What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-04 compared with 2021-08-05 · 187 added, 180 removed, 505 unchanged (42% of the section changed)

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You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates” or similar expressions that concern our strategy, plans or intentions.

All statements we make relating to estimated and projected earnings, costs, expenditures, cash flows, growth rates and financial results, and all statements we make relating to (i) our exploration of strategic alternatives and potential future plans, strategies or transactions that may be identified, explored or implemented as a result of such review process, (ii) our planned divestitures, the expected proceeds generated therefrom, the expected reduction in revenue resulting therefrom and any resulting litigation or dispute therewith, (iii) anticipated share repurchases, and (iv) the potential impact of the COVID-19 pandemic on our business or the global economy as a whole, are forward‑looking statements.

All statements we make relating to estimated and projected earnings, costs, expenditures, cash flows, growth rates and financial results, and all statements we make relating to (i) our current growth strategy and other future plans, strategies or transactions that may be identified, explored or implemented and any litigation or dispute resulting from any completed transaction, (ii) any anticipated share repurchases or cash distributions, and (iv) the potential impact of the COVID-19 pandemic on our business or the global economy as a whole, are forward‑looking statements.

In addition, we, through our senior management, from time to time make forward‑looking public statements concerning our expected future operations and performance and other developments.

All of these forward‑looking statements are subject to risks and uncertainties that may change at any time, including, with respect to our exploration of strategic alternatives, risks and uncertainties as to the terms, timing, structure, benefits and costs of any divestiture or separation transaction and whether one will be consummated at all, and the impact of any divestiture or separation transaction on our remaining businesses.

All of these forward‑looking statements are subject to risks and uncertainties that may change at any time, including with respect to our current growth strategy and the impact of any completed divestiture or separation transaction on our remaining businesses.

Accordingly, our actual results may differ materially from those we expected.

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While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results.

Important factors that could cause actual results to differ materially from our expectations, including, without limitation, in conjunction with the forward-looking statements included in this Form 10-Q, are disclosed in “Item 1—Business,” and “Item 1A—Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the 2020 Form 10-K).

Important factors that could cause actual results to differ materially from our expectations, including, without limitation, in conjunction with the forward-looking statements and risk factor included in this Form 10-Q, are disclosed in “Item 1—Business,” and “Item 1A—Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the 2020 Form 10-K), as updated in Part II, “Item 1A—Risk Factors” in this Form 10-Q.

Some of the factors that we believe could affect our results include:

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• our ability to maintain and, subsequently, increase tuition rates and student enrollments in our institutions;

• our ability to successfully complete previously announced divestitures;

• the risks associated with our exploration of strategic alternatives, including possible disruption to our ongoing businesses and increased transaction-related expenses;

• the risks and uncertainties related to the long-term effect to the Company of the COVID-19 pandemic and its resurgence, including, but not limited to, its effect on student enrollment, tuition pricing, and collections in future periods;

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We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you.

In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Form 10-Q may not in fact occur.

In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this

Form 10-Q may not in fact occur.

We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

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

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

Collectively, we have approximately 390,200 students enrolled at five institutions in these two countries, which represent our Continuing Operations as of September 30, 2021.

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

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We have two reportable segments as described below.

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

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

We group our institutions by geography in Mexico and Peru for reporting purposes.

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

The outbreak of COVID-19 has caused domestic and global disruption in operations for institutions of higher education.

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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.

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

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

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

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

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

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

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

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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.

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Our Corporate segment is an internal source of capital and provides financial, human resource, information technology, insurance, legal, and tax compliance services.

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

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

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

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

Institutions Enrollment 2021 YTD Revenues

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5 390,200 $ 790.0 100 %

(1) Amounts related to Corporate, partially offset by the elimination of intersegment revenues, totaled $3.4 million and are not separately presented.

(1) Amounts related to Corporate, partially offset by the elimination of inter-segment revenues, totaled $6.8 million and are not separately presented.

Our operations are subject to complex business, economic, legal, regulatory, political, tax and foreign currency risks, which may be difficult to adequately address.

