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1



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________

FORM 10-Q



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

For the quarterly and six month period ended December 31, 2003


Commission file number 1-13988



DeVRY INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)




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


One Tower Lane, Oakbrook Terrace, Illinois 60181
- --------------------------------------------------------------
(Address of principal executive offices) (Zip Code)




(630) 571-7700
---------------------------------------------------------
(Registrant's telephone number, including area 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 X



Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act).

YES X



Number of shares of Common Stock, $0.01 par value, outstanding on
January 30, 2004: 70,098,104



Total number of pages: 40


2
DeVRY INC.
----------

FORM 10-Q INDEX
For the Quarter and Six Months Ended December 31, 2003

Page No.
--------

PART I. Financial Information

Item 1. Financial Statements:

Consolidated Balance Sheets at
December 31, 2003, June 30, 2003,
and December 31, 2002 3-4

Consolidated Statements of Income
for the quarter and six months ended
December 31, 2003 and 2002 5

Consolidated Statements of Cash
Flows for the six months ended
December 31, 2003 and 2002 6

Notes to Consolidated Financial
Statements 7-21

Item 2. Management's Discussion and
Analysis of Results of Operations
and Financial Condition 22-28

Item 3. Quantitative and Qualitative
Disclosures About Market Risk 28-29

Item 4. Controls and Procedures 29


Part II. Other Information

Item 1. Legal Proceedings 30

Item 4. Submission of Matters to a Vote
of Security Holders 31

Item 5. Other Information 32

Item 6. Exhibits and Reports on Form 8-K 32


SIGNATURES 33

3
PART I - Financial Information

Item 1 - Financial Statements


DEVRY INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)



December 31, June 30, December 31
2003 2003 2002
------------ ------------ ------------
(Unaudited) (Unaudited)

ASSETS

Current Assets

Cash and Cash Equivalents $126,417 $108,699 $134,575
Restricted Cash 21,476 14,052 41,173
Accounts Receivable, Net 75,705 24,275 46,845
Inventories 2,241 4,315 3,022
Prepaid Income Taxes - - 11,101
Deferred Income Taxes 9,944 11,358 5,448
Prepaid Expenses and Other 7,963 6,988 4,036
------- ------- -------
Total Current Assets 243,746 169,687 246,200
------- ------- -------
Land, Buildings and Equipment

Land 60,300 59,888 58,936
Buildings 198,428 188,320 175,564
Equipment 216,753 207,405 188,842
Construction In Progress 3,198 12,662 989
------- ------- -------
478,679 468,275 424,331

Accumulated Depreciation (197,046) (182,921) (165,391)
------- ------- -------
Land, Buildings and
Equipment, Net 281,633 285,354 258,940
------- ------- -------
Other Assets

Intangible Assets, Net 93,091 103,330 35,330
Goodwill 285,670 280,979 42,391
Perkins Program Fund, Net 11,861 11,291 10,617
Other Assets 5,264 6,003 2,007
------- ------- -------
Total Other Assets 395,886 401,603 90,345
------- ------- -------
TOTAL ASSETS $921,265 $856,644 $595,485
======= ======= =======






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

4

DEVRY INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)



December 31, June 30, December 31
2003 2003 2002
------------ ------------ ------------
(Unaudited) (Unaudited)

LIABILITIES

Current Liabilities

Current Maturities of
Revolving Loan $ - $ 15,000 $ -
Accounts Payable 35,714 34,094 31,285
Accrued Salaries, Wages &
Benefits 31,759 30,791 31,288
Accrued Expenses 20,310 31,767 11,945
Advance Tuition Payments 6,546 10,568 19,211
Deferred Tuition Revenue 116,021 16,291 97,355
------- ------- -------
Total Current Liabilities 210,350 138,511 191,084
------- ------- -------
Non-Current Liabilities

Revolving Loan 115,000 150,000 -
Senior Debt 125,000 125,000 -
Deferred Income Taxes 13,432 13,049 4,888
Deferred Rent and Other 15,196 14,417 11,849
------- ------- -------
Total Non-Current
Liabilities 268,628 302,466 16,737
------- ------- -------
TOTAL LIABILITIES 478,978 440,977 207,821
------- ------- -------
SHAREHOLDERS' EQUITY

Common Stock, $0.01 par value,
200,000,000 Shares Authorized,
70,058,125, 70,021,513 and
69,928,447, Shares Issued and
Outstanding at December 31,
2003, June 30, 2003 and
December 31, 2002,
Respectively 701 701 700
Additional Paid-in Capital 67,906 67,288 66,481
Retained Earnings 373,045 346,975 319,934
Accumulated Other Comprehensive
Income 635 703 549
------- ------- -------
TOTAL SHAREHOLDERS' EQUITY 442,287 415,667 387,664
------- ------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $921,265 $856,644 $595,485
======= ======= =======

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

5

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



For The Quarter For The Six Months
Ended December 31, Ended December 31,
--------------------- ----------------------
2003 2002 2003 2002
--------------------- ----------------------

REVENUES:

Tuition $187,286 $159,159 $364,880 $310,314
Other Educational 11,479 13,272 23,064 25,301
Interest 41 117 98 202
------- ------- ------- -------
Total Revenues 198,806 172,548 388,042 335,817
------- ------- ------- -------
COSTS AND EXPENSES:

Cost of Educational Services 104,635 93,480 209,085 185,651
Student Services and
Administrative Expense 70,156 55,271 138,105 107,728
Interest Expense 1,972 47 4,128 94
------- ------- ------- -------
Total Costs and Expenses 176,763 148,798 351,318 293,473
------- ------- ------- -------
Income Before Income Taxes 22,043 23,750 36,724 42,344

Income Tax Provision 6,465 8,949 10,654 16,387
Non-Recurring Tax Benefits - (8,150) - (8,150)
------- ------- ------- -------
NET INCOME $ 15,578 $ 22,951 $ 26,070 $ 34,107
======= ======= ======= =======


EARNINGS PER COMMON SHARE
Basic $0.22 $0.33 $0.37 $0.49
===== ===== ===== =====
Diluted $0.22 $0.33 $0.37 $0.49
===== ===== ===== =====











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

6

DEVRY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)

For The Six Months
Ended December 31,
2003 2002
--------- ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 26,070 $ 34,107
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:

Depreciation 19,667 18,666
Amortization of Intangible Assets 6,769 362
Amortization of Other Assets 527 22
Provision for Refunds and
Uncollectible Accounts 17,461 17,931
Deferred Income Taxes 1,797 6,689
Loss on Disposals of Land, Buildings
and Equipment 147 128
Changes in Assets and Liabilities:
Restricted Cash (7,424) (21,909)
Accounts Receivable (68,891) (38,606)
Inventories 2,074 1,885
Prepaid Expenses And Other (632) (11,681)
Accounts Payable 1,620 (4,999)
Accrued Salaries, Wages,
Expenses and Benefits (10,489) 3,995
Advance Tuition Payments (4,022) 3,328
Deferred Tuition Revenue 99,730 85,068
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 84,404 94,986
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (16,093) (20,107)
Payments for Purchases of Businesses,
net of Cash Acquired (1,143) -
------- -------
NET CASH USED IN INVESTING ACTIVITIES: (17,236) (20,107)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds From Exercise of Stock Options 618 136
Repayments Under Revolving Credit Facility (50,000) -
------- -------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (49,382) 136

Effects of Exchange Rate Differences (68) (125)
------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 17,718 74,890

Cash and Cash Equivalents at Beginning
of Period 108,699 59,685
------- -------
Cash and Cash Equivalents at End of Period $126,417 $134,575
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest Paid During the Period $3,923 $93
Income Tax Payments During the Period, Net 21,729 14,552


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

7

DEVRY INC.
Notes to Consolidated Financial Statements
For the Quarter and Six Months Ended December 31, 2003

----------



NOTE 1: INTERIM FINANCIAL STATEMENTS

The interim consolidated financial statements include the accounts of DeVry
Inc. (the Company) and its wholly-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 the
Company. The June 30, 2003 data, which 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 the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2003
and in conjunction with the Company's quarterly report on Form 10-Q for the
quarter ended September 30, 2003, each as filed with the Securities and
Exchange Commission.

