LAUREATE EDUCATION, INC. 10-Q

Item 1. Financial Statements (Unaudited) LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Statements of Operations IN THOUSANDS, except per share amounts For the three months ended June 30, 2021 2020 (Unaudited) (Unaudited) Revenues $ 327,579 $ 303,856 Costs and expenses: Direct costs 213,315 207,799 General and administrative expenses 49,361 43,140 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. 2 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 ) Interest income 1,188 910 Interest expense ( 37,059 ) ( 50,995 ) Loss on debt extinguishment ( 77,940 ) — Loss on derivatives ( 24,517 ) ( 626 ) Other expense, net ( 21 ) ( 486 ) Foreign currency exchange gain, net 12,664 73,981 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 ) Income tax (expense) benefit ( 126,045 ) 221,315 Equity in net income of affiliates, net of tax — 181 (Loss) income from continuing operations ( 280,410 ) 194,537 Income (loss) from discontinued operations, net of tax (expense) benefit of $( 8,602 ) and $ 8,226 , respectively 86,243 ( 407,849 ) Net loss ( 194,167 ) ( 213,312 ) Net loss attributable to noncontrolling interests 239 5,104 Net loss attributable to Laureate Education, Inc. $ ( 193,928 ) $ ( 208,208 ) Basic and diluted earnings (loss) per share: (Loss) income from continuing operations $ ( 1.43 ) $ 0.93 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. 3 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income IN THOUSANDS For the three months ended June 30, 2021 2020 (Unaudited) (Unaudited) Net loss $ ( 29,224 ) $ ( 311,628 ) Other comprehensive income: Foreign currency translation adjustment, net of tax of $ 0 for both periods 510,443 14,034 Minimum pension liability adjustment, net of tax of $ 0 for both periods 27 — 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 ) The accompanying notes are an integral part of these consolidated financial statements. 4 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income IN THOUSANDS 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 income (loss) attributable to Laureate Education, Inc. $ 256,633 $ ( 525,913 ) The accompanying notes are an integral part of these consolidated financial statements. 5 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Balance Sheets IN THOUSANDS, except per share amounts June 30, 2021 December 31, 2020 Assets (Unaudited) Current assets: Cash and cash equivalents $ 427,142 $ 750,147 Restricted cash 106,770 117,151 Receivables: Accounts and notes receivable 143,113 138,738 Other receivables 48,525 49,835 Allowance for doubtful accounts ( 68,098 ) ( 76,694 ) Receivables, net 123,540 111,879 Income tax receivable 17,131 14,564 Prepaid expenses and other current assets 20,349 15,079 Current assets held for sale 202,093 434,966 Total current assets 897,025 1,443,786 Notes receivable, net 848 1,321 Property and equipment: Land 118,234 126,228 Buildings 329,894 351,480 Furniture, equipment and software 482,306 494,079 Leasehold improvements 122,340 121,683 Construction in-progress 5,891 7,254 Accumulated depreciation and amortization ( 540,326 ) ( 522,240 ) Property and equipment, net 518,339 578,484 Operating lease right-of-use assets, net 426,926 462,767 Land use rights, net 1,548 1,548 Goodwill 568,767 574,832 Tradenames 159,219 225,573 Deferred costs, net 10,856 17,623 Deferred income taxes 101,993 130,567 Other assets 40,158 51,924 Long-term assets held for sale 919,989 1,482,469 Total assets $ 3,645,668 $ 4,970,894 The accompanying notes are an integral part of these consolidated financial statements. 6 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Balance Sheets (continued) IN THOUSANDS, except per share amounts June 30, 2021 December 31, 2020 Liabilities and stockholders' equity (Unaudited) Current liabilities: Accounts payable $ 34,015 $ 41,073 Accrued expenses 75,108 95,743 Accrued compensation and benefits 72,394 64,089 Deferred revenue and student deposits 48,620 47,180 Current portion of operating leases 46,714 44,631 Current portion of long-term debt and finance leases 50,941 95,818 Income taxes payable 104,962 29,682 Derivative instruments — 17,680 Other current liabilities 19,710 15,109 Current liabilities held for sale 164,330 353,550 Total current liabilities 616,794 804,555 Long-term operating leases, less current portion 432,890 474,507 Long-term debt and finance leases, less current portion 123,470 899,898 Deferred compensation 13,560 13,425 Income taxes payable 50,096 36,078 Deferred income taxes 86,126 86,368 Derivative instruments — 8,144 Other long-term liabilities 26,548 33,555 Long-term liabilities held for sale 21,930 348,706 Total liabilities 1,371,414 2,705,236 Redeemable noncontrolling interests and equity 1,812 1,724 Stockholders' equity: 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 619 548 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 294 363 Additional paid-in capital 3,763,855 3,760,029 Accumulated deficit ( 370,851 ) ( 176,822 ) Accumulated other comprehensive loss ( 491,425 ) ( 941,986 ) 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 ) Total Laureate Education, Inc. stockholders' equity 2,285,584 2,276,816 Noncontrolling interests ( 13,142 ) ( 12,882 ) Total stockholders' equity 2,272,442 2,263,934 Total liabilities and stockholders' equity $ 3,645,668 $ 4,970,894 The accompanying notes are an integral part of these consolidated financial statements. 7 LAUREATE EDUCATION, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows IN THOUSANDS For the six months ended June 30, 2021 2020 Cash flows from operating activities (Unaudited) (Unaudited) Net loss $ ( 194,167 ) $ ( 213,312 ) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 49,689 84,276 Amortization of operating lease right-of-use assets 27,003 49,475 Loss on impairment of assets 65,137 448,852 (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 — Non-cash interest expense 5,662 8,828 Non-cash share-based compensation expense 4,778 6,605 Bad debt expense 21,372 63,695 Deferred income taxes 66,965 ( 226,841 ) Unrealized foreign currency exchange gain ( 13,455 ) ( 25,597 ) Non-cash loss from non-income tax contingencies 11,925 5,952 Other, net ( 3,879 ) 670 Changes in operating assets and liabilities: Receivables ( 43,148 ) ( 139,873 ) Prepaid expenses and other assets ( 13,558 ) ( 18,166 ) Accounts payable and accrued expenses ( 33,013 ) ( 100,296 ) Income tax receivable/payable, net ( 17,859 ) ( 46,314 ) Deferred revenue and other liabilities ( 4,600 ) 127,371 Net cash provided by operating activities 17,852 61,361 Cash flows from investing activities Purchase of property and equipment ( 20,551 ) ( 49,163 ) Expenditures for deferred costs ( 4,444 ) ( 8,335 ) Receipts from sales of discontinued operations, net of cash sold, and property and equipment 725,323 22,454 Payments on derivatives related to sale of discontinued operations ( 50,341 ) — Payments to related parties — ( 1 ) Net cash provided by (used in) investing activities 649,987 ( 35,045 ) Cash flows from financing activities Proceeds from issuance of long-term debt, net of original issue discount 55,394 525,187 Payments on long-term debt ( 932,901 ) ( 256,299 ) Payments of deferred purchase price for acquisitions — ( 1,858 ) Proceeds from exercise of stock options 374 26,732 Withholding of shares to satisfy tax withholding for vested stock awards and exercised stock options ( 1,236 ) ( 1,150 ) Payments to repurchase common stock ( 251,374 ) ( 29,203 ) Payments of call premiums and debt issuance costs ( 32,980 ) — Net cash (used in) provided by financing activities ( 1,162,723 ) 263,409 Effects of exchange rate changes on Cash and cash equivalents and Restricted cash ( 3,438 ) ( 3,904 ) Change in cash included in current assets held for sale 164,936 ( 66,508 ) Net change in Cash and cash equivalents and Restricted cash ( 333,386 ) 219,313 Cash and cash equivalents and Restricted cash at beginning of period 867,298 97,817 Cash and cash equivalents and Restricted cash at end of period $ 533,912 $ 317,130 The accompanying notes are an integral part of these consolidated financial statements. 8 Laureate Education, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Dollars and shares in thousands) Note 1. Description of Business Laureate Education, Inc. and subsidiaries (hereinafter Laureate, we, us, our, or the Company) provide higher education programs and services to students through licensed universities and higher education institutions (institutions). Laureate's programs are provided through institutions that are campus-based and internet-based, or through electronically distributed educational programs (online). In response to the COVID-19 pandemic, we 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. We are domiciled in Delaware as a public benefit corporation, a demonstration of our long-term commitment to our mission to benefit our students and society. The Company completed its initial public offering (IPO) on February 6, 2017 and its shares are listed on the Nasdaq Global Select Market under the symbol “LAUR.” Discontinued Operations In 2017 and 2018, the Company announced the divestiture of certain subsidiaries located in Europe, Asia and Central America, which were included in the following segments: Peru (formerly Andean), Central America (formerly Central America & U.S. Campuses), and Rest of World. The goal of the divestitures was to create a more focused and simplified business model and generate proceeds to be used for further repayment of long-term debt. This represented a strategic shift that had a major effect on the Company’s operations and financial results. Accordingly, all of the divestitures that were part of this strategic shift, as well as the Company's operations in the Kingdom of Saudi Arabia that were managed under a contract that expired on August 31, 2019 and was not renewed, were accounted for as Discontinued Operations for all periods presented in accordance with Accounting Standards Codification (ASC) 205-20, “Discontinued Operations” (ASC 205). On January 27, 2020, we announced that our board of directors had authorized the Company to explore strategic alternatives for each of its businesses to unlock shareholder value. As a result of these efforts to explore strategic alternatives, during the third quarter of 2020, the Company announced that it had completed a sale of its operations in Chile and had signed agreements to sell its operations in Brazil, Australia and New Zealand, as well as Walden University, its fully online higher education institution in the United States. This also represented a strategic shift that had a major effect on the Company’s operations and financial results. As such, Chile, Brazil, Australia and New Zealand, and Walden also have been accounted for as Discontinued Operations for all periods presented in accordance with ASC 205. The sale of 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. Accordingly, Mexico and Peru represent our Continuing Operations. The decision to focus on a regional operating model in Mexico and Peru at this time does not preclude further engagement with potential buyers for those businesses. See Note 4, Discontinued Operations and Assets Held for Sale, and Note 5, Dispositions, for more information. Unless indicated otherwise, the information in the footnotes to the Consolidated Financial Statements relates to Continuing Operations. The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, these financial statements include all adjustments considered necessary to present a fair statement of our consolidated results of operations, financial position and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. These unaudited Consolidated Financial Statements should be read in conjunction with Laureate's audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the 2020 Form 10-K). 9 Note 2. Significant Accounting Policies COVID-19 The outbreak of COVID-19 has caused domestic and global disruption in operations for institutions of higher education. The long-term effect to the Company of the COVID-19 pandemic depends on numerous factors, including, but not limited to, the effect on student enrollment, tuition pricing, and collections in future periods, which cannot be fully quantified at this time. As of 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 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 (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. The guidance also simplifies the accounting for franchise taxes, transactions that result in a step-up in the tax basis of goodwill, and the effect of enacted changes in tax laws or rates in interim periods. The Company adopted ASU 2019-12 in the first quarter of 2021 and the adoption had no material impact to our Consolidated Financial Statements. Note 3. Revenue Revenue Recognition Laureate's revenues primarily consist of tuition and educational service revenues. We also generate other revenues from student fees, dormitory/residency fees and other education-related activities. These other revenues are less material to our overall financial results and have a tendency to trend with tuition revenues. Revenues are recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. These revenues are recognized net of scholarships and other discounts, refunds, waivers and the fair value of any guarantees made by Laureate related to student financing programs. Laureate's institutions have various billing and academic cycles. We determine revenue recognition through the five-step model prescribed by ASC Topic 606, Revenue from Contracts with Customers , as follows: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, we satisfy a performance obligation. We assess collectibility on a portfolio basis prior to recording revenue. Generally, students cannot re-enroll for the next academic session without satisfactory resolution of any past-due amounts. If a student withdraws from an institution, Laureate's obligation to issue a refund depends on the refund policy at that institution and the timing of the student's withdrawal. Generally, our refund obligations are reduced over the course of the academic term. We record refunds as a reduction of deferred revenue as applicable. 10 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) Total 2021 Tuition and educational services $ 157,714 $ 205,022 $ — $ 362,736 111 % Other 17,804 12,863 1,636 32,303 10 % Gross revenue 175,518 217,885 1,636 395,039 121 % Less: Discounts / waivers / scholarships ( 51,235 ) ( 16,225 ) — ( 67,460 ) ( 21 ) % Total $ 124,283 $ 201,660 $ 1,636 $ 327,579 100 % 2020 Tuition and educational services $ 136,408 $ 195,199 $ — $ 331,607 109 % Other 12,137 10,357 1,420 23,914 8 % Gross revenue $ 148,545 $ 205,556 $ 1,420 $ 355,521 117 % Less: Discounts / waivers / scholarships ( 33,681 ) ( 17,984 ) — ( 51,665 ) ( 17 ) % Total $ 114,864 $ 187,572 $ 1,420 $ 303,856 100 % (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) Total 2021 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 % Less: Discounts / waivers / scholarships ( 105,385 ) ( 19,762 ) — ( 125,147 ) ( 24 ) % Total $ 259,680 $ 259,158 $ 3,442 $ 522,280 100 % 2020 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 % Less: 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 The timing of billings, cash collections and revenue recognition results in accounts receivable (contract assets) and deferred revenue and student deposits (contract liabilities) on the Consolidated Balance Sheets. We have various billing and academic cycles and recognize student receivables when an academic session begins, although students generally enroll in courses prior to the start of the academic session. Receivables are recognized only to the extent that it is probable that we will collect substantially all of the consideration to which we are entitled in exchange for the goods and services that will be transferred to the student. We receive advance payments or deposits from our students before revenue is recognized, which are recorded as contract liabilities in deferred revenue and student deposits. Payment terms vary by university with some universities requiring payment in advance of the academic session and other universities allowing students to pay in installments over the term of the academic session. All of our contract assets are considered accounts receivable and are included within the Accounts and notes receivable balance in the accompanying Consolidated Balance Sheets. Total accounts receivable from our contracts with students were $ 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 11 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 $ 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 . 12 Note 4. Discontinued Operations and Assets Held for Sale As discussed in Note 1, Description of Business, the Company’s remaining principal markets are Mexico and Peru (the Continuing Operations). All remaining markets 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 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 June 30, 2021 2020 Revenues $ 232,114 $ 513,372 Depreciation and amortization expense — ( 22,002 ) Share-based compensation expense ( 585 ) ( 888 ) Other direct costs ( 171,469 ) ( 350,822 ) Loss on impairment of assets ( 204 ) ( 421,312 ) Other non-operating expense ( 4,389 ) ( 10,020 ) 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 Income (loss) from discontinued operations, net of tax $ 86,243 $ ( 407,849 ) Operating cash flows of discontinued operations $ 56,567 $ 193,459 Investing cash flows of discontinued operations $ ( 9,941 ) $ ( 29,632 ) Financing cash flows of discontinued operations $ ( 18,059 ) $ 14,135 Loss Recognized on Brazil Held-For-Sale Disposal Group 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 previously disclosed. The sale of the Brazil disposal group closed on May 28, 2021. See Note 5, Dispositions, for more information. 