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Section 1: 8-K (FORM 8-K)

 

 

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)

December 11, 2018

 

 

 

ADTALEM GLOBAL EDUCATION INC.

(Exact name of registrant as specified in its charter)  

 

 

 

Delaware   1-13988   36-3150143
(State of incorporation)   (Commission File Number)   (IRS Employer Identification No.)
     

500 West Monroe Street

Chicago, Illinois

  60661
(Address of principal executive offices)   (Zip Code)
             

(630) 515-7700

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report)  

 

 

 

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):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ 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 Rule 405 of the Securities Act of 1933 (17 CPR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ¨

 

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. ¨

 

 

 

 

 

Item 9.01 Financial Statements and Exhibits

 

As previously reported by Adtalem Global Education Inc. (“Adtalem”) on the Current Report on Form 8-K dated December 11, 2018, Adtalem completed the sale to Cogswell Education, LLC all of Adtalem’s right, title, and interest in and to the issued and outstanding shares of capital stock of DeVry University, Inc. and DeVry New York Inc.

 

The disposition of DeVry University constituted a significant disposition. Accordingly, the pro forma financial information required by Item 9.01 is included as Exhibit 99.1 to this Current Report on Form 8-K. This pro forma financial information is presented combined with the pro forma adjustments for the disposition of Adtalem’s ownership of all the outstanding equity interests in U.S. Education Holdings LLC, the holding company of its Carrington College subsidiaries, as previously reported by Adtalem on the Current Report on Form 8-K dated December 10, 2018.

 

Forward-Looking Statements

 

Certain statements contained in this Form 8-K, including those that affect Adtalem’s expectations or plans, may constitute forward-looking statements subject to the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as Adtalem Global Education Inc. or its management “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “foresees,” “intends,” “plans” or other words or phrases of similar import.

 

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause Adtalem’s actual results to differ materially from those projected or implied by these forward-looking statements. Additional information regarding factors that could cause results to differ can be found in Adtalem’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018 and Form 10-Q for the quarter ended September 30, 2018.

 

These forward-looking statements are based on information as of December 13, 2018, and Adtalem assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

 

(b) Pro Forma Financial Information.

 

The following financial information is included as Exhibit 99.1 to this Current Report on Form 8-K:

 

·Pro Forma Consolidated Balance Sheets as of June 30, 2018 and September 30, 2018.
·Pro Forma Consolidated Statements of Income for the year ended June 30, 2018 and three months ended September 30, 2018.

 

The information set forth under this Item 9.01(b) is being furnished under Item 9.01 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.

 

The following is a list of the Exhibits filed with this report:

 

Exhibit No.Exhibit Description
99.1Pro Forma Financial Information

 

 

 

 

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.

 

  ADTALEM GLOBAL EDUCATION INC.
  (Registrant)
     
Date: December 13, 2018 By:  

/s/ Kathleen A. Carroll

      Kathleen A. Carroll
Vice President, Controller
       

 

 

 

 

 

 

 

 

 

 

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

EXHIBIT 99.1

 

Pro Forma Financial Information

 

The following supplemental pro forma information is presented for information purposes only, to provide an understanding of Adtalem’s historical financial results as adjusted for the sales of DeVry University and Carrington College. 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 Adtalem’s filings on Form 10-K and Form 10-Q. The unaudited pro forma 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 Pro Forma Consolidated Balance Sheets as of June 30, 2018 and September 30, 2018 presents our consolidated financial position giving pro forma effect to the dispositions of DeVry University and Carrington College as if they had occurred on June 30, 2018. The Pro Forma Consolidated Statements of Income for the year ended June 30, 2018 and three months ended September 30, 2018 presents our consolidated results of operations giving pro forma effect to the dispositions of DeVry University and Carrington College as if they had occurred on July 1, 2017 and July 1, 2018, respectively. These pro forma financial statements should be read in connection with Adtalem’s historical consolidated financial statements, which were included in the Annual Report on Form 10-K for the year ended June 30, 2018, filed on August 24, 2018 and Quarterly Report on Form 10-Q for the three months ended September 30, 2018, filed on November 1, 2018.

 

The pro forma adjustments are based on currently available information, estimates and assumptions that Adtalem believes are reasonable in order to reflect, on a pro forma basis, the impact of these dispositions on our historical information.

 

 

 

 

ADTALEM GLOBAL EDUCATION INC.
 PRO FORMA CONSOLIDATED BALANCE SHEET
 (unaudited and amounts in thousands, except share and par value amounts)

 

   June 30, 2018  
   Adtalem   Pro Forma     Adtalem 
   Historical   Adjustments     Pro Forma 
               
ASSETS:              
Current Assets:                 
Cash and Cash Equivalents  $430,690   $(31,900)  (a)  $398,790 
Marketable Securities and Investments   4,255    -      4,255 
Restricted Cash   310    -      310 
Accounts Receivable, Net   146,726    -      146,726 
Prepaid Expenses and Other Current Assets   58,887    -      58,887 
Current Assets Held for Sale   47,132    (47,132)  (b)   - 
Total Current Assets   688,000    (79,032)     608,968 
Land, Building and Equipment:                 
Land   48,177    -      48,177 
Building   389,129    -      389,129 
Equipment   302,516    -      302,516 
Construction in Progress   25,360    -      25,360 
    765,182    -      765,182 
Accumulated Depreciation   (376,528)   -      (376,528)
Land, Building and Equipment Held for Sale, Net   -    -      - 
Land, Building and Equipment, Net   388,654    -      388,654 
Noncurrent Assets:                 
Deferred Income Taxes   38,780    -      38,780 
Intangible Assets, Net   362,931    -      362,931 
Goodwill   813,887    -      813,887 
Other Assets, Net   39,259    -      39,259 
Noncurrent Assets Held for Sale   13,450    (13,450)  (b)   - 
Total Noncurrent Assets   1,268,307    (13,450)     1,254,857 
TOTAL ASSETS  $2,344,961   $(92,482)    $2,252,479 
                  
LIABILITIES:                 
Current Liabilities:                 
Accounts Payable  $47,477   $-     $47,477 
Accrued Salaries, Wages and Benefits   71,289    -      71,289 
Accrued Liabilities   80,803    (1,827)  (c)   78,976 
Deferred Revenue   106,773    -      106,773 
Current Portion of Long-Term Debt   3,000    -      3,000 
Current Liabilities Held for Sale   56,439    (56,439)  (b)   - 
Total Current Liabilities   365,781    (58,266)     307,515 
Noncurrent Liabilities:                 
Long-Term Debt   290,073    -      290,073 
Deferred Income Taxes   29,115    -      29,115 
Other Liabilities   131,380    (3,677)  (c)   127,703 
Noncurrent Liabilities Held for Sale   216    (216)  (b)   - 
Total Noncurrent Liabilities   450,784    (3,893)     446,891 
TOTAL LIABILITIES   816,565    (62,159)     754,406 
COMMITMENTS AND CONTINGENCIES                 
NONCONTROLLING INTEREST   9,110    -      9,110 
SHAREHOLDERS' EQUITY:                 
Common Stock, $0.01 Par Value   793    -      793 
Additional Paid-in Capital   454,653    -      454,653 
Retained Earnings   1,917,373    (30,323)  (d)   1,887,050 
Accumulated Other Comprehensive Loss   (142,168)   -      (142,168)
Treasury Stock, at Cost   (711,365)   -      (711,365)
TOTAL SHAREHOLDERS' EQUITY   1,519,286    (30,323)     1,488,963 
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY  $2,344,961   $(92,482)    $2,252,479 

 

 

 

 

ADTALEM GLOBAL EDUCATION INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(unaudited and amounts in thousands, except per share amounts)

 

   Year Ended June 30, 2018 
   Adtalem   Pro Forma     Adtalem 
   Historical   Adjustments     Pro Forma 
REVENUE  $1,231,211   $-     $1,231,211 
OPERATING COST AND EXPENSE:                 
Cost of Educational Services   645,604    -      645,604 
Student Services and Administrative Expense   373,064    -      373,064 
Restructuring Expense   5,067    -      5,067 
Total Operating Cost and Expense   1,023,735    -      1,023,735 
Operating Income from Continuing Operations   207,476    -      207,476 
INTEREST:                 
Interest Income   5,827    -      5,827 
Interest Expense   (14,620)   -      (14,620)
Net Interest Expense   (8,793)   -      (8,793)
Income from Continuing Operations Before Income Taxes   198,683    -      198,683 
Income Tax Provision   (84,102)   -      (84,102)
Equity Method Investment Loss   (138)   -      (138)
Income from Continuing Operations   114,443    -      114,443 
DISCONTINUED OPERATIONS:                 
Loss from Discontinued Operations Before Income Taxes   (124,162)   124,162   (b)   - 
Income Tax Benefit   44,016    (44,016)  (b)   - 
Loss from Discontinued Operations   (80,146)   80,146      - 
NET INCOME   34,297    80,146      114,443 
Net Income Attributable to Noncontrolling Interest   (528)   -      (528)
NET INCOME ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION  $33,769   $80,146     $113,915 
                  
AMOUNTS ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION:                 
Income from Continuing Operations  $113,915   $-     $113,915 
Loss from Discontinued Operations   (80,146)   80,146      - 
NET INCOME ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION  $33,769   $80,146     $113,915 
                  
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO                 
ADTALEM GLOBAL EDUCATION SHAREHOLDERS:                 
Basic:                 
Continuing Operations  $1.85   $-     $1.85 
Discontinued Operations  $(1.30)  $1.30     $- 
Total  $0.55   $1.30     $1.85 
Diluted:                 
Continuing Operations  $1.83   $-     $1.83 
Discontinued Operations  $(1.29)  $1.29     $- 
Total  $0.54   $1.29     $1.83 

 

 

 

 

Notes to June 30, 2018 Pro Forma Consolidated Financial Information
  (a) Represents $21.3 million of cash transferred to provide a working capital balance of $7.5 million, $1.25 million for Incentive Assurance Payments, as defined in the Stock Purchase Agreement, related to the delayed sale closing and transaction costs of $2.3 million to be paid by Adtalem related to the sale of DeVry University.  In addition, represents $10.6 million of cash transferred to provide a working capital balance of $11.5 million related to the sale of Carrington College.
  (b) Represents the elimination of the assets, liabilities and operating results associated with the businesses disposition. As of June 30, 2018, DeVry University's and Carrington College's assets and liabilities were classified as held for sale on Adtalem's Consolidated Balance Sheet and DeVry University's and Carrington College's results of operations were classified as discontinued operations in Adtalem's Consolidated Statement of Income, each in the Form 10-K filed on August 24, 2018.
  (c) Represents the deferred rent liabilities associated with DeVry University and Carrington College leases as of June 30, 2018, which will be assumed by the respective Buyers, and removed from Adtalem's liability balances.
  (d) Represents the estimated loss realized on the sale of DeVry University and Carrington College had the transactions closed on June 30, 2018. These amounts are subject to finalization. This estimated loss is not included in the adjustments in the pro forma consolidated statement of income, as this amount will be included as discontinued operations in the consolidated statement of income of Adtalem following the disposition.

 

 

 

 

 

ADTALEM GLOBAL EDUCATION INC.
 PRO FORMA CONSOLIDATED BALANCE SHEET
 (unaudited and amounts in thousands, except share and par value amounts)

 

   September 30, 2018  
   Adtalem   Pro Forma     Adtalem 
   Historical   Adjustments     Pro Forma 
               
ASSETS:                 
Current Assets:                 
Cash and Cash Equivalents  $408,765   $(21,949)  (a)  $386,816 
Marketable Securities and Investments   8,402    -      8,402 
Restricted Cash   877    -      877 
Accounts Receivable, Net   166,794    -      166,794 
Prepaid Expenses and Other Current Assets   69,714    -      69,714 
Current Assets Held for Sale   84,834    (84,834)  (b)   - 
Total Current Assets   739,386    (106,783)     632,603 
Land, Building and Equipment:                 
Land   43,724    -      43,724 
Building   349,694    -      349,694 
Equipment   269,298    -      269,298 
Construction in Progress   26,849    -      26,849 
    689,565    -      689,565 
Accumulated Depreciation   (338,162)   -      (338,162)
Land, Building and Equipment Held for Sale, Net   -    -      - 
Land, Building and Equipment, Net   351,403    -      351,403 
Noncurrent Assets:                 
Deferred Income Taxes   31,080    -      31,080 
Intangible Assets, Net   355,595    -      355,595 
Goodwill   805,285    -      805,285 
Other Assets, Net   53,666    -      53,666 
Noncurrent Assets Held for Sale   13,450    (13,450)  (b)   - 
Total Noncurrent Assets   1,259,076    (13,450)     1,245,626 
TOTAL ASSETS  $2,349,865   $(120,233)    $2,229,632 
                  
LIABILITIES:                 
Current Liabilities:                 
Accounts Payable  $50,413   $-     $50,413 
Accrued Salaries, Wages and Benefits   46,255    -      46,255 
Accrued Liabilities   90,167    (1,799)  (c)   88,368 
Deferred Revenue   185,061    -      185,061 
Current Portion of Long-Term Debt   3,000    -      3,000 
Current Liabilities Held for Sale   84,190    (84,190)  (b)   - 
Total Current Liabilities   459,086    (85,989)     373,097 
Noncurrent Liabilities:                 
Long-Term Debt   289,579    -      289,579 
Deferred Income Taxes   29,378    -      29,378 
Other Liabilities   122,757    (3,205)  (c)   119,552 
Noncurrent Liabilities Held for Sale   216    (216)  (b)   - 
Total Noncurrent Liabilities   441,930    (3,421)     438,509 
TOTAL LIABILITIES   901,016    (89,410)     811,606 
COMMITMENTS AND CONTINGENCIES                 
NONCONTROLLING INTEREST   8,814    -      8,814 
SHAREHOLDERS' EQUITY:                 
Common Stock, $0.01 Par Value   798    -      798 
Additional Paid-in Capital   469,545    -      469,545 
Retained Earnings   1,908,465    (30,823)  (d)   1,877,642 
Accumulated Other Comprehensive Loss   (163,168)   -      (163,168)
Treasury Stock, at Cost   (775,605)   -      (775,605)
TOTAL SHAREHOLDERS' EQUITY   1,440,035    (30,823)     1,409,212 
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY  $2,349,865   $(120,233)    $2,229,632 

 

 

 

 

ADTALEM GLOBAL EDUCATION INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(unaudited and amounts in thousands, except per share amounts)

 

   Three Months Ended September 30, 2018  
   Adtalem   Pro Forma     Adtalem 
   Historical   Adjustments     Pro Forma 
REVENUE  $284,190   $-     $284,190 
OPERATING COST AND EXPENSE:                 
Cost of Educational Services   148,653    -      148,653 
Student Services and Administrative Expense   98,497    -      98,497 
Restructuring Expense   39,548    -      39,548 
Total Operating Cost and Expense   286,698    -      286,698 
Operating Income from Continuing Operations   (2,508)   -      (2,508)
INTEREST:                 
Interest Income   1,945    -      1,945 
Interest Expense   (6,202)   -      (6,202)
Net Interest Expense   (4,257)   -      (4,257)
Loss from Continuing Operations Before Income Taxes   (6,765)   -      (6,765)
Income Tax Benefit   1,887    -      1,887 
Loss from Continuing Operations   (4,878)   -      (4,878)
DISCONTINUED OPERATIONS:                 
Loss from Discontinued Operations Before Income Taxes   (6,135)   6,135   (b)   - 
Income Tax Benefit   1,428    (1,428)  (b)   - 
Loss from Discontinued Operations   (4,707)   4,707      - 
NET LOSS   (9,585)   4,707      (4,878)
Net Loss Attributable to Noncontrolling Interest   55    -      55 
NET LOSS ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION  $(9,530)  $4,707     $(4,823)
                  
AMOUNTS ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION:                 
Loss from Continuing Operations  $(4,823)  $-     $(4,823)
Loss from Discontinued Operations   (4,707)   4,707      - 
NET LOSS ATTRIBUTABLE TO ADTALEM GLOBAL EDUCATION  $(9,530)  $4,707     $(4,823)
                  
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO                 
ADTALEM GLOBAL EDUCATION SHAREHOLDERS:                 
Basic:                 
Continuing Operations  $(0.08)  $-     $(0.08)
Discontinued Operations  $(0.08)  $0.08     $- 
Total  $(0.16)  $0.08     $(0.08)
Diluted:                 
Continuing Operations  $(0.08)  $-     $(0.08)
Discontinued Operations  $(0.08)  $0.08     $- 
Total  $(0.16)  $0.08     $(0.08)

 

 

 

 

Notes to September 30, 2018 Pro Forma Consolidated Financial Information
  (a) Represents $10.9 million of cash transferred to provide a working capital balance of $7.5 million, $1.25 milllion for Incentive Assurance Payments, as defined in the Stock Purchase Agreement, related to the delayed sale closing and transaction costs of $2.3 million to be paid by Adtalem related to the sale of DeVry University.  In addition, represents $11.0 million of cash transferred to provide a working capital balance of $11.5 million related to the sale of Carrington College.
  (b) Represents the elimination of the assets, liabilities and operating results associated with the businesses disposition. As of September 30, 2018, DeVry University's and Carrington College's assets and liabilities were classified as held for sale on Adtalem's Consolidated Balance Sheet and DeVry University's and Carrington College's results of operations were classified as discontinued operations in Adtalem's Consolidated Statement of Income, each in the Form 10-Q filed on November 1, 2018.
  (c) Represents the deferred rent liabilities associated with DeVry University and Carrington College leases as of September 30, 2018, which will be assumed by the respective Buyers, and removed from Adtalem's liability balances.
  (d) Represents the estimated loss realized on the sale of DeVry University and Carrington College had the transaction closed on September 30, 2018. These amounts are subject to finalization. This estimated loss is not included in the adjustments in the pro forma consolidated statement of income, as this amount will be included as discontinued operations in the consolidated statement of income of Adtalem following the disposition.

 

 

 

 

 

 

 

 

 

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