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The Phoenix, Arizona-based company reported net income for the fourth quarter of $91.5 million or $0.59 per share, compared to $229.6 million or $1.43 per share for the year-ago quarter.
The latest quarter results include special items totaling pre-tax charges of $95.4 million, including an accrual for an estimated litigation settlement of $80.5 million.
Last month, University of Phoenix confirmed that it has entered into settlement talks with plaintiffs to resolve the Incentive Compensation False Claims Act litigation pending in the U.S. District Court for the Eastern District of California. Pending the outcome of those talks, University of Phoenix and the plaintiffs jointly requested a stay of all litigation proceedings for 45 days, which was granted on October 2. In connection with the matter, Apollo Group recorded a pre-tax charge of $80.5 million in the latest quarter which is the company's best estimate of the loss to be incurred in connection with the matter, including associated expenses.
The year-ago results included a reversal of a previously-accrued litigation loss associated with a securities matter of $170.0 million when the earlier judgment was vacated, as well as a $9.5 million gain from a third party's forfeiture of an escrow deposit in connection with a now-cancelled agreement to sell and lease back the company's headquarters buildings.
Excluding items, adjusted net income for the fourth quarter was $165.6 million or $1.06 per share, compared to $120.5 million or $0.75 per share in the prior year quarter.
On average, 21 analysts polled by Thomson Reuters expected the company to earn $1.04 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Net revenues for the fourth quarter rose 29.4% to $1.08 billion from $831.40 million in the same quarter last year, driven by a 22.3% growth in University of Phoenix total degreed enrollment to 443,000. Nineteen analysts had a consensus revenue estimate of $1.03 billion for the fourth quarter.
Apollo Global Inc., a unit of Apollo Group, completed the acquisition of BPP, a UK-based provider of education and training mainly to professionals in the legal and finance industries in July, for a final purchase price of $602 million. BPP's operations contributed $13.1 million to fourth quarter revenue but reduced earnings per share by $0.03, the company said.
For the fiscal year 2009, the company reported net income of $598.3 million or $3.75 per share, compared to $476.5 million or $2.87 per share for the fiscal year 2008.
Excluding items, adjusted net income for fiscal 2009 was $672.4 million or $4.22 per share, compared to $470.7 million or $2.84 per share in the prior fiscal year.
Net revenues for the fiscal year 2009 rose 26.5% to $3.97 billion from $3.14 billion last year.
Analysts expected the company to earn $4.19 per share on revenue of $3.93 billion for the fiscal year 2009.
Additionally, Apollo Group announced that the Enforcement Division of the Securities and Exchange Commission has commenced an informal probe into the company's revenue recognition practices. The company said it plans to cooperate fully with the SEC in the probe.
Among others in the industry, DeVry, Inc. (DV | Quote | Chart | News | PowerRating) on Tuesday reported a 57% jump in first quarter profit, as revenue increased 42% on higher enrollment. The company's results also beat analysts' estimates.
Apollo Group shares, which have traded in a range of $52.93 to $90.00 over the past year, closed Tuesday's regular trading session at $72.97, down 23 cents. The stock is currently losing $12.97 or 17.77% in after hour trading.
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