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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2022
OR
☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to __________.
Commission File Number: 001-38002
Laureate Education, Inc.
(Exact name of registrant as specified in its charter)

Delaware |  | 52-1492296
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
78 SW 7th Street, Suite 900 | Miami, | Florida |  | 33130
(Address of principal executive offices) |  | (Zip Code)

Registrant’s telephone number, including area code: (786) 209-3368
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common stock, par value $0.004 per share | LAUR | The NASDAQ Stock Market LLC
Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer ☐ Non-accelerated filer ☐
Smaller reporting company ☐ Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class |  | Outstanding at September 30, 2022
Common stock, par value $0.004 per share |  | 164,649,273 shares

INDEX
PART I. - FINANCIAL INFORMATION | Page No.
Item 1. | Financial Statements (Unaudited) |
| Consolidated Statements of Operations - Three months ended September 30, 2022 and September 30, 2021 | 2
| Consolidated Statements of Operations - Nine months ended September 30, 2022 and September 30, 2021 | 3
| Consolidated Statements of Comprehensive Income - Three months ended September 30, 2022 and September 30, 2021 | 4
| Consolidated Statements of Comprehensive Income - Nine months ended September 30, 2022 and September 30, 2021 | 5
| Consolidated Balance Sheets - September 30, 2022 and December 31, 2021 | 6
| Consolidated Statements of Cash Flows - Nine months ended September 30, 2022 and September 30, 2021 | 8
| Notes to Consolidated Financial Statements | 9
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 27
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 46
Item 4. | Controls and Procedures | 47
PART II. - OTHER INFORMATION
Item 1. | Legal Proceedings | 48
Item 1A. | Risk Factors | 48
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 48
Item 6. | Exhibits | 48
SIGNATURES | 49

1

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
IN THOUSANDS, except per share amounts

For the three months ended September 30, | 2022 |  | 2021
| (Unaudited) |  | (Unaudited)
Revenues | $ | 300,999 |  |  | $ | 267,691 |
Costs and expenses: |  |  |
Direct costs | 229,361 |  |  | 181,978 |
General and administrative expenses | 15,321 |  |  | 47,315 |
Loss on impairment of assets | — |  |  | 3,292 |
Operating income | 56,317 |  |  | 35,106 |
Interest income | 1,970 |  |  | 1,268 |
Interest expense | (3,694) |  |  | (3,736) |
Other income (expense), net | 1,393 |  |  | (46) |
Foreign currency exchange gain, net | 15,146 |  |  | 6,085 |
Loss on disposal of subsidiaries, net | — |  |  | (949) |
Income from continuing operations before income taxes | 71,132 |  |  | 37,728 |
Income tax expense | (39,280) |  |  | (48,118) |
Income (loss) from continuing operations | 31,852 |  |  | (10,390) |
(Loss) income from discontinued operations, net of tax expense of $0 and $248,838, respectively | (816) |  |  | 370,527 |
Net income | 31,036 |  |  | 360,137 |
Net loss attributable to noncontrolling interests | 81 |  |  | 269 |
Net income attributable to Laureate Education, Inc. | $ | 31,117 |  |  | $ | 360,406 |

Basic and diluted earnings (loss) per share: |  |  |
Income (loss) from continuing operations | $ | 0.19 |  |  | $ | (0.06) |
Income from discontinued operations | — |  |  | 2.00 |
Basic and diluted earnings per share | $ | 0.19 |  |  | $ | 1.94 |

The accompanying notes are an integral part of these consolidated financial statements.
2

LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
IN THOUSANDS, except per share amounts

For the nine months ended September 30, | 2022 |  | 2021
| (Unaudited) |  | (Unaudited)
Revenues | $ | 895,943 |  |  | $ | 789,971 |
Costs and expenses: |  |  |
Direct costs | 655,055 |  |  | 577,141 |
General and administrative expenses | 48,752 |  |  | 139,270 |
Loss on impairment of assets | 144 |  |  | 67,161 |
Operating income | 191,992 |  |  | 6,399 |
Interest income | 5,623 |  |  | 2,456 |
Interest expense | (11,589) |  |  | (40,795) |
Loss on debt extinguishment | — |  |  | (77,940) |
Loss on derivatives | — |  |  | (24,517) |
Other income (expense), net | 413 |  |  | (67) |
Foreign currency exchange (loss) gain, net | (2,906) |  |  | 18,749 |
Gain (loss) on disposal of subsidiaries, net | 1,461 |  |  | (922) |
Income (loss) from continuing operations before income taxes and equity in net income of affiliates | 184,994 |  |  | (116,637) |
Income tax expense | (159,213) |  |  | (174,163) |
Equity in net income of affiliates, net of tax | 70 |  |  | — |
Income (loss) from continuing operations | 25,851 |  |  | (290,800) |
Income from discontinued operations, net of tax expense of $0 and $257,440, respectively | 4,064 |  |  | 456,770 |
Net income | 29,915 |  |  | 165,970 |
Net loss attributable to noncontrolling interests | 414 |  |  | 508 |
Net income attributable to Laureate Education, Inc. | $ | 30,329 |  |  | $ | 166,478 |

Basic and diluted earnings (loss) per share: |  |  |  |  |
Income (loss) from continuing operations | $ | 0.15 |  |  | $ | (1.51) |  |  |
Income from discontinued operations | 0.02 |  |  | 2.37 |  |  |
Basic and diluted earnings per share | $ | 0.17 |  |  | $ | 0.86 |  |  |

The accompanying notes are an integral part of these consolidated financial statements.
3

LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
IN THOUSANDS

For the three months ended September 30, | 2022 |  | 2021
| (Unaudited) |  | (Unaudited)
Net income | $ | 31,036 |  |  | $ | 360,137 |
Other comprehensive income: |  |  |
Foreign currency translation adjustment, net of tax of $0 for both periods | (42,161) |  |  | (22,627) |
Minimum pension liability adjustment, net of tax of $0 for both periods | 983 |  |  | — |
Total other comprehensive loss | (41,178) |  |  | (22,627) |
Comprehensive (loss) income | (10,142) |  |  | 337,510 |
Net comprehensive loss attributable to noncontrolling interests | 82 |  |  | 248 |
Comprehensive (loss) income attributable to Laureate Education, Inc. | $ | (10,060) |  |  | $ | 337,758 |

The accompanying notes are an integral part of these consolidated financial statements.
4

LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
IN THOUSANDS

For the nine months ended September 30, | 2022 |  | 2021
| (Unaudited) |  | (Unaudited)
Net income | $ | 29,915 |  |  | $ | 165,970 |
Other comprehensive income (loss): |  |  |
Foreign currency translation adjustment, net of tax of $0 for both periods | 25,386 |  |  | 428,055 |
Minimum pension liability adjustment, net of tax of $0 for both periods | 997 |  |  | (141) |
Total other comprehensive income | 26,383 |  |  | 427,914 |
Comprehensive income | 56,298 |  |  | 593,884 |
Net comprehensive loss attributable to noncontrolling interests | 410 |  |  | 507 |
Comprehensive income attributable to Laureate Education, Inc. | $ | 56,708 |  |  | $ | 594,391 |

The accompanying notes are an integral part of these consolidated financial statements.
5

LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
IN THOUSANDS, except per share amounts

| September 30, 2022 |  | December 31, 2021
Assets | (Unaudited) |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 319,039 |  |  | $ | 324,801 |
Restricted cash | 17,448 |  |  | 20,774 |
Receivables: |  |  |
Accounts and notes receivable | 125,922 |  |  | 117,987 |
Other receivables | 5,824 |  |  | 96,229 |
Allowance for doubtful accounts | (56,535) |  |  | (62,226) |
Receivables, net | 75,211 |  |  | 151,990 |
Income tax receivable | 24,642 |  |  | 30,474 |
Prepaid expenses and other current assets | 19,543 |  |  | 16,280 |
Total current assets | 455,883 |  |  | 544,319 |
Property and equipment: |  |  |
Land | 122,323 |  |  | 121,173 |
Buildings | 333,842 |  |  | 328,343 |
Furniture, equipment and software | 472,370 |  |  | 459,189 |
Leasehold improvements | 111,559 |  |  | 106,813 |
Construction in-progress | 6,493 |  |  | 9,622 |
Accumulated depreciation and amortization | (560,275) |  |  | (525,623) |
Property and equipment, net | 486,312 |  |  | 499,517 |
Operating lease right-of-use assets, net | 365,527 |  |  | 384,344 |
Goodwill | 553,275 |  |  | 546,795 |
Tradenames | 144,429 |  |  | 142,848 |
Deferred costs, net | 5,939 |  |  | 5,981 |
Deferred income taxes | 47,465 |  |  | 38,713 |
Other assets | 39,933 |  |  | 42,629 |
Long-term assets held for sale | — |  |  | 6,164 |
Total assets | $ | 2,098,763 |  |  | $ | 2,211,310 |

The accompanying notes are an integral part of these consolidated financial statements.
6

LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (continued)
IN THOUSANDS, except per share amounts

| September 30, 2022 |  | December 31, 2021
Liabilities and stockholders' equity | (Unaudited) |  |
Current liabilities: |  |  |
Accounts payable | $ | 31,193 |  |  | $ | 26,870 |
Accrued expenses | 59,537 |  |  | 65,558 |
Accrued compensation and benefits | 80,569 |  |  | 90,454 |
Deferred revenue and student deposits | 74,274 |  |  | 43,959 |
Current portion of operating leases | 38,677 |  |  | 38,149 |
Current portion of long-term debt and finance leases | 46,403 |  |  | 49,082 |
Income taxes payable | 56,691 |  |  | 38,705 |
Special cash distribution payable | 139,995 |  |  | 6,932 |
Other current liabilities | 21,096 |  |  | 11,165 |
Current liabilities held for sale | — |  |  | 1,054 |
Total current liabilities | 548,435 |  |  | 371,928 |
Long-term operating leases, less current portion | 345,845 |  |  | 377,104 |
Long-term debt and finance leases, less current portion | 78,359 |  |  | 104,588 |
Deferred compensation | 10,619 |  |  | 11,896 |
Income taxes payable | 127,381 |  |  | 96,463 |
Deferred income taxes | 90,601 |  |  | 73,624 |
Other long-term liabilities | 27,266 |  |  | 24,640 |
Long-term liabilities held for sale | — |  |  | 9,795 |
Total liabilities | 1,228,506 |  |  | 1,070,038 |
Redeemable equity | 1,398 |  |  | 1,714 |
Stockholders' equity: |  |  |
Preferred stock, par value $0.001 per share – 50,000 shares authorized, no shares issued and outstanding as of September 30, 2022 and December 31, 2021 | — |  |  | — |
Common stock, par value $0.004 per share – 700,000 shares authorized, 230,444 shares issued and 164,649 shares outstanding as of September 30, 2022 and 228,831 shares issued and 180,611 shares outstanding as of December 31, 2021 | 922 |  |  | 915 |
Additional paid-in capital | 2,268,879 |  |  | 2,388,783 |
Retained earnings | 45,852 |  |  | 15,523 |
Accumulated other comprehensive loss | (493,825) |  |  | (520,204) |
Treasury stock at cost (65,795 shares held at September 30, 2022 and 48,220 shares held at December 31, 2021) | (951,272) |  |  | (744,174) |
Total Laureate Education, Inc. stockholders' equity | 870,556 |  |  | 1,140,843 |
Noncontrolling interests | (1,697) |  |  | (1,285) |
Total stockholders' equity | 868,859 |  |  | 1,139,558 |
Total liabilities and stockholders' equity | $ | 2,098,763 |  |  | $ | 2,211,310 |

The accompanying notes are an integral part of these consolidated financial statements.
7

LAUREATE EDUCATION, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
IN THOUSANDS

For the nine months ended September 30, | 2022 |  | 2021
Cash flows from operating activities | (Unaudited) |  | (Unaudited)
Net income | $ | 29,915 |  |  | $ | 165,970 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 43,628 |  |  | 75,617 |
Amortization of operating lease right-of-use assets | 22,200 |  |  | 35,797 |
Loss on impairment of assets | 144 |  |  | 68,429 |
Gain on sales and disposal of subsidiaries and property and equipment, net | (5,797) |  |  | (625,532) |
Loss on derivative instruments | — |  |  | 24,517 |
Loss on debt extinguishment | — |  |  | 77,999 |
Non-cash interest expense | 1,127 |  |  | 6,129 |
Non-cash share-based compensation expense | 6,971 |  |  | 7,175 |
Bad debt expense | 14,194 |  |  | 17,672 |
Deferred income taxes | 8,152 |  |  | 267,551 |
Unrealized foreign currency exchange gain | (2,169) |  |  | (11,240) |
Non-cash loss from non-income tax contingencies | 419 |  |  | 11,976 |
Other, net | 120 |  |  | (71) |
Changes in operating assets and liabilities: |  |  |
Receivables | (22,011) |  |  | (9,632) |
Prepaid expenses and other assets | (11) |  |  | (20,021) |
Accounts payable and accrued expenses | (16,866) |  |  | (47,175) |
Income tax receivable/payable, net | 53,588 |  |  | 63,151 |
Deferred revenue and other liabilities | 21,077 |  |  | (54,272) |
Net cash provided by operating activities | 154,681 |  |  | 54,040 |
Cash flows from investing activities |  |  |
Purchase of property and equipment | (16,754) |  |  | (27,578) |
Expenditures for deferred costs | (363) |  |  | (5,371) |
Receipts from sales of discontinued operations, net of cash sold, and property and equipment | 83,405 |  |  | 2,137,673 |
Payments on derivatives related to sale of discontinued operations | — |  |  | (50,341) |
Net cash provided by investing activities | 66,288 |  |  | 2,054,383 |
Cash flows from financing activities |  |  |
Proceeds from issuance of long-term debt, net of original issue discount | 235,181 |  |  | 46,493 |
Payments on long-term debt | (270,413) |  |  | (933,213) |
Payment of dividend equivalent rights for vested share-based awards | (4,572) |  |  | — |
Proceeds from exercise of stock options | 11,888 |  |  | 1,160 |
Withholding of shares to satisfy tax withholding for vested stock awards and exercised stock options | (1,438) |  |  | (1,718) |
Payments to repurchase common stock | (207,151) |  |  | (364,275) |
Payments of call premiums and debt issuance costs | — |  |  | (32,980) |
Net cash used in financing activities | (236,505) |  |  | (1,284,533) |
Effects of exchange rate changes on Cash and cash equivalents and Restricted cash | 6,448 |  |  | (14,360) |
Change in cash included in current assets held for sale | — |  |  | 285,027 |
Net change in Cash and cash equivalents and Restricted cash | (9,088) |  |  | 1,094,557 |
Cash and cash equivalents and Restricted cash at beginning of period | 345,575 |  |  | 867,298 |
Cash and cash equivalents and Restricted cash at end of period | $ | 336,487 |  |  | $ | 1,961,855 |

The accompanying notes are an integral part of these consolidated financial statements.
8

Laureate Education, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Dollars and shares in thousands)
Note 1. Description of Business
Laureate Education, Inc. and subsidiaries (hereinafter Laureate, we, us, our, or the Company) provide higher education programs and services to students through licensed universities and higher education institutions (institutions). Laureate's programs are provided through institutions that are campus-based and through electronically distributed educational programs (online). In response to the COVID-19 pandemic, we temporarily transitioned the educational delivery method at all of our campus-based institutions to be online, leveraging our existing technologies and learning platforms to serve students outside of the traditional classroom setting. Face-to-face educational activities have now resumed across our campuses.
We are domiciled in Delaware as a public benefit corporation, a demonstration of our long-term commitment to our mission to benefit our students and society. The Company completed its initial public offering (IPO) on February 6, 2017, and its shares are listed on the Nasdaq Global Select Market under the symbol “LAUR.”
Discontinued Operations
As a result of the strategic review first announced in January 2020, during the third quarter of 2020, the Company completed a sale of its operations in Chile and signed agreements to sell its operations in Brazil, Australia and New Zealand, as well as Walden University in the United States. Additionally, prior to 2020, the Company had announced the divestiture of certain other subsidiaries in Europe, Asia and Central America, which has been completed. These announcements represented strategic shifts that had a major effect on the Company’s operations and financial results. Accordingly, all of the divestitures that were part of these strategic shifts were accounted for as Discontinued Operations for all periods presented in accordance with Accounting Standards Codification (ASC) 205-20, “Discontinued Operations” (ASC 205).
All planned divestitures have now been completed, and the Company has concluded its strategic review process. The Company’s continuing operations are Mexico and Peru. All other markets have been divested (the Discontinued Operations). See Note 3, Discontinued Operations and Assets Held for Sale, and Note 4, Dispositions, for more information. Unless indicated otherwise, the information in the footnotes to the Consolidated Financial Statements relates to continuing operations.
The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, these financial statements include all adjustments considered necessary to present a fair statement of our consolidated results of operations, financial position and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. These unaudited Consolidated Financial Statements should be read in conjunction with Laureate's audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the 2021 Form 10-K).
Note 2. Revenue
Revenue Recognition
Laureate's revenues primarily consist of tuition and educational service revenues. We also generate other revenues from student fees and other education-related activities. These other revenues are less material to our overall financial results and have a tendency to trend with tuition revenues. Revenues are recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. These revenues are recognized net of scholarships and other discounts, refunds and waivers. Laureate's institutions have various billing and academic cycles.
9

We determine revenue recognition through the five-step model prescribed by ASC Topic 606, Revenue from Contracts with Customers, as follows:
•Identification of the contract, or contracts, with a customer;
•Identification of the performance obligations in the contract;
•Determination of the transaction price;
•Allocation of the transaction price to the performance obligations in the contract; and
•Recognition of revenue when, or as, we satisfy a performance obligation.
We assess collectibility on a portfolio basis prior to recording revenue. Generally, students cannot re-enroll for the next academic session without satisfactory resolution of any past-due amounts. If a student withdraws from an institution, Laureate's obligation to issue a refund depends on the refund policy at that institution and the timing of the student's withdrawal. Generally, our refund obligations are reduced over the course of the academic term. We record refunds as a reduction of deferred revenue as applicable.
The following table shows the components of Revenues by reportable segment and as a percentage of total revenue for the three months ended September 30, 2022 and 2021:

|  | Mexico | Peru |  |  |  | Corporate(1) | Total
2022 |  |  |  |  |  |  |  |  |
Tuition and educational services |  | $ | 178,733 |  | $ | 147,982 |  |  |  |  | $ | — |  | $ | 326,715 |  | 109 | %
Other |  | 32,750 |  | 15,493 |  |  |  |  | 670 |  | 48,913 |  | 16 | %
Gross revenue |  | 211,483 |  | 163,475 |  |  |  |  | 670 |  | 375,628 |  | 125 | %
Less: Discounts / waivers / scholarships |  | (63,701) |  | (10,928) |  |  |  |  | — |  | (74,629) |  | (25) | %
Total |  | $ | 147,782 |  | $ | 152,547 |  |  |  |  | $ | 670 |  | $ | 300,999 |  | 100 | %
2021 |  |  |  |  |  |  |  |  |
Tuition and educational services |  | $ | 160,117 |  | $ | 129,715 |  |  |  |  | $ | — |  | $ | 289,832 |  | 108 | %
Other |  | 25,813 |  | 12,959 |  |  |  |  | 3,309 |  | 42,081 |  | 16 | %
Gross revenue |  | 185,930 |  | 142,674 |  |  |  |  | 3,309 |  | 331,913 |  | 124 | %
Less: Discounts / waivers / scholarships |  | (54,669) |  | (9,553) |  |  |  |  | — |  | (64,222) |  | (24) | %
Total |  | $ | 131,261 |  | $ | 133,121 |  |  |  |  | $ | 3,309 |  | $ | 267,691 |  | 100 | %

(1) Includes the elimination of inter-segment revenues.
The following table shows the components of Revenues by reportable segment and as a percentage of total revenue for the nine months ended September 30, 2022 and 2021:

|  | Mexico | Peru |  |  |  | Corporate(1) | Total
2022 |  |  |  |  |  |  |  |  |
Tuition and educational services |  | $ | 541,744 |  | $ | 451,570 |  |  |  |  | $ | — |  | $ | 993,314 |  | 111 | %
Other |  | 80,869 |  | 41,841 |  |  |  |  | 3,848 |  | 126,558 |  | 14 | %
Gross revenue |  | 622,613 |  | 493,411 |  |  |  |  | 3,848 |  | 1,119,872 |  | 125 | %
Less: Discounts / waivers / scholarships |  | (187,622) |  | (36,307) |  |  |  |  | — |  | (223,929) |  | (25) | %
Total |  | $ | 434,991 |  | $ | 457,104 |  |  |  |  | $ | 3,848 |  | $ | 895,943 |  | 100 | %
2021 |  |  |  |  |  |  |  |  |
Tuition and educational services |  | $ | 483,854 |  | $ | 386,189 |  |  |  |  | $ | — |  | $ | 870,043 |  | 110 | %
Other |  | 67,139 |  | 35,405 |  |  |  |  | 6,751 |  | 109,295 |  | 14 | %
Gross revenue |  | 550,993 |  | 421,594 |  |  |  |  | 6,751 |  | 979,338 |  | 124 | %
Less: Discounts / waivers / scholarships |  | (160,052) |  | (29,315) |  |  |  |  | — |  | (189,367) |  | (24) | %
Total |  | $ | 390,941 |  | $ | 392,279 |  |  |  |  | $ | 6,751 |  | $ | 789,971 |  | 100 | %

(1) Includes the elimination of inter-segment revenues.
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Contract Balances
The timing of billings, cash collections and revenue recognition results in accounts receivable (contract assets) and Deferred revenue and student deposits (contract liabilities) on the Consolidated Balance Sheets. We have various billing and academic cycles and recognize student receivables when an academic session begins, although students generally enroll in courses prior to the start of the academic session. Receivables are recognized only to the extent that it is probable that we will collect substantially all of the consideration to which we are entitled in exchange for the goods and services that will be transferred to the student. We receive advance payments or deposits from our students before revenue is recognized, which are recorded as contract liabilities in deferred revenue and student deposits. Payment terms vary by university with some universities requiring payment in advance of the academic session and other universities allowing students to pay in installments over the term of the academic session.
All of our contract assets are considered accounts receivable and are included within the Accounts and notes receivable balance in the accompanying Consolidated Balance Sheets. Total accounts receivable from our contracts with students were $125,922 and $117,987 as of September 30, 2022 and December 31, 2021, respectively. The increase in the contract assets balance at September 30, 2022 compared to December 31, 2021 was primarily driven by our enrollment cycles. The first and third calendar quarters generally coincide with the primary and secondary intakes for our larger institutions. All contract asset amounts are classified as current.
Contract liabilities in the amount of $74,274 and $43,959 were included within the Deferred revenue and student deposits balance in the current liabilities section of the accompanying Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, respectively. The increase in the contract liability balance during the period ended September 30, 2022 was the result of semester billings and cash payments received in advance of satisfying performance obligations, partially offset by revenue recognized during that period. Revenue recognized for the nine months ended September 30, 2022 that was included in the contract liability balance at the beginning of the year was approximately $38,000.
Note 3. Discontinued Operations and Assets Held for Sale
As discussed in Note 1, Description of Business, the Company’s remaining principal markets are Mexico and Peru. All other markets have been divested.
Summarized operating results and cash flows of the Discontinued Operations are presented in the following tables:

For the three months ended September 30, | 2022 |  | 2021
Revenues | $ | — |  |  | $ | 70,787 |
Share-based compensation expense | — |  |  | (371) |
Other direct costs | — |  |  | (58,123) |
Other non-operating expense | — |  |  | (4,938) |
(Loss) gain on sale of discontinued operations before taxes, net | (816) |  |  | 612,010 |
Pretax (loss) income of discontinued operations | (816) |  |  | 619,365 |
Income tax benefit | — |  |  | (248,838) |
(Loss) income from discontinued operations, net of tax | $ | (816) |  |  | $ | 370,527 |

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For the nine months ended September 30, | 2022 |  | 2021
Revenues | $ | — |  |  | $ | 542,650 |
Share-based compensation expense | — |  |  | (1,198) |
Other direct costs | — |  |  | (430,789) |
Loss on impairment of assets | — |  |  | (1,268) |
Other non-operating expense | — |  |  | (20,489) |
Gain on sale of discontinued operations before taxes, net | 4,064 |  |  | 625,304 |
Pretax income of discontinued operations | 4,064 |  |  | 714,210 |
Income tax expense | — |  |  | (257,440) |
Income from discontinued operations, net of tax | $ | 4,064 |  |  | $ | 456,770 |
Operating cash flows of discontinued operations | $ | — |  |  | $ | 16,420 |
Investing cash flows of discontinued operations | $ | — |  |  | $ | (11,161) |
Financing cash flows of discontinued operations | $ | — |  |  | $ | (18,054) |

During the second quarter of 2022, the Company completed the transfer of the remaining assets and liabilities of the Discontinued Operations that were classified as held for sale as of December 31, 2021, which resulted in a gain of approximately $4,300. The carrying amounts of the major classes of assets and liabilities that were classified as held for sale as of December 31, 2021 are presented in the following table:

| September 30, 2022 |  | December 31, 2021
Assets of Discontinued Operations |  |  |
Operating lease right-of-use assets, net | $ | — |  |  | $ | 6,164 |
Total assets held for sale | $ | — |  |  | $ | 6,164 |

Liabilities of Discontinued Operations |  |  |
Operating leases, including current portion | $ | — |  |  | $ | 10,849 |
Total liabilities held for sale | $ | — |  |  | $ | 10,849 |

Not e 4. Dispositions
Receipt of Escrow Receivable from Sale of Walden
On August 12, 2021, pursuant to the Membership Interest Purchase Agreement (the Walden Purchase Agreement) with Adtalem Global Education Inc. (the Walden Purchaser), the Company sold to the Walden Purchaser all of the issued and outstanding equity interest in Walden e-Learning, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (Walden), and its subsidiary, Walden University, LLC, a Florida limited liability company and an indirect wholly owned subsidiary of the Company (together with Walden, the Walden Group). At the closing date of August 12, 2021, the Walden Purchaser paid an additional $74,000 of the sale transaction value into an escrow account, which was to be released in full or in part to the Company one year following the closing of the transaction pursuant to the terms and conditions of the escrow agreement. On August 23, 2022, the Company received approximately $71,700 of the escrow amount.
Note 5. Business and Geographic Segment Information
Laureate’s educational services are offered through two reportable segments: Mexico and Peru. Laureate determines its segments based on information utilized by the chief operating decision maker to allocate resources and assess performance.
Our segments generate revenues by providing an education that emphasizes profession-oriented fields of study with undergraduate and graduate degrees in a wide range of disciplines. Our educational offerings utilize hybrid (a combination of online and in-classroom) courses and programs to deliver their curriculum. The Mexico and Peru markets are characterized by what we believe is a significant imbalance between supply and demand. The demand for higher education is large and growing and is fueled by several demographic and economic factors, including a growing middle class, global growth in services and technology-related industries and recognition of the significant personal and economic benefits gained by graduates of higher education institutions. The target demographics are primarily 18- to 24-year-olds in the countries in which we compete. We
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compete with other private higher education institutions on the basis of price, educational quality, reputation and location. We believe that we compare favorably with competitors because of our focus on quality, professional-oriented curriculum and the competitive advantages provided by our network. There are a number of private and public institutions in Mexico and Peru, and it is difficult to predict how the markets will evolve and how many competitors there will be in the future. We expect competition to increase as the Mexican and Peruvian markets mature. Essentially all of our revenues were generated from private pay sources as there are no material government-sponsored loan programs in Mexico or Peru. Specifics related to both of our reportable segments are discussed below.
In Mexico, the private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities. Laureate owns two nationally licensed institutions and is present throughout the country with a footprint of over 35 campuses. Students in our Mexican institutions typically finance their own education.
In Peru, private universities are increasingly providing the capacity to meet growing demand in the higher-education market. Laureate owns three institutions in Peru.
As discussed in Note 1, Description of Business, in prior periods a number of our subsidiaries met the requirements to be classified as Discontinued Operations. As a result, the Discontinued Operations have been excluded from the segment information for all periods presented.
Inter-segment transactions are accounted for in a similar manner as third-party transactions and are eliminated in consolidation. The Corporate amounts presented in the following tables include corporate charges that were not allocated to our reportable segments and adjustments to eliminate inter-segment items.
We evaluate segment performance based on Adjusted EBITDA, which is a non-GAAP performance measure defined as Income (loss) from continuing operations before income taxes and equity in net income of affiliates, adding back the following items: (Loss) gain on disposal of subsidiaries, net, Foreign currency exchange gain (loss), net, Other income (expense), net, Loss on derivatives, Loss on debt extinguishment, Interest expense, Interest income, Depreciation and amortization expense, Loss on impairment of assets, Share-based compensation expense and expenses related to our Excellence-in-Process (EiP) initiative. Our EiP initiative was completed as of December 31, 2021, except for certain EiP expenses related to the completion of programs that began in prior periods. EiP was an enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources. It included the establishment of regional shared services organizations (SSOs), as well as improvements to the Company's system of internal controls over financial reporting. The EiP initiative also included other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure, an enterprise-wide program aimed at revenue growth, and certain non-recurring costs incurred in connection with the dispositions.
Adjusted EBITDA is a key measure used by our management and Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Additionally, Adjusted EBITDA is a key financial measure used by the compensation committee of our Board of Directors and our Chief Executive Officer in connection with the payment of incentive compensation to our executive officers and other members of our management team. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. We use total assets as the measure of assets for reportable segments.
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The following tables provide financial information for our reportable segments, including a reconciliation of Adjusted EBITDA to Income (loss) from continuing operations before income taxes and equity in net income of affiliates, as reported in the Consolidated Statements of Operations:

| For the three months ended |  | For the nine months ended
| September 30, |  | September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Revenues |  |  |  |  |  |  |
Mexico | $ | 147,782 |  |  | $ | 131,261 |  |  | $ | 434,991 |  |  | $ | 390,941 |
Peru | 152,547 |  |  | 133,121 |  |  | 457,104 |  |  | 392,279 |
Corporate | 670 |  |  | 3,309 |  |  | 3,848 |  |  | 6,751 |
Revenues | $ | 300,999 |  |  | $ | 267,691 |  |  | $ | 895,943 |  |  | $ | 789,971 |
Adjusted EBITDA of reportable segments |  |  |  |  |  |  |
Mexico | $ | 23,442 |  |  | $ | 27,047 |  |  | $ | 79,848 |  |  | $ | 61,503 |
Peru | 61,223 |  |  | 70,791 |  |  | 201,363 |  |  | 196,016 |
Total Adjusted EBITDA of reportable segments | 84,665 |  |  | 97,838 |  |  | 281,211 |  |  | 257,519 |
Reconciling items: |  |  |  |  |  |  |
Corporate | (11,860) |  |  | (21,955) |  |  | (37,156) |  |  | (64,866) |
Depreciation and amortization expense | (14,471) |  |  | (25,872) |  |  | (43,628) |  |  | (75,617) |
Loss on impairment of assets | — |  |  | (3,292) |  |  | (144) |  |  | (67,161) |
Share-based compensation expense | (1,849) |  |  | (2,026) |  |  | (6,971) |  |  | (5,977) |
EiP expenses | (168) |  |  | (9,587) |  |  | (1,320) |  |  | (37,499) |
Operating income | 56,317 |  |  | 35,106 |  |  | 191,992 |  |  | 6,399 |
Interest income | 1,970 |  |  | 1,268 |  |  | 5,623 |  |  | 2,456 |
Interest expense | (3,694) |  |  | (3,736) |  |  | (11,589) |  |  | (40,795) |
Loss on debt extinguishment | — |  |  | — |  |  | — |  |  | (77,940) |
Loss on derivatives | — |  |  | — |  |  | — |  |  | (24,517) |
Other income (expense), net | 1,393 |  |  | (46) |  |  | 413 |  |  | (67) |
Foreign currency gain (loss), net | 15,146 |  |  | 6,085 |  |  | (2,906) |  |  | 18,749 |
(Loss) gain on disposal of subsidiaries, net | — |  |  | (949) |  |  | 1,461 |  |  | (922) |
Income (loss) from continuing operations before income taxes and equity in net income of affiliates | $ | 71,132 |  |  | $ | 37,728 |  |  | $ | 184,994 |  |  | $ | (116,637) |

| September 30, 2022 |  | December 31, 2021
Assets |  |  |
Mexico | $ | 1,144,840 |  |  | $ | 1,251,791 |
Peru | 580,737 |  |  | 598,862 |
Corporate and Discontinued Operations | 373,186 |  |  | 360,657 |
Total assets | $ | 2,098,763 |  |  | $ | 2,211,310 |

