UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

R

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 
For the quarterly period ended: MarchDecember 31, 2013
OR
OR
£

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to

Commission file number: 1-13988

DeVry Education Group Inc.

(Exact name of registrant as specified in its charter)

 

DELAWARE
(State or other jurisdiction of
Incorporation or organization)
36-3150143
(I.R.S. Employer
Identification No.)
3005 HIGHLAND PARKWAY
DOWNERS GROVE, ILLINOIS
(Address of principal executive offices)
36-3150143
(I.R.S. Employer
Identification No.)
60515
(Zip Code)

Registrant’s telephone number; including area code:

(630) 515-7700

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes R     No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes R     No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerR Accelerated filer£¨
Non-accelerated filer
£ (Do not check if a smaller reporting company)
Smaller reporting company£¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes £     No R

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: May 01, 2013January 29, 2014 — 62,886,88463,349,000 shares of Common Stock, $0.01 par value

 

DEVRY INC.

FORM 10-Q FOR THEQUARTERLY PERIOD ENDED MARCH 31, 2013

TABLE OF CONTENTS

Page No.
  
DEVRY EDUCATION GROUP INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2013
TABLE OF CONTENTS
Page No.
PART I – Financial Information
Item 1
— Financial Statements (Unaudited)
Consolidated Balance Sheets
3
Consolidated Statements of Income
4
Consolidated Statements of Comprehensive Income
5
Consolidated Statements of Cash Flows
6
Notes to Consolidated Financial Statements
7
Item 2
— Management’s Discussion and Analysis of Financial Condition and Results of Operations
26
            30
Item 3
— Quantitative and Qualitative Disclosures About Market Risk
39
            44
Item 4
— Controls and Procedures
40
            45
PART II – Other Information
Item 1
— Legal Proceedings
41
           45
Item 1A
— Risk Factors
42
           47
Item 2
— Unregistered Sales of Equity Securities and Use of Proceeds
42
           48
Item 4
— Mine Safety DisclosureDisclosures
43
           48
Item 6
— Exhibits
43
           48
Signatures
44
           50

2

DEVRY EDUCATION GROUP INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

  March 31,  June 30,  March 31, 
  2013  2012  2012 
  (Dollars in thousands) 
ASSETS:            
Current Assets:            
Cash and Cash Equivalents $277,994  $174,076  $329,440 
Marketable Securities and Investments  2,952   2,632   2,665 
Restricted Cash  7,151   2,498   13,194 
Accounts Receivable, Net  194,398   113,911   254,661 
Deferred Income Taxes, Net  24,459   27,845   23,019 
Refundable Income Taxes  657   40,278   8,212 
Prepaid Expenses and Other  40,414   39,874   34,177 
Total Current Assets  548,025   401,114   665,368 
Land, Buildings and Equipment:            
Land  66,063   65,172   66,019 
Buildings  389,345   386,028   382,972 
Equipment  485,570   433,949   422,271 
Construction In Progress  64,412   61,752   50,192 
   1,005,390   946,901   921,454 
Accumulated Depreciation  (435,427)  (387,924)  (374,904)
Land, Buildings and Equipment, Net  569,963   558,977   546,550 
Other Assets:            
Intangible Assets, Net  292,098   285,220   292,118 
Goodwill  566,497   549,961   567,316 
Perkins Program Fund, Net  13,450   13,450   13,450 
Other Assets  27,953   29,894   27,400 
Total Other Assets  899,998   878,525   900,284 
TOTAL ASSETS $2,017,986  $1,838,616  $2,112,202 
             
LIABILITIES:            
Current Liabilities:            
Accounts Payable $53,999  $63,094  $53,208 
Accrued Salaries, Wages and Benefits  81,290   77,741   72,443 
Accrued Expenses  76,442   76,243   56,328 
Advance Tuition Payments  17,226   20,580   23,257 
Deferred Tuition Revenue  180,498   77,551   349,200 
Total Current Liabilities  409,455   315,209   554,436 
Other Liabilities:            
Deferred Income Taxes, Net  58,354   62,276   63,693 
Deferred Rent and Other  92,037   96,496   91,415 
Total Other Liabilities  150,391   158,772   155,108 
TOTAL LIABILITIES  559,846   473,981   709,544 
             
NON-CONTROLLING INTEREST  9,017   8,242   8,168 
SHAREHOLDERS’ EQUITY:            
Common Stock, $0.01 Par Value, 200,000,000 Shares Authorized; 62,989,000; 64,722,000 and 65,831,000 Shares Issued and Outstanding at March 31, 2013, June 30, 2012 and March 31, 2012, Respectively  744   741   741 
Additional Paid-in Capital  285,242   272,962   267,285 
Retained Earnings  1,616,850   1,488,988   1,490,371 
Accumulated Other Comprehensive (Loss) Income  (5,934)  (5,889)  3,163 
Treasury Stock, at Cost (11,409,000, 9,386,000 and 8,266,000 Shares, Respectively)  (447,779)  (400,409)  (367,070)
TOTAL SHAREHOLDERS’ EQUITY  1,449,123   1,356,393   1,394,490 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $2,017,986  $1,838,616  $2,112,202 

  December 31, June 30, December 31, 
  2013 2013 2012 
           
  (Dollars in thousands) 
ASSETS:          
Current Assets:          
Cash and Cash Equivalents $262,034 $196,576 $216,567 
Marketable Securities and Investments  3,263  2,975  2,752 
Restricted Cash  11,873  7,019  3,894 
Accounts Receivable, Net  117,812  139,778  118,322 
Deferred Income Taxes, Net  31,169  29,758  25,008 
Refundable Income Taxes  6,969  154  23,827 
Prepaid Expenses and Other  42,625  49,685  31,695 
Current Assets of Divested Business  -  16,219  28,706 
Total Current Assets  475,745  442,164  450,771 
Land, Building and Equipment:          
Land  66,539  71,122  65,963 
Building  429,463  424,902  388,010 
Equipment  472,944  475,656  459,711 
Construction in Progress  44,115  33,724  48,143 
   1,013,061  1,005,404  961,827 
Accumulated Depreciation  (455,018)  (433,747)  (407,991) 
Land, Building and Equipment of Divested Business, Net  -  -  5,521 
Land, Building and Equipment, Net  558,043  571,657  559,357 
Other Assets:          
Intangible Assets, Net  293,720  281,998  294,177 
Goodwill  514,757  508,937  566,199 
Perkins Program Fund, Net  13,450  13,450  13,450 
Other Assets  33,398  33,025  30,112 
Other Assets of Divested Business  -  5,787  718 
Total Other Assets  855,325  843,197  904,656 
TOTAL ASSETS $1,889,113 $1,857,018 $1,914,784 
           
LIABILITIES:          
Current Liabilities:          
Accounts Payable $62,721 $55,131 $60,383 
Accrued Salaries, Wages and Benefits  77,447  88,444  63,607 
Accrued Expenses  69,259  74,451  71,432 
Deferred and Advance Tuition  97,725  97,478  140,576 
Current Liabilities of Divested Business  -  713  1,530 
Total Current Liabilities  307,152  316,217  337,528 
Other Liabilities:          
Deferred Income Taxes, Net  59,941  60,103  64,444 
Deferred Rent and Other  91,054  82,576  107,553 
Total Other Liabilities  150,995  142,679  171,997 
Other Liabilities of Divested Business  -  112  - 
TOTAL LIABILITIES  458,147  459,008  509,525 
COMMITMENTS AND CONTINGENCIES (NOTE 12)          
NON-CONTROLLING INTEREST  5,975  854  8,901 
SHAREHOLDERS' EQUITY          
Common Stock, $0.01 Par Value, 200,000,000 Shares Authorized: 63,332,000, 62,946,000 and 63,287,000 Shares Issued and Outstanding at December 31, 2013, June 30, 2013 and December 31, 2012, Respectively  752  745  744 
Additional Paid-in Capital  304,807  291,269  280,901 
Retained Earnings  1,599,985  1,575,009  1,560,130 
Accumulated Other Comprehensive Loss  (25,573)  (17,101)  (6,696) 
Treasury Stock, at Cost (11,661,000, 11,581,000 and 11,079,000 Shares, Respectively)  (454,980)  (452,766)  (438,721) 
TOTAL SHAREHOLDERS' EQUITY  1,424,991  1,397,156  1,396,358 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,889,113 $1,857,018 $1,914,784 
The accompanying notes are an integral part of these consolidated financial statements.

3

DEVRY EDUCATION GROUP INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands Except Per Share Amounts)

(Unaudited)

  For the Quarter Ended
March 31,		  For the Nine Months Ended
March 31,		 
  2013  2012  2013  2012 
             
REVENUES:                
Tuition $472,239  $505,651  $1,400,199  $1,488,432 
Other Educational  36,513   35,156   96,533   95,462 
Total Revenues  508,752   540,807   1,496,732   1,583,894 
COSTS AND EXPENSES:                
Cost of Educational Services  241,020   244,195   726,966   723,655 
Student Services and Administrative Expense  192,100   201,158   572,955   596,125 
Restructuring Expenses  2,029   -   11,513   - 
Asset Impairment Charges  -   -  ��-   75,039 
Total Operating Costs and Expenses  435,149   445,353   1,311,434   1,394,819 
Operating Income  73,603   95,454   185,298   189,075 
INTEREST AND OTHER (EXPENSE) INCOME:                
Interest Income  415   110   1,206   520 
Interest Expense  (756)  (650)  (3,006)  (1,653)
Net Gain on Sale of Assets  -   -   -   3,695 
Net Interest and Other (Expense) Income  (341)  (540)  (1,800)  2,562 
Income Before Income Taxes  73,262   94,914   183,498   191,637 
Income Tax Provision  16,102   27,610   43,292   57,741 
NET INCOME  57,160   67,304   140,206   133,896 
Net (Income) Loss Attributable to Non-controlling Interest  (339)  (173)  (1,110)  (416)
NET INCOME ATTRIBUTABLE TO DEVRY INC. $56,821  $67,131  $139,096  $133,480 
                 
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO DEVRY INC. SHAREHOLDERS:                
Basic $0.89  $1.01  $2.16  $1.97 
Diluted $0.88  $1.00  $2.15  $1.96 
                 
Cash Dividend Declared per Common Share $-  $-  $0.17  $0.15 

  For the Three Months
Ended December 31,		 For the Six Months Ended
December 31,		 
  2013 2012 2013 2012 
REVENUES:             
Tuition $457,888 $471,881 $877,205 $920,566 
Other Educational  33,381  28,785  64,976  60,020 
Total Revenues  491,269  500,666  942,181  980,586 
OPERATING COSTS AND EXPENSES:             
Cost of Educational Services  242,997  240,244  484,732  479,697 
Student Services and Administrative Expense  185,046  183,743  374,205  374,762 
Gain on Sale of Assets  -  -  (1,918)  - 
Restructuring Expenses  4,664  9,484  16,329  9,484 
Total Operating Costs and Expenses  432,707  433,471  873,348  863,943 
Operating Income  58,562  67,195  68,833  116,643 
INTEREST (EXPENSE) INCOME:             
Interest Income  310  230  893  791 
Interest Expense  (1,052)  (759)  (2,052)  (2,250) 
Net Interest (Expense) Income  (742)  (529)  (1,159)  (1,459) 
Income from Continuing Operations Before
Income Taxes		  57,820  66,666  67,674  115,184 
Income Tax Provision  (8,492)  (14,604)  (10,195)  (29,126) 
Income from Continuing Operations  49,328  52,062  57,479  86,058 
DISCONTINUED OPERATIONS (NOTE 3):             
Loss from Operations of Divested Component  (1,387)  (1,290)  (17,711)  (4,948) 
Income Tax Benefit  467  452  1,463  1,936 
Loss on Discontinued Operations  (920)  (838)  (16,248)  (3,012) 
              
NET INCOME  48,408  51,224  41,231  83,046 
Net Income Attributable to Non-controlling Interest  (253)  (938)  (208)  (771) 
NET INCOME ATTRIBUTABLE TO
    DEVRY EDUCATION GROUP INC.		 $48,155 $50,286 $41,023 $82,275 
              
AMOUNTS ATTRIBUTABLE TO
    DEVRY EDUCATION GROUP INC.:		             
Income from Continuing Operations, Net of Income Taxes  49,075  51,124  57,271  85,287 
Loss from Discontinued Operations, Net of Income Taxes  (920)  (838)  (16,248)  (3,012) 
NET INCOME ATTRIBUTABLE TO
    DEVRY EDUCATION GROUP INC.		 $48,155 $50,286 $41,023 $82,275 
              
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO DEVRY EDUCATION GROUP INC. SHAREHOLDERS             
Basic:             
Continuing Operations $0.76 $0.79 $0.89 $1.32 
Discontinued Operations  (0.01)  (0.01)  (0.25)  (0.05) 
  $0.75 $0.78 $0.64 $1.27 
Diluted:             
Continuing Operations $0.75 $0.79 $0.88 $1.32 
Discontinued Operations  (0.01)  (0.01)  (0.25)  (0.05) 
  $0.74 $0.78 $0.63 $1.27 
              
Cash Dividends Declared per Common Share $0.17 $0.17 $0.17 $0.17 
The accompanying notes are an integral part of these consolidated financial statements.

4
4

DEVRY EDUCATION GROUP INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

(Unaudited)

  For the Three Months
Ended March 31,		  For the Nine Months
Ended March 31,		 
  2013  2012  2013  2012 
             
NET INCOME $57,160  $67,304  $140,206  $133,896 
OTHER COMPREHENSIVE INCOME , NET OF TAX                
Currency Translation Gain (Loss)  651   (1,392)  (218)  (12,581)
Change in Fair Value of Available -For- Sale Securities  111   97   173   15 
COMPREHENSIVE INCOME  57,922   66,009   140,161   121,330 
COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST  (526)  75   (1,164)  1,833 
COMPREHENSIVE INCOME ATTRIBUTABLE TO DEVRY INC. $57,396  $66,084  $138,997  $123,163 

  For the Three Months For the Six Months Ended 
  Ended December 31, December 31, 
  2013 2012 2013 2012 
              
NET INCOME $48,408 $51,224 $41,231 $83,046 
OTHER COMPREHENSIVE INCOME (LOSS),
     NET OF TAX		             
Currency Translation Loss  (8,030)  (1,279)  (8,654)  (869) 
Change in Fair Value of Available -For- Sale Securities  62  (5)  182  62 
COMPREHENSIVE INCOME  40,440  49,940  32,759  82,239 
COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE
    TO NON-CONTROLLING INTEREST		  60  (717)  153  (638) 
COMPREHENSIVE INCOME ATTRIBUTABLE
    TO DEVRY EDUCATION GROUP INC.		 $40,500 $49,223 $32,912 $81,601 
The accompanying notes are an integral part of these consolidated financial statements.

5

DEVRY EDUCATION GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

  For the Nine Months Ended
March 31,		 
  2013  2012 
  (Dollars in Thousands) 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net Income $140,206  $133,896 
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:        
Stock-Based Compensation Expense  12,090   12,891 
Depreciation  63,717   56,512 
Amortization  7,605   8,336 
Impairment of Goodwill and Intangible Assets  -   75,039 
Provision for Refunds and Uncollectible Accounts  62,432   73,058 
Deferred Income Taxes  (2,760)  (5,157)
Loss on Disposals of Land, Buildings and Equipment  1,664   805 
Unrealized Loss on Assets Held for Sale  6,250   - 
Realized Gain on Sale of Assets  -   (3,695)
Changes in Assets and Liabilities, Net of Effects from Acquisitions of Businesses:        
Restricted Cash  (4,653)  (10,886)
Accounts Receivable  (139,481)  (212,973)
Prepaid Income Taxes  40,434   (2,364)
Prepaid Expenses and Other  (6,218)  (3,028)
Accounts Payable  (9,095)  (11,327)
Accrued Salaries, Wages, Benefits and Expenses  10,812   (26,149)
Advance Tuition Payments  (3,527)  877 
Deferred Tuition Revenue  102,947   269,294 
NET CASH PROVIDED BY OPERATING ACTIVITIES  282,423   355,129 
CASH FLOWS FROM INVESTING ACTIVITIES:        
Capital Expenditures  (79,329)  (92,167)
Marketable Securities Purchases  (268)  (66)
Payment for Purchase of Business, Net of Cash Acquired  (31,386)  (250,150)
Cash Received from Sale of Assets  —   4,475 
NET CASH USED IN INVESTING ACTIVITIES  (110,983)  (337,908)
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from Exercise of Stock Options  1,774   6,041 
Proceeds from Stock Issued Under Employee Stock Purchase Plan  1,278   1,298 
Repurchase of Common Stock for Treasury  (48,353)  (124,160)
Cash Dividends Paid  (20,707)  (18,430)
Excess Tax Benefit from Stock-Based Payments  (332)  727 
Payment of Debt Financing Fees  -   (70)
NET CASH USED IN FINANCING ACTIVITIES  (66,340)  (134,594)
Effects of Exchange Rate Differences  (1,182)  (332)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  103,918   (117,705)
Cash and Cash Equivalents at Beginning of Period  174,076   447,145 
Cash and Cash Equivalents at End of Period $277,994  $329,440 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        
Cash Paid During the Period For:        
Interest $788  $742 
Income Taxes  9,383   49,226 
Non-cash Investing and Financing Activity:        
Declaration of Cash Dividends to be Paid  -   - 
Accretion of Non-controlling Interest Put Option  (335)  997 

  For the Six Months 
Ended December 31,		 
  2013 2012 
  (Dollars in thousands) 
CASH FLOW FROM OPERATING ACTIVITIES:       
Net Income $41,231 $83,046 
Loss from Discontinued Operations  16,248  3,012 
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:       
Stock Based Compensation Expense  9,860  8,370 
Depreciation  40,719  40,842 
Amortization  3,590  5,019 
Provision for Refunds and Uncollectible Accounts  37,274  40,777 
Deferred Income Taxes  1,699  2,075 
Loss on Disposal of Land, Building and Equipment  1,333  2,237 
Unrealized Loss on Assets Held for Sale  244  6,250 
Realized Gain on Sale of Assets  (1,918)  - 
Changes in Assets and Liabilities, Net of Effects from Acquisition of Businesses:       
Restricted Cash  (4,854)  (1,396) 
Accounts Receivable  (17,170)  (62,674) 
Prepaid Expenses and Other  1,338  29,040 
Accounts Payable  7,592  (1,449) 
Accrued Salaries, Wages, Benefits and Expenses  (23,279)  (11,590) 
Deferred and Advance Tuition  (589)  42,332 
Net Cash Provided by Operating Activities-Continuing Operations  113,318  185,891 
Net Cash Used by Operating Activities- Discontinued Operations  (197)  (5,686) 
NET CASH PROVIDED BY OPERATING ACTIVITIES  113,121  180,205 
CASH FLOWS FROM INVESTING ACTIVITIES:       
Capital Expenditures  (33,426)  (47,213) 
Payment for Purchase of Businesses, Net of Cash Acquired  (12,343)  (31,386) 
Marketable Securities Purchased  (106)  (82) 
Cash Received on Sale of Assets  8,662  - 
Net Cash Used in Investing Activities-Continuing Operations  (37,213)  (78,681) 
Net Cash Used in Investing Activities- Discontinued Operations  -  (972) 
NET CASH USED IN INVESTING ACTIVITIES  (37,213)  (79,653) 
CASH FLOWS FROM FINANCING ACTIVITIES:       
Proceeds from Exercise of Stock Options  3,576  1,139 
Proceeds from Stock Issued Under Employee Stock Purchase Plan  708  756 
Repurchase of Common Stock for Treasury  -  (38,567) 
Cash Dividends Paid  (10,941)  (20,707) 
Excess Tax Benefit from Stock-Based Payments  -  58 
Payments of Seller Financed Debt  (2,138)  - 
NET CASH USED IN FINANCING ACTIVITIES  (8,795)  (57,321) 
Effects of Exchange Rate Differences  (2,223)  (1,048) 
NET INCREASE IN CASH AND CASH EQUIVALENTS  64,890  42,183 
Cash and Cash Equivalents at Beginning of Period  197,144  174,076 
Cash and Cash Equivalents at End of Period  262,034  216,259 
Less: Cash and Cash Equivalents of Discontinued Operations at End of Period  -  308 
Cash and Cash Equivalents at End of Period $262,034 $216,567 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:       
Cash Paid During the Period For:       
Interest $698 $527 
Income Taxes, Net  8,074  4,458 
Non-cash Investing and Financing Activity:       
Accretion of Non-controlling Interest Put Option  4,913  (112) 
The accompanying notes are an integral part of these consolidated financial statements.

6

DEVRY EDUCATION GROUP INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE 1:  INTERIM FINANCIAL STATEMENTS

The interim consolidated financial statements include the accounts of DeVry Education Group Inc. (“DeVry”DeVry Group”) and its wholly-owned and majority-owned subsidiaries. These financial statements are unaudited but, in the opinion of management, contain all adjustments, consisting only of normal, recurring adjustments, necessary to present fairly the financial condition and results of operations of DeVry.DeVry Group. The June 30, 20122013 data that is presented is derived from audited financial statements.

The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in DeVry'sDeVry Group’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012,2013, and DeVry’sDeVry Group’s Quarterly ReportsReport on Form 10-Q for the quartersquarter ended September 30, 2012 and December 31, 2012,2013, each as filed with the Securities and Exchange Commission.

The results of operations for the three and ninesix months ended MarchDecember 31, 2013, are not necessarily indicative of results to be expected for the entire fiscal year.


NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses reported during the period. Actual results could differ from those estimates.

Revenue Recognition
DeVry University tuition revenues are recognized ratably on a straight-line basis over the applicable academic term. Ross University School of Medicine, Ross University School of Veterinary Medicine (together “Ross University”) and American University of the Caribbean School of Medicine (“AUC”) basic science curriculum revenues are recognized ratably on a straight-line basis over the academic term. The clinical portion of the Ross University and AUC education programs are conducted under the supervision of U.S. teaching hospitals and veterinary schools. Ross University and AUC are responsible for the billing and collection of tuition from its students during the period of clinical education. Revenues are recognized on a weekly basis based on actual program attendance during the period of the clinical program. Fees paid to the hospitals and veterinary schools for supervision of Ross University and AUC students are charged to expense on the same basis. Carrington, Chamberlain and DeVry Brasil tuition and fee revenues are recognized ratably on a straight-line basis over the applicable academic term. The provision for refunds, which is reported as a reduction to Tuition Revenues in the Consolidated Statements of Income, and the provision for uncollectible accounts, which is included in the Cost of Educational Services in the Consolidated Statements of Income, also are recognized in the same ratable fashion as revenue to most appropriately match these costs with the tuition revenue in that term.
Estimates of DeVry Group’s expected refunds are determined at the outset of each academic term, based upon actual experience in previous terms, and monitored and adjusted as necessary within the term. If a student leaves school prior to completing a term, federal, state and/or Canadian provincial regulations and accreditation criteria permit DeVry Group to retain only a set percentage of the total tuition received from such student, which varies with, but generally equals or exceeds, the percentage of the term completed by such student. Payment amounts received by DeVry Group in excess of such set percentages of tuition are refunded to the student or the appropriate funding source. All refunds are netted against revenue during the applicable academic term. The allowance for uncollectible accounts is determined by analyzing the current aging of accounts receivable and historical loss rates on collections of accounts receivable. In addition, management considers projections of future receivable levels and collection loss rates. We monitor the inputs to this analysis periodically throughout the year. Provisions required to maintain the allowance at appropriate levels are charged to expense in each period as required. Related reserves with respect to uncollectible accounts and refunds totaled $44.4 million and $52.5 million at December 31, 2013 and December 31, 2012, respectively.
Sales of textbooks, electronic course materials, and other educational products, including training services and the Becker self-study products, are included in Other Educational Revenues in the Consolidated Statements of Income. Textbook, electronic course materials and other educational product revenues are recognized when the sale occurs. Revenues from training services, which are generally short-term in duration, are recognized when the training service is provided. In addition, fees from international licensees of the Becker programs are included in Other Educational Revenues and recognized when confirmation of course delivery is received.
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Internal-Use Software Development Costs

DeVry Group capitalizes certain internal-use software development costs that are amortized using the straight-line method over the estimated lives of the software, not to exceed sevenfive years. Capitalized costs include external direct costs of equipment, materials and services consumed in developing or obtaining internal-use software and payroll-related costs for employees directly associated with the internal-use software development project. Capitalization of such costs ceases at the point at which the project is substantially complete and ready for its intended purpose. Capitalized internal-use software development costs for projects not yet complete are included as construction in progress in the Land, Buildings and Equipment section of the Consolidated Balance Sheets. Costs capitalized during the ninethree and six months ended MarchDecember 31, 2013 were approximately $2.4 million. No costs were capitalized in the three months ended March 31, 2013.$0.3 million and $0.5 million, respectively. Costs capitalized during the three and ninesix months ended MarchDecember 31, 2012, were approximately $4.7$0.3 million and $14.9$2.4 million, respectively. In both years theseThese costs were primarily related to Project DELTA (a new student information systemsystems for DeVry University and Chamberlain College of Nursing)Nursing and the Becker e-Commerce system. As of MarchDecember 31, 2013 and 2012, the net balance of capitalized software development costs was $65.4$54.1 million and $73.7$69.3 million, respectively.

Perkins Program Fund

DeVry University is required under federal aid program regulations to make contributions to the Perkins Student Loan Fund, most recently at a rate equal to 33%33% of new contributions by the federal government. No new federal contributions were received in fiscal yearsduring the three and six months ended December 31, 2013 or 2012. DeVry Group carries its investment in such contributions at original values, net of allowances for expected losses on loan collections, of $2.6$2.6 million at MarchDecember 31, 2013 and 2012. The allowance for future loan losses is based upon an analysis of actual loan losses experienced since the inception of the program. As previous borrowers repay their Perkins loans, their payments are used to fund new loans, thus creating a revolving loan fund. The federal contributions to this revolving loan program do not belong to DeVry Group and are not recorded onin its financial statements. Under current law, upon termination of the program by the federal government or withdrawal from future program participation by DeVry University, subsequent student loan repayments would be divided between the federal government and DeVry University to satisfy their respective cumulative contributions to the fund.