The results of operations for the six months ended December 31, 2003, are
not necessarily indicative of results to be expected for the entire fiscal
year.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents
- -------------------------
Included in the accounts payable balance is $20.3, $15.2 and $18.4 million at
December 31, 2003, June 30, 2003 and December 31, 2002, respectively, for
checks issued but not yet cleared through the Company's bank accounts.

Derivative Instruments and Hedging Activities
- ---------------------------------------------
The Company uses derivative financial instruments to manage its exposure to
movements in interest rates. The use of these financial instruments modifies
the exposure of these risks with the intent to reduce the risk to the Company.
The Company does not use financial instruments for trading purposes, nor does
it use leveraged financial instruments. Credit risk related to the derivative
financial instruments is considered minimal and is managed by requiring high
credit standards for its counterparties and periodic settlements. All
derivative contracts are reported at fair value, with changes in fair value
reported in earnings or deferred, depending on the nature and effectiveness
of the offset or hedging relationship. Any ineffectiveness in a hedging
relationship is recognized immediately into earnings.





8

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Derivative Instruments and Hedging Activities, continued
- --------------------------------------------------------
During the first quarter of fiscal 2004, the Company entered into several
interest rate cap agreements to protect approximately $100,000,000 of its
current borrowings from sharp increases in short-term interest rates upon
which its borrowings are based. The Company intends to periodically evaluate
the need for interest rate protection in light of projected changes in
interest rates and borrowing levels.

These interest rate cap agreements are designated as cash flow hedging
instruments and are intended to protect the portion of the Company's debt
that is covered by these agreements from increases in short-term interest
rates above 3.5%.

These cap agreements were purchased at fair market values totaling $512,000.
This cost has been capitalized and is being amortized to earnings and recorded
as interest expense over the 24-month term of the agreements. Differences
between the changes in fair value of the interest rate caps and the amount
being amortized to earnings are reported as a component of Other Comprehensive
Income. These amounts will be reclassified and recognized into earnings over
the 24-month term of the agreements. As of December 31, 2003, $18,000 is
recorded as Other Comprehensive Income in the Consolidated Balance Sheet. This
represents the cumulative difference between the decline in the fair market
value of the interest rate caps of $12,000 and the $30,000 expensed as interest
during the six months ended December 31, 2003. For the quarter and six months
ended December 31, 2003, there was no ineffectiveness related to these
agreements.

Internal Software Development Costs
- -----------------------------------
The Company capitalizes certain internal software development costs that are
amortized using the straight line method over the estimated useful lives of the
software, not to exceed five years. Capitalized costs include external direct
costs of materials and services consumed in developing or obtaining internal-
use software and payroll and payroll related costs for employees who are
directly associated with the internal software development project.
Capitalization of such costs ceases no later than the point at which the
project is substantially complete and ready for its intended purpose.
Capitalized software development costs for projects not yet complete, which
are included as Equipment in the Land, Buildings and Equipment section of the
Consolidated Balance Sheets, were $9,702,000, $12,349,000 and $9,861,000 as
of December 31, 2003, June 30, 2003 and December 31, 2002, respectively. The
gross capitalized software development costs for completed projects, which
are also included as Equipment in the Land, Building and Equipment section of
the Consolidated Balance Sheets, were $7,962,000, $2,305,000 and $1,849,000
at December 31, 2003, June 30, 2003, and December 31, 2002, respectively.





9

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Post-employment Benefits
- ------------------------
The Company's employment agreements with its co-Chief Executive Officers
provide certain post-employment benefits that require accrual over the
expected future service period beginning with the second quarter of fiscal
2002. The Company recorded expense accruals of approximately $808,000 for
the six months ended December 31, 2003 and $1.1 million for the six months
ended December 31, 2002, related to these agreements. This accrual is
based on recording, over the period of active service, the amount that
will represent the present value of the obligation through the date the
executive attains full eligibility for the benefits, discounted using a
5.25% rate and using the sinking fund accrual method.

Guarantees
- ----------
The Company adopted the accounting requirements of Financial Interpretation No.
45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness to Others," for guarantees issued
or modified after December 31, 2002. The adoption did not have an impact on
the Company's financial statements as of December 31, 2003 or June 30, 2003.

Under its bylaws, the Company has agreed to indemnify its officers and
directors for certain events or occurrences while the officer or director is
performing at its request in such capacity. The indemnification agreement
period is for the officer's or director's lifetime. The maximum potential
amount of future payments the Company could be required to make under these
indemnification agreements is unlimited; however, the Company has a directors
and officer liability insurance policy that limits its exposure and enables it
to recover a portion of any future amounts paid. As a result of its insurance
policy coverage, the Company estimates the fair value of these indemnification
agreements is minimal.

Earnings Per Common Share
- -------------------------
Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding during the period. Shares used
in this computation were 70,047,000 and 69,927,000 for the second quarters
ended December 31, 2003 and 2002, respectively and 70,038,000 and 69,919,000
for the six months ended December 31, 2003 and 2002, respectively. Diluted
earnings per share is computed by dividing net income 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. Shares
used in this computation were 70,626,000 and 70,227,000 for the second quarters
ended December 31, 2003 and 2002, respectively and 70,625,000 and 70,269,000
for the six months ended December 31, 2003 and 2002, respectively. Excluded
from the computations of







10

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Earnings Per Common Share, continued
- ------------------------------------
diluted earnings per share were options to purchase 1,168,000 and 1,180,000
shares of common stock for the second quarter and six months ended December 31,
2003, respectively, and 1,708,000 shares of common stock, for the second
quarter and six months ended December 31, 2002. These outstanding options were
excluded because the option exercise prices were greater than the average
market price of the common shares during these periods and therefore, their
effect would be anti-dilutive.

Stock-based Compensation
- ------------------------
During the six months ended December 31, 2003, the Company granted options at
fair market value to purchase up to 570,000 shares of the Company's common
stock under the 1999 Stock Incentive Plan.

The Company accounts for its stock option plan using Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," which results
in no charge to earnings when options are issued at fair market value. The
following table illustrates the effect on net income and earnings per share if
the Company had applied the fair value recognition provisions of Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation,"as amended by SFAS No. 148, "Accounting for Stock-Based
Compensation -Transition and Disclosure," to stock-based employee compensation.





