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Item 7. Management’s Discussion and Analysis

2022-02-24 compared with 2021-02-25 · 266 added, 369 removed, 579 unchanged (52% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our results of operations and financial condition with the audited historical consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K (or, Form 10-K).

This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Item 1A.

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Actual results may differ materially from those contained in any forward-looking statements.

See “Forward-Looking Statements.”

See “Forward-Looking Statements” on page 2 of this Form 10-K.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (the ‘‘MD&A’’) is provided to assist readers of the financial statements in understanding the results of operations, financial condition and cash flows of Laureate Education, Inc.

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

Collectively, we have approximately 336,500 students enrolled at five institutions in these two countries, which represent our Continuing Operations as of December 31, 2020.

Collectively, we have approximately 388,500 students enrolled at five institutions in these two countries, which represent our Continuing Operations.

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

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We have two reportable segments as described below.

We group our institutions by geography in:

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

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.

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

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

In addition, regulatory activity in response to COVID-19 could have an adverse effect on our business if, for example, legislation was passed to suspend or reduce student tuition payments in any of the markets in which we operate.

As a result, the full impact of COVID-19 and the scope of any adverse effect on the Company’s operations, including any potential impairments, which could be material, cannot be fully determined at this time.

See also “Item 1A—Risk Factors—An epidemic, pandemic or other public health emergency, such as the recent outbreak of a novel strain of coronavirus (COVID-19), could have a material adverse effect on our business, financial condition, cash flows and results of operations.”

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

After the novel coronavirus (“COVID-19”) outbreak was declared a pandemic in March 2020, we closed all of our physical campuses in a matter of a few short weeks, and all of our students were effectively transitioned to an online learning environment, and our staff and faculty were effectively moved to a fully remote environment.

The vast majority of our campuses have remained closed throughout this ongoing pandemic.

We believe that our institutions have a competitive advantage in online and distance learning given the investments that we have made in digital learning platforms in prior years and believe that we are well-positioned to continue to serve our students during and after the pandemic.

We have recently commenced a return to campus where safe and appropriate to do so, implementing a range of precautions, in accordance with local laws, regulations and health guidelines, to protect the health and safety of our students, faculty and staff.

Most of our universities are expecting to adopt a phased approach, prioritizing classes that require in-person technical teaching (such as in our interactive labs).

We will continue to monitor the situation and adjust based on what is most appropriate for each market.

See also “Item 1A—Risk Factors—“An epidemic, pandemic or other public health emergency, such as the current global coronavirus (COVID-19) outbreak and the efficacy and distribution of COVID-19 vaccines in the locations in which we operate could have a material adverse effect on our business, financial condition, cash flows and results of operations.”

Discontinued Operations

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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.

As a result of these efforts to explore strategic alternatives, d uring the third quarter of 2020, the Company announced that it had completed a sale of its operations in Chile and had signed agreements to sell its operations in Brazil, Australia and New Zealand, as well as Walden University, its fully online higher education institution in the United States.

As a result of these efforts to explore strategic alternatives, during the third quarter of 2020, the Company announced that it had completed a sale of its operations in Chile and had signed agreements to sell its operations in Brazil, Australia and New Zealand, as well as Walden University, its fully online higher education institution in the United States.

This also represented a strategic shift that had a major effect on the Company’s operations and financial results.

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

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

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

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

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

As noted above, during the third quarter of 2020, we signed agreements to sell Walden University and divest our operations in Australia and New Zealand, and Brazil.

In October 2020, we entered into an agreement to sell our operations in Honduras.

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

We have not yet completed the divestitures of Walden University or our subsidiaries in Honduras and Brazil.

Our Discontinued Operations are excluded from the segment 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.

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-K.

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

During 2020, the Company recorded impairment charges for certain subsidiaries while they were still classified as held and used, and also recorded charges on disposal groups classified as held-for-sale.

See Note 4, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-K for discussion of the charges recorded during 2020 for our operations in Chile, Honduras and Brazil.

While the Company explores strategic alternatives for its remaining Continuing Operations, and until the held-for-sale criteria are met, the long-lived assets in these businesses continue to be classified as held and used and are evaluated for impairment under that model, based on the cash flows expected to be generated by the use of those asset groups in operations.

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

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

If the Company decides to sell any of its remaining businesses, the carrying value used to evaluate the business for potential write down and to determine the gain or loss on sale will include any accumulated foreign currency translation (FX) losses associated with that business.

In recent years, the U.S.

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

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

As of December 31, 2020 and 2019, the Company’s consolidated FX loss totaled approximately $1.0 billion and $1.1 billion, respectively.

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

In addition, upon classification of a business as held-for-sale, the cumulative translation losses would be included as part of the carrying value of that business when evaluating it for potential write down.

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

Asset Group/ Reporting Unit Foreign Currency Translation Losses As of

(in millions) December 31, 2020 December 31, 2019

Brazil $ 479 $ 407

Mexico 509 461

Total Brazil and Mexico $ 988 $ 868

As discussed in Note 4, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-K, the Company decided to sell its Brazil operations during the third quarter of 2020 and recorded a loss of approximately $190 million to write down the carrying value of the Brazil disposal group to its estimated fair value less costs to sell.

During the fourth quarter of 2020, the Company recorded an additional loss of approximately $15 million in order to write down the carrying value of the Brazil disposal group to its estimated fair value less costs to sell as of December 31, 2020.

While the Company has not agreed to divest our Mexico operations, the substantial amounts of FX losses attributable to this business would have a material effect on the amount of gain or loss that would result from its sale.

Moreover, such FX losses could result in a material loss if the held-for-sale criteria are met and the carrying value of a held-for-sale business exceeds its fair value, less cost to sell.

To date, the Company has not identified impairment indicators related to its Mexico asset group/reporting unit based on the Company’s estimates of future cash flows assuming that the business is held and used.

As a result of the considerations highlighted above and the significant FX losses, the Mexico asset group may be at risk of a material loss if the Company commits to a plan to sell its interests in this business.

Furthermore, additional loss on the Brazil disposal group could be required in future periods depending on changes in Brazil’s carrying value or estimated fair value.

The Company will continue to monitor for impairment indicators as additional information becomes known.

Our segments generate revenues by providing an education that emphasizes profession-oriented fields of study with undergraduate and graduate degrees in a wide range of disciplines.

Our educational offerings are increasingly utilizing online and hybrid (a combination of onli ne and in-classroom) courses and programs to deliver their curriculum.

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

In response to the COVID-19 pandemic, we t ran sitioned the educational delivery method at all of our institutions to be online, leveraging our existing technologies and learning platforms to serve students outside of the traditional classroom setting.

Our institutions are focused on planning for a safe return to campus

when appropriate to do so.

We expect our educational offerings will utilize hybrid (a combination of onli ne and in-classroom) courses and programs to deliver their curriculum .

The Mexico and Peru markets are characterized by what we believe is a significant imbalance between supply and demand.

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Corporate is a non-operating business unit whose purpose is to support operations.

Its departments are responsible for establishing operational policies and internal control standards;

implementing strategic initiatives;

and monitoring compliance with policies and controls throughout our operations.

Its departments are responsible for establishing operational policies and internal control standards, implementing strategic initiatives, and monitoring compliance with policies and controls throughout our operations.

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

The following information for our reportable segments is presented as of December 31, 2021:

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5 388,500 $ 1,086.7 100 %

(1) Amounts related to Corporate, partially offset by the elimination of intersegment revenues, totaled $7.4 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.

The majority of our operations are outside the United States.

(1) Amounts related to Corporate, partially offset by the elimination of inter-segment revenues, totaled $9.2 million and are not separately presented.

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

As a result, we face risks that are inherent in international operations, including:

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and compliance with a wide variety of foreign laws.

See “Item 1A—Risk Factors—Risks Relating to Our Business—We operate a portfolio of degree-granting higher education institutions in Mexico and Peru and are subject to complex business, economic, legal, political, tax and foreign currency risks, which risks may be difficult to adequately address.” There are also risks associated with our decision to divest certain operations.

See “Item 1A—Risk Factors—Risks Relating to Our Business—Our exploration of strategic alternatives and our activities related to previously announced divestitures may disrupt our ongoing businesses, result in increased expenses and present certain risks to the Company.” We plan to grow our Continuing Operations organically by:

See “Item 1A—Risk Factors—Risks Relating to Our Business—We operate a portfolio of degree-granting higher education institutions in Mexico and Peru and are subject to complex business, economic, legal, political, tax and foreign currency risks, which risks may be difficult to adequately address.” We plan to grow our Continuing Operations organically by:

1) adding new programs and course offerings;

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These laws and regulations are subject to updates and changes.

We cannot predict the form of the rules that ultimately may be adopted in the future or what effects they might have on our business, financial condition, results of operations and cash flows.

We cannot predict the form of the rules that ultimately may be adopted in the

future or what effects they might have on our business, financial condition, results of operations and cash flows.

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

See “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,” for a detailed discussion of our different regulatory environments and Note 18, Legal and Regulatory Matters, in our consolidated financial statements included elsewhere in this Form 10-K.

See “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,” for a detailed discussion of our different regulatory environments and Note 17, Legal and Regulatory Matters, in our consolidated financial statements included elsewhere in this Form 10-K.

Key Business Metric

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Institutions in our Mexico segment have their Primary Intake during the third calendar quarter and a Secondary Intake during the first calendar quarter.

Our institutions in Peru are generally

out of session in January, February and July, while institutions in Mexico are generally out of session in May through July.

Our institutions in Peru are generally out of session in January, February and July, while institutions in Mexico are generally out of session in May through July.

Revenues are recognized when classes are in session.

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Additionally, varying levels of discounts and scholarships are offered depending on market-specific dynamics and individual achievements of our students.

Revenues are recognized net of scholarships, other discounts, refunds, waivers and the fair value of any guarantees made by Laureate related to student financing programs.

Revenues are recognized net of scholarships and other discounts, refunds and waivers.

In addition to tuition revenues, we generate other revenues from student fees, dormitory/residency fees and other education-related activities.

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In general, a significant portion of our direct costs tend to be variable in nature and trend with enrollment, and management continues to monitor and improve the efficiency of instructional delivery.

Conversely, as campuses expand, direct costs may grow faster than enrollment growth as infrastructure investments are made in anticipation of future enrollment growth.

General and Administrative Expenses

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Factors Affecting Comparability

Our past experiences provide us with the expertise to further our mission of providing high-quality, accessible and affordable higher education to students by expanding into new markets if opportunities arise, primarily through acquisitions.

Acquisitions have historically affected the comparability of our financial statements from period to period.

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

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

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

We made no acquisitions in 2020 and 2019, and made only a small acquisition in 2018 that had essentially no impact on the comparability of the periods presented for our continued operations.

While we may consider acquisitions in the future if opportunities arise, we have not made any acquisitions in recent years, including from 2019 through 2021.

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

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Foreign Exchange

Institutions in our Continuing Operations are located outside the United States.

These institutions enter into transactions in currencies other than USD and keep their local financial records in a functional currency other than the USD.

While the USD is our reporting currency, our institutions are located in Mexico and Peru and operate in other functional currencies, namely the Mexican peso and Peruvian nuevo sol.

We monitor the impact of foreign currency movements and the correlation between the local currency and the USD.

Our revenues and expenses are generally denominated in local currency.

The USD is our reporting currency and our subsidiaries operate in other functional currencies, namely the Mexican peso and Peruvian nuevo sol.

The principal foreign exchange exposure is the risk related to the

translation of revenues and expenses incurred in each country from the local currency into USD.

The principal foreign exchange exposure is the risk related to the translation of revenues and expenses incurred in each country from the local currency into USD.

See “Item 1A—Risk Factors—Risks Relating to Our Business—Our reported revenues and earnings may be negatively affected by the strengthening of the U.S.

dollar and currency exchange rates.” 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.

The institutions in our portfolio have a summer break, during which classes are generally not in session and minimal revenues are recognized.

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.

Operating expenses, however, do not fully correlate to the enrollment and revenue cycles, as the institutions continue to incur expenses during summer breaks.

Accordingly, our second and fourth quarters are stronger revenue quarters, as our institutions are in session for most of these respective quarters.

Given the geographic diversity of our institutions and differences in timing of summer breaks, our second and fourth quarters are stronger revenue quarters as the majority of our institutions are in session for most of these respective quarters.

Our first and third fiscal quarters are weaker revenue quarters because our institutions have summer breaks for some portion of one of these two quarters.

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Due to this seasonality, revenues and profits in any one quarter are not necessarily indicative of results in subsequent quarters and may not be correlated to new enrollment in any one quarter.

Additionally, seasonality may be affected due to other events, such as the COVID-19 pandemic, which changed the academic calendar at many of our institutions.

Additionally, seasonality may be affected due to other events that could change the academic calendar at our institutions.

See “Item 1A—Risk Factors—Risks Relating to Our Business—We experience seasonal fluctuations in our results of operations.”

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

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

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

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

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Gain on sale of discontinued operations before taxes, net 636.2 25.0 793.5

Pretax (loss) income of discontinued operations (183.8) 1,121.8 668.1

Pretax income (loss) of discontinued operations 721.2 (183.8) 1,121.8

Income tax expense (234.3) (114.3) (33.7)

(Loss) income from discontinued operations, net of tax $ (298.1) $ 1,088.1 $ 562.2

Enrollments at our Discontinued Operations as of December 31, 2020, 2019 and 2018 were 335,500, 575,300 and 680,300, respectively.

Income (loss) from discontinued operations, net of tax $ 486.9 $ (298.1) $ 1,088.1

Year Ended December 31, 2021

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

On January 25, 2018, we completed the sale of LEI Lie Ying Limited (LEILY).

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

In April 2021, the Company received 168.3 million Hong Kong Dollars (approximately $21.7 million at the date of receipt), which represented payment in full for the remainder of the escrow account and resulted in a pretax 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 on sale of discontinued operations before taxes, net.

On May 28, 2021, we completed the sale of our operations in Brazil, which resulted in a pre-tax gain of $33.0 million, including working capital and purchase price adjustments that were completed during the third and fourth quarters of 2021, and contingent consideration that was recognized during the fourth quarter of 2021.

On August 12, 2021, we completed the sale of Walden University, which resulted in a pre-tax gain of $619.4 million, including a working capital settlement completed during the fourth quarter of 2021.

In addition, the Company recognized estimated tax expense of approximately $278.0 million.

Year Ended December 31, 2020

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

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

Accordingly, the Company recorded the receipt of $8.4 million through a reduction of the loss on sale for Turkey.

The remaining deferred purchase price was due in January 2021 and will be recognized when collected.

On November 3, 2020, we completed the sale of our Australia and New Zealand operations, which resulted in a pre-tax gain of approximately $555.8 million.

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On February 12, 2019, we sold our operations in Thailand, which resulted in a gain of approximately $10.8 million.

On January 25, 2018, we completed the sale of LEI Lie Ying Limited (LEILY).

On January 25, 2018, we completed the sale of LEILY.

During the first quarter of 2019, a legal matter, for which the Company had indemnified the buyer and recorded a contingent liability, was settled with no cost to the Company.

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

The sale of the Costa Rica institutions was completed on January 10, 2020.

In early October 2019, we sold Universidad Interamericana de Panamá (UIP), in addition to real estate which served as the campus of UIP, and recognized a gain of approximately $21.0 million.

In October 2019, we sold Universidad Interamericana de Panamá (UIP), in addition to real estate which served as the campus of UIP, and recognized a gain of approximately $21.0 million.

On November 1, 2019, we sold UniNorte, a traditional higher education institution in Manaus, Brazil, which resulted in a loss on sale of approximately $0.3 million.

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

Year Ended December 31, 2018

On January 11, 2018, we sold the operations of European University-Cyprus Ltd (EUC) and Laureate Italy S.r.L.

(Laureate Italy), which resulted in a gain on sale of approximately $218.0 million.

On January 25, 2018, we sold the operations of LEILY, which resulted in a gain on sale of approximately $84.0 million.

On April 12, 2018, we sold the operations of Laureate Germany, which resulted in a loss on sale of approximately $5.5 million.

On April 13, 2018, we sold the operations of Laureate Somed, the operator of Université Internationale de Casablanca, a comprehensive campus-based university in Casablanca, Morocco, and recognized a gain on the sale of approximately $17.4 million.

On August 6, 2018, we sold the operations of Kendall, which resulted in a loss on sale of approximately $17.2 million.

In connection with our goodwill impairment testing in the fourth quarter of 2018, we wrote off the remaining goodwill balance of $3.1 million associated with our operations in the Kingdom of Saudi Arabia, which are now included in Discontinued Operations.

Effective September 30, 2018, the University of Liverpool (Liverpool), an institution in our Online & Partnerships segment, began a teach-out process.

As a result, during the third quarter of 2018, we recorded an impairment charge of $10.0 million related to the fixed assets of this entity that were no longer recoverable based on expected future cash flows.

As noted, the entire Online & Partnerships segment is now classified in discontinued operations.

Results of Operations

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Year Ended December 31, 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, the Company fully repaid the remaining balance outstanding under its 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 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.

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

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

This loss is included in Other non-operating expense in the table below.

In December 2021, the Company completed a lease termination agreement with the landlord of our Kendall property in Chicago, Illinois.

In connection with the lease termination agreement, we recorded a loss of approximately $25.8 million, which is included in Excellence-in-Process (EiP) expenses within Operating (loss) income in the table below.

Year Ended December 31, 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, as described in Note 8, Goodwill and Other Intangible Assets, in our consolidated financial statements included elsewhere in this Form 10-K.

During the second quarter of 2020, the Company recorded an impairment charge of approximately $23.8 million related to the Brazil enrollment to graduation cycle ( E2G) software assets that were recorded on the Corporate segment, as described in Note 7, Goodwill and Other Intangible Assets, in our consolidated financial statements included elsewhere in this Form 10-K.

During the third quarter of 2020, the Company recognized an impairment charge of $320.0 million on the Laureate tradename, an intangible asset, as described in Note 7, Goodwill and Other Intangible Assets, in our consolidated financial statements included elsewhere in this Form 10-K.

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During the fourth quarter of 2020, the Company dissolved a dormant subsidiary, resulting in the release of accumulated foreign currency translation loss of approximately $6.1 million.

This loss is included in Other non-operating (expense) income in the table below and is part of Continuing Operations as this entity was not part of the strategic shifts described above in Overview.

This loss is included in Other non-operating expense in the table below and is part of Continuing Operations as this entity was not part of the strategic shifts described above in Overview.

Year Ended December 31, 2019

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In connection with this debt repayment, the Company recorded a loss on debt extinguishment of $6.3 million, primarily related to the write off of a pro-rata portion of the unamortized deferred financing costs associated with the repaid debt balances.

This loss is included in Other non-operating (expense) income in the table below.

This loss is included in Other non-operating expense in the table below.

During the second quarter of 2019, we fully repaid the remaining balance outstanding under our 2024 Term Loan, using the proceeds received from the sales of our operations in India, Spain and Portugal.

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In connection with these debt repayments, the Company recorded a loss on debt extinguishment of $15.6 million related to the write off of a pro-rata portion of the unamortized deferred financing costs associated with the repaid debt balances, as well as the debt discount associated with the 2024 Term Loan.

This loss is included in Other non-operating (expense) income in the table below.

This loss is included in Other non-operating expense in the table below.

During the third and fourth quarters of 2019, we dissolved several dormant subsidiaries, resulting in the release of accumulated foreign currency translation loss of approximately $37.5 million.

This loss is included in Other non-operating (expense) income in the table below and is part of Continuing Operations as these entities were not part of the strategic shifts described above in Overview.

Year Ended December 31, 2018

On February 1, 2018, we amended our Senior Secured Credit Facility to reduce the interest rate on our 2024 Term Loan.

In connection with this transaction, we also repaid $350.0 million of the principal balance of the 2024 Term Loan.

As a result of this transaction, the Company recorded a $7.5 million loss on debt extinguishment related to the pro-rata write-off of the term loan's remaining deferred financing costs.

This loss is included in Other non-operating (expense) income in the table below.

This loss is included in Other non-operating expense in the table below and is part of Continuing Operations as these entities were not part of the strategic shifts described above in Overview.

Comparison of Consolidated Results for the Years Ended December 31, 2021, 2020 and 2019

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General and administrative expenses 204.4 199.8 226.3 (2) % 12 %

Loss on impairment of assets 352.0 0.2 — nm nm

Operating (loss) income (329.3) 36.0 (26.8) nm nm

Loss on impairment of assets 72.5 352.0 0.2 79 % nm

Operating (loss) income (4.6) (329.3) 36.0 99 % nm

Interest expense, net of interest income (41.9) (98.7) (121.7) 58 % 19 %

Other non-operating (expense) income (22.8) (33.9) 92.3 33 % (137) %

Other non-operating expense (91.0) (22.8) (33.9) nm 33 %

Loss from continuing operations before income taxes and equity in net income of affiliates (137.5) (450.8) (119.7) 69 % nm

Income tax benefit (expense) 130.1 (31.0) (71.2) nm 56 %

Equity in net income of affiliates, net of tax 0.2 0.2 — — % nm

Income tax (expense) benefit (145.6) 130.1 (31.0) nm nm

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

Loss from continuing operations (283.1) (320.6) (150.5) 12 % (113) %

(Loss) income from discontinued operations, net of tax (298.1) 1,088.1 562.2 (127) % 94 %

Net (loss) income (618.7) 937.7 370.9 (166) % 153 %

Net loss (income) attributable to noncontrolling interests 5.4 0.8 (0.9) nm (189) %

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

Income (loss) from discontinued operations, net of tax 486.9 (298.1) 1,088.1 nm (127) %

Net income (loss) 203.8 (618.7) 937.7 133 % (166) %

Net (income) loss attributable to noncontrolling interests (11.3) 5.4 0.8 nm nm

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

$ 192.4 $ (613.3) $ 938.5 131 % (165) %

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Comparison of Consolidated Results for the Year Ended December 31, 2021 to the Year Ended December 31, 2020

Revenues increased by $61.8 million to $1,086.7 million for 2021 from $1,024.9 million for 2020.

Average total enrollment at a majority of our institutions, mainly in our Peru segment, increased during 2021, increasing revenues by $75.2 million compared to 2020.

The increase in average total enrollment in Peru was attributable to a robust primary intake cycle during 2021 and increased retention rates.

Additionally, the effect of changes in tuition rates and enrollments in programs at varying price points (“product mix”), pricing and timing increased revenues by $19.6 million compared to 2020.

These increases in revenues were partially offset by the effect of a net change in foreign currency exchange rates, which decreased revenues by $34.8 million, due to weakening of the Peruvian nuevo sol against the USD.

Other Corporate and Eliminations changes accounted for an increase in revenues of $1.8 million.

Direct costs and general and administrative expenses combined increased by $16.6 million to $1,018.9 million for 2021 from $1,002.3 million for 2020.

The effect of operational changes increased direct costs by $42.0 million compared to 2020, mainly driven by higher amortization expense at Corporate, mostly related to the amortization of the finite-lived tradename.

Changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in indemnification assets resulted in a year-over-year increase in costs of $7.8 million.

These increases in direct costs were partially offset by a decrease in EiP implementation expense, which decreased direct costs by $14.2 million, driven by cost-saving initiatives.

Additionally, the effect of a net change in foreign currency exchange rates decreased costs by $12.2 million compared to 2020.

Other Corporate and Eliminations expenses accounted for a decrease in costs of $6.8 million in 2021, related to cost-reduction efforts.

Operating loss decreased by $324.7 million to $4.6 million for 2021 from $329.3 million for 2020.

This change was primarily a result of lower impairment charges of $279.5 million, mainly related to the Laureate tradename impairment recognized during 2020.

Additionally, operating income at our Peru and Mexico segments increased during 2021 compared to 2020.

Interest expense, net of interest income decreased by $56.8 million to $41.9 million for 2021 from $98.7 million for 2020.

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 $68.2 million to $91.0 million for 2021 from $22.8 million for 2020.

This increase was attributable to a higher loss on debt extinguishment of $77.3 million, primarily related to the repayment of the Senior Notes due 2025 during 2021.

This increase in other non-operating expense was partially offset by:

(1) a lower loss on disposal of subsidiaries of $6.7 million;

(2) a lower loss on derivative instruments during 2021 of $1.5 million;

(3) a decrease in foreign currency exchange gain of $0.3 million;

and (4) a decrease in other non-operating expense of $0.6 million.

Income tax (expense) benefit changed by $275.7 million to an expense of $(145.6) million for 2021 from a benefit of $130.1 million for 2020.

This change was attributable to tax expense recorded in 2021 of approximately $35.7 million related to amended returns filed for the Company's election to exclude certain foreign income of foreign corporations from GILTI.

In the prior year the Company recorded a $70.9 million tax benefit for this item, resulting in a year-over-year change of approximately $106.6 million.

In addition, the decrease in pre-tax loss in the current year resulted in $76.9 million of less tax benefit as compared to 2020.

Additionally, there was a year-over-year increase in state tax expense of $41.3 million and a year-over-year increase in withholding taxes of $30.0 million.

Income (loss) from discontinued operations, net of tax changed by $785.0 million to income of $486.9 million for 2021 from a loss of $(298.1) million for 2020.

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

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

Net (income) loss attributable to noncontrolling interests changed by $16.7 million to income of $(11.3) million for 2021 from a loss of $5.4 million for 2020.

This change was primarily related to our previous joint venture in Saudi Arabia and the income effect to noncontrolling interests that resulted in 2021 from the settlement of certain intercompany transactions.

Comparison of Consolidated Results for the Year Ended December 31, 2020 to the Year Ended December 31, 2019

Revenues decreased by $187.2 million to $1,024.9 million for 2020 from $1,212.1 million for 2019.

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Average total enrollment at a majority of our institutions decreased during 2020, reducing revenues by $62.3 million compared to 2019.

The effect of changes in tuition rates and enrollments in programs at varying price points (“product mix”), pricing and timing decreased revenues by $38.0 million, mainly driven by an increase in discounts and scholarships as a percentage of revenues in 2020 compared to 2019.

The effect of product mix, pricing and timing decreased revenues by $38.0 million, mainly driven by an increase in discounts and scholarships as a percentage of revenues in 2020 compared to 2019.

Other Corporate and Eliminations changes accounted for a decrease in revenues of $5.1 million.

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Other Corporate and Eliminations expenses accounted for a decrease in costs of $50.4 million in 2020, related to cost-reduction efforts.

Changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in indemnification assets resulted in a year-over-year decrease in costs of $0.8 million.

These decreases in direct costs were partially offset by Excellence-in-Process (EiP) implementation expense, which increased direct costs by $14.6 million.

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 decrease in costs of $0.8 million.

These decreases in direct costs were partially offset by EiP implementation expense, which increased direct costs by $14.6 million.

Operating (loss) income changed by $365.3 million to loss of $(329.3) million for 2020 from income of $36.0 million for 2019.

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

Other non-operating expense decreased by $11.1 million to $22.8 million for 2020, compared to $33.9 million for 2019.

Other non-operating expense decreased by $11.1 million to $22.8 million for 2020 from $33.9 million for 2019.

This decrease was attributable to:

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This change was primarily attributable to a $75.1 million benefit due to the increase in pretax loss, a tax benefit of approximately $70.9 million related to the Company's election to exclude certain foreign income of foreign corporations from GILTI, and a tax benefit for release of valuation allowances for state deferred tax assets of $32.3 million, partially offset by a tax expense of approximately $32.4 million that was recognized during 2020 related to the tax-basis step up of certain intellectual property that became subject to taxation in the Netherlands.

(Loss) income on sales of discontinued operations, net of tax decreased by $1,386.2 million to a loss of $(298.1) million for 2020 from income of $1,088.1 million for 2019, primarily driven by lower gains upon the completion of divestitures in 2020 as compared to 2019, combined with higher losses recorded during 2020 for discontinued operations due to impairments and charges to write held-for-sale disposal groups down to fair value.

(Loss) income from discontinued operations, net of tax changed by $1,386.2 million to a loss of $(298.1) million for 2020, from income of $1,088.1 million for 2019, primarily driven by lower gains upon the completion of divestitures in 2020 as compared to 2019, combined with higher losses recorded during 2020 for discontinued operations due to impairments and charges to write held-for-sale disposal groups down to fair value.

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

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This change was primarily related to our previous joint venture in Saudi Arabia.

Comparison of Consolidated Results for the Year Ended December 31, 2019 to the Year Ended December 31, 2018

Revenues increased by $67.5 million to $1,212.1 million for 2019 from $1,144.6 million for 2018.

This revenue increase was driven by higher average total enrollment at a majority of our institutions, which increased revenues by $34.7 million;

the effect of product mix, pricing and timing, which increased revenues by $33.4 million;

and other Corporate and Eliminations changes, which accounted for an increase in revenues of $10.4 million.

These increases in revenues were partially offset by the effect of a net change in foreign currency exchange rates, which decreased revenues by $11.0 million compared to 2018.

Direct costs and general and administrative expenses combined increased by $4.4 million to $1,175.8 million for 2019 from $1,171.4 million for 2018.

The direct costs increase was due to the overall higher enrollments and costs related to expanding our Continuing Operations, which increased costs by $30.3 million compared to 2018, and changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets, which increased direct costs by $2.2 million.

Partially offsetting these direct costs increases were the effect of a net change in foreign currency exchange rates, which decreased costs by $7.6 million, and other Corporate and Eliminations expenses, which accounted for a decrease in costs of $20.5 million in 2019.

Operating income (loss) changed by $62.8 million to income of $36.0 million for 2019 from loss of $(26.8) million for 2018.

This change to operating income was primarily the result of increased operating income at our Peru segment combined with lower 2019 operating expenses at Corporate.

Interest expense, net of interest income decreased by $63.9 million to $121.7 million for 2019 from $185.6 million for 2018.

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

Other non-operating (expense) income changed by $126.2 million to expense of $(33.9) million for 2019 from income of $92.3 million for 2018.

This change was attributable to:

(1) a decrease in gain on derivative instruments of $80.2 million, primarily related to a gain recorded in 2018 upon the conversion of the Series A Preferred Stock;

(2) a loss on disposal of subsidiaries of $20.4 million in 2019, primarily related to the release of accumulated foreign currency translation upon the dissolution of several dormant subsidiaries;

(3) an increase in loss on debt extinguishment of $15.1 million, related to increased debt repayments in 2019;

(4) a loss on foreign currency exchange in 2019 compared to a gain in 2018, for a change of $8.8 million;

and (5) a decrease in other non-operating income of $1.7 million.

Income tax expense decre ased by $40.2 million to $31.0 million for 2019 from $71.2 million for 2018.

This decrease was primarily due to a year-over-year reduction in withholding tax expense as a result of the redesignation of certain intercompany loans from permanent to temporary during 2018, which increased withholding tax expense in 2018, in addition to a reduction in 2019 withholding tax expense resulting from changes to tax treaties between U.S.

jurisdictions.

Income from discontinued operations, net of tax increased by $525.9 million to $1,088.1 million for 2019, from $562.2 million for 2018, primarily related to higher gains upon the completion of divestitures during 2019 as compared to 2018.

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

Non-GAAP Financial Measure

We define Adjusted EBITDA as income (loss) from continuing operations, before equity in net (income) loss of affiliates, net of tax, income tax expense (benefit), (gain) loss on sale or disposal of subsidiaries, net, foreign currency exchange (gain) loss, net, other (income) expense, net, loss (gain) on derivatives, loss on debt extinguishment, interest expense and interest income, plus depreciation and amortization, share-based compensation expense, loss on impairment of assets and expenses related to implementation of our Excellence-in-Process (EiP) initiative.

When we review Adjusted EBITDA on a segment basis, we exclude inter-segment revenues and expenses that eliminate in consolidation.

Adjusted EBITDA is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures.

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.

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

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.

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Loss from continuing operations $ (283.1) $ (320.6) $ (150.5) 12 % (113) %

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

Income tax (benefit) expense (130.1) 31.0 71.2 nm 56 %

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

Income tax expense (benefit) 145.6 (130.1) 31.0 nm nm

Loss from continuing operations before income taxes and equity in net income of affiliates (137.5) (450.8) (119.7) 69 % nm

Loss on disposal of subsidiaries, net 7.3 20.4 — 64 % nm

Foreign currency exchange (gain) loss, net (13.5) 8.1 (0.7) nm nm

Loss on disposal of subsidiaries, net 0.6 7.3 20.4 92 % 64 %

Foreign currency exchange (gain) loss, net (13.8) (13.5) 8.1 2 % nm

Other expense (income), net 1.7 2.4 (8.9) 29 % (127) %

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Interest income (4.4) (2.2) (3.3) 100 % (33) %

Operating (loss) income (329.3) 36.0 (26.8) nm nm

Operating (loss) income (4.6) (329.3) 36.0 99 % nm

Depreciation and amortization 101.2 83.1 82.0 (22) % (1) %

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Loss on impairment of assets (b)

352.0 0.2 — nm nm

72.5 352.0 0.2 79 % nm

EiP implementation expenses (c)

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(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) around the world, 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 and certain non-recurring costs incurred in connection with the planned and completed dispositions.

Beginning in 2019, EiP also includes expenses associated with an enterprise-wide program aimed at revenue growth.

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 dispositions.

As of December 31, 2021, the EiP initiative had been completed.

The only EiP expenses expected in 2022 are those related to the run out of programs that began in prior periods.

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Years Ended December 31, 2021 and 2020

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Share-based compensation expense decreased by $1.3 million to $8.9 million for 2021 from $10.2 million for 2020.

EiP implementation expenses decreased by $14.2 million to $75.4 million for 2021 from $89.6 million for 2020.

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

The decreases in EiP costs were partially offset by the cost associated with the lease buyout for our Kendall property in Chicago, Illinois, and lease termination for our previous Corporate headquarters in 2021.

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Years Ended December 31, 2020 and 2019

Depreciation and amortization increased by $1.1 million to $83.1 million for 2020 from $82.0 million for 2019.

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

When combined with other items, this increased depreciation and amortization expense by $5.5 million.

Partially offsetting this increase was the effect of foreign currency exchange, which decreased depreciation and amortization expense by $4.4 million for 2020, as compared to 2019.

Share-based compensation expense decreased by $0.1 million to $10.2 million for 2020 from $10.3 million for 2019.

EiP implementation expenses increased by $14.6 million to $89.6 million for 2020 from $75.0 million for 2019.

This increase was primarily attributable to higher legal and consulting fees related to our divestiture activity and the inclusion in EiP of expenses associated with an enterprise-wide program aimed at revenue growth.

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Years Ended December 31, 2019 and 2018

Depreciation and amortization decreased by $2.6 million to $82.0 million for 2019 from $84.6 million for 2018.

Share-based compensation expense increased by $3.7 million to $10.3 million for 2019 from $6.6 million for 2018.

This increase was mostly attributable to the effect of a correction of an immaterial error in the first quarter of 2018, which reduced share-based compensation expense for 2018.

EiP implementation expenses decreased by $0.2 million to $75.0 million for 2019 from $75.2 million for 2018.

Segment Results

We have two reportable segments:

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

For purposes of the following comparison of results discussion, “ segment direct costs ” represent direct costs by 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.

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.

Organic enrollment is based on average total enrollment for the period.

For a further description of our segments, see Overview.

The following tables, derived from our consolidated financial statements included elsewhere in this Form 10-K, presents selected financial information of our reportable segments included in Continuing Operations:

The following tables, derived from our consolidated financial statements included elsewhere in this Form 10-K, present selected financial information of our reportable segments:

(in millions) % Change

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Peru 537.1 482.9 546.8 11 % (12) %

Corporate 7.4 12.5 2.1 (41) % nm

Corporate 9.2 7.4 12.5 24 % (41) %

Consolidated Total Revenues $ 1,086.7 $ 1,024.9 $ 1,212.1 6 % (15) %

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Consolidated Total Adjusted EBITDA $ 253.4 $ 205.7 $ 203.6 23 % 1 %

nm - percentage change not meaningful

Financial Overview

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(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 $118.2 million, an 18% decrease from 2019.

• Organic enrollment decreased during 2020 by 4%, which decreased revenues by $28.8 million, mainly due to impacts from the COVID-19 pandemic.

Revenues increased by $5.8 million, a 1% increase from 2020.

• The Mexican peso strengthened against the USD during 2021 compared to 2020, increasing revenue by $27.0 million.

• Organic enrollment during 2021 remained relatively flat compared to 2020.

• 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.

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Adjusted EBITDA decreased by $17.1 million, a 15% decrease from 2020.

• The overall decrease in Adjusted EBITDA was partially offset by a gain of $5.8 million from the sale of land and buildings at one of our campuses in 2020.

This gain is included in Organic constant currency.

• The decrease in Adjusted EBITDA includes the year-over-year effect of a gain of $5.8 million from the sale of land and buildings at one of our campuses in 2020, which is included in Organic constant currency.

Comparison of Mexico Results for the Year Ended December 31, 2020 to the Year Ended December 31, 2019

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(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 $6.7 million, a 1% increase from 2018.

• The increase in revenues from product mix, pricing and timing was partially offset by a decrease in organic enrollment of 2%, which decreased revenues by $16.0 million.

Revenues decreased by $118.2 million, an 18% decrease from 2019.

• Organic enrollment decreased during 2020 by 4%, which decreased revenues by $28.8 million, mainly due to impacts from the COVID-19 pandemic.

• 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 53% of our consolidated total revenues for 2020 compared to 54% for 2019.

Adjusted EBITDA increased by $4.6 million, a 3% increase from 2018.

Adjusted EBITDA decreased by $34.9 million, a 24% decrease from 2019.

• The overall decrease in Adjusted EBITDA was partially offset by a gain of $5.8 million from the sale of land and buildings at one of our campuses in 2020.

This gain is included in Organic constant currency.

Financial Overview

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Dispositions — — —

Other — (0.1) 0.1

December 31, 2021 $ 537.1 $ 291.4 $ 245.7

(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.

Revenues decreased by $63.9 million, a 12% decrease from 2019.

• Organic enrollment decreased during 2020 by 7%, decreasing revenues by $33.5 million, mainly due to impacts from the COVID-19 pandemic.

• 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.

(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 $54.2 million, an 11% increase from 2020.

• Organic enrollment increased during 2021 by 16%, increasing revenues by $75.2 million, mainly driven by a robust primary intake cycle during 2021 and increased retention rates.

• Revenue represented 50% of our consolidated total revenues for 2021 compared to 47% for 2020.

Adjusted EBITDA decreased by $8.3 million, a 4% decrease from 2019.

Adjusted EBITDA increased by $56.2 million, a 30% increase from 2020.

Comparison of Peru Results for the Year Ended December 31, 2020 to the Year Ended December 31, 2019

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Revenues increased by $50.4 million, a 10% increase from 2018.

• Organic enrollment increased during 2019 by 11%, increasing revenues by $50.7 million.

Revenues decreased by $63.9 million, a 12% decrease from 2019.

• Organic enrollment decreased during 2020 by 7%, decreasing revenues by $33.5 million, mainly due to impacts from the COVID-19 pandemic.

• 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 47% of our consolidated total revenues for 2020 compared to 46% for 2019.

Adjusted EBITDA increased by $28.6 million, a 17% increase from 2018.

