NOTE 2: DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

On December 4, 2017, Adtalem announced the signing of a definitive agreement to divest DeVry University, pursuant to, and subject to the terms and conditions of a stock purchase agreement with Cogswell Education, LLC, with an expected closing date occurring in early fiscal year 2019. The decision to divest was made based on changes in strategic direction for the Adtalem portfolio of institutions. As the potential sale represents a strategic shift that will have a major effect on Adtalem’s operations and financial results, Devry University is now presented in Adtalem’s financial reporting as a discontinued operation. All periods presented disclose the assets and liabilities as held for sale, and operations and cash flows of DeVry University, which was previously a part of the U.S. Traditional Postsecondary reporting segment, as discontinued operations.

In the second quarter of fiscal year 2018, asset impairment charges of $47.2 million were recorded to write-down intangible assets, goodwill, and building and equipment to zero based on the fair value market value of the DeVry University operations. During the second quarter of fiscal year 2018, management also completed the sale of the DeVry University and Carrington co-located campus in Pomona, California, for $11.1 million, which was previously recorded on the Consolidated Balance Sheet as held for sale for $11.3 million, resulting in a $0.2 million realized loss on sale of assets. The assets which were previously recorded as held for sale, the unrealized loss on assets held for sale and the loss on sale of assets associated with the Pomona, California, campus have all been classified within discontinued operations.

The following is a summary of balance sheet information of assets and liabilities reported as discontinued operations (in thousands).

	December 31,		June 30,		December 31,
	2017		2017		2016
ASSETS:
Current Assets:
Cash and Cash Equivalents	$	902	$	1,553	$	2,085
Restricted Cash		5,880		4,358		5,470
Accounts Receivable, Net		11,206		11,957		22,296
Prepaid Expenses and Other		10,138		5,748		7,351
Total Current Assets Held for Sale		28,126		23,616		37,202
Land, Building and Equipment Held for Sale, Net		-		37,904		39,967
Other Assets:
Intangible Assets		-		1,645		1,645
Goodwill		-		22,196		22,196
Perkins Program Fund, Net		13,450		13,450		13,450
Other Assets, Net		-		999		813
Total Other Assets Held for Sale		13,450		38,290		38,104
Total Assets Held for Sale	$	41,576	$	99,810	$	115,273

LIABILITIES:
Current Liabilities:
Accounts Payable	$	14,713	$	17,868	$	15,770
Accrued Salaries, Wages and Benefits		10,223		14,580		14,184
Accrued Liabilities		7,287		8,937		7,216
Deferred Revenue		4,246		1,788		8,557
Total Current Liabilities Held for Sale		36,469		43,173		45,727
Total Liabilities Held for Sale	$	36,469	$	43,173	$	45,727

The following is a summary of income statement information of operations reported as discontinued operations (in thousands).

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2017		2016		2017		2016
REVENUE:
Tuition	$	86,172	$	118,000	$	172,840	$	230,130
Other Educational		4,471		4,390		13,550		13,127
Total Revenue		90,643		122,390		186,390		243,257
OPERATING COST AND EXPENSE:
Cost of Educational Services		48,221		60,639		100,397		123,826
Student Services and Administrative Expense		36,624		44,484		85,896		102,084
Restructuring Expense		2,209		2,087		7,814		3,785
Asset Impairment Charge - Intangible and Goodwill		23,841		-		23,841		-
Asset Impairment Charge - Building and Equipment		23,391		-		23,391		-
Loss on Sale of Assets		230		-		230		-
Regulatory Settlements		-		4,102		-		4,102
Loss on Assets Held for Sale		-		4,764		-		4,764
Total Operating Cost and Expense		134,516		116,076		241,569		238,561
Operating (Loss) Income from Discontinued Operations		(43,873)		6,314		(55,179)		4,696
Interest Income		-		7		-		20
(Loss) Income from Discontinued Operations Before
Income Taxes		(43,873)		6,321		(55,179)		4,716
Income Tax Benefit		18,453		1,134		20,371		1,952
(Loss) Income from Discontinued Operations	$	(25,420)	$	7,455	$	(34,808)	$	6,668