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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2022
OR
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to __________.
Commission File Number: 001-38002
laur-20220930_g1.jpg
Laureate Education, Inc.
(Exact name of registrant as specified in its charter)
Delaware52-1492296
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
78 SW 7th Street, Suite 900Miami,Florida33130
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (786) 209-3368
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.004 per shareLAUR
The NASDAQ Stock Market LLC
Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                                 Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                                                                                               Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer x              Accelerated filer              Non-accelerated filer
Smaller reporting company          Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
ClassOutstanding at September 30, 2022
Common stock, par value $0.004 per share164,649,273 shares







INDEX
PART I. - FINANCIAL INFORMATIONPage No.
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Operations - Three months ended September 30, 2022 and September 30, 2021
Consolidated Statements of Operations - Nine months ended September 30, 2022 and September 30, 2021
Consolidated Statements of Comprehensive Income - Three months ended September 30, 2022 and
September 30, 2021
Consolidated Statements of Comprehensive Income - Nine months ended September 30, 2022 and September 30, 2021
Consolidated Balance Sheets - September 30, 2022 and December 31, 2021
Consolidated Statements of Cash Flows - Nine months ended September 30, 2022 and September 30, 2021
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
SIGNATURES

1


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)

LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
IN THOUSANDS, except per share amounts
For the three months ended September 30, 20222021
(Unaudited)(Unaudited)
Revenues$300,999 $267,691 
Costs and expenses:
Direct costs229,361 181,978 
General and administrative expenses15,321 47,315 
Loss on impairment of assets 3,292 
Operating income56,317 35,106 
Interest income1,970 1,268 
Interest expense(3,694)(3,736)
Other income (expense), net1,393 (46)
Foreign currency exchange gain, net15,146 6,085 
Loss on disposal of subsidiaries, net (949)
Income from continuing operations before income taxes71,132 37,728 
Income tax expense(39,280)(48,118)
Income (loss) from continuing operations31,852 (10,390)
(Loss) income from discontinued operations, net of tax expense of $0 and $248,838, respectively
(816)370,527 
Net income31,036 360,137 
Net loss attributable to noncontrolling interests81 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.











2



LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
IN THOUSANDS, except per share amounts
For the nine months ended September 30, 20222021
(Unaudited)(Unaudited)
Revenues$895,943 $789,971 
Costs and expenses:
Direct costs655,055 577,141 
General and administrative expenses48,752 139,270 
Loss on impairment of assets144 67,161 
Operating income191,992 6,399 
Interest income5,623 2,456 
Interest expense(11,589)(40,795)
Loss on debt extinguishment (77,940)
Loss on derivatives (24,517)
Other income (expense), net413 (67)
Foreign currency exchange (loss) gain, net(2,906)18,749 
Gain (loss) on disposal of subsidiaries, net1,461 (922)
Income (loss) from continuing operations before income taxes and equity in net income of affiliates184,994 (116,637)
Income tax expense(159,213)(174,163)
Equity in net income of affiliates, net of tax70  
Income (loss) from continuing operations25,851 (290,800)
Income from discontinued operations, net of tax expense of $0 and $257,440, respectively
4,064 456,770 
Net income29,915 165,970 
Net loss attributable to noncontrolling interests414 508 
Net income attributable to Laureate Education, Inc.$30,329 $166,478 
Basic and diluted earnings (loss) per share:
Income (loss) from continuing operations $0.15 $(1.51)
Income from discontinued operations0.02 2.37 
Basic and diluted earnings per share$0.17 $0.86 
The accompanying notes are an integral part of these consolidated financial statements.

3



LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
IN THOUSANDS
For the three months ended September 30, 20222021
(Unaudited)(Unaudited)
Net income$31,036 $360,137 
Other comprehensive income:
Foreign currency translation adjustment, net of tax of $0 for both periods
(42,161)(22,627)
Minimum pension liability adjustment, net of tax of $0 for both periods
983  
Total other comprehensive loss(41,178)(22,627)
Comprehensive (loss) income(10,142)337,510 
Net comprehensive loss attributable to noncontrolling interests82 248 
Comprehensive (loss) income attributable to Laureate Education, Inc.$(10,060)$337,758 
The accompanying notes are an integral part of these consolidated financial statements.

4



LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
IN THOUSANDS
For the nine months ended September 30, 20222021
(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
997 (141)
Total other comprehensive income26,383 427,914 
Comprehensive income56,298 593,884 
Net comprehensive loss attributable to noncontrolling interests410 507 
Comprehensive income attributable to Laureate Education, Inc.$56,708 $594,391 
The accompanying notes are an integral part of these consolidated financial statements.

5



LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
IN THOUSANDS, except per share amounts
September 30,
2022
December 31,
2021
Assets(Unaudited)
Current assets:
Cash and cash equivalents$319,039 $324,801 
Restricted cash17,448 20,774 
Receivables:
Accounts and notes receivable125,922 117,987 
Other receivables5,824 96,229 
Allowance for doubtful accounts(56,535)(62,226)
Receivables, net75,211 151,990 
Income tax receivable24,642 30,474 
Prepaid expenses and other current assets19,543 16,280 
Total current assets455,883 544,319 
Property and equipment:
Land122,323 121,173 
Buildings333,842 328,343 
Furniture, equipment and software472,370 459,189 
Leasehold improvements111,559 106,813 
Construction in-progress6,493 9,622 
Accumulated depreciation and amortization(560,275)(525,623)
Property and equipment, net486,312 499,517 
Operating lease right-of-use assets, net365,527 384,344 
Goodwill553,275 546,795 
Tradenames144,429 142,848 
Deferred costs, net5,939 5,981 
Deferred income taxes47,465 38,713 
Other assets39,933 42,629 
Long-term assets held for sale 6,164 
Total assets$2,098,763 $2,211,310 
The accompanying notes are an integral part of these consolidated financial statements.

6



LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (continued)
IN THOUSANDS, except per share amounts
September 30,
2022
December 31,
2021
Liabilities and stockholders' equity(Unaudited)
Current liabilities:
Accounts payable$31,193 $26,870 
Accrued expenses59,537 65,558 
Accrued compensation and benefits80,569 90,454 
Deferred revenue and student deposits74,274 43,959 
Current portion of operating leases38,677 38,149 
Current portion of long-term debt and finance leases46,403 49,082 
Income taxes payable56,691 38,705 
Special cash distribution payable139,995 6,932 
Other current liabilities21,096 11,165 
Current liabilities held for sale 1,054 
Total current liabilities 548,435 371,928 
Long-term operating leases, less current portion345,845 377,104 
Long-term debt and finance leases, less current portion78,359 104,588 
Deferred compensation10,619 11,896 
Income taxes payable127,381 96,463 
Deferred income taxes90,601 73,624 
Other long-term liabilities27,266 24,640 
Long-term liabilities held for sale 9,795 
Total liabilities1,228,506 1,070,038 
Redeemable equity1,398 1,714 
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
922 915 
Additional paid-in capital2,268,879 2,388,783 
Retained earnings45,852 15,523 
Accumulated other comprehensive loss(493,825)(520,204)
Treasury stock at cost (65,795 shares held at September 30, 2022 and 48,220 shares held at December 31, 2021)
(951,272)(744,174)
Total Laureate Education, Inc. stockholders' equity870,556 1,140,843 
Noncontrolling interests(1,697)(1,285)
Total stockholders' equity868,859 1,139,558 
Total liabilities and stockholders' equity$2,098,763 $2,211,310 
The accompanying notes are an integral part of these consolidated financial statements.
7



LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
IN THOUSANDS
For the nine months ended September 30, 20222021
Cash flows from operating activities(Unaudited)(Unaudited)
Net income$29,915 $165,970 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization43,628 75,617 
Amortization of operating lease right-of-use assets 22,200 35,797 
Loss on impairment of assets144 68,429 
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 
Non-cash interest expense1,127 6,129 
Non-cash share-based compensation expense6,971 7,175 
Bad debt expense14,194 17,672 
Deferred income taxes8,152 267,551 
Unrealized foreign currency exchange gain(2,169)(11,240)
Non-cash loss from non-income tax contingencies419 11,976 
Other, net120 (71)
Changes in operating assets and liabilities:
Receivables(22,011)(9,632)
Prepaid expenses and other assets(11)(20,021)
Accounts payable and accrued expenses(16,866)(47,175)
Income tax receivable/payable, net53,588 63,151 
Deferred revenue and other liabilities21,077 (54,272)
Net cash provided by operating activities154,681 54,040 
Cash flows from investing activities
Purchase of property and equipment(16,754)(27,578)
Expenditures for deferred costs(363)(5,371)
Receipts from sales of discontinued operations, net of cash sold, and property and equipment83,405 2,137,673 
Payments on derivatives related to sale of discontinued operations (50,341)
Net cash provided by investing activities66,288 2,054,383 
Cash flows from financing activities
Proceeds from issuance of long-term debt, net of original issue discount235,181 46,493 
Payments on long-term debt(270,413)(933,213)
Payment of dividend equivalent rights for vested share-based awards(4,572) 
Proceeds from exercise of stock options11,888 1,160 
Withholding of shares to satisfy tax withholding for vested stock awards and exercised stock options(1,438)(1,718)
Payments to repurchase common stock(207,151)(364,275)
Payments of call premiums and debt issuance costs (32,980)
Net cash used in financing activities(236,505)(1,284,533)
Effects of exchange rate changes on Cash and cash equivalents and Restricted cash6,448 (14,360)
Change in cash included in current assets held for sale 285,027 
Net change in Cash and cash equivalents and Restricted cash(9,088)1,094,557 
Cash and cash equivalents and Restricted cash at beginning of period345,575 867,298 
Cash and cash equivalents and Restricted cash at end of period$336,487 $1,961,855 
The accompanying notes are an integral part of these consolidated financial statements.
8



Laureate Education, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Dollars and shares in thousands)
Note 1. Description of Business

Laureate Education, Inc. and subsidiaries (hereinafter Laureate, we, us, our, or the Company) provide higher education programs and services to students through licensed universities and higher education institutions (institutions). 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. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, these financial statements include all adjustments considered necessary to present a fair statement of our consolidated results of operations, financial position and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. These unaudited Consolidated Financial Statements should be read in conjunction with Laureate's audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the 2021 Form 10-K).

Note 2. Revenue

Revenue Recognition

Laureate's revenues primarily consist of tuition and educational service revenues. We also generate other revenues from student fees and other education-related activities. These other revenues are less material to our overall financial results and have a tendency to trend with tuition revenues. Revenues are recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. These revenues are recognized net of scholarships and other discounts, refunds and waivers. Laureate's institutions have various billing and academic cycles.

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We determine revenue recognition through the five-step model prescribed by ASC Topic 606, Revenue from Contracts with Customers, as follows:

Identification of the contract, or contracts, with a customer;
Identification of the performance obligations in the contract;
Determination of the transaction price;
Allocation of the transaction price to the performance obligations in the contract; and
Recognition of revenue when, or as, we satisfy a performance obligation.

We assess collectibility on a portfolio basis prior to recording revenue. Generally, students cannot re-enroll for the next academic session without satisfactory resolution of any past-due amounts. If a student withdraws from an institution, Laureate's obligation to issue a refund depends on the refund policy at that institution and the timing of the student's withdrawal. Generally, our refund obligations are reduced over the course of the academic term. 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:
MexicoPeru
Corporate(1)
Total
2022
Tuition and educational services $178,733 $147,982 $ $326,715 109 %
Other32,750 15,493 670 48,913 16 %
Gross revenue211,483 163,475 670 375,628 125 %
Less: Discounts / waivers / scholarships(63,701)(10,928) (74,629)(25)%
Total $147,782 $152,547 $670 $300,999 100 %
2021
Tuition and educational services$160,117 $129,715 $ $289,832 108 %
Other25,813 12,959 3,309 42,081 16 %
Gross revenue185,930 142,674 3,309 331,913 124 %
Less: 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:
MexicoPeru
Corporate(1)
Total
2022
Tuition and educational services $541,744 $451,570 $ $993,314 111 %
Other80,869 41,841 3,848 126,558 14 %
Gross revenue622,613 493,411 3,848 1,119,872 125 %
Less: Discounts / waivers / scholarships(187,622)(36,307) (223,929)(25)%
Total $434,991 $457,104 $3,848 $895,943 100 %
2021
Tuition and educational services $483,854 $386,189 $ $870,043 110 %
Other67,139 35,405 6,751 109,295 14 %
Gross revenue550,993 421,594 6,751 979,338 124 %
Less: Discounts / waivers / scholarships(160,052)(29,315) (189,367)(24)%
Total $390,941 $392,279 $6,751 $789,971 100 %
(1) Includes the elimination of inter-segment revenues.

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Contract Balances

The timing of billings, cash collections and revenue recognition results in accounts receivable (contract assets) and Deferred revenue and student deposits (contract liabilities) on the Consolidated Balance Sheets. We have various billing and academic cycles and recognize student receivables when an academic session begins, although students generally enroll in courses prior to the start of the academic session. Receivables are recognized only to the extent that it is probable that we will collect substantially all of the consideration to which we are entitled in exchange for the goods and services that will be transferred to the student. We receive advance payments or deposits from our students before revenue is recognized, which are recorded as contract liabilities in deferred revenue and student deposits. Payment terms vary by university with some universities requiring payment in advance of the academic session and other universities allowing students to pay in installments over the term of the academic session.

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. 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.

Note 3. 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, 20222021
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 

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For the nine months ended September 30, 20222021
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, net4,064 625,304 
Pretax income of discontinued operations4,064 714,210 
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 $4,300. The carrying amounts of the major classes of assets and liabilities that were classified as held for sale as of December 31, 2021 are presented in the following table:
September 30, 2022December 31, 2021
Assets of Discontinued Operations
Operating lease right-of-use assets, net$ $6,164 
Total assets held for sale$ $6,164 
Liabilities of Discontinued Operations
Operating leases, including current portion$ $10,849 
Total liabilities held for sale$ $10,849 

Note 4. Dispositions

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.

Note 5. Business and Geographic Segment Information

Laureate’s educational services are offered through two reportable segments: Mexico and Peru. Laureate determines its segments based on information utilized by the chief operating decision maker to allocate resources and assess performance.

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. 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. We
12


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. We expect competition to increase as the Mexican and Peruvian markets mature. Essentially all of our revenues were generated from private pay sources as there are no material government-sponsored loan programs in Mexico or Peru. Specifics related to both of our reportable segments are discussed below.

In Mexico, the private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities. Laureate owns two nationally licensed institutions and is present throughout the country with a footprint of over 35 campuses. Students in our Mexican institutions typically finance their own education.

In Peru, private universities are increasingly providing the capacity to meet growing demand in the higher-education market. 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. The Corporate amounts presented in the following tables include corporate charges that were not allocated to our reportable segments and adjustments to eliminate inter-segment items.

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. 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. EiP was an 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.

Adjusted EBITDA is a key measure used by our management and Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Additionally, Adjusted EBITDA is a key financial measure used by the compensation committee of our Board of Directors and our Chief Executive Officer in connection with the payment of incentive compensation to our executive officers and other members of our management team. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. We use total assets as the measure of assets for reportable segments.

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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 endedFor the nine months ended
September 30, September 30,
2022202120222021
Revenues
Mexico$147,782 $131,261 $434,991 $390,941 
Peru152,547 133,121 457,104 392,279 
Corporate670 3,309 3,848 6,751 
Revenues$300,999 $267,691 $895,943 $789,971 
Adjusted EBITDA of reportable segments
Mexico$23,442 $27,047 $79,848 $61,503 
Peru61,223 70,791 201,363 196,016 
Total Adjusted EBITDA of reportable segments84,665 97,838 281,211 257,519 
Reconciling items:
Corporate(11,860)(21,955)(37,156)(64,866)
Depreciation and amortization expense(14,471)(25,872)(43,628)(75,617)
Loss on impairment of assets (3,292)(144)(67,161)
Share-based compensation expense(1,849)(2,026)(6,971)(5,977)
EiP expenses(168)(9,587)(1,320)(37,499)
Operating income56,317 35,106 191,992 6,399 
Interest income1,970 1,268 5,623 2,456 
Interest expense(3,694)(3,736)(11,589)(40,795)
Loss on debt extinguishment   (77,940)
Loss on derivatives   (24,517)
Other income (expense), net1,393 (46)413 (67)
Foreign currency gain (loss), net15,146 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, 2022December 31, 2021
Assets
Mexico$1,144,840 $1,251,791 
Peru580,737 598,862 
Corporate and Discontinued Operations373,186 360,657 
Total assets$2,098,763 $2,211,310 

Note 6. Goodwill

The change in the net carrying amount of Goodwill from December 31, 2021 through September 30, 2022 was composed of the following items:
MexicoPeruTotal
Balance at December 31, 2021$479,223 $67,572 $546,795 
Currency translation adjustments5,875 605 6,480 
Balance at September 30, 2022$485,098 $68,177 $553,275 

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Note 7. Debt

Outstanding long-term debt was as follows:
September 30, 2022December 31, 2021
Senior long-term debt:
Senior Secured Credit Facility (stated maturity date October 2024)$ $ 
Other debt:
Lines of credit4,895 10,131 
Notes payable and other debt78,168 102,003 
Total senior and other debt83,063 112,134 
Finance lease obligations and sale-leaseback financings44,104 45,124 
Total long-term debt and finance leases127,167 157,258 
Less: total unamortized deferred financing costs2,405 3,588 
Less: current portion of long-term debt and finance leases46,403 49,082 
Long-term debt and finance leases, less current portion$78,359 $104,588 

Senior Secured Credit Facility

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.

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.

Certain Covenants

As of September 30, 2022, our Third A&R Credit Agreement contained certain negative covenants including, among others: (1) limitations on additional indebtedness; (2) limitations on dividends; (3) limitations on asset sales, including the sale of ownership interests in subsidiaries and sale-leaseback transactions; and (4) limitations on liens, guarantees, loans or investments. The Third A&R Credit Agreement provides, solely with respect to the revolving credit facility, that the Company shall not permit its Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, to exceed 3.50x as of the last day of each quarter commencing with the quarter ending December 31, 2019 and thereafter. 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 4.75x 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. In addition, indebtedness at some of our locations contain financial maintenance covenants. We were in compliance with these covenants as of September 30, 2022.

Note 8. Leases

Laureate conducts a significant portion of its operations at leased facilities, including many of Laureate's higher education facilities and other office locations. In accordance with ASC Topic 842, “Leases,” Laureate analyzes each lease agreement to determine whether it should be classified as a finance lease or an operating lease.

Finance Leases

Our finance lease agreements are for property and equipment. The lease assets are included within buildings as well as furniture, equipment and software and the related lease liability is included within debt and finance leases on the Consolidated Balance Sheets.

15


Operating Leases

Our operating lease agreements are primarily for real estate space and are included within operating lease right-of-use (ROU) assets and operating lease liabilities on the Consolidated Balance Sheets. The terms of our operating leases vary and generally contain renewal options. Certain of these operating leases provide for increasing rent over the term of the lease. Laureate also leases certain equipment under noncancellable operating leases, which are typically for terms of 60 months or less.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Our variable lease payments consist of non-lease services related to the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. On occasion, Laureate has entered into sublease agreements for certain leased office space; however, the sublease income from these agreements is immaterial.

Note 9. Commitments and Contingencies

Loss Contingencies

Laureate is subject to legal actions arising in the ordinary course of its business. In management's opinion, we have adequate legal defenses, insurance coverage and/or accrued liabilities with respect to the eventuality of such actions. 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

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.

Guarantees

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.

16


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.

Note 10. Share-based Compensation

Share-based compensation expense was as follows: