The oxygen on cyclohexanone gets protonated into -OH by the amine hydrogen and again by acetic acid to HOH, a good leaving group. When the HOH leaves, it forms a reactive intermediate which can be deprotonated by water at the alpha-carbon (from cyclohexanone), forming the pyrrolidine enamine of cyclohexanone:
CH2-CH2 CH2
/ \ / \
CH2 C--N: CH2
\ // \ /
CH2-CH CH2-CH2