What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2021-02-25 compared with 2020-02-27 · 444 added, 681 removed, 504 unchanged (69% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our results of operations and financial condition with the “Selected Financial Data ” and the audited historical consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K (or, Form 10-K).

You should read the following discussion of our results of operations and financial condition with the audited historical consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K (or, Form 10-K).

This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Item 1A.

10 unchanged sentences

• Liquidity and Capital Resources;

Contractual Obligations;

Off-Balance Sheet Arrangements;

• Critical Accounting Policies and Estimates;

• Recently Issued Accounting Standards.

We have built the largest international portfolio of degree-granting higher education institutions, primarily focused in Latin America, with 875,100 students enrolled at our 29 institutions in nine countries on more than 150 campuses included in our continuing operations as of December 31, 2019 , which we collectively refer to as the Laureate International Universities network.

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

Advanced education opportunities drive higher earnings potential, and we believe the projected growth in the middle-class population worldwide and limited government resources dedicated to higher education create substantial opportunities for high-quality private institutions to meet this growing and unmet demand.

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

As of December 31, 2019 , our international portfolio of 29 institutions comprised 28 institutions we owned or controlled and one additional institution that we managed through a joint venture arrangement.

We have six operating segments as described below.

We operate a portfolio of degree-granting higher education institutions in Mexico and Peru.

Collectively, we have approximately 336,500 students enrolled at five institutions in these two countries, which represent our Continuing Operations as of December 31, 2020.

We believe that the higher education markets in Mexico and Peru present an attractive long-term opportunity, primarily because of the large and growing imbalance between the supply and demand for affordable, quality higher education in those markets.

We believe that the combination of the projected growth in the middle class, limited government resources dedicated to higher education, and a clear value proposition demonstrated by the higher earnings potential afforded by higher education, creates substantial opportunities for high-quality private institutions to meet this growing and unmet demand.

By offering high-quality, outcome-focused education, we believe that we enable students to prosper and thrive in the dynamic and evolving knowledge economy.

We have two reportable segments as described below.

We group our institutions by geography in:

4) Central America & U.S.

and 5) Rest of World for reporting purposes.

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

and 2) Peru (formerly Andean) for reporting purposes.

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

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

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

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

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

See also “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.”

Discontinued Operations

In 2017, the Company announced the divestiture of certain subsidiaries in our Rest of World and Central America & U.S.

Campuses segments.

In August 2018, the Company announced the divestiture of additional subsidiaries located in Europe, Asia and Central America.

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.

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 & U.S.

Campuses segment, and all remaining institutions in the Rest of World segment, except for Australia, New Zealand and the managed institutions in the Kingdom of Saudi Arabia and China.

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

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

The divestitures represented a strategic shift that had a major effect on the Company's operations and financial results.

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 our Form 10-K.

Since our entire Central America & U.S.

Campuses 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.

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.

In 2017 and 2018, the Company announced the divestiture of certain subsidiaries located in Europe, Asia and Central America, which were included in the following segments:

Peru (formerly Andean), Central America (formerly Central America & U.S.

Campuses), and Rest of World.

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

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

Accordingly, all of the divestitures that were part of this strategic shift, 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, we announced that our board of directors had authorized the Company to explore strategic alternatives for each of its businesses to unlock shareholder value.

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.

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

As such, 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.

For Laureate’s institutions in Mexico and Peru, the board decided after a thorough evaluation of all strategic options, including a potential sale, to continue to operate these assets under Laureate management.

Accordingly, Mexico and Peru represent our Continuing Operations.

The decision to focus on a regional operating model in Mexico and Peru at this time does not preclude further engagement with potential buyers for those businesses.

Because a number of our subsidiaries 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.

Unless indicated otherwise, the information in the MD&A relates to Continuing Operations.

The Company began closing sale transactions in the first quarter of 2018.

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) and the University of St.

Augustine for Health Sciences, LLC (St.

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

We have not yet completed the divestitures of our subsidiaries in Honduras and Malaysia, as well as NewSchool of Architecture and Design, LLC (NSAD), a small campus-based institution in the United States, for which we have a signed sale agreement.

See also Note 4 , Discontinued Operations and Assets Held for Sale , Note 6 , Dispositions and Asset Sales and Note 25 , Subsequent Events , in our consolidated financial statements included elsewhere in this Form 10-K.

Exploration of Strategic Alternatives

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

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

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

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

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

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

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.

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.

This supply and demand imbalance has created a market opportunity for private sector participants.

Most students finance their own education.

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

These campus-based segments include Brazil, Mexico, Andean, Central America & U.S.

Campuses, and Rest of World.

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

In Brazil, approximately 73% of post-secondary students are enrolled in private higher education institutions.

While the federal government defines the national curricular guidelines, institutions are licensed to operate by city.

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

Many students finance their own education while others rely on the government-sponsored programs such as Prouni and FIES.

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

However, many public institutions are faced with capacity constraints or the quality of the education is considered low.

As noted above, during the third quarter of 2020, we signed agreements to sell Walden University and divest our operations in Australia and New Zealand, and Brazil.

In October 2020, we entered into an agreement to sell our operations in Honduras.

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

We have not yet completed the divestitures of Walden University or our subsidiaries in Honduras and Brazil.

See also Note 4, Discontinued Operations and Assets Held for Sale, and Note 6, Dispositions, in our consolidated financial statements included elsewhere in this Form 10-K.

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 a charge to write down the carrying value to fair value and the amount of that charge could be material.

During 2020, the Company recorded impairment charges for certain subsidiaries while they were still classified as held and used, and also recorded charges on disposal groups classified as held-for-sale.

See Note 4, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-K for discussion of the charges recorded during 2020 for our operations in Chile, Honduras and Brazil.

While the Company explores 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.

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

In recent years, the U.S.

dollar has strengthened against many international currencies, including the Brazilian real and the Mexican peso.

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

As of December 31, 2020 and 2019, the Company’s consolidated FX loss totaled approximately $1.0 billion and $1.1 billion, respectively.

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

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

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

Asset Group/ Reporting Unit Foreign Currency Translation Losses As of

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

Brazil $ 479 $ 407

Mexico 509 461

Total Brazil and Mexico $ 988 $ 868

As discussed in Note 4, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-K, the Company decided to sell its Brazil operations during the third quarter of 2020 and recorded a loss of approximately $190 million to write down the carrying value of the Brazil disposal group to its estimated fair value less costs to sell.

During the fourth quarter of 2020, the Company recorded an additional loss of approximately $15 million in order to write down the carrying value of the Brazil disposal group to its estimated fair value less costs to sell as of December 31, 2020.

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 loss if the held-for-sale criteria are met and the carrying value of a held-for-sale business exceeds its fair value, less cost to sell.

To date, the Company has not identified impairment indicators related to its Mexico asset group/reporting unit based on the Company’s estimates of future cash flows assuming that the business is held and used.

As a result of the considerations highlighted above and the significant FX losses, the Mexico asset group may be at risk of a material loss if the Company commits to a plan to sell its interests in this business.

Furthermore, additional loss on the Brazil disposal group 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.

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

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

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

The Mexico and Peru markets are characterized by what we believe is a significant imbalance between supply and demand.

The demand for higher education is large and growing and is fueled by several demographic and economic factors, including a growing middle class, global growth in services and technology-related industries and recognition of the significant personal and economic benefits gained by graduates of higher education institutions.

The target demographics are primarily 18- to 24-year-olds in the countries in which we compete.

We compete with other private higher education institutions on the basis of price, educational quality, reputation and location.

We believe that we compare favorably with competitors because of our focus on quality, professional-oriented curriculum and the competitive advantages provided by our network.

There are a number of private and public institutions in both of the countries in which we operate, and it is difficult to predict how the markets will evolve and how many competitors there will be in the future.

We expect competition to increase as the Mexican and Peruvian markets mature.

Essentially all of our revenues were generated from private pay sources as there are no material government-sponsored loan programs in Mexico or Peru.

Specifics related to both of our reportable segments are discussed below:

• Private education providers in Mexico constitute 35% of the total higher-education market.

The private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities.

Laureate owns two institutions and is present throughout the country with a footprint of over 35 campuses.

1 unchanged sentence

Students in our Mexican institutions typically finance their own education.

The Andean segment includes institutions in Chile and Peru.

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

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

As of December 31, 2019, the Central America & U.S.

Campuses segment includes institutions in Costa Rica, Honduras and the United States.

Students in Central America typically finance their own education while students in the United States finance

their education in a variety of ways, including U.S.

Department of Education (DOE) Title IV programs.

The entire Central America & U.S.

Campuses segment is included in Discontinued Operations.

As discussed in Note 25 , Subsequent Events , of our consolidated financial statements included elsewhere in this Form 10-K, we completed the sale of our operations in Costa Rica on January 10, 2020.

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

Additionally, the Rest of World segment manages one institution in China through a joint venture arrangement and, until August 31, 2019 when the contract expired, the Rest of World segment also managed eight licensed institutions in the Kingdom of Saudi Arabia.

The institutions in Malaysia and the Kingdom of Saudi Arabia are 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.

These online institutions primarily serve working adults with undergraduate and graduate degree program offerings.

Students in the United States finance their education in a variety of ways, including Title IV programs.

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

• In Peru, private universities are increasingly providing the capacity to meet growing demand and constitute 72% of the total higher-education market.

Laureate owns three institutions in Peru.

Corporate is a non-operating business unit whose purpose is to support operations.

5 unchanged sentences

The following information for our reportable segments is presented as of December 31, 2020:

2019 Revenues ($ in millions) (1)

Institutions Enrollment 2020 Revenues (in millions) (1)

% Contribution to 2020 YTD Revenues

Rest of World

Online & Partnerships (2)

(1) Amounts related to Corporate, partially offset by the elimination of intersegment revenues, total $5.1 million and are not separately presented.

(2) We no longer accept new enrollments at the University of Liverpool and the University of Roehampton .

Our international operations are subject to complex business, economic, legal, regulatory, political, tax and foreign currency risks, which may be difficult to adequately address.

Mexico 2 194,000 $ 534.6 53 %

Peru 3 142,500 482.9 47 %

5 336,500 $ 1,024.9 100 %

(1) Amounts related to Corporate, partially offset by the elimination of intersegment revenues, totaled $7.4 million and are not separately presented.

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.

7 unchanged sentences

and compliance with a wide variety of foreign laws.

See “Item 1A—Risk Factors—Risks Relating to Our Continuing Business—We are a multinational business with continuing operations in nine countries around the world, predominantly in Latin America, and are subject to complex business, economic, legal, political, tax and foreign currency risks, which risks may be difficult to adequately address.” There are also risks associated with our decision to divest certain operations and explore other strategic alternatives.

See “Item 1A—Risk Factors—Risks Relating to Our Continuing Business—Our exploration of strategic alternatives and our activities related to previously announced divestitures may disrupt our ongoing businesses, result in increased expenses and present certain risks to the Company.” We plan to grow our continuing operations organically by:

See “Item 1A—Risk Factors—Risks Relating to Our Business—We operate a portfolio of degree-granting higher education institutions in Mexico and Peru and are subject to complex business, economic, legal, political, tax and foreign currency risks, which risks may be difficult to adequately address.” There are also risks associated with our decision to divest certain operations.

See “Item 1A—Risk Factors—Risks Relating to Our Business—Our exploration of strategic alternatives and our activities related to previously announced divestitures may disrupt our ongoing businesses, result in increased expenses and present certain risks to the Company.” We plan to grow our Continuing Operations organically by:

1) adding new programs and course offerings;

7 unchanged sentences

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

See “Item 1A—Risk Factors—Risks Relating to Our Continuing Business—Our institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition and results of operations,” “Risk Factors—Risks Relating to Our Continuing Business—Political and regulatory developments in Chile may materially adversely affect us,” “Risk Factors—Risks Relating to Our Highly Regulated Industry in the United States,” and “Item 1—Business—Industry Regulation” for a detailed discussion of our different regulatory environments and Note 20 , Legal and Regulatory Matters , in our consolidated financial statements included elsewhere in this Form 10-K.

See “Item 1A—Risk Factors—Risks Relating to Our 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 Walden University, which is included in our Discontinued Operations, and the Highly Regulated Higher Education Industry in the United States,” and “Item 1—Business—Industry Regulation,” for a detailed discussion of our different regulatory environments and Note 18, Legal and Regulatory Matters, in our consolidated financial statements included elsewhere in this Form 10-K.

Key Business Metric

6 unchanged sentences

Each of our institutions has an enrollment cycle that varies by geographic region and academic program.

During each academic year, each institution has a “Primary Intake” period in which the majority of the enrollment occurs.

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.

The first calendar quarter generally coincides with the Primary Intakes for our institutions in the Brazil, Andean and Rest of World segments.

The third calendar quarter generally coincides with the Primary Intakes for our institutions in the Mexico and Online & Partnerships segments.

The following chart shows our enrollment cycles at our continuing operations.

Shaded areas in the chart represent periods when classes are generally in session and revenues are recognized.

Areas that are not shaded represent summer breaks during which revenues are not typically recognized.

The large circles indicate the Primary Intake start dates of our institutions, and the small circles represent Secondary Intake start dates.

Our Peruvian institutions have their Primary Intake during the first calendar quarter and a Secondary Intake during the third calendar quarter.

Institutions in our Mexico segment have their Primary Intake during the third calendar quarter and a Secondary Intake during the first calendar quarter.

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.

Revenues are recognized when classes are in session.

Principal Components of Income Statement

16 unchanged sentences

Our past experiences provide us with the expertise to further our mission of providing high-quality, accessible and affordable higher education to students by expanding into new markets if opportunities arise, primarily through acquisitions.

Acquisitions affect the comparability of our financial statements from period to period.

Acquisitions have historically affected the comparability of our financial statements from period to period.

Acquisitions completed during one period impact comparability to a prior period in which we did not own the acquired entity.

Therefore, changes related to such entities are considered “incremental impact of acquisitions” for the first 12 months of our ownership.

