What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-04 compared with 2022-11-03 · 101 added, 311 removed, 294 unchanged (58% of the section changed)

3 unchanged sentences

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

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

All statements we make relating to estimated and projected earnings, costs, expenditures, cash flows, growth rates and financial results, and all statements we make relating to our current growth strategy and other future plans, strategies or transactions that may be identified, explored or implemented and any litigation or dispute resulting from any completed transaction are forward-looking statements.

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

5 unchanged sentences

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

• the risks associated with operating our portfolio of degree-granting higher education institutions in Mexico and Peru, including complex business, foreign currency, political, legal, regulatory, tax and economic risks;

• the risks associated with operating our portfolio of degree-granting higher education institutions in Mexico and Peru, including complex business, political, legal, regulatory, tax and economic risks;

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

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

• our ability to effectively manage the growth of our business and increase our operating leverage;

• the risks associated with maintaining the value of our brands and our reputation;

• the effect of existing international and U.S.

4 unchanged sentences

• market acceptance of new service offerings by us or our competitors and our ability to predict and respond to changes in the markets for our educational services;

• the effect of greater than anticipated tax liabilities;

• the effect on our business and results of operations from fluctuations in the value of foreign currencies;

• our ability to attract and retain key personnel;

• the fluctuations in revenues due to seasonality;

• the risks associated with disruptions to our computer networks and other cybersecurity incidents, including misappropriation of personal or proprietary information;

• the risks and uncertainties associated with an epidemic, pandemic or other public health emergency, such as the global coronavirus (COVID-19) pandemic, including, but not limited to, effects on student enrollment, tuition pricing, and collections in future periods;

• the risks associated with protests, strikes or natural or other disasters;

• our ability to attract and retain key personnel;

• our ability to maintain proper and effective internal controls necessary to produce accurate financial statements on a timely basis;

• the risks associated with indebtedness and disruptions to credit and equity markets;

• our focus on a specific public benefit purpose and producing a positive effect for society may negatively influence our financial performance;

20 unchanged sentences

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

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

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

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

See also “Item 1A—Risk Factors—An epidemic, pandemic or other public health emergency, such as the current global coronavirus (COVID-19) outbreak and the efficacy and distribution of COVID-19 vaccines in the locations in which we operate could have a material adverse effect on our business, financial condition, cash flows and results of operations” in our 2021 Form 10-K.

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).

The Discontinued Operations are excluded from the segment information for all periods presented, as they do not meet the criteria for a reportable segment under ASC 280, “Segment Reporting.” Unless indicated otherwise, the information in the MD&A relates to continuing operations.

See also Note 3, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-Q.

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.

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.

1 unchanged sentence

Specifics related to both of our reportable segments are discussed below:

• Private education providers in Mexico constitute 35% of the total higher-education market.

• Private education providers in Mexico constitute approximately 36% of the total higher-education market.

The private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities.

5 unchanged sentences

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

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

Our Corporate segment provides financial, human resource, information technology, insurance, legal, and tax compliance services.

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

The following information for our reportable segments is presented as of September 30, 2022:

The following information for our reportable segments is presented as of March 31, 2023:

Institutions Enrollment 2023 YTD Revenues

9 unchanged sentences

price controls and foreign currency exchange restrictions;

potential economic and political instability in the countries in which we operate;

potential economic and political instability in both countries in which we operate;

expropriation of assets by local governments;

19 unchanged sentences

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

Attrition is defined as a student leaving the institution before completion of the program.

defined as a student leaving the institution before completion of the program.

To minimize attrition, we have implemented programs that involve assisting students in remedial education, mentoring, counseling and student financing.

1 unchanged sentence

Each institution has a “Primary Intake” period during each academic year in which the majority of the enrollment occurs.

Most institutions also have one or more smaller “Secondary Intake” periods.

Each institution also has a smaller “Secondary Intake” period.

Our Peruvian institutions have their Primary Intake during the first calendar quarter and a Secondary Intake during the third calendar quarter.

40 unchanged sentences

See “Item 1A—Risk Factors—Risks Relating to Our Business—We may have exposure to greater-than-anticipated tax liabilities” in our 2022 Form 10-K.

Results from the Discontinued Operations

The results of operations of our Discontinued Operations for the three and nine months ended September 30, 2022 and 2021 were as follows:

For the three months ended For the nine months ended

September 30, September 30,

(in millions) 2022 2021 2022 2021

Revenues $ — $ 70.8 $ — $ 542.7

Share-based compensation expense — (0.4) — (1.2)

Other direct costs — (58.1) — (430.8)

Loss on impairment of assets — — — (1.3)

Other non-operating expense — (4.9) — (20.5)

(Loss) gain on sale of discontinued operations before taxes, net (0.8) 612.0 4.1 625.3

Pretax (loss) income of discontinued operations (0.8) 619.4 4.1 714.2

Income tax expense — (248.8) — (257.4)

(Loss) income from discontinued operations, net of tax $ (0.8) $ 370.5 $ 4.1 $ 456.8

We completed all of our planned divestitures in 2021.

