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: February 28, 2015
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 March 18, 2015, the following shares of stock were outstanding:

Apollo Education Group, Inc. Class A common stock, no par value	107,178,079 Shares
Apollo Education Group, Inc. Class B common stock, no par value	475,149 Shares

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTER ENDED FEBRUARY 28, 2015

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 Operations	5
	Condensed Consolidated Statements of Comprehensive (Loss) 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	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	44
SIGNATURES		45

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)	February 28, 2015			August 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	566,078		$	1,228,813
Restricted cash and cash equivalents	224,987			224,135
Marketable securities	193,745			187,472
Accounts receivable, net	235,453			225,398
Prepaid taxes	55,113			34,006
Deferred tax assets	82,018			83,871
Other current assets	55,344			58,855
Total current assets	1,412,738			2,042,550
Marketable securities	75,096			87,811
Property and equipment, net	402,920			435,733
Goodwill	248,632			259,901
Intangible assets, net	167,768			189,365
Deferred tax assets	50,400			37,335
Other assets	48,387			40,240
Total assets	$	2,405,941		$	3,092,935
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	15,664		$	609,506
Accounts payable	72,294			63,907
Student deposits	262,387			280,562
Deferred revenue	261,428			225,818
Accrued and other current liabilities	308,181			363,607
Total current liabilities	919,954			1,543,400
Long-term debt	45,157			47,590
Deferred tax liabilities	25,715			22,674
Other long-term liabilities	225,884			233,942
Total liabilities	1,216,710			1,847,606
Commitments and contingencies
Redeemable noncontrolling interests	55,621			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	(3,965,057		)	(3,936,607		)
Retained earnings	5,152,466			5,143,949
Accumulated other comprehensive loss	(54,574		)	(27,320		)
Total Apollo shareholders’ equity	1,132,939			1,180,126
Noncontrolling interests	671			676
Total equity	1,133,610			1,180,802
Total liabilities, redeemable noncontrolling interests and shareholders’ equity	$	2,405,941		$	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 OPERATIONS

(Unaudited)

	Three Months Ended February 28,						Six Months Ended February 28,
(In thousands, except per share data)	2015			2014			2015			2014
Net revenue	$	578,572		$	672,754		$	1,297,624		$	1,520,902
Costs and expenses:
Instructional and student advisory	293,073			316,577			617,337			653,779
Marketing	127,421			139,272			256,214			273,101
Admissions advisory	57,840			53,121			114,925			102,819
General and administrative	70,598			67,275			142,965			142,054
Depreciation and amortization	34,819			37,465			71,223			73,803
Provision for uncollectible accounts receivable	11,969			11,534			29,367			25,512
Restructuring and impairment charges	35,536			15,209			54,564			47,172
Acquisition and other related costs	1,742			13,005			4,961			13,005
Litigation charges	100			9,000			100			9,000
Total costs and expenses	633,098			662,458			1,291,656			1,340,245
Operating (loss) income	(54,526		)	10,296			5,968			180,657
Interest income	740			599			1,329			1,167
Interest expense	(1,739		)	(1,983		)	(3,401		)	(4,069		)
Other (loss) income, net	(1,146		)	107			(2,431		)	914
(Loss) income from continuing operations before income taxes	(56,671		)	9,019			1,465			178,669
Benefit from (provision for) income taxes	20,533			5,130			(5,134		)	(65,088		)
(Loss) income from continuing operations	(36,138		)	14,149			(3,669		)	113,581
Loss from discontinued operations, net of tax	—			(1,972		)	—			(2,363		)
Net (loss) income	(36,138		)	12,177			(3,669		)	111,218
Net loss attributable to noncontrolling interests	2,528			2,428			3,844			2,278
Net (loss) income attributable to Apollo	$	(33,610	)	$	14,605		$	175		$	113,496
Earnings (loss) per share - Basic:
Continuing operations attributable to Apollo	$	(0.31	)	$	0.15		$	—		$	1.03
Discontinued operations attributable to Apollo	—			(0.02		)	—			(0.02		)
Basic (loss) income per share attributable to Apollo	$	(0.31	)	$	0.13		$	—		$	1.01
Earnings (loss) per share - Diluted:
Continuing operations attributable to Apollo	$	(0.31	)	$	0.15		$	—		$	1.02
Discontinued operations attributable to Apollo	—			(0.02		)	—			(0.02		)
Diluted (loss) income per share attributable to Apollo	$	(0.31	)	$	0.13		$	—		$	1.00
Basic weighted average shares outstanding	108,166			112,151			108,375			112,742
Diluted weighted average shares outstanding	108,166			113,380			109,337			113,676

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

5

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

CONDENSEDCONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

	Three Months Ended February 28,					Six Months Ended February 28,
($ in thousands)	2015			2014		2015			2014
Net (loss) income	$	(36,138	)	$	12,177	$	(3,669	)	$	111,218
Other comprehensive (loss) income (net of tax):
Currency translation (loss) gain(1)	(20,212		)	4,483		(37,992		)	7,318
Change in fair value of available-for-sale securities(1)	315			—		241			—
Comprehensive (loss) income	(56,035		)	16,660		(41,420		)	118,536
Comprehensive loss attributable to noncontrolling interests	8,469			1,748		14,341			1,499
Comprehensive (loss) income attributable to Apollo	$	(47,566	)	$	18,408	$	(27,079	)	$	120,035

⁽¹⁾ The tax effect on each component of other comprehensive (loss) income during the three and six months ended February 28, 2015 and 2014, 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	—	—		—	—		—			1,527		(40,318		)	—			—			(40,318		)	—			(40,318		)	—
Share reissuances	—	—		—	—		(21,208		)	(282	)	11,868			10,335			—			995			—			995			—
Net tax effect for stock incentive plans	—	—		—	—		(2,370		)	—		—			—			—			(2,370		)	—			(2,370		)	—
Share-based compensation	—	—		—	—		21,914			—		—			—			—			21,914			—			21,914			—
Currency translation adjustment, net of tax	—	—		—	—		—			—		—			—			(27,495		)	(27,495		)	(73		)	(27,568		)	(10,424		)
Available-for-sale securities adjustment, net of tax	—	—		—	—		—			—		—			—			241			241			—			241			—
Acquisition	—	—		—	—		—			—		—			—			—			—			—			—			3,437
Redemption value adjustments	—	—		—	—		—			—		—			(1,993		)	—			(1,993		)	—			(1,993		)	1,993
Net income (loss)	—	—		—	—		—			—		—			175			—			175			68			243			(3,912		)
Other	—	—		—	—		1,664			—		—			—			—			1,664			—			1,664			—
Balance as of February 28, 2015	188,007	$	103	475	$	1	$	—		80,830		$	(3,965,057	)	$	5,152,466		$	(54,574	)	$	1,132,939		$	671		$	1,133,610		$	55,621
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	—	—		—	—		—			2,403		(72,237		)	—			—			(72,237		)	—			(72,237		)	—
Share reissuances	—	—		—	—		(15,008		)	(391	)	16,601			200			—			1,793			—			1,793			—
Net tax effect for stock incentive plans	—	—		—	—		(7,502		)	—		—			—			—			(7,502		)	—			(7,502		)	—
Share-based compensation	—	—		—	—		22,510			—		—			—			—			22,510			—			22,510			—
Currency translation adjustment, net of tax	—	—		—	—		—			—		—			—			6,539			6,539			103			6,642			676
Acquisition	—	—		—	—		—			—		—			—			—			—			—			—			51,197
Net income (loss)	—	—		—	—		—			—		—			113,496			—			113,496			207			113,703			(2,485		)
Balance as of February 28, 2014	188,007	$	103	475	$	1	$	—		77,194		$	(3,880,394	)	$	5,092,511		$	(30,024	)	$	1,182,197		$	721		$	1,182,918		$	49,388

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)

	Six Months Ended February 28,
($ in thousands)	2015			2014
Operating activities:
Net (loss) income	$	(3,669	)	$	111,218
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Share-based compensation	21,914			22,510
Excess tax benefits from share-based compensation	(236		)	—
Depreciation and amortization	71,223			73,803
Accelerated depreciation included in restructuring	4,272			4,316
Loss (gain) on asset dispositions and impairment charges, net	21,228			(1,984		)
Non-cash foreign currency loss, net	1,362			596
Provision for uncollectible accounts receivable	29,367			25,512
Deferred income taxes	(10,434		)	(6,255		)
Changes in assets and liabilities, excluding the impact of acquisitions and disposition:
Restricted cash and cash equivalents	(1,002		)	(24,165		)
Accounts receivable	(51,199		)	(6,469		)
Prepaid taxes	(21,440		)	15,230
Other assets	(3,771		)	(11,445		)
Accounts payable	7,870			(11,454		)
Student deposits	(15,873		)	17,409
Deferred revenue	47,821			32,881
Accrued and other liabilities	(42,320		)	(48,219		)
Net cash provided by operating activities	55,113			193,484
Investing activities:
Purchases of property and equipment	(43,310		)	(58,119		)
Purchases of marketable securities	(109,544		)	(227,978		)
Maturities and sales of marketable securities	113,651			105,237
Acquisitions, net of cash acquired	(21,166		)	(94,937		)
Other	467			3,446
Net cash used in investing activities	(59,902		)	(272,351		)
Financing activities:
Payments on borrowings	(599,925		)	(619,268		)
Proceeds from borrowings	4,515			—
Share repurchases	(38,718		)	(72,237		)
Share reissuances	995			1,793
Excess tax benefits from share-based compensation	236			—
Payment for contingent consideration	(21,371		)	—
Net cash used in financing activities	(654,268		)	(689,712		)
Exchange rate effect on cash and cash equivalents	(3,678		)	34
Net decrease in cash and cash equivalents	(662,735		)	(768,545		)
Cash and cash equivalents, beginning of period	1,228,813			1,414,485
Cash and cash equivalents, end of period	$	566,078		$	645,940
Supplemental disclosure of cash flow and non-cash information:
Cash paid for income taxes, net of refunds	$	37,346		$	70,868
Cash paid for interest	3,514			3,911
Restricted stock units vested and released	6,255			7,104
Unsettled share repurchases	1,600			—

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 providers, serving students since 1973. Through our subsidiaries, we offer undergraduate, graduate, professional development and other nondegree educational programs and services, online and on-campus principally to working learners. Our educational programs and services are offered throughout the United States and in Europe, Australia, Latin America, Africa and Asia, as well as online throughout the world. Refer to Note 17, 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 and six months ended February 28, 2015 are not necessarily indicative of the results to be expected for the entire fiscal year.

Reclassifications

We reclassified certain previously reported amounts to conform to our current presentation as follows:

• 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;

9

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

• We began presenting litigation charges as a component of the change in accrued and other liabilities on our Condensed Consolidated Statements of Cash Flows, which did not impact total cash provided by operating activities; and

• As discussed in Note 3, Discontinued Operations, we began presenting Institute for Professional Development’s operating results as discontinued operations on our Condensed Consolidated Statements of Operations.

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 apply the standard to any disposals that occur after adoption.

Note 2. Restructuring and Impairment Charges

Restructuring and impairment charges includes the following for the respective periods:

	Three Months Ended February 28,				Six Months Ended February 28,
($ in thousands)	2015		2014		2015		2014
Restructuring charges	$	16,587	$	15,209	$	35,615	$	47,172
Intangibles impairment	12,999		—		12,999		—
Property and equipment impairment	5,950		—		5,950		—
Restructuring and impairment charges	$	35,536	$	15,209	$	54,564	$	47,172

The U.S. higher education industry continues to experience 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 our business processes and 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 costs to align with our lower enrollment and revenue.

Our restructuring activities initiated prior to fiscal year 2015 principally include rationalizing our administrative real estate facilities, closing 115 University of Phoenix ground locations, and workforce reductions. During the six months ended February 28, 2015, we incurred $23.3 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.

During the six months ended February 28, 2015, we incurred $12.3 million of restructuring expense associated with new restructuring activities initiated after fiscal year 2014. The expense consisted of $8.5 million of severance and other employee separation costs associated with the elimination of approximately 300 positions. The majority of the remaining restructuring expense represents costs associated with termination of a curriculum-based contract. The expense associated with these activities for the six months ended February 28, 2015 is reflected in our segment reporting as follows: $1.1 million in University of Phoenix and $11.2 million in Other.

10

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following details the changes in our restructuring liabilities during the six months ended February 28, 2015:

	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	—		90,131			3,545			167			3,150			1,160			98,153
Expense	—		12,014			3,860			426			—			287			16,587
Other	—		(2,530		)	(635		)	—			—			—			(3,165		)
Payments	—		(13,290		)	(2,801		)	(475		)	—			(704		)	(17,270		)
February 28, 2015(2)	$	—	$	86,325		$	3,969		$	118		$	3,150		$	743		$	94,305

⁽¹⁾ We have incurred $367 million of cumulative costs associated with prior year restructuring as of February 28, 2015, which includes lease exit, employee separation, and other related costs of $241 million, $84 million and $42 million, respectively. These cumulative costs have been reflected in our segment reporting as follows: $285 million in University of Phoenix, $18 million in Apollo Global, and $64 million in Other.

⁽²⁾ The gross, undiscounted obligation associated with our restructuring liabilities as of February 28, 2015 was approximately $167 million, which principally represents non-cancelable leases that will be paid over the respective lease terms through fiscal year 2023.

We intend to further reduce costs to align with our lower enrollment and revenue, and expect to incur material charges associated with other future restructuring activities. These efforts include University of Phoenix continuing to actively evaluate the extent, functionality and location of its ground facilities and the potential closure of additional facilities in the future that are determined to be underutilized or unnecessary.

Impairment Charges

In February 2015, University of Phoenix ceased using certain technology that had been incorporated into its academic platform. The University had finite-lived intangibles with a remaining carrying value of $13.0 million associated with this technology. We do not expect any future cash flows associated with this technology over its remaining useful life and, accordingly, we recorded a $13.0 million impairment charge during the second quarter of fiscal year 2015.

Based on developments and trends at University of Phoenix during the second quarter of fiscal year 2015, we evaluated the property and equipment at University of Phoenix’s remaining ground locations for recoverability. Accordingly, we compared the estimated undiscounted cash flows of the locations over the remaining useful lives of their fixed assets to the carrying amount of their fixed assets. Based on our analysis, we recorded $6.0 million of impairment charges during the second quarter of fiscal year 2015. Changes to our business or other circumstances could lead to additional impairments in the future.

Note 3. Discontinued Operations

During 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 Operations. We determined that 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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following summarizes IPD’s operating results for the three and six months ended February 28, 2014, which are presented in loss from discontinued operations, net of tax on our Condensed Consolidated Statements of Operations:

($ in thousands)	Three Months Ended February 28, 2014			Six Months Ended February 28, 2014
Net revenue	$	6,304		$	14,491
Costs and expenses	(9,470		)	(18,224		)
Loss from discontinued operations before income taxes	(3,166		)	(3,733		)
Benefit from income taxes	1,194			1,370
Loss from discontinued operations, net of tax	$	(1,972	)	$	(2,363	)

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. Acquisitions

Fiscal Year 2015 Acquisition

On December 4, 2014, Apollo Global acquired a 75% interest in Sociedade Técnica Educacional da Lapa S.A., a provider of postsecondary educational programs in Brazil under the name Faculdade da Educacional da Lapa (“FAEL”). This acquisition provides access to a new market and supports our strategy to diversify and expand our global operations. We made an initial cash payment of R$73.8 million (equivalent to $28.9 million on the acquisition date), and the acquisition includes a potential contingent consideration payment in the future that is principally based on FAEL’s calendar year 2018 net revenue. The contingent payment 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 insignificant based on our estimate of FAEL’s future revenue in relation to the contingent payment threshold as defined in the acquisition agreement. We incurred $1.2 million of transaction costs in connection with this acquisition and these costs are included in acquisition and other related costs on our Condensed Consolidated Statements of Operations in the six months ended February 28, 2015.

In connection with the acquisition, we also have the option to buy the remaining noncontrolling interests, and the noncontrolling shareholders have the option to sell their shares to us, beginning in the third quarter of our fiscal year 2019, or earlier in limited circumstances. The prices for these options are based on a formula specified at the acquisition date and are 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. Since the options are embedded in the shares owned by the noncontrolling shareholders and the shareholders have the option to redeem their shares, we have classified the noncontrolling interests as redeemable equity on our Condensed Consolidated Balance Sheets. Subsequent to recording the noncontrolling interests at fair value on the acquisition date, as discussed further below, we record the redeemable noncontrolling interests at the greater of the carrying value or the redemption value because the interests are probable of becoming redeemable. We determine the redemption value using the formula specified at the acquisition date, and by assuming the end of each period is the redemption date. We record redemption value adjustments through retained earnings.

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APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We accounted for the acquisition as a business combination and the following details our preliminary allocation of the purchase price to the assets acquired and liabilities assumed at fair value:

($ in thousands)
Cash and cash equivalents	$	7,685
Intangibles:
Trademark (indefinite useful life)	9,223
Accreditation (indefinite useful life)	5,940
Course curriculum (4 year useful life)	1,212
Other (4 year useful life)	4,182
Goodwill	14,538
Other assets	2,877
Liabilities	(13,369		)
Total assets acquired and liabilities assumed	32,288
Less: Fair value of redeemable noncontrolling interests	(3,437		)
Total fair value of consideration transferred	28,851
Less: Cash acquired	(7,685		)
Cash paid for acquisition, net of cash acquired	$	21,166

The above purchase price allocation is preliminary and subject to revision as we finalize the valuation of intangible assets, and as additional information about the fair value of other assets and liabilities becomes available.

We determined the fair value of assets acquired, liabilities assumed and the redeemable noncontrolling interests based on assumptions that reasonable market participants would use while employing the concept of highest and best use of the respective items. We used the following assumptions, the majority of which include significant unobservable inputs, and valuation methodologies to determine fair value:

• Intangibles - We used income approaches to value the substantial majority of the acquired intangibles. The trademark was valued using the relief-from-royalty method, which represents the benefit of owning the intangible asset rather than paying royalties for its use. We used the excess earnings method or the with and with-out method for the remaining intangibles valued using income approaches.

• Other assets and liabilities - The carrying value of all other assets and liabilities approximated fair value at the time of acquisition.

• Redeemable noncontrolling interests - We estimated the fair value of the redeemable noncontrolling interests principally as the noncontrolling ownership percentage of the implied fair value of FAEL’s total equity. We reduced the fair value of the noncontrolling interest for certain discounts including lack of control.

We recorded $14.5 million of goodwill as a result of the FAEL acquisition, which may become deductible for tax purposes in the future. The goodwill is principally attributable to the future earnings potential associated with student growth and other intangibles that do not qualify for separate recognition such as the assembled workforce. The goodwill is included in our Apollo Global reportable segment and we have selected a July 1 annual goodwill impairment test date.

We assigned an indefinite useful life to the acquired trademark and accreditation intangibles as we believe they have the ability to generate cash flows indefinitely. In addition, there are no legal, regulatory, contractual, economic or other factors to limit the intangibles’ useful life and, as applicable, we intend to renew the intangibles and renewal can be accomplished at little cost. We determined all of the other acquired intangibles are finite-lived and we are amortizing them on either a straight-line or an accelerated basis that reflects the pattern in which we expect the economic benefits of the assets to be consumed. The weighted average original useful life of the acquired finite-lived intangibles was 4 years. Refer to Note 7, Goodwill and Intangibles, for the estimated future amortization of our finite-lived intangibles.

FAEL’s operating results are included in our consolidated financial statements from date of acquisition. We have not provided pro forma information or FAEL’s revenue and operating results because the results of operations are not material to our consolidated results of operations.

13

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Fiscal Year 2014 Acquisition

On December 20, 2013, Apollo Global acquired 70% of the outstanding shares of Open Colleges, a provider of education and training to adult learners in Australia. We paid A$110.3 million (equivalent to$98.1 million on the transaction date), plus contingent consideration, which we initially measured at $21.4 million based on information available as of the acquisition date. We settled the contingent consideration during fiscal year 2015 as discussed at Note 8, Fair Value Measurements.

We accounted for the Open Colleges acquisition as a business combination and Open Colleges’ operating results are included in our consolidated financial statements from the date of acquisition. We have not provided pro forma information or Open Colleges’ revenue and operating results because the results of operations are not material to our consolidated results of operations.

The acquisition purchase price allocation is summarized below:

($ in thousands)
Net working capital deficit(1)	$	(10,979	)
Property and equipment	2,684
Finite-lived intangibles	60,575
Goodwill	127,656
Deferred taxes, net(1)	(9,279		)
Total assets acquired and liabilities assumed	170,657
Less: Fair value of redeemable noncontrolling interests	(51,197		)
Total fair value of consideration transferred	119,460
Less: Fair value of contingent consideration	(21,371		)
Less: Cash acquired	(3,152		)
Cash paid for acquisition, net of cash acquired	$	94,937

⁽¹⁾ Net working capital deficit and deferred taxes, net include approximately $33 million of assumed liabilities.

14

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 5. 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:

	February 28, 2015
($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents(1)		Current Marketable Securities		Noncurrent Marketable Securities
Cash	$	657,122	$	—	$	—		$	657,122	$	657,122	$	—	$	—
Level 1:
Money market funds	108,666		—		—			108,666		108,666		—		—
Level 2:
Corporate bonds	128,979		62		(180		)	128,861		—		80,069		48,792
Tax-exempt municipal bonds	76,244		79		(199		)	76,124		202		63,479		12,443
Time deposits	50,180		—		—			50,180		25,075		25,105		—
Other	39,001		8		(56		)	38,953		—		25,092		13,861
Total	$	1,060,192	$	149	$	(435	)	$	1,059,906	$	791,065	$	193,745	$	75,096

	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(2)	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.

⁽²⁾ Auction-rate securities were redeemed at par value during the second quarter of fiscal year 2015.

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.

• Other financial instruments - We use a market approach with Level 2 observable inputs for all other securities. The Level 2 inputs include quoted prices for similar assets in active markets, or quoted prices for identical or similar assets in markets that are not active.

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.

15

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 6. Accounts Receivable, Net

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

($ in thousands)	February 28, 2015			August 31, 2014
Student accounts receivable	$	274,295		$	255,134
Less allowance for doubtful accounts	(49,891		)	(50,145		)
Net student accounts receivable	224,404			204,989
Other receivables	11,049			20,409
Total accounts receivable, net	$	235,453		$	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 February 28,						Six Months Ended February 28,
($ in thousands)	2015			2014			2015			2014
Beginning allowance for doubtful accounts	$	52,682		$	55,895		$	50,145		$	59,744
Provision for uncollectible accounts receivable	11,969			11,534			29,367			25,512
Write-offs, net of recoveries	(14,760		)	(14,391		)	(29,621		)	(32,218		)
Ending allowance for doubtful accounts	$	49,891		$	53,038		$	49,891		$	53,038

Note 7. Goodwill and Intangibles

The following details changes in our goodwill by reportable segment during the six months ended February 28, 2015:

($ in thousands)	University of Phoenix		Apollo Global			Other		Total
Goodwill as of August 31, 2014	$	71,812	$	171,198		$	16,891	$	259,901
FAEL acquisition	—		14,538			—		14,538
Currency translation adjustment	—		(25,807		)	—		(25,807		)
Goodwill as of February 28, 2015	$	71,812	$	159,929		$	16,891	$	248,632

16

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Intangibles consist of the following as of the respective periods:

	February 28, 2015										August 31, 2014
($ in thousands)	Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation			Net Carrying Amount
Accreditations and designations	$	21,628	$	(5,094	)	$	(1,910	)	$	14,624	$	21,628	$	(3,015	)	$	1,000		$	19,613
Trademarks	17,919		(2,093		)	(1,771		)	14,055		17,919		(1,238		)	907			17,588
Curriculum(1)	18,205		(5,172		)	(1,398		)	11,635		16,993		(2,933		)	826			14,886
Student and customer relationships(2)	14,437		(10,365		)	(1,578		)	2,494		15,934		(9,780		)	(1,161		)	4,993
Software and technology(3)	—		—			—			—		42,389		(25,151		)	—			17,238
Other(1), (2)	11,303		(5,919		)	(1,978		)	3,406		20,891		(19,909		)	(611		)	371
Total finite-lived intangibles	83,492		(28,643		)	(8,635		)	46,214		135,754		(62,026		)	961			74,689
Trademarks(1)	115,737		—			(7,189		)	108,548		106,514		—			(68		)	106,446
Accreditations and designations(1)	14,470		—			(1,464		)	13,006		8,530		—			(300		)	8,230
Total indefinite-lived intangibles	130,207		—			(8,653		)	121,554		115,044		—			(368		)	114,676
Total intangible assets, net	$	213,699	$	(28,643	)	$	(17,288	)	$	167,768	$	250,798	$	(62,026	)	$	593		$	189,365

⁽¹⁾ We acquired intangibles during the second quarter of fiscal year 2015 as a result of our acquisition of FAEL. Refer to Note 4, Acquisitions.