11

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Stock-based Compensation, continued
- -----------------------------------


(Dollars in thousands, except per share amounts)

For the Quarter Ended For the Six Months Ended
December 31, December 31,
2003 2002 2003 2002
------- ------- ------- -------

Net Income:

Net Income as Reported $15,578 $22,951 $26,070 $34,107

Stock based employee compensation
expense had the fair value method
been applied to all options
awarded, net of income tax expense (920) (629) (1,695) (1,204)
------ ------ ------ ------
Pro Forma Net Income $14,658 $22,322 $24,375 $32,903
====== ====== ====== ======


Earnings per Common Share:

Basic as Reported $0.22 $0.33 $0.37 $0.49

Stock based employee compensation
expense had the fair value method
been applied to all options
awarded, net of income tax expense (0.01) (0.01) (0.02) (0.02)
---- ---- ---- ----
Pro Forma Basic $0.21 $0.32 $0.35 $0.47
==== ==== ==== ====

Diluted as Reported $0.22 $0.33 $0.37 $0.49

Stock based employee compensation
expense had the fair value method
been applied to all options
awarded, net of income tax expense (0.01) (0.01) (0.02) (0.02)
---- ---- ---- ----
Pro Forma Diluted $0.21 $0.32 $0.35 $0.47
==== ==== ==== ====






12

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Comprehensive Income
- --------------------
The differences between changes in the fair values of the cash flow hedging
instruments described above in "Derivative Instruments and Hedging Activities",
and the amount of these instruments being amortized to earnings are reported as
a component of Accumulated Other Comprehensive Income. The amount recorded as
Accumulated Other Comprehensive Income was $18,000 for the quarter and six
months ended December 31, 2003. The Company's only other item that meets the
definition for adjustment to arrive at Comprehensive Income is the change in
cumulative translation adjustment. The amounts recorded in Other Comprehensive
Income for the changes in translation rates were an expense of $84,000 and
income of $122,000, for the quarters ended December 31, 2003 and 2002,
respectively, and expense of $86,000 and $125,000 for six months ended
December 31, 2003 and 2002, respectively.

NOTE 3: BUSINESS COMBINATIONS

Ross University
- ---------------
On May 16, 2003, the Company acquired all of the outstanding shares of capital
stock of Dominica Management, Inc. (DMI) for $329,259,000 in cash which
includes approximately $4,175,000 of acquisition related fees. The results of
DMI's operations have been included in the consolidated financial statements of
the Company since that date. DMI owns and operates Ross University School of
Medicine and Ross University School of Veterinary Medicine. With campuses
located in the Caribbean countries of Dominica and St. Kitts/Nevis, Ross
University is one of the world's largest providers of medical and veterinary
education with more than 2,800 students. The acquisition gives the Company
entry into a growing sector of the higher education market. The addition of
Ross University will further diversify the Company's curricula and help
maintain a leadership position in career-focused education.

During the first six months of fiscal 2004, the Company recorded an adjustment
to the purchase price of DMI based on a settlement of final working capital
balances. This adjustment resulted in a reduction of $1,207,000 to the
goodwill balance recorded for this acquisition.

The Company also finalized the allocation of the purchase price of DMI in the
first quarter of 2004. Based on a final purchase price allocation analysis
performed for the Company by independent professional valuation specialists,
the goodwill from this acquisition that was recorded at June 30, 2003, was
increased by $3,470,000. Also, the Student Relationships amortizable intangible
assets were reduced by $5,200,000 and the Ross Title IV Eligibility and
Accreditations indefinite-lived intangible assets were increased by $1,730,000.





13

NOTE 3: BUSINESS COMBINATIONS, continued

Ross University, continued
- --------------------------
The following unaudited pro forma financial information presents the results of
operations of the Company and DMI as if the acquisition had occurred at the
beginning of fiscal 2003. The pro forma information is based on historical
results of operations and does not necessarily reflect the actual results that
would have occurred, nor is it necessarily indicative of future results of
operations of the combined enterprises:

For the Quarter Ended For the Six Months Ended
December 31, 2002 December 31, 2002
(Unaudited) (Unaudited)
--------------------- ------------------------
Revenues $189,205,000 $367,046,000
Net Income 23,882,000 35,111,000
Earnings per Common Share:
Basic $0.34 $0.50
Diluted $0.34 $0.50

Person/Wolinsky
- ---------------
On October 21, 2003, Becker Professional Review, a wholly owned subsidiary of
the Company, acquired certain tangible operating assets, trademarks and trade
names of Person/Wolinsky CPA Review ("Person/Wolinsky"). These assets were
purchased for $2.35 million in cash. Person/Wolinsky is a training firm
preparing students to pass the CPA exam. Founded in 1967, its primary locations
include New York City, Philadelphia and Washington, D.C. Pending the final
allocation of the purchase price, all amounts paid for this acquisition are
recorded as goodwill as of December 31, 2003.

Funding for the acquisition was provided from the Company's existing operating
cash balances.





14

NOTE 4: INTANGIBLE ASSETS

Intangible assets consist of the following:

As of December 31, 2003
----------------------------------
Gross Carrying Accumulated
Amount Amortization
----------------------------------
Amortized Intangible Assets:
Student Relationships $47,500,000 $ (8,211,000)
License and Non Compete
Agreements 2,600,000 (1,905,000)
Class Materials 2,900,000 (600,000)
Other 600,000 (450,000)
---------- ----------
Total $53,600,000 $(11,166,000)
========== ==========
Indefinite-lived Intangible Assets:
Trade Names $20,972,000
Trademark 1,645,000
Ross Title IV Eligibility
And Accreditations 14,100,000
Intellectual Property 13,940,000
----------
Total $50,657,000
==========

As of December 31, 2002
----------------------------------
Gross Carrying Accumulated
Amount Amortization
----------------------------------
Amortized Intangible Assets:
License and Non Compete
Agreements $2,600,000 $(1,477,000)
Class Materials 2,900,000 (400,000)
Other 600,000 (350,000)
--------- ----------
Total $6,100,000 $(2,227,000)
========= ==========
Indefinite-lived Intangible Assets:
Trademark $ 1,645,000
Trade Names 15,872,000
Intellectual Property 13,940,000
----------
Total $31,457,000
==========





15

NOTE 4: INTANGIBLE ASSETS, continued

Amortization expense for amortized intangible assets was $3,384,000 and
$6,769,000 for the quarter and six months ended December 31, 2003,
respectively, and $180,000 and $362,000 for the quarter and six months ended
December 31, 2002, respectively. Estimated amortization expense for amortized
intangible assets for the next five fiscal years ending June 30, is as
follows:

Fiscal Year
2004 $13,840,000
2005 14,030,000
2006 9,820,000
2007 6,720,000
2008 3,580,000

The original weighted-average amortization period for amortized intangible
assets is five years for Student Relationships, six years for License and Non-
compete Agreements, 14 years for Class Materials and six years for Other as of
December 31, 2003. These intangible assets are being amortized on a straight-
line basis except for the Student Relationships. The amount being amortized
for these Student Relationships is based on the estimated progression of the
students through the respective medical and veterinary programs, giving
consideration to the revenue and cash flow associated with both existing
students and new applicants. This results in the amount being amortized at an
annual rate for each of the five years of estimated economic life as follows:

Year 1 27.4%
Year 2 29.0%
Year 3 21.0%
Year 4 14.5%
Year 5 8.1%

Indefinite-lived intangible assets related to Trademarks, Trade Names, Title
IV Eligibility, Accreditation 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. As
of the end of fiscal years 2003 and 2002, there was no impairment loss
associated with these indefinite-lived intangible assets as fair value
exceeds the carrying amount.

The Company performs an annual analysis of potential impairment with the
assistance of independent professional valuation specialists. Based on the
results of this analysis, there was no impairment in the value of the Company's
goodwill for any reporting units as of the end of fiscal 2003 or 2002. The
carrying amount of goodwill related to the DeVry University reportable segment
at December 31, 2003 and 2002 was unchanged at $22,195,000. The carrying





16

NOTE 4: INTANGIBLE ASSETS, continued

amount of goodwill related to the Professional and Training reportable segment
at December 31, 2003 was $22,546,000. This is an increase of $2,350,000 from
the balance of $20,196,000 at June 30, 2003. This change represents the
purchase price of Person/Wolinsky in October 2003 (See Note 2-Business
Combinations).

The carrying amount of goodwill related to the Ross University segment
was $240,930,000 at December 31, 2003. This is an increase of $2,342,000
from the balance at June 30, 2003. This change is comprised of the
following:

Final Allocation of Purchase
Price (Note 3) $3,470,000
Adjustment to Purchase Price
(Note 3) (1,207,000)
Additional Acquisition Related
Costs 79,000
---------
Total Adjustments $2,342,000
=========

NOTE 5: INCOME TAXES

The principal operating subsidiaries of DMI are Ross University School of
Medicine (the Medical School) incorporated under the laws of the Commonwealth
of Dominica and 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. Both operating companies have agreements
with the respective governments that exempt them from local income taxation
through the years 2043 and 2023, respectively. Accordingly no current
provision for foreign income taxes was recorded in the second quarter or six
months ended December 31, 2003 for the Medical or Veterinary Schools.

The Company has not recorded a tax provision for the undistributed earnings of
the Medical and Veterinary Schools for the period after the acquisition. It is
the Company's intention to indefinitely reinvest post-acquisition
undistributed earnings and profits to service debt, improve the facilities and
operations of the Schools and pursue future opportunities outside of the
United States. As of December 31, 2003, cumulative undistributed earnings were
approximately $8.2 million.





17

NOTE 6: LONG-TERM DEBT

All of the Company's borrowings and letters of credit under its long-term debt
agreements are through DeVry Inc. and Global Education International, Inc.
(GEI), a subsidiary newly formed in relation to the acquisition of DMI
(Note 3). This long-term debt consists of the following at December 31, 2003:

Effective
Outstanding Interest Rate at
Debt December 31, 2003
Revolving Credit Agreement: ------------ -----------------
DeVry Inc. as borrower $ 70,000,000 2.67%
GEI as borrower 45,000,000 2.67%
-----------
Total $115,000,000 2.67%

Senior Notes:
DeVry Inc. as borrower $ 75,000,000 2.41%
GEI as borrower 50,000,000 2.41%
-----------
Total $125,000,000 2.41%
-----------
Total long-term debt $240,000,000 2.54%
===========

NOTE 7: SEGMENT INFORMATION

The Company's principal business is providing post-secondary education. The
services of our operations are described in more detail under "Nature of
Operations" in Note 1 to the consolidated financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2003.
The Company presents three reportable segments: the DeVry University
undergraduate and graduate operations (DeVry University), the professional
examination review and training operations including Becker Professional Review
and Center for Corporate Education (Professional and Training) and the Ross
University medical and veterinary school operations (Ross University).

These segments are based on the method by which management evaluates
performance and allocates resources. Such decisions are based upon each
segment's operating income, which is defined as income before interest
expense, amortization 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 1 - Summary of Significant Accounting
Policies to the consolidated financial statements contained in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 2003.

The consistent measure of segment profit excludes interest expense,
amortization and certain corporate related depreciation. 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.





18

NOTE 7: SEGMENT INFORMATION, continued

Following is a tabulation of business segment information for the quarters and
for the six months ended December 31, 2003 and 2002. Corporate information is
included where it is needed to reconcile segment data to the consolidated
financial statements.




For the Quarter For the Six Months
Ended December 31, Ended December 31,
------------------- -------------------
2003 2002 2003 2002
-------- -------- -------- --------

Revenues:
DeVry University $164,483 $159,103 $324,532 $313,561
Professional and Training 13,709 13,445 24,011 22,256
Ross University 20,614 - 39,499 -
------- ------- ------- -------
Total Consolidated Revenues $198,806 $172,548 $388,042 $335,817
------- ------- ------- -------
Operating Income:
DeVry University $14,029 $18,170 $24,135 $35,256
Professional and Training 5,771 6,014 8,427 7,941
Ross University 7,822 - 15,483 -
Reconciling Items:
Amortization Expense (3,394) (192) (6,790) (384)
Interest Expense (1,972) (47) (4,128) (94)
Depreciation and Other (213) (195) (403) (375)
------- ------- ------- -------
Total Consolidated Income
before Income Taxes $22,043 $23,750 $36,724 $42,344
------- ------- ------- -------
Segment Assets:
DeVry University $451,163 $497,311 $451,163 $497,311
Professional and Training 72,098 69,714 72,098 69,714
Ross University 394,236 - 394,236 -
Corporate 3,768 28,460 3,768 28,460
------- ------- ------- -------
Total Consolidated Assets $921,265 $595,485 $921,265 $595,485
------- ------- ------- -------
Additions to Long-lived Assets:
DeVry University $6,630 $10,021 $12,776 $20,051
Professional and Training 2,361 42 2,370 56
Ross University 566 - 2,090 -
------- ------- ------- -------
Total Consolidated Additions
to Long-lived Assets $9,557 $10,063 $17,236 $20,107
------- ------- ------- -------
Depreciation Expense:
DeVry University $ 9,684 $ 9,770 $18,047 $18,084
Professional and Training 77 97 157 191
Ross University 589 - 1,070 -
Corporate 198 196 393 391
------- ------- ------- -------
Total Consolidated Depreciation $10,548 $10,063 $19,667 $18,666
------- ------- ------- -------
Amortization Expense:
DeVry University $ 8 $ 7 $ 16 $ 15
Professional and Training 183 185 368 369
Ross University 3,203 - 6,406 -
------- ------- ------- -------
Total Consolidated Amortization $3,394 $192 $6,790 $384
------- ------- ------- -------



19

NOTE 7: SEGMENT INFORMATION, continued

The Company conducts its educational operations in the United States, Canada,
the Caribbean countries of Dominica and St. Kitts/Nevis, Europe, the Middle
East and the Pacific Rim. Other international revenues, which are derived
principally from Canada were less than 5% of total revenues for the quarters
and six months ended December 31, 2003 and 2002. Revenues and long-lived assets
by geographic area are as follows:



For the Quarter For the Six Months
Ended December 31, Ended December 31,
-------------------- --------------------
2003 2002 2003 2002
-------------------- --------------------


Revenues from Unaffiliated Customers:
Domestic Operations $173,902 $167,072 $339,949 $325,353
International Operations:
Dominica and St. Kitts/Nevis 20,614 - 39,499 -
Other 4,290 5,476 8,594 10,464
------- ------- ------- -------
Total International 24,904 5,476 48,093 10,464
------- ------- ------- -------
Consolidated $198,806 $172,548 $388,042 $335,817
======= ======= ======= =======

Long-lived Assets:
Domestic Operations $359,703 $346,931 $359,703 $346,931
International Operations:
Dominica and St. Kitts/Nevis 316,455 - 316,455 -
Other 1,361 2,354 1,361 2,354
------- ------- ------- -------
Total International 317,816 2,354 317,816 2,354
------- ------- ------- -------
Consolidated $677,519 $349,285 $677,519 $349,285
======= ======= ======= =======



No one customer accounted for more than 10% of the Company's consolidated
revenues.

NOTE 8: COMMITMENTS AND CONTINGENCIES

In October 2003, the Company announced that its subsidiary, DeVry Canada LLC,
had signed an agreement with RCC College of Technology ("RCC") that will enable
DeVry to phase out its operations at its Toronto campus commencing with the
term that began in November 2003. Based in Vaughn, Ontario, RCC provides
career- focused electronics and computer technology diploma programs.

Under the terms of the agreement, which has been approved by the Ontario
Provincial Ministry, DeVry College of Technology has contracted with RCC to
manage the completion of programs of study for DeVry's current student body in
Toronto. DeVry's Toronto campus will no longer admit new students. RCC will
use existing DeVry curricula to deliver courses that allow current DeVry
students to earn DeVry diplomas and certificates. The agreement also makes
provisions for the acquisition of DeVry assets by RCC and the use of certain
portions of DeVry curriculum under the RCC brand name.





20

NOTE 8: COMMITMENTS AND CONTINGENCIES, continued

In the second quarter of fiscal 2004, the Company recognized an approximately
$0.5 million pre-tax asset impairment loss in accordance with SFAS 144 on the
furniture and laboratory equipment associated with the Company's Toronto-area
operations. This equipment may become the future property of RCC and will have
no further use at DeVry beyond the period of the teachout of DeVry's current
student body.

The Company is subject to occasional lawsuits, regulatory reviews associated
with financial assistance programs and claims arising in the normal conduct
of its business.

In September 2003, the Company received a notice claiming patent-infringement
from Acacia Research Corporation. The notice alleges that the Company has
infringed upon several Acacia patents relating to streaming audio and video
technology. This technology is used by the Company through its online
education platform provider and is also used by many other companies in the
delivery of online programs.

In March 2002, the Company received notice of a class-action complaint
filed under the Fair Labor Standards Act by several former field sales
representatives seeking overtime compensation for services rendered
during their period of employment. In March 2003, the Company
participated in a required mediation session but no resolution was
reached. The action was subsequently dismissed but an appeal has been
filed.

In January 2002, the Company received notice of an antitrust complaint
concerning the alleged monopoly by operations of its Becker CPA Review Corp.
subsidiary in California. This complaint was filed in federal district court
by the trustee in bankruptcy of a failed CPA review provider seeking a
substantial amount of damages. On April 15, 2002, this complaint was
voluntarily dismissed by the plaintiff without prejudice. The complaint was
amended and has subsequently been re-filed.

In January 2002, a graduate of one of DeVry University's Los Angeles-area
campuses filed a class-action complaint on behalf of all students enrolled in
the post-baccalaureate degree program in Information Technology. The suit
alleges that the program offered by DeVry did not conform to the program as it
was presented in the advertising and other marketing materials. In March 2003,
the complaint was dismissed by the court with limited right to amend and re-
file. The complaint was subsequently amended and re-filed.

In November 2000, three 1999 graduates of one of DeVry University's
Chicago-area campuses filed a class-action complaint that alleges DeVry
graduates do not have appropriate skills for employability in the
computer information systems field. The complaint was subsequently
dismissed by the court, but was amended and re-filed, this time including
a then current student from a second Chicago-area campus.





21

NOTE 8: COMMITMENTS AND CONTINGENCIES, continued

The Company has recorded approximately $1 million associated with
estimated loss contingencies at December 31, 2003. While the ultimate
outcome of these contingencies is difficult to estimate at this time, the
Company does intend to vigorously defend itself with respect to these
claims.

In conjunction with the required annual review procedures related to its
administration of financial aid programs under the Ontario Student Aid Program,
the Toronto-area DeVry campuses had engaged in discussions with the Ontario
Ministry of Education relating to certain additional information requirements.
These additional information requirements could serve as the basis for a
Ministry claim for the return of some amounts of financial aid disbursed to
students attending these campuses. Discussions continue on a periodic basis
but the Company believes that there will be no significant monetary liability.

At this time, the Company does not believe that the outcome of current claims,
regulatory reviews and lawsuits will have a material effect on its results of
operations or financial position.


22

Item 2 - Management's Discussion and Analysis of Results of
Operations and Financial Condition
- -----------------------------------------------------------

Certain information contained in this quarterly report on Form 10-
K may constitute forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are based upon
the Company's current expectations and beliefs about future
events. Such statements are inherently uncertain and may involve
risks that could cause future results to differ materially from
the forward-looking statements. Potential risks and
uncertainties include, but are not limited to, undergraduate
program concentration in selected areas of technology, dependence
on student financial aid, dependence on state and provincial
approvals and licensing requirements, dependence on continued
accreditation for DeVry and Ross University and other factors
detailed in the Company's annual report on Form 10-K as filed
with the Securities and Exchange Commission.

The following discussion of the Company's results of operations
and financial condition should be read in conjunction with the
consolidated financial statements of the Company and the notes
thereto as included in the Company's quarterly report on Form 10-Q
for the quarter ended September 30, 2003 and the Company's
annual report on Form 10-K for the fiscal year ended June 30,
2003. The Company's annual report on Form 10-K includes a
detailed description of the method of application for critical
accounting policies, estimates and assumptions used in the
preparation of the Company's financial statements including, but
not limited to, revenue recognition, useful lives of equipment
and facilities, valuation of goodwill and indefinite-lived
intangible assets, valuation and useful lives of acquired finite-
lived intangible assets, pattern of amortization of finite-lived
intangible assets over their economic lives, losses on the
collection of student receivable balances, resolution of law
suits and health care costs for incurred but not yet paid medical
services.

Because of the somewhat seasonal pattern of the Company's
enrollments and its educational program starting dates, which
affect the results of operations and the timing of cash inflows,
the Company's management believes that comparisons of its results
of operations should be made to the corresponding period in the
preceding year. Comparisons of financial position should be made
to both the end of the previous fiscal year and to the end of the
corresponding interim quarterly period in the preceding year.

Copies of the Company's annual and quarterly reports on Form 10-K
and Form 10-Q as filed with the Securities and Exchange
Commission may be obtained without charge at the Company's
website, www.devry.com.

Results of Operations
- ---------------------
The Company's total consolidated revenues increased by $26.3
million, or 15.2%, and by $52.2 million, or 15.6%, for the second
quarter and first half of the fiscal year, respectively. Tuition
revenue, which is the largest component of total revenues,
represents over 92% of total revenues.


23
Second quarter and first half revenues include $20.6 and $39.5
million, respectively, of revenues from Dominica Management, Inc.
("DMI") that was acquired in May 2003 and not included in the
Company's financial results in the first half of last year. DMI
owns and operates the Ross University School of Medicine and the
Ross University School of Veterinary Medicine ("Ross
University").

Revenues also increased from the corresponding periods last year
because of higher enrollments and price increases at Becker
Professional Review in the Professional and Training segment and
similarly at Keller Graduate School within DeVry University.
Higher revenues at Becker Professional Review resulted, in part,
from additional Stalla seminar classes taught during the first
half of the year leading to the December CFA level 1 exam. This
is the first time that the level 1 exam has been administered in
December.

Effective with calendar year 2004, the twice a year, paper and
pencil CPA exam format will no longer be offered. Instead, the
exam will be available on demand in a new computer based format.
This new exam format will be offered for the first time in April.
The Company believes that some CPA candidates may have
accelerated their exam preparation to take the last
administration of the old exam format, contributing some
additional revenues in the first half of this fiscal year.
Further, some exam candidates may delay taking the new exam so as
to benefit from the experiences of the first new exam takers,
reducing enrollments in the Becker CPA Review courses in the
second half of the fiscal year until later quarters, which would
be in the Company's fiscal 2005 year.

In October 2003, the Company acquired the assets of
Person/Wolinsky CPA Review. Person/Wolinsky conducts CPA exam
preparation classes in the metropolitan areas of Boston, New York
City and Philadelphia as well as in Albany and Rochester, N.Y.
Arlington, VA. and Hartford, CT. This acquisition is not
expected to have a material effect on fiscal 2004 or future
period revenues or earnings.

At Keller Graduate School, revenues were higher than last year,
in part, because of the July conversion in course length from ten
weeks to eight weeks as the graduate program academic calendar
was aligned with the DeVry University calendar. This change
increases the number of terms each year from five to six, and
correspondingly increases revenue by 20% in each quarter and for
the total year assuming that all students proceed through the
year with continuous enrollment at the accelerated pace.
Enrollments for the Keller term that began in September 2003
increased by 3.9% from last year and by 4.8% for the term that
began in November, further contributing to the revenue increase.

For the second quarter and first half of the year, revenues from
undergraduate DeVry University programs were slightly below the
level of revenues last year. Undergraduate total student
enrollments for the term that began in July were 5.2% lower than
last year and undergraduate total student enrollments for the
term that began in November were 4.0% lower than last year.
Although new student enrollments increased from last year in both
of these terms, the increased new student enrollments have been
for online programs and programs at DeVry University Center
locations that primarily serve working adult students with a
greater proportion enrolled for less than a full-time academic
load, and accordingly, who pay a lesser tuition. Partly
offsetting the lower enrollments was a tuition price increase of
5-6% effective in July.

24

The Company's Cost of Educational Services increased by $11.2
million, or 11.9%, from the second quarter of last year. For the
first half, Cost of Educational Services increased by $23.4
million, or 12.6%, from last year. The increase includes the
cost of operation at Ross University which was not a part of the
Company's operations last year. Cost increases were also
incurred throughout all of the Company's continuing operations,
including its new DeVry University Centers and the undergraduate
Houston campus opened in September. At the new DeVry
undergraduate campus in Philadelphia that was opened in the first
half of last year, additional faculty and staff have been hired
as students progress into higher terms of their educational
programs. For the Keller Graduate School term that began in
November, courses were taught in six new locations compared to
last year. In addition, expanding enrollments in the Company's
online educational programs, both undergraduate and graduate,
have generated additional costs as faculty and staff are added to
support this growing method of course delivery. During the
second quarter, the Company recognized an approximately $0.5
million asset impairment loss in accordance with SFAS 144 on the
furniture and laboratory equipment associated with the Company's
Toronto-area operations. In connection with its agreement with
RCC for the teachout of the remaining DeVry student programs,
this equipment may become the future property of RCC and will
have no further useful life for DeVry beyond the period of the
teachout.

Depreciation expense, most of which is included in Cost of
Educational Services, increased by $0.5 million in the second
quarter and by $1.0 million in the first half of the year. This
increase in depreciation expense is entirely attributable to
depreciation expense of the acquired Ross University operations.

Student Services and Administrative Expense increased by $14.9
million, or 26.9%, in the second quarter and by $30.4 million, or
28.2%, in the first half. The increased cost includes the costs
of marketing and administration at Ross University which was not
a part of the Company last year. In addition, the Company
incurred higher advertising and selling costs associated with
efforts to generate more new student enrollments, primarily in
the Company's undergraduate educational programs. For the
undergraduate term that began in November, new student
enrollments increased by 3.2% from last year, the second
consecutive term with an increase in new student enrollments
after five consecutive terms of declining new student enrollment.

Information systems development costs are included in Student
Services and Administrative Expense. These costs, related to the
development of the new student information system and to other
system initiatives and support have increased by $0.6 million
from the first half of last year. A major component of the
information system expense is the Company's continued investment
in a new student information system to provide better support for
the educational processes and related student services. In
accordance with accounting principles for internal software
development costs, certain wage and outside consulting costs are
being capitalized. During the second quarter, the Company
capitalized $1.6 million, bringing to $3.0 million the amount
capitalized year-to-date. For the second quarter and first half
of last year, the Company capitalized $1.4 million and $3.1
million, respectively. Cumulatively since the inception of this
project, the Company has capitalized $17.6 million. In the
second quarter, the Company charged $1.5 million of indirect
project costs directly to expense. For the first six months,
indirect costs charged directly to expense were $3.1 million
compared to $2.6 million charged directly to expense in the first
half of last year. In the second quarter, $0.4 million of
previously capitalized costs were amortized to expense, bringing
to $0.6 million the amount amortized in the first half.

25

In the first half of last year, $0.2 million of previously
capitalized costs were amortized to expense. As additional parts
of this system are placed into service over the coming quarters,
amortization expense of previously capitalized amounts will
increase somewhat.

Also included in the Student Services and Administration Expense
category was $3.4 million in the second quarter and $6.8 million
in the first half of amortization of finite-lived intangible
assets, mostly associated with the acquisition of Ross
University. This compares to $0.2 million and $0.4 million of
amortization in the second quarter and first half of last year,
respectively. Spending for Student Services and Administrative
Expense, excluding this amortization, was 33.6% and 33.8% of
revenue for the second quarter and first half, respectively.
This compares to 33.7% in the second half of last fiscal year
during which time spending on undergraduate student marketing had
been increased to current levels to produce the new student
enrollment gains reported for the July and November terms.

In the DeVry University segment, both operating income and
operating margin as a percent of revenue in the second quarter
continued to trail last year but did improve significantly from
the first quarter. While historically the second quarter has
reflected increased revenues and earnings because of higher fall
term student enrollments, the rate of increase from the first to
second quarter this year is greater than during the corresponding
period last year. For the second quarter of this year, operating
income was $14.0 million and the operating margin was 8.5%. This
compares to operating income of $10.1 million and an operating
margin of 6.3% in the first quarter. In the second quarter of
last year, operating income was $18.2 million and the operating
margin was 11.4%, up from 11.1% in the first quarter of last
year.

Contributing to this year's lower operating income and margins
are the lesser total undergraduate student enrollments discussed
above and increased spending on undergraduate new student
recruiting to increase future term enrollments. Expenses have
also increased because of new teaching locations and educational
operations to support increased enrollments in online programs.
Also contributing to the increased cost and lower earnings was
the recognition of a $0.5 million pre-tax asset impairment loss
on the Toronto-area furniture and laboratory equipment used in
conjunction with the teachout agreement with RCC. This agreement
is expected to reduce the Company's operating losses at the
Toronto campus below what such losses would have been if the
Company continued to manage the educational process and services
through the period of teach out. The Company believes that
operating losses incurred during each year of the teach out
period should not exceed $3 million pre-tax which is less than
the loss experienced from operations in fiscal 2003. Partly
offsetting these factors are higher enrollments at Keller
Graduate School and the effect on revenues and earnings of the
conversion to an eight-week term length aligned with the common
DeVry University calendar. Additionally, price increases across
all of DeVry University of approximately 5-6% were implemented in
July.

In the Professional and Training segment, operating income for
the second quarter was almost equal to that reported last year.
For the first half, operating income increased by $0.5 million
with an operating margin about equal to last year. The higher
first half operating income reflects higher tuition rates and the
increased enrollments in the CPA and CFA review programs
discussed above while costs increased somewhat for development of
the new CPA exam format course materials.

26

The Ross University segment was first incorporated into the
Company's financial results in the fourth quarter of fiscal 2003,
following completion of the acquisition in May. For the second
quarter, Ross contributed $7.8 million of operating income for a
37.9% margin. In the first half, Ross had operating income of
$15.5 million and an operating margin of 39.2%.

Interest expense increased by $1.9 million in the second quarter
and by $4.0 million in the first half compared to last year. The
increased expense is attributable to the fourth quarter of fiscal
2003 borrowings for the acquisition of Ross University. During
the first six months, borrowings were reduced by $50 million to
$240 million using existing cash balances and cash generated from
operations. Short-term interest rates, that serve as the basis
for the interest rate on this debt, have not increased during
this period. If short-term interest rates rise in the coming
quarters, then interest expense may increase from current levels,
depending upon the amount of debt outstanding at that time.

Taxes on income were 29.3% of pretax income in the second
quarter, compared to 28.5% in the first quarter. Last year, the
tax rate on first half pretax income was 19.5%. In the second
quarter of last year, the Company recognized non-recurring tax
benefits of $8.2 million associated with the restructuring of its
Canadian operations. Without this non-recurring benefit, the tax
rate for the first half of last year would have been 38.7%. The
Company's tax rate on income is the composite of state and
federal taxes on operations other than Ross University and a
single digit tax rate on the earnings of Ross University, most of
which is earned offshore in jurisdictions where the Company has
agreements with the governments that exempt these earnings from
local taxes. The higher composite tax rate in the second
quarter, compared to the first quarter, reflects an increase in
the earnings from operations other than Ross, e.g. DeVry
University and Becker Professional Review, which are taxed at a
higher rate.

Liquidity and Capital Resources
- -------------------------------
Cash generated from operations during the first half of the
fiscal year was $84.4 million, compared to $95.0 million last
year. Contributing to the lower cash flow in this year's first
half was a $20.1 million receivable from federal and state
student financial aid programs. This receivable represents
amounts disbursed to the accounts of students under various
federal and state grant programs for which cash has not yet been
received by the Company. Most of the amount owed to the Company
at December 31, 2003, was received in January. While there have
been amounts owed to the Company from these student financial aid
programs in previous periods, there was no amount owed at the
corresponding time last year.

Net income for the first half of this year was $8.0 million lower
than last year, which period last year included $8.2 million of
non-recurring tax benefits associated with the Company's Canadian
operations. Also, taxes paid on income increased by $7.2 million
during the first six months of this year relating to tax
liabilities associated with the acquisition of DMI.

Also contributing to the lower cash flow was a $21.8 million net
receivable from students at Ross University, an increase of
approximately $16.0 million during the first six months of this
year. Most of this increase in Ross accounts receivable was
offset by an increase in the related Ross deferred tuition
revenue of $13.9 million in the first half of this year. Ross,
acquired in May 2003, was not included in the Company's financial
statements for this period last year.

27

Partly offsetting the negative effect of these items on cash flow
was an increase in the non-cash charges for depreciation and
amortization totaling approximately $7.4 million, lower levels of
receivables from students at DeVry University reflecting improved
collections and processing of financial aid and a decrease of
$14.5 million in the amount of cash restricted under state and
federal financial aid programs.

Capital spending for the first six months was $16.1 million, down
$4.0 million from last year. In the second half of this fiscal
year, construction is expected to commence on dormitory
facilities located on the DeVry University Fremont, California
and Kansas City, Missouri undergraduate campus sites. However,
with no new large undergraduate campuses scheduled for
construction, a much lesser cost associated with the opening of
each new DeVry University Center and completion of the new 19,000
square foot Ross University medical school facility in the first
half of the year, capital spending for the full year is expected
to be in the range of $40 million, approximately the same level
of spending as in fiscal 2003.

In conjunction with its acquisition of Ross University, the
Company entered into two credit agreements to provide the
required funding. At June 30, 2003, borrowings under these
agreements totaled $290 million. During the first half, the
Company repaid $50 million of these borrowings using existing
cash balances and cash flow generated from operations. In
addition to the remaining $240 million of borrowings, there are
approximately $3.7 million of letters of credit issued under
these borrowing agreements. These letters of credit were issued
in conjunction with DeVry University's participation in student
financial aid programs, various business insurance policies and a
rental agreement on a leased teaching facility.

All of the Company's borrowings are based upon a floating
interest rate, generally LIBOR, at the Company's option. During
the first quarter, the Company entered into several interest rate
cap agreements to protect $100 million of borrowings from sharp
increases in the short-term interest rates upon which the
borrowings are based. The Company intends to periodically review
further debt repayment options and the need for additional
interest rate protection in light of projected changes in working
capital requirements and future period interest rates.

The Company is not a party to any off-balance sheet financing or
contingent payment arrangements nor are there any unconsolidated
subsidiaries of the Company. The Company's only long-term
contractual obligations consist of its revolving line of credit
and Senior Notes, operating leases on facilities and equipment
and agreements for various services. There are no loans extended
to any officer, director or other person affiliated with the
Company. The Company has not entered into any synthetic leases
and there are no residual purchase or value commitments related
to any facility or equipment lease. The Company has not entered
into any derivative, swap, futures contract, put, call, hedge or
non-exchange traded contract except for the interest rate cap
agreements noted above. Under the terms of these cap agreements,
the Company is not obligated to any further payment liability
beyond their original purchase price.

The Company's primary source of liquidity is the cash received
from payments for student tuition, books and fees. These
payments include funds originating as student and family
educational loans; other financial aid from various federal,
state and provincial loan and grant programs; and student and
family financing resources. Funds originating as student and
family educational loans and other forms of financial aid from
various sources are dependent upon DeVry and Ross University's
continued compliance with and participation in these programs.

28

The Company is highly dependent upon the timely receipt of these
financial aid funds because approximately 70% of its
undergraduate student revenues, approximately 40% of its graduate
student revenues and approximately 70% of Ross University student
revenues are funded by these programs. These financial aid and
assistance programs are subject to political and governmental
budgetary considerations. There is no assurance that such
funding will be maintained in the future.

Extensive and complex regulations in the United States and Canada
govern all of the government financial assistance programs in
which the Company's students participate. The Company's
administration of these programs is periodically reviewed by
various regulatory agencies. Any regulatory violation could be
the basis for disciplinary action, including initiation of a
suspension, limitation or termination proceeding against the
Company.

In conjunction with the required annual review procedures related
to its administration of financial aid programs under the Ontario
Student Aid Program, the Toronto-area DeVry campuses had engaged
in discussions with the Ontario Ministry of Education relating to
certain additional information requirements. These additional
information requirements could serve as the basis for a Ministry
claim for the return of some amounts of financial aid disbursed
to students attending these campuses. Discussions continue on a
periodic basis but the Company believes that there will be no
significant monetary liability.

Included in the Company's consolidated cash balances of $126.4
million at December 31, 2003, is $37.4 million of cash
attributable to the Ross University operations. It is the
Company's intention to indefinitely reinvest this cash and
subsequent earnings and cash flow to service outstanding debt,
improve and expand facilities and operations of the schools and
pursue future business opportunities outside the United States.
In accordance with this plan, cash held by Ross University will
not be available for general Company purposes such as at DeVry
University.

The Company believes that current balances of unrestricted cash,
cash generated from operations and borrowings under its financing
agreements will be sufficient to fund its current operations and
current growth plans for the foreseeable future unless new
investment opportunities should arise similar to the recent
acquisition of Ross University.


Item 3 - Qualitative and Quantitative Disclosures About Market Risk
- -------------------------------------------------------------------

The nature of the Company's educational operations does not
subject it to a concentration or dependency upon the price levels
or fluctuations in pricing of any particular one or group of
commodities.

The financial position and results of operations of Ross
University's Caribbean operations are measured using the U.S.
dollar as the functional currency. Almost all Ross University
financial transactions are denominated in the U.S. dollar.

The financial position and results of operations for the
Company's Canadian educational programs are measured using the
local currency as the functional currency. The Canadian
operations have not entered into any material long term contracts
to purchase or sell goods and services, other than lease
agreements on teaching facilities. The Company does not have any
foreign exchange contracts or derivative financial instruments
related to protection from changes in the value of the Canadian

29

dollar. Because the assets and liabilities of the Company's
Canadian operations are small relative to those of the Company,
currently Canadian assets are less than 3% of total Company
assets, changes in currency value would not have a material
effect on the Company'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 pre-
tax translation adjustment of less than $100,000.

Of the $240 million in Company debt outstanding at December 31,
2003, $115 million matures on July 1, 2006 and $125 million
matures on April 30, 2010. Future investment opportunities,
however, may result in lesser or no debt repayments in the period
including and following such investment and could require
additional borrowings. The interest rate on the Company's debt
is based upon LIBOR interest rates for periods typically ranging
from one to three months. Based upon the level of Company
borrowings at the end of the second quarter, a 1% increase in
short-term interest rates would result in $2.4 million of
additional annual interest expense. The Company entered into
several interest rate cap agreements to protect $100 million of
its borrowings from sharp increases in short-term interest rates.
However, these interest rate cap agreements do not provide
protection from increases in short-term interest rates of less
than 2.35% from current rates.


Item 4 - Controls and Procedures
- --------------------------------

The Company's management does not believe that any set of
disclosure or internal controls can absolutely prevent all fraud
and error. Such disclosure and internal controls, including
those employed by DeVry Inc., can and should, however, provide
reasonable, but not absolute assurance that assets have been
safeguarded, used only for their intended purpose and that
financial transactions have been properly recorded and reported
to permit the preparation of financial statements in conformity
with generally accepted accounting principles reported within the
timeframes required by the SEC.

The Company's co-chief Executive Officers and its Chief Financial
Officer have evaluated the effectiveness of the design and
operation of the Company's disclosure controls and internal
control procedures upon which these financial statements and
management discussion are based. This review included the results
of the Company's internal audit procedures. This review was made
as of the end of the period covered by this quarterly report.
Based upon this evaluation, and with the participation of
management, subject to the limitations on absolute prevention of
fraud and error, the above named officers have concluded that
these controls and procedures are effective and appropriate to
ensure the correctness and completeness of this report.

There were no changes in internal control over financial
reporting identified in connection with the evaluation referred
to above that occurred during the Company's second quarter that
materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.

30

Part II - Other Information
- ---------------------------
Item 1 - Legal Proceedings
- --------------------------

The Company is subject to occasional lawsuits, regulatory reviews
associated with financial assistance programs and claims arising
in the normal conduct of its business. The Company has recorded
approximately $1 million associated with estimated loss
contingencies at December 31, 2003. While the ultimate outcome
of these contingencies is difficult to estimate at this time, the
Company does intend to vigorously defend itself with respect to
these claims.

The following updates the status of litigation and claims
previously disclosed.

In September 2003, the Company received a notice claiming patent-
infringement from Acacia Research Corporation. The notice
alleges that the Company has infringed upon several Acacia
patents relating to streaming audio and video technology. This
technology is used by the Company through its online education
platform provider and is also used by many other companies in
conjunction with the delivery of online programs.

In March 2002, the Company received notice of a class-action
complaint filed under the Fair Labor Standards Act by several
former field sales representatives seeking overtime compensation
for services rendered during their period of employment. In
March 2003, the Company participated in a required mediation
session but no resolution was reached. The action was
subsequently dismissed but an appeal has been filed.

In January 2002, the Company received notice of an antitrust
complaint concerning the alleged monopoly by operations of its
Becker CPA Review Corp. subsidiary in California. This complaint
was filed in federal district court by the trustee in bankruptcy
of a failed CPA review provider seeking a substantial amount of
damages. In April 2002, this complaint was voluntarily dismissed
by the plaintiff without prejudice. This complaint was amended
and has subsequently been re-filed.

In January 2002, a graduate of one of DeVry University's Los
Angeles-area campuses filed a class-action complaint on behalf of
all students enrolled in the post-baccalaureate degree program in
Information Technology. The suit alleges that the program
offered by DeVry did not conform to the program as it was
presented in the advertising and other marketing materials. In
March 2003, the complaint was dismissed by the court with limited
right to amend and re-file. The complaint was subsequently
amended and re-filed.

In November 2000, three graduates of one of DeVry University's
Chicago-area campuses filed a class-action complaint that alleges
DeVry graduates do not have appropriate skills for employability
in the computer information systems field. The complaint was
subsequently dismissed by the court, but was amended and re-
filed, this time including a then current student from a second
Chicago-area campus.

At this time, the Company does not believe that the outcome of
current claims, regulatory reviews and lawsuits will have a
material effect on its results of operations or financial
position.

31

Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The Company's regular annual meeting of stockholders was held in
Chicago, Illinois, on Tuesday, November 18, 2003, pursuant to
notice duly given. Proxies for the meeting were solicited in
accordance with the Securities Exchange Act of 1934 and there was
no solicitation in opposition to those of management.

At the meeting, one Director of the Company was elected as a
Class II Director to hold office until 2005 or until her
successor is elected and qualified and four Directors of the
Company were elected to serve as Class III Directors to hold
office until 2006 or until their respective successors are
elected and qualified. The results of the voting for Directors,
whether in person or by proxy, were as follows:

No. of Shares No. of Shares
Class II Class III Voted For Voted to Withhold
-------- --------- ------------- -----------------
Connie R. Curran 59,444,578 337,003
Charles A. Bowsher 59,094,457 687,124
Robert C. McCormack 58,837,872 943,709
Julie A. McGee 59,093,466 688,115
Ronald L. Taylor 59,150,337 631,244


The terms of office of the following Directors continued after
the meeting: David S. Brown, Dennis J. Keller, Frederick A.
Krehbiel, Thurston E. Manning, Hugo J. Melvoin and Harold T.
Shapiro.

The DeVry Inc. 2003 Stock Incentive Plan was adopted by the
Company's Board of Directors in August 2003 and submitted for
stockholder approval at this meeting. The following table
presents the results of the stockholder vote on this matter:

Broker
For Against Abstain Non-Vote
--- ------- ------- ---------
48,177,757 5,661,790 58,144 5,883,890


Also submitted to a vote of the stockholders at this meeting was
a proposal for the ratification of the appointment of
PricewaterhouseCoopers LLP as independent public accountants for
the Company for the current fiscal year. The following table
presents the results of the stockholders' vote this matter:

Broker
For Against Abstain Non-Vote
--- ------- ------- --------
58,864,153 865,476 51,952 0

32

Item 5 - Other Information
- --------------------------
On January 12, 2004, the Company announced that Ross University
president, Timothy E. Foster, was leaving effective January 30,
2004, to pursue other interests. On an interim basis, Dennis J.
Keller, DeVry chairman and co-CEO will assume the
responsibilities of the president of Ross University.


Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------

(a) Exhibits

Sequentially
Exhibit # Description Numbered Page
--------- ----------- -------------
31 Rule 13a-14(a)/15d-14(a)Certifications 34-39

32 Section 1350 Certifications 40


(b) Reports on Form 8-K

During the quarter ended December 31, 2003, the Company
filed the following reports on Form 8-K:

1. December 5, 2003, reporting enrollment for fall term at
DeVry University and Ross University.

2. October 22, 2003, reporting financial results for first
fiscal quarter and the acquisition of Person/Wolinsky CPA Review.



33

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.




Date: FEBRUARY 10, 2004 /s/Ronald L. Taylor
-------------------
Ronald L. Taylor
Co-Chief Executive Officer and
President




Date: FEBRUARY 10, 2004 /s/Norman M. Levine
-------------------
Norman M. Levine
Senior Vice President and
Chief Financial Officer