UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 1-13988

DeVry Inc.

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

     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 þ No o

     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 þ No o

     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 o No þ

     Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: April 30, 2011 — 68,788,567 shares of Common Stock, $0.01 par value

 

 

DEVRY INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011

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 Cash Flows			5
Notes to Consolidated Financial Statements			6
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3 — Quantitative and Qualitative Disclosures About Market Risk			34
Item 4 — Controls and Procedures			35
PART II – Other Information
Item 1 — Legal Proceedings			35
Item 1A — Risk Factors			36
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds			37
Item 4 — [Removed and Reserved]			37
Item 6 — Exhibits			37
Signatures			38
EX-31
EX-32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

DEVRY INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

		March 31,				June 30,				March 31,
		2011				2010				2010
		(Dollars in thousands)
ASSETS:
Current Assets:
Cash and Cash Equivalents		$	596,515			$	307,702			$	439,897
Marketable Securities and Investments			2,556				15,666				61,781
Restricted Cash			7,378				2,102				55,869
Accounts Receivable, Net			223,953				119,210				155,902
Deferred Income Taxes, Net			26,290				22,340				22,489
Prepaid Expenses and Other			31,030				32,627				32,645
Total Current Assets			887,722				499,647				768,583
Land, Buildings and Equipment:
Land			54,274				53,914				53,965
Buildings			302,843				283,044				283,367
Equipment			361,837				346,979				385,703
Construction In Progress			73,713				38,188				8,958
			792,667				722,125				731,993
Accumulated Depreciation			(354,711	)			(333,988	)			(359,981	)
Land, Buildings and Equipment, Net			437,956				388,137				372,012
Other Assets:
Intangible Assets, Net			191,870				194,195				196,003
Goodwill			517,822				514,864				515,052
Perkins Program Fund, Net			13,450				13,450				13,450
Other Assets			21,607				17,533				15,127
Total Other Assets			744,749				740,042				739,632
TOTAL ASSETS		$	2,070,427			$	1,627,826			$	1,880,227
LIABILITIES:
Current Liabilities:
Current Portion of Debt		$	—			$	—			$	44,757
Accounts Payable			63,741				90,364				89,152
Accrued Salaries, Wages and Benefits			69,410				92,368				69,552
Accrued Expenses			45,338				53,565				55,019
Advance Tuition Payments			22,435				20,930				24,170
Deferred Tuition Revenue			398,452				86,627				366,113
Total Current Liabilities			599,376				343,854				648,763
Other Liabilities:
Deferred Income Taxes, Net			63,874				43,368				48,281
Deferred Rent and Other			62,130				56,216				51,059
Total Other Liabilities			126,004				99,584				99,340
TOTAL LIABILITIES			725,380				443,438				748,103
NON-CONTROLLING INTEREST			6,466				5,007				4,518
SHAREHOLDERS’ EQUITY:
Common Stock, $0.01 Par Value, 200,000,000 Shares Authorized; 68,966,000; 71,030,000 and 71,231,000 Shares Issued and Outstanding at March 31, 2011, June 30, 2010 and March 31, 2010, Respectively			736				734				733
Additional Paid-in Capital			238,813				224,209				217,805
Retained Earnings			1,300,862				1,055,591				991,295
Accumulated Other Comprehensive Income			13,662				9,896				9,995
Treasury Stock, at Cost (4,638,000; 2,394,000 and 2,077,000 Shares, Respectively)			(215,492	)			(111,049	)			(92,222	)
TOTAL SHAREHOLDERS’ EQUITY			1,338,581				1,179,381				1,127,606
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	2,070,427			$	1,627,826			$	1,880,227

The accompanying notes are an integral part of these consolidated financial statements.

DEVRY INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)

		For the Quarter Ended								For the Nine Months Ended
		March 31,								March 31,
		2011				2010				2011				2010
REVENUES:
Tuition		$	521,484			$	468,143			$	1,528,003			$	1,318,491
Other Educational			41,246				36,242				107,618				90,016
Total Revenues			562,730				504,385				1,635,621				1,408,507
COSTS AND EXPENSES:
Cost of Educational Services			232,914				214,300				690,912				610,748
Student Services and Administrative Expense			192,589				168,065				560,114				487,425
Total Operating Costs and Expenses			425,503				382,365				1,251,026				1,098,173
Operating Income			137,227				122,020				384,595				310,334
INTEREST AND OTHER (EXPENSE) INCOME:
Interest Income			435				476				1,239				1,550
Interest Expense			(348	)			(336	)			(841	)			(1,253	)
Net Investment Gain			—				81				—				1,225
Net Interest and Other (Expense) Income			87				221				398				1,522
Income Before Income Taxes			137,314				122,241				384,993				311,856
Income Tax Provision			44,405				41,321				129,851				103,775
NET INCOME			92,909				80,920				255,142				208,081
Net (Income) Loss Attributable to Non-controlling Interest			(9	)			232				65				252
NET INCOME ATTRIBUTABLE TO DEVRY INC.		$	92,900			$	81,152			$	255,207			$	208,333
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO DEVRY INC. SHAREHOLDERS:
Basic		$	1.34			$	1.14			$	3.64			$	2.92
Diluted		$	1.32			$	1.12			$	3.60			$	2.88
Cash Dividend Declared per Common Share		$	—			$	—			$	0.12			$	0.10

The accompanying notes are an integral part of these consolidated financial statements.

DEVRY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

		For the Nine Months Ended March 31,
		2011				2010
		(Dollars in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income		$	255,142			$	208,081
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Stock-Based Compensation Expense			11,192				7,901
Depreciation			43,289				38,381
Amortization			4,589				9,328
Provision for Refunds and Uncollectible Accounts			73,534				71,094
Deferred Income Taxes			16,220				(4,807	)
Loss on Disposals of Land, Buildings and Equipment			262				398
Unrealized Net Gain on Investments			—				(1,225	)
Changes in Assets and Liabilities:
Restricted Cash			(5,276	)			(50,516	)
Accounts Receivable			(177,807	)			(122,113	)
Prepaid Expenses and Other			(6,225	)			2,834
Accounts Payable			(26,631	)			17,560
Accrued Salaries, Wages, Benefits and Expenses			(16,267	)			16,558
Advance Tuition Payments			1,384				(3,595	)
Deferred Tuition Revenue			311,825				291,449
NET CASH PROVIDED BY OPERATING ACTIVITIES			485,231				481,328
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures			(91,299	)			(101,599	)
Marketable Securities Purchases			(91	)			(47	)
Marketable Securities Sales			13,495				—
Other			(627	)			(700	)
NET CASH USED IN INVESTING ACTIVITIES			(78,522	)			(102,346	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Exercise of Stock Options			3,081				9,632
Proceeds from Stock Issued Under Employee Stock Purchase Plan			1,033				756
Repurchase of Common Stock for Treasury			(104,746	)			(22,671	)
Cash Dividends Paid			(15,529	)			(12,839	)
Excess Tax Benefit from Stock-Based Payments			561				2,728
Borrowings Under Revolving Credit Facility			—				70,000
Repayments Under Revolving Credit Facility			—				(150,000	)
Borrowings Under Collateralized Line of Credit			—				242
Repayments Under Collateralized Line of Credit			—				(296	)
NET CASH USED IN FINANCING ACTIVITIES			(115,600	)			(102,448	)
Effects of Exchange Rate Differences			(2,296	)			(1,839	)
NET INCREASE IN CASH AND CASH EQUIVALENTS			288,813				274,695
Cash and Cash Equivalents at Beginning of Period			307,702				165,202
Cash and Cash Equivalents at End of Period		$	596,515			$	439,897
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid During the Period For:
Interest		$	234			$	684
Income Taxes, Net			117,417				92,126
Non-cash Investing and Financing Activity:
Accretion of Non-controlling Interest Put Option			1,524				1,582

The accompanying notes are an integral part of these consolidated financial statements.

DEVRY INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE 1: INTERIM FINANCIAL STATEMENTS

     The interim consolidated financial statements include the accounts of DeVry Inc. (“DeVry”) 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. The June 30, 2010 data presented were 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 Annual Report on Form 10-K for the fiscal year ended June 30, 2010, and DeVry’s Quarterly Reports on Form 10-Q for the quarters ended September 30, 2010 and December 31, 2010, each as filed with the Securities and Exchange Commission.

     The results of operations for the three and nine months ended March 31, 2011, 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.

     Marketable Securities and Investments

     DeVry owns investments in marketable securities that have been designated as “available for sale” in accordance with authoritative guidance. Available for sale securities are carried at fair value with the unrealized gains and losses reported in the Consolidated Balance Sheets as a component of Accumulated Other Comprehensive Income.

     DeVry’s marketable securities consist of investments in mutual funds. The following is a summary of our available-for-sale marketable securities at March 31, 2011 (dollars in thousands):

						Gross Unrealized
		Cost				(Loss)				Gain				Fair Value
Marketable Securities:
Bond Mutual Fund		$	895			$	—			$	36			$	931
Stock Mutual Funds			2,001				(376	)			—				1,625
Total Marketable Securities		$	2,896			$	(376	)		$	36			$	2,556

     Investments are classified as short-term if they are readily convertible to cash or have other characteristics of short-term investments such as highly liquid markets or maturities within one year. All mutual fund investments are recorded at fair market value based upon quoted market prices. At March 31, 2011, all of the Bond and Stock mutual fund investments are held in a rabbi trust for the purpose of paying benefits under DeVry’s non-qualified deferred compensation plan.

     As of March 31, 2011, all unrealized losses in the above table have been in a continuous unrealized loss position for more than one year. When evaluating its investments for possible impairment, DeVry reviews factors such as length of time and extent to which fair value has been less than cost basis, the financial condition of the issuer, and DeVry’s ability and intent to hold the investment for a period of time believed to be sufficient for anticipated recovery in fair value. The decline in value of the above investments is considered temporary in nature and, accordingly, DeVry does not consider these investments to be other-than-temporarily impaired as of March 31, 2011.

     As of June 30, 2010, DeVry held auction-rate debt securities in the aggregate principal amount of $13.5 million. These outstanding securities were purchased by DeVry’s broker, UBS, in early July 2010.

     Realized gains and losses are computed on the basis of specific identification and are included in Net Interest and Other Income/(Expense) in the Consolidated Statements of Income. DeVry has not recorded any realized gains or realized losses for fiscal 2011. See Note 4 for further disclosures on the Fair Value of Financial Instruments.

     Prepaid Clinical Fees

     Clinical rotation costs for Ross University medical students are included in Cost of Educational Services. Over the past several years, Ross University has entered into long-term contracts with a hospital group to secure clinical rotations for its students at fixed rates in exchange for prepayment of the rotation fees. Under the contracts, the established rate-per-clinical rotation was being deducted from the prepaid balance and charged to expense as the medical students utilized the clinical clerkships. The hospital group closed two of its hospitals due to financial difficulties in February 2009. To date, the hospital group has provided Ross with a limited number of additional clinical clerkships at its remaining hospital, but not nearly enough to offset the void created by the closure of its other two hospitals. During April 2009, Ross filed a lawsuit against the hospital group to enforce the contract. The suit seeks specific performance of the hospital group’s obligations to provide Ross with the prepaid clinical clerkships. As of March 31, 2011, the outstanding balance of prepaid clinical rotations with this hospital group was approximately $6.2 million. Though DeVry believes that Ross has a contractual right to utilize other clinical rotations within the hospital group’s system, given the business uncertainty of this situation, a reserve of $1.6 million has been provided against the prepaid balance.

