8-K 1 a8k_india.htm 8-K INDIA Document
  UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported)
May 13, 2019 (May 9, 2019)
 
Laureate Education, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-38002
 
52-1492296
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
                          650 South Exeter Street
Baltimore, MD 21202
(Address of principal executive offices, including zip code)
 
(410) 843-6100
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A common stock, par value $0.004 per share

LAUR
The NASDAQ Stock Market LLC
(Nasdaq Global Select Market)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o                     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o                     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o                     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o                     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company   o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   o

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 Item 2.01.    Completion of Acquisition or Disposition of Assets.
 
On May 9, 2019, LEI Singapore Holdings Pte Limited, a Singapore corporation, Laureate I B.V., a Netherlands private limited company, and Laureate International B.V., a Netherlands private limited company (collectively, the “Sellers”), all of which are indirect wholly owned subsidiaries of Laureate Education, Inc. (the “Company”), closed a transaction pursuant to the Share Purchase Agreement (the “Agreement”), among the Sellers, Global University Systems India Bidco B.V., a Netherlands private limited liability company (the “Purchaser”) and Global University Systems Holding B.V. (the “Purchaser Guarantor”), a Netherlands private limited liability company. Pursuant to the Agreement, the Purchaser acquired from the Sellers all of the issued and outstanding shares in the capital of Pearl Retail Solutions Private Limited, an India corporation (“PRS”), M-Power Energy India Private Limited (“M-Power”), an India corporation, and Data Ram Sons Private Limited (“Data Ram”), an India corporation. As a result of the closing of the transaction, the Company will no longer consolidate its network institutions in India, including Creative Arts Education Society (“CAES”), the operator of Pearl Academy, and University of Petroleum and Energy Studies (“UPES”). In connection with the Agreement, certain of the Sellers also closed a separate transaction with the minority owners of PRS relating to the purchase by them of the minority owners’ 10% interest in PRS.
The total purchase price under the Agreement was $145.6 million. The net proceeds received by the Sellers, after the payment to the 10% minority owners, transaction fees and taxes, were approximately $132.5 million, which the Company intends to use to repay indebtedness under its 2024 Term Loan. The consummation of this transaction constituted a significant disposition for purposes of Item 2.01 of Form 8-K. As a result, the Company prepared the accompanying unaudited pro forma condensed consolidated financial statements in accordance with Article 11 of Regulation S-X, which are presented in Item 9.01(b).

Forward-Looking Statements

This Current Report on Form 8-K includes certain disclosures which contain “forward-looking statements” within the meaning of the U.S. federal securities laws, which involve risks and uncertainties. You can identify forward-looking statements because they contain words such as “seek,” “intend,” “expect” or similar expressions that concern the Company’s strategy, plans or intentions. Forward-looking statements are based on the Company’s current expectations and assumptions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from the Company’s expectations are set forth under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. 



2


Item 9.01.    Financial Statements and Exhibits.
 
(b)  Pro Forma Financial Information.
 
The following financial information is included at the end of this Current Report on Form 8-K and is furnished herewith and incorporated herein by reference:
 
•                                           Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2019.
 
•                                           Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2018 and the three months ended March 31, 2019.
    
 
The information set forth under this Item 9.01(b) is being furnished under Items 9.01 and 2.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
 
(d)   Exhibits.
  
 
#                                          Laureate Education, Inc. hereby undertakes to furnish supplementally a copy of any omitted schedule or exhibit to such agreement to the U.S. Securities and Exchange Commission upon request.
 



3


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
  

 
LAUREATE EDUCATION, INC.
 
 
 
 
 
 
 
By:
/s/ Sean P. Mulcahy
 
Name:
Sean P. Mulcahy
 
Title:
Vice President, Assistant General Counsel
 
Date: May 13, 2019
 



4


 
Pro Forma Financial Information.
 
The following supplemental pro forma information is presented for informational purposes only, to provide an understanding of the Company’s historical financial results as adjusted for the disposition. These pro forma financial statements should not be considered a substitute for the actual historical financial information prepared in accordance with generally accepted accounting principles, as presented in the Company’s filings on Form 10-Q and 10-K. The unaudited pro forma condensed consolidated financial information disclosed in this report is for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the pro forma events taken place on the dates indicated, or our future consolidated results of operations.
The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2018 and the three months ended March 31, 2019 presents our condensed consolidated results of operations giving pro forma effect to the disposition as if it had occurred on January 1, 2018. The unaudited pro forma condensed consolidated balance sheet at March 31, 2019 presents our condensed consolidated financial position giving pro forma effect to the disposition as if it had occurred on March 31, 2019. These pro forma financial statements should be read in connection with the Company’s historical consolidated financial statements for the year ended December 31, 2018, which were included in the Form 10-K filed on February 28, 2019 and the Company's historical consolidated financial statements for the three months ended March 31, 2019, which were included in the Quarterly Report on Form 10-Q filed on May 9, 2019. In those historical consolidated financial statements, the entities included in this disposition were classified as discontinued operation for all periods presented.
The pro forma adjustments are based on currently available information, estimates and assumptions that the Company believes are reasonable in order to reflect, on a pro forma basis, the impact of this disposition on our historical financial information.

 



5


LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheet - Unaudited
 
IN THOUSANDS, except per share amounts
 
 
March 31, 2019
 
 
 
Laureate
Historical
 
Pro Forma
Adjustments

Pro Forma
 
 
 
 
 
 

 
 
Assets
 
 
 
 

 
 
Current assets:
 
 
 
 

 
 
Cash and cash equivalents
 
$
278,782

 
$
—


$
278,782

 
Restricted cash
 
203,633

 
—


203,633

 
Receivables:
 
 
 
 

 
 
    Accounts and notes receivable
 
606,235

 
—


606,235

 
    Other receivables
 
13,429

 
—


13,429

 
    Allowance for doubtful accounts
 
(165,011
)
 
—


(165,011
)
 
Receivables, net
 
454,653

 
—


454,653

 
Other current assets
 
463,393

 
(86,302
)
(a)
377,091

 
Total current assets
 
1,400,461

 
(86,302
)

1,314,159

 
Property and equipment:
 
 
 
 

 
 
Land, leasehold improvements and construction in-progress
 
608,785

 
—


608,785

 
Buildings
 
651,359

 
—


651,359

 
Furniture, equipment and software
 
995,564

 
—


995,564

 
Accumulated depreciation and amortization
 
(1,018,103
)
 
—


(1,018,103
)
 
Property and equipment, net
 
1,237,605

 
—


1,237,605

 
Operating lease right-of-use assets, net
 
952,890

 
—

 
952,890

 
Goodwill
 
1,738,228

 
—


1,738,228

 
Tradenames and other intangible assets, net
 
1,136,818

 
—


1,136,818

 
Other non-current assets
 
1,367,519

 
(103,948
)
(a)
1,263,571

 
Total assets
 
$
7,833,521

 
$
(190,250
)

$
7,643,271

 
Liabilities and stockholders’ equity
 
 
 
 

 
 
Current liabilities:
 
 
 
 

 
 
Other current liabilities
 
$
1,601,672

 
$
(43,617
)
(a)
$
1,558,055

 
Total current liabilities
 
1,601,672

 
(43,617
)

1,558,055

 
Long-term operating leases, less current portion
 
871,588

 
—

 
871,588

 
Long-term debt and finance leases, less current portion
 
2,136,328

 
(132,454
)
(b)
2,003,874

 
Other long-term liabilities
 
882,118

 
(40,546
)
(a)
841,572

 
Total liabilities
 
5,491,706

 
(216,617
)

5,275,089

 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interests and equity
 
13,909

 
(2,086
)
(d)
11,823

 
Stockholders’ equity:
 
 
 
 

 
 
Total Laureate Education, Inc. stockholders’ equity
 
2,335,388

 
29,642

(c)
2,365,030

 
Noncontrolling interests
 
(7,482
)
 
(1,189
)
(d)
(8,671
)
 
Total stockholders’ equity
 
2,327,906

 
28,453


2,356,359

 
Total liabilities and stockholders’ equity
 
$
7,833,521

 
$
(190,250
)

$
7,643,271

 
 
 

6


LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Income- Unaudited
 
IN THOUSANDS, except per share amounts

 
 
For the year ended December 31, 2018
 
 
Laureate
Historical
 
Pro Forma
Adjustments
 
Pro Forma
 
 
 
 
 
 
 
Revenues
 
$
3,350,224

 
$
—

 
$
3,350,224

Costs and expenses:
 
 
 
 
 


Direct costs
 
2,746,868

 
—

 
2,746,868

General and administrative expenses
 
299,264

 
—

 
299,264

Loss on impairment of assets
 
13,110

 
—

 
13,110

Operating income
 
290,982

 
—

 
290,982

Interest expense, net of interest income
 
(223,379
)
 
8,000

(e)
(215,379
)
Other gains, net of losses
 
60,829

 
—

 
60,829

Income from continuing operations before income taxes and equity in net income of affiliates
 
128,432

 
8,000

 
136,432

Income tax expense
 
(133,160
)
 
—

 
(133,160
)
Equity in net loss of affiliates, net of tax
 
(2
)
 
—

 
(2
)
Loss from continuing operations
 
(4,730
)
 
8,000

 
3,270

Net income attributable to noncontrolling interests
 
(11
)
 
129

(d)
118

Loss from continuing operations attributable to Laureate Education, Inc.
 
(4,741
)
 
8,129

 
3,388

Accretion of Series A convertible redeemable preferred stock and other redeemable noncontrolling interests and equity
 
(62,825
)
 
—

 
(62,825
)
Gain upon conversion of Series A convertible redeemable preferred stock
 
74,110

 
—

 
74,110

Net income from continuing operations available to common stockholders for basic earnings per share
 
6,544

 
8,129

 
14,673

    Adjusted for: accretion of Series A Preferred Stock
 
61,974

 
—

 
61,974

    Adjusted for: gain upon conversion of Series A Preferred Stock
 
(74,110
)
 
—

 
(74,110
)
Net loss from continuing operations available to common stockholders for diluted earnings per share
 
$
(5,592
)
 
$
8,129

 
$
2,537

 
 
 
 
 
 
 
Basic and diluted earnings per share:
 
 
 
 
 
 
Basic earnings per share (weighted average shares outstanding 212,769)
 
$
0.03

 
$
—

 
$
0.07

Diluted earnings per share (weighted average shares outstanding 212,769)
 
$
(0.03
)
 
$
—

 
$
0.01

 













7


LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Income- Unaudited
 
IN THOUSANDS, except per share amounts
 
 
For the three months ended March 31, 2019
 
 
Laureate
Historical
 
Pro Forma
Adjustments
 
Pro Forma
 
 
 
 
 
 
 
Revenues
 
$
621,796

 
$
—

 
$
621,796

Costs and expenses:
 
 
 
 
 
 
Direct costs
 
652,414

 
—

 
652,414

General and administrative expenses
 
53,911

 
—

 
53,911

Operating loss
 
(84,529
)
 
—

 
(84,529
)
Interest expense, net of interest income
 
(51,102
)
 
2,000

(e)
(49,102
)
Other losses, net of gains
 
(9,739
)
 
—

 
(9,739
)
Loss from continuing operations before income taxes
 
(145,370
)
 
2,000

 
(143,370
)
Income tax benefit
 
35,056

 
—

 
35,056

Loss from continuing operations
 
(110,314
)
 
2,000

 
(108,314
)
Net income attributable to noncontrolling interests
 
(2,731
)
 
107

(d)
(2,624
)
Loss from continuing operations attributable to Laureate Education, Inc.
 
(113,045
)
 
2,107

 
(110,938
)
 
 
 
 
 
 
 
Accretion of other redeemable noncontrolling interests and equity
 
263

 
—

 
263

Net loss from continuing operations available to common stockholders
 
$
(112,782
)
 
$
2,107

 
$
(110,675
)
 
 
 
 
 
 
 
Basic and diluted earnings (loss) per share:
 
 
 
 
 
 
Basic and diluted loss per share (weighted average shares outstanding 224,655)
 
$
(0.50
)
 
$
—

 
$
(0.49
)

Notes to Unaudited Pro Forma Condensed Financial Information
(a)
Represents the elimination of the assets and liabilities associated with the disposition. As of March 31, 2019, total assets and total liabilities included in the disposition were classified as "held for sale" in the Form 10-Q filed on May 9, 2019.
(b)
Represents the intended use of the estimated net proceeds for payment on the Company's indebtedness under its credit agreement.
(c)
Represents the net effect of the removal of the disposed net assets, offset by the net proceeds received, had the transaction closed on March 31, 2019. The estimated gain is subject to finalization and is not included in the adjustments in the unaudited pro forma consolidated income statement as this amount will be included in the consolidated income statement of the Company within the next calendar year following the disposition and is not expected to have a continuing effect on the Company’s operations.
(d)
Represents the removal of the noncontrolling interest of PRS resulting from the purchase by one of the Sellers of the minority owners’ 10% interest in PRS.
(e)
Represents the estimated interest expense savings resulting from the intended partial repayment of the Company's indebtedness under its credit agreement using the estimated net proceeds from the disposition as described herein, assuming no tax effect. The estimated interest expense savings were derived using an interest rate of 6.0%, the interest rate in effect for the term loans under our credit agreement as of March 31, 2019.

8