NOTE 7: BUSINESS COMBINATIONS

American University of the Caribbean

On August 3, 2011, AUC School of Medicine B.V. (“AUC BV”) a wholly owned St. Maarten subsidiary of DeVry Inc. acquired the international business operations of privately held American University of the Caribbean (“AUC”). DeVry Medical International, Inc. (“DMI”), a wholly owned U.S. subsidiary of DeVry Inc. acquired the Florida business operations of Medical Education Services, Inc. (“MES”). Under the terms of the agreement, AUC BV and DMI paid a combined $228 million in cash in exchange for the business assets of AUC and MES.

AUC’s medical school campus is located in St. Maarten, and its administrative offices are located in Coral Gables, Florida. Since 1978, AUC has provided its students with medical education, and now has more than 4,000 graduates who are licensed and practicing medicine throughout the world. The school is accredited by the Accreditation Commission on Colleges of Medicine (ACCM), and its students are eligible to sit for the United States Medical Licensing Examination, obtain U.S. Federal Financial Aid if qualified, become members of the American Medical Student Association (AMSA) and, upon graduation, obtain residency and licensure throughout the United States. AUC is one of only three Caribbean medical schools whose students are eligible to receive federal student aid. AUC utilizes the same curriculum as U.S. medical schools, with two years of basic sciences taught at the St. Maarten campus, followed by two years of clinical sciences taught at affiliated hospitals in the U. S. and England.

The operations of AUC are included in DeVry’s Medical and Healthcare segment. The results of AUC’s operations have been included in the Consolidated Financial Statements of DeVry since the date of acquisition.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (dollars in thousands).


	At August 3, 2011
Current Assets	$	3,901
Property and Equipment		35,125
Intangible Assets		131,400
Goodwill		68,321

Total Assets Acquired		238,747
Liabilities Assumed		12,844

Net Assets Acquired	$	225,903

Goodwill, which represents the excess of cost over the fair value of the net tangible and intangible assets acquired, was all assigned to the AUC reporting unit which is classified within the Medical and Healthcare segment. Factors that contributed to a purchase price resulting in the recognition of goodwill include AUC’s strategic fit into the Medical and Healthcare segment, the reputation of the educational programs and the acquired assembled workforce. The acquired goodwill is expected to be deductible for income tax purposes. Of the $131.4 million of acquired intangible assets, $100 million was assigned to Title IV Eligibility and Accreditations and $17.1 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 and its value and estimated useful life is as follows (dollars in thousands):


	At August 3, 2011
	Value Assigned		Estimated Useful Lives
Student Relationships	$	14,300		4 years

There is no pro forma presentation of operating results for this acquisition due to the insignificant effect on consolidated operations.

Faculdade Boa Viagem

On February 29, 2012, Fanor-Faculdades Nordeste S/A (“DeVry Brasil”), a subsidiary of DeVry Inc. acquired the stock of FBV S/A, the Brazilian owner of business operations of Faculdade Boa Viagem (“FBV”). Under the terms of the agreement, DeVry Brasil paid $24.2 million in cash in exchange for the stock of FBV. In addition, DeVry Brasil will make additional installment payments totaling $21.9 million over the next four years.

FBV offers undergraduate and graduate degree programs in business, law, engineering, communication, culinary, hospitality, fashion design, and information technology at three campuses located in the city of Recife. The acquisition of FBV is consistent with DeVry’s growth and diversification strategy, increasing its international presence in Brazil.

The operations of FBV are included in DeVry’s International, K-12 and Professional Education segment. The results of FBV’s operations have been included in the Consolidated Financial Statements of DeVry since the date of acquisition.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (dollars in thousands).


	At February 29, 2012
Current Assets	$	548
Property and Equipment		12,822
Intangible Assets		19,108
Goodwill		14,092
Total Assets Acquired		46,570

Liabilities Assumed		22,323

Net Assets Acquired	$	24,247

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, K-12 and Professional Education segment. Factors that contributed to a purchase price resulting in the recognition of goodwill include FBV’s strategic fit into DeVry’s expanding presence in 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 $19.1 million of acquired intangible assets, $13.5 million was assigned to Accreditations and $2.3 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 a weighted average useful life of approximately 5.8 years. Their values and estimated useful lives by asset type are as follows (dollars in thousands):


	At February 29, 2012
	Value Assigned		Estimated Useful Lives
Student Relationships	$	3,174		6 years
Curriculum		133		2 years

There is no pro forma presentation of operating results for this acquisition due to the insignificant effect on consolidated operations.

Falcon Physician Reviews

On April 2, 2012, Becker Professional Education (Becker), a subsidiary of DeVry Inc., acquired the operations of Falcon Physician Reviews (Falcon). Falcon offers comprehensive review programs for medical students preparing for the United States Medical Licensing Examination (USMLE) and the Comprehensive Osteopathic Medical Licensing Examination (COMLEX). Under the terms of the agreement, Becker paid approximately $5.4 million in cash in exchange for the operations of Falcon. The transaction marked Becker’s entrance into the growing healthcare professional education market. The results of Falcon’s operations have been included in the Consolidated Financial Statements of DeVry since the date of acquisition.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (dollars in thousands).


	At April 2, 2012
Current Assets	$	670
Property and Equipment		41
Intangible Assets		2,260
Goodwill		3,699

Total Assets Acquired		6,670
Liabilities Assumed		1,288

Net Assets Acquired	$	5,382

Goodwill, which represents the excess of cost over the fair value of the net tangible and intangible assets acquired, was all assigned to the Becker Professional Review reporting unit which is classified within the International, K-12 and Professional Education segment. Factors that contributed to a purchase price resulting in the recognition of goodwill include Falcon’s strategic fit into Becker’s exam preparation business, the reputation of the review programs and the acquired assembled workforce. None of the goodwill acquired is expected to be deductible for income tax purposes. All of the acquired intangible assets have been determined to be subject to amortization with a weighted average useful life of 5.8 years. Their values and estimated useful lives by asset type are as follows (dollars in thousands):


	At April 2, 2012
	Value		Estimated
	Assigned		Useful Life
Trade Name	$	50	1 yr 6 months
Curriculum		870	5 yrs
Customer Relationships		400	10 yrs
Non-competition Agreements		940	5 yrs

There is no pro forma presentation of operating results for this acquisition due to the insignificant effect on consolidated operations.

Faculdade do Vale do Ipojuca

On September 3, 2012, Fanor-Faculdades Nordeste S/A (“DeVry Brasil”), a subsidiary of DeVry Inc. acquired the business operations of Faculdade do Vale do Ipojuca (“FAVIP”), which is located in the state of Pernambuco, Brazil. Under the terms of the agreement, DeVry Brasil paid approximately $30.3 million in cash in exchange for the stock of FAVIP. In addition, DeVry Brasil will be required to make an additional payment of approximately $3.9 million over the next 12 months should FAVIP receive status of a university center.

FAVIP currently serves about 5,000 students and offers more than 30 undergraduate and graduate programs at two campuses located in Caruaru, the state’s second largest city. The institution’s largest programs are in the areas of law, business, psychology and nutrition. The acquisition of FAVIP is consistent with DeVry’s growth and diversification strategy, increasing its international presence in Brazil.

The operations of FAVIP are included in DeVry’s International, K-12 and Professional Education segment. The results of FAVIP’s operations have been included in the Consolidated Financial Statements of DeVry since the date of acquisition.

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (dollars in thousands).


	At September 3, 2012
Current Assets	$	4,414
Property and Equipment		2,897
Other Long-term Assets		844
Intangible Assets		13,571
Goodwill		14,272

Total Assets Acquired		35,998
Liabilities Assumed		5,677

Net Assets Acquired	$	30,321

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, K-12 and Professional Education segment. Factors that contributed to a purchase price resulting in the recognition of goodwill include FAVIP’s strategic fit into DeVry’s expanding presence in 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 $13.6 million of acquired intangible assets, $10.2 million was assigned to Accreditations and $1.1 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 4.9 years. Their values and estimated useful lives by asset type are as follows (dollars in thousands):


	At September 3, 2012
	Value Assigned		Estimated Useful Lives
Student Relationships	$	2,257		5 years
Curriculum		79		2 years

There is no pro forma presentation of operating results for this acquisition due to the insignificant effect on consolidated operations.