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Restructuring Charges

12 Months Ended

Jun. 30, 2020

Restructuring and Related Activities [Abstract]

Restructuring Charges

6. Restructuring Charges

During fiscal year 2020, Adtalem recorded restructuring charges primarily related to the sale of Becker’s courses for healthcare students, Adtalem’s home office and ACAMS real estate consolidations, and workforce reductions across the organization. During fiscal year 2019, Adtalem recorded restructuring charges primarily related to the impairment of the property and equipment at the Dominica campus of RUSM and severance related to workforce reductions in Dominica. In January 2019, RUSM relocated its campus operations to Barbados with no plans to return to Dominica. The property and equipment in Dominica have been fully impaired as management determined the market value less the costs to sell the facilities or move the equipment was zero. In addition, during fiscal year 2019, Adtalem recorded restructuring charges related to Adtalem’s home office real estate consolidations. When estimating costs of exiting lease space, estimates are made which could differ materially from actual results and result in additional restructuring charges or reversals in future periods. Termination benefit charges, resulting from reducing Adtalem’s workforce by 66 and 223 positions in fiscal years 2020 and 2019, respectively, represented severance pay and benefits for these employees. Adtalem’s home office is classified as “Home Office and Other” in Note 21 “Segment Information.” Pre-tax restructuring charges by segment were as follows (in thousands):


		Year Ended June 30, 2020									Year Ended June 30, 2019
		Real Estate and Other			Termination Benefits			Total			Real Estate and Other			Termination Benefits			Total
Medical and Healthcare		$	1,129		$	578		$	1,707		$	40,372		$	1,294		$	41,666
Financial Services			4,366			476			4,842			1,304			—			1,304
Home Office and Other			20,160			1,919			22,079			9,581			516			10,097
Total		$	25,655		$	2,973		$	28,628		$	51,257		$	1,810		$	53,067

The following table summarizes the separation and restructuring plan activity for the fiscal years 2019 and 2020, for which cash payments are required (in thousands):


Liability balance as of June 30, 2018		$	38,927
Increase in liability (separation and other charges)			8,870
Reduction in liability (payments and adjustments)			(22,714)
Liability balance as of June 30, 2019			25,083
ASC 842 (leases) adjustment ⁽¹⁾			(25,030)
Liability balance as of July 1, 2019			53
Increase in liability (separation and other charges)			4,955
Reduction in liability (payments and adjustments)			(3,573)
Liability balance as of June 30, 2020		$	1,435

⁽¹⁾Reflects amounts reclassified out of the opening balance of restructuring reserve accruals as of June 30, 2019 to operating lease assets that was recorded with the adoption of ASC 842. See Note 2 “Summary of Significant Accounting Policies” for additional information.

The liability balance of $1.4 million is recorded as accrued liabilities on the Consolidated Balance Sheet as of June 30, 2020. This liability balance represents exit cost accruals for employees who have either not yet separated from Adtalem or for whom full severance has not yet been paid. All of these remaining costs are expected to be paid within the next 12 months. We have substantially completed our current restructuring plans as of June 30, 2020. Adjustments to leases that have been placed in restructure will result in charges extending past fiscal year 2020 and will be presented as future restructuring expense. Management may institute future restructuring plans.