XML 25 R16.htm IDEA: XBRL DOCUMENT
v3.8.0.1

INTANGIBLE ASSETS | 6 Months Ended
--- | ---
Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract] |
INTANGIBLE ASSETS | NOTE 10: INTANGIBLE ASSETS Intangible assets relate mainly to acquired business operations. These assets consist of the acquisition fair value of certain identifiable intangible assets acquired and goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. Intangible assets consist of the following (in thousands):
|  | December 31, 2017 |  |  |
|  | Gross Carrying Amount |  | Accumulated Amortization |  | Weighted Average Amortization Period |
Amortizable Intangible Assets: |  |  |  |  |  |  |  |  |
Student Relationships |  | $ | 11,049 |  | $ | (8,999) |  | 5 Years |
Customer Relationships |  |  | 42,900 |  |  | (7,261) |  | 10 Years |
Non-compete Agreements |  |  | 700 |  |  | (682) |  | 1 Year |
Curriculum/Software |  |  | 7,143 |  |  | (3,375) |  | 4 Years |
Franchise Contracts |  |  | 10,597 |  |  | (1,717) |  | 18 Years |
Clinical Agreements |  |  | 392 |  |  | (118) |  | 15 Years |
Trade Names |  |  | 1,143 |  |  | (1,000) |  | 10 Years |
Proprietary Technology |  |  | 500 |  |  | (187) |  | 4 Years |
Total |  | $ | 74,424 |  | $ | (23,339) |  |  |
Indefinite-Lived Intangible Assets: |  |  |  |  |  |  |  |  |
Trade Names |  | $ | 109,462 |  |  |  |  |  |
Ross Title IV Eligibility and Accreditations |  |  | 14,100 |  |  |  |  |  |
Intellectual Property |  |  | 13,940 |  |  |  |  |  |
Chamberlain Title IV Eligibility and Accreditations |  |  | 1,200 |  |  |  |  |  |
Carrington Title IV Eligibility and Accreditations |  |  | 20,200 |  |  |  |  |  |
AUC Title IV Eligibility and Accreditations |  |  | 100,000 |  |  |  |  |  |
Adtalem Brazil Accreditation |  |  | 97,013 |  |  |  |  |  |
Total |  | $ | 355,915 |  |  |  |  |  |
|  | June 30, 2017 |
|  | Gross Carrying Amount |  | Accumulated Amortization |
Amortizable Intangible Assets: |  |  |  |  |  |  |
Student Relationships |  | $ | 12,459 |  | $ | (9,323) |
Customer Relationships |  |  | 42,900 |  |  | (4,923) |
Non-compete Agreements |  |  | 700 |  |  | (665) |
Curriculum/Software |  |  | 7,147 |  |  | (2,329) |
Franchise Contracts |  |  | 10,615 |  |  | (1,425) |
Clinical Agreements |  |  | 393 |  |  | (104) |
Trade Names |  |  | 1,145 |  |  | (945) |
Proprietary Technology |  |  | 500 |  |  | (125) |
Total |  | $ | 75,859 |  | $ | (19,839) |
Indefinite-Lived Intangible Assets: |  |  |  |  |  |  |
Trade Names |  | $ | 109,519 |  |  |  |
Ross Title IV Eligibility and Accreditations |  |  | 14,100 |  |  |  |
Intellectual Property |  |  | 13,940 |  |  |  |
Chamberlain Title IV Eligibility and Accreditations |  |  | 1,200 |  |  |  |
Carrington Title IV Eligibility and Accreditations |  |  | 20,200 |  |  |  |
AUC Title IV Eligibility and Accreditations |  |  | 100,000 |  |  |  |
Adtalem Brazil Accreditation |  |  | 97,179 |  |  |  |
Total |  | $ | 356,138 |  |  |  |
|  | December 31, 2016 |
|  | Gross Carrying Amount |  | Accumulated Amortization |
Amortizable Intangible Assets: |  |  |  |  |  |  |
Student Relationships |  | $ | 12,657 |  | $ | (8,324) |
Customer Relationships |  |  | 42,900 |  |  | (2,547) |
Non-compete Agreements |  |  | 1,640 |  |  | (1,226) |
Curriculum/Software |  |  | 8,143 |  |  | (2,206) |
Franchise Contracts |  |  | 10,783 |  |  | (1,148) |
Clinical Agreements |  |  | 399 |  |  | (93) |
Trade Names |  |  | 1,163 |  |  | (901) |
Proprietary Technology |  |  | 500 |  |  | (63) |
Total |  | $ | 78,185 |  | $ | (16,508) |
Indefinite-Lived Intangible Assets: |  |  |  |  |  |  |
Trade Names |  | $ | 110,048 |  |  |  |
Ross Title IV Eligibility and Accreditations |  |  | 14,100 |  |  |  |
Intellectual Property |  |  | 13,940 |  |  |  |
Chamberlain Title IV Eligibility and Accreditations |  |  | 1,200 |  |  |  |
Carrington Title IV Eligibility and Accreditations |  |  | 20,200 |  |  |  |
AUC Title IV Eligibility and Accreditations |  |  | 100,000 |  |  |  |
Adtalem Brazil Accreditation |  |  | 98,718 |  |  |  |
Total |  | $ | 358,206 |  |  |  |
Amortization expense for amortized intangible assets was $2.5 million and $5.0 million for the three and six months ended December 31, 2017, respectively, and $2.4 million and $5.7 million for the three and six months ended December 31, 2016, respectively. Estimated amortization expense for amortizable intangible assets for the next five fiscal years ending June 30 and in the aggregate, by reporting unit, is as follows (in thousands):
|  | Becker and |  | Adtalem |  |  |  |
Fiscal Year |  | ACAMS |  | Brazil |  | Total |
2018 |  | $ | 6,501 |  | $ | 2,861 |  | $ | 9,362 |
2019 |  |  | 6,422 |  |  | 2,057 |  |  | 8,479 |
2020 |  |  | 4,671 |  |  | 1,448 |  |  | 6,119 |
2021 |  |  | 4,440 |  |  | 907 |  |  | 5,347 |
2022 |  |  | 4,300 |  |  | 615 |  |  | 4,915 |
Thereafter |  |  | 15,386 |  |  | 6,387 |  |  | 21,773 |
All amortizable intangible assets except student relationships and customer relationships are being amortized on a straight-line basis. The amount being amortized for student relationships is based on the estimated progression of the students through the respective, Centro Universitário Vale do Ipojuca (“Unifavip”), Damásio Educacional (“Damasio”) and Grupo Ibmec Educacional S.A. (“Grupo Ibmec”) programs, giving consideration to the revenue and cash flow associated with both existing students and new applicants. The amount being amortized for customer relationships related to ACAMS is based on the estimated retention of the customers, giving consideration to the revenue and cash flow associated with these existing customers. Indefinite-lived intangible assets related to trade names, Title IV eligibility, accreditations 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. In accordance with GAAP, goodwill and indefinite-lived intangibles arising from a business combination are not amortized and charged to expense over time. Instead, these assets must be reviewed annually for impairment or more frequently if circumstances arise indicating potential impairment. Adtalem’s annual impairment review was most recently completed during the fourth quarter of fiscal year 2017, at which time, there was no impairment loss associated with recorded goodwill or indefinite-lived intangible assets for any reporting unit. Adtalem had six reporting units that contained goodwill as of the start of the second quarter of fiscal year 2018. These reporting units constitute components for which discrete financial information is available and regularly reviewed by segment management. If the carrying amount of a reporting unit containing the goodwill exceeds the fair value of that reporting unit, an impairment loss to goodwill is recognized. In analyzing the results of operations and business conditions of all the reporting units as of December 31, 2017, it was determined that no triggering event had occurred that would indicate the carrying value of a reporting unit had exceeded its fair value, except at DeVry University. During the quarter, a triggering event did occur within the DeVry University reporting unit which resulted in a write-off of all goodwill balances as of December 31, 2017. On December 4, 2017, Adtalem, entered into a Stock Purchase Agreement (the “Purchase Agreement”), pursuant to which Adtalem agreed to sell DeVry University to Cogswell Education, LLC (“Cogswell”). Subject to the terms and conditions of the Purchase Agreement, Adtalem will sell all of the outstanding equity interests of DeVry University, Inc. and DeVry New York Inc. to Cogswell for $1.00. As this sales price indicates a fair value that is less than the carrying value of the DeVry University goodwill and intangible asset balances, both amounts were written down to zero as of December 31, 2017. This resulted in impairment charges for goodwill of $22.2 million and indefinite-lived intangible assets of $1.6 million in the second quarter of fiscal year 2018. These amounts were charged to Discontinued Operations (see “Note 2: Discontinued Operations and Assets Held for Sale”). For indefinite-lived intangible assets at the six reporting units that contained indefinite-lived intangible assets as of December 31, 2017, management first analyzes qualitative factors including results of operations and business conditions, significant changes in cash flows at the individual indefinite-lived intangible asset level, if applicable, as well as how much previously calculated fair values exceed carrying values to determine if it is more likely than not that the intangible assets associated with these reporting units have been impaired. At Carrington, management is executing a plan to increase enrollment and control costs to improve profitability. As a result, as of the end of the second quarter of fiscal year 2018, management does not believe business conditions had deteriorated such that it was more likely than not that the fair value of the Title IV Eligibility and Accreditation indefinite-lived intangible asset had fallen below its carrying value. Should declines in student enrollment at Carrington result in financial performance that is significantly below management expectations, the carrying value of this reporting unit’s indefinite-lived intangible assets could be impaired. This could require a write-off of up to $20.2 million. Management does not believe the effects of Hurricanes Irma and Maria created a triggering event which would require an impairment analysis of AUC’s or RUSM’s indefinite-lived intangible assets and goodwill. Damage to physical property will be repaired with the majority of costs expected to be reimbursable by insurance proceeds. The September 2017 semesters at both institutions were completed with minimal lost students and revenue and commencement of future semesters is not in question. Management believes it is probable that the response to the crisis and its ability to continue providing educational services demonstrates AUC’s and RUSM’s ability to generate future revenue and operating results sufficient to maintain fair values of these assets in excess of their carrying values. These interim triggering event conclusions were based on the fact that the qualitative analysis of Adtalem’s reporting units and indefinite-lived intangible assets resulted in no impairment indicators as of the end of fiscal year 2017, except at the DeVry University reporting unit, and that no interim events or deviations from planned operating results occurred as of December 31, 2017, that would cause management to reassess these conclusions. Determining the fair value of a reporting unit or an intangible asset involves the use of significant estimates and assumptions. Management bases its fair value estimates on assumptions it believes to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Actual results may differ from those estimates, which could lead to additional impairments of intangible assets or goodwill. At December 31, 2017, intangible assets from business combinations totaled $407.0 million and goodwill totaled $832.9 million. Together, these assets equaled approximately 56% of total assets as of such date, and any impairment could significantly affect future results of operations. The table below summarizes goodwill balances by reporting unit (in thousands):
|  | December 31, |  | June 30, |  | December 31, |
Reporting Unit |  | 2017 |  | 2017 |  | 2016 |
Chamberlain |  | $ | 4,716 |  | $ | 4,716 |  | $ | 4,716 |
AUC |  |  | 68,321 |  |  | 68,321 |  |  | 68,321 |
RUSM and RUSVM |  |  | 237,173 |  |  | 237,173 |  |  | 237,173 |
Becker and ACAMS |  |  | 306,808 |  |  | 306,653 |  |  | 306,382 |
Adtalem Brazil |  |  | 215,925 |  |  | 212,223 |  |  | 216,050 |
Total |  | $ | 832,943 |  | $ | 829,086 |  | $ | 832,642 |
The table below summarizes goodwill balances by reporting segment (in thousands):
|  | December 31, |  | June 30, |  | December 31, |
Reporting Segment |  | 2017 |  | 2017 |  | 2016 |
Medical and Healthcare |  | $ | 310,210 |  | $ | 310,210 |  | $ | 310,210 |
Professional Education |  |  | 306,808 |  |  | 306,653 |  |  | 306,382 |
Technology and Business |  |  | 215,925 |  |  | 212,223 |  |  | 216,050 |
Total |  | $ | 832,943 |  | $ | 829,086 |  | $ | 832,642 |
The table below summarizes the changes in the carrying amount of goodwill by reporting segment (in thousands):
|  |  |  |  |  |  |  |  |  |  | U.S. Traditional Postsecondary |  |  |  |
|  | Medical |  |  |  |  | Technology |  |  |  |  | Accumulated |  |  |  |
|  | and |  | Professional |  | and |  |  |  |  | Impairment |  |  |  |
|  | Healthcare |  | Education |  | Business |  | Gross |  | Losses |  | Total |
Balance at June 30, 2016 |  |  | 310,210 |  |  | 32,043 |  |  | 223,558 |  |  | 185,717 |  |  | (185,717) |  |  | 565,811 |
Purchase Accounting Adjustments |  |  | - |  |  | - |  |  | (3,122) |  |  | - |  |  | - |  |  | (3,122) |
Acquisitions |  |  | - |  |  | 274,620 |  |  | - |  |  | - |  |  | - |  |  | 274,620 |
Foreign exchange rate changes |  |  | - |  |  | (281) |  |  | (4,386) |  |  | - |  |  | - |  |  | (4,667) |
Balance at December 31, 2016 |  |  | 310,210 |  |  | 306,382 |  |  | 216,050 |  |  | 185,717 |  |  | (185,717) |  |  | 832,642 |
Purchase Accounting Adjustments |  |  | - |  |  | 69 |  |  | (481) |  |  | - |  |  | - |  |  | (412) |
Foreign exchange rate changes |  |  | - |  |  | 202 |  |  | (3,346) |  |  | - |  |  | - |  |  | (3,144) |
Balance at June 30, 2017 |  |  | 310,210 |  |  | 306,653 |  |  | 212,223 |  |  | 185,717 |  |  | (185,717) |  |  | 829,086 |
Acquisitions |  |  | - |  |  | - |  |  | 4,121 |  |  | - |  |  | - |  |  | 4,121 |
Foreign exchange rate changes |  |  | - |  |  | 155 |  |  | (419) |  |  | - |  |  | - |  |  | (264) |
Balance at December 31, 2017 |  | $ | 310,210 |  | $ | 306,808 |  | $ | 215,925 |  | $ | 185,717 |  | $ | (185,717) |  | $ | 832,943 |
The increase in the goodwill balance from June 30, 2017 in the Professional Education segment is the result of a change in the value of the British Sterling Pound compared to the U.S. dollar. Since Becker’s European subsidiary’s goodwill is recorded in local currency, fluctuations in the value of the British Sterling Pound in relation to the U.S. dollar will cause changes in the balance of this asset. The increase in the goodwill balance from June 30, 2017 in the Technology and Business segment is the result of the addition of $4.1 million with the acquisition of SJT. The increase was partially offset by a change in the value of the Brazilian Real compared to the U.S. dollar. Since Adtalem Brazil goodwill is recorded in local currency, fluctuations in the value of the Brazilian Real in relation to the U.S. dollar will cause changes in the balance of this asset. The table below summarizes the indefinite-lived intangible asset balances by reporting segment (in thousands):
|  | December 31, |  | June 30, |  | December 31, |
Reporting Segment |  | 2017 |  | 2017 |  | 2016 |
Medical and Healthcare |  | $ | 137,500 |  | $ | 137,500 |  | $ | 137,500 |
Professional Education |  |  | 67,812 |  |  | 67,812 |  |  | 67,812 |
Technology and Business |  |  | 130,403 |  |  | 130,626 |  |  | 132,694 |
U.S. Traditional Postsecondary |  |  | 20,200 |  |  | 20,200 |  |  | 20,200 |
Total |  | $ | 355,915 |  | $ | 356,138 |  | $ | 358,206 |
Total indefinite-lived intangible assets decreased by $0.2 million from June 30, 2017. The decrease is the result of a change in the value of the Brazilian Real as compared to the U.S. dollar. Since Adtalem Brazil intangible assets are recorded in the local currency, fluctuations in the value of the Brazilian Real in relation to the U.S. dollar will cause changes in the balance of these assets.

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration