XML 27 R18.htm IDEA: XBRL DOCUMENT

Leases

9 Months Ended

Mar. 31, 2023

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 December 2034, most of which include options to terminate for a fee or extend the leases for an additional five-year period. The lease term includes the noncancelable period of the lease, as well as any periods for which we are reasonably certain to exercise extension options. 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 Consolidated Balance Sheets. 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 March 31, 2023, we entered into one additional operating lease that has not yet commenced. The lease is expected to commence during the second quarter of fiscal year 2024, has a 12-year lease term, and will result in an additional operating lease asset and operating lease liability of approximately $16.6 million. Subsequent to March 31, 2023, we entered into an additional lease, which will require approximately $13.4 million of minimum lease payments over the next 12 fiscal years.

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


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2023		2022		2023		2022
Operating lease cost	$	12,302	$	13,794	$	36,272	$	42,381
Sublease income		(3,301)		(3,599)		(10,388)		(10,430)
Total lease cost	$	9,001	$	10,195	$	25,884	$	31,951

Maturities of lease liabilities by fiscal year as of March 31, 2023 were as follows (in thousands):


	Operating
Fiscal Year	Leases
2023 (remaining)	$	14,663
2024		56,090
2025		46,742
2026		33,944
2027		31,505
Thereafter		70,104
Total lease payments		253,048
Less: imputed interest		(42,452)
Present value of lease liabilities	$	210,596

Lease term and discount rate were as follows:


	March 31,
	2023
Weighted-average remaining operating lease term (years)		5.7
Weighted-average operating lease discount rate		6.0%

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


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2023		2022		2023		2022
Cash paid for amounts in the measurement of operating lease liabilities (net of sublease receipts)	$	11,643	$	13,071	$	36,461	$	39,799
Operating lease assets obtained in exchange for operating lease liabilities	$	7,489	$	42,293	$	20,528	$	48,609

Adtalem maintains agreements to lease either a portion or the full space of two facilities owned by Adtalem to DeVry University with expiration dates through December 2023. Adtalem maintains agreements to sublease either a portion or the full leased space at nine 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 College prior to their divestitures during fiscal year 2019. All sublease expirations with DeVry University and Carrington College 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 in future periods. Future minimum lease and sublease rental income under these agreements as of March 31, 2023, were as follows (in thousands):


Fiscal Year	Amount
2023 (remaining)	$	3,727
2024		10,261
2025		5,121
2026		2,038
Total lease and sublease rental income	$	21,147