Devry Education Group Inc. – ‘10-Q’ for 9/30/05

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Quarterly Report   —   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Devry Inc. Form 10Q for First Quarter of FY 2006      39    174K 
 2: EX-4        Exhibit 4 to 1st Quarter FY 2006 10Q                   6     20K 
 3: EX-31       Exhibit 31 to 1st Quarter FY 2006 10Q                  4     15K 
 4: EX-32       Exhibit 32 to 1st Quarter FY 2006 10Q                  1      5K 

10-Q   —   Devry Inc. Form 10Q for First Quarter of FY 2006
Document Table of Contents

10-Q
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION                  
WASHINGTON, D.C.  20549                   
_______________________                   

FORM 10-Q                   

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

For the quarterly period ended September 30, 2005                   

Commission file number 1-13988                  

DeVry Inc.              
------------------------------------------------------                  
(Exact name of registrant as specified in its charter)                  

DELAWARE                            36-3150143                
------------------------------          -------------------                     
(State or other jurisdiction of          (I.R.S. Employer                       
incorporation or organization)          Identification No.)                     

One Tower Lane, Oakbrook Terrace, Illinois     60181              
-------------------------------------------------------------                   
(Address of principal executive offices)           (Zip Code)                   

(630) 571-7700              
---------------------------------------------------                   
(Registrant's telephone number, including area code)                  

Indicate  by check mark whether the registrant (1) has filed  all               
reports  required  to be filed by Section  13  or  15(d)  of  the               
Securities  Exchange Act of 1934 during the preceding  12  months               
(or  for such shorter period that the registrant was required  to               
file  such  reports),  and (2) has been subject  to  such  filing               
requirements for the past 90 days.                                              

YES   X                     

Indicate  by  check mark whether the registrant is an accelerated               
filer (as defined in Rule 12b-2 of the Exchange Act).                           

YES   X                     

Indicate by check mark whether the registrant is a shell  company               
(as defined in Rule 12b-2 of the Exchange Act).                                 

NO   X                    

Number of shares of Common Stock, $0.01 par value, outstanding on               
October 31, 2005:  70,529,100                                                   

Total number of pages:  50                                                      

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DeVry Inc.                  

FORM 10-Q INDEX                   
For the Quarter Ended September 30, 2005                  

                                      Page No.
                                      --------

PART I.   Financial Information                                                 

Item 1. Financial Statements:                                                 

Consolidated Balance Sheets at                                            
September 30, 2005, June 30, 2005,                                    
and September 30, 2004                               3-4              

Consolidated Statements of Income                                         
for the quarter ended                                                 
September 30, 2005 and 2004                          5                

Consolidated Statements of Cash                                           
Flows for the three months ended                                      
September 30, 2005 and 2004                          6                

Notes to Consolidated Financial                                           
Statements                                           7-24             

Item 2. Management's Discussion and                                           
Analysis of Financial Condition                           
and Results of Operations                     25-33       

Item 3. Quantitative and Qualitative                                          
Disclosures About Market Risk                 34          

Item 4. Controls and Procedures                         35                    

Part II.  Other Information                                                     

Item 1. Legal Proceedings                               36-37                 

Item 4. Submission of Matters to a                                            
Vote of Security Holders                      37          

Item 6. Exhibits                                        38                    

SIGNATURES                                               39                     

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PART I - Financial Information                                                  

Item 1 - Financial Statements                                               

                                                                [Download Table]
                                   DEVRY INC.                            
                          CONSOLIDATED BALANCE SHEETS                    
                             (Dollars in Thousands)                      
                                   (Unaudited)                           


                                  September 30,  June 30,   September 30,
                                      2005         2005         2004     
                                  ------------ ------------ ------------ 
                                                 Restated     Restated   
                                                                         
ASSETS                                                                   

  Current Assets                                                         

    Cash and Cash Equivalents       $119,829     $161,823     $115,071   
    Restricted Cash                   26,217       13,935       27,702   
    Accounts Receivable, Net          83,585       39,226       64,298   
    Inventories                           95          164        1,376   
    Deferred Income Taxes             17,142       17,142        6,454   
    Prepaid Expenses and Other        16,478       10,048       12,831   
                                     -------      -------      -------   
       Total Current Assets          263,346      242,338      227,732   
                                     -------      -------      -------   
  Land, Buildings and Equipment                                          

    Land                              68,015       68,013       64,256   
    Buildings                        222,479      212,428      204,378   
    Equipment                        237,620      234,201      227,110   
    Construction In Progress           4,105       15,813        7,513   
                                     -------      -------      -------   
                                     532,219      530,455      503,257   

    Accumulated Depreciation        (249,966)    (243,688)    (220,343)  
                                     -------      -------      -------   
       Land, Buildings and                                               
         Equipment, Net              282,253      286,767      282,914   
                                     -------      -------      -------   
  Other Assets                                                           

    Intangible Assets, Net            71,118       73,699       82,709   
    Goodwill                         291,308      289,308      284,397   
    Perkins Program Fund, Net         13,290       13,290       12,472   
    Other Assets                       4,481        4,633        5,457   
                                     -------      -------      -------   
       Total Other Assets            380,197      380,930      385,035   
                                     -------      -------      -------   
TOTAL ASSETS                        $925,796     $910,035     $895,681   
                                     =======      =======      =======   


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

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                                                                [Download Table]
                                   DEVRY INC.                            
                          CONSOLIDATED BALANCE SHEETS                    
                             (Dollars in Thousands)                      
                                   (Unaudited)                           


                                  September 30,  June 30,   September 30,
                                      2005         2004         2004     
                                  ------------ ------------ ------------ 
                                                 Restated     Restated   
                                                                         
LIABILITIES                                                              

  Current Liabilities                                                    

    Current Maturities of                                                
      Revolving Loan                $ 50,000     $ 50,000     $     -    
    Accounts Payable                  24,154       30,681       17,601   
    Accrued Salaries, Wages &                                            
      Benefits                        30,784       34,071       33,316   
    Accrued Expenses                  30,525       34,462       28,062   
    Advance Tuition Payments          15,664       14,685       16,981   
    Deferred Tuition Revenue          95,446       22,823       82,311   
                                     -------      -------      -------   
       Total Current Liabilities     246,573      186,722      178,271   
                                     -------      -------      -------   
  Other Liabilities                                                      

    Revolving Loan                         0       50,000       75,000   
    Senior Debt                      125,000      125,000      125,000   
    Deferred Income Taxes             15,963       15,949       13,736   
    Accrued Post-employment                                              
      Agreements                       6,352        6,352        4,267   
    Deferred Rent and Other           12,613       12,629       13,016   
                                     -------      -------      -------   
       Total Other Liabilities       159,928      209,930      231,019   
                                     -------      -------      -------   
TOTAL LIABILITIES                    406,501      396,652      409,290   
                                     -------      -------      -------   
SHAREHOLDERS' EQUITY                                                     

  Common Stock, $0.01 par value,                                         
    200,000,000 Shares Authorized,                                       
    70,527,000, 70,475,000  and                                          
    70,365,000, Shares Issued and                                        
    Outstanding at September 30,                                         
    2005, June 30, 2005 and                                              
    September 30, 2004,                                                  
    Respectively                         706          706          704   
  Additional Paid-in Capital         115,086      113,571      102,116   
  Retained Earnings                  403,572      398,840      383,071   
  Accumulated Other Comprehensive                                        
    Income (Loss)                        (69)         266          500   
                                     -------      -------      -------   
TOTAL SHAREHOLDERS' EQUITY           519,295      513,383      486,391   
                                     -------      -------      -------   
TOTAL LIABILITIES AND                                                    
  SHAREHOLDERS' EQUITY              $925,796     $910,035     $895,681   
                                     =======      =======      =======   

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

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                                                                [Download Table]
                               DEVRY INC.                     
                   CONSOLIDATED STATEMENTS OF INCOME          
           (Dollars in Thousands Except for Per Share Amounts)
                              (Unaudited)                     



                                         For The Quarter      
                                       Ended September 30,    
                                      ---------------------   
                                        2005         2004     
                                      ---------------------   
                                                   Restated   
                                                              
REVENUES:                                                     

   Tuition                            $183,053     $177,984   
   Other Educational                    13,308       10,352   
   Interest                                419           60   
                                       -------      -------   
      Total Revenues                   196,780      188,396   
                                       -------      -------   
COSTS AND EXPENSES:                                           

   Cost of Educational Services        111,709      110,265   
   Student Services and                                       
      Administrative Expense            75,890       75,267   
   Interest Expense                      2,655        1,991   
                                       -------      -------   
      Total Costs and Expenses         190,254      187,523   
                                       -------      -------   
Income Before Income Taxes and                                
   Cumulative Effect of Change                                
   in Accounting                         6,526          873   

Income Tax Provision                     1,794          543   
                                       -------      -------   
Income Before Cumulative Effect                               
   of Change in Accounting               4,732          330   

Cumulative Effect of Change in                                
   Accounting, Net of Tax                    -        1,810   
                                       -------      -------   
NET INCOME                            $  4,732     $  2,140   
                                       =======      =======   

EARNINGS PER COMMON SHARE                                     
   Basic                                                      
      Income Before Cumulative                                
      Effect of Change in Accounting     $0.07        $0.01   
      Cumulative Effect of Change                             
      in Accounting                          -         0.02   
                                         -----        -----   
      Net Income                         $0.07        $0.03   
                                         =====        =====   

   Diluted                                                    
      Income Before Cumulative                                
      Effect of Change in Accounting     $0.07        $0.01   
      Cumulative Effect of Change                             
      in Accounting                          -         0.02   
                                         -----        -----   
      Net Income                         $0.07        $0.03   
                                         =====        =====   

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

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                                                                [Download Table]
                                DEVRY INC.                                 
                  CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                         (Dollars in Thousands)                            
                               (Unaudited)                                 

                                                      For The Three Months 
                                                      Ended September 30,  
                                                      -------------------- 
                                                        2005        2004   
                                                      --------    -------- 
                                                                  Restated 
                                                                           
