What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-06 compared with 2020-05-07 · 409 added, 163 removed, 489 unchanged (54% of the section changed)

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While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results.

Important factors that could cause actual results to differ materially from our expectations, including, without limitation, in conjunction with the forward-looking statements included in this Form 10-Q, are disclosed in “Item 1—Business,” and “Item 1A—Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the 2019 Form 10-K), as updated in Part II, “Item 1A—Risk Factors” in this Form 10-Q.

Some of the factors that we believe could affect our results include:

• the risks and uncertainties related to the long-term effect 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;

Important factors that could cause actual results to differ materially from our expectations, including, without limitation, in conjunction with the forward-looking statements included in this Form 10-Q, are disclosed in “Item 1—Business,” and “Item 1A—Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the 2019 Form 10-K), as updated by Part II, “Item 1A—Risk Factors” of our Form 10-Q for the quarter ended March 31, 2020 and in Part II, “Item 1A—Risk Factors” of this Form 10-Q.

Some of the factors that we believe could affect our results include:d

• the risks and uncertainties related to the long-term effect to the Company of the COVID-19 pandemic and its resurgence, including, but not limited to, its effect on student enrollment, tuition pricing, and collections in future periods;

• the risks associated with conducting our global operations, including complex business, foreign currency, political, legal, regulatory, tax and economic risks;

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• Recently Adopted Accounting Standards.

We have built the largest international portfolio of degree-granting higher education institutions, primarily focused in Latin America, with 873,300 students enrolled at our 29 institutions in nine countries on more than 150 campuses included in our continuing operations as of March 31, 2020, which we collectively refer to as the Laureate International Universities network.

We have built the largest international portfolio of degree-granting higher education institutions, primarily focused in Latin America, with 834,500 students enrolled at our 29 institutions in nine countries on more than 150 campuses included in our continuing operations as of June 30, 2020, which we collectively refer to as the Laureate International Universities network.

We believe the global higher education market presents an attractive long-term opportunity, primarily because of the large and growing imbalance between the supply and demand for quality higher education around the world.

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Our outcomes-driven strategy is focused on enabling students to prosper and thrive in the dynamic and evolving knowledge economy.

As of March 31, 2020, our international portfolio of 29 institutions comprised 28 institutions we owned or controlled, and one addition al institution that we managed through a joint venture arrangement.

As of June 30, 2020, our international portfolio of 29 institutions comprised 28 institutions we owned or controlled, and one addition al institution that we managed through a joint venture arrangement.

We have six operating segments as described below.

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Our sixth segment, Online & Partnerships, includes fully online institutions that operate globally.

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.

In response to the COVID-19 pandemic, we h ave temporarily tran sitioned 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.

The outbreak of COVID-19 has caused domestic and global disruption in operations for institutions of higher education.

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.

In addition, regulatory activity that occurs in response to COVID-19 could have an adverse effect on our business if, for example, legislation was passed to suspend or reduce student tuition payments in any of the markets in which we operate.

As a result, the

full impact of COVID-19 and the scope of any adverse effect on the Company’s operations, including any potential impairments, which could be material, cannot be fully determined at this time.

See also “Part II, Item 1A–Risk Factors–An epidemic, pandemic or other public health emergency, such as the recent outbreak of a novel strain of coronavirus (COVID-19), could have a material adverse effect on our business, financial condition, cash flows and results of operations.”

addition, regulatory activity that occurs in response to COVID-19 could have an adverse effect on our business if, for example, legislation was passed to suspend or reduce student tuition payments in any of the markets in which we operate.

As a result, the full impact of COVID-19 and the scope of any adverse effect on the Company’s operations, including any potential impairments, which could be material, cannot be fully determined at this time.

The COVID-19 pandemic has affected the academic calendars at a number of our institutions, resulting in the deferral of revenue to the second half of 2020 that would otherwise have been recognized by June 30, 2020, if the academic calendars had not been changed.

For the three and six months ended June 30, 2020, revenue of approximately $40 million and $80 million, respectively, was deferred to the second half of 2020, due to changes in the academic calendars of our institutions, primarily as a result of the COVID-19 pandemic.

Discontinued Operations

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Augustine for Health Sciences, LLC (St.

Augustine) and NewSchool of Architecture and Design, LLC (NSAD) in the United States, and Centro Universitário do Norte (UniNorte), an institution in the Brazil segment that was included in continuing operations as it was not part of the strategic shift.

Augustine), NewSchool of Architecture and Design, LLC (NSAD) in the United States, and Centro Universitário do Norte (UniNorte), an institution in the Brazil segment that was included in continuing operations as it was not part of the strategic shift.

We have not yet completed the divestitures of our subsidiaries in Honduras and Malaysia.

See also Note 4, Discontinued Operations and Assets Held for Sale and Note 5, Dispositions, in our consolidated financial statements included elsewhere in this Form 10-Q.

On July 29, 2020, the Company entered into an agreement to sell its Australia and New Zealand operations, which did not meet the held-for-sale criteria as of June 30, 2020.

The Company expects to reclassify Australia and New Zealand as discontinued operations in the third quarter of 2020, when the held-for-sale criteria were met.

See also Note 4, Discontinued Operations and Assets Held for Sale, Note 5, Dispositions, and Note 21, Subsequent Events, in our consolidated financial statements included elsewhere in this Form 10-Q.

Exploration of Strategic Alternatives

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 this process of exploring strategic alternatives, if the Company should determine that the estimated fair value of any of its remaining businesses is less than its carrying value, the Company will be required to record impairment charges that could be material.

In accordance with ASC 360, while the Company explores these strategic alternatives and until the held-for-sale criteria are met, the long-lived assets in these businesses continue to be classified as held and used and are evaluated for impairment under that model, based on the cash flows expected to be generated by the use of those asset groups in operations.

Once the held-for-sale criteria are met, the long-lived assets are recorded at the lower of their carrying value or fair value, less cost to sell.

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.

If the Company determines that the estimated fair value of any business is less than its carrying value, the Company will be required to record an impairment charge that could be material.

See Note 8, Goodwill and Loss on Impairment of Assets, in our consolidated financial statements included elsewhere in this Form 10-Q for discussion of the impairment charge that the Company recorded during the second quarter of 2020.

While the Company explores these strategic alternatives and until the held-for-sale criteria are met, the long-lived assets in these businesses continue to be classified as held and used and are evaluated for impairment under that model, based on the cash flows expected to be generated by the use of those asset groups in operations.

Should the held-for-sale criteria be met, the long-lived assets will be recorded at the lower of their carrying value or fair value, less cost to sell.

Because completing a sale, spin-off, or other transaction may be challenging due to the regulatory environment, market conditions and other factors, the values that may be realized from any potential transactions could be less than if these businesses remained held and used.

If the Company decides to sell any of its businesses, the carrying value used to evaluate the business for potential impairment and to determine the gain or loss on sale will include any accumulated foreign currency translation (FX) losses associated with that business.

In recent years, the U.S.

dollar has strengthened against many international currencies, including the Brazilian Real, the Chilean Peso and the Mexican Peso.

As a result, the Company has significant FX losses recorded within stockholders’ equity, as a component of accumulated other comprehensive income.

As of June 30, 2020, and December 31, 2019, the Company’s consolidated FX loss totaled approximated $1.4 billion and $1.1 billion, respectively.

Upon the sale of a business, any FX loss related to that business would be recognized as part of the gain or loss on sale.

In addition, upon classification of a business as held-for-sale, the cumulative translation losses would be included as part of the carrying value of that business when evaluating it for potential impairment.

Presented in the table below are the Company’s businesses, by asset group/reporting unit, that carry the most significant FX losses.

Asset Group/ Reporting Unit Foreign Currency Translation Losses

(in millions) June 30, 2020 December 31, 2019

Chile $ 249 $ 211

Brazil 488 407

Mexico 642 461

Total Chile, Brazil and Mexico $ 1,379 $ 1,079

While the Company has not agreed to divest any of the institutions in the regions shown in the table above, the substantial amounts of FX losses attributable to these businesses would have a material effect on the amount of gain or loss that would result from the sale of those businesses.

Moreover, such FX losses could result in a material impairment charge (or increase it) if the held-for-sale criteria are met and the carrying value of a held-for-sale business exceeds its fair value, less cost to sell.

To date, the Company has not identified impairment indicators related to its Brazil and Mexico asset groups/reporting units based on the Company’s estimates of future cash flows assuming that the businesses are held and used.

The Company did, however, identify an impairment indicator related to its Chile asset group/reporting unit during the second quarter of 2020 and recorded an impairment charge.

See Note 8, Goodwill and Loss on Impairment of Assets, in our consolidated financial statements included elsewhere in this Form 10-Q for further discussion.

As a result of the considerations highlighted above and the significant FX losses, the Brazil and Mexico asset groups/reporting units may be at risk of impairment if the Company commits to a plan to sell its interests in any of these businesses.

The Company will continue to monitor for impairment indicators as additional information becomes known.

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.

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The Corporate segment also contains the eliminations of intersegment revenues and expenses.

The following information for our reportable segments in continuing operations is presented as of March 31, 2020:

The following information for our reportable segments in continuing operations is presented as of June 30, 2020:

Countries Institutions Enrollment 2020 YTD Revenues ($ in millions) (1)

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We will continue to develop and implement necessary changes that enable us to comply with such laws and regulations.

See Part II, “Item 1A—Risk Factors—An epidemic, pandemic or other public health emergency, such as the recent outbreak of a novel strain of coronavirus (COVID-19), could have a material adverse effect on our business, financial condition, cash flows and results of operations.”See also “Item 1A—Risk Factors—Risks Relating to Our Continuing Business—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,” “Risk Factors—Risks Relating to Our Continuing Business—Political and regulatory developments in Chile may materially adversely affect us,” “Risk Factors—Risks Relating to Our Highly Regulated Industry in the United States,” and “Item 1—Business—Industry Regulation,” in our 2019 Form 10-K for a detailed discussion of our different regulatory environments.

See Part II, “Item 1A—Risk Factors—Political and regulatory developments in Chile may materially adversely affect us.” See also Part II, “Item 1A—Risk Factors—An epidemic, pandemic or other public health emergency, such as the recent outbreak of a novel strain of coronavirus (COVID-19), could have a material adverse effect on our business, financial condition, cash flows and results of operations” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

See also “Item 1A—Risk Factors—Risks Relating to Our Continuing Business—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,” “Risk Factors—Risks Relating to Our Highly Regulated Industry in the United States,” and “Item 1—Business—Industry Regulation,” in our 2019 Form 10-K for a detailed discussion of our different regulatory environments.

Chilean Regulatory Developments

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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

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.

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Additionally, we will continue to evaluate our accounting treatment of the Chilean non-profit universities to determine whether we can continue to consolidate them.

In October 2020, Chileans are scheduled to vote on whether Chile should create a new constitution;

see Part II, “Item 1A—Risk Factors—Political and regulatory developments in Chile may materially adversely affect us.”

Key Business Metric

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Due to this seasonality, revenues and profits in any one quarter are not necessarily indicative of results in subsequent quarters and may not be correlated to new enrollment in any one quarter.

Additionally, seasonality may be affected due to other events, such as the COVID-19 pandemic, which changed the academic calendar at many of our institutions.

See “Item 1A—Risk Factors—Risks Relating to Our Continuing Business—We experience seasonal fluctuations in our results of operations” in our 2019 Form 10-K.

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Results from the Discontinued Operations

The results of operations of our Discontinued Operations for the three months ended March 31, 2020 and 2019 were as follows:

The results of operations of our Discontinued Operations for the three and six months ended June 30, 2020 and 2019 were as follows:

For the three months ended For the six months ended

June 30, June 30,

(in millions) 2020 2019 2020 2019

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Other direct costs 23.3 126.2 50.8 278.6

Operating income 5.7 70.3

Loss on impairment of assets 10.0 — 10.0 —

Operating (loss) income (7.7) 30.6 (2.0) 100.9

Other non-operating (expense) income (2.6) 3.4 (10.6) 6.5

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(Loss) income from discontinued operations, net of tax (12.2) 30.3 (16.0) 93.6

(Loss) gain on sales of discontinued operations, net of tax (22.0) 248.0

Gain (loss) on sales of discontinued operations, net of tax 2.3 641.5 (19.7) 889.5

Net (loss) income from discontinued operations $ (9.9) $ 671.8 $ (35.6) $ 983.1

Enrollments at our discontinued operations as of March 31, 2020 and March 31, 2019 were 74,000 and 161,400, respectively.

Sales Completed during the Three Months Ended March 31, 2020

Enrollments at our discontinued operations as of June 30, 2020 and June 30, 2019 were 37,200 and 113,600, respectively.

Six Months Ended June 30, 2020

On January 10, 2020, we sold our operations in Costa Rica, which resulted in a pre-tax loss of approximately $18.6 million.

On March 6, 2020, we sold the operations of NSAD, which resulted in a pre-tax loss of approximately $5.7 million.

Sales Completed during the Three Months Ended March 31, 2019

During the second quarter of 2020, we recorded an impairment charge of $10.0 million 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.

Six Months Ended June 30, 2019

On February 1, 2019, we sold the operations of St.

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Accordingly, the Company reversed the liability and recognized additional gain on the sale of LEILY of approximately $13.7 million.

On April 8, 2019, we sold Monash South Africa as well as the real estate associated with that institution, which resulted in a gain of approximately $2.3 million.

On May 9, 2019, we sold our operations in India, which resulted in a gain of approximately $19.5 million.

On May 31, 2019, we sold our institutions in Spain and Portugal, which resulted in a gain of approximately $618.0 million.

Results of Operations

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Summary Comparison of Consolidated Results

Discussion of Significant Items Affecting the Consolidated Results for the Three Months Ended March 31, 2020 and 2019

Three Months Ended March 31, 2020

Discussion of Significant Items Affecting the Consolidated Results for the Six Months Ended June 30, 2020 and 2019

Six Months Ended June 30, 2020

During the first quarter of 2020, the Company recorded an impairment charge of $3.8 million primarily related to the write-off of capitalized curriculum development costs for a program that the Company decided to stop developing.

Three Months Ended March 31, 2019

During the second quarter of 2020, the Company recorded impairment charges of approximately $418.0 million related to Chile and $27.1 million related to the Brazil enrollment to graduation cycle (E2G) software assets, as described in Note 8, Goodwill and Loss on Impairment of Assets, in our consolidated financial statements included elsewhere in this Form 10-Q.

Six Months Ended June 30, 2019

During the first quarter of 2019, we used approximately $340.0 million of the net proceeds from the sale of St.

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In addition, the Company elected to repay approximately $35.0 million of the approximately $51.7 million principal balance outstanding for certain notes payable at a real estate subsidiary in Chile.

In connection with these debt repayments, the Company recorded a loss on debt extinguishment of $10.6 million, primarily related to the write off of a pro-rata portion of the unamortized deferred financing costs associated with the repaid debt balances.

This loss is included in other non-operating income (expense) in the table below.

Comparison of Consolidated Results for the Three Months Ended March 31, 2020 and 2019

costs associated with the repaid debt balances.

This loss is included in other non-operating income (expense) in the year-to-date table below.

During the second quarter of 2019, we fully repaid the remaining balance outstanding under the 2024 Term Loan, using proceeds received from the sale of our operations in India, Spain and Portugal.

The remaining proceeds were used to repay borrowings outstanding under the senior secured revolving credit facility.

In connection with these debt repayments, the Company recorded a loss on debt extinguishment of $15.6 million related to the write off of a pro-rata portion of the unamortized deferred financing costs associated with the repaid debt balances, as well as the debt discount associated with the 2024 Term Loan.

This loss is included in other non-operating (expense) income in the tables below.

Comparison of Consolidated Results for the Three Months Ended June 30, 2020 and 2019

Better/(Worse)

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Loss on impairment of assets 445.1 0.5 nm

Operating loss (117.1) (92.0) (27) %

Operating (loss) income (254.8) 217.2 nm

Interest expense, net of interest income (32.8) (38.7) 15 %

Other non-operating (expense) income (6.6) 3.6 nm

(Loss) income from continuing operations before income taxes and equity in net income of affiliates (294.2) 182.2 nm

Income tax expense (7.5) (74.6) 90 %

Equity in net income of affiliates, net of tax — 0.2 (100) %

(Loss) income from continuing operations (301.8) 107.8 nm

(Loss) income from discontinued operations, net of tax (12.2) 30.3 (140) %

Gain on sales of discontinued operations, net of tax 2.3 641.5 (100) %

Net (loss) income (311.6) 779.6 (140) %

Net loss attributable to noncontrolling interests 3.8 2.0 (90) %

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

$ (307.8) $ 781.6 (139) %

nm - percentage changes not meaningful

For further details on certain discrete items discussed below, see “Discussion of Significant Items Affecting the Consolidated Results.”

Comparison of Consolidated Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019

Revenues decreased by $200.7 million to $791.7 million for the three months ended June 30, 2020 (the 2020 fiscal quarter) from $992.4 million for the three months ended June 30, 2019 (the 2019 fiscal quarter).

The effect of a net change in foreign currency exchange rates decreased revenues by $113.9 million, mainly driven by the weakening of the Brazilian Real, the Chilean Peso and the Mexican Peso against the USD.

The incremental impact of the disposition of UniNorte during the fourth quarter of 2019 decreased revenues by $12.0 million.

The effect of changes in tuition rates and enrollments in programs at varying price points (product mix), pricing and timing decreased revenues by $56.2 million compared to the 2019 fiscal quarter, attributable primarily to the effect of the COVID-19 pandemic on the academic calendar timing at a number of our institutions.

Additionally, average total organic enrollment at a majority of our institutions decreased during the 2020 fiscal quarter, decreasing revenues by $20.7 million compared to the 2019 fiscal quarter.

The overall decrease in organic enrollment was partially offset by an increase in our Rest of World segment.

Other Corporate and Eliminations changes accounted for an increase in revenues of $2.1 million.

Direct costs and general and administrative expenses combined decreased by $173.5 million to $601.3 million for the 2020 fiscal quarter from $774.8 million for the 2019 fiscal quarter.

The effect of a net change in foreign currency exchange rates decreased costs by $79.9 million.

The incremental impact of the disposition of UniNorte decreased direct costs by $9.4 million.

The effect of operational changes decreased costs by $71.7 million, mainly driven by cost-saving initiatives to preserve

liquidity in the wake of the COVID-19 pandemic.

Additionally, changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets resulted in a year-over-year decrease in direct costs of $0.5 million.

Other Corporate and Eliminations expenses accounted for a decrease in costs of $12.0 million.

Operating (loss) income changed by $472.0 million to a loss of $(254.8) million for the 2020 fiscal quarter from an income of $217.2 million for the 2019 fiscal quarter.

This change was primarily a result of the impairment charges of $445.1 million during the 2020 fiscal quarter and, to a lesser extent, weakened foreign currency exchange rates compared to the 2019 fiscal quarter.

These decreases in operating income were partially offset by increased operating income in our Rest of World segment, combined with lower operating charges at Corporate.

Interest expense, net of interest income decreased by $5.9 million to $32.8 million for the 2020 fiscal quarter from $38.7 million for the 2019 fiscal quarter.

The decrease in interest expense was primarily attributable to lower average debt balances.

Other non-operating (expense) income changed by $10.2 million to expense of $(6.6) million for the 2020 fiscal quarter from income of $3.6 million for the 2019 fiscal quarter.

This change was primarily attributable to:

(1) a loss on foreign currency exchange for the 2020 fiscal quarter compared to a gain for the 2019 fiscal quarter, for a change of $13.8 million;

(2) other non-operating expense for the 2020 fiscal quarter compared to income for the 2019 fiscal quarter, for a change of $8.1 million, primarily related to an increase in the estimated fair value of an equity security held at Corporate during the 2019 fiscal quarter;

and (3) a loss on derivative instruments for the 2020 fiscal quarter compared to a gain for the 2019 fiscal quarter, for a change of $4.0 million.

These decreases in other non-operating income were partially offset by a year-over-year decrease in loss on debt extinguishment of $15.6 million, related to the write off of deferred financing costs and debt discount as a result of the repayments of debt during the 2019 fiscal quarter.

In addition, during the 2020 fiscal quarter, we recognized a gain on disposal of subsidiaries of $0.1 million.

Income tax expense decreased by $67.1 million to $7.5 million for the 2020 fiscal quarter from $74.6 million for the 2019 fiscal quarter.

This decrease in income tax expense was primarily due to changes in the mix of pre-tax book income attributable to taxable and non-taxable entities in various taxing jurisdictions and a tax benefit related to changes in reserves on uncertain tax positions due to statute expirations and divestitures.

(Loss) income from discontinued operations, net of tax changed by $42.5 million to a loss of $(12.2) million for the 2020 fiscal quarter from an income of $30.3 million for the 2019 fiscal quarter.

This change was the result of the sales during 2019 of discontinued operations that generated income during the 2019 fiscal quarter, combined with an impairment charge of $10.0 million during the 2020 fiscal quarter related to assets that were held for sale.

Gain on sales of discontinued operations, net of tax decreased by $639.2 million to $2.3 million for the 2020 fiscal quarter, compared to $641.5 million for the 2019 fiscal quarter, related to the sales of our subsidiaries in South Africa, India, Spain and Portugal in 2019.

Comparison of Consolidated Results for the Six Months Ended June 30, 2020 and 2019

Better/(Worse)

(in millions) 2020 2019 2020 vs.

Revenues $ 1,320.2 $ 1,593.5 (17) %

Direct costs 1,146.9 1,346.6 15 %

General and administrative expenses 96.4 121.3 21 %

Loss on impairment of assets 448.9 0.5 nm

Operating (loss) income (371.9) 125.1 nm

Interest expense, net of interest income (66.2) (89.7) 26 %

Other non-operating income (expense) 32.7 (6.2) nm

Loss from continuing operations before income taxes and equity in net income of affiliates (111.2) (152.9) 27 %

Income tax benefit 235.1 35.8 nm

Equity in net income of affiliates, net of tax 0.2 — nm

Income (loss) from continuing operations 124.1 (117.1) nm

(Loss) income from continuing operations before income taxes and equity in net income of affiliates (405.4) 29.2 nm

Income tax benefit (expense) 227.6 (38.7) nm

Equity in net income of affiliates, net of tax 0.2 0.2 — %

Loss from continuing operations (177.7) (9.2) nm

(Loss) income from discontinued operations, net of tax (16.0) 93.6 (117) %

(Loss) gain on sales of discontinued operations, net of tax (19.7) 889.5 (102) %

Net income 98.3 194.3 (49) %

Net loss (income) attributable to noncontrolling interests 1.3 (3.0) (143) %

Net income attributable to Laureate Education, Inc.

Net (loss) income (213.3) 973.9 (122) %

Net loss (income) attributable to noncontrolling interests 5.1 (1.0) nm

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

$ (208.2) $ 972.8 (121) %

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For further details on certain discrete items discussed below, see “Discussion of Significant Items Affecting the Consolidated Results.”

Comparison of Consolidated Results for the Three Months Ended March 31, 2020 to the Three Months Ended March 31, 2019

Revenues decreased by $72.5 million to $528.6 million for the three months ended March 31, 2020 (the 2020 fiscal quarter) from $601.1 million for the three months ended March 31, 2019 (the 2019 fiscal quarter).

The effect of a net change in foreign currency exchange rates decreased revenues by $40.5 million.

The incremental impact of disposition decreased revenues by $7.4 million, related to the sale of UniNorte during the fourth quarter of 2019.

Average total organic enrollment at a majority of our institutions decreased during the 2020 fiscal quarter, decreasing revenues by $3.4 million compared to the 2019 fiscal quarter.

Comparison of Consolidated Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019

Revenues decreased by $273.3 million to $1,320.2 million for the six months ended June 30, 2020 (the 2020 fiscal period) from $1,593.5 million for the six months ended June 30, 2019 (the 2019 fiscal period).

The effect of a net change in foreign currency exchange rates decreased revenues by $154.5 million, mainly driven by the weakening of the Brazilian Real, the Chilean Peso and the Mexican Peso against the USD.

The incremental impact of dispositions decreased revenues by $19.4 million, related to the sale of UniNorte during the fourth quarter of 2019.

Average total organic enrollment at a majority of our institutions decreased during the 2020 fiscal period, decreasing revenues by $15.3 million compared to the 2019 fiscal period.

The overall decrease in organic enrollment was partially offset by an increase in our Rest of World segment.

The effect of changes in tuition rates and enrollments in programs at varying price points (“product mix”), pricing and timing decreased revenues by $21.8 million for the 2020 fiscal quarter, attributable primarily to the academic calendar and the timing of semester start dates in the Andean segment.

The effect of product mix, pricing and timing decreased revenues by $86.8 million for the 2020 fiscal period, attributable primarily to the effect of the COVID-19 pandemic on the academic calendar timing at a number of our institutions.

These decreases in revenues were partially offset by other Corporate and Eliminations changes, which accounted for an increase in revenues of $2.7 million.

Direct costs and general and administrative expenses combined decreased by $51.2 million to $641.9 million for the 2020 fiscal quarter from $693.1 million for the 2019 fiscal quarter.

This decrease in direct costs was due to the effect of a net change in foreign currency exchange rates, which decreased costs by $44.8 million;

the incremental impact of the disposition of UniNorte, which decreased direct costs by $9.9 million;

the effect of operational changes, which decreased direct costs by $6.5 million;

and other Corporate and Eliminations expenses, which accounted for a decrease in costs of $9.1 million in the 2020 fiscal quarter.

Partially offsetting these decreases in direct costs were Excellence-in-Process (EiP) implementation expense, which increased costs by $18.1 million for the 2020 fiscal quarter compared to the 2019 fiscal quarter, in addition to changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets, which resulted in a year-over-year increase in direct costs of $1.0 million.

Operating loss increased by $25.1 million to $117.1 million for the 2020 fiscal quarter from $92.0 million for the 2019 fiscal quarter.

This increase in operating loss was primarily the result of a higher operating loss in our Andean segment, a change from operating income to operating loss in our Mexico segment, and a lower operating income in our Online & Partnerships

segment, combined with an impairment loss of $3.8 million at Corporate during the 2020 fiscal quarter.

These increases in operating loss were partially offset by decreased loss in our Brazil and Rest of World segments in the 2020 fiscal quarter compared to the 2019 fiscal quarter.

Interest expense, net of interest income decreased by $17.7 million to $33.4 million for the 2020 fiscal quarter from $51.1 million for the 2019 fiscal quarter.

Direct costs and general and administrative expenses combined decreased by $224.6 million to $1,243.3 million for the 2020 fiscal period from $1,467.9 million for the 2019 fiscal period.

The effect of a net change in foreign currency exchange rates decreased costs by $124.6 million.

The incremental impact of the disposition of UniNorte decreased direct costs by $19.2 million.

The effect of operational changes decreased direct costs by $75.2 million, mainly driven by cost-saving initiatives to preserve liquidity in the wake of the COVID-19 pandemic.

Other Corporate and Eliminations expenses accounted for a decrease in costs of $21.2 million in the 2020 fiscal period.

Partially offsetting these decreases in direct costs were Excellence-in-Process (EiP) implementation expense, which increased costs by $15.1 million for the 2020 fiscal period compared to the 2019 fiscal period, in addition to changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets, which resulted in a year-over-year increase in direct costs of $0.5 million.

Operating (loss) income changed by $497.0 million to a loss of $(371.9) million for the 2020 fiscal period from an income of $125.1 million for the 2019 fiscal period.

This change was primarily a result of the impairment charges of $448.9 million during the 2020 fiscal period, partially offset by a change from operating loss to operating income in our Rest of World segment, combined with lower operating charges at Corporate.

Interest expense, net of interest income decreased by $23.5 million to $66.2 million for the 2020 fiscal period from $89.7 million for the 2019 fiscal period.

The decrease in interest expense was primarily attributable to lower average debt balances.

Other non-operating income (expense) changed by $49.2 million, to an income of $39.4 million for the 2020 fiscal quarter from an expense of $(9.8) million for the 2019 fiscal quarter.

Other non-operating income (expense) changed by $38.9 million, to an income of $32.7 million for the 2020 fiscal period from an expense of $(6.2) million for the 2019 fiscal period.

This change was primarily attributable to:

(1) a gain on foreign currency exchange during the 2020 fiscal quarter compared to a loss during the 2019 fiscal quarter, for a change of $40.7 million;

(2) a decrease in loss on debt extinguishment of $10.6 million related to the partial repayment of the 2024 Term Loan during the 2019 fiscal quarter;

and (3) a gain on sale of subsidiaries of $2.7 million related primarily to a sale price adjustment for UniNorte.

These increases in non-operating income were partially offset by a decrease in gain on derivative instruments of $4.4 million compared to the 2019 fiscal quarter, and other non-operating expense in the 2020 fiscal quarter compared to income in the 2019 fiscal quarter, for a change of $0.4 million.

Income tax benefit increased by $199.3 million to $235.1 million for the 2020 fiscal quarter from $35.8 million for the 2019 fiscal quarter.

This increase was attributable to a discrete tax benefit of approximately $222 million that was recognized during the 2020 fiscal quarter related to the tax-basis step up of certain intellectual property that became subject to Dutch taxation in the Netherlands.

(Loss) income from discontinued operations, net of tax changed by $67.1 million to a loss of $(3.8) million for the 2020 fiscal quarter from income of $63.3 million for the 2019 fiscal quarter.

This change was the result of the sales during 2019 of discontinued operations that generated income during the 2019 fiscal quarter.

(Loss) gain on sales of discontinued operations, net of tax changed by $270.0 million to a loss of $(22.0) million for the 2020 fiscal quarter, related to the sales of our Costa Rica and NSAD operations, compared to a gain of $248.0 million for the 2019 fiscal quarter related to the sales of our St.

Augustine and Thailand operations, along with an adjustment to the gain on the sale of our China operation.

Net loss (income) attributable to noncontrolling interests changed by $4.3 million to a loss of $1.3 million for the 2020 fiscal quarter from an income of $(3.0) million for the 2019 fiscal quarter.

(1) an increase in gain on foreign currency exchange of $26.9 million;

(2) a decrease in loss on debt extinguishment of $26.2 million, related to the repayment of the 2024 Term Loan during the 2019 fiscal period;

and (3) a gain on sale of subsidiaries of $2.8 million, primarily related to a sale price adjustment for UniNorte.

These increases in non-operating income were partially offset by a loss on derivative instruments for the 2020 fiscal period compared to a gain for the 2019 fiscal period, for a change of $8.4 million, and other non-operating expense for the 2020 fiscal period compared to income for the 2019 fiscal period, for a change of $8.6 million, primarily related to an increase in the estimated fair value of an equity security held at Corporate during the 2019 fiscal period.

Income tax benefit (expense) changed by $266.3 million to a benefit of $227.6 million for the 2020 fiscal period from an expense of $(38.7) million for the 2019 fiscal period.

This change was attributable to a discrete tax benefit of approximately $222 million that was recognized during the 2020 fiscal period related to the tax-basis step up of certain intellectual property that became subject to Dutch taxation in the Netherlands.

(Loss) income from discontinued operations, net of tax changed by $109.6 million to a loss of $(16.0) million for the 2020 fiscal period from income of $93.6 million for the 2019 fiscal period.

This change was primarily the result of the sales during 2019 of discontinued operations that generated income during the 2019 fiscal period, combined with an impairment charge of $10.0 million during the 2020 fiscal period related to assets that were held for sale.

(Loss) gain on sales of discontinued operations, net of tax changed by $909.2 million to a loss of $(19.7) million for the 2020 fiscal period, related to the sales of NSAD and our operations in Costa Rica, compared to a gain of $889.5 million for the 2019 fiscal period related to the sales of St.

Augustine and our operations in Thailand, South Africa, India, Spain and Portugal, along with an adjustment to the gain on the sale of our China operation.

Net loss (income) attributable to noncontrolling interests changed by $6.1 million to a loss of $5.1 million for the 2020 fiscal period, compared to income of $(1.0) million for the 2019 fiscal period.

This change was primarily related to our previous joint venture in Saudi Arabia.

7 unchanged sentences

Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

The following table presents Adjusted EBITDA and reconciles income (loss) from continuing operations to Adjusted EBITDA for the three months ended March 31, 2020 and 2019:

The following table presents Adjusted EBITDA and reconciles (loss) income from continuing operations to Adjusted EBITDA for the three months ended June 30, 2020 and 2019:

Better/(Worse)

(in millions) 2020 2019 2020 vs.

Income (loss) from continuing operations $ 124.1 $ (117.1) nm

Equity in net income of affiliates, net of tax (0.2) — nm

Income tax benefit (235.1) (35.8) nm

Loss from continuing operations before income taxes and equity in net income of affiliates (111.2) (152.9) 27 %

(Loss) income from continuing operations $ (301.8) $ 107.8 nm

Equity in net income of affiliates, net of tax — (0.2) (100) %

Income tax expense 7.5 74.6 90 %

(Loss) income from continuing operations before income taxes and equity in net income of affiliates (294.2) 182.2 nm

Gain on disposal of subsidiaries, net (0.1) — nm

Foreign currency exchange (gain) loss, net (35.9) 4.7 nm

Foreign currency exchange loss (gain), net 4.9 (8.9) (155) %

Other expense (income), net 0.4 (7.7) (105) %

Gain on derivatives (0.8) (5.2) (85) %

Loss (gain) on derivatives 1.4 (2.6) (154) %

Loss on debt extinguishment — 15.6 100 %

1 unchanged sentence

Interest income (1.0) (2.8) (64) %

Operating loss (117.1) (92.0) (27) %

Operating (loss) income (254.8) 217.2 nm

Depreciation and amortization 40.1 49.3 19 %

8 unchanged sentences

(b) Represents non-cash charges related to impairments of long-lived assets.

For further details, see “Discussion of Significant Items Affecting the Consolidated Results for the Three Months Ended March 31, 2020.”

For further details, see “Discussion of Significant Items Affecting the Consolidated Results for the Six Months Ended June 30, 2020.”

(c) EiP implementation expenses are related to our enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources.

2 unchanged sentences

Beginning in the third quarter of 2019, EiP also includes expenses associated with an enterprise-wide program aimed at revenue growth.

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Three Months Ended March 31, 2020 and 2019

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Three Months Ended June 30, 2020 and 2019

Depreciation and amortization decreased by $9.2 million to $40.1 million for the 2020 fiscal quarter from $49.3 million for the 2019 fiscal quarter.

The effects of foreign currency exchange decreased depreciation and amortization expense by $5.7 million for the 2020 fiscal quarter.

In addition, the incremental impact of the disposition of UniNorte decreased depreciation and amortization expense by $0.1 million for the 2020 fiscal quarter.

These decreases were partially offset by other items, which increased depreciation and amortization by $0.5 million.

Other items decreased depreciation and amortization by $3.5 million.

Share-based compensation expense decreased by $0.1 million to $4.6 million for the 2020 fiscal quarter from $4.7 million for the 2019 fiscal quarter.

EiP implementation expenses increased by $18.1 million to $30.4 million for the 2020 fiscal quarter from $12.3 million for the 2019 fiscal quarter.

EiP implementation expenses decreased by $3.1 million to $24.0 million for the 2020 fiscal quarter from $27.1 million for the 2019 fiscal quarter.

The year-over-year decrease in EiP expenses is primarily attributable to lower costs of severance and retention bonuses related to our divestiture activity, and lower severance related to streamlining our organizational structure, partially offset by an increase in EiP expenses associated with an enterprise-wide program aimed at revenue growth.

The following table presents Adjusted EBITDA and reconciles loss from continuing operations to Adjusted EBITDA for the six months ended June 30, 2020 and 2019:

Better/(Worse)

(in millions) 2020 2019 2020 vs.

Loss from continuing operations $ (177.7) $ (9.2) nm

Equity in net income of affiliates, net of tax (0.2) (0.2) — %

Income tax (benefit) expense (227.6) 38.7 nm

(Loss) income from continuing operations before income taxes and equity in net income of affiliates (405.4) 29.2 nm

Gain on disposal of subsidiaries, net (2.8) — nm

Foreign currency exchange gain, net (31.0) (4.1) nm

Other expense (income), net 0.5 (8.1) (106) %

Loss (gain) on derivatives 0.6 (7.8) (108) %

Loss on debt extinguishment — 26.2 100 %

Interest expense 69.9 96.1 27 %

Interest income (3.7) (6.4) (42) %

Operating (loss) income (371.9) 125.1 nm

Depreciation and amortization 84.3 96.6 13 %

EBITDA (287.6) 221.7 nm

Share-based compensation expense (a)

Loss on impairment of assets (b)

EiP implementation expenses (c)

54.4 39.3 (38) %

Adjusted EBITDA $ 222.2 $ 269.2 (17) %

nm - percentage changes not meaningful

(a) Represents non-cash, share-based compensation expense pursuant to the provisions of ASC 718, “Stock Compensation.”

(b) Represents non-cash charges related to impairments of long-lived assets.

For further details, see “Discussion of Significant Items Affecting the Consolidated Results for the Six Months Ended June 30, 2020.”

It included the establishment of regional shared services organizations (SSOs) around the world, as well as improvements to the Company's system of internal controls over financial reporting.

The EiP initiative also includes other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure and certain non-recurring costs incurred in connection with the planned and completed dispositions.

Beginning in the third quarter of 2019, EiP also includes expenses associated with an enterprise-wide program aimed at revenue growth.

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Six Months Ended June 30, 2020 and 2019

Depreciation and amortization decreased by $12.3 million to $84.3 million for the 2020 fiscal period from $96.6 million for the 2019 fiscal period.

The effects of foreign currency exchange decreased depreciation and amortization expense by $9.1 million for the 2020 fiscal period.

Other items decreased depreciation and amortization by $3.2 million.

Share-based compensation expense decreased by $1.1 million to $6.6 million for the 2020 fiscal period from $7.7 million for the 2019 fiscal period.

EiP implementation expenses increased by $15.1 million to $54.4 million for the 2020 fiscal period from $39.3 million for the 2019 fiscal period.

This increase is primarily attributable to the inclusion in EiP of expenses associated with an enterprise-wide program aimed at revenue growth.

9 unchanged sentences

Better/(Worse)

For the three months ended March 31, 2020 2019 2020 vs.

For the three months ended June 30, 2020 2019 2020 vs.

Brazil $ 118.5 $ 197.1 (40) %

9 unchanged sentences

Andean 160.7 186.5 (14) %

Rest of World 4.8 (3.4) nm

Rest of World 19.7 12.1 63 %

Online & Partnerships 43.4 49.9 (13) %

1 unchanged sentence

Consolidated Total Adjusted EBITDA $ 259.0 $ 298.8 (13) %

(in millions) % Change

Better/(Worse)

For the six months ended June 30, 2020 2019 2020 vs.

Brazil $ 202.2 $ 307.1 (34) %

Mexico 269.1 318.9 (16) %

Andean 435.4 561.9 (23) %

Rest of World 106.1 84.6 25 %

Online & Partnerships 305.4 321.5 (5) %

Corporate 2.1 (0.6) nm

Consolidated Total Revenues $ 1,320.2 $ 1,593.5 (17) %

Adjusted EBITDA:

Brazil $ 22.4 $ 28.2 (21) %

Mexico 43.0 57.4 (25) %

Andean 98.5 153.3 (36) %

Rest of World 24.5 8.8 178 %

Online & Partnerships 86.7 98.4 (12) %

Corporate (53.0) (76.9) 31 %

Consolidated Total Adjusted EBITDA $ 222.2 $ 269.2 (17) %

nm - percentage change not meaningful

Financial Overview

Comparison of Brazil Results for the Three Months Ended March 31, 2020 to the Three Months Ended March 31, 2019

Comparison of Brazil Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019

(in millions) Revenues Direct Costs Adjusted EBITDA

March 31, 2019 $ 110.0 $ 140.7 $ (30.7)

June 30, 2019 $ 197.1 $ 138.2 $ 58.9

Organic enrollment (1)

2 unchanged sentences

Foreign exchange (43.3) (27.5) (15.8)

Acquisitions — — —

Dispositions (2)

March 31, 2020 $ 83.7 $ 102.9 $ (19.2)

(12.0) (9.4) (2.6)

June 30, 2020 $ 118.5 $ 76.9 $ 41.6

(1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.

(2) Relates to the sale of UniNorte during the fourth quarter of 2019.

(3) Other is composed of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets.

Revenues decreased by $78.6 million, a 40% decrease from the 2019 fiscal quarter.

• Organic enrollment remained flat during the 2020 fiscal quarter compared to the 2019 fiscal quarter.

• Organic enrollment decreased during the 2020 fiscal quarter by 3%, decreasing revenues by $4.1 million compared to the 2019 fiscal quarter.

• The decrease in revenues from product mix, pricing and timing was in part due to the effect of the COVID-19 pandemic on the academic calendar timing.

• Revenues represented 15% of our consolidated total revenues for the 2020 fiscal quarter compared to 20% for the 2019 fiscal quarter.

Adjusted EBITDA increased by $11.5 million, a 37% increase from the 2019 fiscal quarter.

Adjusted EBITDA decreased by $17.3 million, a 29% decrease from the 2019 fiscal quarter.

Comparison of Brazil Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019

(in millions) Revenues Direct Costs Adjusted EBITDA

June 30, 2019 $ 307.1 $ 278.9 $ 28.2

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency (24.3) (35.2) 10.9

Foreign exchange (61.2) (44.2) (17.0)

Dispositions (2)

(19.4) (19.2) (0.2)

June 30, 2020 $ 202.2 $ 179.8 $ 22.4

(2) Relates to the sale of UniNorte during the fourth quarter of 2019.

(3) Other is composed of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets.

Revenues decreased by $104.9 million, a 34% decrease from the 2019 fiscal period.

• Organic enrollment decreased during the 2020 fiscal period by 2%, decreasing revenues by $3.4 million compared to the 2019 fiscal period.

• The decrease in revenues from product mix, pricing and timing was in part due to the effect of the COVID-19 pandemic on the academic calendar timing.

• Revenues represented 16% of our consolidated total revenues for the 2020 fiscal period, compared to 20% for the 2019 fiscal period.

Adjusted EBITDA decreased by $5.8 million, a 21% decrease from the 2019 fiscal period.

Financial Overview

Comparison of Mexico Results for the Three Months Ended March 31, 2020 to the Three Months Ended March 31, 2019

Comparison of Mexico Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019

(in millions) Revenues Direct Costs Adjusted EBITDA

March 31, 2019 $ 156.5 $ 130.7 $ 25.8

June 30, 2019 $ 162.5 $ 130.9 $ 31.6

Organic enrollment (1)

2 unchanged sentences

Foreign exchange (26.5) (20.9) (5.6)

Acquisitions — — —

Dispositions — — —

March 31, 2020 $ 154.2 $ 130.9 $ 23.3

June 30, 2020 $ 114.9 $ 95.2 $ 19.7

1 unchanged sentence

Revenues decreased by $47.6 million, a 29% decrease from the 2019 fiscal quarter.

• Revenue increases from product mix, pricing and timing were partially offset by a decrease in organic enrollment of 2% during the 2020 fiscal quarter, which decreased revenues by $4.1 million.

• Organic enrollment decreased during the fiscal quarter by 5%, decreasing revenues by $7.3 million.

• The decrease in revenues from product mix, pricing and timing was mainly due to the effect of the COVID-19 pandemic on the academic calendar timing.

• Revenues represented 15% of our consolidated total revenues for the 2020 fiscal quarter, compared to 16% for the 2019 fiscal quarter.

Adjusted EBITDA decreased by $11.9 million, a 38% decrease from the 2019 fiscal quarter.

Comparison of Mexico Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019

(in millions) Revenues Direct Costs Adjusted EBITDA

June 30, 2019 $ 318.9 $ 261.5 $ 57.4

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency (17.7) (13.1) (4.6)

Foreign exchange (32.1) (23.3) (8.8)

Dispositions — — —

June 30, 2020 $ 269.1 $ 226.1 $ 43.0

(2) Other is composed of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets.

Revenues decreased by $49.8 million, a 16% decrease from the 2019 fiscal period.

• Organic enrollment decreased during the 2020 fiscal period by 3%, decreasing revenues by $11.1 million.

• The decrease in revenues from product mix, pricing and timing was mainly due to the effect of the COVID-19 pandemic on the academic calendar timing.

• Revenues represented 20% of our consolidated total revenues for both the 2020 and the 2019 fiscal periods.

Adjusted EBITDA decreased by $14.4 million, a 25% decrease from the 2019 fiscal period.

Financial Overview

Comparison of Andean Results for the Three Months Ended March 31, 2020 to the Three Months Ended March 31, 2019

Comparison of Andean Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019

(in millions) Revenues Direct Costs Adjusted EBITDA

March 31, 2019 $ 138.9 $ 172.1 $ (33.2)

June 30, 2019 $ 423.0 $ 236.5 $ 186.5

Organic enrollment (1)

2 unchanged sentences

Foreign exchange (39.7) (22.8) (16.9)

Acquisitions — — —

Dispositions — — —

March 31, 2020 $ 89.5 $ 151.7 $ (62.2)

June 30, 2020 $ 345.9 $ 185.2 $ 160.7

Revenues decreased by $49.4 million, a 36% decrease from the 2019 fiscal quarter.

• Revenue decreases during the 2020 fiscal quarter were due primarily to the academic calendar and the timing of semester start dates.

• Organic enrollment increased during the 2020 fiscal quarter by 1%, increasing revenues by $0.6 million.

Revenues decreased by $77.1 million, an 18% decrease from the 2019 fiscal quarter.

• The decrease in revenues from product mix, pricing and timing was mainly due to the effect of the COVID-19 pandemic on the academic calendar timing.

• Organic enrollment decreased during the 2020 fiscal quarter by 5%, decreasing revenues by $16.8 million.

• Revenue represented 44% of our consolidated total revenues for the 2020 fiscal quarter compared to 43% for the 2019 fiscal quarter.

Adjusted EBITDA decreased by $29.0 million, an 87% decrease from the 2019 fiscal quarter.

• Foreign exchange affected the results for the 2020 fiscal quarter, primarily due to weakening of the Chilean Peso relative to the USD.

Adjusted EBITDA decreased by $25.8 million, a 14% decrease from the 2019 fiscal quarter.

• Foreign exchange affected the results for the 2020 fiscal quarter, primarily due to the weakening of the Chilean Peso relative to the USD.

Comparison of Andean Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019

(in millions) Revenues Direct Costs Adjusted EBITDA

June 30, 2019 $ 561.9 $ 408.6 $ 153.3

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency (74.3) (29.9) (44.4)

Foreign exchange (52.2) (41.8) (10.4)

Dispositions — — —

June 30, 2020 $ 435.4 $ 336.9 $ 98.5

Revenues decreased by $126.5 million, a 23% decrease from the 2019 fiscal period.

• The decrease in revenues from product mix, pricing and timing was mainly due to the effect of the COVID-19 pandemic on the academic calendar timing.

• Organic enrollment decreased during the 2020 fiscal period by 2%, decreasing revenues by $8.4 million.

• Revenue represented 33% of our consolidated total revenues for the 2020 fiscal period compared to 35% for the 2019 fiscal period.

Adjusted EBITDA decreased by $54.8 million, a 36% decrease from the 2019 fiscal period.

• Foreign exchange affected the results for the 2020 fiscal period, primarily due to weakening of the Chilean Peso relative to the USD.

Rest of World

Financial Overview

Comparison of Rest of World Results for the Three Months Ended March 31, 2020 to the Three Months Ended March 31, 2019

Comparison of Rest of World Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019

(in millions) Revenues Direct Costs Adjusted EBITDA

March 31, 2019 $ 33.4 $ 36.8 $ (3.4)

June 30, 2019 $ 51.2 $ 39.1 $ 12.1

Organic enrollment (1)

2 unchanged sentences

Foreign exchange (4.4) (3.0) (1.4)

Acquisitions — — —

Dispositions — — —

March 31, 2020 $ 43.6 $ 38.8 $ 4.8

June 30, 2020 $ 62.6 $ 42.9 $ 19.7

1 unchanged sentence

• Organic enrollment increased during the 2020 fiscal quarter by 23%, increasing revenues by $11.8 million.

• Revenues represented 8% of our consolidated total revenues for the 2020 fiscal quarter compared to 6% for the 2019 fiscal quarter.

Adjusted EBITDA increased by $8.2 million from the 2019 fiscal quarter.

• Foreign exchange affected the results for the 2020 fiscal quarter, primarily due to the weakening of the Australian Dollar relative to the USD.

• Revenue represented 8% of our consolidated total revenues for the 2020 fiscal quarter compared to 5% for the 2019 fiscal quarter.

Adjusted EBITDA increased by $7.6 million, a 63% increase from the 2019 fiscal quarter.

Comparison of Rest of World Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019

(in millions) Revenues Direct Costs Adjusted EBITDA

June 30, 2019 $ 84.6 $ 75.8 $ 8.8

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency 30.5 12.0 18.5

Foreign exchange (9.0) (6.2) (2.8)

Dispositions — — —

June 30, 2020 $ 106.1 $ 81.6 $ 24.5

Revenues increased by $21.5 million, a 25% increase from the 2019 fiscal period.

• Organic enrollment increased during the 2020 fiscal period by 23%, increasing revenues by $18.8 million.

• Revenues represented 8% of our consolidated total revenues for the 2020 fiscal period compared to 5% for the 2019 fiscal period.

Adjusted EBITDA increased by $15.7 million, a 178% increase from the 2019 fiscal period.

Online & Partnerships

Financial Overview

Comparison of Online & Partnerships Results for the Three Months Ended March 31, 2020 to the Three Months Ended March 31, 2019

Comparison of Online & Partnerships Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019

(in millions) Revenues Direct Costs Adjusted EBITDA

March 31, 2019 $ 161.8 $ 113.2 $ 48.6

June 30, 2019 $ 159.7 $ 109.8 $ 49.9

Organic enrollment (1)

2 unchanged sentences

Foreign exchange — — —

Acquisitions — — —

Dispositions — — —

March 31, 2020 $ 156.5 $ 113.2 $ 43.3

June 30, 2020 $ 148.9 $ 105.5 $ 43.4

1 unchanged sentence

• Organic enrollment decreased during the 2020 fiscal quarter by 5%, decreasing revenues by $4.3 million.

This decrease was primarily attributable to a decrease in organic enrollment at the University of Liverpool and the University of Roehampton, as we no longer accept new enrollments at those institutions.

• Revenues represented 19% of our consolidated total revenues for the 2020 fiscal quarter, compared to 16% for the 2019 fiscal quarter.

Adjusted EBITDA decreased by $6.5 million, a 13% decrease compared to the 2019 fiscal quarter.

Comparison of Online & Partnerships Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019

(in millions) Revenues Direct Costs Adjusted EBITDA

June 30, 2019 $ 321.5 $ 223.1 $ 98.4

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency (16.1) (4.4) (11.7)

Foreign exchange — — —

Dispositions — — —

June 30, 2020 $ 305.4 $ 218.7 $ 86.7

Revenues decreased by $16.1 million, a 5% decrease from the 2019 fiscal period.

• Organic enrollment decreased during the 2020 fiscal period by 6%, decreasing revenues by $11.2 million.

• Revenues represented 23% of our consolidated total revenues for the 2020 fiscal period, compared to 20% for the 2019 fiscal period.

Adjusted EBITDA decreased by $11.7 million, a 12% decrease compared to the 2019 fiscal period.

Corporate revenues represent amounts from our consolidated joint venture with the University of Liverpool, as well as centralized IT costs charged to various segments, offset by the elimination of intersegment revenues.

Operating results for Corporate for the three months ended March 31, 2020 and 2019:

Comparison of Corporate Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019

Better/(Worse)

3 unchanged sentences

Adjusted EBITDA $ (26.0) $ (40.1) 35 %

Comparison of Corporate Results for the Three Months Ended March 31, 2020 to the Three Months Ended March 31, 2019

Adjusted EBITDA increased by $14.1 million, a 35% increase from the 2019 fiscal quarter.

• Labor costs and other professional fees decreased expenses by $10.7 million for the 2020 fiscal quarter compared to the 2019 fiscal quarter, related to cost-reduction efforts.

• Labor costs and other professional fees decreased by $14.8 million for the 2020 fiscal quarter compared to the 2019 fiscal quarter, related to cost-reduction efforts.

• Other items accounted for a decrease in Adjusted EBITDA of $0.7 million.

Comparison of Corporate Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019

Better/(Worse)

(in millions) 2020 2019 2020 vs.

Revenues $ 2.1 $ (0.6) nm

Expenses 55.1 76.3 28 %

Adjusted EBITDA $ (53.0) $ (76.9) 31 %

Adjusted EBITDA increased by $23.9 million, a 31% increase from the 2019 fiscal period.

• Labor costs and other professional fees decreased expenses by $25.6 million for the 2020 fiscal period compared to the 2019 fiscal period, related to cost-reduction efforts.

• Other items accounted for a decrease in Adjusted EBITDA of $1.7 million.

Liquidity and Capital Resources

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We anticipate that cash flow from operations and available cash will be sufficient to meet our current operating requirements and manage our liquidity needs, including any effects on the Company’s business operations that arise from the COVID-19 pandemic, for at least the next 12 months from the date of issuance of this report.

In addition, we are controlling discretionary expenses and reviewing our capital spending projects.

In addition, we are controlling discretionary expenses and reviewing our capital spending projects, as well as engaging with landlords to negotiate rent deferrals or other rent concessions.

However, as the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs.

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In the event of a sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions, such as obtaining additional financing.

The Company will continue to evaluate its financial position in light of future developments, particularly those relating to COVID-19.

The Company will continue to evaluate its financial position in light of future developments, particularly those relating to the COVID-19 pandemic.

Our primary source of cash is revenue from tuition charged to students in connection with our various education program offerings.

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If our educational institutions within one country were unable to maintain sufficient liquidity, we would consider using internal cash resources or reasonable short-term working capital facilities to accommodate any short- to medium-term shortfalls.

As of March 31, 2020, our secondary source of liquidity was cash and cash equivalents of $546.7 million, which does not include $46.8 million of cash recorded at subsidiaries that are classified as held for sale at March 31, 2020.

As of June 30, 2020, our secondary source of liquidity was cash and cash equivalents of $629.6 million, which does not include $34.2 million of cash recorded at subsidiaries that are classified as held for sale at June 30, 2020.

Our cash accounts are maintained with high-quality financial institutions with no significant concentration in any one institution.

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In March 2020, we fully drew down our $410.0 million revolving credit facility in order to increase our cash position and preserve financial flexibility in light of the COVID-19 pandemic.

Sale Transactions

On January 10, 2020, we completed the sale of our Costa Rica operations and received net proceeds of approximately $15.0 million (approximately $3.3 million net of cash sold and transaction fees).

Completed Sale Transactions

On January 10, 2020, we completed the sale of our Costa Rica operations and received net proceeds of approximately $15.0 million.

The proceeds received net of cash sold, transaction fees and the working capital adjustment completed during the second quarter of 2020, were approximately $1.8 million.

The Company will also receive up to $5.0 million within two years after the sale if Laureate Costa Rica meets certain performance metrics.

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Under the terms of the sale agreement, the Company will pay additional subsidies to the buyers of approximately $2.8 million ratably on a quarterly basis over the next four years, beginning on March 31, 2020.

In June 2020, we received 141.6 million Hong Kong Dollars (approximately $18.3 million at the date of receipt), related to the portion of the transaction value from the January 2018 sale of our China operations that was paid into escrow by the buyer.

As of December 31, 2019, the Company had recorded a receivable of approximately $25.9 million for the portion of the escrowed amount that we expected to receive.

Under the terms of the sale agreement, we expect to receive the remaining escrow receivable amount in January 2021.

Pending Sale Transactions

On February 28, 2020, the Company entered into an agreement to sell its operations in Malaysia for a total purchase price of $140.0 million.

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

On July 29, 2020, the Company entered into an agreement to sell its Australia and New Zealand operations for a purchase price of $642.7 million.

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 Australia and New Zealand operations.

Liquidity Restrictions

Our liquidity is affected by restricted cash balances, which totaled $196.4 million and $186.9 million as of March 31, 2020 and December 31, 2019, respectively.

Our liquidity is affected by restricted cash balances, which totaled $185.7 million and $186.9 million as of June 30, 2020 and December 31, 2019, respectively.

Indefinite Reinvestment of Foreign Earnings

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As part of our business strategies, we have determined that, except for one of our institutions in Peru, all earnings from our foreign continuing operations will be deemed indefinitely reinvested outside of the United States.

As of March 31, 2020, $347.7 million of our total $546.7 million of cash and cash equivalents were held by foreign subsidiaries, including $145.5 million held by VIEs.

These amounts above do not include $46.8 million of cash recorded at subsidiaries that are classified as held for sale at March 31, 2020, of which $46.6 million was held by foreign subsidiaries.

As of June 30, 2020, $454.1 million of our total $629.6 million of cash and cash equivalents were held by foreign subsidiaries, including $215.9 million held by VIEs.

These amounts above do not include $34.2 million of cash recorded at subsidiaries that are classified as held for sale at June 30, 2020, almost all of which was held by foreign subsidiaries.

As of December 31, 2019, $275.6 million of our total $339.6 million of cash and cash equivalents were held by foreign subsidiaries, including $157.0 million held by VIEs.

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and payments of other third-party obligations.

As of March 31, 2020, senior long-term borrowings totaled $1,209.1 million and consisted of $409.1 million of borrowings under our revolving credit facility and $800.0 million in Senior Notes due 2025 that mature in May 2025.

As of June 30, 2020, senior long-term borrowings totaled $1,209.1 million and consisted of $409.1 million of borrowings under our revolving credit facility and $800.0 million in Senior Notes due 2025 that mature in May 2025.

As discussed above, in March 2020, we fully drew down our $410.0 million revolving credit facility in order to increase our cash position and preserve financial flexibility in light of the COVID-19 pandemic.

As of March 31, 2020, other debt balances totaled $364.8 million and our finance lease obligations and sale-leaseback financings were $91.6 million.

As of June 30, 2020, other debt balances totaled $356.4 million and our finance lease obligations and sale-leaseback financings were $85.3 million.

Other debt includes lines of credit and short-term borrowing arrangements of subsidiaries, mortgages payable and notes payable.

Approximately $34.4 million of long-term debt, including the current portion, is included in the held-for-sale liabilities recorded on the consolidated balance sheet as of March 31, 2020.

Approximately $31.8 million of long-term debt, including the current portion, is included in the held-for-sale liabilities recorded on the consolidated balance sheet as of June 30, 2020.

For further description of the held-for-sale amounts see Note 4, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-Q.

Senior Secured Credit Facility

As of March 31, 2020 and December 31, 2019, the outstanding balance under our Senior Secured Credit Facility was $409.1 million and $202.4 million, respectively, which consisted entirely of balances outstanding under our $410.0 million revolving credit facility.

As of June 30, 2020 and December 31, 2019, the outstanding balance under our Senior Secured Credit Facility was $409.1 million and $202.4 million, respectively, which consisted entirely of balances outstanding under our $410.0 million revolving credit facility.

Under the Third A&R Credit Agreement, we are subject to a Consolidated Senior Secured Debt to Consolidated EBITDA financial maintenance covenant, as defined in the Third A&R Credit Agreement, unless certain conditions are satisfied.

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

The maximum ratio, as defined, is 3.50x as of March 31, 2020 and thereafter.

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

The maximum ratio, as defined, is 3.50x as of June 30, 2020 and thereafter.

In addition, notes payable at some of our locations contain financial maintenance covenants and we were in compliance with those covenants.

As of both March 31, 2020 and December 31, 2019, the outstanding balance under our Senior Notes due 2025 was $800.0 million.

As of both June 30, 2020 and December 31, 2019, the outstanding balance under our Senior Notes due 2025 was $800.0 million.

We conduct a significant portion of our operations from leased facilities.

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In the past, one method of payment for acquisitions was the use of promissory notes payable to the sellers of acquired companies.

As of March 31, 2020 and December 31, 2019, we recorded $16.9 million and $21.5 million, respectively, for these liabilities.

As of June 30, 2020 and December 31, 2019, we recorded $16.0 million and $21.5 million, respectively, for these liabilities.

See also Note 6, Due to Shareholders of Acquired Companies, in our consolidated financial statements included elsewhere in this Form 10-Q.

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We typically fund our capital expenditures through cash flow from operations and external financing.

In the event that we are unable to obtain the necessary funding for capital expenditures, our long-term growth strategy could be significantly affected.

In the event that we are unable to obtain the necessary funding for capital

expenditures, our long-term growth strategy could be significantly affected.

We believe that our internal sources of cash and our ability to obtain additional third-party financing, subject to market conditions, will be sufficient to fund our investing activities.

Our total capital expenditures for our continuing and discontinued operations, excluding receipts from the sale of subsidiaries and property equipment, were $28.1 million and $35.8 million during the three months ended March 31, 2020 and 2019, respectively.

The 22% decrease in capital expenditures for the 2020 fiscal quarter compared to the 2019 fiscal quarter was a result of the divestitures.

Our total capital expenditures for our continuing and discontinued operations, excluding receipts from the sale of subsidiaries and property equipment, were $57.5 million and $70.8 million during the six months ended June 30, 2020 and 2019, respectively.

The 19% decrease in capital expenditures for the 2020 fiscal period compared to the 2019 fiscal period was primarily a result of the divestitures.

In the normal course of business, our operations are exposed to fluctuations in foreign currency values and interest rate changes.

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The effects of exchange rate changes on cash are presented separately in the consolidated statements of cash flows.

The following table summarizes our cash flows from operating, investing, and financing activities for each of the three months ended March 31, 2020 and 2019:

The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, 2020 and 2019:

(in millions) 2020 2019

Cash (used in) provided by:

Cash provided by (used in):

Operating activities $ 61.4 $ 32.5

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Net change in cash and cash equivalents and restricted cash $ 288.7 $ (188.2)

Comparison of Cash Flows for the Three Months Ended March 31, 2020 to the Three Months Ended March 31, 2019

Comparison of Cash Flows for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019

Operating Activities

Cash flows from operating activities decreased by $48.5 million to an operating cash outflow of $(3.5) million for the 2020 fiscal quarter from an operating cash inflow of $45.0 million for the 2019 fiscal quarter.

This decrease in operating cash was attributable to the higher operating loss as well as the year-over-year effect of the divestitures that occurred in 2019, as certain of the divested institutions, such as St.

Cash provided by operating activities increased by $28.9 million to $61.4 million for the 2020 fiscal period from $32.5 million for the 2019 fiscal period.

This increase in operating cash was attributable to:

(1) a decrease in cash paid for interest of $53.7 million, from $115.8 million for the 2019 fiscal period to $62.1 million for the 2020 fiscal period, attributable to lower average debt balances;

(2) a decrease in cash paid for taxes of $11.1 million, from $58.5 million for the 2019 fiscal period to $47.4 million for the 2020 fiscal period;

and (3) a positive year-over-year effect to operating cash of $7.6 million primarily related to a cash payment during the 2019 fiscal period to settle cross currency and interest rate swaps in Chile.

These increases in operating cash were partially offset by lower operating income as well as the year-over-year effect of the divestitures that occurred in 2019, as certain of the divested institutions, such as St.

Augustine, contributed positive operating cash flows during the first quarter of 2019.

When combined with changes in working capital, these factors accounted for a decrease in operating cash flows of approximately $43.5 million.

This decrease was partially offset by:

(1) a decrease in cash paid for interest of $33.1 million, from $47.7 million for the 2019 fiscal quarter to $14.6 million for the 2020 fiscal quarter, attributable to lower average debt balances;

(2) a decrease in cash paid for taxes of $2.4 million, from $18.7 million for the 2019 fiscal quarter to $16.3 million for the 2020 fiscal quarter;

and (3) a positive year-over-year effect to operating cash of $8.2 million related to a cash payment during the 2019 fiscal quarter to settle cross currency and interest rate swaps in Chile.

Investing Activities

Cash flows from investing activities decreased by $318.1 million to an investing cash outflow of $(24.0) million for the 2020 fiscal quarter from an investing cash inflow of $294.1 million for the 2019 fiscal quarter.

This decrease was primarily attributable to lower cash receipts from the sales of discontinued operations of $327.0 million, from $331.0 million during the 2019 fiscal quarter (for the sales of our St.

Augustine and Thailand operations) to $4.0 million, net, during the 2020 fiscal quarter (for the sales of our Costa Rica and NSAD operations and the receipt of a deposit for INTI Malaysia).

This decrease in investing cash was partially offset by a decrease in capital expenditures of $7.7 million.

Additionally, during the 2019 fiscal quarter, we made a payment of $1.2 million for a small acquisition in Brazil.

Cash flows from investing activities decreased by $1,137.4 million to an investing cash outflow of $(35.0) million for the 2020 fiscal period from an investing cash inflow of $1,102.4 million for the 2019 fiscal period.

This decrease was primarily attributable to lower cash receipts from the sales of discontinued operations of $1,138.9 million, from $1,161.4 million during the 2019 fiscal period (for the sales of St.

Augustine and our operations in Thailand, South Africa, India, Spain and Portugal) to $22.5 million, net, during the 2020 fiscal period (for the sales of NSAD and our operations in Costa Rica, the receipt of a deposit for INTI Malaysia, and the receipt of a portion of the escrow receivable balance related to the 2018 sale of our China operations).

In addition, during the 2019 fiscal period, we received $12.9 million from derivative settlements related to foreign exchange swap agreements associated with the sale of the Spain and Portugal institutions.

These decreases in investing cash were partially offset by a decrease in capital expenditures of $13.3 million, and the year-over-year effect of a payment of $1.2 million during the 2019 fiscal period for a small acquisition in Brazil.

Other items accounted for the remaining change of $0.1 million.

Financing Activities

Cash flows from financing activities increased by $717.5 million to a financing cash inflow of $267.9 million for the 2020 fiscal quarter from a financing cash outflow of $(449.6) million for the 2019 fiscal quarter.

Cash flows from financing activities increased by $1,659.5 million to a financing cash inflow of $263.4 million for the 2020 fiscal period from a financing cash outflow of $(1,396.1) million for the 2019 fiscal period.

This increase in financing cash inflows was primarily attributable to:

(1) net proceeds from long-term debt during the 2020 fiscal quarter, related to the full draw down on our $410.0 million revolving credit facility in order to increase our cash position and preserve financial flexibility in response to the COVID-19 pandemic, compared to net payments of long-term debt during the 2019 fiscal quarter, for a change of $714.9 million;

(2) proceeds from exercise of common stock options of $26.8 million during the 2020 fiscal quarter;

and (3) a payment for a debt redemption in Chile during the 2019 fiscal quarter of $5.2 million.

These increases in financing cash inflows were partially offset by payments of $29.2 million made during the 2020 fiscal quarter to repurchase shares of our Class A common stock under our stock repurchase program.

(1) net proceeds from long-term debt during the 2020 fiscal period, related to the full draw down on our $410.0 million revolving credit facility in order to increase our cash position and preserve financial flexibility in response to the COVID-19 pandemic, compared to net payments of long-term debt during the 2019 fiscal period, for a change of $1,638.5 million;

(2) proceeds from exercise of common stock options of $26.7 million during the 2020 fiscal period;

(3) lower payments of deferred price for acquisitions during the 2020 fiscal period by $10.2 million, primarily due to the full repayment of the St.

Augustine seller note during the 2019 fiscal period;

(4) a payment for a debt redemption in Chile during the 2019 fiscal period of $5.9 million;

and (5) a payment of $5.8 million during the 2019 fiscal period to acquire the remaining 10% noncontrolling interest of one of our operations in India, immediately prior to the sale of those operations.

These increases in financing cash inflows were partially offset by payments of $29.2 million made during the 2020 fiscal period to repurchase shares of our Class A common stock under our stock repurchase program.

Other items accounted for the remaining difference of $1.6 million.

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For a complete discussion of our critical accounting policies, see the “Critical Accounting Policies and Estimates” section of the MD&A in our 2019 Form 10-K.

During the three months ended March 31, 2020, there were no significant changes to our critical accounting policies.

During the six months ended June 30, 2020, there were no significant changes to our critical accounting policies.

We will continue to monitor the effect to the Company of the COVID-19 pandemic and assess whether any changes to our accounting estimates are warranted as additional information becomes available.

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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 2. Management’s Discussion and Analysis