Laureate Education, Inc. (NASDAQ:LAUR) Q3 2020 Earnings Conference Call November 5, 2020 8:30 PM ET Company Participants Adam Morse – Senior Vice President of Corporate Finance and Global Treasurer Eilif Serck-Hanssen – President and Chief Executive Officer J. J. Charhon – Chief Financial Officer Conference Call Participants Adam Parrington – Stifel Operator Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter 2020 Laureate Education Inc Earnings Conference Call. At this time al ...

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, 2020 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 Laureate Education, Inc. (Exact name of registrant as specified in its charter) | Delaware | 52-1492296 | ...

Laureate Education, Inc. (NASDAQ:LAUR) Q2 2020 Earnings Conference Call August 6, 2020 8:30 AM ET Company Participants Adam Morse - SVP, Corporate Finance & Global Treasurer Eilif Serck-Hanssen - President, CEO & Director Jean-Jacques Charhon - EVP & CFO Conference Call Participants Shlomo Rosenbaum - Stifel, Nicolaus & Company Ryan Leonard - Barclays Bank Marcelo Santos - JPMorgan Chase & Co. Caio Moscardini - Morgan Stanley Operator Ladies and gentlemen, thank you for standing by, and welcome to Laureate ...

Second Quarter 2020 Earnings Presentation August 6, 2020 LAUREATE EDUCATION INC® © 2020 Laureate Education, Inc. 1 Forward Looking Statements This presentation includes statements that express Laureate's opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, ''forward-looking statements'' within the meaning of the federal securities laws, which involve risks and uncertainties. Laureate's actual resul ...

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 June 30, 2020 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 Laureate Education, Inc. (Exact name of registrant as specified in its charter) | Delaware | 52-1492296 | | -- ...

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, 2020 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 Laureate Education, Inc. (Exact name of registrant as specified in its charter) | Delaware | 52-1492296 | | - ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2019 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 Laureate Education, Inc. (Exact name of registrant as specified in its charter) | Delaware | | | 52-1492296 | | -- ...

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, 2019 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 Laureate Education, Inc. (Exact name of registrant as specified in its charter) Delaware 52-1492296 (Stat ...

PART I. - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents Laureate Education, Inc.'s unaudited consolidated financial statements, including operations, balance sheets, and cash flows, with detailed notes [Consolidated Statements of Operations (Three Months)](index=3&type=section&id=Consolidated%20Statements%20of%20Operations%20-%20Three%20months%20ended%20June%2030%2C%202019%20and%20June%2030%2C%202018) Summarizes Laureate Education, Inc.'s consolidated statements of operations for the three months ended June 30, 2019 and 2018 Consolidated Statements of Operations (Three Months Ended June 30, in millions) | Metric | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | | :------------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Revenues | $1,001.8 | $1,017.2 | | Operating income | $213.7 | $218.2 | | Income from continuing operations | $104.5 | $173.9 | | Net income | $779.6 | $224.0 | | Net income attributable to Laureate Education, Inc. | $781.6 | $224.4 | | Basic earnings per share | $3.48 | $1.37 | | Diluted earnings per share | $3.48 | $1.00 | [Consolidated Statements of Operations (Six Months)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20-%20Six%20months%20ended%20June%2030%2C%202019%20and%20June%2030%2C%202018) Summarizes Laureate Education, Inc.'s consolidated statements of operations for the six months ended June 30, 2019 and 2018 Consolidated Statements of Operations (Six Months Ended June 30, in millions) | Metric | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | | :------------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Revenues | $1,623.6 | $1,649.4 | | Operating income | $129.2 | $125.6 | | (Loss) income from continuing operations | $(5.8) | $8.2 | | Net income | $973.9 | $395.5 | | Net income attributable to Laureate Education, Inc. | $972.8 | $393.3 | | Basic earnings per share | $4.33 | $2.01 | | Diluted earnings per share | $4.33 | $1.75 | [Consolidated Statements of Comprehensive Income (Three Months)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20-%20Three%20months%20ended%20June%2030%2C%202019%20and%20June%2030%2C%202018) Presents Laureate Education, Inc.'s consolidated statements of comprehensive income for the three months ended June 30, 2019 and 2018 Consolidated Statements of Comprehensive Income (Three Months Ended June 30, in millions) | Metric | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | | :------------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net income | $779.6 | $224.0 | | Foreign currency translation adjustment, net | $10.2 | $(196.7) | | Unrealized (loss) gain on derivative instruments, net | $(10.6) | $10.1 | | Total other comprehensive loss | $(0.4) | $(186.5) | | Comprehensive income | $779.2 | $37.4 | | Comprehensive income attributable to Laureate Education, Inc. | $781.3 | $37.4 | [Consolidated Statements of Comprehensive Income (Six Months)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20-%20Six%20months%20ended%20June%2030%2C%202019%20and%20June%2030%2C%202018) Presents Laureate Education, Inc.'s consolidated statements of comprehensive income for the six months ended June 30, 2019 and 2018 Consolidated Statements of Comprehensive Income (Six Months Ended June 30, in millions) | Metric | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | | :------------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net income | $973.9 | $395.5 | | Foreign currency translation adjustment, net | $59.7 | $(113.3) | | Unrealized (loss) gain on derivative instruments, net | $(8.0) | $12.3 | | Total other comprehensive income (loss) | $51.8 | $(100.6) | | Comprehensive income | $1,025.7 | $294.9 | | Comprehensive income attributable to Laureate Education, Inc. | $1,024.7 | $292.5 | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets%20-%20June%2030%2C%202019%20and%20December%2031%2C%202018) Details Laureate Education, Inc.'s consolidated balance sheets as of June 30, 2019, and December 31, 2018 Consolidated Balance Sheets (in millions) | Metric | June 30, 2019 (in millions) | December 31, 2018 (in millions) | | :------------------------------------------------- | :-------------------------- | :-------------------------- | | **Assets** | | | | Cash and cash equivalents | $236.4 | $388.5 | | Total current assets | $1,120.9 | $1,217.1 | | Property and equipment, net | $1,238.5 | $1,278.9 | | Goodwill | $1,737.5 | $1,707.1 | | Total assets | $7,091.8 | $6,769.6 | | **Liabilities & Equity** | | | | Total current liabilities | $1,205.5 | $1,190.1 | | Long-term debt and finance leases, less current portion | $1,222.1 | $2,593.6 | | Total liabilities | $3,972.2 | $4,704.3 | | Total stockholders' equity | $3,107.1 | $2,050.9 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20-%20Six%20months%20ended%20June%2030%2C%202019%20and%20June%2030%2C%202018) Outlines Laureate Education, Inc.'s consolidated statements of cash flows for the six months ended June 30, 2019 and 2018 Consolidated Statements of Cash Flows (in millions) | Metric | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | | :------------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | $32.5 | $1.8 | | Net cash provided by investing activities | $1,102.4 | $264.3 | | Net cash used in financing activities | $(1,396.1) | $(393.1) | | Net change in Cash and cash equivalents and Restricted cash | $(164.4) | $(109.1) | | Cash and cash equivalents and Restricted cash at end of period | $425.4 | $423.7 | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting Laureate Education, Inc.'s consolidated financial statements [Note 1. Description of Business](index=11&type=section&id=Note%201.%20Description%20of%20Business) Describes Laureate Education, Inc.'s business model, operations, and strategic focus on principal markets - Laureate Education, Inc. provides higher education programs through an international network of licensed universities and institutions, operating as a **public benefit corporation** since **October 1, 2015**[25](index=25&type=chunk) - The Company announced divestitures of subsidiaries in Europe, Asia, and Central America, classifying them as discontinued operations to strategically focus on principal markets: **Brazil, Chile, Mexico, Peru, and the Online & Partnerships segment**, along with institutions in **Australia and New Zealand**[26](index=26&type=chunk) [Note 2. Significant Accounting Policies](index=12&type=section&id=Note%202.%20Significant%20Accounting%20Policies) Outlines Laureate Education, Inc.'s key accounting policies, including consolidation of VIEs and lease accounting changes - Laureate consolidates certain internationally based educational organizations as **Variable Interest Entities (VIEs)** because it has the power to direct their activities and the right to receive significant economic benefits, despite some being not-for-profit in their home countries[29](index=29&type=chunk)[30](index=30&type=chunk) Selected Consolidated Statements of Operations Information for VIEs (Continuing Operations, in millions) | Metric | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Revenues | $148.5 | $150.6 | $204.9 | $205.6 | | Operating income (loss) | $44.4 | $33.9 | $17.1 | $(5.5) | | Net income | $41.8 | $39.0 | $17.6 | $4.0 | - The **New Higher Education Law in Chile**, effective **May 29, 2019**, prohibits conflicts of interest and related party transactions, leading Laureate to evaluate its contractual relationships with Chilean non-profit universities and its accounting treatment for consolidation[32](index=32&type=chunk)[33](index=33&type=chunk) - The Company adopted **ASU 2016-02 (Leases)** on **January 1, 2019**, under a modified retrospective method, resulting in the recognition of **$937.884 million** in ROU assets and **$958.066 million** in lease liabilities for operating leases as of **June 30, 2019**, and a **$28.944 million** cumulative-effect adjustment to retained earnings[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 3. Revenue](index=15&type=section&id=Note%203.%20Revenue) Details Laureate Education, Inc.'s revenue recognition policies and segment-wise revenue breakdown - Laureate's revenues primarily consist of tuition and educational service revenues, recognized net of scholarships, discounts, and refunds, following a **five-step model** prescribed by **ASC Topic 606**[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) Revenues by Reportable Segment (Three Months Ended June 30, in millions) | Segment | 2019 (in millions) | 2018 (in millions) | | :------------------ | :----------------- | :----------------- | | Brazil | $197.1 | $225.6 | | Mexico | $162.5 | $159.6 | | Andean | $423.0 | $409.5 | | Rest of World | $60.6 | $61.3 | | Online & Partnerships | $159.7 | $165.0 | | Corporate | $(1.1) | $(3.9) | | Total Revenues | $1,001.8 | $1,017.2 | Revenues by Reportable Segment (Six Months Ended June 30, in millions) | Segment | 2019 (in millions) | 2018 (in millions) | | :------------------ | :----------------- | :----------------- | | Brazil | $307.1 | $348.4 | | Mexico | $318.9 | $315.5 | | Andean | $561.9 | $544.6 | | Rest of World | $114.7 | $113.6 | | Online & Partnerships | $321.5 | $333.0 | | Corporate | $(0.6) | $(5.7) | | Total Revenues | $1,623.6 | $1,649.4 | - Contract assets (accounts receivable) increased to **$531.390 million** as of **June 30, 2019**, from **$399.322 million** at **December 31, 2018**, primarily due to enrollment cycles[45](index=45&type=chunk) - Contract liabilities (deferred revenue and student deposits) increased to **$283.763 million** from **$193.226 million** in the same period[46](index=46&type=chunk) [Note 4. Discontinued Operations and Assets Held for Sale](index=18&type=section&id=Note%204.%20Discontinued%20Operations%20and%20Assets%20Held%20for%20Sale) Reports on Laureate Education, Inc.'s divested operations and assets classified as held for sale - Laureate is divesting institutions in Europe, Asia, and Central America to focus on principal markets (**Brazil, Chile, Mexico, Peru, Online & Partnerships, Australia, New Zealand**), with these divestitures classified as discontinued operations[48](index=48&type=chunk) Summarized Operating Results of Discontinued Operations (in millions) | Metric | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Revenues | $147.9 | $230.7 | $350.6 | $483.8 | | Operating income | $34.1 | $47.6 | $96.9 | $112.7 | | Income from discontinued operations, net of tax | $33.6 | $38.1 | $90.2 | $56.9 | | Operating cash flows | $13.2 | $64.5 | $13.2 | $64.5 | | Investing cash flows | $(11.0) | $(22.0) | $(11.0) | $(22.0) | | Financing cash flows | $(25.7) | $(9.9) | $(25.7) | $(9.9) | Assets and Liabilities Classified as Held for Sale (in millions) | Category | June 30, 2019 (in millions) | December 31, 2018 (in millions) | | :------------------------------------ | :-------------------------- | :-------------------------- | | Total assets held for sale | $681.0 | $1,337.8 | | Total liabilities held for sale | $303.0 | $662.7 | - Laureate signed agreements to sell **UniNorte (Brazil)** for approximately **$50.9 million** and **NewSchool of Architecture and Design, LLC (NSAD)** for **one dollar plus subsidies of up to $5.8 million**, both pending regulatory approvals and expected to close in the **second half of 2019**[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) [Note 5. Dispositions](index=20&type=section&id=Note%205.%20Dispositions) Summarizes gains and proceeds from Laureate Education, Inc.'s completed divestitures in the first half of 2019 - In **Q1 2019**, Laureate completed the sale of **St. Augustine** for **$400 million**, generating **$346.4 million** in net proceeds (used for debt repayment) and a gain of approximately **$223 million**[55](index=55&type=chunk) - The sale of **Thailand operations** in **Q1 2019** yielded approximately **$27.9 million** in net proceeds from a **$35.3 million** purchase price, recognizing a gain of approximately **$10.8 million**[56](index=56&type=chunk) - An additional gain of approximately **$13.7 million** was recognized in **Q1 2019** from the sale of **China operations (LEILY)** due to the settlement of a loss contingency with no cost to the Company[57](index=57&type=chunk)[58](index=58&type=chunk) - The sale of **Monash South Africa** in **April 2019** generated approximately **$9 million** in proceeds and a gain of approximately **$2.3 million**[59](index=59&type=chunk) - The sale of **India operations** in **May 2019** for **$145.6 million** resulted in net proceeds of approximately **$144.6 million** (used for debt repayment) and a gain of approximately **$19.5 million**[60](index=60&type=chunk)[61](index=61&type=chunk) - The sale of **Spain and Portugal institutions** in **May 2019** for **EUR 770 million** (approx. **$857 million**) generated approximately **$908 million** in net proceeds (used for debt repayment) and a gain of approximately **$618 million**, including a tax benefit[62](index=62&type=chunk)[63](index=63&type=chunk) [Note 6. Due to Shareholders of Acquired Companies](index=22&type=section&id=Note%206.%20Due%20to%20Shareholders%20of%20Acquired%20Companies) Details amounts owed to shareholders of acquired companies and changes in these obligations Amounts Due to Shareholders of Acquired Companies (in millions) | Company | June 30, 2019 (in millions) | December 31, 2018 (in millions) | Nominal Currency | Interest Rate % | | :------------------------------------------ | :-------------------------- | :-------------------------- | :--------------- | :-------------- | | Universidade Anhembi Morumbi (UAM Brazil) | $32.6 | $30.9 | BRL | CDI + 2% | | Faculdade Porto-Alegrense (FAPA) | $2.1 | $1.9 | BRL | IGP-M | | IADE Group | $1.1 | $1.1 | EUR | 3% | | University of St. Augustine for Health Sciences, LLC (St. Augustine) | $— | $11.4 | USD | 7% | | Total due to shareholders of acquired companies | $35.9 | $45.4 | | | | Less: Current portion | $14.2 | $23.8 | | | | Due to shareholders, less current portion | $21.6 | $21.6 | | | - The **St. Augustine seller note** was fully repaid during **Q2 2019** following the resolution of legal matters[65](index=65&type=chunk) [Note 7. Business and Geographic Segment Information](index=22&type=section&id=Note%207.%20Business%20and%20Geographic%20Segment%20Information) Provides financial performance and asset information by Laureate Education, Inc.'s business and geographic segments - Laureate operates through **six segments**: Brazil, Mexico, Andean, Central America & U.S. Campuses, Rest of World, and Online & Partnerships, with campus-based segments focusing on professional-oriented fields in developing markets[66](index=66&type=chunk)[67](index=67&type=chunk) - The **Central America & U.S. Campuses segment** and portions of the **Rest of World segment** are classified as discontinued operations[74](index=74&type=chunk) - Segment performance is evaluated based on **Adjusted EBITDA**, a non-GAAP measure that excludes certain non-operating and non-cash items, as well as expenses related to the **Excellence-in-Process (EiP) initiative**[76](index=76&type=chunk) Revenues by Reportable Segment (in millions) | Segment | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | | :------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Brazil | $197.1 | $225.6 | $307.1 | $348.4 | | Mexico | $162.5 | $159.6 | $318.9 | $315.5 | | Andean | $423.0 | $409.5 | $561.9 | $544.6 | | Rest of World | $60.6 | $61.3 | $114.7 | $113.6 | | Online & Partnerships | $159.7 | $165.0 | $321.5 | $333.0 | | Corporate | $(1.1) | $(3.9) | $(0.6) | $(5.7) | | Total Revenues | $1,001.8 | $1,017.2 | $1,623.6 | $1,649.4 | Adjusted EBITDA of Reportable Segments (in millions) | Segment | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | | :------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Brazil | $58.9 | $77.9 | $28.2 | $51.9 | | Mexico | $31.6 | $27.8 | $57.4 | $58.3 | | Andean | $186.7 | $184.2 | $153.5 | $144.8 | | Rest of World | $10.5 | $7.6 | $15.0 | $10.6 | | Online & Partnerships | $49.9 | $45.4 | $98.4 | $90.4 | | Corporate | $(40.2) | $(39.4) | $(76.8) | $(82.0) | | Total Adjusted EBITDA | $297.3 | $303.6 | $275.7 | $273.9 | Total Assets by Segment (in millions) | Segment | June 30, 2019 (in millions) | December 31, 2018 (in millions) | | :-------------------------- | :-------------------------- | :-------------------------- | | Brazil | $1,189.1 | $1,011.4 | | Mexico | $1,300.9 | $971.3 | | Andean | $1,870.8 | $1,608.4 | | Rest of World | $250.7 | $231.4 | | Online & Partnerships | $1,245.1 | $1,308.9 | | Corporate and Discontinued Operations | $1,235.3 | $1,638.3 | | Total assets | $7,091.8 | $6,769.6 | [Note 8. Goodwill](index=25&type=section&id=Note%208.%20Goodwill) Details changes in Laureate Education, Inc.'s goodwill carrying amount, including acquisitions and currency adjustments Change in Net Carrying Amount of Goodwill (in millions) | Metric | Brazil (in millions) | Mexico (in millions) | Andean (in millions) | Rest of World (in millions) | Online & Partnerships (in millions) | Total (in millions) | | :-------------------------- | :------------------- | :------------------- | :------------------- | :-------------------------- | :-------------------------- | :------------------ | | Balance at December 31, 2018 | $406.5 | $498.2 | $254.3 | $87.4 | $460.7 | $1,707.1 | | Acquisitions | $1.3 | $— | $— | $— | $— | $1.3 | | Currency translation adjustments | $5.7 | $19.2 | $5.1 | $(1.0) | $— | $29.0 | | Balance at June 30, 2019 | $413.5 | $517.4 | $259.3 | $86.5 | $460.7 | $1,737.5 | - Goodwill increased by **$30.366 million** from **December 31, 2018**, to **June 30, 2019**, primarily due to currency translation adjustments (**$29.029 million**) and a small acquisition in Brazil (**$1.337 million**)[79](index=79&type=chunk) [Note 9. Debt](index=25&type=section&id=Note%209.%20Debt) Outlines Laureate Education, Inc.'s outstanding long-term debt, including repayments and extinguishment losses Outstanding Long-Term Debt (in millions) | Debt Type | June 30, 2019 (in millions) | December 31, 2018 (in millions) | | :------------------------------------------ | :-------------------------- | :-------------------------- | | Senior Secured Credit Facility | $14.5 | $1,321.6 | | Senior Notes (stated maturity May 2025) | $800.0 | $800.0 | | Total senior long-term debt | $814.5 | $2,121.6 | | Other debt (Lines of credit, Notes payable) | $531.9 | $542.4 | | Finance lease obligations and sale-leaseback financings | $83.1 | $119.6 | | Total long-term debt and finance leases | $1,429.5 | $2,783.7 | | Long-term debt and finance leases, less current portion | $1,222.1 | $2,593.6 | - The Company recorded a **Loss on debt extinguishment** of **$15.595 million** for the three months and **$26.217 million** for the six months ended **June 30, 2019**, due to the repayment of the **2024 Term Loan** and other notes payable, resulting in the write-off of deferred financing costs and debt discount[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - As of **June 30, 2019**, Laureate was not subject to its **Consolidated Senior Secured Debt to Consolidated EBITDA leverage ratio covenant**, as conditions for its non-application were met[86](index=86&type=chunk) [Note 10. Leases](index=27&type=section&id=Note%2010.%20Leases) Presents Laureate Education, Inc.'s lease-related balance sheet information, terms, and cost components Supplemental Balance Sheet Information Related to Leases (in millions) | Metric | June 30, 2019 (in millions) | | :------------------------------------------ | :-------------------------- | | Operating lease right-of-use assets, net | $937.9 | | Buildings, Furniture, equipment and software, net (Finance) | $35.1 | | Total leased assets | $973.0 | | Current portion of operating leases | $95.7 | | Current portion of long-term debt and finance leases | $3.8 | | Long-term operating leases, less current portion | $862.4 | | Long-term debt and finance leases, less current portion | $34.3 | | Total lease liabilities | $996.1 | Lease Terms and Discount Rates (June 30, 2019) | Metric | Value | | :-------------------------- | :------ | | Weighted average remaining lease terms (Operating) | 9.5 years | | Weighted average remaining lease terms (Finance) | 10.5 years | | Weighted average discount rate (Operating) | 9.50% | | Weighted average discount rate (Finance) | 9.20% | Components of Lease Cost (Six Months Ended June 30, 2019, in millions) | Lease Cost Component | Amount (in millions) | | :-------------------------- | :------------------- | | Operating lease cost | $90.5 | | Amortization of leased assets (Finance) | $2.6 | | Interest on leased assets (Finance) | $1.5 | | Short-term lease costs | $2.0 | | Variable lease costs | $6.6 | | Sublease income | $(2.2) | | Total lease cost | $101.0 | [Note 11. Commitments and Contingencies](index=29&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) Details Laureate Education, Inc.'s various commitments, contingent liabilities, and legal exposures - As of **June 30, 2019**, the carrying value of all noncontrolling interest holder put arrangements was **$10.779 million**, with an estimated value of **$10.779 million** if all were exercised[92](index=92&type=chunk)[93](index=93&type=chunk) - Laureate has recorded cumulative liabilities for taxes other-than-income tax of **$53.603 million** and for income tax contingencies of **$54.823 million** as of **June 30, 2019**[97](index=97&type=chunk)[98](index=98&type=chunk) - The maximum potential amount of payments Laureate's Chilean institutions could be required to make under the government-sponsored **CAE Program** was approximately **$516 million** at **June 30, 2019**, with an estimated long-term guarantee liability of **$37.743 million** recorded[101](index=101&type=chunk) - As of **June 30, 2019**, Laureate had approximately **$127 million** in standby **Letters of Credit (LOCs)** in favor of the **DOE**, fully collateralized with restricted cash, and **$22.503 million** in surety bonds[107](index=107&type=chunk)[109](index=109&type=chunk) [Note 12. Financing Receivables](index=32&type=section&id=Note%2012.%20Financing%20Receivables) Provides details on Laureate Education, Inc.'s financing receivables, allowances, and aging by country Financing Receivables, Net of Allowances (in millions) | Metric | June 30, 2019 (in millions) | December 31, 2018 (in millions) | | :-------------------------- | :-------------------------- | :-------------------------- | | Financing receivables | $36.2 | $16.5 | | Allowance for doubtful accounts | $(6.4) | $(6.4) | | Financing receivables, net of allowances | $29.8 | $10.1 | Aging of Financing Receivables by Country Portfolio (June 30, 2019, in millions) | Status | Chile (in millions) | Other (in millions) | Total (in millions) | | :-------------------------- | :------------------ | :------------------ | :------------------ | | Amounts past due less than one year | $9.9 | $1.1 | $11.0 | | Amounts past due one year or greater | $3.1 | $0.1 | $3.3 | | Total past due | $13.0 | $1.2 | $14.3 | | Not past due | $20.6 | $1.4 | $22.0 | | Total financing receivables | $33.6 | $2.6 | $36.2 | Rollforward of Allowance for Doubtful Accounts (Six Months Ended June 30, 2019, in millions) | Metric | Chile (in millions) | Other (in millions) | Total (in millions) | | :-------------------------- | :------------------ | :------------------ | :------------------ | | Balance at December 31, 2018 | $(6.1) | $(0.3) | $(6.4) | | Charge-offs | $1.1 | $0.5 | $1.6 | | Provision | $(0.7) | $(0.7) | $(1.4) | | Currency adjustments | $(0.1) | $0.0 | $(0.1) | | Balance at June 30, 2019 | $(5.9) | $(0.5) | $(6.4) | - During the six months ended **June 30, 2019**, **327 financing receivable accounts** were modified under **Troubled Debt Restructuring (TDR)** terms, with pre-modification balances of **$1.1 million** and post-modification balances of **$0.98 million**[114](index=114&type=chunk) [Note 13. Share-based Compensation](index=34&type=section&id=Note%2013.%20Share-based%20Compensation) Reports Laureate Education, Inc.'s share-based compensation expense for continuing and discontinued operations Share-based Compensation Expense (in millions) | Metric | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Stock options, net of estimated forfeitures | $1.3 | $2.0 | $2.2 | $(5.3) | | Restricted stock awards | $3.4 | $5.3 | $5.6 | $8.4 | | Total continuing operations | $4.7 | $7.3 | $7.7 | $3.2 | | Discontinued operations | $0.1 | $0.4 | $0.3 | $0.7 | | Total continuing and discontinued operations | $4.9 | $7.7 | $8.0 | $3.9 | [Note 14. Stockholders' Equity](index=35&type=section&id=Note%2014.%20Stockholders'%20Equity) Details changes in Laureate Education, Inc.'s stockholders' equity, including comprehensive income and stock transactions - Total Laureate Education, Inc. stockholders' equity increased from **$2,061.079 million** at **December 31, 2018**, to **$3,118.214 million** at **June 30, 2019**, driven by net income and foreign currency translation adjustments[21](index=21&type=chunk)[117](index=117&type=chunk) - The adoption of **ASU 2016-02 (Leases)** resulted in a cumulative-effect adjustment to retained earnings of **$28.944 million** as of **January 1, 2019**[36](index=36&type=chunk)[118](index=118&type=chunk) Accumulated Other Comprehensive Income (Loss) (in millions) | Component | June 30, 2019 (in millions) | December 31, 2018 (in millions) | | :------------------------------------------ | :-------------------------- | :-------------------------- | | Foreign currency translation loss | $(1,067.9) | $(1,127.7) | | Unrealized gain on derivatives | $10.4 | $18.4 | | Minimum pension liability adjustment | $(3.3) | $(3.3) | | Accumulated other comprehensive loss | $(1,060.8) | $(1,112.7) | - In **June 2019**, Laureate's controlling stockholder, **Wengen Alberta, Limited Partnership**, converted **Class B common stock** to **Class A** and sold **10,955 shares** in a secondary offering, with all net proceeds going to Wengen[122](index=122&type=chunk) [Note 15. Derivative Instruments](index=37&type=section&id=Note%2015.%20Derivative%20Instruments) Explains Laureate Education, Inc.'s use of derivative instruments for managing market risks and their fair values - Laureate uses derivative instruments (**foreign currency swaps, interest rate swaps**) to manage exposure to foreign currency and interest rate fluctuations, reporting all derivatives at fair value[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) Fair Values of Derivative Instruments (in millions) | Metric | June 30, 2019 (in millions) | December 31, 2018 (in millions) | | :------------------------------------------ | :-------------------------- | :-------------------------- | | Total derivative instrument assets | $— | $3.3 | | Total derivative instrument liabilities | $— | $10.7 | - Cash flow hedge interest rate swaps related to the **2024 Term Loan** were fully settled in **August 2018**, and amounts in **AOCI** were accelerated to earnings in **Q2 2019** due to the full repayment of the loan, resulting in a gain of approximately **$9.8 million**[127](index=127&type=chunk) - Net investment hedge cross currency swaps were terminated in **April 2019** for a net settlement of **$7.679 million**, with accumulated gains in **AOCI** deferred until the sale or liquidation of the hedged investee[128](index=128&type=chunk) - Derivatives not designated as hedging instruments, including **EUR to USD foreign currency swaps** for **Spain and Portugal sales**, resulted in a realized gain of **$5.088 million** and a realized loss of approximately **$0.565 million** from various settlements[133](index=133&type=chunk)[134](index=134&type=chunk) [Note 16. Income Taxes](index=41&type=section&id=Note%2016.%20Income%20Taxes) Describes Laureate Education, Inc.'s income tax accounting policies, including deferred taxes and uncertain tax positions - Laureate uses the **liability method** for income taxes, recognizing deferred income taxes for temporary differences and recording interest and penalties related to uncertain tax positions as a component of **Income tax expense**[142](index=142&type=chunk)[143](index=143&type=chunk) - During the six months ended **June 30, 2019**, Laureate recognized **$2.642 million** in interest and penalties related to income taxes and derecognized **$8.482 million** of previously accrued amounts[143](index=143&type=chunk) - Approximately **$25.848 million** of unrecognized tax benefits, if recognized, would affect the effective income tax rate, with a reasonably possible decrease of up to **$13.449 million** within the next **12 months**[143](index=143&type=chunk)[144](index=144&type=chunk) [Note 17. Earnings (Loss) Per Share](index=42&type=section&id=Note%2017.%20Earnings%20(Loss)%20Per%20Share) Presents Laureate Education, Inc.'s basic and diluted earnings per share calculations and antidilutive instruments Basic and Diluted Earnings Per Share (Three Months Ended June 30) | Metric | 2019 | 2018 | | :------------------------------------------ | :--- | :--- | | Basic earnings per share | $3.48 | $1.37 | | Diluted earnings per share | $3.48 | $1.00 | Basic and Diluted Earnings Per Share (Six Months Ended June 30) | Metric | 2019 | 2018 | | :------------------------------------------ | :--- | :--- | | Basic earnings per share | $4.33 | $2.01 | | Diluted earnings per share | $4.33 | $1.75 | Antidilutive Stock Options, Restricted Stock, and RSUs (in thousands) | Metric | 3 Months Ended June 30, 2019 (in thousands) | 3 Months Ended June 30, 2018 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | 6 Months Ended June 30, 2018 (in thousands) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Stock options | 8,846 | 9,714 | 8,993 | 9,779 | | Restricted stock and RSUs | 14 | 131 | 915 | 169 | [Note 18. Legal and Regulatory Matters](index=45&type=section&id=Note%2018.%20Legal%20and%20Regulatory%20Matters) Addresses Laureate Education, Inc.'s ongoing legal actions and management's assessment of their financial impact - Laureate is subject to legal actions in the ordinary course of business, with management believing adequate defenses and accruals are in place to prevent material impact on financial statements[150](index=150&type=chunk) [Note 19. Fair Value Measurement](index=45&type=section&id=Note%2019.%20Fair%20Value%20Measurement) Explains Laureate Education, Inc.'s fair value measurement hierarchy for financial assets and liabilities - Fair value measurements are categorized into a **three-level hierarchy**: **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than quoted prices), and **Level 3** (unobservable inputs)[151](index=151&type=chunk)[153](index=153&type=chunk) Financial Assets and Liabilities Measured at Fair Value (June 30, 2019, in millions) | Asset/Liability | Total (in millions) | Level 1 (in millions) | Level 2 (in millions) | Level 3 (in millions) | | :------------------------------------------ | :------------------ | :-------------------- | :-------------------- | :-------------------- | | Derivative instruments (Assets) | $— | $— | $— | $— | | Equity securities - preferred stock investment | $11.1 | $— | $11.1 | $— | | Derivative instruments (Liabilities) | $— | $— | $— | $— | - As of **June 30, 2019**, Laureate's equity securities investment in preferred stock of a private education company was valued at an estimated fair value of **$11.116 million (Level 2)**, based on interest from an existing investor and a recent financing round[153](index=153&type=chunk)[154](index=154&type=chunk) [Note 20. Supplemental Cash Flow Information](index=46&type=section&id=Note%2020.%20Supplemental%20Cash%20Flow%20Information) Provides a reconciliation of Laureate Education, Inc.'s cash, cash equivalents, and restricted cash balances Reconciliation of Cash and Cash Equivalents and Restricted Cash (in millions) | Metric | June 30, 2019 (in millions) | June 30, 2018 (in millions) | December 31, 2018 (in millions) | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $236.4 | $249.9 | $388.5 | | Restricted cash | $188.9 | $173.9 | $201.3 | | Total Cash and cash equivalents and Restricted cash | $425.4 | $423.7 | $589.8 | [Note 21. Subsequent Events](index=47&type=section&id=Note%2021.%20Subsequent%20Events) Discloses significant events occurring after June 30, 2019, including divestiture agreements and stock repurchase plans - Subsequent to **June 30, 2019**, Laureate entered into an agreement to sell **Universidad Interamericana de Panamá (UIP)** for an expected enterprise value of approximately **$86.75 million**, pending regulatory approvals[157](index=157&type=chunk)[158](index=158&type=chunk) - The closing of the **Inti Education Holdings Sdn. Bhd. (Malaysia)** transaction, scheduled for **July 12, 2019**, was disputed by the purchaser, who formally moved to terminate the agreement, which Laureate views as a repudiatory breach[159](index=159&type=chunk)[160](index=160&type=chunk) - In **July 2019**, the Company's board approved a new stock repurchase program to acquire up to **$150 million** of **Class A common stock**, to be financed with operating cash flows and excess liquidity[161](index=161&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes Laureate Education, Inc.'s financial performance, liquidity, and capital resources, highlighting strategic shifts and risks [Forward-Looking Statements](index=48&type=section&id=Forward-Looking%20Statements) Highlights the inherent risks and uncertainties associated with Laureate Education, Inc.'s forward-looking statements - The report contains forward-looking statements regarding estimated earnings, costs, cash flows, growth rates, and planned divestitures, which are subject to various risks and uncertainties inherent in global operations, including foreign currency, political, legal, regulatory, and economic factors[163](index=163&type=chunk)[164](index=164&type=chunk) [Overview](index=49&type=section&id=Overview) Provides an overview of Laureate Education, Inc.'s global operations, strategic focus, and key business drivers - Laureate Education, Inc. is the largest international network of degree-granting higher education institutions, primarily focused in **Latin America**, with **908,700 students** across **38 institutions** in **10 countries** as of **June 30, 2019**[166](index=166&type=chunk) - The Company is undergoing a strategic shift, divesting subsidiaries in Europe, Asia, and Central America to focus on core markets (**Brazil, Chile, Mexico, Peru, Online & Partnerships, Australia, New Zealand**), with these divestitures classified as discontinued operations[168](index=168&type=chunk) Reportable Segments in Continuing Operations (as of June 30, 2019) | Segment | Countries | Institutions | Enrollment | Revenues YTD (in millions) | % Contribution to Revenues YTD | | :------------------ | :-------- | :----------- | :--------- | :------------------------- | :----------------------------- | | Brazil | 1 | 13 | 309,000 | $307.1 | 19% | | Mexico | 1 | 2 | 179,200 | $318.9 | 20% | | Andean | 2 | 8 | 340,900 | $561.9 | 34% | | Rest of World | 4 | 12 | 20,200 | $114.7 | 7% | | Online & Partnerships | 2 | 3 | 59,400 | $321.5 | 20% | | Total | 10 | 38 | 908,700 | $1,623.6 | 100% | - International operations face complex risks including foreign exchange fluctuations, political instability, and regulatory changes, particularly in **Chile** where a new **Higher Education Law** impacts related party transactions[176](index=176&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - Enrollment is the primary revenue indicator, with varying cycles by region; the **first and third calendar quarters** generally coincide with **Primary Intakes** for different segments[180](index=180&type=chunk)[181](index=181&type=chunk) Results from Discontinued Operations (in millions) | Metric | 3 Months Ended June 30, 2019 (in millions) | 3 Months Ended June 30, 2018 (in millions) | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Revenues | $147.9 | $230.7 | $350.6 | $483.8 | | Income from discontinued operations, net of tax | $33.6 | $38.1 | $90.2 | $56.9 | | Gain on sales of discontinued operations, net of tax | $641.5 | $12.0 | $889.5 | $330.3 | | Net income from discontinued operations | $675.1 | $50.1 | $979.7 | $387.3 | | Enrollments | 108,200 | 162,100 | 108,200 | 162,100 | - In the **first half of 2019**, Laureate completed sales of **St. Augustine, Thailand, Monash South Africa, India, and Spain and Portugal operations**, recognizing significant gains on these divestitures[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk) [Results of Operations](index=55&type=section&id=Results%20of%20Operations) Analyzes Laureate Education, Inc.'s consolidated and segment-level financial performance for the reporting periods - In the **first half of 2019**, Laureate repaid portions of its **2024 Term Loan** and other notes payable using proceeds from asset sales, resulting in a total **loss on debt extinguishment** of **$26.2 million** for the six months ended **June 30, 2019**[200](index=200&type=chunk)[201](index=201&type=chunk) Consolidated Results (Three Months Ended June 30, in millions) | Metric | 2019 (in millions) | 2018 (in millions) | % Change | | :------------------------------------------------- | :----------------- | :----------------- | :------- | | Revenues | $1,001.8 | $1,017.2 | (2)% | | Operating income | $213.7 | $218.2 | (2)% | | Interest expense, net of interest income | $(38.7) | $(57.5) | 33% | | Other non-operating income | $3.5 | $105.8 | (97)% | | Income from continuing operations before income taxes | $178.6 | $266.5 | (33)% | | Income tax expense | $(74.3) | $(92.7) | 20% | | Income from continuing operations | $104.5 | $173.9 | (40)% | | Net income | $779.6 | $224.0 | nm | | Net income attributable to Laureate Education, Inc. | $781.6 | $224.4 | nm | Consolidated Results (Six Months Ended June 30, in millions) | Metric | 2019 (in millions) | 2018 (in millions) | % Change | | :------------------------------------------------- | :----------------- | :----------------- | :------- | | Revenues | $1,623.6 | $1,649.4 | (2)% | | Operating income | $129.2 | $125.6 | 3% | | Interest expense, net of interest income | $(89.7) | $(117.6) | 24% | | Other non-operating (expense) income | $(6.2) | $69.8 | (109)% | | Income from continuing operations before income taxes | $33.3 | $77.8 | (57)% | | Income tax expense | $(39.3) | $(69.6) | 44% | | (Loss) income from continuing operations | $(5.8) | $8.2 | (171)% | | Net income | $973.9 | $395.5 | 146% | | Net income attributable to Laureate Education, Inc. | $972.8 | $393.3 | 147% | - Consolidated revenues decreased by **$15.4 million (2%)** for the three months and **$25.8 million (2%)** for the six months ended **June 30, 2019**, primarily due to negative foreign currency exchange impacts, partially offset by higher organic enrollment[205](index=205&type=chunk)[215](index=215&type=chunk)[217](index=217&type=chunk) - **Adjusted EBITDA** decreased by **2%** to **$297.3 million** for the three months ended **June 30, 2019**, but increased by **1%** to **$275.7 million** for the six months ended **June 30, 2019**, compared to the prior year periods[227](index=227&type=chunk)[232](index=232&type=chunk) - **Brazil segment's revenues** decreased by **13%** (three months) and **12%** (six months) due to increased discounts and scholarships and declining **FIES participation**, despite organic enrollment growth[241](index=241&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk) - **Online & Partnerships segment's Adjusted EBITDA** increased by **10%** (three months) and **9%** (six months) primarily due to reduced marketing expenses, despite a decrease in revenues[274](index=274&type=chunk)[277](index=277&type=chunk) [Liquidity and Capital Resources](index=72&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses Laureate Education, Inc.'s cash flow, debt management, and ability to meet future financial obligations - Laureate anticipates sufficient cash flow from operations and available cash to meet operating requirements for at least the next **12 months**, with primary cash sources from student tuition[283](index=283&type=chunk)[284](index=284&type=chunk) - As of **June 30, 2019**, cash and cash equivalents totaled **$236.4 million**, excluding **$124.4 million** held by subsidiaries classified as held for sale[286](index=286&type=chunk) - The Company used proceeds from the sales of **St. Augustine ($340 million)**, **India ($144.6 million)**, and **Spain and Portugal ($908 million)** to repay significant portions of its long-term debt, including the full repayment of the **2024 Term Loan**[287](index=287&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk)[298](index=298&type=chunk) - Liquidity is affected by restricted cash balances, totaling **$188.9 million** as of **June 30, 2019**, primarily for **DOE LOCs** and surety bonds[292](index=292&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) - As of **June 30, 2019**, senior long-term debt was **$814.5 million**, consisting of **$14.5 million** under the **Senior Secured Credit Facility** and **$800.0 million** in **Senior Notes due 2025**[296](index=296&type=chunk) - Capital expenditures decreased by **30%** to **$70.8 million** for the six months ended **June 30, 2019**, driven by lower spending in Peru, Costa Rica, and Brazil, and reduced expenditures due to divestitures[304](index=304&type=chunk) - A new stock repurchase program was approved in **July 2019** to acquire up to **$150 million** of **Class A common stock**, to be financed with operating cash flows and excess cash[307](index=307&type=chunk) Summary of Cash Flows (in millions) | Activity | 6 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2018 (in millions) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | | Operating activities | $32.5 | $1.8 | | Investing activities | $1,102.4 | $264.3 | | Financing activities | $(1,396.1) | $(393.1) | | Effects of exchange rates changes on cash | $8.7 | $3.8 | | Change in cash included in current assets held for sale | $88.1 | $14.1 | | Net change in cash and cash equivalents and restricted cash | $(164.4) | $(109.1) | - Cash provided by operating activities increased by **$30.7 million** to **$32.5 million** for the six months ended **June 30, 2019**, primarily due to decreased cash paid for taxes and interest[310](index=310&type=chunk) - Cash provided by investing activities increased significantly by **$838.1 million** to **$1,102.4 million**, mainly due to higher cash receipts from sales of discontinued operations[311](index=311&type=chunk) - Cash used in financing activities increased by **$1,003.0 million** to **$1,396.1 million**, primarily due to higher net payments of long-term debt[312](index=312&type=chunk) [Critical Accounting Policies and Estimates](index=76&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Discusses management's significant judgments and estimates used in preparing Laureate Education, Inc.'s financial statements - The preparation of financial statements requires management to make significant judgments and estimates, with no material changes to critical accounting policies during the six months ended **June 30, 2019**[313](index=313&type=chunk) [Recently Issued Accounting Standards](index=76&type=section&id=Recently%20Issued%20Accounting%20Standards) Refers to Note 2 for details on recently adopted accounting standards impacting Laureate Education, Inc - Refer to **Note 2, Significant Accounting Policies**, for details on recently issued accounting standards[314](index=314&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=77&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) States no significant changes in Laureate Education, Inc.'s market risk exposures since December 31, 2018 - No significant changes in market risk exposures have occurred since **December 31, 2018**[315](index=315&type=chunk) [Item 4. Controls and Procedures](index=77&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of Laureate Education, Inc.'s disclosure controls and internal controls over financial reporting - Management, with **CEO and CFO** participation, concluded that disclosure controls and procedures were effective as of **June 30, 2019**[316](index=316&type=chunk) - There were no material changes in internal control over financial reporting during the fiscal quarter ended **June 30, 2019**[317](index=317&type=chunk) PART II. - OTHER INFORMATION [Item 1. Legal Proceedings](index=78&type=section&id=Item%201.%20Legal%20Proceedings) Updates on Laureate Education, Inc.'s legal proceedings, including settlements and favorable court affirmations - The **Hemingway et al. v. University of St. Augustine for Health Sciences, Inc.** lawsuit was settled without cost to Laureate, and a second suit, **Johnson v. University of St. Augustine for Health Sciences, LLC**, was dismissed[320](index=320&type=chunk) - The **Supreme People's Court of China** affirmed judgments in favor of Laureate affiliates, dismissing appeals in two cases related to **Hunan International Economics University**, involving claims by an heir of a minority shareholder and another minority shareholder[321](index=321&type=chunk)[322](index=322&type=chunk) [Item 1A. Risk Factors](index=78&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to Laureate Education, Inc.'s previously disclosed risk factors from the 2018 Form 10-K - There have been no material changes in the **Risk Factors** included in **Item 1A** of the **2018 Form 10-K**[323](index=323&type=chunk) [Item 6. Exhibits](index=79&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the report, including various agreements, certificates, and plans - The report includes a comprehensive list of exhibits, such as **sale and purchase agreements, certificates of incorporation, debt indentures, stock incentive plans, and certifications**, with many incorporated by reference from prior **SEC filings**[325](index=325&type=chunk)[327](index=327&type=chunk)[329](index=329&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk) [SIGNATURES](index=87&type=section&id=SIGNATURES) Confirms the official signing of the report by Laureate Education, Inc.'s Executive Vice President and CFO, and Chief Accounting Officer - The report was signed on **August 8, 2019**, by **Jean-Jacques Charhon, Executive Vice President and Chief Financial Officer**, and **Tal Darmon, Senior Vice President, Chief Accounting Officer and Global Controller**[337](index=337&type=chunk)[338](index=338&type=chunk)

PART I. - FINANCIAL INFORMATION This part presents Laureate Education, Inc.'s unaudited consolidated financial statements and management's discussion for Q1 2019 [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Laureate Education, Inc.'s unaudited consolidated financial statements for the three months ended March 31, 2019 and 2018, including statements of operations, comprehensive income, balance sheets, and cash flows, along with detailed notes explaining significant accounting policies, segment information, debt, leases, and other financial disclosures [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's revenues, operating loss, net income, and earnings per share for the three months ended March 31, 2019 and 2018 Consolidated Statements of Operations (3 months ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | | :----------------------------------- | :------------------ | :------------------ | :----------- | | Revenues | $621,796 | $632,216 | (1.6%) | | Operating loss | $(84,529) | $(92,621) | 8.7% (Improvement) | | Loss from continuing operations | $(110,314) | $(165,635) | 33.4% (Improvement) | | Income from discontinued operations | $56,574 | $18,853 | 199.0% | | Gain on sales of discontinued operations | $248,005 | $318,327 | (22.1%) | | Net income | $194,265 | $171,545 | 13.2% | | Net income attributable to Laureate Education, Inc. | $191,243 | $168,879 | 13.2% | | Basic and diluted EPS | $0.85 | $0.59 | 44.1% | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's net income and other comprehensive income components, including foreign currency translation adjustments, for Q1 2019 and 2018 Consolidated Statements of Comprehensive Income (3 months ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | | :----------------------------------- | :------------------ | :------------------ | :----------- | | Net income | $194,265 | $171,545 | 13.2% | | Foreign currency translation adjustment, net | $49,551 | $83,369 | (40.5%) | | Unrealized gain on derivative instruments, net | $2,609 | $2,210 | 18.1% | | Total other comprehensive income | $52,160 | $85,955 | (39.3%) | | Comprehensive income attributable to Laureate Education, Inc. | $243,373 | $255,113 | (4.6%) | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity as of March 31, 2019, and December 31, 2018 Consolidated Balance Sheets (as of March 31, 2019 and December 31, 2018) | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | Change (QoQ) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Total current assets | $1,400,461 | $1,217,133 | 15.1% | | Property and equipment, net | $1,237,605 | $1,278,935 | (3.2%) | | Operating lease right-of-use assets, net | $952,890 | $0 | N/A | | Goodwill | $1,738,228 | $1,707,089 | 1.8% | | Total assets | $7,833,521 | $6,769,636 | 15.7% | | Total current liabilities | $1,601,672 | $1,190,087 | 34.6% | | Long-term operating leases, less current portion | $871,588 | $0 | N/A | | Long-term debt and finance leases, less current portion | $2,136,328 | $2,593,585 | (17.6%) | | Total liabilities | $5,491,706 | $4,704,294 | 16.7% | | Total stockholders' equity | $2,327,906 | $2,050,946 | 13.5% | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash flows from operating, investing, and financing activities for the three months ended March 31, 2019 and 2018 Consolidated Statements of Cash Flows (3 months ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | | :----------------------------------- | :------------------ | :------------------ | :----------- | | Net cash provided by (used in) operating activities | $44,974 | $(7,076) | $52,050 (Increase) | | Net cash provided by investing activities | $294,084 | $302,690 | (2.8%) | | Net cash used in financing activities | $(449,602) | $(368,999) | (21.8%) (Increased usage) | | Net change in Cash and cash equivalents and Restricted cash | $(107,375) | $(51,335) | (109.2%) (Increased decrease) | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details accounting policies, segment information, debt, leases, and other financial disclosures [Note 1. Description of Business](index=9&type=section&id=Note%201.%20Description%20of%20Business) This note describes Laureate Education, Inc.'s business as an international higher education network and its strategic divestiture plans - Laureate Education, Inc. provides higher education programs through an international network of licensed universities and institutions, operating as a public benefit corporation since October 1, 2015[21](index=21&type=chunk) - The company is undergoing a strategic shift to divest subsidiaries in Europe, Asia, and Central America, focusing on Brazil, Chile, Mexico, Peru, and the Online & Partnerships segment, with these divestitures classified as discontinued operations[22](index=22&type=chunk) [Note 2. Significant Accounting Policies](index=10&type=section&id=Note%202.%20Significant%20Accounting%20Policies) This note outlines the company's key accounting policies, including consolidation of VIEs, adoption of new lease standards, and impacts of the Chilean Higher Education Law - Laureate consolidates certain internationally based educational organizations identified as Variable Interest Entities (VIEs), primarily in Brazil, Mexico, and Andean segments, due to control and economic benefit rights[25](index=25&type=chunk)[26](index=26&type=chunk) Selected VIE Financial Information (3 months ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | | :----------------------------------- | :------------------ | :------------------ | | VIE Revenues | $56,450 | $55,036 | | VIE Operating loss | $(27,335) | $(39,426) | | VIE Net loss | $(24,200) | $(34,994) | - Adoption of ASU 2016-02 (Leases) on January 1, 2019, materially impacted the balance sheet, recognizing **$952.9 million** in ROU assets and **$969.1 million** in lease liabilities for operating leases as of March 31, 2019[33](index=33&type=chunk) - The new Chilean Higher Education Law, effective May 29, 2019, prohibits conflicts of interest and related party transactions, prompting Laureate to modify relationships with Chilean universities and evaluate continued consolidation of non-profit universities[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 3. Revenue](index=13&type=section&id=Note%203.%20Revenue) This note details the company's revenue recognition policies and provides a breakdown of revenues by reportable segment - Revenues are primarily from tuition and educational services, recognized net of scholarships and discounts, following a five-step model[35](index=35&type=chunk)[36](index=36&type=chunk) Revenues by Reportable Segment (3 months ended March 31) | Segment | 2019 (in thousands) | 2018 (in thousands) | % of Total 2019 | | :-------------------- | :------------------ | :------------------ | :-------------- | | Brazil | $109,969 | $122,792 | 18% | | Mexico | $156,464 | $155,899 | 25% | | Andean | $138,942 | $135,054 | 22% | | Rest of World | $54,156 | $52,274 | 9% | | Online & Partnerships | $161,774 | $168,031 | 26% | | Total Revenues | $621,796 | $632,216 | 100% | - Contract liabilities (deferred revenue and student deposits) increased significantly to **$556.4 million** as of March 31, 2019, from **$193.2 million** at December 31, 2018, primarily due to semester billings and advance payments for upcoming academic sessions[40](index=40&type=chunk) [Note 4. Discontinued Operations and Assets Held for Sale](index=15&type=section&id=Note%204.%20Discontinued%20Operations%20and%20Assets%20Held%20for%20Sale) This note outlines the company's strategic divestitures, presenting summarized operating results and assets/liabilities held for sale - Laureate is divesting institutions in Portugal, Spain, Central America & U.S. Campuses, and most of the Rest of World segment (excluding Australia, New Zealand, Saudi Arabia, and China) as part of a strategic shift to focus on Brazil, Chile, Mexico, and Peru[41](index=41&type=chunk) Summarized Operating Results of Discontinued Operations (3 months ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | | :----------------------------------- | :------------------ | :------------------ | :----------- | | Revenues | $202,616 | $253,072 | (19.9%) | | Operating income | $62,806 | $65,159 | (3.6%) | | Income from discontinued operations, net of tax | $56,574 | $18,853 | 199.0% | | Operating cash flows of discontinued operations | $16,124 | $20,682 | (22.1%) | Assets and Liabilities Held for Sale (as of March 31, 2019 and December 31, 2018) | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Total assets held for sale | $1,269,862 | $1,337,831 | | Total liabilities held for sale | $689,700 | $662,684 | [Note 5. Dispositions](index=16&type=section&id=Note%205.%20Dispositions) This note details the gains and proceeds from the sales of University of St. Augustine, Thailand operations, and China operations - Sale of University of St. Augustine for Health Sciences completed on February 1, 2019, yielding approximately **$346.4 million** in net proceeds and a pre-tax gain of **$223.5 million**[45](index=45&type=chunk)[46](index=46&type=chunk) - Sale of Thailand operations completed on February 12, 2019, with net proceeds of approximately **$27.9 million** and a pre-tax gain of **$10.8 million**[47](index=47&type=chunk) - An additional gain of approximately **$13.7 million** was recognized from the sale of China operations (LEILY) in Q1 2019 due to the reversal of a loss contingency[48](index=48&type=chunk) [Note 6. Due to Shareholders of Acquired Companies](index=17&type=section&id=Note%206.%20Due%20to%20Shareholders%20of%20Acquired%20Companies) This note presents the outstanding amounts owed to shareholders of acquired companies, including interest rates and nominal currencies Due to Shareholders of Acquired Companies (as of March 31, 2019 and December 31, 2018) | Company | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | Nominal Currency | Interest Rate % | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :--------------- | :-------------- | | Universidade Anhembi Morumbi (UAM Brazil) | $31,744 | $30,912 | BRL | CDI + 2% | | University of St. Augustine for Health Sciences, LLC | $11,395 | $11,395 | USD | 7% | | Faculdade Porto-Alegrense (FAPA) | $2,030 | $1,943 | BRL | IGP-M | | IADE Group | $1,126 | $1,141 | EUR | 3% | | Total due to shareholders of acquired companies | $46,295 | $45,391 | | | [Note 7. Business and Geographic Segment Information](index=18&type=section&id=Note%207.%20Business%20and%20Geographic%20Segment%20Information) This note provides financial information by operating segment, including revenues and Adjusted EBITDA, and details the segment evaluation metric - Laureate's six operating segments are Brazil, Mexico, Andean, Central America & U.S. Campuses, Rest of World, and Online & Partnerships, with Central America & U.S. Campuses now fully in Discontinued Operations[51](index=51&type=chunk)[59](index=59&type=chunk) - Segment performance is evaluated using Adjusted EBITDA, which excludes intercompany revenues and expenses[61](index=61&type=chunk)[62](index=62&type=chunk) Revenues by Segment (3 months ended March 31) | Segment | 2019 (in millions) | 2018 (in millions) | % Change (YoY) | | :-------------------- | :----------------- | :----------------- | :------------- | | Brazil | $110.0 | $122.8 | (10)% | | Mexico | $156.5 | $155.9 | 0% | | Andean | $138.9 | $135.1 | 3% | | Rest of World | $54.2 | $52.3 | 4% | | Online & Partnerships | $161.8 | $168.0 | (4)% | | Total Revenues | $621.8 | $632.2 | (2)% | Adjusted EBITDA by Segment (3 months ended March 31) | Segment | 2019 (in millions) | 2018 (in millions) | % Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Brazil | $(30.7) | $(26.0) | (18)% | | Mexico | $25.8 | $30.4 | (15)% | | Andean | $(33.2) | $(39.4) | 16% | | Rest of World | $4.5 | $3.0 | 50% | | Online & Partnerships | $48.6 | $45.0 | 8% | | Total Adjusted EBITDA | $15.0 | $13.0 | 15% | [Note 8. Goodwill](index=21&type=section&id=Note%208.%20Goodwill) This note details the changes in goodwill, including acquisitions and currency translation adjustments, from December 31, 2018, to March 31, 2019 Change in Goodwill (December 31, 2018 to March 31, 2019) | Metric | Amount (in thousands) | | :----------------------------------- | :-------------------- | | Balance at December 31, 2018 | $1,707,089 | | Acquisitions | $1,327 | | Currency translation adjustments | $29,812 | | Balance at March 31, 2019 | $1,738,228 | - A small acquisition in Brazil for **BRL 5,000** (**$1,327**) was recorded as Goodwill, contributing to the increase[66](index=66&type=chunk) [Note 9. Debt](index=21&type=section&id=Note%209.%20Debt) This note provides details on outstanding long-term debt, including senior secured credit facilities and notes, and debt repayment activities Outstanding Long-Term Debt (as of March 31, 2019 and December 31, 2018) | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | Change (QoQ) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Senior Secured Credit Facility, net | $921,127 | $1,321,629 | (30.3%) | | Senior Notes (stated maturity May 2025) | $800,000 | $800,000 | 0% | | Total senior long-term debt | $1,721,127 | $2,121,629 | (18.9%) | | Total long-term debt and finance leases | $2,324,055 | $2,783,692 | (16.5%) | - Laureate repaid approximately **$340 million** of its 2024 Term Loan and **$35 million** of notes payable in Chile, resulting in a **$10.6 million** loss on debt extinguishment[69](index=69&type=chunk)[70](index=70&type=chunk) - The company was not subject to its Consolidated Senior Secured Debt to Consolidated EBITDA leverage ratio covenant as of March 31, 2019, due to satisfying specific conditions[71](index=71&type=chunk) [Note 10. Leases](index=23&type=section&id=Note%2010.%20Leases) This note presents supplemental balance sheet information and components of lease cost following the adoption of the new lease accounting standard Supplemental Balance Sheet Information Related to Leases (as of March 31, 2019) | Metric | Amount (in thousands) | | :----------------------------------- | :-------------------- | | Operating lease right-of-use assets, net | $952,890 | | Current portion of operating leases | $97,517 | | Long-term operating leases, less current portion | $871,588 | | Total lease liabilities | $994,573 | Components of Lease Cost (3 months ended March 31, 2019) | Metric | Amount (in thousands) | | :----------------------------------- | :-------------------- | | Operating lease cost | $45,716 | | Finance lease cost (amortization + interest) | $1,767 | | Short-term lease costs | $677 | | Variable lease costs | $3,848 | | Sublease income | $(959) | | Total lease cost | $51,049 | [Note 11. Commitments and Contingencies](index=25&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) This note details various financial commitments and contingent liabilities, including put arrangements, tax contingencies, and guarantees - Noncontrolling interest holder put arrangements had a carrying value of **$12.2 million** as of March 31, 2019, representing potential obligations to acquire minority interests[78](index=78&type=chunk)[79](index=79&type=chunk) - Contingent liabilities for taxes (other-than-income tax) totaled **$54.0 million**, and for income tax contingencies, **$62.3 million** as of March 31, 2019[82](index=82&type=chunk)[83](index=83&type=chunk) - Material guarantees under Chile's CAE Program could require maximum potential payments of approximately **$509.0 million**, with an estimated long-term guarantee liability of **$37.4 million** recorded[86](index=86&type=chunk) - Laureate had approximately **$139.0 million** in outstanding letters of credit (LOCs) in favor of the DOE, fully collateralized by restricted cash, to allow participation in Title IV programs[92](index=92&type=chunk)[93](index=93&type=chunk) [Note 12. Financing Receivables](index=28&type=section&id=Note%2012.%20Financing%20Receivables) This note provides details on financing receivables, including the allowance for doubtful accounts and troubled debt restructurings Financing Receivables (as of March 31, 2019 and December 31, 2018) | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | Change (QoQ) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Financing receivables | $25,816 | $16,531 | 56.2% | | Allowance for doubtful accounts | $(6,477) | $(6,395) | (1.3%) | | Financing receivables, net | $19,339 | $10,136 | 90.8% | Troubled Debt Restructurings (TDRs) (3 months ended March 31) | Metric | 2019 | 2018 | | :----------------------------------- | :--- | :--- | | Number of Financing Receivable Accounts | 296 | 409 | | Pre-Modification Balance Outstanding (in thousands) | $898 | $1,372 | [Note 13. Share-based Compensation](index=30&type=section&id=Note%2013.%20Share-based%20Compensation) This note outlines the share-based compensation expense for stock options and restricted stock awards for the three months ended March 31 Share-based Compensation Expense (3 months ended March 31) | Metric | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | | :----------------------------------- | :------------------ | :------------------ | :----------- | | Stock options, net | $823 | $(7,247) | N/A | | Restricted stock awards | $2,164 | $3,170 | (31.7%) | | Total continuing operations | $2,987 | $(4,077) | N/A | - The negative stock options expense in Q1 2018 was due to the correction of an immaterial error[101](index=101&type=chunk) [Note 14. Stockholders' Equity](index=31&type=section&id=Note%2014.%20Stockholders%27%20Equity) This note details changes in total stockholders' equity and accumulated other comprehensive income (loss) as of March 31, 2019 Total Stockholders' Equity (as of March 31, 2019 and December 31, 2018) | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | Change (QoQ) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Total Laureate Education, Inc. stockholders' equity | $2,335,388 | $2,061,079 | 13.3% | | Total stockholders' equity | $2,327,906 | $2,050,946 | 13.5% | - The adoption of ASU 2016-02 resulted in a cumulative-effect adjustment to retained earnings of **$28.9 million**[103](index=103&type=chunk) Accumulated Other Comprehensive Income (Loss) (as of March 31, 2019 and December 31, 2018) | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Foreign currency translation loss | $(1,078,198) | $(1,127,719) | | Unrealized gain on derivatives | $20,975 | $18,366 | | Minimum pension liability adjustment | $(3,342) | $(3,342) | | Accumulated other comprehensive loss | $(1,060,565) | $(1,112,695) | [Note 15. Derivative Instruments](index=32&type=section&id=Note%2015.%20Derivative%20Instruments) This note describes the company's use of derivative instruments to manage foreign currency and interest rate exposures, and their fair values - Laureate uses derivative instruments (foreign currency swaps, interest rate swaps) to manage foreign currency and interest rate exposures, not for speculative trading[107](index=107&type=chunk)[109](index=109&type=chunk) Fair Values of Derivative Instruments (as of March 31, 2019 and December 31, 2018) | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Total derivative instrument assets | $9,974 | $3,259 | | Total derivative instrument liabilities | $1,223 | $10,677 | - In Q1 2019, Laureate settled CLP to UF cross currency and interest rate swaps in Chile for a net cash payment of approximately **$8.2 million**[120](index=120&type=chunk) - The company entered into EUR to USD swap agreements to mitigate foreign currency exposure on the sale proceeds for subsidiaries in Spain and Portugal[117](index=117&type=chunk)[118](index=118&type=chunk) [Note 16. Income Taxes](index=36&type=section&id=Note%2016.%20Income%20Taxes) This note provides information on income tax benefits, accrued interest and penalties, and unrecognized tax benefits as of March 31, 2019 - Income tax benefit for the three months ended March 31, 2019, was **$35.1 million**[10](index=10&type=chunk) - Accrued interest and penalties related to uncertain tax positions totaled **$26.2 million** as of March 31, 2019[127](index=127&type=chunk) - Approximately **$23.8 million** of unrecognized tax benefits, if recognized, would impact the effective income tax rate, with a possible decrease of up to **$12.6 million** within the next 12 months[127](index=127&type=chunk)[128](index=128&type=chunk) [Note 17. Earnings (Loss) Per Share](index=37&type=section&id=Note%2017.%20Earnings%20(Loss)%20Per%20Share) This note presents the basic and diluted earnings per share, including contributions from continuing and discontinued operations Basic and Diluted Earnings (Loss) Per Share (3 months ended March 31) | Metric | 2019 | 2018 | Change (YoY) | | :----------------------------------- | :--- | :--- | :----------- | | Loss from continuing operations | $(0.50) | $(1.20) | 58.3% (Improvement) | | Income from discontinued operations | $1.35 | $1.79 | (24.6%) | | Basic and diluted earnings per share | $0.85 | $0.59 | 44.1% | | Basic and diluted weighted average shares outstanding | 224,655 | 187,765 | 19.6% | [Note 18. Legal and Regulatory Matters](index=38&type=section&id=Note%2018.%20Legal%20and%20Regulatory%20Matters) This note provides an update on legal actions and regulatory environment, affirming no material impact on financial statements - Laureate is subject to legal actions in the ordinary course of business, with management believing any settlement would not materially impact financial statements[132](index=132&type=chunk) - No material changes to laws and regulations affecting higher education institutions have occurred since the 2018 Form 10-K[132](index=132&type=chunk) [Note 19. Fair Value Measurement](index=38&type=section&id=Note%2019.%20Fair%20Value%20Measurement) This note explains the fair value measurement hierarchy and classification of derivative instruments as Level 3 inputs - Fair value measurements are categorized into a three-level hierarchy, with Level 3 inputs being unobservable and supported by little or no market activity[133](index=133&type=chunk) - Laureate's derivative instruments are classified as Level 3, with the company's own credit risk being a significant unobservable input in their fair value measurement[134](index=134&type=chunk) Financial Assets and Liabilities Measured at Fair Value (as of March 31, 2019) | Metric | Total (in thousands) | Level 3 (in thousands) | | :----------------------------------- | :------------------- | :------------------- | | Derivative instruments (Assets) | $9,974 | $9,974 | | Derivative instruments (Liabilities) | $1,223 | $1,223 | [Note 20. Supplemental Cash Flow Information](index=39&type=section&id=Note%2020.%20Supplemental%20Cash%20Flow%20Information) This note reconciles cash and cash equivalents with restricted cash and explains the nature of restricted cash balances Reconciliation of Cash and Cash Equivalents and Restricted Cash (as of March 31, 2019 and 2018) | Metric | March 31, 2019 (in thousands) | March 31, 2018 (in thousands) | December 31, 2018 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Cash and cash equivalents | $278,782 | $305,890 | $388,490 | | Restricted cash | $203,633 | $175,557 | $201,300 | | Total Cash and cash equivalents and Restricted cash | $482,415 | $481,447 | $589,790 | - Restricted cash primarily consists of cash equivalents held to collateralize standby letters of credit for DOE Title IV programs[137](index=137&type=chunk) [Note 21. Subsequent Events](index=39&type=section&id=Note%2021.%20Subsequent%20Events) This note details significant events occurring after the reporting period, including the sales of Monash South Africa and UniNorte - On April 8, 2019, Laureate completed the sale of Monash South Africa, receiving approximately **$7.4 million** and transferring **$20.2 million** in debt[138](index=138&type=chunk)[139](index=139&type=chunk) - On April 16, 2019, an agreement was signed to sell UniNorte in Brazil for an enterprise value of **BRL 194.8 million** (approx. **$49.9 million**), including assumed net debt of **BRL 9.8 million** (approx. **$2.5 million**), with closing anticipated in the second half of 2019[140](index=140&type=chunk)[141](index=141&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Laureate Education, Inc.'s financial condition, results of operations, and cash flows for the three months ended March 31, 2019. It covers an overview of the business, challenges, regulatory environment, key business metrics, principal income statement components, factors affecting comparability, and detailed segment results, concluding with liquidity and capital resources [Overview](index=42&type=section&id=Overview) This section provides an overview of Laureate's international higher education network, student enrollment, and strategic divestiture focus - Laureate is the largest international network of degree-granting higher education institutions, with **921,500 students** enrolled across **38 institutions** in **10 countries** as of March 31, 2019[146](index=146&type=chunk)[154](index=154&type=chunk) - The company is strategically divesting certain subsidiaries in Europe, Asia, and Central America to focus on principal markets in Brazil, Chile, Mexico, Peru, and the Online & Partnerships segment[148](index=148&type=chunk) - As of March 31, 2019, Laureate's continuing operations include **13 institutions** in Brazil (**298,300 enrollment**), **2 in Mexico** (**195,800 enrollment**), **8 in Andean** (**345,900 enrollment**), **12 in Rest of World** (**20,800 enrollment**), and **3 in Online & Partnerships** (**60,700 enrollment**)[154](index=154&type=chunk) [Challenges](index=44&type=section&id=Challenges) This section discusses the complex risks associated with international operations, including foreign currency fluctuations and political instability - International operations are subject to complex risks including foreign currency fluctuations, economic and political instability, and varying tax laws[155](index=155&type=chunk) - The company plans to grow organically by adding new programs, expanding student demographics, and increasing capacity, which depends on effectively managing these international risks[155](index=155&type=chunk) [Regulatory Environment and Other Matters](index=44&type=section&id=Regulatory%20Environment%20and%20Other%20Matters) This section highlights the regulatory landscape affecting the business, particularly the impact of the new Chilean Higher Education Law - The business is regulated by various agencies, and future changes in regulations could materially affect financial performance[156](index=156&type=chunk) - The new Chilean Higher Education Law, effective May 29, 2019, prohibits conflicts of interest and related party transactions, leading Laureate to modify relationships with Chilean universities and assess the continued consolidation of non-profit universities[157](index=157&type=chunk)[159](index=159&type=chunk) [Key Business Metrics](index=45&type=section&id=Key%20Business%20Metrics) This section identifies enrollment as the primary revenue indicator and explains the company's approach to tuition rate adjustments - Enrollment is the lead revenue indicator, driven by new and continuing students and acquisitions, offset by graduations, attrition, and dispositions[160](index=160&type=chunk) - Laureate proactively adjusts tuition rates based on market conditions to maintain competitiveness and optimize price and content combinations[164](index=164&type=chunk) [Principal Components of Income Statement](index=46&type=section&id=Principal%20Components%20of%20Income%20Statement) This section describes the main components of the income statement, including revenue sources, direct costs, and general and administrative expenses - The majority of revenue comes from tuition and educational services, recognized net of scholarships and discounts[165](index=165&type=chunk) - Direct costs are largely variable with enrollment, but may increase faster than enrollment due to infrastructure investments[166](index=166&type=chunk) - General and administrative expenses cover corporate functions like executive management, finance, and legal[167](index=167&type=chunk) [Factors Affecting Comparability](index=46&type=section&id=Factors%20Affecting%20Comparability) This section explains how acquisitions, dispositions, foreign exchange fluctuations, seasonality, and income tax variations impact financial comparability - Acquisitions and dispositions impact comparability; strategic divestitures are classified as discontinued operations[168](index=168&type=chunk)[169](index=169&type=chunk) - Foreign exchange fluctuations significantly impact reported revenues and expenses, as most operations are outside the U.S. and use local functional currencies[170](index=170&type=chunk)[171](index=171&type=chunk) - Revenues and profits are seasonal, with Q2 and Q4 typically stronger due to academic calendars, while operating expenses do not fully correlate[172](index=172&type=chunk) - Income tax expense fluctuates due to the mix of earnings across various tax-paying, tax-exempt, and loss-making entities in different jurisdictions[173](index=173&type=chunk) [Results from the Discontinued Operations](index=47&type=section&id=Results%20from%20the%20Discontinued%20Operations) This section summarizes the financial results and enrollment figures for operations classified as discontinued, including gains from sales Results from Discontinued Operations (3 months ended March 31) | Metric | 2019 (in millions) | 2018 (in millions) | Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :----------- | | Revenues | $202.6 | $253.1 | (19.9%) | | Income from discontinued operations, net of tax | $56.6 | $18.9 | 199.0% | | Gain on sales of discontinued operations, net of tax | $248.0 | $318.3 | (22.1%) | | Net income from discontinued operations | $304.6 | $337.2 | (9.6%) | Enrollment at Discontinued Operations (as of March 31) | Metric | 2019 | 2018 | Change (YoY) | | :----------------------------------- | :--- | :--- | :----------- | | Enrollment | 155,800 | 167,800 | (7.2%) | - Sales completed in Q1 2019 included St. Augustine (pre-tax gain **$223.5 million**), Thailand operations (pre-tax gain **$10.8 million**), and an additional **$13.7 million** gain from China operations due to a settled legal matter[174](index=174&type=chunk)[175](index=175&type=chunk)[177](index=177&type=chunk) [Summary Comparison of Consolidated Results](index=48&type=section&id=Summary%20Comparison%20of%20Consolidated%20Results) This section provides a consolidated overview of revenues, operating loss, and net income, highlighting key changes and their drivers Summary Comparison of Consolidated Results (3 months ended March 31) | Metric | 2019 (in millions) | 2018 (in millions) | % Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Revenues | $621.8 | $632.2 | (2)% | | Operating loss | $(84.5) | $(92.6) | 9% (Better) | | Loss from continuing operations before income taxes | $(145.4) | $(188.7) | 23% (Better) | | Net income | $194.3 | $171.5 | 13% | - Revenues decreased by **$10.4 million**, primarily due to a **$35.5 million** negative impact from foreign currency exchange rates, partially offset by higher organic enrollment and product mix/pricing changes[183](index=183&type=chunk) - Interest expense, net of interest income, decreased by **$9.0 million** to **$51.1 million**, mainly due to lower average debt balances[186](index=186&type=chunk) [Non-GAAP Financial Measure (Adjusted EBITDA)](index=50&type=section&id=Non-GAAP%20Financial%20Measure) This section defines Adjusted EBITDA as a non-GAAP measure used by management to evaluate core operating performance and trends - Adjusted EBITDA is a non-GAAP measure used by management to evaluate core operating performance and trends, excluding items like income tax, foreign currency exchange, derivatives, debt extinguishment, interest, depreciation, amortization, share-based compensation, and EiP expenses[190](index=190&type=chunk)[191](index=191&type=chunk) Adjusted EBITDA Reconciliation (3 months ended March 31) | Metric | 2019 (in millions) | 2018 (in millions) | % Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Loss from continuing operations | $(110.3) | $(165.6) | 33% (Better) | | Operating loss | $(84.5) | $(92.6) | 9% (Better) | | Depreciation and amortization | $47.6 | $57.0 | 16% (Better) | | Share-based compensation expense | $3.0 | $(4.1) | (173)% (Worse) | | EiP implementation expenses | $12.3 | $10.1 | (22)% (Worse) | | Adjusted EBITDA | $(21.6) | $(29.7) | 27% (Better) | - Depreciation and amortization decreased by **$9.4 million**, partly due to foreign currency effects and the classification of UniNorte as held-for-sale[193](index=193&type=chunk) - Share-based compensation expense increased by **$7.1 million**, mainly due to a correction of an immaterial error in Q1 2018[194](index=194&type=chunk) - EiP implementation expenses increased by **$2.2 million**, primarily due to higher severance and retention bonuses related to divestiture activities[195](index=195&type=chunk) [Segment Results](index=52&type=section&id=Segment%20Results) This section presents the financial performance of Laureate's operating segments, including revenues and Adjusted EBITDA [Brazil](index=53&type=section&id=Brazil) This section details the financial performance of the Brazil segment, including revenues, Adjusted EBITDA, and enrollment trends Brazil Segment Financial Overview (3 months ended March 31) | Metric | 2019 (in millions) | 2018 (in millions) | % Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Revenues | $110.0 | $122.8 | (10)% | | Adjusted EBITDA | $(30.7) | $(26.0) | (18)% | - Organic enrollment in Brazil increased by **3%**, contributing **$4.5 million** to revenues, primarily from growth in lower-revenue distance learning programs[204](index=204&type=chunk) - Adjusted EBITDA decreased due to an increase in discounts and scholarships as a percentage of revenue, linked to the decline in FIES program participation[201](index=201&type=chunk) [Mexico](index=54&type=section&id=Mexico) This section details the financial performance of the Mexico segment, including revenues, Adjusted EBITDA, and enrollment trends Mexico Segment Financial Overview (3 months ended March 31) | Metric | 2019 (in millions) | 2018 (in millions) | % Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Revenues | $156.5 | $155.9 | 0% | | Adjusted EBITDA | $25.8 | $30.4 | (15)% | - Organic enrollment in Mexico decreased by **1%**, leading to a **$2.9 million** reduction in revenues[209](index=209&type=chunk) [Andean](index=55&type=section&id=Andean) This section details the financial performance of the Andean segment, including revenues, Adjusted EBITDA, and the impact of foreign exchange rates Andean Segment Financial Overview (3 months ended March 31) | Metric | 2019 (in millions) | 2018 (in millions) | % Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Revenues | $138.9 | $135.1 | 3% | | Adjusted EBITDA | $(33.2) | $(39.4) | 16% (Better) | - Organic enrollment in the Andean segment increased by **6%**, adding **$7.1 million** to revenues[214](index=214&type=chunk) - Foreign exchange rates negatively impacted results due to the weakening of the Chilean Peso and Peruvian Nuevo Sol against the USD[212](index=212&type=chunk) [Rest of World](index=56&type=section&id=Rest%20of%20World) This section details the financial performance of the Rest of World segment, including revenues, Adjusted EBITDA, and enrollment growth Rest of World Segment Financial Overview (3 months ended March 31) | Metric | 2019 (in millions) | 2018 (in millions) | % Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Revenues | $54.2 | $52.3 | 4% | | Adjusted EBITDA | $4.5 | $3.0 | 50% | - Organic enrollment in the Rest of World segment increased by **11%**, contributing **$5.8 million** to revenues[217](index=217&type=chunk) - Foreign exchange results were affected by the weakening of the Australian Dollar relative to the USD[217](index=217&type=chunk) [Online & Partnerships](index=57&type=section&id=Online%20%26%20Partnerships) This section details the financial performance of the Online & Partnerships segment, including revenues, Adjusted EBITDA, and enrollment trends Online & Partnerships Segment Financial Overview (3 months ended March 31) | Metric | 2019 (in millions) | 2018 (in millions) | % Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Revenues | $161.8 | $168.0 | (4)% | | Adjusted EBITDA | $48.6 | $45.0 | 8% | - Organic enrollment in the Online & Partnerships segment decreased by **3%**, leading to a **$3.0 million** reduction in revenues[222](index=222&type=chunk) [Corporate](index=57&type=section&id=Corporate) This section details the corporate operating results, including revenues, expenses, and Adjusted EBITDA, highlighting cost reductions Corporate Operating Results (3 months ended March 31) | Metric | 2019 (in millions) | 2018 (in millions) | % Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Revenues | $0.5 | $(1.8) | 128% | | Expenses | $37.1 | $40.8 | 9% (Better) | | Adjusted EBITDA | $(36.6) | $(42.6) | 14% (Better) | - The improvement in Corporate Adjusted EBITDA was mainly driven by a **$6.9 million** decrease in labor costs and other professional fees[231](index=231&type=chunk) [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity sources, restrictions, and requirements, including cash flows and debt obligations [Liquidity Sources](index=58&type=section&id=Liquidity%20Sources) This section identifies primary cash sources, available cash, and net proceeds from asset sales used for debt repayment - Cash flow from operations and available cash are expected to be sufficient for current operating requirements[224](index=224&type=chunk) - Primary cash source is tuition revenue, with **$278.8 million** in cash and cash equivalents as of March 31, 2019, excluding **$215.8 million** from held-for-sale subsidiaries[226](index=226&type=chunk)[231](index=231&type=chunk) - Net proceeds from the sale of St. Augustine were approximately **$346.4 million**, used to repay debt[227](index=227&type=chunk) - Net proceeds from the sale of Thailand operations were approximately **$27.9 million**[228](index=228&type=chunk) - Net proceeds from the sale of Monash South Africa (subsequent event) were approximately **$7.4 million**, planned for debt reduction[229](index=229&type=chunk) [Liquidity Restrictions](index=58&type=section&id=Liquidity%20Restrictions) This section details restricted cash balances and cash held by foreign subsidiaries deemed indefinitely reinvested outside the U.S - Restricted cash balances totaled **$203.6 million** as of March 31, 2019, impacting liquidity[230](index=230&type=chunk) - **$247.0 million** of cash and cash equivalents held by foreign subsidiaries (including **$75.0 million** by VIEs) are deemed indefinitely reinvested outside the U.S., with VIE cash generally restricted to VIE operations[231](index=231&type=chunk) [Liquidity Requirements](index=59&type=section&id=Liquidity%20Requirements) This section outlines short-term and long-term liquidity needs, including debt service, lease obligations, and capital expenditures - Short-term liquidity needs include debt service, operating lease obligations, payments to acquired company shareholders, working capital, and capital expenditures[232](index=232&type=chunk) - Long-term debt and finance leases totaled **$2.32 billion** as of March 31, 2019[234](index=234&type=chunk) - Capital expenditures for Q1 2019 were **$35.8 million**, a **25% decrease YoY**, driven by lower spending in Brazil, Peru, Costa Rica, and Mexico, and reduced expenditures due to divestitures[242](index=242&type=chunk) [Cash Flows](index=60&type=section&id=Cash%20Flows) This section summarizes cash flows from operating, investing, and financing activities, explaining the drivers of changes Summary of Cash Flows (3 months ended March 31) | Metric | 2019 (in millions) | 2018 (in millions) | Change (YoY) | | :----------------------------------- | :----------------- | :----------------- | :----------- | | Operating activities | $45.0 | $(7.1) | $52.1 (Increase) | | Investing activities | $294.1 | $302.7 | $(8.6) (Decrease) | | Financing activities | $(449.6) | $(369.0) | $(80.6) (Increased usage) | - Operating cash flow increase was primarily due to a **$13.3 million** decrease in cash paid for taxes and a **$47.3 million** increase from changes in operating assets and liabilities[247](index=247&type=chunk) - Investing cash flow decrease was mainly due to **$28.5 million** lower cash receipts from sales of discontinued operations, partially offset by decreased capital expenditures and derivative settlement payments[248](index=248&type=chunk) - Financing cash usage increased due to **$88.7 million** higher net payments of long-term debt and **$5.1 million** higher payments for debt issuance costs and redemption premiums[249](index=249&type=chunk) [Critical Accounting Policies and Estimates](index=61&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section states that financial statements rely on significant management judgments and estimates, with no material policy changes in Q1 2019 - Financial statements require significant management judgments and estimates, which could materially affect financial statements[250](index=250&type=chunk) - No significant changes to critical accounting policies occurred during the three months ended March 31, 2019[250](index=250&type=chunk) [Recently Issued Accounting Standards](index=61&type=section&id=Recently%20Issued%20Accounting%20Standards) This section refers to Note 2 for information on recently issued accounting standards relevant to the financial statements - Information on recently issued accounting standards is provided in Note 2, Significant Accounting Policies[251](index=251&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no significant changes in Laureate Education, Inc.'s market risk exposures since December 31, 2018 - No significant changes in market risk exposures have occurred since December 31, 2018[252](index=252&type=chunk) [Item 4. Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of Laureate Education, Inc.'s disclosure controls and procedures, concluding their effectiveness as of March 31, 2019. It also notes no material changes in internal controls over financial reporting during the quarter, aside from implementing controls for the new lease standard [Evaluation of Disclosure Controls and Procedures](index=62&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms that management, including the CEO and CFO, concluded the effectiveness of disclosure controls and procedures as of March 31, 2019 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2019[253](index=253&type=chunk) [Changes in Internal Controls over Financial Reporting](index=62&type=section&id=Changes%20in%20Internal%20Controls%20over%20Financial%20Reporting) This section states that no material changes in internal control over financial reporting occurred during Q1 2019, aside from controls for the new lease standard - No material changes in internal control over financial reporting occurred during Q1 2019[254](index=254&type=chunk) - Internal controls were implemented to assess the impact of adopting the new lease standard, but these did not result in significant changes to internal control over financial reporting[254](index=254&type=chunk) PART II. - OTHER INFORMATION This part provides updates on legal proceedings, risk factors, exhibits, and official signatures for the Form 10-Q [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) This section updates on legal proceedings, noting a settled civil proceeding and ongoing appeals related to China operations - A civil proceeding in China (Li Shihong and Hunan Lieying Education Investment Management Co Ltd vs. HIEU) was settled in Q1 2019 without cost to Laureate[257](index=257&type=chunk) - Two appeals related to China operations (Chen Zhengxian and Guangdong Nanbo Education Investment Co Ltd vs. LEI Lie Ying Limited) are ongoing at the Supreme People's Court[258](index=258&type=chunk)[259](index=259&type=chunk) - Laureate has indemnified the purchaser of its HIEU interest against liabilities from these claims, with an aggregate cap of **RMB 400 million** (approximately **$60 million**)[260](index=260&type=chunk) [Item 1A. Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) This section confirms that there have been no material changes in the Risk Factors previously disclosed in Laureate Education, Inc.'s 2018 Form 10-K - No material changes to the Risk Factors have occurred since the 2018 Form 10-K[262](index=262&type=chunk) [Item 6. Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section provides a comprehensive list of all exhibits filed with the Form 10-Q, including various agreements, corporate documents, and XBRL financial data files, some of which were previously filed and incorporated by reference - The exhibits include various agreements (e.g., sale and purchase agreements, credit agreements), corporate documents (e.g., certificate of incorporation, bylaws), and XBRL financial data files[263](index=263&type=chunk)[265](index=265&type=chunk)[267](index=267&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk) [SIGNATURES](index=73&type=section&id=SIGNATURES) This section contains the official signatures for the Form 10-Q, signed by Jean-Jacques Charhon, Executive Vice President and Chief Financial Officer, and Tal Darmon, Senior Vice President, Chief Accounting Officer and Global Controller, on May 9, 2019 - The report was signed by Jean-Jacques Charhon (EVP & CFO) and Tal Darmon (SVP, Chief Accounting Officer & Global Controller) on May 9, 2019[275](index=275&type=chunk)[276](index=276&type=chunk)