What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 221 added, 201 removed, 688 unchanged (38% of the section changed)

4 unchanged sentences

IN THOUSANDS, except per share amounts

For the three months ended June 30, 2021 2020

For the three months ended September 30, 2021 2020

(Unaudited) (Unaudited)

4 unchanged sentences

Loss on impairment of assets 3,292 323,397

Operating income 57,684 29,143

Operating income (loss) 35,106 ( 318,235 )

Interest income 1,268 684

Interest expense ( 3,736 ) ( 24,703 )

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 )

Other (expense) income, net ( 46 ) 1,300

Foreign currency exchange gain (loss), net 6,085 ( 2,907 )

(Loss) gain on disposal of subsidiaries, net ( 949 ) 622

Income (loss) from continuing operations before income taxes 37,728 ( 343,239 )

Income tax (expense) benefit ( 48,118 ) 72,199

Loss from continuing operations ( 10,390 ) ( 271,040 )

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

Income (loss) from discontinued operations, net of tax expense of $ 248,838 and $ 103,794 , respectively

370,527 ( 513,390 )

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

Net loss attributable to noncontrolling interests 224 3,805

Net loss attributable to Laureate Education, Inc.

Net income (loss) 360,137 ( 784,430 )

Net loss (income) attributable to noncontrolling interests 269 ( 12 )

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

$ 360,406 $ ( 784,442 )

2 unchanged sentences

Income (loss) from discontinued operations 2.00 ( 2.44 )

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

Basic and diluted earnings (loss) per share $ 1.94 $ ( 3.73 )

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

3 unchanged sentences

IN THOUSANDS, except per share amounts

For the six months ended June 30, 2021 2020

For the nine months ended September 30, 2021 2020

(Unaudited) (Unaudited)

4 unchanged sentences

Loss on impairment of assets 67,161 350,939

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

Operating income (loss) 6,399 ( 366,178 )

Interest income 2,456 1,594

2 unchanged sentences

Loss on derivatives ( 24,517 ) ( 626 )

Other expense, net ( 21 ) ( 486 )

Other (expense) income, net ( 67 ) 814

Foreign currency exchange gain, net 18,749 71,074

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

Loss on disposal of subsidiaries, net ( 922 ) ( 1,178 )

Loss from continuing operations before income taxes and equity in net income of affiliates ( 116,637 ) ( 370,198 )

1 unchanged sentence

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

Loss from continuing operations ( 290,800 ) ( 76,503 )

Income (loss) from discontinued operations, net of tax expense of $ 257,440 and $ 95,568 , respectively

456,770 ( 921,239 )

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

Net income (loss) 165,970 ( 997,742 )

Net loss attributable to noncontrolling interests 508 5,092

Net loss attributable to Laureate Education, Inc.

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

$ 166,478 $ ( 992,650 )

Basic and diluted earnings (loss) per share:

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

Loss from continuing operations $ ( 1.51 ) $ ( 0.36 )

Income (loss) from discontinued operations 2.37 ( 4.36 )

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

Basic and diluted earnings (loss) per share $ 0.86 $ ( 4.72 )

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

2 unchanged sentences

Consolidated Statements of Comprehensive Income

For the three months ended June 30, 2021 2020

For the three months ended September 30, 2021 2020

(Unaudited) (Unaudited)

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

Other comprehensive income:

Net income (loss) $ 360,137 $ ( 784,430 )

Other comprehensive (loss) income:

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

( 22,627 ) 326,342

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

Total other comprehensive income 510,470 14,034

Total other comprehensive (loss) income ( 22,627 ) 326,342

Comprehensive income (loss) 337,510 ( 458,088 )

6 unchanged sentences

Consolidated Statements of Comprehensive Income

For the six months ended June 30, 2021 2020

For the nine months ended September 30, 2021 2020

(Unaudited) (Unaudited)

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

Net income (loss) $ 165,970 $ ( 997,742 )

Other comprehensive income (loss):

3 unchanged sentences

( 141 ) ( 932 )

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

Total other comprehensive income 427,914 9,328

Comprehensive income (loss) 593,884 ( 988,414 )

7 unchanged sentences

IN THOUSANDS, except per share amounts

September 30,

2021 December 31,

11 unchanged sentences

Total current assets 2,169,846 1,443,786

Notes receivable, net 848 1,321

Property and equipment:

7 unchanged sentences

Operating lease right-of-use assets, net 409,102 462,767

Land use rights, net 1,548 1,548

Goodwill 559,283 574,832

10 unchanged sentences

IN THOUSANDS, except per share amounts

September 30,

2021 December 31,

9 unchanged sentences

Derivative instruments — 17,680

Special cash distribution payable 1,271,790 —

Other current liabilities 21,014 15,109

12 unchanged sentences

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

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

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

Class A common stock, par value $ 0.004 per share – 700,000 shares authorized, 162,085 shares issued and 114,983 shares outstanding as of September 30, 2021 and 137,162 shares issued and 115,119 shares outstanding as of December 31, 2020

Class B common stock, par value $ 0.004 per share – 175,000 shares authorized, 66,354 shares issued and outstanding as of September 30, 2021 and 90,792 shares issued and outstanding as of December 31, 2020

Additional paid-in capital 2,494,856 3,760,029

1 unchanged sentence

Accumulated other comprehensive loss ( 514,073 ) ( 941,986 )

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

Treasury stock at cost ( 47,102 shares held at September 30, 2021 and 22,043 shares held at December 31, 2020)

( 729,902 ) ( 365,316 )

8 unchanged sentences

Consolidated Statements of Cash Flows

For the six months ended June 30, 2021 2020

For the nine months ended September 30, 2021 2020

Cash flows from operating activities (Unaudited) (Unaudited)

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

Net income (loss) $ 165,970 $ ( 997,742 )

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

7 unchanged sentences

Non-cash interest expense 6,129 14,075

Interest paid on deferred purchase price for acquisitions — ( 3,969 )

Non-cash share-based compensation expense 7,175 10,277

26 unchanged sentences

Payments of call premiums and debt issuance costs ( 32,980 ) ( 726 )

Distributions to noncontrolling interest holders — ( 609 )

Net cash (used in) provided by financing activities ( 1,284,533 ) 257,391

13 unchanged sentences

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.

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 predominantly 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.

6 unchanged sentences

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).

Accordingly, all of the divestitures that were part of this strategic shift, which have now been completed, 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.

2 unchanged sentences

As such, Chile, Brazil, Australia and New Zealand, and Walden also have been accounted for as Discontinued Operations for all periods presented in accordance with ASC 205.

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

The sale of our operations in Australia and New Zealand was completed on November 3, 2020, the sale of our operations in Brazil was completed on May 28, 2021, and the sale of Walden University was completed on August 12, 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.

8 unchanged sentences

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

As of 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.

As of September 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.

While this evaluation did not result in a material effect to the Company’s Consolidated Financial Statements as of and for the nine months ended September 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

22 unchanged sentences

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

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

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

Mexico Peru Corporate (1)

9 unchanged sentences

Total $ 115,949 $ 127,314 $ 260 $ 243,523 100 %

(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:

(1) Includes the elimination of inter-segment revenues.

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

Mexico Peru Corporate (1)

9 unchanged sentences

Total $ 385,021 $ 351,413 $ 3,264 $ 739,698 100 %

(1) Includes the elimination of intersegment revenues.

(1) Includes the elimination of inter-segment revenues.

Contract Balances

5 unchanged sentences

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

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

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

The first and third calendar quarters

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

Total accounts receivable from our contracts with students were $ 113,844 and $ 138,738 as of September 30, 2021 and December 31, 2020, respectively.

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

The first and third

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

All contract asset amounts are classified as current.

Contract liabilities in the amount of $ 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 .

Contract liabilities in the amount of $ 68,300 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 September 30, 2021 and December 31, 2020, respectively.

The increase in the contract liability balance during the period ended September 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 nine months ended September 30, 2021 that was included in the contract liability balance at the beginning of the year was approximately $ 38,764 .

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).

All other markets have been 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.

1 unchanged sentence

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

For the three months ended September 30, 2021 2020

Revenues $ 70,787 $ 459,442

6 unchanged sentences

Pretax income (loss) of discontinued operations 619,365 ( 409,596 )

Income tax benefit 1,063 3,043

Income tax expense ( 248,838 ) ( 103,794 )

Income (loss) from discontinued operations, net of tax $ 370,527 $ ( 513,390 )

For the six months ended June 30, 2021 2020

For the nine months ended September 30, 2021 2020

Revenues $ 542,650 $ 1,342,298

6 unchanged sentences

Pretax income (loss) of discontinued operations 714,210 ( 825,671 )

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

Income tax expense ( 257,440 ) ( 95,568 )

Income (loss) from discontinued operations, net of tax $ 456,770 $ ( 921,239 )

7 unchanged sentences

See Note 5, Dispositions, for more information.

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

The assets and liabilities of the Discontinued Operations, which are subject to finalization, have been classified as held for sale as of September 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

September 30, 2021 December 31, 2020

Assets of Discontinued Operations

13 unchanged sentences

Total liabilities held for sale $ 16,620 $ 702,256

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

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

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

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.

Brazil Divestiture

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

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

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

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

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

Honduras Divestiture

4 unchanged sentences

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

3 unchanged sentences

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.

Brazil Divestiture

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

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

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

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

The Company recognized a pre-tax gain on the sale of approximately $ 26,100 , which included a working capital adjustment that was completed during the third quarter of 2021.

This gain is included in Income (loss) from discontinued operations, net of tax in the Consolidated Statement of Operations for the nine months ended September 30, 2021.

Walden Divestiture

On August 12, 2021, the Company closed the previously disclosed transaction pursuant to the Membership Interest Purchase Agreement (the Walden Purchase Agreement), dated September 11, 2020, with Adtalem Global Education Inc., a Delaware corporation (the Walden Purchaser).

Pursuant to the Walden Purchase Agreement, the Company sold 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 (Walden), and its subsidiary, Walden University, LLC, a Florida limited liability company and an indirect wholly owned subsidiary of the Company (together with Walden, the Walden Group).

The proceeds received, net of cash sold, transaction fees, and certain closing adjustments, were approximately $ 1,397,200 .

At closing, the Company also recorded a receivable of $ 74,000 , representing the portion of the transaction value that was paid into an escrow account, to be released to the Company one year following the closing of the transaction pursuant to the terms and conditions of the escrow agreement.

In addition, approximately $ 83,600 of restricted cash on the Company's balance sheet related to collateralized regulatory obligations is expected to be released within the next twelve months.

The Company recognized a pre-tax gain on the sale of approximately $ 615,200 , as well as estimated tax expense of approximately $ 278,000 , which is included in Income (loss) from discontinued operations, net of tax in the Consolidated Statement of Operations for the three and nine months ended September 30, 2021.

Collection of Note Receivable from Divestiture of Chilean Operations

On September 10, 2020, the Company completed the divestiture of its operations in Chile.

Under the terms of the agreement, the purchase price included a note receivable of $ 21,500 that was payable one year from the date of divestiture.

In September 2021, the Company collected this receivable.

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.

Mexico and Peru.

Laureate determines its segments based on information utilized by the chief operating decision maker to allocate resources and assess performance.

6 unchanged sentences

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.

We believe that we compare favorably with competitors because of our focus on quality, professional-oriented curriculum.

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.

11 unchanged sentences

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.

Inter-segment 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 inter-segment 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.

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

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,

The following tables provide financial information for our reportable segments, including a reconciliation of Adjusted EBITDA to Income (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 nine months ended

September 30, September 30,

2021 2020 2021 2020

18 unchanged sentences

Loss on derivatives — — ( 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

Other (expense) income, net ( 46 ) 1,300 ( 67 ) 814

Foreign currency gain (loss), net 6,085 ( 2,907 ) 18,749 71,074

(Loss) gain on disposal of subsidiaries, net ( 949 ) 622 ( 922 ) ( 1,178 )

Income (loss) from continuing operations before income taxes and equity in net income of affiliates $ 37,728 $ ( 343,239 ) $ ( 116,637 ) $ ( 370,198 )

September 30, 2021 December 31, 2020

Mexico $ 1,326,223 $ 1,278,198

3 unchanged sentences

Goodwill and Loss on Impairment of Assets

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

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

Mexico Peru Total

1 unchanged sentence

Currency translation adjustments ( 6,174 ) ( 9,375 ) ( 15,549 )

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

Balance at September 30, 2021 $ 494,076 $ 65,207 $ 559,283

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.

