NOTE 8: 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 March 31, 2012
	Gross Carrying Amount		Accumulated Amortization			Weighted Avg. Amortization Period
Amortizable Intangible Assets:
Student Relationships	$	81,534	$	(66,683	)		(1	)
Customer Relationships		3,121		(277	)		12 years
Customer Contracts		7,000		(5,921	)		6 years
License and Non-compete Agreements		2,775		(2,719	)		6 years
Class Materials		500		(500	)		14 years
Curriculum/Software		4,775		(3,158	)		(2	)
Outplacement Relationships		3,900		(919	)		15 years
Trade Names		6,327		(4,438	)		8.5 years
Other		639		(639	)		6 years

Total	$	110,571	$	(85,254	)

Indefinite-lived Intangible Assets:
Trade Names	$	39,667
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		71,100
AUC Title IV Eligibility and Accreditations		100,000
DeVry Brasil and FBV Accreditations		25,149

Total	$	266,801

(1)	The respective Ross University, Chamberlain College of Nursing, and the Carrington Student Relationships were fully amortized at December 31, 2009. The total weighted average estimated amortization period for Student Relationships is 5 years for DeVry Brasil, 6 years for FBV and 4 years for AUC.

(2)	The total weighted average estimated amortization period for Curriculum/Software is 5 years for AAI, ATC, Carrington and DeVry Brasil and 2 years for FBV.


	As of March 31, 2011
	Gross Carrying Amount		Accumulated Amortization
Amortizable Intangible Assets:
Student Relationships	$	65,245	$	(61,395	)
Customer Contracts		7,000		(4,816	)
License and Non-compete Agreements		2,684		(2,684	)
Class Materials		2,900		(2,020	)
Curriculum/Software		3,655		(2,256	)
Outplacement Relationships		3,900		(659	)
Trade Names		8,457		(5,745	)
Other		639		(639	)

Total	$	94,480	$	(80,214	)

Indefinite-lived Intangible Assets:
Trade Names	$	20,372
Trademark		1,645
Ross Title IV Eligibility and Accreditations		14,100
Intellectual Property		13,940
Chamberlain Title IV Eligibility and Accreditations		1,200
Carrington Title IV Eligibility and Accreditations		112,300
DeVry Brasil Accreditation		14,046

Total	$	177,603

Amortization expense for amortized intangible assets was $2.8 million and $7.8 million for the three and nine months ended March 31, 2012, respectively, and $1.5 million and $4.5 for the three and nine months ended March 31, 2011, 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):


Fiscal Year	Advanced Academics		Becker		DeVry Brasil		Carrington		AUC		Total
2012	$	1,538	$	694	$	2,408	$	420	$	5,593	$	10,653
2013		618		622		2,600		420		4,973		9,232
2014		369		519		1,465		295		3,347		5,995
2015		—		519		703		260		387		1,869
2016		—		485		475		260		—		1,220

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

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


Fiscal Year	Direct to Student			Direct to 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	%

The amount being amortized for the FBV 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
2012	11.94	%
2013	33.65	%
2014	25.89	%
2015	16.70	%
2016	9.02	%
2017	2.64	%
2018	0.17	%

The amount being amortized for the AUC 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
2012	38.0	%
2013	38.5	%
2014	21.6	%
2015	1.9	%

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.

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 annual impairment review for all reporting units was most recently completed during the fourth quarter of fiscal year 2011 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.

During the second quarter of fiscal year 2012, revenues and operating income for DeVry's Carrington Colleges Group reporting unit were significantly below management's expectations driven by a larger than expected decline in new student enrollments. Carrington's revenue declined 27% during the second quarter as compared to the prior year. As a result of the significant decrease in revenue, Carrington generated an operating loss in the second quarter of fiscal year 2012 as compared to operating income in the year-ago period. Accordingly, management revised its forecast and future cash flow projections for Carrington.

Based upon these facts and circumstances, management performed an interim impairment review for the Carrington indefinite-lived intangible asset and the Carrington reporting unit. To determine the fair value of the Carrington indefinite-lived intangible asset and Carrington reporting unit in our interim step one impairment analysis, a discounted cash flow valuation method was utilized incorporating assumptions that a reasonable market participant would use regarding the impact of the current operating losses and the increased uncertainty impacting future operations. We used significant unobservable inputs (Level 3) in our discounted cash flow valuation including future cash flow projections and discount rate assumptions.

For indefinite-lived intangible assets, DeVry determines their fair value based on the nature of the asset using various valuation techniques including a discounted cash flow model for the Carrington Accreditation and Title IV Eligibility. The estimated fair values of indefinite-lived intangible assets are based on management's projection of revenues, gross margin, operating costs and cash flows considering planned business and operational strategies over a long-term planning horizon of 5 years. The assumed growth rates used to project cash flows and operating results are commensurate with historical results and analysis of the economic environment in which the reporting unit that records indefinite-lived intangible assets operates. The valuations employ present value techniques to measure fair value and consider market factors. Management believes the assumptions used for the impairment testing are consistent with those that would be utilized by a market participant in performing similar valuations of its indefinite-lived intangible assets. The discount rate of 14% that was utilized in the Carrington valuation takes into account management's assumptions on growth rates and risk, both company specific and macro-economic, inherent in the reporting unit in addition to the specific risk of the Accreditation and Title IV Eligibility asset relative to Carrington's other assets. This intangible asset is closely tied to the overall risk of the reporting unit in which it is recorded so management would expect the discount rate to approximate that used for valuing this reporting unit. Management bases its fair value estimates on assumptions it believes to be reasonable at the time, but such assumptions are subject to inherent uncertainty. There have been no changes in the indefinite-lived valuation techniques since June 30, 2011.

Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. The estimate of fair value of each reporting unit is based on management's projection of revenues, gross margin, operating costs and cash flows considering planned business and operational strategies over a long-term planning horizon of 5 years along with a terminal value calculated based on discounted cash flows. These measures of business performance are similar to those management uses to evaluate the results of operations on a regular basis. The growth rates used to project cash flows, operating results and terminal values of reporting units are commensurate with historical results and analysis of the economic environment in which the reporting units operate. The valuations employ present value techniques to estimate fair value and consider market factors. Management believes the assumptions used for the impairment testing are consistent with those utilized by a market participant in performing similar valuations of its reporting units. A discount rate of 13% was utilized for the Carrington reporting unit. The discount rate utilized takes into account management's assumptions on growth rates and risk, both organization specific and macro-economic, inherent in the reporting unit. Management bases its fair value estimates on assumptions it believes to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Actual results may differ from those estimates. There have been no changes in the reporting unit valuation techniques since June 30, 2011.

Management's interim impairment analysis resulted in an estimated fair value for the Carrington Accreditation and Title IV Eligibility intangible asset of $71.1 million which is $41.2 million less than its carrying value. Based on a calculation of the estimated fair value of the Carrington reporting unit and a hypothetical purchase price allocation which included the estimated fair value of the Accreditation and Title IV Eligibility intangible asset, management determined the Carrington reporting unit would have implied goodwill of $151.9 million. This is $33.8 million less than the carrying value of this reporting unit. Accordingly, Carrington's Accreditation and Title IV Eligibility indefinite-lived intangible assets and the goodwill balance were considered to be impaired and were written down by $41.2 million and $33.8 million, respectively.

Management also evaluated Carrington's remaining long-lived assets, including property and equipment and finite-lived intangible assets, for recoverability and determined there was no impairment. Therefore in the second quarter of fiscal year 2012, Carrington's goodwill and other intangibles impairment charges in the aggregate were $75.0 million, with an income tax benefit of $19.3 million for the write-down of the intangible asset. The goodwill write-down is not deductible for tax purposes.

No further impairment indicators were noted for Carrington during the third quarter of fiscal 2012, and no impairment indicators were noted for any of DeVry's other reporting units through the period ended March 31, 2012. The estimated fair values of the other reporting units and indefinite-lived intangible assets exceeded their carrying values by at least 15% as of the end of fiscal year 2011. Though some reporting units experienced a decline in operating results from the previous year, management did not believe business conditions had deteriorated in any of its reporting units such that it was more likely than not that the fair value was below carrying value for any other reporting unit or indefinite-lived intangible asset.

