shares remain subject to this Award, then Participant shall, immediately prior to the closing of that Change in Control transaction, vest in all those unvested Shares. The Shares that so vest shall be converted into the right to receive for each such Share the same consideration per share of Class A Common Stock payable to the other holders of such Class A Common Stock in consummation of the Change in Control. Each distribution following a Change in Control shall be subject to the Corporation’s collection of the applicable Withholding Taxes.  This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. For the avoidance of doubt, a Change in Control shall only be considered effected, closed or consummated when the underlying transaction or event is completed and not when shareholder approval or another intermediate step relating to the Change in Control occurs.

6.    Adjustment in Shares. Should any change be made to the Class A Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction, extraordinary dividend or distribution or other change affecting the outstanding Class A Common Stock as a class without the Corporation’s receipt of consideration, or should the value of outstanding shares of Class A Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization, then equitable adjustments shall be made by the Plan Administrator to the total number and/or class of securities issuable pursuant to this Award in order to reflect such change and thereby prevent a dilution or enlargement of benefits hereunder. In making such equitable adjustments, the Plan Administrator shall take into account any amounts credited to Participant’s book account under Paragraph 4(b) in connection with the transaction, and the determination of the Plan Administrator shall be final, binding and conclusive. However, in the event of a Change of Control, the adjustments (if any) shall be made in accordance with the applicable provisions of Section 13.8 of the Plan governing Change of Control transactions. Notwithstanding the above, the conversion of any convertible securities of the Corporation shall not be deemed to have been effected without the Corporation’s receipt of consideration.

7.    Issuance of Shares of Common Stock.

(a)    The vested portion, if any, of the Performance Shares (after giving effect to Paragraphs 3 and 5 hereof) shall be issued upon the earliest of (i) Participant’s Separation from Service (at the time set forth in Section 7(b)), (ii) a Change in Control, provided such event is also a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation under Code Section 409A (at the same time as payments to stockholders but in no event later than seventy-four (74) days following the date of such change), and (iii) the deferred

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payment date, if any, elected by Participant at the time of deferral (which deferred payment date shall be the first business day of a year no earlier than five (5) years after the year of the Award Date in accordance with procedures approved by the Committee).

(b)    To the extent the Performance Shares are to be issued upon Participant’s Separation from Service pursuant to Paragraph 7(a) hereof, the Performance Shares shall be issued on the Corporation’s first business day following the six-month anniversary of such Separation from Service or, if later in the same calendar year of such anniversary, when the Plan Administrator, in accordance with Section 3(a), determines and certifies whether the Performance Goal has been attained.

(c)    The phantom dividend equivalents credited to Participant’s book account under Paragraph 4(b) shall be distributed concurrently with the issuance of the vested Performance Shares to which they relate.

(d)    Except as otherwise provided in Paragraph 5, no Shares shall be issued prior to the completion of the Performance Period.

(e)    Except as otherwise determined by the Corporation in its sole discretion, the Corporation shall collect the Withholding Taxes with respect to each distribution of phantom dividend equivalents by withholding a portion of that distribution equal to the amount of the applicable Withholding Taxes, with the cash portion of the distribution to be the first portion so withheld.

(f)    Except as otherwise determined by the Corporation in its sole discretion, the Corporation shall collect the applicable Withholding Taxes with respect to all Shares which vest pursuant to the provisions of this Agreement through the following automatic share withholding method.

-    On the applicable withholding dates, the Corporation shall withhold, from vested Shares, a portion of those Shares with a Fair Market Value (measured as of the issuance date) equal to the applicable Withholding Taxes; provided, however, that the number of Shares which the Corporation shall be required to so withhold shall not exceed in Fair Market Value (other than by reason of the rounding up of any fractional share to the next whole share) the amount necessary to satisfy the Corporation’s required tax withholding obligations using the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to supplemental taxable income. Participant hereby expressly authorizes the Corporation to withhold any such additional fractional share that is needed to round up the share withholding to the next whole Share, with the Fair Market Value of that additional fractional share to be added to the amount of taxes withheld by the Corporation from his or her wages for the calendar year in which the issuance date occurs, and to report that additional tax withholding as part of his or her W-2 tax withholdings for such year.

(g)    Except as otherwise provided in Paragraph 5 or this Paragraph 7, the settlement of all restricted stock units which vest under the Award shall be made solely in shares of Class A Common Stock. No fractional share of Class A Common Stock shall be issued pursuant to this Award, and any fractional share resulting from any calculation made in accordance with the terms of this Agreement shall be rounded down to the next whole share of Class A Common Stock.

8.    Compliance with Laws and Regulations. The issuance of shares of Class A Common Stock pursuant to the Award shall be subject to compliance by the Corporation and Participant with all applicable requirements of law relating thereto and with all applicable regulations of any Stock Exchange on which the Common Stock may be listed for trading at the time of such issuance.

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9.    Notices. Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the most recent address then on file for Participant in the Corporation’s Human Resources Department. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

10.    Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Participant and the legal representatives, heirs and legatees of Participant’s estate and any beneficiaries of the Award designated by Participant.

11.    Code Section 409A

(a)    To the extent there is any ambiguity as to whether one or more provisions of this Agreement would contravene the requirements or limitations of Code Section 409A and the Treasury Regulations, then those provisions shall be interpreted and applied in a manner that does not result in a violation of the requirements or limitations of Code Section 409A and the Treasury Regulations thereunder.

(b)    In no event shall Participant have the right to determine the calendar year in which any such issuance or distribution is to occur.

(c)    Participant’s right to a series of Share installments pursuant to the terms of this Award or a series of installment distributions of any other amounts to which Participant may become entitled hereunder shall in each instance be treated as a right to a series of separate payments.

12.    Construction. This Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the Award.

13.    Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Arizona without resort to that State’s conflict-of-laws rules.

14.    Employment at Will. Nothing in this Agreement or in the Plan shall confer upon Participant any right to remain in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation or of Participant, which rights are hereby expressly reserved by each, to terminate Participant’s Service at any time for any reason, with or without cause.

15.    Proprietary Information and Intellectual Property Agreement. Participant accepts and agrees to comply with the terms of the Corporation’s Proprietary Information and Intellectual Property Agreement (“PIIPA”), attached hereto as Appendix B and incorporated herein by reference.

16.    Participant Acceptance. Participant must accept the terms and conditions of this Agreement, including the PIIPA, either electronically through the electronic acceptance procedure established by the Corporation or through a written acceptance delivered to the Corporation in a form

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satisfactory to the Corporation. In no event shall any shares of Class A Common Stock be issued under this Agreement in the absence of such acceptance.

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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

APOLLO EDUCATION GROUP, INC.

By:

Title:

PARTICIPANT:

_____________________________________

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APPENDIX A

DEFINITIONS

The following definitions shall be in effect under the Agreement:

A.    Agreement shall mean this Restricted Stock Unit Issuance Agreement.

B.    Award shall mean the award of restricted stock units made to Participant pursuant to the terms of this Agreement.

C.    Award Date shall mean the date the restricted stock units are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

D.    Board shall mean the Corporation’s Board of Directors.

E.    Change in Control shall have the meaning assigned to such term in Section 3.1(e) of the Plan.

F.    Code shall mean the Internal Revenue Code of 1986, as amended.

G.    Class A Common Stock shall mean shares of the Corporation’s Class A common stock.

H.    Corporation shall mean Apollo Education Group, Inc., an Arizona corporation, and any successor corporation to Apollo Education Group, Inc. which shall by appropriate action adopt the Plan.

I.    Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

J.    Fair Market Value per share of Class A Common Stock on any relevant date shall be the closing price per share of such Class A Common Stock on the date in question on the Stock Exchange serving as the primary market for the Class A Common Stock, as such price is reported by the National Association of Securities Dealers (if primarily traded on the Nasdaq Global or Global Select Market) or as officially quoted in the composite tape of transactions on any other Stock Exchange on which the Class A Common Stock is then primarily traded. If there is no closing selling price for the Class A Common Stock on the date in question, then the Fair Market Value shall be the closing price on the last preceding date for which such quotation exists.

K.    Involuntary Terminationshall have the same meaning as assigned to such term in the Senior Executive Severance Pay Plan.

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L.    1934 Act shall mean the Securities Exchange Act of 1934, as amended from time to time.

M.    Participant shall mean the person to whom the Award is made pursuant to the Agreement.

N.    Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

O.    Performance Goal shall mean the performance goal specified in Schedule I to this Agreement.

P.    Performance Period shall mean the period specified on attached Schedule I to this Agreement over which the attainment of the Performance Goal is to be measured.

Q.    Performance Shares shall mean the Shares in which Participant can vest under this Agreement if the Performance Goal is attained.

R.    Plan shall mean the Corporation’s 2000 Stock Incentive Plan, as amended or restated from time to time.

S.    Plan Administrator shall mean the Compensation Committee of the Board acting in its capacity as administrator of the Plan.

T.    Separation from Service shall mean Participant’s cessation of Employee status by reason of death, retirement or termination of employment. Participant shall be deemed to have terminated employment for such purpose at such time as the level of his or her bona fide services to be performed as an Employee (or as a consultant or independent contractor) permanently decreases to a level that is not more than twenty percent (20%) of the average level of services he or she rendered as an Employee during the immediately preceding thirty-six (36) months. Any such determination as to Separation from Service shall be made in accordance with the applicable standards of the Treasury Regulations issued under Section 409A of the Code.

U.    Service shall mean Participant’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee. For purposes of this Agreement, Participant shall be deemed to cease Service immediately upon the occurrence of the either of the following events: (i) Participant no longer performs services in an Employee capacity for the Corporation (or any Parent or Subsidiary) or (ii) the entity for which Participant renders services in an Employee capacity ceases to remain a Parent or Subsidiary of the Corporation, even though Participant may subsequently continue to perform services for that entity. Service as an Employee shall not be deemed to cease during a period of military leave, sick leave or other personal leave approved by the Corporation; provided, however, that except to the extent otherwise required by law or expressly

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authorized by the Plan Administrator or by the Corporation’s written policy on leaves of absence, no Service credit shall be given for vesting purposes for any period Participant is on a leave of absence.

V.    Shares shall mean the shares of Class A Common Stock which may vest and become issuable under the Award pursuant to the terms of this Agreement.

W.    Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

X.    Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

Y.    Termination for Cause shall mean the termination of Participant’s Service by the Corporation (or any Parent or Subsidiary employing Participant) for one or more of the following reasons:

(i)    repeated dereliction of the material duties and responsibilities of his or her position with the Corporation (or any Parent or Subsidiary);

(ii)    misconduct, insubordination or failure to comply with the policies of the Corporation (or any Parent or Subsidiary employing the Participant) governing employee conduct and procedures;

(iii)    excessive lateness or absenteeism;

(iv)    conviction of or pleading guilty or nolo contendere to any felony involving theft, embezzlement, dishonesty or moral turpitude;

(v)    commission of any act of fraud against, or the misappropriation of property belonging to, the Corporation (or any Parent or Subsidiary);

(vi)    commission of any act of dishonesty in connection with his or her responsibilities as an Employee that is intended to result in his or her personal enrichment or the personal enrichment of his or her family or others;

(vii)    any other misconduct adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary); or

(viii)    a material breach of any agreement Participant may have at the time with the Corporation (or any Parent or Subsidiary employing Participant), including (without limitation) any proprietary information, non-disclosure or confidentiality agreement.

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Z.    Withholding Taxes shall mean the federal, state and local income taxes and the employee portion of the federal, state and local employment taxes required to be withheld by the Corporation in connection with the vesting and issuance of the shares of Common Stock which vest under of the Award and any phantom dividend equivalents distributed with respect to those shares.

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APPENDIX B

PROPRIETARY INFORMATION AND INTELLECTUAL PROPERTY AGREEMENT

This Proprietary Information and Intellectual Property Agreement (“PIIPA”) confirms certain terms of my employment with Apollo Education Group, Inc., is a condition of my employment, and is a material part of the consideration for my employment by the Company. The headings contained in this PIIPA are for convenience only, have no legal significance, and are not intended to change or limit this PIIPA in any matter whatsoever. Capitalized terms not defined in this PIIPA have the meanings ascribed to them in the Company’s Intellectual Property Policy. I have read and agree to comply with such policy. I understand that the Intellectual Property Policy may be amended from time to time by the Company. I further understand and agree that I am obligated to comply with such amendments and will review this policy periodically to ensure that I am aware of such amendments. If there is any conflict between the terms of such policy and this PIIPA, the terms of this PIIPA will prevail.

I. Definitions

A. The “Company”

As used in this PIIPA, the “Company” refers to Apollo Education Group, Inc., each of its subsidiaries, parent companies, and successors and assigns. A subsidiary is any company that is directly or indirectly, wholly or partially, owned by Apollo Education Group, Inc. I recognize and agree that my obligations under this PIIPA and all terms of this PIIPA apply to me regardless of whether I am employed by or provide services to Apollo Education Group, Inc. or any subsidiary, parent company, successor or assign of Apollo Education Group, Inc.

B. “Proprietary Information”

I understand that the Company possesses and will possess Proprietary Information which is important to its business. For purposes of this PIIPA, “Proprietary Information” is information that was or will be developed, created, or discovered by or on behalf of the Company, or which became or will become known by, or was or is conveyed to the Company. “Proprietary Information” includes information concerning the organization, business and finances of the Company or of any third party which the Company is under an obligation to keep confidential or that is maintained by the Company as confidential, including (without limitation):

1. the Company’s Lead List which is comprised of prospective students;

2. data and information on current and prospective corporate accounts, including, but not limited to, the identity of the corporate accounts, the decision makers or decision influencers, the buying criteria of the accounts and programs for those accounts;

3. information with respect to past, current and prospective merger, acquisition, disposition, joint venture and other transactions and opportunities, including, but not limited to, the identity of the transaction targets or prospects, the decision makers or decision influencers with respect to the transactions, the proposed terms and conditions of any such past, current or prospective transactions or opportunities, including the status thereof;

4. the management process, training materials, scripts, programs and preferred responses to questions from current, former or prospective students pertaining to features and benefits of the Company’s educational courses, offerings, and programs provided to enrollment counselors, academic counselors and finance counselors;

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5. the certification training materials and processes for the certification of the Company’s student advisors (known as the ACU online learning system program), including, but not limited to, the tests taken, materials provided and course work;

6. the information and data contained in the Company’s enrollment data system, including all monthly enrollment reports;

7. all business models and financial information, data and materials of the Company not otherwise available to the general public through the Company’s Annual Report or otherwise;

8. all market research or works for hire materials, including, but not limited to, industry data, demographics, company profiles and/or specific consumer behavior information,

9. all monthly financial, statistical and operational information and reports, and all other information concerning enrollment by campus, profit and loss per campus and the terms of any lease;

10. all monthly financial statements, including, but not limited to, any materials prepared for the Board of Directors;

11. all internally developed source code and the techniques and processes embodied therein, including, but not limited to, modifications to existing source codes for student information systems (such as Galaxy, Campus Tracking, OSIRIS and eCampus), academic systems (such as rEsource and OnLine Learning System (OLS), proprietary modifications to packaged applications (such as PeopleSoft, Oracle Financials and ADP HRizon) and all future internally developed source code;

12. information provided to the Company from a third party under a non-disclosure agreement;

13. the “Personally Identifiable Information” and other student information records protected by the Family Educational Rights and Privacy Act of 1974, as amended, that is known or accessible as a result of employment with the Company. “Personally Identifiable Information” includes, but is not limited to information that is directly associated with a specific person such as a name, address, telephone number, e-mail address, or information about activities directly linked to that person. It also includes, but is not limited to, “Education Records” as that term is defined in the Family Educational Rights and Privacy Act of 1974, as amended.

I understand and agree that my employment creates a relationship of confidence and trust between the Company and me with respect to Proprietary Information.

C. “Company Documents and Materials”

I understand that the Company possesses or will possess “Company Documents and Materials” which are important to its business. For purposes of this PIIPA, “Company Documents and Materials” are documents or other media or tangible items that contain or embody Proprietary Information or any other information concerning the business, operations or plans of the Company, whether such documents, media or items have been prepared by me or by others.

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“Company Documents and Materials” include (without limitation) blueprints, drawings, photographs, charts, graphs, notebooks, customer lists, computer disks, tapes, computer hard drives, floppy disks, CD ROMS, or printouts, sound recordings and other printed, typewritten or handwritten documents, sample products, prototypes and models and any information recorded in any other form whatsoever. “Company Documents and Materials” also include copies of any of the foregoing.

II. Assignment of Rights and Confidentiality Requirements

All Proprietary Information is and shall be the sole property of the Company. I hereby grant and assign, and agree to grant and assign, to the Company entity that employs me any and all rights, title and interest I may have or acquire in such Proprietary Information.

At all times, both during my employment by the Company and after its termination, I will keep in confidence and trust and will not use or disclose any Proprietary Information or anything relating to it without the prior written consent of an officer of the Company as specified in the Company’s Schedule of Executive Authority (“SEA”), except as may be necessary in the ordinary course of performing my duties to the Company. I acknowledge that, without prejudice to any and all rights of the Company, an injunction is the only effective remedy to protect the Company’s rights and property as set out herein.

III. Maintenance and Return of Company Documents and Materials

I agree to make and maintain adequate and current written records, in a form specified by the Company, of all inventions, trade secrets and works of authorship assigned or to be assigned to the Company pursuant to this PIIPA. All Company Documents and Materials are and shall be the sole property of the Company.

I agree that during my employment by the Company, I will not remove any Company Documents and Materials from the business premises of the Company or deliver any Company Documents and Materials to any person or entity outside the Company, except in connection with performing the duties of my employment. I further agree that, immediately upon the termination of my employment by me or by the Company for any reason, or during my employment if so requested by the Company, I will return all Company Documents and Materials, apparatus, equipment and other physical property, or any reproduction of such property, excepting only (i) my personal copies of records relating to my compensation; (ii) my personal copies of any materials previously distributed generally to stockholders of the Company; and (iii) my copy of this PIIPA.

IV. Disclosure of Intellectual Property to the Company

I will promptly disclose in accordance with the Company’s Intellectual Property Policy, all Company Intellectual Property (as defined below) which includes (without limitation) all software programs or subroutines, source or object code, algorithms, improvements, inventions, works of authorship, trade secrets, technology, designs, formulas, ideas, processes, techniques, know-how and data, whether or not patentable, and any other property subject to legal protection by patents, copyrights, trademarks, and/or trade secrets, or which may become subject to legal protection hereafter, whether or not they were, are, or will be so protected, which are made or discovered or conceived or reduced to practice or developed by me, either alone or jointly with others, during the term of my employment.

I will also disclose in accordance with the Company’s Intellectual Property Policy, all Company Intellectual Property made, discovered, conceived, reduced to practice, or developed by me within

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six (6) months after the termination of my employment with the Company which resulted, in whole or in part, from my prior employment by the Company. Such disclosures shall be received by the Company in confidence (to the extent such Company Intellectual Property are not assigned to the Company pursuant to Section V below) and do not extend the assignment made in Section V below.

I agree to disclose Company Intellectual Property to the Company upon the first to occur of:

-- Creation;

-- A request by Intellectual Property (“IP”) Counsel, as appointed by the Company’s General Counsel, or a designee of IP Counsel;

-- As required by any applicable External Sponsor contract, by this Agreement, or by any other Company policy;

-- A determination is made by me that the Company or an External Sponsor may have an interest in the Intellectual Property.

I understand and agree that my disclosure of the creation of Company Intellectual Property must occur prior to any discussions or actions involving the Commercial Application of Company Intellectual Property and prior to any non-confidential presentation or other public release of the Company Intellectual Property. “Commercial Application of Intellectual Property” means any application of Intellectual Property in which an Employee or the Company intends to obtain, or is likely to receive, economic gain from the use or disposition of the Intellectual Property.

I further agree to disclose promptly to IP Counsel any potentially unauthorized use of Company Intellectual Property by a third party.

Notwithstanding any other provision of this Agreement to the contrary, this Agreement does not obligate me to assign to the Company any of my rights in Intellectual Property that does not qualify as Company Intellectual Property. “Company Intellectual Property” is Intellectual Property that: (a) is created in the scope of my employment; (b) is developed, in whole or in part, by the use of Company Resources (excluding resources accessed and used entirely as part of a student or faculty academic endeavor at any subsidiary); (c) relates to the business of the Company or to the Company’s actual or demonstrably anticipated strategies, plans or research and development; or (d) contains Company Proprietary Information. Company Resources include, but are not limited to the following resources owned or controlled by Apollo Education Group, Inc., or a subsidiary: facilities, computers, research funding, resources for asynchronous or distance learning programs, paid time within the employment period, assistance of support staff, telecommunication services, central computing resources, instructional or graphic design or other production services, Company trade secret information, and any other equipment, technologies or facilities.

V. Right to New Ideas

A. Assignment of Company Intellectual Property to the Company

I agree that all Company Intellectual Property that I make, discover, conceive, reduce to practice or develop (in whole or in part, either alone or jointly with others) during my employment shall be the sole property of the Company entity that employs me to the maximum extent permitted by applicable law. However, any Intellectual Property that I make, discover, conceive, reduce to practice or develop (in whole or in part, either alone or jointly with others) during my employment shall not be the sole property of the Company so long as such Intellectual Property does not qualify as Company Intellectual Property.

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The Company shall be the sole owner of all patents, patent rights, copyrights, trade secret rights, trademark rights and all other intellectual property or other rights in connection with Company Intellectual Property. I hereby assign and agree to assign to the Company any and all rights, title and interest I may have or acquire in Company Intellectual Property.

I agree to receive written approval from IP Counsel prior to incorporating, in any manner or fashion, any Intellectual Property not fully-owned by the Company into Company Intellectual Property.

If I incorporate any Intellectual Property in which I have an interest into Company Intellectual Property or any Company product, service, or process, I hereby grant and agree to grant to the Company a royalty-free, fully paid-up, irrevocable, perpetual, sublicensable, worldwide license to make, have made, modify, use, market, sell and distribute any such Intellectual Property as part of or in connection with Company Intellectual Property or Company product, service or process in any media now known or later developed.

Furthermore, if I incorporate, without prior written approval, any Intellectual Property in which any party other than the Company has an interest into Company Intellectual Property or any Company product, service, or process, I agree to indemnify the Company for any consequences of such incorporation.

B. Works Made for Hire

I further acknowledge and agree that Company Intellectual Property, including (without limitation) any computer programs, programming documentation, and other works of authorship, are “works made for hire” for purposes of the Company’s rights under copyright laws. I hereby assign and agree to assign to the Company any and all rights, title and interest I may have or acquire in such works made for hire.

C. Cooperation

I agree to perform, during and after my employment, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company’s expense, in further evidencing and perfecting the assignments made to the Company under this PIIPA and in obtaining, maintaining, defending and enforcing patents, patent rights, copyrights, trademark rights, trade secret rights or any other rights in connection with Company Intellectual Property and improvements thereto in any and all jurisdictions. Such acts may include (without limitation) execution of documents and assistance or cooperation in legal proceedings. I hereby irrevocably designate and appoint and agree to appoint the Company and its duly authorized officers and agents, as my agents and attorneys to act for and on my behalf and instead of me, to execute and file any documents, applications or related findings and to do all other lawfully permitted acts in the same manner as I could do to further the purposes set forth above in this Section V.C., including (without limitation) the perfection of assignment and the prosecution and issuance of patents, patent applications, copyright applications and registrations, trademark applications and registrations or other rights in connection with Company Intellectual Property and improvements thereto with the same legal force and effect as if executed by me.

D. Assignment or Waiver of Moral Rights

Any assignment of copyright hereunder (and any ownership of a copyright as a work made for hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other

B-5

rights that may be known as or referred to as “moral rights” in applicable copyright or other legislation (collectively “Moral Rights”). To the extent such Moral Rights cannot be assigned under applicable law of a jurisdiction, and to the extent the following is allowed by the laws in the various jurisdictions where Moral Rights exist, I hereby waive the whole of my Moral Rights in any work and warrant that any work created by me is original.

E. List of Intellectual Property

I have attached hereto as Exhibit A a complete list of all Intellectual Property or improvements to which I claim ownership and that I desire to remove from the operation of this PIIPA (except for the license granted in Section V.A. above), and I acknowledge and agree that such list is complete. If no such list is attached to this PIIPA, I represent that I have no such Intellectual Property at the time of signing this PIIPA.

VI. Company Authorization for Publication

Prior to my submitting or disclosing for possible non-confidential publication or dissemination outside the Company any material prepared by me that incorporates information that concerns the Company’s Intellectual Property or its business or anticipated research, I agree to deliver a copy of such material to an officer of the Company as specified in the DOA for his or her review and written consent. I agree to make such deletions and revisions as are reasonably requested by the Company to protect its Proprietary Information and Intellectual Property.

VII. Former Employer’s and Others’ Information

I represent that my performance of all the terms of this PIIPA does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired or developed by me in confidence or in trust prior to my employment by the Company.

I agree that I will not disclose to the Company, or use in the performance of my duties and responsibilities as an employee of the Company, any trade secrets or confidential or proprietary information or material belonging to any previous employers or other person or entity.

VIII. Competition

I agree that during the term of my employment by the Company, I will not engage in any employment or business activity that is competitive with, or which could conflict with my employment by the Company without first disclosing such activity to the Company and obtaining its express written approval, which may be denied in the Company’s sole discretion. If there is a conflict between this provision and any restrictive covenants contained in any employment agreement executed by me and the Company, the provisions of the employment agreement will govern.

IX. Non-Solicitation of Employees

For the period of my employment by the Company and for one (1) year thereafter, I will not, either directly or indirectly, solicit, attempt to solicit, or assist in the solicitation of any employee, independent contractor, or consultant of the Company for whom I had managerial responsibility, to whom I reported, with whom I participated on Company teams or projects, , to terminate his or her relationship with the Company. If there is a conflict between this provision and any restrictive covenants contained in any employment agreement executed by me and the Company, the provisions of the employment agreement will govern.

X. At-Will Employment

B-6

I understand that my employment with the Company is not for a definite term and either I or the Company can terminate the employment relationship at any time, with or without cause or advance notice, subject to any severance benefits to which I may become entitled to pursuant to the provisions of any employment agreement in effect at the time between me and the Company. The terms of this Agreement survive the termination of employment as provided for herein. If there is a conflict between this provision and any term contained in any employment agreement executed by me and the Company, the provisions of the employment agreement will govern.

XI. Reformation and Severability

I agree that if any provision, or portion of a provision, of this Agreement is deemed unenforceable by reason of the scope, extent or duration of its coverage, then such provision shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and enforceable. Should any provision, or portion of a provision, of this Agreement be deemed unenforceable for any other reason, such unenforceability will not affect any other provision, or portion of a provision, of this Agreement and this Agreement shall be construed as if such unenforceable provision, or portion of provision, had never been contained herein.

XII. Authorization for Post-Termination Notification of Obligations under PIIPA

I hereby authorize the Company to notify any person or entity with whom I become employed, or to whom I provide services, following the termination of my employment with the Company of my ongoing obligations under this PIIPA.

XIII. Entire Agreement

This PIIPA sets forth the entire agreement and understanding between the Company and me relating to the subject matters covered herein, and this PIIPA merges, cancels, supersedes and replaces all prior discussions between us, including (without limitation) any and all statements, representations, negotiations, promises or agreements relating to the subject matters covered by this PIIPA that may have been made by any officer, employee or representative of the Company. Furthermore, any subsequent change(s) to my job duties, responsibilities, title, reporting level or relationship, compensation, benefits, regular place of employment or any other term or condition of my employment with the Company shall not affect the validity or scope of this Agreement which shall remain in full force and effect notwithstanding any such change(s).

XIV. Effective Date

This Agreement shall be effective as of the first day of my employment with the Company and shall be binding upon me, my heirs, executors, assigns and administrators and shall inure to the benefit of the Company.

XV. Governing Law

Although I may work for the Company outside of Arizona or the United States, I understand and agree that this Agreement will be interpreted and enforced in accordance with the laws of the State of Arizona.

B-7

I HAVE READ THIS PIIPA CAREFULLY, AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS THAT IT IMPOSES UPON ME WITHOUT RESERVATION.

I SIGN THIS PIIPA FREELY AND VOLUNTARILY, WITHOUT COERCION OR DURESS.

________________________________________________________________

Employee Signature    Date

__________________________________________

Employee Name [Please Print]

FOR APOLLO EDUCATION GROUP, INC.

Fred Newton

Senior Vice President – Human Resources

B-8

EXHIBIT A TO APPENDIX B

1. The following is a complete list of all Intellectual Property relevant to the subject matter of my employment by the Company that have been made or discovered or conceived or first reduced to practice by me or jointly with others prior to my employment by the Company that I desire to remove from the operation of the Company’s Proprietary Information and Intellectual Property Agreement (“PIIPA”), except for the license granted in Section V.A. of the PIIPA:

No Intellectual Property.

See below:

See _____ (#) additional sheets attached.

2. I propose to bring to my employment the following materials and documents of a former employer or other person/entity:

No materials or documents

See below:

See ____ (#) additional sheet(s) attached:

Date:____________________________________________________________________

Employee Signature

B-9

SCHEDULE I

PERFORMANCE PERIOD AND PERFORMANCE GOAL

The Performance Period shall be coincident with the Corporation’s ______ fiscal year and shall accordingly commence on ________________ and end on ____________________.

[SPECIFY PERFORMANCE GOAL]

Schedule I-1

EX-10.3

DEFERRAL ELECTION FORM

FY2016 ANNUAL LONG TERM INCENTIVE AWARD

Name (Last, First, Middle Initial) Employee Number

You may use this form to

• Indicate whether you wish to defer your annual restricted stock unit grant under the 2000 Stock Incentive Plan as further described below.

• Designate the settlement timing of your deferred annual restricted stock unit grant that vests.

PLEASE REMEMBER THAT ONCE YOU MAKE AN ELECTION

TO DEFER A RESTRICTED STOCK UNIT GRANT,

YOU CANNOT REVOKE THAT ELECTION

DEFERRAL ELECTION Please select if you wish to defer your annual restricted stock unit award

o

I elect to defer the settlement of my annual restricted stock unit award for the 2016 fiscal year, if any, that is granted pursuant to the 2000 Stock Incentive Plan, as amended, or any successor plan thereto (the “Plan”), which is anticipated to be awarded in or about [Insert Applicable Year]. Such award, if any, is subject to approval by the Compensation Committee and all applicable terms and conditions of such award. This election does not apply to other awards that may be granted under the Plan.

