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)
November 5, 2020 (November 3, 2020)
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)
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))
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 | ||||||||
Indicate by check mark whether the registrant is an emerging growth company 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 ☐
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 November 3, 2020, LEI AMEA Investments B.V., a Netherlands private limited liability company (the “Seller”), an indirect, wholly owned subsidiary of Laureate Education, Inc. (the “Company”), and the Company, solely as guarantor of certain of the Seller’s obligations thereunder, closed the previously disclosed transaction pursuant to the Sale and Purchase Agreement (the “ANZ Purchase Agreement”) with SEI Newco Inc., a Delaware corporation (the “Purchaser”), and Strategic Education, Inc., a Maryland corporation (the “Purchaser’s Guarantor”).
Pursuant to the ANZ Purchase Agreement, the Seller sold to the Purchaser all of the issued and outstanding shares in the capital of (i) LEI Higher Education Holdings Pty Ltd, an Australian private company and the direct owner of Torrens University Australia, (ii) LEI Australia Holdings Pty Ltd, an Australian private company and the indirect owner of Think Education, (iii) LESA Education Services Holdings Pty Ltd, an Australian private company, and (iv) LEI New Zealand, a New Zealand company and the indirect owner of Media Design School (collectively, Laureate ANZ). The Purchaser’s Guarantor will guarantee the obligations of the Purchaser. The total purchase price was $642.7 million of cash proceeds, plus certain closing adjustments.
The disposition of Laureate ANZ constituted a significant disposition for purposes of Item 2.01 of Form 8-K, as Laureate ANZ met the significant subsidiary investment test. Accordingly, the pro forma financial information required by Item 9.01 is included at the end of this Current Report on Form 8-K.
Forward-Looking Statements
This Current Report on Form 8-K may include certain disclosures which contain “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates” or similar expressions that concern our 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 our expectations are disclosed in our Annual Report on Form 10-K filed with the SEC on February 27, 2020, our Quarterly Reports on Form 10-Q filed and to be filed with the SEC and other filings made with the SEC.
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 filed herewith and incorporated herein by reference:
•Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2020.
•Unaudited Pro Forma Condensed Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017.
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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/ Leslie S. Brush | |||||||
| Name: | Leslie S. Brush | |||||||
| Title: | Vice President, Assistant General Counsel and Secretary | |||||||
Date: November 5, 2020
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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 of Laureate ANZ and the classification of Laureate ANZ as a discontinued operation for the years ended December 31, 2019, 2018 and 2017. 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 balance sheet as of September 30, 2020 presents our condensed consolidated financial position giving pro forma effect to the disposition of Laureate ANZ as if it had occurred on September 30, 2020. The unaudited pro forma consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017 reflect the pro forma classification of Laureate ANZ as a discontinued operation for those historical periods. An unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2020 is omitted as no pro forma adjustments are applicable and Laureate ANZ was previously classified as a discontinued operation in the historical consolidated financial statements for the nine months ended September 30, 2020, which were included in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 that was filed on November 5, 2020.
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.
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LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheet - Unaudited
Pro Forma Condensed Consolidated Balance Sheet - Unaudited
IN THOUSANDS, except per share amounts
| September 30, 2020 | ||||||||||||||||||||
| Laureate Historical | Transaction Accounting Adjustments | Pro Forma | ||||||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 716,799 | $ | 652,963 | (a) | $ | 1,369,762 | |||||||||||||
| Restricted cash | 30,857 | — | 30,857 | |||||||||||||||||
| Receivables: | ||||||||||||||||||||
| Accounts and notes receivable | 136,240 | — | 136,240 | |||||||||||||||||
| Other receivables | 48,945 | 48,945 | ||||||||||||||||||
| Allowance for doubtful accounts | (73,292) | — | (73,292) | |||||||||||||||||
| Receivables, net | 111,893 | — | 111,893 | |||||||||||||||||
| Other current assets | 620,905 | (73,434) | (b) | 547,471 | ||||||||||||||||
| Total current assets | 1,480,454 | 579,529 | 2,059,983 | |||||||||||||||||
| Property and equipment: | ||||||||||||||||||||
| Land, leasehold improvements and construction in-progress | 243,991 | — | 243,991 | |||||||||||||||||
| Buildings | 325,863 | — | 325,863 | |||||||||||||||||
| Furniture, equipment and software | 452,893 | — | 452,893 | |||||||||||||||||
| Accumulated depreciation and amortization | (475,684) | — | (475,684) | |||||||||||||||||
| Property and equipment, net | 547,063 | — | 547,063 | |||||||||||||||||
| Operating lease right-of-use assets, net | 444,679 | — | 444,679 | |||||||||||||||||
| Goodwill | 518,332 | — | 518,332 | |||||||||||||||||
| Tradenames | 221,143 | — | 221,143 | |||||||||||||||||
| Other non-current assets | 1,963,478 | (177,680) | (b) | 1,785,798 | ||||||||||||||||
| Total assets | $ | 5,175,149 | $ | 401,849 | $ | 5,576,998 | ||||||||||||||
| Liabilities and stockholders’ equity | ||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
| Other current liabilities | $ | 1,033,792 | $ | (106,529) | (b) | $ | 927,263 | |||||||||||||
| Total current liabilities | 1,033,792 | (106,529) | 927,263 | |||||||||||||||||
| Long-term operating leases, less current portion | 452,111 | — | 452,111 | |||||||||||||||||
| Long-term debt and finance leases, less current portion | 1,307,849 | — | 1,307,849 | |||||||||||||||||
| Other long-term liabilities | 555,103 | (44,855) | (b) | 510,248 | ||||||||||||||||
| Total liabilities | 3,348,855 | (151,384) | 3,197,471 | |||||||||||||||||
| Redeemable noncontrolling interests and equity | 1,714 | — | 1,714 | |||||||||||||||||
| Stockholders’ equity: | ||||||||||||||||||||
| Total Laureate Education, Inc. stockholders’ equity | 1,837,198 | 553,233 | (c) | 2,390,431 | ||||||||||||||||
| Noncontrolling interests | (12,618) | — | (12,618) | |||||||||||||||||
| Total stockholders’ equity | 1,824,580 | 553,233 | 2,377,813 | |||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 5,175,149 | $ | 401,849 | $ | 5,576,998 | ||||||||||||||
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LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations - Unaudited
Pro Forma Condensed Consolidated Statement of Operations - Unaudited
IN THOUSANDS, except per share amounts
| For the year ended December 31, 2019 | ||||||||||||||||||||
| Laureate Historical | Transaction Accounting Adjustments | Pro Forma | ||||||||||||||||||
| Revenues | $ | 3,250,326 | $ | (189,703) | (d) | $ | 3,060,623 | |||||||||||||
| Costs and expenses: | ||||||||||||||||||||
| Direct costs | 2,671,557 | (169,909) | (d) | 2,501,648 | ||||||||||||||||
| General and administrative expenses | 252,179 | — | 252,179 | |||||||||||||||||
| Loss on impairment of assets | 470 | — | 470 | |||||||||||||||||
| Operating income | 326,120 | (19,794) | (d) | 306,326 | ||||||||||||||||
| Interest expense, net of interest income | (155,122) | 1,982 | (d) | (153,140) | ||||||||||||||||
| Other losses, net of gains | (76,600) | 833 | (d) | (75,767) | ||||||||||||||||
| Income from continuing operations before income taxes and equity in net income of affiliates | 94,398 | (16,979) | (d) | 77,419 | ||||||||||||||||
| Income tax expense | (80,656) | 546 | (d) | (80,110) | ||||||||||||||||
| Equity in net income of affiliates, net of tax | 219 | — | 219 | |||||||||||||||||
| Income (loss) from continuing operations | 13,961 | (16,433) | (d) | (2,472) | ||||||||||||||||
| Income from discontinued operations, net of tax | 53,941 | 16,433 | (d) | 70,374 | ||||||||||||||||
| Gain on sales of discontinued operations, net of tax | 869,762 | — | 869,762 | |||||||||||||||||
| Net income | 937,664 | — | 937,664 | |||||||||||||||||
| Net loss attributable to noncontrolling interests | 820 | — | 820 | |||||||||||||||||
| Net income attributable to Laureate Education, Inc. | $ | 938,484 | $ | — | $ | 938,484 | ||||||||||||||
| — | ||||||||||||||||||||
| Accretion of redeemable noncontrolling interests and equity | (208) | — | (208) | |||||||||||||||||
| Net income available to common stockholders | $ | 938,276 | $ | — | $ | 938,276 | ||||||||||||||
| Basic earnings per share: | ||||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.06 | $ | (0.07) | $ | (0.01) | ||||||||||||||
| Income from discontinued operations | 4.17 | 0.07 | 4.24 | |||||||||||||||||
| Basic earnings per share (weighted average shares outstanding 221,928) | $ | 4.23 | $ | — | $ | 4.23 | ||||||||||||||
| Diluted earnings per share: | ||||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.06 | $ | (0.07) | $ | (0.01) | ||||||||||||||
| Income from discontinued operations | 4.16 | 0.07 | $ | 4.23 | ||||||||||||||||
| Diluted earnings per share (weighted average shares outstanding 222,471) | $ | 4.22 | $ | — | $ | 4.22 | ||||||||||||||
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LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations - Unaudited
Pro Forma Condensed Consolidated Statement of Operations - Unaudited
IN THOUSANDS, except per share amounts
| For the year ended December 31, 2018 | ||||||||||||||||||||
| Laureate Historical | Transaction Accounting Adjustments | Pro Forma | ||||||||||||||||||
| Revenues | $ | 3,290,213 | $ | (177,350) | (d) | $ | 3,112,863 | |||||||||||||
| Costs and expenses: | ||||||||||||||||||||
| Direct costs | 2,697,049 | (162,653) | (d) | 2,534,396 | ||||||||||||||||
| General and administrative expenses | 299,264 | — | 299,264 | |||||||||||||||||
| Loss on impairment of assets | 10,030 | — | 10,030 | |||||||||||||||||
| Operating income | 283,870 | (14,697) | (d) | 269,173 | ||||||||||||||||
| Interest expense, net of interest income | (223,357) | 4,386 | (d) | (218,971) | ||||||||||||||||
| Other gains, net of losses | 60,726 | 6,106 | (d) | 66,832 | ||||||||||||||||
| Gain from continuing operations before income taxes | 121,239 | (4,205) | (d) | 117,034 | ||||||||||||||||
| Income tax expense | (131,771) | (413) | (d) | (132,184) | ||||||||||||||||
| Equity in net income of affiliates, net of tax | (2) | — | (2) | |||||||||||||||||
| Loss from continuing operations | (10,534) | (4,618) | (d) | (15,152) | ||||||||||||||||
| Income from discontinued operations, net of tax | 84,884 | 4,618 | (d) | 89,502 | ||||||||||||||||
| Gain on sales of discontinued operations, net of tax | 296,580 | — | 296,580 | |||||||||||||||||
| Net income | 370,930 | — | 370,930 | |||||||||||||||||
| Net income attributable to noncontrolling interests | (863) | — | (863) | |||||||||||||||||
| Net income attributable to Laureate Education, Inc. | $ | 370,067 | $ | — | $ | 370,067 | ||||||||||||||
| 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 available to common stockholders | $ | 381,352 | $ | — | $ | 381,352 | ||||||||||||||
| Basic earnings per share: | ||||||||||||||||||||
| Loss from continuing operations | $ | — | $ | (0.02) | $ | (0.02) | ||||||||||||||
| Income from discontinued operations | 1.79 | 0.02 | 1.81 | |||||||||||||||||
| Basic earnings per share (weighted average shares outstanding 212,769) | $ | 1.79 | $ | — | $ | 1.79 | ||||||||||||||
| Diluted earnings per share: | ||||||||||||||||||||
| Loss from continuing operations | $ | (0.06) | $ | (0.02) | $ | (0.08) | ||||||||||||||
| Income from discontinued operations | 1.79 | 0.02 | $ | 1.81 | ||||||||||||||||
| Diluted earnings per share (weighted average shares outstanding 212,769) | $ | 1.73 | $ | — | $ | 1.73 | ||||||||||||||
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LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations - Unaudited
Pro Forma Condensed Consolidated Statement of Operations - Unaudited
IN THOUSANDS, except per share amounts
| For the year ended December 31, 2017 | ||||||||||||||||||||
| Laureate Historical | Transaction Accounting Adjustments | Pro Forma | ||||||||||||||||||
| Revenues | $ | 3,333,073 | $ | (160,987) | (d) | $ | 3,172,086 | |||||||||||||
| Costs and expenses: | ||||||||||||||||||||
| Direct costs | 2,775,326 | (154,603) | (d) | 2,620,723 | ||||||||||||||||
| General and administrative expenses | 315,471 | — | 315,471 | |||||||||||||||||
| Loss on impairment of assets | 7,121 | — | 7,121 | |||||||||||||||||
| Operating income | 235,155 | (6,384) | (d) | 228,771 | ||||||||||||||||
| Interest expense, net of interest income | (323,035) | 4,835 | (d) | (318,200) | ||||||||||||||||
| Other gains, net of losses | 11,113 | (2,015) | (d) | 9,098 | ||||||||||||||||
| Loss from continuing operations before income taxes and equity in net income of affiliates | (76,767) | (3,564) | (d) | (80,331) | ||||||||||||||||
| Income tax benefit | 92,989 | 1,008 | (d) | 93,997 | ||||||||||||||||
| Equity in net income of affiliates, net of tax | 152 | — | 152 | |||||||||||||||||
| Income from continuing operations | 16,374 | (2,556) | (d) | 13,818 | ||||||||||||||||
| Income from discontinued operations, net of tax | 77,390 | 2,556 | (d) | 79,946 | ||||||||||||||||
| Gain on sales of discontinued operations, net of tax | — | — | — | |||||||||||||||||
| Net income | 93,764 | — | 93,764 | |||||||||||||||||
| Net income attributable to noncontrolling interests | (2,299) | — | (2,299) | |||||||||||||||||
| Net income attributable to Laureate Education, Inc. | $ | 91,465 | $ | — | $ | 91,465 | ||||||||||||||
| Accretion of Series A convertible redeemable preferred stock and other redeemable noncontrolling interests and equity | (298,497) | — | (298,497) | |||||||||||||||||
| Net loss available to common stockholders | $ | (207,032) | $ | — | $ | (207,032) | ||||||||||||||
| Basic and diluted earnings per share: | ||||||||||||||||||||
| Loss from continuing operations | $ | (1.64) | $ | (0.01) | $ | (1.65) | ||||||||||||||
| Income from discontinued operations | 0.44 | 0.01 | 0.45 | |||||||||||||||||
| Basic and diluted loss per share (weighted average shares outstanding 172,409) | $ | (1.20) | $ | — | $ | (1.20) | ||||||||||||||
Notes to Unaudited Pro Forma Condensed Financial Information
(a)Represents the estimated cash proceeds received including purchase price adjustments, net of transaction costs.
(b)Represents the elimination of the assets and liabilities associated with the disposition of Laureate ANZ. As of September 30, 2020, total assets and total liabilities included in the disposition were classified as "held for sale" in the Form 10-Q for the quarter ended September 30, 2020, as filed on November 5, 2020.
(c)Represents the net effect of the removal of the disposed net assets, offset by the net proceeds received, had the transaction closed on September 30, 2020. This estimated gain on sale of approximately $553 million is based on the carrying value of the net assets of Laureate ANZ as of September 30, 2020 and is subject to finalization. Once finalized, the gain amount will be included in the Company's consolidated statement of operations for the fourth quarter of 2020.
(d) Represents the net effect of the reclassification of Laureate Australia and New Zealand’s operations from continuing operations to discontinued operations.
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