UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

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

Commission file number: 1-13988

DeVry Inc.

(Exact name of registrant as specified in its charter)

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

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

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

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

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

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

     Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: January 31, 2011 — 69,241,453 shares of Common Stock, $0.01 par value

 

 

DEVRY INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2010

TABLE OF CONTENTS

		Page No.
PART I — Financial Information
Item 1 — Financial Statements (Unaudited)
Consolidated Balance Sheets			3
Consolidated Statements of Income			4
Consolidated Statements of Cash Flows			5
Notes to Consolidated Financial Statements			6
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Item 3 — Quantitative and Qualitative Disclosures About Market Risk			33
Item 4 — Controls and Procedures			33
PART II — Other Information
Item 1 — Legal Proceedings			34
Item 1A — Risk Factors			34
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds			35
Item 4 — [Removed and Reserved]			35
Item 6 — Exhibits			36
Signatures			37
EX-31
EX-32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

DEVRY INC.

		December 31,				June 30,				December 31,
		2010				2010				2009
		(Dollars in thousands)
ASSETS:
Current Assets:
Cash and Cash Equivalents		$	459,282			$	307,702			$	272,550
Marketable Securities and Investments			2,464				15,666				61,608
Restricted Cash			9,108				2,102				54,599
Accounts Receivable, Net			152,834				119,210				135,183
Deferred Income Taxes, Net			24,547				22,340				22,191
Prepaid Expenses and Other			27,517				32,627				32,504
Total Current Assets			675,752				499,647				578,635
Land, Buildings and Equipment:
Land			54,197				53,914				54,038
Buildings			297,519				283,044				270,727
Equipment			356,046				346,979				356,203
Construction In Progress			61,550				38,188				17,776
			769,312				722,125				698,744
Accumulated Depreciation			(354,353	)			(333,988	)			(352,987	)
Land, Buildings and Equipment, Net			414,959				388,137				345,757
Other Assets:
Intangible Assets, Net			192,916				194,195				198,142
Goodwill			516,648				514,864				514,873
Perkins Program Fund, Net			13,450				13,450				13,450
Other Assets			20,858				17,533				14,961
Total Other Assets			743,872				740,042				741,426
TOTAL ASSETS		$	1,834,583			$	1,627,826			$	1,665,818
LIABILITIES:
Current Liabilities:
Current Portion of Debt		$	—			$	—			$	44,732
Accounts Payable			62,185				90,364				71,246
Accrued Salaries, Wages and Benefits			58,349				92,368				50,009
Accrued Expenses			54,775				53,565				65,605
Advance Tuition Payments			21,531				20,930				70,298
Deferred Tuition Revenue			260,001				86,627				223,615
Total Current Liabilities			456,841				343,854				525,505
Other Liabilities:
Deferred Income Taxes, Net			43,914				43,368				51,790
Deferred Rent and Other			58,286				56,216				39,254
Total Other Liabilities			102,200				99,584				91,044
TOTAL LIABILITIES			559,041				443,438				616,549
NON-CONTROLLING INTEREST			6,035				5,007				4,104
SHAREHOLDERS’ EQUITY:
Common Stock, $0.01 Par Value, 200,000,000 Shares Authorized; 69,452,000; 71,030,000 and 71,107,000 Shares Issued and Outstanding at December 31, 2010, June 30, 2010 and December 31, 2009, Respectively			735				734				731
Additional Paid-in Capital			233,371				224,209				207,884
Retained Earnings			1,208,419				1,055,591				910,802
Accumulated Other Comprehensive Income			13,623				9,896				11,547
Treasury Stock, at Cost (4,070,000; 2,394,000 and 1,977,000 Shares, Respectively)			(186,641	)			(111,049	)			(85,799	)
TOTAL SHAREHOLDERS’ EQUITY			1,269,507				1,179,381				1,045,165
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,834,583			$	1,627,826			$	1,665,818

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

DEVRY INC.

		For the Quarter Ended								For the Six Months Ended
		December 31,								December 31,
		2010				2009				2010				2009
REVENUES:
Tuition		$	520,180			$	448,977			$	1,006,519			$	850,348
Other Educational			31,283				24,035				66,372				53,774
Total Revenues			551,463				473,012				1,072,891				904,122
COSTS AND EXPENSES:
Cost of Educational Services			229,917				199,965				457,998				396,448
Student Services and Administrative Expense			185,993				164,118				367,525				319,360
Total Operating Costs and Expenses			415,910				364,083				825,523				715,808
Operating Income			135,553				108,929				247,368				188,314
INTEREST AND OTHER (EXPENSE) INCOME:
Interest Income			381				574				804				1,074
Interest Expense			(239	)			(495	)			(493	)			(917	)
Net Investment Gain			—				313				—				1,144
Net Interest and Other (Expense) Income			142				392				311				1,301
Income Before Income Taxes			135,695				109,321				247,679				189,615
Income Tax Provision			46,823				36,731				85,446				62,454
NET INCOME			88,872				72,590				162,233				127,161
Net (Income) Loss Attributable to Non-controlling Interest			(166	)			(136	)			74				20
NET INCOME ATTRIBUTABLE TO DEVRY INC.		$	88,706			$	72,454			$	162,307			$	127,181
EARNINGS PER COMMON SHARE ATTRIBUTABLE
TO DEVRY INC. SHAREHOLDERS:
Basic		$	1.26			$	1.02			$	2.30			$	1.78
Diluted		$	1.25			$	1.00			$	2.28			$	1.76
Cash Dividend Declared per Common Share		$	0.12			$	0.10			$	0.12			$	0.10

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

DEVRY INC.

		For the Six Months Ended
		December 31,
		2010				2009
		(Dollars in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income		$	162,233			$	127,161
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Stock-Based Compensation Expense			8,319				5,717
Depreciation			28,321				25,124
Amortization			3,045				7,653
Provision for Refunds and Uncollectible Accounts			50,599				46,215
Deferred Income Taxes			(1,947	)			(889	)
Loss on Disposals of Land, Buildings and Equipment			118				352
Unrealized Net Gain on Investments			—				(1,144	)
Changes in Assets and Liabilities:
Restricted Cash			(7,006	)			(49,250	)
Accounts Receivable			(83,869	)			(76,422	)
Prepaid Expenses and Other			3,435				(8,834	)
Accounts Payable			(28,184	)			(349	)
Accrued Salaries, Wages, Benefits and Expenses			(35,028	)			424
Advance Tuition Payments			523				42,555
Deferred Tuition Revenue			173,374				148,951
NET CASH PROVIDED BY OPERATING ACTIVITIES			273,933				267,264
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures			(53,663	)			(61,629	)
Marketable Securities Purchases			(82	)			(39	)
Marketable Securities Sales			13,495				—
Other			—				(7	)
NET CASH USED IN INVESTING ACTIVITIES			(40,250	)			(61,675	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Exercise of Stock Options			973				3,739
Proceeds from Stock Issued Under Employee Stock Purchase Plan			661				470
Repurchase of Common Stock for Treasury			(75,745	)			(16,316	)
Cash Dividends Paid			(7,134	)			(5,716	)
Excess Tax Benefit from Stock-Based Payments			103				1,157
Borrowings Under Revolving Credit Facility			—				70,000
Repayments Under Revolving Credit Facility			—				(150,000	)
Borrowings Under Collateralized Line of Credit			—				173
Repayments Under Collateralized Line of Credit			—				(252	)
NET CASH USED IN FINANCING ACTIVITIES			(81,142	)			(96,745	)
Effects of Exchange Rate Differences			(961	)			(1,496	)
NET INCREASE IN CASH AND CASH EQUIVALENTS			151,580				107,348
Cash and Cash Equivalents at Beginning of Period			307,702				165,202
Cash and Cash Equivalents at End of Period		$	459,282			$	272,550
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid During the Period For:
Interest		$	141			$	553
Income Taxes, Net			90,959				48,297
Non-cash Investing and Financing Activity:
Declaration of Cash Dividends to be Paid			8,360				7,109
Accretion of Non-controlling Interest Put Option			1,102				936

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

DEVRY INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE 1: INTERIM FINANCIAL STATEMENTS

     The interim consolidated financial statements include the accounts of DeVry Inc. (“DeVry”) and its wholly-owned and majority-owned subsidiaries. These financial statements are unaudited but, in the opinion of management, contain all adjustments, consisting only of normal, recurring adjustments, necessary to present fairly the financial condition and results of operations of DeVry. The June 30, 2010 data presented were derived from audited financial statements.

     The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in DeVry’s Annual Report on Form 10-K for the fiscal year ended June 30, 2010, and DeVry’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, each as filed with the Securities and Exchange Commission.

     The results of operations for the three and six months ended December 31, 2010, are not necessarily indicative of results to be expected for the entire fiscal year.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Use of Estimates

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

     Marketable Securities and Investments

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

     Marketable securities and investments consist of investments in mutual funds. The following is a summary of our available-for-sale marketable securities at December 31, 2010 (dollars in thousands):

		Gross Unrealized
		Cost				(Loss)				Gain				Fair Value
Marketable Securities:
Bond Mutual Fund		$	889			$	—			$	34			$	923
Stock Mutual Funds			1,999				(458	)			—				1,541
Total Marketable Securities		$	2,888			$	(458	)		$	34			$	2,464

     Investments are classified as short-term if they are readily convertible to cash or have other characteristics of short-term investments such as highly liquid markets or maturities within one year. All mutual fund investments are recorded at fair market value based upon quoted market prices. At December 31, 2010, all of the Bond and Stock mutual fund investments are held in a rabbi trust for the purpose of paying benefits under DeVry’s non-qualified deferred compensation plan.

     As of December 31, 2010, all unrealized losses in the above table have been in a continuous unrealized loss position for more than one year. When evaluating its investments for possible impairment, DeVry reviews factors such as length of time and extent to which fair value has been less than cost basis, the financial condition of the issuer, and DeVry’s ability and intent to hold the investment for a period of time that may be sufficient for anticipated recovery in fair value. The decline in value of the above investments is considered temporary in nature and, accordingly, DeVry does not consider these investments to be other-than-temporarily impaired as of December 31, 2010.

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

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

     Prepaid Clinical Fees

     Clinical rotation costs for Ross University medical students are included in Cost of Educational Services. Over the past several years, Ross University has entered into long-term contracts with a hospital group to secure clinical rotations for its students at fixed rates in exchange for prepayment of the rotation fees. Under the contracts, the established rate-per-clinical rotation was being deducted from the prepaid balance and charged to expense as the medical students utilized the clinical clerkships. The hospital group closed two of its hospitals due to financial difficulties in February 2009. To date, the hospital group has provided Ross with a limited number of additional clinical clerkships at its remaining hospital, but not nearly enough to offset the void created by the closure of its other two hospitals. During April 2009, Ross filed a lawsuit against the hospital group to enforce the contract. The suit seeks specific performance of the hospital group’s obligations to provide Ross with the prepaid clinical clerkships. As of December 31, 2010, the outstanding balance of prepaid clinical rotations with this hospital group was approximately $6.2 million. Though DeVry believes that Ross has a contractual right to utilize other clinical rotations within the hospital group’s system, given the business uncertainty of this situation, a reserve of $1.6 million has been provided against the prepaid balance.

     Internal-Use Software Development Costs

     DeVry capitalizes certain internal-use software development costs that are amortized using the straight-line method over the estimated lives of the software, not to exceed five years. Capitalized costs include external direct costs of equipment, materials and services consumed in developing or obtaining internal-use software and payroll-related costs for employees directly associated with the internal-use software development project. Capitalization of such costs ceases at the point at which the project is substantially complete and ready for its intended purpose. Capitalized internal-use software development costs for projects not yet complete are included as construction in progress in the Land, Buildings and Equipment section of the Consolidated Balance Sheets. Costs capitalized during the three and six months ended December 31, 2010, were approximately $7.0 million and $11.8 million, respectively. Costs capitalized during the three and six months ended December 31, 2009, were approximately $8.2 million and $12.4 million, respectively. In both years these costs were primarily related to Project DELTA (a new student information system for DeVry University and Chamberlain College of Nursing). As of December 31, 2010 and 2009, the net balance of capitalized software development costs was $56.3 million and $20.8 million, respectively.

     Perkins Program Fund

     DeVry University is required, under federal aid program regulations, to make contributions to the Perkins Student Loan Fund, most recently at a rate equal to 33% of new contributions by the federal government. No new federal contributions have been received in fiscal 2011 or fiscal 2010. DeVry carries its investment in such contributions at original values, net of allowances for expected losses on loan collections, of $2.6 million at December 31, 2010 and 2009. The allowance for future loan losses is based upon an analysis of actual loan losses experienced since the inception of the program. As previous borrowers repay their Perkins loans, their payments are used to fund new loans, thus creating a revolving loan fund. The federal contributions to this revolving loan program do not belong to DeVry and are not recorded on its financial statements. Under current law, upon termination of the program by the federal government or withdrawal from future program participation by DeVry University, subsequent student loan repayments would be divided between the federal government and DeVry University to satisfy their respective cumulative contributions to the fund.

     Earnings per Common Share

     Basic earnings per share is computed by dividing net income attributable to DeVry Inc. by the weighted average number of common shares outstanding during the period plus unvested participating restricted shares. Diluted earnings per share is computed by dividing net income attributable to DeVry Inc. by the weighted average number of shares assuming dilution. Dilutive shares are computed using the Treasury Stock Method and reflect the additional shares that would be outstanding if dilutive stock options were exercised during the period. Excluded from the computations of diluted earnings per share were options to purchase 1,291,000 and 1,186,000 shares of common stock for the three and six months ended December 31, 2010, respectively, and 817,000 and 717,000 shares of common stock for the three and six months ended December 31, 2009 , respectively. These outstanding options were excluded because the option exercise prices were greater than the average market price of the common shares or the assumed proceeds

upon exercise under the Treasury Stock Method resulted in the repurchase of more shares than would be issued; thus, their effect would be anti-dilutive.

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

		Three Months Ended								Six Months Ended
		December 31,								December 31,
		2010				2009				2010				2009
Weighted Average Shares Outstanding			69,873				71,058				70,289				71,091
Unvested Participating Restricted Shares			308				218				265				174
Basic shares			70,181				71,276				70,554				71,265
Effect of Dilutive Stock Options			686				956				666				934
Diluted Shares			70,867				72,232				71,220				72,199

     Treasury Stock

     DeVry’s Board of Directors has authorized stock repurchase programs on five occasions (see “Note 6 — Dividends and Stock Repurchase Program”). The first repurchase program was completed in April 2008, the second program was completed in November 2009, the third program was completed in September 2010, and the fourth program was completed in December 2010. The fifth repurchase program was approved by the DeVry Board of Directors on November 10, 2010. Shares that are repurchased by DeVry are recorded as Treasury Stock at cost and result in a reduction of Shareholders’ Equity.

     From time to time, shares of its common stock are delivered back to DeVry under a swap arrangement resulting from employees’ exercise of incentive stock options pursuant to the terms of the DeVry Stock Incentive Plans (see “Note 3 — Stock-Based Compensation”). These shares are recorded as Treasury Stock at cost and result in a reduction of Shareholders’ Equity.

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

     Accumulated Other Comprehensive Income

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

		Three Months Ended								Six Months Ended
		December 31,								December 31,
		2010				2009				2010				2009
Balance at Beginning of Period		$	12,704			$	11,131				9,896			$	7,157
Net Unrealized Investment Gains			53				9				131				155
Net Unrealized Investment Losses Recognized			—				—				—				—
Translation Adjustments:											—				—
Attributable to DeVry Inc.			636				283				2,855				3,309
Attributable to Non-controlling Interest			230				124				741				926
Balance at End of Period		$	13,623			$	11,547				13,623			$	11,547

     The Accumulated Other Comprehensive Income balance at December 31, 2010, consists of $13.9 million ($11.3 million attributable to DeVry Inc. and $2.6 million attributable to non-controlling interests) of cumulative translation gains and $0.3 million of unrealized losses on available-for-sale marketable securities, net of tax of $0.2 million and all attributable to DeVry Inc. At December 31, 2009, this balance consisted of $11.9 million ($9.9 million attributable to DeVry Inc. and $2.0 million attributable to non-

controlling interests) of cumulative translation gains and $0.4 million of unrealized losses on available-for-sale marketable securities, net of tax of $0.2 million and all attributable to DeVry Inc.

     Advertising Expense

     Advertising costs are recognized as expense in the period in which materials are purchased or services are performed. Advertising expense, which is included in student services and administrative expense in the Consolidated Statements of Income, was $60.8 million and $122.8 million for the three and six months ended December 31, 2010, respectively, and $49.8 million and $102.5 million for the three and six months ended December 31, 2009, respectively.

     Recent Accounting Pronouncements

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

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

NOTE 3: STOCK-BASED COMPENSATION

     DeVry maintains four stock-based award plans: the 1994 Stock Incentive Plan, the 1999 Stock Incentive Plan, the 2003 Stock Incentive Plan and the 2005 Incentive Plan. Under these plans, directors, key executives and managerial employees are eligible to receive incentive stock or nonqualified options to purchase shares of DeVry’s common stock. The 2005 Incentive Plan also permits the award of stock appreciation rights, restricted stock, performance stock and other stock and cash based compensation. Though options remain outstanding under the 1994 Stock Incentive Plan, no further stock based awards will be issued from this plan. The 1999 and 2003 Stock Incentive Plans and the 2005 Incentive Plan are administered by the Compensation Committee of the Board of Directors. Options are granted for terms of up to 10 years and can vest immediately or over periods of up to five years. The requisite service period is equal to the vesting period. The option price under the plans is the fair market value of the shares on the date of the grant.

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

     At December 31, 2010, 4,649,288 authorized but unissued shares of common stock were reserved for issuance under DeVry’s stock incentive plans.

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

The following is a summary of options activity for the six months ended December 31, 2010:

										Weighted
						Weighted				Average				Aggregate
						Average				Remaining				Intrinsic
		Options				Exercise				Contractual				Value
		Outstanding				Price				Life				($000)
Outstanding at July 1, 2010			2,634,541			$	33.76
Options Granted			508,150			$	38.71
Options Exercised			(37,711	)		$	25.58
Options Canceled			(25,052	)		$	34.35
Outstanding at December 31, 2010			3,079,928			$	34.74				6.33			$	43,801
Exercisable at December 31, 2010			1,793,348			$	29.82				4.91			$	33,762

     The total intrinsic value of options exercised for the six months ended December 31, 2010 and 2009 was $0.4 million and $5.1 million, respectively.

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

     The weighted average estimated grant date fair values, for options granted at market price under DeVry’s stock option plans during first six months of fiscal years 2011 and 2010 were $16.53 and $23.11, per share, respectively. The fair values of DeVry’s stock option awards were estimated assuming the following weighted average assumptions:

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

     The expected life of the options granted is based on the weighted average exercise life with age and salary adjustment factors from historical exercise behavior. DeVry’s expected volatility is computed by combining and weighting the implied market volatility, the most recent volatility over the expected life of the option grant, and DeVry’s long-term historical volatility. The pre-vesting forfeiture rate is based on DeVry’s historical stock option forfeiture experience.

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

     During the first six months of fiscal year 2011, DeVry granted 276,540 shares of restricted stock to selected employees and non-employee directors. Of these, 69,970 are performance based shares which are earned by the recipients over a three year period based on achievement of specified DeVry return on invested capital targets. The remaining 206,570 shares and all other previously granted non-performance based shares of restricted stock are subject to restrictions which lapse ratably over three and four-year periods on the grant anniversary date based on the recipient’s continued service on the Board of Directors or employment with DeVry, or upon retirement. During the restriction period, the recipient of the non-performance based shares shall have a beneficial interest in the restricted stock and all associated rights and privileges of a stockholder, including the right to receive dividends. These rights do not pertain to the performance based shares. The following is a summary of restricted stock activity for the six months ended December 31, 2010:

						Weighted
		Restricted				Average
		Stock				Grant Date
		Outstanding				Fair Value
Nonvested at July 1, 2010			214,098			$	52.16
Shares Granted			276,540			$	39.31
Shares Vested			(46,148	)		$	52.06
Shares Canceled			(9,777	)		$	44.93
Nonvested at December 31, 2010			434,713			$	44.16

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

		For the Three Months								For the Six Months
		Ended December 31,								Ended December 31,
		2010				2009				2010				2009
		(Dollars in thousands)								(Dollars in thousands)
Cost of Educational Services		$	982			$	671			$	2,662			$	1,830
Student Services and Administrative Expense			2,087				1,424				5,657				3,887
Income Tax Benefit			(438	)			(334	)			(1,042	)			(959	)
Net Stock-Based Compensation Expense		$	2,631			$	1,761			$	7,277			$	4,758

     As of December 31, 2010, $29.4 million of total pre-tax unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of 2.8 years. The total fair value of options and shares vested during the three months ended December 31, 2010 and 2009, was approximately $7.0 million and $6.2 million, respectively.

     There were no capitalized stock-based compensation costs at December 31, 2010 and 2009.

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

NOTE 4: FAIR VALUE MEASUREMENTS

     As permitted by the authoritative guidance, DeVry has elected not to measure any assets or liabilities at fair value other than those required to be measured at fair value such as financial assets and liabilities required to be measured at fair value on a recurring basis and assets measured at fair value on a non-recurring basis such as goodwill and intangible assets. Management has fully considered all authoritative guidance when determining the fair value of DeVry’s financial assets as of December 31, 2010.

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

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

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

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

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

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

     The following tables present DeVry’s assets at December 31, 2010, that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (dollars in thousands).

		Level 1				Level 2				Level 3
Cash and Cash Equivalents		$	459,282			$	—			$	—
Available for Sale Investments:
Marketable Securities, short-term			2,464				—				—
Total Financial Assets at Fair Value		$	461,746			$	—			$	—

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

     Below is a roll-forward of assets measured at fair value using Level 3 inputs for the six months ended December 31, 2010 (dollars in thousands). At no time during the three month period ended December 31, 2010, were any assets measured using Level 3 inputs. All Level 3 investments were purchased by DeVry’s broker, UBS, in early July 2010. These investments consisted of auction rate securities. These securities were valued using a discounted cash flow model using assumptions that, in management’s judgment, reflected the assumptions a marketplace participant would have used. See “Note 2-Summary Of Significant Accounting Policies-Marketable Securities and Investments” for further information on these investments.

		Investments
		Six Months Ended
		December 31, 2010
Balance at Beginning of Period		$	13,495
Total Unrealized Gains (Losses) Included in Income:
Change in Fair Value of ARS Portfolio			—
Change in Fair Value of UBS Put Right			—
Purchases, Sales and Maturities			(13,495	)
Balance at December 31, 2010		$	—

NOTE 5: FINANCING RECEIVABLES

     DeVry’s institutional loan programs are available to students at its DeVry University, Chamberlain College of Nursing, Carrington College and Carrington College of California schools as well as selected students at Ross University School of Medicine. These loan programs are designed to assist students who are unable to completely cover educational costs by other means. These loans may be used only for tuition, books, and fees, and are available only after all other student financial assistance has been applied toward those purposes. Repayment plans for institutional loan program balances are developed to address the financial circumstances of the particular student. Interest charges accrue each month on the unpaid balance. After a student leaves school, the student typically will have a monthly installment repayment plan with all balances due within 12 to 60 months. In addition, the Becker CPA Review Course can be financed through Becker with a zero percent, 18-month term loan.

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

     The following table details the institutional loan balances along with the related allowances for credit losses as of December 31, 2010 and 2009.

		As of December 31,
		2010				2009
		(Dollars in thousands)
Gross Institutional Student Loans		$	43,743			$	26,480
Allowance for Credit Losses			(19,651	)			(10,653	)
Net Institutional Student Loans		$	24,092			$	15,827

     Of the net balances above, $16.2 million and $7.8 million are classified in the Consolidated Balance Sheets as Accounts Receivable, Net at December 31, 2010 and 2009, respectively, and $7.9 million and $8.0 million are classified in the Consolidated Balance Sheets as Other Assets at December 31, 2010 and 2009, respectively.

     The following tables detail the credit risk profiles of the institutional student loan balances based on payment activity and provide an aging analysis of past due institutional student loans as of December 31, 2010 and 2009. Loans are considered nonperforming if they are more than 120 days past due (dollars in thousands).

		As of December 31,
		2010				2009
Institutional Student Loans:
Performing		$	31,553			$	18,565
Nonperforming			12,190				7,915
Total Institutional Student Loans		$	43,743			$	26,480

										Greater												Total
		30-59				60-89				Than 90												Institutional
		Days				Days				Days				Total								Student
		Past Due				Past Due				Past Due				Past Due				Current				Loans
Institutional Student Loans:
December 31, 2010		$	3,782			$	1,587			$	13,520			$	18,889			$	24,854			$	43,743
December 31, 2009		$	2,419			$	1,273			$	9,106			$	12,798			$	13,682			$	26,480

NOTE 6: DIVIDENDS AND STOCK REPURCHASE PROGRAM

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

     On November 10, 2010, the DeVry Board of Directors authorized a fifth share repurchase program, which allows DeVry to repurchase up to $50 million of its common stock through December 31, 2012. Under this plan as of December 31, 2010, DeVry has repurchased, on the open market, 23,188 shares of its common stock at a total cost of approximately $1.1 million. The timing and amount of any repurchase will be determined by management based on its evaluation of market conditions and other factors. These repurchases may be made through the open market, including block purchases, or in privately negotiated transactions, or otherwise. The buyback will be funded through available cash balances and/or borrowings, and may be suspended or discontinued at any time.

     DeVry completed its first share repurchase program in April 2008, repurchasing, on the open market, 908,399 shares of its common stock at a total cost of approximately $35.0 million. On May 13, 2008, the DeVry Board of Directors authorized a second share

repurchase program, which allowed DeVry to repurchase up to $50 million of its common stock through December 31, 2010. As of November 30, 2009, DeVry completed this share repurchase program, repurchasing, on the open market, 1,027,417 shares of its common stock at a total cost of approximately $50.0 million. On November 11, 2009, the DeVry Board of Directors authorized a third share repurchase program, which allowed DeVry to repurchase up to $50 million of its common stock through December 31, 2011. As of September 30, 2010, DeVry completed this share repurchase program, repurchasing, on the open market, 972,205 shares of its common stock at a total cost of approximately $50.0 million. On August 11, 2010, the DeVry Board of Directors authorized a fourth share repurchase program, which allowed DeVry to repurchase up to $50 million of its common stock through June 30, 2012. As of December 31, 2010, DeVry had completed this share repurchase program, repurchasing, on the open market, 1,103,628 shares of its common stock at a total cost of approximately $50.0 million.

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

NOTE 7: INTANGIBLE ASSETS

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

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

		As of December 31, 2010
		Gross								Weighted Avg.
		Carrying				Accumulated				Amortization
		Amount				Amortization				Period
Amortizable Intangible Assets:
Student Relationships		$	65,047			$	(60,739	)		(1)
Customer Contracts			7,000				(4,489	)		6 years
License and Non-compete Agreements			2,684				(2,684	)		6 years
Class Materials			2,900				(1,980	)		14 years
Curriculum/Software			3,647				(2,070	)		5 years
Outplacement Relationships			3,900				(594	)		15 years
Trade Names			8,383				(5,380	)		(2)
Other			639				(639	)		6 years
Total		$	94,200			$	(78,576	)
Indefinite-lived Intangible Assets:
Trade Names		$	20,372
Trademark			1,645
Ross Title IV Eligibility and Accreditations			14,100
Intellectual Property			13,940
Chamberlain Title IV Eligibility and Accreditations			1,200
Carrington Title IV Eligibility and Accreditations			112,300
DeVry Brasil Accreditations			13,736
Total		$	177,292

		As of December 31, 2009
		Gross
		Carrying				Accumulated
		Amount				Amortization
Amortizable Intangible Assets:
Student Relationships		$	64,626			$	(58,229	)
Customer Contracts			7,000				(3,084	)
License and Non-compete Agreements			2,684				(2,684	)
Class Materials			2,900				(1,800	)
Curriculum/Software			3,631				(1,338	)
Outplacement Relationships			3,900				(334	)
Trade Names			6,326				(3,990	)
Other			639				(639	)
Total		$	91,706			$	(72,098	)
Indefinite-lived Intangible Assets:
Trade Names		$	22,272
Trademark			1,645
Ross Title IV Eligibility and Accreditations			14,100
Intellectual Property			13,940
Chamberlain Title IV Eligibility and Accreditations			1,200
Carrington Title IV Eligibility and Accreditations			112,300
DeVry Brasil Accreditation			13,077
Total		$	178,534

     Amortization expense for amortized intangible assets was $1.5 million and $3.0 million for the three and six months ended December 31, 2010, respectively, and $3.7 million and $7.6 for the three and six months ended December 31, 2009, respectively. Estimated amortization expense for amortized intangible assets for the next five fiscal years ending June 30, by reporting unit, is as follows (dollars in thousands):

		Advanced								DeVry
Fiscal Year		Academics				Becker				Brasil				Carrington				Total
2011		$	1,806			$	1,110			$	2,506			$	420			$	5,842
2012			1,538				160				2,106				420				4,224
2013			618				160				1,607				420				2,805
2014			369				160				684				295				1,508
2015			—				160				231				260				651

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

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

		Direct to				Direct to
Fiscal Year		Student				District
2008			12	%			14	%
2009			18	%			24	%
2010			19	%			25	%
2011			17	%			21	%
2012			14	%			16	%
2013			11	%			—
2014			9	%			—
The amount being amortized for the DeVry Brasil Student Relationships is based on the estimated progression of the students through the respective programs, giving consideration to the revenue and cash flow associated with both existing students and new applicants. This results in the basis being amortized at an annual rate for each of the years of estimated economic life as follows:
Fiscal Year
2009							8.3	%
2010							30.3	%
2011							24.7	%
2012							19.8	%
2013							13.6	%
2014							3.3	%

     Indefinite-lived intangible assets related to Trademarks, Trade Names, Title IV Eligibility, Accreditations and Intellectual Property are not amortized, as there are no legal, regulatory, contractual, economic or other factors that limit the useful life of these intangible assets to the reporting entity. Beginning in fiscal year 2010, the Trade Name associated with the Stalla CFA Review was reclassified to a finite lived intangible asset and is being amortized on a straight line basis over two years. This asset had a book value of $0.5 million as of December 31, 2010. As of the latest impairment analysis completed during the fourth quarter of fiscal year 2010, the asset’s fair value exceeded this book value.

     Authoritative guidance provides that goodwill and indefinite-lived intangibles arising from a business combination are not amortized and charged to expense over time. Instead, goodwill and indefinite-lived intangibles must be reviewed annually for impairment or more frequently if circumstances arise indicating potential impairment. This impairment review was most recently completed during the fourth quarter of fiscal year 2010 at which time there was no impairment loss associated with recorded goodwill or indefinite-lived intangible assets, as estimated fair values exceeded the carrying amount.

     DeVry did not perform an interim impairment review during the first six months of fiscal year 2011, as no impairment indicators were noted through the period ended December 31, 2010. The estimated fair values of the reporting units and indefinite-lived intangible assets exceeded their carrying values by at least 40% as of the end of fiscal year 2010 except those indefinite-lived intangible assets acquired with the acquisitions of Carrington and DeVry Brasil where fair values exceeded carrying values by at least 14%. The smaller premium for the newly acquired assets would be expected considering all have been acquired within twenty months of the fourth quarter fiscal year 2010 valuation date and there has been less time for these assets to have appreciated in value from their fair market value purchase price. Management did not believe business conditions had deteriorated in any of its reporting units to the extent that the fair values of the reporting units or indefinite-lived intangible assets would have differed materially from their fiscal year 2010 fair values. In this regard, revenues grew for all reporting units in the first six months of fiscal year 2011 except at Advanced Academics (AAI). At AAI, which carries a goodwill balance of $17.1 million, revenues declined slightly from the prior year. The revenue decline at Advanced Academics was the result of lower summer school and fall enrollments as school districts have reduced such programs driven by state budget constraints. AAI also experienced a decline in operating profit which was the result of the decline in revenues and increased investment to initiate programs designed to enhance future revenue growth. The fair value of the AAI reporting unit significantly exceeded its carrying value as of the fiscal year 2010 impairment analysis. Management believes the negative trends at AAI will be temporary and believes its planned business and operational strategies will reverse this negative trend in the foreseeable future. However, if operating improvements are not realized, all or some of the goodwill could be impaired in the future.

The table below summarizes the goodwill balances by reporting unit as of December 31, 2010 (dollars in thousands):

Reporting Unit
DeVry University		$	22,195
Becker Professional Review			24,716
Ross University			237,175
Chamberlain College of Nursing			4,716
Advanced Academics			17,075
Carrington			185,715
DeVry Brasil			25,056
Total		$	516,648

The table below summarizes goodwill balances by reporting segment as of December 31, 2010 (dollars in thousands):

Reporting Segment:
Business, Technology and Management		$	22,195
Medical and Healthcare			427,606
Professional Education			24,716
Other Educational Services			42,131
Total		$	516,648

     Total goodwill increased by $1.78 million from June 30, 2010. This increase is the result of an increase in the value of the Brazilian Real as compared to the U.S. dollar. Since DeVry Brasil goodwill is recorded in the local Brazilian currency, fluctuations in its value in relation to the U.S. dollar will cause changes in the balance of this asset.

     The table below summarizes the indefinite-lived intangible assets balances by reporting unit as of December 31, 2010 (dollars in thousands):

Reporting Unit:
DeVry University		$	1,645
Becker Professional Review			27,912
Ross University			19,200
Chamberlain College of Nursing			1,200
Advanced Academics			1,300
Carrington			112,300
DeVry Brasil			13,735
Total		$	177,292

     The only change in the indefinite-lived intangible assets balances from June 30, 2010, resulted from the effects of foreign currency translation. Since DeVry Brasil intangible assets are recorded in the local Brazilian currency, fluctuations in the value of the Brazilian Real in relation to the U.S. dollar will cause changes in the balance of this asset.

NOTE 8: INCOME TAXES

     DeVry’s effective income tax rate reflects benefits derived from significant operations outside the United States. Earnings of these international operations are not subject to U.S. federal or state income taxes, so long as such earnings are not repatriated, as discussed below. Three of DeVry’s subsidiaries, Ross University School of Medicine (the Medical School) incorporated under the laws of the Commonwealth of Dominica, Ross University School of Veterinary Medicine (the Veterinary School) incorporated under the laws of the Federation of St. Christopher, Nevis, St. Kitts in the West Indies, and DeVry Brasil incorporated under the laws of Brazil, all benefit from local tax incentives. The Medical and Veterinary Schools have agreements with the respective governments that exempt them from local income taxation through the years 2043 and 2023, respectively, while DeVry Brasil’s effective tax rate reflects

benefits derived from their participation in PROUNI, a Brazilian program for providing scholarships to a portion of its undergraduate students.

     DeVry has not recorded a U.S. federal or state tax provision for the undistributed earnings of its international subsidiaries. It is DeVry’s intention to indefinitely reinvest accumulated cash balances, future cash flows and post-acquisition undistributed earnings and profits to improve the facilities and operations of its international Schools and pursue future opportunities outside the United States. In accordance with this plan, cash held by the international subsidiaries will not be available for general company purposes and under current laws will not be subject to U.S. taxation. As of December 31 2010 and 2009, cumulative undistributed earnings attributable to international operations were approximately $298.8 million and $234.1 million, respectively.

     The effective tax rate was 34.5% for both the second quarter and first six months of fiscal year 2011, compared to 33.6% and 32.9% for the prior year second quarter and first six months, respectively. The higher effective income tax rate in fiscal year 2011 was primarily due to an increase in the proportion of income generated by U.S. operations versus the offshore operations of Ross University as compared to the prior year.

     As of December 31, 2010, the total amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, was $6.5 million. The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $6.5 million. As of December 31, 2009, gross unrecognized tax benefits, including positions impacting only the timing of benefits, was $1.7 million. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $1.7 million. We expect that our unrecognized tax benefits will decrease by an insignificant amount during the next twelve months. DeVry classifies interest and penalties on tax uncertainties as a component of the provision for income taxes. The total amount of interest and penalties accrued at June 30, 2010 was $0.7 million. The corresponding amount at December 31, 2010 was not materially different from the amount at June 30, 2010.

NOTE 9: DEBT

Debt consists of the following at December 31, 2010, June 30, 2010 and December 31, 2009 (dollars in thousands):

														Average
		Outstanding Debt												Interest Rate
		December 31,				June 30,				December 31,				December 31,
		2010				2010				2009				2010
Revolving Credit Facility:
DeVry Inc. as borrower		$	—			$	—			$	—				—
GEI as borrower			—				—				—				—
Total		$	—			$	—			$	—				—
Auction Rate Securities Collateralized Line of Credit:
DeVry Inc. as borrower		$	—			$	—			$	44,732				—
Total Outstanding Debt		$	—			$	—			$	44,732				—
Current Maturities of Debt		$	—			$	—			$	44,732				—
Total Long-term Debt		$	—			$	—			$	—				—

Revolving Credit Facility

     All of DeVry’s borrowings and letters of credit under its $175 million revolving credit facility are through DeVry Inc. and Global Education International, Inc. (“GEI”), an international subsidiary. The revolving credit facility became effective on May 16, 2003, and was amended as of September 30, 2005 and again on January 11, 2007. DeVry Inc. aggregate commitments including borrowings and letters of credit under this agreement cannot exceed $175.0 million, and GEI aggregate commitments cannot exceed $50.0 million. At the request of DeVry, the maximum borrowings and letters of credit can be increased to $275.0 million in total with GEI aggregate commitments not to exceed $50.0 million. There are no required payments under this revolving credit agreement and all borrowings and letters of credit mature on January 11, 2012. As a result of the agreement extending beyond one year, any borrowings would be classified as long-term with the exception of amounts expected to be repaid in the 12 months subsequent to the balance sheet date. DeVry Inc. letters of credit outstanding under this agreement were $4.6 million and $15.2 million as of December 31, 2010 and 2009, respectively. As of December 31, 2010, had there been outstanding borrowings under this agreement they would have borne interest, payable quarterly or upon expiration of the interest rate period, at the prime rate or at a LIBOR rate plus 0.50%, at the option of DeVry. Outstanding letters of credit under the revolving credit agreement are charged an annual fee equal to 0.50% of the undrawn face amount of the letter of credit, payable quarterly. The agreement also requires payment of a commitment fee equal to 0.1% of the

undrawn portion of the credit facility. The interest rate, letter of credit fees and commitment fees are adjustable quarterly, based upon DeVry’s achievement of certain financial ratios.

     The revolving credit agreement contains certain covenants that, among other things, require maintenance of certain financial ratios, as defined in the agreement. These financial ratios include a consolidated fixed charge coverage ratio, a consolidated leverage ratio and a composite Equity, Primary Reserve and Net Income, Department of Education, financial responsibility ratio (“DOE Ratio”). Failure to maintain any of these ratios or to comply with other covenants contained in the agreement will constitute an event of default and could result in termination of the agreement and require payment of all outstanding borrowings. DeVry was in compliance with all debt covenants as of December 31, 2010.

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

Auction Rate Securities Collateralized Line of Credit

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

NOTE 10: COMMITMENTS AND CONTINGENCIES

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

     The Boca Raton Firefighters’ and Police Pension Fund filed a complaint (the “Shareholder Case”) in the United States District Court for the Northern District of Illinois on November 1, 2010 (Case No. 1:10-cv-07031). The complaint was filed on behalf of a putative class of persons who purchased DeVry common stock between October 25, 2007, and August 13, 2010. The plaintiffs claim DeVry, Daniel Hamburger, Richard M. Gunst and David J. Pauldine violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated there under by failing to disclose abusive and fraudulent recruiting and financial aid lending practices, thereby increasing DeVry’s student enrollment and revenues and artificially inflating DeVry’s stock price during the class period. DeVry and its executives believe the allegations contained in the complaint are without merit and intend to defend them vigorously.

     Two derivative cases similar to the Shareholder Case also were filed in the Circuit Court of Cook County, Illinois, Chancery Division: DeVry shareholder Timothy Hald filed a derivative complaint on behalf of DeVry on January 3, 2011 (Hald v. Hamburger et al., Case No. 11 CH 0087) and Matthew Green (also a DeVry shareholder) filed a derivative complaint on behalf of DeVry on January 7, 2011 (Green v. Hamburger et al., Case No. 11 CH 0770) (“Derivative Actions”). The Derivative Actions allege that Daniel Hamburger, Richard M. Gunst, David J. Pauldine, Sharon T. Parrott, Ronald L. Taylor, Lisa W. Pickrum, Darren R. Huston, David S. Brown, William T. Keevan, Fernando Ruiz, Harold D. Shapiro, Lyle Logan, and Julia McGee breached their fiduciary duties to DeVry by failing to disclose the same allegedly abusive and fraudulent recruiting and financial aid lending practices alleged in the Shareholder Case. The Derivative Actions also allege that DeVry’s officers and directors unjustly enriched themselves and wasted DeVry’s assets by (i) causing DeVry to incur substantial costs in defending the Shareholder Case; (ii) causing DeVry to pay compensation and benefits to individuals who breached their fiduciary duties; (iii) causing potential losses from “certain of DeVry’s programs no longer being eligible for federal financial aid;” and (iv) damaging DeVry’s corporate image and goodwill. DeVry and its executives believe the allegations contained in the derivative complaints are without merit and intend to defend them vigorously.

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

NOTE 11: SEGMENT INFORMATION

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

     These segments are consistent with the method by which the Chief Operating Decision Maker (DeVry’s President and CEO) evaluates performance and allocates resources. Such decisions are based, in part, on each segment’s operating income, which is defined as income before interest income and expense, amortization, minority interest and income taxes. Intersegment sales are accounted for at amounts comparable to sales to nonaffiliated customers and are eliminated in consolidation. The accounting policies of the segments are the same as those described in “Note 2 — Summary of Significant Accounting Policies” to the consolidated financial statements contained in its Annual Report on Form 10-K for the fiscal year ended June 30, 2010.

     The consistent measure of segment operating income excludes interest income and expense, amortization and certain corporate-related depreciation and expenses. As such, these items are reconciling items in arriving at income before income taxes. The consistent measure of segment assets excludes deferred income tax assets and certain depreciable corporate assets. Additions to long-lived assets have been measured in this same manner. Reconciling items are included as corporate assets.

     Following is a tabulation of business segment information based on the current segmentation for each of the three and six months ended December 31, 2010 and 2009. Corporate information is included where it is needed to reconcile segment data to the consolidated financial statements (dollars in thousands).

		For the Three Months Ended								For the Six Months Ended
		December 31,								December 31,
		2010				2009				2010				2009
Revenues:
Business, Technology and Management		$	370,743			$	313,256			$	723,661			$	596,762
Medical and Healthcare			142,145				125,774				278,803				242,932
Professional Education			21,268				16,834				41,238				35,995
Other Educational Services			17,307				17,148				29,189				28,433
Total Consolidated Revenues		$	551,463			$	473,012			$	1,072,891			$	904,122
Operating Income:
Business, Technology and Management		$	99,472			$	78,134			$	183,991			$	134,213
Medical and Healthcare			30,964				31,159				59,126				58,298
Professional Education			6,590				3,249				12,969				9,693
Other Educational Services			148				705				(7,374	)			(5,817	)
Reconciling Items:
Amortization Expense			(1,477	)			(3,657	)			(2,952	)			(7,571	)
Depreciation and Other			(144	)			(661	)			1,608				(502	)
Total Consolidated Operating Income		$	135,553			$	108,929			$	247,368			$	188,314
Interest and Other Income (Expense):
Interest Income		$	381			$	574			$	804			$	1,074
Interest Expense			(239	)			(495	)			(493	)			(917	)
Net Investment Gain			—				313				—				1,144
Net Interest and Other Income (Expense)			142				392				311				1,301
Total Consolidated Income Before Income Taxes		$	135,695			$	109,321			$	247,679			$	189,615
Segment Assets:
Business, Technology and Management		$	536,654			$	499,288			$	536,654			$	499,288
Medical and Healthcare			984,631				932,097				984,631				932,097
Professional Education			80,217				77,234				80,217				77,234
Other Educational Services			122,479				117,145				122,479				117,145
Corporate			110,602				40,054				110,602				40,054
Total Consolidated Assets		$	1,834,583			$	1,665,818			$	1,834,583			$	1,665,818
Additions to Long-lived Assets:
Business, Technology and Management		$	8,325			$	28,483			$	17,791			$	45,122
Medical and Healthcare			13,633				5,281				18,938				12,526
Professional Education			1,420				26				2,393				43
Other Educational Services			1,670				1,357				3,393				3,938
Corporate			5,605				—				11,148				—
Total Consolidated Additions to Long-lived Assets		$	30,653			$	35,147			$	53,663			$	61,629
Depreciation Expense:
Business, Technology and Management		$	6,719			$	8,512			$	12,989			$	16,356
Medical and Healthcare			4,270				3,657				8,305				6,971
Professional Education			36				58				69				115
Other Educational Services			1,305				738				2,183				1,342
Corporate			2,270				166				4,775				340
Total Consolidated Depreciation		$	14,600			$	13,131			$	28,321			$	25,124
Intangible Asset Amortization Expense:
Business, Technology and Management		$	—			$	—			$	—			$	—
Medical and Healthcare			105				2,116				210				4,541
Professional Education			268				288				555				575
Other Educational Services			1,104				1,253				2,187				2,455
Total Consolidated Amortization		$	1,477			$	3,657			$	2,952			$	7,571

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

     DeVry conducts its educational operations in the United States, Canada, the Caribbean countries of Dominica and St. Kitts/Nevis, Brazil, Europe, the Middle East and the Pacific Rim. Other international revenues, which are derived principally from Brazil and Canada, were less than 5% of total revenues for the quarters ended December 31, 2010 and 2009. Revenues and long-lived assets by geographic area are as follows (dollars in thousands):

		For the Three Months Ended								For the Six Months Ended
		December 31,								December 31,
		2010				2009				2010				2009
Revenue from Unaffiliated Customers:
Domestic Operations		$	482,709			$	409,655			$	944,205			$	786,676
International Operations:
Dominica and St. Kitts/Nevis			53,691				49,478				101,979				92,921
Other			15,063				13,879				26,707				24,525
Total International			68,754				63,357				128,686				117,446
Consolidated		$	551,463			$	473,012			$	1,072,891			$	904,122
Long-lived Assets:
Domestic Operations		$	749,013			$	692,796			$	749,013			$	692,796
International Operations:
Dominica and St. Kitts/Nevis			338,795				328,349				338,795				328,349
Other			71,023				66,038				71,023				66,038
Total International			409,818				394,387				409,818				394,387
Consolidated		$	1,158,831			$	1,087,183			$	1,158,831			$	1,087,183