Pension Trust Fund For Operating Engineers v. DeVry Education Group, Inc. et al

Northern District of Illinois, ilnd-1:2016-cv-05198

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Case: 1:16-cv-05198 Document #: 93-2 Filed: 03/30/18 Page 1 of 7 PageID #:1584 EXHIBIT B Case: 1:16-cv-05198 Document #: 93-2 Filed: 03/30/18 Page 2 of 7 PageID #:1585 Section 1: 10-K Section 1: 10-K (10-K) (10-K) UNITED STATES UNITED STATES SECURITIES AND EXCHANGE SECURITIES AND EXCHANGE COMMISSION COMMISSION Washington, D.C. 20549 Washington, D.C. 20549 Form 10-K Form 10-K (Mark One) (Mark One) þ 0 ANNUAL REPORT ANNUAL REPORT PURSUANT PURSUANT TO SECTION 13 TO SECTION 13 OR OR 15(d) 15(d) OF THE OF SECURITIES EXCHANGE THE SECURITIES EXCHANGE ACT ACT OF OF 1934 1934 For the For the fiscal year ended: fiscal year June 30, ended: June 30, 2014 2014 OR OR ¨ ❑ TRANSITION REPORT PURSUANT TRANSITION REPORT PURSUANT TO TO SECTION SECTION 13 13 OR OR 15(d) 15(d) OF THE OF SECURITIES EXCHANGE THE SECURITIES EXCHANGE ACT ACT OF OF 1934 1934 For the For the transition transition period period from from to to Commission file Commission file number: 1-13988 number: 1-13988 DeVry Education DeVry Education Group Group Inc. Inc. (Exact name (Exact name of registrant as of registrant as specified specified in its charter) in its charter) DELAWARE DELAWARE 36-3150143 36-3150143 (State or (State or other jurisdiction of other jurisdiction of (I.R.S. Employer (I.R.S. Employer incorporation or incorporation or organization) organization) Identification No.) Identification No.) 3005 HIGHLAND 3005 HIGHLAND PARKWAY PARKWAY 60515 60515 DOWNERS GROVE, DOWNERS ILLINOIS GROVE, ILLINOIS (Zip Code) (Zip Code) (Address of principal executive (Address ofprincipal executive offices) offices) Registrant's telephone Registrant's telephone number; including area number; including area code: code: (630) 515-7700 (630) 515-7700 Securities Securities registered registered pursuant to section pursuant to section 12(b) 12(b) of of the the Act: Act: Title of Each Title of Each Class Class Name of Name of Each Each Exchange Exchange on Which Registered: on Which Registered: Common Stock Common Stock $0.01 Par Value $0.01 Par Value NYSE, CSE NYSE, CSE Common Stock Common Purchase Rights Stock Purchase Rights NYSE NYSE Securities Securities registered pursuant to registered pursuant to Section 12(g) of Section 12(g) of the the Act: Act: None None Indicate by Indicate by check check mark mark if if the the Registrant Registrant is is aa well-known well-known seasoned seasoned issuer, issuer, as as defined in Rule defined in Rule 405 405 of of the the Securities Act. Yes Securities Act. Yes R R No ¨ No ❑ Indicate by Indicate by check mark if check mark if the the Registrant Registrant is not required is not to file required to file reports pursuant to reports pursuant to Section 13 or Section 13 or Section 15(d) of Section 15(d) of the the Act. Act. Yes Yes ¨ ❑ No R No R Indicate by Indicate by check mark whether check mark whether thethe Registrant Registrant (1) (1) has has filed filed all all reports reports required required toto be be filed filed by by Section Section 13 or 15(d) 13 or 15(d) of of the the Securities Securities Exchange Exchange Act Act of of 1934 during 1934 during the the preceding preceding 12 12 months months (or (or for such shorter for such shorter period period that that the the registrant was required registrant was required toto file such reports), file such and (2) reports), and (2) has has been been subject subject to to such filing such filing requirements requirements for for the the past past 90 90 days. days. Yes Yes R R No No ¨ ❑ Indicate by Indicate by check mark whether check mark whether thethe registrant registrant has has submitted submitted electronically electronically and and posted posted on on its its corporate corporate WebWeb site, site, if if any, any, every every Interactive Interactive Data Data File required File required toto be be submitted submitted andand posted posted pursuant pursuant toto Rule Rule 405405 of Regulation S-T of Regulation S-T (§ (§ 232.405 232.405 ofof this this chapter) chapter) during the preceding during the preceding 12 12 months months (or (or for for such shorter such shorter period period that that the the registrant registrant was was required required toto submit submit and and post post such such files). Yes R files). Yes R NoNo ¨ ❑ Indicate by Indicate by check mark if check mark disclosure of if disclosure of delinquent delinquent filers pursuant to filers pursuant to Item Item 405 405 of Regulation S-K of Regulation S-K isis not not contained contained herein, herein, and and will will not not be be contained, contained, to the to the best best of of registrant's registrant's knowledge, knowledge, in in definitive definitive proxy proxy or or information statements incorporated information statements incorporated by by reference reference in Part III in Part III of this Form of this Form 10-K 10-K or any or any amendment to amendment to this this Form Form 10-K. 10-K. ¨ ❑ Indicate by Indicate by check mark whether check mark whether thethe registrant registrant is is aa large large accelerated accelerated filer, filer, an an accelerated accelerated filer, filer, aa non-accelerated non-accelerated filer, filer, or or aa smaller smaller reporting reporting company. company. See the definitions See the definitions ofof "large "large accelerated accelerated filer," filer," "accelerated "accelerated filer" and "smaller filer" and "smaller reporting reporting company" company" in Rule 12b-2 in Rule 12b-2 ofof the the Exchange Exchange Act. Act. Large Case: accelerated Large accelerated filer 1:16-cv-05198 Document #: 93-2 Filed: R filer R 03/30/18 Page 3 of 7 Accelerated Accelerated PageID #:1586 filer filer ¨ ❑ Non-accelerated filer Non-accelerated filer ¨ (Do not ❑ (Do not check check if if aa smaller smaller reporting reporting company) company) Smaller reporting Smaller reporting company company ¨ ❑ Indicate by Indicate by check check mark mark whether whether the the registrant registrant is is aa shell shell company (as defined company (as defined in Rule 12b-2 in Rule 12b-2 of of the the Exchange Exchange Act). Act). Yes Yes ¨ ❑ No R No R State the aggregate State the aggregate market market value value of the voting of the voting and and non-voting non-voting common common equity held by equity held by nonaffiliates nonaffiliates computed computed byby reference reference to to the the price price at at which which the common the equity was common equity was last sold, or last sold, or the the average average bid bid and and asked asked price price of such common of such common equity, as of equity, as of the the last business day last business day of the Registrant's of the Registrant's most most recently recently completed second fiscal completed second fiscal quarter. quarter. Shares of common Shares of stock held common stock held directly directly or or controlled controlled by by each each director and executive director and officer have executive officer been have been excluded. excluded. December 31, December 31, 2013 2013 -- $2,202,948,169 $2,202,948,169 Indicate the Indicate the number number of of shares shares outstanding outstanding of of each each of of the the registrant's registrant's classes classes of of common common stock, stock, as as of of the the latest practicable date. latest practicable date. August 20, August 20, 2014 2014 — — 63,703,000 63,703,000 shares shares of Common Stock, of Common Stock, $0.01 par value $0.01 par value DOCUMENTS INCORPORATED DOCUMENTS INCORPORATED BY BY REFERENCE REFERENCE Certain portions of Certain portions of the the Registrant's Registrant's definitive definitive Proxy Proxy Statement Statement for the Annual for the Annual Meeting Meeting of of Stockholders to be Stockholders to be held held on November 6, on November 6, 2014, 2014, are are incorporated into Part incorporated into Part III III of of this this Form Form 10-K 10-K to to the the extent stated herein. extent stated herein. Case: 1:16-cv-05198 Document #: 93-2 Filed: 03/30/18 Page 4 of 7 PageID #:1587 DeVry Education DeVry Education Group Inc. Group Inc. ANNUAL REPORT ANNUAL REPORT ON FORM 10-K ON FORM 10-K FISCAL YEAR FISCAL YEAR ENDED ENDED JUNE JUNE 30, 30, 2014 2014 TABLE OF TABLE OF CONTENTS CONTENTS Page # Page # PART II PART Item 11 Item — — Business Business 33 Item 1A Item lA — — Risk Factors Risk Factors 39 39 Item 1B Item 1B — — Unresolved Staff Unresolved Comments Staff Comments 48 48 Item 22 Item — — Properties Properties 48 48 Item 33 Item — — Legal Proceedings Legal Proceedings 50 50 Item 4 Item 4 — — Mine Safety Mine Disclosures Safety Disclosures 51 51 — — Supplementary Item-Executive Officers Supplementary Item-Executive Officers of of the the Registrant Registrant 52 52 PART II PART II Item 55 Item — — Market for Market for Registrant's Registrant's Common Common Equity, Equity, Related Related Stockholder Stockholder Matters Matters and and Issuer Issuer Purchases Purchases of of Equity Equity Securities Securities 54 54 Item 66 Item — — Selected Financial Data Selected Financial Data 57 57 Item 77 Item — — Management's Discussion Management's Discussion and and Analysis Analysis of of Financial Financial Condition Condition and and Results Results of Operations of Operations 57 57 Item 7A Item 7A — — Quantitative and Quantitative and Qualitative Qualitative Disclosures Disclosures about about Market Market Risk Risk 87 87 Item 88 Item — — Financial Statements Financial and Supplementary Statements and Data Supplementary Data 88 88 Item 99 Item — — Changes in Changes and Disagreements in and Disagreements with with Accountants Accountants onon Accounting Accounting and and Financial Financial Disclosure Disclosure 88 88 Item 9A Item 9A — — Controls and Controls and Procedures Procedures 88 88 Item 9B Item 9B — — Other Information Other Information 89 89 PART III PART III Item 10 Item 10 — — Directors, Executive Directors, Executive Officers Officers and and Corporate Corporate Governance Governance 130 130 Item 11 Item 11 — — Executive Compensation Executive Compensation 130 130 Item 12 Item 12 — — Security Ownership of Security Ownership of Certain Certain Beneficial Beneficial Owners Owners and and Management Management and and Related Related Stockholder Matters Stockholder Matters 130 130 Item 13 Item 13 — — Certain Relationships Certain Relationships and and Related Related Transactions, and Director Transactions, and Director Independence Independence 130 130 Item 14 Item 14 — — Principal Accountant Principal Accountant Fees Fees and and Services Services 130 130 PART IV PART IV Item 15 Item 15 — Exhibits — Exhibits and and Financial Financial Statement Statement Schedules Schedules 131 131 — Financial — Financial Statements Statements 131 131 — Financial — Financial Statement Schedules Statement Schedules 131 131 — Exhibits — Exhibits 131 131 SIGNATURES SIGNATURES 136 136 22 Case: 1:16-cv-05198 Document #: 93-2 Filed: 03/30/18 Page 5 of 7 PageID #:1588 To measure the To measure the students' students' success, success, every 6 months every 6 months aa survey survey gathers gathers information about employment information about employment rates rates and and salaries. salaries. DeVry DeVry Brasil's Brasil's last last survey of survey of students students who who concluded undergraduate programs concluded undergraduate programs waswas taken taken in in January 2014 and January 2014 and indicated an employment indicated an employment rate of 74.9%, rate of with an 74.9%, with an average monthly average monthly annual annual salary salary of of R$32,973 R$32,973 (US$14,805). (US$14,805). Business, Technology Business, Technology and Management and Management DeVry University DeVry University DeVry University DeVry University believes believes that that the the employment employment of of its its graduates graduates isis essential to the essential to the achievement achievement of of its mission and its mission and its its ability ability to to attract attract and and retain students. retain students. Career Career Services professionals across Services professionals across the the DeVry DeVry University University system system work work diligently diligently to to partner partner with with graduates graduates to to attain attain positions in positions in their their career career fields. Although DeVry fields. Although DeVry University University cannot cannot guarantee guarantee employment, employment, it it is dedicated to is dedicated to helping helping guide and motivate guide and motivate itsits students and students and graduates through the graduates through the career career process. process. DeVry DeVry University University representatives representatives work work with with students students and and graduates graduates on on career planning, career planning, job interviewing job and resumé interviewing and preparation. Students' resume preparation. Students' career efforts are career efforts are also also supported supported by by an an employer employer database containing information database containing information on on national and national and local companies. Students local companies. Students can log into can log one site into one site to to view, view, apply apply for, and learn for, and more about learn more about job job opportunities opportunities appropriate appropriate to to their their experience experience and education level. and education DeVry University level. DeVry University students students andand graduates graduates have, have, in addition, access in addition, access toto robust online, self-service robust online, self-service career career preparation tools preparation tools through through My My Compass Compass To To MyMy Career. Career. The The capabilities of this capabilities of this system system include include aa self-assessment self-assessment application, application, networking networking tools, video tools, video tutorials, tutorials, resume resume writing writing software, software, video video mock mock interview software, links interview software, to resources, links to resources, and and feeds for events feeds for events and and job job leads relevant leads relevant to their to their degree degree program. program. DeVry University DeVry University holds holds virtual virtual and and onsite onsite Career Career Fairs periodically to Fairs periodically to enable students to enable students to meet meet and and network network with with recruiters of DeVry recruiters of DeVry University graduates. University The national graduates. The job database national job database that that is is available available to to DeVry DeVry University University students students also also allows allows employers employers to to access access the the system system directly and directly and post post open positions, providing open positions, providing additional additional opportunities opportunities for students and for students and graduates. graduates. InIn many many cases, employer hiring cases, employer hiring representatives conduct representatives conduct interviews interviews atat DeVry DeVry University University campuses. campuses. For For the the last last ten ten years, years, DeVry DeVry University University graduates graduates have obtained have obtained employment employment at at over over 95 95 of the Fortune of the Fortune 100 100 companies. companies. DeVry DeVry University University works works with with many many Fortune Fortune 100 100 companies companies toto design programs that design programs that provide real-world provide knowledge. real-world knowledge. In 2013, In 2013, 90.9% 90.9% of of graduates graduates of DeVry University's of DeVry University's associate associate and and bachelor's bachelor's degree programs who degree programs who were were actively actively seeking seeking employment employment had had careers in their careers in their chosen chosen fields within six fields within six months months of of graduation graduation atat an an average average salary salary of of $44,295. To aa large $44,295. To large extent, these figures extent, these figures are are based based upon upon self-reported data self-reported data from graduates. They from graduates. They reflect reflect graduates graduates whowho were were employed employed in positions relating in positions to their relating to their field field of of study study within within 180 180 days days ofof graduation from graduation from among among those those graduates who were graduates who were eligible eligible for career assistance for career assistance and and who who actively actively pursued pursued employment relating to employment relating to their their field field of study. of study. Graduates Graduates areare not not considered considered eligible for career eligible for career assistance assistance if they are if they are continuing continuing their their education, employed in education, employed in positions positions unrelated unrelated to their to their field of study field of study and and not seeking positions not seeking positions related related to to their their field of study, field of study, legally legally ineligible to work ineligible to work in the United in the United States or Canada, States or Canada, or or unable to unable to accept accept career career advising advising assistance assistance because because of circumstances such of circumstances such as as military military deployment, national or deployment, national or social social service service (Peace (Peace Corps, Corps, Teach for America, Teach for America, etc.), etc.), incarceration, critical illness incarceration, critical illness or or death. Graduates who death. Graduates who pursue pursue employment employment relating relating to to their their field field of study for of study for less than less than 180 days 180 are not days are not considered considered to to be be pursuing pursuing employment employment actively. actively. Graduates Graduates areare not not counted counted differently differently toto the the extent they were extent they were employed employed when they when they enrolled enrolled or or they they became became employed while completing employed while their academic completing their academic programs. programs. Annual compensation Annual compensation information includes base information includes base salary salary and and any any additional additional taxable taxable compensation compensation of of those those graduates who chose graduates who to chose to disclose this information. disclose this Graduates employed information. Graduates employed when when they they enrolled or who enrolled or who became became employed employed while while completing their academic completing their academic programs programs generally earned generally earned more more than than graduates graduates who who accepted accepted new new employment employment after after graduation. graduation. SEASONALITY SEASONALITY DeVry Group's DeVry Group's quarterly quarterly revenue and net revenue and net income income fluctuate primarily as fluctuate primarily as aa result result of the pattern of the pattern of of student student enrollments. enrollments. Generally, the schools' Generally, the schools' highest enrollment highest and revenues enrollment and revenues typically typically occur occur in the fall, in the which corresponds fall, which corresponds to to the the second second and and third third quarters of DeVry quarters of DeVry Group's Group's fiscal year. fiscal year. Enrollment is Enrollment slightly lower is slightly lower in the spring, in the spring, and and the the lowest lowest enrollment enrollment generally occurs during generally occurs during the the summer summer months. months. DeVry DeVry Group's operating costs Group's operating do costs do not fluctuate not as significantly fluctuate as significantly on on aa quarterly quarterly basis. basis. Results of Results of operations operations reflect both this reflect both this seasonal seasonal enrollment pattern and enrollment pattern and the the pattern pattern of of student student recruiting recruiting activity activity costs costs that that precede precede the the start start of of every term. Revenues, every term. Revenues, operating operating income, and net income, and net income by quarter income by quarter for for each of the each of the past past two two fiscal years are fiscal years are included in Note included in Note 17 17 to to the the Consolidated Consolidated Financial Statements, Financial "Quarterly Financial Statements, "Quarterly Financial Data." Data." 36 36 Case: 1:16-cv-05198 Document #: 93-2 Filed: 03/30/18 Page 6 of 7 PageID #:1589 DeVry University DeVry University centers are established centers are established in in convenient metropolitan locations convenient metropolitan locations in modern buildings. in modem buildings. These These centers, which mostly centers, which mostly range range in in size from size approximately 3,000 from approximately 3,000 to to 25,000 25,000 square square feet, feet, include include classrooms, classrooms, computer computer labs with internet labs with access, reference intemet access, reference materials, materials, admissions admissions and and administrative offices. administrative offices. Teaching centers have Teaching centers have an an information center designed information center designed to to enhance students' success enhance students' success and and support support coursework requiring coursework requiring data and data and information beyond that information beyond that provided provided in in course texts and course texts and packets. packets. The The information information centers centers include personal computers; include personal computers; all all software software required in required in courses; courses; wireless wireless intemet internet access; access; alternate alternate texts; texts; popular popular business business periodicals; periodicals; videos videos of of selected selected courses; courses; and and access access to to numerous numerous electronic data-bases. electronic data-bases. As of As of June 30, 2014, June 30, 2014, there there were were 89 89 DeVry DeVry University University locations, including both locations, including both campuses campuses and and centers, centers, in operation. These in operation. These locations locations comprised approximately comprised approximately 2.3 2.3 million million in in total total square square feet, feet, of which, approximately of which, approximately 1.5 1.5 million million square square feet were under feet were under lease and approximately lease and approximately 800,000 square 800,000 square feet were owned, feet were owned, including one student including one student residence residence building building at at the the Fremont, Fremont, California California campus. campus. DeVry DeVry Group Group plans plans to to consolidate consolidate additional DeVry additional DeVry University University locations locations in in fiscal 2015. Consolidations fiscal 2015. Consolidations ofof DeVry DeVry University University locations may be locations may be necessary necessary beyond beyond fiscal 2015 should fiscal 2015 should enrollments continue enrollments to decline. continue to decline. Home Office Home Office DeVry Group's DeVry Group's home home office office staff staff are are located located in two leased in two leased facilities facilities in the Chicago in the Chicago suburbs suburbs of of Downers Downers Grove Grove and and Oak Oak Brook, Brook, Illinois. Illinois. DeVry DeVry Group Group leases approximately 254,000 leases approximately 254,000 square square feet feet of of total total office office space space for for these these two two locations. locations. In addition, In addition, DeVry DeVry Group Group leases two buildings leases two buildings comprising comprising aa total total of of 137,000 137,000 square square feet feet in Chicago, Illinois, in Chicago, Illinois, and and the the Chicago Chicago suburb suburb of Addison, of Addison, Illinois and Illinois and owns owns two two buildings buildings comprising comprising aa total total of 212,500 square of 212,500 square feet feet in the Chicago in the Chicago suburbs suburbs of Naperville and of Naperville and Wood Wood Dale, Dale, Illinois. Illinois. The The Wood Wood Dale facility Dale has been facility has been vacated vacated and and is is currently currently held held for sale while for sale while the the remaining remaining three three sites sites house house DeVry DeVry Group's Group's online online operations operations and and student student finance administrative staff. finance administrative staff. DeVry Group's DeVry Group's leased leased facilities are occupied facilities are under leases occupied under leases whose whose remaining remaining terms terms range range from from one to 15 one to years. A 15 years. A majority majority ofof these these leases contain leases contain provisions giving provisions giving DeVry DeVry Group Group thethe right right to to renew renew itsits lease lease for additional periods for additional periods at at various various rental rental rates, though generally rates, though generally atat rates rates higher higher than than are are currently being paid. currently being paid. DeVry DeVry Group's Group's owned owned facilities facilities total total approximately approximately 2,306,000 2,306,000 square square feet world-wide. No feet world-wide. No facility facility that that is owned by is owned by DeVry DeVry Group Group is subject to is subject to aa mortgage mortgage or or other other indebtedness. indebtedness. ITEM 33 — ITEM – LEGAL LEGAL PROCEEDINGS PROCEEDINGS DeVry Group DeVry Group is subject to is subject to lawsuits, administrative proceedings, lawsuits, administrative proceedings, regulatory reviews and regulatory reviews and investigations associated with investigations associated with financial assistance financial assistance programs and programs and other other matters matters arising arising in the normal in the normal conduct conduct of its business. of its business. The The following is aa description following is description of of pending pending legal legal matters matters that that may may be be considered considered other than ordinary, other than ordinary, routine and incidental routine and incidental to to the the business. business. The Boca The Boca Raton Raton Firefighters' Firefighters' and and Police Police Pension Pension Fund Fund ("Boca ("Boca Raton") Raton") filed an initial filed an complaint (the initial complaint (the "Shareholder "Shareholder Case") Case") in the United in the United States States District Court District Court for the Northern for the Northern District District of Illinois on of Illinois on November November 1, 1, 2010 2010 (Case (Case No. No. 1:10-cv-07031). 1:10-cv-07031). TheThe initial complaint was initial complaint was filed filed on on behalf behalf ofof aa putative class putative class of persons who of persons who purchased purchased DeVry DeVry Group Group common stock between common stock between October October 25, 25, 2007, 2007, and and August August 13, 13, 2010. 2010. Plaintiff Plaintiff filed an amended filed an amended complaint (the "First complaint (the "First Amended Amended Complaint") Complaint") on on March March 7, 2011 alleging 7, 2011 alleging the the same same categories categories ofof claims in the claims in the initial complaint. The initial complaint. The plaintiff plaintiff claimed claimed inin the First the First Amended Amended Complaint Complaint that that DeVry DeVry Group, Daniel Hamburger Group, Daniel Hamburger and and Richard Richard M.M. Gunst violated Sections Gunst violated Sections 10(b) 10(b) and and 20(a) 20(a) of of the the Securities Securities Exchange Act Exchange Act ofof 1934 1934 and and Rule Rule 10b-5 promulgated thereunder 10b-5 promulgated thereunder by by failing to disclose failing to abusive and disclose abusive and fraudulent fraudulent recruiting and financial recruiting and financial aidaid lending lending practices, thereby practices, thereby increasing increasing DeVry DeVry Group's Group's student student enrollment and revenues enrollment and revenues andand artificially artificially inflating inflating DeVry DeVry Group's stock price Group's stock price during during thethe class class period. On period. On March March 27, 27, 2012, 2012, Judge Judge John John F. F. Grady dismissed the Grady dismissed the First First Amended Amended Complaint Complaint without without prejudice, prejudice, granting plaintiff leave granting plaintiff leave toto file file aa second second amended complaint amended complaint by by May May 4, 4, 2012. 2012. On May On May 4,4, 2012, 2012, the the plaintiff plaintiff again again amended amended its its allegations allegations in the Shareholder in the Case (the Shareholder Case (the "Second "Second Amended Amended Complaint"). Complaint"). The The Second Amended Second Amended Complaint alleged Complaint alleged aa longer putative class longer putative class period period of of October October 27, 27, 2007 2007 toto August August 11, 11, 2011, 2011, but but narrowed narrowed the the scope scope of the alleged of the alleged fraud significantly as fraud significantly as compared compared toto the the previous previous two two complaints. Plaintiff focused complaints. Plaintiff focused exclusively exclusively onon DeVry DeVry Group's practices for Group's practices for compensating student Admissions compensating student Admissions Advisors, alleging Advisors, alleging DeVry DeVry Group Group misled misled the the market market by by failing failing to to disclose that its disclose that its compensation practices violated compensation practices violated federal federal law law and and by by making making affirmative misrepresentations affirmative misrepresentations that that DeVry DeVry Group Group complied complied with with compensation compensation regulations. regulations. The The Second Amended Complaint Second Amended Complaint was was subsequently subsequently corrected to add corrected to add an additional plaintiff, an additional plaintiff, West West Palm Palm Beach Beach Firefighters' Firefighters' Pension Pension Fund, Fund, in response to in response to DeVry DeVry Group's Group's challenge challenge of of plaintiff's plaintiff's standing standing to complain to about statements complain about statements DeVry DeVry Group made after Group made after plaintiff plaintiff had had purchased purchased its stock. its stock. On July On July 10, 2012, DeVry 10, 2012, DeVry Group filed aa Motion Group filed Motion to to Dismiss Dismiss the the corrected corrected Second Amended Complaint. Second Amended Complaint. On On March March 27, 27, 2013, 2013, Judge Grady granted Judge Grady granted DeVry Group's DeVry Motion to Group's Motion to Dismiss Dismiss and and entered judgment in entered judgment in favor of DeVry favor of DeVry Group Group and and against against plaintiffs. plaintiffs. Judge Judge Grady thereby dismissed Grady thereby the case dismissed the case with prejudice; with prejudice; however, however, he he reserved jurisdiction to reserved jurisdiction to examine the question examine the of whether question of whether sanctions sanctions should should bebe imposed imposed against plaintiffs and/or against plaintiffs and/or their their counsel. counsel. On April 26, On April 26, 2013, 2013, the the plaintiffs plaintiffs filed filed aa notice of appeal notice of appeal of of Judge Judge Grady's order of Grady's order dismissal to of dismissal to the the Seventh Seventh Circuit Circuit of of the the United United States States Court of Court of Appeals. Appeals. The appeal was The appeal was stayed stayed pending pending Judge Judge Grady's Grady's resolution resolution of of the the sanctions sanctions issue. issue. 50 50 Case: 1:16-cv-05198 Document #: 93-2 Filed: 03/30/18 Page 7 of 7 PageID #:1590 On May On May 8,8, 2014, 2014, Judge Grady entered Judge Grady an Order entered an Order finding that the finding that the DeVry DeVry Group defendants were Group defendants were presumptively presumptively entitled entitled to to their their reasonable reasonable attorneys' fees attorneys' fees and and other other expenses expenses for the entire for the action and entire action and ordered DeVry Group ordered DeVry to submit Group to submit aa fee petition. Thereafter, fee petition. the parties Thereafter, the parties agreed agreed to to resolve resolve the matter the matter on on aa confidential confidential basis basis and and the the appeal appeal was was dismissed pursuant to dismissed pursuant to an an Order Order entered June 10, entered June 10, 2014 2014 by by the the Seventh Circuit. Seventh Circuit. DeVry Group DeVry Group was was served served on on October October 11, 11, 2013, 2013, with with aa complaint complaint in in aa qui tam action qui tam action (the (the "Qui "Qui Tam Action") filed Tam Action") filed under under the the federal False Claims federal False Claims Act and Act and the the Minnesota Minnesota False False Claims Claims ActAct by by two two former former employees employees of of aa customer customer of of DeVry DeVry Group's subsidiary, Advanced Group's subsidiary, Advanced Academics, Academics, Inc. Inc. ("AAI"). The ("AAI"). lawsuit, United The lawsuit, States and United States and the State of the State of Minnesota Minnesota ex rel. Jill ex rel. Jill Bachmann Bachmann and and Shelley Shelley Madore Madore v. Minnesota Transitions v. Minnesota Transitions Charter Charter Schools, Advanced Schools, Advanced Academics, Academics, Inc., Inc., DeVry DeVry Education Education Group Inc., and Group Inc., and MNMN Virtual High School, Virtual High School, CACA No. No. 12-cv-01359-DWF-JSM, 12-cv-01359-DWF-JSM, was was filed filed in the in the United States United District Court States District for the Court for the District District of Minnesota. The of Minnesota. complaint was The complaint was filed on June filed on June 6, 2012 but 6, 2012 but kept under seal kept under seal in in order order for the federal for the and federal and Minnesota state Minnesota state governments governments to to investigate the allegations investigate the allegations and and determine determine if they wished if they wished to to intervene intervene in the action in the action and and pursue pursue the the alleged alleged claims. claims. Both the Both the federal federal and and Minnesota Minnesota state state governments declined to governments declined to intervene, intervene, thereby thereby giving giving the the plaintiffs plaintiffs the the choice choice toto pursue pursue the the alleged alleged claims claims onon behalf of behalf of the the state state and and federal federal governments. governments. The The complaint was unsealed complaint was unsealed and and made made public public on on June 6, 2013. June 6, 2013. TheThe complaint complaint relates relates toto certain certain federal federal and state and state funding funding received received byby Minnesota Minnesota Transitions Charter Schools Transitions Charter Schools andand MNMN Virtual Virtual High High School. School. The The complaint complaint alleges alleges that that Minnesota Minnesota Transitions Charter Schools Transitions Charter and MN Schools and MN Virtual Virtual High High School received certain School received certain state state and and federal federal funding, funding, which which depended depended on on the the accurate accurate reporting reporting ofof student enrollment student enrollment The The complaint complaint alleges that Minnesota alleges that Minnesota Transitions Transitions Charter Charter Schools Schools and and MN MN Virtual Virtual High High School received more School received more funding funding from the federal from the federal and state governments and state governments for for special special education and other education and other services services than than they they should should havehave received received in 2008, 2009 in 2008, 2009 andand 2010 2010 asas aa result result of of allegedly non-compliant allegedly non-compliant practices practices arising arising from the reporting from the reporting of of student student enrollment data. The enrollment data. complaint further The complaint alleges that further alleges that all all schools schools ofof defendant defendant Minnesota Transitions Minnesota Charter Schools Transitions Charter received over Schools received $75 million over $75 million in total state in total state and and federal federal funding during fiscal funding during years 2008 fiscal years 2008 to to 2010, 2010, aa portion portion ofof which related which related to to the the school school for which AAI for which AAI provided provided services; services; plaintiff plaintiff does does not not quantify what portion quantify what portion ofof the the $75 million was $75 million was obtained obtained as as aa result result of of the allegedly the allegedly fraudulent practices. The fraudulent practices. The complaint alleges that complaint alleges that AAI AAI provided provided certain certain curriculum curriculum and and other other services services toto MN MN Virtual Virtual High High School and School and operated the school. operated the school. The The only only reference reference toto DeVry DeVry Group Group inin the the complaint complaint pertains pertains to to its status as its status as the the parent parent corporation corporation to to AM. AAI. After After DeVry DeVry Group and AAI Group and AAI filed filed aa motion motion to to dismiss, the Qui dismiss, the Qui Tam Action was Tam Action was dismissed without prejudice dismissed without prejudice pursuant pursuant to to stipulation stipulation by by and and between between plaintiffs, plaintiffs, onon the one the one hand, hand, and and DeVry DeVry Group and AAI Group and AAI onon the the other. other. In April In April 2013, 2013, DeVry DeVry Group Group received received aa subpoena subpoena from the Office from the Office of the Attorney of the Attorney General General of of the the State of Illinois State of Illinois and and aa Civil Civil Investigative Investigative Demand Demand ("CID") issued ("CID") by the issued by the Office Office of of the the Attorney Attorney General General of of the the Commonwealth Commonwealth of of Massachusetts. Massachusetts. The Illinois subpoena The Illinois subpoena concerns concerns potential potential state state law law implications implications inin the the event violations of event violations of federal law took federal law took place. place. It It was was issued pursuant to issued pursuant to the the Illinois Illinois False False Claims Claims ActAct in in connection with an connection with an investigation concerning whether investigation concerning whether thethe compensation compensation practices practices of of DeVry DeVry Group and certain Group and certain of its affiliates of its affiliates are are in in compliance with the compliance with the Incentive Incentive Compensation Ban Compensation Ban ofof the the Higher Higher Education Education Act Act and and requires DeVry Group requires DeVry Group toto provide provide documents relating to documents relating to these these matters matters for periods on for periods on or or after after January 1, January 1, 2002. 2002. The The Massachusetts Massachusetts demand demand was was issued in connection issued in with an connection with an investigation investigation into whether DeVry into whether DeVry Group Group caused caused false false claims and/or claims and/or false statements to false statements to be be submitted submitted to to the the Commonwealth Commonwealth of of Massachusetts Massachusetts relating relating to to student student loans, loans, guarantees, guarantees, and and grants grants provided provided toto DeVry DeVry Group's Massachusetts students Group's Massachusetts students and and requires requires DeVry DeVry Group Group to to answer answer interrogatories interrogatories and and to to provide provide documents documents relating to periods relating to periods onon or or after after January 1, January 1, 2007. 2007. The timing or The timing outcome of or outcome of the the investigations, investigations, or their possible or their possible impact impact on DeVry Group's on DeVry business, financial Group's business, condition or financial condition or results results of of operations, cannot be operations, cannot be predicted predicted at at this this time. time. On January On 28, 2014, January 28, 2014, DeVry DeVry Group Group received received aa CID CID for information from for information the Federal from the Federal Trade Commission ("FTC") Trade Commission ("FTC") relating relating to to the the advertising, advertising, marketing, or marketing, sale of or sale secondary or of secondary postsecondary educational or postsecondary educational products products or or services, services, or or educational accreditation products educational accreditation products oror services. services. The The stated stated nature and nature and scope scope ofof the the CID CID was was to to determine determine whether whether unnamed persons and/or unnamed persons and/or entities entities have have violated violated Section Section 55 of the Federal of the Federal Trade Commission Trade Commission Act, 15 Act, 15 U.S.C. U.S.C. §§ 45, 45, as as amended amended and, and, if so, whether if so, whether further FTC action further FTC action would would be be in the public in the public interest. interest. Since receiving the Since receiving the CID, CID, DeVry DeVry Group Group has has negotiated its negotiated scope with its scope with the the FTC FTC and and has has produced, produced, and and continues to produce, continues to produce, responsive responsive information. information. TheThe timing timing oror outcome outcome ofof this this matter, matter, or or its its possible impact possible on DeVry impact on DeVry Group's Group's business, business, financial financial condition or results condition or results of of operations, operations, cannot be predicted cannot be predicted at at this this time. time. On July On July 15, 15, 2014, 2014, DeVry DeVry Group Group received received aa letter letter dated July 9, dated July 9, 2014 2014 from the New from the New York York Office Office of of the the Attorney Attorney General ("NYOAG"). The General ("NYOAG"). The letter letter requested cooperation with requested cooperation with the the NYOAG's NYOAG's inquiry inquiry into whether recent into whether television advertisements recent television advertisements and and website website marketing marketing regarding regarding DeVry DeVry University University may have may have violated violated federal and state federal and state laws prohibiting false laws prohibiting advertising and false advertising and deceptive deceptive practices. practices. The The letter letter requests requests relevant information from relevant information from January 1, January 1, 2011, 2011, to to the the present present to to enable enable NYOAG NYOAG to to make make aa determination determination of of what what action, action, if any, is if any, warranted. DeVry is warranted. DeVry Group Group is cooperating with is cooperating with the the request. request. The timing or The timing or outcome outcome ofof this this matter, matter, or or its possible impact its possible on DeVry impact on DeVry Group's Group's business, business, financial financial condition condition or or results results of of operations, operations, cannot cannot be predicted be predicted at at this this time. time. ITEM 44 -- MINE ITEM MINE SAFETY SAFETY DISCLOSURES DISCLOSURES Not applicable. Not applicable. 51 51