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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 March 31, 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-20220331_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 March 31, 2022
Common stock, par value $0.004 per share172,504,981 shares







INDEX
PART I. - FINANCIAL INFORMATIONPage No.
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Operations - Three months ended March 31, 2022 and March 31, 2021
Consolidated Statements of Comprehensive Income - Three months ended March 31, 2022 and March 31, 2021
Consolidated Balance Sheets - March 31, 2022 and December 31, 2021
Consolidated Statements of Cash Flows - Three months ended March 31, 2022 and March 31, 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 March 31, 20222021
(Unaudited)(Unaudited)
Revenues$209,563 $194,701 
Costs and expenses:
Direct costs182,880 181,848 
General and administrative expenses17,505 42,594 
Loss on impairment of assets144 56,650 
Operating income (loss)9,034 (86,391)
Interest income1,968 711 
Interest expense(3,731)(23,518)
Loss on debt extinguishment (13)
Gain on derivatives 29,330 
Other (expense) income, net(1,226)34 
Foreign currency exchange (loss) gain, net(3,601)28,183 
Income (loss) from continuing operations before income taxes and equity in net income of affiliates2,444 (51,664)
Income tax expense(47,967)(112,861)
Equity in net income of affiliates, net of tax108  
Loss from continuing operations(45,415)(164,525)
Income (loss) from discontinued operations, net of tax expense of $0 and $9,665, respectively
735 (418)
Net loss(44,680)(164,943)
Net loss attributable to noncontrolling interests469 15 
Net loss attributable to Laureate Education, Inc.$(44,211)$(164,928)
Basic and diluted earnings (loss) per share:
Loss from continuing operations $(0.25)$(0.82)
Income (loss) from discontinued operations  
Basic and diluted loss per share$(0.25)$(0.82)
The accompanying notes are an integral part of these consolidated financial statements.

2



LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
IN THOUSANDS
For the three months ended March 31, 20222021
(Unaudited)(Unaudited)
Net loss$(44,680)$(164,943)
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax of $0 for both periods
49,575 (59,761)
Minimum pension liability adjustment, net of tax of $0 for both periods
14 (168)
Total other comprehensive income (loss)49,589 (59,929)
Comprehensive income (loss)4,909 (224,872)
Net comprehensive loss attributable to noncontrolling interests467 33 
Comprehensive income (loss) attributable to Laureate Education, Inc.$5,376 $(224,839)
The accompanying notes are an integral part of these consolidated financial statements.
3



LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
IN THOUSANDS, except per share amounts
March 31,
2022
December 31,
2021
Assets(Unaudited)
Current assets:
Cash and cash equivalents$293,835 $324,801 
Restricted cash20,607 20,774 
Receivables:
Accounts and notes receivable108,851 117,987 
Other receivables80,690 96,229 
Allowance for doubtful accounts(60,461)(62,226)
Receivables, net129,080 151,990 
Income tax receivable27,055 30,474 
Prepaid expenses and other current assets21,034 16,280 
Total current assets491,611 544,319 
Property and equipment:
Land127,695 121,173 
Buildings346,870 328,343 
Furniture, equipment and software478,945 459,189 
Leasehold improvements113,034 106,813 
Construction in-progress8,902 9,622 
Accumulated depreciation and amortization(558,593)(525,623)
Property and equipment, net516,853 499,517 
Operating lease right-of-use assets, net384,496 384,344 
Goodwill567,061 546,795 
Tradenames148,646 142,848 
Deferred costs, net5,903 5,981 
Deferred income taxes47,782 38,713 
Other assets41,807 42,629 
Long-term assets held for sale6,573 6,164 
Total assets$2,210,732 $2,211,310 
The accompanying notes are an integral part of these consolidated financial statements.


4



LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (continued)
IN THOUSANDS, except per share amounts
March 31,
2022
December 31,
2021
Liabilities and stockholders' equity(Unaudited)
Current liabilities:
Accounts payable$45,704 $26,870 
Accrued expenses72,190 65,558 
Accrued compensation and benefits68,677 90,454 
Deferred revenue and student deposits97,055 43,959 
Current portion of operating leases39,281 38,149 
Current portion of long-term debt and finance leases53,220 49,082 
Income taxes payable32,348 38,705 
Other current liabilities16,891 18,097 
Current liabilities held for sale1,167 1,054 
Total current liabilities 426,533 371,928 
Long-term operating leases, less current portion373,557 377,104 
Long-term debt and finance leases, less current portion99,425 104,588 
Deferred compensation11,971 11,896 
Income taxes payable128,800 96,463 
Deferred income taxes88,361 73,624 
Other long-term liabilities24,987 24,640 
Long-term liabilities held for sale10,496 9,795 
Total liabilities1,164,130 1,070,038 
Redeemable noncontrolling interests and equity1,714 1,714 
Stockholders' equity:
Preferred stock, par value $0.001 per share – 50,000 shares authorized, no shares issued and outstanding as of March 31, 2022 and December 31, 2021
  
Common stock, par value $0.004 per share – 700,000 shares authorized, 230,210 shares issued and 172,505 shares outstanding as of March 31, 2022 and 228,831 shares issued and 180,611 shares outstanding as of December 31, 2021
921 915 
Additional paid-in capital2,402,072 2,388,783 
(Accumulated deficit) retained earnings(28,688)15,523 
Accumulated other comprehensive loss(470,617)(520,204)
Treasury stock at cost (57,705 shares held at March 31, 2022 and 48,220 shares held at December 31, 2021)
(857,048)(744,174)
Total Laureate Education, Inc. stockholders' equity1,046,640 1,140,843 
Noncontrolling interests(1,752)(1,285)
Total stockholders' equity1,044,888 1,139,558 
Total liabilities and stockholders' equity$2,210,732 $2,211,310 
The accompanying notes are an integral part of these consolidated financial statements.
5



LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
IN THOUSANDS
For the three months ended March 31, 20222021
Cash flows from operating activities(Unaudited)(Unaudited)
Net loss$(44,680)$(164,943)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization14,365 22,672 
Amortization of operating lease right-of-use assets 7,763 15,688 
Loss on impairment of assets144 57,714 
(Gain) loss on sales and disposal of subsidiaries and property and equipment, net(713)16,461 
Gain on derivative instruments (29,330)
Loss on debt extinguishment 73 
Non-cash interest expense234 4,592 
Non-cash share-based compensation expense2,762 1,576 
Bad debt expense(2,535)3,273 
Deferred income taxes4,413 84,409 
Unrealized foreign currency exchange gain(753)(23,687)
Non-cash loss from non-income tax contingencies69 11,995 
Other, net1,563 1,909 
Changes in operating assets and liabilities:
Receivables18,922 5,111 
Prepaid expenses and other assets(2,996)(14,133)
Accounts payable and accrued expenses(15,695)(30,733)
Income tax receivable/payable, net26,960 (16,731)
Deferred revenue and other liabilities44,054 65,367 
Net cash provided by operating activities53,877 11,283 
Cash flows from investing activities
Purchase of property and equipment(1,211)(11,743)
Expenditures for deferred costs(44)(1,896)
Receipts from sales of discontinued operations, net of cash sold, and property and equipment9,193 30,845 
Payments on derivatives related to sale of discontinued operations (18,294)
Net cash provided by (used in) investing activities7,938 (1,088)
Cash flows from financing activities
Proceeds from issuance of long-term debt, net of original issue discount49,691 996 
Payments on long-term debt(58,890)(53,670)
Payment of dividend equivalent rights for vested share-based awards(3,490) 
Proceeds from exercise of stock options11,496  
Withholding of shares to satisfy tax withholding for vested stock awards and exercised stock options(774)(1,222)
Payments to repurchase common stock(102,171)(145,244)
Payments of debt issuance costs (14)
Net cash used in financing activities(104,138)(199,154)
Effects of exchange rate changes on Cash and cash equivalents and Restricted cash11,190 (6,850)
Change in cash included in current assets held for sale (3,526)
Net change in Cash and cash equivalents and Restricted cash(31,133)(199,335)
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$314,442 $667,963 
The accompanying notes are an integral part of these consolidated financial statements.
6



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 at most of 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 4, Discontinued Operations and Assets Held for Sale, 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).
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Note 2. Significant Accounting Policies

COVID-19

The outbreak of COVID-19 has caused domestic and global disruption in operations for institutions of higher education. The long-term effect to the Company of the COVID-19 pandemic depends on numerous factors, including, but not limited to, the effect on student enrollment, tuition pricing, and collections in future periods, which cannot be fully quantified at this time. As of March 31, 2022 and through the date of this Form 10-Q, the Company evaluated its accounting estimates that require consideration of forecasted financial information, based on current information reasonably available to us. The forecast also includes certain estimates and assumptions around macroeconomic conditions. While this evaluation did not result in a material effect to the Company’s Consolidated Financial Statements as of and for the three months ended March 31, 2022, future evaluations could result in a material effect, including potential impairments, depending on the eventual impact to the Company of the COVID-19 pandemic and its effect on student enrollment, tuition pricing, and collections in future periods.

Note 3. Revenue

Revenue Recognition

Laureate's revenues primarily consist of tuition and educational service revenues. We also generate other revenues from student fees, dormitory/residency fees and other education-related activities. 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.

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.

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The following table shows the components of Revenues by reportable segment and as a percentage of total revenue for the three months ended March 31, 2022 and 2021:
MexicoPeru
Corporate(1)
Total
2022
Tuition and educational services $174,074 $56,519 $ $230,593 110 %
Other28,616 13,387 1,610 43,613 21 %
Gross revenue202,690 69,906 1,610 274,206 131 %
Less: Discounts / waivers / scholarships(60,141)(4,502) (64,643)(31)%
Total $142,549 $65,404 $1,610 $209,563 100 %
2021
Tuition and educational services $166,024 $51,452 $ $217,476 112 %
Other23,522 9,583 1,806 34,911 18 %
Gross revenue189,546 61,035 1,806 252,387 130 %
Less: Discounts / waivers / scholarships(54,149)(3,537) (57,686)(30)%
Total $135,397 $57,498 $1,806 $194,701 100 %
(1) Includes the elimination of inter-segment revenues.

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 $108,851 and $117,987 as of March 31, 2022 and December 31, 2021, respectively. The decrease in the contract assets balance at March 31, 2022 compared to December 31, 2021 was primarily driven by collections, in particular the repayment of past-due amounts by students re-enrolling for the next academic session. The first and third calendar quarters generally coincide with the primary and secondary intakes for our larger institutions. All contract asset amounts are classified as current.

Contract liabilities in the amount of $97,055 and $43,959 were included within the Deferred revenue and student deposits balance in the current liabilities section of the accompanying Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, respectively. The increase in the contract liability balance during the period ended March 31, 2022 was the result of semester billings and cash payments received in advance of satisfying performance obligations, partially offset by revenue recognized during that period. Revenue recognized for the three months ended March 31, 2022 that was included in the contract liability balance at the beginning of the year was approximately $30,510.

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Note 4. 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 March 31, 20222021
Revenues$ $239,750 
Share-based compensation expense (242)
Other direct costs (201,197)
Loss on impairment of assets (1,064)
Other non-operating expense (11,163)
Gain (loss) on sale of discontinued operations before taxes, net735 (16,837)
Pretax income (loss) of discontinued operations735 9,247 
Income tax expense (9,665)
Income (loss) from discontinued operations, net of tax$735 $(418)
Operating cash flows of discontinued operations$ $31,117 
Investing cash flows of discontinued operations$ $(4,858)
Financing cash flows of discontinued operations$ $(13,559)

The assets and liabilities of the Discontinued Operations have been classified as held for sale as of March 31, 2022 and December 31, 2021. The assets and liabilities are recorded at the lower of their carrying values or their estimated fair values less costs to sell. The carrying amounts of the major classes of assets and liabilities that were classified as held for sale are presented in the following table:
March 31, 2022December 31, 2021
Assets of Discontinued Operations
Operating lease right-of-use assets, net$6,573 $6,164 
Total assets held for sale$6,573 $6,164 
Liabilities of Discontinued Operations
Operating leases, including current portion$11,663 $10,849 
Total liabilities held for sale$11,663 $10,849 

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 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.
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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, and Note 4, Discontinued Operations and Assets Held for Sale, in prior periods a number of our subsidiaries met the requirements to be classified as Discontinued Operations. As 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: Foreign currency exchange (loss) gain, net, Other (expense) income, net, Gain on derivatives, Loss on debt extinguishment, Interest expense, Interest income, Depreciation and amortization expense, Loss on impairment of assets, Share-based compensation expense and expenses related to our Excellence-in-Process (EiP) initiative. 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.

When we review Adjusted EBITDA on a segment basis, we exclude any intercompany revenues and expenses related to network fees and royalties between our segments, which eliminate in consolidation. 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 ended March 31, 20222021
Revenues
Mexico$142,549 $135,397 
Peru65,404 57,498 
Corporate1,610 1,806 
Revenues$209,563 $194,701 
Adjusted EBITDA of reportable segments
Mexico$36,951 $17,269 
Peru3,829 11,594 
Total Adjusted EBITDA of reportable segments40,780 28,863 
Reconciling items:
Corporate(13,625)(19,202)
Depreciation and amortization expense(14,365)(22,761)
Loss on impairment of assets(144)(56,650)
Share-based compensation expense(2,762)(1,334)
EiP expenses(850)(15,307)
Operating income (loss)9,034 (86,391)
Interest income1,968 711 
Interest expense(3,731)(23,518)
Loss on debt extinguishment (13)
Gain on derivatives 29,330 
Other (expense) income, net(1,226)34 
Foreign currency (loss) gain, net(3,601)28,183 
Income (loss) from continuing operations before income taxes and equity in net income of affiliates$2,444 $(51,664)
March 31, 2022December 31, 2021
Assets
Mexico$1,240,282 $1,251,791 
Peru585,917 598,862 
Corporate and Discontinued Operations384,533 360,657 
Total assets$2,210,732 $2,211,310 

Note 6. Goodwill

The change in the net carrying amount of Goodwill from December 31, 2021 through March 31, 2022 was composed of the following items:
MexicoPeruTotal
Balance at December 31, 2021$479,223 $67,572 $546,795 
Currency translation adjustments15,657 4,609 20,266 
Balance at March 31, 2022$494,880 $72,181 $567,061 

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Note 7. Debt

Outstanding long-term debt was as follows:
March 31, 2022December 31, 2021
Senior long-term debt:
Senior Secured Credit Facility (stated maturity date October 2024)$ $ 
Other debt:
Lines of credit10,816 10,131 
Notes payable and other debt98,966 102,003 
Total senior and other debt109,782 112,134 
Finance lease obligations and sale-leaseback financings46,095 45,124 
Total long-term debt and finance leases155,877 157,258 
Less: total unamortized deferred financing costs3,232 3,588 
Less: current portion of long-term debt and finance leases53,220 49,082 
Long-term debt and finance leases, less current portion$99,425 $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 March 31, 2022 and December 31, 2021, no amounts were borrowed on this facility.

Estimated Fair Value of Debt

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

Certain Covenants

As of March 31, 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 March 31, 2022, these conditions were satisfied and, therefore, we were not subject to the leverage ratio. In addition, indebtedness at some of our locations contain financial maintenance covenants. We were in compliance with these covenants as of March 31, 2022.

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.

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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 March 31, 2022 and December 31, 2021, Laureate has recorded cumulative liabilities for income tax contingencies of $124,150 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 March 31, 2022 and December 31, 2021, approximately $7,400 and $7,200, respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets.

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

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Note 10. Share-based Compensation

Share-based compensation expense was as follows:
For the three months ended March 31, 20222021
Continuing operations
Stock options, net of estimated forfeitures$ $176 
Restricted stock awards2,762 1,158 
Total continuing operations$2,762 $1,334 
Discontinued operations
Share-based compensation expense for discontinued operations 242 
Total continuing and discontinued operations$2,762 $1,576 

Note 11. Stockholders’ Equity

The components of net changes in stockholders’ equity for the three months ended March 31, 2022 are as follows:
Laureate Education, Inc. Stockholders
Common StockAdditional paid-in capitalRetained Earnings (Accumulated Deficit)Accumulated other comprehensive lossTreasury stock at costNon-controlling interestsTotal stockholders’ equity
SharesAmount
Balance at December 31, 2021180,611$915 $2,388,783 $15,523 $(520,204)$(744,174)$(1,285)$1,139,558 
Non-cash stock compensation— — 2,762 — — — — 2,762 
Purchase of treasury stock at cost(9,485)— — — — (112,874)— (112,874)
Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding1,379 6 10,716 — — — — 10,722 
Equitable adjustments to stock-based awards— — (189)— — — — (189)
Net loss— — — (44,211)— — (469)(44,680)
Foreign currency translation adjustment, net of tax of $0
— — — — 49,573 — 2 49,575 
Minimum pension liability adjustment, net of tax of $0
— — — — 14 — — 14 
Balance at March 31, 2022172,505 $921 $2,402,072 $(28,688)$(470,617)$(857,048)$(1,752)$1,044,888 

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The components of net changes in stockholders’ equity for the three months ended March 31, 2021 are as follows:
Laureate Education, Inc. Stockholders
Class A
Common Stock
Class B
Common Stock
Additional paid-in capitalAccumulated DeficitAccumulated other comprehensive lossTreasury stock at costNon-controlling interestsTotal stockholders’ equity
SharesAmountSharesAmount
Balance at December 31, 2020115,119 $548 90,792 $363 $3,760,029 $(176,822)$(941,986)$(365,316)$(12,882)$2,263,934 
Beginning retained earnings adjustment— — — — — (101)— — — (101)
Non-cash stock compensation— — — — 1,576 — — — — 1,576 
Conversion of Class B shares to Class A shares17,248 69 (17,248)(69)— — — — —  
Purchase of treasury stock at cost(10,401)— — — — — — (145,806)— (145,806)
Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding247 1 — — (1,223)— — — — (1,222)
Accretion of redeemable noncontrolling interests and equity— — — — (20)— — — — (20)
Net loss— — — — — (164,928)— — (15)(164,943)
Foreign currency translation adjustment, net of tax of $0
— — — — — — (59,743)— (18)(59,761)
Minimum pension liability adjustment, net of tax of $0
— — — — — — (168)— — (168)
Balance at March 31, 2021122,213 $618 73,544 $294 $3,760,362 $(341,851)$(1,001,897)$(511,122)$(12,915)$1,893,489 

Effective October 29, 2021, each share of Company Class A common stock and each share of Company Class B common stock automatically converted into one share of common stock of the Company. Following the conversion, the Company has only one class of common stock outstanding.

Stock Repurchase Program

On March 14, 2022, Laureate announced that its Board of Directors had approved an increase of $50,000 to the existing authorization to repurchase shares of the Company’s common stock under its share repurchase program, for a total authorization of $650,000. The authorizations do not have an expiration date. The Company’s repurchases may be made on the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Repurchases may be effected pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act. The Company’s Board of Directors will review the share repurchase program periodically and may authorize adjustment of its terms and size or suspend or discontinue the program. The Company expects to finance the repurchases with free cash flow, from excess cash and liquidity on-hand, or from its revolving credit facility, or a combination thereof. During the three months ended March 31, 2022, the Company repurchased 9,485 shares of its outstanding common stock for a total purchase price of $112,874. Approximately $10,700 of this total purchase price was paid in April 2022.

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Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) (AOCI) in our Consolidated Balance Sheets includes the accumulated translation adjustments arising from translation of foreign subsidiaries’ financial statements, the unrealized gains on derivatives designated as effective hedges, and the accumulated net gains or losses that are not recognized as components of net periodic benefit cost for our minimum pension liability. The change in AOCI includes the removal of the cumulative translation adjustment related to subsidiaries that were sold during the period. The components of these balances were as follows:
March 31, 2022December 31, 2021
Laureate Education, Inc.Noncontrolling InterestsTotalLaureate Education, Inc.Noncontrolling InterestsTotal
Foreign currency translation adjustment$(479,899)$948 $(478,951)$(529,472)$946 $(528,526)
Unrealized gain on derivatives10,416  10,416 10,416  10,416 
Minimum pension liability adjustment(1,134) (1,134)(1,148) (1,148)
Accumulated other comprehensive loss$(470,617)$948 $(469,669)$(520,204)$946 $(519,258)

Note 12. Derivative Instruments

In the normal course of business, our operations are exposed to fluctuations in foreign currency values and interest rate changes. We may seek to control a portion of these risks through a risk management program that includes the use of derivative instruments.

Prior to their repayment, Laureate’s senior long-term debt arrangements were primarily in USD. Our ability to make debt payments was subject to fluctuations in the value of the USD against foreign currencies, since a majority of our operating cash used to make these payments was generated by subsidiaries with functional currencies other than USD. As part of our overall risk management policies, Laureate has at times entered into foreign currency swap contracts and floating-to-fixed interest rate swap contracts. For example, in November 2020 we entered into the BRL to USD foreign currency swap described below. In addition, we occasionally enter into foreign exchange forward contracts to reduce the impact of other non-functional currency-denominated receivables and payables. We do not enter into speculative or leveraged transactions, nor do we hold or issue derivatives for trading purposes. We generally intend to hold our derivatives until maturity.

Laureate reports all derivatives at fair value. These contracts are recognized as either assets or liabilities, depending upon the derivative’s fair value. Gains or losses associated with the change in the fair value of these swaps are recognized in our Consolidated Statements of Operations on a current basis over the term of the contracts, unless designated and effective as a hedge. For swaps that are designated and effective as cash flow hedges, gains or losses associated with the change in fair value of the swaps are recognized in our Consolidated Balance Sheets as a component of AOCI and amortized into earnings as a component of Interest expense over the term of the related hedged items. Upon early termination of an effective interest rate swap designated as a cash flow hedge, unrealized gains or losses are deferred in our Consolidated Balance Sheets as a component of AOCI and are amortized as an adjustment to Interest expense over the period during which the hedged forecasted transaction affects earnings. For derivatives that are both designated and effective as net investment hedges, gains or losses associated with the change in fair value of the derivatives are recognized on our Consolidated Balance Sheets as a component of AOCI.

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

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BRL to USD Foreign Currency Swaps

In November 2020, in connection with the signing of the sale agreement for its Brazilian operations, Laureate entered into six BRL-to-USD swap agreements. The purpose of these swaps was to mitigate the risk of foreign currency exposure on the expected proceeds from the sale. Two of the swaps were deal contingent, with the settlement date occurring on the second business day following the completion of the sale. On the settlement date, Laureate would deliver the combined notional amount of BRL 1,900,000 (BRL 950,000 for each swap) and receive an amount in USD equal to each swap's notional amount multiplied by each swap's contract rate of exchange at the settlement date. The remaining four swaps were originally put/call options with a maturity date of May 13, 2021, where Laureate could put the combined notional amount of BRL 1,875,000 and call a combined USD amount of $343,783 at an exchange rate of 5.4540 BRL per 1 USD. The terms of these options included deferred premium payments from Laureate to the counterparties of $18,294, which were paid in full in January 2021. During the second quarter of 2021, all four of these swaps were converted to be deal contingent, with the settlement date occurring on the second business day following the aforementioned sale. This conversion resulted in cash proceeds to Laureate of $1,663. On the settlement date, Laureate would deliver the combined notional amount of BRL 1,875,000 and receive an amount in USD equal to each swap’s notional amount multiplied by each swap’s contract rate of exchange at the settlement date.

The sale of Laureate’s Brazilian operations closed on May 28, 2021. Per the terms of the agreements, the swaps were settled on June 2, 2021, which resulted in a realized loss and net settlement amount paid to the counterparties at closing of $33,710. These swaps were not designated as hedges for accounting purposes.

Components of the reported Gain on derivatives not designated as hedging instruments in the Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 were as follows:
For the three months ended March 31, 20222021
Cross currency swaps
Unrealized gain$ $47,624 
Realized loss (18,294)
Gain on derivatives, net$ $29,330 

Credit Risk and Credit-Risk-Related Contingent Features
Derivatives expose us to credit risk to the extent that the counterparty may possibly fail to perform its contractual obligation. The amount of our credit risk exposure is equal to the fair value of the derivative when any of the derivatives are in a net gain position. Laureate limits its credit risk by only entering into derivative transactions with highly rated major financial institutions. We have not entered into collateral agreements with our derivatives’ counterparties. As of March 31, 2022 and December 31, 2021, we did not hold any derivatives in a net gain position, and thus had no credit risk.

Laureate’s agreements with its derivative counterparties typically contain a provision under which the Company could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to a default on the indebtedness. As of March 31, 2022 and December 31, 2021, the Company did not have any outstanding derivative agreements.

Note 13. Income Taxes

Laureate's income tax provisions for all periods consist of federal, state and foreign income taxes. The tax provisions for the three months ended March 31, 2022 and 2021 are based on estimated full-year effective tax rates, adjusted for discrete income tax items related specifically to the interim periods. Laureate has operations in multiple countries at various statutory tax rates and other operations that are loss-making entities for which it is not more likely than not that a tax benefit will be realized on the loss.

For the three months ended March 31, 2022, the Company recognized income tax expense of $47,967, as compared to $112,861 in the prior year period. Income tax expense for the three months ended March 31, 2022 was primarily driven by discrete tax expense of approximately $32,500 that was recorded for income tax reserves related to a retrospective provision of final regulations from the U.S. Treasury Department that were published during the first quarter of 2022. In addition, income tax expense for the three months ended March 31, 2022 was attributable to pretax income, the jurisdictional mix of earnings and pretax losses for which the Company cannot recognize a tax benefit, and the tax effect of stock options that expired unexercised. The income tax expense for the three months ended March 31, 2021 was primarily driven by discrete tax expense recorded for income tax reserves of approximately $58,900.
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Note 14. Earnings (Loss) Per Share

Effective October 29, 2021, each share of the Company's Class A common stock and each share of the Company's Class B common stock automatically converted into one share of common stock of the Company. Following the conversion, the Company has only one class of common stock outstanding. Prior to that, our common stock had a dual class structure, consisting of Class A common stock and Class B common stock. Other than voting rights, the Class B common stock had the same rights as the Class A common stock, and therefore both were treated as the same class of stock for purposes of the earnings per share calculation. Laureate computes basic earnings per share (EPS) by dividing income available to common shareholders by the weighted average number of common shares outstanding for the reporting period. Diluted EPS reflects the potential dilution that would occur if share-based compensation awards, contingently issuable shares, or convertible securities were exercised or converted into common stock. To calculate the diluted EPS, the basic weighted average number of shares is increased by the dilutive effect of stock options, restricted stock, restricted stock units, and any contingently issuable shares determined using the treasury stock method, and any convertible securities using the if-converted method.
The following tables summarize the computations of basic and diluted earnings (loss) per share:
For the three months ended March 31, 20222021
Numerator used in basic and diluted earnings (loss) per common share for continuing operations:
Loss from continuing operations$(45,415)$(164,525)
Loss attributable to noncontrolling interests469 24 
Loss from continuing operations attributable to Laureate Education, Inc.(44,946)(164,501)
Accretion of redemption value of redeemable noncontrolling interests and equity (20)
Net loss from continuing operations for basic and diluted loss per share$(44,946)$(164,521)
Numerator used in basic and diluted earnings (loss) per common share for discontinued operations:
Income (loss) from discontinued operations, net of tax$735 $(418)
Loss (income) attributable to noncontrolling interests