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Significant Accounting Policies | 9 Months Ended
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Sep. 30, 2017
Accounting Policies [Abstract] |
Significant Accounting Policies | Significant Accounting Policies The Variable Interest Entity (VIE) Arrangements Laureate consolidates in its financial statements certain internationally based educational organizations that do not have shares or other equity ownership interests. Although these educational organizations may be considered not-for-profit entities in their home countries and they are operated in compliance with their respective not-for-profit legal regimes, we believe they do not meet the definition of a not-for-profit entity under GAAP, and therefore we treat them as "for-profit" entities for accounting purposes. These entities generally cannot declare dividends or distribute their net assets to the entities that control them. Under ASC 810-10, "Consolidation," we have determined that these institutions are VIEs and that Laureate is the primary beneficiary of these VIEs because we have, as further described herein: (1) the power to direct the activities of the VIEs that most significantly affect their educational and economic performance and (2) the right to receive economic benefits from contractual and other arrangements with the VIEs that could potentially be significant to the VIEs. We account for the acquisition of the right to control a VIE in accordance with ASC 805, "Business Combinations." The VIEs in Brazil and Mexico include several not-for-profit foundations that have insignificant revenues and operating expenses. Selected Consolidated Statements of Operations information for these VIEs was as follows:
| For the three months ended September 30, |  | For the nine months ended September 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
Selected Statements of Operations information: |  |  |  |  |  |  |
Revenues, by segment: |  |  |  |  |  |  |
Brazil | $ | 11 |  |  | $ | — |  |  | $ | 57 |  |  | $ | — |
Mexico | — |  |  | — |  |  | — |  |  | — |
Andean & Iberian | 114,494 |  |  | 116,839 |  |  | 300,385 |  |  | 257,327 |
Central America & U.S. Campuses | 16,350 |  |  | 15,113 |  |  | 47,362 |  |  | 44,088 |
EMEAA | 42,662 |  |  | 41,919 |  |  | 176,177 |  |  | 187,454 |
Revenues | 173,517 |  |  | 173,871 |  |  | 523,981 |  |  | 488,869 |
Depreciation and amortization | 12,697 |  |  | 13,422 |  |  | 38,171 |  |  | 39,190 |
Operating (loss) income, by segment: |  |  |  |  |  |  |
Brazil | (23 | ) |  | (17 | ) |  | (30 | ) |  | (60 | )
Mexico | (163 | ) |  | (105 | ) |  | (516 | ) |  | (492 | )
Andean & Iberian | 6,584 |  |  | 12,365 |  |  | (3,567 | ) |  | (29,625 | )
Central America & U.S. Campuses | 910 |  |  | 406 |  |  | 1,873 |  |  | 212 |
EMEAA | (11,510 | ) |  | (14,606 | ) |  | 8,377 |  |  | 5,075 |
Operating (loss) income | (4,202 | ) |  | (1,957 | ) |  | 6,137 |  |  | (24,890 | )
Net income (loss) | 378 |  |  | 1,563 |  |  | 23,418 |  |  | (18,517 | )
Net income (loss) attributable to Laureate Education, Inc. | 1,265 |  |  | 2,707 |  |  | 22,284 |  |  | (18,474 | )
The following table reconciles the Net (loss) income attributable to Laureate Education, Inc. as presented in the table above, to the amounts in our Consolidated Statements of Operations:
| For the three months ended September 30, |  | For the nine months ended September 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
Net (loss) income attributable to Laureate Education, Inc.: |  |  |  |  |  |  |
Variable interest entities | $ | 1,265 |  |  | $ | 2,707 |  |  | $ | 22,284 |  |  | $ | (18,474 | )
Other operations | 49,968 |  |  | 61,132 |  |  | 264,644 |  |  | 387,008 |
Corporate and eliminations | (149,192 | ) |  | 22,478 |  |  | (391,308 | ) |  | (37,995 | )
Net (loss) income attributable to Laureate Education, Inc. | $ | (97,959 | ) |  | $ | 86,317 |  |  | $ | (104,380 | ) |  | $ | 330,539 |
The following table presents selected assets and liabilities of the consolidated VIEs. Except for Goodwill, the assets in the table below include the assets that can be used only to settle the obligations for the VIEs. The liabilities in the table are liabilities for which the creditors of the VIEs do not have recourse to the general credit of Laureate. Selected Consolidated Balance Sheet amounts for these VIEs were as follows:
| September 30, 2017 |  | December 31, 2016
| VIE |  | Consolidated |  | VIE |  | Consolidated
Balance Sheets data: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 265,494 |  |  | $ | 504,962 |  |  | $ | 169,074 |  |  | $ | 464,965 |
Current assets held for sale | 2,723 |  |  | 92,248 |  |  | — |  |  | — |
Other current assets | 281,504 |  |  | 962,689 |  |  | 153,136 |  |  | 650,836 |
Total current assets | 549,721 |  |  | 1,559,899 |  |  | 322,210 |  |  | 1,115,801 |
Goodwill | 193,669 |  |  | 2,028,286 |  |  | 181,669 |  |  | 1,934,464 |
Tradenames | 109,394 |  |  | 1,330,302 |  |  | 104,117 |  |  | 1,307,633 |
Other intangible assets, net | — |  |  | 43,206 |  |  | — |  |  | 46,700 |
Long-term assets held for sale | 28,306 |  |  | 279,801 |  |  | — |  |  | — |
Other long-term assets | 676,960 |  |  | 2,541,070 |  |  | 701,117 |  |  | 2,657,872 |
Total assets | 1,558,050 |  |  | 7,782,564 |  |  | 1,309,113 |  |  | 7,062,470 |
Current liabilities held for sale | 6,855 |  |  | 158,280 |  |  | — |  |  | — |
Current liabilities | 497,470 |  |  | 1,736,699 |  |  | 320,922 |  |  | 1,440,232 |
Long-term liabilities held for sale | 11,239 |  |  | 73,199 |  |  | — |  |  | — |
Long-term debt and other long-term liabilities | 91,332 |  |  | 3,915,249 |  |  | 103,375 |  |  | 4,601,013 |
Total liabilities | 606,896 |  |  | 5,883,427 |  |  | 424,297 |  |  | 6,041,245 |
Total stockholders' equity | 951,154 |  |  | 1,582,229 |  |  | 884,816 |  |  | 664,392 |
Total stockholders' equity attributable to Laureate Education, Inc. | 932,384 |  |  | 1,551,678 |  |  | 866,997 |  |  | 632,210 |
The amounts classified as held-for-sale assets and liabilities at September 30, 2017 in the table above relate to VIEs that are included in our EMEAA segment and are subject to finalization. Refer to Note 4, Assets Held for Sale, for further discussion. Recently Issued Accounting Standards Not Yet Adopted Accounting Standards Update (ASU) No. 2017-12(ASU 2017-12), Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities On August 28, 2017, the Financial Accounting Standards Board (FASB) issued ASU 2017-12, which contains significant amendments to the hedge accounting model. The new guidance is intended to simplify the application of hedge accounting and should allow for more hedging strategies to qualify for hedge accounting. ASU 2017-12 also amends the presentation and disclosure requirements and changes how companies assess effectiveness. Public business entities like Laureate will have until the end of the first quarter in which a hedge is designated to perform an initial assessment of a hedge’s effectiveness. After initial qualification, the new guidance permits a qualitative effectiveness assessment for certain hedges instead of a quantitative test, such as a regression analysis, if the company can reasonably support an expectation of high effectiveness throughout the term of the hedge. An initial quantitative test to establish that the hedge relationship is highly effective is still required. The effective date of this ASU for Laureate is January 1, 2019. Early adoption is permitted in any interim period or fiscal year before the effective date. However, if the guidance is early adopted in an interim period, any adjustments would be reflected as of the beginning of the fiscal year that includes that interim period. Laureate is evaluating whether to early adopt this ASU as of January 1, 2018. ASU No. 2017-04 (ASU 2017-04), Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU 2017-04 in order to simplify the test for goodwill impairment by eliminating Step 2, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. Under the amendments in this ASU, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU is effective for Laureate beginning on January 1, 2020 and early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are still evaluating the impact of ASU 2017-04 on our Consolidated Financial Statements and whether we will early adopt this ASU for goodwill impairment tests performed on testing dates after January 1, 2018. ASU No. 2016-02 (ASU 2016-02), Leases (Topic 842) On February 25, 2016, the FASB issued ASU 2016-02. Lessees will need to recognize on their balance sheet a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs and uneven rent payments. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. The standard is effective for Laureate beginning January 1, 2019. The new standard must be adopted using a modified retrospective transition and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We have completed our diagnostic assessment and have established a cross-functional implementation team which is in the process of identifying changes to our accounting policies, business processes, systems and internal controls in preparation for the implementation. We anticipate that ASU 2016-02 will have a material impact on our Consolidated Balance Sheets, as we will record significant asset and liability balances in connection with our leased properties. We are still evaluating the impact to our Consolidated Statements of Operations. We do not currently plan to early adopt this ASU. ASU No. 2014-09, (ASU 2014-09), Revenue from Contracts with Customers (Topic 606) On May 28, 2014, the FASB issued ASU 2014-09, which supersedes the revenue recognition requirements in ASC 605, ‘‘Revenue Recognition’’ and most industry-specific guidance. The core principle of ASU 2014-09 is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB deferred the effective date of ASU 2014-09. The new revenue standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 (January 1, 2018 for Laureate) and allows either a full retrospective adoption to all periods presented or a modified retrospective adoption approach with the cumulative effect of initial application of the revised guidance recognized at the date of initial application. We have completed our diagnostic assessment and are finalizing policies and processes relating to this ASU, which we plan to adopt effective January 1, 2018. We do not expect the adoption of this ASU to result in a significant change to our method of recognizing tuition revenues; however, we are still evaluating and quantifying the potential impact of other aspects of the standard, including variable consideration and costs to obtain a contract. We plan to elect modified retrospective adoption of this new standard. Recently Adopted Accounting Standards ASU No. 2015-17 (ASU 2015-17), Income Taxes (Topic 740) In November 2015, the FASB issued ASU 2015-17 as a part of the Simplification Initiative and in response to concerns that the current requirement that entities separate deferred income tax liabilities and assets into current and noncurrent amounts results in little or no benefit to users of the financial statements. The amendments in this ASU aim to simplify this presentation by requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 was effective for Laureate beginning January 1, 2017 and we adopted this guidance on a retrospective basis. Accordingly, as of September 30, 2017 all deferred tax assets and liabilities are classified as noncurrent and we reclassified current deferred tax assets and liabilities of approximately $110,000 and $6,000, respectively, as of December 31, 2016 to noncurrent. ASU No. 2016-09 (ASU 2016-09), Compensation—Stock compensation (Topic 718): Improvements to Employee Share-based Payment Accounting On March 30, 2016, the FASB issued ASU 2016-09 as part of its initiative to reduce complexity in accounting standards. The areas for simplification in this ASU involve several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance was effective for Laureate beginning January 1, 2017. Laureate has elected to continue estimating forfeitures when determining the amount of share-based compensation expense to be recognized each period. The Company adopted this standard prospectively in the first quarter of 2017 and it did not have a material impact on our Consolidated Financial Statements.

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