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 Laureate 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.

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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.

The remaining carrying value of the tradename asset, which was approximately $ 5,825 as of September 30, 2021, is being amortized prospectively over the remainder of 2021, which is its estimated useful life.

Outstanding long-term debt was as follows:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Senior long-term debt:

12 unchanged sentences

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.

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

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

2 unchanged sentences

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.

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

Estimated Fair Value of Debt

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

As of September 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.

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Certain Covenants

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

As of September 30, 2021, our Third Amended and Restated Credit Agreement (the Third A&R Credit Agreement) contained certain negative covenants including, among others:

(1) limitations on additional indebtedness;

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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 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.

As of September 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.

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

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

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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.

As of September 30, 2021 and December 31, 2020, Laureate has recorded cumulative liabilities totaling $ 1,287 and $ 38,355 , respectively, for taxes other-than-income tax, principally payroll-tax-related uncertainties recorded at the time of an acquisition, of which $ 37,794 was classified as held for sale as of December 31, 2020.

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

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Changes in the recorded values of non-income tax contingencies impact operating income and interest expense, while changes in the related indemnification assets impact only operating income.

For Continuing Operations, the total decrease to operating income for adjustments to non-income tax contingencies and indemnification assets was $ 13,388 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.

For Continuing Operations, the total decrease to operating income for adjustments to non-income tax contingencies and indemnification assets was $ 13,438 and $ 6,139 , respectively, for the nine months ended September 30, 2021 and 2020.

In addition, as of September 30, 2021 and December 31, 2020, Laureate has recorded cumulative liabilities for income tax contingencies of $ 58,094 and $ 40,668 , respectively, of which $ 6,461 and $ 11,752 , respectively, were classified as held for sale.

As of September 30, 2021 and December 31, 2020, indemnification assets primarily related to acquisition contingencies were $ 768 and $ 55,940 , respectively, of which $ 40,877 was classified as held for sale as of December 31, 2020.

These indemnification assets primarily cover contingencies for income taxes and taxes other-than-income taxes.

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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.

As of September 30, 2021 and December 31, 2020, approximately $ 7,300 and $ 8,300 , respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets.

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

During the first quarter of 2021, one of our Peruvian institutions issued a bank guarantee in the amount of PEN 23,764 (approximately $ 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.

During the first quarter of 2021, one of our Peruvian institutions issued a bank guarantee in the amount of PEN 23,764 (approximately $ 5,767 at September 30, 2021) in order to appeal a preliminary tax assessment received related to tax audits of 2014 and 2015.

Standby Letters of Credit and Other Commitments

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

As of both September 30, 2021 and December 31, 2020, we had approximately $ 83,600 posted as an LOC in favor of the DOE, and the restricted cash used to collateralize this LOC was held by a corporate entity.

Prior to the sale of Walden, this LOC was required to allow Walden to participate in the DOE Title IV program.

This restricted cash is expected to be released within the twelve-month period following the closing of the Walden sale, which occurred during the third quarter of 2021.

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.

As of September 30, 2021 and December 31, 2020, we had approximately $ 11,000 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 September 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.

In October 2021, the Company made a payment to the STA of approximately $ 9,300 , in order to reduce the amount of future interest that could be incurred as the appeals process continues.

Following the payment, the LOCs are no longer required and therefore are expected to be released during the fourth quarter of 2021.

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.

In addition, on March 11, 2020, ICE received a preliminary assessment of approximately EUR 21,600 (approximately $ 25,300 at September 30, 2021), related to the STA’s extension of their audit to review withholding taxes on income earned by nonresidents.

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

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At this time, we consider the matter resolved.

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

See Note 19, Subsequent Events, for additional information.