We have made only small acquisitions in 2019, 2018, and 2017 that had essentially no impact on the comparability of the periods presented.

We made no acquisitions in 2020 and 2019, and made only a small acquisition in 2018 that had essentially no impact on the comparability of the periods presented for our continued operations.

Any dispositions of our Continuing Operations affect the comparability of our financial statements from period to period.

1 unchanged sentence

Therefore, changes related to such entities are considered “incremental impact of dispositions” for the first 12 months subsequent to the disposition.

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.

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.

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

The majority of our institutions are located outside the United States.

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.

1 unchanged sentence

Our revenues and expenses are generally denominated in local currency.

The USD is our reporting currency and our subsidiaries operate in various other functional currencies, including:

Australian Dollar, Brazilian Real, Chilean Peso, Euro, Mexican Peso, New Zealand Dollar, 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.

See “Risk Factors—Risks Relating to Our Continuing Business—Our reported revenues and earnings may be negatively affected by the strengthening of the U.S.

dollar and currency exchange rates.” 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.

Most of the institutions in our network have a summer break during which classes are generally not in session and minimal revenues are recognized.

The USD is our reporting currency and our subsidiaries operate in other functional currencies, namely 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.

See “Item 1A—Risk Factors—Risks Relating to Our Business—Our reported revenues and earnings may be negatively affected by the strengthening of the U.S.

dollar and currency exchange rates.” 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.

The institutions in our portfolio 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.

Operating expenses, however, do not fully correlate to the enrollment and revenue cycles, as the institutions continue to incur expenses during summer breaks.

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.

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.

Accordingly, our second and fourth quarters are stronger revenue quarters, as our institutions are in session for most of these respective quarters.

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.

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.

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

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

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

Income Tax Expense

2 unchanged sentences

Our tax rate fluctuates from period to period due to changes in the mix of earnings between our tax-paying entities, our tax-exempt entities and our loss-making entities for which it is not 'more likely than not' that a tax benefit will be realized on the loss.

See “Item 1A—Risk Factors—Risks Relating to Our Continuing Business—We may have exposure to greater-than-anticipated tax liabilities.”

See “Item 1A—Risk Factors—Risks Relating to Our Business—We may have exposure to greater-than-anticipated tax liabilities.”

Results of the Discontinued Operations

1 unchanged sentence

For the year ended December 31,

Depreciation and amortization

2020 2019 2018

Revenues $ 1,674.6 $ 2,540.0 $ 3,075.3

Depreciation and amortization expense (60.4) (111.4) (155.4)

Share-based compensation expense (3.1) (2.7) (4.2)

1 unchanged sentence

Loss on impairment of assets (438.3) (0.7) (13.1)

Operating income

Other non-operating income (expense)

Pretax income of discontinued operations

Other non-operating expense (68.6) (70.7) (91.1)

Gain on sale of discontinued operations before taxes, net 25.0 793.5 293.1

Pretax (loss) income of discontinued operations (183.8) 1,121.8 668.1

Income tax expense (114.3) (33.7) (105.9)

Income from discontinued operations, net of tax

Gain on sales of discontinued operations, net of tax

Net income from discontinued operations

(Loss) income from discontinued operations, net of tax $ (298.1) $ 1,088.1 $ 562.2

Enrollments at our Discontinued Operations as of December 31, 2020, 2019 and 2018 were 335,500, 575,300 and 680,300, respectively.

Year Ended December 31, 2020

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

Together with the 2019 loss described below, the total loss on the sale of Costa Rica was approximately $43.6 million.

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.

During the second quarter of 2020, we recorded impairment charges of $418.0 million related to our Chilean operations, in order to write down the carrying value of their assets to their estimated fair value, and $3.3 million related to the Brazil enrollment to graduation (E2G) software assets.

We also recorded a loss of $10.0 million on the held-for-sale Honduras disposal group, in order to write down the carrying value of the group to its estimated fair value, which is included in Gain on sale of discontinued operations before taxes, net.

During the third quarter of 2020, we recorded a loss of approximately $190.0 million related to our Brazil operations in order to write down the carrying value of Brazil’s disposal group to its estimated fair value.

We also recorded an additional loss of $10.0 million related to our held-for-sale Honduras group, in order to write down its carrying value to the estimated fair value based on the sale agreement that was signed in October 2020.

These losses are included in Gain on sale of discontinued operations before taxes, net.

On September 10, 2020, we completed the divestiture of our operations in Chile, resulting in a pre-tax loss of approximately $338.2 million that relates primarily to the accumulated foreign currency translation losses associated with the Chilean operations.

On September 29, 2020, we completed the sale of our operations in Malaysia, which resulted in a pre-tax gain of approximately $47.9 million.

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.

At the time of the sale, the Company determined that this deferred purchase price would be recognized if collected.

Accordingly, the Company recorded the receipt of $8.4 million through a reduction of the loss on sale for Turkey.

The remaining deferred purchase price was due in January 2021 and will be recognized when collected.

On November 3, 2020, we completed the sale of our Australia and New Zealand operations, which resulted in a pre-tax gain of approximately $555.8 million.

During the fourth quarter of 2020, we recorded an additional loss of approximately $15.0 million in order to adjust the carrying value of our Brazil’s disposal group to its estimated fair value less costs to sell as of December 31, 2020.

This loss is included in Gain on sale of discontinued operations before taxes, net.

Year Ended December 31, 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.

During the first quarter of 2019, a legal matter related to the January 2018 sale of LEI Lie Ying Limited (LEILY), for which the Company had indemnified the buyer and recorded a contingent liability, was settled with no cost to the Company.

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.

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

3 unchanged sentences

On August 27, 2019, we sold our operations in Turkey, which resulted in a loss of approximately $37.7 million.

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.

During the third quarter of 2019, we recorded a loss of approximately $25.0 million on the held-for-sale Costa Rica disposal group, in order to write down its carrying value to the estimated fair value.

This loss is included in Gain on sale of discontinued operations before taxes, net.

The sale of the Costa Rica institutions was completed on January 10, 2020.

In early October 2019 , we sold Universidad Interamericana de Panamá (UIP), in addition to a real estate which served as the campus of UIP, and recognized a gain of approximately $21.0 million .

During the fourth quarter of 2019, we recorded an impairment charge of approximately $17.8 million related to long-lived assets of our operations in Honduras, in order to write down the carrying value of those assets to their estimated fair value.

In early October 2019, we sold Universidad Interamericana de Panamá (UIP), in addition to real estate which served as the campus of UIP, and recognized a gain of approximately $21.0 million.

On November 1, 2019, we sold UniNorte, a traditional higher education institution in Manaus, Brazil, which resulted in a loss on sale of approximately $0.3 million.

During the fourth quarter of 2019, we recorded a loss of approximately $17.8 million related to the held-for-sale Honduras disposal group, in order to write down its carrying value to the estimated fair value.

This loss is included in Gain on sale of discontinued operations before taxes, net.

Year Ended December 31, 2018

6 unchanged sentences

In connection with our goodwill impairment testing in the fourth quarter of 2018, we wrote off the remaining goodwill balance of $3.1 million associated with our operations in the Kingdom of Saudi Arabia, which are now included in Discontinued Operations.

Year Ended December 31, 2017

Upon completion of our impairment testing for 2017, we recorded a total impairment loss of $33.5 million related to the discontinued operations described in Note 4 , Discontinued Operations and Assets Held for Sale , in our consolidated financial statements included elsewhere in this Form 10-K, which under ASC 360-10 are required to be recorded at the lower of their carrying values or their estimated ‘‘fair values less costs to sell.’’ Two subsidiaries in our Central America & U.S.

Campuses that met the held-for-sale criteria during the fourth quarter of 2017 recorded impairments totaling approximately $17.4 million , and the German institutions within our Rest of World segment recorded impairment of approximately $16.1 million .

Because the estimated fair values of these disposal groups were less than their carrying values by more than the carrying value of the long-lived assets, we recorded an impairment on the long-lived assets and wrote the remaining tradenames and Property and equipment, net down to a carrying value of $0.

Effective September 30, 2018, the University of Liverpool (Liverpool), an institution in our Online & Partnerships segment, began a teach-out process.

As a result, during the third quarter of 2018, we recorded an impairment charge of $10.0 million related to the fixed assets of this entity that were no longer recoverable based on expected future cash flows.

As noted, the entire Online & Partnerships segment is now classified in discontinued operations.

Results of Operations

6 unchanged sentences

Year Ended December 31, 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.

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 8, Goodwill and Other Intangible Assets, in our consolidated financial statements included elsewhere in this Form 10-K.

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 8, Goodwill and Other Intangible Assets, in our consolidated financial statements included elsewhere in this Form 10-K.

In November 2020, Universidad del Valle de Mexico, SC, a wholly owned subsidiary of the Company, signed an agreement to sell the land and buildings of Campus Guadalajara Norte, after a decision was made to relocate all students of Campus Guadalajara Norte to the nearby Campus Zapopan in Jalisco, Mexico.

The total purchase price was approximately $13.9 million, prior to transaction fees.

The Company recognized a pre-tax operating gain on the sale of this property and equipment of approximately $5.8 million, which is included in Direct costs in the table below.

During the fourth quarter of 2020, the Company dissolved a dormant subsidiary, resulting in the release of accumulated foreign currency translation loss of approximately $6.1 million.

This loss is included in Other non-operating (expense) income in the table below and is part of Continuing Operations as this entity was not part of the strategic shifts described above in Overview.

Year Ended December 31, 2019

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

Augustine to repay a portion of our term loan that had a maturity date of April 2024 (the 2024 Term Loan).

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

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

In connection with this debt repayment, the Company recorded a loss on debt extinguishment of $6.3 million, primarily related to the write off of a pro-rata portion of the unamortized deferred financing costs associated with the repaid debt balances.

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

3 unchanged sentences

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

On November 1, 2019 , we sold UniNorte, a traditional higher education institution in Manaus, Brazil, which resulted in a loss on sale of approximately $0.3 million .

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

During the third and fourth quarters of 2019, we dissolved several dormant subsidiaries, resulting in the release of accumulated foreign currency translation loss of approximately $37.5 million.

This loss is included in other non-operating (expense) income in the table below and is part of the continuing operations as these entities were not part of the strategic shift described in Note 1 , Description of Business , and Note 4 , Discontinued Operations and Assets Held for Sale in our consolidated financial statements included elsewhere in this Form 10-K.

This loss is included in Other non-operating (expense) income in the table below and is part of Continuing Operations as these entities were not part of the strategic shifts described above in Overview.

Year Ended December 31, 2018

3 unchanged sentences

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

Effective September 30, 2018, the University of Liverpool (Liverpool), an institution in our Online & Partnerships segment, began a teach-out process that is expected to be completed in April 2021.

As a result, during the third quarter of 2018, we recorded an impairment charge of $10.0 million related to fixed assets of this entity that are no longer recoverable based on expected future cash flows.

Year Ended December 31, 2017

During the second quarter of 2017, the Company completed refinancing transactions that resulted in repayment of the previous senior credit facility and the redemption of the 9.250% Senior Notes due 2019 (the Senior Notes due 2019) (other than $250.0 million in aggregate principal amount of the Senior Notes due 2019 that the Company exchanged on April 21, 2017 for substantially identical but non-redeemable notes issued under a new indenture (the Exchanged Notes)).

As a result of the refinancing transactions, during the quarter ended June 30, 2017, we recorded approximately $22.8 million in General and administrative expenses related to new third-party costs.

We also recorded a loss on debt extinguishment of $8.4 million as a result of the refinancing transactions combined with the repayment of notes in the first quarter related to the note exchange transaction, as discussed in Note 10 , Debt in our consolidated financial statements included elsewhere in this Form 10-K.

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

On August 11, 2017 , the remaining Senior Notes due 2019 were exchanged for a total of 18.7 million shares of the Company's Class A common stock and the Senior Notes due 2019 were canceled.

In November 2017 , we completed the sale of property and equipment at Ad Portas, a for-profit real estate subsidiary in our Andean segment, to UDLA Ecuador, a licensed institution in Ecuador, that was formerly consolidated into Laureate.

We recognized an operating gain on the sale of this property and equipment of approximately $20.3 million .

This gain is included in direct costs in the table below.

In December 2017, we reached a final purchase price settlement agreement with the counterparty that acquired our Swiss hospitality management schools in 2016, and made a payment of approximately $9.3 million .

The total settlement amount was approximately $10.3 million , which we recognized as loss on sales of subsidiaries, net, in the Consolidated Statement of Operations for the year ended December 31, 2017, as it represented an adjustment of the sale purchase price.

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

Upon completion of our impairment testing for 2017, we recorded a total impairment loss of $7.1 million related to impairments of certain Property and equipment, net as well as impairments of Deferred costs and Other intangible assets, which were not associated with the discontinued operations and therefore are included in the results of our continuing operations.

These included the impairment of a lease intangible, certain modular buildings, and online course development costs.

Comparison of Consolidated Results for the Years Ended December 31, 2020, 2019 and 2018

Better/(Worse)

(in millions)

(in millions) 2020 2019 2018 2020 vs.

2019 2019 vs.

Revenues $ 1,024.9 $ 1,212.1 $ 1,144.6 (15) % 6 %

Direct costs 802.5 949.5 904.0 15 % (5) %

General and administrative expenses 199.8 226.3 267.4 12 % 15 %

Loss on impairment of assets

Operating income

Loss on impairment of assets 352.0 0.2 — nm nm

Operating (loss) income (329.3) 36.0 (26.8) nm nm

Interest expense, net of interest income (98.7) (121.7) (185.6) 19 % 34 %

Other non-operating (expense) income (22.8) (33.9) 92.3 33 % (137) %

Income (loss) from continuing operations before income taxes and equity in net income of affiliates

Income tax (expense) benefit

Equity in net income of affiliates, net of tax

Income (loss) from continuing operations

Income from discontinued operations, net of tax

Gain on sales of discontinued operations, net of tax

Net loss (income) attributable to noncontrolling interests

Net income attributable to Laureate Education, Inc.

Loss from continuing operations before income taxes and equity in net income of affiliates (450.8) (119.7) (120.1) nm — %

Income tax benefit (expense) 130.1 (31.0) (71.2) nm 56 %

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

Loss from continuing operations (320.6) (150.5) (191.3) (113) % 21 %

(Loss) income from discontinued operations, net of tax (298.1) 1,088.1 562.2 (127) % 94 %

Net (loss) income (618.7) 937.7 370.9 (166) % 153 %

Net loss (income) attributable to noncontrolling interests 5.4 0.8 (0.9) nm (189) %

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

$ (613.3) $ 938.5 $ 370.1 (165) % 154 %

nm - percentage changes not meaningful

1 unchanged sentence

Comparison of Consolidated Results for the Year Ended December 31, 2020 to the Year Ended December 31, 2019

Revenues decreased by $39.9 million to $3,250.3 million for the year ended December 31, 2019 from $3,290.2 million for the year ended December 31, 2018 .

The effect of a net change in foreign currency exchange rates decreased revenues by $135.4 million , mainly due to weakening of the Chilean Peso and the Brazilian Real relative to the USD compared to 2018 .

In addition, the incremental impact of the disposition of UniNorte decreased revenues by $8.4 million for 2019 compared to 2018.

These decreases in revenues were partially offset by higher average total enrollment at a majority of our institutions, which increased revenues by $86.1 million ;

the effect of changes in tuition rates and enrollments in programs at varying price points (“product mix”), pricing and timing, which increased revenues by $4.6 million ;

and other Corporate and Eliminations changes, which accounted for an increase in revenues of $13.2 million .

Revenues decreased by $187.2 million to $1,024.9 million for 2020 from $1,212.1 million for 2019.

The effect of a net change in foreign currency exchange rates decreased revenues by $81.8 million, due to weakening of the Mexican peso and the Peruvian nuevo sol against the USD.

Average total enrollment at a majority of our institutions decreased during 2020, reducing revenues by $62.3 million compared to 2019.

The effect of changes in tuition rates and enrollments in programs at varying price points (“product mix”), pricing and timing decreased revenues by $38.0 million, mainly driven by an increase in discounts and scholarships as a percentage of revenues in 2020 compared to 2019.

Other Corporate and Eliminations changes accounted for a decrease in revenues of $5.1 million.

Direct costs and general and administrative expenses combined decreased by $173.5 million to $1,002.3 million for 2020 from $1,175.8 million for 2019.

The direct costs decrease was due to the effect of a net change in foreign currency exchange rates, which decreased costs by $118.7 million ;

the incremental impact of the disposition of UniNorte, which decreased costs by $7.9 million ;

changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in indemnification assets, which resulted in a year-over-year decrease in costs of $0.9 million ;

and other Corporate and Eliminations expenses, which accounted for a decrease in costs of $14.4 million in 2019 .

Partially offsetting these direct cost decreases was the effect of overall higher organic enrollments, which increased costs by $47.1 million compared to 2018 , in addition to share-based compensation expense and Excellence-in-Process (EiP) implementation expense, which increased direct costs by $22.3 million .

Operating income increased by $42.2 million to $326.1 million for 2019 from $283.9 million for 2018 .

The increase in operating income was primarily the result of increased operating income at our Andean and Rest of World segments combined with a decrease in impairment loss of $9.5 million and lower 2019 operating expenses at Corporate.

These increases in operating income were partially offset by a decrease in operating income at our Brazil segment.

The effect of a net change in foreign currency exchange rates decreased costs by $61.1 million.

The effect of operational changes decreased direct costs by $75.8 million compared to 2019.

Other Corporate and Eliminations expenses accounted for a decrease in costs of $50.4 million in 2020, related to cost-reduction efforts.

Changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in indemnification assets resulted in a year-over-year decrease in costs of $0.8 million.

These decreases in direct costs were partially offset by Excellence-in-Process (EiP) implementation expense, which increased direct costs by $14.6 million.

Operating (loss) income changed by $365.3 million to loss of $(329.3) million for 2020 from income of $36.0 million for 2019.

This change was primarily a result of the impairment charges of $352.0 million during 2020 and operating loss at our Mexico segment for 2020 compared to operating income for 2019, partially offset by lower 2020 operating expenses at Corporate.

Interest expense, net of interest income decreased by $23.0 million to $98.7 million for 2020 from $121.7 million for 2019.

The decrease in interest expense was primarily attributable to lower average debt balances as a result of the debt repayments.

Other non-operating income (expense) decreased by $137.3 million to expense of $(76.6) million for 2019 , compared to income of $60.7 million for 2018 .

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

Other non-operating expense decreased by $11.1 million to $22.8 million for 2020, compared to $33.9 million for 2019.

This decrease was attributable to:

(1) a decrease in gain on derivative instruments of $81.0 million , primarily related to a gain recorded in 2018 upon the conversion of the Series A Preferred Stock;

(2) a loss on sale and disposal of subsidiaries in 2019 compared to a gain in 2018 for a change of $38.0 million , which is primarily related to the release of accumulated foreign currency translation in 2019 upon the dissolution of several dormant subsidiaries;

(3) an increase in loss on debt extinguishment of $20.8 million , related to increased debt repayments in 2019;

and (4) a decrease in other non-operating income of $3.0 million , primarily related to proceeds from corporate-owned life insurance in 2018, partially offset by an increase in the estimated fair value of an equity security held at Corporate in 2019.

These decreases in non-operating income were partially offset by less foreign currency exchange loss of $5.5 million .

Income tax expense decreased by $51.1 million to $80.7 million for 2019 from $131.8 million for 2018 .

This decrease was primarily due to a year-over-year reduction in withholding tax expense as a result of the redesignation of certain intercompany loans from permanent to temporary during 2018, which increased withholding tax expense in 2018, in addition to a reduction in 2019 withholding tax expense resulting from changes to tax treaties between U.S.

jurisdictions.

Income from discontinued operations, net of tax decreased by $31.0 million to $53.9 million for 2019 from $84.9 million for 2018 .

The income from discontinued operations included impairment charges related to assets held for sale of $43.3 million in 2019 compared to $3.1 million in 2018.

Gain on sales of discontinued operations, net of tax increased by $573.2 million to $869.8 million for 2019 related to the sales of our St.

Augustine, Thailand, South Africa, India, Spain, Portugal, Turkey, and Panama operations, compared to $296.6 million for 2018 related to the sales of Kendall and our institutions in Cyprus, Italy, China, Germany, and Morocco.

(1) a decrease in loss on debt extinguishment of $22.0 million, primarily related to the repayment of the 2024 Term Loan during 2019;

(2) a foreign currency exchange gain for 2020 compared to a loss for 2019, for a change of $21.6 million;

and (3) a decrease in loss on disposal of subsidiaries of $13.2 million.

These decreases in other non-operating expense were partially offset by a loss on derivative instruments for 2020 compared to a gain for 2019, for a change of $34.3 million, and other non-operating expense for 2020 compared to income for 2019, for a change of $11.4 million, primarily attributable to non-operating income recorded during 2019 related to the sale of an equity security held at Corporate.

Income tax benefit (expense) changed by $161.1 million to a benefit of $130.1 million for 2020 from an expense of $(31.0) million for 2019.

This change was primarily attributable to a $75.1 million benefit due to the increase in pretax loss, a tax benefit of approximately $70.9 million related to the Company's election to exclude certain foreign income of foreign corporations from GILTI, and a tax benefit for release of valuation allowances for state deferred tax assets of $32.3 million, partially offset by a tax expense of approximately $32.4 million that was recognized during 2020 related to the tax-basis step up of certain intellectual property that became subject to taxation in the Netherlands.

(Loss) income on sales of discontinued operations, net of tax decreased by $1,386.2 million to a loss of $(298.1) million for 2020 from income of $1,088.1 million for 2019, primarily driven by lower gains upon the completion of divestitures in 2020 as compared to 2019, combined with higher losses recorded during 2020 for discontinued operations due to impairments and charges to write held-for-sale disposal groups down to fair value.

See Overview for further detail on results of the Discontinued Operations.

Net loss attributable to noncontrolling interests increased by $4.6 million to $5.4 million for 2020 from $0.8 million for 2019.

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

Comparison of Consolidated Results for the Year Ended December 31, 2019 to the Year Ended December 31, 2018

Revenues decreased by $42.9 million to $3,290.2 million for the year ended December 31, 2018 from $3,333.1 million for the year ended December 31, 2017 .

This revenue decrease was driven by the effect of a net change in foreign currency exchange rates, which decreased revenues by $114.6 million compared to 2017 .

This decrease in revenues was partially offset by higher average total enrollment at a majority of our institutions, which increased revenues by $21.2 million ;

Revenues increased by $67.5 million to $1,212.1 million for 2019 from $1,144.6 million for 2018.

This revenue increase was driven by higher average total enrollment at a majority of our institutions, which increased revenues by $34.7 million;

the effect of product mix, pricing and timing, which increased revenues by $33.4 million;

and other Corporate and Eliminations changes, which accounted for an increase in revenues of $10.4 million.

Direct costs and general and administrative expenses combined decreased by $94.5 million to $2,996.3 million for 2018 from $3,090.8 million for 2017 .

The direct costs decrease was due to the effect of a net change in foreign currency exchange rates, which decreased costs by $89.4 million ;

share-based compensation expense and EiP implementation expense, which decreased direct costs by $56.5 million ;

and other Corporate and Eliminations expenses, which accounted for a decrease in costs of $19.9 million in 2018 , primarily attributable to an expense of $22.8 million in 2017 related to the portion of the refinancing transactions that was deemed to be a debt modification.

Offsetting these direct cost decreases was the overall higher enrollments and costs related to expanding our continuing operations, which increased costs by $40.8 million compared to 2017 .

Acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets, increased direct costs by $7.4 million in 2018 and decreased direct costs

by $2.8 million in 2017 , increasing expenses by $10.2 million in 2018 compared to 2017 .

An operating gain on the sale of an asset group at Ad Portas decreased direct costs by $20.3 million in 2017 .

Operating income increased by $48.7 million to $283.9 million for 2018 from $235.2 million for 2017 .

The increase in operating income was primarily the result of increased operating income at our Andean and Mexico segments combined with decreased operating loss at our Rest of World segment and lower 2018 operating expenses at Corporate, primarily related to lower share-based compensation expense in 2018 and the 2017 debt modification expenses as described above.

These increases in revenues were partially offset by the effect of a net change in foreign currency exchange rates, which decreased revenues by $11.0 million compared to 2018.

Direct costs and general and administrative expenses combined increased by $4.4 million to $1,175.8 million for 2019 from $1,171.4 million for 2018.

The direct costs increase was due to the overall higher enrollments and costs related to expanding our Continuing Operations, which increased costs by $30.3 million compared to 2018, and changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets, which increased direct costs by $2.2 million.

Partially offsetting these direct costs increases were the effect of a net change in foreign currency exchange rates, which decreased costs by $7.6 million, and other Corporate and Eliminations expenses, which accounted for a decrease in costs of $20.5 million in 2019.

Operating income (loss) changed by $62.8 million to income of $36.0 million for 2019 from loss of $(26.8) million for 2018.

This change to operating income was primarily the result of increased operating income at our Peru segment combined with lower 2019 operating expenses at Corporate.

Interest expense, net of interest income decreased by $63.9 million to $121.7 million for 2019 from $185.6 million for 2018.

The decrease in interest expense was primarily attributable to lower average debt balances and lower interest rates during 2018 resulting from the 2017 debt refinancing transactions.

Other non-operating income increased by $49.6 million to $60.7 million for 2018 from $11.1 million for 2017 .

This increase was primarily attributable to a higher gain on derivative instruments of $59.6 million compared to 2017 , primarily related to the embedded derivatives on our Series A Preferred Stock that was retired in 2018;

other non-operating income in 2018 compared to an expense in 2017 for a change of $14.2 million ;

an increase in gain on sale of subsidiaries of $10.7 million compared to 2017, primarily related to the adjustment in 2017 of the sale purchase price of Swiss hospitality management schools;

and a decrease in loss on debt extinguishment of $0.9 million .

These increases were partially offset by a loss on foreign currency exchange in 2018 compared to gain in 2017, for a change of $35.8 million .

Income tax benefit (expense) changed by $224.8 million to an expense of $(131.8) million for 2018 from a benefit of $93.0 million for 2017 .

This change was due in part to a $59.6 million change in recorded withholding tax on intercompany loan redesignations in 2017 and 2018, a $12.9 million 2018 deferred tax asset release on a real estate sale between profitable and not-for-profit entities in Chile, an $8.3 million 2017 valuation allowance release in Brazil, a $4.7 million 2017 contingency release in Brazil, and a $2.8 million 2017 tax benefit related to tax rate change in Chile.

In addition, the effects of the U.S.

tax reform legislation resulted in a benefit in 2017 of $82.4 million for the remeasurement of deferred tax assets/liabilities due to the decrease in the U.S.

federal tax rate from 35% to 21% beginning in 2018, and a $53.3 million benefit for valuation allowance release on the deferred tax assets other than net operating losses that, when realized, will become indefinite-lived net operating losses.

Changes in the mix of pre-tax book income attributable to taxable and non-taxable entities in various taxing jurisdictions also contributed to the overall change.

Income from discontinued operations, net of tax increased by $7.5 million to $84.9 million for 2018 from $77.4 million for 2017 .

Gain on sales of discontinued operations, net of tax for 2018 was $296.6 million related to the sales of our Cyprus, Italy, China, Germany, Morocco, and Kendall subsidiaries in 2018 .

The decrease in interest expense was primarily attributable to lower average debt balances as a result of the debt repayments.

Other non-operating (expense) income changed by $126.2 million to expense of $(33.9) million for 2019 from income of $92.3 million for 2018.

This change was attributable to:

(1) a decrease in gain on derivative instruments of $80.2 million, primarily related to a gain recorded in 2018 upon the conversion of the Series A Preferred Stock;

(2) a loss on disposal of subsidiaries of $20.4 million in 2019, primarily related to the release of accumulated foreign currency translation upon the dissolution of several dormant subsidiaries;

(3) an increase in loss on debt extinguishment of $15.1 million, related to increased debt repayments in 2019;

(4) a loss on foreign currency exchange in 2019 compared to a gain in 2018, for a change of $8.8 million;

and (5) a decrease in other non-operating income of $1.7 million.

Income tax expense decre ased by $40.2 million to $31.0 million for 2019 from $71.2 million for 2018.

jurisdictions.

Income from discontinued operations, net of tax increased by $525.9 million to $1,088.1 million for 2019, from $562.2 million for 2018, primarily related to higher gains upon the completion of divestitures during 2019 as compared to 2018.

See Overview for further detail on results of the Discontinued Operations.

Non-GAAP Financial Measure

6 unchanged sentences

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

The following table presents Adjusted EBITDA and reconciles net income (loss) from continuing operations to Adjusted EBITDA for the years ended December 31, 2019 , 2018 and 2017 :

The following table presents Adjusted EBITDA and reconciles loss from continuing operations to Adjusted EBITDA for the years ended December 31, 2020 , 2019 and 2018:

Better/(Worse)

(in millions)

Income (loss) from continuing operations

Equity in net income of affiliates, net of tax

Income tax expense (benefit)

Income (loss) from continuing operations before income taxes and equity in net income of affiliates

Loss (gain) on sale of subsidiaries, net

Foreign currency exchange loss (gain), net

Other (income) expense, net

Gain on derivatives

Loss on debt extinguishment

(in millions) 2020 2019 2018 2020 vs.

2019 2019 vs.

Loss from continuing operations $ (320.6) $ (150.5) $ (191.3) (113) % 21 %

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

Income tax (benefit) expense (130.1) 31.0 71.2 nm 56 %

Loss from continuing operations before income taxes and equity in net income of affiliates (450.8) (119.7) (120.1) nm — %

Loss on disposal of subsidiaries, net 7.3 20.4 — 64 % nm

Foreign currency exchange (gain) loss, net (13.5) 8.1 (0.7) nm nm

Other expense (income), net 2.4 (8.9) (10.6) (127) % (16) %

Loss (gain) on derivatives 26.0 (8.3) (88.5) nm (91) %

Loss on debt extinguishment 0.6 22.6 7.5 97 % nm

Interest expense 100.9 125.0 188.4 19 % 34 %

Interest income (2.2) (3.3) (2.8) (33) % 18 %

Operating income

Operating (loss) income (329.3) 36.0 (26.8) nm nm

Depreciation and amortization 83.1 82.0 84.6 (1) % 3 %

EBITDA (246.2) 118.0 57.8 nm 104 %

Share-based compensation expense (a)

10.2 10.3 6.6 1 % (56) %

Loss on impairment of assets (b)

352.0 0.2 — nm nm

EiP implementation expenses (c)

89.6 75.0 75.2 (19) % — %

Adjusted EBITDA $ 205.7 $ 203.6 $ 139.6 1 % 46 %

8 unchanged sentences

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Years Ended December 31, 2020 and 2019

Depreciation and amortization decreased by $18.6 million to $192.2 million for 2019 from $210.8 million for 2018 .

The effects of foreign currency exchange decreased depreciation and amortization expense by $7.8 million for 2019 compared to 2018 .

In addition, the incremental impact of the disposition of UniNorte decreased depreciation and amortization expense by $2.7 million for 2019 .

Other items decreased depreciation and amortization expense by $8.1 million .

Share-based compensation expense increased by $3.0 million to $12.7 million for 2019 from $9.7 million for 2018 .

This increase is mostly attributable to the effect of a correction of an immaterial error in the first quarter of 2018, which reduced share-based compensation expense for 2018.

EiP implementation expenses increased by $19.3 million to $115.1 million for 2019 from $95.8 million for 2018 .

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

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Years Ended December 31, 2018 and 2017

Depreciation and amortization increased by $1.1 million to $83.1 million for 2020 from $82.0 million for 2019.

Depreciation and amortization expense increased by $15.0 million , primarily attributable to a larger depreciable asset base in 2018 compared to 2017, as well as accelerated depreciation on certain corporate assets whose estimated useful lives were reduced.

This increase was partially offset by the effects of foreign currency exchange, which decreased depreciation and amortization expense by $5.3 million for 2018 compared to 2017 .

This increase was primarily attributable to amortization of Laureate's tradename which, during 2020, changed from being an indefinite-lived intangible asset to being a finite-lived intangible asset.

When combined with other items, this increased depreciation and amortization expense by $5.5 million.

Partially offsetting this increase was the effect of foreign currency exchange, which decreased depreciation and amortization expense by $4.4 million for 2020, as compared to 2019.

Share-based compensation expense decreased by $0.1 million to $10.2 million for 2020 from $10.3 million for 2019.

This decrease is mostly attributable to stock options that were granted to the Company’s then-CEO in 2017 under the Executive Profits Interests (EPI) agreement.

The EPI options vested upon consummation of the IPO on February 6, 2017, resulting in additional share-based compensation expense of $14.6 million during 2017.

Additionally, in 2017, the Company recognized $21.0 million of share-based compensation expense for award modifications, of which $6.0 million related to stock option repricing and $15.0 million related to the extension of the post-employment exercise periods of vested stock options for several executives in connection with their separation from the Company.

Also, in 2018, the Company reversed expense for certain performance-based stock option awards where the performance target became improbable of achievement and recorded the correction of an immaterial error in the prior year.

EiP implementation expenses increased by $14.6 million to $89.6 million for 2020 from $75.0 million for 2019.

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.

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Years Ended December 31, 2019 and 2018

Depreciation and amortization decreased by $2.6 million to $82.0 million for 2019 from $84.6 million for 2018.

Share-based compensation expense increased by $3.7 million to $10.3 million for 2019 from $6.6 million for 2018.

This increase was mostly attributable to the effect of a correction of an immaterial error in the first quarter of 2018, which reduced share-based compensation expense for 2018.

EiP implementation expenses decreased by $0.2 million to $75.0 million for 2019 from $75.2 million for 2018.

The year-over-year decrease in EiP expenses relates primarily to higher severance costs recognized in 2017, which were predominantly contractual termination benefits recognized in accordance with ASC 712, “Compensation-Nonretirement Postemployment Benefits,” partially offset by higher 2018 expenses attributable to compliance monitoring of information technology general controls and costs incurred in connection with the dispositions.

Segment Results

We have five reportable segments:

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

As discussed in “Overview,” the entire Central America & U.S.

Campuses segment is included in Discontinued Operations and therefore is 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 EiP implementation expenses have been excluded.

We have two reportable segments:

Mexico and Peru (formerly Andean), as discussed in Overview.

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.

Organic enrollment is based on average total enrollment for the period.

1 unchanged sentence

The following tables, derived from our consolidated financial statements included elsewhere in this Form 10-K, presents selected financial information of our reportable segments included in Continuing Operations:

(in millions)

(in millions) % Change

Better/(Worse)

For the year ended December 31,

Rest of World

Online & Partnerships

For the year ended December 31, 2020 2019 2018 2020 vs.

2019 2019 vs.

Mexico $ 534.6 $ 652.8 $ 646.1 (18) % 1 %

Peru 482.9 546.8 496.4 (12) % 10 %

Corporate 7.4 12.5 2.1 (41) % nm

Consolidated Total Revenues $ 1,024.9 $ 1,212.1 $ 1,144.6 (15) % 6 %

Adjusted EBITDA:

Rest of World

Online & Partnerships

Mexico $ 112.9 $ 147.8 $ 143.2 (24) % 3 %

Peru 189.5 197.8 169.2 (4) % 17 %

Corporate (96.7) (142.0) (172.9) 32 % 18 %

Consolidated Total Adjusted EBITDA $ 205.7 $ 203.6 $ 139.6 1 % 46 %

nm - percentage change not meaningful

Financial Overview

Comparison of Brazil Results for the Year Ended December 31, 2019 to the Year Ended December 31, 2018

(in millions)

Adjusted EBITDA

December 31, 2018

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency

Foreign exchange

December 31, 2019

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

Revenues decreased by $75.9 million , a 12% decrease from 2018 .

Product mix, pricing and timing decreased revenues due to an increase in discounts and scholarships as a percentage of revenue, combined with a reduction in the number of students participating in the Brazilian government student loan program (FIES), who have a higher average revenue per student than non-FIES students.

Organic enrollment increased during 2019 by 3% , increasing revenues by $24.3 million .

The increase in enrollments in 2019 was attributable to growth in distance learning, which has a lower average revenue per student than our campus-based programs.

Revenues represented 18% of our consolidated total revenues for 2019 compared to 20% for 2018 .

Adjusted EBITDA decreased by $21.7 million , a 21% decrease from 2018 .

The sale of UniNorte in 2019 accounted for a decrease in Adjusted EBITDA of $3.2 million .

Comparison of Brazil Results for the Year Ended December 31, 2018 to the Year Ended December 31, 2017

(in millions)

Adjusted EBITDA

Comparison of Mexico Results for the Year Ended December 31, 2020 to the Year Ended December 31, 2019

(in millions) Revenues Direct Costs Adjusted EBITDA

December 31, 2019 $ 652.8 $ 505.0 $ 147.8

3 unchanged sentences

Foreign exchange (58.4) (43.7) (14.7)

Dispositions — — —

December 31, 2020 $ 534.6 $ 421.7 $ 112.9

1 unchanged sentence

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

Revenues decreased by $111.4 million , a 15% decrease from 2017 .

The decrease in revenues was primarily due to weakening of the Brazilian Real relative to the USD compared to 2017, partially offset by the effect of higher organic enrollment, which increased during 2018 by 3% , increasing revenues by $20.6 million .

Revenues decreased by $118.2 million, an 18% decrease from 2019.

• Organic enrollment decreased during 2020 by 4%, which decreased revenues by $28.8 million, mainly due to impacts from the COVID-19 pandemic.

• 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 53% of our consolidated total revenues for 2020, compared to 54% for 2019.

Adjusted EBITDA decreased by $34.9 million, a 24% decrease from 2019.

Acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets, increased direct costs by $3.2 million in 2018 and decreased direct costs by $6.2 million in 2017 , increasing expenses by $9.4 million in 2018 compared to 2017 .

Financial Overview

• The overall decrease in Adjusted EBITDA was partially offset by a gain of $5.8 million from the sale of land and buildings at one of our campuses in 2020.

This gain is included in Organic constant currency.

Comparison of Mexico Results for the Year Ended December 31, 2019 to the Year Ended December 31, 2018

(in millions)

Adjusted EBITDA

(in millions) Revenues Direct Costs Adjusted EBITDA

December 31, 2018 $ 646.1 $ 502.9 $ 143.2

3 unchanged sentences

Foreign exchange (3.3) (1.9) (1.4)

Dispositions — — —

December 31, 2019 $ 652.8 $ 505.0 $ 147.8

2 unchanged sentences

Revenues increased by $6.7 million, a 1% increase from 2018.

Revenues increase from product mix, pricing and timing was partially offset by a decrease in organic enrollment of 2% , which decreased revenues by $16.0 million .

Revenues represented 20% of our consolidated total revenues for both 2019 and 2018 .

Adjusted EBITDA increased by $4.6 million , a 3% increase from 2018 .

Comparison of Mexico Results for the Year Ended December 31, 2018 to the Year Ended December 31, 2017

(in millions)

Adjusted EBITDA

December 31, 2017

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency

Foreign exchange

December 31, 2018

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

Revenues decreased by $0.1 million , remaining relatively flat compared to 2017 .

Organic enrollment decreased during 2018 by 2% , decreasing revenues by $18.0 million , which was more than offset by increases from product mix, pricing and timing.

• The increase in revenues from product mix, pricing and timing was partially offset by a decrease in organic enrollment of 2%, which decreased revenues by $16.0 million.

• Revenues represented 54% of our consolidated total revenues for 2019 compared to 57% for 2018.

Adjusted EBITDA decreased by $4.0 million , a 3% decrease from 2017 .

Adjusted EBITDA increased by $4.6 million, a 3% increase from 2018.

Financial Overview

Comparison of Andean Results for the Year Ended December 31, 2019 to the Year Ended December 31, 2018

(in millions)

Adjusted EBITDA

Comparison of Peru Results for the Year Ended December 31, 2020 to the Year Ended December 31, 2019

(in millions) Revenues Direct Costs Adjusted EBITDA

December 31, 2019 $ 546.8 $ 349.0 $ 197.8

3 unchanged sentences

Foreign exchange (23.4) (13.0) (10.4)

Dispositions — — —

December 31, 2020 $ 482.9 $ 293.4 $ 189.5

Revenues increased by $34.0 million , a 3% increase from 2018 .

Organic enrollment increased during 2019 by 6% , increasing revenues by $65.6 million , primarily at our institutions in Peru.

Revenues decreased by $63.9 million, a 12% decrease from 2019.

• Organic enrollment decreased during 2020 by 7%, decreasing revenues by $33.5 million, mainly due to impacts from the COVID-19 pandemic.

• 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.

• Revenue represented 47% of our consolidated total revenues for 2020 compared to 46% for 2019.

Adjusted EBITDA increased by $26.2 million , an 8% increase from 2018 .

The overall increase in Adjusted EBITDA was partially offset by the effect of weakening foreign currency exchange rates, primarily the Chilean Peso, relative to the USD.

Comparison of Andean Results for the Year Ended December 31, 2018 to the Year Ended December 31, 2017

(in millions)

Adjusted EBITDA

December 31, 2017

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency

Foreign exchange

December 31, 2018

(2) Other includes an operating gain on the sale of property and equipment from Ad Portas to UDLA Ecuador in 2017.

