XML 34 R19.htm IDEA: XBRL DOCUMENT

Leases

12 Months Ended

Jun. 30, 2020

11. Leases

We determine if a contract contains a lease at inception. We have entered into operating leases for academic sites, housing facilities, and office space which expire at various dates through January 2031, most of which include options

to terminate for a fee or extend the leases for an additional five-year period. The lease term includes options to terminate or extend when it is reasonably certain that the option will be exercised. We elected to account for lease and non-lease components (e.g., common-area maintenance costs) as a single lease component for all operating leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet. We have not entered into any financing leases.

Operating lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets represent our right to use an underlying asset during the lease term. Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. Operating lease assets are adjusted for any prepaid or accrued lease payments, lease incentives, initial direct costs, and impairments. Our incremental borrowing rate is utilized in determining the present value of the lease payments based upon the information

available at the commencement date. Our incremental borrowing rate is determined using a secured borrowing rate for the same currency and term as the associated lease. Operating lease expense is recognized on a straight-line basis over the lease term.

As of June 30, 2020, we entered into one additional operating lease that has not yet commenced. The operating lease will commence during the first quarter of fiscal year 2021, has a 10-year lease term, and will result in an additional lease asset and lease liability of $10.1 million.

The components of lease cost were as follows (in thousands):


	Year Ended
	June 30,
	2020
Operating lease cost	$	56,136
Sublease income		(19,524)
Total lease cost	$	36,612

Maturities of lease liabilities by fiscal year as of June 30, 2020 were as follows (in thousands):


	Operating
Fiscal Year	Leases
2021	$	62,731
2022		58,921
2023		48,400
2024		32,224
2025		22,081
Thereafter		39,049
Total lease payments		263,406
Less: imputed interest		(35,730)
Present value of lease liabilities	$	227,676

Lease term and discount rate were as follows:


	June 30, 2020
Weighted-average remaining operating lease term (years)		5.2
Weighted-average operating lease discount rate		5.4%

Supplemental disclosures of cash flow information related to leases were as follows (in thousands):


	Year Ended
	June 30,
	2020
Cash paid for amounts in the measurement of operating lease liabilities (net of sublease receipts)	$	47,147
Operating lease assets obtained in exchange for operating lease liabilities	$	26,477

Adtalem maintains agreements to lease four facilities owned by Adtalem to DeVry University with various expiration dates through December 2023. Adtalem maintains agreements to sublease either a portion or the full leased space at 22 of its operating lease locations. Most of these subleases are a result of Adtalem retaining leases associated with restructured lease activities at DeVry University and Carrington prior to their divestitures during fiscal year 2019. All sublease expirations with DeVry University and Carrington coincide with Adtalem’s original head lease expiration dates. At that time, Adtalem will be relieved of its obligations. In addition, Adtalem has entered into subleases with non-affiliated entities for vacated or partially vacated space from restructuring activities. Adtalem’s sublease agreements expire at various dates through December 2025. We record sublease income as an offset against our lease expense recorded on the head lease. For leases which Adtalem vacated or partially vacated space, we recorded estimated restructuring charges in prior periods. Actual results may differ from these estimates, which could result in additional restructuring charges or reversals. Future minimum lease and sublease rental income under these agreements as of June 30, 2020, were as follows (in thousands):


Fiscal Year	Amount
2021	$	19,856
2022		16,816
2023		16,078
2024		10,261
2025		5,121
Thereafter		2,038
Total lease and sublease rental income	$	70,170

As previously disclosed in our 2019 Form 10-K and under the previous lease accounting guidance in ASC 840, future minimum rental commitments for all noncancelable operating leases, adjusted to exclude Adtalem Brazil, having a remaining term in excess of one year at June 30, 2019, were as follows (in thousands):


Fiscal Year	Amount
2020	$	67,109
2021		60,781
2022		55,982
2023		44,970
2024		28,374
Thereafter		36,120
Total minimum lease payments	$	293,336

Rent expense, adjusted to exclude Adtalem Brazil, for the years ended June 30, 2019 and 2018 was $35.8 million and $25.0 million, respectively.