Corporate revenues represent amounts from our consolidated joint venture with the University of Liverpool and revenues from transition services agreements related to divestitures, as well as centralized IT costs charged to other business units, partially offset by the elimination of intersegment revenues.

Adjusted EBITDA decreased by $8.3 million, a 4% decrease from 2019.

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 inter-segment revenues.

Operating results for Corporate for the years ended December 31, 2021, 2020 and 2019 were as follows:

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2020 2020 vs.

Revenues $ 7.4 $ 12.5 $ 2.1 (41) % nm

Revenues $ 9.2 $ 7.4 $ 12.5 24 % (41) %

Expenses 97.3 104.1 154.5 7 % 33 %

Adjusted EBITDA $ (88.1) $ (96.7) $ (142.0) 9 % 32 %

nm - percentage change not meaningful

Comparison of Corporate Results for the Year Ended December 31, 2021 to the Year Ended December 31, 2020

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• Labor costs and other professional fees decreased expenses by $23.3 million for 2021 compared to 2020, related to cost-reduction efforts.

• Other items accounted for a decrease in Adjusted EBITDA of $10.2 million, primarily related to a reduction in revenues from the joint venture with the University of Liverpool.

Other items accounted for a decrease in Adjusted EBITDA of $14.7 million.

Comparison of Corporate Results for the Year Ended December 31, 2020 to the Year Ended December 31, 2019

Adjusted EBITDA increased by $30.9 million, an 18% increase from 2018.

Adjusted EBITDA increased by $45.3 million, a 32% increase from 2019.

• Labor costs and other professional fees decreased expenses by $55.5 million for 2020 compared to 2019, related to cost-reduction efforts.

• Other items accounted for a decrease in Adjusted EBITDA of $11.5 million, primarily attributable to the year-over-year impact of the resolution of an earnout liability during 2018 that was related to the 2014 acquisition of Monash South Africa;

the reversal of the earnout liability increased Adjusted EBITDA for 2018.

• Other items accounted for a decrease in Adjusted EBITDA of $10.2 million, primarily related to a reduction in revenues from the joint venture with the University of Liverpool.

Liquidity and Capital Resources

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We anticipate that cash flow from operations and available cash will be sufficient to meet our current operating requirements and manage our liquidity needs, including any effects on the Company’s business operations that arise from the COVID-19 pandemic, for at least the next 12 months from the date of issuance of this report.

As the impact of the COVID-19 pandemic on the economy and our operations continues to evolve, we will continue to assess our liquidity needs.

We continue to assess our liquidity needs as a result of the COVID-19 pandemic.

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.

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Essentially all of our revenues are generated from private pay sources as there are no material government-sponsored loan programs in Mexico or Peru.

We anticipate generating sufficient cash flow from operations in the majority of countries where we operate to satisfy the working capital and financing needs of our organic growth plans for each country.

We anticipate generating sufficient cash flow from operations in the countries in which we operate to satisfy the working capital and financing needs of our organic growth plans for each country.

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 December 31, 2020, our secondary source of liquidity was cash and cash equivalents of $750.1 million, which does not include $270.2 million of cash recorded at subsidiaries that are classified as held for sale at December 31, 2020.

As of December 31, 2021, our secondary source of liquidity was cash and cash equivalents of $324.8 million.

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

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From time to time, we draw down on the revolver, and, in accordance with the terms of the credit agreement, any proceeds drawn on the revolving credit facility may be used for general corporate purposes.

In March 2020, we fully drew down our $410.0 million revolving credit facility in order to increase our cash position and preserve financial flexibility in light of the COVID-19 pandemic.

During the fourth quarter of 2020, following the sale of our operations in Australia and New Zealand, the company fully repaid the outstanding balance of the revolving credit facility.

If certain conditions are satisfied, the Third Amended and Restated Credit Agreement (the Third A&R Credit Agreement) also provides for an incremental revolving and term loan facilities not to exceed $565.0 million plus additional amounts so long as both immediately before and after giving effect to such incremental facilities the Company’s Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, on a pro forma basis, does not exceed 2.75x.

If certain conditions are satisfied, the Third Amended and Restated Credit Agreement (the Third A&R Credit Agreement) also provides for incremental revolving and term loan facilities, at the request of the Company, not to exceed (i) the greater of (a) $565.0 million and (b) 100% of the consolidated EBITDA of the Company, plus (ii) additional amounts so long as both immediately before and after giving effect to such incremental facilities the Company’s Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, on a pro forma basis, does not exceed 2.75x, plus, (iii) the aggregate amounts of any voluntary repayments of term loans, if any, and aggregate amount of voluntary repayments of revolving credit facilities that are accompanied by a corresponding termination or reduction of revolving credit commitments.

Completed Sale Transactions

On January 10, 2020, we completed the sale of our Costa Rica operations and received net proceeds of approximately $15.0 million.

The proceeds received net of cash sold, transaction fees and the working capital adjustment completed during the second quarter of 2020, were approximately $1.8 million.

The Company will also receive up to $5.0 million within two years after the sale if Laureate Costa Rica meets certain performance metrics.

On March 6, 2020, we completed the sale of NSAD, a higher education institution located in California.

At closing, the Company paid subsidies to the buyers of approximately $4.5 million.

Under the terms of the sale agreement, the Company will pay additional subsidies to the buyers of approximately $2.8 million ratably on a quarterly basis over the next four years, beginning on March 31, 2020.

On January 25, 2018, the Company completed the sale of its operations in China, and, at the closing of the sale, a portion of the total transaction value was paid into an escrow account.

As of December 31, 2019, the Company had recorded a receivable of approximately $25.9 million for the portion of the escrowed amount that we expected to receive.

In June 2020, we received 141.6 million Hong Kong Dollars (approximately $18.3 million at the date of receipt) from the escrow, which was offset against the receivable recorded.

Under the terms of the agreement, the remaining escrow receivable amount was due in late January 2021.

The Company is pursuing collection and considers the net receivable remaining to be fully collectable.

On September 11, 2020, we completed the divestiture of our operations in Chile through the transfer of control of our not-for-profit institutions and the sale of our for-profit operations.

The cash proceeds received at closing, prior to transaction fees, were approximately $195.3 million.

In addition, the purchase price included a note receivable of approximately $21.5 million that is payable one year from the date of divestiture.

At the closing date, the Chilean operations had a cash balance (cash sold) of approximately $288.0 million that was transferred to the buyer as part of the transaction.

On September 29, 2020, we completed the sale of our operations in Malaysia and received proceeds of $116.3 million, net of cash sold, but prior to transaction fees.

The cash proceeds included a deposit of $5.0 million that we received from the buyer in February 2020.

In connection with the sale, on October 1, 2020, we made a payment of $13.7 million to the minority owner of Inti Holdings for their 10.10% interest.

On November 3, 2020, we completed the sale of our operations in Australia and New Zealand and received proceeds of approximately $624.2 million, net of cash sold and transaction costs.

In November 2020, one of the Company's subsidiaries in Mexico sold land and buildings for a total purchase price of approximately $13.9 million, prior to transaction fees.

As of December 31, 2020, the Company received approximately $7.0 million of the total purchase price, with the outstanding amount of approximately $6.9 million to be paid before the one-year anniversary of the signing of the agreement.

Pending Sale Transactions

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

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

Department of Education and the Higher Learning Commission and required antitrust approvals.

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

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

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

See also Overview—Regulatory Environment and Other Matters— Department of Justice Voluntary Information Request for Walden University.

On October 13, 2020, the Company entered into a definitive agreement with Fundación Nasser, a not-for-profit foundation in Honduras, to transfer control of its operations in Honduras for total cash consideration of approximately $29.8 million, prior to closing costs.

The buyer will also assume indebtedness which, as of December 31, 2020, was approximately $29.5 million.

The transaction is subject to certain closing conditions, including regulatory approval, and is expected to be completed in the first half of 2021.

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

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

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

The transaction is targeted to close by the end of the second quarter of 2021 and is subject to certain specified closing conditions.

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.

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.

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

On May 28, 2021, we completed the sale of our operations in Brazil and received proceeds of approximately $625.0 million, net of cash sold, transaction fees and settlement of foreign currency swaps.

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

On August 12, 2021, we completed the sale of Walden University and received proceeds of approximately $1,403.5 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 was released during the fourth quarter of 2021.

As described in Note 11, Share-based Compensation and Equity, in our consolidated financial statements included elsewhere in this Form 10-K, in connection with the adoption of a plan of partial liquidation providing for the distribution of the net proceeds from the sale of Walden University, on October 29, 2021, the Company paid a special cash distribution to shareholders of approximately $1,270.0 million, and, on December 28, 2021, the Company paid a special cash distribution to shareholders of approximately $105 million, which primarily consisted of the cash that was released during the fourth quarter of 2021 related to the collateralized regulatory obligations.

In addition, in December 2021, the Company paid approximately $150 million in estimated taxes and fees due on prior sales (including Walden University).

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 $20.8 million and $117.2 million as of December 31, 2021 and 2020, respectively.

Restricted cash consists of cash equivalents held to collateralize a standby letter of credit in favor of the DOE.

This letter of credit was required by the DOE in order to allow Walden and, in 2019, NSAD, to participate in the Title IV program.

As of December 31, 2020 and 2019, we had approximately $83.6 million and $127.3 million, respectively, posted as a letter of credit in favor of the DOE.

As of December 31, 2020, the restricted cash used to collateralize this letter of credit was held by a corporate entity.

As of December 31, 2019, the restricted cash used to collateralize the letter of credit was primarily held by Walden.

Because Walden is classified as a discontinued operation, its restricted cash balances were included in Current assets held for sale on the Consolidated Balance Sheets.

As of December 31, 2020 and 2019, we had EUR 9.4 million (approximately $11.5 million at December 31, 2020) and EUR 5.0 million (approximately $5.5 million at December 31, 2019), respectively, posted as cash-collateral for LOCs related to the Spain Tax Audits.

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 December 31, 2020 and 2019, the total face amount of these surety bonds was $17.1 million and $25.6 million, respectively.

As of December 31, 2019, approximately $17 million of these surety bonds were held at a corporate entity;

however, during 2020, all of the surety bonds were transferred to Walden and were held at Walden at December 31, 2020.

As of December 31, 2021, restricted cash consisted of cash equivalents held to collateralize LOCs related to the Spanish Tax Audits and cash equivalents held as assets for a supplemental employment retention agreement for a former executive.

Indefinite Reinvestment of Foreign Earnings

We earn a significant portion of our income from subsidiaries located in countries outside the United States.

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 part of our business strategies, we have determined that all earnings from our foreign continuing operations will be deemed indefinitely reinvested outside of the United States.

As of December 31, 2021, $272.6 million of our total $324.8 million of cash and cash equivalents were held by foreign subsidiaries.

These amounts above do not include $270.2

million of cash recorded at subsidiaries that are classified as held for sale at December 31, 2020, of which $66.4 million was 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.

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We have analyzed our domestic operation's cash repatriation strategies, projected cash flows, projected working capital and liquidity, and the expected availability within the debt or equity markets to provide funds for our domestic needs.

As a result, we rely on payments from contractual arrangements, such as intellectual property royalty, network fee and management services agreements, as well as repayments of intercompany loans to meet any of our existing or future debt service and other obligations, a substantial portion of which are denominated in USD.

Based on our analysis, we believe we have the ability to indefinitely reinvest these foreign earnings.

If our expectations change based on future developments, including as a result of the announcement on January 27, 2020 to explore strategic alternatives, such that some or all of the undistributed earnings of our foreign subsidiaries may be remitted to the United States in the foreseeable future, we will be required to recognize deferred tax expense and liabilities on those amounts and pay additional taxes.

Based on our analysis, we believe we have the ability to indefinitely reinvest our historical foreign earnings.

If our expectations change based on future developments such that some or all of the undistributed earnings of our foreign subsidiaries may be remitted to the United States in the foreseeable future, we will be required to recognize deferred tax expense and liabilities and pay additional taxes on any amounts that we are unable to repatriate in a tax-free manner.

For Peru, we have recognized deferred tax liabilities of approximately $0.1 million for the portion of the undistributed foreign earnings that are not expected to be indefinitely reinvested outside the United States.

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operating lease obligations;

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

payments of deferred compensation;

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capital expenditures;

repurchase of the Company's common stock;

and business development activities.

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and payments of other third-party obligations.

On April 26, 2017, we completed an offering of $800.0 million aggregate principal amount of 8.250% Senior Notes due 2025 (the Senior Notes due 2025).The Senior Notes due 2025 were issued at par and will mature on May 1, 2025.

Interest on the Senior Notes due 2025 is payable semi-annually on May 1 and November 1, and the first interest payment date was November 1, 2017.

During the fourth quarter of 2020, following the expiration of two cash tender offers, the Company purchased a total of $1.3 million aggregate principal amount of the Senior Notes due 2025, at a purchase price of 100% of the principal amount thereof plus accrued and unpaid interest to, but not including, the purchase dates.

Substantially concurrently with the issuance of the Senior Notes due 2025, we consummated a refinancing of our Senior Secured Credit Facility by means of an amendment and restatement of the existing amended and restated credit agreement (the Second Amended and Restated Credit Agreement) to provide a new revolving credit facility that had an original borrowing capacity of $385.0 million and originally matured in April 2022 (the Revolving Credit Facility), as well as a syndicated term loan of $1,600.0 million that had a maturity date of April 26, 2024 (the 2024 Term Loan).

As previously noted, the 2024 Term Loan was fully repaid in 2019.

The Company entered into the Third A&R Credit Agreement on October 7, 2019.

Among other things, the Third A&R Credit Agreement increased the borrowing capacity of our revolving credit facility from $385.0 million to $410.0 million and extended the maturity date from April 26, 2022 to October 7, 2024.

As of December 31, 2020, senior long-term borrowings totaled $798.7 million, which consisted entirely of the balance outstanding under our Senior Notes due 2025.

As of December 31, 2020, other debt balances totaled $197.6 million and our finance lease obligations and sale-leaseback financings were $52.6 million.

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

Approximately $171.5 million of long-term debt and seller notes, including the current portion, is included in the held-for-sale liabilities recorded on the consolidated balance sheet as of December 31, 2020.

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

As of December 31, 2021, our debt obligations included lines of credit and short-term borrowing arrangements of subsidiaries and notes payable, which totaled $112.1 million.

In addition, our finance lease obligations and sale-leaseback financings were $45.1 million.

Senior Secured Credit Facility

As described above, during the fourth quarter of 2020, the Company fully repaid the outstanding balance of our $410.0 million revolving credit facility, following the sale of our Australia and New Zealand operations.

The revolving credit facility provides for borrowings of $410.0 million and has a maturity date of October 7, 2024.

As of December 31, 2019, the outstanding balance under our senior credit facility was $202.4 million, which consisted entirely of balances outstanding under our $410.0 million revolving credit facility.

As of December 31, 2020 and 2019, the outstanding balance under our Senior Notes due 2025 was $798.7 million and $800.0 million, respectively.

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.

Our senior secured revolving credit facility (the Senior Secured Credit Facility) provides for borrowings of $410.0 million and has a maturity date of October 7, 2024.

As of December 31, 2021 and 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 that applies only to the revolving credit facility (a leverage ratio covenant), as defined in the Third A&R Credit Agreement, unless certain conditions are satisfied.

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

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We were in compliance with these covenants as of December 31, 2021.

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

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

As of December 31, 2021 and 2020, the aggregate outstanding balances on our lines of credit were $10.1 million and $59.0 million, respectively.

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The loan matures in June 2024 and carries a variable interest rate based on TIIE, plus an applicable margin, which is established based on the ratio of debt to EBITDA, as defined in the agreement (8.12% as of December 31, 2021).

Payments on the loan were deferred until December 2018, at which time quarterly principal payments were due, beginning at MXN 42.5 million ($2.1 million at December 31, 2020) and increasing to MXN 76.5 million ($3.9 million at December 31, 2020), with a balloon payment of MXN 425.0 million ($21.4 million at December 31, 2020) due at maturity.

In 2019, this loan was reassigned to another wholly owned subsidiary of the Company in Mexico.

The current quarterly payments on the loan total MXN 68.0 million ($3.3 million at December 31, 2021) and increasing over the remaining term of the loan to MXN 76.5 million ($3.7 million at December 31, 2021), with a balloon payment of MXN 425.0 million ($20.5 million at December 31, 2021) due at maturity.

In 2019, this loan was reassigned to another wholly owned Mexican subsidiary of the Company.

In 2021, the loan was again reassigned to another wholly owned Mexican subsidiary of the Company, following a merger.

As of December 31, 2021 and 2020, the outstanding balance of this loan was $52.5 million and $68.0 million, respectively.

The Company obtained financing to fund the construction of two new campuses at one of our institutions in Peru, Universidad Peruana de Ciencias Aplicadas.

In 2019, the Company repaid the loans except for one, which carries an interest rate of 7.93% and is scheduled to mature in October 2023.

Principal payments, plus accrued and unpaid interest, are made semi-annually in April and October.

In 2019, the Company repaid the loans except for one, which, as of December 31, 2021, carried an interest rate of 5.09% and is scheduled to mature in November 2025.

Over the remaining term of the loan, principal payments, plus accrued and unpaid interest, of approximately $1.4 million are made semi-annually in April and October.

As of December 31, 2021 and 2020, the outstanding balance on the loan was $10.3 million and $13.4 million, respectively.

We have outstanding notes payable at Universidad Privada del Norte (UPN), one of our institutions in Peru.

These loans have varying maturity dates through January 2022 and have interest rates ranging from 2.10% to 7.85%.

As of December 31, 2020 and 2019, these loans had an aggregate balance of $12.7 million and $23.5 million, respectively.

In December 2017, one of our subsidiaries in Peru entered into an agreement to borrow PEN 247.5 million (approximately $76.0 million at the agreement date).

The loan matures in December 2023.

Quarterly payments in the amount of PEN 9.3 million ($2.6 million at December 31, 2020) were due from March 2018 through December 2019.

The quarterly payments increased to PEN 14.4 million ($4.0 million at December 31, 2020) in March 2020 through the loan's maturity in December 2023.

In June 2020, during the COVID-19 pandemic, the quarterly principal payments were suspended until June 2021.

The loan bears interest at a fixed rate of 6.62% per annum and is scheduled to mature in December 2023.

Over the remaining term of the loan, quarterly payments of PEN 14.4 million ($3.6 million at December 31, 2021) are due.

As of December 31, 2021 and 2020, this loan had a balance of $29.0 million and $44.0 million, respectively.

On December 20, 2017, one of our subsidiaries in Brazil entered into an agreement to borrow BRL 360.0 million (approximately $110.0 million at the time of the loan).

The loan was scheduled to mature on December 25, 2022.

In 2020, during the COVID-19 pandemic, quarterly payments were deferred from June to December 2020 and the loan maturity was

extended to July 25, 2023.

Following the deferral of the quarterly payments in 2020, the loan requires total principal payments of BRL 99.0 million ($19.1 million at December 31, 2020) in 2021, BRL 108.0 million ($20.9 million at December 31, 2020) in 2022, and BRL 76.5 million ($14.8 million at December 31, 2020) in 2023.

As of December 31, 2020 and 2019, the loan had a balance of $54.7 million and $75.0 million, respectively.

In addition to this loan, the same Laureate subsidiary in Brazil entered into two additional loans during the year ended December 31, 2019 totaling BRL 190.0 million (approximately $47.5 million at the time of loan).

These loans have maturity dates of April 2021 and November 2021.

As of December 31, 2020 and 2019, the outstanding balance on these loans was $33.8 million and $46.6 million, respectively.

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

These facilities include our corporate headquarters, other office locations, and many of our higher education facilities.

We conduct a significant portion of our operations from leased facilities, including many of our higher education facilities and other office locations.

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

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As of December 31, 2021, the minimum lease payments required during 2022 for our Continuing Operations is $77.1 million.

Due to Shareholders of Acquired Companies

One method of payment for past acquisitions was the use of promissory notes payable to the sellers of the acquired companies.

As of December 31, 2020 and 2019, we recorded $8.6 million and $22.3 million, respectively, for these liabilities, which relate to Discontinued Operations.

Capital Expenditures

Capital expenditures consist of purchases of property and equipment and expenditures for deferred costs.

Capital expenditures primarily consist of purchases of property and equipment.

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

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(2) new campuses for institutions in our existing markets;

(3) information technology to increase efficiency and controls;

and (4) online content development.

and (3) information technology to increase efficiency and controls.

Our non-discretionary spending includes the maintenance of existing facilities.

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Our total capital expenditures for our continuing and discontinued operations, excluding receipts from the sale of subsidiaries and property and equipment, were $56.3 million, $89.2 million and $173.3 million during 2021, 2020 and 2019, respectively.

The 49% decrease in capital expenditures for 2020 compared to 2019 was primarily due to a targeted reduction and deferral across all business lines to preserve cash amid the COVID-19 pandemic, as well as a result of the executed divestitures.

The 33% decrease in capital expenditures for 2019 compared to 2018 was driven mainly by reduced capital expenditures as a result of divestitures, as well as lower spending in Costa Rica, Peru and Brazil due to significant capital expenditures made in prior periods to launch several new campuses in these geographies, and reduced accreditation/regulatory expenditures in Brazil.

The 37% decrease in capital expenditures for 2021 compared to 2020 was primarily due to the completed divestitures.

The 49% decrease in capital expenditures for 2020 compared to 2019 was driven mainly by a targeted reduction and deferral across all business lines to preserve cash amid the COVID-19 pandemic, as well as a result of the executed divestitures.

Laureate Education, Inc.

Deferred Compensation Plan

Laureate maintains a deferred compensation plan to provide certain executive employees and members of our Board of Directors with the opportunity to defer their salaries, bonuses, and Board of Directors' retainers and fees in order to accumulate funds for retirement on a pre-tax basis.

During the first quarter of 2021, the Company's Board of Directors approved the termination of a deferred compensation plan for certain executive employees and members of our Board of Directors, with such termination effective April 1, 2021.

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

The plan allowed participants to defer their salaries, bonuses, and Board of Directors' retainers and fees in order to accumulate funds for retirement on a pre-tax basis.

Participants are 100% vested in their respective deferrals and the earnings thereon.

Laureate does not make contributions to the plan or guarantee returns on the investments.

Although plan investments and participant deferrals are kept in a separate trust account, the assets remain Laureate’s property and are subject to claims of general creditors.

As of December 31, 2021 and 2020, plan assets included in Other assets in our Consolidated Balance Sheets were $1.9 million and $3.1 million, respectively.

As of December 31, 2021 and 2020, the plan liabilities reported in our Consolidated Balance Sheets were $5.1 million and $6.2 million, respectively.

As of December 31, 2020 and 2019, $1.2 million and $1.8 million,

respectively, of the total plan liability was classified as a current liability;

As of December 31, 2021 and 2020, $5.1 million and $1.2 million, respectively, of the total plan liability was classified as a current liability;

the remainder was noncurrent and recorded in Other long-term liabilities.

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 November 5, 2020, Laureate’s Board of Directors approved a new stock repurchase program to acquire up to $300 million of the Company’s common stock.

On April 30, 2021, the Company’s Board of Directors approved an increase of the above authorization to repurchase shares of the Company’s common stock by $200 million, and, on December 14, 2021, the Company’s Board of Directors approved an increase of the above authorization to repurchase shares of the Company’s common stock by $100 million, for a total authorization (including the above authorized repurchases) of up to $600 million of the Company’s common stock.

The Company’s proposed repurchases may be made from time to time 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 intends to finance the repurchases with free cash flow and excess cash and liquidity on-hand.

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

The Company also expects to complete the repurchase program in the first half of 2022, dependent on market conditions.

As of December 31, 2021, the approximate dollar value of shares yet to be purchased under this stock repurchase program is $156.7 million.

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(in millions) 2021 2020 2019

Cash provided by (used in):

Cash (used in) provided by:

Operating activities $ (156.1) $ 259.6 $ 339.8

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Operating activities

Cash flows from operating activities changed by $415.7 million to cash outflow of $(156.1) million for 2021, compared to a cash inflow of $259.6 million for 2020.

This decrease in operating cash was primarily attributable to:

(1) changes in working capital and divestiture of subsidiaries that contributed positive operating cash flows during 2020, which accounted for $266.6 million of the decrease;

(2) higher cash paid for taxes of $159.7 million, from $91.4 million in 2020 to $251.1 million in 2021, primarily due to the payment of estimated taxes related to the sale of Walden University in 2021 and payment of withholding taxes for intercompany loans that were capitalized during 2021;

and (3) payments of $46.8 million for lease termination agreements in 2021.

These decreases in operating cash flow were partially offset by a decrease in cash paid for interest of $57.4 million, prior to interest income, from $120.6 million in 2020 to $63.2 million in 2021, attributable to lower average debt balances.

Investing activities

Cash provided by investing activities increased by $1,456.8 million, to $2,044.2 million for 2021 from $587.4 million in 2020.

This increase was primarily attributable to higher cash receipts from the sales of discontinued operations of $1,474.2 million,

from $676.6 million in 2020 (for the net effect of the sales of NSAD and our operations in Costa Rica, Chile, Malaysia, Australia and New Zealand, net of cash sold, and the receipt of a portion of the escrow receivable balance related to the 2018 sale of our China operations) to $2,150.8 million, net, in 2021 (primarily for the sale of 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 a portion 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 by $32.9 million compared to 2020.

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

Financing activities

Cash used in financing activities increased by $2,410.5 million to $2,683.2 million for 2021 from $272.7 million for 2020.

This increase in financing cash outflows was primarily attributable to:

(1) payments of special cash distributions to shareholders in 2021 of $1,374.9 million following the sale of Walden University;

(2) higher net payments of long-term debt in 2021 as compared to 2020 of $718.6 million, primarily related to the 2021 repayment in full of the balance outstanding under the Senior Notes due 2025;

(3) higher payments in 2021 of $281.0 million to repurchase shares of our common stock under our stock repurchase program;

(4) higher payments of call premiums and debt issuance costs of $32.2 million, mainly the call premiums associated with the redemption of the Senior Notes due 2025 during 2021;

and (5) lower proceeds from stock option exercises of $22.3 million during 2021, as compared to 2020.

These increases in financing cash outflows were partially offset by the year-over-year effect of a $13.7 million payment in 2020 to the minority owner of our Malaysia operations in connection with the sale of those operations and $5.7 million of deferred purchase price payments in 2020 related to acquisitions.

Other items accounted for the remaining difference of $0.9 million.

Comparison of Cash Flows for the Year Ended December 31, 2020 to the Year Ended December 31, 2019

Operating activities

Cash provided by operating activities decreased by $80.2 million to $259.6 million for 2020, compared to $339.8 million for 2019.

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Augustine and our Thailand, South Africa, India, Spain, Portugal, Turkey, Panama, and UniNorte operations) to $676.6 million, net, in 2020 (for the net effect of the sales of NSAD and our operations in Costa Rica, Chile, Malaysia, Australia and New Zealand, net of cash sold, and the receipt of a portion of the escrow receivable balance related to the 2018 sale of our China operations);

(2) the year-over-year negative effect of cash receipt from derivative

settlements of $12.9 million, related to the foreign exchange swap agreements associated with the sale of the Spain and Portugal institutions in 2019;

(2) the year-over-year negative effect of cash receipt from derivative settlements of $12.9 million, related to the foreign exchange swap agreements associated with the sale of the Spain and Portugal institutions in 2019;

and (3) the year-over-year effect of proceeds of $0.9 million in 2019 from the sale of shares of a preferred stock investment in a private education company.

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(1) higher net payments of long-term debt in 2019 as compared to 2020 of $1,207.6 million, primarily related to the use of divestiture proceeds for debt repayment;

(2) lower payments in 2020 of $164.6 million to repurchase shares of our Class A common stock under our stock repurchase program;

(2) lower payments in 2020 of $164.6 million to repurchase shares of our common stock under our stock repurchase program;

(3) lower payments of deferred purchase price for acquisitions of $14.5 million, due primarily to the full repayment of the St.

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Other items accounted for the remaining difference of $2.5 million.

Comparison of Cash Flows for the Year Ended December 31, 2019 to the Year Ended December 31, 2018

Operating activities

Cash provided by operating activities decreased by $57.1 million to $339.8 million for 2019, compared to $396.9 million for 2018.

This decrease in operating cash flows during 2019 was primarily due to the following:

(1) changes in operating assets and liabilities and other working capital, which decreased operating cash by $102.9 million, due largely to the year-over-year effect of cash received during the fall intake cycle of 2018 for entities that were subsequently divested in 2019;

and (2) proceeds from the settlement of derivative contracts were $22.9 million higher in 2018 than in 2019 due to the fact that, in 2018, we received $14.1 million in cash from the settlement of interest rate swaps whereas, in 2019, we made a cash payment of $8.8 million in order to settle certain cross currency and interest swaps, primarily in Chile.

Partially offsetting these operating cash decreases were increases in operating cash flows resulting from:

(1) a $45.4 million decrease in cash paid for interest, prior to interest income, that is attributable to the lower average debt balances as a result of the debt repayments, from $234.1 million of cash paid for interest in 2018 to $188.7 million in 2019;

and (2) a decrease in cash paid for taxes of $23.3 million, from $143.0 million in 2018, which included approximately $34.5 million of payments to the Spanish Tax Authorities, to $119.7 million in 2019.

Investing activities

Cash flows from investing activities increased by $1,001.3 million to $1,116.8 million for 2019 from $115.5 million in 2018.

This increase is primarily attributable to:

(1) higher cash receipts from the sales of discontinued operations of $890.2 million, from $375.8 million in 2018 (for the sales of Kendall and our operations in Cyprus, Italy, China, Germany, and Morocco) to $1,266.0 million in 2019 (for the sales of St.

Augustine and our Thailand, South Africa, India, Spain, Portugal, Turkey, Panama, and UniNorte operations);

(2) a decrease in capital expenditures of $84.6 million;

(3) a year-over-year increase in cash from derivative settlements of $22.9 million, related to the foreign exchange swap agreements associated with the sale of the Cyprus and Italy institutions in 2018 and the Spain and Portugal institutions in 2019, as well as the settlement of the net investment hedges in 2019;

(4) a year-over-year decrease in cash paid for acquisitions of $15.8 million;

and (5) proceeds of $11.5 million in the 2019 fiscal period from the sale of shares of a preferred stock investment in a private education company.

Partially offsetting these increases in investing cash flows was the effect of proceeds received from corporate-owned life insurance policies in 2018, resulting in a year-over-year decrease of $26.6 million.

Other items accounted for the remaining change of $2.9 million.

Financing activities

Cash used in financing activities increased by $1,263.9 million to $1,674.0 million for 2019 from $410.1 million for 2018.

The increased financing cash outflows were primarily attributable to:

(1) higher net payments of long-term debt in 2019 as compared to 2018 of $1,002.2 million, related to the use of divestiture proceeds for debt repayment;

(2) payments of $264.1 million made during the third and fourth quarters of 2019 to repurchase shares of our Class A common stock under our stock repurchase program;

(3) higher payments for debt issuance costs and redemption and call premiums during 2019 of $8.5 million, which was mostly related to a debt repayment in Chile;

(4) higher payments to purchase noncontrolling interests of $5.6 million, primarily attributable to the payment made during 2019 to acquire the remaining 10% noncontrolling interest of one of our operations in India, immediately prior to the sale of those operations;

and (5) higher payments of deferred purchase price for acquisitions of $6.5 million, due primarily to the full repayment of the St.

Augustine seller note in 2019.

These increases in financing cash outflows were partially offset by:

(1) an $11.1 million reduction in dividend payments for the

Series A Preferred Stock (no further dividend payments were required following the April 2018 conversion of the Series A Preferred Stock into Class A common stock);

and (2) proceeds from stock option exercises during 2019 of $14.0 million.

Other items accounted for the remaining difference of $2.1 million.

Critical Accounting Policies and Estimates

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Management has discussed the selection of these critical accounting policies and estimates with the audit committee of the Board of Directors.

Business Combinations

We apply the purchase accounting standards under ASC 805, “Business Combinations,” to acquisitions.

The purchase price of an acquisition is allocated, for accounting purposes, to individual tangible and identifiable intangible assets acquired, liabilities assumed, and noncontrolling interests based on their estimated fair values on the acquisition date.

Any excess purchase price over the assigned values of net assets acquired is recorded as goodwill.

The acquisition date is the date on which control is obtained by the acquiring company.

Any non-monetary consideration transferred and any previously held noncontrolling interests that are part of the purchase consideration are remeasured at fair value on the acquisition date, with any resulting gain or loss recognized in earnings.

The preliminary allocations of the purchase price are subject to revision in subsequent periods based on the final determination of fair values, which must be finalized no later than the first anniversary of the date of the acquisition.

Transaction costs are expensed as incurred.

See Note 5, Acquisitions, in our consolidated financial statements included elsewhere in this Form 10-K for details of our business combinations.

Goodwill and Indefinite-lived Intangible Assets

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We estimate the fair value of each reporting unit, and, if the carrying amount of the reporting unit is less than the reporting unit’s estimated fair value, then there is no goodwill impairment.

If the carrying amount of the reporting unit exceeds its estimated fair value, then goodwill is impaired and the difference between the reporting unit's carrying amount and its fair value is recognized as a loss on impairment of assets in the consolidated statements of operations.

If the carrying amount of the reporting unit exceeds its estimated fair value, then goodwill is

impaired and the difference between the reporting unit's carrying amount and its fair value is recognized as a loss on impairment of assets in the consolidated statements of operations.

We completed our annual impairment testing, and no impairments of goodwill were identified.

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We have determined that none of our reporting units with material goodwill were at risk of failing the goodwill impairment test as of December 31, 2021.

We completed our IPO on February 6, 2017 at an initial public offering price that was below the expected range, and since then our stock price at times has traded below the initial public offering price.

We completed our initial public offering (IPO) on February 6, 2017 at an initial public offering price that was below the expected range, and since then our stock price at times has traded below the initial public offering price.

While our market capitalization is currently in excess of the carrying value of our stockholders’ equity, a significant decline in our stock price for an extended period of time could be considered an impairment indicator that would cause us to perform an interim impairment test that could result in additional impairments of goodwill or other intangible assets.

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and (3) the estimated royalty rates.

During the third quarter of 2020, following the reclassification of several of our subsidiaries as held-for-sale, the Company tested the Laureate tradename for impairment and concluded that the estimated fair value of the Laureate tradename was less than its carrying value.

In 2020, following the reclassification of several of our subsidiaries as held-for-sale, the Company tested the Laureate tradename for impairment and concluded that the estimated fair value of the Laureate tradename was less than its carrying value.

As a result, the Company recognized an impairment charge of $320.0 million, in accordance with ASC 350-30-35-17.

Additionally, the Company determined that the useful life of the remaining Laureate tradename asset was no longer indefinite and would be amortized over five years, its estimated useful life.

Additionally, the Company determined that the remaining Laureate tradename asset no longer had an indefinite life and was fully amortized as of December 31, 2021

During the first quarter of 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, a finite-lived intangible asset, beyond 2021.

The remaining carrying value of the tradename asset was fully amortized as of December 31, 2021.

Long-Lived Assets and Finite-Lived Intangible Assets

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• a change in regulatory environment;

• a significant change in the use of an asset, its physical condition, or a change in management's intended use of the asset;

• a change in business plans;

• an adverse change in anticipated cash flows.

• a significant decrease in the market price of an asset.

If an impairment indicator is present, we evaluate recoverability by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to result from the use and eventual disposition of the assets.

If the assets are determined

to be impaired, the impairment recognized is the excess of the carrying amount over the fair value of the assets.

If the assets are determined to be impaired, the impairment recognized is the excess of the carrying amount over the fair value of the assets.

Fair value is generally determined by the discounted cash flow method.

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These accreditation costs are amortized to direct costs over the life of the accreditation on a straight-line basis.

As of December 31, 2020 and 2019, the unamortized balances of accreditation costs were $0.2 million and $0.3 million, respectively.

As of both December 31, 2021 and 2020, the unamortized balances of accreditation costs were $0.2 million.

Laureate also defers certain commissions and bonuses earned by third party agents and our employees that are considered incremental and recoverable costs of obtaining a contract with a customer.

These costs are amortized over the period of benefit, which ranges from two to four years.

As of both December 31, 2020 and 2019, the unamortized balances of contract costs were $2.1 million.

As of December 31, 2021 and 2020, the unamortized balances of contract costs were $2.7 million and $2.1 million, respectively.

At December 31, 2021 and 2020, our total deferred costs were $27.1 million and $33.4 million, respectively, with accumulated amortization of $(21.1) million and $(15.7) million, respectively.

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We apply a more-likely-than-not threshold for tax positions, under which we must conclude that a tax position is more likely than not to be sustained in order for us to continue to recognize the benefit.

This assumes that the position will be examined by the appropriate taxing authority and that full knowledge of all relevant information is available.

This assumes that the position will be examined by the appropriate taxing authority and

that full knowledge of all relevant information is available.

In determining the provision for income taxes, judgment is used, reflecting estimates and assumptions, in applying the more-likely-than-not threshold.

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Indefinite Reinvestment of Foreign Earnings

We earn a significant portion of our income from subsidiaries located in countries outside the United States.

Except for one of our institutions in Peru, deferred tax liabilities have not been recognized for undistributed foreign earnings of Continuing Operations because management believes that the earnings will be indefinitely reinvested outside the United States under the Company's planned tax-neutral methods.

ASC 740, “Income Taxes,” requires that we evaluate our circumstances to determine whether or not there is sufficient evidence to support the assertion that we will reinvest undistributed foreign earnings indefinitely.

We earn substantially all of our income from subsidiaries located in countries outside the United States.

Deferred tax liabilities have not been recognized for undistributed historical foreign earnings because management believes that the historical retained earnings will be indefinitely reinvested outside the United States under the Company's planned tax-neutral methods.

Our assertion that earnings from our foreign operations will be indefinitely reinvested is supported by projected working capital and long-term capital plans in each foreign subsidiary location in which the earnings are generated.

Additionally, we believe that we have the ability to indefinitely reinvest foreign earnings based on our domestic operation's cash repatriation strategies, projected cash flows, projected working capital and liquidity, and the expected availability of capital within the debt or equity markets.

If our expectations change based on future developments, such that some or all of the undistributed earnings of our foreign subsidiaries may be remitted to the United States in the foreseeable future, we will be required to recognize deferred tax expense and liabilities on any amounts that we are unable to repatriate in a tax-free manner.

Revenue Recognition

Laureate's revenues primarily consist of tuition and educational service revenues.

Our revenues primarily consist of tuition and educational service revenues.

We also generate other revenues from student fees, dormitory/residency fees and other education-related activities.

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Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

These revenues are recognized net of scholarships and other discounts, refunds, waivers and the fair value of any guarantees made by Laureate related to student financing programs.

These revenues are recognized net of scholarships and other discounts, refunds and waivers.

For further description, see also Note 3, Revenue, in our consolidated financial statements included elsewhere in this Form 10-K.

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Prior to the IPO, the estimated fair value of the underlying common stock was based on third-party valuations.

After our IPO, the estimated fair value of the underlying common stock is based on the closing price of our Class A common stock on the grant date.

After our IPO, the estimated fair value of the underlying common stock is based on the closing price of our common stock on the grant date.

Because we have only been publicly traded since February 2017, our volatility estimates are based on an average of:

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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-K

Item 7. Management’s Discussion and Analysis