Revenues increased by $70.1 million , a 6% increase from 2017 .

Organic enrollment increased during 2018 by 3% , increasing revenues by $31.2 million .

Revenues represented 35% of our consolidated total revenues for 2018 compared to 32% for 2017 .

Adjusted EBITDA increased by $15.9 million , a 5% increase from 2017 .

The overall increase in Adjusted EBITDA was partially offset by the effect of an operating gain in 2017 of approximately $20.3 million , which we recognized after the sale of property and equipment from Ad Portas to UDLA Ecuador in November 2017 .

This gain is included in the Other line item in the above table.

Rest of World

Financial Overview

Comparison of Rest of World Results for the Year Ended December 31, 2019 to the Year Ended December 31, 2018

(in millions)

Adjusted EBITDA

Adjusted EBITDA decreased by $8.3 million, a 4% decrease from 2019.

Comparison of Peru Results for the Year Ended December 31, 2019 to the Year Ended December 31, 2018

(in millions) Revenues Direct Costs Adjusted EBITDA

December 31, 2018 $ 496.4 $ 327.2 $ 169.2

3 unchanged sentences

Foreign exchange (7.7) (5.2) (2.5)

Dispositions — — —

December 31, 2019 $ 546.8 $ 349.0 $ 197.8

4 unchanged sentences

Adjusted EBITDA increased by $28.6 million, a 17% increase from 2018.

Foreign exchange affected the results for 2019, primarily due to the weakening of the Australian Dollar relative to the USD.

Comparison of Rest of World Results for the Year Ended December 31, 2018 to the Year Ended December 31, 2017

(in millions)

Adjusted EBITDA

December 31, 2017

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency

Foreign exchange

December 31, 2018

Revenues increased by $16.1 million , a 10% increase from 2017 .

Organic enrollment increased during 2018 by 13% , increasing revenues by $20.7 million .

Revenues represented 5% of our consolidated total revenues for both 2018 and 2017 .

Adjusted EBITDA increased by $4.2 million , a 17% increase from 2017 .

Online & Partnerships

Financial Overview

Comparison of Online & Partnerships Results for the Year Ended December 31, 2019 to the Year Ended December 31, 2018

(in millions)

Adjusted EBITDA

December 31, 2018

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency

Foreign exchange

December 31, 2019

Revenues decreased by $30.1 million , a 5% decrease from 2018 .

Organic enrollment decreased during 2019 by 3% , decreasing revenues by $9.6 million .

This decrease was 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, partially offset by organic growth at Walden University.

A portion of the product mix, pricing and timing decrease was due to higher discounts and scholarships as a percentage of revenues.

Revenues represented 19% of our consolidated total revenues for 2019 compared to 20% for 2018 .

Adjusted EBITDA decreased by $3.8 million , a 2% decrease compared to 2018 .

Comparison of Online & Partnerships Results for the Year Ended December 31, 2018 to the Year Ended December 31, 2017

(in millions)

Adjusted EBITDA

December 31, 2017

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency

Foreign exchange

December 31, 2018

Revenues decreased by $26.2 million , a 4% decrease from 2017 .

Organic enrollment decreased during 2018 by 6% , decreasing revenues by $33.3 million .

Revenues represented 20% of our consolidated total revenues for 2018 compared to 21% for 2017 .

Adjusted EBITDA decreased by $9.8 million , a 5% decrease compared to 2017 .

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.

2017 also included revenues from contractual arrangements with UDLA Ecuador, an institution in Ecuador that was formerly consolidated into Laureate prior to 2013.

Corporate revenues represent amounts from our consolidated joint venture with the University of Liverpool and revenues from transition services agreements related to divestitures, as well as centralized IT costs charged to other business units, partially offset by the elimination of intersegment revenues.

Operating results for Corporate for the years ended December 31, 2020, 2019 and 2018 were as follows:

Better/(Worse)

(in millions)

(in millions) 2020 2019 2018 2020 vs.

2019 2019 vs.

Revenues $ 7.4 $ 12.5 $ 2.1 (41) % nm

Expenses 104.1 154.5 175.0 33 % 12 %

Adjusted EBITDA $ (96.7) $ (142.0) $ (172.9) 32 % 18 %

nm - percentage change not meaningful

Comparison of Corporate Results for the Year Ended December 31, 2020 to the Year Ended December 31, 2019

1 unchanged sentence

• Labor costs and other professional fees decreased expenses by $55.5 million for 2020 compared to 2019, related to cost-reduction efforts.

Other items accounted for a decrease in Adjusted EBITDA of $3.5 million .

This decrease includes the year-over-year impact of the resolution of an earnout liability during 2018 that was related to the 2014 acquisition of Monash South Africa;

the reversal of the earnout liability increased Adjusted EBITDA for 2018.

• Other items accounted for a decrease in Adjusted EBITDA of $10.2 million, primarily related to a reduction in revenues from the joint venture with the University of Liverpool.

Comparison of Corporate Results for the Year Ended December 31, 2019 to the Year Ended December 31, 2018

Adjusted EBITDA increased by 28.6 million , a 14% increase from 2017 .

2017 included an expense of $22.8 million related to the portion of the 2017 refinancing transactions that was deemed to be a debt modification.

2017 included an expense of $4.5 million related to a transaction with a former business partner.

2017 included $4.9 million of revenue from contractual arrangements with UDLA Ecuador.

Other items accounted for an increase in Adjusted EBITDA of $6.2 million , which primarily included a positive impact from the resolution of an earnout liability related to the 2014 acquisition of Monash South Africa.

Adjusted EBITDA increased by $30.9 million, an 18% increase from 2018.

• Labor costs and other professional fees decreased expenses by $42.4 million for 2019 compared to 2018, related to cost-reduction efforts.

• Other items accounted for a decrease in Adjusted EBITDA of $11.5 million, primarily attributable to the year-over-year impact of the resolution of an earnout liability during 2018 that was related to the 2014 acquisition of Monash South Africa;

the reversal of the earnout liability increased Adjusted EBITDA for 2018.

Liquidity and Capital Resources

Liquidity Sources

We anticipate that cash flow from operations and available cash will be sufficient to meet our current operating requirements for at least the next 12 months from the date of issuance of this report.

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.

As the impact of the COVID-19 pandemic on the economy and our operations continues to evolve, we will continue to assess our liquidity needs.

A continued worldwide disruption could materially affect our future access to liquidity sources, particularly our cash flows from operations, as well as our financial condition and capitalization.

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

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

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

The majority of our students finance the cost of their own education and/or seek third-party financing programs.

Essentially all of our revenues are generated from private pay sources as there are no material government-sponsored loan programs in Mexico or Peru.

We anticipate generating sufficient cash flow from operations in the majority of countries where we operate to satisfy the working capital and financing needs of our organic growth plans for each country.

3 unchanged sentences

The Company also maintains a revolving credit facility with a syndicate of financial institutions as a source of liquidity.

The revolving credit facility provides for borrowings of $410.0 million and a maturity date of October 7, 2024 .

The revolving credit facility provides for borrowings of $410.0 million and has a maturity date of October 7, 2024.

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.

During the fourth quarter of 2020, following the sale of our operations in Australia and New Zealand, the company fully repaid the outstanding balance of the revolving credit facility.

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.

The Company has taken actions to reduce leverage, improve liquidity, and increase cash flow.

As discussed below, we used proceeds from the additional divestitures that occurred in 2019 to repay debt, including full repayment of the 2024 Term Loan.

The Company has some subsidiaries in our Rest of World and Central America & U.S.

Campuses segments that are classified as held for sale as of December 31, 2019 , as discussed in “Overview” and in Note 4 , Discontinued Operations and Assets Held for Sale , of our consolidated financial statements included elsewhere in this Form 10-K.

The Company intends to use substantially all proceeds from these subsidiary sales to repay debt.

2019 and 2020 Sale Transactions

On February 1, 2019, we completed the sale of St.

Augustine and received net proceeds of approximately $346.4 million (approximately $301.8 million net of cash sold).

The Company used $340.0 million of the net proceeds to repay a portion of the 2024 Term Loan, with the remaining proceeds utilized to repay borrowings outstanding under our revolving credit facility.

On February 12, 2019, we completed the sale of our Thailand operations.

The total purchase price was approximately $35.3 million , resulting in net proceeds of approximately $26.4 million .

Of the $26.4 million in net proceeds, $22.2 million (approximately $18.8 million net of cash sold) was received at closing.

Of the remaining balance, $2.8 million was received in May 2019 and the remaining balance of approximately $1.4 million was received in February 2020 upon satisfaction of certain post-closing requirements.

On April 8, 2019 , we completed the sale of our institution in South Africa, Monash South Africa, as well as the sale of the real estate associated with that institution.

Including working capital adjustments, the Company received approximately $9.0 million from the buyer, which approximated the amount of cash sold with the business.

On May 9, 2019 , we completed the sale of our operations in India for net proceeds of approximately $145.8 million (approximately $77.3 million net of cash sold), before the payment to the 10% minority owners and after transaction fees and taxes, including receipt in July 2019 of certain taxes that were withheld at closing.

The Company used the proceeds to repay a portion of the 2024 Term Loan.

On May 31, 2019, we completed the sale of our institutions in Spain and Portugal and received net proceeds of approximately $906.0 million (approximately $760.0 million net of cash sold).

The Company used the net proceeds to repay indebtedness, including full repayment of the remaining balance outstanding under the 2024 Term Loan.

Additionally, the buyer assumed debt of approximately $109.0 million .

On August 27, 2019 , we completed the sale of our institution in Turkey for a total purchase price of $90.0 million , which consisted of cash proceeds of $75.0 million and deferred purchase price of $15.0 million in the form of an instrument payable one year after closing.

At the date of sale, Bilgi had approximately $89.0 million of cash and restricted cash on its balance sheet.

Following the sale, the Company fully repaid a note payable at Universidad del Valle de México (UVM Mexico) that had a remaining balance outstanding of approximately $102.2 million .

In early October 2019 , we completed the sale of our institution in Panama, in addition to real estate that serves as the institution's campus, and received net proceeds of approximately $82.0 million .

On November 1, 2019 , the we completed the sale of UniNorte, a traditional higher education institution in Manaus, Brazil.

The Company received net cash proceeds of approximately $43.0 million .

On January 10, 2020 , we completed the sale of our institution in Costa Rica.

Consideration for the transaction consisted of $15.0 million of cash paid at closing and up to $7.0 million to be paid within the next two years if the institution meets certain performance metrics.

Additionally, the buyer assumed obligations to pay approximately $30.0 million in finance lease indebtedness.

Completed Sale Transactions

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

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

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

On March 6, 2020, we completed the sale of NSAD, a higher education institution located in California.

At closing, the Company paid subsidies to the buyers of approximately $4.5 million.

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

On January 25, 2018, the Company completed the sale of its operations in China, and, at the closing of the sale, a portion of the total transaction value was paid into an escrow account.

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

In June 2020, we received 141.6 million Hong Kong Dollars (approximately $18.3 million at the date of receipt) from the escrow, which was offset against the receivable recorded.

Under the terms of the agreement, the remaining escrow receivable amount was due in late January 2021.

The Company is pursuing collection and considers the net receivable remaining to be fully collectable.

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.

The cash proceeds received at closing, prior to transaction fees, were approximately $195.3 million.

In addition, the purchase price included a note receivable of approximately $21.5 million that is payable one year from the date of divestiture.

At the closing date, the Chilean operations had a cash balance (cash sold) of approximately $288.0 million that was transferred to the buyer as part of the transaction.

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.

The cash proceeds included a deposit of $5.0 million that we received from the buyer in February 2020.

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.

On November 3, 2020, we completed the sale of our operations in Australia and New Zealand and received proceeds of approximately $624.2 million, net of cash sold and transaction costs.

In November 2020, one of the Company's subsidiaries in Mexico sold land and buildings for a total purchase price of approximately $13.9 million, prior to transaction fees.

As of December 31, 2020, the Company received approximately $7.0 million of the total purchase price, with the outstanding amount of approximately $6.9 million to be paid before the one-year anniversary of the signing of the agreement.

Pending Sale Transactions

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.

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

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

Under certain specified circumstances, the 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.

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.

Upon completion of the sale, the restricted cash that is held at a corporate entity to collateralize the letters of credit in favor of the DOE will be released and reclassified to cash and cash equivalents.

See also Overview—Regulatory Environment and Other Matters— Department of Justice Voluntary Information Request for Walden University.

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.

The buyer will also assume indebtedness which, as of December 31, 2020, was approximately $29.5 million.

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

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.

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.

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 .

The transaction is targeted to close by the end of the second quarter of 2021 and is subject to certain specified closing conditions.

Liquidity Restrictions

Our liquidity is affected by restricted cash balances, which totaled $117.2 million and $36.2 million as of December 31, 2020 and 2019, respectively.

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

These letters of credit are required by the DOE in order to allow our U.S.

institutions to participate in the Title IV program.

As of December 31, 2019 and 2018 , we had approximately $127.3 million and $139 million , respectively, posted as LOCs in favor of the DOE.

As of December 31, 2019 , the amount required by the DOE to be posted was approximately $125.8 million .

As of both December 31, 2019 and 2018 , we had EUR 5.0 million (approximately $5.6 million at December 31, 2019 ) posted as cash-collateral for LOCs related to the Spain Tax Audits.

Restricted cash consists of cash equivalents held to collateralize a standby letter of credit in favor of the DOE.

This letter of credit was required by the DOE in order to allow Walden and, in 2019, NSAD, to participate in the Title IV program.

As of December 31, 2020 and 2019, we had approximately $83.6 million and $127.3 million, respectively, posted as a letter of credit in favor of the DOE.

As of December 31, 2020, the restricted cash used to collateralize this letter of credit was held by a corporate entity.

As of December 31, 2019, the restricted cash used to collateralize the letter of credit was primarily held by Walden.

Because Walden is classified as a discontinued operation, its restricted cash balances were included in Current assets held for sale on the Consolidated Balance Sheets.

As of December 31, 2020 and 2019, we had EUR 9.4 million (approximately $11.5 million at December 31, 2020) and EUR 5.0 million (approximately $5.5 million at December 31, 2019), respectively, posted as cash-collateral for LOCs related to the Spain Tax Audits.

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

1 unchanged sentence

As of December 31, 2020 and 2019, the total face amount of these surety bonds was $17.1 million and $25.6 million, respectively.

As of December 31, 2019, approximately $17 million of these surety bonds were held at a corporate entity;

however, during 2020, all of the surety bonds were transferred to Walden and were held at Walden at December 31, 2020.

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.

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 variable interest entities (VIEs).

These amounts above do not include $55.4 million of cash recorded at subsidiaries that are classified as held for sale at December 31, 2019 , of which $49.5 million was held by foreign subsidiaries.

As of December 31, 2018 , $327.2 million of our total $387.8 million of cash and cash equivalents were held by foreign subsidiaries, including $158.4 million held by VIEs.

As of December 31, 2020, $127.7 million of our total $750.1 million of cash and cash equivalents were held by foreign subsidiaries.

These amounts above do not include $270.2

million of cash recorded at subsidiaries that are classified as held for sale at December 31, 2020, of which $66.4 million was held by foreign subsidiaries.

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 are classified as held for sale at December 31, 2019, of which $269.3 million was held by foreign subsidiaries.

The VIEs' cash and cash equivalents balances are generally required to be used only for the operations of these VIEs.

Our plans to indefinitely reinvest certain earnings are supported by projected working capital and long-term capital requirements in each foreign subsidiary location in which the earnings are generated.

8 unchanged sentences

operating lease obligations;

payments due to shareholders of acquired companies;

payments due to shareholders of acquired companies (seller notes);

payments of deferred compensation;

1 unchanged sentence

operating expenses;

payments of third-party obligations;

capital expenditures;

settlements of derivatives;

and business development activities.

2 unchanged sentences

operating lease obligations;

payments of long-term amounts due to shareholders of acquired companies;

payments of deferred compensation;

and payments of third-party obligations.

and payments of other third-party obligations.

On April 26, 2017, we completed an offering of $800.0 million aggregate principal amount of 8.250% Senior Notes due 2025 (the Senior Notes due 2025).The Senior Notes due 2025 were issued at par and will mature on May 1, 2025.

Interest on the Senior Notes due 2025 is payable semi-annually on May 1 and November 1, and the first interest payment date was November 1, 2017.

During the fourth quarter of 2020, following the expiration of two cash tender offers, the Company purchased a total of $1.3 million aggregate principal amount of the 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 dates.

Substantially concurrently with the issuance of the Senior Notes due 2025, we consummated a refinancing of our Senior Secured Credit Facility by means of an amendment and restatement of the existing amended and restated credit agreement (the Second Amended and Restated Credit Agreement) to provide a new revolving credit facility that had an original borrowing capacity of $385.0 million and originally matured in April 2022 (the Revolving Credit Facility), as well as a syndicated term loan of $1,600.0 million that had a maturity date of April 26, 2024 (the 2024 Term Loan).

As previously noted, the 2024 Term Loan was

fully repaid in 2019.

As previously noted, the 2024 Term Loan was fully repaid in 2019.

The Company entered into the Third A&R Credit Agreement on October 7, 2019.

Among other things, the Third A&R Credit Agreement increased the borrowing capacity of our revolving credit facility from $385.0 million to $410.0 million and extended the maturity date from April 26, 2022 to October 7, 2024.

As of December 31, 2019 , senior long-term borrowings totaled $1,002.4 million and consisted of $202.4 million of Revolving Credit Facility borrowings under the Senior Secured Credit Facility that matures in October 2024 and $800.0 million in Senior Notes due 2025 that mature in May 2025.

As of December 31, 2020, senior long-term borrowings totaled $798.7 million, which consisted entirely of the balance outstanding under our Senior Notes due 2025.

As of December 31, 2020, other debt balances totaled $197.6 million and our finance lease obligations and sale-leaseback financings were $52.6 million.

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

Approximately $55.5 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 December 31, 2019 .

Approximately $171.5 million of long-term debt and seller notes, including the current portion, is included in the held-for-sale liabilities recorded on the consolidated balance sheet as of December 31, 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-K.

Senior Secured Credit Facility

As of December 31, 2019 , the outstanding balance under our Senior Secured Credit Facility was $202.4 million , which consisted entirely of amounts outstanding under our $410.0 million revolving credit facility, as the term loans were fully repaid in 2019 with proceeds from the divestitures.

As of December 31, 2018 , the outstanding balance under our previous senior credit facility was $1,321.6 million , which consisted of $93.5 million outstanding under our $385.0 million revolving credit facility and an aggregate outstanding balance of $1,228.1 million , net of a debt discount, under the term loans.

As of both December 31, 2019 and 2018 , the outstanding balance under our Senior Notes due 2025 was $800.0 million .

As described above, during the fourth quarter of 2020, the Company fully repaid the outstanding balance of our $410.0 million revolving credit facility, following the sale of our Australia and New Zealand operations.

The revolving credit facility provides for borrowings of $410.0 million and has a maturity date of October 7, 2024.

As of December 31, 2019, the outstanding balance under our senior credit facility was $202.4 million, which consisted entirely of balances outstanding under our $410.0 million revolving credit facility.

As of December 31, 2020 and 2019, the outstanding balance under our Senior Notes due 2025 was $798.7 million and $800.0 million, respectively.

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

As of December 31, 2019 , we were in compliance with the leverage ratio covenant.

The maximum ratio, as defined, is 3.50x as of December 31, 2019 and thereafter.

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

As of December 31, 2020, these conditions were satisfied and, therefore, we were not subject to the leverage ratio.

The maximum ratio, as defined, is 3.50x as of the last day of each quarter commencing with the quarter ending December 31, 2019 and thereafter.

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

We were in compliance with these covenants as of December 31, 2020.

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

1 unchanged sentence

In December 2017, UVM Mexico entered into an agreement with a bank for a loan of MXN 1,700.0 million (approximately $89.0 million at the time of the loan).

The loan matures in December 2023 and carries a variable interest rate based on TIIE, plus an applicable margin, which is established based on the ratio of debt to EBITDA, as defined in the agreement ( 9.06% as of December 31, 2019 ).

The loan matures in June 2024 and carries a variable interest rate based on TIIE, plus an applicable margin, which is established based on the ratio of debt to EBITDA, as defined in the agreement (5.98% as of December 31, 2020).

Payments on the loan were deferred until December 2018, at which time quarterly principal payments were due, beginning at MXN 42.5 million ($2.1 million at December 31, 2020) and increasing to MXN 76.5 million ($3.9 million at December 31, 2020), with a balloon payment of MXN 425.0 million ($21.4 million at December 31, 2020) due at maturity.

During the year ended December 31, 2019 , this loan was reassigned to another wholly owned subsidiary of the Company in Mexico.

In 2019, this loan was reassigned to another wholly owned subsidiary of the Company in Mexico.

As of December 31, 2020 and 2019, the outstanding balance of this loan was $68.0 million and $77.6 million, respectively.

The Company obtained financing to fund the construction of two new campuses at one of our institutions in Peru, Universidad Peruana de Ciencias Aplicadas.

During the year ended December 31, 2019 , the Company repaid the loans except for one, which matures in October 2022.

As of December 31, 2019 and 2018 , the outstanding balance on the loans was $14.5 million and $32.9 million , respectively.

In 2019, the Company repaid the loans except for one, which carries an interest rate of 7.93% and is scheduled to mature in October 2023.

Principal payments, plus accrued and unpaid interest, are made semi-annually in April and October.

As of December 31, 2020 and 2019, the outstanding balance on the loan was $13.4 million and $14.5 million, respectively.

We have outstanding notes payable at Universidad Privada del Norte (UPN), one of our institutions in Peru.

These loans have varying maturity dates through December 2024.

These loans have varying maturity dates through January 2022 and have interest rates ranging from 2.10% to 7.85%.

As of December 31, 2020 and 2019, these loans had an aggregate balance of $12.7 million and $23.5 million, respectively.

2 unchanged sentences

Quarterly payments in the amount of PEN 9.3 million ($2.6 million at December 31, 2020) were due from March 2018 through December 2019.

The quarterly payments increase to PEN 14.4 million ( $4.4 million at December 31, 2019 ) in March 2020 through the loan's maturity in December 2022.

The quarterly payments increased to PEN 14.4 million ($4.0 million at December 31, 2020) in March 2020 through the loan's maturity in December 2023.

In June 2020, during the COVID-19 pandemic, the quarterly principal payments were suspended until June 2021.

As of December 31, 2020 and 2019, this loan had a balance of $44.0 million and $52.3 million, respectively.

In December 2013, Laureate acquired THINK and financed a portion of the purchase price by borrowing AUD 45.0 million ( $31.2 million at December 31, 2019 ) under a syndicated facility agreement in the form of two te rm loans of AUD 22.5 million each.

Facility A was payable at its maturity date of December 20, 2018.

Facility B was amended in 2016 to be a revolving facility of up to AUD 15.0 million ( $10.4 million at December 31, 2019 ) and any balance outstanding was repayable at its maturity date of December 20, 2018.

In October 2017, these loan facilities were further amended to provide the lender a security interest in all of the assets of Laureate's Australian operations.

In addition, Facility A was converted from a term loan to a loan with a balloon payment due at maturity.

In December 2018, these loan facilities were again amended to extend the maturity date from December 20, 2018 to June 30, 2020.

As of December 31, 2019 and 2018 , $14.4 million and $14.7 million , respectively, was outstanding under these loan facilities.

We acquired Faculdades Metropolitanas Unidas Educacionais Ltda.

(FMU) on September 12, 2014 and financed a portion of the purchase price by borrowing amounts under two loans that totaled BRL 259.1 million (approximately $110.3 million at the borrowing date).

Beginning in October 2017, the loans require semi-annual principal payments of BRL 22.0 million ( $5.4 million at December 31, 2019 ), continuing through their maturity dates in April 2021.

As of December 31, 2019 and 2018 , the outstanding balance of these loans was $16.2 million and $28.4 million , respectively.

On December 20, 2017, one of our subsidiaries in Brazil entered into an agreement to borrow BRL 360.0 million (approximately $110.0 million at the time of the loan).

The loan matures on December 25, 2022.

Quarterly payments in the amount of BRL 13.5 million ( $3.3 million at December 31, 2019 ) were due from March 2019 through December 2019, at which point the quarterly payments increase to BRL 22.5 million ( $5.5 million at December 31, 2019 ) from March 2020 through December 2020, then to BRL 27.0 million ( $6.6 million at December 31, 2019 ) from March 2021 through maturity in December 2022.

The loan was scheduled to mature on December 25, 2022.

In 2020, during the COVID-19 pandemic, quarterly payments were deferred from June to December 2020 and the loan maturity was

extended to July 25, 2023.

Following the deferral of the quarterly payments in 2020, the loan requires total principal payments of BRL 99.0 million ($19.1 million at December 31, 2020) in 2021, BRL 108.0 million ($20.9 million at December 31, 2020) in 2022, and BRL 76.5 million ($14.8 million at December 31, 2020) in 2023.

As of December 31, 2020 and 2019, the loan had a balance of $54.7 million and $75.0 million, respectively.

In addition to this loan, the same Laureate subsidiary in Brazil entered into two additional loans during the year ended December 31, 2019 totaling BRL 190.0 million (approximately $47.5 million at the time of loan).

These loans have maturity dates of May 2021 and December 2021 .

As of December 31, 2019 , the outstanding balance on these loans was $46.6 million .

These loans have maturity dates of April 2021 and November 2021.

As of December 31, 2020 and 2019, the outstanding balance on these loans was $33.8 million and $46.6 million, respectively.

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

These facilities include our corporate headquarters, other office locations, and many of our higher education facilities.

As discussed in Note 11 , Leases , in our consolidated financial statements included elsewhere in this Form 10-K, we have significant liabilities recorded related to our leased facilities, which will require future cash payments.

As discussed in Note 10, Leases, in our consolidated financial statements included elsewhere in this Form 10-K, we have significant operating lease liabilities recorded related to our leased facilities, which will require future cash payments.

As of December 31, 2020 and 2019, the present value of operating lease liabilities was $519.1 million and $559.0 million, respectively.

These amounts exclude operating lease liabilities for our discontinued operations of $151.4 million and $388.2 million as of December 31, 2020 and 2019, respectively.

As of December 31, 2020, the minimum lease payments required during 2021 for our Continuing Operations is $91.5 million.

Due to Shareholders of Acquired Companies

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

As of December 31, 2019 and 2018 , we recorded $21.5 million and $45.4 million , respectively, for these liabilities.

See also Note 7 , Due to Shareholders of Acquired Companies , in our consolidated financial statements included elsewhere in this Form 10-K.

As of December 31, 2020 and 2019, we recorded $8.6 million and $22.3 million, respectively, for these liabilities, which relate to Discontinued Operations.

Capital Expenditures

8 unchanged sentences

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

In the event that we are unable to obtain the necessary funding for capital expenditures, our long-term growth

strategy could be significantly affected.

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

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

Our total capital expenditures for our continuing and discontinued operations, excluding receipts from the sale of subsidiaries and property and equipment, were $89.2 million, $173.3 million and $257.9 million during 2020, 2019 and 2018, respectively.

The 49% decrease in capital expenditures for 2020 compared to 2019 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.

The 33% decrease in capital expenditures for 2019 compared to 2018 was driven mainly by reduced capital expenditures as a result of divestitures, as well as lower spending in Costa Rica, Peru and Brazil due to significant capital expenditures made in prior periods to launch several new campuses in these geographies, and reduced accreditation/regulatory expenditures in Brazil.

The 12% decrease in capital expenditures for 2018 compared to 2017 was primarily due to lower spending on growth initiatives in Brazil and Peru in 2018.

Redeemable Noncontrolling Interests and Equity

In connection with certain past acquisitions, we 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.

Certain of our call rights contain minimum payment provisions.

If we exercise such call rights, the consideration required could be higher than the estimated put values.

Upon exercise of these puts or calls, our ownership interests in these subsidiaries would increase.

Laureate Education, Inc.

6 unchanged sentences

As of December 31, 2020 and 2019, the plan liabilities reported in our Consolidated Balance Sheets were $6.2 million and $6.8 million, respectively.

As of December 31, 2019 and 2018 , $1.8 million and $1.2 million , respectively, of the total plan liability was classified as a current liability;

As of December 31, 2020 and 2019, $1.2 million and $1.8 million,

respectively, of the total plan liability was classified as a current liability;

the remainder was noncurrent and recorded in Other long-term liabilities.

Stock Repurchase Program

On August 8, 2019 , the Company announced that its board of directors had authorized a stock repurchase program to acquire up to $150.0 million of the Company’s Class A common stock.

In early October 2019, the Company's stock repurchases reached the authorized limit of $150.0 million .

On October 14, 2019, the Company's board of directors approved the increase of its existing authorization to repurchase shares of the Company's Class A common stock by $150.0 million for a total authorization (including the previously authorized repurchases) of up to $300.0 million of the Company's Class A common stock.

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

In January 2020, the Company's stock repurchases reached the total authorized limit of $300.0 million .

On November 5, 2020, Laureate’s board of directors approved a new stock repurchase program to acquire up to $300 million of the Company’s Class A common stock.

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

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

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

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

As of December 31, 2020, the approximate dollar value of shares yet to be purchased under this stock repurchase program is $235.1 million.

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.

13 unchanged sentences

Cash provided by operating activities decreased by $80.2 million to $259.6 million for 2020, compared to $339.8 million for 2019.

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, as certain of the divested institutions contributed positive operating cash flows during 2019 prior to divestiture.

These factors accounted for a decrease in operating cash flows of approximately $184.7 million.

This decrease was partially offset by:

(1) a decrease in cash paid for interest of $68.1 million, prior to interest income, that is attributable to the lower average debt balances, from $188.7 million of cash paid for interest in 2019 to $120.6 million in 2020;

(2) a decrease in cash paid for taxes of $28.3 million, from $119.7 million in 2019 to $91.4 million in 2020;

and (3) a positive year-over-year effect to operating cash of $8.1 million primarily related to a cash payment in 2019 to settle cross currency and interest rate swaps in Chile.

Investing activities

Cash provided by investing activities decreased by $529.4 million, to $587.4 million for 2020 from $1,116.8 million in 2019.

This decrease was primarily attributable to:

(1) lower cash receipts from the sales of discontinued operations of $589.4 million, from $1,266.0 million in 2019 (for the sales of St.

Augustine and our Thailand, South Africa, India, Spain, Portugal, Turkey, Panama, and UniNorte operations) to $676.6 million, net, in 2020 (for the net effect of the sales of NSAD and our operations in Costa Rica, Chile, Malaysia, Australia and New Zealand, net of cash sold, and the receipt of a portion of the escrow receivable balance related to the 2018 sale of our China operations);

(2) the year-over-year negative effect of cash receipt from derivative

settlements of $12.9 million, related to the foreign exchange swap agreements associated with the sale of the Spain and Portugal institutions in 2019;

and (3) the year-over-year effect of proceeds of $11.5 million in 2019 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 $84.2 million, and the year-over-year effect of a payment of $1.2 million in 2019 for a small acquisition in Brazil.

Other items accounted for the remaining change of $1.0 million.

Financing activities

Cash used in financing activities decreased by $1,401.3 million to $272.7 million for 2020 from $1,674.0 million for 2019.

This decrease in financing cash outflows was primarily attributable to:

(1) higher net payments of long-term debt in 2019 as compared to 2020 of $1,207.6 million, primarily related to the use of divestiture proceeds for debt repayment;

(2) lower payments in 2020 of $164.6 million to repurchase shares of our Class A common stock under our stock repurchase program;

(3) lower payments of deferred purchase price for acquisitions of $14.5 million, due primarily to the full repayment of the St.

Augustine seller note in 2019;

(4) higher proceeds from stock option exercises of $11.7 million during 2020, as compared to 2019;

and (5) lower payments for debt issuance costs and redemption and call premiums of $8.3 million, mostly related to a debt repayment in Chile in 2019.

These decreases in financing cash outflows were partially offset by higher year-over-year payments to purchase noncontrolling interests of $7.9 million, from a $5.8 million payment in 2019 to acquire the remaining noncontrolling interest of one of our operations in India, immediately prior to the sale of those operations, to a $13.7 million payment in 2020 to the minority owner of our Malaysia operations in connection with the sale of those operations.

Other items accounted for the remaining difference of $2.5 million.

Comparison of Cash Flows for the Year Ended December 31, 2019 to the Year Ended December 31, 2018

Operating activities

Cash provided by operating activities decreased by $57.1 million to $339.8 million for 2019, compared to $396.9 million for 2018.

This decrease in operating cash flows during 2019 was primarily due to the following:

(1) changes in operating assets and liabilities and other working capital, which decreased operating cash by $102.9 million, due largely to the year-over-year effect of cash received during the fall intake cycle of 2018 for entities that were subsequently divested in 2019;

and (2) proceeds from the settlement of derivative contracts were $22.9 million higher in 2018 than in 2019 due to the fact that, in 2018, we received $14.1 million in cash from the settlement of interest rate swaps whereas, in 2019, we made a cash payment of $(8.8) million in order to settle certain cross currency and interest rate swaps, primarily in Chile.

and (2) proceeds from the settlement of derivative contracts were $22.9 million higher in 2018 than in 2019 due to the fact that, in 2018, we received $14.1 million in cash from the settlement of interest rate swaps whereas, in 2019, we made a cash payment of $8.8 million in order to settle certain cross currency and interest swaps, primarily in Chile.

Partially offsetting these operating cash decreases were increases in operating cash flows resulting from:

4 unchanged sentences

This increase is primarily attributable to:

(1) higher cash receipts from the sales of discontinued operations of $890.2 million , from

$375.8 million in 2018 (for the sales of Kendall and our operations in Cyprus, Italy, China, Germany, and Morocco) to $1,266.0 million in 2019 (for the sales of St.

(1) higher cash receipts from the sales of discontinued operations of $890.2 million, from $375.8 million in 2018 (for the sales of Kendall and our operations in Cyprus, Italy, China, Germany, and Morocco) to $1,266.0 million in 2019 (for the sales of St.

Augustine and our Thailand, South Africa, India, Spain, Portugal, Turkey, Panama, and UniNorte operations);

15 unchanged sentences

These increases in financing cash outflows were partially offset by:

(1) an $11.1 million reduction in dividend payments for the Series A Preferred Stock (no further dividend payments were required following the April 2018 conversion of the Series A Preferred Stock into Class A common stock);

(1) an $11.1 million reduction in dividend payments for the

Series A Preferred Stock (no further dividend payments were required following the April 2018 conversion of the Series A Preferred Stock into Class A common stock);

and (2) proceeds from stock option exercises during 2019 of $14.0 million.

Other items accounted for the remaining difference of $2.1 million.

Comparison of Cash Flows for the Year Ended December 31, 2018 to the Year Ended December 31, 2017

Operating activities

Cash provided by operating activities increased by $204.7 million to $396.9 million for 2018 , compared to $192.2 million for 2017 .

This increase in operating cash flows during 2018 was primarily due to the following:

(1) cash paid for interest, prior to interest income, decreased by $150.1 million , from $384.2 million for 2017 to $234.1 million for 2018 as a result of the 2017 refinancing transactions and the $350.0 million principal repayment made in connection with the February 1, 2018 amendment of the Senior Secured Credit Facility;

(2) during 2017, we fully repaid the FMU seller notes, the interest portion of which was classified in operating cash flows, resulting in a year-over-year increase in operating cash flows of $35.0 million ;

(3) during 2017, we made payments of $22.8 million for third-party general and administrative expenses in connection with the debt refinancing that was completed during the second quarter of 2017;

and (4) proceeds from the settlement of derivative contracts increased operating cash flows by $14.1 million for 2018, as compared to 2017, related to cash received from the settlement of interest rate swaps.

Partially offsetting these operating cash increases was an increase in cash paid for taxes of $12.5 million , from $130.5 million in 2017 to $143.0 million in 2018.

The increase in cash paid for taxes was primarily due to approximately $34.8 million of payments made to the Spanish Tax Authorities during 2018, plus a U.S.

payment of $3.5 million related to tax reform, partially offset by an approximately $20 million refund received by one of our Spanish subsidiaries during the first quarter of 2018 from an estimated tax payment made in 2016.

Changes in operating assets and liabilities and other working capital accounted for the remaining change in operating cash of $4.8 million .

Investing activities

Cash flows from investing activities increased by $400.2 million to an investing cash inflow of $115.5 million for 2018 , from an investing cash outflow of $(284.7) million in 2017 .

This increase was primarily attributable to the sales of Kendall and the Cyprus, Italy, China, Germany, and Morocco institutions during 2018, which resulted in a $366.0 million year-over-year increase in receipts from the sales of these Discontinued Operations and property and equipment.

In addition, capital expenditures decreased from 2017 to 2018 by $35.9 million .

Also, in 2018, the Company received proceeds from corporate-owned life insurance policies, which are deferred compensation plan assets, contributing to a total year-over-year increase in proceeds from insurance of $27.0 million .

These investing cash increases were partially offset by a $10.0 million realized loss in 2018 on the foreign exchange swap agreements associated with the sale of the Cyprus and Italy institutions, as well as an increase in cash paid for acquisitions of $16.2 million , primarily related to the November 2018 acquisition of Avansys in Peru.

Other items accounted for the remaining change of $2.5 million .

Financing activities

Cash flows from financing activities decreased by $567.7 million to a financing cash outflow of $(410.1) million for 2018 , compared to a financing cash inflow of $157.6 million for 2017 .

This decrease was primarily attributable to the $456.4 million of net proceeds from the 2017 IPO, and net proceeds from the issuance of Series A Preferred Stock during 2017 of $55.3 million .

Additionally, net payments of long-term debt during 2018, which included the $350.0 million repayment of the 2024 Term Loan, were $242.3 million higher than in 2017.

These financing cash decreases were partially offset by lower payments during 2018 for debt issuance costs and redemption and call premiums of $80.7 million , related to the debt refinancing that was completed during the second quarter of 2017, in addition to lower payments of deferred price for acquisitions during 2018 versus 2017 of $81.2 million , due primarily to the repayment of the FMU seller note in September 2017.

Payments to purchase noncontrolling interests were also $17.3 million lower in 2018 versus 2017.

In addition, payments of dividends on the Series A Preferred Stock decreased by $8.3 million in 2018, as a result of the April 23, 2018 conversion of the Series A Preferred Stock into Class A common stock (no further dividend payments are required following the conversion).

Other items accounted for the remaining change of $1.2 million .

Contractual Obligations

The following table reflects a summary of our contractual obligations as of December 31, 2019 :

Payments due by period

(in millions)

less than 1 year

More than 5 years

Long-term debt (a),

Operating lease obligations (b)

Interest payments (c)

Finance lease obligations (d)

Due to shareholders of acquired companies (e)

Other obligations (f)

Amount shown includes approximately $15.3 million of debt related to subsidiaries that are classified as held for sale as of December 31, 2019 .

Includes approximately $29.0 million of minimum future operating lease payments related to subsidiaries classified as held for sale as of December 31, 2019 .

Interest payments relate to long-term debt, including interest on obligations related to subsidiaries that are classified as held for sale as of December 31, 2019 .

Interest payments for variable-rate long-term debt were calculated using the variable interest rates in effect at December 31, 2019 .

Also includes approximately $24.0 million of finance lease obligations related to subsidiaries classified as held for sale as of December 31, 2019 .

Due to shareholders of acquired companies represent promissory notes payable to the sellers of companies acquired by us.

It also includes $0.8 million of due to shareholder liabilities related to subsidiaries classified as held for sale.

Other obligations consists primarily of contractually owed service-related compensation, foreign tax settlement payments, and other contractual obligations.

The preceding table does not reflect unrecognized income tax benefits, including interest and penalties, as of December 31, 2019 of approximately $90.1 million .

We are unable to make a reasonably reliable estimate of the period of any cash settlements.

It is reasonably possible that our liability for unrecognized tax benefits could change during the time period.

Off-Balance Sheet Arrangements

As of December 31, 2019 , we have the following off-balance sheet arrangements:

Student Loan Guarantees

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

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

The guarantees by these institutions are in effect during the period in which the student is enrolled .

The maximum potential amount of payments our institutions could be required to make under the CAE Program was approximately $474.0 million and $499.0 million at December 31, 2019 and 2018 , respectively.

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

As of December 31, 2019 and 2018 , we recorded $30.9 million and $28.3 million , respectively, as estimated long-term guarantee liabilities for these obligations, through a reduction of Revenues.

Subsidiary Shares as Collateral

In conjunction with the purchase of Universidade Potiguar in Brazil (UNP), we pledged all of the acquired shares as a guarantee of our payments of rents as they become due.

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

In the event of forfeiture, Laureate may be required to transfer the books and management of UNP to the former owners.

We acquired the remaining 49% ownership interest in Universidade Anhembi Morumbi (UAM Brazil) in April 2013.

As part of the agreement to purchase the 49% ownership interest, we pledged 49% of our total shares in UAM Brazil as a guarantee of our payment obligations under the purchase agreement.

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

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

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

In connection with a loan agreement entered into by a Laureate subsidiary in Peru, all of the shares of UPN Peru, one of our universities, were pledged to the third-party lender as a guarantee of the payment obligations under the loan.

Standby Letters of Credit

As of December 31, 2019 , Laureate had outstanding letters of credit (LOCs), which consisted primarily of the following:

Fully cash-collateralized LOCs of $127.3 million in favor of the DOE, which are included in Restricted cash .

These LOCs were required to allow Walden and NewSchool to continue participating in the DOE Title IV program.

Fully cash-collateralized LOCs totaling $5.6 million , which are included in Restricted cash , that were issued to continue the appeals process with the Spain Tax Authorities who challenged the holding company structure in Spain.

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

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

As of December 31, 2019 , the total face amount of these fully cash-collateralized surety bonds was $25.6 million .

In November 2016, in order to continue participating in Prouni, a federal program that offers tax benefits designed to increase higher education participation rates in Brazil, UAM Brazil posted a guarantee in the amount of $15.3 million .

In connection with the issuance of the guarantee, UAM Brazil obtained a non-collateralized surety bond from a third party in order to secure the guarantee.

The cost of the surety bond was $1.4 million , of which half was reimbursed by the former owner of UAM Brazil, and is being amortized over the five -year term.

Critical Accounting Policies and Estimates

5 unchanged sentences

Management has discussed the selection of these critical accounting policies and estimates with the audit committee of the board of directors.

Variable Interest Entities (VIEs)

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

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

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

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

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

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

As with all of our educational institutions, the VIE institutions' primary source of income is tuition fees paid by students, for which the students receive educational services and goods that are proportionate to the prices charged.

Laureate maintains control of these VIEs through our rights to designate a majority of the governing entities' board members, through which we have the legal ability to direct the activities of the entities.

Laureate maintains a variable interest in these VIEs through mutual contractual arrangements at market rates and terms that provide them with necessary products and services, and/or intellectual property, and has the ability to enter into additional such contractual arrangements at market rates and terms.

We also have the ability to transfer our rights to govern these VIEs, or the entities that possess those rights, to other parties, which could yield a return if and when these rights are transferred.

We generally do not have legal entitlement to distribute the net assets of the VIEs.

Generally, in the event of liquidation or the sale of the net assets of the VIEs, the net proceeds can only be transferred either to another VIE institution with similar purposes or to the government.

In the unlikely case of liquidation or a sale of the net assets of the VIE, we may be able to retain the residual value by naming another Laureate-controlled VIE resident in the same jurisdiction as the recipient, if one exists;

however, we generally cannot name a for-profit entity as the recipient.

Moreover, because the institution generally would be required to provide for the continued education of its students, liquidation would not be a likely course of action and would be unlikely to result in significant residual assets available for distribution.

However, we operate our VIEs as going concern enterprises, maintain control in perpetuity, and have the ability to provide additional contractual arrangements for educational and other services priced at up to market rates with Laureate-controlled service companies.

Typically, we are not legally obligated to make additional investments in the VIE institutions.

Laureate for-profit entities provide necessary products and services, and/or intellectual property, to all institutions in the Laureate International Universities network, including the VIE institutions, through contractual arrangements at market rates and terms, which are accretive to Laureate.

We periodically modify the rates we charge under these arrangements so that they are priced at or below fair market value and to add additional services.

If it is determined that contractual arrangements with any institution are not on market terms, it could have an adverse regulatory impact on such institution.

We believe that these arrangements improve the quality of the academic curriculum and the students' educational experience.

There are currently four types of contractual arrangements:

(i) intellectual property (IP) royalty arrangements;

(ii) network fee arrangements;

(iii) management service arrangements;

and (iv) lease arrangements.

Under the IP royalty arrangements, institutions in the Laureate International Universities network pay to Laureate royalty payments for the use of Laureate's tradename and best practice policies and procedures.

Institutions in the Laureate International Universities network gain access to other network resources, including academic content, support with curriculum design, online programs, professional development, student exchange and access to

dual degree programs, through network fee arrangements whereby the institutions pay stipulated fees to Laureate for such access.

Institutions in the Laureate International Universities network contract with Laureate and pay fees under management services agreements for the provision of support and managerial services including access to management, legal, tax, finance, accounting, treasury and other services, which in some cases Laureate provides through shared service arrangements in certain jurisdictions.

Laureate for-profit entities own various campus real estate properties and have entered into long-term lease contracts with the respective institutions in the Laureate International Universities network, whereby they pay market-based rents for the use of the properties in the conduct of their educational operations.

Revenues recognized by our for-profit entities from these contractual arrangements with our consolidated VIEs were $39.0 million , $100.2 million and $123.2 million for the years ended December 31, 2019 , 2018 and 2017 , respectively.

These revenues are eliminated in consolidation.

Under our accounting policy, we allocate all of the income or losses of these VIEs to Laureate unless there is a noncontrolling interest where the economics of the VIE are shared with a third party.

The income or losses of these VIEs allocated to Laureate represent the earnings after deducting charges related to contractual arrangements with our for-profit entities as described above.

We believe that the income remaining at the VIEs after these charges accretes value to our rights to control these entities.

Laureate's VIEs are generally exempt from income taxes.

As a result, the VIEs generally do not record deferred tax assets or liabilities or recognize any income tax expense in the Consolidated Financial Statements.

No deferred taxes are recognized by the for-profit service companies for the remaining income in these VIEs, as the legal status of these entities generally prevents them from declaring dividends or making distributions to their sponsors.

However, these for-profit service companies record income taxes related to revenues from their contractual arrangements with these VIEs.

Risks in relation to the VIEs

We believe that all of the VIE institutions in the Laureate network are operated in full compliance with local law and that the contractual arrangements with the VIEs are legally enforceable;

however, these VIEs are subject to regulation by various agencies based on the requirements of local jurisdictions.

These agencies, as well as local legislative bodies, review and update laws and regulations as they deem necessary or appropriate.

We cannot predict the form of any laws that may be enacted, or regulations that ultimately may be adopted in the future, or what effects they might have on our business, financial condition, results of operations and cash flows.

If local laws or regulations were to change, if the VIEs were found to be in violation of existing local laws or regulations, or if the regulators were to question the financial sustainability of the VIEs and/or whether the contractual arrangements were at fair value, local government agencies could, among other actions:

revoke the business licenses and/or accreditations of the VIE institutions;

void or restrict related-party transactions, such as the contractual arrangements between Laureate and the VIE institutions;

impose fines that significantly impact business performance or other requirements with which the VIEs may not be able to comply;

require Laureate to change the VIEs' governance structures, such that Laureate would no longer maintain control of the activities of the VIEs;

disallow a transfer of our rights to govern these VIEs, or the entities that possess those rights, to a third party for consideration.

Laureate's ability to conduct our business would be negatively affected if local governments were to carry out any of the aforementioned or other similar actions.

In any such case, Laureate may no longer be able to consolidate the VIEs.

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

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

(in millions)

For the years ended December 31,

Selected Statements of Operations information:

Revenues, by segment:

Depreciation and amortization

Operating income (loss), by segment:

Operating income (loss)

Net income attributable to Laureate Education, Inc.

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

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

(in millions)

For the years ended December 31,

Variable interest entities

Other operations including discontinued operations

Corporate and eliminations

Net income attributable to Laureate Education, Inc.

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

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

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

December 31, 2019

December 31, 2018

(in millions)

Balance Sheets data:

Cash and cash equivalents

Current assets held for sale

Other current assets

Total current assets

Other intangible assets, net

Operating lease right-of-use assets, net

Long-term assets held for sale

Other long-term assets

Current liabilities held for sale

Other current liabilities

Long-term operating leases, less current portion

Long-term liabilities held for sale

Long-term debt and other long-term liabilities

Total liabilities

Total stockholders' equity

Total stockholders' equity attributable to Laureate Education, Inc.

The amounts classified as held-for-sale assets and liabilities at December 31, 2019 in the table above relate to a VIE that is included in our Central America & U.S.

Campuses segment.

The amounts classified as held-for-sale assets and liabilities at December 31, 2018 in the table above relate to VIEs that were included in our Rest of World, Andean, and Central America & U.S.

Campuses segments.

Chile - Higher Education Law

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

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

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

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

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

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

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

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

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

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

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

profit entities.

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

Our continuing evaluation of the impact of the New Law may result in changes to our expectations due to changes in our interpretations of the law, assumptions used, and additional guidance that may be issued.

Business Combinations

10 unchanged sentences

We also evaluate these assets on an interim basis if events or changes in circumstances between annual tests indicate that the assets may be impaired.

For example, during the second quarter of 2020, we recorded an impairment of the indefinite-lived intangible assets that were part of the Chile reporting unit.

We have not made material changes to the methodology used to assess impairment loss on indefinite-lived tradenames during the past three fiscal years.

Our impairment testing in the fourth quarter of 2019 resulted in no impairment of goodwill or indefinite-lived tradenames.

If the estimates and related assumptions used in assessing the recoverability of our goodwill and indefinite-lived tradenames decline, we may be required to record impairment charges for those assets.

2 unchanged sentences

In addition, we make certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of our reporting units.

We have the option of first performing a qualitative assessment (i.e., step zero) before calculating the fair value of the reporting unit (i.e., step one of the two-step fair value-based impairment test).

On January 1, 2020, the Company adopted Accounting Standards Update (ASU) No.

2017-04, Intangibles - Goodwill and Other (Topic 350):

Simplifying the Accounting for Goodwill Impairment.

This ASU requires entities to calculate goodwill impairment as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

Under the updated guidance, the Company continues to have the option of first performing a qualitative goodwill impairment assessment (i.e., step zero) in order to determine if the quantitative impairment test is necessary.

The requirement to perform a qualitative assessment for a reporting unit with a zero or negative carrying amount is eliminated.

A reporting unit is defined as a component of an operating segment for which discrete financial information is available and regularly reviewed by management of the segment.

If we determine on the basis of qualitative factors that the fair value of the reporting unit is more likely than not less than the carrying amount, the two-step impairment test is required.

If we do not perform the qualitative assessment for a reporting unit or determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative two-step fair value-based test is performed.

In the first step, we estimate the fair value of each reporting unit, utilizing a weighted combination of a discounted cash flow analysis and a market multiples analysis.

If the recorded net assets of the reporting unit are less than the reporting unit’s estimated fair value, then there is no goodwill deemed to be impaired.

If the recorded net assets of the reporting unit exceed its estimated fair value, then goodwill is potentially impaired and we perform the second step.

In the second step, we calculate the implied fair value of goodwill by deducting the estimated fair value of all tangible and identifiable intangible net assets of the reporting unit from the estimated fair value of the reporting unit.

If the recorded amount of goodwill exceeds this implied fair value, the difference is recognized as a loss on impairment of assets in the consolidated statements of operations.

Our valuation approach utilizes a weighted combination of a discounted cash flow analysis and a market multiples analysis.

Based on the qualitative assessment, if we determine that it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, the quantitative impairment test is not required.

We estimate the fair value of each reporting unit, and, if the carrying amount of the reporting unit is less than the reporting unit’s estimated fair value, then there is no goodwill impairment.

If the carrying amount of the reporting unit exceeds its estimated fair value, then goodwill is impaired and the difference between the reporting unit's carrying amount and its fair value is recognized as a loss on impairment of assets in the consolidated statements of operations.

We completed our annual impairment testing, and no impairments of goodwill were identified.

Our valuation approach to estimate the fair value of a reporting unit utilizes a weighted combination of a discounted cash flow analysis and a market multiples analysis.

The discounted cash flow analysis relies on historical data and internal estimates, which are developed as a part of our long-range plan process, and includes an estimate of terminal value based on these expected cash flows using the generally accepted Gordon Dividend Growth formula, which derives a valuation using an assumed perpetual annuity based on the reporting unit’s residual cash flows.

4 unchanged sentences

We also evaluate the sensitivity of a change in assumptions related to goodwill impairment, assessing whether a 10% reduction in our estimates of revenue or a 1% increase in our estimated discount rates would result in impairment of goodwill.

Using the current estimated cash flows and discount rates, each reporting unit's estimated fair value exceeds its carrying value by at least 15% in instances where we performed step one of the two-step fair value-based impairment testing.

We have determined that none of our reporting units with material goodwill were at risk of failing the first step of the goodwill impairment test as of December 31, 2019 .

Using the current estimated cash flows and discount rates, each reporting unit's estimated fair value exceeds its carrying value by at least 15% in instances where we performed fair value-based impairment testing.

We have determined that none of our reporting units with material goodwill were at risk of failing the goodwill impairment test as of December 31, 2020.

We completed our IPO on February 6, 2017 at an initial public offering price that was below the expected range, and since then our stock price at times has traded below the initial public offering price.

9 unchanged sentences

and (3) the estimated royalty rates.

During the third quarter of 2020, following the reclassification of several of our subsidiaries as held-for-sale, the Company tested the Laureate tradename for impairment and concluded that the estimated fair value of the Laureate tradename was less than its carrying value.

As a result, the Company recognized an impairment charge of $320.0 million, in accordance with ASC 350-30-35-17.

Additionally, the Company determined that the useful life of the remaining Laureate tradename asset was no longer indefinite and would be amortized over five years, its estimated useful life.

Long-Lived Assets and Finite-Lived Intangible Assets

7 unchanged sentences

If an impairment indicator is present, we evaluate recoverability by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to result from the use and eventual disposition of the assets.

If the assets are determined to be impaired, the impairment recognized is the excess of the carrying amount over the fair value of the assets.

If the assets are determined

to be impaired, the impairment recognized is the excess of the carrying amount over the fair value of the assets.

Fair value is generally determined by the discounted cash flow method.

16 unchanged sentences

These costs are amortized over the period of benefit, which ranges from two to four years.

As of December 31, 2019 and 2018 , the unamortized balances of contract costs were $11.6 million and $7.0 million , respectively.

As of both December 31, 2020 and 2019, the unamortized balances of contract costs were $2.1 million.

At December 31, 2020 and 2019, our total deferred costs were $33.4 million and $39.5 million, respectively, with accumulated amortization of $(15.7) million and $(14.8) million, respectively.

65 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.

What changed 10-K

Item 7. Management’s Discussion and Analysis