NOTE 15: SEGMENT INFORMATION

Beginning in the second quarter of fiscal year 2018, DeVry University operations is classified as discontinued operations as discussed in “Note 2: Discontinued Operations and Assets Held for Sale.” Therefore, segment information presented excludes the results of DeVry University, which is presented as discontinued operations in the Consolidated Financial Statements. Discontinued operations assets are included in the table below to reconcile to Total Consolidated Assets presented on the Consolidated Balance Sheets. In addition, certain expenses previously allocated to DeVry University within the U.S. Traditional Postsecondary segment have been reclassified to the Home Office and Other segment based on discontinued operating reporting guidance regarding allocation of corporate overhead.

Adtalem’s principal business is the provision of educational services. During the third quarter of fiscal year 2017, Adtalem effected a change to reportable segments to align with current strategic priorities and resource allocation. As of the quarter ended March 31, 2017, Adtalem presents four reporting segments: “Medical and Healthcare,” which includes the operations of Chamberlain and the medical and veterinary schools (which include AUC, RUSM and RUSVM); “Professional Education,” which includes the operations of Becker and ACAMS; “Technology and Business,” which includes the operations of Adtalem Brazil; and “U.S. Traditional Postsecondary,” which includes the operations of Carrington. Prior period amounts have been reclassified to conform to the current reportable segment presentation.

These segments are consistent with the method by which the Chief Operating Decision Maker (Adtalem’s President and Chief Executive Officer) evaluates performance and allocates resources. Performance evaluations are based, in part, on each segment’s operating income. Intersegment sales are accounted for at amounts comparable to sales to nonaffiliated customers and are eliminated in consolidation. “Home Office and Other” includes activity not allocated to a reporting segment and is included to reconcile segment results to the Consolidated Financial Statements. The accounting policies of the segments are the same as those described in “Note 4: Summary of Significant Accounting Policies.”

Summary financial information by reporting segment is as follows (in thousands):

	Three Months Ended December 31,				Six Months Ended December 31,
	2017		2016		2017		2016
Revenue:
Medical and Healthcare	$	203,297	$	201,409	$	394,582	$	401,178
Professional Education		30,359		27,366		70,401		62,096
Technology and Business		75,133		73,387		137,572		131,627
U.S. Traditional Postsecondary		29,033		32,445		61,168		69,431
Home Office and Other		(578)		(649)		(1,201)		(1,347)
Total Consolidated Revenue	$	337,244	$	333,958	$	662,522	$	662,985
Operating Income (Loss):
Medical and Healthcare	$	55,047	$	52,152	$	81,279	$	96,016
Professional Education		2,193		134		12,700		6,191
Technology and Business		13,991		13,482		15,852		11,506
U.S. Traditional Postsecondary		(5,779)		(6,281)		(11,293)		(8,301)
Home Office and Other (1)		(10,068)		(60,957)		(17,412)		(72,156)
Total Consolidated Operating Income (Loss)	$	55,384	$	(1,470)	$	81,126	$	33,256
Segment Assets:
Medical and Healthcare	$	954,114	$	956,510	$	954,114	$	956,510
Professional Education		444,029		456,824		444,029		456,824
Technology and Business		610,803		581,355		610,803		581,355
U.S. Traditional Postsecondary		55,008		57,246		55,008		57,246
Home Office and Other		105,192		134,225		105,192		134,225
Discontinued Operations		41,576		115,273		41,576		115,273
Total Consolidated Assets	$	2,210,722	$	2,301,433	$	2,210,722	$	2,301,433
Additions to Long-Lived Assets:
Medical and Healthcare	$	8,669	$	3,541	$	14,336	$	6,844
Professional Education		298		-		1,221		363,658
Technology and Business		12,407		2,828		15,748		7,613
U.S. Traditional Postsecondary		360		559		1,121		1,766
Home Office and Other		2,463		1,315		4,305		2,542
Total Consolidated Additions to Long-Lived Assets	$	24,197	$	8,243	$	36,731	$	382,423
Reconciliation to Consolidated Financial Statements:
Capital Expenditures	$	20,060	$	8,243	$	32,594	$	18,771
Increase in Capital Assets from Acquisitions		16		-		16		4,913
Increase in Intangible Assets and Goodwill		4,121		-		4,121		358,739
Total Increase in Consolidated Long-Lived Assets	$	24,197	$	8,243	$	36,731	$	382,423
Depreciation Expense:
Medical and Healthcare	$	6,332	$	6,720	$	12,909	$	13,198
Professional Education		289		180		527		347
Technology and Business		2,477		2,169		5,103		4,110
U.S. Traditional Postsecondary		1,169		1,201		2,300		2,392
Home Office and Other		1,853		3,060		4,026		5,996
Total Consolidated Depreciation Expense	$	12,120	$	13,330	$	24,865	$	26,043
Intangible Asset Amortization Expense:
Professional Education	$	1,626	$	1,884	$	3,251	$	3,786
Technology and Business		837		548		1,709		1,909
Total Consolidated Amortization Expense	$	2,463	$	2,432	$	4,960	$	5,695

(1) Home Office and Other Operating Loss includes $52.2 million in charges in the three and six months ended December 31, 2016 for regulatory settlements as described in “Note 3: Regulatory Settlements.”

Adtalem conducts its educational operations in the U.S., Dominica, St. Kitts, St. Maarten, Brazil, Canada, Europe, the Middle East, India, China and the Pacific Rim. Other international revenue, which is derived principally from Europe and the Pacific Rim, was less than 5% of total revenue for each of the three-month and six-month periods ended December 31, 2017 and 2016. Revenue and long-lived assets by geographic area are as follows (in thousands):

	Three Months Ended December 31,				Six Months Ended December 31,
	2017		2016		2017		2016
Revenue from Unaffiliated Customers:
Domestic Operations	$	173,128	$	171,196	$	357,288	$	352,363
International Operations:
Dominica, St. Kitts and St. Maarten		88,236		88,542		165,614		176,846
Brazil		75,133		73,387		137,572		131,627
Other		747		833		2,048		2,149
Total International		164,116		162,762		305,234		310,622
Total Consolidated Revenue	$	337,244	$	333,958	$	662,522	$	662,985
Long-Lived Assets:
Domestic Operations	$	177,562	$	211,319	$	177,562	$	211,319
International Operations:
Dominica, St. Kitts and St. Maarten		167,841		190,796		167,841		190,796
Brazil		106,884		111,096		106,884		111,096
Other		4,143		3,575		4,143		3,575
Total International		278,868		305,467		278,868		305,467
Total Consolidated Long-Lived Assets	$	456,430	$	516,786	$	456,430	$	516,786

No one customer accounted for more than 10% of Adtalem’s consolidated revenue.