Non-Controlling Interest

DeVry Group maintains an 83.5a96.3 percent ownership interest in DeVry Brasil with the remaining 16.53.7 percent mostly owned by memberssome of the current DeVry Brasil senior management group. Prior to the June 2013 purchase of additional DeVry Brasil stock, DeVry Group’s ownership percentage was93.5 percent. Beginning January 2013,July 1, 2015, DeVry Group has the right to exercise a call option and purchase any remaining DeVry Brasil stock from DeVry Brasil management. Likewise, DeVry Brasil management has the right to exercise a put option and sell its remaining ownership interest in DeVry Brasil to DeVry.DeVry Group. Since the put option is out of the control of DeVry Group, authoritative guidance requires the non-controlling interest, which includes the value of the put option, to be displayed outside of the equity section of the consolidated balance sheet. DeVry intends on exercising its rights under this call option before the end of fiscal 2013

The DeVry Brasil management put option is being accreted to its redemption value according toin accordance with the stock purchase agreement. The adjustment to increase or decrease the put option to its expected redemption value each reporting period is recorded to retained earnings in accordance with the authoritative guidance. The fair value of this put option does not exceed its recorded redemption value.United States Generally Accepted Accounting Principles. The adjustment to increase or decrease the DeVry Brasil non-controlling interest each reporting period for its proportionate share of DeVry Brasil’s profit/loss will continue to flow through the consolidated income statement based on DeVry'sDeVry Group’s historical non-controlling interest accounting policy.

The following is a reconciliation of the non-controlling interest balance (in thousands):

  Three Months Ended
March 31,		  Nine Months Ended
March 31,		 
  2013  2012  2013  2012 
Balance at Beginning of period $8,901  $7,632  $8,242  $6,755 
Net Income Attributable to Non-controlling Interest  339   173   1,110   416 
Accretion of Non-controlling Interest Put Option  (223)  363   (335)  997 
Balance at End of period $9,017  $8,168  $9,017  $8,168 

  Three Months Ended
December 31,		 Six Months Ended
December 31,		 
  2013 2012 2013 2012 
Balance at Beginning of period $5,890 $8,637 $854 $8,242 
Net Income Attributable to Non-controlling Interest  253  938  208  771 
Accretion of Non-controlling Interest Put Option  (168)  (674)  4,913  (112) 
Balance at End of period $5,975 $8,901 $5,975 $8,901 
 

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Earnings per Common Share

Basic earnings per share is computed by dividing net income attributable to DeVry by the sum of the weighted average number of common shares outstanding during the period plus unvested participating restricted share units. Diluted earnings per share is computed by dividing net income attributable to DeVry Education Group Inc. by the weighted average number of shares assuming dilution. Dilutive shares are computed using the Treasury Stock Method and reflect the additional shares that would be outstanding if dilutive stock options were exercised during the period. Excluded from the computations of diluted earnings per share were options to purchase 2.1 million2,298,000 and 2.8 million2,158,000 shares of common stock for the three and ninesix months ended MarchDecember 31, 2013, respectively, and 1.2 million3,000,000 and 1.6 million2,743,000 shares of common stock for the three and ninesix months ended MarchDecember 31, 2012, respectively. These outstanding options were excluded because the option exercise prices were greater than the average market price of the common shares or the assumed proceeds upon exercise under the Treasury Stock Method resulted in the repurchase of more shares than would be issued; thus, their effect would be anti-dilutive.

The following is a reconciliation of basic shares to diluted shares (in(amounts in thousands):

  Three Months Ended
March 31,		  Nine Months Ended
March 31,		 
  2013  2012  2013  2012 
Weighted Average Shares Outstanding  63,131   66,254   63,615   67,249 
Unvested Participating Restricted Shares  845   446   755   413 
Basic shares  63,976   66,700   64,370   67,662 
Effect of Dilutive Stock Options  303   525   269   573 
Diluted Shares  64,279   67,225   64,639   68,235 

  Three Months Ended
December 31,		 Six Months Ended
December 31,		 
  2013 2012 2013 2012 
Weighted Average Shares Outstanding  63,282  63,456  63,170  63,851 
Unvested Participating Restricted Shares  914  846  896  712 
Basic Shares  64,196  64,302  64,066  64,563 
Effect of Dilutive Stock Options  523  234  550  225 
Diluted Shares  64,719  64,536  64,616  64,788 
 

Treasury Stock

DeVry’s

DeVry Group’s Board of Directors has authorized stock repurchase programs on eight occasions (see “Note 6 – Dividends and Stock Repurchase Program”). The first seven repurchase programs were all completed as of December 2012.occasions. The eighth repurchase program was approved by the DeVry Group Board of Directors on August 29, 2012 and commenced in November 2012. Share repurchases under this plan were suspended as of May 2013. Shares that are repurchased by DeVry Group are recorded as Treasury Stock at cost and result in a reduction of Shareholders’ Equity.

From time to time, shares of its common stock are delivered back to DeVry Group under a swap arrangement resulting from employees’ exercise of incentive stock options pursuant to the terms of the DeVry Group Stock Incentive Plans (see “Note 34 – Stock-Based Compensation”). These shares are recorded as Treasury Stock at cost and result in a reduction of Shareholders’ Equity.

Treasury shares are reissued on a monthly basis at market value, to the DeVry Group Employee Stock Purchase Plan in exchange for employee payroll deductions.  When treasury shares are reissued, DeVry Group uses an average cost method to reduce the Treasury Stock balance. Gains on the difference between the average cost and the reissuance price are credited to Additional Paid-in Capital. Losses on the difference are charged to Additional Paid-in Capital to the extent that previous net gains from reissuance are included therein; otherwise such losses are charged to Retained Earnings.

Accumulated Other Comprehensive (Loss) IncomeLoss

Accumulated Other Comprehensive (Loss) IncomeLoss is composed of the change in cumulative translation adjustmentsadjustment and unrealized gains and losses on available-for-sale marketable securities, net of the effects of income taxes.

The Accumulated Other Comprehensive Loss balance at MarchDecember 31, 2013, consists of $5.9$25.6 million of cumulative translation losses ($5.324.7 million attributable to DeVry Education Group Inc. and $0.6$0.9 million attributable to non-controlling interests) and $0.1$0.1 million of unrealized gains on available-for-sale marketable securities, net of tax of $0.1 million and all attributable to DeVry Education Group Inc. At December 31, 2012, this balance consisted of $6.5 million of cumulative translation losses ($5.7 million attributable to DeVry Education Group Inc. and $0.8 million attributable to non-controlling interests) and $0.2 million of unrealized losses on available-for-sale marketable securities, net of tax of $0.1$0.1 million and all attributable to DeVry. At March 31, 2012, the Accumulated Other Comprehensive Income balance consisted of $3.4 million of cumulative translation gains ($2.5 million attributable to DeVry and $0.9 million attributable to non-controlling interests) and $0.2 million of unrealized losses on available-for-sale marketable securities, net of tax of $0.1 million and all attributable to DeVry.

Education Group Inc. 

Advertising Expense

Advertising costs are recognized as expense in the period in which materials are purchased or services are performed. Advertising expense, which is included in student services and administrative expense in the Consolidated Statements of Income, was $69.2$67.8 million and $199.0$140.8 million for the three and ninesix months ended MarchDecember 31, 2013, respectively, and $70.6$60.9 million and $203.4$127.6 million for the three and ninesix months ended MarchDecember 31, 2012, respectively.

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Recent Accounting Pronouncements
 

Recent Accounting Pronouncements

In AprilJuly 2013, the FASBFinancial Accounting Standards Board issued authoritativeAccounting Standards Update No. 2013-11: “Income Taxes (Topic 740): Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”. This guidance updating disclosure requirements for Comprehensive Income. The amendments dorequires an unrecognized tax benefit related to a net operating loss carryforward, a similar tax loss or a tax credit carryforward to be presented as a reduction to a deferred tax asset, unless the tax benefit is not changeavailable at the current requirements for reporting netdate to settle any additional income or other comprehensive income in financial statements. However,taxes under the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the facetax law of the statement where net incomeapplicable tax jurisdiction. The guidance is presented oreffective for the fiscal years and interim periods beginning after December 15, 2013 with early adoption permitted. Management is in the notes, significant amounts reclassified outprocess of accumulated other comprehensive income byevaluating the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The guidance will be effective for our interim and annual reporting period beginning July 1, 2013. Applicationeffects of this guidance but does not believe it will not have a material effectsignificant impact on DeVry’sDeVry Group’s consolidated financial statements.

Reclassifications
 The previously reported amounts in the Consolidated Balance Sheets and Consolidated Statements of Cash Flows for Advance Tuition Payments and Deferred Tuition Revenue have been combined as Deferred and Advance Tuition to conform to the current presentation format.

NOTE 3:  ASSETS AND LIABILITIES OF DIVESTED BUSINESS AND DISCONTINUED OPERATIONS
Assets and Liabilities of Divested Business
In December 2013, the assets of DeVry Group’s Advanced Academics Inc. (“AAI”) subsidiary, which had previously been disclosed as “held for sale” were divested. These assets were sold for $2.0 million which approximated the recorded net book value of the assets on the date of sale. The assets and liabilities of AAI are separately disclosed in the Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012. The following is a summary of balance sheet information of divested assets and liabilities at June 30, 2013 and December 31, 2012 (dollars in thousands).
  June 30, December 31, 
  2013 2012 
ASSETS:       
Current Assets:       
Cash and Cash Equivalents $568 $(308) 
Accounts Receivable, Net  12,050  21,336 
Deferred Income Taxes, Net  2,757  168 
Prepaid Expenses and Other  844  7,510 
Total Current Assets of Divested Business  16,219  28,706 
Land, Building and Equipment of Divested Business, Net  -  5,521 
Other Assets:       
Deferred Income Taxes, Net  2,602  498 
Other Assets  3,185  220 
Total Other Assets of Divested Business  5,787  718 
Total Assets of Divested Business $22,006 $34,945 
LIABILITIES:       
Current Liabilities:       
Accounts Payable $178 $286 
Accrued Salaries, Wages and Benefits  482  436 
Accrued Expenses  47  34 
Deferred and Advance Tuition  6  774 
Total Current Liabilities of Divested Business  713  1,530 
Other Liabilities:       
Deferred Rent and Other  112  - 
Total Other Liabilities of Divested Business  112  - 
Liabilities of Divested Business $825 $1,530 
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Discontinued Operations
The operating results of AAI are separately disclosed in the Consolidated Income Statements as “Discontinued Operations – Loss from Operations of Divested Component”. The following is a summary of operating results of the discontinued operations for the three and six month periods ended December 31, 2013 and 2012 (dollars in thousands).
  For the Three Months For the Six Months Ended  
  Ended December 31, December 31, 
  2013 2012 2013  2012 
DISCONTINUED OPERATIONS:              
Loss from Operations of Divested Component $(1,084) $(1,290) $(3,931)  $(4,948) 
Gain on Sale of Assets  372  -  372   - 
Asset Impairment Charge (Note 5)  -  -  (13,477)   - 
Restructuring Expense  (675)  -  (675)   - 
   (1,387)  (1,290)  (17,711)   (4,948) 
Income Tax Benefit  467  452  1,463   1,936 
Loss from Discontinued Operations, Net of Income Taxes $(920) $(838) $(16,248)  $(3,012) 

NOTE 3:4:  STOCK-BASED COMPENSATION

DeVry Group maintains fourfive stock-based award plans: the 1994 Stock Incentive Plan, the 1999 Stock Incentive Plan, the 2003 Stock Incentive Plan, and the Second Amended and Restated Incentive Plan of 2005.2005 and the Second Amended and Restated Incentive Plan of 2013. Under these plans, directors, key executives and managerial employees are eligible to receive incentive stock or nonqualified options to purchase shares of DeVry’sDeVry Group’s common stock. The Second Amended and Restated Incentive Plan of 2013 and Second Amended and Restated Incentive Plan of 2005 also permitspermit the award of stock appreciation rights, restricted stock, performance stock and other stock and cash based compensation. Though options remain outstanding under the 1994, 1999, 2003 and 2003 Stock Incentive Plans,2005 incentive plans, no further stock based awards will be issued from these plans.  The 2003 Stock Incentive PlanSecond Amended and theRestated Incentive Plan of 2005 and the Second Amended and Restated Incentive Plan of 2013 are administered by the Compensation Committee of the Board of Directors. Options are granted for terms ofup to10 years and can vest immediately or over periods of up to five years. The requisite service period is equal to the vesting period. The option price under the plans is the fair market value of the shares on the date of the grant.

DeVry Group accounts for options granted to retirement eligible employees that fully vest upon an employees’ retirement under the non-substantive vesting period approach to these options. Under this approach, the entire compensation cost is recognized at the grant date for options issued to retirement eligible employees.

At MarchDecember 31, 2013, 5,377,00611,088,024 authorized but unissued shares of common stock were reserved for issuance under DeVry’sDeVry Group’s stock incentive plans.

Stock-based compensation cost is measured at grant date based on the fair value of the award, and is recognized as expense over the employeesemployee requisite service period, reduced by an estimated forfeiture rate.


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The following is a summary of options activity for the nine monthsfiscal year ended MarchDecember 31, 2013:

        Weighted    
     Weighted  Average  Aggregate 
     Average  Remaining  Intrinsic 
  Options  Exercise  Contractual  Value 
  Outstanding  Price  Life in Years  ($000) 
Outstanding at July 1, 2012  2,939,772  $36.37         
Options Granted  860,610  $18.63         
Options Exercised  (93,341) $18.99         
Options Canceled  (183,111) $38.80         
Outstanding at March 31, 2013  3,523,930  $32.37   6.17  $18,612 
Exercisable at March 31, 2013  2,095,453  $35.07   4.43  $7,808 

       Weighted    
       Average    
     Weighted Remaining  Aggregate 
     Average Contractual  Intrinsic 
  Options  Exercise Life in   Value 
  Outstanding  Price Years  ($000) 
Outstanding at July 1, 2013 3,327,668 $32.64      
Options Granted 556,050 $28.32      
Options Exercised (153,645) $22.67      
Options Forfeited (14,746) $24.48      
Options Expired (40,804) $40.21      
Outstanding at December 31, 2013 3,674,523 $32.37 6.28 $25,465 
Exercisable at December 31, 2013 2,246,701 $35.82 4.71 $11,742 
The following is a summary of stock appreciation rights activity for the nine monthsfiscal year ended MarchDecember 31, 2013:

        Weighted    
  Stock  Weighted  Average  Aggregate 
  Appreciation  Average  Remaining  Intrinsic 
  Rights  Exercise  Contractual  Value 
  Outstanding  Price  Life in Years  ($000) 
Outstanding at July 1, 2012  -  $-         
Rights Granted  117,015  $42.87         
Rights Exercised  -  $-         
Rights Canceled  -  $-         
Outstanding at March 31, 2013  117,015  $42.87   7.20  $21 
Exercisable at March 31, 2013  67,614  $47.32   6.20  $- 

       Weighted    
       Average    
  Stock  Weighted Remaining  Aggregate 
  Appreciation  Average Contractual  Intrinsic 
  Rights  Exercise Life in  Value 
  Outstanding  Price Years  ($000) 
Outstanding at July 1, 2013 117,015 $42.87      
Rights Granted 1,050 $28.32      
Rights Exercised - $-      
Rights Canceled - $-      
Outstanding at December 31, 2013 118,065 $42.74 6.20 $94 
Exercisable at December 31, 2013 85,855 $45.25 5.20 $22 
The total intrinsic value of options exercised for the ninesix months ended MarchDecember 31, 2013 and 2012 was $0.6$1.8 million and $4.1$0.4 million, respectively.

The fair valuesvalue of DeVry’sDeVry Group’s stock-based awards was estimated using a binomial model. This model uses historical cancellation and exercise experience of DeVry Group to determine the option value. It also takes into account the illiquid nature of employee options during the vesting period.

The weighted average estimated grant date fair values for options granted at market price under DeVry’sDeVry Group’s stock option plans during first ninesix months of fiscal years 2014 and 2013 were $11.68 and 2012 were $7.62 and $17.41,$7.62, per share, respectively. The fair value of DeVry’sDeVry Group’s stock option awards were estimated assuming the following weighted average assumptions:

  Fiscal Year 
  2013  2012 
Expected Life (in Years)  6.63   6.65 
Expected Volatility  43.67%  42.27%
Risk-free Interest Rate  1.03%  1.52%
Dividend Yield  0.61%  0.38%
Pre-vesting Forfeiture Rate  3.00%  5.00%

  Fiscal Year 
  2013  2012 
Expected Life (in Years) 6.58  6.63 
Expected Volatility 43.76% 43.67%
Risk-free Interest Rate 2.16% 1.03%
Dividend Yield 0.90% 0.61%
Pre-vesting Forfeiture Rate 3.00% 3.00%
The expected life of the options granted is based on the weighted average exercise life with age and salary adjustment factors from historical exercise behavior. DeVry’sDeVry Group’s expected volatility is computed by combining and weighting the implied market volatility, the most recent volatility over the expected life of the option grant, and DeVry’sDeVry Group’s long-term historical volatility. The pre-vesting forfeiture rate is based on DeVry’sDeVry Group’s historical stock option forfeiture experience.

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If factors change and different assumptions are employed in the valuation of stock-based awards in future periods, the stock-based compensation expense that DeVry Group records may differ significantly from what was recorded in previous periods.

During the first ninesix months of fiscal year 2013,2014, DeVry Group granted 697,940 units433,970 shares of restricted stock to selected employees and non-employee directors. Of these, 121,50073,010 are performance based unitsshares which are earned by the recipients over athree year period based on achievement of specified academic and student outcome goals when a minimum level of DeVry performance targets.Group return on invested capital is attained. The remaining 576,440 units360,960 shares and all other previously granted unitsshares of restricted stock that are not performance-based are subject to restrictions which lapse ratably overthree and four-yearfour-year periods on the grant anniversary date based on the recipient’s continued service on the Board of Directors or employment with DeVry Group, or upon retirement. During the restriction period, the recipient of the non-performance based unitsshares shall have a beneficial interest in the restricted stock and all associated rights and privileges of a stockholder, including the right to receive dividends. These rights dodividend equivalents. This right does not pertain to the performance based units.shares. The following is a summary of restricted stock unit activity for the ninesix months ended MarchDecember 31, 2013:

     Weighted 
  Restricted  Average 
  Stock  Grant Date 
  Outstanding  Fair Value 
Nonvested at July 1, 2012  619,261  $42.06 
Units Granted  697,940  $19.37 
Units Vested  (198,230) $45.51 
Units Canceled  (48,632) $33.37 
Nonvested at March 31, 2013  1,070,339  $27.02 

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     Weighted 
  Restricted  Average 
  Stock  Grant Date 
  Outstanding  Fair Value 
Nonvested at July 1, 2013 1,058,443 $27.03 
Shares Granted 431,170 $28.85 
Shares Vested (307,935) $31.53 
Shares Canceled (29,364) $27.70 
Nonvested at December 31, 2013 1,152,314 $26.49 
The following table shows total stock-based compensation expense included in the Consolidated Statements of Income (dollars in thousands):

  For the Three Months  For the Nine Months 
  Ended March 31,  Ended March 31, 
  2013  2012  2013  2012 
Cost of Educational Services $1,190  $1,292  $3,869  $4,125 
Student Services and Administrative Expense  2,530   2,745   8,221   8,766 
Income Tax Benefit  (1,281)  (1,340)  (3,976)  (4,177)
Net Stock-Based Compensation Expense $2,439  $2,697  $8,114  $8,714 

  For the Three Months For the Six Months 
  Ended December 31, Ended December 31, 
  2013 2012 2013 2012 
Cost of Educational Services $1,294 $849 $3,155 $2,679 
Student Services and Administrative Expense  2,750  1,805  6,705  5,691 
Income Tax Benefit  (1,392)  (848)  (3,338)  (2,695) 
Net Stock-Based Compensation Expense $2,652 $1,806 $6,522 $5,675 
As of MarchDecember 31, 2013, $26.2$29.8 million of total pre-tax unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of 2.52.4 years. The total fair value of options and shares vested during the ninesix months ended MarchDecember 31, 2013 and 2012 was approximately $9.0$6.3 million and $8.9$9.0 million, respectively.

There were no capitalized stock-based compensation costs at MarchDecember 31, 2013 and 2012.

DeVry Group has an established practice of issuing new shares of common stock to satisfy share option exercises. However, DeVry Group also may issue treasury shares to satisfy option exercises under certain of its plans.


NOTE 4:5: FAIR VALUE MEASUREMENTS

DeVry Group has elected not to measure any assets or liabilities at fair value other than those required to be measured at fair value on a recurring basis, and assets measured at fair value on a non-recurring basis such as goodwill and intangible assets.assets and assets of businesses where the long-term value of the operations have been impaired. Management has fully considered all authoritative guidance when determining the fair value of DeVry’sDeVry Group’s financial assets as of MarchDecember 31, 2013.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.  The guidance specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques.  Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions.  The guidance establishes fair value measurement classifications under the following hierarchy:

Level 1–Quoted prices for identical instruments in active markets.

Level 2– Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.

Level 3–3 – Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.

When available, DeVry Group uses quoted market prices to determine fair value, and such measurements are classified within Level 1.  In some cases where market prices are not available, DeVry Group makes use of observable market based inputs to calculate fair value, in which case the measurements are classified within Level 2.  If quoted or observable market prices are not available, fair value is based upon internally developed models that use, where possible, current market-based parameters such as interest rates and yield curves.  These measurements are classified within Level 3.

14

Fair value measurements are classified according to the lowest level input or value-driver that is significant to the valuation.  A measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable.

Assets measured at fair value on a non-recurring basis include goodwill and indefinite-lived intangibles arising from a business combination. These assets are not amortized and charged to expense over time. Instead, goodwill and indefinite-lived intangibles must be reviewed annually for impairment or more frequently if circumstances arise indicating potential impairment. The annualThis impairment review was most recently completed during the fourth quarter of fiscal year 2012.2013. See “Note 8: Intangible Assets” to the Consolidated Financial Statements contained in DeVry’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012 for further discussion on the impairment review including valuation techniques and assumptions.

During the first quarter of fiscal year 2014, it was determined that net assets of AAI reporting unit had been further impaired. This determination was made after review of the updated third party offers to purchase the assets of the business. Assets measured at fair value in circumstances where the long-term value of a business has been impaired include the assets of AAI. To determine the fair value of the AAI assets, management incorporated assumptions that a reasonable market participant would use regarding the impact of the current operating losses and the increased uncertainty impacting future operations. We used significant unobservable inputs (Level 3) in our analysis including third party offers received to acquire the assets of AAI along with estimated costs to dispose of the assets. Based on this analysis, the fair market value of the AAI assets less the costs to sell was determined to be approximately $2.0 million which was approximately $13.5 million less than the carrying value.  As a result management recorded a pre-tax $13.5 million asset impairment charge in the first quarter of fiscal year 2014. The assets of this business were sold in December 2013 for $2.0 million. See “Note 3: Assets and Liabilities of Divested Business and Discontinued Operations” for further discussions on AAI.
The following tables present DeVry’sDeVry Group’s assets and liabilities at MarchDecember 31, 2013, whichthat are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (dollars in thousands).

March 31, 2013 Level 1  Level 2  Level 3 
Cash and Cash Equivalents $277,994  $-  $- 
Available for Sale Investments:            
Marketable Securities, short-term  2,952   -   - 
ATC Earn-out Liability  -   -   4,428 
FAVIP Contingent Consideration  -   -   2,769 
Total Financial Assets and Liabilities at Fair Value $280,946  $-  $7,197 

  Level 1 Level 2 Level 3 
Cash and Cash Equivalents $262,034 $- $- 
Available for Sale Investments:          
Marketable Securities, short-term  3,263  -  - 
Favip Contingent Consideration  -  -  2,371 
Total Financial Assets at Fair Value $265,297 $- $2,371 
Cash equivalentsEquivalents and investments in short-term marketable securitiesMarketable Securities are valued using a market approach based on the quoted market prices of identical instruments. The ATC earn-out liability is valued using standard present value techniques using a discount rate of 6.2%, which management believes a reasonable market participant would assume for this type of liability and duration. The Faculdade do Vale do Ipojuca (“FAVIP”) contingent considerationFavip Contingent Consideration is valued at amanagement’s estimate of the percentage likelihood of its potential settlement price based on the estimated probabilitycontingency being realized. Management assumes that there is a70 percent likelihood that Favip will receive status of FAVIP achievinga university center status. See “Note 7: Business Combinations” for further information on these liabilities.

and that the contingency will be payable.

The fair value of the institutional loans receivable included in Accounts Receivable, netNet and Other Assets on the Consolidated Balance Sheet as of MarchDecember 31, 2013 is estimated by discounting the future cash flows using current rates for similar arrangements. As of MarchDecember 31, 2013, the carrying value and the estimated fair value of these financial instruments was approximately $36.2$43.4 million. See “Note 5:6: Financing Receivables” for further discussion on these institutional loans receivable.

Below is a roll-forward of liabilities measured at fair value using Level 3 inputs for the three and ninesix months ended MarchDecember 31, 2013 and 2012 (dollars in thousands). The amount recorded as interest expense in fiscal 2013 is classified in the Interest and Other (Expense) Income section of the Consolidated Statements of Income. The amount recorded as foreign currency translation loss is classified as student servicesStudent Services and administrative expenseAdministrative Expense in the Consolidated Statements of Income.

