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What changed in LAUREATE EDUCATION, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of LAUREATE EDUCATION, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+263 added−279 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-23)

Top changes in LAUREATE EDUCATION, INC.'s 2023 10-K

263 paragraphs added · 279 removed · 194 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

43 edited+22 added−12 removed72 unchanged
Biggest changeSee Note 6, Business and Geographic Segment Information, in our consolidated financial statements for financial information regarding our operating segments and financial information about geographic areas; see also “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Segment Results” and “—Overview—Factors Affecting Comparability—Seasonality” in this Form 10-K. 9 The following table presents information about the institutions as of December 31, 2022: Reportable Segment (Enrollment) Higher Education Institution Year Joined Laureate Network Year Founded Mexico Universidad del Valle de México (UVM) 2000 1960 (222,800) Universidad Tecnológica de México (UNITEC) 2008 1966 Peru Universidad Peruana de Ciencias Aplicadas (UPC) 2004 1994 (200,200) CIBERTEC 2004 1983 Universidad Privada del Norte (UPN) 2007 1994 Competition We face competition in both of our reportable segments.
Biggest changeThe following table presents information about the institutions as of December 31, 2023: Reportable Segment (Enrollment) Higher Education Institution Year Joined Laureate Network Year Founded Mexico Universidad del Valle de México (UVM) 2000 1960 (242,000) Universidad Tecnológica de México (UNITEC) 2008 1966 Peru Universidad Peruana de Ciencias Aplicadas (UPC) 2004 1994 (206,900) CIBERTEC 2004 1983 Universidad Privada del Norte (UPN) 2007 1994 Competition We face competition in both of our reportable segments.
While institutional autonomy is still recognized, and universities are permitted to create their own internal governance rules and determine their own academic, management and economic systems, including curriculum design and entrance and graduation requirements, all of these matters are now subject to review and evaluation by SUNEDU through its periodic review of universities as part of a license renewal process.
While institutional autonomy is still recognized, and universities are permitted to create their own internal governance rules and determine their own academic, management and economic systems, including curriculum design and entrance and graduation requirements, all of these matters are now subject to review and evaluation by SUNEDU through its periodic review of universities as part of a license renewal 14 process.
We provide those students with a hybrid learning experience, mixing face-to-face classroom experience with technology through our online platform, which we believe improves the student experience by providing them with a wide range of online courses, interactive discussions, virtual experiences, digital resources, and simulations that enhance their learning experiences both within and outside the classroom. • Fully Online Programs.
We provide those students with a hybrid learning experience, mixing face-to-face classroom experience with technology through our online platform, which we believe improves the student experience by providing them with a wide range of online courses, interactive discussions, virtual experiences, digital resources, and simulations that enhance their learning experiences both within and outside the classroom. 9 • Fully Online Programs.
On February 6, 2017, we consummated our initial public offering and shares of our common stock began trading on the Nasdaq under the symbol “LAUR”. Public Benefit Corporation Status In October 2015, we redomiciled in Delaware as a public benefit corporation as a demonstration of our long-term commitment to our mission to benefit our students and society.
On February 6, 2017, we consummated our initial public offering and shares of our common stock began trading on the Nasdaq under the symbol “LAUR”. 12 Public Benefit Corporation Status In October 2015, we redomiciled in Delaware as a public benefit corporation as a demonstration of our long-term commitment to our mission to benefit our students and society.
Acuerdo 17/11/17 also provides that private institutions that provide Superior Education services in accordance with presidential decrees or secretarial resolutions ( acuerdos secretariales ) issued specifically to them may maintain the obligations provided to them 12 thereunder and may function under the simplified provisions of Acuerdo 17/11/17.
Acuerdo 17/11/17 also provides that private institutions that provide Superior Education services in accordance with presidential decrees or secretarial resolutions ( acuerdos secretariales ) issued specifically to them may maintain the obligations provided to them thereunder and may function under the simplified provisions of Acuerdo 17/11/17.
These systems provide data and insights on a scale that we believe will allow us to improve student experience, retention rates and outcomes, while also enabling a more efficient and lower cost educational delivery model. Leading Online Technology .
These systems provide data and insights on a scale that we believe will allow us to improve student 7 experience, retention rates and outcomes, while also enabling a more efficient and lower cost educational delivery model. Leading Online Technology .
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 demand for higher education is large and growing and is fueled by 6 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.
Our ability to provide quality education to these underserved markets has provided additional growth opportunities to our network and we intend to leverage our management capabilities and local knowledge to further capitalize on these opportunities in new and existing markets. 8 • Increase Capacity at Existing and New Campus Locations.
Our ability to provide quality education to these underserved markets has provided additional growth opportunities to our network and we intend to leverage our management capabilities and local knowledge to further capitalize on these opportunities in new and existing markets. • Increase Capacity at Existing and New Campus Locations.
We believe that increasing student demand, new instruction methodologies designed for the online medium, and growing employer and regulatory acceptance of degrees obtained through online and hybrid modalities will continue to drive online learning in Mexico and Peru.
Increasing Demand for Online Offerings. We believe that increasing student demand, new instruction methodologies designed for the online medium, and growing employer and regulatory acceptance of degrees obtained through online and hybrid modalities will continue to drive online learning in Mexico and Peru.
External assessment methodologies, such as QS Stars™, allows us to identify key areas for improvement in order to drive a culture of quality and continual innovation at our institutions. 7 Attractive Financial Model. • Private Pay Model.
External assessment methodologies, such as QS Stars™, allows us to identify key areas for improvement in order to drive a culture of quality and continual innovation at our institutions. Attractive Financial Model. • Private Pay Model.
Our stated public benefit is firmly rooted in our company mission and our belief that when our students succeed, countries 11 prosper and societies benefit. Becoming a public benefit corporation underscores our commitment to our purpose and our stakeholders, including students, regulators, employers, local communities and stockholders.
Our stated public benefit is firmly rooted in our company mission and our belief that when our students succeed, countries prosper and societies benefit. Becoming a public benefit corporation underscores our commitment to our purpose and our stakeholders, including students, regulators, employers, local communities and stockholders.
Various corporate governance documents, including o ur Audit Committee Charter, Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Corporate Governance Guidelines and Code of Conduct and Ethics are available without charge through the “Leadership and Governance” portion of our investor relations website, listed above.
Various corporate governance documents, including o ur Audit and Risk Committee Charter, Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Corporate Governance Guidelines and Code of Conduct and Ethics are available without charge through the “Leadership and Governance” portion of our investor relations website, listed above.
The Institutes Law created two types of institutes: Higher Education Institutes (“Institutes”) which are dedicated to technical careers and Higher Education Colleges (“Colleges”) which are devoted to technical careers related to education, as well as science and information technology. Colleges grant Technical Bachelor Degrees and Professional Technical Degrees.
The Institutes and Colleges Law created two types of institutions: Higher Education Institutes (“Institutes”) which are dedicated to technical careers and Higher Education Colleges (“Colleges”) which are devoted to technical careers related to education, as well as science and information technology. Institutes grant Technical Bachelor Degrees and Professional Technical Degrees.
Essentially all of our revenues for 2022 were generated from private pay sources, as there are no material government-sponsored student loan programs in Mexico or Peru. We believe that students’ and families’ willingness to allocate personal resources to fund higher education at our institutions validates our strong value proposition. • Revenue Visibility Enhanced by Program Length and Strong Retention.
Essentially all of our revenues for 2023 were generated from private pay sources, as there are no material government-sponsored student loan programs in Mexico or Peru. We believe that students’ and families’ willingness to allocate personal resources to fund higher education at our institutions validates our strong value proposition. • Revenue Visibility Enhanced by Program Length and Strong Retention.
In addition, many of our institutions and programs have earned the highest accreditation available, which provides us with a strong competitive advantage in local markets. For example, medical school licenses are often the most difficult to obtain and are only granted to institutions that meet rigorous standards. Throughout Mexico and Peru we operate 13 medical and seven dental schools.
In addition, many of our institutions and programs have earned the highest accreditation available, which provides us with a strong competitive advantage in local markets. For example, medical school licenses are often the most difficult to obtain and are only granted to institutions that meet rigorous standards. Throughout Mexico and Peru we operate 17 medical and seven dental schools.
Further, we believe that integration will enable further innovation and efficiency in our academic model and operations, and allow us to expand our market share. Leverage and Expand Existing Portfolio.
Further, we believe that 8 integration will enable further innovation and efficiency in our academic model and operations, and allow us to expand our market share. Leverage and Expand Existing Portfolio.
In particular, we emphasize science, technology, engineering and math (STEM) and business disciplines, areas in which we believe that there is large and growing demand, especially in developing countries. Students pursuing degrees in Medicine & Health Sciences, Engineering & Information Technology and Business & Management, our three largest disciplines, constitute over 70% of our total post-secondary enrollments.
In particular, we emphasize science, technology, engineering and math (STEM) and business disciplines, areas in which we believe that there is large and growing demand, especially in developing countries. Students pursuing degrees in Medicine & Health Sciences, Engineering & Information Technology and Business & Management, our three largest disciplines, constitute approximately 70% of our total post-secondary enrollments.
While global participation rates have increased for traditional higher education students (defined as 18-24 year olds), the market for higher education in Mexico and Peru is still significantly underpenetrated, at approximately 34% and 52%, respectively, as compared to approximately 62% in the United States. Strong Economic Incentives for Higher Education.
While global participation rates have increased for traditional higher education students (defined as 18-24 year olds), the market for higher education in Mexico and Peru is still significantly underpenetrated, at approximately 34% and 52%, respectively, as compared to approximately 60% in the United States. Strong Economic Incentives for Higher Education.
The following information for our segments is presented as of December 31, 2022. Our Industry We operate higher education institutions in Mexico and Peru. These markets are characterized by what we believe is a significant imbalance between supply and demand.
The following information for our segments is presented as of December 31, 2023. Our Industry We operate higher education institutions in Mexico and Peru. These markets are characterized by what we believe is a significant imbalance between supply and demand.
Technical-vocational institutes are regulated by the MINEDU, which grants operating licenses for six years, after which the Ministry conducts a revalidation process. Since 2016, a new law regarding technical-vocational institutes (the “Institutes Law”) was enacted.
Technical-vocational institutes are regulated by the MINEDU, which grants operating licenses for six years, after which the Ministry conducts a revalidation process. Since 2016, a new law regarding technical-vocational institutes (the “Institutes and Colleges Law”) was enacted.
If there is a change in the program or in the campus at which it is taught, the entity will need to get a new REVOE. The Federal Ministry of Education has issued a set of general resolutions ( Acuerdos ) that regulate the general requirements for obtaining REVOEs.
REVOEs are granted for each program taught at each campus. If there is a change in the program or in the campus at which it is taught, the entity will need to get a new REVOE. The Federal Ministry of Education has issued a set of general resolutions ( Acuerdos ) that regulate the general requirements for obtaining REVOEs.
To achieve our mission, we execute a strategy enabled by the following initiatives: Integration of Campus-Based Operations in Mexico and Peru. Our institutions in Mexico and Peru serve approximately 423,000 students in a relatively homogenous operating environment, creating a unique opportunity to harvest the benefits of scale.
To achieve our mission, we execute a strategy enabled by the following initiatives: Integration of Campus-Based Operations in Mexico and Peru. Our institutions in Mexico and Peru serve approximately 448,900 students in a relatively homogenous operating environment, creating a unique opportunity to harvest the benefits of scale.
In both Mexico and Peru, the private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities. In Mexico, private education providers constitute 36% of the total higher-education market (42% in states in which we have operations).
In both Mexico and Peru, the private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities. In Mexico, private education providers constitute 37% of the total higher-education market (43% in states in which we have operations).
These institutions, which we collectively refer to as the Laureate International Universities n etwork, are leading brands in their respective markets and offer a broad range of undergraduate and graduate degrees through campus-based, online and hybrid programs. Collectively, we have approximately 423,000 students enrolled at five institutions with over 50 campuses as of December 31, 2022.
These institutions, which we collectively refer to as the Laureate International Universities n etwork, are leading brands in their respective markets and offer a broad range of undergraduate and graduate degrees through campus-based, online and hybrid programs. Collectively, we have approximately 448,900 students enrolled at five institutions with over 50 campuses as of December 31, 2023.
Additionally, through targeted programs and multiple teaching modalities, we are able to serve the differentiated needs of non-traditional students in these markets. Our program and level of study mix for 2022 was as follows: 5 Our Segments We have two reporta ble segments, which are summarized in the charts below.
Additionally, through targeted programs and multiple teaching modalities, we are able to serve the differentiated needs of non-traditional students in these markets. Our program and level of study mix for 2023 was as follows: Our Segments We have two reportable segments, which are summarized in the charts below.
With strong brands and highly reputed i nstitutions in Mexico and Peru, we believe that we are uniquely positioned to address these market opportunities. 4 Country Institution Enrollment at December 31, 2022 Market Segment QS Stars™ Overall University Rating Ratings/Rankings Mexico Universidad del Valle de México (UVM) 103,700 Premium/ Traditional «««« • Ranked Top 10 university in Mexico • 5-Star rated by QS Stars™ in categories of Employability & Inclusiveness Mexico Universidad Tecnológica de México (UNITEC) 119,100 Value/Teaching ««« • Largest private university in Mexico • 5-Stars rated by QS Stars™ in categories of Employability & Inclusiveness Peru Universidad Peruana de Ciencias Aplicadas (UPC) 69,000 Premium/Traditional «««« • Ranked Top 5 university in Peru • 5-Star rated by QS Stars™ in categories of Employability & Inclusiveness Peru Universidad Privada del Norte (UPN) 112,100 Value/Teaching «««« • 3rd largest private university in Peru • 5-Stars rated by QS Stars™ in categories of Employability & Inclusiveness Peru CIBERTEC 19,100 Tech/Voc N/A • 2 nd largest private tech/voc institute in Peru Source s: QS Stars™, Guía Universitaria (UVM), AmericaEconomia (UPC) Our institutions in Mexico and Peru offer traditional higher education students a private education alternative, with multiple brands and price points in each market and innovative programs and strong career-driven outcomes.
With strong brands and highly reputed i nstitutions in Mexico and Peru, we believe that we are uniquely positioned to address these market opportunities. 4 Country Institution Enrollment at December 31, 2023 Market Segment QS Stars™ Overall University Rating Ratings/Rankings Mexico Universidad del Valle de México (UVM) 113,200 Premium/ Traditional «««« • Ranked Top 10 university in Mexico • 5-Star rated by QS Stars™ in categories of Employability, Inclusiveness, Online Learning & Social Responsibility Mexico Universidad Tecnológica de México (UNITEC) 128,800 Value/Teaching ««« • Largest private university in Mexico • 5-Star rated by QS Stars™ in categories of Employability, Inclusiveness, Online Learning & Social Responsibility Peru Universidad Peruana de Ciencias Aplicadas (UPC) 69,700 Premium/Traditional «««« • Ranked Top 5 university in Peru • 5-Star rated by QS Stars™ in categories of Employability, Inclusiveness, Online Learning & Social Responsibility Peru Universidad Privada del Norte (UPN) 117,200 Value/Teaching «««« • 3 rd largest private university in Peru • 5-Star rated by QS Stars™ in categories of Employability, Inclusiveness, Online Learning & Social Responsibility Peru CIBERTEC 20,000 Tech/Voc N/A • 3 rd largest private tech/voc institute in Peru Source s: QS Stars™, Guía Universitaria (UVM), AmericaEconomia (UPC) 5 Our institutions in Mexico and Peru offer traditional higher education students a private education alternative, with multiple brands and price points in each market and innovative programs and strong career-driven outcomes.
Both UPC and UPN had their licenses renewed in 2017, in each case for a period of six years, extended one additional year due to COVID-19.
Both UPC and UPN had their licenses renewed in 2017, in each case for a period of six years, extended one additional year due to COVID-19. Accordingly, both UPC and UPN will undergo the renewal process in 2025.
The General Law on Education ( Ley General de Educación ) in Mexico classifies studies in the following three categories: (i) Basic Education, which includes pre-school (kindergarten), elementary school and junior high school ( secundaria ); (ii) Mid-Superior Education, which includes high school ( preparatoria ) and equivalent studies, as well as professional education that does not consider preparatoria as a prerequisite; and (iii) Superior Education, which includes the studies taught after preparatoria, including undergraduate school ( licenciatura ), specialties ( especialidades ), master’s studies, doctorate studies and studies for teachers ( educación normal ).
The General Law on Education ( Ley General de Educación ) in Mexico classifies studies in the following three categories: (i) Basic Education, which includes pre-school (kindergarten), elementary school and junior high school ( secundaria ); (ii) Mid-Superior Education, which includes high school ( preparatoria ) and equivalent studies, as well as professional education that does not consider preparatoria as a prerequisite; and (iii) Superior Education, which includes the studies taught after preparatoria, including undergraduate school ( licenciatura ), specialties ( especialidades ), master’s studies, doctorate studies and studies for teachers ( educación normal ). 13 The REVOEs are issued either by the Federal Ministry of Education under the General Law on Education or by any of the state Ministries of Education under the applicable state law.
According to data from the Organization for Economic Co-operation and Development (“OECD”), in countries that are members of the OECD, the earnings from employment for younger adults (25-34 years) and older adults (45-54 years) completing higher education were approximately 39% and 75% higher, respectively, than those of younger and older adults with only an upper secondary education.
According to data from the Organization for Economic Co-operation and Development (“OECD”), in countries that are members of the OECD, the earnings from employment for younger adults (25-34 years) completing higher education was approximately 66% higher, and the earnings advantage was more than twice as much among older adults (45-54 years), than those of younger and older adults with only an upper secondary education.
In addition to capacity limitations, we believe that limited public resources, and the corresponding policy reforms to make higher education systems less dependent on the financial and operational support of local governments, have resulted in increased enrollments in private institutions relative to public institutions. 6 Increasing Demand for Online Offerings.
In Peru, private education providers constitute 74% of the total higher-education market. In addition to capacity limitations, we believe that limited public resources, and the corresponding policy reforms to make higher education systems less dependent on the financial and operational support of local governments, have resulted in increased enrollments in private institutions relative to public institutions.
The Ministry of Education (“MINEDU”) has overall responsibility for the national education system. In 2014, the Peruvian Congress enacted a new law (the “University Law”) to regulate the establishment, operation, monitoring and closure of universities and to promote continuous improvement of quality at Peruvian universities.
In 2014, the Peruvian Congress enacted a new law (the “University Law”) to regulate the establishment, operation, monitoring and closure of universities and to promote continuous improvement of quality at Peruvian universities.
Additionally, we actively monitor and manage student retention because of the impact it has on student outcomes and our financial results. Our historical annual student retention rate, which we define as the proportion of prior year students returning in the current year (excluding graduating students), was 79% on average over the last five years.
Our historical annual student retention rate, which we define as the proportion of prior year students returning in the current year (excluding graduating students), was 79% on average over the last five years.
SUNEDU allows for the educational services to be provided by three modalities: (i) face-to-face learning (with a maximum of 20% virtual credits), (ii) hybrid learning (with 20% to 70% of the total credits of the academic program allowed to be taken virtually) and (iii) virtual learning (credits taken virtually cannot exceed 80% of the total credits of undergraduate academic programs, with the exception of programs that are specially designed for an adult population over 24 years old - (WA programs)).
SUNEDU allows for the educational services to be provided by three modalities: (i) face-to-face learning (with a maximum of 20% virtual credits), (ii) hybrid learning (with up to 60% of the total credits of the academic program allowed to be taken virtually) and (iii) virtual learning (credits taken virtually cannot exceed 80% of the total credits of undergraduate and working adult academic programs).
Our institutions in Mexico and Peru operate within scaled country networks, which provide advantages in terms of shared infrastructure, technology, curricula and operational best practices. More than 80% of our students are enrolled in programs of four or more years in duration.
Our institutions in Mexico and Peru operate within scaled country networks, which provide advantages in terms of shared infrastructure, technology, curricula and operational best practices.
As of December 31, 2022, a vast majority of o ur students were enrolled at traditional, campus-based institutions offering multi-year degrees, similar to leading private and public higher education institutions in developed markets such as the United States and Europe.
O ur students are enrolled at traditional, campus-based institutions offering multi-year degrees, with an average program length of four years, similar to leading private and public higher education institutions in developed markets such as the United States and Europe.
Recognizing the Impact of our People • Through the expertise, passion, and commitment of our people, we are making a positive impact within and beyond communities across Mexico, Peru, and the United States. In 2022 we published our 2021 Impact Report which recognizes and celebrates the impact our people are creating. The report is available on our website at laureate.net.
Recognizing the Impact of Our People • Through the expertise, passion, and commitment of our people, we are making a positive impact within and beyond communities across Mexico and Peru. In 2023 we published our 2022 Impact Report which recognizes and celebrates the impact our people are creating, aligned to the United Nations Sustainable Development Goals.
We have also registered or filed applications in the applicable jurisdictions in which we operate for the trademarks “La ureate Online International” and “Laureate Online Education.” In addition, we have the rights to trade names, logos and other intellectual property specific to most of our higher education institutions, in the countries in which those institutions operate.
We have also registered or filed applications in the applicable jurisdictions in which we operate for the trademarks “La ureate Online International” and “Laureate Online Education.” In addition, we have the rights to trade names, logos and other intellectual property specific to most of our higher education institutions, in the countries in which those institutions operate. 10 Human Capital Expanding access to quality higher education and enriching communities through delivering market-leading outcomes for students requires the highest levels of engagement, commitment, and performance from our workforce.
In 2022, our students, faculty and staff were able to safely return to campus and fully transitioned to blended learning modalities by the second half of the year. As we return to face-to-face operations at our campuses, we are targeting to have 40% to 60% percent of our student credit hours taken online going forward.
In 2022, our students, faculty and staff were able to safely return to campus and fully transitioned to blended learning modalities. Our new operating model is now targeting to have 40% to 60% percent of our student credit hours taken online going forward. Currently, we operate within this range with adaptability and flexibility.
A new higher education bill was enacted in April 2021, and expected secondary provisions for this bill have not yet been added to the legislative agenda. No foreseeable material changes are expected to impact the business as a result of this bill and the expected secondary provisions.
A new higher education bill was enacted in April 2021. No foreseeable material changes are expected to impact the business as a result of this bill and expected secondary provisions. Peruvian Regulation We operate three post-secondary education institutions in Peru, two of which are universities and one of which is a technical-vocational institute.
Peruvian Regulation We operate three post-secondary education institutions in Peru, two of which are universities and one of which is a technical-vocational institute. Peruvian law provides that universities and technical-vocational institutes can be operated as public or private entities, and that the private entities may be organized for profit.
Peruvian law provides that universities and technical-vocational institutes can be operated as public or private entities and that the private entities may be organized for profit. The Ministry of Education (“MINEDU”) has overall responsibility for the national education system.
Under the University Law, university licenses are granted for specific time periods but are renewable, and are granted by SUNEDU.
As of July 2022, Law 31520 modified the composition of the SUNEDU Board of Directors and eliminated its powers for the approval of new careers, schools and faculties. Under the University Law, university licenses are granted for specific time periods but are renewable, and are granted by SUNEDU.
The length of our programs provides us with a high degree of revenue visibility. The majority of the academic programs offered by our institutions last between four and five years, and more than 80% of our students were enrolled in programs of at least four years or more in duration as of December 31, 2022.
The length of our programs provides us with a high degree of revenue visibility. The majority of the academic programs offered by our institutions last between four and five years. Additionally, we actively monitor and manage student retention because of the impact it has on student outcomes and our financial results.
We plan to continue these efforts with publication of our 2022 Impact Report later this year. Information contained on our website is not incorporated by reference herein and is not a part of this Annual Report on Form 10-K. Diversity and Inclusion • We are committed to strengthening our commitment to Diversity and Inclusion across our company.
Information contained on our website is not incorporated by reference herein and is not a part of this Annual Report on Form 10-K. • These Impact Reports feature data and case studies tracked by our Impact Committee–comprised of Impact leaders from Mexico and Peru and from multiple functional areas including Finance, Communications, Academic, Operations and Ethics and Compliance.
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In Peru, private education providers constitute 73% of the total higher-education market.
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See Note 6, Business and Geographic Segment Information, in our consolidated financial statements for financial information regarding our operating segments and financial information about geographic areas; see also “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Segment Results” and “—Overview—Factors Affecting Comparability—Seasonality” in this Form 10-K.
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Human Capital At Laureate Education, Inc., we employ approximately 35,000 people (including approximately 22,000 academic staff) and are committed to promoting a culture that is strengthened by its diversity, enriched through collaboration, and built upon a foundation of continuous learning and development.
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We currently enroll approximately 448,900 students across our five institutions in Mexico and Peru, in campus-based, fully online, and hybrid learning programs. These students are supported by a workforce of more than 28,900 employees, including 16,000 academic staff.
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Our workforce proudly serves a population of approximately 423,000 students across Mexico and Peru and is focused on delivering academic quality and a market-leading student experience, while ensuring the highest standards of accountability, governance, and reporting. Leading an international workforce requires a combination of universal standards, expectations, and protocols, along with a deep understanding of local culture and context.
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More than 99% of our employees are based in Mexico or Peru, and our corporate team extends across the United States, Switzerland, the Netherlands, Brazil, Chile, and Honduras. The combination of dedicated in-country teams supported by a diverse, international corporate workforce continues to serve the company well.
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Regardless of geography, we establish and maintain the highest degree of ethical conduct, compliance, and transparency, and design and implement initiatives to promote engagement, performance, and collaboration. 10 In 2022, some of our company-wide initiatives included: Ethics and Compliance • The launch of a revised Code of Conduct, which sets out principles of integrity and ethical behavior, and our responsibilities to each other, our students, suppliers, stockholders, and the public.
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Throughout 2023, we continued to strengthen our culture through a range of strategies, including a focus on accelerating our progress in support of gender equality. Below are examples of the pillars that underpin our Human Capital strategy, including our focus on diversity and inclusion.
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The Code covers such topics as accurate records, proper use of assets and information, conflicts of interest, and bribery and corruption. • Company-wide Ethics communication campaigns targeting all employees, including live, interactive town-halls. • Ongoing mandatory training for all employees, in all geographies.
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Leadership and Governance • Our Board of Directors receives regular reports on talent development, succession planning, and company-wide culture-building efforts. • There are two established committees of our Board of Directors with responsibility for reviewing and considering a range of Human Capital related topics throughout the year.
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Employee Engagement Benchmarking • We conducted a comprehensive employee engagement survey, with an overall response rate of 79%, and an overall engagement score well above the median within higher education. • Our overall engagement score combines net promoter score, pride in the company, intention to stay, and discretionary effort to go above and beyond.
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The Nominating and Corporate Governance Committee oversees our social impact strategy, including diversity and inclusion efforts, and our Compensation Committee reviews compensation practices and establishes annual performance targets and related compensation-based incentives. • Our Chief People Officer is responsible for leading the development and execution of company-wide culture-building and talent development initiatives. • Our executive team is committed to developing strategies to increase the number of women in positions of leadership, accelerate company-wide culture-building activities, and build a more diverse and inclusive workforce.
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Specific areas of strength, company-wide, included productivity, engagement, and inclusion. The survey also revealed areas in which we can improve, and a series of targeted actions are being developed for 2023.
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Diversity and Inclusion • Throughout 2023, we took a range of actions to advance our commitment to diversity and inclusion.
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In 2022, we established a Diversity and Equity Committee across both our universities in Mexico, and in Peru, we improved gender diversity in senior leadership by more than 20%.
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These efforts built upon our long-standing Discrimination and Harassment policy (available at https://www.laureate.net/wp-content/uploads/2024/02/Laureate-Discrimination-and-Harassment-Policy.pdf), which includes a stated commitment to equal employment opportunities. • Promoting gender equality was a significant area of focus throughout 2023, as reflected by specific programs to support and promote women in positions of leadership.
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The REVOEs are issued either by the Federal Ministry of Education under the General Law on Education or by any of the state Ministries of Education under the applicable state law. REVOEs are granted for each program taught at each campus.
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Significant milestones achieved during 2023 included: • Co-designing a Women in Leadership program, building upon on an established program known as Compass. In 2024, we intend to expand the program to include more women across Laureate, whom will have the opportunity to participate in a version of the program adapted specifically for us.
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In December 2022, SUNEDU modified the possibility of having WA programs 100% virtual learning, leaving 13 only the possibility of reaching 80% of virtuality. It does not apply to previously approved programs, as the case of UPC and UPN, which must be adapted to the new percentage at the time of re-licensing.
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Program participants are expected to be selected from a range of geographies and functions, as well as from multiple levels of the organization. • At the end of 2023, 29% of Laureate’s senior leaders were women, an increase of 6% compared to the prior year. • Strategies to eliminate gender bias in all recruitment practices were introduced across Peru, and we will seek to expand these practices across Mexico in 2024.
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In January 2023, the Constitutional Court declared constitutional Law 31520 that was passed in July 2022, which modified the composition of the SUNEDU Board of Directors and reduced its powers for the approval of new careers, schools and faculties. We are awaiting the appointment of the new members of SUNEDU.
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Ongoing Training and Access to Education Assistance • Scholarships and discounts are made available at each of our five institutions for employees (an average of 81% of tuition is paid for employees).
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According to the schedule determined by the regulations, in 2018, Cibertec was granted a license by the MINEDU for a five-year period. In November 2022, Cibertec’s license renewal was submitted, with a request for a renewal period of six years. 14
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Significant discounts are also provided for immediate family members of employees in Mexico and Peru. • In the United States, education assistance is offered to all corporate employees to pursue additional education opportunities or certifications. • Regular workshops and training are offered to all employees, including courses focused on Ethics and Compliance and IT security. 11 Employee Engagement • Comprehensive company-wide engagement surveys are conducted every two years, with the next scheduled to occur in 2024.
Added
Throughout 2023 shorter pulse surveys were conducted across Peru. In addition, multiple metrics are consistently tracked to monitor engagement and employee satisfaction. These metrics include voluntary attrition, changes in individual and team performance and outcomes, and reports to the Ethics and Compliance hotline.
Added
Performance Management and Ongoing Development • Laureate has a company-wide approach to performance management, goal setting, feedback, and performance-based compensation, which, at a minimum, includes two formal review checkpoints per year. • In 2023, all members of Laureate’s executive team participated in a comprehensive executive coaching and development program and contributed to a range of culture-building and workforce development initiatives.
Added
Compensation and Employee Benefits • Employee compensation is reviewed and benchmarked annually against independent market data to ensure our compensation remains competitive and fair. • Senior leaders across the United States, Peru, and Mexico participate in our long-term equity incentive program as part of Laureate’s competitive compensation and talent retention initiatives. • We continue to audit all employee benefits to ensure there is no unintentional discrimination embedded in any of the benefits offered.
Added
Safety and Security • We remain committed to the safety and well-being of all employees, students, and other stakeholders. In both Mexico and Peru, we employ dedicated security teams to develop and execute strategies to promote the safety of all students, employees, and campuses.
Added
Incidents and risks are reported, reviewed, and addressed through established cross-functional incident response teams. • Cybersecurity is a major area of focus across the Company.
Added
For more information regarding the Company’s Cybersecurity risk management, strategy and governance, see “Item 1C.—Cybersecurity.” • Our employees are expected to complete mandatory cybersecurity training multiple times per year, covering a wide range of topics aimed at keeping employees and the business protected from increasing cyber risks. • Strict data management controls are enforced across the company to ensure our workforce and human capital data is appropriately and securely captured and stored.
Added
Workplace Flexibility • We value flexibility for employees and, as much as possible, provide opportunities for hybrid work for those not required to teach (or support students) in-person on campus.
Added
Our workforce continues to be highly productive in a hybrid modality. • In the United States, corporate employees, most of whom work remotely, are offered access to co-working locations in their city of residence, along with access to our headquarters in Miami.
Added
In November 2023, SUNEDU stipulated that health sciences undergraduate programs can only be carried out in face-to-face mode. This requirement, however, does not apply to previously approved programs and will only apply at the time of an institution's relicensing, which for UPC and UPN will be in 2025.
Added
In May 2023, Cibertec was granted an Institutes license renewal for a six-year period. Also during 2023, Cibertec was granted a Colleges license for a six-year period, which will now allow Cibertec to offer four-year programs for professional bachelor degrees. 15

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

49 edited+8 added−7 removed137 unchanged
Biggest changeAdditional challenges associated with the conduct of our business overseas that may materially adversely affect our operating results include: • difficulty in staffing and managing foreign operations as a result of distance, language, legal and other differences; • our presence solely in Latin America presents risks relating to regional economic pressures; • each of our institutions is subject to unique business risks and challenges, including competitive pressures and diverse pricing environments at the local level; • difficulty maintaining quality standards consistent with our brands and with local accreditation requirements; • potential economic and political instability in the countries in which we operate, including student unrest; • fluctuations in exchange rates, possible currency devaluations, inflation and hyperinflation; • difficulty selecting, monitoring and controlling partners outside of the United States; • compliance with a wide variety of foreign laws and regulations; • expropriation of assets by governments; • difficulty protecting our intellectual property rights overseas due to, among other reasons, the uncertainty of laws and enforcement in certain countries relating to the protection of intellectual property rights; • lower levels of availability or use of the Internet, through which our online programs are delivered; • limitations on the repatriation and investment of funds and foreign currency exchange restrictions; and • acts of terrorism, public health risks, crime and natural disasters, particularly in areas in which we have significant operations.
Biggest changeAdditional challenges associated with the conduct of our business overseas that may materially adversely affect our operating results include: • our presence solely in Latin America presents risks relating to regional economic pressures; • each of our institutions is subject to unique business risks and challenges, including competitive pressures and diverse pricing environments at the local level; • difficulty maintaining quality standards consistent with our brands and with local accreditation requirements; • potential economic and political instability in the countries in which we operate, including student unrest; • fluctuations in exchange rates, possible currency devaluations, inflation and hyperinflation; • compliance with a wide variety of foreign laws and regulations; • expropriation of assets by governments; • lower levels of availability or use of the Internet, through which our online programs are delivered; • limitations on the repatriation and investment of funds and foreign currency exchange restrictions; and • acts of terrorism, public health risks, crime and natural disasters, particularly in areas in which we have significant operations.
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended 25 and restated bylaws or (iv) any action asserting a claim against us governed by the internal affairs doctrine will have to be brought only in the Court of Chancery in the State of Delaware unless we otherwise consent in writing to an alternative form.
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws or (iv) any action asserting a claim against us governed by the internal affairs doctrine will have to be brought only in the Court of Chancery in the State of Delaware unless we otherwise consent in writing to an alternative form.
Upgrading the facilities at our institutions could be difficult for a number of reasons, including the following: • our properties may not have the capacity or configuration to accommodate proposed renovations; • construction and other costs may be prohibitive; • we may fail to obtain regulatory approvals; • it may be difficult and expensive to comply with local building and fire codes; • we may be unable to finance construction and other costs; and • we may not be able to negotiate reasonable terms with our landlords or developers or complete the work within acceptable timeframes.
Upgrading the facilities at our institutions could be difficult for a number of reasons, including the following: 22 • our properties may not have the capacity or configuration to accommodate proposed renovations; • construction and other costs may be prohibitive; • we may fail to obtain regulatory approvals; • it may be difficult and expensive to comply with local building and fire codes; • we may be unable to finance construction and other costs; and • we may not be able to negotiate reasonable terms with our landlords or developers or complete the work within acceptable timeframes.
However, over time, the sophistication of these threats continues to increase. The preventative actions we take to reduce the risk of cyber incidents and protect our information may be insufficient. A user who circumvents security measures could misappropriate proprietary information or cause interruptions to or malfunctions in operations.
However, over time, the sophistication of these threats continues to increase. The preventative actions we take to reduce the risk of cyber incidents and protect our information and systems may be insufficient. A user who circumvents security measures could misappropriate proprietary information or cause interruptions to or malfunctions in operations.
While we believe that this designation and obligation will benefit the Company given the importance to our long-term success of our commitment to education, it could cause our board of directors to make decisions and take actions not in keeping with the short-term or more narrow interests of our stockholders.
While we believe that this designation and 25 obligation will benefit the Company given the importance to our long-term success of our commitment to education, it could cause our board of directors to make decisions and take actions not in keeping with the short-term or more narrow interests of our stockholders.
This choice of forum provision, however, may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims.
This choice of forum provision, however, may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may 26 discourage lawsuits with respect to such claims.
We have invested, and expect to continue to invest, significant resources to comply with privacy laws and regulations. 20 A breach, theft or loss of personal information regarding our students and their families, our employees, or other persons that is held by us or our vendors, or a violation of the laws and regulations governing privacy in one or more of the countries in which we operate, could result in significant penalties or legal liability, reputational damage, and/or remediation and compliance costs, which could be substantial and materially adversely affect our business, financial condition and results of operations.
We have invested, and expect to continue to invest, significant resources to comply with privacy laws and regulations. 21 A breach, theft or loss of personal information regarding our students and their families, our employees, or other persons that is held by us or our vendors, or a violation of the laws and regulations governing privacy in one or more of the countries in which we operate, could result in significant penalties or legal liability, reputational damage, and/or remediation and compliance costs, which could be substantial and materially adversely affect our business, financial condition and results of operations.
Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially adversely affect our financial results in the period or periods for which such determination is made. 18 Our reported revenues and earnings may be negatively affected by the strengthening of the U.S. dollar and currency exchange rates.
Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially adversely affect our financial results in the period or periods for which such determination is made. 19 Our reported revenues and earnings may be negatively affected by the strengthening of the U.S. dollar and currency exchange rates.
Our business is subject to the risk of litigation by employees, students, suppliers, competitors, minority partners, counterparties in transactions in which we purchase or sell assets, stockholders, government agencies or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation, some of which may take place in jurisdictions in which local parties may have certain advantages over foreign parties.
Our business is subject to the risk of litigation by employees, students, suppliers, competitors, minority partners, counterparties in transactions in which we purchase or sell assets or leased property, stockholders, government agencies or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation, some of which may take place in jurisdictions in which local parties may have certain advantages over foreign parties.
The success of our institutions depends to a significant extent on the willingness of prospective employers to hire our students upon graduation. Increasingly, employers demand that their employees possess appropriate technological skills and appropriate “soft” skills, such as communication, critical thinking and teamwork skills. These skills can evolve rapidly in a changing economic and technological environment.
The success of our institutions depends to a significant extent on the willingness of prospective employers to hire our students upon graduation. Increasingly, employers demand that their employees possess appropriate technological and other appropriate skills, such as communication, critical thinking and teamwork. These skills can evolve rapidly in a changing economic and technological environment.
While the Credit Agreement provide s for quarterly compliance with the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio, as defined in the Credit Agreement, as of December 31, 2022, we were not required to comply with this covenant. We rely on funds from our operating subsidiaries to meet our debt service and other obligations.
While the Credit Agreement provide s for quarterly compliance with the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio, as defined in the Credit Agreement, as of December 31, 2023, we were not required to comply with this covenant. We rely on funds from our operating subsidiaries to meet our debt service and other obligations.
We report revenues, costs and earnings in U.S. dollars, while our institutions generally collect tuition in the local currency. Exchange rates between the U.S. dollar and the local currency in the countries where we operate institutions are likely to fluctuate from period to period. In 2022, essentially all of our revenues originated outside the United States.
We report revenues, costs and earnings in U.S. dollars, while our institutions generally collect tuition in the local currency. Exchange rates between the U.S. dollar and the local currency in the countries where we operate institutions are likely to fluctuate from period to period. In 2023, essentially all of our revenues originated outside the United States.
Any failure by us to effectively manage the challenges associated with our operations could materially adversely affect our business, financial condition and results of operations. 15 If we cannot maintain student enrollments in our institutions and maintain tuition levels, our results of operations may be materially adversely affected.
Any failure by us to effectively manage the challenges associated with our operations could materially adversely affect our business, financial condition and results of operations. 16 If we cannot maintain student enrollments in our institutions and maintain tuition levels, our results of operations may be materially adversely affected.
If we cannot respond effectively to market changes, our business may be materially adversely affected. Even if we are able to develop acceptable new programs, we may not be able to introduce these new programs as quickly as students or employers require or as quickly as our competitors are 17 able to introduce competing programs.
If we cannot respond effectively to market changes, our business may be materially adversely affected. Even if we are able to develop acceptable new programs, we may 18 not be able to introduce these new programs as quickly as students or employers require or as quickly as our competitors are able to introduce competing programs.
Any failure to accomplish this may have a material adverse effect on our future growth. 16 If we do not effectively manage our growth and business, our results of operations may be materially adversely affected.
Any failure to accomplish this may have a material adverse effect on our future growth. 17 If we do not effectively manage our growth and business, our results of operations may be materially adversely affected.
An epidemic, pandemic or other public health emergency, such as the current COVID-19 pandemic and the efficacy and distribution of COVID-19 vaccines, in the locations in which our students, faculty, and staff live, work and attend classes could have an adverse effect on our business, financial condition, cash flows and results of operations.
An epidemic, pandemic or other public health emergency, such as the COVID-19 pandemic and the efficacy and use of COVID-19 vaccines, in the locations in which our students, faculty, and staff live, work and attend classes could have an adverse effect on our business, financial condition, cash flows and results of operations.
A number of our institutions in Mexico and Peru are located in areas that are prone to damage from major weather events, which may be substantial and may occur with higher frequency or severity or be less predictable in the future due to the effects of climate change.
A number of our institutions in Mexico and Peru are located in areas that are prone to damage from natural or other disasters and major weather events, which may be substantial and may occur with higher frequency or severity or be less predictable in the future due to the effects of climate change.
We also collect and maintain personal information of our employees in the ordinary course of our business. In addition, we collect and maintain other types of information, such as leads, that may include personal information of our business contacts in the ordinary course of our business.
In addition, we collect and maintain other types of information, such as leads, that may include personal information of our business contacts in the ordinary course of our business.
An epidemic, pandemic or other public health emergency, such as the global coronavirus (COVID-19) pandemic and the efficacy and distribution of COVID-19 vaccines, could have a material adverse effect on our business, financial condition, cash flows and results of operations.
An epidemic, pandemic or other public health emergency, such as the global coronavirus (COVID-19) pandemic, could have a material adverse effect on our business, financial condition, cash flows and results of operations.
While the Mexican peso and the Peruvian nuevo sol strengthened against the U.S. dollar in 2022, in recent years, the U.S. dollar has strengthened against many international currencies, including the Mexican peso and Peruvian nuevo sol.
While the Mexican peso and the Peruvian nuevo sol strengthened against the U.S. dollar in 2023, in recent years, the U.S. dollar has strengthened against many international currencies, including the Mexican peso and Peruvian nuevo sol.
Also as of December 31, 2022, we had $100 million of U.S. dollar denominated debt obligations outstanding under our Senior Secured Credit Facility, As a result, we rely on our operating subsidiaries to pay dividends or to make distributions or other payments to their parent companies.
Also as of December 31, 2023, we had $59 million of U.S. dollar denominated debt obligations outstanding under our Senior Secured Credit Facility, As a result, we rely on our operating subsidiaries to pay dividends or to make distributions or other payments to their parent companies.
We conduct all of our operations through certain of our subsidiaries, and we have no significant assets other than cash of approximately $10 million as of December 31, 2022 held at corporate entities and the capital stock or other control rights of our subsidiaries.
We conduct all of our operations through certain of our subsidiaries, and we have no significant assets other than cash of approximately $8 million as of December 31, 2023 held at corporate entities and the capital stock or other control rights of our subsidiaries.
Our Third Amended and Restated Credit Agreement dated as of October 7, 2019 (as amended from time to time, the “Credit Agreement”), which governs our multi-currency revolving credit facility (the “Revolving Credit Facility”), contains various covenants that may limit our ability to engage in specified types of transactions.
Our Third Amended and Restated Credit Agreement dated as of October 7, 2019, as amended in September 2023 (and as may be further amended from time to time, the “Credit Agreement”), which governs our multi-currency revolving credit facility (the 24 “Revolving Credit Facility”), contains various covenants that may limit our ability to engage in specified types of transactions.
This tax applies if the value of stock determined under certain Peruvian valuation rules (calculated in PEN) transferred multiplied by the Peru Ratio exceeds approximately $48 million applying the PEN/USD exchange rate of December 31, 2022 (the Threshold). The Threshold is calculated in PEN and changes with currency exchange rates.
This tax applies if the value of stock determined under certain Peruvian valuation rules (calculated in PEN) transferred multiplied by the Peru Ratio exceeds approximately $53 million applying the PEN/USD exchange rate of December 31, 2023 (the “Threshold”). The Threshold is calculated in PEN and changes with currency exchange rates.
Any computer system error or failure, or a sudden and significant increase in traffic on our institutions’ computer networks, may result in the unavailability of these computer networks. In addition, any significant failure of our computer networks could disrupt our on-campus operations.
Any computer system error or failure, or a sudden and significant increase in traffic on our institutions’ computer networks or those of our third-party providers, may result in the unavailability of these computer networks. In addition, any significant failure of our computer networks could disrupt our on-campus operations.
As of December 31, 2022, the net carrying value of our goodwill and other intangible assets totaled approximately $735 million. Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations.
As of December 31, 2023, the net carrying value of our goodwill and other intangible assets totaled approximately $831 million. Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations.
In determining the amount of such gain subject to such tax, the gain is first multiplied by the percentage of the Company’s value that is represented by its Peruvian business determined under certain Peruvian valuation rules (the Peru Ratio).
In determining the amount of such gain subject to such tax, the gain is first multiplied by the percentage of the Company’s value that is represented by its Peruvian business determined under certain Peruvian valuation rules (the “Peru Ratio”).
If such a transaction were to occur and the Peruvian tax authorities sought to collect the Peruvian capital gains taxes from the Company’s Peruvian subsidiaries that were not paid by such transferor, it could have a material adverse effect on our business, financial condition or results of operations.
If such a transaction were to occur and the Peruvian tax authorities sought to collect the Peruvian capital gains taxes from the Company’s Peruvian subsidiaries that were not paid by such transferor, it could have a material adverse effect on our business, financial condition or results of operations. Item 1B. Unresolved Staff Comments None.
Mexico and Peru have passed or are considering similar privacy regulations, resulting in additional compliance burdens and uncertainty as to how some of these laws will be interpreted.
Mexico and Peru have passed or are considering enhanced privacy and data security regulations, resulting in additional compliance burdens and uncertainty as to how some of these laws will be interpreted.
The marketplace for senior executive management candidates is very competitive. Unplanned or repeated turnover within the senior management ranks in the corporate team or in the regions in which we operate can lead to instability or weakness in oversight that creates the conditions for gaps in performance and non-compliance with our control environment or public company reporting requirements.
Unplanned or repeated turnover within the senior management ranks in the corporate team or in the regions in which we operate can lead to instability or weakness in oversight that creates the conditions for gaps in performance and non-compliance with our control environment or public company reporting requirements.
As circumstances change and if some or all of these undistributed foreign earnings are remitted to the United States, we may be required to recognize deferred tax liabilities on any amounts that we are unable to repatriate in a tax-free manner. We are subject to regular review and audit by both domestic and foreign tax authorities.
As circumstances change and if some or all of these undistributed foreign earnings are remitted to the United States, we may be required to recognize deferred tax liabilities on any amounts that we are unable to repatriate in a tax-free manner.
Because a significant portion of our expenses do not vary proportionately with the fluctuations in our revenues, our results in a particular fiscal quarter may not indicate accurately the results we will achieve in a subsequent quarter or for the full fiscal year. 19 Connectivity constraints or technology system disruptions to our computer networks could have a material adverse effect on our ability to attract and retain students.
Because a significant portion of our expenses do not vary proportionately with the fluctuations in our revenues, our results in a particular fiscal quarter may not indicate accurately the results we will achieve in a subsequent quarter or for the full fiscal year. 20 Connectivity constraints or technology system breaches and/or disruptions to our computer networks could have a material adverse effect on our ability to attract and retain students and subject us to liability, reputational damage or interrupt the operation of our business.
For the year ended December 31, 2022, a hypothetical 10% adverse change in average annual foreign currency exchange rates would have decreased our operating income and our Adjusted EBITDA by approximately $35.6 million and $41.3 million, respectively.
For the year ended December 31, 2023, a hypothetical 10% adverse change in average annual foreign currency exchange rates would have decreased our operating income and our Adjusted EBITDA by approximately $40.6 million and $47.7 million, respectively.
We run the online operations of our institutions on different platforms, which are in various stages of development. The performance and reliability of these online operations are critical to the reputation of our institutions and our ability to attract and retain students.
We rely upon our information technology systems and infrastructure to operate our business. We run the online operations of our institutions on different platforms, which are in various stages of development. The performance and reliability of these online operations are critical to the reputation of our institutions and our ability to attract and retain students.
The existence of any material weakness in our internal control over financial reporting also could result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause the holders of our common stock to lose confidence in our reported financial information, all of which could materially adversely affect our business and share price. 23 Risks Relating to Our Indebtedness Our debt agreements contain, and future debt agreements may contain, restrictions that may limit our flexibility in operating our business.
The existence of any material weakness in our internal control over financial reporting also could result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause the holders of our common stock to lose confidence in our reported financial information, all of which could materially adversely affect our business and share price.
We are subject to privacy and information security laws and regulations due to our collection and use of personal information, and any violations of those laws or regulations, or any breach, theft or loss of that information, could materially adversely affect our reputation and operations.
Any breach, theft or loss of personal information that we collect or any violations of the privacy and information security laws and regulations to which we are subject could materially adversely affect our reputation and operations. Possession and use of personal information in our operations subjects us to risks and costs that could harm our business.
It may be difficult to maintain consistency in the quality of our faculty and administrative staff. If we are unable to, or are perceived to be unable to, attract and retain experienced and qualified faculty, our business, financial condition and results of operations may be materially adversely affected.
If we are unable to, or are perceived to be unable to, attract and retain experienced and qualified faculty, our business, financial condition and results of operations may be materially adversely affected. Litigation and divestiture-related indemnification obligations may materially adversely affect our business, financial condition and results of operations.
If we are unable to obtain needed capital on terms acceptable to us, we may need to limit our growth initiatives or take other actions that materially adversely affect our business, financial condition, results of operations and cash flows. 24 Risks Relating to Investing in Our Common Stock As a public benefit corporation, our focus on a specific public benefit purpose and producing a positive effect for society may negatively influence our financial performance.
If we are unable to obtain needed capital on terms acceptable to us, we may need to limit our growth initiatives or take other actions that materially adversely affect our business, financial condition, results of operations and cash flows.
All of these regulations and their applicable interpretations are subject to change. Moreover, regulatory agencies may scrutinize our institutions because they are owned or controlled by a U.S.-based for-profit corporation. Changes in applicable regulations may cause a material adverse effect on our business, financial condition and results of operations.
Additionally, our institutions are subject to requirements and limitations imposed by the governmental regulatory bodies of the various countries in which they are located. All of these regulations and their applicable interpretations are subject to change. Moreover, regulatory agencies may scrutinize our institutions because they are owned or controlled by a U.S.-based for-profit corporation.
The higher education market is very competitive, and we may not be able to compete effectively. Higher education markets around the world are highly fragmented and are very competitive and dynamic. Our institutions compete with traditional public and private colleges and universities and other proprietary institutions, including those that offer online professional-oriented programs.
Changes in applicable regulations may cause a material adverse effect on our business, financial condition and results of operations. The higher education market is very competitive, and we may not be able to compete effectively. Our institutions compete with traditional public and private colleges and universities and other proprietary institutions, including those that offer online professional-oriented programs.
Controls and Procedures—Remediation of Material Weaknesses” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. However, we may in the future discover areas of our internal financial and accounting controls and procedures that need improvement. Our internal control over financial reporting will not prevent or detect all errors and all fraud.
We have in the past had material weaknesses in our internal control over financial reporting. We have identified and remediated material weaknesses in the past and may in the future discover areas of our internal financial and accounting controls and procedures that need improvement. Our internal control over financial reporting will not prevent or detect all errors and all fraud.
Possession and use of personal information in our operations subjects us to risks and costs that could harm our business. Our institutions collect, use and retain large amounts of personal information regarding our students and their families, including social security numbers, tax return information, personal and family financial data and credit card numbers.
Our institutions collect, use and retain large amounts of personal information regarding our students and their families, including tax identification numbers, tax return information, personal and family financial data and credit card numbers. We also collect and maintain personal information of our employees in the ordinary course of our business.
The process of hiring employees with the combination of skills and attributes required to implement our business strategy can be difficult and time-consuming. Our faculty members in particular are key to the success of our institutions. We face competition in attracting and 21 retaining faculty members who possess the necessary experience and accreditation to teach at our institutions.
Our faculty members in particular are key to the success of our institutions. We face competition in attracting and retaining faculty members who possess the necessary experience and accreditation to teach at our institutions. It may be difficult to maintain consistency in the quality of our faculty and administrative staff.
Any adverse outcome of such a review or audit could have a negative effect on our operating results and financial condition. We are also subject to non-income based taxes, such as payroll, sales, use, value-a dded, net worth, property and goods and services taxes, in both the United States and various foreign jurisdictions.
We are also subject to non-income based taxes, such as payroll, sales, use, value-a dded, net worth, property and goods and services taxes, in both the United States and various foreign jurisdictions. We are under regular audit by tax authorities with respect to these non-income based taxes and may have exposure to additional non-income based tax liabilities.
Individual, sustained or repeated occurrences could significantly damage the reputation of our institutions’ operations and result in a loss of potential or existing students. Additionally, the computer systems and operations of our institutions are vulnerable to interruption or malfunction due to events beyond our control, including natural disasters and other catastrophic events and network and telecommunications failures.
Additionally, our computer systems (and those of our third-party providers) and operations of our institutions are vulnerable to interruption or malfunction due to events beyond our control, including cyber-attacks, natural disasters and other catastrophic events and network and telecommunications failures.
Despite our success in effectively transitioning all of our students to an online learning environment shortly after COVID-19 was declared a global pandemic in March 2020, the expansion of our existing online programs and the creation of new online academic programs may not be accepted by students or employers, or by government regulators or accreditation agencies.
The expansion of our existing online programs and the creation of new online academic programs may not be accepted by students or employers, or by government regulators or accreditation agencies.
In the event of a sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions. Protests and strikes may disrupt our ability to hold classes as well as our ability to attract and retain students, which could materially adversely affect our operations.
Protests and strikes may disrupt our ability to hold classes as well as our ability to attract and retain students, which could materially adversely affect our operations.
See “Item 3—Legal Proceedings.” 22 We are subject to anti-corruption laws in the jurisdictions in which we operate, including the U.S. Foreign Corrupt Practices Act (the “FCPA”), as well as trade compliance and economic sanctions laws and regulations.
If we incur costs associated with indemnification claims related to our divestitures, our business, financial condition and results of operations may be adversely affected. 23 We are subject to anti-corruption laws in the jurisdictions in which we operate, including the U.S. Foreign Corrupt Practices Act (the “FCPA”), as well as trade compliance and economic sanctions laws and regulations.
Therefore, we remain cautious about how the economy might behave for the next few years and continue to monitor the potential impact of COVID-19 on our operations. Any general economic slowdown or recession that disproportionately impacts the countries in which our institutions operate could have a material adverse effect on our business, financial condition, cash flows and results of operations.
Any general economic slowdown or recession that disproportionately impacts the countries in which our institutions operate could have a material adverse effect on our business, financial condition, cash flows and results of operations. In the event of a sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions.
Removed
We are under regular audit by tax authorities with respect to these non-income based taxes and may have exposure to additional non-income based tax liabilities.
Added
We are subject to regular review and au dit by both domestic and foreign tax authorities of entities related to both our current operations and operations related to divested entities. Any adverse outcome of such a review or audit could have a negative effect on our operating results and financial condition.
Removed
For example, the European Union’s privacy and data security regulation, the General Data Protection Regulation (the “GDPR”), imposes more stringent requirements in how we collect and process personal data and provides for significantly greater penalties for noncompliance.
Added
Individual, sustained or repeated occurrences could significantly damage the reputation of our institutions’ operations and result in a loss of potential or existing students.
Removed
Our institutions are vulnerable to natural or other disasters, including fires, floods, earthquakes, hurricanes and other events beyond our control.
Added
For example, in 2023, the weather phenomenon known as El Niño returned. Peru and its economy are particularly vulnerable to El Niño, which generally results in an increase in storms, flooding and mudslides.
Removed
For example, in 2017, Peru’s normally arid regions experienced historic, torrential rainfall and subsequent flooding. At least one of our campuses located there suffered flood-related damage. There, as elsewhere in the country, flood-related damage caused a range of disruptions, including in our case a delay in the regularly scheduled start of classes for the semester, which caused revenue disruptions.
Added
Depending upon the severity of El Niño and its resulting impact on Peru and its economy, we may experience a range of disruptions, including campus closures, reductions in enrollment and flood-related damage, which could have a material adverse effect on our financial condition and results of operations.
Removed
We may be unable to recruit, train and retain qualified and experienced faculty and administrative staff at our institutions. Our success and ability to grow depend on the ability to hire and retain large numbers of talented people.
Added
Our success and ability to grow depend on the ability to hire and retain large numbers of talented people. The process of hiring employees with the combination of skills and attributes required to implement our business strategy can be difficult and time-consuming. The marketplace for senior executive management candidates is very competitive.
Removed
Litigation may materially adversely affect our business, financial condition and results of operations.
Added
See “Item 3—Legal Proceedings.” In the past, we have divested a number of businesses. As customary, we have contractually agreed to indemnify the buyers against certain liabilities and obligations related to the divestiture.
Removed
We have in the past had material weaknesses in our internal control over financial reporting. In 2018, we remediated each of the four material weaknesses that were previously identified and were disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. See “Item 9A.
Added
Risks Relating to Our Indebtedness Our debt agreements contain, and future debt agreements may contain, restrictions that may limit our flexibility in operating our business.
Added
Risks Relating to Investing in Our Common Stock As a public benefit corporation, our focus on a specific public benefit purpose and producing a positive effect for society may negatively influence our financial performance.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeThe following table summarizes the Company's properties by segment as of December 31, 2022: Segment Square feet leased space Square feet owned space Total square feet Mexico 25,173,389 8,529,832 33,703,221 Peru 623,614 5,464,092 6,087,706 Corporate (including headquarters) 10,059 — 10,059 Other — 109,104 109,104 Total 25,807,062 14,103,028 39,910,090 Our Mexico and Peru segments lease or own various sites that may include a local headquarters and all or some of the facilities of a campus or location.
Biggest changeThe following table summarizes the Company's properties by segment as of December 31, 2023: Segment Square feet leased space Square feet owned space Total square feet Mexico 25,105,361 8,498,457 33,603,818 Peru 717,490 5,341,244 6,058,734 Corporate (including headquarters) 6,589 — 6,589 Other — 109,104 109,104 Total 25,829,440 13,948,805 39,778,245 Our Mexico and Peru segments lease or own various sites that may include a local headquarters and all or some of the facilities of a campus or location.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+3 added−2 removed1 unchanged
Biggest changeAccordingly, we have paid assessments totaling approximately $40.8 million for tax years during the period 2006 to 2015. We have filed various appeals of the assessments, which have been rejected.
Biggest changeAccordingly, we have paid assessments totaling approximately $40.8 million for tax years during the period from 2006 to 2015. We filed various appeals of the assessments, which were rejected, and in June 2023, the Spanish Supreme Court ruled in favor of the STA on its appeal regarding these issues.
Removed
However, a decision is still pending with respect to the STA’s appeal to the Spanish Supreme Court on these issues, which the Company believes will provide resolution of the relevant issues raised in the Company’s objections to the assessments. The Company does not expect that this matter will have a material effect on its consolidated financial statements. Item 4.
Added
As a result, the Company has no further recourse with respect to the related final assessments for tax years 2006 to 2010. This ruling does not have a material effect on the Company’s consolidated financial statements.
Removed
Mine Safety Disclosures Not applicable. 27 Part II
Added
In May 2023, we were notified by the STA that an audit of our former Spanish holding company was being initiated in relation to corporate income tax for the period from January 2018 to May 2020 and withholding on account of non-resident income tax for the period from May 2019 to May 2020.
Added
The Company will continue to work with the STA on this matter and believes that it is in compliance with Spanish tax law. Item 4. Mine Safety Disclosures Not applicable. 29 Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−2 removed10 unchanged
Biggest changeIn addition, in November 2022 the Company paid a special cash dividend of $0.68 per share of the Company’s common stock to each holder of record on November 4, 2022.
Biggest changeFurthermore, in November 2022, the Company paid a special cash dividend of $0.68 per share of the Company’s common stock to each holder of record on November 4, 2022. In addition, in November 2023, the Company paid a special cash dividend of $0.70 per share of the Company’s common stock to each holder of record on November 15, 2023.
Accordingly, the performance graph below adjusts for these distributions. 29 The information contained in the performance graphs shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be deemed incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate it by reference into such filing.
Accordingly, the performance graph below adjusts for these distributions. 31 The information contained in the performance graphs shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be deemed incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate it by reference into such filing.
The performance graph assumes $100 investment on December 31, 2017 in either our common stock, the companies in our industry peer group, or the Nasdaq Composite Index. Data for the Nasdaq Composite Index and our peer group assume reinvestment of dividends. The peer group included in the performance graph above consists of Strategic Education, Inc. (STRA), Adtalem Global Education, Inc.
The performance graph assumes $100 investment on December 31, 2018 in either our common stock, the companies in our industry peer group, or the Nasdaq Composite Index. Data for the Nasdaq Composite Index and our peer group assume reinvestment of dividends. The peer group included in the performance graph above consists of Strategic Education, Inc. (STRA), Adtalem Global Education, Inc.
Subject to the foregoing, the payment of cash dividends in the future, if any, will be at the discretion of our Board of Directors and will depend upon such factors as earnings levels, capital requirements, our overall financial condition and any other factors deemed relevant by our Board of Directors. 28 Stock Performance Graph The following graph compares the cumulative total return of our common stock, an industry peer group index, and the Nasdaq Composite Index from December 31, 2017 through December 31, 2022.
Subject to the foregoing, the payment of cash dividends in the future, if any, will be at the discretion of our Board of Directors and will depend upon such factors as earnings levels, capital requirements, our overall financial condition and any other factors deemed relevant by our Board of Directors. 30 Stock Performance Graph The following graph compares the cumulative total return of our common stock, an industry peer group index, and the Nasdaq Composite Index from December 31, 2018 through December 31, 2023.
Following the conversion, the Company has only one class of common stock outstanding. Holders of Record There were 70 holders of record of our common stock as of January 31, 2023.
Following the conversion, the Company has only one class of common stock outstanding. Holders of Record There were 58 holders of record of our common stock as of January 31, 2024.
Removed
Issuer Purchases of Equity Securities (in thousands, except per share amounts) The following table provides a summary of the Company’s purchases of its common stock during the fourth quarter of the fiscal year ended December 31, 2022: Period Total number of shares purchased (1) 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 10/1/22 - 10/31/22 — $ — — $ — 11/1/22 - 11/30/22 7,971 $ 9.41 — $ — 12/1/22 - 12/31/22 — $ — — $ — Total 7,971 $ 9.41 — $ — (1) The secondary offering that was completed on November 22, 2022 also included the Company's repurchase of 7,971 shares of common stock from the underwriters at a price per share of $9.40875.
Added
Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None. Item 6. [Reserved]
Removed
During the third quarter of 2022, the Company's repurchases reached the total authorized limit under its previous stock repurchase program of $650 million and the Company has not authorized a new repurchase program. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

89 edited+35 added−60 removed109 unchanged
Biggest changeAccordingly, 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. 39 The following table presents Adjusted EBITDA and reconciles income (loss) from continuing operations to Adjusted EBITDA for the years ended December 31, 2022 , 2021 and 2020: % Change Better/(Worse) (in millions) 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Income (loss) from continuing operations $ 60.7 $ (283.1) $ (320.6) 121 % 12 % Plus: Equity in net income of affiliates, net of tax (0.3) — (0.2) nm (100) % Income tax expense (benefit) 185.4 145.6 (130.1) (27) % nm Income (loss) from continuing operations before income taxes and equity in net income of affiliates 245.9 (137.5) (450.8) nm 69 % Plus: (Gain) loss on disposal of subsidiaries, net (1.4) 0.6 7.3 nm 92 % Foreign currency exchange loss (gain), net 17.4 (13.8) (13.5) nm 2 % Other (income) expense, net (0.8) 1.7 2.4 147 % 29 % Loss on derivatives — 24.5 26.0 100 % 6 % Loss on debt extinguishment — 77.9 0.6 100 % nm Interest expense 16.4 46.3 100.9 65 % 54 % Interest income (7.6) (4.4) (2.2) 73 % 100 % Operating income (loss) 270.0 (4.6) (329.3) nm 99 % Plus: Depreciation and amortization 59.1 101.2 83.1 42 % (22) % EBITDA 329.1 96.6 (246.2) nm 139 % Plus: Share-based compensation expense (a) 8.8 8.9 10.2 1 % 13 % Loss on impairment of assets (b) 0.1 72.5 352.0 100 % 79 % EiP implementation expenses (c) 0.8 75.4 89.6 99 % 16 % Adjusted EBITDA $ 338.9 $ 253.4 $ 205.7 34 % 23 % 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.
Biggest changeAccordingly, 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. 40 The following table presents Adjusted EBITDA and reconciles Net income to Adjusted EBITDA for the years ended December 31, 2023 , 2022 and 2021: % Change Better/(Worse) (in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Net income $ 107.3 $ 69.0 $ 203.8 56 % (66) % Plus: Loss (income) from discontinued operations, net of tax 9.8 (8.3) (486.9) nm (98) % Income (loss) from continuing operations 117.0 60.7 (283.1) 93 % 121 % Plus: Equity in net income of affiliates, net of tax (0.2) (0.3) — (33) % nm Income tax expense 137.6 185.4 145.6 26 % (27) % Income (loss) from continuing operations before income taxes and equity in net income of affiliates 254.5 245.9 (137.5) 3 % nm Plus: (Gain) loss on disposal of subsidiaries, net (3.6) (1.4) 0.6 157 % nm Foreign currency exchange loss (gain), net 75.7 17.4 (13.8) nm nm Other expense (income), net 0.3 (0.8) 1.7 (138) % 147 % Interest expense 21.0 16.4 46.3 (28) % 65 % Interest income (9.1) (7.6) (4.4) 20 % 73 % Loss on derivatives — — 24.5 nm 100 % Loss on debt extinguishment — — 77.9 nm 100 % Operating income (loss) 338.8 270.0 (4.6) 25 % nm Plus: Depreciation and amortization 69.6 59.1 101.2 (18) % 42 % EBITDA 408.4 329.1 96.6 24 % nm Plus: Share-based compensation expense (a) 7.1 8.8 8.9 19 % 1 % Loss on impairment of assets (b) 3.1 0.1 72.5 nm 100 % EiP implementation expenses (c) — 0.8 75.4 100 % 99 % Adjusted EBITDA $ 418.6 $ 338.9 $ 253.4 24 % 34 % 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.
Operating income (loss) changed by $274.6 million to income of $270.0 million for 2022 from loss of $(4.6) million for 2021. This increase in operating income was primarily a result of the impairment loss related to the Laureate tradename impairment that was recognized during 2021, combined with higher operating income at our Mexico and Peru segments during 2022.
Operating income (loss) changed by $274.6 million to income of $270.0 million for 2022 from a loss of $(4.6) million for 2021. This increase in operating income was primarily a result of the impairment loss related to the Laureate tradename impairment that was recognized during 2021, combined with higher operating income at our Mexico and Peru segments during 2022.
This decrease was primarily attributable to lower cash receipts from the sales of discontinued operations of $2,067.4 million, from $2,150.8 million, net, in 2021 (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 a portion 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, in 2022 (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 was primarily attributable to lower cash receipts from the sales of discontinued operations of $2,067.4 million, from $2,150.8 million, net, in 2021 (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 a portion 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, in 2022 (primarily related to the receipt of the escrow receivable related to the 2021 sale of Walden University, and the collection of certain receivables from the sale of our Brazilian operations).
This increase in operating cash flows was attributable to: (1) increased operating income combined with the net effect of changes in operating assets and liabilities, which increased operating cash by $143.8 million compared to 2021; (2) lower cash paid for taxes of $97.3 million, from $251.1 million in 2021 to $153.8 million in 2022, a decrease primarily driven by the payment of estimated taxes related to the sale of Walden University in 2021 and payment of withholding taxes for intercompany loans that were capitalized during 2021; (3) the year-over-year effect of $46.8 million of payments for lease termination agreements in 2021; and (4) a decrease in cash paid for interest of $46.4 million, from $63.2 million in 2021 to $16.8 million in 2022, attributable to lower average debt balances.
This increase in operating cash flows was attributable to: (1) increased operating income combined with the net effect of changes in operating assets and liabilities, which increased operating cash by $143.8 million compared to 2021; (2) lower cash paid for taxes of $97.3 million, from $251.1 million in 2021 to $153.8 million in 2022, a decrease primarily driven by the payment of estimated taxes related to the sale of Walden University in 2021 and payment of withholding taxes for intercompany loans that were capitalized during 2021; (3) the year-over-year effect of $46.8 million of 49 payments for lease termination agreements in 2021; and (4) a decrease in cash paid for interest of $46.4 million, from $63.2 million in 2021 to $16.8 million in 2022, attributable to lower average debt balances.
This decrease was primarily attributable to the finite-lived Laureate tradename, which was fully amortized in 2021, combined with a lower depreciable asset base at Corporate following the outsourcing of a majority of our information technology activities to a third-party service provider during 2021. 40 EiP implementation expenses decreased by $74.6 million to $0.8 million for 2022 from $75.4 million for 2021.
This decrease was primarily attributable to the finite-lived Laureate tradename, which was fully amortized in 2021, combined with a lower depreciable asset base at Corporate following the outsourcing of a majority of our information technology activities to a third-party service provider during 2021. EiP implementation expenses decreased by $74.6 million to $0.8 million for 2022 from $75.4 million for 2021.
Additionally, the increase was partially offset by less tax cost associated with the Netherlands intellectual property restructuring when compared to the prior year. Income from discontinued operations, net of tax decreased by $478.6 million to $8.3 million for 2022 from $486.9 million for 2021. This decrease was primarily attributable to the gain on sale of Walden University during 2021.
Additionally, the increase was partially offset by less tax cost associated with the Netherlands intellectual property restructuring when compared to the prior year. 39 Income from discontinued operations, net of tax decreased by $478.6 million to $8.3 million for 2022 from $486.9 million for 2021. This decrease was primarily attributable to the gain on sale of Walden University during 2021.
(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 $73.5 million, a 14% increase from 2021. • Organic enrollment increased during 2022 by 9%, increasing revenues by $41.8 million. • Revenues from our Mexico segment represented 50% of our consolidated total revenues for both 2022 and 2021.
(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 $73.5 million, a 14% increase from 2021. • Organic enrollment increased during 2022 by 9%, increasing revenues by $41.8 million. • Revenues from our Mexico segment represented 50% of our consolidated total revenues for 2022 and 2021.
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 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 previous dispositions.
Revenues increased by $87.1 million, a 16% increase from 2021. • Organic enrollment increased during 2022 by 14%, increasing revenues by $70.1 million. • Revenues from our Peru segment represented 50% of our consolidated total revenues for both 2022 and 2021. Adjusted EBITDA increased by $21.0 million, a 9% increase from 2021.
Revenues increased by $87.1 million, an 16% increase from 2021. • Organic enrollment increased during 2022 by 14%, increasing revenues by $70.1 million. • Revenues from our Peru segment represented 50% of our consolidated total revenues for both 2022 and 2021. Adjusted EBITDA increased by $21.0 million, a 9% increase from 2021.
Additionally, cost-reduction efforts resulted in lower operating costs at Corporate in 2022, as compared to 2021. 37 Interest expense, net of interest income decreased by $33.0 million to $8.9 million for 2022 from $41.9 million for 2021.
Additionally, cost-reduction efforts resulted in lower operating costs at Corporate in 2022, as compared to 2021. Interest expense, net of interest income decreased by $33.0 million to $8.9 million for 2022 from $41.9 million for 2021.
See Overview for further detail on results of the Discontinued Operations. Net loss (income) attributable to noncontrolling interests changed by $11.9 million to a loss of $0.6 million for 2022 from an income of $(11.3) million for 2021.
See Overview for further detail on results of the Discontinued Operations. Net loss (income) attributable to noncontrolling interests changed by $11.9 million to a loss of $0.6 million for 2022 from income of $(11.3) million for 2021.
A reporting unit is defined as a component of an operating segment for which discrete financial information is available and regularly reviewed by management of the segment.
A reporting unit is defined as a 50 component of an operating segment for which discrete financial information is available and regularly reviewed by management of the segment.
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 approximately 36% of the total higher-education market.
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 approximately 37% of the total higher-education market.
Peru Financial Overview 43 Comparison of Peru Results for the Year Ended December 31, 2022 to the Year Ended December 31, 2021 (in millions) Revenues Direct Costs Adjusted EBITDA December 31, 2021 $ 537.1 $ 291.4 $ 245.7 Organic enrollment (1) 70.1 Product mix, pricing and timing (1) 5.3 Organic constant currency 75.4 60.8 14.6 Foreign exchange 11.7 5.3 6.4 December 31, 2022 $ 624.2 $ 357.5 $ 266.7 (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.
Comparison of Peru Results for the Year Ended December 31, 2022 to the Year Ended December 31, 2021 (in millions) Revenues Direct Costs Adjusted EBITDA December 31, 2021 $ 537.1 $ 291.4 $ 245.7 Organic enrollment (1) 70.1 Product mix, pricing and timing (1) 5.3 Organic constant currency 75.4 60.8 14.6 Foreign exchange 11.7 5.3 6.4 December 31, 2022 $ 624.2 $ 357.5 $ 266.7 (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.
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.
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 30 campuses.
See “Item 1A—Risk Factors—Risks Relating to Our Business—We experience seasonal fluctuations in our results of operations.” 33 Income Tax Expense Our consolidated income tax provision is derived based on the combined impact of federal, state and foreign income taxes.
See “Item 1A—Risk Factors—Risks Relating to Our Business—We experience seasonal fluctuations in our results of operations.” 35 Income Tax Expense Our consolidated income tax provision is derived based on the combined impact of federal, state and foreign income taxes.
Our MD&A is presented in the following sections: • Overview; • Results of Operations; • Liquidity and Capital Resources; • Critical Accounting Policies and Estimates; and • Recently Issued Accounting Standards. 30 Overview Our Business We operate a portfolio of degree-granting higher education institutions in Mexico and Peru.
Our MD&A is presented in the following sections: • Overview; • Results of Operations; • Liquidity and Capital Resources; • Critical Accounting Policies and Estimates; and 32 • Recently Issued Accounting Standards. Overview Our Business We operate a portfolio of degree-granting higher education institutions in Mexico and Peru.
The 6% decrease in capital expenditures for 2022 compared to 2021 was primarily due to the year-over-year effect of divestitures completed in 2021 combined with lower spending in Peru and Corporate, partially offset by higher spending in health science programs in Mexico. The 37% decrease in capital expenditures for 2021 compared to 2020 was primarily due to the completed divestitures.
The 6% decrease in capital expenditures for 2022 compared to 2021 was primarily due to the year-over-year effect of divestitures completed in 2021 combined with lower spending in Peru and Corporate, partially offset by higher spending in health science programs in Mexico.
Our institutions in Peru are generally out of 32 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.
Our institutions in Peru are generally out of 34 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.
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 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 any acquisitions, divestitures and other items, as described in the segments results.
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 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 segment results.
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.
Non-GAAP Financial Measure We define Adjusted EBITDA as net income, before loss (income) from discontinued operations, net of tax, equity in net (income) loss of affiliates, net of tax, and income tax expense (benefit) adjusted for (gain) loss on disposal of subsidiaries, net, foreign currency exchange (gain) loss, net, other expense (income), net, interest expense, interest income, loss on derivatives and loss on debt extinguishment, plus depreciation and amortization, share-based compensation expense, loss on impairment of assets and expenses related to our Excellence-in-Process (EiP) initiative.
For further details on certain impairment items see “Discussion of Significant Items Affecting the Consolidated Results for the Years Ended December 31, 2021 and 2020.” (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.
For further details on certain impairment items see “Discussion of Significant Items Affecting the Consolidated Results for the Year Ended December 31, 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.
These decreases in other non-operating expense were partially offset by foreign currency exchange loss in 2022, compared to a gain in 2021, for a change of $31.2 million. Income tax expense inc reased by $39.8 million to $185.4 million for 2022 from $145.6 million for 2021.
These decreases in other non-operating expense were partially offset by foreign currency exchange loss in 2022, compared to a gain in 2021, for a change of $31.2 million. Income tax expense increased by $39.8 million to $185.4 million for 2022 from $145.6 million for 2021.
We have determined that neither of our reporting units with material goodwill were at risk of failing the goodwill impairment test as of December 31, 2022.
We have determined that neither of our reporting units with material goodwill were at risk of failing the goodwill impairment test as of December 31, 2023.
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.
Covenants Under the Amended 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 Amended Credit Agreement , unless certain conditions are satisfied.
Collectively, we have approximately 423,000 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.
Collectively, we have approximately 448,900 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.
As of December 31, 2022, these 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.
As of December 31, 2023, these conditions were satisfied and, therefore, we were not subject to the leverage ratio. The maximum ratio, as defined, is 3.00x 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.
Deferred tax liabilities have not been recognized for undistributed historical foreign earnings because management believes that the historical retained earnings will be indefinitely reinvested outside the United States under the Company's planned tax-neutral methods.
Deferred tax liabilities have not been recognized for undistributed historical foreign earnings that would be subject to tax because management believes that the historical retained earnings will be indefinitely reinvested outside the United States under the Company's planned tax-neutral methods.
We were in compliance with these covenants as of December 31, 2022. Leases We conduct a significant portion of our operations from leased facilities, including many of our higher education facilities and other office locations.
We were in compliance with these covenants as of December 31, 2023. 47 Leases We conduct a significant portion of our operations from leased facilities, including many of our higher education facilities and other office locations.
Indefinite-lived Intangible Assets The impairment test for indefinite-lived intangible assets, such as indefinite-lived tradenames, generally requires a new determination of the fair value of the intangible asset using the relief-from-royalty method. This method estimates the amount of royalty expense that we would expect to incur if the assets were licensed from a third party.
If required, the quantitative impairment test for indefinite-lived tradenames generally requires a new determination of the fair value of the intangible asset using the relief-from-royalty method. This method estimates the amount of royalty expense that we would expect to incur if the assets were licensed from a third party.
As discussed in Note 9, Leases, in our consolidated financial statements included elsewhere in this Form 10-K, we have significant operating lease liabilities recorded related to our leased facilities, which will require future cash payments. As of December 31, 2022 and 2021, the present value of operating lease liabilities was $415.9 million and $415.3 million, respectively.
As discussed in Note 9, Leases, in our consolidated financial statements included elsewhere in this Form 10-K, we have significant operating lease liabilities recorded related to our leased facilities, which will require future cash payments. As of December 31, 2023 and 2022, the present value of operating lease liabilities was $417.6 million and $415.9 million, respectively.
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 December 31, 2022, our secondary source of liquidity was cash and cash equivalents of $85.2 million. Our cash accounts are maintained with high-quality financial institutions.
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 December 31, 2023, our secondary source of liquidity was cash and cash equivalents of $89.4 million. Our cash accounts are maintained with high-quality financial institutions.
We have analyzed our domestic operation's cash repatriation strategies, projected cash flows, projected working capital and liquidity, and the expected availability within the debt or equity markets to provide funds for our domestic needs. Based on our analysis, we believe we have the ability to indefinitely reinvest our historical foreign earnings.
We have analyzed our domestic operation's cash repatriation strategies, projected cash flows, projected working capital and liquidity, and the expected availability within the debt or equity markets to provide funds for our domestic needs. Based on our analysis, we believe we have the ability to indefinitely reinvest our historical foreign earnings that would be subject to tax.
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 73% of the total higher-education market. Laureate owns three institutions in Peru. 31 Corporate is a non-operating business unit whose purpose is to support operations.
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 74% of the total higher-education market. Laureate owns three institutions in Peru, with a footprint of 19 campuses. Corporate is a non-operating business unit whose purpose is to support operations.
Our total capital expenditures for our continuing and discontinued operations, excluding receipts from the sale of subsidiaries and property and equipment, were $53.1 million, $56.3 million and $89.2 million during 2022, 2021 and 2020, respectively.
Our total capital expenditures for our continuing and discontinued operations, excluding receipts from the sale of subsidiaries and property and equipment, were $56.5 million, $53.1 million and $56.3 million during 2023, 2022 and 2021, respectively.
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. As of December 31, 2022, the Company had borrowed $100.0 million of the $410.0 million of available capacity.
From time to time, we draw down on the Revolving Credit Facility , 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. As of December 31, 2023, the Company had borrowed $59.0 million of the $300.0 million of available capacity.
Our significant accounting policies are discussed in Note 2, Significant Accounting Policies, in our consolidated financial statements included elsewhere in this Form 10-K. Our critical accounting policies require the most significant judgments and estimates about the effect of matters that are inherently uncertain.
Actual results could differ from these estimates. Our significant accounting policies are discussed in Note 2, Significant Accounting Policies, in our consolidated financial statements included elsewhere in this Form 10-K. Our critical accounting policies require the most significant judgments and estimates about the effect of matters that are inherently uncertain.
The loan matures in June 2024 and carries a variable interest rate, plus an applicable margin, which is established based on the ratio of debt to EBITDA, as defined in the agreement (12.26% as of December 31, 2022).
The loan matures in June 2024 and carries a variable interest rate, plus an applicable margin, which is established based on the ratio of debt to EBITDA, as defined in the agreement (13.00% as of December 31, 2023).
On May 28, 2021, we completed the sale of our operations in Brazil, which resulted in a pre-tax gain of $33.0 million, including working capital and purchase price adjustments that were completed during the third and fourth quarters of 2021, and contingent consideration that was recognized during the fourth quarter of 2021. 34 On August 12, 2021, we completed the sale of Walden University, which resulted in a pre-tax gain of $619.4 million, including a working capital settlement completed during the fourth quarter of 2021.
On May 28, 2021, we completed the sale of our operations in Brazil, which resulted in a pre-tax gain of $33.0 million, including working capital and purchase price adjustments that were completed during the third and fourth quarters of 2021, and contingent consideration that was recognized during the fourth quarter of 2021.
If our expectations change based on future developments, such that some or all of the undistributed earnings of our foreign subsidiaries may be remitted to the United States in the foreseeable future, we will be required to recognize deferred tax expense and liabilities on any amounts that we are unable to repatriate in a tax-free manner.
If our expectations change based on future developments, such that some or all of the undistributed earnings of our foreign subsidiaries may be remitted to the United States in the foreseeable future, we will be required to recognize deferred tax expense and liabilities on any amounts that we are unable to repatriate in a tax-free manner. 52 Revenue Recognition Our revenues primarily consist of tuition and educational service revenues.
Revenue Recognition Our 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.
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.
The effects of exchange rate changes on cash are presented separately in the consolidated statements of cash flows. 47 The following table summarizes our cash flows from operating, investing, and financing activities for each of the past three fiscal years: (in millions) 2022 2021 2020 Cash provided by (used in): Operating activities $ 178.2 $ (156.1) $ 259.6 Investing activities 30.3 2,044.2 587.4 Financing activities (461.6) (2,683.2) (272.7) Effects of exchange rate changes on cash 1.2 (14.7) (0.5) Change in cash included in current assets held for sale — 288.1 195.8 Net change in cash and cash equivalents and restricted cash $ (251.8) $ (521.7) $ 769.5 Comparison of Cash Flows for the Year Ended December 31, 2022 to the Year Ended December 31, 2021 Operating activities Cash flows from operating activities changed by $334.3 million to a cash inflow of $178.2 million for 2022, compared to a cash outflow of $(156.1) million for 2021.
The effects of exchange rate changes on cash are presented separately in the consolidated statements of cash flows. 48 The following table summarizes our cash flows from operating, investing, and financing activities for each of the past three fiscal years: (in millions) 2023 2022 2021 Cash provided by (used in): Operating activities $ 250.8 $ 178.2 $ (156.1) Investing activities (51.9) 30.3 2,044.2 Financing activities (201.9) (461.6) (2,683.2) Effects of exchange rate changes on cash 6.6 1.2 (14.7) Change in cash included in current assets held for sale (0.5) — 288.1 Net change in cash and cash equivalents and restricted cash $ 3.1 $ (251.8) $ (521.7) Comparison of Cash Flows for the Year Ended December 31, 2023 to the Year Ended December 31, 2022 Operating activities Cash provided by operating activities increased by $72.6 million to $250.8 million for 2023, compared to $178.2 million for 2022.
Operating results for Corporate for the years ended December 31, 2022, 2021 and 2020 were as follows: % Change Better/(Worse) (in millions) 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Revenues $ 4.1 $ 9.2 $ 7.4 (55) % 24 % Expenses 55.3 97.3 104.1 43 % 7 % Adjusted EBITDA $ (51.2) $ (88.1) $ (96.7) 42 % 9 % Comparison of Corporate Results for the Year Ended December 31, 2022 to the Year Ended December 31, 2021 Adjusted EBITDA increased by $36.9 million, a 42% increase from 2021, mainly driven by a decrease in labor costs and other professional fees, related to cost-reduction efforts.
Operating results for Corporate for the years ended December 31, 2023, 2022 and 2021 were as follows: % Change Better/(Worse) (in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Revenues $ — $ 4.1 $ 9.2 (100) % (55) % Expenses 45.2 55.3 97.3 18 % 43 % Adjusted EBITDA $ (45.2) $ (51.2) $ (88.1) 12 % 42 % 45 Comparison of Corporate Results for the Year Ended December 31, 2023 to the Year Ended December 31, 2022 Adjusted EBITDA increased by $6.0 million, a 12% increase from 2022, mainly driven by a decrease in labor expenses and other professional fees, as well as a reduction in IT-related costs.
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; 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.
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; stock repurchases; an indemnification claim; and business development activities.
In addition to the Senior Secured Credit Facility, our subsidiaries had approximately $63.7 million of available borrowing capacity under lines of credit and short-term borrowing arrangements as of December 31, 2022.
In addition to the Revolving Credit Facility, our subsidiaries had approximately $68.8 million of available borrowing capacity under lines of credit and short-term borrowing arrangements as of December 31, 2023.
Other items accounted for the remaining difference of $0.7 million. Comparison of Cash Flows for the Year Ended December 31, 2021 to the Year Ended December 31, 2020 Operating activities Cash flows from operating activities changed by $415.7 million to cash outflow of $(156.1) million for 2021, compared to a cash inflow $259.6 million for 2020.
Other items accounted for the remaining difference of $1.2 million. Comparison of Cash Flows for the Year Ended December 31, 2022 to the Year Ended December 31, 2021 Operating activities Cash flows from operating activities changed by $334.3 million to cash inflow of $178.2 million for 2022, compared to a cash outflow of $(156.1) million for 2021.
Under the updated guidance, the Company continues to have the option of first performing a qualitative goodwill impairment assessment (i.e., step zero) in order to determine if the quantitative impairment test is necessary. The requirement to perform a qualitative assessment for a reporting unit with a zero or negative carrying amount is eliminated.
Under the updated guidance, the Company continues to have the option of first performing a qualitative goodwill impairment assessment (i.e., step zero) in order to determine if a quantitative impairment test is necessary.
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. 35 Summary Comparison of Consolidated Results Discussion of Significant Items Affecting the Consolidated Results for the Years Ended December 31, 2021 and 2020 Year Ended December 31, 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.
Summary Comparison of Consolidated Results Discussion of Significant Items Affecting the Consolidated Results for the Year Ended December 31, 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.
The following tables, derived from our consolidated financial statements included elsewhere in this Form 10-K, present selected financial information of our reportable segments: (in millions) % Change Better/(Worse) For the year ended December 31, 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Revenues: Mexico $ 613.9 $ 540.4 $ 534.6 14 % 1 % Peru 624.2 537.1 482.9 16 % 11 % Corporate 4.1 9.2 7.4 (55) % 24 % Consolidated Total Revenues $ 1,242.3 $ 1,086.7 $ 1,024.9 14 % 6 % Adjusted EBITDA: Mexico $ 123.4 $ 95.8 $ 112.9 29 % (15) % Peru 266.7 245.7 189.5 9 % 30 % Corporate (51.2) (88.1) (96.7) 42 % 9 % Consolidated Total Adjusted EBITDA $ 338.9 $ 253.4 $ 205.7 34 % 23 % 41 Mexico Financial Overview Comparison of Mexico Results for the Year Ended December 31, 2022 to the Year Ended December 31, 2021 (in millions) Revenues Direct Costs Adjusted EBITDA December 31, 2021 $ 540.4 $ 444.6 $ 95.8 Organic enrollment (1) 41.8 Product mix, pricing and timing (1) 25.4 Organic constant currency 67.2 54.8 12.4 Foreign exchange 6.3 4.2 2.1 Other (2) — (13.1) 13.1 December 31, 2022 $ 613.9 $ 490.5 $ 123.4 (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.
The following tables, derived from our consolidated financial statements included elsewhere in this Form 10-K, present selected financial information of our reportable segments: (in millions) % Change Better/(Worse) For the year ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Revenues: Mexico $ 782.6 $ 613.9 $ 540.4 27 % 14 % Peru 701.7 624.2 537.1 12 % 16 % Corporate — 4.1 9.2 (100) % (55) % Consolidated Total Revenues $ 1,484.3 $ 1,242.3 $ 1,086.7 19 % 14 % Adjusted EBITDA: Mexico $ 177.0 $ 123.4 $ 95.8 43 % 29 % Peru 286.9 266.7 245.7 8 % 9 % Corporate (45.2) (51.2) (88.1) 12 % 42 % Consolidated Total Adjusted EBITDA $ 418.6 $ 338.9 $ 253.4 24 % 34 % 42 Mexico Financial Overview Comparison of Mexico Results for the Year Ended December 31, 2023 to the Year Ended December 31, 2022 (in millions) Revenues Direct Costs Adjusted EBITDA December 31, 2022 $ 613.9 $ 490.5 $ 123.4 Organic enrollment (1) 52.2 Product mix, pricing and timing (1) 24.9 Organic constant currency 77.1 44.5 32.6 Foreign exchange 91.6 71.0 20.6 Other (2) — (0.4) 0.4 December 31, 2023 $ 782.6 $ 605.6 $ 177.0 (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.
If certain conditions are satisfied, the Third Amended and Restated Credit Agreement (the Third A&R Credit Agreement) also provides for 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. 45 Liquidity Restrictions Our liquidity is affected by restricted cash balances, which totaled $8.6 million and $20.8 million as of December 31, 2022 and 2021, respectively.
If certain conditions are satisfied, the Amended Credit Agreement also provides for incremental revolving and term loan facilities, at the request of the Company, not to exceed (i) the greater of (a) $172.5 million and (b) 50% of the Company's Consolidated EBITDA, 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 Amended Credit Agreement, on a pro forma basis, does not exceed 2.25x , 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.
On January 25, 2018, we completed the sale of LEI Lie Ying Limited (LEILY). 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.
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.
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.
Other items accounted for the remaining difference of $0.7 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.
Comparison of Corporate Results for the Year Ended December 31, 2021 to the Year Ended December 31, 2020 Adjusted EBITDA increased by $8.6 million, a 9% increase from 2020. • Labor costs and other professional fees decreased expenses by $23.3 million for 2021 compared to 2020, related to cost-reduction efforts.
Comparison of Corporate Results for the Year Ended December 31, 2022 to the Year Ended December 31, 2021 Adjusted EBITDA increased by $36.9 million, a 42% increase from 2021, mainly driven by a decrease in labor costs and other professional fees, related to cost-reduction efforts.
We have granted restricted stock, restricted stock units and performance awards for which the vesting is based on our annual performance metrics. For interim periods, we use our year-to-date actual results, financial forecasts, and other available information to estimate the probability of the award vesting based on the performance metrics.
For interim periods, we use our year-to-date actual results, financial forecasts, and other available information to estimate the probability of the award vesting based on the performance metrics. The related compensation expense recognized is affected by our estimates of the vesting probability of these performance awards.
This 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.
This 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.
This loss is included in Other non-operating expense in the table below and is part of continuing operations as this entity was not part of the strategic shifts described above in Overview. 36 Comparison of Consolidated Results for the Years Ended December 31, 2022, 2021 and 2020 % Change Better/(Worse) (in millions) 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Revenues $ 1,242.3 $ 1,086.7 $ 1,024.9 14 % 6 % Direct costs 907.4 814.5 802.5 (11) % (1) % General and administrative expenses 64.8 204.4 199.8 68 % (2) % Loss on impairment of assets 0.1 72.5 352.0 100 % 79 % Operating income (loss) 270.0 (4.6) (329.3) nm 99 % Interest expense, net of interest income (8.9) (41.9) (98.7) 79 % 58 % Other non-operating expense (15.3) (91.0) (22.8) 83 % nm Income (loss) from continuing operations before income taxes and equity in net income of affiliates 245.9 (137.5) (450.8) nm 69 % Income tax (expense) benefit (185.4) (145.6) 130.1 (27) % nm Equity in net income of affiliates, net of tax 0.3 — 0.2 nm (100) % Income (loss) from continuing operations 60.7 (283.1) (320.6) 121 % 12 % Income (loss) from discontinued operations, net of tax 8.3 486.9 (298.1) (98) % nm Net income (loss) 69.0 203.8 (618.7) (66) % 133 % Net loss (income) attributable to noncontrolling interests 0.6 (11.3) 5.4 (105) % nm Net income (loss) attributable to Laureate Education, Inc. $ 69.6 $ 192.4 $ (613.3) (64) % 131 % 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 Year Ended December 31, 2022 to the Year Ended December 31, 2021 Revenues increased by $155.6 million to $1,242.3 million for 2022 from $1,086.7 million for 2021.
In connection with the lease termination agreement, we recorded a loss of approximately $25.8 million, which is included in Excellence-in-Process (EiP) expenses within Operating (loss) income in the table below. 37 Comparison of Consolidated Results for the Years Ended December 31, 2023, 2022 and 2021 % Change Better/(Worse) (in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Revenues $ 1,484.3 $ 1,242.3 $ 1,086.7 19 % 14 % Direct costs 1,089.8 907.4 814.5 (20) % (11) % General and administrative expenses 52.6 64.8 204.4 19 % 68 % Loss on impairment of assets 3.1 0.1 72.5 nm 100 % Operating income (loss) 338.8 270.0 (4.6) 25 % nm Interest expense, net of interest income (11.9) (8.9) (41.9) (34) % 79 % Other non-operating expense (72.5) (15.3) (91.0) nm 83 % Income (loss) from continuing operations before income taxes and equity in net income of affiliates 254.5 245.9 (137.5) 3 % nm Income tax expense (137.6) (185.4) (145.6) 26 % (27) % Equity in net income of affiliates, net of tax 0.2 0.3 — (33) % nm Income (loss) from continuing operations 117.0 60.7 (283.1) 93 % 121 % (Loss) income from discontinued operations, net of tax (9.8) 8.3 486.9 nm (98) % Net income 107.3 69.0 203.8 56 % (66) % Net loss (income) attributable to noncontrolling interests 0.3 0.6 (11.3) 50 % (105) % Net income attributable to Laureate Education, Inc. $ 107.6 $ 69.6 $ 192.4 55 % (64) % 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 Year Ended December 31, 2023 to the Year Ended December 31, 2022 Revenues increased by $242.0 million to $1,484.3 million for 2023 from $1,242.3 million for 2022.
Recently Issued Accounting Standards Refer to Note 2, Significant Accounting Policies, in our consolidated financial statements included elsewhere in this Form 10-K for recently issued accounting standards.
See Note 11, Share-based Compensation and Equity, in our consolidated financial statements included elsewhere in this Form 10-K for further discussion of these arrangements. Recently Issued Accounting Standards Refer to Note 2, Significant Accounting Policies, in our consolidated financial statements included elsewhere in this Form 10-K for recently issued accounting standards.
This transfer was completed during the second quarter of 2022 and resulted in a gain of approximately $4.3 million. Year Ended December 31, 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.
Year Ended December 31, 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. 36 On January 25, 2018, we completed the sale of LEI Lie Ying Limited (LEILY).
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 December 31, 2022, $77.3 million of our total $85.2 million of cash and cash equivalents were held by foreign subsidiaries. 46 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.
Long-Lived Assets We evaluate our long-lived assets, including property and equipment, to determine whether events or changes in circumstances indicate that the remaining estimated useful lives of such assets may warrant revision or that their carrying values may not be fully recoverable.
Long-Lived Assets We evaluate our long-lived assets, including property and equipment, to determine whether events or changes in circumstances indicate that the remaining estimated useful lives of such assets may warrant revision or that their carrying values may not be fully recoverable. 51 Indicators of impairment include, but are not limited to: • a significant deterioration of operating results; • a change in regulatory environment; • a change in business plans; or • an adverse change in anticipated cash flows.
Comparison of Depreciation and Amortization and EiP Implementation Expenses for the Years Ended December 31, 2022 and 2021 Depreciation and amortization decreased by $42.1 million to $59.1 million for 2022 from $101.2 million for 2021.
The remaining increase in depreciation and amortization expense of $5.2 million was primarily attributed to a higher depreciable asset base in Mexico and Peru. 41 Comparison of Depreciation and Amortization and EiP Implementation Expenses for the Years Ended December 31, 2022 and 2021 Depreciation and amortization decreased by $42.1 million to $59.1 million for 2022 from $101.2 million for 2021.
In December 2017, one of our subsidiaries in Mexico entered into an agreement with a bank for a loan of MXN 1,700.0 million (approximately $89.0 million at the time of the loan).
As of December 31, 2023 and 2022, the aggregate outstanding balances on our lines of credit were $10.9 million and $13.8 million, respectively. In December 2017, one of our subsidiaries in Mexico entered into an agreement with a bank for a loan of MXN 1,700.0 million (approximately $89.0 million at the time of the loan).
Results of the Discontinued Operations The results of operations of the Discontinued Operations for the years ended December 31, 2022, 2021, and 2020 were as follows: For the year ended December 31, 2022 2021 2020 Revenues $ — $ 543.0 $ 1,674.6 Depreciation and amortization expense — — (60.4) Share-based compensation expense — (1.3) (3.1) Other direct costs — (433.1) (1,313.3) Loss on impairment of assets — (1.3) (438.3) Other non-operating expense — (22.3) (68.6) Gain on sale of discontinued operations before taxes, net 7.8 636.2 25.0 Pretax income (loss) of discontinued operations 7.8 721.2 (183.8) Income tax benefit (expense) 0.5 (234.3) (114.3) Income (loss) from discontinued operations, net of tax $ 8.3 $ 486.9 $ (298.1) Year Ended December 31, 2022 The $7.8 million gain in the table above primarily resulted from 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.
Results of the Discontinued Operations The results of operations of the Discontinued Operations for the years ended December 31, 2023, 2022, and 2021 were as follows: For the year ended December 31, 2023 2022 2021 Revenues $ — $ — $ 543.0 Depreciation and amortization expense — — — Share-based compensation expense — — (1.3) Other direct costs — — (433.1) Loss on impairment of assets — — (1.3) Other non-operating expense — — (22.3) (Loss) gain on sale of discontinued operations before taxes, net (9.8) 7.8 636.2 Pretax (loss) income of discontinued operations (9.8) 7.8 721.2 Income tax benefit (expense) — 0.5 (234.3) (Loss) income from discontinued operations, net of tax $ (9.8) $ 8.3 $ 486.9 Year Ended December 31, 2023 The $9.8 million loss in the table above primarily resulted from an adjustment to the sale price of Walden University pursuant to an indemnification claim received from the buyer, as described in Note 5, Dispositions, in our consolidated financial statements included elsewhere in this Form 10-K.
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 revolving credit facility provides for borrowings of $410.0 million and has a maturity date of October 7, 2024.
The Company also maintains a revolving credit facility (the Senior Secured Credit Facility) with a syndicate of financial institutions as a source of liquidity.
Other Debt Other debt includes lines of credit and short-term borrowing arrangements of subsidiaries and notes payable, the significant components of which are described below. As of December 31, 2022 and 2021, the aggregate outstanding balances on our lines of credit were $13.8 million and $10.1 million, respectively.
Senior Secured Credit Facility As of December 31, 2023 and 2022, there was a $59.0 million and $100.0 million balance outstanding under our Senior Secured Credit Facility, respectively. Other Debt Other debt includes lines of credit and short-term borrowing arrangements of subsidiaries and notes payable, the significant components of which are described below.
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.
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 for the Years Ended December 31, 2023 and 2022 Depreciation and amortization increased by $10.5 million to $69.6 million for 2023 from $59.1 million for 2022.
Adjusted EBITDA increased by $27.6 million, a 29% increase from 2021. • The increase in Adjusted EBITDA included a year-over-year benefit from the $13.1 million charge recorded during 2021 related to acquisition-related contingencies. 42 Comparison of Mexico Results for the Year Ended December 31, 2021 to the Year Ended December 31, 2020 (in millions) Revenues Direct Costs Adjusted EBITDA December 31, 2020 $ 534.6 $ 421.7 $ 112.9 Organic enrollment (1) — Product mix, pricing and timing (1) (21.2) Organic constant currency (21.2) (5.6) (15.6) Foreign exchange 27.0 20.6 6.4 Other (2) — 7.9 (7.9) December 31, 2021 $ 540.4 $ 444.6 $ 95.8 (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.
Adjusted EBITDA increased by $53.6 million, a 43% increase from 2022, mainly driven by higher revenues, partially offset by higher costs associated with return-to-campus expenses. 43 Comparison of Mexico Results for the Year Ended December 31, 2022 to the Year Ended December 31, 2021 (in millions) Revenues Direct Costs Adjusted EBITDA December 31, 2021 $ 540.4 $ 444.6 $ 95.8 Organic enrollment (1) 41.8 Product mix, pricing and timing (1) 25.4 Organic constant currency 67.2 54.8 12.4 Foreign exchange 6.3 4.2 2.1 Other (2) — (13.1) 13.1 December 31, 2022 $ 613.9 $ 490.5 $ 123.4 (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.
As of December 31, 2022, restricted cash consisted of cash equivalents held as assets for a supplemental employment retention agreement for a former executive. Indefinite Reinvestment of Foreign Earnings We earn a significant portion of our income from subsidiaries located in countries outside the United States.
Indefinite Reinvestment of Foreign Earnings We earn a significant portion of our income from subsidiaries located in countries outside the United States. As of December 31, 2023, $82.7 million of our total $89.4 million of cash and cash equivalents were held by foreign subsidiaries.
This ASU requires entities to calculate goodwill impairment as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.
Goodwill On January 1, 2020, the Company adopted Accounting Standards Update (ASU) No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. This ASU requires entities to calculate goodwill impairment as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.
Comparison of Peru Results for the Year Ended December 31, 2021 to the Year Ended December 31, 2020 (in millions) Revenues Direct Costs Adjusted EBITDA December 31, 2020 $ 482.9 $ 293.4 $ 189.5 Organic enrollment (1) 75.2 Product mix, pricing and timing (1) 40.8 Organic constant currency 116.0 29.7 86.3 Foreign exchange (61.8) (31.6) (30.2) Other (2) — (0.1) 0.1 December 31, 2021 $ 537.1 $ 291.4 $ 245.7 (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.
Peru Financial Overview 44 Comparison of Peru Results for the Year Ended December 31, 2023 to the Year Ended December 31, 2022 (in millions) Revenues Direct Costs Adjusted EBITDA December 31, 2022 $ 624.2 $ 357.5 $ 266.7 Organic enrollment (1) 27.1 Product mix, pricing and timing (1) 33.1 Organic constant currency 60.2 47.3 12.9 Foreign exchange 17.3 10.0 7.3 December 31, 2023 $ 701.7 $ 414.8 $ 286.9 (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.
A change in the assessment of the outcome of a tax review or audit could materially adversely affect our consolidated financial statements.
A change in the assessment of the outcome of a tax review or audit could materially adversely affect our consolidated financial statements. See Note 13, Income Taxes, in our consolidated financial statements included elsewhere in this Form 10-K for details of our deferred taxes and tax contingencies.
The current quarterly payments on the loan total MXN 72.3 million ($3.7 million at December 31, 2022) 46 and increase over the remaining term of the loan to MXN 76.5 million ($3.9 million at December 31, 2022), with a balloon payment of MXN 425.0 million ($21.9 million at December 31, 2022) due at maturity.
The current quarterly payments on the loan total MXN 76.5 million ($4.5 million at December 31, 2023), with a balloon payment of MXN 425.0 million ($25.0 million at December 31, 2023) due at maturity. As of December 31, 2023 and 2022, the outstanding balance of this loan was $29.5 million and $41.4 million, respectively.
If the estimates and related assumptions used in assessing the recoverability of our goodwill and indefinite-lived tradenames decline, we may be required to record impairment charges for those assets. We base our fair value estimates on assumptions that we believe to be reasonable but that are unpredictable and inherently uncertain. Actual results may differ from those estimates.
We base our fair value estimates on assumptions that we believe to be reasonable but that are unpredictable and inherently uncertain. Actual results may differ from those estimates. In addition, we make certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of our reporting units.
In the event that current collection trends differ from historical trends, an adjustment is made to the allowance account and bad debt expense. Share-Based Compensation We use the Black-Scholes-Merton option pricing model to calculate the fair value of stock options.
In the event that current collection trends differ from historical trends, an adjustment is made to the allowance account and bad debt expense. Share-Based Compensation We have granted restricted stock, restricted stock units and performance awards for which the vesting is based on our annual performance metrics.
Based on the leases outstanding at December 31, 2022, $83.6 million of minimum lease payments will be required during 2023. 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.
Based on the operating leases outstanding at December 31, 2023, $95.0 million of minimum lease payments will be required during 2024. In addition, we had finance lease obligations and sale-leaseback financings of $57.6 million and $48.2 million as of December 31, 2023 and 2022, respectively. Capital Expenditures Capital expenditures primarily consist of purchases of property and equipment.
See Note 13, Income Taxes, in our consolidated financial statements included elsewhere in this Form 10-K for details of our deferred taxes and tax contingencies. 51 Indefinite Reinvestment of Foreign Earnings We earn substantially all of our income from subsidiaries located in countries outside the United States.
Indefinite Reinvestment of Foreign Earnings We earn substantially all of our income from subsidiaries located in countries outside the United States.
Revenues increased by $54.2 million, an 11% increase from 2020. • Organic enrollment increased during 2021 by 16%, increasing revenues by $75.2 million, mainly driven by a robust primary intake cycle during 2021 and increased retention rates. • Revenues from our Peru segment represented 50% of our consolidated total revenues for 2021 compared to 47% for 2020.
Revenues increased by $77.5 million, a 12% increase from 2022. • Organic enrollment increased during 2023 by 6%, increasing revenues by $27.1 million. • Revenues from our Peru segment represented 47% of our consolidated total revenues for 2023 compared to 50% for 2022.
The Company will continue to monitor regulatory developments to assess potential impacts to the Company.
This legislation has not had a material impact on the financial statements and the Company will continue to monitor regulatory developments to assess potential impacts.
For example, during the second quarter of 2020, we recorded an impairment of the indefinite-lived intangible assets that were part of the Chile reporting unit. We have not made material changes to the methodology used to assess impairment loss on indefinite-lived tradenames during the past three fiscal years.
We have not made material changes to the methodology used to assess impairment loss on indefinite-lived tradenames during the past three fiscal years. If the estimates and related assumptions used in assessing the recoverability of our goodwill and indefinite-lived tradenames decline, we may be required to record impairment charges for those assets.
This change was primarily a result of lower impairment charges of $279.5 million, mainly related to the Laureate tradename impairment recognized during 2020. Additionally, operating income at our Peru and Mexico segments increased during 2021 compared to 2020. Interest expense, net of interest income decreased by $56.8 million to $41.9 million for 2021 from $98.7 million for 2020.
This increase in operating income was a result of higher operating income at our Mexico and Peru segments, combined with lower operating costs at Corporate, as compared to 2022. Interest expense, net of interest income increased by $3.0 million to $11.9 million for 2023 from $8.9 million for 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−2 removed3 unchanged
Biggest changeAs a policy, we do not engage in speculative or leveraged transactions, nor do we hold or issue derivatives for trading purposes. 52 Interest Rate Risk We are subject to risk from fluctuations in interest rates, primarily relating to our Senior Secured Credit Facility and certain local debt, which bear interest at variable rates.
Biggest changeInterest Rate Risk We are subject to risk from fluctuations in interest rates, primarily relating to our Senior Secured Credit Facility and certain local debt, which bear interest at variable rates.
These gains and losses are recorded in foreign currency exchange gain (loss) on our consolidated statements of operations. • Gains and losses on foreign currency transactions. These gains and losses are recorded in foreign currency exchange gain (loss) on our consolidated statements of operations.
These gains and losses are recorded in foreign currency 53 exchange gain (loss) on our consolidated statements of operations. • Gains and losses on foreign currency transactions. These gains and losses are recorded in foreign currency exchange gain (loss) on our consolidated statements of operations.
We derived substantially all of our revenues outside of the United States for the year ended December 31, 2022. Our business is transacted through a network of international and domestic subsidiaries, generally in the local currency, considered the functional currency for that subsidiary.
We derived substantially all of our revenues outside of the United States for the year ended December 31, 2023. Our business is transacted through a network of international and domestic subsidiaries, generally in the local currency, considered the functional currency for that subsidiary.
Based on our outstanding variable-rate debt as of December 31, 2022, an increase of 100 basis points in our weighted-average interest rate would result in an increase in interest expense of $1.4 million on an annual basis. Foreign Currency Exchange Risk We use the USD as our reporting currency.
Based on our outstanding variable-rate debt as of December 31, 2023, an increase of 100 basis points in our weighted-average interest rate would result in an increase in interest expense of $0.9 million on an annual basis. Foreign Currency Exchange Risk We use the USD as our reporting currency.
For the year ended December 31, 2022, a hypothetical 10% adverse change in average annual foreign currency exchange rates would have decreased Operating income and Adjusted EBITDA by approximately $35.6 million and $41.3 million, respectively. We monitor the impact of foreign currency movements related to differences between our subsidiaries' local currencies and the USD.
For the year ended December 31, 2023, a hypothetical 10% adverse change in average annual foreign currency exchange rates would have decreased Operating income and Adjusted EBITDA by approximately $40.6 million and $47.7 million, respectively. We monitor the impact of foreign currency movements related to differences between our subsidiaries' local currencies and the USD. 54
We may seek to control a portion of these risks through a risk-management program that includes the use of derivatives to reduce earnings and cash flow volatility associated with changes in interest rates and foreign currency exchange rates.
We may seek to control a portion of these risks through a risk-management program that includes the use of derivatives to reduce earnings and cash flow volatility associated with changes in interest rates and foreign currency exchange rates. As a policy, we do not engage in speculative or leveraged transactions, nor do we hold or issue derivatives for trading purposes.
Removed
Our U.S. debt facilities are primarily denominated in USD. We may enter into foreign exchange forward contracts to protect the USD value of our assets and future cash flows, as well as to reduce the earnings impact of exchange rate fluctuations on receivables and payables denominated in currencies other than the functional currencies.
Removed
See Note 12, Derivative Instruments, in our consolidated financial statements included elsewhere in this Form 10-K for additional discussion regarding our derivatives. 53

Other LAUR 10-K year-over-year comparisons