⁽²⁾ The decrease in the gross carrying amount as of February 28, 2015 compared to August 31, 2014 was due to the removal of intangibles that were fully amortized during fiscal year 2015.

⁽³⁾ We recorded a $13.0 million impairment charge of technology intangibles during the second quarter of fiscal year 2015. Refer to Note 2, Restructuring and Impairment Charges.

The following is the estimated future amortization expense of our finite-lived intangibles as of February 28, 2015:

($ in thousands)	Remainder of 2015		2016		2017		2018		2019		2020		Thereafter		Total
Estimated future amortization expense(1)	$	7,006	$	11,255	$	10,214	$	7,543	$	3,135	$	1,609	$	5,452	$	46,214

⁽¹⁾ The estimated future amortization expense may vary as acquisitions and dispositions occur in the future and as a result of foreign currency translation adjustments.

Note 8. Fair Value Measurements

We measure and disclose certain financial instruments at fair value as described in Note 5, 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 February 28, 2015 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 February 28, 2015	$	6,416	$	—	$	—	$	6,416
Contingent consideration as of August 31, 2014	$	41,893	$	—	$	—	$	41,893

17

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 using significant unobservable inputs (Level 3) for the respective periods:

	Three Months Ended February 28,				Six Months Ended February 28,
($ in thousands)	2015		2014		2015			2014
Beginning balance	$	6,292	$	5,743	$	41,893		$	5,277
Initial contingent consideration at fair value	—		21,371		—			21,371
Change in fair value included in net income	124		8,288		(997		)	8,754
Payment for contingent consideration	—		—		(34,480		)	—
Currency translation adjustment	—		621		—			621
Ending balance	$	6,416	$	36,023	$	6,416		$	36,023

Our contingent consideration liabilities are 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. We settled the contingent consideration during fiscal year 2015 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 February 28, 2015, the estimated fair value for this contingent consideration was $6.4 million.

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

Note 9. Accrued and Other Liabilities

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

($ in thousands)	February 28, 2015		August 31, 2014
Salaries, wages and benefits	$	81,995	$	125,165
Student refunds, grants and scholarships	43,400		20,072
Restructuring obligations	43,146		43,339
Accrued legal and other professional obligations	35,604		33,651
Accrued advertising	29,558		33,853
Deferred rent and other lease liabilities	12,982		12,384
Curriculum materials	10,904		12,069
Contingent consideration	—		35,239
Other	50,592		47,835
Total accrued and other current liabilities	$	308,181	$	363,607

18

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)	February 28, 2015		August 31, 2014
Deferred revenue	$	58,737	$	51,831
Deferred rent and other lease liabilities	53,516		57,788
Restructuring obligations	51,159		59,744
Deferred gains on sale-leasebacks	20,905		21,641
Uncertain tax positions	7,187		9,770
Other	34,380		33,168
Total other long-term liabilities	$	225,884	$	233,942

Note 10. Debt

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

($ in thousands)	February 28, 2015			August 31, 2014
Revolving Credit Facility	$	—		$	585,000
Capital lease obligations	22,707			32,806
Other	38,114			39,290
Total debt	60,821			657,096
Less short-term borrowings and current portion of long-term debt	(15,664		)	(609,506		)
Long-term debt	$	45,157		$	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 February 28, 2015, we have approximately $44 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 February 28, 2015 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 February 28, 2015 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.

19

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 11. 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 12. 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 $52.2 million remained available as of February 28, 2015. 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 share-based awards, which do not fall under the repurchase program described above.

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

	Three Months Ended February 28,				Six Months Ended February 28,
(In thousands, except per share data)	2015		2014		2015		2014
Share repurchases under share repurchase program:
Number of shares repurchased	763		1,713		1,440		2,290
Weighted average purchase price per share	$	26.22	$	31.93	$	26.45	$	30.44
Cost of share repurchases(1)	$	20,000	$	54,684	$	38,092	$	69,684
Share repurchases related to vesting of share-based awards:
Number of shares repurchased	9		25		87		113
Cost of share repurchases	$	254	$	682	$	2,226	$	2,553

⁽¹⁾ At February 28, 2015, $1.6 million was recorded in accrued and other current liabilities on our Condensed Consolidated Balance Sheets for repurchased shares that settled subsequent to February 28, 2015.

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APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 February 28,		Six Months Ended February 28,
(In thousands)	2015	2014	2015	2014
Number of shares reissued	55	110	282	391

Note 13. 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 February 28,					Six Months Ended February 28,
(In thousands, except per share data)	2015			2014		2015		2014
Numerator:
Net (loss) income attributable to Apollo (basic and diluted)	$	(33,610	)	$	14,605	$	175	$	113,496
Denominator:
Basic weighted average shares outstanding	108,166			112,151		108,375		112,742
Dilutive effect of restricted stock units and performance share awards(1)	—			1,070		759		838
Dilutive effect of stock options(1)	—			159		203		96
Diluted weighted average shares outstanding	108,166			113,380		109,337		113,676
Basic (loss) income per share attributable to Apollo	$	(0.31	)	$	0.13	$	—	$	1.01
Diluted (loss) income per share attributable to Apollo	$	(0.31	)	$	0.13	$	—	$	1.00
Anti-dilutive securities excluded from diluted (loss) income per share:
Anti-dilutive restricted stock units and performance share awards outstanding(1)	929			9		11		842
Anti-dilutive stock options outstanding(1)	2,572			2,628		2,411		3,079

⁽¹⁾ Due to the loss from continuing operations attributable to Apollo during the three months ended February 28, 2015, no dilutive share-based awards were included in the calculation of diluted loss per share for the respective period because they would have been anti-dilutive.

Note 14. Share-Based Compensation

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

	Three Months Ended February 28,				Six Months Ended February 28,
($ in thousands)	2015		2014		2015		2014
Instructional and student advisory	$	2,905	$	3,280	$	5,887	$	6,813
Marketing	783		937		1,619		2,045
Admissions advisory	256		212		517		314
General and administrative	6,624		5,644		12,504		11,012
Restructuring and impairment charges	635		464		1,387		2,326
Share-based compensation expense	$	11,203	$	10,537	$	21,914	$	22,510

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APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In accordance with our Amended and Restated 2000 Stock Incentive Plan, we granted 14,000 and 68,000 restricted stock units and performance share awards during the three and six months ended February 28, 2015, respectively. The granted awards had a weighted average grant date fair value per share of $32.00 and $30.06, respectively. As of February 28, 2015, we had $59.2 million and $3.2 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 2.4 years.

We did not grant any stock options during the six months ended February 28, 2015. As of February 28, 2015, we had $6.9 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 2.7 years.

Note 15. 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 February 28, 2015, the face amount of these surety bonds was approximately $34 million.

Letters of Credit

As of February 28, 2015, we had approximately $44 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.

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. Captioned Paredes v. The University of Phoenix, Inc.,the action was initially filed in California Superior Court in San Bernadino County, but was subsequently removed to Federal District Court in the Central District of California. The complaint purports to assert claims on behalf of the class of individuals 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 under the Telephone Consumer Protection Act

On February 28, 2015, Thomas Barton and Leon Abdullah filed a class action complaint against University of Phoenix in the United States District Court for the Northern District of California. The complaint alleges that University of Phoenix violated the Telephone Consumer Protection Act by contacting plaintiffs on their cellular telephones using automated dialing technology without their express written consent. The complaint seeks to recover damages on behalf of plaintiffs 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.

22

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, and their appeal remains pending before that court.

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.

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APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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.

24

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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, which was granted on October 27, 2011. 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. On February 19, 2015, plaintiffs filed a motion seeking the preliminary approval of the settlement.

As of February 28, 2015, we had accrued an immaterial amount reflecting the agreed upon settlement, which we subsequently paid in March 2015. 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 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. Captioned Tandy v. Apollo

25

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Education Group, Inc., et al., the action was initially filed in California Superior Court in San Diego County, but was subsequently removed to Federal District Court in the Southern District of California. On February 25, 2015, plaintiff voluntarily dismissed her complaint.

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”). Captioned Gonzalez v. The University of Phoenix, 3:14-cv-02279, the action was filed in U.S. District Court for the Southern District of California. On February 13, 2015, plaintiff voluntarily dismissed her complaint.

Himmel Derivative Action

On March 24, 2011, Daniel Himmel filed a shareholder derivative complaint in the Superior Court for the State of Arizona, Maricopa County, entitled Himmel v. Bishop, et al, Case Number CV2011-005604. On February 2, 2015, plaintiff filed a stipulation seeking the voluntary dismissal of his complaint, and the Court entered a dismissal order on February 5, 2015, thus terminating this action.

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 16. 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. The current reauthorization of the federal Higher Education Act expired September 30, 2013, but Title IV student financial aid programs remain authorized and functioning. Congress continues to engage in Higher Education Act reauthorization hearings, but the timing and terms of any eventual reauthorization cannot be predicted.

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 while 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. The University has received and responded to a draft program review report which included findings regarding compliance with the Clery Act and various Title IV administrative matters. We believe that all findings regarding Title IV administrative matters have been resolved and that a Final Program Review Determination Letter will be issued in due course. Findings regarding compliance with the Clery Act have been referred to the Department’s Clery Team and to the Administrative Action and Appeals Division which is standard protocol in such matters.

Western International University was recertified by the Department of Education in November 2014 and subsequently entered into a new Title IV Program Participation Agreement which expires in June 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

26

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

eligible program, including the relevant recognized occupations, cost, completion rate, job placement rate, and median loan debt of program completers.

In October 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. Under the final regulations, which apply on a program-by-program basis, students enrolled in a program will be eligible for Title IV student financial aid only if that program satisfies at least one of two tests relating to student debt-to-earnings ratios. The two tests specify minimum debt-to-earnings ratios calculated on the basis of the earnings of program graduates; one test measures student loan debt as a percentage of total earnings, and the other test measures student loan debt as a percentage of discretionary earnings. Programs that fail to meet at least one of the minimum ratios for two years will lose eligibility for federal financial aid for a period not less than three years.

The Department has indicated that the official 2014 gainful employment debt-to-earnings ratios will be issued sometime during calendar year 2016. The expected timing of the issuance of the 2015 ratios is unknown at this time. We believe it is likely that some of our programs will be impacted by the regulations, which may require modification of the affected programs or, in some cases, discontinuation.

Higher Learning Commission Accreditation

University of Phoenix is accredited by The Higher Learning Commission (“HLC”), which 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 hosted a focused visit in January 2015 to validate the contents of the Notice Report filed in November 2014. Based on the process to date, we believe that the University has adequately addressed the concerns expressed by the HLC in connection with its Notice determination. We expect that the HLC Board of Trustees will consider the matter and take final action at its meeting in late June 2015. If the HLC Board were to determine that the requirements for lifting the Notice sanction have not been met or that the University otherwise is not in compliance with the applicable accreditation criteria, the Board could impose additional sanctions on the University, including probation, or take other action that could adversely impact 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 our outstanding Class B common shares, the only class of Apollo voting stock, University of Phoenix hosted a visit by an HLC peer review team in December 2014 focused on ascertaining the appropriateness of the prior approval, implications for succession planning, and the effect, if any, of the change in trust arrangements on Apollo and its relevant subsidiaries, and their ability to continue to meet HLC’s Criteria for Accreditation and Assumed Practices. Based upon the process to date, we believe that we have adequately addressed the Commission’s relevant criteria in this matter. Final action is pending with HLC.

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

27

APOLLO EDUCATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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.

Note 17. 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 nondegree 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”);

• Faculdade da Educacional da Lapa (“FAEL”);

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

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

• Apollo Global corporate operations.

Apollo Global acquired FAEL during the second quarter of fiscal year 2015. Refer to Note 4, Acquisitions. Apollo Global also acquired Open Colleges and Milpark Education during fiscal year 2014. The operating results for each of these entities are included in our Apollo Global operating segment from the date of each respective acquisition.

Other includes:

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

• Carnegie Learning, Inc.;

• Western International University, Inc.; and

• Apollo Corporate activities.

During 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 Operations 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 February 28,						Six Months Ended February 28,
($ in thousands)	2015			2014			2015			2014
Net revenue:
University of Phoenix	$	487,769		$	594,081		$	1,080,622		$	1,338,944
Apollo Global	81,100			68,634			196,240			159,793
Other	9,703			10,039			20,762			22,165
Net revenue	$	578,572		$	672,754		$	1,297,624		$	1,520,902
Operating (loss) income(1):
University of Phoenix	$	1,350		$	86,682		$	94,861		$	270,155
Apollo Global(2)	(27,541		)	(40,004		)	(32,383		)	(37,787		)
Other(3)	(28,335		)	(36,382		)	(56,510		)	(51,711		)
Operating (loss) income	(54,526		)	10,296			5,968			180,657
Reconciling items:
Interest income	740			599			1,329			1,167
Interest expense	(1,739		)	(1,983		)	(3,401		)	(4,069		)
Other (loss) income, net	(1,146		)	107			(2,431		)	914
(Loss) income from continuing operations before income taxes	$	(56,671	)	$	9,019		$	1,465		$	178,669

⁽¹⁾ University of Phoenix, Apollo Global and Other include restructuring and impairment charges during the periods. Refer to Note 2, Restructuring and Impairment Charges.

⁽²⁾ During the three and six months ended February 28, 2015, Apollo Global incurred $1.0 million and $2.7 million of acquisition and other related costs, respectively. The operating loss for Apollo Global in the three and six months ended February 28, 2014 includes $13.0 million of acquisition and other related costs.

⁽³⁾ The operating loss for Other in the three and six months ended February 28, 2015 includes $0.7 million and $2.3 million of acquisition and other related costs, respectively. The operating loss for Other in the three and six months ended February 28, 2014 includes $9.0 million of charges associated with our legal matters.

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

($ in thousands)	February 28, 2015		August 31, 2014
University of Phoenix	$	769,666	$	824,895
Apollo Global	671,914		680,363
Other(1)	964,361		1,587,677
Total assets	$	2,405,941	$	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 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 nondegree educational programs and services, online and on-campus principally to working learners. Our educational programs and services are offered throughout the United States and in Europe, Australia, Latin America, Africa and Asia, as well as online throughout the world.

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 17, 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 continues to experience 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 proprietary sector in which we operate has experienced significant and increasing competition from traditional public and private colleges and universities as these institutions have increased their distance learning and other online education programs, including programs that are geared towards the needs of working learners. We believe these developments have contributed to the decline in University of Phoenix enrollment that began in late 2010. See further discussion of enrollment in Results of Operations below.

We are focused on 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 those discussed below relating to careers and reengineering our business processes. Additionally, we are restructuring the administration of University of Phoenix’s colleges to emphasize their distinctiveness and to allow each of them to more effectively address the needs of their students and the employers they serve. We are also increasing the use of targeted scholarships and discounts designed to attract students and reward persistence, and are implementing other initiatives focused on supporting student retention.

• 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 we are focused on better connecting our students to the careers they want and connecting employers with the talent they need. We intend to focus on areas of high demand for qualified employees. In furtherance of this, we are focused on introducing new programs, including professional development and other nondegree programs, and revamping and refreshing existing programs to better meet the needs of students and employers in these areas.

• Business Process Reengineering.We remain focused on reengineering our business processes and educational delivery systems to improve the efficiency and effectiveness of our services to students, and further reducing costs to align with our lower enrollment and revenue. These activities include streamlining and, where appropriate, automating, our administrative and student facing services and closing underutilized or unnecessary University of Phoenix campus locations. University of Phoenix continues to actively evaluate the extent, functionality and location of its ground facilities and expects to close additional facilities in the future that are determined to be underutilized or unnecessary. See further discussion of University of Phoenix ground facilities in Results of Operations below.

• Online Student Classroom.University of Phoenix’s new online student classroom, which was fully implemented in late June 2014, has experienced technical challenges that adversely impacted the user experience for our students. 

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We completed a substantial portion of the corrective measures during the second quarter of fiscal year 2015, and remediation work will continue throughout the remainder of fiscal year 2015. We believe that the disruptions experienced by our students using the online classroom contributed to the decline in student retention we experienced during the six months ended February 28, 2015.

• Expansion into New Markets.We have operations on six continents and are working to expand our global operations, including exploring new opportunities for growth outside the U.S. in areas of non-traditional higher education, such as certificate programs and vocational 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, including the Department of Education, 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 of the federal Higher Education Act expired September 30, 2013, but Title IV student financial aid programs remain authorized and functioning. Congress continues to engage in Higher Education Act reauthorization hearings, but the timing and terms of any eventual reauthorization cannot be predicted.

Title IV program funding is a potential target for reduction as Congress seeks to reduce the U.S. budget deficit. Because a significant portion of our revenue is derived from Title IV programs, any action by Congress that reduces Title IV program funding, either as part of the Higher Education Act reauthorization or through across-the-board funding reductions, sequestration or otherwise, or which 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, military financial aid programs may be reduced as military branches address decreased funding. Reductions and/or changes in military financial aid could 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.

In October 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. Under the final regulations, which apply on a program-by-program basis, students enrolled in a program will be eligible for Title IV student financial aid only if that program satisfies at least one of two tests relating to student debt-to-earnings ratios. The two tests specify minimum debt-to-earnings ratios calculated on the basis of the earnings of program graduates; one test measures student loan debt as a percentage of total earnings, and the other test measures student loan debt as a percentage of discretionary earnings. Programs that fail to meet at least one of the minimum ratios for two years will lose eligibility for federal financial aid for a period not less than three years.

The Department has indicated that the official 2014 gainful employment debt-to-earnings ratios will be issued sometime during calendar year 2016. The expected timing of the issuance of the 2015 ratios is unknown at this time. We believe it is likely that some of our programs will be impacted by the regulations, which may require modification of the affected programs or, in some cases, discontinuation.

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• U.S. Department of Education Program Participation Agreement and Program Review. 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 while 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. The University has received and responded to a draft program review report which included findings regarding compliance with the Clery Act and various Title IV administrative matters. We believe that all findings regarding Title IV administrative matters have been resolved and that a Final Program Review Determination Letter will be issued in due course. Findings regarding compliance with the Clery Act have been referred to the Department’s Clery Team and to the Administrative Action and Appeals Division which is standard protocol in such matters.

Western International University was recertified by the Department of Education in November 2014 and subsequently entered into a new Title IV Program Participation Agreement which expires in June 2018.

• National College Rating System. In response to President Obama’s call for a national college rating system, the U.S. Department of Education released a draft ratings framework in December 2014 which is intended to provide increased transparency regarding access, affordability, and student outcomes at U.S. colleges. The public comment period on the draft ratings framework ended 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 impact of the ratings system cannot be predicted, but if the system as adopted compares schools with dramatically different demographics and missions without appropriate qualifications or otherwise casts a negative light on the proprietary sector, our reputation and business could be adversely affected.

• The Higher Learning Commission Accreditation. 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 hosted a focused visit in January 2015 to validate the contents of the report. Refer to Note 16, Regulatory Matters, in Item 1, Financial Statements. Based on the process to date, we believe that the University has adequately addressed the concerns expressed by the HLC in connection with its Notice determination. We expect that the HLC Board of Trustees will consider the matter and take final action at its meeting in late June 2015. If the HLC Board were to determine that the requirements for lifting the Notice sanction have not been met or that the University otherwise is not in compliance with the applicable accreditation criteria, the Board could impose additional sanctions on the University, including probation, or take other action that could adversely impact 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 our outstanding Class B common shares, the only class of Apollo voting stock, University of Phoenix hosted a visit by an HLC peer review team in December 2014 focused on ascertaining the appropriateness of the prior approval, implications for succession planning, and the effect, if any, of the change in trust arrangements on Apollo and its relevant subsidiaries, and their ability to continue to meet HLC’s Criteria for Accreditation and Assumed Practices. Based upon the process to date, we believe that we have adequately addressed the Commission’s relevant criteria in this matter. Final action is pending with HLC.

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.

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Other Fiscal Year 2015 Events

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

1. 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 4, Acquisitions, in Item 1, Financial Statements.

2. Student Loan Cohort Default Rates.During the second quarter of fiscal year 2015, the U.S. Department of Education released the draft three-year cohort default rates for the 2012 federal fiscal year. The 2012 draft three-year cohort default rate for University of Phoenix, which will be finalized in September 2015, was 13.6%, which is a decrease from the University’s 2011 three-year cohort default rate of 19.0%.

Critical Accounting Policies and Estimates

Refer to our 2014 Annual Report on Form 10-K for our critical accounting policies and estimates and refer to Note 2, Restructuring and Impairment Charges, in Item 1, Financial Statements, for discussion of long-lived asset impairments recorded during the second quarter of fiscal year 2015.

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 and six months ended February 28, 2015 compared to the three and six months ended February 28, 2014.

As discussed in the Overview of this MD&A, the U.S. higher education industry continues to experience unprecedented, rapidly developing changes. We believe University of Phoenix enrollment has been adversely impacted by these changes, and we are focused on adapting our business to meet these rapidly evolving developments and to stabilize University of Phoenix enrollment.

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 Operations

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 February 28,										Six Months Ended February 28,
	2015			2014			% of Net Revenue				2015			2014			% of Net Revenue
($ in thousands)							2015		2014								2015		2014
Net revenue	$	578,572		$	672,754		100.0	%	100.0	%	$	1,297,624		$	1,520,902		100.0	%	100.0	%
Costs and expenses:
Instructional and student advisory	293,073			316,577			50.7	%	47.1	%	617,337			653,779			47.6	%	43.0	%
Marketing	127,421			139,272			22.0	%	20.7	%	256,214			273,101			19.7	%	18.0	%
Admissions advisory	57,840			53,121			10.0	%	7.9	%	114,925			102,819			8.8	%	6.8	%
General and administrative	70,598			67,275			12.2	%	10.0	%	142,965			142,054			11.0	%	9.3	%
Depreciation and amortization	34,819			37,465			6.0	%	5.6	%	71,223			73,803			5.5	%	4.8	%
Provision for uncollectible accounts receivable	11,969			11,534			2.1	%	1.7	%	29,367			25,512			2.3	%	1.7	%
Restructuring and impairment charges	35,536			15,209			6.1	%	2.3	%	54,564			47,172			4.2	%	3.0	%
Acquisition and other related costs	1,742			13,005			0.3	%	1.9	%	4,961			13,005			0.4	%	0.9	%
Litigation charges	100			9,000			—	%	1.3	%	100			9,000			—	%	0.6	%
Total costs and expenses	633,098			662,458			109.4	%	98.5	%	1,291,656			1,340,245			99.5	%	88.1	%
Operating (loss) income	(54,526		)	10,296			(9.4	)%	1.5	%	5,968			180,657			0.5	%	11.9	%
Interest income	740			599			0.1	%	0.1	%	1,329			1,167			0.1	%	0.1	%
Interest expense	(1,739		)	(1,983		)	(0.3	)%	(0.3	)%	(3,401		)	(4,069		)	(0.3	)%	(0.3	)%
Other (loss) income, net	(1,146		)	107			(0.2	)%	—	%	(2,431		)	914			(0.2	)%	—	%
(Loss) income from continuing operations before income taxes	(56,671		)	9,019			(9.8	)%	1.3	%	1,465			178,669			0.1	%	11.7	%
Benefit from (provision for) income taxes	20,533			5,130			3.6	%	0.8	%	(5,134		)	(65,088		)	(0.4	)%	(4.2	)%
(Loss) income from continuing operations	(36,138		)	14,149			(6.2	)%	2.1	%	(3,669		)	113,581			(0.3	)%	7.5	%
Loss from discontinued operations, net of tax	—			(1,972		)	—	%	(0.3	)%	—			(2,363		)	—	%	(0.2	)%
Net (loss) income	(36,138		)	12,177			(6.2	)%	1.8	%	(3,669		)	111,218			(0.3	)%	7.3	%
Net loss attributable to noncontrolling interests	2,528			2,428			0.4	%	0.4	%	3,844			2,278			0.3	%	0.2	%
Net (loss) income attributable to Apollo	$	(33,610	)	$	14,605		(5.8	)%	2.2	%	$	175		$	113,496		—	%	7.5	%

Net Revenue

Our net revenue decreased$94.2 million and $223.3 million, or 14.0% and 14.7%, in the three and six months ended February 28, 2015, respectively, compared to the prior year periods. The decreases were primarily attributable to net revenue declines at University of Phoenix of 17.9% and 19.3% during the respective periods, principally due to lower enrollment. See discussion of the enrollment decline in University of Phoenix below. This was partially offset by increases in Apollo Global net revenue.

Instructional and Student Advisory

Instructional and student advisory decreased$23.5 million and $36.4 million, or 7.4% and 5.6%, in the three and six months ended February 28, 2015, respectively, compared to the prior year periods. This represented increases as a percentage of net revenue of 360 and 460 basis points, respectively. The decreases in expense were primarily due to lower costs from the University of Phoenix enrollment decline and lower costs including rent and compensation attributable to our restructuring activities. This was partially offset by costs attributable to Apollo Global’s recent acquisitions.

