What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-05 · 225 added, 93 removed, 474 unchanged (40% of the section changed)

4 unchanged sentences

IN THOUSANDS, except per share amounts

For the three months ended March 31, 2022 2021

For the three months ended June 30, 2022 2021

(Unaudited) (Unaudited)

4 unchanged sentences

Loss on impairment of assets — 7,219

Operating income 126,641 57,684

Interest income 1,685 477

Interest expense ( 4,164 ) ( 13,541 )

Loss on debt extinguishment — ( 77,927 )

Loss on derivatives — ( 53,847 )

Other income (expense), net 246 ( 55 )

Foreign currency exchange loss, net ( 14,451 ) ( 15,519 )

Gain on disposal of subsidiaries, net 1,461 27

Income (loss) from continuing operations before income taxes and equity in net loss of affiliates 111,418 ( 102,701 )

Income tax expense ( 71,966 ) ( 13,184 )

Equity in net loss of affiliates, net of tax ( 38 ) —

Income (loss) from continuing operations 39,414 ( 115,885 )

Income from discontinued operations, net of tax benefit of $ 0 and $ 1,063 , respectively

Net income (loss) 43,559 ( 29,224 )

Net (income) loss attributable to noncontrolling interests ( 136 ) 224

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

$ 43,423 $ ( 29,000 )

Basic earnings (loss) per share:

Income (loss) from continuing operations $ 0.24 $ ( 0.60 )

Income from discontinued operations 0.02 0.45

Basic earnings (loss) per share $ 0.26 $ ( 0.15 )

Diluted earnings (loss) per share:

Income (loss) from continuing operations $ 0.23 $ ( 0.60 )

Income from discontinued operations 0.02 0.45

Diluted earnings (loss) per share $ 0.25 $ ( 0.15 )

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

LAUREATE EDUCATION, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

IN THOUSANDS, except per share amounts

For the six months ended June 30, 2022 2021

(Unaudited) (Unaudited)

Revenues $ 594,944 $ 522,280

Costs and expenses:

Direct costs 425,694 395,163

General and administrative expenses 33,431 91,955

Loss on impairment of assets 144 63,869

Operating income (loss) 135,675 ( 28,707 )

2 unchanged sentences

Loss on debt extinguishment — ( 77,940 )

Gain on derivatives — 29,330

Other (expense) income, net ( 1,226 ) 34

Loss on derivatives — ( 24,517 )

Other expense, net ( 980 ) ( 21 )

Foreign currency exchange (loss) gain, net ( 18,052 ) 12,664

Gain on disposal of subsidiaries, net 1,461 27

Income (loss) from continuing operations before income taxes and equity in net income of affiliates 113,862 ( 154,365 )

2 unchanged sentences

Loss from continuing operations ( 6,001 ) ( 280,410 )

Income (loss) from discontinued operations, net of tax expense of $ 0 and $ 9,665 , respectively

Income from discontinued operations, net of tax expense of $ 0 and $ 8,602 , respectively

Net loss ( 1,121 ) ( 194,167 )

4 unchanged sentences

Loss from continuing operations $ ( 0.03 ) $ ( 1.43 )

Income (loss) from discontinued operations — —

Basic and diluted loss per share $ ( 0.25 ) $ ( 0.82 )

Income from discontinued operations 0.03 0.44

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

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

2 unchanged sentences

Consolidated Statements of Comprehensive Income

For the three months ended March 31, 2022 2021

For the three months ended June 30, 2022 2021

(Unaudited) (Unaudited)

Net income (loss) $ 43,559 $ ( 29,224 )

Other comprehensive income:

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

17,972 510,443

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

Total other comprehensive income 17,972 510,470

Comprehensive income 61,531 481,246

Net comprehensive (income) loss attributable to noncontrolling interests ( 139 ) 226

Comprehensive income attributable to Laureate Education, Inc.

