929887--10/21/2010--APOLLO_GROUP

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Risks Related to the Control Over Our Voting Stock Our Class A common stock has no voting rights. Our Executive Chairman and Vice Chairman of the Board control 100% of our voting stock and control substantially all actions requiring the vote or consent of our shareholders, which may have an adverse effect on the trading price of our Class A common stock and may discourage a takeover. If regulators do not approve or delay their approval of transactions involving a change of control of our company, our state licenses, accreditation, and ability to participate in Title IV programs and state grant programs may be impaired. Risks Related to the Highly Regulated Industry in Which We Operate If we fail to comply with the extensive regulatory requirements for our business, we could face significant monetary liabilities, fines and penalties, including loss of access to U.S. federal student loans and grants for our students. Pending rulemaking by the U.S. Department of Education could result in regulatory changes that materially and adversely affect our business. Action by the U.S. Congress to revise the laws governing the federal student financial aid programs or reduce funding for those programs could reduce our student population and increase our costs of operation. Our schools and programs would lose their eligibility to participate in federal student financial aid programs if the percentage of our revenues derived from those programs is too high, in which event we could not conduct our business as it is currently conducted. 90/10 Rule Percentages for Fiscal Years Ended August 31, An increase in our student loan default rates could result in the loss of eligibility to participate in Title IV programs, which would materially and adversely affect our business. Two-Year Cohort Default Rates for Three-Year Cohort Default Rates for If we fail to maintain our institutional accreditation or if our institutional accrediting body loses recognition by the U.S. Department of Education, we could lose our ability to participate in Title IV programs, which would materially and adversely affect our business. Our business could be harmed if we experience a disruption in our ability to process student loans because of the phase-out of Family Education Loan Program loans and the corresponding transition to direct student loans under the Federal Direct Loan Program. If any regulatory audit, investigation or other proceeding finds us not in compliance with the numerous laws and regulations applicable to the postsecondary education industry, we may not be able to successfully challenge such finding and our business could suffer. If we fail to maintain any of our state authorizations, we would lose our ability to operate in that state and to participate in Title IV programs there. A failure to demonstrate administrative capability or financial responsibility may result in the loss of eligibility to participate in Title IV programs, which would materially and adversely affect our business. If we are not recertified to participate in Title IV programs by the U.S. Department of Education, we would lose eligibility to participate in Title IV programs and could not conduct our business as it is currently conducted. If regulators do not approve our domestic acquisitions, the acquired schools state licenses, accreditation, and ability to participate in Title IV programs may be impaired. We will be subject to sanctions if we fail to properly calculate and make timely payment of refunds of Title IV program funds for students who withdraw before completing their educational program. If IPD s client institutions are sanctioned due to non-compliance with Title IV requirements, our business could be responsible for any resulting fines and penalties. Government regulations relating to the Internet could increase our cost of doing business and affect our ability to grow. Risks Related to Our Business Ongoing and contemplated changes to our business may adversely affect our growth rate, profitability, financial condition, results of operations and cash flows. Our business may be adversely affected by a further economic slowdown in the U.S. or abroad or by an economic recovery in the U.S. If we are unable to successfully conclude pending litigation and governmental inquiries, our business, financial condition, results of operations and cash flows could be adversely affected. We are subject to the oversight of the Securities and Exchange Commission and other regulatory agencies, and investigations by these agencies could divert management s focus and have a material adverse impact on our reputation and financial condition. Our financial performance depends on our ability to continue to develop awareness among, and enroll and retain students; recent adverse publicity may negatively impact demand for our programs. If the proportion of our students who enroll with, and accumulate, fewer than 24 credits continues to increase, we may experience increased cost and reduced profitability. System disruptions and security threats to our computer networks could have a material adverse effect on our business. We may not be able to successfully identify, pursue or integrate acquisitions; acquisitions may result in additional debt or dilution to our shareholders. Our future operating results and the market price of our common stock could be materially adversely affected if we are required to further write down the carrying value of goodwill and/or other intangible assets associated with any of our reporting units in the future. If we do not maintain existing, and develop additional, relationships with employers, our future growth may be impaired. Budget constraints in states that provide state financial aid to our students could reduce the amount of such financial aid that is available to our students, which could reduce our enrollment and adversely affect our 90/10 Rule calculation. Our principal credit agreement limits our ability to take various actions. Our financial performance depends, in part, on our ability to keep pace with changing market needs and technology; if we fail to keep pace or fail in implementing or adapting to new technologies, our business may be adversely affected. A failure of our information systems to properly store, process and report relevant data may reduce our management s effectiveness, interfere with our regulatory compliance and increase our operating expenses. The personal information that we collect may be vulnerable to breach, theft or loss that could adversely affect our reputation and operations. We face intense competition in the postsecondary education market from both public and private educational institutions, which could adversely affect our business. Our expansion into new markets outside the U.S. subjects us to risks inherent in international operations. We may experience movements in foreign currency exchange rates which could adversely affect our operating results. We rely on proprietary rights and intellectual property that may not be adequately protected under current laws, and we encounter disputes from time to time relating to our use of intellectual property.

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929887--10/21/2010--APOLLO_GROUP_INC