929887--10/27/2009--APOLLO_GROUP

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{regulation, government, change}

{system, service, information}

{acquisition, growth, future}

{tax, income, asset}

{operation, international, foreign}

{regulation, change, law}

{product, market, service}

{financial, litigation, operation}

{cost, operation, labor}

{operation, natural, condition}

{property, intellectual, protect}

{condition, economic, financial}

{debt, indebtedness, cash}

{personnel, key, retain}

{cost, regulation, environmental}

{competitive, industry, competition}

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. The reauthorization of the federal Higher Education Act in August 2008 includes substantially increased reporting and other requirements which may impair our reputation and adversely affect our enrollments. In addition, not all of these new requirements are clear on their face. Our failure to accurately interpret these new requirements may subject us to penalties and other sanctions imposed by the U.S. Department of Education. 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. 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. Our business could be harmed if we experience a disruption in our ability to process student loans because of the proposed phase-out of Family Education Loan Program loans and the corresponding transition to direct student loans under the Federal Direct Loan Program. 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 may be impaired. 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. 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. Student loan defaults could result in the loss of eligibility to participate in Title IV programs. 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 our institutional accreditation, we would lose our ability to participate in Title IV programs. 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. 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. We are subject to sanctions if we pay impermissible commissions, bonuses, or other incentive payments to individuals involved in certain recruiting, admission, or financial aid activities. 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, affect our ability to grow or otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows. Risks Related to Our Business 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 may not be able to sustain our recent growth rate or profitability, and we may not be able to manage future growth effectively. Our financial performance depends on our ability to continue to develop awareness among, and recruit and retain students. If the proportion of our students who are enrolled in our associate s degree programs continues to increase, we may experience increased cost and reduced margins. 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 write down the carrying value of goodwill and 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. 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. Our acquisition and operation of BPP Holdings plc may not result in increased value. We may experience movements in foreign currency exchange rates which could negatively 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. We may incur liability for the unauthorized duplication, distribution or other use of materials posted online. Our Insight Schools business faces regulatory and administrative challenges in various states which may result in the imposition of fines and other penalties and may reduce the value we receive upon disposition of that business. We may have unanticipated tax liabilities that could adversely impact our financial position.

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929887--10/27/2009--APOLLO_GROUP_INC