UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þR	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended: December 31, 2013

~~For the quarterly period ended: December 31, 2012~~

¨£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

~~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		~~36-3150143~~
(State or other jurisdiction of Incorporation or ~~organization)~~organization)		36-3150143 (I.R.S. Employer Identification No.)

3005 HIGHLAND PARKWAY DOWNERS GROVE, ILLINOIS		~~60515~~
(Address of principal executive ~~offices)~~offices)		60515 (Zip ~~Code)~~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 þR 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 þR 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.

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

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: January ~~31, 2013~~29, 2014 — ~~63,171,797~~63,349,000 shares of Common Stock, $0.01 par value

DEVRY EDUCATION GROUP INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, ~~2012~~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		25	30
Item 3	— Quantitative and Qualitative Disclosures About Market Risk		37	44
Item 4	— Controls and Procedures		38	45

	PART II – Other Information

Item 1	— Legal Proceedings		38	45
Item 1A	— Risk Factors		39	47
Item 2	— Unregistered Sales of Equity Securities and Use of Proceeds		39	48
Item 4	— Mine Safety ~~Disclosure~~Disclosures		40	48
Item 6	— Exhibits		40	48

Signatures		50

	2
~~Signatures~~			41

DEVRY EDUCATION GROUP INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

   December 31, June 30, December 31,
   2012 2012 2011
   (Dollars in thousands)
ASSETS:

Current Assets:

Cash and Cash Equivalents
   $ 216,259 $ 174,076 $ 285,749
Marketable Securities and Investments
   2,752 2,632 2,499
Restricted Cash
   3,894 2,498 30,799
Accounts Receivable, Net
   139,658 113,911 145,488
Deferred Income Taxes, Net
   25,176 27,845 21,760
Refundable Income Taxes
   23,827 40,278 7,560
Prepaid Expenses and Other
   39,205 39,874 34,925


Total Current Assets
   450,771 401,114 528,780


Land, Buildings and Equipment:

Land
   65,963 65,172 61,360
Buildings
   388,259 386,028 366,102
Equipment
   491,232 433,949 444,851
Construction In Progress
   28,953 61,752 47,926


   974,407 946,901 920,239
Accumulated Depreciation
   (415,050 ) (387,924 ) (395,331 )


Land, Buildings and Equipment, Net
   559,357 558,977 524,908


Other Assets:

Intangible Assets, Net
   294,177 285,220 276,448
Goodwill
   566,199 549,961 553,456
Perkins Program Fund, Net
   13,450 13,450 13,450
Other Assets
   30,112 29,894 27,290


Total Other Assets
   903,938 878,525 870,644


TOTAL ASSETS
   $ 1,914,066 $ 1,838,616 $ 1,924,332


LIABILITIES:

Current Liabilities:

Accounts Payable
   $ 60,669 $ 63,094 $ 51,413
Accrued Salaries, Wages and Benefits
   64,043 77,741 58,792
Accrued Expenses
   71,466 76,243 37,217
Advance Tuition Payments
   32,159 20,580 19,701
Deferred Tuition Revenue
   109,191 77,551 259,967


Total Current Liabilities
   337,528 315,209 427,090
Other Liabilities:

Deferred Income Taxes, Net
   63,946 62,276 64,570
Deferred Rent and Other
   107,333 96,496 71,001


Total Other Liabilities
   171,279 158,772 135,571


TOTAL LIABILITIES
   508,807 473,981 562,661


NON-CONTROLLING INTEREST
   8,901 8,242 7,632
SHAREHOLDERS’ EQUITY:

Common Stock, $0.01 Par Value, 200,000,000 Shares Authorized; 63,287,000; 64,722,000 and 66,569,000 Shares Issued and Outstanding at December 31, 2012, June 30, 2012 and December 31, 2011, Respectively
   744 741 740
Additional Paid-in Capital
   280,901 272,962 260,755
Retained Earnings
   1,560,130 1,488,988 1,423,651
Accumulated Other Comprehensive (Loss) Income
   (6,696 ) (5,889 ) 4,458
Treasury Stock, at Cost (11,079,000, 9,386,000 and 7,416,000 Shares, Respectively)
   (438,721 ) (400,409 ) (335,565 )


TOTAL SHAREHOLDERS’ EQUITY
   1,396,358 1,356,393 1,354,039


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 1,914,066 $ 1,838,616 $ 1,924,332

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
December 31, For the Six Months Ended
December 31,
   2012 2011 2012 2011
REVENUES:

Tuition
   $ 476,459 $ 496,294 $ 927,960 $ 982,781
Other Educational
   28,785 27,755 60,020 60,306


Total Revenues
   505,244 524,049 987,980 1,043,087


COSTS AND EXPENSES:

Cost of Educational Services
   243,401 241,212 485,946 479,460
Student Services and Administrative Expense
   186,454 194,042 380,855 394,967
Restructuring Expenses
   9,484 —   9,484 —
Asset Impairment Charges
   —   75,039 —   75,039


Total Operating Costs and Expenses
   439,339 510,293 876,285 949,466


Operating Income
   65,905 13,756 111,695 93,621
INTEREST AND OTHER (EXPENSE) INCOME:

Interest Income
   230 226 791 410
Interest Expense
   (759 ) (481 ) (2,250 ) (1,003 )
Net Gain on Sale of Assets
   —   3,695 —   3,695


Net Interest and Other (Expense) Income
   (529 ) 3,440 (1,459 ) 3,102


Income Before Income Taxes
   65,376 17,196 110,236 96,723
Income Tax Provision
   14,152 7,916 27,190 30,131


NET INCOME
   51,224 9,280 83,046 66,592
Net (Income) Loss Attributable to Non-controlling Interest
   (938 ) (415 ) (771 ) (243 )


NET INCOME ATTRIBUTABLE TO DEVRY INC.
   $ 50,286 $ 8,865 $ 82,275 $ 66,349


EARNINGS PER COMMON SHARE ATTRIBUTABLE TO DEVRY INC. SHAREHOLDERS:

Basic
   $ 0.78 $ 0.13 $ 1.27 $ 0.97


Diluted
   $ 0.78 $ 0.13 $ 1.27 $ 0.97


Cash Dividend Declared per Common Share
   $ 0.17 $ 0.15 $ 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

DEVRY EDUCATION GROUP INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

(Unaudited)

   For the Three Months
Ended December 31, For the Six Months
Ended December 31,
   2012 2011 2012 2011
NET INCOME
   $ 51,224 $ 9,280 $ 83,046 $ 66,592
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

Currency Translation Loss
   (1,279 ) (961 ) (869 ) (11,189 )
Change in Fair Value of Available-For-Sale Securities
   (5 ) 71 62 (82 )


COMPREHENSIVE INCOME
   49,940 8,390 82,239 55,321
COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST
   (717 ) (295 ) (638 ) 1,759


COMPREHENSIVE INCOME ATTRIBUTABLE TO DEVRY INC.
   $ 49,223 $ 8,095 $ 81,601 $ 57,080

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 Six Months
Ended December 31,
   2012 2011
   (Dollars in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income
   $ 83,046 $ 66,592
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

Stock-Based Compensation Expense
   8,370 8,854
Depreciation
   42,219 36,959
Amortization
   5,019 5,372
Impairment of Goodwill and Intangible Assets
   —   75,039
Provision for Refunds and Uncollectible Accounts
   41,094 48,595
Deferred Income Taxes
   2,017 (1,765 )
Loss on Disposals of Land, Buildings and Equipment
   2,237 488
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
   (1,396 ) (28,491 )
Accounts Receivable
   (63,462 ) (79,995 )
Prepaid Expenses and Other
   25,691 (5,820 )
Accounts Payable
   (2,426 ) (13,121 )
Accrued Salaries, Wages, Benefits and Expenses
   (11,510 ) (67,398 )
Advance Tuition Payments
   11,416 (2,379 )
Deferred Tuition Revenue
   31,640 180,061


NET CASH PROVIDED BY OPERATING ACTIVITIES
   180,205 219,296


CASH FLOWS FROM INVESTING ACTIVITIES:

Capital Expenditures
   (48,185 ) (63,027 )
Marketable Securities Purchases
   (82 ) (58 )
Payment for Purchase of Business, Net of Cash Acquired
   (31,386 ) (225,903 )
Cash Received from Sale of Assets
   — 4,475


NET CASH USED IN INVESTING ACTIVITIES
   (79,653 ) (284,513 )


CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from Exercise of Stock Options
   1,139 3,524
Proceeds from Stock Issued Under Employee Stock Purchase Plan
   756 792
Repurchase of Common Stock for Treasury
   (38,567 ) (92,033 )
Cash Dividends Paid
   (20,707 ) (8,285 )
Excess Tax Benefit from Stock-Based Payments
   58 272
Payment of Debt Financing Fees
   —   (70 )


NET CASH USED IN FINANCING ACTIVITIES
   (57,321 ) (95,800 )


Effects of Exchange Rate Differences
   (1,048 ) (379 )


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
   42,183 (161,396 )
Cash and Cash Equivalents at Beginning of Period
   174,076 447,145


Cash and Cash Equivalents at End of Period
   $ 216,259 $ 285,749


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash Paid During the Period For:

Interest
   $ 527 $ 480
Income Taxes
   4,458 47,622
Non-cash Investing and Financing Activity:

Declaration of Cash Dividends to be Paid
   —   10,039
Accretion of Non-controlling Interest Put Option
   (112 ) 634

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, ~~2012~~2013 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’s~~DeVry Group’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2012,~~2013, and ~~DeVry’s~~DeVry Group’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2012,~~2013, each as filed with the Securities and Exchange Commission.

The results of operations for the three and six months ended December 31, ~~2012,~~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.
7

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 ~~seven~~five 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 three and six months ended December 31, ~~2012,~~2013 were approximately ~~$0.3~~$0.3 million and ~~$2.4~~$0.5 million, respectively. Costs capitalized during the three and six months ended December 31, ~~2011,~~2012, were approximately ~~$5.8~~$0.3 million and ~~$10.2~~$2.4 million, respectively. ~~In both years these~~These costs were primarily related to ~~Project DELTA (a~~ new student information ~~system~~systems for DeVry University and Chamberlain College of ~~Nursing)~~Nursing and the Becker e-Commerce system. As of December 31, ~~2012~~2013 and ~~2011,~~2012, the net balance of capitalized software development costs was ~~$69.3~~$54.1 million and ~~$72.2~~$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 years~~during 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 December 31, ~~2012~~2013 and ~~2011.~~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 83.5~~a96.3 percent ownership interest in DeVry Brasil with the remaining ~~16.5~~3.7 percent ~~mostly~~ owned by ~~several members~~some 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.
The DeVry Brasil management put option is being accreted to its redemption value ~~according to~~in 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’s~~DeVry Group’s historical non-controlling interest accounting policy.
The following is a reconciliation of the non-controlling interest balance (in thousands):

   Three Months Ended
December 31,    Six Months Ended
December 31,
   2012 2011    2012 2011
Balance at Beginning of period
   $ 8,637    $ 7,176       $ 8,242    $ 6,755
Net Income (Loss) Attributable to Non-controlling Interest
   938 415    771 243
Accretion of Non-controlling Interest Put Option
   (674 ) 41    (112 ) 634




Balance at End of period
   $ 8,901    $ 7,632       $ 8,901    $ 7,632




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
8

Earnings per Common Share
Basic earnings per share is computed by dividing net income ~~attributable to DeVry Inc.~~ 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 ~~3,000,000~~2,298,000 and ~~2,743,000~~2,158,000 shares of common stock for the three and six months ended December 31, ~~2012,~~2013, respectively, and ~~1,186,000~~3,000,000 and ~~1,563,000~~2,743,000 shares of common stock for the three and six months ended December 31, ~~2011,~~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
December 31,    Six Months Ended
December 31,
   2012    2011    2012    2011
Weighted Average Shares Outstanding
   63,456    67,093    63,851    67,741
Unvested Participating Restricted Shares
   846    429    712    400








Basic shares
   64,302    67,522    64,563    68,141
Effect of Dilutive Stock Options
   234    554    225    601








Diluted Shares
   64,536    68,076    64,788    68,742








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 ~~it was~~ 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) Income~~Loss
Accumulated Other Comprehensive ~~(Loss) Income~~Loss is composed of the change in cumulative translation ~~adjustments~~adjustment 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 December 31, ~~2012,~~2013, consists of ~~$6.5~~$25.6 million of cumulative translation losses ($~~5.7~~24.7 million attributable to DeVry Education Group Inc. and ~~$0.8~~$0.9 million attributable to non-controlling interests) and $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 ~~$0.2~~$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 Education Group Inc. At December 31, 2011, the Accumulated Other Comprehensive Income balance consisted of $4.7 million ($3.6 million attributable to DeVry Inc. and $1.1 million attributable to non-controlling interests) of cumulative translation gains and $0.2 million of unrealized losses on available-for-sale marketable securities, net of tax of $0.2 million and all attributable to DeVry 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 ~~$61.6~~$67.8 million and ~~$129.8~~$140.8 million for the three and six months ended December 31, 2013, respectively, and $60.9 million and $127.6 million for the three and six months ended December 31, 2012, ~~respectively,~~respectively.
9

Recent Accounting Pronouncements
In July 2013, the Financial Accounting Standards Board issued Accounting 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 requires 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 available at the reporting date to settle any additional income taxes under the tax law of the applicable tax jurisdiction. The guidance is effective for the fiscal years and ~~$62.2~~interim periods beginning after December 15, 2013 with early adoption permitted. Management is in the process of evaluating the effects of this guidance but does not believe it will have a significant impact on DeVry 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 ~~$132.9 million~~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
10

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 ~~months~~month periods ended December 31, ~~2011, respectively.~~
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 ~~four~~five stock-based award plans: the 1994 Stock Incentive Plan, the 1999 Stock Incentive Plan, the 2003 Stock Incentive Plan, the Second Amended and Restated Incentive Plan of 2005 and the ~~2005~~Second Amended and Restated Incentive ~~Plan.~~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’s~~DeVry Group’s common stock. The ~~2005~~Second Amended and Restated Incentive Plan of 2013 and Second Amended and Restated Incentive Plan of 2005 also ~~permits~~permit 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 ~~1999 Stock Incentive Plans,~~2005 incentive plans, no further stock based awards will be issued from these plans.  The ~~2003 Stock~~Second Amended and Restated Incentive Plan of 2005 and the ~~2005~~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 December 31, ~~2012, 5,852,303~~2013,11,088,024 authorized but unissued shares of common stock were reserved for issuance under ~~DeVry’s~~DeVry 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 employee requisite service period, reduced by an estimated forfeiture rate.

11

The following is a summary of options activity for the fiscal year ended December 31, ~~2012:~~

   Options
Outstanding Weighted
Average
Exercise
Price    Weighted
Average
Remaining
Contractual
Life in Years    Aggregate
Intrinsic
Value
($000)
Outstanding at July 1, 2012
   2,939,772 $ 36.37
Options Granted
   860,610 $ 18.62
Options Exercised
   (65,448 ) $ 17.48
Options Canceled
   (139,178 ) $ 42.88



Outstanding at December 31, 2012
   3,595,756 $ 32.21    6.44    $ 6,103






Exercisable at December 31, 2012
   2,124,634 $ 34.92    4.69    $ 1,649






2013:
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 fiscal year ended December 31, 2013:
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 six months ended December 31, 2013 and 2012 ~~and 2011~~ was ~~$0.4~~$1.8 million and ~~$2.3~~$0.4 million, respectively.
The fair value of ~~DeVry’s~~DeVry 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’s~~DeVry Group’s stock option plans during first six months of fiscal years 2014 and 2013 were $11.68 and ~~2012 were $7.62 and $17.48,~~$7.62, per share, respectively. The fair value of ~~DeVry’s~~DeVry 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’s~~DeVry 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’s~~DeVry Group’s long-term historical volatility. The pre-vesting forfeiture rate is based on ~~DeVry’s~~DeVry Group’s historical stock option forfeiture experience.
12

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 six months of fiscal year ~~2013,~~2014, DeVry Group granted ~~680,560~~433,970 shares of restricted stock to selected employees and non-employee directors. Of these, ~~121,500~~73,010 are performance based shares 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 ~~559,060~~360,960 shares and all other previously granted shares of restricted stock ~~that are not performance-based~~ are subject to restrictions which lapse ratably overthree and ~~four-year~~four-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 shares 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 do~~dividend equivalents. This right does not pertain to the performance based shares. The following is a summary of restricted stock activity for the six months ended December 31, ~~2012:~~

   Restricted
Stock
Outstanding Weighted
Average
Grant Date
Fair Value
Nonvested at July 1, 2012
   619,261 $ 42.06
Shares Granted
   680,560 $ 19.13
Shares Vested
   (185,589 ) $ 46.05
Shares Canceled
   (9,227 ) $ 37.70


Nonvested at December 31, 2012
   1,105,005 $ 27.30


2013:
13

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
Ended December 31, For the Six Months
Ended December 31,
   2012 2011 2012 2011
Cost of Educational Services
   $ 849 $ 1,266 $ 2,679 $ 2,834
Student Services and Administrative Expense
   1,805 2,689 5,691 6,020
Income Tax Benefit
   (848 ) (1,309 ) (2,695 ) (2,837 )


Net Stock-Based Compensation Expense
   $ 1,806 $ 2,646 $ 5,675 $ 6,017


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 December 31, ~~2012, $29.7~~2013, $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 ~~2.7~~2.4 years. The total fair value of options and shares vested during the six months ended December 31, ~~2012~~2013 and ~~2011~~2012 was approximately ~~$9.0~~$6.3 million and ~~$8.9~~$9.0 million, respectively.
There were no capitalized stock-based compensation costs at December 31, ~~2012~~2013 and ~~2011.~~
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.
During the second quarter of fiscal 2013, DeVry concluded that its President and Chief Executive Officer had been granted stock options in excess of the limits of the 2005 Incentive Plan. These grants were made during fiscal years 2009, 2011, 2012 and 2013. As a result, the stock options in excess of the limit are considered null and void as they should not have been granted. These errors were immaterial to the individual prior periods impacted. As a result, DeVry has recorded a net $1.0 million pre-tax adjustment to current period earnings for the reversal of stock-based compensation expense previously recorded for these options.

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’s~~DeVry Group’s financial assets as of December 31, ~~2012.~~
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 –~~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 – 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 annual~~This 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’s~~DeVry Group’s assets and liabilities at December 31, ~~2012,~~2013, that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (dollars in thousands).

December 31, 2012
   Level 1    Level 2    Level 3
Cash and Cash Equivalents
   $ 216,259    $ —      $ —
Available for Sale Investments:

Marketable Securities, short-term
   2,752    —      —
ATC Earn-out Liability
   —      —      4,686
FAVIP Contingent Consideration
   —      —      2,733






Total Financial Assets and Liabilities at Fair Value
   $ 219,011    $ —      $ 7,419






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 ~~equivalents~~Equivalents and investments in short-term ~~marketable securities~~Marketable 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 considers 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 probability~~contingency being realized. Management assumes that there is a70 percent likelihood that Favip will receive status of ~~FAVIP achieving~~a 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, ~~net~~Net and Other Assets on the Consolidated Balance Sheet as of December 31, ~~2012~~2013 is estimated by discounting the future cash flows using current rates for similar arrangements. As of December 31, ~~2012,~~2013, the carrying value and the estimated fair value of these financial instruments was approximately ~~$36.4~~$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 six months ended December 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 services~~Student Services and ~~administrative expense~~Administrative Expense in the Consolidated Statements of Income.

   Long-Term Liabilities
   Three Months
Ended
December 31,
2012    Six Months
Ended
December 31,
2012
Balance at Beginning of Period
   $ 7,344       $ 4,361
Total Realized Losses Included in Income:

Interest Expense- ATC Accretion
   71    140
Foreign Currency Translation Loss
   4    185
Transfers into Level 3:

FAVIP Contingent Consideration
   —      2,733




Balance at December 31, 2012
   $ 7,419       $ 7,419




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. In addition, the Becker CPA Review ~~and Falcon Physician Review courses~~Course 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’s~~DeVry 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 December 31, ~~2012~~2013 and ~~2011~~2012 (dollars in thousands).

   As of December 31,
   2012 2011
Gross Institutional Student Loans
   $ 55,108 $ 52,419
Allowance for Credit Losses
   (18,665 ) (18,850 )


Net Institutional Student Loans
   $ 36,443 $ 33,569


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, ~~$18.6~~$20.1 million and ~~$19.2~~$18.6 million were classified as Accounts Receivable, Net in the Consolidated Balance Sheets at December 31, 2013 and 2012, respectively, and ~~2011, respectively. $17.8~~$23.3 million and ~~$14.3~~$17.8 million, representing amounts due beyond one year, were classified in the Consolidated Balance Sheets as Other Assets at December 31, 2013 and 2012, ~~and 2011, 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 December 31, ~~2012~~2013 and ~~2011.~~2012. Loans are considered nonperforming if they are more than120 days past due (dollars in thousands).

   As of December 31,
   2012    2011
Institutional Student Loans:

Performing
   $ 41,524    $ 38,807
Nonperforming
   13,584    13,612




Total Institutional Student Loans
   $ 55,108    $ 52,419




   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:

December 31, 2012
   $ 4,030    $ 1,773    $ 1,346    $ 13,584    $ 20,733    $ 34,375    $ 55,108
December 31, 2011
   $ 4,122    $ 1,573    $ 1,138    $ 13,612    $ 20,445    $ 31,974    $ 52,419
~~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.~~

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
The dividend paid on December 19, 2012 of $10.9 million was recorded as a reduction to retained earnings as of December 31, 2012. Future dividends will be at the discretion of the Board of Directors.
~~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
   196,792    5.0




Totals
   11,050,988    $ 440.0




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
16

NOTE 7: BUSINESS COMBINATIONS
Faculdade ~~do Vale do Ipojuca~~Diferencial Integral
On ~~September 3, 2012,~~July 1, 2013, DeVry Educacional do Brasil S/A (f/k/a Fanor-Faculdades Nordeste S/~~A (“DeVry Brasil”)~~A) (DeVry Brasil), a subsidiary of DeVry ~~Inc.~~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 ~~FAVIP~~Favip receive status of a university center. As of December 31, ~~2012, $2.7~~2013, $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 ~~FAVIP~~Favip is consistent with ~~DeVry’s~~DeVry Group's growth and diversification strategy, increasing its international presence in Brazil.
The operations of ~~FAVIP~~Favip are included in ~~DeVry’s~~DeVry Group’s International ~~K-12~~ and Professional Education segment. ~~The~~The results of ~~FAVIP’s~~Favip’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’s~~Favip’s strategic fit into ~~DeVry’s~~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 ~~$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.
18

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 December 31, 2012
   Gross
Carrying
Amount    Accumulated
Amortization Weighted Avg.
Amortization
Period
Amortizable Intangible Assets:

Student Relationships
   $ 82,562    $ (71,803 ) (1)
Customer Relationships
   3,569    (549 ) 12 years
Non-compete Agreements
   2,516    (1,700 ) (2)
Curriculum/Software
   5,689    (3,936 ) 5 years
Outplacement Relationships
   3,900    (1,114 ) (3)
Trade Names
   6,048    (4,644 ) 8.5 years




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



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 ~~AREA~~Area 1), 6 years for ~~FBV,~~Faculdade Boa Viagem ("FBV"), 5 years for ~~FAVIP~~Favip and 4 years for AUC. All other Student Relationships are fully amortized at December 31, ~~2012.~~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 December 31, ~~2012.~~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 December 31, ~~2012.~~2013.

   As of December 31, 2011
   Gross
Carrying
Amount    Accumulated
Amortization
Amortizable Intangible Assets:

Student Relationships
   $ 78,372    $ (64,523 )
Customer Relationships
   3,019    (193 )
Customer Contracts
   7,000    (5,661 )
License and Non-compete Agreements
   1,568    (1,496 )
Curriculum/Software
   4,609    (2,912 )
Outplacement Relationships
   3,900    (854 )
Trade Names
   6,249    (4,296 )




Total
   $ 104,717    $ (79,935 )




Indefinite-lived Intangible Assets:

Trade Names
   $ 37,472
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
   12,209



Total
   $ 251,666



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 ~~$4.7~~$3.3 million for the three and six months ended December 31, ~~2012,~~2013, respectively, and ~~$2.7~~$2.4 million and ~~$5.0~~$4.7 million for the three and six months ended December 31, ~~2011,~~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
   $ 1,065    $ 2,964    $ 420    $ 4,973    $ 9,422
2014
   937    2,062    295    3,347    6,641
2015
   929    1,147    260    387    2,723
2016
   894    720    260    —      1,874
2017
   628    319    260    —      1,207
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 ~~AREA~~Area 1) Student Relationships, the FBV Student Relationships, the ~~FAVIP~~Favip Student Relationships and the AUC Student Relationships, are being amortized on a straight-line basis.
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 %
20

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 intangibles~~these 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 ~~2012~~2013 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 consider~~considers 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’s~~DeVry Group’s operations. As of December 31, ~~2012, DeVry’s~~2013, DeVry Group’s market capitalization exceeded its book value by approximately ~~7%. Though this premium~~58%, which is ~~lower~~higher 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.
21

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 ~~some~~certain reporting units experienced a decline in operating results ~~during~~in the first six months of fiscal ~~2013 as~~year 2014 compared to the year-ago period, management ~~does~~did not believe business conditions ~~have~~had deteriorated in any of its reporting units ~~to the extent~~such that it was more likely than not that the fair ~~values of the~~value was below carrying value for those reporting units or their associated indefinite-lived intangible assets ~~would differ materially from their~~at 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 balance of ~~$22.2~~$22.2 million, revenue ~~for the first six 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 ~~lower~~a decline in undergraduate student enrollments and ~~increased scholarships and discounting. Management believes these declines are~~graduate coursetakers due to lower 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, the prolonged economic downturn, and reduced consumer confidence .~~ 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 ~~improving~~increasing efficiencies. Over the ~~admissions and student service process~~past year DeVry Group has reduced costs through staffing adjustments. Management has made the decision to ~~better serve prospective students and drive future growth~~close 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 profitable~~has 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 ~~2012~~2013 indicated the fair value exceeded the carrying value of the DeVry University reporting unit by ~~250%~~100%.
At Carrington, which carries a goodwill balance of $151.9 million as of December 31, 2012, revenue for the first six months of fiscal 2013 declined by 8% 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 the prolonged economic downturn and persistent level of high unemployment, which has resulted in reductions in the volume of inquiries from potential students from the levels of a few years ago. In addition, management believes a lack of brand awareness resulting from the Carrington name change in July 2010 was a contributing factor to enrollment declines. To address this issue, Carrington is focused on building brand. Carrington is also making additional investments in its website interface and admissions processes to better serve prospective students. The revenue decline has also resulted in operating losses. Management believes its planned business and operational strategies will reverse the negative trend in the foreseeable future. Evidence of some recovery in enrollments This excess margin has been ~~experienced~~rapidly declining in recent years. Should business conditions at Carrington where new student enrollments increased over the prior year by 33.3% and 12.7% as of September 2012 and December 2012, respectively and total student enrollments increased over the prior year as of December 2012. However, if future operating improvements are not realized, all or some of the remaining goodwill could be impairedDeVry University continue to deteriorate resulting in ~~the future. The impairment review completed in the fourth quarter of fiscal year 2012 indicated the fair value exceeded~~ the carrying value of ~~the Carrington~~this reporting unit ~~by less than five percent.~~
exceeding its fair value then goodwill and intangible assets could be impaired. This would require a possible write-off of 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.
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The table below summarizes ~~the~~ goodwill balances by reporting unit as of December 31, ~~2012~~2013 (dollars in thousands):

   As of
December 31, 2012
Reporting Unit

DeVry University
   $ 22,196
Becker Professional Review
   32,960
Ross University
   237,173
Chamberlain College of Nursing
   4,716
Carrington
   151,878
American University of the Caribbean
   68,321
DeVry Brasil
   48,955


Total
   $ 566,199


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 balances by reporting segment as of December 31, ~~2012~~2013 (dollars in thousands):

      As of
December 31, 2012
Reporting Segment:

Business, Technology and Management
   $ 22,196
Medical and Healthcare
   462,088
International, K-12 and Professional Education
   81,915


Total
   $ 566,199


Total goodwill increased by $16.2 million from June 30, 2012. This increase is the result of the addition of $16.1 million of goodwill associated with the acquisition of FAVIP and changes in the values of the Brazilian Real and the British Pound Sterling as compared to the U.S. dollar. Since DeVry Brasil and ATC goodwill is recorded in their respective local currencies, fluctuations in their value in relation to the U.S. dollar will cause changes in the balance of this asset.
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, ~~2012~~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
   —      —      118    118








Balance at December 31, 2012
   $ 22,196       $ 462,088       $ 81,915       $ 566,199








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, 2013 in the International and Professional Education segment is the result of the addition of goodwill of $8.2 millionfrom the acquisition of Facid partially offset by changes in the value of the Brazilian Real and 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 Becker Europe, (f/d/b/a ATC), goodwill is recorded in their respective local currencies, fluctuations in its value in relation to the U.S. dollar will cause changes in the balance of this asset.
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The table below summarizes the indefinite-lived intangible asset balances by reporting unit as of December 31, ~~2012~~2013 (dollars in thousands):

   As of
December 31, 2012
Reporting Unit:

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
   35,482


Total
   $ 273,639


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 ~~$11.2~~$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 plus~~Facid 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 quarter~~first 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 ~~570~~475 positions across all 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 quarter of fiscal 2013,those employees who separated from DeVry recorded an additional $0.7 million pre-tax charge for additional severance pay and benefits primarily to the Business Technology and Management segment. Cash payments for the severance charges and restructuring charges were approximately $5.8 million for the six months ended December 31, 2012. As of December 31, 2012, approximately $0.5 million remains accrued and is expected to be paid by the end of fiscal 2013.
~~During the second quarter of~~Group. Also during fiscal year 2013, DeVry Group made decisions to consolidate certain facilities at its Carrington and DeVry University educational institutions. This resulted in pre-tax charges of $6.3 million in fiscal year 2013. In addition, DeVry Group consolidated its administrative offices in the Chicagoland area. As a result, ~~the~~a DeVry ~~owned~~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, during~~Other restructuring charges totaling $1.7 million were also expensed in fiscal year 2013.
The following table summarizes the ~~second quarter a decision was made~~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 and facilities at DeVry’s Carrington and DeVry University operating units. This resulted in a pre-tax charge of $1.6 million during~~be paid over the ~~second quarter of fiscal 2013.~~
next 12 months.
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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 ~~our~~DeVry 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. ~~The~~Ross Medical School and Ross Veterinary ~~Schools~~School each have agreements with ~~the~~their respective domestic governments that exempt them from local income ~~taxation through~~taxation. Both of these agreements have been extended to provide, in the ~~years 2043~~case of Ross Medical School, an indefinite period of exemption and, ~~2023, respectively, while~~in the case of Ross Veterinary 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’s~~DeVry 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 December 31, ~~2012~~2013 and ~~2011,~~2012, cumulative undistributed earnings attributable to international operations were approximately ~~$464.3~~$578.8 million and ~~$375.4~~$464.3 million, respectively.
Taxes on income from continuing operations were ~~21.6%~~14.7% of pretax income for the second quarter and ~~24.7%~~15.1% for the first six months of fiscal year ~~2013,~~2014, compared to ~~46.0%~~21.9% for the second quarter and ~~31.2%~~25.3% for the first six months of fiscal ~~2012.~~year 2013. The lower effective ~~income~~ tax ~~rates~~rate in the second quarter and first six months of fiscal year ~~2013 were due~~2014 resulted primarily ~~to a decrease in~~from the ~~proportion~~jurisdictional mix of ~~income generated by~~pre-tax earnings from U.S. operations versus the offshore operations of Ross ~~University~~Medical School, ~~of Medicine,~~ Ross ~~University~~Veterinary School, ~~of Veterinary Medicine,~~ AUC and DeVry Brasil as ~~compared to~~well as the ~~prior year.~~
Embedded within DeVry’s tax rate calculation is the tax expected on the amount of subpart F income that would be recognized for the current year assuming Internal Revenue Code Section 954(c)(6), Look-Thru Rule for Related Controlled Foreign Corporations, is not extended. The look-thru rule generally excludes from U.S. federal income tax certain dividends, interest, rents, and royalties received or accrued by one controlled foreign corporation (“CFC”) of a U.S. multinational enterprise from a related CFC that would otherwise be taxable pursuant to the subpart F regime. Subsequent to the endfavorable impacts of the ~~second quarter, the U.S.~~American Tax Relief Act of 2012 signed into law on January 2, 2013, in which Congress ~~adopted~~enacted legislation extending the benefits of Internal Revenue Code Section 954(c)(6) (”CFC Look-through”) for a ~~two-year period. The extension applies retroactively from~~two year period for tax years beginning after January 1, 2012 ~~and will be effective~~ through December 31, 2013. ~~DeVry will begin recognizing the benefit of this Section in the third quarter of fiscal 2013, and expects its third quarter effective tax rate to be in the range of 23 percent to 25 percent.~~
As of December 31, ~~2012,~~2013, the total amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, was ~~$23.6~~ $9.1 million, and, if recognized, the total amount would impact the effective tax rate. As of December 31, ~~2011,~~2012, gross unrecognized tax benefits, including positions impacting only the timing of benefits, was ~~$9.1~~$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 (IRS). As a result, DeVry Group reduced its unrecognized tax benefits by $13 million to reflect settlements with the IRS. We expect that our unrecognized tax benefits will increase by an insignificant amount during the next twelve months. 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, ~~2012~~2013 was ~~$1.9~~$1.2 million. The corresponding amount at December 31, ~~2012~~2013 was ~~$2.6~~$1.4 million.

NOTE 11: DEBT
DeVry Group had no outstanding borrowings under its ~~revolving~~ credit facility at December 31, ~~2012~~2013 and December 31, ~~2011.~~
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
~~All of DeVry’s~~
DeVry Group maintains a revolving credit facility which expires on May 5, 2016. The facility provides aggregate commitments including borrowings and letters of credit ~~under its $400~~up to $400 million ~~revolving credit facility are through DeVry Inc. At~~and 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 ~~Inc.~~Group letters of credit outstanding under this agreement were ~~$2.4 million and $9.3~~$13.2 million as of December 31, ~~2012~~2013, and ~~2011, respectively.~~were $2.4 million as of December 31, 2012. As of December 31, ~~2012,~~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 December 31, ~~2012, outstanding letters of credit under the revolving credit agreement are~~2013, DeVry Group is charged an annual fee equal to ~~0.125%~~0.125% of the undrawn face amount of the ~~letter~~outstanding 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 December 31, ~~2012.~~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 December 31, ~~2012.~~
2013.
The stock of ~~certain~~most 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 ~~litigation~~legal matters that may be considered other than ordinary, ~~and~~ routine ~~litigation that is~~and 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. ~~Plaintiffs~~Plaintiff filed an amended complaint (the “First Amended Complaint”) on March 7, 2011 alleging the same categories of claims in the initial complaint. The ~~plaintiffs~~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’s~~DeVry Group’s student enrollment and revenues and artificially inflating ~~DeVry’s~~DeVry Group’s stock price during the class period. On March 27, 2012, Judge John F. Grady dismissed the First Amended Complaint without prejudice, granting ~~Plaintiffs~~plaintiff leave to file a second amended complaint by May 4, 2012.
On May 4, 2012, the ~~Plaintiffs~~plaintiff again amended ~~their~~its allegations in the Shareholder Case (the “Second Amended Complaint”). The Second Amended Complaint ~~alleges~~alleged a longer putative class period of October 27, 2007 to August 11, 2011, but ~~narrows~~narrowed the scope of the alleged fraud significantly as compared to the previous two complaints. ~~Plaintiffs now focus~~Plaintiff focused exclusively on ~~DeVry’s~~DeVry 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 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, which is awaiting~~Complaint. On March 27, 2013, Judge Grady granted DeVry 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 ~~consideration.~~
~~Three derivative cases similar to~~order of dismissal; however, the ~~Shareholder Case also have~~appeal has been ~~filed (“Derivative Actions”). Two~~stayed pending Judge Grady’s resolution of the ~~Derivative Actions were~~sanctions issue. The issue of sanctions was 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 ~~Circuit~~United States District Court for the District of ~~Cook County, Illinois, Chancery Division: DeVry shareholder Timothy Hald~~Minnesota. The complaint was filed ~~a derivative complaint~~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 ~~DeVry~~the state and federal governments. The complaint was unsealed and made public on ~~January 3, 2011 (~~~~Hald v. Hamburger et al.~~~~, Case No. 11 CH 0087)~~June 6, 2013. The complaint relates to certain federal 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).~~state funding received by Minnesota Transitions Charter Schools and MN Virtual High School. The~~Haldand~~~~Green~~cases (the “Illinois Consolidated Action”) were consolidated by court order dated February 9, 2011. 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). By Order entered January 15, 2013, the Illinois Consolidated Action was dismissed without prejudice. The Delaware~~~~Dotro~~~~case has been stayed by agreement of the parties until certain matters are resolved or clarified with respect to the disposition of the Shareholder Case.~~
~~The Dotro~~ complaint alleges that Daniel Hamburger, Richard M. Gunst, David J. Pauldine, Sharon Thomas Parrott, Ronald L. Taylor, Lisa W. Pickrum, Darren R. Huston, David S. Brown, William T. Keevan, Fernando Ruiz, Harold T. Shapiro, Lyle Logan, Connie R. Curran,Minnesota Transitions Charter Schools and ~~Julia McGee breached their fiduciary duties~~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 ~~by failing to disclose the same allegedly abusive and fraudulent recruiting and financial aid lending practices alleged~~Group in the ~~Shareholder Case.~~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 ~~Dotro complaint also alleges that DeVry’s officers~~settlement is expected to be concluded and ~~directors unjustly enriched themselves and wasted DeVry’s assets~~the litigation dismissed by ~~(i) causing~~stipulation sometime in DeVry ~~to incur substantial costs in defending the Shareholder Case; (ii) causing~~Group’s third quarter of fiscal year 2014.
Although DeVry to pay compensation and benefits to individuals who breached their fiduciary duties; (iii) causing potential losses from “certain of DeVry’s programs no longer being eligible for federal financial aid;” and (iv) damaging DeVry’s corporate image and goodwill. DeVry and its executives and directors believe the allegations contained in the Dotro complaint are without merit and intend to defend them vigorously.
~~Although DeVry~~Group believes that the appeal of the dismissed Shareholder Case ~~and the related Dotro derivative action are~~is without merit, the ultimate outcome of pending litigation is difficult to predict. DeVry Group will vigorously defend any appellate proceedings which may proceed in the Shareholder Case. At this time, DeVry Group does not expect that the outcome of ~~any such matter~~the 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 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 Group’s business, financial condition or results of operations, cannot be predicted at this time.

NOTE 13:  SEGMENT INFORMATION
~~DeVry’s~~
DeVry Group’s principal business is providing ~~secondary and postsecondary~~post-secondary education. ~~The services of our~~Our 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-K~~10-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 accounting policies of the segments are the same as those described in “Note 2 — 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.
The consistent measure of segment operating income excludes non-controlling interest, income taxes, interest income and expense, amortization and certain corporate-related depreciation and expenses. As such, these items are reconciling items in arriving at income before income taxes. 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 3 — 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, 2013.
Following is a tabulation of business segment information based on the segmentation for each of the three and six months ended December 31, ~~2012~~2013 and ~~2011.~~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
December 31, For the Six Months Ended
December 31,
   2012 2011 2012 2011
Revenues:

Business, Technology and Management
   $ 280,239 $ 325,573 $ 564,853 $ 663,169
Medical and Healthcare
   167,746 153,520 326,103 300,973
International, K-12 and Professional Education
   57,259 44,956 97,024 78,945


Total Consolidated Revenues
   $ 505,244 $ 524,049 $ 987,980 $ 1,043,087


Operating Income:

Business, Technology and Management
   $ 38,836 $ 57,821 $ 64,406 $ 119,183
Medical and Healthcare
   26,705 (51,933 ) 51,887 (28,644 )
International, K-12 and Professional Education
   13,937 10,151 13,628 7,164
Reconciling Items:

Amortization Expense
   (2,412 ) (2,726 ) (4,690 ) (5,044 )
Depreciation and Other
   (11,160 ) 443 (13,535 ) 962


Total Consolidated Operating Income
   $ 65,905 $ 13,756 $ 111,695 $ 93,621


Interest and Other Income (Expense):

Interest Income
   $ 230 $ 226 $ 791 $ 410
Interest Expense
   (759 ) (481 ) (2,250 ) (1,003 )
Net Gain on Sale of Assets
   —   3,695 —   3,695


Net Interest and Other Income (Expense)
   (529 ) 3,440 (1,459 ) 3,102


Total Consolidated Income Before Income Taxes
   $ 65,376 $ 17,196 $ 110,236 $ 96,723


Segment Assets:

Business, Technology and Management
   $ 380,295 $ 532,308 $ 380,295 $ 532,308
Medical and Healthcare
   1,098,022 1,030,129 1,098,022 1,030,129
International, K-12 and Professional Education
   283,922 229,088 283,922 229,088
Corporate
   151,827 132,807 151,827 132,807


Total Consolidated Assets
   $ 1,914,066 $ 1,924,332 $ 1,914,066 $ 1,924,332


Additions to Long-lived Assets:

Business, Technology and Management
   $ 11,575 $ 9,717 $ 24,219 $ 23,892
Medical and Healthcare
   6,889 5,158 12,456 250,177
International, K-12 and Professional Education
   3,703 4,207 37,546 8,930
Corporate
   1,629 8,200 6,557 14,874


Total Consolidated Additions to Long-lived Assets
   $ 23,796 $ 27,282 $ 80,778 $ 297,873


Reconciliation to Consolidated Financial Statements

Capital Expenditures
   21,948 $ 29,207 $ 48,185 $ 63,027
Increase in Capital Assets from Acquisitions
   —   —   2,897 35,125
Increase (Decrease) in Intangible Assets and Goodwill
   1,848 (1,925 ) 29,696 199,721


Total Increase in Consolidated Long-lived Assets
   $ 23,796 $ 27,282 $ 80,778 $ 297,873


Depreciation Expense:

Business, Technology and Management
   $ 11,052 $ 9,560 $ 21,892 $ 18,518
Medical and Healthcare
   6,350 5,655 12,090 10,644
International, K-12 and Professional Education
   1,988 1,718 3,756 3,050
Corporate
   2,339 2,513 4,481 4,747


Total Consolidated Depreciation
   $ 21,729 $ 19,446 $ 42,219 $ 36,959


Intangible Asset Amortization Expense:

Business, Technology and Management
   $ —   $ —   $ —   $ —
Medical and Healthcare
   1,347 1,630 2,695 2,752
International, K-12 and Professional Education
   1,065 1,096 1,995 2,292


Total Consolidated Amortization
   $ 2,412 $ 2,726 $ 4,690 $ 5,044


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 ~~countries~~Islands (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 ~~Europe~~Canada and ~~Canada,~~Europe, were less than 5%5% of total revenues for the ~~quarters~~three and six monthperiods ended December 31, ~~2012~~2013 and ~~2011.~~2012. Revenues and long-lived assets by geographic area are as follows:

   For the Three Months Ended
December 31,    For the Six Months Ended
December 31,
   2012    2011    2012    2011
Revenue from Unaffiliated Customers:

Domestic Operations
   $ 395,984    $ 432,485    $ 788,939    $ 874,654
International Operations:

Dominica and St. Kitts/Nevis, St. Maarten
   78,766    71,410    148,583    133,289
Brazil
   25,584    15,182    42,900    26,526
Other
   4,910    4,972    7,558    8,618








Total International
   109,260    91,564    199,041    168,433








Consolidated
   $ 505,244    $ 524,049    $ 987,980    $ 1,043,087








Long-lived Assets:

Domestic Operations
   $ 737,225    $ 739,745    $ 737,225    $ 739,745
International Operations:

Dominica and St. Kitts/Nevis, St. Maarten
   585,162    580,080    585,162    580,080
Brazil
   132,158    66,656    132,158    66,656
Other
   8,750    9,071    8,750    9,071








Total International
   726,070    655,807    726,070    655,807








Consolidated
   $ 1,463,295    $ 1,395,552    $ 1,463,295    $ 1,395,552








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’s~~DeVry 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’s~~DeVry Group’s Web site is http://~~www.devryinc.com.~~
www.devryeducationgroup.com.
The following discussion of ~~DeVry’s~~DeVry Group’s results of operations and financial condition should be read in conjunction with ~~DeVry’s~~DeVry 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’s~~DeVry Group’s Consolidated Financial Statements and related Notes thereto in Item 8 “FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” in ~~DeVry’s~~DeVry Group’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2012. DeVry’s~~2013. 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’s~~DeVry 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’s~~DeVry 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. ~~Sequential comparisons are also made in relation to enrollment, cost saving and other trends.~~ 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.
30

FORWARD-LOOKING STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-Q, including those that affect ~~DeVry’s~~DeVry 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’s~~DeVry 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’s~~DeVry Group’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2012~~2013 and filed with the Securities and Exchange Commission on August ~~28, 2012~~29, 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 second quarter of fiscal ~~2013~~year 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 achieving~~on DeVry University’s turnaround plan, including further improving academic quality and realigning its ~~top priorities of realigning DeVry’s~~ cost structure with student ~~enrollments levels, regaining~~ enrollment ~~growth, and making targeted investments to drive future growth.~~levels. Operational and financial highlights for the second quarter of fiscal year ~~2013~~2014 include:
During the quarter, DeVry made solid progress in aligning its cost structure with its enrollments, and reengineering and redesigning processes across all institutions. Management expects it will realize at least $80 million in total cost and expense savings and value creation opportunities in fiscal year 2013. In the second quarter, Cost of Educational Services and Student Service and Administrative Expense both decreased as a percent of revenue as compared to the first quarter ended September 30, 2012.
· 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. Management expects it will achieve $75 million in total expense savings in fiscal year 2014 at the institutions in transition (DeVry University, Carrington College and Carrington College California (collectively “Carrington”)).
·
During the second quarter of fiscal year 2014, DeVry Group recorded pre-tax restructuring charges totaling $4.7 million. These restructuring actions were made to align cost structure with enrollments primarily at Carrington and the DeVry Group home office.
· The assets of Advanced Academics Inc. (“AAI”) were divested in December 2013 and the operating results for AAI are disclosed as “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 their fair market value as of September 30, 2013.
·
For the November 2013 session, total student enrollments at Chamberlain College of Nursing (“Chamberlain”) increased 28.5% to a record 15,732 students as compared to the same term 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 Group’s financial position remained strong, generating $113.1 million of operating cash flow during the first six months of fiscal year 2014. As of December 31, 2013, cash and cash equivalents totaled $262.0 million and there were no outstanding borrowings.
During the quarter, DeVry recorded pre-tax, non-cash restructuring charges totaling $9.5 million. Of these charges, $7.9 million related to the write-down of land, buildings and equipment at DeVry’s facility in Wood Dale, Illinois, which was vacated in December due to the previously announced decision to consolidate administrative offices in the Chicagoland area. The remaining $1.6 million in charges related to the costs of consolidating facilities at Carrington College and DeVry University.
For the three month period ended December 31, 2012, new student enrollments at Carrington College and Carrington College California (collectively “Carrington”) increased 12.7% as compared to the same period last year.
~~For the November 2012 term, total student enrollments at Chamberlain College of Nursing (“Chamberlain”) increased 15.3% to a record 12,245 students as compared to the same term last year.~~
During the quarter, DeVry completed its seventh share repurchase program and began executing its eighth program. DeVry repurchased a total of 538,844 shares of its common stock under both programs at an average cost of $23.84 per share during the second quarter.
In November 2012, DeVry’s Board of Directors approved a 13% dividend increase, raising its annual dividend rate from $0.30 per share to $0.34 per share. The most recent semi-annual dividend of $10.9 million ($0.17 per share) was paid on December 19, 2012.
DeVry’s financial position remained strong, generating $180.2 million of operating cash flow during the first six months of fiscal year 2013. As of December 31, 2012, cash and marketable securities balances totaled $219.0 million and there were no outstanding borrowings.
31

USE OF NON-GAAP FINANCIAL INFORMATION AND SUPPLEMENTAL RECONCILIATION SCHEDULE
During the second quarter and first six months of fiscal year ~~2013,~~2014, DeVry Group recorded restructuring ~~charges for the write-down of land, building and equipment~~expenses related to workforce reductions and real estate consolidations to align its ~~decision to relocate a facility in Wood Dale, Illinois in order to consolidate administrative operations in the Chicagoland area.~~cost structure at DeVry also recorded restructuring charges related to the costs to consolidate facilities at Carrington College and DeVry University. During the second quarter of fiscal year 2012, DeVry recorded impairment charges related to itsUniversity, 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 during~~a former DeVry University campus in Decatur, Georgia. Additionally, DeVry Group recorded the ~~second quarter~~operating results of ~~fiscal year 2012.~~its Advanced Academic Inc. reporting unit as discontinued operations. The following table illustrates the effects of ~~these~~the restructuring ~~and impairment charges~~expense, discontinued operations and gain ~~from~~on the sale of assets on ~~DeVry’s~~DeVry 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’s~~DeVry 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’s~~DeVry 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 Six Months
   Ended December 31, Ended December 31,
   2012    2011 2012    2011
Net Income
   $ 50,286    $ 8,865 $ 82,275    $ 66,349
Earnings per Share (diluted)
   $ 0.78    $ 0.13 $ 1.27    $ 0.97
Restructuring Charges (net of tax)
   $ 5,940    $ —   $ 5,940    $ —
Effect on Earnings per Share (diluted)
   $ 0.09    $ —   $ 0.09    $ —
Impairment Charges (net of tax)
   $ —      $ 55,751 $ —      $ 55,751
Effect on Earnings per Share (diluted)
   $ —      $ 0.82 $ —      $ 0.81
Gain on Sale of Assets (net of tax)
   $ —      $ (2,216 ) $ —      $ (2,216 )
Effect on Earnings per Share (diluted)
   $ —      $ (0.03 ) $ —      $ (0.03 )
Net Income Excluding the Restructuring Charges, Impairment Charges and Gain on Sale of Assets
   $ 56,226    $ 62,400 $ 88,215    $ 119,884
Earnings per Share Excluding the Impairment Charges and Gain on Sale of Assets (diluted)
   $ 0.87    $ 0.92 $ 1.36    $ 1.74
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
32

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 second quarter and first six months of both the current and prior fiscal year. Percentages may not add because of rounding.

   For the Three
Months Ended
December 31, For the Six
Months Ended
December 31,
   2012 2011 2012 2011
Revenues
   100.0 % 100.0 % 100.0 % 100.0 %
Cost of Educational Services
   48.2 % 46.0 % 49.2 % 46.0 %
Student Services and Administrative Expense
   36.9 % 37.0 % 38.5 % 37.9 %
Restructuring Charges
   1.9 % 0.0 % 1.0 % 0.0 %
Asset Impairment Charge
   0.0 % 14.3 % 0.0 % 7.2 %


Total Operating Costs and Expense
   87.0 % 97.4 % 88.7 % 91.0 %


Operating Income
   13.0 % 2.6 % 11.3 % 9.0 %
Net Interest and Other Income (Expense)
   (0.1 %) 0.7 % (0.1 %) 0.3 %


Income Before Income Taxes
   12.9 % 3.3 % 11.2 % 9.3 %
Income Tax Provision
   2.8 % 1.5 % 2.7 % 2.9 %


Net Income
   10.2 % 1.8 % 8.4 % 6.4 %
Net Loss Attributable to Non-controlling Interest
   (0.2 %) -0.1 % (0.1 %) 0.0 %


Net Income Attributable to DeVry Inc.
   10.0 % 1.7 % 8.4 % 6.4 %


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 second quarter of fiscal year ~~2013~~2014 of ~~$505.2~~$491.3 million decreased ~~$18.8~~$9.4 million, or ~~3.6%~~1.9%, as compared to the year-ago quarter. For the first six months of fiscal year ~~2013,~~2014, total consolidated revenues decreased ~~$55.1~~$38.4 million or ~~5.3%~~3.9% to ~~$988.0~~$942.2 million. ~~For both the second quarter and first six months of fiscal year 2013, revenues~~Revenues decreased within ~~DeVry’s~~the Business, Technology and Management segment as a result of a decline in ~~undergraduate and graduate~~ student enrollments and an increase in ~~scholarships due to heightened competition, the challenging economic environment, and persistent levels of high unemployment.~~scholarships. This decrease was partially offset by revenue increases within ~~DeVry’s~~the 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),~~do Vale do Ipojuca (Favip) which was acquired on ~~February 29,~~September 3, 2012, and ~~FAVIP,~~Faculdade Diferencial Integral (Facid) which was acquired ~~September 3, 2012,~~on July 1, 2013, contributed to offsetting the revenue decline during ~~both~~ the ~~quarter and~~ first six months of ~~the current year.~~
fiscal year 2014.
Management expects that total revenues will be down for ~~total~~ fiscal year ~~2013~~2014 as compared to fiscal year ~~2012,~~2013, driven ~~largely~~ by the ~~continuing effect of~~impact from declines in new and total student enrollments within DeVry University ~~and Carrington~~ experienced in fiscal year ~~2012~~2013 and which ~~DeVry University continues~~have continued into fiscal year 2014 and are expected to ~~experience in fiscal 2103, partially offset by~~continue into the ~~increase in new student enrollments experienced at Carrington in the first six months~~second half of fiscal year ~~2013 along with~~2014. These lower revenues will be partially offset by anticipated revenue growth within ~~DeVry’s~~DeVry Group’s other educational institutions.
Business, Technology and Management
Revenues in DeVry Group’s Business, Technology and Management segment, ~~revenues~~which is comprised solely of DeVry University, decreased ~~13.9%~~14.4% to ~~$280.2~~$239.9 million in the second quarter and declined ~~14.8%~~16.4% to ~~$564.9~~$472.2 million for the first six months of fiscal year ~~2013~~2014 as compared to the year-ago periods as a result of a decline in ~~undergraduate~~ student enrollments and ~~graduate coursetakers and an increase~~increased scholarships. This trend is expected to continue into the remainder of fiscal year 2014 which will result in ~~scholarships due to~~lower revenues for the ~~challenging economic environment, persistent unemployment and heightened competition. The Business, Technology and Management segment is comprised solely of DeVry University.~~year. Key trends in enrollment and tuition pricing are set forth below.
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Undergraduate new student enrollment by term:
· Decreased by 24.7% from July 2012 (7,532 students) to July 2013 (5,674 students);
· Increased by 0.1% from September 2012 (6,580 students) to September 2013 (6,589 students);
· Decreased by 12.0% from November 2012 (5,482 students) to November 2013 (4,824 students); and
· Decreased by 7.9% from January 2013 (5,330 students) to January 2014 (4,911 students),
~~Decreased by 16.6% from July 2011 (9,026 students) to July 2012 (7,532 students);~~
~~Decreased by 8.6% from September 2011 (7,200 students) to September 2012 (6,580 students);~~
~~Decreased by 15.4% from November 2011 (6,488 students) to November 2012 (5,486 students); and~~
~~Decreased by 4.7% from January 2012 (5,593 students) to January 2013 (5,330 students).~~
Undergraduate total student enrollment by term:
· Decreased by 16.1% from July 2012 (50,503 students) to July 2013 (42,374 students);
· Decreased by 16.3% from September 2012 (56,086 students) to September 2013 (46,966 students);
· Decreased by 11.7% from November 2012 (49,515 students) to November 2013 (43,726 students): and
· Decreased by 15.1% from January 2013 (53,138 students) to January 2014 (45,097 students).
~~Decreased by 15.8% from July 2011 (59,966 students) to July 2012 (50,503 students);~~
~~Decreased by 14.9% from September 2011 (65,933 students) to September 2012 (56,086 students);~~
~~Decreased by 17.7% from November 2011 (60,103 students) to November 2012 (49,465 students); and~~
~~Decreased by 14.9% from January 2012 (62,435 students) to January 2013 (53,138 students).~~
Graduate coursetaker enrollment, ~~including~~principally 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% from the July 2011 session (21,576 coursetakers) to the July 2012 session (19,635 coursetakers);~~
· Decreased by 18.0% from the July 2012 session (19,635 coursetakers) to the July 2013 session (16,107 coursetakers); and
· Decreased by 18.8% from the September 2012 session (22,072 coursetakers) to the September 2013 session (17,925 coursetakers).
· Decreased by 14.1% from the November 2012 session (19,540 coursetakers) to the November 2013 session (16,778 coursetakers).
· Decreased by 18.0% from the January 2013 session (21,131 coursetakers) to the January 2014 session (17,322 coursetakers).
~~Decreased by 7.8% from the September 2011 session (23,937 coursetakers) to the September 2012 session (22,072 coursetakers);~~
~~Decreased by 16.2% from the November 2011 session (23,264 coursetakers) to the November 2012 session (19,498 coursetakers); and~~
~~Decreased by 12.1% from the January 2012 session (24,029 coursetakers) to the January 2013 session (21,131 coursetakers).~~
Tuition rates:
· Effective July 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 books, supplies, transportation and living expenses.
· Keller Graduate School of Management program tuition per course is $2,298.
Effective July 2012, 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 materials and supplies. These tuition rates represent an expected increase of approximately 1.2% as compared to the summer 2011 session. The impact of this tuition price increase will be partially offset by an increase in the amount of scholarships awarded to DeVry University students.
~~Effective July 2012, Keller Graduate School of Management program tuition per course is $2,298. This represents an expected 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 ~~impact~~perceptions of the value of a college degree and increased reluctance to take on ~~student decision making from the prolonged economic downturn and persistent unemployment,~~debt, resulting in a reduction in interest from potential students. In addition, management believes heightened ~~and innovative~~ competition from both ~~public~~public-sector and ~~private sector~~private-sector education providers contributed to the decreases in DeVry University undergraduate and graduate enrollments. To ~~regain enrollment growth~~improve performance at DeVry University, ~~management’s~~management is executing a turnaround plan ~~includes channel-focused initiatives, technology and brand awareness.~~ 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 ~~high school channel,~~cost structure, management is focused on increasing efficiencies. Over the past year 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. DeVry University’s brand awareness campaigns are helping drive higher quality inquiries and steadily improving conversion rates. In addition, managementGroup has reduced costs through staffing adjustments. Management has made the decision to ~~increase scholarships~~close or consolidate certain DeVry University campuses while balancing the potential impact on enrollment and ~~grants~~student satisfaction. Management is also focused on process redesign and restructuring in areas such as student finance.
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The plan to ~~help~~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 ~~achieve~~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 ~~academic goals.~~
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 ~~9.3%~~13.5% to ~~$167.7~~$190.4 million in the second quarter and increased ~~8.3%~~12.3% to ~~$326.1~~$366.3 million for the first six months of fiscal year ~~2013~~2014 as compared to the ~~year-ago periods. For both the second quarter and first six months of fiscal~~prior year ~~2013, higher~~period. Higher total student enrollments at ~~Chamberlain~~several of the institutions that comprise this segment (Chamberlain College of Nursing (“Chamberlain”) and DeVry Medical International (which is composed of Ross University ~~School~~Schools of Medicine ~~Ross University School of~~and Veterinary Medicine and American University of the Caribbean School of Medicine (“AUC”))) were the key drivers of the segment revenue growth, which more than offset a decline in total student enrollment at Carrington College and Carrington College California (collectively “Carrington”). Carrington experienced a decrease in student enrollment in the June and September terms over the year-ago periods which affected the second quarter and the first six months of fiscal 2013 results but did see an increase in total enrollment in the December term over the year-ago period. Also, AUC, which was acquired on August 3, 2011, contributed a full six months of revenue in the current year period as opposed to the five months contributed in the first half of fiscal year 2012.growth. 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 5.7% from September 2012 (925 students) to September 2013 (978 students); and
· Decreased by 3.5% from January 2013 (603 students) to January 2014 (582 students).
~~Increased by 13.6% from May 2011 (566 students) to May 2012 (643 students);~~
~~Increased by 8.4% from September 2011 (853 students) to September 2012 (925 students); and~~
~~Increased by 0.3% from January 2012 (601 students) to January 2013 (603 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 4.0% from September 2012 (6,209 students) to September 2013 (6,458 students); and
· Increased by 5.6% from January 2013 (6,318 students) to January 2014 (6,673 students).
~~Increased by 1.0% from May 2011 (5,885 students) to May 2012 (5,944 students);~~
~~Increased by 2.1% from September 2011 (6,082 students) to September 2012 (6,209 students); and~~
~~Increased by 4.9% from January 2012 (6,024 students) to January 2013 (6,318 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 108.0% from September 2012 (1,625 students) to September 2013 (3,380 students);
· Decreased by 8.0% from November 2012 (2,121 students) to November 2013 (1,952 students); and
· Increased by 65.1% from January 2013 (2,120 students) to January 2014 (3,501 students).
~~Increased by 14.7% from July 2011 (1,721 students) to July 2012 (1,974 students);~~
~~Increased by 52.6% from September 2011 (1,065 students) to September 2012 (1,625 students);~~
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~~Increased by 13.5% from November 2011 (1,868 students) to November 2012 (2,121 students); and~~
~~Increased by 87.8% from January 2012 (1,129 students) to January 2013 (2,120 students).~~
Chamberlain College of Nursing total student enrollment by term:
· Increased by 16.5% from July 2012 (10,852 students) to July 2013 (12,648 students);
· Increased by 30.2% from September 2012 (12,050 students) to September 2013 (15,690 students);
· Increased by 28.5% from November 2012 (12,247 students) to November 2013 (15,732 students); and
· Increased by 32.2% from January 2013 (13,714 students) to January 2014 (18,136 students).
~~Increased by 15.8% from July 2011 (9,374 students) to July 2012 10,852 students);~~
~~Increased by 20.2% from September 2011 (10,029 students) to September 2012 (12,050 students);~~
~~Increased by 15.3% from November 2011 (10,619 students) to November 2012 (12,245 students); and~~
~~Increased by 26.0% from January 2012 (10,888 students) to January 2013 (13,714 students).~~
Carrington new student enrollment by term:
· Decreased by 1.5% from June 2012 (1,632 students) to June 2013 (1,607 students);
· Decreased by 19.5% from September 2012 (3,396 students) to September 2013 (2,733 students);
· Decreased by 3.2% from December 2012 (1,763 students) to December 2013 (1,706 students).
~~Decreased by 19.7% from June 2011 (2,033 students) to June 2012 (1,632 students);~~
~~Increased by 33.3% from September 2011 (2,548 students) to September 2012 (3,396 students); and~~
~~Increased by 12.7% from December 2011 (1,565 students) to December 2012 (1,763 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 0.6% from December 2012 (7,405 students) to December 2013 (7,358 students).
~~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); and~~
~~Increased by 0.4% from December 2011 (7,379 students) to December 2012 (7,405 students).~~
Tuition rates:
Effective September 2012, 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 and $16,800, respectively, per semester. Tuition and fees for the final clinical portion of the programs are $19,500 per semester for the medical school, and $21,100 per semester for the veterinary school. These tuition rates represent an increase from September 2011 rates of 6.6% and 7.1% for the medical school and 6.3% for the veterinary school. These amounts do not include the cost course materials, supplies, transportation, and living expenses.
·
Effective September 2013, tuition and fees for the basic sciences portion of the programs at the Ross University School of Medicine and Ross University School of Veterinary Medicine are $18,825 and $17,725, respectively, per semester. Tuition and fees for the clinical portion of the programs are $20,775 per semester for the medical school, and $22,250 per semester for the veterinary school. These tuition rates represent an increase from September 2012 rates of 6.5% for the medical school and 5.5% for the veterinary school. These amounts do not include the cost of books, supplies, transportation, and living expenses.
·
Effective September 2013, tuition and fees for the basic sciences and clinical rotation portions of AUC’s medical program are $18,975 and $21,250, respectively, per semester. These tuition rates represent an increase from the September 2012 rates of approximately 5.9%.
·
Effective July 2013, tuition is $665 per credit hour for students enrolling 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 $200 per credit hour per session for each credit hour in excess of six credit hours. This excess credit hour rate represents a $100 increase as compared to the prior year. These amounts do not include the cost of books, supplies, transportation and living expenses.
·
Effective July 2013, tuition is $590 per credit hour for students enrolled in the Chamberlain Registered Nurse to Bachelor of Science in Nursing (RN-to-BSN) online degree program. This tuition rate is unchanged from the July 2012 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, 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.
Effective September 2012, tuition and fees for the beginning basic sciences and final clinical rotation portions of AUC’s medical program are $17,925 and $20,050, respectively, per semester. These tuition rates represent an increase from the September 2011 rates of 6.1%.
Effective July 2012, 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. Tuition is $100 per credit hour per session for each credit hour in excess of six credit hours. These effective tuition rates are unchanged as compared to the prior year. These amounts do not include the cost of course materials and supplies.
Effective July 2012, tuition is $590 per credit hour for students enrolled in the Chamberlain RN-to-BSN online degree program. This tuition rate is unchanged from the July 2011 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 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 management~~classrooms which reduced capacity constraints that existed in the prior fiscal year. Management expects ~~these~~positive 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.
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Continued demand for nurses positively influenced career decisions of new students towards this field of study. The ~~increase~~historical trend of increases in new student enrollments ~~in the July 2012, September 2012, November 2012 and January 2013 sessions at Chamberlain was~~is attributable to increased ~~conversion rates~~demand for its RN-to-BSN online completion program, the addition of several new campus locations, ~~in Indianapolis in March 2012~~capacity expansion and ~~Atlanta in May, 2012, along with~~ organic growth at existing ~~locations. The~~locations and the introduction of new ~~campuses are both co-located~~graduate degree programs.New student enrollment at Chamberlain for the July 2013 and November 2013 terms as compared to the July 2012 and November 2012 terms were impacted by the realignment of the academic calendar, with ~~DeVry University.~~
September, January and May intakes. As a result there were no onsite enrollments for the 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 two~~in previous fiscal years ~~are~~were 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. ~~In addition, management believes a lack of brand awareness resulting from the Carrington name change in July 2010 was a contributing factor to the enrollment decline.~~ 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, ~~and~~ improving its recruiting process through its new student contact ~~center.~~center and narrowing its focus geographically and programmatically around Carrington’s core strengths in healthcare. Carrington ~~is also making~~continues to make targeted investments in enhancing its students’ academic experience.These initiatives contributed to ~~the 33% and 12.7%~~ growth in new student enrollments for several successive terms in ~~the September and December 2012 terms, respectively, as well as~~fiscal year 2013, which 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 ~~term.~~
31, 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 ~~27.4%~~16.6% to ~~$57.3~~$61.4 million in the second quarter and increased ~~22.9%~~17.3% to ~~$97.0~~$105.2 million for the first six months of fiscal year ~~2013~~2014 as compared to the ~~year-ago periods. For both the second quarter and first six 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 second quarter~~2012 and ~~first six 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 ~~increased slightly~~grew, driven primarily by ~~the contribution of Falcon Physician Reviews (“Falcon”) which was acquired~~increases 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 by 2.2% from September 2011 (4,090 students) to September 2012 (4,179 students).~~
·
Decreased by 9.4% from September 2012 (4,179 students) to September 2013 (3,785 students). The acquisition of Facid accounted for 309 new students. Excluding the impact of the Facid acquisition, new student enrollments decreased by 16.8%.
DeVry Brasil total student enrollment by term:
·
Increased by 11.4% from September 2012 (26,343 students) to September 2013 (29,340 students). 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 ~~9.2% from~~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 ~~2011 (24,135 students)~~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 ~~September 2012 (26,346 students).~~
have the third enrollment limitation removed and expects this to occur within the next several months.
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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 increased ~~0.9%~~1.2% to ~~$243.4~~$243.0 million during the second quarterand grew ~~1.4%~~1.1% to ~~$485.9~~$484.7 million during the first six months of fiscal year ~~2013~~2014 as compared to the respective year-ago periods. ~~The acquisitions~~Lower Costs of ~~FBV, which was acquired on February 29, 2012, Falcon, which was acquired on April 3, 2012~~Educational Services within DeVry University and ~~FAVIP, which was acquired on September 3, 2012, accounted for most~~Carrington as a result of savings from cost reduction measures were offset by the increase in costs necessary to support the operations of the growth institutions. This increase ~~during the second quarter and first six months of fiscal year 2013. In addition, cost increases~~includes costs that were ~~also~~ incurred into support ~~of operating~~ a higher number of ~~campus locations~~total student enrollments for Chamberlain as compared to the prior year and the need to support continued growth at DeVry Medical International and DeVry Brasil. ~~These increases were partially offset by lower Costs~~The costs at DeVry Brasil include the full six month’s effect of ~~Educational Services within DeVry University and Carrington Colleges as a result~~expense from the acquisition of ~~savings from cost reduction measures.~~
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 ~~percent~~percentage of revenue, Cost of Educational Services increased to ~~48.2%~~49.5% in the second quarter of fiscal year ~~2013~~2014 from ~~46.0%~~48.0% during the prior year period. For the first six months of fiscal year ~~2013,~~2014, Cost of Educational Services increased to ~~49.2%~~51.4% from ~~46.0%~~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 3.9%~~increased 0.7% to ~~$186.5~~$185.0 million during the second quarter ~~of fiscal year 2013~~ and ~~decreased 3.6%~~declined 0.2% to ~~$380.9~~$374.2 million during the first six monthsof fiscal ~~2013~~year 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 ~~FAVIP.~~Facid and the increase in costs necessary to support the operations of the growing institutions. Amortization of finite-lived intangible assets in connection with acquisitions of businesses ~~declined slightly~~decreased by $0.8 million during the second quarter and decreased $1.4 million for the first six months of fiscal year ~~2013~~2014 as compared to the respective year-ago ~~period.~~periods. Amortization expense is included entirely in the Student Services and Administrative Expense category.
As a ~~percent~~percentage of revenue, Student Services and Administrative Expense ~~remained relatively flat at 36.9%~~increased to 37.7% in the second quarter of fiscal year ~~2013 as compared to 37.0% in~~2014 from 36.7% during the year-ago quarter. For the first six months of fiscal year ~~2013,~~2014, Student Services and Administrative Expense increased to ~~38.5%~~39.7% from ~~37.9%~~38.2% during the prior year period. The increase was the result of decreased operating leverage ~~as a result of revenue declines~~from declining revenues primarily at DeVry ~~University and Carrington.~~
University.
~~Restructuring Charges~~Gain on the Sale of Assets
During the first quarter of fiscal year 2014, management completed the sale of the former DeVry University campus 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 gain of $1.9 million.
Restructuring Expenses
During the second quarter of fiscal year ~~2013,~~2014, DeVry ~~consolidated~~Medical 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 ~~second~~first quarter of fiscal ~~2013~~year 2014. These restructuring costs were allocated to the 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 Group home office which is classified as “Depreciation and Other” in “Note 13 - Segment Information” to the consolidated financial statements of this Form 10-Q.
38

Cash payments for ~~a write-down~~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 ~~assets~~December 31, 2013. The balance is expected to ~~fair market value and an expected loss on this asset sale. Also, during~~be paid within the second quarter a decision was made to consolidate facilities at DeVry’s Carrington and DeVry University operating units. This resulted in a pre-tax charge of $1.6 million. DeVry expects to save approximately $3 million annually as a result of these consolidations.
next 12 months.
OPERATING INCOME
Total consolidated operating income from continuing operations for the second quarter of fiscal year ~~2013~~2014 of ~~$65.9~~$58.6 million ~~increased 379.0%~~decreased 12.8% as compared to the prior year quarter. For the first six months of fiscal year ~~2013,~~2014, total consolidated operating income of ~~$111.7~~$68.8 million ~~increased 19.3%~~decreased 41.0% as compared to the prior year period. The largest single driver of the increase in operating income for both the second quarter and first six months of fiscal year 2013 was a $75.0 million non-cash asset impairment charge recorded in the second quarter of fiscal 2012. Excluding this charge, total consolidated operating income for the second quarter of fiscal year 2013 decreased 25.8% as compared to the prior year quarter and declined 33.8% inFor the first six months, ~~of fiscal year 2013 as compared to~~ the ~~prior year period. Revenue declines~~operating income decline was experienced at ~~DeVry University~~the Business, Technology and ~~Carrington Colleges contributed to~~Management and the International and Professional Education segments. The largest driver of the decline in operating income during 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. ~~The~~Operating 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 leverage increased. This also resulted in a second quarter increase in operating income ~~decline was limited to~~for the International and Professional Education segment of which DeVry Brasil is a part.
Business, Technology and Management ~~segment.~~
~~Business, Technology and Management~~
Business, Technology and Management segment operating income decreased ~~32.8%~~74.4% to ~~$38.8~~$9.9 million during the second quarter of fiscal year ~~2013,~~2014, as compared to the year-ago quarter. The Business, Technology and ~~declined 46.0%~~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 ~~month~~months of fiscal year ~~2013 as compared to the year-ago periods.~~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 second quarter and first six months of fiscal ~~2013~~year 2014, excluding the restructuring charges and gain on the sale of assets decreased ~~9.8%~~4.6% and 6.6% as compared to the respective year-ago ~~quarter and declined 8.0% in the first six 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 ~~recorded~~ operating income ~~of $26.7~~increased 32.2% to $35.3 million during the second quarter of fiscal year ~~2013~~2014, and grew 17.2% to $60.8 million during the first six months of fiscal year 2014 as compared to anthe year-ago periods. The increase in operating ~~loss~~income was the result of ~~$51.9~~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 induring the ~~year-ago~~second quarter of fiscal year 2014 as compared to the year ago quarter. For the first six months of fiscal year ~~2013,~~2014, the ~~Medical~~International and ~~Healthcare~~Professional Education segment recorded operating income of ~~$51.9~~$17.5 million as compared to an operating ~~loss~~income of ~~$28.6~~$18.6 million in the year-ago period. The ~~largest single driver of~~decreased operating results for the ~~increase in operating~~six months were primarily driven by investments for expansion and growth.
NET INTEREST (EXPENSE) INCOME
Interest income for ~~both~~ the second quarter and first six months of fiscal year ~~2013~~2014 of $0.3 million and $0.9 million, respectively, was consistent with the ~~$75.0~~year-ago periods.
Interest expense increased by $0.3 million ~~non-cash asset impairment charge recorded~~ in the second quarter of fiscal ~~2012. Excluding this charge, total consolidated operating income for the second quarter of fiscal~~ year ~~2013 increased 15.6% as compared to the prior year quarter~~2014 and increased 11.8% in the first six months of fiscal year 2013 as compared to the prior year period. The increase in operating income was primarily the result of increased operating income at both Chamberlain and Ross University Schools of Medicine and Veterinary Medicine. These increases in operating income more than offset the slight increase in operating loss at Carrington.
~~International, K-12 and Professional Education~~
~~International, K-12 and Professional Education segment operating income increased 37.3% to $13.9 million during the second quarter of fiscal year 2013, and grew 90.2% to $13.6~~decreased by $0.2 million during the first six months of fiscal ~~2013~~year 2014 as compared to the respective year-ago periods. The ~~improved operating results were driven primarily by increased operating leverage within DeVry Brasil and a narrowing of the operating loss at Advanced Academics.~~
~~NET INTEREST AND OTHER INCOME (EXPENSE)~~
~~Interest income was relatively unchanged during the second quarter and first six months of fiscal year 2013 as compared to the year-ago periods.~~
~~Interest expense increased slightly during the second quarter and first six months of fiscal year 2013 as compared to the year-ago periods. The increase~~changes in interest expense ~~was~~are attributable to fluctuations in interest ~~accreted~~rates at DeVry Brasil where interest is accrued on earn-outs and installment payments related to ~~the acquisition of FBV.~~
~~In the second quarter of fiscal 2012, DeVry recorded a $3.6 million pre-tax gain on the sale of Becker’s Stalla CFA review operations.~~
recent acquisitions, as discussed above.
39

INCOME TAXES
Taxes on income from continuing operations were ~~21.6%~~14.7% of pretax income for the second quarter and ~~24.7%~~15.1% for the first six months of fiscal year ~~2013,~~2014, compared to ~~46.0%~~21.9% for the second quarter and ~~31.2%~~25.3% for the first six months of fiscal ~~2012.~~year 2013. The lower effective ~~income~~ tax ~~rates~~rate in the second quarter and first six months of fiscal year ~~2013 were due~~2014 resulted primarily tofrom the ~~non-deductibility~~jurisdictional mix of a significant portion of the goodwill associated with the Carrington impairment charge that was recorded in the second quarter of fiscal 2012. Taxes on income in fiscal 2012, excluding the asset impairment charge and net gain on sale of assets, were 29.1% of pretax income for the second quarter and 28.5% for the first six months. The lower fiscal 2013 rates were also the result of a decrease in the proportion of income generated bypre-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 ~~compared to~~well as the ~~prior year.~~
Embedded within DeVry’s tax rate calculation is the tax expected on the amount of subpart F income that would be recognized for the current year assuming Internal Revenue Code Section 954(c)(6), Look-Thru Rule for Related Controlled Foreign Corporations, is not extended. The look-thru rule generally excludes from U.S. federal income tax certain dividends, interest, rents, and royalties received or accrued by one controlled foreign corporation (“CFC”) of a U.S. multinational enterprise from a related CFC that would otherwise be taxable pursuant to the subpart F regime. Subsequent to the endfavorable impacts of the ~~second quarter, the U.S.~~American Tax Relief Act of 2012 signed into law on January 2, 2013, in which Congress ~~adopted~~enacted legislation extending the benefits of Internal Revenue Code Section 954(c)(6) (“CFC Look-through”) for a ~~two-year period. The extension applies retroactively from~~two year period for tax years beginning after January 1, 2012 ~~and will be effective~~ through December 31, 2013.
DeVry ~~will begin recognizing the benefit of this Section in the third quarter of fiscal 2013, and expects its third quarter effective tax rate to be in the range of 23 percent to 25 percent.~~
~~DeVry’s~~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 ~~our~~DeVry 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, ~~AUC~~American 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 Medical~~RUSM and ~~Veterinary Schools~~RUSVM have agreements with ~~the~~their respective domestic governments that exempt them from local income ~~taxation through~~taxation. Both of these agreements have been extended to provide, in the ~~years 2043~~case of RUSM, an indefinite period of exemption and, ~~2023, respectively, while~~in the case of RUSVM, exemption until 2037. DeVry Brasil’s effective tax rate reflects benefits derived from ~~their~~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 and~~Ross 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 ~~provincial~~state 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’s~~DeVry Group’s institutional loan programs.
40

The following table summarizes ~~DeVry’s~~DeVry 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’s~~DeVry 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 December 31, ~~2012,~~2013, total accounts receivable, net of related reserves, ~~were $139.7~~was $117.8 million compared to ~~$145.5~~$118.3 million at December 31, ~~2011.~~2012. The decrease in net accounts receivable was attributable to ~~the~~ revenue declines at DeVry University, ~~and Carrington. This decrease was~~ partially offset ~~with~~by the impact of continued revenue growth at Chamberlain and DeVry Brasil as well as increases in ~~net accounts~~federal 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. ~~Financial~~All 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 for~~guides 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’s~~DeVry Group’s financial condition and cash flows could be materially and adversely affected. Please see ~~“Item 1A.~~Item 1A Risk ~~Factors”~~Factors in ~~DeVry’s~~the Annual Report on Form 10-K, 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’s~~DeVry 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 years~~year 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’s~~DeVry 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’s~~DeVry 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. ~~Once~~DeVry 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 December 31, ~~2012,~~2013, cash in the amount of ~~$3.9~~$11.9 million was held in restricted bank accounts, compared to ~~$30.8~~$3.9 million at December 31, ~~2011. This decrease~~2012. The increase is ~~a result in a change in the~~due to timing of ~~the receipt of financial aid due~~transfers 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 a~~unrestricted accounts.
A separate financial responsibility test ~~if their~~for 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 six months of fiscal year ~~2013~~2014 was ~~$180.2~~$113.3 million, compared to ~~$219.3~~$185.9 million in the year-ago period. ~~Although~~This 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 $16.5 million~~ from ~~the year-ago period,~~continuing operations. Also contributing to the decrease in cash ~~flow~~generated 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 to~~were changes in deferred tuition revenue, advanced tuition payments and restricted cash of $107.5 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 $98.1~~that were $30.3 million ~~greater source of cash as compared to~~less 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’s~~DeVry Group’s payroll and bill payment cycles. ~~Finally, realized and unrealized gains and losses on~~Another factor in the ~~sale or disposal of assets increased~~decrease in operating cash ~~flow by $11.7~~flows 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.
42

Cash Used in Investing Activities
Capital expenditures for continuing operations in the first six months of fiscal year ~~2013~~2014 were ~~$48.2~~$33.4 million compared to ~~$63.0~~$47.2 million in the year-ago period. The decrease in capital spending was driven by a focus on prudent capital ~~deployment~~deployment. DeVry Group continues to invest capital in facility expansion at the Ross University School of Medicine and ~~a delay~~the 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 ~~2013~~year 2014 capital spending to be in the ~~range of $130~~$90 to ~~$140 million.~~
$100 million range.
On ~~September 3, 2012, Fanor-Faculdades Nordeste S/A (DeVry Brasil), a subsidiary of~~July 1, 2013, DeVry ~~Inc.,~~Brasil acquired the stock of Faculdade ~~do Vale do Ipojuca~~Diferencial 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 be~~is required to make an additional ~~payment~~payments 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 interest~~four 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 ~~value~~net proceeds on this sale were approximately $6.7 million which resulted in the recording of ~~this call option is currently recorded at $8.9 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 six months of fiscal year 2013,~~
DeVry repurchased a total of 1,669,718 shares of its stock, on the open market, for approximately $38.6 million under its share repurchase programs. During the second quarter of fiscal year 2013, DeVry completed its seventh share repurchase program and commenced its eighth program. As of December 31, 2012, the total remaining authorization under this eighth repurchase program was $95.0 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’s~~Group’s consolidated cash balances of ~~$216.3~~$262.0 million at December 31, ~~2012,~~2013, included approximately ~~$167.3~~$198.4 million of cash attributableto ~~DeVry’s~~DeVry Group’s international operations. It is ~~DeVry’s~~DeVry Group’s intention to indefinitely reinvest this cash and subsequent earnings and cash flow to improve and expand facilities and operations of its international ~~institutions~~schools 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’s~~DeVry 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 six months of fiscal year ~~2013,~~2014, cash flows from domestic operating activities were approximately ~~$69.2~~$29 million which when added to ~~DeVry’s~~DeVry Group’s beginning of the year domestic cash balances, was sufficient to fund ~~$34.7~~$15.8 million of domestic capital investment and pay dividends of ~~$20.7~~$10.9 million ~~and fund $38.6 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 ~~loan~~credit facility will be sufficient to fund both ~~DeVry’s~~DeVry 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 ~~Agreement~~Facility
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’s~~DeVry Group’s achievement of certain financial ratios. ~~As of December 31, 2012, there were no outstanding borrowings under this agreement. DeVry’s~~DeVry Group’s letters of credit outstanding under the revolving credit facility were approximately ~~$2.4~~$13.2 million as of December 31, ~~2012.~~
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 December 31, ~~2012.~~
2013.
43

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 six months of fiscal year ~~2013.~~2014. DeVry Group had no open derivative positions at December 31, ~~2012.~~
2013.
RECENT ACCOUNTING PRONOUNCEMENTS
~~There~~
In July 2013, the Financial Accounting Standards Board issued Accounting 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 requires 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 available at the reporting date to settle any additional income taxes under the tax law of the applicable tax jurisdiction. The guidance is effective for the fiscal years and interim periods beginning after December 15, 2013 with early adoption permitted. Management is in the process of evaluating the effects of this guidance but does not believe it will have ~~been no recent accounting pronouncements applicable to DeVry.~~
a significant impact on DeVry Group’s consolidated financial statements.
ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET ~~RISK~~RISK
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’s~~DeVry 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’s~~DeVry Group’s Canadian educational ~~programs~~operations 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’s~~DeVry 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’s~~DeVry 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’s~~DeVry 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’s~~DeVry 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’s~~DeVry 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’s~~DeVry Group’s results of operations; however, the volatility of the Brazilian Real over the past 1812 months resulted in a ~~$24~~$20.0 million charge to Accumulated Other Comprehensive Income ~~in fiscal 2012~~over that time period and a charge of ~~$0.8~~$9.8 million for the first six 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.
44

The interest rate on ~~DeVry’s~~DeVry 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 December 31, ~~2012,~~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’s~~DeVry 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’s~~DeVry 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’s~~DeVry 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’s~~DeVry 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 ~~second quarter~~first six months of fiscal year ~~2013~~2014 that materially affected, or are reasonably likely to materially affect, ~~DeVry’s~~DeVry Group’s internal control over financial reporting.
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 ~~litigation~~legal matters that may be considered other than ordinary, ~~and~~ routine ~~litigation that is~~and 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. ~~Plaintiffs~~Plaintiff filed an amended complaint (the “First Amended Complaint”) on March 7, 2011 alleging the same categories of claims in the initial complaint. The ~~plaintiffs~~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’s~~DeVry Group’s student enrollment and revenues and artificially inflating ~~DeVry’s~~DeVry Group’s stock price during the class period. On March 27, 2012, Judge John F. Grady dismissed the First Amended Complaint without prejudice, granting ~~Plaintiffs~~plaintiff leave to file a second amended complaint by May 4, 2012.
45

On May 4, 2012, the ~~Plaintiffs~~plaintiff again amended ~~their~~its allegations in the Shareholder Case (the “Second Amended Complaint”). The Second Amended Complaint ~~alleges~~alleged a longer putative class period of October 27, 2007 to August 11, 2011, but ~~narrows~~narrowed the scope of the alleged fraud significantly as compared to the previous two complaints. ~~Plaintiffs now focus~~Plaintiff focused exclusively on ~~DeVry’s~~DeVry 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 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, which is awaiting~~Complaint. On March 27, 2013, Judge Grady granted DeVry 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 ~~consideration.~~
~~Three derivative cases similar to~~order of dismissal; however, the ~~Shareholder Case also have~~appeal has been ~~filed (“Derivative Actions”). Two~~stayed pending Judge Grady’s resolution of the ~~Derivative Actions were~~sanctions issue. The issue of sanctions was 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 ~~Circuit~~United States District Court for the District of ~~Cook County, Illinois, Chancery Division: DeVry shareholder Timothy Hald~~Minnesota. The complaint was filed ~~a derivative complaint~~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 ~~DeVry~~the state and federal governments. The complaint was unsealed and made public on ~~January 3, 2011 (Hald v. Hamburger et al., Case No. 11 CH 0087)~~June 6, 2013. The complaint relates to certain federal 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).~~state funding received by Minnesota Transitions Charter Schools and MN Virtual High School. The Hald and Green cases (the “Illinois Consolidated Action”) were consolidated by court order dated February 9, 2011. 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). By Order entered January 15, 2013, the Illinois Consolidated Action was dismissed without prejudice. The Delaware Dotro case has been stayed by agreement of the parties until certain matters are resolved or clarified with respect to the disposition of the Shareholder Case.
~~The Dotro~~ complaint alleges that Daniel Hamburger, Richard M. Gunst, David J. Pauldine, Sharon Thomas Parrott, Ronald L. Taylor, Lisa W. Pickrum, Darren R. Huston, David S. Brown, William T. Keevan, Fernando Ruiz, Harold T. Shapiro, Lyle Logan, Connie R. Curran,Minnesota Transitions Charter Schools and ~~Julia McGee breached their fiduciary duties~~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 ~~by failing to disclose the same allegedly abusive and fraudulent recruiting and financial aid lending practices alleged~~Group in the ~~Shareholder Case.~~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 ~~Dotro complaint also alleges that DeVry’s officers~~settlement is expected to be concluded and ~~directors unjustly enriched themselves and wasted DeVry’s assets~~the litigation dismissed by ~~(i) causing~~stipulation sometime in DeVry ~~to incur substantial costs in defending the Shareholder Case; (ii) causing~~Group’s third quarter of fiscal year 2014.
Although DeVry to pay compensation and benefits to individuals who breached their fiduciary duties; (iii) causing potential losses from “certain of DeVry’s programs no longer being eligible for federal financial aid;” and (iv) damaging DeVry’s corporate image and goodwill. DeVry and its executives and directors believe the allegations contained in the Dotro complaint are without merit and intend to defend them vigorously.
~~Although DeVry~~Group believes that the appeal of the dismissed Shareholder Case ~~and the related Dotro derivative action are~~is without merit, the ultimate outcome of pending litigation is difficult to predict. DeVry Group will vigorously defend any appellate proceedings which may proceed in the Shareholder Case. At this time, DeVry Group does not expect that the outcome of ~~any such matter~~the 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 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 Group’s business, financial condition or results of operations, cannot be predicted at this time.
46

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’s~~DeVry Group’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2012,~~2013, which could materially affect ~~DeVry’s~~DeVry Group’s business, financial condition or future results, should be carefully considered. Such risks are not the only risks facing DeVry ~~additional~~Group. 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’s~~DeVry 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 ~~uncertainties~~uncertainties.
At December 31, ~~2012,~~2013, intangible assets from business combinations totaled ~~$294.2~~$293.7 million, and goodwill totaled ~~$566.2~~$514.8 million. Together, these assets equaled approximately ~~45%~~40% of total assets as of such date. If ~~DeVry’s~~DeVry 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 ~~$294.2~~$293.7 million of intangible assets and up to ~~$566.2~~$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.
47

ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity
Securities
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 $79,723,028 million as of December 31, 2013. DeVry Group suspended repurchases under this plan in May 2013.
~~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)
October 2012
   342,052       $ 23.06    342,052       $ 100,000,000
November 2012
   81,032       $ 25.47    81,032       97,935,996
December 2012
   115,760       $ 25.01    115,760       95,041,332








Total
   538,844       $ 23.84    538,844       $ 95,041,332








~~(1)~~ On November 2, 2011, the Board of Directors authorized a share repurchase program to buy back up to $100 million of DeVry common stock through December 31, 2013. This share repurchase program was completed as of December 31, 2012. On August 29, 2012, the Board of Directors authorized a share repurchase program to buy back up to $100 million of DeVry common stock through December 31, 2014. The total remaining authorization under this share repurchase program was $95,041,332 million as of December 31, 2012.
Other Purchases of Equity Securities
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 Group’s stock incentive plans.

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)
October 2012
   —         $ —      N/A       N/A
November 2012
   6,976       $ 25.75    N/A       N/A
December 2012
   —         $ —      N/A       N/A





Total
   6,976       $ 25.75    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’s stock incentive plans.~~
ITEM 4 — MINE SAFETY DISCLOSURES
Not applicable.
ITEM 6 —– EXHIBITS
~~The exhibits to this report are listed on the Exhibit Index included elsewhere herein.~~
Exhibit 3.1 Restated Certificate of Incorporation of the Registrant, as amended
Exhibit 3.2 Amended and Restated By-laws of DeVry Education Group Inc., as amended as of November 6, 2013 (incorporated by reference to the Registrant’s Current Report on Form 8-K dated November 6, 2013)
Exhibit 10.1 DeVry Education Group Inc. Second Amended and Restated Incentive Plan of 2013 (incorporated by reference to the Registrant’s Registration Statement on Form S-8 dated December 20, 2013)
Exhibit 31 Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended
Exhibit 32 Certification Pursuant to Title 18 of the United States Code Section 1350
48

101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
49

~~SIGNATURES~~
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.
~~DeVry Inc.~~
Date: February ~~7, 2013~~4, 2014 By     By
/s/  Timothy J. Wiggins
Timothy J. Wiggins
Senior Vice President, Chief Financial Officer
~~(Principle~~
(Principal Financial Officer) and Treasurer
Date: February ~~7, 2013~~4, 2014 By     By
/s/  Patrick J. Unzicker
Patrick J. Unzicker
Vice President, Finance and Chief Accounting
Officer ~~(Principle~~(Principal Accounting Officer)
~~INDEX TO EXHIBITS~~
50
~~Exhibit~~
~~Number~~
~~Exhibit~~
3 ~~Certificate of Amendment of Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed November 8, 2012 (File No. 1-13988)~~
31 ~~Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended (filed herewith)~~
32 ~~Certification Pursuant to Title 18 of the United States Code Section 1350 (filed herewith)~~
~~101.INS~~ ~~XBRL Instance Document~~
~~101.SCH~~ ~~XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~ ~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~ ~~XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~ ~~XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~ ~~XBRL Taxonomy Extension Presentation Linkbase Document~~
41


	December 31,			June 30,			December 31,
	2012			2012			2011
	(Dollars in thousands)
ASSETS:
Current Assets:
Cash and Cash Equivalents	$	216,259		$	174,076		$	285,749
Marketable Securities and Investments		2,752			2,632			2,499
Restricted Cash		3,894			2,498			30,799
Accounts Receivable, Net		139,658			113,911			145,488
Deferred Income Taxes, Net		25,176			27,845			21,760
Refundable Income Taxes		23,827			40,278			7,560
Prepaid Expenses and Other		39,205			39,874			34,925

Total Current Assets		450,771			401,114			528,780

Land, Buildings and Equipment:
Land		65,963			65,172			61,360
Buildings		388,259			386,028			366,102
Equipment		491,232			433,949			444,851
Construction In Progress		28,953			61,752			47,926

		974,407			946,901			920,239
Accumulated Depreciation		(415,050	)		(387,924	)		(395,331	)

Land, Buildings and Equipment, Net		559,357			558,977			524,908

Other Assets:
Intangible Assets, Net		294,177			285,220			276,448
Goodwill		566,199			549,961			553,456
Perkins Program Fund, Net		13,450			13,450			13,450
Other Assets		30,112			29,894			27,290

Total Other Assets		903,938			878,525			870,644

TOTAL ASSETS	$	1,914,066		$	1,838,616		$	1,924,332

LIABILITIES:
Current Liabilities:
Accounts Payable	$	60,669		$	63,094		$	51,413
Accrued Salaries, Wages and Benefits		64,043			77,741			58,792
Accrued Expenses		71,466			76,243			37,217
Advance Tuition Payments		32,159			20,580			19,701
Deferred Tuition Revenue		109,191			77,551			259,967

Total Current Liabilities		337,528			315,209			427,090
Other Liabilities:
Deferred Income Taxes, Net		63,946			62,276			64,570
Deferred Rent and Other		107,333			96,496			71,001

Total Other Liabilities		171,279			158,772			135,571

TOTAL LIABILITIES		508,807			473,981			562,661

NON-CONTROLLING INTEREST		8,901			8,242			7,632
SHAREHOLDERS’ EQUITY:
Common Stock, $0.01 Par Value, 200,000,000 Shares Authorized; 63,287,000; 64,722,000 and 66,569,000 Shares Issued and Outstanding at December 31, 2012, June 30, 2012 and December 31, 2011, Respectively		744			741			740
Additional Paid-in Capital		280,901			272,962			260,755
Retained Earnings		1,560,130			1,488,988			1,423,651
Accumulated Other Comprehensive (Loss) Income		(6,696	)		(5,889	)		4,458
Treasury Stock, at Cost (11,079,000, 9,386,000 and 7,416,000 Shares, Respectively)		(438,721	)		(400,409	)		(335,565	)

TOTAL SHAREHOLDERS’ EQUITY		1,396,358			1,356,393			1,354,039

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,914,066		$	1,838,616		$	1,924,332


	For the Quarter Ended December 31,						For the Six Months Ended December 31,
	2012			2011			2012			2011
REVENUES:
Tuition	$	476,459		$	496,294		$	927,960		$	982,781
Other Educational		28,785			27,755			60,020			60,306

Total Revenues		505,244			524,049			987,980			1,043,087

COSTS AND EXPENSES:
Cost of Educational Services		243,401			241,212			485,946			479,460
Student Services and Administrative Expense		186,454			194,042			380,855			394,967
Restructuring Expenses		9,484			—			9,484			—
Asset Impairment Charges		—			75,039			—			75,039

Total Operating Costs and Expenses		439,339			510,293			876,285			949,466

Operating Income		65,905			13,756			111,695			93,621
INTEREST AND OTHER (EXPENSE) INCOME:
Interest Income		230			226			791			410
Interest Expense		(759	)		(481	)		(2,250	)		(1,003	)
Net Gain on Sale of Assets		—			3,695			—			3,695

Net Interest and Other (Expense) Income		(529	)		3,440			(1,459	)		3,102

Income Before Income Taxes		65,376			17,196			110,236			96,723
Income Tax Provision		14,152			7,916			27,190			30,131

NET INCOME		51,224			9,280			83,046			66,592
Net (Income) Loss Attributable to Non-controlling Interest		(938	)		(415	)		(771	)		(243	)

NET INCOME ATTRIBUTABLE TO DEVRY INC.	$	50,286		$	8,865		$	82,275		$	66,349

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO DEVRY INC. SHAREHOLDERS:
Basic	$	0.78		$	0.13		$	1.27		$	0.97

Diluted	$	0.78		$	0.13		$	1.27		$	0.97

Cash Dividend Declared per Common Share	$	0.17		$	0.15		$	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


	For the Three Months Ended December 31,						For the Six Months Ended December 31,
	2012			2011			2012			2011
NET INCOME	$	51,224		$	9,280		$	83,046		$	66,592
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Currency Translation Loss		(1,279	)		(961	)		(869	)		(11,189	)
Change in Fair Value of Available-For-Sale Securities		(5	)		71			62			(82	)

COMPREHENSIVE INCOME		49,940			8,390			82,239			55,321
COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST		(717	)		(295	)		(638	)		1,759

COMPREHENSIVE INCOME ATTRIBUTABLE TO DEVRY INC.	$	49,223		$	8,095		$	81,601		$	57,080

	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


	Three Months Ended December 31,					Six Months Ended December 31,
	2012			2011		2012			2011
Balance at Beginning of period	$	8,637		$	7,176	$	8,242		$	6,755
Net Income (Loss) Attributable to Non-controlling Interest		938			415		771			243
Accretion of Non-controlling Interest Put Option		(674	)		41		(112	)		634

Balance at End of period	$	8,901		$	7,632	$	8,901		$	7,632


	Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value ($000)
Outstanding at July 1, 2012		2,939,772		$	36.37
Options Granted		860,610		$	18.62
Options Exercised		(65,448	)	$	17.48
Options Canceled		(139,178	)	$	42.88

Outstanding at December 31, 2012		3,595,756		$	32.21		6.44	$	6,103

Exercisable at December 31, 2012		2,124,634		$	34.92		4.69	$	1,649

				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

				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


	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	%


	Restricted Stock Outstanding			Weighted Average Grant Date Fair Value
Nonvested at July 1, 2012		619,261		$	42.06
Shares Granted		680,560		$	19.13
Shares Vested		(185,589	)	$	46.05
Shares Canceled		(9,227	)	$	37.70

Nonvested at December 31, 2012		1,105,005		$	27.30

			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

	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


December 31, 2012	Level 1		Level 2		Level 3
Cash and Cash Equivalents	$	216,259	$	—	$	—
Available for Sale Investments:
Marketable Securities, short-term		2,752		—		—
ATC Earn-out Liability		—		—		4,686
FAVIP Contingent Consideration		—		—		2,733

Total Financial Assets and Liabilities at Fair Value	$	219,011	$	—	$	7,419


	Long-Term Liabilities
	Three Months Ended December 31, 2012		Six Months Ended December 31, 2012
Balance at Beginning of Period	$	7,344	$	4,361
Total Realized Losses Included in Income:
Interest Expense- ATC Accretion		71		140
Foreign Currency Translation Loss		4		185
Transfers into Level 3:
FAVIP Contingent Consideration		—		2,733

Balance at December 31, 2012	$	7,419	$	7,419

	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


	As of December 31,
	2012			2011
Gross Institutional Student Loans	$	55,108		$	52,419
Allowance for Credit Losses		(18,665	)		(18,850	)

Net Institutional Student Loans	$	36,443		$	33,569


	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:
December 31, 2012	$	4,030	$	1,773	$	1,346	$	13,584	$	20,733	$	34,375	$	55,108
December 31, 2011	$	4,122	$	1,573	$	1,138	$	13,612	$	20,445	$	31,974	$	52,419


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


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		196,792		5.0

Totals		11,050,988	$	440.0

							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

	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

	At July 1, 2013
	Value		Estimated
	Assigned		Useful Life

Clinical Agreement	$	583		15 years


	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


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


	As of December 31, 2012
	Gross Carrying Amount		Accumulated Amortization			Weighted Avg. Amortization Period
Amortizable Intangible Assets:
Student Relationships	$	82,562	$	(71,803	)		(1)
Customer Relationships		3,569		(549	)		12 years
Non-compete Agreements		2,516		(1,700	)		(2)
Curriculum/Software		5,689		(3,936	)		5 years
Outplacement Relationships		3,900		(1,114	)		(3)
Trade Names		6,048		(4,644	)		8.5 years

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

	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


	As of December 31, 2011
	Gross Carrying Amount		Accumulated Amortization
Amortizable Intangible Assets:
Student Relationships	$	78,372	$	(64,523	)
Customer Relationships		3,019		(193	)
Customer Contracts		7,000		(5,661	)
License and Non-compete Agreements		1,568		(1,496	)

Curriculum/Software		4,609		(2,912	)
Outplacement Relationships		3,900		(854	)
Trade Names		6,249		(4,296	)

Total	$	104,717	$	(79,935	)

Indefinite-lived Intangible Assets:
Trade Names	$	37,472
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		12,209

Total	$	251,666


Fiscal Year	Becker		DeVry Brasil		Carrington		AUC		Total
2013	$	1,065	$	2,964	$	420	$	4,973	$	9,422
2014		937		2,062		295		3,347		6,641
2015		929		1,147		260		387		2,723
2016		894		720		260		—		1,874
2017		628		319		260		—		1,207

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