Marketing

Marketing decreased$11.9 million and $16.9 million, or 8.5% and 6.2%, in the three and six months ended February 28, 2015, respectively, compared to the prior year periods. This represented increases as a percentage of net revenue of 130 and 170 basis points, respectively. The decreases in expense were principally attributable to lower headcount due in part to our restructuring activities, and lower advertising costs. This was partially offset by advertising costs attributable to Apollo Global’s recent acquisitions.

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Admissions Advisory

Admissions advisory increased$4.7 million and $12.1 million, or 8.9% and 11.8%, in the three and six months ended February 28, 2015, respectively, compared to the prior year periods. This represented increases as a percentage of net revenue of 210 and 200 basis points, respectively. The increases in expense were principally attributable to higher average employee compensation at University of Phoenix resulting from its effort to retain qualified personnel following the reorganization its admissions advisory function. The increase was also due to costs attributable to Open Colleges as a result of the timing of the acquisition during the second quarter of fiscal year 2014.

General and Administrative

General and administrative increased$3.3 million and $0.9 million, or 4.9% and 0.6%, in the three and six months ended February 28, 2015, respectively, compared to the prior year periods. This represented increases as a percentage of net revenue of 220 and 170 basis points, respectively. The increases were primarily due to costs attributable to Apollo Global’s recent acquisitions.

Depreciation and Amortization

Depreciation and amortization decreased$2.6 million in both the three and six months ended February 28, 2015 compared to the prior year periods. This represented decreases of 7.1% and 3.5% during the three and six month periods, respectively, and increases as a percentage of net revenue of 40 and 70 basis points, respectively. The decrease in expense was principally attributable to lower depreciation due in part to the decline in depreciable assets resulting from our restructuring activities. This was partially offset by intangibles amortization attributable to Apollo Global’s recent acquisitions.

Provision for Uncollectible Accounts Receivable

Provision for uncollectible accounts receivable increased$0.4 million and $3.9 million, or 3.8% and 15.1%, in the three and six months ended February 28, 2015, respectively, compared to the prior year periods. This represented increases as a percentage of net revenue of 40 and 60 basis points, respectively. The increases principally occurred at Open Colleges as a result of the timing of the acquisition during the second quarter of fiscal year 2014 and its increased enrollment since the acquisition.

Restructuring and Impairment Charges

Restructuring and impairment charges includes the following for the respective periods:

	Three Months Ended February 28,				Six Months Ended February 28,
($ in thousands)	2015		2014		2015		2014
Restructuring charges	$	16,587	$	15,209	$	35,615	$	47,172
Intangibles impairment(1)	12,999		—		12,999		—
Property and equipment impairment(1)	5,950		—		5,950		—
Restructuring and impairment charges	$	35,536	$	15,209	$	54,564	$	47,172

⁽¹⁾ Refer to Note 2, Restructuring and Impairment Charges, in Item 1, Financial Statements, for discussion of these impairment charges.

The U.S. higher education industry continues to experience 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 our business processes and 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 costs to align with our lower enrollment and revenue.

Our restructuring activities initiated prior to fiscal year 2015 principally include rationalizing our administrative real estate facilities, closing 115 University of Phoenix ground locations, and workforce reductions. During the six months ended February 28, 2015, we incurred $23.3 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.

During the six months ended February 28, 2015, we incurred $12.3 million of restructuring expense associated with new restructuring activities initiated after fiscal year 2014. The expense consisted of $8.5 million of severance and other employee separation costs associated with the elimination of approximately 300 positions. The majority of the remaining restructuring expense represents costs associated with termination of a curriculum-based contract. The expense associated with these

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activities for the six months ended February 28, 2015 is reflected in our segment reporting as follows: $1.1 million in University of Phoenix and $11.2 million in Other.

We intend to further reduce costs to align with our lower enrollment and revenue, and expect to incur material charges associated with other future restructuring activities. These efforts include University of Phoenix continuing to actively evaluate the extent, functionality and location of its ground facilities and the potential closure of additional facilities in the future that are determined to be underutilized or unnecessary.

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

Acquisition and Other Related Costs

We recorded $1.7 million and $5.0 million of acquisition and other related costs during the three and six months ended February 28, 2015, respectively. This principally represents costs associated with our acquisition of FAEL completed in December 2014, and diligence costs related to other potential acquisitions that were not completed.

During the three and six months ended February 28, 2014, we recorded $13.0 million associated with changes in the fair value of contingent consideration associated with our acquisitions. The substantial majority of this expense was attributable to our acquisition of Open Colleges.

Litigation Charges

We recorded charges of $0.1 million and $9.0 million during the second quarters of fiscal year 2015 and 2014, respectively, associated with our legal matters. Refer to Note 15, Commitments and Contingencies in Item 1, Financial Statements.

Benefit from (Provision for) Income Taxes

We recorded a benefit from income taxes during the second quarter of fiscal year 2015, which represented a 36.2% effective income tax rate. The effective rate was adversely impacted by foreign losses for which we cannot take a tax benefit.

During the six months ended February 28, 2015, we had pre-tax income of $1.5 million and recorded $5.1 million of income tax expense. The low pre-tax income caused our foreign losses for which we cannot take a tax benefit to have a more significant impact on our effective tax rate for the period.

We had pre-tax income of $9.0 million during the three months ended February 28, 2014 and recorded an aggregate $5.1 million benefit from income taxes. The aggregate benefit was principally attributable to a $10.2 million benefit from resolution with the Internal Revenue Service related to the deductibility of certain costs for our foreign subsidiaries, and a $2.8 million tax benefit resulting from tax reform in Mexico. These benefits were partially offset by an increase in nondeductible foreign losses primarily due to the acquisition and other related costs discussed above.

During the six months ended February 28, 2014, our effective income tax rate was 36.4%, which was favorably impacted by the tax benefits recorded in the second quarter of fiscal year 2014 discussed above.

Analysis of Operating Results by Reportable Segment

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

	Three Months Ended February 28,											Six Months Ended February 28,
($ in thousands)	2015			2014			$ Change			% Change		2015			2014			$ Change			% Change
Net revenue
University of Phoenix	$	487,769		$	594,081		$	(106,312	)	(17.9	)%	$	1,080,622		$	1,338,944		$	(258,322	)	(19.3	)%
Apollo Global	81,100			68,634			12,466			18.2	%	196,240			159,793			36,447			22.8	%
Other	9,703			10,039			(336		)	(3.3	)%	20,762			22,165			(1,403		)	(6.3	)%
Net revenue	$	578,572		$	672,754		$	(94,182	)	(14.0	)%	$	1,297,624		$	1,520,902		$	(223,278	)	(14.7	)%
Operating (loss) income
University of Phoenix	$	1,350		$	86,682		$	(85,332	)	(98.4	)%	$	94,861		$	270,155		$	(175,294	)	(64.9	)%
Apollo Global	(27,541		)	(40,004		)	12,463			31.2	%	(32,383		)	(37,787		)	5,404			14.3	%
Other	(28,335		)	(36,382		)	8,047			22.1	%	(56,510		)	(51,711		)	(4,799		)	(9.3	)%
Operating (loss) income	$	(54,526	)	$	10,296		$	(64,822	)	*		$	5,968		$	180,657		$	(174,689	)	(96.7	)%

* Not meaningful

36

University of Phoenix

University of Phoenix’s net revenue decreased $106.3 million and $258.3 million, or 17.9% and 19.3%, during the three and six months ended February 28, 2015, respectively, compared to the prior year periods. The decreases were principally attributable to lower enrollment from the continued decline in New Degreed Enrollment, as detailed and defined in the table below, and a decline in student retention. The University’s net revenue also decreased as a result of the increased use of discounts, grants and scholarships.

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.

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

	Three Months Ended February 28,					Six Months Ended February 28,
(Rounded to the nearest hundred)	2015	2014	% Change			2015	2014	% Change
Degreed Enrollment(1)	213,800	250,300	(14.6	)%	Average Degreed Enrollment(3)	224,900	260,800	(13.8	)%
New Degreed Enrollment(2)	28,300	32,500	(12.9	)%	Aggregate New Degreed Enrollment	67,900	74,200	(8.5	)%

⁽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 13.8% in the six months ended February 28, 2015 compared to the prior year period due to the continued decline in New Degreed Enrollment and lower student retention. We believe the following factors, some of which are discussed in more detail in the Overview of this MD&A, contributed to the decrease:

1. University of Phoenix enrollment continues to be adversely impacted by the rapidly evolving and highly competitive education industry.

2. The University’s reduced advertising in the second quarter of fiscal year 2015 contributed to the 12.9% decline in New Degreed Enrollment for the quarter.

3. The disruptions experienced by our students using the University’s new online classroom contributed to the decline in student retention we experienced during the six months ended February 28, 2015.

University of Phoenix’s operating income decreased $85.3 million and $175.3 million, or 98.4% and 64.9%, in the three and six months ended February 28, 2015, respectively, compared to the prior year periods. The University’s operating margins were 0.3% and 8.8% in the three and six months ended February 28, 2015, respectively, and its operating results were impacted by restructuring and impairment charges of $31.0 million and $41.2 million in the respective periods. The decreases in operating income were 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 $12.5 million and $36.4 million, or 18.2% and 22.8%, during the three and six months ended February 28, 2015, respectively, compared to the prior year periods. The increases were primarily due to revenue from recent acquisitions and an increase in enrollment at other institutions. This was partially offset by a decrease associated with changes in foreign exchange rates.

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Apollo Global’s operating losses decreased $12.5 million and $5.4 million, or 31.2% and 14.3% during the three and six months ended February 28, 2015, respectively, compared to the prior year periods. Apollo Global’s operating results include the following during the respective periods:

	Three Months Ended February 28,				Six Months Ended February 28,
($ in thousands)	2015		2014		2015		2014
Depreciation and amortization	$	9,678	$	9,007	$	20,149	$	15,366
Acquisition and other related costs	1,012		12,997		2,698		12,997
Restructuring and impairment charges	43		304		101		1,567

The decreased operating loss in the three and six months ended February 28, 2015 compared to the prior year periods was principally due to a reduction in acquisition and other related costs.

In addition to acquisition and other related costs, Apollo’s Global’s recent acquisitions have a negative near term impact due to intangibles amortization and integration related costs. Additionally, 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’ enrollment 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. Apollo Global’s deferred revenue was approximately $177 million and $115 million as of February 28, 2015 and 2014, respectively.

Other

Other net revenue decreased $0.3 million and $1.4 million during the three and six months ended February 28, 2015, respectively, compared to the prior year periods. The decreases were principally attributable to lower enrollment at Western International University.

Operating losses during the three months ended February 28, 2015 decreased $8.0 million compared to the prior year. The decrease was principally attributable to the $9.0 million litigation charge in the second quarter of fiscal year 2014 discussed above.

Operating losses during the six months ended February 28, 2015 increased $4.8 million compared to the prior year. This was principally attributable to increased losses at Western International University and an increase in restructuring charges, which was partially offset by the litigation charge in the second quarter of fiscal year 2014 discussed above.

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.

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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)	February 28, 2015		August 31, 2014		% Change		February 28, 2015		August 31, 2014
Cash and cash equivalents	$	566,078	$	1,228,813	(53.9	)%	23.5	%	39.7	%
Restricted cash and cash equivalents	224,987		224,135		0.4	%	9.4	%	7.2	%
Marketable securities(1)	193,745		187,472		3.3	%	8.1	%	6.1	%
Total	$	984,810	$	1,640,420	(40.0	)%	41.0	%	53.0	%

⁽¹⁾ Represents current marketable securities. We also have $75.1 million and $87.8 million of long-term marketable securities as of February 28, 2015 and August 31, 2014, respectively, which includes securities maturing in less than three years.

Cash and cash equivalents (excluding restricted cash) decreased $662.7 million primarily due to:

• $595.4 million of payments on borrowings (net of proceeds from borrowings);

• $43.3 million for capital expenditures;

• $38.7 million for share repurchases;

• $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; and

• $21.2 million paid to acquire FAEL.

The above items were partially offset by $55.1 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 February 28, 2015, the earnings from these operations were not significant.

As of February 28, 2015, we had $108.7 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.

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 5, 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 February 28, 2015, we have approximately $44 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 February 28, 2015 and August 31, 2014.

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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 February 28, 2015 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:

	Six Months Ended February 28,
($ in thousands)	2015			2014
Net (loss) income	$	(3,669	)	$	111,218
Non-cash items	138,696			118,498
Changes in assets and liabilities, excluding the impact of acquisitions and disposition	(79,914		)	(36,232		)
Net cash provided by operating activities	$	55,113		$	193,484

Six Months Ended February 28, 2015 - Our non-cash items primarily consisted of $71.2 million of depreciation and amortization, a $29.4 million provision for uncollectible accounts receivable, $21.9 million of share-based compensation, and $21.2 million for losses on asset dispositions and impairment charges. The changes in assets and liabilities primarily consisted of the following:

• a $51.2 million use of cash related to the change in accounts receivable, excluding the provision for uncollectible accounts receivable;

• a $42.3 million decrease in accrued and other liabilities principally attributable to the payment of accrued bonuses and the payment of the Open Colleges contingent consideration discussed above;

• a $21.4 million increase in prepaid taxes primarily due to the timing and method of calculating our quarterly estimated income tax payments; and

• a $15.9 million decrease in student deposits principally attributable to the timing of course starts at BPP.

The above changes were partially offset by a $47.8 million increase in deferred revenue principally attributable to the timing of course starts at BPP and increased enrollment at Open Colleges.

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 student accounts receivable balance as of the end of the period. As of February 28, 2015, excluding accounts receivable and the related net revenue for Apollo Global, our days sales outstanding was 22 days compared to 21 days as of August 31, 2014 and 19 days as of February 28, 2014.

Six Months Ended February 28, 2014 - Our non-cash items primarily consisted of $73.8 million of depreciation and amortization, a $25.5 million provision for uncollectible accounts receivable, and $22.5 million of share-based compensation. The changes in assets and liabilities primarily consisted of a $48.2 million decrease in accrued and other liabilities principally attributable to the timing of our payroll cycle and accrued bonus payments, and a $24.2 million increase in restricted cash and cash equivalents. This was partially offset by a $32.9 million increase in deferred revenue principally attributable to the timing of course starts at BPP, a $17.4 million increase in student deposits, and a $15.2 million decrease in prepaid income taxes.

Investing Activities

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

	Six Months Ended February 28,
($ in thousands)	2015			2014
Capital expenditures	$	(43,310	)	$	(58,119	)
Acquisitions, net of cash acquired	(21,166		)	(94,937		)
Maturities and sales (purchases) of marketable securities, net	4,107			(122,741		)
Other	467			3,446
Net cash used in investing activities	$	(59,902	)	$	(272,351	)

40

Cash paid for acquisitions during the first six months of fiscal year 2015 represents Apollo Global’s acquisition of FAEL, and the amount in the prior year represents Apollo Global’s acquisition of Open Colleges.

Financing Activities

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

	Six Months Ended February 28,
($ in thousands)	2015			2014
Payments on borrowings, net	$	(595,410	)	$	(619,268	)
Share repurchases	(38,718		)	(72,237		)
Payment for contingent consideration	(21,371		)	—
Other	1,231			1,793
Net cash used in financing activities	$	(654,268	)	$	(689,712	)

Six Months Ended February 28, 2015 - Cash used in financing activities primarily consisted of the following:

• $595.4 million used for payments on borrowings (net of proceeds from borrowings);

• $38.7 million used for share repurchases, which excludes $1.6 million of shares repurchased during the second quarter of fiscal year 2015 that settled subsequent to February 28, 2015. Total share repurchases during the first six months of fiscal year 2015 consisted of $38.1 million used to repurchase 1.4 million shares at a weighted average purchase price of $26.45 per share, and additional repurchases related to tax withholding requirements on restricted stock units; and

• $21.4 million representing the financing portion of our Open Colleges contingent consideration payment discussed above.

As of February 28, 2015, we had $52.2 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.

Six Months Ended February 28, 2014 - Cash used in financing activities primarily consisted of $619.3 million used for payments on borrowings, and $72.2 million used for share repurchases. Share repurchases consisted of $69.7 million used to repurchase 2.3 million shares at a weighted average purchase price of $30.44 per share, and additional repurchases related to tax withholding requirements on the restricted stock units.

Contractual Obligations and Other Commercial Commitments

We had the following material changes in our contractual obligations and other commercial commitments during the six months ended February 28, 2015:

• We repaid the entire amount borrowed on our Revolving Credit Facility of $585.0 million;

• We paid $34.5 million of contingent consideration associated with our Open Colleges acquisition; and

• In connection with our acquisition of FAEL in December 2014, we also have the option to buy the remaining noncontrolling interests, and the noncontrolling shareholders have the option to sell their shares to us, beginning in the third quarter of our fiscal year 2019, or earlier in limited circumstances. The prices for these options are based on a formula specified at the acquisition date and are 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. Refer Note 4, Acquisitions, in Item 1, Financial Statements.

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 February 28, 2015. 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.

41

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 February 28, 2015, 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 15, 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 $52.2 million remained available as of February 28, 2015. There is no expiration date on the repurchase authorizations and repurchases occur at our discretion.

During the three months ended February 28, 2015, we repurchased 0.8 million shares of our Class A common stock at a total cost of $20 million, representing a weighted average purchase price of $26.22 per share. The following details changes in our treasury stock during the three months ended February 28, 2015:

(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 November 30, 2014	80,113		$	49.27	80,113		$	72,224
New authorizations	—		—		—		—
Share repurchases	—		—		—		—
Share reissuances	(5	)	49.27		(5	)	—
Treasury stock as of December 31, 2014	80,108		$	49.27	80,108		$	72,224
New authorizations	—		—		—		—
Share repurchases	362		25.96		362		(9,389		)
Share reissuances	(40	)	49.17		(40	)	—
Treasury stock as of January 31, 2015	80,430		$	49.17	80,430		$	62,835
New authorizations	—		—		—		—
Share repurchases	401		26.46		401		(10,611		)
Share reissuances	(1	)	49.06		(1	)	—
Treasury stock as of February 28, 2015	80,830		$	49.06	80,830		$	52,224

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 February 28, 2015.

43

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	Apollo Education Group, Inc. Deferred Compensation Plan (effective February 1, 2012) (as amended and restated effective November 1, 2014)
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

44

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: March 25, 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 Finance, Chief Accounting Officer and Controller (Principal Accounting Officer)

45

EX-10.1

EXHIBIT 10.1

APOLLO EDUCATION GROUP, INC.

DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective November 1, 2014)

As Amended and Restated November 1, 2014

Table of Contents

	Page
ARTICLE I:	DEFINITIONS	1
ARTICLE II:	PARTICIPATION	8
ARTICLE III:	DEFERRAL AND COMPANY MATCH CREDITS	9
ARTICLE IV:	PLAN ACCOUNTS	11
ARTICLE V:	SHORT-TERM PAYOUTS, WITHDRAWALS AND CORPORATE EVENT DISTRIBUTIONS	13
ARTICLE VI:	RETIREMENT BENEFITS	15
ARTICLE VII:	TERMINATION BENEFIT	16
ARTICLE VIII:	DISABILITY WAIVER AND BENEFIT	16
ARTICLE IX:	BENEFICIARY DESIGNATION	17
ARTICLE X:	LEAVE OF ABSENCE	17
ARTICLE XI:	TERMINATION, AMENDMENT OR MODIFICATION	18
ARTICLE XII:	ADMINISTRATION	19
ARTICLE XIII:	OTHER BENEFITS AND AGREEMENTS	19
ARTICLE XIV:	CLAIMS PROCEDURE	20
ARTICLE XV:	TRUST	21
ARTICLE XVI:	MISCELLANEOUS	22

i

Effective February 1, 2012

APOLLO EDUCATION GROUP, INC.

DEFERRED COMPENSATION PLAN

The purpose of this Plan is to provide certain specified benefits to a select group of management and highly compensated employees who contribute materially to the continued growth, development and future business success of Apollo Education Group, Inc., (or any successor thereto) and its Affiliates. This Plan is unfunded for tax purposes and for purposes of Title I of ERISA. The Plan is intended to satisfy and be in compliance with the provisions of the Internal Revenue Code of 1986 (the “Code”) as they relate to deferred compensation benefits, with particular emphasis on §409A of the said Code. If any provision or term of this document would be prohibited by or inconsistent with the requirements of Section 409A of the Code, then such provision or term shall be deemed to be reformed to comply with Section 409A of the Code.

ARTICLE I: DEFINITIONS

1.010Account(s) means one of the accounts established for the purpose of measuring and determining a Participant’s interest in this Plan, such accounts being the Participant's Deferral Account(s) and Company Match Account(s) and Company Discretionary Contribution Account(s).

1.020Account Balance means, with respect to each Participant, an account in the records of the Company equal to the sum of the Participant’s:

(a) Deferral Account balance,

(b) Company Match Account balance

(c) Company Discretionary Contribution Account balance.

The Account Balance (and each underlying balance making up such Account Balance) is a bookkeeping entry only and will be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his designated Beneficiary, pursuant to this Plan.

1.030 Administrative Committeemeans the Administrative Committee designated by the Company to administer the Plan.

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1.040 Affiliate means:

(a) any corporation incorporated under the laws of one of the United States of America of which the Company owns, directly or indirectly, eighty percent (80%) or more of the combined voting power of all classes of stock or eighty percent (80%) or more of the total value of the shares of all classes of stock (all within the meaning of Code §1563);

(b) any partnership or other business entity organized under such laws, of which the Company owns, directly or indirectly, eighty percent (80%) or more of the voting power or eighty percent (80%) or more of the total value (all within the meaning of Code §414(c)); and

(c) any other company deemed to be an Affiliate by the Company.

1.050Annual Company Discretionary Contribution Amount for any Plan Year means the amount determined in accordance with Section 3.040.

1.060Annual Company Match Amount for any Plan Year means the amount determined in accordance with Section 3.030.

1.070Annual Deferral Amount means that portion of a Participant's Base Annual Salary and/or Bonus which a Participant elects to have deferred, in accordance with Article III, for any one Plan Year.

1.080Annual Installment Method means a benefit payment method involving a series of annual installment payments over the number of years selected by the Participant in accordance with this Plan, which will be calculated in the manner set forth in this Section. The Account Balance of the Participant will be determined as of the close of the business day that is closest to the date of distribution as administratively practicable. The annual installment will be calculated by multiplying this balance by a fraction, the numerator of which is one (1), and the denominator of which is the remaining number of annual payments due the Participant. (By way of example, if a Participant were to elect a 10-year payment under the Annual Installment Method, the first payment would be one-tenth (1/10) of the Account Balance, calculated as described in this definition. The following year, the payment would be one-ninth (1/9) of the Account Balance, calculated as described in this definition.) Each annual installment will be paid within the first sixty (60) days of the calendar year following the applicable year or as soon as administratively practicable.

1.090Base Annual Salary means the annual cash compensation relating to services performed during any calendar year, whether or not paid in such calendar year or included on the Federal Income Tax Form W‑2 for such calendar year, excluding bonuses, severance pay, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, non-monetary awards, directors fees and other fees, automobile and other allowances (whether or not such allowances are included in the Employee’s gross income) paid to a Participant for employment services rendered. Base Annual Salary will be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or non‑qualified plans of the Company or any Affiliate and will be calculated to include amounts not otherwise included

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in the Participant's gross income under Code §125, 402(e)(3), 402(h), or 403(b), pursuant to plans established by the Company or an Affiliate; provided, however, that all such amounts will be included in compensation only to the extent that, had there been no such plan, the amount would have been payable in cash to the Participant.

1.100Beneficiary means one or more persons, trusts, estates or other entities, designated in accordance with Article IX who or which are entitled to receive benefits under this Plan upon the death of a Participant.

1.110Beneficiary Designation Form means the form established from time to time by the Administrative Committee or its delegate that a Participant completes, signs and returns to the Administrative Committee or its delegate or completes electronically, in order to designate one or more Beneficiaries.

1.120Bonus means any compensation earned and payable to a Participant under any incentive pay plan or program that has been designated by the Company as eligible for deferral under the Plan. As of October 1, 2014, the only bonus plans that have been designated by the Company as eligible for deferral under the plan are the Company’s Executive Officer Performance Incentive Plan, Corporate Bonus Plan - Leadership Team, Corporate Bonus Plan - Non-Covered Employees (Excluding Leadership Team), and Corporate Bonus Plan - Covered Employees.

1.130Code means the Internal Revenue Code of 1986, as from time to time amended.

1.140Company means Apollo Education Group, Inc., an Arizona corporation.

1.150Company Discretionary Contribution Account means:

(a) the sum of all of a Participant's Annual Company Discretionary Contribution Amounts,

(b) adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the provisions of Section 4.020(b), as such provisions relate to such Company Discretionary Contribution Account(s), and

(c) reduced by any amount debited thereon equal to the amount of all distributions made to the Participant or his Beneficiary pursuant to this Plan which are related to such Company Discretionary Contribution Account(s).

1.160Company Match Account means:

(a) the sum of all of a Participant's Annual Company Match Amounts,

(b) adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the provisions of Section 4.020(b), as such provisions relate to such Company Match Account(s), and

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(c) reduced by any amount debited thereon equal to the amount of all distributions made to the Participant or his Beneficiary pursuant to this Plan which are related to such Company Match Account(s).