     Internal-Use Software Development Costs

     DeVry 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 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 nine months ended March 31, 2011, were approximately $6.6 million and $18.4 million, respectively. Costs capitalized during the three and nine months ended March 31, 2010, were approximately $7.6 million and $20.0 million, respectively. In both years these costs were primarily related to Project DELTA (a new student information system for DeVry University and Chamberlain College of Nursing). As of March 31, 2011 and 2010, the net balance of capitalized software development costs was $62.2 million and $28.4 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% of new contributions by the federal government. There were no new federal contributions received in fiscal 2011 or fiscal 2010. DeVry carries its investment in such contributions at original values, net of allowances for expected losses on loan collections, of $2.6 million at March 31, 2011 and 2010. 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 and are not recorded on 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 maintains an 83.5 percent ownership interest in DeVry Brasil with 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. These options may become exercisable prior to January 2013 if DeVry Brasil’s management ownership interest falls below five percent. Since the put option is out of the control of DeVry, 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, which is not currently redeemable but is probable of becoming redeemable, is being accreted to its expected redemption value according to a fair market value formula contained in 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 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 historical non-controlling interest accounting policy.

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

		Nine Months Ended March 31,
		2011				2010
Balance at Beginning of period			5,007				3,188
Net Income (Loss) Attributable to Non-controlling Interest			(65	)			(252	)
Accretion of Non-controlling Interest Put Option			1,524				1,582
Balance at End of period			6,466				4,518

     Earnings per Common Share

     Basic earnings per share is computed by dividing net income attributable to DeVry Inc. by the weighted average number of common shares outstanding during the period plus unvested participating restricted shares. Diluted earnings per share is computed by dividing net income attributable to DeVry 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 910,000 and 1,188,000 shares of common stock for the three and nine months ended March 31, 2011, respectively, and 323,000 and 749,000 shares of common stock for the three and nine months ended March 31, 2010, 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 thousands).

		Three Months Ended								Nine Months Ended
		March 31,								March 31,
		2011				2010				2011				2010
Weighted Average Shares Outstanding			69,189				71,187				69,901				71,125
Unvested Participating Restricted Shares			319				222				283				189
Basic shares			69,508				71,409				70,184				71,314
Effect of Dilutive Stock Options			764				978				702				957
Diluted Shares			70,272				72,387				70,886				72,271

     Treasury Stock

     DeVry’s Board of Directors has authorized stock repurchase programs on five occasions (see “Note 6 — Dividends and Stock Repurchase Program”). The first repurchase program was completed in April 2008, the second program was completed in November 2009, the third program was completed in September 2010, and the fourth program was completed in December 2010. The fifth repurchase program was approved by the DeVry Board of Directors on November 10, 2010, and it was commenced in late December 2010. Shares that are repurchased by DeVry 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 under a swap arrangement resulting from employees’ exercise of incentive stock options pursuant to the terms of the DeVry Stock Incentive Plans and as payment for withholding taxes due

from employees upon the lapse of restricted stock units (see “Note 3 — 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 Employee Stock Purchase Plan in exchange for employee payroll deductions. When treasury shares are reissued, DeVry 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 Income

     Accumulated Other Comprehensive Income is composed of the change in cumulative translation adjustments and unrealized gains and losses on available-for-sale marketable securities, net of the effects of income taxes. The following are the amounts recorded in Accumulated Other Comprehensive Income for the three and nine months ended March 31 (dollars in thousands).

		Three Months Ended								Nine Months Ended
		March 31,								March 31,
		2011				2010				2011				2010
Balance at Beginning of Period		$	13,623			$	11,547			$	9,896			$	7,157
Net Unrealized Investment Gains			9				52				140				207
Net Unrealized Investment Losses Recognized			—				—				—				—
Translation Adjustments:											—				—
Attributable to DeVry Inc.			(59	)			(1,426	)			2,796				1,883
Attributable to Non-controlling Interest			89				(178	)			830				748
Balance at End of Period		$	13,662			$	9,995			$	13,662			$	9,995

     The Accumulated Other Comprehensive Income balance at March 31, 2011, consists of $13.9 million ($11.2 million attributable to DeVry Inc. and $2.7 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 $0.1 million and all attributable to DeVry Inc. At March 31, 2010, this balance consisted of $10.3 million ($8.3 million attributable to DeVry Inc. and $2.0 million attributable to non-controlling interests) of cumulative translation gains and $0.3 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 $65.4 million and $188.1 million for the three and nine months ended March 31, 2011, respectively, and $56.1 million and $158.6 million for the three and nine months ended March 31, 2010, respectively.

     Recent Accounting Pronouncements

     In January 2010, the FASB issued authoritative guidance for improving disclosure on fair value measurements. This guidance requires reporting entities to provide information about movements of assets among levels of the three-tier fair value hierarchy established by SFAS No. 157 (ASC 820). The guidance is effective for DeVry’s fiscal year 2011, and it should be used for quarterly and annual filings. The application of this guidance did not have a significant impact on DeVry’s financial disclosures.

     In July 2010, the FASB issued authoritative guidance for improving disclosure on the credit quality of financing receivables and allowances for credit losses. This guidance requires reporting entities to provide information that will enable readers of financial statements to understand the nature of credit risk in a company’s financing receivables, how that risk is analyzed in determining the related allowance for credit losses and changes to the allowance during the reporting period. The guidance is effective for DeVry’s second quarter of fiscal year 2011, and it should be used for quarterly and annual filings. The application of this guidance is included in Note 5 to these consolidated financial statements.

NOTE 3: STOCK-BASED COMPENSATION

     DeVry maintains four stock-based award plans: the 1994 Stock Incentive Plan, the 1999 Stock Incentive Plan, the 2003 Stock Incentive Plan and the 2005 Incentive Plan. Under these plans, directors, key executives and managerial employees are eligible to receive incentive stock or nonqualified options to purchase shares of DeVry’s common stock. The 2005 Incentive Plan also permits the award of stock appreciation rights, restricted stock, performance stock and other stock and cash based compensation. Though options remain outstanding under the 1994 Stock Incentive Plan, no further stock based awards will be issued from this plan. The 1999 and 2003 Stock Incentive Plans and the 2005 Incentive Plan are administered by the Compensation Committee of the Board of Directors. Options are granted for terms of up to 10 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 accounts for options granted to retirement eligible employees that fully vest upon an employee’s 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 March 31, 2011, 4,559,226 authorized but unissued shares of common stock were reserved for issuance under DeVry’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.

The following is a summary of options activity for the nine months ended March 31, 2011:

										Weighted
						Weighted				Average				Aggregate
						Average				Remaining				Intrinsic
		Options				Exercise				Contractual				Value
		Outstanding				Price				Life (in years)				($000)
Outstanding at July 1, 2010			2,634,541			$	33.76
Options Granted			508,150			$	38.71
Options Exercised			(119,188	)		$	25.80
Options Canceled			(37,201	)		$	35.02
Outstanding at March 31, 2011			2,986,302			$	34.98				6.13			$	60,069
Exercisable at March 31, 2011			1,712,715			$	30.03				4.68			$	42,939

     The total intrinsic value of options exercised for the nine months ended March 31, 2011 and 2010 was $2.6 million and $12.1 million, respectively.

     The fair value of DeVry’s stock-based awards was estimated using a binomial model. This model uses historical cancellation and exercise experience of DeVry 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 stock option plans during first nine months of fiscal years 2011 and 2010 were $16.53 and $23.11, per share, respectively. The fair values of DeVry’s stock option awards were estimated assuming the following weighted average assumptions:

		Fiscal year
		2011				2010
Expected Life (in Years)			6.67				6.77
Expected Volatility			41.88	%			41.06	%
Risk-free Interest Rate			1.99	%			3.02	%
Dividend Yield			0.29	%			0.31	%
Pre-vesting Forfeiture Rate			5.00	%			5.00	%

     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 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 long-term historical volatility. The pre-vesting forfeiture rate is based on DeVry’s historical stock option forfeiture experience.

     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 records may differ significantly from what was recorded in previous periods.

     During the first nine months of fiscal year 2011, DeVry granted 282,430 shares of restricted stock to selected employees and non-employee directors. Of these, 69,970 are performance based shares which are earned by the recipients over a three year period based on achievement of specified DeVry return on invested capital targets. The remaining 212,460 shares and all other previously granted non-performance based shares of restricted stock are subject to restrictions which lapse ratably over three and four-year periods on the grant anniversary date based on the recipient’s continued service on the Board of Directors or employment with DeVry, 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 not pertain to the performance based shares. The following is a summary of restricted stock activity for the nine months ended March 31, 2011:

						Weighted
		Restricted				Average
		Stock				Grant Date
		Outstanding				Fair Value
Nonvested at July 1, 2010			214,098			$	52.16
Shares Granted			282,430			$	39.61
Shares Vested			(46,985	)		$	52.16
Shares Canceled			(14,866	)		$	50.25
Nonvested at March 31, 2011			434,677			$	44.07

The following table shows total stock-based compensation expense included in the Consolidated Statement of Earnings:

		For the Three Months								For the Nine Months
		Ended March 31,								Ended March 31,
		2011				2010				2011				2010
		(Dollars in thousands)								(Dollars in thousands)
Cost of Educational Services		$	919			$	698			$	3,581			$	2,528
Student Services and Administrative Expense			1,954				1,485				7,611				5,373
Income Tax Benefit			(349	)			(354	)			(1,391	)			(1,314	)
Net Stock-Based Compensation Expense		$	2,524			$	1,829			$	9,801			$	6,587

     As of March 31, 2011, $25.8 million of total pre-tax unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of 2.6 years. The total fair value of options and shares vested during the three months ended March 31, 2011 and 2010, was approximately $7.1 million and $6.6 million, respectively.

     There were no capitalized stock-based compensation costs at March 31, 2011 and 2010.

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

NOTE 4: FAIR VALUE MEASUREMENTS

     As permitted by the authoritative guidance, DeVry has elected not to measure any assets or liabilities at fair value other than those required to be measured at fair value such as financial assets and liabilities 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. Management has fully considered all authoritative guidance when determining the fair value of DeVry’s financial assets as of March 31, 2011.

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

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

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

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

     When available, DeVry 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 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.

     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.

     The following tables present DeVry’s assets at March 31, 2011, that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (dollars in thousands).

		Level 1				Level 2				Level 3
Cash and Cash Equivalents		$	596,515			$	—			$	—
Available for Sale Investments:
Marketable Securities, short-term			2,556				—				—
Total Financial Assets at Fair Value		$	599,071			$	—			$	—

     Cash Equivalents and investments in short-term Marketable Securities are valued using a market approach based on the quoted market prices of identical instruments.

     Below is a roll-forward of assets measured at fair value using Level 3 inputs for the nine months ended March 31, 2011 (dollars in thousands). At no time during the most recent two quarters of fiscal 2011 were any assets measured using Level 3 inputs. All Level 3 investments were purchased by DeVry’s broker, UBS, in early July 2010. These investments consisted of auction rate securities. These securities were valued using a discounted cash flow model using assumptions that, in management’s judgment, reflected the

assumptions a marketplace participant would have used. See “Note 2-Summary Of Significant Accounting Policies-Marketable Securities and Investments” for further information on these investments.

		Investments
		Nine Months Ended
		March 31, 2011
Balance at Beginning of Period		$	13,495
Total Unrealized Gains (Losses) Included in Income:
Change in Fair Value of ARS Portfolio			—
Change in Fair Value of UBS Put Right			—
Purchases, Sales and Maturities			(13,495	)
Balance at March 31, 2011		$	—

NOTE 5: FINANCING RECEIVABLES

     DeVry’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. 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 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. After a student leaves school, the student typically will have a monthly installment repayment plan with all balances due within 12 to 60 months. In addition, the Becker CPA Review Course can be financed through Becker with a zero percent, 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. In addition, management considers projections of future receivable levels and collection loss rates. Management performs this analysis periodically throughout the year. Since all of DeVry’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 March 31, 2011 and 2010.

		As of March 31,
		2011				2010
		(Dollars in thousands)
Gross Institutional Student Loans		$	47,982			$	30,592
Allowance for Credit Losses			(20,757	)			(11,860	)
Net Institutional Student Loans		$	27,225			$	18,732

     Of the net balances above, $16.4 million and $7.7 million were classified as Accounts Receivable, Net in the Consolidated Balance Sheets at March 31, 2011 and 2010, respectively, and $10.8 million and $11.0 million were classified in the Consolidated Balance Sheets as Other Assets at March 31, 2011 and 2010, 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 March 31, 2011 and 2010. Loans are considered nonperforming if they are more than 120 days past due (dollars in thousands).

		As of March 31,
		2011				2010
Institutional Student Loans:
Performing		$	34,210			$	22,012
Nonperforming			13,772				8,580
Total Institutional Student Loans		$	47,982			$	30,592

										Greater												Total
		30-59				60-89				Than 90												Institutional
		Days				Days				Days				Total								Student
		Past Due				Past Due				Past Due				Past Due				Current				Loans
Institutional Student Loans:
March 31, 2011		$	3,483			$	1,413			$	14,869			$	19,765			$	28,217			$	47,982
March 31, 2010		$	2,552			$	1,235			$	9,894			$	13,681			$	16,911			$	30,592

NOTE 6: DIVIDENDS AND STOCK REPURCHASE PROGRAM

     On November 10, 2010, the DeVry Board of Directors declared a cash dividend of $0.12 per share of common stock. This dividend was paid on January 10, 2011, to common stockholders of record as of December 10, 2010. The total dividend declared of $8.4 million was recorded as a reduction to retained earnings as of December 31, 2010. On May 18, 2010, the DeVry Board of Directors declared a cash dividend of $0.10 per share. This dividend was paid on July 8, 2010, to common stockholders of record as of June 15, 2010. The total dividend declared of $7.1 million was recorded as a reduction to retained earnings as of June 30, 2010. Future dividends will be at the discretion of the Board of Directors.

     On November 10, 2010, the DeVry Board of Directors authorized a fifth share repurchase program, which allows DeVry to repurchase up to $50 million of its common stock through December 31, 2012. Under this plan as of March 31, 2011, DeVry has repurchased, on the open market, 593,788 shares of its common stock at a total cost of approximately $30.1 million. 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, or 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.

     DeVry has completed four previous share repurchase programs, repurchasing, on the open market, 4,011,649 shares of its common stock at a total cost of approximately $185.0 million.

     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.

NOTE 7: INTANGIBLE ASSETS

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

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

		As of March 31, 2011
		Gross								Weighted Avg.
		Carrying				Accumulated				Amortization
		Amount				Amortization				Period
Amortizable Intangible Assets:
Student Relationships		$	65,245			$	(61,395	)			(1	)
Customer Contracts			7,000				(4,816	)		6 years
License and Non-compete Agreements			2,684				(2,684	)		6 years
Class Materials			2,900				(2,020	)		14 years
Curriculum/Software			3,655				(2,256	)		5 years
Outplacement Relationships			3,900				(659	)		15 years
Trade Names			8,457				(5,745	)			(2	)
Other			639				(639	)		6 years
Total		$	94,480			$	(80,214	)
Indefinite-lived Intangible Assets:
Trade Names		$	20,372
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			112,300
DeVry Brasil Accreditations			14,046
Total		$	177,603

		As of March 31, 2010
		Gross
		Carrying				Accumulated
		Amount				Amortization
Amortizable Intangible Assets:
Student Relationships		$	64,437			$	(58,877	)
Customer Contracts			7,000				(3,460	)
License and Non-compete Agreements			2,684				(2,684	)
Class Materials			2,900				(1,850	)
Curriculum/Software			3,623				(1,480	)
Outplacement Relationships			3,900				(336	)
Trade Names			6,255				(4,346	)
Other			639				(639	)
Total		$	91,438			$	(73,672	)
Indefinite-lived Intangible Assets:
Trade Names		$	22,272
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			112,300
DeVry Brasil Accreditation			12,780
Total		$	178,237

     Amortization expense for amortizable intangible assets was $1.5 million and $4.5 million for the three and nine months ended March 31, 2011, respectively, and $1.6 million and $9.2 million for the three and nine months ended March 31, 2010, 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):

		Advanced								DeVry
Fiscal Year		Academics				Becker				Brasil				Carrington				Total
2011		$	1,806			$	1,110			$	2,738			$	420			$	6,074
2012			1,538				160				2,294				420				4,412
2013			618				160				1,741				420				2,939
2014			369				160				746				295				1,570
2015			—				160				237				260				657

     All amortizable intangible assets, except for the Advanced Academics (AAI) Customer Contracts and DeVry Brasil Student Relationships, are being amortized on a straight-line basis.

     The amount being amortized for the AAI Customer Contracts is based on the estimated renewal probability of the contracts, giving consideration to the revenue and discounted cash flow associated with the respective Direct to Student and Direct to District customer relationships. This results in the basis being amortized at an annual rate for each of the years of estimated economic life as follows:

		Direct to				Direct to
Fiscal Year		Student				District
2008			12	%			14	%
2009			18	%			24	%
2010			19	%			25	%
2011			17	%			21	%
2012			14	%			16	%
2013			11	%			0	%
2014			9	%			0	%

     The amount being amortized for the DeVry Brasil 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	%

     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. Beginning in fiscal year 2010, the Trade Name associated with the Stalla CFA Review was reclassified to a finite lived intangible asset and is being amortized on a straight line basis over two years. This asset had a book value of $0.2 million as of March 31, 2011. As of the latest impairment analysis completed during the fourth quarter of fiscal year 2010, the asset’s fair value exceeded this book value.

     Authoritative guidance provides that 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 must be reviewed annually for impairment or more frequently if circumstances arise indicating potential impairment. This impairment review was most recently completed during the fourth quarter of fiscal year 2010 at which time there was no impairment loss associated with recorded goodwill or indefinite-lived intangible assets, as estimated fair values exceeded the carrying amount.

     DeVry did not perform an interim impairment review during the first nine months of fiscal year 2011, as no impairment indicators were noted through the period ended March 31, 2011. The estimated fair values of the reporting units and indefinite-lived intangible assets exceeded their carrying values by at least 40% as of the end of fiscal year 2010 except those indefinite-lived intangible assets acquired with the acquisitions of Carrington and DeVry Brasil where fair values exceeded carrying values by at least 14%. The smaller premium for the newly acquired assets would be expected considering all have been acquired within twenty months of the fourth quarter fiscal year 2010 valuation date and there has been less time for these assets to have appreciated in value from their fair market value purchase price. Management did not believe business conditions had deteriorated in any of its reporting units to the extent that the fair values of the reporting units or indefinite-lived intangible assets would have differed materially from their fiscal year 2010 fair values. In this regard, revenues grew for all reporting units in the first nine months of fiscal year 2011 except at AAI and Carrington.

     At AAI, which carries a goodwill balance of $17.1 million, revenues declined slightly from the prior year. The revenue decline at Advanced Academics was the result of lower summer school and fall enrollments as school districts have reduced such programs driven by state budget constraints. Despite this decline in revenues, AAI’s operating loss for the first nine months of fiscal 2011 was flat in relation to the first nine months of fiscal 2010. This was the result of a decline in advertising spending which offset the revenue decline and the increased investment to initiate programs designed to enhance future revenue growth. The fair value of the AAI

reporting unit significantly exceeded its carrying value as of the fiscal year 2010 impairment analysis. Management believes the negative trends at AAI will be temporary and believes its planned business and operational strategies will reverse this negative trend in the foreseeable future. However, if operating improvements are not realized, all or some of the goodwill could be impaired in the future.

     At Carrington, which carries a goodwill balance of $185.7 million, revenue declined slightly from the prior year. The revenue decline at Carrington was the result of lower fall and spring term student enrollments. Management believes these declines were the result of decreasing volume of high quality lead flows and economic uncertainties. To address this issue, Carrington has shifted its focus from brand awareness associated with the recent name change to more direct response communications. 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 lower operating income; however, this reporting unit remains profitable with operating margins exceeding 10%. The fair value of the Carrington reporting unit significantly exceeded its carrying value as of the fiscal year 2010 impairment analysis. Management believes the negative trends at Carrington will be temporary and believes its planned business and operational strategies will reverse this negative trend in the foreseeable future. However, if operating improvements are not realized, all or some of the goodwill could be impaired in the future.

The table below summarizes the goodwill balances by reporting unit as of March 31, 2011 (dollars in thousands):

Reporting Unit
DeVry University		$	22,195
Becker Professional Review			24,716
Ross University			237,175
Chamberlain College of Nursing			4,716
Advanced Academics			17,075
Carrington			185,715
DeVry Brasil			26,230
Total		$	517,822

The table below summarizes goodwill balances by reporting segment as of March 31, 2011 (dollars in thousands):

Reporting Segment:
Business, Technology and Management		$	22,195
Medical and Healthcare			427,606
Professional Education			24,716
Other Educational Services			43,305
Total		$	517,822

     Total goodwill increased by $2.96 million from June 30, 2010. This increase is the result of the recognition of a preacquisition related liability of $0.7 million and an increase in the value of the Brazilian Real as compared to the U.S. dollar. Since DeVry Brasil goodwill is recorded in the local Brazilian currency, fluctuations in its value in relation to the U.S. dollar will cause changes in the balance of this asset.

     The table below summarizes the indefinite-lived intangible assets balances by reporting unit as of March 31, 2011 (dollars in thousands):

Reporting Unit:
DeVry University		$	1,645
Becker Professional Review			27,912
Ross University			19,200
Chamberlain College of Nursing			1,200
Advanced Academics			1,300
Carrington			112,300
DeVry Brasil			14,046
Total		$	177,603

     The only change in the indefinite-lived intangible assets balances from June 30, 2010, resulted from the effects of foreign currency translation. 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 this asset.

NOTE 8: INCOME TAXES

     DeVry’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. Three of DeVry’s subsidiaries, Ross University School of Medicine (the Medical School) incorporated under the laws of the Commonwealth of Dominica, Ross University School of Veterinary Medicine (the Veterinary School) incorporated under the laws of the Federation of St. Christopher, Nevis, St. Kitts in the West Indies, and DeVry Brasil incorporated under the laws of Brazil, all benefit from local tax incentives. The Medical and Veterinary Schools have agreements with the respective governments that exempt them from local income taxation through the years 2043 and 2023, respectively, while DeVry Brasil’s effective tax rate reflects benefits derived from their participation in PROUNI, a Brazilian program for providing scholarships to a portion of its undergraduate students.

     DeVry has not recorded a U.S. federal or state tax provision for the undistributed earnings of its international subsidiaries. It is DeVry’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 March 31 2011 and 2010, cumulative undistributed earnings attributable to international operations were approximately $315.2 million and $251.4 million, respectively.

     The effective tax rate was 32.3% and 33.7% for the third quarter and first nine months of fiscal year 2011, respectively. These compare to 33.8% and 33.3% for the prior year third quarter and first nine months, respectively. The higher effective income tax rate for the first nine months of fiscal year 2011 was primarily due to an increase in the proportion of income generated by U.S. operations versus the international operations of Ross University as compared to the prior year. In the third quarter, this increased rate due to income mix was offset by discrete items which reduced income tax expense for the period.

     As of March 31, 2011, the total amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, was $9.1 million. The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $9.1 million. As of March 31, 2010, gross unrecognized tax benefits, including positions impacting only the timing of benefits, was $2.3 million. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $2.3 million. We expect that our unrecognized tax benefits will decrease by an insignificant amount during the next twelve months. DeVry 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, 2010 was $0.7 million. The corresponding amount at March 31, 2011 was $0.9 million.

NOTE 9: DEBT

Debt consists of the following at March 31, 2011, June 30, 2010 and March 31, 2010 (dollars in thousands):

														Average
		Outstanding Debt												Interest Rate
		March 31,				June 30,				March 31,				March 31,
		2011				2010				2010				2011
Revolving Credit Facility:
DeVry Inc. as borrower		$	—			$	—			$	—				—
GEI as borrower			—				—				—				—
Total		$	—			$	—			$	—				—
Auction Rate Securities Collateralized Line of Credit:
DeVry Inc. as borrower		$	—			$	—			$	44,757				—
Total Outstanding Debt		$	—			$	—			$	44,757				—
Current Maturities of Debt		$	—			$	—			$	44,757				—
Total Long-term Debt		$	—			$	—			$	—				—

Revolving Credit Facility

     All of DeVry’s borrowings and letters of credit under its $175 million revolving credit facility are through DeVry Inc. and Global Education International, Inc. (“GEI”), an international subsidiary. The revolving credit facility became effective on May 16, 2003, and was amended as of September 30, 2005 and again on January 11, 2007. DeVry Inc. aggregate commitments including borrowings and letters of credit under this agreement cannot exceed $175.0 million, and GEI aggregate commitments cannot exceed $50.0 million. At the request of DeVry Inc., the maximum borrowings and letters of credit can be increased to $275.0 million in total with GEI aggregate commitments not to exceed $50.0 million. There are no required payments under this revolving credit agreement and all borrowings and letters of credit mature on January 11, 2012. DeVry Inc. letters of credit outstanding under this agreement were $3.0 million and $15.5 million as of March 31, 2011 and 2010, respectively. As of March 31, 2011, had there been outstanding borrowings under this agreement they would have borne interest, payable quarterly or upon expiration of the interest rate period, at the prime rate or at a LIBOR rate plus 0.50%, at the option of DeVry. Outstanding letters of credit under the revolving credit agreement are charged an annual fee equal to 0.50% of the undrawn face amount of the letter of credit, payable quarterly. The agreement also requires payment of a commitment fee equal to 0.1% of the undrawn portion of the credit facility. The interest rate, letter of credit fees and commitment fees are adjustable quarterly, based upon DeVry’s achievement of certain financial ratios.

     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”). 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. DeVry was in compliance with all debt covenants as of March 31, 2011.

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

Auction Rate Securities Collateralized Line of Credit

     In connection with the completion of the acquisition of Carrington, on September 18, 2008, DeVry borrowed approximately $46 million against its portfolio of auction rate securities under a temporary, uncommitted, demand revolving line of credit facility between DeVry Inc. and UBS Bank USA (the “Lender”). This borrowing totaled approximately 80% of the fair market value on September 18, 2008, of DeVry’s auction rate securities portfolio held through its broker, UBS, which was the maximum borrowing permitted under this credit facility. These borrowings were fully repaid as of June 30, 2010, and the lending agreement was terminated.

NOTE 10: COMMITMENTS AND CONTINGENCIES

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

     The Boca Raton Firefighters’ and Police Pension Fund filed a 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 complaint was filed on behalf of a putative class of persons who purchased DeVry common stock between October 25, 2007, and August 13, 2010. Plaintiffs filed an amended complaint (the “Amended Complaint”) on March 7, 2011 alleging the same categories of claims in the initial complaint. The plaintiffs claim DeVry, 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 student enrollment and revenues and artificially inflating DeVry’s stock price during the class period. DeVry and its executives believe the allegations contained in the Amended Complaint are without merit and intend to defend them vigorously. DeVry plans to file a Motion to Dismiss the Amended Complaint by May 6, 2011.

     Three derivative cases similar to the Shareholder Case also have been filed (“Derivative Actions”). Two of the Derivative Actions were filed in the Circuit Court of Cook County, Illinois, Chancery Division: DeVry shareholder Timothy Hald filed a derivative complaint on behalf of DeVry on January 3, 2011 (Hald v. Hamburger et al., Case No. 11 CH 0087) and Matthew Green (also a DeVry shareholder) filed a derivative complaint on behalf of DeVry on January 7, 2011 (Green v. Hamburger et al., Case No. 11 CH 0770). The Hald and Green cases (the “Consolidated Cases”) 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). The Dotro case has been stayed pending resolution of DeVry’s forthcoming Motion

to Dismiss the Shareholder Case (“Motion to Dismiss”). DeVry is currently examining the possibility of obtaining a similar stay of the Consolidated Cases pending the outcome of the Motion to Dismiss the Shareholder Case.

     The Derivative Actions allege that Daniel Hamburger, Richard M. Gunst, David J. Pauldine, Sharon T. Parrott, Ronald L. Taylor, Lisa W. Pickrum, Darren R. Huston, David S. Brown, William T. Keevan, Fernando Ruiz, Harold D. Shapiro, Lyle Logan, Connie R. Curran, and Julia McGee breached their fiduciary duties to DeVry by failing to disclose the same allegedly abusive and fraudulent recruiting and financial aid lending practices alleged in the Shareholder Case. The Derivative Actions also allege that DeVry’s officers and directors unjustly enriched themselves and wasted DeVry’s assets by (i) causing DeVry to incur substantial costs in defending the Shareholder Case; (ii) causing 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 believe the allegations contained in the Derivative Actions are without merit and intend to defend them vigorously.

     Although DeVry believes that the Shareholder Case and the Derivative Actions are without merit, the ultimate outcome of pending litigation is difficult to predict. At this time, DeVry does not expect that the outcome of any such matter will have a material effect on its cash flows, results of operations or financial position.

NOTE 11: SEGMENT INFORMATION

     DeVry’s principal business is providing secondary and post-secondary education. The services of our operations are described in more detail in “Note 1- Nature of Operations” to the consolidated financial statements contained in its Annual Report on Form 10-K for the fiscal year ended June 30, 2010. DeVry presents four reportable segments: “Business, Technology and Management”, which includes DeVry University undergraduate and graduate operations; “Professional Education”, which includes the professional exam review and training operations of Becker CPA Review and Stalla Review for the CFA Exams; “Medical and Healthcare” which includes the operations of Ross University medical and veterinary schools, Chamberlain College of Nursing and Carrington; and “Other Educational” which includes the DeVry Brasil and AAI operations.

     These segments are consistent with the method by which the Chief Operating Decision Maker (DeVry’s President and CEO) evaluates performance and allocates resources. Such decisions are based, in part, on each segment’s operating income, which is defined as income before interest income and expense, amortization, non-controlling interest and income taxes. 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, 2010.

     The consistent measure of segment operating income excludes 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.

     Following is a tabulation of business segment information based on the current segmentation for each of the three and nine months ended March 31, 2011 and 2010. Corporate information is included where it is needed to reconcile segment data to the consolidated financial statements (dollars in thousands).

		For the Three Months								For the Nine Months Ended
		Ended March 31,								March 31,
		2011				2010				2011				2010
Revenues:
Business, Technology and Management		$	378,698			$	334,603			$	1,102,359			$	931,365
Medical and Healthcare			142,544				132,640				421,347				375,572
Professional Education			24,529				22,828				65,767				58,823
Other Educational Services			16,959				14,314				46,148				42,747
Total Consolidated Revenues		$	562,730			$	504,385			$	1,635,621			$	1,408,507
Operating Income:
Business, Technology and Management		$	99,351			$	85,751			$	283,342			$	219,964
Medical and Healthcare			29,289				30,951				88,415				89,249
Professional Education			9,150				8,147				22,119				17,840
Other Educational Services			1,113				(1,414	)			(6,261	)			(7,231	)
Reconciling Items:
Amortization Expense			(1,497	)			(1,618	)			(4,449	)			(9,189	)
Depreciation and Other			(179	)			203				1,429				(299	)
Total Consolidated Operating Income		$	137,227			$	122,020			$	384,595			$	310,334
Interest and Other Income (Expense):
Interest Income		$	435			$	476			$	1,239			$	1,550
Interest Expense			(348	)			(336	)			(841	)			(1,253	)
Net Investment Gain			—				81				—				1,225
Net Interest and Other Income (Expense)			87				221				398				1,522
Total Consolidated Income Before Income Taxes		$	137,314			$	122,241			$	384,993			$	311,856
Segment Assets:
Business, Technology and Management		$	702,088			$	690,605			$	702,088			$	690,605
Medical and Healthcare			1,017,875				931,845				1,017,875				931,845
Professional Education			99,108				80,780				99,108				80,780
Other Educational Services			130,846				119,433				130,846				119,433
Corporate			120,510				57,564				120,510				57,564
Total Consolidated Assets		$	2,070,427			$	1,880,227			$	2,070,427			$	1,880,227
Additions to Long-lived Assets:
Business, Technology and Management		$	17,717			$	32,113			$	35,508			$	77,235
Medical and Healthcare			8,308				7,028				27,246				19,554
Professional Education			773				13				3,166				56
Other Educational Services			2,923				816				6,316				4,754
Corporate			7,915				—				19,063				—
Total Consolidated Additions to Long-lived Assets		$	37,636			$	39,970			$	91,299			$	101,599
Depreciation Expense:
Business, Technology and Management		$	6,696			$	8,619			$	19,685			$	24,975
Medical and Healthcare			4,598				3,633				12,903				10,604
Professional Education			35				54				104				169
Other Educational Services			671				781				2,854				2,123
Corporate			2,968				170				7,743				510
Total Consolidated Depreciation		$	14,968			$	13,257			$	43,289			$	38,381
Intangible Asset Amortization Expense:
Business, Technology and Management		$	—			$	—			$	—			$	—
Medical and Healthcare			105				105				315				4,646
Professional Education			277				287				832				862
Other Educational Services			1,115				1,226				3,302				3,681
Total Consolidated Amortization		$	1,497			$	1,618			$	4,449			$	9,189

     Beginning in fiscal year 2011, certain additions to long-lived assets that were previously reported in the Business, Technology and Management segment are now reported as Corporate additions. These additions consist primarily of the costs being capitalized as part of the Project DELTA (a new student information system for DeVry University and Chamberlain College of Nursing. See “Note 2 — Summary of Significant Accounting Policies — Internal-Use Software Development Costs”).

     DeVry conducts its educational operations in the United States, Canada, the Caribbean countries of Dominica, Freeport, Grand Bahama, and St. Kitts/Nevis, Brazil, Europe, the Middle East and the Pacific Rim. Other international revenues, which are derived principally from Brazil and Canada, were less than 5% of total revenues for the quarters ended March 31, 2011 and 2010. Revenues and long-lived assets by geographic area are as follows (dollars in thousands):

		For the Three Months Ended								For the Nine Months Ended
		March 31,								March 31,
		2011				2010				2011				2010
Revenue from Unaffiliated Customers:
Domestic Operations		$	494,807			$	439,415			$	1,439,012			$	1,226,091
International Operations:
Dominica, Freeport, Grand Bahama and St. Kitts/Nevis			52,576				52,442				154,555				145,363
Other			15,347				12,528				42,054				37,053
Total International			67,923				64,970				196,609				182,416
Consolidated		$	562,730			$	504,385			$	1,635,621			$	1,408,507
Long-lived Assets:
Domestic Operations		$	766,139			$	719,843			$	766,139			$	719,843
International Operations:
Dominica, Freeport, Grand Bahama and St. Kitts/Nevis			342,863				327,384				342,863				327,384
Other			73,703				64,417				73,703				64,417
Total International			416,566				391,801				416,566				391,801
Consolidated		$	1,182,705			$	1,111,644			$	1,182,705			$	1,111,644