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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 period ended September 30, 2004


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
October 22, 2004: 70,365,498



Total number of pages: 52


2
DeVRY INC.
----------
FORM 10-Q INDEX
For the Quarter Ended September 30, 2004

Page No.
--------

PART I. Financial Information

Item 1. Financial Statements:

Consolidated Balance Sheets at
September 30, 2004, June 30, 2004,
and September 30, 2003 3-4

Consolidated Statements of Income
for the quarter ended
September 30, 2004 and 2003 5

Consolidated Statements of Cash
Flows for the three months ended
September 30, 2004 and 2003 6

Notes to Consolidated Financial
Statements 7-21

Item 2. Management's Discussion and
Analysis of Results of Operations
and Financial Condition 22-30

Item 3. Quantitative and Qualitative
Disclosures About Market Risk 30-31

Item 4. Controls and Procedures 31


Part II. Other Information

Item 1. Legal Proceedings 32-33

Item 4. Submission of Matters to a Vote
of Security Holders 33

Item 5. Other Information 33

Item 6. Exhibits and Reports on Form 8-K 33


SIGNATURES 34

3
PART I - Financial Information

Item 1 - Financial Statements


DEVRY INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)



September 30, June 30, September 30,
2004 2004 2003
------------ ------------ ------------
(Unaudited) (Unaudited)

ASSETS

Current Assets

Cash and Cash Equivalents $115,071 $146,227 $117,885
Restricted Cash 27,702 13,457 21,348
Accounts Receivable, Net 64,298 28,150 50,888
Inventories 1,376 3,281 3,072
Deferred Income Taxes 6,454 7,619 11,358
Prepaid Expenses and Other 12,831 10,141 9,990
------- ------- -------
Total Current Assets 227,732 208,875 214,541
------- ------- -------
Land, Buildings and Equipment

Land 64,256 64,256 59,875
Buildings 204,378 203,651 190,818
Equipment 227,110 222,898 210,384
Construction In Progress 7,513 6,214 12,339
------- ------- -------
503,257 497,019 473,416

Accumulated Depreciation (220,343) (210,132) (189,569)
------- ------- -------
Land, Buildings and
Equipment, Net 282,914 286,887 283,847
------- ------- -------
Other Assets

Intangible Assets, Net 82,709 86,346 96,475
Goodwill 284,397 284,397 283,298
Perkins Program Fund, Net 12,472 12,247 11,291
Other Assets 5,457 5,380 5,665
------- ------- -------
Total Other Assets 385,035 388,370 396,729
------- ------- -------
TOTAL ASSETS $895,681 $884,132 $895,117
======= ======= =======






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

4

DEVRY INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)



September 30, June 30, September 30,
2004 2004 2003
------------ ------------ ------------
(Unaudited) (Unaudited)

LIABILITIES

Current Liabilities

Current Maturities of
Revolving Loan $ - $ 35,000 $ -
Accounts Payable 17,601 27,349 14,635
Accrued Salaries, Wages &
Benefits 33,316 31,041 38,012
Accrued Expenses 28,062 24,610 28,836
Advance Tuition Payments 16,981 16,819 8,870
Deferred Tuition Revenue 82,311 21,830 87,479
------- ------- -------
Total Current Liabilities 178,271 156,649 177,832
------- ------- -------
Other Liabilities

Revolving Loan 75,000 90,000 138,000
Senior Debt 125,000 125,000 125,000
Deferred Income Taxes 17,660 17,660 13,049
Deferred Rent and Other 17,283 16,566 14,689
------- ------- -------
Total Other Liabilities 234,943 249,226 290,738
------- ------- -------
TOTAL LIABILITIES 413,214 405,875 468,570
------- ------- -------
SHAREHOLDERS' EQUITY

Common Stock, $0.01 par value,
200,000,000 Shares Authorized,
70,365,498, 70,331,323 and
70,040,257, Shares Issued and
Outstanding at September 30,
2004, June 30, 2004 and
September 30, 2003,
Respectively 704 704 701
Additional Paid-in Capital 71,927 71,797 67,678
Retained Earnings 409,336 405,036 357,467
Accumulated Other Comprehensive
Income 500 720 701
------- ------- -------
TOTAL SHAREHOLDERS' EQUITY 482,467 478,257 426,547
------- ------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $895,681 $884,132 $895,117
======= ======= =======

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 Ended
September 30,

2004 2003
-------- --------

REVENUES:

Tuition $177,984 $177,594
Other Educational 10,352 11,585
Interest 60 57
------- -------
Total Revenues 188,396 189,236
------- -------
COSTS AND EXPENSES:

Cost of Educational Services 109,485 104,450
Student Services and
Administrative Expense 73,608 67,949
Interest Expense 1,991 2,156
------- -------
Total Costs and Expenses 185,084 174,555
------- -------
Income Before Income Taxes and
Cumulative Effect of Change in
Accounting 3,312 14,681

Income Tax Provision 822 4,189
------- -------
Income Before Cumulative Effect of
Change in Accounting 2,490 10,492

Cumulative Effect of Change
in Accounting, Net of Tax 1,810 -
------- -------
NET INCOME $ 4,300 $ 10,492
======= =======

EARNINGS PER COMMON SHARE
Basic
Income Before Cumulative Effect
of Change in Accounting $0.04 $0.15
Cumulative Effect of Change
in Accounting $0.02 -
----- -----
Net Income $0.06 $0.15
===== =====
Diluted
Income Before Cumulative Effect
of Change in Accounting $0.04 $0.15
Cumulative Effect of Change
in Accounting $0.02 -
----- -----
Net Income $0.06 $0.15
===== =====



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 Quarter
Ended September 30,
2004 2003
--------- ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 4,300 $ 10,492
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:

Depreciation 9,630 9,119
Amortization 3,907 3,649
Provision for Refunds and
Uncollectible Accounts 9,225 9,579
Deferred Income Taxes 1,165 -
Loss on Disposals of Land, Buildings
and Equipment 55 67
Changes in Assets and Liabilities, Net of
Effects from Acquisitions of Businesses:
Restricted Cash (14,245) (7,296)
Accounts Receivable (45,348) (36,192)
Inventories 1,905 1,243
Prepaid Expenses And Other (2,300) (2,690)
Perkins Program Fund Contributions and Other (250) -
Accounts Payable (9,748) (4,231)
Accrued Salaries, Wages,
Expenses and Benefits 5,727 4,290
Advance Tuition Payments 162 (1,698)
Deferred Tuition Revenue 60,481 71,188
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 24,666 57,520
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (5,712) (7,679)
Adjustment to Payment for Purchase of Business - 1,185
------- -------
NET CASH USED IN INVESTING ACTIVITIES: (5,712) (6,494)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds From Exercise of Stock Options 130 390
Repayments Under Revolving Credit Facility (50,000) (27,000)
------- -------
NET CASH USED IN FINANCING ACTIVITIES (49,870) (26,610)
------- ------
Effects of Exchange Rate Differences (240) (2)
------- -------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (31,156) 24,414

Cash and Cash Equivalents at Beginning
of Period 146,227 93,471
------- -------
Cash and Cash Equivalents at End of Period $115,071 $117,885
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest Paid During the Period $1,567 $1,600
Income Tax Payments During the Period, Net 314 8,427


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


7


DEVRY INC.
Notes to Consolidated Financial Statements
For the Quarter Ended September 30, 2004

----------



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 fairly present the financial condition
and results of operations of the Company. The June 30, 2004 data
that is presented is derived from audited financial statements.

The interim consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
contained in the Company's Annual Report on Form 10-K as filed
with the Securities and Exchange Commission for the fiscal year
ended June 30, 2004.

The results of operations for the three months ended September 30,
2004, are not necessarily indicative of results to be expected for the
entire fiscal year.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

During the first quarter of fiscal 2004, the Company entered into
several interest rate cap agreements to protect approximately
$100,000,000 of its outstanding 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 short-
term interest rates above 3.5%.






8

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Derivative Instruments and Hedging Activities, continued
- --------------------------------------------------------
These cap agreements were purchased at fair market values totaling
$568,000. 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 are being reclassified and recognized into
earnings over the 24-month term of the agreements. As of
September 30, 2004, $38,000 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 $112,000 and the $150,000 expensed as
interest. For the three months ended September 30, 2004, a gain
of $20,000 was recorded as Other Comprehensive Income and interest
expense of $60,000 was charged to earnings for these interest rate
caps. There has been no ineffectiveness of the hedging
relationship 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 $1,083,000, $3,120,000 and $13,790,000 as of
September 30, 2004, June 30, 2004 and September 30, 2003,
respectively. 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 (gross) $18,767,000, $16,431,000 and $2,305,000 at
September 30, 2004, June 30, 2004, and September 30, 2003,
respectively.

Post-employment Benefits
- ------------------------
The Company's employment agreements with its Chairman of the
Board of Directors and Chief Executive Officer provide certain
post-employment benefits that require accrual over the
expected future service period beginning with the second
quarter of fiscal 2003. For the three months ended September
30, 2004 and 2003, the Company recognized expense of
approximately $588,000 and $445,000, respectively, related to
these agreements. The amounts provided are 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 6.03% rate and using the sinking fund
accrual method.





9

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

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 70,349,000 and
70,030,000 for the first quarters ended September, 2004 and 2003,
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 70,677,000 and 70,637,000 for the first quarters
ended September 30, 2004 and 2003, respectively. Excluded from
the computations of diluted earnings per share were options to
purchase 1,289,000 and 1,160,000 shares of common stock for the
first quarters ended September 30, 2004 and 2003, respectively.
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 first quarter ended September 30, 2004, the Company
granted options at fair market value to purchase up to 609,700
shares of the Company's common stock under the 2003 Stock
Incentive Plan.

As permitted under Statement of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock-Based Compensation," ("SFAS
123"), as amended by SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure ("SFAS 148"), the Company
has elected to continue to account for stock-based employee
compensation under the intrinsic value method of APB Opinion No.
25. Under this method, the Company generally recognizes no compensation
expense with respect to such awards, since the exercise price of the
common stock options awarded is equal to the fair market value of
the underlying security on the date of the grant.

Pro forma information regarding net income and earnings per share
is required by SFAS 123 for awards granted after June 30, 1995, as
if the Company had accounted for its stock-based awards under the
fair value method of SFAS 123. Prior to fiscal 2005, the fair
value of the Company's stock-based awards was estimated as of the
date of grant using the Black-Scholes option pricing model ("Black-
Scholes model"). The Black-Scholes model was developed to estimate
the fair value of freely tradable, fully transferable options
without vesting restrictions, which significantly differ from the
Company's stock option awards. This model also requires highly
subjective assumptions, including future stock price volatility
and expected time until exercise, which greatly affect the
calculated grant date fair value.











10

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Stock-based Compensation, continued

Beginning with all options granted in the first quarter of fiscal
2005, the fair value of the Company's stock-based awards is
estimated using a binomial model. This model uses cancellation
and historical exercise experience of the Company to determine the
option value. It also takes into account the illiquid nature of
employee options during the vesting period, something that the
Black-Scholes model does not consider. For these reasons, Company
management believes that the binomial model provides a fair value
that is more representative of actual experience and future
expected experience than the value calculated in previous years,
using the Black-Scholes model.

The weighted average estimated grant date fair values, as defined
by SFAS 123, for options granted at market price under the
Company's stock option plans during the first quarters of fiscal
2005 and 2004 were $9.09 and $17.15, per share, respectively. The
fair values of the Company's stock option awards for the first
quarters of fiscal 2005 and 2004, were estimated assuming no
expected dividends and the following weighted average assumptions:

Fiscal Year,
2005 2004
---- ----
Expected Life (in Years) 6.69 7.50
Expected Volatility 41.41% 58.16%
Risk-free Interest Rate 3.83% 3.75%
Pre-vesting Forfeiture Rate 4.00% -

The use of a pre-vesting forfeiture rate is optional under SFAS
123, however, it is an important element of option valuation and,
accordingly, has been included in option valuation using the
binomial model.



11

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Stock-based Compensation, continued

The following table illustrates the effect on net income and
earnings per share if the Company had applied the fair value
recognition provisions of SFAS 123, to stock-based employee
compensation. The change from the Black-Scholes valuation model
to a binomial model had no significant effect on the pro forma
amounts presented below.


For the Quarter Ended
September 30,
2004 2003
------- -------
Net Income as Reported $4,300,000 $10,492,000

Stock based employee compensation
expense had the fair value method
been applied to all options
awarded, net of income tax (1,101,000) (773,000)
---------- ----------
Pro Forma Net Income $3,199,000 $ 9,719,000
========== ==========

Earnings per Common Share:

Basic as Reported $0.06 $0.15

Stock based employee compensation
expense had the fair value method
been applied to all options
awarded, net of income tax (0.01) (0.01)
---- ----
Pro Forma Basic $0.05 $0.14
==== ====

Diluted as Reported $0.06 $0.15

Stock based employee compensation
expense had the fair value method
been applied to all options
awarded, net of income tax (0.01) (0.01)
---- ----
Pro Forma Diluted $0.05 $0.14
==== ====

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 Comprehensive Income. The amount recorded in Other
Comprehensive




12

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Comprehensive Income, continued
- -------------------------------
Income is a gain of $20,000 for the three months ended September
30, 2004. 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 currency translation rates
were a loss of $240,000 for the three months ended September 30,
2004 and a loss of $2,000 for the three months ended September 30,
2003.

The Accumulated Other Comprehensive Income balance at September
30, 2004, is composed of the $38,000 gain related to the cash flow
hedge and a cumulative translation gain of $462,000. At September
30, 2003, this balance is composed entirely of the cumulative
translation gain of $701,000.

NOTE 3: CHANGE IN ACCOUNTING - CHANGED FISCAL YEAR OF SUBSIDIARY

Prior to July 1, 2004, the accounts of Becker Professional Review
were consolidated based on an April 30 fiscal year end, which
management believed was its natural year-end based on its then
business cycle. As a result of a change in the CPA exam schedule,
the Company has aligned the Becker fiscal year end to that of
DeVry Inc. The results of operations for the two-month period
from May 1, 2004 through June 30, 2004, are included as a
cumulative effect of change in accounting in the Consolidated
Statements of Income for the first quarter of fiscal 2005. The
cumulative effect of this change in accounting added $1,810,000,
or $0.02 per share to net income for the first quarter. This
amount is net of income tax expense of $1,189,000.

Net Income and basic and diluted earnings per share for the three
months ended September 30, 2004 and 2003 are set forth below as if
the consolidation of the Becker operations had been accounted for
in the same manner for all periods presented.

Proforma
Three Months Ended
September 30,
2004 2003
---- ----

Net Income $2,490,000 $10,967,000

Earnings per Share
Basic $0.04 $0.16
Diluted $0.04 $0.16


NOTE 4: 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




13

NOTE 4: BUSINESS COMBINATIONS, continued

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 quarter 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 $1,185,000 to the goodwill balance recorded for
this acquisition. This adjustment was revised later in fiscal
2004 to $1,207,000.

The Company also finalized the allocation of the purchase price of
DMI in the first quarter of fiscal 2004. Based upon a number of
factors, including a valuation analysis prepared by an independent
professional valuation specialist, the final purchase price
allocation for acquired intangible assets totaled $66,700,000. Of
this amount $5,100,000 was assigned to the value of trade names,
$14,100,000 was assigned to the value of the Ross Medical and
Veterinary Schools' U.S. Title IV financial aid eligibility and
accreditations, all of which are not subject to amortization, and
$47,500,000 was assigned to student relationships that have an
initial average useful life of approximately five years. The
goodwill balance of $239,408,000 was all assigned to the Ross
University operating segment. None of the intangible assets or
goodwill is expected to be deductible for U.S. tax reporting
purposes.

Person/Wolinsky
- ---------------
On October 21, 2003, Becker Professional Review, a wholly owned
subsidiary of the Company, acquired certain tangible operating
assets and trade names of Person/Wolinsky CPA Review
("Person/Wolinsky"). These assets were purchased for $2.7 million
in cash. Funding was provided from the Company's existing
operating cash balances. 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.

