What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2022-11-03 · 104 added, 412 removed, 341 unchanged (60% of the section changed)

4 unchanged sentences

IN THOUSANDS, except per share amounts

For the three months ended September 30, 2022 2021

(Unaudited) (Unaudited)

Revenues $ 300,999 $ 267,691

Costs and expenses:

Direct costs 229,361 181,978

General and administrative expenses 15,321 47,315

Loss on impairment of assets — 3,292

Operating income 56,317 35,106

Interest income 1,970 1,268

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

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

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 )

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

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

( 816 ) 370,527

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

Basic and diluted earnings per share $ 0.19 $ 1.94

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 nine months ended September 30, 2022 2021

For the three months ended March 31, 2023 2022

(Unaudited) (Unaudited)

7 unchanged sentences

Interest expense ( 5,952 ) ( 3,731 )

Loss on debt extinguishment — ( 77,940 )

Loss on derivatives — ( 24,517 )

Other income (expense), net 261 ( 1,226 )

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

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 )

Foreign currency exchange loss, net ( 28,952 ) ( 3,601 )

Gain on disposal of subsidiaries, net 306 —

(Loss) income from continuing operations before income taxes and equity in net (loss) income of affiliates ( 16,550 ) 2,444

Income tax expense ( 10,195 ) ( 47,967 )

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

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

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

4,064 456,770

Net income 29,915 165,970

Equity in net (loss) income of affiliates, net of tax ( 3 ) 108

Loss from continuing operations ( 26,748 ) ( 45,415 )

(Loss) income from discontinued operations, net of tax of $ 0 for both periods

Net loss ( 26,762 ) ( 44,680 )

Net loss attributable to noncontrolling interests 155 469

Net income attributable to Laureate Education, Inc.

Net loss attributable to Laureate Education, Inc.

$ ( 26,607 ) $ ( 44,211 )

Basic and diluted earnings (loss) per share:

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

Loss from continuing operations $ ( 0.17 ) $ ( 0.25 )

Income from discontinued operations — —

Basic and diluted earnings per share $ 0.17 $ 0.86

Basic and diluted loss per share $ ( 0.17 ) $ ( 0.25 )

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 September 30, 2022 2021

For the three months ended March 31, 2023 2022

(Unaudited) (Unaudited)

Net income $ 31,036 $ 360,137

Net loss $ ( 26,762 ) $ ( 44,680 )

Other comprehensive income:

2 unchanged sentences

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

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

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

LAUREATE EDUCATION, INC.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the nine months ended September 30, 2022 2021

(Unaudited) (Unaudited)

Net income $ 29,915 $ 165,970

Other comprehensive income (loss):

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

25,386 428,055

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

Total other comprehensive income 72,797 49,589

8 unchanged sentences

IN THOUSANDS, except per share amounts

September 30,

2023 December 31,

20 unchanged sentences

Goodwill 618,471 583,493

Tradenames 144,429 142,848

Tradenames, net 159,454 151,645

Deferred costs, net 4,684 5,310

1 unchanged sentence

Other assets 41,794 40,677

Long-term assets held for sale — 6,164

Total assets $ 2,095,474 $ 1,972,237

4 unchanged sentences

IN THOUSANDS, except per share amounts

September 30,

2023 December 31,

8 unchanged sentences

Income taxes payable 13,436 38,738

Special cash distribution payable 139,995 6,932

Other current liabilities 21,745 17,587

Current liabilities held for sale — 1,054

Total current liabilities 407,776 381,387

5 unchanged sentences

Other long-term liabilities 32,526 30,823

Long-term liabilities held for sale — 9,795

Total liabilities 1,273,144 1,196,482

1 unchanged sentence

Stockholders' equity:

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

Preferred stock, par value $ 0.001 per share – 50,000 shares authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022

Common stock, par value $ 0.004 per share – 700,000 shares authorized, 230,948 shares issued and 157,174 shares outstanding as of March 31, 2023 and 230,779 shares issued and 157,013 shares outstanding as of December 31, 2022

Additional paid-in capital 2,205,434 2,204,755

1 unchanged sentence

Accumulated other comprehensive loss ( 369,633 ) ( 442,424 )

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

Treasury stock at cost ( 73,766 shares held at both March 31, 2023 and December 31, 2022)

( 1,026,272 ) ( 1,026,272 )

8 unchanged sentences

Consolidated Statements of Cash Flows

For the nine months ended September 30, 2022 2021

For the three months ended March 31, 2023 2022

Cash flows from operating activities (Unaudited) (Unaudited)

Net income $ 29,915 $ 165,970

Net loss $ ( 26,762 ) $ ( 44,680 )

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

2 unchanged sentences

Loss on impairment of assets — 144

Gain on sales and disposal of subsidiaries and property and equipment, net ( 5,797 ) ( 625,532 )

Loss on derivative instruments — 24,517

Loss on debt extinguishment — 77,999

Loss (gain) on sales and disposal of subsidiaries and property and equipment, net 1,524 ( 713 )

Non-cash interest expense 245 234

2 unchanged sentences

Deferred income taxes ( 607 ) 4,413

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

Unrealized foreign currency exchange loss (gain) 28,949 ( 753 )

Non-cash loss from non-income tax contingencies 61 69

10 unchanged sentences

Expenditures for deferred costs — ( 44 )

Receipts from sales of discontinued operations, net of cash sold, and property and equipment 83,405 2,137,673

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

Net cash provided by investing activities 66,288 2,054,383

Receipts from sales of discontinued operations and property and equipment 254 9,193

Net cash (used in) provided by investing activities ( 5,579 ) 7,938

Cash flows from financing activities

2 unchanged sentences

Payment of dividend equivalent rights for vested share-based awards ( 2,318 ) ( 3,490 )

Payments to purchase noncontrolling interests ( 123 ) —

Proceeds from exercise of stock options 1,423 11,496

1 unchanged sentence

Payments to repurchase common stock — ( 102,171 )

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

Net cash used in financing activities ( 236,505 ) ( 1,284,533 )

Net cash provided by (used in) financing activities 21,144 ( 104,138 )

Effects of exchange rate changes on Cash and cash equivalents and Restricted cash 3,462 11,190

Change in cash included in current assets held for sale — 285,027

Net change in Cash and cash equivalents and Restricted cash 45,496 ( 31,133 )

10 unchanged sentences

Laureate's programs are provided through institutions that are campus-based and through electronically distributed educational programs (online).

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 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.

The Company completed its initial public offering (IPO) on February 6, 2017, and its shares are listed on the Nasdaq Global Select Market under the symbol “LAUR.”

Discontinued Operations

As a result of the strategic review first announced in January 2020, during the third quarter of 2020, the Company completed a sale of its operations in Chile and signed agreements to sell its operations in Brazil, Australia and New Zealand, as well as Walden University in the United States.

Additionally, prior to 2020, the Company had announced the divestiture of certain other subsidiaries in Europe, Asia and Central America, which has been completed.

These announcements represented strategic shifts that had a major effect on the Company’s operations and financial results.

Accordingly, all of the divestitures that were part of these strategic shifts were accounted for as Discontinued Operations for all periods presented in accordance with Accounting Standards Codification (ASC) 205-20, “Discontinued Operations” (ASC 205).

All planned divestitures have now been completed, and the Company has concluded its strategic review process.

The Company’s continuing operations are Mexico and Peru.

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

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.

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q.

21 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 September 30, 2022 and 2021:

Mexico Peru Corporate (1)

Tuition and educational services $ 178,733 $ 147,982 $ — $ 326,715 109 %

Other 32,750 15,493 670 48,913 16 %

Gross revenue 211,483 163,475 670 375,628 125 %

Discounts / waivers / scholarships ( 63,701 ) ( 10,928 ) — ( 74,629 ) ( 25 ) %

Total $ 147,782 $ 152,547 $ 670 $ 300,999 100 %

Tuition and educational services $ 160,117 $ 129,715 $ — $ 289,832 108 %

Other 25,813 12,959 3,309 42,081 16 %

Gross revenue 185,930 142,674 3,309 331,913 124 %

Discounts / waivers / scholarships ( 54,669 ) ( 9,553 ) — ( 64,222 ) ( 24 ) %

Total $ 131,261 $ 133,121 $ 3,309 $ 267,691 100 %

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

The following table shows the components of Revenues by reportable segment and as a percentage of total revenue for the nine months ended September 30, 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 March 31, 2023 and 2022:

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 $ 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.

Total accounts receivable from our contracts with students were $ 120,261 and $ 133,105 as of March 31, 2023 and December 31, 2022, respectively.

The decrease in the contract assets balance at March 31, 2023 compared to December 31, 2022 was primarily driven by collections, in particular the repayment of outstanding amounts by students re-enrolling for the next academic session.

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 $ 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

As discussed in Note 1, Description of Business, the Company’s remaining principal markets are Mexico and Peru.

All other markets have been divested.

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

For the three months ended September 30, 2022 2021

Revenues $ — $ 70,787

Share-based compensation expense — ( 371 )

Other direct costs — ( 58,123 )

Other non-operating expense — ( 4,938 )

(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 )

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

For the nine months ended September 30, 2022 2021

Revenues $ — $ 542,650

Share-based compensation expense — ( 1,198 )

Other direct costs — ( 430,789 )

Loss on impairment of assets — ( 1,268 )

Other non-operating expense — ( 20,489 )

Gain on sale of discontinued operations before taxes, net 4,064 625,304

Pretax income of discontinued operations 4,064 714,210

Income tax expense — ( 257,440 )

Income from discontinued operations, net of tax $ 4,064 $ 456,770

Operating cash flows of discontinued operations $ — $ 16,420

Investing cash flows of discontinued operations $ — $ ( 11,161 )

Financing cash flows of discontinued operations $ — $ ( 18,054 )

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:

September 30, 2022 December 31, 2021

Assets of Discontinued Operations

Operating lease right-of-use assets, net $ — $ 6,164

Total assets held for sale $ — $ 6,164

Liabilities of Discontinued Operations

Operating leases, including current portion $ — $ 10,849

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.

Contract liabilities in the amount of $ 114,832 and $ 51,264 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, 2023 and December 31, 2022, respectively.

The increase in the contract liability balance during the period ended March 31, 2023 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, 2023 that was included in the contract liability balance at the beginning of the year was approximately $ 36,400 .

Business and Geographic Segment Information

3 unchanged sentences

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 utilize hybrid (a combination of online and in-classroom) courses and programs to deliver their curriculum.

Our educational offerings utilize campus-based, online and hybrid (a combination of online 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.

The demand for higher education is large and growing and is fueled by several demographic and economic factors, including a growing middle class, global growth in services and technology-related industries and recognition of the significant personal and economic benefits gained by graduates of higher education institutions.

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

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

gained by graduates of higher education institutions.

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

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

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

There are a number of private and public institutions in Mexico and Peru, and it is difficult to predict how the markets will evolve and how many competitors there will be in the future.

There are a number of private and public institutions in both countries in which we operate, and it is difficult to predict how the markets will evolve and how many competitors there will be in the future.

We expect competition to increase as the Mexican and Peruvian markets mature.

6 unchanged sentences

Laureate owns three institutions in Peru.

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.

Inter-segment transactions are accounted for in a similar manner as third-party transactions and are eliminated in consolidation.

1 unchanged sentence

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:

(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.

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

1 unchanged sentence

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 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.

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.

3 unchanged sentences

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 For the nine months ended

September 30, September 30,

2022 2021 2022 2021

The following tables provide financial information for our reportable segments, including a reconciliation of Adjusted EBITDA to (Loss) income 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, 2023 2022

Mexico $ 181,963 $ 142,549

1 unchanged sentence

Corporate 59 1,610

Revenues $ 300,999 $ 267,691 $ 895,943 $ 789,971

Total Revenues $ 251,255 $ 209,563

Adjusted EBITDA of reportable segments

11 unchanged sentences

Interest expense ( 5,952 ) ( 3,731 )

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

Loss on derivatives — — — ( 24,517 )

Other income (expense), net 261 ( 1,226 )

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 )

September 30, 2022 December 31, 2021

Foreign currency loss, net ( 28,952 ) ( 3,601 )

Gain on disposal of subsidiaries, net 306 —

(Loss) income from continuing operations before income taxes and equity in net income of affiliates $ ( 16,550 ) $ 2,444

March 31, 2023 December 31, 2022

Mexico $ 1,324,038 $ 1,220,630

Peru 545,468 536,141

Corporate and Discontinued Operations 373,186 360,657

Corporate 225,968 215,466

Total assets $ 2,095,474 $ 1,972,237

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

The change in the net carrying amount of Goodwill from December 31, 2022 through March 31, 2023 was composed of the following items:

Mexico Peru Total

1 unchanged sentence

Currency translation adjustments 34,015 963 34,978

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

Balance at March 31, 2023 $ 547,005 $ 71,466 $ 618,471

Outstanding long-term debt was as follows:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

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

As of March 31, 2023 and December 31, 2022, the Senior Secured Credit Facility had a total outstanding balance of $ 138,000 and $ 100,000 , respectively.

Estimated Fair Value of Debt

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

As of March 31, 2023 and December 31, 2022, the estimated fair value of our debt approximated its carrying value.

Certain Covenants

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

As of March 31, 2023, 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 September 30, 2022, these conditions were satisfied and, therefore, we were not subject to the leverage ratio.

As of March 31, 2023, more than 25 % of the revolving credit facility was utilized and we were in compliance with the leverage ratio covenant.

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

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

We were in compliance with these covenants as of March 31, 2023.

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

22 unchanged sentences

We do not believe that any settlement would have a material impact on our Consolidated Financial Statements.

Contingent Liabilities for Taxes

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

Income Tax Contingencies

As of March 31, 2023 and December 31, 2022, Laureate had recorded cumulative liabilities for income tax contingencies of $ 127,568 and $ 130,323 , respectively.

Non-Income Tax Loss Contingencies

Laureate has accrued liabilities for certain civil actions against our institutions, a portion of which existed prior to our acquisition of these entities.

Laureate intends to vigorously defend against these matters.

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.

As of March 31, 2023 and December 31, 2022, approximately $ 12,500 and $ 11,400 , respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets.

We have also identified certain loss contingencies that we have assessed as being reasonably possible of loss, but not probable of loss, and could have an adverse effect on the Company’s results of operations if the outcomes are unfavorable.

In the aggregate, we estimate that the reasonably possible loss for these unrecorded contingencies could be up to approximately $ 16,600 if the outcomes were unfavorable.

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 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 September 30, For the nine months ended September 30,

2022 2021 2022 2021

Continuing operations

Stock options, net of estimated forfeitures $ — $ 72 $ — $ 349

Restricted stock awards 1,849 1,954 6,971 5,628

Total continuing operations 1,849 2,026 6,971 5,977

Discontinued operations

Share-based compensation expense for discontinued operations — 371 — 1,198

Total continuing and discontinued operations $ 1,849 $ 2,397 $ 6,971 $ 7,175

As of March 31, 2023 and December 31, 2022, the amount of the guarantee was $ 7,172 and $ 7,076 , respectively.

Stockholders’ Equity

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

The components of net changes in stockholders’ equity for the three months ended March 31, 2023 are as follows:

Laureate Education, Inc.

Common stock Additional paid-in capital Retained earnings (accumulated deficit) Accumulated other comprehensive loss Treasury stock at cost Non-controlling interests Total stockholders’ equity

Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock at cost Non-controlling interests Total stockholders’ equity

Shares Amount

Balance at December 31, 2022 157,013 $ 923 $ 2,204,755 $ 39,244 $ ( 442,424 ) $ ( 1,026,272 ) $ ( 1,869 ) $ 774,357

Non-cash stock compensation — — 2,762 — — — — 2,762

Purchase of treasury stock at cost ( 9,485 ) — — — — ( 112,874 ) — ( 112,874 )

Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 1,379 6 10,716 — — — — 10,722

Non-cash share-based compensation — — 1,124 — — — — 1,124

Exercise of stock options and vesting of restricted stock units, net of shares withheld to satisfy tax withholding 161 1 ( 448 ) — — — — ( 447 )

Equitable adjustments to stock-based awards — — ( 13 ) — — — — ( 13 )

Change in noncontrolling interests — — 16 — — — ( 140 ) ( 124 )

Net loss — — — ( 26,607 ) — — ( 155 ) ( 26,762 )

1 unchanged sentence

— — — — 72,791 — 6 72,797

Minimum pension liability adjustment, net of tax of $ 0

— — — — 14 — — 14

Balance at March 31, 2023 157,174 $ 924 $ 2,205,434 $ 12,637 $ ( 369,633 ) $ ( 1,026,272 ) $ ( 2,158 ) $ 820,932

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

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:

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

Laureate Education, Inc.

common stock Class B

common stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Treasury stock at cost Non-controlling interests Total stockholders’ equity

Shares Amount Shares Amount

Common stock Additional paid-in capital Retained earnings (accumulated deficit) Accumulated other comprehensive loss Treasury stock at cost Non-controlling interests Total stockholders’ equity

Shares Amount

Balance at December 31, 2021 180,611 $ 915 $ 2,388,783 $ 15,523 $ ( 520,204 ) $ ( 744,174 ) $ ( 1,285 ) $ 1,139,558

Beginning retained earnings adjustment — — — — — ( 101 ) — — — ( 101 )

Non-cash stock compensation — — — — 1,576 — — — — 1,576

Conversion of Class B shares to Class A shares 17,248 69 ( 17,248 ) ( 69 ) — — — — — —

Non-cash share-based compensation — — 2,762 — — — — 2,762

Purchase of treasury stock at cost ( 9,485 ) — — — — ( 112,874 ) — ( 112,874 )

Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding 247 1 — — ( 1,223 ) — — — — ( 1,222 )

Accretion of redeemable noncontrolling interests and equity — — — — ( 20 ) — — — — ( 20 )

Exercise of stock options and vesting of restricted stock units, net of shares withheld to satisfy tax withholding 1,379 6 10,716 — — — — 10,722

Equitable adjustments to stock-based awards — — ( 189 ) — — — — ( 189 )

Net loss — — — ( 44,211 ) — — ( 469 ) ( 44,680 )

4 unchanged sentences

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

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

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.

Following the conversion, the Company has only one class of common stock outstanding.

Stock Repurchase Program

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.

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

Repurchases may be effected pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act.

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

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

During the 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.

Share-based Compensation Expense

During the three months ended March 31, 2023 and 2022, the Company recorded share-based compensation expense for restricted stock unit awards of $ 1,124 and $ 2,762 , respectively.

Accumulated Other Comprehen sive Income (Loss)

2 unchanged sentences

The components of these balances were as follows:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Laureate Education, Inc.

5 unchanged sentences

Accumulated other comprehensive loss $ ( 369,633 ) $ 965 $ ( 368,668 ) $ ( 442,424 ) $ 959 $ ( 441,465 )

Derivative Instruments

In the normal course of business, our operations are exposed to fluctuations in foreign currency values and interest rate changes.

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

Prior to their repayment, Laureate’s senior long-term debt arrangements were primarily in USD.

Our ability to make debt payments was subject to fluctuations in the value of the USD against foreign currencies, since a majority of our operating cash used to make these payments was generated by subsidiaries with functional currencies other than USD.

As part of our overall risk management policies, Laureate has at times entered into foreign currency swap contracts and floating-to-fixed interest rate swap contracts.

For example, in November 2020 we entered into the BRL to USD foreign currency swap described below.

In addition, we occasionally enter into foreign exchange forward contracts to reduce the impact of other non-functional currency-denominated receivables and payables.

We do not enter into speculative or leveraged transactions, nor do we hold or issue derivatives for trading purposes.

We generally intend to hold our derivatives until maturity.

Laureate reports all derivatives at fair value.

These contracts are recognized as either assets or liabilities, depending upon the derivative’s fair value.

Gains or losses associated with the change in the fair value of these swaps are recognized in our Consolidated Statements of Operations on a current basis over the term of the contracts, unless designated and effective as a hedge.

For swaps that are designated and effective as cash flow hedges, gains or losses associated with the change in fair value of the swaps are recognized in our Consolidated Balance Sheets as a component of AOCI and amortized into earnings as a component of Interest expense over the term of the related hedged items.

Upon early termination of an effective interest rate swap designated as a cash flow hedge, unrealized gains or losses are deferred in our Consolidated Balance Sheets as a component of AOCI and are amortized as an adjustment to Interest expense over the period during which the hedged forecasted transaction affects earnings.

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 September 30, 2022 and December 31, 2021.

BRL to USD Foreign Currency Swaps

In November 2020, in connection with the signing of the sale agreement for its Brazilian operations, Laureate entered into six BRL-to-USD swap agreements.

The purpose of these swaps was to mitigate the risk of foreign currency exposure on the expected proceeds from the sale.

Two of the swaps were deal contingent, with the settlement date occurring on the second business day following the completion of the sale.

On the settlement date, Laureate would deliver the combined notional amount of BRL 1,900,000 (BRL 950,000 for each swap) and receive an amount in USD equal to each swap's notional amount multiplied by each swap's contract rate of exchange at the settlement date.

The remaining four swaps were originally put/call options with a maturity date of May 13, 2021, where Laureate could put the combined notional amount of BRL 1,875,000 and call a combined USD amount of $ 343,783 at an exchange rate of 5.4540 BRL per 1 USD.

The terms of these options included deferred premium payments from Laureate to the counterparties of $ 18,294 , which were paid in full in January 2021.

During the second quarter of 2021, all four of these swaps were converted to be deal contingent, with the settlement date occurring on the second business day following the aforementioned sale.

This conversion resulted in cash proceeds to Laureate of $ 1,663 .

On the settlement date, Laureate would deliver the combined notional amount of BRL 1,875,000 and receive an amount in USD equal to each swap’s notional amount multiplied by each swap’s contract rate of exchange at the settlement date.

The sale of Laureate’s Brazilian operations closed on May 28, 2021.

Per the terms of the agreements, the swaps were settled on June 2, 2021, which resulted in a realized loss and net settlement amount paid to the counterparties at closing of $ 33,710 .

These swaps were not designated as hedges for accounting purposes.

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 gain $ — $ 25,824

Realized loss — ( 50,341 )

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

Credit Risk and Credit-Risk-Related Contingent Features

Derivatives expose us to credit risk to the extent that the counterparty may possibly fail to perform its contractual obligation.

The amount of our credit risk exposure is equal to the fair value of the derivative when any of the derivatives are in a net gain position.

Laureate limits its credit risk by only entering into derivative transactions with highly rated major financial institutions.

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

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 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 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.

The tax provisions for the three months ended March 31, 2023 and 2022 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 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.

For the three months ended March 31, 2023, the Company recognized income t ax expense of $ 10,195 , as compared to $ 47,967 in the prior year period.

Income tax expense for the three months ended March 31, 2023 was attributable to pretax income, the jurisdictional mix of earnings, and pretax losses for which the Company cannot recognize a tax benefit.

In addition, the Company benefited from changes in reserves for uncertain tax positions.

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 the application of the high-tax exception to global intangible low-taxed income.

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.

Earnings (Loss) Per Share

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

Following the conversion, the Company has only one class of common stock outstanding.

Prior to that, our common stock had a dual class structure, consisting of Class A common stock and Class B common stock.

Other than voting rights, the Class B common stock had the same rights as the Class A common stock, and therefore both were treated as the same class of stock for purposes of the earnings per share calculation.