  Long-Term Liabilities 
  Three Months
Ended March
31, 2013		  Nine Months
Ended March
31, 2013		 
       
Balance at Beginning of Period $7,419  $4,361 
Total Realized Losses Included in Income:        
Interest Expense- ATC Accretion  47   187 
Foreign Currency Translation Loss  (269)  (120)
Transfers into Level 3:        
FAVIP Contingent Consideration  -   2,769 
Balance at March 31, 2013 $7,197  $7,197 
  Three Months Ended Six Months Ended 
  December 31, December 31, 
  2013 2012 2013 2012 
Balance at Beginning of Period $2,519 $7,344 $2,509 $4,361 
Total Realized Losses Included in Income:             
Interest Expense-ATC Accretion  -  71  -  140 
Total Unrealized (Losses) Gains Included in AOCI:             
Foreign Currency Translation Changes  (148)  4  (138)  185 
Transfers into Level 3:             
Favip Contingent Consideration  -  -  -  2,733 
Balance at End of Period $2,371 $7,419 $2,371 $7,419 
15

NOTE 5:6: FINANCING RECEIVABLES

DeVry’s

DeVry Group’s institutional loan programs are available to students at its DeVry University, Chamberlain College of Nursing, Carrington College and Carrington College of California schools as well as selected students at Ross University School of Medicine and Ross University School of Veterinary Medicine. These loan programs are designed to assist students who are unable to completely cover educational costs by other means. These loans may be used for tuition, books, and fees, and are available only after all other student financial assistance has been applied toward those purposes. In addition, Ross University School of Medicine and Ross University School of Veterinary Medicine loans may be used for students’ living expenses. Repayment plans for institutional loan program balances are developed to address the financial circumstances of the particular student. Interest charges accrue each month on the unpaid balance. DeVry University, Chamberlain College of Nursing, Carrington College and Carrington College of California require that students begin repaying a small portion of the loans while they are still in school, and then payments increase upon completing or departing the program. After a student leaves school, the student typically will have a monthly installment repayment plan with all balances due within12 to60 months or 15 to 25 years for Ross University School of Medicine and Ross University of Veterinary Medicine borrowers. months. In addition, the Becker CPA Review and Falcon Physician Review coursesCourse can be financed through Becker with a zero percent, 18-month and 6-month, respectively,18-month term loan.

Reserves for uncollectible loans are determined by analyzing the current aging of accounts receivable and historical loss rates of loans at each educational institution. Management performs this analysis periodically throughout the year. Since all of DeVry’sDeVry Group’s financing receivables are generated through the extension of credit to students to fund educational costs, all such receivables are considered part of the same loan portfolio.

The following table details the institutional loan balances along with the related allowances for credit losses as of MarchDecember 31, 2013 and 2012 (dollars in thousands).

  As of March 31, 
  2013  2012 
Gross Institutional Student Loans $58,003  $53,486 
         
Allowance for Credit Losses  (21,768)  (20,940)
         
Net Institutional Student Loans $36,235  $32,546 

  As of December 31, 
  2013 2012 
Gross Institutional Student Loans $62,187 $55,108 
        
Allowance for Credit Losses  (18,735)  (18,665) 
        
Net Institutional Student Loans $43,452 $36,443 
Of the net balances above, $19.2$20.1 million wasand $18.6 million were classified as Accounts Receivable, Net in the Consolidated Balance Sheets at both MarchDecember 31, 2013 and 2012. $17.02012, respectively, and $23.3 million and $13.4$17.8 million, representing amounts due beyond one year, were classified in the Consolidated Balance Sheets as Other Assets at MarchDecember 31, 2013 and 2012, respectively, as the amounts are due beyond the next twelve months.

respectively.

The following tables detail the credit risk profiles of the institutional student loan balances based on payment activity and provide an aging analysis of past due institutional student loans as of MarchDecember 31, 2013 and 2012. Loans are considered nonperforming if they are more than120 days past due (dollars in thousands).

  As of March 31, 
  2013  2012 
Institutional Student Loans:        
Performing $42,545  $39,987 
Nonperforming  15,458   13,499 
Total Institutional Student Loans $58,003  $53,486 

  30-59
Days
Past
Due		  60-89
Days
Past
Due		  90-119
Days
Past
Due		  Greater
Than
120 Days
Past Due		  Total
Past
Due		  Current  Total
Institutional
Student
Loans		 
Institutional Student Loans:                            
March 31, 2013 $3,838  $1,214  $783  $15,458  $21,293  $36,710  $58,003 
March 31, 2012 $3,551  $1,241  $1,127  $13,499  $19,418  $34,068  $53,486 

NOTE 6: DIVIDENDS AND STOCK REPURCHASE PROGRAM

During fiscal years 2013 and 2012, the DeVry Board of Directors (the “Board”) declared the following cash dividends. Future dividends will be at the discretion of the Board of Directors.

Declaration Date Record
Date		 Payment Date Dividend
Per Share		  Total Dividend
Amount
(In Thousands)		 
November 2, 2011 December 8, 2011 January 10, 2012 $0.15  $10,039 
May 14, 2012 June 21, 2012 July 12, 2012 $0.15  $9,794 
November 8, 2012 November 30, 2012 December 19, 2012 $0.17  $10,913 

DeVry has repurchased shares under the following programs as of December 31, 2012:

Date Authorized Shares Repurchased  Total Cost (millions) 
November 15, 2006  908,399  $35.0 
May 13, 2008  1,027,417   50.0 
November 11, 2009  972,205   50.0 
August 11, 2010  1,103,628   50.0 
November 10, 2010  968,105   50.0 
May 20, 2011  2,396,143   100.0 
November 2, 2011  3,478,299   100.0 
August 29, 2012  544,072   14.7 
Totals  11,398,268  $449.7 

In October 2012, DeVry completed its seventh share repurchase program. On August 29, 2012, the Board authorized an eighth share repurchase program, which will allow DeVry to repurchase up to $100 million of its common stock through December 31, 2014. This program commenced in November 2012. The timing and amount of any repurchase will be determined by management based on its evaluation of market conditions and other factors. These repurchases may be made through the open market, including block purchases, in privately negotiated transactions, or otherwise. The buyback will be funded through available cash balances and/or borrowings and may be suspended or discontinued at any time.

Shares of stock repurchased under the programs are held as treasury shares. These repurchased shares have reduced the weighted average number of shares of common stock outstanding for basic and diluted earnings per share calculations.

  As of December 31, 
  2013 2012 
Institutional Student Loans:       
Performing $46,108 $41,524 
Nonperforming  16,079  13,584 
Total Institutional Student Loans $62,187 $55,108 
             Greater          
             Than       Total 
 30-59 60-89  90-119 120       Institutional 
 Days Days  Days Days  Total    Student 
 Past Due Past Due  Past Due Past Due  Past Due Current Loans 
Institutional Student Loans:                          
December 31, 2013$ 4,896 $1,737  $ 1,520 $  16,079 $24,232 $37,955 $62,187 
December 31, 2012$ 4,030 $1,773  $ 1,346 $  13,584 $20,733 $34,375 $55,108 
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NOTE 7: BUSINESS COMBINATIONS

 

Faculdade do Vale do IpojucaDiferencial Integral

On September 3, 2012,July 1, 2013, DeVry Educacional do Brasil S/A (f/k/a Fanor-Faculdades Nordeste S/A) (“DeVry Brasil”)(DeVry Brasil), a subsidiary of DeVry Group, acquired the stock ofFaculdade Diferencial Integral (“Facid”), located in the state of Piaui, Brazil, for approximately$16.1 million in cash. In addition, DeVry Brasil will be required to make additional payments of approximately $9.0 million over the next four years. Facid currently serves approximately2,500 students at two campuses in the city of Teresina, and offers degree programs primarily in healthcare, including a Doctor of Medicine (M.D.) program. Facid also offers undergraduate degrees in other healthcare fields such as nursing, pharmacy, and dentistry, as well as a law program. Facid joined DeVry Brasil, which following the acquisition operates six institutions at 13 campuses in northeast Brazil. With the addition of Facid, these institutions provide education programs to nearly 30,000 students.
 The operations of Facid are included in DeVry Group’s International and Professional Education segment. The results of Facid’s operations have been included in the Consolidated Financial Statements of DeVry Group since the date of acquisition.
The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (dollars in thousands).
  At July 1, 2013 
Current Assets $4,699 
Property and Equipment  2,037 
Other Long-term Assets  167 
Intangible Assets  17,723 
Goodwill  8,238 
Total Assets Acquired  32,864 
Liabilities Assumed  16,801 
Net Assets Acquired $16,063 
Goodwill, which represents the excess of cost over the fair value of the net tangible and intangible assets acquired, was all assigned to the DeVry Brasil reporting unit which is classified within the International and Professional Education segment. Factors that contributed to a purchase price resulting in the recognition of goodwill include Facid’s strategic fit into DeVry Group’s expanding presence in northeast Brazil, the reputation of the educational programs and the acquired assembled workforce.None of the goodwill acquired is expected to be deductible for income tax purposes. Of the $17.7 million of acquired intangible assets, $15.2 million was assigned to Accreditations and $1.9 million was assigned to Trade Names, both of which have been determined not to be subject to amortization. The remaining acquired intangible asset was determined to be subject to amortization with an average useful life of approximately15 years. Their values and estimated useful lives by asset type are as follows (dollars in thousands):
  At July 1, 2013 
  Value Estimated 
  Assigned Useful Life 
        
Clinical Agreement $583  15 years 
There is no pro forma presentation of operating results for this acquisition due to the insignificant effect on consolidated operations.
Faculdade do Vale do Ipojuca
On September 3, 2012, DeVry Brasil acquired thebusiness operations of Faculdade do Vale do Ipojuca (“FAVIP”Favip”), which is located in the state of Pernambuco, Brazil.  Under the terms of the agreement, DeVry Brasil paid approximately $32.2$32.2 million in cash in exchange for the stock of FAVIP.Favip. In addition, DeVry Brasil will be required to make an additional payment of approximately $3.9$3.9 million over the next 12 months should FAVIPFavip receive status of a university center. As of MarchDecember 31, 2013, $2.9$2.4 million is accrued for this additional payment.

FAVIP

17

Favip currently serves about5,000 students and offers more than 30 undergraduate and graduate programs at two campuses located in Caruaru, the state’s second largest city. The institution’s largest programs are in the areas of law, business, psychology and nutrition.The acquisition of FAVIPFavip is consistent with DeVry'sDeVry Group's growth and diversification strategy, increasing its international presence in Brazil.

The operations of FAVIPFavip are included in DeVry’sDeVry Group’s International K-12 and Professional Education segment. The results of FAVIP��sFavip’s operations have been included in the Consolidated Financial Statements of DeVry Group since the date of acquisition.

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (dollars in thousands).

  At September 3,
2012		 
Current Assets $4,414 
Property and Equipment  2,897 
Other Long-term Assets  844 
Intangible Assets  13,571 
Goodwill  16,120 
Total Assets Acquired  37,846 
Liabilities Assumed  5,677 
Net Assets Acquired $32,169 

  At September 3, 
  2012 
Current Assets $4,414 
Property and Equipment  2,897 
Other Long-term Assets  844 
Intangible Assets  13,571 
Goodwill  16,120 
Total Assets Acquired  37,846 
Liabilities Assumed  5,677 
Net Assets Acquired $32,169 
Goodwill, which represents the excess of cost over the fair value of the net tangible and intangible assets acquired, was all assigned to the DeVry Brasil reporting unit which is classified within the International K-12 and Professional Education segment. Factors that contributed to a purchase price resulting in the recognition of goodwill include FAVIP’sFavip’s strategic fit into DeVry’sDeVry Group’s expanding presence in northeast Brazil, the reputation of the educational programs and the acquired assembled workforce.Noneworkforce.None of the goodwill acquired is expected to be deductible for income tax purposes. Of the $13.6$13.6 million of acquired intangible assets, $10.2$10.2 million was assigned to Accreditations and $1.1$1.1 million was assigned to Trade Names, both of which have been determined not to be subject to amortization. The remaining acquired intangible assets were determined to be subject to amortization with an average useful life of approximately4.9 years. Their values and estimated useful lives by asset type are as follows (dollars in thousands):

  At September 3, 2012
  Value
Assigned		  Estimated
Useful Lives
      
Student Relationships $2,257  5 years
Curriculum  79  2 years

  At September 3, 2012 
  Value Estimated 
  Assigned Useful Lives 
        
Student Relationships $2,257  5 years 
Curriculum  79  2 years 
There is no pro forma presentation of operating results for this acquisition due to the insignificant effect on consolidated operations.

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NOTE 8:  INTANGIBLE ASSETS

Intangible assets relate mainly to acquired business operations. These assets consist of the acquisition fair value of certain identifiable intangible assets acquired and goodwill. Goodwill represents the excess of the purchase price over the fair value of assets acquired less liabilities assumed.

Intangible assets consist of the following (dollars in thousands):

  As of March 31, 2013    
  Gross
Carrying
Amount		  Accumulated
Amortization		  Weighted Avg.
Amortization
Period		 
Amortizable Intangible Assets:            
Student Relationships $82,719  $(73,818)  (1)
Customer Relationships  3,364   (600)  12 years 
Non-compete Agreements  2,505   (1,749)  (2)
Curriculum/Software  5,628   (4,087)  5 years 
Outplacement Relationships  3,900   (1,179)  (3)
Trade Names  6,074   (4,766)  8.5 years 
Total $104,190  $(86,199)    
Indefinite-lived Intangible Assets:            
Trade Names $39,238         
Trademark  1,645         
Ross Title IV Eligibility and Accreditations  14,100         
Intellectual Property  13,940         
Chamberlain Title IV Eligibility and Accreditations  1,200         
Carrington Title IV Eligibility and Accreditations  71,100         
AUC Title IV Eligibility and Accreditations  100,000         
DeVry Brasil Accreditation  32,884         
Total $274,107         

  As of December 31, 2013   
  Gross
Carrying
Amount		 Accumulated
Amortization		 Weighted Avg.
Amortization
Period		 
Amortizable Intangible Assets:         
Student Relationships $80,971 $(76,814) (a) 
Customer Relationships  3,630  (922) 12 Years 
Non-compete Agreements  2,521  (1,910) (b) 
Curriculum/Software  5,648  (4,545) 5 Years 
Outplacement Relationships  3,900  (1,374) 15 Years 
Clinical Agreements  550  (18) 15 Years 
Trade Names  5,699  (4,823) (c) 
Total $102,919 $(90,406)   
Indefinite-lived Intangible Assets:         
Trade Names $40,617      
Trademark  1,645      
Ross Title IV Eligibility and Accreditations  14,100      
Intellectual Property  13,940      
Chamberlain Title IV Eligibility and Accreditations  1,200      
Carrington Title IV Eligibility and Accreditations  67,200      
AUC Title IV Eligibility and Accreditations  100,000      
DeVry Brasil Accreditation  42,505      
Total $281,207      
(1)(a)The total weighted average estimated amortization period for Student Relationships is 5 years for DeVry Brasil (Fanor, Ruy Barbosa and AREAArea 1), 6 years for FBV,Faculdade Boa Viagem ("FBV"), 5 years for FAVIPFavip and 4 years for American University of the Caribbean School of Medicine ("AUC").AUC. All other Student Relationships are fully amortized at MarchDecember 31, 2013.
(2)(b)The total weighted average estimated amortization period for Non-compete Agreements is 1.5 years for ATC and 5 years for Falcon.Becker Physician Review. All other Non-compete Agreements are fully amortized at MarchDecember 31, 2013.
(3)(c) The total weighted average estimated amortization period for Trade Names is 2 years for ATC, 8.5 years for DeVry Brasil (Fanor, Ruy Barbosa and AREA1) and 1.5 years for Falcon.Area 1). All other Trade Names are fully amortized at MarchDecember 31, 2013.

  As of March 31, 2012 
  Gross
Carrying
Amount		  Accumulated
Amortization		 
Amortizable Intangible Assets:        
Student Relationships $81,534  $(66,683)
Customer Relationships  3,121   (277)
Customer Contracts  7,000   (5,921)
License and Non-compete Agreements  2,775   (2,719)
Curriculum/Software  4,775   (3,158)
Outplacement Relationships  3,900   (919)
Trade Names  6,327   (4,438)
Total $109,432  $(84,115)
Indefinite-lived Intangible Assets:        
Trade Names $39,667     
Trademark  1,645     
Ross Title IV Eligibility and Accreditations  14,100     
Intellectual Property  13,940     
Chamberlain Title IV Eligibility and Accreditations  1,200     
Carrington Title IV Eligibility and Accreditations  71,100     
AUC Title IV Eligibility and Accreditations  100,000     
DeVry Brasil Accreditation  25,149    
Total $266,801     

19

  As of December 31, 2012 
  Gross
Carrying
Amount		 Accumulated
Amortization		 
Amortizable Intangible Assets:       
Student Relationships $82,562 $(71,803) 
Customer Relationships  3,569  (549) 
Non-compete Agreements  2,516  (1,700) 
Curriculum/Software  5,689  (3,936) 
Outplacement Relationships  3,900  (1,114) 
Trade Names  6,048  (4,644) 
Total  104,284  (83,746) 
        
Indefinite-lived Intangible Assets:       
Trade Names $39,198    
Trademark  1,645    
Ross Title IV Eligibility and Accreditations  14,100    
Intellectual Property  13,940    
Chamberlain Title IV Eligibility and Accreditations  1,200    
Carrington Title IV Eligibility and Accreditations  71,100    
AUC Title IV Eligibility and Accreditations  100,000    
DeVry Brasil Accreditation  32,456    
Total $273,639    
Amortization expense for amortized intangible assets was $2.4$1.7 million and $7.1$3.3 million for the three and ninesix months ended MarchDecember 31, 2013, respectively, and $2.8$2.4 million and $7.8$4.7 million for the three and ninesix months ended MarchDecember 31, 2012, respectively. Estimated amortization expense for amortizable intangible assets for the next five fiscal years ending June 30, by reporting unit, is as follows (dollars in thousands):

Fiscal Year Becker  DeVry
Brasil		  Carrington  AUC  Total 
2013 $1,022  $3,010  $420  $4,973  $9,425 
2014  903   2,173   295   3,346   6,717 
2015  895   1,164   260   386   2,705 
2016  856   730   260   -   1,846 
2017  608   329   260   -   1,197 

Fiscal 
Year		 AUC Becker DeVry
Brasil		 Carrington Total 
2014 $3,347 $947 $1,888 $295 $6,477 
2015  387  939  1,074  260  2,660 
2016  -  931  681  260  1,872 
2017  -  635  331  260  1,226 
2018  -  363  190  260  813 
Thereafter  -  1,142  482  1,356  2,980 
All amortizable intangible assets, except for the DeVry Brasil (Fanor, Ruy Barbosa and AREAArea 1) Student Relationships, the FBV Student Relationships, the FAVIPFavip Student Relationships and the AUC Student Relationships, are being amortized on a straight-line basis.

17

The amount being amortized for the AUC, DeVry Brasil, FBV and Favip Student Relationships is based on the estimated progression of the students through the respective programs, giving consideration to the revenue and cash flow associated with both existing students and new applicants. This results in the basis being amortized at an annual rate for each of the years of estimated economic life as follows:

Fiscal Year   
2009  8.3%
2010  30.3%
2011  24.7%
2012  19.8%
2013  13.6%
2014  3.3%

The amount being amortized for the FBV Student Relationships is based on the estimated progression of the students through the respective programs, giving consideration to the revenue and cash flow associated with both existing students and new applicants. This results in the basis being amortized at an annual rate for each of the years of estimated economic life as follows:

Fiscal Year   
2012  11.9%
2013  33.7%
2014  25.9%
2015  16.7%
2016  9.0%
2017  2.6%
2018  0.2%

The amount being amortized for the FAVIP Student Relationships is based on the estimated progression of the students through the respective programs, giving consideration to the revenue and cash flow associated with both existing students and new applicants. This results in the basis being amortized at an annual rate for each of the years of estimated economic life as follows:

Fiscal Year   
2013  27.6%
2014  32.2%
2015  23.0%
2016  13.2%
2017  4.0%

The amount being amortized for the AUC Student Relationships is based on the estimated progression of the students through the respective programs, giving consideration to the revenue and cash flow associated with both existing students and new applicants. This results in the basis being amortized at an annual rate for each of the years of estimated economic life as follows:

Fiscal Year   
2012  38.0%
2013  38.5%
2014  21.6%
2015  1.9%

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Fiscal         
Year AUC DeVry Brasil FBV Favip 
2009 - 8.3% - - 
2010 - 30.3% - - 
2011 - 24.7% - - 
2012 38.0% 19.8% 11.9% - 
2013 38.5% 13.6% 33.7% 27.6% 
2014 21.6% 3.3% 25.9% 32.2% 
2015 1.9% - 16.7% 23.0% 
2016 - - 9.0% 13.2% 
2017 - - 2.6% 4.0% 
2018 - - 0.2% - 
Indefinite-lived intangible assets related to Trademarks, Trade Names, Title IV Eligibility, Accreditations and Intellectual Property are not amortized, as there are no legal, regulatory, contractual, economic or other factors that limit the useful life of these intangible assets to the reporting entity.

Authoritative guidance provides that

In accordance with U.S. generally accepted accounting principles, goodwill and indefinite-lived intangibles arising from a business combination are not amortized and charged to expense over time. Instead, goodwill and indefinite-lived intangiblesthese assets must be reviewed annually for impairment or more frequently if circumstances arise indicating potential impairment. This annual impairment review was most recently completed during the fourth quarter of fiscal year 2012.2013. As a result, it was determined that the goodwill and the indefinite-lived intangible asset of the Carrington Colleges Group (“Carrington”) reporting unit had been impaired. As of the fourth quarter of fiscal year 20122013 impairment review, there was no impairment loss associated with recorded goodwill or indefinite-lived intangible assets for any other reporting unit, other than Advanced Academics, Inc. (“AAI”), as estimated fair values exceeded the carrying amounts.

All other DeVry reporting units’ estimated fair values exceeded their carrying values as of the fourth quarter impairment analysis by at least 25% except for Carrington. At Carrington the fair value slightly exceeded carrying value. The smaller excess margin for the Carrington reporting unit would be expected considering an impairment charge was recorded for this reporting unit during fiscal 2012. Consequently, there had been less time for this organization to have appreciated in value from its previous impairment date.

Management does considerconsiders certain triggering events when evaluating whether an interim impairment analysis is warranted. Among these would be a significant long-term decrease in the market capitalization of DeVry Group based on events specific to DeVry’sDeVry Group’s operations. As of MarchDecember 31, 2013, DeVry’sDeVry Group’s market capitalization exceeded its book value by approximately 38%. Though this premium58%, which is lowerhigher than the 47%41% premium as of June 30, 2012, it is partially the result of a decline in revenue, primarily within DeVry University, which has resulted in lower earnings. Management is making progress towards achieving its top priorities of realigning DeVry’s cost structure with student enrollments levels, regaining enrollment growth, and making targeted investments to drive future growth. Management believes these planned business and operational strategies will reverse the negative trends in the foreseeable future. Management also believes the decline in the market price of DeVry’s common stock has been partially caused by the increased competition facing DeVry as well as the continued overhang of government regulatory changes in the education industry. These factors have led to significant uncertainty among investors and have worked to keep the prices of private sector education stocks at depressed levels for the last few years.2013. Other triggering events that could be cause for an interim impairment review would be changes in the accreditation, regulatory or legal environment; increased competition; innovation changes and changes in the market acceptance of our educational programs and the graduates of those programs.

The estimated fair values of DeVry Group’s reporting units exceeded their carrying values by at least12% as of the end of fiscal year 2013, except that of Carrington. The estimated fair values of the indefinite-lived intangible assets exceeded their carrying values by at least100% as of the end of fiscal year 2013, except those indefinite-lived intangible assets acquired with the acquisitions of AUC and FBV and where fair values exceeded carrying values by4% to67%. The smaller premiums for the FBV and AUC indefinite-lived intangible assets would be expected considering the assets were acquired within two years of the fourth quarter fiscal year 2013 valuation date and there has been less time for these assets to have appreciated in value from their fair market value purchase price. As for Carrington, during the fourth quarter of fiscal year 2013, management recorded an impairment loss of $57.0 million for the decline in fair value of this reporting unit and its associated indefinite-lived intangible assets. Therefore, no premiums existed with respect to either the reporting unit’s carrying value or the carrying value of the indefinite-lived intangible assets as of June 30, 2013. Accordingly, this situation also requires management to remain cognizant of the fact that if Carrington’s realized and projected operating results do not meet expectations, an interim review and possible further impairment would be necessary.
To improve Carrington’s financial results, management continues to execute a turn-around plan initiated in fiscal year 2012 which includes increasing its focus on building Carrington’s brand awareness, optimizing its marketing approach to emphasize the development of internally-generated inquiries, improving its recruiting process through its new student contact center and narrowing its focus geographically and programmatically around Carrington’s core strengths in healthcare. Carrington continues to make additional investments in its website interface and admissions processes to better serve prospective students. Despite a difficult economy, evidence of a recovery in enrollments was experienced at Carrington where total student enrollment increased for four consecutive terms through September 2013.Total student enrollment decreased for the term ended December 31, 2013 compared to the same period last fiscal year as a result of the decision to focus Carrington’s program offerings and suspend recruiting for certain non-core programs.
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The improvements in enrollment resulted in increased revenues in the first six months of fiscal year 2014 compared to the same period last fiscal year and, along with cost control efforts, reduced the operating losses from levels of a year ago in the six months ended December 31, 2013. The revenue and operating results also exceeded internal plans for the first six months of fiscal year 2014. Management believes its planned business and operational strategies have reversed the negative trend in revenue and operating income declines experienced over the past several years. However, if operating improvements do not continue, all or some of the remaining goodwill could be impaired in the future.
Though somecertain reporting units experienced a decline in operating results duringin the first ninesix months of fiscal 2013 asyear 2014 compared to the year-ago period, management doesdid not believe business conditions havehad deteriorated in any of its reporting units to the extentsuch that it was more likely than not that the fair values of thevalue was below carrying value for those reporting units or their associated indefinite-lived intangible assets would differ materially from theirat December 31, 2013. In this regard, revenues, operating results and cash flows grew for all reporting units in the first six months of fiscal year 2012 fair values.

2014 except at DeVry University and DeVry Brasil. The revenue and operating results of DeVry Brasil exceeded internal plans for the first six months of fiscal year 2014 and its revenues grew by more than 32% from the year-ago period. Operating earnings decreased from the year-ago period reflecting investments for expansion and growth.

At DeVry University, which carries a goodwill and indefinite-lived intangible asset balancesbalance of $22.2$22.2 million, and $1.6 million, respectively, at March 31, 2013, revenue for the first nine months of fiscal year 2013 declined by approximately 15%16% from the year-ago six month period. The revenue decline at DeVry University was primarily the result of a decline in undergraduate student enrollments and graduate coursetakers due to lower cyclical demand among the university’s target segment of students, believed to be driven by the challenging economic environment, persistent high levels of unemployment, perceptions of the value of a college degree, increased reluctance to take on debt and heightened competition. To address this issue,improve performance, management continues to execute a turnaround plan at DeVry University which includes:
⋅
Sharpening DeVry University’s value proposition, which is educational quality, career outcomes and exceptional student support;
⋅Aligning the cost structure with enrollment levels; and
⋅Strategic use of scholarships to attract new students and improve student persistence.
In aligning the cost structure, management is focused on improvingincreasing efficiencies. Over the admissions and student service processpast year DeVry Group has reduced costs through staffing adjustments. Management has made the decision to better serve prospective students and drive future growthclose or consolidate certain DeVry University campuses while balancing the potential impact on enrollment and student satisfaction. Though operating profits declined by approximately 46%,Management is also focused on process redesign and restructuring in areas such as student finance. 
The plan to increase enrollments includes communication of DeVry University’s value proposition, which is educational quality, career prospects and high levels of student service. This communication plan includes integrated university-wide efforts at key points in the year. A September 2013 “call to action event” included the new Career Catalyst Scholarship. Under the Career Catalyst Scholarship DeVry University remains profitablehas committed more than $15 million over the next three years to be awarded to qualifying students who enroll in the September 2013 session. The scholarships are valued at up to a total of $20,000 per student, depending on the degree and credits required to attain that degree. Students qualifying for DeVry University’s Career Catalyst Scholarship are eligible to receive scholarship awards of progressive amounts over a period of three years.For example, students in their first year of a bachelor’s degree program can be awarded up to $5,000. During the second year, the available award may increase up to $7,000. For the third year, the award can increase up to $8,000. To facilitate this new scholarship, management consolidated multiple, smaller scholarships into a larger program which was more clearly communicated to prospective students. The results of this program in attracting and retaining successful students convinced management to again offer this Career Catalyst Program to qualifying students that enroll in the March 2014 session. In addition, tuition rates for fiscal year 2014 at DeVry University remain unchanged from those of fiscal year 2013. Enhanced use of technology is also expected to increase the effectiveness of the student recruiting process. 
Management continues to execute a program strategy which focuses resources on providing students of DeVry University with operating margins of 11%. strong programs in high-growth fields. This program strategy is a priority designed to provide students with successful outcomes.
Management believes its planned business and operational strategies will reverse the negative trends inover the foreseeable future.next several years. However, if operating improvements are not realized, all or some of the goodwill could be impaired in the future. The impairment review completed in the fourth quarter of fiscal year 20122013 indicated the fair value exceeded the carrying value of the DeVry University reporting unit by 250%100%.

At Carrington, which carries This excess margin has been rapidly declining in recent years. Should business conditions at DeVry University continue to deteriorate resulting in the carrying value of this reporting unit exceeding its fair value then goodwill and indefinite-lived intangible asset balances of $151.9 million and $71.1 million, respectively, as of March 31, 2013, revenue for the first nine months of fiscal 2013 declined by 5% from the year-ago period. The revenue decline at Carrington was primarily the result of lower total student enrollments. Management believes these declines are due to heightened competition, the prolonged economic downturn and persistent unemployment, which has resulted in reductions in the volume of inquiries from potential students from the levels of a few years ago. The decline in revenue has also resulted in operating losses. To address these issues, Carrington continues to execute a turnaround plan, which includes increasing itsfocus on building awareness of Carrington’s brand, optimizing its marketing approach to emphasize the development of internally-generated inquiries, improving its recruiting process through its new student contact centerand narrowing it focus geographically and programmatically around Carrington’s core strengths in healthcare. Carrington is also making targeted investments in enhancing its students’ academic experience. Management believes it is making progress in its turnaround plan and that its planned business and operational strategies will continue to reverse the negative trends in the foreseeable future. Despite a difficult economy, evidence of a recovery in enrollments has been experienced at Carrington where new student enrollments increased over the prior year by 33.3%, 12.7% and 17.5% as of September 2012, December 2012 and March 2013, respectively, and total student enrollments increased by approximately 9% over the prior year as of March 2013. These improvements resulted in increased revenues in the third quarter of fiscal 2013 compared to the same period last fiscal year and, along with cost control efforts, have reduced the operating losses from levels of a year ago in both the quarter and nine months ended March 31, 2013. The revenue and operating results also exceeded internal plans for the nine months ended March 31, 2013. Along with a narrowing programmatic focus, management continues to evaluate Carrington’s online strategy. As a result there is a risk that if future operating improvements are not realized to the extent necessary to increase the long-term value of the Carrington operations all or some of the remaining goodwill and indefinite-lived intangible assets could be impaired in the future. The next annual impairment review will be performed in the fourth quarterimpaired. This would require a possible write-off of fiscal 2013. The impairment review completed in the fourth quarter of fiscal year 2012 indicated the fair value exceeded the carrying value of the Carrington reporting unit by less than five percent.

up to $22.2 million.

Determining the fair value of a reporting unit or an intangible asset involves the use of significant estimates and assumptions. Management bases its fair value estimates on assumptions it believes to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Actual results may differ from those estimates.

The table below summarizes the goodwill balances by reporting unit as of March 31, 2013 (dollars in thousands):

Reporting Unit As of
March 31,
2013		 
DeVry University $22,196 
Becker Professional Review  32,638 
Ross University  237,175 
Chamberlain College of Nursing  4,716 
Carrington  151,876 
American University of the Caribbean  68,321 
DeVry Brasil  49,575 
Total $566,497 

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The table below summarizes goodwill balances by reporting segmentunit as of MarchDecember 31, 2013 (dollars in thousands):

Reporting Segment: As of March
31, 2013		 
Business, Technology and Management $22,196 
Medical and Healthcare  462,088 
International, K-12 and Professional Education  82,213 
Total $566,497 

Total

Reporting Unit As of
December 31,
2013		 
DeVry University $22,196 
Becker Professional Review  33,056 
Ross University  237,174 
Chamberlain College of Nursing  4,716 
Carrington Colleges Group  98,784 
American University of the Caribbean  68,321 
DeVry Brasil  50,510 
Total $514,757 
The table belowsummarizes goodwill increasedbalances by $16.5 millionreporting segment as of December 31, 2013 (dollars in thousands):
Reporting Segment: As of 
December 31, 
2013		 
Business, Technology and Management $22,196 
Medical and Healthcare  408,994 
International and Professional Education  83,567 
Total $514,757 
The table below summarizes the changes in the carrying amount of goodwill, by segment as of December 31, 2013 (dollars in thousands):
  Business, 
Technology and 
Management		 Medical and 
Healthcare		 International 
and Professional 
Education		 Total 
Balance at June 30, 2013 $22,196 $408,994 $77,747 $508,937 
Acquisitions  -  -  8,238  8,238 
Foreign currency exchange rate changes and other  -  -  (2,418)  (2,418) 
Balance at December 31, 2013 $22,196 $408,994 $83,567 $514,757 
The increase in the goodwill balance from June 30, 2012. This increase2013 in the International and Professional Education segment is the result of the addition of $16.1goodwill of $8.2 million of goodwill associated withfrom the acquisition of FAVIP andFacid partially offset by changes in the valuesvalue of the Brazilian Real and the British Pound Sterling as compared to the U.S. dollar. See Note 7 for further explanation of the acquisition of Facid. Since DeVry Brasil and ATCBecker Europe, (f/d/b/a ATC), goodwill is recorded in their respective local currencies, fluctuations in theirits value in relation to the U.S. dollar will cause changes in the balance of this asset.

The table below summarizes the changes in the carrying amount of goodwill, by segment as of March 31, 2013 (dollars in thousands):

  Business,
Technology and
Management		  Medical and
Healthcare		  International, 
K-12 and
Professional
Education		  Total 
Balance at June 30, 2012 $22,196  $462,088  $65,677  $549,961 
Acquisitions  -   -   16,120   16,120 
Foreign currency exchange rate changes and other  -   -   416   416 
Balance at March 31, 2013 $22,196  $462,088  $82,213  $566,497 

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The table below summarizes the indefinite-lived intangible asset balances by reporting unit as of MarchDecember 31, 2013 (dollars in thousands):

Reporting Unit: As of March
31, 2013		 
DeVry University $1,645 
Becker Professional Review  27,912 
Ross University  19,200 
Chamberlain College of Nursing  1,200 
Carrington  71,100 
American University of the Caribbean  117,100 
DeVry Brasil  35,950 
 Total $274,107 

Reporting Unit: As of 
December 31, 
2013		 
DeVry University $1,645 
Becker Professional Review  27,912 
Ross University  19,200 
Chamberlain College of Nursing  1,200 
Carrington Colleges Group  67,200 
American University of the Caribbean  117,100 
DeVry Brasil  46,950 
Total $281,207 
Total indefinite-lived intangible assets increased by $11.6$14.4 million from June 30, 2012.2013. This increase is the result of the addition of $11.3$17.1 million of indefinite-lived intangibles associated with the acquisitionof FAVIP plusFacid partially offset by theeffects of foreign currency translation on the DeVry Brasil assets. Since DeVry Brasil intangible assets are recorded in the local Brazilian currency, fluctuations in the value of the Brazilian Real in relation to the U.S. dollar will cause changes in the balance of these assets.


NOTE 9:  RESTRUCTURING CHARGES

During the fourth quarterfirst six months of fiscal 2012,year 2014, DeVry Group implemented a Voluntary Separation Plan (VSP) that reduced its workforce by 66 positions across DeVry University and the DeVry Group home office. This resulted in a pre-tax charge of $10.4 million in the six month period that represented severance pay and benefits for these employees. In addition, charges related to real estate consolidation of $6.0 million were recorded during the first six months of fiscal year 2014. These restructuring costs were allocated to the following DeVry Group segments: $8.0 million to Business Technology and Management, $5.5 million to Medical and Healthcare and $2.9 million to DeVry Group home office, which is classified as “Depreciation and Other” in “Note 13 - Segment Information”.
During fiscal year 2013, DeVry Group implemented an involuntary reduction in force (RIF), a Voluntary Separation Plan (VSP), and other staff reduction actions that reduced its workforce by approximately 570475 positions across all operating segments.reporting units. This resulted in a pre-tax charge of approximately $7.1$10.3 million in fiscal year 2013 that primarily represented severance pay and benefits for these employees. This was allocated to the segments as follows: $5.0 million to Business Technology and Management, $2.0 million to Medical and Healthcare and $0.1 million to International, K-12 and Professional Education. During the first and third quarters ofthose employees who separated from DeVry Group. Also during fiscal year 2013, DeVry recorded additionalGroup made decisions to consolidate certain facilities at its Carrington and DeVry University educational institutions. This resulted in pre-tax charges of $0.7$6.3 million and $1.5 million, respectively, for additional severance pay and benefits related primarily to the Business Technology and Management and Medical and Healthcare segments. Cash payments for the severance charges and restructuring charges were approximately $6.5 million for the nine months ended March 31, 2013. As of March 31, 2013, approximately $1.4 million remains accrued and is expected to be paid by the end of fiscal 2013.

During the second quarter ofin fiscal year 2013,2013. In addition, DeVry Group consolidated its administrative offices in the Chicagoland area. As a result, the DeVry-owneda DeVry Group-owned facility in Wood Dale, Illinois was closed in December 2012, and employees were re-located to other facilities in the area. The Wood Dale facility is held as available for sale. This resulted in a pre-tax charge of $7.9 million in the second quarter of fiscal year 2013 for a write-down of these assets to fair market value and an expected loss on this asset sale. Also, decisionsOther restructuring charges totaling $1.7 million were madealso expensed in fiscal year 2013.

The following table summarizes the separation and restructuring plan activity for the six months ended December 31, 2013 and 2012, for which cash payments are required (dollars in millions):
  Six months ended 
  December 31, 
  2013 2012 
Liability balance at Beginning of Period $13.2 $5.6 
Increase in liability (separation and other charges)  15.3  0.7 
Reduction in liability (payments and adjustments)  (10.6)  (5.8) 
Liability balance at End of Period $17.9 $0.5 
The remaining liability balances as of December 31, 2013 primarily represent costs for employees that have either not yet separated from DeVry Group or their full severance has not yet been paid. All of these remaining costs are expected to consolidate facilities at DeVry’s Carrington and DeVry University operating units. These decisions resulted in pre-tax charges of $1.6 million and $0.5 million duringbe paid over the second and third quarters of fiscal 2013, respectively.

next 12 months.

24

NOTE 10:  INCOME TAXES

DeVry’s

DeVry Group’s effective income tax rate reflects benefits derived from significant operations outside the United States. Earnings of these international operations are not subject to U.S. federal or state income taxes, so long as such earnings are not repatriated, as discussed below. Four of DeVry’sDeVry Group’s subsidiaries, Ross University School of Medicine (the(Ross Medical School), incorporated under the laws of the Commonwealth of Dominica, Ross University School of Veterinary Medicine (the(Ross Veterinary School), incorporated under the laws of the Federation of St. Christopher, Nevis, St. Kitts in the West Indies, American University of the Caribbean Medical School (AUC), incorporated under the laws of St. Maarten, and DeVry Brasil incorporated under the laws of Brazil and AUC School of Medicine BV (AUC) incorporated under the laws of St. Maarten all benefit from local tax incentives. TheRoss Medical School and Ross Veterinary SchoolsSchool each have agreements with thetheir respective domestic governments that exempt them from local income taxation. Both of these agreements have been extended to provide, (inin the case of theRoss Medical School),School, an indefinite period of exemption and, (inin the case of for theRoss Veterinary School),School, exemption until 2037. DeVry Brasil’s effective tax rate reflects benefits derived from its participation in PROUNI, a Brazilian program for providing scholarships to a portion of its undergraduate students. AUC’s effective tax rate reflects benefits derived from investment incentives.

DeVry Group has not recorded a U.S. federal or state tax provision for the undistributed earnings of its international subsidiaries. It is DeVry’sDeVry Group’s intention to indefinitely reinvest accumulated cash balances, future cash flows and post-acquisition undistributed earnings and profits to improve the facilities and operations of its international schools and pursue future opportunities outside the United States. In accordance with this plan, cash held by the international subsidiaries will not be available for general company purposes and under current laws will not be subject to U.S. taxation. As of MarchDecember 31, 2013 and 2012, cumulative undistributed earnings attributable to international operations were approximately $490.2$578.8 million and $395.6$464.3 million, respectively.

Taxes on income from continuing operations were 22.0%14.7% of pretax income for the thirdsecond quarter and 23.6%15.1% for the first ninesix months of fiscal year 2013,2014, compared to 29.1%21.9% for the thirdsecond quarter and 30.1%25.3% for the first ninesix months of fiscal 2012.year 2013. The decreaselower effective tax rate in effective income tax rates for the periods ended March 31, 2013 relative to the priorsecond quarter and first six months of fiscal year 2014 resulted primarily from the jurisdictional mix of pre-tax earnings from U.S. operations versus the offshore operations of Ross UniversityMedical School, of Medicine, Ross UniversityVeterinary School, of Veterinary Medicine, AUC and DeVry Brasil as well as the favorable impacts of the American Tax Relief Act of 2012 signed into law on January 2, 2013, in which Congress enacted legislation extending the benefits of Internal Revenue Code Section 954(c)(6) (”CFC Look-through”) for a two year period for tax years beginning after January 1, 2012 through December 31, 2013.

DeVry's

As of December 31, 2013, the total amount of gross unrecognized tax benefits excluding interestfor uncertain tax positions, including positions impacting only the timing of tax benefits, was $9.1 million, and, penalties, were $10.6 million asif recognized, the total amount would impact the effective tax rate. As of MarchDecember 31, 2013 and $11.2 million as of March 31, 2012. All of DeVry’s2012, gross unrecognized tax benefits, asincluding positions impacting only the timing of March 31, 2013,benefits, was $23.6 million, and, if recognized, the total amount would impact the effective tax rate. In March 2013, DeVry Group completed an examination by the Internal Revenue Service.Service (IRS). As a result, DeVry Group reduced its unrecognized tax benefits by $13.0$13 million to reflect settlements with the Internal Revenue Service. Management expectsIRS. We expect that our unrecognized tax benefits will increase by an insignificant amount during the next twelve months. DeVry’s total accrued interest and penalties were $1.39 million as of March 31, 2013 and $1.23 million as of March 31, 2012. DeVry Group classifies interest and penalties on tax uncertainties as a component of the provision for income taxes.

 The total amount of interest and penalties accrued at June 30, 2013 was $1.2 million. The corresponding amount at December 31, 2013 was $1.4 million.


NOTE 11: DEBT

DeVry Group had no outstanding borrowings under its credit facility at December 31, 2013 and December 31, 2012. DeVry Group does have liabilities recorded for deferred purchase price agreements with sellers related to the purchases of FBV, Favip and Facid (see “Note 7: Business Combinations” for discussion of Favip and Facid acquisitions). This financing is in the form of hold backs of a portion of the purchase price of these acquisitions or installment payments. Payments are made under these agreements as various conditions of the purchase are met.
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Revolving Credit Facility
DeVry Group maintains a revolving credit facility at March 31, 2013 and March 31, 2012.

Revolving Credit Facility

All of DeVry’swhich expires on May 5, 2016. The facility provides aggregate commitments including borrowings and letters of credit under its $400up to $400 million revolving credit facility are through DeVry. Atand at the request of DeVry Group, the maximum borrowings and letters of credit can be increased to $550$550 million. There are no required principal payments under this revolving credit agreement and all borrowings and letters of credit mature in May 2016. As a result of the agreement extending beyond one year, any borrowings would be classified as long-term with the exception of amounts expected to be repaid in the 12 months subsequent to the balance sheet date. DeVry Group letters of credit outstanding under this agreement were $14.7 million and $9.3$13.2 million as of MarchDecember 31, 2013, and 2012, respectively.were $2.4 million as of December 31, 2012. As of MarchDecember 31, 2013, if there were outstanding borrowings under this agreement they would bear interest, payable quarterly or upon expiration of the interest rate period, at the prime rate plus 0.75%0.75% or at a LIBOR rate plus 1.75%1.75%, at the option of DeVry.DeVry Group. As of MarchDecember 31, 2013, outstanding letters of credit under the revolving credit agreement areDeVry Group is charged an annual fee equal to 0.125%0.125% of the undrawn face amount of the letteroutstanding letters of credit under the agreement, payable quarterly. The agreement also requires payment of a commitment fee equal to 0.2%0.2% of the undrawn portion of the credit facility as of MarchDecember 31, 2013. The interest rate, letter of credit fees and commitment fees are adjustable quarterly, based upon DeVry’s DeVry Group’sachievement of certain financial ratios. Interest rate margins can be raised as high as 1.5%1.5% on prime rate loans and 2.5%2.5% on LIBOR rate loans.

The revolving credit agreement contains certain covenants that, among other things, require maintenance of certain financial ratios, as defined in the agreement. These financial ratios include a consolidated fixed charge coverage ratio, a consolidated leverage ratio and a composite Equity, Primary Reserve and Net Income Department of Education Financial Responsibility Ratio (“DOE Ratio”).financial responsibility ratio. Failure to maintain any of these ratios or to comply with other covenants contained in the agreement will constitute an event of default and could result in termination of the agreement and require payment of all outstanding borrowings.borrowings and letters of credit. DeVry Group was in compliance with the financial debt covenants as of MarchDecember 31, 2013.

The stock of certainmost subsidiaries of DeVry Group is pledged as collateral for the borrowings under the revolving credit facility.


NOTE 12: COMMITMENTS AND CONTINGENCIES

DeVry Group is subject to occasional lawsuits, administrative proceedings, regulatory reviews and investigations associated with financial assistance programs and other matters arising in the normal conduct of its business. The following is a description of pending litigationlegal matters that may be considered other than ordinary, and routine litigation that isand incidental to the business.

The Boca Raton Firefighters’ and Police Pension Fund filed an initial complaint (the “Shareholder Case”) in the United States District Court for the Northern District of Illinois on November 1, 2010 (Case No. 1:10-cv-07031). The initial complaint was filed on behalf of a putative class of persons who purchased DeVry Group common stock between October 25, 2007, and August 13, 2010. Plaintiff filed an amended complaint (the “First Amended Complaint”) on March 7, 2011 alleging the same categories of claims in the initial complaint. The plaintiff claimed in the First Amended Complaint that DeVry Group, Daniel Hamburger and Richard M. Gunst violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by failing to disclose abusive and fraudulent recruiting and financial aid lending practices, thereby increasing DeVry’sDeVry Group’s student enrollment and revenues and artificially inflating DeVry’sDeVry Group’s stock price during the class period. On March 27, 2012, Judge John F. Grady dismissed the First Amended Complaint without prejudice, granting plaintiff leave to file a second amended complaint by May 4, 2012.

On May 4, 2012, the plaintiff again amended its allegations in the Shareholder Case (the “Second Amended Complaint”). The Second Amended Complaint alleged a longer putative class period of October 27, 2007 to August 11, 2011, but narrowed the scope of the alleged fraud significantly as compared to the previous two complaints. Plaintiff focused exclusively on DeVry’sDeVry Group’s practices for compensating student Admissions Advisors, alleging DeVry Group misled the market by failing to disclose that its compensation practices violated federal law and by making affirmative misrepresentations that DeVry Group complied with compensation regulations. The Second Amended Complaint was subsequently corrected to add an additional plaintiff, West Palm Beach Firefighters’ Pension Fund, in response to DeVry’sDeVry Group’s challenge of plaintiff’s standing to complain about statements DeVry Group made after plaintiff had purchased its stock.

On July 10, 2012, DeVry Group filed a Motion to Dismiss the corrected Second Amended Complaint. On March 27, 2013, Judge Grady granted DeVry’sDeVry Group’s Motion to Dismiss and entered judgment in favor of DeVry Group and against plaintiffs. Judge Grady thereby dismissed the case with prejudice; however, he reserved jurisdiction to examine the question of whether sanctions should be imposed against plaintiffs and/or their counsel. On April 26, 2013, the plaintiffs filed a notice of appeal of Judge Grady’s order of dismissal; however, the appeal has been stayed pending Judge Grady’s resolution of the sanctions issue. The issue of sanctions is beingwas fully briefed by the parties as of May 17, 2013, and remains under consideration by Judge Grady.  
26

DeVry Group was served on October 11, 2013, with a complaint in a qui tam action filed under the federal False Claims Act and the Minnesota False Claims Act by two former employees of a customer of DeVry Group’s subsidiary, Advanced Academics, Inc. (“AAI”). The lawsuit, United States and the State of Minnesota ex rel. Jill Bachmann and Shelley Madore v. Minnesota Transitions Charter Schools, Advanced Academics, Inc., DeVry Education Group Inc., and MN Virtual High School, CA No. 12-cv-01359-DWF-JSM, was filed in the United States District Court for the District of Minnesota. The complaint was filed on June 6, 2012 but kept under seal in order for the federal and Minnesota state governments to investigate the allegations and determine if they wished to intervene in the action and pursue the alleged claims.   Both the federal and Minnesota state governments declined to intervene, thereby giving the plaintiffs the choice to pursue the alleged claims on behalf of the state and federal governments. The complaint was unsealed and made public on June 6, 2013. The complaint relates to certain federal and state funding received by Minnesota Transitions Charter Schools and MN Virtual High School. The complaint alleges that Minnesota Transitions Charter Schools and MN Virtual High School received certain state and federal funding, which depended on the accurate reporting of student enrollment data. The complaint alleges that Minnesota Transitions Charter Schools and MN Virtual High School received more funding from the federal and state governments for special education and other services than they should have received in 2008, 2009 and 2010 as a result of allegedly non-compliant practices arising from the reporting of student enrollment data. The complaint further alleges that all schools of defendant Minnesota Transitions Charter Schools received over $75 million in total state and federal funding during fiscal years 2008 to 2010, a portion of which related to the school for which AAI provided services; plaintiff does not quantify what portion of the $75 million was obtained as a result of the allegedly fraudulent practices. The complaint alleges that AAI provided certain curriculum and other services to MN Virtual High School and operated the school. The only reference to DeVry Group in the complaint pertains to its status as the parent corporation to AAI. An agreement in principle was reached in January of 2014 that fully and finally resolves all claims asserted in this matter against DeVry Group and AAI. The settlement is expected to be complete by May 17, 2013. Onceconcluded and the issue of sanctions is resolved, the March 27, 2013 judgment will be subject to appeal by plaintiffs if they decide to contest the judgment.

Three shareholder derivative cases similar to the Shareholder Case had been filed (“Derivative Actions”), but each has been voluntarilylitigation dismissed by the plaintiffs who brought them. Twostipulation sometime in DeVry Group’s third quarter of the Derivative Actions were filed in the Circuit Court of Cook County, Illinois, Chancery Division:fiscal year 2014.

Although DeVry shareholder Timothy Hald filed a derivative complaint on behalf of DeVry on January 3, 2011 (Hald v. Hamburger et al., Case No. 11 CH 0087) and Matthew Green (also a DeVry shareholder) filed a derivative complaint on behalf of DeVry on January 7, 2011 (Green v. Hamburger et al., Case No. 11 CH 0770). The Hald and Green cases (the “Illinois Consolidated Action”) were consolidated by court order dated February 9, 2011 but was voluntarily dismissed without prejudice by Order entered January 15, 2013. Maria Dotro, another DeVry shareholder, filed a third derivative complaint on DeVry’s behalf in the Delaware Court of Chancery on March 11, 2011 (Dotro v. Hamburger et al., Case No. 6263). In the wake of Judge Grady’s award of judgment in favor of DeVry in the Shareholder Case, described above, the Dotro shareholder case was voluntarily dismissed without prejudice as well.

Although DeVryGroup believes that the appeal of the dismissed Shareholder Case and the related derivative actions areis without merit, the ultimate outcome of pending litigation is difficult to predict. In the event that the plaintiffs in the Shareholder Case decide to appeal the adverse judgment entered against them or the shareholders decide to re-file their related claims, DeVry Group will vigorously defend any forthcoming litigation based onappellate proceedings which may proceed in the same or similar allegations,Shareholder Case. At this time, DeVry Group does not expect that the outcome of any such matterthe appeal of the dismissal of the Shareholder Case or any other pending lawsuits will have a material effect on its cash flows, results of operations or financial position.

In April 2013, DeVry Group received a subpoena from the Office of the Attorney General of the State of Illinois and a Civil Investigative Demand issued by the Office of the Attorney General of the Commonwealth of Massachusetts. The Illinois subpoena concerns potential state law implications in the event violations of federal law took place. It was issued pursuant to the Illinois False Claims Act in connection with an investigation concerning whether the compensation practices of DeVry Group and certain of its affiliates are in compliance with the Incentive Compensation Ban of the Higher Education Act and requires DeVry Group to provide documents relating to these matters for periods on or after January 1, 2002. The Massachusetts demand was issued in connection with an investigation into whether DeVry Group caused false claims and/or false statements to be submitted to the Commonwealth of Massachusetts relating to student loans, guarantees, and grants provided to DeVry’sDeVry Group’s Massachusetts students and requires DeVry Group to answer interrogatories and to provide documents relating to periods on or after January 1, 2007.  The timing or outcome of the investigations, or their possible impact on DeVry’sDeVry Group’s business, financial condition or results of operations, cannot be predicted at this time.


23

NOTE 13:  SEGMENT INFORMATION

DeVry’s

DeVry Group’s principal business is providing secondary and postsecondarypost-secondary education. The services of ourOur operations are described in more detail in “Note 1-1- Nature of Operations” to the consolidated financial statements contained in its Annual Report on Form 10-K10-K for the fiscal year ended June 30, 2012.2013. DeVry Group presents three reportable segments: “Business, Technology and Management”, which includes DeVry University undergraduate and graduate operations; “Medical and Healthcare” which includes the operations of Ross University School of Medicine, Ross University School of Veterinary Medicine, American University of the Caribbean, Chamberlain College of Nursing and Carrington Colleges Group; and “International K-12 and Professional Education”, which includes the operations of DeVry Brasil Advanced Academics and Becker Professional Review.

Education.

These segments are consistent with the method by which the Chief Operating Decision Maker (DeVry’s(DeVry Group’s President and CEO) evaluates performance and allocates resources. Performance evaluations are based, in part, on each segment’s operating income, which is defined as income before non-controlling interest, income taxes, interest income and expense, amortization, and certain corporate-related depreciation and expenses.Income taxes, interest income and expense, amortization, and certain corporate-related depreciation and expenses are reconciling items in arriving at income before income taxes for each segment.Intersegment sales are accounted for at amounts comparable to sales to nonaffiliated customers and are eliminated in consolidation. The consistent measure of segment assets excludes deferred income tax assets and certain depreciable corporate assets. Additions to long-lived assets have been measured in this same manner. Reconciling items are included as corporate assets.The accounting policies of the segments are the same as those described in “Note 23 — Summary of Significant Accounting Policies” to the consolidated financial statements contained in its Annual Report on Form 10-K for the fiscal year ended June 30, 2012.

2013.

Following is a tabulation of business segment information based on the segmentation for each of the three and ninesix months ended MarchDecember 31, 2013 and 2012. Corporate information is included where it is needed to reconcile segment data to the consolidated financial statements (dollars in thousands).

  For the Three Months Ended
March 31,		  For the Nine Months Ended
March 31,		 
  2013  2012  2013  2012 
Revenues:                
Business, Technology and Management $283,540  $338,790  $848,393  $1,001,959 
Medical and Healthcare  175,125   160,483   501,228   461,456 
International, K-12 and Professional Education  51,209   41,534   148,233   120,479 
Intersegment Revenues  (1,122)  -   (1,122)  - 
Total Consolidated Revenues $508,752  $540,807  $1,496,732  $1,583,894 
Operating Income:                
Business, Technology and Management $34,431  $64,667  $98,836  $183,850 
Medical and Healthcare  34,635   25,963   86,522   (2,681)
International, K-12 and Professional Education  8,582   7,214   22,210   14,378 
Reconciling Items:                
Amortization Expense  (2,421)  (2,800)  (7,111)  (7,844)
Depreciation and Other  (1,624)  410   (15,158)  1,372 
Total Consolidated Operating Income $73,603  $95,454  $185,298  $189,075 
Interest and Other Income (Expense):                
Interest Income $415  $110  $1,206  $520 
Interest Expense  (756)  (650)  (3,006)  (1,653)
Net Gain on Sale of Assets  -   -   -   3,695 
Net Interest and Other Income (Expense)  (341)  (540)  (1,800)  2,562 
Total Consolidated Income Before Income Taxes $73,262  $94,914  $183,498  $191,637 
Segment Assets:                
Business, Technology and Management $526,705  $676,386  $526,705  $676,386 
Medical and Healthcare  1,075,515   1,021,224   1,075,515   1,021,224 
International, K-12 and Professional Education  293,693   279,331   293,693   279,331 
Corporate  122,073   135,261   122,073   135,261 
Total Consolidated Assets $2,017,986  $2,112,202  $2,017,986  $2,112,202 
Additions to Long-lived Assets:                
Business, Technology and Management $10,419  $12,557  $34,638  $36,449 
Medical and Healthcare  16,265   7,931   28,722   258,108 
International, K-12 and Professional Education  2,380   47,931   39,926   56,861 
Corporate  2,080   6,743   8,637   21,617 
Total Consolidated Additions to Long-lived Assets $31,144  $75,162  $111,922  $373,035 
Reconciliation to Consolidated Financial Statements                
Capital Expenditures  31,144  $29,140  $79,329  $92,167 
Increase in Capital Assets from Acquisitions  -   12,822   2,897   47,947 
Increase (Decrease) in Intangible Assets and Goodwill  -   33,200   29,696   232,921 
Total Increase in Consolidated Long-lived Assets $31,144  $75,162  $111,922  $373,035 
Depreciation Expense:                
Business, Technology and Management $10,978  $9,726  $32,870  $28,244 
Medical and Healthcare  5,999   5,426   18,089   16,070 
International, K-12 and Professional Education  2,048   1,798   5,804   4,848 
Corporate  2,473   2,603   6,954   7,350 
Total Consolidated Depreciation $21,498  $19,553  $63,717  $56,512 
Intangible Asset Amortization Expense:                
Business, Technology and Management $-  $-  $-  $- 
Medical and Healthcare  1,349   1,631   4,044   4,383 
International, K-12 and Professional Education  1,072   1,169   3,067   3,461 
Total Consolidated Amortization $2,421  $2,800  $7,111  $7,844 

27

  For the Three Months Ended 
December 31,		 For the Six Months Ended 
December 31,		 
Revenues: 2013 2012 2013 2012 
Business, Technology and Management $239,913 $280,239 $472,222 $564,853 
Medical and Healthcare  190,447  167,746  366,303  326,103 
International and Professional Education  61,430  52,681  105,151  89,630 
Intersegment Revenues  (521)  -  (1,495)  - 
Total Consolidated Revenues $491,269 $500,666 $942,181 $980,586 
              
Operating Income:             
Business, Technology and Management $9,947 $38,835 $(1,114) $64,405 
Medical and Healthcare  35,311  26,705  60,827  51,887 
International and Professional Education  16,409  15,226  17,489  18,576 
              
Reconciling Items:             
Amortization Expense  (1,612)  (2,412)  (3,261)  (4,690) 
Depreciation and Other  (1,493)  (11,159)  (5,108)  (13,535) 
Total Consolidated Operating Income $58,562 $67,195 $68,833 $116,643 
              
Interest Income (Expense):             
Interest Income $310 $230 $893 $791 
Interest Expense  (1,052)  (759)  (2,052)  (2,250) 
Net Interest Income (Expense)  (742)  (529)  (1,159)  (1,459) 
Total Consolidated Income from Continuing
Operations Before Income Taxes		 $57,820 $66,666 $67,674 $115,184 
              
Segment Assets:             
Business, Technology and Management $341,167 $380,295 $341,167 $380,295 
Medical and Healthcare  1,100,815  1,098,022  1,100,815  1,098,022 
International and Professional Education  282,102  249,863  282,102  249,863 
Corporate  165,029  151,827  165,029  151,827 
Assets of Divested Business  -  34,777  -  34,777 
Total Consolidated Assets $1,889,113 $1,914,784 $1,889,113 $1,914,784 
              
Additions to Long-lived Assets:             
Business, Technology and Management $3,904 $11,575 $7,854 $24,219 
Medical and Healthcare  4,632  6,889  18,928  12,456 
International and Professional Education  1,684  3,347  31,541  36,575 
Corporate  1,025  1,629  3,100  6,557 
Total Consolidated Additions to Long-lived Assets $11,245 $23,440 $61,423 $79,807 
              
Reconciliation to Consolidated Financial Statements             
Capital Expenditures  11,245 $21,592 $33,426 $47,214 
Increase in Capital Assets from Acquisitions  -  -  2,037  2,897 
Increase in Intangible Assets and Goodwill  -  1,848  25,960  29,696 
Total Increase in Consolidated Long-lived Assets $11,245 $23,440 $61,423 $79,807 
              
Depreciation Expense:             
Business, Technology and Management $11,076 $11,052 $21,911 $21,892 
Medical and Healthcare  6,474  6,350  12,621  12,090 
International and Professional Education  566  1,275  1,114  2,379 
Corporate  2,623  2,339  5,073  4,481 
Total Consolidated Depreciation $20,739 $21,016 $40,719 $40,842 
              
Intangible Asset Amortization Expense:             
Medical and Healthcare $902 $1,347 $1,844 $2,695 
International and Professional Education  710  1,065  1,417  1,995 
Total Consolidated Amortization $1,612 $2,412 $3,261 $4,690 
28

DeVry Group conducts its educational operations in the United States, Canada, the Caribbean countriesIslands (countries of Dominica, St. Kitts and St. Kitts/Nevis, Grand Bahama and St. Maarten,Maarten), Brazil, Canada, Europe, the Middle East and the Pacific Rim. Other international revenues, which are derived principally from EuropeCanada and Canada,Europe, were less than 5%5% of total revenues for the quartersthree and six monthperiods ended MarchDecember 31, 2013 and 2012. Revenues and long-lived assets by geographic area are as follows:

  For the Three Months Ended
March 31,		  For the Nine Months Ended
March 31,		 
  2013  2012  2013  2012 
Revenue from Unaffiliated Customers:                
                 
Domestic Operations $401,651  $450,964  $1,194,825  $1,325,618 
International Operations:                
Dominica and St. Kitts/Nevis, St. Maarten  76,607   72,502   225,190   205,791 
Brazil  23,531   14,665   66,431   41,191 
Other  6,963   2,676   10,286   11,294 
Total International  107,101   89,843   301,907   258,276 
                 
Consolidated $508,752  $540,807  $1,496,732  $1,583,894 
Long-lived Assets:                
Domestic Operations $732,865  $745,363  $732,865  $745,363 
International Operations:                
Dominica and St. Kitts/Nevis, St. Maarten  594,904   582,388   594,904   582,388 
Brazil  134,182   109,924   134,182   109,924 
Other  8,010   9,159   8,010   9,159 
Total International  737,096   701,471   737,096   701,471 
                 
Consolidated $1,469,961  $1,446,834  $1,469,961  $1,446,834 

  For the Three Months Ended 
December 31,		 For the Six Months Ended 
December 31,		 
  2013 2012 2013 2012 
Revenue from Unaffiliated Customers:             
Domestic Operations $368,271 $391,406 $718,388 $781,545 
International Operations:             
Dominica, St. Kitts and St. Maarten  86,388  78,766  161,895  148,583 
Brazil  32,905  25,584  56,426  42,900 
Other  3,705  4,910  5,472  7,558 
Total International  122,998  109,260  223,793  199,041 
Consolidated $491,269 $500,666 $942,181 $980,586 
              
Long-lived Assets:             
Domestic Operations $391,922 $417,041 $391,922 $417,041 
International Operations:             
Dominica, St. Kitts and St. Maarten  168,249  137,146  168,249  137,146 
Brazil  44,485  41,627  44,485  41,627 
Other  235  1,584  235  1,584 
Total International  212,968  180,357  212,968  180,357 
Long-lived Assets of Business Held for Sale  -  6,239  -  6,239 
Consolidated $604,891 $603,637 $604,891 $603,637 
No one customer accounted for more than 10%10% of DeVry'sDeVry Group’s consolidated revenues.

29

ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS

Through its website, DeVry Group offers (free of charge) its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other reports filed with the United States Securities and Exchange Commission. DeVry’sDeVry Group’s Web site is http://www.devryinc.com.

www.devryeducationgroup.com.

The following discussion of DeVry’sDeVry Group’s results of operations and financial condition should be read in conjunction with DeVry’sDeVry Group’s Consolidated Financial Statements and the related Notes thereto in Item 1, “FINANCIAL STATEMENTS” in this Quarterly Report on Form 10-Q and DeVry’sDeVry Group’s Consolidated Financial Statements and related Notes thereto in Item 8 “FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” in DeVry’sDeVry Group’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012. DeVry’s2013. DeVry Group’s Annual Report on Form 10-K includes a description of critical accounting policies and estimates and assumptions used in the preparation of DeVry’sDeVry Group’s financial statements. These include, but are not limited to, the use of estimates and assumptions that affect the reported amounts of assets and liabilities; revenue and expense recognition; allowance for uncollectible accounts; internally developed software; land, buildings and equipment; stock-based compensation; impairment of goodwill and other intangible assets; valuation of long-lived assets; and income taxes.

The seasonal pattern of DeVry’sDeVry Group’s enrollments and its educational program starting dates affect the results of operations and the timing of cash flows. Therefore, management believes that comparisons of its results of operations should primarily be made to the corresponding period in the preceding year. Comparisons of financial position should be made to both the end of the previous fiscal year and to the end of the corresponding quarterly period in the preceding year. Sequential comparisons are also made in relation to enrollment and other trends. 

2630

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q, including those that affect DeVry’sDeVry Group’s expectations or plans, may constitute “forward-looking statements” subject to the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as DeVry Group or its management “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “foresees,” “intends,” “plans” or other words or phrases of similar import. Such statements are inherently uncertain and may involve risks and uncertainties that could cause future results to differ materially from those projected or implied by these forward-looking statements.  Potential risks and uncertainties that could affect DeVry’sDeVry Group’s results are described throughout this Report,report, including those in Note 12 to the Consolidated Financial Statements, in Part II, Item 1, “Legal Proceedings”, in Part II, Item 1A. “Risk Factors”, and in DeVry’sDeVry Group’s Annual Report on Form 10-K for the fiscal year ended June 30, 20122013 and filed with the Securities and Exchange Commission on August 28, 201229, 2013 including, without limitation, in Item 1A, “Risk Factors” and in the subsections of “Item 1 — Business” entitled “Competition,” “Student Admissions,” “Accreditation,” “Approval and Licensing,” “Tuition and Fees,” “Financial Aid and Financing Student Education,” “Student Loan Defaults,” “Career Services,” “Seasonality,” and “Employees.”

All forward-looking statements included in this report speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the Securities and Exchange Commission, we are not under any obligation to update any forward-looking information — whether as a result of new information, future events, or otherwise. You should not place undue reliance on forward-looking statements.

OVERVIEW

DeVry’s

DeVry Group’s financial results for the thirdsecond quarter of fiscal 2013year 2014 reflect a continued revenue decline primarily within DeVry University, which resulted in decreased earnings as compared to the prior year. This decline was partially offset by continued growth from DeVry Group’s healthcare, international and professional education program offerings. Management believes that it is making progress towards achievingon DeVry University’s turnaround plan, including further improving academic quality and realigning its top priorities of realigning DeVry’s cost structure with student enrollment levels, regaining enrollment growth, and making targeted investments to drive future growth.levels. Operational and financial highlights for the thirdsecond quarter of fiscal year 20132014 include:

·During the second quarter of fiscal year 2014, DeVry Education Group Inc. changed its name from DeVry Inc. This change was made to better reflect the growth and diversity of the organization.
·
DeVry Group made solid progress in aligning its cost structure with its enrollments, and reengineering and redesigning processes across its institutions.enrollments. Management expects it will realize at least $100achieve $75 million in total cost and expense savings in fiscal year 2013, primarily2014 at DeVrythe institutions in transition (DeVry University, Carrington College and Carrington College California (collectively “Carrington”) and Advanced Academics Inc.). 

·
During the second quarter of fiscal year 2014, DeVry Group recorded pre-tax restructuring charges totaling $2.0$4.7 million. Of these charges, $0.9 million relatedThese restructuring actions were made to severance for DeVry University campus consolidation. The remaining $1.1 million in charges related to the costs of consolidating facilitiesalign cost structure with enrollments primarily at Carrington College and severance costs atthe DeVry Medical International.Group home office. 

·ForThe assets of Advanced Academics Inc. (“AAI”) were divested in December 2013 and the three month period ended March 31, 2013, new student enrollments at Carrington increased 17.5%operating results for AAI are disclosed as compared“discontinued operations” in the Consolidated Statements of Income. The fiscal year 2014 second quarter pre-tax loss on discontinued operations was $1.4 million. The assets of AAI were written down to the same period last year. This is the third straight quartertheir fair market value as of positive new student enrollment growth.September 30, 2013.

·
For the MarchNovember 2013 session, total student enrollments at Chamberlain College of Nursing (“Chamberlain”) increased 16.9%28.5% to a record 13,23515,732 students as compared to the same sessionterm last year. Chamberlain continues to invest in its programs, student services and campus locations.

·Carrington College of California obtained conditional approval to add the campuses of Carrington College to its existing campus network from its accreditor, the Accrediting Commission for Community and Junior Colleges, Western Association of Schools and Colleges.
·DeVry University received Reaffirmation of Accreditation by the Institutional Actions Council (IAC) ofThe Higher Learning Commission (HLC) of the North Central Association of Colleges and Schools (NCA). The IAC action continues the accreditation of DeVry University, DeVry College of New York and the University’s Keller Graduate School of Management until 2019.

·The American Institute of Certified Public Accountants released its 2012 Elijah Watt Sells award winners, honoring candidates with the highest scores on the CPA exam. There were 39 winners, and 37 of them prepared for the exam using Becker course material.

·During the third quarter, DeVry repurchased a total of 347,280 shares of its common stock under its eight repurchase program at an average cost of $28.18 per share.

·DeVry’sGroup’s financial position remained strong, generating $282.4$113.1 million of operating cash flow during the first ninesix months of fiscal year 2013.2014. As of MarchDecember 31, 2013, cash and marketable securities balancescash equivalents totaled $280.9$262.0 million and there were no outstanding borrowings.

31

USE OF NON-GAAP FINANCIAL INFORMATION AND SUPPLEMENTAL RECONCILIATION SCHEDULE

During the thirdsecond quarter and first ninesix months of fiscal year 2013,2014, DeVry Group recorded restructuring chargesexpenses related to the costsworkforce reductions and real estate consolidations to consolidate facilitiesalign its cost structure at Carrington College and DeVry University, and for severance at DeVry Medical International. During the first nine months of fiscal 2013, DeVry also recorded restructuring charges for the write-down of land, building and equipment related to its decision to relocate a facility in Wood Dale, Illinois in order to consolidate administrative operations in the Chicagoland area. During the first nine months of fiscal year 2012, DeVry recorded impairment charges related to its Carrington Colleges and the DeVry Group reporting unit.home office with enrollments. DeVry Group also recorded a gain from the sale of Becker’s Stalla CFA review operations duringa former DeVry University campus in Decatur, Georgia. Additionally, DeVry Group recorded the first nine monthsoperating results of fiscal year 2012.its Advanced Academic Inc. reporting unit as discontinued operations. The following table illustrates the effects of thesethe restructuring and impairment chargesexpense, discontinued operations and gain fromon the sale of assets on DeVry’sDeVry Group’s earnings. Management believes that the non-GAAP disclosure of net income and earnings per share excluding these discrete items and discontinued operations provides investors with useful supplemental information regarding the underlying business trends and performance of DeVry’sDeVry Group’s ongoing operations and is useful for period-over-period comparisons of such operations given the discrete nature of the restructuring charges and gain on the sale of assets. DeVry Group uses these supplemental financial measures internally in its management and budgeting process. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, DeVry’sDeVry Group’s reported results prepared in accordance with GAAP. The following table reconciles these non-GAAP measures to the most directly comparable GAAP information (in thousands, except per share data):

  For the Three Months  For the Nine Months 
  Ended March 31,  Ended March 31, 
  2013  2012  2013  2012 
Net Income $56,821  $67,131  $139,096  $133,480 
Earnings per Share (diluted) $0.88  $1.00  $2.15  $1.96 
Restructuring Charges (net of tax) $1,271  $-  $7,211  $- 
Effect on Earnings per Share (diluted) $0.02  $-  $0.11  $- 
Impairment Charges (net of tax) $-  $-  $-  $55,751 
Effect on Earnings per Share (diluted) $-  $-  $-  $0.82 
Gain on Sale of Assets (net of tax) $-  $-  $-  $(2,216)
Effect on Earnings per Share (diluted) $-  $-  $-  $(0.03)
Net Income Excluding the Restructuring                
Charges, Impairment Charges and                
Gain on Sale of Assets $58,092  $67,131  $146,307  $187,015 
Earnings per Share Excluding the                
Impairment Charges and Gain on                
Sale of Assets (diluted) $0.90  $1.00  $2.26  $2.74 

  For the Three Months For the Six Months 
  Ended December 31, Ended December 31, 
  2013 2012 2013 2012 
Net Income $48,155 $50,286 $41,023 $82,275 
Earnings per Share (diluted) $0.74 $0.78 $0.63 $1.27 
Discontinued Operations (net of tax) $920 $838 $16,248 $3,012 
Earnings per Share (diluted) $0.01 $0.01 $0.25 $0.05 
Restructuring Charges (net of tax) $2,877 $5,940 $10,057 $5,940 
Effect on Earnings per Share (diluted) $0.04 $0.09 $0.16 $0.09 
Gain on Sale of Assets (net of tax) $- $- $(1,167) $- 
Effect on Earnings per Share (diluted) $- $- $(0.02) $- 
Net Income from Continuing Operations Excluding the Restructuring             
Expenses and Gain on Sale of Assets (net of tax) $51,952 $57,064 $66,161 $91,227 
Earnings per Share from Continuing Operations Excluding the Restructuring Expenses and Gain on Sale of Assets (net of tax) $0.80 $0.88 $1.02 $1.41 
2832

RESULTS OF OPERATIONS

The following table presents information with respect to the relative size to revenue of each item in the Consolidated Statements of Income for the thirdsecond quarter and first ninesix months of both the current and prior fiscal year. Percentages may not add because of rounding.

  For the Three
Months Ended
March 31,		  For the Nine Months
Ended March 31,		 
  2013  2012  2013  2012 
Revenues  100.0%  100.0%  100.0%  100.0%
Cost of Educational Services  47.4%  45.2%  48.6%  45.7%
Student Services and Administrative Expense  37.8%  37.2%  38.3%  37.6%
Restructuring Expenses  0.4%  0.0%  0.8%  0.0%
Asset Impairment Charges  0.0%  0.0%  0.0%  4.7%
Total Operating Costs and Expenses  85.5%  82.3%  87.6%  88.1%
Operating Income  14.5%  17.7%  12.4%  11.9%
Net Interest and Other (Expense) Income  -0.1%  -0.1%  -0.1%  0.2%
Income Before Income Taxes  14.4%  17.6%  12.3%  12.1%
Income Tax Provision  3.2%  5.1%  2.9%  3.6%
Net Income  11.2%  12.4%  9.4%  8.5%
Net Income Attributable to Non-controlling Interest  -0.1%  0.0%  -0.1%  0.0%
Net Income Attributable to DeVry Inc.  11.2%  12.4%  9.3%  8.4%

  For the Three
Months Ended
December 31,		  For the Six
Months Ended
December 31,		 
  2013  2012  2013  2012 
Revenues  100.0%  100.0%  100.0%  100.0%
Cost of Educational Services  49.5%  48.0%  51.4%  48.9%
Student Services and Administrative Expense  37.7%  36.7%  39.7%  38.2%
Gain on Sale of Assets  -   -   (0.2)%  - 
Restructuring Charges  0.9%  1.9%  1.7%  1.0%
Total Operating Costs and Expense  88.1%  86.6%  92.7%  88.1%
Operating Income from Continuing Operations  11.9%  13.4%  7.3%  11.9%
Net Interest (Expense) Income  (0.2)%  (0.1)%  (0.1)%  (0.1)%
Income From Continuing Operations Before Non-controlling
    Interest and Income Taxes		  11.8%  13.3%  7.2%  11.7%
Income Tax Provision  (1.7)%  (2.9)%  (1.1)%  (3.0)%
Income From Continuing Operations Before Non-controlling
    Interest		  10.0%  10.4%  6.1%  8.8%
Loss on Discontinued Operations, Net of Tax  (0.2)%  (0.2)%  (1.7)%  (0.3)%
Net Income  9.9%  10.2%  4.4%  8.5%
Net Income Attributable to Non-controlling Interest  (0.1)%  (0.2)%  0.0%  (0.1)%
Net Income Attributable to DeVry Education Group Inc.  9.8%  10.0%  4.4%  8.4%
REVENUES

Total consolidated revenues for the thirdsecond quarter of fiscal year 20132014 of $508.8$491.3 million decreased $32.1$9.4 million, or 5.9%1.9%, as compared to the year-ago quarter. For the first ninesix months of fiscal year 2013,2014, total consolidated revenues decreased $87.2$38.4 million or 5.5%3.9% to $1,497$942.2 million. For both the third quarter and first nine months of fiscal year 2013, revenuesRevenues decreased within DeVry’sthe Business, Technology and Management segment as a result of a decline in undergraduate and graduate student enrollments and an increase in scholarships. This decrease was partially offset by revenue increases within DeVry’sthe Medical and Healthcare and International K-12 and Professional Education segments as a result of growth in total student enrollments and tuition price increases. In addition, the two most recent additions to DeVry Brasil, Faculdade Boa Viagem (FBV), which was acquired on February 29, 2012, and FAVIP,do Vale do Ipojuca (Favip) which was acquired on September 3, 2012, andFaculdade Diferencial Integral (Facid) which was acquired on July 1, 2013, contributed to offsetting the revenue decline during both the quarter and first ninesix months of the current fiscal year.

year 2014.

Management expects that total revenues will be down for total fiscal year 20132014 as compared to fiscal year 2012,2013, driven largely by the continuing effect ofimpact from declines in new and total student enrollments within DeVry University partially offset by the increaseexperienced in new student enrollments experienced at Carrington in the first nine months of fiscal year 2013 and which have continued into fiscal year 2014 and are expected to continue into the second half of fiscal year 2014. These lower revenues will be partially offset by anticipated revenue growth within DeVry’sDeVry Group’s other educational institutions.

Business, Technology and Management

Revenues in DeVry Group’s Business, Technology and Management segment, revenueswhich is comprised solely of DeVry University, decreased 16.3%14.4% to $283.5$239.9 million in the thirdsecond quarter and declined 15.3%16.4% to $848.4$472.2 million for the first ninesix months of fiscal year 20132014 as compared to the year-ago periods as a result of a decline in undergraduate student enrollments and graduate coursetakers dueincreased scholarships. This trend is expected to continue into the remainder of fiscal year 2014 which will result in lower cyclical demand amongrevenues for the University’s target segment of students, driven by the challenging economic environment, persistent high levels of unemployment, perceptions of the value of a college degree and heightened competition. In addition, an increase in scholarships also contributed to the decline in revenues as compared to the prior year periods. The Business, Technology and Management segment is comprised solely of DeVry University.year. Key trends in enrollment and tuition pricing are set forth below.

2933

Undergraduate new student enrollment by term:

·Decreased by 16.6%24.7% from July 2011 (9,0262012 (7,532 students) to July 2012 (7,5322013 (5,674 students);

·Increased by 0.1% from September 2012 (6,580 students) to September 2013 (6,589 students);
·Decreased by 8.6%12.0% from September 2011 (7,200November 2012 (5,482 students) to September 2012 (6,580November 2013 (4,824 students); and

·Decreased by 15.5% from November 2011 (6,488 students) to November 2012 (5,482 students);

·Decreased by 4.7%7.9% from January 2012 (5,5932013 (5,330 students) to January 2013 (5,3302014 (4,911 students); and,

·Decreased by 21.2% from March 2012 (6,533 students) to March 2013 (5,146 students).

Undergraduate total student enrollment by term:

·Decreased by 15.8%16.1% from July 2011 (59,9662012 (50,503 students) to July 2012 (50,5032013 (42,374 students);

·Decreased by 14.9%16.3% from September 2011 (65,9332012 (56,086 students) to September 2012 (56,0862013 (46,966 students);

·Decreased by 17.6%11.7% from November 2011 (60,1032012 (49,515 students) to November 2012 (49,5152013 (43,726 students);: and

·Decreased by 14.9%15.1% from January 2012 (62,4352013 (53,138 students) to January 2013 (53,138 students); and

·Decreased by 16.5% from March 2012 (56,958 students) to March 2013 (47,5372014 (45,097 students).

Graduate coursetaker enrollment, includingprincipally the Keller Graduate School of Management:

The term “coursetaker” refers to the number of courses taken by a student. Thus, one student taking two courses is counted as two coursetakers.

·Decreased by 9.0%18.0% from the July 2011 session (21,576 coursetakers) to the July 2012 session (19,635 coursetakers) to the July 2013 session (16,107 coursetakers); and

·Decreased by 7.8%18.8% from the September 2011 session (23,937 coursetakers) to the September 2012 session (22,072 coursetakers); to the September 2013 session (17,925 coursetakers).

·Decreased by 16.0%14.1% from the November 2011 session (23,264 coursetakers) to the November 2012 session (19,540 coursetakers); to the November 2013 session (16,778 coursetakers).

·Decreased by 12.1%18.0% from the January 20122013 session (24,029(21,131 coursetakers) to the January 20132014 session (21,131coursetakers); and

·Decreased by 18.4% from the March 2012 session (23,366 coursetakers) to the March 2013 session (19,075(17,322 coursetakers).

Tuition rates:

·Effective July 2012, 2013, DeVry University froze both undergraduate and graduate tuition rates for the school year which ends in June 2014. Management believes this will increase interest from potential students and positively impact persistence among its current students.
·
DeVry University’s U.S. undergraduate tuition is $609 per credit hour for students enrolling in one to six credit hours per session. Tuition is $365 per credit hour for each credit hour in excess of six credit hours. These amounts do not include the cost of course materialsbooks, supplies, transportation and supplies. These tuition rates represent an increase of approximately 1.2% as compared to the summer 2011 session. The impact of this tuition price increase is offset by an increase in the amount of scholarships awarded to DeVry University students.living expenses.

·Effective July 2012, Keller Graduate School of Management program tuition per course is $2,298. This represents a weighted average increase of 1.9% compared to the year-ago session.

Management believes the decreases in enrollments were due to lower demand from DeVry University’s target student segment driven by the prolonged low level of economic growth, persistent higher levels of unemployment, negative perceptions of the value of a college degree and increased reluctance to take on debt, resulting in a reduction in interest from potential students. In addition, management believes heightened competition from both public-sector and private-sector education providers contributed to the decreases in DeVry University undergraduate and graduate enrollments. To improve performance at DeVry University, management is executing a turnaround plan which includes:
·Effective July 2013,Sharpening DeVry UniversityUniversity’s value proposition which is freezing both undergraduateeducational quality, career outcomes and graduate tuition rates forexceptional student support;
·Aligning the school year which ends in June 2014. Management believes this will increase interest from potentialcost structure with enrollment levels; and
·Strategic use of scholarships to attract new students and improve persistence among its current students.student persistence.
In aligning the cost structure, management is focused on increasing efficiencies. Over the past year DeVry Group has reduced costs through staffing adjustments. Management has made the decision to close or consolidate certain DeVry University campuses while balancing the potential impact on enrollment and student satisfaction. Management is also focused on process redesign and restructuring in areas such as student finance. 
·34Management believes the decreases in enrollments were due to lower cyclical demand from the University’s target student segment driven by the prolonged economic downturn, persistent unemployment, negative perceptions of the value of a college degree and increased reluctance to take on debt, resulting in a reduction in interest from potential students. In addition, management believes heightened competition from both public-sector and private-sector education providers and issues with internal execution contributed to the decreases in DeVry University undergraduate and graduate enrollments. To regain enrollment growth at DeVry University, management’s plan includes channel-focused initiatives, technology improvements and brand awareness. In the high school channel, DeVry is leveraging its array of institutions beyond DeVry University to raise awareness of career paths. Technology-focused efforts include the development of a self-service portal that prospective students can use to streamline the application process. In addition, management made the decision to increase scholarships and grants to help DeVry University’s students achieve their academic goals. DeVry is also exploring methods to increase the flexibility of its programs in order to lower the overall cost of education to its students along with better educating prospective students on the value of a college degree.

The plan to stabilize enrollments includes communication of DeVry University’s value proposition, which is educational quality, career prospects and high levels of student service.This communication plan includes integrated university-wide efforts at key points in the year. A September 2013 “call to action event” included the new Career Catalyst Scholarship. Under the Career Catalyst Scholarship, DeVry University committed more than $15 million over the following three-year period to scholarships that will be awarded to qualifying students who enrolled in the September 2013 session. The scholarships are valued at up to a total of $20,000 per student, depending on the degree and credits required to attain that degree. Students qualifying for DeVry University’s Career Catalyst Scholarship will be eligible to receive scholarship awards in progressive amounts over a period of three years. For example, students in their first year of a bachelor’s degree program can be awarded up to $5,000. During the second year, the available award can increase up to $7,000. For the third year, the award can increase to $8,000. As a result of positive results from this program in attracting and retaining successful students, DeVry University will again offer this Career Catalyst Program to qualifying students that enroll in the March 2014 session.
Management continues to execute a program strategy that focuses resources on providing students of DeVry University with strong programs in high-growth fields. This program strategy is a priority designed to provide students with successful outcomes.
DeVry Group is also exploring methods to increase the flexibility of its programs to lower the overall cost of education to its students along with better educating prospective students on the value of a college degree.Tuition rates for fiscal year 2014 at DeVry University remain unchanged from those of fiscal year 2013. Enhanced use of technology is also expected to increase the effectiveness of the student recruiting process. 
Medical and Healthcare

Medical and Healthcare segment revenues increased 9.1%13.5% to $175.1$190.4 million in the thirdsecond quarter and increased 8.6%12.3% to $501.2$366.3 million for the first ninesix months of fiscal year 20132014 as compared to the year-ago periods. For both the third quarter and first nine months of fiscalprior year 2013, higherperiod. Higher total student enrollments at Chamberlainseveral of the institutions that comprise this segment (Chamberlain College of Nursing (“Chamberlain”) and DeVry Medical International (which is composed of Ross University SchoolSchools of Medicine Ross University School ofand Veterinary Medicine and American University of the Caribbean School of Medicine (“AUC”))) were the key drivers of the segment revenue growth. Carrington College and Carrington College California (collectively “Carrington”) experienced a decrease in total student enrollment in the June and September terms over the year-ago periods which negatively affected the first nine months of fiscal 2013 revenues; however, total enrollments for the December and March terms increased over the year-ago periods which resulted in higher revenue in the third quarter of fiscal 2013 compared to the year ago quarter. Also, AUC, which was acquired on August 3, 2011, contributed a full nine months of revenue in the current year period as opposed to the eight months contributed in the first nine months of fiscal year 2012. Key trends for DeVry Medical International, Chamberlain and Carrington are set forth below.

See discussion following the enrollment information for explanation of the trends.

DeVry Medical International new student enrollment by term:

·Decreased by 19.4% from May 2012 (643 students) to May 2013 (518 students);
·Increased by 13.6% from May 2011 (566 students) to May 2012 (643 students);

·Increased by 8.4%5.7% from September 2011 (8532012 (925 students) to September 2012 (9252013 (978 students); and

·IncreasedDecreased by 0.3%3.5% from January 2012 (6012013 (603 students) to January 2013 (6032014 (582 students).

DeVry Medical International total student enrollment by term:

·Decreased by 2.4% from May 2012 (5,944 students) to May 2013 (5,800 students);
·Increased by 1.0%4.0% from May 2011 (5,885September 2012 (6,209 students) to May 2012 (5,944September 2013 (6,458 students); and

·Increased by 2.1% from September 2011 (6,082 students) to September 2012 (6,209 students); and

·Increased by 4.9%5.6% from January 2012 (6,0242013 (6,318 students) to January 2013 (6,3182014 (6,673 students).

Chamberlain College of Nursing new student enrollment by term:

·Decreased by 34.9% from July 2012 (1,974 students) to July 2013 (1,285 students);
·Increased by 14.7%108.0% from July 2011 (1,721September 2012 (1,625 students) to July 2012 (1,974September 2013 (3,380 students);

·Decreased by 8.0% from November 2012 (2,121 students) to November 2013 (1,952 students); and
·Increased by 52.6% from September 2011 (1,065 students) to September 2012 (1,625 students);

·Increased by 13.5% from November 2011 (1,868 students) to November 2012 (2,121 students);

·Increased by 87.8%65.1% from January 2012 (1,1292013 (2,120 students) to January 2013 (2,1202014 (3,501 students); and.

·35Decreased by 25.0% from March 2012 (1,801 students) to March 2013 (1,350 students).

31

Chamberlain College of Nursing total student enrollment by term:

·Increased by 15.8%16.5% from July 2011 (9,3742012 (10,852 students) to July 2012 10,8522013 (12,648 students);

·Increased by 20.2%30.2% from September 2011 (10,0292012 (12,050 students) to September 2012 (12,0502013 (15,690 students);

·Increased by 15.3%28.5% from November 2011 (10,6192012 (12,247 students) to November 2012 (12,2452013 (15,732 students); and

·Increased by 26.0%32.2% from January 2012 (10,8882013 (13,714 students) to January 2013 (13,714 students); and

·Increased by 16.9% from March 2012 (11,321 students) to March 2013 (13,2352014 (18,136 students).

Carrington new student enrollment by term:

·Decreased by 19.7%1.5% from June 2011 (2,0332012 (1,632 students) to June 2012 (1,6322013 (1,607 students);

·IncreasedDecreased by 33.3%19.5% from September 2011 (2,5482012 (3,396 students) to September 2012 (3,3962013 (2,733 students);

·IncreasedDecreased by 12.7%3.2% from December 2011 (1,5652012 (1,763 students) to December 2012 (1,763 students); and

·Increased by 17.5% from March 2012 (2,035 students) to March 2013 (2,391(1,706 students).

Carrington total student enrollment by term:

·Increased by 9.6% from June 2012 (6,486 students) to June 2013 (7,111 students);
·Increased by 1.0% from September 2012 (7,628 students) to September 2013 (7,706 students); and
·Decreased by 25.7% from June 2011 (8,728 students) to June 2012 (6,486 students);

·Decreased by 8.3% from September 2011 (8,322 students) to September 2012 (7,628 students);

·Increased by 0.4%0.6% from December 2011 (7,3792012 (7,405 students) to December 2012 (7,4052013 (7,358 students); and.

Tuition rates:
·Increased by 8.8% from March 2012 (7,309 students) to March 2013 (7,951 students).

Tuition rates:

·
Effective September 2012,2013, tuition and fees for the beginning basic sciences portion of the programs at the Ross University School of Medicine and Ross University School of Veterinary Medicine are $17,675$18,825 and $16,800,$17,725, respectively, per semester. Tuition and fees for the final clinical portion of the programs are $19,500$20,775 per semester for the medical school, and $21,100$22,250 per semester for the veterinary school. These tuition rates represent an increase from September 20112012 rates of 6.6% and 7.1%6.5% for the medical school and 6.3%5.5% for the veterinary school. These amounts do not include the cost course materials,of books, supplies, transportation, and living expenses.

·
Effective September 2012,2013, tuition and fees for the beginning basic sciences and final clinical rotation portions of AUC’s medical program are $17,925$18,975 and $20,050,$21,250, respectively, per semester. These tuition rates represent an increase from the September 20112012 rates of 6.1%approximately 5.9%.

·
Effective July 2012,2013, tuition is $665 per credit hour for students enrolling in one to six credit hours per session in the Chamberlain Bachelor of Science in Nursing (BSN) (onsite), Associate Degree in Nursing (ADN) and Licensed Practical Nurse to Registered Nurse (LPN-to-RN) programs. This rate is unchanged as compared to the prior year. Tuition is $100$200 per credit hour per session for each credit hour in excess of six credit hours. These effective tuition rates are unchangedThis excess credit hour rate represents a $100 increase as compared to the prior year. These amounts do not include the cost of course materialsbooks, supplies, transportation and supplies.living expenses.

·
Effective July 2012,2013, tuition is $590 per credit hour for students enrolled in the Chamberlain RN-to-BSNRegistered Nurse to Bachelor of Science in Nursing (RN-to-BSN) online degree program. This tuition rate is unchanged from the July 20112012 tuition rate. Tuition for students enrolled in the online Master of Science in Nursing (MSN) program is $650 per credit hour, which is unchanged from the prior year.
·
On a per credit hour basis, tuition for the Carrington College and Carrington College California programs ranges from $254 per credit hour to $1,651 per credit hour, for non-general education courses, with the wide range due to the nature of the programs. General Education courses are charged at $325 per credit hour at Carrington College, and $364 per credit hour at Carrington College California. Students are charged a non-refundable registration fee of $100, and they are also charged separately for books and special (program specific) supplies and/or testing. A student services fee ranging from $75 to $150 is charged at Carrington College and Carrington College California as well, depending on the program. Total program tuition at each institution ranges from approximately $13,000 for certificate programs to over $60,000 for some advanced programs.

Continued demand for medical doctors and veterinarians positively influenced career decisions of new students towards these respective fields of study. Also, there currently exists a supply and demand imbalance in medical education. Over the past few semesters, DeVry Medical International new student enrollments were negatively impacted by a transition of key roles within marketing and enrollment management. Management believes that the historical enrollment increases at DeVry Medical International have resulted from the reputation of its academic programs and student outcomes, enhancements made to its marketing and recruiting functions, and steps taken to meet student demand such as adding faculty and classrooms. Though managementclassrooms which reduced capacity constraints that existed in the prior fiscal year. Management expects thesepositive enrollment trends to continue in the low single digits; however, heightened competition may adversely affect DeVry Medical International’s ability to continue to attract qualified students to its programs.

36

Continued demand for nurses positively influenced career decisions of new students towards this field of study. The increasehistorical trend of increases in new student enrollments in the July 2012, September 2012, November 2012 and January 2013 sessions at Chamberlain wasis attributable to increased conversion ratesdemand for its RN-to-BSN online completion program, the addition of several new campus locations, in Indianapolis in March 2012capacity expansion and Atlanta in May, 2012, along with organic growth at existing locations. Thelocations and the introduction of new campuses are both co-located with DeVry University.graduate degree programs.New student enrollment at Chamberlain for the MarchJuly 2013 termand November 2013 terms as compared to the MarchJuly 2012 term wasand November 2012 terms were impacted by the realignment of the academic calendar, with September, January and May intakes. As a result there were no onsite enrollments for the March term.

July and November terms. These enrollments were shifted to the September 2013 and the January 2014 terms which partially accounts for the 110 percent increase in new student enrollments from September 2012 to September 2013.

Management believes the declines in total student enrollments experienced at Carrington over the last twoin previous fiscal years arewere the result of heightened competition, the prolonged economic downturn and persistent unemployment, which has resulted in reductions in the volume of inquiries from potential students. To address these issues, Carrington continues to execute a turnaround plan, which includes increasing its focus on building awareness of Carrington’s brand, optimizing its marketing approach to emphasize the development of internally-generated inquiries, improving its recruiting process through its new student contact center and narrowing its focus geographically and programmatically around Carrington’s core strengths in healthcare. Carrington is also makingcontinues to make targeted investments in enhancing its students’ academic experience.These initiatives contributed to the 33%, 12.7% and 17.5% growth in new student enrollments for several successive terms in the September 2012, December 2012 and Marchfiscal year 2013, terms, respectively, as well aswhich resulted in an increase in total student enrollment for four consecutive terms through September 2013. In the June 2013 term, new student enrollments declined as a result of the decision to focus Carrington’s program offerings and suspend recruiting for certain non-core programs. In the September 2013 term, new student enrollments decreased as a result of the number of session starts in the current year period as compared to the year-ago period. During the first quarter of fiscal year 2014, Carrington had four session starts as compared to five in the year-ago period. The decrease in new student enrollments for the December 2012 and March31, 2013 term compared to the year-ago period was also a result of the narrowed program focus. Total student enrollments for the December 31, 2013 term decreased from the year-ago period due to the declines in new student enrollments for the past three terms.

International K-12 and Professional Education

International K-12 and Professional Education segment revenues rose 23.3%16.6% to $51.2$61.4 million in the thirdsecond quarter and increased 23.0%17.3% to $148.2$105.2 million for the first ninesix months of fiscal year 20132014 as compared to the year-ago periods. For both the third quarter and first nine months of fiscal year 2013,prior year. DeVry Brasil was the primary driver of revenue growth in this segment primarily due to new and total student enrollment growth as compared to the year-ago period. Revenue growth at DeVry Brasil was primarily the result of the recent acquisitions of FBV, which was acquired on February 29, 2012, and FAVIP,Favip, which was acquired on September 3, 2012. Revenue declined at Advanced Academics during the third quarter2012 and first nine months of fiscal year 2013 primarily due to competitive pressures and continuing school district budget constraints.Facid, which was acquired on July 1, 2013. Becker Professional Education revenues increasedgrew, driven primarily by the contribution of Falcon Physician Reviews (“Falcon”) which was acquiredincreases in April, 2012.Becker CPA self-study revenues. Key enrollment trends for DeVry Brasil are set forth below.

DeVry Brasil new student enrollment by term:

·Increased
Decreased by 2.2%9.4% from September 2011 (4,0902012 (4,179 students) to September 2012 (4,1792013 (3,785 students); and. The acquisition of Facid accounted for 309 new students. Excluding the impact of the Facid acquisition, new student enrollments decreased by 16.8%.

·Increased by 2.0% from March 2012 (7,244 students) to March 2013 (7,390 students).

DeVry Brasil total student enrollment by term:

·
Increased by 9.2%11.4% from September 2011 (24,1352012 (26,343 students) to September 2012 (26,3462013 (29,340 students); and. The acquisition of Facid accounted for 2,582 new students. Excluding the impact of the Facid acquisition, total student enrollments increased by 1.6%.

A large percentage of DeVry Brasil’s program offerings are subject to limitations by Brazil’s Ministry of Education as to the number of students who can be enrolled in the programs. The new student enrollment decline experienced in the September 2013 term was primarily the result of a temporary admissions restriction for three programs at one of its institutions, Area 1. As of December 31, 2013, these restrictions have been removed for two of the three programs. Management has applied for approval to have the third enrollment limitation removed and expects this to occur within the next several months.
·37Increased by 7.2% from March 2012 (27,133 students) to March 2013 (29,083 students).

COSTS AND EXPENSES

Cost of Educational Services

The largest component of Cost of Educational Services is the cost of faculty and staff who support educational operations. This expense category also includes the costs of facilities, adjunct faculty, supplies, bookstore and other educational materials, student education-related support activities, and the provision for uncollectible student accounts.

DeVry’s

DeVry Group’s Cost of Educational Services decreased 1.3%increased 1.2% to $241.0$243.0 million during the thirdsecond quarterand grew 0.5%1.1% to $727.0$484.7 million during the first ninesix months of fiscal year 20132014 as compared to the respective year-ago periods. For the third quarter, lowerLower Costs of Educational Services within DeVry University and Carrington Colleges as a result of savings from cost reduction measures more thanwere offset by the increase in costs necessary to support the operations of the growth institutions and from the acquisitions of FBV, which was acquired on February 29, 2012, Falcon, which was acquired on April 3, 2012 and FAVIP, which was acquired on September 3, 2012. These acquisitions also accounted for most of the costinstitutions. This increase during the first nine months of fiscal year 2013. In addition, cost increasesincludes costs that were also incurred in both the third quarter and first nine months of fiscal 2013 into support of operating a higher number of campus locationstotal student enrollments for Chamberlain as compared to the prior year and the need to support continued growth at DeVry Medical International and DeVry Brasil.

The costs at DeVry Brasil include the full six month’s effect of expense from the acquisition of Favip, which was acquired on September 3, 2012, compared to four months of expense in fiscal year 2013, along with the expenses of Facid, which was acquired on July 1, 2013.

As a percentage of revenue, Cost of Educational Services increased to 47.4%49.5% in the thirdsecond quarter of fiscal year 20132014 from 45.2%48.0% during the prior year period. For the first ninesix months of fiscal year 2013,2014, Cost of Educational Services increased to 48.6%51.4% from 45.7%48.9% during the prior year period. The increase was the result of decreased operating leverage as a result of revenue declines primarily at DeVry University and Carrington.

University.

Student Services and Administrative Expense

This expense category includes student admissions, marketing and advertising costs, general and administrative costs, expenses associated with curriculum development, and the amortization expense of finite-lived intangible assets related to acquisitions of businesses.

Student Services and Administrative Expense declined 4.5%increased 0.7% to $192.1$185.0 million during the thirdsecond quarter of fiscal year 2013 and decreased 3.9%declined 0.2% to $573.0$374.2 million during the first ninesix monthsof fiscal 2013year 2014 as compared to the respective year-ago periods. The increase in the second quarter was mainly the result of higher costs necessary to support the operations of DeVry Group’s growth institutions (DeVry Medical International, Chamberlain, DeVry Brasil, and Becker Professional Education). This increase was enough to offset the decrease in expenses reflects savings from cost reduction measures (workforce reductions and reduced project spending) and deferred advertising spending. These. For the first six months of fiscal year 2014, these reductions more than offset the expense growth from the most recent acquisitions of FBV, Falcon,Favip and FAVIPFacid and the increase in costs necessary to support the operations of the growth institutions.growing institutions. Amortization of finite-lived intangible assets in connection with acquisitions of businesses declined slightlydecreased by $0.8 million during the thirdsecond quarter and decreased $1.4 million for the first ninesix months of fiscal year 20132014 as compared to the respective year-ago period.periods. Amortization expense is included entirely in the Student Services and Administrative Expense category.

As a percentage of revenue, Student Services and Administrative Expense increased to 37.8%37.7% in the thirdsecond quarter of fiscal year 2013 as compared to 37.2% in2014 from 36.7% during the year-ago quarter. For the first ninesix months of fiscal year 2013,2014, Student Services and Administrative Expense increased to 38.3%39.7% from 37.6%38.2% during the prior year period. The increase in the third quarter and first nine months of fiscal 2013 was the result of decreased operating leverage as a result of revenue declinesfrom declining revenues primarily at DeVry University and Carrington.University.

Restructuring ExpensesGain on the Sale of Assets

DeVry made decisions to consolidate facilities at its Carrington and

During the first quarter of fiscal year 2014, management completed the sale of the former DeVry University educational institutions. Thiscampus in Decatur, GA, which was vacated a number of years ago. The net proceeds on this sale were approximately $6.7 million, which resulted in the recording of a pre-tax chargesgain of $1.4 million and $3.0 million for the third quarter and first nine months of fiscal 2013, respectively. $1.9 million.
Restructuring Expenses
During the second quarter of fiscal year 2013,2014, DeVry consolidatedMedical International and Carrington recorded charges related to real estate consolidations of $0.3 million and $4.4 million, respectively. During the first quarter of fiscal year 2014, DeVry Group implemented a reduction in its administrative offices in the Chicagoland area. As a result, a DeVry owned facility in Wood Dale, Illinois was closed in December 2012, and employees were re-located to other facilities in the area. The Wood Dale facility is held as available for sale. Thisworkforce that resulted in a pre-tax charge of $7.9$10.4 million that represented severance pay and benefits for these employees. In addition, charges related to real estate consolidation of $1.3 million were recorded in the first nine months of fiscal 2013 for a write-down of assets to fair market value and an expected loss on this asset sale. Also, during the third quarter of fiscal 2013, a decision was madeyear 2014. These restructuring costs were allocated to restructure positions atthe segments in the first six months as follows: $8.0 million to Business Technology and Management, $5.5 million to Medical and Healthcare, $2.9 million to the DeVry Medical International. This resultedGroup home office which is classified as “Depreciation and Other” in a pre-tax charge“Note 13 - Segment Information” to the consolidated financial statements of $0.6 million. DeVry expectsthis Form 10-Q.
38

Cash payments for these charges were approximately $10.6 million for the six months ended December 31, 2013. The remaining accrual for these charges is $17.9 million as of December 31, 2013. The balance is expected to save approximately $3 million annually as a result of these actions.

be paid within the next 12 months.

OPERATING INCOME

Total consolidated operating income from continuing operations for the thirdsecond quarter of fiscal year 20132014 of $73.6$58.6 million decreased 22.9%12.8% as compared to the prior year quarter. For the first ninesix months of fiscal year 2013,2014, total consolidated operating income of $185.3$68.8 million decreased 2.0%41.0% as compared to the prior year period. Revenue declines at DeVry University for both reporting periods of fiscal 2013 and at Carrington Colleges forFor the first ninesix months, the operating income decline was experienced at the Business, Technology and Management and the International and Professional Education segments. The largest driver of fiscal 2013 contributed to the decline in operating income for those periodsduring fiscal year 2014 was the revenue decline at DeVry University and the restructuring expenses. This decline more than offset the increases in revenue and operating income resulting from recent acquisitions and growth in other institutions. The revenue decline was partially offset by the decrease in expenses from cost reduction measures, as discussed above. TheOperating income also declined for the first six months at DeVry Brasil primarily driven by investments for expansion and growth. This decline at DeVry Brasil began to reverse in the second quarter as operating income decline was limited to the Business, Technology and Management segment. The decreaseleverage increased. This also resulted in a second quarter increase in operating income for the first nine monthsInternational and Professional Education segment of fiscal year 2013 would have been greater withoutwhich DeVry Brasil is a $75.0 million non-cash asset impairment charge recorded in the first nine months of fiscal 2012. Excluding this charge, total consolidated operating income for the first nine months of fiscal year 2013 decreased 29.8% as compared to the prior year period.

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part.

Business, Technology and Management

Business, Technology and Management segment operating income decreased 46.8%74.4% to $34.4$9.9 million during the thirdsecond quarter of fiscal year 2013, and declined 46.2% to $98.8 million during the first nine months of fiscal year 20132014, as compared to the year-ago periods.quarter. The Business, Technology and Management segment generated an operating loss in the first six months of fiscal year 2014 of $1.1 million compared to operating income of $64.4 million during the first six months of fiscal year 2013. The decrease in operating income was the result of lower revenue and decreased operating leverage.leverage and a restructuring charge of $8.0 million in the first quarter of fiscal year 2014 (as discussed earlier). Total segment expenses for the thirdsecond quarter and first six months of fiscal 2013year 2014, excluding the restructuring charges and gain on the sale of assets decreased 9.1%4.6% and 6.6% as compared to the respective year-ago quarter and declined 8.4% in the first nine months of fiscal 2013 as compared to year ago period,periods, as a result of savings from cost reduction measures, as discussed above. Excluding special charges and the gain on the sale of assets, the Business, Technology and Management segment generated operating income of $4.9 million during the first six months of fiscal year 2014. Management continues to mitigate the effects of this challenging environment by better aligning its cost structure with student enrollments while also targeting investments in growth initiatives such as new programs.

Management believes that consolidations of DeVry University locations and further cost control measures will be necessary for the remainder of fiscal year 2014 and beyond if enrollments continue to decline.

 

Medical and Healthcare

Medical and Healthcare segment operating income increased 33.4%32.2% to $34.6$35.3 million during the thirdsecond quarter of fiscal year 2013 as compared2014, and grew 17.2% to the prior year quarter. For$60.8 million during the first ninesix months of fiscal year 2013, the Medical and Healthcare segment recorded operating income of $86.5 million as compared to an operating loss of $2.7 million in the year-ago period. The increase in operating income in the third quarter was primarily the result of increased operating income at Chamberlain, Ross University Schools of Medicine and Veterinary Medicine and American University of the Caribbean School of Medicine. The operating loss at Carrington also declined in the third quarter as compared to the year ago period. The largest single driver of the increase in operating income for the first nine months of fiscal year 2013 was the $75.0 million non-cash asset impairment charge recorded in the first nine months of fiscal 2012. Excluding this charge, total consolidated operating income for the first nine months of fiscal year 2013 increased 23% as compared to the prior year period. This increase in operating income in the first nine months of fiscal 2013 was primarily the result of increased operating income at Chamberlain, Ross University Schools of Medicine and Veterinary Medicine and American University of the Caribbean School of Medicine. The operating loss at Carrington also declined in the first nine months of fiscal 2013 as compared to the year ago period.

International, K-12 and Professional Education

International, K-12 and Professional Education segment operating income increased 19.0% to $8.6 million during the third quarter of fiscal year 2013, and grew 54.5% to $22.2 million during the first nine months of fiscal year 2013 as compared to the year-ago periods. The improved operating results were driven primarily by increased operating leverage within Professional Education and DeVry Brasil.

NET INTEREST AND OTHER INCOME (EXPENSE)

Interest income was relatively unchanged during the third quarter and first nine months of fiscal year 2013 as compared to the year-ago periods.

Interest expense increased slightly during the third quarter and first nine months of fiscal year 20132014 as compared to the year-ago periods. The increase in operating income was the result of increased operating earnings at DeVry Medical International and Chamberlain as a result of increased revenues which were partially offset by investments to drive future enrollment growth. Also operating losses at Carrington decreased as a result of higher total student enrollments as compared to the year-ago quarter and six month period, and cost reduction measures, as discussed above.

International and Professional Education
International and Professional Education segment operating income increased 7.8% to $16.4 million during the second quarter of fiscal year 2014 as compared to the year ago quarter. For the first six months of fiscal year 2014, the International and Professional Education segment recorded operating income of $17.5 million as compared to operating income of $18.6 million in the year-ago period. The decreased operating results for the six months were primarily driven by investments for expansion and growth.
NET INTEREST (EXPENSE) INCOME
Interest income for the second quarter and first six months of fiscal year 2014 of $0.3 million and $0.9 million, respectively, was consistent with the year-ago periods. 
Interest expense increased by $0.3 million in the second quarter of fiscal year 2014 and decreased by $0.2 million during the first six months of fiscal year 2014 as compared to the respective year-ago periods. The changes in interest expense wasare attributable to fluctuations in interest accretedrates at DeVry Brasil where interest is accrued on earn-outs and installment payments related to the acquisition of FBV.

recent acquisitions, as discussed above.

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INCOME TAXES

Taxes on income from continuing operations were 22.0%14.7% of pretax income for the thirdsecond quarter and 23.6%15.1% for the first ninesix months of fiscal year 2013,2014, compared to 29.1%21.9% for the thirdsecond quarter and 30.1%25.3% for the first ninesix months of fiscal 2012.year 2013. The decreaselower effective tax rate in the effective income tax rates for the periods ended March 31, 2013 relative to the priorsecond quarter and first six months of fiscal year 2014 resulted primarily from the jurisdictional mix of pre-tax earnings from U.S. operations versus the offshore operations of Ross University School of Medicine, Ross University School of Veterinary Medicine, AUC and DeVry Brasil as well as the favorable impacts of the American Tax Relief Act of 2012 signed into law on January 2, 2013, in which Congress enacted legislation extending the benefits of Internal Revenue Code Section 954(c)(6) (”(“CFC Look-through”) for a two year period for tax years beginning after January 1, 2012 through December 31, 2013.

DeVry’s

DeVry Group’s effective income tax rate reflects benefits derived from significant operations outside the United States. Earnings of these international operations are not subject to U.S. federal or state income taxes, so long as such earnings are not repatriated, as discussed below. Four of DeVry’sDeVry Group’s subsidiaries, Ross University School of Medicine (the Medical School)(RUSM), incorporated under the laws of the Commonwealth of Dominica, Ross University School of Veterinary Medicine (the Veterinary School)(RUSVM), incorporated under the laws of the Federation of St. Christopher, Nevis, St. Kitts in the West Indies, AUCAmerican University of the Caribbean School of Medicine BV (AUC), incorporated under the laws of St. Maarten, and DeVry Brasil, incorporated under the laws of Brazil all benefit from local tax incentives. The MedicalRUSM and Veterinary SchoolsRUSVM have agreements with thetheir respective domestic governments that exempt them from local income taxation. Both of these agreements have been extended to provide, (inin the case of the Medical School),RUSM, an indefinite period of exemption and, (inin the case of for the Veterinary School),RUSVM, exemption until 2037. DeVry Brasil’s effective tax rate reflects benefits derived from its participation in PROUNI, a Brazilian program for providing scholarships to a portion of its undergraduate students. AUC’s effective tax rate reflects benefits derived from investment incentives.

DeVry Group intends to indefinitely reinvest international earnings and cash flow to improve and expand facilities and operations at the Medical andRoss University School of Medicine, Ross University School of Veterinary schools,Medicine, AUC and DeVry Brasil, and pursue other business opportunities outside the United States. Accordingly, DeVry Group has not recorded a provision for the payment of U.S. income taxes on these earnings.

DISCONTINUED OPERATIONS
In the fourth quarter of fiscal year 2013, management determined that the operations of AAI no longer aligned with the strategic direction of DeVry Group. At that time, management committed to divest the AAI business.  As a result, it was determined that the net assets of AAI would be classified as “held for sale” in the Consolidated Balance Sheets and the results of operations of AAI would be classified in the Consolidated Statements of Income and Consolidated Statements of Cash Flows as discontinued operations retroactive to full fiscal year 2013.
In the first quarter of fiscal year 2014, management wrote down the net assets of AAI to their fair market value based on the estimated selling price of the assets as of September 30, 2013. As a result of its review of the preliminary purchase offers for the assets of the business, management determined that the market value of this business had been significantly diminished. This resulted in a $13.5 million pre-tax impairment charge. In December 2013, the assets of AAI were sold for $2.0 million which was approximately $0.4 million higher than the fair value of the net assets on the date of the sale. This gain on the sale was recorded in the second quarter of fiscal year 2014 and is included in the Loss from Operations of Divested Component in the Consolidated Statements of Income.
 The reported loss on discontinued operations in the second quarter of fiscal year 2014 is comprised of $1.8 million in operating losses and a pre-tax gain of $0.4 million recorded on the sale of AAI’s net assets. The reported loss on discontinued operations in the first six months of fiscal year 2014 is comprised of $4.6 million in operating losses and a pre-tax impairment charge of $13.1 million for the net fair market write-down of AAI’s net assets.
See “Note 3 – Assets and Liabilities of Divested Business and Discontinued Operations” to the Consolidated Financial Statements for additional disclosures.
LIQUIDITY AND CAPITAL RESOURCES

Student Payments

DeVry’s

DeVry Group’s primary source of liquidity is the cash received from payments for student tuition, course materials,books, other educational materials and fees. These payments include funds originating as financial aid from various federal state and provincialstate loan and grant programs; student and family educational loans (“private loans”); employer educational reimbursements; and student and family financial resources. Private loans as a percentage of DeVry Group’s total revenue are relatively small. DeVry Group continues to pursue all available financing options for its students, including DeVry’sDeVry Group’s institutional loan programs.

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The following table summarizes DeVry’sDeVry Group’s cash receipts from tuition and related fee payments by fund source as a percentage of total revenue for the fiscal years 2013 and 2012, and 2011, respectively.

  Fiscal Year 
  2012  2011 
Funding Source:        
Federal Assistance (Title IV) Program Funding (Grants and Loans)  69%  73%
State Grants  1%  2%
Private Loans  1%  1%
Student accounts, cash payments, private scholarships, employer and military provided tuition assistance and other  29%  24%
Total  100%  100%

  Fiscal Year 
  2013  2012 
Funding Source:      
Federal Assistance (Title IV) Program Funding (Grants and Loans) 66% 69%
State Grants 1% 1%
Private Loans 1% 1%
Student accounts, cash payments, private scholarships,
    employer and military provided tuition assistance and other		 32% 29%
Total 100% 100%
The pattern of cash receipts during the year is seasonal. DeVry’sDeVry Group’s accounts receivable peak immediately after tuition bills are issued at the beginning of each academic period.session. Historically, accounts receivable reach their lowest level at the end of each academic term,semester/session, dropping to their lowest point during the year at the end of June.

At MarchDecember 31, 2013, total accounts receivable, net of related reserves, were $194.4was $117.8 million compared to $254.7$118.3 million at MarchDecember 31, 2012. The decrease in net accounts receivable was attributable to the revenue declines at DeVry University, and Carrington. This decrease was partially offset withby the impact of continued revenue growth at Chamberlain and DeVry Brasil as well as increases in net accountsfederal funds receivable from to the acquisitions of FBV and FAVIP.

at DeVry University.

Financial Aid

Like other higher education institutions, DeVry Group is highly dependent upon the timely receipt of federal financial aid funds. FinancialAll financial aid and assistance programs are subject to political and governmental budgetary considerations. In the United States, the Higher Education Act (“HEA”) provides the authority forguides the federal government’s support of postsecondary education. If there are changes to financial aid programs that restrict student eligibility or reduce funding levels, DeVry’sDeVry Group’s financial condition and cash flows could be materially and adversely affected. Please see “Item 1A.Item 1A Risk Factors”Factors in DeVry’sthe Annual Report on Form 10-K, for the fiscal year ended June 30, 2012 for a discussion of student financial aid related risks.

In addition, please see Item 1A Risk Factors in this Quarterly Report on Form 10-Q for an update on the discussion of the U.S. Department of Education negotiated rule making committee process on Gainful Employment.

In addition, government-funded financial assistance programs are governed by extensive and complex regulations in both the United States, Brazil and Brazil.Canada. Like any other educational institution, DeVry’sDeVry Group’s administration of these programs is periodically reviewed by various regulatory agencies and is subject to audit or investigation by other governmental authorities. Any violation could be the basis for penalties or other disciplinary action, including initiation of a suspension, limitation or termination proceeding. Previous Department of Education and state regulatory agency program reviews have not resulted in material findings or adjustments against DeVry.

any DeVry Group institution. A comprehensive program review of DeVry University’s administration of its Title IV programs, initiated in May 2011, was completed in September 2013 with no material adverse findings.

A U.S. Department of Education regulation known as the “90/10 Rule” affects only proprietary postsecondary institutions, such as DeVry University, Ross University School of Medicine, Ross University School of Veterinary Medicine, American University of the Caribbean,AUC, Chamberlain, Carrington College and Carrington College California. Under this regulation, an institution that derives more than 90% of its revenues from Title IV student financial assistance programs in any two consecutive yearsyear may not participate in these programs infor the year following that period.

year.

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The following table details the percentage of revenue from federal financial assistance programs for each of DeVry’sDeVry Group’s Title IV eligible institutions for fiscal years 2013 and 2012, and 2011, respectively.

  Fiscal Year 
  2012  2011 
DeVry University:        
Undergraduate  75%  81%
Graduate  73%  81%
Ross University School of Medicine  80%  81%
Ross University School of Veterinary Medicine  89%  89%
Chamberlain College of Nursing  66%  71%
Carrington College  80%  82%
Carrington College California  81%  85%
American University of the Caribbean School of Medicine  81%  81%

  Fiscal Year 
  2013  2012 
DeVry University:      
Undergraduate 72% 75%
Graduate 70% 73%
Ross University School of Medicine 80% 80%
Ross University School of Veterinary Medicine 87% 89%
Chamberlain College of Nursing 66% 66%
Carrington College 79% 80%
Carrington College California 81% 81%
American University of the Caribbean School of Medicine 80% 81%
Under the terms of DeVry’sDeVry Group institutions’ participation in financial aid programs, certain cash received from state governments and the U.S. Department of Education is maintained in restricted bank accounts. OnceDeVry Group receives these funds either after the financial aid authorization and disbursement process for the benefit of the student is completed, or just prior to that authorization. Once the authorization and disbursement process for a particular student is completed, the restricted funds may be transferred to unrestricted accounts and become available for DeVry Group to use in current operations. This process generally occurs during the academic term for which such funds have been authorized. At MarchDecember 31, 2013, cash in the amount of $7.2$11.9 million was held in restricted bank accounts, compared to $13.2$3.9 million at MarchDecember 31, 2012. This decreaseThe increase is a result in a change in thedue to timing of the receipt of financial aid duetransfers from restricted cash to the move to a new student centric academic calendar at DeVry University and Chamberlain where students may start an academic term at any of six times during the year.

As described in more detail in “Item 1. Business” in DeVry’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012, institutions must meet aunrestricted accounts.

A separate financial responsibility test if theirfor continued participation by an institution’s students in federal financial assistance programs is based upon a composite score of three ratios: an equity ratio that measures the institution’s capital resources; a primary reserve ratio that measures an institution’s ability to fund its operations from current resources; and a net income ratio that measures an institution’s ability to operate profitably. A minimum score of 1.5 is necessary to meet the Department of Education’s financial standards. Institutions with scores of less than 1.5 but greater than or equal to 1.0 are considered financially responsible, but require additional oversight. These schools are subject to cash monitoring and other participation requirements. An institution with a score less than 1.0 is considered not financially responsible. However, a school with a score less than 1.0 may continue to participate in the Title IV programs under provisional certification. In addition, this lower score typically requires that the school be subject to cash monitoring requirements and post a letter of credit (equal to a minimum of 10 percent of the Title IV aid it received in the institution's most recent fiscal year).
For the past several years, DeVry Group’s composite score has exceeded the required minimum of 1.5. If DeVry Group were unable to meet requisite financial responsibility standards or otherwise demonstrate, within the regulations, its ability to continue to provide educational services, then DeVry Group could be subject to heightened monitoring or required to post a letter of credit to enable its students to continue to participate in federal financial assistance programs. The U.S. Department of Education relies on a test that considers Equity, Primary Reserve, and Net Income ratios, with a minimum required score of 1.5. Management has calculated DeVry’s composite score as 2.0 at June 30, 2012. Management believes DeVry will continue to demonstrate the required level of financial stability.

Cash from Operations

Cash generated from continuing operations in the first ninesix months of fiscal year 20132014 was $282.4$113.3 million, compared to $355.1$185.9 million in the year-ago period. AlthoughThis decrease in operating cash flows from continuing operations was primarily the result of a $28.6 million decrease from the prior year in net income increased $6.3 million from the year-ago period,continuing operations. Also contributing to the decrease in cash flowgenerated from continuing operations occurred partially due to a $75.0 million non-cash asset impairment charge in the prior fiscal year. Also, the decrease in cash flow from operations was due in part towere changes in net accounts receivable, deferred tuition revenue, advanced tuition payments and restricted cash of $101.7 million as compared to the prior year. This decrease is a result in a change in the timing of student billing due to the move to a new student centric academic calendar at DeVry University and Chamberlain where students may start an academic term at any of six times during the year. These decreases in operating cash flows were partially offset by changes in levels of prepaid expenses, accounts payable and accrued expenses which resulted in a $78.8that were $30.3 million greater source of cash as compared toless than the prior year.year-ago changes. Variations in the levels of accrued and prepaid expenses and accounts payable from period to period are caused, in part, by the timing of the period-end relative to DeVry’sDeVry Group’s payroll and bill payment cycles. Finally, realized and unrealized gains and losses onAnother factor in the sale or disposal of assets increaseddecrease in operating cash flow by $10.8flows were changes in net accounts receivable, deferred and advance tuition and restricted cash that were $4.4 million less than prior year changes. The receivables balance increased due to the impact of revenue growth primarily at Chamberlain and DeVry Brasil as compared to the prior year.

year-ago period.

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Cash Used in Investing Activities

Capital expenditures for continuing operations in the first ninesix months of fiscal year 20132014 were $79.3$33.4 million compared to $92.2$47.2 million in the year-ago period. The decrease in capital spending was driven by a focus on prudent capital deploymentdeployment. DeVry Group continues to invest capital in facility expansion at the Ross University School of Medicine and a delaythe Ross University School of Veterinary Medicine and AUC; spending for the new Chamberlain campuses and expanding existing facilities; and facility improvements at DeVry University and DeVry Brasil.   
 Capital spending for the remainder of fiscal year 2014 is expected to support continued investment in spending on projects.academic quality at Ross University School of Medicine, Ross University School of Veterinary Medicine and AUC; and facility improvements and planned new locations for Chamberlain and DeVry Brasil. Management anticipates full year fiscal 2013year 2014 capital spending to be in the range of $125$90 to $135 million.

$100 million range.

On September 3, 2012,July 1, 2013, DeVry Educacional do Brasil S/A (f/k/a Fanor-Faculdades Nordeste S/A) (DeVry Brasil), a subsidiary of DeVry, acquired the stock of Faculdade do Vale do IpojucaDiferencial Integral (“FAVIP”Facid”).  Under the terms of the agreement, DeVry Brasil paid approximately $30.3$16.1 million in cash in exchange for the stock of FAVIP.Facid. In addition, DeVry Brasil will beis required to make an additional paymentpayments of approximately $3.9$9.0 million over the next 12 months should FAVIP receive university center status.

DeVry maintains an 83.5 percent ownership interestfour years. Facid currently serves approximately 2,500 students at two campuses in the city of Teresina, and offers degree programs primarily in healthcare, including a Doctor of Medicine (M.D.) program. Facid joins DeVry Brasil, which now operates six institutions at 13 campuses in northeast Brazil. With the addition of Facid, these institutions provide education programs to nearly 30,000 students. Along with its M.D. program, Facid offers undergraduate degrees in other healthcare fields such as nursing, pharmacy, and dentistry, as well as a law program.

During the remaining 16.5 percent owned by the current DeVry Brasil management group. Beginning January 2013, DeVry has the right to exercise a call option and purchase any remaining DeVry Brasil stock from DeVry Brasil management. Likewise, DeVry Brasil management has the right to exercise a put option and sell its remaining ownership interest in DeVry Brasil to DeVry. DeVry intends on exercising its rights under this call option before the endfirst quarter of fiscal 2013.year 2014, management completed the sale of the former DeVry University campus in Decatur, GA, which was vacated a number of years ago. The valuenet proceeds on this sale were approximately $6.7 million which resulted in the recording of this call option is currently recorded at $9.0 million.

a pre-tax gain of $1.9 million in the first six months of fiscal year 2014.

Cash Used in Financing Activities

During the first nine months of fiscal year 2013,

DeVry repurchased a total of 2,016,998 shares of its stock, on the open market, for approximately $48.4 million under its share repurchase programs. As of March 31, 2013, the total remaining authorization under the eighth repurchase program was $85.3 million. This latest share repurchase program was authorized by the Board of Directors on August 29, 2012. It will allow DeVry to repurchase up to $100 million of its common stock through December 31, 2014. The timing and amount of any future repurchases will be determined based on evaluation of market conditions and other factors. These repurchases may be made through the open market, including block purchases, or in privately negotiated transactions, or otherwise. The buyback will be funded through available cash balances and/or borrowings under its revolving credit agreement and may be suspended or discontinued at any time.

DeVry’s Board of Directors declared a dividend on November 7, 2012 of $0.17 per share to common stockholders of record as of November 30, 2012. The total dividend of $10.9 million was paid on December 19, 2012.

DeVry’sGroup’s consolidated cash balances of $278.0$262.0 million at MarchDecember 31, 2013, included approximately $129.0$198.4 million of cash attributableto DeVry’sDeVry Group’s international operations. It is DeVry’sDeVry Group’s intention to indefinitely reinvest this cash and subsequent earnings and cash flow to improve and expand facilities and operations of its international institutionsschools and pursue future business opportunities outside the United States. Therefore, cash held by international operations will not be available for domestic general corporate purposes. Management does not believe that this policy will adversely affect DeVry’sDeVry Group’s overall liquidity.

Historically, DeVry Group has produced positive domestic cash flows from operating activities sufficient to fund the delivery of its domestic educational programs and services as well as to fund capital investment and other activities including share repurchases and dividend payments. In addition, DeVry Group maintains a $400 million revolving line of credit which can be expanded with bank approval to $550 million at the option of DeVry.DeVry Group. For the first ninesix months of fiscal year 2013,2014, cash flows from domestic operating activities were approximately $194.2$29 million which when added to DeVry’sDeVry Group’s beginning of the year domestic cash balances, was sufficient to fund $49.9$15.8 million of domestic capital investment and pay dividends of $20.7$10.9 million and fund $48.4 million of common stock repurchases, in addition to funding other investment and financing activities.

Management believes that current balances of unrestricted cash, cash generated from operations and the revolving loancredit facility will be sufficient to fund both DeVry’sDeVry Group’s current domestic and international operations and growth plans, and current share repurchase program, for the foreseeable future unless future significant investment opportunities should arise.

Revolving Credit AgreementFacility

DeVry Group maintains a revolving credit facility which expires on May 5, 2016. This facility provides aggregate commitments including borrowings and letters of credit of up to $400 million and, at the request of DeVry Group, can be increased to $550 million. Borrowings under this agreement will bear interest at the prime rate plus 0.75% or at a LIBOR, rate plus 1.75%, at the option of DeVry.DeVry Group, plus a pre-established margin. Outstanding letters of credit under the revolving credit agreement are charged a fee for the undrawn face amount of the letter of credit, payable quarterly. The agreement also requires payment of a commitment fee for the undrawn portion of the credit facility. The interest rate margin, letter of credit fees and commitment fees are adjustable quarterly, based upon DeVry’sDeVry Group’s achievement of certain financial ratios. As of March 31, 2013, there were no outstanding borrowings under this agreement. DeVry’sDeVry Group’s letters of credit outstanding under the revolving credit facility were approximately $14.7$13.2 million as of MarchDecember 31, 2013.

The revolving credit agreement contains certain covenants that, among other things, require maintenance of certain financial ratios, as defined in the agreements.agreement. These financial ratios include a consolidated fixed charge coverage ratio, a consolidated leverage ratio and a composite Equity, Primary Reserve and Net Income Department of Education Financial Responsibility Ratio (“DOE Ratio”).financial responsibility ratio. Failure to maintain any of these ratios or to comply with other covenants contained in the agreement will constitute an event of default and could result in termination of the agreements and require payment of all outstanding borrowings. DeVry Group was in compliance with all debt covenants as of MarchDecember 31, 2013.

3843

Other Contractual Arrangements

DeVry’s

DeVry Group’s long-term contractual obligations consist of its $400 million revolving line of credit (discussed above), operating leases on facilities and equipment, and agreements for various services.

In addition, DeVry Group has recorded liabilities for deferred purchase price agreements with sellers related to the acquisitions of FBV, Favip and Facid (see “Note 7: Business Combinations” of the notes to the Consolidated Financial Statements). This financing is in the form of hold backs of a portion of the purchase price of these acquisitions or installment payments. Payments are made under these agreements as various conditions of the purchase are met.
DeVry Group is not a party to any off-balance sheet financing or contingent payment arrangements, nor are there any unconsolidated subsidiaries. DeVry Group has not extended any loans to any officer, director or other affiliated person. DeVry Group has not entered into any synthetic leases, and there are no residual purchase or value commitments related to any facility lease. DeVry Group did not enter into any significant derivatives, swaps, futures contracts, calls, hedges or non-exchange traded contracts during the first ninesix months of fiscal year 2013.2014. DeVry Group had no open derivative positions at MarchDecember 31, 2013.

RECENT ACCOUNTING PRONOUNCEMENTS

In AprilJuly 2013, the FASBFinancial Accounting Standards Board issued authoritativeAccounting Standards Update No. 2013-11: “Income Taxes (Topic 740): Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”. This guidance updating disclosure requirements for Comprehensive Income. The amendments dorequires an unrecognized tax benefit related to a net operating loss carryforward, a similar tax loss or a tax credit carryforward to be presented as a reduction to a deferred tax asset, unless the tax benefit is not changeavailable at the current requirements for reporting netdate to settle any additional income or other comprehensive income in financial statements. However,taxes under the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the facetax law of the statement where net incomeapplicable tax jurisdiction. The guidance is presented oreffective for the fiscal years and interim periods beginning after December 15, 2013 with early adoption permitted. Management is in the notes, significant amounts reclassified outprocess of accumulated other comprehensive income byevaluating the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The guidance will be effective for our interim and annual reporting period beginning July 1, 2013. Applicationeffects of this guidance but does not believe it will not have a material effectsignificant impact on DeVry’sDeVry Group’s consolidated financial statements.

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK

DeVry Group is not dependent upon the price levels, nor affected by fluctuations in pricing, of any particular commodity or group of commodities. However, more than 50% of DeVry’sDeVry Group’s costs are in the form of employee wages and benefits. Changes in employment market conditions or escalations in employee benefit costs could cause DeVry Group to experience cost increases at levels beyond what it has historically experienced.

The financial position and results of operations of Ross University’s Caribbean operations as well as those of AUC are measured using the U.S. dollar as the functional currency. Substantially all Ross University and AUC financial transactions are denominated in the U.S. dollar.

The financial position and results of operations of DeVry’sDeVry Group’s Canadian educational programsoperations are measured using the Canadian dollar as the functional currency. The Canadian operations have not entered into any material long-term contracts to purchase or sell goods and services. DeVry Group does not have any foreign exchange contracts or derivative financial instruments designed to mitigate changes in the value of the Canadian dollar. Because Canada-based assets and liabilities constitute less than 1.0% of DeVry’sDeVry Group’s overall assets and liabilities, changes in the value of Canada’s currency at rates experienced during the past several years are unlikely to have a material effect on DeVry’sDeVry Group’s results of operations or financial position. Based upon the current value of the net assets in the Canadian operations, a change of $0.01 in the value of the Canadian dollar relative to the U.S. dollar would result in a translation adjustment of less than $100,000.

The financial position and results of operations of DeVry’sDeVry Group’s investment in DeVry Brasil are measured using the Brazilian Real as the functional currency. DeVry Brasil has not entered into any material long-term contracts to purchase or sell goods and services, other than the lease agreements on teaching facilities and contingencies relating to prior acquisitions. Currently, DeVry Group does not have any foreign exchange contracts or derivative financial instruments designed to mitigate changes in the value of the Brazilian Real. Since Brazilian-based assets constitute approximately 8.0%8.9% of DeVry’sDeVry Group’s overall assets, and its Brazilian liabilities constitute approximately 6.0%8.0% of overall liabilities, and because there are very few transactions between DeVry Brasil and DeVry’sDeVry Group’s U.S. based subsidiaries, changes in the value of Brazil’s currency at rates experienced during the past several years are unlikely to have a material effect on DeVry’sDeVry Group’s results of operations; however, the volatility of the Brazilian Real during fiscal 2012over the past 12 months resulted in a $24$20.0 million charge to Accumulated Other Comprehensive Income in fiscal 2012. A gainover that time period and a charge of approximately $0.3$9.8 million was recognized in Accumulated Other Comprehensive Income for the first ninesix months of fiscal 2013.year 2014. Based upon the current value of the net assets in DeVry Brasil’s operations, a change of $0.01 in the value of the Brazilian Real relative to the U.S. dollar would result in a translation adjustment to Accumulated Other Comprehensive Income of approximately $2.2$3.5 million.

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The interest rate on DeVry’sDeVry Group’s revolving credit facility is based upon the prime rate or LIBOR interest rates for periods typically ranging from one to three months. Based upon borrowings of $50 million, a 100 basis point increase in short-term interest rates would result in approximately $0.5 million of additional annual interest expense. At MarchDecember 31, 2013, DeVry Group had no outstanding borrowings under this facility. However, future investment opportunities and cash flow generated from operations may affect the level of outstanding borrowings and the effect of a change in interest rates.

DeVry’s

DeVry Group’s customers are principally individual students enrolled in its various educational programs. Accordingly, concentration of accounts receivable credit risk is small relative to total revenues or accounts receivable.

DeVry’s

DeVry Group’s cash is held in accounts at various large, financially secure depository institutions. Although the amount on deposit at a given institution typically will exceed amounts subject to guarantee, DeVry Group has not experienced any deposit losses to date, nor does management expect to incur such losses in the future.

ITEM 4 — CONTROLS AND PROCEDURES

Principal Executive and Principal Financial Officer Certificates

The required compliance certificates signed by the DeVry’sDeVry Group’s CEO and CFO are included as Exhibits 31 and 32 of this Quarterly Report on Form 10-Q.

Disclosure Controls and Procedures

Disclosure controls and procedures are designed to help ensure that all the information required to be disclosed in DeVry’sDeVry Group’s reports filed under the Securities Exchange Act of 1934 (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified by the applicable rules and forms.

DeVry’s

DeVry Group’s Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that DeVry’sDeVry Group’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) are effective to ensure that information required to be disclosed in the reports that DeVry Group files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to DeVry’sDeVry Group’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in internal control over financial reporting that occurred during the third quarterfirst six months of fiscal year 20132014 that materially affected, or are reasonably likely to materially affect, DeVry’sDeVry Group’s internal control over financial reporting.

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PART II – Other Information

ITEM 1 – LEGAL PROCEEDINGS

DeVry Group is subject to occasional lawsuits, administrative proceedings, regulatory reviews and investigations associated with financial assistance programs and other matters arising in the normal conduct of its business. The following is a description of pending litigationlegal matters that may be considered other than ordinary, and routine litigation that isand incidental to the business.

The Boca Raton Firefighters’ and Police Pension Fund filed an initial complaint (the “Shareholder Case”) in the United States District Court for the Northern District of Illinois on November 1, 2010 (Case No. 1:10-cv-07031). The initial complaint was filed on behalf of a putative class of persons who purchased DeVry Group common stock between October 25, 2007, and August 13, 2010. Plaintiff filed an amended complaint (the “First Amended Complaint”) on March 7, 2011 alleging the same categories of claims in the initial complaint. The plaintiff claimed in the First Amended Complaint that DeVry Group, Daniel Hamburger and Richard M. Gunst violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by failing to disclose abusive and fraudulent recruiting and financial aid lending practices, thereby increasing DeVry’sDeVry Group’s student enrollment and revenues and artificially inflating DeVry’sDeVry Group’s stock price during the class period. On March 27, 2012, Judge John F. Grady dismissed the First Amended Complaint without prejudice, granting plaintiff leave to file a second amended complaint by May 4, 2012.

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On May 4, 2012, the plaintiff again amended its allegations in the Shareholder Case (the “Second Amended Complaint”). The Second Amended Complaint alleged a longer putative class period of October 27, 2007 to August 11, 2011, but narrowed the scope of the alleged fraud significantly as compared to the previous two complaints. Plaintiff focused exclusively on DeVry’sDeVry Group’s practices for compensating student Admissions Advisors, alleging DeVry Group misled the market by failing to disclose that its compensation practices violated federal law and by making affirmative misrepresentations that DeVry Group complied with compensation regulations. The Second Amended Complaint was subsequently corrected to add an additional plaintiff, West Palm Beach Firefighters’ Pension Fund, in response to DeVry’sDeVry Group’s challenge of plaintiff’s standing to complain about statements DeVry Group made after plaintiff had purchased its stock.

On July 10, 2012, DeVry Group filed a Motion to Dismiss the corrected Second Amended Complaint. On March 27, 2013, Judge Grady granted DeVry’sDeVry Group’s Motion to Dismiss and entered judgment in favor of DeVry Group and against plaintiffs. Judge Grady thereby dismissed the case with prejudice; however, he reserved jurisdiction to examine the question of whether sanctions should be imposed against plaintiffs and/or their counsel. On April 26, 2013, the plaintiffs filed a notice of appeal of Judge Grady’s order of dismissal; however, the appeal has been stayed pending Judge Grady’s resolution of the sanctions issue. The issue of sanctions is beingwas fully briefed by the parties as of May 17, 2013, and remains under consideration by Judge Grady.  
DeVry Group was served on October 11, 2013, with a complaint in a qui tam action filed under the federal False Claims Act and the Minnesota False Claims Act by two former employees of a customer of DeVry Group’s subsidiary, Advanced Academics, Inc. (“AAI”). The lawsuit, United States and the State of Minnesota ex rel. Jill Bachmann and Shelley Madore v. Minnesota Transitions Charter Schools, Advanced Academics, Inc., DeVry Education Group Inc., and MN Virtual High School, CA No. 12-cv-01359-DWF-JSM, was filed in the United States District Court for the District of Minnesota. The complaint was filed on June 6, 2012 but kept under seal in order for the federal and Minnesota state governments to investigate the allegations and determine if they wished to intervene in the action and pursue the alleged claims.   Both the federal and Minnesota state governments declined to intervene, thereby giving the plaintiffs the choice to pursue the alleged claims on behalf of the state and federal governments. The complaint was unsealed and made public on June 6, 2013. The complaint relates to certain federal and state funding received by Minnesota Transitions Charter Schools and MN Virtual High School. The complaint alleges that Minnesota Transitions Charter Schools and MN Virtual High School received certain state and federal funding, which depended on the accurate reporting of student enrollment data. The complaint alleges that Minnesota Transitions Charter Schools and MN Virtual High School received more funding from the federal and state governments for special education and other services than they should have received in 2008, 2009 and 2010 as a result of allegedly non-compliant practices arising from the reporting of student enrollment data. The complaint further alleges that all schools of defendant Minnesota Transitions Charter Schools received over $75 million in total state and federal funding during fiscal years 2008 to 2010, a portion of which related to the school for which AAI provided services; plaintiff does not quantify what portion of the $75 million was obtained as a result of the allegedly fraudulent practices. The complaint alleges that AAI provided certain curriculum and other services to MN Virtual High School and operated the school. The only reference to DeVry Group in the complaint pertains to its status as the parent corporation to AAI. An agreement in principle was reached in January of 2014 that fully and finally resolves all claims asserted in this matter against DeVry Group and AAI. The settlement is expected to be complete by May 17, 2013. Onceconcluded and the issue of sanctions is resolved, the March 27, 2013 judgment will be subject to appeal by plaintiffs if they decide to contest the judgment.

Three shareholder derivative cases similar to the Shareholder Case had been filed (“Derivative Actions”), but each has been voluntarilylitigation dismissed by the plaintiffs who brought them. Twostipulation sometime in DeVry Group’s third quarter of the Derivative Actions were filed in the Circuit Court of Cook County, Illinois, Chancery Division:fiscal year 2014.

Although DeVry shareholder Timothy Hald filed a derivative complaint on behalf of DeVry on January 3, 2011 (Hald v. Hamburger et al., Case No. 11 CH 0087) and Matthew Green (also a DeVry shareholder) filed a derivative complaint on behalf of DeVry on January 7, 2011 (Green v. Hamburger et al., Case No. 11 CH 0770). The Hald and Green cases (the “Illinois Consolidated Action”) were consolidated by court order dated February 9, 2011 but was voluntarily dismissed without prejudice by Order entered January 15, 2013. Maria Dotro, another DeVry shareholder, filed a third derivative complaint on DeVry’s behalf in the Delaware Court of Chancery on March 11, 2011 (Dotro v. Hamburger et al., Case No. 6263). In the wake of Judge Grady’s award of judgment in favor of DeVry in the Shareholder Case, described above, the Dotro shareholder case was voluntarily dismissed without prejudice as well.

Although DeVryGroup believes that the appeal of the dismissed Shareholder Case and the related derivative actions areis without merit, the ultimate outcome of pending litigation is difficult to predict. In the event that the plaintiffs in the Shareholder Case decide to appeal the adverse judgment entered against them or the shareholders decide to re-file their related claims, DeVry Group will vigorously defend any forthcoming litigation based onappellate proceedings which may proceed in the same or similar allegations,Shareholder Case. At this time, DeVry Group does not expect that the outcome of any such matterthe appeal of the dismissal of the Shareholder Case or any other pending lawsuits will have a material effect on its cash flows, results of operations or financial position.

In April 2013, DeVry Group received a subpoena from the Office of the Attorney General of the State of Illinois and a Civil Investigative Demand issued by the Office of the Attorney General of the Commonwealth of Massachusetts. The Illinois subpoena concerns potential state law implications in the event violations of federal law took place. It was issued pursuant to the Illinois False Claims Act in connection with an investigation concerning whether the compensation practices of DeVry Group and certain of its affiliates are in compliance with the Incentive Compensation Ban of the Higher Education Act and requires DeVry Group to provide documents relating to these matters for periods on or after January 1, 2002. The Massachusetts demand was issued in connection with an investigation into whether DeVry Group caused false claims and/or false statements to be submitted to the Commonwealth of Massachusetts relating to student loans, guarantees, and grants provided to DeVry’sDeVry Group’s Massachusetts students and requires DeVry Group to answer interrogatories and to provide documents relating to periods on or after January 1, 2007.  The timing or outcome of the investigations, or their possible impact on DeVry’sDeVry Group’s business, financial condition or results of operations, cannot be predicted at this time.

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ITEM 1A — RISK FACTORS

In addition to the other information set forth in this report, and the update to the risk factor described below, the factors discussed in Part I “Item 1A. Risk Factors” in DeVry’sDeVry Group’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012,2013, which could materially affect DeVry’sDeVry Group’s business, financial condition or future results, should be carefully considered.  Such risks are not the only risks facing DeVry additionalGroup.  Additional risks and uncertainties not currently known to DeVry Group or that management currently deems to be immaterial also may materially adversely affect its business, financial condition and/or operating results.

DeVry’sDeVry Group’s goodwill and intangible assets could potentially be impaired if our business results and financial condition were materially and adversely impacted by the risks and uncertaintiesuncertainties.

At MarchDecember 31, 2013, intangible assets from business combinations totaled $292.1$293.7 million, and goodwill totaled $566.5$514.8 million. Together, these assets equaled approximately 43%40% of total assets as of such date. If DeVry’sDeVry Group’s or any of its subsidiaries’ business results and financial condition were materially and adversely impacted, then such goodwill and intangible assets could be impaired, requiring possible write-off of up to $292.1$293.7 million of intangible assets and up to $566.5$514.8 million of goodwill.

The U.S. Department of Education may adopt gainful employment regulations that could cause programs at some of our institutions to lose access to federal financial aid. 
As a provider of higher education, DeVry Group is subject to extensive regulation on both the federal and state levels. In particular, the Higher Education Act, as amended and reauthorized, (“the Higher Education Act”) subjects DeVry Group’s U.S. degree granting institutions (DeVry University, Chamberlain College of Nursing, Carrington College and Carrington College California) and all other higher education institutions, including DeVry Group’s Ross University School of Medicine, Ross University School of Veterinary Medicine and American University of the Caribbean School of Medicine, that participate in the various federal student financial aid programs under Title IV of the Higher Education Act (“Title IV”) to significant regulatory scrutiny.
To participate in Title IV, an institution must receive and maintain authorization by the appropriate state education agencies, be accredited by an accrediting commission recognized by the U.S. Department of Education (“ED”), and be certified by the ED as an eligible institution, which ultimately is accomplished through the execution of a Program Participation Agreement. If any DeVry Group institution were to lose its Title IV eligibility the impacted institution would experience a dramatic and adverse decline in revenue and would be unable to continue business as it is currently conducted. In the fall of 2009, the ED initiated the process of negotiated rulemaking with respect to Program Integrity Issues to consider changes to certain provisions of the regulations governing the Title IV Programs.   The resulting program integrity rules promulgated in October 2010 and June 2011 address fourteen topics, including standards for programs that prepare students for gainful employment in a recognized occupation, commonly referred to as “gainful employment.” On June 30, 2012, the U.S. District Court for the District of Columbia, in the case captioned Association of Private Sector Colleges and Universities (APSCU) v. Duncan, issued a decision that vacated most of the gainful employment regulations that the ED published on October 29, 2010 and June 13, 2011 and remanded those regulations to the ED for further action. On June 12, 2013, the ED announced its intention to establish a negotiated rulemaking committee to negotiate the rules vacated by the Court.  The negotiated rulemaking panel met three times, in September, November and December of 2013.  At its final meeting, the ED called for a vote on proposed rules developed over the course of the rulemaking sessions and the rulemaking panel failed to reach consensus. Because the panel failed to agree on the proposed rule, the ED is free to issue proposed gainful employment regulations free of any of the recommendations agreed to within the negotiated rulemaking process. We cannot predict with certainty whether the ED ultimately will propose new gainful employment regulations, whether proposed regulations, if issued, will become final following the required public comment period, the timeframe in which any such final regulations would be promulgated and become effective, the final content of such new regulations, whether they would be challenged in court, or whether they will withstand legal challenge.
If final rules are promulgated by the ED in a manner that withstands challenge, such new gainful employment regulations might, at the point that they become effective, limit the ability of our institutions to offer current programs or offer new programs in accordance with their operating and strategic plans.  Such programs may be determined to be out of compliance with new gainful employment regulations, and ultimately at risk for loss of Title IV funding, when they become effective. In addition, programs that are in compliance with new gainful employment regulations when they become effective could later become at risk for loss of Title IV funding eligibility due to factors beyond our control, such as changes in the actual or deemed income level of our graduates, changes in student borrowing levels, increases in interest rates, changes in the federal poverty income level relevant for calculating discretionary income, changes in the percentage of our former students who are currently in default on their student loans, and other factors. Our exposure to these external factors could reduce our ability to offer or continue certain types of programs for which there is market demand, and therefore could impact our ability to maintain or grow our business.
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ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity
Securities

Securities

Period Total Number of
Shares Purchased		  Average Price
Paid per Share		  Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs (1)		  Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under the
Plans or Programs
(1)		 
January 2013  121,548  $24.31   121,548  $92,086,620 
February 2013  109,972  $29.59   109,972   88,832,826 
March 2013  115,760  $30.90   115,760   85,255,994 
 Total  347,280  $28.18   347,280  $85,255,994 

       Total Number    
       of Shares Approximate Dollar 
       Purchased as Value of Shares that 
       Part of Publicly May Yet Be 
       Announced Purchased Under the 
  Total Number of Average Price Plans or Plans or Programs 
Period Shares Purchased Paid per Share Programs (1) (1) 
October 2013 - $- - $- 
November 2013 - $- -  - 
December 2013 - $- -  - 
Total - $- - $79,723,028 
(1) On August 29, 2012, the Board of Directors authorized a share repurchase program to buy back up to $100 million of DeVry Group common stock through December 31, 2014. The total remaining authorization under this share repurchase program was $85,255,994$79,723,028 million as of MarchDecember 31, 2013.

DeVry Group suspended repurchases under this plan in May 2013.

Other Purchases of Equity Securities

Period Total Number of
Shares Purchased		  Average Price
Paid per Share		  Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs (2)		 Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under the
Plans or Programs
(2) 
January 2013  -  $-  N/A N/A
February 2013  4,291  $30.80  N/A N/A
March 2013  -  $-  N/A N/A
 Total  4,291  $30.80  N/A N/A

       Total Number   
       of Shares Approximate Dollar 
       Purchased as Value of Shares that 
       Part of Publicly May Yet Be 
       Announced Purchased Under the 
  Total Number of Average Price Plans or Plans or Programs 
Period Shares Purchased Paid per Share Programs (2) (2) 
October 2013 - $- N/A N/A 
November 2013 10,307 $35.23 N/A N/A 
December 2013 401 $34.02 N/A N/A 
Total 10,708 $35.19 N/A N/A 
(2) Represents shares delivered back to the issuer for payment of withholding taxes from employees for vesting restricted shares pursuant to the terms of DeVry’sDeVry Group’s stock incentive plans.

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ITEM 4 — MINE SAFETY DISCLOSURES

Not applicable.

ITEM 6 —– EXHIBITS

The exhibits to this report are listed on the Exhibit Index included elsewhere herein.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Exhibit 3.1DeVry Inc.Restated Certificate of Incorporation of the Registrant, as amended
  
Date: May 3,Exhibit 3.2Amended and Restated By-laws of DeVry Education Group Inc., as amended as of November 6, 2013By /s/  Timothy J. Wiggins
Timothy J. Wiggins
Senior Vice President, Chief Financial Officer
(Principal Financial Officer) and Treasurer
Date: May 3, 2013By /s/  Patrick J. Unzicker
Patrick J. Unzicker
Vice President, Finance and Chief Accounting
Officer (Principal Accounting Officer)

INDEX TO EXHIBITS

Exhibit
Number

Exhibit

10.1Form of Stock Appreciation Rights Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated February 13,November 6, 2013)
  
Exhibit 10.110.2FormDeVry Education Group Inc. Second Amended and Restated Incentive Plan of Restricted Stock Unit Agreement2013 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current ReportRegistration Statement on Form 8-KS-8 dated February 13,December 20, 2013)
  
Exhibit 31Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended (filed herewith)
  
Exhibit 32Certification Pursuant to Title 18 of the United States Code Section 1350 (filed herewith)

48

101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document

4549

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DeVry Education Group Inc.
Date: February 4, 2014By /s/  Timothy J. Wiggins
Timothy J. Wiggins
Senior Vice President, Chief Financial Officer
 (Principal Financial Officer) and Treasurer
Date: February 4, 2014By /s/  Patrick J. Unzicker
Patrick J. Unzicker
Vice President, Finance and Chief Accounting
Officer (Principal Accounting Officer)
50