XML 33 R10.htm IDEA: XBRL DOCUMENT
v3.20.2

Significant Accounting Policies | 6 Months Ended
--- | ---
Jun. 30, 2020
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, for 2019, and Mexico include several not-for-profit foundations that had insignificant operating expenses and no revenues. Selected Consolidated Statements of Operations information for VIEs that are included in continuing operations was as follows, net of the charges related to the above-described contractual arrangements:
| For the three months ended June 30, |  |  |  | For the six months ended June 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
Selected Statements of Operations information: |  |  |  |  |  |  |
Revenues, by segment: |  |  |  |  |  |  |
Andean | $ | 116,035 |  |  | $ | 148,472 |  |  | $ | 152,501 |  |  | $ | 204,922 |
Revenues | 116,035 |  |  | 148,472 |  |  | 152,501 |  |  | 204,922 |
Depreciation and amortization | 5,568 |  |  | 6,890 |  |  | 11,493 |  |  | 12,986 |
Operating (loss) income, by segment: |  |  |  |  |  |  |
Brazil | — |  |  | (17) |  |  | — |  |  | (34) |
Mexico | (110) |  |  | (99) |  |  | (278) |  |  | (196) |
Andean | (250,501) |  |  | 44,519 |  |  | (282,806) |  |  | 17,299 |
Operating (loss) income | (250,611) |  |  | 44,403 |  |  | (283,084) |  |  | 17,069 |
Net (loss) income attributable to Laureate Education, Inc. | (249,346) |  |  | 41,785 |  |  | (280,021) |  |  | 17,585 |
As discussed in Note 8, Goodwill and Loss on Impairment of Assets, during the second quarter of 2020, the Company recorded an impairment charge of approximately $418,000 related to the long-lived assets, indefinite-lived intangible assets and goodwill of our Chilean operations, of which approximately $291,000 related to our VIE institutions in Chile. 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 June 30, |  |  |  | For the six months ended June 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
Net income (loss) attributable to Laureate Education, Inc.: |  |  |  |  |  |  |
Variable interest entities | $ | (249,346) |  |  | $ | 41,785 |  |  | $ | (280,021) |  |  | $ | 17,585 |
Other operations | 30,443 |  |  | 699,745 |  |  | (52,186) |  |  | 654,533 |
Corporate and eliminations | (88,920) |  |  | 40,062 |  |  | 123,999 |  |  | 300,717 |
Net (loss) income attributable to Laureate Education, Inc. | $ | (307,823) |  |  | $ | 781,592 |  |  | $ | (208,208) |  |  | $ | 972,835 |
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.
| June 30, 2020 |  |  |  | December 31, 2019 |  |
| VIE |  | Consolidated |  | VIE |  | Consolidated
Balance Sheets data: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 215,908 |  |  | $ | 629,551 |  |  | $ | 157,003 |  |  | $ | 339,629 |
Current assets held for sale | 17,758 |  |  | 62,312 |  |  | 16,050 |  |  | 83,800 |
Other current assets | 159,233 |  |  | 578,331 |  |  | 173,072 |  |  | 519,498 |
Total current assets | 392,899 |  |  | 1,270,194 |  |  | 346,125 |  |  | 942,927 |
Goodwill | 31,431 |  |  | 1,355,585 |  |  | 159,957 |  |  | 1,701,495 |
Tradenames | — |  |  | 977,799 |  |  | 61,691 |  |  | 1,119,454 |
Other intangible assets, net | — |  |  | 963 |  |  | — |  |  | 1,431 |
Operating lease right-of-use assets, net | 34,694 |  |  | 691,631 |  |  | 65,761 |  |  | 861,878 |
Long-term assets held for sale | 52,745 |  |  | 187,174 |  |  | 52,519 |  |  | 305,973 |
Other long-term assets | 145,992 |  |  | 1,470,331 |  |  | 262,579 |  |  | 1,582,470 |
Total assets | 657,761 |  |  | 5,953,677 |  |  | 948,632 |  |  | 6,515,628 |
Current liabilities held for sale | 12,087 |  |  | 50,252 |  |  | 11,741 |  |  | 64,204 |
Other current liabilities | 179,078 |  |  | 1,055,916 |  |  | 130,602 |  |  | 1,006,600 |
Long-term operating leases, less current portion | 52,577 |  |  | 700,944 |  |  | 56,571 |  |  | 792,358 |
Long-term liabilities held for sale | 38,545 |  |  | 68,425 |  |  | 29,666 |  |  | 124,914 |
Long-term debt and other long-term liabilities | 35,667 |  |  | 1,785,922 |  |  | 28,619 |  |  | 1,711,106 |
Total liabilities | 317,954 |  |  | 3,661,459 |  |  | 257,199 |  |  | 3,699,182 |
Total stockholders' equity | 339,807 |  |  | 2,280,061 |  |  | 691,433 |  |  | 2,804,151 |
Total stockholders' equity attributable to Laureate Education, Inc. | 339,807 |  |  | 2,294,191 |  |  | 691,433 |  |  | 2,816,963 |
The amounts classified as held-for-sale assets and liabilities in the table above relate to a VIE that is included in our Central America segment. Chile - Higher Education Law On May 29, 2018, a new Higher Education Law (the New Law) was enacted. Among other things, the New Law prohibits conflicts of interests and related party transactions involving universities and their controlling parties, with certain exceptions. These exceptions include the provision of services that are educational in nature or essential for the university’s purposes. The New Law established a Superintendency of Higher Education, with authority to regulate institutions of higher education and promulgate regulations and procedures implementing the New Law. On May 29, 2019, the New Law’s provisions regarding related party transactions went effective and the Superintendent has since issued further interpretive guidance and regulations. Prior to the effectiveness of the provisions, each of the Chilean non-profit universities and the relevant Laureate services provider agreed to terminate their existing network services agreement in favor of an open bidding process, wherein unrelated third parties and Laureate-related providers were invited to compete in the provision of the services that are essential to the fulfillment of each of the universities’ academic missions. The Company participated in these open bid processes, conducted by a third party, who found the Company had the superior bid in many of them. Awarded contracts entered into force once the applicable university’s board approved them or in January 2020, in the case of some of the educational services. Within the ordinary regulatory course of supervision, the Company and the Chilean non-profit universities will continue to interact with the Superintendent to maintain compliance with the New Law. We do not believe that the New Law will change our relationship with our two technical-vocational institutions in Chile that are for-profit entities. Additionally, we will continue to evaluate our accounting treatment of the Chilean non-profit universities to determine whether we can continue to consolidate them. COVID-19 The outbreak of COVID-19 has caused domestic and global disruption in operations for institutions of higher education. The long-term effect to the Company of the COVID-19 pandemic depends on numerous factors, including, but not limited to, the effect on student enrollment, tuition pricing, and collections in future periods, which cannot be fully quantified at this time. As of June 30, 2020 and through the date of this Form 10-Q, the Company evaluated its accounting estimates that require consideration of forecasted financial information, based on current information reasonably available to us. The forecast also includes certain estimates and assumptions around macroeconomic conditions and the timing of campuses reopening. While this evaluation did not result in a material effect to the Company’s Consolidated Financial Statements as of and for the six months ended June 30, 2020, future evaluations could result in a material effect, including potential impairments, depending on the eventual impact to the Company of the COVID-19 pandemic and its effect on student enrollment, tuition pricing, and collections in future periods. Recently Adopted Accounting Standards Accounting Standards Update (ASU) No. 2016-13 (ASU 2016-13), Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU 2016-13, which sets forth a “current expected credit loss” (CECL) model and requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. ASU 2016-13 applies to financial instruments that are not measured at fair value, including receivables that result from revenue transactions. This ASU was effective for Laureate beginning on January 1, 2020 and did not have a material impact on our Consolidated Financial Statements. Laureate adopted this ASU using the modified retrospective transition method. Under this transition method, the new standard is applied from January 1, 2020 without restatement of comparative period amounts. The impact of transitioning to the new standard was immaterial and no adjustment was recorded to retained earnings for the cumulative effect of adopting this ASU on January 1, 2020. Results for reporting periods beginning after January 1, 2020 are presented under Topic 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. 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 was effective for Laureate beginning on January 1, 2020 and the adoption of this guidance did not have a material impact on our Consolidated Financial Statements.

X
- References No definition available. + Details
Name: | us-gaap_AccountingPoliciesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
Name: | us-gaap_SignificantAccountingPoliciesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration