8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 23, 2006

APOLLO GROUP, INC.

(Exact name of registrant as specified in charter)

Arizona	0-25232	86-0419443
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4615 East Elwood Street, Phoenix, Arizona	85040
(Address of principal executive offices)	(Zip Code)

(480) 966-5394

     (Registrant’s telephone number, including area code)     

Not Applicable

     (Former name or former address, if changed since last report)     

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99.1

Item 2.02. Results of Operations and Financial Condition.

On March 23, 2006, Apollo Group, Inc. reported via press release its results of operations for its second quarter ended February 28, 2006. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information furnished pursuant to this Item 2.02 and the exhibit hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements, Pro Forma Financial Information and Exhibits.

(c) Exhibits.

99.1 Press Release dated March 23, 2006

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

March 23, 2006	Apollo Group, Inc.
	(Registrant)
	By:	/s/ Kenda B. Gonzales
	Name: Kenda B. Gonzales
	Title: Chief Financial Officer, Secretary, and Treasurer
March 23, 2006	Apollo Group, Inc.
	(Registrant)
	By:	/s/ Daniel E. Bachus
	Name: Daniel E. Bachus
	Title: Chief Accounting Officer and Controller
March 23, 2006	Apollo Group, Inc.
	(Registrant)
	By:	/s/ Brian Mueller
	Name: Brian Mueller
	Title: President

Exhibit Index

Exhibit No.	Description
99.1	Press Release dated March 23, 2006

EX-99.1

Exhibit 99.1

Apollo Group, Inc.
News Release

APOLLO GROUP, INC. REPORTS FISCAL 2006
SECOND QUARTER RESULTS

     Phoenix, Arizona, March 23, 2006 — Apollo Group, Inc. (Nasdaq:APOL) today reported fiscal 2006 financial results for the second quarter ended February 28, 2006.

     Net income attributed to Apollo Education Group common stock for the three months ended February 28, 2006, was $80.6 million, or $.46 per diluted share, compared to $87.1 million, or $.47 per diluted share reported for the same period last year. The expense related to the amounts paid to our former CEO under the terms of the Separation Agreement reduced diluted earnings per share by $.09. $6.2 million related to the Separation Agreement was recorded directly through shareholders’ equity.

     Net income attributed to Apollo Education Group common stock for the six months ended February 28, 2006, was $211.4 million, or $1.19 per diluted share, compared to $196.6 million, or $1.04 per diluted share reported for the same period last year.

     Total consolidated revenues for Apollo Group, Inc. for the three months ended February 28, 2006, rose 12.6% to $569.6 million, compared with $505.7 million in the second quarter of fiscal 2005. The University of Phoenix accounted for 81.7% of the $526.7 million in net tuition revenues from students enrolled in degree programs for the quarter ended February 28, 2006.

     Total consolidated revenues for Apollo Group, Inc. for the six months ended February 28, 2006, rose 15.2% to $1.198 billion, compared with $1.041 billion in the same period last year. The University of Phoenix accounted for 83.3% of the $1.109 billion in net tuition revenues from students enrolled in degree programs for the six months ended February 28, 2006.

     Commenting on the quarter, Brian Mueller, President, said, “Our revenue was in line with the revised guidance we gave at the end of February. As we discussed then, we have undertaken a variety of focused initiatives to increase top-line growth for the second half of the year and beyond. These three primary strategies include investing aggressively in our core business of working adults, further developing the echo boomer business and leveraging our strategic relationship with advertising.com. We have already seen progress in these key initiatives and are excited by the many growth opportunities that lie ahead.”

     Consolidated degree enrollments for University of Phoenix and Western International University’s Axia College at February 28, 2006, increased by 10.5% to 281,400 students compared to 254,600 students at February 28, 2005. Consolidated degree enrollments of online students increased 20.5%.

~continued~

     The company will hold a conference call to discuss these earnings results at 11:00 AM Eastern time, 9:00 AM Phoenix time, on Thursday, March 23, 2006. The call may be accessed by dialing (877) 292-6888 (domestic) or (706) 634-1393 (internationally). The conference ID number is 6340488. A live webcast of this event may be accessed by visiting the company website at: www.apollogrp.edu. A replay of the call will be available on our website or at (706) 645-9291 (conf. ID # 6340488) until April 7, 2006.

     Apollo Group, Inc. has been providing higher education programs to working adults for almost 30 years. Apollo Group, Inc., operates through its subsidiaries: The University of Phoenix, Inc., Institute for Professional Development, The College for Financial Planning Institutes Corporation, and Western International University, Inc. The consolidated enrollment in its educational programs makes it the largest private institution of higher education in the United States. It offers educational programs and services at 95 campuses and 159 learning centers in 39 states, Puerto Rico, Alberta, British Columbia, Netherlands, and Mexico.

     For more information about Apollo Group, Inc. and its subsidiaries, call (800) 990-APOL or visit Apollo on the company website at: www.apollogrp.edu.

-Table to Follow-

APOLLO GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	For the Three Months Ended				For the Six Months Ended
	February 28,				February 28,
	2006		2005		2006		2005
(In thousands, except per share amounts)
Revenues:
Tuition and other, net	$	569,551	$	505,693	$	1,198,435	$	1,040,619
Costs and expenses:
Instructional costs and services		258,447		221,635		518,332		439,052
Selling and promotional		124,426		121,016		252,546		241,601
General and administrative		57,205		23,499		87,285		44,687
		440,078		366,150		858,163		725,340
Income from operations		129,473		139,543		340,272		315,279
Interest income and other, net		3,567		3,855		8,070		8,417
Income before income taxes		133,040		143,398		348,342		323,696
Provision for income taxes		52,405		56,284		136,933		127,051
Net income	$	80,635	$	87,114	$	211,409	$	196,645
Earnings per share attributed to Apollo Education Group common stock:
Diluted net income per share	$	0.46	$	0.47	$	1.19	$	1.04
Diluted weighted average shares outstanding		175,235		187,007		177,783		188,419

The company adopted SFAS 123(R) during the first quarter of 2006 resulting in $12.7 million and $18.5 million of stock-based compensation expense for the three and six months ended February 28, 2006, respectively. There was no stock-based compensation expense related to employee stock options and employee stock purchases under SFAS 123 in the same periods of fiscal 2005 because the Company did not adopt the recognition provisions of SFAS 123. Net income, including pro forma stock-based compensation expense, as previously disclosed in the notes to the Condensed Consolidated Financial Statements for the three and six months ended February 28, 2005, was $82.9 million or $0.44 per diluted share, and $188.2 million or $1.00 per diluted share, respectively.

~continued~

APOLLO GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

	February 28,			August 31,
	2006			2005
(Dollars in thousands)
Assets:
Current assets
Cash and cash equivalents	$	20,539		$	145,607
Restricted cash		238,351			225,706
Marketable securities		97,801			224,112
Receivables, net		200,719			201,615
Deferred tax assets, net		17,565			14,991
Other current assets		19,738			23,058
Total current assets		594,713			835,089
Property and equipment, net		287,068			268,661
Marketable securities		76,079			97,350
Cost in excess of fair value of assets purchased, net		37,096			37,096
Deferred tax assets, net		32,193			35,756
Other assets		28,003			28,993
Total assets	$	1,055,152		$	1,302,945
Liabilities and Shareholders’ Equity:
Current liabilities
Current portion of long-term liabilities	$	20,432		$	18,878
Accounts payable		44,879			40,129
Accrued liabilities		62,428			61,315
Income taxes payable		9,185			9,740
Student deposits and current portion of deferred revenue		391,914			387,910
Total current liabilities		528,838			517,972
Deferred tuition revenue, less current portion		359			351
Long-term liabilities, less current portion		84,537			77,748
Total liabilities		613,734			596,071
Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value, 1,000,000 shares authorized; none issued
Apollo Education Group Class A nonvoting common stock, no par value, 400,000,000 shares authorized; 188,002,000 issued at February 28, 2006 and August 31, 2005, and 172,205,000 and 179,184,000 outstanding at February 28, 2006 and August 31, 2005, respectively		103			103
Apollo Education Group Class B voting common stock, no par value, 3,000,000 shares authorized; 477,000 issued and outstanding at February 28, 2006 and August 31, 2005		1			1
Additional paid-in capital
Apollo Education Group Class A treasury stock, at cost, 15,797,000 and 8,818,000 shares at February 28, 2006 and August 31, 2005, respectively		(1,079,274	)		(645,742	)
Retained earnings		1,522,022			1,353,650
Accumulated other comprehensive loss		(1,434	)		(1,138	)
Total shareholders’ equity		441,418			706,874
Total liabilities and shareholders’ equity	$	1,055,152		$	1,302,945

~continued~

APOLLO GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	For the Six Months Ended
	February 28,
	2006			2005
(In thousands)
Cash flows provided by (used for) operating activities:
Net income	$	211,409		$	196,645
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense		10,983
Depreciation and amortization		32,100			25,093
Amortization of investment premiums		673			2,196
Provision for uncollectible accounts		39,883			18,919
Deferred income taxes		989			17,046
Tax benefits of stock options exercised					24,430
Excess tax benefits from stock-based compensation		(9,533	)
Cash received for tenant improvements		1,594			1,263
Changes in assets and liabilities
Receivables		(38,987	)		(43,660	)
Other assets		3,408			(4,132	)
Accounts payable and accrued liabilities		(9,647	)		(30,112	)
Income taxes		9,896			(26,076	)
Student deposits and deferred revenue		4,440			46,640
Other liabilities		3,058			1,689
Net cash provided by operating activities		260,266			229,941
Cash flows provided by (used for) investing activities:
Net additions to property and equipment		(15,350	)		(43,897	)
Development of land and buildings related to future Online expansion		(14,761	)
Purchase of marketable securities		(187,156	)		(18,961	)
Maturities of marketable securities		334,065			238,094
Purchase of restricted securities		(460,664	)		(173,731	)
Maturities of restricted securities		448,019			130,495
Purchase of other assets		(721	)		(1,253	)
Net cash provided by investing activities		103,432			130,747
Cash flows provided by (used for) financing activities:
Purchase of Apollo Education Group Class A common stock		(510,882	)		(542,988	)
Issuance of Apollo Education Group Class A common stock		19,119			33,865
Cash paid for cancellation of vested options		(6,240	)
Excess tax benefits from stock-based compensation		9,533
Net cash used for financing activities		(488,470	)		(509,123	)
Currency translation loss		(296	)		(356	)
Net decrease in cash and cash equivalents		(125,068	)		(148,791	)
Cash and cash equivalents at beginning of period		145,607			156,669
Cash and cash equivalents at end of period	$	20,539		$	7,878
Supplemental disclosure of non-cash investing activities
Tenant improvement allowances	$	10,777		$	7,795
Purchases of property and equipment included in accounts payable	$	15,510		$	4,960

~continued~

APOLLO GROUP, INC. AND SUBSIDIARIES
DEGREE ENROLLMENTS
(Unaudited)

	February 28,
	2006		2005
The University of Phoenix, Inc. and Axia College
Associates		53,500		22,800
Bachelors		155,700		159,100
Masters		68,700		70,200
Doctoral		3,500		2,500
		281,400		254,600
Apollo Group, Inc. Consolidated
Associates		61,200		30,200
Bachelors		168,800		172,800
Masters		77,300		78,300
Doctoral		3,500		2,500
		310,800		283,800

~continued~

APOLLO GROUP, INC. AND SUBSIDIARIES
SUPPLEMENTARY DATA—THREE MONTHS ENDED FEBRUARY 28, 2006
(Unaudited)

     Instructional costs and services increased by $36.8 million in the three months ended February 28, 2006, from the three months ended February 28, 2005. The following table sets forth the changes in significant components of instructional costs and services, in millions:

					Percent of Revenues
	For the Three Months Ended				For the Three Months Ended
	February 28,				February 28,
	2006		2005		2006			2005
Employee compensation and related expenses	$	90.1	$	81.3		15.9	%		16.1	%
Stock-based compensation		3.5				0.6	%
Faculty compensation		49.1		43.4		8.6	%		8.6	%
Classroom lease expenses and depreciation		46.3		41.7		8.1	%		8.2	%
Financial aid processing costs		12.7		10.4		2.2	%		2.1	%
Bad debt expense		19.8		9.9		3.5	%		1.9	%
Other instructional costs and services		36.9		34.9		6.5	%		6.9	%
Instructional costs and services	$	258.4	$	221.6		45.4	%		43.8	%

     Selling and promotional expenses increased by $3.4 million in the three months ended February 28, 2006, from the three months ended February 28, 2005. The following table sets forth the changes in significant components of selling and promotional expenses, in millions:

					Percent of Revenues
	For the Three Months Ended				For the Three Months Ended
	February 28,				February 28,
	2006		2005		2006			2005
Enrollment advisors’ compensation and related expenses	$	62.7	$	51.7		11.0	%		10.2	%
Stock-based compensation		0.4				0.0	%
Advertising		49.4		56.1		8.7	%		11.1	%
Other selling and promotional expenses		11.9		13.2		2.1	%		2.6	%
Selling and promotional expenses	$	124.4	$	121.0		21.8	%		23.9	%

     General and administrative expenses increased by $33.7 million in the three months ended February 28, 2006, from the three months ended February 28, 2005. The following table sets forth the changes in significant components of general and administrative expenses, in millions:

					Percent of Revenues
	For the Three Months Ended				For the Three Months Ended
	February 28,				February 28,
	2006		2005		2006			2005
Employee compensation and related expenses	$	32.7	$	11.9		5.7	%		2.4	%
Stock-based compensation		8.8				1.5	%
Administrative space and depreciation		5.7		4.0		1.0	%		0.8	%
Other general and administrative expenses		10.0		7.6		1.8	%		1.5	%
General and administrative expenses	$	57.2	$	23.5		10.1	%		4.7	%

     Included in the above general and administrative employee compensation and related expenses is $19.0 million related to our former CEO’s Separation Agreement. Included in the above general and administrative stock-based compensation is $7.5 million related to our former CEO’s Separation Agreement.

~continued~

APOLLO GROUP, INC. AND SUBSIDIARIES
SUPPLEMENTARY DATA—SIX MONTHS ENDED FEBRUARY 28, 2006
(Unaudited)

     Instructional costs and services increased by $79.3 million in the six months ended February 28, 2006, from the six months ended February 28, 2005. The following table sets forth the changes in significant components of instructional costs and services, in millions:

					Percent of Revenues
	For the Six Months Ended				For the Six Months Ended
	February 28,				February 28,
	2006		2005		2006			2005
Employee compensation and related expenses	$	178.3	$	161.8		14.9	%		15.6	%
Stock-based compensation		6.3				0.6	%
Faculty compensation		102.4		87.9		8.6	%		8.4	%
Classroom lease expenses and depreciation		92.7		82.0		7.7	%		7.9	%
Financial aid processing costs		25.5		20.7		2.1	%		2.0	%
Bad debt expense		39.9		19.0		3.3	%		1.8	%
Other instructional costs and services		73.2		67.7		6.1	%		6.5	%
Instructional costs and services	$	518.3	$	439.1		43.3	%		42.2	%

     Selling and promotional expenses increased by $10.9 million in the six months ended February 28, 2006, from the six months ended February 28, 2005. The following table sets forth the changes in significant components of selling and promotional expenses, in millions:

					Percent of Revenues
	For the Six Months Ended				For the Six Months Ended
	February 28,				February 28,
	2006		2005		2006			2005
Enrollment advisors’ compensation and related expenses	$	119.5	$	99.9		10.0	%		9.6	%
Stock-based compensation		0.9				0.1	%
Advertising		105.9		115.9		8.8	%		11.1	%
Other selling and promotional expenses		26.2		25.8		2.2	%		2.5	%
Selling and promotional expenses	$	252.5	$	241.6		21.1	%		23.2	%

     General and administrative expenses increased by $42.6 million in the six months ended February 28, 2006, from the six months ended February 28, 2005. The following table sets forth the changes in significant components of general and administrative expenses, in millions:

					Percent of Revenues
	For the Six Months Ended				For the Six Months Ended
	February 28,				February 28,
	2006		2005		2006			2005
Employee compensation and related expenses	$	44.9	$	21.9		3.7	%		2.1	%
Stock-based compensation		11.3				0.9	%
Administrative space and depreciation		11.6		7.8		1.0	%		0.8	%
Other general and administrative expenses		19.5		15.0		1.6	%		1.4	%
General and administrative expenses	$	87.3	$	44.7		7.3	%		4.3	%

     Included in the above general and administrative employee compensation and related expenses is $19.0 million related to our former CEO’s Separation Agreement. Included in the above general and administrative stock-based compensation is $7.5 million related to our former CEO’s Separation Agreement.

Company Contact: Kenda B. Gonzales, CFO ~ (800) 990-APOL ~ kenda.gonzales@apollogrp.edu
Investor Relations Contact: Janess Pasinski ~ Apollo Group, Inc. ~ (800) 990-APOL, option 6 ~ janess@apollogrp.edu
Press Contact: Ayla Dickey ~ Apollo Group, Inc. ~ (480) 557-2952 ~ ayla.dickey@apollogrp.edu