What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-05-06 · 311 added, 229 removed, 578 unchanged (48% of the section changed)

4 unchanged sentences

IN THOUSANDS, except per share amounts

For the three months ended March 31, 2021 2020

For the three months ended June 30, 2021 2020

(Unaudited) (Unaudited)

4 unchanged sentences

Loss on impairment of assets 7,219 23,774

Operating income 57,684 29,143

Interest income 477 288

Interest expense ( 13,541 ) ( 25,705 )

Loss on debt extinguishment ( 77,927 ) —

Loss on derivatives ( 53,847 ) ( 1,428 )

Other expense, net ( 55 ) ( 405 )

Foreign currency exchange loss, net ( 15,519 ) ( 4,735 )

Gain on disposal of subsidiaries, net 27 —

Loss from continuing operations before income taxes and equity in net loss of affiliates ( 102,701 ) ( 2,842 )

Income tax expense ( 13,184 ) ( 8,713 )

Equity in net loss of affiliates, net of tax — ( 4 )

Loss from continuing operations ( 115,885 ) ( 11,559 )

Income (loss) from discontinued operations, net of tax benefit of $ 1,063 and $ 3,043 , respectively

86,661 ( 300,069 )

Net loss ( 29,224 ) ( 311,628 )

Net loss attributable to noncontrolling interests 224 3,805

Net loss attributable to Laureate Education, Inc.

$ ( 29,000 ) $ ( 307,823 )

Basic and diluted earnings (loss) per share:

Loss from continuing operations $ ( 0.60 ) $ ( 0.05 )

Income (loss) from discontinued operations 0.45 ( 1.41 )

Basic and diluted loss per share $ ( 0.15 ) $ ( 1.46 )

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

LAUREATE EDUCATION, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

IN THOUSANDS, except per share amounts

For the six months ended June 30, 2021 2020

(Unaudited) (Unaudited)

Revenues $ 522,280 $ 496,175

Costs and expenses:

Direct costs 395,163 428,367

General and administrative expenses 91,955 88,209

Loss on impairment of assets 63,869 27,542

Operating loss ( 28,707 ) ( 47,943 )

2 unchanged sentences

Loss on debt extinguishment ( 77,940 ) —

Gain on derivatives 29,330 802

Other income (expense), net 34 ( 81 )

Loss on derivatives ( 24,517 ) ( 626 )

Other expense, net ( 21 ) ( 486 )

Foreign currency exchange gain, net 12,664 73,981

Loss on disposal of subsidiaries, net — ( 1,800 )

Gain (loss) on disposal of subsidiaries, net 27 ( 1,800 )

Loss from continuing operations before income taxes and equity in net income of affiliates ( 154,365 ) ( 26,959 )

2 unchanged sentences

(Loss) income from continuing operations ( 280,410 ) 194,537

Loss from discontinued operations, net of tax (expense) benefit of $( 9,665 ) and $ 5,183 , respectively

Income (loss) from discontinued operations, net of tax (expense) benefit of $( 8,602 ) and $ 8,226 , respectively

86,243 ( 407,849 )

Net (loss) income ( 164,943 ) 98,316

Net loss ( 194,167 ) ( 213,312 )

Net loss attributable to noncontrolling interests 239 5,104

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

Net loss attributable to Laureate Education, Inc.

$ ( 193,928 ) $ ( 208,208 )

1 unchanged sentence

(Loss) income from continuing operations $ ( 1.43 ) $ 0.93

Loss from discontinued operations — ( 0.51 )

Basic and diluted (loss) earnings per share $ ( 0.82 ) $ 0.47

Income (loss) from discontinued operations 0.44 ( 1.92 )

Basic and diluted loss per share $ ( 0.99 ) $ ( 0.99 )

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

2 unchanged sentences

Consolidated Statements of Comprehensive Income

For the three months ended March 31, 2021 2020

For the three months ended June 30, 2021 2020

(Unaudited) (Unaudited)

Net (loss) income $ ( 164,943 ) $ 98,316

Other comprehensive loss:

Net loss $ ( 29,224 ) $ ( 311,628 )

Other comprehensive income:

Foreign currency translation adjustment, net of tax of $ 0 for both periods

1 unchanged sentence

Minimum pension liability adjustment, net of tax of $ 0 for both periods

Total other comprehensive income 510,470 14,034

Comprehensive income (loss) 481,246 ( 297,594 )

Net comprehensive loss attributable to noncontrolling interests 226 3,873

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

$ 481,472 $ ( 293,721 )

Total other comprehensive loss ( 59,929 ) ( 331,048 )

Comprehensive loss ( 224,872 ) ( 232,732 )

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

LAUREATE EDUCATION, INC.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the six months ended June 30, 2021 2020

(Unaudited) (Unaudited)

Net loss $ ( 194,167 ) $ ( 213,312 )

Other comprehensive income (loss):

Foreign currency translation adjustment, net of tax of $ 0 for both periods

450,682 ( 316,082 )

Minimum pension liability adjustment, net of tax of $ 0 for both periods

( 141 ) ( 932 )

Total other comprehensive income (loss) 450,541 ( 317,014 )

Comprehensive income (loss) 256,374 ( 530,326 )

Net comprehensive loss attributable to noncontrolling interests 259 4,413

Comprehensive loss attributable to Laureate Education, Inc.

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

$ 256,633 $ ( 525,913 )

4 unchanged sentences

IN THOUSANDS, except per share amounts

March 31, 2021 December 31, 2020

2021 December 31,

Assets (Unaudited)

7 unchanged sentences

Income tax receivable 17,131 14,564

Derivative instruments 21,800 —

Prepaid expenses and other current assets 20,349 15,079

24 unchanged sentences

IN THOUSANDS, except per share amounts

March 31, 2021 December 31, 2020

2021 December 31,

Liabilities and stockholders' equity (Unaudited)

22 unchanged sentences

Stockholders' equity:

Preferred stock, par value $ 0.001 per share – 49,889 shares authorized as of March 31, 2021 and December 31, 2020, respectively, no shares issued and outstanding as of March 31, 2021 and December 31, 2020

Class A common stock, par value $ 0.004 per share – 700,000 shares authorized, 154,657 shares issued and 122,213 shares outstanding as of March 31, 2021 and 137,162 shares issued and 115,119 shares outstanding as of December 31, 2020

Class B common stock, par value $ 0.004 per share – 175,000 shares authorized, 73,544 shares issued and outstanding as of March 31, 2021 and 90,792 shares issued and outstanding as of December 31, 2020

Preferred stock, par value $ 0.001 per share – 49,889 shares authorized as of June 30, 2021 and December 31, 2020, respectively, no shares issued and outstanding as of June 30, 2021 and December 31, 2020

Class A common stock, par value $ 0.004 per share – 700,000 shares authorized, 154,777 shares issued and 114,786 shares outstanding as of June 30, 2021 and 137,162 shares issued and 115,119 shares outstanding as of December 31, 2020

Class B common stock, par value $ 0.004 per share – 175,000 shares authorized, 73,542 shares issued and outstanding as of June 30, 2021 and 90,792 shares issued and outstanding as of December 31, 2020

Additional paid-in capital 3,763,855 3,760,029

1 unchanged sentence

Accumulated other comprehensive loss ( 491,425 ) ( 941,986 )

Treasury stock at cost ( 32,444 shares held at March 31, 2021 and 22,043 shares held at December 31, 2020)

Treasury stock at cost ( 39,992 shares held at June 30, 2021 and 22,043 shares held at December 31, 2020)

( 616,908 ) ( 365,316 )

8 unchanged sentences

Consolidated Statements of Cash Flows

For the three months ended March 31, 2021 2020

For the six months ended June 30, 2021 2020

Cash flows from operating activities (Unaudited) (Unaudited)

Net (loss) income $ ( 164,943 ) $ 98,316

Net loss $ ( 194,167 ) $ ( 213,312 )

Adjustments to reconcile net income to net cash provided by operating activities:

2 unchanged sentences

Loss on impairment of assets 65,137 448,852

Loss on sales and disposal of subsidiaries and property and equipment, net 16,461 21,175

Gain on derivative instruments ( 29,330 ) ( 802 )

(Gain) loss on sales and disposal of subsidiaries and property and equipment, net ( 13,516 ) 36,036

Loss on derivative instruments 24,517 626

Payments for settlement of derivative contracts — ( 626 )

Loss on debt extinguishment 77,999 —

12 unchanged sentences

Deferred revenue and other liabilities ( 4,600 ) 127,371

Net cash provided by (used in) operating activities 11,283 ( 3,529 )

Net cash provided by operating activities 17,852 61,361

Cash flows from investing activities

3 unchanged sentences

Payments on derivatives related to sale of discontinued operations ( 50,341 ) —

Receipts from related parties — 87

Net cash used in investing activities ( 1,088 ) ( 23,963 )

Payments to related parties — ( 1 )

Net cash provided by (used in) investing activities 649,987 ( 35,045 )

Cash flows from financing activities

5 unchanged sentences

Payments to repurchase common stock ( 251,374 ) ( 29,203 )

Payments of debt issuance costs ( 14 ) —

Payments of call premiums and debt issuance costs ( 32,980 ) —

Net cash (used in) provided by financing activities ( 1,162,723 ) 263,409

27 unchanged sentences

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 our operations in Australia and New Zealand was completed on November 3, 2020.

The sale of our operations in Australia and New Zealand was completed on November 3, 2020, and the sale of our operations in Brazil was completed on May 28, 2021.

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.

11 unchanged sentences

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 March 31, 2021 and through the date of this Form 10-Q, the Company evaluated its accounting estimates that require consideration of forecasted financial information, based on current information reasonably available to us.

As of June 30, 2021 and through the date of this Form 10-Q, the Company evaluated its accounting estimates that require consideration of forecasted financial information, based on current information reasonably available to us.

The forecast also includes certain estimates and assumptions around macroeconomic conditions and the timing of campuses reopening.

While this evaluation did not result in a material effect to the Company’s Consolidated Financial Statements as of and for the three months ended March 31, 2021, future evaluations could result in a material effect, including potential impairments, depending on the eventual impact to the Company of the COVID-19 pandemic and its effect on student enrollment, tuition pricing, and collections in future periods.

While this evaluation did not result in a material effect to the Company’s Consolidated Financial Statements as of and for the six months ended June 30, 2021, future evaluations could result in a material effect, including potential impairments, depending on the eventual impact to the Company of the COVID-19 pandemic and its effect on student enrollment, tuition pricing, and collections in future periods.

Recently Adopted Accounting Standards

Accounting Standards Update (ASU) No.

2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes

2019-12 (ASU 2019-12), Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, which removes certain exceptions for performing intraperiod tax allocations, recognizing deferred taxes for investments, and calculating income taxes in interim periods.

19 unchanged sentences

We record refunds as a reduction of deferred revenue as applicable.

The following table shows the components of Revenues by reportable segment and as a percentage of total revenue for the three months ended March 31, 2021 and 2020:

The following table shows the components of Revenues by reportable segment and as a percentage of total revenue for the three months ended June 30, 2021 and 2020:

Mexico Peru Corporate (1)

10 unchanged sentences

(1) Includes the elimination of intersegment revenues.

The following table shows the components of Revenues by reportable segment and as a percentage of total revenue for the six months ended June 30, 2021 and 2020:

Mexico Peru Corporate (1)

Tuition and educational services $ 323,738 $ 256,474 $ — $ 580,212 111 %

Other 41,327 22,446 3,442 67,215 13 %

Gross revenue 365,065 278,920 3,442 647,427 124 %

Discounts / waivers / scholarships ( 105,385 ) ( 19,762 ) — ( 125,147 ) ( 24 ) %

Total $ 259,680 $ 259,158 $ 3,442 $ 522,280 100 %

Tuition and educational services $ 300,573 $ 226,494 $ — $ 527,067 106 %

Other 39,354 17,739 3,005 60,098 12 %

Gross revenue $ 339,927 $ 244,233 $ 3,005 $ 587,165 118 %

Discounts / waivers / scholarships ( 70,856 ) ( 20,134 ) — ( 90,990 ) ( 18 ) %

Total $ 269,071 $ 224,099 $ 3,005 $ 496,175 100 %

(1) Includes the elimination of intersegment revenues.

Contract Balances

5 unchanged sentences

All of our contract assets are considered accounts receivable and are included within the Accounts and notes receivable balance in the accompanying Consolidated Balance Sheets.

Total accounts receivable from our contracts with students were $ 110,504 and $ 138,738 as of March 31, 2021 and December 31, 2020, respectively.

The decrease in the contract assets balance at March 31, 2021 compared to December 31, 2020 was primarily driven by collections, in particular the repayment of past-due amounts by students re-enrolling for the next academic session.

The first and third calendar quarters generally coincide with the primary and secondary intakes for our larger institutions.

Total accounts receivable from our contracts with students were $ 143,113 and $ 138,738 as of June 30, 2021 and December 31, 2020, respectively.

The increase in the contract assets balance at June 30, 2021 compared to December 31, 2020 was primarily driven by our enrollment cycles.

The first and third calendar quarters

generally coincide with the primary and secondary intakes for our larger institutions.

All contract asset amounts are classified as current.

Contract liabilities in the amount of $ 85,881 and $ 47,180 were included within the Deferred revenue and student deposits balance in the current liabilities section of the accompanying Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020, respectively.

The increase in the contract liability balance during the period ended March 31, 2021 was the result of semester billings and cash payments received in advance of satisfying performance obligations, partially offset by revenue recognized during that period.

Revenue recognized for the three months ended March 31, 2021 that was included in the contract liability balance at the beginning of the year was approximately $ 30,948 .

Contract liabilities in the amount of $ 48,620 and $ 47,180 were included within the Deferred revenue and student deposits balance in the current liabilities section of the accompanying Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020, respectively.

The increase in the contract liability balance during the period ended June 30, 2021 was the result of semester billings and cash payments received in advance of satisfying performance obligations, partially offset by revenue recognized during that period.

Revenue recognized for the six months ended June 30, 2021 that was included in the contract liability balance at the beginning of the year was approximately $ 36,426 .

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).

All remaining markets have been or will be divested (the Discontinued Operations).

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 the prior year were presented in two lines, have been combined into one line labeled Loss from discontinued operations, net of tax, for all periods presented.

On the Consolidated Statements of Operations, the results from the Discontinued Operations, which in the prior year were presented in two lines, have been combined into one line labeled Income (loss) 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 tables:

For the three months ended March 31, 2021 2020

For the three months ended June 30, 2021 2020

Revenues $ 232,114 $ 513,372

4 unchanged sentences

Other non-operating expense ( 4,389 ) ( 10,020 )

Loss on sale of discontinued operations before taxes, net ( 16,837 ) ( 23,553 )

Gain (loss) on sale of discontinued operations before taxes, net 30,131 ( 11,440 )

Pretax income (loss) of discontinued operations 85,598 ( 303,112 )

Income tax benefit 1,063 3,043

Income (loss) from discontinued operations, net of tax $ 86,661 $ ( 300,069 )

For the six months ended June 30, 2021 2020

Revenues $ 471,863 $ 882,856

Depreciation and amortization expense — ( 46,513 )

Share-based compensation expense ( 827 ) ( 1,333 )

Other direct costs ( 372,665 ) ( 729,704 )

Loss on impairment of assets ( 1,268 ) ( 421,312 )

Other non-operating expense ( 15,551 ) ( 65,076 )

Gain (loss) on sale of discontinued operations before taxes, net 13,293 ( 34,993 )

Pretax income (loss) of discontinued operations 94,845 ( 416,075 )

Income tax (expense) benefit ( 8,602 ) 8,226

Loss from discontinued operations, net of tax $ ( 418 ) $ ( 107,780 )

Income (loss) from discontinued operations, net of tax $ 86,243 $ ( 407,849 )

Operating cash flows of discontinued operations $ 56,567 $ 193,459

3 unchanged sentences

During the first quarter of 2021, the Company recorded a loss of approximately $ 32,400 related to the Brazil 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 less costs to sell as of March 31, 2021, in accordance with ASC 360-10, “Impairment and Disposal of Long-lived Assets” (ASC 360-10).

The estimated fair value was based on the sale agreement for the disposal group that was announced on November 2, 2020, as discussed further below.

The assets and liabilities of the Discontinued Operations, which are subject to finalization, have been classified as held for sale as of March 31, 2021 and December 31, 2020, in accordance with ASC 205.

The estimated fair value was based on the sale agreement for the disposal group that was announced on November 2, 2020, as previously disclosed.

The sale of the Brazil disposal group closed on May 28, 2021.

See Note 5, Dispositions, for more information.

The assets and liabilities of the Discontinued Operations, which are subject to finalization, have been classified as held for sale as of June 30, 2021 and December 31, 2020.

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 tables:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Assets of Discontinued Operations

7 unchanged sentences

Total assets held for sale $ 1,122,082 $ 1,917,435

March 31, 2021 December 31, 2020

Liabilities of Discontinued Operations

4 unchanged sentences

Total liabilities held for sale $ 186,260 $ 702,256

Discontinued Operations with Signed Sale Agreements Pending Closure at March 31, 2021

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 during the second quarter of 2021, subject to regulatory approval.

Discontinued Operations with Signed Sale Agreements Pending Closure at June 30, 2021

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

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

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

On July 21, 2021, Laureate and the Walden Purchaser entered into a waiver and amendment to the Walden Sale Agreement (the Amendment).

Under the Amendment, Laureate and the Walden Purchaser agreed (i) that the U.S.

Department of Education notification dated June 23, 2021 to Walden University (the DOE Notification) meets the definition of a DOE Preacquisition Response (as defined in the Walden Sale Agreement) and (ii) to waive any right to terminate the Walden Sale Agreement under sections 7.01(b)(iii) or 7.01(c)(ii) thereof in respect of the DOE Notification.

Laureate also agreed to provide additional indemnification to the Walden Purchaser from and after the closing of the transactions contemplated by the Walden Sale Agreement.

The closing of the sale transaction is expected to occur during the third quarter 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.

Brazil Divestiture

On May 28, 2021, the Company completed the sale of its operations in Brazil to Ânima Holding S.A.

The proceeds received, net of cash sold, transaction fees and settlement of foreign currency swaps, were approximately $ 625,500 .

The Company used a portion of the proceeds to repay the remaining balance outstanding under its Senior Notes due 2025.

Additionally, the buyer assumed indebtedness, gross of cash sold, of approximately $ 121,000 .

The Company recognized a pre-tax gain on the sale of approximately $ 27,500 , which is included in Income (loss) from discontinued operations, net of tax in the Consolidated Statement of Operations for the three and six months ended June 30, 2021.

Honduras Divestiture

On March 8, 2021, the Company completed the divestiture of its operations in Honduras to Fundación Nasser, a not-for-profit foundation in Honduras.

In connection with the transaction, the Company transferred control of Fundaempresa, which manages Universidad Tecnológica Centroamericana (UNITEC), including Centro Universitario Tecnológico (CEUTEC), and received proceeds of approximately $ 26,000 , net of cash sold and closing costs.

The proceeds received, net of cash sold, closing costs and a working capital adjustment that was completed during the second quarter of 2021, were approximately $ 24,000 .

Under the transaction terms, additional consideration of $ 2,000 was paid into an escrow account at closing and, assuming certain conditions are met, will be released to the Company based on the following schedule:

50 % after 18 months, 25 % after 24 months and 25 % after 36 months.

At closing, the Company recognized an after-tax gain of approximately $ 500 , which is included in Loss from discontinued operations, net of tax in the Consolidated Statement of Operations for the three months ended March 31, 2021.

The Company recognized a pre-tax loss of approximately $ 1,700 , which is included in Income (loss) from discontinued operations, net of tax in the Consolidated Statement of Operations for the six months ended June 30, 2021.

Receipt of Remaining Escrow Receivable from Sale of China Operations

2 unchanged sentences

In June 2020, the Company received approximately one-half of the escrow account, and the remainder was due in January 2021.

In April 2021, the Company received 168,284 Hong Kong Dollars

(approximately $ 21,650 at the date of receipt), which represented payment in full for the remainder of the escrow account.

Accordingly, the Company recognized a gain of approximately $ 13,600 , which is included in Loss from discontinued operations, net of tax in the Consolidated Statement of Operations for the three months ended March 31, 2021.

In April 2021, the Company received 168,284 Hong Kong Dollars (approximately $ 21,650 at the date of receipt), which represented payment in full for the remainder of the escrow account.

Accordingly, the Company recognized a gain of approximately $ 13,600 , which is included in Income (loss) from discontinued operations, net of tax in the Consolidated Statement of Operations for the six months ended June 30, 2021.

Business and Geographic Segment Information

27 unchanged sentences

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 disposal of subsidiaries, net, Foreign currency exchange gain, net, Other income (expense), net, Gain on derivatives, Loss on debt extinguishment, Interest expense, Interest income, Depreciation and amortization expense, Loss on impairment of assets, Share-based compensation expense and expenses related to our Excellence-in-Process (EiP) initiative.

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

It included the establishment of regional shared services organizations (SSOs), 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, an enterprise-wide program aimed at revenue growth, 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 5, Dispositions.

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.

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 three months ended March 31, 2021 2020

For the three months ended For the six months ended

June 30, June 30,

2021 2020 2021 2020

Mexico $ 124,283 $ 114,864 $ 259,680 $ 269,071

12 unchanged sentences

EiP expenses ( 12,607 ) ( 19,300 ) ( 27,913 ) ( 42,078 )

Operating loss ( 86,391 ) ( 77,086 )

Operating income (loss) 57,684 29,143 ( 28,707 ) ( 47,943 )

Interest income 477 288 1,188 910

1 unchanged sentence

Loss on debt extinguishment ( 77,927 ) — ( 77,940 ) —

Gain on derivatives 29,330 802

Other income (expense), net 34 ( 81 )

Foreign currency gain, net 28,183 78,716

Loss on disposal of subsidiaries, net — ( 1,800 )

Loss on derivatives ( 53,847 ) ( 1,428 ) ( 24,517 ) ( 626 )

Other expense, net ( 55 ) ( 405 ) ( 21 ) ( 486 )

Foreign currency (loss) gain, net ( 15,519 ) ( 4,735 ) 12,664 73,981

Gain (loss) on disposal of subsidiaries, net 27 — 27 ( 1,800 )

Loss from continuing operations before income taxes and equity in net income of affiliates $ ( 102,701 ) $ ( 2,842 ) $ ( 154,365 ) $ ( 26,959 )

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Mexico $ 1,261,261 $ 1,278,198

3 unchanged sentences

Goodwill and Loss on Impairment of Assets

The change in the net carrying amount of Goodwill from December 31, 2020 through March 31, 2021 was composed of the following items:

The change in the net carrying amount of Goodwill from December 31, 2020 through June 30, 2021 was composed of the following items:

Mexico Peru Total

1 unchanged sentence

Currency translation adjustments 928 ( 6,993 ) ( 6,065 )

Balance at March 31, 2021 $ 479,728 $ 72,025 $ 551,753

Balance at June 30, 2021 $ 501,178 $ 67,589 $ 568,767

Impairment of Laureate Tradename

During the three months ended March 31, 2021, the Company recognized an impairment charge of $ 51,400 on the Laureate tradename, a finite-lived intangible asset.

During the first quarter of 2021, the Company recognized an impairment charge of $ 51,400 on the Laureate tradename, a finite-lived intangible asset.

In March 2021, the Company decided that, during 2021, it would wind down certain support functions related to the Laureate network and would no longer invest in and support the tradename beyond 2021.

2 unchanged sentences

The significant assumptions used in estimating the fair value included:

(1) the revenue growth rates;

and (2) the estimated royalty rates.

(1) the revenue growth rates and (2) the estimated royalty rates.

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

The decrease in the fair value of the tradename was attributable to the shortened duration of the estimated future revenues.

The remaining carrying value of the tradename asset of $ 18,700 will be amortized prospectively over the remainder of 2021, which is its estimated useful life.

The remaining carrying value of the tradename asset, which was approximately $ 11,650 as of June 30, 2021 , is being amortized prospectively over the remainder of 2021, which is its estimated useful life.

Outstanding long-term debt was as follows:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Senior long-term debt:

10 unchanged sentences

Long-term debt and finance leases, less current portion $ 123,470 $ 899,898

Senior Secured Credit Facility

The Company maintains a revolving credit facility under our Senior Secured Credit Facility that has a borrowing capacity of $ 410,000 and has a maturity date of October 7, 2024.

As of March 31, 2021 and December 31, 2020, no amounts were borrowed on this facility.

As described in Note 19, Subsequent Events, o n May 4, 2021, the Company redeemed $ 500,000 aggregate principal amount of its 8.250 % Senior Notes due 2025 (the Senior Notes) at a redemption price of 104.125 % of the principal amount thereof plus accrued and unpaid interest thereon to, but excluding the redemption date.

Additionally, the Company has notified the holders of its Senior Notes of its election to redeem the remaining $ 298,725 aggregate principal amount of the Senior Notes.

Among other conditions, the redemption is contingent on the sale of Brazil operations, which is targeted to close during the second quarter of 2021.

As of March 31, 2021 , the amount of unamortized deferred financing costs associated with the Senior Notes was approximately $ 45,700 .

Following completion of these redemptions, the Company will have repaid the entire outstanding principal amount of the Senior Notes.

As of June 30, 2021 and December 31, 2020, no amounts were borrowed on this facility.

On May 4, 2021, the Company redeemed $ 500,000 aggregate principal amount of its 8.250 % Senior Notes due 2025 (the Senior Notes) at a redemption price of 104.125 % of the principal amount thereof plus accrued and unpaid interest thereon to, but excluding the redemption date.

The Company used a portion of the proceeds from the sale of its operations in Australia and New Zealand, which was completed on November 3, 2020, to fund the redemption of the Senior Notes.

Additionally, on May 28, 2021, the Company completed the sale of its operations in Brazil and used a portion of the proceeds to redeem the remaining outstanding balance of the Senior Notes of $ 298,725 at a redemption price of 104.125 % of the principal amou nt thereof plus accrued and unpaid interest thereon to, but excluding the redemption date of, June 3, 2021.

Loss on Debt Extinguishment

In connection with the repayment of the Senior Notes during the three months ended June 30, 2021, the Company recorded a Loss on debt extinguishment of approximately $ 77,900 , related to the redemption premium paid and the write off of the unamortized deferred financing costs associated with the repaid debt balances.

Estimated Fair Value of Debt

The estimated fair value of our debt was determined using observable market prices as the majority of our securities, including the Senior Secured Credit Facility and the Senior Notes due 2025, are traded in a brokered market.

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

As of March 31, 2021 and December 31, 2020,

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.

As of June 30, 2021, the estimated fair value of our debt approximated its carrying value.

As of December 31, 2020, the estimated fair value of our debt was determined using observable market prices as the majority of our securities, including the Senior Secured Credit Facility and the Senior Notes due 2025, were traded in a brokered market.

The fair value of the remaining debt instruments was approximated at the carrying value based on their terms.

As of December 31, 2020, 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:

March 31, 2021 December 31, 2020

Carrying amount Estimated fair value Carrying amount Estimated fair value

December 31, 2020

Carrying amount Estimated fair value

Total senior and other debt $ 996,369 $ 1,043,294

Certain Covenants

As of March 31, 2021, our senior long-term debt contained certain negative covenants including, among others:

As of June 30, 2021, our senior long-term debt contained certain negative covenants including, among others:

(1) limitations on additional indebtedness;

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The agreement also provides that if (i) the Company’s Consolidated Total Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, is not greater than 4.75 x as of such date and (ii) less than 25 % of the revolving credit facility is utilized as of that date, then such financial covenant shall not apply.

As of March 31, 2021, these conditions were satisfied and, therefore, we were not subject to the leverage ratio.

As of June 30, 2021, 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 March 31, 2021.

We were in compliance with these covenants as of June 30, 2021.

Laureate conducts a significant portion of its operations at leased facilities.

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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.

Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term.

Rental expense for lease payments related to operating leases is

recognized on a straight-line basis over the lease term.

On occasion, Laureate has entered into sublease agreements for certain leased office space;

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In connection with the exercise of this early termination option, the Company is required to pay an early termination fee of approximately $ 1,200 , half of which was paid in March 2021, and half of which is due by June 30, 2022.

Accordingly, during the first quarter of 2021, the Company remeasured the

operating lease liability, including the early termination fee, and recorded a reduction in the ROU asset and the operating lease liability of approximately $ 14,900 .

Accordingly, during the first quarter of 2021, the Company remeasured the operating lease liability, including the early termination fee, and recorded a reduction in the ROU asset and the operating lease liability of approximately $ 14,900 .

Commitments and Contingencies

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Contingent Liabilities for Taxes

As of March 31, 2021 and December 31, 2020, Laureate has recorded cumulative liabilities totaling $ 35,030 and $ 38,355 , respectively, for taxes other-than-income tax, principally payroll-tax-related uncertainties recorded at the time of an acquisition, of which $ 34,514 and $ 37,794 , 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.

As of June 30, 2021 and December 31, 2020, Laureate has recorded cumulative liabilities totaling $ 452 and $ 38,355 , respectively, for taxes other-than-income tax, principally payroll-tax-related uncertainties recorded at the time of an acquisition, of which $ 0 and $ 37,794 , respectively, were classified as held for sale.

The majority of the liability balance at December 31, 2020 related to our operations in Brazil which were sold on May 28, 2021.

See Note 5, Dispositions, for more information.

The terms of the statutes of limitations on these contingencies vary but can be up to 10 years.

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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.

For Continuing Operations, the total decrease to operating income for adjustments to non-income tax contingencies and indemnification assets was $ 13,349 and $ 6,607 , respectively, for the three months ended March 31, 2021 and 2020.

In addition, as of March 31, 2021 and December 31, 2020, Laureate has recorded cumulative liabilities for income tax contingencies of $ 53,162 and $ 40,668 , respectively, of which $ 9,493 and $ 11,752 , respectively, were classified as held for sale.

As of March 31, 2021 and December 31, 2020, indemnification assets primarily related to acquisition contingencies were $ 38,471 and $ 55,940 , respectively, of which $ 37,340 and $ 40,877 , respectively, were classified as held for sale.

For Continuing Operations, the total decrease to operating income for adjustments to non-income tax contingencies and indemnification assets was $ 13,388 and $ 5,952 , respectively, for the six months ended June 30, 2021 and 2020.

In addition, as of June 30, 2021 and December 31, 2020, Laureate has recorded cumulative liabilities for income tax contingencies of $ 51,319 and $ 40,668 , respectively, of which $ 6,380 and $ 11,752 , respectively, were classified as held for sale.

As of June 30, 2021 and December 31, 2020, indemnification assets primarily related to acquisition contingencies were $ 1,027 and $ 55,940 , respectively, of which $ 0 and $ 40,877 , 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 $ 13,000 and $ 14,000 as of March 31, 2021 and December 31, 2020, respectively, from the former owner of one of our Brazil institutions which is guaranteed by future rental payments to the former owner.

We have identified certain contingencies, primarily tax-related, that we have assessed as being reasonably possible of loss, but not probable of loss, and could have an adverse effect on the Company’s results of operations if the outcomes are unfavorable.

The majority of the indemnification assets at December 31, 2020 related to our operations in Brazil, which were sold on May 28, 2021.

We have identified certain contingencies, 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, which is now classified in Discontinued Operations.

In the aggregate, we estimate that the reasonably possible loss for these unrecorded contingencies in Brazil could be up to approximately $ 50,000 if the outcomes were unfavorable in all cases.

In cases where we are not indemnified, the unrecorded contingencies are not material.

Other Loss Contingencies

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Laureate intends to vigorously defend against these matters.

As of March 31, 2021 and December 31, 2020, approximately $ 8,000 and $ 8,300 , respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets.

In addition, as of March 31, 2021 and December 31, 2020, approximately $ 22,200 and $ 23,800 , respectively, of loss contingencies were classified as held for sale.

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.

As of June 30, 2021 and December 31, 2020, approximately $ 8,800 and $ 8,300 , respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets.

In addition, as of June 30, 2021 and December 31, 2020, approximately $ 0 and $ 23,800 , respectively, of loss contingencies were classified as held for sale.

The majority of the balance at December 31, 2020 related to our operations in Brazil, which were sold on May 28, 2021.

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

During the first quarter of 2021, one of our Peruvian institutions issued a bank guarantee in the amount of PEN 23,764 (approximately $ 6,364 at March 31, 2021) in order to appeal a preliminary tax assessment received related to tax audits of 2014 and 2015.

During the first quarter of 2021, one of our Peruvian institutions issued a bank guarantee in the amount of PEN 23,764 (approximately $ 5,975 at June 30, 2021) in order to appeal a preliminary tax assessment received related to tax audits of 2014 and 2015.

Standby Letters of Credit, Surety Bonds and Other Commitments

As of March 31, 2021 and December 31, 2020, Laureate's outstanding letters of credit (LOCs) and surety bonds primarily consisted of the items discussed below.

As of both March 31, 2021 and December 31, 2020, we had approximately $ 83,600 posted as an LOC in favor of the DOE.

As of June 30, 2021 and December 31, 2020, Laureate's outstanding letters of credit (LOCs) and surety bonds primarily consisted of the items discussed below.

As of both June 30, 2021 and December 31, 2020, we had approximately $ 83,600 posted as an LOC in favor of the DOE.

This LOC was required to allow Walden to participate in the DOE Title IV program.

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

As of March 31, 2021 and December 31, 2020, the total face amount of these surety bonds, which are fully collateralized with cash, was $ 16,929 and $ 17,094 , 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 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 a five -year term.

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

As of June 30, 2021 and December 31, 2020, the total face amount of these surety bonds, which are fully collateralized with cash, was $ 17,046 and $ 17,094 , respectively.

Spanish Tax Audits

As of March 31, 2021 and December 31, 2020, we had approximately $ 11,100 and $ 11,500 , respectively, posted as cash collateral for LOCs related to the Spanish tax audits.

This was recorded in Continuing Operations and classified as Restricted cash on our March 31, 2021 and December 31, 2020 Consolidated Balance Sheets.

As of June 30, 2021 and December 31, 2020, we had approximately $ 11,300 and $ 11,500 , respectively, posted as cash collateral for LOCs related to the Spanish tax audits.

This was recorded in Continuing Operations and classified as Restricted cash on our June 30, 2021 and December 31, 2020 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.

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during the second quarter of 2020, ICE was migrated to the Netherlands and its name was changed to Laureate Netherlands Holding B.V.

In addition, on March 11, 2020, ICE received a preliminary assessment of approximately EUR 21,600 (approximately $ 25,500 at March 31, 2021), related to the STA’s extension of their audit to review withholding taxes on income earned by nonresidents.

In addition, on March 11, 2020, ICE received a preliminary assessment of approximately EUR 21,600 (approximately $ 25,800 at June 30, 2021), related to the STA’s extension of their audit to review withholding taxes on income earned by nonresidents.

This assessment was not final, and ICE challenged the assessment.

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At this time, we consider the matter resolved.

On July 22, 2021, the Company received notice of a decision from the Spanish National Court regarding the tax audits.

See Note 19, Subsequent Events, for additional information.

Share-based Compensation

Share-based compensation expense was as follows:

For the three months ended March 31, 2021 2020

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

2021 2020 2021 2020

Continuing operations

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Stockholders’ Equity

The components of net changes in stockholders’ equity for the three months ended March 31, 2021 are as follows:

The components of net changes in stockholders’ equity for the fiscal quarters of 2021 are as follows:

Laureate Education, Inc.

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Balance at March 31, 2021 122,213 $ 618 73,544 $ 294 $ 3,760,362 $ ( 341,851 ) $ ( 1,001,897 ) $ ( 511,122 ) $ ( 12,915 ) $ 1,893,489

The components of net changes in stockholders’ equity for the three months ended March 31, 2020 are as follows:

Non-cash stock compensation — — — — 3,202 — — — — 3,202

Conversion of Class B shares to Class A shares 2 — ( 2 ) — — — — — — —

Purchase of treasury stock at cost ( 7,548 ) — — — — — — ( 105,786 ) — ( 105,786 )

Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 119 1 — — 359 — — — — 360

Accretion of redeemable noncontrolling interests and equity — — — — ( 68 ) — — — — ( 68 )

Reclassification of redeemable noncontrolling interests and equity — — — — — — — — ( 1 ) ( 1 )

Net loss — — — — — ( 29,000 ) — — ( 224 ) ( 29,224 )

Foreign currency translation adjustment, net of tax of $ 0

— — — — — — 510,445 — ( 2 ) 510,443

Minimum pension liability adjustment, net of tax of $0 — — — — — — 27 — — 27

Balance at June 30, 2021 114,786 $ 619 73,542 $ 294 $ 3,763,855 $ ( 370,851 ) $ ( 491,425 ) $ ( 616,908 ) $ ( 13,142 ) $ 2,272,442

The components of net changes in stockholders’ equity for the fiscal quarters of 2020 are as follows:

Laureate Education, Inc.

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Balance at March 31, 2020 119,075 $ 546 90,813 $ 363 $ 3,752,186 $ 536,124 $ ( 1,405,788 ) $ ( 300,309 ) $ ( 13,314 ) $ 2,569,808

Non-cash stock compensation — — — — 4,621 — — — — 4,621

Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 132 1 — — ( 33 ) — — — — ( 32 )

Change in noncontrolling interests — — — — — — — — 3,471 3,471

Accretion of redeemable noncontrolling interests and equity — — — — 201 — — — — 201

Reclassification of redeemable noncontrolling interests and equity — — — — — — — — ( 414 ) ( 414 )

Net loss — — — — — ( 307,823 ) — — ( 3,805 ) ( 311,628 )

Foreign currency translation adjustment, net of tax of $ 0

— — — — — — 14,102 — ( 68 ) 14,034

Balance at June 30, 2020 119,207 $ 547 90,813 $ 363 $ 3,756,975 $ 228,301 $ ( 1,391,686 ) $ ( 300,309 ) $ ( 14,130 ) $ 2,280,061

Stock Repurchase Program

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.

On April 30, 2021, the Company’s board of directors approved an increase of its existing authorization to repurchase shares of the Company’s Class A common stock by $ 200,000 , for a total authorization (including the previously authorized repurchases) of up to $ 500,000 of the Company’s Class A common stock.

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

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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 expects to finance the repurchases with free cash flow and excess cash and liquidity on-hand.

During the first quarter of 2021, the Company repurchased 10,401 shares of its outstanding Class A common stock for a total purchase price of $ 145,806 .

As discussed in Note 19, Subsequent Events, on April 30, 2021, the Company’s board of directors approved an increase of its existing authorization to repurchase shares of the Company’s Class A common stock by $ 200,000 , for a total authorization (including the previously authorized repurchases) of up to $ 500,000 of the Company’s Class A common stock.

The Company expects to finance the repurchases with free cash flow, from excess cash and liquidity on-hand, or from its revolving credit facility, or a combination thereof.

During the six months ended June 30, 2021, the Company repurchased 17,949 shares of its outstanding Class A common stock for a total purchase price of $ 251,592 .

Accumulated Other Comprehen sive Income (Loss)

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The components of these balances were as follows:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Laureate Education, Inc.

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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 our operating cash used to make these payments is generated by subsidiaries with functional currencies other than USD.

Prior to their repayment, the interest and principal payments for Laureate’s senior long-term debt arrangements were primarily in USD.

Our ability to make debt payments was subject to fluctuations in the value of the USD against foreign currencies, since a majority of our operating cash used to make these payments was 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.

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The reported fair values of our derivatives, which are classified in Derivative instruments on our Consolidated Balance Sheets, were as follows:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Derivatives not designated as hedging instruments:

Current assets:

Cross currency swaps $ 21,800 $ —

Current liabilities:

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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 March 31, 2021, these swaps were in an asset position and had an aggregate fair value of $ 21,800 , which was recorded in Derivative instruments as a current asset.

The purpose of these swaps was to mitigate the risk of foreign currency exposure on the expected proceeds from the sale.

Two of the swaps were deal contingent, with the settlement date occurring on the second business day following the completion of the sale.

On the settlement date, Laureate would 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.

The remaining four swaps were originally put/call options with a maturity date of May 13, 2021, where Laureate could 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 included deferred premium payments from Laureate to the counterparties of $ 18,294 , which were paid in full in January 2021.

During the second quarter of 2021, all four of these swaps were converted to be deal contingent, with the settlement date occurring on the second business day following the aforementioned sale.

This conversion resulted in cash proceeds to Laureate of $ 1,663 .

On the settlement date, Laureate would deliver the combined notional amount of BRL 1,875,000 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.

As discussed in Note 5, Dispositions, the sale of Laureate’s Brazilian operations closed on May 28, 2021.

Per the terms of the agreements, the swaps were settled on June 2, 2021, which resulted in a realized loss and net settlement amount paid to the counterparties at closing of $ 33,710 .

As of December 31, 2020, these swaps were in a liability position and 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.

These swaps are not designated as hedges for accounting purposes.

AUD to USD Foreign Currency Swap

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 swap was not designated as a hedge for accounting purposes.

These swaps were not designated as hedges for accounting purposes.

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

For the three months ended March 31, 2021 2020

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

2021 2020 2021 2020

Cross currency swaps

Unrealized gain $ 47,624 $ 802

Unrealized (loss) gain $ ( 21,800 ) $ ( 802 ) $ 25,824 $ —

Realized loss ( 32,047 ) ( 626 ) ( 50,341 ) ( 626 )

Gain on derivatives, net $ 29,330 $ 802

Loss on derivatives, net $ ( 53,847 ) $ ( 1,428 ) $ ( 24,517 ) $ ( 626 )

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 March 31, 2021 and December 31, 2020, the estimated fair values of derivatives in a gain position were $ 21,800 and $ 0 , respectively.

Laureate has limited its credit risk by only entering into derivative transactions with highly rated major financial institutions.

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.

Laureate limits 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 March 31, 2021, 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.

As of June 30, 2021 and December 31, 2020, we did not hold any derivatives in a net gain position, and thus had no credit risk.

Laureate’s agreements with its derivative counterparties contain a provision under which the Company 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 March 31, 2021 and December 31, 2020, the Company had not breached any default provisions and had not posted any collateral related to these agreements.

If the Company had breached any of these provisions, it could have been required to settle the obligations under the derivative agreements for an amount that, at a maximum, the Company believes would approximate their estimated fair values as of March 31, 2021 and December 31, 2020 of $ 0 and $ 25,824 , respectively.

As of December 31, 2020, the Company had not breached any default provisions and had not posted any

collateral related to these agreements.

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

The tax provisions for the three months ended March 31, 2021 and 2020 are based on estimated full-year effective tax rates, adjusted for discrete income tax items related specifically to the interim periods.

The tax provisions for the six months ended June 30, 2021 and 2020 are based on estimated full-year effective tax rates, adjusted for discrete income tax items related specifically to the interim periods.

Laureate has operations in multiple countries at various statutory tax rates and other operations that are loss-making entities for which it is not more likely than not that a tax benefit will be realized on the loss.

For the three months ended March 31, 2021 , the Company recognized income t ax (expense) from continuing operations of $( 112,861 ), as compared to income tax benefit from continuing operations of $ 230,028 in the prior year period.

Income tax expense for the three months ended March 31, 2021 was primarily driven by changes in income tax reserves, withholding taxes and jurisdictional mix of earnings offset by the benefit for pretax loss for the period.

Income tax benefit for the three months ended March 31, 2020 was primarily driven by the benefit recorded due to the change in tax status of a Netherlands subsidiary, the pretax loss for the period and jurisdictional mix of earnings.

During the three months ended March 31, 2021 , Laureate recognized additional tax expense of $ 46,493 related to prior year tax positions and tax expense for interest and penalties related to income taxes of $ 802 .

During the three months ended March 31, 2021, the Company recorded an out-of-period adjustment of approximately $ 12,400 for income tax expense that should have been recorded during 2016 through 2020.

For the six months ended June 30, 2021, the Company recognized income t ax (expense) from continuing operations of $( 126,045 ), as compared to income tax benefit from continuing operations of $ 221,315 in the prior year period.

Income tax expense for the six months ended June 30, 2021 was primarily driven by changes in income tax reserves, withholding taxes and jurisdictional mix of earnings offset by the benefit for pretax loss for the period.

Income tax benefit for the six months ended June 30, 2020 was primarily driven by the benefit recorded due to the change in tax status of a Netherlands subsidiary, the pretax loss for the period and jurisdictional mix of earnings.

During the first quarter of 2021, the Company recorded an out-of-period adjustment of approximately $ 12,400 for income tax expense that should have been recorded during 2016 through 2020.

The Company concluded that the adjustment was immaterial to the consolidated financial statements for both the current and prior-periods.

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

For the three months ended March 31, 2021 2020

For the three months ended June 30, 2021 2020

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

Loss from continuing operations $ ( 115,885 ) $ ( 11,559 )

Loss attributable to noncontrolling interests 2 27

Loss from continuing operations attributable to Laureate Education, Inc.

( 115,883 ) ( 11,532 )

Accretion of redemption value of redeemable noncontrolling interests and equity ( 68 ) 201

Net loss from continuing operations for basic and diluted earnings (loss) per share $ ( 115,951 ) $ ( 11,331 )

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

Income (loss) from discontinued operations, net of tax $ 86,661 $ ( 300,069 )

Loss attributable to noncontrolling interests 222 3,778

Net income (loss) from discontinued operations for basic and diluted earnings (loss) per share $ 86,883 $ ( 296,291 )

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

Basic and diluted weighted average shares outstanding 191,990 209,929

Basic and diluted earnings (loss) per share:

Loss from continuing operations $ ( 0.60 ) $ ( 0.05 )

Income (loss) from discontinued operations 0.45 ( 1.41 )

Basic and diluted loss per share $ ( 0.15 ) $ ( 1.46 )

For the six months ended June 30, 2021 2020

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

(Loss) income from continuing operations $ ( 280,410 ) $ 194,537

Net loss attributable to noncontrolling interests 24 12

Loss attributable to noncontrolling interests 27 38

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

3 unchanged sentences

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

Loss from discontinued operations, net of tax $ ( 418 ) $ ( 107,780 )

(Income) loss attributable to noncontrolling interests ( 9 ) 1,287

Net loss from discontinued operations for basic and diluted earnings (loss) per share $ ( 427 ) $ ( 106,493 )

Income (loss) from discontinued operations, net of tax $ 86,243 $ ( 407,849 )

Loss attributable to noncontrolling interests 212 5,066

Net income (loss) from discontinued operations for basic and diluted earnings (loss) per share $ 86,455 $ ( 402,783 )

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

Basic weighted average shares outstanding 196,085 209,863

Dilutive effect of stock options — 83

Dilutive effect of restricted stock units — 187

2 unchanged sentences

(Loss) income from continuing operations $ ( 1.43 ) $ 0.93

Loss from discontinued operations — ( 0.51 )

Basic and diluted (loss) earnings per share $ ( 0.82 ) $ 0.47

Income (loss) from discontinued operations 0.44 ( 1.92 )

Basic and diluted loss per share $ ( 0.99 ) $ ( 0.99 )

The following table summarizes the number of stock options and shares of restricted stock units that were excluded from the diluted EPS calculations because the effect would have been antidilutive:

For the three months ended March 31, 2021 2020

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

2021 2020 2021 2020

Stock options 3,256 4,100 3,324 4,391

5 unchanged sentences

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.

For example, 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.

Except as set forth below, there have been no material changes to the laws and regulations affecting our higher education institutions that are described in our Annual Report on Form 10-K for the year ended December 31, 2020.

Continuing Operations

Mexican Regulation

A new higher education bill was enacted into law effective April 21, 2021.

The new law, which, among other things, confirms the guaranteed right to higher education, is not expected to materially impact the business.

COVID-19 Update

Mexican Regulation – COVID-19 Update

Administrative activities have resumed at most of our campuses.

Limited face-to-face educational activities have resumed at 10 campuses (in seven states), but such activities will not be permitted to resume at any other campus until the region (municipality or state) in which such campus is located is assigned a green color code under the country’s color-coded sanitary alert system, which is updated on a biweekly basis.

Limited face-to-face educational activities have resumed at 18 campuses.

Further activities will not be permitted to resume until the region (municipality or state) in which a campus 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 June 2021, and may be extended again after the second round of presidential elections on June 6, 2021.

Due to the more aggressive and deadly second wave of COVID-19, Peru has extended its region-by-region confinement plan until May 9, 2021, subject to continuing review.

Lima has been qualified as “in extreme status,” which severely limits or prohibits economic activities, including presential gatherings like in-person instruction.

Nevertheless, the government has announced that face-to-face classes may resume this year, initially semi-presential.

Peru’s national sanitary emergency has been extended until August 31, 2021, and may be extended again.

Due to the easing of the second wave of COVID-19, Peru has reduced its region-by-region confinement plan.

Currently, no province qualifies as “in extreme status.” Lima has been qualified as “high status,” which limits presential activities, as well as in-person instruction.

The government has announced that face-to-face classes may resume next year, initially semi-presential.

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

Discontinued Operations

Brazilian Regulation – COVID-19 Update

As of August 2020, Provisional Presidential Act n.

934/2020 has been converted to Law n.

Accordingly, institutions remain authorized to substitute face-to-face classes with remote activities and adjust the academic calendar.

By the end of 2020, the National Board of Education had issued an opinion concerning the continuity of remote activities for an additional year.

While the Ministry of Education originally had insisted on a gradual return to face-to-face classes, beginning on March 1, 2021, for higher education, this effort was affected by a second wave of COVID-19 infections and the consequent increase of local sanitary restrictive measures.

As such, remote activities will continue until either a safety standard is sustained or mass vaccination reaches the students’ main age groups.

As of now, decisions 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, with short interruptions due to local sanitary statistics, at most 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.

The “90/10 Rule.”

As part of the American Rescue Plan Act of 2021 (“ARPA”) signed into law on March 11, 2021, Congress amended certain provisions of the U.S.

Higher Education Act (the “HEA”) pertaining to a requirement of the HEA commonly referred to as the “90/10 Rule”.

Specifically, the 90/10 Rule currently provides that a for-profit educational institution loses its eligibility to participate in federal student financial aid programs under Title IV of the HEA (“Title IV programs”) if, under a complex regulatory formula that requires cash basis accounting and other adjustments to the calculation of revenues, the institution derives more than 90% of its revenues from Title IV program funds for any two consecutive fiscal years.

The ARPA amended the HEA to require that all “federal education assistance funds,” rather than only Title IV program funds, be included in the numerator of the 90/10 Rule.

While the phrase “federal education assistance funds” was not defined by the statutory change, it presumably will include funds derived from student assistance programs administered by the U.S.

Department of Veteran’s Affairs and the U.S.

Department of Defense, among others.

The ARPA requires the U.S.

Department of Education to conduct a negotiated rulemaking to develop regulations needed to implement the revisions to the 90/10 Rule, with such negotiated rulemaking not permitted to begin before October 1, 2021.

The revision to the 90/10 Rule to include all “federal education assistance funds” will take effect with institutional fiscal years beginning on or after January 1, 2023.

Department of Justice Notice of Election to Decline Intervention

5 unchanged sentences

Effective as of May 3, 2021, the HLC removed such designation.

Per the court order related to the Notice, the Relators may elect to continue to pursue the action.

The Company cannot predict how long it may take to resolve this matter.

The Company believes that the Relators’ claims are without merit and intends to defend vigorously against them.

The Relators filed on July 23, 2021 a voluntary Motion to Dismiss the complaint and the DOJ filed a concurring motion.

We have no reason to believe that the district court judge will not grant the Motion.

Although such Motion would permit the relators to refile at a later date, we consider the matter closed.

If the Relators take the extraordinary step to re-file, the Company will vigorously defend Walden University’s interests.

The Company maintains that Walden University has not engaged in any unlawful conduct or other wrongdoing that would serve as a basis for any liability or damages claimed in the complaint.

Fair Value Measurement

12 unchanged sentences

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 March 31, 2021 and December 31, 2020 were classified as Level 2 of the fair value hierarchy.

Laureate's financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2021 were as follows:

Total Level 1 Level 2 Level 3

Derivative instruments $ 21,800 $ — $ 21,800 $ —

Derivative instruments $ — $ — $ — $ —

As a result, all of our derivatives held as of December 31, 2020 were classified as Level 2 of the fair value hierarchy.

As of June 30, 2021, Laureate did not hold any financial assets or liabilities that are measured at fair value on a recurring basis.

Laureate's financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2020 were as follows:

4 unchanged sentences

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 March 31, 2020 balance.

The March 31, 2021 and March 31, 2020 balances sum to the amounts shown in the Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020:

March 31, 2021 March 31, 2020 December 31, 2020

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets, as well as the June 30, 2020 balance.

The June 30, 2021 and June 30, 2020 balances sum to the amounts shown in the Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020:

June 30, 2021 June 30, 2020 December 31, 2020

Cash and cash equivalents $ 427,142 $ 284,008 $ 750,147

5 unchanged sentences

Subsequent Events

Redemption of Senior Notes

On May 4, 2021, the Company redeemed $ 500,000 aggregate principal amount of its 8.250 % Senior Notes due 2025 (the Senior Notes), at a redemption price of 104.125 % of the principal amount thereof plus accrued and unpaid interest thereon to, but excluding the redemption date.

The total payment made was $ 520,969 .

The redemption of the Senior Notes was made pursuant to the indenture governing the Senior Notes as a result of the Company’s decision to exercise its right to optionally redeem any part of the Senior Notes.

The source of the funds was cash on hand from the proceeds of the sale of the Company’s operations in Australia and New Zealand.

The Company has also notified the holders of its Senior Notes of its election to redeem the remaining $ 298,725 aggregate principal amount of the Senior Notes at a price of 104.125 % of the principal amount thereof plus accrued and unpaid interest thereon to, but excluding the redemption date.

Among other conditions, the redemption is contingent on the sale of our operations in Brazil, which is targeted to close during the second quarter of 2021.

Following completion of the above redemptions, the Company will have repaid the entire outstanding principal amount of the Senior Notes.

Stock Repurchase Program

Spanish Tax Audits-National Court Decision

On July 22, 2021, the Spanish National Court issued a decision on the Company’s appeal regarding the Spanish Taxing Authority’s (STA) audits of Iniciativas Culturales de España, S.L.

(ICE), our former Spanish holding company, for the fiscal years 2006-2007 and 2008-2010.

Based on our understanding of the decision, the matter is not yet resolved in favor of either the Company or the STA.

The National Court decision can be appealed by the Company or the STA.

The Company is evaluating its options, including an appeal to the Spanish Supreme Court, and awaiting further actions by the STA in reaction to the court decision.

The Company does not believe that this matter will have a material effect on its consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements