DISCONTINUED OPERATIONS

6 Months Ended

Dec. 31, 2018

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

NOTE 2: DISCONTINUED OPERATIONS

On December 4, 2018, Adtalem completed the sale of Carrington to San Joaquin Valley College, Inc. (“SJVC”) for de minimis consideration. Adtalem has retained certain leases associated with the Carrington operations. Adtalem remains the primary lessee on these leases and subleases to Carrington. Adtalem records the proceeds from these subleases as an offset to operating costs. Adtalem also assigned certain leases to Carrington but remains contingently liable under these leases. Adtalem recorded a pre-tax loss of $11.1 million on the sale of Carrington and transferred $9.9 million of cash and restricted cash balances in the second quarter of fiscal year 2019, subject to post-closing adjustments to be completed in the third quarter of fiscal year 2019.

On December 11, 2018, Adtalem completed the sale of DeVry University to Cogswell Education, LLC (“Cogswell”) for de minimis consideration. The purchase agreement includes an earn-out entitling Adtalem to payments of up to $20 million over a ten-year period payable based on DeVry University’s free cash flow. In connection with the closing of the sale, Adtalem loaned to DeVry University $10 million under the terms of the promissory note, dated as of December 11, 2018 (the “Note”). The Note bears interest at a rate of 4% per annum, payable annually in arrears and has a maturity date of January 1, 2022. DeVry University may make prepayments on the loan. This loan is presented as Other Assets, Net on the Consolidated Balance Sheet. Adtalem has retained certain leases associated with DeVry University operations. Adtalem remains the primary lessee on these leases and subleases to DeVry University. In addition, Adtalem owns the buildings for certain DeVry University operating and administrative office locations and leases space to DeVry University under one-year operating leases, renewable annually at DeVry University’s option. Adtalem records the proceeds from these leases and subleases as an offset to operating costs. Adtalem also assigned certain leases to DeVry University but remains contingently liable under these leases. Adtalem recorded a pre-tax loss of $21.7 million on the sale of DeVry University and transferred $39.0 million of cash and restricted cash balances in the second quarter of fiscal year 2019, subject to post-closing adjustments to be completed in the third quarter of fiscal year 2019.

The following is a summary of balance sheet information of assets and liabilities reported as held for sale (in thousands):

	December 31,		June 30,		December 31,
	2018		2018		2017
ASSETS:
Current Assets:
Cash and Cash Equivalents	$	-	$	1	$	902
Restricted Cash		-		13,404		6,579
Accounts Receivable, Net		-		25,294		25,404
Prepaid Expenses and Other Current Assets		-		8,433		10,611
Total Current Assets Held for Sale		-		47,132		43,496
Land, Building and Equipment Held for Sale, Net Noncurrent Assets:		-		-		20,821
Intangible Assets		-		-		20,200
Perkins Program Fund, Net		-		13,450		13,450
Other Assets, Net		-		-		3,420
Total Noncurrent Assets Held for Sale		-		13,450		37,070
Total Assets Held for Sale	$	-	$	60,582	$	101,387
LIABILITIES:
Current Liabilities:
Accounts Payable	$	-	$	24,312	$	19,801
Accrued Salaries, Wages and Benefits		-		13,979		13,846
Accrued Liabilities		-		1,514		8,044
Deferred Revenue		-		16,634		15,517
Total Current Liabilities Held for Sale		-		56,439		57,208
Noncurrent Liabilities:
Deferred Income Taxes		-		216		878
Total Noncurrent Liabilities Held for Sale		-		216		878
Total Liabilities Held for Sale	$	-	$	56,655	$	58,086

The following is a summary of income statement information of operations reported as discontinued operations (in thousands). The results include Carrington's and DeVry University's operations through the date of each respective sale.

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2018			2017			2018			2017
REVENUE	$	83,414		$	119,674		$	195,716		$	247,557
OPERATING COST AND EXPENSE:
Cost of Educational Services		48,075			69,747			109,416			144,688
Student Services and Administrative Expense		43,920			47,537			99,292			109,073
Restructuring Expense (Gain)		21			3,337			(497	)		10,192
Asset Impairment Charge - Intangible and Goodwill		-			23,841			-			23,841
Asset Impairment Charge - Building and Equipment		(289	)		23,391			1,953			23,391
Loss on Sale of Assets		-			230			-			230
Total Operating Cost and Expense		91,727			168,083			210,164			311,415
Loss from Discontinued Operations Before Income Taxes		(8,313	)		(48,409	)		(14,448	)		(63,858	)
Loss on Disposal of Discontinued Operations Before Income Taxes		(32,714	)		-			(32,714	)		-
Income Tax Benefit		5,904			19,094			7,332			21,890
Loss from Discontinued Operations	$	(35,123	)	$	(29,315	)	$	(39,830	)	$	(41,968	)