What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-06 compared with 2020-05-07 · 397 added, 196 removed, 833 unchanged (42% of the section changed)

4 unchanged sentences

IN THOUSANDS, except per share amounts

For the three months ended March 31, 2020 2019

For the three months ended June 30, 2020 2019

(Unaudited) (Unaudited)

4 unchanged sentences

Loss on impairment of assets 445,085 470

Operating loss ( 117,135 ) ( 92,029 )

Operating (loss) income ( 254,780 ) 217,165

Interest income 1,016 2,844

1 unchanged sentence

Loss on debt extinguishment — ( 15,595 )

Gain on derivatives 802 5,183

(Loss) gain on derivatives ( 1,428 ) 2,632

Other (expense) income, net ( 406 ) 7,704

Foreign currency exchange gain (loss), net 35,944 ( 4,746 )

Foreign currency exchange (loss) gain, net ( 4,903 ) 8,881

Gain on disposal of subsidiaries, net 93 —

(Loss) income from continuing operations before income taxes and equity in net (loss) income of affiliates ( 294,220 ) 182,165

Income tax expense ( 7,529 ) ( 74,564 )

Equity in net (loss) income of affiliates, net of tax ( 4 ) 219

(Loss) income from continuing operations ( 301,753 ) 107,820

(Loss) income from discontinued operations, including tax expense of $ 1,909 and $ 3,722 , respectively

( 12,171 ) 30,280

Gain on sales of discontinued operations, including tax benefit of $ 3,768 and $ 34,457 , respectively

2,296 641,516

Net (loss) income ( 311,628 ) 779,616

Net loss attributable to noncontrolling interests 3,805 1,976

Net (loss) income attributable to Laureate Education, Inc.

$ ( 307,823 ) $ 781,592

Basic and diluted earnings (loss) per share:

(Loss) income from continuing operations $ ( 1.44 ) $ 0.48

(Loss) income from discontinued operations ( 0.03 ) 3.00

Basic and diluted (loss) earnings per share $ ( 1.47 ) $ 3.48

The accompanying notes are an integral part of these consolidated financial statements.

LAUREATE EDUCATION, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

IN THOUSANDS, except per share amounts

For the six months ended June 30, 2020 2019

(Unaudited) (Unaudited)

Revenues $ 1,320,235 $ 1,593,475

Costs and expenses:

Direct costs 1,146,887 1,346,553

General and administrative expenses 96,410 121,316

Loss on impairment of assets 448,853 470

Operating (loss) income ( 371,915 ) 125,136

Interest income 3,683 6,397

Interest expense ( 69,922 ) ( 96,119 )

Loss on debt extinguishment — ( 26,217 )

(Loss) gain on derivatives ( 626 ) 7,815

Other (expense) income, net ( 508 ) 8,101

Foreign currency exchange gain, net 31,041 4,135

Gain on sales of subsidiaries, net 2,822 —

Loss from continuing operations before income taxes and equity in net income of affiliates ( 111,205 ) ( 152,917 )

Income tax benefit 235,102 35,848

(Loss) income from continuing operations before income taxes and equity in net income of affiliates ( 405,425 ) 29,248

Income tax benefit (expense) 227,573 ( 38,716 )

Equity in net income of affiliates, net of tax 181 219

Income (loss) from continuing operations 124,082 ( 117,069 )

Loss from continuing operations ( 177,671 ) ( 9,249 )

(Loss) income from discontinued operations, net of tax expense of $ 3,391 and $ 13,863 , respectively

2 unchanged sentences

( 19,666 ) 889,521

Net income 98,316 194,265

Net (loss) income ( 213,312 ) 973,881

Net loss (income) attributable to noncontrolling interests 5,104 ( 1,046 )

Net income attributable to Laureate Education, Inc.

Net (loss) income attributable to Laureate Education, Inc.

$ ( 208,208 ) $ 972,835

Basic and diluted earnings (loss) per share:

Income (loss) from continuing operations $ 0.59 $ ( 0.52 )

Loss from continuing operations $ ( 0.85 ) $ ( 0.04 )

(Loss) income from discontinued operations ( 0.15 ) 4.37

Basic and diluted earnings per share $ 0.47 $ 0.85

Basic and diluted (loss) earnings per share $ ( 1.00 ) $ 4.33

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Comprehensive Income

For the three months ended March 31, 2020 2019

For the three months ended June 30, 2020 2019

(Unaudited) (Unaudited)

Net income $ 98,316 $ 194,265

Net (loss) income $ ( 311,628 ) $ 779,616

Other comprehensive income (loss):

1 unchanged sentence

14,034 10,188

Unrealized gain on derivative instruments, net of tax of $ 0

Unrealized loss on derivative instruments, net of tax of $ 0

Total other comprehensive income (loss) 14,034 ( 371 )

Comprehensive (loss) income ( 297,594 ) 779,245

Net comprehensive loss attributable to noncontrolling interests 3,873 2,063

Comprehensive (loss) income attributable to Laureate Education, Inc.

$ ( 293,721 ) $ 781,308

The accompanying notes are an integral part of these consolidated financial statements.

LAUREATE EDUCATION, INC.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the six months ended June 30, 2020 2019

(Unaudited) (Unaudited)

Net (loss) income $ ( 213,312 ) $ 973,881

Other comprehensive income (loss):

Foreign currency translation adjustment, net of tax of $ 0 for both periods

( 316,082 ) 59,739

Unrealized loss on derivative instruments, net of tax of $ 0

Minimum pension liability adjustment, net of tax of $ 0

9 unchanged sentences

IN THOUSANDS, except per share amounts

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Assets (Unaudited)

38 unchanged sentences

IN THOUSANDS, except per share amounts

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Liabilities and stockholders' equity (Unaudited)

24 unchanged sentences

Stockholders' equity:

Preferred stock, par value $ 0.001 per share – 49,889 shares authorized as of March 31, 2020 and December 31, 2019, respectively, no shares issued and outstanding as of March 31, 2020 and December 31, 2019

Class A common stock, par value $ 0.004 per share – 700,000 shares authorized, 136,702 shares issued and 119,075 shares outstanding as of March 31, 2020 and 135,583 shares issued and 119,575 shares outstanding as of December 31, 2019

Class B common stock, par value $ 0.004 per share – 175,000 shares authorized, 90,813 shares issued and outstanding as of March 31, 2020 and 90,831 shares issued and outstanding as of December 31, 2019

Preferred stock, par value $ 0.001 per share – 49,889 shares authorized as of June 30, 2020 and December 31, 2019, respectively, no shares issued and outstanding as of June 30, 2020 and December 31, 2019

Class A common stock, par value $ 0.004 per share – 700,000 shares authorized, 136,834 shares issued and 119,207 shares outstanding as of June 30, 2020 and 135,583 shares issued and 119,575 shares outstanding as of December 31, 2019

Class B common stock, par value $ 0.004 per share – 175,000 shares authorized, 90,813 shares issued and outstanding as of June 30, 2020 and 90,831 shares issued and outstanding as of December 31, 2019

Additional paid-in capital 3,756,975 3,724,636

1 unchanged sentence

Accumulated other comprehensive loss ( 1,391,686 ) ( 1,073,981 )

Treasury stock at cost ( 17,627 shares held at March 31, 2020 and 16,008 shares held at December 31, 2019)

Treasury stock at cost ( 17,627 shares held at June 30, 2020 and 16,008 shares held at December 31, 2019)

( 300,309 ) ( 271,106 )

8 unchanged sentences

Consolidated Statements of Cash Flows

For the three months ended March 31, 2020 2019

For the six months ended June 30, 2020 2019

Cash flows from operating activities (Unaudited) (Unaudited)

Net income $ 98,316 $ 194,265

Net (loss) income $ ( 213,312 ) $ 973,881

Adjustments to reconcile net income to net cash provided by operating activities:

3 unchanged sentences

Loss (gain) on sales of subsidiaries and disposal of property and equipment, net 26,068 ( 852,348 )

Gain on derivative instruments ( 802 ) ( 5,343 )

Loss (gain) on derivative instruments 626 ( 7,977 )

Payments for settlement of derivative contracts ( 626 ) ( 8,233 )

4 unchanged sentences

Deferred income taxes ( 226,841 ) 4,744

Unrealized foreign currency exchange (gain) loss ( 29,720 ) 5,458

Unrealized foreign currency exchange gain ( 25,597 ) ( 5,246 )

Non-cash loss from non-income tax contingencies 5,952 4,609

6 unchanged sentences

Deferred revenue and other liabilities 127,371 57,482

Net cash (used in) provided by operating activities ( 3,529 ) 44,974

Net cash provided by operating activities 61,361 32,547

Cash flows from investing activities

2 unchanged sentences

Receipts from sales of discontinued operations, net of cash sold, and property and equipment 22,454 1,161,440

Settlement of derivatives related to sale of discontinued operations and net investment hedge — 12,866

Business acquisitions, net of cash acquired — ( 1,205 )

Payments from related parties 87 87

(Payments to) receipts from related parties ( 1 ) 87

Net cash (used in) provided by investing activities ( 35,045 ) 1,102,365

3 unchanged sentences

Payments of deferred purchase price for acquisitions ( 1,858 ) ( 12,133 )

Payments to purchase noncontrolling interests — ( 5,761 )

Proceeds from exercise of stock options 26,732 —

Payments to repurchase common stock ( 29,203 ) —

Withholding of shares to satisfy tax withholding for vested stock awards and exercised stock options ( 1,150 ) ( 1,251 )

Payments to repurchase common stock ( 29,203 ) —

Payments of debt issuance costs — ( 5,949 )

14 unchanged sentences

and subsidiaries (hereinafter Laureate, we, us, our, or the Company) provide higher education programs and services to students through an international portfolio of licensed universities and higher education institutions (institutions).

Laureate's programs are provided through institutions that are campus-based and internet-based, or through electronically distributed educational programs (online).

Laureate's programs are provided through institutions that are campus-based and internet-based, or throug h electronically distributed educational programs (online).

In response to the COVID-19 pandemic, we have temporarily transitioned the educational delivery method at all of our campus-based institutions to be online and are leveraging our existing technologies and learning platforms to serve students outside of the traditional classroom setting.

2 unchanged sentences

Discontinued Operations

On August 9, 2018, the Company announced the divestiture of additional subsidiaries located in Europe, Asia and Central America, which were included in the Rest of World, Andean, and Central America (formerly Central America & U.S.

On August 9, 2018, the Company announced the divestiture of certain subsidiaries located in Europe, Asia and Central America, which were included in the Rest of World, Andean, and Central America (formerly Central America & U.S.

Campuses) segments.

7 unchanged sentences

On January 27, 2020, Laureate announced that its Board of Directors had authorized the Company to explore strategic alternatives for each of its businesses to unlock shareholder value.

As part of this process, the Company will evaluate all potential options for its remaining businesses, including sales, spin-offs or business combinations.

As part of this process, the Company is evaluating all potential options for its remaining businesses, including sales, spin-offs or business combinations.

There can be no assurance as to the outcome of this process, including whether it will result in the completion of any transaction, as to the values that may be realized from any potential transaction or as to how long the review process will take.

The rationale for embarking on the strategic review process has not changed.

However, as a result of the COVID-19 pandemic and its continuing effect on market conditions, the strategic review is progressing at a slower pace than anticipated.

During the quarter ended March 31, 2020, no additional entities met the held-for-sale criteria and therefore, there were no changes to the entities classified as Discontinued Operations.

During the six months ended June 30, 2020, no additional entities met the held-for-sale criteria and, therefore, there were no changes to the entities classified as Discontinued Operations.

As discussed in Note 21, Subsequent Events, on July 29, 2020, the Company entered into an agreement to sell its Australia and New Zealand operations.

During the second quarter of 2020, the Company recorded an impairment charge of approximately $ 418,000 related to the long-lived assets, indefinite-lived intangible assets and goodwill of our institutions in Chile.

See further discussion in Note 8, Goodwill and Loss on Impairment of Assets.

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q.

11 unchanged sentences

We account for the acquisition of the right to control a VIE in accordance with ASC 805, “Business Combinations.”

The VIEs in Brazil, for 2019, and Mexico include several not-for-profit foundations that had insignificant revenues and operating expenses.

The VIEs in Brazil, for 2019, and Mexico include several not-for-profit foundations that had insignificant operating expenses and no revenues.

Selected Consolidated Statements of Operations information for VIEs that are included in continuing operations was as follows, net of the charges related to the above-described contractual arrangements:

For the three months ended March 31, 2020 2019

For the three months ended June 30, For the six months ended June 30,

2020 2019 2020 2019

Selected Statements of Operations information:

Revenues, by segment:

Brazil $ — $ —

Andean $ 116,035 $ 148,472 $ 152,501 $ 204,922

1 unchanged sentence

Depreciation and amortization 5,568 6,890 11,493 12,986

Operating loss, by segment:

Operating (loss) income, by segment:

Brazil — ( 17 ) — ( 34 )

1 unchanged sentence

Andean ( 250,501 ) 44,519 ( 282,806 ) 17,299

Operating loss ( 32,473 ) ( 27,335 )

Net loss attributable to Laureate Education, Inc.

Operating (loss) income ( 250,611 ) 44,403 ( 283,084 ) 17,069

Net (loss) income attributable to Laureate Education, Inc.

( 249,346 ) 41,785 ( 280,021 ) 17,585

The following table reconciles the Net loss attributable to Laureate Education, Inc.

As discussed in Note 8, Goodwill and Loss on Impairment of Assets, during the second quarter of 2020, the Company recorded an impairment charge of approximately $ 418,000 related to the long-lived assets, indefinite-lived intangible assets and goodwill of our Chilean operations, of which approximately $ 291,000 related to our VIE institutions in Chile.

The following table reconciles the Net (loss) income attributable to Laureate Education, Inc.

as presented in the table above, to the amounts in our Consolidated Statements of Operations:

For the three months ended March 31, 2020 2019

Net (loss) income attributable to Laureate Education, Inc.:

For the three months ended June 30, For the six months ended June 30,

2020 2019 2020 2019

Net income (loss) attributable to Laureate Education, Inc.:

Variable interest entities $ ( 249,346 ) $ 41,785 $ ( 280,021 ) $ 17,585

1 unchanged sentence

Corporate and eliminations ( 88,920 ) 40,062 123,999 300,717

Net income (loss) attributable to Laureate Education, Inc.

Net (loss) income attributable to Laureate Education, Inc.

$ ( 307,823 ) $ 781,592 $ ( 208,208 ) $ 972,835

2 unchanged sentences

The liabilities in the table are liabilities for which the creditors of the VIEs do not have recourse to the general credit of Laureate.

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

VIE Consolidated VIE Consolidated

26 unchanged sentences

The New Law established a Superintendency of Higher Education, with authority to regulate institutions of higher education and promulgate regulations and procedures implementing the New Law.

As of May 29, 2019, the New Law’s provisions regarding related party transactions came into force and the Superintendent has since issued further interpretive guidance and regulations.

Immediately prior to these provisions coming into force, each of the Chilean non-profit universities and the relevant Laureate services provider reached an agreement to terminate the prior network services agreement in favor of an open bidding process, wherein unrelated third parties and Laureate-related providers were invited to compete in the provision of the range of services that are essential to the fulfillment of each of their academic missions.

Each of the Chilean non-profit universities has completed all of the bidding and contractual processes subsequent to the May 2019 contract terminations.

The Company participated in these open bid processes, conducted by a third party, and was judged to have submitted the superior bid in many of them.

Awarded contracts entered into force once the applicable university’s board approved them or in January 2020, in the case of some of the educational services, due to the academic calendar.

On May 29, 2019, the New Law’s provisions regarding related party transactions went effective and the Superintendent has since issued further interpretive guidance and regulations.

Prior to the effectiveness of the provisions, each of the Chilean non-profit universities and the relevant Laureate services provider agreed to terminate their existing network services agreement in favor of an open bidding process, wherein unrelated third parties and Laureate-related providers were invited to compete in the provision of the services that are essential to the fulfillment of each of the universities’ academic missions.

The Company participated in these open bid processes, conducted by a third party, who found the Company had the superior bid in many of them.

Awarded contracts entered into force once the applicable university’s board approved them or in January 2020, in the case of some of the educational services.

Within the ordinary regulatory course of supervision, the Company and the Chilean non-profit universities will continue to interact with the Superintendent to maintain compliance with the New Law.

3 unchanged sentences

The long-term effect to the Company of the COVID-19 pandemic depends on numerous factors, including, but not limited to, the effect on student enrollment, tuition pricing, and collections in future periods, which cannot be fully quantified at this time.

As of March 31, 2020 and through the date of this Form 10-Q, the Company evaluated its accounting estimates that require consideration of forecasted financial information, based on current information reasonably available to us.

As of June 30, 2020 and through the date of this Form 10-Q, the Company evaluated its accounting estimates that require consideration of forecasted financial information, based on current information reasonably available to us.

The forecast also includes certain estimates and assumptions around macroeconomic conditions and the timing of campuses reopening.

While this evaluation did not result in a material effect to the Company’s Consolidated Financial Statements as of and for the three months ended March 31, 2020, future evaluations could result in a material effect, including potential impairments, depending on the eventual impact to the Company of the COVID-19 pandemic, including but not limited to, its effect on student enrollment, tuition pricing, and collections in future periods.

While this evaluation did not result in a material effect to the Company’s Consolidated Financial Statements as of and for the six months ended June 30, 2020, future evaluations could result in a material effect, including potential impairments, depending on the eventual impact to the Company of the COVID-19 pandemic and its effect on student enrollment, tuition pricing, and collections in future periods.

Recently Adopted Accounting Standards

2 unchanged sentences

Measurement of Credit Losses on Financial Instruments

In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, which sets forth a “current expected credit loss” (CECL) model and requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.

In June 2016, the FASB issued ASU 2016-13, which sets forth a “current expected credit loss” (CECL) model and requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.

ASU 2016-13 applies to financial instruments that are not measured at fair value, including receivables that result from revenue transactions.

10 unchanged sentences

This ASU was effective for Laureate beginning on January 1, 2020 and the adoption of this guidance did not have a material impact on our Consolidated Financial Statements.

The Company's next annual goodwill impairment test will occur as of October 1, 2020.

Revenue Recognition

16 unchanged sentences

We record refunds as a reduction of deferred revenue as applicable.

The following table shows the components of Revenues by reportable segment and as a percentage of total net revenue for the three months ended March 31, 2020 and 2019:

The following table shows the components of Revenues by reportable segment and as a percentage of total net revenue for the three months ended June 30, 2020 and 2019:

Brazil Mexico Andean Rest of World Online & Partnerships Corporate (1)

9 unchanged sentences

Total $ 197,106 $ 162,455 $ 422,994 $ 51,186 $ 159,715 $ ( 1,053 ) $ 992,403 100 %

The following table shows the components of Revenues by reportable segment and as a percentage of total net revenue for the six months ended June 30, 2020 and 2019:

Brazil Mexico Andean Rest of World Online & Partnerships Corporate (1)

Tuition and educational services $ 367,818 $ 300,573 $ 473,431 $ 116,237 $ 335,381 $ — $ 1,593,440 121 %

Other 2,494 39,354 25,213 3,126 25,495 2,064 97,746 7 %

Gross revenue 370,312 339,927 498,644 119,363 360,876 2,064 1,691,186 128 %

Discounts / waivers / scholarships ( 168,112 ) ( 70,856 ) ( 63,269 ) ( 13,228 ) ( 55,486 ) — ( 370,951 ) ( 28 ) %

Total $ 202,200 $ 269,071 $ 435,375 $ 106,135 $ 305,390 $ 2,064 $ 1,320,235 100 %

Tuition and educational services $ 535,013 $ 342,890 $ 586,374 $ 88,866 $ 358,640 $ — $ 1,911,783 120 %

Other 4,367 47,662 38,610 3,941 25,327 ( 562 ) 119,345 7 %

Gross revenue 539,380 390,552 624,984 92,807 383,967 ( 562 ) 2,031,128 127 %

Discounts / waivers / scholarships ( 232,306 ) ( 71,633 ) ( 63,047 ) ( 8,189 ) ( 62,478 ) — ( 437,653 ) ( 27 ) %

Total $ 307,074 $ 318,919 $ 561,937 $ 84,618 $ 321,489 $ ( 562 ) $ 1,593,475 100 %

(1) Includes the elimination of intersegment revenues.

6 unchanged sentences

All of our contract assets are considered accounts receivable and are included within the Accounts and notes receivable balance in the accompanying Consolidated Balance Sheets.

Total accounts receivable from our contracts with students were $ 535,408 and $ 432,910 as of March 31, 2020 and December 31, 2019, respectively.

The increase in the contract assets balance at March 31, 2020 compared to December 31, 2019 is primarily driven by our enrollment cycles.

Total accounts receivable from our contracts with students were $ 469,294 and $ 432,910 as of June 30, 2020 and December 31, 2019, respectively.

The increase in the contract assets balance at June 30, 2020 compared to December 31, 2019 was primarily driven by our enrollment cycles.

The first and third calendar quarters generally coincide with the primary and secondary intakes for our larger institutions.

All contract asset amounts are classified as current.

Contract liabilities in the amount of $ 505,716 and $ 216,816 were included within the Deferred revenue and student deposits balance in the current liabilities section of the accompanying Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019, respectively.

The increase in the contract liability balance during the period ended March 31, 2020 is the result of semester billings and cash payments received in advance of satisfying performance obligations, offset by revenue recognized during that period.

Revenue recognized for the three months ended March 31, 2020 that was included in the contract liability balance at the beginning of the year was approximately $ 149,300 .

Contract liabilities in the amount of $ 340,343 and $ 216,816 were included within the Deferred revenue and student deposits balance in the current liabilities section of the accompanying Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019, respectively.

The increase in the contract liability balance during the period ended June 30, 2020 was the result of semester billings and cash payments received in advance of satisfying performance obligations, offset by revenue recognized during that period.

Revenue recognized for the six months ended June 30, 2020 that was included in the contract liability balance at the beginning of the year was approximately $ 168,700 .

Discontinued Operations and Assets Held for Sale

4 unchanged sentences

Accordingly, these institutions were disposed of other than by sale on August 31, 2019 and, beginning in the third quarter of 2019, have been included in Discontinued Operations for all periods presented.

As of March 31, 2020, one VIE institution in Honduras is included in the Discontinued Operations.

As of June 30, 2020, one VIE institution in Honduras is included in Discontinued Operations.

The goal of the divestitures was to create a more focused and simplified business model and generate proceeds to be used for further repayment of long-term debt.

2 unchanged sentences

Summarized operating results and cash flows of the Discontinued Operations are presented in the following tables:

For the three months ended March 31, 2020 2019

For the three months ended June 30, 2020 2019

Revenues $ 25,550 $ 157,347

1 unchanged sentence

Share-based compensation expense 6 106

Other direct costs 23,274 126,202

Loss on impairment of assets 9,967 —

Operating (loss) income ( 7,697 ) 30,640

Other non-operating (loss) income ( 2,565 ) 3,362

Pretax (loss) income of discontinued operations ( 10,262 ) 34,002

Income tax expense ( 1,909 ) ( 3,722 )

(Loss) income from discontinued operations, net of tax $ ( 12,171 ) $ 30,280

For the six months ended June 30, 2020 2019

Revenues $ 58,796 $ 380,686

Depreciation and amortization — 834

Share-based compensation expense 9 269

Loss on impairment of assets 9,967 —

Other direct costs 50,822 278,639

Operating income 5,695 70,306

Operating (loss) income ( 2,002 ) 100,944

Other non-operating (loss) income ( 10,582 ) 6,528

5 unchanged sentences

Financing cash flows of discontinued operations $ ( 1,856 ) $ ( 31,964 )

The assets and liabilities of the Discontinued Operations, which are subject to finalization, have been classified as held for sale as of March 31, 2020 and December 31, 2019, in accordance with ASC 205.

Loss on Impairment of Assets

During the second quarter of 2020, we recorded an impairment charge of $ 9,967 related to long-lived assets of our institution in Honduras, in order to write down the carrying value of those assets to their estimated fair value.

The assets and liabilities of the Discontinued Operations, which are subject to finalization, have been classified as held for sale as of June 30, 2020 and December 31, 2019, in accordance with ASC 205.

The assets and liabilities are recorded at the lower of their carrying values or their estimated ‘fair values less costs to sell.’

The carrying amounts of the major classes of assets and liabilities that were classified as held for sale are presented in the following tables:

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Assets of Discontinued Operations

10 unchanged sentences

Total assets held for sale $ 249,486 $ 389,773

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Liabilities of Discontinued Operations

4 unchanged sentences

Total liabilities held for sale $ 118,677 $ 189,118

Sale Agreement Pending Closure as of March 31, 2020

Sale Agreement Pending Closure as of June 30, 2020

Inti Education Holdings Sdn.

9 unchanged sentences

The closing of the transaction is subject to customary closing conditions, including approval by regulators in Malaysia.

In connection with the signing of the Malaysia Sale Agreement, the Malaysia Purchaser paid to the Malaysia Seller a cash deposit of $ 5,000 , which the Company has recorded as a liability pending the closing of the sale and is included in Receipts from sales of discontinued operations, net of cash sold, and property and equipment within investing activities in the Consolidated Statement of Cash Flows for the three months ended March 31, 2020.

Sale of Costa Rica Operations

3 unchanged sentences

(collectively, Laureate Costa Rica) and (ii) a note due from ULatina to Laureate International.

Consideration for the transaction consisted of $ 15,000 paid at closing and up to $ 7,000 to be paid within the next two years if Laureate Costa Rica meets certain performance metrics.

The proceeds received at closing, net of cash sold and transaction fees, were approximately $ 3,300 .

Consideration for the transaction consisted of $ 15,000 paid at closing and up to $ 7,000 to be paid within the next two years if Laureate Costa Rica met certain performance metrics.

One of the performance metrics was finalized during the second quarter of 2020 and did not result in any additional proceeds to the Company;

the maximum additional proceeds that the Company could receive if the remaining performance metric is met is $ 5,000 .

The proceeds received, net of cash sold, transaction fees and a working capital adjustment that was completed during the second quarter of 2020, were approximately $ 1,800 .

Additionally, Laureate Costa Rica retained obligations to pay approximately $ 30,000 in finance lease indebtedness for which the Costa Rica Buyer has no recourse to Laureate International.

During the third quarter of 2019, the Company recorded an impairment loss of approximately $ 25,000 on the long-lived assets at the Costa Rica institutions, in order to write down the carrying value of those assets to their estimated fair value, per ASC 360-10.

Upon completion of the sale in January 2020, the Company recognized a pre-tax loss of approximately $ 17,200 , which related to subsequent changes in net carrying values and is included in loss on sales of discontinued operations on the Consolidated Statement of Operations for the three months ended March 31, 2020.

Upon completion of the sale in January 2020 and after including the working capital adjustment, the Company recognized a pre-tax loss of approximately $ 18,600 , which related to subsequent changes in net carrying values and is included in loss on sales of discontinued operations on the Consolidated Statement of Operations for the six months ended June 30, 2020.

The Costa Rica Buyer is controlled by certain affiliates of Sterling Capital Partners II, L.P.

10 unchanged sentences

The remaining subsidy of $ 2,800 will be paid to the NSAD Buyers ratably on a quarterly basis over the next four years .

The Company recognized a pre-tax loss on the sale of approximately $ 5,700 , which is included in loss on sales of discontinued operations on the Consolidated Statement of Operations for the three months ended March 31, 2020.

Sale of China Operations-Receipt of Escrow

On January 25, 2018, the Company completed the sale of LEI Lie Ying Limited in China.

At the closing of the sale on January 25, 2018, a portion of the total transaction value was paid into an escrow account, to be distributed to the Company pursuant to the terms and conditions of the escrow agreement.

As of December 31, 2019, the Company had recorded a receivable of approximately $ 25,900 for the portion of the escrowed amount that the Company expected to receive.

Per the terms of the escrow agreement, in June 2020, the Company received approximately 141,647 Hong Kong Dollars (approximately $ 18,300 at the date of receipt) from the escrow, which was offset against the receivable recorded, and is included in receipts from sales of discontinued operations within investing activities on the Consolidated Statement of Cash Flows.

Under the terms of the agreement, the Company expects to receive the remaining escrow receivable amount in January 2021.

Due to Shareholders of Acquired Companies

3 unchanged sentences

The amounts due to shareholders of acquired companies, currencies, and interest rates applied were as follows:

March 31, 2020 December 31, 2019 Nominal Currency Interest

June 30, 2020 December 31, 2019 Nominal Currency Interest

Universidade Anhembi Morumbi (UAM Brazil) $ 15,814 $ 20,179 BRL CDI + 2 %

16 unchanged sentences

Our campus-based segments generate revenues by providing an education that emphasizes profession-oriented fields of study with undergraduate and graduate degrees in a wide range of disciplines.

Our educational offerings are increasingly utilizing online and hybrid (a combination of online and in-classroom) courses and programs to deliver their curriculum.

Our educational offerings are increasingly utilizing online and hybrid (a combination of onli ne and in-classroom) courses and programs to deliver their curriculum.

9 unchanged sentences

Laureate owns 12 institutions in seven states throughout Brazil, with a particularly strong presence in the competitive São Paulo market.

Many students finance their own education while others rely on the government-sponsored programs such as Prouni and Fundo de Financiamento Estudantil (FIES).

Most students finance their own education while others rely on the government-sponsored programs such as Prouni and Fundo de Financiamento Estudantil (FIES).

Public universities in Mexico enroll approximately two-thirds of students attending post-secondary education.

