DISCONTINUED OPERATIONS

9 Months Ended

Mar. 31, 2019

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 fourth 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 fourth 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):

	March 31,		June 30,		March 31,
	2019		2018		2018
ASSETS:
Current Assets:
Cash and Cash Equivalents	$	-	$	1	$	707
Restricted Cash		-		13,404		9,781
Accounts Receivable, Net		-		25,294		23,549
Prepaid Expenses and Other Current Assets		-		8,433		9,587
Total Current Assets Held for Sale		-		47,132		43,624
Land, Building and Equipment Held for Sale, Net		-		-		14,994
Noncurrent Assets:
Intangible Assets		-		-		20,200
Perkins Program Fund, Net		-		13,450		13,450
Other Assets, Net		-		-		3,471
Total Noncurrent Assets Held for Sale		-		13,450		37,121
Total Assets Held for Sale	$	-	$	60,582	$	95,739
LIABILITIES:
Current Liabilities:
Accounts Payable	$	-	$	24,312	$	18,190
Accrued Salaries, Wages and Benefits		-		13,979		11,610
Accrued Liabilities		-		1,514		2,548
Deferred Revenue		-		16,634		40,276
Total Current Liabilities Held for Sale		-		56,439		72,624
Noncurrent Liabilities:
Deferred Income Taxes		-		216		1,021
Total Noncurrent Liabilities Held for Sale		-		216		1,021
Total Liabilities Held for Sale	$	-	$	56,655	$	73,645

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. For the three months ended March 31, 2019, activity is related to adjustments to accounts based on settlement of balances.

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2019			2018			2019			2018
REVENUE	$	-		$	122,705		$	195,716		$	370,263
OPERATING COST AND EXPENSE:
Cost of Educational Services		-			65,182			109,416			209,871
Student Services and Administrative Expense		(65	)		53,057			99,227			162,130
Restructuring (Gain) Expense		(1,973	)		6,150			(2,470	)		16,342
Asset Impairment Charge - Intangible and Goodwill		-			-			-			23,841
Asset Impairment Charge - Building and Equipment		-			5,738			1,953			29,129
Loss on Sale of Assets		-			-			-			230
Total Operating Cost and Expense		(2,038	)		130,127			208,126			441,543
Income (Loss) from Discontinued Operations Before Income Taxes		2,038			(7,422	)		(12,410	)		(71,280	)
Loss on Disposal of Discontinued Operations Before Income Taxes		(265	)		-			(32,979	)		-
Income Tax (Provision) Benefit		(120	)		3,851			7,212			25,741
Income (Loss) from Discontinued Operations	$	1,653		$	(3,571	)	$	(38,177	)	$	(45,539	)