1.170 Corporate Event means the occurrence of any one of the following events:

(1)A change in the ownership of the Company, which shall occur on the date that any one person, or more than one person Acting as a Group, other than Excluded Person(s), acquires ownership of stock of the Company possessing more than fifty percent (50%) of the total voting power of the outstanding stock of the Company. However, if any one person or more than one person Acting as a Group is considered to own more than fifty percent (50%) of the total voting power of the outstanding stock of the Company, the acquisition of additional voting stock by the same person or persons is not considered to cause a Corporate Event.

(2)The date all of the members of the Company's board of directors are replaced during any 12 month period by directors whose appointment or election is not endorsed by a majority of the members of the Company's board of directors before the date of the appointment or election.

(3)A sale or other disposition in a single transaction or series of related transactions occurring within a twelve (12) month period of 80% or more of the Company's assets except pursuant to an Excluded Transaction (as defined below).

For purposes of this Section 1.170:

Persons will not be considered to be "Acting as a Group" solely because they purchase or own stock of the Company at the same time, or as a result of the same public offering, or solely because they purchase assets of the Company at the same time, or as a result of the same public offering, as the case may be.

The term 'Excluded Transaction" means any transaction in which assets are transferred to: (A) a shareholder of the Company (determined immediately before the asset transfer) in exchange for or with respect to its stock; (B) an entity, forty percent (40%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company (determined after the asset transfer); (C) a person, or more than one person Acting as a Group, that owns, directly or indirectly, fifty percent (50%) or more of the total value of voting power of all the outstanding stock of the Company (determined after the asset transfer); or (D) an entity at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a person described in clause (C) of this definition (determined after the asset transfer).

The term "Excluded Person(s)" means (A) John G. Sperling and Peter V. Sperling, (B) any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of John G. Sperling or Peter V. Sperling and any person (other than a tenant or employee) sharing the household of John G. Sperling or Peter V. Sperling; (C) any trust established by John G. Sperling or Peter V.

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Sperling; (D) any person or entity controlling, controlled by or under common control with a person or entity described in clauses (A), (B) and (C) of this definition; (E) the Company or any of its Affiliates; (F) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates; (G) an underwriter temporarily holding securities of the Company pursuant to an offering of such securities; or (H) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock in the Company.

For the avoidance of doubt, a “Corporate Event,” as defined above, shall only constitute a Corporate Event for purposes of this Plan if it also constitutes a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, as determined in accordance with any guidance, rules or regulations promulgated by the Internal Revenue Service in construing the rules and regulations applicable to Code Section 409A.

1.180Deferral Account means:

(a) the sum of all of a Participant's Annual Deferral Amounts,

(b) adjusted by amounts credited or debited (gains or losses) thereto, in accordance with the provisions of Section 4.020(b), as such provisions relate to such Deferral Account(s), and

(c) reduced by any amount debited thereon equal to the amount of all distributions made to the Participant or his Beneficiary pursuant to this Plan which are related to such Deferral Account(s).

1.190Deferral Election means an election made pursuant to Article III by a Participant to defer receipt of a part of his Base Annual Salary and/or Bonus. Participants will be required to make a separate election with respect to Base Annual Salary and/or Bonus and the Company will maintain separate accounts for Base Annual Salary Deferrals and Bonus Deferrals for each Participant.

1. 200Deferral Election Form means the form established from time to time by the Administrative Committee or its delegate that a Participant completes, signs and returns to the Administrative Committee or its delegate or completes electronically to make a Deferral Election pursuant to Article III, in order to defer receipt of a part of his Base Annual Salary and/or Bonus and to designate the form of distribution for such deferrals and the earnings thereon.

1.210Disability means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

1.230Eligible Employee means any Employee who: (i) is employed in the United States or paid from United States payroll by the Company or an Affiliate; (ii) has completed a year of continuous employment with the Company or an Affiliate; and (iii) has a Base Annual Salary which is equal to or greater than One Hundred Thirty Thousand Dollars ($130,000.00). The term "Eligible

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Employee" shall also include the Chairman of the board of directors of the Company and the Vice Chairman of the board of directors of the Company.

1.240Employee means any person who is employed by the Company or by an Affiliate.

1.250ERISA means the Employee Retirement Income Security Act of 1974, as from time to time amended.

1.260Measurement Funds means the investment vehicles offered under this Plan which shall be (unless otherwise provided by the Administrative Committee) the same as the Investment Funds offered under the Apollo Education Group, Inc. Savings and Investment Plan (or its successor), each of whose purpose is to mirror, to the greatest extent reasonably possible, the investment performance of a particular benchmark mutual fund sponsored and offered by the Apollo Education Group, Inc. Savings and Investment Plan.

1.270Named Fiduciary means the Administrative Committee, its delegates and the Trustee.

1.280Participant means an Eligible Employee:

(a) who elects to participate in the Plan;

(b) who signs a Deferral Election Form;

(c) whose signed Deferral Election Form is accepted by the Administrative Committee or its delegate;

(d) who commences participation in the Plan; and

(e) who has not elected to terminate participation in the Plan.

A spouse or former spouse of a Participant will not be treated as a Participant in the Plan or have any Account Balances under the Plan, even if the spouse or former spouse has an interest in the Participant's benefits under the Plan as a result of applicable law or property settlements resulting from legal separation or divorce.

1.290Plan means this Apollo Education Group, Inc. Deferred Compensation Plan, which is evidenced by this instrument and by the forms associated with the said instrument, as they may be amended from time to time.

1.300Plan Year means each twelve-month period ending on the last day of December, except the initial Plan Year which will be from February 1, 2012 through December 31, 2012.

1.310Retirement, Retire(s) or Retired means, with respect to an Employee, severance from employment with the Company and all of its Affiliates for any reason other than death or Disability on or after the attainment of age 55 with 10 years of service with the Company or an Affiliate; age 60 with 5 years of service; or age 65. Notwithstanding the foregoing, a Participant shall not be considered to have Retired until such Participant has had a Separation from Service. Further notwithstanding the foregoing, for purposes of eligibility to receive an installment form of

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distribution, a Participant shall not be considered to have Retired unless his Separation from Service was on account of Retirement.

1.320Retirement Benefit means the benefit set forth in Article VI.

1.330Separation from Service means a termination of employment with the Company and all affiliates of the Company for any reason (including Retirement, death, Disability or other termination) subject to the following:

(a) The employment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other bona fide leave of absence (such as temporary employment by the government) if the period of such leave does not exceed six months, or if longer, so long as the individual’s right to reemployment with the Company is provided either by statute or by contract. If the period of leave exceeds six months and the individual’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period.

(b) Whether a termination of employment has occurred is determined based on the facts and circumstances. Where an employee either actually or purportedly continues in the capacity of an employee, such as through the execution of an employment agreement under which the employee agrees to be available to perform services if requested, but the facts and circumstances indicate that the employer and the employee did not intend for the employee to provide more than insignificant services for the employer, an employee will be treated as having a Separation from Service. For purposes of the preceding sentence, an employer and employee will not be treated as having intended for the employee to provide insignificant services where the employee continues to provide services as an employee at an annual rate that is at least equal to 20 percent of the services rendered, on average, during the immediately preceding three full calendar years of employment (or, if employed less than three years, such lesser period). Where an employee continues to provide services to a previous employer in a capacity other than as an employee, a Separation from Service will not be deemed to have occurred if the former employee is providing services at an annual rate that is 50 percent or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or if employed less than three years, such lesser period) and the annual remuneration for such services is 50 percent or more of the annual remuneration earned during the final three full calendar years of employment (or if less, such lesser period). For purposes of this definition, the annual rate of providing services is determined based upon the measurement used to determine the individual’s base compensation (for example, amounts of time required to earn salary, hourly wages, or payments for specific projects).

1.340Short-Term Payout means the payout set forth in Section 5.010 of the Plan.

1.350Termination Benefit means the benefit set forth in Article VII.

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1.360Termination of Employment means the severing of a Participant’s employment with the Company and all Affiliates, voluntarily or involuntarily, for any reason other than Retirement or death. Notwithstanding the foregoing, a Participant shall not be considered to have a Termination of Employment for purposes of this Plan unless the Participant has had a Separation from Service.

1.370Trustmeans the trust established by agreement between the Company and the Trustee, which will be a grantor trust.

1.380Trusteemeans the trustee of the Trust described in Section 1.370 of this Plan.

1.390Unforeseeable Financial Emergency means an unanticipated emergency that is caused by an event beyond the control of the Participant which would result in severe financial hardship to the Participant and which itself results from:

(a) a sudden and unexpected illness or accident of the Participant or the spouse or a dependent (as defined in Code Section 152(a)) of the Participant,

(b) a loss of the Participant's property due to casualty, or

(c) such other extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined in the discretion of the Administrative Committee or its delegate.

Whether an Unforeseeable Financial Emergency exists shall be determined based on the relevant facts and circumstances but in no event shall an Unforeseeable Financial Emergency exist to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise or by liquidation of the Participant's assets (to the extent that liquidation of such assets would not cause severe financial hardship).

ARTICLE II: PARTICIPATION

2.010Select Group Defined. Since participation in the Plan is intended to be limited to a select group of management and highly compensated Employees, the Plan is only available to Eligible Employees of the Company and its Affiliates.

2.020Commencement of Participation. In order to participate during a Plan Year, an Employee must, be an Eligible Employee as of the December 1 preceding the first day of the applicable Plan Year. For example, an Employee who is hired on December 2, 2012 and then becomes an Eligible Employee on December 2, 2013, would first be eligible to defer Base Annual Salary for Plan Year 2015 and Bonus payments earned in the Company’s 2015 fiscal year (for Bonuses that qualify as “Performance-Based Compensation” under Code Section 409A or the Company’s 2016 fiscal year (for Bonuses that do not qualify as “Performance-Based Compensation” under Code Section 409A). As a condition to initial participation in this Plan, each Eligible Employee who wishes to participate in the Plan will be required to complete a Deferral Election Form in accordance with Article III of the Plan and within the timeframes described below.

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(a) In the case of such an Eligible Employee’s initial election to become a Participant in a particular Plan Year, such documentation must be provided by the Eligible Employee to the Administrative Committee or its delegate before the December 31 (or such later time set forth in Section 3.020 with respect to Bonuses) immediately preceding the Plan Year for which the deferral is intended.

(b) If an Eligible Employee has met all enrollment requirements set forth in this Plan and required by the Administrative Committee or its delegate (including returning all required documents to the Administrative Committee or its delegate) in the time frames described in the above subsections, that Eligible Employee will become a Plan Participant on the first day of the Plan Year following the month in which he completes all such enrollment requirements (or in the case of an election made in accordance with Section 3.020, immediately following such election).

In addition, the Administrative Committee or its delegate will establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary.

2.030Termination of Participation and/or Deferrals. If the Administrative Committee or its delegate determines in good faith that a Participant no longer qualifies as a member of a select group of management or highly compensated employees, as membership in such group is determined in accordance with ERISA §§201(2), 301(a)(3) and 401(a)(1), the Participant shall be prevented from making future Deferral Elections.

ARTICLE III: DEFERRAL AND COMPANY MATCH CREDITS

3.010Base Annual Salary Deferral. Each Plan Participant will be permitted to make an irrevocable election to defer (such Deferral Election to be made in whole percentages) receipt of an amount equal to one percent (1%) through seventy‑five percent (75%) of his Base Annual Salary.

(a) For each Plan Year, a Participant, will be permitted, in his sole discretion, to make an irrevocable election for the following Plan Year (and such other elections as the Administrative Committee or its delegate deems necessary or desirable) and must deliver such Deferral Election to the Company or an Affiliate on a new Deferral Election Form before December 31 of the Plan Year immediately preceding the Plan Year for which the deferral is intended. If no such Deferral Election Form is timely delivered for a Plan Year, the Annual Deferral Amount with respect to Base Annual Salary will be zero for that Plan Year.

(b) During each Plan Year, the Base Annual Salary Deferral Amount will be withheld from each regularly scheduled Base Annual Salary payroll in equal amounts, as adjusted from time to time for increases and decreases in Base Annual Salary.

3.020Bonus Deferral. Each Plan Participant will be permitted to make an irrevocable election to defer (such Deferral Election to be made in whole percentages) receipt of an amount up to seventy-five percent (75%) of his Bonus (or such greater percentage determined by the Company in its sole

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discretion) in accordance with such rules established by the Company in compliance with Code Section 409A.

(a) For each Bonus that qualifies as “Performance Based Compensation” under Code Section 409A), a Participant, will be permitted, in his sole discretion, to make an irrevocable election pertaining to such Bonus by timely delivering a Deferral Election to the Company or an Affiliate on a Deferral Election Form no later than six (6) months before the end of the performance service period and in accordance with Code Section 409A or such earlier time as may be determined by the Company in its sole discretion. If no such Deferral Election Form is timely delivered for a Plan Year, the Annual Deferral Amount with respect to Bonus will be zero for that Plan Year.

(b) For each Bonus that does not qualify as “Performance Based Compensation” under Code Section 409A, a Participant, will be permitted, in his sole discretion, to make an irrevocable election pertaining to such Bonus by timely delivering a Deferral Election to the Company or an Affiliate on a Deferral Election Form no later than December 31 preceding the initial Plan Year in which such Bonus commences to be earned, or before such other deadline established in accordance with the requirements of Code Section 409A. If no such Deferral Election Form is timely delivered for a Plan Year, the Annual Deferral Amount with respect to Bonus will be zero for that Plan Year.

3.030Annual Company Match Amount. A Participant's Annual Company Match Amount for any Plan Year will be equal to the amount determined under a formula or formulas, if any, established by the Company on an annual basis in its sole discretion. Such formula(s) may include a matching amount based on the amount a Participant elects to defer under the Apollo Education Group, Inc. Savings and Investment Plan for some or all of the Participants who have made the maximum elective contributions permitted under the terms of such plan. In no event, however, shall such formula(s) violate the requirements of the Code. The Annual Company Match Amount will be calculated and contributed as soon as administratively feasible. The time and form of distribution for the Annual Company Match Amount for a particular Plan Year shall be determined in accordance with the Deferral Elections made with respect to Base Annual Salary for that same Plan Year. For example, a matching contribution made with respect to Plan Year 2012, will be distributed in accordance with the rules applicable to the Deferral Elections made with respect to Plan Year 2012 Base Annual Salary. In the event no such Deferral Elections have been made with respect to a Plan Year, the Annual Company Match Amount for such Plan Year shall be paid in accordance with Section 7.020. Notwithstanding the foregoing, the Annual Company Match Amount shall be reduced for any Plan Year by the amount necessary to comply with the final regulations issued under Code Section 409A relating to the coordination of deferral elections under qualified plan with the benefits provided under nonqualified plans.

3.040Annual Company Discretionary Contribution Amount. A Participant's Annual Company Discretionary Contribution Amount for any Plan Year will be equal to the amount determined under a formula or formulas, if any, established by the Company on an annual basis in its sole discretion. In no event, however, shall such formula(s) violate the requirements of the Code. The Annual Company Discretionary Contribution Amount will be calculated and contributed as soon as administratively feasible. The time and form of distribution for the Annual Company Discretionary

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Contribution Amount for a particular Plan Year shall be determined in accordance with the Deferral Elections made with respect to Base Annual Salary for that same Plan Year. For example, a discretionary contribution made with respect to Plan Year 2012, will be distributed in accordance with the rules applicable to the Deferral Elections made with respect to Plan Year 2012 Base Annual Salary. In the event no such Deferral Elections have been made with respect to a Plan Year, the Annual Company Discretionary Contribution Amount for such Plan Year shall be paid in accordance with Section 7.020.

ARTICLE IV: PLAN ACCOUNTS

4.010Vesting. A Participant will have a one hundred percent (100%) vested interest in his Deferral Account(s), Company Match Account(s), and Company Discretionary Contribution Account(s).

4.020Crediting/Debiting of Account Balances. In accordance with, and subject to, the rules and procedures that are established from time to time by the Administrative Committee or its delegate, in its sole discretion, amounts will be credited or debited to a Participant's Account Balance in the manner set forth in the provisions of this Section:

(a) Allocation to Measurement Funds. A Participant, in connection with his initial Deferral Election in accordance with Section 3.010 or Section 3.020 above, will be permitted to also elect to have one or more Measurement Funds used to determine the amounts to be credited to his Account Balance and his election will continue to be in effect thereafter, unless it should be changed in accordance with subsection (c).

(b) Crediting or Debiting Method. The performance (either positive or negative) of each elected Measurement Fund will be determined by the Administrative Committee or its delegate, based on the performance of the Measurement Funds themselves. A Participant's Account Balance will be credited or debited on a daily basis based on the performance of each Measurement Fund selected by the Participant, as determined by the Administrative Committee or its delegate in its sole discretion, as though:

(1) a Participant's Account Balance were actually invested in the Measurement Fund(s) selected by the Participant as of the close of business on any business day, at the closing price on that day;

(2) the portion of the Annual Deferral Amount that was actually deferred during any calendar quarter were invested in the Measurement Fund(s) selected by the Participant, as soon as administratively feasible after such amounts are actually deferred from the Participant's Base Annual Salary and/or Bonus through reductions in his payroll; and

(3) any distribution made to a Participant that decreases such Participant's Account Balance ceased being invested in the Measurement Fund(s), in the

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applicable percentages, on the closest administratively feasible business day prior to the distribution, at the closing price on such date.

(c) Transfers among Measurement Funds. The Participant will be permitted to change, on a daily basis, any previous Measurement Fund election or elections he has made with regard to his Account Balance. The elections and changes to such elections which a Participant makes pursuant to this subsection will be made by means of any method (including any available telephonic or electronic method which is acceptable to the Administrative Committee or its delegate at the time the election or change is made by the Participant), and may be made at any time and will be effective as of the New York Stock Exchange closing immediately following the making of that election or change; provided, however, if it is determined by the Administrative Committee or its delegate that an investment election made by a Participant is invalid or defective, the Participant’s election, until duly corrected by him, will be deemed to have been made in favor of whatever short-term, money market vehicle is available under the Plan at that time.

(d) No Actual Investment. Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant's election of any such Measurement Fund, the allocation to his Account Balance thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant's Account Balance will not be considered or construed in any manner as an actual investment of his Account Balance in any such Measurement Fund. In the event that the Company or the Trustee, in its own discretion, decides to invest funds in any or all of the Measurement Funds, no Participant will have any rights in or to such investments themselves. Without limiting the foregoing, a Participant's Account Balance will at all times be a bookkeeping entry only and will not represent any investment made on his behalf by the Company or the Trust. The Participant will at all times remain an unsecured creditor of the Company.

(e) Company Reservation of Rights. Consistent with the preceding sentence, nothing to the contrary in this Plan or any of its forms or communication material, nor in any document associated with the Trust, should be interpreted or understood to provide Participants or their Beneficiaries with any current, direct rights with respect to the assets held by the Trustee in the Trust.

4.030FICA and Other Taxes.

(a) Annual Deferral Amounts. For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant or an Annual Company Match Amount or Annual Company Discretionary Contribution Amount is credited, the Company or any Affiliate employing the Participant will withhold from that portion of the Participant’s Base Annual Salary and/or Bonus which is not being deferred the Participant’s share of FICA and other employment taxes on such Annual Deferral

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Amount and Annual Company Match Amount and Annual Company Discretionary Contribution Amount.

(b) Distributions. The Company or any Affiliate employing the Participant, or the Trustee of the Trust, will withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Company and the Trustee of the Trust.

ARTICLE V: SHORT-TERM PAYOUTS, WITHDRAWALS AND

CORPORATE EVENT DISTRIBUTIONS

5.010Short-Term Payouts. In connection with each election to defer an Annual Deferral Amount, a Participant may elect to receive a future Short-Term Payout from the Plan with respect to such Annual Deferral Amount.

(a) The said Short-Term Payout will be a lump sum payment or in annual installments over a period not to exceed 10 years. The lump sum payment or annual installments shall be equal to the Annual Deferral Amount, as adjusted for amounts credited or debited in the manner provided in Section 4.020 on that amount, determined at the time that the Short‑Term Payout is paid (rather than at the date of a Termination of Employment).

(b) Subject to the terms and conditions of this Plan, each Short‑Term Payout elected will be paid out (or begin to be paid out) during a sixty (60) day period commencing immediately after the last day of any Plan Year designated by the Participant that is at least three Plan Years after the Plan Year in which the Annual Deferral Amount is actually deferred. By way of example, if a three-year Short-Term Payout in the form of a lump sum is elected for Annual Deferral Amounts that are deferred in the Plan Year commencing January 1, 2015, the three-year Short-Term Payout would be paid out during a sixty (60) day period commencing January 1, 2019.

(c) Subject to the provisions of Section 5.020, a Participant may change any election he has previously made to a different payout period permitted hereunder, but only one such a change may be made with respect to any single election. Such change will be accomplished by the Participant submitting notice of such change to the Administrative Committee or its delegate in the form prescribed by the to the Administrative Committee (including in electronic form), but such change will not be valid, unless such change satisfies the requirements of Section 5.020.

(d) Should an event occur that triggers a benefit under Article VI, VII or VIII, any Annual Deferral Amount, plus amounts credited or debited thereon, that is subject to a Short-Term Payout election under this Section will not be paid in accordance with this Section, but will instead be paid in accordance with the other applicable Article. For the avoidance of doubt, this Section 5.010(d) shall only apply if such event occurs prior to January 1 of the calendar year in which a Short-Term Payout is payable (or

As Amended and Restated November 1, 2014            

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first becomes payable). Notwithstanding the foregoing, if a Participant has elected a Short-Term Payout in annual installments and the Participant dies or suffers a Disability on or after January of the calendar year in which such installments have commenced, then any remaining installments shall instead be paid in a single lump sum in accordance with Section 6.040, Section 6.050 or Article VIII, as applicable, to the extent that such death or Disability occurs prior to January 1 of the calendar year in which such installments are due.

(e) Notwithstanding the foregoing, a Participant may elect two Short Term Payouts (which have not yet begun to be paid out) at any time.

5.020Changes to Short-Term Payout Methods. A Participant may change any election he has previously made pursuant to Section 5.010, but; provided, however, that any such change must:

(a) not result in the acceleration of payments;

(b) not be effective for 12 months after such change is made;

(c) result in the deferral of payments with respect to which the election is changed for a period of at least 5 years (e.g., change from lump sum to installments commencing 5 years from the date previously elected);

(d) not be made less than 12 months prior to the first scheduled payment.

5.030Withdrawal for Unforeseeable Financial Emergencies. In the event that any Participant should encounter an Unforeseeable Financial Emergency, such Participant may petition the Administrative Committee or its delegate to permit him to receive a partial or full payout from the Plan in a manner consistent with Code Section 409A. Such a payout will not exceed the lesser

of --

(a) the Participant's Account Balance, calculated as if the Participant were receiving a Termination Benefit, or

(b) the amount reasonably needed to satisfy the Unforeseeable Financial Emergency (which may include amounts necessary to pay any Federal, state or local income taxes or penalties reasonably anticipated to result from the distribution).

If, subject to the sole discretion of the Administrative Committee or its delegate, the petition for a payout is approved, such payout will be made within sixty (60) days of the date of approval and the Participant’s deferrals under the Plan shall be terminated as of the date of such approval.

In addition, a Participant’s deferral elections under this Plan shall be terminated to the extent the Company determines, in its sole discretion, that termination of such Participant’s deferral elections is required pursuant to Treas. Reg. §1.401(k)-1(d)(3) for the Participant to obtain a hardship distribution from an Employer’s 401(k) Plan. If the Company determines, in its sole discretion, that a termination of the Participant’s deferrals is required in accordance with the preceding sentence,

As Amended and Restated November 1, 2014            

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the Participant’s deferrals shall be terminated following the date on which such determination is made.

5.040Inclusion in Income Under Section 409A. Notwithstanding any other provision of this Plan, in the event this Plan fails to satisfy the requirements of Code Section 409A and regulations thereunder with respect to any Participant, there shall be distributed to such Participant the Participant’s Account Balance hereunder as promptly as possible after the Administrative Committee becomes aware of such fact of noncompliance.

5.050Corporate Event Distribution. Notwithstanding any other provision of this Plan, if a Corporate Event occurs, each Participant's Account Balance hereunder shall be distributed to such Participant in a lump sum 10 days after such Corporate Event.

ARTICLE VI: RETIREMENT BENEFITS

6.010Retirement Benefit. A Participant who Retires will receive, as a Retirement Benefit, his Account Balance.

6.020Payment of Retirement Benefit. A Participant may elect in his Deferral Election Form to receive the Retirement Benefit in a lump sum or pursuant to an Annual Installment Method of periods of from two (2) through ten (10) years. Subject to the provisions of Section 6.030, a Participant may change any election he has previously made to a different payout period permitted hereunder, but only one such a change may be made with respect to any single election. Such change will be accomplished by the Participant submitting notice of such change to the Administrative Committee or its delegate in the form prescribed by the to the Administrative Committee (including in electronic form), but such change will not be valid, unless it has been submitted by the Participant and accepted by the Administrative Committee or its delegate (in the Administrative Committee’s or delegate’s discretion) at least six (6) months prior to the Participant's Retirement and such change satisfies the requirements of Section 6.030. The Deferral Agreement most recently accepted by the Administrative Committee or its delegate shall govern the payout of the Retirement Benefit. If a Participant does not make any election with respect to the payment of the Retirement Benefit, then such benefit shall be payable in a lump sum. The Account(s) of a Participant receiving payments pursuant to the Annual Installment Method shall continue to have his Account(s) credited with earnings and losses pursuant to Section 4.020.

A lump sum payment of amounts deferred and credited hereunder shall be paid, and installment payments herefrom shall begin, on the six (6) month anniversary of the date the Participant Retires.

6.030Changes to Retirement Benefit Payment Methods.

A Participant may change any election he has previously made pursuant to Section 6.020, but; provided, however, that any such change must:

(a) not result in the acceleration of payments;

(b) not be effective for 12 months after such change is made;

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(c) result in the deferral of payments with respect to which the election is changed for a period of at least 5 years (e.g., change from lump sum to installments commencing 5 years from the six (6) month anniversary of the participant’s termination date);

(d) not be made less than 12 months prior to the first scheduled payment.

6.040Death Prior to Completion of Retirement Benefit. If a Participant dies after Retirement or Termination of Employment but before the Retirement Benefit or Termination Benefit is paid in full, the Participant's unpaid Retirement Benefit payments shall be paid to the Participant's Beneficiary in a lump sum within 60 days of the Participant's death.

6.050Death Prior to Retirement. If a Participant dies while still employed with the Company and prior to Retirement or Termination of Employment, the Participant's benefits shall be paid to the Participant's Beneficiary in a lump sum within sixty (60) days of the Participant’s death.

6.060Small Accounts. Notwithstanding any other provision herein to the contrary, if the aggregate total of a Participant’s Account Balance along with the value of such Participant’s account balance or benefits under any other plan of the Company with which this Plan is required to be aggregated with under Section 409A of the Code as of such Participant’s Retirement date does not exceed the dollar amount of the deferral limit then in effect under Section 402(g) of the Code, the Participant’s Retirement Benefit shall be paid in a lump sum. A lump sum payment shall be paid on the six (6) month anniversary of the date the Participant Retires.

ARTICLE VII: TERMINATION BENEFIT

7.010Termination Benefit. The Participant will receive a Termination Benefit, which will be equal to the Participant's Account Balance if a Participant experiences a Termination of Employment prior to his Retirement, death or Disability.

7.020Payment of Termination Benefit. The form of payment of a Participant’s Account Balance, if such payment is due to the Participant’s Termination of Employment, will in all cases be a lump sum. A lump sum payment of amounts deferred or credited hereunder shall be paid on the six (6) month anniversary of the date the Participant’s Termination of Employment.

ARTICLE VIII: DISABILITY WAIVER AND BENEFIT

8.010Continued Eligibility; Disability Benefit. A Participant suffering a Disability will receive a Disability Benefit equal to his Account Balance at the time of the Disability determination; provided, however, that this Section 8.010 shall not apply should the Participant otherwise have been eligible to Retire at the time of the Disability determination. The Disability Benefit will be paid in a lump sum within sixty (60) days of the Disability determination.

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ARTICLE IX: BENEFICIARY DESIGNATION

9.010Beneficiary. Each Participant will have the right, at any time, to designate his Beneficiary or Beneficiaries (both primary and contingent) to receive any benefits payable under the Plan to a beneficiary upon the death of a Participant. The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other plan of an Employer in which the Participant participates.

9.020Beneficiary Designation or Change of Designation. A Participant will be permitted to designate his Beneficiary by completing and signing the Beneficiary Designation Form. A Participant will have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form. Upon the acceptance of a new Beneficiary Designation Form, all Beneficiary designations previously filed will be canceled.

9.030Spousal Consent Required. If a Participant names someone other than his spouse as a Beneficiary, a spousal consent, in the form designated by the Company or its delegate, must be signed by that Participant's spouse and returned to the Company or its delegate.

9.040Acknowledgment. No designation or change in designation of a Beneficiary will be effective until received by the Company or its delegate.

9.050Absence of Valid Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided in the preceding Sections or, if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then the Participant's designated Beneficiary will be deemed to be his surviving spouse. If the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary will be payable to the executor or personal representative of the Participant's estate.

9.060Doubt as to Beneficiary. If the Company or its delegate has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Company or its delegate will have the right, exercisable in its discretion, to withhold such payments until this matter is resolved to the Company's or the delegate’s satisfaction.

9.070Discharge of Obligations. The payment of benefits under the Plan to a Beneficiary will fully and completely discharge the Company and all of its Affiliates and the Administrative Committee from all further obligations under this Plan with respect to the Participant, and that Participant's participation in this Plan will terminate upon such full payment of benefits.

ARTICLE X: LEAVE OF ABSENCE

10.010Paid Leave of Absence. If a Participant is authorized by the Company or the Affiliate employing the Participant for any reason to take a paid leave of absence, the Participant will continue to be considered to be an Employee and the Annual Deferral Amount will continue to be withheld during such paid leave of absence.

10.020Unpaid Leave of Absence. If a Participant is authorized by the Company or the Affiliate employing the Participant to take an unpaid leave of absence, the Participant will be excused from

As Amended and Restated November 1, 2014            

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making deferrals until the earlier of the date the leave of absence expires or the Participant returns to a paid employment status. Upon such expiration or return, deferrals will resume for the remaining portion of the Plan Year in which the expiration or return occurs, based on the Deferral Election, if any, made for that Plan Year. If no Deferral Election was made for that Plan Year, no deferral will be withheld.

ARTICLE XI: TERMINATION, AMENDMENT OR MODIFICATION

11.010Termination. Although the Company and each Affiliate anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that the Company or any such Affiliate will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, the Company reserves the right to discontinue sponsorship of the Plan and/or to terminate the Plan at any time with respect to any or all of its participating Employees, by action of the Company.

If this Plan is terminated, no additional deferrals or contributions shall be credited to any Participant Account hereunder. Following Plan termination, Participants’ Accounts shall be paid at such time and in such form as provided under the Plan. Notwithstanding the preceding sentence, either at the time of termination or on a subsequent date the Company may, in its discretion, determine to distribute the then existing Account Balances of Participants and Beneficiaries and, following such distribution, there shall be no further obligation to any Participant or Beneficiary under this Plan; provided, however, that the authority granted to the Company under this sentence shall be implemented only to the extent permissible under Code Section 409A and regulations and other guidance issued by the Internal Revenue Service interpreting the provisions of that Section.

11.020Amendment. The Company may, at any time, amend or modify the Plan in whole or in part by action of the Administrative Committee; provided, however, that:

(a) no amendment or modification shall be effective to decrease or restrict the value of a Participant's Account Balance in existence at the time the amendment or modification is made, calculated as if the Participant had experienced a Termination of Employment as of the effective date of the amendment or modification or, if the amendment or modification occurs after the date upon which the Participant was eligible to Retire, the Participant had Retired as of the effective date of the amendment or modification; and

(b) the amendment or modification of the Plan shall not affect any Participant or Beneficiary who has become entitled to the payment of benefits under the Plan as of the date of the amendment or modification.

Notwithstanding the foregoing, the Administrative Committee may make any amendment it deems necessary or desirable for purposes of compliance with the requirements of Code Section 409A and regulations thereunder.

11.030Effect of Payment. The full payment of all applicable benefits hereunder shall completely discharge all obligations to a Participant and his Beneficiaries under this Plan.

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ARTICLE XII: ADMINISTRATION

12.010Administrative Committee Duties. Except as otherwise provided in this Article, this Plan will be administered by the Administrative Committee and its delegates. Members of the Administrative Committee may be Participants under this Plan. The Administrative Committee will also have the discretion and authority to:

(a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan, and

(b) decide or resolve any and all questions including interpretations of this Plan, as may arise in connection with the Plan.

Any individual serving on the Administrative Committee who is a Participant will not be permitted to vote or act on any matter relating solely to himself or herself. When making a determination or calculation, the Administrative Committee will be entitled to rely on information furnished by a Participant or the Company.

12.020Agents. In the administration of this Plan, the Administrative Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to any Employer.

12.040Binding Effect of Decisions. The decision or action of the Administrative Committee or its delegate with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder will be final and conclusive and binding upon all persons having any interest in the Plan.

12.050Indemnity of Administrative Committee. The Company and its Affiliates shall indemnify and hold harmless the members of the Administrative Committee, any Employee to whom the duties of the Administrative Committee may be delegated, and the Administrative Committee or its delegate against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Administrative Committee, any of its members, or such Employee.

12.060Employer Information. To enable the Administrative Committee and its delegates to perform their functions, the Company will supply full and timely information to the Administrative Committee and delegates on all matters relating to the compensation of its Participants, the date and circumstances of the Retirement, Disability, death or circumstances of the Retirement, Disability, death or Termination of Employment of its Participants, and such other pertinent information as the Administrative Committee or its delegate may reasonably require.

ARTICLE XIII: OTHER BENEFITS AND AGREEMENTS

13.010Coordination with Other Benefits. The benefits provided for a Participant and Participant's Beneficiary under the Plan are in addition to any other benefits available to such Participant under

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any other plan or program for employees of the Company and its Affiliates. The Plan will supplement and will not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

ARTICLE XIV: CLAIMS PROCEDURE

14.010Presentation of Claim. Any Participant or Beneficiary of a deceased Participant (such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Administrative Committee or its delegate a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days after such notice was received by the Claimant. All other claims must be made within one hundred and eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant. Claims should be submitted to: Administrative Committee, Apollo Education Group, Inc. Deferred Compensation Plan, c/o Apollo Education Group, Inc., 4025 South Riverpoint Pkwy., Phoenix, AZ 85040.

14.020Notification of Decision. The Administrative Committee or its delegate will consider a Claimant's claim within a reasonable time, and will notify the Claimant in writing:

(a) that the Claimant's requested determination has been made, and that the claim has been allowed in full; or

(b) that the Administrative Committee or its delegate has reached a conclusion contrary, in whole or in part, to the Claimant's requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant;

(c) the specific reason(s) for the denial of the claim, or any part of it;

(1) specific reference(s) to pertinent provisions of the Plan upon which such denial was based;

(2) a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and

(3) an explanation of the claim review procedure set forth in Section 14.030 below.

14.030Review of a Denied Claim. Within sixty (60) days after receiving a notice from the Administrative Committee or its delegate that a claim has been denied, in whole or in part, a Claimant (or the Claimant's duly authorized representative) may file with the Administrative Committee or its delegate a written request for a review of the denial of the claim. Thereafter, but not later than thirty (30) days after the review procedure began, the Claimant (or the Claimant's duly authorized representative):

(a) may review pertinent documents;

As Amended and Restated November 1, 2014            

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(b) may submit written comments or other documents; and/or

(c) may request a hearing, which the Administrative Committee or its delegate, in its sole discretion, may grant.

14.040Decision on Review. The Administrative Committee or its delegate will render any decision on review promptly, and not later than 60 days after the filing of a written request for review of the denial, unless a hearing is held or other special circumstances require additional time, in which case the Administrative Committee's or its delegate’s decision must be rendered within one hundred and twenty (120) days after such date. Such decision must be written in a manner calculated to be understood by the Claimant, and it must contain:

(a) specific reasons for the decision;

(b) specific reference(s) to the pertinent Plan provisions upon which the decision was based; and

(c) such other matters as the Administrative Committee or its delegate deems relevant.

14.050Legal Action. A Claimant's compliance with the foregoing provisions of this Article 14 is a mandatory prerequisite to a Claimant's right to commence any legal action with respect to any claim for benefits under this Plan.

ARTICLE XV: TRUST

15.010Establishment of the Trust. The Company shall establish a Trust (which may be referred to herein as a “Rabbi Trust”). The Trust shall be irrevocable and shall remain irrevocable with respect to the Plan until all benefits due under this Plan and benefits and account balances due to participants and beneficiaries under any other plan covered by the Trust have been paid in full.

15.020Interrelationship of the Plan and the Trust. The provisions of the Plan and each Participant’s Deferral Election Forms will govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust will govern the rights of the Company and its Affiliates, Participants and the creditors of the Company and its Affiliates to the assets transferred to the Trust. The Company and each of its Affiliates employing any Participant will at all times remain liable to carry out their obligations under the Plan.

15.030Distributions From the Trust. The Company’s and each of its Affiliate's obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution will reduce their obligations under this Plan.

15.040Rabbi Trust. The Rabbi Trust shall:

(a) be a non-qualified grantor trust which satisfies in all material respects the requirement of Revenue Procedure 92-64, 1992-2 CB 122 (or any successor Revenue Procedure or other applicable authority);

As Amended and Restated November 1, 2014            

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(b) provide that any successor trustee shall be a bank trust department or other party that may be granted corporate trustee powers under state law.

ARTICLE XVI: MISCELLANEOUS

16.010Status of Plan. The Plan is intended to be a plan that is not qualified within the meaning of Code §401(a) and that “is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employee” within the meaning of ERISA §§201(2), 301(a)(3) and 401(a)(1). The Plan will be administered and interpreted to the extent possible in a manner consistent with that intent.

16.020Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of the Company or its Affiliates. For purposes of the payment of benefits under this Plan, any and all of the Company’s or Affiliate’s assets shall be, and remain, the general, unpledged unrestricted assets of the Company or Affiliate. The Company or Affiliate’s obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.

16.030Company Liability. The Company’s or an Affiliate's liability for the payment of benefits will be defined only by the Plan. The Company and its Affiliates will have no obligation to a Participant under the Plan, except as expressly provided in the Plan.

16.040Nonassignability. Neither a Participant nor any other person will have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable will, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.

16.050Not a Contract of Employment. The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Company or any of its Affiliates and the Participant. Such employment is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided in a written employment agreement. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of any the Company or an Affiliate or to interfere with the right of the Company or an Affiliate to discipline or discharge the Participant at any time.

16.060Furnishing Information. A Participant or his Beneficiary will cooperate with the Administrative Committee or its delegate by furnishing any and all information requested by the Administrative Committee or its delegate and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder, including but

As Amended and Restated November 1, 2014            

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not limited to taking such physical examinations as the Administrative Committee or its delegate may deem necessary.

16.070Terms. Whenever any words are used herein in the masculine, they should be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they should be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.

16.080Captions. The captions of the articles, sections and paragraphs of this Plan are for convenience only and do not control or affect the meaning or construction of any of its provisions.

16.090Governing Law. Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the laws of the State of Arizona.

16.100Successors. The provisions of this Plan shall bind and inure to the benefit of the Company and its successors and assigns and the Participant and the Participant's designated Beneficiaries.

16.110Spouse's Interest. The interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant will automatically pass to the Participant and will not be transferable by such spouse in any manner, including but not limited to such spouse's will, nor will such interest pass under the laws of intestate succession.

16.120Validity. In case any provision of this Plan should be found to be illegal or invalid for any reason, said illegality or invalidity will not affect the remaining parts hereof, but this Plan should be construed and enforced as if such illegal or invalid provision had never been inserted herein.

16.130Minors, Incompetent Persons, etc. If the Administrative Committee or its delegate determines that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling the disposition of that person's property, the Administrative Committee or its delegate may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Administrative Committee or its delegate may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Participant and the Participant's Beneficiary, as the case may be, and will be a complete discharge of any liability under the Plan for such payment amount.

16.140Court Order. The Administrative Committee or its delegate is authorized to make any payments directed by court order in any action in which the Plan or the Administrative Committee has been named as a party. In addition, if a court determines that a spouse or former spouse of a Participant has an interest in the Participant’s benefits under the Plan in connection with a property settlement or otherwise, the Administrative Committee or its delegate, in its sole discretion, will have the right, notwithstanding any election made by a Participant, to distribute the spouse's or former spouse's interest in the Participant’s benefits under the Plan to that spouse or former spouse.

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16.150Insurance. The Company, on its own behalf or on behalf of the trustee of the Trust, and, in its discretion, may apply for and procure insurance on the life of the Participant, in such amounts and in such forms as the Trust may choose. The Company or the trustee of the Trust, as the case may be, will be the sole owner and beneficiary of any such insurance. The Participant will have no interest whatsoever in any such policy or policies, and at the request of the Company will submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to which the Company has applied for insurance.

16.160Requirement for Release. Any payment to any Participant or a Participant's present, future or former spouse or Beneficiary in accordance with the provisions of this Plan will, to the extent thereof, be in full satisfaction of all claims against the Plan, the Trustee and the Company, and the Trustee may require such Participant or Beneficiary, as a condition precedent to such payment to execute a receipt and release to such effect. Any such release, if required, must become effective prior to time payment is scheduled to commence under the terms of this Plan and any applicable Deferral Election.

APOLLO EDUCATION GROUP, INC.

By:	/s/ Fred Newton	November 5, 2014
	Fred Newton	Date
	Senior Vice President - Human Resources

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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: March 25, 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: March 25, 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 February 28, 2015, 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: March 25, 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 February 28, 2015, 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: March 25, 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.

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Discontinued Operations (Details) (USD $)	3 Months Ended		6 Months Ended		3 Months Ended
	Feb. 28, 2015	Feb. 28, 2014	Feb. 28, 2015	Feb. 28, 2014	Aug. 31, 2014
Discontinued Operations [Line Items]
Loss from discontinued operations, net of tax	$ 0	$ (1,972,000)	$ 0	$ (2,363,000)
Institute for Professional Development [Member]
Discontinued Operations [Line Items]
Proceeds from disposition					4,000,000
Net revenue		6,304,000		14,491,000
Costs and expenses		(9,470,000)		(18,224,000)
Loss from discontinued operations before income taxes		(3,166,000)		(3,733,000)
Benefit from income taxes		1,194,000		1,370,000
Loss from discontinued operations, net of tax		$ (1,972,000)		$ (2,363,000)

XML

Segment Reporting (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Feb. 28, 2015	Feb. 28, 2014	Feb. 28, 2015	Feb. 28, 2014	Aug. 31, 2014
Segment reporting [Line Items]
Net revenue	$ 578,572	$ 672,754	$ 1,297,624	$ 1,520,902
Operating (loss) income	(54,526)	10,296	5,968	180,657
Interest income	740	599	1,329	1,167
Interest expense	(1,739)	(1,983)	(3,401)	(4,069)
Other (loss) income, net	(1,146)	107	(2,431)	914
(Loss) income from continuing operations before income taxes	(56,671)	9,019	1,465	178,669
Acquisition and other related costs	1,742	13,005	4,961	13,005
Litigation charges	100	9,000	100	9,000
Total assets	2,405,941		2,405,941		3,092,935
University Of Phoenix [Member]
Segment reporting [Line Items]
Net revenue	487,769	594,081	1,080,622	1,338,944
Operating (loss) income	1,350	86,682	94,861	270,155
Total assets	769,666		769,666		824,895
Apollo Global [Member]
Segment reporting [Line Items]
Net revenue	81,100	68,634	196,240	159,793
Operating (loss) income	(27,541)	(40,004)	(32,383)	(37,787)
Acquisition and other related costs	1,000	13,000	2,700	13,000
Total assets	671,914		671,914		680,363
Other [Member]
Segment reporting [Line Items]
Net revenue	9,703	10,039	20,762	22,165
Operating (loss) income	(28,335)	(36,382)	(56,510)	(51,711)
Acquisition and other related costs	700		2,300
Litigation charges		9,000		9,000
Total assets	$ 964,361		$ 964,361		$ 1,587,677

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Shareholders' Equity and Redeemable Noncontrolling Interests (Details) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Feb. 28, 2015	Feb. 28, 2014	Feb. 28, 2015	Feb. 28, 2014
Share Repurchases [Line Items]
Accrued share repurchase	$ 1,600,000		$ 1,600,000
Treasury stock purchases, cost			40,318,000	72,237,000
Apollo Class A nonvoting common stock [Member]
Share Repurchases [Line Items]
Stock repurchase program, remaining authorized repurchased amount	52,200,000		52,200,000
Aggregate share repurchase program	250,000,000		250,000,000
Treasury stock reissued, shares	55	110	282	391
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)	763	1,713	1,440	2,290
Treasury stock purchases, average price per share	$ 26.22	31.93	$ 26.45	$ 30.44
Treasury stock purchases, cost	20,000,000	54,684,000	38,092,000	69,684,000
Apollo Class A nonvoting common stock [Member] | Repurchases Related To Restricted Stock Units [Member]
Share Repurchases [Line Items]
Share repurchases (in shares)	9	25	87	113
Treasury stock purchases, cost	$ 254,000	682,000	$ 2,226,000	$ 2,553,000

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Accrued and Other Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Feb. 28, 2015	Aug. 31, 2014
Salaries, wages and benefits	$ 81,995	$ 125,165
Student refunds, grants and scholarships	43,400	20,072
Restructuring obligations	43,146	43,339
Accrued legal and other professional obligations	35,604	33,651
Accrued advertising	29,558	33,853
Deferred rent and other lease liabilities	12,982	12,384
Curriculum materials	10,904	12,069
Contingent consideration	0
Other	50,592	47,835
Total accrued and other current liabilities	308,181	363,607
Other Long-Term Liabilities [Abstract]
Deferred revenue	58,737	51,831
Restructuring obligations	51,159	59,744
Deferred rent and other lease liabilities	53,516	57,788
Deferred gains on sale-leasebacks	20,905	21,641
Uncertain tax positions	7,187	9,770
Other	34,380	33,168
Total other long-term liabilities	225,884	233,942
Open Colleges [Member] | Current Portion [Member]
Contingent consideration		$ 35,239

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Debt (Tables)

6 Months Ended

Feb. 28, 2015

Debt Disclosure [Abstract]

Debt

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

($ in thousands)	February 28, 2015			August 31, 2014
Revolving Credit Facility	$	—		$	585,000
Capital lease obligations	22,707			32,806
Other	38,114			39,290
Total debt	60,821			657,096
Less short-term borrowings and current portion of long-term debt	(15,664		)	(609,506		)
Long-term debt	$	45,157		$	47,590

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Restructuring and Impairment Charges (Tables)

6 Months Ended

Feb. 28, 2015

Restructuring and Related Activities [Abstract]

Restructuring and impairment charges

Restructuring and impairment charges includes the following for the respective periods:

	Three Months Ended February 28,				Six Months Ended February 28,
($ in thousands)	2015		2014		2015		2014
Restructuring charges	$	16,587	$	15,209	$	35,615	$	47,172
Intangibles impairment	12,999		—		12,999		—
Property and equipment impairment	5,950		—		5,950		—
Restructuring and impairment charges	$	35,536	$	15,209	$	54,564	$	47,172

Changes in restructuring liabilities

The following details the changes in our restructuring liabilities during the six months ended February 28, 2015:

	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	—		90,131			3,545			167			3,150			1,160			98,153
Expense	—		12,014			3,860			426			—			287			16,587
Other	—		(2,530		)	(635		)	—			—			—			(3,165		)
Payments	—		(13,290		)	(2,801		)	(475		)	—			(704		)	(17,270		)
February 28, 2015(2)	$	—	$	86,325		$	3,969		$	118		$	3,150		$	743		$	94,305

⁽¹⁾ We have incurred $367 million of cumulative costs associated with prior year restructuring as of February 28, 2015, which includes lease exit, employee separation, and other related costs of $241 million, $84 million and $42 million, respectively. These cumulative costs have been reflected in our segment reporting as follows: $285 million in University of Phoenix, $18 million in Apollo Global, and $64 million in Other.

⁽²⁾ The gross, undiscounted obligation associated with our restructuring liabilities as of February 28, 2015 was approximately $167 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 (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Feb. 28, 2015	Feb. 28, 2014	Feb. 28, 2015	Feb. 28, 2014
Share-based compensation expense [Line Items]
Share-based compensation expense	$ 11,203	$ 10,537	$ 21,914	$ 22,510
Instructional and student advisory [Member]
Share-based compensation expense [Line Items]
Share-based compensation expense	2,905	3,280	5,887	6,813
Marketing [Member]
Share-based compensation expense [Line Items]
Share-based compensation expense	783	937	1,619	2,045
Admissions advisory [Member]
Share-based compensation expense [Line Items]
Share-based compensation expense	256	212	517	314
General and administrative [Member]
Share-based compensation expense [Line Items]
Share-based compensation expense	6,624	5,644	12,504	11,012
Restructuring and other charges [Member]
Share-based compensation expense [Line Items]
Share-based compensation expense	$ 635	$ 464	$ 1,387	$ 2,326

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Accounts Receivable, Net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Feb. 28, 2015	Feb. 28, 2014	Feb. 28, 2015	Feb. 28, 2014	Aug. 31, 2014
Accounts receivable, net [Abstract]
Student accounts receivable	$ 274,295		$ 274,295		$ 255,134
Less allowance for doubtful accounts	(49,891)	(53,038)	(49,891)	(53,038)
Net student accounts receivable	224,404		224,404		204,989
Other receivables	11,049		11,049		20,409
Total accounts receivable, net	235,453		235,453		225,398
Allowance for doubtful accounts [Abstract]
Allowance for doubtful accounts	52,682	55,895	50,145	59,744
Provision for uncollectible accounts receivable	11,969	11,534	29,367	25,512
Write-offs, net of recoveries	(14,760)	(14,391)	(29,621)	(32,218)
Allowance for doubtful accounts	$ 49,891	$ 53,038	$ 49,891	$ 53,038

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Segment Reporting (Tables)

6 Months Ended

Feb. 28, 2015

Segment Reporting [Abstract]

Segment reporting information

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

	Three Months Ended February 28,						Six Months Ended February 28,
($ in thousands)	2015			2014			2015			2014
Net revenue:
University of Phoenix	$	487,769		$	594,081		$	1,080,622		$	1,338,944
Apollo Global	81,100			68,634			196,240			159,793
Other	9,703			10,039			20,762			22,165
Net revenue	$	578,572		$	672,754		$	1,297,624		$	1,520,902
Operating (loss) income(1):
University of Phoenix	$	1,350		$	86,682		$	94,861		$	270,155
Apollo Global(2)	(27,541		)	(40,004		)	(32,383		)	(37,787		)
Other(3)	(28,335		)	(36,382		)	(56,510		)	(51,711		)
Operating (loss) income	(54,526		)	10,296			5,968			180,657
Reconciling items:
Interest income	740			599			1,329			1,167
Interest expense	(1,739		)	(1,983		)	(3,401		)	(4,069		)
Other (loss) income, net	(1,146		)	107			(2,431		)	914
(Loss) income from continuing operations before income taxes	$	(56,671	)	$	9,019		$	1,465		$	178,669

⁽¹⁾ University of Phoenix, Apollo Global and Other include restructuring and impairment charges during the periods. Refer to Note 2, Restructuring and Impairment Charges.

⁽²⁾ During the three and six months ended February 28, 2015, Apollo Global incurred $1.0 million and $2.7 million of acquisition and other related costs, respectively. The operating loss for Apollo Global in the three and six months ended February 28, 2014 includes $13.0 million of acquisition and other related costs.

⁽³⁾ The operating loss for Other in the three and six months ended February 28, 2015 includes $0.7 million and $2.3 million of acquisition and other related costs, respectively. The operating loss for Other in the three and six months ended February 28, 2014 includes $9.0 million of charges associated with our legal matters.

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

($ in thousands)	February 28, 2015		August 31, 2014
University of Phoenix	$	769,666	$	824,895
Apollo Global	671,914		680,363
Other(1)	964,361		1,587,677
Total assets	$	2,405,941	$	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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Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	Feb. 28, 2015	Aug. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
Outstanding surety bonds	$ 34
Letters of credit outstanding	$ 44	$ 24

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Debt (Details) (USD $)	3 Months Ended	6 Months Ended
	Nov. 30, 2014	Feb. 28, 2015	Aug. 31, 2014
Debt [Line Items]
Total debt		$ 60,821,000	$ 657,096,000
Less short-term borrowings and current portion of long-term debt		(15,664,000)	(609,506,000)
Long-term debt		45,157,000	47,590,000
Letters of credit outstanding		44,000,000	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		22,707,000	32,806,000
Notes Payable, Other Payables [Member]
Debt [Line Items]
Total debt		$ 38,114,000	$ 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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Discontinued Operations

6 Months Ended

Feb. 28, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

During 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 Operations. We determined that 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 and six months ended February 28, 2014, which are presented in loss from discontinued operations, net of tax on our Condensed Consolidated Statements of Operations:

($ in thousands)	Three Months Ended February 28, 2014			Six Months Ended February 28, 2014
Net revenue	$	6,304		$	14,491
Costs and expenses	(9,470		)	(18,224		)
Loss from discontinued operations before income taxes	(3,166		)	(3,733		)
Benefit from income taxes	1,194			1,370
Loss from discontinued operations, net of tax	$	(1,972	)	$	(2,363	)

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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Goodwill and Intangibles (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Feb. 28, 2015	Aug. 31, 2014
Goodwill [Line Items]
Goodwill beginning balance	$ 259,901
Acquisitions	14,538
Currency translation adjustment	(25,807)
Goodwill ending balance	248,632
Intangible assets, net	167,768	189,365
Future intangible amortization [Abstract]
Remainder of 2015	7,006
2016	11,255
2017	10,214
2018	7,543
2019	3,135
2020	1,609
Thereafter	5,452
Total estimated amortization expense	46,214
University Of Phoenix [Member]
Goodwill [Line Items]
Goodwill beginning balance	71,812
Acquisitions	0
Currency translation adjustment	0
Goodwill ending balance	71,812
Apollo Global [Member]
Goodwill [Line Items]
Goodwill beginning balance	171,198
Acquisitions	14,538
Currency translation adjustment	(25,807)
Goodwill ending balance	159,929
Other [Member]
Goodwill [Line Items]
Goodwill beginning balance	16,891
Acquisitions	0
Currency translation adjustment	0
Goodwill ending balance	$ 16,891

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Accounts Receivable, Net (Tables)

6 Months Ended

Feb. 28, 2015

Receivables [Abstract]

Accounts receivable, net

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

($ in thousands)	February 28, 2015			August 31, 2014
Student accounts receivable	$	274,295		$	255,134
Less allowance for doubtful accounts	(49,891		)	(50,145		)
Net student accounts receivable	224,404			204,989
Other receivables	11,049			20,409
Total accounts receivable, net	$	235,453		$	225,398

Allowance for doubtful accounts

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

	Three Months Ended February 28,						Six Months Ended February 28,
($ in thousands)	2015			2014			2015			2014
Beginning allowance for doubtful accounts	$	52,682		$	55,895		$	50,145		$	59,744
Provision for uncollectible accounts receivable	11,969			11,534			29,367			25,512
Write-offs, net of recoveries	(14,760		)	(14,391		)	(29,621		)	(32,218		)
Ending allowance for doubtful accounts	$	49,891		$	53,038		$	49,891		$	53,038

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Financial Instruments (Tables)

6 Months Ended

Feb. 28, 2015

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:

	February 28, 2015
($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents(1)		Current Marketable Securities		Noncurrent Marketable Securities
Cash	$	657,122	$	—	$	—		$	657,122	$	657,122	$	—	$	—
Level 1:
Money market funds	108,666		—		—			108,666		108,666		—		—
Level 2:
Corporate bonds	128,979		62		(180		)	128,861		—		80,069		48,792
Tax-exempt municipal bonds	76,244		79		(199		)	76,124		202		63,479		12,443
Time deposits	50,180		—		—			50,180		25,075		25,105		—
Other	39,001		8		(56		)	38,953		—		25,092		13,861
Total	$	1,060,192	$	149	$	(435	)	$	1,059,906	$	791,065	$	193,745	$	75,096

	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(2)	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.

⁽²⁾ Auction-rate securities were redeemed at par value during the second quarter of fiscal year 2015.

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Goodwill and Intangibles (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended
	Feb. 28, 2014	Feb. 28, 2014	Feb. 28, 2015	Feb. 28, 2015	Aug. 31, 2014
Intangible Assets [Line Items]
Gross carrying amount			$ 213,699	$ 213,699	$ 250,798
Accumulated amortization			(28,643)	(28,643)	(62,026)
Intangible Assets Translation Adjustments			(17,288)	(17,288)	593
Intangible assets, net			167,768	167,768	189,365
Intangibles impairment	0	0
Software and technology [Member] | University Of Phoenix [Member]
Intangible Assets [Line Items]
Intangibles impairment			12,999	12,999
Finite-Lived Intangible Assets [Member]
Intangible Assets [Line Items]
Gross carrying amount			83,492	83,492	135,754
Accumulated amortization			(28,643)	(28,643)	(62,026)
Intangible Assets Translation Adjustments			(8,635)	(8,635)	961
Intangible assets, net			46,214	46,214	74,689
Finite-Lived Intangible Assets [Member] | Accreditations and designations [Member]
Intangible Assets [Line Items]
Gross carrying amount			21,628	21,628	21,628
Accumulated amortization			(5,094)	(5,094)	(3,015)
Intangible Assets Translation Adjustments			(1,910)	(1,910)	1,000
Intangible assets, net			14,624	14,624	19,613
Finite-Lived Intangible Assets [Member] | Trademarks [Member]
Intangible Assets [Line Items]
Gross carrying amount			17,919	17,919	17,919
Accumulated amortization			(2,093)	(2,093)	(1,238)
Intangible Assets Translation Adjustments			(1,771)	(1,771)	907
Intangible assets, net			14,055	14,055	17,588
Finite-Lived Intangible Assets [Member] | Curriculum [Member]
Intangible Assets [Line Items]
Gross carrying amount			18,205	18,205	16,993
Accumulated amortization			(5,172)	(5,172)	(2,933)
Intangible Assets Translation Adjustments			(1,398)	(1,398)	826
Intangible assets, net			11,635	11,635	14,886
Finite-Lived Intangible Assets [Member] | Student and customer relationships [Member]
Intangible Assets [Line Items]
Gross carrying amount			14,437	14,437	15,934
Accumulated amortization			(10,365)	(10,365)	(9,780)
Intangible Assets Translation Adjustments			(1,578)	(1,578)	(1,161)
Intangible assets, net			2,494	2,494	4,993
Finite-Lived Intangible Assets [Member] | Software and technology [Member]
Intangible Assets [Line Items]
Gross carrying amount			0	0	42,389
Accumulated amortization			0	0	(25,151)
Intangible Assets Translation Adjustments			0	0	0
Intangible assets, net			0	0	17,238
Finite-Lived Intangible Assets [Member] | Other [Member]
Intangible Assets [Line Items]
Gross carrying amount			11,303	11,303	20,891
Accumulated amortization			(5,919)	(5,919)	(19,909)
Intangible Assets Translation Adjustments			(1,978)	(1,978)	(611)
Intangible assets, net			3,406	3,406	371
Indefinite-lived Intangible Assets [Member]
Intangible Assets [Line Items]
Gross carrying amount			130,207	130,207	115,044
Accumulated amortization			0	0	0
Intangible Assets Translation Adjustments			(8,653)	(8,653)	(368)
Intangible assets, net			121,554	121,554	114,676
Indefinite-lived Intangible Assets [Member] | Accreditations and designations [Member]
Intangible Assets [Line Items]
Gross carrying amount			14,470	14,470	8,530
Accumulated amortization			0	0	0
Intangible Assets Translation Adjustments			(1,464)	(1,464)	(300)
Intangible assets, net			13,006	13,006	8,230
Indefinite-lived Intangible Assets [Member] | Trademarks [Member]
Intangible Assets [Line Items]
Gross carrying amount			115,737	115,737	106,514
Accumulated amortization			0	0	0
Intangible Assets Translation Adjustments			(7,189)	(7,189)	(68)
Intangible assets, net			$ 108,548	$ 108,548	$ 106,446

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Goodwill and Intangibles (Tables)

6 Months Ended

Feb. 28, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in goodwill and goodwill carrying value

The following details changes in our goodwill by reportable segment during the six months ended February 28, 2015:

($ in thousands)	University of Phoenix		Apollo Global			Other		Total
Goodwill as of August 31, 2014	$	71,812	$	171,198		$	16,891	$	259,901
FAEL acquisition	—		14,538			—		14,538
Currency translation adjustment	—		(25,807		)	—		(25,807		)
Goodwill as of February 28, 2015	$	71,812	$	159,929		$	16,891	$	248,632

Intangible assets

Intangibles consist of the following as of the respective periods:

	February 28, 2015										August 31, 2014
($ in thousands)	Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation			Net Carrying Amount
Accreditations and designations	$	21,628	$	(5,094	)	$	(1,910	)	$	14,624	$	21,628	$	(3,015	)	$	1,000		$	19,613
Trademarks	17,919		(2,093		)	(1,771		)	14,055		17,919		(1,238		)	907			17,588
Curriculum(1)	18,205		(5,172		)	(1,398		)	11,635		16,993		(2,933		)	826			14,886
Student and customer relationships(2)	14,437		(10,365		)	(1,578		)	2,494		15,934		(9,780		)	(1,161		)	4,993
Software and technology(3)	—		—			—			—		42,389		(25,151		)	—			17,238
Other(1), (2)	11,303		(5,919		)	(1,978		)	3,406		20,891		(19,909		)	(611		)	371
Total finite-lived intangibles	83,492		(28,643		)	(8,635		)	46,214		135,754		(62,026		)	961			74,689
Trademarks(1)	115,737		—			(7,189		)	108,548		106,514		—			(68		)	106,446
Accreditations and designations(1)	14,470		—			(1,464		)	13,006		8,530		—			(300		)	8,230
Total indefinite-lived intangibles	130,207		—			(8,653		)	121,554		115,044		—			(368		)	114,676
Total intangible assets, net	$	213,699	$	(28,643	)	$	(17,288	)	$	167,768	$	250,798	$	(62,026	)	$	593		$	189,365

⁽¹⁾ We acquired intangibles during the second quarter of fiscal year 2015 as a result of our acquisition of FAEL. Refer to Note 4, Acquisitions.

⁽²⁾ The decrease in the gross carrying amount as of February 28, 2015 compared to August 31, 2014 was due to the removal of intangibles that were fully amortized during fiscal year 2015.

⁽³⁾ We recorded a $13.0 million impairment charge of technology intangibles during the second quarter of fiscal year 2015. Refer to Note 2, Restructuring and Impairment Charges.

Future intangibles amortization

The following is the estimated future amortization expense of our finite-lived intangibles as of February 28, 2015:

($ in thousands)	Remainder of 2015		2016		2017		2018		2019		2020		Thereafter		Total
Estimated future amortization expense(1)	$	7,006	$	11,255	$	10,214	$	7,543	$	3,135	$	1,609	$	5,452	$	46,214

⁽¹⁾ The estimated future amortization expense may vary as acquisitions and dispositions occur in the future and as a result of foreign currency translation adjustments.

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Fair Value Measurements (Tables)

6 Months Ended

Feb. 28, 2015

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 February 28, 2015 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 February 28, 2015	$	6,416	$	—	$	—	$	6,416
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 using significant unobservable inputs (Level 3) for the respective periods:

	Three Months Ended February 28,				Six Months Ended February 28,
($ in thousands)	2015		2014		2015			2014
Beginning balance	$	6,292	$	5,743	$	41,893		$	5,277
Initial contingent consideration at fair value	—		21,371		—			21,371
Change in fair value included in net income	124		8,288		(997		)	8,754
Payment for contingent consideration	—		—		(34,480		)	—
Currency translation adjustment	—		621		—			621
Ending balance	$	6,416	$	36,023	$	6,416		$	36,023

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Restructuring and Impairment Charges

6 Months Ended

Feb. 28, 2015

Restructuring and Related Activities [Abstract]

Restructuring and Impairment Charges

Restructuring and Impairment Charges

Restructuring and impairment charges includes the following for the respective periods:

	Three Months Ended February 28,				Six Months Ended February 28,
($ in thousands)	2015		2014		2015		2014
Restructuring charges	$	16,587	$	15,209	$	35,615	$	47,172
Intangibles impairment	12,999		—		12,999		—
Property and equipment impairment	5,950		—		5,950		—
Restructuring and impairment charges	$	35,536	$	15,209	$	54,564	$	47,172

The U.S. higher education industry continues to experience 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 our business processes and 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 costs to align with our lower enrollment and revenue.

Our restructuring activities initiated prior to fiscal year 2015 principally include rationalizing our administrative real estate facilities, closing 115 University of Phoenix ground locations, and workforce reductions. During the six months ended February 28, 2015, we incurred $23.3 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.

During the six months ended February 28, 2015, we incurred $12.3 million of restructuring expense associated with new restructuring activities initiated after fiscal year 2014. The expense consisted of $8.5 million of severance and other employee separation costs associated with the elimination of approximately 300 positions. The majority of the remaining restructuring expense represents costs associated with termination of a curriculum-based contract. The expense associated with these activities for the six months ended February 28, 2015 is reflected in our segment reporting as follows: $1.1 million in University of Phoenix and $11.2 million in Other.

The following details the changes in our restructuring liabilities during the six months ended February 28, 2015:

	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	—		90,131			3,545			167			3,150			1,160			98,153
Expense	—		12,014			3,860			426			—			287			16,587
Other	—		(2,530		)	(635		)	—			—			—			(3,165		)
Payments	—		(13,290		)	(2,801		)	(475		)	—			(704		)	(17,270		)
February 28, 2015(2)	$	—	$	86,325		$	3,969		$	118		$	3,150		$	743		$	94,305

⁽¹⁾ We have incurred $367 million of cumulative costs associated with prior year restructuring as of February 28, 2015, which includes lease exit, employee separation, and other related costs of $241 million, $84 million and $42 million, respectively. These cumulative costs have been reflected in our segment reporting as follows: $285 million in University of Phoenix, $18 million in Apollo Global, and $64 million in Other.

⁽²⁾ The gross, undiscounted obligation associated with our restructuring liabilities as of February 28, 2015 was approximately $167 million, which principally represents non-cancelable leases that will be paid over the respective lease terms through fiscal year 2023.

We intend to further reduce costs to align with our lower enrollment and revenue, and expect to incur material charges associated with other future restructuring activities. These efforts include University of Phoenix continuing to actively evaluate the extent, functionality and location of its ground facilities and the potential closure of additional facilities in the future that are determined to be underutilized or unnecessary.

Impairment Charges

In February 2015, University of Phoenix ceased using certain technology that had been incorporated into its academic platform. The University had finite-lived intangibles with a remaining carrying value of $13.0 million associated with this technology. We do not expect any future cash flows associated with this technology over its remaining useful life and, accordingly, we recorded a $13.0 million impairment charge during the second quarter of fiscal year 2015.

Based on developments and trends at University of Phoenix during the second quarter of fiscal year 2015, we evaluated the property and equipment at University of Phoenix’s remaining ground locations for recoverability. Accordingly, we compared the estimated undiscounted cash flows of the locations over the remaining useful lives of their fixed assets to the carrying amount of their fixed assets. Based on our analysis, we recorded $6.0 million of impairment charges during the second quarter of fiscal year 2015. Changes to our business or other circumstances could lead to additional impairments in the future.

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Accrued and Other Liabilities (Tables)

6 Months Ended

Feb. 28, 2015

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)	February 28, 2015		August 31, 2014
Salaries, wages and benefits	$	81,995	$	125,165
Student refunds, grants and scholarships	43,400		20,072
Restructuring obligations	43,146		43,339
Accrued legal and other professional obligations	35,604		33,651
Accrued advertising	29,558		33,853
Deferred rent and other lease liabilities	12,982		12,384
Curriculum materials	10,904		12,069
Contingent consideration	—		35,239
Other	50,592		47,835
Total accrued and other current liabilities	$	308,181	$	363,607

Other long-term liabilities

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

($ in thousands)	February 28, 2015		August 31, 2014
Deferred revenue	$	58,737	$	51,831
Deferred rent and other lease liabilities	53,516		57,788
Restructuring obligations	51,159		59,744
Deferred gains on sale-leasebacks	20,905		21,641
Uncertain tax positions	7,187		9,770
Other	34,380		33,168
Total other long-term liabilities	$	225,884	$	233,942

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Acquisitions (Details)	3 Months Ended	6 Months Ended			1 Months Ended	3 Months Ended						1 Months Ended		1 Months Ended		1 Months Ended		3 Months Ended	6 Months Ended
	Feb. 28, 2015 USD ($)	Feb. 28, 2015 USD ($)	Feb. 28, 2014 USD ($)	Aug. 31, 2014 USD ($)	Dec. 31, 2014 Faculdade da Educacional da Lapa [Member] USD ($)	Feb. 28, 2015 Faculdade da Educacional da Lapa [Member] USD ($)	Feb. 28, 2015 Faculdade da Educacional da Lapa [Member] BRL	Dec. 04, 2014 Faculdade da Educacional da Lapa [Member] USD ($)	Dec. 04, 2014 Faculdade da Educacional da Lapa [Member] BRL	Dec. 04, 2014 Faculdade da Educacional da Lapa [Member] Trademarks [Member] USD ($)	Dec. 04, 2014 Faculdade da Educacional da Lapa [Member] Accreditation [Member] USD ($)	Dec. 31, 2014 Faculdade da Educacional da Lapa [Member] Curriculum [Member]	Dec. 04, 2014 Faculdade da Educacional da Lapa [Member] Curriculum [Member] USD ($)	Dec. 31, 2014 Faculdade da Educacional da Lapa [Member] Other [Member]	Dec. 04, 2014 Faculdade da Educacional da Lapa [Member] Other [Member] USD ($)	Dec. 31, 2013 Open Colleges [Member] USD ($)	Dec. 31, 2013 Open Colleges [Member] AUD	Feb. 28, 2014 Open Colleges [Member] USD ($)	Feb. 28, 2015 Open Colleges [Member] USD ($)	Feb. 28, 2014 Open Colleges [Member] USD ($)	Dec. 20, 2013 Open Colleges [Member] USD ($)
Purchase price allocation [Line Items]
Percentage of shares acquired								75.00%	75.00%												70.00%
Initial cash payment						$ 28,851,000	73,800,000									$ 98,100,000	110,300,000
Contingent consideration maximum								13,300,000	34,000,000
Transaction costs								1,200,000
Net working capital deficit																					(10,979,000)
Property and equipment																					2,684,000
Indefinite-lived intangibles										9,223,000	5,940,000
Finite-lived intangibles													1,212,000		4,182,000						60,575,000
Finite-lived intangible assets, useful life												4 years		4 years
Goodwill	248,632,000	248,632,000		259,901,000				14,538,000													127,656,000
Other assets								2,877,000
Liabilities								(13,369,000)													(33,000,000)
Deferred taxes, net																					(9,279,000)
Total assets acquired and liabilities assumed								32,288,000													170,657,000
Fair value of redeemable noncontrolling interests								(3,437,000)													(51,197,000)
Fair value of contingent consideration	0	0														(21,371,000)		(21,371,000)	(21,371,000)	(21,371,000)
Fair value of consideration transferred								28,851,000													119,460,000
Cash and cash equivalents								(7,685,000)													(3,152,000)
Cash paid for acquisition, net of cash acquired		$ 21,166,000	$ 94,937,000		$ 21,166,000											$ 94,937,000
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life					4 years

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Regulatory Matters (Details) (Apollo Class B voting common stock [Member])	Feb. 28, 2015
Apollo Class B voting common stock [Member]
Stock ownership percentage	51.00%

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Feb. 28, 2015	Aug. 31, 2014
Current assets:
Cash and cash equivalents	$ 566,078	$ 1,228,813
Restricted cash and cash equivalents	224,987	224,135
Marketable securities	193,745	187,472
Accounts receivable, net	235,453	225,398
Prepaid taxes	55,113	34,006
Deferred tax assets	82,018	83,871
Other current assets	55,344	58,855
Total current assets	1,412,738	2,042,550
Marketable securities	75,096	87,811
Property and equipment, net	402,920	435,733
Goodwill	248,632	259,901
Intangible assets, net	167,768	189,365
Deferred tax assets	50,400	37,335
Other assets	48,387	40,240
Total assets	2,405,941	3,092,935
Current liabilities:
Short-term borrowings and current portion of long-term debt	15,664	609,506
Accounts payable	72,294	63,907
Student deposits	262,387	280,562
Deferred revenue	261,428	225,818
Accrued and other current liabilities	308,181	363,607
Total current liabilities	919,954	1,543,400
Long-term debt	45,157	47,590
Deferred tax liabilities	25,715	22,674
Other long-term liabilities	225,884	233,942
Total liabilities	1,216,710	1,847,606
Commitments and contingencies
Redeemable noncontrolling interests	55,621	64,527
Shareholders’ equity:
Preferred stock, no par value
Additional paid-in capital	0	0
Apollo Class A treasury stock, at cost	(3,965,057)	(3,936,607)
Retained earnings	5,152,466	5,143,949
Accumulated other comprehensive loss	(54,574)	(27,320)
Total Apollo shareholders’ equity	1,132,939	1,180,126
Noncontrolling interests	671	676
Total equity	1,133,610	1,180,802
Total liabilities, redeemable noncontrolling interests and shareholders’ equity	2,405,941	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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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		1 Months Ended
	Feb. 28, 2015	Feb. 28, 2014	Feb. 28, 2015	Feb. 28, 2014	Dec. 31, 2013	Aug. 31, 2014	Nov. 30, 2014	Nov. 30, 2013	Aug. 31, 2013
Assets and liabilities measured on a recurring basis [Line Items]
Contingent consideration	$ 0		$ 0
Initial contingent consideration at fair value	0		0
Change in fair value included in net income	124	8,288	(997)	8,754
Currency translation adjustment	0	621	0	621
Payment for contingent consideration	0	0		0
Balance	0		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	21,371	21,371	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	6,416		6,416
Balance	6,416		6,416
Level 1 [Member] | Recurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring basis [Line Items]
Contingent consideration	0		0			0
Balance						0
Balance	0		0			0
Level 2 [Member] | Recurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring basis [Line Items]
Contingent consideration	0		0			0
Balance						0
Balance	0		0			0
Level 3 [Member] | Recurring Fair Value Measurement [Member]
Assets and liabilities measured on a recurring basis [Line Items]
Contingent consideration		36,023		36,023		41,893	6,292	5,743	5,277
Balance						41,893	6,292	5,743	5,277
Balance		36,023		36,023		41,893	6,292	5,743	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	6,416		6,416
Balance	$ 6,416		$ 6,416

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Feb. 28, 2015	Feb. 28, 2014
Operating activities:
Net (loss) income	$ (3,669)	$ 111,218
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Share-based compensation	21,914	22,510
Excess tax benefits from share-based compensation	(236)	0
Depreciation and amortization	71,223	73,803
Accelerated depreciation included in restructuring	4,272	4,316
Loss (gain) on asset dispositions and impairment charges, net	(21,228)	1,984
Non-cash foreign currency loss, net	1,362	596
Provision for uncollectible accounts receivable	29,367	25,512
Deferred income taxes	(10,434)	(6,255)
Changes in assets and liabilities, excluding the impact of acquisitions and disposition:
Restricted cash and cash equivalents	(1,002)	(24,165)
Accounts receivable	(51,199)	(6,469)
Prepaid taxes	(21,440)	15,230
Other assets	(3,771)	(11,445)
Accounts payable	7,870	(11,454)
Student deposits	(15,873)	17,409
Deferred revenue	47,821	32,881
Accrued and other liabilities	(42,320)	(48,219)
Net cash provided by operating activities	55,113	193,484
Investing activities:
Purchases of property and equipment	(43,310)	(58,119)
Purchases of marketable securities	(109,544)	(227,978)
Maturities and sales of marketable securities	113,651	105,237
Acquisitions, net of cash acquired	(21,166)	(94,937)
Other	467	3,446
Net cash used in investing activities	(59,902)	(272,351)
Financing activities:
Payments on borrowings	(599,925)	(619,268)
Proceeds from borrowings	4,515	0
Share repurchases	(38,718)	(72,237)
Share reissuances	995	1,793
Excess tax benefits from share-based compensation	(236)	0
Payment for contingent consideration	(21,371)	0
Net cash used in financing activities	(654,268)	(689,712)
Exchange rate effect on cash and cash equivalents	(3,678)	34
Net decrease in cash and cash equivalents	(662,735)	(768,545)
Cash and cash equivalents, beginning of period	1,228,813	1,414,485
Cash and cash equivalents, end of period	566,078	645,940
Supplemental disclosure of cash flow and non-cash information:
Cash paid for income taxes, net of refunds	37,346	70,868
Cash paid for interest	3,514	3,911
Restricted stock units vested and released	6,255	7,104
Unsettled share repurchases	$ 1,600	$ 0

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Earnings Per Share (Tables)

6 Months Ended

Feb. 28, 2015

Earnings Per Share [Abstract]

Earnings per share

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

	Three Months Ended February 28,					Six Months Ended February 28,
(In thousands, except per share data)	2015			2014		2015		2014
Numerator:
Net (loss) income attributable to Apollo (basic and diluted)	$	(33,610	)	$	14,605	$	175	$	113,496
Denominator:
Basic weighted average shares outstanding	108,166			112,151		108,375		112,742
Dilutive effect of restricted stock units and performance share awards(1)	—			1,070		759		838
Dilutive effect of stock options(1)	—			159		203		96
Diluted weighted average shares outstanding	108,166			113,380		109,337		113,676
Basic (loss) income per share attributable to Apollo	$	(0.31	)	$	0.13	$	—	$	1.01
Diluted (loss) income per share attributable to Apollo	$	(0.31	)	$	0.13	$	—	$	1.00
Anti-dilutive securities excluded from diluted (loss) income per share:
Anti-dilutive restricted stock units and performance share awards outstanding(1)	929			9		11		842
Anti-dilutive stock options outstanding(1)	2,572			2,628		2,411		3,079

⁽¹⁾ Due to the loss from continuing operations attributable to Apollo during the three months ended February 28, 2015, no dilutive share-based awards were included in the calculation of diluted loss per share for the respective period because they would have been anti-dilutive.

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Regulatory Matters

6 Months Ended

Feb. 28, 2015

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. The current reauthorization of the federal Higher Education Act expired September 30, 2013, but Title IV student financial aid programs remain authorized and functioning. Congress continues to engage in Higher Education Act reauthorization hearings, but the timing and terms of any eventual reauthorization cannot be predicted.

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 while 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. The University has received and responded to a draft program review report which included findings regarding compliance with the Clery Act and various Title IV administrative matters. We believe that all findings regarding Title IV administrative matters have been resolved and that a Final Program Review Determination Letter will be issued in due course. Findings regarding compliance with the Clery Act have been referred to the Department’s Clery Team and to the Administrative Action and Appeals Division which is standard protocol in such matters.

Western International University was recertified by the Department of Education in November 2014 and subsequently entered into a new Title IV Program Participation Agreement which expires in June 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.

In October 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. Under the final regulations, which apply on a program-by-program basis, students enrolled in a program will be eligible for Title IV student financial aid only if that program satisfies at least one of two tests relating to student debt-to-earnings ratios. The two tests specify minimum debt-to-earnings ratios calculated on the basis of the earnings of program graduates; one test measures student loan debt as a percentage of total earnings, and the other test measures student loan debt as a percentage of discretionary earnings. Programs that fail to meet at least one of the minimum ratios for two years will lose eligibility for federal financial aid for a period not less than three years.

The Department has indicated that the official 2014 gainful employment debt-to-earnings ratios will be issued sometime during calendar year 2016. The expected timing of the issuance of the 2015 ratios is unknown at this time. We believe it is likely that some of our programs will be impacted by the regulations, which may require modification of the affected programs or, in some cases, discontinuation.

Higher Learning Commission Accreditation

University of Phoenix is accredited by The Higher Learning Commission (“HLC”), which 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 hosted a focused visit in January 2015 to validate the contents of the Notice Report filed in November 2014. Based on the process to date, we believe that the University has adequately addressed the concerns expressed by the HLC in connection with its Notice determination. We expect that the HLC Board of Trustees will consider the matter and take final action at its meeting in late June 2015. If the HLC Board were to determine that the requirements for lifting the Notice sanction have not been met or that the University otherwise is not in compliance with the applicable accreditation criteria, the Board could impose additional sanctions on the University, including probation, or take other action that could adversely impact 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 our outstanding Class B common shares, the only class of Apollo voting stock, University of Phoenix hosted a visit by an HLC peer review team in December 2014 focused on ascertaining the appropriateness of the prior approval, implications for succession planning, and the effect, if any, of the change in trust arrangements on Apollo and its relevant subsidiaries, and their ability to continue to meet HLC’s Criteria for Accreditation and Assumed Practices. Based upon the process to date, we believe that we have adequately addressed the Commission’s relevant criteria in this matter. Final action is pending with HLC.

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.

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Share-Based Compensation (Table)

6 Months Ended

Feb. 28, 2015

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 February 28,				Six Months Ended February 28,
($ in thousands)	2015		2014		2015		2014
Instructional and student advisory	$	2,905	$	3,280	$	5,887	$	6,813
Marketing	783		937		1,619		2,045
Admissions advisory	256		212		517		314
General and administrative	6,624		5,644		12,504		11,012
Restructuring and impairment charges	635		464		1,387		2,326
Share-based compensation expense	$	11,203	$	10,537	$	21,914	$	22,510

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Nature of Operations and Significant Accounting Policies (Policies)

6 Months Ended

Feb. 28, 2015

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 certain previously reported amounts to conform to our current presentation as follows:

• 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;

• We began presenting litigation charges as a component of the change in accrued and other liabilities on our Condensed Consolidated Statements of Cash Flows, which did not impact total cash provided by operating activities; and

• As discussed in Note 3, Discontinued Operations, we began presenting Institute for Professional Development’s operating results as discontinued operations on our Condensed Consolidated Statements of Operations.

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Nature of Operations and Significant Accounting Policies

6 Months Ended

Feb. 28, 2015

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 providers, serving students since 1973. Through our subsidiaries, we offer undergraduate, graduate, professional development and other nondegree educational programs and services, online and on-campus principally to working learners. Our educational programs and services are offered throughout the United States and in Europe, Australia, Latin America, Africa and Asia, as well as online throughout the world. Refer to Note 17, 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 and six months ended February 28, 2015 are not necessarily indicative of the results to be expected for the entire fiscal year.

Reclassifications

We reclassified certain previously reported amounts to conform to our current presentation as follows:

• 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;

• We began presenting litigation charges as a component of the change in accrued and other liabilities on our Condensed Consolidated Statements of Cash Flows, which did not impact total cash provided by operating activities; and

• As discussed in Note 3, Discontinued Operations, we began presenting Institute for Professional Development’s operating results as discontinued operations on our Condensed Consolidated Statements of Operations.

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 apply the standard to any disposals that occur after adoption.

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Feb. 28, 2015	Feb. 28, 2014	Feb. 28, 2015	Feb. 28, 2014
Income Statement [Abstract]
Net revenue	$ 578,572	$ 672,754	$ 1,297,624	$ 1,520,902
Instructional and student advisory	293,073	316,577	617,337	653,779
Marketing	127,421	139,272	256,214	273,101
Admissions advisory	57,840	53,121	114,925	102,819
General and administrative	70,598	67,275	142,965	142,054
Depreciation and amortization	34,819	37,465	71,223	73,803
Provision for uncollectible accounts receivable	11,969	11,534	29,367	25,512
Restructuring and impairment charges	35,536	15,209	54,564	47,172
Acquisition and other related costs	1,742	13,005	4,961	13,005
Litigation charges	100	9,000	100	9,000
Total costs and expenses	633,098	662,458	1,291,656	1,340,245
Operating (loss) income	(54,526)	10,296	5,968	180,657
Interest income	740	599	1,329	1,167
Interest expense	(1,739)	(1,983)	(3,401)	(4,069)
Other (loss) income, net	(1,146)	107	(2,431)	914
(Loss) income from continuing operations before income taxes	(56,671)	9,019	1,465	178,669
Benefit from (provision for) income taxes	20,533	5,130	(5,134)	(65,088)
(Loss) income from continuing operations	(36,138)	14,149	(3,669)	113,581
Loss from discontinued operations, net of tax	0	(1,972)	0	(2,363)
Net (loss) income	(36,138)	12,177	(3,669)	111,218
Net loss attributable to noncontrolling interests	2,528	2,428	3,844	2,278
Net (loss) income attributable to Apollo	$ (33,610)	$ 14,605	$ 175	$ 113,496
Earnings (Loss) Per Share, Basic [Abstract]
Continuing operations attributable to Apollo	$ (0.31)	$ 0.15	$ 0.00	$ 1.03
Discontinued operations attributable to Apollo	$ 0.00	$ (0.02)	$ 0.00	$ (0.02)
Basic (loss) income per share attributable to Apollo (in dollars per share)	$ (0.31)	$ 0.13	$ 0.00	$ 1.01
Earnings Per Share, Diluted [Abstract]
Continuing operations attributable to Apollo	$ (0.31)	$ 0.15	$ 0.00	$ 1.02
Discontinued operations attributable to Apollo	$ 0.00	$ (0.02)	$ 0.00	$ (0.02)
Diluted (loss) income per share attributable to Apollo (in dollars per share)	$ (0.31)	$ 0.13	$ 0.00	$ 1.00
Basic weighted average shares outstanding (in shares)	108,166	112,151	108,375	112,742
Diluted weighted average shares outstanding (in shares)	108,166	113,380	109,337	113,676

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Income Taxes

6 Months Ended

Feb. 28, 2015

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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Document and Entity Information	6 Months Ended
	Feb. 28, 2015	Mar. 18, 2015
Entity Information [Line Items]
Document Type	10-Q
Document Period End Date	Feb. 28, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
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)		107,178,079
Apollo Class B voting common stock [Member]
Entity Information [Line Items]
Entity Common Stock Outstanding (in shares)		475,149

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Shareholders' Equity and Redeemable Noncontrolling Interests

6 Months Ended

Feb. 28, 2015

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 $52.2 million remained available as of February 28, 2015. 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 share-based awards, which do not fall under the repurchase program described above.

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

	Three Months Ended February 28,				Six Months Ended February 28,
(In thousands, except per share data)	2015		2014		2015		2014
Share repurchases under share repurchase program:
Number of shares repurchased	763		1,713		1,440		2,290
Weighted average purchase price per share	$	26.22	$	31.93	$	26.45	$	30.44
Cost of share repurchases(1)	$	20,000	$	54,684	$	38,092	$	69,684
Share repurchases related to vesting of share-based awards:
Number of shares repurchased	9		25		87		113
Cost of share repurchases	$	254	$	682	$	2,226	$	2,553

⁽¹⁾ At February 28, 2015, $1.6 million was recorded in accrued and other current liabilities on our Condensed Consolidated Balance Sheets for repurchased shares that settled subsequent to February 28, 2015.

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 February 28,		Six Months Ended February 28,
(In thousands)	2015	2014	2015	2014
Number of shares reissued	55	110	282	391

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Condensed Consolidated Statements of Comprehensive (Loss) Income (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Feb. 28, 2015		Feb. 28, 2014		Feb. 28, 2015		Feb. 28, 2014
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (36,138)		$ 12,177		$ (3,669)		$ 111,218
Other comprehensive (loss) income (net of tax):
Currency translation (loss) gain	(20,212)	[1]	4,483	[1]	(37,992)	[1]	7,318	[1]
Change in fair value of available-for-sale securities	315	[1]	0	[1]	241	[1]	0	[1]
Comprehensive (loss) income	(56,035)		16,660		(41,420)		118,536
Comprehensive loss attributable to noncontrolling interests	8,469		1,748		14,341		1,499
Comprehensive (loss) income attributable to Apollo	$ (47,566)		$ 18,408		$ (27,079)		$ 120,035

[1] The tax effect on each component of other comprehensive (loss) income during the three and six months ended February 28, 2015 and 2014, respectively, is not significant.

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Accounts Receivable, Net

6 Months Ended

Feb. 28, 2015

Receivables [Abstract]

Accounts Receivable, Net

Accounts Receivable, Net

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

($ in thousands)	February 28, 2015			August 31, 2014
Student accounts receivable	$	274,295		$	255,134
Less allowance for doubtful accounts	(49,891		)	(50,145		)
Net student accounts receivable	224,404			204,989
Other receivables	11,049			20,409
Total accounts receivable, net	$	235,453		$	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 February 28,						Six Months Ended February 28,
($ in thousands)	2015			2014			2015			2014
Beginning allowance for doubtful accounts	$	52,682		$	55,895		$	50,145		$	59,744
Provision for uncollectible accounts receivable	11,969			11,534			29,367			25,512
Write-offs, net of recoveries	(14,760		)	(14,391		)	(29,621		)	(32,218		)
Ending allowance for doubtful accounts	$	49,891		$	53,038		$	49,891		$	53,038

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Financial Instruments

6 Months Ended

Feb. 28, 2015

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:

	February 28, 2015
($ in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents(1)		Current Marketable Securities		Noncurrent Marketable Securities
Cash	$	657,122	$	—	$	—		$	657,122	$	657,122	$	—	$	—
Level 1:
Money market funds	108,666		—		—			108,666		108,666		—		—
Level 2:
Corporate bonds	128,979		62		(180		)	128,861		—		80,069		48,792
Tax-exempt municipal bonds	76,244		79		(199		)	76,124		202		63,479		12,443
Time deposits	50,180		—		—			50,180		25,075		25,105		—
Other	39,001		8		(56		)	38,953		—		25,092		13,861
Total	$	1,060,192	$	149	$	(435	)	$	1,059,906	$	791,065	$	193,745	$	75,096

	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(2)	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.

⁽²⁾ Auction-rate securities were redeemed at par value during the second quarter of fiscal year 2015.

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.

• Other financial instruments - We use a market approach with Level 2 observable inputs for all other securities. The Level 2 inputs include quoted prices for similar assets in active markets, or quoted prices for identical or similar assets in markets that are not active.

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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Segment Reporting

6 Months Ended

Feb. 28, 2015

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 nondegree 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”);

• Faculdade da Educacional da Lapa (“FAEL”);

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

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

• Apollo Global corporate operations.

Apollo Global acquired FAEL during the second quarter of fiscal year 2015. Refer to Note 4, Acquisitions. Apollo Global also acquired Open Colleges and Milpark Education during fiscal year 2014. The operating results for each of these entities are included in our Apollo Global operating segment from the date of each respective acquisition.

Other includes:

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

• Carnegie Learning, Inc.;

• Western International University, Inc.; and

• Apollo Corporate activities.

During 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 Operations 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 February 28,						Six Months Ended February 28,
($ in thousands)	2015			2014			2015			2014
Net revenue:
University of Phoenix	$	487,769		$	594,081		$	1,080,622		$	1,338,944
Apollo Global	81,100			68,634			196,240			159,793
Other	9,703			10,039			20,762			22,165
Net revenue	$	578,572		$	672,754		$	1,297,624		$	1,520,902
Operating (loss) income(1):
University of Phoenix	$	1,350		$	86,682		$	94,861		$	270,155
Apollo Global(2)	(27,541		)	(40,004		)	(32,383		)	(37,787		)
Other(3)	(28,335		)	(36,382		)	(56,510		)	(51,711		)
Operating (loss) income	(54,526		)	10,296			5,968			180,657
Reconciling items:
Interest income	740			599			1,329			1,167
Interest expense	(1,739		)	(1,983		)	(3,401		)	(4,069		)
Other (loss) income, net	(1,146		)	107			(2,431		)	914
(Loss) income from continuing operations before income taxes	$	(56,671	)	$	9,019		$	1,465		$	178,669

⁽¹⁾ University of Phoenix, Apollo Global and Other include restructuring and impairment charges during the periods. Refer to Note 2, Restructuring and Impairment Charges.

⁽²⁾ During the three and six months ended February 28, 2015, Apollo Global incurred $1.0 million and $2.7 million of acquisition and other related costs, respectively. The operating loss for Apollo Global in the three and six months ended February 28, 2014 includes $13.0 million of acquisition and other related costs.

⁽³⁾ The operating loss for Other in the three and six months ended February 28, 2015 includes $0.7 million and $2.3 million of acquisition and other related costs, respectively. The operating loss for Other in the three and six months ended February 28, 2014 includes $9.0 million of charges associated with our legal matters.

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

($ in thousands)	February 28, 2015		August 31, 2014
University of Phoenix	$	769,666	$	824,895
Apollo Global	671,914		680,363
Other(1)	964,361		1,587,677
Total assets	$	2,405,941	$	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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Earnings Per Share

6 Months Ended

Feb. 28, 2015

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 February 28,					Six Months Ended February 28,
(In thousands, except per share data)	2015			2014		2015		2014
Numerator:
Net (loss) income attributable to Apollo (basic and diluted)	$	(33,610	)	$	14,605	$	175	$	113,496
Denominator:
Basic weighted average shares outstanding	108,166			112,151		108,375		112,742
Dilutive effect of restricted stock units and performance share awards(1)	—			1,070		759		838
Dilutive effect of stock options(1)	—			159		203		96
Diluted weighted average shares outstanding	108,166			113,380		109,337		113,676
Basic (loss) income per share attributable to Apollo	$	(0.31	)	$	0.13	$	—	$	1.01
Diluted (loss) income per share attributable to Apollo	$	(0.31	)	$	0.13	$	—	$	1.00
Anti-dilutive securities excluded from diluted (loss) income per share:
Anti-dilutive restricted stock units and performance share awards outstanding(1)	929			9		11		842
Anti-dilutive stock options outstanding(1)	2,572			2,628		2,411		3,079

⁽¹⁾ Due to the loss from continuing operations attributable to Apollo during the three months ended February 28, 2015, no dilutive share-based awards were included in the calculation of diluted loss per share for the respective period because they would have been anti-dilutive.

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Accrued and Other Liabilities

6 Months Ended

Feb. 28, 2015

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)	February 28, 2015		August 31, 2014
Salaries, wages and benefits	$	81,995	$	125,165
Student refunds, grants and scholarships	43,400		20,072
Restructuring obligations	43,146		43,339
Accrued legal and other professional obligations	35,604		33,651
Accrued advertising	29,558		33,853
Deferred rent and other lease liabilities	12,982		12,384
Curriculum materials	10,904		12,069
Contingent consideration	—		35,239
Other	50,592		47,835
Total accrued and other current liabilities	$	308,181	$	363,607

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

($ in thousands)	February 28, 2015		August 31, 2014
Deferred revenue	$	58,737	$	51,831
Deferred rent and other lease liabilities	53,516		57,788
Restructuring obligations	51,159		59,744
Deferred gains on sale-leasebacks	20,905		21,641
Uncertain tax positions	7,187		9,770
Other	34,380		33,168
Total other long-term liabilities	$	225,884	$	233,942

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Goodwill and Intangibles

6 Months Ended

Feb. 28, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles

Goodwill and Intangibles

The following details changes in our goodwill by reportable segment during the six months ended February 28, 2015:

($ in thousands)	University of Phoenix		Apollo Global			Other		Total
Goodwill as of August 31, 2014	$	71,812	$	171,198		$	16,891	$	259,901
FAEL acquisition	—		14,538			—		14,538
Currency translation adjustment	—		(25,807		)	—		(25,807		)
Goodwill as of February 28, 2015	$	71,812	$	159,929		$	16,891	$	248,632

Intangibles consist of the following as of the respective periods:

	February 28, 2015										August 31, 2014
($ in thousands)	Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Effect of Foreign Currency Translation			Net Carrying Amount
Accreditations and designations	$	21,628	$	(5,094	)	$	(1,910	)	$	14,624	$	21,628	$	(3,015	)	$	1,000		$	19,613
Trademarks	17,919		(2,093		)	(1,771		)	14,055		17,919		(1,238		)	907			17,588
Curriculum(1)	18,205		(5,172		)	(1,398		)	11,635		16,993		(2,933		)	826			14,886
Student and customer relationships(2)	14,437		(10,365		)	(1,578		)	2,494		15,934		(9,780		)	(1,161		)	4,993
Software and technology(3)	—		—			—			—		42,389		(25,151		)	—			17,238
Other(1), (2)	11,303		(5,919		)	(1,978		)	3,406		20,891		(19,909		)	(611		)	371
Total finite-lived intangibles	83,492		(28,643		)	(8,635		)	46,214		135,754		(62,026		)	961			74,689
Trademarks(1)	115,737		—			(7,189		)	108,548		106,514		—			(68		)	106,446
Accreditations and designations(1)	14,470		—			(1,464		)	13,006		8,530		—			(300		)	8,230
Total indefinite-lived intangibles	130,207		—			(8,653		)	121,554		115,044		—			(368		)	114,676
Total intangible assets, net	$	213,699	$	(28,643	)	$	(17,288	)	$	167,768	$	250,798	$	(62,026	)	$	593		$	189,365

⁽¹⁾ We acquired intangibles during the second quarter of fiscal year 2015 as a result of our acquisition of FAEL. Refer to Note 4, Acquisitions.

⁽²⁾ The decrease in the gross carrying amount as of February 28, 2015 compared to August 31, 2014 was due to the removal of intangibles that were fully amortized during fiscal year 2015.

⁽³⁾ We recorded a $13.0 million impairment charge of technology intangibles during the second quarter of fiscal year 2015. Refer to Note 2, Restructuring and Impairment Charges.

The following is the estimated future amortization expense of our finite-lived intangibles as of February 28, 2015:

($ in thousands)	Remainder of 2015		2016		2017		2018		2019		2020		Thereafter		Total
Estimated future amortization expense(1)	$	7,006	$	11,255	$	10,214	$	7,543	$	3,135	$	1,609	$	5,452	$	46,214

⁽¹⁾ The estimated future amortization expense may vary as acquisitions and dispositions occur in the future and as a result of foreign currency translation adjustments.

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Fair Value Measurements

6 Months Ended

Feb. 28, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

We measure and disclose certain financial instruments at fair value as described in Note 5, 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 February 28, 2015 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 February 28, 2015	$	6,416	$	—	$	—	$	6,416
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 using significant unobservable inputs (Level 3) for the respective periods:

	Three Months Ended February 28,				Six Months Ended February 28,
($ in thousands)	2015		2014		2015			2014
Beginning balance	$	6,292	$	5,743	$	41,893		$	5,277
Initial contingent consideration at fair value	—		21,371		—			21,371
Change in fair value included in net income	124		8,288		(997		)	8,754
Payment for contingent consideration	—		—		(34,480		)	—
Currency translation adjustment	—		621		—			621
Ending balance	$	6,416	$	36,023	$	6,416		$	36,023

Our contingent consideration liabilities are 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. We settled the contingent consideration during fiscal year 2015 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 February 28, 2015, the estimated fair value for this contingent consideration was $6.4 million.

