LAUREATE EDUCATION, INC. 10-K

Item 8. Financial Statements Report of Management on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. We conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020, based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. Based on our evaluation, we have concluded that our internal control over financial reporting was effective as of December 31, 2020. The effectiveness of our internal control over financial reporting as of December 31, 2020, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein. Date: February 25, 2021 /s/ EILIF SERCK-HANSSEN Eilif Serck-Hanssen President and Chief Executive Officer /s/ JEAN-JACQUES CHARHON Jean-Jacques Charhon Executive Vice President and Chief Financial Officer 92 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Laureate Education, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Laureate Education, Inc. and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Change in Accounting Principle As discussed in Note 10 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 93 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Certain Reserves for Uncertain Tax Positions As described in Notes 2 and 14 to the consolidated financial statements, the Company’s reserves for uncertain tax positions were $385.3 million as of December 31, 2020. A tax position must meet a minimum probability threshold before a financial statement benefit is recognized. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position and having full knowledge of all relevant information . This involves the use of significant estimates and assumptions by management with respect to the potential outcome of positions taken on tax returns that may be reviewed by tax authorities. The principal considerations for our determination that performing procedures relating to certain reserves for uncertain tax positions is a critical audit matter are (i) the significant judgment by management when determining certain reserves for uncertain tax positions, including a high degree of estimation uncertainty when measuring the reserves, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate management’s determination of certain reserves for uncertain tax positions, the technical merits of the tax positions, and the accurate measurement of the tax positions, (ii) the evaluation of audit evidence available to support certain reserves for the uncertain tax positions is complex and resulted in significant auditor judgment as the nature of the evidence is often highly subjective, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the recognition and measurement of certain reserves for uncertain tax positions. These procedures also included, among others (i) testing the information used in the calculation of certain reserves for uncertain tax positions, (ii) testing the calculation of certain reserves for uncertain tax positions, including management’s assessment of the technical merits of tax positions and estimates of the amount of tax benefit expected to be sustained, as well as the likelihood of the possible estimated outcome, and (iii) testing the completeness of management’s assessment of possible outcomes of certain uncertain tax positions. Professionals with specialized skill and knowledge were used to assist in the evaluation of the measurement of certain of the Company’s reserves for uncertain tax positions, including evaluating the reasonableness of management’s assessment of whether certain tax positions are more-likely-than-not of being sustained and the amount of potential benefit to be realized, and the application of relevant tax laws. Impairment Assessment - Laureate Tradename Intangible Asset As described in Notes 2 and 8 to the consolidated financial statements, the Company’s consolidated tradename balance was $225.6 million as of December 31, 2020, which includes the Laureate tradename of $74.5 million. During the third quarter of 2020, the Company announced that it had completed a sale of its operations in Chile and that it had signed agreements to sell its operations in Brazil, Australia and New Zealand, as well as Walden University. Because of these events, management determined that the useful life of the Laureate tradename asset was no longer indefinite and tested the asset for impairment. Management estimated the fair value of the tradename asset using the relief-from-royalty method. As a result of the impairment test, management concluded that the estimated fair value of the Laureate tradename was less than its carrying value by approximately $320.0 million and recorded an impairment charge for that amount. The significant assumptions used in estimating the fair value included: (i) the estimates of revenue projections, including the period of those projections; (ii) the discount rates; and (iii) the estimated royalty rate. The principal considerations for our determination that performing procedures relating to the impairment assessment for the Laureate tradename intangible asset is a critical audit matter are the significant judgment by management when determining that the useful life of the asset was no longer indefinite and determining the fair value of the tradename, which in turn led to a high 94 degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to estimates of revenue projections, including the period of those projections, and the estimated royalty rate. In addition, the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s evaluation of triggering events and relief-from-royalty valuation of the Laureate tradename. These procedures also included, among others, (i) testing management’s process for determining the fair value estimate of the tradename, (ii) evaluating the appropriateness of the relief-from-royalty method, (iii) testing the completeness and accuracy of underlying data used in the valuation, and (iv) evaluating the reasonableness of the significant assumptions used by management related to the estimates of revenue projections, including the period of those projections, and the estimated royalty rate. Evaluating management’s assumptions related to the estimates of revenue projections, including the period of those projections, involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Company’s institutions, (ii) the consistency with external market data, (iii) management’s planned future use of the tradename, and (iv) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the Company’s relief-from-royalty method and evaluating the appropriateness of the estimated royalty rate assumption. /s/ PricewaterhouseCoopers LLP Baltimore, Maryland February 25, 2021 We have served as the Company’s auditor since 2007, which includes periods before the Company became subject to SEC reporting requirements. 95 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Statements of Operations IN THOUSANDS, except per share amounts For the years ended December 31, 2020 2019 2018 Revenues $ 1,024,917 $ 1,212,070 $ 1,144,574 Costs and expenses: Direct costs 802,458 949,471 904,002 General and administrative expenses 199,790 226,331 267,364 Loss on impairment of assets 351,971 248 — Operating (loss) income ( 329,302 ) 36,020 ( 26,792 ) Interest income 2,169 3,294 2,814 Interest expense ( 100,894 ) ( 125,042 ) ( 188,431 ) Loss on debt extinguishment ( 610 ) ( 22,601 ) ( 7,481 ) (Loss) gain on derivatives ( 25,980 ) 8,300 88,476 Other (expense) income, net ( 2,420 ) 8,922 10,598 Foreign currency exchange gain (loss), net 13,474 ( 8,125 ) 695 Loss on disposals of subsidiaries, net ( 7,276 ) ( 20,429 ) — Loss from continuing operations before income taxes and equity in net income of affiliates ( 450,839 ) ( 119,661 ) ( 120,121 ) Income tax benefit (expense) 130,069 ( 31,041 ) ( 71,196 ) Equity in net income of affiliates, net of tax 172 219 — Loss from continuing operations ( 320,598 ) ( 150,483 ) ( 191,317 ) (Loss) income from discontinued operations, net of tax expense of $ 114,257 , $ 33,681 and $ 105,880 , respectively ( 298,104 ) 1,088,147 562,247 Net (loss) income ( 618,702 ) 937,664 370,930 Net loss (income) attributable to noncontrolling interests 5,371 820 ( 863 ) Net (loss) income attributable to Laureate Education, Inc. $ ( 613,331 ) $ 938,484 $ 370,067 Accretion of redeemable noncontrolling interests and equity and, for 2018, Series A convertible redeemable preferred stock $ 149 $ ( 208 ) $ ( 62,825 ) Gain upon conversion of Series A convertible redeemable preferred stock — — 74,110 Net (loss) income available to common stockholders $ ( 613,182 ) $ 938,276 $ 381,352 Basic earnings (loss) per share: Loss from continuing operations $ ( 1.53 ) $ ( 0.68 ) $ ( 0.85 ) (Loss) income from discontinued operations ( 1.40 ) 4.91 2.64 Basic (loss) earnings per share $ ( 2.93 ) $ 4.23 $ 1.79 Diluted earnings (loss) per share: Loss from continuing operations $ ( 1.53 ) $ ( 0.68 ) $ ( 0.91 ) (Loss) income from discontinued operations ( 1.40 ) 4.91 2.64 Diluted (loss) earnings per share $ ( 2.93 ) $ 4.23 $ 1.73 The accompanying notes are an integral part of these consolidated financial statements. 96 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income IN THOUSANDS For the years ended December 31, 2020 2019 2018 Net (loss) income $ ( 618,702 ) $ 937,664 $ 370,930 Other comprehensive income (loss): Foreign currency translation adjustment, net of tax of $ 0 for all years 133,827 42,935 ( 200,006 ) Unrealized (loss) gain on derivative instruments, net of tax of $ 0 for all years — ( 7,950 ) 13,709 Minimum pension liability adjustment, net of tax of $ 0 , $ 0 and $ 144 , respectively ( 1,200 ) 3,596 ( 350 ) Total other comprehensive income (loss) 132,627 38,581 ( 186,647 ) Comprehensive (loss) income ( 486,075 ) 976,245 184,283 Net comprehensive loss (income) attributable to noncontrolling interests 4,739 953 ( 1,355 ) Comprehensive (loss) income attributable to Laureate Education, Inc. $ ( 481,336 ) $ 977,198 $ 182,928 The accompanying notes are an integral part of these consolidated financial statements. 97 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Balance Sheets IN THOUSANDS, except per share amounts December 31, 2020 December 31, 2019 Assets Current assets: Cash and cash equivalents $ 750,147 $ 61,576 Restricted cash 117,151 36,241 Receivables: Accounts and notes receivable 138,738 123,132 Other receivables 49,835 12,394 Allowance for doubtful accounts ( 76,694 ) ( 60,465 ) Receivables, net 111,879 75,061 Income tax receivable 14,564 6,833 Prepaid expenses and other current assets 15,079 29,811 Current assets held for sale 434,966 706,544 Total current assets 1,443,786 916,066 Notes receivable, net 1,321 353 Property and equipment: Land 126,228 135,813 Buildings 351,480 351,232 Furniture, equipment and software 494,079 494,713 Leasehold improvements 121,683 124,429 Construction in-progress 7,254 33,719 Accumulated depreciation and amortization ( 522,240 ) ( 499,276 ) Property and equipment, net 578,484 640,630 Operating lease right-of-use assets, net 462,767 521,764 Land use rights, net 1,548 1,628 Goodwill 574,832 606,483 Tradenames, net 225,573 562,137 Deferred costs, net 17,623 24,704 Deferred income taxes 130,567 49,422 Other assets 51,924 72,251 Long-term assets held for sale 1,482,469 3,100,985 Total assets $ 4,970,894 $ 6,496,423 The accompanying notes are an integral part of these consolidated financial statements. 98 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Balance Sheets (continued) IN THOUSANDS, except per share amounts December 31, 2020 December 31, 2019 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 41,073 $ 63,427 Accrued expenses 95,743 103,591 Accrued compensation and benefits 64,089 100,688 Deferred revenue and student deposits 47,180 54,849 Current portion of operating leases 44,631 42,039 Current portion of long-term debt and finance leases 95,818 48,139 Current portion of due to shareholders of acquired companies — 1,109 Income taxes payable 29,682 14,737 Derivative instruments 17,680 — Other current liabilities 15,109 14,050 Current liabilities held for sale 353,550 602,426 Total current liabilities 804,555 1,045,055 Long-term operating leases, less current portion 474,507 516,979 Long-term debt and finance leases, less current portion 899,898 1,103,302 Deferred compensation 13,425 12,744 Income taxes payable 36,078 47,767 Deferred income taxes 86,368 170,363 Derivative instruments 8,144 — Other long-term liabilities 33,555 31,300 Long-term liabilities held for sale 348,706 752,467 Total liabilities 2,705,236 3,679,977 Redeemable noncontrolling interests and equity 1,724 12,295 Stockholders' equity: Preferred stock, par value $ 0.001 per share – 49,889 shares authorized as of December 31, 2020 and December 31, 2019, no shares issued and outstanding as of December 31, 2020 and December 31, 2019 — — Class A common stock, par value $ 0.004 per share – 700,000 shares authorized, 137,162 shares issued and 115,119 shares outstanding as of December 31, 2020 and 135,583 shares issued and 119,575 outstanding as of December 31, 2019 548 542 Class B common stock, par value $ 0.004 per share – 175,000 shares authorized, 90,792 shares issued and outstanding as of December 31, 2020 and 90,831 shares issued and outstanding as of December 31, 2019 363 363 Additional paid-in capital 3,760,029 3,724,636 (Accumulated deficit) retained earnings ( 176,822 ) 436,509 Accumulated other comprehensive loss ( 941,986 ) ( 1,073,981 ) Treasury stock at cost ( 22,043 shares held at December 31, 2020 and 16,008 shares held at December 31, 2019) ( 365,316 ) ( 271,106 ) Total Laureate Education, Inc. stockholders' equity 2,276,816 2,816,963 Noncontrolling interests ( 12,882 ) ( 12,812 ) Total stockholders' equity 2,263,934 2,804,151 Total liabilities and stockholders' equity $ 4,970,894 $ 6,496,423 The accompanying notes are an integral part of these consolidated financial statements. 99 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity IN THOUSANDS Laureate Education, Inc. Stockholders Class A Common Stock Class B Common Stock Additional paid-in capital (Accumulated deficit) retained earnings Accumulated other comprehensive (loss) income Treasury stock at cost Non-controlling interests Total stockholders' equity Shares Amount Shares Amount Balance at December 31, 2017 55,052 $ 220 132,443 $ 530 $ 3,446,206 $ ( 946,236 ) $ ( 925,556 ) $ — $ 12,118 $ 1,587,282 Adoption of accounting standards — — — — — 45,250 — — — 45,250 Balance at January 1, 2018 55,052 220 132,443 530 3,446,206 ( 900,986 ) ( 925,556 ) — 12,118 1,632,532 Non-cash stock compensation — — — — 10,791 — — — — 10,791 Conversion of Class B shares to Class A shares 15,638 63 ( 15,638 ) ( 63 ) — — — — — — Vesting of restricted stock and restricted stock units, net of shares withheld to satisfy tax withholding 617 3 60 — ( 2,531 ) — — — — ( 2,528 ) Distributions from noncontrolling interest holders — — — — — — — — 334 334 Change in noncontrolling interests — — — — ( 471 ) — — — ( 23,305 ) ( 23,776 ) Accretion of redeemable noncontrolling interests and equity — — — — ( 292 ) — — — — ( 292 ) Accretion of Series A Preferred Stock — — — — ( 61,974 ) — — — — ( 61,974 ) Gain upon conversion of Series A Preferred Stock — — — — 74,110 — — — — 74,110 Reclassification of Series A Preferred Stock upon conversion 36,143 144 — — 237,957 — — — — 238,101 Reclassification of redeemable noncontrolling interests and equity — — — — — — — — ( 635 ) ( 635 ) Net income — — — — — 370,067 — — 863 370,930 Foreign currency translation adjustment, net of tax of $ 0 — — — — — — ( 200,498 ) — 492 ( 200,006 ) Unrealized gain on derivatives, net of tax of $ 0 — — — — — — 13,709 — — 13,709 Minimum pension liability adjustment, net of tax of $ 144 — — — — — — ( 350 ) — — ( 350 ) Balance at December 31, 2018 107,450 $ 430 116,865 $ 467 $ 3,703,796 $ ( 530,919 ) $ ( 1,112,695 ) $ — $ ( 10,133 ) $ 2,050,946 Adoption of accounting standards — — — — — 28,944 — — — 28,944 Balance at January 1, 2019 107,450 430 116,865 467 3,703,796 ( 501,975 ) ( 1,112,695 ) — ( 10,133 ) 2,079,890 Non-cash stock compensation — — — — 12,994 — — — — 12,994 Conversion of Class B shares to Class A shares 26,034 104 ( 26,034 ) ( 104 ) — — — — — — Purchase of treasury stock at cost ( 16,008 ) — — — — — — ( 271,106 ) — ( 271,106 ) Exercise of stock options and vesting of restricted stock and restricted stock units, net of shares withheld to satisfy tax withholding 2,099 8 — — 11,754 — — — — 11,762 Distributions to noncontrolling interest holders — — — — — — — — ( 1,356 ) ( 1,356 ) Change in noncontrolling interests — — — — ( 3,700 ) — — — — ( 3,700 ) Accretion of redeemable noncontrolling interests and equity — — — — ( 208 ) — — — — ( 208 ) Reclassification of redeemable noncontrolling interests and equity — — — — — — — — ( 370 ) ( 370 ) Net income — — — — — 938,484 — — ( 820 ) 937,664 Foreign currency translation adjustment, net of tax of $ 0 — — — — — — 43,068 — ( 133 ) 42,935 Unrealized loss on derivatives, net of tax of $ 0 — — — — — — ( 7,950 ) — — ( 7,950 ) Minimum pension liability adjustment, net of tax of $ 0 — — — — — — 3,596 — — 3,596 Balance at December 31, 2019 119,575 $ 542 90,831 $ 363 $ 3,724,636 $ 436,509 $ ( 1,073,981 ) $ ( 271,106 ) $ ( 12,812 ) $ 2,804,151 The accompanying notes are an integral part of these consolidated financial statements. 100 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity (continued) IN THOUSANDS Laureate Education, Inc. Stockholders Class A Common Stock Class B Common Stock Additional paid-in capital (Accumulated deficit) retained earnings Accumulated other comprehensive (loss) income Treasury stock at cost Non-controlling interests Total stockholders' equity Shares Amount Shares Amount Balance at December 31, 2019 119,575 $ 542 90,831 $ 363 $ 3,724,636 $ 436,509 $ ( 1,073,981 ) $ ( 271,106 ) $ ( 12,812 ) $ 2,804,151 Non-cash stock compensation — — — — 13,298 — — — — 13,298 Conversion of Class B shares to Class A shares 39 — ( 39 ) — — — — — — — Purchase of treasury stock at cost ( 6,035 ) — — — — — — ( 94,210 ) — ( 94,210 ) Exercise of stock options and vesting of restricted stock and restricted stock units, net of shares withheld to satisfy tax withholding 1,540 6 — — 24,556 — — — — 24,562 Change in noncontrolling interests — — — — ( 2,610 ) — — — 3,471 861 Accretion of redeemable noncontrolling interests and equity — — — — 149 — — — — 149 Reclassification of redeemable noncontrolling interests and equity — — — — — — — — 1,198 1,198 Net loss — — — — — ( 613,331 ) — — ( 5,371 ) ( 618,702 ) Foreign currency translation adjustment, net of tax of $ 0 — — — — — — 133,195 — 632 133,827 Minimum pension liability adjustment, net of tax of $ 0 — — — — — — ( 1,200 ) — — ( 1,200 ) Balance at December 31, 2020 115,119 $ 548 90,792 $ 363 $ 3,760,029 $ ( 176,822 ) $ ( 941,986 ) $ ( 365,316 ) $ ( 12,882 ) $ 2,263,934 The accompanying notes are an integral part of these consolidated financial statements. 101 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows IN THOUSANDS For the years ended December 31, 2020 2019 2018 Cash flows from operating activities Net (loss) income $ ( 618,702 ) $ 937,664 $ 370,930 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization expense 143,516 193,356 239,998 Amortization of operating lease right-of-use assets 80,203 122,673 — Loss on impairment of assets 790,229 940 13,110 Gain on sales and disposal of subsidiaries and property and equipment, net ( 22,756 ) ( 753,519 ) ( 292,108 ) Loss (gain) on derivative instruments 25,980 ( 7,438 ) ( 89,143 ) (Payments for) proceeds from settlement of derivative contracts ( 626 ) ( 8,772 ) 14,117 Loss on debt extinguishment 610 28,752 7,481 Non-cash interest expense 17,450 3,535 15,408 Interest paid on deferred purchase price for acquisitions ( 3,969 ) ( 5,305 ) ( 4,463 ) Non-cash share-based compensation expense 13,298 12,994 10,791 Bad debt expense 117,867 100,829 112,440 Deferred income taxes ( 185,652 ) ( 29,813 ) ( 7,474 ) Unrealized foreign currency exchange loss 26,344 29,186 37,796 Non-cash loss from non-income tax contingencies 3,059 9,075 6,839 Other, net 408 ( 5,341 ) ( 10,297 ) Changes in operating assets and liabilities: Receivables ( 323,036 ) ( 163,202 ) ( 83,316 ) Prepaid expenses and other assets ( 28,504 ) ( 42,047 ) ( 39,347 ) Accounts payable and accrued expenses ( 47,200 ) 5,574 ( 7,512 ) Income tax receivable/payable, net 99,563 ( 36,220 ) 48,875 Deferred revenue and other liabilities 171,474 ( 53,152 ) 52,733 Net cash provided by operating activities 259,556 339,769 396,858 Cash flows from investing activities Purchase of property and equipment ( 74,624 ) ( 155,641 ) ( 238,046 ) Expenditures for deferred costs ( 14,538 ) ( 17,701 ) ( 19,866 ) Receipts from sales of discontinued operations, net of cash sold, property and equipment and other 676,569 1,266,042 375,807 Settlement of derivatives related to sale of discontinued operations and net investment hedge — 12,866 ( 9,960 ) Proceeds from property insurance recoveries and corporate-owned life insurance — 842 27,356 Business acquisitions, net of cash acquired — ( 1,205 ) ( 17,019 ) Payments (to) from related parties and investments in affiliates ( 7 ) 84 ( 2,778 ) Proceeds from sale of investment — 11,473 — Net cash provided by investing activities 587,400 1,116,760 115,494 Cash flows from financing activities Proceeds from issuance of long-term debt, net of original issue discount 528,382 1,123,179 485,470 Payments on long-term debt ( 705,353 ) ( 2,507,790 ) ( 867,915 ) Payments of deferred purchase price for acquisitions ( 5,680 ) ( 20,157 ) ( 13,650 ) Payments to purchase noncontrolling interests ( 13,716 ) ( 5,761 ) ( 127 ) Payment of dividends on Series A Preferred Stock and to noncontrolling interests — — ( 11,103 ) Proceeds from exercise of stock options 25,716 14,007 — Payments to repurchase common stock ( 99,523 ) ( 264,093 ) — Withholding of shares to satisfy tax withholding for vested stock awards and exercised stock options ( 1,154 ) ( 2,245 ) ( 2,528 ) Payments of debt issuance costs ( 779 ) ( 9,091 ) ( 587 ) Distributions (to) from noncontrolling interest holders ( 609 ) ( 2,026 ) 311 Net cash used in financing activities ( 272,716 ) ( 1,673,977 ) ( 410,129 ) Effects of exchange rate changes on Cash and cash equivalents and Restricted cash ( 546 ) 5,070 8,998 Change in cash included in current assets held for sale 195,787 184,578 ( 109,546 ) Net change in Cash and cash equivalents and Restricted cash 769,481 ( 27,800 ) 1,675 Cash and cash equivalents and Restricted cash at beginning of period 97,817 125,617 123,942 Cash and cash equivalents and Restricted cash at end of period $ 867,298 $ 97,817 $ 125,617 The accompanying notes are an integral part of these consolidated financial statements. 102 Laureate Education, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Dollars and shares in thousands) Note 1. Description of Business Laureate Education, Inc. and subsidiaries (hereinafter Laureate, we, us, our, or the Company) provide higher education programs and services to students through licensed universities and higher education institutions (institutions). Laureate's programs are provided through institutions that are campus-based and internet-based, or through electronically distributed educational programs (online). In response to the COVID-19 pandemic, we have temporarily transitioned the educational delivery method at all of our campus-based institutions to be online and are leveraging our existing technologies and learning platforms to serve students outside the traditional classroom setting. We are domiciled in Delaware as a public benefit corporation, a demonstration of our long-term commitment to our mission to benefit our students and society. The Company completed its initial public offering (IPO) on February 6, 2017 and its shares are listed on the Nasdaq Global Select Market under the symbol ‘‘LAUR.’’ Discontinued Operations 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. The sale of Australia and New Zealand was completed on November 3, 2020 . 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. See Note 4, Discontinued Operations and Assets Held for Sale, and Note 6, Dispositions, for more information. Unless indicated otherwise, the information in the footnotes to the Consolidated Financial Statements relates to Continuing Operations. Note 2. Significant Accounting Policies The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States (GAAP) requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates. Principles of Consolidation and Investments in Affiliates General Our Consolidated Financial Statements include all accounts of Laureate, our majority-owned subsidiaries, and an educational institution that is part of our network and, although not owned by Laureate, is a variable interest entity (VIE) pursuant to ASC Topic 810-10, "Consolidation." As of December 31, 2020, the Laureate network includes one VIE institution in Honduras, which is a discontinued operation. Laureate has determined it is the “primary beneficiary” of this VIE, as such term is defined 103 in ASC 810-10-20, and has consolidated the financial results of operations, assets and liabilities, and cash flows of this VIE in the Company's Consolidated Financial Statements. Intercompany accounts and transactions have been eliminated in consolidation. Noncontrolling Interests A noncontrolling interest is the portion of a subsidiary that is not attributable to us either directly or indirectly. A noncontrolling interest can also be referred to as a minority interest. We recognize noncontrolling interest holders’ share of equity and net income or loss separately in Noncontrolling interests in the Consolidated Balance Sheets and Net loss (income) attributable to noncontrolling interests in the Consolidated Statements of Operations. Affiliates When Laureate exercises significant influence over an affiliated entity, but does not control the entity, we account for our investments using the equity method of accounting. Significant influence occurs generally through ownership, directly or indirectly, of at least 20% and up to 50% of the voting interests. Under the equity method of accounting, Laureate records the proportionate share of these investments in Other assets in the Consolidated Balance Sheets. Our proportionate share of income or loss related to these investments is recorded in Equity in net income of affiliates, net of tax, in the Consolidated Statements of Operations. Business Combinations Laureate accounts for business combinations as prescribed by ASC 805, “Business Combinations.” When we complete a business combination, all tangible and identifiable intangible assets acquired and all liabilities assumed are recorded at fair value. Any excess purchase price is recorded as goodwill. Transaction costs associated with business combinations are expensed as incurred. If Laureate acquires less than 100% of an entity (a partial acquisition) and consolidates the entity upon acquisition, all assets and liabilities, including noncontrolling interests, are recorded at their estimated fair value. When a partial acquisition results in Laureate obtaining control of an entity, Laureate remeasures any previously existing investment in the entity at fair value and records a gain or loss. Partial acquisitions in which Laureate’s control does not change are accounted for as equity transactions. Revenues and the results of operations of the acquired business are included in the accompanying Consolidated Financial Statements commencing on the date of acquisition. Laureate accounts for acquired businesses using the acquisition method of accounting. Certain acquisitions require the payment of contingent amounts of purchase consideration if specified operating results are achieved in periods subsequent to the acquisition date. For acquisitions consummated on or after January 1, 2009, we record such contingent consideration at fair value on the acquisition date, with subsequent adjustments recognized in Direct costs in our Consolidated Statements of Operations. Cash payments of contingent consideration that are made soon after the consummation of a business combination are classified within investing activities. Cash payments of contingent consideration that are made later than that are classified within financing and operating activities. The portion of the cash payment up to the acquisition date fair value of the contingent consideration liability (including any measurement-period adjustments) will be classified as a financing outflow, and amounts paid in excess of the acquisition date fair value of that liability will be classified as an operating outflow. Laureate generally obtains indemnification from the sellers of the higher education institutions upon acquisition for various contingent liabilities that may arise and are related to pre-acquisition events in order to protect itself from economic losses arising from such exposures. At the date of acquisition, we recognize an indemnification asset at the same time and on the same basis as the related indemnified item, subject to any contractual limitations and to the extent that collection is reasonably assured, in accordance with ASC 805. When indemnified, subsequent changes in the indemnified item are offset by changes in the indemnification asset. We assess the realizability of the indemnification assets each reporting period. The Company records changes in uncertain income tax positions as a component of Income tax expense, while related changes to the indemnification asset are included in Operating income in the Consolidated Statements of Operations. Changes in the principal portion of non-income tax contingencies, as well as changes in any related indemnification asset, are included in Operating income. Foreign Currency Translation and Transaction Gains and Losses The United States Dollar (USD) is the functional currency of Laureate and our subsidiaries operating in the United States. Our subsidiaries’ financial statements are maintained in their functional currencies. The functional currency of each of our foreign 104 subsidiaries is the currency of the economic environment in which the subsidiary primarily does business. Our foreign subsidiaries’ financial statements are translated into USD using the exchange rates applicable to the dates of the financial statements. Assets and liabilities are translated into USD using the period-end spot foreign exchange rates. Income and expenses are translated at the weighted-average exchange rates in effect during the period. Equity accounts are translated at historical exchange rates. The effects of these translation adjustments are reported as a component of Accumulated other comprehensive income (loss) included in the Consolidated Statements of Stockholders’ Equity. Laureate has certain intercompany loans that are deemed to have the characteristics of a long-term investment. That is, the settlement of the intercompany loan is not planned or anticipated in the foreseeable future. Transaction gains and losses related to these types of loans are recorded as a component of Accumulated other comprehensive income (loss) included in the Consolidated Statements of Stockholders’ Equity. Transaction gains and losses related to all other intercompany loans are included in Foreign currency exchange gain (loss), net in the Consolidated Statements of Operations. For any transaction that is in a currency different from the entity’s functional currency, Laureate records a gain or loss based on the difference between the exchange rate at the transaction date and the exchange rate at the transaction settlement date (or rate at period end, if unsettled) as Foreign currency exchange gain (loss), net in the Consolidated Statements of Operations. Cash and Cash Equivalents Laureate considers all highly liquid investments that are purchased with an original maturity of three months or less to be cash equivalents. Restricted Cash Restricted cash includes cash equivalents held to collateralize standby letters of credit. In addition, Laureate may at times have restricted cash in escrow, hold a United States deposit for a letter of credit in lieu of a surety bond, or otherwise have cash that is not immediately available for use in current operations. Laureate’s United States institution, Walden University (Walden), participates in the United States Department of Education (DOE) Title IV student financing assistance lending programs (Title IV programs). A letter of credit is required by the DOE in order to allow Walden to participate in the Title IV program. 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. Financial Instruments Laureate’s financial instruments consist of cash and cash equivalents, restricted cash, accounts and notes receivable, other receivables, accounts payable, derivative instruments, debt, and operating and finance lease obligations. The fair value of these financial instruments approximates their carrying amounts reported in the Consolidated Balance Sheets with the exception of debt, as discussed in Note 9, Debt. Additional information about fair value is provided in Note 19, Fair Value Measurement. Our cash accounts are maintained with high-quality financial institutions with no significant concentration in any one institution. Our accounts receivable are not concentrated with any one significant customer. Accounts and Notes Receivable We recognize student receivables when an academic session begins, although students generally enroll in courses prior to the start of the academic session. Receivables are recognized only to the extent that it is probable that we will collect substantially all of the consideration to which we are entitled in exchange for the goods and services that will be transferred to the student. Laureate offers long-term financing through note receivable agreements with students at certain of our institutions. These notes receivable generally are not collateralized. Non-interest bearing, long-term student receivables are recorded at present value using a discount rate approximating the unsecured borrowing rate for an individual. Differences between the present value and the principal amount of long-term student receivables are accreted through Interest income over their terms. Occasionally, certain of our institutions have sold certain long-term student receivables to local financial institutions without recourse. These transactions were deemed sales of receivables and the receivables were derecognized from our Consolidated Balance Sheets. 105 Allowance for Doubtful Accounts Receivables are deemed to be uncollectible when they have been outstanding for two years , or earlier when collection efforts have ceased, at which time they are written off. Prior to that, Laureate records an allowance for doubtful accounts to reduce our receivables to their net realizable value. Our allowance estimation methodology is based on the age of the receivables, the status of past-due amounts, historical collection trends, current economic conditions and student enrollment status. In the event that current collection trends differ from historical trends, an adjustment is made to the allowance account and bad debt expense. The reconciliations of the beginning and ending balances of the Allowance for doubtful accounts were as follows: For the years ended December 31, 2020 2019 2018 Balance at beginning of period $ 60,465 $ 43,491 $ 39,176 Additions: charges to bad debt expense 44,707 20,324 23,107 Deductions (a) ( 28,478 ) ( 3,350 ) ( 18,792 ) Balance at end of period $ 76,694 $ 60,465 $ 43,491 (a) Deductions include accounts receivable written off against the allowance (net of recoveries), reclassifications, and foreign currency translation. The beginning and ending balances of the Allowance for doubtful accounts include the current portion, as shown on the face of Consolidated Balance Sheets, in addition to the noncurrent portion that is included in Notes receivable, net on the Consolidated Balance Sheets. Property and Equipment, and Leased Assets Property and equipment includes land, buildings, furniture, equipment, software, library books, leasehold improvements, and construction in-progress. We record property and equipment at cost less accumulated depreciation and amortization. Software that is developed for internal use is classified within the line item titled Furniture, equipment and software in our Consolidated Balance Sheets. Repairs and maintenance costs are expensed as incurred. Assets under construction are recorded in Construction in-progress until they are available for use. Interest is capitalized as a component of the cost of projects during the construction period. We conduct a significant portion of our operations at leased facilities. These facilities include our corporate headquarters, other office locations, and many of Laureate’s higher education facilities. Laureate analyzes each lease agreement to determine whether it should be classified as a finance lease or an operating lease. For operating leases, right-of-use (ROU) assets and lease liabilities are recognized at the commencement date of the lease based on the estimated present value of lease payments over the lease term. For finance leases, we initially record the assets and lease liabilities at the present value of the future minimum lease payments. As most of the Company’s leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The significant assumption used in estimating the present value of the lease payments is the incremental borrowing rate. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements, including structural improvements, are amortized using the straight-line method over the lesser of the estimated useful life of the asset or the lease term, including reasonably-assured renewals or purchase options that are considered likely to be exercised. Laureate includes the amortization of assets recorded under finance leases within depreciation expense. Assets under finance leases are typically amortized over the related lease term using the straight-line method. We recognize operating lease rent expense on a straight-line basis over the lease term. Depreciation and amortization periods are as follows: Buildings 10 - 50 years Furniture, equipment and software 2 - 10 years Leasehold improvements 2 - 25 years 106 Direct and Deferred Costs Direct costs reported on the Consolidated Statements of Operations represent the cost of operations, including selling and administrative expenses, which are directly attributable to specific business units. Deferred costs on the Consolidated Balance Sheets consist primarily of direct costs associated with online course development, accreditation and costs to obtain a contract. Deferred costs associated with the development of online educational programs are capitalized after technological feasibility has been established. Deferred online course development costs are amortized to Direct costs on a straight-line basis over the estimated period that the associated products are expected to generate revenues. Deferred online course development costs are evaluated on a quarterly basis through review of the corresponding course catalog. If a course is no longer listed or offered in the current course catalog, then the costs associated with its development are written off. As of December 31, 2020 and 2019, the unamortized balances of online course development costs were $ 15,258 and $ 22,326 , respectively. Laureate defers direct and incremental third-party costs incurred for obtaining initial accreditation and for the renewal of accreditations. These accreditation costs are amortized to Direct costs over the life of the accreditation on a straight-line basis. As of December 31, 2020 and 2019, the unamortized balances of accreditation costs were $ 241 and $ 287 , respectively. As discussed in Note 3, Revenue, Laureate also defers certain commissions and bonuses earned by third party agents and our employees that are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are amortized over the period of benefit which ranges from two to four years . As of December 31, 2020 and 2019, the unamortized balances of contract costs were $ 2,124 and $ 2,091 , respectively. At December 31, 2020 and 2019, Laureate’s total Deferred costs were $ 33,361 and $ 39,465 , respectively, with accumulated amortization of $( 15,738 ) and $( 14,761 ), respectively. Debt Issuance Costs Debt issuance costs were paid as a result of certain debt transactions and are presented as a deduction from debt. These debt issuance costs are amortized over the term of the associated debt instruments. The amortization expense is recognized as a component of Interest expense in the Consolidated Statements of Operations. As of December 31, 2020 and 2019, the unamortized balances of deferred financing costs were $ 53,292 and $ 62,911 , respectively. Goodwill, Other Intangible Assets and Long-lived Assets Goodwill Goodwill primarily represents the amounts paid by Wengen Alberta, Limited Partnership (Wengen), the Company's controlling stockholder, in excess of the fair value of the net assets acquired in the August 2007 leveraged buyout transaction (LBO) (see Note 8, Goodwill and Other Intangible Assets), plus the excess purchase price over fair value of net assets for businesses acquired after the LBO transaction. Goodwill is evaluated annually as of October 1st each year for impairment at the reporting unit level, in accordance with ASC 350, “Intangibles - Goodwill and Other.” We also evaluate goodwill for impairment on an interim basis if events or changes in circumstances between annual tests indicate that the asset may be impaired. For example, during the second quarter of 2020, we recorded an impairment of the goodwill that was part of the Chile reporting unit, as disclosed in Note 4, Discontinued Operations and Assets Held for Sale. Goodwill is impaired when the carrying amount of a reporting unit’s goodwill exceeds its implied fair value. 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. 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. 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. 107 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 fair value-based test is performed. 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. The discount rate is based on the generally accepted Weighted Average Cost of Capital methodology, and is derived using a cost of equity based on the generally accepted Capital Asset Pricing Model and a cost of debt based on the typical rate paid by market participants. The market multiples analysis utilizes multiples of business enterprise value to revenues, operating income and earnings before interest, taxes, depreciation and amortization of comparable publicly traded companies and multiples based on fair value transactions where public information is available. Significant assumptions used in estimating the fair value of each reporting unit include: (1) the revenue and profitability growth rates and (2) the discount rate. Other Intangible Assets Other intangible assets on the Consolidated Balance Sheets include acquired indefinite-lived tradenames, which are valued using the relief-from-royalty method. This method estimates the amount of royalty expense that we would expect to incur if the assets were licensed from a third party. We use publicly available information in determining certain assumptions to assist us in estimating fair value using market participant assumptions. Any costs incurred to internally develop new tradenames are expensed as incurred. Accreditations are not considered a separate unit of account and their values are embedded in the cash flows generated by the institution, which are used to value its tradename. The Company does not believe accreditations have significant value on their own due to the fact that they are neither exclusive nor scarce, and the direct costs associated with obtaining accreditations are not material. Other intangible assets also include the Laureate tradename, which during the third quarter of 2020 was determined to no longer have an indefinite life and is being amortized over a five-year useful life. Indefinite-lived tradenames are evaluated annually as of October 1st each year for impairment as well as on an interim basis if events or changes in circumstances between annual tests indicate that the asset may be impaired. The impairment test for indefinite-lived intangible assets generally requires a new determination of the fair value of the intangible asset using the relief-from-royalty method. If the fair value of the intangible asset is less than its carrying value, the intangible asset is adjusted to its new estimated fair value, and an impairment loss is recognized. Significant assumptions used in estimating the fair value of indefinite-lived tradenames include: (1) the revenue growth rates; (2) the discount rates; and (3) the estimated royalty rates. Long-lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be fully recoverable. These events or changes in circumstances may include, but are not limited to, a significant deterioration of operating results, a change in regulatory environment, changes in business plans, or adverse changes in anticipated future cash flows. 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. Fair value is generally determined by the discounted cash flow method. The discount rate used in any estimate of discounted cash flows is the rate commensurate with a similar investment of similar risk. Derivative Instruments In the normal course of business, our operations have significant exposure to fluctuations in foreign currency values and interest rate changes. Accordingly, Laureate mitigates a portion of these risks through a risk-management program that includes the use of derivative financial instruments (derivatives). Laureate selectively enters into foreign exchange forward contracts to reduce the earnings impact related to receivables and payables that are denominated in foreign currencies. In addition, in certain cases Laureate uses interest rate swaps to mitigate certain risks associated with floating-rate debt arrangements. We do not engage in speculative or leveraged transactions, nor do we hold or issue derivatives for trading purposes. Laureate reports all derivatives 108 on our Consolidated Balance Sheets at fair value, including any identified embedded derivatives. Realized and unrealized gains and/or losses resulting from derivatives are recognized in our Consolidated Statements of Operations, unless designated and effective as a hedge. For derivatives that are both designated and effective as cash flow hedges, gains or losses associated with the change in fair value of the derivatives are recognized on our Consolidated Balance Sheets as a component of Accumulated other comprehensive income (loss) and amortized over the term of the related hedged items. For derivatives that are both designated and effective as net investment hedges, gains or losses associated with the change in fair value of the derivatives are recognized on our Consolidated Balance Sheets as a component of Accumulated other comprehensive income (loss). Revenue Recognition Laureate's revenues primarily consist of tuition and educational service revenues. We also generate other revenues from student fees, dormitory/residency fees and other education-related activities. These other revenues are less material to our overall financial results and have a tendency to trend with tuition revenues. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. These revenues are recognized net of scholarships and other discounts, refunds, waivers and the fair value of any guarantees made by Laureate related to student financing programs. For further description, see Note 3, Revenue. Advertising Laureate expenses advertising costs as incurred. Advertising expenses were $ 45,318 , $ 53,819 and $ 52,537 for the years ended December 31, 2020, 2019 and 2018, respectively, and are recorded in Direct costs in our Consolidated Statements of Operations. Share-based Compensation Share-based compensation expense is based on the grant-date fair value estimated in accordance with the provisions of ASC 718, “Compensation – Stock Compensation.” Laureate recognizes share-based compensation expense, less estimated forfeitures, on a straight-line basis over the requisite service period for time based awards and graded vesting basis for performance-based awards. Laureate estimates forfeitures based on historical activity, expected employee turnover, and other qualitative factors which are adjusted for changes in estimates and award vesting. All expenses for an award will be recognized by the time it becomes fully vested. We use the Black-Scholes-Merton option pricing model to calculate the fair value of stock options. This option valuation model requires the use of subjective assumptions, including the estimated fair value of the underlying common stock, the expected stock price volatility, and the expected term of the option. Prior to the IPO, the estimated fair value of the underlying common stock was based on third-party valuations. After our IPO, the estimated fair value of the underlying common stock is based on the closing price of our Class A common stock on the grant date. Because we have only been publicly traded since February 2017, our volatility estimates are based on an average of: (1) a peer group of companies and (2) Laureate's historical volatility. We estimate the expected term of awards to be the weighted average mid-point between the vesting date and the end of the contractual term. We use this method to estimate the expected term because we do not have sufficient historical exercise data. Laureate has granted restricted stock, restricted stock units, stock options, and performance awards for which the vesting is based on annual performance metrics of the Company. For interim periods, we use our year-to-date actual results, financial forecasts, and other available information to estimate the probability of the award vesting based on the performance metrics. The related compensation expense recognized is affected by our estimates of the vesting probability of these performance awards. In one case, Laureate granted a small number of restricted stock units where vesting is based on the fulfillment of both a service condition and a market condition; a Monte Carlo simulation method was used to estimate the grant date fair value these awards. 109 Income Taxes Laureate records the amount of taxes payable or refundable for the current year. Deferred income tax assets and liabilities are recorded with respect to temporary differences in the accounting treatment of items for GAAP financial reporting purposes and for income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period in which the new rate is enacted. Where, based on the weight of all available evidence, it is more likely than not that some portion of recorded deferred tax assets will not be realized, a valuation allowance is established for the amount that, in management's judgment, is sufficient to reduce the deferred tax asset to an amount that is more likely than not to be realized. A tax position must meet a minimum probability threshold before a financial statement benefit is recognized. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position and having full knowledge of all relevant information. This involves the use of significant estimates and assumptions by management with respect to the potential outcome of positions taken on tax returns that may be reviewed by tax authorities. We earn a significant portion of our income from subsidiaries located in countries outside the United States. For all Continuing Operations except one institution in Peru, deferred tax liabilities have not been recognized for undistributed foreign earnings because management believes that the earnings will be indefinitely reinvested outside the United States under the Company's planned tax neutral methods. Our assertion that earnings from our foreign operations will be indefinitely reinvested is supported by projected working capital and long-term capital plans in each foreign subsidiary location in which the earnings are generated. Additionally, we believe that we have the ability to indefinitely reinvest foreign earnings based on our domestic operation's cash repatriation strategies, projected cash flows, projected working capital and liquidity, and the expected availability of capital within the debt or equity markets. If our expectations change based on future developments, including as a result of the announcement on January 27, 2020 to explore strategic alternatives, such that some or all of the undistributed earnings of our foreign subsidiaries may be remitted to the United States in the foreseeable future, we will be required to recognize deferred tax expense and liabilities on those amounts. For Peru, we have recognized deferred tax liabilities of approximately $ 100 for the portion of the undistributed foreign earnings that are not expected to be indefinitely reinvested outside the United States. For additional information regarding income taxes and deferred tax assets and liabilities, see Note 14, Income Taxes. Contingencies Laureate accrues for contingent obligations when it is probable that a liability has been incurred and the amount or range of amounts is reasonably estimable. As new facts become known to management, the assumptions related to a contingency are reviewed and adjustments are made, as necessary. Any legal costs incurred related to contingencies are expensed as incurred. COVID-19 The outbreak of COVID-19 has caused domestic and global disruption in operations for institutions of higher education. The long-term effect to the Company of the COVID-19 pandemic depends on numerous factors, including, but not limited to, the effect on student enrollment, tuition pricing, and collections in future periods, which cannot be fully quantified at this time. As of December 31, 2020 and through the date of this Form 10-K, the Company evaluated its accounting estimates that require consideration of forecasted financial information, based on current information reasonably available to us. The forecast also includes certain estimates and assumptions around macroeconomic conditions and the timing of campuses reopening. While this evaluation did not result in a material effect to the Company’s Consolidated Financial Statements as of and for the year ended December 31, 2020, future evaluations could result in a material effect, including potential impairments, depending on the eventual impact to the Company of the COVID-19 pandemic and its effect on student enrollment, tuition pricing, and collections in future periods. 110 Recently Adopted Accounting Standards ASU No. 2016-13 (ASU 2016-13), Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, which sets forth a “current expected credit loss” (CECL) model and requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. ASU 2016-13 applies to financial instruments that are not measured at fair value, including receivables that result from revenue transactions. This ASU was effective for Laureate beginning on January 1, 2020 and did not have a material impact on our Consolidated Financial Statements. Laureate adopted this ASU using the modified retrospective transition method. Under this transition method, the new standard is applied from January 1, 2020 without restatement of comparative period amounts. No adjustment was recorded to retained earnings for the cumulative effect of adopting this ASU on January 1, 2020. Results for reporting periods beginning after January 1, 2020 are presented under Topic 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. ASU No. 2017-04 (ASU 2017-04), Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU 2017-04 in order to simplify the test for goodwill impairment by eliminating Step 2, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. Under the amendments in this ASU, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU was effective for Laureate beginning on January 1, 2020, and the adoption of this guidance did not have a material impact on our Consolidated Financial Statements. Note 3. Revenue Revenue Recognition Laureate's revenues primarily consist of tuition and educational service revenues. We also generate other revenues from student fees, dormitory/residency fees and other education-related activities. These other revenues are less material to our overall financial results and have a tendency to trend with tuition revenues. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. These revenues are recognized net of scholarships and other discounts, refunds, waivers and the fair value of any guarantees made by Laureate related to student financing programs. Laureate's institutions have various billing and academic cycles. We adopted ASC Topic 606, “Revenue from Contracts with Customers” (Topic 606) as of January 1, 2018 using the modified retrospective transition method and elected to apply the standard only to contracts that were not completed as of that date. We recorded a net increase to opening retained earnings of approximately $ 1,400 as of January 1, 2018 due to the cumulative impact of adopting Topic 606, with the impact primarily related to the deferral of costs to obtain a contract which were previously expenses as incurred. We determine revenue recognition through the five-step model prescribed by Topic 606 , as follows: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, we satisfy a performance obligation. We assess collectibility on a portfolio basis prior to recording revenue. Generally, students cannot re-enroll for the next academic session without satisfactory resolution of any past-due amounts. If a student withdraws from an institution, Laureate's obligation to issue a refund depends on the refund policy at that institution and the timing of the student's withdrawal. Generally, our refund obligations are reduced over the course of the academic term. We record refunds as a reduction of deferred revenue as applicable. 111 The following table shows the components of Revenues by reportable segment and as a percentage of total net revenue for the years ended December 31, 2020, 2019 and 2018: Mexico Peru Corporate (1) Total 2020 Tuition and educational services $ 634,956 $ 482,977 $ — $ 1,117,933 109 % Other 81,764 41,869 7,432 131,065 13 % Gross revenue 716,720 524,846 7,432 1,248,998 122 % Less: Discounts / waivers / scholarships ( 182,113 ) ( 41,968 ) — ( 224,081 ) ( 22 ) % Total $ 534,607 $ 482,878 $ 7,432 $ 1,024,917 100 % 2019 Tuition and educational services $ 715,817 $ 526,112 $ — $ 1,241,929 102 % Other 101,224 54,020 12,473 167,717 14 % Gross revenue 817,041 580,132 12,473 1,409,646 116 % Less: Discounts / waivers / scholarships ( 164,195 ) ( 33,381 ) — ( 197,576 ) ( 16 ) % Total $ 652,846 $ 546,751 $ 12,473 $ 1,212,070 100 % 2018 Tuition and educational services $ 701,223 $ 472,754 $ — $ 1,173,977 103 % Other 99,015 51,485 2,072 152,572 13 % Gross revenue 800,238 524,239 2,072 1,326,549 116 % Less: Discounts / waivers / scholarships ( 154,104 ) ( 27,871 ) — ( 181,975 ) ( 16 ) % Total $ 646,134 $ 496,368 $ 2,072 $ 1,144,574 100 % (1) Includes the elimination of intersegment revenues. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting in Topic 606. A contract’s transaction price is allocated to each performance obligation identified in the arrangement based on the relative standalone selling price of each distinct good or service in the contract and recognized as revenue when, or as, the performance obligation is satisfied. The primary method used to estimate standalone selling price is the adjusted market assessment approach, under which we evaluate the market and estimate the price that a customer would be willing to pay for the goods and services we provide. Our performance obligations are primarily satisfied over time during the course of an academic semester or academic year. Laureate's transaction price is determined based on gross price, net of scholarships and other discounts, refunds, waivers and the fair value of any guarantees made by Laureate related to student financing programs. The majority of our revenue is derived from tuition and educational services agreements with students, and thus, is recognized over time on a weekly straight-line basis over each academic session. We view the knowledge gained by the student as the benefit which the student receives during the academic sessions. We use the output method to recognize tuition and educational services revenue as this method faithfully depicts our performance toward complete satisfaction of the performance obligation. Dormitory/residency revenues, which are included in the Other line item in the table above, are recognized over time throughout the occupancy period using the output method based on the proportional period of time elapsed which faithfully depicts our performance toward complete satisfaction of the performance obligation. We have elected the optional exemption to not disclose amounts where the performance obligation is part of a contract that has an original expected duration of one year or less. We expect to recognize substantially all revenue on these remaining performance obligations over the next 12 months. 112 Contract Balances The timing of billings, cash collections and revenue recognition results in accounts receivable (contract assets) and deferred revenue and student deposits (contract liabilities) on the Consolidated Balance Sheets. We have various billing and academic cycles and recognize student receivables when an academic session begins, although students generally enroll in courses prior to the start of the academic session. Receivables are recognized only to the extent that it is probable that we will collect substantially all of the consideration to which we are entitled in exchange for the goods and services that will be transferred to the student. We receive advance payments or deposits from our students before revenue is recognized, which are recorded as contract liabilities in deferred revenue and student deposits. Payment terms vary by university with some universities requiring payment in advance of the academic session and other universities allowing students to pay in installments over the term of the academic session. All of our contract assets are considered accounts receivable and are included within the Accounts and notes receivable balance in the accompanying Consolidated Balance Sheets. Total accounts receivable from our contracts with students were $ 138,738 and $ 123,132 a s of December 31, 2020 and 2019, respectively. All contract asset amounts are classified as current. Contract liabilities in the amount of $ 47,180 and $ 54,849 w ere included within the Deferred revenue and student deposits balance in the current liabilities section of the accompanying Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively. Substantially all of the contract liability balance at the beginning of the year was recognized into revenue during the year ended December 31, 2020. Costs to Obtain a Contract Certain commissions and bonuses earned by third party agents and our employees are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized over the period of benefit which ranges from two to four years . We determined the expected period of benefit, by university, as the expected student enrollment period. As of December 31, 2020 and 2019, the asset balances were approximately $ 4,000 and $ 3,000 , respectively, and the accumulated amortization balances were approximately $ 1,900 and $ 900 , respectively, both of which are included in Deferred costs, net, in the accompanying Consolidated Balance Sheets. The associated operating costs of approximately $ 1,100 and $ 700 , respectively, were recorded in Direct costs in the accompanying Consolidated Statement of Operations for the years ended December 31, 2020 and 2019. We also pay certain commissions and bonuses where the period of benefit is one year or less . We have elected the practical expedient available in ASC 340-40 whereby any incremental costs of obtaining a contract are recognized as an expense when incurred if the amortization period of the asset that would have been recognized is one year or less . Practical Expedients and Optional Exemptions We elected to adopt this standard using the modified retrospective approach with the cumulative effect of adoption recognized at the initial date of application. We have elected to apply the standard only to contracts that are not completed at the initial date of application. As noted above, we recognize the incremental costs of obtaining a contract with a student as an expense when incurred in instances where the amortization period of the asset that we would have recognized is one year or less . We have made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by governmental authorities that are both imposed on and concurrent with specific revenue-producing transactions and collected by the entity from our customers (e.g., sales, use, value added and excise taxes). 113 Note 4. Discontinued Operations and Assets Held for Sale As discussed in Note 1, Description of Business, the Company's remaining principal markets are Mexico and Peru (the Continuing Operations). All remaining markets are being divested (the Discontinued Operations). As described in Note 6, Dispositions, a number of sale transactions closed during 2020, 2019 and 2018. In the tables below, certain classification changes have been made to the prior year amounts in order to conform to the current year presentation. On the Consolidated Statements of Operations, the results from the Discontinued Operations, which in prior periods were presented in two lines, have been combined into one line called (Loss) income from discontinued operations, net of tax, for all periods presented. Summarized operating results and cash flows of the Discontinued Operations are presented in the following table: For the years ended December 31, 2020 2019 2018 Revenues $ 1,674,602 $ 2,539,995 $ 3,075,320 Depreciation and amortization expense ( 60,378 ) ( 111,376 ) ( 155,430 ) Share-based compensation expense ( 3,050 ) ( 2,669 ) ( 4,217 ) Other direct costs ( 1,313,258 ) ( 2,026,187 ) ( 2,436,416 ) Loss on impairment of assets ( 438,258 ) ( 691 ) ( 13,112 ) Other non-operating expense ( 68,553 ) ( 70,719 ) ( 91,132 ) Gain on sale of discontinued operations before taxes, net 25,048 793,475 293,114 Pretax (loss) income of discontinued operations ( 183,847 ) 1,121,828 668,127 Income tax expense ( 114,257 ) ( 33,681 ) ( 105,880 ) (Loss) income from discontinued operations, net of tax $ ( 298,104 ) $ 1,088,147 $ 562,247 Operating cash flows of discontinued operations $ 288,271 $ 315,406 $ 396,042 Investing cash flows of discontinued operations $ ( 48,428 ) $ ( 99,725 ) $ ( 169,082 ) Financing cash flows of discontinued operations $ ( 969 ) $ ( 103,583 ) $ ( 61,622 ) 2020 Impairments and Losses Recognized on Held-For-Sale Disposal Groups Chile As described in Note 1, Description of Business, the Company is exploring strategic alternatives for each of its businesses and, as part of that process, the Company is evaluating all potential options for its remaining businesses, including sales, spin-offs or business combinations. During the second quarter of 2020, the Company received and considered information regarding the market valuation for control of its Chilean operations, which was both a reporting unit and an asset group. In a divestiture scenario, this market feedback revealed the range of values that could be expected to be offered by potential investors, and this range of values was lower than carrying value. The reasons for this included uncertainties that market participants had around operating higher education institutions in Chile related to the challenging political and regulatory environment and the possibility that a new Chilean constitution could become effective as early as the summer of 2022. These uncertainties particularly affected the views of market participants (as well as the views of the Company) about operating a not-for-profit education institution in Chile. After assessing these factors, the Company concluded that it was more likely than not that the fair value of its Chile reporting unit was less than its carrying value. Accordingly, the Company performed an impairment test of the long-lived assets that were part of the Chile reporting unit. Because Chile had not yet met the held-for-sale criteria as of June 30, 2020, the long-lived assets other than goodwill were evaluated for impairment under the held-and-used model, based on the probability-weighted cash flows expected to be generated by the asset group. Goodwill was also evaluated for impairment. The projections used in the impairment testing included key assumptions around the effect of regulatory uncertainties on the future cash flows expected to be generated, reducing the estimates of those cash flows. In addition, the projections incorporated assumptions around growth rates, tax rates and discount rates. The inputs used were not observable to active markets and were therefore deemed “Level 3” inputs in the fair value hierarchy. As a result of the impairment test, the Company determined that the carrying value 114 of the Chile asset group exceeded its fair value by approximately $ 418,000 and recorded an impairment charge in that amount during the second quarter of 2020, as follows: Goodwill and tradenames $ 238,400 Land and buildings 80,600 Other long-lived assets 36,500 Operating lease right-of-use assets, net 62,500 Total Chile impairment $ 418,000 In addition, the Company had recorded within stockholders’ equity, as a component of accumulated other comprehensive income, approximately $ 293,000 of accumulated foreign currency translation losses associated with the Chilean operations. As discussed further in Note 6, Dispositions, the Company completed the divestiture of its Chilean operations during the third quarter of 2020 and, as a result, these accumulated foreign currency translation losses were recognized as part of the loss on sale. Honduras During the second quarter of 2020, the Company recorded a loss of approximately $ 10,000 related to the Honduras disposal group, which was classified as a Discontinued Operation, in order to write down the carrying value of those assets to their estimated fair value at that time, in accordance with ASC 360-10, “Impairment and Disposal of Long-lived Assets” (ASC 360-10). During the third quarter of 2020, the Company recorded an additional loss of approximately $ 10,000 related to the Honduras disposal group, in order to adjust the carrying value of those assets to their estimated fair value based on the sale agreement for the institution that was signed in October 2020, as discussed further below. Brazil As discussed further below, during the third quarter of 2020, the Company signed an agreement to sell its Brazil operations and, as a result, Brazil was classified as a Discontinued Operation for all periods presented. In connection with this decision to sell Brazil, the Company recorded a loss of approximately $ 190,000 in order to write down the carrying value of the Brazil disposal group to its estimated fair value less costs to sell, as required by ASC 360-10. The estimated fair value was based on an offer received from a market participant. Because the held-for-sale criteria were met during the third quarter, the carrying value used to evaluate the Brazil business included the accumulated foreign currency translation losses associated with Brazil, resulting in this loss. During the fourth quarter of 2020, the Company recorded an additional loss of approximately $ 15,000 in order to adjust the carrying value of the Brazil disposal group to its estimated fair value less costs to sell as of December 31, 2020. 2019 Losses Recognized on Held-For-Sale Disposal Groups During 2019, the Company recognized total losses of approximately $ 43,000 related to the write-down of held-for-sale disposal groups. Of this amount, approximately $ 25,000 relates to the Costa Rica disposal group and was recorded during the third quarter of 2019, in order to write down the carrying value of those assets to their estimated fair value, per ASC 360-10. As discussed in Note 6, Dispositions, the Costa Rica institutions were sold on January 10, 2020 . The remaining loss relates to a write down of the carrying value of our Honduras disposal group that was recorded during the fourth quarter of 2019, in order to reduce the carrying value of those assets to their estimated fair value at that time. 2018 Loss on Impairment of Assets In connection with our goodwill impairment testing in the fourth quarter of 2018, we wrote off the remaining goodwill balance of $ 3,080 associated with our operations in the Kingdom of Saudi Arabia, which are now included in Discontinued Operations. During 2018 we also recorded an impairment charge of $ 10,030 for the University of Liverpool (Liverpool), an institution in our Online & Partnerships segment that is now included in Discontinued Operations. The impairment was caused by Liverpool's decision not to renew its institutional partnership agreement and to stop enrolling new students and begin a teach-out process. As a result, we recorded an impairment charge related to the fixed assets of this entity that were no longer recoverable based on expected future cash flows. 115 The assets and liabilities of the Discontinued Operations, which are subject to finalization, have been classified as held for sale as of December 31, 2020 and 2019, in accordance with ASC 205. The assets and liabilities are recorded at the lower of their carrying values or their estimated 'fair values less costs to sell.' The carrying amounts of the major classes of assets and liabilities that were classified as held for sale are presented in the following table: December 31, 2020 December 31, 2019 Assets of Discontinued Operations Cash and cash equivalents $ 270,164 $ 333,455 Receivables, net 113,386 209,704 Property and equipment, net 259,471 784,198 Goodwill and tradenames 1,202,496 1,668,971 Operating lease assets 136,806 399,345 Other assets 183,742 446,532 Valuation allowance on held-for-sale disposal groups ( 248,630 ) ( 43,079 ) Subtotal: assets of Discontinued Operations $ 1,917,435 $ 3,799,126 Other assets classified as Held for Sale Property and equipment, net — 8,403 Subtotal: other assets classified as held for sale $ — $ 8,403 Total assets held for sale $ 1,917,435 $ 3,807,529 December 31, 2020 December 31, 2019 Liabilities of Discontinued Operations Deferred revenue and student deposits $ 87,793 $ 176,255 Operating leases, including current portion 151,413 388,202 Long-term debt, seller notes and finance leases, including current portion 171,451 304,355 Other liabilities 291,599 486,081 Total liabilities held for sale $ 702,256 $ 1,354,893 Discontinued Operations with Signed Sale Agreements Pending Closure at December 31, 2020 Brazil Operations On November 2, 2020, the Company announced that it had entered into a definitive agreement with Ânima Holding S.A. (Anima) for the sale of its Brazilian operations. The transaction value is approximately 4,400,000 Brazilian Reals (approximately $ 765,000 at the time of signing), including 3,800,000 Brazilian Reals (approximately $ 660,700 at the time of signing) in cash consideration, which is subject to certain adjustments, and the assumption of net indebtedness. Under the agreement with Anima, the Company will be entitled to receive up to 203,000 Brazilian Reals (approximately $ 35,300 at the time of signing) in additional cash consideration if certain metrics are achieved following the closing. The transaction is targeted to close by the end of the second quarter of 2021. Walden On September 11, 2020, Laureate entered into a Membership Interest Purchase Agreement (the Walden Sale Agreement) with Adtalem Global Education Inc., a Delaware corporation (the Walden Purchaser). Pursuant to the Walden Sale Agreement, the Company has agreed to sell to the Walden Purchaser all of the issued and outstanding equity interest in Walden e-Learning, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company and its subsidiary, Walden University, LLC, a Florida limited liability company and an indirect wholly owned subsidiary of the Company (together with Walden e-Learning, LLC, the Walden Group), in exchange for a purchase price of $ 1,480,000 in cash, subject to certain adjustments set forth in the Walden Sale Agreement. 116 The closing of this transaction is expected to occur toward the end of 2021 and is subject to customary closing conditions, including regulatory approval by the U.S. Department of Education and the Higher Learning Commission and required antitrust approvals. Under certain specified circumstances, the Walden Purchaser may be required to pay the Company a termination fee of $ 88,000 , including if the Walden Purchaser terminates the Walden Sale Agreement as a result of the imposition by the U.S. Department of Education of certain specified restrictions, or if Laureate terminates the Walden Sale Agreement as a result of the Walden Purchaser’s failure to consummate the transaction upon satisfaction of the closing conditions. Honduras On October 13, 2020, the Company entered into a definitive agreement with Fundación Nasser, a not-for-profit foundation in Honduras, to transfer control of its operations in Honduras for total cash consideration of approximately $ 29,800 , prior to closing costs. The buyer will also assume indebtedness which, as of December 31, 2020, was approximately $ 29,500 . The transaction is subject to certain closing conditions, including regulatory approval, and is expected to be completed in the first half of 2021. 117 Note 5. Acquisitions We had no material acquisitions in 2019 or 2020. 2018 Acquisition in Peru On November 5, 2018, Laureate Education Peru, SRL, an indirect wholly owned subsidiary of the Company, acquired all of the capital stock of Instituto de Educación Superior Tecnológico Privado Red Avansys SAC (Avansys), an institution in Peru, for a total purchase price of approximately 63,000 Peruvian Nuevo Sols (approximately $ 18,900 at the acquisition date), plus debt assumed. The cash paid at acquisition, net of cash acquired, was $ 17,019 . We account ed for this acquisition as a business combin ation. For this acquisition, Revenues, Operating (loss) income and Net (loss) income attributable to Laureate Education, Inc. were immaterial for the year ended December 31, 2018. The following table summarizes the estimated fair value of all assets acquired and the liabilities assumed at the date of acquisition: Avansys Peru Current assets $ 3,921 Property and equipment 13,673 Goodwill 4,658 Other long-term assets 815 Total assets acquired 23,067 Current portion of long-term debt 874 Other current liabilities 3,332 Total liabilities assumed 4,206 Net assets acquired attributable to Laureate Education, Inc. 18,861 Debt assumed 874 Net assets acquired attributable to Laureate Education, Inc. plus debt assumed $ 19,735 Net assets acquired $ 18,861 Cash acquired ( 1,842 ) Net cash paid at acquisition $ 17,019 2018 Summary The amounts recorded for the 2018 acquisition are considered final. None of the goodwill related to the 2018 acquisition is expected to be deductible for income tax purposes. Pro forma results of operations have not been presented because the effects of the acquisition were not material to the Company’s financial results. 118 Note 6. Dispositions 2020 Dispositions Sale of Costa Rica Operations On January 10, 2020, Laureate International B.V., a Netherlands private limited liability company (Laureate International), an indirect, wholly owned subsidiary of the Company, entered into, and consummated the transactions contemplated by, an Equity Purchase Agreement (the Costa Rica Agreement) with SP Costa Rica Holdings, LLC, a Delaware limited liability company (the Costa Rica Buyer). Pursuant to the Agreement, the Costa Rica Buyer purchased from Laureate International (i) all of the equity units of Education Holding Costa Rica, S.R.L., which owned, directly or indirectly, all of the equity units of Lusitania S.R.L., Universidad ULatina, S.R.L. (ULatina) and Universidad Americana UAM, S.R.L. (collectively, Laureate Costa Rica) and (ii) a note due from ULatina to Laureate International. Consideration for the transaction consisted of $ 15,000 paid at closing and up to $ 7,000 to be paid within the next two years if Laureate Costa Rica met certain performance metrics. One of the performance metrics was finalized during the second quarter of 2020 and did not result in any additional proceeds to the Company; the maximum additional proceeds that the Company could receive if the remaining performance metric is met is $ 5,000 . The proceeds received, net of cash sold, transaction fees and a working capital adjustment that was completed during the second quarter of 2020, were approximately $ 1,800 . Additionally, Laureate Costa Rica retained obligations to pay approximately $ 30,000 in finance lease indebtedness for which the Costa Rica Buyer has no recourse to Laureate International. During the third quarter of 2019, the Company recorded a loss of approximately $ 25,000 on the held-for-sale Costa Rica disposal group, in order to write down the carrying value of those assets to their estimated fair value, per ASC 360-10. Upon completion of the sale in January 2020 and after including the working capital adjustment, the Company recognized additional pre-tax loss of approximately $ 18,600 , which related to subsequent changes in net carrying values. Accordingly, the total loss on the sale of Costa Rica was approximately $ 43,600 and is included in loss from discontinued operations on the Consolidated Statement of Operations for the year ended December 31, 2020. The Costa Rica Buyer is controlled by certain affiliates of Sterling Capital Partners II, L.P. (Sterling II). Sterling II has the right to designate a director to the Laureate Board of Directors pursuant to a securityholders agreement, and Steven Taslitz currently serves as the Sterling-designated director. Mr. Taslitz did not participate in the Laureate Board of Directors’ consideration of the transaction, which was approved by Laureate's Audit Committee as a related party transaction. Sale of NewSchool of Architecture and Design, LLC (NSAD) On March 6, 2020, the Company completed the sale of NSAD. Under the terms of the membership interests purchase agreement, Exeter Street Holdings, LLC, an indirect wholly owned subsidiary of the Company, sold 100 % of the outstanding membership interests of NSAD to Ambow NSAD, Inc. and Ambow Education Holding, Ltd. (the NSAD Buyers) for a purchase price of one dollar, subject to certain adjustments. NSAD is a higher education institution located in California that offers undergraduate and graduate degrees and non-degree certificates in design and construction management. Under the terms of the agreement, the Company agreed to pay subsidies to the NSAD Buyers totaling approximately $ 7,300 , of which all but $ 2,800 was settled at the closing date. The remaining subsidy of $ 2,800 is being paid to the NSAD Buyers ratably on a quarterly basis over the next four years . The Company recognized a pre-tax loss on the sale of approximately $ 5,900 , which is included in loss from discontinued operations on the Consolidated Statement of Operations for the year ended December 31, 2020. Sale of China Operations-Receipt of Escrow On January 25, 2018, the Company completed the sale of LEI Lie Ying Limited in China. At the closing of the sale on January 25, 2018, a portion of the total transaction value was paid into an escrow account, to be distributed to the Company pursuant to the terms and conditions of the escrow agreement. As of December 31, 2019, the Company had recorded a receivable of approximately $ 25,900 for the portion of the escrowed amount that the Company expected to receive. Per the terms of the escrow agreement, in June 2020, the Company received approximately 141,647 Hong Kong Dollars (approximately $ 18,300 at the date of receipt) from the escrow, which was offset against the receivable recorded, and is included in receipts from sales of discontinued operations within investing activities on the Consolidated Statement of Cash Flows. Under the terms of the agreement, the 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. 119 Divestiture of Chilean Operations On September 10, 2020, Laureate International and Laureate I, B.V., each a Netherlands private limited liability company (together, the LDES Sellers), and Servicios Regionales Universitarios LE, S.C., a Mexican company (sociedad civil) (together with the LDES Sellers, the Controlling Entities), all of which are indirect, wholly owned subsidiaries of the Company, entered into a Master Agreement (the Chile Agreement) with Fundación Educación y Cultura, a Chilean non-for-profit foundation (the Chile Buyer). Pursuant to the Chile Agreement, as of September 11, 2020, Laureate completed the divestiture of its operations in Chile through the transfer of control of its not-for-profit institutions, Universidad Andrés Bello, Universidad de Las Américas and Universidad Viña del Mar, to the Chile Buyer, and the sale of its for-profit operations, which includes the sale of Instituto Profesional AIEP to Universidad Andrés Bello. The not-for-profit institutions were consolidated by Laureate under the variable interest entity model. The cash proceeds received at closing, prior to transaction fees, were approximately $ 195,300 . In addition, the purchase price includes a note receivable of $ 21,500 that is payable one year from the date of divestiture. At the closing date, the Chilean operations had a cash balance (cash sold) of approximately $ 288,000 that was transferred to the Chile Buyer as part of the transaction. This divestiture resulted in a pre-tax loss of approximately $ 338,200 , which related primarily to the accumulated foreign currency translation losses associated with the Chilean operations. The loss is recorded in loss from discontinued operations in the Consolidated Statements of Operations for the year ended December 31, 2020. As discussed in Note 4, Discontinued Operations and Assets Held for Sale, during the second quarter of 2020, the Company recorded an impairment charge of approximately $ 418,000 related to the long-lived assets, indefinite-lived intangible assets and goodwill of the Chilean operations, in order to write down the carrying value of the Chilean operations assets to its estimated fair value. Inti Education Holdings Sdn. Bhd. (Inti Holdings) On February 28, 2020, Exeter Street Holdings Sdn. Bhd., a Malaysia corporation (the Malaysia Seller), and LEI Holdings, LTD., a Hong Kong corporation (the Malaysia Seller Guarantor), each of which is an indirect wholly owned subsidiary of Laureate, entered into a Share Sale & Purchase Agreement (the Malaysia Sale Agreement) with HOPE Education Group (Hong Kong) Company Limited (the Malaysia Purchaser) and HOPE Education Group Co. Ltd. (the Malaysia Purchaser Guarantor). Pursuant to the Malaysia Sale Agreement, the Malaysia Purchaser would purchase from the Malaysia Seller all of the issued and outstanding shares in the capital of Inti Education Holdings Sdn. Bhd., a Malaysia corporation (Inti Holdings), the Malaysia Seller’s Guarantor would guarantee certain obligations of the Malaysia Seller and the Malaysia Purchaser’s Guarantor would guarantee certain obligations of the Malaysia Purchaser. Inti Holdings was the indirect owner of INTI University and Colleges, a higher education institution with five campuses in Malaysia. In connection with the Malaysia Sale Agreement, the Malaysia Seller entered into a separate agreement with the current minority owner of the equity of Inti Holdings relating to the purchase by the Malaysia Seller of the minority owner’s 10.10 % interest in Inti Holdings, the closing of which was a precondition to the closing of the transaction under the Malaysia Sale Agreement. The sale of Inti Holdings was completed on September 29, 2020. The total purchase price, including the payment to the current minority owner, was $ 140,000 . The closing of the transaction was subject to customary closing conditions, including approval by regulators in Malaysia. At the time of the signing of the Malaysia Sale Agreement in February 2020, the Malaysia Purchaser paid to the Malaysia Seller a cash deposit of $ 5,000 , which the Company initially recorded as a liability pending the closing of the sale, and which was recognized as part of the gain on sale upon the closing of the transaction in September 2020. The cash proceeds received, prior to transaction fees and net of approximately $ 19,500 of cash sold, were approximately $ 116,300 and are included in Receipts from sales of discontinued operations, net of cash sold, property and equipment and other within investing activities in the Consolidated Statement of Cash Flows for the year ended December 31, 2020. In addition, the Malaysia Purchaser withheld $ 4,200 for taxes that the Company collected in February 2021. The payment to the minority owner for their 10.10 % interest in Inti Holdings, which totaled approximately $ 13,700 , was made in early October 2020. An additional $ 420 , which represents the minority owner’s share of the taxes that were withheld as noted above, will be paid to the minority owner following receipt by the Company. The Company recognized a pre-tax gain on sale of approximately $ 47,900 , which is included in income (loss) from discontinued operations in the Consolidated Statements of Operations for the year ended December 31, 2020. Divestiture of Turkey Operations: Receipt of Portion of Deferred Consideration As previously disclosed, in August 2019, the Company completed the divestiture of its operations in Turkey. The total consideration included a deferred payment of $ 15,000 in the form of an instrument that was payable one year after closing. At 120 the time of the divestiture, the Company determined that this deferred amount would be recognized if collected. In early October 2020, the Company received $ 8,436 of the deferred consideration and recognized this as a reduction to the loss on the sale of control of the Turkish operations. The outstanding amount was due in January 2021, and the Company is pursuing collection. Australia and New Zealand Operations On July 29, 2020, LEI AMEA Investments B.V., a Netherlands private limited liability company (the ANZ Seller), an indirect, wholly owned subsidiary of the Company, and the Company, solely as guarantor of certain of the ANZ Seller’s obligations thereunder, entered into a Sale and Purchase Agreement (the ANZ Purchase Agreement) with SEI Newco Inc., a Delaware corporation (the ANZ Purchaser), and Strategic Education, Inc., a Maryland corporation (the ANZ Purchaser’s Guarantor). Pursuant to the ANZ Purchase Agreement, the ANZ Seller has agreed to sell to the ANZ Purchaser all of the issued and outstanding shares in the capital of (i) LEI Higher Education Holdings Pty Ltd, an Australian private company and the direct owner of Torrens University Australia, (ii) LEI Australia Holdings Pty Ltd, an Australian private company and the indirect owner of Think Education, (iii) LESA Education Services Holdings Pty Ltd, an Australian private company, and (iv) LEI New Zealand, a New Zealand company and the indirect owner of Media Design School (collectively, the ANZ Target Companies). The ANZ Purchaser’s Guarantor will guarantee the obligations of the ANZ Purchaser. The closing of the transaction occurred on November 3, 2020, following completion of the required regulatory approvals and other customary closing conditions. The proceeds received, net of cash sold and transaction fees, were approximately $ 624,200 . The Company recognized a pre-tax gain on sale of approximately $ 555,800 , which is included in income (loss) from discontinued operations in the Consolidated Statements of Operations for the year ended December 31, 2020. Campus Guadalajara Norte Sale In November 2020, an agreement was signed between Universidad del Valle de Mexico, SC (UVM) and Grupo Dalton for the sale of the land and buildings of Campus Guadalajara Norte, after a decision was made to relocate all students from the Campus Guadalajara Norte to the nearby Campus Zapopan in Jalisco, Mexico. The total purchase price was approximately $ 13,900 , prior to transaction fees. As of December 31, 2020, the Company has received approximately $ 7,000 of the total purchase price, with the outstanding amount of approximately $ 6,900 to be paid before the one-year anniversary of the signing of the agreement. The Company recognized a pre-tax operating gain on the sale of this property and equipment of approximately $ 5,800 , which is included in Direct costs in the Consolidated Statements of Operations for the year ended December 31, 2020. 2019 Dispositions Sale of the University of St. Augustine for Health Sciences, LLC On February 1, 2019, the Company completed the sale of the University of St. Augustine for Health Sciences, LLC (St. Augustine), in the United States. The total transaction value under the sale agreement was $ 400,000 . Upon completion of the sale, the Company received net proceeds of approximately $ 346,400 , which included $ 11,700 of customary closing adjustments, and was net of $ 58,100 of debt assumed by the purchaser and $ 7,200 of fees. The proceeds net of cash sold were approximately $ 301,800 , which the Company used to repay outstanding indebtedness under its U.S. term loan and revolving credit facility. The Company recognized a gain on the sale of approximately $ 223,000 , which is included in income (loss) from discontinued operations on the Consolidated Statement of Operations for the year ended December 31, 2019. 121 Sale of Thailand Operations On February 12, 2019, the Company completed the sale of its interests in Thai Education Holdings Company Limited, a Thailand corporation (TEDCO), and Far East Stamford International Co. Ltd. (FES), a Thailand corporation. TEDCO was the owner of a controlling interest in FES, which was the license holder for Stamford International University, which had three campuses in Thailand. The total purchase price was approximately $ 35,300 , and net proceeds were approximately $ 26,400 , net of debt assumed by the buyer and other customary closing adjustments and fees. Of the $ 26,400 in net proceeds, $ 22,200 , or $ 18,800 net of cash sold, was received at closing. The balance of $ 4,200 was payable upon satisfaction of certain post-closing requirements; the first post-closing requirement was satisfied in May 2019 and the Company received $ 2,800 . The second post-closing requirement was satisfied in February 2020 and the Company received approximately $ 1,400 . For the year ended December 31, 2019, the Company recognized a gain on the sale of approximately $ 10,800 , which is included in income (loss) from discontinued operations on the Consolidated Statement of Operations. Additional Gain on Sale of China Operations As discussed further below, on January 25, 2018, the Company completed the sale of LEI Lie Ying Limited (LEILY). A portion of the purchase price was held back and subject to deduction of any indemnifiable losses payable to the buyer pursuant to the sale purchase agreement. On January 25, 2019, Laureate received HKD 71,463 (approximately $ 9,100 at date of receipt) for the second and final holdback payment, net of legal fees. Also, as of December 31, 2018, the Company had recorded a liability of approximately $ 14,300 related to loss contingencies for which the Company had indemnified the buyer. During the first quarter of 2019, the legal matter that this loss contingency related to was settled, with no cost to the Company. Accordingly, during the first quarter of 2019, the Company reversed the loss contingency and recognized additional gain on the sale of LEILY of approximately $ 13,700 , which is included in income (loss) from discontinued operations on the Consolidated Statement of Operations for the year ended December 31, 2019. The remaining liability recorded relates to certain legal fees. Additionally, at the closing of the sale on January 25, 2018, a portion of the total transaction value was paid into an escrow account and will be distributed to the Company pursuant to the terms and conditions of the escrow agreement. As of December 31, 2019, the Company has recorded a receivable of approximately $ 25,900 for the portion of the escrowed amount that the Company expected to receive; the majority of this receivable was collected in 2020, as described above. Sale of Monash South Africa On April 8, 2019, the Company completed the sale of its institution in South Africa, Monash South Africa, as well as the sale of the real estate associated with that institution. The transactions consisted of: (i) the transfer by Monash South Africa Limited (MSA), an Australia limited company that is an indirect 75 %-owned subsidiary of the Company, to The Independent Institute of Education Limited (IIE), a South Africa limited company that is a subsidiary of ADvTECH Limited, of all of MSA’s assets and certain of its operational liabilities for a sale price of 15,000 South African Rand (ZAR) (subject to customary adjustments) (or approximately $ 1,100 at the closing date) and (ii) the sale by LEI AMEA Investments B.V., a Netherlands limited company that is an indirect wholly owned subsidiary of the Company, of all of the shares of Laureate South Africa Pty. Ltd. (LSA), a South Africa limited company, to IIE for a net sale price of approximately ZAR 99,000 (subject to customary adjustments) (or approximately $ 7,000 at the closing date). In addition, IIE assumed debt of approximately $ 20,200 . In the aggregate, including working capital adjustments, the Company received approximately $ 9,000 from the buyer, which approximated the amount of cash sold with the business. The Company recognized a gain for these transactions of approximately $ 2,300 , which is included in income (loss) from discontinued operations on the Consolidated Statement of Operations for the year ended December 31, 2019. 122 Sale of India Operations On May 9, 2019, LEI Singapore Holdings Pte Limited, a Singapore corporation, Laureate I B.V., a Netherlands private limited company (Laureate I), and Laureate International B.V., a Netherlands private limited company (collectively, the India Sellers), all of which are indirect wholly owned subsidiaries of the Company, closed a transaction pursuant to the share purchase agreement (the India Agreement), among the India Sellers, Global University Systems India Bidco B.V., a Netherlands private limited liability company (the India Purchaser) and Global University Systems Holding B.V. (the India Purchaser Guarantor), a Netherlands private limited liability company. Pursuant to the India Agreement, the India Purchaser acquired from the India Sellers all of the issued and outstanding shares in the capital of Pearl Retail Solutions Private Limited, an India corporation (PRS), M-Power Energy India Private Limited (M-Power), an India corporation, and Data Ram Sons Private Limited (Data Ram), an India corporation. As a result of the closing of the transaction, the Company no longer consolidates its network institutions in India, including Creative Arts Education Society (CAES), the operator of Pearl Academy, and University of Petroleum and Energy Studies (UPES). In connection with the India Agreement, certain of the India Sellers also closed a separate transaction with the minority owners of PRS relating to the purchase by them of the minority owners’ 10 % interest in PRS. The total purchase price under the India Agreement was $ 145,600 . The net proceeds received by the India Sellers, before the payment to the 10 % minority owners and after transaction fees and taxes, including receipt in July 2019 of certain taxes withheld at closing, were approximately $ 145,800 , or approximately $ 77,300 net of cash sold, which the Company used to repay indebtedness under its term loan that had a maturity date of April 2024 (the 2024 Term Loan). The Company recognized a gain for these transactions of approximately $ 19,500 , which is included in income (loss) from discontinued operations on the Consolidated Statement of Operations for the year ended December 31, 2019. Sale of Spain and Portugal Operations On May 31, 2019, Iniciativas Culturales de España S.L., a Spanish private limited liability company (ICE), and Laureate I, both of which are indirect wholly owned subsidiaries of the Company, closed a previously announced transaction pursuant to the sale and purchase agreement (the Spain and Portugal Sale Agreement) with Samarinda Investments, S.L., a Spanish limited liability company (Samarinda). Pursuant to the Spain and Portugal Sale Agreement, Samarinda acquired from ICE all of the issued and outstanding shares in the capital of each of Universidad Europea de Madrid, S.L.U., Iniciativas Educativas de Mallorca, S.L.U., Iniciativa Educativa UEA, S.L.U., Universidad Europea de Canarias, S.L.U., and Universidad Europea de Valencia, S.L.U. (together, the Spain Companies), and Samarinda acquired from Laureate I all of the issued and outstanding shares in the capital of Ensilis—Educação e Formação, Unipessoal, Lda. (the Portugal Company). Three of the Spain Companies are the entities that operate Universidad Europea de Madrid, Universidad Europea de Canarias, and Universidad Europea de Valencia. The Portugal Company is the entity that operates Universidade Europeia, a comprehensive university in Portugal, and Instituto Português de Administração de Marketing (IPAM Lisbon and IPAM Porto), post-secondary schools of marketing in Portugal. The total purchase price under the Spain and Portugal Sale Agreement was EUR 770,000 (or approximately $ 857,000 at the date of closing), subject to customary closing adjustments. After payment of transaction fees, receipt of working capital and other adjustments, as well as settlement of foreign currency swaps, the total net proceeds received by ICE and Laureate I were approximately $ 906,000 , or approximately $ 760,000 net of cash sold, which the Company used to repay indebtedness, including full repayment of the remaining balance outstanding under the 2024 Term Loan. Additionally, the buyer assumed debt of approximately $ 109,000 . The Company recognized a gain for these transactions of approximately $ 615,000 , including a tax benefit of approximately $ 30,000 that relates to the reversal of net deferred tax liabilities, which is included in income (loss) from discontinued operations on the Consolidated Statement of Operations for the year ended December 31, 2019. Sale of Turkey Operations On August 27, 2019, Laureate I B.V. and Can Uluslararasi Yatirim Holding A.Ş. (Can Holding), a Turkish company, executed and closed a Sale and Purchase Agreement (the Turkey SPA). Pursuant to the Turkey SPA, Can Holding purchased from Laureate I B.V. 100 % of the share capital of Education Turkey B.V. (ET), a private limited liability company incorporated under the laws of the Netherlands. ET and certain of its direct and indirect subsidiaries and affiliates together have the right to appoint a majority of the Trustees of Bilgi Eğitim ve Kültür Vakfı (Bilgi Foundation). Bilgi Foundation is the sponsor of Istanbul Bilgi University (Bilgi), an institution located in Turkey that the Company previously consolidated under the variable interest entity model. As a result of the closing of the Turkey SPA on August 27, 2019, the Company no longer consolidates Bilgi. 123 The total purchase price was $ 90,000 , which consisted of cash proceeds of $ 75,000 and deferred purchase price of $ 15,000 in the form of an instrument payable one year after closing. The deferred purchase price carries no stated interest rate. At the date of sale, Bilgi had approximately $ 89,000 of cash and restricted cash on its balance sheet. The Company recognized a loss for this transaction of approximately $ 37,700 , which is included in income (loss) from discontinued operations on the Consolidated Statement of Operations for the year ended December 31, 2019. Sale of Universidad Interamericana de Panamá (UIP) In early October 2019, the Company closed on the previously announced sale of UIP, in addition to real estate which serves as the campus of UIP, to Universal Knowledge Systems, Inc. and Global Education Services, Inc. (the UIP Buyers). Pursuant to the sale and purchase agreement (the UIP Agreement), the UIP Buyers purchased from the Universidad U Latina, SRL and Education Holding Costa Rica EHCR, SRL (the UIP Sellers) 100 % of the ownership interests of UIP, a higher education institution in Panama. Excelencia y Superacion S.A. (EXSUSA), an affiliate of the UIP Buyers, was also party to the UIP Agreement as a guarantor of the UIP Sellers’ obligations under the UIP Agreement. In addition, Desarrollos Urbanos Educativos S. de R.L. (DUE), an indirect wholly owned subsidiary of the Company, entered into and closed a real estate purchase agreement (the DUE Real Estate Purchase Agreement) with EXSUSA, pursuant to which EXSUSA or its designees purchased the campus real estate. The total enterprise value under the UIP Agreement and the DUE Real Estate Purchase Agreement was approximately $ 86,750 , and the net proceeds received were approximately $ 82,000 . The Company recognized a net gain for this transaction of approximately $ 21,000 , including a tax benefit of approximately $ 1,500 , which is included in income (loss) from discontinued operations on the Consolidated Statement of Operations for the year ended December 31, 2019. Sale of UniNorte On November 1, 2019, the Company closed on the previously announced sale of its institution UniNorte, a traditional higher education institution in Manaus, Brazil. Under the sale agreement, Cenesup - Centro Nacional de Ensino Superior Ltda., a limited liability company organized under the laws of Brazil (the UniNorte Purchaser) purchased 100% of the quota capital of Sodecam - Sociedade de Desenvolvimento Cultural do Amazonas Ltda., a limited liability company organized under the laws of Brazil, which is the maintaining entity of UniNorte. The Company and Ser Educacional S.A., the parent of the UniNorte Purchaser, are also parties to the Agreement as guarantors of certain obligations of their respective subsidiaries. The Company received cash proceeds of approximately $ 43,000 , net of transaction costs, and recognized a total net loss on the transaction of approximately $ 300 . UniNorte was not part of the strategic shift described in Note 1, Description of Business, and Note 4, Discontinued Operations and Assets Held for Sale. Dissolution of Dormant Subsidiaries During the third and fourth quarters of 2019, the Company dissolved several dormant subsidiaries, resulting in the release of accumulated foreign currency translation loss of approximately $ 37,500 . This loss is included in Loss on disposals of subsidiaries, net in 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. 2018 Dispositions Sale of Cyprus and Italy Operations On January 11, 2018, we completed the sale of European University-Cyprus Ltd (EUC) and Laureate Italy S.r.L. (Laureate Italy). Upon closing, we received gross proceeds of approximately EUR 232,000 (approximately $ 275,500 , or approximately $ 244,300 net of cash sold and net of the approximately $ 4,100 working capital settlement between the Company and the buyer that was completed during the second quarter of 2018), and recognized a total gain on sale for the year ended December 31, 2018 of approximately $ 218,000 , which is included in income (loss) from discontinued operations on the Consolidated Statement of Operations. The Company used the proceeds from this transaction, along with borrowings on our revolving credit facility that were subsequently repaid with the China sale proceeds discussed below, to repay $ 350,000 of the principal balance on our syndicated term loan that had a maturity date of April 2024 (the 2024 Term Loan), as discussed in Note 9, Debt. Sale of China Operations On January 25, 2018, we completed the sale of LEI Lie Ying Limited (LEILY) for a total transaction value of Chinese Renminbi (RMB) 1,430,000 (approximately $ 225,500 at the time of sale), of which RMB 50,000 (approximately $ 7,900 at the time of sale) will not be paid because certain conditions were not satisfied by the closing date. At closing, the Company 124 received initial gross proceeds totaling approximately $ 128,800 (approximately $ 110,800 net of cash sold), net of banker transaction fees and certain taxes and duties totaling approximately $ 16,000 . Six months after the closing date, the buyer was required to pay to the Company the Hong Kong Dollar (HKD) equivalent of RMB 120,000 (the First Holdback Payment). On July 27, 2018, the Company received the First Holdback Payment from the buyer, net of withholding taxes and agreed-upon legal fees, for a net payment of HKD 142,221 or $ 18,117 at the date of receipt, prior to banker transaction fees. Twelve months after the closing date, the buyer was required to pay to the Company the HKD equivalent of RMB 60,000 (the Second Holdback Payment). On January 25, 2019, Laureate received HKD 71,463 (approximately $ 9,100 ) for the Second Holdback Payment, net of legal fees. Both the First Holdback Payment and the Second Holdback Payment were subject to deduction of any indemnifiable losses payable by the Company to the buyer pursuant to the sale purchase agreement. The remainder of the transaction value was paid into an escrow account and will be distributed to the Company pursuant to the terms and conditions of the escrow agreement. As of December 31, 2018, the Company had recorded a receivable for the Second Holdback Payment that was collected in January 2019, as well as a receivable of approximately $ 25,900 for the portion of the escrowed amount that the Company expects to receive. In addition, the Company had recorded a liability of approximately $ 14,300 related to loss contingencies for which we have indemnified the buyer. The Company recognized a gain on the sale of LEILY for the year ended December 31, 2018 of approximately $ 84,000 , including tax effect, which is included in income (loss) from discontinued operations on the Consolidated Statement of Operations. Sale of German Operations On April 12, 2018, LEI European Investments B.V., a Netherlands private limited liability company (LEI BV), and Laureate International B.V., a Netherlands private limited liability company (Laureate International), both of which are indirect, wholly owned subsidiaries of Laureate Education, Inc., executed and closed a Sale and Purchase Agreement (the Laureate Germany SPA) with Global University Systems Germany B.V., a Netherlands private limited liability company (Global University Systems). Pursuant to the Laureate Germany SPA, Global University Systems purchased from LEI BV all of the issued and outstanding shares of capital stock of Laureate Germany Holding GmbH and its consolidated institutions, including the University of Applied Sciences Europe and Laureate Academies GmbH (collectively, Laureate Germany), and Laureate International guaranteed the obligations of LEI BV under the Laureate Germany SPA. Upon completion of the sale, LEI BV received gross proceeds of EUR 1,000 (approximately $ 1,200 at the date of receipt). At the date of sale, Laureate Germany had approximately $ 12,900 of cash and restricted cash on its balance sheet. In connection with this transaction, the Company contributed capital to Laureate Germany of approximately $ 3,600 . The Company recognized a loss on the sale of Laureate Germany for the year ended December 31, 2018 of approximately $ 5,500 , which is included in income (loss) from discontinued operations on the Consolidated Statement of Operations. Sale of Moroccan Operations On November 29, 2017, Laureate Middle East Holdings B.V., a Netherlands private limited liability company and an indirect, wholly owned subsidiary of the Company (LMEH), and La Société Maroc Emirats Arabes Unis de Développement, a Morocco company (SOMED and, together with LMEH, the Morocco Sellers), Laureate I B.V., a Netherlands private limited liability company and an indirect, wholly owned subsidiary of the Company (the Morocco Guarantor), and UPM Pédagogique, a Morocco company (the Morocco Purchaser), entered into a Share Purchase Agreement (the Laureate Somed SPA), pursuant to which the Morocco Purchaser agreed to purchase from the Morocco Sellers all of the issued and outstanding capital shares of Laureate Somed Holding, a Morocco company (Laureate Somed), for a total transaction value of 500,000 Moroccan Dirhams, and the Morocco Guarantor agreed to guarantee certain obligations of LMEH under the Laureate Somed SPA. The transaction closed on April 13, 2018, and LMEH received net proceeds of 300,000 Moroccan Dirhams (approximately $ 32,500 at the date of sale, or approximately $ 31,100 net of cash sold). The proceeds were used for general debt repayment across the Company rather than repayment of a specific tranche. Prior to the consummation of the sale, LMEH owned approximately 60 % of the capital shares of Laureate Somed, while SOMED owned the remaining approximately 40 % of the capital shares of Laureate Somed. Laureate Somed is the operator of Université Internationale de Casablanca, a comprehensive campus-based university in Casablanca, Morocco. The Company recognized a gain on the sale of Laureate Somed of approximately $ 17,400 for the year ended December 31, 2018, which is included in income (loss) from discontinued operations on the Consolidated Statement of Operations. 125 Sale of Kendall College, LLC On January 15, 2018, Kendall College, LLC (Kendall), an Illinois limited liability company and indirect wholly owned subsidiary of Laureate, The Dining Room at Kendall NFP, an Illinois not-for-profit corporation, National Louis University, an Illinois not for profit corporation (NLU), and Laureate, solely as guarantor of certain of Kendall’s obligations thereunder, entered into an asset purchase agreement. On August 6, 2018, we closed the transaction and Kendall transferred to NLU certain assets, including all of Kendall's education programs, subject to certain conditions, in exchange for consideration of one dollar. Closing of the transaction was subject to prior receipt of regulatory consents, including those of the U.S. Department of Education and the Higher Learning Commission. As part of the agreement, at closing Laureate paid to NLU $ 14,000 to support NLU’s construction of facilities for the acquired culinary program on NLU’s campus, subject to possible partial recoupment under specified conditions during the 10-year post-closing period. In addition, at closing Laureate paid approximately $ 2,100 to NLU for a working capital adjustment and other items provided for under the agreement. This payment was included in the loss on sale, which totaled approximately $ 17,200 , including tax effect, and is included in income (loss) from discontinued operations on the Consolidated Statement of Operations for the year ended December 31, 2018. Also, at the closing date of the sale, the cease-use criteria were met for a leased building that was not part of the sale transaction and that has a lease term ending in July 2028. Accordingly, during the third quarter of 2018, the Company recorded a liability of approximately $ 24,000 for the present value of the remaining lease costs, less estimated sublease income, which was charged to loss from discontinued operations, net of tax, on the Consolidated Statements of Operations. Note 7. Business and Geographic Segment Information Laureate’s educational services are offered through two reportable segments: Mexico and Peru (formerly Andean). Following the September 2020 sale of Chile, the former Andean segment is now called the Peru segment. Laureate determines its segments based on information utilized by the chief operating decision maker to allocate resources and assess performance. 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. Each institution in Mexico has a national license. Students in our Mexican institutions typically finance their own education. 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. As discussed in Note 1, Description of Business, and Note 4, Discontinued Operations and Assets Held for Sale, a number of our subsidiaries have met the requirements to be classified as discontinued operations. As a result, the discontinued operations have been excluded from the segment information for all periods presented. 126 Intersegment transactions are accounted for in a similar manner as third-party transactions and are eliminated in consolidation. The Corporate amounts presented in the following tables include corporate charges that were not allocated to our reportable segments and adjustments to eliminate intersegment items. We evaluate segment performance based on Adjusted EBITDA, which is a non-GAAP performance measure defined as Income (loss) from continuing operations before income taxes and equity in net income of affiliates, adding back the following items: Loss on disposals of subsidiaries, net, Foreign currency exchange gain (loss), net, Other (expense) income, net, (Loss) gain on derivatives, Loss on debt extinguishment, Interest expense, Interest income, Depreciation and amortization expense, Loss on impairment of assets, Share-based compensation expense and expenses related to our Excellence-in-Process (EiP) initiative. EiP is an enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources. It included the establishment of regional shared services organizations (SSOs) around the world, as well as improvements to the Company's system of internal controls over financial reporting. The EiP initiative also includes other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure and certain non-recurring costs incurred in connection with the planned dispositions described in Note 4, Discontinued Operations and Assets Held for Sale, and the completed dispositions described in Note 6, Dispositions. Beginning in 2019, EiP also includes expenses associated with an enterprise-wide program aimed at revenue growth. When we review Adjusted EBITDA on a segment basis, we exclude intercompany revenues and expenses related to network fees and royalties between our segments, which eliminate in consolidation. We use total assets as the measure of assets for reportable segments. The following tables provide financial information for our reportable segments, including a reconciliation of Adjusted EBITDA to Loss from continuing operations before income taxes and equity in net income of affiliates, as reported in the Consolidated Statements of Operations, for the years ended December 31, 2020, 2019 and 2018: Mexico Peru Corporate Total 2020 Revenues $ 534,607 $ 482,878 $ 7,432 $ 1,024,917 Adjusted EBITDA 112,917 189,488 ( 96,708 ) 205,697 Depreciation and amortization expense 29,032 26,962 27,139 83,133 Loss on impairment of assets 989 — 350,982 351,971 Total assets 1,278,198 623,294 3,069,402 4,970,894 Expenditures for long-lived assets 13,377 18,505 8,376 40,258 2019 Revenues $ 652,846 $ 546,751 $ 12,473 $ 1,212,070 Adjusted EBITDA 147,807 197,828 ( 142,014 ) 203,621 Depreciation and amortization expense 31,132 27,703 23,145 81,980 Loss on impairment of assets — — 248 248 Total assets 1,315,377 643,473 4,537,573 6,496,423 Expenditures for long-lived assets 30,239 23,837 18,825 72,901 2018 Revenues $ 646,134 $ 496,368 $ 2,072 $ 1,144,574 Adjusted EBITDA 143,221 169,213 ( 172,875 ) 139,559 Depreciation and amortization expense 31,007 27,615 25,945 84,567 Loss on impairment of assets — — — — Expenditures for long-lived assets 31,376 28,847 27,279 87,502 In order to reconcile to total consolidated assets as of December 31, 2020 and 2019 in the table above, assets held for sale related to Discontinued Operations of $ 1,917,435 and $ 3,799,126 , respectively, are included in the Corporate amounts. 127 For the years ended December 31, 2020 2019 2018 Adjusted EBITDA of reportable segments: Mexico $ 112,917 $ 147,807 $ 143,221 Peru 189,488 197,828 169,213 Total Adjusted EBITDA of reportable segments 302,405 345,635 312,434 Reconciling items: Corporate ( 96,708 ) ( 142,014 ) ( 172,875 ) Depreciation and amortization expense ( 83,133 ) ( 81,980 ) ( 84,567 ) Loss on impairment of assets ( 351,971 ) ( 248 ) — Share-based compensation expense ( 10,248 ) ( 10,325 ) ( 6,575 ) EiP expenses ( 89,647 ) ( 75,048 ) ( 75,209 ) Operating loss ( 329,302 ) 36,020 ( 26,792 ) Interest income 2,169 3,294 2,814 Interest expense ( 100,894 ) ( 125,042 ) ( 188,431 ) Loss on debt extinguishment ( 610 ) ( 22,601 ) ( 7,481 ) (Loss) gain on derivatives ( 25,980 ) 8,300 88,476 Other (expense) income, net ( 2,420 ) 8,922 10,598 Foreign currency exchange gain (loss), net 13,474 ( 8,125 ) 695 Loss on disposals of subsidiaries, net ( 7,276 ) ( 20,429 ) — Loss from continuing operations before income taxes and equity in net income of affiliates $ ( 450,839 ) $ ( 119,661 ) $ ( 120,121 ) Geographic Information No individual customer accounted for more than 10% of Laureate’s consolidated revenues. Revenues from customers by geographic area, primarily generated by students enrolled at institutions in those areas, were as follows: For the years ended December 31, 2020 2019 2018 External Revenues (1) Mexico $ 532,530 $ 650,593 $ 643,348 Peru 482,819 545,291 493,008 United States 9,509 15,189 7,720 Other foreign countries 59 997 498 Consolidated total $ 1,024,917 $ 1,212,070 $ 1,144,574 (1) Excludes intercompany revenues and therefore does not agree to the table above Long-lived assets are composed of Property and equipment, net. Laureate’s long-lived assets of Continuing Operations by geographic area were as follows: December 31, 2020 2019 Long-lived assets Mexico $ 229,613 $ 232,380 Peru 323,020 354,100 United States 25,851 54,150 Consolidated total $ 578,484 $ 640,630 128 Note 8. Goodwill and Other Intangible Assets The change in the net carrying amount of Goodwill from December 31, 2018 through December 31, 2020 was composed of the following items: Mexico Peru Total Balance at December 31, 2018 $ 498,219 $ 80,300 $ 578,519 Acquisitions — — — Impairments — — — Currency translation adjustments 27,037 927 27,964 Balance at December 31, 2019 $ 525,256 $ 81,227 $ 606,483 Acquisitions — — — Impairments — — — Currency translation adjustments ( 25,006 ) ( 6,645 ) ( 31,651 ) Balance at December 31, 2020 $ 500,250 $ 74,582 $ 574,832 Tradenames and Other Intangible Assets Amortization expense for intangible assets includes only the finite-lived tradename, as all other intangible assets subject to amortization were fully amortized as of December 31, 2020 and 2019. Amortization expense was $ 7,583 , $ 0 and $ 0 for the years ended December 31, 2020, 2019 and 2018, respectively. The estimated future amortization expense for the finite-lived tradename for the years ending December 31, 2021, 2022, 2023, 2024, 2025 and beyond is $ 25,928 , $ 12,954 , $ 12,954 , $ 12,954 , $ 9,715 and $ 0 , respectively. The following table summarizes our identifiable intangible assets as of December 31, 2020: Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period (Yrs) Tradenames Finite-lived tradename $ 82,088 $ ( 7,583 ) $ 74,505 4.8 Indefinite-lived tradenames 151,068 — 151,068 — Total tradenames 233,156 ( 7,583 ) 225,573 Other intangible assets Student rosters 20,239 ( 20,239 ) — — Other 1,699 ( 1,699 ) — — Total $ 255,094 $ ( 29,521 ) $ 225,573 129 The following table summarizes our identifiable intangible assets as of December 31, 2019: Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period (Yrs) Tradenames Finite-lived tradename $ — $ — $ — — Indefinite-lived tradenames 562,137 — 562,137 — Total tradenames 562,137 — 562,137 Other intangible assets Student rosters $ 21,358 $ ( 21,358 ) $ — — Other 1,792 ( 1,792 ) — — Total $ 585,287 $ ( 23,150 ) $ 562,137 Impairment Tests The following table summarizes the Loss on impairment of assets: For the years ended December 31, 2020 2019 2018 Impairments of Tradenames $ 320,000 $ — $ — Impairments of Goodwill — — — Impairments of Deferred costs and Other intangible assets, net — — — Impairments of long-lived assets 31,971 248 — Total $ 351,971 $ 248 $ — We perform annual impairment tests of our non-amortizable intangible assets, which consist of goodwill and indefinite-lived tradenames, in the fourth quarter of each year. The impairment charges discussed below were recorded to reduce the assets' carrying values to fair value. For the purposes of our annual impairment testing of the Company's goodwill, fair value measurements are determined primarily using the income approach, based largely on inputs that are not observable to active markets, which would be deemed “Level 3” fair value measurements as defined in Note 19, Fair Value Measurement. These inputs include our expectations about future revenue growth and profitability, marginal income tax rates by jurisdiction, and the discount rate. Where a market approach is used, the inputs also include publicly available data about our competitors' financial ratios and transactions. For purposes of our annual impairment testing of the Company’s indefinite-lived tradenames, fair value measurements were determined using the income approach, based largely on inputs that are not observable to active markets, which would be deemed “Level 3” fair value measurements as defined in Note 19, Fair Value Measurement. These inputs include our expectations about future revenue growth, marginal income tax rates by jurisdiction, the discount rate and the estimated royalty rate. We use publicly available information and proprietary third-party arm’s length agreements that Laureate has entered into with various licensors in determining certain assumptions to assist us in estimating fair value using market participant assumptions. 130 Impairment of Finite-Lived Tradename (Laureate Tradename) During the third quarter of 2020, the Company recognized an impairment charge of $ 320,000 on the Laureate tradename, an intangible asset. As described in Note 1, Description of Business, the Company had previously announced that it would explore strategic alternatives for each of its businesses, and, during the third quarter, the Company announced that it had completed a sale of its operations in Chile and that it had signed agreements to sell its operations in Brazil, Australia and New Zealand, as well as Walden University. Because of these events, the Company determined that the useful life of the Laureate tradename asset was no longer indefinite, and, in accordance with ASC 350-30-35-17, the Company tested the asset for impairment. The Company estimated the fair value of the tradename asset using the relief-from-royalty method, based on the projected revenues for each business over the estimated period that each business would remain part of the Laureate network. As a result of the impairment test, the Company concluded that the estimated fair value of the Laureate tradename was less than its carrying value by approximately $ 320,000 and recorded an impairment charge for that amount. The significant assumptions used in estimating the fair value included: (1) the estimates of revenue projections, including the period of those projections; (2) the discount rates; and (3) the estimated royalty rate. The inputs used were not observable to active markets and are therefore deemed “Level 3” inputs in the fair value hierarchy. The decrease in the fair value of the tradename was primarily caused by the shortened duration of the estimated future revenues. As of December 31, 2020, the finite-lived Laureate tradename has a net carrying amount of $ 74,505 and is being amortized over five years , its estimated useful life. New events or changes in circumstances, such as the signing of additional sale agreements, may be indicators of impairment that would require the Company to perform additional impairment tests. Impairment of Brazil E2G Software Assets As part of a transformation initiative for the enrollment to graduation cycle (E2G) that started several years ago, the Company began developing a solution to standardize the information systems and processes in Brazil. During development, those costs that qualified for capitalization as internal-use software were classified within Construction in-progress on our Consolidated Balance Sheets. In addition, a portion of the Brazil E2G project costs were deemed to be implementation costs of a hosting arrangement and were capitalized within Other assets on our Consolidated Balance Sheets. These capitalized costs were recorded on our Brazil and Corporate segments, as most of the Brazil E2G expenditures were made by Corporate. During the second qu arter of 2020, the Company determined that it was no longer probable that the Brazil E2G project would be completed and placed into service, and that the likelihood that a potential buyer of the Brazil business would utilize this system was low due to its cost and associated complexities. As stated in ASC 350-40-35-3, there is a presumption that uncompleted software has a fair value of $ 0 . Accordingly, during the second quarter of 2020, the Company recorded an impairment charge to fully write off the Brazil E2G project assets. Approximately $ 23,800 of the impairment charge was related to assets recorded on the Corporate segment and is therefore included in Continuing Operations. The remaining portion of the impairment charge, approximately $ 3,300 , related to assets recorded on the Brazil segment and is therefore included in Discontinued Operations. 131 Note 9. Debt Outstanding long-term debt was as follows: December 31, 2020 December 31, 2019 Senior long-term debt: Senior Secured Credit Facility (stated maturity date October 2024) $ — $ 202,400 Senior Notes (stated maturity date May 2025) 798,725 800,000 Total senior long-term debt 798,725 1,002,400 Other debt: Lines of credit 59,014 14,542 Notes payable and other debt 138,630 169,308 Total senior and other debt 996,369 1,186,250 Finance lease obligations and sale-leaseback financings 52,639 28,102 Total long-term debt and finance leases 1,049,008 1,214,352 Less: total unamortized deferred financing costs 53,292 62,911 Less: current portion of long-term debt and finance leases 95,818 48,139 Long-term debt and finance leases, less current portion $ 899,898 $ 1,103,302 As of December 31, 2020 , aggregate annual maturities of the senior and other debt, excluding finance lease obligations and sale-leaseback financings, were as follows: December 31, Senior and Other Debt 2021 $ 90,388 2022 38,243 2023 39,148 2024 28,102 2025 800,488 Thereafter — Total senior and other debt $ 996,369 Senior Secured Credit Facility During the second quarter of 2017, we completed 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 revolving credit facility that had an original borrowing capacity of $ 385,000 and originally matured in April 2022 (the Revolving Credit Facility), as well as a syndicated term loan of $ 1,600,000 that had a maturity date of April 26, 2024 (the 2024 Term Loan). 2024 Term Loan On February 1, 2018, we amended our Senior Secured Credit Facility to reduce the interest rate on the 2024 Term Loan. In connection with this transaction, we also repaid $ 350,000 of the principal balance of the 2024 Term Loan in addition to $ 1,239 of accrued interest using the proceeds from the sale of our Cyprus and Italy operations, along with borrowings on our revolving credit facility that were subsequently repaid with the China sale proceeds. Pursuant to the February 1, 2018 amendment, the interest rate margins applicable to the 2024 Term Loan were amended to 3.50 % for LIBOR term loans and 2.50 % for ABR term loans and such interest rate margins were no longer based upon the Company’s consolidated total debt to consolidated EBITDA ratio. The amendment effectively reduced the current interest rate margins applicable to the outstanding term loans, which prior to the amendment were based on the Company’s consolidated total debt to consolidated EBITDA ratio, by 100 basis points, from 4.50 % to 3.50 % for LIBOR term loans, and 3.50 % to 2.50 % for ABR term loans. 132 As discussed in Note 6, Dispositions, the sale of St. Augustine was completed on February 1, 2019 and the Company used $ 340,000 of the net proceeds to repay a portion of the 2024 Term Loan. During the second quarter of 2019, the Company fully repaid the remaining balance outstanding under its 2024 Term Loan, using the proceeds received from the sales of its operations in India, Spain and Portugal, as discussed in Note 6, Dispositions. Revolving Credit Facility Pursuant to terms of the Second Amended and Restated Credit Agreement in 2017, the maturity date for the Revolving Credit Facility was April 26, 2022. On October 7, 2019, the Company entered into a Third Amended and Restated Credit Agreement (the Third A&R Credit Agreement). Among other things, the Third A&R Credit Agreement increased the borrowing capacity of our revolving credit facility from $ 385,000 to $ 410,000 and extended the maturity date from April 26, 2022 to October 7, 2024. Under the Third A&R Credit Agreement, the revolving credit facility bears interest at a per annum interest rate, at the option of the Company, at either the LIBO rate or the ABR rate, as defined in the agreement, plus an applicable margin of 2.50 % per annum, 2.25 % per annum, 2.00 % per annum or 1.75 % per annum for LIBOR loans, and 1.50 % per annum, 1.25 % per annum, 1.00 % per annum or 0.75 % per annum for ABR loans, in each case, based on the Company’s Consolidated Total Debt to Consolidated EBITDA ratio, as defined in the agreement. As a subfacility under the Revolving Credit Facility, the Third A&R Credit Agreement provides for letter of credit commitments in the aggregate amount of $ 50,000 . The Third A&R Credit Agreement also provides, subject to the satisfaction of certain conditions, for incremental revolving and term loan facilities, at the request of the Company, not to exceed the greater of (a) $ 565,000 or (b) 100% of the consolidated EBITDA of the Company, 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 2.75 x. In March 2020, we fully drew down the $ 410,000 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. As such, as of December 31, 2020, the Revolving Credit Facility had a total outstanding balance of $ 0 . As of December 31, 2019, the Revolving Credit Facility had a total outstanding balance of $ 202,400 , which consisted of $ 121,300 of LIBOR Loans that had an average interest rate of 3.61 % and $ 81,100 of ABR loans that had an interest rate of 5.75 %. Guarantors of the Senior Secured Credit Facility Laureate Education, Inc. is the borrower under our Senior Secured Credit Facility. All of Laureate’s required United States legal entities, excluding Walden, National Hispanic University (NHU), and certain subsidiaries that the Company considers dormant based on the lack of activity, are guarantors of the Senior Secured Credit Facility, and all of the guarantors’ assets, both real and intangible, are pledged as collateral. Certain Walden assets are also pledged as collateral, including all of Walden’s United States receivables other than Title IV student loans, all of its copyrights, patents, and trademarks. As of December 31, 2020 and 2019, the carrying value of the Walden receivables and intangibles pledged as collateral was $ 407,267 and $ 400,484 , respectively. Additionally, not more than 65 % of the shares held directly by United States guarantors in non-domestic subsidiaries are pledged as collateral. Senior Notes On April 26, 2017, we completed an offering of $ 800,000 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. We may redeem the Senior Notes due 2025, in whole or in part, at any time on or after May 1, 2020, at redemption prices starting at 106.188 % of the principal amount thereof and decreasing from there each year thereafter until May 1, 2023, plus accrued and unpaid interest. From and after May 1, 2023, we may redeem all or part of the Senior Notes due 2025 at a redemption price of 100 %, plus accrued and unpaid interest. On October 13, 2020, the Company announced the commencement of a cash tender offer (the First Asset Sale Offer) to purchase up to $ 300,000 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 date. The First Asset Sale Offer was made pursuant to the indenture governing the Senior Notes due 2025 as a result of the Company's sale of its operations in Chile and Malaysia. The First Asset Sale Offer expired on November 10, 2020. On November 16, 2020, the Company purchased $ 775 133 aggregate principal amount, plus accrued and unpaid interest, of the Senior Notes due 2025 that were validly tendered as of the expiration of the First Asset Sale Offer. On November 12, 2020, following the expiration of the First Asset Sale Offer, the Company announced the commencement of a cash tender offer (the Second Asset Sale Offer) to purchase up to $ 650,000 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 date. The Second Asset Sale Offer was made pursuant to the indenture governing the Senior Notes due 2025 as a result of the Company's sale of its operations in Australia and New Zealand. The Second Asset Sale Offer expired on December 10, 2020. On December 14, 2020, the Company purchased $ 500 aggregate principal amount, plus accrued and unpaid interest, of the Senior Notes due 2025 that were validly tendered as of the expiration of the Second Asset Sale Offer. As of December 31, 2020 and 2019, our Senior Notes due 2025 had an outstanding balance of $ 798,725 and $ 800,000 , respectively. Estimated Fair Value of Debt The estimated fair value of our debt was determined using observable market prices since the majority of our securities, including the Senior Secured Credit Facility and the Senior Notes due 2025, are traded in a brokered market. The fair value of our remaining debt instruments approximates carrying value based on their terms. As of December 31, 2020 and December 31, 2019, our long-term debt was classified as Level 2 within the fair value hierarchy, based on the frequency and volume of trading in the brokered market. The estimated fair value of our debt was as follows: December 31, 2020 December 31, 2019 Carrying amount Estimated fair value Carrying amount Estimated fair value Total senior and other debt $ 996,369 $ 1,043,294 $ 1,186,250 $ 1,248,110 Certain Covenants As of December 31, 2020, our senior long-term debt contained certain negative covenants including, among others: (1) limitations on additional indebtedness; (2) limitations on dividends; (3) limitations on asset sales, including the sale of ownership interests in subsidiaries and sale-leaseback transactions; and (4) limitations on liens, guarantees, loans or investments. The Third A&R Credit Agreement provides, solely with respect to the revolving credit facility, that the Company shall not permit its Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, to exceed 3.50 x as of the last day of each quarter commencing with the quarter ending December 31, 2019 and thereafter. The agreement also provides that if (i) the Company’s Consolidated Total Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, is not greater than 4.75 x as of such date and (ii) less than 25 % of the revolving credit facility is utilized as of that date, then such financial covenant shall not apply. As of December 31, 2020, these conditions were satisfied and, therefore, we were not subject to the leverage ratio. In addition, indebtedness at some of our locations contain financial maintenance covenants. We were in compliance with these covenants as of December 31, 2020. Debt Modification and Loss on Debt Extinguishment In 2020, the Company recorded a Loss on debt extinguishment of $ 610 related primarily to the write off of a pro-rata portion of the unamortized deferred financing costs associated with repaid debt balances. In 2019, the Company recorded a Loss on debt extinguishment of $ 22,601 related primarily to the write off of a pro-rata portion of the unamortized deferred financing costs associated with repaid debt balances, as well as the debt discount associated with the 2024 Term Loan. In 2018, Laureate recorded a Loss on debt extinguishment of $ 7,481 related to the February 1, 2018 amendment of our Senior Secured Credit Facility and the write-off of a pro-rata portion of the term loan’s remaining deferred financing costs in connection with the $ 350,000 principal payment. Debt Issuance Costs Amortization of debt issuance costs and accretion of debt discounts that are recorded in Interest expense in the Consolidated Statements of Operations totaled approximately $ 10,103 , $ 10,370 and $ 11,187 for the years ended December 31, 2020, 2019 134 and 2018, respectively. During the years ended December 31, 2020, 2019 and 2018, we paid and capitalized a total of $ 669 , $ 1,368 and $ 61 , respectively, in debt issuance costs. Certain unamortized debt issuance costs were written off in 2020, 2019 and 2018 in connection with early repayment of debt balances and debt agreement amendments, as discussed above. As of December 31, 2020 and 2019, our unamortized debt issuance costs were $ 53,292 and $ 62,911 , respectively. Currency and Interest Rate Swaps The interest and principal payments for Laureate’s senior long-term debt arrangements are to be paid primarily in USD. Our ability to make debt service payments is subject to fluctuations in the value of the USD relative to foreign currencies, because a majority of our operating cash used to make these payments is generated by subsidiaries with functional currencies other than USD. As part of our overall risk management policies, Laureate has at times entered into foreign currency swap contracts and interest rate swap contracts. See also Note 13, Derivative Instruments. Other Debt Lines of Credit Individual Laureate subsidiaries have the ability to borrow pursuant to unsecured lines of credit and similar short-term borrowing arrangements (collectively, lines of credit). The lines of credit are available for working capital purposes and enable us to borrow and repay until those lines mature. At December 31, 2020 and 2019, the aggregate outstanding balances on our lines of credit were $ 59,014 and $ 14,542 , respectively. At December 31, 2020, we had zero additional available borrowing capacity under our outstanding lines of credit. At December 31, 2020, interest rates on our lines of credit ranged from 2.10 % to 7.93 %. At December 31, 2019, we had one line of credit outstanding that had an interest rate of 7.93 %. Our weighted-average short-term borrowing rate was 6.13 % and 7.93 % at December 31, 2020 and 2019, respectively. Notes Payable Notes payable include mortgages payable that are secured by certain fixed assets. The notes payable have varying maturity dates and repayment terms through 2025. Interest rates on notes payable ranged from 2.10 % to 10.25 % and 5.75 % to 10.25 % at December 31, 2020 and 2019, respectively. In August 2015, Universidad del Valle de México (UVM Mexico) entered into an agreement with a bank for a loan of MXN 1,300,000 (approximately $ 79,000 at the time of the loan). The loan carried a variable interest rate based on the 28-day Mexican Interbanking Offer Rate (TIIE) plus an applicable margin and was scheduled to mature in August 2020. During December 2017, this loan was paid in full and a new loan in the amount of MXN 1,700,000 (approximately $ 89,000 at the time of the loan) was obtained. The new loan was scheduled to mature in December 2023. During the year ended December 31, 2019, this loan was reassigned to Estrater, S.A. de C.V., SOFOM ENR (Estrater), a wholly owned subsidiary of the Company within Mexico. The loan 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 % and 9.06 % as of December 31, 2020 and 2019, respectively). Quarterly principal payments on the loan commenced in December 2018, beginning at MXN 42,500 ($ 2,139 at December 31, 2020) and increasing over the term of the loan to MXN 76,500 ($ 3,850 at December 31, 2020), with a balloon payment of MXN 425,000 ($ 21,388 at December 31, 2020) due at maturity. In June 2020, during the COVID-19 pandemic, Esrater and the lender agreed to defer the quarterly loan payments for six months, until December 2020, after which, the principal and interest payments resumed in accordance to the original agreement. Under the terms of the deferral agreement, the maturity date of the loan was extended by six months to June 22, 2024. As of December 31, 2020 and December 31, 2019, the outstanding balance of this loan was $ 68,013 and $ 77,569 , 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 (UPC). As of December 31, 2020 and 2019, one loan remained outstanding, and had an outstanding balance of $ 13,361 and $ 14,542 , respectively. The remaining loan carries an interest rate of 7.93 % and was originally scheduled to mature in October 2022. Principal payments, plus accrued and unpaid interest, are made semi-annually in April and October. During the COVID-19 pandemic, UPC and the lending bank agreed to defer the scheduled 2020 principal payments for one year (the deferral period), and agreed to extend the loan maturity date by one year to October 2023. During the deferral period, the quarterly interest payments will continue per the terms of the original agreement, and the quarterly principal payments will resume in April 2021. 135 Laureate has outstanding notes payable at Universidad Privada del Norte (UPN), one of our institutions in Peru. As of December 31, 2020 and 2019, these loans had interest rates ranging from 2.10 % to 7.85 % and 7.85 % to 8.70 %, respectively, and had varying maturity dates through January 2022 and December 2024, respectively. As of December 31, 2020 and 2019, these loans had a balance of $ 12,694 and $ 23,480 , respectively. On December 22, 2017, a Laureate subsidiary in Peru entered into an agreement to borrow PEN 247,500 (approximately $ 76,000 at the agreement date). The loan bears interest at a fixed rate of 6.62 % per annum and was originally scheduled to mature in December 2022. Quarterly payments in the amount of PEN 9,281 ($ 2,573 at December 31, 2020) were due from March 2018 through December 2019. The quarterly payments increased to PEN 14,438 ($ 4,003 at December 31, 2020) in March 2020 through the loan's maturity. In June 2020, the Laureate subsidiary and the lender agreed to defer the quarterly principal payments for one year (the deferral period), and agreed to extend the maturity date of the loan by one year to December 2023. During the deferral period, the quarterly interest payments will continue per the terms of the original agreement, and the quarterly principal payments will resume in June 2021. As of December 31, 2020 and 2019, this loan had a balance of $ 44,029 and $ 52,278 , respectively. Note 10. Leases Laureate conducts a significant portion of its operations at leased facilities. These facilities include our corporate headquarters, other office locations, and many of Laureate's higher education facilities. Laureate analyzes each lease agreement to determine whether it should be classified as a finance lease or an operating lease. As a result of adopting ASC Topic 842 on January 1, 2019, we recorded on our balance sheet significant asset and liability balances associated with the operating leases, as described further below. Finance Leases Our finance lease agreements are for property and equipment. The lease assets are included within buildings as well as furniture, equipment and software and the related lease liability is included within debt and finance leases on the consolidated balance sheets. Operating Leases Our operating lease agreements are primarily for real estate space and are included within operating lease ROU assets and operating lease liabilities on the consolidated balance sheets. The terms of our operating leases vary and generally contain renewal options. Certain of these operating leases provide for increasing rent over the term of the lease. Laureate also leases certain equipment under noncancellable operating leases, which are typically for terms of 60 months or less. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. As discussed in Note 2, Significant Accounting Policies, ROU assets and lease liabilities are recognized at the commencement date of the lease based on the estimated present value of lease payments over the lease term. Our variable lease payments consist of non-lease services related to the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Many of our lessee agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. On occasion, Laureate has entered into sublease agreements for certain leased office space; however, the sublease income from these agreements is immaterial. 136 Supplemental balance sheet information related to leases as of December 31, 2020 and 2019 was as follows: Leases Classification 2020 2019 Assets: Operating Operating lease right-of-use assets, net $ 462,767 $ 521,764 Finance Buildings, Furniture, equipment and software, net 49,237 25,962 Total leased assets $ 512,004 $ 547,726 Liabilities: Current Operating Current portion of operating leases 44,631 42,039 Finance Current portion of long-term debt and finance leases 5,430 2,314 Non-current Operating Long-term operating leases, less current portion 474,507 516,979 Finance Long-term debt and finance leases, less current portion 47,209 25,788 Total lease liabilities $ 571,777 $ 587,120 Lease Term and Discount Rate 2020 2019 Weighted average remaining lease terms Operating leases 9.9 years 6.5 years Finance leases 14.5 years 5.3 years Weighted average discount rate Operating leases 9.20 % 6.13 % Finance leases 9.50 % 4.50 % The components of lease cost for the years ended December 31, 2020 and 2019 were as follows: Lease Cost Classification 2020 2019 Operating lease cost Direct costs $ 68,488 $ 75,622 Finance lease cost Amortization of leased assets Direct costs 4,484 2,609 Interest on leased assets Interest expense 2,750 1,831 Short-term lease costs Direct costs 1,121 904 Variable lease costs Direct costs ( 877 ) 2,595 Sublease income Revenues ( 890 ) ( 2,826 ) Total lease cost $ 75,076 $ 80,735 Rent Concessions The Company has taken actions with respect to certain of its existing leases, including engaging with landlords to discuss rent deferrals, as well as other rent concessions. Consistent with the updated guidance from the Financial Accounting Standards Board (FASB) in April 2020, the Company has elected the practical expedient for rent concessions where the total payments required by the modified contract are substantially the same or less than the total payments required by the original contract. In those cases, the Company treated the rent concessions as if there were no modification to the lease contract and accounted for these rent concessions as variable lease payments. 137 As of December 31, 2020, maturities of lease liabilities were as follows: Maturity of Lease Liability Operating Leases Finance Leases Year 1 $ 91,461 $ 9,724 Year 2 87,231 9,143 Year 3 84,988 8,448 Year 4 83,941 6,319 Year 5 82,191 4,915 Thereafter 338,167 85,403 Total lease payments $ 767,979 $ 123,952 Less: interest and inflation ( 248,841 ) ( 71,314 ) Present value of lease liabilities $ 519,138 $ 52,638 Supplemental cash flow information related to leases for the years ended December 31, 2020 and 2019 was as follows: Other Information 2020 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 69,881 $ 75,196 Operating cash flows from finance leases $ 2,750 $ 1,831 Financing cash flows from finance leases $ 2,736 $ 1,267 Leased assets obtained for new finance lease liabilities $ 27,757 $ 24,774 Leased assets obtained for new operating lease liabilities $ 13,565 $ 10,038 Note 11. Commitments and Contingencies Loss Contingencies Laureate is subject to legal actions arising in the ordinary course of its business. In management's opinion, we have adequate legal defenses, insurance coverage and/or accrued liabilities with respect to the eventuality of such actions. We do not believe that any settlement would have a material impact on our Consolidated Financial Statements. Contingent Liabilities for Taxes, Indemnification Assets and Other As of December 31, 2020 and 2019, Laureate has recorded cumulative liabilities totaling $ 38,355 and $ 44,595 , respectively, for taxes other-than-income tax, principally payroll-tax-related uncertainties recorded at the time of an acquisition. Included in these amounts, as of December 31, 2020 and 2019, $ 37,794 and $ 41,560 , respectively, were classified as held for sale. The changes in this recorded liability are related to acquisitions, interest and penalty accruals, changes in tax laws, expirations of statutes of limitations, settlements and changes in foreign currency exchange rates. The terms of the statutes of limitations on these contingencies vary but can be up to 10 years. These liabilities were included in current and long-term liabilities on the Consolidated Balance Sheets. Changes in the recorded values of non-income tax contingencies impact operating income and interest expense, while changes in the related indemnification assets impact only operating income. The total decrease to operating income for adjustments to non-income tax contingencies and indemnification assets was $ 5,619 , $ 6,381 , and $ 4,166 for the years ended December 31, 2020, 2019 and 2018, respectively. In addition, as of December 31, 2020 and 2019, Laureate has recorded cumulative liabilities for income tax contingencies of $ 40,668 and $ 51,442 , respectively, of which $ 11,752 and $ 21,429 , respectively, were classified as held for sale. Income tax contingencies are disclosed further in Note 14, Income Taxes. As of December 31, 2020 and 2019, indemnification assets primarily related to acquisition contingencies were $ 55,940 and $ 69,040 , respectively, of which $ 40,877 and $ 46,284 , respectively, were classified as held for sale. These indemnification assets primarily cover contingencies for income taxes and taxes other-than-income taxes. We have also recorded receivables, which are classified as held for sale, of approximately $ 14,000 and $ 19,000 as of December 31, 2020 and 2019, respectively, from the former owner of one of our Brazil institutions which is guaranteed by future rental payments to the former owner. 138 We have identified certain contingencies, primarily tax-related, that we have assessed as being reasonably possible of loss, but not probable of loss, and could have an adverse effect on the Company’s results of operations if the outcomes are unfavorable. In most cases, Laureate has received indemnifications from the former owners and/or noncontrolling interest holders of the acquired businesses for contingencies, and therefore, we do not believe we will sustain an economic loss even if we are required to pay these additional amounts. In cases where we are not indemnified, the unrecorded contingencies are not individually material and are primarily in Brazil. In the aggregate, we estimate that the reasonably possible loss for these unrecorded contingencies in Brazil could be up to approximately $ 49,000 if the outcomes were unfavorable in all cases. Other Loss Contingencies Laureate has accrued liabilities for certain civil actions against our institutions, a portion of which existed prior to our acquisition of these entities. Laureate intends to vigorously defend against these matters. As of December 31, 2020 and 2019, approximately $ 8,300 and $ 5,800 , respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets. In addition, as of December 31, 2020 and 2019, approximately $ 23,800 and $ 26,300 , respectively, of loss contingencies were classified as liabilities held for sale. Material Guarantees – Other Laureate acquired the remaining 49 % ownership interest in UAM Brazil in April 2013. As part of the agreement to purchase the 49% ownership interest, Laureate pledged 49 % of its 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, Laureate pledged its acquired shares to third-party lenders as a guarantee of our payment obligations under the loans that financed a portion of the purchase price. The shares are pledged until full 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, Surety Bonds and Other Commitments As of December 31, 2020 and 2019, Laureate's outstanding letters of credit (LOCs) and surety bonds primarily consisted of the items discussed below. As of December 31, 2020 and 2019, we had approximately $ 83,600 and $ 127,300 , respectively, posted as an LOC in favor of the DOE. This LOC was required to allow Walden and, in 2019, NSAD, to participate in the DOE Title IV program. 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 9,443 (approximately $ 11,500 at December 31, 2020) and EUR 5,036 (approximately $ 5,500 at December 31, 2019), respectively, posted as cash collateral for LOCs related to the Spain Tax Audits. This was recorded in Continuing Operations and classified as Restricted cash on our December 31, 2020 and 2019 Consolidated Balance Sheets. The cash collateral is related to final assessments issued by the Spanish Taxing Authority (STA) in October 2018 and January 2020 to Iniciativas Culturales de España, S.L. (ICE). In addition, on March 11, 2020, ICE received a preliminary assessment of approximately EUR 21,600 (approximately $ 26,400 at December 31, 2020), related to the STA’s extension of their audit to review withholding taxes on income earned by nonresidents. This assessment is not final, and ICE intends to challenge the assessment before the STA. ICE was formerly our Spanish holding company; during the second quarter of 2020, ICE was migrated to the Netherlands and its name was changed to Laureate Netherlands Holding B.V. As part of our normal operations, our insurers issue surety bonds on our behalf, as required by various state education authorities in the United States. We are obligated to reimburse our insurers for any payments made by the insurers under the surety bonds. As of December 31, 2020 and 2019, the total face amount of these surety bonds, which are fully collateralized with cash, was $ 17,094 and $ 25,582 , respectively. In November 2016, in order to continue participating in Prouni, a federal program that offers tax benefits designed to increase higher education participation rates in Brazil, UAM Brazil posted a guarantee in the amount of $ 15,300 . In connection with the 139 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 $ 1,400 , of which half was reimbursed by the former owner of UAM Brazil, and is being amortized over the five-year term. The Company believes that this matter will not have a material impact on our Consolidated Financial Statements. Note 12. Share-based Compensation and Equity Share-based compensation expense was as follows: For the years ended December 31, 2020 2019 2018 Continuing operations Stock options, net of estimated forfeitures $ 1,291 $ 3,101 $ ( 3,610 ) Restricted stock awards 8,957 7,224 10,184 Total continuing operations $ 10,248 $ 10,325 $ 6,574 Discontinued operations Share-based compensation expense for discontinued operations 3,050 2,669 4,217 Total continuing and discontinued operations $ 13,298 $ 12,994 $ 10,791 The negative stock options expense in 2018 relates to the reversal of expense for a change in estimate related to certain performance-based stock option awards where the performance target became improbable of achievement, as well as the correction of an immaterial error. 2007 Stock Incentive Plan In August 2007, Laureate's Board of Directors (the Board) approved the Laureate Education, Inc. 2007 Stock Incentive Plan (2007 Plan). The total shares authorized under the 2007 Plan were 9,232 . Shares that were forfeited, terminated, canceled, allowed to expire unexercised, withheld to satisfy tax withholding, or repurchased were available for re-issuance. Any awards that were not vested upon termination of employment for any reason were forfeited. Upon voluntary or involuntary termination without cause (including death or disability), the grantee (or the estate) has a specified period of time after termination to exercise options vested on or prior to termination. The 2007 Plan’s restricted stock awards have a claw-back feature whereby all vested shares, or the gross proceeds from the sale of those shares, must be returned to Laureate for no consideration if the employee does not abide by the agreed-upon restrictive covenants such as covenants not to compete and covenants not to solicit. Stock option awards under the 2007 Plan have a contractual life of 10 years and were granted with an exercise price equal to the fair market value of Laureate’s stock at the date of grant. As of December 31, 2020, 2019 and 2018, all outstanding awards that were granted under the 2007 Plan are fully vested. 2013 Long-Term Incentive Plan On June 13, 2013, the Board approved the Laureate Education, Inc. 2013 Long-Term Incentive Plan (2013 Plan), as a successor plan to Laureate’s 2007 Plan. The 2013 Plan became effective in June 2013, following approval by the stockholders of Laureate. No awards have been made under the 2007 Plan since the 2013 Plan has been effective. Under the 2013 Plan, the Company may grant stock options, stock appreciation rights, unrestricted common stock or restricted stock (collectively, ‘‘stock awards’’), unrestricted stock units or restricted stock units, and other stock-based awards, to eligible individuals on the terms and subject to the conditions set forth in the 2013 Plan. As of the effective date, the total number of shares of common stock issuable under the 2013 Plan were 7,521 , which is equal to the sum of (i) 7,074 shares plus (ii) 447 shares of common stock that were still available for issuance under Laureate’s 2007 Plan. In September 2015, the Board and Shareholders approved an amendment to increase the total number of shares of common stock issuable under the 2013 Plan by 1,219 , and in December 2016, the Board and Shareholders approved an amendment to increase the total number of shares of common stock issuable under the 2013 Plan by 3,884 . Shares that are forfeited, terminated, canceled, allowed to expire unexercised, withheld to satisfy tax withholding, or repurchased are available for re-issuance. Any awards that have not vested upon termination of employment for any reason are forfeited. Holders of restricted stock shall have all of the rights of a stockholder of common stock including, without limitation, the right to vote and the right to receive dividends. However, dividends declared payable on performance-based restricted stock shall be subjected to forfeiture at least until achievement of the applicable performance target related to such shares of restricted stock. Any accrued but unpaid dividends on unvested restricted stock shall be forfeited upon termination of employment. Holders of stock units do not have any rights of a stockholder of common stock and are not entitled 140 to receive dividends. All awards outstanding under the 2013 Plan terminate upon the liquidation, dissolution or winding up of Laureate. Stock options, stock appreciation rights and restricted stock units granted under the 2013 Plan have provisions for accelerated vesting if there is a change in control of Laureate. As defined in the 2013 Plan, a change in control means the first of the following to occur: (i) a change in ownership of Laureate or Wengen or (ii) a change in the ownership of assets of Laureate. A change in ownership of Laureate or Wengen shall occur on the date that more than 50 % of the total voting power of the capital stock of Laureate is sold or more than 50 % of the partnership interests of Wengen is sold in a single or a series of related transactions. A change in the ownership of assets of Laureate would occur if 80 % or more of the total gross fair market value of all of the assets of Laureate are sold during a 12-month period. The gross fair market value of Laureate is determined without regard to any liabilities associated with such assets. Upon consummation of the change in control and an employee’s “qualifying termination” (as defined in the employee's award agreement): (a) those time-based stock options and stock appreciation rights that would have vested and become exercisable on or prior to the third anniversary of the effective time of change in control would become fully vested and immediately exercisable; (b) those performance-based stock options and stock appreciation rights that would have vested and become exercisable had Laureate achieved the performance targets in the three fiscal years ending coincident with or immediately subsequent to the effective time of such change in control, excluding the portion of awards that would have vested only pursuant to any catch-up provisions, would become fully vested and immediately exercisable; (c) those time-based restricted stock awards that would have become vested and free of forfeiture risk and lapse restriction on or prior to the third anniversary of the effective time of such change in control would become fully vested and immediately exercisable; (d) those performance-based restricted stock awards that would have vested and become free of forfeiture risk and lapse restrictions had Laureate achieved the target performance in the three fiscal years ending coincident with or immediately subsequent to the effective time of such change in control would become fully vested and immediately exercisable; (e) those time-based restricted stock units that would have become vested or earned on or prior to the third anniversary of the effective time of such change in control would become vested and earned and be settled in cash or shares of common stock as promptly as practicable; and (f) those performance-based restricted stock units, performance shares and performance units that would have become vested or earned had Laureate achieved the target performance in the three fiscal years ending coincident with or immediately subsequent to the effective time of such change in control would become vested and earned and be settled in cash or shares of common stock as promptly as practicable. After giving effect to the foregoing change in control acceleration, any remaining unvested time-based and performance-based stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance share units shall be forfeited for no consideration. As discussed in Note 1, Description of Business, on January 27, 2020, the Company announced that it would explore strategic alternatives for each of its businesses to unlock shareholder value. Also on January 27, 2020, in connection with such announcement, the Company's Board of Directors determined that any outstanding awards under the 2007 Plan and the 2013 Plan that are held by a participant at the time that such participant is terminated without cause as of and following January 27, 2020 and before a divestiture, sale, spin-off, or any other similar corporate transaction involving the participant's employing entity will receive the same treatment that such awards would have received upon a qualifying termination on or following a change in control ( i.e., accelerated vesting of unvested equity awards in accordance with the terms of such awards). Stock Options Under 2013 Plan Stock option awards under the 2013 Plan generally have a contractual term of 10 years and are granted with an exercise price equal to or greater than the fair market value of Laureate’s stock at the date of grant. These options typically vest over a period of five or three years . There were no stock options granted in 2020. Of the options granted in 2019 and 2018, 698 and 690 , respectively, are Time Options and the remainder are Performance Options. The Performance Options granted under the 2013 Plan are eligible for vesting based on achieving annual pre-determined Equity Value performance targets or Adjusted EBITDA targets, as defined in the plan, and the continued service of the employee. Some of the performance-based awards include a catch-up provision, allowing the grantee to vest in any year in which a target is missed if a following year's target is achieved as long as the following year is within eight years from the grant date. Compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award, which is usually the vesting period. For Time Options, expense is recognized ratably over the five-year or three-year vesting period. For Performance Options, expense is recognized under a graded expense attribution method, to the extent that it is probable that the stated annual earnings target will be achieved and options will vest for any year. We assess the probability of each option tranche vesting throughout the life of each grant. 141 Amendment to 2013 Long-Term Incentive Plan On June 19, 2017, the Board approved, subject to stockholder approval, an amendment and restatement of the 2013 Plan. Among other things, the amendment (i) increases the number of shares of Class A common stock that may be issued pursuant to awards under the 2013 Plan to 14,714 ; (ii) adds performance metrics, the ability to grant cash awards, and annual limits on grants, intended to qualify awards as performance-based awards that are not subject to certain limits on tax deductibility of compensation payable to certain executives; and (iii) extends the term of the 2013 Plan to June 18, 2027, the day before the 10th anniversary of the date of adoption of the amendment. On June 19, 2017, the holder of the majority of the voting power of the Company's outstanding stock (the Majority Holder) approved by written consent the amended and restated 2013 Plan and it became effective. Stock Option Activity for 2007 and 2013 Plans The following tables summarize the stock option activity and the assumptions used to record the related share-based compensation expense for the years ended December 31, 2020, 2019 and 2018: 2020 2019 2018 Options Weighted Average Exercise Price Aggregate Intrinsic Value Options Weighted Average Exercise Price Aggregate Intrinsic Value Options Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding at January 1 5,388 $ 18.18 $ 3,396 9,020 $ 18.79 $ 744 9,903 $ 19.30 $ — Granted — — 698 14.99 717 14.27 Exercised ( 860 ) 17.60 2,353 ( 1,569 ) 16.95 794 — — — Forfeited or expired ( 1,100 ) 19.66 ( 2,761 ) 20.06 ( 1,600 ) 19.92 Outstanding at December 31 3,428 17.85 159 5,388 18.18 3,396 9,020 18.79 744 Exercisable at December 31 3,292 17.97 159 4,846 18.50 2,136 7,878 19.11 265 Vested and expected to vest 3,426 17.85 159 5,274 18.20 3,344 8,990 18.80 722 Options Outstanding Options Exercisable Assumption Range* Exercise Prices Number of Shares Weighted Average Remaining Contractual Terms (Years) Number of Shares Weighted Average Remaining Contractual Terms (Years) Risk-Free Interest Rate Expected Terms in Years Expected Volatility Year Ended December 31, 2020 $ 13.97 - $ 15.55 748 6.84 625 6.58 1.99 % - 3.05 % 3.25 - 5.91 38.29 % - 64.18 % $ 16.38 - $ 17.89 2,247 2.72 2,235 2.68 1.38 % - 2.34 % 3.20 - 7.12 35.20 % - 58.84 % $ 21.00 146 0.70 146 0.70 1.81 % 4.00 57.79 % $ 22.88 - $ 31.92 287 0.76 287 0.76 0.73 % - 2.86 % 4.00 - 6.52 39.03 % - 53.80 % Year Ended December 31, 2019 $ 13.97 - $ 15.55 944 7.89 524 7.06 1.81 % - 3.05 % 3.25 - 5.91 38.29 % - 64.18 % $ 17.00 - $ 19.56 3,597 3.12 3,475 2.95 1.38 % - 2.94 % 2.60 - 10.00 35.20 % - 58.84 % $ 21.00 - $ 21.52 330 1.09 330 1.09 0.68 % - 2.61 % 3.79 - 6.55 38.16 % - 57.79 % $ 22.32 - $ 31.92 517 1.44 517 1.44 0.60 % - 3.03 % 3.18 - 6.52 36.93 % - 53.80 % Year Ended December 31, 2018 $ 13.97 - $ 15.55 674 8.31 250 7.98 1.81 % - 3.05 % 3.25 - 5.91 49.98 % - 64.18 % $ 17.00 - $ 19.56 5,730 3.69 5,013 3.50 0.49 % - 2.94 % 2.60 - 10.00 36.04 % - 69.74 % $ 21.00 - $ 21.52 1,917 1.39 1,916 1.39 0.68 % - 2.60 % 2.92 - 6.52 38.16 % - 69.74 % $ 22.32 - $ 31.92 699 2.53 699 2.53 0.60 % - 2.93 % 4.00 - 6.52 36.93 % - 53.80 % * The expected dividend yield is zero for all options in all years. 142 The weighted-average estimated fair value of stock options granted was $ 0.00 , $ 6.05 and $ 7.67 per share for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020, Laureate had $ 821 of unrecognized share-based compensation costs related to stock options outstanding. Of the total unrecognized cost, $ 821 relates to Time Options and $ 0 relates to Performance Options. The unrecognized Time Options expense is expected to be recognized over a weighted-average expense period of 0.1 years. Non-Vested Restricted Stock and Restricted Stock Units The following table summarizes the non-vested restricted stock and restricted stock units activity for the years ended December 31, 2020, 2019 and 2018: 2020 2019 2018 Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Non-vested at January 1 1,251 $ 14.69 1,895 $ 15.31 1,650 $ 19.74 Granted 969 15.80 1,003 15.10 1,306 14.11 Vested ( 861 ) 14.11 ( 765 ) 16.18 ( 853 ) 21.66 Forfeited ( 359 ) 15.95 ( 882 ) 15.20 ( 208 ) 17.41 Non-vested at December 31 1,000 15.81 1,251 14.69 1,895 15.31 Restricted stock units granted under the 2013 Plan consist of time-based restricted stock units (RSU), performance-based restricted stock units (PSU) and market condition-based restricted stock units with various vesting periods over the next three to five years . PSUs are eligible to vest annually upon the Board's determination that the annual performance targets are met. The performance targets are the same as for Performance Options, as defined in the 2013 Plan, except for targets set for certain PSUs granted in 2016. The vesting percentage for those PSUs is based on LEI’s attainment of a performance level: threshold, target, maximum or a percentage between the “Threshold” and “Target; Maximum” which is determined by linear interpolation, provided that continued employment is required through the date the attainment of target is approved by the Compensation Committee. The PSUs granted from 2013 to February 2016 include a catch-up provision, allowing the grantee to vest in any year in which a target is missed if a following year's target is obtained as long as the following year is within eight years from the grant date. During the fourth quarter of 2017, Laureate granted a small number of restricted stock units where vesting is based on the fulfillment of both a service condition and the achievement of a Laureate stock price hurdle during the performance period, which is considered to be a market condition. The fair value of the non-vested restricted stock awards in the table above is measured using the fair value of Laureate’s common stock on the date of grant or the most recent modification date, whichever is later. As of December 31, 2020, unrecognized share-based compensation expense related to non-vested restricted stock and restricted stock unit awards was $ 8,300 . Of the total unrecognized cost, $ 5,331 relates to time-based RSUs, $ 2,967 relates to PSUs and $ 2 related to market-condition-based restricted stock units. This unrecognized expense for time-based restricted stock and restricted stock units will be recognized over a weighted-average expense period of 1.0 year. Other Stockholders' Equity Transactions Series A Convertible Redeemable Preferred Stock In December 2016 and January 2017, the Company issued an aggregate of 400 shares of convertible redeemable preferred stock (the Series A Preferred Stock) for total gross proceeds of $ 400,000 . The Series A Preferred Stock included a Beneficial Conversion Feature (BCF) that was contingent on a qualified IPO (as defined in the Certificate of Designations governing the terms of the Series A Preferred Stock), which was consummated on February 6, 2017. Accordingly, during the first quarter of 2017, the Company recorded the BCF at its estimated fair value as a reduction of the carrying value of the Series A Preferred Stock and an increase to Additional paid-in capital. The accretion of this BCF and dividends on the Series A Preferred Stock reduced net income available to common stockholders in the calculation of earnings per share, as shown in Note 15, Earnings (Loss) Per Share. The total BCF of $ 265,368 was accreted using a constant yield approach over a one-year period. For the year ended December 31, 2018, we recorded total accretion of the BCF and dividends of $ 61,974 . 143 On April 23, 2018, all of the issued and outstanding shares of the Series A Preferred Stock were converted into 36,143 shares of the Company’s Class A common stock, par value $ 0.004 per share. This conversion was treated as a redemption for accounting purposes and resulted in an increase in Additional paid-in capital upon reclassification of the carrying value of the Series A Preferred Stock. A portion of the fair value of the shares of Class A common stock issued to redeem the Series A Preferred Stock was allocated to the BCF contained in the Series A Preferred Stock. The difference between the remaining fair value of the shares of Class A common stock issued, the carrying value of the Series A Preferred Stock and fair value of the embedded derivatives resulted in a gain of 74,110 , which was recorded as Additional paid-in capital but included in income available to common stockholders in the calculation of earnings per share. Secondary Offerings In November 2018, Wengen, our controlling stockholder, converted 14,088 owned shares of the Company's Class B common stock into an equal number of shares of the Company's Class A common stock and sold the 14,088 shares of Class A common stock to the public at a price of $ 14.00 per share, prior to underwriting discounts and commissions. Wengen received all of the net proceeds from this offering and no shares of Class A common stock were sold by the Company. In the secondary offering, KKR Capital Markets, an affiliate of KKR who in turn is an affiliate of Wengen, bought approximately 757 shares of Class A common stock. In June 2019, Wengen converted owned shares of the Company's Class B common stock into an equal number of shares of the Company's Class A common stock and sold a total of 10,955 shares of Class A common stock in a secondary offering at a price of $ 15.3032 per share. Wengen received all of the net proceeds from this offering and no shares of Class A common stock were sold by the Company. In September 2019, Wengen converted owned shares of the Company's Class B common stock into an equal number of shares of the Company's Class A common stock and sold a total of 15,000 shares of Class A common stock in a secondary offering at a price of $ 16.85 per share, prior to underwriting discounts and commissions. Wengen received all of the net proceeds from this offering and no shares of Class A common stock were sold by the Company. 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 $ 150,000 of the Company’s Class A common stock. In early October 2019, the Company's stock repurchases reached the authorized limit of $ 150,000 . On October 14, 2019, the Company's board of directors approved the increase of its existing authorization to repurchase shares of the Company's Class A common stock by $ 150,000 for a total authorization (including the previously authorized repurchases) of up to $ 300,000 of the Company's Class A common stock. The Company’s repurchases were made in a block trade, as well as on the open market at prevailing market prices and pursuant to a Rule 10b5-1 stock repurchase plan, in accordance with applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). In January 2020, the Company repurchased 1,619 shares of its outstanding Class A common stock for a total purchase price of $ 29,203 and reached the total authorized limit of $ 300,000 . On November 5, 2020, Laureate’s board of directors announced a new stock repurchase program to acquire up to $ 300,000 of the Company’s Class A common stock. The Company’s proposed repurchases may be made from time to time on the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations promulgated under the 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. Note 13. Derivative Instruments In the normal course of business, our operations are exposed to fluctuations in foreign currency values and interest rate changes. We may seek to control a portion of these risks through a risk management program that includes the use of derivative instruments. The interest and principal payments for Laureate’s senior long-term debt arrangements are to be paid primarily in USD. Our ability to make debt payments is subject to fluctuations in the value of the USD against foreign currencies, since a majority of 144 our operating cash used to make these payments is generated by subsidiaries with functional currencies other than USD. As part of our overall risk management policies, Laureate has at times entered into foreign currency swap contracts and floating-to-fixed interest rate swap contracts. In addition, we occasionally enter into foreign exchange forward contracts to reduce the impact of other non-functional currency-denominated receivables and payables. We do not enter into speculative or leveraged transactions, nor do we hold or issue derivatives for trading purposes. We generally intend to hold our derivatives until maturity. Laureate reports all derivatives at fair value. These contracts are recognized as either assets or liabilities, depending upon the derivative’s fair value. Gains or losses associated with the change in the fair value of these swaps are recognized in our Consolidated Statements of Operations on a current basis over the term of the contracts, unless designated and effective as a hedge. For swaps that are designated and effective as cash flow hedges, gains or losses associated with the change in fair value of the swaps are recognized in our Consolidated Balance Sheets as a component of Accumulated Other Comprehensive Income (AOCI) and amortized into earnings as a component of Interest expense over the term of the related hedged items. Upon early termination of an effective interest rate swap designated as a cash flow hedge, unrealized gains or losses are deferred in our Consolidated Balance Sheets as a component of AOCI and are amortized as an adjustment to Interest expense over the period during which the hedged forecasted transaction affects earnings. For derivatives that are both designated and effective as net investment hedges, gains or losses associated with the change in fair value of the derivatives are recognized on our Consolidated Balance Sheets as a component of AOCI. The reported fair values of our derivatives, which are classified in Derivative instruments on our Consolidated Balance Sheets, were as follows: December 31, 2020 December 31, 2019 Derivatives not designated as hedging instruments: Current liabilities: Cross currency swaps $ 17,680 $ — Long-term liabilities: Cross currency swaps 8,144 — Total derivative instrument assets $ — $ — Total derivative instrument liabilities $ 25,824 $ — Derivatives Designated as Hedging Instruments Net Investment Hedge - Cross Currency Swaps In December 2017, Laureate entered into two EUR-USD cross currency swaps (net investment hedges) to hedge the foreign currency exchange volatility on operations of our Euro functional currency subsidiaries and better match our cash flows with the currencies in which our debt obligations are denominated. Both swaps had an effective date of December 22, 2017 and a maturity date of November 2, 2020, and were designated at inception as effective net investment hedges. In April 2019, the Company terminated both EUR-USD cross currency swaps for a net settlement received of $ 7,679 , which is included in Settlement of derivatives related to sale of discontinued operations and net investment hedge on the Consolidated Statement of Cash Flows for the year ended December 31, 2019. The terms of the swaps specified that at maturity on the first swap, Laureate would deliver the notional amount of EUR 50,000 and receive USD $ 59,210 at an implied exchange rate of 1.1842 and at maturity on the second swap, Laureate would deliver the notional amount of EUR 50,000 and receive USD $ 59,360 at an implied exchange rate of 1.1872 . Semiannually until maturity, Laureate was obligated to pay 5.63 % and receive 8.25 % on EUR 50,000 and USD $ 59,210 , respectively, on the first swap and pay 5.6675 % and receive 8.25 % on EUR 50,000 and USD $ 59,360 , respectively, on the second swap. The swaps were determined to be 100 % effective; therefore, the amount of gain or loss recognized in income on the ineffective portion of derivative instruments designated as hedging instruments was $ 0 . The accumulated gain recognized in AOCI will be deferred from earnings until the sale or liquidation of the hedged investee. Cash Flow Hedge - 2024 Term Loan Interest Rate Swaps In May 2017, Laureate entered into, and designated as cash flow hedges, four pay-fixed, receive-floating amortizing interest rate swaps with notional amounts of $ 100,000 , $ 100,000 , $ 200,000 and $ 300,000 , respectively. These notional amounts matched the corresponding principal of the 2024 Term Loan borrowings of which these swaps were effectively hedging the interest payments. As such, the notional values amortized annually based on the terms of the agreements to match the principal 145 borrowings as they were repaid. These swaps effectively fixed the floating interest rate on the term loan to reduce exposure to variability in cash flows attributable to changes in the USD-LIBOR-BBA swap rate. All four swaps were fully settled on August 21, 2018, prior to their May 31, 2022 maturity date, with the remaining AOCI to be ratably reclassified into income through Interest expense over the remaining maturity period of the 2024 Term Loans. The cash received at settlement from the swap counterparties was $ 14,117 , which is included in (Payments for) proceeds from settlement of derivative contracts on the Consolidated Statement of Cash Flows for the year ended December 31, 2018. During the second quarter of 2019, the Company accelerated the reclassification of amounts in AOCI to earnings as a result of the hedged forecasted transactions becoming probable not to occur, due to the full repayment of the 2024 Term Loan in June 2019 using proceeds from the sale of our institutions in Portugal and Spain. The accelerated amounts were a gain of approximately $ 9,800 and were recorded as a decrease to Interest expense. Prior to settlement of the swaps, they were determined to be 100 % effective; therefore, the amount of gain or loss recognized in income on the ineffective portion was $ 0 . The table below shows the total recorded unrealized (loss) gain in Comprehensive income for the derivatives designated as hedging instruments. The impact of these derivative instruments on Comprehensive income, Interest expense and AOCI for the years ended December 31, 2020, 2019 and 2018 were as follows: (Loss) Gain Recognized in Comprehensive Income (Effective Portion) Income Statement Location Gain Reclassified from AOCI to Income (Effective Portion) Total Consolidated Interest Expense 2020 2019 2018 2020 2019 2018 2020 2019 2018 Cash flow hedge Interest rate swaps $ — $ ( 11,818 ) $ 5,772 Interest expense $ — $ 11,818 $ 2,446 Net investment hedge Cross currency swaps — 3,868 7,937 N/A — — — Total $ — $ ( 7,950 ) $ 13,709 $ — $ 11,818 $ 2,446 $ ( 100,894 ) $ ( 125,042 ) $ ( 188,431 ) 146 Derivatives Not Designated as Hedging Instruments BRL to USD Foreign Currency Swaps In November 2020, in connection with the signing of the sale agreement for its Brazilian operations, Laureate entered into six BRL-to-USD swap agreements. The purpose of these swaps is to mitigate the risk of foreign currency exposure on the expected proceeds from the sale. Four of the swaps are put/call options with a maturity date of May 13, 2021, where Laureate can put the combined notional amount of BRL 1,875,000 and call a combined USD amount of $ 343,783 at an exchange rate of 5.4540 BRL per 1 USD. The terms of these options include deferred premium payments from Laureate to the counterparties of $ 18,294 , which were paid in full in January 2021. The remaining two swaps are deal contingent, with the settlement date occurring on the second business day following the completion of the aforementioned sale. On the settlement date, Laureate will deliver the combined notional amount of BRL 1,900,000 (BRL 950,000 for each swap) and receive an amount in USD equal to each swap's notional amount multiplied by each swap's contract rate of exchange at the settlement date. For one of the swaps, the contract rate of exchange has a possible range of 5.484143 - 5.678624 BRL per 1 USD, and the maturity date is December 31, 2021. For the other swap, the contract rate of exchange has a possible range of 5.44706 - 5.63255 BRL per 1 USD, and the maturity date is January 3, 2022. As of December 31, 2020, these swaps had an aggregate fair value of $ 25,824 , of which $ 17,680 was recorded in Derivative instruments as a current liability and $ 8,144 was recorded in Derivative instruments as a long-term liability through a charge to unrealized loss on derivatives. These swaps are not designated as hedges for accounting purposes. AUD to USD Foreign Currency Swaps In March 2020, Laureate entered into an AUD-to-USD swap agreement with a maturity date of April 15, 2020, in connection with an intercompany funding transaction. The terms of the swap stated that on the maturity date, Laureate would deliver the notional amount of AUD 21,000 and receive USD $ 13,713 at a rate of exchange of 0.6530 USD per 1 AUD. On April 8, 2020, Laureate entered into a net settlement agreement for this swap to deliver USD $ 12,999 and receive the notional amount of AUD 21,000 at a rate of exchange of 0.6190 USD per 1 AUD. This net settlement was executed on April 15, 2020, which resulted in a realized gain and proceeds received of $ 714 . This amount is included in (Loss) gain on derivatives on the Consolidated Statement of Operations for the year ended December 31, 2020, and is included in (Payments for) proceeds from settlement of derivative contracts on the Consolidated Statement of Cash Flows for the year ended December 31, 2020. This swap was not designated as a hedge for accounting purposes. On April 8, 2020, Laureate entered into a new AUD-to-USD swap agreement with a notional amount of AUD 21,000 . On the maturity date of June 15, 2020, Laureate delivered the notional amount and received USD $ 12,921 at a rate of exchange of 0.6153 USD per 1 AUD, resulting in a realized loss of $ 1,340 . This amount is included in (Loss) gain on derivatives on the Consolidated Statements of Operations for the year ended December 31, 2020 and is included in (Payments for) proceeds from settlement of derivative contracts on the Consolidated Statement of Cash Flows for the year ended December 31, 2020. This swap was not designated as a hedge for accounting purposes. EUR to USD Foreign Currency Swaps - Spain and Portugal In December 2018, Laureate entered into two EUR-to-USD swap agreements in connection with the signing of the sale agreement for the subsidiaries in Spain and Portugal. The purpose of the swaps was to mitigate the risk of foreign currency exposure on the sale proceeds. The first swap was deal contingent, with the settlement date occurring on the second business day following the completion of the sale. On the settlement date, Laureate delivered the notional amount of EUR 275,000 and received USD $ 314,573 at a rate of exchange of 1.1439 , which resulted in a realized gain of $ 5,088 . The second swap was a put/call option with a maturity date of April 8, 2019, where Laureate could put the notional amount of EUR 275,000 and call the USD amount of $ 310,750 at an exchange rate of 1.13 . Based on expected timing of the sale transaction, the swap was terminated on April 2, 2019, resulting in a payment to the counterparty of $ 980 that included a deferred premium payment net of proceeds received. The realized gain of $ 5,088 and the payment of $ 980 are included in Settlement of derivatives related to sale of discontinued operations and net investment hedge on the Consolidated Statement of Cash Flows for the year ended December 31, 2019. These swaps were not designated as hedges for accounting purposes. In addition to the swaps above, in order to continue to mitigate the risk of foreign currency exposure on the expected sale proceeds for Spain and Portugal in advance of the May 31, 2019 sale closing date, in April 2019, Laureate also entered into seven EUR-to-USD swap agreements with a combined notional amount of EUR 375,000 . On the maturity date of May 15, 2019, Laureate paid the EUR notional amount and received a combined total of USD $ 423,003 at a rate of exchange of 1.128007 , resulting in a gain of $ 1,644 . In May 2019, Laureate entered into nine EUR-to-USD swap agreements with a combined notional amount of EUR 532,000 . On the maturity date of June 4, 2019, Laureate paid the EUR notional amount and 147 received a combined total of USD $ 597,149 at a rate of exchange of 1.122461 , resulting in a realized loss of approximately $ 565 . The realized gain of $ 1,644 and the realized loss of $ 565 are included in Settlement of derivatives related to sale of discontinued operations and net investment hedge on the Consolidated Statement of Cash Flows for the year ended December 31, 2019. These swaps were not designated as hedges for accounting purposes. CLP to Unidad de Fomento (UF) Cross Currency and Interest Rate Swaps The cross currency and interest rate swap agreements are intended to provide a better correlation between our debt obligations and operating currencies. In 2010, one of our subsidiaries in Chile entered into four cross currency and interest rate swap agreements with an aggregate notional amount of approximately $ 31,000 , and converted CLP-denominated, floating-rate debt to fixed-rate UF-denominated debt. The UF is a Chilean inflation-adjusted unit of account. One of the swaps was scheduled to mature on December 1, 2024, and the remaining three were scheduled to mature on July 1, 2025 (the CLP to UF cross currency and interest rate swaps); however, during the first quarter 2019, the Company elected to settle all four swaps for a net cash payment of approximately USD $ 8,200 . In addition, Chile also elected to repay a portion of the principal balance outstanding for certain notes payable. This payment is included in (Payments for) proceeds from settlement of derivative contracts on the Consolidated Statement of Cash Flows for the year ended December 31, 2019. The CLP to UF cross currency and interest rate swaps were not designated as hedges for accounting purposes. MXN to USD Foreign Currency Swaps In September 2019, Laureate entered into three MXN to USD swap agreements with a combined notional amount of MXN 453,146 . During the fourth quarter of 2019, Laureate delivered the notional amount and received USD $ 23,000 at a rate of exchange of 0.0508 , resulting in a realized loss of $ 583 . The realized loss is included in (Payments for) proceeds from settlement of derivative contracts on the Consolidated Statement of Cash Flows for the year ended December 31, 2019. These swaps were not designated as hedges for accounting purposes. AUD to USD Foreign Currency Swaps In September 2019, Laureate entered into two AUD to USD swap agreements with a combined notional amount of AUD 11,000 . During the fourth quarter ended 2019, Laureate received the notional amount and delivered USD $ 7,443 at a rate of exchange of 0.6766 USD per 1 AUD, resulting in a realized gain of $ 45 . The realized gain is included in (Payments for) proceeds from settlement of derivative contracts on the Consolidated Statement of Cash Flows for the year ended December 31, 2019. These swaps were not designated as hedges for accounting purposes. EUR to USD Foreign Currency Swaps - Cyprus and Italy In December 2017, the Company entered into a total of six EUR to USD forward exchange swap agreements in connection with the sale of its institutions in Cyprus and Italy. The purpose of the swaps was to mitigate the risk of foreign currency exposure on the sale proceeds. The swaps had an aggregate notional amount of EUR 200,000 and matured on January 16, 2018, resulting in a total realized loss on derivatives of $ 9,960 , which was included in Settlement of derivatives related to sale of discontinued operations and net investment hedge on the Consolidated Statement of Cash Flows for the year ended December 31, 2018. The swaps were not designated as hedges for accounting purposes. Derivatives related to Series A Preferred Stock Offering In December 2016 and January 2017, the Company issued shares of convertible redeemable preferred stock (the Series A Preferred Stock) and identified several embedded derivatives related to certain contingent redemption features of the Series A Preferred Stock. These derivatives were not designated as hedges for accounting purposes and therefore the changes in estimated fair value were recognized as a component of earnings. The Series A Preferred Stock was converted into Class A common stock on April 23, 2018. The estimated fair value of these derivatives at the conversion date was approximately $ 140,300 ; accordingly, the derivative assets were recorded at their estimated fair values through a corresponding gain on derivatives, a component of non-operating income. The increase in fair value of the derivatives can be attributed to the use of the Monte Carlo Simulation Method to value the derivatives prior to the April 23, 2018 conversion date, when the probability of conversion increased to 100 % and the valuation inputs became definitive. In connection with the conversion of the Series A Preferred Stock into Class A common stock, the carrying value of the derivative assets was reclassified into equity in April 2018. 148 Components of the reported Gain (loss) on derivatives not designated as hedging instruments in the Consolidated Statements of Operations were as follows: For the years ended December 31, 2020 2019 2018 Unrealized (Loss) Gain Contingent redemption features - Series A Preferred $ — $ — $ ( 42,140 ) Cross currency and interest rate swaps ( 25,354 ) 4,022 257 Total unrealized (loss) gain ( 25,354 ) 4,022 ( 41,883 ) Realized (Loss) Gain Contingent redemption features - Series A Preferred — — 140,320 Cross currency and interest rate swaps ( 626 ) 4,278 ( 9,961 ) Total realized (loss) gain ( 626 ) 4,278 130,359 Total (Loss) Gain Contingent redemption features - Series A Preferred — — 98,180 Cross currency and interest rate swaps ( 25,980 ) 8,300 ( 9,704 ) (Loss) gain on derivatives, net $ ( 25,980 ) $ 8,300 $ 88,476 Credit Risk and Credit-Risk-Related Contingent Features Laureate’s derivatives expose us to credit risk to the extent that the counterparty may possibly fail to perform its contractual obligation. The amount of our credit risk exposure is equal to the fair value of the derivative when any of the derivatives are in a net gain position. As of December 31, 2020, the estimated fair value of derivatives in a gain position was $ 0 . Laureate has limited its credit risk by only entering into derivative transactions with highly rated major financial institutions. We have not entered into collateral agreements with our derivatives' counterparties. At December 31, 2020, two institutions which were rated A1 and one institution which was rated A2 by the global rating agency of Moody's Investors Service accounted for all of Laureate's derivative credit risk exposure. Laureate's agreements with its derivative counterparties contain a provision under which we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to a default on the indebtedness. As of December 31, 2020, we had not breached any default provisions and had not posted any collateral related to these agreements. If we had breached any of these provisions, we could have been required to settle the obligations under the derivative agreements for an amount that, at a maximum, we believe would approximate their estimated fair value of $ 25,824 as of December 31, 2020. Note 14. Income Taxes Significant components of the Income tax (expense) benefit on earnings from Continuing Operations were as follows: For the years ended December 31, 2020 2019 2018 Current: United States $ 6,391 $ 17,493 $ ( 33,123 ) Foreign ( 72,660 ) ( 77,421 ) ( 72,667 ) State — — — Total current ( 66,269 ) ( 59,928 ) ( 105,790 ) Deferred: United States 124,718 22,337 29,619 Foreign 25,612 6,265 4,814 State 46,008 285 161 Total deferred 196,338 28,887 34,594 Total income tax benefit (expense) $ 130,069 $ ( 31,041 ) $ ( 71,196 ) 149 For the years ended December 31, 2020, 2019 and 2018, foreign (loss) income from Continuing Operations before income taxes was $( 250,910 ), $ 2,358 , and $ 391,038 , respectively. For the years ended December 31, 2020, 2019 and 2018, domestic loss from Continuing Operations before income taxes was $ 199,928 , $ 122,019 , and $ 511,159 , respectively. Significant components of deferred tax assets and liabilities arising from Continuing Operations were as follows: December 31, 2020 2019 Deferred tax assets: Net operating loss and tax credits carryforwards $ 410,456 $ 335,325 Depreciation 45,717 38,532 Deferred revenue 10,913 13,587 Allowance for doubtful accounts 13,552 9,772 Deferred compensation 16,997 20,551 Unrealized loss 3,128 5,395 Nondeductible reserves 24,835 27,062 Interest 32,282 8,630 Operating lease asset 140,500 158,189 Total deferred tax assets 698,380 617,043 Deferred tax liabilities: Investment in subsidiaries 71,183 86,906 Amortization of intangible assets 133,091 175,386 Operating lease liability 127,131 148,436 Other 1,918 3,137 Total deferred tax liabilities 333,323 413,865 Net deferred tax assets 365,057 203,178 Valuation allowance for deferred tax assets ( 320,858 ) ( 324,119 ) Net deferred tax assets (liabilities) $ 44,199 $ ( 120,941 ) The 2019 column of the table above was recast to remove deferred taxes now classified as held for sale. During 2020, the Company amended the partnership agreement of one of its subsidiaries that owned intellectual property, such that the s ubsidiary became subject to tax in the Netherlands, and conducted an internal restructuring of its Dutch subsidiaries. Additionally, during the year there was an impairment event for book purposes in the Netherlands, affecting the value of its i ntellectual property . The net result was a tax benefit of approximately $ 19,000 that represents the book-and-tax basis difference of the intellectual property, measured based on the intellectual property’s fair value. In the effective tax rate reconciliation table below, this net benefit is reflected in two components. The first component is simply a benefit from pretax loss at the United States statutory tax rate of $ 51,000 . The second component of $ 32,000 is primarily the tax-effected difference between the book basis being impaired and the tax basis, net of uncertain tax positions, being established during the year. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act provides a substantial stimulus and assistance package intended to address the impact of the COVID-19 pandemic, including tax relief and government loans, grants and investments. The CARES Act did not have a significant impact on Laureate’s Continuing Operations for the year ended December 31, 2020. We continue to monitor any effects that may result from the CARES Act as well as any similar stimulus legislation enacted in other jurisdictions where Laureate has material operations. In July 2020, the U.S. Treasury Department released final regulations addressing global intangible low-taxed income (GILTI). Among other changes, these regulations provide an election to exclude certain foreign income of foreign corporations from GILTI if such income is deemed high-taxed in a foreign jurisdiction. These elective provisions may be applied retroactively and accordingly require significant analysis of the potential financial statement impacts. During the third quarter of 2020, the Company recorded a discrete tax benefit of approximately $ 70,900 related to 2018 and 2019. Laureate previously has not provided deferred taxes on unremitted earnings attributable to international companies that have been considered to be reinvested indefinitely. As of December 31, 2020, undistributed earnings from foreign subsidiaries totaled $ 610,800 . Except as discussed below regarding Peru, all historical earnings are permanently reinvested. 150 A portion of the historical earnings of Peru are no longer needed to be retained in that market. The Company has recorded a deferred tax liability of $ 100 on $ 2,000 USD of earnings to account for the withholding taxes on this eventual distribution. If the Company were to remove its assertion and distribute the remaining unremitted earnings, we would record approximately $ 18,800 in additional deferred tax liabilities. The amount of additional deferred tax liabilities recognized could increase if our expectations change based on future developments such that some or all of the undistributed earnings of our foreign subsidiaries are remitted to the United States in the foreseeable future. The Company has $ 634,200 of US federal net operating loss carryforwards that expire from 2035 to 2036 and $ 67,600 of US federal net operating loss carryforwards that do not expire. The Company has $ 168,100 of deferred tax asset for US state net operating loss carryforwards that expire from 2021 to 2040 and $ 7,500 of deferred tax asset for US state net operating loss carryforwards that do not expire. The Company has $ 509,200 of foreign net operating loss carryforwards that expire from 2023 to 2030. The Company has $ 152,700 of tax credit carryforwards that do not expire and $ 76,400 of interest carryforwards that do not expire. The Company assesses the realizability of deferred tax assets by examining all available evidence, both positive and negative. Accounting guidance restricts the amount of reliance the Company can place on projected taxable income to support the recovery of the deferred tax assets when a company is in a three-year cumulative loss position. A valuation allowance is recorded when the company is not able to identify a source of income to support realization of the deferred tax asset on a more-likely-than-not basis. The reconciliations of the beginning and ending balances of the valuation allowance on deferred tax assets were as follows: For the years ended December 31, 2020 2019 2018 Balance at beginning of period $ 324,119 $ 562,944 $ 624,487 (Deductions) additions from tax expense from continuing operations ( 19,879 ) 2,427 ( 61,373 ) Charges to other accounts Additions 16,618 — — Deductions — ( 241,252 ) ( 170 ) Balance at end of period $ 320,858 $ 324,119 $ 562,944 The reconciliations of the reported Income tax (expense) benefit to the amount that would result by applying the United States federal statutory tax rate of 21% to income from Continuing Operations before income taxes were as follows: For the years ended December 31, 2020 2019 2018 Tax benefit at the United States statutory rate $ 94,676 $ 19,566 $ 17,456 Permanent differences ( 24,184 ) ( 7,693 ) 6,008 Global Intangible Low Taxed Income 70,965 ( 38,305 ) ( 35,631 ) Netherlands intellectual property restructuring ( 32,425 ) — — State income tax benefit, net of federal tax effect 36,343 5,783 4,445 Tax effect of foreign income taxed at lower rate ( 5,534 ) ( 25,228 ) 33,451 Change in valuation allowance 3,241 ( 25,337 ) ( 46,171 ) Effect of tax contingencies 2,706 11,635 2,215 Tax credits ( 2,302 ) 26,436 — Withholding taxes ( 13,254 ) ( 869 ) ( 52,064 ) Other ( 163 ) 2,971 ( 905 ) Total income tax benefit (expense) $ 130,069 $ ( 31,041 ) $ ( 71,196 ) 151 The reconciliations of the beginning and ending amount of unrecognized tax benefits were as follows: For the years ended December 31, 2020 2019 2018 Beginning of the period $ 56,395 $ 50,900 $ 69,801 Additions for tax positions related to prior years 3,582 — 1,640 Decreases for tax positions related to prior years — ( 1,338 ) ( 199 ) Additions for tax positions related to current year 327,142 8,585 8,731 Decreases for unrecognized tax benefits as a result of a lapse in the statute of limitations ( 1,836 ) ( 1,752 ) ( 1,500 ) Settlements for tax positions related to prior years — — ( 27,573 ) End of the period $ 385,283 $ 56,395 $ 50,900 Laureate records interest and penalties related to uncertain tax positions as a component of Income tax expense. During the years ended December 31, 2020, 2019 and 2018, Laureate recognized interest and penalties related to income taxes of $ 1,402 , $ 2,587 , and $ 2,762 , respectively. Laureate had $ 14,731 and $ 16,513 of accrued interest and penalties at December 31, 2020 and 2019, respectively. During the years ended December 31, 2020, 2019 and 2018, Laureate derecognized $ 4,458 , $ 6,920 , and $ 11,523 , respectively, of previously accrued interest and penalties. Approximately $ 264,526 of unrecognized tax benefits, if recognized, will affect the effective income tax rate. It is reasonably possible that Laureate’s unrecognized tax benefits may decrease within the next 12 months by up to approximately $ 13,265 as a result of the lapse of statutes of limitations and as a result of the final settlement and resolution of outstanding tax matters in various jurisdictions. Laureate and various subsidiaries file income tax returns in the United States federal jurisdiction, and in various states and foreign jurisdictions. With few exceptions, Laureate is no longer subject to United States federal, state and local, or foreign income tax examinations by tax authorities for years before 2010. United States federal and state statutes are generally open back to 2017; however, the Internal Revenue Service (the IRS) has the ability to challenge 2005 through 2016 net operating loss carryforwards. Except as discussed below, statutes of other major jurisdictions are open back to 2014 for Spain and 2010 for Mexico. ICE Audit During 2010 and 2013, Laureate was notified by the Spain Tax Authorities (STA) that two tax audits of our Spanish subsidiaries were being initiated for 2006 through 2007, and for 2008 through 2010, respectively. On June 29, 2012, the STA issued a final assessment to ICE, our Spanish holding company, for EUR 11,051 ($ 13,500 at December 31, 2020), including interest, for the 2006 through 2007 period. Laureate appealed this final assessment related to the 2006 through 2007 period and issued a cash-collateralized letter of credit in July 2012, in order to continue the appeal process. In October 2015, the STA issued a final assessment to ICE for the 2008 through 2010 period for approximately EUR 17,187 ($ 21,000 at December 31, 2020), including interest, for those three years. In order to continue the appeals process, we issued cash-collateralized letters of credit for the 2008 to 2010 period assessment amount, plus interest and surcharges. During the second quarter of 2015, the Company reassessed its position regarding the ICE tax audit matters as a result of recent adverse decisions from the Spanish Supreme Court and the Spanish National Court on cases for taxpayers with similar facts and determined that it could no longer support a more-likely-than-not position. As a result, during 2015, the Company recorded a provision totaling EUR 37,610 (approximately $ 42,100 at that date). The Company plans to continue the appeals process for the periods already audited and assessed. During the second quarter of 2016, we were notified by the STA that tax audits of the Spanish subsidiaries were also being initiated for 2011 and 2012, and in July 2017 the tax audit was extended to include 2013. Also, during the second quarter of 2016, the Regional Administrative Court issued a decision against the Company on its appeal. The Company has further appealed at the Highest Administrative Court level, which appeal was rejected. The Company has appealed both decisions to the National Court. In the first quarter of 2018, the Company made payments to the Spanish Tax Authorities (STA) totaling approximately EUR 29,600 (approximately $ 36,800 at the time of payment) in order to reduce the amount of future interest that could be incurred as the appeals process continues. The payments were made using the restricted cash that collateralized the letters of credit and reduced the liability that had been recorded for this income tax contingency. In October of 2018, the STA issued a final assessment to ICE for the 2011 through 2013 period totaling approximately EUR 4,100 (approximately $ 5,000 at December 31, 2020), including interest. In February 2019, the Company appealed this assessment to the Highest Administrative Court. As of December 31, 2020, the Company has posted a cash-collateralized letter of credit of approximately $ 5,500 for the assessment, plus a surcharge. In May 2019, the Company was notified by the STA 152 that a new tax audit of fiscal years 2014 and 2015 was being initiated. In January 2020, ICE received a final assessment from the STA for the 2014 to 2015 period totaling approximately EUR 4,300 (approximately $ 5,300 at December 31, 2020). ICE intends to appeal the referred assessment before the Administrative Central Court, and, in order to do so, ICE has posted a cash-collateralized letter of credit of approximately EUR 4,300 ($ 5,300 at December 31, 2020). Finally, the referred tax audit was extended in June 2019 to the non-resident income tax for the second semester of fiscal year 2015. On March 11, 2020, ICE received a preliminary assessment of approximately EUR 21,600 (approximately $ 26,400 at December 31, 2020). This assessment is not final, and we intend to challenge the referred assessment before the STA. Note 15. Earnings (Loss) Per Share Our common stock has a dual class structure, consisting of Class A common stock and Class B common stock. Other than voting rights, the Class B common stock has the same rights as the Class A common stock and therefore both are treated as the same class of stock for purposes of the earnings per share calculation. Laureate computes basic earnings per share (EPS) by dividing income available to common shareholders by the weighted average number of common shares outstanding for the reporting period. Diluted EPS reflects the potential dilution that would occur if share-based compensation awards, contingently issuable shares, and convertible securities were exercised or converted into common stock. To calculate the diluted EPS, the basic weighted average number of shares is increased by the dilutive effect of stock options, restricted stock, restricted stock units, and other share-based compensation arrangements determined using the treasury stock method, and convertible securities using the if-converted method. 153 The following tables summarize the computations of basic and diluted earnings per share: For the years ended December 31, 2020 2019 2018 Numerator used in basic and diluted earnings (loss) per common share for continuing operations: Loss from continuing operations $ ( 320,598 ) $ ( 150,483 ) $ ( 191,317 ) Net loss (income) attributable to noncontrolling interests 17 ( 98 ) ( 141 ) Loss from continuing operations attributable to Laureate Education, Inc. ( 320,581 ) ( 150,581 ) ( 191,458 ) Accretion of redemption value of redeemable noncontrolling interests and equity 149 ( 208 ) ( 292 ) Adjusted for: accretion related to noncontrolling interests and equity redeemable at fair value — — ( 559 ) Accretion of Series A Preferred Stock — — ( 61,974 ) Gain upon conversion of Series A Preferred Stock — — 74,110 Subtotal: accretion of reedemable noncontrolling interests and equity, and, for 2018, Series A Preferred Stock, net 149 ( 208 ) 11,285 Net loss from continuing operations available to common stockholders for basic earnings per share ( 320,432 ) ( 150,789 ) ( 180,173 ) Adjusted for: accretion of Series A Preferred Stock — — 61,974 Adjusted for: gain upon conversion of Series A Preferred Stock — — ( 74,110 ) Net loss from continuing operations available to common stockholders for diluted earnings per share $ ( 320,432 ) $ ( 150,789 ) $ ( 192,309 ) Numerator used in basic and diluted earnings (loss) per common share for discontinued operations: (Loss) income from discontinued operations, net of tax ( 298,104 ) 1,088,147 562,247 Loss (income) attributable to noncontrolling interests 5,354 918 ( 722 ) Net (loss) income from discontinued operations for basic and diluted earnings per share $ ( 292,750 ) $ 1,089,065 $ 561,525 Denominator used in basic and diluted earnings (loss) per common share: Basic and diluted weighted average shares outstanding 209,710 221,928 212,769 Basic earnings (loss) per share: Loss from continuing operations $ ( 1.53 ) $ ( 0.68 ) $ ( 0.85 ) (Loss) income from discontinued operations ( 1.40 ) 4.91 2.64 Basic (loss) earnings per share $ ( 2.93 ) $ 4.23 $ 1.79 Diluted earnings (loss) per share: Loss from continuing operations $ ( 1.53 ) $ ( 0.68 ) $ ( 0.91 ) (Loss) income from discontinued operations ( 1.40 ) 4.91 2.64 Diluted (loss) earnings per share $ ( 2.93 ) $ 4.23 $ 1.73 In the calculation of diluted EPS for 2018, the conversion of the Series A Preferred Stock, which occurred on April 23, 2018, was assumed to have occurred as of the beginning of the period; accordingly, the effects of the accretion and the gain upon conversion of the Series A Preferred Stock were removed from net income available to common stockholders for diluted earnings per share. The following table summarizes the number of stock options, shares of restricted stock and restricted stock units (RSUs) that were excluded from the diluted EPS calculations because the effect would have been antidilutive: For the years ended December 31, 2020 2019 2018 Stock options 4,040 8,740 9,387 Restricted stock and RSUs 1,021 1,090 1,300 154 Note 16. Related Party Transactions As part of the issuance and sale of shares of the Company’s Series A Preferred Stock in December 2016, KKR and Snow Phipps, affiliates of Wengen, purchased from the Company 60 and 15 shares of Series A Preferred Stock, respectively. During the year ended December 31, 2018, the Company paid cash dividends on the Series A Preferred Stock totaling $ 11,103 , of which $ 1,822 , was paid to KKR and Snow Phipps. As discussed in Note 12, Share-based Compensation and Equity, on April 23, 2018, all of the issued and outstanding shares of the Series A Preferred Stock were converted into Class A common stock. As discussed in Note 6, Dispositions, the buyer of our Costa Rica operations is controlled by certain affiliates of Sterling Capital Partners II, L.P., an entity that has the right to designate a director to the Laureate Board of Directors pursuant to a securityholders agreement. Note 17. Benefit Plans Domestic Defined Contribution Retirement Plan Laureate sponsors a defined contribution retirement plan in the United States under section 401(k) of the Internal Revenue Code. The plan offers employees a traditional “pre-tax” 401(k) option and an “after-tax” Roth 401(k) option, providing the employees with choices and flexibility for their retirement savings. All employees are eligible to participate in the plan after meeting certain service requirements. Participants may contribute up to a maximum of 80 % of their annual compensation and 100 % of their annual cash bonus, as defined and subject to certain annual limitations. Laureate may, at its discretion, make matching contributions that are allocated to eligible participants. The matching on the “after-tax” Roth contributions is the same as the matching on the traditional “pre-tax” contributions. Laureate made discretionary contributions in cash to this plan of $ 4,636 , $ 5,431 , and $ 5,345 for the years ended December 31, 2020, 2019 and 2018, respectively. Laureate Education, Inc. Deferred Compensation Plan Laureate maintains a deferred compensation plan to provide certain executive employees and members of our Board of Directors with the opportunity to defer their salaries, bonuses, and Board of Directors retainers and fees in order to accumulate funds for retirement on a pre-tax basis. Participants are 100 % vested in their respective deferrals and the earnings thereon. Laureate does not make contributions to the plan or guarantee returns on the investments. Although plan investments and participant deferrals are kept in a separate trust account, the assets remain Laureate’s property and are subject to claims of general creditors. The plan assets are recorded at fair value with the earnings (losses) on those assets recorded in Other income (expense). The plan liabilities are recorded at the contractual value, with the changes in value recorded in operating expenses. As of December 31, 2020 and 2019, plan assets included in Other assets in our Consolidated Balance Sheets were $ 3,055 and $ 4,505 , respectively, and the total plan liabilities reported in our Consolidated Balance Sheets were $ 6,192 and $ 6,835 , respectively. Supplemental Employment Retention Agreement (SERA) In November 2007, Laureate established a SERA for one of its then-executive officers. Because Laureate achieved certain Pro-rata EBITDA targets, as defined in the SERA, from 2007 to 2011 and this officer remained employed through December 31, 2012, this individual received an annual SERA payment of $ 1,500 . The SERA provided annuity payments to the former executive over the course of his lifetime, and, following the former executive's death in 2018, an annual payment of $ 1,500 will be made to his spouse for the remainder of her life. The SERA is administered through a Rabbi Trust, and its assets are subject to the claims of creditors. At the inception of the plan, Laureate purchased annuities which provided funds for the SERA obligations until the former executive's death, at which point proceeds from corporate-owned life insurance policies were received and will be used to fund the future SERA obligations. As of December 31, 2020 and 2019, the total SERA assets were $ 11,037 and $ 12,494 , respectively, which were recorded on our Consolidated Balance Sheets in Restricted cash at December 31, 2020 and 2019. As of December 31, 2020 and 2019, the total SERA liabilities recorded in our Consolidated Balance Sheets were $ 14,925 and $ 14,244 , respectively, of which $ 1,500 each year was recorded in Accrued compensation and benefits, and $ 13,425 and $ 12,744 , respectively, was recorded in Deferred compensation. Mexico Profit-Sharing The Fiscal Reform that was enacted in Mexico in December 2013 subjects Laureate's Mexico entities to corporate income tax and also requires them to comply with profit-sharing legislation, whereby 10% of the taxable income of Laureate's Mexican entities will be set aside as employee compensation. Note 18. Legal and Regulatory Matters Laureate is subject to legal proceedings arising in the ordinary course of business. In management's opinion, we have adequate legal defenses, insurance coverage, and/or accrued liabilities with respect to the eventuality of these actions. Management believes that any settlement would not have a material impact on Laureate's financial position, results of operations, or cash flows. 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. Continuing Operations Mexican Regulation– COVID-19 Update Administrative activities have resumed at half of our campuses. Face-to-face educational activities will not be permitted to resume at any campus until the region (municipality or state) in which it is located is assigned a green color code under the country’s color-coded sanitary alert system, which is updated on a biweekly basis. Peruvian Regulation– COVID-19 Update Peru’s national sanitary emergency has been extended until March 2021. In addition, due to the second wave of COVID-19, effective from January 31 until February 28, 2021, Peru entered into a region-by-region confinement plan, which includes a total curfew of vehicles and individuals in the whole department of Lima, among others. The economic reactivation plan has been suspended for many activities (mostly malls and restaurants presential attention) during the confinement period, including presential practices classes and some administrative tasks. The government has announced that face-to-face classes may resume this year, initially semi-presential; however, the actual resumption of classes will depend upon COVID-19 infection rates at such time. Discontinued Operations Brazilian Regulation We operate 10 post-secondary education institutions in Brazil. The responsibility of the federal government in regulating, monitoring and evaluating higher education institutions and undergraduate programs is exercised by the Brazilian Ministry of Education (the MEC), along with a number of related federal agencies and related offices. The MEC is the highest authority of the higher education system in Brazil and has the power to issue implementing rules, (regulations, notices, and technical advisories governing the conduct of higher education), as well as to regulate and monitor the higher education segment, including aspects like adherence by higher education institutions (HEIs) to the rules for federal education programs like Prouni and the Fundo de Financiamento Estudantil (the FIES program, or FIES), through one or more of which all of our institutions enroll students. Additionally, Brazilian law requires that almost all change-of-control transactions by Laureate receive the prior approval of the Brazilian antitrust authority, the Conselho Administrativo de Defesa Economico (CADE). As noted, Laureate’s institutions in Brazil participate in the FIES program, which is a federal program established to provide financing to students enrolled in courses in private institutions of higher education that have achieved a minimum satisfactory evaluation according to the National Higher Education Evaluation System (SINAES) and receive a grade of 3 or higher out of 5 on the National Examination of Student Performance (ENADE). Under this basic structure, FIES targets both of the government’s education policy goals: increased access and improved academic quality outcomes. As of December 31, 2020, approximately 4 % of our students in Brazil participated in FIES, representing approximately 8.5 % of our 2020 Brazil revenues. As of December 31, 2019, approximately 7 % of our total students in Brazil participated in FIES, representing approximately 13 % of our 2019 Brazil revenues. 156 All of our Brazil HEIs adhere to Prouni, a federal program of tax benefits designed to increase higher education participation rates by making college more affordable. Prouni provides private HEIs with an exemption from certain federal taxes in exchange for granting partial and full scholarships to low-income students enrolled in traditional and technology undergraduate programs. HEIs may join Prouni by signing a term of membership valid for ten years and renewable for the same period. This term of membership shall include the number of scholarships to be offered in each program, unit and class, and a percentage of scholarships for degree programs to be given to indigenous and Afro-Brazilians. To join Prouni, an educational institution must maintain a certain relationship between the number of scholarships granted and the number of regular paying students. The relationship between the number of scholarships and regular paying students is tested annually. If this relationship is not observed during a given academic year due to the departure of students, the institution must adjust the number of scholarships in a proportional manner the following academic year. For the years ended December 31, 2020, 2019 and 2018, our HEIs granted Prouni scholarships of approximately $ 75,700 , $ 100,600 and $ 112,500 , respectively, that resulted in tax credits. COVID-19 Update In response to the transition from face-to-face classes to online classes due to the COVID-19 pandemic, legislative assemblies in several Brazilian states passed laws requiring schools to discount tuition. With respect to the states in which we operate, only Rio de Janeiro, Bahia and Paraiba passed such laws. However, because injunctions were granted to suspend the effects of such laws in Rio de Janeiro and Paraiba, mandatory discounts only were applied to classes taken at our Bahia campuses. The constitutionality of the aforementioned laws was challenged both in state courts and the Supreme Court. By the end of 2020, the Supreme Court had ruled on the first round of cases – including the Bahia case –, declaring the mandatory discount laws to be at odds with the Brazilian constitution. The same outcome is expected for the remaining cases. As of August 2020, Provisional Presidential Act n. 934/2020 has been converted to Law n. 14,040. Accordingly, institutions remain authorized to substitute face-to-face classes with remote activities and adjust the academic calendar. By the end of 2020, the National Board of Education had issued an opinion concerning the continuity of remote activities for an additional year. The Ministry of Education, however, has insisted on a gradual return to face-to-face classes, beginning on March 1 st for higher education. Nonetheless, this effort will be affected by local sanitary indicators and may effectively be delayed until either a safety standard is sustained or mass vaccination reaches the students’ main age groups. As of now, government measures to resume face-to-face educational activities in Brazil are being implemented on a state-by-state and city-by-city basis. Laboratory and professional practice activities have resumed at the vast majority of our Brazilian campuses. Despite being authorized to gradually return to face-to-face classes in some locations, academic planners still consider a larger contingent of remote activities to be the most suitable option given the current circumstances. United States Postsecondary Education Regulation Walden University, our postsecondary educational institution in the United States, is subject to extensive regulation by federal and state governmental entities as well as accrediting bodies. The U.S. Higher Education Act (HEA), and the regulations promulgated thereunder by the U.S. Department of Education (DOE), subject Walden University to ongoing regulatory review and scrutiny. Walden University must also comply with a myriad of requirements in order to participate in Title IV federal financial aid programs under the HEA (Title IV programs). In particular, to participate in the Title IV programs under currently effective DOE regulations, an institution must be authorized to offer its educational programs by the relevant state agencies in the states in which it is located, accredited by an accrediting agency that is recognized by the DOE, and also certified by the DOE. In determining whether to certify an institution, the DOE closely examines an institution’s administrative and financial capability to administer Title IV program funds. Based on Laureate’s consolidated audited financial statements for its fiscal year ended December 31, 2019, the DOE required us to post a letter of credit of approximately $ 83,600 (an amount equal to 10 % of the Title IV program funds received by Laureate in the most recently completed fiscal year) and remain subject to Heightened Cash Monitoring 1. The DOE also required us to comply with additional notification and reporting requirements. We have provided the DOE with a letter of credit in the amount required, and we are complying with the additional requirements. See Note 11, Commitments and Contingencies, for further description of the outstanding DOE letters of credit as of December 31, 2020 and 2019. In recent years, the DOE has proposed or promulgated a substantial number of new regulations that impact Walden University, including, but not limited to, borrower defense to repayment, state authorization and financial responsibility. Changes in or new interpretations of applicable laws, DOE rules, or regulations could have a material adverse effect on Walden University’s eligibility to participate in the Title IV programs. 157 Department of Justice Voluntary Information Request for Walden University Our institutions are subject to regulatory oversight and from time to time must respond to inquiries about their compliance with the various statutory requirements under which they operate. On September 14, 2020, Walden University received a letter from the Civil Division of the United States Department of Justice (referred to herein as “DOJ”) indicating that the DOJ is examining whether Walden University, in the operation of its Masters of Science in Nursing program (referred to herein as the “Nursing Program”), may have violated the Federal False Claims Act by misrepresenting compliance with its program participation agreement with the DOE, which agreement covers Walden University’s participation in federal student financial aid programs under Title IV of the U.S. Higher Education Act. The letter invites Walden University to provide information regarding a number of specific areas primarily related to the practicum component of its Nursing Program, but it makes no allegations of any misconduct or wrongdoing by Walden University. Further, on November 9, 2020, Walden University received notice from the Higher Learning Commission (“HLC”) that a public “Governmental Investigation” designation would be assigned to Walden University due to the DOJ inquiry and such designation became effective on November 9, 2020. On November 24, 2020, representatives of Walden University met with individuals from the DOJ to present the information requested. While Laureate is cooperating with the DOJ’s request to voluntarily provide information, it cannot predict the timing or outcome of this matter. Laureate accrues for a liability when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. The disclosures, accruals or estimates, if any, resulting from the foregoing analysis are reviewed and adjusted to reflect the effect of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. At this time, Laureate does not believe that this matter will have a material effect on its financial position, results of operations, or cash flows. Further, consistent with the HLC’s policies and procedures, a Governmental Investigation designation by the HLC could delay or prevent the HLC’s approval of a substantive change application to approve the pending sale of Walden University. We continue to evaluate these regulatory developments and the potential impact, if any, on the pending sale of Walden University. Note 19. Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date. Accounting standards utilize a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels, which are described below: • Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets • Level 2 – Observable inputs other than quoted prices that are either directly or indirectly observable for the asset or liability • Level 3 – Unobservable inputs that are supported by little or no market activity These levels are not necessarily an indication of the risk of liquidity associated with the financial assets or liabilities disclosed. In instances where the determination of fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety, as required under ASC 820-10, "Fair Value Measurement." Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Derivative Instruments Laureate uses derivative instruments as economic hedges for bank debt, foreign exchange fluctuations and interest rate risk. Their values are derived using valuation models commonly used for derivatives. These valuation models require a variety of inputs, including contractual terms, market prices, forward-price yield curves, notional quantities, measures of volatility and correlations of such inputs. Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by ourself and our counterparties. We have determined that the significance of the impact of the credit valuation adjustments made to our derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of our derivatives held as of December 31, 2020 were classified as Level 2 of the fair value hierarchy. 158 Equity securities - preferred stock investment In 2013, Laureate purchased approximately 1,020 shares (the Shares) of preferred stock of a private education company for $ 5,000 . This equity security did not have a readily determinable fair value. In June 2019, based on interest expressed by an investor to purchase the Shares, Laureate recorded this investment at its estimated fair value and recorded a non-operating gain of approximately $ 6,100 . In September 2019, Laureate sold the Shares and received cash proceeds of $ 11,473 , resulting in a total non-operating gain of $ 6,473 for the year ended December 31, 2019. The proceeds are included in Proceeds from sale of investment on the Consolidated Statement of Cash Flows. Laureate's financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2020 were as follows: Total Level 1 Level 2 Level 3 Assets Derivative instruments $ — $ — $ — $ — Liabilities Derivative instruments $ 25,824 $ — $ 25,824 $ — As of December 31, 2019, Laureate did not hold any financial assets or liabilities that are measured at fair value on a recurring basis. 159 Note 20. Quarterly Financial Data (Unaudited) The following quarterly financial information reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of the results of the interim periods. Earnings per share are computed independently for each of the quarters presented. Per share amounts may not sum due to rounding. Summarized quarterly operating data were as follows: 2020 Quarters Ended Per share amounts in whole dollars December 31 September 30 June 30 March 31 Revenues $ 285,219 $ 243,523 $ 303,856 $ 192,319 Operating costs and expenses 248,343 561,758 274,713 269,405 Operating income (loss) $ 36,876 $ ( 318,235 ) $ 29,143 $ ( 77,086 ) (Loss) income from continuing operations $ ( 244,095 ) $ ( 271,040 ) $ ( 11,559 ) $ 206,096 Income (loss) from discontinued operations, net of tax 623,135 ( 513,390 ) ( 300,069 ) ( 107,780 ) Net loss (income) attributable to noncontrolling interests 279 ( 12 ) 3,805 1,299 Net income (loss) attributable to Laureate Education, Inc. 379,319 ( 784,442 ) ( 307,823 ) 99,615 Accretion of redeemable noncontrolling interests and equity ( 14 ) 6 201 ( 44 ) Net income (loss) available to common stockholders $ 379,305 $ ( 784,436 ) $ ( 307,622 ) $ 99,571 Basic and diluted earnings (loss) per share: Income (loss) from continuing operations $ ( 1.17 ) $ ( 1.29 ) $ ( 0.05 ) $ 0.98 Income (loss) from discontinued operations 2.98 ( 2.44 ) ( 1.41 ) ( 0.51 ) Basic and diluted earnings (loss) per share $ 1.81 $ ( 3.73 ) $ ( 1.46 ) $ 0.47 2019 Quarters Ended Per share amounts in whole dollars December 31 September 30 June 30 March 31 Revenues $ 351,846 $ 277,267 $ 370,938 $ 212,019 Operating costs and expenses 294,527 295,678 318,963 266,882 Operating income (loss) $ 57,319 $ ( 18,411 ) $ 51,975 $ ( 54,863 ) Income (loss) from continuing operations $ 61,193 $ ( 86,649 ) $ 93,924 $ ( 218,951 ) (Loss) income from discontinued operations, net of tax ( 616 ) ( 10,145 ) 685,694 413,214 Net loss (income) attributable to noncontrolling interests 298 1,568 1,976 ( 3,022 ) Net income (loss) attributable to Laureate Education, Inc. 60,875 ( 95,226 ) 781,594 191,241 Accretion of redeemable noncontrolling interests and equity ( 472 ) ( 193 ) 194 263 Net income (loss) available to common stockholders $ 60,403 $ ( 95,419 ) $ 781,788 $ 191,504 Basic and diluted earnings (loss) per share: Income (loss) from continuing operations $ 0.28 $ ( 0.39 ) $ 0.42 $ ( 0.97 ) Income (loss) from discontinued operations — ( 0.04 ) 3.06 1.82 Basic and diluted earnings (loss) per share $ 0.28 $ ( 0.43 ) $ 3.48 $ 0.85 The Company has adjusted the September 30, 2020 and December 31, 2019 balances of deferred income tax liabilities and long-term liabilities held for sale that were previously reported in the Company’s quarterly report on Form 10-Q for the third quarter of 2020, in order to reflect Walden’s deferred income taxes in Continuing Operations. 160 Note 21. Other Financial Information Accumulated Other Comprehensive Income AOCI in our Consolidated Balance Sheets includes the accumulated translation adjustments arising from translation of foreign subsidiaries’ financial statements, the unrealized gains or losses on derivatives designated as effective hedges, and the accumulated net gains or losses that are not recognized as components of net periodic benefit cost for our minimum pension liability. The components of these balances were as follows: December 31, 2020 2019 Laureate Education, Inc. Noncontrolling Interests Total Laureate Education, Inc. Noncontrolling Interests Total Foreign currency translation loss $ ( 951,456 ) $ 958 $ ( 950,498 ) $ ( 1,084,651 ) $ 326 $ ( 1,084,325 ) Unrealized gains on derivatives 10,416 — 10,416 10,416 — 10,416 Minimum pension liability adjustment ( 946 ) — ( 946 ) 254 — 254 Accumulated other comprehensive loss $ ( 941,986 ) $ 958 $ ( 941,028 ) $ ( 1,073,981 ) $ 326 $ ( 1,073,655 ) Laureate reports changes in AOCI in our Consolidated Statements of Stockholders’ Equity. See also Note 13, Derivative Instruments, for the effects of reclassifications out of AOCI into net income. Foreign Currency Exchange of Certain Intercompany Loans Laureate periodically reviews its investment and cash repatriation strategies in order to meet our liquidity requirements in the United States. Laureate recognized currency exchange adjustments attributable to intercompany loans that are not designated as indefinitely invested as Foreign currency exchange gain (loss), net, of $ 21,171 , $( 11,769 ) and $( 1,533 ) in the Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018, respectively. Supplemental Schedule for Transactions with Noncontrolling Interest Holders Transactions with noncontrolling interest holders had the following effects on the equity attributable to Laureate: For the years ended December 31, 2020 2019 2018 Net (loss) income attributable to Laureate Education, Inc. $ ( 613,331 ) $ 938,484 $ 370,067 Decrease in equity for changes in noncontrolling interests ( 2,610 ) ( 3,700 ) ( 471 ) Change from net (loss) income attributable to Laureate Education, Inc. and net transfers to the noncontrolling interests $ ( 615,941 ) $ 934,784 $ 369,596 Write Off of Accounts and Notes Receivable During the years ended December 31, 2020, 2019 and 2018, Laureate wrote off approximately $ 24,300 , $ 4,500 and $ 17,600 , respectively, of fully reserved accounts and notes receivable that were deemed uncollectible. Note 22. Supplemental Cash Flow Information Cash interest payments, prior to interest income, for Continuing Operations and Discontinued Operations were $ 120,640 , $ 188,682 and $ 234,102 for the years ended December 31, 2020, 2019 and 2018, respectively. Net income tax cash payments for Continuing Operations and Discontinued Operations were $ 91,371 , $ 119,682 and $ 143,000 for the years ended December 31, 2020, 2019 and 2018, respectively. During the year ended December 31, 2018, the Company paid cash dividends on the Series A Preferred Stock in the amount of $ 11,103 . As discussed in Note 12, Share-based Compensation and Equity, on April 23, 2018, all of the issued and outstanding shares of the Series A Preferred Stock were converted into shares of the Company’s Class A common stock. Accordingly, the Company did not pay any cash dividends during the years ended December 31, 2020 and 2019. 161 Reconciliation of Cash and cash equivalents and Restricted cash The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets, as well as the December 31, 2018 balance, to the amounts shown in the Consolidated Statements of Cash Flows: For the year ended December 31, 2020 2019 2018 Cash and cash equivalents $ 750,147 $ 61,576 $ 77,765 Restricted cash 117,151 36,241 47,852 Total Cash and cash equivalents and Restricted cash shown in the Consolidated Statements of Cash Flows $ 867,298 $ 97,817 $ 125,617 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.