NOTE 11: RESTRUCTURING CHARGES

During the third quarter and first nine months of fiscal year 2018, Adtalem recorded restructuring charges related to workforce reductions and real estate consolidations at the medical and veterinary schools, Carrington and Adtalem’s home office. Termination benefit charges, as a result of reducing Adtalem’s workforce by 169 positions in the first nine months of fiscal year 2018, represented severance pay and benefits for these employees. We also recorded a reduction to restructuring charges in the first nine months of fiscal year 2018 for an adjustment to previously accrued estimates for real estate consolidations at Adtalem’s home office. During the third quarter and first nine months of fiscal year 2017, Adtalem recorded restructuring charges related to real estate consolidations and workforce reductions at the administrative support operations of the medical and veterinary schools, Carrington and Adtalem’s home office. We also recorded a reduction to restructuring charges in the third quarter and first nine months of fiscal year 2017 for adjustments to previously accrued estimates for real estate consolidations at Carrington and Adtalem’s home office. Adtalem’s home office is classified as “Home Office and Other” in “Note 15: Segment Information” to the Consolidated Financial Statements. Pre-tax restructuring charges by segment were as follows (in thousands):

	Three Months Ended March 31, 2018						Nine Months Ended March 31, 2018
	Real Estate		Termination Benefits		Total		Real Estate		Termination Benefits		Total
Medical and Healthcare	$	-	$	530	$	530	$	26	$	616	$	642
U.S. Traditional Postsecondary		-		-		-		1,722		656		2,378
Home Office and Other		46		45		91		(419)		2,961		2,542
Total	$	46	$	575	$	621	$	1,329	$	4,233	$	5,562

	Three Months Ended March 31, 2017						Nine Months Ended March 31, 2017
	Real Estate		Termination Benefits		Total		Real Estate		Termination Benefits		Total
Medical and Healthcare	$	137	$	530	$	667	$	137	$	530	$	667
U.S. Traditional Postsecondary		(422)		1,147		725		3,282		1,147		4,429
Home Office and Other		(222)		1,634		1,412		1,706		2,315		4,021
Total	$	(507)	$	3,311	$	2,804	$	5,125	$	3,992	$	9,117

The following table summarizes the separation and restructuring plan activity for the fiscal years 2018 and 2017, for which cash payments are required (in thousands):

Liability balance at June 30, 2016	$	48,223
Increase in liability (separation and other charges)		27,620
Reduction in liability (payments and adjustments)		(29,728)
Liability balance at June 30, 2017		46,115
Increase in liability (separation and other charges)		17,689
Reduction in liability (payments and adjustments)		(23,019)
Liability balance at March 31, 2018	$	40,785

Of this liability balance, $14.7 million is recorded as Accrued Liabilities and $26.1 million is recorded as Deferred Rent and Other Liabilities on the Consolidated Balance Sheet at March 31, 2018. These liability balances primarily represent rent accruals and costs for employees that have either not yet separated from Adtalem or their full severance has not yet been paid. All of these remaining costs are expected to be paid over the next 12 months except for rent charges which may be paid out for periods of up to 7 years.