Apollo Group Financial Chief: 'No Further Insight' Into SEC Probe

The for-profit educator said in a conference call with investors that it became aware of the probe last week. Shares were recently trading down 17.2% at $60.41 after closing at $72.97; the company's stock was the most active after- hours mover on the Nasdaq stock exchange.

"Based on the information that has been disclosed to Apollo Group," the company stated in its earnings press release, "The scope, duration and outcome of the inquiry cannot be determined at this time."

Finance Chief Brian Swartz reiterated that the company didn't have "any further insight" on a conference call with investors, adding, "We believe that our revenue recognition policies are appropriate and in accordance with GAAP."

The company also noted that its 10-Q SEC filing, which includes its quarterly report, is signed by auditors.

For-profit colleges have come under fire numerous times for their methods of recognizing revenue, most of which is derived from government loans. Apollo received a letter from the SEC's Division of Corporate Finance related to its revenue recognition in February and said in its conference call that, "to our knowledge," it answered all of that division's questions. The current probe comes from the SEC's Division of Enforcement.

This summer, the Government Accountability Office issued a report encouraging greater oversight of admissions to ensure that qualified students are admitted to schools, even open-access schools such as Apollo's University of Phoenix.

Co-Chief Executive Chas Edelstein said on the company's conference call that the company is working to "ensure that only students who have a reasonable chance to succeed enroll in our universities," as that improves the chance that they will repay their loans.

Apollo's bad debt expense - the money it loses on loans it deems unrecoverable - rose to 4.2% from 3% in the fourth quarter from a year earlier.

-By Melissa Korn, Dow Jones Newswires; 212-416-2271; melissa.korn@dowjones.com

  (END) Dow Jones Newswires
  10-27-091821ET
  Copyright (c) 2009 Dow Jones & Company, Inc.