What changed in this filing

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Item 1. Financial Statements

2020-11-05 compared with 2020-08-06 · 412 added, 480 removed, 750 unchanged (54% of the section changed)

4 unchanged sentences

IN THOUSANDS, except per share amounts

For the three months ended June 30, 2020 2019

For the three months ended September 30, 2020 2019

(Unaudited) (Unaudited)

4 unchanged sentences

Loss on impairment of assets 323,398 —

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

Operating loss ( 318,235 ) ( 18,411 )

Interest income 684 912

1 unchanged sentence

Loss on debt extinguishment — ( 200 )

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

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

Gain on derivatives — 283

Other income, net 1,301 992

Foreign currency exchange (loss) gain, net ( 2,907 ) 7,659

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

Gain (loss) on disposal of subsidiaries, net 621 ( 1,474 )

Loss from continuing operations before income taxes ( 343,239 ) ( 38,557 )

Income tax benefit (expense) 72,199 ( 48,092 )

Loss from continuing operations ( 271,040 ) ( 86,649 )

(Loss) income from discontinued operations, including tax (expense) benefit of $( 51,081 ) and $ 24,070 , respectively

( 169,768 ) 30,986

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

Loss on sales of discontinued operations, including tax expense of $ 52,712 and $ 3,591 , respectively

( 343,622 ) ( 41,131 )

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.

Net loss ( 784,430 ) ( 96,794 )

Net (income) loss attributable to noncontrolling interests ( 12 ) 1,568

Net loss attributable to Laureate Education, Inc.

$ ( 784,442 ) $ ( 95,226 )

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

Loss from continuing operations $ ( 1.29 ) $ ( 0.39 )

Loss from discontinued operations ( 2.44 ) ( 0.04 )

Basic and diluted loss per share $ ( 3.73 ) $ ( 0.43 )

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

3 unchanged sentences

IN THOUSANDS, except per share amounts

For the six months ended June 30, 2020 2019

For the nine months ended September 30, 2020 2019

(Unaudited) (Unaudited)

4 unchanged sentences

Loss on impairment of assets 350,939 248

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

Operating loss ( 366,178 ) ( 21,299 )

Interest income 1,594 2,594

2 unchanged sentences

(Loss) gain on derivatives ( 626 ) 9,166

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

Other income, net 814 9,090

Foreign currency exchange gain, net 71,074 7,601

Gain on sales of subsidiaries, net 2,822 —

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

Loss on disposal of subsidiaries, net ( 1,178 ) ( 1,474 )

Loss from continuing operations before income taxes and equity in net income of affiliates ( 370,198 ) ( 117,929 )

Income tax benefit (expense) 293,514 ( 93,966 )

1 unchanged sentence

Loss from continuing operations ( 76,503 ) ( 211,676 )

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

(Loss) income from discontinued operations, net of tax (expense) benefit of $( 48,214 ) and $ 17,364 , respectively

( 557,951 ) 240,373

(Loss) gain on sales of discontinued operations, including tax benefit of $ 5,359 and $ 34,744 , respectively

(Loss) gain on sales of discontinued operations, including tax (expense) benefit of $( 47,353 ) and $ 31,153 , respectively

( 363,288 ) 848,390

Net (loss) income ( 997,742 ) 877,087

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

Net loss attributable to noncontrolling interests 5,092 522

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

8 unchanged sentences

Consolidated Statements of Comprehensive Income

For the three months ended June 30, 2020 2019

For the three months ended September 30, 2020 2019

(Unaudited) (Unaudited)

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

Net loss $ ( 784,430 ) $ ( 96,794 )

Other comprehensive income (loss):

1 unchanged sentence

326,342 ( 82,580 )

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

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

Total other comprehensive income (loss) 326,342 ( 78,049 )

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

Comprehensive loss ( 458,088 ) ( 174,843 )

Net comprehensive loss attributable to noncontrolling interests 62 2,078

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

Comprehensive loss attributable to Laureate Education, Inc.

$ ( 458,026 ) $ ( 172,765 )

3 unchanged sentences

Consolidated Statements of Comprehensive Income

For the six months ended June 30, 2020 2019

For the nine months ended September 30, 2020 2019

(Unaudited) (Unaudited)

5 unchanged sentences

Minimum pension liability adjustment, net of tax of $ 0

Total other comprehensive (loss) income ( 317,014 ) 51,789

Total other comprehensive income (loss) 9,328 ( 26,260 )

Comprehensive (loss) income ( 988,414 ) 850,827

Net comprehensive loss (income) attributable to noncontrolling interests 4,413 ( 989 )

Net comprehensive loss attributable to noncontrolling interests 4,475 1,089

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

5 unchanged sentences

IN THOUSANDS, except per share amounts

June 30, 2020 December 31, 2019

Assets (Unaudited)

September 30, 2020 December 31, 2019

Assets (Unaudited) (Unaudited)

Current assets:

Cash and cash equivalents (includes VIE amounts of $ 215,908 and $ 157,003 , see Note 2)

$ 629,551 $ 339,629

Cash and cash equivalents $ 716,799 $ 61,576

Restricted cash 30,857 36,241

6 unchanged sentences

Current assets held for sale 510,397 706,544

Total current assets (includes VIE amounts of $ 392,899 and $ 346,125 , see Note 2)

1,270,194 942,927

Total current assets 1,480,454 916,066

Notes receivable, net 1,430 353

10 unchanged sentences

Goodwill 518,332 606,483

Other intangible assets:

Tradenames 221,143 562,137

Other intangible assets, net 963 1,431

Deferred costs, net 19,013 24,704

2 unchanged sentences

Long-term assets held for sale 1,598,303 3,100,985

Total assets (includes VIE amounts of $ 657,761 and $ 948,632 , see Note 2)

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

Total assets $ 5,175,149 $ 6,496,423

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

3 unchanged sentences

IN THOUSANDS, except per share amounts

June 30, 2020 December 31, 2019

Liabilities and stockholders' equity (Unaudited)

September 30, 2020 December 31, 2019

Liabilities and stockholders' equity (Unaudited) (Unaudited)

Current liabilities:

9 unchanged sentences

Current liabilities held for sale 594,399 602,426

Total current liabilities (includes VIE amounts of $ 191,165 and $ 142,343 , see Note 2)

1,106,168 1,070,804

Total current liabilities 1,033,792 1,045,055

Long-term operating leases, less current portion 452,111 516,979

Long-term debt and finance leases, less current portion 1,307,849 1,103,302

Due to shareholders of acquired companies, less current portion 7,872 9,995

Deferred compensation 11,527 12,744

3 unchanged sentences

Long-term liabilities held for sale 375,488 847,715

Total liabilities (includes VIE amounts of $ 317,954 and $ 257,199 , see Note 2)

3,661,459 3,699,182

Total liabilities 3,348,855 3,679,977

Redeemable noncontrolling interests and equity 1,714 12,295

Stockholders' equity:

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

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

Class A common stock, par value $ 0.004 per share – 700,000 shares authorized, 136,897 shares issued and 119,270 shares outstanding as of September 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 September 30, 2020 and 90,831 shares issued and outstanding as of December 31, 2019

Additional paid-in capital 3,758,008 3,724,636

Retained earnings 228,301 436,509

(Accumulated deficit) retained earnings ( 556,141 ) 436,509

Accumulated other comprehensive loss ( 1,065,270 ) ( 1,073,981 )

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

Treasury stock at cost ( 17,627 shares held at September 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 six months ended June 30, 2020 2019

For the nine months ended September 30, 2020 2019

Cash flows from operating activities (Unaudited) (Unaudited)

9 unchanged sentences

Non-cash interest expense 14,075 3,386

Interest paid on deferred purchase price for acquisitions ( 3,969 ) —

Non-cash share-based compensation expense 10,277 9,581

1 unchanged sentence

Deferred income taxes ( 264,381 ) ( 3,107 )

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

Unrealized foreign currency exchange (gain) loss ( 15,355 ) 8,434

Non-cash loss from non-income tax contingencies 3,375 5,196

14 unchanged sentences

(Payments to) receipts from related parties ( 3 ) 84

Proceeds from sale of investment — 11,473

Net cash (used in) provided by investing activities ( 34,157 ) 1,050,680

22 unchanged sentences

Laureate Education, Inc.

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 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.

and subsidiaries (hereinafter Laureate, we, us, our, or the Company) provide higher education programs and services to students through 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).

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.

We are domiciled in Delaware as a public benefit corporation, a demonstration of our long-term commitment to our mission to benefit our students and society.

1 unchanged sentence

Discontinued Operations

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.

In 2017 and 2018, the Company announced the divestiture of certain subsidiaries located in Europe, Asia and Central America, which were included in the Rest of World, Peru (formerly Andean), and Central America (formerly Central America & U.S.

Campuses) segments.

Previously, the Company had announced the divestiture of certain subsidiaries in the Rest of World and Central America segments.

After completing all of these announced divestitures, the Company’s remaining principal markets would be Brazil, Chile, Mexico and Peru, along with the Online & Partnerships segment and the institutions in Australia and New Zealand.

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.

This represented a strategic shift that had a major effect on the Company’s operations and financial results.

Accordingly, all of the divestitures that were part of this strategic shift, including the divestitures announced on August 9, 2018 and those announced previously, as well as the Company's operations in the Kingdom of Saudi Arabia that were managed under a contract that expired on August 31, 2019 and was not renewed, are accounted for as discontinued operations for all periods presented in accordance with Accounting Standards Codification (ASC) 205-20, “Discontinued Operations” (ASC 205).

See Note 4, Discontinued Operations and Assets Held for Sale, for more information.

Unless indicated otherwise, the information in the footnotes to the Consolidated Financial Statements relates to continuing operations.

Exploration of Strategic Alternatives

Accordingly, all of the divestitures that were part of this strategic shift, as well as the Company's operations in the Kingdom of Saudi Arabia that were managed under a contract that expired on August 31, 2019 and was not renewed, were accounted for as discontinued operations for all periods presented in accordance with Accounting Standards Codification (ASC) 205-20, “Discontinued Operations” (ASC 205).

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.

1 unchanged sentence

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.

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.

As a result of these efforts to explore strategic alternatives, d uring the third quarter of 2020, the Company announced that it had completed a sale of its operations in Chile and had signed agreements to sell its operations in Brazil, Australia and New Zealand, as well as Walden University, its fully online higher education institution in the United States.

The sale of Australia and New Zealand was subsequently completed on November 3, 2020.

After completing these announced divestitures, the Company’s remaining principal markets will be Mexico and Peru.

This also represented a strategic shift that had a major effect on the Company’s operations and financial results.

Accordingly, Chile, Brazil, Australia and New Zealand, and Walden also have been accounted for as discontinued operations for all periods presented in accordance with ASC 205.

The timing and ability to complete any of the remaining transactions is uncertain and will be subject to market and other conditions, which may include regulatory approvals and consents of third parties.

See Note 4, Discontinued Operations and Assets Held for Sale, for more information.

Unless indicated otherwise, the information in the footnotes to the Consolidated Financial Statements relates to continuing operations.

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.

4 unchanged sentences

Significant Accounting Policies

The Variable Interest Entity (VIE) Arrangements

Laureate consolidates in its financial statements certain internationally based educational organizations that do not have shares or other equity ownership interests.

Although these educational organizations may be considered not-for-profit entities in their home countries and they are operated in compliance with their respective not-for-profit legal regimes, we believe they do not meet the definition of a not-for-profit entity under GAAP, and therefore we treat them as “for-profit” entities for accounting purposes.

These entities generally cannot declare dividends or distribute their net assets to the entities that control them.

Under ASC 810-10, “Consolidation,” we have determined that these institutions are VIEs and that Laureate is the primary beneficiary of these VIEs because we have, as further described herein:

(1) the power to direct the activities of the VIEs that most significantly affect their educational and economic performance and (2) the right to receive economic benefits from contractual and other arrangements with the VIEs that could potentially be significant to the VIEs.

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 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 June 30, For the six months ended June 30,

2020 2019 2020 2019

Selected Statements of Operations information:

Revenues, by segment:

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

Revenues 116,035 148,472 152,501 204,922

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

Operating (loss) income, by segment:

Brazil — ( 17 ) — ( 34 )

Mexico ( 110 ) ( 99 ) ( 278 ) ( 196 )

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

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

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 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

Other operations 30,443 699,745 ( 52,186 ) 654,533

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

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

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

The following table presents selected assets and liabilities of the consolidated VIEs.

Except for Goodwill, the assets in the table below include the assets that can be used only to settle the obligations for the VIEs.

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

June 30, 2020 December 31, 2019

VIE Consolidated VIE Consolidated

Balance Sheets data:

Cash and cash equivalents $ 215,908 $ 629,551 $ 157,003 $ 339,629

Current assets held for sale 17,758 62,312 16,050 83,800

Other current assets 159,233 578,331 173,072 519,498

Total current assets 392,899 1,270,194 346,125 942,927

Goodwill 31,431 1,355,585 159,957 1,701,495

Tradenames — 977,799 61,691 1,119,454

Other intangible assets, net — 963 — 1,431

Operating lease right-of-use assets, net 34,694 691,631 65,761 861,878

Long-term assets held for sale 52,745 187,174 52,519 305,973

Other long-term assets 145,992 1,470,331 262,579 1,582,470

Total assets 657,761 5,953,677 948,632 6,515,628

Current liabilities held for sale 12,087 50,252 11,741 64,204

Other current liabilities 179,078 1,055,916 130,602 1,006,600

Long-term operating leases, less current portion 52,577 700,944 56,571 792,358

Long-term liabilities held for sale 38,545 68,425 29,666 124,914

Long-term debt and other long-term liabilities 35,667 1,785,922 28,619 1,711,106

Total liabilities 317,954 3,661,459 257,199 3,699,182

Total stockholders' equity 339,807 2,280,061 691,433 2,804,151

Total stockholders' equity attributable to Laureate Education, Inc.

339,807 2,294,191 691,433 2,816,963

The amounts classified as held-for-sale assets and liabilities in the table above relate to a VIE that is included in our Central America segment.

Chile - Higher Education Law

On May 29, 2018, a new Higher Education Law (the New Law) was enacted.

Among other things, the New Law prohibits conflicts of interests and related party transactions involving universities and their controlling parties, with certain exceptions.

These exceptions include the provision of services that are educational in nature or essential for the university’s purposes.

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.

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.

We do not believe that the New Law will change our relationship with our two technical-vocational institutions in Chile that are for-profit entities.

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

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.

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.

As of September 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 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.

While this evaluation did not result in a material effect to the Company’s Consolidated Financial Statements as of and for the nine months ended September 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 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 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.

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

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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 June 30, 2020 and 2019:

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

The following table shows the components of Revenues by reportable segment plus the Corporate business unit, and as a percentage of total revenue for the three months ended September 30, 2020 and 2019:

Mexico Peru Corporate (1)

Tuition and educational services $ 141,897 $ 126,455 $ — $ 268,352 110 %

8 unchanged sentences

Total $ 145,790 $ 130,805 $ 672 $ 277,267 100 %

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)

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

Mexico Peru Corporate (1)

Tuition and educational services $ 442,470 $ 352,949 $ — $ 795,419 108 %

16 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 $ 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.

Total accounts receivable from our contracts with students were $ 136,240 and $ 123,132 as of September 30, 2020 and December 31, 2019, respectively.

The increase in the contract assets balance at September 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 $ 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 .

All co ntr act asset amounts are classified as current.

Contract liabilities in the amount of $ 62,612 and $ 54,849 were included within the Deferred revenue and student deposits balance in the current liabilities section of the accompanying Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively.

The increase in the contract liability balance during the period ended September 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 nine months ended September 30, 2020 that was included in the contract liability balance at the beginning of the year was approximately $ 43,600 .

Discontinued Operations and Assets Held for Sale

As discussed in Note 1, Description of Business, on August 9, 2018, the Company announced that it planned to focus on its principal markets and would divest certain of its other markets .

The principal markets that would remain (the Continuing Operations) included Brazil, Chile, Mexico, and Peru, along with the Online & Partnerships segment and the institutions in Australia and New Zealand.

At the time of the announcement on August 9, 2018 , the markets being divested by sale ( the Discontinued Operations) included the institutions in Portugal and Spain, which were part of the Andean segment, all remaining institutions in the Central America segment, and all remaining institutions in the Rest of World segment, except for Australia, New Zealand and the managed institutions in the Kingdom of Saudi Arabia and China.

The institutions in the Kingdom of Saudi Arabia were managed under a contract that expired at the end of August 2019 and was not renewed.

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 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.

As discussed in Note 1, Description of Business, the Company’s remaining principal markets are Mexico and Peru (the Continuing Operations).

All other remaining markets are being divested (the Discontinued Operations).

As described in Note 5, Dispositions, a number of sale transactions closed during 2019 and 2020.

The assets and liabilities of the Discontinued Operations, which are subject to finalization, have been classified as held for sale as of September 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.”

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

For the three months ended June 30, 2020 2019

For the three months ended September 30, 2020 2019

Revenues $ 459,442 $ 561,748

Costs and expenses:

Depreciation and amortization 13,656 28,523

Share-based compensation expense 1,045 334

Other direct costs 23,274 126,202

Loss on impairment of assets 208,040 25,000

Other direct costs 340,657 468,573

Operating (loss) income ( 103,956 ) 39,318

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

Other non-operating loss ( 14,731 ) ( 32,402 )

Pretax (loss) income of discontinued operations ( 118,687 ) 6,916

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

Income tax (expense) benefit ( 51,081 ) 24,070

(Loss) income from discontinued operations, net of tax $ ( 169,768 ) $ 30,986

For the six months ended June 30, 2020 2019

For the nine months ended September 30, 2020 2019

Revenues $ 1,342,298 $ 1,952,952

Costs and expenses:

Depreciation and amortization 60,168 84,666

3 unchanged sentences

Operating (loss) income ( 429,930 ) 268,287

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

Other non-operating loss ( 79,807 ) ( 45,278 )

Pretax (loss) income of discontinued operations ( 509,737 ) 223,009

Income tax expense ( 3,391 ) ( 13,863 )

Income tax (expense) benefit ( 48,214 ) 17,364

(Loss) income from discontinued operations, net of tax $ ( 557,951 ) $ 240,373

3 unchanged sentences

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.’

Chile Impairment

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.

During the second quarter of 2020, the Company received and considered information regarding the market valuation for control of its Chilean operations, which was both a reporting unit and an asset group.

In a divestiture scenario, this market feedback revealed 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 included uncertainties that market participants had 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 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 was less than its carrying value.

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

Because Chile had not yet met the held-for-sale criteria as of June 30, 2020, 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 were not observable to active markets and were therefore deemed “Level 3” inputs in the fair value hierarchy.

As a result of the impairment test, 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 second quarter of 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, at the time of the sale, the Company had recorded within stockholders’ equity, as a component of accumulated other comprehensive income, approximately $ 293,000 of accumulated foreign currency translation losses associated with the Chilean operations that were sold.

As discussed further in Note 5, Dispositions, the Company completed the divestiture of its Chilean operations during the third quarter of 2020 and, as a result, these accumulated foreign currency translation losses were recognized as part of the loss on sale.

Honduras Impairment

During the second quarter of 2020, the Company recorded an impairment charge of approximately $ 10,000 related to long-lived assets of its institution in Honduras in order to write down the carrying value of those assets to their estimated fair value at that time.

During the third quarter of 2020, the Company recorded an additional impairment charge of approximately $ 10,000 related to the long-lived assets of its Honduras institution, in order to write down the carrying value of those assets to their estimated fair value based on the sale agreement for the institution that was signed in October 2020, as discussed further below and in Note 19, Subsequent Events.

Brazil Impairment

As discussed further below, during the third quarter of 2020, the Company signed an agreement to sell its Brazil operations and, as a result, Brazil was classified as a Discontinued Operation for all periods presented.

In connection with this decision to sell Brazil, the Company recorded a goodwill impairment charge of approximately $ 190,000 in order to write down the carrying value of Brazil to its estimated ‘fair value less costs to sell’, as required by ASC 360-10.

The estimated fair value was based on an offer received from a market participant.

Because the held-for-sale criteria were met during the third quarter, the carrying value used to evaluate the Brazil business for impairment included the accumulated foreign currency translation losses associated with Brazil, resulting in the impairment.

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

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Assets of Discontinued Operations

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Total assets held for sale $ 2,108,700 $ 3,807,529

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Liabilities of Discontinued Operations

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Operating leases, including current portion 185,473 388,202

Long-term debt and finance leases, including current portion 31,778 55,495

Long-term debt, seller notes and finance leases, including current portion 180,112 304,355

Other liabilities 400,437 581,329

Total liabilities held for sale $ 969,887 $ 1,450,141

Sale Agreement Pending Closure as of June 30, 2020

Inti Education Holdings Sdn.

(Inti Holdings)

On February 28, 2020, Exeter Street Holdings Sdn.

Bhd., a Malaysia corporation (the Malaysia Seller), and LEI Holdings, LTD., a Hong Kong corporation (the Malaysia Seller Guarantor), each of which is an indirect wholly owned subsidiary of Laureate, entered into a Share Sale & Purchase Agreement (the Malaysia Sale Agreement) with HOPE Education Group (Hong Kong) Company Limited (the Malaysia Purchaser) and HOPE Education Group Co.

(the Malaysia Purchaser Guarantor).

Pursuant to the Malaysia Sale Agreement, the Malaysia Purchaser will purchase from the Malaysia Seller all of the issued and outstanding shares in the capital of Inti Education Holdings Sdn.

Bhd., a Malaysia corporation (Inti Holdings), the Malaysia Seller’s Guarantor will guarantee certain obligations of the Malaysia Seller and the Malaysia Purchaser’s Guarantor will guarantee certain obligations of the Malaysia Purchaser.

Inti Holdings is the indirect owner of INTI University and Colleges, a higher education institution with five campuses in Malaysia.

In connection with the Malaysia Sale Agreement, the Malaysia Seller entered into a separate agreement with the current minority owner of the equity of Inti Holdings relating to the purchase by the Malaysia Seller of the minority owner’s 10.10 % interest in Inti Holdings, the closing of which is a precondition to the closing of the transaction under the Agreement.

The total purchase price, including the payment to the current minority owner, will be $ 140,000 .

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 six months ended June 30, 2020.

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 the 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 (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 was $ 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 occurred on November 3, 2020, following completion of the required regulatory approvals and other customary closing conditions.

Brazil Operations

On September 11, 2020, Laureate and Rede Internacional de Universidades Laureate Ltda., a Brazilian limited liability company and an indirect wholly owned subsidiary of Laureate (Rede), entered into a transaction agreement (the Brazil Sale Agreement) with Ser Educacional S.A., a Brazilian publicly held company (SER), and, solely for the purposes of certain provisions thereof, José Janguiê Bezerra Diniz and certain of his family members.

Pursuant to the Brazil Sale Agreement, Laureate agreed to sell to SER all of the issued and outstanding equity interests of Rede, the direct or indirect owner of Laureate’s Brazilian operations, in exchange for 1,700,000 Brazilian Reals (or approximately $ 318,700 at the time of signing) in cash, subject to certain adjustments, and 101,138,369 newly issued shares of SER’s common stock (the Stock Consideration).

Immediately following the closing of the transaction (the Brazil Closing), Laureate would own approximately 44 % of SER’s outstanding common stock, unless SER were to issue additional common stock prior to the Brazil Closing to the extent permitted under the Brazil Sale Agreement.

The transaction value is approximately 3,862,000 Brazilian Reals (or approximately $ 724,000 at the exchange rate and share value at the time of signing), including the assumption of indebtedness, net of cash (which, at the time of signing, was approximately $ 124,900 ).

The closing of this transaction was targeted to occur toward the end of 2021 and was subject to certain specified closing conditions, including receipt of regulatory approval, receipt of required approvals by SER’s shareholders, establishment of a facility to issue American Depositary Shares (ADSs), the listing of the ADSs on a U.S.

securities exchange, the effectiveness of registration statements to register the issuance of the Stock Consideration and other matters under U.S.

federal securities laws and other customary closing conditions.

Under the terms of the Brazil Sale Agreement, during the period from September 11, 2020 and continuing until 12:01 A.M.

(New York time) on October 13, 2020 (the Go-Shop Period), the Company had the right to solicit and engage in discussions with respect to a competing proposal for the acquisition of its Brazilian operations from third parties.

Prior to the expiration of the Go-Shop Period, Laureate received a competing proposal from Ânima Holding S.A.

(Anima), which on October 12, 2020, Laureate’s Board of Directors determined constituted a Superior Proposal as defined in the transaction agreement.

On October 13, 2020, Laureate notified SER of the Superior Proposal, and SER had the right, for a period of five business days, to match Anima’s proposal.

On October 20, 2020, instead of submitting a matching proposal before the expiration of the match period, SER informed the Company that it had obtained a partial and temporary injunction solely with respect to termination of the Brazil Sale Agreement and without a ruling on the merits of the superior proposal.

On November 2, 2020, the Company announced that it had entered into a definitive agreement with Anima for the sale of its Brazilian operations.

Net of the termination fee payable to SER to be borne by Anima, the transaction value is approximately 4,400,000 Brazilian Reals (approximately $ 765,000 at the exchange rate at the time of signing), including 3,800,000 Brazilian Reals (approximately $ 660,700 at the exchange rate at the time of signing) in cash consideration, which is subject to certain adjustments, and the assumption of net indebtedness.

Under the agreement with Anima, the Company will be entitled to receive up to 203,000 Brazilian Reals (approximately $ 35,300 at the time of signing) in additional cash consideration if certain metrics are achieved following the closing.

The Company and SER have agreed to terminate their previously announced transaction agreement and settle all legal proceedings related to such agreement.

SER and Anima have agreed that Anima will bear the 180,000 Brazilian Reals (approximately $ 31,300 at the exchange rate at the time of signing) termination fee that the Company owes Ser in connection with the termination of the transaction agreement.

The transaction is targeted to close by the end of the second quarter of 2021.

On September 11, 2020, Laureate entered into a Membership Interest Purchase Agreement (the Walden Sale Agreement) with Adtalem Global Education Inc., a Delaware corporation (the Walden Purchaser).

Pursuant to the Walden Sale Agreement, the Company has agreed to sell to the Walden Purchaser all of the issued and outstanding equity interest in Walden e-Learning, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company and its subsidiary, Walden University, LLC (Walden University), a Florida limited liability company and an indirect wholly owned subsidiary of the Company (together with Walden e-Learning, LLC, the Walden Group), in exchange for a purchase price of $ 1,480,000 in cash, subject to certain adjustments set forth in the Walden Sale Agreement.

The closing of this transaction is expected to occur toward the end of 2021 and is subject to customary closing conditions, including regulatory approval by the U.S.

Department of Education and the Higher Learning Commission and required antitrust approvals.

Under certain specified circumstances, the Walden Purchaser may be required to pay the Company a termination fee of $ 88,000 , including if the Walden Purchaser terminates the Walden Sale Agreement as a result of the imposition by the U.S.

Department of Education of certain specified restrictions, or if Laureate terminates the Walden Sale Agreement as a result of the Walden Purchaser’s failure to consummate the transaction upon satisfaction of the closing conditions.

On October 13, 2020, the Company entered into a definitive agreement with Fundación Nasser, a not-for-profit foundation in Honduras, to transfer control of its operations in Honduras for total cash consideration of approximately $ 29,800 , prior to closing costs.

The buyer will also assume indebtedness which, as of September 30, 2020, was approximately $ 30,000 .

The transaction is subject to certain closing conditions, including regulatory approval, and is expected to be completed in the first half of 2021.

Sale of Costa Rica Operations

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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 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.

(Sterling II).

Sterling II has the right to designate a director to the Laureate Board of Directors pursuant to a securityholders agreement, and Steven Taslitz currently serves as the Sterling-designated director.

Sterling II has the right to designate a director to the Laureate Board of Directors pursuant to a securityholders agreement, and Steven Taslitz currently

serves as the Sterling-designated director.

Taslitz did not participate in the Laureate Board of Directors’ consideration of the transaction, which was approved by Laureate's Audit Committee as a related party transaction.

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Under the terms of the agreement, the Company agreed to pay subsidies to the NSAD Buyers totaling approximately $ 7,300 , of which all but $ 2,800 was settled at the closing date.

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 six months ended June 30, 2020.

The remaining subsidy of $ 2,800 is being 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 $ 5,900 , which is included in loss on sales of discontinued operations on the Consolidated Statement of Operations for the nine months ended September 30, 2020.

Sale of China Operations-Receipt of Escrow

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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

The amounts due to shareholders of acquired companies generally arise in connection with Laureate’s acquisition of a majority or all of the ownership interest of these companies.

Promissory notes payable to the sellers of acquired companies, referred to as “seller notes,” are commonly used as a means of payment for business acquisitions.

Seller note payments are classified as Payments of deferred purchase price for acquisitions within financing activities in our Consolidated Statements of Cash Flows.

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

June 30, 2020 December 31, 2019 Nominal Currency Interest

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

Faculdade Porto-Alegrense (FAPA) 184 230 BRL IGP-M

IADE Group — 1,109 EUR 3 %

Total due to shareholders of acquired companies 15,998 21,518

Current portion of due to shareholders of acquired companies 8,126 11,523

Due to shareholders of acquired companies, less current portion $ 7,872 $ 9,995

Brazilian Real CDI:

Certificados de Depósitos Interbancários (Brazil)

European Euro IGP-M:

General Index of Market Prices (Brazil)

Divestiture of Chilean Operations

On September 10, 2020, Laureate International and Laureate I, B.V., each a Netherlands private limited liability company (together, the LDES Sellers), and Servicios Regionales Universitarios LE, S.C., a Mexican company (sociedad civil) (together with the LDES Sellers, the Controlling Entities), all of which are indirect, wholly owned subsidiaries of the Company, entered into a Master Agreement (the Chile Agreement) with Fundación Educación y Cultura, a Chilean non-for-profit foundation (the Chile Buyer).

Pursuant to the Chile Agreement, as of September 11, 2020, Laureate completed the divestiture of its operations in Chile through the transfer of control of its not-for-profit institutions, Universidad Andrés Bello, Universidad de Las Américas and Universidad Viña del Mar, to the Chile Buyer, and the sale of its for-profit operations, which includes the sale of Instituto Profesional AIEP to Universidad Andrés Bello.

The not-for-profit institutions were consolidated by Laureate under the variable interest entity model.

The cash proceeds received at closing, prior to transaction fees, were approximately $ 195,300 .

In addition, the purchase price includes a note receivable of $ 21,500 that is payable one year from the date of divestiture.

At the closing date, the Chilean operations had a cash balance (cash sold) of approximately $ 288,000 that was transferred to the Chile Buyer as part of the transaction.

This divestiture resulted in a pre-tax loss of approximately $ 344,500 , which relates primarily to the accumulated foreign currency translation losses associated with the Chilean operations.

The loss is recorded in loss on sales of discontinued operations in the Consolidated Statements of Operations for the three and nine months ended September 30, 2020.

As discussed in Note 4, Discontinued Operations and Assets Held for Sale, 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 the Chilean operations, in order to write down the carrying value of the Chilean operations assets to its estimated fair value.

Inti Education Holdings Sdn.

(Inti Holdings)

On February 28, 2020, Exeter Street Holdings Sdn.

(the Malaysia Purchaser Guarantor).

Pursuant to the Malaysia Sale Agreement, the Malaysia Purchaser would purchase from the Malaysia Seller all of the issued and outstanding shares in the capital of Inti Education Holdings Sdn.

Bhd., a Malaysia corporation (Inti Holdings), the Malaysia Seller’s Guarantor would guarantee certain obligations of the Malaysia Seller and the Malaysia Purchaser’s Guarantor would guarantee certain obligations of the Malaysia Purchaser.

Inti Holdings was the indirect owner of INTI University and Colleges, a higher education institution with five campuses in Malaysia.

In connection with the Malaysia Sale Agreement, the Malaysia Seller entered into a separate agreement with the current minority owner of the equity of Inti Holdings relating to the purchase by the Malaysia Seller of the minority owner’s 10.10 % interest in Inti Holdings, the closing of which was a precondition to the closing of the transaction under the Malaysia Sale Agreement.

The sale of Inti Holdings was completed on September 29, 2020.

The total purchase price, including the payment to the current minority owner, was $ 140,000 .

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

At the time of the signing of the Malaysia Sale Agreement in February 2020, the Malaysia Purchaser paid to the Malaysia Seller a cash deposit of $ 5,000 , which the Company initially recorded as a liability pending the closing of the sale, and which was recognized as part of the gain on sale upon the closing of the transaction in September 2020.

The cash proceeds received, prior to transaction fees and net of approximately $ 19,500 of cash sold, were approximately $ 116,300 and are 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 nine months ended September 30, 2020.

In addition, the Malaysia Purchaser withheld $ 4,200 for taxes that the Company expects to receive during the fourth quarter of 2020.

The payment to the minority owner for their 10.10 % interest in Inti Holdings, which totaled approximately $ 13,700 , was made in early October 2020.

An additional $ 420 , which represents the minority owner’s share of the taxes that were withheld as noted above, will be paid to the minority owner once received by the Company.

The Company recognized a pre-tax gain on sale of approximately $ 45,200 , which is included in the total gain/loss on sales of discontinued operations in the Consolidated Statements of Operations for the three and nine months ended September 30, 2020.

Divestiture of Turkey Operations:

Receipt of Portion of Deferred Consideration

As previously disclosed, in August 2019, the Company completed the divestiture of its operations in Turkey.

The total consideration included a deferred payment of $ 15,000 in the form of an instrument that was payable one year after closing.

At the time of the divestiture, the Company determined that this deferred amount would be recognized if collected.

In early October 2020, the Company received $ 8,436 of the deferred consideration.

Accordingly, as of September 30, 2020, the Company recorded a receivable of $ 8,436 , through a reduction to the loss on the sale of control of the Turkish operations.

The outstanding amount is due in January 2021.

Business and Geographic Segment Information

Laureate’s educational services are offered through six operating segments:

Brazil, Mexico, Andean, Central America, Rest of World and Online & Partnerships.

Brazil, Mexico, Peru (formerly Andean), Central America, Rest of World and Online & Partnerships.

Following the March 2020 sale of NSAD, Laureate’s last remaining U.S.

1 unchanged sentence

Campuses segment is now called the Central America segment.

Following the September 2020 sale of Chile, the former Andean segment is now called the Peru segment.

Laureate determines its operating segments based on information utilized by the chief operating decision maker to allocate resources and assess performance.

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However, there are some government-sponsored student financing programs which are discussed below.

These campus-based segments include Brazil, Mexico, Andean, Central America, and Rest of World.

These campus-based segments include Brazil, Mexico, Peru, Central America, and Rest of World.

Specifics related to each of these campus-based segments and our Online & Partnerships segment are discussed below.

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

The entire Brazil segment is included in Discontinued Operations.

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

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Students in our Mexican institutions typically finance their own education.

The Andean segment includes institutions in Chile and Peru.

In Chile, private universities enroll approximately 72 % of post-secondary students and there are government-sponsored student financing programs.

In Peru, the public sector plays a significant role, but private universities are increasingly providing the capacity to meet growing demand.

The Peru segment includes three institutions, where the public sector plays a significant role, but private universities are increasingly providing the capacity to meet growing demand.

The Central America segment includes an institution in Honduras, which is included in Discontinued Operations.

Students in Central America typically finance their own education.

The Rest of World segment includes campus-based institutions in Asia Pacific with operations in Australia, Malaysia and New Zealand.

The Rest of World segment includes campus-based institutions in Asia Pacific with operations in Australia and New Zealand.

Additionally, the Rest of World segment manages one institution in China through a joint venture arrangement.

The institution in Malaysia is included in Discontinued Operations.

The entire Rest of World segment is included in Discontinued Operations.

The Online & Partnerships segment includes fully online institutions that offer profession-oriented degree programs in the United States through Walden University (Walden), a U.S.-based accredited institution, and through the University of Liverpool and the University of Roehampton in the United Kingdom.

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We no longer accept new enrollments at the University of Liverpool and the University of Roehampton, which are in a teach-out process.

As discussed in Note 1, Description of Business, and Note 4, Discontinued Operations and Assets Held for Sale, a number of our subsidiaries have met the requirements to be classified as discontinued operations, including the entire Central America segment .

As a result, the operations of the Central America segment has been excluded from the segment information for all periods presented.

In addition, the portion of the Rest of World reportable segment that is included in Discontinued Operations has also been excluded from the segment information for all periods presented.

The entire Online & Partnerships segment is included in Discontinued Operations.

As discussed in Note 1, Description of Business, and Note 4, Discontinued Operations and Assets Held for Sale, several of our subsidiaries have met the requirements to be classified as discontinued operations.

As a result, the operations of the Brazil, Central America, Rest of World and Online & Partnerships segments have been excluded from the segment information for all periods presented.

Intersegment transactions are accounted for in a similar manner as third-party transactions and are eliminated in consolidation.

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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, 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.

Gain (loss) on sale or disposal of subsidiaries, Foreign currency exchange gain, net, Other 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.

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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 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,

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 For the nine months ended

September 30, September 30,

2020 2019 2020 2019

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

Mexico $ 115,949 $ 145,790 $ 385,021 $ 464,709

Andean 345,867 422,994 435,375 561,937

Rest of World 62,559 51,186 106,135 84,618

Online & Partnerships 148,885 159,715 305,390 321,489

Peru 127,314 130,805 351,413 391,055

Corporate 260 672 3,264 4,460

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Adjusted EBITDA of reportable segments

Brazil $ 41,590 $ 58,856 $ 22,390 $ 28,200

Mexico $ 15,530 $ 23,064 $ 58,544 $ 80,476

Andean 160,692 186,530 98,542 153,287

Rest of World 19,688 12,109 24,525 8,750

Online & Partnerships 43,400 49,859 86,681 98,435

Peru 56,474 45,232 128,975 133,783

Total Adjusted EBITDA of reportable segments 72,004 68,296 187,519 214,259

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EiP expenses ( 24,392 ) ( 27,263 ) ( 66,471 ) ( 56,122 )

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

Operating loss ( 318,235 ) ( 18,411 ) ( 366,178 ) ( 21,299 )

Interest income 684 912 1,594 2,594

1 unchanged sentence

Loss on debt extinguishment — ( 200 ) — ( 22,059 )

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

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

Gain (loss) on derivatives — 283 ( 626 ) 9,166

Other income, net 1,301 992 814 9,090

Foreign currency (loss) gain, net ( 2,907 ) 7,659 71,074 7,601

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

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

Gain (loss) on disposal of subsidiaries, net 621 ( 1,474 ) ( 1,178 ) ( 1,474 )

Loss from continuing operations before income taxes and equity in net income of affiliates $ ( 343,239 ) $ ( 38,557 ) $ ( 370,198 ) $ ( 117,929 )

September 30, 2020 December 31, 2019

Mexico $ 1,121,783 $ 1,315,377

Andean 1,345,984 1,715,145

Rest of World 239,237 194,409

Online & Partnerships 1,251,246 1,303,811

Peru 716,745 643,473

Corporate and Discontinued Operations 3,336,621 4,537,573

1 unchanged sentence

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

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

Mexico Peru Total

Balance at December 31, 2019 $ 525,256 $ 81,227 $ 606,483

Acquisitions — — — — — —

Dispositions — — —

1 unchanged sentence

Currency translation adjustments ( 81,862 ) ( 6,289 ) ( 88,151 )

Adjustments to prior acquisitions — — — — — —

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

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.

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.

Balance at September 30, 2020 $ 443,394 $ 74,938 $ 518,332

Impairment of Laureate Tradename

During the third quarter of 2020, the Company recognized an impairment charge of $ 320,000 on the Laureate tradename, an intangible asset.

As described in Note 1, Description of Business, the Company had previously announced that it would explore strategic alternatives for each of its businesses and, during the third quarter, the Company announced that it had completed a sale of its operations in Chile and that it had signed agreements to sell its operations in Brazil, Australia and New Zealand, as well as Walden University.

Because of these events, the Company determined that the useful life of the Laureate tradename asset was no longer indefinite and, in accordance with ASC 350-30-35-17, the Company tested the asset for impairment.

The Company estimated the fair value of the tradename asset using the relief-from-royalty method, based on the projected revenues for each business over the estimated period that each business would remain part of the Laureate network.

As a result of the impairment test, the Company concluded that the estimated fair value of the Laureate tradename was less than its carrying value by approximately $ 320,000 and recorded an impairment charge for that amount.

The significant assumptions used in estimating the fair value included:

(1) the revenue growth rates;

(2) the discount rates;

and (3) the estimated royalty rates.

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

The decrease in the fair value of the tradename was primarily caused by the shortened duration of the estimated future revenues.

The remaining carrying value of the tradename asset of $ 82,000 will be amortized prospectively over five years , its estimated useful life.

New events or changes in circumstances, such as the signing of additional sale agreements, may be indicators of impairment that would require the Company to perform additional impairment tests.

Impairment of Brazil E2G Software Assets

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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.

During the second qu arter 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.

Accordingly, during the second quarter of 2020, the Company recorded an impairment charge to fully write off the Brazil E2G project assets.

Approximately $ 23,800 of the impairment charge was related to assets recorded on the Corporate segment and is therefore included in Continuing Operations.

The remaining portion of the impairment charge, approximately $ 3,300 , related to assets recorded on the Brazil segment and is therefore included in Discontinued Operations.

Outstanding long-term debt was as follows:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Senior long-term debt:

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

As of September 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:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Carrying amount Estimated fair value Carrying amount Estimated fair value

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Certain Covenants

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

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

(1) limitations on additional indebtedness;

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

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

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

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Laureate analyzes each lease agreement to determine whether it should be classified as a finance lease or an operating lease.

As a result of adopting ASC Topic 842 on January 1, 2019, we recorded on our balance sheet significant asset and liability balances associated with the operating leases, as described further below.

As a result of adopting ASC Topic 842 on January 1,

2019, we recorded on our balance sheet significant asset and liability balances associated with the operating leases, as described further below.

Finance Leases

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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 June 30, 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.

The redeemable noncontrolling interests are recorded at the greater of the accreted redemption value or the traditional noncontrolling interest.

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 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

INTI Education Holdings Sdn Bhd (Inti Holdings) - 10.10% MYR Current $ 10,443 $ 10,443

Total noncontrolling interest holder put arrangements 10,443 10,443

Puttable common stock - not currently redeemable USD * — 1,714

Total redeemable noncontrolling interests and equity $ 10,443 $ 12,157

* Contingently redeemable

Malaysian Ringgit

Laureate’s noncontrolling interest put arrangements are specified in agreements with each noncontrolling interest holder.

The terms of these agreements determine the measurement of the redemption value of the put options based on a non-GAAP measure of earnings before interest, taxes, depreciation and amortization (EBITDA, or recurring EBITDA), the definition of which varies for each particular contract.

Loss Contingencies

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Contingent Liabilities for Taxes

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.

As of September 30, 2020 and December 31, 2019, Laureate has recorded cumulative liabilities totaling $ 35,038 and $ 44,595 , respectively, for taxes other-than-income tax, principally payroll-tax-related uncertainties recorded at the time of an acquisition, of which $ 34,214 and $ 41,560 , 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.

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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 .

contingencies and indemnification assets was $ 3,375 and $ 5,196 , respectively, for the nine months ended September 30, 2020 and 2019.

In addition, as of September 30, 2020 and December 31, 2019, Laureate has recorded cumulative liabilities for income tax contingencies of $ 36,602 and $ 51,442 , respectively, of which $ 11,746 and $ 21,429 , respectively, were classified as held for sale.

As of September 30, 2020 and December 31, 2019, indemnification assets primarily related to acquisition contingencies were $ 50,949 and $ 69,040 , respectively, of which $ 37,536 and $ 46,284 , respectively, were classified as held for sale.

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

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 also recorded receivables, which are classified as held for sale, of approximately $ 16,000 and $ 19,000 as of September 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.

In most cases, Laureate has received indemnifications from the former owners and/or noncontrolling interest holders of the acquired businesses for contingencies, and therefore, we do not believe we will sustain an economic loss even if we are required to pay these additional amounts.

In cases where we are not indemnified, the unrecorded contingencies are not individually material and are primarily in Brazil.

In cases where we are not indemnified, the unrecorded contingencies are not individually material and are primarily in Brazil, which is now classified in Discontinued Operations.

In the aggregate, we estimate that the reasonably possible loss for these unrecorded contingencies in Brazil could be up to approximately $ 45,000 if the outcomes were unfavorable in all cases.

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Laureate intends to vigorously defend against these matters.

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

The accredited Chilean institutions in the Laureate network also participate in a government-sponsored student financing program known as Crédito con Aval del Estado (the CAE Program).

The CAE Program was formally implemented by the Chilean government in 2006 to promote higher education in Chile for lower socio-economic level students in good academic standing.

The CAE Program involves tuition financing and guarantees that are provided by our institutions and the government.

As part of the CAE Program, these institutions provide guarantees which result in contingent liabilities to third-party financing institutions, beginning at 90% of the tuition loans made directly to qualified students enrolled through the CAE Program and declining to 60% over time.

The guarantees by these institutions are in effect during the period in which the student is enrolled, and the guarantees are assumed entirely by the government upon the student’s graduation.

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 $ 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 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.

Material Guarantees – Other

As of September 30, 2020 and December 31, 2019, approximately $ 7,700 and $ 5,800 , respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets.

In addition, as of September 30, 2020 and December 31, 2019, approximately $ 20,900 and $ 26,300 , respectively, of loss contingencies were classified as held for sale.

Material Guarantees

Laureate acquired the remaining 49 % ownership interest in UAM Brazil in April 2013.

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Standby Letters of Credit, Surety Bonds and Other Commitments

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.

As of September 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 September 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 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.

These LOCs are recorded almost entirely on Walden and are fully collateralized with cash equivalents and certificates of deposit.

Because Walden is classified as a Discontinued Operation, these balances are recorded as current assets held for sale on our September 30, 2020 and December 31, 2019 Consolidated Balance Sheets.

As of September 30, 2020 and December 31, 2019, we had EUR 9,443 (approximately $ 11,000 at September 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 September 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.

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.

In addition, on March 11, 2020, ICE received a preliminary assessment of approximately EUR 21,600 (approximately $ 25,100 at September 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.

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

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

As of September 30, 2020 and December 31, 2019, the total face amount of these surety bonds was $ 17,360 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.

These bonds are fully collateralized with cash, which was classified as Restricted cash on our September 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 .

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The Company believes that this matter will not have a material impact on our Consolidated Financial Statements.

Financing Receivables

Laureate’s financing receivables consist primarily of trade receivables related to student tuition financing programs with an initial term in excess of one year .

We have offered long-term financing through the execution of note receivable agreements with students at some of our institutions.

Our disclosures include financing receivables that are classified in our Consolidated Balance Sheets as both current and long-term, reported in accordance with ASC 310, “Receivables.”

Laureate’s financing receivables balances were as follows:

June 30, 2020 December 31, 2019

Financing receivables $ 30,052 $ 28,856

Allowance for doubtful accounts ( 7,131 ) ( 5,909 )

Financing receivables, net of allowances $ 22,921 $ 22,947

We do not purchase financing receivables in the ordinary course of our business.

We may sell certain receivables that are significantly past due.

No material amounts of financing receivables were sold during the periods reported herein.

Delinquency is the primary indicator of credit quality for our financing receivables.

Receivable balances are considered delinquent when contractual payments on the loan become past due.

Delinquent financing receivables are placed on non-accrual status for interest income.

The accrual of interest is resumed when the financing receivable becomes contractually current and when collection of all remaining amounts due is reasonably assured.

We record an Allowance for doubtful accounts to reduce our financing receivables to their net realizable value.

The Allowance for doubtful accounts is based on the age of the receivables, the status of past-due amounts, historical collection trends, current economic conditions, and reasonable supportable forecasts of student attrition.

Each of our institutions evaluates its balances for potential impairment.

We consider impaired loans to be those that are past due one year or greater, and those that are modified as a troubled debt restructuring (TDR).

The aging of financing receivables grouped by country portfolio was as follows:

Chile Other Total

As of June 30, 2020

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

Amounts past due one year or greater 2,651 208 2,859

Total past due (on non-accrual status) 12,144 1,029 13,173

Not past due 14,336 2,543 16,879

Total financing receivables $ 26,480 $ 3,572 $ 30,052

As of December 31, 2019

Amounts past due less than one year $ 10,687 $ 1,556 $ 12,243

Amounts past due one year or greater 3,295 62 3,357

Total past due (on non-accrual status) 13,982 1,618 15,600

Not past due 12,556 700 13,256

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 six months ended June 30, 2020 and 2019, grouped by country portfolio:

Chile Other Total

Balance at December 31, 2019 $ ( 5,654 ) $ ( 255 ) $ ( 5,909 )

Charge-offs 2,879 4 2,883

Recoveries — — —

Reclassifications — — —

Provision ( 3,712 ) ( 924 ) ( 4,636 )

Currency adjustments 432 99 531

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

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

Charge-offs 1,071 495 1,566

Recoveries — — —

Reclassifications — — —

Provision ( 731 ) ( 675 ) ( 1,406 )

Currency adjustments ( 129 ) ( 7 ) ( 136 )

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

Restructured Receivables

A TDR is a financing receivable in which the borrower is experiencing financial difficulty and Laureate has granted an economic concession to the student debtor that we would not otherwise consider.

When we modify financing receivables in a TDR, Laureate typically offers the student debtor an extension of the loan maturity and/or a reduction in the accrued interest balance.

In certain situations, we may offer to restructure a financing receivable in a manner that ultimately results in the forgiveness of contractually specified principal balances.

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 six months ended June 30, 2020 and 2019 were as follows:

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

2020 348 $ 1,222 $ 1,178

2019 327 $ 1,100 $ 980

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 June 30, 2019 that subsequently defaulted during the six months ended June 30, 2019:

Number of Financing Receivable Accounts Balance at Default

Total 174 $ 431

Share-based Compensation

Share-based compensation expense was as follows:

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

For the three months ended September 30, For the nine months ended September 30,

2020 2019 2020 2019

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Common Stock Class B

Common Stock Additional paid-in capital Retained earnings Accumulated other comprehensive (loss) income Treasury stock at cost Non-controlling interests Total stockholders’ equity

Common Stock Additional paid-in capital Retained earnings (accumulated deficit) Accumulated other comprehensive (loss) income Treasury stock at cost Non-controlling interests Total stockholders’ equity

Shares Amount Shares Amount

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Reclassification of redeemable noncontrolling interests and equity — — — — — — — — 38 38

Net income (loss) — — — — — 99,615 — — ( 1,299 ) 98,316

Net income — — — — — 99,615 — — ( 1,299 ) 98,316

Foreign currency translation adjustment, net of tax of $ 0

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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

Non-cash stock compensation — $ — — $ — $ 3,672 $ — $ — $ — $ — $ 3,672

Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 63 — — — ( 35 ) — — — — ( 35 )

Change in noncontrolling interests — — — — ( 2,610 ) — — — — ( 2,610 )

Accretion of redeemable noncontrolling interests and equity — — — — 6 — — — — 6

Reclassification of redeemable noncontrolling interests and equity — — — — — — — — 1,574 1,574

Net loss — — — — — ( 784,442 ) — — 12 ( 784,430 )

Foreign currency translation adjustment, net of tax of $0 — — — — — — 326,416 — ( 74 ) 326,342

Balance at September 30, 2020 119,270 $ 547 90,813 $ 363 $ 3,758,008 $ ( 556,141 ) $ ( 1,065,270 ) $ ( 300,309 ) $ ( 12,618 ) $ 1,824,580

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

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

Non-cash stock compensation — — — — 1,578 — — — — 1,578

Conversion of Class B shares to Class A shares 15,002 60 ( 15,002 ) ( 60 ) — — — — — —

Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 96 — — — 1,455 — — — — 1,455

Purchases of treasury stock at cost ( 6,150 ) — — — — — — ( 104,849 ) — ( 104,849 )

Accretion of redeemable noncontrolling interests and equity — — — — ( 193 ) — — — — ( 193 )

Reclassification of redeemable noncontrolling interests and equity — — — — — — — — 649 649

Net loss — — — — — ( 95,226 ) — — ( 1,568 ) ( 96,794 )

Foreign currency translation adjustment, net of tax of $0 — — — — — — ( 82,070 ) — ( 510 ) ( 82,580 )

Minimum pension liability adjustment, net of tax of $0 — — — — — — 4,531 — — 4,531

Balance at September 30, 2019 127,754 $ 535 90,864 $ 363 $ 3,710,145 $ 375,634 $ ( 1,138,388 ) $ ( 104,849 ) $ ( 12,560 ) $ 2,830,880

Stock Repurchase Program

As previously disclosed, on August 8, 2019, the Company announced that its board of directors had authorized a stock repurchase program to acquire up to $ 150,000 of the Company’s Class A common stock.

On August 8, 2019, the Company announced that its board of directors had authorized a stock repurchase program to acquire up to $ 150,000 of the Company’s Class A common stock.

In early October 2019, the Company’s stock repurchases reached the authorized limit of $ 150,000 .

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.

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 aut horized repurchases) of up to $ 300,000 of the Company’s Class A common stock.

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 .

Accumulated Other Comprehensive Income (Loss)

As discussed in Note 19, Subsequent Events, the Company announced an additional stock repurchase program in November 2020.

Accumulated Other Comprehen sive Income (Loss)

Accumulated other comprehensive income (loss) (AOCI) in our Consolidated Balance Sheets includes the accumulated translation adjustments arising from translation of foreign subsidiaries’ financial statements, the unrealized gains on derivatives designated as cash flow hedges, and the accumulated net gains or losses that are not recognized as components of net periodic benefit cost for our minimum pension liability.

The change in AOCI includes the removal of the cumulative translation adjustment related to subsidiaries that were sold during the period.

The change in AOCI includes the removal of the cumulative translation adjustment related to subsidiaries that were sold during the period, which consisted primarily of the Chile balance of $ 293,000 .

The components of these balances were as follows:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Laureate Education, Inc.

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For swaps that are designated and effective as cash flow hedges, gains or losses associated with the change in fair value of the swaps are recognized in our Consolidated Balance Sheets as a component of AOCI and amortized into earnings as a component of Interest expense over the term of the related hedged items.

Upon early termination of an effective interest rate swap designated as a cash flow hedge, unrealized gains or losses are deferred in our Consolidated Balance Sheets as a component of AOCI and are amortized as an adjustment to Interest expense over the period during which the hedged forecasted transaction affects earnings.

transaction affects earnings.

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.

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

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

Derivatives Designated as Hedging Instruments

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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.

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 nine months ended September 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 .

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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

from AOCI to Income

(Effective Portion) Total Consolidated Interest Expense

2020 2019 2020 2019 2020 2019

Cash flow hedge

Interest rate swaps $ — $ ( 10,606 ) Interest expense $ — $ 10,606

Net investment hedge

Cross currency swaps — 47 N/A — —

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

For the six months ended June 30:

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

For the three months ended September 30, 2020 and 2019, there was no impact of derivative instruments, and for the nine months ended September 30, 2020 and 2019, the impact of these derivative instruments on Comprehensive income, Interest expense and AOCI was as follows:

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

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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 amount is included in Gain on derivatives on the Consolidated Statement of Operations for the nine months ended September 30, 2020, and is included in Payments for settlement of derivative contracts on the Consolidated Statement of Cash Flows for the nine months ended September 30, 2020.

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

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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 amount is included in Gain on derivatives on the Consolidated Statements of Operations for the nine months ended September 30, 2020 and is included in Payments for settlement of derivative contracts on the Consolidated Statement of Cash Flows for the nine months ended September 30, 2020.

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

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

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.

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

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

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,

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

For the three months ended September 30, For the nine months ended September 30,

2020 2019 2020 2019

Cross currency and interest rate swaps

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

Unrealized gain $ — $ 283 $ — $ 4,305

Realized (loss) gain — — ( 626 ) 4,861

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

Gain (loss) on derivatives, net $ — $ 283 $ ( 626 ) $ 9,166

Credit Risk and Credit-Risk-Related Contingent Features

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

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.

As of September 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 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.

As of September 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 me thod to account for income taxes.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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

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.

The tax provisions for the three and nine months ended September 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 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.

During the nine months ended September 30, 2020, Laureate recognized interest and penalties related to income taxes of $ 995 .

Laureate had $ 11,563 of accrued interest and penalties as of September 30, 2020.

During the nine months ended September 30, 2020, Laureate derecognized $ 4,340 of previously accrued interest and penalties.

Approximately $ 10,685 of unrecognized tax benefits, if recognized, will affect the effective income tax rate.

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As of January 1, 2020, the Company amended the partnership agreement of one of its subsidiaries that owned intellectual property, such that the subsidiary became subject to tax in the Netherlands.

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.

The result was a net discrete tax benefit of approximately $ 222,000 that represented 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.

This net tax benefit decreased by $ 81,000 during the third quarter as compared to the first quarter of 2020 as a result of certain entities being reclassified as Discontinued Operations during the third quarter of 2020.

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 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.

The CARES Act did not have a significant impact on Laureate’s consolidated financial statements for the three and nine months ended September 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.

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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.

During the third quarter of 2020, the Company recorded a discrete tax benefit of approximately $ 70,900 related to 2018 and 2019.

The Company assesses the realizability of deferred tax assets by examining all available evidence, both positive and negative.

A valuation allowance is recorded if negative evidence outweighs positive evidence.

A company’s three-year cumulative loss position is significant negative evidence in considering whether deferred tax assets are realizable.

Accounting guidance restricts the amount of reliance the Company can place on projected taxable income to support the recovery of the deferred tax assets.

During the third quarter of 2020, valuation allowances were released at entities in Australia and the United States of approximately $ 19,200 and $ 12,200 , respectively, due to the change from a three-year cumulative loss position to a three-year cumulative income position, as well as other positive factors including projections of future profitability.

Earnings (Loss) Per Share

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

For the three months ended June 30, 2020 2019

For the three months ended September 30, 2020 2019

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

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

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

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

Loss from continuing operations $ ( 271,040 ) $ ( 86,649 )

Net income attributable to noncontrolling interests ( 7 ) ( 12 )

Loss from continuing operations attributable to Laureate Education, Inc.

( 271,047 ) ( 86,661 )

Accretion of redemption value of redeemable noncontrolling interests and equity 6 ( 193 )

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

Net loss from continuing operations for basic and diluted earnings (loss) per share $ ( 271,041 ) $ ( 86,854 )

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

(Loss) income from discontinued operations, net of tax $ ( 169,768 ) $ 30,986

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

Loss on sales of discontinued operations, net of tax ( 343,622 ) ( 41,131 )

(Income) loss attributable to noncontrolling interests ( 5 ) 1,580

Net loss from discontinued operations for basic and diluted earnings (loss) per share $ ( 513,395 ) $ ( 8,565 )

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

Basic weighted average shares outstanding 209,929 224,658

Dilutive effect of stock options — 25

Dilutive effect of restricted stock units — 263

Diluted weighted average shares outstanding 209,929 224,946

Basic and diluted weighted average shares outstanding 210,033 224,193

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

Loss from continuing operations $ ( 1.29 ) $ ( 0.39 )

Loss from discontinued operations ( 2.44 ) ( 0.04 )

Basic and diluted loss per share $ ( 3.73 ) $ ( 0.43 )

For the nine months ended September 30, 2020 2019

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

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Accretion of redemption value of redeemable noncontrolling interests and equity 163 264

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

Net loss from continuing operations for basic and diluted earnings (loss) per share $ ( 76,313 ) $ ( 211,473 )

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

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(Loss) gain on sales of discontinued operations, net of tax ( 363,288 ) 848,390

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

Loss attributable to noncontrolling interests 5,065 583

Net (loss) income from discontinued operations for basic and diluted earnings (loss) per share $ ( 916,174 ) $ 1,089,346

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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 June 30, For the six months ended June 30,

For the three months ended September 30, For the nine months ended September 30,

2020 2019 2020 2019

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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, as updated in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

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, as updated in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.

Australian Regulation

Courses at our two post-secondary educational institutions in Australia continue to be delivered primarily online and are in compliance with all local regulations.

In certain limited situations, dependent on state-by-state COVID-19 regulatory responses, plans to permit physical access to campuses and face-to-face course delivery are being implemented.

Brazilian Regulation

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

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.

In response to the transition from face-to-face classes to online classes due to the COVID-19 pandemic, 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, Bahia and Paraiba have passed such laws.

However, because injunctions were granted to suspend the effects of such laws in Rio de Janeiro and Paraiba, we currently are applying the mandatory discount only to classes taken at our Bahia campuses.

The constitutionality of the aforementioned laws is being questioned both in state courts and the Supreme Court.

As of August 2020, Provisional Presidential Act n.

934/2020 has been converted to Law n.

Accordingly, institutions remain authorized to substitute face-to-face classes with remote activities and adjust the academic calendar and degree anticipation for specific health undergraduate programs.

Government measures to resume face-to-face educational activities in Brazil are being implemented on a state-by-state and city-by-city basis.

Laboratory and professional practice activities have resumed at the vast majority of our Brazilian campuses.

Despite being authorized to gradually return to face-to-face classes in some locations, academic planners consider remote activities to be the most suitable option given the current circumstances.

Mexican Regulation

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.

Administrative activities have resumed at all but two of our campuses.

Face-to-face educational activities will not be permitted to resume at any campus until the region (municipality or state) in which it is located is assigned a green color code under the country’s color-coded sanitary alert system.

Peruvian Regulation

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.

While Peru’s national sanitary emergency has been extended until November 30, 2020, effective September 1, 2020, Peru entered phase four of its economic reactivation plan.

The government has announced that face-to-face classes may resume next year;

however, the actual resumption of classes will depend upon COVID-19 infection rates at such time.

Department of Education Rulemaking Activities

On August 24, 2020, the U.S.

Department of Education (the DOE) issued final regulations making changes to regulations that impact distance education programs in particular.

The final regulations provide new definitions for, among other terms, correspondence courses, distance education, and academic engagement.

Walden University offers both course-based distance education programs and direct assessment distance education programs through its Tempo Learning offerings.

Under these new regulations, it is possible that students eligible for Title IV federal student aid funds who are enrolled in Walden University’s Tempo Learning programs will receive their funds on a more regular disbursement pattern that is better aligned with their individualized progression.

The final regulations have an effective date of July 1, 2021, but the DOE will allow institutions to opt for early implementation of portions of these regulations.

Department of Justice Voluntary Information Request for Walden University

Our institutions are subject to regulatory oversight and from time to time must respond to inquiries about their compliance with the various statutory requirements under which they operate.

On September 14, 2020, Walden University (Walden) received a letter from the Civil Division of the United States Department of Justice (DOJ) indicating that the DOJ is examining whether Walden, in the operation of its Masters of Science in Nursing program (Nursing Program), may have violated the Federal False Claims Act by misrepresenting compliance with its program participation agreement with the U.S.

Department of Education, which agreement covers Walden University’s participation in federal student financial aid programs under Title IV of the U.S.

Higher Education Act.

The letter invites Walden to provide information regarding a number of specific areas primarily related to the practicum component of its Nursing Program, but it makes no allegations of any misconduct or wrongdoing by Walden.

While the Company is cooperating with the DOJ’s request to voluntarily provide information, it cannot predict the timing or outcome of this matter.

Further, on October 12, 2020, Walden received notice from the Higher Learning Commission (HLC) of its intent to assign a public “Governmental Investigation” designation to Walden due to the DOJ inquiry.

While the HLC has complete discretion in whether to issue such a public designation, Walden has requested that such a designation not be imposed,

as there has been no governmental allegation of any misconduct or illegal acts.

The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated.

Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable.

The disclosures, accruals or estimates, if any, resulting from the foregoing analysis are reviewed and adjusted to reflect the effect of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter.

At this time, the Company does not believe that this matter will have a material effect on the Company’s financial position, results of operations, or cash flows.

Fair Value Measurement

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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.

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:

As of September 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 nine months ended September 30, 2020 were as follows:

Balance at December 31, 2019 $ —

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Settlements 626

Balance at June 30, 2020 $ —

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

Balance at September 30, 2020 $ —

Laureate had no fair value measurements classified as Level 3 as of September 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 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

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

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

September 30, 2020 September 30, 2019 December 31, 2019

Cash and cash equivalents $ 716,799 $ 93,153 $ 61,576

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Total Cash and cash equivalents and Restricted cash shown in the Consolidated Statements of Cash Flows $ 747,656 $ 128,254 $ 97,817

Restricted cash includes cash equivalents held to collateralize standby letters of credit in favor of the DOE.

Restricted cash includes cash equivalents held to collateralize standby letters of credit.

In addition, Laureate may at times hold a United States deposit for a letter of credit in lieu of a surety bond, or otherwise have cash that is not immediately available for use in current operations.

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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.

Agreement to Sell Honduras Operations

As discussed in Note 4, Discontinued Operations and Assets Held for Sale, on October 13, 2020, the Company entered into a definitive agreement with Fundación Nasser, a not-for-profit foundation in Honduras, to transfer control of its operations in Honduras for total cash consideration of approximately $ 29,800 , prior to closing costs.

Asset Sale Offer to Purchase Up to $300 Million of Senior Notes

On October 13, 2020, the Company announced that it was commencing a cash tender offer (the Asset Sale Offer) to purchase up to $ 300,000 aggregate principal amount (the Offer Amount) of its 8.250 % Senior Notes due 2025 (the Senior Notes), at a purchase price of 100% of the principal amount thereof plus accrued and unpaid interest to, but not including, the purchase date.

The Asset Sale Offer is being made pursuant to the indenture governing the Senior Notes (the Indenture) as a result of the Company’s sale of its operations in Chile and Malaysia.

Those sales constituted Asset Sales, as defined in the Indenture.

The source of funds is cash on hand from the proceeds of the Asset Sales.

The Asset Sale Offer will expire at 11:59 p.m., New York City time, on November 10, 2020, unless extended by the Company, in its sole discretion (the Expiration Time).

If the aggregate principal amount of Senior Notes validly tendered (and not validly withdrawn) in the Asset Sale Offer exceeds the Offer Amount, only the Offer Amount will be accepted for purchase, and the Senior Notes will be purchased on a pro rata basis (with such adjustments as may be needed so that only Senior Notes in minimum amounts of $ 2,000 and integral multiples of $ 1,000 in excess thereof will be so purchased).

Tenders of the Senior Notes must be made on or prior to the Expiration Time and may be validly withdrawn at any time on or prior to the Expiration Time.

In the event that the aggregate principal amount of tendered and accepted Senior Notes is less than the Offer Amount, any amount less than the Offer Amount not used for the purchase of Senior Notes pursuant to the Asset Sale Offer will be available for use in any manner permitted under the Indenture.

Stock Repurchase Program

Laureate’s board of directors has approved a new stock repurchase program to acquire up to $ 300,000 of the Company’s Class A common stock.

The Company’s proposed repurchases may be made from time to time on the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act).

Repurchases may be effected pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act.

The Company’s board of directors will review the share repurchase program periodically and may authorize adjustment of its terms and size or suspend or discontinue the program.

The Company intends to finance the repurchases with free cash flow and excess cash and liquidity on-hand.

Completion of Sale of Australia and New Zealand

As discussed in Note 4, Discontinued Operations and Assets Held for Sale, on November 3, 2020, the Company completed the sale of Australia and New Zealand.

At closing, the Company received proceeds of approximately $ 650,000 , net of transaction costs.

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