Note 6. Goodwill
The change in the net carrying amount of Goodwill from December 31, 2021 through September 30, 2022 was composed of the following items:

| Mexico | Peru | Total
Balance at December 31, 2021 | $ | 479,223 |  | $ | 67,572 |  | $ | 546,795 |
Currency translation adjustments | 5,875 |  | 605 |  | 6,480 |
Balance at September 30, 2022 | $ | 485,098 |  | $ | 68,177 |  | $ | 553,275 |

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Note 7. Debt
Outstanding long-term debt was as follows:

| September 30, 2022 |  | December 31, 2021
Senior long-term debt: |  |  |
Senior Secured Credit Facility (stated maturity date October 2024) | $ | — |  |  | $ | — |
Other debt: |  |  |
Lines of credit | 4,895 |  |  | 10,131 |
Notes payable and other debt | 78,168 |  |  | 102,003 |
Total senior and other debt | 83,063 |  |  | 112,134 |
Finance lease obligations and sale-leaseback financings | 44,104 |  |  | 45,124 |
Total long-term debt and finance leases | 127,167 |  |  | 157,258 |
Less: total unamortized deferred financing costs | 2,405 |  |  | 3,588 |
Less: current portion of long-term debt and finance leases | 46,403 |  |  | 49,082 |
Long-term debt and finance leases, less current portion | $ | 78,359 |  |  | $ | 104,588 |

Senior Secured Credit Facility
Under our Third Amended and Restated Credit Agreement (the Third A&R Credit Agreement), the Company maintains a revolving credit facility (the Senior Secured Credit Facility) that has a borrowing capacity of $410,000 and a maturity date of October 7, 2024. As of September 30, 2022 and December 31, 2021, no amounts were borrowed on this facility.
Estimated Fair Value of Debt
As of September 30, 2022 and December 31, 2021, the estimated fair value of our debt approximated its carrying value.
Certain Covenants
As of September 30, 2022, our Third A&R Credit Agreement contained certain negative covenants including, among others: (1) limitations on additional indebtedness; (2) limitations on dividends; (3) limitations on asset sales, including the sale of ownership interests in subsidiaries and sale-leaseback transactions; and (4) limitations on liens, guarantees, loans or investments. The Third A&R Credit Agreement provides, solely with respect to the revolving credit facility, that the Company shall not permit its Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, to exceed 3.50x as of the last day of each quarter commencing with the quarter ending December 31, 2019 and thereafter. The agreement also provides that if (i) the Company’s Consolidated Total Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, is not greater than 4.75x as of such date and (ii) less than 25% of the revolving credit facility is utilized as of that date, then such financial covenant shall not apply. As of September 30, 2022, these conditions were satisfied and, therefore, we were not subject to the leverage ratio. In addition, indebtedness at some of our locations contain financial maintenance covenants. We were in compliance with these covenants as of September 30, 2022.
Note 8. Leases
Laureate conducts a significant portion of its operations at leased facilities, including many of Laureate's higher education facilities and other office locations. In accordance with ASC Topic 842, “Leases,” Laureate analyzes each lease agreement to determine whether it should be classified as a finance lease or an operating lease.
Finance Leases
Our finance lease agreements are for property and equipment. The lease assets are included within buildings as well as furniture, equipment and software and the related lease liability is included within debt and finance leases on the Consolidated Balance Sheets.
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Operating Leases
Our operating lease agreements are primarily for real estate space and are included within operating lease right-of-use (ROU) assets and operating lease liabilities on the Consolidated Balance Sheets. The terms of our operating leases vary and generally contain renewal options. Certain of these operating leases provide for increasing rent over the term of the lease. Laureate also leases certain equipment under noncancellable operating leases, which are typically for terms of 60 months or less.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Our variable lease payments consist of non-lease services related to the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. On occasion, Laureate has entered into sublease agreements for certain leased office space; however, the sublease income from these agreements is immaterial.
Note 9. Commitments and Contingencies
Loss Contingencies
Laureate is subject to legal actions arising in the ordinary course of its business. In management's opinion, we have adequate legal defenses, insurance coverage and/or accrued liabilities with respect to the eventuality of such actions. We do not believe that any settlement would have a material impact on our Consolidated Financial Statements.
Contingent Liabilities for Taxes
As of September 30, 2022 and December 31, 2021, Laureate had recorded cumulative liabilities for income tax contingencies of $124,591 and $91,585, respectively.
Other Loss Contingencies
Laureate has accrued liabilities for certain civil actions against our institutions, a portion of which existed prior to our acquisition of these entities. Laureate intends to vigorously defend against these matters. As of September 30, 2022 and December 31, 2021, approximately $10,100 and $7,200, respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets.
Guarantees
In connection with a loan agreement entered into by a Laureate subsidiary in Peru, all of the shares of Universidad Privada del Norte, one of our universities, were pledged to the third-party lender as a guarantee of the payment obligations under the loan.
During the first quarter of 2021, one of our Peruvian institutions issued a bank guarantee in order to appeal a preliminary tax assessment received related to tax audits of 2014 and 2015. As of September 30, 2022 and December 31, 2021, the amount of the guarantee was $5,937 and $5,885, respectively.
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Letter of Credit
As of September 30, 2022 and December 31, 2021, we had approximately $9,000 and $10,700, respectively, posted as cash collateral for a letter of credit related to the Spanish tax audits. This was recorded in Continuing Operations and classified as Restricted cash on our September 30, 2022 and December 31, 2021 Consolidated Balance Sheets. The cash collateral was related to final assessments issued by the Spanish Taxing Authority (STA) in October 2018 and January 2020 to Iniciativas Culturales de España, S.L. (ICE), our former Spanish holding company. During the second quarter of 2020, ICE was migrated to the Netherlands, and its name was changed to Laureate Netherlands Holding B.V. In October 2021, the Company made a payment to the STA of approximately $9,300, in order to reduce the amount of future interest that could be incurred as the appeals process continues. Following the payment, the letter of credit was no longer required and the cash was subsequently released in October 2022.
Note 10. Share-based Compensation
Share-based compensation expense was as follows:

| For the three months ended September 30, |  | For the nine months ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Continuing operations |  |  |  |  |  |  |
Stock options, net of estimated forfeitures | $ | — |  |  | $ | 72 |  |  | $ | — |  |  | $ | 349 |
Restricted stock awards | 1,849 |  |  | 1,954 |  |  | 6,971 |  |  | 5,628 |
Total continuing operations | 1,849 |  |  | 2,026 |  |  | 6,971 |  |  | 5,977 |
Discontinued operations |  |  |  |  |  |  |
Share-based compensation expense for discontinued operations | — |  |  | 371 |  |  | — |  |  | 1,198 |
Total continuing and discontinued operations | $ | 1,849 |  |  | $ | 2,397 |  |  | $ | 6,971 |  |  | $ | 7,175 |

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Note 11. Stockholders’ Equity
The components of net changes in stockholders’ equity for the fiscal quarters of 2022 are as follows:

| Laureate Education, Inc. Stockholders |  |
| Common stock | Additional paid-in capital | Retained earnings (accumulated deficit) | Accumulated other comprehensive loss | Treasury stock at cost | Non-controlling interests | Total stockholders’ equity
| Shares | Amount
Balance at December 31, 2021 | 180,611 |  | $ | 915 |  | $ | 2,388,783 |  | $ | 15,523 |  | $ | (520,204) |  | $ | (744,174) |  | $ | (1,285) |  | $ | 1,139,558 |
Non-cash stock compensation | — |  | — |  | 2,762 |  | — |  | — |  | — |  | — |  | 2,762 |
Purchase of treasury stock at cost | (9,485) |  | — |  | — |  | — |  | — |  | (112,874) |  | — |  | (112,874) |
Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding | 1,379 |  | 6 |  | 10,716 |  | — |  | — |  | — |  | — |  | 10,722 |
Equitable adjustments to stock-based awards | — |  | — |  | (189) |  | — |  | — |  | — |  | — |  | (189) |
Net loss | — |  | — |  | — |  | (44,211) |  | — |  | — |  | (469) |  | (44,680) |
Foreign currency translation adjustment, net of tax of $0 | — |  | — |  | — |  | — |  | 49,573 |  | — |  | 2 |  | 49,575 |
Minimum pension liability adjustment, net of tax of $0 | — |  | — |  | — |  | — |  | 14 |  | — |  | — |  | 14 |
Balance at March 31, 2022 | 172,505 |  | $ | 921 |  | $ | 2,402,072 |  | $ | (28,688) |  | $ | (470,617) |  | $ | (857,048) |  | $ | (1,752) |  | $ | 1,044,888 |
Non-cash stock compensation | — |  | — |  | 2,360 |  | — |  | — |  | — |  | — |  | 2,360 |
Purchase of treasury stock at cost | (8,013) |  | — |  | — |  | — |  | — |  | (93,362) |  | — |  | (93,362) |
Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding | 171 |  | 1 |  | (472) |  | — |  | — |  | — |  | — |  | (471) |
Equitable adjustments to stock-based awards | — |  | — |  | (35) |  | — |  | — |  | — |  | — |  | (35) |
Change in noncontrolling interests | — |  | — |  | 2 |  | — |  | — |  | — |  | (2) |  | — |
Reclassification of redeemable equity to non-redeemable equity | — |  | — |  | 316 |  | — |  | — |  | — |  | — |  | 316 |
Net income | — |  | — |  | — |  | 43,423 |  | — |  | — |  | 136 |  | 43,559 |
Foreign currency translation adjustment, net of tax of $0 | — |  | — |  | — |  | — |  | 17,969 |  | — |  | 3 |  | 17,972 |
Balance at June 30, 2022 | 164,663 |  | $ | 922 |  | $ | 2,404,243 |  | $ | 14,735 |  | $ | (452,648) |  | $ | (950,410) |  | $ | (1,615) |  | $ | 1,015,227 |
Non-cash stock compensation | — |  | — |  | 1,849 |  | — |  | — |  | — |  | — |  | 1,849 |
Purchase of treasury stock at cost | (77) |  | — |  | — |  | — |  | — |  | (862) |  | — |  | (862) |
Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding | 63 |  | — |  | 199 |  | — |  | — |  | — |  | — |  | 199 |
Special cash distribution accrued on outstanding common stock | — |  | — |  | (136,642) |  | — |  | — |  | — |  | — |  | (136,642) |
Equitable adjustments to stock-based awards | — |  | — |  | (770) |  | — |  | — |  | — |  | — |  | (770) |
Net income | — |  | — |  | — |  | 31,117 |  | — |  | — |  | (81) |  | 31,036 |
Foreign currency translation adjustment, net of tax of $0 | — |  | — |  | — |  | — |  | (42,160) |  | — |  | (1) |  | (42,161) |
Minimum pension liability adjustment, net of tax of $0 | — |  | — |  | — |  | — |  | 983 |  | — |  | — |  | 983 |
Balance at September 30, 2022 | 164,649 |  | $ | 922 |  | $ | 2,268,879 |  | $ | 45,852 |  | $ | (493,825) |  | $ | (951,272) |  | $ | (1,697) |  | $ | 868,859 |

18

The components of net changes in stockholders’ equity for the fiscal quarters of 2021 are as follows:

| Laureate Education, Inc. Stockholders |  |
| Class A common stock | Class B common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive loss | Treasury stock at cost | Non-controlling interests | Total stockholders’ equity
| Shares | Amount | Shares | Amount
Balance at December 31, 2020 | 115,119 |  | $ | 548 |  | 90,792 |  | $ | 363 |  | $ | 3,760,029 |  | $ | (176,822) |  | $ | (941,986) |  | $ | (365,316) |  | $ | (12,882) |  | $ | 2,263,934 |
Beginning retained earnings adjustment | — |  | — |  | — |  | — |  | — |  | (101) |  | — |  | — |  | — |  | (101) |
Non-cash stock compensation | — |  | — |  | — |  | — |  | 1,576 |  | — |  | — |  | — |  | — |  | 1,576 |
Conversion of Class B shares to Class A shares | 17,248 |  | 69 |  | (17,248) |  | (69) |  | — |  | — |  | — |  | — |  | — |  | — |
Purchase of treasury stock at cost | (10,401) |  | — |  | — |  | — |  | — |  | — |  | — |  | (145,806) |  | — |  | (145,806) |
Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding | 247 |  | 1 |  | — |  | — |  | (1,223) |  | — |  | — |  | — |  | — |  | (1,222) |
Accretion of redeemable noncontrolling interests and equity | — |  | — |  | — |  | — |  | (20) |  | — |  | — |  | — |  | — |  | (20) |
Net loss | — |  | — |  | — |  | — |  | — |  | (164,928) |  | — |  | — |  | (15) |  | (164,943) |
Foreign currency translation adjustment, net of tax of $0 | — |  | — |  | — |  | — |  | — |  | — |  | (59,743) |  | — |  | (18) |  | (59,761) |
Minimum pension liability adjustment, net of tax of $0 | — |  | — |  | — |  | — |  | — |  | — |  | (168) |  | — |  | — |  | (168) |
Balance at March 31, 2021 | 122,213 |  | $ | 618 |  | 73,544 |  | $ | 294 |  | $ | 3,760,362 |  | $ | (341,851) |  | $ | (1,001,897) |  | $ | (511,122) |  | $ | (12,915) |  | $ | 1,893,489 |
Non-cash stock compensation | — |  | — |  | — |  | — |  | 3,202 |  | — |  | — |  | — |  | — |  | 3,202 |
Conversion of Class B shares to Class A shares | 2 |  | — |  | (2) |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
Purchase of treasury stock at cost | (7,548) |  | — |  | — |  | — |  | — |  | — |  | — |  | (105,786) |  | — |  | (105,786) |
Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding | 119 |  | 1 |  | — |  | — |  | 359 |  | — |  | — |  | — |  | — |  | 360 |
Accretion of redeemable noncontrolling interests and equity | — |  | — |  | — |  | — |  | (68) |  | — |  | — |  | — |  | — |  | (68) |
Reclassification of redeemable noncontrolling interests and equity | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |  | (1) |  | (1) |
Net loss | — |  | — |  | — |  | — |  | — |  | (29,000) |  | — |  | — |  | (224) |  | (29,224) |
Foreign currency translation adjustment, net of tax of $0 | — |  | — |  | — |  | — |  | — |  | — |  | 510,445 |  | — |  | (2) |  | 510,443 |
Minimum pension liability adjustment, net of tax of $0 | — |  | — |  | — |  | — |  | — |  | — |  | 27 |  | — |  | — |  | 27 |
Balance at June 30, 2021 | 114,786 |  | $ | 619 |  | 73,542 |  | $ | 294 |  | $ | 3,763,855 |  | $ | (370,851) |  | $ | (491,425) |  | $ | (616,908) |  | $ | (13,142) |  | $ | 2,272,442 |
Non-cash stock compensation | — |  | — |  | — |  | — |  | 2,397 |  | — |  | — |  | — |  | — |  | 2,397 |
Conversion of Class B shares to Class A shares | 7,188 |  | 29 |  | (7,188) |  | (29) |  | — |  | — |  | — |  | — |  | — |  | — |
Purchase of treasury stock at cost | (7,110) |  | — |  | — |  | — |  | — |  | — |  | — |  | (112,994) |  | — |  | (112,994) |
Exercise of stock options and vesting of restricted stock, net of shares withheld to satisfy tax withholding | 119 |  | — |  | — |  | — |  | 304 |  | — |  | — |  | — |  | — |  | 304 |
Change in noncontrolling interests | — |  | — |  | — |  | — |  | 90 |  | — |  | — |  | — |  | — |  | 90 |
Special cash distribution accrued on outstanding common stock | — |  | — |  | — |  | — |  | (1,271,790) |  | — |  | — |  | — |  | — |  | (1,271,790) |
Net income | — |  | — |  | — |  | — |  | — |  | 360,406 |  | — |  | — |  | (269) |  | 360,137 |
Foreign currency translation adjustment, net of tax of $0 | — |  | — |  | — |  | — |  | — |  | — |  | (22,648) |  | — |  | 21 |  | (22,627) |
Balance at September 30, 2021 | 114,983 |  | $ | 648 |  | 66,354 |  | $ | 265 |  | $ | 2,494,856 |  | $ | (10,445) |  | $ | (514,073) |  | $ | (729,902) |  | $ | (13,390) |  | $ | 1,227,959 |

Effective October 29, 2021, each share of Company Class A common stock and each share of Company Class B common stock automatically converted into one share of common stock of the Company. Following the conversion, the Company has only one class of common stock outstanding.
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Stock Repurchase Program
On March 14, 2022, the Company announced that its Board of Directors had approved an increase of $50,000 to the existing authorization to repurchase shares of the Company’s common stock under its share repurchase program, for a total authorization of $650,000. The authorizations do not have an expiration date. The Company’s repurchases may be made on the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Repurchases may be effected pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act. The Company’s Board of Directors will review the share repurchase program periodically and may authorize adjustment of its terms and size or suspend or discontinue the program. The Company expects to finance the repurchases with free cash flow, from excess cash and liquidity on-hand, or from its revolving credit facility, or a combination thereof. During the nine months ended September 30, 2022, the Company repurchased 17,575 shares of its outstanding common stock for a total purchase price of $207,098, and its repurchases reached the total authorized limit of $650,000.
Special Cash Distribution
On September 14, 2022, the Company announced that its Board of Directors approved, pursuant to the previously announced adoption of a Partial Liquidation Plan related to the distribution of net proceeds from the Company’s sale of Walden e-Learning LLC (the Walden Sale), the payment of a special cash distribution (the October 2022 Distribution) equal to $0.83 per each share of the Company’s common stock, par value $0.004 per share, to each holder of record on September 28, 2022. The proceeds that were distributed were attributable to the release during the third quarter of 2022 of $71,700 of escrowed funds from the Walden Sale, plus remaining net proceeds that had yet to be distributed. This is anticipated to be the final distribution pursuant to the Plan. The October 2022 Distribution was paid on October 12, 2022. During the third quarter of 2022, the Company recorded additional dividend payable of approximately $136,600, based on the number of shares outstanding at the record date.
In connection with the October 2022 Distribution, the Board of Directors approved certain required adjustments under the Company’s equity award compensation plans. The ex-dividend date was September 27, 2022, and therefore these required equitable adjustments were recorded in the consolidated financial statements during the third quarter of 2022. The exercise prices of the Company’s stock options were reduced by $0.83 per share, and holders of restricted and performance stock units will receive an amount in cash equal to $0.83 per unvested stock unit, payable when such unit vests. As of September 30, 2022, the Company recorded a payable of approximately $770 related to the equitable adjustments for the equity award compensation plans.
As previously disclosed in the 2021 Form 10-K, in September 2021, the Board approved the payment of a special cash distribution pursuant to the Partial Liquidation Plan equal to $7.01 per each share of the Company’s common stock, par value $0.004 per share, to each holder of record on October 6, 2021. The distribution was paid on October 29, 2021.
As of December 31, 2021, there were dividends payable of $6,932 for equitable adjustments related to restricted stock awards that had not yet vested. In the December 31, 2021 balance sheet that was included in our 2021 Form 10-K, this amount was classified within Other current liabilities. In order to conform with the presentation in the September 30, 2022 balance sheet presented in this Form 10-Q, this $6,932 has been reclassified within Special cash distribution payable on the comparative December 31, 2021 balance sheet.
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Accumulated Other Comprehen sive Income (Loss)
Accumulated other comprehensive income (loss) (AOCI) in our Consolidated Balance Sheets includes the accumulated translation adjustments arising from translation of foreign subsidiaries’ financial statements, the unrealized gain on a derivative designated as an effective net investment hedge, and the accumulated net gains or losses that are not recognized as components of net periodic benefit cost for our minimum pension liability. The AOCI related to the net investment hedge will be deferred from earnings until the sale or liquidation of the hedged investee. The components of these balances were as follows:

| September 30, 2022 |  | December 31, 2021
| Laureate Education, Inc. | Noncontrolling Interests | Total |  | Laureate Education, Inc. | Noncontrolling Interests | Total
Foreign currency translation adjustment | $ | (504,090) |  | $ | 950 |  | $ | (503,140) |  |  | $ | (529,472) |  | $ | 946 |  | $ | (528,526) |
Unrealized gain on derivatives | 10,416 |  | — |  | 10,416 |  |  | 10,416 |  | — |  | 10,416 |
Minimum pension liability adjustment | (151) |  | — |  | (151) |  |  | (1,148) |  | — |  | (1,148) |
Accumulated other comprehensive loss | $ | (493,825) |  | $ | 950 |  | $ | (492,875) |  |  | $ | (520,204) |  | $ | 946 |  | $ | (519,258) |

Note 12. Derivative Instruments
In the normal course of business, our operations are exposed to fluctuations in foreign currency values and interest rate changes. We may seek to control a portion of these risks through a risk management program that includes the use of derivative instruments.
Prior to their repayment, Laureate’s senior long-term debt arrangements were primarily in USD. Our ability to make debt payments was subject to fluctuations in the value of the USD against foreign currencies, since a majority of our operating cash used to make these payments was generated by subsidiaries with functional currencies other than USD. As part of our overall risk management policies, Laureate has at times entered into foreign currency swap contracts and floating-to-fixed interest rate swap contracts. For example, in November 2020 we entered into the BRL to USD foreign currency swap described below. In addition, we occasionally enter into foreign exchange forward contracts to reduce the impact of other non-functional currency-denominated receivables and payables. We do not enter into speculative or leveraged transactions, nor do we hold or issue derivatives for trading purposes. We generally intend to hold our derivatives until maturity.
Laureate reports all derivatives at fair value. These contracts are recognized as either assets or liabilities, depending upon the derivative’s fair value. Gains or losses associated with the change in the fair value of these swaps are recognized in our Consolidated Statements of Operations on a current basis over the term of the contracts, unless designated and effective as a hedge. For swaps that are designated and effective as cash flow hedges, gains or losses associated with the change in fair value of the swaps are recognized in our Consolidated Balance Sheets as a component of AOCI and amortized into earnings as a component of Interest expense over the term of the related hedged items. Upon early termination of an effective interest rate swap designated as a cash flow hedge, unrealized gains or losses are deferred in our Consolidated Balance Sheets as a component of AOCI and are amortized as an adjustment to Interest expense over the period during which the hedged forecasted transaction affects earnings. For derivatives that are both designated and effective as net investment hedges, gains or losses associated with the change in fair value of the derivatives are recognized on our Consolidated Balance Sheets as a component of AOCI.
Laureate did not hold any derivatives as of September 30, 2022 and December 31, 2021.
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BRL to USD Foreign Currency Swaps
In November 2020, in connection with the signing of the sale agreement for its Brazilian operations, Laureate entered into six BRL-to-USD swap agreements. The purpose of these swaps was to mitigate the risk of foreign currency exposure on the expected proceeds from the sale. Two of the swaps were deal contingent, with the settlement date occurring on the second business day following the completion of the sale. On the settlement date, Laureate would deliver the combined notional amount of BRL 1,900,000 (BRL 950,000 for each swap) and receive an amount in USD equal to each swap's notional amount multiplied by each swap's contract rate of exchange at the settlement date. The remaining four swaps were originally put/call options with a maturity date of May 13, 2021, where Laureate could put the combined notional amount of BRL 1,875,000 and call a combined USD amount of $343,783 at an exchange rate of 5.4540 BRL per 1 USD. The terms of these options included deferred premium payments from Laureate to the counterparties of $18,294, which were paid in full in January 2021. During the second quarter of 2021, all four of these swaps were converted to be deal contingent, with the settlement date occurring on the second business day following the aforementioned sale. This conversion resulted in cash proceeds to Laureate of $1,663. On the settlement date, Laureate would deliver the combined notional amount of BRL 1,875,000 and receive an amount in USD equal to each swap’s notional amount multiplied by each swap’s contract rate of exchange at the settlement date.
The sale of Laureate’s Brazilian operations closed on May 28, 2021. Per the terms of the agreements, the swaps were settled on June 2, 2021, which resulted in a realized loss and net settlement amount paid to the counterparties at closing of $33,710. These swaps were not designated as hedges for accounting purposes.
There was no gain or loss on derivatives in the Consolidated Statements of Operations for the three months ended September 30, 2022 and 2021.
Components of the reported Loss on derivatives not designated as hedging instruments in the Consolidated Statements of Operations for the nine months ended September 30, 2022 and 2021 were as follows:

|  |  | For the nine months ended September 30,
|  |  |  |  | 2022 |  | 2021
Cross currency swaps |  |  |  |  |  |  |
Unrealized gain |  |  |  |  | $ | — |  |  | $ | 25,824 |
Realized loss |  |  |  |  | — |  |  | (50,341) |
Loss on derivatives, net |  |  |  |  | $ | — |  |  | $ | (24,517) |

Credit Risk and Credit-Risk-Related Contingent Features
Derivatives expose us to credit risk to the extent that the counterparty may possibly fail to perform its contractual obligation. The amount of our credit risk exposure is equal to the fair value of the derivative when any of the derivatives are in a net gain position. Laureate limits its credit risk by only entering into derivative transactions with highly rated major financial institutions. We have not entered into collateral agreements with our derivatives’ counterparties. As of September 30, 2022 and December 31, 2021, we did not hold any derivatives in a net gain position, and thus had no credit risk.
Laureate’s agreements with its derivative counterparties typically contain a provision under which the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to a default on the indebtedness. As of September 30, 2022 and December 31, 2021, the Company did not have any outstanding derivative agreements.
Note 13. Income Taxes
Laureate's income tax provisions for all periods consist of federal, state and foreign income taxes. The tax provisions for the nine months ended September 30, 2022 and 2021 are based on estimated full-year effective tax rates, adjusted for discrete income tax items related specifically to the interim periods. Laureate has operations in multiple countries at various statutory tax rates and other operations that are loss-making entities for which it is not more likely than not that a tax benefit will be realized on the loss.
For the nine months ended September 30, 2022, the Company recognized income t ax expense of $159,213, as compared to $174,163 in the prior year period.
22

Income tax expense for the nine months ended September 30, 2022 was attributable to pretax income, the jurisdictional mix of earnings, pretax losses for which the Company cannot recognize a tax benefit, and discrete tax expense of approximately $32,500 that was recorded for income tax reserves related to the application of the high-tax exception to global intangible low-taxed income.
Income tax expense for the nine months ended September 30, 2021 was primarily driven by jurisdictional mix of earnings, changes in income tax reserves and withholding taxes. In addition, during the nine months ended September 30, 2021, the Company recorded discrete tax expense of approximately $35,700 for changes in estimate associated with provision-to-return adjustments for the amended tax returns for 2018 and 2019 and the tax return for 2020, specifically related to the final regulations that were released by the U.S. Treasury Department in July 2020 for the high-tax exception to global intangible low-taxed income.
Inflation Reduction Act of 2022
On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which implemented a 15% minimum tax on book income of certain large corporations, a 1% excise tax on stock repurchases and tax incentives to promote clean energy, among other provisions. The Company does not believe that this legislation will have a material impact on the financial statements and will continue to monitor regulatory developments to assess potential impacts to the Company.
23

Note 14. Earnings (Loss) Per Share
Effective October 29, 2021, each share of the Company's Class A common stock and each share of the Company's Class B common stock automatically converted into one share of common stock of the Company. Following the conversion, the Company has only one class of common stock outstanding. Prior to that, our common stock had a dual class structure, consisting of Class A common stock and Class B common stock. Other than voting rights, the Class B common stock had the same rights as the Class A common stock, and therefore both were treated as the same class of stock for purposes of the earnings per share calculation. Laureate computes basic earnings per share (EPS) by dividing income available to common shareholders by the weighted average number of common shares outstanding for the reporting period. Diluted EPS reflects the potential dilution that would occur if share-based compensation awards, contingently issuable shares, or convertible securities were exercised or converted into common stock. To calculate the diluted EPS, the basic weighted average number of shares is increased by the dilutive effect of stock options, restricted stock, restricted stock units, and any contingently issuable shares determined using the treasury stock method, and any convertible securities using the if-converted method.
The following tables summarize the computations of basic and diluted earnings (loss) per share:

For the three months ended September 30, | 2022 |  | 2021
Numerator used in basic and diluted earnings (loss) per common share for continuing operations: |  |  |
Income (loss) from continuing operations | $ | 31,852 |  |  | $ | (10,390) |
Loss (income) attributable to noncontrolling interests | 81 |  |  | (17) |
Net income (loss) from continuing operations for basic and diluted earnings (loss) per share | $ | 31,933 |  |  | $ | (10,407) |
Numerator used in basic and diluted earnings (loss) per common share for discontinued operations: |  |  |
(Loss) income from discontinued operations, net of tax | $ | (816) |  |  | $ | 370,527 |
Loss attributable to noncontrolling interests | — |  |  | 286 |
Net (loss) income from discontinued operations for basic and diluted earnings (loss) per share | $ | (816) |  |  | $ | 370,813 |
Denominator used in basic and diluted earnings (loss) per common share: |  |  |
Basic weighted average shares outstanding | 164,645 |  |  | 185,569 |
Dilutive effect of stock options | 221 |  |  | — |
Dilutive effect of restricted stock units | 149 |  |  | — |
Diluted weighted average shares outstanding | 165,015 |  |  | 185,569 |
Basic and diluted earnings (loss) per share: |  |  |
Income (loss) from continuing operations | $ | 0.19 |  |  | $ | (0.06) |
Income from discontinued operations | — |  |  | 2.00 |
Basic and diluted earnings per share | $ | 0.19 |  |  | $ | 1.94 |

24

For the nine months ended September 30, | 2022 |  | 2021
Numerator used in basic and diluted earnings (loss) per common share for continuing operations: |  |  |
Income (loss) from continuing operations | $ | 25,851 |  |  | $ | (290,800) |
Loss attributable to noncontrolling interests | 414 |  |  | 9 |
Income (loss) from continuing operations attributable to Laureate Education, Inc. | 26,265 |  |  | (290,791) |
Accretion of redemption value of redeemable noncontrolling interests and equity | — |  |  | (88) |
Net income (loss) from continuing operations for basic and diluted earnings (loss) per share | $ | 26,265 |  |  | $ | (290,879) |
Numerator used in basic and diluted earnings (loss) per common share for discontinued operations: |  |  |
Income from discontinued operations, net of tax | $ | 4,064 |  |  | $ | 456,770 |
Loss attributable to noncontrolling interests | — |  |  | 499 |
Net income from discontinued operations for basic and diluted earnings (loss) per share | $ | 4,064 |  |  | $ | 457,269 |
Denominator used in basic and diluted earnings (loss) per common share: |  |  |
Basic weighted average shares outstanding | 169,885 |  |  | 192,543 |
Dilutive effect of stock options | 302 |  |  | — |
Dilutive effect of restricted stock units | 173 |  |  | — |
Diluted weighted average shares outstanding | 170,360 |  |  | 192,543 |
Basic and diluted earnings (loss) per share: |  |  |
Income (loss) from continuing operations | $ | 0.15 |  |  | $ | (1.51) |
Income from discontinued operations | 0.02 |  |  | 2.37 |
Basic and diluted earnings per share | $ | 0.17 |  |  | $ | 0.86 |