As previously disclosed, on July 22, 2021, the Spanish National Court issued a decision on the Company’s appeal regarding the STA audits of ICE 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.

During the third quarter of 2021, both the Company and the STA appealed the Spanish National Court decision.

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

Share-based Compensation

Share-based compensation expense was as follows:

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

For the three months ended September 30, For the nine months ended September 30,

2021 2020 2021 2020

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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

Non-cash stock compensation — — — — 2,397 — — — — 2,397

Conversion of Class B shares to Class A shares 7,188 29 ( 7,188 ) ( 29 ) — — — — — —

Purchase of treasury stock at cost ( 7,110 ) — — — — — — ( 112,994 ) — ( 112,994 )

Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 119 — — — 304 — — — — 304

Change in noncontrolling interests — — — — 90 — — — — 90

Net income — — — — — 360,406 — — ( 269 ) 360,137

Special cash distribution accrued on outstanding common stock — — — — ( 1,271,790 ) — — — — ( 1,271,790 )

Foreign currency translation adjustment, net of tax of $ 0

— — — — — — ( 22,648 ) — 21 ( 22,627 )

Balance at September 30, 2021 114,983 $ 648 66,354 $ 265 $ 2,494,856 $ ( 10,445 ) $ ( 514,073 ) $ ( 729,902 ) $ ( 13,390 ) $ 1,227,959

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

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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

Non-cash stock compensation — — — — 3,672 — — — — 3,672

Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 63 — — — ( 35 ) — — — — ( 35 )

Change in noncontrolling interests — — — — ( 2,610 ) — — — — ( 2,610 )

Accretion of redeemable noncontrolling interests and equity — — — — 6 — — — — 6

Reclassification of redeemable noncontrolling interests and equity — — — — — — — — 1,574 1,574

Net loss — — — — — ( 784,442 ) — — 12 ( 784,430 )

Foreign currency translation adjustment, net of tax of $0 — — — — — — 326,416 — ( 74 ) 326,342

Balance at September 30, 2020 119,270 $ 547 90,813 $ 363 $ 3,758,008 $ ( 556,141 ) $ ( 1,065,270 ) $ ( 300,309 ) $ ( 12,618 ) $ 1,824,580

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.

On November 5, 2020, Laureate’s board of directors announced a 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 by $ 200,000 , for a total repurchase authorization (including the previously authorized repurchases) of up to $ 500,000 of the Company’s Class A common stock.

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

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

The Company expects to finance the repurchases with free cash flow, 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 .

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 nine months ended September 30, 2021, the Company repurchased 25,059 shares of its outstanding Class A common stock for a total purchase price of $ 364,586 .

Special Cash Distribution

On September 15, 2021, the board of directors of the Company approved a plan of partial liquidation (the Partial Liquidation Plan) in connection with the previously disclosed sale of Walden e-Learning LLC.

Pursuant to the Partial Liquidation Plan, the gross proceeds from the sale of the Walden Group, less expenses related to the sale, will be distributed to the Company’s stockholders before the end of calendar year 2022.

Notwithstanding the adoption of the Partial Liquidation Plan, the Company expects to continue operating as a going concern and a publicly traded company.

On September 15, 2021 after the adoption of the Partial Liquidation Plan, the Board approved the payment of a special cash distribution (the Distribution) pursuant to the Partial Liquidation Plan equal to $ 7.01 per each share of the Company’s Class A common stock, par value $ 0.004 per share, and Class B common stock, par value $ 0.004 per share, to each holder of record of the common stock on October 6, 2021.

The Distribution was paid on October 29, 2021, based on the number of shares outstanding on October 6, 2021.

The aggregate amount of the Distribution was $ 806,652 for Class A common stock and $ 465,138 for Class B common stock for a total of $ 1,271,790 .

Nasdaq determined that the Company’s Class A common stock would trade with "due bills" representing an assignment of the right to receive the Distribution during the period from October 5, 2021 through and including October 29, 2021 (the Due Bill Period).

Stockholders who sold their shares during the Due Bill Period were not entitled to receive the Distribution.

The Company’s shares began trading ex-dividend on November 1, 2021, the first business day after the payment date.

Gross proceeds from the sale include $ 74,000 held in escrow and approximately $ 83,600 of restricted cash related to collateralized regulatory obligations associated with activities of the divested business.

In accordance with the Partial Liquidation Plan, upon release of escrow amounts and restricted cash, the Company intends to subsequently distribute to stockholders any net proceeds from such amounts in the form of special distributions before December 31, 2022.

In connection with the Distribution, the board of directors approved certain required adjustments under the Company’s equity award compensation plans.

These required equitable adjustments were effective on November 1, 2021 and will be recorded in the consolidated financial statements during the fourth quarter of 2021.

The exercise prices of the Company’s options were reduced by $ 7.01 per share, and holders of restricted and performance stock units will receive an amount in cash equal to $ 7.01 per unvested stock unit, payable when such unit vests.

If all outstanding stock units vest, the aggregate amount to be paid in respect of the units will be approximately $ 7,000 .

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.

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 effective hedges, and the accumulated net gains or losses that are not recognized as components of net periodic benefit cost for our minimum pension liability.

The 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

September 30, 2021 December 31, 2020

Laureate Education, Inc.

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We may seek to control a portion of these risks through a risk management program that includes the use of derivative instruments.

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

Prior to their repayment, 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.

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Derivatives not designated as hedging instruments:

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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

There was no gain or loss on derivatives in the Consolidated Statements of Operations for the three months ended September 30, 2021 and 2020.

Components of the reported Loss on derivatives not designated as hedging instruments in the Consolidated Statements of Operations for the nine months ended September 30, 2021 and 2020 were as follows:

For the nine months ended September 30,

Cross currency swaps

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

Unrealized gain $ 25,824 $ —

Realized loss ( 50,341 ) ( 626 )

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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.

As of September 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

collateral related to these agreements.

As of December 31, 2020, the Company had not breached any default provisions and had not posted any collateral related to these agreements.

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

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.

The tax provisions for the nine months ended September 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.

For the nine months ended September 30, 2021, the Company recognized income t ax (expense) from continuing operations of $( 174,163 ), as compared to income tax benefit from continuing operations of $ 293,514 in the prior year period.

Income tax expense for the nine months ended September 30, 2021 was primarily driven by jurisdictional mix of earnings, changes in income tax reserves and withholding taxes.

In addition, during the nine months ended September 30, 2021, the Company recorded discrete tax expense of approximately $ 35,700 for changes in estimate associated with provision-to-return adjustments for the amended tax returns for 2018 and 2019 and the tax return for 2020, specifically related to the final regulations that were released by the U.S.

Treasury Department in July 2020 for the high-tax exception to global intangible low-taxed income.

The income tax benefit for the nine months ended September 30, 2020 was primarily driven by the benefit recorded due to the change in tax status of a Netherlands subsidiary, the issuance of GILTI regulations, 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.

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

For the three months ended June 30, 2021 2020

For the three months ended September 30, 2021 2020

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

Loss from continuing operations $ ( 10,390 ) $ ( 271,040 )

Loss attributable to noncontrolling interests 2 27

Income attributable to noncontrolling interests ( 17 ) ( 7 )

Loss from continuing operations attributable to Laureate Education, Inc.

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Income (loss) from discontinued operations, net of tax $ 370,527 $ ( 513,390 )

Loss attributable to noncontrolling interests 222 3,778

Loss (income) attributable to noncontrolling interests 286 ( 5 )

Net income (loss) from discontinued operations for basic and diluted earnings (loss) per share $ 370,813 $ ( 513,395 )

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Income (loss) from discontinued operations 2.00 ( 2.44 )

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

For the six months ended June 30, 2021 2020

Basic and diluted earnings (loss) per share $ 1.94 $ ( 3.73 )

For the nine months ended September 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 from continuing operations $ ( 290,800 ) $ ( 76,503 )

Loss attributable to noncontrolling interests 9 27

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

Loss from continuing operations attributable to Laureate Education, Inc.

( 290,791 ) ( 76,476 )

Accretion of redemption value of redeemable noncontrolling interests and equity ( 88 ) 163

Net (loss) income from continuing operations for basic and diluted earnings (loss) per share $ ( 280,471 ) $ 194,732

Net loss from continuing operations for basic and diluted loss per share $ ( 290,879 ) $ ( 76,313 )

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

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Basic weighted average shares outstanding 192,543 209,920

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

Loss from continuing operations $ ( 1.51 ) $ ( 0.36 )

Income (loss) from discontinued operations 2.37 ( 4.36 )

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

Basic and diluted earnings (loss) per share $ 0.86 $ ( 4.72 )

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,

For the three months ended September 30, For the nine months ended September 30,

2021 2020 2021 2020

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Our institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition and results of operations.

For example, in recent years, the DOE has proposed or promulgated a substantial number of new regulations that impact Walden University, including, but not limited to, borrower defense to repayment, state authorization and financial responsibility.

Changes in or new interpretations of applicable laws, DOE rules, or regulations could have a material adverse effect on Walden University’s eligibility to participate in the Title IV programs.

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

Continuing Operations

Mexican Regulation – 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.

Administrative activities and limited face-to-face educational activities have resumed at all campuses.

Education was determined to be an essential activity for the country and thus no longer restrained by the country’s color-coded sanitary alert system.

Peruvian Regulation

COVID-19 Update

Peru’s national sanitary emergency has been extended until March 2022 in an effort to prevent a third wave of COVID-19.

Lima’s emergency status has been upgraded as a result of increasing vaccination rates and significantly decreasing COVID-19 infection rates.

Economic activities are close to pre-pandemic levels, however, presential gathering, such as in-person instruction, are still suspended in most cases.

Nevertheless, the government has announced that face-to-face classes at higher education institutions may resume in 2022, initially semi-presential.

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

Discontinued Operations

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.

Peruvian Nonresident Capital Gains Tax

Holders who sell, exchange, or otherwise dispose of Company shares may be subject to Peruvian tax at a rate of 30% on their gain realized in such transaction determined under certain Peruvian valuation rules regardless of whether the transaction is taxable for non-Peruvian purposes.

In determining the amount of such gain subject to such tax, the gain is first multiplied by the percentage of the Company’s value that is represented by its Peruvian business determined under certain Peruvian valuation rules (the “Peru Ratio”).

This tax applies if the value of stock determined under certain Peruvian valuation rules (calculated in PEN) transferred multiplied by the Peru Ratio exceeds approximately $42,500 applying the PEN/USD exchange rate of September 30, 2021 (the “Threshold”).

The Threshold is calculated in PEN and changes with currency exchange rates.

For purposes of determining whether the Threshold has been exceeded by any holder, all transfers made by such holder over any 12-month period are aggregated.

For purposes of determining whether any tax is owed, the holder must have their basis “certified” by the Peruvian tax authorities in advance of such transaction.

If the holder exceeds the Threshold and does not obtain a tax basis certificate before the transaction, the holder’s tax basis in the shares will be considered zero for Peruvian tax purposes.

In the event that a direct or indirect sale, exchange, or other disposition of Company shares occurs and any resulting Peruvian tax is not paid, the Company’s Peruvian subsidiaries may be jointly and severally liable for such tax.

Joint and several liability may be imposed if during any of the 12 months preceding the transaction, inter alia , the transferor of Company shares held an indirect or direct interest of more than 10% of the Company’s outstanding shares.

If such a transaction were to occur and the Peruvian tax authorities sought to collect the Peruvian capital gains taxes from the Company’s Peruvian subsidiaries that were not paid by such transferor, it could have a material adverse effect on our business, financial condition or results of operations.

Fair Value Measurement

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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.

As of September 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:

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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

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

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

September 30, 2021 September 30, 2020 December 31, 2020

Cash and cash equivalents $ 1,856,856 $ 716,799 $ 750,147

1 unchanged sentence

Total Cash and cash equivalents and Restricted cash shown in the Consolidated Statements of Cash Flows $ 1,961,855 $ 747,656 $ 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.

Restricted cash represents cash that is not immediately available for use in current operations and primarily includes cash held to collateralize standby letters of credit.

See also Note 10, Commitments and Contingencies.

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.

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

What changed 10-Q

Item 1. Financial Statements