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BUSINESS COMBINATIONS
9 Months Ended
Mar. 31, 2015
BUSINESS COMBINATIONS
NOTE 8: BUSINESS COMBINATIONS
 
Damásio Educacional
 
On February 2, 2015, DeVry Educacional do Brasil S/A (f/k/a Fanor-Faculdades Nordeste S/A), (“DeVry Brasil”) a subsidiary of DeVry Group completed the acquisition of Damásio Educacional (“Damasio”). Under the terms of the agreement DeVry Brasil agreed to pay approximately $81.4 million in cash, in exchange for the stock of Damasio. Approximately $66.0 million of payments were made in the third quarter of fiscal year 2015, with additional aggregate payments of approximately $15.4 million required over the succeeding five years. Damasio is a leader in bar exam test preparation and operates a law school. Damasio has a 44-year history in Brazil and serves more than  50,000 students through a network of approximately 220 learning centers located in many major cities throughout Brazil and through distance learning. The law school has three locations in São Paulo. The acquisition of Damasio establishes DeVry Brasil’s presence in São Paulo and the southeast of Brasil.
 
The operations of Damasio are included in DeVry Group’s International and Professional Education segment. The results of Damasio’s operations have been included in the Consolidated Financial Statements of DeVry Group since the date of acquisition.
 
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands).
 
 
 
At Feb 2,  2015
 
Current Assets
 
$
9,747
 
Property and Equipment
 
 
3,367
 
Other Long-term Assets
 
 
136
 
Intangible Assets
 
 
46,862
 
Goodwill
 
 
55,492
 
Total Assets Acquired
 
 
115,604
 
Liabilities Assumed
 
 
34,262
 
Net Assets Acquired
 
$
81,342
 
 
Goodwill, which represents the excess of cost over the fair value of the net tangible and intangible assets acquired, was all assigned to the DeVry Brasil reporting unit which is classified within the International and Professional Education segment. Factors that contributed to a purchase price resulting in the recognition of goodwill include Damasio’s  strategic fit into DeVry Group’s expanding presence in Brazil, the reputation of the educational programs and the acquired assembled workforce. None of the goodwill acquired is expected to be deductible for income tax purposes. Of the $46.9 million of acquired intangible assets, $19.3 million was assigned to Accreditations and $8.0 million was assigned to Trade Names, both of which have been determined not to be subject to amortization. The remaining acquired intangible assets were determined to be subject to amortization with an average useful life of approximately 8 years. The values and estimated useful lives by asset type are as follows (dollars in thousands):
 
 
 
At Feb 2, 2015
 
 
 
Value
Assigned
 
Estimated
Useful Life
 
Franchise Contracts
 
$
13,085
 
18 years
 
Student Relationships
 
 
5,294
 
6 years
 
Test Preparation Relationships
 
 
1,193
 
1 year
 
 
There is no pro forma presentation of operating results for this acquisition due to the insignificant effect on consolidated operations.
 
Faculdade Ideal
 
On January 2, 2015, DeVry Brasil completed the acquisition of Faculdade Ideal (“Faci”) which is located in Belém, Pará in northern Brazil. Under the terms of the agreement, DeVry Brasil agreed to pay approximately $0.1 million in cash, in exchange for the stock of Faci. The payment was made in the third quarter of fiscal year 2015. Faci serves approximately 2,500 students and offers undergraduate programs in high-demand career fields such as law, education, accounting, technology and engineering. The acquisition of Faci further expands DeVry Brasil’s presence in the northeast and northern areas of the country.
 
The operations of Faci are included in DeVry Group’s International and Professional Education segment. The results of Faci’s operations have been included in the Consolidated Financial Statements of DeVry Group since the date of acquisition.
 
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands).
 
 
 
At Jan 2, 2015
 
Current Assets
 
$
1,052
 
Property and Equipment
 
 
6,049
 
Intangible Assets
 
 
6,754
 
Goodwill
 
 
1,657
 
Total Assets Acquired
 
 
15,512
 
Liabilities Assumed
 
 
15,402
 
Net Assets Acquired
 
$
110
 
 
Goodwill, which represents the excess of cost over the fair value of the net tangible and intangible assets acquired, was all assigned to the DeVry Brasil reporting unit which is classified within the International and Professional Education segment. Factors that contributed to a purchase price resulting in the recognition of goodwill include Faci’s strategic fit into DeVry Group’s expanding presence in northern Brazil, the reputation of the educational programs and the acquired assembled workforce. None of the goodwill acquired is expected to be deductible for income tax purposes. Of the $6.8 million of acquired intangible assets, $5.8 million was assigned to Accreditations and $1.0 million was assigned to Trade Names, both of which have been determined not to be subject to amortization. None of the acquired intangible assets were determined to be subject to amortization.
 
There is no pro forma presentation of operating results for this acquisition due to the insignificant effect on consolidated operations.
 
Faculdade Martha Falcao
 
On October 1, 2014, DeVry Brasil completed the acquisition of Faculdade Martha Falcao (“FMF”) which is located in the city of Manaus in the state of Amazonas in northern Brazil. Under the terms of the agreement, DeVry Brasil agreed to pay approximately $11.4 million in cash, in exchange for the stock of FMF. The majority of payments were made in the second quarter of fiscal year 2015, with additional aggregate payments of approximately $1.6 million required over the succeeding two years. FMF serves approximately 3,500 students and offers undergraduate and graduate programs in business, accounting, law, information technology and engineering. The FMF acquisition further expands DeVry Brasil’s presence in the northeast and now the northern areas of the country. 
 
The operations of FMF are included in DeVry Group’s International and Professional Education segment. The results of FMF’s operations have been included in the Consolidated Financial Statements of DeVry Group since the date of acquisition.
 
     The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands).
 
 
 
At Oct 1, 2014
 
Current Assets
 
$
890
 
Property and Equipment
 
 
1,505
 
Other Long-term Assets
 
 
36
 
Intangible Assets
 
 
5,249
 
Goodwill
 
 
10,115
 
Total Assets Acquired
 
 
17,795
 
Liabilities Assumed
 
 
6,336
 
Net Assets Acquired
 
$
11,459
 
 
Goodwill, which represents the excess of cost over the fair value of the net tangible and intangible assets acquired, was all assigned to the DeVry Brasil reporting unit which is classified within the International and Professional Education segment. Factors that contributed to a purchase price resulting in the recognition of goodwill include FMF’s strategic fit into DeVry Group’s expanding presence in north and northeast Brazil, the reputation of the educational programs and the acquired assembled workforce. None of the goodwill acquired is expected to be deductible for income tax purposes. Of the $5.2 million of acquired intangible assets, $4.1 million was assigned to Accreditations and $1.0 million was assigned to Trade Names, both of which have been determined not to be subject to amortization. The remaining acquired intangible asset was determined to be subject to amortization with an average useful life of approximately two years. Its value and estimated useful life by asset type is as follows (dollars in thousands):
 
 
 
At Oct 1, 2014
 
 
 
Value
Assigned
 
Estimated
Useful Life
 
Curriculum
 
$
121
 
2 years
 
 
There is no pro forma presentation of operating results for this acquisition due to the insignificant effect on consolidated operations.
 
Faculdade Diferencial Integral
 
On July 1, 2013, DeVry Brasil acquired the stock of Faculdade Diferencial Integral (“Facid”), located in the state of Piaui, Brazil, for approximately $16.1 million in cash. In addition, DeVry Brasil is required to make additional aggregate payments of approximately $9.0 million over the next three years. Facid serves approximately 2,900 students at two campuses in the city of Teresina, and offers degree programs primarily in healthcare, including a Doctor of Medicine (M.D.) program. Facid also offers undergraduate degrees in other healthcare fields such as nursing, pharmacy, and dentistry, as well as a law program.
 
The operations of Facid are included in DeVry Group’s International and Professional Education segment. The results of Facid’s operations have been included in the Consolidated Financial Statements of DeVry Group since the date of acquisition.
 
The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands).
 
 
 
At July 1, 2013
 
Current Assets
 
$
4,699
 
Property and Equipment
 
 
2,037
 
Other Long-term Assets
 
 
167
 
Intangible Assets
 
 
17,723
 
Goodwill
 
 
8,238
 
Total Assets Acquired
 
 
32,864
 
Liabilities Assumed
 
 
16,801
 
Net Assets Acquired
 
$
16,063
 
 
Goodwill, which represents the excess of cost over the fair value of the net tangible and intangible assets acquired, was all assigned to the DeVry Brasil reporting unit which is classified within the International and Professional Education segment. Factors that contributed to a purchase price resulting in the recognition of goodwill include Facid’s strategic fit into DeVry Group’s expanding presence in north and northeast Brazil, the reputation of the educational programs and the acquired assembled workforce. None of the goodwill acquired is expected to be deductible for income tax purposes. Of the $17.7 million of acquired intangible assets, $15.2 million was assigned to Accreditations and $1.9 million was assigned to Trade Names, both of which have been determined not to be subject to amortization. The remaining acquired intangible asset was determined to be subject to amortization with an average useful life of approximately 15 years. Its value and estimated useful life by asset type is as follows (dollars in thousands):
 
 
 
At July 1, 2013
 
 
 
Value
Assigned
 
Estimated
Useful Life
 
Clinical Agreement
 
$
583
 
15 years
 
 
There is no pro forma presentation of operating results for this acquisition due to the insignificant effect on consolidated operations.