Selling and promotional expenses increased by 51

As a percentage of net revenue,instructional costs and services declined 380 basis points to 38.9 versus 42.7in the prior year quarter. Additionally, the Company continues to benefit from lowerclassroom lease expenses and depreciation as a percentage of net revenue. Baddebt expense declined 60 basis points as a percentage of net revenue, primarilydue to a continued focus on front end collection efforts and improved studentretention rates. As compared to the fourth quarter of fiscal 2008, bad debtexpense increased 60 basis points, as a percentage of net revenue, due, in part,to the risk of collecting aged receivables given the current economicenvironment. Selling and promotional expenses increased by $51.7 million, or 29.2, to $228.6million for the three months ended November 30, 2008, from $176.9 million in thethree months ended November 30, 2007.

As a percentage of net revenue, sellingand promotional expenses increased 90 basis points to 23.5, from 22.6 in theprior years first quarter. This was mainly a result of an 80 basis pointincrease in other selling and promotional expenses principally driven byincreases in the Companys corporate marketing function, including additionalemployees. The Company continues to invest in marketing to build greater brandidentity as well as to drive and support future enrollment growth. General and administrative ("G&A") expenses for the three months ended November30, 2008, increased by $6.9 million, or 13.5, to $58.2 million, from $51.3million in the three months ended November 30, 2007.

G&A, as a percentage of netrevenue, decreased to 6.0 in the first quarter of 2009, versus 6.6 in thecomparable period a year ago. The 60 basis point decline is mainly attributableto a decrease in legal costs, share-based compensation expense, and other G&Aexpense, somewhat offset by higher employee compensation expense, as apercentage of net revenue. Financial and Operating MetricsBelow are Apollo Groups unaudited financial data and operating metrics for thefirst quarter of fiscal 2009.Q1 2009 Revenues (in thousands)Degree Seeking Gross Revenues (1)$944,356Less: Discounts and other (42,870) Degree Seeking Net Revenues (1) 901,486Non-degree Seeking Revenues (2) 9,281Other, net of discounts (3) 60,200$970,967Revenue by Degree Type (in thousands)(1) Associates $327,935Bachelors 401,633Masters 197,800Doctoral16,988 Less: Discounts and other (42,870)$901,486Degreed Enrollment (rounded to hundreds)(4)Associates161,800Bachelors 146,800Masters 69,800 Doctoral6,500384,900Degree Seeking Gross Revenues per DegreedEnrollment(1) (4)Associates $2,027Bachelors 2,736Masters 2,834Doctoral2,614All degrees (after discounts) 2,342New Degreed Enrollments (rounded tohundreds)(5) Associates45,800 Bachelors 26,100 Masters 13,300 Doctoral1,10086,300 (1)Represents revenue from students enrolled in University of Phoenix degree programs and Western InternationalUniversity associate's degree programs. Also includes revenue from students participating in University ofPhoenix certificate programs of at least 18 credit hours in length with some course applicability into a related degree program.(2)Represents revenue from students participating in University of Phoenix certificate programs less than 18 hours in length, certificate programs with no applicability into a related degree program, single courses and continuing education courses.(3)Represents revenues from IPD, CFP, Western International University (excluding associate's degree students), Insight Schools, Apollo Global and other.(4)Represents individual students enrolled in a University of Phoenix degree program or Western InternationalUniversity associates degree program who attended acourse during the quarter and did not graduate as of the end of the quarter. Degreed Enrollment for a quarteralso includes any student who previously graduated from one degree program and started a new University ofPhoenix degree program in the quarter (for example, a graduate of the associates degree program returns for a bachelors degree or a bachelors degree graduate returns for a masters degree).