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We will continue to develop and implement necessary changes that enable us to comply with such laws and regulations.

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

See also “Item 1A—Risk Factors—Risks Relating to Our Business—Our institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition and results of operations,” and “Item 1—Business—Industry Regulation” in our 2020 Form 10-K, as well as “Item 1A—Risk Factors” in this Form 10-Q for a detailed discussion of our different regulatory environments.

Key Business Metric

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

New enrollments provide an

indication of future revenue trends.

New enrollments provide an indication of future revenue trends.

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

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

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

subsequent to the disposition.

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

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

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dollar and currency exchange rates” in our 2020 Form 10-K.

In order to provide a framework for assessing how our business performed excluding the effects of foreign currency fluctuations, we present organic constant currency in our segment results, which is calculated using the change from prior-year average foreign exchange rates to current-year average foreign exchange rates, as applied to local-currency operating results for the current year, and then excludes the impact of acquisitions, divestitures and other items, as described in the segments results.

Institutions in our network have a summer break during which classes are generally not in session and minimal revenues are recognized.

In order to provide a framework for assessing how our

business performed excluding the effects of foreign currency fluctuations, we present organic constant currency in our segment results, which is calculated using the change from prior-year average foreign exchange rates to current-year average foreign exchange rates, as applied to local-currency operating results for the current year, and then excludes the impact of acquisitions, divestitures and other items, as described in the segments results.

Our institutions have a summer break during which classes are generally not in session and minimal revenues are recognized.

In addition to the timing of summer breaks, holidays such as Easter also have an impact on our academic calendar.

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Results from the Discontinued Operations

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

For the three months ended For the six months ended

June 30, June 30,

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

For the three months ended For the nine months ended

September 30, September 30,

(in millions) 2021 2020 2021 2020

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Pretax income (loss) of discontinued operations 619.4 (409.6) 714.2 (825.7)

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

Income tax expense (248.8) (103.8) (257.4) (95.6)

Income (loss) from discontinued operations, net of tax $ 370.5 $ (513.4) $ 456.8 $ (921.2)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

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

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At the closing of the sale, a portion of the total transaction value was paid into an escrow account, to be distributed to the Company pursuant to the terms and conditions of the escrow agreement.

During the first quarter of 2021, the Company adjusted the final receivable balance from the escrow account of 168.3 million Hong Kong Dollars (approximately $21.7 million at the date of receipt in April 2021), which resulted in a pre-tax gain of approximately $13.6 million.

During the first quarter of 2021, the Company adjusted the final receivable balance from the escrow account

of 168.3 million Hong Kong Dollars (approximately $21.7 million at the date of receipt in April 2021), which resulted in a pre-tax gain of approximately $13.6 million.

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

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

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

Six Months Ended June 30, 2020

On May 28, 2021, we completed the sale of our operations in Brazil, which resulted in a pre-tax gain of $26.1 million, including a working capital adjustment during the third quarter of 2021.

On August 12, 2021, we completed the sale of Walden University, which resulted in a pre-tax gain of $615.2 million, as well as estimated tax expense of approximately $278.0 million.

Nine Months Ended September 30, 2020

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

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

During the third quarter of 2020, we recorded a loss of approximately $190.0 million related to our Brazil operations in order to write down the carrying value of Brazil’s disposal group to its estimated fair value.

We also recorded an additional loss of $10.0 million related to our held-for-sale Honduras group, in order to write down its carrying value to the estimated fair value based on the sale agreement that was signed in October 2020.

These losses are included in Gain (loss) on sale of discontinued operations before taxes, net.

On September 10, 2020, we completed the divestiture of our operations in Chile, resulting in a pre-tax loss of approximately $344.5 million that related primarily to the accumulated foreign currency translation losses associated with the Chilean operations.

On September 29, 2020, we completed the sale of our operations in Malaysia, which resulted in a pre-tax gain of approximately $45.2 million.

In early October 2020, we received a payment for $8.4 million, representing a portion of the $15.0 million deferred purchase price related to the sale of our operations in Turkey in August 2019.

