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Business and Geographic Segment Information | 9 Months Ended
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Sep. 30, 2019
Segment Reporting [Abstract] |
Business and Geographic Segment Information | Business and Geographic Segment Information Laureate’s educational services are offered through six operating segments: Brazil, Mexico, Andean, Central America & U.S. Campuses, Rest of World and Online & Partnerships. Laureate determines its operating segments based on information utilized by the chief operating decision maker to allocate resources and assess performance. Our campus-based segments generate revenues by providing an education that emphasizes professional-oriented fields of study with undergraduate and graduate degrees in a wide range of disciplines. Our educational offerings are increasingly utilizing online and hybrid (a combination of online and in-classroom) courses and programs to deliver their curriculum. Many of our largest campus-based operations are in developing markets which are experiencing a growing demand for higher education based on favorable demographics and increasing secondary completion rates, driving increases in participation rates and resulting in continued growth in the number of higher education students. Traditional higher education students (defined as 18-24 year olds) have historically been served by public universities, which have limited capacity and are often underfunded, resulting in an inability to meet the growing student demand and employer requirements. This supply and demand imbalance has created a market opportunity for private sector participants. Most students finance their own education. However, there are some government-sponsored student financing programs which are discussed below. The campus-based segments include Brazil, Mexico, Andean, Central America & U.S. Campuses and Rest of World. Specifics related to each of these campus-based segments and our Online & Partnerships segment are discussed below. In Brazil, approximately 75% of post-secondary students are enrolled in private higher education institutions. While the federal government defines the national curricular guidelines, institutions are licensed to operate by city. Laureate owns 13 institutions in eight states throughout Brazil, with a particularly strong presence in the competitive São Paulo market. Many students finance their own education while others rely on the government-sponsored programs such as Prouni and FIES. As described in Note 4, Discontinued Operations and Assets Held for Sale, on April 16, 2019, the Company entered into an agreement to divest UniNorte, a traditional higher education institution in Manaus, Brazil. This transaction closed on November 1, 2019. See also Note 21, Subsequent Events. Public universities in Mexico enroll approximately two thirds of students attending post-secondary education. However, many public institutions are faced with capacity constraints or the quality of the education is considered low. Laureate owns two institutions and is present throughout the country with a footprint of over 40 campuses. Each institution in Mexico has a national license. Students in our Mexican institutions typically finance their own education. The Andean segment includes institutions in Chile and Peru. In Chile, private universities enroll approximately 80% of post-secondary students and there are government-sponsored student financing programs. In Peru, the public sector plays a significant role, but private universities are increasingly providing the capacity to meet growing demand. The Central America & U.S. Campuses segment includes institutions in Costa Rica, Honduras, Panama and the United States. Students in Central America typically finance their own education while students in the United States finance their education in a variety of ways, including U.S. Department of Education (DOE) Title IV programs. The entire Central America & U.S. Campuses segment is included in Discontinued Operations. The Rest of World segment includes campus-based institutions in Asia Pacific with operations in Australia, Malaysia and New Zealand. Additionally, the Rest of World segment manages one institution in China through a joint venture arrangement and, until August 31, 2019 when the contract expired, the Rest of World segment also managed eight licensed institutions in the Kingdom of Saudi Arabia. The institutions in Malaysia and the Kingdom of Saudi Arabia are included in Discontinued Operations. The Online & Partnerships segment includes fully online institutions that offer professionally oriented degree programs in the United States through Walden University (Walden), a U.S.-based accredited institution, and through the University of Liverpool and the University of Roehampton in the United Kingdom. These online institutions primarily serve working adults with undergraduate and graduate degree program offerings. Students in the United States finance their education in a variety of ways, including Title IV programs. We no longer accept new enrollments at the University of Liverpool and the University of Roehampton, which are in a teach-out process. As discussed in Note 1, Description of Business, and Note 4, Discontinued Operations and Assets Held for Sale, a number of our subsidiaries have met the requirements to be classified as discontinued operations, including the entire Central America & U.S. Campuses segment. As a result, the operations of the Central America & U.S. Campuses segment have been excluded from the segment information for all periods presented. In addition, the portion of the Rest of World reportable segment that is included in Discontinued Operations has also been excluded from the segment information for all periods presented. Intersegment transactions are accounted for in a similar manner as third-party transactions and are eliminated in consolidation. The Corporate amounts presented in the following tables include corporate charges that were not allocated to our reportable segments and adjustments to eliminate intersegment items. We evaluate segment performance based on Adjusted EBITDA, which is a non-GAAP performance measure defined as Income (loss) from continuing operations before income taxes and equity in net income of affiliates, adding back the following items: Loss on sale or disposal of subsidiaries, Foreign currency exchange loss, net, Other income, net, Gain on derivatives, Loss on debt extinguishment, Interest expense, Interest income, Depreciation and amortization expense, Loss on impairment of assets, Share-based compensation expense and expenses related to our Excellence-in-Process (EiP) initiative. EiP is an enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources. It included the establishment of regional shared services organizations (SSOs) around the world, as well as improvements to the Company's system of internal controls over financial reporting. The EiP initiative also includes other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure and certain non-recurring costs incurred in connection with the planned dispositions described in Note 4, Discontinued Operations and Assets Held for Sale, and the completed dispositions described in Note 5, Dispositions. Beginning in 2019, EiP also includes expenses associated with an enterprise-wide program aimed at revenue growth. When we review Adjusted EBITDA on a segment basis, we exclude intercompany revenues and expenses related to network fees and royalties between our segments, which eliminate in consolidation. We use total assets as the measure of assets for reportable segments. The following tables provide financial information for our reportable segments, including a reconciliation of Adjusted EBITDA to (Loss) income from continuing operations before income taxes and equity in net income of affiliates, as reported in the Consolidated Statements of Operations:
| For the three months ended |  | For the nine months ended
| September 30, |  | September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Revenues |  |  |  |  |  |  |
Brazil | $ | 114,055 |  |  | $ | 121,089 |  |  | $ | 421,129 |  |  | $ | 469,480 |
Mexico | 145,790 |  |  | 148,325 |  |  | 464,709 |  |  | 463,868 |
Andean | 307,270 |  |  | 299,613 |  |  | 869,207 |  |  | 844,213 |
Rest of World | 52,585 |  |  | 47,701 |  |  | 137,204 |  |  | 131,412 |
Online & Partnerships | 155,501 |  |  | 165,221 |  |  | 476,991 |  |  | 498,207 |
Corporate | (1,502 | ) |  | (3,694 | ) |  | (2,066 | ) |  | (9,418 | )
Revenues | $ | 773,699 |  |  | $ | 778,255 |  |  | $ | 2,367,174 |  |  | $ | 2,397,762 |
Adjusted EBITDA of reportable segments |  |  |  |  |  |  |
Brazil | $ | 3,134 |  |  | $ | 682 |  |  | $ | 31,334 |  |  | $ | 52,600 |
Mexico | 23,064 |  |  | 23,715 |  |  | 80,476 |  |  | 81,965 |
Andean | 92,604 |  |  | 90,610 |  |  | 246,095 |  |  | 235,376 |
Rest of World | 11,455 |  |  | 8,046 |  |  | 20,205 |  |  | 11,968 |
Online & Partnerships | 44,320 |  |  | 45,725 |  |  | 142,755 |  |  | 136,126 |
Total Adjusted EBITDA of reportable segments | 174,577 |  |  | 168,778 |  |  | 520,865 |  |  | 518,035 |
Reconciling items: |  |  |  |  |  |  |
Corporate | (40,827 | ) |  | (45,562 | ) |  | (117,895 | ) |  | (127,567 | )
Depreciation and amortization expense | (48,557 | ) |  | (52,806 | ) |  | (145,108 | ) |  | (161,185 | )
Loss on impairment of assets | — |  |  | (10,030 | ) |  | (470 | ) |  | (10,030 | )
Share-based compensation expense | (1,459 | ) |  | (6,388 | ) |  | (9,194 | ) |  | (9,572 | )
EiP expenses | (38,004 | ) |  | (24,996 | ) |  | (77,332 | ) |  | (60,292 | )
Operating income | 45,730 |  |  | 28,996 |  |  | 170,866 |  |  | 149,389 |
Interest income | 3,154 |  |  | 3,502 |  |  | 9,552 |  |  | 9,358 |
Interest expense | (40,319 | ) |  | (58,319 | ) |  | (136,438 | ) |  | (181,746 | )
Loss on debt extinguishment | (200 | ) |  | — |  |  | (26,417 | ) |  | (7,481 | )
Gain (loss) on derivatives | 284 |  |  | (144 | ) |  | 8,099 |  |  | 92,112 |
Other income, net | 1,038 |  |  | 8,312 |  |  | 9,138 |  |  | 10,815 |
Foreign currency exchange loss, net | (14,777 | ) |  | (26,443 | ) |  | (10,643 | ) |  | (43,959 | )
Loss on disposal of subsidiaries | (1,474 | ) |  | — |  |  | (1,474 | ) |  | — |
(Loss) income from continuing operations before income taxes and equity in net income of affiliates | $ | (6,564 | ) |  | $ | (44,096 | ) |  | $ | 22,683 |  |  | $ | 28,488 |
| September 30, 2019 |  | December 31, 2018
Assets |  |  |
Brazil | $ | 1,072,447 |  |  | $ | 1,011,391 |
Mexico | 1,284,743 |  |  | 971,309 |
Andean | 1,922,829 |  |  | 1,608,406 |
Rest of World | 203,881 |  |  | 196,370 |
Online & Partnerships | 1,227,428 |  |  | 1,308,854 |
Corporate and Discontinued Operations | 1,113,385 |  |  | 1,673,306 |
Total assets | $ | 6,824,713 |  |  | $ | 6,769,636 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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