SETTLEMENT DATE OF DEFERRED AWARD* Please indicate settlement timing for your deferred annual restricted stock unit award
DEFAULT ELECTION	Unless another election is made below, I elect to defer the settlement of any vested restricted stock unit award covered by this Election to the earlier of:    (i) my Separation of Service (as defined in Section 409A of    the Internal Revenue Code); or    (ii) a Change of Control (as defined in the Plan), provided    such event is also a “change in control” event (as defined in    Section 409A of the Internal Revenue Code and payable    within 74 days thereafter).
-- OR --

o	Date Specific (subject to earlier settlement upon Separation from Service)	I elect to defer the settlement of any vested restricted stock unit awards covered by this Election to the earlier of:    (i) my Separation from Service;    (ii) a Change of Control (as defined in the Plan), provided    such event is also a “change in control” event (as defined in    Section 409A of the Internal Revenue Code and payable    within 74 days thereafter; or    (ii) the first business day of 20___ (designated year must    be at least 5 years after the year that award is granted).
* Restricted stock unit awards will be settled in shares of the Company’s Class A common stock or as otherwise provided for in the Plan and the applicable award agreement. The settlement of any deferred annual restricted stock unit grant upon Separation from Service will be made on the first business day following the six-month anniversary of such Separation from Service or, if later in the same calendar year of such anniversary, when the Compensation Committee of the Board certifies that the applicable performance goal(s) have been met.

I understand:

• To the extent I do not elect to defer the settlement of my restricted stock unit grant, the restricted stock unit grant will be automatically settled in shares of the Company’s Class A common stock following the vesting of the restricted stock unit grant, as more fully set forth in the award agreement under which such restricted stock units were granted (“Award Agreement”). Any vested deferred restricted stock unit grant will be settled in shares of the Company’s Class A common stock (except as set forth in the Award Agreement) as elected by me above.

• The receipt of shares of the Company’s Class A common stock pursuant to any restricted stock unit award will be taxed as ordinary income to me based on the value of the shares on the date the stock unit award is settled and I receive shares of the Company’s common stock. This is true whether or not I elect to defer settlement of my restricted stock units. However, employment taxes with respect to my deferred Restricted Stock Units will generally be due upon vesting of my award.

• Except as otherwise determined by the Company in its sole discretion, applicable withholding taxes with respect to all vested shares shall be collected through an automatic share withholding method.

• The restricted stock unit award shall be subject to all of the terms and conditions set forth in the Plan and any applicable award agreement approved by the Company.

• The settlement of my restricted stock unit award that vests is unfunded and unsecured; as such, my right to future settlement is limited to that of a general unsecured creditor of the Company. This is true whether or not I elect to defer settlement of my restricted stock units.

• I have consulted with, or had the opportunity to consult with, my tax and/or financial advisor regarding this deferral election.

ACKNOWLEDGED AND AGREED:

Signature of Participant Date

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory W. Cappelli, certify that:

1. I have reviewed this Form 10-Q of Apollo Education Group, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 8, 2015

/s/ Gregory W. Cappelli  

Gregory W. Cappelli 

Chief Executive Officer and Director

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Brian L. Swartz, certify that:

1. I have reviewed this Form 10-Q of Apollo Education Group, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 8, 2015

/s/ Brian L. Swartz

Brian L. Swartz

Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Apollo Education Group, Inc. (the “Company”) on Form 10-Q for the quarter ended November 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory W. Cappelli, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: January 8, 2015

/s/ Gregory W. Cappelli  

Gregory W. Cappelli 

Chief Executive Officer and Director

(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to Apollo Education Group, Inc. and will be retained by Apollo Education Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Apollo Education Group, Inc. (the “Company”) on Form 10-Q for the quarter ended November 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian L. Swartz, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: January 8, 2015

/s/ Brian L. Swartz  

Brian L. Swartz 

Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to Apollo Education Group, Inc. and will be retained by Apollo Education Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013	Aug. 31, 2014	Aug. 31, 2013
Assets and liabilities measured on a recurring basis [Line Items]
Contingent consideration	$ 0
Change in fair value included in net income	(1,121)	466
Payment for contingent consideration		0
Balance	0
Payment for contingent consideration	21,371	0
Open Colleges [Member]
Assets and liabilities measured on a recurring basis [Line Items]
Initial contingent consideration at fair value	21,371
Payment for contingent consideration	(34,480)
Recurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring basis [Line Items]
Contingent consideration			41,893
Balance			41,893
Balance			41,893
Recurring Fair Value Measurement [Member] | Noncontrolling Interest in Apollo Global [Member]
Assets and liabilities measured on a recurring basis [Line Items]
Contingent consideration	6,292
Balance	6,292
Level 1 [Member] | Recurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring basis [Line Items]
Contingent consideration	0		0
Balance			0
Balance	0		0
Level 2 [Member] | Recurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring basis [Line Items]
Contingent consideration	0		0
Balance			0
Balance	0		0
Level 3 [Member] | Recurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring basis [Line Items]
Contingent consideration		5,743	41,893	5,277
Balance			41,893	5,277
Balance		5,743	41,893	5,277
Level 3 [Member] | Recurring Fair Value Measurement [Member] | Noncontrolling Interest in Apollo Global [Member]
Assets and liabilities measured on a recurring basis [Line Items]
Contingent consideration	6,292
Balance	$ 6,292

XML

Segment Reporting (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013	Aug. 31, 2014	Dec. 04, 2014
Segment reporting [Line Items]
Net revenue	$ 719,052	$ 848,148
Operating income	60,494	170,361
Interest income	589	568
Interest expense	(1,662)	(2,086)
Other (loss) income, net	(1,285)	807
Income from continuing operations before income taxes	58,136	169,650
Acquisition costs and contingent consideration charges	3,219	0
Total assets	2,422,288		3,092,935
Subsequent Event [Member] | Faculdade da Educacional da Lapa [Member]
Segment reporting [Line Items]
Percentage of shares acquired				75.00%
University Of Phoenix [Member]
Segment reporting [Line Items]
Net revenue	592,853	744,863
Operating income	93,511	183,473
Total assets	814,470		824,895
Apollo Global [Member]
Segment reporting [Line Items]
Net revenue	115,140	91,159
Operating income	(4,842)	2,217
Acquisition costs and contingent consideration charges	1,700
Total assets	684,019		680,363
Other [Member]
Segment reporting [Line Items]
Net revenue	11,059	12,126
Operating income	(28,175)	(15,329)
Acquisition costs and contingent consideration charges	1,500
Total assets	$ 923,799		$ 1,587,677

XML

Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	Nov. 30, 2014	Aug. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
Outstanding surety bonds	$ 34
Letters of credit outstanding	$ 46	$ 24

XML

Segment Reporting (Tables)

3 Months Ended

Nov. 30, 2014

Segment Reporting [Abstract]

Segment reporting information

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

	Three Months Ended November 30,
($ in thousands)	2014			2013
Net revenue:
University of Phoenix	$	592,853		$	744,863
Apollo Global	115,140			91,159
Other	11,059			12,126
Net revenue	$	719,052		$	848,148
Operating income (loss)(1):
University of Phoenix	$	93,511		$	183,473
Apollo Global(2)	(4,842		)	2,217
Other(2)	(28,175		)	(15,329		)
Operating income	60,494			170,361
Reconciling items:
Interest income	589			568
Interest expense	(1,662		)	(2,086		)
Other (loss) income, net	(1,285		)	807
Income from continuing operations before income taxes	$	58,136		$	169,650

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

⁽²⁾ During the three months ended November 30, 2014, Apollo Global and Other incurred $1.7 million and $1.5 million of acquisition costs and contingent consideration charges, respectively.

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

($ in thousands)	November 30, 2014		August 31, 2014
University of Phoenix	$	814,470	$	824,895
Apollo Global	684,019		680,363
Other(1)	923,799		1,587,677
Total assets	$	2,422,288	$	3,092,935

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

XML

Financial Instruments (Tables)

3 Months Ended

Nov. 30, 2014

Financial Instruments [Abstract]

Financial instruments

The following summarizes our cash and cash equivalents, restricted cash and cash equivalents and marketable securities by significant financial instrument category as of the respective periods:

	November 30, 2014
($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents(1)		Current Marketable Securities		Noncurrent Marketable Securities
Cash	$	657,747	$	—	$	—		$	657,747	$	657,747	$	—	$	—
Level 1:
Money market funds	128,952		—		—			128,952		128,952		—		—
Level 2:
Corporate bonds	120,639		94		(93		)	120,640		140		78,314		42,186
Tax-exempt municipal bonds	95,653		113		(29		)	95,737		—		75,903		19,834
Time deposits	50,141		—		—			50,141		25,058		25,083		—
Other	31,973		9		(1		)	31,981		—		26,387		5,594
Level 3:
Auction-rate securities	6,850		—		(904		)	5,946		—		—		5,946
Total	$	1,091,955	$	216	$	(1,027	)	$	1,091,144	$	811,897	$	205,687	$	73,560

	August 31, 2014
($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents(1)		Current Marketable Securities		Noncurrent Marketable Securities
Cash	$	1,295,395	$	—	$	—		$	1,295,395	$	1,295,395	$	—	$	—
Level 1:
Money market funds	132,508		—		—			132,508		132,508		—		—
Level 2:
Tax-exempt municipal bonds	106,543		155		(11		)	106,687		—		78,443		28,244
Corporate bonds	106,575		123		(52		)	106,646		—		56,837		49,809
Time deposits	50,100		—		—			50,100		25,041		25,059		—
Commercial paper	11,793		1		—			11,794		—		11,794		—
Other	19,155		1		(1		)	19,155		4		15,339		3,812
Level 3:
Auction-rate securities	6,850		—		(904		)	5,946		—		—		5,946
Total	$	1,728,919	$	280	$	(968	)	$	1,728,231	$	1,452,948	$	187,472	$	87,811

⁽¹⁾ Cash and cash equivalents includes restricted cash and cash equivalents.

XML

Shareholders' Equity and Redeemable Noncontrolling Interests (Details) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
Share Repurchases [Line Items]
Treasury stock purchases, cost	$ 20,064,000	$ 16,871,000
Apollo Class A nonvoting common stock [Member]
Share Repurchases [Line Items]
Aggregate share repurchase program	250,000,000
Amount remaining on repurchase authorization	72,200,000
Treasury stock reissued, shares	227	281
Share repurchases (in shares)	0	0
Treasury stock purchases, cost	0	0
Apollo Class A nonvoting common stock [Member] | Share Repurchases [Member]
Share Repurchases [Line Items]
Share repurchases (in shares)	677	577
Treasury stock purchases, cost	18,092,000	15,000,000
Treasury stock purchases, average price per share	$ 26.72	$ 26.02
Apollo Class A nonvoting common stock [Member] | Repurchases Related To Restricted Stock Units [Member]
Share Repurchases [Line Items]
Share repurchases (in shares)	78	88
Treasury stock purchases, cost	$ 1,972,000	$ 1,871,000

XML

Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2014	Aug. 31, 2014
Financial Instruments [Line Items]
Amortized cost	1,091,955	$ 1,728,919
Unrealized gains	216	280
Unrealized losses	(1,027)	(968)
Fair value	1,091,144	1,728,231
Cash and cash equivalents	811,897	1,452,948
Current marketable securities	205,687	187,472
Noncurrent marketable securities	73,560	87,811
Maximum [Member]
Financial Instruments [Line Items]
Marketable securities maturities	3 years
Cash [Member]
Financial Instruments [Line Items]
Amortized cost	657,747	1,295,395
Unrealized gains	0	0
Unrealized losses	0	0
Fair value	657,747	1,295,395
Cash and cash equivalents	657,747	1,295,395
Current marketable securities	0	0
Noncurrent marketable securities	0	0
Money market funds [Member]
Financial Instruments [Line Items]
Amortized cost	128,952	132,508
Unrealized gains	0	0
Unrealized losses	0	0
Cash and cash equivalents	128,952	132,508
Current marketable securities	0	0
Noncurrent marketable securities	0	0
Corporate bonds [Member]
Financial Instruments [Line Items]
Amortized cost	120,639	106,575
Unrealized gains	94	123
Unrealized losses	(93)	(52)
Cash and cash equivalents	140	0
Current marketable securities	78,314	56,837
Noncurrent marketable securities	42,186	49,809
Tax-exempt municipal bonds [Member]
Financial Instruments [Line Items]
Amortized cost	95,653	106,543
Unrealized gains	113	155
Unrealized losses	(29)	(11)
Cash and cash equivalents	0	0
Current marketable securities	75,903	78,443
Noncurrent marketable securities	19,834	28,244
Time deposits [Member]
Financial Instruments [Line Items]
Amortized cost	50,141	50,100
Unrealized gains	0	0
Unrealized losses	0	0
Cash and cash equivalents	25,058	25,041
Current marketable securities	25,083	25,059
Noncurrent marketable securities	0	0
Commercial paper [Member]
Financial Instruments [Line Items]
Amortized cost		11,793
Unrealized gains		1
Unrealized losses		0
Cash and cash equivalents		0
Current marketable securities		11,794
Noncurrent marketable securities		0
Other [Member]
Financial Instruments [Line Items]
Amortized cost	31,973	19,155
Unrealized gains	9	1
Unrealized losses	(1)	(1)
Cash and cash equivalents	0	4
Current marketable securities	26,387	15,339
Noncurrent marketable securities	5,594	3,812
Auction-rate securities [Member]
Financial Instruments [Line Items]
Amortized cost	6,850	6,850
Unrealized gains	0	0
Unrealized losses	(904)	(904)
Cash and cash equivalents	0	0
Current marketable securities	0	0
Noncurrent marketable securities	5,946	5,946
Level 1 [Member] | Money market funds [Member]
Financial Instruments [Line Items]
Fair value	128,952	132,508
Level 2 [Member] | Corporate bonds [Member]
Financial Instruments [Line Items]
Fair value	120,640	106,646
Level 2 [Member] | Tax-exempt municipal bonds [Member]
Financial Instruments [Line Items]
Fair value	95,737	106,687
Level 2 [Member] | Time deposits [Member]
Financial Instruments [Line Items]
Fair value	50,141	50,100
Level 2 [Member] | Commercial paper [Member]
Financial Instruments [Line Items]
Fair value		11,794
Level 2 [Member] | Other [Member]
Financial Instruments [Line Items]
Fair value	31,981	19,155
Level 3 [Member] | Auction-rate securities [Member]
Financial Instruments [Line Items]
Fair value	5,946	$ 5,946

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Regulatory Matters (Details) (Apollo Class B voting common stock [Member])	Nov. 30, 2014
Apollo Class B voting common stock [Member]
Stock ownership percentage	51.00%

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Discontinued Operations

3 Months Ended

Nov. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

During the fourth quarter of fiscal year 2014, we sold the assets of our subsidiary Institute for Professional Development (“IPD”) for $4 million. IPD had insignificant assets and liabilities as of the date of sale and as a result, we realized an immaterial gain on sale. We sold IPD because its business was no longer consistent with our long-term strategic objectives due to recent operating losses and limitations on our ability to further develop and expand the domestic business. We do not have significant continuing involvement with IPD after the sale and, accordingly, IPD’s operating results are presented as discontinued operations on our Condensed Consolidated Statements of Income. We determined cash flows from our discontinued operations are not material and are included with cash flows from continuing operations on our Condensed Consolidated Statements of Cash Flows. IPD was previously included in Other in our segment reporting.

The following summarizes IPD’s operating results for the three months ended November 30, 2013, which are presented in loss from discontinued operations, net of tax on our Condensed Consolidated Statements of Income:

($ in thousands)
Net revenue	$	8,187
Costs and expenses	(8,754		)
Loss from discontinued operations before income taxes	(567		)
Benefit from income taxes	176
Loss from discontinued operations, net of tax	$	(391	)

The operating results of our discontinued operations only include revenues and costs directly attributable to the discontinued operations. Accordingly, no interest expense or general corporate overhead have been allocated to IPD. IPD did not meet the held for sale criteria until the period it was sold.

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Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
Earnings Per Share [Abstract]
Net income attributable to Apollo (basic and diluted)	$ 33,785	$ 98,891
Basic weighted average shares outstanding (in shares)	108,581	113,326
Anti-dilutive securities [Line Items]
Diluted weighted average shares outstanding (in shares)	109,378	113,960
Basic income per share attributable to Apollo (in dollars per share)	$ 0.31	$ 0.87
Diluted income per share attributable to Apollo (in dollars per share)	$ 0.31	$ 0.87
Restricted stock units and performance share awards [Member]
Anti-dilutive securities [Line Items]
Dilutive effect of share-based awards (in shares)	618	44
Anti-dilutive securities excluded from earnings per share computation (in shares)	316	1,012
Stock options [Member]
Anti-dilutive securities [Line Items]
Dilutive effect of share-based awards (in shares)	179	590
Anti-dilutive securities excluded from earnings per share computation (in shares)	2,476	3,240

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Debt (Tables)

3 Months Ended

Nov. 30, 2014

Debt Disclosure [Abstract]

Debt

Debt and short-term borrowings consist of the following as of the respective periods:

($ in thousands)	November 30, 2014			August 31, 2014
Revolving Credit Facility	$	—		$	585,000
Capital lease obligations	24,902			32,806
Other	37,990			39,290
Total debt	62,892			657,096
Less short-term borrowings and current portion of long-term debt	(15,902		)	(609,506		)
Long-term debt	$	46,990		$	47,590

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Accrued and Other Liabilities (Tables)

3 Months Ended

Nov. 30, 2014

Payables and Accruals [Abstract]

Accrued and other current liabilities

Accrued and other current liabilities consist of the following as of the respective periods:

($ in thousands)	November 30, 2014		August 31, 2014
Salaries, wages and benefits	$	69,844	$	125,165
Student refunds, grants and scholarships	45,019		20,072
Restructuring obligations	42,630		43,339
Accrued legal and other professional obligations	38,800		33,651
Accrued advertising	24,043		33,853
Deferred rent and other lease liabilities	12,323		12,384
Curriculum materials	11,684		12,069
Contingent consideration	—		35,239
Other	40,762		47,835
Total accrued and other current liabilities	$	285,105	$	363,607

Other long-term liabilities

Other long-term liabilities consist of the following as of the respective periods:

($ in thousands)	November 30, 2014		August 31, 2014
Deferred revenue	$	62,665	$	51,831
Restructuring obligations	55,523		59,744
Deferred rent and other lease liabilities	55,244		57,788
Deferred gains on sale-leasebacks	21,273		21,641
Uncertain tax positions	9,429		9,770
Other	30,919		33,168
Total other long-term liabilities	$	235,053	$	233,942

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Share-Based Compensation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
Share-based compensation expense [Line Items]
Share-based compensation expense	$ 10,711	$ 11,973
Instructional and student advisory [Member]
Share-based compensation expense [Line Items]
Share-based compensation expense	2,982	3,533
Marketing [Member]
Share-based compensation expense [Line Items]
Share-based compensation expense	836	1,108
Admissions advisory [Member]
Share-based compensation expense [Line Items]
Share-based compensation expense	261	102
General and administrative [Member]
Share-based compensation expense [Line Items]
Share-based compensation expense	5,880	5,368
Restructuring and other charges [Member]
Share-based compensation expense [Line Items]
Share-based compensation expense	$ 752	$ 1,862

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Shareholders' Equity and Redeemable Noncontrolling Interests (Tables)

3 Months Ended

Nov. 30, 2014

Equity [Abstract]

Share repurchases

The following summarizes our share repurchase activity for the respective periods:

	Three Months Ended November 30,
(In thousands, except per share data)	2014		2013
Share repurchases under share repurchase program:
Number of shares repurchased	677		577
Weighted average purchase price per share	$	26.72	$	26.02
Cost of share repurchases	$	18,092	$	15,000
Share repurchases related to vesting of restricted stock units and performance share awards:
Number of shares repurchased	78		88
Cost of share repurchases	$	1,972	$	1,871

Share reissuances

Share reissuances were as follows for the respective periods:

	Three Months Ended November 30,
(In thousands)	2014	2013
Number of shares reissued	227	281

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Earnings Per Share (Tables)

3 Months Ended

Nov. 30, 2014

Earnings Per Share [Abstract]

Earnings per share

The components of basic and diluted earnings per share are as follows:

	Three Months Ended November 30,
(In thousands, except per share data)	2014		2013
Numerator:
Net income attributable to Apollo (basic and diluted)	$	33,785	$	98,891
Denominator:
Basic weighted average shares outstanding	108,581		113,326
Dilutive effect of restricted stock units and performance share awards	618		44
Dilutive effect of stock options	179		590
Diluted weighted average shares outstanding	109,378		113,960
Basic income per share attributable to Apollo	$	0.31	$	0.87
Diluted income per share attributable to Apollo	$	0.31	$	0.87
Anti-dilutive securities excluded from diluted earnings per share:
Anti-dilutive restricted stock units and performance share awards outstanding	316		1,012
Anti-dilutive stock options outstanding	2,476		3,240

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Restructuring and Other Charges

3 Months Ended

Nov. 30, 2014

Restructuring and Related Activities [Abstract]

Restructuring and Other Charges

Restructuring and Other Charges

The U.S. higher education industry is experiencing unprecedented, rapidly developing changes that challenge many of the core principles underlying the industry. We began initiating restructuring activities in fiscal year 2011 to reengineer and simplify our business processes and refine our educational delivery systems to improve the efficiency and effectiveness of our services to students. We have continued restructuring activities in fiscal year 2015 as we further reduce the size of our services infrastructure and associated operating expenses to align with our reduced enrollment and revenue.

Fiscal Year 2015 Restructuring

During the first quarter of fiscal year 2015, we incurred $8.4 million of restructuring expense associated with new restructuring activities initiated after fiscal year 2014. The expense consisted of $4.6 million of severance and other employee separation costs associated with the elimination of approximately 200 positions. The substantial majority of the remaining restructuring expense during the first quarter of fiscal year 2015 represented costs associated with termination of a curriculum-based contract. The expense associated with these activities is reflected in our segment reporting as follows: $0.3 million in University of Phoenix and $8.1 million in Other.

We do not expect to incur material future charges related to these restructuring activities; however, we intend to further reduce the size of our services infrastructure and associated operating expenses to align with our reduced enrollment and revenue, and expect to incur material charges associated with future restructuring activities.

Prior Fiscal Year Restructuring

Our restructuring activities initiated prior to fiscal year 2015 principally include rationalizing our administrative real estate facilities, closing 115 University of Phoenix ground locations, which at the time was intended to result in 110 remaining ground locations, and workforce reductions. University of Phoenix began closing its ground locations during fiscal year 2013 and has maintained locations throughout the U.S. and Puerto Rico. However, University of Phoenix continues to evaluate the extent, functionality and location of its ground facilities and to close facilities that are underutilized or unnecessary.

During the first quarter of fiscal year 2015, we incurred $10.6 million of expense associated with restructuring activities initiated prior to fiscal year 2015. The substantial majority of the expense represents an increase in our estimated future cash payments associated with certain lease obligations included in the University of Phoenix ground location rationalization discussed above. We do not expect to incur material charges related to the remaining space expected to be vacated. However, we will incur interest accretion and may record additional adjustments associated with the estimated lease obligations, which involves significant judgment, in future periods.

Restructuring Liability Changes

The following details the changes in our restructuring liabilities during the three months ended November 30, 2014:

	Lease and Related Costs, Net					Severance and Other Employee Separation Costs						Other Restructuring Related Costs						Total
($ in thousands)	2015 Restructuring		Prior Year Restructuring(1)			2015 Restructuring			Prior Year Restructuring(1)			2015 Restructuring			Prior Year Restructuring(1)
August 31, 2014	$	—	$	96,204		$	—		$	5,687		$	—		$	1,192		$	103,083
Expense	—		10,094			4,643			167			3,767			357			19,028
Other	—		(2,605		)	(752		)	—			—			—			(3,357		)
Payments	—		(13,562		)	(346		)	(5,687		)	(617		)	(389		)	(20,601		)
November 30, 2014(2)	$	—	$	90,131		$	3,545		$	167		$	3,150		$	1,160		$	98,153

⁽¹⁾ We have incurred $355 million of cumulative costs associated with prior year restructuring as of November 30, 2014, which includes lease exit, employee separation, and other related costs of $230 million, $83 million and $42 million, respectively. These cumulative costs have been reflected in our segment reporting as follows: $274 million in University of Phoenix, $18 million in Apollo Global, and $63 million in Other.

⁽²⁾ The gross, undiscounted obligation associated with our restructuring liabilities as of November 30, 2014 was approximately $163 million, which principally represents non-cancelable leases that will be paid over the respective lease terms through fiscal year 2023.

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Share-Based Compensation (Table)

3 Months Ended

Nov. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based compensation expense

The following details share-based compensation expense for the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014		2013
Instructional and student advisory	$	2,982	$	3,533
Marketing	836		1,108
Admissions advisory	261		102
General and administrative	5,880		5,368
Restructuring and other charges	752		1,862
Share-based compensation expense	$	10,711	$	11,973

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Accrued and Other Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Nov. 30, 2014	Aug. 31, 2014
Salaries, wages and benefits	$ 69,844	$ 125,165
Student refunds, grants and scholarships	45,019	20,072
Restructuring obligations	42,630	43,339
Accrued legal and other professional obligations	38,800	33,651
Accrued advertising	24,043	33,853
Deferred rent and other lease liabilities	12,323	12,384
Curriculum materials	11,684	12,069
Contingent consideration	0
Other	40,762	47,835
Total accrued and other current liabilities	285,105	363,607
Other Long-Term Liabilities [Abstract]
Deferred revenue	62,665	51,831
Restructuring obligations	55,523	59,744
Deferred rent and other lease liabilities	55,244	57,788
Deferred gains on sale-leasebacks	21,273	21,641
Uncertain tax positions	9,429	9,770
Other	30,919	33,168
Total other long-term liabilities	235,053	233,942
Open Colleges [Member] | Current Portion [Member]
Contingent consideration		$ 35,239

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Nov. 30, 2014	Aug. 31, 2014
Current assets:
Cash and cash equivalents	$ 584,976	$ 1,228,813
Restricted cash and cash equivalents	226,921	224,135
Marketable securities	205,687	187,472
Accounts receivable, net	251,518	225,398
Prepaid taxes	13,917	34,006
Deferred tax assets	76,968	83,871
Other current assets	61,229	58,855
Total current assets	1,421,216	2,042,550
Marketable securities	73,560	87,811
Property and equipment, net	418,088	435,733
Goodwill	248,932	259,901
Intangible assets, net	173,786	189,365
Deferred tax assets	36,137	37,335
Other assets	50,569	40,240
Total assets	2,422,288	3,092,935
Current liabilities:
Short-term borrowings and current portion of long-term debt	15,902	609,506
Accounts payable	68,405	63,907
Student deposits	252,448	280,562
Deferred revenue	248,887	225,818
Accrued and other current liabilities	285,105	363,607
Total current liabilities	870,747	1,543,400
Long-term debt	46,990	47,590
Deferred tax liabilities	19,093	22,674
Other long-term liabilities	235,053	233,942
Total liabilities	1,171,883	1,847,606
Commitments and contingencies
Redeemable noncontrolling interests	58,229	64,527
Shareholders’ equity:
Preferred stock, no par value
Additional paid-in capital	0	0
Apollo Class A treasury stock, at cost	(3,947,352)	(3,936,607)
Retained earnings	5,179,412	5,143,949
Accumulated other comprehensive loss	(40,618)	(27,320)
Total Apollo shareholders’ equity	1,191,546	1,180,126
Noncontrolling interests	630	676
Total equity	1,192,176	1,180,802
Total liabilities, redeemable noncontrolling interests and shareholders’ equity	2,422,288	3,092,935
Common stock [Member] | Apollo Class A nonvoting common stock [Member]
Shareholders’ equity:
Apollo common stock	103	103
Total equity	103	103
Common stock [Member] | Apollo Class B voting common stock [Member]
Shareholders’ equity:
Apollo common stock	1	1
Total equity	$ 1	$ 1

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Share-Based Compensation (Details 2) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Nov. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted	0
Restricted stock units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized shared-based compensation cost	68.0
Performance share awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized shared-based compensation cost	3.5
Restricted stock units and performance share awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted	54,000,000
Weighted average fair value of granted awards	29.55
Weighted average period unrecognized share-based compensation expected to be recognized	2 years 7 months 6 days
Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized shared-based compensation cost	8.4
Weighted average period unrecognized share-based compensation expected to be recognized	2 years 4 months 24 days

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
Operating activities:
Net income	$ 32,469	$ 99,041
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation	10,711	11,973
Excess tax benefits from share-based compensation	(229)	0
Depreciation and amortization	36,404	36,338
Accelerated depreciation included in restructuring	3,086	2,806
Loss on asset dispositions and write-offs	(972)	0
Non-cash foreign currency loss (gain), net	535	(1,099)
Provision for uncollectible accounts receivable	17,398	13,978
Deferred income taxes	2,938	4,738
Changes in assets and liabilities:
Restricted cash and cash equivalents	(3,298)	(26,438)
Accounts receivable	(50,331)	(11,148)
Prepaid taxes	19,989	64,469
Other assets	(13,032)	(11,190)
Accounts payable	5,156	(8,835)
Student deposits	(26,138)	(805)
Deferred revenue	29,822	8,076
Accrued and other liabilities	(48,153)	(53,007)
Net cash provided by operating activities	18,299	128,897
Investing activities:
Purchases of property and equipment	(20,337)	(34,366)
Purchases of marketable securities	(59,490)	(146,333)
Maturities and sales of marketable securities	53,974	57,412
Other	405	0
Net cash used in investing activities	(25,448)	(123,287)
Financing activities:
Payments on borrowings	(596,789)	(615,925)
Proceeds from borrowings	3,563	0
Share repurchases	(20,064)	(16,871)
Share reissuances	217	796
Excess tax benefits from share-based compensation	(229)	0
Payment for contingent consideration	(21,371)	0
Net cash used in financing activities	(634,215)	(632,000)
Exchange rate effect on cash and cash equivalents	(2,473)	35
Net decrease in cash and cash equivalents	(643,837)	(626,355)
Cash and cash equivalents, beginning of period	1,228,813	1,414,485
Cash and cash equivalents, end of period	584,976	788,130
Supplemental disclosure of cash flow and non-cash information:
Cash paid for income taxes, net of refunds	3,214	0
Cash paid for interest	1,701	1,891
Restricted stock units vested and released	$ 5,499	$ 5,113

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Restructuring and Other Charges (Details) (USD $)	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
Restructuring [Line Items]
Expense	$ 19,028,000	$ 31,963,000
Balance	103,083,000
Other	(3,357,000)
Payments	(20,601,000)
Balance	98,153,000
Restructuring gross obligation	163,000,000
Prior year restructuring [Member]
Restructuring [Line Items]
Expense	10,600,000
Cumulative costs for restructuring activities	355,000,000
2015 Restructuring [Member]
Restructuring [Line Items]
Expense	8,400,000
University Of Phoenix [Member]
Restructuring [Line Items]
Number of facilities	110
University Of Phoenix [Member] | Prior year restructuring [Member]
Restructuring [Line Items]
Number of facilities	115
Cumulative costs for restructuring activities	274,000,000
University Of Phoenix [Member] | 2015 Restructuring [Member]
Restructuring [Line Items]
Expense	300,000
Apollo Global [Member] | Prior year restructuring [Member]
Restructuring [Line Items]
Cumulative costs for restructuring activities	18,000,000
Other [Member] | Prior year restructuring [Member]
Restructuring [Line Items]
Cumulative costs for restructuring activities	63,000,000
Other [Member] | 2015 Restructuring [Member]
Restructuring [Line Items]
Expense	8,100,000
Lease and related costs, net [Member] | Prior year restructuring [Member]
Restructuring [Line Items]
Expense	10,094,000
Balance	96,204,000
Other	(2,605,000)
Payments	(13,562,000)
Balance	90,131,000
Cumulative costs for restructuring activities	230,000,000
Lease and related costs, net [Member] | 2015 Restructuring [Member]
Restructuring [Line Items]
Expense	0
Balance	0
Other	0
Payments	0
Balance	0
Severance and other employee separation costs [Member] | Prior year restructuring [Member]
Restructuring [Line Items]
Expense	167,000
Balance	5,687,000
Other	0
Payments	(5,687,000)
Balance	167,000
Cumulative costs for restructuring activities	83,000,000
Severance and other employee separation costs [Member] | 2015 Restructuring [Member]
Restructuring [Line Items]
Expense	4,643,000
Number of positions eliminated	200
Balance	0
Other	(752,000)
Payments	(346,000)
Balance	3,545,000
Other restructuring related costs [Member] | Prior year restructuring [Member]
Restructuring [Line Items]
Expense	357,000
Balance	1,192,000
Other	0
Payments	(389,000)
Balance	1,160,000
Cumulative costs for restructuring activities	42,000,000
Other restructuring related costs [Member] | 2015 Restructuring [Member]
Restructuring [Line Items]
Expense	3,767,000
Balance	0
Other	0
Payments	(617,000)
Balance	$ 3,150,000

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Nature of Operations and Significant Accounting Policies (Policies)

3 Months Ended

Nov. 30, 2014

Accounting Policies [Abstract]

Basis of Presentation Policy

Basis of Presentation

These unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission and, in our opinion, contain all adjustments, consisting of normal, recurring adjustments, necessary to fairly present the financial condition, results of operations and cash flows for the periods presented. These unaudited interim condensed consolidated financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements. Therefore, this information should be read in conjunction with the audited consolidated financial statements and related notes included in our 2014 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on October 21, 2014. We consistently applied the accounting policies described in the notes to our consolidated financial statements included in our 2014 Annual Report on Form 10-K in preparing these unaudited interim condensed consolidated financial statements.

Principles of Consolidation Policy

Principles of Consolidation

The unaudited interim condensed consolidated financial statements include the assets, liabilities, revenues and expenses of Apollo Education Group, Inc., our wholly-owned subsidiaries, and other subsidiaries that we control. We eliminate intercompany transactions and balances in consolidation.

Use of Estimates Policy

Use of Estimates

The preparation of financial statements in accordance with GAAP requires certain estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results may differ from these estimates.

Reclassifications Policy

Reclassifications

We reclassified prior periods for the following to conform to our current presentation:

• During the second quarter of fiscal year 2014, we began presenting share reissuances in the aggregate on our Condensed Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interests, which consists of reissuances attributable to our employee stock purchase plan and our equity compensation plans that were previously reported separately; and

• During the fourth quarter of fiscal year 2014, we began presenting Institute for Professional Development’s operating results as discontinued operations on our Condensed Consolidated Statements of Income.

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Discontinued Operations (Details) (USD $)	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013	Aug. 31, 2014
Discontinued Operations [Line Items]
Loss from discontinued operations, net of tax	$ 0	$ (391,000)
Institute for Professional Development [Member]
Discontinued Operations [Line Items]
Proceeds from disposition			4,000,000
Net revenue		8,187,000
Costs and expenses		(8,754,000)
Loss from discontinued operations before income taxes		(567,000)
Benefit from income taxes		176,000
Loss from discontinued operations, net of tax		$ (391,000)

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Discontinued Operations Discontinued Operations (Tables)

3 Months Ended

Nov. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued operations

The following summarizes IPD’s operating results for the three months ended November 30, 2013, which are presented in loss from discontinued operations, net of tax on our Condensed Consolidated Statements of Income:

($ in thousands)
Net revenue	$	8,187
Costs and expenses	(8,754		)
Loss from discontinued operations before income taxes	(567		)
Benefit from income taxes	176
Loss from discontinued operations, net of tax	$	(391	)

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Nature of Operations and Significant Accounting Policies

3 Months Ended

Nov. 30, 2014

Accounting Policies [Abstract]

Nature of Operations and Significant Accounting Policies

Nature of Operations and Significant Accounting Policies

Apollo Education Group, Inc. is one of the world’s largest private education services providers, serving students since 1973. Through our subsidiaries, we offer undergraduate, graduate, professional development and other non-degree educational programs and services, online and on-campus, principally to working learners in the U.S. and abroad. Refer to Note 15, Segment Reporting, for further information regarding our education platforms.

Our fiscal year is from September 1 to August 31. Unless otherwise stated, references to particular years or quarters refer to our fiscal years and the associated quarters of those fiscal years.

Basis of Presentation

These unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission and, in our opinion, contain all adjustments, consisting of normal, recurring adjustments, necessary to fairly present the financial condition, results of operations and cash flows for the periods presented. These unaudited interim condensed consolidated financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements. Therefore, this information should be read in conjunction with the audited consolidated financial statements and related notes included in our 2014 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on October 21, 2014. We consistently applied the accounting policies described in the notes to our consolidated financial statements included in our 2014 Annual Report on Form 10-K in preparing these unaudited interim condensed consolidated financial statements.

Principles of Consolidation

The unaudited interim condensed consolidated financial statements include the assets, liabilities, revenues and expenses of Apollo Education Group, Inc., our wholly-owned subsidiaries, and other subsidiaries that we control. We eliminate intercompany transactions and balances in consolidation.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires certain estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results may differ from these estimates.

Seasonality

Our operations are generally subject to seasonal trends, which vary depending on subsidiary. We have historically experienced, and expect to continue to experience, fluctuations in our results of operations as a result of seasonal variations in the level of our institutions’ enrollments.

• University of Phoenix - Although University of Phoenix enrolls students throughout the year, its net revenue is generally lower in our second fiscal quarter (December through February) than the other quarters due to holiday breaks.

• Apollo Global - Our Apollo Global subsidiaries experience seasonality associated with the timing of when courses begin, exam dates, the timing of their respective holidays and other factors. These factors have historically resulted in lower net revenue in our second and fourth fiscal quarters, particularly for BPP, which also results in substantially lower operating results during these quarters due to BPP’s relatively fixed cost structure.

Because of the seasonal nature of our business and other factors, the results of operations for the three months ended November 30, 2014 are not necessarily indicative of the results to be expected for the entire fiscal year.

Reclassifications

We reclassified prior periods for the following to conform to our current presentation:

• During the second quarter of fiscal year 2014, we began presenting share reissuances in the aggregate on our Condensed Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interests, which consists of reissuances attributable to our employee stock purchase plan and our equity compensation plans that were previously reported separately; and

• During the fourth quarter of fiscal year 2014, we began presenting Institute for Professional Development’s operating results as discontinued operations on our Condensed Consolidated Statements of Income.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”(“ASU 2014-09”). The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is not permitted. Accordingly, the standard is effective for us on September 1, 2017 using either a full retrospective or a modified retrospective approach. We are currently evaluating which transition approach to use and the impact that the standard will have on our financial statements.

In April 2014, the FASB issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). The standard raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. ASU 2014-08 is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2014, and early adoption is permitted. We do not expect to early adopt ASU 2014-08, which will be effective for us on September 1, 2015 and will apply to disposals that have not yet been reported in our financial statements as of the adoption date. Accordingly, the standard will not impact our previously reported disposals, and we will evaluate the impact of the standard on any disposals that occur after adoption.

Subsequent Event

On December 4, 2014, Apollo Global acquired a 75% interest in Sociedade Técnica Educacional da Lapa S.A., which provides postsecondary educational programs in Brazil under the name Faculdade da Educacional da Lapa (“FAEL”), for an initial cash payment of R$73.8 million (equivalent to $28.9 million on the acquisition date), plus a future contingent payment. The contingent payment is principally based on FAEL’s calendar year 2018 net revenue, has a maximum of approximately R$34 million (equivalent to $13.3 million on the acquisition date), and its fair value on the acquisition date was not significant. In addition, we have the option to buy the remaining noncontrolling interests, and the noncontrolling shareholders have the option to sell their shares to us, beginning in calendar year 2019, or earlier in limited circumstances. The price for the options is based on a formula specified at the acquisition date and is principally based on a multiple of FAEL’s operating results as defined in the acquisition agreement. There is no minimum or maximum price for these options.

This acquisition provides access to a new market and supports our strategy to diversify and expand our global operations. FAEL’s operating results are not material to our consolidated financial statements and they will be included in our Apollo Global operating segment from the date of acquisition. We have not yet completed the purchase price allocation for this acquisition principally due to the recent acquisition date.

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Condensed Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
Income Statement [Abstract]
Net revenue	$ 719,052	$ 848,148
Instructional and student advisory	324,264	337,202
Marketing	128,793	133,829
Admissions advisory	57,085	49,698
General and administrative	72,367	74,779
Depreciation and amortization	36,404	36,338
Provision for uncollectible accounts receivable	17,398	13,978
Restructuring and other charges	19,028	31,963
Acquisition costs and contingent consideration charges	3,219	0
Total costs and expenses	658,558	677,787
Operating income	60,494	170,361
Interest income	589	568
Interest expense	(1,662)	(2,086)
Other (loss) income, net	(1,285)	807
Income from continuing operations before income taxes	58,136	169,650
Provision for income taxes	(25,667)	(70,218)
Income from continuing operations	32,469	99,432
Loss from discontinued operations, net of tax	0	(391)
Net income	32,469	99,041
Net loss (income) attributable to noncontrolling interests	1,316	(150)
Net income attributable to Apollo	$ 33,785	$ 98,891
Earnings (Loss) Per Share, Basic [Abstract]
Continuing operations attributable to Apollo	$ 0.31	$ 0.88
Discontinued operations attributable to Apollo	$ 0.00	$ (0.01)
Basic income per share attributable to Apollo (in dollars per share)	$ 0.31	$ 0.87
Earnings Per Share, Diluted [Abstract]
Continuing operations attributable to Apollo	$ 0.31	$ 0.87
Discontinued operations attributable to Apollo	$ 0.00	$ 0.00
Diluted income per share attributable to Apollo (in dollars per share)	$ 0.31	$ 0.87
Basic weighted average shares outstanding (in shares)	108,581	113,326
Diluted weighted average shares outstanding (in shares)	109,378	113,960

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Earnings Per Share

3 Months Ended

Nov. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Our outstanding shares consist of Apollo Class A and Class B common stock. Our Articles of Incorporation treat the declaration of dividends on the Class A and Class B common stock in an identical manner. As such, both the Class A and Class B common stock are included in the calculation of our earnings per share.

Diluted weighted average shares outstanding includes the incremental effect of shares that would be issued upon the assumed exercise of stock options and the vesting and release of restricted stock units and performance share awards. The components of basic and diluted earnings per share are as follows:

	Three Months Ended November 30,
(In thousands, except per share data)	2014		2013
Numerator:
Net income attributable to Apollo (basic and diluted)	$	33,785	$	98,891
Denominator:
Basic weighted average shares outstanding	108,581		113,326
Dilutive effect of restricted stock units and performance share awards	618		44
Dilutive effect of stock options	179		590
Diluted weighted average shares outstanding	109,378		113,960
Basic income per share attributable to Apollo	$	0.31	$	0.87
Diluted income per share attributable to Apollo	$	0.31	$	0.87
Anti-dilutive securities excluded from diluted earnings per share:
Anti-dilutive restricted stock units and performance share awards outstanding	316		1,012
Anti-dilutive stock options outstanding	2,476		3,240

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Document and Entity Information In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2014	Jan. 02, 2015
Entity Information [Line Items]
Document Type	10-Q
Document Period End Date	Nov. 30, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Registrant Name	Apollo Education Group Inc
Entity Central Index Key	0000929887
Current Fiscal Year End Date	--08-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Apollo Class A nonvoting common stock [Member]
Entity Information [Line Items]
Entity Common Stock Outstanding (in shares)		107,900
Apollo Class B voting common stock [Member]
Entity Information [Line Items]
Entity Common Stock Outstanding (in shares)		475

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Share-Based Compensation

3 Months Ended

Nov. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

The following details share-based compensation expense for the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014		2013
Instructional and student advisory	$	2,982	$	3,533
Marketing	836		1,108
Admissions advisory	261		102
General and administrative	5,880		5,368
Restructuring and other charges	752		1,862
Share-based compensation expense	$	10,711	$	11,973

In accordance with our Amended and Restated 2000 Stock Incentive Plan, we granted 54,000 restricted stock units and performance share awards during the three months ended November 30, 2014. The granted awards had a weighted average grant date fair value of $29.55. As of November 30, 2014, we had $68.0 million and $3.5 million of unrecognized share-based compensation cost, net of forfeitures, related to unvested restricted stock units and performance share awards, respectively. These costs are expected to be recognized over a weighted average period of 2.6 years.

We did not grant any stock options during the three months ended November 30, 2014. As of November 30, 2014, we had $8.4 million of unrecognized share-based compensation cost, net of forfeitures, related to unvested stock options. These costs are expected to be recognized over a weighted average period of 2.4 years.

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2014		Nov. 30, 2013
Statement of Comprehensive Income [Abstract]
Net income	$ 32,469		$ 99,041
Other comprehensive income (loss) (net of tax):
Currency translation (loss) gain	(17,780)	[1]	2,835	[1]
Unrealized loss on available-for-sale securities	(74)	[1]	0	[1]
Comprehensive income	14,615		101,876
Comprehensive loss (income) attributable to noncontrolling interests	5,872		(249)
Comprehensive income attributable to Apollo	$ 20,487		$ 101,627

[1] The tax effect on each component of other comprehensive income during the three months ended November 30, 2014 and 2013, respectively, is not significant.

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Fair Value Measurements

3 Months Ended

Nov. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

We measure and disclose certain financial instruments at fair value as described in Note 4, Financial Instruments.Liabilities measured at fair value on a recurring basis, all of which are included in other liabilities on our Condensed Consolidated Balance Sheets, consist of the following as of November 30, 2014 and August 31, 2014:

			Fair Value Measurements at Reporting Dates Using
	Fair Value as of Respective Reporting Dates		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
($ in thousands)
Contingent consideration as of November 30, 2014	$	6,292	$	—	$	—	$	6,292
Contingent consideration as of August 31, 2014	$	41,893	$	—	$	—	$	41,893

The following summarizes changes in liabilities measured at fair value on a recurring basis for the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014			2013
Beginning balance	$	41,893		$	5,277
Change in fair value included in net income	(1,121		)	466
Payment for contingent consideration	(34,480		)	—
Ending balance	$	6,292		$	5,743

Our contingent consideration liabilities are classified within Level 3 and valued using discounted cash flow valuation methods encompassing significant unobservable inputs. The inputs include estimated operating results scenarios for the applicable performance periods, probability weightings assigned to operating results scenarios and the discount rates applied. Our contingent consideration liabilities relate to the following:

• Open Colleges - As a result of our acquisition of Open Colleges during fiscal year 2014, we had contingent consideration that was based on Open Colleges’ operating results through June 2014, as defined in the acquisition agreement. We initially measured the contingent consideration at $21.4 million based on information available as of the acquisition date. During the first quarter of fiscal year 2015, we settled the contingent consideration and paid $34.5 million, which includes $21.4 million in financing activities and the remaining portion is included in operating activities on our Condensed Consolidated Statements of Cash Flows.

• Apollo Global - As a result of our purchase of the noncontrolling interest in Apollo Global during fiscal year 2013, we have contingent consideration that is based on a portion of Apollo Global’s operating results through the fiscal years ending August 31, 2017. As of November 30, 2014, the estimated fair value for this contingent consideration was $6.3 million.

We did not change our valuation techniques associated with recurring fair value measurements from prior periods.

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Accounts Receivable, Net

3 Months Ended

Nov. 30, 2014

Receivables [Abstract]

Accounts Receivable, Net

Accounts Receivable, Net

Accounts receivable, net consist of the following as of the respective periods:

($ in thousands)	November 30, 2014			August 31, 2014
Student accounts receivable	$	291,680		$	255,134
Less allowance for doubtful accounts	(52,682		)	(50,145		)
Net student accounts receivable	238,998			204,989
Other receivables	12,520			20,409
Total accounts receivable, net	$	251,518		$	225,398

Student accounts receivable is composed primarily of amounts due related to tuition and educational services. The following summarizes the activity in allowance for doubtful accounts for the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014			2013
Beginning allowance for doubtful accounts	$	50,145		$	59,744
Provision for uncollectible accounts receivable	17,398			13,978
Write-offs, net of recoveries	(14,861		)	(17,827		)
Ending allowance for doubtful accounts	$	52,682		$	55,895

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Restructuring and Other Charges (Tables)

3 Months Ended

Nov. 30, 2014

Restructuring and Related Activities [Abstract]

Restructuring and other charges

The following details the changes in our restructuring liabilities during the three months ended November 30, 2014:

	Lease and Related Costs, Net					Severance and Other Employee Separation Costs						Other Restructuring Related Costs						Total
($ in thousands)	2015 Restructuring		Prior Year Restructuring(1)			2015 Restructuring			Prior Year Restructuring(1)			2015 Restructuring			Prior Year Restructuring(1)
August 31, 2014	$	—	$	96,204		$	—		$	5,687		$	—		$	1,192		$	103,083
Expense	—		10,094			4,643			167			3,767			357			19,028
Other	—		(2,605		)	(752		)	—			—			—			(3,357		)
Payments	—		(13,562		)	(346		)	(5,687		)	(617		)	(389		)	(20,601		)
November 30, 2014(2)	$	—	$	90,131		$	3,545		$	167		$	3,150		$	1,160		$	98,153

⁽¹⁾ We have incurred $355 million of cumulative costs associated with prior year restructuring as of November 30, 2014, which includes lease exit, employee separation, and other related costs of $230 million, $83 million and $42 million, respectively. These cumulative costs have been reflected in our segment reporting as follows: $274 million in University of Phoenix, $18 million in Apollo Global, and $63 million in Other.

⁽²⁾ The gross, undiscounted obligation associated with our restructuring liabilities as of November 30, 2014 was approximately $163 million, which principally represents non-cancelable leases that will be paid over the respective lease terms through fiscal year 2023.

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Commitments and Contingencies

3 Months Ended

Nov. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Surety Bonds

As part of our normal operations, our insurers issue surety bonds for us that are required by various states where we operate. We are obligated to reimburse our insurers for any surety bonds that are paid. As of November 30, 2014, the face amount of these surety bonds was approximately $34 million.

Letters of Credit

As of November 30, 2014, we had approximately $46 million of outstanding letters of credit, which principally support certain guarantees provided by our subsidiaries as part of our normal operations for which fair value is not material.

Litigation and Other Matters

We are subject to various claims and contingencies that arise from time to time in the ordinary course of business, including those related to regulation, litigation, business transactions, employee-related matters and taxes, among others. We do not believe any of these are material for separate disclosure.

The following is a description of pending litigation, settlements, and other proceedings that fall outside the scope of ordinary and routine litigation incidental to our business.

Securities Class Action (Apollo Institutional Investors Group)

On August 13, 2010, a securities class action complaint was filed in the U.S. District Court for the District of Arizona by Douglas N. Gaer naming us, John G. Sperling, Gregory W. Cappelli, Charles B. Edelstein, Joseph L. D’Amico, Brian L. Swartz and Gregory J. Iverson as defendants for allegedly making false and misleading statements regarding our business practices and prospects for growth. That complaint asserted a putative class period stemming from December 7, 2009 to August 3, 2010. A substantially similar complaint was also filed in the same Court by John T. Fitch on September 23, 2010 making similar allegations against the same defendants for the same purported class period. Finally, on October 4, 2010, another purported securities class action complaint was filed in the same Court by Robert Roth against the same defendants as well as Brian Mueller, Terri C. Bishop and Peter V. Sperling based upon the same general set of allegations, but with a defined class period of February 12, 2007 to August 3, 2010. The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On October 15, 2010, three additional parties filed motions to consolidate the related actions and be appointed the lead plaintiff.

On November 23, 2010, the Fitch and Roth actions were consolidated with Gaer and the Court appointed the “Apollo Institutional Investors Group” consisting of the Oregon Public Employees Retirement Fund, the Mineworkers’ Pension Scheme, and Amalgamated Bank as lead plaintiffs. The case is now entitled, In re Apollo Group, Inc. Securities Litigation, Lead Case Number CV-10-1735-PHX-JAT. On February 18, 2011, the lead plaintiffs filed a consolidated complaint naming Apollo, John G. Sperling, Peter V. Sperling, Joseph L. D’Amico, Gregory W. Cappelli, Charles B. Edelstein, Brian L. Swartz, Brian E. Mueller, Gregory J. Iverson, and William J. Pepicello as defendants. The consolidated complaint asserts a putative class period of May 21, 2007 to October 13, 2010. On April 19, 2011, we filed a motion to dismiss and oral argument on the motion was held before the Court on October 17, 2011. On October 27, 2011, the Court granted our motion to dismiss and granted plaintiffs leave to amend. On December 6, 2011, the lead plaintiffs filed an Amended Consolidated Class Action Complaint, which alleges similar claims against the same defendants. On January 9, 2012, we filed a motion to dismiss the Amended Consolidated Class Action Complaint. On June 22, 2012, the Court granted our motion to dismiss and entered a judgment in our favor.

On July 20, 2012, the plaintiffs filed a Notice of Appeal with the U.S. Court of Appeals for the Ninth Circuit. On December 16, 2014, the U.S. Court of Appeals for the Ninth Circuit issued an opinion affirming the District Court’s dismissal of plaintiffs’ complaint.

Securities Class Action (Teamsters Local 617 Pensions and Welfare Funds)

On November 2, 2006, the Teamsters Local 617 Pension and Welfare Funds filed a class action complaint purporting to represent a class of shareholders who purchased our stock between November 28, 2001 and October 18, 2006. The complaint, filed in the U.S. District Court for the District of Arizona, is entitled Teamsters Local 617 Pension & Welfare Funds v. Apollo Group, Inc. et al., Case Number 06-cv-02674-RCB, and alleges that we and certain of our current and former directors and officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by purportedly making misrepresentations concerning our stock option granting policies and practices and related accounting. The defendants are Apollo, J. Jorge Klor de Alva, Daniel E. Bachus, John M. Blair, Dino J. DeConcini, Kenda B. Gonzales, Hedy F. Govenar, Brian E. Mueller, Todd S. Nelson, Laura Palmer Noone, John R. Norton III, John G. Sperling and Peter V. Sperling. On September 11, 2007, the Court appointed The Pension Trust Fund for Operating Engineers as lead plaintiff. Lead plaintiff filed an amended complaint on November 23, 2007, asserting the same legal claims as the original complaint and adding claims for violations of Section 20A of the Securities Exchange Act of 1934 and allegations of breach of fiduciary duties and civil conspiracy. On April 30, 2009, plaintiffs filed their Second Amended Complaint, which alleges similar claims for alleged securities fraud against the same defendants.

On March 31, 2011, the U.S. District Court for the District of Arizona dismissed the case with prejudice and entered judgment in our favor. Plaintiffs filed a motion for reconsideration of this ruling, and the Court denied this motion on April 2, 2012. On April 27, 2012, the plaintiffs filed a Notice of Appeal with the U.S. Court of Appeals for the Ninth Circuit. During the pendency of this appeal, the parties reached an agreement in principle to settle this matter and, at the request of the parties, the Ninth Circuit issued an order staying the appeal on April 30, 2014. The parties plan to present a stipulation of settlement to the district court for approval in the near term.

As of November 30, 2014, we have accrued an immaterial amount reflecting the agreed-upon settlement. We intend to pursue reimbursement of the settlement amount from our insurance carriers, although the outcome of any such recovery efforts is uncertain at this point.

Class Action under the Telephone Consumer Protection Act

On September 25, 2014, Mundy Gonzalez filed a class action complaint against University of Phoenix alleging violations of the Telephone Consumer Protection Act (“TCPA”). The complaint, which is captioned Gonzalez v. The University of Phoenix, 3:14-cv-02279 and which was filed in U.S. District Court for the Southern District of California, alleges that University of Phoenix violated the TCPA by using automatic dialing systems to place unsolicited telephone calls to the cellular telephones of plaintiff and other individuals. The complaint seeks to recover damages on behalf of plaintiff and other similarly situated individuals.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

Class Action Alleging Unfair and Deceptive Practices

On November 13, 2014, Ashley Paredes filed a class action complaint against University of Phoenix and Apollo Education Group, Inc. alleging unfair and deceptive business practices in violation of California law. The complaint, which is captioned Paredes v. The University of Phoenix, Inc. and was filed in California Superior Court in San Bernadino County, purports to assert claims on behalf of the class of students who enrolled in the University’s educational programs for Psychology, Education, Nursing, Health Administration and Criminal Justice, and Technology from November 10, 2011 through November 10, 2014. The complaint alleges that the University misled class members regarding transferability of credits earned at the University and by promising or guaranteeing employment upon completion of studies. The complaint seeks to recover damages on behalf of plaintiff and other members of the class.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

Class Action Alleging Violations of the California Labor Code

On December 24, 2014, Carmin Tandy, who was previously employed as a faculty member at University of Phoenix, filed a class action complaint against Apollo Education Group, Inc. and University of Phoenix alleging violations of the California Labor Code pertaining to the manner in which University of Phoenix faculty in California were compensated. The complaint, which is captioned Tandy v. Apollo Education Group, Inc., et al., was filed in California Superior Court in San Diego County, purports to assert claims on behalf of faculty who were employed by defendants in California within either four, three, or one years of the filing of the complaint, and seeks to recover repayment of wages and other damages and relief under California law. 

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

Incentive Compensation False Claims Act Lawsuit

On May 25, 2011, we were notified that a qui tam complaint had been filed against us in the U.S. District Court, Eastern District of California, by private relators under the Federal False Claims Act and California False Claims Act, entitled USA and State of California ex rel. Hoggett and Good v. University of Phoenix, et al, Case Number 2:10-CV-02478-MCE-KJN. When the federal government declines to intervene in a qui tam action, as it has done in this case, the relators may elect to pursue the litigation on behalf of the federal government and, if successful, they are entitled to receive a portion of the federal government’s recovery.

The complaint alleges, among other things, that University of Phoenix has violated the Federal False Claims Act since December 12, 2009 and the California False Claims Act for the preceding ten years by falsely certifying to the U.S. Department of Education and the State of California that University of Phoenix was in compliance with various regulations that require compliance with federal rules regarding the payment of incentive compensation to admissions personnel, in connection with University of Phoenix’s participation in student financial aid programs. In addition to injunctive relief and fines, the relators seek significant damages on behalf of the Department of Education and the State of California, including all student financial aid disbursed by the Department to our students since December 2009 and by the State of California to our students during the preceding ten years. On July 24, 2014, the Court granted our motion to dismiss for lack of jurisdiction and dismissed relators’ complaint with prejudice. On December 14, 2014, relators filed a Notice of Appeal with the U.S. Court of Appeals for the Ninth Circuit.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on the information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

Himmel Derivative Action

On November 12, 2010, we received a shareholder demand to investigate, address and commence proceedings against each of our directors and certain of our officers for violation of any applicable laws, including in connection with the subject matter of the report of the Government Accountability Office prepared for the U.S. Senate in August 2010, our withdrawal of the outlook we previously provided for our fiscal year 2011, the investigation into possible unfair and deceptive trade practices associated with certain alleged practices of University of Phoenix by the State of Florida Office of the Attorney General in Fort Lauderdale, Florida, the participation by the State of Oregon Office of the Attorney General in the Securities Class Action (Apollo Institutional Investors Group), and the informal inquiry by the Enforcement Division of the Securities and Exchange Commission that commenced in October 2009.

On March 24, 2011, a shareholder derivative complaint was filed in the Superior Court for the State of Arizona, Maricopa County by Daniel Himmel, the foregoing shareholder who previously made a demand for investigation. In the complaint, the plaintiff asserts a derivative claim on our behalf against certain of our current and former officers and directors for breach of fiduciary duty, waste of corporate assets, and unjust enrichment. The complaint alleges that the individual defendants made improper statements and engaged in improper business practices that caused our stock price to drop, led to securities class actions against us, and enhanced regulation and scrutiny by various government entities and regulators. The case is entitled, Himmel v. Bishop, et al, Case Number CV2011-005604. Pursuant to a stipulation between all parties, on August 31, 2011, the Court ordered this action stayed during the pendency of the underlying Securities Class Action (Apollo Institutional Investors Group) matter.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on the information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

K.K. Modi Investment and Financial Services Pvt. Ltd.

On November 8, 2010, a suit was filed by K.K. Modi Investment and Financial Services Pvt. Ltd. (“Modi”) in the High Court of Delhi at New Delhi against defendants Apollo, Western International University, Inc., University of Phoenix, Inc., Apollo Global, Inc., Modi Apollo International Group Pvt. Ltd., Apollo International, Inc., John G. Sperling, Peter V. Sperling and Jorge Klor De Alva, seeking to permanently enjoin the defendants from making investments in the education industry in the Indian market in breach of an exclusivity and noncompete provision which plaintiff alleges is applicable to Apollo and its subsidiaries. The case is entitled, K.K. Modi Investment and Financial Services Pvt. Ltd. v. Apollo International, et. al. We believe that the relevant exclusivity and noncompete provision is inapplicable to us and our affiliates. On October 31, 2014, the Court denied the Apollo defendants’ initial applications to have the case dismissed, concluding that plaintiffs’ complaint raised factual issues that needed to be resolved through the submission of evidence. Defendants have appealed that ruling to the Division Bench of the High Court, and that appeal remains pending. If plaintiff ultimately obtains the requested injunctive relief, our ability to conduct business in India, including through our joint venture with HT Media Limited, may be adversely affected. It is also possible that in the future K.K. Modi may seek to expand existing litigation in India or commence litigation in the U.S. in which it may assert a significant damage claim against us.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on the information available to us at present, we cannot reasonably estimate a range of loss for this action and, accordingly, we have not accrued any liability associated with this action.

Attorney General Investigations

On October 22, 2010, University of Phoenix received notice that the State of Florida Office of the Attorney General in Fort Lauderdale, Florida had commenced an investigation into possible unfair and deceptive trade practices associated with certain alleged practices of the University. The notice included a subpoena to produce documents and detailed information for the time period of January 1, 2006 to the present about a broad spectrum of the University’s business. We are cooperating with the investigation, but also filed a suit to quash or limit the subpoena and to protect information sought that constitutes proprietary or trade secret information. We cannot predict the eventual scope, duration or outcome of the investigation at this time.

In May 2011 and January 2013, University of Phoenix received Civil Investigative Demands from the State of Massachusetts Office of the Attorney General. The Demands relate to an investigation of possible unfair or deceptive methods, acts, or practices by proprietary educational institutions in connection with the recruitment of students and the financing of education. The Demands seek documents, information and testimony regarding a broad spectrum of the University’s business for the time period of January 1, 2002 to the present. We are cooperating with the investigation. We cannot predict the eventual scope, duration or outcome of the investigation at this time.

Because of the many questions of fact and law that may arise, the outcome of these investigative proceedings is uncertain at this point. Based on the information available to us at present, we cannot reasonably estimate a range of loss for these matters and, accordingly, we have not accrued any liability associated with these matters.

In addition, from time to time, we receive informal requests from state Attorneys General and other government agencies relating to specific complaints they have received from students or former students and seeking information about the student, our programs, and other matters relating to our activities in the relevant state. These requests can be broad and time consuming to respond to, and there is a risk that they could expand and/or lead to a formal inquiry or investigation into our practices in a particular state.

UNIACC Investigations

UNIACC was advised by the National Accreditation Commission of Chile in November 2011 that its institutional accreditation would not be renewed and therefore had lapsed. Subsequently, in June 2012, a prosecutor’s office in Santiago, Chile requested that UNIACC provide documents relating to UNIACC’s relationship with a former employee and consultant who served as a member of the National Accreditation Commission until March 2012, and we received requests for additional information in connection with this investigation. Furthermore, in August 2012, the prosecutor’s office began requesting that UNIACC provide information about UNIACC’s business structure and operations and its relationship with other Apollo entities, in connection with an additional investigation regarding UNIACC’s compliance with applicable laws concerning the generation of profit by universities such as UNIACC. The prosecutor’s office has also requested additional information from UNIACC regarding certain government funding received by the institution. UNIACC is cooperating with these investigations. At this time, we cannot predict the eventual scope, duration or outcome of these investigations.

In November 2012, UNIACC learned that the Ministry of Education was commencing a formal investigation into profit related issues and concerning the official recognition of UNIACC as a university under Chilean law. On November 18, 2013, we were notified by the Ministry of Education that it declined to pursue any charges against UNIACC and closed its investigation without imposing any sanction on UNIACC. In closing its investigation, the Ministry forwarded certain of its files for review by the Chilean tax authorities and the criminal prosecutor conducting the profit investigation referenced above.

Because of the many questions of fact and law that may arise, the outcome of these investigative proceedings is uncertain at this point. Based on the information available to us at present, we cannot reasonably estimate a range of loss for these matters and, accordingly, we have not accrued any liability associated with these matters.

Office of the Inspector General of the U.S. Department of Education (“OIG”) Subpoena

On March 21, 2014, University of Phoenix received a subpoena from the Mid-Atlantic Region of the OIG. The subpoena seeks the production by the University of documents and detailed information regarding a broad spectrum of the activities conducted in the University’s Centralized Service Center for the Northeast Region located in Columbia, Maryland, for the time period of January 1, 2007 to the present, including information relating to marketing, recruitment, enrollment, financial aid processing, fraud prevention, student retention, personnel training, attendance, academic grading and other matters. We are cooperating with these requests but cannot at this time predict the eventual scope, duration or outcome of this matter.

Because of the many questions of fact and law that may arise, the outcome of this matter is uncertain at this point. Based on the information available to us at present, we cannot reasonably estimate a range of loss and, accordingly, we have not accrued any liability associated with this matter.

Securities Class Action (Nader Saleh)

On April 24, 2014, a securities class action complaint was filed in the U.S. District Court for the District of Arizona by Nader Saleh naming Apollo Education Group, Inc., Gregory W. Cappelli, and Brian L. Swartz as defendants and asserting a putative class period stemming from October 19, 2011 to April 1, 2014. The complaint is entitled Saleh v. Apollo Education Group, Inc., 2:14-cv-00877-SRB and alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, among other complaints. On November 12, 2014, plaintiff voluntarily dismissed the complaint, and the district court subsequently terminated the case on November 13, 2014.

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Income Taxes

3 Months Ended

Nov. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We determine our interim income tax provision by applying our estimated effective income tax rate expected to be applicable for the full fiscal year to our income before income taxes for the period. Our effective income tax rate is dependent upon several factors, such as tax rates in state and foreign jurisdictions and the relative amount of income we earn in such jurisdictions. In determining our full year estimate, we do not include the estimated impact of unusual and/or infrequent items, which may cause significant variations in the customary relationship between income tax expense and income before income taxes. We exercise significant judgment in determining our income tax provision due to transactions, credits and calculations where the ultimate tax determination is uncertain.

Our U.S. federal income tax return for fiscal year 2013 is currently open for review by the Internal Revenue Service (“IRS”) and we are participating in the IRS’s Compliance Assurance Process for fiscal years 2014 and 2015, which is a voluntary program in which taxpayers seek to resolve all or most issues with the IRS prior to or soon after filing their U.S. federal income tax returns. We are also subject to numerous ongoing audits by state, local and foreign tax authorities with various tax years as early as 2007 that remain subject to examination. Although we believe our tax accruals are reasonable, the final determination of tax returns under review or returns that may be reviewed in the future and any related litigation could result in tax liabilities that materially differ from our historical income tax provisions and accruals.

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Accrued and Other Liabilities

3 Months Ended

Nov. 30, 2014

Payables and Accruals [Abstract]

Accrued and Other Liabilities

Accrued and Other Liabilities

Accrued and other current liabilities consist of the following as of the respective periods:

($ in thousands)	November 30, 2014		August 31, 2014
Salaries, wages and benefits	$	69,844	$	125,165
Student refunds, grants and scholarships	45,019		20,072
Restructuring obligations	42,630		43,339
Accrued legal and other professional obligations	38,800		33,651
Accrued advertising	24,043		33,853
Deferred rent and other lease liabilities	12,323		12,384
Curriculum materials	11,684		12,069
Contingent consideration	—		35,239
Other	40,762		47,835
Total accrued and other current liabilities	$	285,105	$	363,607

Other long-term liabilities consist of the following as of the respective periods:

($ in thousands)	November 30, 2014		August 31, 2014
Deferred revenue	$	62,665	$	51,831
Restructuring obligations	55,523		59,744
Deferred rent and other lease liabilities	55,244		57,788
Deferred gains on sale-leasebacks	21,273		21,641
Uncertain tax positions	9,429		9,770
Other	30,919		33,168
Total other long-term liabilities	$	235,053	$	233,942

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Debt

3 Months Ended

Nov. 30, 2014

Debt Disclosure [Abstract]

Debt

Debt

Debt and short-term borrowings consist of the following as of the respective periods:

($ in thousands)	November 30, 2014			August 31, 2014
Revolving Credit Facility	$	—		$	585,000
Capital lease obligations	24,902			32,806
Other	37,990			39,290
Total debt	62,892			657,096
Less short-term borrowings and current portion of long-term debt	(15,902		)	(609,506		)
Long-term debt	$	46,990		$	47,590

In fiscal year 2012, we entered into a syndicated $625 million unsecured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility is used for general corporate purposes, which may include acquisitions and share repurchases. The term is five years and will expire in April 2017. The Revolving Credit Facility may be used for borrowings in certain foreign currencies and letters of credit, in each case up to specified sublimits.

We borrowed $585.0 million and had approximately $24 million of outstanding letters of credit under the Revolving Credit Facility as of August 31, 2014. We repaid the entire amount borrowed under the Revolving Credit Facility during the first quarter of fiscal year 2015. As of November 30, 2014, we have approximately $46 million of outstanding letters of credit under the Revolving Credit Facility.

The Revolving Credit Facility fees are determined based on a pricing grid that varies according to our leverage ratio. The Revolving Credit Facility fee ranges from 25 to 40 basis points. Incremental fees for borrowings under the facility generally range from LIBOR + 125 to 185 basis points. The weighted average interest rate on outstanding short-term borrowings under the Revolving Credit Facility at August 31, 2014 was 3.5%.

The Revolving Credit Facility contains various customary representations, covenants and other provisions, including a material adverse event clause and the following financial covenants: maximum leverage ratio, minimum interest and rent expense coverage ratio, and U.S. Department of Education financial responsibility composite score requirements. We were in compliance with all applicable covenants related to the Revolving Credit Facility at November 30, 2014 and August 31, 2014.

Other debt principally includes debt at subsidiaries of Apollo Global and the present value of an obligation payable over a 10-year period associated with our purchase of technology in fiscal year 2012. The weighted average interest rate on our outstanding other debt at November 30, 2014 and August 31, 2014 was 5.6% and 5.8%, respectively.

The carrying value of our debt, excluding capital leases, approximates fair value based on the nature of our debt, which includes consideration of the portion that is variable-rate.

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Shareholders' Equity and Redeemable Noncontrolling Interests

3 Months Ended

Nov. 30, 2014

Equity [Abstract]

Shareholders' Equity and Redeemable Noncontrolling Interests

Shareholders’ Equity and Redeemable Noncontrolling Interests

Share Repurchases

Our Board of Directors has authorized us to repurchase outstanding shares of our Class A common stock from time to time depending on market conditions and other considerations. During fiscal year 2013, our Board of Directors authorized an increase in the amount available under our share repurchase program up to an aggregate amount of $250 million, of which $72.2 million remained available as of November 30, 2014. There is no expiration date on the repurchase authorizations and the amount and timing of future share repurchase authorizations and repurchases, if any, will be made as market and business conditions warrant. Repurchases occur at our discretion and may be made on the open market through various methods including but not limited to accelerated share repurchase programs, or in privately negotiated transactions, pursuant to the applicable Securities and Exchange Commission rules, and may include repurchases pursuant to Securities and Exchange Commission Rule 10b5-1 nondiscretionary trading programs.

We also repurchase shares in connection with tax withholding requirements associated with the release of vested shares of restricted stock units, which do not fall under the repurchase program described above.

The following summarizes our share repurchase activity for the respective periods:

	Three Months Ended November 30,
(In thousands, except per share data)	2014		2013
Share repurchases under share repurchase program:
Number of shares repurchased	677		577
Weighted average purchase price per share	$	26.72	$	26.02
Cost of share repurchases	$	18,092	$	15,000
Share repurchases related to vesting of restricted stock units and performance share awards:
Number of shares repurchased	78		88
Cost of share repurchases	$	1,972	$	1,871

Share Reissuances

We reissue our Class A common stock from our treasury stock as a result of the release of shares covered by vested restricted stock units, performance share awards, stock option exercises and purchases under our employee stock purchase plan. Share reissuances were as follows for the respective periods:

	Three Months Ended November 30,
(In thousands)	2014	2013
Number of shares reissued	227	281

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Nature of Operations and Significant Accounting Policies (Details) (Subsequent Event [Member], Faculdade da Educacional da Lapa [Member]) In Millions, unless otherwise specified	1 Months Ended
	Dec. 31, 2014 USD ($)	Dec. 31, 2014 BRL	Dec. 04, 2014 USD ($)	Dec. 04, 2014 BRL
Subsequent Event [Line Items]
Percentage of shares acquired			75.00%	75.00%
Initial cash payment	$ 28.9	73.8
Contingent consideration			$ 13.3	34.0

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Segment Reporting

3 Months Ended

Nov. 30, 2014

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

We operate in the education industry and our operating segments have been determined based on the method by which our chief operating decision maker evaluates performance and allocates resources. We have not aggregated any of our operating segments, which are presented in our segment reporting as follows:

• University of Phoenix;

• Apollo Global; and

• Other.

University of Phoenix offers undergraduate and graduate degrees in a wide range of program areas as well as various non-degree programs. The University’s students attend classes online and at ground campus locations throughout the U.S. and Puerto Rico. The majority of students attend classes exclusively online.

Apollo Global includes:

• BPP Holdings Limited (“BPP”);

• Open Colleges Australia Pty Ltd (“Open Colleges”);

• Universidad Latinoamericana (“ULA”);

• Milpark Education (Pty) Ltd. (“Milpark Education”);

• Apollo Global Chile S.A. (“Apollo Global Chile”);

• India Education Services Private Ltd (“India Education Services”); and

• Apollo Global corporate operations.

Apollo Global acquired Open Colleges and Milpark Education during fiscal year 2014. The operating results of Open Colleges and Milpark Education are included in our Apollo Global operating segment from the date of each respective acquisition. Additionally, as discussed in Subsequent Event in Note 1, Nature of Operations and Significant Accounting Policies, Apollo Global acquired a 75% interest in FAEL in December 2014, and its operating results will be included in our Apollo Global operating segment from the date of acquisition.

Other includes:

• The College for Financial Planning Institutes Corporation (“College for Financial Planning”);

• Carnegie Learning, Inc.;

• Western International University, Inc.;

• Apollo Lightspeed; 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 Condensed Consolidated Statements of Income for all periods presented, we have revised our financial information by segment to exclude IPD’s operating results.

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

	Three Months Ended November 30,
($ in thousands)	2014			2013
Net revenue:
University of Phoenix	$	592,853		$	744,863
Apollo Global	115,140			91,159
Other	11,059			12,126
Net revenue	$	719,052		$	848,148
Operating income (loss)(1):
University of Phoenix	$	93,511		$	183,473
Apollo Global(2)	(4,842		)	2,217
Other(2)	(28,175		)	(15,329		)
Operating income	60,494			170,361
Reconciling items:
Interest income	589			568
Interest expense	(1,662		)	(2,086		)
Other (loss) income, net	(1,285		)	807
Income from continuing operations before income taxes	$	58,136		$	169,650

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

⁽²⁾ During the three months ended November 30, 2014, Apollo Global and Other incurred $1.7 million and $1.5 million of acquisition costs and contingent consideration charges, respectively.

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

($ in thousands)	November 30, 2014		August 31, 2014
University of Phoenix	$	814,470	$	824,895
Apollo Global	684,019		680,363
Other(1)	923,799		1,587,677
Total assets	$	2,422,288	$	3,092,935

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

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Accounts Receivable, Net (Tables)

3 Months Ended

Nov. 30, 2014

Receivables [Abstract]

Accounts receivable, net

Accounts receivable, net consist of the following as of the respective periods:

($ in thousands)	November 30, 2014			August 31, 2014
Student accounts receivable	$	291,680		$	255,134
Less allowance for doubtful accounts	(52,682		)	(50,145		)
Net student accounts receivable	238,998			204,989
Other receivables	12,520			20,409
Total accounts receivable, net	$	251,518		$	225,398

Allowance for doubtful accounts

The following summarizes the activity in allowance for doubtful accounts for the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014			2013
Beginning allowance for doubtful accounts	$	50,145		$	59,744
Provision for uncollectible accounts receivable	17,398			13,978
Write-offs, net of recoveries	(14,861		)	(17,827		)
Ending allowance for doubtful accounts	$	52,682		$	55,895

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Debt (Details) (USD $)	3 Months Ended
	Nov. 30, 2014	Aug. 31, 2014
Debt [Line Items]
Total debt	$ 62,892,000	$ 657,096,000
Less short-term borrowings and current portion of long-term debt	(15,902,000)	(609,506,000)
Long-term debt	46,990,000	47,590,000
Letters of credit outstanding	46,000,000	24,000,000
Revolving credit facility [Member]
Debt [Line Items]
Total debt	0	585,000,000
Borrowing capacity	625,000,000
Debt term	5 years
Debt repaid	585,000,000
Weighted average interest rate		3.50%
Revolving credit facility [Member] | Minimum [Member]
Debt [Line Items]
Fees	0.25%
Revolving credit facility [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt [Line Items]
Fees for borrowings	1.25%
Revolving credit facility [Member] | Maximum [Member]
Debt [Line Items]
Fees	0.40%
Revolving credit facility [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt [Line Items]
Fees for borrowings	1.85%
Capital Lease Obligations [Member]
Debt [Line Items]
Total debt	24,902,000	32,806,000
Notes Payable, Other Payables [Member]
Debt [Line Items]
Total debt	$ 37,990,000	$ 39,290,000
Weighted average interest rate	5.60%	5.80%
Technology Purchase Obligation [Member]
Debt [Line Items]
Debt term	10 years

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Condensed Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interests (USD $) In Thousands		Total		Redeemable noncontrolling interests [Member]	Apollo Class A nonvoting common stock [Member]	Apollo Class B voting common stock [Member]	Permanent Equity [Member]	Common stock [Member] Apollo Class A nonvoting common stock [Member]	Common stock [Member] Apollo Class B voting common stock [Member]	Additional paid-in capital [Member]	Apollo Education Group Class A treasury stock [Member]	Retained earnings [Member]	Accumulated other comprehensive loss [Member]		Total Apollo shareholders' equity [Member]		Noncontrolling interests [Member]
Balance at Aug. 31, 2013		$ 1,118,009						$ 103	$ 1	$ 0	$ (3,824,758)	$ 4,978,815	$ (36,563)		$ 1,117,598		$ 411
Treasury stock outstanding (in shares) at Aug. 31, 2013											75,182
Shares at Aug. 31, 2013					188,007	475
Share repurchases (in shares)					0	0					665
Share repurchases		(16,871)			0	0				0	(16,871)	0	0		(16,871)		0
Share reissuances (in shares)					0	0					(281)
Share reissuances		(796)			0	0				(7,135)	(11,669)	(3,738)	0		(796)		0
Net tax effect for stock incentive plans		(4,838)			0	0				(4,838)	0	0	0		(4,838)		0
Share-based compensation		11,973			0	0				11,973	0	0	0		11,973		0
Currency translation adjustment, net of tax		2,835	[1]		0	0				0	0	0	2,736	[1]	2,736	[1]	99
Available-for-sale securities adjustment, net of tax	[1]	0
Net income (loss)					0	0				0	0		0
Net income (loss)		99,041										98,891			98,891		150
Balance at Nov. 30, 2013		1,210,945						103	1	0	(3,829,960)	5,073,968	(33,827)		1,210,285		660
Treasury stock outstanding (in shares) at Nov. 30, 2013											75,566
Shares at Nov. 30, 2013					188,007	475
Redeemable noncontrolling interests at Aug. 31, 2014		64,527		64,527
Balance at Aug. 31, 2014		1,180,802						103	1	0	(3,936,607)	5,143,949	(27,320)		1,180,126		676
Treasury stock outstanding (in shares) at Aug. 31, 2014											79,585
Shares at Aug. 31, 2014					188,007	475
Share repurchases (in shares)					0	0					755
Share repurchases		(20,064)		0	0	0				0	(20,064)	0	0		(20,064)		0
Share reissuances (in shares)					0	0					(227)
Share reissuances		(217)		0	0	0				(10,308)	(9,319)	(1,206)	0		(217)		0
Net tax effect for stock incentive plans		(2,067)		0	0	0				(2,067)	0	0	0		(2,067)		0
Share-based compensation		10,711		0	0	0				10,711	0	0	0		10,711		0
Currency translation adjustment, net of tax		(17,780)	[1]	(4,466)	0	0	(13,314)			0	0	0	(13,224)		(13,224)		(90)
Available-for-sale securities adjustment, net of tax		(74)	[1]	0	0	0				0	0	0	(74)	[1]	(74)	[1]	0
Redemption value adjustments				472	0	0	472			0	0	472	0		472		0
Net income (loss)		33,829			0	0				0	0	33,785	0		33,785		44
Net income (loss)				(1,360)
Net income (loss)		32,469
Other		1,664		0	0	0				1,664	0	0	0		1,664		0
Redeemable noncontrolling interests at Nov. 30, 2014		58,229		58,229
Balance at Nov. 30, 2014		$ 1,192,176						$ 103	$ 1	$ 0	$ (3,947,352)	$ 5,179,412	$ (40,618)		$ 1,191,546		$ 630
Shares at Nov. 30, 2014					188,007	475
Treasury stock outstanding (in shares) at Nov. 30, 2014											80,113

[1] The tax effect on each component of other comprehensive income during the three months ended November 30, 2014 and 2013, respectively, is not significant.

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Financial Instruments

3 Months Ended

Nov. 30, 2014

Financial Instruments [Abstract]

Financial Instruments

Financial Instruments

We invest our excess cash in a variety of marketable securities, which are all classified as available-for-sale. The following summarizes our cash and cash equivalents, restricted cash and cash equivalents and marketable securities by significant financial instrument category as of the respective periods:

	November 30, 2014
($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents(1)		Current Marketable Securities		Noncurrent Marketable Securities
Cash	$	657,747	$	—	$	—		$	657,747	$	657,747	$	—	$	—
Level 1:
Money market funds	128,952		—		—			128,952		128,952		—		—
Level 2:
Corporate bonds	120,639		94		(93		)	120,640		140		78,314		42,186
Tax-exempt municipal bonds	95,653		113		(29		)	95,737		—		75,903		19,834
Time deposits	50,141		—		—			50,141		25,058		25,083		—
Other	31,973		9		(1		)	31,981		—		26,387		5,594
Level 3:
Auction-rate securities	6,850		—		(904		)	5,946		—		—		5,946
Total	$	1,091,955	$	216	$	(1,027	)	$	1,091,144	$	811,897	$	205,687	$	73,560

	August 31, 2014
($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents(1)		Current Marketable Securities		Noncurrent Marketable Securities
Cash	$	1,295,395	$	—	$	—		$	1,295,395	$	1,295,395	$	—	$	—
Level 1:
Money market funds	132,508		—		—			132,508		132,508		—		—
Level 2:
Tax-exempt municipal bonds	106,543		155		(11		)	106,687		—		78,443		28,244
Corporate bonds	106,575		123		(52		)	106,646		—		56,837		49,809
Time deposits	50,100		—		—			50,100		25,041		25,059		—
Commercial paper	11,793		1		—			11,794		—		11,794		—
Other	19,155		1		(1		)	19,155		4		15,339		3,812
Level 3:
Auction-rate securities	6,850		—		(904		)	5,946		—		—		5,946
Total	$	1,728,919	$	280	$	(968	)	$	1,728,231	$	1,452,948	$	187,472	$	87,811

⁽¹⁾ Cash and cash equivalents includes restricted cash and cash equivalents.

We measure our financial instruments at fair value on a recurring basis as follows:

• Money market funds - We use Level 1 inputs that primarily consist of real-time quotes for transactions in active exchange markets involving identical assets.

• Auction-rate securities - We use a discounted cash flow model encompassing Level 3 significant unobservable inputs such as estimated interest rates, credit spreads, timing and amount of cash flows, credit quality of the underlying securities and illiquidity considerations. There were no changes in the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended November 30, 2014.

• All other securities - We use a market approach with Level 2 observable inputs including quoted prices for similar assets in active markets, or quoted prices for identical or similar assets in markets that are not active.

Substantially all of our marketable securities have maturities that occur within three years. We may sell certain of our available-for-sale securities prior to their stated maturities for strategic reasons including, but not limited to, investment yield and credit risk management. We have not recognized significant gains or losses related to such sales.

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Fair Value Measurements (Tables)

3 Months Ended

Nov. 30, 2014

Fair Value Disclosures [Abstract]

Fair value liabilities measured on recurring basis

Liabilities measured at fair value on a recurring basis, all of which are included in other liabilities on our Condensed Consolidated Balance Sheets, consist of the following as of November 30, 2014 and August 31, 2014:

			Fair Value Measurements at Reporting Dates Using
	Fair Value as of Respective Reporting Dates		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
($ in thousands)
Contingent consideration as of November 30, 2014	$	6,292	$	—	$	—	$	6,292
Contingent consideration as of August 31, 2014	$	41,893	$	—	$	—	$	41,893

Fair value liabilities measured on recurring basis, unobservable input reconciliation

The following summarizes changes in liabilities measured at fair value on a recurring basis for the respective periods:

	Three Months Ended November 30,
($ in thousands)	2014			2013
Beginning balance	$	41,893		$	5,277
Change in fair value included in net income	(1,121		)	466
Payment for contingent consideration	(34,480		)	—
Ending balance	$	6,292		$	5,743

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Accounts Receivable, Net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013	Aug. 31, 2014
Accounts receivable, net [Abstract]
Student accounts receivable	$ 291,680		$ 255,134
Less allowance for doubtful accounts	(52,682)	(55,895)
Net student accounts receivable	238,998		204,989
Other receivables	12,520		20,409
Total accounts receivable, net	251,518		225,398
Allowance for doubtful accounts [Abstract]
Allowance for doubtful accounts	50,145	59,744
Provision for uncollectible accounts receivable	17,398	13,978
Write-offs, net of recoveries	(14,861)	(17,827)
Allowance for doubtful accounts	$ 52,682	$ 55,895

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Regulatory Matters

3 Months Ended

Nov. 30, 2014

Regulatory Matters [Abstract]

Regulatory Matters

Regulatory Matters

All U.S. federal financial aid programs are established by Title IV of the Higher Education Act and regulations promulgated thereunder. The U.S. Congress must periodically reauthorize the Higher Education Act and annually determine the funding level for each Title IV program. In 2008, the Higher Education Act was reauthorized through September 30, 2013 by the Higher Education Opportunity Act and an automatic one year extension continued the authorization through September 30, 2014. Congress continues to engage in Higher Education Act reauthorization hearings and although the one year automatic extension has expired, Title IV student financial aid programs remain authorized and functioning. Changes to the Higher Education Act, including changes in eligibility and funding for Title IV programs, are likely to occur in connection with the next reauthorization, but we cannot predict the scope or substance of any such changes.

The Higher Education Act, as reauthorized, specifies the manner in which the U.S. Department of Education reviews institutions for eligibility and certification to participate in Title IV programs. Every educational institution involved in Title IV programs must be certified to participate and is required to periodically renew this certification.

University of Phoenix was recertified in November 2009 and entered into a new Title IV Program Participation Agreement which expired on December 31, 2012. University of Phoenix has submitted necessary documentation for re-certification and its eligibility continues on a month-to-month basis until the Department issues its decision on the application. We have no reason to believe that the University’s application will not be renewed in due course, and it is not unusual to be continued on a month-to-month basis until the Department completes its review. Additionally, in August 2014, the Department commenced an ordinary course program review of University of Phoenix’s administration of Title IV programs covering federal financial aid years 2012-2013 and 2013-2014, as well as compliance with the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act, the Drug-Free Schools and Communities Act and related regulations. We cannot predict whether, or to what extent, the imposition of the Notice sanction by The Higher Learning Commission, discussed below, or the pendency of the ordinary course program review, might have on the process for renewal of University of Phoenix’s Program Participation Agreement.

The Department has notified us that it has completed its review of Western International University’s application for a new Title IV Program Participation Agreement and that it has been approved with an expiration date of June 30, 2018.

Gainful Employment

Under the Higher Education Act, as reauthorized, proprietary schools are generally eligible to participate in Title IV programs only in respect of educational programs that lead to “gainful employment in a recognized occupation.” In connection with this requirement, proprietary postsecondary institutions are required to provide information to prospective students about each eligible program, including the relevant recognized occupations, cost, completion rate, job placement rate, and median loan debt of program completers.

On October 31, 2014, the U.S. Department of Education published final regulations, effective July 1, 2015, on the metrics for determining whether an academic program prepares students for gainful employment in a recognized occupation. These final regulations expand upon the existing gainful employment disclosure requirements discussed above, implement program level annual reporting for all proprietary institutions participating in Title IV programs, require program eligibility certification as part of the institution’s program participation agreement and establish minimum standards related to the debt-to-earnings ratios of the program’s graduates.

Higher Learning Commission Accreditation

University of Phoenix is accredited by The Higher Learning Commission (“HLC”) of the North Central Association of Colleges and Schools. This accreditation provides the following:

• Recognition and acceptance by employers, other higher education institutions and governmental entities of the degrees and credits earned by students;

• Qualification to participate in Title IV programs (in combination with state higher education operating and degree granting authority); and

• Qualification for authority to operate in certain states.

In July 2013, the accreditation of University of Phoenix was reaffirmed by HLC through the 2022-2023 academic year. At the same time, HLC placed the University on Notice status for a two-year period. Notice status is a sanction that means that HLC has determined that an institution is on a course of action that, if continued, could lead the institution to be out of compliance with one or more of the HLC Criteria for Accreditation or Core Components. University of Phoenix was assigned by HLC to the Standard Pathway reaffirmation process, pursuant to which the University will host a comprehensive evaluation visit in 2016-2017 and will undergo its next reaffirmation visit and process in 2022-2023.

The University submitted a Notice Report to HLC in November 2014 providing evidence that the University has ameloriated those conditions that led to the Notice status and continues to meet the Criteria for Accreditation, Core Components and Assumed Practices associated with those conditions. In addition, in the Notice Report the University reported on its progress in other areas of concern not included as a basis for the Notice sanction, including retention and graduation rates, three-year student loan cohort default rates, and credit hour policies and practices relating to learning teams. The University is required to host a focused visit by the HLC in January 2015, to validate the contents of the Notice Report. The HLC Board of Trustees will review the University’s Notice Report, together with a report of the focused visit, at a meeting in 2015. During the Notice period, the University is required to disclose its Notice status in connection with any statements regarding its HLC accreditation. If, after the Notice period, HLC determines that University of Phoenix is not in compliance with one or more of HLC’s Criteria for Accreditation, HLC may elect to impose probation, which would have further, more significant consequences for the University and our business.

In addition to the above, as a condition of HLC’s approval of the July 2014 changes to the voting stock trust which holds approximately 51% of Apollo’s outstanding Class B common shares, the only class of Apollo voting stock, University of Phoenix hosted a visit by HLC in December 2014 focused on ascertaining the appropriateness of the approval, implications for succession planning, and the effect, if any, of the change in trust arrangements on Apollo and the respective institutions and their ability to continue to meet HLC’s Criteria for Accreditation and Assumed Practices. The report from this visit is pending.

OIG Audit of the U.S. Department of Education

In October 2011, the Office of the Inspector General of the U.S. Department of Education (“OIG”) notified us that it was conducting a nationwide audit of the Department’s program requirements, guidance, and monitoring of institutions of higher education offering distance education. In connection with the OIG’s audit of the Department, the OIG examined a sample of University of Phoenix students who enrolled during the period from July 1, 2010 to June 30, 2011. The OIG subsequently notified University of Phoenix that in the course of this review it identified certain conditions that the OIG believed were Title IV program compliance exceptions at University of Phoenix. In February 2014, the OIG released a final audit report on this subject, which identified exceptions based on select student records related principally to the calculation of the amount of Title IV program funds returned after student withdrawals and the process for confirming student eligibility prior to disbursement of Title IV program funds. While the OIG recommended follow-up action with regard to some schools, University of Phoenix was not among them. We were not the direct subject of the OIG’s audit of the Department, and we have not accrued any liability associated with this matter.