Our remaining operations are included in continuing operations.

Nine Months Ended September 30, 2022

During the second quarter of 2022, we completed the transfer of the remaining assets and liabilities that were classified as held for sale as of December 31, 2021, which related to the divestiture of our operations in Chile.

This resulted in a gain of approximately $4.3 million.

Nine Months Ended September 30, 2021

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

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

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

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

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

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

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

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

The Organization for Economic Co-operation and Development (OECD) has proposed changes to numerous long-standing tax principles.

These proposals, if finalized and adopted by its member countries, will likely increase tax uncertainty, and may adversely affect our provision for income taxes.

The Company will continue to monitor regulatory developments to assess potential impacts to the Company.

Results of Operations

4 unchanged sentences

Summary Comparison of Consolidated Results

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

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

As a result, the Company tested the asset for impairment and estimated the fair value of the tradename asset using the relief-from-royalty method, based on the projected revenues for each business over the estimated remaining useful life of the asset .

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

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

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

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

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

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

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

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

Comparison of Consolidated Results for the Three Months Ended September 30, 2022 and 2021

Comparison of Consolidated Results for the Three Months Ended March 31, 2023 and 2022

Better/(Worse)

6 unchanged sentences

Interest expense, net of interest income (3.8) (1.8) (111) %

Other non-operating income 16.5 5.2 nm

Income from continuing operations before income taxes 71.1 37.7 89 %

Other non-operating expense (28.4) (4.8) nm

(Loss) income from continuing operations before income taxes and equity in net income of affiliates (16.6) 2.4 nm

Income tax expense (10.2) (48.0) 79 %

Income (loss) from continuing operations 31.9 (10.4) nm

(Loss) income from discontinued operations, net of tax (0.8) 370.5 (100) %

Net income 31.0 360.1 (91) %

Equity in net income of affiliates, net of tax — 0.1 (100) %

Loss from continuing operations (26.7) (45.4) 41 %

Income from discontinued operations, net of tax — 0.7 (100) %

Net loss (26.8) (44.7) 40 %

Net loss attributable to noncontrolling interests 0.2 0.5 60 %

Net income attributable to Laureate Education, Inc.

Net loss attributable to Laureate Education, Inc.

$ (26.6) $ (44.2) 40 %

nm - percentage changes not meaningful

Comparison of Consolidated Results for the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021

Revenues increased by $33.3 million to $301.0 million for the three months ended September 30, 2022 (the 2022 fiscal quarter) from $267.7 million for the three months ended September 30, 2021 (the 2021 fiscal quarter).

This increase in revenues was largely attributable to higher average total organic enrollment at our institutions during the 2022 fiscal quarter, increasing revenues by $24.1 million compared to the 2021 fiscal quarter.

The effect of changes in tuition rates and enrollments in programs at varying price points (product mix), pricing and timing increased revenues by $6.7 million compared to the 2021 fiscal quarter.

Additionally, the effect of a net change in foreign currency exchange rates increased revenues by $5.1 million compared to the 2021 fiscal quarter.

Comparison of Consolidated Results for the Three Months Ended March 31, 2023 to the Three Months Ended March 31, 2022

Revenues increased by $41.7 million to $251.3 million for the three months ended March 31, 2023 (the 2023 fiscal quarter) from $209.6 million for the three months ended March 31, 2022 (the 2022 fiscal quarter).

Average total organic enrollment was higher at our institutions, increasing revenues by $18.1 million compared to the 2022 fiscal quarter.

The effect of a net change in foreign currency exchange rates increased revenues by $16.9 million, mostly driven by the strengthening of the Mexican peso against the USD compared to the 2022 fiscal quarter.

In addition, the effect of product mix, pricing and timing increased revenues by $8.2 million for the 2023 fiscal quarter.

These increases in revenues were partially offset by other Corporate and Eliminations changes, which accounted for a decrease in revenues of $1.5 million.

Direct costs and general and administrative expenses combined increased by $35.2 million to $235.6 million for the 2023 fiscal quarter from $200.4 million for the 2022 fiscal quarter.

The increase in direct costs was primarily driven by the effect of operational changes, which increased costs by $46.4 million, primarily due to the result of higher enrollment at our institutions, as well as return-to-campus expenses.

The effect of a net change in foreign currency exchange rates increased costs by $2.3 million compared to the 2021 fiscal quarter.

In addition, changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in indemnification assets, increased direct costs by $0.3 million compared to the 2021 fiscal quarter.

These increases in direct costs were partially offset by:

(1) a decrease of $9.4 million in expenses related to the Excellence-in-Process (EiP) program in the 2022 fiscal quarter as compared to the 2021 fiscal quarter, following the completion of the EiP program in the fourth quarter of 2021;

(2) lower depreciation and amortization expense of $11.5 million, which was mostly attributable to the finite-lived tradename being fully amortized during 2021;

and (3) a decrease of $12.7 million in Corporate and Eliminations expenses, driven by cost-reduction efforts.

The effect of operational changes increased direct costs by $29.1 million, mostly attributable to the effect of higher enrollments at our institutions as well as return-to-campus expenses, compared to the 2022 fiscal quarter.

Additionally, the effect of a net change in foreign currency exchange rates increased costs by $12.3 million compared to the 2022 fiscal quarter.

These increases in direct costs were partially offset by other Corporate and Eliminations expenses, which accounted for a decrease in costs of $6.1 million in the 2023 fiscal quarter, as well as a period-over-period decrease in direct costs of $0.1 million from changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in indemnification assets.

Operating income increased by $6.6 million to $15.6 million for the 2023 fiscal quarter from $9.0 million for the 2022 fiscal quarter.

The increase in operating income was driven by cost-reduction efforts at Corporate, partially offset by lower operating income at both our Peru and Mexico segments, as compared to the 2021 fiscal quarter.

Interest expense, net of interest income decreased by $0.7 million to $1.7 million for the 2022 fiscal quarter from $2.4 million for the 2021 fiscal quarter.

Other non-operating income increased by $11.3 million to $16.5 million for the 2022 fiscal quarter from $5.2 million for the 2021 fiscal quarter.

This increase was attributable to:

(1) a higher gain on foreign currency exchange of $9.0 million during the 2022 fiscal quarter;

(2) other non-operating income of $1.4 million during the 2022 fiscal quarter;

and (3) the year-over-year effect of a loss on disposal of subsidiaries of $0.9 million during the 2021 fiscal quarter.

This increase was primarily a result of higher operating income at our Mexico segment, combined with lower operating costs at Corporate, as compared to the 2022 fiscal quarter.

These increases in operating income were partially offset by a higher operating loss at our Peru segment compared to the 2022 fiscal quarter, primarily due to return-to-campus expenses.

Interest expense, net of interest income increased by $2.0 million to $3.8 million for the 2023 fiscal quarter from $1.8 million for the 2022 fiscal quarter.

The increase in interest expense was primarily attributable to higher average debt balances compared to the 2022 fiscal quarter.

Other non-operating expense increased by $23.6 million to $28.4 million for the 2023 fiscal quarter from $4.8 million for the 2022 fiscal quarter.

This increase was attributable to a higher loss on foreign currency exchange of $25.4 million compared to the 2022 fiscal quarter, mainly related to intercompany loan obligations.

This loss was partially offset by the period-over-period change in other non-operating income of $1.5 million during the 2023 fiscal quarter, combined with a gain on disposal of subsidiaries of $0.3 million during the 2023 fiscal quarter from the release of accumulated foreign currency translation gains upon liquidation of two subsidiaries.

Income tax expense decreased by $37.8 million to $10.2 million for the 2023 fiscal quarter from $48.0 million for the 2022 fiscal quarter.

This decrease was primarily attributable to discrete return-to-provision adjustments recorded in 2021 for the final regulations addressing the high-tax exemption for global intangible low-tax income, partially offset by the tax effect of the increase in pretax income between the two fiscal quarters.

(Loss) income from discontinued operations, net of tax changed by $371.3 million to loss of $(0.8) million for the 2022 fiscal quarter from income of $370.5 million for the 2021 fiscal quarter.

This change was primarily attributable to the gain on sale of Walden University during the 2021 fiscal quarter.

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

Comparison of Consolidated Results for the Nine Months Ended September 30, 2022 and 2021

Better/(Worse)

(in millions) 2022 2021 2022 vs.

Revenues $ 895.9 $ 790.0 13 %

Direct costs 655.1 577.1 (14) %

General and administrative expenses 48.8 139.3 65 %

Loss on impairment of assets 0.1 67.2 100 %

Operating income 192.0 6.4 nm

Interest expense, net of interest income (6.0) (38.3) 84 %

Other non-operating expense (1.0) (84.7) 99 %

Income (loss) from continuing operations before income taxes and equity in net income of affiliates 185.0 (116.6) nm

Income tax expense (159.2) (174.2) 9 %

Equity in net income of affiliates, net of tax 0.1 — nm

Income (loss) from continuing operations 25.9 (290.8) 109 %

Income from discontinued operations, net of tax 4.1 456.8 (99) %

Net income 29.9 166.0 (82) %

Net loss attributable to noncontrolling interests 0.4 0.5 20 %

Net income attributable to Laureate Education, Inc.

$ 30.3 $ 166.5 (82) %

nm - percentage changes not meaningful

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

Comparison of Consolidated Results for the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021

Revenues increased by $105.9 million to $895.9 million for the nine months ended September 30, 2022 (the 2022 fiscal period) from $790.0 million for the nine months ended September 30, 2021 (the 2021 fiscal period).

Average total organic enrollment was higher at our institutions, increasing revenues by $86.7 million compared to the 2021 fiscal period.

The effect of product mix, pricing and timing increased revenues by $16.5 million for the 2022 fiscal period.

In addition, the effect of a net change in foreign currency exchange rates increased revenues by $5.7 million compared to the 2021 fiscal period.

These increases in revenues were partially offset by other Corporate and Eliminations changes, which accounted for a decrease in revenues of $3.0 million.

Direct costs and general and administrative expenses combined decreased by $12.5 million to $703.9 million for the 2022 fiscal period from $716.4 million for the 2021 fiscal period.

This decrease in direct costs and administrative expenses was primarily related to:

(1) lower EiP implementation expense of $36.2 million in the 2022 fiscal period following the completion of our EiP program in 2021;

(2) lower depreciation and amortization expense of $31.8 million, mainly driven by the full amortization of the finite-lived tradename in 2021;

(3) Other Corporate and Eliminations expenses, which accounted for a decrease in costs of $30.7 million in the 2022 fiscal period, related to cost-reduction efforts;

(4) a period-over-period decrease in direct costs of $13.0 million from changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in indemnification assets;

and (5) the effect of a net change in foreign currency exchange rates, which decreased costs by $0.2 million.

These decreases in direct costs were partially offset by the effect of operational changes, which increased direct costs by $99.4 million, mostly attributable to the effect of higher enrollments at our institutions, as well as return-to-campus expenses.

Operating income increased by $185.6 million to $192.0 million for the 2022 fiscal period from $6.4 million for the 2021 fiscal period.

This increase was primarily a result of the impairment loss related to the Laureate tradename impairment that was recognized during the 2021 fiscal period, combined with higher operating income at our Mexico and Peru segments during the 2022 fiscal period.

In addition, cost-reduction efforts resulted in lower operating costs at Corporate compared to the 2021 fiscal period.

Interest expense, net of interest income decreased by $32.3 million to $6.0 million for the 2022 fiscal period from $38.3 million for the 2021 fiscal period.

The decrease in interest expense was primarily attributable to lower average debt balances mainly driven by the full repayment of the Senior Notes due 2025 in the 2021 fiscal period.

Other non-operating expense decreased by $83.7 million to $1.0 million for the 2022 fiscal period from $84.7 million for the 2021 fiscal period.

This decrease was attributable to:

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

(2) a loss on derivative instruments of $24.5 million during the 2021 fiscal period, driven by settlement of foreign currency swap agreements in connection with the sale of our Brazilian operations;

(3) a gain on disposal of subsidiaries during the 2022 fiscal period, compared to a loss during the 2021 fiscal period, for a change of $2.4 million;

and (4) the period-over-period effect of other non-operating income of $0.5 million during the 2022 fiscal period.

These decreases in other non-operating expense were partially offset by a loss on foreign currency exchange in the 2022 fiscal period, compared to a gain in the 2021 fiscal period, for a change of $21.6 million.

Income tax expense decreased by $15.0 million to $159.2 million for the 2022 fiscal period from $174.2 million for the 2021 fiscal period.

This decrease was primarily attributable to discrete return-to-provision adjustments recorded in 2021 for the final regulations addressing the high-tax exemption for global intangible low-tax income and a net reduction in discrete expense attributable to changes in judgment for uncertain tax positions, partially offset by the tax effect of the increase in pretax income between the two periods.

Income from discontinued operations, net of tax decreased by $452.7 million to $4.1 million for the 2022 fiscal period from $456.8 million for the 2021 fiscal period.

This decrease was primarily attributable to the gain on sale of Walden University during the 2021 fiscal quarter.

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

This decrease was primarily attributable to a discrete tax expense recorded during the 2022 fiscal quarter of approximately $32.5 million for additions to income tax reserves related to the application of the high-tax exception to global intangible low-taxed income.

The remaining difference was primarily attributable to the change in pretax earnings.

Non-GAAP Financial Measure

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

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

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

3 unchanged sentences

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

The following table presents Adjusted EBITDA and reconciles income (loss) from continuing operations to Adjusted EBITDA for the three months ended September 30, 2022 and 2021:

The following table presents Adjusted EBITDA and reconciles loss from continuing operations to Adjusted EBITDA for the three months ended March 31, 2023 and 2022:

Better/(Worse)

(in millions) 2023 2022 2023 vs.

Income (loss) from continuing operations $ 31.9 $ (10.4) nm

Loss from continuing operations $ (26.7) $ (45.4) 41 %

Equity in net income of affiliates, net of tax — (0.1) (100) %

Income tax expense 10.2 48.0 79 %

Income from continuing operations before income taxes 71.1 37.7 89 %

Loss on disposal of subsidiaries, net — 0.9 100 %

Foreign currency exchange gain, net (15.1) (6.1) 148 %

Other income, net (1.4) — nm

(Loss) income from continuing operations before income taxes and equity in net income of affiliates (16.6) 2.4 nm

Gain on disposal of subsidiaries, net (0.3) — nm

Foreign currency exchange loss, net 29.0 3.6 nm

Other (income) expense, net (0.3) 1.2 125 %

Interest expense 6.0 3.7 (62) %

10 unchanged sentences

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

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

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

The EiP initiative also 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.

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

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Three Months Ended September 30, 2022 and 2021

Depreciation and amortization decreased by $11.4 million to $14.5 million for the 2022 fiscal quarter from $25.9 million for the 2021 fiscal quarter.

This decrease was primarily attributable to the finite-lived Laureate’s tradename, which was fully amortized in 2021.

When combined with other items, this change decreased depreciation and amortization by $11.5 million.

The effects of foreign currency exchange increased depreciation and amortization expense by $0.1 million for the 2022 fiscal quarter.

Share-based compensation expense decreased by $0.2 million to $1.8 million for the 2022 fiscal quarter from $2.0 million for the 2021 fiscal quarter.

EiP implementation expenses decreased by $9.4 million to $0.2 million for the 2022 fiscal quarter from $9.6 million for the 2021 fiscal quarter.

This decrease resulted from the completion of our EiP program in 2021, with exception of certain EiP expenses related to the run out of programs that began in prior periods.

The following table presents Adjusted EBITDA and reconciles income (loss) from continuing operations to Adjusted EBITDA for the nine months ended September 30, 2022 and 2021:

Better/(Worse)

(in millions) 2022 2021 2022 vs.

Income (loss) from continuing operations $ 25.9 $ (290.8) 109 %

Equity in net income of affiliates, net of tax (0.1) — nm

Income tax expense 159.2 174.2 9 %

Income (loss) from continuing operations before income taxes and equity in net income of affiliates 185.0 (116.6) nm

(Gain) loss on disposal of subsidiaries, net (1.5) 0.9 nm

Foreign currency exchange loss (gain), net 2.9 (18.7) (116) %

Other (income) expense, net (0.4) 0.1 nm

Loss on derivatives — 24.5 100 %

Loss on debt extinguishment — 77.9 100 %

Interest expense 11.6 40.8 72 %

Interest income (5.6) (2.5) 124 %

Operating income 192.0 6.4 nm

Depreciation and amortization 43.6 75.6 42 %

EBITDA 235.6 82.0 187 %

Share-based compensation expense (a)

7.0 6.0 (17) %

Loss on impairment of assets (b)

0.1 67.2 100 %

EiP implementation expenses (c)

1.3 37.5 97 %

Adjusted EBITDA $ 244.1 $ 192.7 27 %

nm - percentage changes not meaningful

(a) Represents non-cash, share-based compensation expense pursuant to the provisions of ASC 718, “Stock Compensation.”

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

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

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

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

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

Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Nine Months Ended September 30, 2022 and 2021

Depreciation and amortization decreased by $32.0 million to $43.6 million for the 2022 fiscal period from $75.6 million for the 2021 fiscal period.

This decrease was primarily attributable to the finite-lived Laureate tradename, which was fully amortized in 2021.

When combined with other items, this change decreased depreciation and amortization by $31.8 million.

The effect of foreign currency exchange further decreased depreciation and amortization expense by $0.2 million for the 2022 fiscal period.

Share-based compensation expense increased by $1.0 million to $7.0 million for the 2022 fiscal period from $6.0 million for the 2021 fiscal period.

The increase was primarily related to the accelerated vesting of unvested equity awards for employees terminated in connection with the now-completed strategic review process.

EiP implementation expenses decreased by $36.2 million to $1.3 million for the 2022 fiscal period from $37.5 million for the 2021 fiscal period.

The decrease resulted from the completion of our EiP program in 2021, with the exception of certain EiP expenses related to the run out of programs that began in prior periods.

Segment Results

7 unchanged sentences

Better/(Worse)

For the three months ended September 30, 2022 2021 2022 vs.

Mexico $ 147.8 $ 131.3 13 %

Peru 152.5 133.1 15 %

Corporate 0.7 3.3 (79) %

Consolidated Total Revenues $ 301.0 $ 267.7 12 %

Adjusted EBITDA:

Mexico $ 23.4 $ 27.0 (13) %

Peru 61.2 70.8 (14) %

Corporate (11.9) (22.0) 46 %

Consolidated Total Adjusted EBITDA $ 72.8 $ 75.9 (4) %

(in millions) % Change

Better/(Worse)

For the nine months ended September 30, 2022 2021 2022 vs.

For the three months ended March 31, 2023 2022 2023 vs.

Mexico $ 182.0 $ 142.5 28 %

4 unchanged sentences

Mexico $ 48.9 $ 37.0 32 %

Peru 201.4 196.0 3 %

Peru (6.5) 3.8 nm

Corporate (9.0) (13.6) 34 %

Consolidated Total Adjusted EBITDA $ 33.5 $ 27.2 23 %

nm - percentage changes not meaningful

Financial Overview

Comparison of Mexico Results for the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021

Comparison of Mexico Results for the Three Months Ended March 31, 2023 to the Three Months Ended March 31, 2022

(in millions) Revenues Direct Costs Adjusted EBITDA

September 30, 2021 $ 131.3 $ 104.3 $ 27.0

March 31, 2022 $ 142.5 $ 105.5 $ 37.0

Organic enrollment (1)

2 unchanged sentences

Foreign exchange 17.3 11.7 5.6

September 30, 2022 $ 147.8 $ 124.4 $ 23.4

March 31, 2023 $ 182.0 $ 133.1 $ 48.9

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

3 unchanged sentences

• Revenues from our Mexico segment represented 72% of our consolidated total revenues for the 2023 fiscal quarter, compared to 68% for the 2022 fiscal quarter.

Adjusted EBITDA decreased by $3.6 million, a 13% decrease from the 2021 fiscal quarter, partly attributable to return-to-campus expenses.

Comparison of Mexico Results for the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021

(in millions) Revenues Direct Costs Adjusted EBITDA

September 30, 2021 $ 390.9 $ 329.4 $ 61.5

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency 46.1 41.2 4.9

Foreign exchange (2.0) (2.4) 0.4

— (13.0) 13.0

September 30, 2022 $ 435.0 $ 355.2 $ 79.8

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

Revenues increased by $44.1 million, an 11% increase from the 2021 fiscal period.

• Organic enrollment increased during the 2022 fiscal period by 8%, increasing revenues by $27.9 million.

• Revenues from our Mexico segment represented 49% of our consolidated total revenues for the 2022 fiscal period, compared to 50% for the 2021 fiscal period.

Adjusted EBITDA increased by $18.3 million, a 30% increase from the 2021 fiscal period, which included a period-over-period benefit from the $13.0 million charge recorded during the 2021 fiscal period related to acquisition-related contingencies.

Adjusted EBITDA increased by $11.9 million, a 32% increase from the 2022 fiscal quarter.

Financial Overview

Comparison of Peru Results for the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021

Comparison of Peru Results for the Three Months Ended March 31, 2023 to the Three Months Ended March 31, 2022

(in millions) Revenues Direct Costs Adjusted EBITDA

September 30, 2021 $ 133.1 $ 62.3 $ 70.8

March 31, 2022 $ 65.4 $ 61.6 $ 3.8

Organic enrollment (1)

2 unchanged sentences

Foreign exchange (0.4) (0.2) (0.2)

September 30, 2022 $ 152.5 $ 91.3 $ 61.2

March 31, 2023 $ 69.2 $ 75.7 $ (6.5)

2 unchanged sentences

• Revenues from our Peru segment represented 28% of our consolidated total revenues for the 2023 fiscal quarter compared to 32% for the 2022 fiscal quarter.

Adjusted EBITDA decreased by $9.6 million, a 14% decrease from the 2021 fiscal quarter, partly attributable to return-to-campus expenses.

Comparison of Peru Results for the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021

(in millions) Revenues Direct Costs Adjusted EBITDA

September 30, 2021 $ 392.3 $ 196.3 $ 196.0

Organic enrollment (1)

Product mix, pricing and timing (1)

Organic constant currency 57.1 57.0 0.1

Foreign exchange 7.7 2.4 5.3

September 30, 2022 $ 457.1 $ 255.7 $ 201.4

Revenues increased by $64.8 million, a 17% increase from the 2021 fiscal period.

• Organic enrollment increased during the 2022 fiscal period by 16%, increasing revenues by $58.8 million.

• Revenues from our Peru segment represented 51% of our consolidated total revenues for the 2022 fiscal period compared to 50% for the 2021 fiscal period.

Adjusted EBITDA increased by $5.4 million, a 3% increase from the 2021 fiscal period.

Corporate revenues primarily include our transition services agreements related to divestitures, which are expected to end in 2022.

Comparison of Corporate Results for the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021

Better/(Worse)

(in millions) 2022 2021 2022 vs.

Revenues $ 0.7 $ 3.3 (79) %

Expenses 12.6 25.3 50 %

Adjusted EBITDA $ (11.9) $ (22.0) 46 %

Adjusted EBITDA increased by $10.1 million, a 46% increase from the 2021 fiscal quarter, mainly driven by a decrease in labor costs and other professional fees related to cost-reduction efforts.

Comparison of Corporate Results for the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021

Adjusted EBITDA decreased by $10.3 million from the 2022 fiscal quarter due primarily to return-to-campus expenses and higher fixed costs during a largely out-of-session quarter.

Corporate revenues primarily represent services revenues.

In 2022, corporate revenues also included transition services agreements related to previous divestitures.

Comparison of Corporate Results for the Three Months Ended March 31, 2023 to the Three Months Ended March 31, 2022

Better/(Worse)

3 unchanged sentences

Adjusted EBITDA $ (9.0) $ (13.6) 34 %

Adjusted EBITDA increased by $27.7 million, a 43% increase from the 2021 fiscal period, mainly driven by a decrease in labor costs and other professional fees related to cost-reduction efforts.

Adjusted EBITDA increased by $4.6 million, a 34% increase from the 2022 fiscal quarter, mainly driven by a decrease in contract labor expenses and other professional fees, as well as a reduction in IT-related costs.

Liquidity and Capital Resources

3 unchanged sentences

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

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

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

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

As of September 30, 2022, our secondary source of liquidity was cash and cash equivalents of $319.0 million.

As of March 31, 2023, our secondary source of liquidity was cash and cash equivalents of $130.6 million.

Our cash accounts are maintained with high-quality financial institutions.

2 unchanged sentences

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

As of March 31, 2023, the Company had borrowed $138.0 million of the $410.0 million of available capacity.

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

Completed Sale Transactions

At the closing of our sale of Walden University in 2021, a portion of the total transaction value was paid into an escrow account, to be released to the Company pursuant to the terms and conditions of the escrow agreement.

On August 23, 2022, the Company received approximately $71.7 million of the escrow amount.

As previously described, in connection with the adoption of a plan of a partial liquidation providing for the distribution of the net proceeds from the sale of Walden University, on October 12, 2022, the company paid a special cash distribution to shareholders of approximately $136.6 million, which consisted of the cash released from the escrow account plus remaining net proceeds that had yet to be distributed.

Liquidity Restrictions

Our liquidity is affected by restricted cash balances, which totaled $17.4 million and $20.8 million as of September 30, 2022 and December 31, 2021, respectively.

A portion of the restricted cash was released in October 2022, as described in Note 9, Commitments and Contingencies, in our consolidated financial statements included elsewhere in this Form 10-Q.

Our liquidity is affected by restricted cash balances, which totaled $8.6 million as of both March 31, 2023 and December 31, 2022.

Restricted cash consisted of cash equivalents held as assets for a supplemental employment retention agreement for a former executive.

Indefinite Reinvestment of Historical Foreign Earnings

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

As part of our business strategies, we have determined that the undistributed historical earnings of our foreign operations for which we have not already recorded taxes will be deemed indefinitely reinvested outside of the United States.

As of September 30, 2022, $153.1 million of our total $319.0 million of cash and cash equivalents were held by foreign subsidiaries.

As of March 31, 2023, $119.2 million of our total $130.6 million of cash and cash equivalents were held by foreign subsidiaries.

As of December 31, 2022, $77.3 million of our total $85.2 million of cash and cash equivalents were held by foreign subsidiaries.

Liquidity Requirements

6 unchanged sentences

capital expenditures;

payment of a special dividend;

and business development activities.

4 unchanged sentences

and payments of other third-party obligations.

As of September 30, 2022, our debt obligations included lines of credit and short-term borrowing arrangements of subsidiaries and notes payable, which totaled $83.1 million.

As of March 31, 2023, our debt obligations consisted of $138.0 million of borrowings under the Senior Secured Credit Facility and $75.4 million of other debt.

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

In addition, our finance lease obligations and sale-leaseback financings were $52.8 million.

Senior Secured Credit Facility

As of both September 30, 2022 and December 31, 2021, there was no balance outstanding under our Senior Secured Credit Facility.

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

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

As of March 31, 2023, we were in compliance with the leverage ratio covenant.

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

In addition, indebtedness at some of our locations contain financial maintenance covenants and we were in compliance with those covenants as September 30, 2022.

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

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

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

As discussed in Note 6, Leases, in our consolidated financial statements included elsewhere in this Form 10-Q, we have significant operating lease liabilities.

As of September 30, 2022 and December 31, 2021, the present value of operating lease liabilities was $384.5 million and $415.3 million, respectively.

As of March 31, 2023 and December 31, 2022, the present value of operating lease liabilities was $427.9 million and $415.9 million, respectively.

Capital Expenditures

9 unchanged sentences

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

Our total capital expenditures for our continuing and discontinued operations, excluding receipts from the sale of subsidiaries and property equipment, were $17.1 million and $32.9 million during the nine months ended September 30, 2022 and 2021, respectively.

The 48% decrease in capital expenditures was primarily due to the year-over-year effect of divestitures completed in 2021 combined with lower spending in Mexico and Peru.

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 million.

In the consolidated statements of cash flows, the changes in operating assets and liabilities are presented excluding the effects of exchange rate changes, acquisitions, and reclassifications, as these effects do not represent operating cash flows.

Our total capital expenditures, excluding receipts from the sale of subsidiaries and property equipment, were $5.8 million and $1.3 million during the three months ended March 31, 2023 and 2022, respectively.

The increase in capital expenditures was primarily due to higher spending related to return-to-campus activities as well as investment in equipment for health science programs in Mexico and Peru.

In the consolidated statements of cash flows, the changes in operating assets and liabilities are presented excluding the effects of exchange rate changes and reclassifications, as these effects do not represent operating cash flows.

Accordingly, the amounts in the consolidated statements of cash flows do not agree with the changes of the operating assets and liabilities as presented in the consolidated balance sheets.

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

The following table summarizes our cash flows from operating, investing, and financing activities for the nine months ended September 30, 2022 and 2021:

The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2023 and 2022:

(in millions) 2023 2022

4 unchanged sentences

Effects of exchange rates changes on cash 3.5 11.2

Change in cash included in current assets held for sale — 285.0

Net change in cash and cash equivalents and restricted cash $ 45.5 $ (31.1)

Comparison of Cash Flows for the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021

Comparison of Cash Flows for the Three Months Ended March 31, 2023 to the Three Months Ended March 31, 2022

Operating Activities

Cash provided by operating activities increased by $100.7 million to $154.7 million for the 2022 fiscal period from $54.0 million for the 2021 fiscal period.

This increase in operating cash was attributable to:

(1) a decrease in cash paid for interest of $47.9 million, from $60.3 million for the 2021 fiscal period to $12.4 million for the 2022 fiscal period, attributable to lower average debt balances;

(2) a decrease in cash paid for taxes of $19.3 million, from $95.0 million for the 2021 fiscal period, primarily related to the payment of withholding taxes for intercompany loans that were capitalized during the 2021 fiscal period, to $75.7 million for the 2022 fiscal period;

and (3) a $33.5 million increase resulting from the net effect of changes in working capital and the divestiture of subsidiaries that, in the aggregate, contributed positive operating cash flows during the 2021 fiscal period.

Cash provided by operating activities decreased by $27.4 million to $26.5 million for the 2023 fiscal quarter from $53.9 million for the 2022 fiscal quarter.

This decrease in operating cash was attributable to an increase in cash paid for taxes of $35.0 million, from $8.4 million for the 2022 fiscal quarter to $43.4 million for the 2023 fiscal quarter, due primarily to the utilization of tax attributes that reduced cash tax payments for the 2022 fiscal quarter.

This decrease in operating cash was partially offset by increased operating income, combined with the net effect of changes in operating assets and liabilities, which increased operating cash by $7.5 million compared to the 2022 fiscal quarter.

Additionally, cash paid for interest decreased by $0.1 million, from $5.4 million for the 2022 fiscal quarter to $5.3 million for the 2023 fiscal quarter.

Investing Activities

Cash provided by investing activities decreased by $1,988.1 million to $66.3 million for the 2022 fiscal period from $2,054.4 million for the 2021 fiscal period.

This decrease in investing cash flows was attributable to lower cash receipts from the sales of Discontinued Operations of $2,054.3 million, from $2,137.7 million during the 2021 fiscal period (primarily for the sale of Walden University, our operations in Honduras and Brazil, the receipt of the note receivable related to the 2020 divestiture of our Chilean operations, and the receipt of portions of the purchase prices that were withheld in connection to the 2018 sale of our China operations and the 2020 sale of our Malaysia operations) to $83.4 million, net, during the 2022 fiscal period (primarily related to the receipt of the escrow receivable related the 2021 sale of Walden University, and the collection of certain receivables from the sale of our Brazilian operations).

This decrease in investing cash flows was partially offset by payments of $50.3 million made during the 2021 fiscal period for derivative instruments related to foreign exchange swap agreements associated with the sale of our Brazilian operations.

Additionally, cash used for capital expenditures decreased by $15.8 million during the 2022 fiscal period, as compared to the 2021 fiscal period.

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

Cash flows from investing activities decreased by $13.5 million to a cash outflow of $(5.6) million for the 2023 fiscal quarter from a cash inflow of $7.9 million for the 2022 fiscal quarter.

This decrease in investing cash flows was attributable to lower cash receipts from the sales of Discontinued Operations of $8.9 million, from $9.2 million, net, during the 2022 fiscal quarter (primarily related to the collection of certain receivables from the 2021 sale of our Brazilian operations) to $0.3 million, during the 2023 fiscal quarter.

Additionally, cash used for capital expenditures increased by $4.6 million during the 2023 fiscal quarter, as compared to the 2022 fiscal quarter.

Financing Activities

Cash used in financing activities decreased by $1,048.0 million to $236.5 million for the 2022 fiscal period from $1,284.5 million for the 2021 fiscal period.

This change in financing cash outflow was attributable to:

(1) lower net payments of long-term debt of $851.5 million during the 2022 fiscal period, as compared to the 2021 fiscal period, mainly driven by the 2021 repayment of the Senior Notes due 2025;

(2) a period-over-period decrease of $157.1 million in the amount of common stock repurchases;

(3) payments of $33.0 million made during the 2021 fiscal period for call premiums associated with the redemption of the Senior Notes due 2025;

and (4) higher proceeds from the exercise of common stock options of $10.7 million during the 2022 fiscal period.

These changes were partially offset by higher payments of dividend equivalent rights for vested share-based awards of $4.6 million during the 2022 fiscal period.

Cash flows from financing activities increased by $125.2 million to a cash inflow of $21.1 million for the 2023 fiscal quarter from a cash outflow of $(104.1) million for the 2022 fiscal quarter.

This increase in financing cash flows was attributable to the period-over-period effect of $102.2 million of payments made during the 2022 fiscal quarter for common stock repurchases.

In addition, we had net proceeds from issuance of long-term debt during the 2023 fiscal quarter as compared to net payments of long-term debt during the 2022 fiscal quarter, for a change of $32.0 million.

These increases in financing cash flows were partially offset by lower proceeds from the exercise of common stock options of $10.1 million compared to the 2022 fiscal quarter.

Other items accounted for the remaining difference of $1.1 million.

6 unchanged sentences

For a complete discussion of our critical accounting policies, see the “Critical Accounting Policies and Estimates” section of the MD&A in our 2022 Form 10-K.

During the nine months ended September 30, 2022, there were no significant changes to our critical accounting policies.

During the three months ended March 31, 2023, there were no significant changes to our critical accounting policies.

Recently Adopted Accounting Standards

3 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis