Apollo Group Profit Falls 11 Percent on Lawsuit Costs

Apollo Group Inc., owner of the biggest for-profit university in the U.S. by enrollment, said quarterly net income fell 11 percent as the company set aside funds to cover the costs of a shareholder lawsuit.

Net income for the fiscal third quarter ended May 31 fell to $179 million, or $1.18 a share, from $201 million, or $1.26 a share, Phoenix-based Apollo said today in a statement distributed by PR Newswire. Revenue rose 28 percent to $1.34 billion.

Shareholders filed lawsuits against Apollo in 2004, charging that the company gave false and misleading information about the contents of a U.S. Department of Education program review, Apollo said. The cases were consolidated, and on June 23, the Ninth Circuit Court of Appeals ruled against Apollo. The company set aside $132.6 million to pay the costs of the suit, Apollo said.

“We are evaluating our available options to challenge the jury verdict or this ruling by the Court of Appeals,” the company said today in a filing with the U.S. Securities and Exchange Commission.

Apollo shares fell 66 cents, or 1.5 percent, to $42.47 at 4 p.m. today in Nasdaq Stock Market composite trading. The company has lost 40 percent in the past 12 months.

Bloomberg