The following table summarizes the number of stock options and shares of restricted stock units that were excluded from the diluted EPS calculations because the effect would have been antidilutive:

| For the three months ended September 30, |  | For the nine months ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Stock options | 14 |  |  | 2,845 |  |  | 54 |  |  | 3,162 |
Restricted stock units | 284 |  |  | 687 |  |  | 239 |  |  | 698 |

Note 15. Legal and Regulatory Matters
Laureate is subject to legal proceedings arising in the ordinary course of business. In management’s opinion, we have adequate legal defenses, insurance coverage, and/or accrued liabilities with respect to the eventuality of these actions. Management believes that any settlement would not have a material impact on Laureate’s financial position, results of operations, or cash flows.
Our institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition and results of operations. There have been no material changes to the laws and regulations affecting our higher education institutions that are described in our Annual Report on Form 10-K for the year ended December 31, 2021.
25

Note 16. Supplemental Cash Flow Information
Reconciliation of Cash and cash equivalents and Restricted cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets, as well as the September 30, 2021 balance. The September 30, 2022 and September 30, 2021 balances sum to the amounts shown in the Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021:

|  | September 30, 2022 | September 30, 2021 | December 31, 2021
Cash and cash equivalents |  | $ | 319,039 |  | $ | 1,856,856 |  | $ | 324,801 |
Restricted cash |  | 17,448 |  | 104,999 |  | 20,774 |
Total Cash and cash equivalents and Restricted cash shown in the Consolidated Statements of Cash Flows |  | $ | 336,487 |  | $ | 1,961,855 |  | $ | 345,575 |

Restricted cash represents cash that is not immediately available for use in current operations and includes cash held to collateralize a letter of credit and cash restricted for a benefit plan. As described in Note 9, Commitments and Contingencies, a portion of the restricted cash was reclassified to Cash and cash equivalents in October 2022, following the release of the letter of credit.
Note 17. Subsequent Events
Special Cash Dividend
On October 24, 2022, the board of directors of the Company approved the payment of a special cash dividend (the Special Dividend) equal to $0.68 per each share of the Company’s common stock, par value $0.004 per share, to each holder of record on November 4, 2022. The Special Dividend is scheduled to be paid on November 17, 2022. Based on the current number of shares outstanding, the aggregate amount of the Special Dividend is expected to be approximately $112,000.
In connection with the Special Dividend, the Board approved certain required adjustments under the Company’s equity award compensation plans. Subject to the payment of the Special Dividend, the exercise price of the Company’s options will be reduced by $0.68 per share, and holders of restricted and performance stock units will receive an amount in cash equal to $0.68 per unvested stock unit held payable when such unit vests. If all outstanding stock units vest, the aggregate amount to be paid in respect of the units will be approximately $635.
Spanish Tax Audits-Spanish Supreme Court Appeal and Mutual Agreement Procedure
As previously reported, during the third quarter of 2021, both the Company and the Spanish Taxing Authority (STA) appealed the Spanish National Court’s decision regarding the STA’s audits of Iniciativas Culturales de España, S.L. (ICE), our former Spanish holding company, for the fiscal years 2006-2007 and 2008-2010.
In July 2022, the Spanish Supreme Court decided not to admit the Company’s appeal. However, the Spanish Supreme Court has decided to admit the STA’s appeal, which the Company believes will provide resolution of the same issues raised in the Company’s appeal.
In addition, in October 2022, the review pursuant to the Mutual Agreement Procedure between the STA and Dutch tax authorities related to the STA’s audits of the Company for fiscal years 2011 through 2013 was completed, and it was determined that the Company does not have the option to seek treaty relief against double taxation for those fiscal years.
The Company does not expect that these matters will have a material effect on its consolidated financial statements.
26

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q (this Form 10-Q) contains “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates” or similar expressions that concern our strategy, plans or intentions. All statements we make relating to estimated and projected earnings, costs, expenditures, cash flows, growth rates and financial results, and all statements we make relating to (i) our current growth strategy and other future plans, strategies or transactions that may be identified, explored or implemented and any litigation or dispute resulting from any completed transaction, (ii) any anticipated share repurchases or cash distributions, and (iii) the potential impact of the COVID-19 pandemic on our business or the global economy as a whole are forward‑looking statements. In addition, we, through our senior management, from time to time make forward‑looking public statements concerning our expected future operations and performance and other developments. All of these forward‑looking statements are subject to risks and uncertainties that may change at any time, including with respect to our current growth strategy and the impact of any completed divestiture or separation transaction on our remaining businesses. Accordingly, our actual results may differ materially from those we expected. We derive most of our forward‑looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, including, without limitation, in conjunction with the forward-looking statements and risk factor included in this Form 10-Q, are disclosed in “Item 1—Business,” and “Item 1A—Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the 2021 Form 10-K). Some of the factors that we believe could affect our results include:
•the risks associated with operating our portfolio of degree-granting higher education institutions in Mexico and Peru, including complex business, foreign currency, political, legal, regulatory, tax and economic risks;
•our ability to maintain and, subsequently, increase tuition rates and student enrollments in our institutions;
•the risks and uncertainties related to the long-term effect to the Company of the COVID-19 pandemic and any resurgence, including, but not limited to, its effect on student enrollment, tuition pricing, and collections in future periods;
•our ability to effectively manage the growth of our business and increase our operating leverage;
•the effect of existing international and U.S. laws and regulations governing our business or changes to those laws and regulations or in their application to our business;
•changes in the political, economic and business climate in the markets in which we operate;
•risks of downturns in general economic conditions and in the educational services and education technology industries that could, among other things, impair our goodwill and intangible assets;
•possible increased competition from other educational service providers;
•market acceptance of new service offerings by us or our competitors and our ability to predict and respond to changes in the markets for our educational services;
•the effect on our business and results of operations from fluctuations in the value of foreign currencies;
•our ability to attract and retain key personnel;
•the fluctuations in revenues due to seasonality;
•our ability to maintain proper and effective internal controls necessary to produce accurate financial statements on a timely basis;
•our focus on a specific public benefit purpose and producing a positive effect for society may negatively influence our financial performance; and
•the future trading prices of our common stock and the impact of any securities analysts’ reports on these prices.
We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Form 10-Q may not in fact occur. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
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Introduction
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (the MD&A) is provided to assist readers of the financial statements in understanding the results of operations, financial condition and cash flows of Laureate Education, Inc. This MD&A should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Form 10-Q. The consolidated financial statements included elsewhere in this Form 10-Q are presented in U.S. dollars (USD) rounded to the nearest thousand, with the amounts in MD&A rounded to the nearest tenth of a million. Therefore, discrepancies in the tables between totals and the sums of the amounts listed may occur due to such rounding. Our MD&A is presented in the following sections:
•Overview;
•Results of Operations;
•Liquidity and Capital Resources;
•Critical Accounting Policies and Estimates; and
•Recently Adopted Accounting Standards.
Overview
Our Business
We operate a portfolio of degree-granting higher education institutions in Mexico and Peru. Collectively, we have approximately 430,900 students enrolled at five institutions in these two countries. We believe that the higher education markets in Mexico and Peru present an attractive long-term opportunity, primarily because of the large and growing imbalance between the supply and demand for affordable, quality higher education in those markets. We believe that the combination of the projected growth in the middle class, limited government resources dedicated to higher education, and a clear value proposition demonstrated by the higher earnings potential afforded by higher education, creates substantial opportunities for high-quality private institutions to meet this growing and unmet demand. By offering high-quality, outcome-focused education, we believe that we enable students to prosper and thrive in the dynamic and evolving knowledge economy. We have two reportable segments as described below. We group our institutions by geography in Mexico and Peru for reporting purposes.
COVID-19
In response to the COVID-19 pandemic, we transitioned the educational delivery method at all of our institutions to be online, leveraging our existing technologies and learning platforms to serve students outside of the traditional classroom setting. Face-to-face educational activities have now resumed across our campuses. We will continue to monitor the situation and adjust based on what is most appropriate for each market. See also “Item 1A—Risk Factors—An epidemic, pandemic or other public health emergency, such as the current global coronavirus (COVID-19) outbreak and the efficacy and distribution of COVID-19 vaccines in the locations in which we operate could have a material adverse effect on our business, financial condition, cash flows and results of operations” in our 2021 Form 10-K.
Discontinued Operations
As a result of the strategic review first announced in January 2020, during the third quarter of 2020, the Company completed a sale of its operations in Chile and signed agreements to sell its operations in Brazil, Australia and New Zealand, as well as Walden University in the United States. Additionally, prior to 2020, the Company had announced the divestiture of certain other subsidiaries in Europe, Asia and Central America, which has been completed. These announcements represented strategic shifts that had a major effect on the Company’s operations and financial results. Accordingly, all of the divestitures that were part of these strategic shifts were accounted for as Discontinued Operations for all periods presented in accordance with Accounting Standards Codification (ASC) 205-20, “Discontinued Operations” (ASC 205).
All planned divestitures have now been completed, and the Company has concluded its strategic review process. The Company’s continuing operations are Mexico and Peru. All other markets have been divested (the Discontinued Operations).
The Discontinued Operations are excluded from the segment information for all periods presented, as they do not meet the criteria for a reportable segment under ASC 280, “Segment Reporting.” Unless indicated otherwise, the information in the MD&A relates to continuing operations. See also Note 3, Discontinued Operations and Assets Held for Sale, in our consolidated financial statements included elsewhere in this Form 10-Q.
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Our Segments
Our segments generate revenues by providing an education that emphasizes profession-oriented fields of study with undergraduate and graduate degrees in a wide range of disciplines. Our educational offerings utilize hybrid (a combination of online and in-classroom) courses and programs to deliver their curriculum. The Mexico and Peru markets are characterized by what we believe is a significant imbalance between supply and demand. The demand for higher education is large and growing and is fueled by several demographic and economic factors, including a growing middle class, global growth in services and technology-related industries and recognition of the significant personal and economic benefits gained by graduates of higher education institutions. The target demographics are primarily 18- to 24-year-olds in the countries in which we compete. We compete with other private higher education institutions on the basis of price, educational quality, reputation and location. We believe that we compare favorably with competitors because of our focus on quality, professional-oriented curriculum and the competitive advantages provided by our network. There are a number of private and public institutions in Mexico and Peru, and it is difficult to predict how the markets will evolve and how many competitors there will be in the future. We expect competition to increase as the Mexican and Peruvian markets mature. Essentially all of our revenues were generated from private pay sources as there are no material government-sponsored loan programs in Mexico or Peru. Specifics related to both of our reportable segments are discussed below:
•Private education providers in Mexico constitute 35% of the total higher-education market. The private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities. Laureate owns two nationally licensed institutions and is present throughout the country with a footprint of over 35 campuses. Students in our Mexican institutions typically finance their own education.
•In Peru, private universities are increasingly providing the capacity to meet growing demand and constitute approximately 69% of the total higher-education market. Laureate owns three institutions in Peru.
Corporate is a non-operating business unit whose purpose is to support operations. Its departments are responsible for establishing operational policies and internal control standards, implementing strategic initiatives, and monitoring compliance with policies and controls throughout our operations. Our Corporate segment is an internal source of capital and provides financial, human resource, information technology, insurance, legal, and tax compliance services. The Corporate segment also contains the eliminations of inter-segment revenues and expenses.
The following information for our reportable segments is presented as of September 30, 2022:

| Institutions | Enrollment | 2022 YTD Revenues ($ in millions)(1) | % Contribution to 2022 YTD Revenues
Mexico | 2 | 228,000 |  | $ | 435.0 |  | 49 | %
Peru | 3 | 202,900 |  | 457.1 |  | 51 | %
Total (1) | 5 | 430,900 |  | $ | 895.9 |  | 100 | %

(1) Amounts related to Corporate totaled $3.8 million and are not separately presented.
Challenges
Our operations are outside of the United States and are subject to complex business, economic, legal, regulatory, political, tax and foreign currency risks, which may be difficult to adequately address. As a result, we face risks that are inherent in international operations, including: fluctuations in exchange rates, possible currency devaluations, inflation and hyper-inflation; price controls and foreign currency exchange restrictions; potential economic and political instability in the countries in which we operate; expropriation of assets by local governments; key political elections and changes in government policies; multiple and possibly overlapping and conflicting tax laws; and compliance with a wide variety of foreign laws. See “Item 1A—Risk Factors—Risks Relating to Our Business—We operate a portfolio of degree-granting higher education institutions in Mexico and Peru and are subject to complex business, economic, legal, political, tax and foreign currency risks, which risks may be difficult to adequately address,” in our 2021 Form 10-K. We plan to grow our operations organically by: 1) adding new programs and course offerings, including online and hybrid offerings; 2) expanding target student demographics; and 3) increasing capacity at existing and new campus locations. Our success in growing our business will depend on the ability to anticipate and effectively manage these and other risks related to operating in various countries.
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Regulatory Environment and Other Matters
Our business is subject to varying laws and regulations based on the requirements of local jurisdictions. These laws and regulations are subject to updates and changes. We cannot predict the form of the rules that ultimately may be adopted in the future or what effects they might have on our business, financial condition, results of operations and cash flows. We will continue to develop and implement necessary changes that enable us to comply with such laws and regulations. See also “Item 1A—Risk Factors—Risks Relating to Our Business—Our institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition and results of operations,” and “Item 1—Business—Industry Regulation” in our 2021 Form 10-K for a detailed discussion of our different regulatory environments.
Key Business Metric
Enrollment
Enrollment is our lead revenue indicator and represents our most important non-financial metric. We define “enrollment” as the number of students registered in a course on the last day of the enrollment reporting period. New enrollments provide an indication of future revenue trends. Total enrollment is a function of continuing student enrollments, new student enrollments and enrollments from acquisitions, offset by graduations, attrition and enrollment decreases due to dispositions. Attrition is defined as a student leaving the institution before completion of the program. To minimize attrition, we have implemented programs that involve assisting students in remedial education, mentoring, counseling and student financing.
Each of our institutions has an enrollment cycle that varies by geographic region and academic program. Each institution has a “Primary Intake” period during each academic year in which the majority of the enrollment occurs. Most institutions also have one or more smaller “Secondary Intake” periods. Our Peruvian institutions have their Primary Intake during the first calendar quarter and a Secondary Intake during the third calendar quarter. Institutions in our Mexico segment have their Primary Intake during the third calendar quarter and a Secondary Intake during the first calendar quarter. Our institutions in Peru are generally out of session in January, February and July, while institutions in Mexico are generally out of session in May through July. Revenues are recognized when classes are in session.
Principal Components of Income Statement
Revenues
The majority of our revenue is derived from tuition and educational services. The amount of tuition generated in a given period depends on the price per credit hour and the total credit hours or price per program taken by the enrolled student population. The price per credit hour varies by program, by market and by degree level. Additionally, varying levels of discounts and scholarships are offered depending on market-specific dynamics and individual achievements of our students. Revenues are recognized net of scholarships and other discounts, refunds and waivers. In addition to tuition revenues, we generate other revenues from student fees and other education-related activities. These other revenues are less material to our overall financial results and have a tendency to trend with tuition revenues. The main drivers of changes in revenues between periods are student enrollment and price. We continually monitor market conditions and carefully adjust our tuition rates to meet local demand levels. We proactively seek the best price and content combinations to remain competitive in all the markets in which we operate.
Direct Costs
Our direct costs include labor and operating costs associated with the delivery of services to our students, including the cost of wages, payroll taxes and benefits, depreciation and amortization, rent, utilities, bad debt expenses, and marketing and promotional costs to grow future enrollments. In general, a significant portion of our direct costs tend to be variable in nature and trend with enrollment, and management continues to monitor and improve the efficiency of instructional delivery.
General and Administrative Expenses
Our general and administrative expenses primarily consist of costs associated with corporate departments, including executive management, finance, legal, business development and other departments that do not provide direct operational services.
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Factors Affecting Comparability
Foreign Exchange
While the USD is our reporting currency, our institutions are located in Mexico and Peru and operate in other functional currencies, namely the Mexican peso and Peruvian nuevo sol. We monitor the impact of foreign currency movements and the correlation between the local currency and the USD. Our revenues and expenses are generally denominated in local currency. The principal foreign exchange exposure is the risk related to the translation of revenues and expenses incurred in each country from the local currency into USD. See “Item 1A—Risk Factors—Risks Relating to Our Business—Our reported revenues and earnings may be negatively affected by the strengthening of the U.S. dollar and currency exchange rates” in our 2021 Form 10-K. In order to provide a framework for assessing how our business performed excluding the effects of foreign currency fluctuations, we present organic constant currency in our segment results, which is calculated using the change from prior-year average foreign exchange rates to current-year average foreign exchange rates, as applied to local-currency operating results for the current year, and then excludes the impact of other items, as described in the segments results.
Seasonality
Our institutions have a summer break during which classes are generally not in session and minimal revenues are recognized. In addition to the timing of summer breaks, holidays such as Easter also have an impact on our academic calendar. Operating expenses, however, do not fully correlate to the enrollment and revenue cycles, as the institutions continue to incur expenses during summer breaks. Given the geographic diversity of our institutions and differences in timing of summer breaks, our second and fourth quarters are stronger revenue quarters as the majority of our institutions are in session for most of these respective quarters. Our first and third fiscal quarters are weaker revenue quarters because our institutions have summer breaks for some portion of one of these two quarters. However, our primary enrollment intakes occur during the first and third quarters. Due to this seasonality, revenues and profits in any one quarter are not necessarily indicative of results in subsequent quarters and may not be correlated to new enrollment in any one quarter. Additionally, seasonality may be affected due to other events that could change the academic calendar at our institutions. See “Item 1A—Risk Factors—Risks Relating to Our Business—We experience seasonal fluctuations in our results of operations” in our 2021 Form 10-K.
Income Tax Expense
Our consolidated income tax provision is derived based on the combined impact of federal, state and foreign income taxes. Also, discrete items can arise in the course of our operations that can further impact the Company’s effective tax rate for the period. Our tax rate fluctuates from period to period due to changes in the mix of earnings between our tax-paying entities and our loss-making entities for which it is not 'more likely than not' that a tax benefit will be realized on the loss. See “Item 1A—Risk Factors—Risks Relating to Our Business—We may have exposure to greater-than-anticipated tax liabilities” in our 2021 Form 10-K.
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Results from the Discontinued Operations
The results of operations of our Discontinued Operations for the three and nine months ended September 30, 2022 and 2021 were as follows:

| For the three months ended |  | For the nine months ended
| September 30, |  | September 30,
(in millions) | 2022 |  | 2021 |  | 2022 |  | 2021
Revenues | $ | — |  |  | $ | 70.8 |  |  | $ | — |  |  | $ | 542.7 |
Share-based compensation expense | — |  |  | (0.4) |  |  | — |  |  | (1.2) |
Other direct costs | — |  |  | (58.1) |  |  | — |  |  | (430.8) |
Loss on impairment of assets | — |  |  | — |  |  | — |  |  | (1.3) |
Other non-operating expense | — |  |  | (4.9) |  |  | — |  |  | (20.5) |
(Loss) gain on sale of discontinued operations before taxes, net | (0.8) |  |  | 612.0 |  |  | 4.1 |  |  | 625.3 |
Pretax (loss) income of discontinued operations | (0.8) |  |  | 619.4 |  |  | 4.1 |  |  | 714.2 |
Income tax expense | — |  |  | (248.8) |  |  | — |  |  | (257.4) |
(Loss) income from discontinued operations, net of tax | $ | (0.8) |  |  | $ | 370.5 |  |  | $ | 4.1 |  |  | $ | 456.8 |

We completed all of our planned divestitures in 2021. Our remaining operations are included in continuing operations.
Nine Months Ended September 30, 2022
During the second quarter of 2022, we completed the transfer of the remaining assets and liabilities that were classified as held for sale as of December 31, 2021, which related to the divestiture of our operations in Chile. This resulted in a gain of approximately $4.3 million.
Nine Months Ended September 30, 2021
On March 8, 2021, we sold our operations in Honduras, which resulted in an after-tax loss of $1.7 million, including a working capital adjustment during the second quarter of 2021.
On January 25, 2018, we completed the sale of LEI Lie Ying Limited in China. At the closing of the sale, a portion of the total transaction value was paid into an escrow account, to be distributed to the Company pursuant to the terms and conditions of the escrow agreement. During the first quarter of 2021, the Company adjusted the final receivable balance from the escrow account of 168.3 million Hong Kong Dollars (approximately $21.7 million at the date of receipt in April 2021), which resulted in a pre-tax gain of approximately $13.6 million.
During the first quarter of 2021, we recorded a loss of approximately $32.4 million in order to adjust the carrying value of our Brazil disposal group to its estimated fair value less costs to sell as of March 31, 2021. This loss is included in (Loss) gain on sale of discontinued operations before taxes, net.
On May 28, 2021, we completed the sale of our operations in Brazil, which resulted in pre-tax gain of $26.1 million, including a working capital adjustment during the third quarter of 2021.
On August 12, 2021, we completed the sale of Walden University, which resulted in a pre-tax gain of $615.2 million, as well as estimated tax expense of approximately $278.0 million.
Results of Operations
The following discussion of the results of our operations is organized as follows:
•Summary Comparison of Consolidated Results;
•Non-GAAP Financial Measure; and
•Segment Results.
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Summary Comparison of Consolidated Results
Discussion of Significant Items Affecting the Consolidated Results for the Nine Months Ended September 30, 2021
In March 2021, the Company decided that, during 2021, it would wind down certain support functions related to the Laureate network and would no longer invest in and support the Laureate tradename beyond 2021. As a result, the Company tested the asset for impairment and estimated the fair value of the tradename asset using the relief-from-royalty method, based on the projected revenues for each business over the estimated remaining useful life of the asset. As a result of the impairment test, the Company concluded that the estimated fair value of the Laureate tradename was less than its carrying value by approximately $51.4 million and recorded an impairment charge for that amount.
During the second quarter of 2021, the Company fully repaid the remaining balance outstanding under its Senior Notes due 2025 using a portion of the proceeds received from the sales of its operations in Australia and New Zealand and Brazil. In connection with the debt repayment, the Company recorded a loss on debt extinguishment of $77.9 million, related to the redemption premium paid and the write off of the unamortized deferred financing costs associated with the repaid debt balances. This loss is included in other non-operating expense in the year-to-date table below.
In November 2020, in connection with the signing of the sale agreement for our Brazil operations, the Company entered into six BRL-to-USD swap agreements to mitigate the risk of foreign currency exposure on the expected proceeds from the sale. The sale of our Brazil operations closed on May 28, 2021. On June 2, 2021, the Company settled the swap agreements, which resulted in a realized loss on derivatives of $24.5 million. This loss is included in other non-operating expense in the year-to-date table below.
Comparison of Consolidated Results for the Three Months Ended September 30, 2022 and 2021

|  |  |  |  | % Change
|  |  |  |  | Better/(Worse)
(in millions) | 2022 |  | 2021 |  | 2022 vs. 2021
Revenues | $ | 301.0 |  |  | $ | 267.7 |  |  | 12 | %
Direct costs | 229.4 |  |  | 182.0 |  |  | (26) | %
General and administrative expenses | 15.3 |  |  | 47.3 |  |  | 68 | %
Loss on impairment of assets | — |  |  | 3.3 |  |  | 100 | %
Operating income | 56.3 |  |  | 35.1 |  |  | 60 | %
Interest expense, net of interest income | (1.7) |  |  | (2.4) |  |  | 29 | %
Other non-operating income | 16.5 |  |  | 5.2 |  |  | nm
Income from continuing operations before income taxes | 71.1 |  |  | 37.7 |  |  | 89 | %
Income tax expense | (39.3) |  |  | (48.1) |  |  | 18 | %
Income (loss) from continuing operations | 31.9 |  |  | (10.4) |  |  | nm
(Loss) income from discontinued operations, net of tax | (0.8) |  |  | 370.5 |  |  | (100) | %
Net income | 31.0 |  |  | 360.1 |  |  | (91) | %
Net loss attributable to noncontrolling interests | 0.1 |  |  | 0.3 |  |  | 67 | %
Net income attributable to Laureate Education, Inc. | $ | 31.1 |  |  | $ | 360.4 |  |  | (91) | %

nm - percentage changes not meaningful
Comparison of Consolidated Results for the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021
Revenues increased by $33.3 million to $301.0 million for the three months ended September 30, 2022 (the 2022 fiscal quarter) from $267.7 million for the three months ended September 30, 2021 (the 2021 fiscal quarter). This increase in revenues was largely attributable to higher average total organic enrollment at our institutions during the 2022 fiscal quarter, increasing revenues by $24.1 million compared to the 2021 fiscal quarter. The effect of changes in tuition rates and enrollments in programs at varying price points (product mix), pricing and timing increased revenues by $6.7 million compared to the 2021 fiscal quarter. Additionally, the effect of a net change in foreign currency exchange rates increased revenues by $5.1 million compared to the 2021 fiscal quarter. These increases in revenues were partially offset by other Corporate and Eliminations changes, which accounted for a decrease in revenues of $2.6 million.
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Direct costs and general and administrative expenses combined increased by $15.4 million to $244.7 million for the 2022 fiscal quarter from $229.3 million for the 2021 fiscal quarter. The increase in direct costs was primarily driven by the effect of operational changes, which increased costs by $46.4 million, primarily due to the result of higher enrollment at our institutions, as well as return-to-campus expenses. The effect of a net change in foreign currency exchange rates increased costs by $2.3 million compared to the 2021 fiscal quarter. In addition, changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in indemnification assets, increased direct costs by $0.3 million compared to the 2021 fiscal quarter. These increases in direct costs were partially offset by: (1) a decrease of $9.4 million in expenses related to the Excellence-in-Process (EiP) program in the 2022 fiscal quarter as compared to the 2021 fiscal quarter, following the completion of the EiP program in the fourth quarter of 2021; (2) lower depreciation and amortization expense of $11.5 million, which was mostly attributable to the finite-lived tradename being fully amortized during 2021; and (3) a decrease of $12.7 million in Corporate and Eliminations expenses, driven by cost-reduction efforts.
Operating income increased by $21.2 million to $56.3 million for the 2022 fiscal quarter from $35.1 million for the 2021 fiscal quarter. The increase in operating income was driven by cost-reduction efforts at Corporate, partially offset by lower operating income at both our Peru and Mexico segments, as compared to the 2021 fiscal quarter.
Interest expense, net of interest income decreased by $0.7 million to $1.7 million for the 2022 fiscal quarter from $2.4 million for the 2021 fiscal quarter.
Other non-operating income increased by $11.3 million to $16.5 million for the 2022 fiscal quarter from $5.2 million for the 2021 fiscal quarter. This increase was attributable to: (1) a higher gain on foreign currency exchange of $9.0 million during the 2022 fiscal quarter; (2) other non-operating income of $1.4 million during the 2022 fiscal quarter; and (3) the year-over-year effect of a loss on disposal of subsidiaries of $0.9 million during the 2021 fiscal quarter.
Income tax expense decreased by $8.8 million to $39.3 million for the 2022 fiscal quarter from $48.1 million for the 2021 fiscal quarter. This decrease was primarily attributable to discrete return-to-provision adjustments recorded in 2021 for the final regulations addressing the high-tax exemption for global intangible low-tax income, partially offset by the tax effect of the increase in pretax income between the two fiscal quarters.
(Loss) income from discontinued operations, net of tax changed by $371.3 million to loss of $(0.8) million for the 2022 fiscal quarter from income of $370.5 million for the 2021 fiscal quarter. This change was primarily attributable to the gain on sale of Walden University during the 2021 fiscal quarter. See Overview for further detail on results of the Discontinued Operations.
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Comparison of Consolidated Results for the Nine Months Ended September 30, 2022 and 2021

|  |  |  |  | % Change
|  |  |  |  | Better/(Worse)
(in millions) | 2022 |  | 2021 |  | 2022 vs. 2021
Revenues | $ | 895.9 |  |  | $ | 790.0 |  |  | 13 | %
Direct costs | 655.1 |  |  | 577.1 |  |  | (14) | %
General and administrative expenses | 48.8 |  |  | 139.3 |  |  | 65 | %
Loss on impairment of assets | 0.1 |  |  | 67.2 |  |  | 100 | %
Operating income | 192.0 |  |  | 6.4 |  |  | nm
Interest expense, net of interest income | (6.0) |  |  | (38.3) |  |  | 84 | %
Other non-operating expense | (1.0) |  |  | (84.7) |  |  | 99 | %
Income (loss) from continuing operations before income taxes and equity in net income of affiliates | 185.0 |  |  | (116.6) |  |  | nm
Income tax expense | (159.2) |  |  | (174.2) |  |  | 9 | %
Equity in net income of affiliates, net of tax | 0.1 |  |  | — |  |  | nm
Income (loss) from continuing operations | 25.9 |  |  | (290.8) |  |  | 109 | %
Income from discontinued operations, net of tax | 4.1 |  |  | 456.8 |  |  | (99) | %
Net income | 29.9 |  |  | 166.0 |  |  | (82) | %
Net loss attributable to noncontrolling interests | 0.4 |  |  | 0.5 |  |  | 20 | %
Net income attributable to Laureate Education, Inc. | $ | 30.3 |  |  | $ | 166.5 |  |  | (82) | %

nm - percentage changes not meaningful
For further details on certain discrete items discussed below, see “Discussion of Significant Items Affecting the Consolidated Results.”
Comparison of Consolidated Results for the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021
Revenues increased by $105.9 million to $895.9 million for the nine months ended September 30, 2022 (the 2022 fiscal period) from $790.0 million for the nine months ended September 30, 2021 (the 2021 fiscal period). Average total organic enrollment was higher at our institutions, increasing revenues by $86.7 million compared to the 2021 fiscal period. The effect of product mix, pricing and timing increased revenues by $16.5 million for the 2022 fiscal period. In addition, the effect of a net change in foreign currency exchange rates increased revenues by $5.7 million compared to the 2021 fiscal period. These increases in revenues were partially offset by other Corporate and Eliminations changes, which accounted for a decrease in revenues of $3.0 million.
Direct costs and general and administrative expenses combined decreased by $12.5 million to $703.9 million for the 2022 fiscal period from $716.4 million for the 2021 fiscal period. This decrease in direct costs and administrative expenses was primarily related to: (1) lower EiP implementation expense of $36.2 million in the 2022 fiscal period following the completion of our EiP program in 2021; (2) lower depreciation and amortization expense of $31.8 million, mainly driven by the full amortization of the finite-lived tradename in 2021; (3) Other Corporate and Eliminations expenses, which accounted for a decrease in costs of $30.7 million in the 2022 fiscal period, related to cost-reduction efforts; (4) a period-over-period decrease in direct costs of $13.0 million from changes in acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in indemnification assets; and (5) the effect of a net change in foreign currency exchange rates, which decreased costs by $0.2 million. These decreases in direct costs were partially offset by the effect of operational changes, which increased direct costs by $99.4 million, mostly attributable to the effect of higher enrollments at our institutions, as well as return-to-campus expenses.
Operating income increased by $185.6 million to $192.0 million for the 2022 fiscal period from $6.4 million for the 2021 fiscal period. This increase was primarily a result of the impairment loss related to the Laureate tradename impairment that was recognized during the 2021 fiscal period, combined with higher operating income at our Mexico and Peru segments during the 2022 fiscal period. In addition, cost-reduction efforts resulted in lower operating costs at Corporate compared to the 2021 fiscal period.
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Interest expense, net of interest income decreased by $32.3 million to $6.0 million for the 2022 fiscal period from $38.3 million for the 2021 fiscal period. The decrease in interest expense was primarily attributable to lower average debt balances mainly driven by the full repayment of the Senior Notes due 2025 in the 2021 fiscal period.
Other non-operating expense decreased by $83.7 million to $1.0 million for the 2022 fiscal period from $84.7 million for the 2021 fiscal period. This decrease was attributable to: (1) the year-over-year effect of a loss on debt extinguishment of $77.9 million during the 2021 fiscal period in connection with the repayment of the Senior Notes due 2025; (2) a loss on derivative instruments of $24.5 million during the 2021 fiscal period, driven by settlement of foreign currency swap agreements in connection with the sale of our Brazilian operations; (3) a gain on disposal of subsidiaries during the 2022 fiscal period, compared to a loss during the 2021 fiscal period, for a change of $2.4 million; and (4) the period-over-period effect of other non-operating income of $0.5 million during the 2022 fiscal period. These decreases in other non-operating expense were partially offset by a loss on foreign currency exchange in the 2022 fiscal period, compared to a gain in the 2021 fiscal period, for a change of $21.6 million.
Income tax expense decreased by $15.0 million to $159.2 million for the 2022 fiscal period from $174.2 million for the 2021 fiscal period. This decrease was primarily attributable to discrete return-to-provision adjustments recorded in 2021 for the final regulations addressing the high-tax exemption for global intangible low-tax income and a net reduction in discrete expense attributable to changes in judgment for uncertain tax positions, partially offset by the tax effect of the increase in pretax income between the two periods.
Income from discontinued operations, net of tax decreased by $452.7 million to $4.1 million for the 2022 fiscal period from $456.8 million for the 2021 fiscal period. This decrease was primarily attributable to the gain on sale of Walden University during the 2021 fiscal quarter. See Overview for further detail on results of the Discontinued Operations.
Non-GAAP Financial Measure
We define Adjusted EBITDA as income (loss) from continuing operations, before equity in net (income) loss of affiliates, net of tax, income tax expense (benefit), (gain) loss on disposal of subsidiaries, net,foreign currency exchange (gain) loss, net, other (income) expense, net, loss (gain) on derivatives, loss on debt extinguishment, interest expense and interest income, plus depreciation and amortization, share-based compensation expense, loss on impairment of assets and expenses related to our Excellence-in-Process (EiP) initiative. Adjusted EBITDA is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures.
Adjusted EBITDA is a key measure used by our management and Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Additionally, Adjusted EBITDA is a key financial measure used by the compensation committee of our Board of Directors and our Chief Executive Officer in connection with the payment of incentive compensation to our executive officers and other members of our management team. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.
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The following table presents Adjusted EBITDA and reconciles income (loss) from continuing operations to Adjusted EBITDA for the three months ended September 30, 2022 and 2021:

|  |  |  |  | % Change
|  |  |  |  | Better/(Worse)
(in millions) | 2022 |  | 2021 |  | 2022 vs. 2021
Income (loss) from continuing operations | $ | 31.9 |  |  | $ | (10.4) |  |  | nm
Plus: |  |  |  |  |
Income tax expense | 39.3 |  |  | 48.1 |  |  | 18 | %
Income from continuing operations before income taxes | 71.1 |  |  | 37.7 |  |  | 89 | %
Plus: |  |  |  |  |
Loss on disposal of subsidiaries, net | — |  |  | 0.9 |  |  | 100 | %
Foreign currency exchange gain, net | (15.1) |  |  | (6.1) |  |  | 148 | %
Other income, net | (1.4) |  |  | — |  |  | nm
Interest expense | 3.7 |  |  | 3.7 |  |  | — | %
Interest income | (2.0) |  |  | (1.3) |  |  | 54 | %
Operating income | 56.3 |  |  | 35.1 |  |  | 60 | %
Plus: |  |  |  |  |
Depreciation and amortization | 14.5 |  |  | 25.9 |  |  | 44 | %
EBITDA | 70.8 |  |  | 61.0 |  |  | 16 | %
Plus: |  |  |  |  |
Share-based compensation expense (a) | 1.8 |  |  | 2.0 |  |  | 10 | %
Loss on impairment of assets (b) | — |  |  | 3.3 |  |  | 100 | %
EiP implementation expenses (c) | 0.2 |  |  | 9.6 |  |  | 98 | %
Adjusted EBITDA | $ | 72.8 |  |  | $ | 75.9 |  |  | (4) | %

nm - percentage changes not meaningful
(a) Represents non-cash, share-based compensation expense pursuant to the provisions of ASC 718, “Stock Compensation.”
(b) Represents non-cash charges related to impairments of long-lived assets.
(c) EiP implementation expenses are related to our enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources. It included the establishment of regional shared services organizations (SSOs), as well as improvements to the Company's system of internal controls over financial reporting. The EiP initiative also included other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure, an enterprise-wide program aimed at revenue growth, and certain non-recurring costs incurred in connection with the dispositions. The EiP initiative was completed as of December 31, 2021, except for certain EiP expenses related to the run out of programs that began in prior periods.
Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Three Months Ended September 30, 2022 and 2021
Depreciation and amortization decreased by $11.4 million to $14.5 million for the 2022 fiscal quarter from $25.9 million for the 2021 fiscal quarter. This decrease was primarily attributable to the finite-lived Laureate’s tradename, which was fully amortized in 2021. When combined with other items, this change decreased depreciation and amortization by $11.5 million. The effects of foreign currency exchange increased depreciation and amortization expense by $0.1 million for the 2022 fiscal quarter.
Share-based compensation expense decreased by $0.2 million to $1.8 million for the 2022 fiscal quarter from $2.0 million for the 2021 fiscal quarter.
EiP implementation expenses decreased by $9.4 million to $0.2 million for the 2022 fiscal quarter from $9.6 million for the 2021 fiscal quarter. This decrease resulted from the completion of our EiP program in 2021, with exception of certain EiP expenses related to the run out of programs that began in prior periods.
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The following table presents Adjusted EBITDA and reconciles income (loss) from continuing operations to Adjusted EBITDA for the nine months ended September 30, 2022 and 2021:

|  |  |  |  | % Change
|  |  |  |  | Better/(Worse)
(in millions) | 2022 |  | 2021 |  | 2022 vs. 2021
Income (loss) from continuing operations | $ | 25.9 |  |  | $ | (290.8) |  |  | 109 | %
Plus: |  |  |  |  |
Equity in net income of affiliates, net of tax | (0.1) |  |  | — |  |  | nm
Income tax expense | 159.2 |  |  | 174.2 |  |  | 9 | %
Income (loss) from continuing operations before income taxes and equity in net income of affiliates | 185.0 |  |  | (116.6) |  |  | nm
Plus: |  |  |  |  |
(Gain) loss on disposal of subsidiaries, net | (1.5) |  |  | 0.9 |  |  | nm
Foreign currency exchange loss (gain), net | 2.9 |  |  | (18.7) |  |  | (116) | %
Other (income) expense, net | (0.4) |  |  | 0.1 |  |  | nm
Loss on derivatives | — |  |  | 24.5 |  |  | 100 | %
Loss on debt extinguishment | — |  |  | 77.9 |  |  | 100 | %
Interest expense | 11.6 |  |  | 40.8 |  |  | 72 | %
Interest income | (5.6) |  |  | (2.5) |  |  | 124 | %
Operating income | 192.0 |  |  | 6.4 |  |  | nm
Plus: |  |  |  |  |
Depreciation and amortization | 43.6 |  |  | 75.6 |  |  | 42 | %
EBITDA | 235.6 |  |  | 82.0 |  |  | 187 | %
Plus: |  |  |  |  |
Share-based compensation expense (a) | 7.0 |  |  | 6.0 |  |  | (17) | %
Loss on impairment of assets (b) | 0.1 |  |  | 67.2 |  |  | 100 | %
EiP implementation expenses (c) | 1.3 |  |  | 37.5 |  |  | 97 | %
Adjusted EBITDA | $ | 244.1 |  |  | $ | 192.7 |  |  | 27 | %

nm - percentage changes not meaningful
(a) Represents non-cash, share-based compensation expense pursuant to the provisions of ASC 718, “Stock Compensation.”
(b) Represents non-cash charges related to impairments of long-lived assets. For further details, see “Discussion of Significant Items Affecting the Consolidated Results for the Nine Months Ended September 30, 2021.”
(c) EiP implementation expenses are related to our enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources. It included the establishment of regional shared services organizations (SSOs), as well as improvements to the Company's system of internal controls over financial reporting. The EiP initiative also included other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure, an enterprise-wide program aimed at revenue growth, and certain non-recurring costs incurred in connection with the dispositions. The EiP initiative was completed as of December 31, 2021, except for certain EiP expenses related to the run out of programs that began in prior periods.
Comparison of Depreciation and Amortization, Share-based Compensation and EiP Implementation Expenses for the Nine Months Ended September 30, 2022 and 2021
Depreciation and amortization decreased by $32.0 million to $43.6 million for the 2022 fiscal period from $75.6 million for the 2021 fiscal period. This decrease was primarily attributable to the finite-lived Laureate tradename, which was fully amortized in 2021. When combined with other items, this change decreased depreciation and amortization by $31.8 million. The effect of foreign currency exchange further decreased depreciation and amortization expense by $0.2 million for the 2022 fiscal period.
38

Share-based compensation expense increased by $1.0 million to $7.0 million for the 2022 fiscal period from $6.0 million for the 2021 fiscal period. The increase was primarily related to the accelerated vesting of unvested equity awards for employees terminated in connection with the now-completed strategic review process.
EiP implementation expenses decreased by $36.2 million to $1.3 million for the 2022 fiscal period from $37.5 million for the 2021 fiscal period. The decrease resulted from the completion of our EiP program in 2021, with the exception of certain EiP expenses related to the run out of programs that began in prior periods.
Segment Results
We have two reportable segments: Mexico and Peru, as discussed in Overview. For purposes of the following comparison of results discussion, “segment direct costs” represent direct costs incurred by the segment as they are included in Adjusted EBITDA, such that depreciation and amortization expense, loss on impairment of assets, share-based compensation expense and our EiP implementation expenses have been excluded. Organic enrollment is based on average total enrollment for the period. For a further description of our segments, see Overview.
The following table, derived from our consolidated financial statements included elsewhere in this Form 10-Q, presents selected financial information of our segments:

(in millions) |  |  |  |  | % Change
|  |  |  |  | Better/(Worse)
For the three months ended September 30, | 2022 |  | 2021 |  | 2022 vs. 2021
Revenues: |  |  |  |  |
Mexico | $ | 147.8 |  |  | $ | 131.3 |  |  | 13 | %
Peru | 152.5 |  |  | 133.1 |  |  | 15 | %
Corporate | 0.7 |  |  | 3.3 |  |  | (79) | %
Consolidated Total Revenues | $ | 301.0 |  |  | $ | 267.7 |  |  | 12 | %
Adjusted EBITDA: |  |  |  |  |
Mexico | $ | 23.4 |  |  | $ | 27.0 |  |  | (13) | %
Peru | 61.2 |  |  | 70.8 |  |  | (14) | %
Corporate | (11.9) |  |  | (22.0) |  |  | 46 | %
Consolidated Total Adjusted EBITDA | $ | 72.8 |  |  | $ | 75.9 |  |  | (4) | %

(in millions) |  |  |  |  | % Change
|  |  |  |  | Better/(Worse)
For the nine months ended September 30, | 2022 |  | 2021 |  | 2022 vs. 2021
Revenues: |  |  |  |  |
Mexico | $ | 435.0 |  |  | $ | 390.9 |  |  | 11 | %
Peru | 457.1 |  |  | 392.3 |  |  | 17 | %
Corporate | 3.8 |  |  | 6.8 |  |  | (44) | %
Consolidated Total Revenues | $ | 895.9 |  |  | $ | 790.0 |  |  | 13 | %
Adjusted EBITDA: |  |  |  |  |
Mexico | $ | 79.8 |  |  | $ | 61.5 |  |  | 30 | %
Peru | 201.4 |  |  | 196.0 |  |  | 3 | %
Corporate | (37.2) |  |  | (64.9) |  |  | 43 | %
Consolidated Total Adjusted EBITDA | $ | 244.1 |  |  | $ | 192.7 |  |  | 27 | %

39

Mexico
Financial Overview
Comparison of Mexico Results for the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021

(in millions) | Revenues |  | Direct Costs |  | Adjusted EBITDA
September 30, 2021 | $ | 131.3 |  |  | $ | 104.3 |  |  | $ | 27.0 |
Organic enrollment (1) | 11.4 |  |  |  |  |
Product mix, pricing and timing (1) | 6.7 |  |  |  |  |
Organic constant currency | 18.1 |  |  | 21.2 |  |  | (3.1) |
Foreign exchange | (1.6) |  |  | (1.4) |  |  | (0.2) |
Other (2) | — |  |  | 0.3 |  |  | (0.3) |
September 30, 2022 | $ | 147.8 |  |  | $ | 124.4 |  |  | $ | 23.4 |

(1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
(2) Other is composed of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets.
Revenues increased by $16.5 million, a 13% increase from the 2021 fiscal quarter.
•Organic enrollment increased during the fiscal quarter by 10%, increasing revenues by $11.4 million.
•Revenues from our Mexico segment represented 49% of our consolidated total revenues for the 2022 fiscal quarter, compared to 50% for the 2021 fiscal quarter.
Adjusted EBITDA decreased by $3.6 million, a 13% decrease from the 2021 fiscal quarter, partly attributable to return-to-campus expenses.
40

Comparison of Mexico Results for the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021

(in millions) | Revenues |  | Direct Costs |  | Adjusted EBITDA
September 30, 2021 | $ | 390.9 |  |  | $ | 329.4 |  |  | $ | 61.5 |
Organic enrollment (1) | 27.9 |  |  |  |  |
Product mix, pricing and timing (1) | 18.2 |  |  |  |  |
Organic constant currency | 46.1 |  |  | 41.2 |  |  | 4.9 |
Foreign exchange | (2.0) |  |  | (2.4) |  |  | 0.4 |
Other (2) | — |  |  | (13.0) |  |  | 13.0 |
September 30, 2022 | $ | 435.0 |  |  | $ | 355.2 |  |  | $ | 79.8 |

(1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
(2) Other is composed of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets.
Revenues increased by $44.1 million, an 11% increase from the 2021 fiscal period.
•Organic enrollment increased during the 2022 fiscal period by 8%, increasing revenues by $27.9 million.
•Revenues from our Mexico segment represented 49% of our consolidated total revenues for the 2022 fiscal period, compared to 50% for the 2021 fiscal period.
Adjusted EBITDA increased by $18.3 million, a 30% increase from the 2021 fiscal period, which included a period-over-period benefit from the $13.0 million charge recorded during the 2021 fiscal period related to acquisition-related contingencies.
Peru
Financial Overview
Comparison of Peru Results for the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021

(in millions) | Revenues |  | Direct Costs |  | Adjusted EBITDA
September 30, 2021 | $ | 133.1 |  |  | $ | 62.3 |  |  | $ | 70.8 |
Organic enrollment (1) | 12.7 |  |  |  |  |
Product mix, pricing and timing (1) | — |  |  |  |  |
Organic constant currency | 12.7 |  |  | 25.4 |  |  | (12.7) |
Foreign exchange | 6.7 |  |  | 3.6 |  |  | 3.1 |
September 30, 2022 | $ | 152.5 |  |  | $ | 91.3 |  |  | $ | 61.2 |

(1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
41

Revenues increased by $19.4 million, a 15% increase from the 2021 fiscal quarter.
•Organic enrollment increased during the 2022 fiscal quarter by 10%, increasing revenues by $12.7 million.
•Revenues from our Peru segment represented 51% of our consolidated total revenues for the 2022 fiscal quarter, compared to 50% for the 2021 fiscal quarter.
Adjusted EBITDA decreased by $9.6 million, a 14% decrease from the 2021 fiscal quarter, partly attributable to return-to-campus expenses.
Comparison of Peru Results for the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021

(in millions) | Revenues |  | Direct Costs |  | Adjusted EBITDA
September 30, 2021 | $ | 392.3 |  |  | $ | 196.3 |  |  | $ | 196.0 |
Organic enrollment (1) | 58.8 |  |  |  |  |
Product mix, pricing and timing (1) | (1.7) |  |  |  |  |
Organic constant currency | 57.1 |  |  | 57.0 |  |  | 0.1 |
Foreign exchange | 7.7 |  |  | 2.4 |  |  | 5.3 |
September 30, 2022 | $ | 457.1 |  |  | $ | 255.7 |  |  | $ | 201.4 |

(1) Organic enrollment and product mix, pricing and timing are not separable for the calculation of direct costs and therefore are combined and defined as Organic constant currency for the calculation of Adjusted EBITDA.
Revenues increased by $64.8 million, a 17% increase from the 2021 fiscal period.
•Organic enrollment increased during the 2022 fiscal period by 16%, increasing revenues by $58.8 million.
•Revenues from our Peru segment represented 51% of our consolidated total revenues for the 2022 fiscal period compared to 50% for the 2021 fiscal period.
Adjusted EBITDA increased by $5.4 million, a 3% increase from the 2021 fiscal period.
Corporate
Corporate revenues primarily include our transition services agreements related to divestitures, which are expected to end in 2022.
Comparison of Corporate Results for the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021

|  |  |  |  | % Change
|  |  |  |  | Better/(Worse)
(in millions) | 2022 |  | 2021 |  | 2022 vs. 2021
Revenues | $ | 0.7 |  |  | $ | 3.3 |  |  | (79) | %
Expenses | 12.6 |  |  | 25.3 |  |  | 50 | %
Adjusted EBITDA | $ | (11.9) |  |  | $ | (22.0) |  |  | 46 | %

Adjusted EBITDA increased by $10.1 million, a 46% increase from the 2021 fiscal quarter, mainly driven by a decrease in labor costs and other professional fees related to cost-reduction efforts.
42

Comparison of Corporate Results for the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021

|  |  |  |  | % Change
|  |  |  |  | Better/(Worse)
(in millions) | 2022 |  | 2021 |  | 2022 vs. 2021
Revenues | $ | 3.8 |  |  | $ | 6.8 |  |  | (44) | %
Expenses | 41.0 |  |  | 71.7 |  |  | 43 | %
Adjusted EBITDA | $ | (37.2) |  |  | $ | (64.9) |  |  | 43 | %

Adjusted EBITDA increased by $27.7 million, a 43% increase from the 2021 fiscal period, mainly driven by a decrease in labor costs and other professional fees related to cost-reduction efforts.
Liquidity and Capital Resources
Liquidity Sources
We anticipate that cash flow from operations and available cash will be sufficient to meet our current operating requirements and manage our liquidity needs for at least the next 12 months from the date of issuance of this report.
Our primary source of cash is revenue from tuition charged to students in connection with our various education program offerings. Essentially all of our revenues are generated from private pay sources as there are no material government-sponsored loan programs in Mexico or Peru. We anticipate generating sufficient cash flow from operations in the countries in which we operate to satisfy the working capital and financing needs of our organic growth plans for each country. If our educational institutions within one country were unable to maintain sufficient liquidity, we would consider using internal cash resources or reasonable short-term working capital facilities to accommodate any short- to medium-term shortfalls.
As of September 30, 2022, our secondary source of liquidity was cash and cash equivalents of $319.0 million. Our cash accounts are maintained with high-quality financial institutions.
The Company also maintains a revolving credit facility (the Senior Secured Credit Facility) with a syndicate of financial institutions as a source of liquidity. The Senior Secured Credit Facility provides for borrowings of $410.0 million and has a maturity date of October 7, 2024. From time to time, we draw down on the revolver and, in accordance with the terms of the credit agreement, any proceeds drawn on the revolving credit facility may be used for general corporate purposes.
If certain conditions are satisfied, the Third Amended and Restated Credit Agreement (the Third A&R Credit Agreement) also provides for an incremental revolving and term loan facilities, at the request of the Company, not to exceed (i) the greater of (a) $565.0 million and (b) 100% of the consolidated EBITDA of the Company, plus (ii) additional amounts so long as both immediately before and after giving effect to such incremental facilities the Company’s Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Third A&R Credit Agreement, on a pro forma basis, does not exceed 2.75x, plus, (iii) the aggregate amounts of any voluntary repayments of term loans, if any, and aggregate amount of voluntary repayments of revolving credit facilities that are accompanied by a corresponding termination or reduction of revolving credit commitments.
Completed Sale Transactions
At the closing of our sale of Walden University in 2021, a portion of the total transaction value was paid into an escrow account, to be released to the Company pursuant to the terms and conditions of the escrow agreement. On August 23, 2022, the Company received approximately $71.7 million of the escrow amount. As previously described, in connection with the adoption of a plan of a partial liquidation providing for the distribution of the net proceeds from the sale of Walden University, on October 12, 2022, the company paid a special cash distribution to shareholders of approximately $136.6 million, which consisted of the cash released from the escrow account plus remaining net proceeds that had yet to be distributed.
Liquidity Restrictions
Our liquidity is affected by restricted cash balances, which totaled $17.4 million and $20.8 million as of September 30, 2022 and December 31, 2021, respectively. A portion of the restricted cash was released in October 2022, as described in Note 9, Commitments and Contingencies, in our consolidated financial statements included elsewhere in this Form 10-Q.
43

Indefinite Reinvestment of Historical Foreign Earnings
We earn a significant portion of our income from subsidiaries located in countries outside the United States. As part of our business strategies, we have determined that the undistributed historical earnings of our foreign operations for which we have not already recorded taxes will be deemed indefinitely reinvested outside of the United States. As of September 30, 2022, $153.1 million of our total $319.0 million of cash and cash equivalents were held by foreign subsidiaries. As of December 31, 2021, $272.6 million of our total $324.8 million of cash and cash equivalents were held by foreign subsidiaries.
Liquidity Requirements
Our short-term liquidity requirements include: funding for debt service (including finance leases); operating lease obligations; payments of deferred compensation; working capital; operating expenses; capital expenditures; payment of a special dividend; and business development activities.
Long-term liquidity requirements include: payments on long-term debt (including finance leases); operating lease obligations; payments of deferred compensation; and payments of other third-party obligations.
Debt
As of September 30, 2022, our debt obligations included lines of credit and short-term borrowing arrangements of subsidiaries and notes payable, which totaled $83.1 million. In addition, our finance lease obligations and sale-leaseback financings were $44.1 million.
Senior Secured Credit Facility
As of both September 30, 2022 and December 31, 2021, there was no balance outstanding under our Senior Secured Credit Facility.
Covenants
Under the Third A&R Credit Agreement, we are subject to a Consolidated Senior Secured Debt to Consolidated EBITDA financial maintenance covenant that applies only to the revolving credit facility (a leverage ratio covenant), as defined in the Third A&R Credit Agreement, unless certain conditions are satisfied. As of September 30, 2022, those conditions were satisfied and, therefore, we were not subject to the leverage ratio. The maximum ratio, as defined, is 3.50x as of the last day of each quarter commencing with the quarter ending December 31, 2019 and thereafter. In addition, indebtedness at some of our locations contain financial maintenance covenants and we were in compliance with those covenants as September 30, 2022.
Leases
We conduct a significant portion of our operations from leased facilities, including many of our higher education facilities and other office locations. As discussed in Note 8, Leases, in our consolidated financial statements included elsewhere in this Form 10-Q, we have significant operating lease liabilities. As of September 30, 2022 and December 31, 2021, the present value of operating lease liabilities was $384.5 million and $415.3 million, respectively.
Capital Expenditures
Capital expenditures primarily consist of purchases of property and equipment. Our capital expenditure program is a component of our liquidity and capital management strategy. This program includes discretionary spending, which we can adjust in response to economic and other changes in our business environment, to grow our business through the following: (1) capacity expansion at institutions to support enrollment growth; (2) new programs and campuses for institutions in our existing markets; and (3) information technology to increase efficiency and controls. Our non-discretionary spending includes the maintenance of existing facilities. We typically fund our capital expenditures through cash flow from operations and external financing. In the event that we are unable to obtain the necessary funding for capital expenditures, our long-term growth strategy could be significantly affected. We believe that our internal sources of cash and our ability to obtain additional third-party financing, subject to market conditions, will be sufficient to fund our investing activities.
44

Our total capital expenditures for our continuing and discontinued operations, excluding receipts from the sale of subsidiaries and property equipment, were $17.1 million and $32.9 million during the nine months ended September 30, 2022 and 2021, respectively. The 48% decrease in capital expenditures was primarily due to the year-over-year effect of divestitures completed in 2021 combined with lower spending in Mexico and Peru.
Special Cash Dividend
On October 24, 2022, the board of directors of the Company approved the payment of a special cash dividend (the Special Dividend) equal to $0.68 per each share of the Company’s common stock, par value $0.004 per share, to each holder of record on November 4, 2022. The Special Dividend is scheduled to be paid on November 17, 2022. Based on the current number of shares outstanding, the aggregate amount of the Special Dividend is expected to be approximately $112 million.
Cash Flows
In the consolidated statements of cash flows, the changes in operating assets and liabilities are presented excluding the effects of exchange rate changes, acquisitions, and reclassifications, as these effects do not represent operating cash flows. Accordingly, the amounts in the consolidated statements of cash flows do not agree with the changes of the operating assets and liabilities as presented in the consolidated balance sheets. The effects of exchange rate changes on cash are presented separately in the consolidated statements of cash flows.
The following table summarizes our cash flows from operating, investing, and financing activities for the nine months ended September 30, 2022 and 2021:

(in millions) | 2022 |  | 2021
Cash provided by (used in): |  |  |
Operating activities | $ | 154.7 |  |  | $ | 54.0 |
Investing activities | 66.3 |  |  | 2,054.4 |
Financing activities | (236.5) |  |  | (1,284.5) |
Effects of exchange rates changes on cash | 6.4 |  |  | (14.4) |
Change in cash included in current assets held for sale | — |  |  | 285.0 |
Net change in cash and cash equivalents and restricted cash | $ | (9.1) |  |  | $ | 1,094.6 |

Comparison of Cash Flows for the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021
Operating Activities
Cash provided by operating activities increased by $100.7 million to $154.7 million for the 2022 fiscal period from $54.0 million for the 2021 fiscal period. This increase in operating cash was attributable to: (1) a decrease in cash paid for interest of $47.9 million, from $60.3 million for the 2021 fiscal period to $12.4 million for the 2022 fiscal period, attributable to lower average debt balances; (2) a decrease in cash paid for taxes of $19.3 million, from $95.0 million for the 2021 fiscal period, primarily related to the payment of withholding taxes for intercompany loans that were capitalized during the 2021 fiscal period, to $75.7 million for the 2022 fiscal period; and (3) a $33.5 million increase resulting from the net effect of changes in working capital and the divestiture of subsidiaries that, in the aggregate, contributed positive operating cash flows during the 2021 fiscal period.
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Investing Activities
Cash provided by investing activities decreased by $1,988.1 million to $66.3 million for the 2022 fiscal period from $2,054.4 million for the 2021 fiscal period. This decrease in investing cash flows was attributable to lower cash receipts from the sales of Discontinued Operations of $2,054.3 million, from $2,137.7 million during the 2021 fiscal period (primarily for the sale of Walden University, our operations in Honduras and Brazil, the receipt of the note receivable related to the 2020 divestiture of our Chilean operations, and the receipt of portions of the purchase prices that were withheld in connection to the 2018 sale of our China operations and the 2020 sale of our Malaysia operations) to $83.4 million, net, during the 2022 fiscal period (primarily related to the receipt of the escrow receivable related the 2021 sale of Walden University, and the collection of certain receivables from the sale of our Brazilian operations). This decrease in investing cash flows was partially offset by payments of $50.3 million made during the 2021 fiscal period for derivative instruments related to foreign exchange swap agreements associated with the sale of our Brazilian operations. Additionally, cash used for capital expenditures decreased by $15.8 million during the 2022 fiscal period, as compared to the 2021 fiscal period. Other items accounted for the remaining difference of $0.1 million.
Financing Activities
Cash used in financing activities decreased by $1,048.0 million to $236.5 million for the 2022 fiscal period from $1,284.5 million for the 2021 fiscal period. This change in financing cash outflow was attributable to: (1) lower net payments of long-term debt of $851.5 million during the 2022 fiscal period, as compared to the 2021 fiscal period, mainly driven by the 2021 repayment of the Senior Notes due 2025; (2) a period-over-period decrease of $157.1 million in the amount of common stock repurchases; (3) payments of $33.0 million made during the 2021 fiscal period for call premiums associated with the redemption of the Senior Notes due 2025; and (4) higher proceeds from the exercise of common stock options of $10.7 million during the 2022 fiscal period. These changes were partially offset by higher payments of dividend equivalent rights for vested share-based awards of $4.6 million during the 2022 fiscal period. Other items accounted for the remaining difference of $0.3 million.
Critical Accounting Policies and Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates. Our significant accounting policies are discussed in Note 2, Significant Accounting Policies, of the audited consolidated financial statements included in our 2021 Form 10-K. Our critical accounting policies require the most significant judgments and estimates about the effect of matters that are inherently uncertain. As a result, these accounting policies and estimates could materially affect our financial statements and are critical to the understanding of our results of operations and financial condition. For a complete discussion of our critical accounting policies, see the “Critical Accounting Policies and Estimates” section of the MD&A in our 2021 Form 10-K. During the nine months ended September 30, 2022, there were no significant changes to our critical accounting policies.
Recently Adopted Accounting Standards
None.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For information regarding our exposure to certain market risks, see Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our 2021 Form 10-K. There have been no significant changes in our market risk exposures since our December 31, 2021 fiscal year end.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)), as of the end of the period covered by this Quarterly Report on Form 10-Q. The purpose of disclosure controls and procedures is to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including our CEO and CFO, to allow timely decisions regarding required disclosures. Based on that evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective.
Changes in Internal Controls over Financial Reporting
There were no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Please refer to “Item 3. Legal Proceedings” in our Annual Report on Form 10-K for the year ended December 31, 2021 (our “2021 Form 10-K”) for information regarding material pending legal proceedings. There have been no new material legal proceedings and no material developments in the legal proceedings previously disclosed.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in “Item 1A. Risk Factors” in our 2021 Form 10‑K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities (amounts in table shown in thousands, except per share amounts)
The following table provides a summary of the Company’s purchases of its common stock during the three months ended September 30, 2022 pursuant to the Company’s authorized share repurchase program:

Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs |  | Approximate dollar value of shares yet to be purchased under the plans or programs (1)
7/1/22 - 7/31/22 | — |  | $ | — |  | — |  |  | $ | 861 |
8/1/22 - 8/31/22 | 77 |  | 11.17 |  | 77 |  |  | — |
9/1/22 - 9/30/22 | — |  | — |  | — |  |  | — |
Total | 77 |  | $ | 11.17 |  | 77 |  |  | $ | — |

(1) On March 14, 2022, the Company announced that its Board of Directors had approved an increase of $50 million to the existing authorization to repurchase shares of the Company’s common stock under its share repurchase program, for a total authorization of $650 million. In August 2022, the Company’s repurchases reached the total authorized limit of $650 million.
Item 6. Exhibits

Exhibit No. | Exhibit Description |  |  |  |
31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  |  |  |
31.2 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  |  |  |
32 | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  |  |  |
101.INS | XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document |  |  |  |
101.SCH | XBRL Taxonomy Extension Schema Document |  |  |  |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |  |  |  |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |  |  |  |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |  |  |  |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |  |  |  |
104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |  |  |  |

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
/s/ RICHARD M. BUSKIRK
Richard M. Buskirk
Senior Vice President and Chief Financial Officer
Date: November 3, 2022
/s/ GERARD M. KNAUER
Gerard M. Knauer
Vice President, Accounting and Global Controller
Date: November 3, 2022
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