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 (“Cogswell”), 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.

During the three and nine months ended March 31, 2018, asset impairment charges of $5.7 million and $53.0 million, respectively, 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. The impairment charges recorded in the third quarter of fiscal year 2018 reflect the current plan of assets being transferred to Cogswell. During the first nine months 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).

	March 31,		June 30,		March 31,
	2018		2017		2017
ASSETS:
Current Assets:
Cash and Cash Equivalents	$	707	$	1,553	$	1,120
Restricted Cash		9,237		4,358		3,463
Accounts Receivable, Net		9,624		11,957		32,008
Prepaid Expenses and Other Current Assets		7,956		4,850		6,800
Total Current Assets Held for Sale		27,524		22,718		43,391
Land, Building and Equipment Held for Sale, Net		-		45,502		48,331
Noncurrent 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		968
Total Noncurrent Assets Held for Sale		13,450		38,290		38,259
Total Assets Held for Sale	$	40,974	$	106,510	$	129,981

LIABILITIES:
Current Liabilities:
Accounts Payable	$	13,831	$	17,868	$	16,318
Accrued Salaries, Wages and Benefits		8,544		14,580		10,530
Accrued Liabilities		2,001		8,728		7,631
Deferred Revenue		31,432		1,788		42,052
Total Current Liabilities Held for Sale		55,808		42,964		76,531
Total Liabilities Held for Sale	$	55,808	$	42,964	$	76,531

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

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2018		2017		2018		2017
REVENUE:
Tuition	$	82,067	$	111,548	$	254,906	$	341,678
Other Educational		8,515		7,867		22,066		20,993
Total Revenue		90,582		119,415		276,972		362,671
OPERATING COST AND EXPENSE:
Cost of Educational Services		44,758		57,029		145,154		180,855
Student Services and Administrative Expense		42,644		54,090		128,541		156,174
Restructuring Expense		6,150		4,967		13,964		8,751
Asset Impairment Charge - Intangible and Goodwill		-		-		23,841		-
Asset Impairment Charge - Building and Equipment		5,738		-		29,129		-
Loss on Sale of Assets		-		-		230		-
Regulatory Settlements		-		-		-		4,102
Loss on Assets Held for Sale		-		-		-		4,764
Total Operating Cost and Expense		99,290		116,086		340,859		354,646
Operating (Loss) Income from Discontinued Operations		(8,708)		3,329		(63,887)		8,025
Interest Income		-		-		-		20
(Loss) Income from Discontinued Operations Before
Income Taxes		(8,708)		3,329		(63,887)		8,045
Income Tax Benefit		3,483		377		23,854		2,329
(Loss) Income from Discontinued Operations	$	(5,225)	$	3,706	$	(40,033)	$	10,374