At the time of the sale, the Company determined that this deferred purchase price would be recognized if collected.

Accordingly, as of September 30, 2020, the Company recorded a receivable of $8.4 million through a reduction of the loss on sale for Turkey.

The remaining deferred purchase price will be recognized when collected.

Results of Operations

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Summary Comparison of Consolidated Results

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

Six Months Ended June 30, 2021

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

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

Nine Months Ended September 30, 2021

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

As a result of the impairment test, the Company concluded that the estimated fair value of the Laureate tradename was less than its carrying value by approximately $51.4 million and recorded an impairment charge for that amount.

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

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

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

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

This loss is included in other non-operating expense in the year-to-date table below.

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

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

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

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

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

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

During the third quarter of 2020, the Company recognized an impairment charge of $320.0 million on the Laureate tradename, an intangible asset.

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

Better/(Worse)

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Loss on impairment of assets 3.3 323.4 99 %

Operating income 57.7 29.1 98 %

Operating income (loss) 35.1 (318.2) 111 %

Interest expense, net of interest income (2.4) (24.0) 90 %

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

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

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

Loss from continuing operations (115.9) (11.6) nm

Other non-operating income (expense) 5.2 (1.0) nm

Income (loss) from continuing operations before income taxes 37.7 (343.2) 111 %

Income tax (expense) benefit (48.1) 72.2 (167) %

Loss from continuing operations (10.4) (271.0) 96 %

Income (loss) from discontinued operations, net of tax 370.5 (513.4) 172 %

Net loss (29.2) (311.6) 91 %

Net loss attributable to noncontrolling interests 0.2 3.8 95 %

Net loss attributable to Laureate Education, Inc.

Net income (loss) 360.1 (784.4) 146 %

Net loss attributable to noncontrolling interests 0.3 — nm

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

$ 360.4 $ (784.4) 146 %

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

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

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

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

Revenues increased by $24.2 million to $267.7 million for the three months ended September 30, 2021 (the 2021 fiscal quarter) from $243.5 million for the three months ended September 30, 2020 (the 2020 fiscal quarter).

Average total organic enrollment at a majority of our institutions increased during the 2021 fiscal quarter, mainly in the Peru segment, increasing revenues by $36.6 million compared to the 2020 fiscal quarter.

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

Other Corporate and Eliminations changes accounted for an increase in revenues of $3.0 million.

These increases in revenues were partially offset by the effect of a net change in foreign currency exchange rates, which decreased revenues by $7.4 million, driven by the weakening of the Peruvian Nuevo Sol against the USD.

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

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

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

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

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

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

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

Additionally, the effect of changes in tuition rates and enrollments in programs at varying price points (product mix), pricing and timing decreased revenues by $8.0 million compared to the 2020 fiscal quarter.

Direct costs and general and administrative expenses combined decreased by $9.1 million to $229.3 million for the 2021 fiscal quarter from $238.4 million for the 2020 fiscal quarter.

The effect of operational changes decreased costs by $13.8 million, mainly driven by cost-saving initiatives, partially offset by higher amortization expense at Corporate, mostly related to the amortization of the finite-lived tradename.

These increases in direct costs were partially offset by the effect of a net change in foreign currency exchange rates, which increased costs by $1.4 million.

Corporate and Eliminations expenses also accounted for an increase in costs of $3.4 million.

Operating income (loss) changed by $353.3 million to income of $35.1 million for the 2021 fiscal quarter from a loss of $(318.2) million for the 2020 fiscal quarter.

This increase in operating income was primarily driven by the impairment charges recorded during the 2020 fiscal quarter, related to the Laureate tradename impairment that was recognized during the 2020 fiscal quarter, combined with higher operating income at our Peru segment and our Mexico segment for the 2021 fiscal quarter.

Interest expense, net of interest income decreased by $21.6 million to $2.4 million for the 2021 fiscal quarter from $24.0 million for the 2020 fiscal quarter.

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

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

This increase was primarily attributable to:

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

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

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

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

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

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

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

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

Other non-operating income (expense) changed by $6.2 million to income of $5.2 million for the 2021 fiscal quarter from an expense of $(1.0) million for the 2020 fiscal quarter.

This change was primarily attributable to gain on foreign currency exchange during the 2021 fiscal quarter compared to a loss during the 2020 fiscal quarter, for a change of $9.0 million.

This increase in other non-operating income was partially offset by loss on disposal of subsidiaries during the 2021 fiscal quarter, compared to a gain during the 2020 fiscal quarter for a change of $1.5 million, and other non-operating income of $1.3 million during the 2020 fiscal quarter.

Income tax (expense) benefit changed by $120.3 million to an expense of $(48.1) million for the 2021 fiscal quarter from an income tax benefit of $72.2 million for the 2020 fiscal quarter.

This change in income tax was primarily due to changes in the mix of pre-tax book income attributable to taxable and non-taxable entities in various taxing jurisdictions, as well as additional tax expense in the 2021 fiscal quarter for changes in estimate associated with provision-to-return adjustments related to the GILTI high-tax exception regulations.

Income (loss) from discontinued operations, net of tax changed by $883.9 million to income of $370.5 million for the 2021 fiscal quarter from a loss of $(513.4) million for the 2020 fiscal quarter.

This change was primarily driven by the gain on sale of Walden University during the 2021 fiscal quarter, combined with charges recorded during the 2020 fiscal quarter to write down certain held-for-sale disposal groups to fair value.

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

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

Comparison of Consolidated Results for the Nine Months Ended September 30, 2021 and 2020

Better/(Worse)

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Loss on impairment of assets 67.2 350.9 81 %

Operating loss (28.7) (47.9) 40 %

Operating income (loss) 6.4 (366.2) 102 %

Interest expense, net of interest income (38.3) (74.1) 48 %

Other non-operating (expense) income (84.7) 70.1 nm

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

Loss from continuing operations before income taxes and equity in net income of affiliates (116.6) (370.2) 69 %

Income tax (expense) benefit (174.2) 293.5 (159) %

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

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

Loss from continuing operations (290.8) (76.5) nm

Income (loss) from discontinued operations, net of tax 456.8 (921.2) 150 %

Net loss (194.2) (213.3) 9 %

Net income (loss) 166.0 (997.7) 117 %

Net loss attributable to noncontrolling interests 0.5 5.1 90 %

Net loss attributable to Laureate Education, Inc.

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

$ 166.5 $ (992.7) 117 %

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

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

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

Comparison of Consolidated Results for the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020

Revenues increased by $50.3 million to $790.0 million for the nine months ended September 30, 2021 (the 2021 fiscal period) from $739.7 million for the nine months ended September 30, 2020 (the 2020 fiscal period).

The effect of product mix, pricing and timing increased revenues by $29.4 million for the 2021 fiscal period.

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Other Corporate and Eliminations changes accounted for an increase in revenues of $3.5 million.

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

These increases in revenues were partially offset by the effect of a net change in foreign currency exchange rates, which decreased revenues by $17.9 million, as a result of the weakening of the Peruvian Nuevo Sol against the USD.

Direct costs and general and administrative expenses combined decreased by $38.5 million to $716.4 million for the 2021 fiscal period from $754.9 million for the 2020 fiscal period.

The effect of operational changes decreased direct costs by $27.9

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

The effect of operational changes decreased direct costs by $41.6 million, mainly driven by cost-saving initiatives, partially offset by higher amortization expense at Corporate, mostly related to the amortization of the finite-lived tradename.

The effect of a net change in foreign currency exchange rates decreased costs by $0.2 million.

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Partially offsetting these decreases in direct costs were changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets, which resulted in a year-over-year increase in direct costs of $7.3 million.

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

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

Operating income (loss) changed by $372.6 million to an income of $6.4 million for the 2021 fiscal period from a loss of $(366.2) million for the 2020 fiscal period.

This change was primarily a result of lower impairment loss during the 2021 fiscal period of $283.7 million, related to the Laureate tradename impairment recognized during the 2020 fiscal period, combined with higher operating income at our Peru segment and lower operating loss at our Mexico segment.

Interest expense, net of interest income decreased by $35.8 million to $38.3 million for the 2021 fiscal period from $74.1 million for the 2020 fiscal period.

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

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

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

(3) less gain on foreign currency exchange of $52.3 million;

and (4) the year-over-year effect of other non-operating expense of $1.0 million during the 2020 fiscal period.

These increases in other non-operating expense were partially offset by a lower loss on disposal of subsidiaries of $0.3 million during the 2021 fiscal period.

Income tax (expense) benefit changed by $467.7 million to an expense of $(174.2) million for the 2021 fiscal period from a benefit of $293.5 million for the 2020 fiscal period.

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

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

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

This change was primarily attributable to a nonrecurring discrete tax benefit of approximately $222 million that was recognized during the 2020 fiscal period related to the tax-basis step up of certain intellectual property that became subject to Dutch taxation in the Netherlands, in addition to tax expense recorded during the 2021 fiscal period of approximately $46.5 million for increases to income tax reserves, and tax expense of approximately $35.7 million for changes in estimate associated with provision-to-return adjustments related to the GILTI high-tax exception regulations.

The majority of the remaining difference is attributable to the change in pretax earnings.

Income (loss) from discontinued operations, net of tax changed by $1,378.0 million to income of $456.8 million for the 2021 fiscal period from a loss of $(921.2) million for the 2020 fiscal period.

This change was primarily driven by the gain on sale of Walden University during the 2021 fiscal period, combined with impairment charges recorded during the 2020 fiscal period and charges recorded during the 2020 fiscal period to write down certain held-for-sale disposal groups to fair value.

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

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Adjusted EBITDA is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans.

In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business.

In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-

to-period comparisons of our core business.

Additionally, Adjusted EBITDA is a key financial measure used by the compensation committee of our board of directors and our Chief Executive Officer in connection with the payment of incentive compensation to our executive officers and other members of our management team.

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

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

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

Better/(Worse)

(in millions) 2021 2020 2021 vs.

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

Income tax expense 13.2 8.7 (52) %

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

Foreign currency exchange loss, net 15.5 4.7 nm

Other expense, net 0.1 0.4 75 %

Loss on derivatives 53.8 1.4 nm

Loss on debt extinguishment 77.9 — nm

Loss from continuing operations $ (10.4) $ (271.0) 96 %

Income tax expense (benefit) 48.1 (72.2) (167) %

Income (loss) from continuing operations before income taxes 37.7 (343.2) 111 %

Loss (gain) on disposal of subsidiaries, net 0.9 (0.6) nm

Foreign currency exchange (gain) loss, net (6.1) 2.9 nm

Other income, net — (1.3) (100) %

Interest expense 3.7 24.7 85 %

Interest income (1.3) (0.7) 86 %

Operating income 57.7 29.1 98 %

Operating income (loss) 35.1 (318.2) 111 %

Depreciation and amortization 25.9 18.2 (42) %

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

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

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

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

It included the establishment of regional shared services organizations (SSOs), as well as improvements to the Company's system of internal controls over financial reporting.

The EiP initiative also includes other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure, an enterprise-wide program aimed at revenue growth, and certain non-recurring costs incurred in connection with the planned and completed dispositions.

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

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

Depreciation and amortization increased by $7.7 million to $25.9 million for the 2021 fiscal quarter from $18.2 million for the 2020 fiscal quarter.

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When combined with other items, this change increased depreciation and amortization by $7.8 million.

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

This increase was partially offset by the effects of foreign currency exchange, which decreased depreciation and amortization expense by $0.1 million for the 2021 fiscal quarter.

Share-based compensation expense decreased by $0.6 million to $2.0 million for the 2021 fiscal quarter from $2.6 million for the 2020 fiscal quarter.

EiP implementation expenses decreased by $14.8 million to $9.6 million for the 2021 fiscal quarter from $24.4 million for the 2020 fiscal quarter.

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

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

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

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

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

Better/(Worse)

(in millions) 2021 2020 2021 vs.

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

Loss from continuing operations $ (290.8) $ (76.5) nm

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

Income tax expense (benefit) 174.2 (293.5) (159) %

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

Loss from continuing operations before income taxes and equity in net income of affiliates (116.6) (370.2) 69 %

Loss on disposal of subsidiaries, net 0.9 1.2 25 %

Foreign currency exchange gain, net (18.7) (71.1) (74) %

Other expense, net — 0.5 100 %

Other expense (income), net 0.1 (0.8) (113) %

Loss on derivatives 24.5 0.6 nm

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Interest income (2.5) (1.6) 56 %

Operating loss (28.7) (47.9) 40 %

Operating income (loss) 6.4 (366.2) 102 %

Depreciation and amortization 75.6 55.9 (35) %

EBITDA 21.0 (10.1) nm

EBITDA 82.0 (310.3) 126 %

Share-based compensation expense (a)

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

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

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

It included the establishment of regional shared services organizations (SSOs), as well as improvements to the Company's system of internal controls over financial reporting.

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

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

Depreciation and amortization increased by $19.7 million to $75.6 million for the 2021 fiscal period from $55.9 million for the 2020 fiscal period.

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We have two reportable segments:

Mexico and Peru (formerly Andean), as discussed in Overview.

Mexico and Peru, as discussed in Overview.

For purposes of the following comparison of results discussion, “ segment direct costs ” represent direct costs incurred by the segment as they are included in Adjusted EBITDA, such that depreciation and amortization expense, loss on impairment of assets, share-based compensation expense and our EiP implementation expenses have been excluded.

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Better/(Worse)

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

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

Mexico $ 131.3 $ 115.9 13 %

Peru 133.1 127.3 5 %

Corporate 1.6 1.4 14 %

Corporate 3.3 0.3 nm

Consolidated Total Revenues $ 267.7 $ 243.5 10 %

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Consolidated Total Adjusted EBITDA $ 75.9 $ 50.4 51 %

nm - percentage changes not meaningful

(in millions) % Change

Better/(Worse)

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

For the nine months ended September 30, 2021 2020 2021 vs.

Mexico $ 390.9 $ 385.0 2 %

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Financial Overview

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

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

(in millions) Revenues Direct Costs Adjusted EBITDA

June 30, 2020 $ 114.9 $ 95.2 $ 19.7

September 30, 2020 $ 115.9 $ 100.4 $ 15.5

Organic enrollment (1)

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Dispositions — — —

June 30, 2021 $ 124.3 $ 107.1 $ 17.2

September 30, 2021 $ 131.3 $ 104.3 $ 27.0

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

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

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

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

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

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

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

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

Revenues increased by $15.4 million, a 13% increase from the 2020 fiscal quarter.

• Organic enrollment increased during the fiscal quarter by 4%, increasing revenues by $4.3 million.

• Revenues represented 50% of our consolidated total revenues for the 2021 fiscal quarter compared to 48% for the 2020 fiscal quarter.

Adjusted EBITDA increased by $11.5 million, a 74% increase from the 2020 fiscal quarter.

Comparison of Mexico Results for the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020

(in millions) Revenues Direct Costs Adjusted EBITDA

June 30, 2020 $ 269.1 $ 226.1 $ 43.0

September 30, 2020 $ 385.0 $ 326.5 $ 58.5

Organic enrollment (1)

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Dispositions — — —

June 30, 2021 $ 259.7 $ 225.2 $ 34.5

September 30, 2021 $ 390.9 $ 329.4 $ 61.5

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

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

Revenues increased by $5.9 million, a 2% increase from the 2020 fiscal period.

• Organic enrollment decreased during the 2021 fiscal period by 1%, decreasing revenues by $5.6 million.

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

• The Mexican peso strengthened against the USD during the 2021 fiscal period compared to the 2020 fiscal period, increasing revenue by $26.8 million .

• Revenues represented 49% of our consolidated total revenues for the 2021 fiscal period, compared to 52% for the 2020 fiscal period.

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

Adjusted EBITDA increased by $3.0 million, a 5% increase from the 2020 fiscal period.

Financial Overview

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

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

(in millions) Revenues Direct Costs Adjusted EBITDA

June 30, 2020 $ 187.6 $ 88.4 $ 99.2

September 30, 2020 $ 127.3 $ 70.8 $ 56.5

Organic enrollment (1)

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Dispositions — — —

June 30, 2021 $ 201.7 $ 88.1 $ 113.6

September 30, 2021 $ 133.1 $ 62.3 $ 70.8

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

Revenues increased by $5.8 million, a 5% increase from the 2020 fiscal quarter.

• Organic enrollment increased during the 2021 fiscal quarter by 27%, increasing revenues by $32.3 million.

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

• Revenue represented 50% of our consolidated total revenues for the 2021 fiscal quarter compared to 52% for the 2020 fiscal quarter.

Adjusted EBITDA increased by $14.3 million, a 25% increase from the 2020 fiscal quarter.

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

Comparison of Peru Results for the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020

(in millions) Revenues Direct Costs Adjusted EBITDA

June 30, 2020 $ 224.1 $ 151.6 $ 72.5

September 30, 2020 $ 351.4 $ 222.4 $ 129.0

Organic enrollment (1)

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Dispositions — — —

June 30, 2021 $ 259.2 $ 134.0 $ 125.2

September 30, 2021 $ 392.3 $ 196.3 $ 196.0

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Adjusted EBITDA increased by $67.0 million, a 52% increase from the 2020 fiscal period.

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

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

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

Better/(Worse)

(in millions) 2021 2020 2021 vs.

Revenues $ 1.6 $ 1.4 14 %

Revenues $ 3.3 $ 0.3 nm

Expenses 25.3 21.9 (16) %

Adjusted EBITDA $ (22.0) $ (21.6) (2) %

Adjusted EBITDA increased by $1.1 million, a 4% increase from the 2020 fiscal quarter.

• Cost-reduction efforts led to reduced labor costs and other professional fees, decreasing expenses by $3.5 million compared to the 2020 fiscal quarter.

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

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

Adjusted EBITDA decreased by $0.4 million, a 2% decrease from the 2020 fiscal quarter.

Comparison of Corporate Results for the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020

Better/(Worse)

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

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

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

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

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

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

Our primary source of cash is revenue from tuition charged to students in connection with our various education program offerings.

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

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

As of September 30, 2021, our secondary source of liquidity was cash and cash equivalents of $1,856.9 million.

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

As discussed further below, on October 29, 2021, the Company paid a special cash distribution to shareholders of approximately $1,271.8 million.

The Company also maintains a revolving credit facility with a syndicate of financial institutions as a source of liquidity.

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On March 8, 2021, we completed the divestiture of our operations in Honduras and received proceeds of approximately $24.0 million, net of cash sold and closing costs.

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

In 2018, we completed the sale of LEI Lie Ying Limited in China.

At the closing of the sale, a portion of the total transaction value was paid into an escrow account, to be distributed to the Company pursuant to the terms and conditions of the escrow agreement.

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

Pending Sale Transaction

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

The closing of this transaction is expected to occur 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.

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

On August 12, 2021, we completed the sale of Walden University and received proceeds of approximately $1,397.2 million, net of cash sold, transaction fees, and certain closing adjustments.

At closing, the Company also recorded a receivable of $74.0 million, representing a 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 $83.6 million of restricted cash on the Company's balance sheet related to collateralized regulatory obligations is expected to be released within the next twelve months.

As described in Note 12, Stockholders’ Equity, in our consolidated financial statements included elsewhere in this Form 10-Q, on October 29, 2021, the Company paid a special cash distribution to shareholders of approximately $1,271.8 million.

In addition, the Company anticipates that it will pay approximately $170 million in estimated taxes and fees due on prior sales (including Walden University).

We expect that the majority of the taxes and fees will be paid during the fourth quarter of 2021.

On September 10, 2020, we completed the divestiture of our operations in Chile.

Under the terms of the agreement, the purchase price included a note receivable of $21.5 million that was payable one year from the date of divestiture.

We collected this receivable in September 2021.

Liquidity Restrictions

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

Our liquidity is affected by restricted cash balances, which totaled $105.0 million and $117.2 million as of September 30, 2021 and December 31, 2020, respectively.

Indefinite Reinvestment of Foreign Earnings

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

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

These amounts above do not include $105.2

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

As of September 30, 2021, $295.5 million of our total $1,856.9 million of cash and cash equivalents were held by foreign subsidiaries.

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

4 unchanged sentences

operating lease obligations;

payments of deferred compensation;

payments of income taxes;

deferred compensation;

working capital;

1 unchanged sentence

capital expenditures;

repurchase of the Company’s common stock;

and business development activities.

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and payments of other third-party obligations.

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

As of September 30, 2021, our debt obligations included lines of credit and short-term borrowing arrangements of subsidiaries, mortgages payable and notes payable, which totaled $119.2 million.

In addition, our finance lease obligations and sale-leaseback financings were $46.5 million.

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

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

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

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

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

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

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

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

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

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

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

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

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

As of September 30, 2021 and December 31, 2020, the present value of operating lease liabilities was $459.5 million and $519.1 million, respectively.

These amounts exclude operating lease liabilities for our Discontinued Operations of $12.0 million and $151.4 million as of September 30, 2021 and December 31, 2020, respectively.

Capital Expenditures

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Our capital expenditure program is a component of our liquidity and capital management strategy.

This program includes discretionary spending, which we can adjust in response to economic and other changes in our business environment, to grow our network through the following:

This program includes discretionary

spending, which we can adjust in response to economic and other changes in our business environment, to grow our business through the following:

(1) capacity expansion at institutions to support enrollment growth;

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

We believe that our internal sources of cash and our

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

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

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

Our total capital expenditures for our Continuing and Discontinued Operations, excluding receipts from the sale of subsidiaries and property equipment, were $32.9 million and $74.3 million during the nine months ended September 30, 2021 and 2020, respectively.

The 56% decrease in capital expenditures was primarily due to the completed divestitures, as well as a targeted reduction and deferral across all business lines to preserve cash as a result of the COVID-19 pandemic.

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

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

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

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

Stock Repurchase Program

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

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

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

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

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

1 unchanged sentence

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.

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

As of September 30, 2021, the approximate dollar value of shares yet to be purchased under this stock repurchase program was $71.0 million.

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

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

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

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

(in millions) 2021 2020

6 unchanged sentences

Net change in cash and cash equivalents and restricted cash $ 1,094.6 $ 649.8

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

Comparison of Cash Flows for the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020

Operating Activities

Cash provided by operating activities decreased by $167.8 million to $54.0 million for the 2021 fiscal period, from $221.8 million for the 2020 fiscal period.

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

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

Additionally, cash paid for taxes increased by $33.0 million, from $62.0 million for the 2020 fiscal period to $95.0 million for the 2021 fiscal period, primarily related to the payment of withholding taxes for intercompany loans that were capitalized during the 2021 fiscal period.

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Cash flows from investing activities increased by $2,088.6 million to investing cash inflow of $2,054.4 million for the 2021 fiscal period from investing cash outflow of $(34.2) million for the 2020 fiscal period.

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

This increase in investing cash was attributable to higher cash receipts from the sales of Discontinued Operations of $2,097.6 million, from $40.1 million during the 2020 fiscal period (for the net effect of the sales of NSAD and our operations in Costa Rica, Chile and Malaysia, and the receipt of a portion of the escrow receivable balance related to the 2018 sale of our China operations) to $2,137.7 million, net, during the 2021 fiscal period (primarily for the sale Walden University, our operations in Honduras and Brazil, the receipt of the note receivable related to the 2020 divestiture of our Chilean operations, and the receipt of portions of the purchase prices that were withheld in connection to the 2018 sale of our China operations and the 2020 sale of our Malaysia operations).

In addition, cash used for capital expenditures decreased $41.4 million compared to the 2020 fiscal period.

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

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

Financing Activities

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

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

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

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

5 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis