What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-05 compared with 2021-05-06 · 286 added, 177 removed, 399 unchanged (54% of the section changed)

26 unchanged sentences

• the fluctuations in revenues due to seasonality;

• information technology system disruptions, unauthorized access, data security breaches, cyberattacks, ransomware attacks, other security threats or the costs associated with protection against and the remediation of the foregoing;

• our ability to maintain proper and effective internal controls necessary to produce accurate financial statements on a timely basis;

15 unchanged sentences

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

Collectively, we have approximately 366,000 students enrolled at five institutions in these two countries, which represent our Continuing Operations as of March 31, 2021.

Collectively, we have approximately 349,200 students enrolled at five institutions in these two countries, which represent our Continuing Operations as of June 30, 2021.

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

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We have two reportable segments as described below.

We group our institutions by geography in:

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

We group our institutions by geography in Mexico and Peru (formerly Andean) for reporting purposes.

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

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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.

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Unless indicated otherwise, the information in the footnotes to the Consolidated Financial Statements relates to Continuing Operations.

Because a number of our subsidiaries are included in Discontinued Operations, they no longer meet the criteria for a reportable segment under ASC 280, “Segment Reporting,” and, therefore, are excluded from the segments information for all periods presented.

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

Our Discontinued Operations are excluded from the segments information for all periods presented, as they no longer meet the criteria for a reportable segment under ASC 280, “Segment Reporting.” Unless indicated otherwise, the information in the MD&A relates to Continuing Operations.

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

We have not yet completed the divestitures of Brazil and Walden University, both of which have signed sale agreements pending closure.

We have not yet completed the divestiture of Walden University, which has a signed sale agreement pending closure.

The sale of Walden University is expected to close during the third quarter of 2021.

See also Note 4, Discontinued Operations and Assets Held for Sale, and Note 5, Dispositions, in our consolidated financial statements included elsewhere in this Form 10-Q.

If the Company determines that the estimated fair value of any business is less than its carrying value, the Company will be required to record a charge to write down the carrying value to fair value and the amount of that charge could be material.

See Note 4, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-Q for disclosure of the valuation allowance that the Company recorded on the Brazil disposal group in order to write down its carrying value to fair value.

The Company’s Continuing Operations continue to be classified as held and used and are evaluated for impairment under that model, based on the cash flows expected to be generated by the use of those asset groups in operations.

Should the held-for-sale criteria be met, the long-lived assets will be recorded at the lower of their carrying value or fair value, less cost to sell.

Because completing a sale, spin-off, or other transaction may be challenging due to the regulatory environment, market conditions and other factors, the values that may be realized from any potential transactions could be less than if these businesses remained held and used.

If the held-for-sale criteria are met, the carrying value used to evaluate a business for potential write down and to determine the gain or loss on sale will include any accumulated foreign currency translation (FX) losses associated with that business.

In recent years, the U.S.

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

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

As of both March 31, 2021 and December 31, 2020, the Company’s consolidated FX loss totaled approximately $1.0 billion.

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

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

Asset Group/ Reporting Unit Foreign Currency Translation Losses as of

(in millions) March 31, 2021 December 31, 2020

Brazil $ 494 $ 479

Mexico 551 509

Total Brazil and Mexico $ 1,045 $ 988

As discussed in Note 4, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-Q, the Company decided to sell its Brazil operations during the third quarter of 2020.

The Company recorded losses in both the third and fourth quarters of 2020 to write down the carrying value of the Brazil disposal group to its estimated fair value less costs to sell.

During the first quarter of 2021, the Company recorded an additional loss of approximately $32.4 million in order to write down the carrying value of the Brazil disposal group to its estimated fair value less costs to sell as of March 31, 2021.

The sale of Brazil operations is targeted to close during the second quarter of 2021.

While the Company plans to continue operating its institutions in Mexico, the substantial amounts of FX losses attributable to the Mexico business would have a material effect on the amount of gain or loss that would result from a sale.

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.

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The Corporate segment also contains the eliminations of intersegment revenues and expenses.

The following information for our reportable segments in continuing operations is presented as of March 31, 2021:

Institutions Enrollment 2021 YTD Revenues ($ in millions) (1)

The following information for our reportable segments in continuing operations is presented as of June 30, 2021:

Institutions Enrollment 2021 YTD Revenues

($ in millions) (1)

% Contribution to 2021 YTD Revenues

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See also “Item 1A—Risk Factors—Risks Relating to Our Business—Our institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition and results of operations,” “Risk Factors—Risks Relating to Walden University, which is included in our Discontinued Operations, and the Highly Regulated Higher Education Industry in the United States,” and “Item 1—Business—Industry Regulation” in our 2020 Form 10-K for a detailed discussion of our different regulatory environments.

Department of Justice Notice of Election to Decline Intervention

On April 28, 2021, the Company was notified that the Civil Division of the United States Department of Justice (the “DOJ”), on behalf of the United States, had filed a Notice of Election to Decline Intervention (the “Notice”) with respect to a civil qui tam action filed by third-party relators (the “Relators”) against Walden University and the Company.

It was this action that prompted the DOJ’s examination of Walden University’s Masters of Science in Nursing program.

The DOJ’s investigation into this matter has now concluded.

Further, as previously disclosed by the Company, the Higher Learning Commission (“HLC”) had informed Walden University that a public “Governmental Investigation” designation would be assigned to Walden University due to the DOJ inquiry;

such designation became effective on November 9, 2020.

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.

Key Business Metric

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We define “enrollment” as the number of students registered in a course on the last day of the enrollment reporting period.

New enrollments provide an indication of future revenue trends.

New enrollments provide an

indication of future revenue trends.

Total enrollment is a function of continuing student enrollments, new student enrollments and enrollments from acquisitions, offset by graduations, attrition and enrollment decreases due to dispositions.

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

Therefore, changes related to

such entities are considered “incremental impact of acquisitions” for the first 12 months of our ownership.

We have not made any acquisitions thus far in 2021, and we did not make any acquisitions in 2020 related to our Continuing Operations.

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

We have not made any acquisitions thus far in 2021, and we did not make any acquisitions in 2020.

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

Dispositions completed during one period impact comparability to a prior period in which we owned the divested entity.

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

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

subsequent to the disposition.

As discussed above, all of the divestitures that are part of the strategic shifts are included in Discontinued Operations for all periods presented.

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Also, discrete items can arise in the course of our operations that can further impact the Company’s effective tax rate for the period.

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

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

See “Item 1A—Risk Factors—Risks Relating to Our Business—We may have exposure to greater-than-anticipated tax liabilities” in our 2020 Form 10-K.

Results from the Discontinued Operations

The results of operations of our Discontinued Operations for the three months ended March 31, 2021 and 2020 were as follows:

The results of operations of our Discontinued Operations for the three and six months ended June 30, 2021 and 2020 were as follows:

For the three months ended For the six months ended

June 30, June 30,

(in millions) 2021 2020 2021 2020

5 unchanged sentences

Other non-operating expense (4.4) (10.0) (15.6) (65.1)

Loss on sale of discontinued operations before taxes, net (16.8) (23.6)

Gain (loss) on sale of discontinued operations before taxes, net 30.1 (11.4) 13.3 (35.0)

Pretax income (loss) of discontinued operations 85.6 (303.1) 94.8 (416.1)

Income tax (expense) benefit (9.7) 5.2

Loss from discontinued operations, net of tax $ (0.4) $ (107.8)

Enrollments at our Discontinued Operations as of March 31, 2021 and March 31, 2020 were 365,800 and 559,900, respectively.

Three Months Ended March 31, 2021

On March 8, 2021, we sold our operations in Honduras, which resulted in an after-tax gain of $0.5 million.

Income tax benefit (expense) 1.1 3.0 (8.6) 8.2

Income (loss) from discontinued operations, net of tax $ 86.7 $ (300.1) $ 86.2 $ (407.8)

Six Months Ended June 30, 2021

On March 8, 2021, we sold our operations in Honduras, which resulted in an after-tax loss of $1.7 million, including a working capital adjustment during the second quarter of 2021.

On January 25, 2018, we completed the sale of LEI Lie Ying Limited in China.

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During the first quarter of 2021, we recorded a loss of approximately $32.4 million in order to adjust the carrying value of our Brazil disposal group to its estimated fair value less costs to sell as of March 31, 2021.

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

Three Months Ended March 31, 2020

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

On May 28, 2021, we completed the sale of our operations in Brazil, which resulted in pre-tax gain of $27.5 million.

Six Months Ended June 30, 2020

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

On March 6, 2020, we sold the operations of NewSchool of Architecture and Design, LLC (NSAD), which resulted in a pre-tax loss of approximately $5.7 million.

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

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

Results of Operations

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Summary Comparison of Consolidated Results

Discussion of Significant Items Affecting the Consolidated Results for the Three Months Ended March 31, 2021 and 2020

Three Months Ended March 31, 2021

Discussion of Significant Items Affecting the Consolidated Results for the Six Months Ended June 30, 2021 and 2020

Six Months Ended June 30, 2021

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.

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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 $51.4 million and recorded an impairment charge for that amount.

Three Months Ended March 31, 2020

During the second quarter of 2021, we fully repaid the remaining balance outstanding under our Senior Notes due 2025 using a portion of the proceeds received from the sales of our operations in Australia and New Zealand and Brazil.

In connection with the debt repayment, the Company recorded a loss on debt extinguishment of $77.9 million, related to the redemption premium paid and the write off of the unamortized deferred financing costs associated with the repaid debt balances.

This loss is included in other non-operating expense in the tables below.

In November 2020, in connection with the signing of the sale agreement for our Brazil operations, the Company entered into six BRL-to-USD swap agreements to mitigate the risk of foreign currency exposure on the expected proceeds from the sale.

The sale of our Brazil operations closed on May 28, 2021.

On June 2, 2021, the Company settled the swap agreements, which resulted in a realized loss on derivatives of $24.5 million.

This loss is included in other non-operating expense in the tables below.

Six Months Ended June 30, 2020

During the first quarter of 2020, the Company recorded an impairment charge of $3.8 million primarily related to the write-off of capitalized curriculum development costs for a program that the Company decided to stop developing.

Comparison of Consolidated Results for the Three Months Ended March 31, 2021 and 2020

During the second quarter of 2020, the Company recorded an impairment charge of approximately $23.8 million related to the Brazil E2G software assets that were recorded on the Corporate segment.

Comparison of Consolidated Results for the Three Months Ended June 30, 2021 and 2020

Better/(Worse)

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General and administrative expenses 49.4 43.1 (15) %

Loss on impairment of assets 56.7 3.8 nm

Loss on impairment of assets 7.2 23.8 70 %

Operating income 57.7 29.1 98 %

Interest expense, net of interest income (13.0) (25.4) 49 %

Other non-operating expense (147.3) (6.5) nm

Loss from continuing operations before income taxes (102.7) (2.8) nm

Income tax expense (13.2) (8.7) (52) %

Loss from continuing operations (115.9) (11.6) nm

Income (loss) from discontinued operations, net of tax 86.7 (300.1) 129 %

Net loss (29.2) (311.6) 91 %

Net loss attributable to noncontrolling interests 0.2 3.8 95 %

Net loss attributable to Laureate Education, Inc.

$ (29.0) $ (307.8) 91 %

nm - percentage changes not meaningful

For further details on certain discrete items discussed below, see “Discussion of Significant Items Affecting the Consolidated Results.”

Comparison of Consolidated Results for the Three Months Ended June 30, 2021 to the Three Months Ended June 30, 2020

Revenues increased by $23.7 million to $327.6 million for the three months ended June 30, 2021 (the 2021 fiscal quarter) from $303.9 million for the three months ended June 30, 2020 (the 2020 fiscal quarter).

Average total organic enrollment at a majority of our institutions increased during the 2021 fiscal quarter, mainly in the Peru segment, increasing revenues by $26.7 million compared to the 2020 fiscal quarter.

Additionally, the effect of changes in tuition rates and enrollments in programs at varying price points (product mix), pricing and timing increased revenues by $0.9 million compared to the 2020 fiscal quarter.

Other Corporate and Eliminations changes accounted for an increase in revenues of $0.2 million.

These increases in revenues were partially offset by the effect of a net change in foreign currency exchange rates, which decreased revenues by $4.1 million, driven by the weakening of the Peruvian Nuevo Sol against the USD.

Direct costs and general and administrative expenses combined increased by $11.8 million to $262.7 million for the 2021 fiscal quarter from $250.9 million for the 2020 fiscal quarter.

The effect of a net change in foreign currency exchange rates increased costs by $6.2 million.

The effect of operational changes increased costs by $5.8 million, which primarily represents the net effect of increased operating costs in Peru attributable to higher enrollment and higher amortization expense at Corporate, mostly related to the amortization of the finite-lived tradename, partially offset by a decrease in EiP expenses.

Additionally, changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets resulted in a year-over-year increase in direct costs of $0.7 million.

These increases in direct costs were partially offset by other Corporate and Eliminations expenses, which accounted for a decrease in costs of $0.9 million.

Operating income increased by $28.6 million to $57.7 million for the 2021 fiscal quarter from $29.1 million for the 2020 fiscal quarter.

This increase was primarily driven by higher operating income in our Peru segment during the 2021 fiscal quarter, combined with lower impairment charges compared to the 2020 fiscal quarter.

Interest expense, net of interest income decreased by $12.4 million to $13.0 million for the 2021 fiscal quarter from $25.4 million for the 2020 fiscal quarter.

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

Other non-operating expense increased by $140.8 million to $147.3 million for the 2021 fiscal quarter from $6.5 million for the 2020 fiscal quarter.

This increase was primarily attributable to:

(1) a loss on debt extinguishment of $77.9 million during the 2021 fiscal quarter in connection with the repayment of the Senior Notes due 2025;

(2) an increase in loss on derivative instruments of $52.4 million, driven by settlement of foreign currency swap agreements in connection with the sale of our Brazil operations during the 2021 fiscal quarter;

and (3) an increase in loss on foreign currency exchange of $10.8 million.

These increases in other non-operating expense were partially offset by a decrease in other non-operating expense of $0.3 million.

Income tax expense increased by $4.5 million to $13.2 million for the 2021 fiscal quarter from $8.7 million for the 2020 fiscal quarter.

This increase in income tax expense was primarily due to changes in the mix of pre-tax book income attributable to taxable and non-taxable entities in various taxing jurisdictions.

Income (loss) from discontinued operations, net of tax changed by $386.8 million to an income of $86.7 million for the 2021 fiscal quarter from a loss of $(300.1) million for the 2020 fiscal quarter.

This change was primarily driven by the $418.0 million impairment charge for Chile recorded during the 2020 fiscal quarter.

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

Comparison of Consolidated Results for the Six Months Ended June 30, 2021 and 2020

Better/(Worse)

(in millions) 2021 2020 2021 vs.

Revenues $ 522.3 $ 496.2 5 %

Direct costs 395.2 428.4 8 %

General and administrative expenses 92.0 88.2 (4) %

Loss on impairment of assets 63.9 27.5 (132) %

Operating loss (28.7) (47.9) 40 %

Interest expense, net of interest income (35.9) (50.1) 28 %

Other non-operating income 57.5 77.6 (26) %

Loss from continuing operations before income taxes and equity in net income of affiliates (51.7) (24.1) (115) %

Other non-operating (expense) income (89.8) 71.1 nm

Loss from continuing operations before income taxes and equity in net income of affiliates (154.4) (27.0) nm

Income tax (expense) benefit (126.0) 221.3 (157) %

Equity in net income of affiliates, net of tax — 0.2 (100) %

(Loss) income from continuing operations (164.5) 206.1 (180) %

Loss from discontinued operations, net of tax (0.4) (107.8) 100 %

Net (loss) income (164.9) 98.3 nm

(Loss) income from continuing operations (280.4) 194.5 nm

Income (loss) from discontinued operations, net of tax 86.2 (407.8) 121 %

Net loss (194.2) (213.3) 9 %

Net loss attributable to noncontrolling interests 0.2 5.1 96 %

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

$ (164.9) $ 99.6 nm

Net loss attributable to Laureate Education, Inc.

$ (193.9) $ (208.2) 7 %

nm - percentage changes not meaningful

For further details on certain discrete items discussed below, see “Discussion of Significant Items Affecting the Consolidated Results.”

Comparison of Consolidated Results for the Three Months Ended March 31, 2021 to the Three Months Ended March 31, 2020

Revenues increased by $2.4 million to $194.7 million for the three months ended March 31, 2021 (the 2021 fiscal quarter) from $192.3 million for the three months ended March 31, 2020 (the 2020 fiscal quarter).

The effect of changes in tuition rates and enrollments in programs at varying price points (“product mix”), pricing and timing increased revenues by $19.2 million for the 2021 fiscal quarter, attributable primarily to the academic calendar and the delay of semester start dates in the Peru segment in 2020 as a result of the COVID-19 pandemic.

Comparison of Consolidated Results for the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

Revenues increased by $26.1 million to $522.3 million for the six months ended June 30, 2021 (the 2021 fiscal period) from $496.2 million for the six months ended June 30, 2020 (the 2020 fiscal period).

The effect of product mix, pricing and timing increased revenues by $34.9 million for the 2021 fiscal period.

Average total organic enrollment was higher at our institutions in Peru, partially offset by lower average enrollment in Mexico, increasing revenues by $1.4 million compared to the 2020 fiscal period.

Other Corporate and Eliminations changes accounted for an increase in revenues of $0.4 million.

These increases in revenues were partially offset by lower average total organic enrollment at a majority of our institutions during the 2021 fiscal quarter, which decreased revenues by $10.4 million compared to the 2020 fiscal quarter.

Additionally, the effect of a net change in foreign currency exchange rates decreased revenues by $6.6 million, driven by the weakening of the Mexican Peso and the Peruvian Nuevo Sol against the USD.

Direct costs and general and administrative expenses combined decreased by $41.3 million to $224.4 million for the 2021 fiscal quarter from $265.7 million for the 2020 fiscal quarter.

The effect of operational changes decreased direct costs by $33.7 million, mainly driven by cost-saving initiatives to preserve liquidity.

These increases in revenues were partially offset by the effect of a net change in foreign currency exchange rates, which decreased revenues by $10.6 million, as a result of the weakening of the Peruvian Nuevo Sol.

Direct costs and general and administrative expenses combined decreased by $29.4 million to $487.2 million for the 2021 fiscal period from $516.6 million for the 2020 fiscal period.

The effect of operational changes decreased direct costs by $27.9

million, mainly driven by cost-saving initiatives, partially offset by higher amortization expense at Corporate, mostly related to the amortization of the finite-lived tradename.

The effect of a net change in foreign currency exchange rates decreased costs by $1.5 million.

Other Corporate and Eliminations expenses accounted for a decrease in costs of $6.6 million in the 2021 fiscal quarter, related to cost-reduction efforts.

Other Corporate and Eliminations expenses accounted for a decrease in costs of $7.5 million in the 2021 fiscal period, related to cost-reduction efforts.

Partially offsetting these decreases in direct costs were changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets, which resulted in a year-over-year increase in direct costs of $7.5 million.

Operating loss increased by $9.3 million to $86.4 million for the 2021 fiscal quarter from $77.1 million for the 2020 fiscal quarter.

This increase was primarily a result of the impairment charges of $56.7 million recorded during the 2021 fiscal quarter, partially offset by a lower operating loss at our Peru segment.

Interest expense, net of interest income decreased by $1.9 million to $22.8 million for the 2021 fiscal quarter from $24.7 million for the 2020 fiscal quarter.

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

Other non-operating income decreased by $20.1 million to $57.5 million for the 2021 fiscal quarter from $77.6 million for the 2020 fiscal quarter.

This decrease was attributable to less gain on foreign currency exchange of $50.5 million, partially offset by:

(1) an increase in gain on derivative instruments of $28.5 million;

(2) a loss on disposal of subsidiaries of $1.8 million during the 2020 fiscal quarter;

and (3) other non-operating expense of $0.1 million during the 2020 fiscal quarter.

Income tax (expense) benefit changed by $342.9 million to an expense of $(112.9) million for the 2021 fiscal quarter from a benefit of $230.0 million for the 2020 fiscal quarter.

This change was primarily attributable to a nonrecurring discrete tax benefit of approximately $222 million that was recognized during the 2020 fiscal quarter related to the tax-basis step up of certain intellectual property that became subject to Dutch taxation in the Netherlands as well as additional tax expense of approximately $46.5 million related to increases to income tax reserves in the 2021 fiscal quarter, with the majority of the remaining difference attributable to the change in pretax earnings.

Loss from discontinued operations, net of tax decreased by $107.4 million to $0.4 million for the 2021 fiscal quarter from $107.8 million for the 2020 fiscal quarter.

This change was a result of the sales during 2020 of certain Discontinued Operations that generated losses during the 2020 fiscal quarter.

Operating loss decreased by $19.2 million to $28.7 million for the 2021 fiscal period from $47.9 million for the 2020 fiscal period.

This decrease was primarily a result of higher operating income at our Peru segment, partially offset by higher operating loss at our Mexico segment and higher impairment charges during the 2021 fiscal period.

Interest expense, net of interest income decreased by $14.2 million to $35.9 million for the 2021 fiscal period from $50.1 million for the 2020 fiscal period.

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

Other non-operating (expense) income changed by $160.9 million to an expense of $(89.8) million for the 2021 fiscal period from an income of $71.1 million for the 2020 fiscal period.

This change was attributable to:

(1) a loss on debt extinguishment of $77.9 million during the 2021 fiscal period in connection with the repayment of the Senior Notes due 2025;

(2) an increase in loss on derivative instruments of $23.9 million, driven by settlement of foreign currency swap agreements in connection with the sale of Brazil operations during the 2021 fiscal period;

and (3) less gain on foreign currency exchange of $61.3 million.

These increases in other non-operating expense were partially offset by a loss on disposal of subsidiaries of $1.8 million during the 2020 fiscal period, combined with the year-over-year effect of other non-operating expense of $0.4 million during the 2020 fiscal period.

Income tax (expense) benefit changed by $347.3 million to an expense of $(126.0) million for the 2021 fiscal period from a benefit of $221.3 million for the 2020 fiscal period.

This change was primarily attributable to a nonrecurring discrete tax benefit of approximately $222 million that was recognized during the 2020 fiscal period related to the tax-basis step up of certain intellectual property that became subject to Dutch taxation in the Netherlands and tax expense of approximately $46.5 million related to increases to income tax reserves in the 2021 fiscal period with the majority of the remaining difference attributable to the change in pretax earnings.

Income (loss) from discontinued operations, net of tax changed by $494.0 million to an income of $86.2 million for the 2021 fiscal period from a loss of $(407.8) million for the 2020 fiscal period.

This change was primarily driven by the $418.0 million impairment charge for Chile recorded during the 2020 fiscal period.

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

Net loss attributable to noncontrolling interests decreased by $4.9 million to $0.2 million for the 2021 fiscal period from $5.1 million for the 2020 fiscal period, which was primarily related to our previous joint venture in Saudi Arabia.

Non-GAAP Financial Measure

6 unchanged sentences

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

The following table presents Adjusted EBITDA and reconciles (loss) income from continuing operations to Adjusted EBITDA for the three months ended March 31, 2021 and 2020:

The following table presents Adjusted EBITDA and reconciles loss from continuing operations to Adjusted EBITDA for the three months ended June 30, 2021 and 2020:

Better/(Worse)

(in millions) 2021 2020 2021 vs.

(Loss) income from continuing operations $ (164.5) $ 206.1 (180) %

Loss from continuing operations $ (115.9) $ (11.6) nm

Income tax expense 13.2 8.7 (52) %

Loss from continuing operations before income taxes (102.7) (2.8) nm

Foreign currency exchange loss, net 15.5 4.7 nm

Other expense, net 0.1 0.4 75 %

Loss on derivatives 53.8 1.4 nm

Loss on debt extinguishment 77.9 — nm

Interest expense 13.5 25.7 47 %

Interest income (0.5) (0.3) 67 %

Operating income 57.7 29.1 98 %

Depreciation and amortization 27.0 18.1 (49) %

EBITDA 84.7 47.2 79 %

Share-based compensation expense (a)

Loss on impairment of assets (b)

7.2 23.8 70 %

EiP implementation expenses (c)

12.6 19.3 35 %

Adjusted EBITDA $ 107.1 $ 94.1 14 %

nm - percentage changes not meaningful

(a) Represents non-cash, share-based compensation expense pursuant to the provisions of ASC 718, “Stock Compensation.”

(b) Represents non-cash charges related to impairments of long-lived assets.

For further details, see “Discussion of Significant Items Affecting the Consolidated Results for the Six Months Ended June 30, 2021.”

(c) EiP implementation expenses are related to our enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources.

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 and completed dispositions.

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Three Months Ended June 30, 2021 and 2020

Depreciation and amortization increased by $8.9 million to $27.0 million for the 2021 fiscal quarter from $18.1 million for the 2020 fiscal quarter.

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

When combined with other items, this change increased depreciation and amortization by $8.5 million.

Additionally, the effects of foreign currency exchange increased depreciation and amortization expense by $0.4 million for the 2021 fiscal quarter.

Share-based compensation expense decreased by $1.1 million to $2.6 million for the 2021 fiscal quarter from $3.7 million for the 2020 fiscal quarter.

EiP implementation expenses decreased by $6.7 million to $12.6 million for the 2021 fiscal quarter from $19.3 million for the 2020 fiscal quarter.

This decrease was primarily attributable to lower costs during the 2021 fiscal quarter associated with an

enterprise-wide program aimed at revenue growth, combined with lower legal and consulting fees related to our divestiture activity.

The following table presents Adjusted EBITDA and reconciles (loss) income from continuing operations to Adjusted EBITDA for the six months ended June 30, 2021 and 2020:

Better/(Worse)

(in millions) 2021 2020 2021 vs.

(Loss) income from continuing operations $ (280.4) $ 194.5 nm

Equity in net income of affiliates, net of tax — (0.2) (100) %

Income tax expense (benefit) 126.0 (221.3) (157) %

Loss from continuing operations before income taxes and equity in net income of affiliates (51.7) (24.1) (115) %

Loss from continuing operations before income taxes and equity in net income of affiliates (154.4) (27.0) nm

Loss on disposal of subsidiaries, net — 1.8 100 %

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Other expense, net — 0.5 100 %

Gain on derivatives (29.3) (0.8) nm

Loss on derivatives 24.5 0.6 nm

Loss on debt extinguishment 77.9 — nm

Interest expense 37.1 51.0 27 %

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Depreciation and amortization 49.7 37.8 (31) %

EBITDA (63.6) (57.4) (11) %

EBITDA 21.0 (10.1) nm

Share-based compensation expense (a)

Loss on impairment of assets (b)

63.9 27.5 (132) %

EiP implementation expenses (c)

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(b) Represents non-cash charges related to impairments of long-lived assets.

For further details, see “Discussion of Significant Items Affecting the Consolidated Results for the Three Months Ended March 31, 2021.”

For further details, see “Discussion of Significant Items Affecting the Consolidated Results for the Six Months Ended June 30, 2021.”

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.

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Three Months Ended March 31, 2021 and 2020

Depreciation and amortization increased by $3.1 million to $22.8 million for the 2021 fiscal quarter from $19.7 million for the 2020 fiscal quarter.

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Six Months Ended June 30, 2021 and 2020

Depreciation and amortization increased by $11.9 million to $49.7 million for the 2021 fiscal period from $37.8 million for the 2020 fiscal period.

When combined with other items, this change increased depreciation and amortization by $12.2 million.

Partially offsetting this increase was the effect of foreign currency exchange, which decreased depreciation and amortization expense by $0.8 million for the 2021 fiscal quarter.

Share-based compensation expense decreased by $0.2 million to $1.3 million for the 2021 fiscal quarter from $1.5 million for the 2020 fiscal quarter.

EiP implementation expenses decreased by $7.5 million to $15.3 million for the 2021 fiscal quarter from $22.8 million for the 2020 fiscal quarter.

This decrease was primarily attributable to lower severance costs and lower legal and consulting fees related to our divestiture activity.

Partially offsetting this increase was the effect of foreign currency exchange, which decreased depreciation and amortization expense by $0.3 million for the 2021 fiscal period.

Share-based compensation expense decreased by $1.3 million to $4.0 million for the 2021 fiscal period from $5.3 million for the 2020 fiscal period.

EiP implementation expenses decreased by $14.2 million to $27.9 million for the 2021 fiscal period from $42.1 million for the 2020 fiscal period.

This decrease was primarily attributable to lower costs during the 2021 fiscal period associated with an enterprise-wide program aimed at revenue growth, combined with lower severance costs and lower legal and consulting fees related to our divestiture activity.

Segment Results

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Better/(Worse)

For the three months ended March 31, 2021 2020 2021 vs.

For the three months ended June 30, 2021 2020 2021 vs.

Mexico $ 124.3 $ 114.9 8 %

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Consolidated Total Adjusted EBITDA $ 107.1 $ 94.1 14 %

(in millions) % Change

Better/(Worse)

For the six months ended June 30, 2021 2020 2021 vs.

Mexico $ 259.7 $ 269.1 (3) %

Peru 259.2 224.1 16 %

Corporate 3.4 3.0 13 %

Consolidated Total Revenues $ 522.3 $ 496.2 5 %

Adjusted EBITDA:

Mexico $ 34.5 $ 43.0 (20) %

Peru 125.2 72.5 73 %

Corporate (42.9) (50.8) 16 %

Consolidated Total Adjusted EBITDA $ 116.8 $ 64.7 81 %

Financial Overview

Comparison of Mexico Results for the Three Months Ended March 31, 2021 to the Three Months Ended March 31, 2020

Comparison of Mexico Results for the Three Months Ended June 30, 2021 to the Three Months Ended June 30, 2020

(in millions) Revenues Direct Costs Adjusted EBITDA

March 31, 2020 $ 154.2 $ 130.9 $ 23.3

June 30, 2020 $ 114.9 $ 95.2 $ 19.7

Organic enrollment (1)

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Dispositions — — —

March 31, 2021 $ 135.4 $ 118.1 $ 17.3

June 30, 2021 $ 124.3 $ 107.1 $ 17.2

(1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.

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

Revenues decreased by $18.8 million, a 12% decrease from the 2020 fiscal quarter.

Revenues increased by $9.4 million, an 8% increase from the 2020 fiscal quarter.

• Organic enrollment decreased during the fiscal quarter by 1%, decreasing revenues by $1.8 million.

• The decrease in revenues from product mix, pricing and timing was mainly due to an increase in discounts and scholarships as a percentage of revenues.

• Revenues represented 70% of our consolidated total revenues for the 2021 fiscal quarter, compared to 80% for the 2020 fiscal quarter.

• Revenues represented 38% of our consolidated total revenues for both the 2021 and 2020 fiscal quarters.

Adjusted EBITDA decreased by $2.5 million, a 13% decrease from the 2020 fiscal quarter.

Comparison of Mexico Results for the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

(in millions) Revenues Direct Costs Adjusted EBITDA

June 30, 2020 $ 269.1 $ 226.1 $ 43.0

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency (24.3) (19.7) (4.6)

Foreign exchange 14.9 11.3 3.6

Dispositions — — —

June 30, 2021 $ 259.7 $ 225.2 $ 34.5

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

Revenues decreased by $9.4 million, a 3% decrease from the 2020 fiscal period.

• Organic enrollment decreased during the 2021 fiscal period by 4%, decreasing revenues by $10.4 million.

• The decrease in revenues from product mix, pricing and timing was mainly due to an increase in discounts and scholarships as a percentage of revenues.

• Revenues represented 50% of our consolidated total revenues for the 2021 fiscal period, compared to 54% for the 2020 fiscal period.

Adjusted EBITDA decreased by $8.5 million, a 20% decrease from the 2020 fiscal period.

Financial Overview

Comparison of Peru Results for the Three Months Ended March 31, 2021 to the Three Months Ended March 31, 2020

Comparison of Peru Results for the Three Months Ended June 30, 2021 to the Three Months Ended June 30, 2020

(in millions) Revenues Direct Costs Adjusted EBITDA

March 31, 2020 $ 36.5 $ 63.2 $ (26.7)

June 30, 2020 $ 187.6 $ 88.4 $ 99.2

Organic enrollment (1)

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Dispositions — — —

March 31, 2021 $ 57.5 $ 45.9 $ 11.6

June 30, 2021 $ 201.7 $ 88.1 $ 113.6

Revenues increased by $21.0 million, a 58% increase from the 2020 fiscal quarter.

• The increase in revenues from product mix, pricing and timing was mainly due to the effect of the COVID-19 pandemic on the academic calendar timing, which decreased revenues for the 2020 fiscal quarter.

• Organic enrollment decreased during the 2021 fiscal quarter by 4%, decreasing revenues by $1.3 million.

• Revenue represented 30% of our consolidated total revenues for the 2021 fiscal quarter compared to 20% for the 2020 fiscal quarter.

Revenues increased by $14.1 million, an 8% increase from the 2020 fiscal quarter.

• Organic enrollment increased during the 2021 fiscal quarter by 16%, increasing revenues by $28.5 million.

• Revenue represented 62% of our consolidated total revenues for both the 2021 and 2020 fiscal quarters.

Adjusted EBITDA increased by $14.4 million, a 15% increase from the 2020 fiscal quarter.

Comparison of Peru Results for the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

(in millions) Revenues Direct Costs Adjusted EBITDA

June 30, 2020 $ 224.1 $ 151.6 $ 72.5

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency 60.6 (5.1) 65.7

Foreign exchange (25.5) (12.5) (13.0)

Dispositions — — —

June 30, 2021 $ 259.2 $ 134.0 $ 125.2

Revenues increased by $35.1 million, a 16% increase from the 2020 fiscal period.

• Organic enrollment increased during the 2021 fiscal period by 5%, increasing revenues by $11.8 million.

• The increase in revenues from product mix, pricing and timing was driven by a combination of pricing increases and more weeks of revenue recognition during the 2021 fiscal period compared to the 2020 fiscal period due to the academic calendar timing.

• Revenue represented 50% of our consolidated total revenues for the 2021 fiscal period compared to 46% for the 2020 fiscal period.

Adjusted EBITDA increased by $52.7 million, a 73% increase from the 2020 fiscal period.

Corporate revenues primarily include our transition services agreements related to divestitures and centralized IT costs charged to other business units, partially offset by the elimination of intersegment revenues.

Comparison of Corporate Results for the Three Months Ended March 31, 2021 to the Three Months Ended March 31, 2020

Comparison of Corporate Results for the Three Months Ended June 30, 2021 to the Three Months Ended June 30, 2020

Better/(Worse)

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• Other items accounted for a decrease in Adjusted EBITDA of $2.4 million.

Comparison of Corporate Results for the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

Better/(Worse)

(in millions) 2021 2020 2021 vs.

Revenues $ 3.4 $ 3.0 13 %

Expenses 46.3 53.8 14 %

Adjusted EBITDA $ (42.9) $ (50.8) 16 %

Adjusted EBITDA increased by $7.9 million, a 16% increase from the 2020 fiscal period.

• Cost-reduction efforts led to reduced labor costs and other professional fees, decreasing expenses by $12.0 million compared to the 2020 fiscal period.

• Other items accounted for a decrease in Adjusted EBITDA of $4.1 million.

Liquidity and Capital Resources

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

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

In the event of a sustained market deterioration, we may need additional liquidity, which would

require us to evaluate available alternatives and take appropriate actions, such as obtaining additional financing.

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

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If our educational institutions within one country were unable to maintain sufficient liquidity, we would consider using internal cash resources or reasonable short-term working capital facilities to accommodate any short- to medium-term shortfalls.

As of March 31, 2021, our secondary source of liquidity was cash and cash equivalents of $561.3 million, which does not include $272.1 million of cash recorded at subsidiaries that are classified as held for sale at March 31, 2021.

As of June 30, 2021, our secondary source of liquidity was cash and cash equivalents of $427.1 million, which does not include $105.2 million of cash recorded at subsidiaries that are classified as held for sale at June 30, 2021.

Our cash accounts are maintained with high-quality financial institutions with no significant concentration in any one institution.

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At the closing of the sale, 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.

In April 2021, the Company received the final balance from the escrow account of $168.3 million Hong Kong Dollars (approximately $21.7 million at the date of receipt).

Pending Sale Transactions

In April 2021, the Company received the final balance from the escrow account, which was approximately $21.7 million at the date of receipt.

On May 28, 2021, we completed the sale of our operations in Brazil and received proceeds of approximately $625.5 million, net of cash sold, transaction fees and settlement of foreign currency swaps.

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

Pending Sale Transaction

On September 11, 2020, the Company entered into a sale agreement to sell its operation of Walden University, LLC, (Walden University) for a purchase price of $1,480.0 million in cash, subject to certain adjustments set forth in the sale agreement.

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

The closing of this 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 purchaser may be required to pay the Company a termination fee of $88.0 million, including if the purchaser terminates the sale agreement as a result of the imposition by the U.S.

Department of Education of certain specified restrictions, or if Laureate terminates the sale agreement as a result of the purchaser’s failure to consummate the transaction upon satisfaction of the closing conditions.

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

On November 2, 2020, the Company entered into a definitive agreement with Ânima Holding S.A., one of the largest private higher education organizations in Brazil, for the sale of its Brazilian operations.

The transaction value is approximately 4,400.0 million Brazilian Reals (approximately $765.0 million at the time of signing), including 3,800.0 million Brazilian Reals (approximately $660.7 million at the time of signing) in cash consideration, which is subject to certain adjustments, and assumption of net indebtedness.

Pursuant to the agreement, the Company will be entitled to receive up to 203.0 million Brazilian Reals (approximately $35.3 million at the time of signing) in additional cash consideration if certain metrics are achieved following the closing.

The transaction is targeted to close during the second quarter of 2021, subject to regulatory approval.

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

Liquidity Restrictions

Our liquidity is affected by restricted cash balances, which totaled $106.6 million and $117.2 million as of March 31, 2021 and December 31, 2020, respectively.

Our liquidity is affected by restricted cash balances, which totaled $106.8 million and $117.2 million as of June 30, 2021 and December 31, 2020, respectively.

Indefinite Reinvestment of Foreign Earnings

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As part of our business strategies, we have determined that, except for one of our institutions in Peru, all earnings from our foreign continuing operations will be deemed indefinitely reinvested outside of the United States.

As of March 31, 2021, $142.9 million of our total $561.3 million of cash and cash equivalents were held by foreign subsidiaries.

These amounts above do not include $272.1 million of cash recorded at subsidiaries that are classified as held for sale at March 31, 2021, of which $39.5 million was held by foreign subsidiaries.

As of June 30, 2021, $164.3 million of our total $427.1 million of cash and cash equivalents were held by foreign subsidiaries.

These amounts above do not include $105.2

million of cash recorded at subsidiaries that are classified as held for sale at June 30, 2021.

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

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operating lease obligations;

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

payments of deferred compensation;

8 unchanged sentences

and payments of other third-party obligations.

As of March 31, 2021, senior long-term borrowings totaled $798.7 million, which consisted entirely of the balance outstanding under our Senior Notes due 2025 that mature in May 2025.

As of March 31, 2021, other debt balances totaled $152.5 million and our finance lease obligations and sale-leaseback financings were $50.4 million.

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

Approximately $116.6 million of long-term debt, seller notes and fi nance leases, including the current portion, is included in the held-for-sale liabilities recorded on the consolidated balance sheet as of March 31, 2021.

For further description of the held-for-sale amounts see Note 4, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-Q.

As of June 30, 2021, our debt obligations included lines of credit and short-term borrowing arrangements of subsidiaries, mortgages payable and notes payable, which totaled $130.0 million.

In addition, our finance lease obligations and sale-leaseback financings were $48.8 million.

Senior Secured Credit Facility

Our Senior Secured Credit Facility consist of the revolving credit facility, which provides for borrowings of $410.0 million.

As of both March 31, 2021 and December 31, 2020, there was no balance outstanding under our Senior Secured Credit Facility.

Our Senior Secured Credit Facility consists of the revolving credit facility, which provides for borrowings of $410.0 million.

As of both June 30, 2021 and December 31, 2020, there was no balance outstanding under our Senior Secured Credit Facility.

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

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

As of June 30, 2021, those conditions were satisfied and, therefore, we were not subject to the leverage ratio.

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

In addition, indebtedness at some of our locations contain financial maintenance covenants and we were in compliance with those covenants as March 31, 2021.

As of both March 31, 2021 and December 31, 2020, the outstanding balance under our Senior Notes due 2025 was $798.7 million.

As described in Note 19, Subsequent Events, in our consolidated financial statements included elsewhere in this Form 10-Q, on May 4, 2021 , we redeemed $500.0 million aggregate principal amount of our Senior Notes due 2025 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 $521.0 million.

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

Additionally, we notified holders of our Senior Notes due 2025 of our election to redeem the remaining $298.7 million aggregate principal amount at a price of 104.125% of the principal amount thereof plus accrued and unpaid interest thereon to, but excluding the redemption date.

The redemption is contingent on completion of the sale of our Brazil operations, which is targeted to close by the end of the second quarter of 2021.

Following completion of the above redempti ons, we will have repaid the entire outstanding principal amount of the Senior Notes due 2025.

As of March 31, 2021, the amount of unamortized deferred financing costs associated with the Senior Notes was approximately $45.7 million.

This amount will be charged to loss on debt extinguishment upon the repayment of the Senior Notes due 2025, which is expected to occur during the second quarter of 2021.

In addition, indebtedness at some of our locations contain financial maintenance covenants and we were in compliance with those covenants as June 30, 2021.

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

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As discussed in Note 9, Leases, in our consolidated financial statements included elsewhere in this Form 10-Q, we have significant liabilities recorded related to our leased facilities, which will require future cash payments.

As of March 31, 2021 and December 31, 2020, the present value of operating lease liabilities was $476.0 million and $519.1 million, respectively.

These amounts exclude operating lease liabilities for our Discontinued Operations of $114.6 million and $151.4 million as of March 31, 2021 and December 31, 2020, respectively.

As of June 30, 2021 and December 31, 2020, the present value of operating lease liabilities was $479.6 million and $519.1 million, respectively.

These amounts exclude operating lease liabilities for our Discontinued Operations of $19.6 million and $151.4 million as of June 30, 2021 and December 31, 2020, respectively.

Capital Expenditures

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

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

Our total capital expenditures for our Continuing and Discontinued Operations, excluding receipts from the sale of subsidiaries and property equipment, were $13.6 million and $28.1 million during the three months ended March 31, 2021 and 2020, respectively.

The 52% decrease in capital expenditures was primarily due to a targeted reduction and deferral across all business lines to preserve cash amid the COVID-19 pandemic, as well as a result of the executed divestitures.

We believe that our internal sources of cash and our

ability to obtain additional third-party financing, subject to market conditions, will be sufficient to fund our investing activities.

Our total capital expenditures for our Continuing and Discontinued Operations, excluding receipts from the sale of subsidiaries and property equipment, were $25.0 million and $57.5 million during the six months ended June 30, 2021 and 2020, respectively.

The 57% decrease in capital expenditures was primarily due to the completed divestitures, as well as a targeted reduction and deferral across all business lines to preserve cash as a result of the COVID-19 pandemic.

Laureate Education, Inc.

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The Company expects that the participants will receive a distribution payout of their account balances under the terms of the plan in April 2022.

As of March 31, 2021, the total plan assets were $1.9 million and the total plan liabilities were $5.1 million.

As of June 30, 2021, the total plan assets were $1.9 million and the total plan liabilities were $5.1 million.

The Company plans to fund the difference between the assets and the liabilities with operating cash flows.

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

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

As of March 31, 2021, the approximate dollar value of shares yet to be purchased under this stock repurchase program was $89.5 million.

On April 30, 2021, the Laureate’s board of directors approved an increase of the above authorization to repurchase shares of the Company’s Class A common stock by $200.0 million, for a total authorization (including the above authorized repurchases) of up to $500.0 million of the Company’s Class A common stock.

The Company expects to finance the additional $200.0 million of repurchases with proceeds received from the sale of the Company’s Brazil operations, from cash on-hand or from its revolving credit facility, or a combination thereof.

As of June 30, 2021, the approximate dollar value of shares yet to be purchased under this stock repurchase program was $183.8 million.

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

In the consolidated statements of cash flows, the changes in operating assets and liabilities are presented excluding the effects of exchange rate changes, acquisitions, and reclassifications, as these effects do not represent operating cash flows.

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The effects of exchange rate changes on cash are presented separately in the consolidated statements of cash flows.

The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2021 and 2020:

The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, 2021 and 2020:

(in millions) 2021 2020

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Net change in cash and cash equivalents and restricted cash $ (333.4) $ 219.3

Comparison of Cash Flows for the Three Months Ended March 31, 2021 to the Three Months Ended March 31, 2020

Comparison of Cash Flows for the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

Operating Activities

Cash flows from operating activities increased by $14.8 million to operating cash inflow of $11.3 million for the 2021 fiscal quarter from operating cash outflow of $(3.5) million for the 2020 fiscal quarter.

This increase in operating cash was primarily attributable to changes in working capital, which accounted for an increase in operating cash flows of approximately $47.9 million, primarily driven by collections.

In addition, cash paid for interest decreased by $3.0 million, from $14.6 million for the 2020 fiscal quarter to $11.6 million for the 2021 fiscal quarter, attributable to lower average debt balances.

These increases in operating cash were partially offset by an increase in cash paid for taxes of $36.1 million, from $16.3 million for the 2020 fiscal quarter to $52.4 million for the 2021 fiscal quarter, primarily related to the payment of withholding taxes for intercompany loans that were capitalized during the 2021 fiscal quarter.

Cash provided by operating activities decreased by $43.5 million to $17.9 million for the 2021 fiscal period, from $61.4 million for the 2020 fiscal period.

This decrease in operating cash was primarily attributable to the net effect of changes in working capital and the divestiture of subsidiaries that contributed positive operating cash flows during the 2020 fiscal period, which

accounted for the year-over-year decrease in operating cash flow of approximately $16.1 million.

Additionally, cash paid for taxes increased by $32.6 million, from $47.4 million for the 2020 fiscal period to $80.0 million for the 2021 fiscal period, primarily related to the payment of withholding taxes for intercompany loans that were capitalized during the 2021 fiscal period.

These decreases in operating cash flow were partially offset by a decrease in cash paid for interest of $5.2 million, from $62.1 million for the 2020 fiscal period to $56.9 million for the 2021 fiscal period, attributable to lower average debt balances.

Investing Activities

Cash used in investing activities decreased by $22.9 million to $1.1 million for the 2021 fiscal quarter from $24.0 million for the 2020 fiscal quarter.

This decrease was primarily attributable to higher cash receipts from the sales of Discontinued Operations of $26.8 million, from $4.0 million during the 2020 fiscal quarter (for the net effect of the sales of NSAD and our operations in Costa Rica) to $30.8 million, net, during the 2021 fiscal quarter (primarily for the sale our operations in Honduras and the receipt of a portion of the purchase price that was withheld in connection to the 2020 sale of our Malaysia operations).

In addition, cash used for capital expenditures decreased $14.4 million compared to the 2020 fiscal quarter.

These increases in investing cash were partially offset by payments of $18.3 million for derivative instruments related to foreign exchange swap agreements associated with the planned sale of our Brazil operations.

Cash flows from investing activities increased by $685.0 million to investing cash inflow of $650.0 million for the 2021 fiscal period from investing cash outflow of $(35.0) million for the 2020 fiscal period.

This increase in investing cash was attributable to higher cash receipts from the sales of Discontinued Operations of $702.8 million, from $22.5 million during the 2020 fiscal period (for the net effect of the sales of NSAD and our operations in Costa Rica, the receipt of a sale deposit for our Malaysia operations, and the receipt of a portion of the escrow receivable balance related to the 2018 sale of our China operations) to $725.3 million, net, during the 2021 fiscal period (primarily for the sale our operations in Honduras and Brazil, and the receipt of portions of the purchase prices that were withheld in connection to the 2018 sale of our China operations and the 2020 sale of our Malaysia operations).

In addition, cash used for capital expenditures decreased $32.5 million compared to the 2020 fiscal period.

These increases in investing cash were partially offset by payments of $50.3 million for derivative instruments related to foreign exchange swap agreements associated with the sale of our Brazil operations.

Financing Activities

Cash flows from financing activities decreased by $467.1 million to a financing cash outflow of $(199.2) million for the 2021 fiscal quarter from a financing cash inflow of $267.9 million for the 2020 fiscal quarter.

This decrease in financing cash was primarily attributable to:

(1) net payments of long-term debt during the 2021 fiscal quarter, compared to net proceeds of long-term debt during the 2020 fiscal quarter, related to the full draw down on our $410.0 million revolving credit facility in the first quarter of 2020 in order to increase our cash position and preserve financial flexibility in response to the COVID-19 pandemic, for a change of $325.6 million;

(2) higher payments during the 2021 fiscal quarter of $116.0 million to repurchase shares of our Class A common stock under our stock repurchase program;

and (3) a year-over-year decrease in proceeds from the exercise of common stock options of $26.8 million.

These decreases in financing cash were partially offset by payments of deferred purchase price for acquisitions during the 2020 fiscal quarter of $1.5 million.

Cash flows from financing activities decreased by $1,426.1 million to a financing cash outflow of $(1,162.7) million for the 2021 fiscal period from a financing cash inflow of $263.4 million for the 2020 fiscal period.

This decrease in financing cash was attributable to:

(1) net payments of long-term debt during the 2021 fiscal period, mainly the repayment in full of the balance outstanding under the Senior Notes due 2025, compared to net proceeds of long-term debt during the 2020 fiscal period, related to the full draw down on our $410.0 million revolving credit facility in the 2020 fiscal period in order to increase our cash position and preserve financial flexibility in response to the COVID-19 pandemic, for a change of $1,146.4 million;

(2) higher payments during the 2021 fiscal period of $222.2 million to repurchase shares of our Class A common stock under our stock repurchase program;

(3) payments of call premiums of $33.0 million associated with the redemption of the Senior Notes due 2025 during the 2021 fiscal period;

and (4) the year-over-year effect of proceeds from the exercise of common stock options of $26.3 million during the 2020 fiscal period.

These decreases in financing cash were partially offset by payments of deferred purchase price for acquisitions during the 2020 fiscal period of $1.9 million.

Other items accounted for the remaining difference of $0.1 million.

6 unchanged sentences

For a complete discussion of our critical accounting policies, see the “Critical Accounting Policies and Estimates” section of the MD&A in our 2020 Form 10-K.

During the three months ended March 31, 2021, there were no significant changes to our critical accounting policies.

During the six months ended June 30, 2021, there were no significant changes to our critical accounting policies.

We will continue to monitor the effect to the Company of the COVID-19 pandemic and assess whether any changes to our accounting estimates are warranted as additional information becomes available.

5 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis