Restructuring Charges

6 Months Ended

Dec. 31, 2019

Restructuring and Related Activities [Abstract]

Restructuring Charges

6. Restructuring Charges

During the second quarter and first six months of fiscal year 2020, Adtalem recorded restructuring charges primarily related to the sale of Becker’s courses for healthcare students and Adtalem’s home office real estate consolidations. During the second quarter and first six months of fiscal year 2019, Adtalem recorded restructuring charges primarily related to the impairment of the property and equipment at the Dominica campus of RUSM and severance related to workforce reductions in Dominica. In January 2019, RUSM relocated its campus operations to Barbados with no plans to return to Dominica. The property and equipment in Dominica have been fully impaired as management determined the market value less the costs to sell the facilities or move the equipment was zero. In addition, during the second quarter and first six months of fiscal year 2019, Adtalem recorded restructuring charges related to Adtalem’s home office real estate consolidations. When estimating costs of exiting lease space, estimates are made which could differ materially from actual results and result in additional restructuring charges or reversals in future periods. Termination benefit charges, resulting from reducing Adtalem’s workforce by 21 and 201 positions in the first six months of fiscal year 2020 and 2019, respectively, represented severance pay and benefits for these employees. Adtalem’s home office is classified as “Home Office and Other” in Note 20 “Segment Information.” Pre-tax restructuring charges by segment were as follows (in thousands):

	Three Months Ended December 31, 2019						Six Months Ended December 31, 2019
	Real Estate		Termination				Real Estate		Termination
	and Other		Benefits		Total		and Other		Benefits		Total
Medical and Healthcare	$	192	$	225	$	417	$	319	$	225	$	544
Financial Services		1,172		(35)		1,137		2,862		254		3,116
Home Office and Other		401		—		401		4,523		302		4,825
Total	$	1,765	$	190	$	1,955	$	7,704	$	781	$	8,485

	Three Months Ended December 31, 2018						Six Months Ended December 31, 2018
	Real Estate		Termination				Real Estate		Termination
	and Other		Benefits		Total		and Other		Benefits		Total
Medical and Healthcare	$	2,389	$	56	$	2,445	$	40,143	$	1,317	$	41,460
Home Office and Other		968		122		1,090		1,477		71		1,548
Total	$	3,357	$	178	$	3,535	$	41,620	$	1,388	$	43,008

The following table summarizes the separation and restructuring plan activity for the fiscal years 2020 and 2019, for which cash payments are required (in thousands):

Liability balance as of June 30, 2018	$	38,927
Increase in liability (separation and other charges)		8,870
Reduction in liability (payments and adjustments)		(22,714)
Liability balance as of June 30, 2019		25,083
ASC 842 (leases) adjustment (1)		(25,030)
Liability balance as of July 1, 2019		53
Increase in liability (separation and other charges)		1,952
Reduction in liability (payments and adjustments)		(1,109)
Liability balance as of December 31, 2019	$	896

⁽¹⁾ Reflects amounts reclassified out of the opening balance of restructuring reserve accruals as of June 30, 2019 to operating lease assets that was recorded with the adoption of ASC 842. See “Note 2: Summary of Significant Accounting Policies” for additional information.

The liability balance of $0.9 million is recorded as accrued liabilities on the Consolidated Balance Sheet as of December 31, 2019. This liability balance represents exit cost accruals and costs for employees who have either not yet separated from Adtalem or for whom full severance has not yet been paid. All of these remaining costs are expected to be paid within the next 12 months.