Based on an analysis performed for the Company by independent
professional valuation specialists, the purchase price of
Person/Wolinsky was allocated as follows in the third quarter of
fiscal 2004:

Amortized Intangible Assets:
Trade Names $110,000
Non-compete Agreement 50,000
Other 20,000
-------
Total $180,000
=======

Goodwill $2,520,000
---------



14

NOTE 5: INTANGIBLE ASSETS

Intangible assets consist of the following:

As of September 30, 2004
----------------------------------
Gross Carrying Accumulated
Amount Amortization
----------------------------------
Amortized Intangible Assets:
Student Relationships $47,500,000 $(18,181,000)
License and Non Compete
Agreements 2,650,000 (2,236,000)
Class Materials 2,900,000 (750,000)
Trade Names 110,000 (27,000)
Other 620,000 (534,000)
---------- ----------
Total $53,780,000 $(21,728,000)
========== ==========
Unamortized 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 September 30, 2003
----------------------------------
Gross Carrying Accumulated
Amount Amortization
----------------------------------
Amortized Intangible Assets:
Student Relationships $47,500,000 $(5,008,000)
License and Non Compete
Agreements 2,600,000 (1,799,000)
Class Materials 2,900,000 (550,000)
Other 600,000 (425,000)
---------- ---------
Total $53,600,000 $(7,782,000)
========== =========
Unamortized 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
==========





15

NOTE 5: INTANGIBLE ASSETS, continued

Amortization expense for amortized intangible assets was
$3,637,000 and $3,385,000 for the three months ended September
30, 2004 and 2003, respectively. Estimated amortization expense
for amortized intangible
assets for the next five fiscal years ending June 30, is as
follows:

Fiscal Year
2005 $14,072,000
2006 9,856,000
2007 6,760,000
2008 3,598,000
2009 203,000

The 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,
four years for Trade Names and six years for Other. 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, beginning with May
2003, 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 year 2004, there was no impairment loss associated with
these indefinite-lived intangible assets as fair value exceeds
the carrying amount.

The Company determined that as of the end of fiscal 2004,
there was no impairment in the value of the Company's
goodwill for any reporting units. This determination was
made after considering a number of factors including a
valuation analysis prepared by an independent professional
valuation specialist. The carrying amount of goodwill
related to the DeVry University reportable segment at
September 30, 2004 and June 30, 2004 was unchanged at
$22,195,000. The carrying amount of goodwill related to
Professional and Training reportable segment at September 30,
2004 and June 30, 2004 was unchanged at $22,716,000. The
carrying amount of goodwill related to the Ross University
segment at September 30, 2004 and June 30, 2004 was unchanged
at $239,486,000.








16

NOTE 6: 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 first quarter ended September 30, 2004
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 September 30, 2004 and 2003,
cumulative undistributed earnings were approximately $19.4
million and $4.7 million, respectively.

NOTE 7: 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 4). This long-term debt
consists of the following at September 30, 2004:

Effective
Outstanding InterestRate at
Debt September 30,2004
----------- -----------------
Revolving Credit Agreement
DeVry Inc. as borrower $ 45,000,000 3.35%
GEI as borrower 30,000,000 3.34%
-----------
Total $ 75,000,000 3.35%
-----------
Senior Notes:
DeVry Inc. as borrower $ 75,000,000 2.93%
GEI as borrower 50,000,000 2.93%
-----------
Total $125,000,000 2.93%
-----------
Total long-term debt $200,000,000 3.09%
-----------

In connection with amending the revolving credit agreement in June
2004, the Company incurred $361,000 of financing costs that were
paid and deferred in the first quarter of fiscal 2005. These costs
are being amortized over the extended five-year life of the
revolving credit agreement.










17

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.

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 from Acacia
Research Corporation claiming patent-infringement. The notice
alleges that the Company has infringed upon several Acacia patents
relating to streaming audio and video technology. This technology
was allegedly 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. The Company has
had discussions with Acacia relating to this claim and does not
believe that it had infringed upon the Acacia patents.

In March 2002, the Company received notice of a class-action
complaint filed in federal district court in Michigan 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. A decision was entered for the Company at
trial; but an appeal was filed. This matter was fully resolved by
settlement between the parties in June 2004.

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. The complaint was amended and
subsequently re-filed in state court. An initial mediation
session did not result in an agreement. A second mediation
session was held in August 2004, resulting in a tentative
agreement to settle the matter. An agreement was finalized
subsequent to the end of the quarter.







18

NOTE 8: COMMITMENTS AND CONTINGENCIES, continued

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.

The Company has recorded approximately $2.9 million
associated with estimated loss contingencies, including the
amount of the tentative agreement in the previously
discussed anti-trust complaint, at September 30, 2004.
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 engaged in
discussions with the Ontario Ministry of Education relating to
certain additional information requirements for the 2001 and 2002
financial aid years. 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. The Company's Toronto-area campus does not accept new
student admissions and is being operated under an agreement with
RCC College of Technology as previously discussed. Accordingly,
the Company is no longer participating in these financial aid
programs.

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 cash flows, results of operations or
financial position.




19

NOTE 9: 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, 2004. 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, in part, 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, 2004.

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.



20

NOTE 9: SEGMENT INFORMATION, continued

Following is a tabulation of business segment information for the
three months ended September 30, 2004 and 2003. Corporate
information is included where it is needed to reconcile segment
data to the consolidated financial statements.

For the Quarter Ended
September 30,
2004 2003
---- ----
Revenues:
DeVry University $156,740,000 $160,049,000
Professional and Training 10,746,000 10,302,000
Ross University 20,910,000 18,885,000
----------- -----------
Total Consolidated Revenues $188,396,000 $189,236,000
----------- -----------

Operating Income (Loss):
DeVry University $ (861,000) $10,106,000
Professional and Training 3,033,000 2,656,000
Ross University 7,033,000 7,661,000
Reconciling Items:
Amortization Expense (3,637,000) (3,396,000)
Interest Expense (1,991,000) (2,156,000)
Depreciation and Other (265,000) (190,000)
---------- ----------
Total Consolidated Income
before Income Taxes and
Cumulative Effect of Change
In Accounting $ 3,312,000 $14,681,000
---------- ----------

Segment Assets:
DeVry University $412,286,000 $419,730,000
Professional and Training 80,843,000 71,489,000
Ross University 385,702,000 387,388,000
Corporate 16,850,000 16,510,000
----------- -----------
Total Consolidated Assets $895,681,000 $895,117,000
----------- -----------

Additions to Long-lived Assets:
DeVry University $4,655,000 $6,146,000
Professional and Training 82,000 9,000
Ross University 975,000 1,524,000
--------- ---------
Total Consolidated Additions
to Long-lived Assets $5,712,000 $7,679,000
--------- ---------

Depreciation Expense:
DeVry University $8,554,000 $8,363,000
Professional and Training 151,000 80,000
Ross University 678,000 481,000
Corporate 247,000 195,000
--------- ---------
Total Consolidated Depreciation $9,630,000 $9,119,000
--------- ---------

Intangible Asset Amortization Expense:
DeVry University $ - $ 8,000
Professional and Training 193,000 185,000
Ross University 3,444,000 3,203,000
--------- ---------
Total Consolidated Amortization $3,637,000 $3,396,000
--------- ---------


21

NOTE 9: 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 ended September 30, 2004 and
2003. Revenues and long- lived assets by geographic area are as follows:

For the Quarter Ended
September 30,
2004 2003
---- ----
Revenues from Unaffiliated Customers:
Domestic Operations $164,337,000 $166,047,000
International Operations:
Dominica and St. Kitts/Nevis 20,910,000 18,885,000
Other 3,149,000 4,304,000
----------- -----------
Total International Operations 24,059,000 23,189,000
----------- -----------
Consolidated $188,396,000 $189,236,000
----------- -----------

Long-lived Assets:
Domestic Operations $350,815,000 $359,866,000
International Operations
Dominica and St. Kitts/Nevis 316,225,000 318,641,000
Other 909,000 2,069,000
----------- -----------
Total International Operations 317,134,000 320,710,000
----------- -----------
Consolidated $667,949,000 $680,576,000
----------- -----------

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


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 and
business, dependence on student financial aid, dependence on
state and provincial approvals and licensing requirements,
dependence on continued accreditation for DeVry and Ross
University, increasing competition for the recruitment of new
students and other factors detailed in the Company's Securities
and Exchange Commission ("SEC") filings, including those
discussed under the heading entitled "Risk Factors" in the
Company's Registration Statement on Form S-3 (No. 333-22457)
and updated for current risks and uncertainties in various sections
of the Company's annual report on Form 10-K, both as filed with
the SEC.

The Sarbanes Oxley Act requires us to evaluate and report on our
systems of disclosure and internal control. We are currently
evaluating, expanding and improving our process documentation and
controls. We are also testing the effectiveness of and our
compliance with the system of internal controls as our basis for
the required management certifications. However, there is no
assurance that our independent registered public accounting firm
will, as a result of their audit of our financial statements and
internal controls, be able to attest as to whether they believe
we maintained, in all material respects, effective internal
control over financial reporting in conjunction with the
Company's financial statements for the fiscal year ending
June 30, 2005.

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 annual report on Form 10-K
for the fiscal year ended June 30, 2004. 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. These include, but are 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, costs associated with settlement of pending legal
matters 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 quarterly period in the preceding year.

23
Copies of the Company's annual and quarterly reports on Form 10-
K, Form 10-Q and other reports 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 financial performance for the first quarter of our
new fiscal year was negatively affected by several factors.
These include lower DeVry undergraduate total student enrollments
for the summer term that began in July. Student enrollments in
technology programs continue to decline from the level of
previous years, with new student enrollments in our technology
programs declining 25% from last July. Although new student
enrollments in our business programs continue to increase, up 29%
from last year, this increase is from a smaller base. Tuition
revenues were further affected by the increase in enrollments at
our DeVry University Centers and in online programs while
enrollments at our campuses declined. This shift in enrollment
has increased the proportion of our undergraduate students
attending on a part-time basis. These part-time students pay a
lesser tuition amount than the full-time students that typically
enroll at our campus locations.

In addition to the effects on revenue described above, expenses
have increased from last year because of the hiring of additional
faculty and staff to support the growing number of DeVry
University Center locations and increased enrollments in our
online programs. We are also enhancing our advertising messages
to aid recruiting efforts and have added approximately 80
enrollment counselors in the last year, predominantly to serve
applicants to the online programs. The increase in spending in
these areas has raised our overall level of spending compared to
last year even as we search for further ways to reduce spending
in areas that are less critical to our success. We hope that in
the longer term, our investments in staff and service to students
will allow us to serve larger numbers of students in technology,
business or healthcare; full-time or part-time; in master's,
bachelor's or associate degree programs or one of our exam
preparation courses and on our campuses, University Centers or
online.

The following table presents information with respect to the
relative size to revenue of each item in the statement of income
for the first quarter for both the current and prior year.
Percents may not add due to rounding.


24
Quarter Ended September 30
--------------------------
2004 2003
---- ----
Revenue 100.0% 100.0%

Cost of Educational Services 58.1% 55.2%
Student Services & Admin. Exp. 39.1% 35.9%
Interest Expense 1.1% 1.1%
------ ------
Total Costs and Expenses 98.2% 92.2%

Income Before Income Taxes and Cumulative
Effect of Change in Accounting 1.8% 7.8%

Income Tax Provision 0.4% 2.2%
------ ------

Income Before Cumulative
Effect of Change in Accounting 1.3% 5.5%

Cumulative Effect of
Change in Accounting 1.0% -
------ ------

NET INCOME 2.3% 5.5%
====== ======


The Company's total consolidated revenues declined by $0.8
million, or 0.4%, for this quarter compared to the same quarter
last year. Tuition revenue, which is the largest component of
total revenues, represented over 94% of total revenues in the
current quarter.

Revenues for the first quarter in the DeVry University Segment
declined from the first quarter of last year by $3.3 million, or
2.1%. The revenue decline occurred because of lower
undergraduate student enrollments for the summer term compared to
last year and because of a greater proportion of students
enrolled on less than a full-time basis who pay a lesser tuition
than do full-time students.

For the summer term that began in July, total undergraduate
enrollments, including the remaining enrollments at the
discontinued Toronto-area campus, were 38,189. This compares to
41,075 in the previous summer. New student enrollments in the
undergraduate technology programs continue to decline, down
approximately 25% from last summer. The Company believes that
declines in technology program enrollments, taught primarily at
its large campus sites, have been caused by reports of reductions
in technology field employment, which decrease applicant interest
in these fields. To counter this trend, the Company has expanded
the offerings and promotion of its business programs. For the
summer term, new student enrollments in business programs
increased by nearly 29% from last year, but, on a smaller base
this increase did not fully offset the declines in technology
program enrollment.


25
In addition, the number of undergraduate students attending the
Company's DeVry University Centers and enrolled in its online
programs has increased as a proportion of the total enrollment.
These delivery modalities are focused on serving the working
adult student whose attendance is predominantly less than full-
time. As a result, tuition revenue from these students in each
term is less than the tuition revenue from full-time campus-based
students. However, while these part-time students may pay less
tuition per term, the time to completion of their program of
study is longer and additional revenues may be realized in future
terms.

Partly offsetting the decline in undergraduate enrollments and
increased proportion of part-time students was a tuition price
increase of approximately 5-6% implemented in March 2004 for
students in both the undergraduate and graduate programs. Also,
Keller Graduate School enrollments continued to increase. For
the graduate summer term that began in July, there were
approximately 10,275 graduate coursetakers, an increase of 8.4%
from the previous July.

The Company has completed an agreement with Follett Higher
Education Group ("Follett") to manage the remaining nine DeVry
University campus bookstores not already managed by Follett. The
transition of these remaining bookstores to Follett management
occurred at the end of the first quarter. Effective with the
second quarter, the Company will no longer report sales at these
stores but will instead report the commission income it receives
on the sales managed by Follett. On an annual basis, the Company
believes that this change will reduce its reported revenues by
approximately $10 million but will have no significant effect on
earnings as the commission earned from Follett will approximate
the profits previously generated when these bookstores were under
Company management.

At Becker Professional Review in the Professional and Training
segment, the change in the schedule of CPA exam administration
has resulted in the re-alignment of the fiscal year from its
previous April year-end, to a June year-end. This change in
accounting was made effective with the first quarter of the
current fiscal year. The segment revenues reported for the first
quarter of this year now reflect the months of July through
September as they do for the rest of the Company. Last year, the
reported first quarter included the months of May through July.
For the current year, revenues increased by approximately $0.4
million, or 4.3%, from the period reported in the first quarter
of last year. However, compared to the comparable three month
period a year ago, revenues declined by approximately $1.0
million. This is the first year of the new CPA exam schedule and
the Company believes that, as a result, the pattern of
enrollments and revenues may be different than in previous years,
particularly as exam candidates may now elect to take individual
portions of the exam, thus stretching the period of their
enrollment and deferring portions of the revenue into future
quarters.

At Ross University, revenues increased by $2.0 million, or 10.7%,
from last year. The increase in revenues results from higher
enrollments at both the medical and veterinary schools and a
tuition price increase that became effective in January 2004.
For the semester that began in May, total enrollment reached
3,310, an increase of 16.1% from last May, but enrollments for
the fall term that began in September increased at a somewhat
lesser rate.

The Company's Cost of Educational Services increased by $5.0
million, or 4.8%, from last year. Although cost management
remains a high priority throughout the organization, cost
increases have occurred as a result of the expanding number of
DeVry University Centers and the growing online operations. For
the term that began in July, courses were being taught at 8 new
DeVry University Centers compared to the year ago July.
Expanding enrollments in the Company's online educational

26
programs, both undergraduate and graduate, have generated
additional costs as faculty and staff are added to support this
growing method of course delivery. For the term that began in
July, the number of online coursetakers increased by almost 93%
from last year to 12,590.

Depreciation expense, most of which is included in Cost of
Educational Services, increased by $0.5 million compared to last
year. The increase in depreciation expense is attributable to
the increased investment throughout the Company for new and
improved laboratory and computer equipment, improvements to
facilities and for expansion of operations. Capital spending on
improvements, including instructional technology, and on
expansion is an integral component of the Company's operating
strategy.

Student Services and Administrative Expense increased by $5.7
million, or 8.3%, from last year. The Company continues to incur
higher advertising and selling costs associated with efforts to
generate more new students, particularly at its undergraduate
campus locations. To further these efforts, the Company has
added approximately 80 enrollment counselors in the past year at
its DeVry University campuses, centers and online operations.
Also, additional admissions staff has been added at Ross
University to help sustain and increase enrollments at both the
medical and veterinary schools.

Much of the work on the Company's new student information system
has now been completed and largely deployed to provide better
support for the educational processes and related student
services. In accordance with accounting principles for internal
software development costs, the amount of current spending being
capitalized has decreased and the amount of previously
capitalized expense that is being amortized has increased. These
costs, which are included partly in Cost of Educational Services
and partly in Student Services and Administrative Expense, when
taken together have increased by more than $2.0 million from the
first quarter of last year. Cumulatively, since the inception of
the project in late 2001, a total of $20.4 million has been
capitalized and $3.9 million has been amortized to expense.

Also included in the Student Services and Administration Expense
category was $3.6 million of amortization of finite-lived
intangible assets, mostly associated with the acquisition of Ross
University. In the first quarter of last year, this amortization
expense equaled $3.4 million.

The DeVry University segment incurred an operating loss of $0.9
million in the quarter compared to an operating income of $10.1
million last year. As discussed above, lower undergraduate
enrollments and an increased proportion of part-time students
both contributed to produce lower revenues than last year,
offsetting higher graduate school enrollments and tuition price
increases implemented in March. Costs continued to increase in
support of new operating locations, from accounting for the
completion of the student information system and from higher
depreciation on increased investment in facilities and equipment.
Although cost reduction activities continue in all areas of
operation as the Company tries to match expenses with revenues,
further investment in areas of future growth will cause total
expenses to continue to increase in future quarters.

The Professional and Training segment operating margin for the
first quarter increased to 28.2% from 25.8% reported in the first
quarter of last year. Operating expenses remained approximately
equal to last year while the increased revenues contributed to
the increased operating profit and higher operating margin. Last
year, the reported first quarter included the months of May

27
through July. When compared to the comparable three month period
in the prior year, lower expenses partly offset reduced revenues
and this year's operating profit and operating margin of $3.0
million and 28.2%, respectively, compared to $3.5 million and
30.0%, respectively, for last year.

Despite higher revenues, Ross University operating margins of
33.6% declined from the 40.5% operating margin last year. Cost
increases occurred from higher faculty wages and higher clinical
training expenses, particularly those paid to the U.S. veterinary
school clinical affiliates for Ross students in attendance for
the clinical training portion of their program. Selling expense
also increased as additional admissions counselors have been
added in response to a growing number of applicants and resulting
enrollments increase.

Interest Expense decreased by $0.2 million from the first quarter
of last year. The amount of outstanding debt was reduced to $200
million at the end of the first quarter of this year, compared to
$263 million at the end of the first quarter of last year.
However, the interest rate on all the Company's debt is floating
rate, based upon short-term interest rates which have increased
by 75 basis points over the past few months. The Company intends
to continue to reduce its outstanding debt but further interest
rate increases may offset much or all of the lower interest
expense benefit from lower debt levels.

Taxes on income were 24.8% of pretax income for the quarter,
compared to a composite effective tax rate of 28.5% in the first
quarter of last year. The lower effective tax rate this year
reflects the greater proportion of Ross University's earnings
that have a single digit effective tax rate compared to the total
Company earnings that are subject to higher domestic tax rates.

Included in the Company's first quarter earnings is $1.8 million,
net of taxes, from a Cumulative Effect of Change in Accounting
for the alignment of the Professional and Training Segment's
fiscal year to the same June-end fiscal year as the rest of the
Company. Because of the change to the CPA exam schedule from a
twice a year November and May administration to a nearly
continuous exam administration, the Company believes that the
historical Becker operating year that ended in April is no longer
the most appropriate fiscal year-end. Effective with the
Company's fiscal 2005, the Becker fiscal year is aligned with the
June 30th year-end of DeVry Inc. and the cumulative effect of
this change in accounting, representing the months of May and
June 2004, is reported in the first quarter of this fiscal year
as the Cumulative Effect of Change in Accounting.


Liquidity and Capital Resources
- -------------------------------
Cash generated from operations during the first quarter was $24.7
million, compared to $57.5 million in the first quarter of last
year. Contributing to the lower cash flow this year was lower
net income, higher student accounts receivable balances and lower
deferred tuition revenue. The increase in accounts receivable
occurred in part at Becker Professional Review, Keller Graduate
School and Ross University, all of which reported increased
enrollments and revenues. However, a larger part of the increase
occurred in the DeVry University undergraduate operations where
the processing and receipt of financial aid was a little slower
than last year. Also contributing to the increase in receivables
at the end of September is the changing pattern of the
undergraduate enrollment periods. While there were previously
just three traditional semester starts in July, November and
March, the DeVry University online and University Center

28
operations have six starts per year, adding starts in September,
January and May that are becoming increasingly large. With the
September new student start and re-registration in September for
students who were enrolled in July on this 8-week session
schedule, the amount of additional tuition billed and added to
receivables in September is growing at this measuring point in
time relative to prior years. The lower deferred tuition revenue
is the result of lower DeVry University undergraduate enrollments
and the changing pattern of Becker enrollments resulting from the
new exam schedule.

Capital spending for the quarter was $5.7 million, down $2.0
million from the first quarter of last year. The first quarter
spending includes the continued funding for construction of
dormitory facilities located on the DeVry University Fremont,
California, undergraduate campus. In the second quarter the
Company expects to complete the acquisition of office facilities
to house its expanding online education sales and administrative
staff and to start construction of student housing units at its
Ross University veterinary school campus. For the year, total
capital spending is expected to be in the range of $40 - $45
million, approximately the same level as last year.

The Company repaid $50 million of borrowings using existing cash
balances and cash flow generated from operations. The Company
expects to continue to reduce its outstanding borrowings during
the balance of the year.

All of the Company's borrowings are based upon a floating
interest rate, generally LIBOR, at the Company's option. During
the first quarter of last fiscal year, 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's significant 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. 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. 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.
The Company is highly dependent upon the timely receipt of these
financial aid funds because

29
more than 60% of its DeVry University undergraduate and 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 January 2003, the New York State Comptroller's Office began an
audit of DeVry New York's compliance with the New York State
Tuition Assistance Program Grant ("TAP") requirements for the
three year period ending June 2002. Fieldwork was completed in
June 2003 and a preliminary report was issued in July. The
Company responded to the preliminary report, disagreeing with
some of the findings in the report. Subsequently, the Company
received an amended report and responded again. In the first
quarter of fiscal 2005, the Company received the final report and
determination of disallowance that results in financial liability
to the Company. The expected liability had previously been
reserved for. The Company has remitted the required claim of
disallowance and the matter is now closed.

In Canada, the Toronto-area campuses completed and submitted the
required annual review of Ontario Student Assistance Program
administration for fiscal 2002. 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 engaged in discussions with the
Ontario Ministry of Education relating to certain additional
information requirements for the 2001 and 2002 financial aid
years. 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.
Although there are no current discussions underway with the
Ministry, based upon its previous discussions, the Company
believes that there will be no significant monetary liability.
The Company's Toronto-area campus does not accept new student
admissions and is being operated under an agreement with the RCC
College of Technology. Accordingly, the Company is no longer
participating in these financial aid programs.

In the spring of 2004, the Company received a complaint from a
student at its Alpharetta, Georgia, DeVry undergraduate campus
that an admissions advisor had entered incorrect financial
information into the student's application for financial aid.
Upon review by the Company, it was determined that financial
information entered for this student and several other students
was incorrect. The Company promptly notified the U.S. Department
of Education of its review and findings as required by federal
regulation and terminated several employees for the violation of
Company policies. The Company's internal controls prevented any
student from receiving an incorrect disbursement. The Chicago
office of the Inspector General acknowledged that the Company
should continue its internal review and report any further
findings within six months. The Company expects to complete and
submit this report as required.

During the first quarter of fiscal 2005, the Ohio Board of
Regents conducted an audit of DeVry University's administration
of the Ohio state grant program for the year 2003. The audit was
concluded with no findings reported.


30
In connection with the discontinuance of the original Denver
Technical College educational programs and its separate
eligibility for student financial aid, the Company is completing
an audit of its participation in these financial aid programs.
Approximately $400,000 of remaining financial aid funds were
identified as a part of this audit as needing to be returned to
the appropriate federal and state funding sources. Most of these
amounts have now been returned. Although the company believes
that there is no significant liability that might arise from this
matter, it remains under review by the Department of Education.

Included in the Company's consolidated cash balances of $115.1
million at September 30, 2004, is approximately $50.1 million of
cash attributable to the Ross University operations. It is the
Company's intention for the foreseeable future to reinvest this
cash plus 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 its 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 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 $200 million in Company debt outstanding at September 30,
2004, $70 million matures on July 1, 2009 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

31
from one to three months. Based upon the level of Company
borrowings at the end of the first quarter, a 1% increase in
short-term interest rates would result in $2.0 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 expire in August and
September 2005 do not provide protection from increases in short-
term interest rates of less than 1.4% 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 Chief Executive Officer 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
Company's internal control documentation and results of 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.

In compliance with the Sarbanes Oxley Act, the Company is
continuing to evaluate and improve upon its system of disclosure
and internal controls where required. However, there were no
significant changes in internal control over financial reporting
identified in connection with the evaluations referred to above
that occurred during the Company's first quarter that materially
affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.


32
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.

In September 2003, the Company received a notice from Acacia
Research Corporation claiming patent-infringement. The notice
alleges that the Company has infringed upon several Acacia
patents relating to streaming audio and video technology. This
technology was allegedly 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.
The Company has had discussions with Acacia relating to this
claim and does not believe that it had infringed upon the Acacia
patents.

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. The complaint was amended
and subsequently re-filed in state court. An initial mediation
session did not result in an agreement. A second mediation
session was held in August 2004, resulting in a tentative
agreement to settle the matter. An agreement was finalized
subsequent to the end of the first quarter.

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. During the first quarter a new complaint
was filed by another plaintiff seeking consolidation with the
existing case.

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.

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 engaged in
discussions with the Ontario Ministry of Education relating to
certain additional information requirements for the 2001 and 2002
financial aid years. 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. The Company's Toronto-area campus does not accept new
student admission and is being operated under an agreement with
RCC College of Technology as previously discussed. Accordingly,
the Company is no longer participating in these financial aid
programs.


33
The Company has recorded approximately $2.9 million associated
with estimated loss contingencies at September 30, 2004. 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. 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 cash flows, results of operations or financial position.


Item 4 - Submission Of Matters To A Vote Of Security Holders
- ------------------------------------------------------------
There were no matters submitted to a vote of the Company's
security holders during the first quarter of the fiscal year.


Item 5 - Other Information
- --------------------------
In October 2004, the Company announced that Thomas C. Shepherd
was named president of Ross University and executive vice
president of DeVry Inc. Dr. Shepherd has spent more than 30
years in healthcare administration and management. Dr.
Shepherd's expertise includes the areas of hospital management,
healthcare reform, strategic management and development, and
healthcare education.

Dr. Shepherd is currently a fellow in the American College of
Healthcare Executives and a former board member of the
Collaboration for Healthcare Renewal Foundation.


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

(a) Exhibits
Sequentially
Exhibit # Description Numbered Page
--------- ----------- -------------

10 Form of Stock Option Agreements 35-46

18 Preferability Letter, dated Nov. 8, 2004, 47
from PricewaterhouseCoopers LLP
regarding change in accounting

31 Rule 13a-14(a)/15d-14(a)Certifications 48-51

32 Section 1350 Certifications 52

(b) Reports on Form 8-K

During the quarter ended September 30, 2004, the Company
filed the following report on Form 8-K:

1. August 18, 2004, reporting earnings for the
Company's fourth quarter and fiscal year
ended June 30, 2004 and summer term enrollments.

34

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: November 8, 2004 /s/Ronald L. Taylor
------------------------
Ronald L. Taylor
Chief Executive Officer




Date: November 8, 2004 /s/Norman M. Levine
--------------------------
Norman M. Levine
Senior Vice President and
Chief Financial Officer