$ 61,392 $ 481,472

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

LAUREATE EDUCATION, INC.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the six months ended June 30, 2022 2021

(Unaudited) (Unaudited)

Net loss $ ( 1,121 ) $ ( 194,167 )

3 unchanged sentences

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

Total other comprehensive income (loss) 49,589 ( 59,929 )

Comprehensive income (loss) 4,909 ( 224,872 )

Total other comprehensive income 67,561 450,541

Comprehensive income 66,440 256,374

Net comprehensive loss attributable to noncontrolling interests 328 259

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

Comprehensive income attributable to Laureate Education, Inc.

$ 66,768 $ 256,633

58 unchanged sentences

Total liabilities 1,085,324 1,070,038

Redeemable noncontrolling interests and equity 1,714 1,714

Redeemable equity 1,398 1,714

Stockholders' equity:

Preferred stock, par value $ 0.001 per share – 50,000 shares authorized, no shares issued and outstanding as of March 31, 2022 and December 31, 2021

Common stock, par value $ 0.004 per share – 700,000 shares authorized, 230,210 shares issued and 172,505 shares outstanding as of March 31, 2022 and 228,831 shares issued and 180,611 shares outstanding as of December 31, 2021

Preferred stock, par value $ 0.001 per share – 50,000 shares authorized, no shares issued and outstanding as of June 30, 2022 and December 31, 2021

Common stock, par value $ 0.004 per share – 700,000 shares authorized, 230,381 shares issued and 164,663 shares outstanding as of June 30, 2022 and 228,831 shares issued and 180,611 shares outstanding as of December 31, 2021

Additional paid-in capital 2,404,243 2,388,783

(Accumulated deficit) retained earnings ( 28,688 ) 15,523

Retained earnings 14,735 15,523

Accumulated other comprehensive loss ( 452,648 ) ( 520,204 )

Treasury stock at cost ( 57,705 shares held at March 31, 2022 and 48,220 shares held at December 31, 2021)

Treasury stock at cost ( 65,718 shares held at June 30, 2022 and 48,220 shares held at December 31, 2021)

( 950,410 ) ( 744,174 )

8 unchanged sentences

Consolidated Statements of Cash Flows

For the three months ended March 31, 2022 2021

For the six months ended June 30, 2022 2021

Cash flows from operating activities (Unaudited) (Unaudited)

4 unchanged sentences

Loss on impairment of assets 144 65,137

(Gain) loss on sales and disposal of subsidiaries and property and equipment, net ( 713 ) 16,461

Gain on derivative instruments — ( 29,330 )

Gain on sales and disposal of subsidiaries and property and equipment, net ( 6,587 ) ( 13,516 )

Loss on derivative instruments — 24,517

Loss on debt extinguishment — 77,999

3 unchanged sentences

Deferred income taxes 9,549 66,965

Unrealized foreign currency exchange gain ( 753 ) ( 23,687 )

Unrealized foreign currency exchange loss (gain) 15,115 ( 13,455 )

Non-cash loss from non-income tax contingencies 175 11,925

12 unchanged sentences

Payments on derivatives related to sale of discontinued operations — ( 50,341 )

Net cash provided by (used in) investing activities 7,938 ( 1,088 )

Net cash provided by investing activities 2,038 649,987

Cash flows from financing activities

5 unchanged sentences

Payments to repurchase common stock ( 206,289 ) ( 251,374 )

Payments of debt issuance costs — ( 14 )

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

Net cash used in financing activities ( 226,184 ) ( 1,162,723 )

14 unchanged sentences

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

Face-to-face educational activities have now resumed at most of our campuses.

Face-to-face educational activities have now resumed across our campuses.

We are domiciled in Delaware as a public benefit corporation, a demonstration of our long-term commitment to our mission to benefit our students and society.

15 unchanged sentences

These unaudited Consolidated Financial Statements should be read in conjunction with Laureate's audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the 2021 Form 10-K).

Significant Accounting Policies

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

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

As of March 31, 2022 and through the date of this Form 10-Q, the Company evaluated its accounting estimates that require consideration of forecasted financial information, based on current information reasonably available to us.

The forecast also includes certain estimates and assumptions around macroeconomic conditions.

While this evaluation did not result in a material effect to the Company’s Consolidated Financial Statements as of and for the three months ended March 31, 2022, future evaluations could result in a material effect, including potential impairments, depending on the eventual impact to the Company of the COVID-19 pandemic and its effect on student enrollment, tuition pricing, and collections in future periods.

Revenue Recognition

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

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

We also generate other revenues from student fees and other education-related activities.

These other revenues are less material to our overall financial results and have a tendency to trend with tuition revenues.

13 unchanged sentences

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

The following table shows the components of Revenues by reportable segment and as a percentage of total revenue for the three months ended March 31, 2022 and 2021:

The following table shows the components of Revenues by reportable segment and as a percentage of total revenue for the three months ended June 30, 2022 and 2021:

Mexico Peru Corporate (1)

10 unchanged sentences

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

The following table shows the components of Revenues by reportable segment and as a percentage of total revenue for the six months ended June 30, 2022 and 2021:

Mexico Peru Corporate (1)

Tuition and educational services $ 363,010 $ 303,588 $ — $ 666,598 112 %

Other 48,120 26,349 3,178 77,647 13 %

Gross revenue 411,130 329,937 3,178 744,245 125 %

Discounts / waivers / scholarships ( 123,921 ) ( 25,380 ) — ( 149,301 ) ( 25 ) %

Total $ 287,209 $ 304,557 $ 3,178 $ 594,944 100 %

Tuition and educational services $ 323,738 $ 256,474 $ — $ 580,212 111 %

Other 41,327 22,446 3,442 67,215 13 %

Gross revenue 365,065 278,920 3,442 647,427 124 %

Discounts / waivers / scholarships ( 105,385 ) ( 19,762 ) — ( 125,147 ) ( 24 ) %

Total $ 259,680 $ 259,158 $ 3,442 $ 522,280 100 %

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

Contract Balances

5 unchanged sentences

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

Total accounts receivable from our contracts with students were $ 108,851 and $ 117,987 as of March 31, 2022 and December 31, 2021, respectively.

The decrease in the contract assets balance at March 31, 2022 compared to December 31, 2021 was primarily driven by collections, in particular the repayment of past-due amounts by students re-enrolling for the next academic session.

Total accounts receivable from our contracts with students were $ 152,037 and $ 117,987 as of June 30, 2022 and December 31, 2021, respectively.

The increase in the contract assets balance at June 30, 2022 compared to December 31, 2021 was primarily driven by our enrollment cycles.

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

All contract asset amounts are classified as current.

Contract liabilities in the amount of $ 97,055 and $ 43,959 were included within the Deferred revenue and student deposits balance in the current liabilities section of the accompanying Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, respectively.

The increase in the contract liability balance during the period ended March 31, 2022 was the result of semester billings and cash payments received in advance of satisfying performance obligations, partially offset by revenue recognized during that period.

Revenue recognized for the three months ended March 31, 2022 that was included in the contract liability balance at the beginning of the year was approximately $ 30,510 .

Contract liabilities in the amount of $ 50,468 and $ 43,959 were included within the Deferred revenue and student deposits balance in the current liabilities section of the accompanying Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021, respectively.

The increase in the contract liability balance during the period ended June 30, 2022 was the result of semester billings and cash payments received in advance of satisfying performance obligations, partially offset by revenue recognized during that period.

Revenue recognized for the six months ended June 30, 2022 that was included in the contract liability balance at the beginning of the year was approximately $ 34,493 .

Discontinued Operations and Assets Held for Sale

2 unchanged sentences

Summarized operating results and cash flows of the Discontinued Operations are presented in the following tables:

For the three months ended March 31, 2022 2021

For the three months ended June 30, 2022 2021

Revenues $ — $ 232,114

3 unchanged sentences

Other non-operating expense — ( 4,389 )

Gain (loss) on sale of discontinued operations before taxes, net 735 ( 16,837 )

Pretax income (loss) of discontinued operations 735 9,247

Gain on sale of discontinued operations before taxes, net 4,145 30,131

Pretax income of discontinued operations 4,145 85,598

Income tax benefit — 1,063

Income from discontinued operations, net of tax $ 4,145 $ 86,661

For the six months ended June 30, 2022 2021

Revenues $ — $ 471,863

Share-based compensation expense — ( 827 )

