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UNITED STATES

FORM 10-K

(Mark One)

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

For the fiscal year ended: August 31, 2003

OR

[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

For the transition period from           to           

Commission file number: 0-25232

APOLLO GROUP, INC.

4615 East Elwood Street, Phoenix, Arizona 85040

Registrant’s telephone number, including area code: (480) 966-5394

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

     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.    Yes x    No o

     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.    o

     Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act).    Yes x    No o 

     No shares of the Company’s Apollo Education Group Class B common stock, its voting stock, are held by non-affiliates. The holders of the Company’s Apollo Education Group Class A common stock are not entitled to any voting rights. The aggregate market value of Apollo Education Group Class A common stock held by non-affiliates as of February 28, 2003, was approximately $8.1 billion. The holders of the Company’s University of Phoenix Online common stock are not entitled to any voting rights. The aggregate market value of University of Phoenix Online common stock held by non-affiliates as of February 28, 2003, was approximately $568.1 million.

     The number of shares outstanding for each of the registrant’s classes of common stock, as of November 17, 2003, is as follows:

Documents Incorporated By Reference

     Portions of the registrant’s Annual Report to Shareholders for the year ended August 31, 2003 are incorporated herein by reference into Part II. With the exception of those portions which are expressly incorporated by reference in this Annual Report on Form 10-K, the Apollo Group, Inc. 2003 Annual Report is not deemed filed as part of this report.

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APOLLO GROUP, INC. AND SUBSIDIARIES

FORM 10-K

INDEX

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PART I

Item 1 — Business

Overview

      This Annual Report on Form 10-K, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Apollo Group, Inc.” and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations of University of Phoenix Online” which are incorporated by reference from our 2003 Annual Report, contain forward-looking statements regarding future events and future results of Apollo Group that are based on current expectations, estimates, forecasts, and the beliefs and assumptions of us and our management, and speak only as of the date made and are not guarantees of future performance. Words such as “believes,” “expects,” “anticipates,” “estimates,” “targets,” “goals,” “projects,” “intends,” “plans,” and other similar statements of expectations identify forward-looking statements. Forward-looking statements are inherently uncertain and subject to risks. Such statements should be viewed with caution. Future events and actual results could differ materially from those set forth in the forward-looking statements as a result of many factors. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in this Form 10-K, including those set forth in Item 1 under the sections titled “Regulatory Environment,” “Accreditation,” “Federal Financial Aid Programs,” and “State Authorization,” and those factors set forth in other reports that we file with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statements, or any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements.

      Apollo Group, Inc. has been providing higher education to working adults for over 25 years. We operate through our subsidiaries, The University of Phoenix, Inc., Institute for Professional Development, The College for Financial Planning Institutes Corporation, and Western International University, Inc. The consolidated enrollment in our educational programs would make us the largest private institution of higher education in the United States. We currently offer our programs and services at 71 campuses and 121 learning centers in 37 states, Puerto Rico, and Vancouver, British Columbia. Our combined degree enrollment increased to approximately 200,100 at August 31, 2003 from approximately 86,800 at August 31, 1999.

      University of Phoenix had degree enrollments of approximately 174,900 adult students at August 31, 2003, is accredited by The Higher Learning Commission, and has been a member of the North Central Association of Colleges and Schools since 1978. University of Phoenix has successfully replicated its teaching/learning model while maintaining educational quality at 46 physical campuses and 87 learning centers in Arizona, California, Colorado, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, Puerto Rico, and Vancouver, British Columbia. University of Phoenix also offers its educational programs worldwide through University of Phoenix Online, its computerized educational delivery system. University of Phoenix has customized computer programs for student tracking, marketing, faculty recruitment and training, and academic quality management. These computer programs are intended to provide uniformity among University of Phoenix’s campuses and learning centers which enhances University of Phoenix’s ability to expand into new markets while still maintaining academic quality. Currently, approximately 50% of University of Phoenix’s students receive some level of tuition assistance from their employers.

      Institute for Professional Development provides program development and management consulting services to regionally accredited private colleges and universities (client institutions) who are interested in expanding or developing their programs for working adults. These services typically include degree program design, curriculum development, market research, student recruitment, and performing accounting and administrative services. Institute for Professional Development provides these services to regionally accredited private colleges and universities at 22 campuses and 31 learning centers in 22 states in exchange for a contractual share of the tuition revenues generated from these programs. Institute for Professional Develop-

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	•	are interested in developing or expanding off-campus degree programs for working adults;
	•	recognize that working adults require a different teaching/ learning model than the 18 to 24 year old student;
	•	desire to increase enrollments with a limited investment in institutional capital; and
	•	recognize the unmet educational needs of the working adult students in their market.

      Approximately 22,300 degree-seeking students are currently enrolled in Institute for Professional Development assisted programs.

      The College for Financial Planning provides financial planning education programs, including the Certified Financial Planner Professional Education Program. The College for Financial Planning also offers some of its non-degree programs at University of Phoenix campuses.

      Western International University currently offers graduate and undergraduate degree programs to approximately 2,000 students in Phoenix, Chandler, Scottsdale, and Fort Huachuca, Arizona.

      We incorporated in Arizona in 1981 and maintain our principal executive offices at 4615 East Elwood Street, Phoenix, Arizona 85040. Our telephone number is (480) 966-5394. Our Internet Web Site addresses are as follows:

      Our fiscal year is from September 1 to August 31. Unless otherwise stated, references to the years 2003, 2002, and 2001 relate to the fiscal years ended August 31, 2003, 2002, and 2001, respectively.

Industry Background

      The adult education market is a significant and growing component of the post-secondary education market, which is estimated by the U.S. Department of Education to be a more than $280 billion industry. According to the U.S. Department of Education, over 5.9 million, or 39% of all students enrolled in higher education programs are over the age of 24. This number is projected to reach 6.6 million in 2007 and 6.9 million in 2012. The market for adult education should continue to increase as working adults seek additional education and training to update and improve their skills, to enhance their earnings potential, and to keep pace with the rapidly expanding knowledge-based economy.

      Many working adults are seeking accredited degree programs that provide flexibility to accommodate the fixed schedules and time commitments associated with their professional and personal obligations. Our format enables working adult students to attend classes and complete coursework on a more convenient schedule. Many universities and emerging technology-based education and training companies currently do not effectively address the unique requirements of working adult students due to the following specific constraints:

	•	Traditional universities and colleges were designed to fulfill the educational needs of conventional, full-time students ages 18 to 24, who remain the primary focus of these universities and colleges. This focus has resulted in a capital-intensive teaching/ learning model that may be characterized by:

	•	a high percentage of full-time tenured faculty with doctoral degrees;
	•	fully-configured library facilities and related full-time staff;

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	•	dormitories, student unions, and other significant plant assets to support the needs of younger students; and
	•	an emphasis on research and the related staff and facilities.

	•	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.
	•	Traditional universities and colleges are also limited in their ability to market to or provide the necessary customer service for working adult students because it requires the development of additional administrative and enrollment infrastructure. University of Phoenix maintains a single-minded focus on serving the needs of working adult students.

      We believe that our track record for enrollment and revenue growth is attributable to our offering a comprehensive service combining educational content, teaching resources, and customer service with a format that is accessible and easy to use for students and corporate clients.

Our Offerings

      We believe that our more than 25-year history as a provider of higher education for working adults enables us to provide our students with an effective education and responsive customer service. Our expertise in designing curriculum, recruiting and training faculty, monitoring academic quality, and providing a high level of support services to students allows us to offer the following:

	•	Accredited Degree Programs. We currently offer 18 degree programs in business, education, information technology, criminal justice, and nursing. The University of Phoenix is accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools. This regional accreditor or one of the other regional accrediting associations accredit the client institutions of the Institute for Professional Development. This accreditation enables us to grant Associates, Bachelors, Masters, and Doctoral degrees, while also providing students with access to federal financial aid programs.
	•	Experienced Faculty Resources. While substantially all of our faculty are working professionals, we require each member of our faculty to possess either a Masters or Doctoral degree and to have five years of recent professional experience in a field related to the subject they teach. We have well-developed methods for hiring and training our faculty, which include peer reviews of newly hired instructors by other members of the faculty, training in grading and instructing students, and a teaching mentorship with a more experienced faculty member. Our classes are designed to be small, with an average of one instructor for every fifteen students. Faculty members are also required to be accessible to students by maintaining office hours.
	•	Current and Relevant Standardized Programs. We use content experts selected from our approximately 17,100 faculty to design our curriculum. This enables us to offer current and relevant standardized programs to our students. We also utilize an institution-wide system to assess the educational outcomes of our students and improve the quality of our curriculum and instructional model. This system evaluates the cognitive and affective skills of our students upon registration and upon conclusion of the program and also surveys students two years after graduation in order to assess the quality of the education they received.
	•	Benefits to Employers. The employers of our students often provide input to faculty members in designing curriculum, and class projects are typically based on issues relevant to the companies that employ our students. Our classes are taught by practitioner faculty members who emphasize the skills desired by employers. In addition, the time flexibility provided by our classes further benefits employers since it avoids conflict with their employees’ work schedules. A recent survey by University of Phoenix

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		showed that approximately 50% of its students receive some level of tuition assistance from their employers.

Strategy

      Our objective is to be the leading provider of accessible, high quality education for working adults and a preferred provider of workplace training to their employers. We are managed as a for-profit corporation in a higher education industry served principally by not-for-profit providers. By design, we treat our adult students as our primary customers and the employers that provide tuition assistance to their employees through tuition reimbursement plans or direct bill arrangements as our secondary customers. We plan to implement the following strategic initiatives to accomplish this objective:

      Establish New University of Phoenix Campuses and Learning Centers. University of Phoenix plans to continue the addition of campuses and learning centers throughout the United States and Canada. 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 Institute for Professional Development Relationships. Institute for Professional Development plans to enter into additional long-term contracts with private colleges and universities in proximity to metropolitan areas throughout the United States.

      Expand Educational Programs. We will continue to respond to the changing educational needs of working adults and their employers by introducing new undergraduate and graduate degree programs as well as training programs. To its degree offerings, University of Phoenix has recently added Doctor of Business Administration, Doctor of Education in Educational Leadership, and Doctor of Health Administration and a specialization in Finance to its Bachelor of Science in Business. To its certificate programs, University of Phoenix has recently added Special Education and Call Center Professional certificates and graduate certificates in Accounting, Marketing, and Human Resource Management. We believe that expanding our program offerings will help us improve our market position as a provider of higher education and training for working adults. We currently have a full-time staff of approximately 55 people involved in our centralized curriculum development process. Potential additions to our current offerings include:

	•	new degree programs, such as a Bachelor of Science in Education, a Bachelor of Science in Security, a Master of Management — International, a Master of Science in Public Safety and Security, and a Master of Social Work;
	•	new specializations in Public Administration and Retail Management to the Bachelor of Science in Business, a specialization in software engineering to the Bachelor of Science in Information Technology, and a specialization in school counseling to the Master of Counseling;
	•	a certificate in Nursing/Health Care Education; and
	•	content area courses for teachers in Math, English, Science, and Social Studies to address the mandates of the “No Child Left Behind” program.

      Expand Access to Programs. We plan to continue expanding our distance education programs and services. Enrollments in distance education degree programs have increased to approximately 80,100 in 2003 from approximately 10,700 in 1999. University of Phoenix Online courses and programs are available via the Internet 24 hours a day, 7 days a week.

      International Expansion. We believe that the international market for our services is a major growth opportunity. The U.S. is the most common destination for international students studying abroad. We believe

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      Effective September 2002, Western International University entered into an agreement with Apollo International, Inc. that allows for Western International University’s educational offerings to be made available in India. Apollo International, Inc. will manage the relationship with the entities in India that are offering the Western International University programs while Western International University maintains the educational content and the quality of the programs. In April 2003, Western International University entered into an agreement with CIBT Canadian Institute of Business and Technology Corp. and CIBT School of Business (“CIBT”) that allows for Western International University’s educational offerings to be made available in Beijing, China starting in 2004. CIBT will manage the operational component of the program in China while Western International University will maintain the educational content and quality of the programs.

      We will continue to monitor and assess the feasibility of expanding our educational programs to other international markets through similar licensing agreements. Currently we do not plan to independently open facilities outside of North America.

Teaching/Learning Model-Degree Programs

      Our teaching/learning model used by University of Phoenix and Institute for Professional Development client institutions was designed specifically to meet the educational needs of 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 learning team. Learning team sessions are an integral part of each course. They facilitate in-depth review of and reflection on course materials. Members work together to complete assigned group projects, and develop communication and teamwork skills. 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 professional experience in business, industry, government, or other professions. In this way, faculty members are able to share their professional knowledge and skills with the students.

      Components of our teaching/learning model include:

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		matter in which they seek to instruct. To help promote quality delivery of the curriculum, all faculty members are required to:
		• complete an initial assessment conducted by staff and faculty;
		• receive training in grading, facilitation of the teaching/learning model, and oversight of learning team activities;
		• complete a mentorship with an experienced faculty mentor; and
		• receive ongoing performance evaluations by students, peer faculty, and staff, which are used to establish developmental plans to improve individual faculty performance and to determine continued eligibility of faculty members to provide instruction.
An Active Learning Environment		Courses are designed to encourage and facilitate collaboration between students and interaction with the instructor. The curriculum requires a high level of student participation for purposes of enhancing learning and increasing the student’s ability to work as part of a team.
Library and Other Learning Resource Services		Students and faculty members are provided with electronic and other learning resources for their information and research needs. Students can access these services directly through the Internet or with the help of a Learning Resource Services research librarian.
Sequential Enrollment		Students enroll in and complete classes sequentially, rather than concurrently. This permits working adults to focus their attentions and resources on one subject at a time, and creates a better balance between learning and ongoing personal and professional responsibilities.
Academic Quality		We have an Academic Quality Management System designed to maintain and improve the quality of programs and academic and student services. This system includes the Adult Learning Outcomes Assessment, which seeks to measure student growth in both the cognitive (subject matter) and affective (educational, personal, and professional values) skills.

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Structural Components of Teaching/ Learning Model

      While adults over the age of 24 comprise approximately 39% of all higher education enrollments in the United States, the mission of most accredited four-year colleges and universities is to serve 18 to 24 year-old students and conduct research. University of Phoenix and Institute for Professional Development client institutions acknowledge the differences in educational needs between older and younger students and provide programs and services that allow working adults to earn their degrees without major disruption to their personal and professional lives.

      The educational literature suggests that working adults require a different teaching/learning model than that designed for traditional, younger students. Working adults seek accessibility, curriculum consistency, time and cost effectiveness, and learning that has an immediate application to the workplace.

      The facilitating elements of our teaching/learning model include:

      The College for Financial Planning currently offers text-based self-study programs for students preparing for the Certified Financial Planner designation and for students seeking further education in financial services, including Master of Science degrees in Financial Planning, Financial Analysis, and Finance. The College for Financial Planning has modularized the learning content for these programs to position them for alternative delivery formats, including but not limited to classroom and online modalities. With the exception of the Masters degrees, these same programs are offered in a classroom-based format through University of Phoenix campuses as well as independent classroom providers and we also offer them through Internet online-based formats. Most of the College for Financial Planning’s students are employed, and approximately 82% have a bachelors degree or higher. The College for Financial Planning’s programs are developed internally by 13 full-

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      Western International University’s teaching/learning model has similar characteristics to the teaching/ learning model used by University of Phoenix and Institute for Professional Development client institutions, including the use of part-time practitioner faculty, standardized curriculum, computerized learning resources, and leased facilities. However, Western International University provides educational programs in two-month sessions and, while its students are primarily working adults, Western International University also serves international and domestic students who are between the ages of 18 and 24. Western International University’s faculty consists of 15 full-time faculty and 279 part-time faculty. Western International University’s faculty are working professionals and possess earned Masters or Doctoral degrees and participate in a selection and training process that is similar to that at University of Phoenix.

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Degree Programs and Services

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      University of Phoenix also offers 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, for the potential award of credit. The average number of credits awarded to the approximately 2,650 University of Phoenix undergraduate students who utilized the process in 2003 was approximately 6 credits of the 120 required to graduate. The Council for Adult and Experiential Learning reports that over 1,500 regionally accredited colleges and universities currently accept credits awarded for college level learning gained through experience.

      Institute for Professional Development Services. The Institute for Professional Development’s contracts with its client institutions are individually negotiated and the actual services may vary from one client institution to another. Services to its client institutions may include:

	•	conducting market research;
	•	assisting with curriculum development;
	•	developing and executing marketing strategies;
	•	marketing and recruiting of students;
	•	performing student accounting and account receivable management;
	•	recommending operational and administrative infrastructures;
	•	offering faculty development and training;
	•	developing and implementing financial accounting and academic quality management systems;
	•	assessing the future needs of adult students;
	•	assisting in developing additional degree programs suitable for the adult higher education market;
	•	assisting in seeking approval from the respective regional accrediting association for new programs; and
	•	training of adult program staff.

      In consideration for its services, the Institute for Professional Development receives a contractual share of revenues, which are negotiated with each client institution.

      In order to facilitate the sharing of information related to the operations of their respective programs, the Institute for Professional Development, its client institutions, and University of Phoenix formed the Consortium for the Advancement of Adult Higher Education. This consortium shares best practices in adult higher education. Conference topics include outcomes assessment, educational technology, leadership and continuous process improvement.

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      Institute for Professional Development client institutions offer the following programs with our assistance:

      The Institute for Professional Development assisted programs also include a limited number of general education courses, certificate programs, and areas of specialization.

      College for Financial Planning Programs. The College for Financial Planning currently offers Master of Science degree programs with majors in Financial Planning, Financial Analysis, and Finance. The Financial Planning major focuses on the fundamentals of financial planning and meets the educational requirement of the CFP Board of Standards, Inc. for taking the CFP National Board Examination. The Financial Analysis major incorporates the CFA Body of Knowledge learning objectives offered by the Association for Investment Management and Research and helps prepare students for the CFA Examinations.

      The College for Financial Planning currently offers the following certification programs:

	•	Accredited Asset Management Specialist
	•	Registered Paraplanner
	•	Chartered Mutual Fund Counselor
	•	Chartered Retirement Plans Specialist
	•	Chartered Retirement Planning Counselor

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      Western International University Programs. Western International University currently offers the following degree programs:

	•	Associate of Arts
	•	Bachelor of Arts in Behavioral Science
	•	Bachelor of Arts in Human Resource Management
	•	Bachelor of Science in Accounting
	•	Bachelor of Science in Business

	•	Areas of Specialization

	•	E-Commerce
	•	Finance
	•	Human Resources Management
	•	Marketing

	•	Bachelor of Science in Business Administration
	•	Bachelor of Science in Information Technology
	•	Bachelor of Science in International Business
	•	Bachelor of Science in Management
	•	Master of Business Administration in Finance
	•	Master of Business Administration in International Business
	•	Master of Business Administration in Information Technology
	•	Master of Business Administration in Management
	•	Master of Business Administration in Marketing
	•	Master of Science in Information Technology
	•	Master of Science in Information Systems Engineering

      Western International University also offers professional studies programs in Accountancy, Certified Financial Planner Certification Education Program, and the Graduate Certificate in Human Resource Management.

Distance Education

      At August 31, 2003, there were approximately 80,100 degree seeking students utilizing our distance education delivery systems, approximately 99% of whom are enrolled at University of Phoenix Online. Our distance education components consist primarily of the following:

      University of Phoenix Online. University of Phoenix Online has developed its system to be easily accessible and familiar to most students. All the student needs to participate in University of Phoenix Online’s classes is a Pentium-class personal computer, a 56.6K modem, and an Internet service provider.

      Each Online class adheres to a set framework thus providing procedural instructional consistency. Prior to the beginning of each class, each student either orders textbooks online from a third party or pays a fee to access rEsource, our online delivery method for course materials. Every class consists of a series of eight newsgroups. The main newsgroup is designated for class discussion, there is an assignments newsgroup to which students submit their assignments, a chat newsgroup for students to discuss non-content related topics, a course materials newsgroup that houses the syllabus and lectures for the class, and four newsgroups which function as forums for the Learning Team assignments.

      Each week, the instructor posts a lecture to the classroom course materials newsgroup. Students log on and read the lecture or print the lecture to read at their convenience. Throughout the week, students participate in class discussions, based on the class content for that week, which is actively facilitated by the instructor. Both the instructor and students are expected to substantively engage in content discussions five out of seven days each class week. In addition to the class participation requirement, students are also expected to complete individual assignments and to work within a small group of 3-5 students on a specific Learning Team assignment. The Learning Team component of the University of Phoenix model not only emphasizes the content focus for the course, but also the importance for successful professionals to acquire team process skills.

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      College for Financial Planning. Business and investment professionals that require continuing professional education as part of their professional certification or for employment requirements may complete individual courses online utilizing most Internet browsers. These programs are mostly short courses designed to focus on important and emerging topics relevant to the students’ trade or profession. The students interact primarily with our Web-based software programs with little or no faculty involvement.

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

Acquisition Strategy

      We periodically evaluate opportunities to acquire businesses and facilities. In evaluating such opportunities, management considers, among other factors, location, demographics, price, the availability of financing on acceptable terms, competitive factors, and the opportunity to improve operating performance through the implementation of our operating strategies. We have no current commitments with regard to potential acquisitions.

Customers/ Students

      The following is a breakdown of our students by the level of program they are seeking, at August 31, 2003:

      We consider the employers that provide tuition assistance to their employees through tuition reimbursement plans or direct bill arrangements our secondary customers.

      Based on student surveys of incoming students in the first half of 2003, the average age of University of Phoenix’s students is in the mid-thirties, approximately 56% are women and 44% are men. We believe that the demographics of students enrolled in Institute for Professional Development assisted programs are similar to those of University of Phoenix. The approximate age percentage distribution of incoming University of Phoenix students is as follows:

      Based on student surveys, the average age of students at the College for Financial Planning is 37, with 79% falling in the age range of 26-50, approximately 36% are women and 64% are men. Most of the College for Financial Planning’s students are employed, and approximately 82% have obtained a bachelors degree or higher.

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      Institute for Professional Development client institutions have historically consisted of small private colleges; however, the Institute for Professional Development also targets larger institutions of higher education that are in need of marketing, prior learning assessment, and curriculum consulting. The Institute for Professional Development understands 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, the Institute for Professional Development 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.

      We work 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. University of Phoenix has also formed educational partnerships with various corporations to provide programs specifically designed for their employees.

      University of Phoenix Online was granted two overseas military contracts in 2003. They allow University of Phoenix Online to offer graduate degree programs to U.S. military personnel on-site at military bases in Europe, Asia, and the Pacific Rim.

Marketing

      To generate interest among potential students, we engage in a broad range of activities to inform the public about our teaching/learning model and the programs offered. These activities include:

      Internet Marketing. We advertise extensively on the Internet using banner advertisements on targeted sites, as well as paying other Web sites, such as education portals, a fee on a per lead basis. We also benefit from non-paid Internet referrals, including leads directed to our domain names as a result of Web search using Internet search engines. We believe these prospective students are more likely to enroll in our programs because these prospects are actively seeking information about degree programs.

      Direct Mail. Direct mail is effective at reaching the working adult population that expresses interest in training, education, and self-improvement. Direct mail also enables us to target specific career fields, such as Accounting, Business, Education, Information Technology, Criminal Justice, and Nursing. We currently purchase education-related mailing lists from numerous suppliers who specialize in this area. In addition, we track leads for every direct mail campaign by allowing potential students the opportunity to respond using the following methods:

	•	mailing a postage paid reply card or envelope;
	•	calling us at a specific 1-800 number; or
	•	directing the potential student to one of our specific URL addresses on the Internet that are used to track individual marketing campaigns for reach and effectiveness.

      Re-Marketing. Re-marketing efforts include both direct mail and e-mail sent to existing leads in our database. Re-marketing is a very successful part of our marketing campaign because of our growing database of “qualified” prospects.

      Referrals. Based on our recent estimates, approximately 50% of our new students are referred by their employers, co-workers, current students, alumni, family, and friends.

      Print and Broadcast. We rely on print and broadcast advertising to target new prospects and to assist with building brand recognition.

Competition

      The higher education market is highly fragmented and competitive with no private or public institution enjoying a significant market share. We compete 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. We expect that these colleges and

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      We believe that the competitive factors in the higher education market include the following:

	•	the ability to provide easy and convenient access to programs and classes;
	•	reliable and hi