13 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: June 30, 2021 December 31, 2020 Assets of Discontinued Operations Cash and cash equivalents $ 105,217 $ 270,164 Receivables, net 42,452 113,386 Property and equipment, net 43,082 259,471 Goodwill and Tradenames 822,440 1,202,496 Operating lease right-of-use assets, net 13,651 136,806 Other assets 95,240 183,742 Valuation allowance on held-for-sale disposal groups — ( 248,630 ) Total assets held for sale $ 1,122,082 $ 1,917,435 Liabilities of Discontinued Operations Deferred revenue and student deposits $ 79,908 $ 87,793 Operating leases, including current portion 19,645 151,413 Long-term debt, seller notes and finance leases, including current portion — 171,451 Other liabilities 86,707 291,599 Total liabilities held for sale $ 186,260 $ 702,256 Discontinued Operations with Signed Sale Agreements Pending Closure at June 30, 2021 Walden On September 11, 2020, Laureate entered into a Membership Interest Purchase Agreement (the Walden Sale Agreement) with Adtalem Global Education Inc., a Delaware corporation (the Walden Purchaser). Pursuant to the Walden Sale Agreement, the Company has agreed to sell to the Walden Purchaser all of the issued and outstanding equity interest in Walden e-Learning, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company and its subsidiary, Walden University, LLC, a Florida limited liability company and an indirect wholly owned subsidiary of the Company (together with Walden e-Learning, LLC, the Walden Group), in exchange for a purchase price of $ 1,480,000 in cash, subject to certain adjustments set forth in the Walden Sale Agreement. 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. 14 Note 5. Dispositions Brazil Divestiture On May 28, 2021, the Company completed the sale of its operations in Brazil to Ânima Holding S.A. (Anima). 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). 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. 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 On January 25, 2018, the Company completed the sale of LEI Lie Ying Limited in China. At the closing of the sale on January 25, 2018, a portion of the total transaction value was paid into an escrow account, to be distributed to the Company pursuant to the terms and conditions of the escrow agreement. 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 Income (loss) from discontinued operations, net of tax in the Consolidated Statement of Operations for the six months ended June 30, 2021. Note 6. Business and Geographic Segment Information Laureate’s educational services are offered through two reportable segments: Mexico and Peru (formerly Andean). Following the September 2020 sale of Chile, the former Andean segment is now called the Peru segment. Laureate determines its segments based on information utilized by the chief operating decision maker to allocate resources and assess performance. Our segments generate revenues by providing an education that emphasizes profession-oriented fields of study with undergraduate and graduate degrees in a wide range of disciplines. Our educational offerings are increasingly utilizing online and hybrid (a combination of onli ne and in-classroom) courses and programs to deliver their curriculum. In response to the COVID-19 pandemic, we h ave temporarily tran sitioned the educational delivery method at all of our institutions to be online and are leveraging our existing technologies and learning platforms to serve students outside of the traditional classroom setting. The Mexico and Peru markets are characterized by what we believe is a significant imbalance between supply and demand. The demand for higher education is large and growing and is fueled by several demographic and economic factors, including a growing middle class, global growth in services and technology-related industries and recognition of the significant personal and economic benefits gained by graduates of higher education institutions. The target demographics are primarily 18- to 24-year-olds in the countries in which we compete. We compete with other private higher education institutions on the basis of price, educational quality, reputation and location. We believe that we compare favorably with competitors because of our focus on quality, professional-oriented curriculum and the competitive advantages provided by our network. There are a number of private and public institutions in both of the countries in which we operate, and it is difficult to predict how the markets will evolve and how many competitors there will be in the future. We expect competition to increase as the Mexican and Peruvian markets mature. Essentially all of our revenues were generated from private pay sources as there are no material government-sponsored loan programs in Mexico or Peru. Specifics related to both of our reportable segments are discussed below. 15 Private education providers in Mexico constitute 35% of the total higher-education market. The private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities. Laureate owns two institutions and is present throughout the country with a footprint of over 35 campuses. Each institution in Mexico has a national license. Students in our Mexican institutions typically finance their own education. In Peru, private universities are increasingly providing the capacity to meet growing demand and constitute 72% of the total higher-education market. Laureate owns three institutions in Peru. As discussed in Note 1, Description of Business, and Note 4, Discontinued Operations and Assets Held for Sale, a number of our subsidiaries have met the requirements to be classified as Discontinued Operations. As a result, the Discontinued Operations have been excluded from the segment information for all periods presented. Intersegment transactions are accounted for in a similar manner as third-party transactions and are eliminated in consolidation. The Corporate amounts presented in the following tables include corporate charges that were not allocated to our reportable segments and adjustments to eliminate intersegment items. We evaluate segment performance based on Adjusted EBITDA, which is a non-GAAP performance measure defined as Income (loss) from continuing operations before income taxes and equity in net income of affiliates, adding back the following items: 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), 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. We use total assets as the measure of assets for reportable segments. 16 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 For the six months ended June 30, June 30, 2021 2020 2021 2020 Revenues Mexico $ 124,283 $ 114,864 $ 259,680 $ 269,071 Peru 201,660 187,572 259,158 224,099 Corporate 1,636 1,420 3,442 3,005 Revenues $ 327,579 $ 303,856 $ 522,280 $ 496,175 Adjusted EBITDA of reportable segments Mexico $ 17,187 $ 19,704 $ 34,456 $ 43,014 Peru 113,631 99,167 125,225 72,501 Total Adjusted EBITDA of reportable segments 130,818 118,871 159,681 115,515 Reconciling items: Corporate ( 23,708 ) ( 24,809 ) ( 42,911 ) ( 50,803 ) Depreciation and amortization expense ( 26,983 ) ( 18,113 ) ( 49,744 ) ( 37,763 ) Loss on impairment of assets ( 7,219 ) ( 23,773 ) ( 63,869 ) ( 27,542 ) Share-based compensation expense ( 2,617 ) ( 3,733 ) ( 3,951 ) ( 5,272 ) EiP expenses ( 12,607 ) ( 19,300 ) ( 27,913 ) ( 42,078 ) Operating income (loss) 57,684 29,143 ( 28,707 ) ( 47,943 ) Interest income 477 288 1,188 910 Interest expense ( 13,541 ) ( 25,705 ) ( 37,059 ) ( 50,995 ) Loss on debt extinguishment ( 77,927 ) — ( 77,940 ) — 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 ) June 30, 2021 December 31, 2020 Assets Mexico $ 1,261,261 $ 1,278,198 Peru 609,769 623,294 Corporate and Discontinued Operations 1,774,638 3,069,402 Total assets $ 3,645,668 $ 4,970,894 Note 7. Goodwill and Loss on Impairment of Assets 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 Balance at December 31, 2020 $ 500,250 $ 74,582 $ 574,832 Currency translation adjustments 928 ( 6,993 ) ( 6,065 ) Balance at June 30, 2021 $ 501,178 $ 67,589 $ 568,767 17 Impairment of Laureate Tradename 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. As a result, the Company tested the asset for impairment and estimated the fair value of the tradename asset using the relief-from-royalty method, based on the projected revenues for each business over the estimated remaining useful life of the asset. 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 $ 51,400 and recorded an impairment charge for that amount. The significant assumptions used in estimating the fair value included: (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, 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. Note 8. Debt Outstanding long-term debt was as follows: June 30, 2021 December 31, 2020 Senior long-term debt: Senior Secured Credit Facility (stated maturity date October 2024) $ — $ — Senior Notes (stated maturity date May 2025) — 798,725 Total senior long-term debt — 798,725 Other debt: Lines of credit 19,540 59,014 Notes payable and other debt 110,432 138,630 Total senior and other debt 129,972 996,369 Finance lease obligations and sale-leaseback financings 48,839 52,639 Total long-term debt and finance leases 178,811 1,049,008 Less: total unamortized deferred financing costs 4,400 53,292 Less: current portion of long-term debt and finance leases 50,941 95,818 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 June 30, 2021 and December 31, 2020, no amounts were borrowed on this facility. 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 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. 18 Estimated Fair Value of Debt 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: December 31, 2020 Carrying amount Estimated fair value Total senior and other debt $ 996,369 $ 1,043,294 Certain Covenants As of June 30, 2021, our senior long-term debt contained certain negative covenants including, among others: (1) limitations on additional indebtedness; (2) limitations on dividends; (3) limitations on asset sales, including the sale of ownership interests in subsidiaries and sale-leaseback transactions; and (4) limitations on liens, guarantees, loans or investments. The Third Amended and Restated Credit Agreement (the Third A&R Credit Agreement) provides, solely with respect to the revolving credit facility, that the Company shall not permit its Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, to exceed 3.50 x as of the last day of each quarter commencing with the quarter ending December 31, 2019 and thereafter. The agreement also provides that if (i) the Company’s Consolidated Total Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, is not greater than 4.75 x as of such date and (ii) less than 25 % of the revolving credit facility is utilized as of that date, then such financial covenant shall not apply. As of 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 June 30, 2021. Note 9. Leases Laureate conducts a significant portion of its operations at leased facilities. These facilities include our corporate headquarters, other office locations, and many of Laureate's higher education facilities. In accordance with ASC Topic 842, “Leases,” Laureate analyzes each lease agreement to determine whether it should be classified as a finance lease or an operating lease. Finance Leases Our finance lease agreements are for property and equipment. The lease assets are included within buildings as well as furniture, equipment and software and the related lease liability is included within debt and finance leases on the Consolidated Balance Sheets. Operating Leases Our operating lease agreements are primarily for real estate space and are included within operating lease right-of-use (ROU) assets and operating lease liabilities on the Consolidated Balance Sheets. The terms of our operating leases vary and generally contain renewal options. Certain of these operating leases provide for increasing rent over the term of the lease. Laureate also leases certain equipment under noncancellable operating leases, which are typically for terms of 60 months or less. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Our variable lease payments consist of non-lease services related to the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Many of our lessee agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. Rental expense for lease payments related to operating leases is 19 recognized on a straight-line basis over the lease term. On occasion, Laureate has entered into sublease agreements for certain leased office space; however, the sublease income from these agreements is immaterial. Corporate Office Lease Termination In March 2021, the Company exercised its one-time right under the operating lease agreement for its corporate headquarters in Baltimore, Maryland to terminate the lease effective June 30, 2022. 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 . Note 10. Commitments and Contingencies Loss Contingencies Laureate is subject to legal actions arising in the ordinary course of its business. In management's opinion, we have adequate legal defenses, insurance coverage and/or accrued liabilities with respect to the eventuality of such actions. We do not believe that any settlement would have a material impact on our Consolidated Financial Statements. Contingent Liabilities for Taxes 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. These liabilities were included in current and long-term liabilities on the Consolidated Balance Sheets. Changes in the recorded values of non-income tax contingencies impact operating income and interest expense, while changes in the related indemnification assets impact only operating income. 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. 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 material. Other Loss Contingencies Laureate has accrued liabilities for certain civil actions against our institutions, a portion of which existed prior to our acquisition of these entities. Laureate intends to vigorously defend against these matters. As of 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. Guarantees 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. 20 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 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. The restricted cash used to collateralize this letter of credit was held by a corporate entity. As part of our normal operations, our insurers issue surety bonds on our behalf, as required by various state education authorities in the United States. We are obligated to reimburse our insurers for any payments made by the insurers under the surety bonds. As of 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 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. (ICE). ICE was formerly our Spanish holding company; during the second quarter of 2020, ICE was migrated to the Netherlands and its name was changed to Laureate Netherlands Holding B.V. 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. On March 30, 2021, in response to our allegations, the STA issued a final assessment to Laureate Netherlands Holding B.V. in which the Chief Tax Auditor challenged the preliminary assessment and found that the STA could not claim the withholding tax obligation in this case. 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. Note 11. Share-based Compensation Share-based compensation expense was as follows: For the three months ended June 30, For the six months ended June 30, 2021 2020 2021 2020 Continuing operations Stock options, net of estimated forfeitures $ 101 $ 382 $ 277 $ 727 Restricted stock awards 2,516 3,351 3,674 4,545 Total continuing operations $ 2,617 $ 3,733 $ 3,951 $ 5,272 Discontinued operations Share-based compensation expense for discontinued operations 585 888 827 1,333 Total continuing and discontinued operations $ 3,202 $ 4,621 $ 4,778 $ 6,605 21 Note 12. Stockholders’ Equity The components of net changes in stockholders’ equity for the fiscal quarters of 2021 are as follows: Laureate Education, Inc. Stockholders Class A Common Stock Class B Common Stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Treasury stock at cost Non-controlling interests Total stockholders’ equity Shares Amount Shares Amount Balance at December 31, 2020 115,119 $ 548 90,792 $ 363 $ 3,760,029 $ ( 176,822 ) $ ( 941,986 ) $ ( 365,316 ) $ ( 12,882 ) $ 2,263,934 Beginning retained earnings adjustment — — — — — ( 101 ) — — — ( 101 ) Non-cash stock compensation — — — — 1,576 — — — — 1,576 Conversion of Class B shares to Class A shares 17,248 69 ( 17,248 ) ( 69 ) — — — — — — Purchase of treasury stock at cost ( 10,401 ) — — — — — — ( 145,806 ) — ( 145,806 ) Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 247 1 — — ( 1,223 ) — — — — ( 1,222 ) Accretion of redeemable noncontrolling interests and equity — — — — ( 20 ) — — — — ( 20 ) Net loss — — — — — ( 164,928 ) — — ( 15 ) ( 164,943 ) Foreign currency translation adjustment, net of tax of $ 0 — — — — — — ( 59,743 ) — ( 18 ) ( 59,761 ) Minimum pension liability adjustment, net of tax of $ 0 — — — — — — ( 168 ) — — ( 168 ) 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 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 22 The components of net changes in stockholders’ equity for the fiscal quarters of 2020 are as follows: Laureate Education, Inc. Stockholders Class A Common Stock Class B Common Stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock at cost Non-controlling interests Total stockholders’ equity Shares Amount Shares Amount Balance at December 31, 2019 119,575 $ 542 90,831 $ 363 $ 3,724,636 $ 436,509 $ ( 1,073,981 ) $ ( 271,106 ) $ ( 12,812 ) $ 2,804,151 Non-cash stock compensation — — — — 1,984 — — — — 1,984 Conversion of Class B shares to Class A shares 18 — ( 18 ) — — — — — — — Purchase of treasury stock at cost ( 1,619 ) — — — — — — ( 29,203 ) — ( 29,203 ) Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 1,101 4 — — 25,610 — — — — 25,614 Accretion of redeemable noncontrolling interests and equity — — — — ( 44 ) — — — — ( 44 ) Reclassification of redeemable noncontrolling interests and equity — — — — — — — — 38 38 Net income — — — — — 99,615 — — ( 1,299 ) 98,316 Foreign currency translation adjustment, net of tax of $ 0 — — — — — — ( 330,875 ) — 759 ( 330,116 ) Minimum pension liability adjustment, net of tax of $0 — — — — — — ( 932 ) — — ( 932 ) 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). Repurchases may be effected pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act. The Company’s board of directors will review the share repurchase program periodically and may authorize adjustment of its terms and size or suspend or discontinue the program. The Company 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 . 23 Accumulated Other Comprehen sive Income (Loss) Accumulated other comprehensive income (loss) (AOCI) in our Consolidated Balance Sheets includes the accumulated translation adjustments arising from translation of foreign subsidiaries’ financial statements, the unrealized gains on derivatives designated as cash flow hedges, and the accumulated net gains or losses that are not recognized as components of net periodic benefit cost for our minimum pension liability. The change in AOCI includes the removal of the cumulative translation adjustment related to subsidiaries that were sold during the period. The components of these balances were as follows: June 30, 2021 December 31, 2020 Laureate Education, Inc. Noncontrolling Interests Total Laureate Education, Inc. Noncontrolling Interests Total Foreign currency translation adjustment $ ( 500,754 ) $ 938 $ ( 499,816 ) $ ( 951,456 ) $ 958 $ ( 950,498 ) Unrealized gain on derivatives 10,416 — 10,416 10,416 — 10,416 Minimum pension liability adjustment ( 1,087 ) — ( 1,087 ) ( 946 ) — ( 946 ) Accumulated other comprehensive loss $ ( 491,425 ) $ 938 $ ( 490,487 ) $ ( 941,986 ) $ 958 $ ( 941,028 ) Note 13. Derivative Instruments In the normal course of business, our operations are exposed to fluctuations in foreign currency values and interest rate changes. We may seek to control a portion of these risks through a risk management program that includes the use of derivative instruments. 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. In addition, we occasionally enter into foreign exchange forward contracts to reduce the impact of other non-functional currency-denominated receivables and payables. We do not enter into speculative or leveraged transactions, nor do we hold or issue derivatives for trading purposes. We generally intend to hold our derivatives until maturity. Laureate reports all derivatives at fair value. These contracts are recognized as either assets or liabilities, depending upon the derivative’s fair value. Gains or losses associated with the change in the fair value of these swaps are recognized in our Consolidated Statements of Operations on a current basis over the term of the contracts, unless designated and effective as a hedge. For swaps that are designated and effective as cash flow hedges, gains or losses associated with the change in fair value of the swaps are recognized in our Consolidated Balance Sheets as a component of AOCI and amortized into earnings as a component of Interest expense over the term of the related hedged items. Upon early termination of an effective interest rate swap designated as a cash flow hedge, unrealized gains or losses are deferred in our Consolidated Balance Sheets as a component of AOCI and are amortized as an adjustment to Interest expense over the period during which the hedged forecasted transaction affects earnings. For derivatives that are both designated and effective as net investment hedges, gains or losses associated with the change in fair value of the derivatives are recognized on our Consolidated Balance Sheets as a component of AOCI. 24 The reported fair values of our derivatives, which are classified in Derivative instruments on our Consolidated Balance Sheets, were as follows: June 30, 2021 December 31, 2020 Derivatives not designated as hedging instruments: Current liabilities: Cross currency swaps $ — $ 17,680 Long-term liabilities: Cross currency swaps — 8,144 Total derivative instrument assets $ — $ — Total derivative instrument liabilities $ — $ 25,824 BRL to USD Foreign Currency Swaps In November 2020, in connection with the signing of the sale agreement for its Brazilian operations, Laureate entered into six BRL-to-USD swap agreements. The purpose of these swaps 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 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 June 30, For the six months ended June 30, 2021 2020 2021 2020 Cross currency swaps Unrealized (loss) gain $ ( 21,800 ) $ ( 802 ) $ 25,824 $ — Realized loss ( 32,047 ) ( 626 ) ( 50,341 ) ( 626 ) 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. 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. 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 December 31, 2020, the Company had not breached any default provisions and had not posted any 25 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 December 31, 2020 of $ 25,824 . Note 14. Income Taxes Laureate's income tax provisions for all periods consist of federal, state and foreign income taxes. 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 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. 26 Note 15. Earnings (Loss) Per Share Our common stock has a dual class structure, consisting of Class A common stock and Class B common stock. Other than voting rights, the Class B common stock has the same rights as the Class A common stock, and therefore both are treated as the same class of stock for purposes of the earnings per share calculation. Laureate computes basic earnings per share (EPS) by dividing income available to common shareholders by the weighted average number of common shares outstanding for the reporting period. Diluted EPS reflects the potential dilution that would occur if share-based compensation awards, contingently issuable shares, or convertible securities were exercised or converted into common stock. To calculate the diluted EPS, the basic weighted average number of shares is increased by the dilutive effect of stock options, restricted stock, restricted stock units, and any contingently issuable shares determined using the treasury stock method, and any convertible securities using the if-converted method. The following tables summarize the computations of basic and diluted earnings (loss) per share: 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 ) 27 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 Loss attributable to noncontrolling interests 27 38 (Loss) income from continuing operations attributable to Laureate Education, Inc. ( 280,383 ) 194,575 Accretion of redemption value of redeemable noncontrolling interests and equity ( 88 ) 157 Net (loss) income from continuing operations for basic and diluted earnings (loss) per share $ ( 280,471 ) $ 194,732 Numerator used in basic and diluted earnings (loss) per common share for discontinued operations: 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 restricted stock units — 187 Diluted weighted average shares outstanding 196,085 210,050 Basic and diluted earnings (loss) per share: (Loss) income from continuing operations $ ( 1.43 ) $ 0.93 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 June 30, For the six months ended June 30, 2021 2020 2021 2020 Stock options 3,256 4,100 3,324 4,391 Restricted stock units 776 747 688 355 Note 16. Legal and Regulatory Matters Laureate is subject to legal proceedings arising in the ordinary course of business. In management’s opinion, we have adequate legal defenses, insurance coverage, and/or accrued liabilities with respect to the eventuality of these actions. Management believes that any settlement would not have a material impact on Laureate’s financial position, results of operations, or cash flows. Our institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition and results of operations. 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. 28 Continuing Operations Mexican Regulation – COVID-19 Update Administrative activities have resumed at most of our campuses. 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 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 U.S. Regulation 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. 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. Note 17. Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date. Accounting standards utilize a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels, which are described below: • Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets; • Level 2 – Observable inputs other than quoted prices that are either directly or indirectly observable for the asset or liability; • Level 3 – Unobservable inputs that are supported by little or no market activity. These levels are not necessarily an indication of the risk of liquidity associated with the financial assets or liabilities disclosed. In instances where the determination of fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety, as required under ASC 820-10, "Fair Value Measurement." Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. 29 Derivative instruments Laureate uses derivative instruments as economic hedges for bank debt, foreign exchange fluctuations and interest rate risk. Their values are derived using valuation models commonly used for derivatives. These valuation models require a variety of inputs, including contractual terms, market prices, forward-price yield curves, notional quantities, measures of volatility and correlations of such inputs. Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by ourself and our counterparties. We have determined that the significance of the impact of the credit valuation adjustments made to our derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of our derivatives held as of December 31, 2020 were classified as Level 2 of the fair value hierarchy. 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: Total Level 1 Level 2 Level 3 Assets Derivative instruments $ — $ — $ — $ — Liabilities Derivative instruments $ 25,824 $ — $ 25,824 $ — Note 18. Supplemental Cash Flow Information 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 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 Restricted cash 106,770 33,122 117,151 Total Cash and cash equivalents and Restricted cash shown in the Consolidated Statements of Cash Flows $ 533,912 $ 317,130 $ 867,298 Restricted cash includes cash equivalents held to collateralize standby letters of credit. In addition, Laureate may at times hold a United States deposit for a letter of credit in lieu of a surety bond, or otherwise have cash that is not immediately available for use in current operations. See also Note 10, Commitments and Contingencies. Note 19. Subsequent Events 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. 30