Item 1.01 Entry into a Material Definitive Agreement.
On January 4, 2008, Apollo Group, Inc. entered into a five-year $500 million credit agreement (the
“Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent, and various lenders
named therein. The Credit Agreement provides for a $500 million revolving credit commitment, which
may be used (i) for revolving loans, (ii) for swingline advances, subject to a sublimit of $25
million, and (iii) to request the issuance of letters of credit on our behalf, subject to a
sublimit of $200 million. We may, subject to customary conditions, increase the commitments by up
to an additional $250 million, subject to, among other things, the receipt of commitments for the
increased amounts. The Credit Agreement also provides for a
multi-currency sublimit facility for borrowings in certain specified
currencies up to $300 million. The facility is unsecured and guaranteed by our material domestic subsidiaries.
The revolving loans under the Credit Agreement bear interest at rates that, at our option, can be
either: (a) a base rate (the “ABR”) equal to the higher of (i) the administrative agent’s prime
rate, and (ii) the federal funds effective rate from time to time plus 0.5%, or (b) reserve and
cost adjusted LIBO rate plus an applicable rate specified in the Credit Agreement. The applicable
rate ranges from 0.50% to 0.825% based primarily on our leverage ratio. All swingline loans bear
interest at the ABR.
We are also required to pay a facility fee on the average daily amount of the aggregate commitment
available under the Credit Agreement (whether used or unused) that ranges from 0.125% to 0.175% per
annum, a letter of credit participation fee at a per annum rate equal to the then applicable rate
(based on our leverage ratio) on the average daily undrawn dollar amount of each letter of credit
plus the amount of unreimbursed draws under such letter of credit, and a letter of credit fronting
fee equal to 0.125% of the average daily undrawn dollar amount of each letter of credit plus the
amount of unreimbursed draws under such letter of credit, as well as customary administrative and
other charges.
The credit facility contains various customary representations, covenants and other provisions. In
addition, we are required to maintain a leverage ratio of consolidated total indebtedness to
consolidated EBITDA of 2.5 or less and a minimum coverage ratio of consolidated EBITDAR (EDITDA
plus rent expense) to consolidated interest expense plus rent expense of at least 1.75. Further,
we are required to maintain a minimum DOE ratio of 1.5. The DOE ratio is a consolidated composite
score determined by the Secretary of the Department of Education pursuant to regulations under
Title IV.
Certain of the lenders under the Credit Agreement or their affiliates have provided, and may in the
future provide, certain commercial, banking, financial advisory, and investment banking services in
the ordinary course of business for us and our subsidiaries, for which they receive customary fees
and commissions.
The foregoing description of the Credit Agreement does not purport to be complete and is qualified
in its entirety by reference to the Credit Agreement.
Item 2.02 Results of Operations and Financial Condition.
On January 8, 2008, we issued a press release regarding selected financial results for our fiscal
quarter ended November 30, 2007. A copy of the press release is furnished as Exhibit 99.1 to this
Current Report on Form 8-K.
This information in Item 2.02 of this Form 8-K and the exhibit attached hereto shall not be deemed
“filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or otherwise subject to the liabilities under that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, regardless of any general incorporation language in such filing.