21 unchanged sentences

We evaluate segment performance based on Adjusted EBITDA, which is a non-GAAP performance measure defined as Income (loss) from continuing operations before income taxes and equity in net income of affiliates, adding back the following items:

Gain (loss) on sale or disposal of subsidiaries, Foreign currency exchange gain (loss), net, Other (expense) income, net, Gain on derivatives, Loss on debt extinguishment, Interest expense, Interest income, Depreciation and amortization expense, Loss on impairment of assets, Share-based compensation expense and expenses related to our Excellence-in-Process (EiP) initiative.

Gain (loss) on sale or disposal of subsidiaries, Foreign currency exchange gain, net, Other (expense) income, net, (Loss) gain on derivatives, Loss on debt extinguishment, Interest expense, Interest income, Depreciation and amortization expense, Loss on impairment of assets, Share-based compensation expense and expenses related to our Excellence-in-Process (EiP) initiative.

EiP is an enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources.

4 unchanged sentences

We use total assets as the measure of assets for reportable segments.

The following tables provide financial information for our reportable segments, including a reconciliation of Adjusted EBITDA to Loss from continuing operations before income taxes and equity in net income of affiliates, as reported in the Consolidated Statements of Operations:

For the three months ended March 31, 2020 2019

The following tables provide financial information for our reportable segments, including a reconciliation of Adjusted EBITDA to Income from continuing operations before income taxes and equity in net (loss) income of affiliates, as reported in the Consolidated Statements of Operations:

For the three months ended For the six months ended

June 30, June 30,

2020 2019 2020 2019

Brazil $ 118,519 $ 197,106 $ 202,200 $ 307,074

18 unchanged sentences

EiP expenses ( 24,008 ) ( 27,069 ) ( 54,360 ) ( 39,329 )

Operating loss ( 117,135 ) ( 92,029 )

Operating (loss) income ( 254,780 ) 217,165 ( 371,915 ) 125,136

Interest income 1,016 2,844 3,683 6,397

1 unchanged sentence

Loss on debt extinguishment — ( 15,595 ) — ( 26,217 )

Gain on derivatives 802 5,183

(Loss) gain on derivatives ( 1,428 ) 2,632 ( 626 ) 7,815

Other (expense) income, net ( 406 ) 7,704 ( 508 ) 8,101

Foreign currency exchange gain (loss), net 35,944 ( 4,746 )

Foreign currency (loss) gain, net ( 4,903 ) 8,881 31,041 4,135

Gain on sales of subsidiaries, net 93 — 2,822 —

Loss from continuing operations before income taxes and equity in net income of affiliates $ ( 111,205 ) $ ( 152,917 )

March 31, 2020 December 31, 2019

Income from continuing operations before income taxes and equity in net (loss) income of affiliates $ ( 294,220 ) $ 182,165 $ ( 405,425 ) $ 29,248

June 30, 2020 December 31, 2019

Brazil $ 834,277 $ 1,068,362

5 unchanged sentences

Total assets $ 5,953,677 $ 6,515,628

The change in the net carrying amount of Goodwill from December 31, 2019 through March 31, 2020 was composed of the following items:

Goodwill and Loss on Impairment of Assets

The change in the net carrying amount of Goodwill from December 31, 2019 through June 30, 2020 was composed of the following items:

Brazil Mexico Andean Rest of World Online & Partnerships Total

5 unchanged sentences

Adjustments to prior acquisitions — — — — — —

Balance at March 31, 2020 $ 316,454 $ 425,881 $ 222,027 $ 75,940 $ 460,740 $ 1,501,042

Balance at June 30, 2020 $ 296,922 $ 435,828 $ 76,680 $ 85,415 $ 460,740 $ 1,355,585

Impairment of Assets for Chile Reporting Unit

As described in Note 1, Description of Business, the Company is exploring strategic alternatives for each of its businesses and, as part of that process, the Company is evaluating all potential options for its remaining businesses, including sales, spin-offs or business combinations.

The Company has received and considered information regarding the market valuation for control of its Chilean operations, which are both a reporting unit and an asset group.

In a divestiture scenario, this market feedback reveals the range of values that could be expected to be offered by potential investors, and this range of values was lower than carrying value.

The reasons for this include uncertainties that market participants have around operating higher education institutions in Chile related to the challenging political and regulatory environment and the possibility that a new Chilean constitution could become effective as early as the summer of 2022.

These uncertainties have particularly affected the views of market participants (as well as the views of the Company) about operating a not-for-profit education institution in Chile.

After assessing these factors, the Company concluded that it was more likely than not that the fair value of its Chile reporting unit, which is part of the Andean segment, was less than its carrying value.

Accordingly, the Company performed an impairment test of the long-lived assets that are part of the Chile reporting unit.

Because Chile has not yet met the held-for-sale criteria, the long-lived assets other than goodwill were evaluated for impairment under the held-and-used model, based on the probability-weighted cash flows expected to be generated by the asset group.

Goodwill was also evaluated for impairment.

The projections used in the impairment testing included key assumptions around the effect of regulatory uncertainties on the future cash flows expected to be generated, reducing the estimates of those cash flows.

In addition, the projections incorporated assumptions around growth rates, tax rates and discount rates.

The inputs used are not observable to active markets and are therefore deemed “Level 3” inputs in the fair value hierarchy.

As a result of the impairment tests, the Company determined that the carrying value of the Chile asset group exceeded its fair value by approximately $ 418,000 and recorded an impairment charge in that amount during the three months ended June 30, 2020, as follows:

Tradenames $ 90,700

Buildings 59,700

Other long-lived assets 36,500

Operating lease right-of-use assets, net 62,500

Goodwill 147,700

Total Chile impairment $ 418,000

In addition, as of June 30, 2020, the Company has recorded within stockholders’ equity, as a component of accumulated other comprehensive income, approximately $ 249,000 of accumulated foreign currency translation (FX) losses associated with Chile.

These FX losses would be recognized if the Company sells the Chile reporting unit or classifies it as held for sale.

Impairment of Brazil E2G Software Assets

As part of a transformation initiative for the enrollment to graduation cycle (E2G) that started several years ago, the Company began developing a solution to standardize the information systems and processes in Brazil.

During development, those costs that qualified for capitalization as internal-use software were classified within Construction in-progress on our Consolidated Balance Sheets.

In addition, a portion of the Brazil E2G project costs were deemed to be implementation costs of a hosting arrangement and were capitalized within Other assets on our Consolidated Balance Sheets.

These capitalized costs were recorded on our Brazil and Corporate segments, as most of the Brazil E2G expenditures were made by Corporate.

During the second quarter of 2020, the Company determined that it was no longer probable that the Brazil E2G project would be completed and placed into service, and that the likelihood that a potential buyer of the Brazil business would utilize this system was low due to its cost and associated complexities.

As stated in ASC 350-40-35-3, there is a presumption that uncompleted software has a fair value of $0.

Accordingly, the Company recorded a impairment charge of approximately $ 27,100 during the three months ended June 30, 2020, to fully write off the Brazil E2G project assets.

Outstanding long-term debt was as follows:

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Senior long-term debt:

13 unchanged sentences

The estimated fair value of our debt was determined using observable market prices as the majority of our securities, including the Senior Secured Credit Facility and the Senior Notes due 2025, are traded in a brokered market.

The fair value of our remaining debt instruments approximates carrying value based on their terms.

As of March 31, 2020 and December 31, 2019, our long-term debt was classified as Level 2 within the fair value hierarchy, based on the frequency and volume of trading in the brokered market.

The fair value of our

remaining debt instruments approximates carrying value based on their terms.

As of June 30, 2020 and December 31, 2019, our long-term debt was classified as Level 2 within the fair value hierarchy, based on the frequency and volume of trading in the brokered market.

The estimated fair value of our debt was as follows:

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Carrying amount Estimated fair value Carrying amount Estimated fair value

1 unchanged sentence

Certain Covenants

As of March 31, 2020, our senior long-term debt contained certain negative covenants including, among others:

As of June 30, 2020, our senior long-term debt contained certain negative covenants including, among others:

(1) limitations on additional indebtedness;

4 unchanged sentences

The agreement also provides that if (i) the Company’s Consolidated Total Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, is not greater than 4.75 x as of such date and (ii) less than 25 % of the revolving credit facility is utilized as of that date, then such financial covenant shall not apply.

As of March 31, 2020, we were in compliance with the leverage ratio covenant.

As of June 30, 2020, we were in compliance with the leverage ratio covenant.

In addition, notes payable at some of our locations contain financial maintenance covenants.

21 unchanged sentences

however, the sublease income from these agreements is immaterial.

Rent Concessions

The Company has taken actions with respect to certain of its existing leases, including engaging with landlords to discuss rent deferrals, as well as other rent concessions.

Consistent with the updated guidance from the Financial Accounting Standards Board (FASB) in April 2020, the Company has elected the practical expedient for rent concessions where the total payments required by the modified contract are substantially the same or less than the total payments required by the original contract.

In those cases, the Company treated the rent concessions as if there were no modification to the lease contract and accounted for these rent concessions as variable lease payments.

Commitments and Contingencies

Noncontrolling Interest Holder Put Arrangements

The following section provides a summary table and description of our noncontrolling interest holder put arrangements, which relate to Discontinued Operations, that Laureate had outstanding as of March 31, 2020.

Laureate has elected to accrete changes in the arrangements’ redemption values over the period from the date of issuance to the earliest redemption date.

1 unchanged sentence

Until the first exercise date, the put instruments’ reported values may be lower than the final amounts that will be required to settle the minority put arrangements.

If the minority put arrangements were all exercised at March 31, 2020, Laureate would be obligated to pay the noncontrolling interest holders an estimated amount of $ 10,249 , as summarized in the following table:

Nominal Currency First Exercisable Date Estimated Value as of March 31, 2020 redeemable within 12-months Reported

If the minority put arrangements were all exercised at June 30, 2020, Laureate would be obligated to pay the noncontrolling interest holders an estimated amount of $ 10,443 , as summarized in the following table:

Nominal Currency First Exercisable Date Estimated Value as of June 30, 2020 redeemable within 12-months Reported

Noncontrolling interest holder put arrangements

12 unchanged sentences

Contingent Liabilities for Taxes

As of March 31, 2020 and December 31, 2019, Laureate has recorded cumulative liabilities totaling $ 37,245 and $ 44,595 , respectively, for taxes other-than-income tax, principally payroll-tax-related uncertainties recorded at the time of an acquisition, of which $ 637 and $ 2,893 , respectively, were classified as held for sale.

As of June 30, 2020 and December 31, 2019, Laureate has recorded cumulative liabilities totaling $ 36,031 and $ 44,595 , respectively, for taxes other-than-income tax, principally payroll-tax-related uncertainties recorded at the time of an acquisition, of which $ 752 and $ 2,893 , respectively, were classified as held for sale.

The changes in this recorded liability are related to acquisitions, interest and penalty accruals, changes in tax laws, expirations of statutes of limitations, settlements and changes in foreign currency exchange rates.

2 unchanged sentences

Changes in the recorded values of non-income tax contingencies impact operating income and interest expense, while changes in the related indemnification assets impact only operating income.

The total decrease to operating income for adjustments to non-income tax contingencies and indemnification assets was $ 6,514 and $ 4,561 , respectively, for the three months ended March 31, 2020 and 2019.

In addition, as of March 31, 2020 and December 31, 2019, Laureate has recorded cumulative liabilities for income tax contingencies of $ 42,929 and $ 51,442 , respectively, of which $ 7,009 and $ 6,996 , respectively, were classified as held for sale.

As of March 31, 2020 and December 31, 2019, indemnification assets primarily related to acquisition contingencies were $ 52,512 and $ 69,040 .

The total decrease to operating income for adjustments to non-income tax

contingencies and indemnification assets was $ 5,952 and $ 4,609 , respectively, for the six months ended June 30, 2020 and 2019.

In addition, as of June 30, 2020 and December 31, 2019, Laureate has recorded cumulative liabilities for income tax contingencies of $ 47,313 and $ 51,442 , respectively, of which $ 7,442 and $ 6,996 , respectively, were classified as held for sale.

As of June 30, 2020 and December 31, 2019, indemnification assets primarily related to acquisition contingencies were $ 50,993 and $ 69,040 .

These indemnification assets primarily cover contingencies for income taxes and taxes other-than-income taxes.

We have also recorded receivables of approximately $ 17,000 and $ 19,000 as of March 31, 2020 and December 31, 2019, respectively, from the former owner of one of our Brazil institutions which is guaranteed by future rental payments to the former owner.

We have also recorded receivables of approximately $ 16,000 and $ 19,000 as of June 30, 2020 and December 31, 2019, respectively, from the former owner of one of our Brazil institutions which is guaranteed by future rental payments to the former owner.

We have identified certain contingencies, primarily tax-related, that we have assessed as being reasonably possible of loss, but not probable of loss, and could have an adverse effect on the Company’s results of operations if the outcomes are unfavorable.

5 unchanged sentences

Laureate intends to vigorously defend against these matters.

As of March 31, 2020 and December 31, 2019, approximately $ 31,100 and $ 31,400 , respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets.

As of June 30, 2020 and December 31, 2019, approximately $ 30,700 and $ 31,400 , respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets.

Material Guarantees – Student Financing

5 unchanged sentences

When a student leaves one of Laureate's institutions and enrolls in another CAE-qualified institution, the Laureate institution will remain guarantor of the tuition loans that have been granted up to the date of transfer, and until the student's graduation from a CAE-qualified institution.

The maximum potential amount of payments our institutions could be required to make under the CAE Program was approximately $ 430,000 and $ 474,000 at March 31, 2020 and December 31, 2019, respectively.

The maximum potential amount of payments our institutions could be required to make under the CAE Program was approximately $ 457,000 and $ 474,000 at June 30, 2020 and December 31, 2019, respectively.

This maximum potential amount assumes that all students in the CAE Program do not graduate, so that our guarantee would not be assigned to the government, and that all students default on the full amount of the CAE-qualified loan balances.

As of March 31, 2020 and December 31, 2019, we recorded $ 37,969 and $ 30,887 , respectively, as estimated long-term guarantee liabilities for these obligations.

As of June 30, 2020 and December 31, 2019, we recorded $ 38,029 and $ 30,887 , respectively, as estimated long-term guarantee liabilities for these obligations.

In accordance with Topic 326, the provision includes an estimated expected credit loss over the contractual period in which the Company is exposed to credit risk, and is recorded at inception.

3 unchanged sentences

In the event that we default on any payment, the agreement provides for a forfeiture of the pledged shares.

In connection with the purchase of FMU Education Group on September 12, 2014, Laureate pledged its acquired shares to third-party lenders as a guarantee of our payment obligations under the loans that financed a portion of the purchase price.

In connection with the purchase of Faculdades Metropolitanas Unidas Educacionais Ltda.

(FMU) Education Group on September 12, 2014, Laureate pledged its acquired shares to third-party lenders as a guarantee of our payment obligations under the loans that financed a portion of the purchase price.

The shares are pledged until full repayment of the loans, which mature in April 2021.

1 unchanged sentence

Standby Letters of Credit, Surety Bonds and Other Commitments

As of March 31, 2020 and December 31, 2019, Laureate's outstanding letters of credit (LOCs) and surety bonds primarily consisted of the items discussed below.

As of March 31, 2020 and December 31, 2019, we had approximately $ 125,800 and $ 127,300 , respectively, posted as LOCs in favor of the DOE.

As of June 30, 2020 and December 31, 2019, Laureate's outstanding letters of credit (LOCs) and surety bonds primarily consisted of the items discussed below.

As of June 30, 2020 and December 31, 2019, we had approximately $ 125,800 and $ 127,300 , respectively, posted as LOCs in favor of the DOE.

These LOCs were required to allow Walden and NSAD, until it was sold in March 2020, to continue participating in the DOE Title IV program.

These LOCs are recorded on Walden and Laureate and are fully collateralized with cash equivalents and certificates of deposit, which are classified as Restricted cash on our March 31, 2020 and December 31, 2019 Consolidated Balance Sheets.

As of March 31, 2020 and December 31, 2019, we had EUR 9,443 (approximately $ 10,500 at March 31, 2020) and EUR 5,036 (approximately $ 5,500 at December 31, 2019), respectively, posted as cash collateral for LOCs related to the Spanish tax audits.

This was recorded in Continuing Operations and classified as Restricted cash on our March 31, 2020 and December 31, 2019 Consolidated Balance Sheets.

These LOCs are recorded on Walden and Laureate and are fully collateralized with cash equivalents and certificates of deposit, which are classified as Restricted cash on our June 30, 2020 and December 31, 2019 Consolidated Balance Sheets.

As of June 30, 2020 and December 31, 2019, we had EUR 9,443 (approximately $ 10,600 at June 30, 2020) and EUR 5,036 (approximately $ 5,500 at December 31, 2019), respectively, posted as cash collateral for LOCs related to the Spanish tax audits.

This was recorded in Continuing Operations and classified as Restricted cash on our June 30, 2020 and December 31, 2019 Consolidated Balance Sheets.

The cash collateral is related to final assessments issued by the Spanish Taxing Authority (STA) in October 2018 and January 2020 to Iniciativas Culturales de España, S.L.

(ICE), our Spanish holding company.

In addition, on March 11, 2020, ICE received a preliminary assessment of approximately EUR 21,600 (approximately $23,900 at

March 31, 2020), related to the STA’s extension of their audit to review withholding taxes on income earned by nonresidents.

In addition, on March 11, 2020, ICE received a preliminary assessment of approximately EUR 21,600 (approximately $ 24,200 at June 30, 2020), related to the STA’s extension of their audit to review withholding taxes on income earned by nonresidents.

This assessment is not final, and ICE intends to challenge the assessment before the STA.

ICE was formerly our Spanish holding company;

during the second quarter of 2020, ICE was migrated to the Netherlands and its name was changed to Laureate Netherlands Holding B.V.

As part of our normal operations, our insurers issue surety bonds on our behalf, as required by various state education authorities in the United States.

We are obligated to reimburse our insurers for any payments made by the insurers under the surety bonds.

As of March 31, 2020 and December 31, 2019, the total face amount of these surety bonds was $ 26,069 and $ 25,852 , respectively.

These bonds are fully collateralized with cash, which was classified as Restricted cash on our March 31, 2020 and December 31, 2019 Consolidated Balance Sheets.

As of June 30, 2020 and December 31, 2019, the total face amount of these surety bonds was $ 16,938 and $ 25,582 , respectively.

In June 2020, a state bond in the amount of approximately $ 9,000 was deemed unnecessary and was canceled.

These bonds are fully collateralized with cash, which was classified as Restricted cash on our June 30, 2020 and December 31, 2019 Consolidated Balance Sheets.

In November 2016, in order to continue participating in Prouni, a federal program that offers tax benefits designed to increase higher education participation rates in Brazil, UAM Brazil posted a guarantee in the amount of $ 15,300 .

7 unchanged sentences

Laureate’s financing receivables balances were as follows:

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Financing receivables $ 30,052 $ 28,856

14 unchanged sentences

Chile Other Total

As of March 31, 2020

As of June 30, 2020

Amounts past due less than one year $ 9,493 $ 821 $ 10,314

9 unchanged sentences

Total financing receivables $ 26,538 $ 2,318 $ 28,856

The following is a rollforward of the Allowance for doubtful accounts related to financing receivables for the three months ended March 31, 2020 and 2019, grouped by country portfolio:

The following is a rollforward of the Allowance for doubtful accounts related to financing receivables for the six months ended June 30, 2020 and 2019, grouped by country portfolio:

Chile Other Total

5 unchanged sentences

Currency adjustments 432 99 531

Balance at March 31, 2020 $ ( 5,808 ) $ ( 315 ) $ ( 6,123 )

Balance at June 30, 2020 $ ( 6,055 ) $ ( 1,076 ) $ ( 7,131 )

Balance at December 31, 2018 $ ( 6,108 ) $ ( 287 ) $ ( 6,395 )

4 unchanged sentences

Currency adjustments ( 129 ) ( 7 ) ( 136 )

Balance at March 31, 2019 $ ( 6,179 ) $ ( 298 ) $ ( 6,477 )

Balance at June 30, 2019 $ ( 5,897 ) $ ( 474 ) $ ( 6,371 )

Restructured Receivables

3 unchanged sentences

Our only TDRs are in Chile.

The number of financing receivable accounts and the pre- and post-modification account balances modified under the terms of a TDR during the three months ended March 31, 2020 and 2019 were as follows:

The number of financing receivable accounts and the pre- and post-modification account balances modified under the terms of a TDR during the six months ended June 30, 2020 and 2019 were as follows:

Number of Financing Receivable Accounts Pre-Modification Balance Outstanding Post-Modification Balance Outstanding

1 unchanged sentence

2019 327 $ 1,100 $ 980

The preceding table represents accounts modified under the terms of a TDR during the three months ended March 31, 2020, whereas the following table represents accounts modified as a TDR between January 1, 2019 and March 31, 2020 that subsequently defaulted during the three months ended March 31, 2020:

The preceding table represents accounts modified under the terms of a TDR during the six months ended June 30, 2020, whereas the following table represents accounts modified as a TDR between January 1, 2019 and June 30, 2020 that subsequently defaulted during the six months ended June 30, 2020:

Number of Financing Receivable Accounts Balance at Default

Total 122 $ 298

The following table represents accounts modified as a TDR between January 1, 2018 and March 31, 2019 that subsequently defaulted during the three months ended March 31, 2019:

The following table represents accounts modified as a TDR between January 1, 2018 and June 30, 2019 that subsequently defaulted during the six months ended June 30, 2019:

Number of Financing Receivable Accounts Balance at Default

2 unchanged sentences

Share-based compensation expense was as follows:

For the three months ended March 31, 2020 2019

For the three months ended June 30, For the six months ended June 30,

2020 2019 2020 2019

Continuing operations

6 unchanged sentences

Stockholders’ Equity

The components of net changes in stockholders’ equity for the three months ended March 31, 2020 are as follows:

The components of net changes in stockholders’ equity for the fiscal quarters of 2020 are as follows:

Laureate Education, Inc.

15 unchanged sentences

Balance at March 31, 2020 119,075 $ 546 90,813 $ 363 $ 3,752,186 $ 536,124 $ ( 1,405,788 ) $ ( 300,309 ) $ ( 13,314 ) $ 2,569,808

The components of net changes in stockholders’ equity for the three months ended March 31, 2019 are as follows:

Non-cash stock compensation — — — — 4,621 — — — — 4,621

Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 132 1 — — ( 33 ) — — — — ( 32 )

Change in noncontrolling interests — — — — — — — — 3,471 3,471

Accretion of redeemable noncontrolling interests and equity — — — — 201 — — — — 201

Reclassification of redeemable noncontrolling interests and equity — — — — — — — — ( 414 ) ( 414 )

Net loss — — — — — ( 307,823 ) — — ( 3,805 ) ( 311,628 )

Foreign currency translation adjustment, net of tax of $ 0

— — — — — — 14,102 — ( 68 ) 14,034

Balance at June 30, 2020 119,207 $ 547 90,813 $ 363 $ 3,756,975 $ 228,301 $ ( 1,391,686 ) $ ( 300,309 ) $ ( 14,130 ) $ 2,280,061

The components of net changes in stockholders’ equity for the fiscal quarters of 2019 are as follows:

Laureate Education, Inc.

17 unchanged sentences

Balance at March 31, 2019 107,783 $ 431 116,857 $ 467 $ 3,705,787 $ ( 310,732 ) $ ( 1,060,565 ) $ — $ ( 7,482 ) $ 2,327,906

Non-cash stock compensation — — — — 4,854 — — — — 4,854

Conversion of Class B shares to Class A shares 10,991 44 ( 10,991 ) ( 44 ) — — — — — —

Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 32 — — — 170 — — — — 170

Distributions to noncontrolling interest holders — — — — — — — — ( 731 ) ( 731 )

Change in noncontrolling interests — — — — ( 3,700 ) — — — — ( 3,700 )

Accretion of redeemable noncontrolling interests and equity — — — — 194 — — — — 194

Reclassification of redeemable noncontrolling interests and equity — — — — — — — — ( 855 ) ( 855 )

Net income — — — — — 781,592 — — ( 1,976 ) 779,616

Foreign currency translation adjustment, net of tax of $ 0

— — — — — — 10,275 — ( 87 ) 10,188

Unrealized gain on derivatives, net of tax of $ 0

— — — — — — ( 10,559 ) — — ( 10,559 )

Balance at June 30, 2019 118,806 $ 475 105,866 $ 423 $ 3,707,305 $ 470,860 $ ( 1,060,849 ) $ — $ ( 11,131 ) $ 3,107,083

Stock Repurchase Program

2 unchanged sentences

On October 14, 2019, the Company’s board of directors approved the increase of its existing authorization to repurchase shares of the Company’s Class A common stock by $ 150,000 for a total authorization (including the previously authorized repurchases) of up to $ 300,000 of the Company’s Class A common stock.

Company’s repurchases were made in a block trade, as well as on the open market at prevailing market prices and pursuant to a Rule 10b5-1 stock repurchase plan, in accordance with applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act).

The Company’s repurchases were made in a block trade, as well as on the open market at prevailing market prices and pursuant to a Rule 10b5-1 stock repurchase plan, in accordance with applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act).

In January 2020, the Company repurchased 1,619 shares of its outstanding Class A common stock for a total purchase price of $ 29,203 and reached the total authorized limit of $ 300,000 .

3 unchanged sentences

The components of these balances were as follows:

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Laureate Education, Inc.

20 unchanged sentences

For derivatives that are both designated and effective as net investment hedges, gains or losses associated with the change in fair value of the derivatives are recognized on our Consolidated Balance Sheets as a component of AOCI.

The reported fair values of our derivatives, which are classified in Prepaid expenses and other current assets on our Consolidated Balance Sheets, were as follows:

March 31, 2020 December 31, 2019

Derivatives not designated as hedging instruments:

Current assets:

Cross currency swaps $ 802 $ —

Total derivative instrument assets $ 802 $ —

The table below shows the total recorded unrealized (loss) gain in Comprehensive income for the derivatives designated as hedging instruments.

The impact of these derivative instruments on Comprehensive income, Interest expense and AOCI for the three months ended March 31, 2020 and 2019 were as follows:

Laureate did not hold any derivatives as of June 30, 2020 and December 31, 2019.

Derivatives Designated as Hedging Instruments

Net Investment Hedge - Cross Currency Swaps

In December 2017, Laureate entered into two EUR-USD cross currency swaps (net investment hedges) to hedge the foreign currency exchange volatility on operations of our Euro functional currency subsidiaries and better match our cash flows with the currencies in which our debt obligations are denominated.

Both swaps had an effective date of December 22, 2017 and a maturity date of November 2, 2020, and were designated at inception as effective net investment hedges.

In April 2019, the Company terminated both EUR-USD cross currency swaps for a net settlement received of $ 7,679 , which is included in

Settlement of derivatives related to sale of discontinued operations and net investment hedge on the Consolidated Statement of Cash Flows for the six months ended June 30, 2019.

The terms of the swaps specified that at maturity on the first swap, Laureate would deliver the notional amount of EUR 50,000 and receive USD $ 59,210 at an implied exchange rate of 1.1842 and at maturity on the second swap, Laureate would deliver the notional amount of EUR 50,000 and receive USD $ 59,360 at an implied exchange rate of 1.1872 .

Semiannually until maturity, Laureate was obligated to pay 5.63 % and receive 8.25 % on EUR 50,000 and USD $ 59,210 , respectively, on the first swap and pay 5.6675 % and receive 8.25 % on EUR 50,000 and USD $ 59,360 , respectively, on the second swap.

The swaps were determined to be 100 % effective;

therefore, the amount of gain or loss recognized in income on the ineffective portion of derivative instruments designated as hedging instruments was $ 0 .

The accumulated gain recognized in AOCI will be deferred from earnings until the sale or liquidation of the hedged investee.

Cash Flow Hedge - 2024 Term Loan Interest Rate Swaps

In May 2017, Laureate entered into, and designated as cash flow hedges, four pay-fixed, receive-floating amortizing interest rate swaps with notional amounts of $ 100,000 , $ 100,000 , $ 200,000 and $ 300,000 , respectively.

These notional amounts matched the corresponding principal of the 2024 Term Loan borrowings of which these swaps were effectively hedging the interest payments.

As such, the notional values amortized annually based on the terms of the agreements to match the principal borrowings as they were repaid.

These swaps effectively fixed the floating interest rate on the term loan to reduce exposure to variability in cash flows attributable to changes in the USD-LIBOR-BBA swap rate.

All four swaps were fully settled on August 21, 2018, prior to their May 31, 2022 maturity date, with the remaining AOCI to be ratably reclassified into income through Interest expense over the remaining maturity period of the 2024 Term Loans.

The cash received at settlement from the swap counterparties was $ 14,117 .

During the second quarter of 2019, the Company accelerated the reclassification of amounts in AOCI to earnings as a result of the hedged forecasted transactions becoming probable not to occur, due to the full repayment of the 2024 Term Loan in June 2019 using proceeds from the sale of our institutions in Portugal and Spain.

The accelerated amounts were a gain of approximately $ 9,800 and were recorded as a decrease to Interest expense.

Prior to settlement of the swaps, they were determined to be 100 % effective;

therefore, the amount of gain or loss recognized in income on the ineffective portion was $ 0 .

The tables below shows the total recorded unrealized (loss) gain in Comprehensive income for the derivatives designated as hedging instruments.

The impact of these derivative instruments on Comprehensive income, Interest expense and AOCI were as follows:

For the three months ended June 30:

(Loss) Gain Recognized in Comprehensive Income (Effective Portion) Income Statement Location Gain Reclassified

7 unchanged sentences

Total $ — $ ( 10,559 ) $ — $ 10,606 $ ( 33,812 ) $ ( 41,466 )

For the six months ended June 30:

(Loss) Gain Recognized in Comprehensive Income (Effective Portion) Income Statement Location Gain Reclassified from AOCI to Income (Effective Portion) Total Consolidated Interest Expense

2020 2019 2020 2019 2020 2019

Cash flow hedge

Interest rate swaps $ — $ ( 11,818 ) Interest expense $ — $ 11,818

Net investment hedge

Cross currency swaps — 3,868 N/A — —

Total $ — $ ( 7,950 ) $ — $ 11,818 $ ( 69,922 ) $ ( 96,119 )

Derivatives Not Designated as Hedging Instruments

AUD to USD Foreign Currency Swaps

2 unchanged sentences

On April 8, 2020, Laureate entered into a net settlement agreement for this swap to deliver USD $ 12,999 and receive the notional amount of AUD 21,000 at a rate of exchange of 0.6190 USD per 1 AUD.

This net settlement was executed on April 15, 2020, which resulted in a gain and proceeds received of $ 714 .

As of March 31, 2020, this swap had an estimated value of $ 802 which was recorded in Prepaid expenses and other current assets on our Consolidated Balance Sheets.

This net settlement was executed on April 15, 2020, which resulted in a realized gain and proceeds received of $ 714 .

This amount is included in (Loss) gain on derivatives on the Consolidated Statement of Operations for the three months and six months ended June 30, 2020, and is included in Payments for settlement of derivative contracts on the Consolidated Statement of Cash Flows for the six months ended June 30, 2020.

This swap was not designated as a hedge for accounting purposes.

On April 8, 2020, Laureate entered into a new AUD to USD swap agreement with a notional amount of AUD 21,000 .

On the maturity date of June 15, 2020, Laureate will deliver the notional amount and receive USD $ 12,921 at a rate of exchange of 0.6153 USD per 1 AUD.

On the maturity date of June 15, 2020, Laureate delivered the notional amount and received USD $ 12,921 at a rate of exchange of 0.6153 USD per 1 AUD, resulting in a realized loss of $ 1,340 .

This amount is included in (Loss) gain on derivatives on the Consolidated Statements of Operations for the three months and six months ended June 30, 2020 and is included in Payments for settlement of derivative contracts on the Consolidated Statement of Cash Flows for the six months ended June 30, 2020.

This swap was not designated as a hedge for accounting purposes.

19 unchanged sentences

In addition, at that time, Chile also elected to repay a portion of the principal balance outstanding for certain notes payable.

This payment was included in Payments for settlement of derivative contracts on the consolidated statement of cash flows for the three months ended March 31, 2019.

This payment is included in Payments for settlement of derivative contracts on the Consolidated Statement of Cash Flows for the six months ended June 30, 2019.

The CLP to UF cross currency and interest rate swaps were not designated as hedges for accounting purposes.

Components of the reported Gain on derivatives not designated as hedging instruments in the Consolidated Statements of Operations were as follows:

For the three months ended March 31, 2020 2019

Unrealized Gain

Cross currency and interest rate swaps $ 802 $ 6,576

Realized Loss

Cross currency and interest rate swaps — ( 1,393 )

Components of the reported (Loss) gain on derivatives not designated as hedging instruments in the Consolidated Statements of Operations were as follows:

For the three months ended June 30, For the six months ended June 30,

2020 2019 2020 2019

Cross currency and interest rate swaps

Gain on derivatives, net $ 802 $ 5,183

Unrealized (loss) gain $ ( 802 ) $ ( 2,555 ) $ — $ 4,021

Realized (loss) gain ( 626 ) 5,187 ( 626 ) 3,794

(Loss) gain on derivatives, net $ ( 1,428 ) $ 2,632 $ ( 626 ) $ 7,815

Credit Risk and Credit-Risk-Related Contingent Features

1 unchanged sentence

The amount of our credit risk exposure is equal to the fair value of the derivative when any of the derivatives are in a net gain position.

As of March 31, 2020 and December 31, 2019, the estimated fair values of derivatives in a gain position were $ 802 and $ 0 , respectively.

Laureate has limited its credit risk by only entering into derivative transactions with highly rated major financial institutions.

Laureate limits its credit risk by only entering into derivative transactions with highly rated major financial institutions.

We have not entered into collateral agreements with our derivatives’ counterparties.

At March 31, 2020, one institution was rated A1 and accounted for all of Laureate’s derivative credit risk exposure.

As of June 30, 2020 and December 31, 2019, we did not hold any derivatives in a net gain position, and thus had no credit risk.

Laureate’s agreements with its derivative counterparties contain a provision under which we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to a default on the indebtedness.

As of March 31, 2020 and December 31, 2019, we did not hold any derivatives in a net loss position, and thus had no derivative obligations.

As of June 30, 2020 and December 31, 2019, we did not hold any derivatives in a net loss position, and thus had no derivative obligations.

Laureate uses the liability method to account for income taxes.

2 unchanged sentences

Laureate's income tax provisions for all periods consist of federal, state and foreign income taxes.

The tax provisions for the three months ended March 31, 2020 and 2019 were based on estimated full-year effective tax rates, after giving effect to significant items related specifically to the interim periods, including the mix of income for the period between higher-taxed and lower-taxed jurisdictions.

The tax provisions for the three months ended June 30, 2020 and 2019 were based on estimated full-year effective tax rates, after giving effect to significant items related specifically to the interim periods, including the mix of income for the period between higher-taxed and lower-taxed jurisdictions.

Laureate has operations in multiple countries at various statutory tax rates or which are tax-exempt entities, and other operations that are loss-making entities for which it is not more likely than not that a tax benefit will be realized on the loss.

Laureate records interest and penalties related to uncertain tax positions as a component of Income tax expense.

During the three months ended March 31, 2020, Laureate recognized interest and penalties related to income taxes of $ 647 .

Laureate had $ 17,210 of accrued interest and penalties as of March 31, 2020.

During the three months ended March 31, 2020, Laureate derecognized $ 4,320 of previously accrued interest and penalties.

During the three months ended June 30, 2020, Laureate recognized interest and penalties related to income taxes of $ 1,886 .

Laureate had $ 17,213 of accrued interest and penalties as of June 30, 2020.

During the three months ended June 30, 2020, Laureate derecognized $ 2,199 of previously accrued interest and penalties.

Approximately $ 19,964 of unrecognized tax benefits, if recognized, will affect the effective income tax rate.

2 unchanged sentences

The result was a discrete tax benefit of approximately $ 222,000 that represents the book-and-tax basis difference of the intellectual property, measured based on the intellectual property’s current fair value and applicable Dutch statutory tax rate.

Determining the fair value of the intellectual

property, which serves as the tax basis of the deferred tax asset, required management to make assumptions and estimates that are inherently uncertain.

Determining the fair value of the intellectual property, which serves as the tax basis of the deferred tax asset, required management to make assumptions and estimates that are inherently uncertain.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law.

The CARES Act provides a substantial stimulus and assistance package intended to address the impact of the COVID-19 pandemic, including tax relief and government loans, grants and investments.

The CARES Act did not have a significant impact on Laureate’s consolidated financial statements for the three months ended March 31, 2020.

We continue to monitor any effects that may result from the CARES Act as well as any similar stimulus legislation enacted in other jurisdictions where Laureate has material operations.

The CARES Act did not have a significant impact on Laureate’s consolidated financial statements for the three and six months ended June 30, 2020.

We continue to monitor any effects that

may result from the CARES Act as well as any similar stimulus legislation enacted in other jurisdictions where Laureate has material operations.

In July 2020, the U.S.

Treasury Department released final regulations addressing global intangible low-taxed income (GILTI).

Among other changes, these regulations provide an election to exclude certain foreign income of foreign corporations from GILTI if such income is deemed high-taxed in a foreign jurisdiction.

These elective provisions may be applied retroactively and accordingly require significant analysis of the potential financial statement impacts.

The Company is in the process of quantifying the impact of these regulations on the prior and current periods and is not able to estimate its impact at this time.

Earnings (Loss) Per Share

5 unchanged sentences

The following tables summarize the computations of basic and diluted earnings (loss) per share:

For the three months ended March 31, 2020 2019

For the three months ended June 30, 2020 2019

Numerator used in basic and diluted earnings (loss) per common share for continuing operations:

Income (loss) from continuing operations $ 124,082 $ ( 117,069 )

(Loss) income from continuing operations $ ( 301,753 ) $ 107,820

Net loss (income) attributable to noncontrolling interests 27 ( 6 )

Loss from continuing operations attributable to Laureate Education, Inc.

(Loss) income from continuing operations attributable to Laureate Education, Inc.

( 301,726 ) 107,814

Accretion of redemption value of redeemable noncontrolling interests and equity 201 194

Net income (loss) from continuing operations available to common stockholders for basic and diluted earnings (loss) per share 124,046 ( 116,848 )

Net (loss) income from continuing operations available to common stockholders for basic and diluted earnings (loss) per share $ ( 301,525 ) $ 108,008

Numerator used in basic and diluted earnings (loss) per common share for discontinued operations:

(Loss) income from discontinued operations, net of tax $ ( 12,171 ) $ 30,280

(Loss) gain on sales of discontinued operations, net of tax ( 21,962 ) 248,005

Loss (income) attributable to noncontrolling interests 1,291 ( 2,980 )

Gain on sales of discontinued operations, net of tax 2,296 641,516

Loss attributable to noncontrolling interests 3,778 1,982

Net (loss) income from discontinued operations for basic and diluted earnings (loss) per share $ ( 6,097 ) $ 673,778

5 unchanged sentences

Basic and diluted earnings (loss) per share:

(Loss) income from continuing operations $ ( 1.44 ) $ 0.48

(Loss) income from discontinued operations ( 0.03 ) 3.00

Basic and diluted (loss) earnings per share $ ( 1.47 ) $ 3.48

For the six months ended June 30, 2020 2019

Numerator used in basic and diluted earnings (loss) per common share for continuing operations:

Loss from continuing operations $ ( 177,671 ) $ ( 9,249 )

Net loss (income) attributable to noncontrolling interests 34 ( 49 )

Loss from continuing operations attributable to Laureate Education, Inc.

