x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2017 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 80-0188269 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Title of each class | Name of exchange on which registered | |
Common Stock, $0.001 par value per share | New York Stock Exchange |
Large accelerated filer | x | Accelerated filer | ¨ |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
Page | ||
Part I. | ||
Item 1. | ||
Item 1A. | ||
Item 1B. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II. | ||
Item 5. | ||
Item 6. | ||
Item 7. | ||
Item 7A. | ||
Item 8. | ||
Item 9. | ||
Item 9A. | ||
Item 9B. | ||
Part III. | ||
Item 10. | ||
Item 11. | ||
Item 12. | ||
Item 13. | ||
Item 14. | ||
Part IV. | ||
Item 15. | ||
Item 16. | ||
• | full service center-based child care and early education (representing approximately 84% of our 2017 revenue); |
• | back-up dependent care (representing approximately 13% of our 2017 revenue); and |
• | educational advisory services (representing approximately 3% of our 2017 revenue). |
• | Secure Relationships with New Employer Clients. Our addressable market includes approximately 13,000 employers, each with at least 1,000 employees, within the industries that we currently service in the United States and the United Kingdom. Our dedicated sales force focuses on establishing new client relationships and is supported by our Horizons Workforce Consulting practice, which helps potential clients to identify the precise work/life offerings that will best meet their strategic goals. |
• | Cross-Sell and Expand Services to Existing Employer Clients. We believe there is a significant opportunity to increase the number of our clients that use more than one of our services, and to expand the services we provide to existing clients. Over the past five years, we have nearly doubled the number of our clients who utilize more than one of our services to 230 clients as of December 31, 2017. |
• | Continue to Expand Through the Assumption of Management of Existing Sponsored Child Care Centers. We occasionally assume the management of existing centers from the incumbent management, which enables us to develop new client relationships, typically with no capital investment and no purchase price payment. |
Full Service Center-Based Child Care | Back-up Dependent Care | Other Educational Advisory Services | Total | ||||||||||||
(In thousands, except percentages) | |||||||||||||||
Year ended December 31, 2017 | |||||||||||||||
Revenue | $ | 1,457,754 | $ | 224,264 | $ | 58,887 | $ | 1,740,905 | |||||||
As a percentage of total revenue | 84 | % | 13 | % | 3 | % | 100 | % | |||||||
Income from operations | $ | 130,289 | $ | 60,373 | $ | 14,777 | $ | 205,439 | |||||||
As a percentage of total income from operations | 63 | % | 30 | % | 7 | % | 100 | % | |||||||
Year ended December 31, 2016 | |||||||||||||||
Revenue | $ | 1,321,699 | $ | 200,106 | $ | 48,036 | $ | 1,569,841 | |||||||
As a percentage of total revenue | 84 | % | 13 | % | 3 | % | 100 | % | |||||||
Income from operations | $ | 129,693 | $ | 57,620 | $ | 9,925 | $ | 197,238 | |||||||
As a percentage of total income from operations | 66 | % | 29 | % | 5 | % | 100 | % | |||||||
Year ended December 31, 2015 | |||||||||||||||
Revenue | $ | 1,236,762 | $ | 181,574 | $ | 40,109 | $ | 1,458,445 | |||||||
As a percentage of total revenue | 85 | % | 12 | % | 3 | % | 100 | % | |||||||
Income from operations | $ | 115,149 | $ | 56,891 | $ | 9,562 | $ | 181,602 | |||||||
As a percentage of total income from operations | 64 | % | 31 | % | 5 | % | 100 | % |
• | a sponsor model, where we provide child care and early education services on either an exclusive or priority enrollment basis for the employees of a specific employer sponsor; and |
• | a lease/consortium model, where we provide child care and early education services to the employees of multiple employers located within a real estate development (for example, an office building or office park), as well as to families in the surrounding community. |
North America | Europe and Other | Total | |||||||||
(In thousands, except percentages) | |||||||||||
Year ended December 31, 2017 | |||||||||||
Revenue | $ | 1,353,032 | $ | 387,873 | $ | 1,740,905 | |||||
As a percentage of total revenue | 78 | % | 22 | % | 100 | % | |||||
Long-lived assets, net | $ | 333,526 | $ | 241,659 | $ | 575,185 | |||||
As a percentage of total fixed assets, net | 58 | % | 42 | % | 100 | % | |||||
Year ended December 31, 2016 | |||||||||||
Revenue | $ | 1,277,165 | $ | 292,676 | $ | 1,569,841 | |||||
As a percentage of total revenue | 81 | % | 19 | % | 100 | % | |||||
Long-lived assets, net | $ | 322,267 | $ | 207,165 | $ | 529,432 | |||||
As a percentage of total fixed assets, net | 61 | % | 39 | % | 100 | % | |||||
Year ended December 31, 2015 | |||||||||||
Revenue | $ | 1,182,629 | $ | 275,816 | $ | 1,458,445 | |||||
As a percentage of total revenue | 81 | % | 19 | % | 100 | % | |||||
Long-lived assets, net | $ | 308,469 | $ | 121,267 | $ | 429,736 | |||||
As a percentage of total fixed assets, net | 72 | % | 28 | % | 100 | % |
• | limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements increasing our cost of borrowing; |
• | requiring a substantial portion of our cash flow to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flow available for working capital, capital expenditures, acquisitions and other general corporate purposes; |
• | limiting our flexibility in planning for, and reacting to, changes in the industry in which we compete; and |
• | placing us at a disadvantage compared to other, less leveraged competitors or competitors with comparable debt at more favorable interest rates. |
• | variations in our operating performance and the performance of our competitors; |
• | actual or anticipated fluctuations in our quarterly or annual operating results; |
• | publication of research reports by securities analysts about us, our competitors, or our industry; |
• | our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; |
• | additions and departures of key personnel; |
• | strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments, or changes in business strategy; |
• | the passage of legislation or other regulatory developments affecting us or our industry; |
• | speculation in the press or investment community; |
• | changes in accounting principles; |
• | terrorist acts, acts of war, or periods of widespread civil unrest; |
• | natural disasters and other calamities; and |
• | changes in general market and economic conditions. |
Location | Number of Centers | Location | Number of Centers | |||
United States: | ||||||
Alabama | 2 | Montana | 2 | |||
Alaska | 1 | Nebraska | 4 | |||
Arizona | 9 | Nevada | 2 | |||
California | 77 | New Hampshire | 3 | |||
Colorado | 16 | New Jersey | 47 | |||
Connecticut | 17 | New York | 57 | |||
Delaware | 5 | North Carolina | 18 | |||
District of Columbia | 19 | Ohio | 5 | |||
Florida | 34 | Oklahoma | 4 | |||
Georgia | 25 | Oregon | 1 | |||
Illinois | 47 | Pennsylvania | 57 | |||
Indiana | 7 | Puerto Rico | 1 | |||
Iowa | 8 | Rhode Island | 1 | |||
Kentucky | 6 | South Carolina | 5 | |||
Louisiana | 3 | South Dakota | 2 | |||
Maine | 1 | Tennessee | 3 | |||
Maryland | 14 | Texas | 34 | |||
Massachusetts | 62 | Utah | 4 | |||
Michigan | 13 | Virginia | 21 | |||
Minnesota | 9 | Washington | 29 | |||
Mississippi | 1 | West Virginia | 2 | |||
Missouri | 8 | Wisconsin | 9 | |||
Total number of centers in the United States | 695 | |||||
Canada | 2 | |||||
United Kingdom | 298 | |||||
Netherlands | 41 | |||||
India | 2 | |||||
Total number of centers | 1,038 |
2017: | High | Low | |||||
First quarter | $ | 72.51 | $ | 65.00 | |||
Second quarter | $ | 81.23 | $ | 69.48 | |||
Third quarter | $ | 86.30 | $ | 75.65 | |||
Fourth quarter | $ | 95.82 | $ | 84.38 |
2016: | High | Low | |||||
First quarter | $ | 70.59 | $ | 60.18 | |||
Second quarter | $ | 67.44 | $ | 63.15 | |||
Third quarter | $ | 69.95 | $ | 63.40 | |||
Fourth quarter | $ | 72.80 | $ | 59.00 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (In thousands) (1) | ||||||||||
October 1, 2017 to October 31, 2017 | — | $ | — | — | $ | 207,868 | ||||||||
November 1, 2017 to November 30, 2017 | 1,000,000 | $ | 87.26 | 1,000,000 | $ | 120,608 | ||||||||
December 1, 2017 to December 31, 2017 | — | $ | — | — | $ | 120,608 | ||||||||
1,000,000 | 1,000,000 |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) (a) | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (1) (b) | Number of Securities Remaining Available For Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a)) (c) | |||||||
Equity compensation plans approved by security holders | 3,092,678 | $ | 42.15 | 1,774,790 | ||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||
Total | 3,092,678 | $ | 42.15 | 1,774,790 |
• | the New York Stock Exchange Composite Index; |
• | the Russell Midcap Growth Index. In 2017, Bright Horizons selected a new peer group index as a comparable for the year ended December 31, 2017 due to merger and acquisition activity and business model changes in certain of the underlying companies included in the Old Peer Group (see below for composition) that resulted in such Old Peer Group no longer being considered an appropriate comparable. As there is a lack of public company comparables in our industry, with most of our peers operating as private companies or divisions of larger diversified companies, there is no widely recognized published industry indices. We determined that an equity index for companies with similar market capitalization and growth objectives would provide for a more appropriate peer group and we believe the Russell Midcap Growth index will provide a better and more consistent comparison to the Company. The Russell Midcap Growth Index is a subset of the Russell 1000 Index and is composed of select companies from the 800 smallest companies of the Russell 1000 Index that display higher forecasted growth values. |
• | the old (previous) peer group consisted of the following five companies in the education and contracted outsourced/business services sector: The Advisory Board Company, The Corporate Executive Board Company, Healthways, Wageworks, and Nord Anglia Education, Inc. (the “Old Peer Group”). |
January 25, 2013 | December 31, 2013 | December 31, 2014 | December 31, 2015 | December 31, 2016 | December 31, 2017 | ||||||||||||||||||
Bright Horizons Family Solutions Inc. | $ | 100.00 | $ | 129.73 | $ | 166.00 | $ | 235.88 | $ | 247.25 | $ | 331.93 | |||||||||||
NYSE Composite Index | $ | 100.00 | $ | 119.71 | $ | 127.92 | $ | 122.82 | $ | 137.65 | $ | 163.64 | |||||||||||
Russell Midcap Growth Index | $ | 100.00 | $ | 127.13 | $ | 142.26 | $ | 141.98 | $ | 152.38 | $ | 190.88 | |||||||||||
Old Peer Group | $ | 100.00 | $ | 156.97 | $ | 150.21 | $ | 132.44 | $ | 148.18 | $ | 188.85 |
Years Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(In thousands, except share data) | |||||||||||||||||||
Consolidated Statement of Income Data: | |||||||||||||||||||
Revenue | $ | 1,740,905 | $ | 1,569,841 | $ | 1,458,445 | $ | 1,352,999 | $ | 1,218,776 | |||||||||
Cost of services | 1,310,295 | 1,178,994 | 1,100,690 | 1,039,397 | 937,840 | ||||||||||||||
Gross profit | 430,610 | 390,847 | 357,755 | 313,602 | 280,936 | ||||||||||||||
Selling, general and administrative expenses | 188,939 | 163,967 | 148,164 | 137,683 | 141,827 | ||||||||||||||
Amortization of intangible assets | 32,561 | 29,642 | 27,989 | 28,999 | 30,075 | ||||||||||||||
Other expenses (1) | 3,671 | — | — | — | — | ||||||||||||||
Income from operations | 205,439 | 197,238 | 181,602 | 146,920 | 109,034 | ||||||||||||||
Loss on extinguishment of debt (2) | — | (11,117 | ) | — | — | (63,682 | ) | ||||||||||||
Interest expense—net | (44,039 | ) | (42,924 | ) | (41,446 | ) | (34,606 | ) | (40,541 | ) | |||||||||
Income before income taxes | 161,400 | 143,197 | 140,156 | 112,314 | 4,811 | ||||||||||||||
Income tax (expense) benefit (3) | (4,437 | ) | (48,437 | ) | (46,229 | ) | (40,279 | ) | 7,533 | ||||||||||
Net income | 156,963 | 94,760 | 93,927 | 72,035 | 12,344 | ||||||||||||||
Net loss attributable to non-controlling interest | — | — | — | — | (279 | ) | |||||||||||||
Net income attributable to Bright Horizons Family Solutions Inc. | $ | 156,963 | $ | 94,760 | $ | 93,927 | $ | 72,035 | $ | 12,623 | |||||||||
Allocation of net income to common stockholders: | |||||||||||||||||||
Common stock—basic | $ | 155,995 | $ | 93,919 | $ | 93,287 | $ | 71,755 | $ | 12,623 | |||||||||
Common stock—diluted | $ | 156,016 | $ | 93,938 | $ | 93,303 | $ | 71,761 | $ | 12,623 | |||||||||
Earnings per common share: | |||||||||||||||||||
Common stock—basic | $ | 2.65 | $ | 1.59 | $ | 1.53 | $ | 1.09 | $ | 0.20 | |||||||||
Common stock—diluted | $ | 2.59 | $ | 1.55 | $ | 1.50 | $ | 1.07 | $ | 0.20 | |||||||||
Weighted average number of common shares outstanding: | |||||||||||||||||||
Common stock—basic | 58,873,196 | 59,229,069 | 60,835,574 | 65,612,572 | 62,659,264 | ||||||||||||||
Common stock—diluted | 60,253,691 | 60,594,895 | 62,360,778 | 67,244,172 | 64,509,036 | ||||||||||||||
Consolidated Balance Sheet Data (at period end): | |||||||||||||||||||
Total cash and cash equivalents | $ | 23,227 | $ | 14,633 | $ | 11,539 | $ | 87,886 | $ | 29,585 | |||||||||
Total assets (4) | 2,468,644 | 2,359,017 | 2,150,541 | 2,141,076 | 2,102,670 | ||||||||||||||
Total liabilities, excluding debt (4) | 535,723 | 530,391 | 483,722 | 468,940 | 449,310 | ||||||||||||||
Total debt, including current maturities (5) | 1,183,861 | 1,140,759 | 939,211 | 921,177 | 764,223 | ||||||||||||||
Total stockholders’ equity | 749,060 | 687,867 | 727,608 | 750,959 | 889,137 |
(1) | The Company incurred losses of $3.7 million during the year ended December 31, 2017, associated with the disposition of our remaining assets in Ireland, which included three centers. |
(2) | The Company recognized a loss on the extinguishment of debt in the years ended December 31, 2016 and 2013 in relation to its debt refinancing on November 2016 and January 2013, respectively. |
(3) | Income tax expense in the current year decreased from prior years primarily due to the impact of the Tax Act, which decreased tax expense by $22.3 million, as well as excess tax benefits from stock-based compensation, which decreased tax expense by $26.5 million, for the year ended December 31, 2017 as more fully discussed in Note 10, “Income Taxes,” to the consolidated financial statements in Item 8 of this Annual Report. |
(4) | The Balance Sheet Data table above reflects the early adoption of ASU 2015-17, Balance Sheet Classification of Deferred Taxes. The Company adopted ASU 2015-17 in 2015 prospectively, which resulted in all current deferred tax assets and current deferred tax liabilities being reported as non-current, while prior period deferred tax assets and deferred tax liabilities were not adjusted. |
(5) | Total debt includes amounts outstanding under our senior secured credit facilities, including our term loans and revolving credit facility. |
Percentage of Centers | |||||
Classification | North America | Europe and Other | |||
Employer locations: | |||||
Healthcare and Pharmaceuticals | 20.0 | % | 2.5 | % | |
Government and Higher Education | 17.5 | 5.0 | |||
Consumer | 7.5 | — | |||
Financial Services | 7.5 | 2.5 | |||
Professional Services and Other | 7.5 | — | |||
Technology | 5.0 | 2.5 | |||
Industrial/Manufacturing | 2.5 | 2.5 | |||
67.5 | 15.0 | ||||
Lease/consortium locations | 32.5 | 85.0 | |||
100.0 | % | 100.0 | % |
• | maintenance and incremental growth of enrollment in our mature and ramping centers, and cost management in response to changes in enrollment in our centers, |
• | effective pricing strategies, including typical annual tuition increases of 3% to 4%, correlated with expected annual increases in personnel costs, including wages and benefits, |
• | additional growth in expanded service offerings to clients, |
• | successful integration of acquisitions and transitions of management of centers, and |
• | successful management and improvement of underperforming centers. |
Years Ended December 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||
Revenue | $ | 1,740,905 | 100.0 | % | $ | 1,569,841 | 100.0 | % | $ | 1,458,445 | 100.0 | % | ||||||||
Cost of services (1) | 1,310,295 | 75.3 | % | 1,178,994 | 75.1 | % | 1,100,690 | 75.5 | % | |||||||||||
Gross profit | 430,610 | 24.7 | % | 390,847 | 24.9 | % | 357,755 | 24.5 | % | |||||||||||
Selling, general and administrative expenses (2) | 188,939 | 10.8 | % | 163,967 | 10.4 | % | 148,164 | 10.2 | % | |||||||||||
Amortization of intangible assets | 32,561 | 1.9 | % | 29,642 | 1.9 | % | 27,989 | 1.9 | % | |||||||||||
Other expenses | 3,671 | 0.2 | % | — | — | % | — | — | % | |||||||||||
Income from operations | 205,439 | 11.8 | % | 197,238 | 12.6 | % | 181,602 | 12.4 | % | |||||||||||
Loss on extinguishment of debt | — | — | % | (11,117 | ) | (0.7 | )% | — | — | % | ||||||||||
Interest expense—net | (44,039 | ) | (2.5 | )% | (42,924 | ) | (2.7 | )% | (41,446 | ) | (2.8 | )% | ||||||||
Income before income taxes | 161,400 | 9.3 | % | 143,197 | 9.2 | % | 140,156 | 9.6 | % | |||||||||||
Income tax expense (3) | (4,437 | ) | (0.3 | )% | (48,437 | ) | (3.1 | )% | (46,229 | ) | (3.2 | )% | ||||||||
Net income | $ | 156,963 | 9.0 | % | $ | 94,760 | 6.1 | % | $ | 93,927 | 6.4 | % | ||||||||
Adjusted EBITDA (4) | $ | 323,585 | 18.6 | % | $ | 299,215 | 19.1 | % | $ | 273,069 | 18.7 | % | ||||||||
Adjusted income from operations (4) | $ | 212,392 | 12.2 | % | $ | 199,723 | 12.7 | % | $ | 182,467 | 12.5 | % | ||||||||
Adjusted net income (4) | $ | 162,167 | 9.3 | % | $ | 130,737 | 8.3 | % | $ | 115,391 | 7.9 | % |
(1) | Cost of services consists of direct expenses associated with the operation of child care centers, and direct expenses to provide back-up dependent care services, including fees to back-up care providers, and educational advisory services. Direct expenses consist primarily of salaries, payroll taxes and benefits for personnel, food costs, program supplies and materials, and parent marketing and facilities costs, which include occupancy costs and depreciation. |
(2) | Selling, general and administrative (“SGA”) expenses consist primarily of salaries, payroll taxes and benefits (including stock-based compensation costs) for corporate, regional and business development personnel. Other overhead costs include information technology, occupancy costs for corporate and regional personnel, professional services fees, including accounting and legal services, and other general corporate expenses. |
(3) | Income tax expense in the current year decreased from prior years primarily due to the impact of the Tax Act, which decreased tax expense by $22.3 million, as well as excess tax benefits from stock-based compensation, which decreased tax expense by $26.5 million, for the year ended December 31, 2017 as more fully discussed in Note 10, “Income Taxes,” to the consolidated financial statements in Item 8 of this Annual Report. |
(4) | 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 increased $0.6 million for the year ended December 31, 2017, when compared to the same period in 2016. Results for the year ended December 31, 2017 included $7.0 million of costs associated with the loss on the disposition of our remaining assets in Ireland, costs related to the May 2017 and November 2017 credit agreement amendments and secondary offerings. Results for the year ended December 31, 2016 included $2.5 million of costs associated with the January 2016 credit agreement amendment, November 2016 debt refinance, secondary offerings and completed acquisitions. After taking these charges into account, income from operations increased $5.1 million in 2017, or 4%, over the prior year primarily due to tuition increases and enrollment gains over the prior year, as well as contributions from new and acquired centers that have been added since December 31, 2016, and effective cost management, partially offset by the costs incurred during the ramp-up of certain new lease/consortium centers opened during 2016 and 2017, the incremental costs associated with technology investments in our centers, the incremental overhead costs incurred during the integration of the Asquith centers in 2017, the amortization expense for intangible assets acquired in business combinations, and the effect of lower foreign currency exchange rates for our United Kingdom operations which reduced revenue growth in the full service center-based child care segment by approximately 1% in 2017. |
• | Income from operations for the back-up dependent care segment increased $2.8 million, or 5%, for the year ended December 31, 2017, when compared to the same period in 2016 due to contributions from the expanding revenue base partially offset by investments in information technology and personnel, and increased care provider fees associated with the incremental revenue. |
• | Income from operations for the other educational advisory services segment increased $4.8 million, or 49%, for the year ended December 31, 2017, when compared to the same period in 2016 due to contributions from the expanding revenue base and the associated overhead leverage as this segment gains scale. |
• | In the full service center-based child care segment, income from operations increased $14.5 million for the year ended December 31, 2016, when compared to the same period in 2015. Results for the year ended December 31, 2016 included $2.5 million for the costs associated with the completion of secondary offerings, costs associated with amending our credit agreement and refinancing our debt, and completed acquisitions. Results for the year ended December 31, 2015 included $0.9 million for the costs associated with the completion of secondary offerings and completed acquisitions. After taking these charges into account, income from operations increased $16.2 million in 2016 primarily due to the tuition increases, enrollment gains over the prior year, contributions from new and acquired centers that have been added since December 31, 2015, and effective cost management, partially offset by the costs incurred during the ramp-up of certain new lease/consortium centers opened during 2015 and 2016. |
• | Income from operations for the back-up dependent care segment increased $0.7 million for the year ended December 31, 2016, compared to the same period in 2015 due to the expanding revenue base. |
• | Income from operations in the other educational advisory services segment increased $0.4 million for the year ended December 31, 2016, compared to the same period in 2015 due to the expanding revenue base. |
Year ended | |||||||||||
2017 | 2016 | 2015 | |||||||||
Net income | $ | 156,963 | $ | 94,760 | $ | 93,927 | |||||
Interest expense, net | 44,039 | 42,924 | 41,446 | ||||||||
Income tax expense | 4,437 | 48,437 | 46,229 | ||||||||
Depreciation | 62,215 | 55,642 | 50,677 | ||||||||
Amortization of intangible assets (a) | 32,561 | 29,642 | 27,989 | ||||||||
EBITDA | 300,215 | 271,405 | 260,268 | ||||||||
Additional adjustments: | |||||||||||
Loss on extinguishment of debt (b) | — | 11,117 | — | ||||||||
Deferred rent (c) | 4,345 | 2,562 | 2,736 | ||||||||
Stock-based compensation expense | 12,072 | 11,646 | 9,200 | ||||||||
Transaction costs (d) | 6,953 | 2,485 | 865 | ||||||||
Total adjustments | 23,370 | 27,810 | 12,801 | ||||||||
Adjusted EBITDA | $ | 323,585 | $ | 299,215 | $ | 273,069 | |||||
Income from operations | $ | 205,439 | $ | 197,238 | $ | 181,602 | |||||
Transaction costs (d) | 6,953 | 2,485 | 865 | ||||||||
Adjusted income from operations | $ | 212,392 | $ | 199,723 | $ | 182,467 | |||||
Net income | $ | 156,963 | $ | 94,760 | $ | 93,927 | |||||
Income tax expense | 4,437 | 48,437 | 46,229 | ||||||||
Income before income taxes | 161,400 | 143,197 | 140,156 | ||||||||
Stock-based compensation expense | 12,072 | 11,646 | 9,200 | ||||||||
Amortization of intangible assets (a) | 32,561 | 29,642 | 27,989 | ||||||||
Loss on extinguishment of debt (b) | — | 11,117 | — | ||||||||
Transaction costs (d) | 6,953 | 2,485 | 865 | ||||||||
Adjusted income before income taxes | 212,986 | 198,087 | 178,210 | ||||||||
Adjusted income tax expense (e) | (50,819 | ) | (67,350 | ) | (62,819 | ) | |||||
Adjusted net income | $ | 162,167 | $ | 130,737 | $ | 115,391 | |||||
Weighted average number of common shares—diluted | 60,253,691 | 60,594,895 | 62,360,778 | ||||||||
Diluted adjusted earnings per common share | $ | 2.69 | $ | 2.16 | $ | 1.85 |
(a) | Represents amortization of intangible assets, including approximately $18.5 million, $18.1 million and $18.0 million for the years ended December 31, 2017, 2016 and 2015, respectively, associated with intangible assets recorded in connection with our going private transaction in May 2008. |
(b) | Represents the write-off of unamortized deferred financing costs and original issue discount associated with indebtedness that was repaid in connection with a debt refinancing. |
(c) | Represents rent expense in excess of cash paid for rent, recognized on a straight line basis over the life of the lease in accordance with Accounting Standards Codification Topic 840, Leases. |
(d) | Represents costs incurred in connection with the disposition of assets in Ireland in 2017, the November 2017, May 2017, and January 2016 amendments to the credit agreement, the November 2016 debt refinancing, secondary offerings, and completed acquisitions as more fully discussed in Note 15, “Segment and Geographic Information,” to the consolidated financial statements in Item 8 of this Annual Report. |
(e) | Represents income tax expense calculated on adjusted income before tax at the effective rate of approximately 24%, 34% and 35% in 2017, 2016, and 2015 respectively. The impact of the Tax Act was not included in the effective rate for purposes of calculating adjusted net income in 2017. |
• | adjusted EBITDA, adjusted income from operations and adjusted net income do not fully reflect the Company’s 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, the Company’s 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 | Years Ended December 31, | ||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
Net cash provided by operating activities | $ | 236,272 | $ | 213,297 | $ | 170,056 | |||||
Net cash used in investing activities | $ | (105,321 | ) | $ | (302,837 | ) | $ | (155,354 | ) | ||
Net cash (used in) provided by financing activities | $ | (123,864 | ) | $ | 93,755 | $ | (90,581 | ) | |||
Cash and cash equivalents (beginning of period) | $ | 14,633 | $ | 11,539 | $ | 87,886 | |||||
Cash and cash equivalents (end of period) | $ | 23,227 | $ | 14,633 | $ | 11,539 |
December 31, | |||||||
2017 | 2016 | ||||||
Term loans | $ | 1,066,938 | $ | 1,075,000 | |||
Deferred financing costs and original issue discount | (10,177 | ) | (10,241 | ) | |||
Total debt | 1,056,761 | 1,064,759 | |||||
Less current maturities | 10,750 | 10,750 | |||||
Long-term debt | $ | 1,046,011 | $ | 1,054,009 |
2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | Total | |||||||||||||||||||||
Term loans (1) | $ | 10,750 | $ | 10,750 | $ | 10,750 | $ | 10,750 | $ | 10,750 | $ | 1,013,188 | $ | 1,066,938 | |||||||||||||
Interest on long-term debt (2) | 38,213 | 37,834 | 37,454 | 37,075 | 36,302 | 35,528 | 222,406 | ||||||||||||||||||||
Operating leases | 113,161 | 108,199 | 100,638 | 88,675 | 83,119 | 508,144 | 1,001,936 | ||||||||||||||||||||
Total (3) | $ | 162,124 | $ | 156,783 | $ | 148,842 | $ | 136,500 | $ | 130,171 | $ | 1,556,860 | $ | 2,291,280 |
(1) | Scheduled principal payments on our term loans. |
(2) | Interest on the outstanding principal balance of the term loans was calculated using the weighted average interest rate for the year ended December 31, 2017 of 3.5%, including commitment fees on the revolving credit facility. |
(3) | Borrowings on our $225.0 million revolving credit facility are not included in the table above, of which there were borrowings outstanding of $127.1 million at December 31, 2017. Additionally, estimated payments for the one-time Transition Tax of $11.0 million are excluded from the above table, that is payable over eight years. |
Page | |
December 31, | |||||||
2017 | 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 23,227 | $ | 14,633 | |||
Accounts receivable—net | 117,138 | 97,212 | |||||
Prepaid expenses and other current assets | 52,096 | 42,554 | |||||
Total current assets | 192,461 | 154,399 | |||||
Fixed assets—net | 575,185 | 529,432 | |||||
Goodwill | 1,306,792 | 1,267,705 | |||||
Other intangibles—net | 348,540 | 374,566 | |||||
Other assets | 45,666 | 32,915 | |||||
Total assets | $ | 2,468,644 | $ | 2,359,017 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 10,750 | $ | 10,750 | |||
Borrowings on revolving credit facility | 127,100 | 76,000 | |||||
Accounts payable and accrued expenses | 132,897 | 125,400 | |||||
Deferred revenue | 155,696 | 146,692 | |||||
Other current liabilities | 34,212 | 28,738 | |||||
Total current liabilities | 460,655 | 387,580 | |||||
Long-term debt—net | 1,046,011 | 1,054,009 | |||||
Deferred rent and related obligations | 66,499 | 59,518 | |||||
Other long-term liabilities | 64,171 | 52,048 | |||||
Deferred revenue | 8,179 | 6,284 | |||||
Deferred income taxes | 74,069 | 111,711 | |||||
Total liabilities | 1,719,584 | 1,671,150 | |||||
Commitments and contingencies (Note 13) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.001 par value; 25,000,000 shares authorized and no shares issued or outstanding at December 31, 2017 and 2016 | — | — | |||||
Common stock, $0.001 par value; 475,000,000 shares authorized; 58,013,144 and 58,910,282 shares issued and outstanding at December 31, 2017 and 2016, respectively | 58 | 59 | |||||
Additional paid-in capital | 747,155 | 899,076 | |||||
Accumulated other comprehensive loss | (33,296 | ) | (89,448 | ) | |||
Retained earnings (accumulated deficit) | 35,143 | (121,820 | ) | ||||
Total stockholders’ equity | 749,060 | 687,867 | |||||
Total liabilities and stockholders’ equity | $ | 2,468,644 | $ | 2,359,017 |
Years ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Revenue | $ | 1,740,905 | $ | 1,569,841 | $ | 1,458,445 | |||||
Cost of services | 1,310,295 | 1,178,994 | 1,100,690 | ||||||||
Gross profit | 430,610 | 390,847 | 357,755 | ||||||||
Selling, general and administrative expenses | 188,939 | 163,967 | 148,164 | ||||||||
Amortization of intangible assets | 32,561 | 29,642 | 27,989 | ||||||||
Other expenses | 3,671 | — | — | ||||||||
Income from operations | 205,439 | 197,238 | 181,602 | ||||||||
Loss on extinguishment of debt | — | (11,117 | ) | — | |||||||
Interest expense—net | (44,039 | ) | (42,924 | ) | (41,446 | ) | |||||
Income before income taxes | 161,400 | 143,197 | 140,156 | ||||||||
Income tax expense | (4,437 | ) | (48,437 | ) | (46,229 | ) | |||||
Net income | $ | 156,963 | $ | 94,760 | $ | 93,927 | |||||
Allocation of net income to common stockholders: | |||||||||||
Common stock—basic | $ | 155,995 | $ | 93,919 | $ | 93,287 | |||||
Common stock—diluted | $ | 156,016 | $ | 93,938 | $ | 93,303 | |||||
Earnings per common share: | |||||||||||
Common stock—basic | $ | 2.65 | $ | 1.59 | $ | 1.53 | |||||
Common stock—diluted | $ | 2.59 | $ | 1.55 | $ | 1.50 | |||||
Weighted average number of common shares outstanding: | |||||||||||
Common stock—basic | 58,873,196 | 59,229,069 | 60,835,574 | ||||||||
Common stock—diluted | 60,253,691 | 60,594,895 | 62,360,778 |
Years ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Net income | $ | 156,963 | $ | 94,760 | $ | 93,927 | |||||
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustments | 53,892 | (50,178 | ) | (17,583 | ) | ||||||
Unrealized gain on interest rate swaps, net of tax | 2,260 | — | — | ||||||||
Total other comprehensive income (loss) | 56,152 | (50,178 | ) | (17,583 | ) | ||||||
Comprehensive income | $ | 213,115 | $ | 44,582 | $ | 76,344 |
Common Stock | Additional Paid-in Capital | Treasury Stock, at Cost | Accumulated Other Comprehensive Loss | Retained Earnings (Accumulated Deficit) | Total Stockholders’ Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at January 1, 2015 | 61,534,802 | $ | 62 | $ | 1,083,091 | $ | — | $ | (21,687 | ) | $ | (310,507 | ) | $ | 750,959 | |||||||||||
Stock-based compensation expense | 9,200 | 9,200 | ||||||||||||||||||||||||
Exercise of stock options | 694,381 | — | 9,811 | 9,811 | ||||||||||||||||||||||
Excess tax benefits from stock option exercises | 9,397 | 9,397 | ||||||||||||||||||||||||
Purchase of treasury stock | (128,103 | ) | (128,103 | ) | ||||||||||||||||||||||
Retirement of treasury stock | (2,221,047 | ) | (2 | ) | (128,101 | ) | 128,103 | — | ||||||||||||||||||
Translation adjustments | (17,583 | ) | (17,583 | ) | ||||||||||||||||||||||
Net income | 93,927 | 93,927 | ||||||||||||||||||||||||
Balance at December 31, 2015 | 60,008,136 | 60 | 983,398 | — | (39,270 | ) | (216,580 | ) | 727,608 | |||||||||||||||||
Stock-based compensation expense | 11,646 | 11,646 | ||||||||||||||||||||||||
Exercise of stock options | 761,452 | 1 | 11,678 | 11,679 | ||||||||||||||||||||||
Excess tax benefits from stock option exercises | 12,891 | 12,891 | ||||||||||||||||||||||||
Options received in net share settlement of stock option exercises | (113,801 | ) | — | (7,747 | ) | (7,747 | ) | |||||||||||||||||||
Purchase of treasury stock | (112,792 | ) | (112,792 | ) | ||||||||||||||||||||||
Retirement of treasury stock | (1,745,505 | ) | (2 | ) | (112,790 | ) | 112,792 | — | ||||||||||||||||||
Translation adjustments | (50,178 | ) | (50,178 | ) | ||||||||||||||||||||||
Net income | 94,760 | 94,760 | ||||||||||||||||||||||||
Balance at December 31, 2016 | 58,910,282 | 59 | 899,076 | — | (89,448 | ) | (121,820 | ) | 687,867 | |||||||||||||||||
Stock-based compensation expense | 12,072 | 12,072 | ||||||||||||||||||||||||
Exercise of stock options and restricted stock units | 1,194,160 | 1 | 22,624 | 22,625 | ||||||||||||||||||||||
Vested restricted stock | 287,625 | — | 5,374 | 5,374 | ||||||||||||||||||||||
Options received in net share settlement of stock option exercises and vesting of restricted stock | (410,508 | ) | — | (29,798 | ) | (29,798 | ) | |||||||||||||||||||
Purchase of treasury stock | (162,195 | ) | (162,195 | ) | ||||||||||||||||||||||
Retirement of treasury stock | (1,968,415 | ) | (2 | ) | (162,193 | ) | 162,195 | — | ||||||||||||||||||
Translation adjustments | 53,892 | 53,892 | ||||||||||||||||||||||||
Unrealized gain on interest rate swaps, net of tax | 2,260 | 2,260 | ||||||||||||||||||||||||
Net income | 156,963 | 156,963 | ||||||||||||||||||||||||
Balance at December 31, 2017 | 58,013,144 | $ | 58 | $ | 747,155 | $ | — | $ | (33,296 | ) | $ | 35,143 | $ | 749,060 |
Years ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income | $ | 156,963 | $ | 94,760 | $ | 93,927 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 94,776 | 85,284 | 78,666 | ||||||||
Loss on extinguishment of debt | — | 11,117 | — | ||||||||
Amortization of original issue discount and deferred financing costs | 1,776 | 3,474 | 3,583 | ||||||||
Loss on foreign currency transactions and other | 1,781 | 43 | 232 | ||||||||
Loss (gain) on disposal of fixed assets | 2,760 | (143 | ) | 351 | |||||||
Stock-based compensation expense | 12,072 | 11,646 | 9,200 | ||||||||
Deferred income taxes | (37,562 | ) | (12,121 | ) | (758 | ) | |||||
Deferred rent | 4,345 | 2,562 | 2,736 | ||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | (18,689 | ) | (78 | ) | (13,340 | ) | |||||
Prepaid expenses and other current assets | (7,371 | ) | (7,289 | ) | 3,825 | ||||||
Income taxes | 11,156 | 12,773 | (12,073 | ) | |||||||
Accounts payable and accrued expenses | 5,912 | (6,858 | ) | (6,448 | ) | ||||||
Deferred revenue | 9,316 | 7,750 | 2,955 | ||||||||
Accrued rent and related obligations | 1,726 | 7,517 | 4,642 | ||||||||
Other assets | (8,387 | ) | (319 | ) | (14,296 | ) | |||||
Other current and long-term liabilities | 5,698 | 3,179 | 16,854 | ||||||||
Net cash provided by operating activities | 236,272 | 213,297 | 170,056 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Purchases of fixed assets | (88,122 | ) | (75,334 | ) | (77,785 | ) | |||||
Proceeds from the disposal of fixed assets | 4,285 | 1,234 | 50 | ||||||||
Payments and settlements for acquisitions—net of cash acquired | (21,484 | ) | (228,737 | ) | (77,619 | ) | |||||
Net cash used in investing activities | (105,321 | ) | (302,837 | ) | (155,354 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Borrowings of long-term debt, net of issuance costs of $9.4 million | — | 1,065,610 | — | ||||||||
Extinguishment of long-term debt | — | (922,488 | ) | — | |||||||
Payments of contingent consideration for acquisitions | (185 | ) | (915 | ) | — | ||||||
Payments of debt issuance costs | (1,711 | ) | (1,002 | ) | — | ||||||
Borrowings under revolving credit facility | 643,201 | 445,868 | 267,300 | ||||||||
Payments under revolving credit facility | (592,101 | ) | (393,868 | ) | (243,300 | ) | |||||
Principal payments of long-term debt | (8,063 | ) | (7,163 | ) | (9,550 | ) | |||||
Taxes paid related to the net share settlement of stock options and restricted stock | (29,798 | ) | (7,747 | ) | — | ||||||
Purchase of treasury stock | (162,195 | ) | (112,792 | ) | (128,103 | ) | |||||
Proceeds from issuance of common stock upon exercise of options | 22,625 | 11,679 | 9,811 | ||||||||
Proceeds from issuance of restricted stock | 4,363 | 3,682 | 3,864 | ||||||||
Excess tax benefits from stock-based compensation | — | 12,891 | 9,397 | ||||||||
Net cash (used in) provided by financing activities | (123,864 | ) | 93,755 | (90,581 | ) | ||||||
Effect of exchange rates on cash and cash equivalents | 1,507 | (1,121 | ) | (468 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | 8,594 | 3,094 | (76,347 | ) | |||||||
Cash and cash equivalents—beginning of period | 14,633 | 11,539 | 87,886 | ||||||||
Cash and cash equivalents—end of period | $ | 23,227 | $ | 14,633 | $ | 11,539 |
Years ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||||||
Cash payments of interest | $ | 44,464 | $ | 37,090 | $ | 38,110 | |||||
Cash payments of income taxes | $ | 31,290 | $ | 34,670 | $ | 49,819 | |||||
NON-CASH TRANSACTION: | |||||||||||
Fixed asset purchases recorded in accounts payable and accrued expenses | $ | 1,500 | $ | 3,000 | $ | 2,000 |
Years ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Beginning balance | $ | 1,054 | $ | 1,556 | $ | 1,235 | |||||
Provision | 2,537 | 839 | 1,322 | ||||||||
Write offs and recoveries | (1,162 | ) | (1,341 | ) | (1,001 | ) | |||||
Ending balance | $ | 2,429 | $ | 1,054 | $ | 1,556 |
At acquisition date As reported December 31, 2016 | Measurement period adjustments | At acquisition date As reported December 31, 2017 | |||||||||
Cash | $ | 5,210 | $ | 75 | $ | 5,285 | |||||
Prepaid expenses and other assets | 5,700 | (237 | ) | 5,463 | |||||||
Fixed assets | 96,868 | (1,368 | ) | 95,500 | |||||||
Intangible assets | 10,540 | 1,860 | 12,400 | ||||||||
Goodwill | 122,714 | (5,914 | ) | 116,800 | |||||||
Total assets acquired | 241,032 | (5,584 | ) | 235,448 | |||||||
Accounts payable and accrued expenses | (18,696 | ) | 1,569 | (17,127 | ) | ||||||
Deferred revenue and parent deposits | (5,394 | ) | 1,026 | (4,368 | ) | ||||||
Deferred tax liabilities | (7,793 | ) | 2,993 | (4,800 | ) | ||||||
Other long-term liabilities | (3,048 | ) | (4 | ) | (3,052 | ) | |||||
Total liabilities assumed | (34,931 | ) | 5,584 | (29,347 | ) | ||||||
Purchase price | $ | 206,101 | $ | — | $ | 206,101 |
Pro forma (Unaudited) | |||||||
Years ended December 31, | |||||||
2016 | 2015 | ||||||
Revenue | $ | 1,649,665 | $ | 1,548,560 | |||
Net income | $ | 96,033 | $ | 89,404 |
Full service center-based child care | Back-up dependent care | Other educational advisory services | Total | ||||||||||||
Balance at December 31, 2015 | $ | 965,114 | $ | 158,894 | $ | 23,801 | $ | 1,147,809 | |||||||
Additions from acquisitions | 139,539 | 9,214 | — | 148,753 | |||||||||||
Adjustments to prior year acquisitions | 73 | — | — | 73 | |||||||||||
Effect of foreign currency translation | (28,930 | ) | — | — | (28,930 | ) | |||||||||
Balance at December 31, 2016 | 1,075,796 | 168,108 | 23,801 | 1,267,705 | |||||||||||
Additions from acquisitions | 14,269 | — | — | 14,269 | |||||||||||
Adjustments to prior year acquisitions | (5,596 | ) | (3 | ) | — | (5,599 | ) | ||||||||
Effect of foreign currency translation | 30,417 | — | — | 30,417 | |||||||||||
Balance at December 31, 2017 | $ | 1,114,886 | $ | 168,105 | $ | 23,801 | $ | 1,306,792 |
December 31, 2017: | Weighted average amortization period | Cost | Accumulated amortization | Net carrying amount | |||||||||
Definite-lived intangibles: | |||||||||||||
Customer relationships | 15 years | $ | 396,428 | $ | (234,742 | ) | $ | 161,686 | |||||
Trade names | 7 years | 10,224 | (4,566 | ) | 5,658 | ||||||||
406,652 | (239,308 | ) | 167,344 | ||||||||||
Indefinite-lived intangibles: | |||||||||||||
Trade names | N/A | 181,196 | — | 181,196 | |||||||||
$ | 587,848 | $ | (239,308 | ) | $ | 348,540 |
December 31, 2016: | Weighted average amortization period | Cost | Accumulated amortization | Net carrying amount | |||||||||
Definite-lived intangibles: | |||||||||||||
Customer relationships | 15 years | $ | 392,820 | $ | (205,342 | ) | $ | 187,478 | |||||
Trade names | 7 years | 8,283 | (2,961 | ) | 5,322 | ||||||||
Non-compete agreements | N/A | 49 | (49 | ) | — | ||||||||
401,152 | (208,352 | ) | 192,800 | ||||||||||
Indefinite-lived intangibles: | |||||||||||||
Trade names | N/A | 181,766 | — | 181,766 | |||||||||
$ | 582,918 | $ | (208,352 | ) | $ | 374,566 |
Estimated amortization expense | |||
2018 | $ | 30,134 | |
2019 | $ | 27,740 | |
2020 | $ | 26,833 | |
2021 | $ | 25,140 | |
2022 | $ | 22,927 |
December 31, | |||||||
2017 | 2016 | ||||||
Prepaid rent and other occupancy costs | $ | 15,553 | $ | 13,932 | |||
Prepaid workers compensation claims | 6,136 | 4,609 | |||||
Prepaid insurance | 6,007 | 3,134 | |||||
Reimbursable costs | 4,186 | 6,101 | |||||
Prepaid income taxes | 1,249 | 649 | |||||
Other prepaid expenses and current assets | 18,965 | 14,129 | |||||
$ | 52,096 | $ | 42,554 |
Estimated useful lives (Years) | December 31, | ||||||||
2017 | 2016 | ||||||||
Buildings | 20 – 40 | $ | 182,701 | $ | 174,168 | ||||
Furniture, equipment and software | 3 – 10 | 206,161 | 178,872 | ||||||
Leasehold improvements | Shorter of the lease term or the estimated useful life | 423,624 | 365,707 | ||||||
Land | — | 103,680 | 92,666 | ||||||
Total fixed assets | 916,166 | 811,413 | |||||||
Accumulated depreciation | (340,981 | ) | (281,981 | ) | |||||
Fixed assets, net | $ | 575,185 | $ | 529,432 |
December 31, | |||||||
2017 | 2016 | ||||||
Accrued payroll and employee benefits | $ | 56,817 | $ | 59,258 | |||
Accounts payable | 31,719 | 26,171 | |||||
Accrued insurance | 8,565 | 5,718 | |||||
Accrued occupancy costs | 3,400 | 3,102 | |||||
Accrued professional fees | 2,693 | 2,376 | |||||
Accrued interest | 370 | 2,985 | |||||
Other accrued expenses | 29,333 | 25,790 | |||||
$ | 132,897 | $ | 125,400 |
December 31, | |||||||
2017 | 2016 | ||||||
Customer amounts on deposit | $ | 17,294 | $ | 14,688 | |||
Deferred rent and other occupancy costs | 5,589 | 4,796 | |||||
Income taxes payable | 4,680 | 3,081 | |||||
Liability for unvested restricted stock | 3,487 | 4,733 | |||||
Other current liabilities | 3,162 | 1,440 | |||||
$ | 34,212 | $ | 28,738 |
December 31, | |||||||
2017 | 2016 | ||||||
Customer amounts on deposit | $ | 16,450 | $ | 14,353 | |||
Liabilities for workers compensation claims | 15,812 | 16,572 | |||||
Transition tax payable | 9,648 | — | |||||
Liability for unvested restricted stock | 7,757 | 7,546 | |||||
Deferred compensation | 5,299 | 2,793 | |||||
Asset retirement obligations | 4,045 | 3,733 | |||||
Liability for uncertain tax positions | 1,903 | 1,096 | |||||
Other long-term liabilities | 3,257 | 5,955 | |||||
$ | 64,171 | $ | 52,048 |
December 31, | |||||||
2017 | 2016 | ||||||
Term loans | $ | 1,066,938 | $ | 1,075,000 | |||
Deferred financing costs and original issue discount | (10,177 | ) | (10,241 | ) | |||
Total debt | 1,056,761 | 1,064,759 | |||||
Less current maturities | 10,750 | 10,750 | |||||
Long-term debt | $ | 1,046,011 | $ | 1,054,009 |
Consolidated balance sheet classification | December 31, 2017 | ||||
Interest rate swaps - asset | Other assets | $ | 3,767 |
Derivatives designated as cash flow hedging instruments | Amount of gain recognized in other comprehensive income | Consolidated statement of income classification | Amount of net loss reclassified into earnings | Total effect on other comprehensive income | ||||||||||
Interest rate swaps | $ | 3,258 | Interest expense—net | $ | (509 | ) | $ | 3,767 | ||||||
Income tax effect | (1,303 | ) | Income tax expense | 204 | (1,507 | ) | ||||||||
Net of income taxes | $ | 1,955 | $ | (305 | ) | $ | 2,260 |
Years ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
United States | $ | 116,225 | $ | 132,846 | $ | 134,611 | |||||
Foreign | 45,175 | 10,351 | 5,545 | ||||||||
Total | $ | 161,400 | $ | 143,197 | $ | 140,156 |
Years ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Current tax expense | |||||||||||
Federal | $ | 29,733 | $ | 42,691 | $ | 29,236 | |||||
State | 4,531 | 10,752 | 8,723 | ||||||||
Foreign | 7,735 | 7,115 | 9,028 | ||||||||
41,999 | 60,558 | 46,987 | |||||||||
Deferred tax (benefit) expense | |||||||||||
Federal | (36,794 | ) | (6,463 | ) | (11,014 | ) | |||||
State | 612 | (2,069 | ) | 6,776 | |||||||
Foreign | (1,380 | ) | (3,589 | ) | 3,480 | ||||||
(37,562 | ) | (12,121 | ) | (758 | ) | ||||||
Income tax expense | $ | 4,437 | $ | 48,437 | $ | 46,229 |
Years ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Federal tax expense computed at statutory rate | $ | 56,490 | $ | 50,119 | $ | 49,055 | |||||
State tax expense, net of federal tax | 2,881 | 6,374 | 5,849 | ||||||||
Valuation allowance, net | (1,028 | ) | (107 | ) | (185 | ) | |||||
Intercompany interest | (5,074 | ) | (6,953 | ) | (6,919 | ) | |||||
Permanent differences and other, net | 1,041 | (389 | ) | (901 | ) | ||||||
Stock-based compensation | (22,757 | ) | — | — | |||||||
Change in tax rate | (32,844 | ) | (96 | ) | 319 | ||||||
Transition Tax | 11,027 | — | — | ||||||||
Change to uncertain tax positions, net | 614 | 432 | (333 | ) | |||||||
Foreign rate differential | (5,913 | ) | (943 | ) | (656 | ) | |||||
Income tax expense | $ | 4,437 | $ | 48,437 | $ | 46,229 |
December 31, | |||||||
2017 | 2016 | ||||||
Deferred tax assets: | |||||||
Reserve on assets | $ | 605 | $ | 342 | |||
Net operating loss carryforwards | 304 | 1,347 | |||||
Liabilities not yet deductible | 28,951 | 39,401 | |||||
Deferred revenue | 2,934 | 3,370 | |||||
Stock-based compensation | 8,024 | 13,855 | |||||
Depreciation | — | 118 | |||||
Other | 2,608 | 1,620 | |||||
43,426 | 60,053 | ||||||
Valuation allowance | — | (1,028 | ) | ||||
Total deferred tax assets | 43,426 | 59,025 | |||||
Deferred tax liabilities: | |||||||
Intangible assets | (97,674 | ) | (143,806 | ) | |||
Depreciation | (19,685 | ) | (26,930 | ) | |||
Total deferred tax liabilities | (117,359 | ) | (170,736 | ) | |||
Net deferred tax liability | $ | (73,933 | ) | $ | (111,711 | ) |
Years ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Beginning balance | $ | 1,096 | $ | 706 | $ | 713 | |||||
Additions for tax positions of prior years | — | — | 353 | ||||||||
Additions for tax positions of current year | 650 | 443 | 353 | ||||||||
Settlements | — | — | (50 | ) | |||||||
Reductions for tax positions of prior years | — | (27 | ) | — | |||||||
Lapses of statutes of limitations | — | — | (663 | ) | |||||||
Effect of foreign currency adjustments | 157 | (26 | ) | — | |||||||
Ending balance | $ | 1,903 | $ | 1,096 | $ | 706 |
Years ended December 31, | |||||
2017 | 2016 | 2015 | |||
Expected dividend yield | 0.0% | 0.0% | 0.0% | ||
Expected stock price volatility | 30.0% | 30.0% | 30.0% | ||
Risk free interest rate | 1.9% | 1.4% | 1.5% | ||
Expected life of options (years) | 5.3 | 5.3 | 5.3 | ||
Weighted average fair value per share of options granted during the period | $22.08 | $19.35 | $15.37 |
Weighted Average Remaining Contractual Life in Years | ||||||||||||
Number of Options | Weighted Average Exercise Price | Aggregate Intrinsic Value (In millions) | ||||||||||
Outstanding at January 1, 2017 | 4.5 | 3,483,877 | $ | 32.34 | ||||||||
Granted | 464,175 | 72.48 | ||||||||||
Exercised | (1,192,160 | ) | 18.98 | |||||||||
Forfeited | (81,050 | ) | 56.75 | |||||||||
Outstanding at December 31, 2017 | 4.4 | 2,674,842 | $ | 44.53 | $ | 132.3 | ||||||
Exercisable at December 31, 2017 | 3.5 | 1,023,230 | $ | 22.07 | $ | 73.6 | ||||||
Vested and expected to vest at December 31, 2017 | 4.3 | 2,547,213 | $ | 43.48 | $ | 128.7 |
Number of Shares | Weighted Average Grant Date Fair Value | Aggregate Intrinsic Value (In millions) | ||||||||
Non-vested restricted stock shares at January 1, 2017 | 538,795 | $ | 22.75 | $ | 25.5 | |||||
Granted | 129,780 | 35.75 | ||||||||
Vested | (287,625 | ) | 18.69 | |||||||
Forfeited | — | — | ||||||||
Non-vested restricted stock shares at December 31, 2017 | 380,950 | $ | 30.24 | $ | 24.6 |
Years ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Basic earnings per share: | |||||||||||
Net income | $ | 156,963 | $ | 94,760 | $ | 93,927 | |||||
Allocation of net income to common stockholders: | |||||||||||
Common stock | $ | 155,995 | $ | 93,919 | $ | 93,287 | |||||
Unvested participating shares | 968 | 841 | 640 | ||||||||
$ | 156,963 | $ | 94,760 | $ | 93,927 | ||||||
Weighted average number of common shares: | |||||||||||
Common stock | 58,873,196 | 59,229,069 | 60,835,574 | ||||||||
Unvested participating shares | 366,029 | 531,364 | 417,285 | ||||||||
Earnings per common share: | |||||||||||
Common stock | $ | 2.65 | $ | 1.59 | $ | 1.53 |
Years ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Diluted earnings per share: | |||||||||||
Earnings allocated to common stock | $ | 155,995 | $ | 93,919 | $ | 93,287 | |||||
Plus earnings allocated to unvested participating shares | 968 | 841 | 640 | ||||||||
Less adjusted earnings allocated to unvested participating shares | (947 | ) | (822 | ) | (624 | ) | |||||
Earnings allocated to common stock | $ | 156,016 | $ | 93,938 | $ | 93,303 | |||||
Weighted average number of common shares: | |||||||||||
Common stock | 58,873,196 | 59,229,069 | 60,835,574 | ||||||||
Effect of dilutive securities | 1,380,495 | 1,365,826 | 1,525,204 | ||||||||
60,253,691 | 60,594,895 | 62,360,778 | |||||||||
Earnings per common share: | |||||||||||
Common stock | $ | 2.59 | $ | 1.55 | $ | 1.50 |
2018 | $ | 113,161 | |
2019 | 108,199 | ||
2020 | 100,638 | ||
2021 | 88,675 | ||
2022 | 83,119 | ||
Thereafter | 508,144 | ||
Total future minimum lease payments | $ | 1,001,936 |
2018 | $ | 10,750 | |
2019 | 10,750 | ||
2020 | 10,750 | ||
2021 | 10,750 | ||
2022 | 10,750 | ||
Thereafter | 1,013,188 | ||
Total future principal payments | $ | 1,066,938 |
Full service center-based child care | Back-up dependent care | Other educational advisory services | Total | ||||||||||||
(In thousands) | |||||||||||||||
Year ended December 31, 2017 | |||||||||||||||
Revenue | $ | 1,457,754 | $ | 224,264 | $ | 58,887 | $ | 1,740,905 | |||||||
Amortization of intangible assets | 30,259 | 1,539 | 763 | 32,561 | |||||||||||
Income from operations (1) | 130,289 | 60,373 | 14,777 | 205,439 | |||||||||||
Year ended December 31, 2016 | |||||||||||||||
Revenue | $ | 1,321,699 | $ | 200,106 | $ | 48,036 | $ | 1,569,841 | |||||||
Amortization of intangible assets | 27,862 | 1,204 | 576 | 29,642 | |||||||||||
Income from operations (2) | 129,693 | 57,620 | 9,925 | 197,238 | |||||||||||
Year ended December 31, 2015 | |||||||||||||||
Revenue | $ | 1,236,762 | $ | 181,574 | $ | 40,109 | $ | 1,458,445 | |||||||
Amortization of intangible assets | 26,690 | 725 | 574 | 27,989 | |||||||||||
Income from operations (3) | 115,149 | 56,891 | 9,562 | 181,602 |
(1) | For the year ended December 31, 2017, income from operations includes transaction costs associated with the loss on the disposition of our remaining assets in Ireland of $3.7 million, and costs related to the May 2017 and November 2017 credit agreement amendments and secondary offerings of $3.3 million, all of which were allocated to the full service center-based child care segment. |
(2) | For the year ended December 31, 2016, income from operations includes $2.5 million of costs associated with secondary offerings, completed acquisitions, an amendment to the credit agreement completed in January 2016, and a debt refinancing completed in November 2016, all of which were allocated to the full service center-based child care segment. |
(3) | For the year ended December 31, 2015, income from operations includes $0.9 million of costs associated with secondary offerings and completed acquisitions, all of which were allocated to full service center-based child care segment. |
Years ended December 31, | |||||||||||
Revenue | 2017 | 2016 | 2015 | ||||||||
North America | $ | 1,353,032 | $ | 1,277,165 | $ | 1,182,629 | |||||
Europe and other | 387,873 | 292,676 | 275,816 | ||||||||
Total revenue | $ | 1,740,905 | $ | 1,569,841 | $ | 1,458,445 |
December 31, | |||||||||||
Long-lived assets | 2017 | 2016 | 2015 | ||||||||
North America | $ | 333,526 | $ | 322,267 | $ | 308,469 | |||||
Europe and other | 241,659 | 207,165 | 121,267 | ||||||||
Total long-lived assets | $ | 575,185 | $ | 529,432 | $ | 429,736 |
March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | ||||||||||||
Revenue | $ | 422,164 | $ | 445,546 | $ | 433,316 | $ | 439,879 | |||||||
Gross profit | 104,934 | 114,341 | 103,194 | 108,141 | |||||||||||
Income from operations | 51,404 | 56,806 | 44,963 | 52,266 | |||||||||||
Net income (1) | 41,374 | 33,040 | 31,105 | 51,444 | |||||||||||
Allocation of net income to common stockholders: | |||||||||||||||
Common stock—basic | 41,151 | 32,828 | 30,905 | 51,111 | |||||||||||
Common stock—diluted | 41,157 | 32,833 | 30,909 | 51,117 | |||||||||||
Earnings per common share: | |||||||||||||||
Common stock—basic | $ | 0.69 | $ | 0.56 | $ | 0.53 | $ | 0.88 | |||||||
Common stock—diluted | $ | 0.68 | $ | 0.54 | $ | 0.51 | $ | 0.86 |
(1) | Net income in the quarter ended December 31, 2017 includes the impact of the Tax Act, which decreased tax expense by $22.3 million as more fully discussed in Note 10, “Income Taxes,” to the consolidated financial statements. |
March 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | ||||||||||||
Revenue | $ | 385,322 | $ | 402,053 | $ | 383,929 | $ | 398,537 | |||||||
Gross profit | 95,776 | 104,383 | 91,472 | 99,216 | |||||||||||
Income from operations | 48,597 | 56,578 | 44,715 | 47,348 | |||||||||||
Net income | 24,727 | 30,403 | 22,510 | 17,120 | |||||||||||
Allocation of net income to common stockholders: | |||||||||||||||
Common stock—basic | 24,517 | 30,131 | 22,306 | 16,965 | |||||||||||
Common stock—diluted | 24,522 | 30,137 | 22,311 | 16,968 | |||||||||||
Earnings per common share: | |||||||||||||||
Common stock—basic | $ | 0.41 | $ | 0.51 | $ | 0.38 | $ | 0.29 | |||||||
Common stock—diluted | $ | 0.40 | $ | 0.50 | $ | 0.37 | $ | 0.28 |
1. | Financial statements: All financial statements are included in Part II, Item 8 of this report. |
2. | Financial statement schedules: All other financial statement schedules are omitted because they are not required or are not applicable, or the required information is provided in the consolidated financial statements or notes described in Item 15(a)(1) above. |
3. | Exhibits: The following is an index of the exhibits included in this Annual Report on Form 10-K or incorporated by reference. |
Exhibit Number | Exhibit Title | |
3.1 | Form of Second Restated Certificate of Incorporation of Bright Horizons Family Solutions Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed October 24, 2012) | |
3.2 | Amended and Restated Bylaws of Bright Horizons Family Solutions Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-K, File No. 001-35780, filed March 15, 2017) | |
4.1 | Form of Amended and Restated Registration Rights Agreement among Bright Horizons Family Solutions Inc. and certain stockholders of Bright Horizons Family Solutions Inc. (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed November 9, 2012) | |
10.1† | Bright Horizons Family Solutions Inc. (f/k/a Bright Horizons Solutions Corp.) 2008 Equity Incentive Plan amended (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed October 24, 2012) |
Exhibit Number | Exhibit Title | |
10.2† | Amendment to Bright Horizons Family Solutions Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.1(1) to Amendment No. 2 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed on January 14, 2013) | |
10.3.1 | Incremental and Amendment and Restatement Agreement, dated as of November 7, 2016, among Bright Horizons Family Solutions LLC, Bright Horizons Capital Corp., Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A. and the Incremental Term Lenders as parties thereto (incorporated by reference to Exhibit 10.3(1) to the Company’s Annual Report on Form 10-K, filed March 1, 2017) | |
10.3.2 | Credit Agreement, as amended and restated on November 7, 2016, by and among Bright Horizons Family Solutions LLC, Bright Horizons Capital Corp., JPMorgan Chase Bank, N.A., the Lenders and other parties thereto, as previously named (incorporated by reference to Exhibit 10.3(2) to the Company’s Annual Report on Form 10-K, filed March 1, 2017) | |
10.4† | Form of Non-Statutory Time-Based Option Award under the 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed October 24, 2012) | |
10.5† | Form of Non-Statutory Performance-Based Option Award under the 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed October 24, 2012) | |
10.6† | Form of Non-Statutory Continuation Option Award under the 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed October 24, 2012) | |
10.7† | Amended and Restated Severance Agreement between Bright Horizons Family Solutions LLC and Stephen I. Dreier (incorporated by reference to Exhibit 10.15 to the Company’s Registration Statement on Form S-1, File No. 333-188903, filed May 29, 2013) | |
10.8† | Form of Non-Statutory Stock Option Agreement (Directors) under 2012 Omnibus Long-Term Incentive Plan (incorporated by reference to Exhibit 10.6(1) to Amendment No. 1 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed November 9, 2012) | |
10.9† | Form of Non-Statutory Stock Option Agreement (Employees) under 2012 Omnibus Long-Term Incentive Plan (incorporated by reference to Exhibit 10.6(2) to Amendment No. 1 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed November 9, 2012) | |
10.10† | Bright Horizons Family Solutions Inc. 2012 Omnibus Long-Term Incentive Plan, as Amended and Restated Effective as of June 1, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed August 7, 2017) | |
10.11† | Bright Horizons Family Solutions Inc. Annual Incentive Plan (incorporated by reference to Exhibit 10.7 Amendment No. 1 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed November 9, 2012) | |
10.12† | Form of Amended and Restated Severance Agreement between Bright Horizons Family Solutions LLC and David Lissy (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed October 24, 2012) | |
10.13† | Amended and Restated Severance Agreement between Bright Horizons Family Solutions LLC and Mandy Berman (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K, filed March 1, 2017) | |
10.14† | Form of Amended and Restated Severance Agreement between Bright Horizons Family Solutions LLC and Elizabeth Boland (incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed October 24, 2012) | |
10.15† | Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.16 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed October 24, 2012) | |
10.16† | Form of Amended and Restated Stockholders Agreement among Bright Horizons Family Solutions Inc. and certain stockholders named therein (incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed October 24, 2012) | |
10.17† | Amended and Restated Severance Agreement between Bright Horizons Family Solutions LLC and Mary Lou Burke (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K, filed March 1, 2017) | |
10.18 | Amended and Restated Lease between the President and Fellows of Harvard College and Bright Horizons Children’s Centers, LLC, dated December 1, 2009 (incorporated by reference to Exhibit 10.22 to the Company’s Registration Statement on Form S-1, File No. 333-184579, filed October 24, 2012) |
Exhibit Number | Exhibit Title | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |
* | Exhibits filed herewith | |
** | Exhibits furnished herewith | |
† | Management contract or compensatory plan | |
(1) | Schedules (or similar attachments) have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant hereby undertakes to furnish supplemental copies of any of the omitted schedules (or similar attachments) upon request by the SEC. |
Bright Horizons Family Solutions Inc. | ||
By: | /s/ Stephen H. Kramer | |
Name: | Stephen H. Kramer | |
Title: | Chief Executive Officer and President |
Signature | Title | Date | ||
/s/ Stephen H. Kramer | Director, Chief Executive Officer and President (Principal Executive Officer) | February 28, 2018 | ||
Stephen H. Kramer | ||||
/s/ Elizabeth Boland | Chief Financial Officer (Principal Financial and Accounting Officer) | February 28, 2018 | ||
Elizabeth Boland | ||||
/s/ David Lissy | Director, Executive Chairman | February 28, 2018 | ||
David Lissy | ||||
/s/ Lawrence Alleva | Director | February 28, 2018 | ||
Lawrence Alleva | ||||
/s/ Julie Atkinson | Director | February 28, 2018 | ||
Julie Atkinson | ||||
/s/ Joshua Bekenstein | Director | February 28, 2018 | ||
Joshua Bekenstein | ||||
/s/ Roger Brown | Director | February 28, 2018 | ||
Roger Brown | ||||
/s/ E. Townes Duncan | Director | February 28, 2018 | ||
E. Townes Duncan | ||||
/s/ Jordan Hitch | Director | February 28, 2018 | ||
Jordan Hitch | ||||
/s/ Marguerite Kondracke | Director | February 28, 2018 | ||
Marguerite Kondracke | ||||
/s/ Sara Lawrence-Lightfoot | Director | February 28, 2018 | ||
Sara Lawrence-Lightfoot | ||||
/s/ Linda Mason | Director | February 28, 2018 | ||
Linda Mason | ||||
/s/ Cathy E. Minehan | Director | February 28, 2018 | ||
Cathy E. Minehan | ||||
/s/ Mary Ann Tocio | Director | February 28, 2018 | ||
Mary Ann Tocio |
Entity | Jurisdiction | |
Bright Horizons Family Solutions Inc. | Delaware | |
Bright Horizons Capital Corp. | Delaware | |
Bright Horizons Family Solutions LLC | Delaware | |
Apex Insurance Inc. | Vermont | |
CorporateFamily Solutions LLC | Tennessee | |
Bright Horizons LLC | Delaware | |
Bright Horizons Children’s Centers LLC | Delaware | |
ChildrenFirst LLC | Massachusetts | |
Resources in Active Learning | California | |
Edlink, LLC. | Delaware | |
Hildebrandt Learning Centers, LLC | Pennsylvania | |
Children’s Choice Learning Centers, Inc. | Nevada | |
Children’s Choice SB Corporation | Nevada | |
Children’s Choice Missouri Corporation I | Missouri | |
Children’s Choice Missouri Corporation II | Missouri | |
Children’s Choice North Carolina Corporation I | North Carolina | |
Children’s Choice Tennessee Corporation I | Tennessee | |
Children’s Choice Nevada Property, L.L.C. | Nevada | |
UVP Holdings, LLC | Delaware | |
UVP Operating, LLC | Delaware | |
College Nannies & Tutors Development, Inc. | Minnesota | |
BHFS One Limited | United Kingdom | |
BHFS Two Limited | United Kingdom | |
Bright Horizons Family Solutions, Ltd. | United Kingdom | |
Conchord Limited | United Kingdom | |
Chestnutbay Acquisitionco Limited | United Kingdom | |
Chestnutbay Limited | United Kingdom | |
Acorndrive Limited | United Kingdom | |
Acorndrift Limited | United Kingdom | |
Asquith Court Holdings Limited | United Kingdom | |
Goosebrook Limited | United Kingdom | |
Rivertide Day Nurseries Limited | United Kingdom | |
Chesire Plato LLP (1) | United Kingdom | |
Asquith Court Nurseries Limited | United Kingdom | |
Asquith Nannies Limited | United Kingdom | |
Asquith Nurseries Limited | United Kingdom | |
Asquith Nurseries Developments Limited | United Kingdom | |
Kids 2 Us Limited | United Kingdom | |
Kinderstart Day Nurseries Limited | United Kingdom | |
Bobby’s Playhouse Limited | United Kingdom | |
Four Seasons Nurseries (Scotland) Limited | United Kingdom | |
Four Seasons at Spectrum Limited | United Kingdom | |
Four Seasons at Skypark Limited | United Kingdom | |
Hickory House Children’s Day Nursery Limited | United Kingdom | |
Allgold Investments Limited | United Kingdom | |
Norfolk Lodge School Limited | United Kingdom |
Entity | Jurisdiction | |
Le Club Frere Jacques Limited | United Kingdom | |
Muddy Puddles Childcare Limited | United Kingdom | |
Bishopbriggs Childcare Centre Limited | United Kingdom | |
Pegasus Childcare Limited | United Kingdom | |
Bright Horizons B.V. | Netherlands | |
Kindergarden Nederland B.V. | Netherlands | |
Bright Horizons Child Care Services Private Limited (2) | India | |
Bright Horizons Family Solutions Ltd. (3) | Canada | |
Bright Horizons Corp. | Puerto Rico |
(1) | Owned 99.9% by Acorndrift Limited and 0.01% by Asquith Court Holdings Limited |
(2) | 9,999 shares owned by Bright Horizons B.V., 1 share owned by BHFS Two Limited. |
(3) | Stock is held 15% by Bright Horizons Family Solutions LLC and 85% by ChildrenFirst LLC. |
/s/ Deloitte & Touche LLP |
Boston, Massachusetts |
February 28, 2018 |
1. | I have reviewed this annual report on Form 10-K 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 the 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 function): |
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: | February 28, 2018 | /s/ Stephen H. Kramer |
Stephen H. Kramer | ||
Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K 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 the 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 function): |
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: | February 28, 2018 | /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; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
Date: | February 28, 2018 | /s/ Stephen H. Kramer |
Stephen H. Kramer* | ||
Chief Executive Officer |
* | A signed original of this written statement required by Section 906 has been provided to Bright Horizons Family Solutions Inc. and will be retained by Bright Horizons Family Solutions Inc. and furnished to the Securities and Exchange Commission or its staff upon request. |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
Date: | February 28, 2018 | /s/ Elizabeth Boland |
Elizabeth Boland* | ||
Chief Financial Officer |
* | A signed original of this written statement required by Section 906 has been provided to Bright Horizons Family Solutions Inc. and will be retained by Bright Horizons Family Solutions Inc. and furnished to the Securities and Exchange Commission or its staff upon request. |
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Document and Entity Information - USD ($) $ in Billions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Feb. 16, 2018 |
Jun. 30, 2017 |
|
Document And Entity Information [Abstract] | |||
Document type | 10-K | ||
Amendment flag | false | ||
Document period end date | Dec. 31, 2017 | ||
Document fiscal year focus | 2017 | ||
Document fiscal period focus | FY | ||
Entity registrant name | BRIGHT HORIZONS FAMILY SOLUTIONS INC. | ||
Entity central index key | 0001437578 | ||
Current fiscal year end date | --12-31 | ||
Entity well-known seasoned issuer | Yes | ||
Entity current reporting status | Yes | ||
Entity voluntary filers | No | ||
Entity filer category | Large Accelerated Filer | ||
Entity common stock, shares outstanding (in shares) | 58,566,024 | ||
Entity public float | $ 3.9 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per shares) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, Issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per shares) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 475,000,000 | 475,000,000 |
Common stock, issued (in shares) | 58,013,144 | 58,910,282 |
Common stock, outstanding (in shares) | 58,013,144 | 58,910,282 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 156,963 | $ 94,760 | $ 93,927 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | 53,892 | (50,178) | (17,583) |
Unrealized gain on interest rate swaps, net of tax | 2,260 | 0 | 0 |
Total other comprehensive income (loss) | 56,152 | (50,178) | (17,583) |
Comprehensive income | $ 213,115 | $ 44,582 | $ 76,344 |
Organization and Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Significant Accounting Policies | ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization — Bright Horizons Family Solutions Inc. (“Bright Horizons” or the “Company”) provides center-based child care and early education, back-up dependent care (for children and elders), tuition reimbursement program management services, college admissions advisory services, and other support services in the United States, the United Kingdom, the Netherlands, Puerto Rico, Canada, and India. The Company provides services designed to help employers and families better address the challenges of work and family life primarily under multi-year contracts with employers who offer child care and other dependent care solutions, as well as other educational advisory services, as part of their employee benefits packages to improve employee engagement. The Company provides its center-based child care services under two general business models: a cost-plus model, where the Company is paid a fee by an employer client for managing a child care center on a cost-plus basis, and a profit and loss (“P&L”) model, where the Company assumes the financial risk of operating a child care center. The P&L model is further classified into two subcategories: (i) a sponsor model, where Bright Horizons provides child care and early education services on either an exclusive or priority enrollment basis for the employees of a specific employer sponsor; and (ii) a lease/consortium model, where the Company provides child care and early education services to the employees of multiple employers located within a specific real estate development (for example, an office building or office park), as well as to families in the surrounding community. In both the cost-plus and sponsor P&L models, the development of a new child care center, as well as ongoing maintenance and repair, is typically funded by an employer sponsor with whom the Company enters into a multi-year contractual relationship. In addition, employer sponsors typically provide subsidies for the ongoing provision of child care services for their employees. Under each model type, the Company retains responsibility for all aspects of operating the child care and early education center, including the hiring and paying of employees, contracting with vendors, purchasing supplies, and collecting tuition and related accounts receivable. The Company provides back-up dependent care services through its own centers and through our Back-Up Care Advantage (“BUCA”) program, which offers access to a contracted network of in-home care agencies and center-based providers in locations where the Company does not otherwise have centers with available capacity. Stock Offerings — On January 30, 2013, the Company completed an initial public offering (the “IPO”) and issued a total of 11.6 million shares of common stock in exchange for $233.3 million, net of offering costs. The Company used the proceeds of the IPO, as well as certain amounts from a 2013 debt refinancing, to repay the principal and accumulated interest under its senior notes outstanding on January 30, 2013. The Company also authorized 25 million shares of undesignated preferred stock for issuance. Subsequent to the IPO, certain of the Company’s stockholders have sold a total of 47.7 million shares of the Company’s common stock in underwritten secondary offerings (“secondary offerings”), including 8.2 million, 4.1 million, and 9.7 million shares in the years ended December 31, 2017, 2016, and 2015, respectively. The Company did not receive proceeds from the sale of shares in the secondary offerings. The Company incurred $0.5 million, $0.5 million, and $0.6 million in the years ended December 31, 2017, 2016, and 2015, respectively, in offering costs related to the secondary offerings, which are included in selling, general and administrative expenses in the consolidated statement of income. The Company purchased 1.7 million, 1.0 million, and 2.1 million of the shares sold in the secondary offerings in 2017, 2016, and 2015, respectively, from investment funds affiliated with Bain Capital Partners LLC at the same price per share paid by the underwriter to the selling stockholders. Principles of Consolidation — The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. Use of Estimates — The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. The Company’s significant accounting estimates in the preparation of the consolidated financial statements relate to the valuation of goodwill and other intangibles, and income taxes. Actual results may differ from management’s estimates. Foreign Operations — The functional currency of the Company’s foreign subsidiaries is their local currency. The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense items are translated at the average exchange rates prevailing during the period. The cumulative translation effect for subsidiaries using a functional currency other than the U.S. dollar is included in accumulated other comprehensive income or loss as a separate component of stockholders’ equity. The Company’s intercompany accounts are denominated in the functional currency of the foreign subsidiary. Gains and losses resulting from the remeasurement of intercompany receivables that the Company considers to be of a long-term investment nature are recorded as a cumulative translation adjustment in accumulated other comprehensive income or loss as a separate component of stockholders’ equity, while gains and losses resulting from the remeasurement of intercompany receivables from those foreign subsidiaries for which the Company anticipates settlement in the foreseeable future are recorded in the consolidated statement of income. The Company incurred foreign currency translation losses of $1.7 million during the year ended December 31, 2017, associated with the disposition of the remaining assets in Ireland, which was included in other expenses in the consolidated statement of income. The net gains and losses recorded in the consolidated statements of income for the years ended December 31, 2016 and 2015 were not significant. Fair Value of Financial Instruments — The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date and applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The Company uses observable inputs where relevant and whenever possible. Level 1 — Quoted prices are available in active markets for identical investments as of the reporting date. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and borrowings on the revolving credit facility approximates their fair value because of their short-term nature. The fair value of the Company's long-term debt is based on current bid prices, which approximates carrying value. As such, the Company's long-term debt was classified as Level 1, as defined under U.S. GAAP. As of December 31, 2017 and 2016, the carrying value and estimated fair value of long-term debt was $1.1 billion. In 2017, the Company entered into interest rate swap agreements, which were included in other assets on the consolidated balance sheets at fair value. As of December 31, 2017, the fair value of the interest rate swaps were $3.8 million, which were estimated using market-standard valuation models. Such models project future cash flows and discount the future amounts to a present value using market-based observable inputs. Additionally, the fair value of the interest rate swaps included consideration of credit risk. The Company used a potential future exposure model to estimate this credit valuation adjustment (“CVA.”) The inputs to the CVA were largely based on observable market data, with the exception of certain assumptions regarding credit worthiness. As the magnitude of the CVA was not a significant component of the fair value of the interest rate swaps, it was not considered a significant input. The fair value of the interest rate swaps is classified as Level 2, as defined under U.S. GAAP. During 2017 and 2016, the Company had no transfers of assets or liabilities between any of the above hierarchy levels. Concentrations of Credit Risk — Financial instruments that potentially expose the Company to concentrations of credit risk consist mainly of cash and cash equivalents and accounts receivable. The Company mitigates its exposure by maintaining its cash and cash equivalents in financial institutions of high credit standing. The Company’s accounts receivable, which are derived primarily from the services it provides, are dispersed across many clients in various industries with no single client accounting for more than 10% of the Company’s net revenue or accounts receivable. The Company believes that no significant credit risk exists at December 31, 2017 and 2016. Cash and Cash Equivalents — The Company considers all highly liquid investments with maturities, when purchased, of three months or less to be cash equivalents. Cash equivalents consist primarily of institutional money market accounts. There were no cash equivalent investments at December 31, 2017 and 2016. The Company’s cash management system provides for the funding of the main bank disbursement accounts on a daily basis as checks are presented for payment. Under this system, outstanding checks may be in excess of the cash balances at certain banks, creating book overdrafts. There were $18.0 million and $11.0 million in book overdrafts at December 31, 2017 and 2016, respectively, included in accounts payable on the consolidated balance sheet. Accounts Receivable — The Company generates accounts receivable from fees charged to parents and employer sponsors and, to a lesser degree, government agencies. The Company monitors collections and payments and maintains a provision for estimated losses based on historical trends, in addition to provisions established for specific collection issues that have been identified. Accounts receivable are stated net of this allowance for doubtful accounts. Activity in the allowance for doubtful accounts is as follows (in thousands):
Fixed Assets — Property and equipment, including leasehold improvements, are carried at cost less accumulated depreciation or amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or their estimated useful lives. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the consolidated balance sheet and the resulting gain or loss is reflected in the consolidated statement of income. Expenditures for maintenance and repairs are expensed as incurred, whereas expenditures for improvements and replacements are capitalized. Depreciation is included in cost of services and selling, general and administrative expenses depending on the nature of the expenditure. Business Combinations — Business combinations are accounted for under the acquisition method of accounting. Amounts paid for an acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition. The accounting for business combinations requires estimates and judgment as to expectations of future cash flows of the acquired business, the allocation of those cash flows to identifiable intangible assets, and in determining the estimated fair value for assets acquired and liabilities assumed. The determination of fair values is based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If actual results differ from these estimates, the amounts recorded in the financial statements could be impaired. Acquisition costs are expensed as incurred and recorded in selling, general and administrative expenses; integration costs associated with a business combination are expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date affect income tax expense. Goodwill and Intangible Assets — Goodwill is recorded when the consideration paid for an acquisition exceeds the fair value of the net tangible and identifiable intangible assets acquired. The Company’s intangible assets principally consist of various customer relationships (including both client and parent relationships) and trade names. Goodwill and intangible assets with indefinite lives are not subject to amortization, but are tested annually for impairment or more frequently if there are indicators of impairment. Indefinite lived intangible assets are also subject to an annual evaluation to determine whether events and circumstances continue to support an indefinite useful life. Goodwill impairment assessments are performed at the reporting unit level, which for Bright Horizons is at the operating segment level. In performing the goodwill impairment test, the Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying value. Qualitative factors may include, but are not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s services, regulatory developments, cost factors, and entity specific factors such as overall financial performance and projected results. If an initial qualitative assessment indicates that it is more likely than not that the carrying value exceeds the fair value of a reporting unit, an additional quantitative evaluation is performed. Alternatively, the Company may elect to proceed directly to the quantitative impairment test. In performing the quantitative analysis, the Company compares the fair value of the reporting unit with its carrying amount, including goodwill. Fair value for each reporting unit is determined by estimating the present value of expected future cash flows, which are forecasted for each of the next ten years, applying a long-term growth rate to the final year, discounted using the Company’s estimated discount rate. If the fair value of the Company’s reporting unit exceeds its carrying amount, the goodwill of the reporting unit is considered not impaired. If the carrying amount of the Company’s reporting unit exceeds its fair value, the Company would recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value, up to the amount of goodwill allocated to that reporting unit. The Company performed a qualitative assessment during the annual impairment review as of October 1, 2017 and concluded that it is not more likely than not that the fair value of the Company’s reporting units are less than their carrying amount. Therefore, no goodwill impairment charges were recorded in the years ended December 31, 2017, 2016, or 2015. We test certain trademarks that are determined to be indefinite-lived intangible assets by comparing the fair value of the trademarks with their carrying value. We estimate the fair value first by estimating the total revenue attributable to the trademarks and then by applying a royalty rate determined by an analysis of empirical, market-derived royalty rates for guideline intangible assets, consistent with the initial valuation of the intangibles. No impairment losses were recorded in the years ended December 31, 2017, 2016 or 2015 in relation to intangible assets. Intangible assets that are separable from goodwill and have determinable useful lives are valued separately and are amortized over the estimated period benefited, ranging from one to seventeen years. Intangible assets related to parent relationships are amortized using an accelerated method over their useful lives. All other intangible assets are amortized on a straight-line basis over their useful lives. Impairment of Long-Lived Assets — The Company reviews long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Impairment is assessed by comparing the carrying amount of the asset to the estimated undiscounted future cash flows over the asset’s remaining life. If the estimated cash flows are less than the carrying amount of the asset, an impairment loss is recognized to reduce the carrying amount of the asset to its estimated fair value less any disposal costs. The Company recorded fixed asset impairment losses of $0.2 million in the year ended December 31, 2017 and less than $0.1 million in the years ended December 31, 2016 and 2015, which have been included in cost of services in the consolidated statement of income. Other Long-Term Assets — Other long-term assets includes a deposit of $8.0 million in the Company's wholly-owned captive insurance entity and a cost basis investment of $2.1 million in a private company, which we review for impairment whenever events or changes in circumstances indicate that the carrying amount of such asset may not be recoverable. Deferred Revenue — The Company records deferred revenue for prepaid tuition and fees received from clients in advance of services being performed. The Company is also a party to agreements where the performance of services extends beyond one year. In these circumstances, the Company records a long-term obligation and recognizes revenue over the period of the agreement as the services are rendered. Leases and Deferred Rent — The Company leases space for certain of its centers and corporate offices. Leases are evaluated and classified as operating or capital for financial reporting purposes. The Company recognizes rent expense from operating leases with periods of free rent, tenant allowances and scheduled rent increases on a straight-line basis over the applicable lease term. The difference between rents paid and straight-line rent expense is recorded as deferred rent. Discount on Long-Term Debt — Original issue discounts on the Company’s debt are recorded as a reduction of long-term debt and are amortized over the life of the related debt instrument in accordance with the effective interest method. Amortization expense is included in interest expense in the consolidated statement of income. Deferred Financing Costs — Deferred financing costs are recorded as a reduction of long-term debt and are amortized over the life of the related debt instrument in accordance with the effective interest method. Amortization expense is included in interest expense in the consolidated statement of income. Income Taxes — The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for tax carryforwards, such as net operating losses. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the provision for income taxes in the period that includes the enactment date. The Company records a valuation allowance to reduce the carrying amount of deferred tax assets if it is more likely than not that such asset will not be realized. Additional income tax expense is recognized as a result of recording valuation allowances. The Company does not recognize a tax benefit on losses in foreign operations where it does not have a history of profitability. The Company records penalties and interest on income tax related items as a component of tax expense. Obligations for uncertain tax positions are recorded based on an assessment of whether the position is more likely than not to be sustained by the taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. Revenue Recognition — The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the fee is fixed and determinable, and collectability is reasonably assured. Center-based child care revenues consist primarily of tuition, which consists of amounts paid by parents, supplemented in some cases by payments from employer sponsors and, to a lesser extent, by payments from government agencies. Revenue may also include management fees, operating subsidies paid either in lieu of or to supplement parent tuition, and fees for other services. Revenue for center-based child care is recognized as the services are performed. The Company enters into contracts with its employer sponsors to manage and operate their child care and early education centers and/or for the provision of back-up dependent care and other educational advisory services under various terms. The Company’s contracts to operate child care and early education centers are generally three to ten years in length with varying renewal options. The Company’s contracts for back-up dependent care and other educational advisory services are generally one to three years in length with varying renewal options. Revenue for these services is recognized as they are performed. Stock-Based Compensation — The Company accounts for stock-based compensation using a fair value method. Stock-based compensation expense is recognized in the consolidated financial statements based on the grant-date fair value of the awards that are expected to vest. This expense is recognized on a straight-line basis over the requisite service period, which generally represents the vesting period, of each separately vesting tranche. The Company calculates the fair value of stock options using the Black-Scholes option-pricing model. Comprehensive Income or Loss — Comprehensive income or loss is comprised of net income or loss, foreign currency translation adjustments, and unrealized gains or losses from interest rate swaps, net of tax. The Company has not recorded a deferred tax liability related to state income taxes and foreign withholding taxes on the undistributed earnings of foreign subsidiaries that are intended to be indefinitely reinvested. Therefore, taxes are not provided for the related currency translation adjustments. Earnings Per Share — Net earnings per share is calculated using the two-class method, which is an earnings allocation formula that determines net income or loss per share for the holders of the Company’s common stock and unvested participating shares. Unvested participating shares are unvested share-based payment awards of restricted stock that participate in dividends with common stock. Net income available to stockholders is allocated on a pro rata basis to each share as if all of the earnings for the period had been distributed. Diluted net income or loss per share is calculated using the more dilutive of (1) the treasury stock method, or (2) the two-class method for all outstanding stock options. Recently Adopted Pronouncement — In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this update simplify several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification on the statement of cash flows. The update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods with early adoption permitted. The Company adopted the standard prospectively on January 1, 2017, and as such, prior periods have not been adjusted. The adoption of this guidance impacted the Company’s income tax expense, effective tax rate, and weighted average shares outstanding. The Company continues to include a forfeiture assumption relative to its unvested awards. Upon adoption, the Company now recognizes all excess tax benefits and tax deficiencies as income tax benefits or expenses on the income statement, which were previously recorded to additional paid-in capital on the balance sheet. As a result, the Company decreased tax expense and increased net income by $26.5 million in the year ended December 31, 2017 in relation to the excess tax benefits associated with the exercise of stock options and vesting of restricted stock. Additionally, weighted average diluted common shares increased in the year ended December 31, 2017 by approximately 0.4 million shares under the new earnings per share methodology and tax benefits from stock options of $26.5 million were included with cash flows from operating activities as a component of net income rather than as cash flows from financing activities under previous guidance. New Accounting Pronouncements — In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides a single comprehensive model for revenue recognition. The FASB has subsequently issued various ASUs which amend or clarify specific areas of the guidance. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This new guidance is effective for the Company beginning January 1, 2018 and can be adopted using either a full retrospective or modified approach. The Company will adopt the standard using the modified approach. The Company established an implementation team to assist with its assessment of the impact of the new revenue guidance on its operations, consolidated financial statements and related disclosures. The Company’s assessment has included performing analysis for each revenue stream identified, assessing the potential differences in recognition and measurement that may result from adopting this standard, evaluating principal versus agent considerations, and assessing whether the Company meets certain practical expedients. Based on the results of the assessment, the adoption of this standard will not have a material impact on the timing or amount of revenue recognized upon adoption and any cumulative prior period adjustment is immaterial and therefore will not be recorded to the opening balance of retained earnings upon adoption. The Company also anticipates changes to its disclosures to comply with the new disclosure requirements under Topic 606. The Company is implementing the necessary changes to its revenue recognition accounting policies and controls to support recognition and disclosure under the new standard. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard amends the existing guidance and requires lessees to recognize on the balance sheet assets and liabilities for the rights and obligations created by those leases with lease terms longer than twelve months. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, and is to be applied using a modified retrospective approach. Early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's consolidated financial statements. Based on its preliminary assessment, the Company anticipates that the adoption of this standard will have a material impact on the Company's consolidated financial statements, as all long-term leases will be capitalized on the consolidated balance sheet. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815), which expands and refines hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The guidance also makes certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. This ASU is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with early adoption permitted. The new guidance with respect to cash flow and net investment hedge relationships existing on the date of adoption must be applied on a modified retrospective basis, and the new presentation and disclosure requirements must be applied on a prospective basis. This standard is not expected to have a significant impact on the Company's consolidated financial statements and related disclosures. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | ACQUISITIONS AND DISPOSITIONS The Company’s growth strategy includes expansion through strategic and synergistic acquisitions. The goodwill resulting from these acquisitions arises largely from synergies expected from combining the operations of the businesses acquired with our existing operations, as well as from benefits derived from gaining the related assembled workforce. 2017 Acquisitions During the year ended December 31, 2017, the Company acquired ten centers in the Netherlands, three centers in the United States, and one center in the United Kingdom in seven separate business acquisitions, which were each accounted for as business combinations. The centers were acquired for cash consideration of $21.5 million, net of cash acquired of $0.3 million, and consideration payable of $0.2 million. The Company recorded goodwill of $14.3 million related to the full service center-based child care segment, a portion of which will be deductible for tax purposes. In addition, the Company recorded intangible assets of $2.3 million, consisting of customer relationships that will be amortized over three to five years, as well as fixed assets of $7.3 million, deferred tax liabilities of $0.6 million, and a working capital deficit of $1.3 million in relation to these acquisitions. The allocation of purchase price consideration is based on preliminary estimates of fair value; such estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). As of December 31, 2017, the purchase price allocations for these acquisitions remain open as the Company gathers additional information regarding the assets acquired and the liabilities assumed. The operating results for the acquired businesses are included in the consolidated results of operations from the date of acquisition, which were not material to the Company’s financial results. 2017 Dispositions During the year ended December 31, 2017, the Company disposed of its remaining three centers in Ireland for a loss of $3.7 million, which was included in other expenses in the consolidated statement of income, offset by a tax benefit of approximately $7.0 million that was recorded from the loss on investment of a subsidiary. 2016 Acquisitions Conchord Limited On November 10, 2016, the Company acquired all of the outstanding shares of Conchord Limited, which operates Asquith Day Nurseries & Pre-Schools (“Asquith”), a group of 90 child care centers and programs throughout the United Kingdom, for cash consideration of $206.1 million, which was accounted for as a business combination. The purchase price was financed with available cash on hand, funds available under the Company’s revolving credit facility, and term loans. The Company incurred transaction costs of approximately $1.4 million for this transaction, which were included in selling, general and administrative expenses in 2016. The purchase price for this acquisition has been allocated based on the fair value of the acquired assets and assumed liabilities at the date of acquisition as follows (in thousands):
The Company acquired fixed assets of $95.5 million, including 39 properties. The Company recorded goodwill of $116.8 million, which will not be deductible for tax purposes. Goodwill related to this acquisition is reported within the full service center-based child care segment. Intangible assets consist of $9.9 million of customer relationships that will be amortized over five years and $2.5 million of trademarks that will be amortized over six years. The operating results for Asquith are included in the consolidated results of operations from the date of acquisition. The following table presents consolidated pro forma information as if the acquisition of Asquith had occurred on January 1, 2015 (in thousands):
The unaudited pro forma results reflect certain adjustments related to the acquisition, such as increased amortization expense related to the acquired intangible assets as well as financing costs. The pro forma results for the year ended December 31, 2015 include nonrecurring transaction costs that were incurred by the Company and the acquired business in relation to the acquisition, totaling $4.3 million, which were excluded from the pro forma results for the year ended December 31, 2016. Asquith contributed total revenue of $11.3 million in the year ended December 31, 2016. The Company has determined that the presentation of net income, from the date of acquisition, is impracticable due to the integration of the operations upon acquisition. Other 2016 Acquisitions During the year ended December 31, 2016, the Company also acquired four centers in the United States and eight centers in the United Kingdom in four separate business acquisitions, which were each accounted for as business combinations. The centers were acquired for cash consideration of $18.1 million and contingent consideration of $1.1 million. The Company recorded goodwill of $17.1 million related to the full service center-based child care segment, a portion of which will be deductible for tax purposes. In addition, the Company recorded intangible assets of $3.3 million, consisting primarily of customer relationships that will be amortized over five years, as well as a working capital deficit of $1.8 million, including cash of $0.3 million, in relation to these acquisitions. During the year ended December 31, 2016, the Company acquired all of the outstanding shares of a provider of back-up care in the United States, which was accounted for as a business combination. The business was acquired for cash consideration of $10.4 million and contingent consideration of $3.8 million. The Company recorded goodwill of $9.2 million related to the back-up care segment, which will not be deductible for tax purposes. In addition, the Company recorded intangible assets of $4.9 million, consisting primarily of the provider network that will be amortized over five years, as well a technology of $2.6 million, and working capital of $0.4 million, including cash of $0.3 million, in relation to this acquisition. 2015 Acquisitions On May 19, 2015, the Company acquired Hildebrandt Learning Centers, LLC, an operator of 40 centers in the United States, for cash consideration of $19.2 million and contingent consideration of $0.5 million, which was accounted for as a business combination. The Company recorded goodwill of $13.2 million related to the full service center-based child care segment, which will be deductible for tax purposes, and intangible assets of $5.7 million, consisting of customer relationships that will be amortized over 12 years. The Company also acquired working capital of $0.3 million, including cash of $1.5 million, and fixed assets of $0.5 million. On July 15, 2015, the Company acquired Active Learning Childcare Limited, an operator of nine centers in the United Kingdom, for cash consideration of $42.2 million, which was accounted for as a business combination. The Company recorded goodwill of $31.1 million related to the full service center-based child care segment, which will not be deductible for tax purposes, and intangible assets of $3.8 million, consisting primarily of customer relationships that will be amortized over five years. The Company also acquired a working capital deficit of $1.8 million, including cash of $2.8 million, fixed assets of $9.8 million, and deferred tax liabilities of $0.7 million. Our acquisitions of Hildebrandt Learning Centers, LLC and Active Learning Childcare Limited contributed approximately $29.6 million of incremental revenue in the year ended December 31, 2015. During the year ended December 31, 2015, the Company also acquired four additional centers in the United States and four additional centers in the United Kingdom, in six separate business acquisitions which were each accounted for as business combinations. The centers were acquired for cash consideration of $20.5 million and contingent consideration of $0.8 million, net of cash acquired of $0.3 million. Contingent consideration of $0.8 million was paid during the year ended December 31, 2016 in relation to these acquisitions. The company recorded goodwill of $18.5 million related to the full service center-based child care segment, a portion of which will be deductible for tax purposes. Intangible assets of $2.7 million, consisting primarily of customer relationships that will be amortized over five years, were also recorded in relation to these acquisitions. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS The changes in the carrying amount of goodwill are as follows (in thousands):
The Company also has intangible assets, which consist of the following at December 31, 2017 and 2016 (in thousands):
The Company recorded amortization expense of $32.6 million, $29.6 million and $28.0 million in the years ended December 31, 2017, 2016, and 2015, respectively. The Company estimates that it will record amortization expense related to intangible assets existing as of December 31, 2017 as follows over the next five years (in thousands):
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Prepaid Expenses and Other Current Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Current Assets | PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following (in thousands):
Under the terms of the Company’s workers compensation policy, the Company is required to make advances to its insurance carrier pertaining to estimated claims for all open plan years. Other prepaid expenses and current assets include deposits of $5.2 million and $3.1 million at December 31, 2017 and 2016, respectively, for the acquisition of full service child care centers in 2018 and 2017, respectively. |
Fixed Assets |
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Fixed Assets | FIXED ASSETS Fixed assets consist of the following (dollars in thousands):
Fixed assets include construction in progress of $31.2 million and $26.4 million at December 31, 2017 and 2016, respectively, which was primarily comprised of leasehold improvements. The Company recorded depreciation expense of $62.2 million, $55.6 million and $50.7 million for the years ended December 31, 2017, 2016, and 2015, respectively. |
Accounts Payable and Accrued Expenses |
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Accounts Payable and Accrued Expenses | ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consist of the following (in thousands):
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Other Current Liabilities | OTHER CURRENT LIABILITIES Other current liabilities consist of the following (in thousands):
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Other Long-Term Liabilities |
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Other Long-Term Liabilities | OTHER LONG-TERM LIABILITIES Other long-term liabilities consist of the following (in thousands):
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Credit Arrangements and Debt Obligations |
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Credit Arrangements and Debt Obligations | 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 and a $225.0 million 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. Outstanding term loan borrowings were as follows at December 31, 2017 and 2016 (in thousands):
The revolving credit facility matures on July 31, 2022. Borrowings outstanding on the revolving credit facility were $127.1 million at December 31, 2017 and $76.0 million at December 31, 2016. All borrowings under the credit agreement are subject to variable interest. At December 31, 2017, borrowings under the term loan facility bear interest at a rate per annum of 1.0% over the base rate, or 2.0% over the Eurocurrency rate (each as defined in the credit agreement), 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 1.0% over the base rate, or 1.50% to 2.0% over the Eurocurrency rate. The effective interest rate for the term loans was 3.57%, 3.50%, and 4.10% at December 31, 2017, 2016, and 2015, respectively, and the weighted average interest rate was 3.53%, 3.90%, and 4.10% for the years ended December 31, 2017, 2016, and 2015, respectively. The effective interest rate for the revolving credit facility was 3.70%, 5.50%, and 5.25% at December 31, 2017, 2016, and 2015, respectively. The weighted average interest rate for the revolving credit facility was 4.10%, 4.20%, and 3.80% for the years ended December 31, 2017, 2016, and 2015, 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 were $1.4 million, $2.2 million, and $2.2 million for the years ended December 31, 2017, 2016, and 2015, respectively. Amortization expense of original issue discount costs were $0.4 million, $1.3 million, and $1.4 million for the years ended December 31, 2017, 2016, and 2015, respectively. A loss on extinguishment of debt of $11.1 million was recorded in the year ended December 31, 2016, related to the write off of unamortized original issue discount costs and deferred financing fees in connection with the November 2016 debt refinancing. All obligations under the senior secured credit facilities are secured by substantially all the assets of the Company’s U.S.-based 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, our 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 our 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., our 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 senior secured first lien net leverage ratio financial maintenance covenant, to be tested only if, on the last day of each fiscal quarter, revolving loans and/or swing-line loans in excess of a specified percentage of the revolving commitments on such date are outstanding under the revolving credit facility. The breach of this covenant is subject to certain equity cure rights. Credit Amendments On January 26, 2016, the Company amended its then existing credit agreement to increase the revolving credit facility from $100.0 million to $225.0 million, to extend the maturity date on the revolving credit facility from January 30, 2018 to July 31, 2019, and to modify the interest rate applicable to borrowings. On November 7, 2016, the Company modified its then existing senior credit facilities and refinanced all of its outstanding term loans into a new seven year term loan facility, which resulted in the issuance of $1.1 billion in new term loans, a portion of which were used to repay $922.5 million in outstanding term loans under the previous term loan facility, and $150.0 million of which was used to fund the acquisition of a business. The terms, interest rate and availability of the revolving credit facility were not modified in the November 2016 debt refinancing. The Company incurred and capitalized financing fees of $6.7 million and original issue discount costs of $2.7 million in connection with the November 2016 debt refinancing. On May 8, 2017 and November 30, 2017, the Company amended its existing senior credit facilities to, among other changes, reduce the applicable interest rates of the term loan facility and the revolving credit facility. In connection with the May 8, 2017 amendment, the Company also extended the maturity date on the revolving credit facility from July 31, 2019 to July 31, 2022. The maturity date of the amended term loan facility of November 7, 2023 was not modified with these amendments. In the year ended December 31, 2017, the Company incurred $2.8 million in fees associated with these amendments which were included in selling, general and administrative expenses. 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. On October 16, 2017, the Company entered into variable-to-fixed interest rate swap agreements to mitigate the exposure to variable interest arrangements on $500.0 million notional amount of the outstanding term loan borrowings, effective October 31, 2017. 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, including the applicable rate for Eurocurrency loans, of approximately 3.90%. 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 to the extent that the swaps are effective as hedges. As of December 31, 2017, there was no ineffectiveness related to the interest rate swap agreements. Gains and losses recorded to other comprehensive income or loss are 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 December 31, 2017, the fair value of the interest rate swap agreements was as follows (in thousands):
For the year ended December 31, 2017, the effect of the interest rate swap agreements on other comprehensive income was as follows (in thousands):
During the next twelve months, the Company estimates that a loss of $0.7 million, pre-tax, will be reclassified from accumulated other comprehensive income to interest expense. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES Income before income taxes consists of the following (in thousands):
The allocation of income before income taxes may fluctuate year to year due to activity within the Bright Horizons consolidated group. Due to the disposition of our remaining assets in Ireland and the related disposition of our investment in the foreign subsidiary in 2017, the foreign income before income taxes includes a gain of approximately $11.9 million, with a corresponding loss of approximately $15.6 million within the U.S. income before income taxes. This transaction resulted in a consolidated net loss of $3.7 million which is included in other expenses in the consolidated statement of income. Income tax expense consists of the following (in thousands):
The following is a reconciliation of the U.S. federal statutory rate to the effective rate on pretax income (in thousands):
The effective income tax rate for 2017 decreased from prior years primarily due to three items. The first relates to the excess tax benefits associated with the exercise of stock options and vesting of restricted stock which reduced income tax expense by $26.5 million in 2017 due to the adoption of ASU 2016-09: Compensation—Stock Compensation (Topic 718) (“ASU 2016-09”). ASU 2016-09 was adopted prospectively as of January 1, 2017. The excess tax benefits from stock-based compensation were recorded to the balance sheet in prior years. Second, a net tax benefit of $22.3 million was recorded due to the enactment of the U.S. Tax Cuts and Jobs Act (“Tax Act”), as discussed in more detail below. Third, a tax benefit of approximately $7.0 million was recorded in 2017 related to the disposition of our remaining assets in Ireland, also resulting in the disposition of our investment in a subsidiary for tax purposes. On December 22, 2017, the U.S. federal government enacted comprehensive tax legislation with the Tax Act that makes broad and complex changes to the U.S. tax code, impacting the year ended December 31, 2017 and future years. For 2017, the Tax Act requires a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years and also allows for bonus depreciation that permits full expensing of qualified property. Effective January 1, 2018, the Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%. The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the date of the Tax Act enactment for companies to complete the accounting under Accounting Standards Codification 740—Income Taxes. In accordance with SAB 118, to the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete, but the company is able to determine a reasonable estimate, it must record a provisional estimate in its financial statements. The Company’s accounting for certain elements of the Tax Act is incomplete. However, the Company was able to make the following reasonable estimates of certain items and has recorded provisional adjustments as of December 31, 2017 based on these estimates. The Tax Act reduces the corporate federal tax rate to 21% effective January 1, 2018. As a result, the Company recorded a provisional decrease of $33.3 million to its net deferred tax liability with a corresponding adjustment to deferred tax benefit for the year ended December 31, 2017. While the Company was able to make a reasonable estimate of the impact of the reduction in corporate tax rate, it may be affected by other analyses related to the Tax Act including, the calculation of the deemed repatriation of foreign income and the state tax effect of federal adjustments. The Deemed Repatriation Transition Tax (“Transition Tax”) is a tax on previously untaxed accumulated and current earnings and profits (“E&P”) of certain foreign subsidiaries. To determine the amount of the Transition Tax, the Company must determine the amount of post-1986 E&P of the relevant foreign subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. The Company is able to make a reasonable estimate of the Transition Tax and recorded a provisional tax obligation of $11.0 million. However, the Company is continuing to gather additional information to more precisely compute the amount of Transition Tax. Significant components of the Company’s net deferred tax liability are as follows (in thousands):
During 2017, the overall deferred tax liability decreased significantly, primarily due to the Tax Act. The U.S. net deferred tax liability was revalued at the lower rate and reduced by $33.3 million. The other book to tax differences, resulting in a net decrease in the deferred tax liability, were in the treatment of amortization of intangible assets, depreciation and stock-based compensation. At December 31, 2017, the net deferred tax liability of $73.9 million includes deferred tax assets of $0.1 million which are recorded to other assets in the consolidated balance sheet. The Company has foreign net operating losses of $1.3 million and has recorded an associated deferred tax asset totaling $0.3 million. The net operating losses in certain foreign jurisdictions will begin to expire in 2024, while others can be carried forward indefinitely. During 2017, the valuation allowance of $1.0 million was released, based upon consideration of the cumulative income over the last three years and projected forecast of taxable income of the foreign subsidiary. At December 31, 2017, there are no foreign deferred tax assets that require a valuation allowance. The Company considers the earnings of certain non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestment of those subsidiary earnings. The Company has not recorded a deferred tax liability of approximately $1.1 million related to the state taxes and foreign withholding taxes on approximately $123.0 million of cumulative undistributed earnings of foreign subsidiaries indefinitely invested outside the United States. Uncertain Tax Positions The Company follows the authoritative guidance relating to the accounting for uncertainty in income taxes. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company’s current provision for income tax expense for the years ended December 31, 2017, 2016 and 2015 included no interest and penalties. There was no liability for total interest and penalties at December 31, 2017 and 2016. During 2017, the Company recorded an unrecognized tax benefit for a foreign subsidiary's tax position. The total amount of unrecognized tax benefits that if recognized would affect the Company’s effective tax rate is $1.9 million. The Company expects the unrecognized tax benefits to change over the next 12 months if certain tax matters ultimately settle with the applicable taxing jurisdiction during this time frame, or if applicable statutes of limitations lapse. The impact of the amount of such changes to previously recorded uncertain tax positions could range from zero to $1.9 million. The Company and its domestic subsidiaries are subject to U.S. federal income tax as well as multiple state jurisdictions. U.S. federal income tax returns are typically subject to examination by the Internal Revenue Service (IRS) and the statute of limitations for federal income tax returns is three years. The Company’s filings for 2014 through 2016 are subject to audit based upon the federal statute of limitations. State income tax returns are generally subject to examination for a period of three to five years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. There were no significant settlements of state audits during the year. As of December 31, 2017, there were no income tax audits in process and the tax years from 2013 to 2016 are subject to audit. The Company is also subject to corporate income tax at its subsidiaries located in the United Kingdom, the Netherlands, India, Canada, Ireland and Puerto Rico. The tax returns for the Company’s subsidiaries located in foreign jurisdictions are subject to examination for periods ranging from one to seven years. |
Stockholders' Equity and Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity and Stock-Based Compensation | STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION Preferred Stock The Company authorized 25 million shares of undesignated preferred stock in 2013 for issuance, of which none have been issued. The Company’s board of directors has the authority, without further action by stockholders, to issue up to 25 million shares of preferred stock in one or more series. The Company’s board of directors may designate the rights, preferences, privileges, and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preference, and number of shares constituting any series or the designation of any series. The issuance of preferred stock could have the effect of restricting dividends on the Company’s common stock, diluting the voting power of its common stock, impairing the liquidation rights of its common stock, or delaying or preventing a change in control. As of December 31, 2017 and 2016, no shares of preferred stock were outstanding. Treasury Stock On August 2, 2016, the board of directors of the Company authorized a share repurchase program of up to $300.0 million of the Company’s outstanding common stock, effective August 5, 2016. The share repurchase program, which has no expiration date, replaces the prior 2015 authorization, of which $26.3 million remained available at the date the program was replaced. The shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions, under Rule 10b5-1 plans, or by other means in accordance with federal securities laws. During the year ended December 31, 2017, the Company repurchased 2.0 million shares for $162.2 million, including a total of 1.7 million shares that were purchased from investment funds affiliated with Bain Capital Partners LLC in secondary offerings at the same price per share paid by the underwriter. At December 31, 2017, $120.6 million remained outstanding under the repurchase program. During the year ended December 31, 2016, the Company repurchased 1.7 million shares for $112.8 million, including a total of 1.0 million shares that were purchased from investment funds affiliated with Bain Capital Partners LLC in secondary offerings at the same price per share paid by the underwriter. On February 4, 2015, the board of directors of the Company authorized a share repurchase program of up to $250.0 million of its common stock. During the year ended December 31, 2015, the Company repurchased 2.2 million shares for $128.1 million, including a total of 2.1 million shares that were purchased from investment funds affiliated with Bain Capital Partners LLC in secondary offerings at the same price per share paid by the underwriter. Equity Incentive Plan The Company's 2012 Omnibus Long-Term Incentive Plan, as Amended and Restated (the “Plan”), allows for the issuance of equity awards of up to 5 million shares of common stock. As of December 31, 2017, there were approximately 1.8 million shares of common stock available for grant. Stock options granted under the Plan are subject to a service condition and expire in seven years from date of grant or termination of the holder’s employment with the Company, unless such termination was due to death, disability or retirement, unless otherwise determined by the administrator of the Plan. The majority of the options have a requisite service period of five years, with 60% of the options vesting on the third anniversary of the date of grant and 20% vesting on each of the fourth and fifth anniversaries. The Company also had an incentive compensation plan (the “2008 Plan”) which, as amended in March 2012, was authorized to issue 150,000 shares of Class L common stock and 1.5 million shares of Class A common stock. No additional options will be granted under the 2008 Plan. However, all outstanding options continue to be governed by their existing terms. Stock-Based Compensation The Company recognized the impact of stock-based compensation in its consolidated statements of income for the years ended December 31, 2017, 2016, and 2015 and did not capitalize any amounts on the consolidated balance sheets. In the years ended December 31, 2017, 2016, and 2015 the Company recorded stock-based compensation expense of $12.1 million, $11.6 million, and $9.2 million, respectively, of which $11.6 million, $11.0 million, and $8.7 million was recorded in selling, general and administrative expenses, respectively, and $0.5 million, $0.6 million, and $0.5 million in cost of services, respectively, in the consolidated statements of income in relation to all awards granted under the equity incentive plans. Stock-based compensation expense generated a deferred income tax benefit of $3.2 million, $4.6 million, and $3.7 million in the years ended December 31, 2017, 2016, and 2015, respectively. There were no share-based liabilities paid during the period. As of December 31, 2017, there was $16.9 million of total unrecognized compensation expense, net of estimated forfeitures, related to unvested share-based compensation arrangements granted under the Plan. That expense is expected to be recognized over the remaining requisite service period. Estimated forfeitures are based on the Company's historical forfeitures and is adjusted periodically based on actual results. The weighted average remaining requisite service period was approximately two years at December 31, 2017. Stock Options The fair value of each stock option granted was estimated on the date of grant using the Black-Scholes option pricing model and the following weighted average assumptions:
The expected dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. Since the Company completed its IPO in January 2013, it does not have sufficient history as a publicly traded company to evaluate its volatility factor. As such, the expected stock price volatility has been based upon the historical volatility of the stock price over the expected life of the options of the Company and that of peer companies that are publicly traded. The risk free interest rate was based on the U.S. Treasury rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the awards being valued. For grants issued during the years ended December 31, 2017, 2016, and 2015, the expected life of the options was calculated using the simplified method. The simplified method defines the life as the average of the contractual term of the options and the weighted average vesting period for all option tranches. This methodology was utilized due to the short length of time our common stock has been publicly traded. The table below reflects stock option activity under the Company’s equity plan for the year ended December 31, 2017.
The fair value (pre-tax) of options that vested during the years ended December 31, 2017, 2016, and 2015 was $6.8 million, $5.1 million, and $2.3 million, respectively. The intrinsic value of options exercised during the years ended December 31, 2017, 2016, and 2015 was $66.6 million, $39.4 million, and $28.9 million, respectively. Cash received by the Company from the exercise of stock options for the years ended December 31, 2017, 2016, and 2015 was $22.6 million, $11.7 million, and $9.8 million, respectively. Income tax benefits realized from the exercise of stock options in the years ended December 31, 2017, 2016, and 2015 were $32.3 million, $15.8 million, and $11.6 million, respectively, inclusive of the excess tax benefits realized of $26.5 million, $12.9 million, and $9.4 million in the years ended December 31, 2017, 2016, and 2015, respectively. Excess tax benefits for 2017 reduced income tax expense due to the adoption of ASU 2016-09, which was adopted prospectively on January 1, 2017. Excess tax benefits were previously recorded to additional paid-in capital on the consolidated balance sheet. Restricted Stock and Restricted Stock Units Restricted stock awards are granted to certain senior managers at the discretion of the board of directors as allowed under the Plan. Restricted stock awards typically vest on the earliest of the third anniversary of the grant date, a change in control of the Company, or the termination of employment by reason of death or disability, and are accounted for as non-vested stock. Restricted stock is sold for a price equal to 50% of the fair value of the stock at the date of grant. Proceeds from the issuance of restricted stock are recorded as other liabilities in the consolidated balance sheet until the earlier of vesting or forfeiture of the awards. The unvested shares of restricted stock participate equally in dividends with common stock. Restricted stock is considered legally issued at the date of grant, but is not considered common stock issued and outstanding in accordance with accounting guidance until the requisite service period is fulfilled. All outstanding shares of restricted stock are expected to vest. Cash proceeds from the issuance of restricted stock for the years ended December 31, 2017, 2016, and 2015 were $4.4 million, $3.7 million, and $3.9 million, respectively. Stock-based compensation expense for restricted stock awards is calculated based on the fair value of the award on the date of grant, which is recognized on a straight line basis over the requisite service period. The Company's stock-based compensation expense recorded in selling, general and administrative expenses in the consolidated statements of income for the years ended December 31, 2017, 2016, and 2015 included $3.7 million, $4.1 million, and $2.9 million, respectively, for restricted stock awards. As of December 31, 2017, total unrecognized compensation expense included $4.5 million related to unvested restricted stock, which is expected to be recognized over the weighted average remaining requisite service period of approximately two years. The table below reflects restricted stock activity under the Company’s equity plan for the year ended December 31, 2017.
Restricted stock units are awarded to members of the board of directors as allowed under the Plan. The awards allow for the issuance of a share of the Company's common stock for each vested unit upon the earliest of termination of service as a member of the board of directors or five years after the date of the award. During the year ended December 31, 2017, 12,820 restricted stock units were awarded at a weighted average fair value of $77.99, and 2,000 restricted stock units were exercised at a weighted average fair value of $59.47. At December 31, 2017, there were 36,886 restricted stock units outstanding, with an intrinsic value of $3.5 million, which vested upon award. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share is calculated by dividing net income by the weighted-average common shares outstanding. Diluted earnings per share is calculated by dividing net income by the weighted-average common shares and potentially dilutive securities outstanding during the period. Earnings per share is calculated using the two-class method, which requires the allocation of earnings to each class of common stock outstanding and to unvested share-based payment awards that participate in dividends with common stock, also referred to herein as unvested participating shares. The Company’s unvested stock-based payment awards include unvested shares awarded as restricted stock awards at the discretion of the Company’s board of directors. The restricted stock awards generally vest at the end of three years. The unvested shares participate equally in dividends. See Note 11, “Stockholders’ Equity and Stock-Based Compensation,” for a discussion of the current year unvested stock awards and issuances. Earnings per Share - Basic The following table sets forth the computation of earnings per share using the two-class method (in thousands, except share and per share amounts):
Earnings per Share - Diluted The Company calculates diluted earnings per share for common stock using the more dilutive of (1) the treasury stock method, or (2) the two-class method. The following table sets forth the computation of diluted earnings per share using the two-class method (in thousands, except share and per share amounts):
Options outstanding to purchase 0.6 million, 0.5 million and 0.2 million shares of common stock were excluded from diluted earnings per share for the years ended December 31, 2017, 2016, and 2015, respectively, since their effect was anti-dilutive, which may be dilutive in the future. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Leases The Company leases various office equipment, child care and early education center facilities and office space under noncancelable operating leases. Most of the leases expire within 10 and 15 years and many contain renewal options for various periods. Rent expense for the years ended December 31, 2017, 2016, and 2015 totaled $116.7 million, $103.1 million and $97.3 million, respectively. Future minimum payments under noncancelable operating leases as of December 31, 2017 are as follows for the years ending December 31 (in thousands):
Long-Term Debt Future minimum payments of long-term debt are as follows for the years ending December 31 (in thousands):
Letters of Credit The Company has 39 letters of credit outstanding used to guarantee certain rent payments for up to $1.6 million. These letters of credit are guaranteed by cash deposits. No amounts have been drawn against these letters of credit. Litigation The Company is a defendant in certain legal matters in the ordinary course of business. Management believes the resolution of such pending legal matters will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows, although we cannot predict the ultimate outcome of any such actions. Insurance and Regulatory The Company self-insures a portion of its medical insurance plans and has a high deductible workers’ compensation plan. Additionally, a portion of the general liability coverage is provided by the Company’s wholly-owned captive insurance entity. Management believes that the amounts accrued for these obligations are sufficient and that ultimate settlement of such claims or costs associated with claims made under these plans will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company’s child care and early education centers are subject to numerous federal, state and local regulations and licensing requirements. Failure of a center to comply with applicable regulations can subject it to governmental sanctions, which could require expenditures by the Company to bring its child care and early education centers into compliance. |
Employee Benefit Plans |
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Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS The Company maintains a 401(k) Retirement Savings Plan (the “401(k) Plan”) for all eligible employees. To be eligible for the 401(k) Plan, an employee must be at least 20.5 years of age and have completed their eligibility period of 60 days and 160 hours of service from date of hire. If they do not meet the 160 hours of service requirement, they may be eligible at 12 months provided they have reached 1,000 hours of service from date of hire. The 401(k) Plan is funded by elective employee contributions of up to 50% of their compensation, subject to certain limitations. Under the 401(k) Plan, the Company matches 25% of employee contributions for each participant up to 8% of the employee’s compensation after one year of service. Expense under the plan, consisting of Company contributions and plan administrative expenses paid by the Company, totaled approximately $3.0 million, $2.7 million and $2.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. The Company maintains a Non-qualified Deferred Compensation Plan (the “NQDC Plan”) for all eligible employees. Eligible employees are employees who have capped contribution levels in our existing 401(k) Plan due to the thresholds dictated by the IRS definition of “highly compensated” employees, as well as other employees at the Company’s discretion. The NQDC Plan is funded by elective employee contributions of up to 50% of their base compensation and up to 100% of other forms of compensation, as defined. Under the NQDC Plan, the Company matches 25% of employee contributions for each participant up to $2,500. The Company holds investments in company-owned life insurance policies to offset the Company’s liabilities under the NQDC Plan. Total investments, included in other assets in the consolidated balance sheet, and NQDC Plan liabilities, included in other long-term liabilities in the consolidated balance sheet, were $5.1 million and $5.3 million at December 31, 2017, respectively. Total investments and plan liabilities were $2.7 million and $2.8 million at December 31, 2016, respectively. |
Segment and Geographic Information |
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Segment and Geographic Information | SEGMENT AND GEOGRAPHIC INFORMATION Bright Horizons work/life services are comprised of full service center-based child care, back-up dependent care, and other educational advisory services. As such, the Company has determined that it has three operating segments, which are also its reportable segments. Full service center-based child care includes the traditional center-based child care, preschool, and elementary education, which have similar operating characteristics and meet the criteria for aggregation. Full service center-based child care derives its revenues primarily from contractual arrangements with corporate clients and from tuition. The Company’s back-up dependent care services consist of center-based back-up child care, in-home care, mildly ill care, and adult/elder care. The Company’s other educational advisory services consist of tuition reimbursement program management and related educational consulting services, and college admissions advisory services, which have similar operating characteristics and meet the criteria for aggregation. The Company and its chief operating decision makers evaluate performance based on revenues and income from operations. The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements; therefore, no additional information is produced or included herein.
