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APOLLO EDUCATION GROUP INC filed this Form 10-Q on 03/25/2015
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Other Fiscal Year 2015 Events
In addition to the items mentioned above, we experienced the following other events during the second quarter of fiscal year 2015:
Acquisition of FAEL. On December 4, 2014, Apollo Global acquired a 75% interest in Sociedade Técnica Educacional da Lapa S.A., which provides postsecondary educational programs in Brazil under the name Faculdade da Educacional da Lapa (“FAEL”). Refer to Note 4, Acquisitions, in Item 1, Financial Statements.
Student Loan Cohort Default Rates. During the second quarter of fiscal year 2015, the U.S. Department of Education released the draft three-year cohort default rates for the 2012 federal fiscal year. The 2012 draft three-year cohort default rate for University of Phoenix, which will be finalized in September 2015, was 13.6%, which is a decrease from the University’s 2011 three-year cohort default rate of 19.0%.
Critical Accounting Policies and Estimates
Refer to our 2014 Annual Report on Form 10-K for our critical accounting policies and estimates and refer to Note 2, Restructuring and Impairment Charges, in Item 1, Financial Statements, for discussion of long-lived asset impairments recorded during the second quarter of fiscal year 2015.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, refer to Note 1, Nature of Operations and Significant Accounting Policies, in Item 1, Financial Statements.
Results of Operations
We have included below a discussion of our operating results and significant items explaining the material changes in our operating results during the three and six months ended February 28, 2015 compared to the three and six months ended February 28, 2014.
As discussed in the Overview of this MD&A, the U.S. higher education industry continues to experience unprecedented, rapidly developing changes. We believe University of Phoenix enrollment has been adversely impacted by these changes, and we are focused on adapting our business to meet these rapidly evolving developments and to stabilize University of Phoenix enrollment.
Our operations are generally subject to seasonal trends, which vary depending on the subsidiary. We have historically experienced, and expect to continue to experience, fluctuations in our results of operations as a result of seasonal variations in the level of our institutions’ enrollments.
University of Phoenix - Although University of Phoenix enrolls students throughout the year, its net revenue is generally lower in our second fiscal quarter (December through February) than the other quarters due to holiday breaks.
Apollo Global - Our Apollo Global subsidiaries experience seasonality associated with the timing of when courses begin, exam dates, the timing of their respective holidays and other factors. These factors have historically resulted in lower net revenue in our second and fourth fiscal quarters, particularly for BPP, which also results in substantially lower operating results during these quarters due to BPP’s relatively fixed cost structure.