Phoenix-based Apollo Group, parent company of the University of Phoenix, said Monday it has met Securities and Exchange Commission requirements regarding the filing of delinquent financial reports and employee stock options.
Brian Mueller, president of Apollo Group, said in a statement the company has updated and improved internal auditing controls dealing with financial reports as well as the sale of stock options to company employees, including executives.
Mueller earlier said he believed his company had complied with the filing requirement laws that prohibits the backdating of shares sold at lower prices sold to company officials.
“We have significantly strengthened the governance and internal controls of the company, including the implementation of a new process for granting stock options,” he said.
He said an independent investigation by a special committee and an outside firm hired by his company determined that 57 of the 100 total stock option grants made from 1994 through September, 2006 used incorrect measurement dates for accounting purposes.
The company also identified four material weaknesses in internal controls over financial reporting, which, Mueller said, have been corrected.
“From a governance standpoint, Apollo is now a much stronger company,” Mueller said. “And we are confident in our procedures going forward.”
The SEC is to decide whether the Apollo Group auditing and stock option sales comply with federal requirements.
The U.S. Attorney for the Southern District of New York had issued subpoenas to Apollo Group and 45 other companies a year ago as part of an investigation by the SEC over stock option grants.
At issue was whether the companies might have backdated stock option grants during fiscal 2000-04, an action that raises questions about the possible financial benefits of its executives by offering shares at lower prices.
In addition, the company also submitted financial reports for fiscal quarters ending May 31, 2006, Nov. 30, 2006 and Feb. 28, 2007.
Meanwhile, Apollo Group’s net income for the second quarter of fiscal 2007 was $60.3 million compared with $79.1 million for three months ended Feb. 28, Consolidated revenues for the three months ended Feb. 28, totalled $608.7 million, a 6.7 percent increase over the second quarter of fiscal 2006.
Total student enrollment increased by 10.2 percent, with the University of Phoenix accounting for 92.9 percent of total tuition, according to Mueller.
Apollo Group, which was founded in 1973, provides educational programs and services to 100 campuses and 159 learning centers in 39 states as well as Puerto Rico, Alberta, British Columbia, the Netherlands and Mexico.