Revenue and long-lived assets by geographic region are 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 and other” includes the United Kingdom, Netherlands, and India operations. Revenues in the United States were $1.3 billion in both 2017 and 2016, and $1.2 billion in 2015. Revenues in the United Kingdom were $328.0 million in 2017, $248.2 million in 2016, and $238.5 million in 2015. Long-lived assets were $331.8 million, $320.5 million, and $306.6 million at December 31, 2017, 2016, and 2015, respectively, in the United States, and $226.5 million, $193.9 million, and $107.8 million at December 31, 2017, 2016, and 2015, respectively, in the United Kingdom. Revenue and long-lived assets associated with other countries were not material. |
Transactions with Related Parties |
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Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | TRANSACTIONS WITH RELATED PARTIES Certain of the Company’s stockholders affiliated with Bain Capital Partners LLC sold shares of the Company’s common stock in underwritten secondary offerings totaling 8.2 million, 4.1 million, and 9.7 million shares in the years ended December 31, 2017, 2016, and 2015, respectively. The Company purchased 1.7 million, 1.0 million, and 2.1 million of the shares sold in the secondary offerings in 2017, 2016, and 2015, respectively, from investment funds affiliated with Bain Capital Partners LLC at the same price per share paid by the underwriter to the selling stockholders. As of December 31, 2017, investment funds affiliated with Bain Capital Partners LLC hold approximately 7.7% of the Company’s common stock and two members of the Company's board of directors are affiliated with Bain Capital Partners LLC. |
Quarterly Results (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Results (Unaudited) | QUARTERLY RESULTS (UNAUDITED) In the opinion of the Company’s management, the accompanying unaudited interim consolidated financial statements contain all adjustments which are necessary for a fair presentation of the quarters presented. The operating results for any quarter are not necessarily indicative of the results of any future quarter. Selected quarterly financial information follows for the years ended December 31, 2017 and 2016 (in thousands, except share and per share amounts):
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Organization and Significant Accounting Policies (Policies) |
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Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Organization | Organization — Bright Horizons Family Solutions Inc. (“Bright Horizons” or the “Company”) provides center-based child care and early education, back-up dependent care (for children and elders), tuition reimbursement program management services, college admissions advisory services, and other support services in the United States, the United Kingdom, the Netherlands, Puerto Rico, Canada, and India. The Company provides services designed to help employers and families better address the challenges of work and family life primarily under multi-year contracts with employers who offer child care and other dependent care solutions, as well as other educational advisory services, as part of their employee benefits packages to improve employee engagement. The Company provides its center-based child care services under two general business models: a cost-plus model, where the Company is paid a fee by an employer client for managing a child care center on a cost-plus basis, and a profit and loss (“P&L”) model, where the Company assumes the financial risk of operating a child care center. The P&L model is further classified into two subcategories: (i) a sponsor model, where Bright Horizons provides child care and early education services on either an exclusive or priority enrollment basis for the employees of a specific employer sponsor; and (ii) a lease/consortium model, where the Company provides child care and early education services to the employees of multiple employers located within a specific real estate development (for example, an office building or office park), as well as to families in the surrounding community. In both the cost-plus and sponsor P&L models, the development of a new child care center, as well as ongoing maintenance and repair, is typically funded by an employer sponsor with whom the Company enters into a multi-year contractual relationship. In addition, employer sponsors typically provide subsidies for the ongoing provision of child care services for their employees. Under each model type, the Company retains responsibility for all aspects of operating the child care and early education center, including the hiring and paying of employees, contracting with vendors, purchasing supplies, and collecting tuition and related accounts receivable. The Company provides back-up dependent care services through its own centers and through our Back-Up Care Advantage (“BUCA”) program, which offers access to a contracted network of in-home care agencies and center-based providers in locations where the Company does not otherwise have centers with available capacity. |
Principles of Consolidation | Principles of Consolidation — The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates — The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. The Company’s significant accounting estimates in the preparation of the consolidated financial statements relate to the valuation of goodwill and other intangibles, and income taxes. Actual results may differ from management’s estimates. |
Foreign Operations | Foreign Operations — The functional currency of the Company’s foreign subsidiaries is their local currency. The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense items are translated at the average exchange rates prevailing during the period. The cumulative translation effect for subsidiaries using a functional currency other than the U.S. dollar is included in accumulated other comprehensive income or loss as a separate component of stockholders’ equity. The Company’s intercompany accounts are denominated in the functional currency of the foreign subsidiary. Gains and losses resulting from the remeasurement of intercompany receivables that the Company considers to be of a long-term investment nature are recorded as a cumulative translation adjustment in accumulated other comprehensive income or loss as a separate component of stockholders’ equity, while gains and losses resulting from the remeasurement of intercompany receivables from those foreign subsidiaries for which the Company anticipates settlement in the foreseeable future are recorded in the consolidated statement of income. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments — The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date and applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The Company uses observable inputs where relevant and whenever possible. Level 1 — Quoted prices are available in active markets for identical investments as of the reporting date. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and borrowings on the revolving credit facility approximates their fair value because of their short-term nature. The fair value of the Company's long-term debt is based on current bid prices, which approximates carrying value. As such, the Company's long-term debt was classified as Level 1, as defined under U.S. GAAP. As of December 31, 2017 and 2016, the carrying value and estimated fair value of long-term debt was $1.1 billion. In 2017, the Company entered into interest rate swap agreements, which were included in other assets on the consolidated balance sheets at fair value. As of December 31, 2017, the fair value of the interest rate swaps were $3.8 million, which were estimated using market-standard valuation models. Such models project future cash flows and discount the future amounts to a present value using market-based observable inputs. Additionally, the fair value of the interest rate swaps included consideration of credit risk. The Company used a potential future exposure model to estimate this credit valuation adjustment (“CVA.”) The inputs to the CVA were largely based on observable market data, with the exception of certain assumptions regarding credit worthiness. As the magnitude of the CVA was not a significant component of the fair value of the interest rate swaps, it was not considered a significant input. The fair value of the interest rate swaps is classified as Level 2, as defined under U.S. GAAP. |
Concentrations of Credit Risk | Concentrations of Credit Risk — Financial instruments that potentially expose the Company to concentrations of credit risk consist mainly of cash and cash equivalents and accounts receivable. The Company mitigates its exposure by maintaining its cash and cash equivalents in financial institutions of high credit standing. The Company’s accounts receivable, which are derived primarily from the services it provides, are dispersed across many clients in various industries with no single client accounting for more than 10% of the Company’s net revenue or accounts receivable. |
Cash and Cash Equivalents | Cash and Cash Equivalents — The Company considers all highly liquid investments with maturities, when purchased, of three months or less to be cash equivalents. Cash equivalents consist primarily of institutional money market accounts. There were no cash equivalent investments at December 31, 2017 and 2016. The Company’s cash management system provides for the funding of the main bank disbursement accounts on a daily basis as checks are presented for payment. Under this system, outstanding checks may be in excess of the cash balances at certain banks, creating book overdrafts. |
Accounts Receivable | Accounts Receivable — The Company generates accounts receivable from fees charged to parents and employer sponsors and, to a lesser degree, government agencies. The Company monitors collections and payments and maintains a provision for estimated losses based on historical trends, in addition to provisions established for specific collection issues that have been identified. Accounts receivable are stated net of this allowance for doubtful accounts. |
Fixed Assets | Fixed Assets — Property and equipment, including leasehold improvements, are carried at cost less accumulated depreciation or amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or their estimated useful lives. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the consolidated balance sheet and the resulting gain or loss is reflected in the consolidated statement of income. Expenditures for maintenance and repairs are expensed as incurred, whereas expenditures for improvements and replacements are capitalized. Depreciation is included in cost of services and selling, general and administrative expenses depending on the nature of the expenditure. |
Business Combinations | Business Combinations — Business combinations are accounted for under the acquisition method of accounting. Amounts paid for an acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition. The accounting for business combinations requires estimates and judgment as to expectations of future cash flows of the acquired business, the allocation of those cash flows to identifiable intangible assets, and in determining the estimated fair value for assets acquired and liabilities assumed. The determination of fair values is based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If actual results differ from these estimates, the amounts recorded in the financial statements could be impaired. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets — Goodwill is recorded when the consideration paid for an acquisition exceeds the fair value of the net tangible and identifiable intangible assets acquired. The Company’s intangible assets principally consist of various customer relationships (including both client and parent relationships) and trade names. Goodwill and intangible assets with indefinite lives are not subject to amortization, but are tested annually for impairment or more frequently if there are indicators of impairment. Indefinite lived intangible assets are also subject to an annual evaluation to determine whether events and circumstances continue to support an indefinite useful life. Goodwill impairment assessments are performed at the reporting unit level, which for Bright Horizons is at the operating segment level. In performing the goodwill impairment test, the Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying value. Qualitative factors may include, but are not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s services, regulatory developments, cost factors, and entity specific factors such as overall financial performance and projected results. If an initial qualitative assessment indicates that it is more likely than not that the carrying value exceeds the fair value of a reporting unit, an additional quantitative evaluation is performed. Alternatively, the Company may elect to proceed directly to the quantitative impairment test. In performing the quantitative analysis, the Company compares the fair value of the reporting unit with its carrying amount, including goodwill. Fair value for each reporting unit is determined by estimating the present value of expected future cash flows, which are forecasted for each of the next ten years, applying a long-term growth rate to the final year, discounted using the Company’s estimated discount rate. If the fair value of the Company’s reporting unit exceeds its carrying amount, the goodwill of the reporting unit is considered not impaired. If the carrying amount of the Company’s reporting unit exceeds its fair value, the Company would recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value, up to the amount of goodwill allocated to that reporting unit. The Company performed a qualitative assessment during the annual impairment review as of October 1, 2017 and concluded that it is not more likely than not that the fair value of the Company’s reporting units are less than their carrying amount. Therefore, no goodwill impairment charges were recorded in the years ended December 31, 2017, 2016, or 2015. We test certain trademarks that are determined to be indefinite-lived intangible assets by comparing the fair value of the trademarks with their carrying value. We estimate the fair value first by estimating the total revenue attributable to the trademarks and then by applying a royalty rate determined by an analysis of empirical, market-derived royalty rates for guideline intangible assets, consistent with the initial valuation of the intangibles. No impairment losses were recorded in the years ended December 31, 2017, 2016 or 2015 in relation to intangible assets. Intangible assets that are separable from goodwill and have determinable useful lives are valued separately and are amortized over the estimated period benefited, ranging from one to seventeen years. Intangible assets related to parent relationships are amortized using an accelerated method over their useful lives. All other intangible assets are amortized on a straight-line basis over their useful lives. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets — The Company reviews long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Impairment is assessed by comparing the carrying amount of the asset to the estimated undiscounted future cash flows over the asset’s remaining life. If the estimated cash flows are less than the carrying amount of the asset, an impairment loss is recognized to reduce the carrying amount of the asset to its estimated fair value less any disposal costs. |
Other Long Term Assets | Other Long-Term Assets — Other long-term assets includes a deposit of $8.0 million in the Company's wholly-owned captive insurance entity and a cost basis investment of $2.1 million in a private company, which we review for impairment whenever events or changes in circumstances indicate that the carrying amount of such asset may not be recoverable. |
Deferred Revenue | Deferred Revenue — The Company records deferred revenue for prepaid tuition and fees received from clients in advance of services being performed. The Company is also a party to agreements where the performance of services extends beyond one year. In these circumstances, the Company records a long-term obligation and recognizes revenue over the period of the agreement as the services are rendered. |
Leases | Leases and Deferred Rent — The Company leases space for certain of its centers and corporate offices. Leases are evaluated and classified as operating or capital for financial reporting purposes. The Company recognizes rent expense from operating leases with periods of free rent, tenant allowances and scheduled rent increases on a straight-line basis over the applicable lease term. The difference between rents paid and straight-line rent expense is recorded as deferred rent. |
Discount on Long-Term Debt | Discount on Long-Term Debt — Original issue discounts on the Company’s debt are recorded as a reduction of long-term debt and are amortized over the life of the related debt instrument in accordance with the effective interest method. Amortization expense is included in interest expense in the consolidated statement of income. |
Deferred Financing Costs | Deferred Financing Costs — Deferred financing costs are recorded as a reduction of long-term debt and are amortized over the life of the related debt instrument in accordance with the effective interest method. Amortization expense is included in interest expense in the consolidated statement of income. |
Income Taxes | Income Taxes — The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for tax carryforwards, such as net operating losses. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the provision for income taxes in the period that includes the enactment date. The Company records a valuation allowance to reduce the carrying amount of deferred tax assets if it is more likely than not that such asset will not be realized. Additional income tax expense is recognized as a result of recording valuation allowances. The Company does not recognize a tax benefit on losses in foreign operations where it does not have a history of profitability. The Company records penalties and interest on income tax related items as a component of tax expense. Obligations for uncertain tax positions are recorded based on an assessment of whether the position is more likely than not to be sustained by the taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. |
Revenue Recognition | Revenue Recognition — The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the fee is fixed and determinable, and collectability is reasonably assured. Center-based child care revenues consist primarily of tuition, which consists of amounts paid by parents, supplemented in some cases by payments from employer sponsors and, to a lesser extent, by payments from government agencies. Revenue may also include management fees, operating subsidies paid either in lieu of or to supplement parent tuition, and fees for other services. Revenue for center-based child care is recognized as the services are performed. The Company enters into contracts with its employer sponsors to manage and operate their child care and early education centers and/or for the provision of back-up dependent care and other educational advisory services under various terms. The Company’s contracts to operate child care and early education centers are generally three to ten years in length with varying renewal options. The Company’s contracts for back-up dependent care and other educational advisory services are generally one to three years in length with varying renewal options. Revenue for these services is recognized as they are performed. |
Stock-based Compensation | Stock-Based Compensation — The Company accounts for stock-based compensation using a fair value method. Stock-based compensation expense is recognized in the consolidated financial statements based on the grant-date fair value of the awards that are expected to vest. This expense is recognized on a straight-line basis over the requisite service period, which generally represents the vesting period, of each separately vesting tranche. The Company calculates the fair value of stock options using the Black-Scholes option-pricing model. |
Comprehensive Income or Loss | Comprehensive Income or Loss — Comprehensive income or loss is comprised of net income or loss, foreign currency translation adjustments, and unrealized gains or losses from interest rate swaps, net of tax. The Company has not recorded a deferred tax liability related to state income taxes and foreign withholding taxes on the undistributed earnings of foreign subsidiaries that are intended to be indefinitely reinvested. Therefore, taxes are not provided for the related currency translation adjustments. |
Earnings or Loss Per Share | Earnings Per Share — Net earnings per share is calculated using the two-class method, which is an earnings allocation formula that determines net income or loss per share for the holders of the Company’s common stock and unvested participating shares. Unvested participating shares are unvested share-based payment awards of restricted stock that participate in dividends with common stock. Net income available to stockholders is allocated on a pro rata basis to each share as if all of the earnings for the period had been distributed. Diluted net income or loss per share is calculated using the more dilutive of (1) the treasury stock method, or (2) the two-class method for all outstanding stock options |
New Accounting Pronouncements | Pronouncement — In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this update simplify several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification on the statement of cash flows. The update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods with early adoption permitted. The Company adopted the standard prospectively on January 1, 2017, and as such, prior periods have not been adjusted. The adoption of this guidance impacted the Company’s income tax expense, effective tax rate, and weighted average shares outstanding. The Company continues to include a forfeiture assumption relative to its unvested awards. Upon adoption, the Company now recognizes all excess tax benefits and tax deficiencies as income tax benefits or expenses on the income statement, which were previously recorded to additional paid-in capital on the balance sheet. As a result, the Company decreased tax expense and increased net income by $26.5 million in the year ended December 31, 2017 in relation to the excess tax benefits associated with the exercise of stock options and vesting of restricted stock. Additionally, weighted average diluted common shares increased in the year ended December 31, 2017 by approximately 0.4 million shares under the new earnings per share methodology and tax benefits from stock options of $26.5 million were included with cash flows from operating activities as a component of net income rather than as cash flows from financing activities under previous guidance. New Accounting Pronouncements — In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides a single comprehensive model for revenue recognition. The FASB has subsequently issued various ASUs which amend or clarify specific areas of the guidance. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This new guidance is effective for the Company beginning January 1, 2018 and can be adopted using either a full retrospective or modified approach. The Company will adopt the standard using the modified approach. The Company established an implementation team to assist with its assessment of the impact of the new revenue guidance on its operations, consolidated financial statements and related disclosures. The Company’s assessment has included performing analysis for each revenue stream identified, assessing the potential differences in recognition and measurement that may result from adopting this standard, evaluating principal versus agent considerations, and assessing whether the Company meets certain practical expedients. Based on the results of the assessment, the adoption of this standard will not have a material impact on the timing or amount of revenue recognized upon adoption and any cumulative prior period adjustment is immaterial and therefore will not be recorded to the opening balance of retained earnings upon adoption. The Company also anticipates changes to its disclosures to comply with the new disclosure requirements under Topic 606. The Company is implementing the necessary changes to its revenue recognition accounting policies and controls to support recognition and disclosure under the new standard. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard amends the existing guidance and requires lessees to recognize on the balance sheet assets and liabilities for the rights and obligations created by those leases with lease terms longer than twelve months. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, and is to be applied using a modified retrospective approach. Early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's consolidated financial statements. Based on its preliminary assessment, the Company anticipates that the adoption of this standard will have a material impact on the Company's consolidated financial statements, as all long-term leases will be capitalized on the consolidated balance sheet. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815), which expands and refines hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The guidance also makes certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. This ASU is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with early adoption permitted. The new guidance with respect to cash flow and net investment hedge relationships existing on the date of adoption must be applied on a modified retrospective basis, and the new presentation and disclosure requirements must be applied on a prospective basis. This standard is not expected to have a significant impact on the Company's consolidated financial statements and related disclosures. |
Organization and Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity in Allowance for Doubtful Accounts | Activity in the allowance for doubtful accounts is as follows (in thousands):
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Acquisitions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allocation of Purchase Price | The purchase price for this acquisition has been allocated based on the fair value of the acquired assets and assumed liabilities at the date of acquisition as follows (in thousands):
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Summary of Operating Results | The operating results for Asquith are included in the consolidated results of operations from the date of acquisition. The following table presents consolidated pro forma information as if the acquisition of Asquith had occurred on January 1, 2015 (in thousands):
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill are as follows (in thousands):
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Intangible Assets Subject to Amortization | The Company also has intangible assets, which consist of the following at December 31, 2017 and 2016 (in thousands):
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Estimated Future Amortization Expense | The Company estimates that it will record amortization expense related to intangible assets existing as of December 31, 2017 as follows over the next five years (in thousands):
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Prepaid Expenses and Other Current Assets (Tables) |
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Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following (in thousands):
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Fixed Assets (Tables) |
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Summary of Fixed Assets | Fixed assets consist of the following (dollars in thousands):
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Accounts Payable and Accrued Expenses (Tables) |
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Summary of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following (in thousands):
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Other Current Liabilities (Tables) |
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Summary of Other Current Liabilities | Other current liabilities consist of the following (in thousands):
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Other Long-Term Liabilities (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Other Long-Term Liabilities | Other long-term liabilities consist of the following (in thousands):
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Credit Arrangements and Debt Obligations (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | Outstanding term loan borrowings were as follows at December 31, 2017 and 2016 (in thousands):
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Schedule of Derivative Assets at Fair Value | December 31, 2017, the fair value of the interest rate swap agreements was as follows (in thousands):
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Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | For the year ended December 31, 2017, the effect of the interest rate swap agreements on other comprehensive income was as follows (in thousands):
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income (Loss) before Income Taxes | Income before income taxes consists of the following (in thousands):
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Components of Income Tax (Benefit) Expense | Income tax expense consists of the following (in thousands):
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Reconciliation of Federal Statutory Rate to Effective Rate | The following is a reconciliation of the U.S. federal statutory rate to the effective rate on pretax income (in thousands):
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Components of Net Deferred Tax Liability | Significant components of the Company’s net deferred tax liability are as follows (in thousands):
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Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):
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Stockholders' Equity and Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Assumptions for Fair Value of Stock Option | The fair value of each stock option granted was estimated on the date of grant using the Black-Scholes option pricing model and the following weighted average assumptions:
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Nonvested Restricted Stock Shares Activity | The table below reflects restricted stock activity under the Company’s equity plan for the year ended December 31, 2017.
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Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Activity | The table below reflects stock option activity under the Company’s equity plan for the year ended December 31, 2017.
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Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share, Basic | The following table sets forth the computation of earnings per share using the two-class method (in thousands, except share and per share amounts):
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Earnings Per Share, Diluted | The Company calculates diluted earnings per share for common stock using the more dilutive of (1) the treasury stock method, or (2) the two-class method. The following table sets forth the computation of diluted earnings per share using the two-class method (in thousands, except share and per share amounts):
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Future Minimum Payments under Non-Cancelable Operating Leases | Future minimum payments under noncancelable operating leases as of December 31, 2017 are as follows for the years ending December 31 (in thousands):
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Future Minimum Payments of Long-Term Debt | Future minimum payments of long-term debt are as follows for the years ending December 31 (in thousands):
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Segment and Geographic Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from Operations by Segment | The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements; therefore, no additional information is produced or included herein.
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Revenue and Long-Lived Assets by Geographic Region | Revenue and long-lived assets by geographic region are as follows (in thousands):
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Quarterly Results (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information | Selected quarterly financial information follows for the years ended December 31, 2017 and 2016 (in thousands, except share and per share amounts):
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Organization and Significant Accounting Policies - Activity in Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Beginning balance | $ 1,054 | $ 1,556 | $ 1,235 |
Provision | 2,537 | 839 | 1,322 |
Write offs and recoveries | (1,162) | (1,341) | (1,001) |
Ending balance | $ 2,429 | $ 1,054 | $ 1,556 |
Acquisitions - Summary of Operating Results (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
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Hildebrandt Learning Centers and Active Learning Childcare Limited [Member] | ||
Business Acquisition [Line Items] | ||
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual | $ 29,600 | |
Conchord Limited Asquith | ||
Business Acquisition [Line Items] | ||
Revenue | $ 1,649,665 | 1,548,560 |
Net income | $ 96,033 | $ 89,404 |
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 32,561 | $ 29,642 | $ 27,989 |
Goodwill and Intangible Assets - Estimated Amortization Expense Related to Intangible Assets (Detail) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2017 | $ 30,134 |
2018 | 27,740 |
2019 | 26,833 |
2020 | 25,140 |
2021 | $ 22,927 |
Prepaid Expenses and Other Current Assets - Schedule of Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Prepaid rent and other occupancy costs | $ 15,553 | $ 13,932 |
Prepaid workers compensation claims | 6,136 | 4,609 |
Prepaid insurance | 6,007 | 3,134 |
Reimbursable costs | 4,186 | 6,101 |
Prepaid income taxes | 1,249 | 649 |
Other prepaid expenses and current assets | 18,965 | 14,129 |
Prepaid expenses and other current assets | 52,096 | 42,554 |
Deposits | $ 5,200 | $ 3,100 |
Fixed Assets - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Property, Plant and Equipment [Line Items] | |||
Construction in progress | $ 31,200 | $ 26,400 | |
Depreciation expense | 62,200 | $ 55,600 | $ 50,700 |
Conchord Limited Asquith | |||
Property, Plant and Equipment [Line Items] | |||
Fixed assets | $ 95,500 |
Accounts Payable and Accrued Expenses - Summary of Accounts Payable and Accrued Expenses (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued payroll and employee benefits | $ 56,817 | $ 59,258 |
Accounts payable | 31,719 | 26,171 |
Accrued insurance | 8,565 | 5,718 |
Accrued occupancy costs | 3,400 | 3,102 |
Accrued professional fees | 2,693 | 2,376 |
Accrued interest | 370 | 2,985 |
Other accrued expenses | 29,333 | 25,790 |
Accounts payable and accrued expenses | $ 132,897 | $ 125,400 |
Other Current Liabilities - Summary of Other Current Liabilities (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Payables and Accruals [Abstract] | ||
Customer amounts on deposit | $ 17,294 | $ 14,688 |
Deferred rent and other occupancy costs | 5,589 | 4,796 |
Income taxes payable | 4,680 | 3,081 |
Liability for unvested restricted stock | 3,487 | 4,733 |
Other current liabilities | 3,162 | 1,440 |
Other current liabilities | $ 34,212 | $ 28,738 |
Other Long-Term Liabilities - Summary of Other Long-Term Liabilities (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Customer amounts on deposit | $ 16,450 | $ 14,353 |
Liabilities for workers compensation claims | 15,812 | 16,572 |
Transition tax payable | 9,648 | 0 |
Liability for unvested restricted stock | 7,757 | 7,546 |
Deferred compensation | 5,299 | 2,793 |
Asset retirement obligations | 4,045 | 3,733 |
Liability for uncertain tax positions | 1,903 | 1,096 |
Other long-term liabilities | 3,257 | 5,955 |
Other long-term liabilities | $ 64,171 | $ 52,048 |
Credit Arrangements and Debt Obligations - Schedule of Long-Term Debt (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule Of Borrowings [Line Items] | ||
Term loans | $ 1,066,938 | $ 1,075,000 |
Deferred financing costs and original issue discount | (10,177) | (10,241) |
Total debt | 1,056,761 | 1,064,759 |
Less current maturities | 10,750 | 10,750 |
Long-term debt | $ 1,046,011 | $ 1,054,009 |
Credit Arrangements and Debt Obligations - Derivative Assets at Fair Value (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | Interest Rate Swap | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Interest rate swaps - asset | $ 3,767 |
Credit Arrangements and Debt Obligations Credit Arrangements and Debt Obligations - Effect of Derivatives on Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Debt Disclosure [Abstract] | |||
Unrealized gain on derivatives, before reclassification, before tax | $ 3,258 | ||
Unrealized gain on derivatives, before reclassification, tax | (1,303) | ||
Unrealized gain on derivatives, before reclassification, net of tax | 1,955 | ||
Reclassification adjustment from AOCI on derivatives, before tax | (509) | ||
Reclassification adjustment from AOCI on derivatives, tax | 204 | ||
Reclassification adjustment from AOCI on derivatives, net of tax | (305) | ||
Derivatives qualifying as hedges, before tax | 3,767 | ||
Derivatives qualifying as hedges, tax | 1,507 | ||
Unrealized gain on interest rate swaps, net of tax | 2,260 | $ 0 | $ 0 |
Loss that will be reclassified from accumulated other comprehensive income to interest expense | $ 700 |
Income Taxes - Income (Loss) Before Income Taxes (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
United States | $ 116,225 | $ 132,846 | $ 134,611 |
Foreign | 45,175 | 10,351 | 5,545 |
Income before income taxes | $ 161,400 | $ 143,197 | $ 140,156 |
Income Taxes - Income Tax (Benefit) Expense (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Current tax expense | |||
Federal | $ 29,733 | $ 42,691 | $ 29,236 |
State | 4,531 | 10,752 | 8,723 |
Foreign | 7,735 | 7,115 | 9,028 |
Current tax expense (benefit) | 41,999 | 60,558 | 46,987 |
Deferred tax (benefit) expense | |||
Federal | (36,794) | (6,463) | (11,014) |
State | 612 | (2,069) | 6,776 |
Foreign | (1,380) | (3,589) | 3,480 |
Deferred tax (benefit) expense | (37,562) | (12,121) | (758) |
Income tax expense | $ 4,437 | $ 48,437 | $ 46,229 |
Income Taxes - Reconciliation of Federal Statutory Rate to Effective Rate (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
Excess tax benefits from stock-based compensation | $ 0 | $ 12,891 | $ 9,397 |
Deferred Tax Liabilities, Net | 73,933 | 111,711 | |
Federal tax expense computed at statutory rate | 56,490 | 50,119 | 49,055 |
State tax expense, net of federal tax | 2,881 | 6,374 | 5,849 |
Valuation allowance, net | (1,028) | (107) | (185) |
Intercompany interest | (5,074) | (6,953) | (6,919) |
Permanent differences and other, net | 1,041 | (389) | (901) |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Share-based Compensation Cost, Amount | (22,757) | 0 | 0 |
Change in tax rate | (32,844) | (96) | 319 |
Effective Income Tax Rate Reconciliation, Repatriation of Foreign Earnings, Amount | 11,027 | 0 | 0 |
Change to uncertain tax positions, net | 614 | 432 | (333) |
Foreign rate differential | (5,913) | (943) | (656) |
Income tax expense | $ 4,437 | $ 48,437 | $ 46,229 |
Income Taxes - Components of Net Deferred Tax Liability (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Deferred tax assets: | ||
Reserve on assets | $ 605 | $ 342 |
Net operating loss carryforwards | 304 | 1,347 |
Liabilities not yet deductible | 28,951 | 39,401 |
Deferred revenue | 2,934 | 3,370 |
Stock-based compensation | 8,024 | 13,855 |
Depreciation | 0 | 118 |
Other | 2,608 | 1,620 |
Deferred tax assets, gross | 43,426 | 60,053 |
Valuation allowance | 0 | (1,028) |
Total deferred tax assets | 43,426 | 59,025 |
Deferred tax liabilities: | ||
Intangible assets | (97,674) | (143,806) |
Depreciation | (19,685) | (26,930) |
Total deferred tax liabilities | (117,359) | (170,736) |
Net deferred tax liability | $ (73,933) | $ (111,711) |
Income Taxes - Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Reconciliation of Unrecognized Tax Benefits [Roll Forward] | |||
Beginning balance | $ 1,096 | $ 706 | $ 713 |
Additions for tax positions of prior years | 0 | 0 | 353 |
Additions for tax positions of current year | 650 | 443 | 353 |
Settlements | 0 | 0 | (50) |
Reductions for tax positions of prior years | 0 | (27) | 0 |
Lapses of statutes of limitations | 0 | 0 | (663) |
Increase resulting from foreign currency adjustments | 157 | ||
Decrease resulting from foreign currency adjustments | (26) | 0 | |
Ending balance | $ 1,903 | $ 1,096 | $ 706 |
Stockholders' Equity and Stock-Based Compensation - Weighted Average Assumptions for Fair Value of Stock Option (Detail) - Common Stock - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions Method Used [Line Items] | |||
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected stock price volatility | 30.00% | 30.00% | 30.00% |
Risk free interest rate | 1.90% | 1.40% | 1.50% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 years 3 months 7 days | 5 years 3 months 7 days | 5 years 3 months 7 days |
Weighted average fair value per share of options granted during the period | $ 22.08 | $ 19.35 | $ 15.37 |
Earnings Per Share - Additional Information (Detail) - shares shares in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Restricted Stock | |||
Earnings Per Share [Line Items] | |||
Award vesting period | 3 years | ||
Common Stock | Employee Stock Option | |||
Earnings Per Share [Line Items] | |||
Options outstanding to purchase (in shares) | 0.6 | 0.5 | 0.2 |
Commitments and Contingencies - Additional Information (Detail) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017
USD ($)
LetterOfCredit
|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Contingencies And Commitments [Line Items] | |||
Rent expense | $ 116.7 | $ 103.1 | $ 97.3 |
Number of letters of credit outstanding | LetterOfCredit | 39 | ||
Letters of credit to guarantee certain rent payments | $ 1.6 | ||
Bank Base Rate | |||
Contingencies And Commitments [Line Items] | |||
Interest rate of overdraft facility | 1.00% | ||
Minimum | |||
Contingencies And Commitments [Line Items] | |||
Operating leases, years until expiration | 10 years | ||
Maximum | |||
Contingencies And Commitments [Line Items] | |||
Operating leases, years until expiration | 15 years |
Commitments and Contingencies - Future Minimum Payments under Non-Cancelable Operating Leases (Detail) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2017 | $ 113,161 |
2018 | 108,199 |
2019 | 100,638 |
2020 | 88,675 |
2021 | 83,119 |
Thereafter | 508,144 |
Total future minimum lease payments | $ 1,001,936 |
Commitments and Contingencies - Future Minimum Payments of Long-term Debt (Detail) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2017 | $ 10,750 |
2018 | 10,750 |
2019 | 10,750 |
2020 | 10,750 |
2021 | 10,750 |
Long-term Debt, Maturities, Repayments of Principal after Year Five | 1,013,188 |
Total future principal payments | $ 1,066,938 |
Segment and Geographic Information - Income from Operations by Segment (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Segment Reporting Information [Line Items] | |||||||||||
Revenue | $ 439,879 | $ 433,316 | $ 445,546 | $ 422,164 | $ 398,537 | $ 383,929 | $ 402,053 | $ 385,322 | $ 1,740,905 | $ 1,569,841 | $ 1,458,445 |
Amortization of intangible assets | 32,561 | 29,642 | 27,989 | ||||||||
Income from operations | $ 52,266 | $ 44,963 | $ 56,806 | $ 51,404 | $ 47,348 | $ 44,715 | $ 56,578 | $ 48,597 | 205,439 | 197,238 | 181,602 |
Operating Segments | Full service center-based child care | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 1,457,754 | 1,321,699 | 1,236,762 | ||||||||
Amortization of intangible assets | 30,259 | 27,862 | 26,690 | ||||||||
Income from operations | 130,289 | 129,693 | 115,149 | ||||||||
Operating Segments | Back-up dependent care | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 224,264 | 200,106 | 181,574 | ||||||||
Amortization of intangible assets | 1,539 | 1,204 | 725 | ||||||||
Income from operations | 60,373 | 57,620 | 56,891 | ||||||||
Operating Segments | Other educational advisory services | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 58,887 | 48,036 | 40,109 | ||||||||
Amortization of intangible assets | 763 | 576 | 574 | ||||||||
Income from operations | $ 14,777 | $ 9,925 | $ 9,562 |
Segment and Geographic Information - Income from Operations by Segment - Footnotes (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Segment Reporting Information [Line Items] | |||
Amortization of intangible assets | $ 32,561 | $ 29,642 | $ 27,989 |
Other Expenses | 3,671 | 0 | 0 |
Expenses incurred in connection with the Offering | 2,500 | ||
Expenses incurred in connection with the modification of stock options | 900 | ||
Operating Segments | Back-up dependent care | |||
Segment Reporting Information [Line Items] | |||
Amortization of intangible assets | 1,539 | 1,204 | 725 |
Operating Segments | Other educational advisory services | |||
Segment Reporting Information [Line Items] | |||
Amortization of intangible assets | $ 763 | $ 576 | $ 574 |
Segment and Geographic Information - Revenue and Long-Lived Assets by Geographic Region (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Segment Reporting Information [Line Items] | |||||||||||
Revenue | $ 439,879 | $ 433,316 | $ 445,546 | $ 422,164 | $ 398,537 | $ 383,929 | $ 402,053 | $ 385,322 | $ 1,740,905 | $ 1,569,841 | $ 1,458,445 |
Long-lived assets | 575,185 | 529,432 | 575,185 | 529,432 | 429,736 | ||||||
UNITED STATES | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 1,300,000 | 1,200,000 | |||||||||
Long-lived assets | 331,800 | 320,500 | 331,800 | 320,500 | 306,600 | ||||||
North America | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 1,353,032 | 1,277,165 | 1,182,629 | ||||||||
Long-lived assets | 333,526 | 322,267 | 333,526 | 322,267 | 308,469 | ||||||
Europe and other | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 387,873 | 292,676 | 275,816 | ||||||||
Long-lived assets | $ 241,659 | $ 207,165 | $ 241,659 | $ 207,165 | $ 121,267 |
Segment and Geographic Information - Additional Information (Detail) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2017 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | $ 439,879 | $ 433,316 | $ 445,546 | $ 422,164 | $ 398,537 | $ 383,929 | $ 402,053 | $ 385,322 | $ 1,740,905 | $ 1,569,841 | $ 1,458,445 | |
Long-lived assets | 575,185 | 529,432 | 575,185 | 529,432 | 429,736 | |||||||
United States | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 1,300,000 | 1,200,000 | ||||||||||
Long-lived assets | 331,800 | 320,500 | 331,800 | 320,500 | 306,600 | |||||||
United Kingdom | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 328,000 | 248,200 | 238,500 | |||||||||
Long-lived assets | $ 226,500 | $ 193,900 | 226,500 | 193,900 | 107,800 | |||||||
Operating Segments | Full service center-based child care | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Other expenses, debt Instrument amendment and acquisition related costs | $ 3,300 | |||||||||||
Revenues | $ 1,457,754 | $ 1,321,699 | $ 1,236,762 |
Transactions with Related Parties - Additional Information (Detail) shares in Millions |
12 Months Ended | 59 Months Ended | |||
---|---|---|---|---|---|
Jan. 30, 2013
shares
|
Dec. 31, 2017
director
shares
|
Dec. 31, 2016
shares
|
Dec. 31, 2015
shares
|
Dec. 31, 2017
shares
|
|
Related Party Transaction [Line Items] | |||||
Issuance of Class L common stock (in shares) | 11.6 | ||||
Sponsor | |||||
Related Party Transaction [Line Items] | |||||
Percentage of common stock held by investment funds affiliated with sponsor | 7.70% | 7.70% | |||
Secondary Offering | |||||
Related Party Transaction [Line Items] | |||||
Issuance of Class L common stock (in shares) | 8.2 | 4.1 | 9.7 | 47.7 | |
Secondary Offering | Sponsor | |||||
Related Party Transaction [Line Items] | |||||
Shares repurchased (in shares) | 1.7 | 1.0 | 2.1 | ||
Director | Sponsor | |||||
Related Party Transaction [Line Items] | |||||
Number of related parties | director | 2 |
Quarterly Results (Unaudited) - Schedule of Quarterly Financial Information (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 439,879 | $ 433,316 | $ 445,546 | $ 422,164 | $ 398,537 | $ 383,929 | $ 402,053 | $ 385,322 | $ 1,740,905 | $ 1,569,841 | $ 1,458,445 |
Gross profit | 108,141 | 103,194 | 114,341 | 104,934 | 99,216 | 91,472 | 104,383 | 95,776 | 430,610 | 390,847 | 357,755 |
Income from operations | 52,266 | 44,963 | 56,806 | 51,404 | 47,348 | 44,715 | 56,578 | 48,597 | 205,439 | 197,238 | 181,602 |
Net income | 51,444 | 31,105 | 33,040 | 41,374 | 17,120 | 22,510 | 30,403 | 24,727 | 156,963 | 94,760 | 93,927 |
Net income (loss) available to common shareholders - basic | 51,111 | 30,905 | 32,828 | 41,151 | 16,965 | 22,306 | 30,131 | 24,517 | 155,995 | 93,919 | 93,287 |
Net income (loss) available to common shareholders - diluted | $ 51,117 | $ 30,909 | $ 32,833 | $ 41,157 | $ 16,968 | $ 22,311 | $ 30,137 | $ 24,522 | $ 156,016 | $ 93,938 | $ 93,303 |
Earnings (loss) per share: | |||||||||||
Common stock-basic (in dollars per share) | $ 0.88 | $ 0.53 | $ 0.56 | $ 0.69 | $ 0.29 | $ 0.38 | $ 0.51 | $ 0.41 | $ 2.65 | $ 1.59 | $ 1.53 |
Common stock-diluted (in dollars per share) | $ 0.86 | $ 0.51 | $ 0.54 | $ 0.68 | $ 0.28 | $ 0.37 | $ 0.50 | $ 0.40 | $ 2.59 | $ 1.55 | $ 1.50 |
Tax Cuts and Jobs Act of 2017, benefit | $ 22,300 |
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