CASH FLOWS FROM OPERATING ACTIVITIES:                                      
  Net Income                                          $  4,732    $  2,140 
  Adjustments to Reconcile Net Income to Net                               
    Cash Provided by Operating Activities:                                 
     Share-Based Compensation Charge                     1,145       2,439 
     Depreciation                                        9,093       9,630 
     Amortization                                        2,701       3,907 
     Provision for Refunds and                                             
      Uncollectible Accounts                            11,264       9,225 
     Deferred Income Taxes                                  14         850 
     Loss on Disposals of Land, Buildings                                  
      and Equipment                                         10          55 
     Changes in Assets and Liabilities, net of                             
       Effects from Acquisition of Business:                               
         Restricted Cash                               (12,279)    (14,245)
         Accounts Receivable                           (55,604)    (45,348)
         Inventories                                        77       1,905 
         Prepaid Expenses And Other                     (6,418)     (2,300)
         Perkins Program Fund Contribution and Other         -        (250)
         Accounts Payable                               (6,556)     (9,748)
         Accrued Salaries, Wages,                                          
          Expenses and Benefits                         (7,281)      5,727 
         Advance Tuition Payments                          941         162 
         Deferred Tuition Revenue                       72,623      60,481 
                                                       -------     ------- 
  NET CASH PROVIDED BY OPERATING ACTIVITIES             14,462      24,630 
                                                       -------     ------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                      
  Capital Expenditures                                  (4,564)     (5,712)
  Payment for Purchase of Business,                                        
    net of Cash Acquired                                (2,000)          - 
                                                       -------     ------- 
  NET CASH USED IN INVESTING ACTIVITIES:                (6,564)     (5,712)
                                                       -------     ------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                      
  Proceeds From Exercise of Stock Options                  328         130 
  Excess Tax Benefit from Share-Based Payments              42          36 
  Repayments Under Revolving Credit Facility           (50,000)    (50,000)
                                                       -------     ------- 
  NET CASH USED IN FINANCING ACTIVITIES                (49,630)    (49,834)

Effects of Exchange Rate Differences                      (262)       (240)
                                                       -------     ------- 
NET DECREASE IN CASH AND CASH EQUIVALENTS              (41,994)    (31,156)

Cash and Cash Equivalents at Beginning                                     
 of Period                                             161,823     146,227 
                                                       -------     ------- 
Cash and Cash Equivalents at End of Period            $119,829    $115,071 
                                                       =======     ======= 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                           
  Interest Paid During the Period                       $2,206      $1,597 
  Income Tax Payments During the Period, Net             6,900         314 


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

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DEVRY INC.  
Notes to Consolidated Financial Statements      
For the Quarter Ended September 30, 2005

----------  

NOTE 1:  INTERIM FINANCIAL STATEMENTS                                           

The interim consolidated financial statements include the accounts              
of DeVry Inc. (the Company) and its wholly-owned subsidiaries. These            
financial statements are unaudited but, in the opinion of management,           
contain all adjustments, consisting only of normal, recurring                   
adjustments, necessary to fairly present the financial condition                
and results of operations of the Company.  The June 30, 2005 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 the Company's Annual Report on Form 10-K as filed                  
with the Securities and Exchange Commission for the fiscal year                 
ended June 30, 2005.                                                            

The results of operations for the three months ended September 30,              
2005, are not necessarily indicative of results to be expected for the          
entire fiscal year.                                                             

The consolidated financial statements that are presented for the                
fiscal year ended June 30, 2005 and the three months ended                      
September 30, 2004, have been restated to reflect the adjustments               
necessary under the provisions of the modified retrospective                    
application method of Statement of Financial Accounting Standards               
No. 123(R), "Share Based Payments" ("SFAS 123(R)"). SFAS123(R) was              
adopted in the first quarter of fiscal 2006 (See Note 3).                       

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Derivative Instruments and Hedging Activities                                   
---------------------------------------------                                   
The Company uses derivative financial instruments to manage its                 
exposure to movements in interest rates. The use of these                       
financial instruments modifies the exposure of these risks with                 
the intent to reduce the risk to the Company. The Company does not              
use financial instruments for trading purposes, nor does it use                 
leveraged financial instruments. Credit risk related to the                     
derivative financial instruments is considered minimal and is                   
managed by requiring high credit standards for its counterparties               
and periodic settlements.                                                       

All derivative contracts are reported at fair value, with changes               
in fair value reported in earnings or deferred, depending on the                
nature and effectiveness of the offset or hedging relationship.                 
Any ineffectiveness in a hedging relationship is recognized                     
immediately into earnings.                                                      

During the first quarter of fiscal 2004, the Company entered into               
several interest rate cap agreements to protect approximately                   
$100,000,000 of its outstanding borrowings from sharp increases                 
in short-term interest rates upon which its borrowings are based.               
These agreements expired in the first quarter of fiscal 2006. The               
Company intends to periodically evaluate the need for interest                  
rate protection in light of projected changes in interest rates                 
and borrowing levels.                                                           

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NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued                  

Derivative Instruments and Hedging Activities, continued                        
--------------------------------------------------------                        
These interest rate cap agreements were designated as cash flow                 
hedging instruments and were intended to protect the portion of                 
the Company's debt that is covered by these agreements from short-              
term interest rates above 3.5%.                                                 

These cap agreements were purchased at fair market values totaling              
$568,000. This cost was capitalized and amortized to earnings and               
recorded as interest expense over the 24-month term of the                      
agreements.  Differences between the changes in fair value of the               
interest rate caps and the amount being amortized to earnings were              
reported as a component of Other Comprehensive Income. These                    
amounts were reclassified and recognized into earnings over the 24-             
month term of the agreements.  As of September 30, 2005, these cap              
agreements had expired so there is no effect on Accumulated Other               
Comprehensive Income in the Consolidated Balance Sheets. As of                  
September 30, 2004, $38,000 was recorded as Other Comprehensive                 
Income in the Consolidated Balance Sheet. This represents the                   
cumulative difference between the decline in the fair market value              
of the interest rate caps of $112,000 and the $150,000 expensed as              
interest. Gains of $12,000 and $20,000 were recorded as Other                   
Comprehensive Income for the three months ended September 30, 2005              
and 2004, respectively.  Interest expense of $73,000 and $60,000                
was charged to earnings for these interest rate caps for the three              
months ended September 30, 2005 and 2004, respectively. For the                 
three months ended September 30, 2005 and 2004, there was no                    
ineffectiveness related to these agreements.                                    

Internal Software Development Costs                                             
-----------------------------------                                             
The Company capitalizes certain internal software development costs             
that are amortized using the straight line method over the estimated            
useful lives of the software, not to exceed five years. Capitalized             
costs include external direct costs of materials and services consumed          
in developing or obtaining internal-use software and payroll and                
payroll related costs for employees who are directly associated with            
the internal software development project. Capitalization of such               
costs ceases no later than the point at which the project is                    
substantially complete and ready for its intended purpose.  Capitalized         
software development costs for projects not yet complete, which are             
included as Equipment in the Land, Buildings and Equipment section of           
the Consolidated Balance Sheets, were $1,083,000 as of September 30, 2004.      
As of September 30, 2005 and June 30, 2005 there were no capitalized            
costs for projects not yet completed.  The gross capitalized software           
development costs for completed projects, which are also included               
as Equipment in the Land, Building and Equipment section of the                 
Consolidated Balance Sheets, were $20,605,000 at September 30,                  
2005 and June 30, 2005, and $18,767,000 at September 30, 2004.                  

Post-employment Benefits                                                        
------------------------                                                        
The Company's employment agreements with its Chairman of the                    
Board of Directors and Chief Executive Officer provide certain                  
post-employment benefits that require accrual over the                          
expected future service period beginning with the second                        
quarter of fiscal 2003. For the three months                                    

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NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued                  

Post-employment Benefits, continued                                             
-----------------------------------                                             
ended September 30, 2005 the Company recognized no expenses                     
related to these agreements. For the three months ended September 30,           
2004, the Company recognized expense of approximately                           
$588,000, related to these agreements. The amounts provided                     
are based on recording, over the period of active service, the                  
amount that will represent the present value of the                             
obligation through the date the executive attains full                          
eligibility for the benefits, discounted using a 6.03% rate                     
and using the sinking fund accrual method.                                      

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.  Shares used in this computation were 70,506,000 and                    
70,349,000 for the first quarters ended September, 2005 and 2004,               
respectively.  Diluted earnings per share is computed by dividing               
net income 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. Shares              
used in this computation were 70,664,000 and 70,677,000 for the                 
first quarters ended September 30, 2005 and 2004, respectively.                 
Excluded from the computations of diluted earnings per share were               
options to purchase 2,839,000 and 1,289,000 shares of common stock for          
the first quarters ended September 30, 2005 and 2004, respectively.             
These outstanding options were excluded because the option                      
exercise prices were greater than the average market price of the               
common shares during these periods and therefore, their effect                  
would be anti-dilutive.                                                         

Comprehensive Income                                                            
--------------------                                                            
The differences between changes in the fair values of the cash                  
flow hedging instruments described above in "Derivative                         
Instruments and Hedging Activities", and the amount of these                    
instruments being amortized to earnings are reported as a                       
component of Comprehensive Income.  The amounts recorded in Other               
Comprehensive Income are gains of $12,000 and $20,000 for the                   
three months ended September 30, 2005 and 2004, respectively. The               
Company's only other item that meets the definition for adjustment              
to arrive at Comprehensive Income is the change in cumulative                   
translation adjustment.  The amounts recorded in Other                          
Comprehensive Income for the changes in currency translation rates              
were a loss of $262,000 for the three months ended September 30,                
2005 and a loss of $240,000 for the three months ended September                
30, 2004.                                                                       

The Accumulated Other Comprehensive Income balance at September                 
30, 2005 is composed entirely of a cumulative translation loss of               
$69,000.  This balance at September 30, 2004, is composed of a                  
$38,000 gain related to the cash flow hedge and a cumulative                    
translation gain of $462,000.                                                   

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NOTE 3:  STOCK-BASED COMPENSATION                                               

The Company maintains five stock-based award plans: the Amended                 
and Restated Stock Incentive Plan, established in 1988, the 1991 Stock          
Incentive Plan, the 1994 Stock Incentive Plan, the 1999 Stock Incentive         
Plan and the 2003 Stock Incentive Plan. Under these plans, directors, key       
executives and managerial employees are eligible to receive                     
incentive stock or nonqualified options to purchase shares of the               
Company's common stock.  The Amended and Restated Stock Incentive               
Plan, the 1994, 1999 and 2003 Stock Incentive Plans are administered            
by a Plan Committee of the board of directors. Plan Committee members           
are granted automatic, nondiscretionary annual options.  The 1991 Stock         
Incentive Plan is administered by the board of directors.  Options under all    
five plans are granted for terms of up to 10 years and vest over periods of     
one 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.                                         

The company accounts for options granted to retirement eligible                 
employees that vest upon an employees' retirement under the non-                
substantive vesting period approach to these options. Under this                
approach, compensation cost is recognized at the grant date for                 
options issued to retirement eligible employees where the options               
vest upon retirement.                                                           

At September 30, 2005, 4,696,617 authorized but unissued shares of              
common stock were reserved for issuance under the Company's stock option        
plans.                                                                          

Effective July 1,2005, the Company adopted the provisions of SFAS               
123(R). SFAS 123(R) establishes accounting for stock-based awards               
exchanged for employee services. Accordingly, 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.  The Company previously applied                       
Accounting Principles Board Opinion No. 25, "Accounting for Stock               
Issued to Employees," ("APB 25")and related Interpretations and                 
provided the required pro forma disclosures of SFAS No. 123,                    
"Accounting for Stock-Based Compensation" ("SFAS 123"). The Company             
elected to adopt the modified retrospective application method as               
provided by SFAS 123(R) and accordingly, financial statement amounts            
for the prior periods presented in this Form 10-Q have been restated            
to reflect the fair value method of expensing options as prescribed by          
SFAS 123(R).                                                                    

The following is a summary of options activity for the three                    
months ended September 30, 2005:                                                

                                                                [Download Table]

                                                           Weighted             
                                                Weighted    Average    Aggregate
                                                 Average    Remaining  Intrinsic
                                    Options     Exercise  Contractual    Value  
                                  Outstanding     Price       Life      ($000)  
                                  -----------   --------  -----------  ---------
                                                                                
Outstanding at July 1, 2005         3,764,844    $22.35                         
Options Granted                         2,000    $20.49                         
Options Exercised                     (52,220)   $ 6.26                         
Options Canceled                      (91,537)   $24.89                         
                                    ---------    ------                         
Outstanding at September 30, 2005   3,624,087    $22.52       6.75      $3,067  
                                    =========    ======       ====      ======  
Exercisable at September 30, 2005   2,612,959    $22.47       6.32      $2,624  
                                    =========    ======       ====      ======  


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NOTE 3:  STOCK-BASED COMPENSATION, continued                                    

The total intrinsic value of options exercised for the quarters                 
ended September 30, 2005 and 2004 was $672,000 and $615,000,                    
respectively.                                                                   

Prior to fiscal 2005, the fair value of the Company's stock-based               
awards was estimated as of the date of grant using the Black-                   
Scholes option pricing model ("Black-Scholes model"). The Black-                
Scholes model was developed to estimate the fair value of freely                
tradable, fully transferable options without vesting restrictions,              
which significantly differ from the Company's stock option awards.              
This model also requires highly subjective assumptions, including               
future stock price volatility and expected time until exercise,                 
which greatly affect the calculated grant date fair value.                      

Beginning with all options granted in the first quarter of fiscal               
2005, the fair value of the Company's stock-based awards is                     
estimated using a binomial model.  This model uses historical                   
cancellation and exercise experience of the Company to determine                
the option value. It also takes into account the illiquid nature                
of employee options during the vesting period, something that the               
Black-Scholes model does not consider. For these reasons, Company               
management believes that the binomial model provides a fair value               
that is more representative of actual experience and future                     
expected experience than the value calculated in previous years,                
using the Black-Scholes model.                                                  

The weighted average estimated grant date fair values, as defined               
by SFAS 123(R), for options granted at market price under the                   
Company's stock option plans during the first quarters of fiscal                
2006 and 2005 were $6.95 and $9.09, per share, respectively.  The               
fair values of the Company's stock option awards for the first                  
quarters of fiscal 2006 and 2005, were estimated assuming no                    
expected dividends and the following weighted average assumptions:              

      Fiscal Year,
      2006        2005
      ----        ----
Expected Life (in Years)          4.38        6.69                            
Expected Volatility              41.30%      41.41%                           
Risk-free Interest Rate           3.80%       3.83%                           
Pre-vesting Forfeiture Rate       4.00%       4.00%                           

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.                                                   

The Company's expected volatility is computed by combining and                  
weighting the implied market volatility, the Company's most recent              
volatility over the expected life of the option grant, and the                  
Company's long-term historical volatility.                                      

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NOTE 3:  STOCK-BASED COMPENSATION, continued                                    

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

(Dollars in thousands)                                                          
For the three months ended September 30,        2005       2004                 
---------------------------------------------------------------                 
Cost of Educational Services                  $  366       $780                 
Student Services and Administrative Expense      779      1,659                 
Income Tax Benefit                               161        279                 
                              -----      -----
Net Stock-based Compensation Expense          $  984     $2,160                 
                              =====      =====

As of September 30, 2005, $9.44 million of total pre-tax                        
unrecognized compensation costs related to non-vested awards is                 
expected to be recognized over a weighted average period of 3                   
years. The total fair value of options vested during the three                  
months ended September 30, 2005 and 2004 was $3,017,000 and                     
$4,176,000, respectively.                                                       

There were no capitalized stock-based compensation costs at                     
September 30, 2005 and 2004.                                                    

The Company has a policy of issuing new shares of common stock to               
satisfy share options exercises.                                                

As previously discussed, the Company elected to adopt SFAS 123(R)               
under the modified retrospective application method.  The Company               
believes that the modified retrospective application of this                    
standard achieves the highest level of clarity and comparability                
among the presented periods. Accordingly, financial statement                   
amounts for the prior periods presented in this Form 10-Q have                  
been                                                                            
restated to reflect the fair value method of expensing prescribed               
by SFAS 123(R).                                                                 

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NOTE 3:  STOCK-BASED COMPENSATION, continued                                    

The following table details the retroactive application impact of               
SFAS 123(R) on previously reported results, (dollars in thousands               
except per share amounts):                                                      

                                                                [Download Table]


                                    For the Quarter ended and as of
                                         September 30, 2004        
                                    -------------------------------
                                                        As         
                                                    Previously     
                                        Restated     Reported      
                                        ----------------------     
                                                                   
CONSOLIDATED STATEMENTS OF INCOME:                                 

Total Costs and Expenses                $187,523    $185,084       

Income before Income Taxes and                                     
  Cumulative Effect of Change                                      
  In Accounting                              873       3,312       

Income Tax Provision                         543         822       

Income before Cumulative Effect                                    
  Of Change in Accounting                    330       2,490       

Net Income                                 2,140       4,300       

EARNINGS PER COMMON SHARE:                                         
Basic                                                              
  Income before Cumulative Effect                                  
   Of Change in Accounting                 $0.01       $0.04       
  Net Income                               $0.03       $0.06       

Diluted                                                            
  Income before Cumulative Effect                                  
   Of Change in Accounting                 $0.01       $0.04       
  Net Income                               $0.03       $0.06       

CONSOLIDATED BALANCE SHEETS                                        

Deferred Income Taxes                   $ 13,736     $17,660       
Total Other Liabilities                  231,019     234,943       
Total Liabilities                        409,290     413,214       

Additional Paid-in Capital               102,116      71,927       
Retained Earnings                        383,071     409,336       
Total Shareholders' Equity               486,391     482,467       


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NOTE 3:  STOCK-BASED COMPENSATION, continued                                    

                                                                [Download Table]

                                        For the Quarter Ended  
                                         September 30, 2004    
                                        ---------------------- 
                                                        As     
                                                    Previously 
                                         Restated    Reported  
                                         --------------------- 
                                                               
CASH FLOW RELATED TO FIRST QUARTER                             
  FISCAL 2005                                                  

Net Income                                $  2,140    $  4,300 
Share Based Compensation Charge              2,439          -  
Deferred Income Taxes                          850       1,165 
Net Cash Provided by Operating Activities   24,630      24,666 

Excess Tax Benefits from Share                                 
  Based Payments                                36          -  
Net Cash Used in Financing Activities      (49,834)    (49,870)

                                                                [Download Table]

                                             June 30, 2005    
                                         ---------------------
                                                        As    
                                                    Previously
                                         Restated    Reported 
                                         ---------------------
                                                              
CONSOLIDATED BALANCE SHEETS                                   

Deferred Income Taxes                     $ 15,949     $21,408
Total Other Liabilities                    209,930     215,389
Total Liabilities                          396,652     402,111

Additional Paid-in Capital                 112,671      73,372
Retained Earnings                          399,740     433,580
Total Shareholders' Equity                 513,383     507,924


NOTE 4:  CHANGE IN ACCOUNTING - CHANGED FISCAL YEAR OF SUBSIDIARY               

Prior to July 1, 2004, the accounts of Becker Professional Review               
were consolidated based on an April 30 fiscal year end, which                   
management believed was its natural year-end based on its then                  
business cycle. As a result of a change in the CPA exam schedule,               
the Company has aligned the Becker fiscal year end to that of                   
DeVry Inc. The results of operations for the two-month period                   
from May 1, 2004 through June 30, 2004, are included as a                       
cumulative effect of change in accounting in the Consolidated                   
Statements of Income for the first quarter of fiscal 2005. The                  
cumulative effect of this change in accounting added $1,810,000,                
or $0.02 per share to net income for the first quarter. This                    
amount is net of income tax expense of $1,189,000.                              

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NOTE 4:  CHANGE IN ACCOUNTING - CHANGED FISCAL YEAR OF SUBSIDIARY,              
continued                                                                       

Net Income and basic and diluted earnings per share for the three               
months ended September 30, 2004 is set forth below as if the                    
consolidation of the Becker operations had been accounted for in                
the same manner for all periods presented. These amounts have been              
restated to reflect the fair value method of expensing stock-based              
compensation as prescribed by SFAS 123(R).                                      

Proforma            
Three Months Ended            
September 30, 2004            
------------------            

Net Income               $330,000                                     

Earnings per Share                                                    
Basic                  $0.01                                
Diluted                $0.01                                

NOTE 5: BUSINESS COMBINATIONS                                                   

Gearty CPE                                                                      
----------                                                                      
In July 2005, the Company signed a definitive agreement to acquire              
Gearty CPE for $2.0 million in cash. Gearty CPE, which operates in              
the New York/New Jersey metro area, is a provider of continuing                 
professional education (CPE) programs and seminars in accounting                
and finance predominantly serving chief financial officers and                  
controllers of Fortune 500 companies.                                           

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

Deaconess College of Nursing                                                    
----------------------------                                                    
On March 24, 2005, Ross University School of Nursing and Health                 
Sciences, a newly formed, wholly owned subsidiary of the Company,               
acquired the operations of Deaconess College of Nursing                         
(Deaconess) for $5,391,000 in cash, subject to purchase price                   
adjustments. Funding was provided from the Company's existing                   
operating cash balances. The results of Deaconess' operations have              
been included in the consolidated financial statements of the                   
Company since the date of acquisition.                                          

Located in St. Louis, Missouri, Deaconess had approximately 450                 
students enrolled at the date of purchase and offers associate and              
bachelor's degree programs in nursing. In addition, Deaconess                   
offers a bachelor's degree completion program designed for                      
registered nurses who have previously completed an associate                    
degree program. Classes are offered days, evenings and weekends                 
with non-clinical coursework offered both on campus and online.                 
The addition of Deaconess will further diversify the Company's                  
curricula.                                                                      

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NOTE 5: BUSINESS COMBINATION, continued                                         

Deaconess College of Nursing, continued                                         
---------------------------------------                                         
The following table summarizes the estimated fair values of the                 
assets acquired and liabilities assumed at the date of                          
acquisition.                                                                    

At March 24, 2005             
(In Thousands)              

Current Assets                           $  659                     
Property and Equipment                       37                     
Intangible Assets                         1,470                     
Goodwill                                  4,911                     
                     -----
Total Assets Acquired                 7,077                 

Current Liabilities Assumed               1,686                     
                     -----
Net Assets Acquired                  $5,391                 
                     -----

Of the $1,470,000 of acquired intangible assets, $470,000 was                   
assigned to the value of the Deaconess Title IV financial aid                   
eligibility and $730,000 was assigned to accreditations, both of                
which have been determined to not be subject to amortization, and               
$270,000 was assigned to student relationships that have an                     
average useful life of approximately 3 years. The Company                       
determined this allocation based upon a number of factors,                      
including a preliminary valuation analysis prepared by an                       
independent professional valuation specialist. The $4,911,000 of                
goodwill was all assigned to the Medical & Healthcare operating                 
segment.                                                                        

The amounts recorded at September 30, 2005, relating to the                     
acquisition are subject to adjustment, as the Company has not yet               
completed the final allocation of purchase price.  The purchase                 
price is still subject to final closing adjustments.  The Company               
expects to finalize the purchase price and complete the                         
allocations during the second quarter of fiscal 2006.  There is no              
pro forma presentation of prior year operating results related to               
this acquisition due to the insignificant effect on consolidated                
operations.                                                                     

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NOTE 6:  INTANGIBLE ASSETS                                                      

Intangible assets consist of the following:                                     

                        As of September 30, 2005
                       -----------------------------
                       Gross Carrying    Accumulated
                            Amount      Amortization
                       -----------------------------
Amortized Intangible Assets:                                          
Student Relationships       $47,770,000    $(30,595,000)    
License and Non Compete                                     
Agreements                 2,650,000      (2,573,000) 
Class Materials               2,900,000        (950,000)    
Trade Names                     110,000         (55,000)    
Other                           620,000        (616,000)    
                        ----------      ----------
Total                       $54,050,000    $(34,789,000)    
                        ==========      ==========
Unamortized Intangible Assets:                                        
Trade Names                 $20,972,000                     
Trademark                     1,645,000                     
Ross Title IV Eligibility                                   
And Accreditations         14,100,000                   
Intellectual Property        13,940,000                     
Deaconess Title IV                                          
Eligibility and                                         
Accreditations              1,200,000                   
        ----------
Total                       $51,857,000                     
        ==========

                        As of September 30, 2004
                       -----------------------------
                       Gross Carrying    Accumulated
                            Amount      Amortization
                       -----------------------------
Amortized Intangible Assets:                                          
Student Relationships       $47,500,000    $(18,181,000)    
License and Non Compete                                     
Agreements                 2,650,000      (2,236,000) 
Class Materials               2,900,000        (750,000)    
Trade Names                     110,000         (27,000)    
Other                           620,000        (534,000)    
                        ----------      ----------
Total                       $53,780,000    $(21,728,000)    
                        ==========      ==========
Unamortized Intangible Assets:                                        
Trade Names                 $20,972,000                     
Trademark                     1,645,000                     
Ross Title IV Eligibility                                   
And Accreditations         14,100,000                   
Intellectual Property        13,940,000                     
        ----------
Total                       $50,657,000                     
        ==========

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NOTE 6:  INTANGIBLE ASSETS, continued                                           

Amortization expense for amortized intangible assets was                        
$2,581,000 and $3,637,000 for the three months ended September                  
30, 2005 and 2004, respectively.  Estimated amortization expense                
for amortized intangible assets for the next five fiscal years                  
ending June 30, is as follows:                                                  

Fiscal Year                                                 
2006                $10,036,000                   
2007                  6,807,000                   
2008                  3,598,000                   
2009                    203,000                   
2010                    200,000                   

The weighted-average amortization period for amortized intangible               
assets is three and five years for Deaconess and Ross Student                   
Relationships, respectively, six years for License and Non-compete              
Agreements, 14 years for Class Materials, four years for Trade                  
Names and six years for Other. These intangible assets, except for              
the Ross Student Relationships, are being amortized on a straight-              
line basis.  The amount being amortized for the Ross Student                    
Relationships is based on the estimated progression of the                      
students through the respective medical and veterinary 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 five years              
of estimated economic life, beginning with May 2003, as follows:                

Year 1         27.4%                              
Year 2         29.0%                              
Year 3         21.0%                              
Year 4         14.5%                              
Year 5          8.1%                              

Indefinite-lived intangible assets related to Trademarks, Trade                 
Names, Title IV Eligibility, Accreditation 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. As of the end               
of fiscal year 2005, there was no impairment loss associated with               
these indefinite-lived intangible assets as fair value exceeds                  
the carrying amount.                                                            

The Company determined that as of the end of fiscal 2005,                       
there was no impairment in the value of the Company's                           
goodwill for any reporting units.  This determination was                       
made after considering a number of factors including a                          
valuation analysis prepared by an independent professional                      
valuation specialist.  The carrying amount of goodwill                          
related to the DeVry University reportable segment at                           
September 30, 2005 and June 30, 2005 was unchanged at                           
$22,195,000.  The carrying amount of goodwill related to                        
Professional and Training reportable segment was $24,716,000                    
at September 30, 2005 and $22,716,000 at June 30, 2004.  The                    
increase of $2,000,000 is the result of the allocation of the                   
purchase price for Gearty CPE as described in Note 5 above.                     
The carrying amount of goodwill related to the Medical &                        
Healthcare segment at September 30, 2005 and June 30, 2005                      
was unchanged at $244,397,000.                                                  

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NOTE 7:  REDUCTION IN WORKFORCE CHARGES                                         

During the second quarter of fiscal 2005, the Company offered a                 
voluntary separation plan to its employees with more than 20 years              
of service. In the third quarter of fiscal 2005, the Company                    
implemented an involuntary reduction in force that reduced its                  
workforce at its educational facilities and corporate office.  In               
the fourth quarter of fiscal 2005, the Company offered another                  
voluntary separation plan for its DeVry University faculty                      
employees with more than 15 years of service and implemented an                 
involuntary reduction in force of its faculty employees.  These                 
voluntary and involuntary separation plans resulted in workforce                
reductions of approximately 230 employees. In addition to these                 
separation and reduction in force plans, the Company experienced                
other involuntary separations during fiscal 2005.  In relation to               
all of these voluntary and involuntary reductions in force, the                 
Company recorded pre-tax charges of approximately $8.4 million in               
the fiscal 2005.  These charges consist of severance pay and in                 
some cases, extended medical and dental benefits coverage.  These               
charges were classified as Cost of Educational Services and                     
Student Services and Administrative Expense in the Consolidated                 
Statements of Income and are related to the DeVry University and                
Medical & Healthcare reportable segments.                                       

Cash payments for the voluntary separation plans and all                        
involuntary reductions in force were approximately $2.0 million in              
the first quarter ended September 30, 2005. Of the total amount                 
accrued for these events, approximately $1,600,000 remained to be               
paid as of September 30, 2005.  Payments will continue into the                 
second quarter of fiscal 2006.                                                  

NOTE 8:  INCOME TAXES                                                           

The principal operating subsidiaries of DMI are Ross University                 
School of Medicine (the Medical School) incorporated under the                  
laws of the Commonwealth of Dominica and Ross University School                 
of Veterinary Medicine (the Veterinary School), incorporated                    
under the laws of the Federation of St. Christopher Nevis, St.                  
Kitts in the West Indies. Both operating companies have                         
agreements with the respective governments that exempt them from                
local income taxation through the years 2043 and 2023,                          
respectively. Accordingly no current provision for foreign income               
taxes was recorded in the three months ended September 30, 2005                 
for the Medical or Veterinary Schools.                                          

The Company has not recorded a tax provision for the                            
undistributed earnings of the Medical and Veterinary Schools for                
the period after the acquisition. It is the Company's intention                 
to indefinitely reinvest post-acquisition undistributed earnings                
and profits to service debt, improve the facilities and                         
operations of the Schools and pursue future opportunities outside               
of the United States. As of September 30, 2005 and 2004,                        
cumulative undistributed earnings were approximately $36.4                      
million and $19.4 million, respectively.                                        

It is the Company's intention for the foreseeable future to use                 
accumulated cash balances at the Medical and Veterinary Schools                 
plus subsequent earnings and cash flow to service outstanding                   
debt, and reinvest remaining balances to improve and expand                     
facilities and operations of the schools and pursue future                      
business opportunities outside the United States.  In accordance                
with this plan, cash held by Ross University will not be available              
for general Company purposes such as at DeVry University and will               
not be subject to U.S. taxation.                                                

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NOTE 9: LONG-TERM DEBT                                                          

All of the Company's borrowings and letters of credit under its                 
long-term debt agreements are through DeVry Inc. and Global                     
Education International, Inc. (GEI).  This long-term debt consists              
of the following at September 30, 2005:                                         

                                               Effective
                                 Outstanding    Interest Rate at
                                    Debt      September 30, 2005
                                ------------  ------------------
Revolving Credit Agreement:                                           
DeVry Inc. as borrower        $ 40,000,000        5.00%     
GEI as borrower                 10,000,000        5.21%     
              ----------
Total                         $ 50,000,000        5.05%     
              ----------
Senior Notes:                                                         
DeVry Inc. as borrower        $ 75,000,000        4.94%     
GEI as borrower                 50,000,000        4.94%     
             -----------
Total                         $125,000,000        4.94%     
             -----------
Total outstanding debt             $175,000,000        4.97%          

Current Maturities of Revolving                                       
Credit Agreement                 $ 50,000,000        5.05%        
             -----------
Total Long-term debt               $125,000,000        4.94%          
             -----------

NOTE 10:  COMMITMENTS AND CONTINGENCIES                                         

The Company is subject to occasional lawsuits, administrative                   
proceedings, regulatory reviews associated with financial                       
assistance programs and other claims arising in the normal                      
conduct of its business.  The following information updates the                 
status of claims and litigations previously disclosed.                          

In January 2002, a graduate of one of DeVry University's Los                    
Angeles-area campuses, filed a class-action complaint against                   
DeVry Inc. and DeVry University, Inc. in the Superior Court of                  
the State of California, County of Los Angeles, on behalf of all                
students enrolled in the post-baccalaureate degree program in                   
Information Technology.  The suit alleges that the program                      
offered by DeVry did not conform to the program as it was                       
presented in the advertising and other marketing materials.  In                 
March 2003, the complaint was dismissed by the court with limited               
right to amend and re-file.  The complaint was subsequently                     
amended and re-filed.  During the first quarter of the Company's                
fiscal year 2004, a new complaint was filed in the same court by                
another plaintiff with the same general allegations and by the                  
same plaintiffs' attorneys.  This subsequent action has been                    
stayed pending the outcome of the initial matter.  Discovery                    
continues, but there is no determinable date at which this matter               
may be brought to conclusion.                                                   

The alleged class action above seeks money damages of an                        
indeterminate amount.  The Company has accrued $0.75 million                    
representing the estimated minimum amount to resolve this claim.                

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NOTE 10:  COMMITMENTS AND CONTINGENCIES, continued                              

In November 2000, three graduates of one of DeVry University's                  
Chicago-area campuses filed a class-action complaint in the                     
Circuit Court for Cook County, Illinois that alleges DeVry                      
graduates do not have appropriate skills for employment in the                  
computer information systems field.  The complaint was                          
subsequently dismissed by the court, but was amended and re-filed               
to include as a plaintiff, a then-current student in another                    
curriculum from a second Chicago-area campus.  In September 2005,               
the court denied the Plaintiff's motion for class action                        
certification in its entirely.  However, while pending claims                   
remain by each of the three named defendants in this action, the                
Company believes that the eventual outcome will not have a                      
material effect on its cash flows, results of operations or                     
financial position.                                                             

In August 2005 counterclaims were filed against the company's                   
subsidiary Dominica Management, Inc. and the Ross University                    
School of Medicine by defendants American University of Antigua                 
College of Medicine, Neal Simon and Sol Weltman in a case filed                 
by Dominica Management, Inc. in the U.S. District Court for the                 
Southern District of New York in September 2004.  The original                  
case filed by Dominica Management, Inc. sought relief primarily                 
for alleged copyright infringement, misappropriation of trade                   
secrets and confidential information, and unfair competition.                   
The counterclaims allege, inter alia, anticompetive behavior,                   
tortious interference with prospective economic relationships,                  
and defamation.  In October 2005, the Company and American University           
of Antigua reached an agreement to resolve this matter and drop all             
claims, and the matter is now resolved.                                         

At September 30, 2005, the Company has recorded                                 
approximately $1.5 million associated with estimated loss                       
contingencies, including the amount of approximately $0.6                       
million in remaining payments under an anti-trust claim                         
settlement agreement. While the ultimate outcome of these                       
and other contingencies is difficult to estimate at this                        
time, the Company does intend to vigorously defend itself                       
with respect to the pending claims.                                             

At this time, the Company does not believe that the outcome of                  
current claims, regulatory reviews and lawsuits will have a                     
material effect on its cash flows, results of operations or                     
financial position.                                                             

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NOTE 11:  SEGMENT INFORMATION                                                   

The Company's principal business is providing post-secondary                    
education. The services of our operations are described in more                 
detail under "Nature of Operations" in Note 1 to the consolidated               
financial statements contained in the Company's Annual Report on                
Form 10-K for the fiscal year ended June 30, 2005.  The Company                 
presents three reportable segments: the DeVry University undergraduate          
and graduate operations (DeVry University), the professional                    
examination review and training operations including Becker                     
Professional Review and Center for Corporate Education                          
(Professional and Training) and the Ross University medical and                 
veterinary school and Deaconess School of Nursing operations                    
(Medical & Healthcare).                                                         

These segments are based on the method by which management                      
evaluates performance and allocates resources.  Such decisions                  
are based, in part, upon each segment's operating income, which                 
is defined as income before interest expense, amortization and                  
income taxes. Intersegment sales are accounted for at amounts                   
comparable to sales to nonaffiliated customers, and are eliminated              
in consolidation. The accounting policies of the segments are the               
same as those described in Note 1 - Summary of Significant                      
Accounting Policies to the consolidated financial statements                    
contained in the Company's Annual Report on Form 10-K for the                   
fiscal year ended June 30, 2005.                                                

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

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NOTE 11:  SEGMENT INFORMATION, continued                                        

Following is a tabulation of business segment information for the               
three months ended September 30, 2005 and 2004.  Where applicable,              
the September 30, 2004, information has been restated to reflect                
the adoption of SFAS 123(R) under the modified retrospective                    
application method.  These amounts have been restated to reflect                
the fair value method of expensing stock-based compensation as                  
prescribed by SFAS 123(R). Corporate information is included where              
it is needed to reconcile segment data to the consolidated                      
financial statements.                                                           

                                                                [Download Table]

                                              For the Quarter Ended    
                                                 September 30,         
                                             2005             2004     
                                             ----             ----     
                                                            Restated   
                                                                       
Revenues:                                                              
   DeVry University                      $160,719,000     $156,740,000 
   Professional and Training               12,280,000       10,746,000 
   Medical & Healthcare                    23,781,000       20,910,000 
                                          -----------      ----------- 
      Total Consolidated Revenues        $196,780,000     $188,396,000 
                                          -----------      ----------- 
Operating Income (Loss):                                               
   DeVry University                       $   (74,000)     $(3,103,000)
   Professional and Training                4,570,000        2,913,000 
   Medical & Healthcare                     7,532,000        6,956,000 
   Reconciling Items:                                                  
     Amortization Expense                  (2,581,000)      (3,637,000)
     Interest Expense                      (2,655,000)      (1,991,000)
     Depreciation and Other                  (266,000)        (265,000)
                                           ----------       ---------- 
      Total Consolidated Income                                        
       before Income Taxes and                                         
       Cumulative Effect of Change                                     
       In Accounting                      $ 6,526,000      $   873,000 
                                           ----------       ---------- 
Segment Assets:                                                        
   DeVry University                      $423,735,000     $412,286,000 
   Professional and Training               79,484,000       80,843,000 
   Medical & Healthcare                   396,027,000      385,702,000 
   Corporate                               26,550,000       16,850,000 
                                          -----------      ----------- 
      Total Consolidated Assets          $925,796,000     $895,681,000 
                                          -----------      ----------- 
Additions to Long-lived Assets:                                        
   DeVry University                        $3,056,000       $4,655,000 
   Professional and Training                   25,000           82,000 
   Medical & Healthcare                     1,483,000          975,000 
                                            ---------        --------- 
     Total Consolidated Additions                                      
       to Long-lived Assets                $4,564,000       $5,712,000 
                                            ---------        --------- 
Depreciation Expense:                                                  
   DeVry University                        $7,777,000       $8,554,000 
   Professional and Training                  114,000          151,000 
   Medical & Healthcare                       955,000          678,000 
   Corporate                                  247,000          247,000 
                                            ---------        --------- 
      Total Consolidated Depreciation      $9,093,000       $9,630,000 
                                            ---------        --------- 

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NOTE 11:  SEGMENT INFORMATION, continued                                        

                                                                [Download Table]


                                             For the Quarter Ended    
                                                 September 30,        
                                             2005             2004    
                                             ----             ----    
                                                                      
Intangible Asset Amortization Expense:                                

   DeVry University                        $       -        $      -  
   Professional and Training                   66,000          193,000
   Medical & Healthcare                     2,515,000        3,444,000
                                            ---------        ---------
      Total Consolidated Amortization      $2,581,000       $3,637,000
                                            ---------        ---------


The Company conducts its educational operations in the United                   
States, Canada, the Caribbean countries of Dominica and St. Kitts/Nevis,        
Europe, the Middle East and the Pacific Rim.  Other international               
revenues, which are derived principally from Canada were less than              
5% of total revenues for the quarters ended September 30, 2005 and              
2004. Revenues and long- lived assets by geographic area are as follows:        

                                                                [Download Table]

                                             For the Quarter Ended    
                                                 September 30,        
                                             2005             2004    
                                             ----             ----    
                                                                      
Revenues from Unaffiliated Customers:                                 
  Domestic Operations                    $172,054,000     $164,337,000
  International Operations:                                           
     Dominica and St. Kitts/Nevis          22,380,000       20,910,000
     Other                                  2,346,000        3,149,000
                                          -----------      -----------
   Total International Operations          24,726,000       24,059,000
                                          -----------      -----------
Consolidated                             $196,780,000     $188,396,000
                                          -----------      -----------
Long-lived Assets:                                                    
  Domestic Operations                    $352,499,000     $350,815,000
  International Operations                                            
     Dominica and St. Kitts/Nevis         309,502,000      316,225,000
     Other                                    449,000          909,000
                                          -----------      -----------
   Total International Operations         309,951,000      317,134,000
                                          -----------      -----------
 Consolidated                            $662,450,000     $667,949,000
                                          -----------      -----------

No one customer accounted for more than 10% of the Company's                    
consolidated revenues.                                                          

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Item 2 - Management's Discussion and Analysis of Results of                     
Operations and Financial Condition                            
-----------------------------------------------------------                     
Forward-Looking Statements                                                      
--------------------------                                                      
Certain information contained in this quarterly report on Form 10-              
Q may constitute forward-looking statements relating to DeVry's                 
future financial results and strategies, business plans or                      
objectives and beliefs about future events.  They are often                     
identified by the use of qualifiers in their description such as                
"expects", "believes", "is likely", "intends", "estimates",                     
"forecast", "assumption" or other similar expressions.  Such                    
statements are inherently uncertain and may involve risks that                  
could cause future results to differ materially from the forward-               
looking statements.  Potential risks and uncertainties include,                 
but are not limited to:                                                         

Shifts in applicant career interests away from the concentration                
of the Company's undergraduate programs in selected areas of                    
technology, healthcare and business that the Company does not                   
adequately anticipate or respond to.                                            

Increased competition in recruiting new students and retaining                  
students already enrolled.                                                      

Reductions in student financial aid, upon which the Company is                  
highly dependent for the collection of its billings, because of                 
changes to  program regulations affecting student eligibility or                
reductions to federal and state funding levels.                                 

Failure of DeVry University, Ross University or Deaconess College               
of Nursing to maintain eligibility for student participation in                 
financial aid programs.                                                         

Reductions in the amount of corporate employee tuition                          
reimbursement because of changes to tax laws or a lower level of                
corporate earnings that affects employee educational benefit                    
plans.                                                                          

Loss or limitations in accreditations and licensing approvals                   
affecting DeVry University, Ross University or Deaconess College                
of Nursing.                                                                     

Changes to laws and regulations that adversely affect the                       
Company's eligibility to participate in government financial aid                
programs, current operations or future growth opportunities.                    

Ability to hire and retain faculty with appropriate                             
qualifications such as education and experience.                                

Reductions in tuition pricing by other educational institutions                 
that affect the Company's current competitive position and its                  
ability to maintain and increase tuition rates in the future.                   

Some of these risks and uncertainties are described more fully in               
the sections of the Company's Annual Report on Form 10-K for the                
fiscal year ended June 30, 2005 that are captioned "Business -                  
Competition, -Student Recruiting, -Accreditation and Approvals, -               
Tuition and Fees, -Financial Aid and Financing Student Education,               
-Career Services, and -Faculty".                                                

All forward-looking statements included in this Report are based                
upon information presently available, and the Company assumes no                
obligation to update any forward-looking statements.                            

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Copies of the Company's annual and quarterly reports on Form 10-                
K, Form 10-Q and other reports filed with the Securities and                    
Exchange Commission may be obtained without charge at the                       
Company's website, www.devryinc.com.                                            

The following discussion of the Company's results of operations                 
and financial condition should be read in conjunction with the                  
consolidated financial statements of the Company and the notes                  
thereto as included in the Company's annual report on Form 10-K                 
for the fiscal year ended June 30, 2005.  The Company's annual                  
report on Form 10-K includes a detailed description of critical                 
accounting policies, estimates and assumptions used in the                      
preparation of the Company's financial statements.  These                       
include, but are not limited to, revenue and expense recognition,               
useful lives of equipment and facilities, valuation of goodwill                 
and indefinite-lived intangible assets, valuation and useful                    
lives of acquired finite-lived intangible assets, pattern of                    
amortization of finite-lived intangible assets over their                       
economic lives, losses on the collection of student receivable                  
balances, costs associated with pending legal matters, health                   
care costs for incurred but not yet paid medical services and                   
stock based compensation.                                                       

Because of the somewhat seasonal pattern of the Company's                       
enrollments and its educational program starting dates, which                   
affect the results of operations and the timing of cash inflows,                
the Company's management believes that comparisons of its results               
of operations should be made to the corresponding period in the                 
preceding year.  Comparisons of financial position should be made               
to both the end of the previous fiscal year and to the end of the               
corresponding quarterly period in the preceding year.                           

Results of Operations                                                           
---------------------                                                           
The Company's financial performance in the first quarter improved               
from the results for the first quarter of the previous fiscal                   
year.  First quarter fiscal 2005 has been restated for the                      
adoption of Statement of Financial Accounting Standard 123R                     
("SFAS 123R"), Share - Based Payments using the modified                        
retrospective approach.  Factors contributing to the improved                   
performance were continued total enrollment growth in DeVry                     
University's graduate school programs, increased tuition rates                  
for both undergraduate and graduate students, an increase in new                
student enrollments and higher tuition rates at Ross University,                
an increase in enrollments in the Professional and Training                     
segment's Becker Professional Review operations, wage savings                   
from the workforce reductions implemented last year and continued               
restraint in spending in other areas of operation.                              

Total DeVry University undergraduate enrollments of 36,200 for                  
the summer term that began in July were 4.8% lower than                         
enrollments a year ago.  However, coursetaker enrollments at                    
DeVry University's Keller Graduate School for the July session                  
increased by 11.3% from last year and coursetakers enrollments                  
for the September session were up by 5% from last year,                         
increasing from 12,129 to 12,732.  At Ross University in the                    
Medical and Healthcare segment, for the term that started in                    
September, new student enrollments increased by 40.6% from last                 
year to 575 and total student enrollments were 3,227.  Although                 
total student enrollments lagged those of last year by 3.8%, this               
is a sequential improvement from the year over year decline of                  
8.5% in the Ross term that began in May 2005.                                   

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The following table presents information with respect to the                    
relative size to revenue of each item in the statement of income                
for the first quarter for both the current and prior year.                      
Percents may not add due to rounding.                                           

                                                                [Download Table]

                                                  Quarter Ended      
                                                  September 30,      
                                               -------------------   
                                                2005       2004 <FN>1
                                                        (Restated)   
                                                                     

Revenue                                        100.0%     100.0%     

Cost of Educational Services                    56.8%      58.5%     
Student Services & Admin. Exp.                  38.6%      40.0%     
Interest Expense                                 1.3%       1.1%     
                                               ------     ------     
   Total Costs and Expenses                     96.7%      99.5%     

Income Before Income Taxes and Cumulative                            
   Effect of Change in Accounting                3.3%       0.5%     

Income Tax Provision                             0.9%       0.3%     
                                               ------     ------     

Income Before Cumulative                                             
   Effect of Change in Accounting                2.4%       0.2%     

Cumulative Effect of                                                 
   Change in Accounting                            -        1.0%     
                                               ------     ------     

NET INCOME                                       2.4%       1.1%     
                                               ======     ======     
<FN>                                                                 
<FN>1 Quarter ended September 30, 2004, restated for the adoption of 
      SFAS 123R using the modified retrospective approach.           
</FN>                                                                

The Company's total consolidated revenue increased by $8.4                      
million, or 4.5%, for the first quarter compared to the first                   
quarter of last year.  Tuition revenue, which is the largest                    
component of total revenue, represented over 93% of total revenue               
in both periods.  All three of the Company's segments contributed               
to the increase in revenue.                                                     

DeVry University                                                                
----------------                                                                
At DeVry University, total first quarter revenues increased by                  
approximately $4.0 million, nearly one half of the increase in                  
revenues for the total Company.  As discussed above, contributing               
to the higher revenues were increased coursetaker enrollments at                
Keller Graduate School and higher tuition rates that were in                    
effect for both the undergraduate and graduate programs compared                
to last year.  Undergraduate program tuition increased by                       
approximately 5% in July 2005 following a similar tuition                       

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increase in November 2004.  For graduate school programs, tuition               
increased by approximately 5% for the September session following               
a similar increase in January 2005.  In addition, higher                        
undergraduate student accounts receivable, which are generally                  
subject to a monthly interest charge of one percent under the                   
Company's EDUCARD revolving charge plan for financing students'                 
education, generated approximately $0.9 million more in student                 
financing charges than last year.                                               

Partly offsetting these increases was a higher proportion of                    
working adult undergraduate students who typically enroll for                   
less than a full-time academic load.  These students are                        
primarily enrolled in the online programs and for program                       
offerings at DeVry University Centers.  These part-time students                
pay a somewhat lesser average tuition amount each term than do                  
full-time students at the undergraduate campus locations.                       
Therefore, the higher revenue per student resulting from tuition                
increases has been partially offset by this greater proportion of               
part-time students.                                                             

In the first quarter of fiscal 2005, the Company completed an                   
agreement with Follett Higher Education Group ("Follett") to                    
manage the nine remaining U.S. DeVry University campus bookstores               
not previously managed by them.  While this resulted in a                       
lowering of bookstore sales revenue in the first quarter of                     
fiscal 2006 compared to last year, DeVry University began to                    
offer selected graduate and undergraduate courses using                         
electronic textbook materials ("eBooks").  The Company reports                  
the sale of these eBooks at their full selling price which is                   
higher than the commission income it reports on sales by Follett.               
The two changes in the reporting of book sales were approximately               
offsetting so that the DeVry University bookstore sales component               
of Other Educational revenue was unchanged.                                     

Professional and Training                                                       
-------------------------                                                       
In the Professional and Training segment, revenues reached a                    
record $12.3 million.  The Company believes that increased                      
enrollment in the Becker Professional Review's CPA review courses               
reflects the market recovery from the effects of the CPA exam                   
changes in fiscal 2004. Not only have on-site course enrollments                
increased, but demand for the review courses online and on CD-ROM               
have increased, contributing approximately $1.8 million of the                  
total Company increase in Other Educational Revenues.  Also                     
contributing to the growth is increased enrollment in the Stalla                
CFA review course in preparation for the December administration                
of the Level 1 exam.  This is only the second year in which this                
part of the exam has been offered in December.                                  

In July 2005, the Company completed the acquisition of Gearty CPE               
by a DeVry Inc. subsidiary. Gearty CPE is a provider of                         
continuing professional education programs and seminars in                      
accounting and finance, predominantly serving customers in the                  
New York/New Jersey metro area.  The acquisition complements the                
Becker Professional Review CPA exam review business.  The                       
acquisition did not contribute significantly to the revenues or                 
operating income of the Professional and Training segment during                
the quarter.                                                                    

Medical and Healthcare                                                          
----------------------                                                          
In the Medical and Healthcare segment, revenues increased by                    
approximately $2.9 million, or 13.7%.  Included in this segment                 
are $0.9 million in revenues for Deaconess College of Nursing                   
that was not acquired by the Company until the latter part of                   
fiscal 2005.  At Ross, although total enrollments during the                    
quarter were lower than a year ago, a tuition price increase of                 

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approximately 5% effective with this September semester,                        
following a price increase of slightly less than 8% in January                  
2005, fully offset the effects of the decline in enrollment and                 
contributed to the revenue increase.                                            

SFAS 123R                                                                       
---------                                                                       
The Company adopted Statement of Financial Accounting Standards                 
123R effective with the start of the first quarter of fiscal                    
2006.  Financial results for fiscal 2005 have been restated to                  
reflect the modified retrospective approach of adoption.                        
Accordingly, expenses relating to share-based awards have been                  
included in the various expense categories for both years as                    
appropriate.                                                                    

SFAS 123R establishes the accounting for stock-based awards                     
issued in exchange for employee services.  To-date, all of the                  
Company's stock-based awards have been granted in the form of                   
stock options.  Stock based compensation is measured at the grant               
date of the option, based on the fair value of the award. The                   
fair value is recognized as expense over the employee requisite                 
service period which is the period over which these options vest.               

At the beginning of fiscal 2005, the Company's stock-based awards               
were valued using a binomial model.  Previously, these awards                   
were valued using the Black-Scholes model for purposes of pro                   
forma disclosure pursuant to SFAS 123 and SFAS 148.  The binomial               
model requires estimates of several important factors, e.g.                     
expected life of an option, stock price volatility, risk-free                   
rate of return, forfeiture rate for options granted and the stock               
dividend yield.  The expected life of an option takes into                      
account the contractual term of the option and the effects of the               
employees' expected exercise and post-vesting employment                        
termination behavior.  The Company has granted stock options to                 
several hundred employees over a period of time longer than the                 
maximum ten-year contractual life of the option and, therefore,                 
has a history upon which estimates of the expected life of the                  
option and the forfeiture rate can be based.  The Company's stock               
has been publicly traded since 1991 and, therefore, there is a                  
history upon which estimates of future stock price volatility can               
be determined.  In determining the appropriate estimates and for                
computing the actual valuation in a binomial model, the Company                 
engaged the assistance of an independent professional actuarial                 
service.                                                                        

Cost of Educational Services                                                    
----------------------------                                                    
The Company's Cost of Educational Services increased by $1.4                    
million, or 1.3%, from the first quarter of last year.                          
Contributing to the increase was an increase of $1.9 million in                 
the provision for doubtful accounts, primarily in the DeVry                     
University undergraduate operations, as student receivables there               
increased from last year.  Also, cost increases were incurred in                
support of the higher number of DeVry University Centers and                    
expanding online program enrollments.  For the September session,               
courses were being offered at nine new DeVry University locations               
compared to a year ago.  The number of online coursetakers                      
enrolled in courses for summer 2005 increased by more than 67%                  
from last year to 21,068.  Costs were also recognized for the                   
Deaconess College of Nursing that were not included in the                      
Company results last year.                                                      

Partly offsetting these increases were the wage savings from                    
workforce reductions implemented last year and continued spending               
restraint in all areas of operation.  Also, lower capital                       
spending during each of the past several years has resulted in                  
lower depreciation expense, most of which is                                    

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included in the Cost of Educational Services.  For the quarter,                 
depreciation expense was $9.1 million compared to $9.6 million                  
last year.  Also included in Cost of Educational Services is $0.4               
million of expense attributed to share-based awards, compared to                
approximately $0.8 million in the restated first quarter of last                
year.                                                                           

DeVry University announced that its computer engineering                        
technology bachelor's degree programs at its campuses in Pomona,                
Calif.; Decatur, Ga.; Chicago and Addison, Ill.; and Long Island                
City, N.Y., earned accreditation from the Technology                            
Accreditation Commission of the Accreditation Board for                         
Engineering and Technology (TAC of ABET).  DeVry's electronics                  
engineering technology bachelor's degree programs at 10 of its                  
campuses were also re-accredited.                                               

TAC of ABET is the recognized accrediting body for college and                  
university programs in applied science, computing, engineering                  
and technology.  TAC of ABET currently accredits more than 2,500                
programs at more than 550 higher education institutions                         
nationwide.  The program accreditation by TAC of ABET is in                     
addition to DeVry University's institutional accreditation by the               
Higher Learning Commission of the North Central Association.                    

Student Services and Administrative Expense                                     
-------------------------------------------                                     
Student Services and Administrative Expense increased by $0.6                   
million, or 0.8%, from last year. The increased cost reflects                   
efforts to generate more new student enrollments in all of the                  
Company's educational programs through more advertising and                     
student recruiting.  Admissions advisors are being added to                     
support the growing online program enrollments and newly opened                 
DeVry University Centers and at Ross University to offset the                   
previous declines in new student enrollments following changes to               
admission standards at the medical school.  Costs were also                     
recognized for the Deaconess College of Nursing that were not                   
included in the Company results last year.                                      

Largely offsetting these increases was lower amortization of                    
finite-lived intangible assets related to acquisitions of                       
businesses including, most recently, Ross University and                        
Deaconess College of Nursing.  Amortization expense is included                 
entirely in the Student Services and Administrative Expense                     
category.  For the first quarter, amortization expense was $2.6                 
million compared to $3.6 million in the first quarter of a year                 
ago.  Also, lower spending for corporate general and                            
administrative expense, primarily savings in outside legal                      
expenses, resulted in savings of approximately $0.9 million                     
compared to the first quarter of last year.  Expense attributed                 
to share-based awards included in the Student Services expense                  
category was approximately $0.8 million for the current year,                   
compared to approximately $1.6 million in the restated first                    
quarter of last year.  There was no post-employment benefit cost                
in the first quarter of this year compared to approximately $0.6                
million in the first quarter of last year, which helped offset                  
the expense increases described above.  The required period of                  
active service, over which the cost of these benefits were                      
recognized, was fully met at the end of fiscal 2005.                            

DeVry University                                                                
----------------                                                                
The DeVry University segment had an operating loss of                           
approximately $0.1 million, compared to a loss last year of $3.1                
million.  The reduced operating loss was the result of the                      
changes to enrollments, tuition rates and spending described                    
above.  In addition, DeVry University's Canadian operation, which               
included the teach out cost for the former undergraduate Toronto-area           

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campuses last year, is no longer incurring any further charges                  
for the teach out activity.  In the first quarter of last year,                 
DeVry University incurred operating losses of approximately $0.5                
million from its Canadian operation.  For the current year, the                 
Canadian operations generated an operating income of                            
approximately $0.1 million.                                                     

Professional and Training                                                       
-------------------------                                                       
As a result of record revenues for the first quarter, operating                 
income in the Professional and Training segment increased from                  
$2.9 million last year to $4.6 million in the first quarter of                  
the current year.  The Company believes that this growth can be                 
attributed to exam candidates who previously procrastinated and                 
who are now starting to prepare for the CPA exam.  The exam                     
review course continues to be updated and improved with good                    
student response, which we believe is attracting more students                  
than before.  Although a small part of the total segment                        
operations, the Stalla CFA exam review continues to increase its                
enrollments.  Declining exam taker pass rates may be attracting                 
more students to take review courses rather than to self-study as               
many have done in the past.                                                     

Medical and Healthcare                                                          
----------------------                                                          
The Medical and Healthcare segment increased operating income by                
$0.6 million, or 8.2%, from last year.  Although Deaconess                      
College of Nursing contributed approximately $0.9 million of                    
revenue to the segment, it did not contribute significantly to                  
the operating income.  Operating expenses at Ross University were               
higher in the first quarter of this year reflecting the expanded                
student recruitment programs and the continuation of spending                   
increases through most of fiscal 2005 for additional faculty and                
depreciation on newly added facilities to further improve the                   
educational programs.  Lower enrollments at Ross University were                
more than offset by tuition increases to produce the higher                     
operating income.                                                               

Interest Expense                                                                
----------------                                                                
Interest expense on the Company's borrowings was $2.7 million                   
compared to $2.0 million last year.  Although borrowings have                   
been reduced, the interest rates on the Company's borrowings is                 
based upon short-term interest rates, which increased                           
significantly over the past year.  For example, at September 30,                
2005, the interest rates on the Company's Senior Notes was 4.94%                
compared to 2.93% at that time last year.                                       

Taxes on Income                                                                 
---------------                                                                 
Taxes on income were 27.5% of pre-tax income for the first                      
quarter.  The effective tax rate reflects the Company's estimates               
of the proportion of earnings attributable to Ross University                   
offshore operations compared to Company earnings that are fully                 
taxable at the appropriate federal and state income tax rates.                  
Changes to this proportion could result in a somewhat higher or                 
lower effective tax rate in future periods.                                     

Cumulative Effect of Change in Accounting                                       
-----------------------------------------                                       
In the first quarter of last year, the Company recognized $1.8                  
million of income, net of taxes, from a Cumulative Effect of                    
Change in Accounting for the alignment of the Professional and                  
Training segment's fiscal year to the same June-end fiscal year                 
as the rest of the Company.  Because of the change to the CPA                   

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exam schedule from a twice a year November and May schedule to a                
nearly continuous exam administration, the Company believes that                
the historical Becker Professional Review operating year that                   
ended in April is no longer the most appropriate                                
fiscal year-end.  Effective with the start of the Company's                     
fiscal 2005, the Becker fiscal year was aligned to the June 30th                
year-end of DeVry Inc. and the cumulative effect of this change                 
in accounting, representing the months of May and June 2004, was                
reported in the first quarter of fiscal 2005.                                   

Liquidity and Capital Resources                                                 
-------------------------------                                                 
Cash generated from operations for the quarter was $14.5 million,               
compared to $24.6 million in the same period last year.                         
Contributing to the lower cash flow was a $3.0 million reduction                
in non-cash charges included in Net Income.  The lower non-cash                 
charges were for share-based compensation, depreciation and                     
amortization.  Reductions in accounts payable and accrued                       
expenses and an increase in prepaid expenses were a $12.7 million               
increased use of cash compared to last year.  Variations in the                 
levels of accrued expenses and accounts payable are caused, in                  
part, by the timing of the quarter-end relative to the Company's                
payroll and bill payment cycles.  Also, accounts receivable, net                
of deferred tuition revenue, increased by $3.9 million.  Higher                 
tuition rates with no commensurate increase in the amount of                    
available student financial aid, extended payment plans to better               
serve the growing number of military and adult students at DeVry                
and an increased proportion of part-time students whose financial               
aid eligibility is less than for full-time students contributed                 
to the higher outstanding receivables.                                          

Capital spending for the quarter was $4.6 million, compared to                  
$5.7 million in the first quarter last year.  Historically,                     
capital spending is lower in the first quarter than in subsequent               
quarters.  There are no major capital projects underway or                      
currently in the late planning stage so that for the total year,                
capital spending is expected to approximate $40 million, slightly               
below the level of the past several years.  In addition to                      
spending on capital additions and improvements during the first                 
quarter, the Company paid $2 million for the acquisition of                     
Gearty CPE.                                                                     

During the first quarter, the Company repaid $50 million in                     
borrowings from its revolving loan agreements using existing cash               
balances and cash flow generated from operations.  During the                   
first quarter of last year, the Company also repaid $50 million                 
of its borrowings.  All of the Company's borrowings are based                   
upon a floating rate, generally LIBOR at the Company's option.                  
In the first quarter of fiscal 2004, the Company entered into                   
several interest rate cap agreements to protect approximately                   
$100,000,000 of its borrowings from sharp increases in short-term               
interest rates upon which its borrowings are based.  These                      
interest rate cap agreements expired during the first quarter of                
this fiscal year.  The company intends to periodically evaluate                 
the need for future interest rate protection in light of                        
projected changes in interest rates and expected borrowing                      
levels.                                                                         

In early November 2005, the Company's revolving loan agreement                  
was amended to exclude from the financial covenant computations,                
the non-cash effects of accounting for share-based awards in                    
accordance with SFAS 123R.  This amendment was initiated at the                 
Company's request in accordance with terms of the original                      
agreement.                                                                      

The Company's only long-term contractual obligations consist of                 
its revolving line of credit and senior notes, operating leases                 
on facilities and equipment, and agreements for various services.               
There are no required payments under the Company's borrowing                    
agreements prior to their maturity in 2009 and 2010.  The Company               

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is not a party to any off-balance sheet financing or contingent                 
payment agreements, nor are there any unconsolidated subsidiaries               
of the Company.  There are no loans extended to any officer,                    
director or other person affiliated with the Company.  The                      
Company has not entered into any derivative, swap, futures                      
contract, put, call, hedge or non-exchange traded contract except               
for the interest rate cap agreements discussed above.                           

The Company's primary source of liquidity is the cash received                  
from payments for student tuition, books, educational supplies                  
and fees.  These payments include funds originating as student                  
and family educational loans; other financial aid from various                  
federal, state and provincial loan and grant programs; and                      
student and family financial resources.                                         

The Company is highly dependent upon the timely receipt of                      
financial aid funds at DeVry University, Ross University and                    
Deaconess College of Nursing.  The Company estimates that                       
historically, more than 60% of its DeVry University undergraduate               
students' tuition, book and fee revenues were financed by                       
government-provided financial aid to students.  At Keller                       
Graduate School, approximately 70% of graduate student revenues                 
are financed by government-provided financial assistance.  At                   
Ross University, collections from student participation in federal              
loan programs are approximately 70% of its revenues.  The financial             
aid and assistance programs in which the Company's students participate         
are subject to political and budgetary considerations.  There is                
no assurance that such funding will be maintained in the future.                
Currently, there are legislative proposals that would adversely                 
affect Ross University's medical school's participation in                      
federal student loan programs.  However, the Company believes                   
that alternative lending sources are readily available, if                      
necessary, and that there would not be a material effect on the                 
Company's cash flows, results of operations or financial                        
position.                                                                       

Extensive and complex regulations in the United States and Canada               
govern all of the government funded financial assistance programs               
in which the company's students participate.  The Company's                     
administration of these programs is periodically reviewed by                    
various regulatory agencies.  Any regulatory violation could be                 
the basis for disciplinary action, including initiation of a                    
suspension, limitation or termination proceeding against the                    
Company.  Such program reviews may be conducted at any                          
educational institution at any time and have been conducted in                  
the past at the Company's educational facilities and headquarters               
location.  Previous Department of Education and state regulatory                
agency program reviews have not resulted in material findings or                
adjustments.                                                                    

Included in the Company's consolidated cash balances at the end                 
of the quarter is $63.1 million attributable to Ross University                 
offshore operations.  For the foreseeable future, it is the                     
Company's intention to reinvest this cash and subsequent earnings               
and cash flow to service the outstanding debt of Global Education               
International (the Corporate parent of Ross University) to                      
improve and expand facilities and operations of the Ross schools                
and pursue future business opportunities outside the United                     
States.  Therefore, cash held by Ross University will not be                    
available for general Company purposes such as at DeVry                         
University.                                                                     

The Company believes that current balances of unrestricted cash,                
cash generated from operations and, if necessary, borrowings                    
under the revolving loan facility will be sufficient to fund both               
its current operations and growth plans for the foreseeable                     
future, unless future investment opportunities, similar to the                  
acquisition of Ross University, should arise.                                   

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Item 3 - Qualitative and Quantitative Disclosures About Market Risk             
-------------------------------------------------------------------             
The nature of the Company's operations does not subject it to a                 
concentration or dependency upon the price levels or fluctuations               
in pricing of any one particular or group of commodities.                       

The financial position and results of operations of Ross                        
University's Caribbean operations are measured using the U.S.                   
dollar as the functional currency.  Substantially all Ross                      
University financial transactions are denominated in the U.S.                   
dollar.                                                                         

The financial position and results of operations for the                        
Company's Canadian educational programs are measured using the                  
local currency as the functional currency.  The Canadian                        
operations have not entered into any material long-term contracts               
to purchase or sell goods and services, other than a lease                      
agreement on its principal teaching facility.  The Company does                 
not have any foreign exchange contracts or derivative financial                 
instruments related to protection from changes in the value of                  
the Canadian dollar.  Because the assets and liabilities of the                 
Company's Canadian operations are small relative to those of the                
Company (Canadian assets are currently less than 2.5% of total                  
Company assets) changes in currency value within the range of                   
changes recently experienced, would not have a material effect on               
the Company's results of operations or financial position.  Based               
upon the current value of the net assets in the Canadian                        
operations, a change of $0.01 in the value of the Canadian dollar               
relative to the U.S. dollar would result in a pre-tax translation               
adjustment of less than $100,000.                                               

The Company's customers are principally individual students                     
enrolled in its various educational programs.  Accordingly,                     
concentration of accounts receivable credit risk is small                       
relative to total revenues or accounts receivable.                              

The Company's cash is held in accounts at various financial                     
institutions.  The Company selects the financial institutions                   
with which it maintains deposits from amongst only those that are               
the largest and most financially secure.  Therefore, although the               
amount on deposit at a given institution will typically exceed                  
amounts subject to guarantee, the Company has not experienced any               
deposit losses to date nor does it expect to incur such losses in               
the future.                                                                     

The interest rate on the Company's debt is based upon LIBOR                     
interest rates for periods typically ranging from one to three                  
months.  Based upon the level of Company borrowings at September                
30, 2005, a 1.0% increase in short-term interest rates would                    
result in $1.75 million of additional annual interest expense.                  
However, future investment opportunities and cash flow generated                
from operations may affect the level of outstanding borrowings                  
and the effect of a change in interest rates.                                   

In the first quarter of fiscal 2004, the Company entered into                   
several interest rate cap agreements to protect a portion of its                
borrowings from sharp increases in short-term interest rates.                   
These agreements, expired by the end of the first quarter of                    
fiscal year 2006 and no longer afford any protection from changes               
interest rates.  The Company intends to periodically review                     
further debt repayment and the need for additional interest rate                
protection agreements in light of projected changes in working                  
capital, investment requirements and expectations about future                  
period interest rates.                                                          

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Item 4 - Controls and Procedures                                                
--------------------------------                                                
CEO and CFO Certificates                                                        
------------------------                                                        
The required compliance certificates signed by the Company's CEO                
and CFO are included as Exhibits 31 and 32 of this Quarterly                    
Report on Form 10-Q.                                                            

Disclosure Controls and Procedures                                              
----------------------------------                                              
Disclosure controls and procedures are designed to help ensure                  
that all the information required to be disclosed in our reports                
filed with the SEC is recorded, processed, summarized and                       
reported within the time periods specified by the appropriate                   
rules.                                                                          

Evaluations required by Rule 13a - 15 of the Securities Exchange                
Act of 1934 of the effectiveness of the Company's disclosure and                
controls and procedures as of the end of the period covered by                  
this Report have been carried out under the supervision and with                
the participation of the Company's management, including its                    
Chief Executive Officer and its Chief Financial Officer.  Based                 
upon these evaluations, the Chief Executive Officer and Chief                   
Financial Officer have concluded that the Company's disclosure                  
controls and procedures were effective as required, and have                    
attested to this in Exhibit 31 of this Report.                                  

Changes In Internal Control Over Financial Reporting                            
----------------------------------------------------                            
There were no changes in internal control over financial                        
reporting that occurred during the first quarter of fiscal year                 
2006 that materially affected, or are reasonably likely to                      
materially affect, the Company's internal control over financial                
reporting.                                                                      

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Part II - Other Information                                                     
---------------------------                                                     
Item 1 - Legal Proceedings                                                      
--------------------------                                                      
The Company is subject to occasional lawsuits, administrative                   
proceedings, regulatory reviews associated with financial                       
assistance programs and other claims arising in the normal                      
conduct of its business.  The following information updates the                 
status of claims and litigations previously disclosed.                          

In January 2002, Royal Gardner, a graduate of one of DeVry                      
University's Los Angeles-area campuses, filed a class-action                    
complaint against DeVry Inc. and DeVry University, Inc. in the                  
Superior Court of the State of California, County of Los Angeles,               
on behalf of all students enrolled in the post-baccalaureate                    
degree program in Information Technology.  The suit alleges that                
the program offered by DeVry did not conform to the program as it               
was presented in the advertising and other marketing materials.                 
In March 2003, the complaint was dismissed by the court with                    
limited right to amend and re-file.  The complaint was                          
subsequently amended and re-filed.  During the first quarter of                 
the Company's fiscal year 2004, a new complaint was filed in the                
same court by Gavino Teanio with the same general allegations and               
by the same plaintiffs' attorneys.  This subsequent action has                  
been stayed pending the outcome of the Gardner matter.  Discovery               
continues in the Gardner matter and a class action certification                
hearing is still pending, but there is no determinable date at                  
which this matter may be brought to conclusion.                                 

The alleged class action above seeks money damages of an                        
indeterminate amount.  The Company has accrued $0.75 million                    
representing the estimated minimum amount to resolve this claim.                

In November 2000, Afshin Zarinebaf, Ali Mousavi and another                     
graduate of one of DeVry University's Chicago-area campuses filed               
a class-action complaint in the Circuit Court for Cook County,                  
Illinois that alleges DeVry graduates do not have appropriate                   
skills for employment in the computer information systems field.                
The complaint was subsequently dismissed by the court, but was                  
amended and re-filed to include as a plaintiff Marck Macenas, a                 
then-current student in another curriculum from a second Chicago-               
area campus.  In September 2005, the court denied the plaintiff's               
motion for class action certification in its entirety.  However,                
pending claims remain by each of the named defendants in this                   
action.                                                                         

In August 2005 counterclaims were filed against the Company's                   
subsidiary Dominica Management, Inc. and the Ross University                    
School of Medicine by defendants American University of Antigua                 
College of Medicine, Neal Simon and Sol Weltman in a case filed                 
by Dominica Management, Inc. in the U.S. District Court for the                 
Southern District of New York in September 2004.  The original                  
case filed by Dominica Management, Inc. sought relief primarily                 
for alleged copyright infringement, misappropriation of trade                   
secrets and confidential information, and unfair competition.                   
The counterclaims allege, inter alia, anticompetive behavior,                   
tortious interference with prospective economic relationships,                  
and defamation.  In October 2005, the Company and American                      
University of Antigua reached an agreement to resolve this matter               
and drop all claims, and the matter is now resolved.                            

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While the ultimate outcome of these and other contingencies is                  
difficult to estimate at this time,                                             
the Company does intend to vigorously defend itself with respect                
to the pending claims.  At this time, the Company does not                      
believe that the outcome of current claims, administrative                      
proceedings, regulatory reviews and lawsuits will have a material               
effect on its cash flows, results of operations or financial                    
position.                                                                       

Item 4 - Submission Of Matters To A Vote Of Security Holders                    
------------------------------------------------------------                    
The Company's regular annual meeting of stockholders will be held               
in Oakbrook Terrace, Illinois, on Wednesday, November 9, 2005,                  
pursuant to notice duly given.  Proxies for the meeting were                    
solicited in accordance with the Securities Exchange Act of 1934                
and there was no solicitation in opposition to those of                         
management.                                                                     

Stockholders are being asked to re-elect David S. Brown, Dennis                 
J. Keller and Frederick A. Krehbiel as directors; to serve until                
the annual meeting of stockholders in 2008 or until their                       
successors are elected and qualified.                                           

In addition, stockholders are being asked to elect William T.                   
Keevan, who had not previously served on the Board, as a director               
until the annual meeting of stockholders in 2006 or until his                   
successor is elected and qualified.  Stockholders are also asked                
to elect Fernando Ruiz, who had not previously served on the                    
Board, as a director until the annual meeting of stockholders in                
2008 or until his successor is elected and qualified.                           

In addition to the election of Directors, stockholders are being                
asked to approve:                                                               

a) the amendment and restatement of the DeVry Inc. Employee                 
Stock Purchase Plan                                                   

b) the DeVry Inc. Incentive Plan of 2005; and                               

c) the selection of PricewaterhouseCoopers LLP as independent               
public accountants for the Company for the current fiscal year        

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Item 6 - Exhibits                                                               
-----------------                                                               
Exhibits                                                                        
                                                    Sequentially
Exhibit #   Description                                Numbered Page  
---------   -----------                                -------------  
4       Second Amendment dated as of                            
September 30, 2005 to Credit Agreement          
between DeVry Inc. and Global Education         
International, Inc. as borrowers and certain    
Financial institutions and Bank of              
     America, N.A. as lenders                        40-45

31       Rule 13a-14(a)/15d-14(a)Certifications          46-49    

32        Section 1350 Certifications                       50    

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Signatures                                                                      
----------                                                                      
Pursuant to the requirements of the Securities Exchange Act of                  
1934, the Registrant has duly caused this report to be signed on                
its behalf by the undersigned thereunto duly authorized.                        

Date: November 8, 2005          /s/Ronald L. Taylor                           
         -----------------------
  Ronald L. Taylor
         Chief Executive Officer

Date: November 8, 2005          /s/Norman M. Levine                           
           -------------------------
  Norman M. Levine
           Senior Vice President and
         Chief Financial Officer

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-Q’ Filing		Date		First		Last			Other Filings
Filed on:		11/9/05		37					3,  8-K,  DEF 14A
		11/8/05		39
		10/31/05		1
For Period End:		9/30/05		1		38
		6/30/05		2		26			10-K,  11-K
		3/24/05		15		16			8-K
		9/30/04		2		24			10-Q
		7/1/04		14					4
		6/30/04		14		18			10-K,  11-K
		5/1/04		14
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