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

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Debt

6 Months Ended

Feb. 28, 2015

Debt Disclosure [Abstract]

Debt

Debt

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

($ in thousands)	February 28, 2015			August 31, 2014
Revolving Credit Facility	$	—		$	585,000
Capital lease obligations	22,707			32,806
Other	38,114			39,290
Total debt	60,821			657,096
Less short-term borrowings and current portion of long-term debt	(15,664		)	(609,506		)
Long-term debt	$	45,157		$	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 February 28, 2015, we have approximately $44 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 February 28, 2015 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 February 28, 2015 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 (Tables)

6 Months Ended

Feb. 28, 2015

Equity [Abstract]

Share repurchases

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

	Three Months Ended February 28,				Six Months Ended February 28,
(In thousands, except per share data)	2015		2014		2015		2014
Share repurchases under share repurchase program:
Number of shares repurchased	763		1,713		1,440		2,290
Weighted average purchase price per share	$	26.22	$	31.93	$	26.45	$	30.44
Cost of share repurchases(1)	$	20,000	$	54,684	$	38,092	$	69,684
Share repurchases related to vesting of share-based awards:
Number of shares repurchased	9		25		87		113
Cost of share repurchases	$	254	$	682	$	2,226	$	2,553

⁽¹⁾ At February 28, 2015, $1.6 million was recorded in accrued and other current liabilities on our Condensed Consolidated Balance Sheets for repurchased shares that settled subsequent to February 28, 2015.

Share reissuances

Share reissuances were as follows for the respective periods:

	Three Months Ended February 28,		Six Months Ended February 28,
(In thousands)	2015	2014	2015	2014
Number of shares reissued	55	110	282	391

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Share-Based Compensation (Details 2) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Feb. 28, 2015	Feb. 28, 2015
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	$ 59.2	$ 59.2
Performance share awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized shared-based compensation cost	3.2	3.2
Restricted stock units and performance share awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted	14,000,000	68,000,000
Weighted average fair value of granted awards	$ 32.00	$ 30.06
Weighted average period unrecognized share-based compensation expected to be recognized		2 years 4 months 10 days
Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized shared-based compensation cost	$ 6.9	$ 6.9
Weighted average period unrecognized share-based compensation expected to be recognized		2 years 7 months 28 days

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Commitments and Contingencies

6 Months Ended

Feb. 28, 2015

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 February 28, 2015, the face amount of these surety bonds was approximately $34 million.

Letters of Credit

As of February 28, 2015, we had approximately $44 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.

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. Captioned Paredes v. The University of Phoenix, Inc.,the action was initially filed in California Superior Court in San Bernadino County, but was subsequently removed to Federal District Court in the Central District of California. The complaint purports to assert claims on behalf of the class of individuals 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 under the Telephone Consumer Protection Act

On February 28, 2015, Thomas Barton and Leon Abdullah filed a class action complaint against University of Phoenix in the United States District Court for the Northern District of California. The complaint alleges that University of Phoenix violated the Telephone Consumer Protection Act by contacting plaintiffs on their cellular telephones using automated dialing technology without their express written consent. The complaint seeks to recover damages on behalf of plaintiffs 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.

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, and their appeal remains pending before that court.

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 (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, which was granted on October 27, 2011. 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. On February 19, 2015, plaintiffs filed a motion seeking the preliminary approval of the settlement.

As of February 28, 2015, we had accrued an immaterial amount reflecting the agreed upon settlement, which we subsequently paid in March 2015. 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 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. Captioned Tandy v. Apollo Education Group, Inc., et al., the action was initially filed in California Superior Court in San Diego County, but was subsequently removed to Federal District Court in the Southern District of California. On February 25, 2015, plaintiff voluntarily dismissed her complaint.

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”). Captioned Gonzalez v. The University of Phoenix, 3:14-cv-02279, the action was filed in U.S. District Court for the Southern District of California. On February 13, 2015, plaintiff voluntarily dismissed her complaint.

Himmel Derivative Action

On March 24, 2011, Daniel Himmel filed a shareholder derivative complaint in the Superior Court for the State of Arizona, Maricopa County, entitled Himmel v. Bishop, et al, Case Number CV2011-005604. On February 2, 2015, plaintiff filed a stipulation seeking the voluntary dismissal of his complaint, and the Court entered a dismissal order on February 5, 2015, thus terminating this action.

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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Discontinued Operations (Tables)

6 Months Ended

Feb. 28, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued operations

The following summarizes IPD’s operating results for the three and six months ended February 28, 2014, which are presented in loss from discontinued operations, net of tax on our Condensed Consolidated Statements of Operations:

($ in thousands)	Three Months Ended February 28, 2014			Six Months Ended February 28, 2014
Net revenue	$	6,304		$	14,491
Costs and expenses	(9,470		)	(18,224		)
Loss from discontinued operations before income taxes	(3,166		)	(3,733		)
Benefit from income taxes	1,194			1,370
Loss from discontinued operations, net of tax	$	(1,972	)	$	(2,363	)

XML

Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Feb. 28, 2015	Feb. 28, 2014	Feb. 28, 2015	Feb. 28, 2014
Earnings Per Share [Abstract]
Net (loss) income attributable to Apollo (basic and diluted)	$ (33,610)	$ 14,605	$ 175	$ 113,496
Basic weighted average shares outstanding (in shares)	108,166,000	112,151,000	108,375,000	112,742,000
Anti-dilutive securities [Line Items]
Dilutive effect of share-based awards (in shares)	0
Diluted weighted average shares outstanding (in shares)	108,166,000	113,380,000	109,337,000	113,676,000
Basic (loss) income per share attributable to Apollo (in dollars per share)	$ (0.31)	$ 0.13	$ 0.00	$ 1.01
Diluted (loss) income per share attributable to Apollo (in dollars per share)	$ (0.31)	$ 0.13	$ 0.00	$ 1.00
Restricted stock units and performance share awards [Member]
Anti-dilutive securities [Line Items]
Dilutive effect of share-based awards (in shares)	0	1,070,000	759,000	838,000
Anti-dilutive securities excluded from earnings per share computation (in shares)	929,000	9,000	11,000	842,000
Stock options [Member]
Anti-dilutive securities [Line Items]
Dilutive effect of share-based awards (in shares)	0	159,000	203,000	96,000
Anti-dilutive securities excluded from earnings per share computation (in shares)	2,572,000	2,628,000	2,411,000	3,079,000

XML

Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Feb. 28, 2015	Aug. 31, 2014
Financial Instruments [Line Items]
Amortized cost	1,060,192	$ 1,728,919
Unrealized gains	149	280
Unrealized losses	(435)	(968)
Fair value	1,059,906	1,728,231
Cash and cash equivalents	791,065	1,452,948
Current marketable securities	193,745	187,472
Noncurrent marketable securities	75,096	87,811
Maximum [Member]
Financial Instruments [Line Items]
Marketable securities maturities	3 years
Cash [Member]
Financial Instruments [Line Items]
Amortized cost	657,122	1,295,395
Unrealized gains	0	0
Unrealized losses	0	0
Fair value	657,122	1,295,395
Cash and cash equivalents	657,122	1,295,395
Current marketable securities	0	0
Noncurrent marketable securities	0	0
Money market funds [Member]
Financial Instruments [Line Items]
Amortized cost	108,666	132,508
Unrealized gains	0	0
Unrealized losses	0	0
Cash and cash equivalents	108,666	132,508
Current marketable securities	0	0
Noncurrent marketable securities	0	0
Corporate bonds [Member]
Financial Instruments [Line Items]
Amortized cost	128,979	106,575
Unrealized gains	62	123
Unrealized losses	(180)	(52)
Cash and cash equivalents	0	0
Current marketable securities	80,069	56,837
Noncurrent marketable securities	48,792	49,809
Tax-exempt municipal bonds [Member]
Financial Instruments [Line Items]
Amortized cost	76,244	106,543
Unrealized gains	79	155
Unrealized losses	(199)	(11)
Cash and cash equivalents	202	0
Current marketable securities	63,479	78,443
Noncurrent marketable securities	12,443	28,244
Time deposits [Member]
Financial Instruments [Line Items]
Amortized cost	50,180	50,100
Unrealized gains	0	0
Unrealized losses	0	0
Cash and cash equivalents	25,075	25,041
Current marketable securities	25,105	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	39,001	19,155
Unrealized gains	8	1
Unrealized losses	(56)	(1)
Cash and cash equivalents	0	4
Current marketable securities	25,092	15,339
Noncurrent marketable securities	13,861	3,812
Auction-rate securities [Member]
Financial Instruments [Line Items]
Amortized cost		6,850
Unrealized gains		0
Unrealized losses		(904)
Cash and cash equivalents		0
Current marketable securities		0
Noncurrent marketable securities		5,946
Level 1 [Member] | Money market funds [Member]
Financial Instruments [Line Items]
Fair value	108,666	132,508
Level 2 [Member] | Corporate bonds [Member]
Financial Instruments [Line Items]
Fair value	128,861	106,646
Level 2 [Member] | Tax-exempt municipal bonds [Member]
Financial Instruments [Line Items]
Fair value	76,124	106,687
Level 2 [Member] | Time deposits [Member]
Financial Instruments [Line Items]
Fair value	50,180	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	38,953	19,155
Level 3 [Member] | Auction-rate securities [Member]
Financial Instruments [Line Items]
Fair value		$ 5,946

XML

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 Class A treasury stock [Member]	Retained earnings [Member]	Accumulated other comprehensive loss [Member]		Total Apollo shareholders' equity [Member]		Noncontrolling interests [Member]
Redeemable noncontrolling interests at Aug. 31, 2013				$ 0
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					2,403
Share repurchases		(72,237)		0	0	0				0	(72,237)	0	0		(72,237)		0
Share reissuances (in shares)					0	0					(391)
Share reissuances		1,793		0	0	0				15,008	16,601	200	0		1,793		0
Net tax effect for stock incentive plans		(7,502)		0	0	0				(7,502)	0	0	0		(7,502)		0
Share-based compensation		22,510		0	0	0				22,510	0	0	0		22,510		0
Currency translation adjustment, net of tax		7,318	[1]	676	0	0	6,642			0	0	0	6,539	[1]	6,539	[1]	103
Available-for-sale securities adjustment, net of tax	[1]	0
Acquisition		0		51,197	0	0				0	0	0	0		0		0
Net income (loss)		113,703			0	0				0	0	113,496	0		113,496		207
Net income (loss)				(2,485)
Redeemable noncontrolling interests at Feb. 28, 2014				49,388
Balance at Feb. 28, 2014		1,182,918						103	1	0	(3,880,394)	5,092,511	(30,024)		1,182,197		721
Shares at Feb. 28, 2014					188,007	475
Treasury stock outstanding (in shares) at Feb. 28, 2014											77,194
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					1,527
Share repurchases		(40,318)		0	0	0				0	(40,318)	0	0		(40,318)		0
Share reissuances (in shares)					0	0					(282)
Share reissuances		995		0	0	0				21,208	11,868	10,335	0		995		0
Net tax effect for stock incentive plans		(2,370)		0	0	0				(2,370)	0	0	0		(2,370)		0
Share-based compensation		21,914		0	0	0				21,914	0	0	0		21,914		0
Currency translation adjustment, net of tax		(37,992)	[1]	(10,424)	0	0	(27,568)			0	0	0	(27,495)		(27,495)		(73)
Available-for-sale securities adjustment, net of tax		241	[1]	0	0	0				0	0	0	241	[1]	241	[1]	0
Acquisition		0		3,437	0	0				0	0	0	0		0		0
Redemption value adjustments				1,993	0	0	1,993			0	0	1,993	0		1,993		0
Net income (loss)		243			0	0				0	0	175	0		175		68
Net income (loss)				(3,912)
Other		1,664		0	0	0				1,664	0	0	0		1,664		0
Redeemable noncontrolling interests at Feb. 28, 2015		55,621		55,621
Balance at Feb. 28, 2015		$ 1,133,610						$ 103	$ 1	$ 0	$ (3,965,057)	$ 5,152,466	$ (54,574)		$ 1,132,939		$ 671
Shares at Feb. 28, 2015					188,007	475
Treasury stock outstanding (in shares) at Feb. 28, 2015											80,830

[1] The tax effect on each component of other comprehensive (loss) income during the three and six months ended February 28, 2015 and 2014, respectively, is not significant.

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Acquisitions

6 Months Ended

Feb. 28, 2015

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Acquisitions

Fiscal Year 2015 Acquisition

On December 4, 2014, Apollo Global acquired a 75% interest in Sociedade Técnica Educacional da Lapa S.A., a provider of postsecondary educational programs in Brazil under the name Faculdade da Educacional da Lapa (“FAEL”). This acquisition provides access to a new market and supports our strategy to diversify and expand our global operations. We made an initial cash payment of R$73.8 million (equivalent to $28.9 million on the acquisition date), and the acquisition includes a potential contingent consideration payment in the future that is principally based on FAEL’s calendar year 2018 net revenue. The contingent payment 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 insignificant based on our estimate of FAEL’s future revenue in relation to the contingent payment threshold as defined in the acquisition agreement. We incurred $1.2 million of transaction costs in connection with this acquisition and these costs are included in acquisition and other related costs on our Condensed Consolidated Statements of Operations in the six months ended February 28, 2015.

In connection with the acquisition, we also have the option to buy the remaining noncontrolling interests, and the noncontrolling shareholders have the option to sell their shares to us, beginning in the third quarter of our fiscal year 2019, or earlier in limited circumstances. The prices for these options are based on a formula specified at the acquisition date and are 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. Since the options are embedded in the shares owned by the noncontrolling shareholders and the shareholders have the option to redeem their shares, we have classified the noncontrolling interests as redeemable equity on our Condensed Consolidated Balance Sheets. Subsequent to recording the noncontrolling interests at fair value on the acquisition date, as discussed further below, we record the redeemable noncontrolling interests at the greater of the carrying value or the redemption value because the interests are probable of becoming redeemable. We determine the redemption value using the formula specified at the acquisition date, and by assuming the end of each period is the redemption date. We record redemption value adjustments through retained earnings.

We accounted for the acquisition as a business combination and the following details our preliminary allocation of the purchase price to the assets acquired and liabilities assumed at fair value:

($ in thousands)
Cash and cash equivalents	$	7,685
Intangibles:
Trademark (indefinite useful life)	9,223
Accreditation (indefinite useful life)	5,940
Course curriculum (4 year useful life)	1,212
Other (4 year useful life)	4,182
Goodwill	14,538
Other assets	2,877
Liabilities	(13,369		)
Total assets acquired and liabilities assumed	32,288
Less: Fair value of redeemable noncontrolling interests	(3,437		)
Total fair value of consideration transferred	28,851
Less: Cash acquired	(7,685		)
Cash paid for acquisition, net of cash acquired	$	21,166

The above purchase price allocation is preliminary and subject to revision as we finalize the valuation of intangible assets, and as additional information about the fair value of other assets and liabilities becomes available.

We determined the fair value of assets acquired, liabilities assumed and the redeemable noncontrolling interests based on assumptions that reasonable market participants would use while employing the concept of highest and best use of the respective items. We used the following assumptions, the majority of which include significant unobservable inputs, and valuation methodologies to determine fair value:

• Intangibles - We used income approaches to value the substantial majority of the acquired intangibles. The trademark was valued using the relief-from-royalty method, which represents the benefit of owning the intangible asset rather than paying royalties for its use. We used the excess earnings method or the with and with-out method for the remaining intangibles valued using income approaches.

• Other assets and liabilities - The carrying value of all other assets and liabilities approximated fair value at the time of acquisition.

• Redeemable noncontrolling interests - We estimated the fair value of the redeemable noncontrolling interests principally as the noncontrolling ownership percentage of the implied fair value of FAEL’s total equity. We reduced the fair value of the noncontrolling interest for certain discounts including lack of control.

We recorded $14.5 million of goodwill as a result of the FAEL acquisition, which may become deductible for tax purposes in the future. The goodwill is principally attributable to the future earnings potential associated with student growth and other intangibles that do not qualify for separate recognition such as the assembled workforce. The goodwill is included in our Apollo Global reportable segment and we have selected a July 1 annual goodwill impairment test date.

We assigned an indefinite useful life to the acquired trademark and accreditation intangibles as we believe they have the ability to generate cash flows indefinitely. In addition, there are no legal, regulatory, contractual, economic or other factors to limit the intangibles’ useful life and, as applicable, we intend to renew the intangibles and renewal can be accomplished at little cost. We determined all of the other acquired intangibles are finite-lived and we are amortizing them on either a straight-line or an accelerated basis that reflects the pattern in which we expect the economic benefits of the assets to be consumed. The weighted average original useful life of the acquired finite-lived intangibles was 4 years. Refer to Note 7, Goodwill and Intangibles, for the estimated future amortization of our finite-lived intangibles.

FAEL’s operating results are included in our consolidated financial statements from date of acquisition. We have not provided pro forma information or FAEL’s revenue and operating results because the results of operations are not material to our consolidated results of operations.

Fiscal Year 2014 Acquisition

On December 20, 2013, Apollo Global acquired 70% of the outstanding shares of Open Colleges, a provider of education and training to adult learners in Australia. We paid A$110.3 million (equivalent to$98.1 million on the transaction date), plus contingent consideration, which we initially measured at $21.4 million based on information available as of the acquisition date. We settled the contingent consideration during fiscal year 2015 as discussed at Note 8, Fair Value Measurements.

We accounted for the Open Colleges acquisition as a business combination and Open Colleges’ operating results are included in our consolidated financial statements from the date of acquisition. We have not provided pro forma information or Open Colleges’ revenue and operating results because the results of operations are not material to our consolidated results of operations.

The acquisition purchase price allocation is summarized below:

($ in thousands)
Net working capital deficit(1)	$	(10,979	)
Property and equipment	2,684
Finite-lived intangibles	60,575
Goodwill	127,656
Deferred taxes, net(1)	(9,279		)
Total assets acquired and liabilities assumed	170,657
Less: Fair value of redeemable noncontrolling interests	(51,197		)
Total fair value of consideration transferred	119,460
Less: Fair value of contingent consideration	(21,371		)
Less: Cash acquired	(3,152		)
Cash paid for acquisition, net of cash acquired	$	94,937

⁽¹⁾ Net working capital deficit and deferred taxes, net include approximately $33 million of assumed liabilities.

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Acquisitions (Tables)

6 Months Ended

Feb. 28, 2015

Faculdade da Educacional da Lapa [Member]

Purchase price allocation [Line Items]

Purchase price allocation

We accounted for the acquisition as a business combination and the following details our preliminary allocation of the purchase price to the assets acquired and liabilities assumed at fair value:

($ in thousands)
Cash and cash equivalents	$	7,685
Intangibles:
Trademark (indefinite useful life)	9,223
Accreditation (indefinite useful life)	5,940
Course curriculum (4 year useful life)	1,212
Other (4 year useful life)	4,182
Goodwill	14,538
Other assets	2,877
Liabilities	(13,369		)
Total assets acquired and liabilities assumed	32,288
Less: Fair value of redeemable noncontrolling interests	(3,437		)
Total fair value of consideration transferred	28,851
Less: Cash acquired	(7,685		)
Cash paid for acquisition, net of cash acquired	$	21,166

Open Colleges [Member]

Purchase price allocation [Line Items]

Purchase price allocation

The acquisition purchase price allocation is summarized below:

($ in thousands)
Net working capital deficit(1)	$	(10,979	)
Property and equipment	2,684
Finite-lived intangibles	60,575
Goodwill	127,656
Deferred taxes, net(1)	(9,279		)
Total assets acquired and liabilities assumed	170,657
Less: Fair value of redeemable noncontrolling interests	(51,197		)
Total fair value of consideration transferred	119,460
Less: Fair value of contingent consideration	(21,371		)
Less: Cash acquired	(3,152		)
Cash paid for acquisition, net of cash acquired	$	94,937

⁽¹⁾ Net working capital deficit and deferred taxes, net include approximately $33 million of assumed liabilities.

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Restructuring and Impairment Charges (Details) (USD $)	3 Months Ended			6 Months Ended
	Feb. 28, 2015	Nov. 30, 2014	Feb. 28, 2014	Feb. 28, 2015	Feb. 28, 2014
Restructuring [Line Items]
Restructuring charges	$ 16,587,000	$ 19,028,000	$ 15,209,000	$ 35,615,000	$ 47,172,000
Intangibles impairment			0		0
Property and equipment impairment			0		0
Restructuring and impairment charges	35,536,000		15,209,000	54,564,000	47,172,000
Balance	98,153,000	103,083,000		103,083,000
Other	(3,165,000)	(3,357,000)
Payments	(17,270,000)	(20,601,000)
Balance	94,305,000	98,153,000		94,305,000
Restructuring gross obligation	167,000,000			167,000,000
Prior year restructuring [Member]
Restructuring [Line Items]
Restructuring charges				23,300,000
Cumulative costs for restructuring activities	367,000,000			367,000,000
2015 Restructuring [Member]
Restructuring [Line Items]
Restructuring charges				12,300,000
University Of Phoenix [Member]
Restructuring [Line Items]
Property and equipment impairment	5,950,000			5,950,000
University Of Phoenix [Member] | Prior year restructuring [Member]
Restructuring [Line Items]
Number of facilities				115
Cumulative costs for restructuring activities	285,000,000			285,000,000
University Of Phoenix [Member] | 2015 Restructuring [Member]
Restructuring [Line Items]
Restructuring charges				1,100,000
University Of Phoenix [Member] | Software and technology [Member]
Restructuring [Line Items]
Intangibles impairment	12,999,000			12,999,000
Apollo Global [Member] | Prior year restructuring [Member]
Restructuring [Line Items]
Cumulative costs for restructuring activities	18,000,000			18,000,000
Other [Member] | Prior year restructuring [Member]
Restructuring [Line Items]
Cumulative costs for restructuring activities	64,000,000			64,000,000
Other [Member] | 2015 Restructuring [Member]
Restructuring [Line Items]
Restructuring charges				11,200,000
Lease and related costs, net [Member] | Prior year restructuring [Member]
Restructuring [Line Items]
Restructuring charges	12,014,000	10,094,000
Balance	90,131,000	96,204,000		96,204,000
Other	(2,530,000)	(2,605,000)
Payments	(13,290,000)	(13,562,000)
Balance	86,325,000	90,131,000		86,325,000
Cumulative costs for restructuring activities	241,000,000			241,000,000
Lease and related costs, net [Member] | 2015 Restructuring [Member]
Restructuring [Line Items]
Restructuring charges	0	0
Balance	0	0		0
Other	0	0
Payments	0	0
Balance	0	0		0
Severance and other employee separation costs [Member] | Prior year restructuring [Member]
Restructuring [Line Items]
Restructuring charges	426,000	167,000
Balance	167,000	5,687,000		5,687,000
Other	0	0
Payments	(475,000)	(5,687,000)
Balance	118,000	167,000		118,000
Cumulative costs for restructuring activities	84,000,000			84,000,000
Severance and other employee separation costs [Member] | 2015 Restructuring [Member]
Restructuring [Line Items]
Restructuring charges	3,860,000	4,643,000		8,500,000
Number of positions eliminated				300
Balance	3,545,000	0		0
Other	(635,000)	(752,000)
Payments	(2,801,000)	(346,000)
Balance	3,969,000	3,545,000		3,969,000
Other restructuring related costs [Member] | Prior year restructuring [Member]
Restructuring [Line Items]
Restructuring charges	287,000	357,000
Balance	1,160,000	1,192,000		1,192,000
Other	0	0
Payments	(704,000)	(389,000)
Balance	743,000	1,160,000		743,000
Cumulative costs for restructuring activities	42,000,000			42,000,000
Other restructuring related costs [Member] | 2015 Restructuring [Member]
Restructuring [Line Items]
Restructuring charges	0	3,767,000
Balance	3,150,000	0		0
Other	0	0
Payments	0	(617,000)
Balance	$ 3,150,000	$ 3,150,000		$ 3,150,000

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Share-Based Compensation

6 Months Ended

Feb. 28, 2015

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 February 28,				Six Months Ended February 28,
($ in thousands)	2015		2014		2015		2014
Instructional and student advisory	$	2,905	$	3,280	$	5,887	$	6,813
Marketing	783		937		1,619		2,045
Admissions advisory	256		212		517		314
General and administrative	6,624		5,644		12,504		11,012
Restructuring and impairment charges	635		464		1,387		2,326
Share-based compensation expense	$	11,203	$	10,537	$	21,914	$	22,510

In accordance with our Amended and Restated 2000 Stock Incentive Plan, we granted 14,000 and 68,000 restricted stock units and performance share awards during the three and six months ended February 28, 2015, respectively. The granted awards had a weighted average grant date fair value per share of $32.00 and $30.06, respectively. As of February 28, 2015, we had $59.2 million and $3.2 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 2.4 years.

We did not grant any stock options during the six months ended February 28, 2015. As of February 28, 2015, we had $6.9 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 2.7 years.