Laureate computes basic earnings per share (EPS) by dividing income available to common shareholders by the weighted average number of common shares outstanding for the reporting period.

Diluted EPS reflects the potential dilution that would occur if share-based compensation awards, contingently issuable shares, or convertible securities were exercised or converted into common stock.

To calculate the diluted EPS, the basic weighted average number of shares is increased by the dilutive effect of stock options, restricted stock, restricted stock units, and any contingently issuable shares determined using the treasury stock method, and any convertible securities using the if-converted method.

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

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 )

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:

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

Loss attributable to noncontrolling interests — 286

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:

Basic weighted average shares outstanding 164,645 185,569

Dilutive effect of stock options 221 —

Dilutive effect of restricted stock units 149 —

Diluted weighted average shares outstanding 165,015 185,569

Basic and diluted earnings (loss) per share:

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

Income from discontinued operations — 2.00

Basic and diluted earnings per share $ 0.19 $ 1.94

For the nine months ended September 30, 2022 2021

Diluted EPS reflects the potential dilution that would occur if share-based compensation awards were exercised or converted into common stock.

To calculate the diluted EPS, the basic weighted average number of shares is increased by the dilutive effect of stock options, restricted stock units, and any other share-based compensation arrangements determined using the treasury stock method.

The following table summarizes the computations of basic and diluted earnings (loss) per share:

For the three months ended March 31, 2023 2022

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

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

Loss from continuing operations $ ( 26,748 ) $ ( 45,415 )

Loss attributable to noncontrolling interests 155 469

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

Net loss from continuing operations for basic and diluted earnings (loss) per share $ ( 26,593 ) $ ( 44,946 )

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

Income from discontinued operations, net of tax $ 4,064 $ 456,770

Loss attributable to noncontrolling interests — 499

Net income from discontinued operations for basic and diluted earnings (loss) per share $ 4,064 $ 457,269

Net (loss) income from discontinued operations for basic and diluted earnings (loss) per share $ ( 14 ) $ 735

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

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 weighted average shares outstanding 157,197 177,995

Basic and diluted earnings (loss) per share:

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

Loss from continuing operations $ ( 0.17 ) $ ( 0.25 )

Income from discontinued operations — —

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 September 30, For the nine months ended September 30,

2022 2021 2022 2021

Basic and diluted loss per share $ ( 0.17 ) $ ( 0.25 )

The following table summarizes the number of stock options and 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, 2023 2022

Stock options 551 1,644

5 unchanged sentences

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.

There have been no material changes to the laws and regulations affecting our higher education institutions that are described in our Annual Report on Form 10-K for the year ended December 31, 2021.

Except as set forth below, there have been no material changes to the laws and regulations affecting our higher education institutions that are described in our Annual Report on Form 10-K for the year ended December 31, 2022.

Peru Regulation

Superintendencia Nacional de Educación Superior Universitaria (“SUNEDU”), the regulatory agency that supervises university standards and quality in Peru, is currently reviewing all regulations applicable to universities, with new regulations expected to be announced during 2023.

This follows the appointment of new members to the board of SUNEDU in the first quarter of 2023 in connection with the implementation of the July 2022 law that modified SUNEDU’s board representation and authority.

On March 30, 2023, Cibertec, the Company’s technical-vocational institute, was granted a higher education colleges license for a six-year period.

This license will now allow Cibertec to offer four-year programs for professional bachelor degrees.

Supplemental Cash Flow Information

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 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

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, 2022 balance.

The March 31, 2023 and March 31, 2022 balances sum to the amounts shown in the Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022:

March 31, 2023 March 31, 2022 December 31, 2022

Cash and cash equivalents $ 130,636 $ 293,835 $ 85,167

1 unchanged sentence

Total Cash and cash equivalents and Restricted cash shown in the Consolidated Statements of Cash Flows $ 139,280 $ 314,442 $ 93,784

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

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.

(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.

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.

Restricted cash represents cash that is not immediately available for use in current operations.

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