( 177,637 ) ( 9,298 )

Accretion of redemption value of redeemable noncontrolling interests and equity 157 457

Net loss available to common stockholders for basic earnings (loss) per share $ ( 177,480 ) $ ( 8,841 )

Numerator used in basic and diluted earnings (loss) per common share for discontinued operations:

(Loss) income from discontinued operations, net of tax $ ( 15,975 ) $ 93,609

(Loss) gain on sales of discontinued operations, net of tax ( 19,666 ) 889,521

Loss (income) attributable to noncontrolling interests 5,070 ( 997 )

Net (loss) income from discontinued operations for basic and diluted earnings (loss) per share $ ( 30,571 ) $ 982,133

Denominator used in basic and diluted earnings (loss) per common share:

Basic and diluted weighted average shares outstanding 209,863 224,656

Basic and diluted earnings (loss) per share:

Loss from continuing operations $ ( 0.85 ) $ ( 0.04 )

(Loss) income from discontinued operations ( 0.15 ) 4.37

1 unchanged sentence

The following table summarizes the number of stock options, shares of restricted stock and restricted stock units (RSUs) that were excluded from the diluted EPS calculations because the effect would have been antidilutive:

For the three months ended March 31, 2020 2019

For the three months ended June 30, For the six months ended June 30,

2020 2019 2020 2019

Stock options 4,100 8,846 4,391 8,993

5 unchanged sentences

Our institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition and results of operations.

Except as set forth below, there have been no material changes to the laws and regulations affecting our higher education institutions that are described in our Annual Report on Form 10-K for the year ended December 31, 2019.

Australian Regulation

Since March 16, 2020, in response to the COVID-19 pandemic, with limited exceptions, courses at our two post-secondary educational institutions in Australia have been delivered online and are in compliance with all local regulations.

Brazilian Regulation

Since the declaration of a public health emergency by the Ministry of Health on February 3, 2020, there have been a number of legislative initiatives at the federal and local levels in Brazil to address the COVID-19 pandemic.

As a result of regulatory and operational restrictions created by social distancing mandates, no face-to-face classes may be conducted in any state in which we operate until each of the relevant government measures is lifted.

The Ministry of Education, however, authorized higher education institutions to transition from face-to-face classes to online classes within established limits.

Accordingly, all face-to-face campus activities at our Brazilian institutions have been suspended and transitioned to online instruction.

Subsequently, Provisional Presidential Act n.

934/2020 (the “Act”) waived legal requirements to observe an annual minimum of 200 school days.

The Act also permits institutions to shorten the duration of Medicine, Nursery, Pharmacy and Physiotherapy course lengths and accelerate student graduation after 75% completion of the normal required course and practicum work in order to quickly establish a contingent of available healthcare professionals.

In response to the transition from face-to-face classes to online classes due to COVID-19, legislative assemblies in several Brazilian states have passed laws requiring schools to discount tuition.

To date, with respect to the states in which we operate, only Rio de Janeiro and Paraiba have passed such laws.

These laws, however, are being challenged in the Brazilian Supreme Court by institutional associations.

Measures to restart face-to-face educational activities in Brazil will be implemented on a state-by-state and city-by-city basis.

To date, with respect to the states in which we operate, only São Paulo and Pernambuco have authorized the reopening of practical classes.

Chilean Regulation

There have been a number of initiatives in Chile to address the COVID-19 pandemic, including a declaration of a State of Constitutional Exception of Catastrophe, effective March 19, 2020, for 90 days, which provides broad powers to the government, including the power to limit free movement (quarantine, curfew measures and social isolation).

While authorities have not suspended educational activities, higher education institutions, including our institutions in Chile, have transitioned from face-to-face classes to online classes in order to comply with social distancing restrictions.

On June 15, 2020, the declaration of a State of Constitutional Exception of Catastrophe, which provides broad powers to the government, including the power to limit free movement (quarantine, curfew measures and social isolation), was extended for an additional 90 days.

The legislature currently is considering various proposals to provide financial aid to students, including measures that would require the institutions to provide direct financial relief.

The Superintendency of Higher Education has instituted an audit of over 45 higher education institutions to oversee the measures adopted in response to the health emergency caused by COVID-19.

Four of our institutions—Universidad Andrés Bello, Universidad de Las Américas, Instituto Profesional AIEP and Instituto Profesional Escuela Moderna de Música—are included in this audit.

Each of these institutions has provided responses to the Superintendency as part of the audit and will continue to cooperate with any further inquiry.

Mexican Regulation

On March 30, 2020, the Ministry of Health declared a national sanitary emergency in response to the COVID-19 pandemic.

On March 31, 2020, the Ministry of Health suspended all non-essential activities, including higher education, and urged people to stay home from March 31, 2020 through April 30, 2020, which has now been extended through May 30, 2020 for most of the country’s municipalities.

Accordingly, all face-to-face campus activities at our Mexican institutions have been suspended and transitioned to online instruction.

On May 29, 2020, the Ministry of Economy, the Health Ministry, the Labor and Social Security Ministry and the Mexican Institute of Social Security issued the Specific Technical Guidelines for the Reopening of Economic Activities, wherein it has established a color-coded sanitary alert system—red, orange, yellow and green—for gradually reopening activities by region (municipality or state).

While certain administrative activities have resumed in a limited manner in some regions, face-to-face educational activities will not be permitted to resume until a region is assigned a green color code.

Peruvian Regulation

On March 9, 2020, Peru declared a national sanitary emergency until June 9, 2020 and subsequently enacted a number of decrees to address the COVID-19 pandemic.

As a result of the regulatory and operational restrictions created by social distancing mandates, no face-to-face classes may be conducted in any of our institutions until each of the relevant government measures is lifted.

The Ministry of Education, however, authorized higher education institutions to substitute online for face-to-face classes, lifting temporarily the 50% limit in force for both universities and technical-vocational institutes.

Accordingly, all three institutions in Peru transitioned to online delivery of classes.

While Peru’s national sanity emergency has been extended until September 7, 2020, effective July 1, 2020, Peru entered phase three of its economic reactivation plan, which lifted restrictions on some educational activities, i.e., research and practical classes in laboratories needed for online classes, as well as library services.

Fair Value Measurement

14 unchanged sentences

Holding other inputs constant, a significant increase (decrease) in our own credit risk would result in a significantly lower (higher) fair value measurement for the Company's derivative instruments.

Laureate’s financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2020 were as follows:

Total Level 1 Level 2 Level 3

Derivative instruments $ 802 $ — $ — $ 802

As of December 31, 2019, Laureate did not hold any financial assets or liabilities that are measured at fair value on a recurring basis.

The changes in our Level 3 Derivative instruments measured at fair value on a recurring basis for the three months ended March 31, 2020 were as follows:

As of June 30, 2020 and December 31, 2019, Laureate did not hold any financial assets or liabilities that are measured at fair value on a recurring basis.

The changes in our Level 3 Derivative instruments measured at fair value on a recurring basis for the six months ended June 30, 2020 were as follows:

Balance at December 31, 2019 $ —

Gain included in earnings:

Unrealized gain, net 802

Balance at March 31, 2020 $ 802

The following table presents quantitative information regarding the significant unobservable inputs and valuation techniques utilized in the fair value measurements of the Company's assets/(liabilities) classified as Level 3 as of March 31, 2020:

Fair Value at March 31, 2020 Valuation Technique Unobservable Input Range/Input Value

Derivative instruments - cross currency swaps $ 802 Discounted Cash Flow Credit Risk 8.08 %

Loss included in earnings:

Realized loss, net ( 626 )

Settlements 626

Balance at June 30, 2020 $ —

Laureate had no fair value measurements classified as Level 3 as of June 30, 2020.

Supplemental Cash Flow Information

Reconciliation of Cash and cash equivalents and Restricted cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets, as well as the March 31, 2019 balance.

The March 31, 2020 and March 31, 2019 balances sum to the amounts shown in the Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019:

March 31, 2020 March 31, 2019 December 31, 2019

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets, as well as the June 30, 2019 balance.

The June 30, 2020 and June 30, 2019 balances sum to the amounts shown in the Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019:

June 30, 2020 June 30, 2019 December 31, 2019

Cash and cash equivalents $ 629,551 $ 209,831 $ 339,629

4 unchanged sentences

See also Note 11, Commitments and Contingencies.

Subsequent Events

Agreement to Sell Australia and New Zealand Operations

On July 29, 2020, LEI AMEA Investments B.V., a Netherlands private limited liability company (the ANZ Seller), an indirect, wholly owned subsidiary of the Company, and the Company, solely as guarantor of certain of ANZ Seller’s obligations thereunder, entered into a Sale and Purchase Agreement (the ANZ Purchase Agreement) with SEI Newco Inc., a Delaware corporation (the ANZ Purchaser), and Strategic Education, Inc., a Maryland corporation (the ANZ Purchaser’s Guarantor).

Pursuant to the ANZ Purchase Agreement, the ANZ Seller has agreed to sell to the ANZ 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 the indirect owner of Blue Mountains International Hotel Management School, and (iv) LEI New Zealand, a New Zealand company and the indirect owner of Media Design School (collectively, the ANZ Target Companies).

The ANZ Purchaser’s Guarantor will guarantee the obligations of the ANZ Purchaser.

The purchase price is $ 642,700 , subject to certain closing adjustments based on the aggregate working capital and indebtedness of the ANZ Target Companies and their subsidiaries and the forecasted performance of the ANZ Target Companies and their subsidiaries.

The closing of the transaction is expected to occur by the first quarter of 2021 and is subject to customary closing conditions, including regulatory approvals in Australia and New Zealand and a mutual right of termination based on the occurrence of a material adverse change in certain forecasted results of the ANZ Target Companies and their subsidiaries.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements