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You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates” or similar expressions that concern our strategy, plans or intentions.
−Removed: All statements we make relating to estimated and projected earnings, costs, expenditures, cash flows, growth rates and financial results, and all statements we make relating to (i) our exploration of strategic alternatives and potential future plans, strategies or transactions that may be identified, explored or implemented as a result of such review process, (ii) our planned divestitures, the expected proceeds generated therefrom and the expected reduction in revenue resulting therefrom, and (iii) the potential impact of the COVID-19 pandemic on our business or the global economy as a whole, are forward-looking statements.
+Added: All statements we make relating to estimated and projected earnings, costs, expenditures, cash flows, growth rates and financial results, and all statements we make relating to (i) our exploration of strategic alternatives and potential future plans, strategies or transactions that may be identified, explored or implemented as a result of such review process, (ii) our planned divestitures, the expected proceeds generated therefrom, the expected reduction in revenue resulting therefrom and any resulting litigation or dispute therewith, and (iii) the potential impact of the COVID-19 pandemic on our business or the global economy as a whole, are forward-looking statements.
In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments.
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While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results.
−Removed: Important factors that could cause actual results to differ materially from our expectations, including, without limitation, in conjunction with the forward-looking statements included in this Form 10-Q, are disclosed in “Item 1—Business,” and “Item 1A—Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the 2019 Form 10-K), as updated by Part II, “Item 1A—Risk Factors” of our Form 10-Q for the quarter ended March 31, 2020 and in Part II, “Item 1A—Risk Factors” of this Form 10-Q.
−Removed: Some of the factors that we believe could affect our results include:d
+Added: Important factors that could cause actual results to differ materially from our expectations, including, without limitation, in conjunction with the forward-looking statements included in this Form 10-Q, are disclosed in “Item 1—Business,” and “Item 1A—Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the 2019 Form 10-K), as updated by Part II, “Item 1A—Risk Factors” of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.
+Added: Some of the factors that we believe could affect our results include:
• the risks and uncertainties related to the long-term effect to the Company of the COVID-19 pandemic and its resurgence, including, but not limited to, its effect on student enrollment, tuition pricing, and collections in future periods;
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• Recently Adopted Accounting Standards.
−Removed: We have built the largest international portfolio of degree-granting higher education institutions, primarily focused in Latin America, with 834,500 students enrolled at our 29 institutions in nine countries on more than 150 campuses included in our continuing operations as of June 30, 2020, which we collectively refer to as the Laureate International Universities network.
+Added: We have built a portfolio of degree-granting higher education institutions, primarily focused in Latin America, with 335,600 students enrolled at our five institutions in two countries (Mexico and Peru) included in our continuing operations as of September 30, 2020.
We believe the global higher education market presents an attractive long-term opportunity, primarily because of the large and growing imbalance between the supply and demand for quality higher education around the world.
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Our outcomes-driven strategy is focused on enabling students to prosper and thrive in the dynamic and evolving knowledge economy.
−Removed: As of June 30, 2020, our international portfolio of 29 institutions comprised 28 institutions we owned or controlled, and one addition al institution that we managed through a joint venture arrangement.
We have six operating segments as described below.
We group our institutions by geography in:
+Added: 3) Peru (formerly Andean);
4) Central America ( formerly Central America & U.S.
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Our sixth segment, Online & Partnerships, includes fully online institutions that operate globally.
+Added: As described further below, our Mexico and Peru operating segments are classified as Continuing Operations and the remaining operating segments are classified as Discontinued Operations.
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.
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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.
−Removed: addition, regulatory activity that occurs in response to COVID-19 could have an adverse effect on our business if, for example, legislation was passed to suspend or reduce student tuition payments in any of the markets in which we operate.
+Added: In addition, regulatory activity that occurs in response to COVID-19 could have an adverse effect on our business if, for example,
+Added: legislation was passed to suspend or reduce student tuition payments in any of the markets in which we operate.
As a result, the full impact of COVID-19 and the scope of any adverse effect on the Company’s operations, including any potential impairments, which could be material, cannot be fully determined at this time.
See also “Part II, Item 1A–Risk Factors–An epidemic, pandemic or other public health emergency, such as the recent outbreak of a novel strain of coronavirus (COVID-19), could have a material adverse effect on our business, financial condition, cash flows and results of operations” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
−Removed: The COVID-19 pandemic has affected the academic calendars at a number of our institutions, resulting in the deferral of revenue to the second half of 2020 that would otherwise have been recognized by June 30, 2020, if the academic calendars had not been changed.
−Removed: For the three and six months ended June 30, 2020, revenue of approximately $40 million and $80 million, respectively, was deferred to the second half of 2020, due to changes in the academic calendars of our institutions, primarily as a result of the COVID-19 pandemic.
+Added: The COVID-19 pandemic has affected the academic calendars at a number of our institutions, resulting in the deferral of revenue to the fourth quarter of 2020 that would otherwise have been recognized by September 30, 2020, if the academic calendars had not been changed.
+Added: For the nine months ended September 30, 2020, revenue of approximately $15 million related to our Mexico operations was deferred to the fourth quarter of 2020, due to changes in the academic calendar, primarily as a result of the COVID-19 pandemic.
+Added: During the third quarter of 2020, our Peru operations held rescheduled classes and recognized revenue that had previously been deferred as of June 30, 2020, due to academic calendar changes during the first half of 2020 that resulted from the COVID-19 pandemic.
Discontinued Operations
−Removed: In 2017, the Company announced the divestiture of certain subsidiaries in our Rest of World and Central America segments.
−Removed: In August 2018, the Company announced the divestiture of additional subsidiaries located in Europe, Asia and Central America.
−Removed: After completing all of the announced divestitures, the Company’s remaining principal markets would be Brazil, Chile, Mexico and Peru, along with the Online and Partnerships segment and the institutions in Australia and New Zealand.
−Removed: At the time of the August 2018 announcement, 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.
−Removed: 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.
−Removed: 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.
−Removed: The divestitures represented a strategic shift that had a major effect on the Company's operations and financial results.
−Removed: Accordingly, in accordance with Accounting Standard Codification (ASC) 205-20, “Discontinued Operations,” the results of the divestitures that are part of the strategic shift are presented as discontinued operations for all periods in our consolidated financial statements included elsewhere in this Form 10-Q.
−Removed: Since our entire Central America operating segment is included in Discontinued Operations, it no longer meets the criteria for a reportable segment under ASC 280, “Segment Reporting,” and, therefore, it is excluded from the segments information for all periods presented.
−Removed: In addition, the portions of the Andean and Rest of World reportable segments that are included in Discontinued Operations have also been excluded from the segment information for all periods presented.
−Removed: Unless indicated otherwise, the information in the MD&A relates to continuing operations.
−Removed: The Company began closing sale transactions in the first quarter of 2018.
−Removed: To date, we have completed the sales of subsidiaries in Cyprus, Italy, China, Germany, Morocco, Thailand, South Africa, India, Spain, Portugal, Turkey, Panama, and Costa Rica, as well as Kendall College, LLC (Kendall), the University of St.
−Removed: Augustine for Health Sciences, LLC (St.
−Removed: Augustine), NewSchool of Architecture and Design, LLC (NSAD) in the United States, and Centro Universitário do Norte (UniNorte), an institution in the Brazil segment that was included in continuing operations as it was not part of the strategic shift.
−Removed: We have not yet completed the divestitures of our subsidiaries in Honduras and Malaysia.
−Removed: On July 29, 2020, the Company entered into an agreement to sell its Australia and New Zealand operations, which did not meet the held-for-sale criteria as of June 30, 2020.
−Removed: The Company expects to reclassify Australia and New Zealand as discontinued operations in the third quarter of 2020, when the held-for-sale criteria were met.
−Removed: See also Note 4, Discontinued Operations and Assets Held for Sale, Note 5, Dispositions, and Note 21, Subsequent Events, in our consolidated financial statements included elsewhere in this Form 10-Q.
−Removed: Exploration of Strategic Alternatives
+Added: 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.
+Added: Campuses) segments.
+Added: 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.
+Added: This represented a strategic shift that had a major effect on the Company’s operations and financial results.
+Added: 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.
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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.
−Removed: 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.
+Added: 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.
+Added: The sale of Australia and New Zealand was subsequently completed on November 3, 2020.
+Added: After completing these announced divestitures, the Company’s remaining principal markets will be Mexico and Peru.
+Added: This also represented a strategic shift that had a major effect on the Company’s operations and financial results.
+Added: 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.
+Added: Because our entire Brazil, Central America, Rest of World and Online & Partnerships operating segments are included in Discontinued Operations, they no longer meet the criteria for a reportable segment under ASC 280, “Segment Reporting,” and, therefore, are excluded from the segments information for all periods presented.
+Added: In addition, the portions of the former Andean reportable segment (now called the Peru segment) that are included in Discontinued Operations, such as Chile, Spain and Portugal, have also been excluded from the segment information for all periods presented.
+Added: Unless indicated otherwise, the information in the MD&A relates to continuing operations.
+Added: The Company began closing sale transactions in the first quarter of 2018.
+Added: We have not yet completed the divestitures of Walden University or our subsidiaries in Honduras and Brazil.
+Added: As noted above, during the third quarter of 2020, we signed agreements to sell Walden University and divest our operations in Brazil, Chile, and Australia and New Zealand.
+Added: The divestitures of Chile and Australia and New Zealand were completed on September 11, 2020 and November 3, 2020, respectively.
+Added: On October 13, 2020, we entered into an agreement to sell our operations in Honduras.
+Added: See also Note 4, Discontinued Operations and Assets Held for Sale, Note 5, Dispositions, and Note 19, Subsequent Events, in our consolidated financial statements included elsewhere in this Form 10-Q.
If the Company determines that the estimated fair value of any business is less than its carrying value, the Company will be required to record an impairment charge that could be material.
−Removed: See Note 8, Goodwill and Loss on Impairment of Assets, in our consolidated financial statements included elsewhere in this Form 10-Q for discussion of the impairment charge that the Company recorded during the second quarter of 2020.
−Removed: While the Company explores these strategic alternatives and until the held-for-sale criteria are met, the long-lived assets in these businesses continue to be classified as held and used and are evaluated for impairment under that model, based on the cash flows expected to be generated by the use of those asset groups in operations.
+Added: See Note 4, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-Q for discussion of the impairment charges that the Company recorded during 2020 for Chile, Honduras and Brazil.
+Added: While the Company explores these strategic alternatives for its remaining Continuing Operations, and until the held-for-sale criteria are met, the long-lived assets in these businesses continue to be classified as held and used and are evaluated for impairment under that model, based on the cash flows expected to be generated by the use of those asset groups in operations.
Should the held-for-sale criteria be met, the long-lived assets will be recorded at the lower of their carrying value or fair value, less cost to sell.
Because completing a sale, spin-off, or other transaction may be challenging due to the regulatory environment, market conditions and other factors, the values that may be realized from any potential transactions could be less than if these businesses remained held and used.
−Removed: If the Company decides to sell any of its businesses, the carrying value used to evaluate the business for potential impairment and to determine the gain or loss on sale will include any accumulated foreign currency translation (FX) losses associated with that business.
+Added: If the Company decides to sell any of its remaining businesses, the carrying value used to evaluate the business for potential impairment and to determine the gain or loss on sale will include any accumulated foreign currency translation (FX) losses associated with that business.
In recent years, the U.S.
−Removed: dollar has strengthened against many international currencies, including the Brazilian Real, the Chilean Peso and the Mexican Peso.
+Added: dollar has strengthened against many international currencies, including the Brazilian Real and the Mexican Peso.
As a result, the Company has significant FX losses recorded within stockholders’ equity, as a component of accumulated other comprehensive income.
−Removed: As of June 30, 2020, and December 31, 2019, the Company’s consolidated FX loss totaled approximated $1.4 billion and $1.1 billion, respectively.
+Added: As of both September 30, 2020, and December 31, 2019, the Company’s consolidated FX loss totaled approximately $1.1 billion.
Upon the sale of a business, any FX loss related to that business would be recognized as part of the gain or loss on sale.
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Asset Group/ Reporting Unit Foreign Currency Translation Losses
−Removed: (in millions) June 30, 2020 December 31, 2019
−Removed: Chile $ 249 $ 211
+Added: (in millions) September 30, 2020 December 31, 2019
Brazil $ 494 $ 407
Mexico 627 461
−Removed: Total Chile, Brazil and Mexico $ 1,379 $ 1,079
−Removed: While the Company has not agreed to divest any of the institutions in the regions shown in the table above, the substantial amounts of FX losses attributable to these businesses would have a material effect on the amount of gain or loss that would result from the sale of those businesses.
+Added: Total Brazil and Mexico $ 1,121 $ 868
+Added: As discussed in Note 4, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-Q, the Company decided to sell its Brazil operations during the third quarter of 2020 and recorded an impairment charge to write down the carrying value of its Brazil operations to its estimated fair value as of September 30, 2020.
+Added: While the Company has not agreed to divest our Mexico operations, the substantial amounts of FX losses attributable to this business would have a material effect on the amount of gain or loss that would result from its sale.
Moreover, such FX losses could result in a material impairment charge (or increase it) if the held-for-sale criteria are met and the carrying value of a held-for-sale business exceeds its fair value, less cost to sell.
−Removed: To date, the Company has not identified impairment indicators related to its Brazil and Mexico asset groups/reporting units based on the Company’s estimates of future cash flows assuming that the businesses are held and used.
−Removed: The Company did, however, identify an impairment indicator related to its Chile asset group/reporting unit during the second quarter of 2020 and recorded an impairment charge.
−Removed: See Note 8, Goodwill and Loss on Impairment of Assets, in our consolidated financial statements included elsewhere in this Form 10-Q for further discussion.
−Removed: As a result of the considerations highlighted above and the significant FX losses, the Brazil and Mexico asset groups/reporting units may be at risk of impairment if the Company commits to a plan to sell its interests in any of these businesses.
+Added: To date, the Company has not identified impairment indicators related to its Mexico asset group/reporting unit based on the Company’s estimates of future cash flows assuming that the business is held and used.
+Added: As a result of the considerations highlighted above and the significant FX losses, the Mexico asset group/reporting unit may be at risk of impairment if the Company commits to a plan to sell its interests in this business.
+Added: Furthermore, additional impairments of the Brazil asset group/reporting unit could be required in future periods depending on changes in Brazil’s carrying value or estimated fair value.
The Company will continue to monitor for impairment indicators as additional information becomes known.
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As noted above, in response to the COVID-19 pandemic we have temporarily transitioned the educational delivery method at our campus-based institutions to be online.
−Removed: Many of our largest campus-based operations are in developing markets which are experiencing a growing demand for higher education based on favorable demographics and increasing secondary completion rates, driving increases in participation rates and resulting in continued growth in the number of higher education students.
+Added: Many of our largest campus-based operations are in developing markets which, in recent years, have experienced a growing demand for higher education based on favorable demographics and increasing secondary completion rates, driving increases in participation rates.
Traditional higher education students (defined as 18-24 year olds) have historically been served by public universities, which have limited capacity and are often underfunded, resulting in an inability to meet the growing student demand and employer requirements.
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However, there are some government-sponsored student financing programs which are discussed below.
−Removed: These campus-based segments include Brazil, Mexico, Andean, Central America, and Rest of World.
+Added: 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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Laureate owns 11 institutions in seven states throughout Brazil, with a particularly strong presence in the competitive São Paulo market.
−Removed: Many students finance their own education while others rely on the government-sponsored programs such as Prouni and Fundo de Financiamento Estudantil (FIES).
+Added: Most students finance their own education, while others rely on the government-sponsored programs such as Prouni and Fundo de Financiamento Estudantil (FIES).
+Added: 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.
−Removed: • The Andean segment includes institutions in Chile and Peru.
−Removed: In Chile, private universities enroll approximately 72% of post-secondary students and there are government-sponsored student financing programs.
−Removed: In Peru, the public sector plays a significant role, but private universities are increasingly providing the capacity to meet growing demand.
+Added: • 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.
−Removed: • The Rest of World segment includes campus-based institutions in Asia Pacific with operations in Australia, Malaysia and New Zealand.
+Added: • 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.
−Removed: The institutions in Malaysia are included in Discontinued Operations.
+Added: 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.
+Added: The entire Online & Partnerships segment is included in Discontinued Operations.
Corporate is a non-operating business unit whose purpose is to support operations.
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The Corporate segment also contains the eliminations of intersegment revenues and expenses.
−Removed: The following information for our reportable segments in continuing operations is presented as of June 30, 2020:
+Added: The following information for our reportable segments in continuing operations is presented as of September 30, 2020:
Countries Institutions Enrollment 2020 YTD Revenues ($ in millions) (1)
% Contribution to 2020 YTD Revenues
−Removed: Brazil 1 12 267,400 $ 202.2 16 %
Mexico 1 2 192,100 385.0 52 %
−Removed: Andean 2 8 323,200 435.4 33 %
−Removed: Rest of World 3 4 18,600 106.1 8 %
−Removed: Online & Partnerships (2)
−Removed: 2 3 56,900 305.4 23 %
+Added: Peru 1 3 143,500 351.4 48 %
2 5 335,600 $ 739.7 100 %
−Removed: (1) Amounts related to Corporate, partially offset by the elimination of intersegment revenues, total $2.1 million and are not separately presented.
−Removed: (2) We no longer accept new enrollments at the University of Liverpool and the University of Roehampton.
−Removed: Our international operations are subject to complex business, economic, legal, regulatory, political, tax and foreign currency risks, which may be difficult to adequately address.
+Added: (1) Amounts related to Corporate, partially offset by the elimination of intersegment revenues, totaled $3.3 million and are not separately presented.
+Added: Our operations are subject to complex business, economic, legal, regulatory, political, tax and foreign currency risks, which may be difficult to adequately address.
The majority of our operations are outside the United States.
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We will continue to develop and implement necessary changes that enable us to comply with such laws and regulations.
−Removed: See Part II, “Item 1A—Risk Factors—Political and regulatory developments in Chile may materially adversely affect us.” See also Part II, “Item 1A—Risk Factors—An epidemic, pandemic or other public health emergency, such as the recent outbreak of a novel strain of coronavirus (COVID-19), could have a material adverse effect on our business, financial condition, cash flows and results of operations” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
+Added: See Part II, “Item 1A—Risk Factors—An epidemic, pandemic or other public health emergency, such as the recent outbreak of a novel strain of coronavirus (COVID-19), could have a material adverse effect on our business, financial condition, cash flows and results of operations” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
See also “Item 1A—Risk Factors—Risks Relating to Our Continuing Business—Our institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition and results of operations,” “Risk Factors—Risks Relating to Our Highly Regulated Industry in the United States,” and “Item 1—Business—Industry Regulation,” in our 2019 Form 10-K for a detailed discussion of our different regulatory environments.
−Removed: Chilean Regulatory Developments
−Removed: On May 29, 2018, a new Higher Education Law (the New Law) was enacted.
−Removed: Among other things, the New Law prohibits conflicts of interests and related party transactions involving universities and their controlling parties, with certain exceptions.
−Removed: These exceptions include the provision of services that are educational in nature or essential for the university’s purposes.
−Removed: 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.
−Removed: On May 29, 2019, the New Law’s provisions
−Removed: regarding related party transactions went effective and the Superintendent has since issued further interpretive guidance and regulations.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Additionally, we will continue to evaluate our accounting treatment of the Chilean non-profit universities to determine whether we can continue to consolidate them.
−Removed: In October 2020, Chileans are scheduled to vote on whether Chile should create a new constitution;
−Removed: see Part II, “Item 1A—Risk Factors—Political and regulatory developments in Chile may materially adversely affect us.”
+Added: Department of Justice Voluntary Information Request for Walden University
+Added: 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.
+Added: Department of Education, which agreement covers Walden University’s participation in federal student financial aid programs under Title IV of the U.S.
+Added: Higher Education Act.
+Added: 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.
+Added: While the Company is cooperating with the DOJ’s request to voluntarily provide information, it cannot predict the timing or outcome of this matter.
+Added: 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.
+Added: 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.
+Added: The Company accrues for a liability when it is both probable that a liability has been incurred and the
+Added: amount of the liability can be reasonably estimated.
+Added: Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable.
+Added: 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.
+Added: 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.
Key Business Metric
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Each of our institutions has an enrollment cycle that varies by geographic region and academic program.
−Removed: During each academic year, each institution has a “Primary Intake” period in which the majority of the enrollment occurs.
+Added: Each institution has a “Primary Intake” period during each academic year in which the majority of the enrollment occurs.
Most institutions also have one or more smaller “Secondary Intake” periods.
−Removed: The first calendar quarter generally coincides with the Primary Intakes for our institutions in the Brazil, Andean and Rest of World segments.
−Removed: The third calendar quarter generally coincides with the Primary Intakes for our institutions in the Mexico and Online & Partnerships segments.
−Removed: The following chart shows our enrollment cycles at our continuing operations.
−Removed: Shaded areas in the chart represent periods when classes are generally in session and revenues are recognized.
−Removed: Areas that are not shaded represent summer breaks during which revenues are not typically recognized.
−Removed: The large circles indicate the Primary Intake start dates of our institutions, and the small circles represent Secondary Intake start dates.
+Added: Our Peruvian institutions have their Primary Intake during the first calendar quarter and a Secondary Intake during the third calendar quarter.
+Added: Institutions in our Mexico segment have their Primary Intake during the third calendar quarter and a Secondary Intake during the first calendar quarter.
+Added: Our institutions in Peru are generally out of session in January, February and July, while institutions in Mexico are generally out of session in May through July.
+Added: Revenues are recognized when classes are in session.
Principal Components of Income Statement
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Therefore, changes related to such entities are considered “incremental impact of acquisitions” for the first 12 months of our ownership.
−Removed: We have made no acquisitions thus far in 2020.
−Removed: We made only a small acquisition in 2019, which had essentially no impact on the comparability of the periods presented.
+Added: We have not made any acquisitions thus far in 2020, and we did not make any acquisitions in 2019 related to our continuing operations.
Any dispositions of our continuing operations affect the comparability of our financial statements from period to period.
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Therefore, changes related to such entities are considered “incremental impact of dispositions” for the first 12 months subsequent to the disposition.
−Removed: As discussed above, all of the divestitures that are part of the strategic shift announced in August 2018 are included in Discontinued Operations for all periods presented.
−Removed: In November 2019, we completed the sale of UniNorte, which is part of continuing operations, and is, therefore, included in the incremental impact of dispositions.
+Added: As discussed above, all of the divestitures that are part of the strategic shifts are included in Discontinued Operations for all periods presented.
Foreign Exchange
−Removed: The majority of our institutions are located outside the United States.
+Added: Institutions in our continuing operations are located outside the United States.
These institutions enter into transactions in currencies other than USD and keep their local financial records in a functional currency other than the USD.
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Our revenues and expenses are generally denominated in local currency.
−Removed: The USD is our reporting currency and our subsidiaries operate in various other
−Removed: functional currencies, including:
−Removed: Australian Dollar, Brazilian Real, Chilean Peso, Euro, Mexican Peso, New Zealand Dollar, and Peruvian Nuevo Sol.
+Added: The USD is our reporting currency and our subsidiaries operate in other functional currencies, including:
+Added: the Mexican Peso and Peruvian Nuevo Sol.
The principal foreign exchange exposure is the risk related to the translation of revenues and expenses incurred in each country from the local currency into USD.
2 unchanged sentences
In order to provide a framework for assessing how our business performed excluding the effects of foreign currency fluctuations, we present organic constant currency in our segment results, which is calculated using the change from prior-year average foreign exchange rates to current-year average foreign exchange rates, as applied to local-currency operating results for the current year, and then excludes the impact of acquisitions, divestitures and other items, as described in the segments results.
−Removed: Most of the institutions in our network have a summer break during which classes are generally not in session and minimal revenues are recognized.
+Added: Institutions in our network have a summer break during which classes are generally not in session and minimal revenues are recognized.
In addition to the timing of summer breaks, holidays such as Easter also have an impact on our academic calendar.
1 unchanged sentence
Given the geographic diversity of our institutions and differences in timing of summer breaks, our second and fourth quarters are stronger revenue quarters as the majority of our institutions are in session for most of these respective quarters.
−Removed: Our first and third fiscal quarters are weaker revenue quarters because the majority of our institutions have summer breaks for some portion of one of these two quarters.
+Added: Our first and third fiscal quarters are weaker revenue quarters because our institutions have summer breaks for some portion of one of these two quarters.
+Added: However, our primary enrollment intakes occur during the first and third quarters.
Due to this seasonality, revenues and profits in any one quarter are not necessarily indicative of results in subsequent quarters and may not be correlated to new enrollment in any one quarter.
7 unchanged sentences
Results from the Discontinued Operations
−Removed: The results of operations of our Discontinued Operations for the three and six months ended June 30, 2020 and 2019 were as follows:
−Removed: For the three months ended For the six months ended
−Removed: June 30, June 30,
+Added: The results of operations of our Discontinued Operations for the three and nine months ended September 30, 2020 and 2019 were as follows:
+Added: For the three months ended For the nine months ended
+Added: September 30, September 30,
(in millions) 2020 2019 2020 2019
Revenues $ 459.4 $ 561.7 $ 1,342.3 $ 1,953.0
+Added: Costs and expenses:
Depreciation and amortization 13.7 28.5 60.2 84.7
3 unchanged sentences
Operating (loss) income (104.0) 39.3 (429.9) 268.3
−Removed: Other non-operating (expense) income (2.6) 3.4 (10.6) 6.5
+Added: Other non-operating expense (14.7) (32.4) (79.8) (45.3)
Pretax (loss) income of discontinued operations (118.7) 6.9 (509.7) 223.0
−Removed: Income tax expense (1.9) (3.7) (3.4) (13.9)
+Added: Income tax benefit (51.1) 24.1 (48.2) 17.4
(Loss) income from discontinued operations, net of tax (169.8) 31.0 (558.0) 240.4
−Removed: Gain (loss) on sales of discontinued operations, net of tax 2.3 641.5 (19.7) 889.5
+Added: (Loss) gain on sales of discontinued operations, net of tax (343.6) (41.1) (363.3) 848.4
Net (loss) income from discontinued operations $ (513.4) $ (10.1) $ (921.2) $ 1,088.8
−Removed: Enrollments at our discontinued operations as of June 30, 2020 and June 30, 2019 were 37,200 and 113,600, respectively.
−Removed: Six Months Ended June 30, 2020
+Added: Enrollments at our discontinued operations as of September 30, 2020 and September 30, 2019 were 393,900 and 606,700, respectively.
+Added: Nine Months Ended September 30, 2020
On January 10, 2020, we sold our operations in Costa Rica, which resulted in a pre-tax loss of approximately $18.6 million.
−Removed: On March 6, 2020, we sold the operations of NSAD, which resulted in a pre-tax loss of approximately $5.7 million.
−Removed: During the second quarter of 2020, we recorded an impairment charge of $10.0 million related to long-lived assets of our institution in Honduras, in order to write down the carrying value of those assets to their estimated fair value.
−Removed: Six Months Ended June 30, 2019
+Added: On March 6, 2020, we sold the operations of NewSchool of Architecture and Design, LLC (NSAD), which resulted in a pre-tax loss of approximately $5.9 million.
+Added: During the second quarter of 2020, we recorded impairment charges of $10.0 million related to our Honduras institution and $418.0 million related to our Chilean operations in order to write down the carrying value of assets in those regions to their estimated fair value, and $3.3 million related to the Brazil enrollment to graduation (E2G) software assets.
+Added: During the third quarter of 2020, we recorded an impairment charge of approximately $190.0 million related to our Brazil operations in order to write down the carrying value of Brazil’s assets to their estimated fair value.
+Added: We also recorded an additional impairment charge of $10.0 million related to our Honduras operation in order to write down the carrying value of its assets to their estimated fair value based on the sale agreement that was signed in October 2020.
+Added: On September 10, 2020, we completed the divestiture of our operations in Chile, resulting in a pre-tax loss of approximately $344.5 million that relates primarily to the accumulated foreign currency translation losses associated with the Chilean operations.
+Added: On September 29, 2020, we completed the sale of our operations in Malaysia, which resulted in a pre-tax gain of approximately $45.2 million.
+Added: In early October 2020, we received a payment for $8.4 million, representing a portion of the $15.0 million deferred purchase price related to the sale of our operations in Turkey in August 2019.
+Added: At the time of the sale, the Company determined that this deferred purchase price would be recognized if collected.
+Added: Accordingly, as of September 30, 2020, the Company recorded a receivable of $8.4 million through a reduction of the loss on sale for Turkey.
+Added: The remaining deferred purchase price is due in January 2021 and will be recognized when collected.
+Added: Nine Months Ended September 30, 2019
On February 1, 2019, we sold the operations of St.
1 unchanged sentence
On February 12, 2019, we sold our operations in Thailand, which resulted in a gain of approximately $10.8 million.
−Removed: As previously disclosed, on January 25, 2018, we completed the sale of LEI Lie Ying Limited (LEILY).
+Added: On January 25, 2018, we completed the sale of LEI Lie Ying Limited (LEILY).
During the first quarter of 2019, a legal matter, for which the Company had indemnified the buyer and recorded a contingent liability, was settled with no cost to the Company.
3 unchanged sentences
On May 31, 2019, we sold our institutions in Spain and Portugal, which resulted in a gain of approximately $615.0 million.
+Added: On August 27, 2019, we sold our operations in Turkey, which resulted in a loss of approximately $37.0 million.
+Added: During the third quarter of 2019, we recorded an impairment charge of approximately $25.0 million related to long-lived assets of our institutions in Costa Rica in order to write down the carrying value of those assets to their estimated fair value.
+Added: The sale of the Costa Rica institutions was completed on January 10, 2020.
Results of Operations
4 unchanged sentences
Summary Comparison of Consolidated Results
−Removed: Discussion of Significant Items Affecting the Consolidated Results for the Six Months Ended June 30, 2020 and 2019
−Removed: Six Months Ended June 30, 2020
+Added: Discussion of Significant Items Affecting the Consolidated Results for the Nine Months Ended September 30, 2020 and 2019
+Added: Nine Months Ended September 30, 2020
During the first quarter of 2020, the Company recorded an impairment charge of $3.8 million primarily related to the write-off of capitalized curriculum development costs for a program that the Company decided to stop developing.
−Removed: During the second quarter of 2020, the Company recorded impairment charges of approximately $418.0 million related to Chile and $27.1 million related to the Brazil enrollment to graduation cycle (E2G) software assets, as described in Note 8, Goodwill and Loss on Impairment of Assets, in our consolidated financial statements included elsewhere in this Form 10-Q.
−Removed: Six Months Ended June 30, 2019
+Added: During the second quarter of 2020, the Company recorded an impairment charge of approximately $23.8 million related to the Brazil E2G software assets that were recorded on the Corporate segment, as described in Note 7, Goodwill and Loss on Impairment of Assets, in our consolidated financial statements included elsewhere in this Form 10-Q.
+Added: During the third quarter of 2020, the Company recognized an impairment charge of $320.0 million on the Laureate tradename, an intangible asset, as described in Note 7, Goodwill and Loss on Impairment of Assets, in our consolidated financial statements included elsewhere in this Form 10-Q.
+Added: Nine Months Ended September 30, 2019
During the first quarter of 2019, we used approximately $340.0 million of the net proceeds from the sale of St.
1 unchanged sentence
In addition, the Company elected to repay approximately $35.0 million of the approximately $51.7 million principal balance outstanding for certain notes payable at a real estate subsidiary in Chile.
−Removed: In connection with these debt repayments, the Company recorded a loss on debt extinguishment of $10.6 million, primarily related to the write off of a pro-rata portion of the unamortized deferred financing
−Removed: costs associated with the repaid debt balances.
−Removed: This loss is included in other non-operating income (expense) in the year-to-date table below.
+Added: In connection with these debt repayments, the Company recorded a loss on debt extinguishment of $10.6 million, primarily related to the write off of a pro-rata portion of the unamortized deferred financing costs associated with the repaid debt balances.
+Added: This loss is included in other non-operating income in the year-to-date table below.
During the second quarter of 2019, we fully repaid the remaining balance outstanding under the 2024 Term Loan, using proceeds received from the sale of our operations in India, Spain and Portugal.
1 unchanged sentence
In connection with these debt repayments, the Company recorded a loss on debt extinguishment of $15.6 million related to the write off of a pro-rata portion of the unamortized deferred financing costs associated with the repaid debt balances, as well as the debt discount associated with the 2024 Term Loan.
−Removed: This loss is included in other non-operating (expense) income in the tables below.
−Removed: Comparison of Consolidated Results for the Three Months Ended June 30, 2020 and 2019
+Added: This loss is included in other non-operating income in the year-to-date table below.
+Added: Comparison of Consolidated Results for the Three Months Ended September 30, 2020 and 2019
Better/(Worse)
4 unchanged sentences
Loss on impairment of assets 323.4 — nm
−Removed: Operating (loss) income (254.8) 217.2 nm
+Added: Operating loss (318.2) (18.4) nm
Interest expense, net of interest income (24.0) (27.4) 12 %
−Removed: Other non-operating (expense) income (6.6) 3.6 nm
−Removed: (Loss) income from continuing operations before income taxes and equity in net income of affiliates (294.2) 182.2 nm
−Removed: Income tax expense (7.5) (74.6) 90 %
−Removed: Equity in net income of affiliates, net of tax — 0.2 (100) %
−Removed: (Loss) income from continuing operations (301.8) 107.8 nm
−Removed: (Loss) income from discontinued operations, net of tax (12.2) 30.3 (140) %
−Removed: Gain on sales of discontinued operations, net of tax 2.3 641.5 (100) %
−Removed: Net (loss) income (311.6) 779.6 (140) %
+Added: Other non-operating (expense) income (1.0) 7.3 (114) %
+Added: Loss from continuing operations before income taxes (343.2) (38.6) nm
+Added: Income tax benefit (expense) 72.2 (48.1) nm
+Added: Loss from continuing operations (271.0) (86.6) nm
+Added: (Loss) income from discontinued operations, net of tax (169.8) 31.0 nm
+Added: Loss on sales of discontinued operations, net of tax (343.6) (41.1) nm
+Added: Net loss (784.4) (96.8) nm
Net loss attributable to noncontrolling interests — 1.6 100 %
−Removed: Net (loss) income attributable to Laureate Education, Inc.
−Removed: $ (307.8) $ 781.6 (139) %
+Added: Net loss attributable to Laureate Education, Inc.
+Added: $ (784.4) $ (95.2) nm
nm - percentage changes not meaningful
For further details on certain discrete items discussed below, see “Discussion of Significant Items Affecting the Consolidated Results.”
−Removed: Comparison of Consolidated Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019
−Removed: Revenues decreased by $200.7 million to $791.7 million for the three months ended June 30, 2020 (the 2020 fiscal quarter) from $992.4 million for the three months ended June 30, 2019 (the 2019 fiscal quarter).
−Removed: The effect of a net change in foreign currency exchange rates decreased revenues by $113.9 million, mainly driven by the weakening of the Brazilian Real, the Chilean Peso and the Mexican Peso against the USD.
−Removed: The incremental impact of the disposition of UniNorte during the fourth quarter of 2019 decreased revenues by $12.0 million.
−Removed: The effect of changes in tuition rates and enrollments in programs at varying price points (product mix), pricing and timing decreased revenues by $56.2 million compared to the 2019 fiscal quarter, attributable primarily to the effect of the COVID-19 pandemic on the academic calendar timing at a number of our institutions.
+Added: Comparison of Consolidated Results for the Three Months Ended September 30, 2020 to the Three Months Ended September 30, 2019
+Added: Revenues decreased by $33.8 million to $243.5 million for the three months ended September 30, 2020 (the 2020 fiscal quarter) from $277.3 million for the three months ended September 30, 2019 (the 2019 fiscal quarter).
+Added: The effect of a net change in foreign currency exchange rates decreased revenues by $22.9 million, driven by the weakening of the Mexican Peso and the Peruvian Nuevo Sol against the USD.
Additionally, average total organic enrollment at a majority of our institutions decreased during the 2020 fiscal quarter, decreasing revenues by $22.9 million compared to the 2019 fiscal quarter.
−Removed: The overall decrease in organic enrollment was partially offset by an increase in our Rest of World segment.
−Removed: Other Corporate and Eliminations changes accounted for an increase in revenues of $2.1 million.
+Added: These decreases in revenues were partially offset by the effect of changes in tuition rates and enrollments in programs at varying price points (product mix), pricing and timing, which increased revenues by $12.4 million compared to the 2019 fiscal quarter, mainly in our Peru segment where it was mostly attributable to changes in the academic calendar resulting from the COVID-19 pandemic.
+Added: Other Corporate and Eliminations changes accounted for a decrease in revenues of $0.4 million.
Direct costs and general and administrative expenses combined decreased by $57.2 million to $238.4 million for the 2020 fiscal quarter from $295.6 million for the 2019 fiscal quarter.
The effect of a net change in foreign currency exchange rates decreased costs by $19.4 million.
−Removed: The incremental impact of the disposition of UniNorte decreased direct costs by $9.4 million.
−Removed: The effect of operational changes decreased costs by $71.7 million, mainly driven by cost-saving initiatives to preserve
−Removed: liquidity in the wake of the COVID-19 pandemic.
+Added: The effect of operational changes decreased costs by $21.0 million, mainly driven by cost-saving initiatives to preserve liquidity in the wake of the COVID-19 pandemic.
Additionally, changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets resulted in a year-over-year decrease in direct costs of $0.2 million.
−Removed: Other Corporate and Eliminations expenses accounted for a decrease in costs of $12.0 million.
−Removed: Operating (loss) income changed by $472.0 million to a loss of $(254.8) million for the 2020 fiscal quarter from an income of $217.2 million for the 2019 fiscal quarter.
−Removed: This change was primarily a result of the impairment charges of $445.1 million during the 2020 fiscal quarter and, to a lesser extent, weakened foreign currency exchange rates compared to the 2019 fiscal quarter.
−Removed: These decreases in operating income were partially offset by increased operating income in our Rest of World segment, combined with lower operating charges at Corporate.
+Added: Other Corporate and Eliminations expenses accounted for a decrease in costs of $16.6 million, related to cost-reduction efforts.
+Added: Operating loss increased by $299.8 million to $318.2 million for the 2020 fiscal quarter from $18.4 million for the 2019 fiscal quarter, driven by the impairment charges of $323.4 million during the 2020 fiscal quarter.
+Added: As compared to the 2019 fiscal quarter, our Mexico segment had a higher operating loss, which was essentially fully offset by higher operating income at our Peru segment.
+Added: The overall increase in operating loss was partially offset by lower operating costs at Corporate.
Interest expense, net of interest income decreased by $3.4 million to $24.0 million for the 2020 fiscal quarter from $27.4 million for the 2019 fiscal quarter.
1 unchanged sentence
Other non-operating (expense) income changed by $8.3 million to expense of $(1.0) million for the 2020 fiscal quarter from income of $7.3 million for the 2019 fiscal quarter.
−Removed: This change was primarily attributable to:
−Removed: (1) a loss on foreign currency exchange for the 2020 fiscal quarter compared to a gain for the 2019 fiscal quarter, for a change of $13.8 million;
−Removed: (2) other non-operating expense for the 2020 fiscal quarter compared to income for the 2019 fiscal quarter, for a change of $8.1 million, primarily related to an increase in the estimated fair value of an equity security held at Corporate during the 2019 fiscal quarter;
−Removed: and (3) a loss on derivative instruments for the 2020 fiscal quarter compared to a gain for the 2019 fiscal quarter, for a change of $4.0 million.
−Removed: These decreases in other non-operating income were partially offset by a year-over-year decrease in loss on debt extinguishment of $15.6 million, related to the write off of deferred financing costs and debt discount as a result of the repayments of debt during the 2019 fiscal quarter.
−Removed: In addition, during the 2020 fiscal quarter, we recognized a gain on disposal of subsidiaries of $0.1 million.
−Removed: Income tax expense decreased by $67.1 million to $7.5 million for the 2020 fiscal quarter from $74.6 million for the 2019 fiscal quarter.
−Removed: This decrease in income tax expense was primarily due to changes in the mix of pre-tax book income attributable to taxable and non-taxable entities in various taxing jurisdictions and a tax benefit related to changes in reserves on uncertain tax positions due to statute expirations and divestitures.
−Removed: (Loss) income from discontinued operations, net of tax changed by $42.5 million to a loss of $(12.2) million for the 2020 fiscal quarter from an income of $30.3 million for the 2019 fiscal quarter.
−Removed: This change was the result of the sales during 2019 of discontinued operations that generated income during the 2019 fiscal quarter, combined with an impairment charge of $10.0 million during the 2020 fiscal quarter related to assets that were held for sale.
−Removed: Gain on sales of discontinued operations, net of tax decreased by $639.2 million to $2.3 million for the 2020 fiscal quarter, compared to $641.5 million for the 2019 fiscal quarter, related to the sales of our subsidiaries in South Africa, India, Spain and Portugal in 2019.
−Removed: Comparison of Consolidated Results for the Six Months Ended June 30, 2020 and 2019
+Added: This change was primarily attributable to a loss on foreign currency exchange for the 2020 fiscal quarter compared to a gain for the 2019 fiscal quarter, for a change of $10.6 million, and a gain on derivative instruments for the 2019 fiscal quarter of $0.3 million.
+Added: These decreases in other non-operating income were partially offset by:
+Added: (1) a gain on disposal of subsidiaries for the 2020 fiscal quarter compared to a loss for the 2019 fiscal quarter, for a change of $2.1 million;
+Added: (2) an increase in other non-operating income of $0.3 million;
+Added: and (3) a loss on debt extinguishment of $0.2 million during the 2019 fiscal quarter.
+Added: Income tax benefit (expense) changed by $120.3 million to a benefit of $72.2 million for the 2020 fiscal quarter from an expense of $(48.1) million for the 2019 fiscal quarter.
+Added: This change was attributable to (1) a discrete tax benefit of approximately $71 million related to the Company’s election to exclude certain foreign income of foreign corporations from global intangible low-taxed income (GILTI), (2) a tax benefit of approximately $31 million related to changes in valuation allowance against the U.S.
+Added: and Australia deferred tax assets, (3) a tax benefit related to changes in reserves on uncertain tax positions audit settlement, and (4) changes in the mix of pre-tax book income attributable to taxable and non-taxable entities in various taxing jurisdictions.
+Added: These tax benefits were partially offset by a tax expense of approximately $81 million related to the remeasurement of the tax-basis step up of certain intellectual property that became subject to Dutch taxation in the Netherlands following the reclassification of certain entities as held for sale during the third quarter of 2020.
+Added: (Loss) income from discontinued operations, net of tax changed by $200.8 million to a loss of $(169.8) million for the 2020 fiscal quarter from income of $31.0 million for the 2019 fiscal quarter.
+Added: This change was primarily driven by higher impairment charges of $183.0 million during the 2020 fiscal quarter related to assets that were held for sale, partially offset by higher income in Chile.
+Added: Loss on sales of discontinued operations, net of tax increased by $302.5 million to $343.6 million for the 2020 fiscal quarter, primarily related to the net effect of the sales of our operations in Chile and Malaysia, combined with an adjustment to the loss on sale of our Turkey operations, compared to $41.1 million for the 2019 fiscal quarter, which was primarily related to the sale of our Turkey operations.
+Added: Comparison of Consolidated Results for the Nine Months Ended September 30, 2020 and 2019
Better/(Worse)
4 unchanged sentences
Loss on impairment of assets 350.9 0.2 nm
−Removed: Operating (loss) income (371.9) 125.1 nm
+Added: Operating loss (366.2) (21.3) nm
Interest expense, net of interest income (74.1) (99.0) 25 %
−Removed: Other non-operating income (expense) 32.7 (6.2) nm
−Removed: (Loss) income from continuing operations before income taxes and equity in net income of affiliates (405.4) 29.2 nm
+Added: Other non-operating income 70.1 2.3 nm
+Added: Loss from continuing operations before income taxes and equity in net income of affiliates (370.2) (117.9) nm
Income tax benefit (expense) 293.5 (94.0) nm
Equity in net income of affiliates, net of tax 0.2 0.2 — %
−Removed: Loss from continuing operations (177.7) (9.2) nm
−Removed: (Loss) income from discontinued operations, net of tax (16.0) 93.6 (117) %
+Added: Loss from continuing operations (76.5) (211.7) 64 %
+Added: (Loss) income from discontinued operations, net of tax (558.0) 240.4 nm
(Loss) gain on sales of discontinued operations, net of tax (363.3) 848.4 (143) %
−Removed: Net (loss) income (213.3) 973.9 (122) %
−Removed: Net loss (income) attributable to noncontrolling interests 5.1 (1.0) nm
+Added: Net (loss) income (997.7) 877.1 nm
+Added: Net loss attributable to noncontrolling interests 5.1 0.5 nm
Net (loss) income attributable to Laureate Education, Inc.
−Removed: $ (208.2) $ 972.8 (121) %
+Added: $ (992.7) $ 877.6 nm
nm - percentage changes not meaningful
For further details on certain discrete items discussed below, see “Discussion of Significant Items Affecting the Consolidated Results.”
−Removed: Comparison of Consolidated Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019
−Removed: Revenues decreased by $273.3 million to $1,320.2 million for the six months ended June 30, 2020 (the 2020 fiscal period) from $1,593.5 million for the six months ended June 30, 2019 (the 2019 fiscal period).
−Removed: The effect of a net change in foreign currency exchange rates decreased revenues by $154.5 million, mainly driven by the weakening of the Brazilian Real, the Chilean Peso and the Mexican Peso against the USD.
−Removed: The incremental impact of dispositions decreased revenues by $19.4 million, related to the sale of UniNorte during the fourth quarter of 2019.
+Added: Comparison of Consolidated Results for the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019
+Added: Revenues decreased by $120.5 million to $739.7 million for the nine months ended September 30, 2020 (the 2020 fiscal period) from $860.2 million for the nine months ended September 30, 2019 (the 2019 fiscal period).
+Added: The effect of a net change in foreign currency exchange rates decreased revenues by $61.5 million, driven by the weakening of the Mexican Peso and the Peruvian Nuevo Sol against the USD.
Average total organic enrollment at a majority of our institutions decreased during the 2020 fiscal period, decreasing revenues by $36.7 million compared to the 2019 fiscal period.
−Removed: The overall decrease in organic enrollment was partially offset by an increase in our Rest of World segment.
−Removed: The effect of product mix, pricing and timing decreased revenues by $86.8 million for the 2020 fiscal period, attributable primarily to the effect of the COVID-19 pandemic on the academic calendar timing at a number of our institutions.
−Removed: These decreases in revenues were partially offset by other Corporate and Eliminations changes, which accounted for an increase in revenues of $2.7 million.
+Added: The effect of product mix, pricing and timing decreased revenues by $21.1 million for the 2020 fiscal period, mainly due to the effect of the COVID-19 pandemic on the academic calendar timing.
+Added: Other Corporate and Eliminations changes accounted for a decrease in revenues of $1.2 million.
Direct costs and general and administrative expenses combined decreased by $126.4 million to $754.9 million for the 2020 fiscal period from $881.3 million for the 2019 fiscal period.
The effect of a net change in foreign currency exchange rates decreased costs by $48.7 million.
−Removed: The incremental impact of the disposition of UniNorte decreased direct costs by $19.2 million.
The effect of operational changes decreased direct costs by $50.1 million, mainly driven by cost-saving initiatives to preserve liquidity in the wake of the COVID-19 pandemic.
−Removed: Other Corporate and Eliminations expenses accounted for a decrease in costs of $21.2 million in the 2020 fiscal period.
−Removed: Partially offsetting these decreases in direct costs were Excellence-in-Process (EiP) implementation expense, which increased costs by $15.1 million for the 2020 fiscal period compared to the 2019 fiscal period, in addition to changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets, which resulted in a year-over-year increase in direct costs of $0.5 million.
−Removed: Operating (loss) income changed by $497.0 million to a loss of $(371.9) million for the 2020 fiscal period from an income of $125.1 million for the 2019 fiscal period.
−Removed: This change was primarily a result of the impairment charges of $448.9 million during the 2020 fiscal period, partially offset by a change from operating loss to operating income in our Rest of World segment, combined with lower operating charges at Corporate.
+Added: Other Corporate and Eliminations expenses accounted for a decrease in costs of $38.8 million in the 2020 fiscal period, related to cost-reduction efforts.
+Added: Partially offsetting these decreases in direct costs was Excellence-in-Process (EiP) implementation expense, which increased costs by $10.4 million for the 2020 fiscal period compared to the 2019 fiscal period, in addition to changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets, which resulted in a year-over-year increase in direct costs of $0.8 million.
+Added: Operating loss increased by $344.9 million to $366.2 million for the 2020 fiscal period from $21.3 million for the 2019 fiscal period.
+Added: This increase was primarily a result of the impairment charges of $350.9 million during the 2020 fiscal period, partially offset by lower operating costs at Corporate.
Interest expense, net of interest income decreased by $24.9 million to $74.1 million for the 2020 fiscal period from $99.0 million for the 2019 fiscal period.
The decrease in interest expense was primarily attributable to lower average debt balances.
−Removed: Other non-operating income (expense) changed by $38.9 million, to an income of $32.7 million for the 2020 fiscal period from an expense of $(6.2) million for the 2019 fiscal period.
+Added: Other non-operating income increased by $67.8 million to $70.1 million for the 2020 fiscal period from $2.3 million for the 2019 fiscal period.
This change was primarily attributable to:
1 unchanged sentence
(2) a decrease in loss on debt extinguishment of $22.1 million, related to the repayment of the 2024 Term Loan during the 2019 fiscal period;
−Removed: and (3) a gain on sale of subsidiaries of $2.8 million, primarily related to a sale price adjustment for UniNorte.
−Removed: These increases in non-operating income were partially offset by a loss on derivative instruments for the 2020 fiscal period compared to a gain for the 2019 fiscal period, for a change of $8.4 million, and other non-operating expense for the 2020 fiscal period compared to income for the 2019 fiscal period, for a change of $8.6 million, primarily related to an increase in the estimated fair value of an equity security held at Corporate during the 2019 fiscal period.
+Added: and (3) a decrease in loss on disposal of subsidiaries of $0.3 million.
+Added: These increases in non-operating income were partially offset by a loss on derivative instruments for the 2020 fiscal period compared to a gain for the 2019 fiscal period, for a change of $9.8 million, and a decrease in other non-operating income of $8.3 million, primarily attributable to non-operating income recorded during the 2019 fiscal period related to the sale of an equity security held at Corporate.
Income tax benefit (expense) changed by $387.5 million to a benefit of $293.5 million for the 2020 fiscal period from an expense of $(94.0) million for the 2019 fiscal period.
−Removed: This change was attributable to a discrete tax benefit of approximately $222 million that was recognized during the 2020 fiscal period related to the tax-basis step up of certain intellectual property that became subject to Dutch taxation in the Netherlands.
+Added: This change was attributable to a net discrete tax benefit of approximately $141 million that was recognized during the 2020 fiscal period related to the tax-basis step up of certain intellectual property that became subject to Dutch taxation in the Netherlands, a discrete tax benefit of approximately $71 million related to the Company’s election to exclude certain foreign income of foreign corporations from GILTI, and a tax benefit of approximately $31 million related to changes in valuation allowance against U.S.
+Added: and Australia deferred tax assets.
(Loss) income from discontinued operations, net of tax changed by $798.4 million to a loss of $(558.0) million for the 2020 fiscal period from income of $240.4 million for the 2019 fiscal period.
−Removed: This change was primarily the result of the sales during 2019 of discontinued operations that generated income during the 2019 fiscal period, combined with an impairment charge of $10.0 million during the 2020 fiscal period related to assets that were held for sale.
−Removed: (Loss) gain on sales of discontinued operations, net of tax changed by $909.2 million to a loss of $(19.7) million for the 2020 fiscal period, related to the sales of NSAD and our operations in Costa Rica, compared to a gain of $889.5 million for the 2019 fiscal period related to the sales of St.
−Removed: Augustine and our operations in Thailand, South Africa, India, Spain and Portugal, along with an adjustment to the gain on the sale of our China operation.
−Removed: Net loss (income) attributable to noncontrolling interests changed by $6.1 million to a loss of $5.1 million for the 2020 fiscal period, compared to income of $(1.0) million for the 2019 fiscal period.
+Added: This change was primarily the result of higher year-over-year impairment charges of $614.1 million during the 2020 fiscal period related to assets that were held for sale, combined with the sales of discontinued operations that generated income during the 2019 fiscal period.
+Added: (Loss) gain on sales of discontinued operations, net of tax changed by $1,211.7 million to a loss of $(363.3) million for the 2020 fiscal period, related to the net effect of the sales of NSAD and our operations in Costa Rica, Chile and Malaysia, combined with an adjustment to the loss on sale of our Turkey operations, compared to a gain of $848.4 million for the 2019 fiscal period related to the sales of St.
+Added: Augustine and our operations in Thailand, South Africa, India, Spain, Portugal and Turkey, along with an adjustment to the gain on the sale of our China operation.
+Added: Net loss attributable to noncontrolling interests increased by $4.6 million to $5.1 million for the 2020 fiscal period from $0.5 million for the 2019 fiscal period.
This change was primarily related to our previous joint venture in Saudi Arabia.
7 unchanged sentences
Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
−Removed: The following table presents Adjusted EBITDA and reconciles (loss) income from continuing operations to Adjusted EBITDA for the three months ended June 30, 2020 and 2019:
+Added: The following table presents Adjusted EBITDA and reconciles loss from continuing operations to Adjusted EBITDA for the three months ended September 30, 2020 and 2019:
Better/(Worse)
(in millions) 2020 2019 2020 vs.
−Removed: (Loss) income from continuing operations $ (301.8) $ 107.8 nm
−Removed: Equity in net income of affiliates, net of tax — (0.2) (100) %
−Removed: Income tax expense 7.5 74.6 90 %
−Removed: (Loss) income from continuing operations before income taxes and equity in net income of affiliates (294.2) 182.2 nm
−Removed: Gain on disposal of subsidiaries, net (0.1) — nm
+Added: Loss from continuing operations $ (271.0) $ (86.6) nm
+Added: Income tax (benefit) expense (72.2) 48.1 nm
+Added: Loss from continuing operations before income taxes (343.2) (38.6) nm
+Added: (Gain) loss on disposal of subsidiaries, net (0.6) 1.5 140 %
Foreign currency exchange loss (gain), net 2.9 (7.7) (138) %
−Removed: Other expense (income), net 0.4 (7.7) (105) %
−Removed: Loss (gain) on derivatives 1.4 (2.6) (154) %
+Added: Other income, net (1.3) (1.0) 30 %
+Added: Gain on derivatives — (0.3) (100) %
Loss on debt extinguishment — 0.2 100 %
1 unchanged sentence
Interest income (0.7) (0.9) (22) %
−Removed: Operating (loss) income (254.8) 217.2 nm
+Added: Operating loss (318.2) (18.4) nm
Depreciation and amortization 18.2 20.4 11 %
−Removed: EBITDA (214.7) 266.5 (181) %
+Added: EBITDA (300.0) 2.0 nm
Share-based compensation expense (a)
+Added: 2.6 1.2 (117) %
Loss on impairment of assets (b)
5 unchanged sentences
(b) Represents non-cash charges related to impairments of long-lived assets.
−Removed: For further details, see “Discussion of Significant Items Affecting the Consolidated Results for the Six Months Ended June 30, 2020.”
+Added: For further details, see “Discussion of Significant Items Affecting the Consolidated Results for the Nine Months Ended September 30, 2020.”
(c) EiP implementation expenses are related to our enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources.
1 unchanged sentence
The EiP initiative also includes other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure and certain non-recurring costs incurred in connection with the planned and completed dispositions.
−Removed: Beginning in the third quarter of 2019, EiP also includes expenses associated with an enterprise-wide program aimed at revenue growth.
−Removed: Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Three Months Ended June 30, 2020 and 2019
+Added: EiP also includes expenses associated with an enterprise-wide program aimed at revenue growth.
+Added: Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Three Months Ended September 30, 2020 and 2019
Depreciation and amortization decreased by $2.2 million to $18.2 million for the 2020 fiscal quarter from $20.4 million for the 2019 fiscal quarter.
1 unchanged sentence
Other items decreased depreciation and amortization by $0.8 million.
−Removed: Share-based compensation expense decreased by $0.1 million to $4.6 million for the 2020 fiscal quarter from $4.7 million for the 2019 fiscal quarter.
+Added: Share-based compensation expense increased by $1.4 million to $2.6 million for the 2020 fiscal quarter from $1.2 million for the 2019 fiscal quarter.
EiP implementation expenses decreased by $2.9 million to $24.4 million for the 2020 fiscal quarter from $27.3 million for the 2019 fiscal quarter.
−Removed: The year-over-year decrease in EiP expenses is primarily attributable to lower costs of severance and retention bonuses related to our divestiture activity, and lower severance related to streamlining our organizational structure, partially offset by an increase in EiP expenses associated with an enterprise-wide program aimed at revenue growth.
−Removed: The following table presents Adjusted EBITDA and reconciles loss from continuing operations to Adjusted EBITDA for the six months ended June 30, 2020 and 2019:
+Added: The following table presents Adjusted EBITDA and reconciles loss from continuing operations to Adjusted EBITDA for the nine months ended September 30, 2020 and 2019:
Better/(Worse)
(in millions) 2020 2019 2020 vs.
−Removed: Loss from continuing operations $ (177.7) $ (9.2) nm
+Added: Loss from continuing operations $ (76.5) $ (211.7) 64 %
Equity in net income of affiliates, net of tax (0.2) (0.2) — %
Income tax (benefit) expense (293.5) 94.0 nm
−Removed: (Loss) income from continuing operations before income taxes and equity in net income of affiliates (405.4) 29.2 nm
−Removed: Gain on disposal of subsidiaries, net (2.8) — nm
+Added: Loss from continuing operations before income taxes and equity in net income of affiliates (370.2) (117.9) nm
+Added: Loss on disposal of subsidiaries, net 1.2 1.5 20 %
Foreign currency exchange gain, net (71.1) (7.6) nm
−Removed: Other expense (income), net 0.5 (8.1) (106) %
+Added: Other income, net (0.8) (9.1) (91) %
Loss (gain) on derivatives 0.6 (9.2) (107) %
2 unchanged sentences
Interest income (1.6) (2.6) (38) %
−Removed: Operating (loss) income (371.9) 125.1 nm
+Added: Operating loss (366.2) (21.3) nm
Depreciation and amortization 55.9 61.6 9 %
1 unchanged sentence
Share-based compensation expense (a)
+Added: 7.9 7.5 (5) %
Loss on impairment of assets (b)
5 unchanged sentences
(b) Represents non-cash charges related to impairments of long-lived assets.
−Removed: For further details, see “Discussion of Significant Items Affecting the Consolidated Results for the Six Months Ended June 30, 2020.”
+Added: For further details, see “Discussion of Significant Items Affecting the Consolidated Results for the Nine Months Ended September 30, 2020.”
(c) EiP implementation expenses are related to our enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources.
2 unchanged sentences
Beginning in the third quarter of 2019, EiP also includes expenses associated with an enterprise-wide program aimed at revenue growth.
−Removed: Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Six Months Ended June 30, 2020 and 2019
+Added: Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Nine Months Ended September 30, 2020 and 2019
Depreciation and amortization decreased by $5.7 million to $55.9 million for the 2020 fiscal period from $61.6 million for the 2019 fiscal period.
1 unchanged sentence
Other items decreased depreciation and amortization by $2.3 million.
−Removed: Share-based compensation expense decreased by $1.1 million to $6.6 million for the 2020 fiscal period from $7.7 million for the 2019 fiscal period.
+Added: Share-based compensation expense increased by $0.4 million to $7.9 million for the 2020 fiscal period from $7.5 million for the 2019 fiscal period.
EiP implementation expenses increased by $10.4 million to $66.5 million for the 2020 fiscal period from $56.1 million for the 2019 fiscal period.
−Removed: This increase is primarily attributable to the inclusion in EiP of expenses associated with an enterprise-wide program aimed at revenue growth.
+Added: This increase was primarily attributable to higher legal and consulting fees related to our divestiture activity and the inclusion in EiP of expenses associated with an enterprise-wide program aimed at revenue growth.
Segment Results
−Removed: We have five reportable segments:
−Removed: Brazil, Mexico, Andean, Rest of World and Online & Partnerships.
−Removed: As discussed in “Overview,” the entire Central America segment is included in Discontinued Operations and therefore is excluded from segment results.
+Added: We have two reportable segments:
+Added: Mexico and Peru (formerly Andean).
+Added: As discussed in “Overview,” the entire Brazil, Central America, Rest of World and Online & Partnerships operating segments are included in Discontinued Operations and therefore are excluded from segment results.
For purposes of the following comparison of results discussion, “ segment direct costs ” represent direct costs by segment as they are included in Adjusted EBITDA, such that depreciation and amortization expense, loss on impairment of assets, share-based compensation expense and our EiP implementation expenses have been excluded.
4 unchanged sentences
Better/(Worse)
−Removed: For the three months ended June 30, 2020 2019 2020 vs.
−Removed: Brazil $ 118.5 $ 197.1 (40) %
+Added: For the three months ended September 30, 2020 2019 2020 vs.
Mexico $ 115.9 $ 145.8 (21) %
−Removed: Andean 345.9 423.0 (18) %
−Removed: Rest of World 62.6 51.2 22 %
−Removed: Online & Partnerships 148.9 159.7 (7) %
+Added: Peru 127.3 130.8 (3) %
Corporate 0.3 0.7 (57) %
1 unchanged sentence
Adjusted EBITDA:
−Removed: Brazil $ 41.6 $ 58.9 (29) %
Mexico $ 15.5 $ 23.1 (33) %
−Removed: Andean 160.7 186.5 (14) %
−Removed: Rest of World 19.7 12.1 63 %
−Removed: Online & Partnerships 43.4 49.9 (13) %
+Added: Peru 56.5 45.2 25 %
Corporate (21.6) (37.8) 43 %
2 unchanged sentences
Better/(Worse)
−Removed: For the six months ended June 30, 2020 2019 2020 vs.
−Removed: Brazil $ 202.2 $ 307.1 (34) %
+Added: For the nine months ended September 30, 2020 2019 2020 vs.
Mexico $ 385.0 $ 464.7 (17) %
−Removed: Andean 435.4 561.9 (23) %
−Removed: Rest of World 106.1 84.6 25 %
−Removed: Online & Partnerships 305.4 321.5 (5) %
−Removed: Corporate 2.1 (0.6) nm
+Added: Peru 351.4 391.1 (10) %
+Added: Corporate 3.3 4.5 (27) %
Consolidated Total Revenues $ 739.7 $ 860.2 (14) %
Adjusted EBITDA:
−Removed: Brazil $ 22.4 $ 28.2 (21) %
Mexico $ 58.5 $ 80.5 (27) %
−Removed: Andean 98.5 153.3 (36) %
−Removed: Rest of World 24.5 8.8 178 %
−Removed: Online & Partnerships 86.7 98.4 (12) %
+Added: Peru 129.0 133.8 (4) %
Corporate (72.4) (110.0) 34 %
Consolidated Total Adjusted EBITDA $ 115.1 $ 104.2 10 %
−Removed: nm - percentage change not meaningful
Financial Overview
−Removed: Comparison of Brazil Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019
−Removed: (in millions) Revenues Direct Costs Adjusted EBITDA
−Removed: June 30, 2019 $ 197.1 $ 138.2 $ 58.9
−Removed: Organic enrollment (1)
−Removed: Product mix, pricing and timing (1)
−Removed: Organic constant currency (23.3) (24.8) 1.5
−Removed: Foreign exchange (43.3) (27.5) (15.8)
−Removed: Dispositions (2)
−Removed: (12.0) (9.4) (2.6)
−Removed: June 30, 2020 $ 118.5 $ 76.9 $ 41.6
−Removed: (1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
−Removed: (2) Relates to the sale of UniNorte during the fourth quarter of 2019.
−Removed: (3) Other is composed of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets.
−Removed: Revenues decreased by $78.6 million, a 40% decrease from the 2019 fiscal quarter.
−Removed: • Organic enrollment decreased during the 2020 fiscal quarter by 3%, decreasing revenues by $4.1 million compared to the 2019 fiscal quarter.
−Removed: • The decrease in revenues from product mix, pricing and timing was in part due to the effect of the COVID-19 pandemic on the academic calendar timing.
−Removed: • Revenues represented 15% of our consolidated total revenues for the 2020 fiscal quarter compared to 20% for the 2019 fiscal quarter.
−Removed: Adjusted EBITDA decreased by $17.3 million, a 29% decrease from the 2019 fiscal quarter.
−Removed: Comparison of Brazil Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019
−Removed: (in millions) Revenues Direct Costs Adjusted EBITDA
−Removed: June 30, 2019 $ 307.1 $ 278.9 $ 28.2
−Removed: Organic enrollment (1)
−Removed: Product mix, pricing and timing (1)
−Removed: Organic constant currency (24.3) (35.2) 10.9
−Removed: Foreign exchange (61.2) (44.2) (17.0)
−Removed: Dispositions (2)
−Removed: (19.4) (19.2) (0.2)
−Removed: June 30, 2020 $ 202.2 $ 179.8 $ 22.4
−Removed: (1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
−Removed: (2) Relates to the sale of UniNorte during the fourth quarter of 2019.
−Removed: (3) Other is composed of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets.
−Removed: Revenues decreased by $104.9 million, a 34% decrease from the 2019 fiscal period.
−Removed: • Organic enrollment decreased during the 2020 fiscal period by 2%, decreasing revenues by $3.4 million compared to the 2019 fiscal period.
−Removed: • The decrease in revenues from product mix, pricing and timing was in part due to the effect of the COVID-19 pandemic on the academic calendar timing.
−Removed: • Revenues represented 16% of our consolidated total revenues for the 2020 fiscal period, compared to 20% for the 2019 fiscal period.
−Removed: Adjusted EBITDA decreased by $5.8 million, a 21% decrease from the 2019 fiscal period.
−Removed: Financial Overview
−Removed: Comparison of Mexico Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019
+Added: Comparison of Mexico Results for the Three Months Ended September 30, 2020 to the Three Months Ended September 30, 2019
(in millions) Revenues Direct Costs Adjusted EBITDA
−Removed: June 30, 2019 $ 162.5 $ 130.9 $ 31.6
+Added: September 30, 2019 $ 145.8 $ 122.7 $ 23.1
Organic enrollment (1)
3 unchanged sentences
Dispositions — — —
−Removed: June 30, 2020 $ 114.9 $ 95.2 $ 19.7
+Added: September 30, 2020 $ 115.9 $ 100.4 $ 15.5
(1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
2 unchanged sentences
• Organic enrollment decreased during the fiscal quarter by 6%, decreasing revenues by $8.3 million.
−Removed: • The decrease in revenues from product mix, pricing and timing was mainly due to the effect of the COVID-19 pandemic on the academic calendar timing.
+Added: • The decrease in revenues from product mix, pricing and timing was mainly due to an increase in discounts and scholarships as a percentage of revenues.
• Revenues represented 48% of our consolidated total revenues for the 2020 fiscal quarter, compared to 53% for the 2019 fiscal quarter.
Adjusted EBITDA decreased by $7.6 million, a 33% decrease from the 2019 fiscal quarter.
−Removed: Comparison of Mexico Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019
+Added: Comparison of Mexico Results for the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019
(in millions) Revenues Direct Costs Adjusted EBITDA
−Removed: June 30, 2019 $ 318.9 $ 261.5 $ 57.4
+Added: September 30, 2019 $ 464.7 $ 384.2 $ 80.5
Organic enrollment (1)
3 unchanged sentences
Dispositions — — —
−Removed: June 30, 2020 $ 269.1 $ 226.1 $ 43.0
+Added: September 30, 2020 $ 385.0 $ 326.5 $ 58.5
(1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
2 unchanged sentences
• Organic enrollment decreased during the 2020 fiscal period by 4%, decreasing revenues by $19.6 million.
−Removed: • The decrease in revenues from product mix, pricing and timing was mainly due to the effect of the COVID-19 pandemic on the academic calendar timing.
−Removed: • Revenues represented 20% of our consolidated total revenues for both the 2020 and the 2019 fiscal periods.
+Added: • The decrease in revenues from product mix, pricing and timing was mainly due to the effect of the COVID-19 pandemic on the academic calendar timing, as well as an increase in discounts and scholarships as a percentage of revenues.
+Added: • Revenues represented 52% of our consolidated total revenues for the 2020 fiscal period, compared to 54% for the 2019 fiscal period.
Adjusted EBITDA decreased by $22.0 million, a 27% decrease from the 2019 fiscal period.
Financial Overview
−Removed: Comparison of Andean Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019
+Added: Comparison of Peru Results for the Three Months Ended September 30, 2020 to the Three Months Ended September 30, 2019
(in millions) Revenues Direct Costs Adjusted EBITDA
−Removed: June 30, 2019 $ 423.0 $ 236.5 $ 186.5
+Added: September 30, 2019 $ 130.8 $ 85.6 $ 45.2
Organic enrollment (1)
3 unchanged sentences
Dispositions — — —
−Removed: June 30, 2020 $ 345.9 $ 185.2 $ 160.7
+Added: September 30, 2020 $ 127.3 $ 70.8 $ 56.5
(1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
−Removed: Revenues decreased by $77.1 million, an 18% decrease from the 2019 fiscal quarter.
−Removed: • The decrease in revenues from product mix, pricing and timing was mainly due to the effect of the COVID-19 pandemic on the academic calendar timing.
+Added: Revenues decreased by $3.5 million, a 3% decrease from the 2019 fiscal quarter.
• Organic enrollment decreased during the 2020 fiscal quarter by 12%, decreasing revenues by $14.6 million.
−Removed: • Revenue represented 44% of our consolidated total revenues for the 2020 fiscal quarter compared to 43% for the 2019 fiscal quarter.
−Removed: Adjusted EBITDA decreased by $25.8 million, a 14% decrease from the 2019 fiscal quarter.
−Removed: • Foreign exchange affected the results for the 2020 fiscal quarter, primarily due to the weakening of the Chilean Peso relative to the USD.
−Removed: Comparison of Andean Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019
−Removed: (in millions) Revenues Direct Costs Adjusted EBITDA
−Removed: June 30, 2019 $ 561.9 $ 408.6 $ 153.3
−Removed: Organic enrollment (1)
−Removed: Product mix, pricing and timing (1)
−Removed: Organic constant currency (74.3) (29.9) (44.4)
−Removed: Foreign exchange (52.2) (41.8) (10.4)
−Removed: Dispositions — — —
−Removed: June 30, 2020 $ 435.4 $ 336.9 $ 98.5
−Removed: (1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
−Removed: Revenues decreased by $126.5 million, a 23% decrease from the 2019 fiscal period.
−Removed: • The decrease in revenues from product mix, pricing and timing was mainly due to the effect of the COVID-19 pandemic on the academic calendar timing.
−Removed: • Organic enrollment decreased during the 2020 fiscal period by 2%, decreasing revenues by $8.4 million.
−Removed: • Revenue represented 33% of our consolidated total revenues for the 2020 fiscal period compared to 35% for the 2019 fiscal period.
−Removed: Adjusted EBITDA decreased by $54.8 million, a 36% decrease from the 2019 fiscal period.
−Removed: • Foreign exchange affected the results for the 2020 fiscal period, primarily due to weakening of the Chilean Peso relative to the USD.
−Removed: Rest of World
−Removed: Financial Overview
−Removed: Comparison of Rest of World Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019
−Removed: (in millions) Revenues Direct Costs Adjusted EBITDA
−Removed: June 30, 2019 $ 51.2 $ 39.1 $ 12.1
−Removed: Organic enrollment (1)
−Removed: Product mix, pricing and timing (1)
−Removed: Organic constant currency 15.8 6.8 9.0
−Removed: Foreign exchange (4.4) (3.0) (1.4)
−Removed: Dispositions — — —
−Removed: June 30, 2020 $ 62.6 $ 42.9 $ 19.7
−Removed: (1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
−Removed: Revenues increased by $11.4 million, a 22% increase from the 2019 fiscal quarter.
−Removed: • Organic enrollment increased during the 2020 fiscal quarter by 23%, increasing revenues by $11.8 million.
+Added: • The increase in revenues from product mix, pricing and timing was mainly due to the effect of the COVID-19 pandemic on the academic calendar timing, as revenue that had previously been deferred was recognized during the 2020 fiscal quarter when rescheduled classes took place.
+Added: This increase was partially offset by an increase in discounts and scholarships as a percentage of revenues.
• Revenue represented 52% of our consolidated total revenues for the 2020 fiscal quarter compared to 47% for the 2019 fiscal quarter.
Adjusted EBITDA increased by $11.3 million, a 25% increase from the 2019 fiscal quarter.
−Removed: Comparison of Rest of World Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019
−Removed: (in millions) Revenues Direct Costs Adjusted EBITDA
−Removed: June 30, 2019 $ 84.6 $ 75.8 $ 8.8
−Removed: Organic enrollment (1)
−Removed: Product mix, pricing and timing (1)
−Removed: Organic constant currency 30.5 12.0 18.5
−Removed: Foreign exchange (9.0) (6.2) (2.8)
−Removed: Dispositions — — —
−Removed: June 30, 2020 $ 106.1 $ 81.6 $ 24.5
−Removed: (1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
−Removed: Revenues increased by $21.5 million, a 25% increase from the 2019 fiscal period.
−Removed: • Organic enrollment increased during the 2020 fiscal period by 23%, increasing revenues by $18.8 million.
−Removed: • Revenues represented 8% of our consolidated total revenues for the 2020 fiscal period compared to 5% for the 2019 fiscal period.
−Removed: Adjusted EBITDA increased by $15.7 million, a 178% increase from the 2019 fiscal period.
−Removed: Online & Partnerships
−Removed: Financial Overview
−Removed: Comparison of Online & Partnerships Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019
−Removed: (in millions) Revenues Direct Costs Adjusted EBITDA
−Removed: June 30, 2019 $ 159.7 $ 109.8 $ 49.9
−Removed: Organic enrollment (1)
−Removed: Product mix, pricing and timing (1)
−Removed: Organic constant currency (10.8) (4.3) (6.5)
−Removed: Foreign exchange — — —
−Removed: Dispositions — — —
−Removed: June 30, 2020 $ 148.9 $ 105.5 $ 43.4
−Removed: (1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
−Removed: Revenues decreased by $10.8 million, a 7% decrease from the 2019 fiscal quarter.
−Removed: • Organic enrollment decreased during the 2020 fiscal quarter by 5%, decreasing revenues by $4.3 million.
−Removed: This decrease was primarily attributable to a decrease in organic enrollment at the University of Liverpool and the University of Roehampton, as we no longer accept new enrollments at those institutions.
−Removed: • Revenues represented 19% of our consolidated total revenues for the 2020 fiscal quarter, compared to 16% for the 2019 fiscal quarter.
−Removed: Adjusted EBITDA decreased by $6.5 million, a 13% decrease compared to the 2019 fiscal quarter.
−Removed: Comparison of Online & Partnerships Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019
+Added: Comparison of Peru Results for the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019
(in millions) Revenues Direct Costs Adjusted EBITDA
−Removed: June 30, 2019 $ 321.5 $ 223.1 $ 98.4
+Added: September 30, 2019 $ 391.1 $ 257.3 $ 133.8
Organic enrollment (1)
3 unchanged sentences
Dispositions — — —
−Removed: June 30, 2020 $ 305.4 $ 218.7 $ 86.7
+Added: September 30, 2020 $ 351.4 $ 222.4 $ 129.0
(1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
1 unchanged sentence
• Organic enrollment decreased during the 2020 fiscal period by 5%, decreasing revenues by $17.1 million.
−Removed: This decrease was primarily attributable to a decrease in organic enrollment at the University of Liverpool and the University of Roehampton, as we no longer accept new enrollments at those institutions.
−Removed: • Revenues represented 23% of our consolidated total revenues for the 2020 fiscal period, compared to 20% for the 2019 fiscal period.
−Removed: Adjusted EBITDA decreased by $11.7 million, a 12% decrease compared to the 2019 fiscal period.
+Added: • The decrease in revenues from product mix, pricing and timing was mainly due to an increase in discounts and scholarships as a percentage of revenues.
+Added: • Revenue represented 48% of our consolidated total revenues for the 2020 fiscal period compared to 46% for the 2019 fiscal period.
+Added: Adjusted EBITDA decreased by $4.8 million, a 4% decrease from the 2019 fiscal period, primarily driven by the weakening of the Peruvian Nuevo Sol relative to the USD.
Corporate revenues represent amounts from our consolidated joint venture with the University of Liverpool, as well as centralized IT costs charged to various segments, offset by the elimination of intersegment revenues.
−Removed: Comparison of Corporate Results for the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019
+Added: Comparison of Corporate Results for the Three Months Ended September 30, 2020 to the Three Months Ended September 30, 2019
Better/(Worse)
3 unchanged sentences
Adjusted EBITDA $ (21.6) $ (37.8) 43 %
−Removed: Adjusted EBITDA increased by $14.1 million, a 35% increase from the 2019 fiscal quarter.
−Removed: • Labor costs and other professional fees decreased by $14.8 million for the 2020 fiscal quarter compared to the 2019 fiscal quarter, related to cost-reduction efforts.
−Removed: • Other items accounted for a decrease in Adjusted EBITDA of $0.7 million.
−Removed: Comparison of Corporate Results for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019
+Added: Adjusted EBITDA increased by $16.2 million, a 43% increase from the 2019 fiscal quarter, primarily due to a decrease in labor costs and other professional fees, related to cost-reduction efforts.
+Added: Comparison of Corporate Results for the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019
Better/(Worse)
(in millions) 2020 2019 2020 vs.
−Removed: Revenues $ 2.1 $ (0.6) nm
+Added: Revenues $ 3.3 $ 4.5 (27) %
Expenses 75.7 114.5 34 %
Adjusted EBITDA $ (72.4) $ (110.0) 34 %
−Removed: Adjusted EBITDA increased by $23.9 million, a 31% increase from the 2019 fiscal period.
−Removed: • Labor costs and other professional fees decreased expenses by $25.6 million for the 2020 fiscal period compared to the 2019 fiscal period, related to cost-reduction efforts.
−Removed: • Other items accounted for a decrease in Adjusted EBITDA of $1.7 million.
+Added: Adjusted EBITDA increased by $37.6 million, a 34% increase from the 2019 fiscal period, primarily due to a decrease in labor costs and other professional fees, related to cost-reduction efforts.
Liquidity and Capital Resources
1 unchanged sentence
We anticipate that cash flow from operations and available cash will be sufficient to meet our current operating requirements and manage our liquidity needs, including any effects on the Company’s business operations that arise from the COVID-19 pandemic, for at least the next 12 months from the date of issuance of this report.
−Removed: In addition, we are controlling discretionary expenses and reviewing our capital spending projects, as well as engaging with landlords to negotiate rent deferrals or other rent concessions.
However, as the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs.
6 unchanged sentences
If our educational institutions within one country were unable to maintain sufficient liquidity, we would consider using internal cash resources or reasonable short-term working capital facilities to accommodate any short- to medium-term shortfalls.
−Removed: As of June 30, 2020, our secondary source of liquidity was cash and cash equivalents of $629.6 million, which does not include $34.2 million of cash recorded at subsidiaries that are classified as held for sale at June 30, 2020.
+Added: As of September 30, 2020, our secondary source of liquidity was cash and cash equivalents of $716.8 million, which does not include $113.0 million of cash recorded at subsidiaries that are classified as held for sale at September 30, 2020.
Our cash accounts are maintained with high-quality financial institutions with no significant concentration in any one institution.
1 unchanged sentence
The revolving credit facility provides for borrowings of $410.0 million and a maturity date of October 7, 2024.
−Removed: If certain conditions are satisfied, the Third Amended and Restated Credit Agreement (the Third A&R Credit Agreement) also provides for an incremental revolving and term loan facilities not to exceed $565.0 million plus additional amounts so long as both immediately before and after giving effect to such incremental facilities the Company’s Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, on a pro forma basis, does not exceed 2.75x.
From time to time, we draw down on the revolver and, in accordance with the terms of the credit agreement, any proceeds drawn on the revolving credit facility may be used for general corporate purposes.
In March 2020, we fully drew down our $410.0 million revolving credit facility in order to increase our cash position and preserve financial flexibility in light of the COVID-19 pandemic.
+Added: If certain conditions are satisfied, the Third Amended and Restated Credit Agreement (the Third A&R Credit Agreement) also provides for an incremental revolving and term loan facilities not to exceed $565.0 million plus additional amounts so long as both immediately before and after giving effect to such incremental facilities the Company’s Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, on a pro forma basis, does not exceed 2.75x.
Completed Sale Transactions
8 unchanged sentences
Under the terms of the sale agreement, we expect to receive the remaining escrow receivable amount in January 2021.
+Added: On September 11, 2020, we completed the divestiture of our operations in Chile through the transfer of control of our not-for-profit institutions and the sale of our for-profit operations.
+Added: The cash proceeds received at closing, prior to transaction fees, were approximately $195.3 million.
+Added: In addition, the purchase price included a note receivable of approximately $21.5 million that is payable one year from the date of divestiture.
+Added: At the closing date, the Chilean operations had a cash balance (cash sold) of approximately $288.0 million that was transferred to the buyer as part of the transaction.
+Added: On September 29, 2020, we completed the sale of our operations in Malaysia and received proceeds of $116.3 million, net of cash sold, but prior to transaction fees.
+Added: The cash proceeds included a deposit of $5.0 million that we received from the buyer in February 2020.
+Added: In connection with the sale, on October 1, 2020, we made a payment of $13.7 million to the minority owner of Inti Holdings for their 10.10% interest.
+Added: On November 3, 2020, we completed the sale of our operations in Australia and New Zealand.
+Added: The purchase price was $642.7 million and was subject to certain closing adjustments based on the aggregate working capital and indebtedness of the Australia and New Zealand entities and their forecasted performance.
+Added: At closing, we received proceeds of approximately $650 million, net of transaction costs.
Pending Sale Transactions
−Removed: On February 28, 2020, the Company entered into an agreement to sell its operations in Malaysia for a total purchase price of $140.0 million.
−Removed: The closing of the transaction is subject to customary closing conditions, including approval by regulators in Malaysia.
−Removed: On July 29, 2020, the Company entered into an agreement to sell its Australia and New Zealand operations for a purchase price of $642.7 million.
−Removed: The closing of the transaction is expected to occur by the first quarter of 2021 and is subject to customary closing conditions, including regulatory approvals in Australia and New Zealand and a mutual right of termination based on the occurrence of a material adverse change in certain forecasted results of the Australia and New Zealand operations.
+Added: On September 11, 2020, the Company entered into a sale agreement to sell its operation of Walden University, LLC, (Walden University) for a purchase price of $1,480.0 million in cash, subject to certain adjustments set forth in the sale agreement.
+Added: 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.
+Added: Department of Education and the Higher Learning Commission and required antitrust approvals.
+Added: Under certain specified circumstances, the purchaser may be required to pay the Company a termination fee of $88.0 million, including if the purchaser terminates the sale agreement as a result of the imposition by the U.S.
+Added: Department of Education of certain specified restrictions, or if Laureate terminates the sale agreement as a result of the purchaser’s failure to consummate the transaction upon satisfaction of the closing conditions.
+Added: Upon completion of the sale, the restricted cash that is held to collateralize the letters of credit in favor of the DOE will be released and reclassified to cash and cash equivalents.
+Added: 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 $29.8 million, prior to closing costs.
+Added: The buyer will also assume indebtedness which, as of September 30, 2020, was approximately $30 million.
+Added: The transaction is subject to certain closing conditions, including regulatory approval, and is expected to be completed in the first half of 2021.
+Added: On November 2, 2020, the Company entered into a definitive agreement with Ânima Holding S.A., one of the largest private higher education organizations in Brazil, for the sale of its Brazilian operations.
+Added: The transaction value is approximately 4,400.0 million Brazilian Reals (or approximately $765.0 million at the time of signing), including 3,800.0 million Brazilian Reals (or approximately $660.7 million at the time of signing) in cash consideration, which is subject to certain adjustments, and assumption of net indebtedness.
+Added: Pursuant to the agreement, the Company will be entitled to receive up to 203.0 million Brazilian Reals (or approximately $35.3 million at the time of signing) in additional cash consideration if certain metrics are achieved following the closing .
+Added: The closing of this transaction is targeted to occur toward the end of the second quarter of 2021 and is subject to certain specified closing conditions.
Liquidity Restrictions
−Removed: Our liquidity is affected by restricted cash balances, which totaled $185.7 million and $186.9 million as of June 30, 2020 and December 31, 2019, respectively.
+Added: Our liquidity is affected by restricted cash balances, which totaled $30.9 million and $36.2 million as of September 30, 2020 and December 31, 2019, respectively.
Indefinite Reinvestment of Foreign Earnings
1 unchanged sentence
As part of our business strategies, we have determined that, except for one of our institutions in Peru, all earnings from our foreign continuing operations will be deemed indefinitely reinvested outside of the United States.
−Removed: As of June 30, 2020, $454.1 million of our total $629.6 million of cash and cash equivalents were held by foreign subsidiaries, including $215.9 million held by VIEs.
−Removed: These amounts above do not include $34.2 million of cash recorded at subsidiaries that are classified as held for sale at June 30, 2020, almost all of which was held by foreign subsidiaries.
−Removed: As of December 31, 2019, $275.6 million of our total $339.6 million of cash and cash equivalents were held by foreign subsidiaries, including $157.0 million held by VIEs.
+Added: As of September 30, 2020, $321.3 million of our total $716.8 million of cash and cash equivalents were held by foreign subsidiaries.
+Added: These amounts above do not include $113.0 million of cash recorded at subsidiaries that are classified as held for sale at September 30, 2020, of which $108.7 million was held by foreign subsidiaries.
+Added: As of December 31, 2019, $55.8 million of our total $61.6 million of cash and cash equivalents were held by foreign subsidiaries.
These amounts above do not include $333.5 million of cash recorded at subsidiaries that were classified as held for sale at December 31, 2019, of which $269.3 million was held by foreign subsidiaries.
−Removed: The VIEs' cash and cash equivalents balances are generally required to be used only for the operations of these VIEs.
Liquidity Requirements
2 unchanged sentences
operating lease obligations;
−Removed: payments due to shareholders of acquired companies;
+Added: payments due to shareholders of acquired companies (seller notes);
payments of deferred compensation;
6 unchanged sentences
operating lease obligations;
−Removed: payments of long-term amounts due to shareholders of acquired companies;
payments of deferred compensation;
and payments of other third-party obligations.
−Removed: As of June 30, 2020, senior long-term borrowings totaled $1,209.1 million and consisted of $409.1 million of borrowings under our revolving credit facility and $800.0 million in Senior Notes due 2025 that mature in May 2025.
+Added: As of September 30, 2020, senior long-term borrowings totaled $1,209.1 million and consisted of $409.1 million of borrowings under our revolving credit facility and $800.0 million in Senior Notes due 2025 that mature in May 2025.
As discussed above, in March 2020, we fully drew down our $410.0 million revolving credit facility in order to increase our cash position and preserve financial flexibility in light of the COVID-19 pandemic.
−Removed: As of June 30, 2020, other debt balances totaled $356.4 million and our finance lease obligations and sale-leaseback financings were $85.3 million.
+Added: As of September 30, 2020, other debt balances totaled $212.0 million and our finance lease obligations and sale-leaseback financings were $31.9 million.
Other debt includes lines of credit and short-term borrowing arrangements of subsidiaries, mortgages payable and notes payable.
−Removed: Approximately $31.8 million of long-term debt, including the current portion, is included in the held-for-sale liabilities recorded on the consolidated balance sheet as of June 30, 2020.
+Added: Approximately $172.2 million of long-term debt and fi nance leases, including the current portion, is included in the held-for-sale liabilities recorded on the consolidated balance sheet as of September 30, 2020.
For further description of the held-for-sale amounts see Note 4, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-Q.
Senior Secured Credit Facility
−Removed: As of June 30, 2020 and December 31, 2019, the outstanding balance under our Senior Secured Credit Facility was $409.1 million and $202.4 million, respectively, which consisted entirely of balances outstanding under our $410.0 million revolving credit facility.
+Added: As of September 30, 2020 and December 31, 2019, the outstanding balance under our Senior Secured Credit Facility was $409.1 million and $202.4 million, respectively, which consisted entirely of balances outstanding under our $410.0 million revolving credit facility.
Under the Third A&R Credit Agreement, we are subject to a Consolidated Senior Secured Debt to Consolidated EBITDA financial maintenance covenant, as defined in the Third A&R Credit Agreement, unless certain conditions are satisfied.
−Removed: As of June 30, 2020, we were in compliance with the leverage ratio covenant.
−Removed: The maximum ratio, as defined, is 3.50x as of June 30, 2020 and thereafter.
+Added: As of September 30, 2020, we were in compliance with the leverage ratio covenant.
+Added: The maximum ratio, as defined, is 3.50x as of September 30, 2020 and thereafter.
In addition, notes payable at some of our locations contain financial maintenance covenants and we were in compliance with those covenants.
−Removed: As of both June 30, 2020 and December 31, 2019, the outstanding balance under our Senior Notes due 2025 was $800.0 million.
+Added: As of both September 30, 2020 and December 31, 2019, the outstanding balance under our Senior Notes due 2025 was $800.0 million.
We conduct a significant portion of our operations from leased facilities.
1 unchanged sentence
As discussed in Note 9, Leases, in our consolidated financial statements included elsewhere in this Form 10-Q, we have significant liabilities recorded related to our leased facilities, which will require future cash payments.
−Removed: Due to Shareholders of Acquired Companies
+Added: Due to Shareholders of Acquired Companies (Seller Notes)
In the past, one method of payment for acquisitions was the use of promissory notes payable to the sellers of acquired companies.
−Removed: As of June 30, 2020 and December 31, 2019, we recorded $16.0 million and $21.5 million, respectively, for these liabilities.
−Removed: See also Note 6, Due to Shareholders of Acquired Companies, in our consolidated financial statements included elsewhere in this Form 10-Q.
+Added: As of September 30, 2020 and December 31, 2019, we recorded $7.9 million and $22.3 million, respectively, for these liabilities, which relate entirely to Discontinued Operations and therefore are classified as liabilities held for sale in our consolidated balance sheets.
Capital Expenditures
8 unchanged sentences
We typically fund our capital expenditures through cash flow from operations and external financing.
−Removed: In the event that we are unable to obtain the necessary funding for capital
−Removed: expenditures, our long-term growth strategy could be significantly affected.
+Added: In the event that we are unable to obtain the necessary funding for capital expenditures, our long-term growth strategy could be significantly affected.
We believe that our internal sources of cash and our ability to obtain additional third-party financing, subject to market conditions, will be sufficient to fund our investing activities.
−Removed: Our total capital expenditures for our continuing and discontinued operations, excluding receipts from the sale of subsidiaries and property equipment, were $57.5 million and $70.8 million during the six months ended June 30, 2020 and 2019, respectively.
−Removed: The 19% decrease in capital expenditures for the 2020 fiscal period compared to the 2019 fiscal period was primarily a result of the divestitures.
+Added: Our total capital expenditures for our continuing and discontinued operations, excluding receipts from the sale of subsidiaries and property equipment, were $74.3 million and $114.2 million during the nine months ended September 30, 2020 and 2019, respectively.
+Added: The 35% decrease in capital expenditures for the 2020 fiscal period compared to the 2019 fiscal period was primarily due to a targeted reduction and deferral across all business lines to preserve cash amid the COVID-19 pandemic, as well as a result of the executed divestitures.
In the normal course of business, our operations are exposed to fluctuations in foreign currency values and interest rate changes.
1 unchanged sentence
For further information on our derivatives, see Note 13, Derivative Instruments, in our consolidated financial statements included elsewhere in this Form 10-Q.
−Removed: Redeemable Noncontrolling Interests and Equity
−Removed: In connection with certain acquisitions, we have entered into put/call arrangements with certain minority shareholders, and we may be required or elect to purchase additional ownership interests in the associated entities within a specified timeframe.
−Removed: In certain cases, call rights may contain minimum payment provisions.
−Removed: If we exercise such call rights, or negotiate the purchase of additional ownership interests, the consideration required could be higher than the estimated put values.
+Added: Asset Sale Offer to Purchase Up to $300 Million of Senior Notes
+Added: On October 13, 2020, the Company announced the commencement of a cash tender offer to purchase up to $300 million aggregate principal amount of its 8.250% Senior Notes due 2025, at a purchase price of 100% of the principal amount thereof plus accrued and unpaid interest to, but not including, the purchase date.
+Added: The Company intends to use cash proceeds from the sale of its operations in Chile and Malaysia to purchase the Senior Notes.
+Added: The offer will expire on November 10, 2020, unless extended by the Company, in its sole discretion.
+Added: Stock Repurchase Program
+Added: Laureate’s board of directors has approved a new stock repurchase program to acquire up to $300 million of the Company’s Class A common stock.
+Added: 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).
+Added: Repurchases may be effected pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act.
+Added: 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.
+Added: The Company intends to finance the repurchases with free cash flow and excess cash and liquidity on-hand.
In the consolidated statements of cash flows, the changes in operating assets and liabilities are presented excluding the effects of exchange rate changes, acquisitions, and reclassifications, as these effects do not represent operating cash flows.
1 unchanged sentence
The effects of exchange rate changes on cash are presented separately in the consolidated statements of cash flows.
−Removed: The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, 2020 and 2019:
+Added: The following table summarizes our cash flows from operating, investing, and financing activities for the nine months ended September 30, 2020 and 2019:
(in millions) 2020 2019
6 unchanged sentences
Net change in cash and cash equivalents and restricted cash $ 649.8 $ 2.6
−Removed: Comparison of Cash Flows for the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019
+Added: Comparison of Cash Flows for the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019
Operating Activities
−Removed: Cash provided by operating activities increased by $28.9 million to $61.4 million for the 2020 fiscal period from $32.5 million for the 2019 fiscal period.
−Removed: This increase in operating cash was attributable to:
+Added: Cash provided by operating activities decreased by $90.5 million to $221.8 million for the 2020 fiscal period from $312.3 million for the 2019 fiscal period.
+Added: This decrease in operating cash was primarily attributable to changes in working capital, as well as the year-over-year effect of the divestitures that occurred in 2019, as certain of the divested institutions contributed positive operating cash flows during 2019 prior to divestiture.
+Added: These factors accounted for a decrease in operating cash flows of approximately $178.5 million.
+Added: This decrease was partially offset by:
(1) a decrease in cash paid for interest of $62.4 million, from $137.7 million for the 2019 fiscal period to $75.3 million for the 2020 fiscal period, attributable to lower average debt balances;
1 unchanged sentence
and (3) a positive year-over-year effect to operating cash of $7.6 million primarily related to a cash payment during the 2019 fiscal period to settle cross currency and interest rate swaps in Chile.
−Removed: These increases in operating cash were partially offset by lower operating income as well as the year-over-year effect of the divestitures that occurred in 2019, as certain of the divested institutions, such as St.
−Removed: Augustine, contributed positive operating cash flows during the first quarter of 2019.
−Removed: When combined with changes in working capital, these factors accounted for a decrease in operating cash flows of approximately $43.5 million.
Investing Activities
1 unchanged sentence
This decrease was primarily attributable to lower cash receipts from the sales of discontinued operations of $1,101.6 million, from $1,141.7 million during the 2019 fiscal period (for the sales of St.
−Removed: Augustine and our operations in Thailand, South Africa, India, Spain and Portugal) to $22.5 million, net, during the 2020 fiscal period (for the sales of NSAD and our operations in Costa Rica, the receipt of a deposit for INTI Malaysia, and the receipt of a portion of the escrow receivable balance related to the 2018 sale of our China operations).
−Removed: In addition, during the 2019 fiscal period, we received $12.9 million from derivative settlements related to foreign exchange swap agreements associated with the sale of the Spain and Portugal institutions.
+Added: Augustine and our operations in Thailand, South Africa, India, Spain, Portugal and Turkey) to $40.1 million, net, during the 2020 fiscal period (for the net effect of the sales of NSAD and our operations in Costa Rica, Chile and Malaysia, net of cash sold, and the receipt of a portion of the escrow receivable balance related to the 2018 sale of our China operations).
+Added: In addition, during the 2019 fiscal period, we received $12.9 million from derivative settlements related to foreign exchange swap agreements associated with the sale of the Spain and Portugal institutions, as well as $11.5 million from the sale of shares of a preferred stock investment in a private education company.
These decreases in investing cash were partially offset by a decrease in capital expenditures of $39.9 million, and the year-over-year effect of a payment of $1.2 million during the 2019 fiscal period for a small acquisition in Brazil.
−Removed: Other items accounted for the remaining change of $0.1 million.
Financing Activities
2 unchanged sentences
(1) net proceeds from long-term debt during the 2020 fiscal period, related to the full draw down on our $410.0 million revolving credit facility in order to increase our cash position and preserve financial flexibility in response to the COVID-19 pandemic, compared to net payments of long-term debt during the 2019 fiscal period, for a change of $1,733.8 million;
−Removed: (2) proceeds from exercise of common stock options of $26.7 million during the 2020 fiscal period;
+Added: (2) increased proceeds from the exercise of common stock options of $25.0 million during the 2020 fiscal period;
(3) lower payments of deferred price for acquisitions during the 2020 fiscal period by $14.1 million, primarily due to the full repayment of the St.
1 unchanged sentence
(4) a payment for a debt redemption in Chile during the 2019 fiscal period of $5.9 million;
−Removed: and (5) a payment of $5.8 million during the 2019 fiscal period to acquire the remaining 10% noncontrolling interest of one of our operations in India, immediately prior to the sale of those operations.
−Removed: These increases in financing cash inflows were partially offset by payments of $29.2 million made during the 2020 fiscal period to repurchase shares of our Class A common stock under our stock repurchase program.
+Added: (5) a payment of $5.8 million during the 2019 fiscal period to acquire the remaining 10% noncontrolling interest of one of our operations in India, immediately prior to the sale of those operations;
+Added: and (6) higher payments during the 2019 fiscal period of $58.7 million to repurchase shares of our Class A common stock under our stock repurchase program.
Other items accounted for the remaining difference of $1.7 million.
6 unchanged sentences
For a complete discussion of our critical accounting policies, see the “Critical Accounting Policies and Estimates” section of the MD&A in our 2019 Form 10-K.
−Removed: During the six months ended June 30, 2020, there were no significant changes to our critical accounting policies.
+Added: During the nine months ended September 30, 2020, there were no significant changes to our critical accounting policies.
We will continue to monitor the effect to the Company of the COVID-19 pandemic and assess whether any changes to our accounting estimates are warranted as additional information becomes available.
5 unchanged sentences
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.