QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices) | (Zip code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | |||
Emerging growth company |
Page | ||
BRIGHT HORIZONS FAMILY SOLUTIONS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable — net of allowance for credit losses of $1,836 and $1,226 at March 31, 2020 and December 31, 2019, respectively | |||||||
Prepaid expenses and other current assets | |||||||
Total current assets | |||||||
Fixed assets — net | |||||||
Goodwill | |||||||
Other intangible assets — net | |||||||
Operating lease right-of-use assets | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | $ | |||||
Accounts payable and accrued expenses | |||||||
Current portion of operating lease liabilities | |||||||
Deferred revenue | |||||||
Other current liabilities | |||||||
Total current liabilities | |||||||
Long-term debt — net | |||||||
Operating lease liabilities | |||||||
Other long-term liabilities | |||||||
Deferred revenue | |||||||
Deferred income taxes | |||||||
Total liabilities | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.001 par value; 25,000,000 shares authorized and no shares issued or outstanding at March 31, 2020 and December 31, 2019 | |||||||
Common stock, $0.001 par value; 475,000,000 shares authorized; 57,920,154 and 57,884,020 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | |||||||
Additional paid-in capital | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Retained earnings | |||||||
Total stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ |
BRIGHT HORIZONS FAMILY SOLUTIONS INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share data) (Unaudited) | |||||||
Three months ended March 31, | |||||||
2020 | 2019 | ||||||
Revenue | $ | $ | |||||
Cost of services | |||||||
Gross profit | |||||||
Selling, general and administrative expenses | |||||||
Amortization of intangible assets | |||||||
Income from operations | |||||||
Interest expense — net | ( | ) | ( | ) | |||
Income before income tax | |||||||
Income tax expense | ( | ) | ( | ) | |||
Net income | $ | $ | |||||
Earnings per common share: | |||||||
Common stock — basic | $ | $ | |||||
Common stock — diluted | $ | $ | |||||
Weighted average common shares outstanding: | |||||||
Common stock — basic | |||||||
Common stock — diluted |
BRIGHT HORIZONS FAMILY SOLUTIONS INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) (Unaudited) | |||||||
Three months ended March 31, | |||||||
2020 | 2019 | ||||||
Net income | $ | $ | |||||
Other comprehensive income (loss): | |||||||
Foreign currency translation adjustments | ( | ) | |||||
Unrealized loss on interest rate swaps and investments, net of tax | ( | ) | ( | ) | |||
Total other comprehensive income (loss) | ( | ) | |||||
Comprehensive income (loss) | $ | ( | ) | $ |
BRIGHT HORIZONS FAMILY SOLUTIONS INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (In thousands, except share data) (Unaudited) | ||||||||||||||||||||||||||
Three months ended March 31, 2020 | ||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Treasury Stock, at Cost | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders’ Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at January 1, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||
Issuance of common stock under the Equity Incentive Plan | ||||||||||||||||||||||||||
Shares received in net share settlement of stock option exercises and vesting of restricted stock | ( | ) | — | ( | ) | ( | ) | |||||||||||||||||||
Purchase of treasury stock | ( | ) | ( | ) | ||||||||||||||||||||||
Retirement of treasury stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||
Balance at March 31, 2020 | $ | $ | $ | $ | ( | ) | $ | $ |
Three months ended March 31, 2019 | ||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Treasury Stock, at Cost | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders’ Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at January 1, 2019 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||
Issuance of common stock under the Equity Incentive Plan | ||||||||||||||||||||||||||
Shares received in net share settlement of stock option exercises and vesting of restricted stock | ( | ) | — | ( | ) | ( | ) | |||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||
Balance at March 31, 2019 | $ | $ | $ | $ | ( | ) | $ | $ |
BRIGHT HORIZONS FAMILY SOLUTIONS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | |||||||
Three months ended March 31, | |||||||
2020 | 2019 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Impairment losses on long-lived assets | |||||||
Stock-based compensation expense | |||||||
Deferred income taxes | ( | ) | |||||
Other non-cash adjustments — net | ( | ) | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | ( | ) | |||||
Prepaid expenses and other current assets | ( | ) | |||||
Accounts payable and accrued expenses | ( | ) | |||||
Income taxes | |||||||
Deferred revenue | ( | ) | |||||
Leases | |||||||
Other assets | ( | ) | |||||
Other current and long-term liabilities | ( | ) | |||||
Net cash provided by operating activities | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of fixed assets | ( | ) | ( | ) | |||
Proceeds from the disposal of fixed assets | |||||||
Proceeds from the maturity of debt securities and sale of other investments | |||||||
Purchases of other investments and debt securities | ( | ) | ( | ) | |||
Payments and settlements for acquisitions — net of cash acquired | ( | ) | ( | ) | |||
Net cash used in investing activities | ( | ) | ( | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Borrowings under revolving credit facility | |||||||
Payments under revolving credit facility | ( | ) | ( | ) | |||
Principal payments of long-term debt | ( | ) | ( | ) | |||
Purchase of treasury stock | ( | ) | ( | ) | |||
Taxes paid related to the net share settlement of stock options and restricted stock | ( | ) | ( | ) | |||
Proceeds from issuance of common stock upon exercise of options and restricted stock upon purchase | |||||||
Payments of contingent consideration for acquisitions | ( | ) | |||||
Net cash used in financing activities | ( | ) | ( | ) | |||
Effect of exchange rates on cash, cash equivalents and restricted cash | ( | ) | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | |||||
Cash, cash equivalents and restricted cash — beginning of period | |||||||
Cash, cash equivalents and restricted cash — end of period | $ | $ |
BRIGHT HORIZONS FAMILY SOLUTIONS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (In thousands) (Unaudited) | |||||||
Three months ended March 31, | |||||||
2020 | 2019 | ||||||
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS: | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash and cash equivalents, included in prepaid expenses and other current assets | |||||||
Total cash, cash equivalents and restricted cash — end of period | $ | $ | |||||
SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||
Cash payments of interest | $ | $ | |||||
Cash payments of income taxes | $ | $ | |||||
Cash paid for amounts included in the measurement of lease liabilities | $ | $ | |||||
NON-CASH TRANSACTIONS: | |||||||
Fixed asset purchases recorded in accounts payable and accrued expenses | $ | $ | |||||
Contingent consideration issued for acquisitions | $ | $ | |||||
Operating right-of-use assets obtained in exchange for operating lease liabilities — net | $ | $ |
• | furloughing a significant portion of the Company’s employees in proportion to the number of center closures, including center personnel for temporarily closed centers and related support functions in the Company’s corporate offices; |
• | reducing discretionary spending and overhead costs, while prioritizing investments that support current operations and deferring to future periods nonessential and discretionary investments; |
• | temporary voluntary reductions in compensation to certain executive officers and board members; |
• | temporary suspension of share repurchases; |
• | amending the Company’s credit agreement in April 2020 and May 2020 to increase the borrowing capacity of its revolving credit facility from $ |
• | raising $ |
Three months ended March 31, 2020 | |||
Beginning balance at January 1, 2020 | $ | ||
Provision | |||
Write offs and recoveries | ( | ) | |
Ending balance at March 31, 2020 | $ |
Full service center-based child care | Back-up care | Educational advisory services | Total | ||||||||||||
Three months ended March 31, 2020 | |||||||||||||||
North America | $ | $ | $ | $ | |||||||||||
Europe | |||||||||||||||
$ | $ | $ | $ | ||||||||||||
Three months ended March 31, 2019 | |||||||||||||||
North America | $ | $ | $ | $ | |||||||||||
Europe | |||||||||||||||
$ | $ | $ | $ |
Three months ended March 31, | |||||||
2020 | 2019 | ||||||
Operating lease expense (1) | $ | $ | |||||
Variable lease expense (1) | |||||||
Total lease expense | $ | $ |
March 31, 2020 | December 31, 2019 | ||
Weighted average remaining lease term (in years) | |||
Weighted average discount rate |
Operating Leases | |||
Remainder of 2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total lease payments | |||
Less imputed interest | ( | ) | |
Present value of lease liabilities | |||
Less current portion of operating lease liabilities | ( | ) | |
Long-term operating lease liabilities | $ |
Full service center-based child care | Back-up care | Educational advisory services | Total | ||||||||||||
Balance at January 1, 2019 | $ | $ | $ | $ | |||||||||||
Additions from acquisitions | |||||||||||||||
Adjustments to prior year acquisitions | ( | ) | ( | ) | |||||||||||
Effect of foreign currency translation | |||||||||||||||
Balance at December 31, 2019 | |||||||||||||||
Additions from acquisitions | |||||||||||||||
Adjustments to prior year acquisitions | ( | ) | ( | ) | ( | ) | |||||||||
Effect of foreign currency translation | ( | ) | ( | ) | ( | ) | |||||||||
Balance at March 31, 2020 | $ | $ | $ | $ |
March 31, 2020 | Weighted average amortization period | Cost | Accumulated amortization | Net carrying amount | |||||||||
Definite-lived intangibles: | |||||||||||||
Customer relationships | $ | $ | ( | ) | $ | ||||||||
Trade names | ( | ) | |||||||||||
( | ) | ||||||||||||
Indefinite-lived intangibles: | |||||||||||||
Trade names | N/A | — | |||||||||||
$ | $ | ( | ) | $ |
December 31, 2019 | Weighted average amortization period | Cost | Accumulated amortization | Net carrying amount | |||||||||
Definite-lived intangibles: | |||||||||||||
Customer relationships | $ | $ | ( | ) | $ | ||||||||
Trade names | ( | ) | |||||||||||
( | ) | ||||||||||||
Indefinite-lived intangibles: | |||||||||||||
Trade names | N/A | — | |||||||||||
$ | $ | ( | ) | $ |
Estimated amortization expense | |||
Remainder of 2020 | $ | ||
2021 | $ | ||
2022 | $ | ||
2023 | $ | ||
2024 | $ |
March 31, 2020 | December 31, 2019 | ||||||
Term loans | $ | $ | |||||
Deferred financing costs and original issue discount | ( | ) | ( | ) | |||
Total debt | |||||||
Less current maturities | |||||||
Long-term debt | $ | $ |
Term Loans | |||
Remainder of 2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
Total future principal payments | $ |
Derivatives designated as cash flow hedging instruments | Amount of gain (loss) recognized in other comprehensive income (loss) | Consolidated statement of income classification | Amount of net gain (loss) reclassified into earnings | Total effect on other comprehensive income (loss) | ||||||||||
Interest rate swaps | $ | ( | ) | Interest expense — net | $ | ( | ) | $ | ( | ) | ||||
Income tax effect | Income tax expense | |||||||||||||
Net of income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Derivatives designated as cash flow hedging instruments | Amount of gain (loss) recognized in other comprehensive income (loss) | Consolidated statement of income classification | Amount of net gain (loss) reclassified into earnings | Total effect on other comprehensive income (loss) | ||||||||||
Interest rate swaps | $ | ( | ) | Interest expense — net | $ | $ | ( | ) | ||||||
Income tax effect | Income tax expense | ( | ) | |||||||||||
Net of income taxes | $ | ( | ) | $ | $ | ( | ) |
Basic earnings per share: | Three months ended March 31, | ||||||
2020 | 2019 | ||||||
Net income | $ | $ | |||||
Allocation of net income to common stockholders: | |||||||
Common stock | $ | $ | |||||
Unvested participating shares | |||||||
$ | $ | ||||||
Weighted average number of common shares: | |||||||
Common stock | |||||||
Unvested participating shares | |||||||
Earnings per common share: | |||||||
Common stock | $ | $ |
Diluted earnings per share: | Three months ended March 31, | ||||||
2020 | 2019 | ||||||
Earnings allocated to common stock | $ | $ | |||||
Earnings allocated to unvested participating shares | |||||||
Adjusted earnings allocated to unvested participating shares | ( | ) | ( | ) | |||
Earnings allocated to common stock | $ | $ | |||||
Weighted average number of common shares: | |||||||
Common stock | |||||||
Effect of dilutive securities | |||||||
Earnings per common share: | |||||||
Common stock | $ | $ |
Three months ended March 31, 2020 | |||
Balance at January 1, 2020 | $ | ||
Settlement of contingent consideration liabilities | ( | ) | |
Changes in fair value | |||
Foreign currency translation | ( | ) | |
Balance at March 31, 2020 | $ |
Three months ended March 31, 2020 | |||||||||||||||
Foreign currency translation adjustments | Unrealized gain (loss) on interest rate swaps | Unrealized gain (loss) on investments | Total | ||||||||||||
Balance at January 1, 2020 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||
Other comprehensive income (loss) before reclassifications, net of tax | ( | ) | ( | ) | ( | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | — | — | |||||||||||||
Net current period other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | |||||||||
Balance at March 31, 2020 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
Three months ended March 31, 2019 | |||||||||||||||
Foreign currency translation adjustments | Unrealized gain (loss) on interest rate swaps | Unrealized gain (loss) on investments | Total | ||||||||||||
Balance at January 1, 2019 | $ | ( | ) | $ | $ | $ | ( | ) | |||||||
Other comprehensive income (loss) before reclassifications, net of tax | ( | ) | |||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | — | ( | ) | — | ( | ) | |||||||||
Net current period other comprehensive income (loss) | ( | ) | |||||||||||||
Balance at March 31, 2019 | $ | ( | ) | $ | $ | $ | ( | ) |
Full service center-based child care | Back-up care | Educational advisory services | Total | ||||||||||||
Three months ended March 31, 2020 | |||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||
Income from operations (1) | |||||||||||||||
Three months ended March 31, 2019 | |||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||
Income from operations (2) |
(1) | For the three months ended March 31, 2020, income from operations included $ |
(2) | For the three months ended March 31, 2019, income from operations included $ |
• | United States: We are operating approximately 150 centers, most of which are employer-sponsored centers, and have temporarily closed approximately 570 centers. We are continuously monitoring guidance and taking direction from medical experts, the Centers for Disease Control and Prevention (“CDC”) and local, state and federal government authorities in order to determine the timing and cadence of re-opening our temporarily closed centers. |
• | United Kingdom: We are operating approximately 35 centers, and have temporarily closed approximately 280 centers. We are continuously monitoring guidance from the U.K. health authorities in order to determine the timing and cadence of re-opening our temporarily closed centers. |
• | Netherlands: We operate approximately 60 centers in the Netherlands which have remained operational under the Dutch government mandate that requires nurseries to remain open to serve the children of parents who work in vital professions, such as health care or emergency services. On April 21, 2020, the Dutch government announced updated protocols to begin re-opening their economy, specifically announcing that schools will begin to re-open May 11, and we expect that centers will be open to all families as of that date. |
• | Back-up Care and Educational Advisory: Our back-up care and educational advisory segments currently remain operational and available for our clients and their employees. |
• | furloughing a significant portion of our employees in proportion to the number of center closures, including center personnel for temporarily closed centers and related support functions in our corporate offices; |
• | reducing discretionary spending and overhead costs, while prioritizing investments that support current operations and deferring to future periods nonessential and discretionary investments; |
• | temporary voluntary reductions in compensation to certain executive officers and board members; |
• | temporary suspension of share repurchases; |
• | amending our credit agreement in April 2020 and May 2020 to increase the borrowing capacity of our revolving credit facility from $225 million to $400 million; and, |
• | raising $250 million in gross proceeds from the issuance and sale of common stock in April 2020. |
Three Months Ended March 31, | |||||||||||||
2020 | % | 2019 | % | ||||||||||
Revenue | $ | 506,323 | 100.0 | % | $ | 501,758 | 100.0 | % | |||||
Cost of services | 397,464 | 78.5 | % | 374,811 | 74.7 | % | |||||||
Gross profit | 108,859 | 21.5 | % | 126,947 | 25.3 | % | |||||||
Selling, general and administrative expenses | 57,369 | 11.4 | % | 55,875 | 11.1 | % | |||||||
Amortization of intangible assets | 8,209 | 1.6 | % | 8,162 | 1.6 | % | |||||||
Income from operations | 43,281 | 8.5 | % | 62,910 | 12.6 | % | |||||||
Interest expense — net | (10,206 | ) | (2.0 | )% | (11,948 | ) | (2.4 | )% | |||||
Income before income tax | 33,075 | 6.5 | % | 50,962 | 10.2 | % | |||||||
Income tax expense | (2,343 | ) | (0.4 | )% | (8,920 | ) | (1.8 | )% | |||||
Net income | $ | 30,732 | 6.1 | % | $ | 42,042 | 8.4 | % | |||||
Adjusted EBITDA (1) | $ | 81,458 | 16.1 | % | $ | 93,838 | 18.7 | % | |||||
Adjusted income from operations (1) | $ | 48,954 | 9.7 | % | $ | 63,343 | 12.6 | % | |||||
Adjusted net income (1) | $ | 43,646 | 8.6 | % | $ | 47,812 | 9.5 | % |
(1) | Adjusted EBITDA, adjusted income from operations and adjusted net income are non-GAAP measures, which are reconciled to net income below under “Non-GAAP Financial Measures and Reconciliation.” |
• | Income from operations for the full service center-based child care segment decreased $24.8 million, or 60%, in the three months ended March 31, 2020 when compared to the same period in 2019 due to reduced margins from the temporary center closures beginning in March 2020 as well as related impairment charges on long-lived assets of $5.0 million, and costs incurred during the pre-opening and ramp-up of certain new lease/consortium centers opened during 2019 and 2020. These reductions were partially offset by tuition increases and enrollment gains over the prior year prior to the temporary center closures, and contributions from new centers that have been added since March 31, 2019. |
• | Income from operations for the back-up care segment increased $5.1 million, or 30%, in the three months ended March 31, 2020 when compared to the same period in 2019 due to the expanding revenue base from increased sales and utilization, partially offset by increased care provider fees associated with the incremental revenue, and spending for technology to support our customer user experience, service delivery and operating efficiency. |
• | Income from operations for the educational advisory services segment increased 1% in the three months ended March 31, 2020 when compared with the same period in 2019 due to contributions from the expanding revenue base. |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net income | $ | 30,732 | $ | 42,042 | |||
Interest expense — net | 10,206 | 11,948 | |||||
Income tax expense | 2,343 | 8,920 | |||||
Depreciation | 20,012 | 18,300 | |||||
Amortization of intangible assets (a) | 8,209 | 8,162 | |||||
EBITDA | 71,502 | 89,372 | |||||
Additional Adjustments: | |||||||
Non-cash operating lease expense (b) | — | 927 | |||||
Stock-based compensation expense (c) | 4,283 | 3,106 | |||||
Other costs (d) | 703 | 433 | |||||
COVID-19 related costs (f) | 4,970 | — | |||||
Total adjustments | 9,956 | 4,466 | |||||
Adjusted EBITDA | $ | 81,458 | $ | 93,838 | |||
Income from operations | $ | 43,281 | $ | 62,910 | |||
Other costs (d) | 703 | 433 | |||||
COVID-19 related costs (f) | 4,970 | — | |||||
Adjusted income from operations | $ | 48,954 | $ | 63,343 | |||
Net income | $ | 30,732 | $ | 42,042 | |||
Income tax expense | 2,343 | 8,920 | |||||
Income before income tax | 33,075 | 50,962 | |||||
Stock-based compensation expense (c) | 4,283 | 3,106 | |||||
Amortization of intangible assets (a) | 8,209 | 8,162 | |||||
Other costs (d) | 703 | 433 | |||||
COVID-19 related costs (f) | 4,970 | — | |||||
Adjusted income before income tax | 51,240 | 62,663 | |||||
Adjusted income tax expense (e) | (7,594 | ) | (14,851 | ) | |||
Adjusted net income | $ | 43,646 | $ | 47,812 | |||
Weighted average common shares outstanding — diluted | 58,878,784 | 58,752,384 | |||||
Diluted adjusted earnings per common share | $ | 0.74 | $ | 0.81 |
(a) | Represents amortization of intangible assets, including $5.0 million and $4.7 million for the three months ended March 31, 2020 and 2019, respectively, associated with intangible assets recorded in connection with our going private transaction in May 2008. |
(b) | Represents the excess of lease expense over cash lease expense (for periods prior to 2020). |
(c) | Represents non-cash stock-based compensation expense in accordance with Accounting Standards Codification Topic 718, Compensation-Stock Compensation. |
(d) | Other costs in the three months ended March 31, 2020 relate to occupancy costs incurred for our new corporate headquarters during the construction period, which represent duplicative corporate office costs in 2020 while we also continue to carry the costs for our existing corporate headquarters. Other costs in the three months ended March 31, 2019 relate to transaction costs incurred in connection with completed acquisitions. |
(e) | Represents income tax expense calculated on adjusted income before income tax at an effective tax rate of approximately 15% and 24% for the three months ended March 31, 2020 and 2019, respectively. The tax rate for 2020 represents a tax rate of approximately 27% applied to the expected adjusted income before income tax, less the estimated effect of excess tax benefits related to equity transactions. However, the jurisdictional mix of the expected adjusted income before income tax for the full year, and the timing and volume of the tax benefits associated with such future equity activity will affect these estimates and the estimated effective tax rate for the year. |
(f) | Represents impairment costs for long-lived assets incurred as a result of the impact of COVID-19 on our operations. |
• | adjusted EBITDA, adjusted income from operations and adjusted net income do not fully reflect our cash expenditures, future requirements for capital expenditures or contractual commitments; |
• | adjusted EBITDA, adjusted income from operations and adjusted net income do not reflect changes in, or cash requirements for, our working capital needs; |
• | adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt; |
• | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future; and adjusted EBITDA, adjusted income from operations and adjusted net income do not reflect any cash requirements for such replacements. |
Cash Flows | Three Months Ended March 31, | ||||||
2020 | 2019 | ||||||
(In thousands) | |||||||
Net cash provided by operating activities | $ | 64,083 | $ | 107,013 | |||
Net cash used in investing activities | $ | (12,964 | ) | $ | (60,562 | ) | |
Net cash used in financing activities | $ | (25,703 | ) | $ | (62,263 | ) | |
Cash, cash equivalents and restricted cash — beginning of period | $ | 31,192 | $ | 38,478 | |||
Cash, cash equivalents and restricted cash — end of period | $ | 55,405 | $ | 23,214 |
March 31, 2020 | December 31, 2019 | ||||||
Term loans | $ | 1,042,750 | $ | 1,045,438 | |||
Deferred financing costs and original issue discount | (6,156 | ) | (6,639 | ) | |||
Total debt | 1,036,594 | 1,038,799 | |||||
Less current maturities | 10,750 | 10,750 | |||||
Long-term debt | $ | 1,025,844 | $ | 1,028,049 |
• | significant changes in the conditions of the markets we operate in, including required school and business closures and shelter-in-place mandates, limiting our ability to provide our services, especially center-based child care and center-based back-up child care; |
• | reduced enrollment upon the re-opening of centers as families may limit their participation in various public activities and gatherings, including group child care, or as social distancing protocols and other licensing regulations may reduce group sizes or otherwise affect the overall capacity of children we can serve; |
• | inability to hire and maintain an adequate level of center staff requiring us to reduce enrollment in order to comply with mandated ratios, inability to retain teachers after long periods of furlough, and the impact to our operations if a significant percentage of our workforce is unable to return to work because of illness, quarantine, worker absenteeism, limitations on travel, government or social distancing restrictions, which may have a disproportionate impact on our business compared to other companies that depend less on the in-person provision of services; |
• | reduced or shifting demand for our services due to adverse and uncertain economic conditions, including as a result of clients that have been adversely impacted, and/or increased unemployment, continued school and business closures, long-term shift to an at-home workforce, and general effects of a broad-based economic recession; |
• | potential incremental costs associated with mitigating the effects of the pandemic and/or additional procedures and protocols required to maintain health and safety at our centers; |
• | a decrease in revenues due to clients requesting refunds or renegotiating contracts for reduced or changing services, including in our cost-plus and employer sponsor model centers; |
• | the potential deterioration in the collectability of our existing accounts receivable and a decrease in the generation of new accounts receivable due to the potential diminished financial health of our clients; |
• | inability to implement our growth strategies due to prolonged business contraction and reduced capital expenditures and cost-saving initiatives; |
• | delayed re-opening of centers outside of our control due in large part to the interdependence of our operations with our client partners’ operating decisions and requirements as well as decisions by governmental authorities regarding school and business closures; |
• | legal actions or proceedings related to COVID-19; |
• | reduction in our liquidity position limiting our ability to service our indebtedness and our future ability to incur additional indebtedness or financing; and |
• | further downgrades to our credit rating by ratings agencies which could reduce our ability to access capital markets. |
Period | Total Number of Shares Purchased (a) | Average Price Paid per Share (b) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) (c) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (In thousands) (1) (d) | ||||||||||
January 1, 2020 to January 31, 2020 (2) | 34,083 | $ | 161.14 | 31,500 | $ | 221,982 | ||||||||
February 1, 2020 to February 29, 2020 (2) (3) | 65,994 | $ | 157.60 | 36,000 | $ | 215,957 | ||||||||
March 1, 2020 to March 31, 2020 (3) | 167,563 | $ | 127.72 | 163,813 | $ | 194,850 | ||||||||
267,640 | 231,313 |
(1) | The board of directors authorized a share repurchase program of up to $300 million of our outstanding common stock effective June 12, 2018. The share repurchase program has no expiration date. All repurchased shares have been retired. |
(2) | During the months of January and February 2020, we retired a total of 26,757 shares that had been issued pursuant to restricted stock award agreements in connection with the payment of tax withholding obligations arising as a result of the vesting of such restricted stock awards. The shares were valued using the transaction date and closing stock price for purposes of such tax withholdings. Shares retired in connection with the payment of tax withholding obligations are not included in, and are not counted against, our $300 million share repurchase authorization. |
(3) | During February and March 2020, we repurchased 9,570 shares of unvested restricted stock awards that were subject to forfeiture resulting from the grantees’ termination of service with us for an aggregate $0.6 million pursuant to the certain restricted stock award agreements. The purchase price was equal to the purchase price paid by the grantees on the date of grant as provided in the restricted stock award agreements. |
Exhibit Number | Exhibit Title | |
10.1* | ||
10.2 | Fourth Amendment to Credit Agreement, dated as of April 24, 2020, by and among Bright Horizons Family Solutions LLC, Bright Horizons Capital Corp., the Loan parties, the Lenders party thereto, the Fourth Amendment Incremental Revolving Credit Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and L/C Issuer (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed April 27, 2020). | |
10.3† | Amended and Restated Severance Agreement between Bright Horizons Family Solutions LLC and John Casagrande (incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K, filed February 27, 2020). | |
10.4† | Severance Agreement between Bright Horizons Family Solutions LLC and Maribeth Bearfield (incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K, filed February 27, 2020). | |
10.5* | ||
31.1* | ||
31.2* | ||
32.1** | ||
32.2** | ||
101.INS* | Inline XBRL Instance Document - the instance document does not appear in Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). |
* | Exhibits filed herewith. |
** | Exhibits furnished herewith. |
† | Management contract or compensatory plan. |
BRIGHT HORIZONS FAMILY SOLUTIONS INC. | |||
Date: | May 11, 2020 | By: | /s/ Elizabeth Boland |
Elizabeth Boland | |||
Chief Financial Officer | |||
(Duly Authorized Officer) |
Page | ||
ARTICLE I | DEFINITIONS | 1 |
1.1 | Definitions | 1 |
ARTICLE II | PURCHASE AND SALE | 2 |
2.1 | Closing | 2 |
2.2 | Payment | 3 |
2.3 | Closing Date | 3 |
2.4 | Closing Deliverables | 3 |
2.5 | Closing Conditions | 3 |
ARTICLE III | REPRESENTATIONS AND WARRANTIES | 5 |
3.1 | Representations and Warranties of the Company | 5 |
3.2 | Representations and Warranties of the Purchasers | 10 |
ARTICLE IV | OTHER AGREEMENTS OF THE PARTIES | 12 |
4.1 | Transfer Restrictions | 12 |
4.2 | Furnishing of Information; Public Information | 14 |
4.3 | Acknowledgment of Dilution | 14 |
4.4 | Integration | 14 |
4.5 | Securities Laws Disclosure; Publicity | 14 |
4.6 | Shareholder Rights Plan | 14 |
4.7 | Use of Proceeds | 15 |
4.8 | Listing of Common Stock | 15 |
4.9 | Certain Transactions and Confidentiality | 15 |
4.10 | Registration Rights | 15 |
ARTICLE V | MISCELLANEOUS | 17 |
5.1 | Fees and Expenses | 17 |
5.2 | Entire Agreement | 18 |
5.3 | Notices | 18 |
5.4 | Amendments; Waivers | 18 |
5.5 | Headings | 18 |
5.6 | Successors and Assigns | 18 |
5.7 | No Third-Party Beneficiaries | 18 |
5.8 | Governing Law; Jurisdiction | 18 |
5.9 | Survival | 19 |
5.10 | Execution | 19 |
Page | |||
5.11 | Severability | 19 | |
5.12 | Replacement of Shares | 19 | |
5.13 | Remedies | 19 | |
5.14 | Construction | 19 | |
5.15 | WAIVER OF JURY TRIAL | 20 |
BRIGHT HORIZONS FAMILY SOLUTIONS INC. | Address for Notice: 200 Talcott Avenue Watertown, MA 02472 |
By: /s/ Elizabeth J. Boland Name: Elizabeth J. Boland Title: Chief Financial Officer With a copy to (which shall not constitute notice): | Fax: 617-673-8629 |
Morgan, Lewis & Bockius LLP One Federal Street Boston, MA 02110 Attn: Laurie A. Cerveny, Esq. Bryan S. Keighery, Esq. Fax: (617) 341-7701 |
DURABLE CAPITAL MASTER FUND LP By: Durable Capital Partners LP, its investment adviser | Address for Notice: c/o Durable Capital Partners LP 5425 Wisconsin Avenue, Suite 802 Chevy Chase, MD 20815 Attn: Julie Jack, General Counsel |
By: /s/ Michael Blandino Name: Michael Blandino Title: Authorized Person With a copy to (which shall not constitute notice): | Email: legalnotices@durablecap.com |
DLA Piper LLP (US) 6225 Smith Avenue Baltimore, MD 21209-3600 Attn: Jason Harmon, Esq. Fax: (301) 580-3001 DLA Piper LLP (US) 11911 Freedom Drive Suite 300 Reston, VA 20190 Attn: Matt VanderGoot, Esq. Fax: (703) 773-5000 |
Lender | Fifth Amendment Revolving Commitment Increase |
Capital One, National Association | $15,000,000.00 |
TOTAL: | $15,000,000.00 |
1. | I have reviewed this quarterly report on Form 10-Q of Bright Horizons Family Solutions Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 11, 2020 | /s/ Stephen Kramer | |
Stephen Kramer | |||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Bright Horizons Family Solutions Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 11, 2020 | /s/ Elizabeth Boland | |
Elizabeth Boland | |||
Chief Financial Officer |
1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | May 11, 2020 | /s/ Stephen Kramer | |
Stephen Kramer | |||
Chief Executive Officer |
1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | May 11, 2020 | /s/ Elizabeth Boland | |
Elizabeth Boland | |||
Chief Financial Officer |
Fair Value Measurements - Contingent Consideration (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2020
USD ($)
| |
Business Combination, Contingent Consideration, Liability [Roll Forward] | |
Ending balance | $ 0 |
Fair Value, Inputs, Level 3 | |
Business Combination, Contingent Consideration, Liability [Roll Forward] | |
Beginning balance | 15,987 |
Settlement of contingent consideration liabilities | (1,088) |
Changes in fair value | 422 |
Ending balance | 14,277 |
Foreign Currency Gain (Loss) | Fair Value, Inputs, Level 3 | |
Business Combination, Contingent Consideration, Liability [Roll Forward] | |
Foreign currency translation | $ (1,044) |
Leases - Additional Information (Details) $ in Millions |
Mar. 31, 2020
USD ($)
|
---|---|
Lessee, Lease, Description [Line Items] | |
Operating lease not yet commenced | $ 52.0 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 10 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 15 years |
Operating lease not yet commenced term | 15 years |
Organization and Basis of Presentation - Additional Information (Detail) |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Apr. 30, 2020
USD ($)
|
Mar. 31, 2020
USD ($)
Center
people
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Dec. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
Jun. 12, 2018
USD ($)
|
|
Subsequent Event [Line Items] | |||||
Stock repurchase program, authorized amount | $ 300,000,000 | ||||
Stock repurchase program, remaining authorized repurchase amount | $ 194,900,000 | ||||
Number of childcare and early education centers operated | Center | 1,094 | ||||
Operated facilities, number of children and families served at capacity | people | 120,000 | ||||
Number of childcare and early education centers open | Center | 250 | ||||
Open facilities, number of children and families served at capacity | people | 32,000 | ||||
Goodwill | $ 1,389,649,000 | $ 1,412,873,000 | $ 1,347,611,000 | ||
Impairment loss on long-lived assets | 5,000,000.0 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Proceeds from issuance | $ 250,000,000 | ||||
Trade names | |||||
Subsequent Event [Line Items] | |||||
Indefinite-lived intangible assets | $ 180,618,000 | $ 181,091,000 |
Credit Arrangements and Debt Obligations |
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Credit Arrangements and Debt Obligations | 6. CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS Senior Secured Credit Facilities The Company’s $1.3 billion senior secured credit facilities consist of a $1.1 billion secured term loan facility (“term loan facility”) and a $225 million multi-currency revolving credit facility (“revolving credit facility”). The term loans mature on November 7, 2023 and require quarterly principal payments of $2.7 million, with the remaining principal balance due on November 7, 2023. Refer to Note 12, Subsequent Events, for changes to the Company’s senior secured credit facilities. Outstanding term loan borrowings were as follows (in thousands):
The revolving credit facility matures on July 31, 2022. There were no borrowings outstanding on the revolving credit facility at March 31, 2020 and December 31, 2019. All borrowings under the credit agreement are subject to variable interest. Borrowings under the term loan facility bear interest at a rate per annum of 0.75% over the base rate, or 1.75% over the eurocurrency rate, which is the one, two, three or six month LIBOR rate or, with applicable lender approval, the twelve month or less than one month LIBOR rate. With respect to the term loan facility, the base rate is subject to an interest rate floor of 1.75% and the eurocurrency rate is subject to an interest rate floor of 0.75%. Borrowings under the revolving credit facility bear interest at a rate per annum ranging from 0.50% to 0.75% over the base rate, or 1.50% to 1.75% over the eurocurrency rate. Refer to Note 12, Subsequent Events, for changes to interest rates applicable to the Company’s revolving credit facility. The effective interest rate for the term loans was 2.74% and 3.55% at March 31, 2020 and December 31, 2019, respectively, and the weighted average interest rate was 3.42% and 4.25% for the three months ended March 31, 2020 and 2019, respectively, prior to the effects of any interest rate swap arrangements. The weighted average interest rate for the revolving credit facility was 5.41% and 4.10% for the three months ended March 31, 2020 and 2019, respectively. Certain financing fees and original issue discount costs are capitalized and are being amortized over the terms of the related debt instruments and amortization expense is included in interest expense. Amortization expense of deferred financing costs was $0.4 million for the three months ended March 31, 2020 and 2019. Amortization expense of original issue discount costs was $0.1 million for the three months ended March 31, 2020 and 2019. All obligations under the senior secured credit facilities are secured by substantially all the assets of the Company’s U.S. subsidiaries. The senior secured credit facilities contain a number of covenants that, among other things and subject to certain exceptions, may restrict the ability of Bright Horizons Family Solutions LLC, the Company’s wholly-owned subsidiary, and its restricted subsidiaries, to: incur certain liens; make investments, loans, advances and acquisitions; incur additional indebtedness or guarantees; pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; engage in transactions with affiliates; sell assets, including capital stock of our subsidiaries; alter the business conducted; enter into agreements restricting the Company’s subsidiaries’ ability to pay dividends; and consolidate or merge. In addition, the credit agreement governing the senior secured credit facilities requires Bright Horizons Capital Corp., the Company’s direct subsidiary, to be a passive holding company, subject to certain exceptions. The revolving credit facility requires Bright Horizons Family Solutions LLC, the borrower, and its restricted subsidiaries, to comply with a maximum consolidated first lien net leverage ratio that is a quarterly maintenance based financial covenant. A breach of this covenant is subject to certain equity cure rights. Refer to Note 12, Subsequent Events, for changes to the financial covenant applicable to the Company’s revolving credit facility. Future principal payments of long-term debt are as follows for the years ending December 31 (in thousands):
Interest Rate Swap Agreements The Company is subject to interest rate risk as all borrowings under the senior secured credit facilities are subject to variable interest rates. In October 2017, the Company entered into variable-to-fixed interest rate swap agreements to mitigate the exposure to variable interest arrangements on $500 million notional amount of the outstanding term loan borrowings. These swap agreements, designated and accounted for as cash flow hedges from inception, are scheduled to mature on October 31, 2021. The Company is required to make monthly payments on the notional amount at a fixed average interest rate, plus the applicable rate for eurocurrency loans. The notional amount is subject to a total interest rate of approximately 3.65%. In exchange, the Company receives interest on the notional amount at a variable rate based on the one-month LIBOR rate, subject to a 0.75% floor. The interest rate swaps are recorded on the Company’s consolidated balance sheet at fair value and classified based on the instruments’ maturity dates. The Company records gains or losses resulting from changes in the fair value of the interest rate swaps to other comprehensive income or loss. These gains or losses are subsequently reclassified into earnings and recognized to interest expense in the Company’s consolidated statement of income in the period that the hedged interest expense on the term loan facility is recognized. As of March 31, 2020 and December 31, 2019, the fair value of the interest rate swap agreements was a liability of $8.9 million and $2.9 million, respectively, which was recorded in other long-term liabilities on the consolidated balance sheet. For the three months ended March 31, 2020, the effect of the interest rate swap agreements on other comprehensive income (loss) was as follows (in thousands):
For the three months ended March 31, 2019, the effect of the interest rate swap agreements on other comprehensive income (loss) was as follows (in thousands):
During the next twelve months, the Company estimates that a net loss of $5.7 million, pre-tax, will be reclassified from accumulated other comprehensive income (loss) and recorded to interest expense, related to these interest rate swap agreements.
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Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss) | 10. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss), which is included as a component of stockholders’ equity, is comprised of foreign currency translation adjustments and unrealized gains or losses from interest rate swaps and investments, net of tax. The changes in accumulated other comprehensive income (loss) by component were as follows (in thousands):
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from Operations by Segment | Revenue and income from operations by reportable segment was as follows (in thousands):
(2) For the three months ended March 31, 2019, income from operations included $0.4 million of expenses related to completed acquisitions, which have been allocated to the back-up care segment.
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Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Statement of Comprehensive Income [Abstract] | ||
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax | $ (4,270) | $ (2,867) |
Net income | 30,732 | 42,042 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | (39,508) | 6,978 |
Total other comprehensive income (loss) | (43,778) | 4,111 |
Comprehensive income (loss) | $ (13,046) | $ 46,153 |
Organization and Basis of Presentation Organization and Basis of Presentation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||
Schedule of Allowance for Credit Loss | Activity in the allowance for credit losses is as follows (in thousands):
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Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | 2. REVENUE RECOGNITION Disaggregation of Revenue The Company disaggregates revenue from contracts with customers into segments and geographical regions. Revenue disaggregated by segment and geographical region was as follows (in thousands):
The classification “North America” is comprised of the Company’s United States, Canada, and Puerto Rico operations and the classification “Europe” includes the United Kingdom, Netherlands, and India operations. Deferred Revenue The Company records deferred revenue when payments are received in advance of the Company’s performance under the contract, which are recognized as revenue as the performance obligation is satisfied. During the three months ended March 31, 2020, $123.8 million was recognized as revenue related to the deferred revenue balance recorded at December 31, 2019. During the three months ended March 31, 2019, $113.4 million was recognized as revenue related to the deferred revenue balance recorded at December 31, 2018. Remaining Performance Obligations The transaction price allocated to the remaining performance obligations relates to services that are paid or invoiced in advance. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original contract term of one year or less, or for variable consideration allocated to the unsatisfied performance obligation of a series of services. The Company’s remaining performance obligations not subject to the practical expedients were not material.
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Credit Arrangements and Debt Obligations (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Borrowings | Outstanding term loan borrowings were as follows (in thousands):
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Schedule of Maturities of Long-term Debt | Future principal payments of long-term debt are as follows for the years ending December 31 (in thousands):
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Schedule of Interest Rate Derivatives | For the three months ended March 31, 2020, the effect of the interest rate swap agreements on other comprehensive income (loss) was as follows (in thousands):
For the three months ended March 31, 2019, the effect of the interest rate swap agreements on other comprehensive income (loss) was as follows (in thousands):
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Credit Arrangements and Debt Obligations - Future Principal Payments Under New Term Loan (Detail) - Term Loan $ in Thousands |
Mar. 31, 2020
USD ($)
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---|---|
Debt Instrument [Line Items] | |
Remainder of 2020 | $ 8,062 |
2021 | 10,750 |
2022 | 10,750 |
2023 | 1,013,188 |
Total debt | $ 1,042,750 |
Goodwill and Intangible Assets - Intangible Assets Subject to Amortization (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2020 |
Dec. 31, 2019 |
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Definite-lived intangibles: | ||
Cost | $ 412,642 | $ 415,323 |
Accumulated amortization | (297,923) | (291,741) |
Net carrying amount | 114,719 | 123,582 |
Indefinite-lived intangibles: | ||
Cost | 593,260 | 596,414 |
Net carrying amount | $ 295,337 | $ 304,673 |
Customer relationships | ||
Definite-lived intangibles: | ||
Weighted average amortization period | 14 years | 14 years |
Cost | $ 402,504 | $ 404,667 |
Accumulated amortization | (289,824) | (283,597) |
Net carrying amount | $ 112,680 | $ 121,070 |
Trade names | ||
Definite-lived intangibles: | ||
Weighted average amortization period | 6 years | 6 years |
Cost | $ 10,138 | $ 10,656 |
Accumulated amortization | (8,099) | (8,144) |
Net carrying amount | 2,039 | 2,512 |
Trade names | ||
Indefinite-lived intangibles: | ||
Net carrying amount | 181,091 | |
Indefinite-lived intangible assets | $ 180,618 | $ 181,091 |
Earnings Per Share - Computation of Diluted Earnings per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
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Diluted earnings per share: | ||
Earnings allocated to common stock | $ 30,587 | $ 41,845 |
Earnings allocated to unvested participating shares | 145 | 197 |
Adjusted earnings allocated to unvested participating shares | (143) | (193) |
Earnings allocated to common stock | $ 30,589 | $ 41,849 |
Weighted average number of common shares: | ||
Common stock-diluted (in shares) | 58,878,784 | 58,752,384 |
Earnings per common share: | ||
Common stock (in dollars per share) | $ 0.52 | $ 0.71 |
Common Stock | ||
Weighted average number of common shares: | ||
Weighted average number of common shares (in shares) | 57,930,909 | 57,679,041 |
Effect of dilutive securities (in shares) | 947,875 | 1,073,343 |
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