Apollo Education Group Inc – ‘10-K’ for 8/31/98

As of:  Thursday, 11/12/98   ·   For:  8/31/98   ·   Accession #:  929887-98-4   ·   File #:  0-25232

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         87    372K 
 2: EX-21       Subsidiaries of the Registrant                         1      5K 
 3: EX-23.1     Consent of Experts or Counsel                          1      4K 
 4: EX-27       Financial Data Schedule (Pre-XBRL)                     1      7K 

10-K   —   Annual Report
Document Table of Contents

10-K
1st Page of 87
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
     UNITED STATES
      SECURITIES AND EXCHANGE COMMISSION
     Washington, D.C.  20549
      FORM  10-K
(Mark One)                                                                      
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE   
ACT OF 1934                                                           
For the fiscal year ended:  August 31, 1998                           

OR

[ ]  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 GROUP, INC.
      (Exact name of registrant as specified in its charter)

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

        4615 EAST ELWOOD STREET, PHOENIX, ARIZONA  85040
          (Address of principal executive offices, including zip code)

          Registrant's telephone number, including area code: (602) 966-5394

         SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE                                      NONE          
  (Title of each class)          (Name of each exchange on which registered)

         SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
        CLASS A COMMON STOCK, NO PAR
        (Title of class)

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.  [X] Yes        [ ] No           

Indicate by check mark if disclosure of delinquent filers pursuant to Item      
405 of Regulation S-K is not contained herein, and will not be contained, to    
the best of registrant's knowledge, in definitive proxy or information          
statements incorporated by reference in Part III of this Form 10-K or any       
amendment to this Form 10-K.  [ ]                                               

No shares of the Company's Class B Common Stock, its voting stock, is held by   
non-affiliates.  The holders of the Company's Class A Common stock are not      
entitled to any voting rights.  Aggregate market value of Class A Common Stock  
held by non-affiliates as of October 23, 1998, was approximately $1.6 billion.  
The number of shares outstanding for each of the registrant's classes of common 
stock, as of October 23, 1998, is as follows:                                   

        Class A Common Stock, no par               76,906,411 Shares
        Class B Common Stock, no par                  511,484 Shares

       DOCUMENTS INCORPORATED BY REFERENCE
        NONE
1                                                                               

10-K
2nd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 2nd
APOLLO GROUP, INC. AND SUBSIDIARIES 
FORM 10-K 
INDEX 

                                                                    PAGE
PART I                                                                  ----    

Item 1.  Business                                                         3     
Item 2.  Properties                                                      30     
Item 3.  Legal Proceedings                                               31     
Item 4.  Submission of Matters to a Vote of Security Holders             31     

PART II                                                                         

Item 5.  Market for Registrant's Common Equity and Related                      
    Stockholder Matters                                             32
Item 6.  Selected Consolidated Financial Data                            33     
Item 7.  Management's Discussion and Analysis of Financial                      
    Condition and Results of Operations                             35
Item 7a. Quantitative and Qualitative Disclosures about Market Risk      45     
Item 8.  Financial Statements and Supplementary Data                     46     
Item 9.  Changes in and Disagreements With Accountants on                       
    Accounting and Financial Disclosure                             68

PART III                                                                        

Item 10. Directors and Executive Officers of the Registrant              69     
Item 11. Executive Compensation                                          73     
Item 12. Security Ownership of Certain Beneficial                               
    Owners and Management                                           80
Item 13. Certain Relationships and Related Transactions                  81     

PART IV                                                                         

Item 14. Exhibits, Financial Statement Schedules, and                           
    Reports on Form 8-K                                             82

SIGNATURES                                                               86     

2                                                                               

10-K
3rd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 3rd
PART I                                                                          
Item 1 -- Business                                                              

OVERVIEW                                                                        

Apollo Group, Inc. ("Apollo" or the "Company"), through its           
subsidiaries, the University of Phoenix, Inc. ("UOP"), the Institute for        
Professional Development ("IPD"), the College for Financial Planning            
Institutes Corporation (the "College"), and Western International University,   
Inc. ("WIU"), is a leading provider of higher education programs for working    
adults based on the number of working adults enrolled in its programs.  The     
consolidated enrollment in the Company's educational programs would make it     
the largest private institution of higher education in the United States.       
The Company currently offers its programs and services at 117 campuses and      
learning centers in 34 states, Puerto Rico and London, England. The Company's   
degree enrollment has increased to approximately 71,400 at August 31, 1998      
from approximately 30,200 at August 31, 1994.                                   

Based on its degree enrollment of over 53,200 adult students, of which
6,500 were distance education students, UOP is currently one of the largest     
regionally accredited private universities in the United States and has one     
of the nation's largest private business schools.  UOP has been accredited by   
the Commission on Institutions of Higher Education of the North Central         
Association of Colleges and Schools ("NCA") since 1978 and has successfully     
replicated its teaching/learning model while maintaining educational quality    
at 70 campuses and learning centers in Arizona, California, Colorado,           
Florida, Hawaii, Louisiana, Michigan, Nevada, New Mexico, Oklahoma, Oregon,     
Utah, Washington and Puerto Rico.  UOP has developed specialized systems for    
student tracking, marketing, faculty recruitment and training and academic      
quality management.  These systems enhance UOP's ability to expand into new     
markets while still maintaining academic quality.  Currently, approximately     
56% of UOP's students receive some level of tuition reimbursement from their    
employers, many of which are Fortune 500 companies.                             

The Apollo Learning Group ("ALG") was established in 1997 to focus on 
education opportunities in information technology ("IT") for enhancing the      
skills of IT professionals.  ALG curriculum includes courses for the            
administration of computer networks, internetworking and customized technical   
training.  ALG's services currently support eight UOP locations offering        
Authorized Academic Training Programs to deliver Microsoft Official             
Curriculum.  These campuses offer lab-based computer courses to prepare         
students for Microsoft Certified Systems Engineer exams.                        

  IPD provides program development and management services under long-term
contracts that meet the guidelines of the client institutions' respective       
regional accrediting associations.  IPD provides these services to 20           
regionally accredited private colleges and universities at 43 campuses and      
learning centers in 22 states and shares in the tuition revenues generated      
from these programs.  In addition, IPD has contracted to develop online         
degree programs for the United States Marine Corp.  IPD is able to assist       
these colleges and universities in expanding and diversifying their programs    
for working adults. IPD places a priority on institutions that: (1) are         
interested in developing or expanding off-campus degree programs for working    
adults; (2) recognize that working adults require a different                   
teaching/learning model than the 18 to 24 year old student; (3) desire to       
increase enrollments with a limited investment in institutional capital and     
(4) recognize the unmet educational needs of the working adult students in      
their market.  Approximately 16,000 degree-seeking students are currently       
enrolled in IPD-assisted programs.                                              
3                                                                               

10-K
4th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 4th
On September 23, 1997, the Company acquired the assets and related    
business operations of the College for Financial Planning and related           
divisions that include the Institute for Wealth Management, the Institute for   
Retirement Planning, the American Institute for Retirement Planners, Inc. and   
the Institute for Tax Studies.  The adjusted purchase price consisted of        
$19.4 million in cash, $15.9 million in stock and the assumption of             
approximately $11.4 million in liabilities.  With current enrollments of        
approximately 750 degree and 23,000 nondegree students, the College is one of   
the largest U.S. providers of financial planning education programs,            
including the Certified Financial Planner Professional Education Program.       

WIU currently offers graduate and undergraduate degree programs to    
approximately 1,300 students and has a total of three campuses and learning     
centers in Phoenix and Fort Huachuca, Arizona and London, England.              

The Company was incorporated in Arizona in 1981 and maintains its     
principal executive offices at 4615 East Elwood Street, Phoenix, Arizona        
85040.  The Company's telephone number is (602) 966-5394.  The Company?s        
Internet Web Site addresses are as follows:                                     

-   Apollo                http://www.apollogrp.edu                    
-   UOP                   http://www.uophx.edu                        
-   IPD                   http://www.ipd.org                          
-   WIU                   http://www.wintu.edu                        
-   the College           http://www.fp.edu                           
-   ALG                   http://www.mcse.com                         

The Company's fiscal year is from September 1 to August 31.  Unless   
otherwise stated, references to the years 1998, 1997 and 1996 relate to the     
fiscal years ended August 31, 1998, 1997 and 1996, respectively.                

This Annual Report on Form 10-K contains "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.  These      
forward-looking statements relating to future plans, expectations, events or    
performances involve risks and uncertainties and a number of factors could      
affect the validity of such forward-looking statements, including those set     
forth in Item 1 of this Form 10-K under the sections "Regulatory                
Environment," "Accreditation," "Federal Financial Aid Programs" and "State      
Authorizations."                                                                

MARKET                                                                          

The United States education market may be divided into the following  
distinct segments: kindergarten through twelfth grade schools ("K-12"),         
vocational and technical training schools, workplace and consumer training,     
and degree-granting colleges and universities ("higher education").  The        
Company primarily operates in the higher education segment and, with the        
acquisition of the College and the introduction of other non-degree programs,   
also operates in the workplace and consumer training segments.  The             
U.S. Department of Education National Center for Education Statistics           
("NCES") estimated that for 1996 (the most recent historical year reported),    
adults over 24 years of age comprised approximately 6.2 million, or 40.9%, of   
the 15.2 million students enrolled in higher education programs.  Currently,    
the U.S. Bureau of Census estimates that approximately 75% of students over     
the age of 24 work while attending school.  The NCES estimates that by the      

4                                                                               

10-K
5th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 5th
year 2003, the number of adult students over the age of 24 will remain          
approximately the same at 6.1 million, or 40.2%, of the 15.1 million students   
projected to be enrolled in higher education programs.                          

  The Company believes that the unique needs of working adults include the
following:                                                                      

  -   Convenient access to a learning environment (including both location
and delivery system)                                          

-   Degree programs offered by regionally accredited institutions that
can be completed in a reasonable amount of time               

 -   Programs that provide knowledge and skills with immediate practical
value in the workplace                                        

-   Education provided by academically qualified faculty with current 
      practical experience in fields related to the subjects they instruct

-   Administrative services designed to accommodate the full-time     
working adult's schedule                                      

-   Recognition of adult students as critical consumers of educational
programs and services                                         

-   A learning environment characterized by a low student-to-faculty  
ratio                                                         

-   Learning resources available electronically to all students       
regardless of geographical location                           

  The Company also believes that the increasing demand from and the unique
requirements of the adult working population represent a significant market     
opportunity to regionally accredited higher education institutions that can     
offer programs that meet these unique needs.                                    

Most regionally accredited colleges and universities are focused on   
serving the 18 to 24 year old student market.  This focus has resulted in a     
capital-intensive teaching/learning model that may be characterized by: (1) a   
high percentage of full-time tenured faculty with doctoral degrees;             
(2) fully-configured library facilities and related full-time staff;            
(3) dormitories, student unions and other significant plant assets to support   
the needs of younger students and (4) an emphasis on research and the related   
staff and facilities.  In addition, the majority of accredited colleges and     
universities continue to provide the bulk of their educational programming      
from September to mid-December and from mid-January to May.  As a result,       
most full-time faculty members only teach during that limited period of time.   
While this structure serves the needs of the full-time 18 to 24 year old        
student, it limits the educational opportunity for working adults who must      
delay their education for up to five months during these spring, summer and     
winter breaks.  In addition, this structure generally requires working adults   
to attend one course three times a week, commute to a central site, take work   
time to complete administrative requirements and, in undergraduate programs,    
participate passively in an almost exclusively lecture-based learning format    
primarily focused on a theoretical presentation of the subject matter.  For     
the majority of working adults, earning an undergraduate degree in this         
manner would take seven to ten years.  In recent years, many regionally         

5                                                                               

10-K
6th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 6th
accredited colleges and universities have begun offering more flexible          
programs for working adults, although their focus appears to remain on the 18   
to 24 year old students.                                                        

BUSINESS STRATEGY                                                               

The Company's strategic goal is to become the preferred provider of   
higher education programs for working adult students and the preferred          
provider of workplace training to their employers.  The Company is managed as   
a for-profit corporation in a higher education industry served principally by   
not-for-profit providers.  By design, the Company treats both its adult         
students and their employers as its primary customers.  Key elements of the     
Company's business strategy include the following:                              

Establish New UOP Campuses and Learning Centers -----------------------------   

UOP plans to add campuses and learning centers throughout the United  
States, Canada and other foreign markets.  New locations are selected based     
on an analysis of various factors, including the population of working adults   
in the area, the number of local employers and their educational                
reimbursement policies and the availability of similar programs offered by      
other institutions.  Campuses consist of classroom and administrative           
facilities with full student and administrative services.  Learning centers     
differ from campuses in that they consist primarily of classroom facilities     
with limited on-site administrative staff.                                      

The timing related to the establishment of new locations and the      
expansion of programs may vary depending on regulatory requirements and         
market conditions.                                                              

Establish New IPD Relationships ---------------------------------------------   

IPD plans to enter into additional long-term contracts with private   
colleges and universities in proximity to metropolitan areas throughout the     
United States.  In general, IPD seeks to establish relationships with           
colleges and universities located in states where it is difficult for out-of-   
state accredited institutions to obtain state authorizations.  In this way,     
the Company is able to optimize its campus-based penetration of potential new   
markets.                                                                        

Expand Educational Programs -------------------------------------------------   

The Company expects to continue to respond to the changing educational
needs of working adults and their employers through the introduction of new     
undergraduate and graduate degree programs and non-degree programs in           
business and information technology.  UOP received approval in 1998 from the    
NCA to offer a Doctor of Management degree.  This educational program will be   
the first doctoral degree offered by the Company.  The Company currently has    
a full-time staff of over 55 persons involved in its centralized curriculum     
development process.                                                            

 The Company is also exploring other educational areas, such as the K-12
market, adult remedial education and international opportunities, where it      
can leverage its educational expertise and/or delivery systems in a cost-       
effective manner.                                                               

6                                                                               

10-K
7th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 7th
Expand Access to Programs ---------------------------------------------------   

The Company plans to expand its distance education programs and       
services.  Enrollments in distance education degree programs, including         
Online, have increased to approximately 7,200 in 1998 from approximately        
1,600 in 1994.  The Company has started the process of converting many of its   
non-degree business and financial programs so that they can be delivered        
through the Internet.  The Company also plans to enhance its distance           
education delivery systems as new technologies become cost-effective, such as   
interactive distance education technology.                                      

International Expansion -----------------------------------------------------   

The Company is conducting ongoing market research in various foreign  
countries.  The Company has been approved by NCA to begin operations in         
Canada.  The first Canadian campus will be in Vancouver, British Columbia,      
with classes expected to commence during the second quarter of 1999.  The       
Company is considering international expansion into various European and        
Latin American markets using the University of Phoenix education model.  The    
Company will continue to monitor and assess the feasibility of expanding its    
educational programs to other international markets.                            

TEACHING/LEARNING MODEL-DEGREE PROGRAMS                                         

The Company's teaching/learning model used by UOP and IPD client      
institutions was designed for working adults.  This model is structured to      
enable students who are employed full-time to earn their degrees and still      
meet their personal and professional responsibilities.  Students attend         
weekly classes, averaging 15 students in size, and also meet weekly as part     
of a three to five person study group.  The study group meetings are used for   
review, work on assigned group projects and preparation for in-class            
presentations.  Courses are designed to facilitate the application of           
knowledge and skills to the workplace and are taught by faculty members who     
possess advanced degrees and have an average of 15 years of professional        
experience in business, industry, government and the professions.  In this      
way, faculty members are able to share their professional knowledge and         
skills with the students.                                                       

The Company's teaching/learning model has the following major         
characteristics:                                                                

Curriculum               The curriculum provides for the achievement of         
                     specific educational outcomes that are based on the
                     input from faculty, students and student employers.
                  The curriculum is designed to integrate academic
                      theory and professional practice and the application
                    to the workplace.  The standardized curriculum for
                 each degree program is also designed to provide
                 students with specified levels of knowledge and
                   skills regardless of delivery method or location.

Faculty                  Faculty applicants must possess an earned master's     
                 or doctoral degree from a regionally accredited
              institution and have a minimum of five years
                      recent professional experience in a field related to
                    the subject matter in which they seek to instruct.
                     To help promote quality delivery of the curriculum,
                      UOP faculty members are required to: (1) complete an

7                                                                               

10-K
8th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 8th
                    initial assessment conducted by staff and faculty;
                  (2) complete a series of certification workshops
         related to grading, facilitation of the
       teaching/learning model, oversight of
                    study group activities, adult learning theory, and
                 use of the Internet; (3) participate in ongoing
                development activities and (4) receive ongoing
                   performance evaluations by students, peer faculty
                  and staff.  The results of these evaluations are
                  used to establish developmental plans to improve
                 individual faculty performance and to determine
                     continued eligibility of faculty members to provide
instruction.                  

Interactive Learning     Courses are designed to combine individual and group   
                      activity with interaction between and among students
                     and the instructor.  The curriculum requires a high
                level of student participation for purposes of
                     increasing the student's ability to work as part of
a team.                       

Learning Resources       Students and faculty members are provided with         
                   electronic and other learning resources for their
                    information needs.  Over the past three years, the
                Company substantially expanded these services,
                    including the addition of research tools available
              on the Internet.  These extensive electronic
           resources minimize the Company's need for
                    capital-intensive library facilities and holdings.

Sequential Enrollment    Students enroll in and complete courses                
                 sequentially, rather than concurrently, thereby
                  allowing full-time working adults to focus their
                   attention and resources on one subject at a time,
                   thus balancing learning with ongoing personal and
professional responsibilities.

Academic Quality         The Company has developed and operationalized an       
                     Academic Quality Management System ("AQMS") that is
                 designed to maintain and improve the quality of
            programs and academic and student services
                regardless of the delivery method or location.
                     Included in the AQMS is the Adult Learning Outcomes
                     Assessment which seeks to measure student growth in
                   both the cognitive (subject matter) and affective
                 (educational, personal and professional values)
domains.                      

STRUCTURAL COMPONENTS OF TEACHING/LEARNING MODEL                                

Although adults over 24 years old comprise approximately 40.9% of all 
higher education enrollments in the United States, the mission of most          
accredited colleges and universities is to serve 18 to 24 year old students     
and conduct research.  UOP and IPD client institutions acknowledge the          
differences in educational needs between older and younger students and         
provide programs and services that allow working adult students to earn their   

8                                                                               

10-K
9th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 9th
degrees while integrating the process with both their personal and              
professional lives.                                                             

The Company believes that working adults require a different          
teaching/learning model than is designed for the 18 to 24 year old student.     
The Company has found that working adults seek accessibility, curriculum        
consistency, time and cost effectiveness and learning that has an immediate     
application to the workplace.  The Company's teaching/learning model differs    
from the models used by most regionally accredited colleges and universities    
because it is designed to enable adults to complete an undergraduate degree     
in four years and a graduate degree in two years while working full-time.       

The structural components of the Company's teaching/learning model    
include:                                                                        

Accessibility            The Company offers standardized curriculum that can    
                   be accessed through a variety of delivery methods
                  (e.g., campus-based or electronically delivered)
               that make the educational programs accessible
                 regardless of where the students work and live.

Instructional Costs      While the faculty at most accredited colleges and      
                      universities are employed full-time, most of the UOP
                     and IPD client institutions' faculty are part-time.
             All faculty are academically qualified, are
                professionally employed and are contracted for
                     instructional services on a course-by-course basis.

Facility Costs           The Company leases its campus and learning center      
                      facilities and rents additional classroom space on a
           short-term basis to accommodate growth in
                   enrollments, thus keeping the facility portion of
   its instructional costs variable.

Employed Students        Substantially all of UOP's students are employed       
                    full-time and approximately 72% have been employed
                      for nine years or more.  This minimizes the need for
                  capital-intensive facilities and services (e.g.,
                      dormitories, student unions, food services, personal
                    and employment counseling, health care, sports and
entertainment).               

Employer Support         Approximately 56% of UOP's students currently          
                  receive some level of tuition reimbursement from
                their employers, many of which are Fortune 500
                    companies; approximately 46% receive at least half
                    of their tuition and some 23% receive full tuition
                    reimbursement.  The Company develops relationships
               with key employers for purposes of recruiting
                     students and responding to specific employer needs.
                    This allows the Company to remain sensitive to the
                   needs and perceptions of employers, while helping
                 both to generate and sustain diverse sources of
revenues.                     

9                                                                               

10-K
10th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 10th
  The College currently offers text-based self-study programs for students
preparing for the Certified Financial Planner designation and other             
financial-related designations.  The Company plans to offer these same          
programs in a classroom-based format and also through Internet or Online-       
based formats.  Most of the College's students are employed and over 75% have   
four or more years of college education.                                        

WIU's teaching/learning model has similar characteristics to the      
teaching/learning model used by UOP and IPD client institutions, including      
the use of part-time practitioner faculty, standardized curriculum,             
computerized learning resources and leased facilities.  However, WIU provides   
educational programs in a semester-based format and does not focus              
exclusively on working adult students.                                          

PROGRAMS AND SERVICES                                                           

UOP Programs ----------------------------------------------------------------   

 UOP currently offers the following degree programs and related areas of
specialization at one or more campuses and learning centers or through its      
distance education delivery systems:                                            

DEGREE PROGRAMS                                                                 
---------------                                                                 
Associate of Arts in General Studies                                            
Bachelor of Arts in Management                                                  
Bachelor of Science in Business                                                 
Bachelor of Science in Nursing                                                  
Bachelor of Science in Human Services                                           
Master of Arts in Education                                                     
Master of Arts in Organizational Management                                     
Master of Business Administration                                               
Master of Counseling                                                            
Master of Science in Nursing                                                    
Master of Science in Computer Information Systems                               

AREAS OF SPECIALIZATION AVAILABLE IN CERTAIN DEGREE PROGRAMS                    
------------------------------------------------------------                    
Undergraduate         BUSINESS                                                  
Accounting                          
Administration                      
Management                          
Marketing                           
Project Management                  

COMPUTER INFORMATION SYSTEMS        
Information Systems                 

Graduate              BUSINESS                                                  
Administration                      
Global Management                   
Organizational Management           

COMPUTER INFORMATION SYSTEMS        
Technology Management               
Information Systems                 

10                                                                              

10-K
11th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 11th
EDUCATION                           
Administration and Supervision      
Bilingual-Bicultural                
Curriculum and Instruction          
Diverse Learner                     
Educational Counseling              
Elementary Education                
English as a Second Language        
  Professional Development for Educators
Special Education                   

NURSING                             
Health Care                         
Women's Health Nurse Practitioner   
Family Nurse Practitioner           

COUNSELING                          
Community Counseling                
Marriage and Family Therapy         
Mental Health Counseling            
 Marriage, Family and Child Counseling

UOP received approval in 1998 from the NCA to offer a Doctor of       
Management degree. This will be UOP's first doctoral program offering.  The     
program is expected to begin enrolling students by the third quarter of 1999.   
UOP also offers over 100 professional education programs, including             
continuing education for teachers, custom training, environmental training      
and many programs leading to certification in the areas of business,            
technology and nursing.                                                         

Undergraduate students may demonstrate and document college level     
learning gained from experience through an assessment by faculty members        
(according to the guidelines of the Council for Adult and Experiential          
Learning ("CAEL")) for the potential award of credit.  The average number of    
credits awarded to the approximately 4,000 UOP undergraduate students who       
utilized the process in 1998 was approximately 12 credits of the 120 required   
to graduate.  CAEL reports that over 1,300 regionally accredited colleges and   
universities currently provide for the assessment mechanism of college level    
learning gained through experience for the award of credit.                     

IPD Services ----------------------------------------------------------------   

  IPD offers services to its client institutions including: (1) conducting
market research; (2) assisting with curriculum development; (3) developing      
and executing marketing strategies; (4) marketing and recruiting of students;   
(5) establishing operational and administrative infrastructures; (6) training   
of faculty; (7) developing and implementing financial accounting and academic   
quality management systems; (8) assessing the future needs of adult students;   
(9) assisting in developing additional degree programs suitable for the adult   
higher education market and (10) assisting in seeking approval from the         
respective regional accrediting association for new programs.  In               
consideration for its services, IPD receives a contractual share of tuition     
revenues from students enrolled in IPD-assisted programs.                       

In order to facilitate the sharing of information related to the      
operations of their respective programs, the IPD client institutions and UOP    
formed the Consortium for the Advancement of Adult Higher Education             
("CAAHE").  CAAHE meets semiannually to address issues such as the              

11                                                                              

10-K
12th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 12th
recruitment and training of part-time, professionally employed faculty,         
employer input in the curriculum development process, assessment of the         
learning outcomes of adult students and regulatory issues affecting the         
operation of programs for working adult students.                               

IPD client institutions offer the following programs with IPD         
assistance:                                                                     
                                               No.  of IPD
Degree Programs                                       Client Institutions       
--------------------------------------------------    --------------------      
Associate of Arts                                              1                
Associate of Science in Business                               8                
Bachelor of Arts in Business Administration                    2                
Bachelor of Arts in Management                                 1                
Bachelor of Business Administration                            9                
Bachelor of Science in Business Administration                 5                
Bachelor of Science in Management                             11                
Bachelor of Science in Management Information Systems          1                
Bachelor of Science in Nursing                                 1                
Master of Business Administration                             11                
Master of Science in Management                                6                
Master of Science in Health Services Administration            1                

The IPD-assisted programs also include a limited number of general    
education courses, certificate programs and areas of specialization.            

The College Programs --------------------------------------------------------   

The College currently offers a Master of Science degree with a        
concentration in Financial Planning and the following non-degree programs:      

Accredited Asset Management Specialist                                          
Certified Financial Planner Professional Education Program                      
Chartered Financial Analyst Study/Review Program                                
Chartered Mutual Fund Counselor                                                 
Foundations in Financial Planning                                               
Chartered Retirement Plans Specialist                                           
Chartered Retirement Planning Counselor                                         
Accredited Tax Advisor                                                          
Accredited Tax Preparer                                                         

WIU Programs ----------------------------------------------------------------   

WIU currently offers the following degree and certificate programs:   

DEGREE PROGRAMS WITH RELATED MAJORS                                             
---------------------------------------------                                   

ASSOCIATE OF ARTS                                                               

BACHELOR OF SCIENCE                                                             
- Accounting                                                                    
- Business Administration                                                       
- Finance                                                                       
- Health Systems Management                                                     
- Information Systems                                                           
- International Business                                                        
- Management                                                                    
- Marketing                                                                     
12                                                                              

10-K
13th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 13th
BACHELOR OF ARTS                                                                
- Administration of Justice                                                     
- Behavioral Science                                                            

MASTER OF BUSINESS ADMINISTRATION                                               
- Finance                                                                       
- Health Care Management                                                        
- International Business                                                        
- Management                                                                    
- Management Information Services                                               
- Marketing                                                                     

MASTER OF PUBLIC ADMINISTRATION                                                 

MASTER OF SCIENCE                                                               
- Accounting                                                                    
- Information Systems                                                           
- Information Systems Engineering                                               

WIU also offers a limited number of business-related certificate      
programs.                                                                       

Distance Education Components -----------------------------------------------   

At August 31, 1998, there were approximately 7,200 degree seeking     
students utilizing the Company's distance education delivery systems,           
approximately 61% of whom are enrolled in Online.  The Company's distance       
education components consist primarily of the following:                        

Online Computer Conferencing                                                    

The Online campus was established by UOP in 1989 to provide group-    
based, faculty-led instruction through computer-mediated communications.        
Students can access their Online classes with a computer and modem from         
anywhere in the world, on schedules that meet their individual needs.  Online   
students work together in small groups of 8 to 13 to engage in class            
discussion and study group activities that are focused on the same learning     
outcomes and objectives required in UOP's classroom degree programs.  This      
enables the Online students to enjoy the benefits of a study group, where       
they can share their regional and cultural differences with each other in the   
context of their coursework.  Students are not required to participate at the   
same time since the communication method is not asynchronous in nature.         
Online's degree programs can be accessed though direct-dial or Internet         
service providers.  The same academic quality management standards applied to   
campus-based programs, including the assessment of student learning outcomes,   
are applied to programs delivered through Online.                               

Directed Study                                                                  

Working adult students may also complete individual courses under the 
direct weekly instructional supervision of a member of the faculty.  These      
directed study programs utilize the same courses, faculty and resources         
available at UOP campuses.  Course assignments are completed in a structured    
environment that allows the student flexibility with their schedule.            
Communication with the faculty member is by telephone, e-mail, fax or mail.     

13                                                                              

10-K
14th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 14th
CPE Internet                                                                    

Business and investment professionals that require continuing         
professional education (CPE) as part of their professional certification or     
for employment requirements may complete individual CPE courses through the     
Internet utilizing most Internet browsers.  These programs are short,           
interactive courses designed to focus on relevant topics to the students'       
trade or profession.  The students interact primarily with the Company's web-   
based software programs with little or no faculty involvement.  The Company     
plans to convert many of its non-degree programs in business, financial         
planning and IT to this web-based format in order to provide consumers with     
an additional delivery option to receive this type of CPE instruction.  The     
College also plans to use this same technology to deliver preparatory work      
for professional certifications in addition to its text-based self study        
delivery methods.                                                               

New Distance Education Markets                                                  

In August 1998, the Company together with Hughes Network Systems and  
Hermes Onetouch L.L.C. ("Hermes") formed a new corporation to acquire One       
Touch Systems.  The merged expertise of these entities is expected to           
contribute to the sales, distribution and service of an integrated and          
interactive distance learning solution for reaching corporate training and      
education markets via satellite.  One Touch Systems has their equipment         
currently installed at many Fortune 500 companies.  The Company plans to        
provide training and educational content to enhance and expand the current      
products offered by One Touch Systems.                                          

Distance education is currently subject to certain regulatory         
constraints.  See "Business -- Federal Financial Aid Programs -- Restrictions   
on Distance Education Programs" and "Business -- State Authorization."          

FACULTY ---------------------------------------------------------------------   

UOP's faculty is comprised of approximately 100 full-time faculty and 
5,100 part-time faculty.  Substantially all faculty are working professionals   
with earned master's or doctoral degrees and an average of 15 years of          
experience in business, industry, government or the professions.  To help       
promote quality delivery of the curriculum, UOP faculty members are required    
to: (1) complete an initial assessment conducted by staff and faculty;          
(2) complete a series of certification workshops related to grading,            
facilitation of the teaching/learning model, oversight of study group           
activities, adult learning theory and use of the Internet; (3) participate in   
ongoing development activities and (4) receive ongoing performance              
evaluations by students, peer faculty and staff.  The results of these          
evaluations are used to establish developmental plans to improve individual     
faculty performance and to determine continued eligibility of faculty members   
to provide instruction.  Most faculty members are recruited as the result of    
referrals from faculty, students and corporate contacts.  All part-time         
faculty are contracted on a course-by-course basis (generally a five to ten     
week period).                                                                   

  The faculty teaching in IPD-assisted programs are comprised of full-time
faculty from the client institution as well as qualified part-time faculty      
who instruct only in these adult programs.  The part-time faculty must be       
approved by each client institution.  IPD makes the AQMS available to its       

14                                                                              

10-K
15th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 15th
client institutions to evaluate faculty and academic and administrative         
quality.  The Company believes that both UOP and IPD will continue to be        
successful in recruiting qualified faculty members.                             

The College's programs are primarily self-study, non-degree programs  
where there is little or no faculty involvement in the delivery of the          
programs.  However, the College employs approximately 15 full-time faculty      
who are involved in curriculum development and the instructional design         
process.                                                                        

WIU's faculty consists of approximately 10 full-time faculty and 170  
part-time faculty.  WIU's practitioner faculty are working professionals and    
possess earned master's or doctoral degrees and participate in a selection      
and training process that is similar to that at UOP.                            

Academic Accountability -----------------------------------------------------   

  UOP is one of the first regionally accredited universities in the nation
to create and utilize an institution-wide system for the assessment of the      
educational outcomes of its students.  The information generated is employed    
by UOP to improve the quality of the curriculum, the instruction and the        
Company's teaching/learning model.  UOP's undergraduate and graduate students   
complete a comprehensive cognitive (core degree subject matter) and affective   
(educational, personal and professional values) assessment prior to and upon    
the completion of their core degree requirements.                               

Students at UOP and IPD client institutions evaluate both academic and
administrative quality.  This evaluation begins with a registration survey      
and continues with the evaluation of the curriculum, faculty, delivery          
method, instruction and administrative services upon the conclusion of each     
course.  The evaluation also includes a survey of a random selection of         
graduates 2-3 years following their graduation.  The results provide an         
ongoing basis for improving the teaching/learning model, selection of           
educational programs and instructional quality.                                 

Admissions Standards --------------------------------------------------------   

 To gain admission to the undergraduate programs of UOP, WIU and the IPD
client institutions, students generally must have a high school diploma or      
General Equivalency Diploma ("G.E.D.") and satisfy certain minimum grade        
point average, employment and age requirements.  Additional requirements may    
apply to individual programs.  Students in undergraduate programs may           
petition to be admitted on provisional status if they do not meet certain       
admission requirements.                                                         

 To gain admission to the graduate programs of UOP, WIU, the College and
the IPD client institutions, students generally must have an undergraduate      
degree from a regionally accredited college or university and satisfy minimum   
grade point average, work experience and employment requirements.  Additional   
requirements may apply to individual programs.  Students in graduate programs   
may petition to be admitted on provisional status if they do not meet certain   
admission requirements.                                                         

ACQUISITION STRATEGY                                                            

The Company periodically evaluates opportunities to acquire businesses
and facilities.  In evaluating such opportunities, management considers,        
among other factors, location, demographics, price, the availability of         

15                                                                              

10-K
16th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 16th
financing on acceptable terms, competitive factors and the opportunity to       
improve operating performance through the implementation of the Company's       
operating strategies.  The Company has no current commitments with regard to    
potential acquisitions.                                                         

CUSTOMERS                                                                       

 The Company's customers consist of working adult students, colleges and
universities, governmental agencies and employers.  Following is a percentage   
breakdown of the Company's students by the level of program they are seeking,   
at August 31:                                                                   

                                                                [Download Table]

                                         1998           1997 
                                        ------         ------
                                                             
Degree Programs:                                             
  Master's                               30.5%          31.8%
  Bachelor's                             68.7%          68.1%
  Associate                                .8%            .1%
                                        ------         ------
Total degree programs                   100.0%         100.0%
                                        ======         ======

Based on recent student surveys, the average age of UOP students is in
the mid-thirties, approximately 55% are women and 45% are men, and the          
average annual household income is $56,000.  Approximately 72% of UOP           
students have been employed on a full-time basis for nine years or more.  The   
Company believes that the demographics of students enrolled in IPD-assisted     
programs are similar to those of UOP.  The approximate age percentage           
distribution of incoming UOP students is as follows:                            

                                                                [Download Table]

Age                                 Percentage of Students 
------------------------            -----------------------
                                                           
25 and under                                  13%          
26 to 33                                      36%          
34 to 45                                      40%          
46 and over                                   11%          
                                           -------         
                                             100%          
                                           =======         

Based on recent student surveys, the average age of students at the   
College is in the mid-thirties, approximately 32% are women and 68% are men,    
most are employed and over 75% have four or more years of college education.    

IPD client institutions have historically consisted of small private  
colleges; however, IPD also targets larger institutions of higher education     
that are in need of marketing and curriculum consulting.  IPD understands       

16                                                                              

10-K
17th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 17th
that to develop and manage educational programs for working adult students      
effectively, these potential client institutions require both capital and       
operational expertise.  In response to these requirements, IPD                  
provides the start-up capital, the curriculum development expertise and the     
ongoing management in support of the client institutions' provision of          
quality programs for working adult students.  All of the Apollo Companies       
consider the employers of its students as customers.  Many of these employers   
provide tuition reimbursement programs in order to educate and provide degree   
opportunities to their employees.                                               

CORPORATE PARTNERSHIPS                                                          

The Company works closely with businesses and governmental agencies to
meet their specific needs either by modifying existing programs or, in some     
cases, by developing customized programs.  These programs are often held at     
the employers' offices or on-site at military bases.  UOP has also formed       
educational partnerships with various corporations to provide programs          
specifically designed for their employees.                                      

MARKETING                                                                       

  To generate interest among potential UOP, WIU and IPD client institution
students, the Company engages in a broad range of activities to inform          
potential students about the Company's teaching/learning model and the          
programs offered.  These activities include print and broadcast advertising,    
advertising on Internet service providers, direct mail and informational        
meetings at targeted organizations.  The Company also attempts to locate its    
campuses and learning centers near major highways to provide high visibility    
and easy access.  A substantial portion of new UOP and IPD client institution   
students are referred by alumni, employers and currently enrolled students.     

The Company also has Web Sites on the Internet World Wide Web         
(http://www.apollogrp.edu, http://www.uophx.edu, http://www.ipd.org,            
http://www.wintu.edu, http://www.fp.edu and http://www.mcse.com) that allow     
electronic access to Company information, product information, research, etc.   

  UOP and WIU advertising is centrally monitored and is directed primarily
at local markets in which a campus or learning center is located.  IPD client   
institutions approve and monitor all advertising provided by IPD on their       
behalf.  Direct responses to advertising and direct mail are received,          
tracked and forwarded promptly to the appropriate enrollment counselors.  In    
addition, all responses are analyzed to provide data for future marketing       
efforts.                                                                        

The College markets its programs and products primarily through       
advertising, direct mail, informational meetings, trade shows, and corporate    
sales efforts with financial service firms.  Marketing activity is primarily    
directed at professionals within the financial services industry.  Enrollment   
advisors are utilized in a comparable fashion to UOP enrollment staff.  All     
marketing activity is tracked to measure effectiveness and to provide           
information for future activity.                                                

17                                                                              

10-K
18th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 18th
The Company employs over 450 enrollment counselors who make visits and
presentations at various organizations and who follow up on leads generated     
from referrals from customers and advertising efforts.  These individuals       
also pursue direct responses to interest from potential individual students     
by arranging for interviews either at a UOP, WIU or IPD location or at a        
prospective student's place of employment.  Interviews are designed to          
establish a prospective student's qualifications, academic background, course   
interests and professional goals.  Student recruiting policies and standards    
and procedures for hiring and training university representatives are           
established centrally, but are implemented at the local level through a         
director of enrollment or marketing at each location.                           

COMPETITION                                                                     

  The higher education market is highly fragmented and competitive with no
private or public institution enjoying a significant market share.  The         
Company competes primarily with four-year and two-year degree-granting public   
and private regionally accredited colleges and universities.  Many of these     
colleges and universities enroll working adults in addition to the              
traditional 18 to 24 year old students and some have greater financial and      
personnel resources than the Company.  The Company expects that these           
colleges and universities will continue to modify their existing programs to    
serve working adults more effectively.  In addition, many colleges and          
universities have announced various distance-education initiatives.             

For its degree programs, the Company competes primarily at a local and
regional level with other regionally accredited colleges and universities       
based on the quality of academic programs, the accessibility of programs and    
learning resources available to working adults, the cost of the program, the    
quality of instruction and the time necessary to earn a degree.                 

  In terms of non-degree programs offered by UOP, IPD and WIU, the Company
competes with a variety of business and IT providers, primarily those in the    
for-profit training sector. Many of these competitors have significantly more   
market share, longer-term relationships with key vendors and, in some cases,    
more financial resources.  There is no assurance that UOP, IPD and WIU will     
be able to gain market share in these more competitive non-degree markets to    
the same extent it has done with its degree programs.                           

The College currently holds a dominant position in the Certified      
Financial Planning ("CFP") education field.  Recently, however, competition     
is increasing slightly due to a higher number of schools registering CFP        
curriculum with the Certified Financial Planner Board of Standards, Inc.  The   
College offers all of its programs using the flexibility of its distance        
education format while the majority of the other competing education programs   
target local markets using classroom based teaching formats.                    

IPD faces competition from other entities offering higher education   
curriculum development and management services for adult education programs.    
The majority of IPD's current competitors provide pre-packaged curriculum or    
turn-key programs.  IPD client institutions, however, face competition from     
both private and public institutions offering degree and non-degree programs    
to working adults.                                                              

18                                                                              

10-K
19th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 19th
EMPLOYEES                                                                       

At September 30, 1998, the Company had the following numbers of       
employees:                                                                      

                                                                [Download Table]

                        Full-Time   Part-Time   Faculty      Total        
                        ---------   ---------  ---------   ---------      
                                                                          
     Apollo                 299           9          --         308<F1>   
     UOP                  1,976          98       5,159<F2>   7,233       
     IPD                    251          10          --<F3>     261       
     The College             83           4          15<F4>     102       
     WIU                     52          11         179<F2>     242       
                         ------      ------      ------      ------       
     Total                2,661         132       5,353       8,146       
                         ======      ======      ======      ======       
______________                                                            
<FN>                                                                      
<F1>  Consists primarily of employees in executive administration,        
      information systems, corporate accounting, financial aid, and human 
      resources.                                                          

<F2>  Consists primarily of part-time professional faculty contracted on a
      course-by-course basis.                                             

<F3>  Faculty teaching IPD-assisted programs are employed by IPD client   
      institutions.                                                       

<F4>  Consists primarily of faculty involved in curriculum development and
      the instructional design process.                                   
</FN>                                                                     

The Company considers its relations with its employees to be good.    

REGULATORY ENVIRONMENT                                                          

The Higher Education Act of 1965, as amended (the "HEA") and the      
regulations promulgated thereunder (the "Regulations") subject all higher       
education institutions eligible to participate in Federal Financial Aid         
programs under Title IV of the HEA ("Title IV Programs") to increased           
regulatory scrutiny.  The HEA mandates specific additional regulatory           
responsibilities for each of the following components of the higher education   
regulatory triad: (1) the accrediting agencies recognized by the United         
States Department of Education (the "DOE"); (2) the federal government          
through the DOE and (3) state higher education regulatory bodies.  All higher   
education institutions participating in Title IV Programs must first be         
accredited by an association recognized by the DOE.  The DOE reviews all such   
participating institutions for compliance with all applicable HEA standards     
and regulations.  Under the HEA, accrediting associations are required to       
include the monitoring of certain aspects of Title IV Program compliance as     
part of their accreditation evaluations.                                        

New or revised interpretations of regulatory requirements could have a
material adverse effect on the Company.  In addition, changes in or new         

19                                                                              

10-K
20th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 20th
interpretations of other applicable laws, rules or regulations could have a     
material adverse effect on the accreditation, authorization to operate in       
various states, permissible activities and costs of doing business of UOP,      
WIU and one or more of the IPD client institutions.  The failure to maintain    
or renew any required regulatory approvals, accreditation or state              
authorizations by UOP or certain of the IPD client institutions could have a    
material adverse effect on the Company.                                         

ACCREDITATION                                                                   

  UOP, WIU, the College, and the IPD client institutions are accredited by
regional accrediting associations recognized by the DOE.  Accreditation         
provides the basis for: (1) the recognition and acceptance by employers,        
other higher education institutions and governmental entities of the degrees    
and credits earned by students; (2) the qualification to participate in         
Title IV Programs and (3) the qualification for authorization in certain        
states.                                                                         

UOP was granted accreditation by NCA in 1978. UOP's accreditation was 
reaffirmed in 1982, 1987, 1992 and 1997.  The next focused evaluation visit     
is scheduled to begin in 1999, and the next NCA reaffirmation visit is          
scheduled to begin in 2002. IPD-assisted programs offered by the IPD client     
institutions are evaluated by the client institutions' respective regional      
accrediting associations either as part of a reaffirmation or focused           
evaluation visits.  Current IPD client institutions are accredited by NCA,      
Middle States, New England or Southern regional accrediting associations.       
The College's graduate degree program is accredited by NCA and the              
Accrediting Commission of the Distance Education and Training Council           
("DETC").  NCA and DETC consented to the change of ownership resulting from     
the Company's acquisition of the assets and related operations of the College   
for Financial Planning and related divisions in September 1997.  NCA began a    
scheduled focus-visit for the College in September 1998 which should be         
completed by the end of the first quarter of 1999. DETC plans to schedule a     
focus-visit for the College in 2000.  WIU was accredited by NCA prior to the    
acquisition by the Company and the accreditation was reaffirmed in 1998.        
WIU's next NCA reaffirmation visit is scheduled to begin in 2005.  The          
withdrawal of accreditation from UOP or certain IPD client institutions would   
have a material, adverse effect on the Company.                                 

All accrediting agencies recognized by the DOE are required to include
certain aspects of Title IV Program compliance in their evaluations of          
accredited institutions.  As a result, all regionally accredited                
institutions, including UOP, WIU, and IPD client institutions, will be          
subject to a Title IV Program compliance review as part of accreditation        
visits.                                                                         

Regional accreditation is accepted nationally as the basis for the    
recognition of earned credit and degrees for academic purposes, employment,     
professional licensure and, in some states, for authorization to operate as a   
degree-granting institution.  Under the terms of a reciprocity agreement        
among the six regional accrediting associations, representatives of each        
region in which a regionally accredited institution operates participate in     
the evaluations for reaffirmation of accreditation.  The achievement of UOP's   
and WIU's missions require them to employ academically qualified practitioner   
faculty that are able to integrate academic theory with current workplace       
practice.  Because of UOP's and WIU's choice to utilize practitioner faculty,   

20                                                                              

10-K
21st Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 21st
they have not sought business school program accreditation of the type found    
at many institutions whose primary missions are to serve the 18 to 24 year      
old student and to conduct research.                                            

UOP's Bachelor of Science in Nursing ("BSN") program received program 
accreditation from the National League for Nursing Accrediting Commission       
("NLNAC") in 1989.  The accreditation was reaffirmed in October 1995.  The      
next NLNAC reaffirmation of the BSN program is scheduled for 2003.  The         
Company believes that the BSN program accreditation is in good standing.  The   
Master of Science in Nursing ("MSN") program earned NLNAC accreditation in      
1996.  The next NLNAC reaffirmation of the MSN program is scheduled for 2000.   

UOP's Community Counseling program (Master of Counseling in Community 
Counseling degree) received initial accreditation for its Phoenix and Tucson    
campuses from the Council for Accreditation of Counseling and Related           
Educational Programs in 1995 and the next reaffirmation visit is scheduled      
for 2002.                                                                       

UOP received approval from the NCA to offer its first doctoral level  
program in 1998.  The first students will be enrolled in the Doctor of          
Management degree beginning in 1999.  The Doctor of Management degree will be   
offered via distance learning technology with annual two-week residencies in    
Phoenix throughout their program. The program will be limited to two groups     
of 30 new students each per year.                                               

The address and phone number for the accrediting bodies referred to   
herein are as follows:                                                          

North Central Association of Colleges and Schools (NCA)               
Commission on Institutions of Higher Education                        
30 North LaSalle Street, Suite 2400                                   
Chicago, Illinois  60602-2504                                         
(312) 263-0456                                                        

National League for Nursing Accrediting Commission (NLNAC)            
61 Broadway, 33rd Floor                                               
New York, New York  10006                                             
(800) 669-9656                                                        

American Counseling Association                                       
Council for Accreditation of Counseling and                           
Related Educational Programs                                          
5999 Stevenson Avenue                                                 
Alexandria, VA  22304                                                 
(703) 823-9800                                                        

Accrediting Commission of the Distance Education and Training Council 
1601 18th Street, NW                                                  
Washington, D.C. 20009-2529                                           
(202) 234-5100                                                        

FEDERAL FINANCIAL AID PROGRAMS                                                  

Students at UOP, WIU and IPD client institutions may participate in   
Title IV Programs.  The College does not participate in Title IV Programs       
because most of its students are enrolled in non-degree programs.  UOP and      
WIU derive approximately 50% and 26% of their net revenues from students who    

21                                                                              

10-K
22nd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 22nd
participate in Title IV Programs, respectively. The IPD percentages are         
estimated to be similar to those at UOP. The respective IPD client              
institutions administer their own Title IV Programs. The Company's students     
are eligible to receive Title IV financial aid because: (i) UOP, WIU and IPD    
client institutions are accredited by an accrediting association recognized     
by the DOE; (ii) the DOE has certified UOP's, WIU's and IPD client              
institutions' Title IV Program eligibility and (iii) UOP, WIU and IPD client    
institutions have applicable state authorization to operate.                    

The DOE has promulgated Regulations, the most recent of which became  
effective on July 1, 1998, that amend certain provisions of the Title IV        
Programs and the Regulations promulgated thereunder.  Some of the more          
important provisions of the Regulations include the following:                  

Limits on Title IV Program Funds --------------------------------------------   

The Regulations define the types of educational programs offered by an
institution that qualify for Title IV Program funds. For students enrolled in   
qualified programs, the Regulations place limits on the amount of Title IV      
Program funds that a student is eligible to receive in any one academic year    
(as defined by the DOE).                                                        

  For undergraduate programs, an academic year must consist of at least 30
weeks of instruction or a minimum of 24 credit hours.  Because the              
Regulations define a week of instruction as the equivalent of 12 hours of       
regularly scheduled instruction, examinations or preparation for                
examinations, an academic year would require a minimum of 360 hours (30 weeks   
times 12 hours per week).  Most of the Company's degree programs meet this      
360 hour minimum and, therefore, qualify for Title IV Program funds.  The       
programs that do not qualify for Title IV Program funds consist primarily of    
certificate, corporate training, and continuing professional education          
programs.  These programs are paid for directly by the students or their        
employers.                                                                      

Authorizations for New Locations --------------------------------------------   

UOP, WIU, the College and IPD client institutions are required to have
authorization to operate as degree-granting institutions in each state where    
they physically provide educational programs. Certain states accept             
accreditation as evidence of meeting minimum state standards for                
authorization. Other states, including California, require separate             
evaluations for authorization. Depending on the state, the addition of a        
degree program not offered previously or the addition of a new location must    
be included in the institution's accreditation and be approved by the           
appropriate state authorization agency. UOP, WIU, the College, and IPD client   
institutions are currently authorized to operate in all states in which they    
have physical locations. If UOP is unable to obtain authorization to operate    
in certain new states, it may have a material adverse effect on the Company's   
ability to expand UOP's business.                                               

In addition, NCA requires UOP and the College to obtain NCA's prior   
approval before they are permitted to expand into new states or foreign         
countries.  NCA recently approved UOP's expansion into Oklahoma and British     
Columbia.  If UOP is unable to obtain NCA's approval for any future             
geographic expansion, it may have a material, adverse effect on the Company's   
ability to expand UOP's business.                                               

22                                                                              

10-K
23rd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 23rd
Restricted Cash -------------------------------------------------------------   

 The DOE places certain restrictions on Title IV Program funds collected
for unbilled tuition and funds transferred to the Company through electronic    
funds transfer.  Under certain circumstances, an institution is required to     
submit an irrevocable letter of credit to the DOE in an amount equal to at      
least 25% of the total dollar amount of refunds paid by the institution in      
its most recent fiscal year.  The Company has established letters of credit     
of $1.6 million for UOP and $44,000 for WIU.                                    

Standards of Financial Responsibility ---------------------------------------   

 Pursuant to the Regulations, which were revised effective July 1, 1998,
all eligible higher education institutions must satisfy the minimum standard    
established for three tests which assess the financial condition of the         
institution at the end of the institution's fiscal year.  The three tests       
are: primary reserve ratio (adjusted equity to total expenses), equity ratio    
(modified equity to modified assets), and net income ratio (income before       
taxes to total revenues).  The tests provide a combined score which must then   
satisfy a composite score standard.  If the institution achieves a composite    
score of at least 1.5, it is considered financially responsible.  A composite   
score from 1.0 to 1.4 is considered financially responsible, subject to         
additional monitoring, and the institution may continue to participate as a     
financially responsible institution for up to three years.  An institution      
that does not achieve a satisfactory composite score will fall under            
alternative standards.  At August 31, 1998, UOP's composite score was 3.0 and   
WIU's composite score was 2.8.                                                  

Branching and Classroom Locations -------------------------------------------   

The Regulations contain specific requirements governing the         
establishment of new main campuses, branch campuses and classroom locations     
at which any student receives more than 50% of his or her instruction.  In      
addition to classrooms at campuses and learning centers, locations affected     
by these requirements include the business facilities of client companies,      
military bases and conference facilities used by UOP and WIU.  The DOE has in   
the past stated that it requires an official approval for each location prior   
to offering Title IV program funds.  Currently UOP has several sites awaiting   
confirmation of DOE approval.                                                   

The "85/15 Rule" ------------------------------------------------------------   

A requirement of the HEA, commonly referred to as the "85/15 Rule,"   
applies only to for-profit institutions of higher education, which includes     
UOP and WIU but not IPD client institutions.  Under this rule, for-profit       
institutions will be ineligible to participate in Title IV Programs if the      
amount of Title IV Program funds used by the students or institution to         
satisfy tuition, fees and other costs incurred by the students exceeds 85% of   
the institution's cash-basis revenues from eligible programs.  UOP's and        
WIU's percentages were 58% and 27%, respectively, at August 31, 1998.  UOP      
and WIU are required to calculate this percentage at the end of each fiscal     
year.                                                                           

Student Loan Defaults -------------------------------------------------------   

Eligible institutions must maintain a student loan cohort default rate
of less than 30% for fiscal year 1993 and 25% for fiscal year 1994 and all      

23                                                                              

10-K
24th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 24th
subsequent fiscal years.  In 1996, the most recent DOE cohort default rate      
reporting period, the national cohort default rate average for all higher       
education institutions was 9.6%.  UOP and WIU students' cohort default rates    
for the Federal Family Education Loans for fiscal 1996 as reported by the DOE   
were 5.8% and 9.1%, respectively, and IPD client institution students' cohort   
default rates averaged 6.1% over that same period.                              

Compensation of Representatives ---------------------------------------------   

The Regulations prohibit an institution from providing any commission,
bonus, or other incentive payment based directly or indirectly on success in    
securing enrollments or financial aid to any person or entity engaged in any    
student recruitment, admission or financial aid awarding activity.  The         
Company believes that its current method of compensating enrollment             
counselors complies with the Regulations.                                       

Eligibility and Certification Procedures ------------------------------------   

The HEA specifies the manner in which the DOE reviews institutions for
eligibility and certification to participate in Title IV Programs.  UOP's and   
WIU's eligibility to participate in Title IV Programs expires in September      
1999 and December 1998, respectively.  If the DOE does not renew UOP's          
eligibility, it would have a material adverse effect on the Company.            

Administrative Capability ---------------------------------------------------   

 The HEA directs the DOE to assess the administrative capability of each
institution to participate in Title IV Programs.  The failure of an             
institution to satisfy any of the criteria used to assess administrative        
capability may allow the DOE to determine that the institution lacks            
administrative capability and, therefore, may be subject to additional          
scrutiny or denied eligibility for Title IV Programs.                           

Title IV Program Reviews ----------------------------------------------------   

 UOP's most recent Department of Education program review began in March
1997, and an initial program review report has been received.  This report      
contained six findings in the areas of satisfactory academic progress,          
refunds and general program administration.  UOP is currently in the process    
of responding to these findings regarding compliance with requirements of the   
Title IV Programs.  UOP's response to these issues is due in January 1999,      
and UOP will have its response prepared prior to the deadline.  Subsequently,   
the Department will issue a final program review determination.  It is          
uncertain when the final determination will be issued and what the results of   
the findings will be.                                                           

 Additionally, in January 1998 the Department of Education Office of the
Inspector General ("OIG") began performing a routine audit of UOP.  The         
auditors reviewed UOP's cash management policies.  Although no draft report     
has been received from the OIG, the audit team indicated at the exit            
interview that it had no findings regarding cash management policies.  The      
team did present questions regarding UOP's interpretation of the "12-hour       
rule", UOP's distance education programs and institutional refund               
obligations.  As of this date, UOP has supplied the OIG with the information    
they have requested and is awaiting an initial draft report.  Although the      
Company believes that the program review and OIG audit will be resolved         
without any material effect, as with any program review or audit, no            
assurance can be given as to the final outcome since the matters are not yet    
resolved.                                                                       
24                                                                              

10-K
25th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 25th
  As previously disclosed, the Company assumed the Title IV liabilities of
Western International University ("Western") which were subject to change       
based on the results of the DOE's audit of Western's Title IV Programs.         
Although much of the fieldwork was completed in early 1996, the final audit     
results and the amount that the Company is responsible for has not been         
determined by the DOE at the current time.  Depending on the interpretation     
of the various regulatory requirements, the final audit results and the         
Company's liability may differ materially from the estimates currently          
recorded.  Any difference between the final amount and the estimates            
currently recorded will be recorded as an increase or decrease, as              
applicable, to expense.                                                         

Restrictions on Distance Education Programs ---------------------------------   

The Regulations specify that an institution is not eligible to          
participate in Title IV Programs funding if 50% or more of its courses are      
correspondence courses, or if 50% or more of its regular students are           
enrolled in the institution's correspondence courses.  Although UOP, IPD and    
WIU do not offer correspondence courses, the Regulations currently consider     
most distance education courses to be correspondence courses if the number of   
distance education courses exceeds 50% of the sum of courses offered in         
campus-based delivery systems and courses offered through distance education.   
UOP, IPD and WIU do not plan to exceed this 50% level and believe that this     
restriction will have no significant impact on their respective business        
strategies.                                                                     

Direct Lending Programs -----------------------------------------------------   

The DOE instituted a new direct lending program several years ago and 
various institutions are participating in the program.  The direct lending      
program eliminates third-party lending institutions and guarantee agencies      
from the loan disbursement process.  The goal of the DOE is to streamline the   
financial aid lending process through this program, but there is uncertainty    
as to when this goal will be fully attained.  The Company has not yet been      
required to implement the new direct lending process and it is uncertain as     
to what effect this new process, if implemented, will have on its cash flow.    

Change of Ownership or Control ----------------------------------------------   

A change of ownership or control of the Company, depending on the type
of change, may have significant regulatory consequences for UOP and WIU.        
Such a change of ownership or control could trigger recertification by the      
DOE, reauthorization by certain state licensing agencies or the evaluation of   
the accreditation by NCA.                                                       

For institutions owned by publicly-held corporations, the DOE has     
adopted the change of ownership and control standards used by the federal       
securities laws.  Upon a change of ownership and control sufficient to          
require the Company to file a Form 8-K with the Securities and Exchange         
Commission, UOP and WIU would cease to be eligible to participate in Title IV   
Programs until recertified by the DOE.  This recertification would not be       
required, however, if the transfer of ownership and control was made upon a     
person's retirement or death and was made either to a member of the person's    
immediate family or to a person with an ownership interest in the Company who   
had been involved in its management for at least two years preceding the        
transfer.                                                                       

25                                                                              

10-K
26th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 26th
  In addition, certain states where the Company is presently licensed have
requirements governing change of ownership or control.  Currently, Arizona      
and California would require UOP and WIU, as applicable, to be reauthorized     
upon a 20% and 25% change of ownership or control of the Company,               
respectively.  These states require a new application to be filed for state     
licensing if such a change of ownership or control occurs.  Washington has a    
similar reauthorization requirement triggered by a change of ownership, but     
provides that a temporary certificate of authorization may be issued pending    
the reauthorization process.                                                    

Moreover, the Company is required to report any change in stock       
ownership of UOP, the College, WIU or Apollo to NCA.  At that time, NCA may     
seek to evaluate the effect of such a change of stock ownership on the          
continuing operations of UOP, the College and WIU.                              

  If UOP is not recertified by the DOE, or does not obtain reauthorization
from the necessary state agencies, or has its accreditation withdrawn as a      
consequence of any change in ownership or control, there would be a material,   
adverse effect on the Company.                                                  

STATE AUTHORIZATION                                                             

UOP currently is authorized to operate in 14 states, Puerto Rico and  
British Columbia.  UOP has held these authorizations for periods ranging from   
less than one year to twenty years.  UOP's NCA accreditation is accepted as     
evidence of compliance with applicable state regulations in Arizona,            
Colorado, Louisiana, Michigan, New Mexico, Nevada, Oklahoma, and Utah.          
Hawaii does not have authorization provisions for regionally accredited         
degree-granting institutions.                                                   

 California law requires an on-site visit to all out-of-state accredited
institutions of higher education every five years to determine if the           
institution is in compliance with the State of California regulations.  All     
institutions, including UOP, that operate in California and are accredited by   
a regional accrediting association other than the Western Association of        
Schools and Colleges are required to be evaluated separately for                
authorization to operate.  UOP was granted its most recent California           
authorization in 1997 for a period through December 31, 1999.                   

All regionally accredited institutions, including UOP, are required to
be evaluated separately for authorization to operate in Puerto Rico.  UOP was   
granted its most recent authorization in Puerto Rico in December 1995 for a     
period of five years.                                                           

UOP received a license to operate in Florida in April 1997.  In August
1997, UOP received NCA approval to operate in Washington and Oregon and         
subsequently, has opened campuses in these states.  The NCA approved UOP's      
expansion into British Columbia and Oklahoma in June 1998, and UOP is           
currently establishing campuses in these locations.  UOP is registered with     
British Columbia's Private Post-Secondary Education Commission and will         
pursue accreditation through the province of British Columbia after the         
required one year period of operation.  Maryland has also approved UOP's        
request to establish a new campus, and UOP is currently seeking expansion       
approval into Maryland from NCA.                                                

26                                                                              

10-K
27th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 27th
IPD client institutions possess authorization to operate in all states
in which they offer educational programs, which are subject to renewal.  The    
College is currently authorized to operate in Colorado and does not require     
authorization for its self-study programs that are offered worldwide. WIU is    
currently authorized to operate in Arizona and London, England.                 

Certain states assert authority to regulate all degree-granting       
institutions if their educational programs are available to their residents,    
whether or not the institutions maintain a physical presence within those       
states.  If a state were to establish grounds for asserting authority over      
telecommunicated learning, UOP may be required to obtain authorization for,     
or restrict access to, its programs available through Online in those states.   

TAX REFORM ACT OF 1997                                                          

In August 1997, Congress passed the Tax Reform Act of 1997 that added 
several new tax credits and incentives for students and extended benefits       
associated with the educational assistance program.  The Hope Scholarship       
Credit provides up to $1,500 tax credit per year per eligible student for       
tuition expenses in the first two years of postsecondary education in a         
degree or certificate program.  The Lifetime Learning Credit provides up to     
$1,000 tax credit per year per taxpayer return for tuition expenses for all     
postsecondary education, including graduate studies.  Both of these credits     
are phased out for taxpayers with modified adjusted gross income between        
$40,000 and $50,000 ($80,000 and $100,000 for joint returns) and are subject    
to other restrictions and limitations.  The Act also provides for the           
deduction of interest from gross income on education loans and limited          
educational IRA's for children under the age of 18.  These deductions are       
also subject to adjusted gross income limitations and other restrictions.       
These new provisions became effective for the 1998 calendar year, and it is     
unclear at this time the effect that these additional tax benefits will have    
on future enrollments.                                                          

EMPLOYER TUITION REIMBURSEMENT                                                  

Many of the Company's students receive some form of tuition           
reimbursement from their employers.  In certain situations, as defined by the   
Internal Revenue Code (the "Code"), this tuition assistance qualifies as a      
deductible business expense when adequately documented by the employer and      
employee.  The Code also provides a safe-harbor provision for an exclusion      
from wages of up to $5,250 of tuition reimbursement per year per student        
under the Educational Assistance Program ("EAP") provision.  Although the EAP   
provision of the Code expired in June 1997, the Tax Reform Act of 1997, which   
was signed into law in August 1997, extended the EAP until June 2000.  The      
EAP provision does not apply to graduate level programs beginning after June    
30, 1996.  Employers or employees may still continue to deduct such tuition     
assistance where it qualifies as a deductible business expense and is           
adequately documented. The percentage of incoming students with access to       
employer tuition reimbursement was 56% in 1998.                                 

27                                                                              

10-K
28th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 28th
LOCATIONS                                                                       

UOP currently has campuses and learning centers located throughout 13 
states and Puerto Rico.  Following is a list of UOP main campuses and           
learning centers as of September 30, 1998, with the year the campus was first   
opened and degree enrollments as of August 31, 1998:                            

                                                                [Download Table]

                                                            Fiscal   Enroll- 
                                                             Year    ment at 
UOP Main Campuses and Respective Learning Centers           Opened   8/31/98 
-----------------------------------------------------------------------------
                                                                             
ARIZONA              Phoenix Campus                         1978      6,096  
                       Mesa                                                  
                       Northwest Phoenix                                     
                       Scottsdale                                            
                       Southbank                                             
                       Tempe*                                                
                     Tucson Campus                          1983      2,641  
                       Fort Huachuca                                         
CALIFORNIA           Orange County (Fountain Valley Campus) 1981      8,298  
                       Diamond Bar                                           
                       Edwards Air Force Base                                
                       Pasadena                                              
                       Ontario                                               
                       Gardena                                               
                       Oxnard*                                               
                       La Mirada                                             
                       Woodland Hills                                        
                     San Jose Campus                        1980      5,140  
                       San Francisco                                         
                       Pleasanton/San Ramon                                  
                       Fresno                                                
                       Walnut Creek                                          
                       Bakersfield*                                          
                       Novato*                                               
                     San Diego Campus                       1989      3,047  
                       Vista                                                 
                       Chula Vista                                           
                       32nd St. Naval Station                                
                       Rancho Bernardo                                       
                     Sacramento Campus                      1993      2,400  
                       Fairfield                                             
                       Stockton                                              
                       Beale Air Force Base*                                 
                       Roseville*                                            
COLORADO             Denver Campus                          1982      4,016  
                       Aurora                                                
                       Colorado Springs                                      
                       Northglenn                                            
FLORIDA              Maitland (Orlando Campus)              1996      1,220  
                       Orlando*                                              
                     Tampa Campus*                          1998        463  
                     Jacksonville Campus*                   1998        301  
HAWAII               Honolulu Campus                        1993        965  
                       Mililani*                                             
LOUISIANA            New Orleans Campus                     1996      1,040  

28                                                                           

10-K
29th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 29th
                                                            Fiscal   Enroll- 
                                                             Year    ment at 
UOP Main Campuses and Respective Learning Centers           Opened   8/31/98 
-----------------------------------------------------------------------------

MICHIGAN             Detroit Campus                         1996      2,308  
                       Livonia                                               
NEVADA               Las Vegas Campus                       1994      1,597  
                       Nellis Air Force Base                                 
                       Henderson                                             
                       Southwest Las Vegas                                   
                       Reno*                                                 
NEW MEXICO           Albuquerque Campus                     1985      2,662  
                       Kirtland Air Force Base                               
                       Santa Fe                                              
                       Santa Teresa/Las Cruces                               
                       Las Alamos                                            
                       Carlsbad**                                            
OKLAHOMA             Oklahoma City Campus**                 1999          -  
OREGON               Portland Campus*                       1998        577  
                       Hillsboro**                                           
UTAH                 Salt Lake City Campus                  1984      1,936  
                       Ogden                                                 
                       Provo                                                 
                       Salt Lake City*                                       
WASHINGTON           Seattle Campus*                        1998        647  
PUERTO RICO          Guaynabo Campus                        1980      1,383  
                       Mayaguez                                              
DISTANCE EDUCATION   Online, San Francisco, CA<F1>          1989      4,456  
                     Center for Distance Education,         1989      2,056  
                       Phoenix, AZ<F2>                                       
                                                                     ------  
TOTAL UOP ENROLLMENT AT AUGUST 31, 1998                              53,249  
                                                                     ======  
<FN>                                                                         
<F1>  Programs are offered throughout the United States and internationally. 

<F2>  Programs are offered in various states throughout the United States.   
</FN>                                                                        
*  Opened in 1998.                                                           
** Opened between September 1 and September 30, 1998.                        

IPD has 21 institutional contracts at August 31, 1998.  IPD-assisted  
programs are currently offered at 43 campuses and learning centers in           
Connecticut, Delaware, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky,      
Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Jersey, New      
York, North Carolina, Ohio, South Carolina, Tennessee, Texas, Virginia and      
Wisconsin.                                                                      

The College operations are located in Denver, Colorado.               

  WIU currently has three campuses and learning centers located in Phoenix
and Fort Huachuca, Arizona and London, England.                                 

29                                                                              

10-K
30th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 30th
Item 2 -- Properties                                                            

  The Company leases all of its administrative and educational facilities.
In some cases, classes are held in the facilities of the students' employers    
at no charge to the Company.  Leases generally range from five to seven         
years; however, the Company attempts to secure longer leases if it is           
advantageous to do so.  The Company also leases space from time-to-time on a    
short-term basis in order to provide specific courses or programs.  The table   
below sets forth certain information as of August 31, 1998, with respect to     
properties leased by the Company in excess of 15,000 square feet:               

                                                                [Download Table]

LOCATION (CITY/STATE)                        SQUARE FEET 
----------------------                      -------------
                                                         
Phoenix, AZ                                    151,391   
Fountain Valley, CA                             67,062   
Tucson, AZ                                      49,469   
Denver, CO                                      47,395   
Tempe, AZ                                       41,664   
Phoenix, AZ                                     39,950   
Gardena, CA                                     39,364   
Phoenix, AZ                                     38,086   
San Jose, CA                                    37,876   
San Diego, CA                                   33,097   
Englewood, CO                                   32,000   
Marietta, GA                                    31,274   
San Francisco, CA                               30,889   
Murray, UT                                      30,000   
Sacramento, CA                                  28,164   
Woodland Hills, CA                              27,424   
Southfield, MI                                  25,558   
Mesa, AZ                                        23,914   
Tempe, AZ                                       23,486   
Albuquerque, NM                                 23,400   
Ontario, CA                                     22,250   
Honolulu, HI                                    21,279   
Overland Park, KS                               21,210   
San Francisco, CA                               20,324   
Colorado Springs, CO                            20,138   
Jacksonville, FL                                20,000   
Tampa, FL                                       19,835   
Englewood, CO                                   19,491   
Westminster, CO                                 19,049   
Orlando, FL                                     18,944   
Las Vegas, NV                                   18,849   
Provo, UT                                       18,585   
Pleasanton, CA                                  18,560   
Bellevue, WA                                    16,814   
Aurora, CO                                      16,807   
Roseville, CA                                   16,763   
Guaynabo, Puerto Rico                           16,000   
Scottsdale, AZ                                  15,457   
Walnut Creek, CA                                15,445   
Diamond Bar, CA                                 15,280   
Quincy, MA                                      15,000   

30                                                                              

10-K
31st Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 31st
The lease on the Company's corporate headquarters, which includes the 
UOP Phoenix Main Campus, expires on August 31, 2003.   The Company purchased    
approximately 19 acres of land in 1997 and 1996 for the possible relocation     
and/or expansion of its corporate headquarters at the expiration of the lease   
term.                                                                           

Item 3 -- Legal Proceedings                                                     

The Company is not involved in any legal proceedings which it believes
would have a material effect on the Company's financial position or operating   
results.                                                                        

Item 4 -- Submission of Matters to a Vote of Security Holders                   

None                                                                  

31                                                                              

10-K
32nd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 32nd
PART II                                                                         
Item 5 -- Market for Registrant's Common Equity and Related Stockholder         
Matters                                                                         

 There is no established public trading market for the Company's Class B
Common Stock, and all shares of the Company's Class B Common Stock are          
beneficially owned by the Company's executive officers.  The Company's Class    
A Common Stock trades on the Nasdaq National Market ("Nasdaq") under the        
symbol "APOL".  The holders of the Company's Class A Common Stock are not       
entitled to any voting rights. The table below sets forth the high and low      
bid prices, adjusted for a 3-for-2 stock split effected in the form of a        
stock dividend in April 1998, for the Company's Class A Common Stock as         
reported by Nasdaq.                                                             

                                                                [Download Table]

                                    High          Low  
                                   ------        ------
Fiscal 1997                                            
---------------------                                  
                                                       
First quarter                      $21.67        $14.83
Second quarter                      25.50         16.67
Third quarter                       24.50         15.33
Fourth quarter                      27.33         21.33

Fiscal 1998                                            
---------------------                                  
First quarter                      $32.58        $22.42
Second quarter                      32.75         25.92
Third quarter                       35.92         28.04
Fourth quarter                      43.25         29.25


  These over-the-counter market quotations may reflect inter-dealer prices
without retail mark-up, mark-down or commission and may not necessarily         
represent actual transactions.                                                  

At September 30, 1998, there were approximately 185 and 4 holders of  
record of shares of Class A and Class B Common Stock, respectively.  The        
Company estimates that, when you include shareholders whose shares are held     
in nominee accounts by brokers, there were approximately 12,500 total holders   
of its Class A Common Stock.                                                    

The Company has never paid cash dividends on its Common Stock and does
not anticipate paying cash dividends in the near future.  It is the current     
policy of the Company's Board of Directors to retain earnings to finance the    
operations and expansion of the Company's business.  Holders of Class A         
Common Stock and Class B Common Stock are entitled to equal per share cash      
dividends to the extent declared by the Board.                                  

32                                                                              

10-K
33rd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 33rd
Item 6 -- Selected Consolidated Financial Data                                  

The following selected financial and operating data is qualified by   
reference to and should be read in conjunction with the financial statements    
and notes thereto and "Management's Discussion and Analysis of Financial        
Condition and Results of Operations" included in Items 7 and 8 of this Form     
10-K.  The Consolidated Statement of Operations for each of the three years     
in the period ended August 31, 1998 and the Consolidated Balance Sheet as of    
August 31, 1998 and 1997, and the report of independent accountants thereon     
are included in Item 8 of this Form 10-K.  Diluted net income per share and     
diluted weighted average shares outstanding have been retroactively restated    
for stock splits.                                                               

                                                        [Enlarge/Download Table]

                                                 Year Ended August 31,               
                                 ----------------------------------------------------
                                   1998       1997       1996       1995       1994  
                                 --------   --------   --------   --------   --------
                                       (In thousands, except per share amounts)      
                                                                                     
Income Statement Data:                                                               
Revenues:                                                                            
 Tuition and other, net          $384,877   $279,195   $211,247   $161,013   $124,440
 Interest income                    6,205      4,341      3,028      2,416        280
                                 --------   --------   --------   --------   --------
 Total net revenues               391,082    283,536    214,275    163,429    124,720
                                 --------   --------   --------   --------   --------
Costs and expenses:                                                                  
 Instruction costs and services   232,592    167,720    130,039    102,122     81,313
 Selling and promotional           49,035     35,187     27,896     21,016     17,918
 General and administrative        33,183     25,648     21,343     18,462     17,194
                                 --------   --------   --------   --------   --------
 Total costs and expenses         314,810    228,555    179,278    141,600    116,425
                                 --------   --------   --------   --------   --------
Income before income taxes         76,272     54,981     34,997     21,829      8,295
Provision for income taxes         29,975     21,602     13,605      9,229      3,383
                                 --------   --------   --------   --------   --------
Net income                       $ 46,297   $ 33,379   $ 21,392   $ 12,600   $  4,912
                                 ========   ========   ========   ========   ========

Diluted net income per share     $    .59   $    .43   $    .28   $    .18   $    .10
Diluted weighted average shares                                                      
  outstanding                      79,086     77,726     76,763     68,872     50,524
_______________                                                                      

33                                                                              

10-K
34th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 34th
                                                        [Enlarge/Download Table]

                                                           August 31,                     
                                       ---------------------------------------------------
                                         1998       1997       1996       1995      1994  
                                       --------   --------   --------   --------  --------
                                                      (Dollars in thousands)              
                                                                                          
Balance Sheet Data:                                                                       
Cash, cash equivalents and                                                                
  restricted cash                      $ 75,039   $ 78,855   $ 63,267   $ 62,601  $ 12,816
Marketable securities                    45,467     41,429     13,273                     
                                       --------   --------   --------   --------  --------
Total cash and marketable securities   $120,506   $120,284   $ 76,540   $ 62,601  $ 12,816
                                       ========   ========   ========   ========  ========

Total assets                           $305,160   $194,910   $137,850   $102,132  $ 43,638
                                       ========   ========   ========   ========  ========

Current liabilities                    $ 95,574   $ 67,394   $ 54,804   $ 45,065  $ 34,890
Long-term liabilities                     9,778      3,199      2,432      1,715     1,347
Shareholders' equity                    199,808    124,317     80,614     55,352     7,401
                                       --------   --------   --------   --------  --------
Total liabilities and                                                                     
  shareholders' equity                 $305,160   $194,910   $137,850   $102,132  $ 43,638
                                       ========   ========   ========   ========  ========
Operating Statistics:                                                                     
Degree Enrollments at end of period<F1>  71,400     56,200     46,900     36,800    30,200
Number of locations at end                                                                
  of period<F2>                             114         96         85         68        60

_______________                                                                           
<FN>                                                                                      
<F1>  Enrollments are defined as students in attendance in a degree program               
      at the end of a period.  Average degree enrollments represent the                   
      average of the ending degree enrollments for each month in the period.              
      Average degree enrollments were 64,100, 50,500, 41,500, 34,000, and                 
      27,500 for the years ended 1998, 1997, 1996, 1995, and 1994,                        
      respectively.                                                                       

<F2>  Includes UOP and WIU campuses and learning centers, IPD client                      
      institutions and the College.  At September 30, 1998,                               
      there were 117 campuses and learning centers.                                       
</FN>                                                                                     

The Company did not pay any cash dividends on its Common Stock during 
any of the periods set forth in the table above.                                

34                                                                              

10-K
35th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 35th
Item 7 -- Management's Discussion and Analysis of Financial Condition and       
Results of Operations                                                           

The following Management's Discussion and Analysis of Financial       
Condition and Results of Operations contains forward-looking statements         
relating to future plans, expectations, events or performances that involve     
risks and uncertainties.  The Company's actual results of operations could      
differ materially from those anticipated in these forward-looking statements    
as a result of certain factors.  The following discussion should be read in     
conjunction with the consolidated financial statements and notes thereto        
included in this Annual Report on Form 10-K.                                    

BACKGROUND AND OVERVIEW                                                         

The Company's revenues, net of student discounts, have increased to   
$391.1 million in 1998 from $124.7 million in 1994.  Average annual degree      
seeking student enrollments have increased to 64,100 students in 1998 from      
approximately 27,500 in 1994.  Net income has increased to $46.3 million in     
1998 from $4.9 million in 1994. At August 31, 1998, 71,400 degree seeking       
students were enrolled in UOP, WIU, the College and IPD-assisted programs at    
IPD client institutions.                                                        

From September 1994 through August 1998, UOP opened 40 campuses and   
learning centers and IPD established operations at 17 campuses and learning     
centers with its client institutions.  Start-up costs for UOP campuses in new   
markets average $700,000 to $900,000 per site.  These start-up costs are        
incurred over an 18 to 21 month period, at which time the enrollments at        
these new campuses average 200 to 300 students.  Costs for establishing a       
learning center in a market currently served by UOP are expected to average     
$150,000.  Start-up costs for IPD contract sites average from $400,000 to       
$500,000 per site over an 18 to 21 month period, and consist primarily of       
administrative salaries, marketing and advertising.  Start-up costs are         
expensed as incurred.                                                           

Approximately 91% of the Company's net revenues in 1998 consist of    
tuition revenues.  The Company's net revenues also include sales of             
textbooks, computers and other education-related products, application fees,    
other student fees, interest and other income.  The Company's net revenues      
vary from period to period based on several factors that include: (1) the       
aggregate number of students attending classes; (2) the number of classes       
held during the period and (3) the weighted average tuition price per credit    
hour (weighted by program and location).  UOP tuition revenues currently        
represent approximately 87% of consolidated tuition revenues.  IPD tuition      
revenues consist of the contractual share of tuition revenues from students     
enrolled in IPD assisted programs at IPD client institutions.  IPD's            
contracts with its respective client institutions generally have terms of       
five to ten years with provisions for renewal.                                  

Instruction costs and services at UOP, WIU and the College consist    
primarily of costs related to the delivery and administration of the            
Company's educational programs that include faculty compensation,               
administrative salaries for departments that provide service directly to the    
students, the costs of educational materials sold, facility leases and other    
occupancy costs, bad debt expense and depreciation and amortization of          
property and equipment.  UOP and WIU faculty members are contracted with and    
paid for one course offering at a time.  All classroom facilities are leased    
or, in some cases, are provided by the students' employers at no charge to      

35                                                                              

10-K
36th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 36th
the Company.  Instruction costs and services at IPD consist primarily of        
program administration, student services and classroom lease expense.  Most     
of the other instruction costs for IPD-assisted programs, including faculty,    
financial aid processing and other administrative salaries, are the             
responsibility of the IPD client institutions.                                  

Selling and promotional costs consist primarily of advertising,       
marketing salaries and other costs related to the selling and promotional       
functions.  These costs are expensed as incurred.  General and administrative   
costs consist primarily of administrative salaries, occupancy costs,            
depreciation and amortization and other related costs for departments such as   
executive management, information systems, corporate accounting, human          
resources and other departments that do not provide direct services to the      
Company's students.  To the extent possible, the Company centralizes these      
services to avoid duplication of effort.                                        

 In September 1997, the Company acquired the assets and related business
operations of the College for Financial Planning and related divisions that     
include the Institute for Wealth Management, the Institute for Retirement       
Planning, the American Institute for Retirement Planners, Inc. and the          
Institute for Tax Studies.  The adjusted purchase price consisted of $19.4      
million in cash, $15.9 million in stock and the assumption of approximately     
$11.4 million in liabilities.  The excess of cost over the fair value of        
assets purchased of $40.0 million is being amortized over 35 years.             

RESULTS OF OPERATIONS                                                           

  The following table sets forth consolidated income statement data of the
Company expressed as a percentage of net revenues for the periods indicated:    

                                                                [Download Table]
                                                  Year Ended August 31,    
                                               --------------------------- 
                                                1998       1997      1996  
                                               -------   -------   ------- 

                                                                           
Revenues:                                                                  
 Tuition and other, net                           98.4%     98.5%     98.6%
 Interest income                                   1.6       1.5       1.4 
                                               -------   -------   ------- 
 Total net revenues                              100.0     100.0     100.0 
                                               -------   -------   ------- 
Costs and expenses:                                                        
 Instruction costs and services                   59.5      59.1      60.7 
 Selling and promotional                          12.5      12.4      13.0 
 General and administrative                        8.5       9.1      10.0 
                                               -------   -------   ------- 
 Total costs and expenses                         80.5      80.6      83.7 
                                               -------   -------   ------- 
Income before income taxes                        19.5      19.4      16.3 
Less provision for income taxes                    7.7       7.6       6.3 
                                               -------   -------   ------- 
Net income                                        11.8%     11.8%     10.0%
                                               =======   =======   ======= 

36                                                                              

10-K
37th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 37th
Year Ended August 31, 1998 Compared with the Year Ended August 31, 1997 -----   

Net revenues increased by 37.9% to $391.1 million in 1998 from $283.5 
million in 1997 due primarily to a 26.9% increase in average degree student     
enrollments, tuition price increases averaging four to five percent             
(depending on the geographic area and program), a higher concentration of       
enrollments at locations that charge a higher rate per credit hour and net      
revenues from the College.  Most of the Company's campuses, which include       
their respective learning centers, had increases in net revenues and average    
degree student enrollments from 1997 to 1998.                                   

Tuition and other net revenues for the year ended August 31, 1998 and 
1997 consists primarily of $334.2 million and $244.7 million, respectively,     
of net tuition revenues from students enrolled in degree programs and $23.1     
million and $13.2 million, respectively, of net tuition revenues from           
students enrolled in non-degree programs.  Average degree student enrollments   
increased to 64,100 in 1998 from approximately 50,500 in 1997.                  

Interest income increased to $6.2 million in 1998 from $4.3 million in
1997 due to the increase in cash and investments during the year.               

Instruction costs and services increased by 38.7% to $232.6 million in
1998 from $167.7 million in 1997 due primarily to the direct costs necessary    
to support the increase in average degree student enrollments, consisting       
primarily of faculty compensation, classroom lease expenses and related staff   
salaries at each respective location and added expenses related to the          
College. These costs as a percentage of net revenues increased to 59.5% in      
1998 from 59.1% in 1997 due primarily to the increase in the number of new      
locations.                                                                      

 Selling and promotional expenses increased by 39.4% to $49.0 million in
1998 from $35.2 million in 1997 due primarily to an increase in the number of   
marketing and enrollment staff, additional advertising and marketing related    
to newly opened campuses and learning centers, and expenses related to the      
College.  These expenses as a percentage of net revenues increased to 12.5%     
in 1998 from 12.4% in 1997 due to an increase in the number of campuses         
opened in new markets in the last two years and an increase in the number of    
marketing and enrollment staff, partially offset by the ability to increase     
enrollments and open new learning centers in existing markets with a            
proportionally lower increase in selling and promotional expenses.  As the      
Company expands into new markets, it may not be able to leverage its selling    
and promotional expenses to the same extent.                                    

 General and administrative expenses increased by 29.4% to $33.2 million
in 1998 from $25.6 million in 1997 due primarily to costs required to support   
the increased number of campuses and learning centers, costs associated with    
the implementation of new information systems and overall increases in          
general and administrative salaries.  General and administrative expenses as    
a percentage of net revenues decreased to 8.5% in 1998 from 9.1% in 1997 due    
primarily to higher net revenues being spread over the fixed costs related to   
various centralized functions such as information services, corporate           
accounting and human resources.  The Company may not be able to leverage its    
costs to the same extent as it faces increased costs related to the             
development and implementation of new information systems and expansion into    
additional markets.                                                             

37                                                                              

10-K
38th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 38th
Costs related to the start-up of new campuses and learning centers are
expensed as incurred and totaled approximately $7.2 million and $3.6 million    
in 1998 and 1997, respectively.  These start-up costs are primarily included    
in instruction costs and services and selling and promotional expenses.         

Interest expense, which is allocated among all categories of costs and
expenses, was $119,000 and $167,000 in 1998 and 1997, respectively.             

The Company's effective tax rate was 39.3% in both 1998 and 1997.     

  Net income increased to $46.3 million in 1998 from $33.4 million in 1997
due primarily to increased enrollments, increased tuition rates and improved    
utilization of general and administrative costs.                                

Year Ended August 31, 1997 Compared with the Year Ended August 31, 1996 -----   

Net revenues increased by 32.3% to $283.5 million in 1997 from $214.3 
million in 1996 due primarily to a 21.7% increase in average degree student     
enrollments and tuition price increases averaging four to six percent,          
depending on the geographic area and program.  Most of the Company's            
campuses, which include their respective learning centers, had increases in     
net revenues and average student enrollments from 1996 to 1997.  Average        
degree student enrollments increased to approximately 50,500 in 1997 from       
41,500 in 1996.                                                                 

Interest income increased to $4.3 million in 1997 from $3.0 million in
1996 due to the increase in cash and investments during the year.               

Instruction costs and services increased by 29.0% to $167.7 million in
1997 from $130.0 million in 1996 due primarily to the direct costs necessary    
to support the increase in average degree student enrollments.  These costs     
as a percentage of net revenues decreased to 59.1% in 1997 from 60.7% in 1996   
due to greater net revenues being spread over the fixed costs related to        
centralized student services.                                                   

 Selling and promotional expenses increased by 26.1% to $35.2 million in
1997 from $27.9 million in 1996 due primarily to increased marketing and        
advertising at the Company's campuses and learning centers.  These expenses     
as a percentage of net revenues decreased to 12.4% in 1997 from 13.0% in 1996   
due to the Company's ability to increase enrollments and open new learning      
centers in existing markets with a proportionally lower increase in selling     
and promotional expenses.                                                       

 General and administrative expenses increased by 20.2% to $25.6 million
in 1997 from $21.3 million in 1996 due primarily to costs required to support   
the increased number of UOP and IPD campuses and learning centers and           
increases in general and administrative salaries.  General and administrative   
expenses as a percentage of net revenues decreased to 9.1% in 1997 from 10.0%   
in 1996 due primarily to higher net revenues being spread over the fixed        
costs related to various centralized functions such as information services,    
corporate accounting and human resources.                                       

Costs related to the start-up of new campuses and learning centers    
totaled approximately $3.6 million in 1997 and 1996.                            

38                                                                              

10-K
39th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 39th
Interest expense, which is allocated among all categories of costs and
expenses, was $167,000 and $77,000 in 1997 and 1996, respectively.              

The Company's effective tax rate increased to 39.3% in 1997 from 38.9%
in 1996 due primarily to the relative impact of expenses that are               
nondeductible for tax purposes.                                                 

  Net income increased to $33.4 million in 1997 from $21.4 million in 1996
due primarily to increased enrollments, increased tuition rates and improved    
utilization of general and administrative costs and fixed instruction costs     
and services.                                                                   

39                                                                              

10-K
40th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 40th
QUARTERLY RESULTS OF OPERATIONS                                                 

The following table sets forth selected unaudited quarterly financial 
information for each of the Company's last eight quarters.  The Company         
believes that this information includes all normal recurring adjustments        
necessary for a fair presentation of such quarterly information when read in    
conjunction with the consolidated financial statements included in Item 8 of    
this Form 10-K.  Certain expenses in the first two quarters of 1998 were        
reclassified between the General and Administrative and the Instructional       
Costs and Services categories from the amounts originally reported.  The        
operating results for any quarter are not necessarily indicative of the         
results for any future period.  Diluted net income per share and  diluted       
weighted average shares outstanding have been retroactively restated for        
stock splits.                                                                   

                                                        [Enlarge/Download Table]

                                                                   Quarter Ended                                 
                                 ------------------------------------------------------------------------------- 
                                               FY 1998                                    FY 1997                
                                 -------------------------------------      ------------------------------------ 
                                 Aug. 31,  May 31,  Feb. 28,   Nov 30,      Aug. 31,  May 31,  Feb. 28,  Nov. 30,
                                   1998      1998     1998      1997          1997     1997     1997      1996   
                                 -------   -------  -------   -------       -------   -------  -------   ------- 
                                                    (In thousands, except per share amounts)                     
                                                                                                                 
Revenues:                                                                                                        
 Tuition and other, net         $106,723  $105,201  $85,078   $87,875       $75,773   $76,633  $60,696   $66,093 
 Interest income                   1,912     1,582    1,386     1,325         1,286     1,209      956       890 
                                 -------   -------  -------   -------       -------   -------  -------   ------- 
 Total net revenues              108,635   106,783   86,464    89,200        77,059    77,842   61,652    66,983 
                                 -------   -------  -------   -------       -------   -------  -------   ------- 
Costs and expenses:                                                                                              
 Instruction costs and services   64,096    61,093   54,780    52,623        46,451    43,572   38,089    39,608 
 Selling and promotional          16,195    11,504   10,770    10,566         9,724     8,492    8,492     8,479 
 General and administrative        8,142     8,479    8,116     8,446         5,792     6,522    6,586     6,748 
                                 -------   -------  -------   -------       -------   -------  -------   ------- 
 Total costs and expenses         88,433    81,076   73,666    71,635        61,967    58,586   53,167    54,835 
                                 -------   -------  -------   -------       -------   -------  -------   ------- 
Income before income taxes        20,202    25,707   12,798    17,565        15,092    19,256    8,485    12,148 
Provision for income taxes         7,766    10,185    5,068     6,956         5,648     7,702    3,393     4,859 
                                 -------   -------  -------   -------       -------   -------  -------   ------- 
Net income                       $12,436   $15,522  $ 7,730   $10,609       $ 9,444   $11,554  $ 5,092   $ 7,289 
                                 =======   =======  =======   =======       =======   =======  =======   ======= 

Diluted net income per share     $   .16   $   .20  $   .10   $   .13       $   .12   $   .15  $   .07   $   .09 
                                 =======   =======  =======   =======       =======   =======  =======   ======= 
Diluted weighted average shares                                                                                  
  outstanding                     79,372    79,250   79,035    78,689        78,050    77,733   77,707    77,414 
                                 =======   =======  =======   =======       =======   =======  =======   ======= 

As a percentage of net revenues:                                                                                 
Revenues:                                                                                                        
 Tuition and other, net             98.2%    98.5%    98.4%     98.5%         98.3%     98.4%    98.4%     98.7% 
 Interest income                     1.8      1.5      1.6       1.5           1.7       1.6      1.6       1.3  
                                 -------   -------  -------   -------       -------   -------  -------   ------- 
 Total net revenues                100.0    100.0    100.0     100.0         100.0     100.0    100.0     100.0  
                                 -------   -------  -------   -------       -------   -------  -------   ------- 
Costs and expenses:                                                                                              
 Instruction costs and services     59.0     57.2     63.3      59.0          60.3      56.0     61.8      59.1  
 Selling and promotional            14.9     10.8     12.5      11.9          12.6      10.9     13.7      12.7  
 General and administrative          7.5      7.9      9.4       9.4           7.5       8.4     10.7      10.1  
                                 -------   -------  -------   -------       -------   -------  -------   ------- 
 Total costs and expenses           81.4     75.9     85.2      80.3          80.4      75.3     86.2      81.9  
                                 -------   -------  -------   -------       -------   -------  -------   ------- 
Income before income taxes          18.6     24.1     14.8      19.7          19.6      24.7     13.8      18.1  
Provision for income taxes           7.2      9.6      5.9       7.8           7.3       9.9      5.5       7.2  
                                 -------   -------  -------   -------       -------   -------  -------   ------- 
Net income                          11.4%    14.5%     8.9%     11.9%         12.3%     14.8%     8.3%     10.9% 
                                 =======   =======  =======   =======       =======   =======  =======   ======= 

40                                                                              

10-K
41st Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 41st
SEASONALITY IN RESULTS OF OPERATIONS                                            

The Company experiences seasonality in its results of operations      
primarily as a result of changes in the level of student enrollments. While     
the Company enrolls students throughout the year, second quarter (December to   
February) average enrollments and related revenues generally are lower than     
other quarters due to the holiday breaks in December and January. Second        
quarter costs and expenses historically increase as a percentage of net         
revenues as a result of certain fixed costs not significantly affected by the   
seasonal second quarter declines in net revenues.                               

The Company experiences a seasonal increase in new enrollments in     
August of each year when most other colleges and universities begin their       
Fall semesters. As a result, instruction costs and services and selling and     
promotional expenses historically increase as a percentage of net revenues in   
the fourth quarter due to increased costs in preparation for the August peak    
enrollments. These increased costs result in accounts payable levels being      
higher in August than in any other month during the year.                       

The Company anticipates that these seasonal trends in the second and
fourth quarters will continue in the future.                                    

LIQUIDITY AND CAPITAL RESOURCES                                                 

 Net cash provided by operating activities increased to $49.7 million in
1998 from $41.5 million in 1997.  This increase resulted primarily from         
increased net income, increased non-cash charges for depreciation,              
amortization and bad debt expense, and increases in accounts payable and        
accrued expenses as a result of the general growth in operations offset by an   
increase in accounts receivable.  The increase in accounts receivable was       
primarily attributable to the general growth in operations as well as the       
implementation in the fourth quarter of new financial aid processing            
software.  Although the Company believes that the new software will             
ultimately result in processing efficiencies and faster collections, delays     
in processing were experienced during the transition and training period.       
The Company expects its accounts receivable balance to return to more           
normalized levels by mid-1999.  Bad debt expense as a percent of net revenues   
was less than 2% in 1998 and 1997.                                              

Capital expenditures increased to $30.9 million in 1998 from $12.7    
million in 1997 primarily due to the implementation of a new financial aid      
software package, the installation of computer labs related to the expansion    
of Information Technology programs, an increase in leasehold improvements at    
new locations and to support an increase in the number of overall locations.    
Total purchases of property and equipment for the year ended August 31, 1999    
are expected to range from $26.0 to $28.0 million.  These expenditures will     
primarily be related to new campuses and learning centers, the continued        
expansion of computer labs designed to support the Information Technology       
programs, hardware and software related to the Company's planned conversion     
to a new human resource system and increases in normal recurring capital        
expenditures due to the overall increase in student and employee levels         
resulting from the growth in the business.  During 1998, the Company used       
$19.4 million of cash for its acquisition of the assets and related business    
operations of the College for Financial Planning and $10.8 million for its      
investment in a joint venture.                                                  

41                                                                              

10-K
42nd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 42nd
  Start-up costs are expected to range from $8.0 to $10.0 million in 1999,
as compared to $7.2 million in 1998, due to recent and planned expansion into   
new geographic markets.                                                         

 In November 1997, the Company increased its line of credit from $4.0 to
$10.0 million.  At August 31, 1998, the Company had no outstanding borrowings   
on the line of credit, which bears interest at prime.  At August 31, 1998,      
availability under the line of credit was reduced by outstanding letters of     
credit of $1.6 million.  The line of credit is renewable annually and any       
amounts borrowed under the line are payable upon its termination in February    
2000.                                                                           

The Company currently leases all of its educational and administrative
facilities.  The lease on the Company's corporate headquarters, which           
includes the UOP Phoenix Main Campus, was renewed in December 1995 for a five   
year term.  The Company is currently considering various options for            
expansion of its corporate headquarters and Phoenix Main Campus.                

  The DOE requires that Title IV Program funds collected by an institution
for unbilled tuition be kept in a separate cash or cash equivalent account      
until the students are billed for the portion of their program related to       
these Title IV Program funds.  In addition, all funds transferred to the        
Company through electronic funds transfer are held in a separate cash account   
until certain conditions are satisfied.  As of August 31, 1998, the Company     
had approximately $22.7 million in these separate accounts, which are           
reflected in the Consolidated Balance Sheet as restricted cash, to comply       
with these requirements.  These funds generally remain in these separate        
accounts for an average of 60-75 days from the date of collection.  These       
restrictions on cash have not affected the Company's ability to fund daily      
operations.                                                                     

  The Title IV Regulations, as revised effective July 1, 1998, require all
higher education institutions to meet a minimum composite score to be deemed    
financially responsible by the DOE.  If the minimum composite score of 1.0 is   
not met, an institution would fall under alternative standards and may lose     
its eligibility to participate in Title IV Programs.  As of August 31, 1998,    
UOP's composite score was 3.0 and WIU's composite score was 2.8.  These         
requirements apply separately to UOP and WIU and to each of the respective      
IPD client institutions, but not to the Company on a consolidated basis.        

 UOP's most recent Department of Education program review began in March
1997, and an initial program review report has been received.  This report      
contained six findings in the areas of satisfactory academic progress,          
refunds and general program administration.  UOP is currently in the process    
of responding to these findings regarding compliance with requirements of the   
Title IV Programs.  UOP's response to these issues is due in January 1999,      
and UOP will have its response prepared prior to the deadline.  Subsequently,   
the Department will issue a final program review determination.  It is          
uncertain when the final determination will be issued and what the results of   
the findings will be.                                                           

 Additionally, in January 1998 the Department of Education Office of the
Inspector General ("OIG") began performing a routine audit of UOP.  The         
auditors reviewed UOP's cash management policies.  Although no draft report     
has been received from the OIG, the audit team indicated at the exit            
interview that it had no findings regarding cash management policies.  The      
team did present questions regarding UOP's interpretation of the "12-hour       
rule", UOP's distance education programs and institutional refund               

42                                                                              

10-K
43rd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 43rd
obligations.  As of this date, UOP has supplied the OIG with the information    
they have requested and is awaiting an initial draft report.  Although the      
Company believes that the program review and OIG audit will be resolved         
without any material effect, as with any program review or audit, no            
assurance can be given as to the final outcome since the matters are not yet    
resolved.                                                                       

  As previously disclosed, the Company assumed the Title IV liabilities of
Western International University ("Western") which were subject to change       
based on the results of the DOE's audit of Western's Title IV Programs.         
Although much of the fieldwork was completed in early 1996, the final audit     
results and the amount that the Company is responsible for has not been         
determined by the DOE at the current time.  Depending on the interpretation     
of the various regulatory requirements, the final audit results and the         
Company's liability may differ materially from the estimates currently          
recorded.  Any difference between the final amount and the estimates            
currently recorded will be recorded as an increase or decrease, as              
applicable, to expense.                                                         

As previously disclosed, the Company began offering an alternative    
student loan program on a test basis at several of its campuses in March        
1997.  In May 1998, this pilot program was discontinued.  The loans currently   
outstanding will continue to be serviced by the commercial lender that          
offered the program under the original terms and conditions.  Loans for         
students that did not meet certain credit requirements were guaranteed by the   
Company, subject to certain limitations.  At August 31, 1998, the Company had   
guaranteed approximately $2.5 million of outstanding loan balances under this   
program.  To date, there have been no material defaults by students whose       
loans are guaranteed by the Company.                                            

On September 25, 1998, the Company's Board of Directors authorized a  
program allocating up to $40 million in Company funds to repurchase shares of   
its Class A Common Stock.  As of October 16, 1998, the Company had              
repurchased approximately 295,000 shares at a total cost of approximately       
$7.0 million.                                                                   

YEAR 2000 COMPLIANCE                                                            

 The Year 2000 computer issue refers to a condition in computer software
where a two digit field rather than a four digit field is used to distinguish   
a calendar year.  Unless corrected, some computer programs, hardware ("IT")     
and non-information technology systems ("non-IT") could be unable to process    
information containing dates subsequent to December 31, 1999.  As a result,     
such programs and systems could experience miscalculations, malfunctions or     
disruptions.                                                                    

 The Company is currently in the assessment phase of evaluating its core
business information systems for Year 2000 readiness and is extending that      
review to include a wide variety of other IT and non-IT systems. As a result    
of hardware and software upgrades and computer system purchases over the past   
few years, many of the Company's computer systems should not have a Year 2000   
problem or have been warranted to be Year 2000 compliant by third-party         
vendors.  The Company is continuing the process of updating much of its         
existing software for Year 2000 compliance by acquiring new and upgraded        
third party software packages to replace existing software and modifying        
existing internally developed software.  In no case is a system being           
replaced solely because of Year 2000 issues, although in some cases, the        
timing of system replacements is being accelerated.  Sufficient testing of      
the Company's IT systems has not been completed to fully validate readiness.    
43                                                                              

10-K
44th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 44th
Additional testing is planned during 1999 to reasonably ensure Year 2000        
compliance.  Additionally, while the Company may have incurred an opportunity   
cost for addressing the Year 2000 issue, it does not believe that any           
specific IT projects have been deferred as a result of its Year 2000 efforts.   
The Company's non-IT compliance is focused primarily in the area of             
facilities leased by the Company.  The Company is working with its lessors to   
ensure compliance on these non-IT systems.                                      

The Company has begun to assess the readiness of its significant      
suppliers, business partners, banking agencies and governmental agencies to     
determine the extent to which the Company may be vulnerable in the event that   
those parties fail to properly remediate their own Year 2000 issues.  The       
Company's operations and liquidity largely depend upon the student funding      
provided by Title IV Programs for its students.  Processing of applications     
for this funding is handled by the U.S. Department of Education's computers     
systems.  The U.S. Department of Education has stated that its systems will     
be Year 2000 compliant in early calendar year 1999 and that various schools     
will be able to run tests of the remediated systems during the first half of    
calendar year 1999; however, the Company is unable to independently assess      
the U.S. Department of Education's progress to date and no test dates have      
been announced yet.  Similarly, UOP, IPD, WIU, the College and IPD client       
institutions are licensed by one or more agencies in the states in which they   
are based and are accredited by accrediting bodies that are recognized by the   
U.S. Department of Education.  Any prolonged interruption would have a          
material adverse impact upon the education industry and, accordingly, upon      
the Company's business, results of operations, liquidity and financial          
condition.  The Company is in the process of developing an appropriate          
contingency plan in the event that a significant exposure is identified         
relative to the dependencies on third-party systems.                            

  The Company believes that the most reasonably likely worst-case scenario
for the Year 2000 issue would be that the Company or the third parties with     
whom it has relationships would cease or not successfully complete their Year   
2000 remediation efforts.  If this were to occur, the Company would encounter   
disruptions to its business that could have a material adverse effect on its    
results of operations.  The Company could be materially impacted by             
widespread economic or financial market disruption or by year 2000 computer     
system failures at the U.S. Department of Education.  The Company has not at    
this time established a formal Year 2000 contingency plan but will consider     
and, if necessary, address doing so as part of its Year 2000 activities.        

Although the Company is unable at this time to assess the possible    
impact on its results of operations, liquidity or financial condition of any    
Year 2000 related disruptions to its business caused by the malfunctioning of   
any IT or non-IT systems and products that it uses or that third parties with   
which it has material relationships use, management does not believe at the     
current time that the cost of remediating the Company's internal Year 2000      
problems will have a material adverse impact upon its business, results of      
operations, liquidity or financial condition.                                   

IMPACT OF INFLATION                                                             

Inflation has not had a significant impact on the Company's historical
operations.                                                                     

44                                                                              

10-K
45th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 45th
Item 7a -- Quantitative and Qualitative Disclosures about Market Risk           

The Company's portfolio of marketable securities includes numerous    
issuers, varying types of securities and maturities.  The Company intends to    
hold these securities to maturity.  The fair value of the Company's portfolio   
of marketable securities would not be significantly impacted by either a 100    
basis point increase or decrease in interest rates due primarily to the         
short-term nature of the portfolio.  The Company does not hold or issue         
derivative financial instruments.                                               

45                                                                              

10-K
46th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 46th
Item 8 -- Financial Statements and Supplementary Data                           

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                      

Page                                                            
----                                                            

Report of Independent Accountants . . . . . . . . . . . . . . . . . . . .  47   

Consolidated Statement of Operations. . . . . . . . . . . . . . . . . . .  48   

Consolidated Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . .  49   

Consolidated Statement of Changes in Shareholders' Equity. . . . . . . . . 50   

Consolidated Statement of Cash Flows. . . . . . . . . . . . . . . . . . .  51   

Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . .  52   

46                                                                              

10-K
47th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 47th
REPORT OF INDEPENDENT ACCOUNTANTS 

To the Board of Directors and Shareholders of Apollo Group, Inc.:               

In our opinion, the accompanying consolidated balance sheet and the   
related consolidated statements of operations, of changes in shareholders'      
equity and of cash flows present fairly, in all material respects, the          
financial position of Apollo Group, Inc. and its subsidiaries at August 31,     
1998 and 1997, and the results of their operations and their cash flows for     
each of the three years in the period ended August 31, 1998, in conformity      
with generally accepted accounting principles.  These financial statements      
are the responsibility of Apollo Group, Inc.'s management; our responsibility   
is to express an opinion on these financial statements based on our audits.     
We conducted our audits of these statements in accordance with generally        
accepted auditing standards which require that we plan and perform the audit    
to obtain reasonable assurance about whether the financial statements are       
free of material misstatement.  An audit includes examining, on a test basis,   
evidence supporting the amounts and disclosures in the financial statements,    
assessing the accounting principles used and significant estimates made by      
management, and evaluating the overall financial statement presentation.  We    
believe that our audits provide a reasonable basis for the opinion expressed    
above.                                                                          

PricewaterhouseCoopers LLP                                                      
Phoenix, Arizona                                                                
October 19, 1998                                                                

47                                                                              

10-K
48th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 48th
APOLLO GROUP, INC. AND SUBSIDIARIES 
Consolidated Statement of Operations  
(In thousands, except per share amounts)  

                                                                [Download Table]

                                                Year Ended August 31,     
                                           -------------------------------
                                             1998        1997       1996  
                                           ---------  ---------  ---------
                                                                          

Revenues:                                                                 
 Tuition and other, net                     $384,877   $279,195   $211,247
 Interest income                               6,205      4,341      3,028
                                            --------   --------   --------
 Total net revenues                          391,082    283,536    214,275
                                            --------   --------   --------
Costs and expenses:                                                       
 Instruction costs and services              232,592    167,720    130,039
 Selling and promotional                      49,035     35,187     27,896
 General and administrative                   33,183     25,648     21,343
                                            --------   --------   --------
 Total costs and expenses                    314,810    228,555    179,278
                                            --------   --------   --------
Income before income taxes                    76,272     54,981     34,997
Provision for income taxes                    29,975     21,602     13,605
                                            --------   --------   --------
Net income                                  $ 46,297   $ 33,379   $ 21,392
                                            ========   ========   ========
Basic net income per share                  $    .60   $    .44   $    .29
                                            ========   ========   ========
Diluted net income per share                $    .59   $    .43   $    .28
                                            ========   ========   ========

Basic weighted average shares outstanding     77,245     75,625     74,721

Diluted weighted average shares outstanding   79,086     77,726     76,763

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

48                                                                              

10-K
49th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 49th
APOLLO GROUP, INC. AND SUBSIDIARIES 
Consolidated Balance Sheet  
(Dollars in thousands)  

                                                        [Enlarge/Download Table]
                                                                         August 31,      
                                                                  -----------------------
                                                                    1998           1997  
                                                                  --------       --------
                                                                                         
Assets:                                                                                  
Current assets-                                                                          
Cash and cash equivalents                                         $ 52,326       $ 58,928
Restricted cash                                                     22,713         19,927
Marketable securities                                               27,538         27,182
Receivables, net                                                    61,282         32,040
Deferred tax assets, net                                             6,203          2,873
Other current assets                                                 3,945          2,853
                                                                  --------       --------
Total current assets                                               174,007        143,803
Property and equipment, net                                         46,618         25,251
Marketable securities                                               17,929         14,247
Investment in joint venture                                         10,807               
Cost in excess of fair value of assets purchased, net               41,398          2,283
Other assets                                                        14,401          9,326
                                                                  --------       --------
Total assets                                                      $305,160       $194,910
                                                                  ========       ========
Liabilities and Shareholders' Equity:                                                    
Current liabilities-                                                                     
Current portion of long-term liabilities                          $    333       $    295
Accounts payable                                                     9,684          7,714
Accrued liabilities                                                 21,311         11,449
Income taxes payable                                                 1,007            253
Student deposits and current portion of deferred revenue            63,239         47,683
                                                                  --------       --------
Total current liabilities                                           95,574         67,394
                                                                  --------       --------
Deferred tuition revenue, less current portion                       4,592             --
                                                                  --------       --------
Long-term liabilities, less current portion                          3,750          2,494
                                                                  --------       --------
Deferred tax liabilities, net                                        1,436            705
                                                                  --------       --------
Commitments and contingencies                                           --             --
                                                                  --------       --------
Shareholders' equity-                                                                    
Preferred stock, no par value, 1,000,000 shares authorized;                              
  none issued                                                           --             --
Class A nonvoting common stock, no par value, 400,000,000                                
  shares authorized; 77,112,000 and 75,614,000 issued and                                
  outstanding at August 31, 1998 and 1997, respectively                101             66
Class B voting common stock, no par value, 3,000,000                                     
  shares authorized; 512,000 and 548,000 issued and outstanding at                       
  August 31, 1998 and 1997, respectively                                 1              1
Additional paid-in capital                                          80,677         51,521
Retained earnings                                                  119,029         72,729
                                                                  --------       --------
Total shareholders' equity                                         199,808        124,317
                                                                  --------       --------
Total liabilities and shareholders' equity                        $305,160       $194,910
                                                                  ========       ========

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

49                                                                              

10-K
50th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 50th
APOLLO GROUP, INC. AND SUBSIDIARIES 
Consolidated Statement of Changes in Shareholders' Equity 
(In thousands)

                                                        [Enlarge/Download Table]

                                           Common Stock                                                    
                                -------------------------------------                                      
                                    Class A             Class B                                            
                                   Nonvoting             Voting                                            
                                -----------------  ------------------  Additional               Total      
                                          Stated              Stated    Paid-In    Retained  Shareholders' 
                                Shares    Value     Shares    Value     Capital    Earnings     Equity     
                                -------  --------  --------  --------  ----------  --------- ------------- 
                                                                                                           
Balance at August 31, 1995      14,136   $     18       576  $      1  $   37,378  $  17,955  $     55,352 
Stock issued under stock                                                                                   
  purchase plan                     84                                        912                      912 
Stock issued under stock                                                                                   
  option plans                     315                                        373                      373 
3-for-2 stock split, Sep 95      7,356         10                            (10)                       -- 
3-for-2 stock split, Feb 96     11,034         15                            (15)                       -- 
3-for-2 stock split, May 96     16,551         22                            (22)                       -- 
Tax benefits of stock options                                                                              
  exercised                                                                 2,585                    2,585 
Net income                                                                            21,392        21,392 
                                -------  --------  --------  --------  ----------  ---------  ------------ 
Balance at August 31, 1996      49,476         65       576         1      41,201     39,347        80,614 
Stock issued under stock                                                                                   
  purchase plan                     80                                      1,834                    1,834 
Stock issued under stock                                                                                   
  option plans                     643          1                             978                      979 
Exchange Class A shares for                                                                                
  Class B shares                    28                 (28)                                             -- 
Tax benefits of stock options                                                                              
  exercised                                                                 7,508                    7,508 
Currency translation gain                                                                  3             3 
Net income                                                                            33,379        33,379 
                               --------  --------  --------  --------  ----------  ---------  ------------ 
Balance at August 31, 1997      50,227         66      548          1      51,521     72,729       124,317 
Stock issued for College                                                                                   
  acquisition                      445                                     15,944                   15,944 
Stock issued under stock                                                                                   
  purchase plan                     75                                      2,457                    2,457 
Stock issued under stock                                                                                   
  option plans                     475          1                           3,542                    3,543 
Exchange Class A shares for                                                                                
  Class B shares                    36                 (36)                                             -- 
Tax benefits of stock options                                                                              
  exercised                                                                 7,249                    7,249 
3-for-2 stock split, April 98   25,854         34                             (34)                      -- 
Fractional shares paid out                                                     (2)                      (2)
Currency translation gain                                                                  3             3 
Net income                                                                            46,297        46,297 
                               --------  --------  --------  --------  ----------  ---------  ------------ 
Balance at August 31, 1998      77,112   $    101      512   $      1  $   80,677  $ 119,029  $    199,808 
                               ========  ========  ========  ========  ==========  =========  ============ 

The accompanying notes are an integral part of these consolidated financial     
statements.                                                                     
50                                                                              

10-K
51st Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 51st
APOLLO GROUP, INC. AND SUBSIDIARIES 
Consolidated Statement of Cash Flows  
(In thousands)  

                                                                [Download Table]

                                                    Year Ended August 31,    
                                              ------------------------------ 
                                                1998       1997       1996   
                                              --------   --------   -------- 
                                                                             
Cash flows from operating activities:                                        
  Net income                                  $ 46,297   $ 33,379   $ 21,392 
  Adjustments to reconcile net income to net                                 
    cash provided by operating activities:                                   
     Depreciation and amortization              12,786      8,291      6,093 
     Provision for uncollectible accounts        5,479      2,523      1,704 
     Deferred income taxes                      (2,599)       145       (475)
     Decrease (increase) in assets:                                          
      Restricted cash                           (2,786)    (8,642)       590 
      Receivables, net                         (29,733)    (8,578)   (11,621)
      Other assets                              (2,491)       970       (350)
     Increase in liabilities:                                                
      Accounts payable and accrued liabilities   9,542        488      1,371 
      Student deposits and deferred revenue     12,955     11,947      6,454 
      Other liabilities                            192        927         91 
                                              --------   --------   -------- 
Net cash provided by operating activities       49,642     41,450     25,249 
                                              --------   --------   -------- 
Cash flows from investing activities:                                        
  Purchase of marketable securities            (43,277)   (51,634)   (18,636)
  Maturities of marketable securities           38,556     22,983      5,363 
  Purchase of other assets                      (3,685)    (3,427)    (4,131)
  Investment in joint venture                  (10,807)                      
  Net additions to property and equipment      (30,855)   (12,699)    (9,873)
  Cash paid for acquisitions, net of cash                                    
    acquired                                   (19,378)                 (585)
                                              --------   --------   -------- 
Net cash used for investing activities         (69,446)   (44,777)   (27,862)
                                              --------   --------   -------- 
Cash flows from financing activities:                                        
  Issuance of common stock                       6,000      2,812      1,284 
  Tax benefits of stock options exercised        7,249      7,508      2,585 
  Payments on long-term debt                       (50)       (50)           
                                              --------   --------   -------- 
Net cash provided by financing activities       13,199     10,270      3,869 
                                              --------   --------   -------- 
Effect of currency translation                       3          3         -- 
                                              --------   --------   -------- 
Net increase (decrease) in cash and                                          
  cash equivalents                              (6,602)     6,946      1,256 
Cash and cash equivalents at beginning                                       
  of year                                       58,928     51,982     50,726 
                                              --------   --------   -------- 
Cash and cash equivalents at end of year      $ 52,326   $ 58,928   $ 51,982 
                                              ========   ========   ======== 

Supplemental disclosure of cash flow                                         
  information                                                                
    Cash paid during the year for:                                           
     Income taxes                             $ 24,235   $ 13,953   $ 11,675 
     Interest                                 $      9   $     11   $      2 


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

51                                                                              

10-K
52nd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 52nd
APOLLO GROUP, INC. AND SUBSIDIARIES   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  

NOTE 1.  NATURE OF OPERATIONS                                                   

  Apollo Group, Inc. ("Apollo" or the "Company"), through its wholly-owned
subsidiaries The University of Phoenix, Inc. ("UOP"), the Institute for         
Professional Development ("IPD"), the College for Financial Planning            
Institutes Corporation (the "College") and Western International University,    
Inc. ("WIU"), is a leading provider of higher education programs for working    
adults.                                                                         

 UOP is a regionally accredited, private institution of higher education
offering bachelor's and master's degree programs in business, management,       
computer information systems, education and health care.  UOP currently has     
70 campuses and learning centers located in Arizona, California, Colorado,      
Florida, Hawaii, Louisiana, Michigan, Nevada, New Mexico, Oklahoma, Oregon,     
Utah, Washington and Puerto Rico.  UOP also offers its educational programs     
worldwide through Online, its computerized educational delivery system.  UOP    
is accredited by the Commission on Institutions of Higher Education of the      
North Central Association of Colleges and Schools ("NCA").                      

  IPD provides program development and management services under long-term
contracts to 20 regionally accredited private colleges and universities.  IPD   
currently operates at 43 campuses and learning centers in 22 states.  IPD has   
contracted to develop online degree programs for the United States Marine       
Corps.                                                                          

  The College, located in Denver, Colorado, was acquired in September 1997
and provides financial planning education programs as well as a regionally      
accredited graduate degree program in financial planning.                       

WIU, which is accredited by NCA, currently offers undergraduate and   
graduate degree programs at three campuses and learning centers in Phoenix      
and Fort Huachuca, Arizona and London, England.                                 

The Company's fiscal year is from September 1 to August 31.  Unless   
otherwise stated, references to the years 1998, 1997 and 1996 relate to the     
fiscal years ended August 31, 1998, 1997 and 1996, respectively.                

NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES                                        

Principles of consolidation -------------------------------------------------   

  The consolidated financial statements include the accounts of Apollo and
its subsidiaries.  All significant intercompany transactions and balances       
have been eliminated.                                                           

Cash and cash equivalents ---------------------------------------------------   

The Company considers all highly liquid investments purchased with an 
original maturity of three months or less to be cash equivalents.               

Restricted cash -------------------------------------------------------------   

The U.S. Department of Education (the "DOE") requires that Title IV   
Program funds collected for unbilled tuition be kept in a separate cash or      
cash equivalent account until the students are billed for that portion of       
52                                                                              

10-K
53rd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 53rd
their program.  In addition, all Title IV Program funds received by the         
Company through electronic funds transfer are subject to certain holding        
period restrictions.  These funds generally remain in these separate accounts   
for an average of 60-75 days from date of receipt.  Restricted cash is          
excluded from cash and cash equivalents in the Consolidated Statement of Cash   
Flows until the cash is transferred from these restricted accounts to the       
Company's operating accounts.  The Company's restricted cash is invested        
primarily in U.S. Agency-backed securities and auction market preferred stock   
with maturities of ninety days or less.                                         

Investments -----------------------------------------------------------------   

Investments in marketable securities such as municipal bonds, auction 
market preferred stock and U.S. agency obligations are stated at amortized      
cost, which approximates fair value.  It is the Company's intention to hold     
its marketable securities until maturity.  Investments in joint ventures and    
other long-term investments are carried at cost.                                

Property and equipment ------------------------------------------------------   

Property and equipment is recorded at cost less accumulated           
depreciation.  The Company capitalizes the cost of software used for internal   
operations once technological feasibility of the software has been              
demonstrated.  Such costs consist primarily of custom-developed and packaged    
software and the direct labor costs of internally developed software.           
Depreciation is provided on all buildings, furniture, equipment and related     
software using the straight-line method over the estimated useful lives of      
the related assets which range from three to seven years, except software       
which is depreciated over three to five years and buildings which are           
depreciated over 30 years.  Leasehold improvements are amortized using the      
straight-line method over the shorter of the lease term or the estimated        
useful lives of the related assets.  Maintenance and repairs are expensed as    
incurred.                                                                       

Revenues, receivables and related liabilities -------------------------------   

  The Company's educational programs range in length from one-day seminars
to degree programs lasting up to four years.  Long-term degree programs are     
billed in blocks of time ranging in length from five weeks to three months.     
Seminars, other shorter term programs and many of the College's non-degree      
programs are usually billed in one installment.  Billings occur when the        
student first attends a session resulting in the recording of a receivable      
and deferred tuition revenue for the amount billed.  The deferred tuition       
revenue is recognized into income pro rata over the period of instruction.      
If a student withdraws from a course or program, the unearned portion of the    
program that the student has paid for is refunded in accordance with the        
Company's refund policy.                                                        

Because most of the Company's educational programs at UOP, IPD and WIU
are billed in short blocks of time ranging from five to six weeks, most         
deferred tuition revenue at the end of each period will be recognized into      
income within five to six weeks following the end of that period.  Many of      
the College's non-degree programs are billed in one installment and will be     
recognized into income over 8 to 36 months.  Any deferred tuition revenue       
that will not be recognized into income within 12 months is classified as       
long-term deferred tuition revenue.                                             

53                                                                              

10-K
54th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 54th
Student deposits consist of payments made in advance of billings.  As 
the student is billed, the student deposit is applied against the resulting     
student receivable.                                                             

  The Company does not record the unbilled portion of educational programs
for existing students because the students are not usually financially          
obligated for the unbilled portion.  A majority of these students do,           
however, remain in their programs until completion.                             

Cost in excess of fair value of assets purchased ----------------------------   

 The Company amortizes costs in excess of fair value of assets purchased
on a straight-line method over the estimated useful life.  At August 31,        
1998, the Company's cost in excess of fair value of assets purchased related    
primarily to the acquisition of certain assets of the College for Financial     
Planning and Western International University ("Western"), which are being      
amortized over 35 years and 15 years, respectively.                             

Statement of Financial Accounting Standards 121, "Accounting for the  
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",   
requires that long-lived assets be reviewed for impairment whenever events or   
changes in circumstances indicate that the carrying amount of assets may not    
be recoverable.  The carrying value of cost in excess of fair value of assets   
purchased is assessed for any permanent impairment by evaluating the            
operating performance and future undiscounted cash flows of the underlying      
businesses.  Adjustments are made if the sum of the expected future net cash    
flows is less than book value.  As of August 31, 1998, there have been no       
impairment adjustments recognized.                                              

Fair value of financial instruments -----------------------------------------   

 The carrying amount reported in the Consolidated Balance Sheet for cash
and cash equivalents, restricted cash, marketable securities, accounts          
receivable, accounts payable, accrued liabilities, and student deposits and     
deferred revenue approximate fair value because of the short-term nature of     
these financial instruments.                                                    

Earnings per share ----------------------------------------------------------   

  Basic net income per share is computed using the weighted average number
of Class A and Class B Common shares outstanding during the period.  Diluted    
net income per share is computed using the weighted average number of Class A   
and Class B common and common equivalent shares outstanding during the          
period.  Both basic and diluted weighted average shares have been               
retroactively restated for stock splits effected in the form of stock           
dividends.  The amount of any tax benefit to be credited to capital related     
to the exercise of options and disqualifying dispositions under the Company's   
Employee Stock Purchase Plan is included when applying the treasury stock       
method to stock options in the computation of earnings per share.               

Deferred rental payments and deposits ---------------------------------------   

  The Company records rent expense using the straight-line method over the
term of the lease agreement.  Accordingly, deferred rental liabilities are      
provided for lease agreements that specify scheduled rent increases over the    
lease term.  Rental deposits are provided for lease agreements that specify     
payments in advance or scheduled rent decreases over the lease term.            

54                                                                              

10-K
55th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 55th
Selling and promotional costs -----------------------------------------------   

  The Company expenses selling and promotional costs as incurred.  Selling
and promotional costs include marketing salaries, direct-response and other     
advertising, promotional materials and related marketing costs.  Advertising    
expenses, including promotional materials, were $30.0 million in 1998, $21.8    
million in 1997 and $16.3 million in 1996.                                      

Start-up costs --------------------------------------------------------------   

Costs related to the start-up of new campuses and learning centers are
expensed as incurred and were $7.2 million in 1998 and $3.6 million in 1997     
and 1996.                                                                       

Income taxes ----------------------------------------------------------------   

Deferred income taxes have been provided for all significant temporary
differences.  These temporary differences arise principally from compensation   
not yet deductible for tax purposes, limitations on bad debt deductions,        
long-term deferred tuition revenue recognized upon receipt of payment for tax   
purposes and the use of accelerated depreciation methods for tax purposes.      

Stock-based compensation ----------------------------------------------------   

The Company has elected to continue to account for its stock-based    
awards in accordance with Accounting Principles Board Opinion No. 25            
"Accounting for Stock Issued to Employees" and has provided the pro forma       
disclosures as required by Statement of Financial Accounting Standards 123,     
"Accounting for Stock Based Compensation" ("SFAS 123"), for the years ended     
August 31, 1998, 1997 and 1996.                                                 

New accounting pronouncements -----------------------------------------------   

During June 1997, the Financial Accounting Standards Board issued     
Statement of Financial Accounting Standards 130, "Reporting Comprehensive       
Income" ("SFAS 130"), which will be effective in the Company's 1999 fiscal      
year.  Under SFAS 130, companies are required to report comprehensive income    
as a measure of overall performance.  Comprehensive income includes all         
changes in equity during a reporting period, except those resulting from        
investments by owners and distributions to owners.  The Company will be         
required to report net income and foreign currency translation adjustments as   
components of comprehensive income.                                             

During June 1997, the Financial Accounting Standards Board issued     
Statement of Financial Accounting Standards 131, "Disclosure about Segments     
of an Enterprise and Related Information" ("SFAS 131"), which will be           
effective in the Company's 1999 fiscal year.  SFAS 131 redefines how            
operating segments are determined and requires expanded quantitative and        
qualitative disclosures relating to an entity's operating segments.  The        
Company does not anticipate that the adoption of SFAS 131 will have a           
significant impact on its disclosures.                                          

In March 1998, the American Institute of Certified Public Accountants 
issued Statement of Position No. 98-1 ("SOP 98-1"), "Accounting for the Costs   
of Computer Software Developed or Obtained for Internal Use."  SOP 98-1 will    
be effective for the Company's 2000 fiscal year.  The Company does not expect   
that the adoption of SOP 98-1 will have a material impact on its financial      
statements.                                                                     

55                                                                              

10-K
56th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 56th
Use of estimates ------------------------------------------------------------   

The preparation of financial statements in accordance with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amount of assets and liabilities at the    
date of the financial statements and the reported amount of revenues and        
expenses during the reporting period.  Actual results could differ from these   
estimates.                                                                      

Consolidated statement of cash flow -----------------------------------------   

Supplemental schedule of non-cash investing activities:               

In September 1997, the Company purchased certain assets of the College
for Financial Planning.  Non-cash consideration paid included the issuance of   
$15.9 million of common stock.  As a result of the acquisition, the Company     
recorded additional assets of $46.7 million and liabilities of $11.4 million.   

 In September 1995, the Company purchased certain assets of Western.  As
a result of the acquisition, the Company recorded additional assets of $2.0     
million and liabilities of $2.4 million.                                        

Reclassifications -----------------------------------------------------------   

Certain amounts reported for the years ended August 31, 1997 and 1996 
have been reclassified to conform to the 1998 presentation, having no effect    
on net income.                                                                  

NOTE 3.  ACQUISITIONS                                                           

 In September 1997, the Company acquired the assets and related business
operations of the College for Financial Planning and related divisions that     
include the Institute for Wealth Management, the Institute for Retirement       
Planning, the American Institute for Retirement Planners, Inc. and the          
Institute for Tax Studies.  The adjusted purchase price consisted of $19.4      
million in cash, $15.9 million in stock and the assumption of approximately     
$11.4 million in liabilities.  The excess of cost over the value of tangible    
assets of $40.0 million is being amortized over 35 years.                       

In September 1995, the Company completed the acquisition of certain   
assets of Western International University ("Western").  Western was a          
private non-profit educational institution incorporated in 1978 that was        
accredited by NCA.  The Company formed a new wholly-owned subsidiary called     
Western International University, Inc. ("WIU") as the holding company for the   
net assets acquired from Western.  The adjusted purchase price consisted of     
$630,000 in cash and the assumption of approximately $2.4 million in            
liabilities.  The excess of cost over the value of tangible assets of $2.6      
million is being amortized over 15 years.                                       

 The acquisitions were both accounted for under the purchase method and,
accordingly, the results of operations related to these new subsidiaries have   
been included with those of the Company for periods subsequent to the date of   
the respective acquisitions.  Results of operations for Western and for the     
College for Financial Planning prior to the acquisition were not material in    
relation to the Company's operations as a whole.                                

56                                                                              

10-K
57th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 57th
NOTE 4.  BALANCE SHEET COMPONENTS                                               

Marketable securities consist of the following, in thousands:         

                                                        [Enlarge/Download Table]

                                         August 31, 1998           August 31, 1997    
                                     ------------------------  -----------------------
                                     Estimated      Amortized  Estimated     Amortized
  Type                               Market Value      Cost    Market Value      Cost 
----------                           ------------    --------  ------------    -------
                                                                                      
Classified as current:                                                                
Municipal bonds                       $26,969         $26,898  $25,938         $25,932
Auction market preferred stock                                     750             750
U.S. agency obligations                   640             640      500             500
                                      -------         -------  -------         -------
Total current marketable securities    27,609          27,538   27,188          27,182
                                      -------         -------  -------         -------
Classified as noncurrent:                                                             
Municipal bonds due in 1-2 years       17,975          17,929   14,267          14,247
                                      -------         -------  -------         -------
Total marketable securities           $45,584         $45,467  $41,455         $41,429
                                      =======         =======  =======         =======

Receivables consist of the following, in thousands:                   

                                                                [Download Table]

                                                           August 31,      
                                                      -------------------- 
                                                       1998         1997   
                                                      -------      ------- 
                                                                           
Trade receivables                                     $67,160      $35,524 
Interest receivable                                       671          606 
Income tax refunds receivable                              79          431 
                                                      -------      ------- 
                                                       67,910       36,561 
Less allowance for doubtful accounts                   (6,628)      (4,521)
                                                      -------      ------- 
  Total receivables, net                              $61,282      $32,040 
                                                      =======      ======= 

Bad debt expense was $5.5 million, $2.5 million and $1.7 million for    
1998, 1997 and 1996, respectively.                                              

57                                                                              

10-K
58th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 58th
Property and equipment consist of the following, in thousands:        

                                                                [Download Table]

                                                           August 31,      
                                                      -------------------- 
                                                       1998         1997   
                                                      -------      ------- 
                                                                           
Furniture and equipment                               $52,698      $32,779 
Software                                               11,061        4,081 
Leasehold improvements                                  7,432        3,766 
Land and buildings                                        350          350 
                                                      -------      ------- 
                                                       71,541       40,976 
Less accumulated depreciation                         (24,923)     (15,725)
                                                      -------      ------- 
  Property and equipment, net                         $46,618      $25,251 
                                                      =======      ======= 

  Depreciation and amortization expense was $9.9 million, $6.4 million and
$4.5 million for 1998, 1997 and 1996, respectively.                             

Cost in excess of fair value of assets purchased consist of the       
following, in thousands:                                                        

                                                                [Download Table]

                                                           August 31,      
                                                      -------------------- 
                                                       1998         1997   
                                                      -------      ------- 
                                                                           
Cost in excess of fair value of assets purchased      $42,831      $ 2,565 
Less accumulated amortization                          (1,433)        (282)
                                                      -------      ------- 
  Total                                               $41,398      $ 2,283 
                                                      =======      ======= 

Total amortization expense was $1.2 million and $176,000 in 1998 and  
1997, respectively.                                                             

58                                                                              

10-K
59th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 59th
Accrued liabilities consist of the following, in thousands:           

                                                                [Download Table]

                                                           August 31,     
                                                      --------------------
                                                       1998         1997  
                                                      -------      -------
                                                                          
Salaries, wages and benefits                          $ 9,816      $ 7,576
Other accrued liabilities                              11,495        3,873
                                                      -------      -------
  Total accrued liabilities                           $21,311      $11,449
                                                      =======      =======

 Student deposits and current portion of deferred revenue consist of the
following, in thousands:                                                        

                                                                [Download Table]

                                                           August 31,     
                                                      --------------------
                                                       1998         1997  
                                                      -------      -------
                                                                          
Student deposits                                      $35,794      $29,086
Current portion of deferred tuition revenue            26,067       17,709
Other deferred revenue                                  1,378          888
                                                      -------      -------
  Total student deposits and current portion of                           
   deferred revenue                                   $63,239      $47,683
                                                      =======      =======

NOTE 5.  INVESTMENT IN JOINT VENTURE                                            

In August 1998, the Company together with Hughes Network Systems and  
Hermes Onetouch L.L.C. ("Hermes") formed a new corporation to acquire One       
Touch Systems, a leading provider of interactive distance learning solutions.   
The Company contributed $10.8 million and provided a $1.2 million letter of     
credit, in exchange for a 19% interest in the newly formed corporation.  This   
investment is accounted for under the cost method of accounting.  Hermes is     
wholly-owned by the Company's Chairman and a Senior Vice President.             

NOTE 6.  SHORT-TERM BORROWINGS                                                  

 In November 1997, the Company increased its line of credit from $4.0 to
$10.0 million.  At August 31, 1998, the Company had no outstanding borrowings   
on the line of credit, which bears interest at prime or, at the Company's       
option, LIBOR plus 1.25%.  At August 31, 1998, availability under the line of   
credit was reduced by outstanding letters of credit of $1.6 million.  Any       
amounts borrowed under the line are payable upon its termination in February    
2000.  The Company's line of credit agreement prohibits the Company from        
paying cash dividends or making other cash distributions without the lender's   
consent.                                                                        

59                                                                              

10-K
60th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 60th
NOTE 7.  LONG-TERM LIABILITIES                                                  

Long-term liabilities consist of the following, in thousands:         

                                                                [Download Table]

                                                           August 31,     
                                                      ------------------- 
                                                       1998         1997  
                                                      -------      ------ 
                                                                          
Deferred compensation and note agreements                                 
  discounted at 7.5% to 12%                            $1,495      $1,554 
Deferred rent                                           1,436       1,235 
Other long-term liabilities                             1,152             
                                                      -------      ------ 
  Total long-term liabilities                           4,083       2,789 
  Less current portion                                   (333)       (295)
                                                      -------      ------ 
  Total long-term liabilities, net                     $3,750      $2,494 
                                                      =======      ====== 

The aggregate maturities of all long-term liabilities for each of the 
five fiscal years subsequent to August 31, 1998 are: 1999--$333,000; 2000--     
$318,000; 2001--$273,000; 2002--$349,000; 2003--$332,000.                       

The undiscounted deferred compensation liability was $1.6 million at  
August 31, 1998 and 1997.  The undiscounted note payable related to the WIU     
acquisition was $600,000 and $650,000 at August 31, 1998 and 1997,              
respectively. The discount rates for these agreements were determined at the    
date of each respective agreement based on the estimated long-term rate of      
return on high-quality fixed income investments with cash flows similar to      
the respective agreements.                                                      

60                                                                              

10-K
61st Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 61st
NOTE 8.  INCOME TAXES                                                           

 Income before income taxes and the related components of the income tax
provision are as follows, in thousands:                                         

                                                                [Download Table]

                                                 Year Ended August 31,    
                                              --------------------------- 
                                                1998      1997      1996  
                                              -------   -------   ------- 
                                                                          
Income (loss) before income taxes:                                        
United States                                 $75,912   $55,001   $34,322 
Puerto Rico                                       544       337       675 
United Kingdom                                   (184)     (357)          
                                              -------   -------   ------- 
  Total income before taxes                   $76,272   $54,981   $34,997 
                                              =======   =======   ======= 
Income tax provision (benefit):                                           
Current:                                                                  
  Federal                                     $26,546   $17,877   $11,239 
  State and other                               6,028     3,870     2,841 
                                              -------   -------   ------- 
Total current                                  32,574    21,747    14,080 
                                              -------   -------   ------- 
Deferred:                                                                 
  Federal                                      (2,004)     (123)     (365)
  State and other                                (595)      (22)     (110)
                                              -------   -------   ------- 
Total deferred                                 (2,599)     (145)     (475)
                                              -------   -------   ------- 
  Total provision for income taxes            $29,975   $21,602   $13,605 
                                              =======   =======   ======= 

The income tax provision differs from the tax that would result from  
application of the statutory federal corporate tax rate.  The reasons for the   
differences are as follows, in thousands:                                       

                                                                [Download Table]

                                                 Year Ended August 31,    
                                              --------------------------- 
                                                1998      1997      1996  
                                              -------   -------   ------- 
                                                                          
Income tax provision at expected rate                                     
  of 35%                                      $26,695   $19,243   $12,249 
State taxes, net of federal benefit             3,918     2,516     1,777 
Non-taxable interest income                    (1,112)     (897)     (534)
Other, net                                        474       740       113 
                                              -------   -------   ------- 
  Total provision for income taxes            $29,975   $21,602   $13,605 
                                              =======   =======   ======= 

61                                                                              

10-K
62nd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 62nd
Deferred tax assets and liabilities consist of the following, in      
thousands:                                                                      

                                                                [Download Table]

                                                           August 31,     
                                                       -------------------
                                                       1998         1997  
                                                       ------       ------
                                                                          
Gross deferred tax assets:                                                
Allowance for doubtful accounts                        $2,869       $1,842
Deferred tuition revenue                                2,264             
Other                                                   2,096        1,879
                                                       ------       ------
  Total gross deferred tax assets                       7,229        3,721
                                                       ------       ------
Gross deferred tax liabilities:                                           
Depreciation and amortization of property                                 
  and equipment                                         1,542        1,354
Other                                                     920          199
                                                       ------       ------
  Total gross deferred tax liabilities                  2,462        1,553
                                                       ------       ------
  Net deferred tax assets                              $4,767       $2,168
                                                       ======       ======

 Net deferred tax assets are reflected in the accompanying balance sheet
as follows, in thousands:                                                       

                                                                [Download Table]

                                                            August 31,     
                                                        ------------------ 
                                                          1998        1997 
                                                        -------     ------ 
                                                                           
Current deferred tax assets, net                        $ 6,203     $2,873 
Noncurrent deferred tax liabilities, net                 (1,436)      (705)
                                                        -------     ------ 
Net deferred tax assets                                 $ 4,767     $2,168 
                                                        =======     ====== 

In light of the Company's history of profitable operations, management
has concluded that it is more likely than not that the Company will             
ultimately realize the full benefit of its deferred tax assets related to       
future deductible items.  Accordingly, the Company believes that a valuation    
allowance is not required for its net deferred tax assets.                      

62                                                                              

10-K
63rd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 63rd
NOTE 9.  COMMON STOCK                                                           

From August 1995 to April 1998, the Company's Board of Directors      
authorized four separate stock splits effected in the form of stock dividends   
as follows:                                                                     
    For Shareholders
Date Authorized      Type         of Record on           Date Distributed       
-----------------    -------      -----------------      ------------------     
August 25, 1995      3-for-2      September 8, 1995      September 22, 1995     
February 2, 1996     3-for-2      February 16, 1996      February 29, 1996      
May 8, 1996          3-for-2      May 21, 1996           May 31, 1996           
April 9, 1998        3-for-2      April 13, 1998         April 27, 1998         

All Common Stock amounts, Common Stock prices and earnings per share  
figures for periods prior to the stock splits, which were effected in the       
form of stock dividends, have been restated to reflect the effect of all        
previous stock splits except for the number of shares outstanding and the       
related impact on the stated value of Class A Common Stock and additional       
paid-in capital on the Consolidated Balance Sheet and the Consolidated          
Statement of Changes in Shareholders' Equity.                                   

On September 25, 1998, the Company's Board of Directors authorized a  
program allocating up to $40 million in Company funds to repurchase shares of   
its Class A Common Stock.  As of October 16, 1998, the Company had              
repurchased approximately 295,000 shares at a total cost of approximately       
$7.0 million.                                                                   

NOTE 10. EARNINGS PER SHARE                                                     

 In February 1998, the Company adopted Statement of Financial Accounting
Standards 128, "Earnings Per Share".  As a result, earnings per share           
calculations for all prior periods have been restated.                          

A reconciliation of the basic and diluted per share computations for  
1998, 1997 and 1996 are as follows:                                             

                                                        [Enlarge/Download Table]

                                              For the Year Ended August 31,                             
                                        (In thousands, except per share amounts)                        
                 ---------------------------------------------------------------------------------------
                            1998                         1997                          1996             
                 ---------------------------  ----------------------------  ----------------------------
                          Weighted                     Weighted                      Weighted           
                            Avg.   Per Share             Avg.    Per Share             Avg.    Per Share
                  Income   Shares    Amount    Income   Shares    Amount     Income   Shares    Amount  
                 -------- -------- ---------  -------- -------- ----------  -------- -------- ----------
                                                                                                        
Basic net income                                                                                        
 per share        $46,297   77,245     $ .60   $33,379   75,625     $ .44    $21,392   74,721     $ .29 
                                       =====                        =====                         ===== 
Effect of dilutive                                                                                      
 securities:                                                                                            
 Stock options               1,841                        2,101                         2,042           
                  -------   ------             -------   ------              -------   ------           
Diluted net income                                                                                      
 per share        $46,297   79,086     $ .59   $33,379   77,726     $ .43    $21,392   76,763     $ .28 
                  =======   ======     =====   =======   ======     =====    =======   ======     ===== 

63                                                                              

10-K
64th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 64th
NOTE 11. EMPLOYEE AND DIRECTOR BENEFIT PLANS                                    

 The Company provides various health, welfare and disability benefits to
its full-time salaried employees which are funded primarily by Company          
contributions.  The Company does not provide post-employment or post-           
retirement health care and life insurance benefits to its employees.            

401(k)Plan ------------------------------------------------------------------   

The Company sponsors a 401(k) plan which is available to all employees
who have completed one year and at least 1,000 hours of continuous service.     
The Company matches 100% of the contributions from the first $10,000 of a       
participant's annual pre-tax earnings.  Contributions from the participant's    
earnings in excess of $10,000 are matched by the Company at 18.5%.              
Participant contributions are subject to certain restrictions as set forth in   
the Internal Revenue Code.  The Company's matching contributions totaled $1.8   
million, $1.3 million and $1.1 million for 1998, 1997 and 1996, respectively.   

Stock Based Compensation Plans ----------------------------------------------   

The Company has three stock-based compensation plans that were adopted
in 1994: the Apollo Group, Inc. Director Stock Plan ("Director Stock Plan"),    
the Apollo Group, Inc. Long-Term Incentive Plan ("LTIP"), and the Apollo        
Group, Inc. 1994 Employee Stock Purchase Plan ("Purchase Plan").                

The Director Stock Plan currently provides for an annual grant to the 
Company's non-employee directors of options to purchase shares of the           
Company's Class A Common Stock on September 1 of each year.  Under the LTIP,    
the Company may grant options, incentive stock options, stock appreciation      
rights and other stock-based awards to certain officers or key employees of     
the Company.  Many of the options granted under the LTIP vest 25% per year      
starting at the end of the year 2002.  The vesting may be accelerated for       
individual employees if the stock price reaches defined goals for at least      
three trading days and if certain profit goals, defined for groups of           
individuals, are also achieved.                                                 

 The Purchase Plan allows employees of the Company to purchase shares of
the Company's Class A Common Stock at quarterly intervals through periodic      
payroll deductions.  The purchase price per share, in general, is 85% of the    
lower of: 1) the fair market value (as defined in the Purchase Plan) on the     
enrollment date into the respective quarterly offering period, or 2) the fair   
market value on the purchase date.                                              

 The Company applies Accounting Principles Board Opinion 25, "Accounting
for Stock Issued to Employees," and related interpretations in accounting for   
its stock-based compensation, and has adopted the disclosure-only provisions    
of SFAS 123.  Accordingly, no compensation cost has been recognized for these   
plans.  Had compensation cost for the plans been determined based on the fair   

64                                                                              

10-K
65th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 65th
value at the grant date consistent with SFAS 123, the Company's net income,     
income per share and weighted average shares outstanding would have been as     
follows, in thousands except per share amounts:                                 

                                                                [Download Table]

                                                 Year Ended August 31     
                                           -------------------------------
                                             1998       1997       1996   
                                           ---------  ---------  ---------
                                                                          
Net income - as reported                    $46,297    $33,379    $21,392 
Net income - pro forma                      $43,986    $31,551    $19,935 
Diluted income per share - as reported      $   .59    $   .43    $   .28 
Diluted income per share - pro forma        $   .55    $   .40    $   .26 
Diluted weighted average shares                                           
  outstanding - as reported                  79,086     77,726     76,763 
Diluted weighted average shares                                           
  outstanding - pro forma                    79,889     78,365     77,056 

The effects of applying SFAS 123 in the above pro forma disclosure are
not necessarily indicative of future amounts.  The fair value of each option    
grant is estimated on the date of grant using the Black-Scholes method with     
the following weighted-average assumptions for grants in 1998, 1997, and        
1996, respectively: (1) dividend yield of 0.00% in all years; (2) expected      
volatility of 40.0%, 37.0%, and 37.1%; (3) risk-free interest rates of 5.9%,    
6.0%, and 5.7% and (4) expected lives of 5.4, 6.9, and 8.3 years.               

65                                                                              

10-K
66th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 66th
  A summary of the activity related to the stock options granted under the
Director Stock Plan and the LTIP is as follows, in thousands except per share   
amounts:                                                                        

                                                                [Download Table]

                                                           Weighted    
                                                            Average    
                                                         Exercise Price
                                               Shares      per Share   
                                               ------   -------------- 
                                                                       
Outstanding at August 31, 1995                  2,529         $0.964   
Granted                                         3,178          7.502   
Exercised                                        (473)         0.793   
Canceled                                          (72)         7.531   
                                               ------                  
Outstanding at August 31, 1996                  5,162          4.913   
Granted                                           314         17.336   
Exercised                                        (965)         1.014   
Canceled                                         (264)         9.158   
                                               ------                  
Outstanding at August 31, 1997                  4,247          6.453   
Granted                                           355         25.986   
Exercised                                        (694)         5.100   
Canceled                                          (42)        13.650   
                                               ------                  
Outstanding at August 31, 1998                  3,866          8.413   
                                               ======                  
Exercisable at August 31, 1998                  2,022                  
                                               ======                  
Available for issuance at August 31, 1998       2,042                  
                                               ======                  

The following table summarizes information about the Company's stock  
options at August 31, 1998:                                                     

                                                        [Enlarge/Download Table]

                                OPTIONS OUTSTANDING                OPTIONS EXERCISABLE    
                       ------------------------------------     ------------------------- 
                                                Weighted Avg.                Weighted Avg.
                          Number     Contractual  Exercise         Number      Exercise   
Range of               Outstanding      Years       Price       Exercisable     Price     
Exercise Prices      (in thousands)   Remaining  per share    (in thousands)  per share   
-------------------    ------------  -----------  ---------     -----------  ------------ 
                                                                                          
$ 0.277 to $ 1.630             795         5.99    $ 0.911            795       $ 0.911   
$ 5.975 to $ 7.532           2,481         7.06    $ 7.500            982       $ 7.452   
$17.000 to $17.417             250         7.20    $17.383            123       $17.348   
$23.792 to $28.833             340         9.07    $25.999            122       $25.044   
                          ---------                             -----------               
$ 0.277 to $28.833           3,866         7.02    $ 8.413          2,022       $ 6.547   
                          =========                             ===========               

66                                                                              

10-K
67th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 67th
NOTE 12. COMMITMENTS AND CONTINGENCIES                                          

The Company is obligated under facility and equipment leases that are 
classified as operating leases.  Following is a schedule of future minimum      
lease commitments as of August 31, 1998, in thousands:                          

                                                                [Download Table]
                                Operating Leases       
                            ---------------------------
                                              Equipment
                            Facilities          & Other
                            ----------        ---------
                                                       
1999                         $ 29,104            $  687
2000                           29,213               412
2001                           26,751               121
2002                           27,704                  
2003                           22,585                  
Thereafter                     29,638                  
                            ----------        ---------
                             $164,995            $1,220
                            ==========        =========

  Facility and equipment rent expense totaled $32.1 million, $23.4 million
and $19.9 million for 1998, 1997 and 1996, respectively.                        

 UOP's most recent Department of Education program review began in March
1997, and an initial program review report has been received.  This report      
contained six findings in the areas of satisfactory academic progress,          
refunds and general program administration.  UOP is currently in the process    
of responding to these findings regarding compliance with requirements of the   
Title IV Programs.  UOP's response to these issues is due in January 1999,      
and UOP will have its response prepared prior to the deadline.  Subsequently,   
the Department will issue a final program review determination.  It is          
uncertain when the final determination will be issued and what the results of   
the findings will be.                                                           

 Additionally, in January 1998 the Department of Education Office of the
Inspector General ("OIG") began performing a routine audit of UOP.  The         
auditors reviewed UOP's cash management policies.  Although no draft report     
has been received from the OIG, the audit team indicated at the exit            
interview that it had no findings regarding cash management policies.  The      
team did present questions regarding UOP's interpretation of the "12-hour       
rule", UOP's distance education programs and institutional refund               
obligations.  As of this date, UOP has supplied the OIG with the information    
they have requested and is awaiting an initial draft report.  Although the      
Company believes that the program review and OIG audit will be resolved         
without any material effect, as with any program review or audit, no            
assurance can be given as to the final outcome since the matters are not yet    
resolved.                                                                       

  As previously disclosed, the Company assumed the Title IV liabilities of
Western International University ("Western") which were subject to change       
based on the results of the DOE's audit of Western's Title IV Programs.         
Although much of the fieldwork was completed in early 1996, the final audit     
results and the amount that the Company is responsible for has not been         
determined by the DOE at the current time.  Depending on the interpretation     

67                                                                              

10-K
68th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 68th
of the various regulatory requirements, the final audit results and the         
Company's liability may differ materially from the estimates currently          
recorded.  Any difference between the final amount and the estimates            
currently recorded will be recorded as an increase or decrease, as              
applicable, to expense.                                                         

The Company is involved in various legal proceedings occurring in the 
normal course of business.  The Company believes that the disposition of        
these cases will not have a material adverse impact on the financial position   
or results of operations of the Company.                                        

Item 9 -- Changes in and Disagreements With Accountants on Accounting and       
Financial Disclosure                                                            

None.                                                                           

68                                                                              

10-K
69th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 69th
PART III                                                                        
Item 10 -- Directors and Executive Officers of the Registrant                   

The Company's directors serve one year terms and are elected each year
by the holders of the Company's Class B Common Stock.  The following sets       
forth information as of October 31, 1998 concerning the Company's directors     
and executive officers:                                                         

                                                                [Download Table]

Name                                   Age    Position                              
----------------------------------  ---    ---------------------------              
                                                                                    
John G. Sperling, Ph.D.              77    Chairman of the Board and Chief Executive
                                            Officer                                 
Todd S. Nelson                       39    President and Director                   
J. Jorge Klor de Alva, J.D., Ph.D.   50    Senior Vice President and Director       
Jerry F. Noble                       56    Senior Vice President and Director       
Peter V. Sperling                    39    Senior Vice President, Secretary,        
                                           Treasurer and Director                   
William H. Gibbs                     48    Senior Vice President and Director       
Kenda B. Gonzales                    41    Chief Financial Officer                  
Junette C. West                      34    Vice President - Controller and Chief    
                                           Accounting Officer                       
Thomas C. Weir                       64    Director                                 
Dino J. DeConcini                    64    Director                                 
Hedy F. Govenar                      53    Director                                 
John R. Norton III                   69    Director                                 


JOHN G. SPERLING, Ph.D., is the founder, Chief Executive Officer and  
Chairman of the Board of Directors of the Company.  Dr. Sperling was also       
President of the Company from its inception until February 1998.  Prior to      
his involvement with the Company, from 1961 to 1973, Dr. Sperling was a         
professor of Humanities at San Jose State University where he was the           
Director of the Right to Read Project and the Director of the NSF Cooperative   
College-School Science Program in Economics.  At various times from 1955 to     
1961, Dr. Sperling was a member of the faculty at the University of Maryland,   
Ohio State University and Northern Illinois University.  Dr. Sperling           
received his Ph.D. from Cambridge University, an M.A. from the University of    
California at Berkeley and a B.A. from Reed College.  Dr. Sperling is the       
father of Peter V. Sperling.                                                    

TODD S. NELSON has been with the Company since 1987.  Mr. Nelson has  
been the President of the Company since February 1998.  Mr. Nelson was the      
Vice President of the Company from 1994 to February 1998 and the Executive      
Vice President of UOP from 1989 to February 1998.  From 1987 to 1989,           
Mr. Nelson was the Director of UOP's Utah campus.  From 1985 to 1987,           
Mr. Nelson was the General Manager at Amembal and Isom, a management training   
company.  From 1984 to 1985, Mr. Nelson was a General Manager for Vickers &     
Company, a diversified holding company.  From 1983 to 1984, Mr. Nelson was a    
Marketing Director at Summa Corporation, a recreational properties company.     
Mr. Nelson received an M.B.A. from the University of Nevada at Las Vegas and    
a B.S. from Brigham Young University.  Mr. Nelson was a member of the faculty   
at University of Nevada at Las Vegas from 1983 to 1984.                         

69                                                                              

10-K
70th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 70th
J. JORGE KLOR DE ALVA, J.D., Ph.D., has been President of UOP and a     
Senior Vice President of the Company since February 1998 and has been a         
director of the Company since 1991.  Dr. Klor de Alva was a Vice President of   
Business Development of the Company from 1996 to 1998.  Dr. Klor de Alva was    
a Professor at the University of California at Berkeley from July 1994 until    
July 1996.  From 1989 to 1994, Dr. Klor de Alva was a Professor at Princeton    
University.  From 1984 to 1989, Dr. Klor de Alva was the Director of the        
Institute for Mesoamerican Studies from 1982 to 1989 and was an Associate       
Professor at the State University of New York at Albany.  From 1971 to 1982,    
Dr. Klor de Alva served at various times as associate professor, assistant      
professor or lecturer at San Jose State University and the University of        
California at Santa Cruz.  Dr. Klor de Alva received a B.A. and J.D. from the   
University of California at Berkeley and a Ph.D. from the University of         
California at Santa Cruz.                                                       

  JERRY F. NOBLE has been with the Company since 1981.  Mr. Noble has been
a Senior Vice President of the Company since 1987 and the President of IPD      
since 1984.  From 1981 to 1987, Mr. Noble also was the controller of the        
Company.  From 1977 to 1981, Mr. Noble was the corporate accounting manager     
for Southwest Forest Industries, a forest products company.  Mr. Noble          
received his M.B.A. from UOP and his B.A. from the University of Montana.       

PETER V. SPERLING has been with the Company since 1983.  Mr. Sperling 
has been a Senior Vice President since June 1998.  Mr. Sperling was the Vice    
President of Administration from 1992 to June 1998 and has been the Secretary   
and Treasurer of the Company since 1988.  From 1987 to 1992, Mr. Sperling was   
the Director of Operations at AEC.  From 1983 to 1987, Mr. Sperling was         
Director of Management Information Services of the Company.  Mr. Sperling       
received his M.B.A from UOP and his B.A. from the University of California at   
Santa Barbara.  Mr. Sperling is the son of John G. Sperling.                    

WILLIAM H. GIBBS has been with the Company since 1980.  Mr. Gibbs has 
been a Senior Vice President of the Company since 1987 and was the President    
of UOP from 1987 to February 1998.  From 1985 to 1987, Mr. Gibbs was the        
President of Apollo Education Corporation ("AEC").  From 1980 to 1985,          
Mr. Gibbs held various positions with the Company, including Chief Financial    
Officer and faculty member.  From 1975 to 1984, Mr. Gibbs was with the          
accounting firm of Price Waterhouse and, from 1982 to 1984, served as a         
management advisory manager.  Mr. Gibbs currently serves as the Chairman of     
the Arizona State Board of Private Post-Secondary Education.  Mr. Gibbs         
received his M.B.A. from the University of Illinois and his B.A. from Arizona   
State University.  Mr. Gibbs is a Certified Public Accountant in the State of   
Arizona.                                                                        

KENDA B. GONZALES has been with the Company since October 1998.  Ms.  
Gonzales is the Chief Financial Officer of the Company.  Prior to joining       
Apollo, Ms. Gonzales was the Senior Executive Vice President and Chief          
Financial Officer of UDC Homes, Inc. from 1996.  From 1985 to 1996, Ms.         
Gonzales was the Senior Vice President and Chief Financial Officer of           
Continental Homes Holding Corp.  Ms. Gonzales began her career as a Certified   
Public Accountant with Peat, Marwick, Mitchell and Company and is a graduate    
of the University of Oklahoma with a Bachelor of Accountancy.                   

  JUNETTE C. WEST has been with the Company since 1986.  Ms. West has been
the Vice President-Controller since 1994 and the Chief Accounting Officer       
since February 1998.  Ms. West has held various accounting and finance          
positions at the Company from 1986 to 1994.  Ms. West received a B.S. in        
Accounting from Grand Canyon University in Phoenix, Arizona in 1985. Ms. West   
is a Certified Public Accountant in the State of Arizona.                       
70                                                                              

10-K
71st Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 71st
THOMAS C. WEIR has been a director of the Company since 1983 and is a   
member of the Audit and Compensation Committees of the Board of Directors of    
the Company.  During 1994, Mr. Weir became the President of Dependable          
Nurses, Inc., a provider of temporary nursing services, W.D.  Enterprises,      
Inc., a financial services company and Dependable Personnel, Inc., a provider   
of temporary clerical personnel.  In 1996, Mr. Weir became the President of     
Dependable Nurses of Phoenix, Inc., a provider of temporary nursing services.   
In addition, Mr. Weir has been an independent financial consultant since        
1990.  From 1989 to 1990, Mr. Weir was President of Tucson Electric Power       
Company.  From 1979 to 1987, Mr. Weir was Chairman and Chief Executive          
Officer of Home Federal Savings & Loan Association, Tucson, Arizona.            

DINO J. DECONCINI has been a director of the Company since 1981 and is
currently a member of the Audit Committee of the Board of Directors of the      
Company.  Mr. DeConcini is currently Executive Director, Savings Bonds          
Marketing Office, U.S. Department of the Treasury.  From 1979 to 1995, Mr.      
DeConcini was a shareholder in DeConcini, McDonald, Brammer, Yetwin and         
Lacy, P.C., Attorneys at Law.  From 1993 to 1995, Mr. DeConcini                 
was a Vice President and Senior Associate of Project International              
Associates, Inc., an international business consulting firm.  From 1991 to      
1993 and 1980 to 1990, Mr. DeConcini was a Vice President and partner of Paul   
R. Gibson & Associates, an international business consulting firm.              

 HEDY F. GOVENAR has been a director of the Company since March of 1997.
Ms. Govenar is founder and President of Governmental Advocates, Inc., a       
lobbying and political consulting firm in Sacramento, California.  An active    
lobbyist with the firm since 1979, she represents a variety of corporate and    
trade association clients.  Ms. Govenar has been a State Assembly appointee     
to the California Film Commission since 1992.  Ms. Govenar received an M.A.     
from California State University, and a B.A. from UCLA.                         

JOHN R. NORTON III has been a director of the Company since March of  
1997 and is currently a member of the Audit and Compensation Committees of      
the Board of Directors of the Company.  Mr. Norton founded his own company in   
1955 engaged in diversified agriculture including crop production and cattle    
feeding.  He served as the Deputy Secretary of the United States Department     
of Agriculture in 1985 and 1986.  Mr. Norton is also on the Board of            
Directors of Arizona Public Service Company, AZTAR Corporation, Terra           
Industries, Inc., Pinnacle West Capital Corporation and Suncor Development      
Company.  He attended Stanford University and the University of Arizona where   
he received a B.S. in Agriculture in 1950.                                      

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE                         

Section 16(a) of the Securities Exchange Act of 1934, as amended,     
requires the Company's directors and executive officers, and persons who own    
more than 10% of a registered class of the Company's equity securities, to      
file with the Securities and Exchange Commission ("SEC") initial reports of     
ownership and reports of changes in ownership.  Officers, directors and         
greater than 10% shareholders are required by SEC regulation to furnish the     
Company with copies of all Section 16(a) forms they file.  Based solely upon    
a review of the copies of such forms furnished to the Company, or written       
representations that no Forms 5 were required, the Company believes that        
during the fiscal year ended August 31, 1998, its officers and directors        
complied with all Section 16(a) filing requirements with the following          
exception:  Jerry F. Noble filed a late Form 4 for June 1998, related to        
transactions involving the selling of 30,000 shares of Class A Common Stock     
on June 30, 1998.                                                               

71                                                                              

10-K
72nd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 72nd
COMMITTEES OF THE BOARD OF DIRECTORS                                            

The Board of Directors has two principal committees: (1) an Audit     
Committee comprised of Thomas C. Weir (Chairperson), Dino J. DeConcini and      
John R. Norton III and (2) a Compensation Committee comprised of Thomas         
C. Weir (Chairperson) and John R. Norton III.                                   

MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES                           

During the year ended August 31, 1998, the Board of Directors of the  
Company met or acted by written consent on nine occasions.  Each of the         
Company's current directors attended 100% of the meetings of the Board of       
Directors and of meetings held by committees of the Board on which such         
director served, except for Mr. Jerry Noble who attended over 85%.              

Compensation Committee ------------------------------------------------------   

  The Compensation Committee of the Board of Directors, which met or acted
by written consent three times during 1998, reviews all aspects of              
compensation of executive officers of the Company and determines or makes       
recommendations on such matters to the full Board of Directors.  The report     
of the Compensation Committee for 1998 is set forth in Item 11.                 

Audit Committee -------------------------------------------------------------   

The Audit Committee, which met or acted by written consent on five    
occasions in 1998, represents the Board of Directors in evaluating the          
quality of the Company's financial reporting process and internal financial     
controls through consultations with the Company's independent accountants,      
internal management and the Board of Directors.                                 

Other Committees ------------------------------------------------------------   

The Company does not maintain a standing nominating committee or other
committee performing similar functions.                                         

72                                                                              

10-K
73rd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 73rd
Item 11 -- Executive Compensation                                               

DIRECTOR COMPENSATION                                                           

Fees ------------------------------------------------------------------------   

  In 1998, non-employee directors of the Company received a $15,000 annual
retainer, $1,250 for each board meeting attended and $625 for each committee    
meeting attended.  Mr. DeConcini has elected not to receive any director        
compensation because of his position with the U.S. Department of the            
Treasury.  In addition, non-employee directors are reimbursed for               
out-of-pocket expenses.  Ms. Govenar was retained by the Company as a           
consultant and received a consulting fee of $62,000 and $60,000 in 1998 and     
1997, respectively.                                                             

Apollo Group, Inc. Director Stock Plan --------------------------------------   

  In August 1994, the Board of Directors of the Company adopted the Apollo
Group, Inc. Director Stock Plan (the "Director Plan") to attract and retain     
independent directors for the Company.  The aggregate number of shares of       
Class A Common Stock subject to the Director Plan may not exceed 675,000,       
subject to adjustment.  Options granted under the Director Plan are fully       
vested six months and one day after the date of grant and are exercisable in    
full thereafter until the date that is ten years after the date of grant.       
The exercise price per share under the Director Plan is equal to the fair       
market value of such shares upon the date of grant. In addition, on September   
1 of each year, non-employee Directors receive an annual grant of options to    
purchase 20,250 shares of the Company's Class A Common Stock. Mr. DeConcini     
has elected not to receive this annual grant because of his position with the   
U.S. Department of the Treasury.                                                

EXECUTIVE COMPENSATION                                                          

The following table discloses the annual and long-term compensation   
earned for services rendered in all capacities by the Company's Chairman of     
the Board and Chief Executive Officer and the Company's four other most         
highly compensated executive officers for 1998, 1997, and 1996:                 

73                                                                              

10-K
74th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 74th
-- SUMMARY COMPENSATION TABLE --              

                                                        [Enlarge/Download Table]

                                                                           Long-Term                              
                                                Annual                    Compensation                            
                                             Compensation                    Awards                               
                                  ---------------------------------  ---------------------                        
                                                          Other      Restrict-   Securities             All Other 
                                                          Annual     ed Stock  Underlying   LTIP       Compen-    
Name and Principal                  Salary    Bonus    Compensation   Awards     Options    Payouts     sation    
Position                   Year      ($)       ($)         ($)<F1>      ($)        (#)        ($)         ($)     
------------------------  ------- ---------  --------  ------------  ---------  ----------  --------  ----------- 
                                                                                                                  
John G. Sperling                                                                                                  
  Chairman of the Board    1998    $387,500  $     --    $72,373      $ --           --      $ --     $     --    
  and Chief Executive      1997     387,500   290,625     62,463        --           --        --           --    
  Officer                  1996     310,000   232,500         --        --      205,875        --           --    

Todd S. Nelson                                                                                                    
  President                1998     247,917   200,000         --        --           --        --           --    
                           1997     175,000   131,250         --        --           --        --           --    
                           1996     140,000   105,000         --        --      205,875        --           --    

Jorge Klor de Alva                                                                                                
  Senior Vice President,   1998     218,750   175,000         --        --           --        --        1,850<F2>
  and President of UOP     1997     175,000   131,250         --        --      112,500        --           --    
                           1996      23,400        --         --        --           --        --           --    

Jerry F. Noble                                                                                                    
  Senior Vice President    1998     225,000   168,750         --        --           --        --        3,073<F2>
  and President of IPD     1997     225,000    84,375         --        --           --        --        2,980<F2>
                           1996     180,000   135,000         --        --      205,875        --        2,980<F2>

William H. Gibbs                                                                                                  
  Senior Vice President    1998     225,000   169,000         --        --           --        --        2,502<F2>
                           1997     225,000   168,750         --        --           --        --        2,409<F2>
                           1996     180,000   135,000         --        --      205,875        --        2,409<F2>

_______________                                                                                                   
<FN>                                                                                                              
<F1>  Messrs. Gibbs, Noble, Nelson and Klor de Alva also received certain                                         
      perquisites, the value of which did not exceed the lesser of $50,000                                        
      for each person or 10% of their cash compensation.  Dr. John Sperling                                       
      received perquisites primarily in the form of a Company provided car,                                       
      available for business and personal use, and tax consulting services.                                       

<F2>  Amounts shown consist of contributions made by the Company to the                                           
      Company's Savings and Investment Plan paid in fiscal years 1998, 1997                                       
      and 1996.                                                                                                   
</FN>                                                                                                             

74                                                                              

10-K
75th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 75th
The following table discloses options granted by the Company to the   
Chairman of the Board and Chief Executive Officer and the four other most       
highly compensated executive officers of the Company for 1998:                  

-- OPTION GRANTS IN THE LAST FISCAL YEAR --       

                                                        [Enlarge/Download Table]

                          Option Grants in Fiscal Year 1998                Potential Realizable 
                    ----------------------------------------------------     Value at Assumed   
                                   % of Total                                 Annual Rates of   
                     Number of    Options/SARs                                  Stock Price     
                     Securities    Granted to     Exercise                    Appreciation for  
                     Underlying     Employees      or Base                      Option Term     
                    Options/SARs    in Fiscal       Price     Expiration  ----------------------
Name                 Granted           Year       ($/Share)      Date         5%         10%    
------------------   ----------    -----------    ---------    ---------  --------    ----------
                                                                                                
John G. Sperling            --            --         $ --           --        $ --         $ -- 
Todd S. Nelson              --            --           --           --          --           -- 
Jorge Klor de Alva          --            --           --           --          --           -- 
Jerry F. Noble              --            --           --           --          --           -- 
William H. Gibbs            --            --           --           --          --           -- 
_______________                                                                                 


The following table discloses the number of shares received from the  
exercise of Company options, the value received therefrom and the number and    
value of in-the-money and out-of-the-money options held by the Company's        
Chairman of the Board and Chief Executive Officer and the four other most       
highly compensated officers of the Company for 1998:                            

                     -- AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998 --
                    AND OPTION VALUES AT AUGUST 31, 1998

                                                        [Enlarge/Download Table]

                                                                             Value of Unexercised   
                     Shares                   Number of Unexercised        Money Options at Fiscal  
                    Acquired      Value     Options at Fiscal Year-End            Year-End          
                   on Exercise   Realized   ---------------------------  ---------------------------
Name                   (#)         ($)      Exercisable   Unexercisable  Exercisable   Unexercisable
-----------------  -----------   ---------  -----------   -------------  -----------   -------------
                                                                                                    
John G. Sperling         --    $       --      461,707        154,406    $ 13,294,787   $ 3,527,112 
Todd S. Nelson       45,000       992,313        6,469        154,406         147,772     3,527,112 
Jorge Klor de Alva       --            --       48,375         84,375         858,546     1,093,357 
Jerry F. Noble      192,273     5,639,787       51,469        154,406       1,175,712     3,527,112 
William H. Gibbs     51,469     1,259,349           --        154,406              --     3,527,112 


75                                                                              

10-K
76th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 76th
Employment and Deferred Compensation Agreements ----------------------------    

 In December 1993, the Company entered into an employment agreement (the
"Employment Agreement") and deferred compensation agreement (the "Deferred      
Compensation Agreement") with Dr. John G. Sperling, the Chairman of the Board   
and Chief Executive Officer of the Company.  The term of the Employment         
Agreement was for four years, and expired on December 31, 1997. It              
automatically renewed for an additional one-year period through December 31,    
1998 and will automatically renew for additional one-year periods thereafter.   
Under the terms of the employment agreement, Dr. Sperling received an annual    
salary, beginning September 1, 1994, of $310,000.  This salary is subject to    
annual review by the Compensation Committee.  Effective for 1997 and 1998,      
Dr. Sperling's salary was increased to $387,500.  The Company may terminate     
the Employment Agreement only for cause and Dr. Sperling may terminate the      
Employment Agreement at any time upon 30 days written notice.                   

The Deferred Compensation Agreement provides that upon his termination
of employment with the Company and until his death, Dr. Sperling shall          
receive monthly payments equal to one-twelfth of his highest annual base        
salary paid by the Company during any one of the three calendar years           
preceding the calendar year in which Dr. Sperling's employment is terminated.   
In addition, upon Dr. Sperling's death, his designated beneficiary shall be     
paid an amount equal to three times his highest annual base salary in 36        
equal monthly installments with the first such installment due on the first     
day of the month following the month of Dr. Sperling's death.                   

The Company does not have employment agreements with any of its other 
executive officers.                                                             

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION                   

The Company's Compensation Committee (the "Committee") is composed    
entirely of independent outside members of the Company's Board of Directors.    
The Committee reviews and approves each of the elements of the executive        
compensation program of the Company and periodically assesses the               
effectiveness and competitiveness of the program in total.  In addition, the    
Committee administers the key provisions of the executive compensation          
program and reviews with the Board of Directors in detail all aspects of        
compensation for the Company's executives.  During 1997, Dino DeConcini         
resigned from the Compensation Committee and was replaced by John Norton III.   
The Committee has furnished the following report on executive compensation:     

Overview and Philosophy -----------------------------------------------------   

The Company's compensation program for executive officers is primarily
comprised of base salary, annual bonus and long-term incentives in the form     
of stock option grants.  Executives also participate in various other benefit   
plans, including medical and retirement plans, generally available to all       
employees of the Company.                                                       

The Company's philosophy is to pay base salaries to executives that   
enable the Company to attract, motivate and retain highly qualified             
executives.  The annual bonus program is designed to reward for performance     
based on financial results.  Stock option grants are intended to provide        
substantial rewards to executives based on stock price appreciation and         
improved overall financial performance.  The vesting of the options can be      
accelerated if certain profit and stock price goals are achieved.               

76                                                                              

10-K
77th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 77th
Base Salary -----------------------------------------------------------------   

Each of the Company's executives receives a base salary, which when   
aggregated with their maximum bonus amount, is intended to be competitive       
with similarly situated executives in comparable industries.  The Company       
targets base pay at the level required to attract and retain highly qualified   
executives.  In determining salaries, the Committee also takes into account     
position within the Company, individual experience and performance and          
specific needs particular to the Company.                                       

Annual Bonus Program --------------------------------------------------------   

In addition to a base salary, executives were eligible to receive a   
bonus of up to seventy-five percent (75%) of their respective base salaries.    
All annual bonuses are tied to the Company's financial performance.             

At the beginning of each fiscal year, the Committee establishes an    
after-tax net income goal for the Company and operating profit goals for the    
Company's subsidiaries.  The annual bonuses are calculated differently for      
(i) executives who also serve as executive officers of either The University    
of Phoenix, Inc. ("UOP") or the Institute for Professional Development          
("IPD") (collectively, the "Division Executives") and (ii) executives who do    
not serve as executive officers of either UOP or IPD (collectively, the         
"Company Executives").                                                          

The annual bonuses for the Company Executives are tied solely to the  
after-tax net income goal for the Company.  If that goal is achieved, the       
Company Executives earn a bonus equal to fifty percent (50%) of their           
respective annual maximum bonus.  If the after-tax net income goal is           
exceeded, the Company Executives earn a larger percentage of their annual       
bonus depending on the amount by which the after-tax net income goal is         
exceeded up to a maximum annual bonus equal to seventy-five percent (75%) of    
their respective base salaries.                                                 

The annual bonuses for the Division Executives are earned (1) fifty   
percent (50%) if their division operating profit goal is achieved, (2) an       
additional twenty-five percent (25%) if the after-tax income goal for the       
Company is achieved and (3) up to another twenty-five percent (25%) depending   
on the amount by which the after-tax net income goal is exceeded up to a        
maximum annual bonus equal to seventy-five percent (75%) of their respective    
base salaries.                                                                  

Options ---------------------------------------------------------------------   

The Company believes that it is important for executives to have an   
equity stake in the Company and, toward this end, makes option grants to key    
executives from time to time under the Apollo Group, Inc. Long-Term Incentive   
Plan.  In making option awards, the Committee reviews the Company's financial   
performance during the past fiscal year, the awards granted to other            
executives within the Company and the individual officer's specific role at     
the Company.                                                                    

Other Benefits --------------------------------------------------------------   

Executive officers are eligible to participate in benefit programs    
designed for all full-time employees of the Company and also received certain   
perquisites primarily including Company cars and Company paid tax consulting.   

77                                                                              

10-K
78th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 78th
These programs include medical, disability and life insurance and a qualified   
retirement program allowed under Section 401(k) of the Internal Revenue Code,   
as amended (the "Code").                                                        

Chief Executive Officer Compensation ----------------------------------------   

Dr. John G. Sperling is the founder, Chief Executive Officer and      
Chairman of the Board of Directors of the Company.  In December 1993, the       
Company entered into an employment agreement (the "Employment Agreement") and   
deferred compensation agreement (the "Deferred Compensation Agreement") with    
Dr. Sperling.  The Employment Agreement terminated on December 31, 1997.  It    
automatically renewed for an additional one-year period through December 31,    
1998 and will automatically renew for additional one-year periods thereafter.   
The Deferred Compensation Agreement provides that upon Dr. Sperling's           
termination of employment with the Company and until his death, Dr. Sperling    
shall receive monthly payments equal to 1/12 of his highest annual base         
salary paid by the Company during any one of the three calendar years           
preceding the calendar year in which Dr. Sperling's employment is terminated.   
In addition, upon Dr. Sperling's death, his designated beneficiary shall be   
paid an amount equal to three times his highest annual base salary in 36        
equal monthly installments with the first installment due on the first day of   
the month following the month of Dr. Sperling's death.                          

 During fiscal year 1998, Dr. Sperling received an annual base salary of
$387,500.  In addition, because the after-tax net income goal for the Company   
was exceeded, Dr. Sperling was eligible for a bonus of $290,625 for 1998.       
Dr. Sperling has elected to forego this bonus in exchange for options that      
will be granted in Fiscal 1999.  Dr. Sperling also was granted options in       
September 1995 to purchase a total of 205,875 shares of Class A Common Stock    
in connection with the 1995 Performance Incentive Grants.  All options were     
granted at fair market value and expire ten years after the grant date.         
These options have an exercise price of $7.5319 per share with various          
vesting periods.                                                                

Under Dr. Sperling's leadership, the Company's net revenues increased 
37.9%, to $391.1 million in 1998 from $283.5 million in 1997.  In addition,     
diluted earnings per share increased to $.59 in 1998 from $.43 in 1997.         
Shareholder value also has increased over this same period.  For example, the   
closing price at August 28, 1997 was $23.792 per share whereas the closing      
price for the Company's Class A Common Stock on August 31, 1998, as reported    
on the Nasdaq National Market, was $30.375 per share.                           

  All share numbers and prices contained in this report have been adjusted
for the stock splits effected in the form of stock dividends that were          
approved by the Company's Board of Directors.                                   

-- COMPENSATION COMMITTEE --  

Thomas C. Weir  
John R. Norton III  

78                                                                              

10-K
79th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 79th
STOCK PERFORMANCE GRAPH                                                         

  The line graph below compares the cumulative total shareholder return on
the Company's Class A Common Stock with the cumulative total return for the     
Standard & Poor's 400 Index and an index of Company-selected peer group         
companies for the period from December 6, 1994 (the effective date of the       
Company's initial public offering) through August 31, 1998.  The graph          
assumes that the value of the investment in the Company's Class A Common        
Stock and each index was $100 at December 6, 1994, and that all dividends       
paid by those companies included in the indexes were reinvested.                

                                                                [Download Table]

                       Dec. 6     Aug. 31    Aug. 31    Aug. 31     Aug. 31  
                       1994       1995       1996        1997        1998    
                      --------   --------   --------   ---------   ----------
                                                                             
Apollo Group, Inc.                                                           
  Class A Common Stock $100.00    $336.80    $966.30   $1,352.40    $1,726.60
S&P 400                 100.00     121.20     140.70      193.10       207.30
Education Peer Group    100.00     135.30     211.70      238.90       262.50

  The education peer group is composed of the publicly-traded common stock
of 13 education-related companies that include Berlitz International, Inc.      
(BTZ), California Culinary Academy, Inc. (COOK), Canterbury Information         
Technology, Inc. (XCEL), Children?s Discovery Centers of America, Inc. (CDCR),  
DeVry Inc. (DV), Education Alternatives, Inc. (EAIN), ITC Learning              
Corporation (ITCC), ITT Educational Services, Inc.(ESI), Nobel Education        
Dynamics, Inc. (NEDI), Sylvan Learning Systems, Inc. (SLVN), TRO Learning,      
Inc. (TUTR), Wave Technologies International, Inc. (WAVT) and Whitman           
Education Group, Inc. (WIX).                                                    

79                                                                              

10-K
80th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 80th
Item 12 -- Security Ownership of Certain Beneficial Owners and Management       

The following table sets forth certain information regarding the      
beneficial ownership of the Common Stock of the Company as of September 30,     
1998.  Except as otherwise indicated, to the knowledge of the Company, all      
persons listed below have sole voting and investment power with respect to      
their shares, except to the extent that authority is shared by spouses under    
applicable law or as otherwise noted below.                                     

                                                        [Enlarge/Download Table]

                                               Class A                           Class B               
                                               Shares                            Shares                
                                              of Common                         of Common              
Name and Address of Beneficial Owner<F1>        Stock              % Owned        Stock       % Owned  
---------------------------------------   ----------------        ---------    -----------   ----------
                                                                                                       
John G. Sperling                          13,936,989<F2><F3><F4><F5> 17.7%      243,081<F17>      47.5%
Peter V. Sperling                         14,420,362<F2><F6><F7>     18.3       232,068<F18>      45.4 
William H. Gibbs                             218,400<F8><F9><F10>      .3            --             -- 
Jerry F. Noble                               546,835<F11>              .7        27,950            5.5 
Todd S. Nelson                               131,447<F12>              .2         8,385            1.6 
J. Jorge Klor de Alva                         76,812<F13>              .1            --             -- 
Thomas C. Weir                                90,750<F14>              .1            --             -- 
Dino J. DeConcini                             33,113<F15>              --            --             -- 
Total for All Directors and Executive                                                                  
 Officers as a Group (11 persons)         28,066,059<F16>            35.7%      511,484          100.0 

_______________                                                                                        
<FN>                                                                                                   
<F1>   The address of each of the listed shareholders, unless noted                                    
       otherwise, is in care of Apollo Group, Inc., 4615 East Elwood Street,                           
       Phoenix, Arizona 85040.                                                                         

<F2>   Includes 1,435,040 shares held by the John Sperling 1994 Irrevocable                            
       Trust dated April 27, 1994 for which Messrs. John and Peter Sperling                            
       are the co-trustees.                                                                            

<F3>   Includes 186,157 shares held by the John G. Sperling Revocable Trust                            
       dated January 31, 1995.                                                                         

<F4>   Includes 1,350,000 shares held by The Sperling Foundation.                                      

<F5>   Includes 513,176 shares that Dr. John Sperling has the right to                                 
       acquire within 60 days of the date of the table set forth above.                                

<F6>   Includes 290,090 shares held by the Peter V. Sperling Revocable Trust                           
       dated January 31, 1995.                                                                         

<F7>   Includes 351,554 shares that Mr. Peter Sperling has the right to                                
       acquire within 60 days of the date of the table set forth above.                                

<F8>   Includes 154,957 shares held by the Gibbs Family Trust dated July 14,                           
       1994.                                                                                           

<F9>   Includes 13,974 shares held by the William H. Gibbs Revocable Trust                             
       dated March 8, 1995                                                                             

<F10>  Includes 51,469 shares that Mr. Gibbs has the right to acquire within                           
       60 days of the date of the table set forth above.                                               

80                                                                                                     

10-K
81st Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 81st
<F11>  Includes 102,938 shares that Mr. Noble has the right to acquire within                          
       60 days of the date of the table set forth above.                                               

<F12>  Includes 57,938 shares that Mr. Nelson has the right to acquire                                 
       within 60 days of the date of the table set forth above.                                        

<F13>  Represents 76,500 shares that Dr. Klor de Alva has the right to                                 
       acquire within 60 days of the date of the table set forth above.                                

<F14>  Includes 80,250 shares that Mr. Weir has the right to acquire within                            
       60 days of the date of the table set forth above.                                               

<F15>  Includes 32,438 shares that Mr. DeConcini has the right to acquire                              
       within 60 days of the date of the table set forth above.                                        

<F16>  Includes 1,307,924 shares that all Directors and Executive Officers as                          
       a group have the right to acquire within 60 days of the date of the                             
       table set forth.                                                                                

<F17>  Includes 243,080 shares held by the John G. Sperling Revocable Trust                            
       dated January 31, 1995.                                                                         

<F18>  Includes 232,067 shares held by the Peter V. Sperling Revocable Trust                           
       dated January 31, 1995.                                                                         
</FN>                                                                                                  

Item 13 -- Certain Relationships and Related Transactions                       

 On August 14, 1998, the Company, Hughes Network Systems ("Hughes"), and
Hermes Onetouch L.L.C. ("Hermes") formed Interactive Distance Learning, Inc.    
for the purpose of acquiring One Touch Systems, Inc. ("One Touch").  In         
connection with the transaction, the Company, Hughes, and Hermes entered into   
certain agreements regarding the relationships among the parties.  As           
contemplated in the agreements, it is anticipated that the Company will from    
time to time engage in transactions with One Touch for the provision of         
distance learning products and services.  Hermes, which owns 30% of the         
outstanding shares of Interactive Distance Learning, Inc., is wholly-owned by   
Dr. John G. Sperling, the Company's Chairman, and Peter V. Sperling, the        
Company's Senior Vice President.                                                

81                                                                              

10-K
82nd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 82nd
PART IV                                                                         
Item 14 -- Exhibits, Financial Statement Schedules, and Reports on Form 8-K     

                                                      Sequentially
                                                      Numbered
                                                      Page or Method
                                                     of Filing
                                                      ----------------
A.  Financial Statements                                                        

(1) Report of PricewaterhouseCoopers LLP                    Page 47     

(2) Consolidated Financial Statements                                   

(a)  Statement of Operations for the Years                      
    Ended August 31, 1998, 1997 and 1996               Page 48

(b)  Balance Sheet as of August 31, 1998                        
    and 1997                                           Page 49

(c)  Statement of Changes in Shareholders?                      
Equity for the Years Ended August 31,                 
    1998, 1997 and 1996                                Page 50

(d)  Statement of Cash Flows for the Years                      
    Ended August 31, 1998, 1997 and 1996               Page 51

(e)  Notes to Consolidated Financial Statements         Page 52 

B.  Financial Statement Schedule:                                               

None.                                                                   

C.  Exhibits                                                                    
                                                        Sequentially
                                                        Numbered
Exhibit                                                  Page or Method 
Number     Description of Exhibit                           of Filing   
 -------    ---------------------------------------       ----------------
  2.1      Asset Purchase Agreement by and among         Incorporated by
        National Endowment for Financial Educa-       reference to
           tion, (R) College for Financial Planning,     Exhibit 10.1 of
         Inc., as assignee of Apollo Online, Inc.,     the Company's
        as Buyer, and Apollo Group, Inc. dated        Registration
         August 21, 1997                               Statement No.
                                                      333-35465 on
                                                        Form S-3 filed
                                                       September 11,
                                              1997

82                                                                              

10-K
83rd Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 83rd
                                                        Sequentially
                                                        Numbered
Exhibit                                                  Page or Method 
Number     Description of Exhibit                           of Filing   
 -------    ---------------------------------------       ----------------
  2.2      Assignment and Amendment of Asset Purch-      Incorporated by
        ase Agreement by and among National           reference to
           Endowment for Financial Education, Inc., the  Exhibit 10.2 of
         the College for Financial Planning, Inc.,     the Company's
        Apollo Online, Inc., and Apollo Group, Inc.,  Registration
         dated September 23, 1997                      Statement No.
                                                      333-35465 on
                                                        Form S-3 filed
                                                       September 11,
                                              1997

  3.1      Restated and Amended Articles of              Incorporated by
        Incorporation of the Company                  reference to
          (As Amended Through September 18, 1997)       Exhibit 3.1 of
                                                        the August 31,
                                                        1997 Form 10-K

  3.2      Amended Bylaws of the Company                 Incorporated by
        (As Amended Through June 1996)                reference to
                                                        Exhibit 3.2 of
                                                        the August 31,
                                                        1996 Form 10-K

 10.1a     Business Loan Agreement between Apollo        Incorporated by
        Group, Inc. and Wells Fargo Bank, National    reference to
            Association                                   Exhibit 10.1a of
                                                          the November 30,
                                                         1997 Form 10-Q.

 10.1c     Revolving Promissory Note between Apollo      Incorporated by
        Group, Inc. and Wells Fargo Bank, National    reference to
            Association                                   Exhibit 10.1c of
                                                          the November 30,
                                                         1997 Form 10-Q.

 10.1d     Modification Agreement between Apollo Group,  Incorporated by
        Inc. and Wells Fargo Bank, National           reference to
            Association                                   Exhibit 10.1d of
                                                          the February 28,
                                                         1998 Form 10-Q.

 10.2      Apollo Group, Inc. Director Stock             Incorporated by
        Plan                                          reference to
                                                         Exhibit 10.2 of
                                                        the August 31,
                                                        1995 Form 10-K

83                                                                              

10-K
84th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 84th
                                                        Sequentially
                                                        Numbered
Exhibit                                                  Page or Method 
Number     Description of Exhibit                           of Filing   
 -------    ---------------------------------------       ----------------
 10.3      Apollo Group, Inc. Long-Term                  Incorporated by
        Incentive Plan                                reference to
                                                         Exhibit 10.3 of
                                                      Form S-1 No.
                                                  33-83804

 10.4      Apollo Group, Inc. Savings and                Incorporated by
        Investment Plan                               reference to
                                                         Exhibit 10.4 of
                                                        the August 31,
                                                         1996 Form 10-K.

 10.5      Apollo Group, Inc. 1994 Employee              Incorporated by
        Stock Purchase Plan (As Amended               reference to
           Through August 1996)                          Exhibit 10.4 of
                                                        the August 31,
                                                         1996 Form 10-K.

 10.6      Employment Agreement between Apollo           Incorporated by
        Group, Inc. and John G. Sperling              reference to
                                                         Exhibit 10.6 of
                                                      Form S-1 No.
                                                  33-83804

 10.7      Deferred Compensation Agreement between       Incorporated by
        John G. Sperling and Apollo Group, Inc.       reference to
                                                         Exhibit 10.7 of
                                                      Form S-1 No.
                                                  33-83804

 10.8      Deferred Compensation Agreement between       Incorporated by
        Apollo Group, Inc. and Carole A.              reference to
           Crawford                                      Exhibit 10.8 of
                                                      Form S-1 No.
                                                  33-83804

 10.9      Lease Agreement between Apollo Group,         Incorporated by
        Inc. and Kaiser Center Partners               reference to
                                                         Exhibit 10.9 of
                                                      Form S-1 No.
                                                  33-83804

 10.10     Shareholder Agreement Dated September         Incorporated by
        7, 1994.                                      reference to
                                                          Exhibit 10.10 of
                                                      Form S-1 No.
                                                  33-83804

 10.11     Agreement of Purchase and Sale of             Incorporated by
            Assets of Western International               reference to the
           University Dated June 30, 1995                August 31, 1995
      (without schedules and exhibits)              Form 10-K.

84                                                                              

10-K
85th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 85th
                                                        Sequentially
                                                        Numbered
Exhibit                                                  Page or Method 
Number     Description of Exhibit                           of Filing   
 -------    ---------------------------------------       ----------------

 10.12     Purchase and Sale Agreement Dated             Incorporated by
        October 10, 1995                              reference to
                                                          Exhibit 10.12 of
                                                        the August 31,
                                                         1996 Form 10-K.

21        List of Subsidiaries                          Filed herewith

23.1      Consent of PricewaterhouseCoopers LLP         Filed herewith

24        Power of Attorney                             Filed herewith

27        Financial Data Schedule                       Filed herewith

 99.1      Form of Agreement of Institute for            Incorporated by
        Professional Development                      reference to
                                                         Exhibit 99.1 of
                                                      Form S-1 No.
                                                  33-83804

D.  Reports on Form 8-K                                                         

During the last quarter of the 1998 fiscal year, the Company filed no   
reports on Form 8-K.                                                            

85                                                                              

10-K
86th Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 86th
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 on Form 10-K   
to be signed on its behalf by the undersigned, thereunto duly authorized, in    
the City of Phoenix, State of Arizona, on November 11, 1998.                    

        APOLLO GROUP, INC.
            An Arizona Corporation

                  By:     /s/ John G. Sperling
                            --------------------------------
                              John G. Sperling
                             Chief Executive
                              Officer and Director

 POWER OF ATTORNEY

  KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John G. Sperling and Todd S. Nelson, and each    
of them, his true and lawful attorneys-in-fact and agents, with full power of   
substitution and resubstitution, for him and in his name, place and stead, in   
any and all capacities, to sign any and all amendments to this Form 10-K        
Annual Report, and to file the same, with all exhibits thereto, and other       
documents in connection therewith with the Securities and Exchange              
Commission, granting unto said attorneys-in-fact and agents, and each of        
them, full power and authority to do and perform each and every act and thing   
requisite and necessary to be done in and about the premises, as fully and to   
all intents and purposes as he might or could do in person hereby ratifying     
and confirming all that said attorneys-in-fact and agents, or his substitute    
or substitutes, may lawfully do or cause to be done by virtue hereof.           

Pursuant to the requirements of the Securities Exchange Act of 1934,  
this report on Form 10-K has been signed below by the following persons on      
behalf of the Registrant and in the capacities and on the date indicated.       

Signature                   Title                           Date                
-----------------------------------------------------------------------------   

/s/ John G. Sperling        Chairman of the Board           November 11, 1998   
-------------------------   of Directors and Chief                              
John G. Sperling        Executive Officer                               
     (Principal Executive Officer)

/s/ Todd S. Nelson          President and Director          November 11, 1998   
-------------------------                                                       
Todd S. Nelson                                                          

/s/ J. Jorge Klor de Alva   Senior Vice President           November 11, 1998   
--------------------------       and Director                                   
J. Jorge Klor de Alva                                                   

86                                                                              

10-K
Last Page of 87
TOC
1st
Previous
Next
↓Bottom
Just 87th
Signature                   Title                           Date                
-----------------------------------------------------------------------------   

/s/ Jerry F. Noble          Senior Vice President and       November 11, 1998   
-------------------------   Director                                            
Jerry F. Noble                                                          

/s/ Peter V. Sperling       Senior Vice President,          November 11, 1998   
-------------------------   Secretary, Treasurer and                            
Peter V. Sperling       Director                                        

/s/ William H. Gibbs        Senior Vice President and       November 11, 1998   
-------------------------   Director                                            
William H. Gibbs                                                        

/s/ Kenda B. Gonzales       Chief Financial Officer         November 11, 1998   
-------------------------   (Principal Financial Officer)                       
Kenda B. Gonzales                                                       

/s/ Junette C. West         Vice President and Controller   November 11, 1998   
-------------------------   (Chief Accounting Officer)                          
Junette C. West                                                         

/s/ Dino J. DeConcini       Director                        November 11, 1998   
-------------------------                                                       
Dino J. DeConcini                                                       

/s/ Thomas C. Weir          Director                        November 11, 1998   
-------------------------                                                       
Thomas C. Weir                                                          

/s/ John R. Norton III      Director                        November 11, 1998   
-------------------------                                                       
John R. Norton III                                                      

/s/ Hedy F. Govenar         Director                        November 11, 1998   
-------------------------                                                       
Hedy F. Govenar                                                         

87                                                                              

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		8/31/03		31					10-K
		12/31/99		26		43
		8/31/99		41					10-K,  10-K/A
		12/31/98		76		78
Filed on:		11/12/98
		11/11/98		86		87
		10/31/98		69
		10/23/98		1
		10/19/98		47
		10/16/98		43		63
		9/30/98		19		80
		9/25/98		43		63
For Period End:		8/31/98		1		82
		8/14/98		81
		7/1/98		22		42
		6/30/98		71
		4/27/98		63
		4/13/98		63
		2/28/98		83					10-Q
		12/31/97		76		78
		11/30/97		83					10-Q
		9/23/97		4		83			8-K,  S-3/A
		9/18/97		83
		9/11/97		82		83			S-3
		8/31/97		4		83			10-K
		8/28/97		78
		8/21/97		82
		8/31/96		4		85			10-K
		6/30/96		27
		5/31/96		63					10-Q
		5/21/96		63
		2/29/96		63					10-Q
		2/16/96		63
		10/10/95		85
		9/22/95		63
		9/8/95		63
		8/31/95		83		84			10-K
		6/30/95		84
		3/8/95		80
		1/31/95		80		81
		12/6/94		79
		9/1/94		76
		8/31/94		3
		7/14/94		80
		4/27/94		80
									List all Filings