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Discontinued Operations and Assets Held for Sale | 12 Months Ended
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Jun. 30, 2020
Discontinued Operations And Disposal Groups [Abstract] |
Discontinued Operations and Assets Held for Sale | 4. Discontinued Operations and Assets Held for Sale On December 4, 2018, Adtalem completed the sale of Carrington to San Joaquin Valley College, Inc. (“SJVC”) for de minimis consideration. As the sale represented a strategic shift that has a major effect on Adtalem’s operations and financial results, Carrington is presented in Adtalem’s financial reporting as a discontinued operation. Adtalem has retained certain leases associated with the Carrington operations. Adtalem remains the primary lessee on these leases and subleases to Carrington. Adtalem records the proceeds from these subleases as an offset to operating costs. Adtalem also assigned certain leases to Carrington but remains contingently liable under these leases. Adtalem recorded a pre-tax loss of $11.3 million on the sale of Carrington and transferred $9.9 million of cash and restricted cash balances to Carrington in fiscal year 2019, subject to post-closing adjustments to be completed in fiscal year 2021. On December 11, 2018, Adtalem completed the sale of DeVry University to Cogswell Education, LLC (“Cogswell”) for de minimis consideration. As the sale represented a strategic shift that has a major effect on Adtalem’s operations and financial results, DeVry University is presented in Adtalem’s financial reporting as a discontinued operation. The purchase agreement includes an earn-out entitling Adtalem to payments of up to $20 million over a ten-year period payable based on DeVry University’s free cash flow. In connection with the closing of the sale, Adtalem loaned to DeVry University $10.0 million under the terms of the promissory note, dated as of December 11, 2018 (the “Note”). The Note bears interest at a rate of 4% per annum, payable annually in arrears and has a maturity date of January 1, 2022. DeVry University may make prepayments on the Note. This loan is recorded as other assets, net on the Consolidated Balance Sheets. Adtalem has retained certain leases associated with DeVry University operation with the exception of one lease which expires December 2023. Adtalem remains the primary lessee on these leases and subleases to DeVry University. In addition, Adtalem owns the buildings for certain DeVry University operating and administrative office locations and leases space to DeVry University under one-year operating leases, renewable annually at DeVry University’s option. Adtalem records the proceeds from these leases and subleases as an offset to operating costs. Adtalem also assigned certain leases to DeVry University but remains contingently liable under these leases. Adtalem recorded a pre-tax loss of $22.3 million on the sale of DeVry University and transferred $40.2 million of cash and restricted cash balances to DeVry University in fiscal year 2019. On April 24, 2020, Adtalem completed the sale of Adtalem Brazil to Estácio Participações S.A. (“Estácio”) and Sociedade de Ensino Superior Estaćio de Sá Ltda, a wholly owned subsidiary of Estácio (“Purchaser”), pursuant to the Stock Purchase Agreement dated October 18, 2019. As the sale represented a strategic shift that has a major effect on Adtalem’s operations and financial results, Adtalem Brazil is presented in Adtalem’s financial reporting as a discontinued operation. Pursuant to the terms and subject to the conditions set forth in the purchase agreement, Adtalem sold the issued and outstanding shares of Adtalem Brasil Holding S.A. (a/k/a Adtalem Brazil) to the Purchaser for R$1,920 million, subject to certain post-closing adjustments pursuant to the purchase agreement. Adtalem received $345.9 million in sale proceeds and $56.0 million of Adtalem Brazil cash, for a combined $401.9 million upon the sale. Adtalem Brazil cash balance on the sale date was $88.4 million, resulting in $313.5 million of cash proceeds, net of this cash transferred. In addition, Adtalem received $110.7 million from the settlement of a deal-contingent foreign currency hedge arrangement entered into in connection with the sale of Adtalem Brazil to economically hedge the Brazilian Real sales price through the mitigation of the currency exchange rate risk. Adtalem recorded this settlement as a pre-tax gain on the hedge of $110.7 million in fiscal year 2020. The hedge agreement had a total notional amount of R$2,154 million. The derivative associated with the hedge agreement did not qualify for hedge accounting treatment under ASC 815, and as a result, all changes in fair value were recorded within the income statement. The following is a summary of balance sheet information of assets and liabilities reported as held for sale as of June 30, 2019, which includes only Adtalem Brazil balances as Carrington and DeVry University were sold prior to that date (in thousands):
​ | ​ | ​ | ​
​ | ​ | June 30,
​ |  | 2019
Assets: |  | ​ |
Current assets: |  | ​ |
Cash and cash equivalents | ​ | $ | 95,243
Accounts receivable, net | ​ |  | 74,269
Prepaid expenses and other current assets | ​ |  | 8,411
Total current assets held for sale | ​ |  | 177,923
Noncurrent assets: | ​ |  |
Property and equipment, net | ​ | ​ | 81,250
Operating lease assets | ​ |  | —
Deferred income taxes | ​ |  | 5,585
Intangible assets, net | ​ |  | 120,108
Goodwill | ​ |  | 187,195
Other assets, net | ​ |  | 10,338
Total noncurrent assets held for sale | ​ |  | 404,476
Total assets held for sale | ​ | $ | 582,399
​ | ​ | ​ | ​
Liabilities: | ​ |  |
Current liabilities: | ​ |  |
Accounts payable | ​ | $ | 4,242
Accrued payroll and benefits | ​ |  | 17,828
Accrued liabilities | ​ |  | 10,193
Deferred revenue | ​ |  | 3,846
Current operating lease liabilities | ​ |  | —
Total current liabilities held for sale | ​ |  | 36,109
Noncurrent liabilities: | ​ |  |
Deferred income taxes | ​ |  | 4,104
Other liabilities | ​ |  | 18,964
Total noncurrent liabilities held for sale | ​ |  | 23,068
Total liabilities held for sale | ​ | $ | 59,177
The following is a summary of income statement information of operations reported as discontinued operations, which includes Adtalem Brazil’s, Carrington’s, and DeVry University’s operations through the date of each respective sale (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended June 30,
​ | ​ | 2020 |  | 2019 |  | 2018
Revenue | ​ | $ | 157,695 | ​ | $ | 421,560 | ​ | $ | 755,203
Operating cost and expense: | ​ |  |  | ​ |  |  | ​ |  |
Cost of educational services | ​ |  | 105,118 | ​ |  | 261,175 | ​ |  | 455,404
Student services and administrative expense | ​ |  | 113,449 | ​ |  | 142,516 | ​ |  | 267,680
Restructuring expense | ​ |  | 646 | ​ |  | 388 | ​ |  | 19,723
Asset impairment charge - intangible and goodwill | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 44,041
Asset impairment charge - building and equipment | ​ |  | — | ​ |  | 1,953 | ​ |  | 51,972
Loss on sale of assets | ​ |  | — | ​ |  | — | ​ |  | 230
Total operating cost and expense | ​ |  | 219,213 | ​ |  | 406,032 | ​ |  | 839,050
Operating (loss) income | ​ |  | (61,518) | ​ |  | 15,528 | ​ |  | (83,847)
Other income (expense): | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest and dividend income | ​ | ​ | 1,862 | ​ | ​ | 4,008 | ​ | ​ | 5,229
Interest expense | ​ | ​ | (2,922) | ​ | ​ | (3,733) | ​ | ​ | (3,039)
Net other (expense) income | ​ |  | (1,060) | ​ |  | 275 | ​ |  | 2,190
(Loss) income from discontinued operations before income taxes | ​ | ​ | (62,578) | ​ | ​ | 15,803 | ​ | ​ | (81,657)
Loss on disposal of discontinued operations before income taxes | ​ | ​ | (287,560) | ​ | ​ | (33,604) | ​ | ​ | —
Benefit from income taxes | ​ |  | 20,823 | ​ |  | 6,513 | ​ |  | 48,020
Loss from discontinued operations | ​ | ​ | (329,315) | ​ | ​ | (11,288) | ​ | ​ | (33,637)
Net income attributable to redeemable noncontrolling interest | ​ | ​ | — | ​ | ​ | (791) | ​ | ​ | (1,023)
Net loss from discontinued operations attributable to Adtalem | ​ | $ | (329,315) | ​ | $ | (12,079) | ​ | $ | (34,660)
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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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