At Advanced Academics, which carries a goodwill balance of $17.1 million, revenues for the first nine months of fiscal 2012 declined by approximately 5% from the prior year period. The resulting operating loss for the first nine months of fiscal 2012 was approximately equal to that of the prior year period and in-line with management's forecasts. The fair value of the Advanced Academics reporting unit exceeded its carrying value as of the fiscal year 2011 impairment analysis by approximately 27%. Management believes the negative operating results at Advanced Academics will be temporary and believes its planned business and operational strategies will continue to lead to improvements in the foreseeable future. However, if operating improvements are not realized, all or some of the goodwill could be impaired in the future.

Determining the fair value of a reporting unit or an intangible asset involves the use of significant estimates and assumptions. Management bases its fair value estimates on assumptions it believes to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Actual results may differ from those estimates.

The table below summarizes the goodwill balances by reporting unit as of March 31, 2012 (dollars in thousands):


Reporting Unit	As of March 31, 2012
DeVry University	$	22,196
Becker Professional Review		29,187
Ross University		237,173
Chamberlain College of Nursing		4,716
Advanced Academics		17,074
Carrington Colleges Group		151,878
American University of the Caribbean		68,321
DeVry Brasil		36,771

Total	$	567,316

The table below summarizes goodwill balances by reporting segment as of March 31, 2012 (dollars in thousands):


Reporting Segment:	As of March 31, 2012
Business, Technology and Management	$	22,196
Medical and Healthcare		462,088
International, K-12 and Professional Education		83,032

Total	$	567,316

The table below summarizes the changes in the carrying amount of goodwill, by segment as of March 31, 2012 (dollars in thousands):


	Business, Technology and Management		Medical and Healthcare			International, K-12 and Professional Education			Total
Balance at June 30, 2011	$	22,196		427,606			73,818		$	523,620
Acquisitions		—		68,321			14,092			82,413
Dispositions		—		—			(413	)		(413	)
Impairment		—		(33,839	)		—			(33,839	)
Foreign currency exchange rate changes and other		—		—			(4,465	)		(4,465	)

Balance as of March 31, 2012	$	22,196	$	462,088		$	83,032		$	567,316

The total increase in the goodwill balance from June 30, 2011 in the Medical and Healthcare segment was the result of the addition of goodwill of $68.3 million from the acquisition of AUC, partially offset by the $33.8 million impairment charge at Carrington. See the discussions above for further explanation of the acquisition and the impairment charge. The increase in the goodwill balance from June 30, 2011 in the International, K-12 and Professional Education segment is the result the addition of goodwill of $14.1 million from the acquisition of FBV, offset by a decrease of $0.4 million resulting from the divestiture of the Stalla CFA Review assets and a decrease in the value of the Brazilian Real and British Pound Sterling as compared to the U.S. dollar. Since DeVry Brasil and ATC goodwill is recorded in their respective local currencies, fluctuations in its value in relation to the U.S. dollar will cause changes in the balance of this asset.

The table below summarizes the indefinite-lived intangible assets balances by reporting unit as of March 31, 2012 (dollars in thousands):


Reporting Unit:	As of March 31, 2012
DeVry University	$	1,645
Becker Professional Review		27,912
Ross University		19,200
Chamberlain College of Nursing		1,200
Advanced Academics		1,300
Carrington Colleges Group		71,100
American University of the Caribbean		117,100
DeVry Brasil		27,344

Total	$	266,801

Total indefinite-lived intangible assets increased by $88.7 million from June 30, 2011. This increase is the result of the addition of $117.1 million and $15.8 million of indefinite-lived intangibles associated with the acquisitions of AUC and FBV, respectively, offset by the impairment charge of $41.2 million at Carrington as described above and the effects of foreign currency translation on the DeVry Brasil assets. 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 these assets.