Apollo Group Class Action

DECEMBER 2011 - According to the Notice:

Description of the Action

The Action began in October 2004. On January 16, 2008, after more than four weeks of trial, the jury returned the Jury Verdict in favor of the Plaintiff Class identified above and against Defendants. On April 6, 2011, Judgment was entered against the Defendants consistent with the Verdict, awarding damages
of $5.55 for each share purchased within the Class Period and held through September 21, 2004, subject to the limitation of damages relating to reductions required by the provisions of the Private Securities Litigation Reform Act of 1995 (“PSLRA”) and any set-offs determined by the Court to be legally required, plus interest (the “Judgment”). As explained below, the Action has been proceeding since entry of Judgment with many issues remaining unresolved and still being contested.

Establishment of Common Fund for Recovery

Pursuant to the terms of the Agreement, the Common Fund, consisting of One Hundred Forty-Five Million Dollars ($145,000,000.00) in cash and any accumulated interest thereon, has been established. The Common Fund will be used to pay Class Members amounts based on the Judgment referred to above, minus the amount of attorneys’ fees and costs awarded by the Court on a pro rata basis (the “Net Common Fund”) as calculated below.

Each Class Member who timely submits a valid Proof of Claim (“Authorized Claimant”) will receive that portion of the Net Common Fund determined by comparing the Authorized Claimant’s Recognized Loss on the Class Member’s eligible shares with the total Recognized Loss suffered by all Class Members who submit valid Proofs of Claim (“Authorized Claimants”). The approximate per share recovery is dependent upon the number of eligible shares for which valid claims are timely submitted; when during the Class Period an Authorized Claimant purchased shares of Apollo common stock; the purchase price paid; any sales of Apollo common stock during the Class Period; the number of shares purchased during the Class Period that were held continuously through September 21, 2004; the number of shares sold during the Class Period and when they were sold; whether each such share is impacted by the 90-day look-back provision of the PSLRA, thus reducing or eliminating any recovery and the amount received. Those factors may affect whether an Authorized Claimant receives the amount of $5.55 plus interest per share (minus attorneys’ fees and costs per share) or some greater or lesser amount.

To the extent there are sufficient funds in the Net Common Fund, Authorized Claimants will receive an amount equal to the “Authorized Claimant’s Recovery” as defined in the Method of Calculation of Claimant Class Members’ Recognized Losses and Recovery (“Method of Calculation”) on page 8 below, to which Class Members are referred. If, however, the total amount of all Authorized Claimant’s Recovery is greater than the Net Common Fund, then each Authorized Claimant will receive the percentage of the Net Common Fund that each Authorized Claimant’s Recovery bears to the total of all Authorized Claimants’ Recovery, and thus the Recovery will be less than the Judgment minus attorneys’ fees and costs. If the total amount of all Authorized Claimants’ Recovery is less than the remainder of the Net Common Fund, then Authorized Claimants will receive more than their Authorized Claimant’s Recovery in the same percentage that each Authorized Claimant’s Recovery bears to the total of all Authorized Claimants’ Recovery, and thus the recovery may be greater than the Judgment minus attorneys’ fees and costs.

Reasons for the Agreement

Lead Plaintiff’s principal reason for entering into the Agreement was to secure the expeditious and efficient distribution of the recovery to the Class and to eliminate further and prolonged delays caused by continued litigation between the Parties. This Action has been pending for seven years and the Verdict was entered almost four years ago. Lead Plaintiff supports the Agreement because it secures an amount certain now, as the Common Fund. Lead Plaintiff also believes that the Agreement will fairly, reasonably and adequately assure a recovery consistent with the Judgment to Class Members who submit valid claims, without the risk of prolonged and potentially successful challenges raised by Defendants to claims administration, which could result in a significant reduction in the amount distributed to the Class. Lead Plaintiff believes that the benefits achieved by this Agreement outweigh the risk of further and prolonged litigation with respect to individualized issues of reliance, likely appeals from any rulings with respect to the adjudication of that issue, possibly years into the future, and the risk of no recovery or a greatly diminished recovery for many Class Members.

Lead Plaintiff acknowledges that, absent the Agreement, there was a risk that under the unique facts and circumstances of this Action, it might not prevail on behalf of the Class as to all, or possibly any, of the post-judgment issues Defendants raised. Therefore, in the absence of the Agreement, Class Members might ultimately be determined to have a collective Recognized Loss that is substantially reduced and/or any distribution to them of their recovery might be delayed for several years as a consequence of the continuing litigation and any appeals therefrom.

While Defendants continue to deny all allegations of wrongdoing or liability whatsoever, they believe that the Agreement will eliminate the expense, risk, and uncertain outcome of the issues still being litigated and to bring finality to the Action so that Apollo can focus its resources on its business without the continued distraction of the Action.