Other direct costs — ( 372,665 )

Loss on impairment of assets — ( 1,268 )

Other non-operating expense — ( 15,551 )

Gain on sale of discontinued operations before taxes, net 4,880 13,293

Pretax income of discontinued operations 4,880 94,845

Income tax expense — ( 8,602 )

Income (loss) from discontinued operations, net of tax $ 735 $ ( 418 )

Income from discontinued operations, net of tax $ 4,880 $ 86,243

Operating cash flows of discontinued operations $ — $ 56,567

1 unchanged sentence

Financing cash flows of discontinued operations $ — $ ( 18,059 )

The assets and liabilities of the Discontinued Operations have been classified as held for sale as of March 31, 2022 and December 31, 2021.

The assets and liabilities are recorded at the lower of their carrying values or their estimated fair values less costs to sell.

The carrying amounts of the major classes of assets and liabilities that were classified as held for sale are presented in the following table:

March 31, 2022 December 31, 2021

During the second quarter of 2022, the Company completed the transfer of the remaining assets and liabilities of the Discontinued Operations that were classified as held for sale as of December 31, 2021, which resulted in a gain of approximately $4,300.

The carrying amounts of the major classes of assets and liabilities that were classified as held for sale as of December 31, 2021 are presented in the following table:

June 30, 2022 December 31, 2021

Assets of Discontinued Operations

29 unchanged sentences

We evaluate segment performance based on Adjusted EBITDA, which is a non-GAAP performance measure defined as Income (loss) from continuing operations before income taxes and equity in net income of affiliates, adding back the following items:

Foreign currency exchange (loss) gain, net, Other (expense) income, net, Gain on derivatives, Loss on debt extinguishment, Interest expense, Interest income, Depreciation and amortization expense, Loss on impairment of assets, Share-based compensation expense and expenses related to our Excellence-in-Process (EiP) initiative.

Foreign currency exchange (loss) gain, net, Other income (expense), net, Loss on derivatives, Loss on debt extinguishment, Interest expense, Interest income, Depreciation and amortization expense, Loss on impairment of assets, Share-based compensation expense and expenses related to our Excellence-in-Process (EiP) initiative.

Our EiP initiative was completed as of December 31, 2021, except for certain EiP expenses related to the completion of programs that began in prior periods.

2 unchanged sentences

The EiP initiative also included 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.

When we review Adjusted EBITDA on a segment basis, we exclude any intercompany revenues and expenses related to network fees and royalties between our segments, which eliminate in consolidation.

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

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

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

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

We use total assets as the measure of assets for reportable segments.

The following tables provide financial information for our reportable segments, including a reconciliation of Adjusted EBITDA to Income (loss) from continuing operations before income taxes and equity in net income of affiliates, as reported in the Consolidated Statements of Operations:

For the three months ended March 31, 2022 2021

For the three months ended For the six months ended

June 30, June 30,

2022 2021 2022 2021

Mexico $ 144,659 $ 124,283 $ 287,209 $ 259,680

16 unchanged sentences

Loss on debt extinguishment — ( 77,927 ) — ( 77,940 )

Gain on derivatives — 29,330

Other (expense) income, net ( 1,226 ) 34

Loss on derivatives — ( 53,847 ) — ( 24,517 )

Other income (expense), net 246 ( 55 ) ( 980 ) ( 21 )

Foreign currency (loss) gain, net ( 14,451 ) ( 15,519 ) ( 18,052 ) 12,664

Gain on disposal of subsidiaries, net 1,461 27 1,461 27

Income (loss) from continuing operations before income taxes and equity in net income of affiliates $ 111,418 $ ( 102,701 ) $ 113,862 $ ( 154,365 )

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Mexico $ 1,185,999 $ 1,251,791

2 unchanged sentences

Total assets $ 2,101,949 $ 2,211,310

The change in the net carrying amount of Goodwill from December 31, 2021 through March 31, 2022 was composed of the following items:

The change in the net carrying amount of Goodwill from December 31, 2021 through June 30, 2022 was composed of the following items:

Mexico Peru Total

1 unchanged sentence

Currency translation adjustments 20,306 3,513 23,819

Balance at March 31, 2022 $ 494,880 $ 72,181 $ 567,061

Balance at June 30, 2022 $ 499,529 $ 71,085 $ 570,614

Outstanding long-term debt was as follows:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Senior long-term debt:

10 unchanged sentences

Under our Third Amended and Restated Credit Agreement (the Third A&R Credit Agreement), the Company maintains a revolving credit facility (the Senior Secured Credit Facility) that has a borrowing capacity of $ 410,000 and a maturity date of October 7, 2024.

As of March 31, 2022 and December 31, 2021, no amounts were borrowed on this facility.

As of June 30, 2022 and December 31, 2021, no amounts were borrowed on this facility.

Estimated Fair Value of Debt

As of March 31, 2022 and December 31, 2021, the estimated fair value of our debt approximated its carrying value.

As of June 30, 2022 and December 31, 2021, the estimated fair value of our debt approximated its carrying value.

Certain Covenants

As of March 31, 2022, our Third A&R Credit Agreement contained certain negative covenants including, among others:

As of June 30, 2022, our Third A&R Credit Agreement contained certain negative covenants including, among others:

(1) limitations on additional indebtedness;

4 unchanged sentences

The agreement also provides that if (i) the Company’s Consolidated Total Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, is not greater than 4.75 x as of such date and (ii) less than 25 % of the revolving credit facility is utilized as of that date, then such financial covenant shall not apply.

As of March 31, 2022, these conditions were satisfied and, therefore, we were not subject to the leverage ratio.

As of June 30, 2022, these conditions were satisfied and, therefore, we were not subject to the leverage ratio.

In addition, indebtedness at some of our locations contain financial maintenance covenants.

We were in compliance with these covenants as of March 31, 2022.

We were in compliance with these covenants as of June 30, 2022.

Laureate conducts a significant portion of its operations at leased facilities, including many of Laureate's higher education facilities and other office locations.

23 unchanged sentences

Contingent Liabilities for Taxes

As of March 31, 2022 and December 31, 2021, Laureate has recorded cumulative liabilities for income tax contingencies of $ 124,150 and $ 91,585 , respectively.

As of June 30, 2022 and December 31, 2021, Laureate had recorded cumulative liabilities for income tax contingencies of $ 122,850 and $ 91,585 , respectively.

Other Loss Contingencies

1 unchanged sentence

Laureate intends to vigorously defend against these matters.

As of March 31, 2022 and December 31, 2021, approximately $ 7,400 and $ 7,200 , respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets.

As of June 30, 2022 and December 31, 2021, approximately $ 9,800 and $ 7,200 , respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets.

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

During the first quarter of 2021, one of our Peruvian institutions issued a bank guarantee in order to appeal a preliminary tax assessment received related to tax audits of 2014 and 2015.

As of March 31, 2022 and December 31, 2021, the amount of the guarantee was $ 6,283 and $ 5,885 , respectively.

As of June 30, 2022 and December 31, 2021, the amount of the guarantee was $ 6,188 and $ 5,885 , respectively.

Share-based Compensation

Share-based compensation expense was as follows:

For the three months ended March 31, 2022 2021

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

2022 2021 2022 2021

Continuing operations

6 unchanged sentences

Stockholders’ Equity

The components of net changes in stockholders’ equity for the three months ended March 31, 2022 are as follows:

The components of net changes in stockholders’ equity for the fiscal quarters of 2022 are as follows:

Laureate Education, Inc.

12 unchanged sentences

Balance at March 31, 2022 172,505 $ 921 $ 2,402,072 $ ( 28,688 ) $ ( 470,617 ) $ ( 857,048 ) $ ( 1,752 ) $ 1,044,888

The components of net changes in stockholders’ equity for the three months ended March 31, 2021 are as follows:

Non-cash stock compensation — — 2,360 — — — — 2,360

Purchase of treasury stock at cost ( 8,013 ) — — — — ( 93,362 ) — ( 93,362 )

Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 171 1 ( 472 ) — — — — ( 471 )

Equitable adjustments to stock-based awards — — ( 35 ) — — — — ( 35 )

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

Reclassification of redeemable equity to non-redeemable equity — — 316 — — — — 316

Net income — — — 43,423 — — 136 43,559

Foreign currency translation adjustment, net of tax of $ 0

— — — — 17,969 — 3 17,972

Balance at June 30, 2022 164,663 $ 922 $ 2,404,243 $ 14,735 $ ( 452,648 ) $ ( 950,410 ) $ ( 1,615 ) $ 1,015,227

The components of net changes in stockholders’ equity for the fiscal quarters of 2021 are as follows:

Laureate Education, Inc.

15 unchanged sentences

Balance at March 31, 2021 122,213 $ 618 73,544 $ 294 $ 3,760,362 $ ( 341,851 ) $ ( 1,001,897 ) $ ( 511,122 ) $ ( 12,915 ) $ 1,893,489

Non-cash stock compensation — — — — 3,202 — — — — 3,202

Conversion of Class B shares to Class A shares 2 — ( 2 ) — — — — — — —

Purchase of treasury stock at cost ( 7,548 ) — — — — — — ( 105,786 ) — ( 105,786 )

Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 119 1 — — 359 — — — — 360

Accretion of redeemable noncontrolling interests and equity — — — — ( 68 ) — — — — ( 68 )

Reclassification of redeemable noncontrolling interests and equity — — — — — — — — ( 1 ) ( 1 )

Net loss — — — — — ( 29,000 ) — — ( 224 ) ( 29,224 )

Foreign currency translation adjustment, net of tax of $ 0

— — — — — — 510,445 — ( 2 ) 510,443

Minimum pension liability adjustment, net of tax of $ 0

— — — — — — 27 — — 27

Balance at June 30, 2021 114,786 $ 619 73,542 $ 294 $ 3,763,855 $ ( 370,851 ) $ ( 491,425 ) $ ( 616,908 ) $ ( 13,142 ) $ 2,272,442

Effective October 29, 2021, each share of Company Class A common stock and each share of Company Class B common stock automatically converted into one share of common stock of the Company.

1 unchanged sentence

Stock Repurchase Program

On March 14, 2022, Laureate announced that its Board of Directors had approved an increase of $ 50,000 to the existing authorization to repurchase shares of the Company’s common stock under its share repurchase program, for a total authorization of $ 650,000 .

On March 14, 2022, the Company announced that its Board of Directors had approved an increase of $ 50,000 to the existing authorization to repurchase shares of the Company’s common stock under its share repurchase program, for a total authorization of $ 650,000 .

The authorizations do not have an expiration date.

3 unchanged sentences

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

During the three months ended March 31, 2022, the Company repurchased 9,485 shares of its outstanding common stock for a total purchase price of $ 112,874 .

Approximately $ 10,700 of this total purchase price was paid in April 2022.

During the six months ended June 30, 2022 , the Company repurchased 17,498 shares of its outstanding common stock for a total purchase price of $ 206,236 .

Accumulated Other Comprehen sive Income (Loss)

Accumulated other comprehensive income (loss) (AOCI) in our Consolidated Balance Sheets includes the accumulated translation adjustments arising from translation of foreign subsidiaries’ financial statements, the unrealized gains on derivatives designated as effective hedges, and the accumulated net gains or losses that are not recognized as components of net periodic benefit cost for our minimum pension liability.

The change in AOCI includes the removal of the cumulative translation adjustment related to subsidiaries that were sold during the period.

Accumulated other comprehensive income (loss) (AOCI) in our Consolidated Balance Sheets includes the accumulated translation adjustments arising from translation of foreign subsidiaries’ financial statements, the unrealized gain on a derivative designated as an effective net investment hedge, and the accumulated net gains or losses that are not recognized as components of net periodic benefit cost for our minimum pension liability.

The AOCI related to the net investment hedge will be deferred from earnings until the sale or liquidation of the hedged investee.

The components of these balances were as follows:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Laureate Education, Inc.

21 unchanged sentences

For derivatives that are both designated and effective as net investment hedges, gains or losses associated with the change in fair value of the derivatives are recognized on our Consolidated Balance Sheets as a component of AOCI.

Laureate did not hold any derivatives as of March 31, 2022 and December 31, 2021.

Laureate did not hold any derivatives as of June 30, 2022 and December 31, 2021.

BRL to USD Foreign Currency Swaps

11 unchanged sentences

These swaps were not designated as hedges for accounting purposes.

Components of the reported Gain on derivatives not designated as hedging instruments in the Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 were as follows:

For the three months ended March 31, 2022 2021

Components of the reported Loss on derivatives not designated as hedging instruments in the Consolidated Statements of Operations were as follows:

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

2022 2021 2022 2021

Cross currency swaps

Unrealized gain $ — $ 47,624

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

Realized loss — ( 32,047 ) — ( 50,341 )

Gain on derivatives, net $ — $ 29,330

Loss on derivatives, net $ — $ ( 53,847 ) $ — $ ( 24,517 )

Credit Risk and Credit-Risk-Related Contingent Features

3 unchanged sentences

We have not entered into collateral agreements with our derivatives’ counterparties.

As of March 31, 2022 and December 31, 2021, we did not hold any derivatives in a net gain position, and thus had no credit risk.

Laureate’s agreements with its derivative counterparties typically contain a provision under which the Company could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to a default on the indebtedness.

As of March 31, 2022 and December 31, 2021, the Company did not have any outstanding derivative agreements.

As of June 30, 2022 and December 31, 2021, we did not hold any derivatives in a net gain position, and thus had no credit risk.

Laureate’s agreements with its derivative counterparties typically contain a provision under which the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to a default on the indebtedness.

As of June 30, 2022 and December 31, 2021, the Company did not have any outstanding derivative agreements.

Laureate's income tax provisions for all periods consist of federal, state and foreign income taxes.

The tax provisions for the three months ended March 31, 2022 and 2021 are based on estimated full-year effective tax rates, adjusted for discrete income tax items related specifically to the interim periods.

The tax provisions for the six months ended June 30, 2022 and 2021 are based on estimated full-year effective tax rates, adjusted for discrete income tax items related specifically to the interim periods.

Laureate has operations in multiple countries at various statutory tax rates and other operations that are loss-making entities for which it is not more likely than not that a tax benefit will be realized on the loss.

For the three months ended March 31, 2022, the Company recognized income t ax expense of $ 47,967 , as compared to $ 112,861 in the prior year period.

Income tax expense for the three months ended March 31, 2022 was primarily driven by discrete tax expense of approximately $ 32,500 that was recorded for income tax reserves related to a retrospective provision of final regulations from the U.S.

For the six months ended June 30, 2022, the Company recognized income t ax expense of $ 119,933 , as compared to $ 126,045 in the prior year period.

Income tax expense for the six months ended June 30, 2022 was in part driven by discrete tax expense of approximately $ 32,500 that was recorded for income tax reserves related to a retrospective provision of final regulations from the U.S.

Treasury Department that were published during the first quarter of 2022.

In addition, income tax expense for the three months ended March 31, 2022 was attributable to pretax income, the jurisdictional mix of earnings and pretax losses for which the Company cannot recognize a tax benefit, and the tax effect of stock options that expired unexercised.

The income tax expense for the three months ended March 31, 2021 was primarily driven by discrete tax expense recorded for income tax reserves of approximately $ 58,900 .

In addition, income tax expense for the six months ended June 30, 2022 was attributable to pretax income, the jurisdictional mix of earnings and pretax losses for which the Company cannot recognize a tax benefit, the tax effect of stock options that expired unexercised, and additional valuation

The income tax expense for the six months ended June 30, 2021 was driven by discrete tax expense recorded for income tax reserves of approximately $ 58,900 .

Earnings (Loss) Per Share

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

For the three months ended March 31, 2022 2021

For the three months ended June 30, 2022 2021

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

Income (loss) from continuing operations $ 39,414 $ ( 115,885 )

(Income) loss attributable to noncontrolling interests ( 136 ) 2

Income (loss) from continuing operations attributable to Laureate Education, Inc.

39,278 ( 115,883 )

Accretion of redemption value of redeemable noncontrolling interests and equity — ( 68 )

Net income (loss) from continuing operations for basic and diluted earnings (loss) per share $ 39,278 $ ( 115,951 )

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

Income from discontinued operations, net of tax $ 4,145 $ 86,661

Loss attributable to noncontrolling interests — 222

Net income from discontinued operations for basic and diluted earnings (loss) per share $ 4,145 $ 86,883

Denominator used in basic and diluted earnings (loss) per common share:

Basic weighted average shares outstanding 167,119 191,990

Dilutive effect of stock options 224 —

Dilutive effect of restricted stock units 120 —

Diluted weighted average shares outstanding 167,463 191,990

Basic earnings (loss) per share:

Income (loss) from continuing operations $ 0.24 $ ( 0.60 )

Income from discontinued operations 0.02 0.45

Basic earnings (loss) per share $ 0.26 $ ( 0.15 )

Diluted earnings (loss) per share:

Income (loss) from continuing operations $ 0.23 $ ( 0.60 )

Income from discontinued operations 0.02 0.45

Diluted earnings (loss) per share $ 0.25 $ ( 0.15 )

For the six months ended June 30, 2022 2021

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

Loss from continuing operations $ ( 6,001 ) $ ( 280,410 )

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

Income (loss) from discontinued operations, net of tax $ 735 $ ( 418 )

Loss (income) attributable to noncontrolling interests — ( 9 )

Net income (loss) from discontinued operations for basic and diluted earnings (loss) per share $ 735 $ ( 427 )

Income from discontinued operations, net of tax $ 4,880 $ 86,243

Loss attributable to noncontrolling interests — 212

Net income from discontinued operations for basic and diluted earnings (loss) per share $ 4,880 $ 86,455

Denominator used in basic and diluted earnings (loss) per common share:

Basic weighted average shares outstanding 177,995 200,224

Basic and diluted weighted average shares outstanding 172,511 196,085

Basic and diluted earnings (loss) per share:

Loss from continuing operations $ ( 0.03 ) $ ( 1.43 )

Income (loss) from discontinued operations — —

Basic and diluted loss per share $ ( 0.25 ) $ ( 0.82 )

Income from discontinued operations 0.03 0.44

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

The following table summarizes the number of stock options and shares of restricted stock units that were excluded from the diluted EPS calculations because the effect would have been antidilutive:

For the three months ended March 31, 2022 2021

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

2022 2021 2022 2021

Stock options 59 3,256 1,277 3,324

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Reconciliation of Cash and cash equivalents and Restricted cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets, as well as the March 31, 2021 balance.

The March 31, 2022 and March 31, 2021 balances sum to the amounts shown in the Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021:

March 31, 2022 March 31, 2021 December 31, 2021

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets, as well as the June 30, 2021 balance.

The June 30, 2022 and June 30, 2021 balances sum to the amounts shown in the Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021:

June 30, 2022 June 30, 2021 December 31, 2021

Cash and cash equivalents $ 156,909 $ 427,142 $ 324,801

2 unchanged sentences

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

Subsequent Events

Spanish Tax Audits-Spanish Supreme Court Appeal

As previously reported, during the third quarter of 2021, both the Company and the Spanish Taxing Authority (STA) appealed the Spanish National Court’s decision regarding the STA’s audits of Iniciativas Culturales de España, S.L.

(ICE), our former Spanish holding company, for the fiscal years 2006-2007 and 2008-2010.

In July 2022, the Spanish Supreme Court decided not to admit the Company’s appeal.

However, the Spanish Supreme Court has decided to admit the STA’s appeal, which the Company believes will provide resolution of the same issues raised in the Company’s appeal.

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

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

What changed 10-Q

Item 1. Financial Statements