Edgar Filing: DEVRY EDUCATION GROUP INC.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

R	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended: December 31, 2013

£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission file number: 1-13988

DeVry Education Group Inc.

(Exact name of registrant as specified in its charter)

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

Registrant’s telephone number; including area code:

(630) 515-7700

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 R No £

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 R No £

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	R		Accelerated filer	¨
Non-accelerated filer	£ (Do not check if a smaller reporting company)		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 £ No R

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: January 29, 2014 — 63,349,000 shares of Common Stock, $0.01 par value

DEVRY EDUCATION GROUP INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2013

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 Comprehensive Income	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
Item 2	— Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3	— Quantitative and Qualitative Disclosures About Market Risk	44
Item 4	— Controls and Procedures	45

	PART II – Other Information
Item 1	— Legal Proceedings	45
Item 1A	— Risk Factors	47
Item 2	— Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 4	— Mine Safety Disclosures	48
Item 6	— Exhibits	48

Signatures		50

	2

DEVRY EDUCATION GROUP INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	December 31,		June 30,		December 31,
	2013		2013		2012

	(Dollars in thousands)
ASSETS:
Current Assets:
Cash and Cash Equivalents	$	262,034	$	196,576	$	216,567
Marketable Securities and Investments		3,263		2,975		2,752
Restricted Cash		11,873		7,019		3,894
Accounts Receivable, Net		117,812		139,778		118,322
Deferred Income Taxes, Net		31,169		29,758		25,008
Refundable Income Taxes		6,969		154		23,827
Prepaid Expenses and Other		42,625		49,685		31,695
Current Assets of Divested Business		-		16,219		28,706
Total Current Assets		475,745		442,164		450,771
Land, Building and Equipment:
Land		66,539		71,122		65,963
Building		429,463		424,902		388,010
Equipment		472,944		475,656		459,711
Construction in Progress		44,115		33,724		48,143
		1,013,061		1,005,404		961,827
Accumulated Depreciation		(455,018)		(433,747)		(407,991)
Land, Building and Equipment of Divested Business, Net		-		-		5,521
Land, Building and Equipment, Net		558,043		571,657		559,357
Other Assets:
Intangible Assets, Net		293,720		281,998		294,177
Goodwill		514,757		508,937		566,199
Perkins Program Fund, Net		13,450		13,450		13,450
Other Assets		33,398		33,025		30,112
Other Assets of Divested Business		-		5,787		718
Total Other Assets		855,325		843,197		904,656
TOTAL ASSETS	$	1,889,113	$	1,857,018	$	1,914,784

LIABILITIES:
Current Liabilities:
Accounts Payable	$	62,721	$	55,131	$	60,383
Accrued Salaries, Wages and Benefits		77,447		88,444		63,607
Accrued Expenses		69,259		74,451		71,432
Deferred and Advance Tuition		97,725		97,478		140,576
Current Liabilities of Divested Business		-		713		1,530
Total Current Liabilities		307,152		316,217		337,528
Other Liabilities:
Deferred Income Taxes, Net		59,941		60,103		64,444
Deferred Rent and Other		91,054		82,576		107,553
Total Other Liabilities		150,995		142,679		171,997
Other Liabilities of Divested Business		-		112		-
TOTAL LIABILITIES		458,147		459,008		509,525
COMMITMENTS AND CONTINGENCIES (NOTE 12)
NON-CONTROLLING INTEREST		5,975		854		8,901
SHAREHOLDERS' EQUITY
Common Stock, $0.01 Par Value, 200,000,000 Shares Authorized: 63,332,000, 62,946,000 and 63,287,000 Shares Issued and Outstanding at December 31, 2013, June 30, 2013 and December 31, 2012, Respectively		752		745		744
Additional Paid-in Capital		304,807		291,269		280,901
Retained Earnings		1,599,985		1,575,009		1,560,130
Accumulated Other Comprehensive Loss		(25,573)		(17,101)		(6,696)
Treasury Stock, at Cost (11,661,000, 11,581,000 and 11,079,000 Shares, Respectively)		(454,980)		(452,766)		(438,721)
TOTAL SHAREHOLDERS' EQUITY		1,424,991		1,397,156		1,396,358
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,889,113	$	1,857,018	$	1,914,784

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

	3

DEVRY EDUCATION GROUP INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands Except Per Share Amounts)

(Unaudited)

	For the Three Months Ended December 31,				For the Six Months Ended December 31,
	2013		2012		2013		2012
REVENUES:
Tuition	$	457,888	$	471,881	$	877,205	$	920,566
Other Educational		33,381		28,785		64,976		60,020
Total Revenues		491,269		500,666		942,181		980,586
OPERATING COSTS AND EXPENSES:
Cost of Educational Services		242,997		240,244		484,732		479,697
Student Services and Administrative Expense		185,046		183,743		374,205		374,762
Gain on Sale of Assets		-		-		(1,918)		-
Restructuring Expenses		4,664		9,484		16,329		9,484
Total Operating Costs and Expenses		432,707		433,471		873,348		863,943
Operating Income		58,562		67,195		68,833		116,643
INTEREST (EXPENSE) INCOME:
Interest Income		310		230		893		791
Interest Expense		(1,052)		(759)		(2,052)		(2,250)
Net Interest (Expense) Income		(742)		(529)		(1,159)		(1,459)
Income from Continuing Operations Before Income Taxes		57,820		66,666		67,674		115,184
Income Tax Provision		(8,492)		(14,604)		(10,195)		(29,126)
Income from Continuing Operations		49,328		52,062		57,479		86,058
DISCONTINUED OPERATIONS (NOTE 3):
Loss from Operations of Divested Component		(1,387)		(1,290)		(17,711)		(4,948)
Income Tax Benefit		467		452		1,463		1,936
Loss on Discontinued Operations		(920)		(838)		(16,248)		(3,012)

NET INCOME		48,408		51,224		41,231		83,046
Net Income Attributable to Non-controlling Interest		(253)		(938)		(208)		(771)
NET INCOME ATTRIBUTABLE TO DEVRY EDUCATION GROUP INC.	$	48,155	$	50,286	$	41,023	$	82,275

AMOUNTS ATTRIBUTABLE TO DEVRY EDUCATION GROUP INC.:
Income from Continuing Operations, Net of Income Taxes		49,075		51,124		57,271		85,287
Loss from Discontinued Operations, Net of Income Taxes		(920)		(838)		(16,248)		(3,012)
NET INCOME ATTRIBUTABLE TO DEVRY EDUCATION GROUP INC.	$	48,155	$	50,286	$	41,023	$	82,275

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO DEVRY EDUCATION GROUP INC. SHAREHOLDERS
Basic:
Continuing Operations	$	0.76	$	0.79	$	0.89	$	1.32
Discontinued Operations		(0.01)		(0.01)		(0.25)		(0.05)
	$	0.75	$	0.78	$	0.64	$	1.27
Diluted:
Continuing Operations	$	0.75	$	0.79	$	0.88	$	1.32
Discontinued Operations		(0.01)		(0.01)		(0.25)		(0.05)
	$	0.74	$	0.78	$	0.63	$	1.27

Cash Dividends Declared per Common Share	$	0.17	$	0.17	$	0.17	$	0.17

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

	4

DEVRY EDUCATION GROUP INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

(Unaudited)

	For the Three Months				For the Six Months Ended
	Ended December 31,				December 31,
	2013		2012		2013		2012

NET INCOME	$	48,408	$	51,224	$	41,231	$	83,046
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Currency Translation Loss		(8,030)		(1,279)		(8,654)		(869)
Change in Fair Value of Available -For- Sale Securities		62		(5)		182		62
COMPREHENSIVE INCOME		40,440		49,940		32,759		82,239
COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST		60		(717)		153		(638)
COMPREHENSIVE INCOME ATTRIBUTABLE TO DEVRY EDUCATION GROUP INC.	$	40,500	$	49,223	$	32,912	$	81,601

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

	5

DEVRY EDUCATION GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months Ended December 31,
	2013		2012
	(Dollars in thousands)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income	$	41,231	$	83,046
Loss from Discontinued Operations		16,248		3,012
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
Stock Based Compensation Expense		9,860		8,370
Depreciation		40,719		40,842
Amortization		3,590		5,019
Provision for Refunds and Uncollectible Accounts		37,274		40,777
Deferred Income Taxes		1,699		2,075
Loss on Disposal of Land, Building and Equipment		1,333		2,237
Unrealized Loss on Assets Held for Sale		244		6,250
Realized Gain on Sale of Assets		(1,918)		-
Changes in Assets and Liabilities, Net of Effects from Acquisition of Businesses:
Restricted Cash		(4,854)		(1,396)
Accounts Receivable		(17,170)		(62,674)
Prepaid Expenses and Other		1,338		29,040
Accounts Payable		7,592		(1,449)
Accrued Salaries, Wages, Benefits and Expenses		(23,279)		(11,590)
Deferred and Advance Tuition		(589)		42,332
Net Cash Provided by Operating Activities-Continuing Operations		113,318		185,891
Net Cash Used by Operating Activities- Discontinued Operations		(197)		(5,686)
NET CASH PROVIDED BY OPERATING ACTIVITIES		113,121		180,205
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures		(33,426)		(47,213)
Payment for Purchase of Businesses, Net of Cash Acquired		(12,343)		(31,386)
Marketable Securities Purchased		(106)		(82)
Cash Received on Sale of Assets		8,662		-
Net Cash Used in Investing Activities-Continuing Operations		(37,213)		(78,681)
Net Cash Used in Investing Activities- Discontinued Operations		-		(972)
NET CASH USED IN INVESTING ACTIVITIES		(37,213)		(79,653)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Exercise of Stock Options		3,576		1,139
Proceeds from Stock Issued Under Employee Stock Purchase Plan		708		756
Repurchase of Common Stock for Treasury		-		(38,567)
Cash Dividends Paid		(10,941)		(20,707)
Excess Tax Benefit from Stock-Based Payments		-		58
Payments of Seller Financed Debt		(2,138)		-
NET CASH USED IN FINANCING ACTIVITIES		(8,795)		(57,321)
Effects of Exchange Rate Differences		(2,223)		(1,048)
NET INCREASE IN CASH AND CASH EQUIVALENTS		64,890		42,183
Cash and Cash Equivalents at Beginning of Period		197,144		174,076
Cash and Cash Equivalents at End of Period		262,034		216,259
Less: Cash and Cash Equivalents of Discontinued Operations at End of Period		-		308
Cash and Cash Equivalents at End of Period	$	262,034	$	216,567
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash Paid During the Period For:
Interest	$	698	$	527
Income Taxes, Net		8,074		4,458
Non-cash Investing and Financing Activity:
Accretion of Non-controlling Interest Put Option		4,913		(112)

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

	6

DEVRY EDUCATION GROUP INC.

Notes to Consolidated Financial Statements (Unaudited)

NOTE 1: INTERIM FINANCIAL STATEMENTS

The interim consolidated financial statements include the accounts of DeVry Education Group Inc. (“DeVry Group”) 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 Group. The June 30, 2013 data that is presented is derived from audited financial statements.

The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in DeVry Group’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013, and DeVry Group’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, each as filed with the Securities and Exchange Commission.

The results of operations for the three and six months ended December 31, 2013, 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.

Revenue Recognition

DeVry University tuition revenues are recognized ratably on a straight-line basis over the applicable academic term. Ross University School of Medicine, Ross University School of Veterinary Medicine (together “Ross University”) and American University of the Caribbean School of Medicine (“AUC”) basic science curriculum revenues are recognized ratably on a straight-line basis over the academic term. The clinical portion of the Ross University and AUC education programs are conducted under the supervision of U.S. teaching hospitals and veterinary schools. Ross University and AUC are responsible for the billing and collection of tuition from its students during the period of clinical education. Revenues are recognized on a weekly basis based on actual program attendance during the period of the clinical program. Fees paid to the hospitals and veterinary schools for supervision of Ross University and AUC students are charged to expense on the same basis. Carrington, Chamberlain and DeVry Brasil tuition and fee revenues are recognized ratably on a straight-line basis over the applicable academic term. The provision for refunds, which is reported as a reduction to Tuition Revenues in the Consolidated Statements of Income, and the provision for uncollectible accounts, which is included in the Cost of Educational Services in the Consolidated Statements of Income, also are recognized in the same ratable fashion as revenue to most appropriately match these costs with the tuition revenue in that term.

Estimates of DeVry Group’s expected refunds are determined at the outset of each academic term, based upon actual experience in previous terms, and monitored and adjusted as necessary within the term. If a student leaves school prior to completing a term, federal, state and/or Canadian provincial regulations and accreditation criteria permit DeVry Group to retain only a set percentage of the total tuition received from such student, which varies with, but generally equals or exceeds, the percentage of the term completed by such student. Payment amounts received by DeVry Group in excess of such set percentages of tuition are refunded to the student or the appropriate funding source. All refunds are netted against revenue during the applicable academic term. The allowance for uncollectible accounts is determined by analyzing the current aging of accounts receivable and historical loss rates on collections of accounts receivable. In addition, management considers projections of future receivable levels and collection loss rates. We monitor the inputs to this analysis periodically throughout the year. Provisions required to maintain the allowance at appropriate levels are charged to expense in each period as required. Related reserves with respect to uncollectible accounts and refunds totaled $44.4 million and $52.5 million at December 31, 2013 and December 31, 2012, respectively.

Sales of textbooks, electronic course materials, and other educational products, including training services and the Becker self-study products, are included in Other Educational Revenues in the Consolidated Statements of Income. Textbook, electronic course materials and other educational product revenues are recognized when the sale occurs. Revenues from training services, which are generally short-term in duration, are recognized when the training service is provided. In addition, fees from international licensees of the Becker programs are included in Other Educational Revenues and recognized when confirmation of course delivery is received.

	7

Internal-Use Software Development Costs

DeVry Group 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, 2013 were approximately $0.3 million and $0.5 million, respectively. Costs capitalized during the three and six months ended December 31, 2012, were approximately $0.3 million and $2.4 million, respectively. These costs were primarily related to new student information systems for DeVry University and Chamberlain College of Nursing and the Becker e-Commerce system. As of December 31, 2013 and 2012, the net balance of capitalized software development costs was $54.1 million and $69.3 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 were received during the three and six months ended December 31, 2013 or 2012. DeVry Group 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, 2013 and 2012. 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 Group and are not recorded in 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.

Non-Controlling Interest

DeVry Group maintains a 96.3 percent ownership interest in DeVry Brasil with the remaining 3.7 percent owned by some of the current DeVry Brasil senior management group. Prior to the June 2013 purchase of additional DeVry Brasil stock, DeVry Group’s ownership percentage was 93.5 percent. Beginning July 1, 2015, DeVry Group has the right to exercise a call option and purchase any remaining DeVry Brasil stock from DeVry Brasil management. Likewise, DeVry Brasil management has the right to exercise a put option and sell its remaining ownership interest in DeVry Brasil to DeVry Group. Since the put option is out of the control of DeVry Group, authoritative guidance requires the non-controlling interest, which includes the value of the put option, to be displayed outside of the equity section of the consolidated balance sheet.

The DeVry Brasil management put option is being accreted to its redemption value in accordance with the stock purchase agreement. The adjustment to increase or decrease the put option to its expected redemption value each reporting period is recorded to retained earnings in accordance with United States Generally Accepted Accounting Principles. The adjustment to increase or decrease the DeVry Brasil non-controlling interest each reporting period for its proportionate share of DeVry Brasil’s profit/loss will continue to flow through the consolidated income statement based on DeVry Group’s historical non-controlling interest accounting policy.

The following is a reconciliation of the non-controlling interest balance (in thousands):

	Three Months Ended December 31,				Six Months Ended December 31,
	2013		2012		2013		2012
Balance at Beginning of period	$	5,890	$	8,637	$	854	$	8,242
Net Income Attributable to Non-controlling Interest		253		938		208		771
Accretion of Non-controlling Interest Put Option		(168)		(674)		4,913		(112)
Balance at End of period	$	5,975	$	8,901	$	5,975	$	8,901

Earnings per Common Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period plus unvested participating restricted share units. Diluted earnings per share is computed by dividing net income attributable to DeVry Education Group 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 2,298,000 and 2,158,000 shares of common stock for the three and six months ended December 31, 2013, respectively, and 3,000,000 and 2,743,000 shares of common stock for the three and six months ended December 31, 2012, 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 (amounts in thousands):

	Three Months Ended December 31,				Six Months Ended December 31,
	2013		2012		2013		2012
Weighted Average Shares Outstanding		63,282		63,456		63,170		63,851
Unvested Participating Restricted Shares		914		846		896		712
Basic Shares		64,196		64,302		64,066		64,563
Effect of Dilutive Stock Options		523		234		550		225
Diluted Shares		64,719		64,536		64,616		64,788

Treasury Stock

DeVry Group’s Board of Directors has authorized stock repurchase programs on eight occasions. The eighth repurchase program was approved by the DeVry Group Board of Directors on August 29, 2012 and commenced in November 2012. Share repurchases under this plan were suspended as of May 2013. Shares that are repurchased by DeVry Group 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 Group under a swap arrangement resulting from employees’ exercise of incentive stock options pursuant to the terms of the DeVry Group Stock Incentive Plans (see “Note 4 – 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 Group Employee Stock Purchase Plan in exchange for employee payroll deductions. When treasury shares are reissued, DeVry Group 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 Loss

Accumulated Other Comprehensive Loss is composed of the change in cumulative translation adjustment and unrealized gains and losses on available-for-sale marketable securities, net of the effects of income taxes.

The Accumulated Other Comprehensive Loss balance at December 31, 2013, consists of $25.6 million of cumulative translation losses ($24.7 million attributable to DeVry Education Group Inc. and $0.9 million attributable to non-controlling interests) and $0.1 million of unrealized gains on available-for-sale marketable securities, net of tax of $0.1 million and all attributable to DeVry Education Group Inc. At December 31, 2012, this balance consisted of $6.5 million of cumulative translation losses ($5.7 million attributable to DeVry Education Group Inc. and $0.8 million attributable to non-controlling interests) and $0.2 million of unrealized losses on available-for-sale marketable securities, net of tax of $0.1 million and all attributable to DeVry Education Group 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 $67.8 million and $140.8 million for the three and six months ended December 31, 2013, respectively, and $60.9 million and $127.6 million for the three and six months ended December 31, 2012, respectively.

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-11: “Income Taxes (Topic 740): Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”. This guidance requires an unrecognized tax benefit related to a net operating loss carryforward, a similar tax loss or a tax credit carryforward to be presented as a reduction to a deferred tax asset, unless the tax benefit is not available at the reporting date to settle any additional income taxes under the tax law of the applicable tax jurisdiction. The guidance is effective for the fiscal years and interim periods beginning after December 15, 2013 with early adoption permitted. Management is in the process of evaluating the effects of this guidance but does not believe it will have a significant impact on DeVry Group’s consolidated financial statements.

Reclassifications

The previously reported amounts in the Consolidated Balance Sheets and Consolidated Statements of Cash Flows for Advance Tuition Payments and Deferred Tuition Revenue have been combined as Deferred and Advance Tuition to conform to the current presentation format.

NOTE 3: ASSETS AND LIABILITIES OF DIVESTED BUSINESS AND DISCONTINUED OPERATIONS

Assets and Liabilities of Divested Business

In December 2013, the assets of DeVry Group’s Advanced Academics Inc. (“AAI”) subsidiary, which had previously been disclosed as “held for sale” were divested. These assets were sold for $2.0 million which approximated the recorded net book value of the assets on the date of sale. The assets and liabilities of AAI are separately disclosed in the Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012. The following is a summary of balance sheet information of divested assets and liabilities at June 30, 2013 and December 31, 2012 (dollars in thousands).

	June 30,		December 31,
	2013		2012
ASSETS:
Current Assets:
Cash and Cash Equivalents	$	568	$	(308)
Accounts Receivable, Net		12,050		21,336
Deferred Income Taxes, Net		2,757		168
Prepaid Expenses and Other		844		7,510
Total Current Assets of Divested Business		16,219		28,706
Land, Building and Equipment of Divested Business, Net		-		5,521
Other Assets:
Deferred Income Taxes, Net		2,602		498
Other Assets		3,185		220
Total Other Assets of Divested Business		5,787		718
Total Assets of Divested Business	$	22,006	$	34,945
LIABILITIES:
Current Liabilities:
Accounts Payable	$	178	$	286
Accrued Salaries, Wages and Benefits		482		436
Accrued Expenses		47		34
Deferred and Advance Tuition		6		774
Total Current Liabilities of Divested Business		713		1,530
Other Liabilities:
Deferred Rent and Other		112		-
Total Other Liabilities of Divested Business		112		-
Liabilities of Divested Business	$	825	$	1,530

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Discontinued Operations

The operating results of AAI are separately disclosed in the Consolidated Income Statements as “Discontinued Operations – Loss from Operations of Divested Component”. The following is a summary of operating results of the discontinued operations for the three and six month periods ended December 31, 2013 and 2012 (dollars in thousands).

	For the Three Months				For the Six Months Ended
	Ended December 31,				December 31,
	2013		2012		2013		2012
DISCONTINUED OPERATIONS:
Loss from Operations of Divested Component	$	(1,084)	$	(1,290)	$	(3,931)	$	(4,948)
Gain on Sale of Assets		372		-		372		-
Asset Impairment Charge (Note 5)		-		-		(13,477)		-
Restructuring Expense		(675)		-		(675)		-
		(1,387)		(1,290)		(17,711)		(4,948)
Income Tax Benefit		467		452		1,463		1,936
Loss from Discontinued Operations, Net of Income Taxes	$	(920)	$	(838)	$	(16,248)	$	(3,012)

NOTE 4: STOCK-BASED COMPENSATION

DeVry Group maintains five stock-based award plans: the 1994 Stock Incentive Plan, the 1999 Stock Incentive Plan, the 2003 Stock Incentive Plan, the Second Amended and Restated Incentive Plan of 2005 and the Second Amended and Restated Incentive Plan of 2013. Under these plans, directors, key executives and managerial employees are eligible to receive incentive stock or nonqualified options to purchase shares of DeVry Group’s common stock. The Second Amended and Restated Incentive Plan of 2013 and Second Amended and Restated Incentive Plan of 2005 also permit the award of stock appreciation rights, restricted stock, performance stock and other stock and cash based compensation. Though options remain outstanding under the 1994, 1999, 2003 and 2005 incentive plans, no further stock based awards will be issued from these plans. The Second Amended and Restated Incentive Plan of 2005 and the Second Amended and Restated Incentive Plan of 2013 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 Group accounts for options granted to retirement eligible employees that fully vest upon an employees’ 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, 2013, 11,088,024 authorized but unissued shares of common stock were reserved for issuance under DeVry Group’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.

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The following is a summary of options activity for the fiscal year ended December 31, 2013:

				Weighted
				Average
			Weighted	Remaining		Aggregate
			Average	Contractual		Intrinsic
	Options		Exercise	Life in		Value
	Outstanding		Price	Years		($000)
Outstanding at July 1, 2013	3,327,668	$	32.64
Options Granted	556,050	$	28.32
Options Exercised	(153,645)	$	22.67
Options Forfeited	(14,746)	$	24.48
Options Expired	(40,804)	$	40.21
Outstanding at December 31, 2013	3,674,523	$	32.37	6.28	$	25,465
Exercisable at December 31, 2013	2,246,701	$	35.82	4.71	$	11,742

The following is a summary of stock appreciation rights activity for the fiscal year ended December 31, 2013:

				Weighted
				Average
	Stock		Weighted	Remaining		Aggregate
	Appreciation		Average	Contractual		Intrinsic
	Rights		Exercise	Life in		Value
	Outstanding		Price	Years		($000)
Outstanding at July 1, 2013	117,015	$	42.87
Rights Granted	1,050	$	28.32
Rights Exercised	-	$	-
Rights Canceled	-	$	-
Outstanding at December 31, 2013	118,065	$	42.74	6.20	$	94
Exercisable at December 31, 2013	85,855	$	45.25	5.20	$	22

The total intrinsic value of options exercised for the six months ended December 31, 2013 and 2012 was $1.8 million and $0.4 million, respectively.

The fair value of DeVry Group’s stock-based awards was estimated using a binomial model. This model uses historical cancellation and exercise experience of DeVry Group 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 Group’s stock option plans during first six months of fiscal years 2014 and 2013 were $11.68 and $7.62, per share, respectively. The fair value of DeVry Group’s stock option awards were estimated assuming the following weighted average assumptions:

	Fiscal Year
	2013		2012
Expected Life (in Years)	6.58		6.63
Expected Volatility	43.76	%	43.67	%
Risk-free Interest Rate	2.16	%	1.03	%
Dividend Yield	0.90	%	0.61	%
Pre-vesting Forfeiture Rate	3.00	%	3.00	%

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 Group’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 Group’s long-term historical volatility. The pre-vesting forfeiture rate is based on DeVry Group’s historical stock option forfeiture experience.

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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 Group records may differ significantly from what was recorded in previous periods.

During the first six months of fiscal year 2014, DeVry Group granted 433,970 shares of restricted stock to selected employees and non-employee directors. Of these, 73,010 are performance based shares which are earned by the recipients over a three year period based on achievement of specified academic and student outcome goals when a minimum level of DeVry Group return on invested capital is attained. The remaining 360,960 shares and all other previously granted 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 Group, or upon retirement. During the restriction period, the recipient of the non-performance based shares shall have the right to receive dividend equivalents. This right does not pertain to the performance based shares. The following is a summary of restricted stock activity for the six months ended December 31, 2013:

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			Weighted
	Restricted		Average
	Stock		Grant Date
	Outstanding		Fair Value
Nonvested at July 1, 2013	1,058,443	$	27.03
Shares Granted	431,170	$	28.85
Shares Vested	(307,935)	$	31.53
Shares Canceled	(29,364)	$	27.70
Nonvested at December 31, 2013	1,152,314	$	26.49

The following table shows total stock-based compensation expense included in the Consolidated Statements of Income (dollars in thousands):

	For the Three Months				For the Six Months
	Ended December 31,				Ended December 31,
	2013		2012		2013		2012
Cost of Educational Services	$	1,294	$	849	$	3,155	$	2,679
Student Services and Administrative Expense		2,750		1,805		6,705		5,691
Income Tax Benefit		(1,392)		(848)		(3,338)		(2,695)
Net Stock-Based Compensation Expense	$	2,652	$	1,806	$	6,522	$	5,675

As of December 31, 2013, $29.8 million of total pre-tax unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of 2.4 years. The total fair value of options and shares vested during the six months ended December 31, 2013 and 2012 was approximately $6.3 million and $9.0 million, respectively.

There were no capitalized stock-based compensation costs at December 31, 2013 and 2012.

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

NOTE 5: FAIR VALUE MEASUREMENTS

DeVry Group has elected not to measure any assets or liabilities at fair value other than those required to be measured at fair value on a recurring basis, assets measured at fair value on a non-recurring basis such as goodwill and intangible assets and assets of businesses where the long-term value of the operations have been impaired. Management has fully considered all authoritative guidance when determining the fair value of DeVry Group’s financial assets as of December 31, 2013.

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 Group 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 Group 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.

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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.

Assets measured at fair value on a non-recurring basis include goodwill and indefinite-lived intangibles arising from a business combination. These assets 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 2013. See “Note 8: Intangible Assets” for further discussion on the impairment review including valuation techniques and assumptions.

During the first quarter of fiscal year 2014, it was determined that net assets of AAI reporting unit had been further impaired. This determination was made after review of the updated third party offers to purchase the assets of the business. Assets measured at fair value in circumstances where the long-term value of a business has been impaired include the assets of AAI. To determine the fair value of the AAI assets, management incorporated 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 analysis including third party offers received to acquire the assets of AAI along with estimated costs to dispose of the assets. Based on this analysis, the fair market value of the AAI assets less the costs to sell was determined to be approximately $2.0 million which was approximately $13.5 million less than the carrying value. As a result management recorded a pre-tax $13.5 million asset impairment charge in the first quarter of fiscal year 2014. The assets of this business were sold in December 2013 for $2.0 million. See “Note 3: Assets and Liabilities of Divested Business and Discontinued Operations” for further discussions on AAI.

The following tables present DeVry Group’s assets and liabilities at December 31, 2013, 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	$	262,034	$	-	$	-
Available for Sale Investments:
Marketable Securities, short-term		3,263		-		-
Favip Contingent Consideration		-		-		2,371
Total Financial Assets at Fair Value	$	265,297	$	-	$	2,371

Cash Equivalents and investments in short-term Marketable Securities are valued using a market approach based on the quoted market prices of identical instruments. The Favip Contingent Consideration is valued at management’s estimate of the percentage likelihood of the contingency being realized. Management assumes that there is a 70 percent likelihood that Favip will receive status of a university center and that the contingency will be payable.

The fair value of the institutional loans receivable included in Accounts Receivable, Net and Other Assets on the Consolidated Balance Sheet as of December 31, 2013 is estimated by discounting the future cash flows using current rates for similar arrangements. As of December 31, 2013, the carrying value and the estimated fair value of these financial instruments was approximately $43.4 million. See “Note 6: Financing Receivables” for further discussion on these institutional loans receivable.

Below is a roll-forward of liabilities measured at fair value using Level 3 inputs for the three and six months ended December 31, 2013 and 2012 (dollars in thousands). The amount recorded as interest expense in fiscal 2013 is classified in the Interest (Expense) Income section of the Consolidated Statements of Income. The amount recorded as foreign currency translation loss is classified as Student Services and Administrative Expense in the Consolidated Statements of Income.

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2013		2012		2013		2012
Balance at Beginning of Period	$	2,519	$	7,344	$	2,509	$	4,361
Total Realized Losses Included in Income:
Interest Expense-ATC Accretion		-		71		-		140
Total Unrealized (Losses) Gains Included in AOCI:
Foreign Currency Translation Changes		(148)		4		(138)		185
Transfers into Level 3:
Favip Contingent Consideration		-		-		-		2,733
Balance at End of Period	$	2,371	$	7,419	$	2,371	$	7,419

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NOTE 6: FINANCING RECEIVABLES

DeVry Group’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 and Ross University School of Veterinary 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 for tuition, books, and fees, and are available only after all other student financial assistance has been applied toward those purposes. In addition, Ross University School of Medicine and Ross University School of Veterinary Medicine loans may be used for students’ living expenses. 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. DeVry University, Chamberlain College of Nursing, Carrington College and Carrington College of California require that students begin repaying a small portion of the loans while they are still in school, and then payments increase upon completing or departing the program. 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. Management performs this analysis periodically throughout the year. Since all of DeVry Group’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, 2013 and 2012 (dollars in thousands).

	As of December 31,
	2013		2012
Gross Institutional Student Loans	$	62,187	$	55,108

Allowance for Credit Losses		(18,735)		(18,665)

Net Institutional Student Loans	$	43,452	$	36,443

Of the net balances above, $20.1 million and $18.6 million were classified as Accounts Receivable, Net in the Consolidated Balance Sheets at December 31, 2013 and 2012, respectively, and $23.3 million and $17.8 million, representing amounts due beyond one year, were classified in the Consolidated Balance Sheets as Other Assets at December 31, 2013 and 2012, 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, 2013 and 2012. Loans are considered nonperforming if they are more than 120 days past due (dollars in thousands).

	As of December 31,
	2013		2012
Institutional Student Loans:
Performing	$	46,108	$	41,524
Nonperforming		16,079		13,584
Total Institutional Student Loans	$	62,187	$	55,108

							Greater
							Than						Total
	30-59		60-89		90-119		120						Institutional
	Days		Days		Days		Days			Total			Student
	Past Due		Past Due		Past Due		Past Due			Past Due	Current		Loans
Institutional Student Loans:
December 31, 2013	$	4,896	$	1,737	$	1,520	$	16,079	$	24,232	$	37,955	$	62,187
December 31, 2012	$	4,030	$	1,773	$	1,346	$	13,584	$	20,733	$	34,375	$	55,108

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NOTE 7: BUSINESS COMBINATIONS

Faculdade Diferencial Integral

On July 1, 2013, DeVry Educacional do Brasil S/A (f/k/a Fanor-Faculdades Nordeste S/A) (DeVry Brasil), a subsidiary of DeVry Group, 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 will be required to make additional payments of approximately $9.0 million over the next four years. Facid currently serves approximately 2,500 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. Facid joined DeVry Brasil, which following the acquisition operates six institutions at 13 campuses in northeast Brazil. With the addition of Facid, these institutions provide education programs to nearly 30,000 students.

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 preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (dollars 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 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. Their values and estimated useful lives by asset type are as follows (dollars in thousands):

	At July 1, 2013
	Value		Estimated
	Assigned		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.

Faculdade do Vale do Ipojuca

On September 3, 2012, DeVry Brasil 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 $32.2 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. As of December 31, 2013, $2.4 million is accrued for this additional payment.

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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 Group's growth and diversification strategy, increasing its international presence in Brazil.

The operations of Favip are included in DeVry Group’s International and Professional Education segment. The results of Favip’s operations have been included in the Consolidated Financial Statements of DeVry Group 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 September 3,
	2012
Current Assets	$	4,414
Property and Equipment		2,897
Other Long-term Assets		844
Intangible Assets		13,571
Goodwill		16,120
Total Assets Acquired		37,846
Liabilities Assumed		5,677
Net Assets Acquired	$	32,169

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 Favip’s strategic fit into DeVry Group’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		Estimated
	Assigned		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.

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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 December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Weighted Avg. Amortization Period
Amortizable Intangible Assets:
Student Relationships	$	80,971	$	(76,814)	(a)
Customer Relationships		3,630		(922)	12 Years
Non-compete Agreements		2,521		(1,910)	(b)
Curriculum/Software		5,648		(4,545)	5 Years
Outplacement Relationships		3,900		(1,374)	15 Years
Clinical Agreements		550		(18)	15 Years
Trade Names		5,699		(4,823)	(c)
Total	$	102,919	$	(90,406)
Indefinite-lived Intangible Assets:
Trade Names	$	40,617
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		67,200
AUC Title IV Eligibility and Accreditations		100,000