What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-04 · 172 added, 118 removed, 581 unchanged (33% of the section changed)

4 unchanged sentences

IN THOUSANDS, except per share amounts

For the three months ended June 30, 2022 2021

For the three months ended September 30, 2022 2021

(Unaudited) (Unaudited)

7 unchanged sentences

Interest expense ( 3,694 ) ( 3,736 )

Loss on debt extinguishment — ( 77,927 )

Loss on derivatives — ( 53,847 )

Other income (expense), net 1,393 ( 46 )

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 )

Foreign currency exchange gain, net 15,146 6,085

Loss on disposal of subsidiaries, net — ( 949 )

Income from continuing operations before income taxes 71,132 37,728

Income tax expense ( 39,280 ) ( 48,118 )

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

Income (loss) from continuing operations 31,852 ( 10,390 )

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.

(Loss) income from discontinued operations, net of tax expense of $ 0 and $ 248,838 , respectively

( 816 ) 370,527

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:

Net income 31,036 360,137

Net loss attributable to noncontrolling interests 81 269

Net income attributable to Laureate Education, Inc.

$ 31,117 $ 360,406

Basic and diluted earnings (loss) per share:

Income (loss) from continuing operations $ 0.19 $ ( 0.06 )

Income from discontinued operations — 2.00

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

Basic and diluted earnings per share $ 0.19 $ 1.94

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

3 unchanged sentences

IN THOUSANDS, except per share amounts

For the six months ended June 30, 2022 2021

For the nine months ended September 30, 2022 2021

(Unaudited) (Unaudited)

4 unchanged sentences

Loss on impairment of assets 144 67,161

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

Operating income 191,992 6,399

Interest income 5,623 2,456

2 unchanged sentences

Loss on derivatives — ( 24,517 )

Other expense, net ( 980 ) ( 21 )

Other income (expense), net 413 ( 67 )

Foreign currency exchange (loss) gain, net ( 2,906 ) 18,749

Gain on disposal of subsidiaries, net 1,461 27

Gain (loss) on disposal of subsidiaries, net 1,461 ( 922 )

Income (loss) from continuing operations before income taxes and equity in net income of affiliates 184,994 ( 116,637 )

1 unchanged sentence

Equity in net income of affiliates, net of tax 70 —

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

Income (loss) from continuing operations 25,851 ( 290,800 )

Income from discontinued operations, net of tax expense of $ 0 and $ 257,440 , respectively

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

4,064 456,770

Net income 29,915 165,970

Net loss attributable to noncontrolling interests 414 508

Net loss attributable to Laureate Education, Inc.

Net income attributable to Laureate Education, Inc.

$ 30,329 $ 166,478

Basic and diluted earnings (loss) per share:

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

Income (loss) from continuing operations $ 0.15 $ ( 1.51 )

Income from discontinued operations 0.02 2.37

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

Basic and diluted earnings per share $ 0.17 $ 0.86

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

2 unchanged sentences

Consolidated Statements of Comprehensive Income

For the three months ended June 30, 2022 2021

For the three months ended September 30, 2022 2021

(Unaudited) (Unaudited)

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

Net income $ 31,036 $ 360,137

Other comprehensive income:

2 unchanged sentences

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.

Total other comprehensive loss ( 41,178 ) ( 22,627 )

Comprehensive (loss) income ( 10,142 ) 337,510

Net comprehensive loss attributable to noncontrolling interests 82 248

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

$ ( 10,060 ) $ 337,758

3 unchanged sentences

Consolidated Statements of Comprehensive Income

For the six months ended June 30, 2022 2021

For the nine months ended September 30, 2022 2021

(Unaudited) (Unaudited)

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

Net income $ 29,915 $ 165,970

Other comprehensive income (loss):

12 unchanged sentences

IN THOUSANDS, except per share amounts

September 30,

2022 December 31,

31 unchanged sentences

IN THOUSANDS, except per share amounts

September 30,

2022 December 31,

8 unchanged sentences

Income taxes payable 56,691 38,705

Special cash distribution payable 139,995 6,932

Other current liabilities 21,096 11,165

11 unchanged sentences

Stockholders' equity:

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

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

Common stock, par value $ 0.004 per share – 700,000 shares authorized, 230,444 shares issued and 164,649 shares outstanding as of September 30, 2022 and 228,831 shares issued and 180,611 shares outstanding as of December 31, 2021

Additional paid-in capital 2,268,879 2,388,783

1 unchanged sentence

Accumulated other comprehensive loss ( 493,825 ) ( 520,204 )

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

Treasury stock at cost ( 65,795 shares held at September 30, 2022 and 48,220 shares held at December 31, 2021)

( 951,272 ) ( 744,174 )

8 unchanged sentences

Consolidated Statements of Cash Flows

For the six months ended June 30, 2022 2021

For the nine months ended September 30, 2022 2021

Cash flows from operating activities (Unaudited) (Unaudited)

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

Net income $ 29,915 $ 165,970

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

9 unchanged sentences

Deferred income taxes 8,152 267,551

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

Unrealized foreign currency exchange gain ( 2,169 ) ( 11,240 )

Non-cash loss from non-income tax contingencies 419 11,976

48 unchanged sentences

All other markets have been divested (the Discontinued Operations).

See Note 3, Discontinued Operations and Assets Held for Sale, for more information.

See Note 3, Discontinued Operations and Assets Held for Sale, and Note 4, Dispositions, for more information.

Unless indicated otherwise, the information in the footnotes to the Consolidated Financial Statements relates to continuing operations.

22 unchanged sentences

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

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

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

Mexico Peru Corporate (1)

17 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 $ 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.

Total accounts receivable from our contracts with students were $ 125,922 and $ 117,987 as of September 30, 2022 and December 31, 2021, respectively.

The increase in the contract assets balance at September 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 $ 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 .

Contract liabilities in the amount of $ 74,274 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 September 30, 2022 and December 31, 2021, respectively.

The increase in the contract liability balance during the period ended September 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 nine months ended September 30, 2022 that was included in the contract liability balance at the beginning of the year was approximately $ 38,000 .

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 June 30, 2022 2021

For the three months ended September 30, 2022 2021

Revenues $ — $ 70,787

1 unchanged sentence

Other direct costs — ( 58,123 )

Loss on impairment of assets — ( 204 )

Other non-operating expense — ( 4,938 )

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

Pretax income of discontinued operations 4,145 85,598

(Loss) gain on sale of discontinued operations before taxes, net ( 816 ) 612,010

Pretax (loss) income of discontinued operations ( 816 ) 619,365

Income tax benefit — ( 248,838 )

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

For the six months ended June 30, 2022 2021

(Loss) income from discontinued operations, net of tax $ ( 816 ) $ 370,527

For the nine months ended September 30, 2022 2021

Revenues $ — $ 542,650

12 unchanged sentences

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

September 30, 2022 December 31, 2021

Assets of Discontinued Operations

4 unchanged sentences

Total liabilities held for sale $ — $ 10,849

Receipt of Escrow Receivable from Sale of Walden

On August 12, 2021, pursuant to the Membership Interest Purchase Agreement (the Walden Purchase Agreement) with Adtalem Global Education Inc.

(the Walden Purchaser), the Company sold to the Walden Purchaser all of the issued and outstanding equity interest in Walden e-Learning, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (Walden), and its subsidiary, Walden University, LLC, a Florida limited liability company and an indirect wholly owned subsidiary of the Company (together with Walden, the Walden Group).

At the closing date of August 12, 2021, the Walden Purchaser paid an additional $ 74,000 of the sale transaction value into an escrow account, which was to be released in full or in part to the Company one year following the closing of the transaction pursuant to the terms and conditions of the escrow agreement.

On August 23, 2022, the Company received approximately $ 71,700 of the escrow amount.

Business and Geographic Segment Information

7 unchanged sentences

The target demographics are primarily 18- to 24-year-olds in the countries in which we compete.

We compete with other private higher education institutions on the basis of price, educational quality, reputation and location.

compete with other private higher education institutions on the basis of price, educational quality, reputation and location.

We believe that we compare favorably with competitors because of our focus on quality, professional-oriented curriculum and the competitive advantages provided by our network.

8 unchanged sentences

Laureate owns three institutions in Peru.

As discussed in Note 1, Description of Business, and Note 3, Discontinued Operations and Assets Held for Sale, in prior periods a number of our subsidiaries met the requirements to be classified as Discontinued Operations.

As discussed in Note 1, Description of Business, in prior periods a number of our subsidiaries met the requirements to be classified as Discontinued Operations.

As a result, the Discontinued Operations have been excluded from the segment information for all periods presented.

2 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 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.

(Loss) gain on disposal of subsidiaries, net, Foreign currency exchange gain (loss), 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.

8 unchanged sentences

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

For the three months ended For the six months ended

June 30, June 30,

For the three months ended For the nine months ended

September 30, September 30,

2022 2021 2022 2021

13 unchanged sentences

EiP expenses ( 168 ) ( 9,587 ) ( 1,320 ) ( 37,499 )

Operating income (loss) 126,641 57,684 135,675 ( 28,707 )

Operating income 56,317 35,106 191,992 6,399

Interest income 1,970 1,268 5,623 2,456

3 unchanged sentences

Other income (expense), net 1,393 ( 46 ) 413 ( 67 )

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

Foreign currency gain (loss), net 15,146 6,085 ( 2,906 ) 18,749

(Loss) gain on disposal of subsidiaries, net — ( 949 ) 1,461 ( 922 )

Income (loss) from continuing operations before income taxes and equity in net income of affiliates $ 71,132 $ 37,728 $ 184,994 $ ( 116,637 )

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Mexico $ 1,144,840 $ 1,251,791

2 unchanged sentences

Total assets $ 2,098,763 $ 2,211,310

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

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

Mexico Peru Total

1 unchanged sentence

Currency translation adjustments 5,875 605 6,480

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

Balance at September 30, 2022 $ 485,098 $ 68,177 $ 553,275

Outstanding long-term debt was as follows:

June 30, 2022 December 31, 2021

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

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

Estimated Fair Value of Debt

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

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

Certain Covenants

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

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

As of September 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 June 30, 2022.

We were in compliance with these covenants as of September 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 June 30, 2022 and December 31, 2021, Laureate had recorded cumulative liabilities for income tax contingencies of $ 122,850 and $ 91,585 , respectively.

As of September 30, 2022 and December 31, 2021, Laureate had recorded cumulative liabilities for income tax contingencies of $ 124,591 and $ 91,585 , respectively.

Other Loss Contingencies

1 unchanged sentence

Laureate intends to vigorously defend against these matters.

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.

As of September 30, 2022 and December 31, 2021, approximately $ 10,100 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 June 30, 2022 and December 31, 2021, the amount of the guarantee was $ 6,188 and $ 5,885 , respectively.

As of September 30, 2022 and December 31, 2021, the amount of the guarantee was $ 5,937 and $ 5,885 , respectively.

Letter of Credit

As of September 30, 2022 and December 31, 2021, we had approximately $ 9,000 and $ 10,700 , respectively, posted as cash collateral for a letter of credit related to the Spanish tax audits.

This was recorded in Continuing Operations and classified as Restricted cash on our September 30, 2022 and December 31, 2021 Consolidated Balance Sheets.

The cash collateral was related to final assessments issued by the Spanish Taxing Authority (STA) in October 2018 and January 2020 to Iniciativas Culturales de España, S.L.

(ICE), our former Spanish holding company.

During the second quarter of 2020, ICE was migrated to the Netherlands, and its name was changed to Laureate Netherlands Holding B.V.

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

Following the payment, the letter of credit was no longer required and the cash was subsequently released in October 2022.

Share-based Compensation

Share-based compensation expense was as follows:

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

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

2022 2021 2022 2021

32 unchanged sentences

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

Non-cash stock compensation — — 1,849 — — — — 1,849

Purchase of treasury stock at cost ( 77 ) — — — — ( 862 ) — ( 862 )

Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 63 — 199 — — — — 199

Special cash distribution accrued on outstanding common stock — — ( 136,642 ) — — — — ( 136,642 )

Equitable adjustments to stock-based awards — — ( 770 ) — — — — ( 770 )

Net income — — — 31,117 — — ( 81 ) 31,036

Foreign currency translation adjustment, net of tax of $ 0

— — — — ( 42,160 ) — ( 1 ) ( 42,161 )

Minimum pension liability adjustment, net of tax of $ 0

— — — — 983 — — 983

Balance at September 30, 2022 164,649 $ 922 $ 2,268,879 $ 45,852 $ ( 493,825 ) $ ( 951,272 ) $ ( 1,697 ) $ 868,859

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

28 unchanged sentences

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

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

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

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

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

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

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

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

Foreign currency translation adjustment, net of tax of $0 — — — — — — ( 22,648 ) — 21 ( 22,627 )

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

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.

7 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 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 .

During the nine months ended September 30, 2022, the Company repurchased 17,575 shares of its outstanding common stock for a total purchase price of $ 207,098 , and its repurchases reached the total authorized limit of $ 650,000 .

Special Cash Distribution

On September 14, 2022, the Company announced that its Board of Directors approved, pursuant to the previously announced adoption of a Partial Liquidation Plan related to the distribution of net proceeds from the Company’s sale of Walden e-Learning LLC (the Walden Sale), the payment of a special cash distribution (the October 2022 Distribution) equal to $ 0.83 per each share of the Company’s common stock, par value $ 0.004 per share, to each holder of record on September 28, 2022.

The proceeds that were distributed were attributable to the release during the third quarter of 2022 of $ 71,700 of escrowed funds from the Walden Sale, plus remaining net proceeds that had yet to be distributed.

This is anticipated to be the final distribution pursuant to the Plan.

The October 2022 Distribution was paid on October 12, 2022.

During the third quarter of 2022, the Company recorded additional dividend payable of approximately $ 136,600 , based on the number of shares outstanding at the record date.

In connection with the October 2022 Distribution, the Board of Directors approved certain required adjustments under the Company’s equity award compensation plans.

The ex-dividend date was September 27, 2022, and therefore these required equitable adjustments were recorded in the consolidated financial statements during the third quarter of 2022.

The exercise prices of the Company’s stock options were reduced by $ 0.83 per share, and holders of restricted and performance stock units will receive an amount in cash equal to $ 0.83 per unvested stock unit, payable when such unit vests.

As of September 30, 2022 , the Company recorded a payable of approximately $ 770 related to the equitable adjustments for the equity award compensation plans.

As previously disclosed in the 2021 Form 10-K, in September 2021, the Board approved the payment of a special cash distribution pursuant to the Partial Liquidation Plan equal to $ 7.01 per each share of the Company’s common stock, par value $ 0.004 per share, to each holder of record on October 6, 2021.

The distribution was paid on October 29, 2021.

As of December 31, 2021, there were dividends payable of $ 6,932 for equitable adjustments related to restricted stock awards that had not yet vested.

In the December 31, 2021 balance sheet that was included in our 2021 Form 10-K, this amount was classified within Other current liabilities.

In order to conform with the presentation in the September 30, 2022 balance sheet presented in this Form 10-Q, this $ 6,932 has been reclassified within Special cash distribution payable on the comparative December 31, 2021 balance sheet.

Accumulated Other Comprehen sive Income (Loss)

2 unchanged sentences

The components of these balances were as follows:

June 30, 2022 December 31, 2021

September 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 June 30, 2022 and December 31, 2021.

Laureate did not hold any derivatives as of September 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 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

There was no gain or loss on derivatives in the Consolidated Statements of Operations for the three months ended September 30, 2022 and 2021.

Components of the reported Loss on derivatives not designated as hedging instruments in the Consolidated Statements of Operations for the nine months ended September 30, 2022 and 2021 were as follows:

For the nine months ended September 30,

Cross currency swaps

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

Unrealized gain $ — $ 25,824

Realized loss — ( 50,341 )

5 unchanged sentences

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

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.

As of September 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.

As of September 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 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.

The tax provisions for the nine months ended September 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 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 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 .

For the nine months ended September 30, 2022, the Company recognized income t ax expense of $ 159,213 , as compared to $ 174,163 in the prior year period.

Income tax expense for the nine months ended September 30, 2022 was attributable to pretax income, the jurisdictional mix of earnings, pretax losses for which the Company cannot recognize a tax benefit, and discrete tax expense of approximately $ 32,500 that was recorded for income tax reserves related to the application of the high-tax exception to global intangible low-taxed income.

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

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

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

Inflation Reduction Act of 2022

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act of 2022, which implemented a 15% minimum tax on book income of certain large corporations, a 1% excise tax on stock repurchases and tax incentives to promote clean energy, among other provisions.

The Company does not believe that this legislation will have a material impact on the financial statements and will continue to monitor regulatory developments to assess potential impacts to the Company.

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 June 30, 2022 2021

For the three months ended September 30, 2022 2021

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

Income (loss) from continuing operations $ 31,852 $ ( 10,390 )

(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 )

Loss (income) attributable to noncontrolling interests 81 ( 17 )

Net income (loss) from continuing operations for basic and diluted earnings (loss) per share $ 31,933 $ ( 10,407 )

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) income from discontinued operations, net of tax $ ( 816 ) $ 370,527

Loss attributable to noncontrolling interests — 286

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

Net (loss) income from discontinued operations for basic and diluted earnings (loss) per share $ ( 816 ) $ 370,813

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

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Diluted weighted average shares outstanding 165,015 185,569

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:

Basic and diluted earnings (loss) per share:

Income (loss) from continuing operations $ 0.19 $ ( 0.06 )

Income from discontinued operations — 2.00

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

For the six months ended June 30, 2022 2021

Basic and diluted earnings per share $ 0.19 $ 1.94

For the nine months ended September 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 )

Income (loss) from continuing operations $ 25,851 $ ( 290,800 )

Loss attributable to noncontrolling interests 414 9

Loss from continuing operations attributable to Laureate Education, Inc.

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

26,265 ( 290,791 )

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

Net loss from continuing operations for basic and diluted loss per share $ ( 5,668 ) $ ( 280,471 )

Net income (loss) from continuing operations for basic and diluted earnings (loss) per share $ 26,265 $ ( 290,879 )

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

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

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

Basic weighted average shares outstanding 169,885 192,543

Dilutive effect of stock options 302 —

Dilutive effect of restricted stock units 173 —

Diluted weighted average shares outstanding 170,360 192,543

Basic and diluted earnings (loss) per share:

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

Income (loss) from continuing operations $ 0.15 $ ( 1.51 )

Income from discontinued operations 0.02 2.37

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

Basic and diluted earnings per share $ 0.17 $ 0.86

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

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

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

2022 2021 2022 2021

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Reconciliation of Cash and cash equivalents and Restricted cash

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

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

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

September 30, 2022 September 30, 2021 December 31, 2021

Cash and cash equivalents $ 319,039 $ 1,856,856 $ 324,801

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Total Cash and cash equivalents and Restricted cash shown in the Consolidated Statements of Cash Flows $ 336,487 $ 1,961,855 $ 345,575

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.

Restricted cash represents cash that is not immediately available for use in current operations and includes cash held to collateralize a letter of credit and cash restricted for a benefit plan.

As described in Note 9, Commitments and Contingencies, a portion of the restricted cash was reclassified to Cash and cash equivalents in October 2022, following the release of the letter of credit.

Subsequent Events

Spanish Tax Audits-Spanish Supreme Court Appeal

Special Cash Dividend

On October 24, 2022, the board of directors of the Company approved the payment of a special cash dividend (the Special Dividend) equal to $ 0.68 per each share of the Company’s common stock, par value $ 0.004 per share, to each holder of record on November 4, 2022.

The Special Dividend is scheduled to be paid on November 17, 2022.

Based on the current number of shares outstanding, the aggregate amount of the Special Dividend is expected to be approximately $ 112,000 .

In connection with the Special Dividend, the Board approved certain required adjustments under the Company’s equity award compensation plans.

Subject to the payment of the Special Dividend, the exercise price of the Company’s options will be reduced by $ 0.68 per share, and holders of restricted and performance stock units will receive an amount in cash equal to $ 0.68 per unvested stock unit held payable when such unit vests.

If all outstanding stock units vest, the aggregate amount to be paid in respect of the units will be approximately $ 635 .

Spanish Tax Audits-Spanish Supreme Court Appeal and Mutual Agreement Procedure

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.

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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.

In addition, in October 2022, the review pursuant to the Mutual Agreement Procedure between the STA and Dutch tax authorities related to the STA’s audits of the Company for fiscal years 2011 through 2013 was completed, and it was determined that the Company does not have the option to seek treaty relief against double taxation for those fiscal years.

The Company does not expect that these matters 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